UniCredito Italiano Group

London - October, 8th 2002

Alessandro Profumo - CEO

Merrill Lynch European Banking & Insurance Conference

“HIGHER RISK VS. LOWER GROWTH - THE CHALLENGE AHEAD”

2

Agenda

Creating value in a volatile world

Portfolio strategy for future growth

3

IN THE LAST FOUR YEARS UCI SHOWED EXCELLENT GROWTH DESPITE MACROECONOMIC AND FINANCIAL MARKETS DISCONTINUITIES ...

(2) Annualised data

UCI EPS evolution

1998 1997

0.09

0.19

1999

0.26

2000 2001 1H02(2)

0.28 0.28

0.33

1997/1H02(2) EPS CAGR: +29.7%

0

50

100

150

200

250

IVQ'9

7

IIQ'9

8

IVQ'9

8

IIQ'9

9

IVQ'9

9

IIQ'0

0

IVQ'0

0

IIQ'0

1

IVQ'0

1

IIQ'0

2

Italian GDP growthMSCI WORLD Euribor 1M

Market indexes and macroeconomic indicators(1) (BASE: IVQ’97=100)

1st Discontinuity: IIQ’00 - Macroeconomic

growth slowdown

2nd Discontinuity: 11th September 2001

(1) Source: Datastream for MSCI World Index; ISTAT for Italian GDP growth; BCE for EURIBOR 1M

4

… WHICH IMPACTED OUR COST OF CAPITAL ...

(1) Calculated as the annualised cost of a 5 year Call Option on UCI, with strike-price in line with the 5 year forward-price of UCI (2) Credit spread paid by UCI on a 5 year senior debt(3) Fixed Rate on 5 year Euro IRS

UCI CoE

2002 2001

Term Debt

Risk Premium (1)

4.48%

4.30%

8.95%

5.10%

3.51%

8.79%

-62 bp

+16 bp

+79 bp

0.18%0.17%

Risk-free Rate(3)

UCI Credit Spread(2) -1 bp

UCI increased its Risk Premium to reflect the higher uncertainty and volatility of equity markets

On the other side, UCI benefited from the decrease of risk-free rates and from its increased capital ratios, resulting in a reduction of the credit spread

TIER I Target

7.5%

5

AS A RESULT, IN 2002 S&P RAISED OUR LONG TERM RATING TO AA- (FROM A+) ON JULY 3RD AND MOODY’S PUT UCI UNDER OBSERVATION FOR A POSSIBLE UPGRADE

(PRESENT RATING Aa3)

... BUT DID NOT AFFECT OUR CAPABILITY TO CREATE VALUE EVEN AFTER A SIGNIFICANT STRENGTHENING OF OUR CAPITAL BASE

CAPITAL ABSORPTION

VALUE CREATION

7,489Group total (at 06/02) 418

Adj NET INCOME

770

RARORAC

%

11.2

(5) BIS standard

MARGINAL RARORAC

%

14.2

(Euro mln)

NOPAT(1)

(a)Risk taken(2)

(b)

Shareholder’s value added

(c) =(a)-COE(3)

Value added per unit of risk taken

(c)/(b)

(2) Minimum regulatory capital, market risks, credit risks and operational risks (3) The Cost of Equity is related to the capital employed(4) FED standard

2001 2000

8.57%

TIER I Ratio (5)

Total Capital Ratio (4)

6.25% 6.79%

10.96%

1H02

11.69%

7.55%

+54 bp+76 bp

+239 bp

+73 bp

UCI Solvency Ratios UCI Credit Spread (6)

40

50

60

70

80

90

mar-01

may-01

jul-01

sep-01

nov-01

jan-02

mar-02

may-02

jul-02

sep-02

Bp

SPREAD vs SWAPISSUE SPREAD

(6) Spread vs Swap on UCI Lower TIER II 16.3.2001/2011, 6% Fixed Rate, Bullet (taken as an example)

(1) Consolidated Net Income (Euro 849 mln) - Net Extraordinary Income after tax (Euro 79 mln)

6

1H02/Avg ‘00

Growth:

+14.6%

72.7%

4.0%

5.5%

17.4%

71.6%

4.7%

9.0%

14.5%

REVENUE COMPOSITION BY BUSINESS AREA (Net of infra-Group dividends and of Corporate Centre & Elisions negative contribution)

DIVERSIFICATION OF REVENUES BY BUSINESS AND BY GEOGRAPHY IS A KEY SUCCESS FACTOR TO ENSURE GROWTH AND MANAGE THE RISK PROFILE

1H01 2000 Avg

4,658

Italian Banking

Investment Banking

Asset Management

New Europe Banking

New Initiatives

78.8%

2.7%

4.8%

13.7%

73.7%

5.3%

6.0%

15.0%

2H01 1H02

0.4% 0.2%

Euro mln5,272 5,361 5,341

7

Agenda

Creating value in a volatile world

Portfolio strategy for future growth

8

VALUE CREATION

POTENTIAL

Natural owner

- +RELATIVE CAPACITY TO EXTRACT VALUE

Cannot add value

-

+

Can add value

Non natural owner

Relative/absolute market share Historical track record of returns Synergies among businesses

IDENTIFY DEGREE OF NATURAL OWNERSHIP OF EACH BU IN ITS RELEVANT MARKET

UNDERSTAND CURRENT AND

POTENTIAL VALUE CREATION FROM

EACH BU

Value creation of current operations

Value creation of new investments/options

COMPARISON CRITERIA

COMPARISON CRITERIA

UCI DIVERSIFIED IN THE RIGHT BUSINESSES AND GEOGRAPHIES, BUT THERE IS STILL A SIGNIFICANT POTENTIAL TO BE EXPLOITED

Corporate

Retail

New Europe

Asset GatheringAsset Management

Private Banking

Consumer Finance

UBM

Push growth limits/allocate additional resources

Do not invest further and/or free up capital allocated

Leverage on synergies and or acquire capabilities of best owner

Divest and/or use assets in M&A

Aggressive and proactive divestiture

Capture value and divest

= Euro 250 mln revenues

9

S3 IS OUR ANSWER TO THE DOMESTIC COMPETITIVE ARENA AND WILL EXPLOIT ALL THE POTENTIAL IN EACH MARKET SEGMENT

PRIVATE BANK

RETAIL BANK

CORPORATE BANK

FROM 7 BANKS... ... TO THE 3 NEW SEGMENT BANKS

10

Retail

VALUE CREATION OPPORTUNITY

Italy is one of the most attractive markets in Europe thanks to product-mix and expected volume growth

The pension system reform is a discontinuity which could have a significant impact on profitability and volume growth

BEST OWNERSHIP/SYNERGIES

UCI has a performance leadership as for efficiency and profitability and a superior track-record over the last 5 years

UCI results have been achieved on the existing customer base, while customer acquisition has not been pushed

Retail Banking is a strong platform to develop specialized businesses with higher multiple (Consumer Finance and Asset Management)

Potential for cross border synergies in product factories and cross fertilization of products/business models

ITALIAN INDUSTRY:2001 RARORAC: 14%01-05 REVENUE GROWTH: 6.7%

High potential

Low potential

Valu

e c

reati

on

p

ote

nti

al

Non-natural owner

Can add value

Cannot add value

Natural owner

RETAIL IS ONE OF THE MOST ATTRACTIVE BUSINESSES IN ITALY...

11

... AND OUR NEW RETAIL BANK IS READY TO EXPLOIT ALL THE VALUE CREATION POTENTIAL THROUGH SCALE AND SPECIALISED SERVICE MODELS ...

DISTRIBUTION CHANNEL:~2,800 branchesdirect channels (self service,

telephone & home banking)23,000 employees2,000-2,300 relationship

managers16,500 commercial operators

Based in Bologna

UCI RETAIL BANK

Single “umbrella” brand + regional brands for distribution

Quick and efficient distribution of innovative products /services specialised by segment:

KEY SUCCESS FACTORS

MASS MARKET: multi-channel offer of standardised products, improved customer mix, better cross-selling and up-selling

AFFLUENT: increased share of wallet, improved customer mix, attraction of new customers, increased profitability through better asset mix

SMALL BUSINESS: improved customer mix, lower churn rate, increased share of wallet also thanks to dedicated consultancy for family’s savings

12

1H01 1H02

1,9592,015

1,023 1,028

Total Revenues

Interest Income

+2.9%

936 987

Non interest income

+5.4%

(Euro mln)

1H01 1H02

1H01 1H02

UNICREDIT BANCA* RETAIL(Mass market + Affluent + Small Business)

* former 7 banks

+0.5%

... AS THE GOOD RESULTS OBTAINED IN 1H02 CLEARLY SHOW

Focus on medium/long term loans

Further penetration of package accounts in mass market and small business segments

Commissions/total revenues: 46.8%

Excellent contribution of Capital Guaranteed products, pushing net sales of Life Insurance products and Segregated Accounts

13

High potential

Low potential

Valu

e c

reati

on

p

ote

nti

al

Non-natural owner

Can add value

Cannot add value

Natural owner

Corporate Banking is a growing business in Italy as well as in the other European countries ...

... but it is a low value-added industry, with profitability lower than cost of capital

Basle II is an important discontinuity which could significantly reshape the industry and improve its profitability

UCI has a clear leadership position and managed to create value in a value destroying industry also thanks to the skills developed in corporate derivatives and other high value products

Corporate banking is a powerful platform to generate synergies with Private Banking and Investment Banking

Potential for cross border synergies in core Europe for service model and product offering

Corporate

ITALIAN INDUSTRY:2001 RARORAC: -7%01-05 REVENUE GROWTH: 6.9%

VALUE CREATION OPPORTUNITY

BEST OWNERSHIP/SYNERGIES

CORPORATE BANKING IS A FAST GROWING BUT LOW VALUE-ADDED BUSINESS ALL ACROSS EUROPE ...

14

DISTRIBUTION CHANNEL:

250 branches + direct channels

4,000 employees

~1,300 relationship managers

Based in Verona

UCI CORPORATE BANK

One single national brand

Broad offer to cover the full range of customer needs (strategic developments, financial structure, operations)

High quality of credit analysis tools (customer risk measurement, risk-adjusted profitability and capital absorption)

Excellence in customers management supported by advanced IT platform and systematic monitoring of customer satisfaction

KEY SUCCESS FACTORS

2001 RARORAC: +5.6% (from 0.5% in 2000)

... WHILE UCI IS ALREADY ABLE TO CREATE VALUE AND WILL STRENGTHEN ITS COMPETITIVE ADVANTAGE THROUGH THE NEW CORPORATE BANK ...

Improve customer mix, and become the leading bank for targeted customers with specific risk/return profile

15

35.4 -1.2 +2.4 36.6

Avg. Loans 1H01

Selective reduction

Avg. Loans 1H02

New loans

(Euro bn)

802643

+24.7%

1H01 1H02

TOTAL REVENUES

UNICREDIT BANCA*

CORPORATE

* former 7 banks

... STARTING FROM THE GOOD RESULTS OF LAST YEARS, FULLY CONFIRMED IN 1H02

Commissions/total revenues: 37.7%

Focus on risk adjusted pricing policies

AVERAGE LENDING VOLUMES Good volumes growth even after a

selective reduction of less profitable assets (lower exposure to financial companies)

Excellent sales of corporate derivatives, pushing growth in commissions

16

The most attractive industry in Italy, with the single highest RARORAC combined with strong revenue growth

Domestic market is fragmented and underserved (mainly via undifferentiated commercial banking approach)

Low intensity of real competition by domestic and international players

UCI could enjoy a significant first mover advantage and transform the dimensional leadership into strategic leadership

Strong synergies with Asset Management and Corporate Banking

Potential for cross border partnerships to exploit growth opportunities

ITALIAN INDUSTRY:2001 RARORAC: 51%01-05 REV. GROWTH: 10.4%

Private BankingHigh potential

Low potential

Valu

e c

reati

on

p

ote

nti

al

Non-natural owner

Can add value

Cannot add value

Natural owner

VALUE CREATION OPPORTUNITY

BEST OWNERSHIP/SYNERGIES

PRIVATE BANKING SHOWS THE HIGHEST RARORAC AND AN ATTRACTIVE REVENUE GROWTH DESPITE SHORT TERM DIFFICULTIES...

17

... AND UCI PRIVATE BANK WILL BE THE BIGGEST AND BEST POSITIONED SPECIALISED PLAYER IN THE ITALIAN MARKET

DISTRIBUTION CHANNEL:

150 branches + direct channels

1,600 employees

750 relationship managers

Based in Turin

One single national brand

Focus on consultancy and long term customer relationship built on innovative products and efficient service

Ability to grow market share in high value services and “share of wallet”

Consolidation of leadership in Italian high net worth individuals segment

UCI PRIVATE BANK KEY SUCCESS FACTORS

International presence to take advantage of fiscal benefits for customers

18

Attractive but volatile (especially in the short term) growth, strong increasing RARORAC

Value concentrated in few countries: Poland, Hungary, Czech, Turkey, Croatia

Second wave of consolidation likely to happen also due to marginal presence of some foreign players

EU Convergence can improve value further

UCI has the largest position in the region ... ... and the best performance in terms of efficiency

and profitability Cross fertilization of business models and product

offering already effective New Europe platform can be leveraged for

specialized businesses and product factory integration

Long term option for cross-country integration (e.g. IT/OPS)

NEW EUROPE:2001 RARORAC: 6.3%01-05 REVENUE GROWTH: 9.4%

New Europe

High potential

Low potentialV

alu

e c

reati

on

p

ote

nti

al

Non-natural owner

Can add value

Cannot add value

Natural owner

VALUE CREATION OPPORTUNITY

BEST OWNERSHIP/SYNERGIES

NEW EUROPE IS OUR SECOND HOME MARKET...

19

... WHERE EU CONVERGENCE WILL REDUCE RISK AND BOOST PROFITABILITY

New Europe should approach the average of 3 least developed EU countries (Portugal, Greece and Spain) by 2020…

… WITH TWO DECADES OF GROWTH RATES 2%/3% HIGHER THAN EU LEVELS

ESTIMATED TIME FOR CONVERGENCE TO EU PER CAPITA GDP IN PPP

Note: Consensus on average years to convergence forecasted by different growth models (Barro model and Levine- Renelt model in Fisher et al (1998) and EU commission convergence model (2001). EU standards are based upon per capita GDP of the three low income EU members, Portugal, Spain and Greece, with convergence income representing 75% of EU’s per capita GDP. Results of different models are similar, with the exception of Slovenia, where the EU Commission forecasts 1 year to convergence.

12-13 Y

14-15 Y

22 Y

27-32 Y

0 10 20 30

CR,SLOVE

EST,SLOVA,

HUN

LAT

BUL,LITH,ROM

PL,

POLAND SLOVAKIACROATIA BULGARIA

Current spread vs. Euro-Bonds(1), b.p. 8231794 149

Real GDP growth forecast (01-05 % CAGR) 4.04.02.7 4.5

Inflation rate (02-05 avg.), % 5.33.03.0 5.1

(1) Spread over Eurobond is based upon SUEMI: Sole24Ore UBM Emerging Market Index, for Euro-denominated high-yield benchmark

20

11.1

33.7

20.0

26.0

9.4

13.0

Total AssetsEuro bln, 31/12/2001

Total net profitEuro mln, 31/12/2001

456

225(3)

223

117

97

69

UCI(2)

HVB

KBC

ERSTE(4)

SG

INTESABCI

26822.3

192

149

146

60

13

24.0

32.5

11.1

21.9

17.4

(1) Considering 100% of total assets / profit for controlled Companies (stake > 50%) and share owned for non controlled companies(2) Including Koç FS and Zivnostenka(3) Our preliminary estimate(4) Excluding Rijeka BankaSource: Bankscope

Pro quotaControlled (1)

UCI IS ALREADY A LEADER IN THE REGION ...

21

... AND LEVERAGES ON CROSS FERTILISATION TO IMPROVE PROFITABILITY AND ON GEOGRAPHICAL DIVERSIFICATION TO MANAGE COUNTRY RISK

1H02 NEW EUROPE BANKING TOT. ASSETS Euro 24.3 bn

GROUP PEKAO 66.7%

Total Division(2)

ROE, %

UniBankaGroup Pekao

Bulbank

7.516.78.8

C/I Ratio, % 68.141.347.7

C/I Ratio – p.p. Ch. on 1H01 -1.5+0.5-7.1

49.7 (3)

-5.4 (3)

Zagrebacka Group(2)

28.4

57.2 (3)

-1.9 (3)

13.4

UNIBANKA 3.0%

ZAGREBACKA 24.8%

BULBANK 5.5%

Revenues – % y/y growth(1) +10.6+6.5+7.3 +7.9 (3)+10.6 (3)

Net Operat. Inc. % y/y growth(1) +16.2+5.6+24 +20.6 (3)+15.6 (3)

(1) At Unchanged FX(2) Including extraordinary items for Pliva shares disposal and revaluation of replacement bonds (16.6 mln Euro)

Italian Accounting Standards

(3) Excluding Zaba’s dividends and Income from equity inv. valued at net equity

22

THE DIFFERENT BUSINESS OPTIONS LEAD TO FOUR KEY STRATEGIC THRUSTS AIMED AT MAXIMIZING VALUE CREATION POTENTIAL AND INTRAGROUP SYNERGIES

= Euro 250 mln revenues STRATEGIC THRUST

Invest to strengthen the leadership in core Retail Banking

Create a long term option in Consumer Finance leveraging on captive businesses and selective M&A to gain leadership in domestic markets

Complete restructuring processes underway and further strengthen positioning in New Europe in the second wave of the consolidation process

Combine Private Banking, Asset Gathering and Asset Management into Wealth Management in order to maximize synergies

Consolidate relationships with Italian corporates through high levels of efficiency and quality

Become the leading partner for target customers

*Including T-Lab**Including Corporate Bank, UniCredit Factoring, Banca Mediocredito and Leasing

Corporate**

New Europe

Asset Gathering

Asset Management

Private Banking

Consumer Finance

UBM

Retail*

Hig

h

pote

nti

al

Low

p

ote

nti

al

Valu

e c

reati

on

pote

nti

al

Can add value

Cannot add value

Natural owner Non-natural owner

Relative capacity to extract value

23

ACCORDINGLY, THE NEW ORGANIZATIONAL STRUCTURE HAS BEEN DESIGNED TO EXPLOIT ALL THE EXISTING BUSINESS POTENTIAL AND TO DRIVE FUTURE GROWTH

UCI

RetailBank

Clarima(1)

Adalya(2)

TradingLab

New Europe Banks

Retail division

Corporate division

Private & AM division

New Europe division

Corporate

New EuropeAsset Gathering

Asset ManagementPrivate Banking

Consumer Finance

UBM

Retail

UBM

Corporate bank

BMC(3)

Locat(4)

Privatebank

Pioneer

Xelion

(1) Consumer Finance (2) Retail mortgages (3) M/l term corporate financing (4) Leasing