Cross selling 8

UNICREDITO ITALIANO GROUP

UNICREDITO’S ARCHITECTURE FOR THE NEW ECONOMY AND 1999 GROUP RESULTS

2NewEconomy - 01/04/00 - IR

Agenda

UniCredito Italiano’s Architecture for the New Economy

Multi-channel Banking: enhancing the existing platform

Xelion: on-line personal financial services

B2B and B2C Initiatives: “web-leveraging” our core competence

1999 Group Results

Conclusions


Agenda





1999 Group Results

Conclusions


OUR LONG-STANDING COMMITMENT TO DELIVERING SHAREHOLDER VALUE CREATION...

‘94 ‘95 ‘96 ‘97 ‘98 ‘99

0.008

0.0430.058

0.100

0.197

0.258

ROE

EPS (Euro)

21.1%

15.4%

8.2%

4.7%3.4%1.4%

CAGR: +100%

TRACK RECORD OF DELIVERING

AND OUTPERFORMING TARGETS


… DRIVES OUR STRATEGIC THINKING IN THE FAST-CHANGING INTERNET BANKING SCENARIO

NEW EUROPE AND CONVERGING

MARKETS

GROWTH OF DOMESTIC MARKET SHARE

X-BORDER PARTNERSHIPS

OUR 3 POINT STRATEGY ...

GAIN KEY POSITIONS IN NEW EUROPE AHEAD OF TAKE-OFF OF

INTERNET REVOLUTION

INTERNET IS A GREAT

OPPORTUNITY TO DEVELOP OUR 12% MARKET

SHARE

CONTINUE PURSUING ADDED VALUE PARTNERSHIPS

... FITS WELL WITH THE INTERNET WORLD

Today we outline our Architecture for the New EconomyIn May 2000 we will present our 3-year Business plan


More power to customers

Threat from new attackers

Cross selling to existing customers

Unprecedented opportunities to expand our customer base

INTERNET AND THE NEW ECONOMY: SOME CHALLENGES AND LOTS OF OPPORTUNITIES

2000 2003

8

25

Internet Users

in Italy (millions)

-

-

+

+

+

+

Source: IDC


INTERNET AND THE NEW ECONOMY: IMPACT ON OUR OPERATING RESULTS OVER 3 - 5 YEARS

False alarm

Price war

New entrants

win

Price Resistance

Low

High

LOSS O

F C

USTO

MER

S

Low HighPRICE COMPETITION

Impact on existing business4 possible scenarios

Operating income today

Margins decrease on

existing clients/products

Cost cutting

Increased cross-selling to existing

customers

New customers and new initiatives

Cross-selling, new customers

and new initiatives are

crucial

Note: foreseen impact


UNICREDITO CAN BUILD ON SOLID GROUND…

The virtual revolution is “The Priority” for UCI’s Board and Top Management

Leadership in customer segmentation and Database Marketing

Integration of group bank IT platforms well underway

Recognised capability in attracting talent

Fully incentivised management team

A number of web initiatives already launched (TRADINGLAB

®/TLX

®, on-line trading, ...)

Excellent 1999 results confirm a leading track record


… WITH CLEAR STRATEGIC PRIORITIES

Protect and develop existing customer

base

Attack further the affluent segment

Leverage core skills to exploit web-related

opportunities

Deepen segmentation and multi-channel distribution of existing platform

Launch on-line personal financial

services platform for affluent segment

Several B2B and B2C initiatives and more in

the pipeline


A 3-PILLAR ARCHITECTURE

DEVELOP NEW GROWTH

PROTECT EXISTING GROWTH

Multi-channel

banking in Italy B2B B2C

New web initiatives

EXPLOIT WEB OPPORTUNITIES

5.3 MLN CURRENT CUSTOMERS

1.5 MILLION NEW CUSTOMERS WITHIN 3-5 YEARS

• Multi-brand open platform

• Affluent customers

• New Multi-channel

• TradingLab• E-Vertical

Supply Chain• E-outsourcing

general corporate services

• More in the pipeline

• Multi-channel home mortgages

• Virtual bank for families


2 strategic partnerships with leading internet VC’s

• Full customer segmentation

• Transformation of existing networks

• Migration of customers onto new channels

• Cross-selling financial and non financial products

• Reduction of costs

Online personal financial services

Xelion






1999 Group Results

Conclusions

Agenda


THE BANKING PLATFORM RESULTING FROM THE UNICREDITO MERGER PROVED TO BE HIGHLY EFFECTIVE IN 1999...

Leading market share in the most affluent regions

5.3 millions of retail and private clients

137,000 corporate clients

Full segmentation of customer base of all group banks

Identification and comprehensive training of:–1,350 Affluent client managers–230 Private bankers–1,140 Small business account managers–800 Corporate account managers

Strong growth in key areasAuM: +34%Deposits: +4%Loans: +14%

Cost/Income Ratio: 52.8%

Integration of IT systems progressing smoothly

Key 1999 achievements

Branches mkt share

>10%

5-10%

<5%


... AND IS ALREADY A TRULY MULTI-CHANNEL ORGANISATION ENCOMPASSING BEYOND THE TRADITIONAL NETWORK NEW HIGH POWER PHYSICAL CHANNELS...

Private banking

Financial consultants

Leasing Network

• 56,000 customers• 108 branches throughout Italy• 230 private bankers• Euro 30 bln AuM

• 3rd network by number of consultants

• 1,670 financial consultants, grown by 20% over the last 12 months

Locat, the leasing company of the group:

• Italian market leader (13% market share)

• 18 branches, 70 agencies and 400 brokers


Call centre

Internetbanking

Group banks are fully “Web-enabled”**• 80,000 retail banking customers in March 2000 (+150%

from Dec. ‘99)• 16,000 on-line trading customers• over 8,300 daily securities trades, generating 23% of total

group trading

One “state-of-the-art” call centre serving the entire group

• 113 workstations• 273,000 customers

OUTBOUND• calls in 1999: 540,000• average redemption: 17%

INBOUND• calls in 1999: 1.9 mln• dedicated operators for small business• securities trading: 227,000 trades in ‘99 (100,000 1Q2000),

counter-value: Euro 1.5 bln (Euro 0.6 bln. 1Q2000, 15% of total volumes*)

… AND ON-LINE CHANNELS

* Credito Italiano only ** CRT from October 2000


OUR PLATFORM WILL SIGNIFICANTLY BENEFIT FROM THE LEADING CRM* SYSTEM IN ITALIAN BANKING...

Key Elements

• Identify and select targets (existing and potential clients)

•Optimise cost per contact

•Choose the most appropriate channel

Organisation

•A dedicated internal team

•Selected International Partners (SAS, Prime Response, iXL)

Expected Achievements

• Increased redemption by 10/12 times

•Reduced attrition rate by 1% in the first year

•First campaigns:–INVESTOR (April 2000)

–Personal Loans (May 2000)

CRM: a group integrated marketing database

IN 2000 CRM WILL ALREADY BE APPLIED TO 50% OF CUSTOMERS

* Customer Relationship Management


… AND IS BOUND FOR FURTHER RADICAL TRANSFORMATION

FULL DIVISIONALISATIONThe New Economy will drive an accelerated evolution of the whole branch network in line with Credito Italiano’s model

EFFICIENCY AND COST CUTTING In addition, depending on the speed of virtual channel acceptance, the size and structure of the physical network will adapt

100

Today 3/5 years

-15%

• Use of direct channels for low added value operations

• Upgraded IT System and re-designed processing

• Re-designed distribution network (geographic rationalisation and branch restructuring) and openings only of specialised branches

• Leverage on existing cost-structure for new initiatives

• Early retirements supported by age pyramid

Credito Italiano CEO

RetailDivision

PrivateBankingDivision

CorporateDivision

8 Regional Offices

847 Branches

74 Branches/442 Corporate

account managers

56 Branches

7 Regional Offices

TotalBankingOperatingCosts






1999 Group Results

Conclusions

Agenda

Xelion: SECOND GENERATION ONLINE PERSONAL FINANCIAL SERVICES - AN OPEN PLATFORM

• A New entity• New brand under UCI umbrella

• Affluent customers (26% of households)

• Wide range of Group and Third Party products

• On-line trading • Mutual Funds• Insurance/Pensions• Banking products

• High added value services• Financial Information• Funds rating • Asset allocation and

Kilovar

• A multi-channel model operating through financial consultants based in financial shops, Internet, mobile phones, call centre, ATM (Interactive TV in the future)

ORGANISATION

CUSTOMERS

PRODUCTS & SERVICES

CHANNELS

TARGET CLIENTS

450,000 affluent customers (9% market share in Italy) by 2005

VALUE PROPOSITION

• Personalised financial advice

• Independence and transparency (open platform)

• Easy access and usage

• Advanced Technology

18

Xelion: TARGET NEW CUSTOMERS

5,200

Affluent customers

in Italy

Number of customers, Estimate 2005(‘000)

Multi-channel affluent

customers

New customer

s

UCI group’s cannibalised customers

450360

902,600

50%

~15% ~20%

Xelion’s* target

* Xelion’s target market share: ~15%

Euro ~100 mln, total investments over a 3 year period

On-line trading to be launched in May 2000

Other financial services to be added in 2H2000

NOT AFRAID OF CANNIBALISATION

19





1999 Group Results

Conclusions

Agenda

20

B2C

Xelion• Multi-channel home mortgages• Virtual bank for families• More in the pipeline

A PORTFOLIO OF B2B AND B2C INITIATIVES TO “WEB-LEVERAGE” OUR CORE COMPETENCE

B2B

• TRADINGLAB®/TLX®

• Supply Chain Vertical Marketplace

• E-outsourcing of general corporate services


Internet-focused

Venture Capital

• Two key partnerships with leading Italian internet venture capitalists: Net Partners, Kiwi

• Web scouting

21

TRADINGLAB® IS THE LEADING “B2B” PROVIDER OF RETAIL PRODUCTS FOR DIRECT INVESTORS...

• One-stop shopping wholesaler for retailers

• Exploiting the increasing sophistication of retail investors

• Products sold to intermediaries (banks and stockbrokers), not directly to the retail customer

• High-margin products:• Covered warrants• Structured bonds

• Quality services to increase loyalty of retail investors

• Kilovar (risk measurement)

• TLX (after-hours trading)• Pricing tools

• 90% of revenues through third party banks and stockbrokers

VALUE PROPOSITION

PRODUCTS/ SERVICES OFFERED

CUSTOMER BASE

7

4Q98 Average1999

29

58

1Q2000

Revenues from TRADINGLAB®

Quarterly Average, Euro mln

CAGR:+443%

22

...UNDERPINNED BY TWO INNOVATIVE INITIATIVES:TLX®- THE FIRST ITALIAN ECN AND MY MONEY - AN OUTSTANDING ON-LINE FINANCIAL MAGAZINE

My Money: one of the most complete Italian

financial websites

Unique Italian ECN with after- hours trading

Kilovar: user-friendly tool for risk measurement of

complex products

TradingLab: 700,000 page views per day

23

B2B: TWO MAIN INITIATIVES ARE ABOUT TO BE LAUNCHED

SUPPLY CHAIN VERTICAL MARKET PLACES

E-OUTSOURCING OF GENERAL CORPORATE SERVICES

Value Proposition

Economics*

Connect a vast number of companies to a marketplace for the outsourcing of non-core services, including administration, HR mgmt/training, temporary recruitment and call centres.

Organise and connect specialised vertical communities centred on a business leader to centralise procurement and logistics

Investments (2001-2005) over Euro 200 mln

Revenues (2005) over Euro 150 mln/year

Expected roll-out of project: April 2000

Investments (2001-2005) ~Euro 160 mln

Revenues (2005) over Euro 180 mln/year

Expected roll-out of project: May 2000

* Relative to the entire initiative, in which UCI will take a share24

B2B: TWO MAIN INITIATIVES ARE ABOUT TO BE LAUNCHED

SUPPLY CHAIN VERTICAL MARKET PLACES

E-OUTSOURCING OF GENERAL CORPORATE SERVICES

Key partnerships

UCI’s role/ contribution

Technology platform providers

Industry leaders

System developers

Technology platform

providers

Large-scale buyers

Non-core service suppliers

Unique player able to involve up to 60,000 Italian SMEs in the projects thanks to its 800 Corporate Account Managers and to ensure fast delivery and neutrality

Solid expertise in payment systems and integration of financial and operating cycles

Strong ability to leverage different competence (platform providers, industry leaders, systems developers)

25

Value Proposition——————————

• Develop the leading multi-channel “non-branch based” provider of mortgage lending to home purchasers

• Leverage core competence of two partners to develop leading Italian vertical portal dedicated to home purchasers/owners

A winning partnershi

p

How we do it

Targets

• is the leading network of real estate agents

– Absolute market leader with ~2,000 outlets in Italy

– Already one of the top mortgage originators in Italy

• Establishment of a separate entity, majority owned by UCI

• UCI Group to acquire a stake in • On-line pre-approval of mortgages• Effective use of securitisation to manage

capital absorption

• Over 100,000 new customers in the first 3-5 years

B2C INITIATIVES: MORTGAGE CO-BRANDING WITH INDUSTRY LEADER

26

WEB-CONVERGENCE FOR MEDIA AND FINANCIAL SERVICES

MEDIA PLAYERFINANCIAL SERVICES

PLAYER• “Web-contents”

• Traffic generation capability

• Web & media-tech know-how

• Client profiling and marketing revenue skills

• Massive virtual traffic

• Marketing revenues

• Customer satisfaction

• Vast, loyal and deeply known customer base

• Financial services content

• Physical network/distribution

Further need for partnership/co-operation with telecom carriers, handset developers, technology developers

27

KATAWEB IS A LEADING AND VERY INNOVATIVE PORTAL AND CONTENT PROVIDER IN ITALY

Actively promoting loyal

communities

KataWeb is a leading Italian portal, content provider and free ISP:

• over 4.5 million page views per day (highest growth in Italy)

• over 1,000 journalists providing content

• second largest player in the on-line advertising market

• partner in Italy of CNN

Part of the media group Editoriale l’Espresso:

• second largest newspaper publisher (La Repubblica)

• largest portfolio of local newspapers closely matching UCI’s banks

• 5 major magazines• 3 nation-wide commercial radio

stations (including the #1 in Italy)

Just launched KataWap, a wap-portal

An innovative range of vortals

and Web TV/Web radio usage28

THE ALLIANCE WITH KATAWEB: LETTER OF INTENT SIGNED ON APRIL, 3

MULTI-CHANNEL BANKING

CONTENTS:

• Jointly owned co-branded national portal as preferred web-access for UCI’s domestic clients

• Jointly owned co-branded “digital cities” for regional banks’ clients (e.g. Il Piccolo-CRTrieste, ...)

IMPACT:

• Increase loyalty/satisfaction of UCI’s customers

• Non-financial revenues (e-commerce, promotions, banners, ...) on ~2 mln clients expected to migrate/join over 5 years

NEW WEB-INITIATIVES

• KataWeb will take a stake in the virtual bank for families launched by UCI and support it with contents, traffic generation, advertising and profiling

• KataWeb will be a preferred media and content partner for Xelion

• Other joint initiatives:

– financial content channel

– co-marketing on off-line

– wap portals

– B2B

– New Europe expansion29

BREAKDOWN OF WEB INVESTMENTS

(Euro mln)

* In addition to the existing plan

MULTI-CHANNEL BANKING (Incremental investments)*

• IT investments

• Physical Network restructuring

• Co-marketing

NEW INITIATIVES • Virtual bank for families

• TradingLab ®

• Venture Capital

• B2B

• Vertical portals

• Other

100 - 150

75 - 100

50 - 75

75 - 100

75 - 100

75 - 100

~ 150

~ 50

100 - 125

Xelion ~ 100

Total 850 - 1,05030


MANAGEMENT IS STRONGLY INCENTIVISED TO THE CHALLENGING OBJECTIVES OF THE GROUP. STOCK GRANTING TO ALL EMPLOYEES INTRODUCED TO ENHANCE MOTIVATION*

STOCK OPTIONS FOR TOP MANAGEMENT

• 50 million shares (1% of capital)

• assignment within two years: 2000 and 2001

• 300 top managers involved

Objectives:

• achieve a very ambitious plan for shareholder value creation

• increase strategic resources loyalty

• 35,000 people involved

• maximum counter-value of Euro 2 th. per-capita

Objectives:

• promote a sense of belonging and further alignment between employee and shareholder interests

STOCK GRANTING TO ALL EMPLOYEES

*Plan to be approved by ESM of May, 2. 200031






1999 Group Results

Conclusions

Agenda


TOTAL REVENUES: +6.3% Interest Income: -3% Net Commissions: +22.7%

OPERATING INCOME: +14% Administrative Costs (incl. depreciation): +0.5%

COST/INCOME (incl. depreciation.): 52.8% (55.8% in Dec. ‘98)

EXCELLENT TREND IN OPERATING INCOME OUTPERFORMING BUDGET TARGETS WITH SIGNIFICANT PROGRESS IN NET INCOME

NET INCOME : Euro 1,286 mln (Euro 950* mln in Dec. ‘98)ROE: 21.5% (15.4% in Dec. ‘98*)EARNING PER SHARE: Euro 0.26 (Euro 0.20 in Dec. ‘98*)

* Before extraordinary depreciation of goodwill for Rolo Banca 1473

1999 results compared excluding Pekao

PROPOSED DIVIDEND: Euro 0.13 (Euro 0.06 in ‘98)

1999 results compared including Pekao


FURTHER RISE IN MARKET SHARE: from 10.78% (Dec. ‘98) to 10.90% on lire deposits(excluding bonds and repos)

POSITIVE CONTRIBUTION OF CURRENT ACCOUNTS: + 14.8% on Dec. ‘98

CUSTOMER DEPOSITS Euro, mln (excl. repos)

… MAINLY DUE TO PACKAGES, 387,000 new accounts in ‘99 (totalling 813,000)Dec. ‘98 Dec. ‘99

83,82687,093

+3.9%

RISE IN MARKET SHARE (from 10.38% in Dec ‘98 to 10.98% in Dec ‘99, excluding repos)

SUBSTANTIAL GROWTH IN MORTGAGES (+22.1%, Euro 28 bln in Dec ‘99)

GOOD PERFORMANCE OF LEASING (+9.3%, Euro 5,151 mln in Dec ‘99)

CUSTOMER LOANS Euro, mln (excl. repos)

74,47785,167

Dec. ‘98 Dec. ‘99

+14.4%

POSITIVE TREND OF CUSTOMER DEPOSITS MAINLY DUE TO THE SIGNIFICANT RISE OF CURRENT ACCOUNTS (+14.8% on Dec. 1998) AND STRONG LOAN GROWTH



QUALITY OF RESULTS CONTINUES TO IMPROVE: NET COMMISSIONS RISE FURTHER (Euro 2,522 mln, +22.7% on Dec. ‘98) LED BY ASSET MANAGEMENT (40% over Dec. ‘98) AND BANCASSURANCE

NET COMMISSIONS/TOTAL REVENUES

37%

32%

1998 1999

NET COMMISSIONS (Euro, mln)% OF ASSET MANAGEMENT

AND BANCASSURANCE

ASSET MANAGEMENT COMMISSIONS

+40% from Euro 789 to Euro 1,104 mln

Strong growth in fees from securities placement (+66%, from Euro 142 mln to Euro 237 mln)

1998

2,056

1999

2,522

45%

6%

37%

4%

BANCASSURANCE:+94%, from Euro 75 mln to Euro 145 mln

AuM: Euro 96 bln, +34% on 1998


STAFF COSTS Euro, mln

OTHER COSTS, Euro mln(incl. depreciation)

1998 1999 19991998

Costs for new projects, strategic initiatives and integration

Strict cost control and productivity improvements

2,159 2,146

263280 Reduced impact of depreciation

EXCLUDING EXPENSES FOR INTEGRATION AND NEW PROJECTS COSTS DECREASE: ADMINISTRATIVE COSTS (excl. Pekao) +0.5%

-0.6%

1,2021,183

+1.7%

26

55

876 884

-6%

+0.9%

+112%



THE PRODUCTIVITY OF THE GROUP BANKS CONVERGED SUCCESSFULLY IN 1999

As of 31/12/98

As of 31/12/99

Ch. %, on previous year

…..

Added value per employee(1) , Euro ’000 per employee and Ch. %, 99/98

Caritro

Rolo Banca

7.3%

21.0%

3.7%6 Banks’ Aggregate

Credito Italiano

Banca Crt

CariVeronaCassamarca

10.4%

16.4%

4.1%

15.6%

167

96

116136

131

160

150

161

80

107117

126

136

137

(1)• Revenues less non-personnel costs• Revenues normalised excluding the effects of: excess capital, dividends and tax collection• Costs composition adjusted as if the effects of the starting up of USI and UPA were the same for all banks and spinning off costs

deriving from tax collection activities• Number of employees revised according to human resources assigned to: USI, UPA and tax collecting unit


ASSET QUALITY REMAINS VERY SATISFACTORY, WITH IMPROVED COVERAGE. THE RISE IN WRITE-DOWNS IS MAINLY DUE TO FONSPA, PEKAO AND HIGHER COVERAGE ON PERFORMING LOANS

Fonspa

Pekao’s post privatisation write-downs

Generic Reserves on Performing Loans*

100 mln

109 mln

53 mln

Euro 263 mln increase in total provisions driven by:

NPL COVERAGE RATIOIMPROVING

Dec. ‘98 Dec. ‘99

45.3%

53.0%

2.6%2.1%

Dec. ‘98 Dec. ‘99

NPL ON TOTAL LOANS DECREASING DESPITE PEKAO

* Total general reserve: Euro 167 mln


PEKAO RESTRUCTURING IS WELL ON TRACK AND REINFORCES OUR CONFIDENCE TOWARDS FURTHER EXPANSION IN THE “NEW EUROPE”

Share price: +30% since

the acquisition

45 joint task-forces already producing operational results

MBO program for 900 managers

New Head Office and regional overhead organisation

New retail scoring system being implemented

Implementation of deep budgeting process and reporting system

Migration of 1,000 employees to front line


Agenda





1999 Group Results

Conclusions


CONCLUSIONS

With our current 12% market share and 88% left to aim for, we will be an attacker as much as an incumbentOur main goals are:

• to grow our customer base in Italy by 1.5 mln over the next 3-5 years

• to cut costs by 15%• to increase customer satisfaction• to generate revenues from non-financial

services as well

We can face this exciting challenge confidently, with our history of innovation, meeting our targets and - above all - value creation

Documents

Cross selling 8