TRANSFORMING THE FRANCHISE: UNICREDIT APPROACH

Alessandro Profumo - CEO

Goldman Sachs Financials ConferenceMontecarlo, June 10th, 2004

2

FOCUS ON THE RETAIL DIVISION

New Europe division

Private & AM division

Corporate division

Retail division

41.2% 30.7% 11.5% 16.6%

Weight on 1Q04 Group revenues pre Corporate Centre and elisions

(1) CR Carpi and Banca dell’Umbria(2) Delta due to other companies of the division and rounding

1Q04 data, Euro mln

UniCredit Banca

Customer Loans

36,167

Clarima 1,915

Total Division (2) 50,126

Customer Deposits

40,226

-

42,583

2,684

-

2,828

Branches

UniCredit Banca per la Casa 8,007

Other banks (1) 3,998

-

2,347

15

129

23,986

294

25,727

Employees

353

1,091

RETAIL DIVISION KEY HIGHLIGHTS

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UCI RENEWED APPROACH TO THE RETAIL BUSINESS

Change of customer relations model

Enhance customer loyalty

Improve revenue quality

Change of network management model

Network differentiation in growth/strengthening areas

Test of new branches format/specialised branches (2H04)

Service model restructuring

4

AGENDA

Change of customer relations model

Change of network management model

First results of the new focus

5

A NEW BANKING ENVIRONMENT

Client’s satisfaction decline, due to recent bond defaults and rising awareness of transactional costs

Low client confidence reduces scope for repricing and requires investments to increase banks’ reputation

UniCredit answer:

Start-up of a deep customer care program

Improved revenue mix, less depending from up-front driven sales and more focused on recurring fees…

… and net interest income, thanks to an increased focus on volume growth in 3 key markets:

small business

consumer finance

household mortgages

6

START-UP OF A DEEP CUSTOMER CARE PROGRAM…

120,000 interviews in 2002 (90,000 UCB customers + 30,000 competitors’ customers) to assess the mood of customers and their behaviours

A synthetic measure of satisfaction has been built down to branch level: TRIM index

Monthly interviews (~250,000 on a yearly basis) in 2004 to track customer satisfaction trends down to branch level (approx. 100 per branch)

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…AND IMPROVED REVENUE MIX, WITH LOWER WEIGHT OF UP-FRONT AND INCREASED IMPORTANCE OF RECURRING REVENUES

Avoidance of re-pricing actions in hi-elasticity demand areas

Commissions more recurring and less up-front (weight of up-front on total net commissions down from 36% in 2003 to a target of 30% in 2004)

Continuous and substantial growth of net interest income, with higher weight on total revenues

Deliberate choice of re-balancing sales (i.e. mutual funds from 21% to 33% of total sales) with positive impact also on bank’s profitability:

NPV of revenues from all asset management products(1) is by far higher than the NPV of the revenues resulting from the sales of structured bonds(1), with the exception of money market mutual funds

As an example, money market mutual funds(1) give a revenue NPV which is 12% lower vs. structured bonds(1), while bond funds(1) already guarantee a 40% higher return for the bank vs. structured bonds(1)(2)

(1) Simulation over 5 years horizon, including only 50% of management fees (the remainder is in Pioneer P&L)(2) Bancassurance is around 100% more profitable than structured bonds and equity mutual funds around 150%

8

SMALL BUSINESS MARKET: NEGLECTED AND PROFITABLE

WHY HOW

Big market

4,8 mln companies(1)

138 bn loans(2)

Profitable

High margins

59% current Cost Income (UCB)

100-125 bp provisioning (diversification)

Neglected by the banking system, squeezed between corporate and retail (asset gathering)

UCB 8% market share on SB vs. 10% branch share

250 Dedicated Small Business Centres / 2,000 Specialist Account Managers

Focus on Business Associations

Dedicated products by industrial sector

X-selling on asset gathering of SB owner (only 50% of SB owners currently have wealth management products with UCB)

Speed of credit response

Very advanced (BIS II) scoring system

Very advanced centralized risk monitoring system

(1) Source: Infocamere 2002 figures, companies with turnover lower than 2.5-3.5 mln Euro(2) Source: internal estimate on Bank of Italy data

9

CONSUMER FINANCE AND HOUSEHOLD MORTGAGE MARKETS: UNDERDEVELOPED, FAST GROWING AND ATTRACTIVE

CONSUMER FINANCE MARKET(1)

OUR OPPORTUNITY

Consumer lending volumes increasing at 15% in 2004 (after a 15.8% increase in 2003)

CLARIMA 150,000 cards of non UCB customers

outstanding (+5,500 a month) Significant opportunities arising from

partnerships 9 new shops to open in 2004 50 new agents in 2004

UNICREDIT BANCAUnder-penetrated customer base now being targeted

Only 2.5% of our mass market customers have a revolving card

Only 7% of our mass market customers have a personal loan

(1) Source: ASSOFIN

Italian market substantially underdeveloped (consumer lending at 3.2% of GDP vs. 6.7% avg. of Eurozone in 2003)

HOUSEHOLD MORTGAGE MARKET(2)

OUR OPPORTUNITY

Household mortgage volumes 03-07 CAGR 9.2% in 2004 (after a 98-03 CAGR of 19.4%(2)

UNICREDIT BANCA PER LA CASA A dedicated and integrated (production +

distribution) “mortgage centre” Significant competitive advantage

coming from the partnerships with real estate agents networks (Tecnocasa, FIAIP, etc.)

15 branches fully dedicated to mortgages

Distribution also through PFAs networksUNICREDIT BANCA

Distribution centre for the division Still under-penetrated customer base

(only 10% of private customers have a residential mortgage)

Italian market still underdeveloped (residential mortgages representing 14.8% of GDP vs. 32.5% avg. of Eurozone in 2003)

(2) Source: Bank of Italy data for historical data, UCI estimate for future growth

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FURTHER GROWTH OPPORTUNITIES CAN ARISE ALSO FROM EXISTING CUSTOMERS, AS SUGGESTED BY KEY PRODUCTS PENETRATION, ESPECIALLY IN MASS MARKET

AFFLUENTMASS

MARKET

CURRENT ACCOUNT PACKAGE 45% 44%

RESIDENTIAL MORTGAGE 4% 11%

PERSONAL LOAN 2% 7%

BANCASSURANCE (Single premium) 21% 4%

CLARIMA CARD 2% 3%

STANDING ORDERS OF PAYMENT (Utility bills) 16% 8%

ASSET MANAGEMENT 51% 11%

SECURITIES IN CUSTODY 38% 6%

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AGENDA

Change of customer relations model

Change of network management model

First results of the new focus

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AFTER ITS CREATION UNICREDIT BANCA HAS STARTED A DETAILED X-RAY OF ITS 2,700 BRANCHES

(1) Excluding mini-branches(2) Excluding headquarter costs (personnel & SG&A)

Branches

High

Low

High

Low

Large

Small

GOP,% of tot

Branch Profitability

Micro-market potential

Branch Dimension

# of branches(% of total(1))

828

(38%)56%

444

(20%)18%

387

(18%)6%

High growth

Medium growth

MAIN TARGET:

SCOPE FOR SUBSTANTIAL GROWTH

SCOPE FOR STRENGTHENING

Cost Income(2)

49%

61%

73%

Large

Small

330

(15%)15%

317

(14%)5%

60%

69%

SCOPE FOR RESTRUCTURING

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BRANCH NETWORK ORGANISATION REDESIGNED TO BETTER FIT WITH TARGETS ASSIGNED TO STRENGTHENING AND DEVELOPMENT REGIONS…

HEAD OF SALES

Lombardia Head

Lombardia Development (D) Head*

Lombardia Strengthening (S) Head*

DevelopersSmall

business centre

“D” branches

“S” branches

11 Regions

2004 MBO TARGETSRevenues

New Customers

Share of Wallet/X-selling

Customer Satisfaction/Retention

* 1 or 2 in each Region, depending on size of Region

High weight

Mid weight

EXAMPLE

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… LEVERAGING ON A DEDICATED NETWORK OF DEVELOPERS TO EXPLOIT OPPORTUNITIES IN HIGH-POTENTIAL MICRO-MARKETS

Senior figures coordinating team efforts

Bank’s total employees substantially unchanged in FY 2004

62 specialists hired from outside

418 resources coming from internal transfers

480 developers introduced in 7 months starting from October 2003

High profile resources specifically devoted to increase the customer base in the so called “Golden customer” segments (Affluent and Small Business)

May 04Sept 03

670

190

Dec 03Mid

Feb 04

260

495

CREATION OF DEVELOPERS NETWORK

Initial focus on acquisition of Small Business customers

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SERVICE MODEL AND GEOGRAPHICAL COVERAGE RESTRUCTURING PRESENT GOOD OPPORTUNITIES TO IMPROVE THE EFFICIENCY PROFILE OF THE DIVISION

MASS MARKET 79%

AFFLUENT 47%

SMALL BUSINESS 59%

EXAMPLE: SUB-SEGMENT CROSS SUBSIDIES IN UNICREDIT BANCA

70 branches already closed in 2003

NETWORK REORGANISATION

~100 further branches to be closed already identified, with a target of 50/60 closures in 2004 (6 already closed as at end of May)

~80 branches to be downsized already identified

~40 branches to be specialized already identified

~15 branches to be opened in 2004 (of which 2 already operating)

Cost income of the different segments

However, further cross subsidies between sub segments exist in each segment

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AGENDA

Change of customer relations model

Change of network management model

First results of the new focus

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DECREASE OF TOTAL COMMISSIONS COMPLETELY DUE TO LOWER UP-FRONT, WITH INCREASED WEIGHT OF RECURRING COMMISSIONS IN LINE WITH INTERNAL EXPECTATIONS…

352

4Q03

302

1Q04

338

3Q03

351

2Q03

347

1Q03

Up-front commissions

Recurring commissions

237

67%

223

74%

217

64%

214

61%

223

64%

33%26%

36%39%36%

NET COMMISSIONS

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…POSITIVELY CONTRIBUTING TO CUSTOMER SATISFACTION IMPROVEMENTS IN PRIVATE AND SMALL BUSINESS SEGMENTS, CONSISTENTLY OUTPERFORMING COMPETITION

PRIVATE CUSTOMERS, TRIM INDEX

UNICREDIT BANCA AVG. TOP 9 COMPETITORS

Stability of front-end relationship with customers

Improved waiting time (shorter queues)

Improved advisory on investment services, with room for further improvement

SMALL BUSINESS, TRIM INDEX

2003 2004 ytd

4751

2003

4638

2003

4245

2003

44

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UNICREDIT BANCA AVG. TOP 9 COMPETITORS

Dedicated service model

Improved advisory on lending products

Focus on quality of sales

TRI*M indexes calculated by NFO InfratestNote: customer satisfaction analyses at system level are commonly based on ~4,000 interviews (ABI, Eurisko etc.)

~42,000 interviews with UCB customers and ~4,500 interviews with competitors’ customers

~21,000 interviews with UCB customers and ~2,500 interviews with competitors’ customers

Mar 04 2004 ytd

Mar 04

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+52%

5.8% yearly growth rate

GOOD ACCELERATION IN CUSTOMER ACQUISITION CAPABILITIES…

SMALL BUSINESS CUSTOMERS,MONTHLY ACQUISITION RATE

0.48%0.58%

0.88%

2003 1Q04 APR MAY04(1)

0.86%

1.40%

2003 1Q04

+63%

0.32%0.40%

0.56%

2003 1Q04

+40%

0.70%

TOTAL BANK DEVELOPMENT REGIONS STRENGTHENING REGIONS45% OF STOCK 55% OF STOCK

PILOT REGIONS: Lombardy, Lazio-Umbria-Sardegna, Tuscany-Marche, South

Excellent results driven by the enhanced focus of branch managers and the brand new network of developers

16.8% yearly growth rate

APR MAY04(1)

APR MAY04(1)

(1) Updated to May 15th

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CONSUMER FINANCE

Continued strong performance in new cards issued by Clarima, with 28,000 revolving cards issued in May (for a total of 168,000 cards issued in 04 vs. 50,000 in FY03)

36 mln new loans issued in May through revolving cards (+16% vs. April) for a total of 120 mln ytd (vs. 95 mln in FY03)

Good increase also in the flow of new personal loans granted by Clarima (330 mln, vs. 690 mln in FY03)

Excellent increase in market share, from 16.8% in December to 17.0% in March

Confirmed good flows of residential mortgages, with ~800 mln in May, thanks to the positive performance of both UCB (~540 mln) and UBCasa (~260 mln)

Y/y comparison showing an excellent 28% increase (~3.4 bn ytd) Growth coming mainly from partnership channel, with 50% y/y increase Avg. amount of mortgage from 93,000 (2003 avg.) to 102,000 Euros (5M04

avg.), up 9.7%

RESIDENTIAL MORTGAGES

… INCREASED MARKET SHARES IN KEY BUSINESSES AND EXCELLENT GRANTING OF NEW LOANS IN MORTGAGE AND CONSUMER FINANCE

MUTUAL FUNDS Good increase in market share on stocks of mutual funds, from 13.39% in Dec03 to 13.49% in May04 (+10 bp)