CEE Banking – Still the right bet by wuyunqing

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									CEE Banking – Still the right bet




UniCredit Group CEE Research Network, July 2008
    CEE - STILL THE RIGHT BET


          In a much more challenging environment, CEE’s economic performance remains relatively good. The
           convergence of households’ living standards continues, while the corporate sector is still exploiting the benefits
           of past investments. Dependency of economic growth on the ability to attract international capital in a period of
           high risk aversion is the main risk, while a gloomy inflation outlook adds to the challenges.
          The financial penetration process is moderating but continues, with 2007-2010 average annual growth
           (CAGR) in volumes of around 23%, revenues growth of some 20% and profit growth of 17%. The CEE banking
           model, which implies a clear focus on lending growth, mostly on the retail side, presents an issue in terms of
           banks’ funding. The capitalisation of CEE banks is high, providing a buffer to withstand potential shocks.
          On the retail side, we see opportunities related to the further transformation of households’ investment portfolio.
           Households’ lending penetration gap is closing, but market potential remains related to the strong demand for
           higher living standards. Risks are related to households’ unhedged FX exposures and some possible
           deterioration in credit quality.
          On the corporate side, cyclical stabilisation is partially balanced by renewed corporate demand for bank
           lending. Banks increasingly compete in providing additional services such as leasing, cash management or
           structured finance.
          International players continue to profit from their investment in the region. A fully-integrated regional
           market has emerged, with some sub-segments and little room for further local acquisitions. New M&A has been
           directed toward new markets or specialised segments, while growth strategies are now mostly focusing on
           organic growth/branch openings. Liquidity issues might represent a constraint for some of the regional players’
           growth plans. Network rationalisation or global M&A can contribute to modifying the shape of the region’s
           banking market.
          UniCredit is the leading player in CEE, with total assets of Euro 118 bn in the region, profit of Euro 2,125 mn
           and a network of banks in 20 countries. The CEE region remains a key focus for the Group, with organic growth
           as the main priority.



2   Note: CEE includes Poland, Czech Repulbic, Slovakia, Hungary, Slovenia, Croatia, Bulgaria, Romania, Serbia, Bosnia, Russia, Ukraine, Kazakhstan, Turkey and Baltics
    Sources: UniCredit Group CEE Research based on local Central Banks’ data
    Agenda




         The CEE economy and the new global challenges

         A sustainable-growth banking model

         International players’ strategies in CEE

         UniCredit in CEE

         Annex - Top players by country




3
    ECONOMIC ACTIVITY IN CEE REMAINS LIVELY, DESPITE REPRICING
    OF RISK AT THE INTERNATIONAL LEVEL



     Still solid growth…                                                                         …with clear repricing of risks
     Real GDP growth % (1)                                                                       5Y USD CDS Spread (2)


                                                                   7.0
                                                6.6
                                                                          6.0
                             5.5
                                                       5.0
                                   4.5




                                                                                                                                                                213

                                                                                                                                                                       202
                                                                                                                                      191

                                                                                                                                              180
         2.3




                                                                                                                                                        127
                1.7




                                                                                                                               100
                                                                                                             83

                                                                                                                    58
                                                                                                     26
                                                                                                    Central Europe             SEE&Baltics            Broader Europe
       Eurozone             Central             SEE&B             Broader
                            Europe                                Europe
                                                                                                                                                              (3)
                                                                                                                  31/12/2007         31/03/2008       Current
                         Avg 2005-'07                  Avg 2008-'10




    Note: (1) CE: Hungary, Czech Rep., Slovakia, Poland, Slovenia; SEE & Baltics: Croatia, Bosnia, Bulgaria, Romania, Serbia, Latvia, Lithuania, Estonia; Broader Europe:
4   Russia, Kazakhstan, Ukraine, Turkey; (2) Excluding Slovenia, Bosnia, Lithuania, Estonia; (3) Latest data: 03/07/2008
    Source: UniCredit Group CEE Research Network, Bloomberg
        ECONOMIC DEPENDENCY ON CAPITAL INFLOWS IS THE MAIN RISK, BUT
        EVEN IN A REDUCED CAPITAL INFLOW SCENARIO, REGIONAL GROWTH
        SETTLES ABOVE 4%

                                   High country dependency on                                                                                                              GDP growth holds even in a scenario of
                                   capital inflow                                                                                                                          “lower capital inflows (3)”
                                   (CA needs, net of non-bank and real estate-related                                                                                      (Average decline in GDP growth in pp for the 2008-10 period vs.
                                   capital FDI, vs. change in the cost of risk)                                                                                            baseline scenario)


                                                                                                                                                                     250
                                                                                                  Ukraine
        (2)


                                       (change in CDS Jan 2007 - June 2008)




                                                                                                                   Kazakhstan                                        200
          Change in the cost of risk




                                                                                                                                    Romania
                                                                                                                                                  Latvia
                                                                                                                  Turkey
                                                                                                                                  Bulgaria                           150

                                                                                                            Hungary                    Estonia
                                                                                                                   Bosnia-H.
                                                                                                                                                       Serbia
                                                                                                                                                                     100
                                                                                                                                Lithuania
                                                                                                                Croatia
                                                                                    Russia

                                                                                                                 Poland                                              50
                                                                                                                     Slovenia

                                                                                        Czech Rep.
                                                                                                                 Slovakia
                                                                                                                                                                     0
                                                                              -10            -5             0             5       10              15            20
                                                                                                                                            (1)
                                                                                                                   CA Financing needs (% of GDP 2007)
                                                                                                                                                                             Relevant slowdown         Moderate slowdown          Resilient
                                                                                                                                                                             (> 2%)                    (> 1% but <2%)             (less than 1%)
                                                                              External Debt / GDP (%)

    Note: (1) Current account financing needs: CA – (FDI – FDI real estate – FDI financial); (2) Delta CDS 5Y USD from 01.01.2007 to 03.07.2008; for SI and LT: delta spread on the 10Y
5   benchmark bond; for BiH: same variation as for Serbia has been applied; (3) A “lower capital inflows” scenario has been identified as an increasing and relevant risk aversion at
    international level and in CEE that brings a relevant reduction of capital inflows.
     Source: Bloomberg, local CBs, UniCredit Group CEE Research Network
    INFLATION PRESSURES PARTICULARLY STRONG IN CEE, DUE TO THE
    WEIGHT OF FOOD AND OIL IN THE REGION’S CONSUMPTION BASKET


     Inflation on the rise                                                                      High weight of food and energy in
     (CPI index, avg)                                                                           the CPI basket
                                                                                                (% of total consumption)


                Central Europe (PL, CZ, HU, SK, SI)
    15                                                                                          50%
                SEE&B (HR, SRB, BH, RO, BG, Baltics)
                Broader Europe (RU, UA, KZ, TK)                                                                Food
                                                                                                40%
    10                                                                                                         Energy
                                                                                                30%

                                                                                                20%
    5
                                                                                                10%

    0                                                                                            0%
          2005         2006          2007             2008f   2009f       2010f                                 CE                  SEE&B            Broader Europe




      A global challenge, which leaves policy makers very limited instruments
      Tightening policies on the agenda
      Negative impact on consumption, also highly dependent on income distribution, while
       international competitiveness might be endangered as inflation combines with appreciation
       pressures
     Note: CE includes Hungary, Czech Rep., Slovakia, Poland, Slovenia; SEE&B includes Croatia, Bosnia, Bulgaria, Romania, Serbia, Latvia, Lithuania, Estonia; Broader Europe
6    includes Russia, Kazakhstan, Ukraine, Turkey
     Source: UniCredit Group CEE Research Network
               REAL INCOME CONVERGENCE REMAINS A DRIVER FOR FURTHER
               REALIGNMENT IN LIVING STANDARDS


                                                                                                        Realignment in consumption patterns
                                                                                                        (Consumption of middle class, % over total expenditure) (2) (3)

             Convergence in real incomes                                                                                        60




                                                                                                              Secondary goods
             (GDP per capita in PPS, EU27=100) (1)
                                                                                                                                50             Western
                                                                                                                                               Europe
                                                                                                                                40                                  Latvia
                                                                      53.9                                                                                     Slovakia Croatia          CEE
                                              49.6                                                                                                                           Estonia
                       46.2                                                                                                     30                                  Lithuania Poland
                                                                                                                                                                                    Romania
                                                                                                                                                                                      Bulgaria
                                                                                                                                20
                                                                                                                                     30       40      50     60            70        80          90
                                                                                                                                                   Primary goods


                                                                                                        Balanced households saving position
                                                                                                        (Household net fin and real wealth % of GDP, 2000=100) (1)

                                                                                                                                120



                       2000                   2004                   2007
                                                                                                                                100
                                                                                                                                                         Net financial wealth
                                                                                                                                                         Net financial and real wealth
                                                                                                                                 80
                                                                                                                                          2000 2001 2002 2003 2004 2005 2006 2007




    Note: (1) CEE including new EU members states + Croatia and Turkey; financial and real wealth excl. the Baltics. (2) Data as of 2005. (3) Primary goods: food and non-alcoholic beverages;
      clothing and footwear; utilities; health. Secondary goods: alcoholic beverages, tobacco and narcotics; transport; purchase of vehicles; operation of personal transport equipment; transport
7     services; communications; recreation and culture; restaurants and hotels; miscellaneous goods and services; education; furnishings, household equipment and routine house maintenance
    Source: UniCredit Group CEE Economic Research, Eurostat
               INVESTMENT PEAKED IN 2006-2007, BUT CORPORATE SECTOR
               PROSPECTS REMAIN SOUND

                   Investment growth (% real)                                                                           Manufacturing still exploiting benefits of past
         20
                                                         avg 2005-'07                 avg 2008-'10                       investments, despite some lower demand (particularly
                                                                                                                         in consumption goods) and pressures on
         15                                                                                                              competitiveness
                                                                                                                        Trade patterns hold, as globalised production models
         10                                                                                                              are now consolidated

          5
                                                                                                                        Structural funds and infrastructural projects to provide
                                                                                                                         some relief to construction, while the real estate
                                                                                                                         sector enters a correction phase
          0
                   Central Europe                        SEE&B                      Broader Europe



                   Central Europe (%, yoy)                                                                             SEE&B (%, yoy)                                             Broader Europe (%, yoy)
    60                                                                                 60                                                                           60

                              Corporate Loans (1)
    50                                                                                 50                                                                           50
                              Corporate Deposits (1)

    40                                                                                 40                                                                           40


    30                                                                                 30                                                                           30


    20                                                                                 20                                                                           20


    10                                                                                 10                                                                           10


     0                                                                                  0                                                                            0
                                                                                            Jan-07


                                                                                                     Mar-07


                                                                                                              May-07


                                                                                                                       Jul-07


                                                                                                                                Sep-07


                                                                                                                                         Nov-07


                                                                                                                                                  Jan-08


                                                                                                                                                           Mar-08




                                                                                                                                                                         Jan-07


                                                                                                                                                                                  Mar-07


                                                                                                                                                                                           May-07


                                                                                                                                                                                                    Jul-07


                                                                                                                                                                                                             Sep-07


                                                                                                                                                                                                                      Nov-07


                                                                                                                                                                                                                               Jan-08


                                                                                                                                                                                                                                        Mar-08
                             M ay-07
          Jan-07


                    Mar-07




                                       Jul-07




                                                                  Jan-08


                                                                           Mar-08
                                                Sep-07


                                                         Nov-07




8
     Note: (1) Calculated at constant exchange rates
     Source: UniCredit Group CEE Economic Research
    Agenda


         The CEE economy and the new global challenges

         A sustainable-growth banking model

                Retail

                Corporate

                Profitability Drivers

         International players’ strategies in CEE

         Annex - UniCredit in CEE

         Top players by country
9
            FINANCIAL PENETRATION TO MODERATE BUT CONTINUING, WITH
            VOLUME GROWTH AT AROUND 23% CAGR 2007-2010 AND LENDING
            GROWTH ABOVE DEPOSIT GROWTH

              CEE (1) Banking penetration gap                                                  Total loans
                                                                                               (New business/GDP %) (2) (3)      CAGR Loans 2007-2010
              (Loans + Deposits)/GDP %                                                                                                  25%


                                                                                               15,0
                      Loans                                              227
                                                                                               10,0
                      Deposits
                                                                                                5,0

                                                                                                0,0

                                                                                               -5,0
                                                       97                                             2001          2004        2007            2010
                                    82
                 60                                                                            Total deposits                  CAGR Deposits 2007-2010
                                                                                                (New business/GDP %) (2) (3)           21%

                                                                                               15,0

               2004               2007               2010            EMU 2007                  10,0

                                                                                                5,0

                                                                                                0,0

                                                                                               -5,0
     Note: (1) CEE: new EU members, Serbia, Bosnia, Croatia, Turkey, Russia, Ukraine and              2001            2004        2007               2010
      Kazakhstan. (2) Total loans and deposits include general govt, non-financial corp. and
      retail and where available NPISHs and Non-MFIs; new business calculated as difference
      between outstanding volumes in the different years. (3) Central Europe: PL, HU, CZ, SK
                                                                                                             Central Europe            SEE&Baltics
      and SI; SEE&Baltics: BG, HR, RO, SRB, BiH, EST, LT; Broader Europe: RUS, TK and                        Broader Europe
10    UKR
     Source: UniCredit Group CEE Research Network
     A BANKING MODEL THAT IMPLIES NEED FOR EXTERNAL FUNDING –
     MEANING RISKS OF A CREDIT SQUEEZE, PARTLY BALANCED BY
     WIDESPREAD PRESENCE OF INTERNATIONAL PLAYERS


      CEE banking sector funding gap                                                                 Countries exposure to the risks of a credit
      (Loans minus deposits, bn €)                                                                   squeeze (1)




                                                                                Change in cost of banks funding
                                                                                                                                                    UA
                                                                                                                  250
                    19%                       2005        2007        2010
     200                                                                                                          200                                           KZ         LV
                                                                                                                              TK          RO

     150                                                                                                          150               BG
                                                                                                                                                         LT
                                                                                                                                                                EE
     100                                     83%                                                                                               HU
                                                                      75%                                         100
                                                                                                                                   SRB RU

       50                                                                                                                                 HR
                                                                                                                   50              PL
                                                                                                                         CZ
         0                                                                                                                    SK
                                                                                                                    0
      -50                                                                                                               60               110             160         210

                   Broader                 SEE&B                     CE                                                                        Loans/Deposits
                   Europe

                                                                                                                        Banks‘ Loans/GDP 2007
             …%       Share of foreign ownership in total assets




     Note: (1) Change in cost of risk is delta 5Y CDS 03/07/2008 – 29/12/2006
11   Source: UniCredit Group CEE Research Network, Bloomberg
     RETAIL BUSINESS STILL GROWING FASTER THAN CORPORATE


      Volume growth - CEE
      CAGR 2007-2010, by segment             RETAIL BUSINESS
                   LOANS                      Households want to improve their living standards and are
      € bn
                                               prepared to stretch their balance sheet positions
      2.000
                                              Opportunities both on the assets and liabilities side
      1.500
                                                   Limited remaining penetration gap in consumer credit, but
                        24%                         growth to continue, as consumption demand is strong
      1.000
                                                   Demand for housing remains, as supply gap still exists
        500
                        28%                        Risks in terms of households’ FX risk exposure and possible
          0                                         deterioration in credit quality
                 2007         2010
                         Corporate    ..%
                         Retail
                                             CORPORATE BUSINESS
       € bn
                 DEPOSITS            CAGR
                                     07-10    Investment cycle peaked in 2006-07 and companies are now
                                               exploiting the benefits. Cyclical stabilisation balanced by renewed
       1,500
                                               corporate demand for bank lending

                        22%
                                              Further growth of corporate business in CEE also tied to new
       1,000
                                               product offering

        500                                         Corporate deposits and cash management services
                        20%
                                                    Leasing and Factoring
             0
                                                    Trade finance
                 2007         2010
12
     Agenda


          The CEE economy and the new global challenges

          A sustainable-growth banking model

                 Retail

                 Corporate

                 Profitability drivers

          International players’ strategies in CEE

          UniCredit in CEE

          Annex - Top Players by Country
13
     ON THE RETAIL SIDE OPPORTUNITIES FOR FURTHER TRANSFORMATION
     OF HOUSEHOLDS’ PORTFOLIO

           Composition of CEE household wealth1,2                                               Households’ mutual funds vs traditional assets
                   8                                                                           Mutual   50.0%                              Traditional asset
                   3                 17               17                                       funds/                        Poland
                   10                                                   30                                                                 gathering
                                     11               13                                       Bank     40.0%
                                      8                6                10                     deposits                        Hungary
                                                                                                                                Slovakia                        Cross-selling
                                                                                                            30.0%                                               opportunities
                                                                        29
                   80                                                                                                      Croatia
                                     63               63                                                    20.0%          Czech R.

                                                                                                                               Turkey                            Russia
                                                                        31                                  10.0%
                                                                                                                              Romania Bulgaria
                  2000             2007              2010              EMU                                   0.0%
                                                                                                                    0%         20%           40%          60%             80%
                 Currency&deposits                  Securities & shares
                                                                                                        MF new volumes 2008-2010                      Mutual funds
                 Mutual funds                       Insurance & pension funds                           (EUR bn)                                      LC CAGR 2008-2010




            CEE managed assets3 to increase by 21% yoy in 2008-2010 on average with long-
             term vehicles still playing a significant role
            Traditional deposits increasingly appealing, given banks need for traditional
             funding and rising rates
            Despite recent negative performances and outflows, still some potential for AuM –
             though banks will be pushing less toward deposit conversion


14   Note:1\CEE: BG, CZ, HR, HU, PL, RO, SK, TK and RUS; 2\EMU proxy excluding Luxembourg and Ireland: 2007E; 3\Mutual funds+Life insurance and pension funds
     Sources: UniCredit Group CEE Research Network, PGMA Economic Research
      CLOSING PENETRATION GAP IN HOUSEHOLDS’ CONSUMER FINANCING,
      WHICH REMAINS, HOWEVER, AN ATTRACTIVE BUSINESS (23% CAGR
      2007-2010) AS HOUSEHOLDS’ DEMAND FOR CONSUMPTION HOLDS

               Consumer finance penetration                                                                      Consumer finance market potential
               (% of GDP, 2007)1
                                                                                                      CF per capita
                                                                                                     vs equilibrium
                     EU                     9.4                                                              (EUR)2

                   CEE                     8.1                                                         1,500


                                                                                                                                    Croatia
               Croatia                                           23.5                                  1,000

            Romania                                 14.9




                                                                                                                                                                                             Risk of saturation
                                                                   20.5% when GDP
             Bulgaria                             13.3                                                   500
                                                                   is corrected for the                                                       Poland
               Poland                            12.3              relevance of
                                                                   informal economy                                                                 Hungary
                                                                                                                                                                       Romania
             Hungary                        9.7                                                                                    Bulgaria
                                                                                                          -
            Slovenia                                                                                                              Slovenia
                                           8.2                                                                                                                       Russia
                                                                                                                            Czech Rep.
               Russia                     7.7                                                                                              Turkey
                                                                                                        (500)             Latvia
            Czech R.                  5.8                                                                                            Slovakia       Lithuania

                Latvia               5.1
                                                                                                      (1,000)
            Slovakia                4.6
                                                                                                                5.0      10.0       15.0        20.0     25.0      30.0       35.0
               Turkey              4.0
           Lithuania               3.8                                                                           New volumes 2008-2010                          LC CAGR 2008-2010
                                                                                                                 (EUR bn)


     Note:1\ CF in CEE countries includes personal loans, car financing, overdraft and revolving credit cards; data for both EU and CEE include also loans granted by specialized lenders;
     proxy for EU-15 incl. B, DE, ES, F, FR, IT, UK, NL, PT and SE; 2\ The equilibrium level is calculated regressing the level of consumer finance/GDP on GDP per capita in PPS based
     on a pool of CEE and EU countries; data in Y-axis are calculated as a difference b/w CF per capita observed in 2007 and the equilibrium level. GDP in Croatia has been corrected to
15   take into account the relevance of informal economy not yet reflected in official statistics
     Source: UniCredit Group CEE Research Network, Eurofinas, local CBs
     POTENTIAL DEMAND FOR HOUSING SUPPORTS FURTHER
     DEVELOPMENT IN THE MORTGAGE BUSINESS (31% CAGR 2007-10)


             Dwelling stock per ‘000 inhabitants1
                                                                                                   Housing
                                                  472                                            loans/GDP
                              413                                                                      2007
                                                                                                      40.0%

                                                                                                      35.0%
                                                                                                                                    First
                                                                                                                     Latvia         wave
                                                                                                      30.0%

                                                                                                      25.0%
                              CEE                 EU
                                                                                                      20.0%          Croatia Lithuania

                                                                                                                      Czech R.
                                                                                                      15.0%        Hungary
             General likelihood to buy house2 %                                                                            Bulgaria                  Second
                                                                                                      10.0%            Poland                        wave
          Yes in next 3 yrs         Yes in next 10 yrs        Maybe after 10 yrs                                           Slovenia         Turkey
                                                                                                       5.0% Slovakia
                                                                                                                        Romania
                                                                                                                                                             Russia
                                                                                                       0.0%
              5                                                                                               5%              25%        45%         65%        85%
                                                         7
                          6     9
        6     9                        5          6           8
                                            4                       6     5                                New volumes 2008-2010                           LC CAGR
                    7     8                              10
        7                       9      8    5     8           7                                            (EUR bn)                                        2008-2010
                                                                    7     7     5
              11    4
        6                 7     5      6    7     5      7    5                 3
                    4                                               4     4     2
      CEE RO BG SK              SI SRB BIH CZ HR RUS PL HU UKR




16   Note:1\ Census Data; CEE including new EU member states and Ukraine; EU proxy including AT, DK, FI, FR, IT, NL and ES; 2\ Survey
     involving 1,000 individuals aged 15+ and living in the largest cities of the country
     Sources: UniCredit Group CEE Research Network, Bank Austria Market Research
     RISING EXPOSURE TO FX RISK FOR UNHEDGED BORROWERS AND
     POTENTIAL DETERIORATION IN CREDIT QUALITY THE MAIN RISKS


        Structure of household debt                                                                   Retail NPLs ratio1
        % denominated/indexed in FX, 2007                                                             % of gross loans

                                                                                                     15,0
        70.2                                                                                                                            Poland               Bulgaria
                  65.6
                                                                                                     12,5                               Czech R.             Slovakia
                           59.8

                                    48.4                                                             10,0

                                                                                                       7,5
                                             27.8
                                                                                                       5,0
                                                      18.8

                                                                                                       2,5
                                                                2.4       2.1     0.05
                                                                                                       0,0
           LV      HR       HU       RO      PL       BG       TK         SK      CZ                             2003           2004           2005   2006     2007



      Increasing share of loans denominated/indexed in FX might raise the issue of exposure of
       unhedged borrowers to FX risk
      Good credit risk management practice essential, to prevent deterioration in retail credit
       quality, as households tend to be increasingly indebted


17   Note: 1\ The comparison of NPLs ratio b/w countries should be taken with care as loans’ classification not always reflect the same standard
     Source: UniCredit Group CEE Research Network
     Agenda


          The CEE economy and the new global challenges

          A sustainable-growth banking model

                 Retail

                 Corporate

                 Profitability drivers

          International players’ strategies in CEE

          UniCredit in CEE

          Annex - Top players by country
18
     CYCLICAL DECELERATION PARTLY BALANCED BY RENEWED
     CORPORATE DEMAND FOR BANK LENDING

     Corporate Loans Penetration Gap                                                              Corporate loans volume (1)
     (% of GDP, 2007)                                                                             (EUR bn)

                  Italy                                  53                                               CE
                  Germany                                52
                                                                                                                                                        14%
                                                                                                                           19%
                  Austria                            46                                                                                135,0                    199,8
                                                                                                               79,3

                  Slovenia                               52                    18
                                                                                                               2004                    2007                    2010F
                  Latvia                             44                   13

                  Estonia                            44                   13
                  Bulgaria                          40                   16                               SEE&B
                  Kazakhstan                       38                                 Including                                                        17%
                                                                                    Cross border                           35%
                  Ukraine                          37
                  Lithuania                                                         financing (2)                                        77,6                   125,0
                                                32                   9                                         31,4
                  Croatia                       31                       31
                  Bosnia-H.                                                                                    2004                     2007                   2010F
                                               29                6

                  Hungary                      29                12
                  Russia                      26                                                          Broader Europe
                                                                                                                                                     28%
                  Slovakia                 23                                                                                                                   824,2
                  Serbia                   21               13                                                            43%
                                                                                                                                        394,4
                  Czech R.                 21
                  Turkey                  19
                                                                                                              136,2
                  Romania                 18            9
                                                                                                               2004                     2007                        2010F
                  Poland                 15
19
      Note: (1) Excluding Cross border financing; (2) External loans vis-a-vis non bank corporations (including non financial corporations, government, non-MFIs)
      Source: UniCredit CEE Research Network, BIS
     FURTHER GROWTH OF BANKS´ CORPORATE BUSINESS IN CEE ALSO
     TIED TO NEW PRODUCT OFFERING


     Corporate business in CEE-10(1):                                                  Corporate business in CEE-10(1):
     total volumes (% on total)                                                        lending volumes (% on total lending)

                                                                                                                         Leasing
                                                                                                                          17%
           Deposits                                                                                                                        Trade
                                                                                                                                         finance
                                                                                                                                           16%


                                                                                             Loans
                                                                                              59%
           Lending
           (inlc.
           Leasing,
           Trade
           Finance,                                                                                                                      Factoring
           etc.)                                                                                                                       and forfeiting
                                                                                                                                            5%
           Investment
           banking                                                                                                        Overdrafts
                                                                                                                            3%




20   Note: (1) CEE-10: BG, HR, CZ, HN, PL, RO, RU, SK, TK, UA Source: UniCredit Group CEE Research Network on McKinsey estimates
     Agenda


          The CEE economy and the new global challenges

          A sustainable-growth banking model

                 Retail

                 Corporate

                 Profitability drivers

          International players strategies in CEE

          UniCredit in CEE

          Annex - Top players by country
21
       GOOD PROFIT POOL, WITH PROFIT GROWTH REMAINING DOUBLE
       DIGIT, DESPITE HIGHER RISKS


         CEE* banking sector profitability                                                                         Profit / Risk trade-off by country
         Profit growth yoy                                                                                         (Profit growth CAGR 2007-2010, vs CDS
                                                                                                                   Spread as a measure of country risk)
                                                CAGR                CAGR
                                               ’04 -’07            ’07 -’10                                        30%
                                                                                                                                                                                      UA
                                                  21%                 11%                                                                            RU
            Central Europe
            SEE                                   30%                 11%
                                                                                                                   25%
            Broader Countries                     36%                 20%

     50%                                                                                                           20%




                                                                                              Potential Growth
                                                                                                                                                      BG
     40%                                                                                                                                                                      TK
                                                                                                                   15%                                     RO

                                                                                                                                        PL                 SRB
     30%
                                                                                                                   10% SK
                                                                                                                                             HR
     20%                                                                                                                            CZ               HU
                                                                                                                     5%

     10%                                                                                                                                                           KZ
                                                                                                                     0%
     0%                                                                                                                      0             100             200             300             400
                                                                                                                  Total profit 2007
                 2006          2007            2008            2009            2010                                                                       Risk
                                                                                                                 Note: Potential Growth is Net Profit's CAGR 04 – 07. Risk is calculated as CDS
22    * Excluding Baltics                                                                                        of the country.

      Note: CE: Hungary, Czech Rep., Slovakia, Poland, Slovenia; SEE: Croatia, Bosnia, Bulgaria, Romania, Serbia; Broader Europe: Russia, Kazakhstan, Ukraine, Turkey;
      Source: UniCredit Group CEE Research Network
              MAIN CEE PROFITABILITY TRENDS – DECELERATING REVENUES
              GROWTH, STABILISING COST/INCOME, HIGHER COST OF RISK


                               Central Europe                                                      SEE                                                 Broader Europe
                          Net other non-interest income
                          Net F&C income
              € bn                                                      € bn                                                          € bn
                          Net interest income
              35
                                                                         20                                                          140
              30                                   12%                                                                                                                  24%
                                                                         18
                                                                                                             11%                     120
                                                                         16
              25
                                                                         14                                                          100
                               16%
              20                                                         12               31%
                                                                                                                                      80
                                                                         10
              15
                                                                          8                                                           60               32%
              10                                                          6                                                           40
       ..%                                                                4
               5                                                                                                                      20
                                                                          2
     Revenues
               0                                                          0
     CAGR                                                                                                                             0
                        2004                2007           2010                    2004              2007              2010                    2004              2007             2010

                         Profit*
                         Provisions                                      € bn                                                        € bn
              € bn
                         Costs                                            20
              35                                                                                                                     140
                                                                          18
              30                                     11%                                                                             120
                                                                          16                                 11%                                                         20%
              25                                                          14                                                         100
                               21%                                        12
              20                                                                           30%                                        80
                                                                          10
              15                                                              8                                                       60                36%
              10                                                              6                                                       40
       ..%                                                                    4
               5                                                                                                                      20
                                                                              2
     Profit
               0                                                              0                                                        0
     CAGR
                        2004               2007            2010                     2004              2007              2010                    2004             2007             2010

       CE (Central Europe) includes Poland, Czech Republic, Hungary, Slovakia and Slovenia; SEE (South Eastern Europe) includes Romania, Bulgaria, Croatia, Serbia, Bosnia. Baltics are

23     excluded; Broader Europe includes Turkey, Russia, Ukraine and Kazakhstan.
       * Profit before tax and extraordinary items
       Source: UniCredit Group CEE Research Network
        CAPITALISATION OF CEE BANKS REMAINS HIGH, SUGGESTING
        ENOUGH SHOCK ABSORBPTION CAPACITY


      Capital adequacy ratio, by region                                                           Capital adequacy ratio, by country
      Percent                                                                                     2007, Percent
                                          2006                     2007                              Austria                              12.7
       18
                                                                     16.4                           Germany                               12.5
                                                                               15.9
       16                                                                                               Italy                        10.9
                                           14.2
       14                                           13.5
                                                                                                        Serbia                                                 27.9
                   12.3
                          11.7                                                                          Turkey                                          18.9
       12
                                                                                                        Russia                                     16.8

       10                                                                                                BiH                                      16.4
                                                                                                     Croatia                                     15.4
             Basel II minimum capital adequacy ratio = 8%
        8                                                                                            Estonia                                    14.8
                                                                                                    Ukraine                                 13.9
        6                                                                                         Romania                                 12.7
                                                                                                   Slovakia                               12.4
        4
                                                                                                     Poland                               12.4

        2                                                                                        Cezch Rep                               11.5
                                                                                                       Latvia                        11.1
        0                                                                                          Lithuania                         10.9
                       CE                     SEE&B              Broader Europe                     Bulgaria                         10.8
                                                                                                   Hungary                          10.6
      Note: 2006 Data on the Capital Adequacy ratio for Serbia, Slovenia and Lithuania is
      not available, these countries are thus excluded from the graph. Simple average used         Slovenia                        9.3
24    to aggregate counties in regions.

     Source: UniCredit Group CEE Research Network, Local Banking Supervision Reports, IMF Financial Stability Report April 2008.
     Agenda




          The CEE economy and the new global challenges

          A sustainable-growth banking model

          International players’ strategies in CEE

          UniCredit in CEE

          Annex - Top players by country




25
      FOREIGN OWNERSHIP PREVAILS IN CE AND IN SEE&BALTIC
      COUNTRIES, RISING RAPIDELY IN BROADER EUROPE

     Foreign banks penetration                                                          Penetration of the foreign global players
     (2007, percent of banking sector total assets                                      (2007, percent of banking sector total assets in the CEE
     in the CEE region)                                                                 region)

                                                                                                                 83%
                                                                                                 75%



                                                                                                                 40%
                                                        50.2%
                                                                                                 42%


           55.7%             44.3%

                                                        40.4%                                                    26%              19%

                                                                                                 33%                              8%
                                                                                                                  17%                    1%
                                                         9.4%                                                                     10%


          Local                 Foreign                                                          CE          SEE&Baltics        Others
          banks                 banks

          Top global             Sub-regional               Other foreign                      Top global      Sub-regional        Other foreign
          players*               players**                  players                            players*        players**           players


      (*) Top global players: UniCredit Group, RZB, KBC, ERSTE, SOGEN, Intesa San Paolo, OTP
26    (**) Sub-regional players: EFG, NBG, Nordea, Pireaus, Sampo, SEB, Swedbank

      Source: UniCredit Group CEE Research
     INTERNATIONAL PLAYERS WITH DIFFERENT STRATEGIES – PAN
     REGIONAL PLAYERS, SUB REGIONAL ONES AND SELECTIVE MARKET
     PARTICIPANTS

                                           International players’ strategic positioning in CEE
                       (country of operation and size in each market, size = total assets controlled in the region)**

                        12




                        10




                        8
     Number of top 5




                        6




                        4




                        2




                        0
                             0                         5                                       10   15      20

                                                      Number of countries with an active presence*


     (*) Including both direct and indirect presence, while excluding representative offices
27   (**) As of end of 2007 (pro-forma - including acquisitions until 05/2008)

        Source: UniCredit Group CEE Research
     A FULLY-INTEGRATED REGIONAL BANKING MARKET, WITH SOME SUB-
     SEGMENTS AND LITTLE ROOM FOR FURTHER LOCAL ACQUISITIONS

            Global players 1/2
            Global + regional and/or local players 3
            Local players 4
                                                                                                                         Russia
                                                                                                                         •Sberbank
                                       Baltics                                                                           •VTB Group
                                       •Swedbank                                                                         •Gazprombank
                                       •SEB Group
                                       •Nordea Group




                                                                                                                                                  Kazakhstan
                                                                                                                                                  •Kazcommerc Bank
                                                                                                                                                  •Bank TuranAlem
                                                                 Poland                                                                           •Halyk Savings Bank
                                                                 •PKO BP                             Ukraine
                                                                                                     •PrivatBank
                                                                                                     •Ukrsibbank



                                                                                  SEE
                                                                                  •EFG Eurobank
                                                                                  •NB of Greece                    Turkey
                                        Slovenia                                                                   •Ziraat
                                        •Nova Ljubljanska                                                          •Is Bankasi
                                        •Nova Kreditna                                                             •Akbank
                                        •Abanka Vipa




     1   Global players: Unicredit, Raiffaisen, OTP, KBC, Societe Generale, IntesaSP, Erste
28   2 Market share of foreign banks (in terms of total assets) > 50% and global banks market hare > 60%
     3 Market share of foreign banks (in terms of total assets) > 50% and global players market share < 60%
     4 Market share of foreign banks (in terms of total assets) < 50% and global players market share < 60%                 Source: UniCredit Group CEE Research
          ALL TOP PLAYERS WITH A STRONG COMMITMENT TO THE REGION


                                                 Total assets (i)                               Net profit (ii)                           Number of                                     Country
                                                    EUR bn                                       EUR mn                                   branches                                     presence (iii)


                                                                    1                                         1
     UniCredit                       25%                    118.0                                        2,125                                     3,690
                                                                                                                                                          1
                                                                                                                                                                                                                    20




     Raiffeisen                       n.s.            72.7                                      973                                             3,015                                                        16




      Erste                          75%              72.0                                     1,026                                       1,915                                               7




                                      21%            62.3 2                                          2
                                                                                                                                          1,4062
      KBC                                                                                     726                                                                                                      11



     SoGen                           71%             59.0                                      1,013                                         2,340                                                          15




      OTP                             n.s.        39.3                                        760                                         1,472                                                    9




     IntesaSP                         6%          36.5 3                                    489
                                                                                                 3
                                                                                                                                           1,5993                                                      11



           ..% Contribution of CEE to group net profit (after tax, after minority interest)

29   Source: UniCredit CEE Research
     (i) 100% of total assets, and profit after tax (before min.interests) for controlled companies (stake > 50%) and pro rata for non-
           controlled companies (stake < 50%); proforma results also include banks acquired during 2007 and 2008;
                                                                                                                                          1 Pro-forma, excluding BPH 200, including ATF and USB; 2 Pro-forma
                                                                                                                                          including Absolut Bank, Economic Investment Bank and Istrobanka; 3 Pro-
     (ii) After tax, before minority interest
                                                                                                                                          forma including JSC Pravex Bank. KMB net profit as of 2006.
     (iii) Including direct and indirect presence in the 25 CEE countries, excluding representative offices
     NEW STRATEGIES IMPLY MOVING EASTWARDS, TARGETING NEW
     ATTRACTIVE SEGMENTS AND OPENING NEW BRANCHES


         Foreign banks growth strategies –                                                       Organic growth focus -
         M&A 2006-08                                                                             Expected branch rollout within 20103
         by target segment, number of operations1                                                        2007                                                    ~ 15,400
                                                                                                      Poland                                                  8%
                                Financial
                                 services                 Asset                                       Turkey                                                  9%
               Investment                           Management
                  Banking
                                   10%        14%                                                   Hungary                                                     9%
                                 2%                                                                                                                                          ~ 4,100
                                                                                                        Other                                                  14%
                                                                                                     Ukraine                                                     18%
         Commercial
            Banking                                                                                                                                                19%
                                                                                                      Russia
                                       74%                                                         Romania                                                            23%
                                                                                                         2010                                                              ~ 19,500
         by target country, number of operations2
                    Other CIS
                                                         CE
                                21%             17%                                         Top players are increasingly focusing new
            Turkey
                                                                                             segments and markets (moving eastward)
                           2%
            Baltics
                           11%                        25%        SEE
                                                                                            ~ 40% of new branch openings targeting
                                                                                             new markets (mainly Russia and Ukraine)
                                     24%
                          Russia



     Notes:1\Asset Management incl. also brokerage, insurance and private banking. Commercial banking incl. also consumer finance, factoring, leasing, real estate and mortgage
30   lending. Financial services incl. custody, online banking, project financing, support activities, corporate, financial and retail services; 2\ CE: PL, HU, CZ, SK and SI. SEE: AL,
     MK,SRB, RO, BG, HR and BiH. Other CIS: UA, MD, GE and KZ; 3\ Not exhaustive and referring to net openings of top 7 Western European players in CEE: new branches-
     closing. Sources: UniCredit Group CEE Research, ABI, McKinsey
     LIQUIDITY ISSUES A POSSIBLE CONSTRAINT FOR SOME PLAYERS,
     WHILE STRUCTURAL TRANSFORMATION POSSIBLY RELATED TO
     FURTHER CROSS-BORDER DEALS AT EU LEVEL

               Potential constraints on growth                                                          Global positioning of leading CEE players
               Liquidity issues at the CEE and global level*
      High
          130
                                                                    RZB                                                                  60                            UniCredit
                                                                                                                                                   Intesa




                                                                                                            Market Capitalization € bn
                                                OTP                                                                                      50
      Loans/Deposit*
        Ratio in CEE




                                                                                                                                                                      SoGen
                                                                                                                                         40
                                    Intesa UniCredit
                        100                                                                                                              30
                                                           KBC
                                                                                                                                                         KBC
                                                                  ERSTE
                                                                                                                                         20                                 RZB
                                                                                                                                                      OTP
                                                                SoGen                                                                    10
                                                                                                                                                                         ERSTE
                          70                                                                                                              0
      Low                     80             100                  120                   140                                                  0%    1%      2%   3%    4%     5%   6%   7%
                                                                              High                                                                         Positioning in CEE**
                         Low
                                       Loans/Deposit* ratio
                                            group level
                        Assets CEE /                                                                                     Total assets controlled in
                        Group total assets                                                                               the CEE region (€ bn)
31      *ForIntesa SP and UniCredit “Deposits” at group level are defined as traditional deposit collection in Italy which includes deposits from customers and securities in issue.
         Positioning in CEE is defined as Group Assets in the CEE out of total assets in CEE.
        **

        Source: UniCredit CEE Research
     Agenda




          The CEE economy and the new global challenges

          A sustainable-growth banking model

          International players strategies in CEE

          UniCredit in CEE

          Annex - Top players by country




32
         AN UNRIVALLED PRESENCE IN 20 CEE COUNTRIES; IN 10 COUNTRIES
         WITHIN TOP 5

         Ranking (DEC 07), Total assets and EVA1 (€ mn)
         Main Presence
                                                                                                                      Russia
                                                                                                                      No. 10
                                                                                                                      € 10.3bn,
               Poland                                                                                                    121
                No. 1
                € 37bn,
                  473                                                                                                 Ukraine
                                                                                                                      No. 4
            Czech Rep.
                                                                                                                      € 5.0bn,
              No. 4                                                                                                     n.a.2
                € 11bn,
                   70                                                                                                 Romania
              Slovakia                                                                                                 No. 7
                                                                                                                      € 3.6bn,
               No. 5
                                                                                                                         31
              € 4.0bn, 29
                                                                                                                      Bulgaria
                                                                                                                       No. 1
              Hungary
                                                                                                                      € 4.6bn,
               No. 7                                                                                                     71
               € 6.1bn,
                  47                                                                                                 Kazakhstan
              Slovenia                                                                                                 No. 5
                                                                                                                       € 6.1bn,
               No. 7
                                                                                                                         n.a.2
               € 2.1bn,
                   7                   Croatia                Bosnia                                    Serbia        Turkey3
                                       No. 1                  No. 1                                     No. 7          No. 5
                                        € 11bn,               € 2.1bn,                                                 € 33bn,
                                                                                                       € 0.9bn, 14
                                           85                    13                                                      133

33   1
     2
       according to Basel 1
       Newly acquired banks
     3 Total Assets of Koc Financial Services (incl. Yapi Kredi). EVA for Turkey is pro rata for UCG
     AFTER THE INTEGRATION PHASE, NOW FULL FOCUS ON ORGANIC
     GROWTH


     Following the successful …         The focus is on …
      … completion of all mergers      High-Growth Countries
       between previous UniCredit and     Countries like RU, TR and RO, due to their
       HVB/Bank Austria                       size
       subsidiaries…                          high-growth rates and
                                              still low presence of UCG in some of
      … introduction of the                    these countries (e.g. Russia, Romania)
       UniCredit Brand throughout
                                        Retail/Asset Gathering
       CEE…
                                          Large revenue potential
      … reduction of IT Platforms in     Source of stable income for the bank,
       CEE as a basis for future           ensuring sustainable growth
       synergies and common product      Generation of liquidity to maintain a stable
                                           funding base
       developments…
                                        Consumer Finance
      … unification of CEE                Large revenue potential
       Governance Model…                   Based on strong demand in an
                                            environment of increasing financial wealth of
                                            households
                                           Supported by the liquidity generated by a
                                            focused strategy on retail/asset gathering
34
         … ALSO THROUGH A ~1,300 BRANCH STRONG EXPANSION PLAN TO
         FULLY LEVERAGE THE EXISTING PLATFORM

                                               Planned branch openings 2008 - 2010
            Total branch expansion                                    “Aggressive” branch expansion
                                                                                               2,387    +894

                                                                                                                             TURKEY
                                                                                1,493
                                                                                                                             RUSSIA

                                                                                                                             ROMANIA
                            +1287
                                       4,846                                                                                 UKRAINE

                                                                                2007           2010
                     3,559

                                                                     “Selective” growth
                                                                                                                              POLAND

                                                                                                                             BULGARIA
                                                                                                                             CROATIA

                                                                                                                              BOSNIA H.
                                                                                               2,459    +393
                                                                                                                             KAZAKH.
                     2007              2010                                     2,066
                                                                                                                             CZECH R.

                                                                                                                             SLOVAKIA
                                                                                                                             SERBIA

                                                                                                                             SLOVENIA
                                                                                2007           2010                          HUNGARY
35
     Note: 2007 excluding BPH 200 and including USB; 2007 and 2010 with Turkey @ 100% and excluding non bank branches (leasing, MIB-units, etc.)
     Agenda




          The CEE economy and the new global challenges

          A sustainable-growth banking model

          International players’ strategies in CEE

          UniCredit in CEE

          Annex - Top players by country




36
        CEE BANKING SYSTEM – ALMOST € 2,000 BN MARKET IN TERMS OF
        TOTAL ASSETS, STILL WITH A FINANCIAL PENETRATION GAP AND
        STRONG ROLE OF INTERNATIONAL PLAYERS
                                                                                         Market share       Total assets           Total gross loans        Total deposits
                                        Banks       Branches       Banking
                                         (no.)     (mn inhabit.) penetration1           Foreign                           % of                      % of             % of
                                                                                                  TOP 5   € bn                      € bn                     € bn
                                                                                         banks                            GDP                       GDP              GDP

                    Poland                645            353             56%             67%      47%      237              73       131              40     139      43
                    Hungary                38            151             76%             68%      55%      108             108       61               61      46      46

      CE            Czech R.               37            192             82%            97% (2)   66%      139             104       63               47      89      67
                    Slovakia               24            217             82%             96%      68%       50              91       25               45      31      57
                    Slovenia               27            346             99%            29%(2)    60%       43             130       27               80      19      57

                    Estonia                14            183             N.A.            98%      96%       20             132       15               95      8       48
                    Latvia                 25            103             N.A.            56%      67%       31             153       19               93      8       39
                    Lithuania              77            265             N.A.           88%(5)    82%       24              85       17               62      11      38
                    Bulgaria               29            330             43%             75%      57%      30(4)           105       19               66      19      65
     SEE&B
                    Romania                41            255             52%             89%      58%       72              64       44               39      38      34
                    Croatia                33            259             87%             90%      72%       46             122       29               78      26      70
                    Serbia                35(3)          294             70%            75%(3)    46%       21              71       11               35      11      35
                    Bosnia                 32            201             91%             91%      59%       10              94        6               58      6       59
                    Kazakhstan             35            153             N.A.             5%      78%       66              92       43               60      22      30
                    Turkey                 46            108             49%             30%      62%     328(4)            66       159              32     198      40
     Other
                    Russia               1296            163             86%            12%(2)    45%      563              61       343              37     299      33
                    Ukraine               175            333             76%             33%      33%      81(4)            84       58               60      38      39
                    Total CEE 17         2,609           206             70%             44%      55%     1,869            74%      1,068           42%     1,007    40%
                    Euro Area            6,130           571             99%            18%(2)    43%     29,468          333%     11,114           125%    8,993   102%


                                                                                                             (2) As   of 2006      (5) On   share capital
             Source: UniCredit CEE Research Network, BA-CA Market Research and ECB
37           Notes: (1) Population aged 15+ having a banking relationship with a bank                        (3)   As of Q4 2007
                                                                                                             (4)   Net
        CEE MARKET FORECASTS

                                                                                                                  Loans                   Deposits
                                                                                             Total gross                     Total
                                                   Avg Real       Avg       Profit                          CAGR 07-10, %               CAGR 07-10, %
                                  Nom GDP                                                      loans                        deposits
                                                 GDP, growth Inflation     CAGR %,
                                   (bn €)                                                      CAGR                          CAGR
                                                 (2008-10), % (2008-10), % 2007-10                         Retail Corporate            Retail Corporate
                                                                                              07-10, %                      07-10, %

              Poland                 309              4.8             3.2            9.9        14.4       17.1       11.8    9.4       8.5      7.1
              Hungary                101              3.1             5.6            5.5        12.3       16.3       9.1     6.2       6.5      4.3
      CE      Czech R.               128              4.3             4.4            5.6        12.4       16.9       11.5    6.1       7.6      5.9
              Slovakia                55              6.5             4.1            9.4        16.4       20.3       15.7    9.4       9.7      9.7
              Slovenia                34              4.2             4.3            19.1       17.2       16.3       17.7    8.8       8.1      6.2
              Estonia                 16              4.0             7.0              -        15.6       15.3       17.3    12.8     13.7     13.6
              Latvia                  20              3.2             9.6              -        11.5       10.8       11.9    11.5      8.8      8.2
              Lithuania               28              5.3             7.7              -        21.3       25.1       19.5    15.4     16.6     13.1
              Bulgaria                29              5.2             6.6            15.8       23.7       19.7       26.0    22.4     21.2     19.0
     SEE&B
              Romania                121              5.2             5.3            12.6       25.3       30.2       18.5    19.6     23.7     13.8
              Croatia                 37              4.4             4.2            6.9        11.6       13.2       10.4    10.6      9.4     12.5
              Serbia                  29              5.6             8.3            11.8       14.8       15.5       14.7    22.5     19.1     20.6
              Bosnia                  11              5.5             4.4            17.9       19.4       19.0       18.7    14.2     20.0     17.6
              Kazakhstan              76              6.2             11.1           0.2        21.7       23.4       21.2    25.6     24.5     25.8
              Turkey                 479              4.9             8.4            11.9       25.4       32.4       21.9    19.5     21.4     19.5
     Other
              Russia                 942              6.5             11.7           25.1       29.7       35.6       27.5    29.4     27.6     28.4
              Ukraine                103              5.2             14.6           26.8       32.4       44.9       24.0    30.4     33.2     22.3
              Total CEE 17          2,517             5.5             8.9            17.3       24.7       27.7       23.7    20.8     19.8     22.0
              EMU 12                8,856             1.7             2.6            -0.7*      3.5*       2.6*       4.6*    5.9*     5.8*     7.3*

             * Only Austria, Germany and Italy
38           Source: UniCredit CEE Research Network, BA-CA Market Research and ECB
     TOP BANKS IN BOSNIA AND HERZEGOVINA


                                            Total Assets (€ bn), market share and ownership

     2.5
              21.3%
                               19.6%           21.0%**
      2




     1.5
                                                11.4%
                                                                 9.6%
                                                                                  9.3%***
      1

                                                                                      5.5%       4.9%
                                                                                                                 4.6%            3.8%            3.5%
     0.5




      0
           UniCredit Group* Raiffeisen Bank Hypo Alpe-Adria- Hypo Alpe-Adria-   NLB Razvojna    UPI Banka       Nova Banka    NLB Tuzlanska   Volksbank BH
                               Sarajevo       Bank Mostar Bank Banja Luka          Banka                                         Banka




           (UniCredit   (Raiffeisen        (Hypo Alpe- (Hypo Alpe-              (NLB/KBC)       (Intesa           (majority   (NLB/KBC)        (Volksbank
             Group)   International)       Adria-Group) Adria-Group)                           SanPaolo)        private local                 International)
                                                                                                                   capital)

     Market share in terms of of total assets (according to
                                                                                                            Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)
      * Including UniCredit Zagrebacka Banka, HVB Central Profit Banka & UniCredit Bank, Banjaluka               *** including NLB Tuzlanska Banka
39    ** including Hypo-Alpe-Adria Bank, Banja Luka
     TOP BANKS IN BULGARIA


                                        Total Assets (€ bn), market share and ownership

      5      15.3%
     4.5                 13.3%
      4

     3.5                                10.4%           10.1%
      3

     2.5
                                                                        7.4%         7.1%
                                                                                                    6.0%
      2

     1.5
                                                                                                                3.4%         3.0%         3.0%
      1

     0.5

      0
             UniCredit   DSK Bank        United         Raiffeisen   Eurobank EFG      First     Piraeus Bank   Sibank         SG         Corporate
             Bulbank                 Bulgarian Bank       Bank                      Investment                             Expressbank   Commercial
                                                                                       Bank                                                 Bank

           (UniCredit     (OTP       (National          (Raiffeisen (Eurobank       (majority    (Piraeus        (KBC      (Société        (majority
             Group)      Group)       Bank of         International)  EFG)           private      Group)        Group)     Générale      local private
                                      Greece)                                        capital)                               Group)          capital)

     Market share in terms of of total assets (according to
                                                                                                       Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


40
     TOP BANKS IN CROATIA


                                           Total Assets (€ bn), market share and ownership

     12
             23.2%

     10
                           17.8%
      8

                                           11.8%
      6                                                  11.2%          10.7%*

                                                                             7.7%       7.5%
      4
                                                                                                       4.2%
                                                                                                                   3.5%         3.1%
      2                                                                                                                                     2.1%

      0
           Zagrebacka Privredna Banka ERSTE &        Raiffeisenbank Hypo Alpe-Adria-     Société       Hrvatska   OTP Banka    Slavonska    Volksbank
             Banka         Zagreb    Steiermärkische     Austria         Bank          Générale       Postanska    Hrvatska      Banka
                                           Bank                                      Splitska Banka     Banka

          (UniCredit     (Intesa         (ERSTE        (Raiffeisen (Hypo-Alpe- (Société               (State)       (OTP  (Hypo-Alpe- (Volksbank
            Group)      SanPaolo)         Group)     International) Adria-Group) Générale                          Group) Adria-Group) International)
                                                                                  Group)

     Market share in terms of of total assets (according to
                                                                                                          Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)
            * Including Slavonska Banka
41
     TOP BANKS IN CZECH REPUBLIC


                                        Total Assets (€ bn), market share and ownership

     35

            21.2%
     30
                         17.7%
     25                                 15.7%

     20


     15
                                                      7.2%
     10
                                                                     3.5%         3.1%           2.3%
      5                                                                                                       1.0%         0.9%        0.7%

      0
            CSOB          Ceska         Komercni   UniCredit Bank   Citibank   Raiffeisenbank   GE Money     Volksbank   J&T Banka   Bawag Bank
                         Sporitelna      Banka                                                    Bank

            (KBC       (ERSTE         (Société      (UniCredit       (Citi       (Raiffeisen   (GE          (Volksbank      (J&T     (BAWAG
           Group)       Group)        Générale        Group)        Group)     International) Capital)     International) Finance)    P.S.K.)
                                       Group)

     Market share in terms of of total assets (according to
                                                                                                    Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


42
     TOP BANKS IN ESTONIA


                                        Total Assets (€ bn), market share and ownership

     12
             52.0%

     10



      8



      6
                         22.6%

      4
                                        11.4%
                                                      8.4%
      2
                                                                     1.4%          0.8%          0.8%            0.5%         0.5%       0.2%
      0
           Hansapank     SEB Eesti    Sampo Pank    Nordea Pank   Krediidipank    UniCredit     BIG (Balti        Parex      Tallinna   Marfin Pank
                         Ühispank                                                             Investeerigute                 Äripank       Eesti
                                                                                                  Grupp)

          (Swedbank)      (SEB         (Sampo        (Nordea      (Latvian       (UniCredit    (private        (majority     (majority   (Marfin
                         Group)         Group)        Group)      Business         Group)      capital)         private    private local Popular
                                                                   Bank)                                        capital)      capital) Bank Group)

     Market share in terms of of total assets (according to
                                                                                                     Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


43
     TOP BANKS IN HUNGARY


                                        Total Assets (€ bn), market share and ownership

     25

              20.4%*

     20



     15


                          9.1%           8.8%         8.7%       8.0%
     10                                                                     7.7%
                                                                                          6.3%

      5
                                                                                                        3.1%           2.6%        2.4%


      0
               OTP         K&H           MKB            CIB    Raiffeisen   ERSTE     UniCredit Bank Budapest Bank    Citibank      FHB
                                                                                       (incl. Mortgage
                                                                                            Bank)

          (majority foreign (KBC (Bayerische         (Intesa    (Raiffeisen (ERSTE      (UniCredit  (GE              (CitiGroup) (no majority
              capital)     Group) Landesbank)       SanPaolo) International) Group)       Group)   Capital)                      shareholder)


     Market share in terms of of total assets (according to
                                                                                             Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)

     * OTP mortgage bank not included
44
     TOP BANKS IN KAZAKHSTAN


                                        Total Assets (€ bn), market share and ownership

     18

            23.2%        22.7%
     16

     14

     12

     10                                13.4%

      8                                                10.2%
                                                                        8.5%
                                                                                   7.5%
      6

      4
                                                                                                  2.8%        2.2%
      2                                                                                                                     1.7%         1.6%

      0
          Kazcommerc       Bank      Halyk Savings   Alliance Bank    ATF Bank      Bank        Temirbank   Bank Caspian   NUR Bank   Bank Eurasian
             Bank       TuranAlem        Bank                                     CentrCredit

          (private      (foreign      (private        (private       (UniCredit   (private      (private    (foreign       (private     (private
            local       capital)        local           local          Group)       local         local     capital)         local      capital)
          capital)                    capital)        capital)                    capital)      capital)                   capital)

     Market share in terms of of total assets (according to
                                                                                                     Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


45
     TOP BANKS IN LATVIA


                                         Total Assets (€ bn), market share and ownership

     8
           21.7%
     7


     6

     5                  14.6%           14.1%

     4


     3
                                                          8.3%    7.9%
                                                                                5.6%          5.1%
     2                                                                                                      4.2%
                                                                                                                          3.4%        3.1%
     1


     0
         Hansabanka    Parex banka   SEB Unibanka     DnB Nord    Nordea    Rietumu banka   Aizkraukles      Latvijas    UniCredit*    Latvijas
                                                                                                banka      Hipoteku un                Krajbanka
                                                                                                          zemes banka

         (Swedbank)     (majority       (SEB)        (DnB Nord)   (Nordea    (majority      (private       (State)       (UniCredit   (Snoras)
                         private                                   Group)     private         local                        Group)
                         capital)                                             capital)      capital)

     Market share in terms of of total assets (according to
                                                                                                   Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)

          * Including branches in Estonia and Lithuania
46
     TOP BANKS IN LITHUANIA


                                        Total Assets (€ bn), market share and ownership

     8
          30.5%
     7

                        23.9%
     6


     5


     4
                                       13.1%
     3

                                                      7.1%          7.0%          6.8%
     2
                                                                                                5.0%
     1
                                                                                                                2.5%           2.0%        1.1%

     0
         SEB Vilnius   Hansabankas DnB Nord Bank Snoras Bank      Nordea Bank   Sampo Bank     Ukio Bank     Siauliu Bank   Parex Bank   UniCredit
           Bank

           (SEB)       (Swedbank) (DnB Nord        (majority        (Nordea      (Sampo        (majority      (ERPB)        (majority    (UniCredit
                                    Bank)         private local      Group)       Group)     private local                   private       Group)
                                                     capital)                                   capital)                     capital)

     Market share in terms of of total assets (according to
                                                                                                    Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


47
     TOP BANKS IN MONTENEGRO


                                        Total Assets (€ bn), market share and ownership

     1.2

                    34.5%
      1



     0.8



     0.6
                                               15.7%
                                                                      13.9%                  13.5%
     0.4

                                                                                                                       6.0%
     0.2



      0
                     CKB                 Prva banka Crne Gore   Hypo Alpe-Adria-Bank   NLB Montenegrobanka       Podgoricka Banka

                     (OTP                                        (Hypo Alpe-           (Nova Ljubljanska            (Société
                    Group)                                       Adria-Group)               Banka)               Générale Group)


     Market share in terms of of total assets (according to
                                                                                          Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


48
     TOP BANKS IN POLAND


                                        Total Assets (€ bn), market share and ownership

            15.4%
     35

                         13.6%
     30


     25


     20
                                         6.7%
                                                      6.2%
     15
                                                                 5.0%          4.9%
                                                                                               3.8%           3.6%
     10
                                                                                                                            2.8%
                                                                                                                                        1.8%
      5


      0
           Pekao SA      PKO BP        ING BSK       BRE Bank    BZ WBK       Citibank    Bank Millenium   Kredyt Bank   Raiffeisen    Fortis Bank
                                                                                                                             Bank

          (UniCredit     (State)       (ING       (Commerz-     (AIB Ltd)   (CitiGroup)      (Banco           (KBC         (Raiffeisen  (Fortis
            Group)                    Group)        bank)                                   Comercial        Group)      International) Group)
                                                                                            Portugues)

     Market share in terms of of total assets (according to
                                                                                                  Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


49
     TOP BANKS IN ROMANIA


                                        Total Assets (€ bn), market share and ownership

     20
            25.3%
     18

     16

     14
                         16.0%
     12

     10

      8

      6                                  6.4%          5.6%          5.3%        5.1%            5.1%           5.1%
                                                                                                                               4.1%        4.0%
      4

      2

      0
            Banca          Banca       Raiffeisen       Banca       Banc Post   Alpha Bank   UniCredit Tiriac   Volksbank   Piraeus Bank   CEC Bank
          Comerciala      Romana         Bank        Transilvania                                Bank
           Romana          Pentru
                         Dezvoltare

          (ERSTE       (Société (Raiffeisen      (majority     (EFG              (Alpha      (UniCredit (Volksbank (Piraeus                  (State)
           Group)      Générale International) private local Eurobank)            Bank         Group) International) Group)
                        Group)                    capital)                       Group)

     Market share in terms of of total assets (according to
                                                                                                     Source: UniCredit New Europe Research Network
     IFRS, consolidated figures)


50
     TOP BANKS IN RUSSIA


                                        Total Assets (€ bn), market share and ownership

     160
            25.5%
     140


     120


     100


      80
                           10.3%
      60


      40
                                         4.1%
                                                        2.6%        2.6%           2.4%           2.2%          2.0%       1.9%
      20                                                                                                                                  1.8%

       0
            Sberbank     VTB Group    Gazprombank Bank of Moscow   Alfa-bank   Rosselkhozbank Raiffeisenbank   Rosbank    Uralsib     UniCredit Bank

           (State)        (State) (Gazprom - (Moscow City          (private        (State)     (Raiffeisen     (Société    (private     (UniCredit
                                    State)   Government)             local                   International)    Générale      local        Group)
                                                                   capital)                                     Group)     capital)

     Market share in terms of of total assets (according to
                                                                                                     Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


51
     TOP BANKS IN SERBIA


                                         Total Assets (€ bn), market share and ownership

      3

             12.5%
     2.5

                           10.1%
                                          9.4%
      2
                                                        8.5%

     1.5
                                                                       5.4%          5.0%          4.7%
      1                                                                                                           4.2%           3.9%          3.8%


     0.5



      0
            Banca Intesa   Raiffeisen  Komercijalna    Hypo Alpe-   Eurobank EFG AIK banka Nis UniCredit Bank     Société     ProCredit Bank Vojvodjanska
              Beograd    banka Beograd   banka         Adria-Bank                                                 Générale       Beograd         banka
                                                        Beograd                                                 Yugoslav Bank

            (Intesa    (Raiffeisen  (State,           (Hypo Alpe- (Eurobank        (majority    (UniCredit       (Société (ProCredit)         (National
           SanPaolo) International) EBRD)             Adria-Group)  EFG)             local        Group)         Générale                      Bank of
                                                                                    capital)                      Group)                       Greece)

     Market share in terms of of total assets (according to
                                                                                                      Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


52
     TOP BANKS IN SLOVAKIA


                                        Total Assets (€ bn), market share and ownership

     10
            17.9%
      9                   16.6%
                                        15.2%
      8

      7                                              12.8%*
      6
                                                      10.3%
      5
                                                                   8.2%
      4
                                                                                 5.2%
      3                                                                                       4.2%
                                                                                                            3.3%          2.9%
      2                                                                                                                               2.5%
      1

      0
           Slovenska        VUB       Tatra Banka      CSOB    UniCredit Bank   ING Bank   Dexia Banka   Prva Stavebna     OTP       Istrobanka
           Sporitelna                                                                                       Sporitelna

          (ERSTE         (Intesa    (Raiffeisen        (KBC     (UniCredit       (ING       (Dexia        (Bauspar-      (majority    (KBC
           Group)       SanPaolo) International)      Group)      Group)        Group)      Group)         kassen)        foreign    Group)
                                                                                                                          capital)

     Market share in terms of of total assets (according to
                                                                                                 Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)

           * Including Istrobanka
53
     TOP BANKS IN SLOVENIA


                                           Total Assets (€ bn), market share and ownership

     14      30.6%

     12


     10


      8


      6
                           10.0%
                                           8.1%
      4
                                                         5.5%          5.4%        5.3%           5.0%          4.5%        4.1%         3.0%
      2


      0
              Nova       Nova kreditna   Abanka Vipa   Banka Celje   SKB banka   Banka Koper UniCredit Bank   Hypo Alpe-   Gorenjska     Raiffeisen
           Ljubljanska   banka Maribor                                                                           Adria      banka      Krekova banka
              banka

          (State, KBC     (State) (majority private (Nova      (Société           (Intesa  (UniCredit (Hypo Alpe-  (majority     (Raiffeisen
          Group 34%)                local capital) Ljubljanska Générale          SanPaolo)   Group) Adria Group) private local International)
                                                   banka 41%) Group)                                                capital)

     Market share in terms of of total assets (according to
                                                                                                     Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


54
     TOP BANKS IN TURKEY


                                        Total Assets (€ bn), market share and ownership

     50     14.4%        14.3%
     45
                                        12.1%         12.0%
     40

     35
                                                                  9.0%
     30
                                                                              7.5%
                                                                                        7.2%
     25

     20

     15                                                                                             3.7%
                                                                                                                 2.7%        2.4%
     10

      5

      0
             Ziraat     Is Bankasi      Akbank        Gananti   Yapi Kredi    Vakif     Halk       Finans        Deniz       HSBC

          (State)       (Is Bank     (Sabanci   (Dogus  (UniCredit           (State)   (State)     (National    (Dexia       (HSBC
                        Pension       Group & Group & GE Group)                                     Bank of     Group)       Group)
                          Fund)      Citigroup) Group)                                              Greece)

     Market share in terms of of total assets (according to
                                                                                           Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)


55
     TOP BANKS IN UKRAINE


                                            Total Assets (€ bn), market share and ownership

     8       9.4%

     7
                             7.4%
     6
                                           6.3%         6.2%
     5

                                                                     4.8%
     4                                                                             4.4%
                                                                                                3.5%
     3                                                                                                       3.2%         3.0%
                                                                                                                                     2.5%
     2


     1


     0
           PrivatBank   Raiffeisen Bank   Ukrsibbank   UniCredit   Ukreximbank Prominvestbank Bank Nadra   Oschadbank   OTP Bank    Alfa Bank
                               Aval                     Group*

          (private        (Raiffeisen (BNP Paribas (UniCredit        (State)     (private      (private      (State)     (OTP      (Alfa Group)
            local       International) Group)        Group)                        local         local                  Group)
          capital)                                                               capital)      capital)

     Market share in terms of of total assets (according to
                                                                                                   Source: UniCredit New Europe Research Network
     local accounting standard, unconsolidated figures)
         * Including Ukrsotsbank and UniCredit Bank Ukraine
56
     METHODOLOGY


         The comparison covers the following 17 countries: Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Kazakhstan, Latvia, Lithuania, Poland,
          Romania, Russia, Serbia, Slovakia, Slovenia, Ukraine and Turkey

         In the ranking of international players, the CEE region includes the above-mentioned 17 countries plus Albania, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Macedonia,
          Moldova, Montenegro, Tajikistan and Uzbekistan.

                       The analysis covers the following European Banking Groups: Unicredit Group, Erste, KBC, Raiffeisen, Société Générale, IntesaSanPaolo, OTP, SwedBank,
                        CitiGroup, SEB, NBG, Commerzbank, ING and Nordea, with focus on the largest seven.

                       Data are according to IAS/IFRS (when not available, LAS are used), proforma 12M including deals closed as of May 2008. Data refer to consolidated audited
                        results (apart from a few exceptions where unconsolidated and/or unaudited data are used)




         The comparison among top banks at single country level (from slide 38) is based on local accounting standards, unconsolidated.




         Closing date end of June 2008




          This is a product of the CEE Research Network. The CEE Research Network involves all the research offices of the Group dealing with the CEE region, with the aim of providing a shared view in terms of economic
          developments at the single country and at the regional level. Disclaimer. This document (the “Document”) has been prepared by UniCredito Italiano S.p.A. and its controlled companies1 (collectively the “UniCredit Group”).
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57
     CONTACTS - Unicredit Group CEE Research Network



                                                 cee.economic.research@unicreditgroup.at


     Debora Revoltella
     UniCredit Group, CEE Chief Economist
     Network Coordinator
     cee.economic.research@unicreditgroup.at

     UniCredit Group, CEE Economic Research                          Pekao SA – Macroeconomic Research Office
     Carmelina Carluzzo, Matteo Ferrazzi, Hans Holzhacker,           Andrzej Bratkowski, Chief Economist
     Fabio Mucci, Lisa Perrin, Bernhard Sinhuber, Gerd Stiglitz      Treasury Division
     Alessia Muzio, Federica Rossetti, Eszter Tóth, Jessica Viragh   Marcin Bibin, Agnieska Decewicz

     UniCredit Bulbank, Economic Research Unit                       UniCredit Tiriac Bank – Economic Research
     Kristofor Pavlov, Chief Economist                               Rozalia Pal, Senior Economist
     Katerina Topalova, Milen Kassabov, Stanislava Vrabcheva         Anca Mihaela Stoica

     Zagrebacka Banka – Macroeconomic Research                       UniCredit Bank (Russia) – Treasury
     Goran Saravanja, Chief Economist                                Valery Inyushin, Dmitry Panteta, Sergey Borisov
     Nenad Golac
                                                                     UniCredit Bank (Slovakia) – Macroeconomics & Market Analyses
     UniCredit Bank (Czech Republic) – Economic Research             Viliam Patoprsty, Chief Analyst
     Pavel Sobisek, Chief Economist                                  Lubomir Korsnak
     Patrik Rozumbersky, Vaclav Verner
                                                                     Yapi Kredi Bankası
     UniCredit Bank (Hungary)                                        Cevdet Akcay, Chief Economist
     Márta Bíróné-Szegõ, Chief Economist                             Ahmet Cimenoglu, Head, Strategic Planning and Research
     Tibor Nagy, Tamás Nagy                                          Yelda Yucel, Eren Ocakverdi, Murat Can Aslak, Cenk Tarhan, Muhammet Mercan




58

								
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