Company report

Italy 3 November 2006

Banca Pop. Verona Novara Accumulate

(unchanged)
11/ 0 2 / 20 0 6
Banks
24
v v ds v dv s dy

23

22 Price
21

20 EUR 21.43
19

18
Target Price
17

16

15
EUR 22.90
Oct 05 Nov 05 Dec 05 Jan 06 Feb 06 M ar 06 Apr 06 M ay 06 Jun 06 Jul 06 Aug 06 Sep 06 Oct 06 Nov 06

B . P OP .VERONA NOVA RA DJ Sto xx B anks (Rebased)

EUR 22.90
Source: Datastream
Accounting Standard/Since IFRS/2005
Benchmark rebased to stock price
Reuters/Bloom berg BPVN.MI/BPVN IM

(EUR) 12/04 12/05 12/06e 12/07e 12/08e Share price on 02/11/2006 (EUR) 21.43
Total Income (m) 2,330 2,484 2,732 2,937 3,139 Target price (EUR) 22.90
Gross Operating Profit (GOP) ( 870 1,097 1,322 1,467 1,609 Market capitalisation (EURm) 8,043.0
EBT (m) 712 981 1,296 1,288 1,408 No. of shares (m) 375.3
Net Profit (reported) (m) 412 597 816 773 845 Free float 100.0%
Shareholders Equity (m) 3,717 4,021 4,576 4,992 5,477 Daily avg. no. trad. sh. 12 mth 2,462,700
GOPPS 2.35 2.94 3.52 3.91 4.29 Daily avg. trad. vol. 12 mth (m) 51.19
EPS (adj.) 1.19 1.54 1.92 2.06 2.25 Price high 12 mth (EUR) 23.42
BVPS 9.17 9.92 11.33 12.44 13.73 Price low 12 mth (EUR) 15.80
DPS 0.50 0.70 0.95 0.96 1.00 Abs. perf. 1 mth -2.6%
P/GOP 5.9 5.1 6.1 5.5 5.0 Abs. perf. 3 mth -5.0%
P/E (adj.) 11.7 9.8 11.1 10.4 9.5 Abs. perf. 12 mth 35.5%
P/BV (adj.) 1.5 1.5 1.9 1.7 1.6
Dividend Yield (%) 3.6 3.3 4.4 4.5 4.7 Local index S&PMIB
Cost/Income (%) 62.7 55.8 51.6 50.0 48.7 DJ Stoxx or EuroStoxx 50 No
ROE (adj.) (%) 12.2 14.9 16.8 16.2 16.1 EPS 06-04 CAGR 27.4%
Shareholders:

A tough challenge for a team with a proven track record

• After an initial negative reaction due to the high price paid to win BPI’s approval of the merger
project, we believe that the market will find solace in a rapid and effective integration of the
two banking groups, thanks to the proven track record of the BPVN management team.
• On the revenue side, the targeted synergies (EUR 280m) correspond to 6.8% of the
combined revenue base (or almost twice the new assessment in the BIN-SPI merger) and
half of it is expected to come from a partial realignment of BPI’s employee productivity to the
best practice of the BPVN group. We cast some doubts on this productivity realignment,
mainly concerning its phasing. Therefore, the successful execution of revenue synergies will
be crucial, and we prudently include in our numbers only half of the target, i.e. EUR 140m vs.
EUR 280m. Despite our prudent approach, BPVN is still trading at a P/E of 12.1x in 2007 and
10.2x in 2008 post-synergies, at a discount on other Italian peers. Therefore, we give BPVN
an Accumulate rating and EUR 22.9 target price.
• The ongoing analysis with respect to Cattolica Assicurazioni concerning a partial integration
with BPVN will continue until end November and will be submitted to BPI’s BoD, which should
evaluate with complete freedom whether to launch the project.

Luigi Tramontana +39 02 4344 4239 luigi.tramontana@bancaakros.it

 Banca Pop. Verona Novara

CONTENTS

Investment case......................................................................................................3
Creating Italy’s biggest Popolare bank ................................................................4
The Cattolica option....................................................................................................5
Active capital management.........................................................................................5
Value creation .........................................................................................................6
The effect on our estimates ........................................................................................8
Conclusions ............................................................................................................9
Banca Pop. Verona Novara: Summary tables ...................................................10

Il presente documento è stato redatto da Luigi Tramontana che svolge funzioni di analista presso Banca Akros SpA ("Banca
Akros"), soggetto responsabile della produzione del documento stesso.
Banca Akros - banca autorizzata anche alla prestazione di servizi di investimento con provvedimento di Banca d’Italia del
14/11/1996, iscritta all’albo delle Banche al n. 5328, appartenente al Gruppo Bipiemme Banca Popolare di Milano (il
“Gruppo”) e soggetta all’attività di direzione e coordinamento di Banca Popolare di Milano (la “Capogruppo”) - ha prodotto il
presente documento per i propri clienti istituzionali (“operatori qualificati” così come definiti all’art. 31 del Regolamento
Consob in materia di Intermediari). Esso è distribuito dal giorno 3 novembre 2006.
Banca Akros, ai sensi degli artt. 69 quater e quinquies del Regolamento Consob in materia di Emittenti, dichiara di non
avere propri rilevanti interessi finanziari negli strumenti finanziari oggetto del presente documento ovvero rilevanti conflitti di
interesse derivanti da rapporti con l’emittente detti strumenti finanziari (l’”Emittente”) ovvero, più in generale, derivanti da
operazioni descritte nel presente documento. Banca Akros dichiara di non essere a conoscenza della sussistenza di
rilevanti interessi finanziari e/o di rilevanti conflitti di interesse della Capogruppo nei confronti dell’Emittente.
L’analista Luigi Tramontana, che ha redatto il presente documento, ha maturato una significativa esperienza presso Banca
Akros e altri intermediari. L’analista e i suoi familiari non detengono Strumenti Finanziari emessi dall’Emittente, né svolgono
ruoli di amministrazione, direzione o consulenza per l’Emittente, né l’analista riceve bonus, stipendi o altre forme di
retribuzione correlate, direttamente o indirettamente, al successo di operazioni di investment banking.
Banca Akros, nell’ultimo anno, ha pubblicato sulla società oggetto di analisi tre studi in data 26 e 31 ottobre 2006.
La Banca rende disponibili ulteriori informazioni, ai sensi delle disposizioni Consob di attuazione dell’art. 114, comma 8 del
D.Lgs 58/98 (TUF) ed in particolare ai sensi dell’art. 69 quinquies, comma 2, del Regolamento Emittenti, presso il proprio
sito internet (si veda http://bancaakros.webank.it/akros/sito.nsf/homepage).
Le informazioni e le opinioni contenute in questo documento si basano su fonti ritenute attendibili. La provenienza di dette
informazioni e il fatto che si tratti di informazioni già rese note al pubblico è stata oggetto di ogni ragionevole verifica da
parte di Banca Akros. Banca Akros tuttavia, nonostante le suddette verifiche, non può garantire in alcun modo né potrà in
nessun caso essere ritenuta responsabile qualora le informazioni alla stessa fornite, riprodotte nel presente documento,
ovvero sulla base delle quali è stato redatto il presente documento, si rivelino non accurate, complete, veritiere ovvero
corrette.
Il documento è fornito a solo scopo informativo; esso non costituisce proposta contrattuale, offerta o sollecitazione
all’acquisto e/o alla vendita di strumenti finanziari o, in genere, all’investimento, né costituisce consulenza in materia di
investimenti. Banca Akros non fornisce alcuna garanzia di raggiungimento di qualunque previsione e/o stima contenuto nel
documento stesso. Inoltre Banca Akros non assume alcuna responsabilità in merito a qualsivoglia conseguenza e/o danno
derivante dall’utilizzo del presente documento e/o delle informazioni in esso contenute. Le informazioni o le opinioni ivi
contenute possono variare senza alcun conseguente obbligo di comunicazione in capo a Banca Akros, fermi restando
eventuali obblighi di legge o regolamentari.
E’ vietata la riproduzione e/o la ridistribuzione, in tutto o in parte, direttamente o indirettamente, del presente documento,
non espressamente autorizzata.

Page 2
 Banca Pop. Verona Novara

Investment case
After an initial negative reaction due to the high price paid to win BPI’s approval of
the merger project, we believe that the market will find solace in a rapid and
effective integration of the two banking groups, thanks to the proven track record of
the BPVN management team. The successful execution of revenue synergies will
be crucial, and we prudently include in our numbers only half of the target, or
EUR 140m vs. EUR 280m. Despite our prudent approach, BPVN is still trading at a
P/E of 12.1x in 2007 and 10.2x in 2008 post-synergies, at a discount to other
Italian peers. Therefore we give to BPVN an Accumulate rating and EUR 22.9
target price.
On the revenue side, the targeted synergies (EUR 280m) correspond to 6.8% of
the combined revenue base (or almost twice the new assessment in the BIN-SPI
merger) and half of it is expected to come from a partial realignment of BPI’s
employee productivity to the best practice of the BPVN group.
We cast some doubts on this productivity realignment, mainly concerning its
phasing, considering that:
• the productivity realignment is still under way in the BPN network, 5 years after
the announcement of the BPV-BPN merger; although it is true that BPV
announced these productivity-alignment targets only 3 years ago (in November
’03), it confirms our view that more time is needed to deliver them compared to
the current merger plan;
• prior to the merger with BPV, the BPN network was selling a limited product
range, due to the lack of product factories in the group; this is not the case of
BPI, which has a wide product range in wealth management, in investment
banking and in other niche markets;
• the BPI network is characterised by a majority (55%) of small branches (less
than 5 employees), where cross-selling opportunities are more limited than in
large branches; the 2006-09 business plan that BPI presented last April
provides for the grouping of these branches and the consequent disposal of
the smaller ones and of those located in areas where BPI has less than 2%
market share – therefore we see a risk of double counting between this plan
and the merger plan with BPVN.
To conclude, we expect only EUR 360m synergies vs. EUR 500m targeted by
2010. This implies a dilutive effect of nearly 7% on our 2008e pro-forma numbers
and an almost neutral effect only in 2009.
The ongoing analysis with respect to Cattolica Assicurazioni concerning a partial
integration with BPVN will continue until end November and will be submitted to
BPI’s BoD, which should evaluate with complete freedom whether to launch the
project. Potential synergies of a partial Cattolica-BPVN merger should be mainly
on the revenue side and should exceed EUR 200m after the BPVN-BPI deal.
According to press rumours, prior to the tie-up Cattolica could spin-off 100% of
Duomo Assicurazioni, 50% of Lombarda Vita and 3% of Banca Lombarda to other
parties. Our preliminary assessment on the value of these assets is in the region of
EUR 0.8-1bn. If the partial integration with Cattolica goes through, it will give the
new group the opportunity to rationalise its Life bancassurance agreements, as
BPVN currently has two joint-ventures (one with Cattolica and the other with
Fondiaria-Sai), while BPI has a joint-venture with UK’s Aviva and a distribution
agreement with Unipol group. But the merger with Cattolica is primarily aimed at
developing P&C bancassurance, both via the bundling of P&C policies with
banking products (like mortgages) or the direct sale of P&C products at banks’
branches, and via the cross-fertilisation of the two customer bases, turning
Cattolica’s clients into customers of the banking group.

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 Banca Pop. Verona Novara

Creating Italy’s biggest Popolare bank

BP Italiana agreed in mid-October to merge with BPVN to create Gruppo Bancario
Popolare (GBP) on the basis of a 0.43x exchange ratio (ex ordinary dividends)
plus an early extraordinary BPI dividend of EUR 2.17/sh. Depending on the BPVN
market price and considering that we forecast an ordinary dividend of EUR 0.95
per BPVN share, the implied valuation of BPI is the following:
BPVN offer on BPI
BPVN BPI
mkt price Valuation
23.0 11.1
22.5 10.9
22.0 10.7
21.5 10.5
21.0 10.3
20.5 10.0
20.0 9.8
19.5 9.6
19.0 9.4
Source: BANCA AKROS

The preliminary timetable for the merger project is the following:

November ’06: Confirmatory data room
December ’06: BPVN and BPI BoDs will approve the merger project and related
business plan and call the EGMs to approve the deal
February ’07: EGMs to approve the merger and the distribution of a EUR 2.17
extraordinary dividend to BPI shareholders
March ’07: Merger act and constitution of the new group (GBP)
The merger will create the third largest Italian banking group and the biggest
among Popolari banks, with a nearly 7% branch market share at national level
thanks to almost 2,200 branches rooted in the wealthiest centre-north of Italy, as
the networks of the two banks have a perfect geographical fit.

3rd Italian branch network… … rooted in wealthiest Centre-north

Source: BPVN Source: BPVN

The new group will have total assets worth EUR 111bn, total loans and direct
funding of EUR 73bn (5th in Italy), AUM worth EUR 48bn (4th in Italy), ranking as
the largest cooperative bank in the country.

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 Banca Pop. Verona Novara

The Cattolica option

The ongoing analysis with respect to Cattolica Assicurazioni concerning a partial
integration with BPVN will continue to end November and will be submitted to
BPI’s BoD, which should evaluate with complete freedom whether to launch the
project.
According to press rumours, prior to the tie-up Cattolica could spin-off 100% of
Duomo Assicurazioni, 50% of Lombarda Vita and 3% of Banca Lombarda to other
parties. Our preliminary assessment on the value of these assets is in the region of
EUR 0.8-1bn (see table below). Cattolica is rumoured to be in talks with Mapfre,
the Spanish insurer, to sell a minority interest in the spun-off assets.
Cattolica spin-off
(EUR m) Premiums Value
100% Duomo Ass.(1) 540 432
50% Lombarda Vita 670 160
3% Banca Lombarda - 200
sub-Total 792
Eurosav (2) 460 184
Total 976
(1) After merger with UniOne; (2) Value accounted at 50% after spin-off of Persona Life Source: BANCA AKROS

Should the deal materialise, we expect a valuation for 100% of Cattolica

Assicurazioni, before any spin-off, of at least EUR 50 per share, or EUR 2.4bn.
Therefore, the “core business” due to be merged with BPVN would be in the region
of EUR 1.4-1.6bn, or EUR 29.5-33.8 per Cattolica share. To conclude, the
exchange ratio of an all-paper offer by BPVN would be 0.625-0.715x.
If the partial integration with Cattolica goes through, it will give the opportunity to
GBP to rationalise its Life bancassurance agreements, as BPVN currently has two
joint-ventures (one with Cattolica and the other with Fondiaria-Sai), while BPI has
a joint-venture with UK’s Aviva and a distribution agreement with Unipol group. But
the merger with Cattolica is primarily aimed at developing P&C bancassurance,
both via the bundling of P&C policies with banking products (like mortgages) or the
direct sale of P&C products at banks’ branches, and via the cross-fertilisation of
the two customer bases, turning Cattolica’s clients into customers of the banking
group. Potential synergies of a partial Cattolica-BPVN merger should be mainly on
the revenue side and were estimated in EUR 100-150m at run rate (in 3Y time)
before the BPVN-BPI merger. Therefore, the synergies should exceed EUR 200m
after the BPVN-BPI deal.

Active capital management

In the light of the outcome of the ongoing analysis with Cattolica, a number of
capital optimisation actions will be considered, such as issuance of hybrid
instruments (preference shares, preferred securities, etc.), disposal of non-
strategic stakes, securitization of performing loans.
The NPL ratio is expected to be 1.14% while the Tier1 ratio will be almost 6% and
solvency ratio 9% after the EUR 1.5bn dividend distribution by BPI, which in a
forward-looking growth scenario will be compensated by BPVN excess capital. The
group expects to be cash-generating from 2008 onwards.

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 Banca Pop. Verona Novara

2007-2010e Tier 1 ratio

Source: BPVN

According to our numbers, the Tier1 ratio should be equal to 6.2% in 2007 pro-
forma (Core Tier1 at 5.7%), as the EUR 500m of ex-BPI preference shares will be
fully booked, while they currently exceed the 15% threshold of BPI Tier 1 ratio and
are therefore booked at half of their value. To raise the Tier1 ratio to 6.5%, the new
group would have to raise EUR 250m of Tier1 capital or reduce RWA by
EUR 3.5bn. We remind investors that the new group could also raise up to
EUR 544m from ex-BPI warrant conversion between 1st July 2008 and 21st
December 2010 (exchange ratio 0.526 and EUR 11 strike price).
2007e Tier1 ratio
(EUR m) 2007
BPI BPVN New group
RWA 34,322 56,144 90,466
Tier 1 2,762 4,164 7,161
extra-dividend - 1,520 0 - 1,520
Tier1 ratio 3.6% 7.4% 6.2%
Core Tier1 2.8% 7.4% 5.7%
Source: Banca Akros

Value creation
One-off integration costs are seen at EUR 300m, while expected synergies are
equal to EUR 500m at run rate in 2010, o/w EUR 220m (or 44%) on the cost side
and EUR 280m (or 56%) on the revenue side.

Targeted synergies (EUR m) and phasing

Source: BPVN

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 Banca Pop. Verona Novara

On the cost side, the targeted synergies (see next chart) correspond to almost 9%
of the combined cost base (in line with the first assessment in the B. Intesa –
SanPaolo IMI merger) and should come from personnel lay-offs (41% or EUR
90m) through management of employees’ exit due to running churn-rate (3% per
year), corresponding to ca. 1,300 redundancies; from IT/back-office rationalisation
(30% or EUR 66m) thanks to the migration to the single BPVN IT platform; and
from rationalisation of head offices and improved purchasing power (29% or EUR
64m). These synergies do not look aggressive, especially concerning personnel
costs. We believe the mgmt has given up the idea of heavy cuts in the workforce to
gain BPI’s personnel approval of the merger in the EGM.

Cost synergies composition (EUR m)

Source: BPVN

On the revenue side, the targeted synergies (see next chart) correspond to 6.8%
of the combined revenue base (or almost twice the new assessment in the BIN-
SPI merger) and half of it is expected to come from a partial realignment of BPI’s
employee productivity to the best practice of the BPVN group.

Revenue synergies composition (EUR m)

Source: BPVN

We cast some doubts on this productivity realignment, mainly concerning its

phasing, considering that:
• the productivity realignment is still under way in the BPN network, 5 years after
the announcement of the BPV-BPN merger; although it is true that BPV
announced these productivity-alignment targets only 3 years ago (in November

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 Banca Pop. Verona Novara

’03), it confirms our view that more time is needed to deliver them compared to
the current merger plan;
• prior to the merger with BPV, the BPN network was selling a limited product
range, due to the lack of product factories in the group; this is not the case of
BPI, which has a wide product range in wealth management (Bipitalia Gestioni
and Arca in Asset Mgmt, Eurovita in Life assurance, Banca Valori in Private
banking), in investment banking (Efibanca in corporate finance, Centrosim in
brokerage) and in other niche markets (Bipitalia Ducato in consumer credit,
Bipielle Leasing (recently sold to Banca Italease) in leasing, etc.);
• the BPI network is characterised by a majority (55%) of small branches (less
than 5 employees), where cross-selling opportunities are more limited than in
large branches; the 2006-09 business plan that BPI presented last April
provides for the grouping of these branches and the consequent disposal of
the smaller ones and of those located in areas where BPI has less than 2%
market share – therefore we see a risk of double counting between this plan
and the merger plan with BPVN.
In conclusion, we believe than in the 4-year plan horizon only half, or EUR 140m,
of the targeted synergies will be delivered.

The effect on our estimates

According to the bank’s management, the merger should have a substantially
neutral effect on 2008e pro-forma EPS and a positive impact of over 10% on
2010e pro-forma numbers.
As stated previously, we are more prudent on the productivity realignment phasing
and, therefore, we expect only EUR 360m synergies vs. EUR 500m targeted by
2010. As shown in the next table, this implies a dilutive effect of nearly 7% on our
2008e pro-forma numbers and an almost neutral effect only in 2009.

BPVN-BPI Financial Targets

(EUR m) 2007 2008 2009
BPI BPVN New group BPI BPVN New group BPI BPVN New group
Revenues 1,795 2,937 4,732 1,951 3,139 5,090 2,096 3,356 5,453
Oper. costs - 1,053 - 1,433 - 2,486 - 1,079 - 1,493 - 2,572 - 1,106 - 1,555 - 2,661
Oper. profit 742 1,505 2,246 872 1,647 2,518 990 1,801 2,792
Pre-tax profit 616 1,288 1,904 733 1,408 2,141 841 1,539 2,380

phasing 28% 58% 85%

Synergies 100.8 208.8 306
revenues 39.2 81.2 119
costs 61.6 127.6 187
one-off charge -84 -90 -81
PTP after syn. 1,920 2,259 2,605
tax rate 36.7% 38.5% 37.9% 36.7% 38.5% 37.9% 36.6% 38.5% 37.8%
taxes - 226 - 496 - 728 - 269 - 542 -856 - 308 - 593 -986
Net profit 390 773 1,192 464 845 1,404 533 924 1,619

n.shares 682 375 669 682 375 669 682 375 669
EPS (EUR) 0.57 2.06 1.78 0.68 2.25 2.10 0.78 2.46 2.42
BPVN dilution -13.4% -6.7% -1.6%
P/E (x) 19.2 10.4 12.1 16.1 9.6 10.2 14.0 8.7 8.9
Source: BANCA AKROS

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 Banca Pop. Verona Novara

Considering also the issue of up to 49.5m shares consequent upon the conversion
of ex-BPI warrants between 1st July 2008 and 21st December 2010, we calculate a
fully diluted EPS of EUR 1.95 in 2008 and of EUR 2.25 in 2009, with a potential full
dilution of BPVN shareholders of 13% in ’08 and 8.4% in ’09 (see next table). In
the hypothesis that the EUR 544m deriving from the warrants’ exercise are
reinvested at CoE of 7.4%, the fully diluted EPS would be EUR 2.0 in ’08 and
EUR 2.3 in ’09, while the full dilution would be equal to 10.5% in ’08 and 6% in ’09.
BPVN full dilution
2008e 2009e
Shares fully diluted (m) 718 718
EPS fully diluted (EUR) 1.95 2.25
BPVN full dilution -13.1% -8.4%
P/E (x) 11.0 9.5
Source: BANCA AKROS

Conclusions
After an initial negative reaction due to the high price paid to win BPI’s approval of
the merger project, we believe that the market will find solace in a rapid and
effective integration of the two banking groups, thanks to the proven track record of
the BPVN management team. The successful execution of revenue synergies will
be crucial, and we prudently include in our numbers only half of the target, or EUR
140m vs. EUR 280m. Despite our prudent approach, BPVN is still trading at a P/E
of 12.1x in 2007 and 10.2x in 2008 post-synergies, at a discount on other Italian
peers (see next table). The valuation discount would be confirmed also with fully-
diluted EPS figures. Therefore, we give BPVN an Accumulate rating and EUR 22.9
target price.

P/E P/BV (adj.)

2006 2007 2008 2006 2007 2008
BANCA INTESA 14.4 13.8 11.5 2.2 1.7 1.5
BANCA MPS 16.4 13.6 11.7 2.1 1.9 1.8
BANCHE POPOLARI UNITE 12.9 12.1 10.9 1.7 1.6 1.4
CAPITALIA 16.7 13.4 11.2 2.3 2.1 1.9
SAN PAOLO IMI 15.6 14.2 12.6 2.3 2.2 2.0
UNICREDITO ITALIANO 15.0 12.7 10.8 2.4 2.1 1.9
Average 15.2 13.3 11.4 2.2 1.9 1.7
Source: BANCA AKROS

Upcoming Corporate Events Calendar

D ate E v e nt T ype D e s c ript io n P e rio d

14/11/06 Results Q3 06 Results 2006Q3

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 Banca Pop. Verona Novara

Banca Pop. Verona Novara: Summary tables

P R O F IT & LO S S ( E UR m ) 2003 2004 2005 2006e 2007e 2008eC A GR 08/ 03
Int e re s t Inc o m e 1,19 5 .0 1,17 7 .9 1,2 9 0 .7 1,3 7 9 .6 1,4 6 9 .4 1,5 4 3 .1 5 .2 %
Co mmissio ns 695.5 751.2 985.5 1,045.6 1,132.2 1,212.0
Trading inco me 128.6 99.9 96.8 236.0 240.0 250.0
Other Inco me and Dividends 193.9 301.4 110.7 71.0 95.9 134.2
N o n- int e re s t inc o m e
T o t a l Inc o m e 2 ,2 13 .0 2 ,3 3 0 .4 2 ,4 8 3 .7 2 ,7 3 2 .2 2 ,9 3 7 .5 3 ,13 9 .3 7 .2 %
Operating Co sts -1,338.6 -1,427.2 -1,356.7 -1,372.9 -1,432.8 -1,492.6
Other Operating P ro visio ns -21.8 -33.1 -29.8 -37.3 -37.3 -37.3
G ro s s O pe ra t ing P ro f it ( G O P ) 8 5 2 .6 8 7 0 .1 1,0 9 7 .2 1,3 2 2 .0 1,4 6 7 .4 1,6 0 9 .4 13 .6 %
Lo ans P ro visio n -147.9 -151.0 -135.6 -155.7 -179.6 -201.9
Other P ro visio ns -12.6 -9.1 -1.5 0.0 0.0 0.0
O pe ra t ing pro f it ( O P ) 6 9 2 .1 7 10 .1 9 6 0 .1 1,16 6 .3 1,2 8 7 .9 1,4 0 7 .5 15 .3 %
A sso ciates 20.1 42.0 0.0 0.0 0.0 0.0
Extrao rdinary Items -86.0 -10.4 21.3 129.6 0.0 0.0
Go o dwill A mo rtisatio n -63.5 -29.9 0.0 0.0 0.0 0.0
Results fro m Financial Investments 0.0 0.0 0.0 0.0 0.0 0.0
General B anking Risks P ro visio ns 0.0 0.0 0.0 0.0 0.0 0.0
E a rnings B e f o re T a x ( E B T ) 5 6 2 .7 7 11.7 9 8 1.4 1,2 9 5 .9 1,2 8 7 .9 1,4 0 7 .5 2 0 .1%
Tax -228.4 -283.5 -368.5 -464.3 -495.8 -541.9
Tax rate 39.8% 38.9% 36.9% 35.4% 37.9% 37.9%
M ino rities -11.0 -16.6 -15.9 -15.6 -19.3 -21.1
P reference dividends
N e t P ro f it ( re po rt e d) 3 2 3 .3 4 11.5 5 9 7 .0 8 16 .1 7 7 2 .7 8 4 4 .5 2 1.2 %
Earnings B efo re Tax (adj.) 712.2 752.0 960.1 1,166.3 1,287.9 1,407.5 17 .6 %
Net P ro fit (adj.) 438.6 438.8 575.7 722.5 772.7 844.5 14 .0 %
B A LA N C E S H E E T ( E UR m )
Due fro m B anks 6,051.9 4,094.5 5,848.4 6,123.0 6,123.0 6,123.0
Custo mer Lo ans 31,949.0 36,333.6 40,275.9 46,219.7 50,841.6 55,417.4 11.6 %
Securities 5,268.7 6,738.6 10,438.6 11,064.9 11,618.2 12,082.9
Int e re s t E a rning A s s e t s ( IE A ) 4 3 ,2 6 9 .6 4 7 ,7 5 9 .5 5 6 ,5 6 2 .9 6 3 ,4 0 7 .6 6 8 ,5 8 2 .8 7 3 ,6 2 3 .2 11.2 %
Go o dwill 325.9 322.6 322.6 322.6 322.6 322.6
Other A ssets 5,009.9 5,236.1 2,872.8 3,133.7 3,328.2 3,517.6
T o tal A ssets 4 8 ,6 0 5 .4 5 3 ,3 18 .3 5 9 ,7 5 8 .3 6 6 ,8 6 3 .9 7 2 ,2 3 3 .6 7 7 ,4 6 3 .4 9 .8 %
Due to B anks 3,328.8 6,281.4 8,099.6 10,317.4 11,015.1 11,141.8
Custo mer Depo sits 36,233.0 37,617.8 42,984.1 46,516.6 50,348.8 54,506.8 8.5%
Other liabilities 5,424.7 5,590.7 4,536.5 5,321.2 5,725.6 6,164.4
S ha re ho lde rs E quit y 3 ,4 7 1.0 3 ,7 16 .8 4 ,0 2 1.0 4 ,5 7 6 .0 4 ,9 9 2 .1 5 ,4 7 7 .3 9 .6 %
M ino rities Equity 147.9 111.7 117.1 132.7 152.0 173.1
O T H E R IT E M S ( E UR m )
T o t a l M a rk e t C a p 4 ,4 0 2 .2 5 ,13 7 .6 5 ,6 14 .5 8 ,0 4 3 .3 8 ,0 4 3 .3 8 ,0 4 3 .3
Shareho lders Equity (GW A dj.) 2,997.1 3,209.1 3,698.4 4,253.4 4,669.5 5,154.7 11.5 %
RWA 37,224.8 41,041.1 44,560.0 51,346.0 56,144.0 60,893.8 10 .3 %
A ssets Under M anagement 58,352.3 66,670.3 73,004.0 75,380.9 80,846.9 86,785.0 8 .3 %
M A R G IN S A N D R A T IO S
Interest Inco me gro wth -5.3% -1.4% 9.6% 6.9% 6.5% 5.0%
No n Interest Inco me gro wth
G ro s s O pe ra t ing P ro f it gro wt h 10 .3 % 2 .1% 2 6 .1% 2 0 .5 % 11.0 % 9 .7 %
Custo mer Lo ans gro wth 0.0% 13.7% 10.9% 14.8% 10.0% 9.0%
Depo sits gro wth 6.2% 3.8% 14.3% 8.2% 8.2% 8.3%
Interest Inco me/A vg. IEA 2.8% 2.6% 2.5% 2.3% 2.2% 2.2%
C o s t / Inc o m e 6 0 .5 % 6 1.2 % 5 4 .6 % 5 0 .2 % 4 8 .8 % 4 7 .5 %
Lo an Lo ss P ro visio ns/A vg. Cust. Lo ans 0.5% 0.4% 0.4% 0.4% 0.4% 0.4%
Lo an Lo ss P ro visio ns/RWA 0.4% 0.4% 0.3% 0.3% 0.3% 0.3%
NP L ratio (gro ss) 4.8% 4.0% 3.2% 2.8% 2.6% 2.4%
NP L co verage 39.6% 39.1% 51.4% 52.0% 52.0% 52.0%
R O E ( a dj.) 13 .0 % 12 .2 % 14 .9 % 16 .8 % 16 .2 % 16 .1%
Tier1 7.9% 7.6% 7.4% 7.3% 7.4% 7.6%
P ayo ut ratio 45.8% 45.0% 43.7% 43.7% 46.5% 44.5%
KE Y M A R KE T R A T IO S
P /GOP 5.2 5.9 5.1 6.1 5.5 5.0
P /E (repo rted) 13.6 12.5 9.4 9.9 10.4 9.5
P / E ( a dj.) 10 .0 11.7 9 .8 11.1 10 .4 9 .5
P /B V 1.3 1.4 1.4 1.8 1.6 1.5
P / B V ( a dj.) 1.4 1.5 1.5 1.9 1.7 1.6
P /A NA V 1.4 1.5 1.5 1.9 1.7 1.6
Dividend yield (gro ss) 3.4 3.6 3.3 4.4 4.5 4.7
P E R S H A R E D A T A ( E UR )
GOP P S 2.30 2.35 2.94 3.52 3.91 4.29 13.2%
EP S (repo rted) 0.87 1.11 1.60 2.17 2.06 2.25 20.8%
E P S ( a dj.) 1.19 1.19 1.5 4 1.9 2 2 .0 6 2 .2 5 13 .7 %
B VP S 9.38 10.04 10.78 12.19 13.30 14.59 9.2%
B V P S ( a dj.) 8 .5 0 9 .17 9 .9 2 11.3 3 12 .4 4 13 .7 3 10 .1%
A NA VP S 8.50 9.17 9.92 11.33 12.44 13.73 10.1%
DP S 0.40 0.50 0.70 0.95 0.96 1.00 20.1%
Source: Company, Banca Akros estimates
2005 restated as IFRS proforma

Page 10
 Banca Pop. Verona Novara

Recommendation system
From the 18th October 2004, the Members of ESN use a New Recommendation System.

The new ESN Recommendation System is Absolute. It means that each stock is rated on the
basis of a total return, measured by the upside potential (including dividends) over a 6 months
time horizon.

The ESN spectrum of recommendations (or ratings) for each stock comprises 5 categories:
Buy, Accumulate (or Add), Hold, Reduce and Sell (in short: B, A, H, R, S).

Meaning of each rating or recommendation:

Banca Akros Ratings Breakdown • Buy: the stock is expected to generate a total return of over 15% during the
next 6 months time horizon.

• Accumulate: the stock is expected to generate a total return of 5% to15%

during the next 6 months time horizon.

• Hold: the stock is expected to generate a total return of 0% to 5% during the

next 6 months time horizon

• Reduce: the stock is expected to generate a total return of 0 to -15% during the
next 6 months time horizon

• Sell: the stock is expected to generate a total return below -15% during the
next 6 months time horizon

Page 11
 Banca Akros
Viale Eginardo, 29
20149 Milano
Italy
Phone: +39 02 43 444 389 Bank Degroof
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Caixa-Banco de Investimento
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Belgium
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Phone: +32 2 287 91 16
Portugal
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Phone: +351 21 389 68 00
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Tel: +49 69 – 58997 – 400 Phone: +34 91 436 7813
Fax:+49 69 – 58997 – 299 Fax: +34 91 577 3770

Egnatia Finance
CM - CIC Securities 8 Dragatsaniou Str.
Avenue de Provence 6 105 59 Athens
75441 Paris Cedex 09 Greece
France Phone: +302 10 32 79 200
Phone: +33 1 4596 7700 Fax: +302 10 32 48 694
Fax: +33 1 4596 7788

Van Lanschot Bankiers Mandatum Securities

Leonardo da Vinciplein 60 Unioninkatu 22, P.O. Box 66,
5223 DR ‘s-Hertogenbosch 00131 Helsinki
Netherlands Finland
Phone: +31 73 548 8724 NCB Stockbrokers Phone: +358 10 236 10
Fax: +31 73 548 8577 3 George Dock, Fax: +358 10 236 4755
Dublin 1
Ireland
Phone: +353 1 611 5611
Fax: +353 1 611 5781