Unicredit — Annual Report 2019

Jul 22, 2021

Annual Report & Financial Statements Financial Year Ended 31 December 2019

UniCredit Bank UniCredit Bank Ireland p.I.c.

Contents

Contents
Directors and Other Information
Chairman's Statement
Directors Report
Statement of Directors' Responsibilities
Independent auditor's report
Finandal Statements
Explanatory Notes

Directors and Other Information

Name

Board of Directors

Aidan Williams Massimiliano Sinagra Guy Laffineur Tara Doyle * Attilio Napoli Andrea Marchetti

Chairman & Independent non-executive Managing Director Group Independent non-executive Group Group

Director resignations during the financial year

Jackie Gilroy resigned as an Independent non-executive Director on the 28th April 2019 Donal Courtney resigned as an Independent non-executive Director on the 31ª October 2019

Registered Office

La Touche House International Financial Services Centre Dublin 1 Registered Number: 240551

Company Secretary

Beatrice Rinaldi La Touche House International Financial Services Centre Dublin i

Independent Auditor

Deloitte Treland LLP. 29 Earlsfort Terrace, Dublin 2. Ireland. D02 AY28

* Tara Doyle was appointed to the role of Independent non-executive Director on the 8ª May 2019.

Chairman's Statement

UniCredit Bank Ireland p.l.c., has come through 2019 with very satisfactory results were achieved in difficult markets conditions against a backdrop which instability through the ongoing Brexit issues coupled with global trade war tensions heightened by the US/China trade negotiations. There were also budgetary tensions between Italy and the EU leading to increased market volatility across the European markets. All of this in a continuing low interest rate environment leading to continuing pressure on interest rate margins.

Our strategic focus in 2020 will be the execution of the first phase of our 2020 to 2023 molti-year plan, including;

• The continuation of our role in managing a significant part of the Group Liquidity Portfolio made up of high quality SSA Assets (Sovereign, Supranational & Agencies);
• Acting as the bridge to the Irish Financial Services sector for the wider UniCredit Group to deliver our Corporate & Investment Banking Platform across a wide range of offerings and services;
• To continue to manage all of the relevant risks of the Company through robust internal control systems, policies and procedures centred on strong Corporate Governance within a culture of openness and transparency;

In 2019 we achieved a net profit of €32.2 million which was 29% ahead of the budgeted net profit of €25.0 million. This compared to a net profit in 2018 of @43.7 million. The main driver of this was a planned reduction in assets particularly inter-group deleveraging and the maturity of assets within our investment portfolio.

Once again, I would like to take this opportunity to thank my fellow Board Members, Management Team and Colleagues for their dedication throughout the year.

Aidan Williams Chairman 3rd February 2020

Directors Report

The Directors present their report together with the audited financial statements of UniCredit Bank Ireland p.l.c. for the financial year ended 31 December 2019.

Definitions

UniCredit Bank Ireland p.l.c .: 'The Company' or 'the Bank', a wholly owned subsidiary of UniCredit S.p.A. UniCredit S.p.A.: The Company's Parent Company.

UniCredit Banking Group or 'Group': The Parent Company and its fully consolidated entities.

Directors

The Directors named on page 2 'Directors and Other Information' served as Directors throughout 2019 unless stated otherwise. There were no other individuals who acted as a Director during 2019.

Ownership

The Bank is a wholly-owned subsidiary of UniCredit S.p.A., which is incorporated in Italy. Consolidated financial statements as at 31 December 2019 are prepared by UniCredit S.p.A., which incorporate the results of its subsidiary companies. The Group financial statements of UniCredit S.p.A. are available on the Group website: https://www.unicreditgroup.ey. The UniCredit S.p.A. Fiscal Code, VAT number with the Company Register of Milan-Monza-Brianza-Lodi is 00348170101.

Principal Activities

The principal business of the Company relates to the investment in securities and in wholesale lending activities, which are funded through short term secured and unsecured deals and also by medium term notes. The medium term notes are listed on the Luxembourg stock exchange.

In terms of governance reporting line, UniCredit Bank Ireland p.l.c. is fully segmented with a single reporting line to Group Corporate & Investment Banking incorporating third party assets and short term funding, with Group Corporate Centre focused on group assets and medium term liabilities. The segmentation would give the opportunity to continue the traditional funding role of the Company, with a more investment focus, in order to deliver a successful Group strategy.

Key Performance Indicators ('KPIs')

• · Profit to 31 December 2019 amounted to €32.2 million (31 December 2018: €43.7 million).
• · Interest income and similar revenues to 31 December 2019 amounted to €275.6 million (31 December 2018: €387.1 million).
• Interest expense and similar charges to 31 December 2019 amounted to €224.7 million (31 December 2018: €321.0 million).
• Net interest income to 31 December 2019 amounted to 650.9 million (31 December 2018: €66.1 million).
• Net write backs on impairment on financial assets of €3.0 million have been recorded in 2019 (31 December 2018: €0.8 million) due to the following reasons;
  • maturity/call of debt securities which resulted in a write-back of approximately €1.9 million;
  • · Jower Probability of Default "PD" attributed to the Parent Company UniCredit S.p.A. resulted in a write-back of approximately €0.5 million;
  • lower PD one year on our sovereign positions resulting in a write-back of approximately €0.6 million;
• Total operating income to 31 December 2019 amounted to 649.3 million (31 December 2018: €63.7 million).

The most significant events for the financial year ended 31 December 2019 were the following:

• 1) The Company continued the execution of its strategic plan. Total assets at the end of 2019 amounted to E12.4 billion, which was lower than 2018 year end mainly due to the combined effect of the maturity of E . 8 billion of an Intercompany bond and the call of a subordinated Intercompany bond of €0.3 billion. The majority of the Assets were non-intercompany as at 31 December 2019, and the percentage of Intercompany Assets over Total Assets (23%) is expected to continue to reduce. Total liabilities also decreased since year end 2018 primarily due to decreases in Deposits from banks. Net interest income of €50.9 million is 23% lower than the prior financial year, primarily due to the reduction in the Banks sovercign and intercompany bond portfolios.
• 2) At year end the Company entered into intercompany deposits of €0.75 billion to ensure compliance with the Net Stable Funding Ratio requirement.
• 3) The 2019 Exeante contribution to the Single Resolution Fund Levy, amounting to €5.6 million, has recorded an increase compared to the 2018 levy (31 December 2018: €4.8 million) mostly driven by the increase in the Bank's perceived riskiness compared to its peers in the Irish market. The CBI Industry funding levy increased to £1.9 million compared to £1.7 million in 2018 mostly driven by an increased percentage of funding to cover CBI costs; both levies have been fully accounted for in the "Other Administrative Expenses' line.
• 4) The negative opening balance of the FVQC) Reserve of E10 million became positive (€57 million) at the end of 2019 mostly due to the Italian Government Bond spread tightening as a result of the market response to the easing of the political crisis in Italy. This determined a positive result of €67 million in the "Financial assets at fair value through Other Comprehensive Income" for year ended 31 December 2019.

Total Shareholders' equity as of 31 December 2019 amounted to E2.4 billion substantially aligned with yearend 2018 figures.

As of 31 December 2019 the fully loaded CET1 was 121.7% (31 December 2018: 68.3%); fully loaded meaning the calculation of the CET1 ratio after the expiry of the transitional provisions. With reference to CETI, as of today no transitional provisions are in place.

Principal Risks and Uncertainties

The Company has designed its risk management framework to capture all material risks to which it is exposed and invested substantial time and effort in its risk management strategies, framework, policies, procedures and monitoring techniques. Nevertheless, there is a risk that these may fail to entirely mitigated situations or circumstances or to an extent previously considered immaterial. Any residual losses, financial and/or reputational, would have to be borne by the Company in such a situation or circumstance.

Risk factors that could have a material adverse effect on the Company's business, financial condition and results of operations over the next 12 months, are as follows:

• continuing uncertainty of the consequences of the United Kingdom's exit from the EU, including the uncertainty over whether the Company's key Central Counterparty ('CCP') for over-the-counter interest rate swaps, London Clearing House ('LCH'), will retain market access to the EU in the event of a 'hard' post Brexit trade deal;
• continuing volatility caused by the political situation in Italy, which, as also highlighted above, can impact adversely the markets in which the Company operates or investments presently held in Other Comprehensive Income portfolio;
• inherent risks from macroeconomic conditions in the Company's main markets, concerns on sovereign debt and financial uncertainties in the EU and the potential effects of those uncertainties on investments presently held by the Company or on Group business activities and results,

• deterioration in the credit quality of the Company's borrowers/counterparties, as well as difficulties in relation to the recoverability of loans and other amounts due from such borrowers and counterparties that could result in significant increases in the Company's impairment provisions,
• the impact of downgrades in the Group's or the Italian Government's credit ratings,
• the impact of the continuing implementation of significant regulatory developments (Basel III and Capital Requirements Directive (CRD) IV),
• the ability of the Company/Group to generate additional liquidity and/or capital, as required, and
• failures in internal controls and procedures leading to financial loss, reputational damage and/or regulatory sanction.

The above list is not exhaustive nor, is it intended to be a definitive list of all risks but the principal risks and uncertainties faced by the Company.

In relation to the United Kingdon's withdrawal from the EU and related potential risks, the Company does not envisage any major risk to its current business model which is based on EU and not UK assets. The Company nevertheless is monitoring the progress of the United Kingdom's withdrawal from the EU and it is part of a project coordinated at UniCredit S.p.A. level, which covers all potential impacts.

Distribution of reserves / Dividends

A distribution of reserves of e41.5 million was approved by the Board on 4 February 2019 and paid on 21 May 2019. In 2018 a dividend of €23.5 million was paid on 21 May 2018. The Directors propose a final dividend for the financial year ended 31 December 2019 of €32.2 million to be paid to UniCredit S.p.A. by the end of May 2020.

Capital Restriction

There is only one class of shares and all of the shares are owned by UniCredit S.p.A. There are no restrictions on the transfer or voting rights of these shares.

Risk Management and Control

The Company, in the normal course of business, is exposed to a number of classes of risk, of which the most significant are credit, market (including interest rate and currency risk), operational, liquidity and funding risk. Details of these risks are provided in Part E. Information on risks and hedging policies of the financial statements. The Company, in preparing the financial statements, follows a documented set of procedures and a control risk framework which is reviewed on a six monthly basis.

Arm's Length Transactions

The Directors have established formal procedures to ensure that all transactions with other members of the ultimate Parent undertaking is carried out on an arm's length basis. The Bank abides by the Group Transfer Pricing Policies and Guidelines which are grounded in the OECD Transfer Pricing Guidelines.

Political Donations

The Electoral Act, 1997 as amended requires companies to disclose all political donations over €200 in aggregate made during the financial period. The Directors have satisfied themselves that no such donations have been made by the Company.

Future Developments

The Company is not planning any material changes to its operating activities.

Going Concern

The financial statements continue to be prepared on a going concern basis, as the Directors are satisfied that the Company as a whole has the resources to continue in business for the foresecable future. Refer to the Part A.I. Accounting Policies Section 1 - Statement of Compliance with IFRSs for details.

Accounting records

The measures taken by the Directors to ensure compliance with the requirements of sections 281 to 285 of the Companies Act 2014 to keep adequate accounting records are the use of appropriate systems and the employment of competent persons. The accounting records are kept at La Touche House, IFSC, Dublin 1.

Independent Auditor

On 6 March 2013 Deloitte Ireland LLP were appointed as auditors. Deloitte Ireland LLP have expressed their willingness to continue in office in accordance with section 383(2) of the Companies Act, 2014.

Regulation/Corporate Governance

UniCredit Bank Ireland p.l.c. is a bank licensed and regulated by the Central Bank of Ireland under the Central Bank Acts 1942 to 2015 and is subject to the Corporate Code for Credit Institutions 2015.

Corporate Governance Statement

The Board retains the primary responsibility for the Corporate Governance within the Bank. Therefore, in line with the Annual Compliance Statement the Board confirms that the Company has complied with the provisions of the Central Bank of Ircland's Corporate Governance Code for Credit Institutions 2015 (the "Code is available on www.centralbank.ie).

The Board is responsible for:

• · ensuring the effective, prudent and ethical oversight of the Company;
• setting the business strategy for the Company;
• overseeing the amounts, types and distribution of both internal capital and own funds adequate to cover the risks of the Company;
• setting the strategy for the on-going management of material risks including inter-alia, liquidity risk;
• implementing a robust and transparent organisational structure with effective communication and reporting channels; and
• a remuneration framework that is in line with the risk strategies of the credit institution;

in accordance with law and applicable regulatory requirements. Please refer to Statement of Directors' Responsibilities on pages 12 -13 for further details of the Boards responsibilities.

Internal Controls

With regard to internal controls, the Board is responsible for implementing an adequate and effective internal control framework, which includes a well-finctioning risk control, compliance and internal audit functions as well as an appropriate financial reporting and accounting framework. All key control functions within the Company such as internal audit, compliance and risk management are independent of business units and have adequate resources and authority to operate effectively and receive timely, accurate and sufficient detailed information.

The Board is required to understand the risks to which the Bank is exposed and has established a documented risk appellte framework for the Bank which is reviewed on a yearly basis. The Board ensures that the risk management system and internal controls reflect the risk appetite and that there are adequate arrangements in place to ensure there is regular reporting to the Board in compliance with the risk appetite.

During 2019 the Board met 7 times.

Board Committees

In order to support the Directors, the Board has delegated authority to 2 sub-committees, the Audit and Risk Committees, to act on its behalf in respect of certain matters. The Board is responsible for the oversight of each of its committees

Audit Committee

The primary function of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities in respect of the Company and its affairs. The Audit Committee does so by:

• monitoring the financial reporting process, including the integrity of the Company's financial statements and the financial information provided to the Company's parent, the Central Bank of Ireland, the Companies Registration Office and others, ensuring that they give a "true and fair view" of the Company's financial status;
• recommending to the Board whether to approve the Company's annual accounts;
• monitoring and reviewing the effectiveness of the Company's systems of internal andit and IT systems;
• s liaising with the external auditor and monitoring the statutory audit of the annual accounts and ensuring the effectiveness of that process;
• reviewing and monitoring the independence of the statutory audit firm, and in particular the provision of additional services to the audited entity; and
• reviewing any financial announcements by, and financial reports of, the Company.

The current Audit Committee comprises of:

• · one Independent non-executive member who is temporarily acting chair of the committee due to the retirement of the Chair of the Audit Committee at the end of October 2019;
• one Independent non-executive member who is a temporary member, and
• one Group Director who is a permanent member.

The proposed new Chair of the Audit Committee fitness and probity application is currently being assessed by the Central Bank of Ireland/European Central Batk, a decision is expected on this application during Q1 2020. The current Audit Committee set up has been provided with external advisory support.

Risk Committee

The primary function of the Risk Committee is to assist the Board to fulfil its oversight responsibilities by advising the Board on the current risk exposures of the Company and future risk strategy and overseing the risk management function of the Company. The Risk Committee does so by:

• developing and maintaining a risk management system within the Company that is effective and proportionate to the nature, scale and complexity of the risks inherent in the Company's business,
• ensuring that risks within the Company are managed and controlled appropriately; and
• ensuring that strategy is informed by and aligned with the Company's risk appetite.

The Risk Committee currently comprises of one Independent non-executive Director and a Group Director.

Remuneration policy

The Board has approved the Group HR Policy Framework to ensure that all employees are remunerated fairly and to align the business objectives of each Group Company with specific and measurable individual objectives and goals, the business strategy, objectives, and long-term interests of UniCredit Banking Group. This Policy is also

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structured so as to minimise actual or potential conflicts of interest and is consistent with and promotes sound and effective risk management. This policy was last approved by the Board of Directors on 30 October 2019.

Shareholders

The Company is controlled by the sole shareholder, UniCredit S.p.A.

Board of Directors

The current Board of Directors of UniCredit Bank Ireland p. l.c. is comprised of 6 members, 1 Executive Director, 3 Group Directors and 2 Independent non-executive Directors. There is one additional Independent non-executive Director to be appointed, the appointment is currently being considered by the Central Bank of Ireland/European Central Bank. The composition of the Board is reviewed at least once every three years. The Board establishes its qualitative and quantitative composition deemed most suitable for achieving the correct performance of the functions assigned to it.

Significant transactions

• In January 2019 the Bank sold €25 million of Italian sovereign bonds. The sales were performed to capture sustained spread tightening and generated a profit of ca. £0.9 million. The Bank purchased an amount of E250 million Italian sovereign bonds in January 2019;
• In February 2019 the Bank sold a total amount of €500 million of Spanish sovereign bonds realizing a profit of ca. €5.8 million and purchased an amount of €100 million of Italian sovereign bonds;
• · In April 2019 the Bank sold €541 million of Italian sovereign bonds. The sales were performed to capture sustained spread tightening and generated a profit of ca. €2.4 million;
• The Bank purchased an amount of E400 million Italian sovereign bonds in May 2019;
• In June 2019 the Bank sold €195 million of Spanish sovereign bonds. The sales were performed to capture sustained spread tightening and generated a profit of ca. £1.7 million;
• · In July 2019 the Bank sold £100 million of Italian sovereign bonds. The sales were performed to capture sustained spread tightening and generated a profit of ca. €0.5 million;
• In September 2019, a e250 million intercompany subordinated security was called on the first call date at , par in line with the Bank's expectations;
• In October 2019 the Bank purchased €695 million of Spanish sovereign bonds and £191 million of Italian sovereign bonds;
• During December 2019 the Bank early terminated €1.9 billion of intercompany securities borrowing and funding transactions realizing a loss of ca. €2.6 million. These transactions were previously entered into during 2018 for Net Stable Funding Ratio ('NSFR') purposes. As an intercompany deposit of £0.8 billion entered into during the fourth quarter of 2019 ensured compliance with the NSFR, these transactions were no longer required.
• Also in December 2019, intergroup assets of ca. €1.8 billion matured and the Bank repaid an intercompany subordinated deposit of ca. 6383 million (an intergroup subordinated bond of ca. €20 million held by the Bank and linked to this deposit was also reimbursed during the month). As a result of these maturities, overall funding levels decreased by ca. €2.4 billion Year on Year, with a large reduction in intragroup funding.

Directors' and Secretary's shareholdings and their interests

Directors:	At 1 January 2019 UniCredit S.p.A. Ordinary Shares	At 31 December 2019 UniCredit S.p.A. Ordinary Shares
IM. Sinagra	865	865
A. Marchetti	1,335	1.335
G. Laffineur	8,270	15,729

Directors not listed above had nil UniCredit S.p.A. Ordinary Shares shareholdings during the year. All Directors had nil UniCredit S.p.A. Ordinary Shares options during the year.

Post balance sheet events

There have been no post balance sheet events that require disclosure in the financial statements. Refer to Part I: Other Explanatory Notes Section 3 Subsequent Events for details.

Compliance Statement

We, the Directors of UniCredit Bank Ireland plc (the "Company") hereby say and affirm:

The Directors of the Company acknowledge that they are responsible for securing the Compliance with its relevant obligations (as defined in the Companies Act 2014 (the "2014 Act")) and, as required by Section 225 of the 2014 Act, the Directors confirm that:

• · a compliance policy statement setting out the Company's policies with regard to complying with the relevant obligations under the 2014 Act has been prepared;
• arrangements and structures have been put in place that they consider sufficient to secure material compliance with the Company's relevant obligations; and
• a review of the arrangements and structures has been conducted during the financial year to which this Directors' report relates.

Statement of Relevant Audit information per section 330 of the Companies Act 2014

• So far as the Directors are aware there is no relevant audit information of which independent auditors are unaware and
• The Directors have taken all the steps they ought to have taken as directors to make themselves aware of any relevant information and to establish that the Company's statutory auditors are aware of that information.

On behalf of the Board

A. Williams

Chairman 3 February 2020

S -----------

M. Sinagra Managing Director 3 February 2020

A. Napoli Director 3 February 2020

T. Doyle

Director 3 February 2020

Statement of Directors' Responsibilities

The Directors' are responsible for preparing the Chairman's report and the financial statements in accordance with the Companies Act 2014 and the applicable regulations.

Irish company law requires the Directors to prepare financial statements for each financial year. Under the law, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union ("relevant financial reporting framework"). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the financial year end date and of the profit or loss of the Company for the financial year and otherwise comply with the Companies Act 2014.

In preparing the financial statements, the Directors are required to:

• select suitable accounting policies for the Company financial statements and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• state whether the financial statements have been prepared in accordance with the applicable accounting standards, identify those standards, and note the effect and the reasons for any material departure from those standards; and
• prepare the financial statements on the going concern basis in is inappropriate to presume that the Company will continue in business.

The Directors are responsible for ensuring that the Company keeps to be kept adequate accounting records which correctly explain and record the transactions of the Company, enable at any time the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy, enable them to ensure that the financial statements and Directors' report comply with the Companies Act 2014 and enable the financial statements to be audited.

They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.

Responsibility statement in accordance with the Transparency Regulations:

The Directors whose names and functions are listed on page 2 confirm that to the best of each Director's knowledge and belief:

• they have complied with the above requirements in preparing the financial statements;
• the financial statements, prepared in accordance with IFRS, as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position of the Company and the profit of the Company for the financial year ended 31 December 2019; and
• the Director's Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties faced by the Company.

On behalf of the Board

A. Williams Chairman

3 February 2020

12:23 M. Sinagra Managing Director 3 February 2020

A. Napoli Director 3 February 2020

T. Doyle. Director

3 February 2020

Independent auditor's report to the members of UniCredit Bank Ireland plc

Report on the audit of the financial statements

Opinion on the financial statements of thiCredit Bank Ireland plc (the 'compony')

In our opinion the financial statements:

• give a true and fair view of the assets, liabilities and financial position of the company as at 31 December 2019 and of the profit for the financial year then ended; and
• have been properly prepared in accordance with the relevant financial reporting framework and, in particular, with the requirements of the Companies Act 2014.

The financial statements we have audited comprise:

• the Profit and Loss Account;
• the Statement of Comprehensive Income;
• the Balance Sheet;
• the Statement of Changes in Equity;
• · the Cash Flow Statement; and
• · the related notes A1 to 15, including a summary of significant accounting policies as set out in note A1.

The relevant financial reporting framework that has been applied in their preparation is the Companies Act 2014 and International Financial Reporting Standards (IFRS) as adopted by the European Union ("the relevant financial reporting framework").

2020 12:58:41 18:23 2017 12:52 2019 10:52 2019 10:00 2014

We conducted our audit in accordance with International Standards on Auditing (Ireland)) and applicable law. Our responsibilities under those standards are described below in the "Auditor's responsibilities for the audit of the financial statements" section of our report.

We are Independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), as applied to public interest entitled our other ethical responsibilities In accordance with these requirements.

We belleve that the audit evidence we have obtained Is sufficient and appropriate to provide a basis for our opinion,

Concrisions relating to going concern

We have nothing to report in respect of the following matters in relation to which ISAs (Ireland) require us to report to you where:

• the directors' use of the going concern basis of accounting in the financial statements is not appropriate: or
• the directors have not disclosed in the financial statements any identified material uncertaintles that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the financial statements are authorised for issue.

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May Acceller Producers

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current financial year and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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	The determination of appropriate provisions for Impalrment is a key audit matter as it requires management judgement, is subject to estimation uncertainty and relies on available data, and has been Identified as a significant risk of material misstatement.
	There is a risk that the provision for impairment of financial assets does not represent a complete and accurate estimate of expected losses and that the carrying value of these items is misstated. This includes the risk that the ECL. model is not compliant with the requirements of IFRS 9 and the risk that data is not complete and accurate.
	The accounting policy and key sources of estimation uncertainty in relation to financial asset impairment provisions are disclosed in Note A1 to the financial statements on pages 32 and 33. Refer also to note E in the financial statements
How the scope of our audit	We undertook an assessment of, and challenged the company's provisioning methodology and compared it with the requirements of IFRS 9.
responded to the key audit matter	We evaluated the design & implementation and tested the operating effectiveness of the company's controls around credit management, data Inputs to loan loss provisioning, ECL model and provision assessment.
	We assessed management's assumptions in relation 'significant increase in credit risk' and the allocation of loans to the three stages. We tested loans to challange that they have been included in the correct stage In accordance with the companys methodology and IFRS 9.
	We reviewed the output of the ECL. model and provison assessment.
	We reviewed the IFRS 7 disclosures for compliance.
	As a result of our work we considered the impairment provision to be in a reasonable range.

Key audit	The company's accounting policy for the recognition of revenue is disclosed in note
matter	Al to the financial statements.
description	Revenue recognition relating to significant trading transactions impacting profit in the current year is a key audit matter. This is due to the materiality of such transactions and the fact that they may have complex structures and contractual arrangements or may involve other Group entities as counterparties, and has been identified as a significant risk of material misstatement.

There is a risk that revenue recognised on these transactions has not been accurately recognised in accordance with the company's accounting policy or IFRS.

Our audit procedures relating to these matters were designed in the financial statements as a whole, and not to express an opinion on individual accounts or disclosures. Qur opinion on the financial statements is not modified with respect to any of the risks described above, and we do not express an opinion on these individual matters.

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We define materially as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably knowledgeable person, relying on the financial statements, would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

We determined materiality for the company to be €5 million. We have considered both expected profit and shareholders equity as benchmarks for determining materiality in arriving at the materiality figure. We have considered the expected pre-tax profit and shareholders equity to be the critical components for determining materiality because because the key driver of performance is expected pre-tax profit and that economic decisions of a reasonably knowledgeable person would be changed or influenced by a change in profitability and shareholder's equity is placed under scrutiny by local regulators and the parent entity and is therefore a key financial metric regularly assessed by Management and Shareholders. We have considered quantitative factors such as understanding the entity and its environment, history of mistatetements and complexity of the company's operations.

We agreed with the Audit Committee that we would report to them any audit differences in excess of £250,000, as well as differences below that threshold which, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

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Our audit was scoped by obtaining an understanding of the company and its environment, including the controls within the company, and assessing the risks of material misstatement related to the financial statements of the company. Based on that understanding the majority of the work was completed in UniCredit Bark Ireland plc with some support relating to intercompany balance, IFRS 9 and general IT controls from the ultimate parent.

We focused our audit scope, and the extent of our testing, based on our assessment of the risks of material misstatement and of the material value of material misstatement that had the greatest effect on our audit are identified as key audit matters in the "Key Audit Matters" section of our report,

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The directors are responsible for the information comprises the information included in the Annual Report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencles or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statement of the other Information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

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We have nothing to report in this regard.

Resports hiller of directors

As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and otherwise comply with the Companies Act 2014, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors elther intend to Ilquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatements can arise from fraud or error and are considered material if, individually or in the agaregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with 15As (Ireland), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• · Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• · Obtain an understanding of Internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control.
• · Evaluate the appropriateness of accounting policles used and the reasonableness of accounting estimates and related disclosures made by the directors.
• · Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the auditor's report. However, future events or conditions may cause the entity (or where relevant, the group) to cease to continue as a going concern.
• · Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timino of the audit and significant audit findnos, including any significant deficiencies in internal control that the auditor identifies during the audit.

For listed entitles and public interest entities, the auditor also provides those charged with a statement that the auditor has complied with requirements regarding independence, including the Ethical Standard for Auditors (Ireland) 2016, and communicates with them all relationships and other matters that may reasonably be thought to bear on the auditor's independence, and where applicable, related safeguards.

Where the auditor is required to report on key audit matters communicated with those charged with governance, the auditor determines that were of most significance in the audit of the financial statements of the current period and are the key audit matters. The auditor describes these matters in the auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, the auditor determines that a matter should not be communicated in the auditor's report because the adverse consequences of doing so would reasonably be expected to outwelgh the public interest benefits of such communication.

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This report is made solely to the company's members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Report on cityer legglebery requirements

Opinion on other matters prescribed by the Companies Act 2014

Based solely on the work undertaken in the course of the audit, we report that:

• We have obtained all the Informations which we consider necessary for the purposes of our audit.
• In our opinion the accounting records of the company were sufficient to permit the financial statements to be readily and properly audited.
• The financial statements are in agreement with the accounting records.
• In our opinion the information given in the directors' report is consistent with the financial statements and the directors' report has been prepared in accordance with the Companies Act 2014.

40 CNC 40 KB 63 63 63 63 63 63 68 68 68 60 00 00 00 00 00 000 000 000 000 000 000 000 000 000

We report, in relation to information given in the Corporate Governance Statement on pages 7 to 9 that, in our opinion, based on the work undertaken during the course of the Information given in the Corporate Governance Statement pursuant to subsections 2(c) of section 1373 Companies Act 2014 is consistent with the company's statutory financial statements in the financial year concerned and such information has been prepared in accordance with the Companies Act 2014.

Based on our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified any material misstatements in this information.

Matters on which we we required to report by axception

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Based on the knowledge and understanding of the company and its environment obtained in the audit, we have not identified material misstatements in the directors' report.

We have nothing to report in respect of the Companles Act 2014 which require us to report to you if, in our opinion, the disclosures of directors' remuneration and transactions specified by law are not made.

Other mathers visity we are raguired to address

Following the recommendation of the Audit Committee, we were appointed by UniCredit Bank Ireland plc Board of Directors on 6 March 2013 to audit the financial statements for the financial year 2013. The period of total uninterrupted engagement including renewals and reappointments of the firm is 7 years, covering the years ending 31 December 2013 to 31 December 2019.

..............................................................................................................................................................................

The non-audit services prohibited by IAASA's Ethical Standard were not provided and we remained independent of the company in conducting the audit.

Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISA (Ireland) 260.

Niamh Geraghty For and on behalf of Deloitte Ireland LLP Chartered Accountants and Statutory Audit Firm Deloitte & Touche House, Earlsfort Terrace, Dublin 2 Date:

Financial Statements

Batance Sheet	20
Income Statement	22
Statement of Other Comprehensive Income	22
Statement of Changes in Shareholders' Equity	23
Cash Flow Statement	25
Explanatory Notes	27

Balance Sheet as at 31 December 2019 and 31 December 2018

	AMOUNTS AS AT
	31 December 2019	31 December 2018
Halance sheet - Assets	€1000	C. (){{(i
20 Financial assets at fair value through the profit and loss;
a) financial assess held for trading	3,800	2,206
c) financing assets mandatorily at fair value	24),739	48,343
30 Financial assets at fair value through other comprehensive income	5 994.152	8,147,196
40 Financial assets at unortised cost:
a) knans and receivables with banks	2,525,877	4,520,239
b) loans and receivables with customers	3,435,507	1,713,221
50 Fledging derivatives	33,824	55,838
60 Changes in fair value of portfolio hedged items (+/-)	331.274	313,788
80 Property, plant and equipment	2,799	126
90 Intargible assets	821	1、443
100 1 ax assets
is) current lax assets	722	695
b) deferred tax assets		735
120 Other assets	691	621
Total Assets	12,359,215	14,804,451
	AMOUNIS AS AT
	31 December 2019	31 December 2018
Bulance sheet - Liabilities	€ 000	€. 000
10 Financial habilities at asnortised cost:
a) deposits from banks	3,818,533	5,942,460
b) deposits from customers	3,525,107	3,631),799
c) debt securities in issue	1,943,191	2.148.820
d) other financial liabilities	2,423
20 I'mancial linbilities held for trading	5,002	1,318
savilkistant dierivalives	684,626	753,973
30 Changes in fair value of portfolio hedged items { +/-}	8.063	23,333
60 Tax liabilities
a) current tax liabilities
b) deferred tax habilities	8,610
80 Clier habilities	4.551	2,745
Total Linhilities	10,000,106	[2,503,448
	31 December 2019	31 December 2018
Hulunce sheet - Shareholders' equity	€1000	€7000
110 Revaluation reserves through the OC1	57,327	(10,054)
140 Reserves
a) Capital contribution	753,419	753.419
b) Other reserves	45,802	45,802
e) Profit and loss account - at start of year	168,717	148,525
(1) Distribution of reserve / Dividend paid	(41,500)	(23,500)
180 Net profit for the financial year	32,325	43.692
log Issued capital	1,343,119	1,343,119
Total Shareholders' Equity	2,359,109	2,301,003
Total liabilities and shareholders' equity	12,359,215	14,804,451

The notes on pages 27 to 92 form part of these financial statements. All results are from continuing activities.

On behalf of the Board

A. Williams

Chairman 3 February 2020

M. Sinagra

Managing Director 3 February 2020

5

À. Napoli Director 3 February 2020

T. Doyle

Director 3 February 2020

Income Statement

Financial Year Ended 31 December 2018 respectively

	31 December 2019 31 December 2018
Items - Part C	€ 0000	€*000
10 Interest income and similar revenues	275 646	387 070
of which: interest income calculated with the effective interest method	(123,843)	(171,532)
20 Interest expense and similar charges	(224.736)	(320,987)
of which: interest expense calculated with the effective interest method	7-15	7,019
30 Net Interest Income	50,910	66,083
50 Fee and commission expense	(9.060)	(5,786)
60 Net fees and commissions	(9,060)	(5,786)
80 Gains and (Losses) on financial assets and liabilities held for trading	(1.125)	13,242
90 Fair Value adjustments in hedge accounting	(429)	(2,022)
(00) Guins/(losses) on disposal of:
a) financial assets at umorised cost	033	646
b) financials assets at fair value through other comprehensive income	10 355	15.512
c) financial lisbilities at amortised cost	(2,568)	(747)
110 Gains/(losses) on:
u) financial assets/liabilities designated at fair value through profit or loss
b) financial assets mandatorily at fair value	327	(23.262)
120 Total operating income	49.343	63.666
130 Net recoveries/(losses) on credit impairment relating to:
a) financial assets at amortised cost	2.344	1,553
b) financial assets at fair value through other comprehensive income	689	(821)
150 Net profit from financial activities	52.376	64-498
160 Administrative costs
a) Staff expenses	<4.163>	(3.955)
b) Other administrative expenses	(10.306)	(9.716)
180 Depreciation on property, plant and equipment	(422)	(93)
190 Amortisation of intengible assets	(837)	(1,075)
200 Other operating moone	224	341
210 Operating costs	{ 15, 504)	(14,498)
260 Profit before tax from continuing operations	36,872	50.000
270 Tax expense related to profit from continuing operations	{4,647)	(6,308)
300 Profit for the financial period {all attributable to shareholders}	32.225	43,692

Statement of Other Comprehensive Income

Financial Year Ended 31 December 2018 respectively ...........................................................................................................................

	31 December 2019 31 December 2018
	€ 600	€.000
10 Profit for the financial vear	32,225	43.692
Other comprehensive income after tax
140 Financial assets at fair value through Other Comprehensive Income
- Net change in fair value	67.381	(142,300)
170 Total of other comprehensive income after tax	67.381	(142,300)
180 Total comprehensive income after tax	99.606	(98,608)

The notes on pages 27 to 92 form part of these financial statements. All results are from continuing activities.

Statement of Changes in Shareholders' Equity Financial Year Ended 31 December 2019

	Share	capital contribution Capital	જ reserves	Other Revaluation through the Teserves 0C	Profit and LOSS account **	Total
Opening balances at 1 January 2019	1,343,119 € €00	753,419 €.000	€,000 45,802	(10,054) ۼ010	168,717 €.040	2,301,003 €.000
Profit attributable to the equity shareholders Other comprehensive income					32.225	32.225
other comprehensive income Change in fair value through
of financial assets
other comprehensive income financial assets				તે ' રેતે		ਰੀ 1 ਤੋਂ 1 ਤੋਂ 1 ਤੋਂ 1 20
hedge				(14.152)		(14.152)
Cash flow hedges:
Effective portion of changes in fair value
Net amount transferred to profit or loss
Movement in deferred tax				(9.626)	1	(9,626)
income Total other comprehensive	મ			67.381		67.381
Total comprehensive income	l		-	67.381	32.225	તેત્તે 'સાર
Distribution of reserves					(41.500)	(41,500)
Closing balances as at 31 December 2019	1,343.119	753,419	45,802		57.327 159.442	2,359,109

* For the financial year ended 31 December 2019, within the Statement of Changes in Shareholders' Equity, "Copital recemption reserve" is reasaned "Other reserves'.

** For the financial year ended 31 December 2019, within the Statement of Changes in Shareholders' Equity, 'First Time Adoption Reserve' has been combined with *Profit and Loss account'.

Statement of Changes in Shareholders' Equity

inancial Year Ended 31 December 2018

	Share	Capital capital contribution	redemption	Capital Revaluation reserves	First lîme	Profit and 1 -055	Fotal
				reserve through the Adoption OCl	Reserve	account
	€ 000	€,000	€ . Offic	€,000	€ 000	€1000	€.000
Closing balances at 31 December 2017 under IAS 39	1,343,119	753.419	45,802	49.033		143,616	2.334.989
First time adoption of IFRS 9 reclassifications				83.212	4.909		88,121
Opening balances at 1 January 2018 under IFRS 9	1,343,119	753.419	45,802	132,245	4.989	143,616	2,423,110
Profit attributable to the equity shareholders						43,692	43.692
Other comprehensive income
Change in fair value through other comprehensive income
of financial assets
- other comprehensive income financial assets				(146.368)			(146,368)
- hedge				(16,261)			(16,261)
Cash flow hedges:
- Effective portion of changes in fair value
- Net amount transferred to profit or loss
Movement in deferred tax				20 329			20.329
Total other comprehensive income	-	-		(142,300)			(1142.300)
Total comprehensive income				(142.300)		43.692	(68,608)
Distribution of reserves					1	(23,500)	(23,500)
Closing hasances as at 31 December 2018	343.119	153.419	45.802	(10.054)	4 की ते	163.808	2.301.002

Anaual Report & Financial Statements Financial Year Ended 31 December 2019

24 | P a g e

Cash Flow Statement (indirect method)

Financial Year Ended 31 December 2019 and 31 December 2018

			31 December 2019 31 December 2018
		€ . 000	€ 1000
	A. Operating Activities
	I. Operations	30,825	55,378
	- profit for the financial year	32 225	43,692
	- fair value losses/(gains) on financial assets/liabilities held for trading and	798	10,020
	on assets/linbilities designated at foir value through profit and loss and
	financial assets mandatory at fair value
	- capital (gains)/losses on hedging operations (+/-)	439	2,022
	- net write-backs due to impairment (+/-)	(3,033)	( 8 3 2 )
	- net write-offs on tangible and intangible assets (+/-)	1 259	1,168
	- tax paid (+/-)	(5,500)	(7,000)
	- Add back tax charge for the financial year	4,647	6,308
	2. Liquidity generated/absorbed by financial assets	2,497,422	2.758,350
	· financial assets held for trading	(2,728)	11,628
	- financial assets mandatory at fair value	18,931	(71,605)
	- financial assets at fair value through other comprehensive income	2.33.733	1,907,345
	loans and receivables with banks	2,044,203	1.656.741
	loans and receivables with customers	(1,721,452)	(471,374)
	other assets	4.736	(274,385)
	3. Liquidity generated/absorbed by financial liabilities	(2.232,018)	(144,282)
	- deposits from banks	(2.123.927)	1.737.746
	- deposits from customers
	- financial liabilities held for trading	(105,650) 3.684	(1,627,278)
	- other liabilities		(5,708)
	Net liquidity generated/absorbed by operating activities	(6,125) 296,229	(249,042) 2,669,446
	B. Investment Activities
	1. Net Liquidity by:
	- purchases of langible assets	(513)	(100)
	- purchases of intangible assets	(215)	(224)
	Net liquidity generated/absorbed by investment activities	(728)	(324)
	C. Financing Activities
	- debt certificates including bonds	(205,629)	(3,107,583)
	of which: related to non-cashflow changes	521	(1,140)
	- lease liabilities	(42)
	distribution to Parcet Company	(41,500)	(23.500)
	Net liquidity generated/absorbed by financing activities	(247,171)	(3,131,083)
	Increase /Decrease in cash and cash equivalents	48,330	(461,961)
	Cash and cash equivalents at ] January	351.595	813,556
	Cush flow	48,330	(46) 961)
	Cash and cash equivalents at 31 December	399,925	351,595
	KEY: (+) generated: (-) absorbed

Cash Flow Statement (indirect method) (continued)

Reconciliation of Cash and Cash Equivalents	31 December 2019 31 December 2018
	€ 000	€.000
Cash and cash balances
Deposit and current accounts with banks	122.092	73.127
Deposits with customers	277,833	278.468
Cash and cash equivalents total at 31 December	399,925	351.595
Included in operating activities are the following:	31 December 2019 31 December 2018
	€ * 000	€ 000
Interest received	294.118	410.826
Interest parc	240,444	325.715

Changes in liabilities arising from financial activities

	01 January 2019	Cush Rows	Non cash How	3) Docenther 2019
Reconcilintion of liquidity generated/ubsorbed by finnacing activities			changes
	C.000	C'000	E.000	€ . 000
Debt certificates including honds™	2.148.830	(206. 150)	321	161 376 1
25 1031253 : 1521180000000		2,085,173
Be auseum passaarer		(2,291,323)
Lease linbililies		(42)
Distribution to Parent Company		(41.500)
Liquidity generated absorbed by financing activities		(247,692)	ક રહ્યા	〔247.17)
* refer lo Part B: Balance Sheet Notes - Liabilities Hem 100 - Decht secueities jo issue for the breakdawn of this stem
* movements in hedge accounting related to financing activities	23.333		(15.270)	8.063

Changes in liabilities arising from financial activities 10/41 Y-e- Finded 21 D-veulers 2015

	01 January 2018	Cash Hows	Nan cash frow	31 December 2018
Reconcilintion of lightilly generated absorbed by firsneing activities			chunges
	Buth.B	€*000	C'000	€.000
Debt certificates including bonds	5.756.403	(3,106-443)	(1. 140)	2,148,820
of which: issuance		7 548.623
of which: payment		13.645.066)
Distribution to Paront Company		(23.500)
Liquidity generated/absorbed by financing sclivities		(3,179,943)	(1,140)	(3.131.083)
* refer to Part B: Ralance Sheet Nates - Lidlifiles Real DC. . Debt securities in issue for the broakdown of this its its its its its its its its its its its its its its its
* movements in hedge accoming related to financing activities	43.015		(19.687)	23.533

Explanatory Notes

Part A.1: Accounting Policies

Section 1 - Statement of Compliance

The financial statements have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC as adopted by the EU and applicable at 31 December 2019.

The same accounting policies and methods of computation have been followed in these financial statements as were followed in the 2018 annual report with the exception of IFRS 16 as discussed below;

• · Effective starting from 1 January 2019 IFRS 16 modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS 17. IFRS 16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor;
• With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right-of-use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract;
• With reference to the accounting treatment to be applied by the lessee, at the initial recognition such asset is measured on the basis of the present value of the lease contract future cash flows. After the initial recognition the right-of-use will be measured on the basis of the assets by IAS 16, IAS 38 or by IAS 40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses. The Company has not capitalised short term leases, lower than 12 months, and low value assets leases as allowed by IFRS 16;
• The company has applied IFRS 16 retrospectively. The Company decided not to restate comparatives and chose, for First Time Adoption purposes, to put the value of right of use asset equal to the lease liability, there was no impact to the opening balance of retained earnings;
• The adoption of IFRS 16 as at 1 January 2019 resulted in the recognition of a right-of-use asset linked to the lease contract of the "La Touche House" office space of €2.8 million and the connected lease liability,
• The E2.8 million right-of-use asset was calculated by discounting the cash flows of the future rental payments. For discounting an Incremental Borrowing Rate of 1.6% determined on the basis of Group secured funding rates, was used;
• · The financial impact on the income statement arising from the adoption of IFRS 16 is considered immaterial;

The financial statements comply with applicable requirements of Irish Statute comprising the Companies Act 2014. The financial statements also comply with the European Union (Credit Institutions: Financial Statements) Regulations 2015 (S.I. No. 266 of 2015).

The financial statements continue to be prepared on a going concern basis, as the Directors are satisfied that the Company as a whole has the resources to continue in business for the foresecable future. Refer to the Directors Report for details.

In 2019 the following standards, amendments or interpretations came into force:

• Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures (Reg. UE 2019/402);
• · Amendments to IAS 19: Plan Amendment, Curtailment or Settlement (Reg. UE 2019/402);

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• Annual Improvements to IFRS Standards 2015-2017 Cycle (Reg. UE 2019/412);
• IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595);
• Amendments to IFRS 9: Prepayment Features with Negative Compensation (EU Regulation 2018/498).

The Directors have considered all other standards and pronouncements newly effective for the financial period ended 31 December 2019 and have concluded that they have no material impact on the financial statements.

Standards issued but not yet effective

As of 31 December 2019 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2020:

· Amendments to References to the Conceptual Framework in IFRS Standards (March 2018);

As of 31 December 2019 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing:

• IFRS 17: Insurance Contracts (May 2017);
• Amendments to IFRS 3: Definition of a Business (October 2018);
• Amendments to IAS 1 and 1AS 8: Definition of Material (October 2018);
• Amendments to IPRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform (September 2019).

The likely impacts of the initial application of the above listed standards, which are subject to completion of the endorsement, are still being considered by management at this point.

Section 2 - General Basis of Preparation

The preparation of financial statements requires managements, estimates and assumptions that affect the application of policies and reported amounts of certain assets, liabilities, revenues and exponses, and disclosures of contingent assets and liabilities. The estimates are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Since management's judgement involves making estimates concerning the likelihood of future events, the actual results could differ from those estimates. The judgements and estimates that could have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next financial year are in the areas of impairment of financial assets, and the fair value of certain financial liabilities. Refer to accounting estimates and key judgements paragraphs that follow on pages 35 - 37 for more details.

The financial statements comprise of the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of Changes in Shareholders' Equity, the Cash Flow Statement and the Notes to the financial statements.

Foreign Currency Translation

Functional and presentational currency

The Company's financial statements are presented in Euro, which is the functional currency of the Company's operations, rounded to the nearest thousand.

Transactions and balances

Monetary assets and liabilities denominated in foreign currencies are translated into Euro at the rates of exchange ruling at the Balance Sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and fiabilities denominated in foreign currencies are recognised in the income statement. Transactions in foreign currences are translated at the exchange rate as at the date of the transaction.

Translation differences on non-monetary items, such as securities held at fair value through profit and loss and fair value through other comprehensive income, are reported as part of the fair value gain or loss. Translation differences on the amortised cost balances of securities classified as financial assets at fair value through other comprehensive income and financial asset mandatorily at fair value are included in the income statement. Other translation differences arising on securities classified financial assets at fair value through other comprehensive income are included in other comprehensive income.

Interest Income and Expense

Interest income and expenses and similar income and expense items relate to financial assets and liabilities, i.e. (1) financial assets and liabilities held for trading, (ii) financial assets mandatorily at fair value, (ii) financials assets at fair value through other comprehensive income, (iv) financial assets and liabilities at anortised cost such as loans and receivables with Banks and Customers, deposits from Banks and Customers, and securities in issue.

Interest also includes the net credit or debit balance of differentials and margins on financial derivatives (i.e. hedging interest-bearing assets and liabilities).

Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method.

The effective interest method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant instrument's expected life. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of the financial asset or to the arnortised cost of a financial liability. The application of the ciffect of recognising income (and expense) receivable (or payable) on the instrument evenly in proportion to the amount outstanding over the period to maturity or repayment.

When calculating the effective interest rate, the Company estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees, including those for estimated carly redemptions, directly attributable transaction costs and all other premiums or discounts.

Interest income recognised due to the application of the method relating to financials assets at fair value through other comprehensive income and financial assets at amortised cost such as loans and receivables with Banks and Customers, are separately disclosed.

Fee and Commission Income (including Other Operating Income) and Expense

Fees and Commissions Income and Expense are generally recognised on an accruals basis when the service has been provided, unless it is appropriate to include them in the effective interest rate calculation.

Commitment fees, together with related costs, for loan facilities where drawdown is probable are deferred and recognised as an adjustment to the effective interest on the loan once drawn. Commitment fees in relation to facilities where drawdown is not probable are recognised on a straight line basis over the commitment.

Other operating income is accounted for in the income statement as the Company satisfies the performance obligation embedded in the contract, in accordatice with to "IFRS 15 Revenue from Contracts with Customers" rules.

In particular:

• if the performance obligation is satisfied at a specific moment ("point in time"), the related revenue is recognized in the income statement when the service is provided;
• if the performance obligation is satisfied over-time, the related revenue is recognized in the income statement in order to reflect the progress of satisfaction of such obligation.

Financial Assets

This classification is based on the business model and characteristics of the contractual cash flows. The analysis of the business model is conducted by assessing the individual assess of the Company and by allocating a specific business model to each of them.

In this regard, the assets that make up the Company's portfolio have been assigned "held-to-collect" or "held-tocollect and sell" business models according to holding intentions and expected turnover of the financial instruments. The derivatives in the Company's portfolio that are trading in nature have been assigned an "other" business model in order to reflect trading intentions.

For the purposes of classifying financial instruments in the categories required by IFRS 9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). The "SPPI Test" examines whether the financial instruments are 'Solely payments of principal and interest on the principal amount outstanding' or not.

In this regard, the Company has developed processes that also leverage Group expertise and systems atmed at analysing the portfolio of securities and loans in order to assess whether the features of their contractual cash flows allows their measurement at amortized cost ("held to collect" portfolio) or at fair value through comprehensive income ("held to collect and sell" portfolio").

The analysis in question was carried out contract locally analysing the contract features with respect to IFRS 9 requirements, and/or by using external data providers.

In application of the aforementioned rules, the Company's financial assets have been classified as follows:

• Asset item 20 a) Financial assets held for trading;
• Asset item 20 c) Financial assets mandatorily at fair value;
• Asset item 30 Financial assets at fair value through Other Comprehensive income;
• Asset item 40 Financial assets at amortised cost.

Asset item 20 a} Financial assets held for trading

A financial asset is classified as held for trading if it is:

• acquired or incurred principally for the purpose of selling or repurchasing it in the short term;
• part of a portfolio of identified financial instruments that are managed together and for which there is . evidence of a recent actual pattern of short-term profit-taking;
• · a derivative contract not designated under hedge accounting, including derivatives with positive fair value embedded in financial liabilities other than those valued at fair value with recognition of income effects through profit or loss.

As with other financial instruments, on initial recognition, and at settlement date, a held-for-trading financial assot is measured at its fair value, usual to the amount paid, excluding transaction costs and revenues, which are recognized in profit and loss although directly attributable to the financial assets. Derivatives are recognized at trade date.

After initial recognition these financial assets are measured at their fair value through profit or loss.

A derivative is a financial instrument or other contract that has all three of the following characteristics:

• its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the 'underlying') provided that in case of non-financial variable, this is not specific of one of the parties to the contract;
• · it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors;
• it is settled at a future date.

The Company has foreign exchange forwards and interest rate swaps classified as financial assets held for trading as at 31 December 2019 and also as at 31 December 2018.

Asset item 20 c) Financial assets mandatorily at fair value

A financial asset is classified as a financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortized cost or at fair value through other comprehensive income.

Specifically, the following assets have been classified in this portfolio:

• debt instruments, securities and loans with cash flows that are not solely payment of principal and interest and have therefore failed the SPPI test;

These assets are accounted for as "Financial assets held for trading"

Asset item 30 Financial assets at fair value through other comprehensive income (Debt instruments) A financial asset is classified as at fair value through other comprehensive income if:

• · its business model is held to collect and sell;
• · its cash flows are solely the payment of principal and interest.

On initial recognition, and at settlement date, a financial as fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument.

After initial recognition, the interest-bearing instruments is recorded in the income statement according to the amortized cost criterion. The gains and losses arising from changes in fair value are recognized in the statement of other comprehensive income and shown under item 110. Revaluation reserves in shareholders' equity.

These instruments are under the impairment model as illustrated in the following section. Expected credit losses are recorded in the income statement with a contra-entry in the statement of other comprehensive income and also shown under item 110. Revaluation reserves in shareholders' equity.

In the event of disposal, the accumulated profits and losses are recorded in the income statement.

Asset item 40 Financial assets at amortised cost

A financial asset is classified within the financial assets measured at amortised cost if:

• its business model is held to collect;
• its cash flows are solely the payment of principal and interest.

On initial recognition, and at settlement date, financial assets at amortized cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument.

After initial recognition at fair value, these assets are measured at amortized cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the loan.

Impairment of financial assets

Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through comprehensive income and relevant off-balance sheet exposures are under the impairment model of IFRS 9.

In this regard, these instruments are classified in Stage 1, Stage 3 according to their absolute or relative credit quality with respect to initial recognition. Specifically:

• Stage I : includes (i) newly issued or acquired credit exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk exemption);
• Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition;
• Stage 3: includes impaired credit exposures, where the asset is non-performing and an objective evidence for impairment following a credit event has been recognized.

For exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. With reference to impaired exposures in stage, the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the original interest rate. Therefore the main determinants of this value are, the expected cash flows; the expected timing of payments of these cash flows; and the effective interest rate used for discounting.

The Stage Allocation model is a key aspect of the accounting model required to calculate expected credit losses. The Stage Allocation model is based on a combination of relative and absolute elements. The main elements are:

• · comparison, for each transaction, between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the Bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination);
• absolute elements such as the backstops required by law (e.g. 30 days past-due);
• additional internal evidence (e.g. Forborne classification).

As at 31 December 2019 the Company had only had Stage 1 exposures and no off-balance sheet exposures subject to Expected Credit Loss 'ECL' calculations.

In order to meet the requirements of the Company leverages specific models that have been developed at Group level to calculate expected credit losses based on PD, LGD and EAD parameters, used for regulatory purposes and adjusted in order to ensure consistency with accounting regulations.

As mentioned in the previous paragraph, the Group has developed specific models for calculating the expected credit losses; such models are based on the parameters of PD, LGD and on the effective interest rate. In particular:

• the PD (Probability of Default), represents the probability of occurrence of an event of default of the credit exposure, in a defined time lag (i.e. I year);
• the LGD (Loss Given Default), represents the percentage of the estimated loss, and thus the expected rate of recovery, at the date of occurrence of the default event of the credit exposure;
• the EAD (Exposure at Default), represents the measure of the exposure at the time of default of the credit exposure;
• · the Effective interest rate is the discount rate that expresses the time value of money.

Further details are available in Part E: Information on risks and hedging policies Section 5 Parameters and risk definitions used for calculating value adjustments and stage allocations.

Financial Liabilities

Financial liabilities include deposits taken, medium term notes, other debt securities issued and derivatives. The Company classifies its financial liabilities in the following categories:

• Liability item 10 Financial liabilities at amortised cost;
• Liability item 20 Financial liabilities held for trading.

Liability item 10 Financial liabilities at amortised cost

Liabilities, deposits and debt securities in issue are initially recognised at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently, these instruments are measured at amortised cost using the effective interest method.

The Company sub classifies its financial liabilities at amortised cost in the following categories:

• a) deposits from banks
• b) deposits from customers
• c) debt securities in issue
• d) other financial liabilities

Liability item 20 Financial liabilities held for trading

Financial liabilities held for trading include at fair value through profit and loss:

• derivatives that are not designated as hedging instruments;
• obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own);
• financial habilities issued with an intention to repurchase them in the near term;
• financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading.

Financial liabilities held for trading derivatives, are measured at fair value on initial recognition and during the life of the transaction.

The Company had foreign exchange forwards and interest rate swaps classified as financial liabilities held for trading as at 31 December 2019 and also as at 31 December 2018.

Offsetting Financial Instruments

Financial assets and liabilities must be offset and the net amount reported in the Balance Sheet when there is a current legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Sale and Repurchase Agreements

Securities may be lent or sold subject to a commitment to repurchase them ("repos"). Such securities are retained on the Balance Sheet when substantially all the risks and rewards of ownership remain with the Company. The liability to the counterparty is included separately on the Balance Sheet as appropriate.

Similarly when securities are purchased subject to a commitment to resell ("reverse repo"), or where the Company borrows securities but does not acquire the risks and rewards of ownership, the transactions are treated as collateralised loans, and the securities are not included in the Balance Sheet. The difference between the sale and repurchase price is accrued over the life of the agreements using the effective interest method.

Securities, Borrowing and Lending

Securities lending agreements are transactions in which the Bank lends or borrows securities for a fee. The Bank continues to recognise the securities in the balance sheet because it retains substantially all of the risks and rewards of ownership. For securities borrowed the securities remain off-balance sheet as substantially all of the risks and rewards of ownership are not transferred.

Income Tax

Income tax comprises current and deferred tax. Income tax is recognised in the income statement, except to the extent that it relates to items recognised income or directly in equity, in which case the related income tax is also recognised respectively in other comprehensive income or equity. Current tax is the expected tax payable on the taxable income for the financial year using tax rates enacted or substantively cracted at the balance sheet date and any adjustment in respect of previous financial years.

Deferred income tax is provided, using the Balance Sheet liability method, on temporary timing differences arising between the tax bases of asses and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax is determined using tax rates based on legislation enacted at the Balance Sheet date and expected to apply when the deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets and liabilities are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related benefit will be realised.

Property, Plant and Equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and provision for impairment, if any. Historical cost includes expenditure that is directly attributable to the asset.

Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year incurred in profit and loss item 160. Administrative costs b) other administrative expense.

The item "Property, plant and equipment" includes assets used by the Bank as lesse contract (right of use), or let/hired out by the Bank as lessor under an operating lease.

Property, plant and equipment include leasehold improvements relating to assets which can be separately identified. Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item 120. Other assets.

Depreciation is charged so as to write down the cost of assets over their estimated useful life using the straight line method. Residual useful life is usually assessed as follows:

• Leasehold improvements: up to 8 years
• Computer equipment: up to 5 years
• Office equipment: up to 3 years
• · Right of use asset (lease): up to 10 years

Intangible Assets

Computer software is stated at cost, less amortisation for impairment, if any. The identifable and directly associated external and internal costs of acquiring and developing software are capitalised where the software is controlled by the Company, and where it is probable that future economic benefits that exceed costs will flow from its use over more than one financial year. Costs associated with maintaining software are recognised as an expense when incurred. Capitalised computer software is amortised over 3 years, subject to the associated useful life using the straight line method, from the date it is brought into use.

Cash and Cash Equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, unrestricted balance with Central Bank and deposits, and short-term (with a maturity of three months or less), highly liquid investments that are readily convertible to a known amount of cash and that are subject to an insignificant risk of changes in value. Cash and cash equivalents are carried at amortised cost in the Balance Sheet.

Share Capital

Issued financial instruments or their components are classified as equity where they meet the definition of equity in IAS 32 and confer on the holder a residual interest in the assets of the Company.

Dividends on ordinary shares are recognised in equity in the period in which they are approved by the Company's shareholders.

Pension Obligations

The Company operates a defined contribution pension scheme. The Company has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense in the income statement when the employee has rendered services which qualify for the contribution. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Accounting Estimates

Under the IFRS, management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets and liabilities and income and expenses reported in the accounts, as well as the disclosure concerning contingent assets and liabilities. Estimates and related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources.

In particular, estimated figures have been used for the recognition and measurement of some of the items in the Financial Statements as at 31 December 2019, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going concern.

Valuation is particularly complex because of the uncertainty in the macroeconomic and market environment; the parameters and information used may be significantly affected by such factors, which could change rapidly in ways that are currently unforeseable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Valuation estimates of financial instruments include of valuation techniques (e.g. Net Present Value of cash flows) employed in determination of fair values and determination of hierarchy levels. With specific reference to valuation techniques, unobservable in the fair value measurement and sensitivities to changes in those inputs, please refer to Part E: Information on risks and hedging policies Section 11 -- Fair Value Disclosures.

Valuation estimates relate to asset item 20 Financial assets at fair value through the profit and loss, asset item 30 Financial assets at fair value through other comprehensive income, asset item 50 Hedging derivatives and asset item 60 Changes in fair value of portfolio hedged items (4/2), liability item 20 Financial for trading, liability item 40 Hedging derivatives, liability item 50 Changes in fair value of portfolio hedged items (+/+) and liability item 110 Revaluation reserves through the OCI. Refer to the in the Financial Statements as at 31 December 2019 for the carrying anounts of the asset and liability items mentioned.

Uncertainty affecting estimates is generally inherent, among others, in the measurement of fair value of financial instruments not listed in active markets, loans and receivables, and, in general, any other financial assets/liabilities, intangible assets and property, plant and equipment, whose assessment may significantly change over time according to the trend international socio-economic conditions and subsequent impact on the Bank's profitability and customers' creditworthiness; and (ii) financial markets which affect changes in interest rates, prices and actuarial assumptions.

With regard to credit exposures evaluation it should be noted that, with the initial application of IFRS 9, such estimation is based on forward looking information and, in particular on the evolution of macroeconomic scenarios used in the loan loss provisions calculation. Purther details are available in Part E. Information on risks and hedging policies.

Credit exposure estimation impacts asset item 30 Financial assets at fair value through other comprehensive income, asset item 40 Financial assets at anortised cost and liability item 110 Revaluation reserves through the OCl. Refer to the in the Financial Statements as at 31 December 2019 for the carrying amounts of the asset and liability items mentioned.

Refer to the following sections for sensitivity analysis related to accounting estimates:

• Credit exposure estimation: Part E: Information on risks and hedging policies Section 5 Parameters and risk definitions used for calculating value adjustments and stage allocations.
• · Valuation estimation: Part E: Information on risks and hedging policies Section 9 -- Market Risk.
• Valuation estimation: Part E: Information on risks and hedging policies Section 11 Fair Value Disclosures.

Key judgements

Key judgements include IFRS 9 classification related criteria such as business model assessment and determining if a financial asset meets the SPPI criteria. Judgements used when the Company is assessing whether a financial asset is to be considered under business model "held to collect and sell" include why the instrument has been acquired or originated and the expected turnover of financial asset. Similarly, when the Company is performing contract by contract analysis of the contractual cash flows ("SPPI Test") on a financial asset it may make judgements in relation to certain features of the scenario where it is not certain if the SPPI criteria are met. Further details of how these judgements are included in Part A.1: Accounting Policies Section 2 - General Basis of Preparation Financial Assets.

Key judgements also include IFRS 9 impairments such as defining the meaning of default and expected credit loss modelling. Details of how these judgements are made are included in Part E: Information on risks and hedging policies.

Derivative Financial Instruments and Hedge Accounting

Derivative instruments used by the Company primarily comprise interest rate swaps, cross currency swaps and foreign exchange forwards.

Non-trading derivative transactions comprise transactions held for hedging purposes, as part of the Company's risk management strategy, against financial liabilities, positions or cash flows, either accounted for on an amortised cost basis or part of the financials assets at fair value through other comprehensive income.

All derivatives are held on the Balance Sheet at fair value and are accounted for on a trade date basis. Fair values are obtained from quoted prices prevailing in active markets where available. Otherwise valuation techniques including discounted cash flows and option pricing models are used to value the instruments. Derivatives are included in assets when their fair value is positive and liabilities when is negative, unless there is a legal ability and intention to settle net.

When a financial instrument is designated as a hedge, the Company formally documents the relationship between the hedging instrument and hedged item as well as its risk management objectives and its strategy for undertaking the various hedging transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values of hedged items.

To the extent that changes in the fair value of the hedging derivatives differ from changes in the fair value of the hedged risk in the hedged item or the cumulative change in the hedging derivative differs from the cumulative change in the fair value of the hedged item, the hedge is ineffective. The amount of ineffectiveness, (taking into account the timing of the expected cash flows, where relevant) provided it is not so great as to disqualify the entire hedge from hedge accounting, is recorded in the income statement.

The Company currently applies only:

Fair value hedge a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability.

Changes in the fair value of derivatives that qualify and are designated as fair value hedges are recorded in the income statement, together with chair value of the hedged asset or liability that are attributable to the hedged risk. If the hedge no longer meets the criteria for hedge accounting, the fair value hedging adjustment

cumulatively made to the carrying value of the hedged item is, for items carried at amortised over the period to maturity of the previously designated hedge relationship using the effective interest method.

The Company has both portfolio 'Macro' and one-to-one 'Micro' hedge relationships.

• · Macro hedge relationships are accounted for dependant on the underlying hedged item. For hedged items carried at amortised cost the change in the fair value of the hedging instrument is accounted for under line item "Changes in fair value of portfolio hedged items". For hedged items carried at fair value through other comprehensive income the changes in the fair value of the hedging instrument is accounted for under line item 110 "Revaluation reserves through the OCI".
• The changes in the fair value of the hedging instruments relating to Micro hedge relationships for which the hedged items are carried at amortised cost or at fair value through other comprehensive income are accounted for directly against the hedged item.

The fair value changes recorded in item 110 "Revaluation reserves through the OCT" are also disclosed in the Statement of Other Comprehensive Income.

Certain derivative contracts entered into as economic hedges do not qualify for hedge accounting. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the income statement in item 80 'Gains and losses on financial assets and liabilities held for trading'.

In relation to the adoption of IFRS 9 the Company has exercised the option to continue applying the existing IAS 39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging.

Section 3 - Segmental Reporting

An operating segment is a component of the Company that engages in business activities from which it may carn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components, whose operating results are reviewed regularly by the Board of Directors (being the chief operating decision maker) to make decisions about resources allocated to each segment and assess its performance, and to which discrete financial information is available.

IFRS 8 Operating Segments requires the disclosure of revenues from external customers for each product and service, or each group of similar products and services. IFRS 8 also requires based on geographical information. For detail on these disclosures please refer to Part G: Segmental Reporting.

Section 4 - Financial Instruments Fair Value

Fair value of financial assets and liabilities held for trading, financial assets mandatorily at fair value, financial assets at fair value through other comprehensive income, fair value of loans and receivables securities and hedging derivatives.

The following paragraphs set out the method of valuing the above mentioned assets and liabilities.

Transferable securities include government bonds, corporate bonds and other debt securities;

• Bonds and debt quoted in an active market.

· Where bonds are not quoted in an active market, the Company uses valuation techniques which include external ratings and market information to assess the pricedure. The prices are reviewed by a UniCredit Banking Group company.

Asset Bucked Securities ( ABS')

• · Where actively traded the closing bid prices are utilised.
• · Where the securities are not quoted in an active market, the Company uses valuation techniques which include external ratings and market information to assess the prices are reviewed by a UniCredit Banking Group.

Where the asset is not quoted in an active market, valuation techniques may include;

• a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets);
• cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost);
• an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset),

Derivative contracts including: Eonia swaps, Interest rate swaps, Cross currency swaps and FX Forwards Derivative contracts are valued using discounted cash flow methodology. Cash flows are discounted using rates which are either directly observable or are implied from instrument prices and input into the system on a daily basis.

Fair value calculation

In order to calculate the fair value of loans and receivables with banks, loans and receivables with customers, deposits from banks, deposits from customers and debt securities in issue, present value calculations based on Euribor/Libor curves as at 31 December 2019 were utilised. The fair value determined using this calculation includes specific risk factors such as liquidity risk, and where relevant, counterparty risk. IFRS 13 requires that for financial instruments measured at fair value on Balance Sheet fair value measurements are disclosed by the source of inputs, using the following three level hierarchies:

• Level 1: Quoted prices in active markets for identical assets or liabilities;
• Level 2: Inputs other than quoted prices included in Level 1 that are based observable market data for the asset or liability, either directly (as prices) or indirectly (derived from prices);
• · Level 3: Inputs for the asset or liability that is not based on observable market data (non-observable inputs).

For details of the disclosure requirements in accordance with IFRS 7 and IFRS 13 please refer to Part E: Information on risks and hedging policies Section 11 - Fair Value Disclosures.

Part B: Balance Sheet Notes - Assets

Item 20 - Financial assets at fair value through profit and loss

Item 20A - Financial assets held for trading

20A.1 Financial assets beld for trading: product break down	31 Decem ber 2019	31 December 2018
	€ 000	.
Derivalive ussels	3.809	2.206
	3.805	2.206

20A.2 Derivatives held for trading		31 December 2019 31 December 2019 31 December 2018		35 Decomber 2018
	€ 000	€ * 000	E. 000	€ 000
	Fair Value	Noninal	Fau Value	Nominal
Eonia swaps	3.685	7.340.000	729	5 940 000
Porward currency sules
Forward currency purchases	124	8.902	1.477	21.022
	3.809	7.348.902	2.206	5.967.022

Included in derivatives held for trading is a fair value carrying amount of €3.8 million (31 December 2018: €2.2 million) due from UniCredit Banking Group. The derivatives classified in financial assets held for trading are entered into for economic hedging purposes including currency and interest rate risk for which IAS 39 hedge accounting requirements have not been fulfilled.

Item 20C - Financial assets mandatorily at fair value

20C.I Financial assets mandatorily at fair value: product break down	31 December 2019 31 December 2018
	€7000	€ 000
Other securities
- Other debt securities	29.739	48.343
	29.739	48.343

The financial assets mandatorily at fair value amount to €29.7 million and are represented by an asset backed security as at 31 December 2019 (31 December 2018: €48.3 million).

Management has considered the financial impact of collateral held within securities and considers it to be sufficient to recover the carrying value of such assets.

30.1 Financials assets at fair value through other comprehensive income; product break down	31 December 2019 31 December 2016
	€.000	€ * (H) D
Issued by public bodies
· Government debt securities	5.085.69-1	7,227,202
- Other public sector debt securities	775.566	170.826
Other securities
· Other debt securities	732.892	747.268
	쓰.994.152	8.147.196

Of which Intercompany :

UniCredit S.p A. Group financials assess at fair value through other comprehensive income

30.2			31 December 2019 31 December 2018
	Financial assels at fair value other comprehensive income analysis by remaining maturity	€ '0 (H)	€ 4000
	- over 5 financial years	923.387	2-789.046
	~ 5 years or less but uver 1 tinancial year	4,827,003	4_633 3 888
	- I financial year or less but over 3 months	114.072	744.732
	= 3 months or 1ess	130.690	460.038
		5.994.157	& . 147 . 196

Financial assets at fair value through other comprehensive income of €4.5 billion (31 December 2018: €6.2 million) have been pledged to third parties in sale and repurchase agreements.

The collateral encumbered to third parties can be used in the Bank's default and non-repayment of the Banks related liabilities with each counterparty, in order to offset each counterparty's exposure to the Bank.

Financial assets at fair value through other comprehensive income with a maturity of 3 months or less do not qualify as cash equivalents as they will be re-invested once matured.

30.3 Financial assets at fair value through ather comprehensive income: listing status	31 December 2019 31 December 2018
	6.000	€ * 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Analysis by ling status
- Listed	5.994.153	8. 147.196

30.4 Financial assets at fair through other commencessive income: unnum chunges	31 December 2019 31 December 2018
	€1000	€ 1100
At 1 January	8,147,196	8 984 899
Additions	<	1.570.599
Disposals and inturitiss	(2,041,731)	(2,114,632)
Exchange differences	4.638	13.377
Changes in fair value	(41.159)	(292,372)
Enterest recersible	(24.792)	(14.675)
At 31 December	5,994,152	8、147、196

Management has considered the financial impact of collateral held within securities and considers it to be sufficient to recover the carrying value of such assets.

E-MARKET

Item 40 - Financial assets at amortised cost

Item 40A - Loans and receivables with banks

40A,) Loans and receivables with banks: analysis by remaining		31 December 2019 31 December 2018
maturity	€ 000	€ 7000
Loans and receivables : Remaining maturity
· over 5 finanovini years	GOS . 100	613.050
- 5 financial years or less but over 1 financial year	72.000	86.729
- 1 financial year or less but over 3 months	27,523
- 3 months or less	121 088	60,894
- Repayable on demand	1.006	12,233
	826,717	772,906
Loans and receivables with banks impannent	(1)	(6)
	826,716	772.900
Unquoted securities : Remaining maturity
- over 5 financial years	1.700.035	1 950,225
- 5 financial years or less but over 1 financial year
- I financial year or less but over 3 months	E	8.800.002
- 3 months or less
	3,700,635	3.750,227
Unquoted securities with banks impairment	(874)	(2,888)
	1,699,162	3.747,339
	2,525,877	4.520,239
Of which Intercompany
Due from parent company and fellow subsidiaries	2,386,000	4.480.120

40A.2 Loans and receivables with banks: Fair value	31 December 2019 31 December 2018
	6.000	E . 000
Loans and receivables with banks		271 889
	2,413,149	4.271.889

Included in the total of loans and receivables with banks are securities of nil billion which have been pledged to third parties in sale and repurchase agreements (31 December 2018: nil).

In December 2019 UniCredit S.p.A. provided a pledge in favour of the Bank in order to secure the debt securities issued by UniCredit S.p.A and bought by the Bank for a total notional of €1.7 billion (31 December 2018: nil), using as a collateral a £0.8 billion (31 December 2018: nil) deposit granted by UniCredit S.p.A. at year-end to ensure compliance with the Net Stable Funding Ratio requirement and €0.9 billion (31 December 2018: nil) of the Senior Class of an Asset Backed Security owned by UniCredit S.p.A.

The pledge, thanks to the collateral, reduces the counterparty risk associated to the investments which becomes "secured" as long as the pledge is outstanding.

The cost of the pledge has been determined between the parties on an arm's length basis in accordance with Transfer Pricing Group Policies.

Included in fee and commission expense is €0.06 million related to the pledge.

E-MARKET
SDIR

E-MARKET SDIR
CERTIFIED

Item 40B - Loans and receivables with customers

40B.I Loans and receivables with customers: analysis by		31 December 2019 31 December 2018
remaining maturity	€ 000	€ * 000
Loans and receivables: Remaining maturity
- over 5 financial years
. 5 financial years or less but over 1 financial year	300.148	450_505
- I financial year or less but over 3 months	150,310
- 3 months or less	277 837	278.467
	728.295	728.972
Loans and receivables with customers impairment	(387)	(677)
	727,908	728,345
Unquoted securities · Remaining maturity
- over 5 financial years	3.492.774	404 . 143
- 5 financial years or less but over I financial year	£ .2 ] 5 . 2 7 3	581.270
~ 1 financial year or less but over 3 months
- 3 months or less
	2,708,047	985.413
Unquoted securities with customers impairment	(448)	(538)
	2,707,599	984.875
	3.435.507	1,713,221
Of which Intercompany:
Due from parent company and fellow subsidiaries	450.458	450.505

40B.2 Louns and receivables with customers: Fair value		31 December 2019 31 December 2018
	€ * 000	€1000
Louns and receivables with customers	3.722 337	.628,133
	3,722,337	.628.133

Included in the total of loans and receivables with customers are securities of £2.0 billion which have been pledged to third parties in sale and repurchase agreements (31 December 2018: €0.8 billion).

The collateral encumbered to third parties can be used in the Bank's default and non-repayment of the Banks related liabilities with cach counterparty, in order to offset each counterparty's exposure to the Bank.

Management has considered the financial impact of collateral held within securities and considers it to be sufficient to recover the carrying value of such assets.

Item 50 - Hedging derivatives

	50.1 Hedging derivatives		31 December 2019 31 December 2019 31 December 2018 31 December 2018
		€ 000	€ . 000	€ 1000	€ 000
		Pair Vikluse	Nominal	Fair Value	Nominal
	Cross currency swaps	20.754	150.660	15.699	133.109
	Anterest Tale SWaps	13.070	1.089.000	40.139	891.673
		33,834	1,239,660	55,838	1,024,782

Included in hedging derivatives is an amount of £33.8 million (31 December 2018: €55.8 million) which is due from UniCredit Banking Group.

For detail on derivatives please refer to the notes on derivatives which is included Part E: Information on risks and hedging policies Section 9 - Market Risk

Item 60 - Changes in fair value of portfolio hedged items (+/-)

60.1 Changes in fair value of portfolio hedged items (+/-)	31 December 2019 31 December 2018
		6000
Positive changes in fair value of portfolio hedged items	331.274	313.788
	331.274	313.788

The above amount relates to changes in portfolio hedged items in securities which are both loans and receivables with banks and loans and receivables with customers.

Leases included in item 80 - property, plant and equipment

Included in property, plant and equipment is a right of use asset of €2.5 million related to the lease contract of the "La Touche House" office space. Included in depreciation charge for financial year is €0.3 million related to the lease right of use asset. Refer to Part B: Balance Sheet Notes - Liabilities Item 10B deposits from Banks for details on the related lease liability and interest expense.

Item 80 - Property, plant and equipment

80,1 Property, plant and equipment	Lease Right of Use asset	Leusehold im provements	() fire equipment	Computer equipment	Tota
Cost	€ . 000	€1000	€ '000	€ 900	C'000
At 1 January 2018		1 .25 I	87	409	1,747
Additions			16	83	ੇ ਹੋ
Disposais			n	(19)	(12)
At 1 January 2019		1 -251	103	473	1,827
At 1 January 2019 (IFRS 16 adoption date)	2,785				2,785
Additions		202	97	214	513
Disposass		(1 3 7 7 )	(65)	(71)	(1,513)
At 31 December 2019	2,785	76	135	6 G	3,612
Accumulated dopreciation	6.100	€ 000	€ 1000	€ 000	67000
At 1 January 2018		1.250	87	241	1,628
Charge for financial year	V		0	કે ઉ	() 3
Disposals	1			(19	(19
At 1 January 2019		1-251	133	357	1,701
Charge for financial year	306		23	ੈ ਤੋ	422
Disposals		(1,175)	(65)	(70)	{ 1,310}
At 31 December 2019	306	76	ર્	380	813
Net book values
At 31 December 2018	t		10	1 Q	126
At 31 December 2019	2.479	1	જ ન	236	2,799

Item 90 - Intangible assets

90.1 Intangible assets	Computer software costs	Total
Cost	€ 0000	€ 000
At 1 January 2018	5 , 45 3	5.453
Additions	224	224
Disposals
At 1 January 2019	5,677	5.677
Additions	215	215
Disposals	(946)	(946)
At 31 December 2019	4.946	4.946
Accumulated amortisation
A1 } January 2018	3,160	3.160
Charge for financial year	1.075	1.075
Disposals
At 1 January 2019	4.235	4 235
Charge for financial year	837	837
Disposals	(946)	(946)
At 31 December 2019	4, 126	4,126
Net book values
At 31 December 2018	1.443	1,443
At 31 December 2019	82 I	821

Item 100 - Tax assets

Time 和实验出版	31 December 2019 31 December 2018
	€ 000	6.7000
100A Current facation asset	722	લ તે દે
Reversal of deferred tax liability
Deferred texation asset nt I January	735
Tax credit arising from positive OCI revaluation reserve	(735)	735
100B At 31 December	1	735
Total tax assets	722	1 .430

The 2018 deferred tax asset is 12.5% of the gross amount of the total OCI revaluation reserve.

Item 120 - Other assets

120.1 Other assets	31 December 2019 31 December 2018
	€ 1000	C.000
Accounts receivable and prepayments		621
	691	621

Leasehold improvements of E0.3 million (31 December 2018: 0.2 million) relating to property, plant and equipment that are identifiable but not considered separable are included in other assets.

Included in other assets is an amount of nil (31 December 2018: 60.01 million) which is due from UniCredit Banking Group. The prior year receivable related to the Service Level Agreement in place to perform activities on behalf of Pioneer Alternative Investments (Israel) Limited.

Part B: Balance Sheet Notes - Liabilities

Item 10 - Financial liabilities at amortised cost

Item 10A - Deposits from banks

10A.1 Deposits from banks: analysis by remaining maturity	31 December 2019 31 December 2018
	€ 000	€ 1000
Remaining maturity
· 5 financial years or less but over 1 financial year	780.932	1.917.844
- 1 financial year or less but over 3 months	675 262	662,453
- 3 months or less	2.362.300	3.362,126
- Repayable on demand	39	37
	3.818.533	5 942,460
Of which Intercompany:
Due to parent company and fellow subsidiaries	1.559.291	2 321.464

Included in deposits from banks are deposits of €2.5 billion (31 December 2018: €4.2 billion) held as security for securities sold under repurchase agreements.

Deposits from banks with a maturity of 3 months or less do not qualify as cash equivalents as they are not held for short term cash commitments.

10A.2 Deposits from banks: Fair Value	31 December 2019 31 December 2018
	€ '000	6,000
Deposits from Banks	3.829.207	5.956.178
	3,829,207	5,956,178

Item 10B - Deposits from customers

103.1 Deposits from customers: analysis by remaining maturity - 31 December 2019 - 31 December 2018
	€ 000	€1000
Remaining maturity
- 5 financial years or less but over I financial year	1	57 844
- I financial year or less but over 3 months	120-370	67 871
- 3 months or less	3,404,737	3.505,084
	3.525.107	3.630.799
Of which Intercompany:
Due to parent company and fellow subsidiaries	70.218	76.457

E-MARKET

10B.2 Denosits from customers: Fair Value		31 December 2019 - 31 December 2018
	€ 000	ﮯ
Deposits from Banks	3.533.281	3,632,376
	3,533.281	3,632,376

Included in customer accounts are deposits of £3.3 billion (31 December 2018: €3.4 billion) held as security for securities sold under repurchase agreements.

Deposits from customers with a maturity of 3 months or less do not qualify as cash equivalents as they are not held for short term cash commitments.

Item 10C - Debt securities in issue

10C.I Debt securities in issue; analysis by remaining maturity	31 December 2019 31 December 2018
	€ 9000	€ 0000
Bonds and medium term notes
Remaining maturity
- 5 financial years or less but over 1 financial year	206,984	282 401
- 1 financial year or less but over 3 months	51 958	101 479
- 3 months or less	29.076	236 617
	288.018	620.497
Other debt securities in issue
Remaining maturity
~ I financial year or less but over 3 months	1.646,283	94.875
~ 3 months or less	8.890	1,433,448
	1.655.173	1,528,323
	1,943,191	2.148.820
Of which Intercompany :
Due to parent company and fellow subsidiaries	16,371	18,836
10C.2 Debt securities in issue: Wair Value	31 December 2019 31 December 2018
	€ . 000
Debt securities in issue	1,957,302
	1,957,302
10C.3 Debt securities in issue: by financial instrument	31 December 2019 31 December 2018
	C' 200
	1.655.173
Commercial paper Medium term note	288.018	00000 2,162,636 2,162,636 € '000 1,528,323 620,497

During 2019 investors' continued appetite for short term funding in the markets in which the Company operates, allowed the Company to move a larger portion of its funding activities towards short term funding in the form of repurchase agreement funding.

Item 10D - Other financial liabilities

Lease Liability remaining maturity	6*000	€ * 000
- Over 5 financial years	84)()
- 5 financial years or less but over 1 financial year	1.226
- 1 financial year or less but over 3 months	230
- 3 months or less	7 7
	2,423

10D.2 Other financial liabilities: Fair Value		3] December 2019 - 31 December 2018
	€ * 000	C 000
Lease liability	2.423
	2,423

Included in 'Other financial liability of £2.4 million related to the lease contract of the "La Touche House" office space. Included in interest expense related to customer accounts is €0.04 million related to the lease liability .

Item 20 - Financial liabilities held for trading

20.1 Financial Habilities held for trading - 31 December 2019 31 December 2018 31 December 2018
	€,000	€ '000	6.000	€ 400
	Fair Value	Nominal	Fair Value	Norm inal
Currency forward purchase contracts	665	35.749	1.285	246.061
Interest rate, conia and cross
currency derivatives	4.337	5,700 000	33	4.900.000
	ട്.(102	5.735.749	1.318	5.146.061

Included in trading derivatives is an amount of €5.0 million (31 December 2018: €1.3 million) which is due to UniCredit Banking Group. Derivative purchases and maturities resulted in variances of the nominal values during the financial year. For details on derivatives please on derivatives which are included within Part E: Information on risks and hedging policies Section 9 - Market Risk, The derivatives classified in financial liabilities held for trading are entered into for economic hedging currency and interest rate risk for which IAS 39 hedge accounting requirements have not been fulfilled.

Item 40 - Hedging derivatives

40.1 Redging derivatives			31 December 2019 31 December 2019 31 December 2018 31 December 2018
	€ '030	€ * 000	€ '000	000
	Fair Value	Nominal	Fair Value	Nominal
Cross currency swaps	30.715	161.793	46.642	262.962
Interest rate swaps	653 911	6.610.597	707 331	8 127.966
	684,626	6,772,390	753,973	8,390.928

Included in hedging derivatives is an anount of E685 million (31 December 2018: €741 million) which is due to UniCredit Banking Group. Derivative purchases and maturities resulted in variances of the nominal values during the financial year. For details on derivatives please refer to the notes on derivatives which are included within Part E: Information on risks and hedging policies Section 9 - Market Risk.

Item 50 - Changes in fair value of portfolio hedged items (+/-)

50.1 Changes in fair value of portfolio hedged items (+/-)	31 December 2019 31 December 2018
		0000
Positive changes in fair value of portfolio hedged items		23.333
		23,333

The above amount relates to changes in portfolio hedged items on deposits from banks and Debt Securities in Issue.

Item 60 - Tax liabilities

	Tax liability	31 December 2019 31 December 2019
		€*000	€ 000
	Deferred taxation liability at 1 January		18.772
	Tax liability arising from positive FVOCI revaluation reserve	8.610	(18,772)
60 B	At 31 December	8.610
	Current tax liability
	Total tax liability	8.610

A deferred tax liability arose in 2019 due to the improved performance of the FVOCI portfolio resulting in a positive FVOCI revaluation reserve.

Item 80 - Other liabilities

80.1 Other linbilities	31 December 2019 31 December 2018
	€7000	6.000
Creditors and accruats	4 - 5 -	2.745
		2.745

Included in other liabilities is the amount of €0.7 million (31 December 2018: €0.7 million) which is due to UniCredit Banking Group.

Included in other liabilities are costs of £0.3 million (31 December 2018: nil) related to Equity-Settled Share Based Payments. Refer to Part F: Description of payment agreements based on parent equity instruments for further details.

						Item 110 - Revaluation reserves through other comprehensive income
--	--	--	--	--	--	--------------------------------------------------------------------	--

THE LEASE REGION COLLECTION CARAL COLLECTION CONSULTION CONSULTION CONSULTION CONSULTION CONSULTION CONSULTION CONSULTION CONSULTION CONSULTION CONSULTION CONSULTION CONSULTI	-1 . 1 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8 . 8
110 1 Other commensive income reveluation reserve

Other comprehensive income revaluation reserve	31 December 2019 31 December 2018
	C'000	€ * (H)
At 1 January	(10.054)	32-246
Change in fair value of financials assets at fair value through other comprehensive income
· financials assets at fair value through other comprehensive income	01,159	(146.368)
- Tredge	(14.152)	(16.261)
Movement in deferred tax	(9,626)	20.329
At 31 December	57.527	(10,054)

The revaluation reserve through the other comprehensive income movements the fair value movements in financial assets at fair value through other comprehensive income and includes the removal of any fair value movement related to any disposals during the financial year.

Item 140 - Reserves

	140.1 Reserves	31 December 2019 31 December 2018
		€1000	€ 000
	a) Capital contribution	753.419	753 419
	b) Other reserves	45 802	45 802
	c) Profit and Loss Account at start of financial year	168.717	143 616
	d) Dividend pakl	(41,500)	(23.500)
	g) Net profit for the financial period	32.225	43.692
		958-663	967.938

Item 160 - Issued Capital

I60.1 Authorised	31 December 2019	31 December 2018
1,343,118,650 (31 December 2018 . 1,343,118,650) ordinary shares of one Euro cach	1,343,119	1,343,119
	1 .343,119	1,343,119
Essued and paid up
1,3-13,118,650 (31 Docember 2018 . 1,343.118.650) ordinary shares of one Euro each	1 343.119	1.343.119
	1,343,119	1.343,119

The Bank's capital adequacy and capital resources are managed and monitored in accordance with the regulatory capital requirements of the Central Bank of Ireland. The Bank must at all times monitor and demonstrate the compliance with the relevant regulatory capital requirements of the Central Bank of the Bank has put in place processes and controls to monitor and manage the Bank's capital adequacy and no breaches were reported to the Central Bank of Ireland during the financial year.

160.2 Regulatory own funds	31 December 2019	31 Docem box 2018
Common Equity Tier I Own Funds
Paid up ordmary share capital - Equity Tier I	1,343,119	1.3-13-119
Capital controbution - Equity Tier P	753.419	753.419
Revenue reserves - Equity Tier I	214,519	194,328
Dividend	(41,500)	(23.500)
First Provision Shortfall - Deduction Equity Tier I	(146)	(724)
Accuritiated other comprehensive income	57,327	(10,054)
Additional Value Adjustsnent	(128)	(210)
Intangsble Assets	( 8 21 )	(1.443)
Excess of deduction from Additional Tier I irems
Other Transitional Adjustments to CET !
Total Common Expity Ther 5 Own Funds	2,325,789	2,254,933
Additional Tier I Own Funds
Ther II Own Funds
Subordmated deposit - Tier II - Grandfathered		200 000
Other transitions adjustments to Tier II Copital
Total Tier II Own Funds		200,000
Tatal Own Fonds	2,325,789	2,454,933
Reconciliation between Own Funds and Shareholders' Equity
	31 Docembor 2019	31 December 2018
Total Shareholders' Equily	2,359,109	2,301,002
(Net Profit of the financial perwd)	(32,225)	(43.692)
(Fikered Accumidated other comprehensive income)
(Deductions and Adjustments)	(1,095)	(2,377)
Ties II Capital		200,000
Total Own Funds	2,325,789	2.454,933

The above Own Funds are computed in accordance with the EU Capital Requirements Regulation 575/2013.

UniCredit Bank Ireland received from the European Central Bank ( ECB ) the joint risk assessment decision that defined UniCredit Bank freland prudential requirements on the basis of Article 16 EU Regulation 1024/2013 and it stated a minimum Total Supervisory Capital Ratio of 8.0% for 2019 (2018: 8.0%). The Bank received confirmation from the ECB that the SREP excess requirement for 2019 was 0% (2018: 0%).

The Total Capital Ratio at 31 December 2019 is 121.65% (31 December 2018: 74.38%),

The Common Equity Tier 1 ratio at 31 December 2019 is 121.65% (31 December 2018: 68.32%). In relation to the Intangible Assets, they were fully deducted against the CET 1.

In relation to the shortfall of Provision against the Internal Ratings Based Expected Loss, it was entirely deducted against CET I.

The Fully Loaded CET and Fully Loaded Total Capital ratios as at 31 December 2019 are 121.65% (31 December 2018: 68.32%).

Based on the ECB recommendation letter dated 8 December 2016, UniCredit Bank Ireland is advised to consider fully loaded total capital ratio when establishing a dividend distribution policy.

As per the ECB letter dated 2 December 2019 relating to SREP, the Bank is required to keep a Total Supervisory Capital Ratio of at least 8.0%.

From 1 January 2019 the Bank is required to calculate a capital conservation buffer of 2.5% of Total Risk Exposures. This capital buffer amounts to €48m as at 31 December 2019.

Since I January 2016 the Bank has also been required to calculate a countercyclical capital buffer requirement based on the weighted average of the buffer rates that apply in the countries where the bathk has credit exposures. This capital buffer for 2019 is zero.

Part C: Income Statement Notes

Item 10 - Interest income and similar revenues

10.1 Interest and similar income arising on:	31 December 2019	31 December 2018
	6.000	Croyo
Financial assets mandatorily at fair value	1 497	24.368
Financial assots at fair value through other comprehensive moome	86_598	110 236
Firancial ussels al amurlised cost	81.414	79.787
Chica 338018	87	રે રે
Interest income on Trading Derivatives	2 444	12.830
Interest income on Hedging Derivatives	08 053	118.278
Interest income on Emancial Liabilities	35.603	41.5 16
	275.646	387.070
Of which Intercompany:
Due from parent company and fellow subsidiaties	50.520	62.965

Total interest income calculated using the effective interest rate method is negative €124 million (31 December 2018: negative €172 million).

Item 20 - Interest expense and similar charges

20.1 Interest expense and similar charges arising on:	31 December 2019	31 December 2018
	€ * 000	C'000
Financial liabilities at amortised cost	(-1) 433)	(74, 194)
Other liabilities	(15)	【行】
Interest expense hedging	(164.701)	(220,266)
Interest expense on Trading Derivatives	(3,938)	(13.871)
Interest expense on Pinancial Assets	(6.629)	(6.642)
	(224,736)	(320.937)
Of which Intercompany:
Due to parent company and fellow subsidiaries	(249,905)	(276,533)

Total interest expense calculated using the effective interest rate method is positive €1 million (31 December 2018: positive €7 million). Included in financial liabilities at amortised cost is interest expense of €0.04 million related to lease liabilities.

Item 40, 50 and 60 - Fee and commission income and expense

49.1 Fees and commission income	31 December 2019	31 December 2018
	600.000	6.000
Querantee fees
Of which Intercompany :
Due from parent company and fellow subsidiaries

E-MARKET

30.1 Fees and commission expense	31 December 2019	31 December 2018
	€ '000	000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
Brokerage and management fees	(392)	(439)
Guargistee fees	(831)	(2,426)
Securities Borrowing	(6.892)	(2,045)
Other frees	(4)45)	(876)
	(9,060)	(S,78G)
Of which Intercompany.
Due to paront company and fellow subsidiaries	(7,963)	(4,175)

60.1 Net Fees and commissions	31 December 2019	31 December 2018
	€ * 000	E . 000
Net fees and commissions	19 060	.786)
		.786)

Item 80 - Gains/(losses) on financial assets and liabilities held for trading

80.1 Gainsi(losses) on financial assets and liabilities held for trading	31 December 2019	31 December 2018
	C . G (FO	6.000
Trading gains/(losses)	(020)	13.781
Foreign currency translation (Bosses)	(205)	(539)
	(1,125)	13.742
Of which Interecompany.
Due from parent company and follow subsidiaries	(1,9,6)	02841

Trading gains/ (losses) are related to fair value movement of derivatives which are not part of any hedge accounting relationship.

Item 90 - Fnir value adjustments in hedge accounting

90.1 Fair Value adjustment	31 December 2019	3) December 2018
	€ . 0 Gu	6.000
Fuir value adjustment on hedging derivatives	29.536	113.745
Fair value adjustment relating to hedged items
+ OCI. Hedge	(-13.3 ) 43	(130.532)
- Non-OC1 Hedro	13-349	14,755
	(429)	(2.022)

Item 100 - Gains/(losses) on disposal of:

	100.1 Grinx/(losses) on disposal of:	31 December 2019	31 December 2018
		671100	6.000
	a) financial ussers ur minirrised cost	933	6:16
	b) financials assots at fair value through other comprehensive income	10.355	15 512
	e) financial liabilities at amortised cost	(2.568)	7777
		8.720	15,411
	Of which Intervompany :
	Due from parent company and fellow subsidiaries	(2,573)	6-16

Item 110 - Gains/{losses} on;

110.1 Conins/(losses) on:	31 December 2019	31 December 2018
	6.000	جَ ' يَسَ لَ
a) financial assets/liabilities designared at foir value through profit or Inss	-
h) financial assets mandatorily at fair value	327	(23 . 262)
	327	(23.262)
Of which Intercompany:
Due from parent company and fellow subsidiaries	(775)	(2,922)

Item 130 - Impairment (provisions)/write-back

130,1 Impairmient (provisions)/write-Dack. on	31 December 2019	51 December 2018
	€ * 000	C'000
a} fhumoial ussors at amortised cost	2.344	1.653
b) financial assets at fair value through other comprehensive income	689	(821)
snowler transactions
	3.033	832

Net impairment write backs of 63.0 million on financial assets have been recorded in 2019 (31 December 2018: €0.8 million) mainly due to the maturity/call of debt securities which resulted in a write-back of approximately €1.9 million and a lower Probability of Default "PD" attributed to Parent Company UniCredit S.p.A. and sovereign positions which resulted in a combined write-back of approximately €1.1 million.

Item 160 - Administrative costs

160.) Administrative costs	3} December 2019	31 Decomber 2018
	F * 100	€ * 000
a) Stall exponses	(4,163)	(4.479)
Wages and antaries	(3.647)	(3.515)
Social security costs	(317)	(152)
Pension Costs	(199)	(212)
b) Other administrative expenses	(10.300)	(1)_592)
Total Adminstrative costs	(14.469)	(13.673)
	31 December 2019	3] December 2018
Auditor's Remoneration excluding VAT (included in other naministrative expenses)	€ 000	€ 000
Stalutory Audil	( { } ( } ( })	(115)
Other assurance services	(45)	(45)
	(153)	(160)

The increase in other administrative expenses was driven by an increase in banking levies during the year.

Included in other administrative costs are banking levies totallion (31 December 2018: €6.5 million). Also included in other administrative costs are informations and technology ("{C"") related costs totalling £1.3 million (31 December 2018: €1.4 million). Also included in other administrative costs are professional services related costs totalling €0.6 million (31 December 2018: €0.4 million).

The number of people employed directly by the Company at the year is 27 (31 December 2018: 28). The average number of employees for the financial year was 28 (31 December 2018: 28).

There were no other assurance or tax services provided by the auditors during the financial year.

Included in staff expenses are costs of €0.3 million related to Equity-Scttled and Cash-Settled Share Based Payments. Refer to Part F: Description of payment agreements based on parent equity instruments for further details.

Staff costs that have been capitalized during the year were nil (3) December 2018: nil). Staff costs previously capitalized of E0.15 million were expensed during the year (31 December 2018: 60.15).

Item 180 - Depreciation on property, plant and equipment

	31 December 2019	31 December 2018
180,1 Isent 200 - Depreciation on property, plant and equipment
	6.000	€ " 000
Depreciation on property, plant and equipment	( 4 2 2 7	93)
of which: deprociation on right of use asset	13051
	(422)	43 )

Item 190 -- Amortisation of intangible assets

190.1 Item 210 - Amortisation of intangible nsacts	31 December 2019	31 December 2018
	6.000	ۼ 000
Amortisation of intangible assets	(837)

Item 200 - Other operating income

200.1 Item 200 - Other operating income	31 December 2018	31 December 2017
	€ 000	000.0
other operation meome
		341

Other operating income of e0.3 million (31 December 2018: €0.3 million) relates to services provided to the ex-Pioneer entities.

Item 270 - Tax expense

290.9	31 December 2019	31 December 2018
Tox (expense) income related to profit or loss from continuing operations	€ 0000	€7000
Curront lax (charge)	(4.638)	(6.305)
Adjustments in respect of provious financial years	( વેટ)
	(4.647)	(6.308)
Profit before lax	36.871	50,000
Tax calculated at a tax rate of 12.5% (31 December 2018. 13.5%)	(4,609)	(6.250)
Effects of:
Dianlowable items	(6)	(18)
Allowable deductions	14
Deferred tax expense (income)
Depreciation in excess of capital allowances	(28)	(28)
Tax relief at source charge	( ( ( ( )	(10)
Adjustments in respect of previous financial years	( 1) )	(3)
Income tax (charge)	(1,647)	(6,308)

Part E: Information on risks and hedging policies

Section 1 Introduction

UniCredit Bank Ireland p.l.c is responsible for the management of its own risks and it has consequently set up processes to properly set the Risk Appetite and the associated data collection, risk measurement and reporting, both for local capital adequacy assessment and at a consolidated level.

The role of the Risk Management function in this context is to design and oversee the Bank's Internal Capital Adequacy Assessment Process "ICAAP" framework, undertaking the following activities:

• identifying which of the Bank's risks are within the scope of the ICAAP;
• · designing the structure and key constituents of the risk appente statement, which also includes developing a process that aligns the business and risk strategy of the bank by linking the Risk Appetite 2020, Budget 2020 and Multi Year Plan 2010-2023; and
• ensuring the local ICAAP framework and its constituent processes and methodologies are both appropriate to local business model requirements (according to the proportionality principal) and consistent with Group ICAAP to allow for consolidated reporting and monitoring and highlight any differences that might exist.

The Bank defines Risk Appetite as the variability in results and/or position, on both a short and a long term, which the Bank and its senior executives are prepared to accept in support of a stated strategy. The aim is not to prevent risk taking, but to pursue the Bank's articulated strategy in a manner that is consistent with the level of risk tolerance set by the Board. In setting the level of Risk Appetite acceptable to the Bank, the Board will take into account factors such as conditions with market environment and regulatory practices, both current and future.

Section 2 Credit Risk general aspects

The Company takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. In the course of its credit business activities the Company is exposed to the risk that an unexpected change in a counterparty's creditworthiness may generate a corresponding unexpected change in the value of the associated credit exposure and may thus result in a partial or full write-off.

The main reasons for a default lie in the borrower's lacking the autonomous ability to service and repay the debt (due to a lack of liquidity, insolvency, etc.), as well as the occurrence of events that are affecting the debtor's operating and financial condition, such as country risk or the impact of operational risk. Other banking operations, in addition to traditional lending and deposit activities, can expose the Company to other credit risks. For example, 'non-traditional' credit risk may arise from:

• entering into derivative contracts:
• purchasing and selling securities, futures, currencies or commodities;
• holding third-party securities.

The counterparties in these transactions or issuers of securities held by the Company could default as a result of insolvency, political and economic events, lack of liquidity, operating problems or other reasons. Defaults of a large number of transactions, or one or more large transactions, could have a material adverse impact on the Company's operations, financial condition and operating results. The Company therefore monitors and manages the specific risk of each counterparty as well as the overall risk of loan portfolios through procedures, structures and rules that steer, govern and standardise the assessment of credit risk, in line with the Group principles and best practice, also aimed to extend their effectiveness to all phases of the economic cycle.

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The Company seeks to minimise credit risk through sound risk management practices. Long term profitability is dependent on the accurate assessment and classification of credit risk. The pricing of credit services must therefore reflect the level of credit risk inherent in proposed credit facilities. UniCredit Bank Ireland p.l.s. is also committed to the early identification of potential credit problems. Early identification affords greater flexibility in maximising recovery and minimising additional risk and losses.

The Company manages the levels of credit risk it undertakes by maintaining a credit management system involving delegated approval authority levels and credit procedures, the objective of which is to build and maintain risk asset portfolios of high quality. Limits are placed on the amount of risk accepted in relation to one counterparty, or group of counterparties, and to industry sectors.

On an annual basis, an Investment Plan are presented to the 'Asset and Liability Committee' (ALCO) for approval and are subsequently approved by the Board of Directors as part of the Budget. Then, individual credit limits within the scope of the Plans are proposed to the Credit Committee comprised of the Managing Director, the Chief Risk Officer and the Chief Financial Officer. Credit proposals outside of the Plans may also be considered by the Credit Committee on an exceptional basis and subject to certain limitations.

UniCredit Bank Ireland p.l.c. grades all its assets on an annual basis or more frequently in case of risk deterioration, to ensure that potential and well defined credit weaknesses associated with the assets are identified and monitored on a timely basis. The current UniCredit Group risk grading framework for Group Wide banks and for Sovereigns consists of eighteen and seventeen grades respectively, reflecting varying degrees of risk of default and the availability of collateral or other credit risk mitigation.

Rating scale	S.&P	PD average	PD min ---	PD max
ਲ ।	AAA	0 00334%	0.00000%	0.0063196
B2	AA+	0.01192%	0 0063186	0.02251%
вз	AA	0.04250%	0.02251%	0 04973%
34	AA-	0.05703%	0.04923%	0 06606%
35	A ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------	0.0765200	0 06606%	0.08864%
B6	A	0.10267%	0 08864%	0.11687%
B7	A-	0.13303%	0.11687%	0-15143%
138	BBB+	0 17236%	0.15143%	0.19620%
Bo	BBB	() 223320%	0.19620%	0.29297%
B10	RBB-	0.38433%	0.29297%	0 50418%
311	BB+	0 66140%	0 50418%	0.8676690
312	લીને	1 13824%	0.86766%	1.42179%
BI3	BB-	1.77598%	1.42179%	2 21840%
R14	R-F	2.77104%	2.21840%	3 46134%
B15	B	4 3236106	3 461 34%	6.40283%
BIG	B-	9.48194%	6.40283%	14 04180%
B17	C/CCCC	20.79449%	14.04180%	99 999900%
318	Default	100.0000%	100.0000%	100.0000%

Group Wide Bank Rating Scale

Group Wide Sovereign Rating Scale

Rating Scale	S&P	PD min	PD max	PD average
ਏ।	AAA	0.00000%	0.00041%	0.00015%
\$2	AA-	0.00041%	0.00312%	0.0011396
83	AA	0.0031290	0.01092%	0.0085997
ਟੈਂਪ	AA-	0.01092%	0.01769%	0 01390%
દરે રે	A.4.	0.01769%	0.02863%	0 02250%
દેશ	A	0.02863%	0.04674%	0.03643%
57	A-	0.04674%	0.07694%	0 0599794
೭8	BBB+	0 07694%	0 12665%	0 09871%
ਣ ਹੈ	BBB	0_12665%	0.20361%	0.16249%
ਤੋ। 0	ввв-	0.20361%	0 31966%	0 25512%
SII	RB+	0 31966%	0.50188%	0.40054%
SI2	BB	0.50188%	0.74185%	0.62885%
SI3	BB.	0.74185%	1.03239%	0.87514%
SIA	13-4	1.03239%	1.43672%	1-21789%
815	B	1.43672%	3.63638%	1.69486%
SIG	13-	3.63638%	16.73938%	7.80197%
SI7	CCC	16.73938%	09 999999 60	35.91484%

As part of its credit risk management strategy, the Risk department conducts periodic reviews of all credit facilities to ensure that significant trends are promptly identified and that borrowers are able to meet interest and capital repayment obligations. The components of this comprehensive portfolio monitoring program are twofold. The first comprises periodic review of individual credit transactions. The second comprises review of all credit facilities in the aggregate.

Aspects which are monitored as part of the portfolio monitoring process include:

• the geographic distribution and industry exposure of the portfolio;
• other significant portfolio concentrations, including credit facilities to one borrower;
• the level of delinquencies, non-performing assets and debt restructurings; ,
• the level of charge-off and recoveries.

The credit policies and procedures are reviewed periodically by (1) the Credit and Risk Committee, and (2) by the Board of Directors. The Credit and Structured Finance Department and the Risk Department at UniCredit Bank Ireland p.l.c. are responsible for the development and maintenance of the Credit policies subject to the final approval of the Board.

The Risk Management function is responsible for the credit risk reporting at portfolio level, producing reports both recurring and specific (on demand of Senior Management or external entitles, e.g. regulators or rating agencies). Credit portfolio performance is analysed with reference to its main risk drivers (such as growth and risk indicators) customer segments, industrial sectors, regions, and impaired credits performance and related coverage.

Country risk is the risk of losses caused by events identified at country level and not at level of specific transaction, counterparty or counterparty group. It is therefore a collection of risks that mainly includes sovereign

risk, transfer and convertibility risk, risk related business environment and jurisdiction, political and geopolitical risk, and economic risk is primarily managed by determining the appropriate groupwide maximum risk levels that can be assumed by the Legal Entities belonging to the Group towards all counterparties (sovereigns, government entities, banks, financial institutions, corporate customers, etc.) residing in or related to the country for cross-border transactions (from the Entity providing the loan).

Country risk management processes are mainly concentrated at UniCredit Group level in terms of both methodological aspects and the decision-making process, in order to ensure a uniform assessment and monitoring approach, particularly for the rating assignment, PD (probability of default) and LGD (loss given default), as well as control of risk concentration.

The Country rating assignment (both in terms of PD and LGD) is performed by using the specific internal rating model. The analysis, focused on both qualitative and quantitative factors, is an integral part of the rating calculation process.

The key objective of the reporting of the credit portfolio is to detect any signs of deterioration and, therefore, to take appropriate corrective action by analysing the main components of credit risk such as EAD (Exposure to Default), EL (Expected Loss), Migration, Risk Cost, etc.

Section 3 Risk management organisation, processes and key functions in applying the ECL upproach

UniCredit Banking Group, with reference to the Loan Loss Provision process, has the following responsibility;

• for Performing exposures, to define the UniCredit Group guidelines in terms of:
  • impairment methodological Rules in line with the IFRS 9 Standards;
    • o expected credit loss measurement;
    • o definition of the Transfer logic criteria qualifying the event of significant deterioration in credit risk, either in terms of quantitative and additional criteria for the Stage allocation.
• For Non Performing exposures to define the UniCredit Group guidelines in terms of:
  • o identification in line with the most recent Default definition as per CRR Article 178, necessary adjustments in case of impairment;
  • o individual and collective assessment for the non performing exposures and POCl treatment

The UniCredit Group Credit Risk Function is responsible for the Bank's eligible asses.

As the Company invests in Group wide portfolios, several tasks related to the ECL calculation process are performed at group level in accordance with Group guidelines on the Loan Loss Provisioning process under IFRS 9, such as:

• development and maintenance of the methodologies for estimating the Loan Loss Provisions;
• parameterization for the risk parameters and transfer logic for group wide portfolios;
• performance of internal back testing activities, at Group level, on systems for measuring Expected Loss.

Section 4 Measurement method for expected losses

The Credit Risk processes described in the previous paragraphs are also the basis for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through comprehensive income and relevant off-balance sheet exposures as required by IFRS9.

In order to meet the requirements of the Company leverages specific models that have been developed at Group level to calculate expected loss based on PD, LGD and EAD parameters, used for regulatory purposes and adjusted in order to ensure consistency with accounting regulations.

For this purpose the calculation of impairment in accordance with loses is based on two main pillars:

• the stage allocation of the credit exposure;
• the associated calculation of expected credit loss.

In UniCredit Group the Stage allocation is based on a combination of relative and absolute elements. The main elements are:

• · comparison, for each transaction, between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of cach transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination);
• absolute elements such as the backstops required by law (e.g. 30 days past-due);
• · additional internal evidence, including renegotiations of financial difficulties met by the counterpart (i.e. Forborne classification).

With regard to debt securities, the Group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard.

The outcome of the stage allocation is the classification of credit exposure in stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically:

• Stage 1: includes (i) newly issued or acquired credit exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption);
• ، Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition;
• Stage 3: includes impaired credit exposures.

The outcome of Stage allocation drives the calculation of impairment. In fact, for exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure.

As at 31 December 2019 the Company only had Stage 1 exposures (31 December 2018: The Company only had Stage I exposures).

The Stage Allocation model is tested at each reporting date; in timely capture both significant deterioration and its reverse in a symmetric way so to correctly allocate each transaction within the proper stage and related expected loss calculation model.

With reference to the calculation of expected credit loss, please note that this amount is based on PD, LGD and EAD parameters adjusted, starting from the parameters used for regulatory purposes, in order to ensure

consistency with accounting regulation. The main adjustments performed to the parameters used for regulatory purposes include those adjustments needed to arrive at the calculation of a point-in-time and forward-looking expected credit loss as well as those needed to include multiple scenarios.

Section 5 Parameters and risk definitions used for calculating value adjustments and stage allocations

The Group has developed specific models for calculating the expected loss; such models are based on the parameters of PD, LGD and EAD and on the effective interest rate. In particular:

• the PD (Probability of Default), represents the probability of occurrence of an event of default of the credit exposure, in a defined time lag (i.e. I year);
• the LGD (Loss Given Default), represents the percentage of the estimated loss, and thus the expected rate of recovery, at the date of occurrence of the default event of the credit exposure;
• the EAD (Exposure at Default), represents the measure of the time of the event of default of the credit exposure;
• the Effective interest rate is the discount rate that expresses of the time value of money.

Such parameters are calculated starting from the corresponding parameters used for regulatory purposes, with specific adjustments in order to ensure consistency between accounting and regulatory treatment despite different regulatory requirements.

The main adjustments aimed at:

• removing conservatism required for regulatory purposes;
• introducing "point-in-time" adjustments to replace "through-the-cycle" adjustments required for regulatory purposes;
• · including "forward looking" information;
• extending credit risk parameters to a multi-year perspective.

With reference to lifetime PD, through-the-cycle PD curves obtained by adjusting observed cumulated default rates were callbrated in order to reflect point-in-time and forward-looking forecasts on portfolio default rates. Recovery rate incorporated into through-the-cycle LGD was adjusted in order to remove conservatism and to reflect the most updated trend of recovery rates as well as expectations about future trends discounted at effective interest rate or at its best approximation.

The lifetime EAD has been obtained by extending the 1 year regulatory or managerial model, removing margin of conservatism and including expectation about future drawing, levels.

With reference to the quantitative component of the model for stage allocation, the Group has adopted a statistical approach based on a quantiles regression whose objective is to define a threshold in terms of maximum variation acceptable between the PD at the time of origination and the PD assessed at the reporting date. The variable objective of the regressive model is thus the change between the PD at the reporting date compared to the one at the date of origination while the explicative variables are factors such as the age of the PD at the date of origination, etc.

A key component of the model is the definition of the quantile that identifies the amount of Stage 2 expected on average in the long-run and that affects the determination of change in PD after which the transaction is classified in Stage 2. The average quantile in the long run is determined based on the expected

average of deterioration of the portfolio determined by the rate of defaults as in any other deterioration stage (i c. 30 days past due).

The amount of exposures classified in Stage 2 at each reporting date will be around the quantile identified for the long run based on the economic conditions at the time and on the future expectations about the evolution of the economic cycle.

With reference to Stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d'Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates.

In particular EBA has defined as "Non-Performing" the exposures that meet one or both of the following criteria:

• material exposures with more than 90 days past due;
• exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and
• realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due.

The expected credit loss either one year or lifetime depending on the stage considers "forward looking" information and macroeconomic forecasts under the baseline scenario through a direct adjustment of the credit risk parameters while the nultiple scenarios effect is captured through the application of an overlay factor directly applied to the portfolio expected credit loss.

The process defined to include macroeconomic scenarios is fully consistent with macrocconomic forecast processes used by the Group for additional risk management objectives (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. The starting point is therefore fully aligned while the application is differentiated in order to comply with different requirements using internal scenarios.

UniCredit Group has onted for the low credit risk exemption for (and only for) debt securities within the scope of IFRS 9 financial instruments (i.e., debt securities recorded at amortized cost (AC) or at fair value through other comprehensive income (FVOCI)).

In order to perform stage allocation on debt securities, the Bank is required to identify the unit of account. The unit of account has been defined as the Tranche level, which means that if the Bank buys the same security at 2 different points in time, each position would need to be individually assessed for stage allocation.

Upon the application of the low credit risk exemption for debt securities, however, even if the Bank buys the same security at 2 different points in time, the stage allocation will be first of all assessed at security code level (i.e. ISIN code/Unit of Account level). At the same time also LLP will be calculated on aggregated level, based on the average price used for carrying value calculation.

The stage allocation approach for debt securities requires assessing whether the debt security is investment grade or not.

If the debt security is Investment Grade, then all the positions shall be allocated in Stage 1.

If the debt security is Not Investment Grade, considering that the legacy system which manages debt securities may not be the same across all Legal Entities in the Group, with a different granularity level of information available, the Bank must assess its local capacity to apply the "regular" Transfer Logic approach applied to Loans perimeter (on rated portfolio). In particular:

• a) if the Bank, given its current local legacy system and data availability, can retrieve and distinguish the inception date and the inception PD of each tranche, then the Bank shall apply for these debt securities the "regular" Transfer Logic applied on loans, assessed at single Transaction level;
• b) if, given its current local legacy system and data availability, cannot retrieve and distinguish the PD at inception by each tranche, but it's able to statistically demonstrate that in the majority of cases the tranches for each debt security (at security code level) are purchased within a short time frame, so that they all have almost the same inception PD, the Bank is allowed to apply the "regular" Transfer Logic applied on loans, but assessed at Security Code level (instead of at Tranche level);
• c) if, given its current local legacy system and data availability, cannot apply neither of the two cases described above, then all the positions shall be allocated in Stage 2;

Option c) is the one currently applied within the model used by the Bank.

When applying the low credit risk exemption, it should be highlighted that in case the Bank has already assessed through group internal rating models the risking(PD) of the security counterpart (issuer), the Bank will use the internally measured PD mapped into the Group Master-Scale to assess the Stage allocation. On the other hand, if an internal rating is not available, the Bank will use the one available and provided by external agencies.

Section 6 Credit Risk tables

The below table shows the Bank's credit exposure broken down by industry:

31 December 2019 Exposure Droken Gown by Industry
Industry .	Panns and	"Cost Cosh and cash)	Financiali		Financial assets Derivatives and	Total
	receivables with !	· Balancos and Lonna	-255cts	nt fair value	Held for
	customers)	and receivables with	mandatorily	through other	Trading
		Danka	at Tair vaice	comprehensive
				Ancome
	. . C., 000	6.900	€,000	€,000	€,000	· €,000
Sovereign	2,708,046			4.905.532		7,613,578
Stage I impairment	(447)	L	ﺷﻬ			(4-17)
Asset backed scourities			29,739			29 739
Stage I impettement	ﺔ				-
Financial	738,295			192.052	1	920-347
compies/invests verissiment balling s
Stage I impuirment	(387)			ﻌﻘ		(387)
Insurance
Stage imparment		-	14
Municipals/Other Creneral		-	U	175.560		175,566
Government
Suge I impairment
Leasing companies				1
Stage I impairment
Sanks		2,526,752		721,002	37.633	3,285,387
Stage I Impanement		(875)				18751
Non-Financial		1
Stage I imparment
Total	3.435.507	2,525,877	29,739	5,994,152	37,633	12,022,908

.............................................................................................................................................................................. Callery of Are States Are Mar

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Industry : " " " " .	DUE SHORT receivables with Enstomers	Ful suns Buch and Sas I .balances and Loans and receivables with ) 11:38 Ka	11 100 00 00 01 City 1 ASSETS mandatorily at fair value	Financial assets Derivatives and Total at firir value through other comprehensive	Held for Trading
	4.050	ਦੇ ਮਿਸ	€,000	income €,000	€,000	€,000
Sovereign				7.042.032	1	7,042,032
Stage I imparment
Asset backed securities			28,642			28,642
Stage I impornent		E	-
Financial companies/Investment banks	1.669.382			193,224		1,862,606
Stage I impairment	(1,0,8,5)					11,085)
1 13.5 111 211 222 22	45,002					-15_002
Stage I Intpatrialement	1751					1 101
Missus ipals/Cither Cremeral Government	-			176.826		176.826
Saugu I imprateriant
Leasing companies
Stage I imparment
Banks		4.523.122	19-701	735. 14	58,044	5,335,9811
telsite insperiment		(2,883)				(2,883)
Non-I unine in!
Stage I tripcient
Total	1-713.221	4.520.239	48.343	8,147,196	58.044	14,487,043

31 December 2018 Exposure broken down by industry

The total of the exposure broken down by industry table €12.0 billion (31 December 2018: €14.5 billion) is represented in lines 10-50 of the Balance Sheet.

Included in the total amount of €12,0 billion (31 December 2018: €14.5 billion) for exposures broken down by industry is an amount of €2.9 billion (31 December 2018: €5.0 billion) which is due from UniCredit Banking Group.

There were no stage 2 impairment or stage 3 impairment exposures as at 31 December 2019 and 31 December 2018.

The below table shows the Bank's credit exposure broken down by counterparty's country of residence:

31 December 2019 Exposure broken down by geographical area

Geographical area	Pan Street Somas and	Cash and cash	Financial	Financial assets Derivatives and		- Total
	receivables with	balances and Loans	SASSEKE	int ther value	Held for
	Customers	and receivables with	mandatorily	through other	Trading
		32333 3	at fair value)	comprehensive
				0 117 03 181 0
	. €,000	€,000	€,000	8.000	€,000	· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·
European Union Including:	3.435.507	2.525.002	20,739	5,994,152	37,633	12,022,033
reland		10.058				110.058
Suge I impatment
11:11	2,657,839	1,780,900	29,739	2.653.763	32.404	7,154.645
Stage I imparment	188411	18751				(1 689)
Spaul	778.502			1,466,176		2,244,678
Stage / impairment	(20)					(20)
United Kingdom		144		41.97		41,971
Stage I impairment
Germany		607 305		1	5.229	612,534
Stage I impairment
Rest of Europe		27.614		1,832,242		1,859,856
Stage I impatrient
Non Ell
Stage I impatrment
North Amerien		875				875
Stage I impairment
Total	3,435,507	2,525,877	29,739	5.994,152	37,633	12,022,908

31 December 2018 Exposure broken down by geographical area

Geographical aren	Loans and	and the state of the same of the same of the states of the states of the states of the states of the states of the states of the states of the states of the states of the sta Cash and cash	【【即得用原定用海质		Finneial assess Derivatives and	Total
	receivables with	· balances and Loans	:5081年度最	ter fort value	Held for
	Customers	and receivables with	mandatorily	through other	Trading
		banka	at foir valuel	comprehensive income
	€,000	€,000	€,000	€,000	€,000	6.000
European Union Including:	1,713,221	4,520,234	48,343	8,147,196	58,044	14.487,043
Ircland		23.212				23.12
Stage I unpartnern						P
Italy	1,713 375	3,867,068	28.642	3.901-215	58,044	9 568,344
Stage I impairenent	(1.163)	(2,483)				(4,046)
Systin				2.233.804		2,233,809
Stage I impairinem			-
United Kingdom	1 009	13,989		43,008		57.096
Stage I impatricent
Clermany		613,050				613.050
Stage I impairment					-
Rest of Extrupe		0 803	19.701	1.969.074		1,995,578
Stage I impulrinent			1	5
Non EU			1
Stage I impatrinent			L
North America		-				5
Stage / impaisment
Total	1,713,221	4,520,239	48,343	8,147,196	58,044	14,487,043

The total of the exposure broken down by geographical area table above €12.0 billion (31 December 2018: €14.5 billion) is represented in lines 10-50 of the Balance Sheet.

Included in the total amount of €12.0 billion (31 December 2018: €14.5 billion) for exposure broken down by geographical area is an amount of €2.9 billion (31 December 2018: €5.0 billion) which is due from UniCredit Banking Group.

There were no stage 2 impairment or stage 3 impairment exposures as at 31 December 2019 and 31 December 2018.

The below table details the Bank's credit exposure broken down by UniCredit Bank Irelit grade ratings.

The Bank applies a scale of ratings that comprises 7 rating categories. Grades B1 - B9 correspond to AAA down to BBB (i.e. investment grade level of external rating categories), whereas rating categories B10 to B18 correspond primarily to the sub-investment grade level.

Rating cutegory	Lonns and	Cost und cash . Ninemein			Financial assets Dorivatives and	Total
	receivubles with	Thelances and Loans	Contrastration and Sease	at fair valuel	Hold for
	Customers	and receivables with unandstorily		through other	""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""
		- Danks	at fair value	comprehensive	Call Property of
				·· income	Carreland Controller
	200,000 000 € 000		E,000] E,000	DOCHER CE, BOO	€,000	60933.
Bt 10 33				1,903,402		1,003,402
- Group		u
- Non-group		-		1,003,402	F	1 003 402
Stage I impairment		-
B4 to E46		137,660	29,739	662,843	37,633	867,876
- Group					37,633	37.633
- Non-group	-	137.650	29,739	662 843		830,243
Stage I impairment
37 10 99	3,435,507	2,388,217		1,654,078	re.	7,477,802
- <iraup	450 -158	2.386.000				2 836.458
- Non-group	2,985,883	3,002		[ , 0 5 - 0 7 8		4 643,053
Stage I Impatricht	183-11	( 8 3 3)				11.704)
B10 10 B12	t			2,673,829		2,673,829
- (Traup
- Non-group				2,673,829		2.673.839
Stage I impatment
13 8 8 814
dnost? "	li					1
- Non-group			144	=
Stage I impatrical
1315 10 1317
(נעטנג - ונטא -
Stage I impairment
Unrated	t
- Circup
- Non-group
Stoge I imparment
Total	3,435,507	Z,525,877	29,739	5,994,152	37,633	12,022,909

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AT EVER HERE PARD EVER BEARCH DOAD IN FAMILY FAUL (193 Rating category	Loans and receivables with	Cash and cash survers and Loans	· ASSETS	Mmancial . Knancial assets Derivatives and at fair value	Heid for	Total
	customers	and receivables with banks	mandatorily) at fair value	. through other comprehensive Income	Transage Children Children	Property of Children
	్,000	€,000	······ ··· · · · · · · · ·	E. Obo Children Children Children	દ,ભાજ	. 6,000
B1 to B3				1,017,220		1.017,220
- Group
- Non-group		-		1,017,220		1.017.220
Stage I impannent
B4 10 336		20,894	28,642	672,898	56, 124	778,558
- Circup					56.124	56, 1 24
וקלוב 18-11-1141 -		20,894	28,642	673.898		722,434
Stage I importinent
37 to 89	1,73,221	4,499,345	19,701	2,533,416	1,920	8,767,603
- Group	430,505	4.480,118	19,701		1,920	+,952,244
- Non-group	1,263.879	22,109		2,533,416		3,819,404
Stage I impoirment	(1.103)	12,883)				(4,046)
BIO In BIZ				3,923,662		3,923,662
- (SE(114)
(Nass-group)				3 923 662		3,923,662
Stage I imparinent
B13 & B14			-
- Group
- Nos-group	-
Stage I impairingent
(315 13 817				f
- Non-group			1
Suge I imparment
Unrated		1
- Group					n	n
- Nors-Broup
Suge I impoirment
Total	1.713,221	4,520,239	48,343	8,147,196	રક, 044	14,487,043

31 December 2018 Exposure broken down by

The total of the exposure broken down by rating category above E12.0 billion (31 December 2018: €14.5 billion) is represented in lines 10-50 of the Balance Sheet.

Included in the total amount of €12.0 billion (31 December 2018: €14.5 billion) for exposure broken down by rating category is an amount of €2.9 billion (31 December 2018: €5.0 billion) which is due from UniCredit Banking Group.

There were no stage 2 impairment or stage 3 impairment exposures as at 31 December 2019 and 31 December 2018.

For details on derivatives please refer to the notes on derivatives within the market risk note in Part E: Information on risks and hedging policies Section 9 - Market Risk.

Maximum Credit Risk Exposure

Maximum credit risk exposure	31 December 2019 31 December 2018	000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
Loans and receivables with customers	3 435 507	1,713,221
Loans and receivables banks	2,525,877	4,520,239
Financial assets mandatorily at fair value	29.739	48.343
If mancial assets at fair value through other comprehensive income	5.994.152	8.147.196
Derivatives	37 633	58,044
Contingent liabilities and commitments
	12,022,909	14,487,043

Derivatives subject to Netting arrangements and similar Agreements:

Amounts not set off on the Statement of Financial Position:

【的手机场直播 【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】【 】 12 000 000 000 000 000 000 000 000 000 000 000 000 000 000 0000 0000 0000 0000	1 . 1 . 1 . 31 December 2019
Accounting classification:
Fair Value:
Financial assets held for trading	3.809
Hedging derivatives	33-824
Financial liabilities held for trading	(5.002)
Hedging derivatives	(684,626)
Collateral held at amortised cost:
Loans and receivables with group banks (collateral related to cleared swaps)	72.000
Loans and receivables with group banks (collateral related to non-cleared swaps)	606.720
Net amount	26.725

Derivatives subject to Netting arrangements and similar Agreements: Amounts not set off on the Statement of Financial Position:

2019 December 2019 11:00 PM 12 12 12 12 131 December 2019 Accounting classification: 11 - 1 - 1 - 1 - 1 - 1 - 1 - 1 - 1 - 1 - 1 -	€ 000
Fair Value:
Financial assets held for trading	2.206
Hedging derivatives	55.838
Financial liabilities held for trading	(1-318)
Hedging derivatives	(753.973)
Collateral held at amortised cost:
Loans and receivables with group banks (collateral related to cleared swaps)	71.000
Loans and receivables with group banks (collateral related to non-cleared swaps)	613.050
Loans and receivables with non-group banks (collateral to non-eleared swaps)	12.989
Net amount	(208)

E-MARKET
SDIR CERTIFIED

Repo's subject to Netting arrangements and similar Agreements: Amounts not set off on the Statement of Financial Position:

and on the closed for the comments of the comments of any with the same of 2019 Accounting classification :	€*000
Repo's held at amortised cost:
Deposits from group banks	(278-005)
Deposits from non-group banks	(2.259.240)
Deposits from non-group customers	(3.321,942)
Collateral held at amortised cost:
Loans and receivables with group banks
Loans and receivables with non-group banks	170.884
Loans and receivables with non-group customers	29.819
Net amount	(5,658,484)

Repo's subject to Netting arrangements and similar Agreements: Amounts not set off on the Statement of Financial Position:

Ascounting classification: 11 Comments of the 100 Comments 31 December 2010 Accounting classification;
Repo's held at amortised cost:
Deposits from group banks	(1.886.906)
Deposits from non-group banks	(3.611.050)
Deposits from non-group customers	(3,402,275)
Collateral held at amortised cost:
Loans and receivables with group banks	2,740
Loans and receivables with non-group banks	6.803
Loans and receivables with non-group customers	129.031
Deposits from non-group banks	(6.391)
Deposits from non-group customers	(11,315)
Net smount	(8,779,364)

The Bank has in place netting agreements with major counterparties in order to mitigate the Counterparty Risk for both Credit Risk and Regulatory purposes.

Within treasury operations the Bank employs bi-lateral close out netting agreements (ISDA netting agreements and some Credit Support Annexes) for its OTC derivative trading activity and Global Master Repo Agreements 'GMRA' for its repo and reverse reportrades. As at 31 December 2019 and 31 December 2018 the Bank did not have any reverse repo trades. The Bank did not hold any collateral as security or have any other ECL credit enhancements in place as at 31 December 2019 and 31 December 2018.

Repo and reverse repo trades are market standard sale and repurchase agreements governed by a GMRA or cleared through a central counterparty and governed by a clearing agreement.

One counterparty agrees the sell and simultaneously repurchase a security at a later date. The difference in the proceeds received and paid representing the agreed cost of financing. All economic exposure to the underlying securities remains with the repo seller (except in the event of default of the repo seller). The issuer of the security is not party to the sale and repurchase agreement.

Included in the fair value amount is asset item 20 a) financial assets held for trading, asset item 50 hedging derivatives, liability item 20 financial liabilities held for trading and liability item 40 hedging derivatives. Included in collateral amount are the derivative margins which are classified under asset item 40 financial assets at amortised cost.

31 December 2019 Exposures outside the scope of the expected credit loss model

Asset item 20 c) financiat Currency [Currency lassets mandatorily at fair value, began the many of the completed to the comments of the		. Maturity date . IProduct . [Type . ] Notional ]	(1) was and the management members and any many and		11 €,000 >	Fair value : E.000
FE MORTGAGE 30/10/43	. EEE TIS	02 May 2023 BOND		ABS		29.7391

31 December 2018 Exposures ontside the scope of the expected credit loss model

Asset item 20 c} financial Currency assets mandatorily at fair value		Maturity date (Product Type Notional consistent to the may be contract and consistence and the contribution of the contribution of the contribution in		6,000	----------------------------------------------------------------------------------- €,000
FE MORTGAGE 30/10/43	EUR	02 May 2023 EOND	A135	33-389	28.62
UC INTL 29/12/49 A	2 ESCURE	10 December 2019 BOND	BOND	18.100	18 875

The Bank did not hold collateral as security related to asset item 20 o) financial assets mandatorily at fair value as at 31 December 2019 or as at 31 December 2018.

Section 7 Sovereign Exposures

Breakdown of Sovereign Debt Securities by Country and Portfolio

The below table provides an overview of the Company's sovereign exposures' as at 31 December 2019:

Country/Portfolio	31 December 2019 31 December 2019 0000
	Nominal Value	Fair Value
-Belgium	20.000	22,169
Financial assets at fair value through other comprehensive invome	20,000	22.169
- Czech Republic	342.500	384.510
Financial assels at fair value through other comprehensive income	342-500	384,510
- Italy	4.354.031	4.840,652
Financial assets at fair value through other comprehensive income	2.450.000	2,637,076
Loans and receivables with customers	1 904,031	2,203,576
Poland	152.046	171.217
Firancial assets at fair value through other comprehensive income	152.046	171,217
- Portugal	35.000	36,753
Financial assets at fair value through other comprehensive income	35 000	36,753
Slovakit	230.692	256,164
Financial assets at fair value through other comprehensive income	230.692	256,164
- Spain	1,885,000	2,177,247
Financial assets at fair value through other comprehensive income	1,190,000	1,397,643
Loans and receivables with customers	695 000	779.605
Total	7.019.269	7.888.712

Country/Portfolio de grapped the pitch (2008) 2008 31 December 2018) 31 December 2018 서울 대통령 대통령 (대한민국) 대한민국 대학교 국민 대학교 대학교 (대학교) 대학교 (	1000-2000 1000 1000 1000 1	€*000
	Nominal Value	Fair Value
-Belgium	20,000	22,397
Financial assets at fair value through other comprehensive income	20,000	22,397
- Czech Republic	342,500	395,267
F manchil assets at fair value through other comprehensive income	342,500	395, 267
- Italy	4,625,672	4,999,525
Financial assets at fan value through other comprehensive income	3,691,000	3,885,105
Loans and receivables with customers	934,672	1,114,420
- Poland	256,245	283,498
Financial assets at fair value through other comprehensive income	256,245	283,498
- Portugal	35,000	38,557
Financial assets at fair value through other comprehensive income	35.000	38,557
- Slovakia	228,886	255,234
Financial assets at fair value through other comprehensive income	228.886	255,234
- Spain	1,885,000	Z,161,973
Financial assets at fair value through other comprehensive income	1,885,000	2,161,973
Total	7,393,303	8,156,451

Sovereign Debt Securities and Loans - Weighted Tenor

The table below shows the weighted duration of the sovereign bonds:

Country	Comments of the program of the section of Financial Year end 31 December 2019 SARE CARTER SECTEMENTS	Financial Xoar end 31 December 2018 Years
- Belgium	3.48	4.48
- Czech Republic	2.34	3.34
- Italy	4 55	4.21
- Poland	2.46	2.27
- Portugal	0.46	1.46
- Slovakia	3.19	4.20
- Spain	4 63	5.50

Sovereign Debt Securities - Classification

The below table shows the classification of sovercign bonds and their percentage incidence on the total of each portfolio under which they are classified:

		Amount as at 31 December 2019 - Amount as at 31 December 2019
	Financial assets at fair value	through other comprehensive Loans and receivables with customers
	Ancome (€,000) -------------------	(E.QOO)
Fair Value	4.905.532	2-983.180
% Portfolio	82%	87%

		and the comments of the Amount as at 31 December 2018 - [ - ] - Amount as at 31 December 2018 -
(R) (A) (The States (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (		I we Financial assets at fair value describing the continued to the comments were
		the the through other comprehensive Loans and receivables with castomers
	income (C,000)
Fair Value	7.042.032	1.114.420
% Portfolio	86%	15596

In addition to the exposures to sovereign debt securities, loans given to central and local governments and government bodies must be taken into account. The total amount of sovereign loans held by UniCredit Bank Ireland is £110 million (31 December 2018: €14 million). The full amount of £110 million (31 December 2018: €14 million) is with the Central Bank of Ireland in relation to the minimum reserve requirement and the deposit protection agreement.

Section & Liquidity Risk

The UniCredit Bank Ireland p.l.c. policy defines Liquidity Risk as the risk that a Bank may find itself unable to fulfil its payment obligations (by cash or delivery), whether expected, thus jeopardising its day to day operations or its financial condition.

The main goal of the Bank's overall liquidity management is to maintain an adequate liquidity and funding position to allow the Bank to meet its payment obligations not only on an on-going basis, but also in ease of market tensions without jeopardizing its brand's name, keeping the refinancing risk at a manageable level. The going concern management of liquidity articulates in short-term liquidity, medium-long term liquidity and intragroup liquidity. With reference to the end of 2019, the Bank's liquidity profile is deemed adequate, with all metrics monitoring the short term profile (Operative Maturity Ladder (OML), Liquidity Coverage Ratio (LCR)) and long term structure (Net Stable Funding Ratio (NSFR), Adjusted NSFR >3y and >Sy and Structural FX Gaps) compliant with set of thresholds in the Risk Appetite Framework (RAF) 2019 and Granular Limit 2019.

UniCredit Bank Ireland regularly monitors its liquidity risk profile in compliance with Supervisory and Group rules and EBA guidelines with daily, weekly and monthly frequency. UniCredit Bank Ireland is part of the Liquidity Reference Bank, UniCredit S.p.A. of the UniCredit Group where liquidity management is centralised and in which the Company's liquidity ladder is included. In fact, with its liquidity profile consolidated in the Liquidity Reference Bank Italy, U.C. Ireland is responsible to preserve a positive liquidity position in the 3-month horizon by setting a limit at €0.

A set of limits and triggers on the liquidity metrics ensures that the Bank maintains liquidity and funding position sufficiently sound to endure possible effects of adverse scenarios. The system of restrictions set at Group and Bank level is articulated in the Granular limits. RAF is annually approved by the Board of Directors which, in case triggers and/or limits breaches, is immediately in case of limit breach, is required to approve the remedy action. However, the granular limits derive from the RAF and its setting, approval and escalation process involves mainly the local ALCO and Group ALCO. In case of breaches on RAF and/or Granular limits, the relevant Group functions are immediately informed.

In term of liquidity structural prowth of assets is financed through appropriate funding, by identifying the most appropriate mix of instruments and maturities during and investment plan process, with the aim of ensuring an adequate level of maturity transformation of the banking activity. The financial stability of the balance sheet and of the medium/long term funding sources aims to avoid excessive and unexpected pressures on the funding requirements in the short term liquidity position, and to optimize the cost of funding,

The Bank's resilience in a situation of contingency is regularly guarded and tested by a set of processes, like the liquidity stress testing, which simulates the effect of a crisis on the different clusters of the balance sheet under different scenarios; the liquidity reverse stress testing, which aims to identify the conditions that would threaten the Bank's viability, starting from a predefined outcome. The contingency liquidity management framework instead provides a set of rules and a dedicated funding contingency plan, independently reviewed by the risk function, to be activated in case of stress to preserve the Bank's ability to meet its payment obligations.

Analysis of Conneial linbilities by remaining contractual maturity - 31 December 2019

	I finneial year or 5 finuncial years or
	Ren party of the all in de mand	3 months or tess	less but over 3 an on the	less but over l угдг	over 5 financial 50 × 8.0 ×	Total
	بوس- 4	undo.3	E 1000	C'000	€ . 000 D	é ann
De paranten Concert Bublig fa a	ﺔ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤ	2.361.669	676.910	783,198		3,821,816
Deposits from customers	1	3,365,536	158.457			3.523.092
Debt securities it isnue	-	71.058	1.770.450	220, 471		4,962,879
Pinnscint liabilities held for trading"		4,474	10 418	6,410		20,501
Hedging derivatives **	-	78,315	344 159	Pag 414	235,944	1,500,833
Other fintrilles			4.552	8, 61 (1		13.163
Undrawn commitments		-
-1 -1 -1 -1	34	5,831,953	2,814,545	1.961.194	235,944	10,843.584

4 Cansists of economic hedging derivatives valued at the current nommal

** Cross ourrency swaps do not settle net

	I finnencial your 5 firmuchat years or
			or less but over 3	1638 Bitt over I	orer 5 Thunchi
	Repaymble on demand	3 months or less	11/00/11/13	yrar	54500	Total
	0000	€ 000	ۼ000	E " 0 (41)	E'DUD	6-4 (34) (1
De popnits ifge Trepuis 2220 lik le	37	3,660 GOS	1,529,113	372,273		6,001,428
Deposits from customers	M	3,538,075	67.850	613.352		3,673,176
Debt securities in issue		1,693,021	135,952	375,094		2,204,064
Finatacial fintilities lield for tradling "		35,245	7,671	1,008		43.944
Bedging derivatives **	-	90,250	289 655	1,077,387	271,494	1.729,786
Cot lance a lest Ballin bet g		r	2,745			2,745
Lindrawn commitmitmitmits				r	-
"I'utuk	37	9.017,496	2,473,006	1.892.113	271,494	13.654,145

Analysis of Ilmancial linbilties by remaining contractual maturity - 31 December 2018

· Consists of economic hedging derivatives valued at the corrent modimal.

** Cross currency swaps do not settle net.

Liquidity Coverage Ratio (LCR)

The LCR was introduced to improve the short-term resilience of the liquidity risk profile of institutions, requiring them to hold a buffer of "high quality" liquid assets to match net liquidity outflows during a 30-day period of stress. The Liquidity Coverage Ratio requires financial institutions to hold a sufficient level of high quality liquid assets to sustain a stressed 30 day cash flow scenario.

The ratio became a mandatory requirement in October 2015 with a minimum ratio requirement of 60% at this date. At the balance sheet the mandatory requirement was 100% (31 December 2018: 100%).

ILCR		31 December 2019 31 December 2018
LCR	2,635%	471%
Minimum Requirement	100%	100%
Liquidity Buffer surplus	€3.3 billion	€1.9 billion

At the 31 December 2019 the LCR of UniCredit Ireland p.l.c. was 2,635% (31 December 2018: 471%), maintaining a significant surplus above the minimum requirement.

Net Stable Funding Ratio (NSFR)

The Basel Committee for Banking Supervision (BCBS) introduced the NSFR with the objective to reduce funding risk over a longer time horizon by requiring banks to finance their sufficiently stable sources of funding in order to mitigate the risk of future funding stress. In short, the NSFR limits over-reliance on short-term wholesale funding.

The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding. Available stable funding is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered by the NSFR, which extends to one year. The amount of such stable funding required ("Required stable funding") of a specific institution of the liquidity characteristics and residual maturities of the various assets held by that institution as well as those of its off-balance sheet exposures.

Although at the present time there is no EU regulatory requirement to maintain a minimum ratio, the NSFR should be equal to at least 100% on an on-going basis. UniCredit Bank Ireland monitors the ratio on a monthly basis in compliance with its Risk Appetite Framework.

At the 31 December 2019 the NSFR of UniCredit Ireland p.l.c. was 130% (31 December 2018: 111%).

Section 9 - Market Risk

Market risk is defined as the risk of facing losses in on and off balance sheet positions, due to market prices movements. These market prices movements can be due to general conditions, such as the interest rate shifts due to European Central Bank decisions or due to factors connected to the specific issuer of financial instruments held by the UniCredit Bank Ireland pl.c. such as the fall in the bond price due to a credit warning on a company. Market risks arise from open positions in interest rate, currency and equity/bond positions, all of which are exposed to general and specific market movement.

The UniCredit Bank Ireland p.l.e. Chief Risk Officer (CRO) department is directly involved in the measuring and monitoring process of the market risk profile of the Banks CRO ensures daily that all reievant information and sensitivities (Basis Point Value "BPV" and Credit Point Value "CPV") generated by the portfolio are correctly captured by the system in terms of market risk exposures.

At 31 December 2019, the sensitivity of interest income to an immediate and parallel shift of the was negative €0.457 million (31 December 2018: negative €0.233 million). The sensitivity of the economic value of

shareholders' equity to an immediate and parallel change in interest rates ("parallel shift") of +200pps was negative €27.1 million as at 31 December 2019 (31 December 2018: nogative €11.3 million),

The principal risk within the banking book is Interest Rate Risk that the market value of positions decreases due to unfavourable interest rate movements. In particular there are the following sources of this type of risk:

• Re-pricing Risk, driven by re-pricing mismatches between asset and liabilities, in case of interest rate risk in the banking book;
• Yield curve risk, related to the changes in the slope and shape of the yield curve;
• Basis risk, related to the imperfect correlation in the adjustment of the rates earned and paid on different instruments with otherwise similar repricing characteristics;
• · Optionality, related to the additional source of interest rate risk arises from the options embedded in many bank assets, liabilities, and off balance sheet (OBS) portfolios.

Interest rate risk measurement includes:

• Net Interest Income analysis: this involves a constant balance sheet analysis (assuming constant balance sheet positions during the period) and then performing an interest income for the current period. The simulation includes the analysis of the impact on income from different parallel shocks of interest rates (+100bp, -30bps and ±200bps). Additional scenarios are performed to take into account basis risk and non-parallel shifts.
• · Economic Value analysis: this includes the calculation of duration measures, value sensitivities of the balance sheet for different points on the curve, as well as the impact on the Economic Value from larger shocks. The interest rate risk is monitored daily in terms of Economic Value sensitivity for an instantaneous and parallel shock of +1 basis point value of the interest rate term structure. On a monthly basis the Economic Value sensitivity for larger parallel (+200bps) and non-parallel shocks (steepening, flattening, etc. in line with European Banking Authority guidelines on Supervisory Outlier Testing) in the interest rate term structure and Net Interest Income Sensitivity are measured.

The Interest Rate risk on the banking book is measured and monitored using Value at Risk (VaR) which is the statistical measure used by the Bank to quantify fluctuations (profit or loss) in the value of a portfolio over a predefined period of time (called holding period) of 1 day and with a 99% confidence interval. The VaR model is based on historical behaviour using 250 seenarios and thereby without parametric assumptions about a priori statistical distribution of the portfolio value movements. Based on the risk factor scenarios, the VaR will vary with the market conditions, even though the portfolio does not change. This approach involves the construction of the hypothetical distribution of the yields (profit and losses) of a portfolio of financial instruments directly by means of the historical fluctuations of the market prices. Once the empirical distribution of profit/losses has been calculated, the VaR is given by the percentile evaluation with the selected confidence interval. Sensitivity (BPV and CPV) and VaR metries capture the market risk exposures on Banking Book portfolio, with relative limits set up on both sensitivities and VaR.

Hedging strategies, aimed at complying with interest tate risk limits set for banking book, are carried out with derivative contracts by the Bank. Interest rate swaps specifically are the most commonly used contracts. The hedges used are one-to-one type contracts, i.e. connected to monetary amounts contained in asset or liability portfolios. The majority of specific accounting hedges are recognised in connection with securities in issue or individual financial assets, most commonly assets held as financial assets at fair value through other comprehensive income.

31 December 2019 in € Average €				Maximum € Minimum € 2018 Average €
2,117,552	1.916.037	3.545.475	886.897	1,233,696
31 December 2018 in £	Average C			Maximum € Minimum € 2017 Average €
1.286.142	.233.696	1-555.197	998,923	3,507,525

It is the responsibility of the local ' Assets and Liability Committee' (ALCO), to ensure all market risks are identified and assessed. The Bank's AL.O has the responsibility over all market risks, by approving the triggers and limits over the Sensitivity and Value at Risk (VaR) level and sub portfolio level and reviewing the measurement results. The Bank's Risk Department might propose to the ALCO any sub-allocation of limits to individual desk or cluster of portfolios.

Management of Market Risk - Derivative financial instruments

Hedging Policy

The Company uses the following derivatives instruments for both hedging and non-hedging purposes:

• · Cross currency forward instruments which represent commitments to purchase foreign and domestic currency, including undelivered spot transactions.
• Currency and interest rate swaps which are commitments to exchange one set of cash flows for another.

Swaps result in an economic exchange of currencies or interest rates (i.e. fixed rate for floating rate) or a combination of these (i.e. cross currency swaps). The Company's credit risk represents the potential cost to replace the swap contracts if counterparties fail to perform their obligation. This risk is monitored on an ongoing basis with reference to the current fair value, the notional amount of the contracts and liquidity of the market. To control the level of credit risk taken, the Company assesses counterparties using the same techniques used in its lending activities.

The notional amounts of certain types of financial instruments provide a basis for comparison with instruments recognised on the balance sheet, but do not indicate the amounts of future cash flows involved or the current fair value of the instruments, and therefore do not indicate the Company's exposure to credit or price risks. Derivative instruments become favourable (assets) or unfavourable (liabilities) as a result of fluctuations in market interest rates or foreign exchange rates relative to their terms. The aggregate contractual or notional amount of derivatives on hand, the extent to which instruments are favourable, and thus the aggregate fair values of derivative financial assets and liabilities, can significantly fluctuate from time to time.

The fair values of derivative contracts are accounted in the following items:

• 20 Assets Financial assets held for trading (for economic non-IAS 39 hedging derivatives)
• 50 Assets Hedging derivatives
• 20 -- Liabilities Financial liabilities held for trading (for economic non-1AS 39 hedging derivatives)
• 40 -- Liabilities Hedging derivatives

IAS 39 Hedge accounting

The Company's policy is to use hedge accounting in order to hedge the interest risk for liabilities, loans and receivables and for financial assets at fair value through other comprehensive income.

All hedging derivatives entered into seek to replicate each essential element of the liability or asset to be hedged (Amount, payment dates, maturity and rates). Hedging derivatives are defined including, if existing, "pull to par" effects, to "transform" the associated bond or asset into a "syntherie" market floating rate position with a nominal amount equivalent to par (100%).

Macro/micro hedging strategies are also used and they may also refer to the interest rate risk of the core portion of financial assets.

To the extent that changes in the fair value of the hedging derivatives differ from changes in the fair value of the hedged risk in the hedged item or the cumulative change in the hedging derivative differs from the cumulative change in the fair value of the hedged item, the hedge is ineffective. The amount of ineffectiveness, (taking into account the timing of the expected cash flows, where relevant) provided it is not so great as to disqualify the entire hedge accounting, is recorded in the income statement. Changes in fair value of the hedged item (i.e. bonds) must be measured with using The Euro Interbank Offered Rate ("EURIBOR") discount curves while the hedging instruments (i.e. derivatives) are required to be measured with a using overnight indexed swap ("OIS") discount curves for collateralized derivatives, resulting in ineffectiveness being recorded in the income statement.

In certain instances, cash flow hedging strategies are also used as an alternative to fair value hedging strategies in order to stabilize income statement profits in the current and future financial years. The Company had no cash flow hedges during 2019 or 2018.

The following types of financial instruments have been designated as hedging instruments:

• interest rate swaps;
• cross currency swaps; and
• foreign exchange swap forwards.

Consistency of all essential clements in a hedged item and a hedging instrument seeks to ensure full effectiveness of the hedging relationship. The consistency is:

• initially verified at the beginning of the hedge relationship; and
• periodically verified through retrospective hedge effectiveness testing

IAS 39 Hedge accounting Quantitative information

Redging Derivatives - fair value bedge.	· ****************************
		3 manghs ar less bat over : but over 1 : over'S financial C % C	1. The nu cial your 5 yours be form 3 months	. An an clud y day .	···· ·· ·· ··· ·······························································································································································	Tokal :
En u-nf-period residual life - fair value	16-22 22 15-21 4	6 13 00	2000	2000	00025.3	e'obo
Assel item 50 Hodging derivalives	Interest Raise Secured if		475	3 . 5 7 2	2 = 1) = 3	£3.070
Asset nem 50 Heughing derwall es	Cross Chrichen Steap	고 2 5		20.522		20.25
Anner Tokul		2 2 5	475	2-1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 , 1 ,	9.022	33,824
Liubility Rem 40 Hedging derivatives	Interest Rute Swap		7 337	404-634	2-5 1-9 40	63.913
Liubility item 40 fledging derivatives	Cass Currency Suap		2 - 19 1	28.334		30.715
Liability Total		4	9,724	432,958	241,744	684,626
Hedging Derivatives - fair vatue hedge				Amount no at 31 Docchiber 2019
		3 412 G B 11 11 10 11 11 1		1 fithuntial year . 5 .years or lexs but over . but over 1 " aver & floancing
		less		3 manneles		. Tatul
Ead-ni-period residunt life - nozinnal am onate	SWAI time	und. B	C'000	000.8	€ 000	€ 1000
Asset nom 50 Hedging derivalives	Interest Rute Suasp		68,000	138.000	R80,000	1.439 000
Asket hem 50 Hedging derivatives	Cross Currency Swap	12 462		138,198		1 9 0 . 16 6 1
AAREI Tutal		1 2 - 4 6 2	68 , 0 03 0	273,193	386.000	1,239,660
Liahility ifem 40 Heuging derivalivos	folcrest Rate Snap		35.000	5,097.546	1 . 2 7 8 . 0 3 !	4.611,597
Liabiluy nom 40 Hedging derivarives	Cross Currency Swap		56.529	105.248		261 793
Liability Fotal			291,534	5,202,813	1.278.031	6.773,391
HE ORIGE DELIVERSES = THE VAIDE ILAIDE
		3 ma a d. 8 b. A. ar	I finanetal year S years or lexs 41 . 18 % % 3 % % % % % % % .	Date over 3 = arer 5 Fundereial.
Hedging sooffectiveness as per Income		Kecall		3 months Innuncial year .:	Sears Total
Stutement line item 94 - break down	Swap type	€ 000	. € '400	€ * (190 ·	0000	R'000
Asset nem 30 Hedgiag derivatives	Interest Rule Swith			2	મે	1 11
Assot item 50 Hedging durivatis os	Crans Currelles Swage			79		7 41
Astet Tutal				માં	8	છે તે
Linbility tom 40 lodging derivatives	for orest Rule Singer		(6)	(13-1)	652	522
Liability nem 40 Hedging derivatives	Cross Currency Swap		(3)			《《》
Liatellity Totul			(10)	(1 = 1)	65 Z	5 1 ਮ

The count De Paravas con con - Eine Vasue Becaree	Ameuns as at 31 December 2018
	I finnin in your . S years or less
		2017, REDE SELE CAR B	. Come Trea Diet UVCS	. but over h over & finnelal
Endoof-period residual life - fair value	Swap sype	055 47 (101) 17	3 months 6"000	financial your יי האמרי ה	Part art ਦੇ ' (ਮਮ)	Total " €7000
Asset itarn 50 [lodging derivatives	forterest Realer Samper	5.150	31 340	3.61-19		447, 139
Asset nulla 50 Fledging derivalives	C. Denals K. Los Presterato Starters			15.699		15.699
Anner Tixall		ਦੇ । ਟੀ	31 -340	। ਹੈ ਕਿ ਉਸ ਮੈਂ ਸੀ। ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ।		55.858
Liabilay nem 30 Hedging der realives	Trilless Rule Sincer	9,990	41 411 11	321.004	272.323	707.331
Liability item 40 Houging derivatives	C'reses C' terrances Success		19.173	27.471		46,642
Linbelity Total		50, 400, 4	23.578	4-48.475	272,323	753,973
新疆省政策局 发生机构建设施工业中 上一篇:中国一次培育 济南省政府 北京省委副				Amount as at 31 December 2018
				1 financial your 5 years an 1688 .
		110011115 112"	ar lens but over		but aver 1 ever 2 financial	3.6711
Emal-of-jariot costum fife - notfomal associato	Swap trpe	奇摩隊。 6.000	我不得要出了出家 作 0000	文章文书 信息公司的文字写 0000	Winters €1700 .	€ 1000 ·
Asset itura 50 Thurlging Gerientis some	forte par set Resta: Marser	250.300	472 673	168.500		891 , 673
Asset item 50 Fledging derivatives	C PASS C. 107 01031 Street			33-100		קלון 33.1
128000 Total		350,500	472,673	301.409		1,02-1.742
S.mbility hem 40 I-ledging derivatives	Interest Kune Swap	450.000	175.041)	-1.526.294	3.076.672	8.127.266
spilluntung gillen 40 placing berivatives	C. proces & . 18 Postery Startegs		20.008	172,954		262,962
Lindrity Total		450,000	265,000	4,699,248	2,976,672	8.390.929
TERENERIE De De errentligen - Ther valler Deriffe		Ansount us nt 31 December 2018
		1 financial year. 5 years or less and a water a la come of the subscriptions a for and the sming top : " top digitaline the
		CHK .	2 months	firman cal year		Total
Teatging ane flectivemenes and por Incento Statement line leem 90 - fireak Dowar		000	.	. € OBA	. 3942 21 5 34 124 0400	C'(bild)
	Samirates Parginat

Statement line leem 90 - Theaktiowa	1 1 1 1 1 1 1 1 1 1 1 1 1 5 we p 1 year 1 1 1 1 1 1 1 2 000 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 000 1 1 1 1 1 000				C'000 .
Asset Rem 50 Hedging derivatives	Interest Rune State Stream	(360) =			(350)
Assol dem Su Plutging derivitives	SEPARS, ASSESSANTE J SSEEN
Ancet Tolal		3661			(354)
Intinuity itom 40 I lodging desivatives	1776 Frest Resta Suare	(2)	255	ਤੇ ਸੀ ਸ	1 205
11.hilility item 40 Hedging derivatives	1. 04050 C. 1817298031 15341282
I in Trikit Ve Tablidal		(3)	255	18 11 14	1.2(1.9

E-MARKET
SDIR CERTIFIED

Hedging Derlyntives - fair value hedge		Amount us at 31 December 2015
Hedge Accounting = Macro nun Micro	Risk type .	Carrying ומ והטסום מג bedged item a 8000	· 314-dire · Accounting . 6000
Assel tem 30 Financials assets at fair value through other comprehensive income (Macio Hedre Accounting) Cuin Loss on hedged item accounted for through Revaluation reserves through the DVA Liability dem 110 - Revaluation reserves through the OC1 -	Exterers Rato Risk	5 459, 933	(143,839) 201.165 57.327
Assel item 20B Loans and receivables with Customers at amortings and (Maero Hedge Accounting) Asses from 60 - Changes in fair value of partfalia hedged items (+/n) =*	Interest Rate Risk	288, 031	331.274 331,274
Assel item 20B Loans and recuivables with Customers at amortissed cost (Miero Hedge Accounting) Asset item 20B Lanns and receivables with Customers at umortised cost ***	Inseress Kate Kisk	1.088.443	5.302 5,302
I a billy it on I OC Dobt securities in issue at aming on a (Micro Heage Accomming) Linbility jon 50 Changes in Fair value of portfolio belged herns (+/a) SAAP	Interest Rule Rick	256. 453	8.003 8.063
Total carrying amounts of helged items recognised in the statement of financial position - Asset		8.255.445
Total carrying amonnes of helged items recognised in the statement of financial position - Listility		256.453
Accumstitude smassit of fair value hodge adjustments on the headed in the carrying amount of the hedged item recognisod in the statement of financial position - Asses (Micen Hedge Accounting)			5-302

* gans and losses on ledged item at his FVOC! and the rolsed holye accounted for in Lablity ien 10 keesbation reserves through the OCT

* the Nacro hotel a counting which to bedged tours changed and the mans and received is with Customer's accommon for in 'A set it in 'A set it in ' A set i iam i Changes in fair value of partfolio hedged Rems (+/-)

** the Metro holge accounting relations classified as 'Asset tem 20 400 Loans and received to the Customers' included in the canying manust of the hedged item

*** * the bedge accounting when when it it is the securited is the securited in accounted for in "lability item St Changes in this also of (+/-) samil the keep it things (+/-)'

Redging Derivatives - Inir value hedge		Amount as at 31 December 2018
		Currying armount of	. Hedge. Account litte
Heuge Accounting - Macro and Mero	Risk ruges	6900	. . Other
Asset fem 30 Financials assets at fair value through other comprehensive income (Macro Hedge Accounting) Gamel.oxs on hedged item accounted for through Reveluation reserves through the OX 1 Linbility item 110 - Revaluation reserves through the OC1 "	Interest Rate Risk	7.981.857	(131.455) 12 (-401 (11),054)
Associent 2013 Loans and receivables with Customers at unortised cost (Marro Fledge Ac c ounting ) Asset item 60 - Changes in fair value of portfolio hedged items (+/-) nn	Interest Ran. Risk	784.191	313.788 313.788
Asset nem 200 Loans and receivables with Customers ut amortised cost (Micro Hedge Accounting) Asset item 2013 Lonns and receivables with Customers at amortised cost ***	Interest Race Rosk	144.024	47-18 ધ્રેન્ડર્મ
Jobility item (0). Debt securities in issue at amortised cost (Macro Fledge Accomming) Liability item 50 Changes in fair value of portfolio hedged items (+/-) "***	Interest Reste Risk	581.722	23.333 23.323
Total carrying amounts of hedged items recognised in the stalement of financial pasition of Asset		8,910,071
Total carrying amounts of heiged items recognised in the statement of financial position - Lightlity		581,792
Accumulated antount of fair value hedge adjustinents on the bedged item included in the carrying anount of the hedged item recognised in the statement of Anancial position - Asset (Miero Hedge Accounting)			948

* Isins and losses ou halged inons closed in 10-1-VXX" and the related hedge accounting are accounted for in 1.4k/s/luy isem 110 Revaluation reserves

through the OCI'

* 1 he Marco bege cceunting elated to has classified as ' New York in Casentes are accounted for i Nast lien i least lien i least lien i last item i' i neuded in the sarying

* * * the hedge accounting mated to bedged item of C. Debt seentias in 1840's accomed for in "Libblity item 50 Changes in fair value of portfollo lindged itamy (47-)'

Economically hedge derivatives

The Company's policy is also to hedge all interest risk positions of the Company even though formal hedge accounting is not in place. Economic hedges are related to all assets and liabilities of the Company which are not at a specific risk free cash or Eonia curve.

For this purpose the following types of financial instruments have been designated as economically hedging instruments:

• interest rate swap;
• cross currency swaps;
• eonia swaps.

Sensitivity Analysis and Stress Testing -Independent Price Verification Process

In this respect, further to the market turmoil following the sub-prime mortgages' meltdown and the subsequent uncertainties in the valuation of most of the structured credit products, the Group Market risk function in a joint effort with Risk management functions at UniCredit Bank Ireland p.i.e. and all other Legal Entities established to:

• · centralise the Independent Price Verification (IPV) process for such products in the risk control function of Unic.redit Bank AG, London Branch, which has been elected as the group"s "competence contre" for the evaluation of credit products, i.e. ABS, CDO, CLO, CDO of ABS etc which represent the various sectors;
• harmonise the IPV methodology across the group, defining a consistent approach based on the ranking of each single position according to the availability and relability of available price sources. As a consequence, all such positions have been treated and valued on a consistent basis across the group;
• define and develop a proper methodology to apply specific fair value adjustments to such valuations. The chosen approach is essentially based on the above ranking of price sources and define specific stress tests for market valuations, the wider the less reliable is the ranking through their respective to a one-notch downgrade;
• the whole process has been shared and developed within the framework of the established cooperation model between all CRO (Chief Risk Officer) functions either at the Group as well as UniCredit Bank Ireland p.l.c. level and the Group and UniCredit Bank Ireland's CFO (Chief Financial Officer) functions, responsible for the accounting treatment of such valuations and adjustments.

Section 10 - Operational Risk

Operational risk is the risk of losses due to errors, interruptions, damages caused by internal processes or personnel or systems or caused by external events. This definition includes legal and compliance risks, but excludes strategic and reputational risk. For example, from the following can be defined as operational: internal or external fraud, employment practices and workplace safety, client claims, products distribution, fines and penalties due to regulation breaches, damage to the company's physical assets, business disruption, system failures and process management.

UniCredit Bank Ireland monitors operational risk exposure in accordance with UniCredit Group policies and procedures which aim to assure the effectiveness of control over operational risk, the reduction of operational risk losses and introduction of risk mitigation measures for the Bank. UniCredit Bank Ireland has been approved for Pillar I purposes to use the Advanced Measurement Approach (AMA) to Operational Risk. With AMA the capital requirement is calculated with the Bank's internal operational risk measurement model, based on the four quantitative elements: internal and external loss data, scenario analysis and key risk indicators.

During 2019 and 2018 the Bank didn't suffer any material operational risk loss events and we don't foresse any changes in our operational risk profile over the next year.

Section 11 - Fair Value Disclosures

IFRS 7 requires fair value measurements to be disclosed by the source of inputs, using the following three level hicrarchies:

• Level 1: Quoted prices in active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).
• · Level 3: Inputs for the asset or liability, that are not based on observable inputs).

Fair Value Disclosure by Valuation Hierarchy Level as at 31 December 2019

Assets measured at fair value	Level 1 C'000 31 December 2019	: 3.0vel 2 E?000 .31 Docember 2019	Level 3 000099 31 December -2019	Tutal . 000 3 . C . 000 . 1 . 31 December -2019
10 Cash and Cash Balances			5
20 Financial assets at thir value through the profit and foxs :
a) finneial assets held for trading "		3.809		3.809
c) financial assers mandatory at fair value"		29.739		29,739
30 Financials assets at fan value through other comprehensive income"	5.977.466	16.6886		5.994,152
40 Financial as sets at amortised cost:
a) loans and receivables with Hanks		2.413.149		2,413,149
b) fours and receivables with Customers	2.983.180	739. 157		3,722,337
50 Hedging derivalives *		33.824		33,824
Total	8.960.646	3,236,363		12,197,010
Liabilities measured at fair value	Level } · 00013. 31 December 2019	·I.evel 2 € 2000 31 December. 400Z	Level 3 Frond 31 December 2019	SOLA! . 00648 31 December 2015
10 Pinancial liabilities at amortised cost:
a) deposits from hanks		3.829.207		3,829,207
b) deposis from customer		3,533,281		3.533.281
c) debl securities in issue	-	1.957.303		1,957,302
20 Fmancial habilities held for trading"	LA	5.002		5,003
40 Hedging derivalives "	F	684.626		684.626
20034		10,009.418		10.009,418

"Carried at Pair Value on the Statement of Financial Position

Fair Value Disclosure by Valuation Hierarchy Level as at 31 December 2018

Assets measured at fair value	Lovel 1 € 000 : 31 December 2019	Level 2 - : 0000 : 31 December 2018	Level 3 € 800 . 31 December 2018	Total € 000 31 December 2018
10 Cash and Cash Balances
20 Financial assets at fair value through the profit and loss:
a) financial assets held for trading +		2,206		2,206
e) financial assots mandatory at fair value*		48.343		48.343
30 Financials assets at fair value through other comprehensive income*	8,131,086	16.110		8.147.196
40 Financial assets at amortised cost:
a) loans and receivables with Banks		4,300,029		4,300,029
b) loans and receivables with Customers	1,114,420	513,713		1,628,133
50 Hedging derivatives *		55.838		55,838
Total	9,245,506	4,936,238		14,181,745
Liabilities measured at fair value the state of the first to the program and many of the county of	Level 1 000x3 31 December . 2018 .	Level 2 E 900 31 December 2018	Level 3 e one 31 December 2018	Fotal 6'000 : 31 December 2018 : .
10 Financial liabities at amortised cost:
a) deposits from banks		\$ 956, 178		5,956,178
b) deposits from customers		3,632,376	L	3,632,376
c) debt securities in issue		2.162.636		2,162,636
20 Financial latibilities held for trading *		1,318		1.318
40 Hedging derivatives *		753,973		753,973
lotal		12,506,480		12,506,480

*Curried at Fuir Value on the Statement of Financial Position

During the financial year no financial liabilities were considered Level 3. There have been no transfers between the levels during the year.

Although the Company believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value.

Financial Assets at fair value through other comprehensive income, Hedging Derivatives Assets and Liabilities and Trading Derivatives Assets and Liabilities are valued at fair value using either quoted prices or observable inputs. Loans and Receivable Assets, Deposit Liabilities and Debt in Issue are valued at amortised cost. For the purposes of the Fair Value Disclosure we used either quoted prices or observable inputs in order to arrive at a fair value for Loans and Receivable Assets, Deposit Liabilities and Debt in Issue.

Part F: Description of payment agreements based on parent equity instruments

Eligible Group executives that are employed directly by UniCredit may be included in the Group Executive Incentive System. The Group Executive Incentive System is managed at Group level and any expense related to the outstanding instruments are allocated to the Group entity at which the Group exceutive is directly employed.

Outstanding instruments

UniCredit Banking Group's Medium & Long Term Incentive Plan for selected employees include Equity-Settled Share Based Payments.

Equity-Settled Share Based Payments includes the following:

• Group Executive Incentive System (Bonus Pool) that offer to eligible Group executives and relevant employees identified following regulatory rules, a bonus structure composed by upfront (following the moment of performance evaluation) and deferred payments in cash and in shares, to be paid over a period of ranging from 1 to 6 years. This payment structure will guarantee the alignment to shareholder interest and will be subjected to Group malus (which applies in case specific profitability, capital and liquidity thresholds are not met at both Group and country/division level) and individual malus/claw back conditions (as legally enforceable) according to the plan rules (both non-market vesting conditions);

It is also noted that the equity-settled share based payments, represented by deferred payments in UniCredit Sp.A ordinary shares not subject to vesting conditions, are used for the so-called golden parachute (e.g. severance) for the relevant employees.

As at 31 December 2019, €0.18 million (31 December 2018: nil) in equity-settled based payments are outstanding towards UniCredit S.p.A and E0.15 million (31 December 2018: nil) in cash-settled share based payments are outstanding towards employees.

Measurement model

Group Executive Incentive System (Bonus pool)

The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period.

Economic and net equity effects will be accrued on a basis of instruments' vesting period.

Group Executive Incentive System "Bonus pool 2014 - 2018" - Shares

The plan is divided into clusters, each of which can have three or four installments of share-based payments spread over a period defined according to plan rules.

	Shares Granted Group Executive Incentive Bystem - Bonus Pool 2014
	135 to the most (2017)	Instaliment (2018)	Installinent (2019)	Instaliment (2020)
Date of Bonus Opportunity Economic Value aranting	Jan-21-2014	Jon-21-2014	Jan-21-2014	Jan-21-2014
Oate of Board resolution its determine n under of sharest	Apr-39-2015	Apr. 05-2015	5102-85-194	Apr-09-2015
esting Period Stan-Date	Jan-01-2014	Jan-01-2014	Jan-01-2014	Jan-01-2014 1. Taxas consider a super service and manager and secures a
resting Pariod End-Date	Dec-21-2018	Dec-31-2017	Dec-31-2015	Doc. 31-2019
Unicredit Share Market Price (€)	5.269	6.269	京 265	6.289
Economic Value of Vesting conditions [6]	340.340	.0 430	-0 710	-1.089
ares Fair Vallie per unit @ Grant Date [C	6.029	5.839	5.489	5.200

	SHARES GRANTED
	GROUP EXECUTIVE INCENTIVE SYSTEM - BOMUS POOL 2015
	INSTAL I MENT	INSTALLMENT	INSTALLMENT	WISTALEME
		120498	(2020)
Date of Bonus Opportunity Economic Value granting	Jar-21-2015	Jan-21-2015	Jan-23-2015	Jan-21-2015
Date of Board resolution (to determine number of shares)	Mar-15-2016	15-2016-18-2016	Mar-15-2016	Mar-15-2015
Vesting Period Start-Date	Jan-01-2015	Jan-01-2015	Jan-01-2015	Jan-01-2012
Vestima Period End-Data	Dec-31-2015	Dec-31-3017	Dec-31-2018	Data31.2010
UniCredit Share Market Price Fel	3411	3417	3414	3 41 7
Economic Value of Vesting conditions [E]	-0 281	-0-222	-0.814	-1.175
res Fair Value per unit @ Grant Date fel (	3.150	7919	> 597	2.236

	SHARES GRANTED GROUP EXECUTIVE INCENTRY SYSTEM - BOWUS POOL. 2016
	MSTALLACIAT	INSTALLINENT	MSTALL MENT	INSTALL BEN
	120191	(2020)	(2021)	(20272
Date of Bonus Opportunity Economic Value granting	Fab-60-2015	Freb. 05-2016	Fab-CanaB	Feb-02-2016
Date of Board resolution its determine number of shares)	Raret Rastis 7	Mat-13-2017	Mar-13-2017	Mar-13-2017
leating Period start date	Jan-01-2016	Jan-01-2016	Jan-G1-2018	Jan-01-2018
testing Period end date	Dec-31-2015	Dec 31-2018	Dec-31-2019	Dac-31-2020
IniCredit Share Market Price F	13.057	15.057	13.057	13.057
Economic Value of Vesting concitients (e)	-0.231	-0.582	-0.993	- 8 421
Performance Shares' Fair Value per unit at Grant Date [E]")	12.826	12.495	12.064	11.636

	SHARES CRANTED LONG TERRI INCENTIVE 2017-2018
	WATAS LEENT 1287201	炒档式ALL MENT 17-02-11	WATALLHENT - Caran	MASTELL MENT (2023)
Date of Boness Opportunity Economic Value aranting	Jan-19-2017	Fatty. (33,2017	Jan-03-2017	Jan-09-2017
Date of Board resolution (to delermine number of shares)	Jan-59-2411	Jaro (35, 2017/	San-09-2017	Jan-69-2011
Vestino Period start date	Jan-21-2017	Jazz 11-2017	300-01-2017	197-01-2011
Vesting: Fenod end date	000-37-2012	Free 31,2022	(3-2-31-2022)	Dec-31-2022
Tooredie Sinarie Market Price M	13876	13 811 25	13 815	13 8 8 6
Foomomic Value of Vesting conditions [E]	-6 543	10 245	·1 425	-1 853
Performance Shares Fair Value per unit at Gront Date (C)	13.253	12.821	12.301	11 963

Group Executive Incentive System 2019 (Bonus Pool)

The new Group Incentive System 2019 is based on a bonus pool approach, aligned with regulatory requirements and market practices, which defines:

• · sustainability, through direct link with entity results and alignment with relevant risk categories, utilizing specific indicators linked to risk-appetite framework;
• • link between bonuses and organization structure, defining the pool at country/division level with further review at Group level;
• bonuses allocated to executives and other relevant employee, identified on a basis of European Bank Authority (EBA) rules, according to local regulations;

• payment structure has been defined in accordance with regulatory provisions qualified by Directive 2013/36/EU (CRD IV) and will be distributed in a period of six years by using a mix of shares and cash.

All profit and loss and net equity effects related to the plan will be booked during the vesting period.

Effects on Profit and Loss

Financial statoment presentation related to share based the shought to be a form the children the country of the payments	1 : 31 December 2019 . 01:13 December 2018		.
	Totsl	Vested Plans	Total	Vested Plans
C. OSES	(329)	ADD A BREACH AND 1988		more and consisted in the states
connected to Equity Settled Plans	(177)
- connected to Cash Settled	(153)
Paid amount to UniCredit S.p A. related to vested plans
- Paid amount to employees related to Cash Settled
Accrued Debts towards UniCredit S.p.A.	(177)
- Accrued Debts towards employees related to Cash Sestled	( ( 53 )

Part G: Segmental Reporting

The Company has only one main class of business, which is the provision of financing facilities, which is carried out from its sole office in Ireland.

IFRS 8 requires entity wide disclosures about product and services and about geographical areas. It also requires a disclosure about the extent of the Company's reliance on major external customers. If revenues from transactions with a single external customer amount to 10 per cent or more of an entity's revenues, this fact must be disclosed. Detail regarding revenues by product type can be found in the income statement notes for Item 10 and Item 200.

The Company has one customer whose revenue exceeds 10%. This customer is UniCredit S.p.A. and fellow subsidiaries. Total revenues for this customer amounted to €41.7 million (31 December 2018: €63.0 million). Included in revenue relating to UniCredit S.p.A. are Interest Income and Fees and Commission Income. The decrease year on year is due to a reduction in UniCredit S.p.A. Loans and Receivables held by The Company.

The Company has two segments Corporate & Investment Banking ("CIB') and Group Corporate Centre. The general criteria of the Segmentation is to report our revenues derived from portfolios under CIB, incorporating third party assets and short term funding, with Group Corporate Centre revenues derived from group assets and medium term liabilities.

Revenue Item - Item - C'000		Coporate ClB (Markets) Coporate Centre Coporate Centre Total 31 December 2019 31 December 2019 31 December 2019 1 6 € 000 - 1 - 1 - 1 - € 000 - € 000
Net Interest Income	60.683	(9,773)	50.910
Net Fees and Commissions	7,731)	1.329)	(9.060)
Trading Income	7.482	11	7-493
Other operating income		224	224
Total Revenues *	60.434	(10,866)	49.567

Total Revenues relating to the split are the following:

* Total Revenues above represents Total operating income per the Income Statement

Revenue Item - 1 - 1 - E'000 - 1 - 1 - E'000 - - 1 - - E'000 - - - - - C'000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	CIB (Markets) 1 31 December 2018	Coporate Centre 4 . Total 31 December 2018 31 December 2018
Net Interest Income	68,772	(2,690)	66.083
Net Fees and Commissions	2,924)	2,862)	(5,786)
Trading Income	7.677	(4.308)	3.369
Other operating income		34 1	341
Total Revenues*	73.526	(9,519)	64.007

* Total Revenues above represents Total operating income per the Income Statement

The below table shows a breakdown of external revenues by geographical location as at 31 December 2019 and as at 31 December 2018:

E-MARKET SDIR
CERTIFIED

31 December 2019	Ireland € 600	italv € € 000 }	United Kingdom . . € 000	Spain € 000
External Revenues	2,942	202, 105	789	14,626
Total	2.942	202,105	789	14,626
31 December 2019 market media Germany	€ 6000	France E 000	Luxem bourg 000.9 .	Poland € 000
External Revenues	4,652	19.827	5.492	6,466
Total	4,652	19,827	5,492	6.466
31 December 2019 .	America 000.3 Children Children	Rest of Europe €'000	Rest of World 1000000	Total € 000
External Revenues	-	18.747	0	275.646
Total	1	18.747	0	275.646

31 December 2018	. Ireland € 000	italy € 000	United Kingdom € 000	Spain 000.3
External Revenues	98.642	202-732	2.362	19,706
Total	98.642	202,732	2,362	19.706
31 December 2018	Germany € 0000	France € 000	Luxem bourg €*000	Poland € 0000
External Revenues	1.095	27,007	7.107	8.130
Total	1.095	27,007	7.107	8.130
31 December 2018	America € 0001	Rest of Europe C'000	Rest of World € 000	Total € 000
External Revenues	337	18.937	1.015	387,070
Total	337	18.937	1.015	387.070

The above split of revenues by geographical location has been attributed to the specific country based on the residency of the issuer or counterparty.

Part H: Transfer of Financial Assets

In the ordinary course of business, the Bank enters into transactions that result in the transfer of financial assets that consist primarily of debt securities, and loans and receivables with customers. The transferred financial assets continue to be recognised in their entirety.

The Bank transfers financial assets primarily through the following transactions:

• sale and repurchase agreements;
• securities lending agreements.

Sale and repurchase agreements are transactions in which the Bank sells a security and simullancously agrees to repurchase it (or an asset that is substantially the same) at a fixed price on a future date. The Bank continues to recognise the securities in their entirety in the balance sheet because it retains substantially all the risks and rewards of ownership. As the Bank has agreed to repurchase the sold security it remains exposed to fluctuations in the fair value of the sold securities. The collateral pledged to third parties can be used in the event of the

Bank's default and non-repayment of the Banks related liabilities with each counterparty, in order to offset each counterparty's exposure to the Bank.

The table below sets out an overview of carrying amounts related to transferred financial assets that are not derecognized;

31 December 2019	Financinis assets at fair value through other comprehensive income € 000	1.000000 1000 receivables with nanks €*000	Loans and receivables with customers C' (H)()
Carrying amount of assets recognised on bakince sheet	4 468,656		2,020,839
Carrying annount of the original assets pre transfer	4,458,265		1,243,445
31 December 2019		Deposits from Eanks € 000	Deposits from Customers C'000
Carrying amount of associnted liabilities		2.357.486	3.326.001
31 December 2018	Financials assets at fuir value through other comprehensive income € 000	·············································································································································································· receivables with bankal €1000	Leans and receivables with customers . @' 0.00
Carrying amount of assets recognised on balance sheet	6,170,264		794 982
31 December 2018		Deposits from Hanks € * 600	Denosits from Customers 6000
Carrying amount of associated habilities		4,190,909	3.405.873

Securities lending agreements are transactions in which the Bank lends or borrows securities for a fee. For securities loaned the Bank continues to recognise the securities in the balance sheet because it retains substantially all of the risks and rewards of ownership. For securities borrowed the securities remain off balance sheet as substantially all of the risks and rewards of ownership are not transferred.

The Company has nil (31 December 2018: nil) in securities lending transactions and €0.20 billion (31 December 2018: El. 95 billion) in securities borrowing. These transactions supported collateral requirements for the bank funding operation. These transactions were entered into in order to take advantage of different national funding platforms and rules within the European Union.

Part I: Other Explanatory Notes

Section 1 Contingent liabilities and commitments

The Company has nil contingent liabilities (31 December 2018: nil). The Company has nil commitments (31 December 2018: nil) other than disclosed under Part H: Transfer of Financial Assets.

Section 2 Pension scheme

The Company operates a defined contribution pension scheme. The funds attributable to the scheme are administered by the Trustees and are independent from the Company's finances. The Company's contributions are charged in the income statement in the financial year in which the contributions are made. Included in staff expenses in the income statement is an amount of £0.20 million (31 December 2018: €0.21 million) in relation to pension contributions. Included in Other liabilities in the balance sheet is an amount of €16,100 (31 December 2018: €16,400) in relation to accruals for pension contributions.

Section 3 Subsequent Events

No material non-adjusting events have occurred after the balance sheet date that would make it necessary to change any of the information given in these financial statements as of 31 December 2019. The Directors propose a final dividend for the financial year ended 31 December 2019 of €32.2 million to be paid to UniCredit Sp.A. by the end of May 2020.

Section 4 Related party transactions

Banking transactions are entered into with related parties in the normal course of business. These include loans, deposits, guarantees, derivative and foreign currency transactions with parent company, fellow subsidiaries and associates of the Parent Company. Transactions with group companies are priced on an arm's length basis in accordance with Transfer Pricing Group Policies.

Details of UniCredit Banking Group balances have been disclosed in Balance Sheet Notes Assets: Items 20, 40, 50, Balance Sheet Notes Liabilities: Items 10, 20, 40, 80, 100, 140 and Income Statement Notes: Items 10, 20, 30, 40, 50, 80, 90, 100, 110, 130, 160, and 200.

Directors' remuneration

Key management personnel comprise the members of the Board of Directors. A listing of the Board of Directors is provided on page 1. In 2019 the total remuneration of the Directors was €530,273 (2018: €430,474).

Payments made on behaff of Directors in respect of other benefits was €374,914 (2018: Ni). Share based payments accruing to Directors are included in other benefits. Refer to Part F: Description of payment agreements based on parent equity instruments for details of share based payments that are accuing to Directors as at 31 December 2019.

A breakdown of total key management personnel compensation is included below;

Type of Benefit	33 December 2019 €1000	31 December 2018 € 900	Notes
a) Short Term Employee Bonefit	530	430	Includes all salaries/opmuses and tax:ble benefits paid via payroll system.
b) Post«Employment Benefits			Includes post-employment payments made by UCI freland.
le) Other Long Term Benefits	329		Includes all equity based payments accrued by UCI freland.
1) Termanation Paynicits			No termination payments made by UCI I Iceland.

There have been no loans provided to key management personnel or any connected person (2018: Nil).

Section 5 Approval of financial statements

The Directors approved the financial statements on the 3 February 2020.