THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY HALF YEARLY REPORT 2004

This document has been translated from that issued in Italy from the Italian into the English language solely for the convenience of international readers.

BANCA CARIGE GROUP

1 DIRECTORS, STATUTORY AUDITORS, MANAGEMENT AND AUDIT FIRM

BOARD OF BOARD OF GENERAL MANAGEMENT STAFF DIRECTORS STATUTORY MANAGEMENT STRUCTURES AUDITORS Commercial CHAIRMAN CHAIRMAN GENERAL Luigi Gardelli Public MANAGER Relations Giovanni Berneschi * Antonio Semeria District of Liguria E. P. Molinari Alfredo Sanguinetto Armando Remuzzi DEPUTY CHAIRMAN AUDITORS Internal Auditing and risk management DEPUTY GENERAL Other Districts Armando Botto Alessandro Scajola* Massimo Scotton MANAGER Mario Cavanna Andrea Traverso (Resources) Planning & DIRECTORS Finance Research and DEPUTY AUDITORS Carlo Arzani Giacomo Burro Management Adalberto Alberici * Control Piergiorgio Alberti ** Adriano Lunardi DEPUTY GENERAL Loans Department Ennio La Monica Andrea Baldini* MANAGER Riccio Da Passano Giorgio Binda (Administration) Jean-Jacques Bonnaud Credit collection AUDIT Luca Bonsignore Giovanni Poggio and litigation FIRM Mario Capelli * Giuseppe Punta Remo Angelo Checconi DEPUTY GENERAL Deloitte & Maurizio Fazzari MANAGER Information- Touche SpA Pietro Isnardi (Commercial) Communication Ferdinando Menconi Technology Paolo Cesare Odone * Achille Tori Giorgio Seronello Vincenzo Roppo Enrico Maria Scerni* Organisation Francesco Taranto Benedetto Frixione Oliviero Tarolli Human Resources Sergio Donegà

Accounting & Services Mario Venturino

Accounting * Member of Executive Committe Mario De Negri ** Senior Director General & Legal Support Giacomo Ottonello

Technical and Bursary Lorenzo La Terra

The Board of Directors was appointed by the Ordinary Shareholders Meeting of 31st March 2003 for the business years 2003, 2004 and 2005. The Executive Committee was appointed by the Board of Directors on 14th April 2003 and will hold office until 31st October 2004. The present organisational structure of the Bank was approved by the Board of Directors on 14th January 2000 and subsequently modified by the General Manager in accordance with his delegated powers as from 9th December 2003. The Board of Statutory Auditors was appointed by the Ordinary Shareholders’ General Meeting of 29th April 2004 for the years 2002, 2003 and 2004. The Board members appointed were Mr Fulvio Rosina (Chairman), Mr Antonio Semeria and Mr Andrea Traverso. Following the resignation of Mr Rosina on 21st June 2004 as Chairman and Member of the Board and pursuant to relevant legislation and the By-Laws of the Bank, the position of Chairman is assigned to Mr Semeria, whilst Mr Massimo Scotton joins the Board as a full member. The external auditors were appointed by the Ordinary Shareholders Meeting of 31st March 2003 for the business years 2003, 2004 and 2005.

2 POWERS OF THE ADMINISTRATIVE BODIES AND THEIR DELEGATED AUTHORITY

As required by directive no. 97001574 of CONSOB dated 20th February 1997 shown below are the powers and delegated authority belonging to the Directors and Management.

Chairman of the Board of Directors

According to article 24 of the By-laws the Chairman of the Board of Directors is the legal representative of the Bank vis-à-vis third parties and in court proceedings. He presides at shareholders’ meetings, convenes and presides at meetings of the Board of Directors of which he is an ex officio member. In a case of compelling urgency not admitting of delay, the Chairman himself may, on a proposal of the Managing Director or General Manager, take decisions falling within the competence of the Board of Directors or the Executive Committee where it is impossible for their members to meet. Decisions so made are to be brought to the notice of the relevant body at its next meeting. The Chairman has no specific delegated powers but has the authority to: a) represent Banca Carige at the shareholders’ meetings of the Group or associated companies and indicate where necessary the guidelines to be followed by the Bank’s representatives on the boards of the same companies; b) attribute the right of proposal regarding relations between the companies of the Group, of which the Bank is parent company; c) confer management or proposal powers on matters concerning human resources and the optimisation thereof.

Executive Committee

Article 25 of the By-laws provides for the appointment of the Executive Committee by the members of the Board of Directors, which is to fix the number of members, their term of office and their functions. The Executive Committee is made up of the Chairman and vice Chairman, who are ex officio members, and between three and five other members. The five members of the executive committee now in office were appointed on 14th April 2003 and will hold office until 31st October 2004. The Board of Directors in conformity with article 21 of the By-laws has delegated to the Executive Committee within defined limits its powers in regard to: a) the grant, renewal, increase, reduction, confirmation, cancellation and suspension of advances and facilities and general credit operations of every description in all branches as well as the treasury and tax-collection payment functions; b) general decision making powers in matters relating to expenditure; c) power to determine a range of matters including the management of human resources, management of the treasury and of the Bank’s investment portfolio, the use of derivatives and foreign exchange operations, the management of equity investments including decisions relating to the exercise (or not) of pre-emption or option rights on shares or shareholdings in subsidiaries as well as in matters of day-to-day management not involving strategic issues, decisions relating to the entering into litigation affecting the Bank, without limits as to the costs estimated or undetermined, decisions regarding the opening, closing, transfer or reorganisation of the Bank’s branches consistent with the Bank’s branch policy document deliberated by the Board of Directors.

Managing Director - General Manager

In accordance with article 27 of the By-laws, a Managing Director or General Manager is appointed by the Board of Directors. The former, if appointed, will also perform the duties of General Manager. Either will exercise those powers belonging to him within the scope of the By-laws and the powers granted to him by the Board of Directors. The General Manager is the head of the Bank’s staff and is responsible for the management and coordination of human resources. The Managing Director in office was appointed on 14th April 2003 and has the following decision-making powers delegated to him: a) with respect to the grant, renewal, increase, reduction, confirmation, cancellation and suspension of advances and facilities andgeneral credit operations of every description in all branches as well as treasury and tax-collection, and payment functions; he can also give guidelines on the above to the banking subsidiaries of the Banca Carige Group as foreseen by current legislation; b) generally with respect to matters relating to expenditure; c) in regard to a range of matters relating to the finances of the Bank, and payment functions; d) with the Chairman’s consent, he has the right to represent the Bank at general meetings of subsidiary and associated companies and to decide the Bank’s policy as he may think fit; e) matters of day-to-day management not involving strategic issues; f) represent the Bank in litigation in full respect of the powers assigned to the Chairman of the Board of Directors or, in his absence, the Deputy Chairman; g) confer proxy and powers of signature to documents relating to all aspects of the Bank’s ordinary activities.

3 h) BANCA CARIGE SPA BALANCE SHEET AT 30st JUNE 2004 CONTENTS

BANCA CARIGE Banca Carige ownership structure at 30/6/2004 7 OWNERSHIP STRUCTURE AT 30/6/2004

FINANCIAL HIGHLIGHTS Financial highlights 9

BOARD OF DIRECTORS’ The first six months of the year in Italy and abroad 11 REPORT Strategy 12 Financial intermediation activities 14 Services, marketing and customer protection 33 Public relations and the promotion of cultural, scientific and social 36 activities Distribution channels and resource management 37 The adoption of International Financial Reporting Standards (IFRS) 40 Investments 42 Share ownership structure and relations with the 44 Cassa di Risparmio di Genova e Imperia Foundation Carige shares 45 Income statement and net income 46 Shareholders’ equity 51 Risk management 55 Corporate governance 59 Significant events after 30th June and prospect for the third and fourth 59 quarters

FINANCIAL STATEMENTS Balance sheet 62 AT 30/6/2004 Assets 62 Liabilities and Stockholders’ Equity 63 Income statement 64 Explanatory notes 65 Introduction 65 Part A – Accounting principles 67 Part B – Balance sheet 72 Part C – Income statement 140

REPORT OF THE Report of the Independent Auditors 152 INDEPENDENT AUDITORS

4 BANCA CARIGE GROUP BALANCE SHEET AT 30th JUNE 2004

CONTENTS

CONSOLIDATED Consolidated financial highlights 156 FINANCIAL HIGHLIGHTS

BASIS OF Basis of consolidation 157 CONSOLIDATION

CONSOLIDATED The first six months in Italy and abroad 159 BOARD OF DIRECTORS’ Headline events for the Banca Carige Group in the first half of the 160 REPORT year Intermediation activities 162 Group personnel and operating structure 175 Income statement 177 Shareholders’ equity 179 The Group companies and equity investments 182 Significant events after 30th June 2003 190 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance sheet 191 AT 30/6/2004 Assets 192 Liabilities and Stockholders’ Equity 193 Consolidated Income statement 194 Consolidated Explanatory notes 195 Introduction 195 Part A – Accounting principles 199 Part B – Consolidated Balance sheet 204 Part C – Consolidated Income statement 271

REPORT OF THE INDEPENDENT AUDITORS Report of the Independent Auditors 281

5 HALF YEARLY BALANCE SHEET 2004

BANCA CARIGE Cassa di Risparmio di Genova e Imperia BANCA CARIGE SpA - Cassa di Risparmio di Genova e Imperia Head Office in Genoa, Via Cassa di Risparmio, 15

6 BANCA CARIGE OWNERHIP STRUCTURE AT 30th June 2004

Fondazione CNCE WestLB La Basilese El Monte Gefip Other Cassa di Risparmio insurance Group (1) (2) (4) Holding shareholders di Genova e (2) (3) (4) Holding shareholders Imperia

43.37% (5) 11.02% (5)7.47% (5)5.63% (5)2.31% (5)2.23% 27.97% (5) Banca Carige S.p.A.

47.50% Frankfurter Bankgesellschaft AG

100.00% Caricarrara Holding S.p.A. (6) (7) 90.00%

Cassa di Risparmio di Carrara S.p.A. (7) 100.00% Galeazzo S.r.l. 54.00% 0.02% Banca del Monte di Lucca S.p.A. 99.98% Columbus Carige Immobiliare S.p.A. 95.90% Cassa di Risparmio di Savona S.p.A. 90.00% Immobiliare Ettore Vernazza S.p.A. 20.00% 10% own shares 76.93% Centro Fiduciario C.F. S.p.A. 100.00% Immobiliare Carisa S.r.l. 60.00% Argo Finance One S.r.l. 100.00% Ligure Leasing S.p.A. 60.00% Priamar Finance S.r.l. (8)

98.11% 37.50% Carige Assicurazioni S.p.A. 1,25% own shares

100.00% 22.50% Carige Vita Nuova S.p.A. Assi90 S.r.l.

0.5% Controls the following insurance agencies: 99.50% - AG S.r.l. (100%) Banca Carige Group Banca Banca Carige Group Carige Banca Carige Asset Management SGR S.p.A. (9) - Savona 2000 S.r.l. (80%) - Assimilano S.r.l. (60%) Banking Activities Trustee activities Insurance Activities Instrumental Activities Financial activities Insurance Agencies

(1) Holding via subsidiaries Compagnie Financière Eulia (6.61%) and CDC Ixis (4.41%). Following internal reorganisation, holding of CNCEP – Caisse Nationale des Caisses d’Epargne et de Prévoyance was transferred to Eulia. (2) Direct holding of 4.989% and indirect holding of 2.480% via subsidiary WestLB (Italia) Finanziaria SpA. (3) Holding via subsidiary Basilese Life Assurance. (4) Holding via Al'Andalus Foreign Investments s.l. (5) Holding via ordinary shares. (6) The company was created on 21st April 2004 following the break up of the holding company Carinord 2. (7) Incorporation into the Banca Carige Group received Bank of Italy authorisation on 25th June 2004, starting from 21st April 2004 (8) Incorporation into the Banca Carige Group received Bank of Italy authorisation on 25th June 2004, starting from 14/01/04 (9) Incorporation into the Banca Carige Group received Bank of Italy authorisation on 25th June 2004, starting from 10/01/04 FINANCIAL HIGHLIGHTS

8 FINANCIAL HIGHLIGHTS

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03 BALANCE SHEET (1) Total assets 15,728.2 15,487.3 14,653.1 14,564.4 7.3 8.0 Funding 12,519.4 12,076.3 11,667.5 11,531.4 7.3 8.6 - Customer Deposits (a) 10,613.5 10,374.1 10,025.4 9,543.1 5.9 11.2 * Amounts owed to customers 6,163.7 6,043.6 5,957.9 5,764.0 3.5 6.9 * Debts evidenced by certificates 4,449.8 4,330.5 4,067.5 3,779.1 9.4 17.7 - Deposits from banks 1,403.5 1,196.8 1,139.6 1,587.9 23.2 -11.6 - Funds managed on behalf of third parties 0.3 0.4 0.4 0.4 -25.0 -25.0 - Subordinated loans 502.1 505.0 502.1 400.0 0.0 25.5 Other Financial Intermediation Activities (OFIA) (b) 13,215.6 12,959.3 12,767.1 12,794.2 3.5 3.3 - Assets under management 6,708.5 6,543.2 6,585.5 6,372.1 1.9 5.3 - Assets in custody 6,507.1 6,416.1 6,181.6 6,422.1 5.3 1.3 Total Financial Intermediation Activities (TFIA) (a + b) 23,829.1 23,333.4 22,792.5 22,337.3 4.5 6.7 Lending (2) (3) 13,080.1 12,774.6 12,316.5 12,187.1 6.2 7.3 - Loans to customers (2) (3) 9,536.1 9,351.5 9,247.1 8,762.7 3.1 8.8 - Loans to banks (2) 1,214.2 1,323.1 942.7 949.4 28.8 27.9 - Securities 2,329.8 2,100.0 2,126.7 2,475.0 9.6 -5.9 * investment securities 173.6 173.6 173.7 232.7 -0.1 -25.4 * trading securities 2,156.2 1,926.4 1,953.0 2,242.3 10.4 -3.8 Shareholders' Equity (4) 1,618.0 1,630.6 1,606.0 1,403.3 0.7 15.3

INCOME STATEMENT (1) Operating income 167.2 52.8 224.5 125.3 33.4 Income from ordinary activities 71.4 42.1 145.0 98.6 -27.7 Income before taxation 75.0 40.7 168.0 109.2 -31.3 Net income 60.1 25.3 106.2 63.0 -4.5

RESOURCES (5) Number of branches 393 393 393 392 0.0 0.3 Number of employees 3,734 3,749 3,759 3,823 -0.7 -2.3

FINANCIAL RATIO Non interest income /Gross operating income 59.70% 52.41% 54.55% 56.60% Operating costs /Gross operating income 59.16% 68.90% 68.58% 65.86% Income before taxation /Shareholders' equity (4) 4.63% 2.49% 10.46% 7.78% ROE 3.72% 1.55% 6.61% 4.49% ROAE (6) 3.73% 1.56% 7.64% 4.54%

SOLVENCY RATIOS Risk-Weighted Assets (RWA) (1) 10,722.8 10,658.5 10,573.1 10,480.5 1.4 2.3 Tier 1 % of RWA 10.48% 10.66% 10.85% 8.95% Total capital % of RWA 13.09% 11.83% 13.89% 11.21% (1) Millions of Euros. (2) Gross of allowance for credit risks. (3) Including leased fixed assets. (4) Including reserves for general banking risks. (5) Statistics at the end of period. (6) Net income on average shareholders' equity (Return On Average Equity).

9 BOARD OF DIRECTORS’ REPORT

10 THE FIRST SIX MONTHS OF THE YEAR IN ITALY AND ABROAD

The world’s economy recorded generalised growth negative and was marked also by a fall in imports. during the first half of the year, particularly in the On the employment front, there was a fall in United States and China. There was an upturn in demand. In fact, employment rose at its lowest rate domestic demand also in Japan and in Europe and for seven years, whilst unemployment remained demand from Asia and China helped to keep substantially unchanged (8.5 per cent), having foreign trade buoyant. Tensions in the Middle East since 2003 fallen every half year. The consumer allied to rising oil prices could, however, influence price index for June was 2.2 per cent, in negatively production and price levels in the comparison to 2.3 per cent in December 2003 and following months. 1.9 per cent in March 2003. In the United States economic expansion, which Despite the less than vibrant context, the Ligurian was particularly strong in the manufacturing sector, economy showed some signs of recovery. Although was an important factor in determining domestic consumption levels remained contained, there was demand. Exports held back the rate of growth in expansion in productive activities, particularly in the comparison to the end of 2003 despite the surging manufacturing sector, which in 2003 had been the Asian economies and the weak dollar. worst hit by the negative economic situation. In the Growth rates for the European Monetary Union building industry, there was greater growth in the (EMU) were higher than expected thanks to, on the private residential sector in comparison to the one hand, rises in net exports despite the strong sector of public works. The region’s ports all had euro and, on the other, an upturn in domestic increases in the levels of containers and goods demand. However, consumer confidence continues handled, whilst passenger traffic fell. The series of to be low as a result of rising prices and a events linked to Genoa as European Culture worsening labour market. In fact, unemployment Capital for 2004 generated an increase in the figures for euroland worsened in comparison to the number of tourists visiting the city and the end of 2003: the area’s unemployment rate was 9 surrounding area with immediate knock-on benefits per cent in May in comparison to December for related sectors of the local economy. After 2003’s figure of 8.8 per cent. several years of considerable growth in the property Within the area there were, however, different market, the first half of the year saw a slowdown. A performances amongst the major economies. In similar pattern was also recorded on the labour Germany, domestic demand continued to drop, but market. Unemployment in the region remained a positive balance of trade helped to offset falls in stable at 6 per cent. Inflation for the city of Genoa consumption and investments. The rise in the euro was at 2 per cent. did not, in fact, affect rising demand for German Turning to monetary policy, there were two rate products especially from China and south east rises of 25 basis points in the US, the first in June Asia. In France, consumption and investment levels and the second in August, bringing the Fed Funds helped to boost the economy in the face of slight rate to 1.25 per cent. In Europe, the European falls for French products from abroad. In Spain, Central Bank maintained rates unchanged. From too, consumption on the home front was the 9th June the ECB’s repo rate was 2 per cent. dominant growth factor. The Spanish economy, in However, in the face of rises in raw materials, fact, grew at the highest level in Europe. Investment particularly oil, the ECB could be forced to adopt a levels were higher in the building sector rather than more restrictive monetary policy. Money markets in plant and machinery. The country continued to had in fact already anticipated such a move in the record a negative balance of trade. second quarter as bond yields at all maturities rose. The Italian economy grew at a level below the In Italy, money rates fell slightly in the first quarter average recorded for euroland in the first six reaching their minimum in March; in the second months of the year. In particular, there was an quarter they rose to reach in June levels previously improvement in domestic demand for consumer recorded at the end of 2003. Rates on Italian goods, particularly consumer durables, as well as in government stock recorded analogous movements. investment levels both in the building and On exchange markets, against the US dollar the machinery sectors. The balance of trade remained euro reached euro 1.30 in March, after falling by

11 around 10 per cent; towards the end of the second develop its position of strength in the Italian quarter the euro made up some of the ground lost banking and finance industry. to reach euro1.23. Carige’s evolution since the early 1990’s has been At the end of June total bank deposits amounted to in three distinct phases: phase one concentrated on 978 bn, a rise of 7.6 per cent in annual terms strengthening the Bank’s financial position; phase (+70 bn) and higher than the annualised rise at two focused on expansion both internally (new June 2003 of 6.5 per cent. branch openings) and externally (acquisitions). Both There were rises in both customer deposits phases contributed to transforming Carige from a (30/6/04: +6.2 per cent; 30/6/03: +6.7per cent) regional bank to a national banking and insurance and bonds, the latter up by 10 per cent over the group. previous June’s rise of 6.2 per cent. The total short- The Strategic Plan 2005-07 represents the third term deposits aggregate at April rose at an phase in the evolution of Banca Carige; its aims annualised 4 per cent (2003:+5.5 per cent). are rationalisation and increased profitability to Medium/long-term borrowing rose by 10 per cent support further future growth of the Banca Carige in comparison to 7.3 per cent in April 2003. Group in its role as a banking, finance and Within total bank borrowing, indirect deposit insurance conglomerate. (In this Report, Banca instruments such as Italian government Treasury Carige will also be referred to variously as ‘Carige’ bills (BOT) and bonds rose, respectively, by 6.7 and and ‘the Bank’; the Banca Carige Group will be 6.1 per cent. With regards to bonds, those issued referred to also as ‘the Group’). by banks rose by 6.1 per cent, whilst those by other The Group’s mission is: institutions increased by 1.9 per cent. There were - to be a banking and insurance conglomerate, in sharp falls in shares (-13.6 per cent) and certificates terms of the range of products and services offered of deposit (-15.8 per cent). The low yields on short- both to depositors and borrowers. The Group will term Italian government issues dampened the continue to function as an aggregation point for appeal of longer-term stock such as floating rate small/medium-sized banks with particular Treasury certificates (CCT) (-1.5 per cent) and locational, structural and managerial Treasury bonds (BTP) (-4.8 per cent). Mutual funds characteristics; were down 2.1 per cent with negative net flows, - to be present throughout Italy, with its stronghold unlike the first half of last year. Banks’ asset in Liguria, but continuing to develop its operations management business fell 3.5 per cent. in other regions with particular awareness of local Bank lending during the first half of the year market needs and characteristics (multi-local increased in annual terms by 6.3 per cent, similar approach); to 2003. Medium/long-term lending rose by 13.2 - to be focused on the quality of the service and per cent, whilst short-term loans dropped 2.9 per development of integrated multi-channel cent. distribution in terms of responsibility, The net bad loans/lending ratio for the system at responsiveness, trustworthiness and flexibility for the April was 1.88 per cent (April 2003: 1.96 per various customer segments of the Group (families, cent). The maintenance of high credit quality levels small and medium-sized enterprises, artisans, is confirmed by the net bad loans/core capital ratio shopkeepers, local authorities) with particular at April of 10.2 per cent (April 2003: 10.8 per emphasis on the potential offered by new cent). technology; - to be committed to the development of resources and structures in terms of an increased STRATEGY specialisation in networks and productive functions, of a unitary management of core Group competences, in addition to the professional During the first half of the year, Carige’s Board of advancement of human resources and the Directors approved the new Group Strategy Plan for attainment of increasingly high levels of efficiency. 2005-07. The document builds on and extends the The strategic goals set in order to realise this strategic aims of autonomy via growth sought over mission are: the improvement of operational the last 15 years. The Carige Group’s primary efficiencies and profitability; increased productive objective is to maintain its independence and

12 via growth; the containment of risk profiles and the customers, particularly in the areas of payments maximisation of the value of the Group assets. systems, consumer credit, and internet banking. The following priority measures have been Outside Liguria, the focus will be on developing identified: critical mass handled by exploiting, in particular, - increased profitability of business areas via the synergies with our insurance companies. Specific optimisation of productive supply chains and the marketing initiatives got under way last year to consolidation of relations with Carige’s foreign provide backup to both areas of action; partners particularly in the fields of asset - review of management processes with the aim of management, payment systems, structured funding, reducing administrative costs and containing the and project financing. During the first half of the share of total costs represented by personnel year, important forms of collaboration were defined charges. This review also seeks to improve the with the Bank’s French (CDC and CNCE) and quality of services offered to customers both German (WestLb) partners: the first was in the area internally and externally. With this in mind, a new of asset management, in relation to funds managed cost management function was set up, which will by the newly-formed Carige Asset Management monitor costs, produce internal and external SGR; the second was in the area of structured benchmark analyses, and identify appropriate finance, in which CDC and West Lb were measures of renegotiation and process re- arrangers, along with UBS, for the securitisation of engineering; home mortgages carried out by Carige during the - containment of costs related to credit, market, first half of the year; liquidity and operative risks, via an integrated risk - increased income generated by our subsidiaries, management across the Group’s banks and thanks to the completion of operational integration insurance companies as well as a commitment to of the branches purchased, which focused on appropriate capital adequacy levels in terms of maximising the value of the brands purchased, and total capital and Tier 1 ratios, and to liquidity, exploiting operational synergies with the insurance particularly at medium/long-term; companies of the Group. With this in mind, during - optimisation of Group assets, with the primary the period, the integration of bank branches and aim of utilising available resources in order to insurance agents became operational. The plan, maximise core business values; ‘Insieme di Più’, aims to develop the cross selling of - optimal management over the medium/long-term bancassurance products both in terms of the sale of of legislative and regulatory aspects relating to the insurance products over the counters of our bank Group, and the subsequent effects on tax and branches (bancassurance in its narrowest sense), accounting decisions. A case in point during the and the distribution the Group’s bank products via period was the decision taken to redeem the capital insurance agents and officers (‘assicurbanca’); gains foreseen by Law 218/90, by taking - increases in amounts intermediated per employee, advantage of the opportunities contained in article with particular attention to cross selling and 2 of Law 350/2003. business retention in Liguria and added focus on The evolution of our Bank over the last ten to fifteen the Group’s operating areas outside Liguria. With years continues to be appreciated by international regards to Liguria, strategic attention will be rating agencies such as Fitch, Standard & Poor’s, concentrated on developing relations with existing and Moody’s, which all confirmed their ratings.

BANCA CARIGE RATING

short-term long-term BFSR (1) (2) Individual (2) Support (3) Fitch F1 A - C 3 Moody's P-1 A2 C+ - - Standard & Poor's A2 A- - - -

(1) Bank Financial Strength Ratings. (2) Rating on financial solidity on a scale from A to E. (3) Rating of likelihood of State intervention in case of crisis on a scale from1 to 5

13 5

FINANCIAL INTERMEDIATION ACTIVITIES

Total Financial Intermediation Activities (TFIA), reach 10,613.5 m. Indirect deposits (‘other made up by direct and indirect deposits, recorded financial intermediation activities’) rose from an increase of 4.5 per cent in the first six months 12,767.1 m at the end of 2003 to 13,215.6 m at of the year to 23,829.1 m; in annual terms the 30/6/04 (+3.5 per cent). Indirect deposits make increase is 6.7 per cent. Within the aggregate, up 55.5 per cent of TFIA. Over twelve months, direct deposits (customer deposits), which account direct deposits rose by 11.2 per cent, whilst for 44.5 per cent of the aggregate total, rose indirect deposits increased by 3.3 per cent. during the first half of the year by 5.9 per cent, to

TOTAL FINANCIAL INTERMEDIATION ACTIVITIES (millions of Euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03 Total (A+B) 23,829.1 23,333.4 22,792.5 22,337.3 4.5 6.7

Direct deposits (A) 10,613.5 10,374.1 10,025.4 9,543.1 5.9 11.2 % Total 44.5% 44.5% 44.0% 42.7% Indirect deposits (B) 13,215.6 12,959.3 12,767.1 12,794.2 3.5 3.3 % Total 55.5% 55.5% 56.0% 57.3% - Assets under management 6,708.5 6,543.2 6,585.5 6,372.1 1.9 5.3 % Total 28.2% 28.0% 28.9% 28.5% % OFIA 50.8% 50.5% 51.6% 49.8% - Assets in custody 6,507.1 6,416.1 6,181.6 6,422.1 5.3 1.3 % Total 27.3% 27.5% 27.1% 28.8% % OFIA 49.2% 49.5% 48.4% 50.2%

Total funds, which include customer deposits issues destined to customers, also Carige’s Euro (10,613.5 m), interbank deposits (1,403.5 m), Medium term Note Programme (EMTN), targeted funds managed on behalf of third parties (0. 3m) at institutional investors; these issues amounted to and subordinated loans (502.1 m), amounted to 567.2 m. 12,519.4 m, up 7.3 per cent in comparison to With regards to other direct deposit products, December 2003 (11,667.5 m) and 8.6 per cent there were increases in current accounts and over June 2003. repurchase agreements of 3.7 and 12.4 per cent, Direct or customer deposits recorded an increase respectively. There were falls, however, in savings of 5.9 per cent in comparison to 31/12/03 to deposits and certificates of deposits (-1.9 per cent reach 10,613.5 m. The rise over twelve months and -7.5 per cent). was of 11.2 per cent. This rise stems from growth By maturities, medium/long-term borrowing rose in bonds (4,036.5 m; + 10.5 per cent over six by 10.2 per cent in the first half of the year, whilst months), which include, as well as traditional short-term funding increased by 3.4 per cent.

14 FUNDING (millions of Euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03 Total (A+B+C+D) 12,519.4 12,076.3 11,667.5 11,531.4 7.3 8.6

Direct deposits (A) 10,613.5 10,374.1 10,025.4 9,543.1 5.9 11.2 Amounts owed to customers 6,163.7 6,043.6 5,957.9 5,764.0 3.5 6.9 current accounts 5,526.1 5,379.1 5,331.4 5,049.8 3.7 9.4 repurchase agreements 168.0 193.8 149.5 262.7 12.4 - 36.0 saving deposits 463.2 464.6 472.0 448.6 - 1.9 3.3 loans from international organizations - - - 0.1 … - 100.0 other borrowings 6.4 6.1 5.0 2.8 28.0 128.6 Debts evidenced by certificates 4,449.8 4,330.5 4,067.5 3,779.1 9.4 17.7 bond certificates 4,036.5 3,923.5 3,653.9 3,330.0 10.5 21.2 certificates of deposits 302.3 313.7 326.8 359.9 - 7.5 - 16.0 outstanding cheques 111.0 93.3 86.8 89.2 27.9 24.4 short term deposits 6,561.1 6,430.5 6,347.7 6,186.4 3.4 6.1 % Total 61.8 62.0 63.3 64.8 long term deposits 4,052.4 3,943.6 3,677.7 3,356.7 10.2 20.7 % Total 38.2 38.0 36.7 35.2

Amounts owed to credit institutions (B) 1,403.5 1,196.8 1,139.6 1,587.9 23.2 - 11.6 Deposits 706.0 413.7 617.3 1,106.5 14.4 - 36.2 Financing 374.1 370.5 373.4 316.2 0.2 18.3 Current accounts 60.5 116.1 88.8 86.5 - 31.9 - 30.1 Repurchase agreements 262.9 296.5 60.1 78.7 337.4 234.1 Due to central banks - - - - … …

Funds managed on behalf of third parties (C) 0.3 0.4 0.4 0.4 - 25.0 - 25.0

Subordinated loans (D) 502.1 505.0 502.1 400.0 - 25.5

Amounts owed to financial institutions totalled to 1,176.4 m (+32.4 per cent), whilst currency 1,403.5 m, an increase of 23.2 per cent in deposits fell by 9.6 per cent to 227.1 m. comparison to the end of 2003, and a fall of 11.6 Funds managed on behalf of third parties per cent over twelve months. Interbank deposits recorded little change in the first half of the year, (706.5 m) is the principal item in this aggregate; remaining at 0.3 m. though up over six months by 14.4 per cent, it Deposits include subordinated loans of 502.1 m, recorded a considerable reduction over twelve issued to provide support to expansion in the months (down 36.2 per cent). In the first six Group’s operating network. In September 2001, months of the year, there were falls in current 400 m was issued, followed at the end of 2003 by accounts (60.5 m; -31.9 per cent), similar to the a further issue of 102.1 m. The latter is in the form twelve-month negative variation of 30.1 per cent. of a hybrid subordinated bond issue with a There was little change in the item ‘financing’, premium at maturity convertible into ordinary which over twelve months rose by 0.2 per cent to shares. 374.1 m; over twelve months the item recorded Full details are given in sections 6, 8 and 11, part an increase of 18.3 per cent. Repurchase B, of the explanatory notes. agreements quadrupled over six months and tripled over twelve. By currency, euro deposits rose

15 DIRECT DEPOSITS (1) - DISTRIBUTION BY SECTOR (millions of Euros)

30/06/04 31/12/03 30/6/03 %%% Amounts owed to customers 6.163,7 5.957,9 5.764,0 Public Administration 242,2 3,9% 192,4 3,2% 180,5 3,1% Financial institutions 301,2 4,9% 221,1 3,7% 318,3 5,5% Non-financial institutions and personal businesses 1.188,8 19,3% 1.122,2 18,8% 1.079,2 18,7% Private social bodies 190,1 3,1% 190,8 3,2% 176,0 3,1% Families 4.197,5 68,1% 4.144,7 69,6% 3.920,3 68,0% Total residents 6.119,8 99,3% 5.871,2 98,5% 5.674,3 98,4% Rest of the world 43,9 0,7% 86,7 1,5% 89,7 1,6% Total 6.163,7 100,0% 5.957,9 100,0% 5.764,0 100,0%

Debts evidenced by certificates 4.449,8 4.067,5 3.779,1

TOTAL DIRECT DEPOSITS 10.613,5 10.025,4 9.543,1 (1) Balance Sheet (Liabilities) caption 20 and 30.

Families make up 68.1 per cent of direct deposits firms at 1.188.8 m, 19.3 per cent of the total (4,197.5 m), down on December 2003’s 69.6 per (31/12/03: 18.8 per cent). Financial institutions cent, but in line with the previous interim share of increase their share from 3.7 to 4.9 per cent. 68 per cent. Next comes non financial and family

DIRECT DEPOSITS (1) - GEOGRAPHICAL DISTRIBUTION (millions of Euros)

30/6/04 31/12/03 30/6/03 % % %

Liguria 7,889.0 74.3% 7,513.5 75.1% 7,315.5 76.6% Latium 689.7 6.5% 635.0 6.3% 569.0 5.9% Sicily 518.4 4.9% 485.0 4.8% 448.9 4.7% Lombardy 419.4 4.0% 391.4 3.9% 347.7 3.6% Piedmont 344.3 3.2% 322.6 3.2% 274.6 2.9% Emilia Romagna 220.0 2.1% 185.2 1.8% 177.7 1.9% Apulia 162.9 1.5% 152.3 1.5% 134.3 1.4% Veneto 116.6 1.1% 117.1 1.2% 103.7 1.1% Sardinia 113.6 1.1% 95.1 1.0% 62.3 0.7% Marches 66.6 0.6% 52.7 0.5% 45.1 0.5% Umbria 24.0 0.2% 19.9 0.2% 18.0 0.2% Tuscany 21.0 0.2% 21.9 0.2% 20.5 0.2% Total Italy 10,585.5 99.7% 9,991.7 99.7% 9,517.3 99.7% Abroad 28.0 0.3% 33.7 0.3% 25.8 0.3% Total direct deposits 10,613.5 100.0% 10,025.4 100.0% 9,543.1 100.0% (1) Balance Sheet (Liabilities) captions 20 and 30. Liguria’s share of direct deposits (the region share from 5.9 and 6.3 per cent in June and accounts for the entirety of the EMTN December 2003 to 6.5 per cent. Other regions programme), albeit high, dropped from 76.6 to include Sicily at 4.9 per cent, Lombardy at 4 per 74.3 per cent over the twelve months since June cent and Piedmont at 3.2 per cent. 2003. The central region of Latium increased its

16 INDIRECT DEPOSITS (millions of Euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03 Total (A+B) 13,215.6 12,959.3 12,767.1 12,794.2 3.5 3.3

Assets under management (A) 6,708.5 6,543.2 6,585.5 6,372.1 1.9 5.3 Mutual funds and unit trusts 3,789.7 3,761.0 3,780.5 3,685.3 0.2 2.8 Private banking 2,164.3 2,075.6 2,102.5 2,050.0 2.9 5.6 including: Security management (1) 1,229.3 1,134.1 1,126.7 1,007.5 9.1 22.0 Mutual funds management 935.0 941.5 975.8 1,042.5 - 4.2 - 10.3 Bancassurance products 754.5 706.6 702.5 636.8 7.4 18.5

Assets in custody (B) 6,507.1 6,416.1 6,181.6 6,422.1 5.3 1.3 Government securities 3,390.1 3,294.1 3,114.3 3,523.5 8.9 - 3.8 Others 3,117.0 3,122.0 3,067.3 2,898.6 1.6 7.5 (1) The figure includes the entire securities portfolio of the insurance subsidiaries.

Indirect deposits reached 13,215.6 m, an (+0.2 per cent) and bancassurance products rose increase of 3.5 per cent over 31st December by 7.4 per cent. Turning to the various lines that 2003, and one of 3.3 per cent over last June. make up asset management, securities Within the aggregate, during the first six months of management totalled 1,229.3 m (+9.1 per cent), the year there were increases in both savings in whilst funds reached 935 m (-4.2 per cent), as a custody and in management, the latter albeit at a result of growth in balanced funds. There were lower level. increases also in multibrand and personalised In particular, savings management rose by 1.9 per fund lines. cent to 6,708.5 m, whilst savings in custody Mutual funds remained stable throughout the recorded an increase of 5.3 per cent to reach period. Growth in the bonds segment (70.2 m) 6,507.1 m. The increases over twelve months was in part neutralised by negative variations in were of 5.3 per cent and 1.3 per cent, monetary funds (-55.2 m). Share funds rose by respectively. 0.2 per cent to 589.6m, whilst balanced funds Within savings management, asset management dropped 4.4 per cent to 166.8 m. recorded an increase of 2.9 per cent over six Savings in custody amounted to 6,507.1 m, up months to 2,164.3 m, with a significant upturn 5.3 per cent in six months. This increase stems towards the end of the period. Mutual funds above all from the government stock segment, remained substantially unchanged at 3,789.7 m which reached 3,390.1 m (+8.9 per cent).

INDIRECT DEPOSITS - DISTRIBUTION BY SECTOR (millions of Euros)

30/06/04 31/12/03 30/6/03 %%%

Public Administration 231.7 1.8% 173.7 1.4% 175.8 1.4% Financial institutions 1,670.5 12.6% 1,485.7 11.6% 1,581.2 12.4% Non-financial institutions and personal businesses 559.8 4.2% 542.9 4.3% 528.6 4.1% Private social bodies 106.6 0.8% 95.6 0.7% 100.0 0.8% Families 10,605.1 80.3% 10,433.4 81.7% 10,383.7 81.2% Total residents 13,173.7 99.7% 12,731.3 99.7% 12,769.4 99.9% Rest of the world 41.9 0.3% 35.8 0.3% 24.8 0.1% Total 13,215.6 100.0% 12,767.1 100.0% 12,794.2 100.0%

17 Indirect deposits are concentrated amongst cent of the aggregate, an increase in comparison families, which make up 80.3 per cent of the total to December (11.6 per cent) and June 2003 (31/12/03: 81.7 per cent; 30/6/03: 81.2 per (12.4 per cent). cent). Financial institutions account for 12.6 per

INDIRECT DEPOSITS - GEOGRAPHICAL DISTRIBUTION (millions of Euros)

30/6/04 31/12/03 30/6/03 %%%

Liguria 10,878.9 82.3% 10,451.9 81.9% 10,480.0 81.8% Latium 550.1 4.2% 554.7 4.3% 571.3 4.5% Piedmont 423.3 3.2% 407.7 3.2% 387.8 3.0% Lombardy 418.4 3.2% 407.3 3.2% 408.9 3.2% Sicily 362.5 2.7% 370.2 2.9% 368.4 2.9% Emilia Romagna 183.7 1.4% 180.9 1.4% 178.6 1.4% Veneto 107.6 0.8% 106.7 0.8% 103.2 0.8% Marches 103.8 0.8% 107.1 0.8% 113.7 0.9% Apulia 100.4 0.8% 94.7 0.7% 97.7 0.8% Umbria 31.5 0.2% 32.4 0.3% 36.1 0.3% Sardinia 31.3 0.2% 30.4 0.2% 26.0 0.2% Tuscany 17.1 0.1% 15.9 0.1% 15.6 0.1% Total Italy 13,208.6 99.9% 12,759.9 99.9% 12,787.3 99.9% Abroad 7.0 0.1% 7.2 0.1% 6.9 0.1% Total indirect deposits 13,215.6 100.0% 12,767.1 100.0% 12,794.2 100.0%

Liguria accounts for the lion’s share at 82.3 per m in the form of a subordinated loan granted by cent, a figure that actually represents an increase Carige to the SPV. over December 2003. There were corresponding The sale of the mortgages generated an excess drops in the shares held by Latium (4.2 per cent) spread of 61.1 m, recorded in the interim P&L at and Sicily (2.7 per cent). There were no significant caption 70 ‘other operating income’. changes in the shares of other regions. As the transaction foresaw the transfer of the Total lending amounted to 12,930.2 m, up 6.3 credits and related risks to third parties, such per cent over six months and 7.3 per cent over credits and any eventual provisions are not twelve. Lending to customers totalled 9,536.1 m, recorded either in these statements or those of the with an increase of 3.1 per cent during the first Banca Carige Group. half of the year (+8.8 per cent over twelve With regards to maturities, short-term lending months). After value adjustments, the figure is amounted to 3,896.3 million, an increase of 22.8 9,390.5 m, an increase of 3.2 and 8.8 per cent in per cent during the period; medium/long-term comparison to June and December 2003, lending dropped 8.3 per cent to 5,292.1 m. respectively. Excluding the securitisation transaction referred to The aggregate includes a short-term loan (882,9 above, short-term lending dropped by 4.5 per m) granted to Argo Mortgage 2 Srl, the SPV cent, whilst medium/long-term lending rose by 6.7 formed during the securitisation of performing per cent. mortgages carried out on 30/6/04 as part of The Commercial Credit Division, offering short- reorganisation of liquidity requirements for the term lending solutions in euro and in currency, Bank in the face of sustained demand for long- recorded a total of 4,295.2 m, 45 per cent of term credits on the part of families. With the issue total lending. This amount represents an increase and subsequent placement of the underlying of 19.2 per cent in the first half of the year and bonds, the credit granted decreased to 83.9 m in one of 21.6 per cent over June 2003. The July, 61.1 m of which in excess spread and 22.8 Division’s results excluding the securitisation

18 transaction are as follows: -4.8 per cent over one of 9.6 per cent over twelve months. Expansion 31/12/03 and – 2.9 per cent over 30/6/03. was driven by leasing activity, which in the first half The Real Estate, Public Works and Mortgages of the year increased by 37.6 m (+5.6 per cent), Division, operating in the field of mortgages and and by factoring, which increased by 5.4 m (+5.5 funding for public bodies, recorded a significant per cent). Consumer credit, however, was fall for the period of 16.3 per cent to 2,785.2 m marginally down by 0.7 per cent. (30/6/03: -6.8 per cent). Excluding the In comparison to 2003, there were increases both securitisation of mortgages carried out at the end in terms of the number of contracts signed (+4 of the period, there were substantial rises of 9.7 per cent) and in related amounts (+32.8 per and 22.1 per cent over six and twelve months. cent). In detail, there was a significant increase in Lending handled by the Division accounts for 29.2 capital goods and immovables, whilst there was a per cent of the total aggregate. fall in the motor car segment. Business generated by the banks Cassa di Risparmio di Savona and The Industrial and Agricultural Credit Division, Banca del Monte di Lucca continues to grow. which handles principally special-rate medium to In comparison to last year, the number of long-term financing to firms, recorded an increase factoring contracts stipulated rose by 28 per cent of 5.2 per cent over 31/12/03 to reach 1,136.3 (32 contracts during the first half of 2004; 25 m (+8.9 over twelve months). This figure during the same period of last year). Related represents 12 per cent of total lending. amounts more than doubled from 5.3 m to 11.1 The Parabanking Division, offering leasing, m. Outstanding invoice amounts held by the factoring and consumer credit, recorded an Bank at the end of the second quarter rose by 28 interim result of 820.6 m (8.6 per cent of total per cent over June 2003 to 382.2 m; turnover lending). This figure represents an increase in rose over the same period by 6.1 per cent to comparison to year-end 2003 of 5.5 per cent and 164.5 m.

19 LENDING (millions of Euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03 Total (A+B+C) 12,930.2 12,618.8 12,168.7 12,050.0 6.3 7.3

Loans to customers (A) 9,390.5 9,199.8 9,103.2 8,634.4 3.2 8.8 -Gross value (1) 9,536.1 9,351.5 9,247.1 8,762.7 3.1 8.8 . Commercial Credit 4,295.2 3,525.5 3,603.8 3,532.8 19.2 21.6 . Real estate and Public Works mortgages 2,785.2 3,521.4 3,326.3 2,989.7 -16.3 -6.8 . Industrial and Agricultural credits 1,136.3 1,064.3 1,080.2 1,043.0 5.2 8.9 . Parabanking (2) 820.6 784.9 777.7 748.4 5.5 9.6 . Others 151.1 146.2 156.6 180.1 -3.5 -16.1

-short term loans 3,896.3 3,096.2 3,173.4 3,009.2 22.8 29.5 % Gross value 40.9 33.1 34.3 34.3 -long term loans 5,292.1 5,946.1 5,771.2 5,484.8 -8.3 -3.5 % Gross value 55.5 63.6 62.4 62.6

. Bad loans 347.7 309.2 302.5 268.7 14.9 29.4 % Gross value 3.6 3.3 3.3 3.1

-Specific allowances for loan losses (-) 145.6 151.7 143.9 128.3 1.2 13.5

Loans to banks (B) 1,209.9 1,319.0 938.8 940.6 28.9 28.6 -Gross value 1,214.2 1,323.1 942.7 949.4 28.8 27.9 . Compulsory reserves 81.7 184.4 102.4 139.0 -20.2 -41.2 . Deposits 586.9 667.1 730.0 652.8 -19.6 -10.1 . Overdraft facilities 172.2 66.6 71.5 96.2 140.8 79.0 . Repurchase agreements 327.6 363.4 - - … … . Other loans 27.9 23.9 21.3 39.1 31.0 -28.6

. Bad loans 17.9 17.7 17.5 22.3 2.3 -19.7 % Gross value 1.5 1.3 1.9 2.3

-Specific allowances for loan losses (-) 4.3 4.1 3.9 8.8 10.3 -51.1

Securities (C) 2,329.8 2,100.0 2,126.7 2,475.0 9.6 -5.9 -Government securities 1,246.7 1,367.8 1,061.3 1,356.0 17.5 -8.1 -Other securities 784.5 578.9 887.5 946.5 -11.6 -17.1 -Shares and equity securities 298.6 153.3 177.9 172.5 67.8 73.1

(1) Including bad loans (2) Amount includes lease assets stated at Balance Sheet caption 100.

20 LOANS TO CUSTOMERS (1) - DISTRIBUTION BY SECTOR (millions of Euros)

30/6/04 31/12/03 30/6/03 %%% Public Administration 1.072,4 11,2% 1.070,0 11,6% 1.090,0 12,5% Financial institutions (2) 1.079,2 11,3% 256,7 2,8% 389,5 4,4% Non-financial and personal businesses 5.451,6 57,2% 5.529,2 59,7% 5.318,2 60,6% Agriculture, farming and fishing 78,8 0,8% 77,7 0,8% 89,3 1,0% Energy products 142,7 1,5% 201,6 2,2% 168,2 1,9% Mineral and ferrous metals and non ferrous 109,1 1,1% 99,0 1,1% 121,4 1,4% Mineral and non metallic products 91,2 1,0% 88,8 1,0% 96,4 1,1% Chemical products 57,7 0,6% 56,7 0,6% 61,7 0,7% Metal products 185,0 1,9% 184,0 2,0% 152,2 1,7% Agricultural and industrial machinery 134,7 1,4% 133,0 1,4% 148,8 1,7% Office equipment 29,7 0,3% 27,6 0,3% 28,5 0,3% Electrical supplies 84,5 0,9% 89,3 1,0% 111,1 1,3% Means of transport 71,6 0,8% 66,6 0,7% 74,4 0,8% Food, drink, tobacco 177,8 1,9% 198,5 2,1% 180,4 2,1% Textiles, leather goods, clothing 95,0 1,0% 88,2 1,0% 90,1 1,0% Paper, printing and publishing 73,4 0,8% 69,1 0,7% 65,5 0,7% Rubber and plastic goods 51,9 0,5% 51,5 0,6% 61,5 0,7% Other industrial products 95,3 1,0% 97,0 1,0% 92,9 1,1% Building and public works 788,0 8,3% 762,1 8,2% 880,5 10,0% Wholesale & retail trade, salvage and repairs 1.013,2 10,6% 1.044,7 11,3% 1.008,3 11,6% Hotel and catering services 265,1 2,8% 255,7 2,8% 247,3 2,8% Transport services 118,9 1,2% 129,1 1,4% 120,8 1,4% Air and sea transport-related services 291,6 3,1% 315,0 3,4% 353,4 4,0% Transport-related services 237,9 2,5% 258,3 2,8% 243,0 2,8% Communications-related services 12,5 0,1% 12,7 0,1% 17,2 0,2% Sales-related services 1.246,0 13,1% 1.223,0 13,2% 905,3 10,3% Private social bodies 53,0 0,6% 30,2 0,3% 29,3 0,3% Families 1.684,5 17,7% 2.088,8 22,7% 1.729,4 19,8% Total residents 9.340,7 98,0% 8.974,9 97,1% 8.556,4 97,6% Rest of the world 195,4 2,0% 272,2 2,9% 206,3 2,4% Total 9.536,1 100,0% 9.247,1 100,0% 8.762,7 100,0%

(1) Balance Sheet (Assets) caption 40 inclusive of expected losses and financial lease. (2) Inclusive of 882,9 million of Euros (30/06/2004) related to the loans due from the special purpose vehicle (related to the secututization of bad loans).

By sector, non financial and family firms account 2.1 per cent (31/12/03: 2.8 per cent; 30/6/03: for 57.2 per cent of overall lending (31/12/03: 4.4 per cent). The securitisation of mortgages 59.7 per cent; 30/6/03: 60.6 per cent), recording referred to above meant a significant reduction in contained falls during the period. Financial the share held by families: down from 22.7 per institutions, however, recorded a sharp increase cent at the start of the year to 17.7 per cent. following the recording of a bridging loan to the Excluding this transaction, the share held by SPV Argo Mortgage 2 Srl. Excluding this families would rise to 26.8 per cent. Funding transaction (securitisation of performing granted to the Public Administration remained mortgages), the share of total credits held by substantially stable and accounts for 11.2 per cent financial institutions drops from 11.3 per cent to of the total aggregate.

21 Within the sector of non financial and family works, continue to have significant businesses, other sales-related activities, the trade concentrations: together they account for 32 per service sector, including repairs and salvage cent of the Bank’s total lending. services, and building, construction and public

LOANS TO CUSTOMERS (1) - GEOGRAPHICAL DISTRIBUTION (millions of Euros)

30/6/04 30/06/2004 net securitization 31/12/03 30/6/03 % % % %

Liguria 6,363.3 66.7% 5,865.4 61.6% 5,788.2 62.8% 5,549.1 63.3% Lombardy 1,069.6 11.2% 1,271.9 13.4% 1,242.0 13.4% 1,093.6 12.5% Emilia Romagna 528.7 5.5% 590.2 6.2% 556.4 6.0% 552.4 6.3% Piedmont 474.4 5.0% 541.6 5.7% 484.0 5.2% 458.1 5.2% Latium 364.2 3.8% 396.5 4.2% 379.2 4.1% 334.5 3.8% Sicily 148.6 1.6% 172.8 1.8% 166.1 1.8% 162.5 1.9% Marches 124.2 1.3% 135.2 1.4% 122.1 1.3% 123.5 1.4% Veneto 118.7 1.2% 157.3 1.7% 146.6 1.6% 137.7 1.6% Umbria 85.3 0.9% 88.6 0.9% 82.4 0.9% 89.2 1.0% Apulia 71.9 0.8% 88.1 0.9% 78.5 0.8% 71.7 0.8% Sardinia 70.1 0.7% 88.6 0.9% 74.7 0.8% 62.5 0.7% Tuscany 34.0 0.4% 38.4 0.4% 40.0 0.4% 34.5 0.4% Total Italy 9,453.0 99.1% 9,434.6 99.1% 9,160.2 99.1% 8,669.3 98.9% Abroad 83.1 0.9% 83.1 0.9% 86.9 0.9% 93.4 1.1% Total loans to customers 9,536.1 100.0% 9,517.7 100.0% 9,247.1 100.0% 8,762.7 100.0% (1) Balance Sheet (Assets) caption 40 inclusive of expected losses and leasing.

Liguria absorbs 66.7 per cent of total lending to the end of last year. During the same period, (31/12/03: 62.8 per cent). This figure includes there were falls in both deposits (586.9 m; -19.6 the credit granted to the SPV, Argo Mortgage 2. per cent) and in compulsory reserves (81.7 m; - Significant variations were recorded in Lombardy, 20.2 per cent). There were increases both in the whose share dropped from 13.4 per cent to 11.2 euro (1,062.8 m, +23 per cent) and currency per cent. components (151.4 m; +92.2 per cent). The concentration of loans concentrated amongst The difference between interbank lending and the first 50 customers considered singly was 19.9 deposits at 30/6/04 showed a balance in favour per cent; taking group connections into account, of the latter at 189.3 m. the figure rises to 22.9 per cent. Both figures are The Bank’s securities portfolio amounted to down by more than two percentage points over 2,329.8 m, up 9.6 per cent over the end of 2003 31st December 2003. and down 5.9 per cent over June 2003. Within At 30th June 2004, lending to customers this total, bonds account for 87.2 per cent. amounting to 407.7 m was covered by swaps and Though the share of bonds in the portfolio is option contracts. tending to fall, there was an increase of 4.2 per Lending to banks before value adjustments cent over six months. However, over twelve amounted to 1,214.2 m, an increase of 28.8 per months the figure dropped by 11.8 per cent. On cent in comparison to 942.7 m recorded at the the other hand, there were sharp increases in the end of 2003. Expected losses relating to bad loan share segment (298.6 m), both over six (+67.8 and watchlist positions totalled 4.3 m. This trend per cent) and twelve months (+73.1 per cent). The was connected to expansion in current accounts, share total continues to remain marginal at 12.8 which more than doubled during the first six per cent. months of the year, and to a significant increase in The investment portfolio is regulated by Consob’s repurchase agreements (327.6 m) in comparison communication of 15/2/95 and the Bank of Italy’s

22 letter of 1/3/95 in addition to the Board of total), proof once more of the Bank’s prudent Directors’ deliberation of 27/3/95, later modified approach to derivatives usage. Balanced contracts on 6/12/99. At 30th June 2004, the portfolio with risk exposure for the Bank in terms of amounted to 173.6 m. The investment portfolio exchange and interest rate totalled 1,084.3 m, accounts for 7.5 per cent of the Bank’s total 15.5 per cent of the total. The rise in these types portfolio, unchanged over six months. of contracts during the first half of the year is due The trading portfolio total amounted to 2,156.2 to the fact that more than half (280.5 m) are m, an increase of 10.4 per cent in six months that hedging contracts on mortgages securitised at the stems principally from bonds and monetary and end of the period which have been reclassified bond funds. Derivatives on the portfolio offer temporarily as trading contracts. These derivatives cover of 813.5 m. will be sold after the second quarter. Excluding Losses on the securities portfolio totalled 19.5m, these contracts, the increase in trading derivatives of which 13 m derive from one structured recorded during the first half of the year drops investment transaction, matched by a related from 16.8 per cent to 7.6 per cent; limiting the swap. Losses are recorded at income statement analysis exclusively to open contracts, there is a caption 60 “gains and losses on financial fall of 10 per cent instead of a rise of 21.4 per transactions”. Writebacks on securities of 0.4 m cent. are recorded at the same caption. Derivatives usage is principally in the form of The notional value of outstanding derivatives swaps (5,007.8 m; 71.6 per cent of the total) and contracts amounted to 6,991.3 m at 30/6/04, an index and rate options (1,143.9 m; 16.4 per cent increase of 12.7 per cent over 31/12/03 and one of the total). of 11.4 per cent over 30/6/03. Of this total, Derivatives-related losses and gains of, 880.1 m refers to capital exchange contracts, respectively, 113.7 m and 125.3 m were whilst 6,110.6 m refers to contracts where no recorded, of which losses of 110.8 m and gains exchange of capital is foreseen. Activity in this of 124.7 m relate to one structured investment area was principally in hedging contracts (3,408.9 transaction. m; 48.8 per cent of the total) and to balanced Counterparties for the derivatives contracts are trading contracts (2,497.5 m; 35.7 per cent of the exclusively primary banks or finance companies.

23 DERIVATIVES CONTRACTS (millions of Euros)

Change % Principal (1) 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03 - Forwards (2) 4.0 - - 100.0 … - 96.0 - Swaps (3) 5,007.8 4,608.9 4,543.9 4,717.0 10.2 6.2 - Futures 159.0 117.8 21.4 26.9 643.0 491.1 - Securities options 198.4 220.9 219.5 107.2 - 9.6 85.1 - Interest-rate and index options (4) 1,143.9 1,118.9 1,091.5 994.7 4.8 15.0 - Exchange rate options 257.5 155.6 109.6 41.6 134.9 519.0 - Credit default products 220.7 218.2 215.0 287.0 2.7 - 23.1 Total 6,991.3 6,440.3 6,200.9 6,274.4 12.7 11.4 - with exchange of principal 880.1 777.6 717.0 614.4 22.7 43.2 - without exchange of principal 6,111.2 5,662.7 5,483.9 5,660.0 11.4 8.0

- hedging 3,408.9 3,257.6 3,132.5 3,163.4 8.8 7.8 - trading 3,582.4 3,182.7 3,068.4 3,111.0 16.8 15.2 * balanced contracts (5) 2,497.5 2,341.4 2,174.9 2,233.0 14.8 11.8 * open-ended contracts (6) 1,084.9 841.3 893.5 878.0 21.4 23.6 (1) Principal relative to basis swaps is stated once. (2) Includes forward rate agreements. (3) Includes basis swaps, interest rate swaps, overnight indexed swaps and cross currency swaps. (4) Includes interest rate caps. (5) Contracts matched by contracts of same characteristics so giving the Bank full cover against interest and exchange-rate risk. (6) Contracts entailing exposure to interest and exchange-rate risk.

DERIVATIVES CONTRACTS AT 30/6/04 (millions of Euros)

Hedging Trading Total Principal (1) "balanced "open-ended Total contracts" (5) contracts" (6) - Forwards (2) - 4.0 - 4.0 4.0 - Swaps (3) 2,820.0 1,797.2 390.6 2,187.8 5,007.8 - Futures 76.0 - 83.0 83.0 159.0 - Securities options 96.0 - 102.4 102.4 198.4 - Interest-rate and index options (4) 387.9 439.4 316.6 756.0 1,143.9 - Exchange-rate options - 257.5 - 257.5 257.5 - Credit default products 29.0 - 191.7 191.7 220.7 Total 3,408.9 2,498.1 1,084.3 3,582.4 6,991.3 - with exchange of principal 328.5 257.5 294.1 551.6 880.1 - without exchange of principal 3,080.4 2,240.6 790.2 3,030.8 6,111.2

(1) Principal relative to basis swaps is stated once. (2) Includes forward rate agreements. (3) Includes basis swaps, interest rate swaps, overnight indexed swaps, cross currency swaps. (4) Includes interest rate caps. (5) Contracts matched by contracts of same characteristics so giving the Bank full cover against interest and exchange-rate risk. (6) Contracts entailing exposure to interest and exchange-rate risk.

24 DERIVATIVES CONTRACTS: WRITEDOWNS AND REVALUATIONS (millions of Euros)

Writedowns Revaluations

1. Trading contracts 1.5 0.4 1.1 Non-quoted trading contracts 1.4 0.4 - Swaps 0.1 0.4 - Options 0.8 - - Credit default products 0.5 - 1.2 Quoted trading contracts 0.1 - - Futures 0.1 - 2. Hedging contracts 112.2 124.9 2.1 Non-quoted hedging contracts 111.3 124.9 - Swaps 111.2 124.8 - Options 0.1 0.1 2.2 Quoted hedging contracts 0.9 - - Futures 0.9 - Total 113.7 125.3

Total risk aggregates at 30th June 2004 relating to losses resulting from the collapse of the amounted to 608.4 m, an increase of 9 per cent Festival Cruise Group. Expected losses of 155.6 in comparison to December 2003. During the m (+1.4 per cent) represent 25.6 per cent of the period, 107.8 m was written down, principally aggregate total.

25 CREDITS AT RISK AND TOTAL ALLOWANCES (thousands of Euros)

30/6/04 31/3/04 Cash Guarantees and Leased Total Cash Guarantees and Leased Total credits commitments assets credits commitments assets Bad loans 365,616 8,066 - 373,682 326,821 8,842 - 335,663 Watchlists 186,059 18,742 - 204,801 308,121 13,944 - 322,065 Country risk 6,648 1,344 - 7,992 6,870 83 - 6,953 Rescheduled loans 13,521 - - 13,521 13,525 - - 13,525 Bad leased assets - - 8,380 8,380 - - 7,732 7,732 Total credits at risk 571,844 28,152 8,380 608,376 655,337 22,869 7,732 685,938 Specific allowances 149,914 2,690 2,952 155,556 155,797 2,766 2,898 161,461

Total allowances 154,914 2,690 2,952 160,556 173,797 2,766 2,898 179,461 - Specific allowances for loan losses 149,914 - - 149,914 155,797 - - 155,797 - Specific allowances for guarantees and commitments - 2,690 - 2,690 - 2,766 - 2,766 - Specific allowances for leased assets - - 2,952 2,952 - - 2,898 2,898 - General allowances for loan losses 5,000 - - 5,000 18,000 - - 18,000

31/12/03 30/6/03 Cash Guarantees and Leased Total Cash Guarantees and Leased Total credits commitments assets credits commitments assets Bad loans 319,942 8,849 - 328,791 290,988 9,517 - 300,505 Watchlists 185,617 9,607 - 195,224 186,245 7,894 - 194,139 Country risk 12,340 5 - 12,345 13,442 1,476 - 14,918 Rescheduled loans 14,123 - - 14,123 10,778 - - 10,778 Bad leased assets - - 7,732 7,732 - - 6,958 6,958 Total credits at risk 532,023 18,461 7,732 558,216 501,453 18,887 6,958 527,298 Specific allowances 147,752 2,787 2,898 153,437 136,985 2,366 1,350 140,701

Total allowances 165,752 2,787 2,898 171,437 149,985 2,366 1,350 153,701 - Specific allowances for loan losses 147,752 - - 147,752 136,985 - - 136,985 - Specific allowances for guarantees and commitments - 2,787 - 2,787 - 2,366 - 2,366 - Specific allowances for leased assets - - 2,898 2,898 - - 1,350 1,350 - General allowances for loan losses 18,000 - - 18,000 13,000 - - 13,000

Cash credits at risk (amounted to 571.8 m)rose by Bad lease contracts (amounted to 8.4 m)rose by 7.5 per cent over 31/12/03, following an around 0.6 m (+8.4 per cent). increase in bad loans (+45.7 m; +14.3 per cent). Expected losses on the total aggregate amounted Watchlists were unchanged (186.1 m; +0.2 per to 149.9 m, an increase of 1.4 per cent in cent), whilst there were falls in both country risk comparison to the previous accounting period. positions (6.6 m; -46.1 per cent) and restructured This total represents 28.2 per cent of the loan positions (13.5 m; -4.3 per cent). aggregate. Guarantees and commitments at risk totalled 28.2 m, up 52.5 per cent over December 2003’s figure.

26 CASH CREDITS AT RISK (thousands of Euros)

30/6/04 31/3/04 Gross Specific Net book % Gross Specific Net book % value allowances value value allowances value (a) (b) (b/a) (a) (b) (b/a)

Bad loans - customers 347,742 126,680 221,062 36.4 309,157 132,607 176,550 42.9 - banks 17,874 3,802 14,072 21.3 17,664 3,592 14,072 20.3 Watchlists - customers 185,229 16,551 168,678 8.9 307,298 16,853 290,445 5.5 - banks 830 513 317 61.8 823 513 310 62.3 Country risk - customers 6,042 - 6,042 - 6,390 - 6,390 - - banks 606 - 606 - 480 - 480 - Rescheduled loans - customers 13,521 2,368 11,153 17.5 13,525 2,232 11,293 16.5 Total cash credits at risk 571,844 149,914 421,930 26.2 655,337 155,797 499,540 23.8 - customers 552,534 145,599 406,935 26.4 636,370 151,692 484,678 23.8 - banks 19,310 4,315 14,995 22.3 18,967 4,105 14,862 21.6 Performing loans 10,178,453 - 10,178,453 - 10,019,345 - 10,019,345 - - customers 8,983,598 - 8,983,598 - 8,715,173 - 8,715,173 - - banks 1,194,855 - 1,194,855 - 1,304,172 - 1,304,172 - Total loans 10,750,297 149,914 10,600,383 1.4 10,674,682 155,797 10,518,885 1.5 - customers 9,536,132 145,599 9,390,533 1.5 9,351,543 151,692 9,199,851 1.6 - banks 1,214,165 4,315 1,209,850 0.4 1,323,139 4,105 1,319,034 0.3

31/12/03 30/6/03 Gross Specific Net book % Gross Specific Net book % value allowances value value allowances value (a) (b) (b/a) (a) (b) (b/a)

Bad loans - customers 302,487 125,123 177,364 41.4 268,721 110,233 158,488 41.0 - banks 17,455 3,383 14,072 19.4 22,267 8,195 14,072 36.8 Watchlists - customers 184,825 16,501 168,324 8.9 185,373 15,952 169,421 8.6 - banks 792 513 279 64.8 872 523 349 60.0 Country risk - customers 11,306 - 11,306 - 13,028 - 13,028 - - banks 1,034 - 1,034 - 414 - 414 - Rescheduled loans - customers 14,123 2,232 11,891 15.8 10,778 2,082 8,696 19.3 Total cash credits at risk 532,023 147,752 384,271 27.8 501,453 136,985 364,468 27.3 - customers 512,741 143,856 368,885 28.1 477,900 128,267 349,633 26.8 - banks 19,281 3,896 15,385 20.2 23,553 8,718 14,835 37.0 Performing loans 9,657,808 - 9,657,808 - 9,210,850 - 9,210,850 - - customers 8,734,357 - 8,734,357 - 8,285,637 - 8,285,637 - - banks 923,451 - 923,451 - 925,213 - 925,213 - Total loans 10,189,830 147,752 10,042,078 1.4 9,712,120 136,985 9,575,135 1.4 - customers 9,247,098 143,856 9,103,242 1.6 8,762,712 128,267 8,634,445 1.5 - banks 942,732 3,896 938,836 0.4 949,408 8,718 940,690 0.9

27 Expected losses derive from an analytical valuation - watchlists rose 4.9 per cent to 204.8 m; of of bad loans, restructured credits, credits implicit these, 186.1 m refers to cash credits, in line with in lease contracts, country risks and significant the previous six months (+0.2 per cent), whilst watchlist positions. Remaining watchlists are commitments almost doubled (18.7 m). evaluated according to the lump-sum analysis Writedowns, carried out exclusively to cash credits, applied to expected losses. amounted to 17.1 m, similar to amounts written The single risk-type categories are analysed in down at December 2003. Referring solely to cash detail below: credits, writedowns represent 9.2 per cent of the - bad loans rose from 335.7 to 373.7 m (+11.3 amount; when applied to total watchlists, the per cent), of which 365.6 m refers to cash credits figure drops to 8.3 per cent; and 8.1 m million relating to commitments. The - country risk positions were down from 12.3 m at aggregate rose as a result of the first-time 31/12/03 to 8 m., of which 1.3 m refers to recording of certain significant positions. Expected commitments. As country risk credits have no losses amounted to 155.5 m. Cash credits were specific credit risk assigned to them, no written down by 35.7 per cent, whilst 33.3 per writedowns to this aggregate were carried out; cent of guarantees and commitments was - rescheduled loans recorded a 4.3 per cent drop matched by provisions. The bad loans/total to 13.5 m in comparison to the end of last year. customer lending ratio rose from 3.3 per cent to Writedowns amounted to 2.4 m, 17.5 per cent of 3.6 per cent; the aggregate.

CREDIT COMMITMENTS (thousands of Euros)

30/6/04 31/3/04 Nominal Specific % Nominal Specific % value allowances value allowances (a) (b) (b/a) (a) (b) (b/a)

Bad loans 8,066 2,690 33.3 8,842 2,766 31.3 Watchlists 18,742 - - 13,944 - - Country risk 1,344 - - 83 - - Total guarantees and 28,152 2,690 9.6 22,869 2,766 12.1 commitments at risk Performing guarantees and commitments 1,071,813 - - 1,074,605 - - Total guarantees and commitments 1,099,965 2,690 0.2 1,097,474 2,766 0.3

31/12/03 30/6/03 Nominal Specific % Nominal Specific % value allowances value allowances (a) (b) (b/a) (a) (b) (b/a)

Bad loans 8,849 2,787 31.5 9,517 2,366 24.9 Watchlists 9,607 - - 7,894 - - Country risk 5 - - 1,476 - - Total guarantees and 18,461 2,787 15.1 18,887 2,366 12.5 commitments at risk Performing guarantees and commitments 1,184,192 - - 1,304,589 - - Total guarantees and commitments 1,202,653 2,787 0.2 1,323,476 2,366 0.2

28 ALLOWANCES AND WRITE OFFS AGAINST LENDING RISKS (thousands of Euros)

30/6/04 31/12/03 30/6/03 PATRIMONIAL AND ECONOMIC ASSETS Total credits at risk Closing balances 608,376 558,216 527,298 Year's net change 50,160 81,969 51,051 Write offs 113,995 (3) 69,308 (3) 22,804 (3) Year's gross change 164,155 151,277 73,855 Reserves for loan losses - Caption 90 Opening balances 18,000 13,000 13,000 - provisions (+) - 18,000 - - utilizations (-) 13,000 13,000 - - other changes (-) - - - Closing balances 5,000 18,000 13,000 Allowances and write offs Allowances (a) 155,556 153,437 140,701 Write offs 113,995 (3) 69,308 (3) 22,804 (3) Total allowances and write offs (b) 269,551 222,745 163,505 Allowances and write offs of the year 116,114 92,215 32,975 ((b) - (a) of the previous year) COVERING OF ALLOWANCES AND WRITE OFFS OF THE YEAR Income statement 95,667 65,039 26,176 Caption 100 - Provisions for risk and charges (leasing) (+) 53 2,440 892 Caption 120 - Provisions (+) (1) 97,836 (3) 66,699 (3) 27,744 (3) Caption 130 - Recoveries (-) (2) 2,222 4,100 2,460 Withdrawals from income statement 7,447 14,176 6,799 Irrecoverable interest on overdue loans (+) 7,447 14,176 6,799 Income statement of the previous years 13,000 13,000 - Utilization of general allowances for loan losses - caption 90 (+) 13,000 13,000 - Other changes (-) - - - Total 116,114 92,215 32,975 (1) Caption 120 for 30/06/04, 31/12/03 and 30/06/03 includes exchange-translation differences, respectively, of 16, 82 and 66 thousands of Euros stemming from write-downs relative to Nice branch. (2) Caption 130 for 30/06/04, 31/12/03 and 30/06/03 excludes, respectively, 806, 5,095 and 2,519 thousands of Euros related to the ex-Tax Collection Service and to written off credit collection. (3) Inclusive of 12,455 thousands of Euros for the full year (6,228 thousand of Euros for the first half of the year) related to the securitisation of bad loans.

Lending risk at 30th June 2004 was calculated at - 2.2 m refers to writebacks on credits 116.1 m (30/6/03: 33 m), of which 7.4 m in the previously written down or written off, form of written off interest arrears. The remaining recorded at income statement caption 130; amount can be broken down as follows: - 53,000 refers to provisions for risks and - 97.8 m refers to writedowns recorded at charges recorded at income statement 100; income statement caption 120, only in part - 13 million refers to utilisation of the credit risk covered by 13 m from credit risk reserves (see fund, recorded at income statement 90. below); .

29 BAD LOANS (1) - DISTRIBUTION BY SECTOR (thousands of Euros)

30/06/04 31/12/03 30/06/03 %%%

Public Administration 24 0.0% 23 0.0% 22 0.0% Financial institutions 14,397 4.1% 13,691 4.5% 11,762 4.4% Non-financial and personal businesses 258,912 74.5% 223,618 74.1% 196,367 73.1% Agriculture, farming and fishing 3,118 0.9% 2,729 0.9% 3,274 1.2% Energy products 0 0.0% 0 0.0% 173 0.1% Mineral and ferrous metals and non ferrous 1,566 0.5% 1,547 0.5% 557 0.2% Mineral and non metallic products 4,737 1.4% 4,595 1.5% 3,981 1.5% Chemical products 9,998 2.9% 815 0.3% 969 0.4% Metal products 9,768 2.8% 8,398 2.8% 6,243 2.3% Agricultural and industrial machinery 5,523 1.6% 4,769 1.6% 6,655 2.5% Office equipment 717 0.2% 708 0.2% 1,145 0.4% Electrical supplies 1,676 0.5% 1,776 0.6% 2,824 1.1% Means of transport 1,943 0.6% 1,927 0.6% 894 0.3% Food, drink, tobacco 17,378 5.0% 30,141 10.0% 8,146 3.0% Textiles, leather goods, clothing 6,159 1.8% 5,139 1.7% 4,344 1.6% Paper, printing and publishing 2,018 0.6% 1,756 0.6% 1,347 0.5% Rubber and plastic goods 1,977 0.6% 1,672 0.6% 2,048 0.8% Other industrial products 3,543 1.0% 3,088 1.0% 3,127 1.2% Building and public works 66,531 19.1% 68,324 22.6% 74,987 27.8% Wholesale & retail trade, salvage and repairs 54,662 15.7% 47,299 15.7% 42,439 15.8% Hotel and catering services 9,604 2.8% 8,511 2.8% 7,770 2.9% Transport services 4,520 1.3% 4,230 1.4% 5,323 2.0% Air and sea transport-related services 22,642 6.5% 131 0.0% 156 0.1% Transport-related services 2,142 0.6% 1,979 0.7% 1,636 0.6% Communications-related services 208 0.1% 67 0.0% 264 0.1% Sales-related services 28,482 8.2% 24,017 8.0% 18,065 6.7% Private social bodies 1,832 0.5% 1,805 0.6% 1,633 0.6% Families 56,648 16.3% 50,118 16.6% 46,530 17.3% Total residents 331,813 95.4% 289,255 95.8% 256,314 95.4% Rest of the world 15,929 4.6% 12,598 4.2% 12,407 4.6% Total 347,742 100.0% 301,853 100.0% 268,721 100.0%

(1) Inclusive of expected losses.

Bad loans are concentrated amongst non-finance December 2003, there was a 6.5 per cent and family businesses: 74.5 per cent of the total at increase in the share represented by sea transport 258.9 m; households come next accounting for in the wake of the collapse of the Festival Group. 16.3 per cent of the total bad risk portfolio of the Other increases include a 2.6 per cent rise in the Bank at 56.6 m. The building and construction chemical segment. There was a 5 per cent fall in industry continues to have the highest risk rating, the share of bad loans concentrated amongst food representing 19.1 per cent of the total (66.5 m). companies as a result of the writing off of amounts Services to trade, salvage and repairs account for relating to the Parmalat Group. 15.7 per cent (54.7 m). In comparison to

30 BAD LOANS/LENDING RATIO (1) - DISTRIBUTION BY SECTOR

30/6/04 31/12/03 30/6/03

Public Administration 0.0% 0.0% 0.0% Financial institutions 1.3% 5.3% 3.0% Non-financial and personal businesses 4.7% 4.0% 3.7% - including (2) Building and public works 8.4% 9.0% 8.5% Wholesale & retail trade, salvage and repairs 5.4% 4.5% 4.2% Hotel and catering services 3.6% 3.3% 3.1% Air and sea transport-related services 7.8% 0.0% 0.0% Sales-related services 2.3% 2.0% 2.0% Private social bodies 3.5% 6.0% 5.6% Families 3.4% 2.4% 2.7% Total residents 3.6% 3.2% 3.0% Rest of the world 8.2% 4.6% 6.0% Total 3.6% 3.3% 3.1%

(1) Inclusive of expected losses. (2) Principal branches of the economy in terms of overall credit exposure

The risk index of Banca Carige’s lending portfolio The building and construction industry has the measured in terms of the bad loans/total lending highest risk rating within the non-finance and ratio recorded an increase in six months from 3.3 family business sector at 8.4 per cent (31/12/03: to 3.6 per cent. In particular, the non-finance and 9 per cent). The increase in the risk levels of sea family business sector – the most significant sector and air transport services stems from the collapse quantitatively - was most at risk at 4.7 per cent. of the Festival Cruise Group.

BAD LOANS (1) - GEOGRAPHICAL DISTRIBUTION (thousands of Euros)

30/6/04 31/12/03 30/6/03 % % %

Liguria 222,788 64.1% 176,249 58.3% 174,541 64.9% Piedmont 32,906 9.5% 27,914 9.2% 26,901 9.9% Lombardy 28,793 8.3% 25,057 8.3% 19,760 7.4% Emilia Romagna 26,266 7.6% 43,089 14.2% 20,591 7.7% Sicily 7,535 2.2% 6,704 2.2% 6,224 2.3% Veneto 5,973 1.7% 3,886 1.3% 2,891 1.1% Latium 4,349 1.3% 2,099 0.7% 1,551 0.6% Apulia 3,068 0.9% 2,362 0.8% 1,773 0.7% Tuscany 2,880 0.8% 2,912 1.0% 2,878 1.1% Umbria 1,116 0.3% 133 0.0% - - Marches 673 0.2% 286 0.1% 6 0.0% Sardinia 2020.1% 900.0%640.0% Total Italy 336,549 96.8% 290,781 96.1% 257,180 95.7% Abroad 11,193 3.2% 11,706 3.9% 11,541 4.3% Total 347,742 100.0% 302,487 100.0% 268,721 100.0% (1) Inclusive of expected losses Liguria has the highest concentration of bad loans Festival Group. Turning to the Bank’s other at 64.1 per cent of the total. This figure is a sharp operating regions, Piedmont accounts for 9.5 per increase over December 2003 (58.3 per cent), cent of bad loans, followed by Lombardy (8.3 per following the collapse of the Genoa-based

31 cent), and Emilia Romagna (7.6 per cent). Other regions have marginal levels.

BAD LOANS/LENDING RATIO (1) - GEOGRAPHICAL DISTRIBUTION

30/6/04 31/12/03 30/6/03

Tuscany 8,5% 7,3% 8,3% Piedmont 6,9% 5,8% 5,9% Sicily 5,1% 4,0% 3,8% Veneto 5,0% 2,7% 2,1% Emilia Romagna 5,0% 7,7% 3,7% Apulia 4,3% 3,0% 2,5% Liguria 3,5% 3,0% 3,1% Lombardy 2,7% 2,0% 1,8% Umbria 1,3% 0,2% - Latium 1,2% 0,6% 0,5% Marches 0,5% 0,2% 0,0% Sardinia 0,3% 0,1% 0,1% Total Italy 3,6% 3,2% 3,0% Abroad 13,5% 13,5% 12,4% Total 3,6% 3,3% 3,1%

(1) Inclusive of expected losses

The bad loans/lending ratio is contained throughout Carige’s operating areas, with the exception of Tuscany (8.5 per cent), Piedmont (6.9 per cent) and the Bank’s sole branch outside Italy, in Nice, France (13.5 per cent). Particularly low are the ratios for the Marches in the centre of the country (0.5 per cent) and Sardinia (0.3 per cent).

32 SERVICES, MARKETING AND CUSTOMER PROTECTION

Banca Carige’s customer services portfolio was January 2004 to carry out business. Following developed further during the year, especially in the authorisation and in line with the Carige Group’s field of payment systems, on the back of continuing strategic objectives, the company received further integration of distribution channels made available authorisation to create three new open mutual to our customers and corporate clients. In the funds in securities: Carige Azionario, Carige Finance Area (commissions on savings Obbligazionario Internazionale and Carige intermediation and management), there was growth Bilanciato Euro. All three funds will be distributed despite a particularly weak market. Consequently, by the banks of the Group. With effect 23rd the Bank was able to expand its service- December 2004, Carige Asset Management SGR generated/net interest income ratio in June 2004 to will replace Eptafund as manager of the Epta 59.7 per cent from 56.6 per cent in June 2003 and Carige Cash, Epta Carige Bond and Epta Carige 54.6 per cent in December 2003. Equity funds, with subsequent changes in the funds’ The number of customers, calculated on the basis names, their benchmarks, investment policy, and of private individuals and other customers with full- subscriber costs. legal identity, institutions, etc. with at least one Bancassurance premiums rose 13.9 per cent in contractual relation with the Bank numbered comparison to the first half of 2003, reaching 69.1 around 785,000 at 30th June 2004; 93 per cent m. Sales were polarised principally between two of this total was made up by private individuals. products, Risparmio Assicurato and Carige Index, The number of customer contracts amounted to which together accounted for 86.7 per cent of total more than 672,000, of which 584,000 (87 per premiums collected. In particular, Risparmio cent of the total) in the form of varying types of Assicurato rose 38.4 per cent, whilst Carige Index deposit accounts (current accounts, deposit did even better, with a 53.4 per cent rise in accounts, cash bonds, certificates of deposit). The premiums in comparison to the first half of 2003. remaining 88,000 (13 per cent of the total) was in Growth in accident insurance was driven by the the form of lending agreements. introduction of two new products, Auto Risparmio With regards to savings management (mutual and Mutuo 100%. funds, securities management, fund management During the first six months of the year, the accident and bancassurance products) Carige’s own segment rose by 6.8 per cent; in comparison to manager trust. Carige Asset Management SGR June 2003, the increase was of 17.3 per cent. received Bank of Italy authorisation on 10th

33 BANCASSURANCE (thousands of euros)

Change % 30/6/04 31/12/03 30/6/03 6/04 6/03 Total life assurance volumes 727,602 681,178 620,482 17.3

Total premiums collected 68,311 137,122 57,428 19.0

Life 65,665 133,176 55,515 18.3 - Carige Unit 435 8,513 8,513 -94.9 - Gestilink 7,056 26,015 7,515 -6.1 - Gestilink Plus 126 250 61 106.6 - Risparmio assicurato 15,840 26,960 11,441 38.4 - Carige Index 41,099 68,756 26,788 53.4 - Vita assicurata 524 1,351 677 -22.6 - Previdenza attiva 253 611 299 -15.4 - Mutuo assicurato 332 720 221 50.2

Accident 2,646 3,946 1,913 38.3 - Correntista sicuro 628 1,080 1,080 -41.9 - Auto assicurata 365 1,218 531 -31.3 - Auto risparmio 292 - - … - Casa assicurata 214 386 - … - C/c assicurato 64 167 85 -24.7 - Famiglia Assicurata 296 510 217 36.4 - Mutuo 100% 787 585 - …

In the field of the distribution of bank products via There was an average of 9,000 transactions per our insurance network (‘assicurbanca’), measures cash dispenser. directed at heightening integration between the The number of POS terminals installed in shops bank and insurance network – a key pillar in the and other outlets increased by 8 per cent over the enlargement and consolidation of the Banca end of 2003 to reach 12,107 (3.3 million Carige Group - continued during the period. In transactions for a total of 195 m). particular, a new organisational model was At 30th June 2004 in circulation there were launched that seeks to systematise relations 273,173 Bancomat cash cards (December 2003: between insurance agents and bank branches. +0.9 per cent) and 98,891 CartaSì credit cards Consequently, specific products have been (+2.4 per cent). identified that will be distributed to our customers Carige’s foreign business (correspondent banking, via the insurance network. The new organisational etc.) recorded 90,000 handling transactions with model is based on the constant and systematic regards to sales and related commissions for exchange of information between the two networks amounts totalling 4 bn. so as to increase the sales of banking and Treasury and payment services managed by the insurance products in addition to developing Bank on behalf of public bodies and companies insurance consultancy services for our customers. numbered 606 at 30th June 2004. Total funds With regards to payment systems, at 30/6/04 there handled during the first six months of the year were 462 Bancomat ATMs (1 more than at reached 8.1 bn (-15.6 per cent lower than June 31/12/03), generating a total of 4.2 million 2003) with an average lending exposure of 50.5 transactions and 656.5 m in cash withdrawals. bn (-5.6 per cent) and an average amount of funds

34 deposited of 175.5 m (+1.8 per cent). The fall in annual income. During the first half of the year, the total of average amounts deposited from 211.7 there were two new index-linked policies issued – m at 31/12/03 to 175.5 m is principally the result Carige Index Protezione & Valore and Carige Index of a return to average levels on the part of the Evoluzione Valore; another unit linked policy, Cassa di Risparmio di Genova e Imperia Carige Unit Dinamicamente Protetta, became Foundation after the conclusion of two available for our customers with the closing date for extraordinary transactions (share capital increase by subscription fixed for the end of the year. With Banca Carige and participation in the Italian state’s regards to savings management, placement of the bank for deposits and loans). first three mutual funds managed by Carige Asset The rise in the total average lending exposure from Management SGR began: Carige Azionario Italia, 45.4 to 50.5 m was due to increased borrowing on Carige Bilanciato Euro, and Carige the part of local health authorities. Obbligazionario Internazionale. Financing against pledged goods rose by 2.9 per Carige’s private banking consultancy services were cent to 10.9 m. extended during the period to another district in The Bank’s marketing activities were differentiated Lombardy (Bergamo). There were also other according to market penetration: in Liguria, our specific campaigns to develop business with high traditional operating stronghold, the aim is to net worth customers. strengthen customer fidelity, whilst in areas of The corporate client segment saw further recent penetration outside Liguria the objective is development with the creation of three teams within principally to increase customer numbers and the Bank’s Large Corporate Office, which from amounts intermediated. early May will be responsible for large corporate To provide support for the second objective, the clients throughout the Carige Group network. distribution of advantageous current account and In line with Carige’s strategic objectives for the mortgage solutions continued: Carige più and distribution network outside Liguria set for 2004, Carige Casa, the latter consisting of a special rate plans are underway to increase our corporate base, mortgage and charge-free current account with especially in the area of medium-sized enterprises. overdraft possibilities. During 2004 particular attention was placed on Growing demand in the housing market, spurred by those corporate clients with significant exposures at low borrowing rates, is met by a wide range of medium/long-term maturities with the aim of mortgage solutions that range from traditional promoting transactions offering cover for risks products (fixed rate, fixed rate with increasing intrinsic in the loans. instalment payments, floating rate) to innovative Again in 2004 as in the previous year, in those packages such as Fisso & Variable, which offers regions where the Corporate Consultancy Service is cover against possible increase rate increases, and operational, all teams were involved in presenting Mutuo con il tetto, which offers customers an their activities to consultants of the private banking interest rate ceiling. All Carige mortgages are now area where connections exist between prime private available for up to 100 per cent of the value of the customers and the corporate segment. property. Call centre activities concentrated on two distinct Further visibility is offered via our collaboration with activities: inbound and outbound calls. The first two mortgage portals, www.telemutuo.it and refers to all toll free calls made by customers (with www.mutuionline.it, which match customer or without a phone banking contract) of the requirements to the range of mortgages on offer by Group’s banks, whilst the second relates to calls banks Carige investment product lines seek to offer aimed at promoting the Group’s products and customers an appropriate return on the basis of the services as well as developing our customer base. degree of risk faced; these range from Carige’s In March collaboration began between the call own bond issues (fixed and floating rate, inflation- centre and the mortgage portal mutuionline.it, index linked) to savings management and pension again aimed at acquiring new customers via the and health solutions. The latter include capital distribution of mortgages. Initial results of this protection and, in some cases, a guaranteed activity are encouraging with regards to the positive

35 promotion of the Carige brand in terms of rapid value dates on cheques paid in; comparisons response times to customers and their needs. between banks in decision times regarding lending Carige’s commitment to customer protection to small businesses. continued during the first half of the year with the application of related legislation, the respect of Group procedures regarding the handling of PUBLIC RELATIONS AND THE customer data, and the updating where necessary PROMOTION OF CULTURAL, SCIENTIFIC of such procedures in the light of legislative AND SOCIAL ACTIVITIES changes. This office was given the responsibility to manage relations with the Group’s banking customers with regards to the requirements contained in Law Activity in the field of public relations continued to 675/96 (“Privacy Law”) and carry out the necessary focus attention on campaigns that sponsor and formalities relating to customer rights foreseen by promote our operational network, support specific article 7 of Legislative decree 196/2003 (ex. Article products targeted at customer segments, and which 13 of Law 675/96). During the period eight consolidate relations with our customers both inside customers exercised their rights as foreseen by the and outside Liguria. This promotion includes above-mentioned article. advertising campaigns, relations with the mass In relation to the high-profile financial difficulties of media, sponsorship and promotion of the arts, the Parmalat and Cirio groups, Banca Carige collaboration with the world of law, economics and behaved at all times in a correct and transparent business. manner and on no occasion took part in any In addition to maintaining its traditional consortia organised to sell the groups’ securities or commitments over a wide area, the first half of the at any time had access to information regarding the year marked Carige’s participation in events financial condition of either group. connected to Genoa’s position as European Investors, with the support of various consumer Culture Capital for 2004. In February Carige protection associations, have taken steps to protect organised the national congress of those working in their legal rights. With regards to bonds issued by the field of finance (‘Forex’), attended by major the Cirio Group, the debenture trustee has representatives from the country’s finance world, submitted claims in the bankruptcy courts on the including the Governor of the Bank of Italy, Mr part of each holder of the bonds in question. For Antonio Fazio. what concerns bonds issued by the Parmalat The acquisition of Cassa di Risparmio di Carrara Group, the Italian Banking Association, in and the creation of Carige Asset Management SGR agreement with suggestions made to it by the were both marked by high-profile promotional insolvency judge and liquidator, has provided events. banks with guidelines in order to enhance the Sponsorship activity included the organisation of effectiveness of customer protection. Each bank of meetings covering various financial topics, the most the Carige Group will cover the costs related to the popular being the consequences of the application submitting of claims with no additional charge to its of new capital adequacy requirements foreseen by customers. Clearly such a measure at no time the second Basle Accord (Basle 2). prevents customers from protecting their interests A key activity in the management of Carige’s individually or in a way they regard as appropriate. corporate identity is in the field of culture and the The Italian Banking Association’s campaign for arts via our well-established presence in publishing, higher levels of disclosure and transparency which includes our arts and culture magazine ‘La regarding current accounts continued during the Casana’. The review offers an insight into the first half of the year. Four areas were the subject of artistic and cultural heritage present in Liguria as attention: cost comparisons between current well as the other 11 regions that make up our accounts; reduced exclusion of citizens from basic operating network. banking products; clarity and certainty regarding

36 Carige is also involved specialised publishing, in particular the Bank’s reviews in law and economics “Prospettive dell’Economia” and “Economia del DISTRIBUTION CHANNELS Terziario”, in collaboration with the University of AND RESOURCE MANAGEMENT Genoa. The prestigious book prize for women writers “Rapallo-Carige” continued to receive considerable The distribution of Banca Carige’s products and attention both in the press and on television services is based on an integrated multi-channel nationally and locally, giving the Bank considerable distribution system based on three legs: traditional, visibility. Items from Carige’s art collection were remote, mobile. included in prestigious exhibitions in Milan (a Van The traditional distribution channel is made up by Dyck), in Genoa (a Veronese) as well as in a our branch network which, during the year, forthcoming exhibition in Paris. continued to be the object of expansion and The Bank’s collection of 1,400 coins, some dating rationalisation, the latter in the form of back to the middle ages, was on display at our reorganisation and customer segmentation with the head office in Genoa from February to April. introduction of further private and corporate Another significant event during the first half of the banking districts. year was the creation of a data bank of the works Banca Carige’s branch network at the end of June of art in Carige’s possession. Each object (painting 2004 was made up by 393 branches, 202 (51.4 or sculpture) has been photographed and per cent) in Liguria, 38 in Sicily (9.7 per cent) and catalogued along with a description of its artistic, 36 in Lombardy (9.2 per cent). A branch was historic and economic value. The data collected will opened in Piedmont (Gavi) and, as part of be then made available on line so enabling a rationalisation, one of the two branches in Ancona virtual tour of Carige’s collection. (Marches) was closed. Carige is present in 12 During the same period the cataloguing of the regions and 54 provinces. It also has a branch in Binelli photo collection, which can now be Nice, France and representative offices abroad. consulted, was completed. The Bank also has a desk at the offices of the Regione Liguria in Brussels.

37 DISTRIBUTION NETWORK

A) TRADITIONAL 30/6/04 31/3/04 31/12/03 30/6/03 number % number % number % number % NORTH-WEST ITALY 269 68,4 269 68,4 268 68,2 267 68,1 Liguria 202 51,4 202 51,4 202 51,4 201 51,3 - Genoa 137 34,9 137 34,9 137 34,9 136 34,7 - Imperia 27 6,9 27 6,9 27 6,9 27 6,9 - La Spezia 19 4,8 19 4,8 19 4,8 19 4,8 - Savona 19 4,8 19 4,8 19 4,8 19 4,8 Lombardy 36 9,2 36 9,2 36 9,2 36 9,2 Piedmont 31 7,9 31 7,9 30 7,6 30 7,7 NORTH-EAST ITALY 31 7,9 31 7,9 31 7,9 31 7,9 Emilia Romagna 19 4,8 19 4,8 19 4,8 19 4,8 Veneto 12 3,1 12 3,1 12 3,1 12 3,1 CENTRAL ITALY 38 9,7 38 9,7 39 9,9 39 9,9 Latium 32 8,1 32 8,1 32 8,1 32 8,2 Tuscany 3 0,8 3 0,8 3 0,8 3 0,8 Marches 2 0,5 2 0,5 3 0,8 3 0,8 Umbria 10,310,310,310,3 SOUTH ITALY AND ISLANDS 54 13,7 54 13,7 54 13,7 54 13,8 Sicily 38 9,7 38 9,7 38 9,7 38 9,7 Apulia 92,392,392,392,3 Sardinia 71,871,871,871,8 BRANCHES ABROAD: Nice (France) 1 0,3 1 0,3 1 0,3 1 0,3 TOTAL 393 100,0 393 100,0 393 100,0 392 100,0

30/6/04 31/3/04 31/12/03 30/6/03 Private banking consultants 94 93 93 94 Corporate consultants81757560

B) REMOTE 30/6/04 31/3/04 31/12/03 30/6/03 ATM - Bancomat 462 460 461 455 Bancacontinua (self service) 13 13 13 13 POS 12.107 11.805 11.211 10.726 Service on line (1) 62.854 60.623 57.982 48.644 (1) Internet banking and Call Center contracts.

C) MOBILE 30/6/04 31/3/04 31/12/03 30/6/03 Insurance agents (2) 299 297 290 287 Estate agents 1.476 1.452 1.425 1.327 (2) Agents of the Group's insurance subsidiaries distributing Banca Carige products.

Banca Carige's retail vocation was reasserted In particular, the private banking consultancy during the first half of the year by means of a review service consists of 94 advisors, in 38 operational of its traditional distribution network. In particular, districts: Liguria, Lombardy, Sicily, Latium, Emilia the Bank has established business and Romagna, Apulia, Veneto, Piedmont, Umbria and organisational modules specific to particular Marches. customer segments. The project, launched at the The Corporate Consultancy Service is offered to end of 1999, consists in a network of financial medium and large businesses in 12 districts, 9 of consultants for high net-worth customers, which in Liguria, organised into 36 teams. subsequently flanked by corporate banking advisors Carige’s Large Corporate Office in Genoa utilises for large businesses. in addition the services of 3 teams based at the Bank’s head office.

38 With regards to remote channels, the number of securities management. In comparison to June fully-automated branches of the “Bancacontinua” 2003, traditional transactions rose by 49.1 per network remained at 13, whilst the number of ATM- cent. Money-movement transactions continue to be Bancomat cash points rose by 7 in comparison to marginal at 9.4 per cent of the total. Total the end of June 2003 to 462. There was amounts relating to money-movement transactions considerable expansion in the number of POS reached 102.1 m (June 2003: 23 m), of which terminals installed in retail outlets: up from 10,726 100.8 m relate to trading and 1.3 m to traditional in June 2003 to 12,107 (+12.9 per cent). transactions. Carige’s on line service, which was launched in July Carige’s mobile channels are made up principally 2000, recorded considerable growth during the first by the Group’s insurance agents. Thanks to rulings half of the year. The number of contracts went made by both the Bank of Italy and the Italian beyond the 50,000 mark, 94.4 per cent stipulated insurance industry regulator ISVAP, Banca Carige with customers with the remaining amount stipulated with the Group’s two insurance represented by employees of the Bank. Growth over companies – Carige Assicurazioni and Carige Vita twelve months was of 29.9 per cent. The number Nuova – agreements for the distribution of Carige of transactions performed on the Internet during the banking products at the offices of the insurance period amounted to around 3 million, up 23 per companies. A total of 299 insurance offices has cent in comparison to last year. There was a signed these agreements (December 2003: 290), progressive increase in the total share represented of these 32 are financial advisors (‘promotori’) who by traditional transactions over trading on line. are qualified to sell non-standardised banking Money-movement transactions, involving the products. movement of money with a subsequent effect on Estate agents working in agreement with the Bank the balance of the account, rose beyond 300,000 are also part of the mobile distribution network. The in total during the first six months of the year number of estate agents collaborating with Banca (+21.3 per cent). Within this total, whilst there was Carige rose by 51 in number to 1,476. At an 18.2 per cent increase in on line trading (more 30/6/04, 542 mortgage contracts were signed for than 50,000 transactions), the rise in traditional an underlying amount of 63.1 m (June 2003: 427 transactions was higher still: + 22.1 per cent. mortgages; 45.2 m). Money transferred over the net at June 2004 The number of Banca Carige employees fell slightly accounts for 21 per cent of the total of these from 3,759 at 31/12/03 to 3,734, following 48 transactions (June 2003: 17.4 per cent). The total new appointments of and 73 terminations, of which of the amounts handled in these transactions is 57 taking advantages of incentives for retirement. constantly rising: 535 m during the first half of the In detail, the total is made up by 45 executives, year, 3.3 per cent of total amounts intermediated 723 managers, and 2,966 clerical and ancillary by the Bank. The was an analogous increase in members of staff. There are 2,094 male employees amounts related to traditional transactions (200.3 and 1,640 female employees; 28.6 per cent total m), even though securities trading continues to staff is employed (1,069 employees) in Carige’s dominate at 334.7 m. Genoa head offices; the remaining amount is The number of Carige’s call centre contracts involved in market activities. numbered 18,355, of which 97.1 per cent with The average age of employees is around 43 with customers. In annual terms, this figure represents 18 years service. an increase of 30.8 per cent. During the period, Training and the valuation of human resources there were 350,000 transactions (June 2003: were able to benefit from a period of stability with +33.7 per cent). The number of traditional regards to the Group’s distribution network after a transactions since the beginning of the year period of intense acquisition activity. The recent reached around 47,000 (56.2 per cent of the acquisition of Cassa di Risparmio di Carrara has total). On line securities trading via the Bank’s call been met not only by measures designed to aid the centre amounted to more than 36,000 migration of the bank’s IT&C systems, but also by transactions, of which 85.3 per cent were related to

39 the inclusion of Carrara personnel in upcoming courses offered and in the number of course cycles training courses. offered. During the first six months of the year, 8,990 days Particular emphasis was placed on the business of training were distributed to 5,104 participants. and interpersonal skills required by our staff; other In order to limit travelling costs and accelerate the measures aimed at optimising human resources training process, programmes were organised in included: managerial skills, safety, preparation for our established decentralised training centres. The the ABI-sponsored Banking and Financial Diploma, positive response on the part of participants meant and well-established training and re-training that the process was extended during the period. programmes. The e-learning programme started last year is also to be extended both in terms of the range of

PERSONNEL

30/6/04 31/3/04 31/12/03 30/6/03 number % number % number % number %

Grade Executives 45 1.2 45 1.2 46 1.2 47 1.2 Managers 723 19.4 733 19.6 746 19.8 694 18.2 Other employees 2,966 79.4 2,971 79.2 2,967 78.9 3,082 80.6 TOTAL 3,734 100.0 3,749 100.0 3,759 100.0 3,823 100.0 Activities Head-offices 1,069 28.6 1,053 28.1 1,054 28.0 1,062 27.8 Branches 2,665 71.4 2,696 71.9 2,705 72.0 2,761 72.2

accounting principles and not to the two mentioned THE ADOPTION OF INTERNATIONAL above or related interpretations. An EC decision FINANCIAL REPORTING STANDARDS (IFRS) regarding IFRS 39 is expected sometime in September. At national level, pursuant to article 25 of Law On 29th September 2003, the European 306/2003 the Government has delegated authority Commission, in its adoption of Regulation no. to adopt the accounting principles into national 1725, made it compulsory for all EU public limited legislation via legislative decrees. The scope of companies to adopt from 1st January 2005 new application of the principles was extended to international accounting standards (IFRS) defined in include the financial statements of both listed and Regulation no. 1606/2002 of the European non-listed companies in addition to banks and Parliament and Council. financial intermediaries subject to Bank of Italy However, uncertainty regarding the adoption of the oversight. The delegated powers expire on 30th standards both at Community and national levels November 2004 and have so far not been remain. exercised. At Community level, at the time of writing 39 Regardless of the legislative delays stated above, accounting principles out of 41 have been ratified. there are significant differences between the new The two standards awaiting ratification are IFRS 39 principles and those at present in force in Italy. The (hedging transactions) and IFRS 32 (fair value of major differences concern: financial instruments), both of significant importance for banks and financial intermediaries. At present, compulsory application relates to the 39

40 - the use of the principle of fair value rather than and planning offices. The Committee is supported historic cost for the valuation of financial by a Coordinating Group formed by staff members instruments and securities investments; with specific competences in the areas of - the possibility of using, as an alternative accounting, management control, risk accounting principle, fair value for the management, IT systems, and organisation. The valuation of intangible assets, premises, Coordinating Group’s responsibilities include legal machinery, etc. and regulatory aspects of the process, the definition - the systematic use of actuarial of measures to be taken, and the monitoring of revaluations/deductions in the valuation of work in progress. certain assets (loans) and liabilities (staff funds); During an initial fact-finding phase the - regular application of impairment testing to Coordinating Group, in collaboration with external monitor the value of significant assets (loans, consultants, identified the primary information and equity investments, goodwill); valuation effects of adoption and consequently its - wider levels of disclosure. ensuing effects on organisation, IT&C, and Application of the new principles will result in accounting; training and learning followed with at differences in the valuation of balance sheet items. first in-house courses, followed by external learning On first time adoption, these effects, pursuant to programmes and participation in workshops IFRS 1, will be on net assets. Consequently, there organised by ABI, the Italian Banking Association. are likely to be differences in the value of the net This activity is flanked by internal work groups assets of the banks belonging to the Carige Group which, particularly during 2004, carried out an from those recorded at 31/12/04 and those at organisational/information analysis of the Bank’s 1/1/05. information systems in order to verify the presence The introduction of the new principles will have an of data required and, where absent, the manner of impact far beyond accounting and the preparation retrieval. Software suppliers to the Bank were of financial statements; the effects will be felt on brought actively into this process. information systems (different organisation of data During the first half of 2004, the following and information), organisation (changes in measures were carried out: the completion of accounting processes with effects on organisational detailed analytical models and operational plans structures), corporate culture (the need to create above all for the valuation of loans and securities; new professional profiles and specific training the signing of contracts for the purchase of programmes). The coherent application of the software; the launch of two significant consultancy principles requires an integrated approach that agreements aimed at, among other things, takes into account the logic underpinning the customer segmentation foreseen by IFRS 14 and principles and their impact. conformity of Carige’s ALM in the light of new Banca Carige as the leader of a universal financial hedge accounting rules and integration of CRM services group (banking, insurance, financial and ALM systems for the fair value calculation of services) during the first half of 2003 began to banking book items. identify, on one hand, the professional duties In spite of legislative uncertainty, Banca Carige has required and, on the other, to define guidelines, sought to build an information platform that is programmes, models, methods and processes that consistent not only with those areas already will enable the effective introduction of the new defined, but also with those that can reasonably be administrative/accounting system foreseen by the expected over the coming months (the extension of European Commission’s Regulation. IFRS to the financial statements of the Bank and to This project is part of a wide-ranging reengineering those of the other companies of the Group in process carried out throughout the Group, addition to the application of IFRS 32 and 39, at including the insurance subsidiaries. It is designed least for those aspects which appear to be the and led by an ad hoc steering committee, made up subject of agreement). by senior managers from the accounting, business In conclusion, on the basis of an analysis of first- and risk management, ITC, organisation, research time application of fair value to equity investments

41 outside the Group and to technical fixed assets, it is The value of the Bank’s equity investments reasonable to expect that the ensuing benefits will (excluding investment securities) rose from 648 m outweigh potential negative effects of the same recorded at December 2003 to 854.6 m (+31.9 criteria on application to loans, with a resulting per cent). overall positive impact on the Bank’s financial Within this amount, 830.2 m refers to significant position. holdings, up 32.5 per cent following the purchase of all the shares in Caricarrara Holding SpA (176 m), whose holding in Cassa di Risparmio di Carrara was of 90 per cent. INVESTMENTS This acquisition was carried out via the partial breaking up of Carinord 2 SpA, a company in which Carige held 87,427,549 shares following At 30th June 2004 Banca Carige’s total tangible the purchase performed in January 2004 according assets amounted to 953.9 million, an increase of to the terms contained in the purchase agreement 33.4 m over the end of the previous year (+3.6 per signed on 16th July 2003 subject to regulatory go cent). This rise was due to an increase in lease ahead. assets, which rose by 36 m (+5.4 per cent). During the period, Carige fully redeemed the Property accounts for 24.8 per cent of tangible entirety of revaluations on equity investments (4.7 assets (236.9 m), whilst furniture and fittings makes m) carried out in accordance with Law 218/90 as up 1.9 per cent of the total at 18.4 m. The foreseen by Law 350/03. remaining 73.2 per cent is in the form of lease The book value of equity investments within the assets (698.6 m). Other items include investments Group increased by 203.4 m to 820.5 m, in progress amounting to 61.7 m, referring almost principally as a result of the transaction relating to exclusively to lease assets. Tangible assets include Carricarrara Holding SpA described above. revaluations of 28.8 m carried out in accordance The following companies belong to the Banca with the provisions contained in Laws 576/75, Carige Group: 72/83, and 413/91. During the period the Bank - Carige Assicurazioni SpA and Carige Vita took advantage of the opportunities foreseen in Nuova SpA are insurance providers; Law 350/03 (article 2) and redeemed the entirety - Banca del Monte di Lucca SpA and Cassa di of revaluations carried out in accordance with Law Risparmio di Savona SpA are banks. Cassa di 218/90 (157.4 m). Risparmio di Carrara was formally incorporated Remaining amounts were depreciated by 431.4 m, into the Carige Group following Bank of Italy 22 m of which carried out during the first six authorisation on 25th June 2004 (with effect months of the year. Of this amount, 21 m refers to 21/4/04); lease assets. - Carige Asset Management SGR SpA is a Further information is given at section 4.1, part B of manager trust company specialising in asset the explanatory notes. management. The company is enrolled in the Intangible assets amounted to 466.3 m, down 1.5 Italian registry of savings management per cent in comparison to December 2003’s figure companies (‘Società per il Gestione del of 473.1 m. This amount is net of amortisation Risparmio’) with effect from 10th January 2004; charges of 67.8 m. - Centro Fiduciario SpA, is a trust company; By type, 437.1m refers to goodwill stemming from - Galeazzo Srl, Columbus Carige Immobiliare branch acquisitions from Banco di Sicilia, and the SpA and Ettore Vernazza SpA offer property- Intesa and Capitalia Groups. Software accounts for related services; 20.1 m, whilst 2.8 m refers to start-up charges, and - Argo Finance One Srl is the SPV established for 6.2 m to other intangibles. the securitisation of bad loans carried out by Further information can be found at section 4.2, Carige at the end of 2000. Banca Carige has part B of the explanatory notes. acquired 60 per cent of the company’s share capital;

42 - Priamar Finance Srl is the SPV established for share capital was carried out in order to improve the securitisation of bad loans carried out by the company’s solvency ratio. Cassa di Risparmio di Savona. The purchase of In particular, Carige increased its holding in Carige the company on the part of the Savona bank Vita Nuova SpA from 92.809 per cent to 100 per was completed on 14th January 2004. cent via the purchase of a further 6,400,000 shares - Banca Carige has an indirect holding in the with a nominal value of euro 0.52 each. following companies, the book value of which With regards to the other insurance subsidiary, is not included at ‘equity investments within the Carige Assicurazioni SpA, Banca Carige increased Group’: its holding from 90.695 per cent to 98.108 per - Ligure Leasing SpA and Immobiliare Carisa Srl cent via the subscription of 18,948 new shares with are owned directly by the Group subsidiary a nominal value of euro 193 plus the purchase of Cassa di Risparmio di Savona. The former is a 8,672 shares with a nominal value of euro 982. finance company, whilst the latter offers The book value of equity investments outside the property-related services; Group dropped by 11.4 per cent in comparison to - Assi90 Srl, offering insurance-related services, 31/12/03 to 34.1 m. is owned directly by the Group subsidiaries In line with CONSOB recommendation no. Carige Assicurazioni and Carige Vita Nuova; 97001574 dated 20/2/97, all intra-subsidiary and - AG Srl, Savona 2000 Srl and Assimilano Srl, associated company relations are regulated by offering insurance-related services, are owned market conditions. directly by Assi90 Srl. In particular, at 30/6/04 with regards to relations With regards to inspections carried out in 2002 by existing between Banca Carige and these ISVAP, the Italian insurance regulator, at the companies, amounts owed to, and amounts insurance subsidiaries Carige Assicurazioni and payable by Banca Carige amounted, respectively, Carige Vita Nuova, Banca Carige and the to 425.9 m and 461.7 m; guarantees and administrators of the two companies involved, in commitments totalled 88.4 million. line with ISVAP’s recommendations, put into place Details are given in the table below. Further details wide-ranging measures for the rationalisation and concerning the Bank’s relations with its subsidiaries innovation of operating procedures present in the and associated companies and changes recorded two companies. In line with these measures, a during the first half of the year are given at section further strengthening of Carige Assicurazioni’s 3, part B of the explanatory notes.

43 EQUITY INVESTMENTS (thousands of Euros)

30/6/04 Assets (1) Liabilities (1) Guarantees & Revenue Expenses Dividends Commitments SUBSIDIARIES 149,720 435,312 14,862 7,096 5,529 18,212 Galeazzo Srl 4 2,876 - 4 42 - Columbus Carige Immobiliare SpA 14,724 30 - 448 966 - Immobiliare Ettore Vernazza SpA 1,690 9 - 42 - 453 Argo Finance One Srl 13 16 - 5 - - Priamar Finance Srl 18 10 - 5 - - Centro Fiduciario SpA 618 108 - 201 160 - Caricarrara Holding SpA 12,401- - - - Cassa di Risparmio di Carrara SpA 21,429 200,816 411 60 894 9,271 Cassa di Risparmio di Savona SpA 13,765 171,478 7,806 2,308 2,165 4,774 Banca del Monte di Lucca SpA 49,214 18,405 3,054 645 395 891 Carige Asset Management SGR SpA 30 439 - 507 484 - Carige Vita Nuova SpA 1,387 10,951 - 1,007 59 1,202 Carige Assicurazioni SpA 46,392 25,388 3,591 1,425 285 1,621 Assi 90 Srl 265 1,085 - 412 7 - AG Srl 86 342 - 2 1 - Assimilano Srl - 798 - 1 7 - Savona 2000 Srl - 88 - - - - Ligure Leasing SpA 84 72 - 24 64 -

SIGNIFICANT HOLDINGS 143,171 816 - 1,493 20 - Frankfurter Bankgesellschaft AG 143,171 133 - 1,493 7 - Recina Servizi Srl - 683 - - 13 -

TOTAL 292,891 436,128 14,862 8,589 5,549 18,212 (1) Unlike table 3.2 in the explanatory notes, this table includes items "other assets", "accrued income and prepaid expenses", "other liabilities", "accrued expenses and defferred income".

Group: 5.63 per cent; El Monte de Piedad y Caja SHARE OWNERSHIP STRUCTURE AND de Ahorros de Huelva y Sevilla: 2.31 per ; Gefip RELATIONS WITH THE CASSA DI Holding: 2.23 per cent; Cattolica Assicurazioni: 2 RISPARMIO DI GENOVA E IMPERIA per cent.. FOUNDATION With regards to business relations existing between the Foundation and Banca Carige, the Bank has liabilities of 57.9 m (of which, 52 m in the form of At 30th June 2004, Banca Carige’s share capital convertible subordinated bonds issued during the was unchanged over 31/12/03 at 1,113,326,839 share capital increase performed by Banca Carige) euros, in the form of 959,897,518 ordinary shares which generated interest charges of 0.5 m. Assets and 153,429,321 convertible savings shares. amount to 0.7 m. Revenues for the Bank relating to The present ownership structure of the Bank is as transferred personnel, and administrative, follows: Cassa di Risparmio di Genova e Imperia accounting and tax-consultancy service contracts Foundation: 43.37 per cent; CDC-CNCEP: 11.02 amounted to 0.7 m. per cent; WestLB: 7.47 per cent; Basilese Insurance

44 Full details are given in section 8, part B of the June 2004, the official share price was euro 3.049. explanatory notes. The Bank’s savings share, first listed on 4th December 2001 at euro 2.040, consolidated the vigorous growth of its early listing, rising to euro CARIGE SHARES 3.255 at 30/6/04 in comparison to euro 3.258 at 31/12/03 and euro 3.183 at 30/6/03. On 6th May 2004 there were gross dividend payouts of The world’s share markets recorded constant albeit euro 0.0723 for the ordinary share and euro sluggish growth. The much awaited upturn appears 0.0923 for the savings share. to be held back by two factors: the sharp rise in oil During the first six months of 2004 the average prices and the worsening conflict in Iraq. price recorded by the ordinary share was of euro The Italian share market tracked performances 3.069 (June 2003: euro 2.295). Carige ordinary recorded on other bourses. The general index of shares were the object of 25,051 trades (June the Milan stock exchange – Mibtel – was up by an 2003: 14,540) relating to a total of 67,508,821 overall 14.7 per cent (June 2003: +8.6 per cent; shares (June 2003: 43,470,268 shares) for a total December 2003: +5.7 per cent). The MIB index of counter value of 210.5 m (June 2003: 99 m). banking stock rose 1 per cent in the first half of the With regards to savings shares, the average share year after a 10.5 per cent surge in the previous six price for the period was euro3.418 (June 2003: months. euro 2.704). There was a total of 563 trades Carige shares, now in their tenth year of listing, relating to 404,343 shares for a value of 1.4 m recorded another better than average performance, (June 2003: 3 m). rising 9.20 per cent over 31/12/03 and 20 per cent in comparison to June 2003. At the end of

CARIGE SHARES PERFORMANCE OVER TWELVE MONTHS

Change %

30/6/04 31/3/04 31/12/03 30/6/03 year 1st half 04 2nd half 03

CARIGE 3.049 3.185 2.792 2.541 19.99 9.20 9.88 CARIGE savings 3.255 3.413 3.258 3.183 2.26 -0.09 2.36 Milan general share index 21,114 20,362 19,980 18,402 14.74 5.68 8.58 Milan banking index 2,274 2,109 2,251 2,037 11.63 1.02 10.51

45 INCOME STATEMENT AND NET INCOME

Against a backdrop of economic weakness, the positive effect of which neutralises the persistent uncertainties on national and foreign negative effects of reduced interest margins. markets and falls in interest rates for most of the In detail, interest income totalled 268.9 m, period, with the ensuing reduction of spreads, down 3.6 per cent over June 2003 (278.9 m); there was an inevitable negative effect on banks’ interest income on lending to customers slipped traditional income sources. Despite this from 225.6 to 218.5 m (-3.5 per cent), whilst scenario, Banca Carige was able to contain interest on securities fell from 42.1 to 39.7 m (- these effects, recording an interim net profit of 5.8 per cent). 60.1 m, down 4.5 per cent over the previous Interest charges – 103.9 m – were 13.1 per cent interim result of 63 m. Another factor that down on June 2003 (119.6 m). Charges impacted negatively the result was the provision payable on customer deposits decreased from contained in Law Decree 168 of July 2004, 83.7 to 80 m, down 4.4 per cent. Interest which eliminated net value adjustments on charges on interbank deposits were almost credits from the scope of deductions foreseen in halved from 21.6 to 11.2 m (-48.3 per cent). the calculation of the regionally levied tax IRAP. Service-generated or non-interest income The resulting decrease in net profit was of 4.2 amounted to 244.3 m, an increase of 17.6 per m. Excluding this change, net profit for the cent in comparison to the first half of 2003. This period would have been 64.3 m, an increase of rise was due to positive performances of 2.1 per cent over June 2003. commission income, improvements in revenues In addition to the situation described above from financial transactions, and strong growth in there were other extraordinary factors that net operating income, the latter in the form of influenced the result: 61.1 m in excess spread from the securitisation - the writing off as losses of 81.1 m following of performing mortgages. Dividends, however, the collapse of the Festival Cruise Group; were down principally as a result of the abolition - the accounting of 61.1 m in excess spread of tax credits. generated revenues relating to the securitisation Net commission income totalled 82.2 m, a rise of performing mortgages carried out during the of 4.7 per cent in comparison to June 2003 period; (78.5 m). Commissions on guarantees given - the accounting of 6.7 m from the distribution increased 15.3 per cent and payment and of the general banking risks fund of Cassa di collection service revenues rose by 2.8 per cent. Risparmio di Carrara; Other positive contributions to the aggregate - the change in the time horizon utilised in the include other services (+4.3 per cent), and calculation of deferred tax with the subsequent management, consultancy and intermediation recording of 15 m in advanced taxes to the commissions (+5.1 per cent). With regards to benefit of the P&L to the same amount. the latter, there was a rise in commissions on the During the first six months of last year, the P&L sales of securities (19.4 m; +6.2 per cent) and benefited from the extraordinary contribution of a fall in asset management commissions (3 m; - 34.1 m in dividends paid out by Cassa di 18.6 per cent). Risparmio di Savona and other revenues Gains from financial transactions (caption 60) stemming from the sales of holdings in IAM SGR reached 3.6 m after the loss of 2.7 m recorded and Eptaconsors. the previous June. The caption includes, Excluding the extraordinary items of both interim amongst others, the effects of valuating periods (2003 and 2004), interim net profit at securities and underlying contracts of a 30th June 2004 would be 22 per cent higher structured investment transaction which than the previous half-year result. generated increased losses of 19.5 m, only in In particular, net interest income amounted to part offset by increased trading gains of 7.4 m. 164.9 m, an increase of 3.5 per cent in Losses on securities include 13.9 m that refer to comparison to the first half of 2003. This is a a security that was the object of a structured result of growth in critical mass intermediated, investment transaction, offset by the revaluation of an analogous amount recorded at ‘other

46 transactions’. Excluding this amount, losses previous year was the result of the capital gain totalled 5.6 m, up by only 0.9 m in comparison made by the Savona bank on the sale of Carige to the first half of 2003 with a positive caption shares (6 m), and the distribution of reserves result of 2.2 m. Currency transactions produced (9.3 m). The fall was offset in part by dividends a profit of 1.3 m (2003: 1.1 m), whilst ‘other of 9.6 m paid out by the newly-acquired Cassa transactions’ rose from 0.1 m in June 2003 to di Risparmio di Carrara; of this amount, 6.7 m 14 m. This result is, however, conditioned by the was extraordinary in the form of the distribution effects of the above-mentioned structured of the subsidiary’s general banking risk reserves investment transaction in the form of recorded (reserve total: 8.3 m). gains of 125.3 m and losses of 111.8 m, which Other operating income amounted to 139.4 m, relate to, respectively, the valuations of the an increase of 62.7 m or 81.7 per cent in forward and IRS contracts. Excluding these comparison to the first half of 2003. This amounts, a contained profit of 0.9 m would be increase was for the most part the result of an recorded at the item ‘other transactions’. excess spread of 6.1 m deriving from the There was a sharp fall in dividends – down from securitisation of performing mortgages 57.2 to 22.4 m – substantially following the performed during the period. abolition of tax credits. The effect of this Other operating charges totalled 3.2 m, up 1.9 legislative change is calculated in the range of m in comparison to the previous interim result, 23.8 m. Excluding this measure, the most mainly as a result of losses on the alienation of significant reduction is connected to the dividend lease assets. paid out by Cassa di Risparmio di Savona, Gross operating income at 30th June 2004 rose which fell from 21.5 m during the first half of 11.5 per cent over June 2003 to 409.3 m. 2003 to 4.8 m. The substantial dividend of the

47 INCOME STATEMENT (thousands of Euros)

Change 30/6/04 31/3/04 31/12/03 30/6/03 absolute %

10 Interest income and similar revenues 268,859 130,855 546,478 278,913 - 10,054 - 3.6 20 Interest expenses and similar charges - 103,919 - 50,008 - 221,820 - 119,624 15,705 - 13.1 NET INTEREST INCOME 164,940 80,847 324,658 159,289 5,651 3.5 40 Commission income 90,117 45,695 179,169 85,922 4,195 4.9 50 Commission expenses - 7,947 - 3,284 - 15,627 - 7,472 - 475 6.4 60 Gains (losses) from financial transactions 3,584 3,713 9,229 - 2,710 6,294 - 232.3 30 Dividends and other revenues 22,388 4,846 63,958 57,177 - 34,789 - 60.8 70 Other operating income 139,428 38,741 160,752 76,732 62,696 81.7 110 Other operating expenses - 3,224 - 683 - 7,747 - 1,873 - 1,351 72.1 NON INTEREST INCOME 244,346 89,028 389,734 207,776 36,570 17.6 GROSS OPERATING INCOME 409,286 169,875 714,392 367,065 42,221 11.5 80 Administrative costs - 178,087 - 84,512 - 366,712 - 181,052 2,965 - 1.6 . Personnel - 110,472 - 54,520 - 234,968 - 116,547 6,075 - 5.2 . Other administrative costs - 67,615 - 29,992 - 131,744 - 64,505 - 3,110 4.8 90 Depreciation and amortization of - 64,046 - 32,527 - 123,207 - 60,682 - 3,364 5.5 intangible and tangible fixed assets OPERATING COSTS - 242,133 - 117,039 - 489,919 - 241,734 - 399 0.2 OPERATING INCOME 167,153 52,836 224,473 125,331 41,822 33.4 100 Provisions for risks and charges - 1,009 - 831 - 3,966 - 2,663 1,654 - 62.1 120 Provisions for loan losses and for - 97,820 - 10,998 - 66,782 - 27,784 - 70,036 252.1 guarantees and commitments 130 Recoveries of loans and reversals of provisions 3,028 1,097 9,195 3,761 - 733 - 19.5 for guarantees and commitments 140 Additional provisions for loan losses - - - 18,000 - - … 150 Write-downs to financial fixed assets - - - - - … 160 Recoveries of financial fixed assets - - 107 - - … PROVISIONS AND WRITE-DOWNS - 95,801 - 10,732 - 79,446 - 26,686 - 69,115 259.0 170 INCOME FROM ORDINARY ACTIVITIES 71,352 42,104 145,027 98,645 - 27,293 - 27.7 180 Extraordinary income 7,174 356 30,029 14,470 - 7,296 - 50.4 190 Extraordinary expenses - 3,534 - 1,786 - 7,022 - 3,908 374 - 9.6 200 EXTRAORDINARY INCOME 3,640 - 1,430 23,007 10,562 - 6,922 - 65.5 INCOME BEFORE TAXATION 74,992 40,674 168,034 109,207 - 34,215 - 31.3 210 Variation of Reserves for general banking risks - - 5,165 - … 220 Income taxes - 14,850 - 15,360 - 67,000 - 46,250 31,400 - 67.9 230 NET INCOME 60,142 25,314 106,199 62,957 - 2,815 - 4.5

48 INCOME STATEMENT - QUARTERLY CHANGESCHANGES (thousands of Euros)

2004 2003 2nd quarter 1st quarter 4th quarter 3rd quarter 2nd quarter 1st quarter

10 Interest income and similar revenues 138,004 130,855 134,375 133,190 137,043 141,870 20 Interest expenses and similar charges - 53,911 - 50,008 - 50,532 - 51,664 - 55,538 - 64,086 NET INTEREST INCOME 84,093 80,847 83,843 81,526 81,505 77,784 40 Commission income 44,422 45,695 50,059 43,188 44,169 41,753 50 Commission expenses - 4,663 - 3,284 - 4,060 - 4,095 - 4,176 - 3,296 60 Gains (losses) from financial transactions - 129 3,713 5,919 6,020 - 1,168 - 1,542 30 Dividends and other revenues 17,542 4,846 - 347 7,128 37,717 19,460 70 Other operat ing income 100,687 38,741 44,673 39,347 38,968 37,764 110 Other operat ing expenses - 2,541 - 683 - 3,148 - 2,726 - 1,231 - 642 NON INTEREST INCOME 155,318 89,028 93,096 88,862 114,279 93,497 GROSS OPERATING INCOME 239,411 169,875 176,939 170,388 195,784 171,281 80 Administrative costs - 93,575 - 84,512 - 92,689 - 92,971 - 92,728 - 88,324 . Personnel - 55,952 - 54,520 - 60,968 - 57,453 - 58,557 - 57,990 . Other administrative costs - 37,623 - 29,992 - 31,721 - 35,518 - 34,171 - 30,334 90 Depreciation and amort ization of - 31,519 - 32,527 - 31,823 - 30,702 - 31,210 - 29,472 intangible and tangible fixed assets OPERATING COSTS - 125,094 - 117,039 - 124,512 - 123,673 - 123,938 - 117,796 OPERATING INCOME 114,317 52,836 52,427 46,715 71,846 53,485 100 Provisions for risks and charges - 178 - 831 - 723 - 580 - 2,330 - 333 120 Provisions for loan losses and for - 86,822 - 10,998 - 18,385 - 20,613 - 11,792 - 15,992 guarantees and commitments 130 Recoveries of loans and reversals of provisions 1,931 1,097 4,561 873 1,262 2,499 for guarantees and commitments 140 Additional provisions for loan losses - - - 18,000 - - - 150 Write-downs to financial fixed assets ------160 Recoveries of financial fixed assets - - 107 - - - PROVISIONS AND WRITE-DOWNS - 85,069 - 10,732 - 32,440 - 20,320 - 12,860 - 13,826 170 INCOME FROM ORDINARY ACTIVITIES 29,248 42,104 19,987 26,395 58,986 39,659 180 Extraordinary income 6,818 356 11,839 3,720 11,097 3,373 190 Extraordinary expenses - 1,748 - 1,786 - 1,662 - 1,452 - 1,973 - 1,935 200 EXTRAORDINARY I NCOME 5,070 - 1,430 10,177 2,268 9,124 1,438 INCOME BEFORE TAXATION 34,318 40,674 30,164 28,663 68,110 41,097 210 Variation of Reserves for general banking risks - - 5,165 - - - 220 Income taxes 510 - 15,360 - 8,500 - 12,250 - 30,350 - 15,900 230 NET INCOME 34,828 25,314 26,829 16,413 37,760 25,197

Operating costs recorded little variation over retirement age. In particular, the item ‘salaries June 2003 (+0.2 per cent) to end the period at and social security charges’ dropped from 98.2 242.1 m. Two items make up this caption: to 93.2 m (-5.1 per cent); provisions to the administrative costs and writedowns on financial severance pay fund also fell from 5.2 to 4.7 m, fixed assets; the first recorded a 1.6 per cent fall, whilst there was a slight increase in provisions to whilst the second rose by 5.5 per cent. the supplementary pension fund from 7.1 to 7.3 Within administrative costs, personnel-related m (+1.7 per cent). charges fell 5.2 per cent from 116.5 to 110.5 Other administrative costs rose by 4.8 per cent m, thanks to the continuing effect of incentives as a result primarily of greater indirect taxes. for termination for those having reached

49 The rise in writedowns on financial fixed assets Ordinary income fell 27.7 per cent from 98.6 m (+5.5 per cent) from 60.7 to 64 m was in June 2003 to 71.4 m. connected to, on one hand, the amortisation of Extraordinary income was down from June goodwill on branches acquired and related 2003’s 10.6 m to 3.6 m, following the premises and fittings and, on the other, lease significant fall in extraordinary revenues after the assets. extraordinary contribution from the sales of the Writedowns on tangible assets rose 4.1 per cent Bank’s holdings in Eptaconsors (6 m) and Intesa from 50.2 to 52.3 m, whilst value adjustments Asset Management (4.5 m). on intangibles rose by 12.3 per cent to 11.7 m Pre-tax profit reached 75 m, down 31.3 per cent as a result of rising-charge amortisation, on last June. introduced at the start of 2003, of goodwill Total income taxes for the first half of 2004 related to the branches purchased by Banca amounted to 14.9 m, significantly lower than the Carige (June 2003: 4.3 m; June 2004: 5.3 m). previous interim tax charge of 46.2 m. This Operating income for the first half of 2004 was reduction stems from the abolition of tax credits 167.2 m (+33.4 per cent). on dividends and changes in valuation criteria Provisions amounted to 95.8 m, considerably applied to deferred tax. Income tax accounted higher than the previous interim figure of 26.7 for 19.8 per cent of pre-tax profit, considerably m as a result of the collapse of the Genoa- lower than June 2003 (42.4 per cent). based cruise operator, Festival Crociere. The Net profit for the first half of 2004 reached 60.1 loss written of amounted to 81.1 m, with only m, down 4.5 per cent in comparison to the partial cover from the credit risk reserve (13 m). previous interim result. Excluding the effects of Provisions for risks and charges were more than Law Decree 168/2004, net profit would have halved from 2.7 to 1 m. Net writedowns on been 2.1 per cent higher than June 2003 at credits totalled 94.8 m, an increase of 70.8 m. 64.3 m. No writedowns or writebacks were carried out on financial fixed assets.

50 SHAREHOLDERS’EQUITY

Shareholders’ equity prior to the distribution of banking risks fund at 30th June 2004 amounted net profit and after provisions to the general to euro 1,618 m.

SHAREHOLDERS' EQUITY (thousands of Euros) prior to the distribution of net profit

30/6/04 31/3/04 31/12/03 30/6/03

Capital Stock 1,113,327 1,113,327 1,113,327 1,020,550 Additional paid-in capital 258,666 256,977 255,023 139,941 Reserves 238,051 252,360 229,723 229,723 - legal 77,971 77,971 67,351 67,351 - taxed extraordinary 41,913 41,913 44,396 44,397 - decree 153/99 11,718 11,718 11,718 11,718 - decree 124/93 121 121 57 56 - incorporation 12,341 12,341 12,341 12,341 - merger 16,589 16,589 16,589 16,589 - own shares 38,824 12,418 - 5,261 - purchase of treasury stock 38,176 79,018 77,000 71,739 - dividend treasury stock 267 140 140 140 - art. 55, decree 917/86 131 131 131 131 Revaluation reserves 7,956 7,956 7,956 7,956 Total 1,618,000 1,630,620 1,606,029 1,398,170 Reserve for general banking risks - - - 5,165 Total 1,618,000 1,630,620 1,606,029 1,403,335

Positive variations in shareholders’ equity derive securitisation of non performing loans. Lastly, principally from the transfer of net earnings for total reserves for the purchase of own shares 2003 (106.2 m) to reserves; after the (created pursuant to article 2357 of the Italian distribution of dividends (83.6 m), the remaining Civil Code) fell from 77 to 38.2 m following 22.7 m was destined to reserves: 10.6 m to the utilisations during the period of 38.8 m. legal reserve and 12.1 m to the extraordinary Turning to share market indicatorsindicators, the Carige taxed reserve. With regards to the latter, share’s p/e ratio rose from 26.11 in 2003 to utilisations, however, totalled 14.6 m in order to 28.41; also up were the earnings per share ratio meet tax charges (‘imposta sostitutiva’) following (from 0.095 to 0.108) and the return on equity the decision on the part of the Bank to take ratio (from 6.6 per cent to 7.4 per cent in advantage of the opportunities contained in annual terms). The rise in the average share article 2 of Law 350/2003, redeeming capital price for the first half of the year from euro gains foreseen by Law 218/90. 2.491 in June 2003 to euro 3.069 on one hand Total shareholders’ equity benefited from pushed up the price/book value ratio from 1.73 provisions for the period to the share premium to 2.11, whilst on the other reduced the reserve totalling 3.6 m in relation to the dividend yield from 2.90 to 2.36 per cent.

51 SHAREMARKET INDICATORS

30/6/04 31/3/04 31/12/03 30/6/03

Return on Equity (ROE) % 7.43 (3) 6.21 (3) 6.61 8.97 (3)

Return on Average Equity (ROAE %) 7.46 (3) 6.67 (3) 7.64 9.08 (3)

Earnings per share (EpS) 0.108 (3) 0.091 (3) 0.095 0.123 (3) Price/Earnings ratio (P/E) (2) 28.41 (3) 33.19 (3) 26.11 18.60 (3)

Price/Book value (P/BV) (2) 2.11 2.06 1.73 1.67

Dividend yield (%) (2) 2.36 (3) 2.39 (3) 2.90 3.15 (3)

Net profit (in thousands of Euros) 60,142 25,314 106,199 62,957 Annual percentage variation -4.5 0.5 1.3 14.7

Equity (thousands of Euros) (1) 1,618,000 1,630,620 1,606,029 1,403,335 Number of shares/1000 1,113,327 1,113,327 1,113,327 1,020,550

Average share price for the period (2) 3.069 3.019 2.491 2.295

(1) Capital and reserves (including general banking risks fund) prior to profit allocation. (2) Ordinary shares only. (3) Data refer to the whole year.

Core capital reduced from 1,469.1 (31/12/2003) to 1,403.7 (30/06/04)(-4.5%). Details are given in the table below:

52 BREAKDOWN OF TOTAL CAPITAL (thousands of Euros)

30/6/04 31/3/04 31/12/03 30/6/03

Tier 1 Capital: positive elements eligible for inclusion (a) 1,628,405 1,622,664 1,620,710 1,420,036 Share capital 1,113,327 1,113,327 1,113,327 1,020,550 Reserves 256,412 252,360 252,360 254,380 Additional paid-in capital 258,666 256,977 255,023 139,941 General banking risks fund - - - 5,165

Tier 1 Capital: negative elements (b) 505,125 485,948 473,530 482,537 Goodwill 437,121 442,392 442,392 446,727 Own s hares 38, 824 12,418 - - Other negative elements 29,180 31,138 31,138 35,810

Total Tier 1 capital (c = a-b) 1,123,280 1,136,716 1,147,180 937,499

Supplementary capital (d) - Tier 2 496,520 511,673 512,498 406,337

Reductions (e) 216,080 (1) 387,261 (1) 190,582 (1) 168,721 (1)

Total core capital (c+d-e) 1,403,720 (1) 1,261,128 (1) 1,469,096 (1) 1,175,115 (1)

(1) As requested by Regulators, this item includes deduction of equity investment in subsidiary Carige Assicurazioni (159,006 thousand euros) and the same subsidiary's subordinated bond issue subscribed by Banca Carige (44,304 thousand euros). Excluding this deduction, total capital would amount to 1,607,030 thousand euros.

Core capital at 30th June 2004 amounted to capital is almost exclusively in the form of a 1,628.4 m, an increase of 0.5 per cent in lower tier 2 subordinated convertible loan, comparison to the end of 2002 following the issued as part of the share capital increase distribution of net profit for 2003 and the completed last December. This aggregate progressive reinstatement of the share premium decreased by 3.1 per cent in comparison to reserve utilised during the securitisation bad year-end 2003 to 496.5 million. Reductions loans at the end of 2000. Negative elements rose to 216.1 m (+13..4 per cent) as a result of rose by 6.7 per cent to 505.1 m in connection an increase in Carige’s holding in the subsidiary to the rise of own shares in portfolio. Tier 2 Carige Assicurazioni.

53 CORE CAPITAL AND SOLVENCY RATIOS (thousands of Euros)

30/6/04 31/3/04 31/12/03 30/6/03

Core capital Tier 1 capital 1,123,280 1,136,716 1,147,180 937,499 Tier 2 capital 496,520 511,673 512,498 406,337 Deductions -216,080 -387,261 -190,582 -168,721 Total capital 1,403,720 1,261,128 1,469,096 1,175,115

Weighted assets Credit risk 9,307,286 9,312,825 9,101,528 9,139,565 Market risk 1,056,000 862,364 988,300 857,608 Other prudential requirements 359,571 483,290 483,286 483,291 Total weighted assets 10,722,857 10,658,479 10,573,114 10,480,464

Solvency ratios % Tier 1/Weighted assets for credit risk 12.07% 12.21% 12.60% 10.26% Total capital/Weighted assets for credit risk (1) 15.08% 13.54% 16.14% 12.86%

Tier 1 capital/Total weighted assets (2) 10.48% 10.66% 10.85% 8.95% Total capital/Total weighted assets (1) (2) 13.09% 11.83% 13.89% 11.21%

(1) As requested by Regulators, amounts include deduction of holding in subsidiary Carige Assicurazioni. Excluding this deduction, total capital would rise to 1,607,030 thousand euros with related rises in the total capital/weighted assets for credit risk from 15,08% to 17,27%, and total capital/total weighted assets ratios from 13,09% to 14,99%. (2) Total weighted assets include credit and market risks.

With regards to capital absorption and capital capital, leave a total of 653.1 m in excess to adequacy levels,levels weighted assets for credit risk capital requirements. totalled 9,307.3 m, of which 651.5 m in capital Solvency, calculated on the basis of the total adequacy requirements (31/12/03: 637.1 m). capital/weighted assets for credit risk was at Capital adequacy requirements for market risks 30/6/04 15.08 per cent; the total capital ratio, totalled 73.9 m, whilst other amounts required which includes also weighted assets for market in relation to the Bank’s securitisation operations risks, was 13.09 per cent. The above coefficients totalled 25.2 m. Overall, capital requirements relating to tier 1 capital were, respectively, totalled 750.6 m which, deducted from core 12.07 per cent and 10.48 per cent.

54 CORE CAPITAL AND SOLVENCY RATIO

1,600 1,469.1 25.00% 1,403.7 1,400 1,147.2 1,200 1,124.2 1,123.3 20.00% 899.6 1,000 13.89% 800 13.09% 15.00% 11.58% 600 9.27% 400 10.00% 10.85% 10.48% 200 0 5.00% 31/12/02 31/12/03 30/6/04

Core capital Tier 1 Total capital ratio Tier 1 ratio

RISK MANAGEMENT

Risk management processes are governed by an a separation between operational and risk organisational structure that includes control evaluation activities. bodies at all three levels foreseen by the Internal The risk management unit, with delegated Control System (ICS). responsibilities for risk management control First level controls are carried out within each throughout the Group companies, guarantees in single productive and distributive unit (branches, quantitative terms the identification, collection, operating area management, headquarter evaluation and control of risk. At the same time, offices belonging directly to risk management the unit matches on a constant basis its findings and control departments). The activities of those to a raft of indicators ranging from those used responsible for oversight at the first level are by the Bank, regulators and other relevant regulated by internal regulations which are the external benchmarks. This unit is linked to the subject of regular review so as to meet changes Research, Planning and Management Control in external regulation. office in order to guarantee a unitary view of Risk management (second level controls) is governance-related activities as well as a based on the: constant oversight of the various components • assignment of banking risk management that make up the planning process. responsibilities (market, rate, credit, liquidity, Third level controls are carried out by the operational risks) to the Asset and Liability Internal Control Office’s internal auditing unit, Committee (ALCO), with the aim of keeping the which evaluates the feasibility of the ICS as a Bank and the Group in line with the risk appetite whole. This unit refers to general management of shareholders, whilst at the same time and is responsible for identifying process and respecting short term, and medium/long-term operational anomalies. It has specific first and strategic objectives; third level duties in addition to the possibility of • development of risk evaluation utilising second level instruments and methodologies that are consistent with current procedures. relevant legislation, expected Basle 2 capital The Board of Directors, the Executive Committee adequacy recommendations, and best practices and General Management are responsible for at national and international level; the definition of strategy and control policy, with • identification of the functions involved at specific reference to risk. the three levels of control in order to guarantee

55 Within the Board of Directors, the Internal provides operational limits for those responsible Control Committee operates in accordance with for portfolio management. those powers foreseen by the Code for Self- During the first half of the year, overall average Regulation of Listed Companies stated at point VAR referring to the entirety of Banca Carige’s 10.2. The Committee reports to the Board on securities and derivatives portfolio overall was matters concerning the overall effectiveness of calculated at 3.1 m. internal control systems. The trend recorded by VAR during the period Management processes relating to the Finance was determined by falls in the volatility of Area utilise the data warehouse generated by financial markets and by portfolio management Carige’s in-house trading floor activities (bonds, aimed at reducing risk exposures. Maximum shares, currency, derivatives, money deposits). VAR for the period (5.3 m) was recorded on 18th Market risk is measured by VAR (Value at Risk), March 2004, whilst the minimum (2 m) was which is calculated on a daily basis and recorded on 28th April 2004.

Trend recorded by V.A.R.

5.500,0

5.000,0

4.500,0

4.000,0

3.500,0

thousands of Euros 3.000,0

2.500,0

2.000,0

4 4 4 4 4 4 0 0 0 0 0 0 0 0 0 0 0 0 /2 /2 /2 /2 /2 /2 01 02 03 04 05 06 1/ 1/ 1/ 1/ 1/ 1/ 0 0 0 0 0 0

A detailed analysis of the different types of risk making up VAR is given in the table below. Amounts are expressed in millions of euros:

30/06/04 Average for 2004 Minimum for 2004 Maximum for 2004 Share risk 1.8 2.5 1.2 4.6 Exchange-rate risk 1.0 1.2 0.9 1.8 Interest-rate risk 1.7 2.0 1.4 3.3 Diversification effect -2.3 -2.6 -4.3 -1.4 VaR total 2.2 3.1 2.0 5.3

Interest-rate risk is analysed utilising: liabilities in a time band from the corresponding • gap analysis evaluates earnings interest rate sensitive assets so producing a exposure by subtracting interest rate sensitive repricing gap for that time band. This gap can

56 be multiplied by an assumed change in interest complementary methodologies which provide, rates to yield an approximation of the change in as one moves from the first to the third, more net interest income that would result from an sophisticated levels of management information. interest rate movement; Incremental gap evaluates the impact on net • duration analysis is based on an interest income stemming from a change in economic value approach and measures the interest rates (up or down) with a parallel sensitivity of the market value of assets to movement in the Bank’s interest rates at the external variations in interest rates. The assets moment of repricing. The second, incremental duration indicator – the difference between beta gap, analyses the response on the part of interest-rate sensitive assets and liabilities – the Bank’s administered interest rates on sight provides an approximation of a percentage loss positions to external variations in market rates. in the capital account resulting from an interest- The coefficients generated are regularly updated rate movement; on the basis of historical trends in administered • sensitivity analysis analyses the market and external rates. Shifted beta gap analysis value of the Bank’s assets in response to takes into consideration the fact that changes in interest rates. The analysis aims at administered rates are sticky and do not respond evaluating the market value of assets in a immediately to variations in market rates. scenario of interest-rate variations; Data at 30th June 2004 reveal, on the basis of a • maximum probable loss analysis seeks to twelve-month time band, shifted gap analysis, a quantify the maximum probable value loss of the loss in net interest income of 17.4 m generated Bank’s assets in a defined period of time. In by a 1 per cent fall in interest rates, and a gain practice this analysis represents the extension of of 17 m with a 1 per cent rise in rates. Average VAR techniques to the Bank as a whole. data for the first six months of 2004 recorded a Gap analysis in particular measures on a loss of 27.2 m accompanying a 1 per cent drop monthly basis changes in interest rates on the in rates and a gain of 26.4 m stemming from a basis of risk exposure to a particular position at 1 per cent rise. Average values recorded during a particular date (a so-called static simulation). the first half of 2004 are summarised in the The analysis is carried out using three table below:

Shock: -1% Shock: +1% Balance-sheetOff-balance Total Balance-sheet Off-balance Total Sight Term sheet Sight Term sheet

a - Incremental gap 38.6 -31.5 0.5 7.6 -44.6 29.9 -0.4 -15.0

b - β Incremental gap 2.0 -31.5 0.5 -28.9 -4.6 29.9 -0.4 25.0

c - Shifted β Gap 3.8 -31.5 0.5 -27.2 -3.2 29.9 -0.4 26.4

β : indicator of elasticity with regards to estimated variations in interest rates on sight positions Millions of Euros.

The overall average impact of a one percent fall term component, the gap between in interest rates (27.2 m) represents 8.03 per medium/long-term lending and borrowing is cent of annualised net interest income for the analysed in terms of total stock and the flows of first six months of the year (338,4 m). maturing positions. In this way, the Bank is in a Liquidity risk is evaluated by analysing overall position to make informed funding policy the total of interest-rate sensitive assets and decisions with regards to ordinary bond issues or liabilities (excluding sight positions) and by a more sophisticated fund raising transactions on focused analysis of the medium/long-term international markets. component. With regards to this medium/long-

57 During the first six months of 2004, the at the same time seeking conformity with assignment of a credit risk rating to the Bank’s national and international regulations. customer portfolio continued. The project was During the first six months of the year, credit coordinated by the Credit Division and the policy continued to be consistent with Carige’s Research, Planning and Management Control retail vocation. Particular attention was placed office. The model for assigning credit risk to on families, craftsmen, shopkeepers, and small small and medium sized enterprises was defined and medium-sized businesses. Ties with our and trials were carried out towards the end of corporate clients were strengthened thanks to 2003. The resulting probability of default figures the network of corporate advisors assigned to for this business segment were then analysed. In medium-sized businesses with a turnover parallel, the evaluation and application of credit ranging from 1.5 to 25 million euros. Another risk models to other customer segments significant example of innovation in Carige’s continued during the year. Banca Carige’s large lending policy and proof of the strategic corporate clients are assigned a rating resulting importance this activity has and will have for the from internal data and an evaluation provided Bank is corporate finance; in this area Banca by the depositary of financial documentation Carige intends to be a reference point for “Centrale dei Bilanci” within the confines of the businesses in the supply of innovative services. Credit Risk Information System project (CRIS). The established policy of diversification was The retail segment (private customers and small favoured during the year by continued businesses) are rated according to a scoring expansion of the Group’s traditional distribution procedure. The CRIS project includes the network. Whilst maintaining its traditional realisation of a credit data warehouse that support for the Ligurian economy, Carige provides data for rating. In addition to extended its lending activities into new areas evaluating the probability of default, a project is with the aim of exploiting the business underway for the calculation of loss given opportunities on offer. default. Initial LGD estimates have been The process of granting overdraft facilities is produced organised according to product and organised on the basis of an information guarantees types. The construction is also platform (‘Pratica Elettronica’) made up by underway of two data warehouses: the first integrated sub-systems powered by various relating to the recovery of past default positions, operational units and supported by various whilst the second contains data on guarantees. information providers. Organisationally, lending The next stages of the project, forecasted for the is under the control of the Credit Division. A second half of 2004, will include: the series of delegated responsibilities drawn up by assignment and testing of probability of default the Board of Directors foresees limits to powers of customers in all segments; the construction of granting overdraft facilities or their extension in evaluation model for the estimation of exposure relation to staff member seniority and level of at risk; the completion of monthly data risk. The granting of loans is divided into three extraction procedures for data provision of categories according to the type of security calculation engines; the implementation of a provided and the overall level of risk. The system portfolio model designed for the calculation of of control has been put in place in order to capital at risk stemming from unexpected credit- guarantee the necessary separation between related losses (model presently being tested operational management and risk control. exclusively on the SME segment). Within the Credit Division, a special credit At an organisational level, the Administrative recovery unit is responsible for the profitable bodies of the Bank establish guidelines relating management of bad loan positions as well as to credit and on the basis of these the Credit the collection of amounts relating to those bad Division is responsible for deciding and loans securitised at the end of 2000. The inflows coordinating operational policy. The various relating to this transaction outperformed those aspects relating to lending (granting, foreseen in the collection schedule and as such management, control) are regulated by a in March 2002 Fitch upgraded class A securities recently updated, specific consolidated from AA to AAA, whilst upgrading twice class B document, the aim of which is to increase the securities, the first time in December 2002 from efficiency and effectiveness of the process, whilst AA- to AA and then again in August 2004 from AA to AAA. With regards to country-risk

58 positions, changes were made to classification criteria during the year 2002. All positions are now evaluated analytically: a risk exposure is CORPORATE GOVERNANCE recorded within the appropriate risk category (bad loans, watchlists, restructured positions), determining the related, analytically calculated In February 2001, the Board of Directors of writedown. Banca Carige deliberated its adherence to the Policies aimed at managing and limiting credit Code of Best Practice in the area of Self- risk range from traditional approaches, such as Regulation for Listed Companies (“the Code”). the demand for particular commitments, to Banca Carige’s governance system is fully in line innovative forms such as securitisation and the with the requirements stated by the Code. It use of derivatives (credit default swaps). The should be pointed out that the present structure Internal Credit Rating project described above of Banca Carige, its functional organisation and will have a significant effect also on the company procedures were already established organisation and management of credit in line and therefore pre-empted the Code’s with Basle Committee recommendations. requirements. The present phase of expansion in the Banca Full details regarding the governance aspects of Carige Group requires accurate organisational Banca Carige and its subsidiaries are contained and technological assessment that provides in the annual corporate governance report effective strategic and management tools. With deposited at Borsa Italiana SpA and available this in mind, a special work group has been set for shareholders’ consultation along with other up to redesign the lending process and seek documentation required by the Shareholders’ heightened efficiencies by exploiting flows in Meeting. The same documentation can also be information, activities, instruments, roles. The found at www.carige.it. work group’s duties include defining the functional needs of the Bank’s IC&T capabilities. SIGNIFICANT EVENTS AFTER 30th The subject of operational risks is under JUNE AND PROSPECTS FOR discussion both within the international banking THE THIRD AND FOURTH QUARTERS industry itself and amongst international regulators. The objective of these discussions is to design a framework of credit risk mitigation On 30th July, the Shareholders’ Meetings of techniques and corresponding capital adequacy Ligure Leasing and Cassa di Risparmio di ratios. New guidelines by the Basle Committee Savona approved the former’s merger into the (Basle 2) to be introduced from 2006 have Savona bank. meant banks having to put into place systematic On 2nd August, the Board of Directors of Banca data collection processes regarding operational Carige and the Shareholders Meeting of losses also when adopting the standard Carricarara Holding approved the merger of approach. In addition, processes for the Carricara into Banca Carige. The merger, which collection of such data are a pre-requisite of the gives Banca Carige a direct holding of 90 per Italian Operational Losses database (DIPO) set cent in Cassa di Risparmio di Carrara, was up by ABI - the Italian Banking Association. completed on 1st September. Banca Carige is participating in this scheme and The Board of Directors in its meeting of 2nd believes that such processes are not only useful August deliberated a wide-ranging review of from a regulatory perspective but also as a Banca Carige’s structural and organisational set means of evaluating more effectively the up. The new model foresees the creation of the profit/risk ratios for each line of activity foreseen following four macro-areas: governance and by the Basle Committee. control; production; distribution; administration The systematic collection of specific operational and support. loss data, which began in June 2002 with During August, the international agency Fitch reference to certain business lines, was extended upgraded its rating from AA to AAA of a tranche to other business lines and the to the whole st of class B securities issued by Argo Finance One Group from 1 January 2003. Srl as part of the securitisation of non

59 performing loans performed by Carige at the Carige’s new branch in Viterbo, north of Rome, end of 2000. became operational on 6th September. There were further reductions in staff levels after Results for the last part of 2004 are expected to 30th June: during July, the total number of be in line with those forecasted and similar to Carige employees dropped by 7; in August the those recorded for last year. total decreased by 1 following 13 terminations and 5 new appointments. At the time of writing there are 3,726 members of staff.

Genoa, 9th September 2004 The Board of Directors

60 FINANCIAL STATEMENTS 30/6/2004

61 BALANCE SHEET

ASSETS Change % (thousands of Euros) 30/6/04 31/12/03 30/6/03 6/04-12/03 6/03-12/02 10 - CASH AND DEPOSITS WITH CENTRAL BANKS AND POST OFFICES 128,068 168,109 130,462 - 23.8 - 24.8 20 - TREASURY BILLS AND SIMILAR BILLS ELIGIBLE FOR REFINANCING WITH CENTRAL BANKS 480,234 691,015 824,845 - 30.5 - 30 - DUE FROM BANKS: 1,210,058 938,836 940,690 28.9 - 30.6 (a) repayable on demand 219,986 378,479 414,291 - 41.9 - 23.8 (b) other deposits 990,072 560,357 526,399 76.7 - 35.1 40 - LOANS TO CUSTOMERS 8,629,943 8,440,644 7,997,671 2.2 1.1 including:

- loans using funds managed on behalf of third parties 234 255 260 - 8.2 38.3 50 - BONDS AND OTHER DEBT SECURITIES: 1,550,984 1,257,740 1,477,678 23.3 - 7.6 (a) issued by public bodies 766,461 637,805 789,882 20.2 - 15.0 (b) issued by banks 330,631 347,560 392,808 - 4.9 1.6 including: - own securities 63,148 58,848 41,312 7.3 - 4.1 (c) issued by financial institutions 371,982 187,991 210,107 97.9 11.0 including: - own securities - - - - - (d) issued by others 81,910 84,384 84,881 - 2.9 - 9.4 60 - SHARES, QUOTAS AND OTHER EQUITY SECURITIES 298,681 177,932 172,484 67.9 - 0.2 70 - EQUITY INVESTMENTS 34,123 31,013 38,507 10.0 - 25.9 80 - INVESTMENTS IN GROUP COMPANIES 820,457 617,016 586,522 33.0 - 90 - INTANGIBLE FIXED ASSETS 466,300 473,530 477,276 - 1.5 - 0.6 including: - start-up costs 2,830 3,250 1,395 - 12.9 33.2 - goodwill 437,121 442,392 446,727 - 1.2 - 0.9 100 - TANGIBLE FIXED ASSETS 953,891 920,539 894,657 3.6 3.4 including: - financial lease 698,614 662,598 636,774 5.4 5.2 120 - OWN SHARES 38,824 - 5,261 ... - 54.7 (nominale value: 4,056) 130 - OTHER ASSETS 1,013,786 837,371 924,077 21.1 16.2 140 - ACCRUED INCOME AND PREPAID EXPENSES: 96,677 99,309 94,253 - 2.7 15.9 (a) accrued income 87,021 91,408 83,636 - 4.8 16.5 (b) prepaid expenses 9,656 7,901 10,617 22.2 12.0 including: - discount on bonds issued 3,182 3,596 4,014 - 11.5 - 9.3 TOTAL ASSETS 15,722,026 14,653,054 14,564,383 7.3 1.2

62 LIABILITIES AND STOCKHOLDERS' EQUITY Change % (thousands of Euros) 30/6/04 31/12/03 30/6/03 6/04-12/03 6/03-12/02 10 - AMOUNTS OWED TO CREDIT INSTITUTIONS: 1,403,507 1,139,632 1,587,905 23.2 - 11.7 (a) repayable on demand 188,509 89,046 161,735 ... - (b) with agreed maturity dates or periods of notice 1,214,998 1,050,586 1,426,170 15.6 - 17.4 20 - AMOUNTS OWED TO CUSTOMERS: 6,163,638 5,957,888 5,764,039 3.5 - 2.5 (a) repayable on demand 5,984,277 5,798,105 5,492,874 3.2 - 0.2 (b) with agreed maturity dates or periods of notice 179,361 159,783 271,165 12.3 - 33.5 30 - DEBTS EVIDENCED BY CERTIFICATES: 4,449,827 4,067,494 3,779,091 9.4 13.7 (a) bonds 4,036,486 3,653,863 3,329,973 10.5 16.7 (b) certificates of deposits 302,332 326,769 359,939 - 7.5 - 9.4 (c) other 111,009 86,862 89,179 27.8 22.7 40 - FUNDS MANAGED ON BEHALF OF THIRD PARTIES 333 368 367 - 9.5 18.4 50 - OTHER LIABILITIES 922,290 579,839 924,365 59.1 13.6 60 - ACCRUED EXPENSES AND DEFERRED INCOME: 165,451 163,572 158,872 1.1 10.0 (a) accrued expenses 91,890 95,528 92,450 - 3.8 14.5 (b) deferred income 73,561 68,044 66,422 8.1 4.3 70 - RESERVE FOR TERMINATION INDEMNITIES 78,116 78,303 81,379 - 0.2 - 4.2 80 - RESERVES FOR RISKS AND CHARGES 359,873 433,676 389,073 - 17.0 - 9.4 (a) reserves for pensions and similar commitments 289,272 289,632 287,795 - 0.1 - (b) reserves for taxation 51,588 111,263 77,870 - 53.6 - 28.8 (c) other reserves 19,013 32,781 23,408 - 42.0 - 27.1 90 - RESERVES FOR LOAN LOSSES 5,000 18,000 13,000 - 72.2 - 100 - RESERVES FOR GENERAL BANKING RISKS - - 5,165 - - 110 - SUBORDINATED LOANS 502,055 502,055 400,000 - - 120 - CAPITAL STOCK 1,113,327 1,113,327 1,020,550 - - 130 - ADDITIONAL PAID-IN CAPITAL 258,666 255,023 139,941 1.4 2.8 140 - RESERVES 238,051 229,722 229,723 3.6 14.9 (a) legal reserve 77,971 67,351 67,351 15.8 18.4 (b) reserve for purchase of treasury stock 38,824 - 5,261 ... - 54.7 (c) statutory reserves - - - - - (d) other reserves 121,256 162,371 157,111 - 25.3 19.5 150 - REVALUATION RESERVES 7,956 7,956 7,956 - - 170 - NET INCOME 60,142 106,199 62,957 - 43.4 - 39.9

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 15,728,232 14,653,054 14,564,383 7.3 1.2

GUARANTEES AND COMMITMENTS 10 - GUARANTEES GIVEN 1,150,988 1,271,681 1,323,475 - 9.5 0.2 including: - acceptances 10,958 2,610 5,818 ... 38.2 - other guarantees 1,140,030 1,269,071 1,317,657 - 10.2 - 20 - COMMITMENTS 789,690 910,193 830,706 - 13.2 7.8 including repurchase agreements - - - -

63 INCOME STATEMENT

Change % (thousands of Euros) 30/6/04 31/12/03 30/6/03 6/04-6/03 6/03-6/02 10 - INTEREST INCOME AND SIMILAR REVENUES 268,859 546,478 278,913 - 3.6 1.3 including: – loans and advances to customers 218,515 439,720 225,556 - 3.1 5.9 – fixed-income securities 39,658 82,753 42,120 - 5.8 - 16.5 20 - INTEREST EXPENSES AND SIMILAR CHARGES - 103,919 - 221,820 - 119,624 - 13.1 - 5.8 including: – amounts owed to customers - 20,006 - 49,654 - 27,399 - 27.0 - 10.5 – securities issued - 66,649 - 123,951 - 63,452 5.0 - 7.7 30 - DIVIDENDS AND OTHER REVENUES: 22,388 63,957 57,177 - 60.8 8.0 (a) from shares, quotas and other equity securities 893 13,085 13,018 - 93.1 ... (b) from equity investments 3,283 8,700 5,342 - 38.5 - 86.1 (c) from equity investments in group companies 18,212 42,172 38,817 - 53.1 … 40 - COMMISSION INCOME 90,117 179,169 85,922 4.9 7.4 50 - COMMISSION EXPENSES - 7,947 - 15,627 - 7,472 6.4 34.7 60 - GAINS (LOSSES) FROM FINANCIAL TRANSACTIONS, NET 3,584 9,229 - 2,710 ... - 11.1 70 - OTHER OPERATING INCOME 139,428 160,752 76,732 81.7 34.6 80 - ADMINISTRATIVE COSTS: - 178,087 - 366,712 - 181,052 - 1.6 13.9 (a) personnel - 110,472 - 234,968 - 116,547 - 5.2 15.4 including: – wages and salaries - 73,228 - 153,683 - 77,053 - 5.0 14.0 – social security costs - 19,961 - 42,896 - 21,175 - 5.7 14.5 – termination indemnities - 4,702 - 9,258 - 5,228 - 10.1 11.8 – pensions and similar commitments - 7,258 - 17,764 - 7,140 1.7 16.8 (b) other administrative costs - 67,615 - 131,744 - 64,505 4.8 11.3 90 - DEPRECIATION AND AMORTIZATION OF INTANGIBLE AND TANGIBLE FIXED ASSETS - 64,046 - 123,207 - 60,682 5.5 24.0 100 - PROVISIONS FOR RISKS AND CHARGES - 1,009 - 3,966 - 2,663 - 62.1 13.3 110 - OTHER OPERATING EXPENSES - 3,224 - 7,747 - 1,873 72.1 - 63.0 120 - PROVISIONS FOR LOAN LOSSES AND FOR GUARANTEES AND COMMITMENTS - 97,820 - 66,781 - 27,784 ... - 3.8 130 - RECOVERIES OF LOANS AND REVERSALS OF PROVISIONS FOR GUARANTEES AND COMMITMENTS 3,028 9,195 3,761 - 19.5 - 33.0 140 - ADDITIONAL PROVISIONS FOR LOAN LOSSES - - 18,000 - - - 160 - RECOVERIES OF FINANCIAL FIXED ASSETS - 107 - - … 170 - INCOME FROM ORDINARY ACTIVITIES 71,352 145,027 98,645 - 27.7 8.4 180 - EXTRAORDINARY INCOME 7,174 30,028 14,470 - 50.4 … 190 - EXTRAORDINARY EXPENSES - 3,534 - 7,021 - 3,908 - 9.6 … 200 - EXTRAORDINARY INCOME, NET 3,640 23,007 10,562 - 65.5 … 210- VARIATION OF RESERVES FOR GENERAL BANKING RISKS - 5,165 - - … 220 - INCOME TAXES - 14,850 - 67,000 - 46,250 - 67.9 20.8 230 - NET INCOME 60,142 106,199 62,957 - 4.5 14.7

64 EXPLANATORY NOTES

INTRODUCTION decision in front of the Tribunal of Luxembourg. Banca Carige actively supports These financial statements have been ABI’s decision and will give the necessary prepared in compliance with art. 81 of help required in preparing an effective line Consob ruling n. 11971 of 14th May 1999 of defence. and with Consob ruling n. 12475 of 6th April On 15th June 2002 Law decree 63/2002 2000. was converted into Law 212/2002 For the sake of continuity with annual implementing the European Commission’s statements, the accounting principles are decision and suspending the tax relief those foreseen by Legislative decree 87/92 contained in articles 22 and 23 of Legislative and relevant Bank of Italy circulars (ruling of decree 153/99 from 2001 until the question 30/7/92 and subsequent amendments.) is resolved. From 2001 onwards awaiting The Balance Sheet and Income Statement judgement on ABI’s appeal, the Bank show amounts in thousands of euros. suspended special reserve provisions. On Comparison is made to the period ending 24th December 2002 Law decree 282/02 30/6/03 and 31/12/03. Captions which was enacted which, in carrying out the show no amounts in the balance sheets of provisions of the EU Commission, obliged the periods under examination have been those banks which had benefited from omitted. Legislative decree 153/99 to return the sums Amounts given in the explanatory notes are owed plus interest charges within 31/12/02. also expressed in thousands of euros. The Bank repaid a total of 1,557 thousand Captions that show no amounts for the euros. periods under examination have been Given the nature of the case (litigation with omitted. Further information has been the European Community) this amount was provided where judged appropriate. recorded under credits. Section 11.8 “Securitisation” contains The total credit is matched by adequate information on the securitisation of credits provisions to tax reserves in the event of a carried out in June 2004. negative decision on the part of the Court and the subsequent loss of the credit The same section provides details relating to involved. the securitisation of performing and non performing loans carried out in recent years Special rate mortgages (Law 133/99 by Banca Carige and its subsidiary Cassa di and article 145 of Law Risparmio di Savona, for whom Carige acts accompanying 2001 Budget). Article as servicer. 29 of Law 133/99 foresees the re- negotiation of mortgage interest rates at a Tax relief foreseen by articles 22 and reference rate equal to the system-wide 23 of Legislative decree 153/99. The average (as defined by article 145 of the th European Commission in its decision of 11 Law accompanying the 2001 budget), with December 2001 judged the tax relief the subsequent charges, all or in part, to be foreseen by Legislative decree 153/99 as covered by the State or public bodies. state aid incompatible with the principles of The Ministry of the Economy’s decree dated the common market. 31/3/2003 article 2 defines the interest rate The Italian Government lodged an appeal to be applied on renegotiation. On against the decision with the Court of application of this regulation, the amounts European Justice. The Italian Banking due for 2003 in addition to those for th Association (ABI) also presented on 25 previous years were covered by provisions to February 2002 an appeal against the a specific fund. 65 Capitalisation of interest due exceptionable period of time as at 2003 is (Constitutional Court Sentence 425 of reduced from 1994 to 30th June 2000. For 9/10/00). The Constitutional Court’s ruling the limited number of actions started, the number 425 of 9/10/00 declared Bank strongly contests the grounds for illegitimate the contents of article 25, returning amounts previously paid also in the Legislative decree 344/99. The article light of differing positions regarding the excluded from liability to legal action those matter on the part of judges. If anything, the clauses between banks and customers majority of first instance and appeal court relating to capitalisation of interest due judges have so far upheld the validity of signed after the coming into effect of the using different time periods for the Inter-ministerial Committee for Credit and calculation of customers’ interest income Saving’s deliberation of 22/4/00, enacting and charges. Legislative decree 344/99. The Constitutional Court confined its Consolidated Financial Statements for judgement exclusively to a criticism of the the Banca Carige Group have been government in its enactment of the above- prepared. mentioned law. In the light of the fact that the judges of the These financial statements were Constitutional Court did not enter into the audited by Deloitte Touche SpA. The merits of the question, the Bank has declined selection of the Bank’s auditors for the requests for the return of interest charges period 2003-2005 was approved by the paid up to June 2000. Shareholders’ Meeting of 31/3/03 pursuant to Legislative decree 58/98. The duties of The number of actions started for the return the auditors for the period are the auditing of interest charges paid has progressively of the Bank’s financial statements, the decreased over time. Given that it is consolidated financial statements, and a reasonable to expect that the actions will be limited review of the half yearly report at 30 time-barred after ten years, the June.

66 PART A ACCOUNTING PRINCIPLES

SECTION 1 under “Liabilities” have been created to offset this particular kind of risk. The Accounting Policies are in compliance with law decree 87/92 and the Bank of SECURITIES PORTFOLIO AND OFF- Italy’s provisions of 30/7/92 and subsequent BALANCE SHEET TRANSACTIONS modifications and are the same as those EXCLUDING THOSE IN CURRENCY used in the previous year. Investment securities For the purposes of calculating assets and Investment securities are valued at cost, liabilities related to deferred taxes and in adjusted on an accruals basis for the addition to stabilizing the tax rate for the difference between cost and their redemption accounting period ending 30th June 2004, at maturity and includes unamortized issue the evaluation method aimed at defining the premiums or discounts. temporal horizon was changed. Also to In the event of long term deterioration of the comply with the IAS 12 the temporal horizon issuer’s solvency, the securities are written was extended beyond five years as on the down. In the case of those securities deriving basis of the past experience future trends in from structured securitised debt transactions, taxable income don’t suggest that the writing down is carried out on the basis of recovery of deferred tax can be considered expected proceeds stemming from the unlikely or unreasonable.Furthermore, the underlying. Bank exercised the right contained in the The original value of investment securities is Budget Law 2004 (Law 350/03, article 2, reinstated when the reasons for writing down paragraph 26) to redeem gains subject to cease to apply. suspension from liability to tax foreseen by Trading securities. Law 218/90 ('Amato Law') via the payment of Trading securities quoted on organised tax ('imposta sostitutiva') calculated at a rate markets are valued either at purchase price of 9 per cent .The transaction resulted in a or the average market price for the last realignment of the tax and book values of month, whichever is lower. those assets revalued on allotment (premises, Securities not quoted on organised markets securities and equity investments). Tax due are valued at cost adjusted for market trends (imposta sostitutiva) is recorded at the and issuer solvency. In the case of those extraordinary taxed reserve. securities deriving from structured securitised debt transactions, value adjustments are LOANS, GUARANTEES AND carried out on the basis of expected COMMITMENTS proceeds stemming from the underlying. Loans are stated at their estimated realizable The purchase price, determined according to value and are determined according to the principle of daily weighted average, debtors’ solvency and the debt-paying includes adjustments for the relevant quota difficulty of the debtors’ home country. of issue premium or discount accumulated The valuation of loans is made under the during the period the securities are held. application of either an analytic or lump-sum Securities held at 1/12/91 and still in method. portfolio at 30/6/2002 are valued at cost The interest on overdue loans is adjusted by defined as the value of transfer to Banca the portion of loans considered to be Carige at 1/12/91 and adjusted for issue irrecoverable. premium or discount pursuant to Legislative Reserves for loan losses, recorded under decree 719/94 and subsequent changes. “Liabilities”, have been created only to offset The original value of the securities is re- contingent credit risks. Reserves for instated when the reasons for writing down guarantees and commitments, recorded cease to apply.

67 Any securities to be transferred from the whichever is lower. Market value of investment to trading portfolio will be contracts is that quoted at the last day of recorded at the book value on the date of the business year. Those contracts which transfer calculated on the basis of the criteria are not quoted on organised markets but applied to investment securities foreseen in which can be evaluated according to the Bank of Italy’s communication of official parameters, are evaluated at 12/6/01, CONSOB’s communication replacement cost at the last day of the no.95001286 of 15/2/95, the latter period; modified by CONSOB’s letter dated c) economically-linked trading contracts, 15/6/01. Securities transferred still present which are closely correlated both in portfolio at year end are evaluated technically and financially, are evaluated according to the criteria applied to the in the same way. The losses which portfolio to which they are destined exceed connected gains are recorded in the income statement; Off balance sheet operations, d) hedging contracts on trading securities excluding those in currency are evaluated in the same way as the Unsettled securities transactions are underlying; market value is the average evaluated according to the criteria of the of prices and parameters recorded in the portfolio to which they are destined. last month of the period. Losses which exceed gains on securities or gains which correspond to losses on securities are Unsettled trading securities transactions are recorded in the income statement; evaluated accordingly: e) hedging contracts on assets and liabilities which are evaluated at cost are a) with regards to commitments to purchase in turn evaluated at cost. and commitments to sell which have the same underlying securities with the same EQUITY INVESTMENTS nominal value, any positive difference between the settlement price of the commitment to purchase and the The Bank's stock rights in relation to its settlement price of the commitment to subsidiaries are included under holdings. sell is recorded in the income statement; These rights, in the form of securities or not, b) the residual commitments to purchase are held for investment. Holdings, both are evaluated at either settlement price substantial and those in Group subsidiaries, or market price whichever is lower; are valued at cost or subscription. With c) the residual commitments to sell are regards to investments resulting from the evaluated at either settlement price or transfer of assets from Cassa di Risparmio di book value, whichever is lower. Genova e Imperia to Banca Carige on 1st December 1991, the cost was estimated by Derivative contracts on securities, interest a group of experts. The cost is written down rate etc., are evaluated accordingly: to reflect any permanent loss in value. The original value is reinstated when the reasons a) contracts related to underlying equity for writing down cease to apply. investments are evaluated at cost and written down in the event of long-term Dividends distributed by subsidiaries in which deterioration of the issuer's solvency; the Bank has a direct holding are recorded b) trading derivatives contracts are in the accounting period in which the st evaluated at either cost or market value, subsidiary's profit matured. From 31 68 December 2003, these dividends, previously Banca Carige on 1/12/91 was estimated by recorded gross of tax credit, are now a group of experts. recorded at distribution value following the The value of tangible fixed assets includes abolition of tax credits on dividends foreseen revaluation in accordance with Laws by Legislative decree 344/03. 575/75, 72/83, 413/91 (only for some assets transferred by merged companies) Dividends on other equity investments are and with reference to capital gains, Law recorded in the same period in which they 218/90. are deliberated, typically coinciding with the Advances to supplies for the purpose of period in which dividends are received. tangible fixed assets are included under tangible fixed assets. Depreciation is determined by using the FOREIGN CURRENCY ASSETS AND straight-line method over the useful life of LIABILITIES INCLUDING OFF- each category. BALANCE SHEET TRANSACTIONS Objects of art, being assets which conserve if not increase their value, are not amortized. Assets, excluding equity investments, and Included in this category are leased assets, liabilities expressed in foreign currencies are in line with the equity method, and are valued applying the spot rate at 30/6/2002. amortized as follows: Equity investments expressed in foreign currencies are valued according to the rate – assets leased from 1986 to 1987 are in force at the time of purchase. depreciated to the maximum extent Off-balance sheet transactions expressed in foreseen for each type of user as foreign currencies are valued: permitted by tax law; – assets leased from 1988 to 1994 are – at the spot rate as of the last business depreciated on a fixed percentage basis day of the period in the case of unsettled in compliance with Presidential decree spot contracts; 917/86; – at the forward exchange rate as of the – assets leased from 1995 onwards are last business day of the period for depreciated as established in the maturities corresponding to those of the relevant financial amortization plan; contracts being valued, in the case of – assets to be leased and assets stolen or forward transactions. destroyed are not amortized. Tangible fixed assets, including assets leased In the case of on-balance sheet assets and or to be leased, are depreciated on a liabilities linked to off-balance sheet assets straight-line basis. and liabilities, off-balance sheet items are accounted for in a manner similar to the INTANGIBLE FIXED ASSETS accounting of on-balance sheet items. Intangible fixed assets are, in those cases foreseen by relevant legislation, recorded TANGIBLE FIXED ASSETS with the consent of the Board of Statutory Tangible assets are recorded at purchase Auditors and are amortized on a straight-line price plus related charges, and include basis. Start-up and improvement costs in leased assets and those assets that are to be addition to research and development costs leased. are amortised over a period not exceeding The value of those assets transferred from five years. Cassa di Risparmio di Genova e Imperia to Amortisation of goodwill stemming from the purchase of branches from Banco di Sicilia, 69 IntesaBci and Capitalia will be carried out taxation and other unforeseen events such as over twenty years; from 1st January 2001 for risk to liabilities after litigation. goodwill deriving from the first acquisition, from 1st October 2001 for the second and OTHER TAX ASPECTS – DEFERRED from 1st January 2003. TAX: POSITIVE AND NEGATIVE The period of amortisation chosen EFFECTS corresponds to the average period of The calculation of deferred tax is made on goodwill intrinsic in the branch network the basis of the equity method with reference acquired. to the timing differences existing between the Amortisation rates on goodwill deriving from value attributed to an asset or liability under the purchase of branches from Banco di accounting criteria and the value attributed Sicilia, Intesa Group and Capitalia Group to the same for the calculation of tax. stem from the application of an analytical The recording of deferred tax assets is model which takes into account the expected carried out according to the criterion returns on the branches acquired and the outlined in section 1 of these accounting period of time required for their integration principles. into the Banca Carige Group. Tax advanced is recorded under assets The application of this methodology subject to the condition that, for prudential represents a change to the previous reasons, there is a reasonable expectation of simplified method and benefits from realising, over a period of five years, taxable heightened information flows from the income sufficient for its recovery. branches during the year. Consequently a The recording of liabilities for taxes payable weighted average rate of 2.27% was applied in the future is subject to the condition that for 2004. there is a possibility of the liability to tax The method of calculation applied from occurring. 2002 utilises a rising-charge rate until the The treatment of deferred tax in these integration of the branches acquired is financial statements is in accordance with completed (2006 for the ex-Banco di Sicilia the Bank of Italy's instructions dated 3/8/99. branches, 2007 for the ex-Intesa group branches, and 2008 for the ex-Capitalia SUPPLEMENTARY PENSION FUND group banks). Post-integration amortisation Provisions have been made to guarantee will be on a fixed-charge basis. sufficient funds as stipulated by both the Supplementary Pension Agreement and PAYABLES similar liabilities. Payables are recorded at face value with the exception of zero coupon and one coupon ACCRUALS AND DEFERRALS debt securities, which are recorded at a Accruals and deferrals are calculated in value corresponding to net proceeds plus accordance with the matching principle. accrued interest.

TERMINATION INDEMNITY Termination indemnity is in accordance with current legislation.

RESERVES FOR RISKS AND CHARGES – RESERVES FOR TAXATION Tax reserves stem from provisions for direct taxation, deferred tax liabilities, indirect 70 SECTION 2

TAX-RELATED ADJUSTMENTS AND PROVISIONS

2.1 Tax Adjustments

No tax adjustments were made during the year.

2.2 Tax provisions

No tax provisions were made during the year.

71 PART B BALANCE SHEET

SECTION 1

LOANS

The Bank’s loans portfolio, summarized in this section, amounts to 10,029,837 thousand euro and is analysed below:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % - Cash and deposits with central banks and post offices (caption 10) 128.068 1,3 168.109 1,8 130.462 1,4 - Due from banks (caption 30) 1.209.850 12,0 938.836 9,8 940.690 10,4 - Loans to customers (caption 40) 8.691.919 86,7 8.440.644 88,4 7.997.671 88,2 Total 10.029.837 100,0 9.547.589 100,0 9.068.823 100,0

Chan 30/6/04 31/12/03 30/6/03 absol % CAPTION t “CASH10 AND DEPOSITS BANKSWITH CENTRAL AND POST 128,068 168,109 -40,041 -23.8 130,462

Change 30/6/04 31/12/03 absolute % 30/6/03 Cash 127,635 166,896 - 39,261 - 23.5 129,943 Promissory notes of Bank of Italy and postal orders and cheques 5 113 - 108 - 95.6 36 Deposits with - central banks ------post offices 428 1,100 - 672 - 61.1 483 Total 128,068 168,109 - 40,041 -23.8 130,462

- euros 117,134 162,498 - 45,364 - 27.9 124,246 - foreign currency 10,934 5,611 5,323 94.9 6,216

Change 30/6/04 31/12/03 absolute % 30/6/03 1.1 CAPTION 30 "DUE FROM BANKS" 1,209,850 938,836 271,014 28.9 940,690 (a) deposits with central banks 81,706 102,385 - 20,679 - 20.2 139,014 (b) bills eligible for refinancing by central banks - - - - - (c) repurchase agreements 327,603 - 327,603 ... - (d) loan of securities - - - - -

72 Caption 30 detailed by technical form and currency is the following:

Change 30/6/04 31/12/03 absolute % 30/6/03 Nominal value

Deposits with central banks 81,706 102,385 - 20,679 - 20.2 139,014 - Compulsory reserves 81,706 102,385 - 20,679 - 20.2 139,014 Deposits with banks 1,132,459 840,347 292,112 34.8 810,394 - Deposits 586,896 729,981 - 143,085 - 19.6 652,771 - Repurchase agreements 327,603 - 327,603 ... - - Discounted notes 726 1,029 - 303 - 29.4 1,728 - Overdraft facilities 172,207 71,534 100,673 ... 96,209 - Loans (financial backing) 11,385 11,098 287 2.6 17,510 - Long term loans 1,260 1,364 - 104 - 7.6 848 - Bad loans 17,874 17,455 419 2.4 22,267 - Other 14,508 7,886 6,622 84.0 19,061 1,214,165 942,732 271,433 28.8 949,408 (-) Total specific allowances 4,315 3,896 419 10.8 8,718 - bad loans 3,802 3,383 419 12.4 8,195 -other loans 513 513 - - 523 Total 1,209,850 938,836 271,014 28.9 940,690 of which: - resident Euros 602,412 557,033 45,379 8.1 630,201 - resident foreign currency 67,815 21,461 46,354 ... 54,839 - non-resident Euros 456,595 303,578 153,017 50.4 182,143 - non-resident foreign currency 83,028 56,764 26,264 46.3 73,507

At 30/6/04, all non-guaranteed credits to residents outside the OECD were evaluated analytically; credit risk positions are classified as either bad loans or watchlists.

1.2 CASH CREDITS BANK 30/6/04 31/12/03

Specific Specific CATEGORIES/BALANCES Gross value Net value Gross value Net value allowances allowances

A. Credits at risks 19,310 4,315 14,995 19,281 3,896 15,385 A.1 Bad loans 17,874 3,802 14,072 17,455 3,383 14,072 A.2 Watchlists 830 513 317 792 513 279 A.3 Credits undergoing restructuring ------A.4 Restructured loans ------A.5 Non-guaranteed credits towards countries at risk 606 - 606 1,034 - 1,034 B. Performing credits 1,194,855 - 1,194,855 923,451 - 923,451

1.2 CASH CREDITS BANK 30/6/03 Specific CATEGORIES/BALANCES Gross value Net value allowances A. Credits at risks 23,553 8,718 14,835 A.1 Bad loans 22,267 8,195 14,072 A.2 Watchlists 872 523 349 A.3 Credits undergoing restructuring - - - A.4 Restructured loans - - - A.5 Non-guaranteed credits towards countries at risk 414 - 414 B. Performing credits 925,855 - 925,855

73 At 30/6/04, items A.1 “Bad loans” and A.2 “Watchlists” refer entirely to country-risk positions.

1.3 DOUBTFUL LOANS BANKS Country risk Loans subject to Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening exposure at 31/12/03 17.455 792 - - 1.034 A.1 of which: interest on overdue loans 1.100 - - - - B. Increases 419 38 - - 231 B.1 ex-performing loans - - - - - B.2 interest on overdue loans 419 - - - - B.3 transfer from other doubtful loan categories - - - - - B.4 other increases - 38 - - 231 C. Decreases - - - - 659 C.1 re-performing credits - - - - - C.2 write offs - - - - - C.3 payments received - - - - 659 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - - - - - C.6 other decreases - - - - - D. Total closing exposure at 30/6/04 17.874 830 - - 606 D.1 of which: interest on overdue loans 1.519 - - - -

1.3 DOUBTFUL LOANS BANKS Country risk Loans subject to Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening exposure at 31/12/02 21.720 445 - - 967 A.1 of which: interest on overdue loans 364 - - - - B. Increases 1.101 502 - - 701 B.1 ex-performing loans - - - - - B.2 interest on overdue loans 1.100 - - - - B.3 transfer from other doubtful loan categories - 484 - - - B.4 other increases 1 18 - - 701 C. Decreases 5.366 155 - - 634 C.1 re-performing credits - - - - - C.2 write offs 5.366 - - - - C.3 payments received - - - - 1 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - - - - 484 C.6 other decreases - 155 - - 149 D. Total closing exposure at 31/12/03 17.455 792 - - 1.034 D.1 of which: interest on overdue loans 1.100 - - - -

74 1.3 DOUBTFUL LOANS BANKS Country risk Loans subject to Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening exposure at 31/12/02 21.720 445 - - 967 A.1 of which: interest on overdue loans 364 - - - - B. Increases 547 502 - - 57 B.1 ex-performing loans - - - - - B.2 interest on overdue loans 546 - - - - B.3 transfer from other doubtful loan categories - 484 - - - B.4 other increases 1 18 - - 57 C. Decreases - 75 - - 610 C.1 re-performing credits - - - - - C.2 write offs - - - - - C.3 payments received - - - - - C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - - - - 484 C.6 other decreases - 75 - - 126 D. Total closing exposure at 30/6/03 22.267 872 - - 414 D.1 of which: interest on overdue loans 910 - - - -

1.4 TOTAL VALUE ADJUSTMENTS BANKS Country risk Loans subject to Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjustments at 31/12/03 3.383 513 - - - - A.1 of which: interest on overdue loans 1.100 - - - - - B. Increases 419 - - - - - B.1 adjustments 419 - - - - - B.1.1 of which: interest on overdue loans 419 - - - - - B.2 amounts from credit risk fund ------B.3 transfer from other loan categories ------B.4 other increases ------C. Decreases ------C.1 recoveries stemming from evaluation ------C.1.1 of which: interest on overdue loans ------C.2 recoveries stemming from payments received ------C.2.1 of which: interest on overdue loans ------C.3 write offs ------C.4 transfer to other loan categories ------C.5 other decreases ------D. Total closing adjustments at 30/6/04 3.802 513 - - - - D.1 of which: interest on overdue loans 1.519 - - - - -

75 1.4 TOTAL VALUE ADJUSTMENTS BANKS Country risk Loans subject to Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjustments at 31/12/02 7,648 267 - - - - A.1 of which: interest on overdue loans 365 - - - - - B. Increases 1,101 296 - - - - B.1 adjustments 1,101 296 - - - - B.1.1 of which: interest on overdue loans 1,100 - - - - - B.2 amounts from credit risk fund ------B.3 transfer from other loan categories ------B.4 other increases ------C. Decreases 5,366 50 - - - - C.1 recoveries stemming from evaluation - 50 - - - - C.1.1 of which: interest on overdue loans ------C.2 recoveries stemming from payments received ------C.2.1 of which: interest on overdue loans ------C.3 write offs 5,366 - - - - - C.4 transfer to other loan categories ------C.5 other decreases ------D. Total closing adjustments at 31/12/03 3,383 513 - - - - D.1 of which: interest on overdue loans 1,100 - - - - -

1.4 TOTAL VALUE ADJUSTMENTS BANKS Country risk Loans subject to Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjustments at 31/12/02 7,648 267 - - - - A.1 of which: interest on overdue loans 365 - - - - - B. Increases 547 301 - - - - B.1 adjustments 547 301 - - - - B.1.1 of which: interest on overdue loans 545 - - - - - B.2 amounts from credit risk fund ------B.3 transfer from other loan categories ------B.4 other increases ------C. Decreases - 45 - - - - C.1 recoveries stemming from evaluation - 45 - - - - C.1.1 of which: interest on overdue loans ------C.2 recoveries stemming from payments received ------C.2.1 of which: interest on overdue loans ------C.3 write offs ------C.4 transfer to other loan categories ------C.5 other decreases ------D. Total closing adjustments at 30/6/03 8,195 523 - - - - D.1 of which: interest on overdue loans 910 - - - - -

76 Change 30/6/04 31/12/03 absolute % 30/6/03 1.5 CAPTION 40 "LOANS TO CUSTOMERS" 8.691.919 8.440.644 251.275 3,0 7.997.671 (a) bills eligible for refinancing by central banks - - - - - (b) repurchase agreements - - - - - (c) loan of securities - - - - -

Caption 40 detailed by technical form is the following:

Change 30/6/04 31/12/03 absolute % 30/6/03 Nominal value Discounted notes 28,705 31,429 - 2,724 - 8.7 32,534 Advances with recourse 250,168 240,146 10,022 4.2 240,029 Overdrafts 1,274,310 1,318,099 - 43,789 - 3.3 1,274,055 Other non-overdrafts loans 1,755,965 1,988,411 - 232,446 - 11.7 1,964,162 Loans backed by pledged assets 10,858 10,575 283 2.7 10,238 Loans 3,921,414 4,406,498 - 485,084 - 11.0 4,032,697 Salary backed loans 20,788 15,173 5,615 37.0 11,740 Consumer credit loans 4,212 4,242 - 30 - 0.7 2,144 Factoring 104,573 99,141 5,432 5.5 97,627 Loans for leased assets 13,255 11,685 1,570 13.4 11,807 Bad loans 347,742 302,487 45,255 15.0 268,748 Credits stemming from securitisation 954,435 8,728 945,707 ... 6,965 Postal bonds 112,000 112,000 - - - Other 39,093 35,886 3,207 8.9 173,192 8,837,518 8,584,500 253,018 2.9 8,125,938 (-) Total specific allowances 145,599 143,856 1,743 1.2 128,267 - bad loans 126,680 125,123 1,557 1.2 110,234 - other 18,919 18,733 186 1.0 18,033 Total 8,691,919 8,440,644 251,275 3.0 7,997,671 of which: - resident Euros 8,304,938 7,962,194 342,744 4.3 7,571,439 - resident foreign currency 203,683 217,698 - 14,015 - 6.4 230,578 - non-resident Euros 135,691 154,745 - 19,054 - 12.3 117,888 - non-resident foreign currency 47,607 106,007 - 58,400 - 55.1 77,766

Allowances were deducted from gross value of loans as shown:

30/6/04 31/12/03 30/6/03 - analytic allowances 138,756 136,997 122,751 - lump-sum allowances 6,843 6,859 5,516 . country risks - - - . other 6,843 6,859 5,516 Total 145,599 143,856 128,267

All bad loan positions are evaluated analytically as are significant watchlist and country-risk positions specified at 1.1. Other watchlists are evaluated on a lump-sum basis. Rescheduled loans were evaluated analytically calculating future flows on the basis of the difference between renegotiated interest rates and the annual average yield for interbank company loans for 2004.

77 In the light of the Bank’s prudential valuation of its complete loan portfolio, provisions calculated by a lump-sum method concerning other “in bonis” loans were deemed unnecessary.

Change 30/6/04 31/12/03 absolute % 30/6/03 1.6 SECURED LOANS TO CUSTOMERS 4,440,912 4,968,467 - 527,555 - 10.6 4,966,523 (a) by mortgages 2,929,712 3,394,999 - 465,287 - 13.7 2,947,923 (b) by pledges on: 93,630 134,508 - 40,878 - 30.4 143,196 1. Cash deposits 3,590 2,091 1,499 71.7 4,264 2. Securities 78,577 121,266 - 42,689 - 35.2 125,826 3. Other valuables 11,463 11,151 312 2.8 13,106 (c) by guarantees from: 1,417,570 1,438,960 - 21,390 - 1.5 1,875,404 1. Governments 36 50 - 14 - 28.0 64 2. Other public entities 12,447 7,874 4,573 58.1 6,818 3. Banks 15,876 11,980 3,896 32.5 13,078 4. Other operators 1,389,211 1,419,056 - 29,845 - 2.1 1,855,444

This detail does not include loans to government and public bodies.

CLIENTELA 1.7 CASH CREDIT CUSTOMERS 30/6/04 31/12/03 Specific Specific CATEGORIES/BALANCES Gross value Net value Gross value Net value allowances allowances A. Credits at risk 559,253 145,599 413,654 519,940 143,856 376,084 A.1 Bad loans 354,460 126,680 227,780 309,686 125,123 184,563 A.2 Watchlists 185,229 16,551 168,678 184,825 16,501 168,324 A.3 Credits undergoing restructuring 1,936 - 1,936 2,406 - 2,406 A.4 Restructured loans 11,586 2,368 9,218 11,717 2,232 9,485 A.5 Non-guaranteed credits towards countries at risk 6,042 - 6,042 11,306 - 11,306 B. Performing credits 8,921,508 - 8,921,508 8,677,611 - 8,677,611

1.7 CASH CREDIT CUSTOMERS 30/6/03 Specific CATEGORIES/BALANCES Gross value Net value allowances A. Credits at risk 484,373 128,267 356,106 A.1 Bad loans 275,194 110,233 164,961 A.2 Watchlists 185,373 15,952 169,421 A.3 Credits undergoing restructuring - - - A.4 Restructured loans 10,778 2,082 8,696 A.5 Non-guaranteed credits towards countries at risk 13,028 - 13,028 B. Performing credits 8,234,932 - 8,234,932

The credits presented in the table refer to balance sheet asset caption 40 "Loans and advances to customers" and to credits related to finance lease transactions which totalled 643,243 thousand euro at 30/6/04. In particular, 6,718 thousand euro is in the form of bad loans and is covered for 2,952 thousand euro by liabilities caption 80c "Reserves for loan losses - other reserves". Finance lease transactions are included at assets caption 100 " Tangible assets" for a total of 698,614 thousand euro. Item A.1 “Bad loans” and A.2 “iWatchlists” include a gross country-risk exposure and writedowns on country-risk positions totalling, respectively, 873,000 and 802,000 euro and 39 and 3 thousand euro.

78 1.8 DOUBTFUL LOANS CUSTOMERS Country risk Loans subject to Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening exposure at 31/12/03 309.686 184.825 2.406 11.717 11.306 A.1 of which: interest on overdue loans 42.219 4.755 - - - B. Increases 171.023 47.626 - 34 17 B.1 ex-performing loans 136.698 43.256 - - - B.2 interest on overdue loans 7.029 1.246 - - - B.3 transfer from other doubtful loan categories 22.432 - - - - B.4 other increases 4.864 3.124 - 34 17 C. Decreases 126.249 47.222 470 165 5.281 C.1 re-performing credits 634 8.058 - - - C.2 write offs 107.512 10 - - - C.3 payments received 17.623 2.412 - 165 4.668 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - 22.432 - - - C.6 other decreases 480 14.310 470 - 613 D. Total closing exposure at 30/6/04 354.460 185.229 1.936 11.586 6.042 D.1 of which: interest on overdue loans 46.893 5.934 - -

1.8 DOUBTFUL LOANS CUSTOMERS Country risk Loans subject to Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening exposure at 31/12/02 240.115 162.529 - 9.315 18.423 A.1 of which: interest on overdue loans 41.259 5.123 - - - B. Increases 158.233 107.688 2.406 2.775 1.240 B.1 ex-performing loans 86.287 99.626 2.406 2.775 - B.2 interest on overdue loans 13.077 1.742 - - - B.3 transfer from other doubtful loan categories 45.449 - - - - B.4 other increases 13.420 6.320 - - 1.240 C. Decreases 88.662 85.392 - 373 8.357 C.1 re-performing credits - 29.830 - 275 - C.2 write offs 49.462 159 - - - C.3 payments received 38.708 3.507 - 98 4.785 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - 45.449 - - - C.6 other decreases 492 6.447 - - 3.572 D. Total closing exposure at 31/12/03 309.686 184.825 2.406 11.717 11.306 D.1 of which: interest on overdue loans 42.219 4.755 - - -

79 1.8 DOUBTFUL LOANS CUSTOMERS Country risk Loans subject to Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening exposure at 31/12/02 240,115 162,529 - 9,315 18,423 A.1 of which: interest on overdue loans 41,259 5,123 - - - B. Increases 64,934 82,029 - 1,859 45 B.1 ex-performing loans 19,191 76,715 - 1,859 - B.2 interest on overdue loans 6,247 1,072 - - - B.3 transfer from other doubtful loan categories 31,248 - - - - B.4 other increases 8,248 4,242 - - 45 C. Decreases 29,855 59,185 - 396 5,440 C.1 re-performing credits 641 20,893 - 275 - C.2 write offs 16,104 37 - - - C.3 payments received 13,066 1,690 - 121 1 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - 31,248 - - - C.6 other decreases 44 5,317 - - 5,439 D. Total closing exposure at 30/6/03 275,194 185,373 - 10,778 13,028 D.1 of which: interest on overdue loans 44,158 5,396 - - -

Country risk Loans subject to Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjustments at 31/12/03 125,123 16,501 - 2,232 - - A.1 of which: interest on overdue loans 42,219 759 - - - - B. Increases 117,281 7,166 - 155 - 246 B.1 adjustments 97,281 7,166 - 155 246 B.1.1 of which: interest on overdue loans 7,028 - - - - B.2 amounts from credit risk fund 13,000 - - - - B.3 transfer from other loan categories 6,984 - - - - B.4 other increases 16 - - - - C. Decreases 115,724 7,116 - 19 - 246 C.1 recoveries stemming from evaluation 224 69 - - - C.1.1 of which: interest on overdue loans 86 - - - - C.2 recoveries stemming from payments received 1,760 53 - 19 - C.2.1 of which: interest on overdue loans 367 53 - - - C.3 write offs 107,512 10 - - 246 C.4 transfer to other loan categories - 6,984 - - - C.5 other decreases 6,228 - - - - D. Total closing adjustments at 30/6/04 126,680 16,551 - 2,368 - - D.1 of which: interest on overdue loans 46,893 706 - - - -

At 30/6/04 items B1 ‘Positive variations – writedowns’ and C5 ‘Negative variations – other variations’ include 6,228 thousand euro corresponding to the amortisation charge for the year relating to losses stemming from the securitisation of bad loans carried out at the end of 2000.

80 1.9 TOTAL VALUE ADJUSTMENTS CUSTOMERS Country risk Loans subject to Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjustments at 31/12/02 101,650 15,825 - 2,165 - - A.1 of which: interest on overdue loans 41,259 1,282 - - - - B. Increases 88,451 9,035 - 381 - - B.1 adjustments 68,009 9,035 - 381 - - B.1.1 of which: interest on overdue loans 13,077 - - - - - B.2 amounts from credit risk fund 13,000 - - - - - B.3 transfer from other loan categories 7,442 - - - - - B.4 other increases ------C. Decreases 64,978 8,359 - 314 - - C.1 recoveries stemming from evaluation 799 109 - 290 - - C.1.1 of which: interest on overdue loans - 39 - - - - C.2 recoveries stemming from payments received 2,180 649 - 24 - - C.2.1 of which: interest on overdue loans 790 483 - - - - C.3 write offs 49,462 159 - - - - C.4 transfer to other loan categories - 7,442 - - - - C.5 other decreases 12,537 - - - - - D. Total closing adjustments at 31/12/03 125,123 16,501 - 2,232 - - D.1 of which: interest on overdue loans 42,219 759 - - - -

1.9 TOTAL VALUE ADJUSTMENTS CUSTOMERS Country risk Loans subject to Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjustments at 31/12/02 101,650 15,825 - 2,165 - - A.1 of which: interest on overdue loans 41,259 1,282 - - - - B. Increases 32,736 7,039 - 233 - 436 B.1 adjustments 26,027 7,039 - 233 - 436 B.1.1 of which: interest on overdue loans 6,247 6 - - - - B.2 amounts from credit risk fund ------B.3 transfer from other loan categories 6,709 - - - - - B.4 other increases ------C. Decreases 24,153 6,912 - 316 - 436 C.1 recoveries stemming from evaluation 620 2 - 316 - - C.1.1 of which: interest on overdue loans ------C.2 recoveries stemming from payments received 1,163 164 - - - - C.2.1 of which: interest on overdue loans 380 - - - - - C.3 write offs 16,104 37 - - - 436 C.4 transfer to other loan categories - 6,709 - - - - C.5 other decreases 6,266 - - - - - D. Total closing adjustments at 30/6/03 110,233 15,952 - 2,082 - - D.1 of which: interest on overdue loans 44,158 1,288 - - - -

81 SECTION 2

SECURITIES

The securities held by the Bank amount to 2,329,805 thousand euro and are analysed below:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % - Treasury bills and other bills eligible for refinancing with central banks (caption 20) 480,234 20.6 691,015 32.5 824,845 33.3 - Bonds and other debt securities (caption 50) 1,550,984 66.6 1,257,740 59.1 1,477,678 59.7 - Shares, quotas and other equity securities (caption 60) 298,587 12.8 177,932 8.4 172,484 7.0 Total 2,329,805 100.0 2,126,687 100.0 2,475,007 100.0 of which: . Investment securities 173,577 7.5 173,737 8.2 232,679 9.4 . Trading securities 2,156,228 92.5 1,952,950 91.8 2,242,328 90.6

Change 30/6/04 31/12/03 absolute % 30/6/03 2.1 INVESTMENT SECURITIES 173,577 173,737 - 160 - 0.1 232,679

30/6/04 31/12/03 30/6/03 Book value Market value Book value Market value Book value Market value 1. Certificates of indebtedness 173,577 172,424 173,737 173,439 232,679 234,032 1.1 Government securities 69,699 70,076 69,745 70,097 85,452 86,921 - listed 69,699 70,076 69,745 70,097 85,452 86,921 - unlisted ------1.2 Other securities 103,878 102,348 103,992 103,342 147,227 147,111 - listed 32,240 32,088 32,243 31,961 75,483 75,552 - unlisted 71,638 70,260 71,749 71,381 71,744 71,559 2. Shared and equity securities ------listed - - - - - unlisted - - - - Total 173,577 172,424 173,737 173,439 232,679 234,032

Book value of investment securities comprises the difference, on the basis of “pro rata temporis” criteria, between cost and redemption value, including issue premium or discount. Market value is the average price recorded during the first six months of the year. The difference between market and book value (1,153 thousand euro) represents the potential earnings for the portfolio. The positive and negative differences between book value and re-payment value at maturity total 330 thousand euro and 349 thousand euro, respectively. These differences were calculated separately for each category.

82 Redemption Positive Negative Book value value differences differences 1. Listed certificates of indebtedness 101,938 101,906 330 298 Public bodies 69,699 69,500 252 53 Banks 25,064 25,018 78 32 Other 7,175 7,388 - 213 2. Unlisted certificates of indebtedness 71,639 71,690 - 51 Public bodies - - - - Banks 5,949 6,000 - 51 Other 65,690 65,690 - - Total 173,577 173,596 330 349

2.2 CHANGES IN INVESTMENT SECURITIES 30/6/04 31/12/03 30/6/03 A. Opening balances 173,737 232,733 232,733 B. Increases 21 2,593 51 B1. Purchases - - - B2. Writebacks - - - B3. Transfers from trading portfolio - - - B4. Other changes 21 2,593 51 C. Decreases 181 61,589 105 C1. Sales - 61,391 - C2. Redemptions 119 25 14 C3. Adjustments including - - - - permanent writedowns - - - C4. Transfers to trading portfolio - - - C5. Other changes 62 173 91 D. Closing balances 173,577 173,737 232,679

Transfers to and/or from the investment securities portfolio were carried out in accordance with the Bank of Italy’s communication of 12/6/01, CONSOB’s communication no.95001286 of 15/2/95, subsequently modified by CONSOB’s letter of 15/6/01, and the policy document approved by the Board of Directors of Banca Carige on 27/3/95, subsequently modified on 6/12/99.

Captions “Other changes” are analysed below:

30/6/04 31/12/03 30/6/03 1. Increases 21 2,593 51 Exchange-rate gains - - - Gains on securities 2,494 36 Intrinsic interest (1) 21 99 15 2. Decreases 62 173 91 Exchange-rate losses - Losses on securities 91 Intrinsic interest (2) 62 173

(1) Includes the share for the period of interest referring to discount bonds and of issuing and negotiation spreads. (2) Includes the share for the period of negotiation spreads.

83 Change 30/6/04 31/12/03 absolute % 30/6/03 2.3 TRADING SECURITIES 2,156,228 1,952,950 203,278 10.4 2,242,328

30/6/04 31/12/03 30/6/03 Book value Market value Book value Market value Book value Market value 1. Certificates of indebtedness 1,857,641 1,896,276 1,775,018 1,820,566 2,069,844 2,137,141 1.1 Government securities 859,290 867,384 991,571 1,000,804 1,270,568 1,288,174 - listed 857,204 865,295 989,422 998,638 1,268,356 1,285,944 - unlisted 2,086 2,089 2,149 2,166 2,212 2,230 1.2 Other securities 998,351 1,028,892 783,447 819,762 799,276 848,967 - listed 645,067 674,403 618,099 652,051 618,820 666,102 - unlisted 353,284 354,489 165,348 167,711 180,456 182,865 2. Shared and equity securities 298,587 303,911 177,932 185,705 172,484 176,696 - listed 297,369 302,693 175,612 183,132 168,128 172,340 - unlisted 1,218 1,218 2,320 2,573 4,356 4,356 Total 2,156,228 2,200,187 1,952,950 2,006,271 2,242,328 2,313,837

The difference between market value and book value represents potential non-recorded capital gains for the period and amounts to 43,959 thousand euros, of which 38,868 thousand euros related to hedging forward transactions (section 10.5).

2.4 CHANGES IN TRADING SECURITIES 30/6/04 31/12/03 30/6/03 A. Opening balances 1,952,950 1,849,625 1,849,625 B. Increases 3,868,241 7,841,239 4,592,570 B1. Purchases 3,855,479 7,798,048 4,569,509 - Certificates of indebtedness 3,155,933 6,714,448 3,928,283 . Government securities 2,136,648 4,880,186 2,807,815 . other securities 1,019,285 1,834,262 1,120,468 - Shares and other equity securities 699,546 1,083,600 641,226 B2. Writebacks 366 751 843 B3. Transfers from investment portfolio - - - B4. Other changes 12,396 42,440 22,218 C. Decreases 3,664,963 7,737,914 4,199,867 C1. Sales 3,644,710 7,709,939 4,178,538 - Certificates of indebtedness 3,063,368 6,639,619 3,549,294 . Government securities 2,271,817 5,056,312 2,694,467 . other securities 791,551 1,583,307 854,827 - Shares and other equity securities 581,342 1,070,320 629,244 C2. Adjustments 18,207 6,660 4,468 C3. Transfers to investment portfolio - - - C5. Other changes 2,046 21,315 16,861 D. Closing balances 2,156,228 1,952,950 2,242,328

84 Details of recognized losses are as follows:

30/6/04 31/12/03 30/6/03 1. Certificates of indebtedness 17,310 3,905 1,300 1.1 Government securities 1,344 580 472 1.2 Other securities 15,966 3,325 828 2. Shares and equity securities 897 2,755 3,168 Total 18,207 6,660 4,468

Captions “Other changes” are analysed below:

1. Increases 12,396 42,440 22,218 Exchange-rate gains 695 - - Gains on securities 9,477 24,765 12,175 Intrinsic interest (1) 2,224 17,675 10,043 2. Decreases 2,046 21,315 16,861 Exchange-rate losses 346 7,917 4,485 Losses on securities 1,700 13,398 12,376

(1) Includes the share for the period of interest referring to discount bonds and of issuing spreads.

85 SECTION 3

EQUITY INVESTMENTS

Equity investments amount to 854,580 thousand euros and are analysed as follows:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % - Equity investments (caption 70) 34,123 4.0 31,013 4.8 38,507 6.2 - Investments in Group companies (caption 80) 820,457 96.0 617,016 95.2 586,522 93.8 Total 854,580 100.0 648,029 100.0 625,029 100.0 including: . significant investments 830,195 97.1 626,748 96.7 596,254 95.4 . other investments 24,385 2.9 21,281 3.3 28,775 4.6

Change 30/6/04 31/12/03 absolute % 30/6/03 3.1 SIGNIFICANT INVESTMENTS 830,195 626,748 203,447 32.5 596,254

Name Location of registered office Stockholders' Net income % Book value equity (loss) ownership A. Subsidiary companies (1) (caption 80) 1. Caricarrara Holding SpA Genoa 89,320 - 1 100.00 176,006 2. Galeazzo Srl (2) Genoa 3,871 23 100.00 3,836 3. Carige Vita Nuova SpA Genoa 49,874 1,475 100.00 131,347 4. Columbus Carige Immobiliare SpA Genoa 25,086 - 9 99.98 25,818 5. Carige Assicurazioni SpA (3) Milan 163,549 1,836 98.11 159,006 6. Carige Asset Management SGR SpA (4) Genoa 4,869 - 263 99.50 5,174 7. Cassa di Risparmio di Savona SpA Savona 152,682 5,305 95.90 225,077 8. Immobiliare Ettore Vernazza SpA (5) Genoa 5,158 477 90.00 31,164 9. Centro Fiduciario SpA (6) Genoa 1,043 76 76.93 407 10. Argo Finance One Srl Genoa 10 - 60.00 6 11. Priamar Finance Srl Genoa 10 - 60.00 6 12. Banca del Monte di Lucca SpA Lucca 26,611 1,760 54.00 62,610 Total 820,457 B. Companies subject to significant influence (included in caption 70) 1. Frankfurter Bankgesellschaft AG (7) Frankfurt 22,653 329 47.50 9,712 2. Consorzio per il Giurista di Impresa Scrl (7) Genoa 15 - 31 22.73 26 Total 9,738

(1) Captions are taken from the Board of Directors’ Report at 30/6/2003. (2) The company holds 0.02% of capital stock of Columbus Carige Immobiliare SpA. (3) The company holds 1.359% of its own shares. (4) Carige Vita Nuova SpA holds 0.5% of capital stock of Carige Asset Management SGR SpA. (5) The company holds 10% of its own shares. (6) Cassa di Risparmio di Savona SpA also holds 20% of capital stock. (7) Figures taken from the last approved statements at 31/12/2003

86 The evaluation of those companies subject to significant influence by the equity method determines a value of 510,459 thousand euro, 319,736 thousand euro lower than book value.

Name Book Share of Difference value stockholders' equity (a) (b) (b-a) Cassa di Risparmio di Savona SpA 225,077 146,424 - 78,653 Carige Assicurazioni SpA 159,006 160,455 1,449 Carige Vita Nuova SpA 131,347 49,874 - 81,473 Banca del Monte di Lucca SpA 62,610 14,370 - 48,240 Caricarrara Holding SpA 176,006 89,320 - 86,686 Immobiliare Ettore Vernazza SpA 31,164 4,642 - 26,522 Columbus Carige Immobiliare SpA 25,818 25,081 - 737 Carige Asset Management SGR SpA 5,174 4,845 - 329 Galeazzo Srl 3,836 3,871 35 Centro Fiduciario SpA 407 802 395 Argo Finance One Srl 6 6 - Priamar Finance Srl 6 6 - Frankfurter Bankgesellschaft AG 9,712 10,760 1,048 Consorzio per il Giurista di Impresa Scrl 26 3 - 23 830,195 510,459 - 319,736

With regards to the Bank’s strategic holdings in the banking subsidiaries, Cassa di Risparmio di Savona, Banca del Monte di Lucca, Caricarrara Holding and in the insurance company Carige Vita Nuova, negative differences between the Bank’s equity investment in each company and book value is due to the higher price paid for each so as to account for the economic value and goodwill of each company. The difference between book value and net equity relating to Immobiliare Ettore Vernazza is due to higher property values than those recorded in the subsidiary’s balance sheet. Valuation of the Bank’s total holdings applying the equity method rather than cost, would generate capital losses of 324,959 thousand euros and capital gains of 581,594 thousand euros, including valuation of Carige’s holding in the Bank of Italy, of 539,216 thousand euros.

87 Change 30/6/04 31/12/03 absolute % 30/6/03 3.2 AMOUNTS DUE TO AND FROM GROUP COMPANIES (a) Assets 125,799 94,272 31,527 33.4 172,636 1. Amounts due from banks including: 64,945 38,093 26,852 70.5 73,650 - subordinated - - - - - 2. Amounts due from financial institutions 42 64 - 22 - 34.4 86 including: - subordinated - - - - - 3. Amounts due from other customers 16,493 11,766 4,727 40.2 12,703 including: - subordinated - - - - - 4. Bonds and other fixed-income securities 44,319 44,349 - 30 - 0.1 86,197 including: - subordinated 44,304 44,304 - - 64,469 (b) Liabilities 415,443 247,476 167,967 67.9 290,767 1. Amounts due to banks 320,621 136,213 184,408 ... 257,568 2. Amounts due to financial institutions 2,613 4,734 - 2,121 - 44.8 135 3. Amounts due to other customers 32,299 54,952 - 22,653 - 41.2 31,115 4. Securities issued 59,910 51,577 8,333 16.2 1,949 5. Subordinated liabilities - - - - - (c) Guarantees and commitments 14,862 4,980 9,882 ... 58,980 1. Guarantees 5,140 4,980 160 3.2 58,980 2. Commitments 9,722 - 9,722 ... -

Change 30/6/04 31/12/03 absolute % 30/6/03 3.3 AMOUNTS DUE TO AND FROM OTHER COMPANIES (a) Assets 300,328 347,404 - 47,076 - 13.6 378,458 1. Amounts due from banks including: 223,866 279,316 - 55,450 - 19.9 290,998 - subordinated - - - - - 2. Amounts due from financial institutions 43,481 35,073 8,408 24.0 24,629 including: - subordinated - - - - - 3. Amounts due from other customers 24,439 24,483 - 44 - 0.2 44,165 including: - subordinated - - - - - 4. Bonds and other fixed-income securities 8,542 8,532 10 0.1 18,666 including: - subordinated 3,269 3,269 - - 3,269 (b) Liabilities 46,250 49,745 - 3,495 - 7.0 60,940 1. Amounts due to banks 16,331 18,354 - 2,023 - 11.0 38,080 2. Amounts due to financial institutions 9,181 16,987 - 7,806 - 46.0 9,968 3. Amounts due to other customers 12,335 6,434 5,901 91.7 6,337 4. Securities issued 8,403 7,970 433 5.4 6,555 5. Subordinated liabilities - - - - - (c) Guarantees and commitments 73,512 82,204 - 8,692 - 10.6 259,728 1. Guarantees 73,512 75,537 - 2,025 - 2.7 258,634 2. Commitments - 6,667 - 6,667 ... 1,094

88 Amounts due from banks include 80,694 thousand euro with the Bank of Italy.

Change 30/6/04 31/12/03 absolute % 30/6/03 3.4 CAPTION 70 "EQUITY INVESTMENTS" 34,123 31,013 3,110 10.0 38,507 (a) in banks 15,073 15,073 - - 15,073 1. listed 4,871 4,871 - - 4,871 2. unlisted 10,202 10,202 - - 10,202 (b) in financial institutions 8,477 5,891 2,586 43.9 5,640 1. listed - - - - - 2. unlisted 8,477 5,891 2,586 43.9 5,640 (c) others 10,573 10,049 524 5.2 17,794 1. listed 723 723 - - 723 2. unlisted 9,850 9,326 524 5.6 17,071

The item includes significant holdings in companies outside the Banca Carige Group as listed at 3.1/B, in addition to other equity investments.

Capital gains subject to suspended liability to tax (Law 218/90) were fully redeemed during the period.

Change 30/6/04 31/12/03 absolute % 30/6/03 3.5 CAPTION 80 "INVESTMENTS IN GROUP COMPANIES" 820,457 617,016 203,441 33.0 586,522 (a) in banks 287,687 287,687 - - 287,687 1. listed - - - - - 2. unlisted 287,687 287,687 - - 287,687 (b) in financial institutions 181,599 413 181,186 ... 365 1. listed - - - - - 2. unlisted 181,599 413 181,186 ... 365 (c) others 351,171 328,916 22,255 6.8 298,470 1. listed - - - - - 2. unlisted 351,171 328,916 22,255 6.8 298,470

89 3.6 CHANGES IN PARTICIPATING INTERESTS

3.6.1 INVESTMENTS IN GROUP COMPANIES 30/6/04 31/12/03 30/6/03 A. Opening balances 617,016 586,522 586,522 B. Increases 203,441 30,494 - B.1 Purchases 27,434 30,387 - B.2 Recoveries - 107 - B.3 Revaluations - - - B.4 Other changes 176,007 - - C. Decreases - - - C1. Sales - - - C2. Write-downs - - - including: - permanent write-downs - - - C3. Other changes - - - D. Closing balances 820,457 617,016 586,522 E. Total revaluations - - - F. Total write-downs - - 107

Details of purchases and all variations are given below:

PURCHASES

PRIAMAR FINANCE SRL Purchase of 55% of capital stock. (Variation in our share holding from 5% to 60%) 5

CARIGE VITA NUOVA SPA Purchase of 6,400,000 shares, nominal unit value 0.52 euros. (Variation in our share holding from 92.809% to 100.000%) 2,517

CARIGE ASSICURAZIONI SPA Subscription of 18,948 new shares, nominal unit value 982 euros and additional paid-in of 193 euros. (Variation in our share holding from 90.695% to 91.932%) 22,264

CARIGE ASSICURAZIONI SPA Purchase of 8,672 shares, nominal unit value 982 euros. (Variation in our share holding from 91.932% to 98.108%) 2,648

Total purchases 27,434

90 OTHER CHANGES

CARICARRARA HOLDING SPA Purchase of 45,462,325 ordinary shares with a unitary nominal value of euro 1 each following the break up (non proportional) of Carinord 2 SpA (Our share holding 100%) 174,415

CARICARRARA HOLDING SPA Support and consultancy fees included as costs relating to the subsidiary 1,591

PRIAMAR FINANCE SRL Transfer on reclassification of the subsidiary from 'other holdings' to 'investments in Group companies' 1

Total other changes 176,007

3.6.2 OTHER PARTICIPATING INTERESTS 30/6/04 31/12/03 30/6/03 A. Opening balances 31,013 51,989 51,989 B. Increases 187,834 13,897 10,049 B.1 Purchases 186,876 310 53 B.2 Recoveries - - - B.3 Revaluations - - - B.4 Other changes 958 13,587 9,996 C. Decreases 184,724 34,873 23,531 C1. Sales 10,303 34,852 23,510 C2. Write-downs - - - including: - permanent write-downs - - - C3. Other changes 174,421 21 21 D. Closing balances 34,123 31,013 38,507 E. Total revaluations - - - F. Total write-downs 4,798 4,798 4,798

91 PURCHASES

CARINORD 2 SPA Purchase of 92,619,780 shares, nominal unit value 0.52 euros to the total price of 183,764,644 euros. 183,765

CENTRO SIM SPA Subscription of 33,330 shares, nominal unit value 60 euros. (Our share holding 9.999%) 2,000

INFRASTRUTTURE LAVORI ITALIA SPA Payment of residual 7/10 related to the subscription of 750,000 shares, nominal unit value 1 euro, made past years. (Our share holding 15.000%) 525

FILSE SPA Payment of residual 7/10 related to the subscription of 1,609,652 new shares, nominal unit value 0.52 euros, made past year. (Our share holding 10.102%) 586

Total purchases 186,876

OTHER CHANGES

CARINORD 2 SPA Costs relating to the investment include consultancy and support services. 952

CONSORZIO PER IL GIURISTA DI IMPRESA SCRL Amount established as our contribution in covering losses recorded during 2002 6

Total other changes 958

92 SALES

CARINORD 2 SPA Sale of 5,192,231 shares, nominal unit value 0.52 euros, for a total price of 10,301,778 euros. 10.302

BUSINESS DATENBANKEN INTERNATIONAL GMBH Amount received following distribution of assets sold in liquidation. 1

Total sales 10.303

OTHER CHANGES

PRIAMAR FINANCE SRL The holding is now classified at “Investments in Group subsidiaries” (previously “other investments”) 1

CARINORD 2 SPA Following the partial break up of the company, 87,427,549 Carinord 2 SpA shares purchased by Banca Carige were converted into 45,462,325 Carricarra Holding SpA shares. 174.415

BUSINESS DATENBANKEN INTERNATIONAL GMBH Loss made following the liquidation of company assets. 5

Total other changes 174.421

93 SECTION 4

TANGIBLE AND INTANGIBLE FIXED ASSETS

Tangible and intangible fixed assets (caption 100 and 90) amount to 1,420,191 thousand euro and are analysed as follows:

Total Share Gross value depreciations Book value % - Tangible fixed assets (caption 100) 1,385,291 431,400 953,891 67.2 - Intangible fixed assets (caption 90) 534,092 67,792 466,300 32.8 Total 1,919,383 499,192 1,420,191 100.0

4.1 CHANGES IN TANGIBLE FIXED ASSETS 30/6/04 Properties Furniture and Leased assets Total fittings A. Opening balances 238,879 19,062 662,598 920,539 B. Increases 789 2,156 92,268 95,213 B1. Purchases 789 2,156 91,599 94,544 B2. Recoveries - - - - B3. Revaluations - - - - B4. Other changes - - 669 669 C. Decreases 2,743 2,866 56,252 61,861 C1. Sales 338 92 9,114 9,544 C2. Depreciation and amortization 2,405 2,774 47,138 52,317 (a) amortization 2,405 2,774 47,138 52,317 (b) permanent write-downs - - - - C3. Other changes - - - - D. Closing balances 236,925 18,352 698,614 953,891 E. Total revaluations - - - - F. Total depreciation and amortization 97,841 85,986 247,573 431,400 (a) amortization 97,841 85,986 247,573 431,400 (b) permanent wtite-downs - - - -

Opening balances include advances for investments in course relating to property, furniture and equipment, and leased assets of 312 thousand euro and 47,732 thousand euro, respectively. Closing balances include 8,380 thousand euro relating to bad leased assets. Closing balances include advances for investments in course relating to furniture and equipment, and leased assets for 825 thousand euro and 60,834 thousand euro, respectively.

94 4.1 CHANGES IN TANGIBLE FIXED ASSETS 31/12/03 Properties Furniture and Leased assets Total fittings A. Opening balances 239,845 20,197 605,418 865,460 B. Increases 4,580 4,778 168,335 177,693 B1. Purchases 4,580 4,778 168,220 177,578 B2. Recoveries - - - - B3. Revaluations - - - - B4. Other changes - - 115 115 C. Decreases 5,546 5,913 111,155 122,614 C1. Sales 967 297 17,200 18,464 C2. Depreciation and amortization 4,579 5,616 90,279 100,474 (a) amortization 4,579 5,616 90,279 100,474 (b) permanent write-downs - - - - C3. Other changes - - 3,676 3,676 D. Closing balances 238,879 19,062 662,598 920,539 E. Total revaluations - - - F. Total depreciation and amortization 95,486 87,306 226,571 409,363 (a) amortization 95,486 87,306 226,571 409,363 (b) permanent wtite-downs - - - -

4.1 CHANGES IN TANGIBLE FIXED ASSETS

30/6/03 Properties Furniture and Leased assets Total fittings A. Opening balances 239,845 20,197 605,418 865,460 B. Increases 641 2,469 82,790 85,900 B1. Purchases 641 2,469 82,765 85,875 B2. Recoveries - - - - B3. Revaluations - - - - B4. Other changes - - 25 25 C. Decreases 2,494 2,775 51,434 56,703 C1. Sales 242 36 4,417 4,695 C2. Depreciation and amortization 2,252 2,739 45,245 50,236 (a) amortization 2,252 2,739 45,245 50,236 (b) permanent write-downs - - - - C3. Other changes - - 1,772 1,772 D. Closing balances 237,992 19,891 636,774 894,657 E. Total revaluations - - - F. Total depreciation and amortization 93,163 89,300 195,377 377,840 (a) amortization 93,163 89,300 195,377 377,840 (b) permanent wtite-downs - - - -

95 Tangible fixed assets are detailed as follows:

30/6/04 31/12/03 Total Total Gross value depreciations Book value Gross value depreciations Book value Properties 334.766 97.841 236.925 334.365 95.486 238.879 Furniture and fittings 18.922 14.845 4.077 18.806 14.875 3.931 Machinery and equipment 83.623 71.141 12.482 86.286 72.431 13.855 Objects of art 968 - 968 964 - 964 Advances for future investments 825 - 825 312 - 312 -properties ------furniture and fittings 825 - 825 312 - 312 Total 439.104 183.827 255.277 440.733 182.792 257.941 Leased assets 946.187 247.573 698.614 889.169 226.571 662.598 Total 1.385.291 431.400 953.891 1.329.902 409.363 920.539

30/6/03 Total Gross value depreciations Book value Properties 331.075 93.163 237.912 Furniture and fittings 18.680 14.515 4.165 Machinery and equipment 89.156 74.785 14.371 Objects of art 942 - 942 Advances for future investments 493 - 493 -properties 80 - 80 - furniture and fittings 413 - 413 Total 440.346 182.463 257.883 Leased assets 832.151 195.377 636.774 Total 1.272.497 377.840 894.657

Properties owned by the Bank were revalued in previous years, in accordance with specific laws, and are analysed below:

30/6/04 31/12/03 30/6/03 Monetary revaluations laws 576/75, 72/83 and 413/91 29,116 29,116 29,128 Revaluations law 218/90 157,111 157,602 157,758 Total 186,227 186,718 186,886

Capital gains subject to suspended liability to tax (Law 218/90) were fully redeemed during the period.

Pursuant to article 10 Law 72/83, details of properties owned by the Bank and revalued are given below:

96 Revaluations L. 576/75 L. 72/83 L. 413/91 Total Building in Genoa Via Cassa di Risparmio 15 1.872 12.911 - 14.783 Building in Genoa Via Pelio 6 926 - 926 Buildings in Genoa Via D'Annunzio, 25-29c-39-41-63-73-81 4.132 - 4.132 Via D'Annunzio, 83-89-93-103 1.728 1.804 3.532 Via D'Annunzio, 23 - 3.876 3.876 Via D'Annunzio, 79 1.132 602 1.734 Via D'Annunzio, garage E1 - 20 20 Via D'Annunzio, car parkings n. 1B2 e n. 2B2 51 - 51 Via D'Annunzio, car parkings 7E1, 8E1, 9E1, 10E1 and cellar - 15 15 Leased assets 47 47 Total 1.872 20.880 6.364 29.116

Property owned and used by the Bank for its business and activities is classified below: Gross Total Net Share value depreciations value % Property utilised in business activities: - productive 287,155 81,669 205,486 86.7 - staff accomodation 2,541 8 2,533 1.1 - other property . supplementary pension fund 35,646 14,127 21,519 9.1 . reserve for termination indemnity 8,660 2,037 6,623 2.8 . others 764 - 764 0.3 Total real estate 334,766 97,841 236,925 100.0

4.2 CHANGES IN INTANGIBLE FIXED ASSETS 30/6/04 Other Total Start-up intangible Software charges Goodwill (1) fixed assets A. Opening balances 20,439 3,250 442,392 7,449 473,530 B. Increases 4,139 35 - 559 4,733 B1. Purchases 4,139 35 - 559 4,733 B2. Recoveries - - - - - B3. Revaluations - - - - - B4. Other changes - - - - - C. Decreases 4,452 455 5,271 1,785 11,963 C1. Sales - - - - - C2. Depreciation and amortization 4,224 455 5,271 1,779 11,729 (a) amortization 4,224 455 5,271 1,779 11,729 (b) permanent write-downs - - - - - C3. Other changes 228 - - 6 234 D. Closing balances 20,126 2,830 437,121 6,223 466,300 E. Total revaluations - F. Total depreciation and amortization 23,666 1,723 26,542 15,861 67,792 (a) amortization 23,666 1,723 26,542 15,861 67,792 (b) permanent write-downs - - - - - (1) Value adjustments on goodwill relate to increases for the purchase of branches during 2000, 2001,and 2002. The item total of 5,271,000 ( Banco di Sicilia branches: 601,000, Intesa branches: 2,776,000, Capitalia branches 1,904,000) derives from an analytical

97 methodology of amortisation charges(amortisation applied for the first time during 2002) that entails a change in the charges calculated as explained in detail in part A, section 1.

The following costs were included under intangible fixed assets during the period (thousand euro):

Software products 4,139 Start-up charges 35 Other intangible fixed assets 559 – maintenance of premises not owned by the Bank 309 – funding for Treasury Service purchases with value attributable to more than one year 250

Closing balances of intangible fixed assets amount to 466,300 thousand euro and are as follow:

Software products 20,126 Start-up charges 2,830 Goodwill 437,121 – Banco di Sicilia (initial value 60,167 thousand euro) 55,354 – Intesa BCI (initial value 276,591 thousand euro) 259,304 – Gruppo Capitalia (initial value 126,905 thousand euro) 122,463 Other intangible fixed assets 6,223 – maintenance of premises not owned by the Bank 3,399 – funding for Treasury Service purchases with value attributable to more than one year 1,229 – INVIM (tax on increased value of immovable property) 20 – research and development costs 289 – licences and trademarks 70 – securitisation transaction 586 – purchase of finance lease contracts 630

31/12/03 Other Total Start-up intangible Software charges Goodwill fixed assets A. Opening balances 18.725 1.047 450.799 9.562 480.133 B. Increases 10.676 3.608 264 1.896 16.444 B1. Purchases 10.676 3.608 264 1.896 16.444 B2. Recoveries - - - - - B3. Revaluations - - - - - B4. Other changes - - - - - C. Decreases 8.962 1.405 8.671 4.009 23.047 C1. Sales - - - - - C2. Depreciation and amortization 8.703 1.405 8.671 3.954 22.733 (a) amortization 8.703 1.405 8.671 3.954 22.733 (b) permanent write-downs - - - - - C3. Other changes 259 - - 55 314 D. Closing balances 20.439 3.250 442.392 7.449 473.530 E. Total revaluations - - - - - F. Total depreciation and amortization 24.824 3.772 21.271 16.463 66.330 (a) amortization 24.824 3.772 21.271 16.463 66.330 (b) permanent write-downs - - - - -

98 31/06/2003 Other Total Start-up intangible Software charges Goodwill fixed assets A. Opening balances 18.725 1.047 450.799 9.562 480.133 B. Increases 5.585 766 264 1.105 7.720 B1. Purchases 5.585 766 264 1.105 7.720 B2. Recoveries - - - - - B3. Revaluations - - - - - B4. Other changes - - - - - C. Decreases 3.954 418 4.336 1.869 10.577 C1. Sales - - - - - C2. Depreciation and amortization 3.839 418 4.336 1.853 10.446 (a) amortization 3.839 418 4.336 1.853 10.446 (b) permanent write-downs - - - - - C3. Other changes 115 - - 16 131 D. Closing balances 20.356 1.395 446.727 8.798 477.276 E. Total revaluations - - - - - F. Total depreciation and amortization 19.961 2.786 16.935 14.346 54.028 (a) amortization 19.961 2.786 16.935 14.346 54.028 (b) permanent write-downs - - - - -

99 SECTION 5

OTHER ASSETS

Other assets amount to 1,054,995 thousand euro and are analysed below:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % Other assets (caption 130) 956,778 90.7 837,371 89.4 924,077 90.7 Accrued income and prepaid expenses (caption 140) 98,217 9.3 99,309 10.6 94,253 9.3 otal 1,054,995 100.0 936,680 100.0 1,018,330 100.0

Change 30/6/04 31/12/03 absolute % 30/6/03 5.1 CAPTION 130 "OTHER ASSETS" 956,778 837,371 119,407 14.3 924,077 - miscellaneous accounts receivable from branches 260,552 244,107 16,445 6.7 279,219 - post-collection notes and other values 211,181 128,105 83,076 64.8 207,889 - off balance sheet revaluations 124,772 149 124,623 ... 176 - amounts in transit between branches 65,836 1,879 63,957 ... 106,289 - current account cheques drawn on other banks 58,762 46,766 11,996 25.7 82,127 - premiums related to option transactions 42,513 38,555 3,958 10.3 32,510 - amounts to be collected from customers 40,550 50,661 - 10,111 - 20.0 35,677 - current account cheques drawn on the Bank 8,008 7,106 902 12.7 8,361 - Bank guarantee deposits 307 310 - 3 - 1.0 251 - accounts relating to tax collection services 180 180 - - 3,222 - fiscal items: 104,837 175,351 - 70,514 - 40.2 141,332 tax advances 51,793 106,471 - 54,678 - 51.4 93,616 taxes paid in advance 25,472 47,590 - 22,118 - 46.5 19,397 accounts receivable from the tax authorities 23,602 16,648 6,954 41.8 22,993 termination indemnity (Law 140/97) 3,790 4,239 - 449 - 10.6 5,112 with-holding taxes 180 403 - 223 - 55.3 214 -others 39,280 144,202 - 104,922 - 72.8 27,024

- -

Change 30/6/04 31/12/03 absolute % 30/6/03 5.2 CAPTION 140 "ACCRUED INCOME AND PREPAID EXPENSES" 98,217 99,309 - 1,092 - 1.1 94,253 Accrued income: 88,561 91,408 - 2,847 - 3.1 83,636 - interest income on loans and advances to credit institutions 6,814 4,787 2,027 42.3 3,976 - interest income on loans to customers 11,967 12,189 - 222 - 1.8 14,002 - interest income on securities in portfolio 24,541 27,416 - 2,875 - 10.5 20,715 - differentials stemming from derivatives contracts 45,239 47,016 - 1,777 - 3.8 44,943 - others - - - ,,, - Prepaid expenses: 9,656 7,901 1,755 22.2 10,617 - premiums related to currency forward transactions 116 307 - 191 - 62.2 95 - differentials stem m ing from derivatives contracts - 10 - 10 - 100.0 - - discounts on issuing of securities 3,182 3,596 - 414 - 11.5 4,014 - administrative charges 3,056 1,314 1,742 ... 3,290 - other transactions 3,302 2,674 628 23.5 3,218

Accrued income and prepaid expenses are not applied directly to the balance sheet accounts, in compliance with article 12, item 2 of Law 87/92.

100 Change 30/6/04 31/12/03 absolute % 30/6/03 5.4 DISTRIBUTION OF SUBORDINATED ASSETS 268,041 178,675 89,366 50.0 241,249 a) loans and advances to credit institutions - - - - - b) loans and advances to customers 87,816 6,796 81,020 ... 5,379 c) bonds and other fixed-income securities 180,225 171,879 8,346 4.9 235,870

Item c) ‘bond and other debt securities’ includes 65,690 thousand euro relating to the subscription of Junior class notes issued in relation to the securitisation of bad loans carried out by Banca Carige at the end of 2000 and during the 2001. These securities were inserted by the Bank into its investment securities portfolio.

101 SECTION 6

PAYABLES

Payables amount to 12,017,305 thousand euros and are analysed as follows:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % - Amounts owed to credit institutions (caption 10) 1,403,507 11.7 1,139,632 10.2 1,587,905 14.3 - Amounts owed to customers (caption 20) 6,163,638 51.3 5,957,888 53.4 5,764,039 51.8 - Debts evidenced by certificates (caption 30) 4,449,827 37.0 4,067,494 36.4 3,779,091 33.9 - Funds managed on behalf of third parties (caption 40) 333 0.0 368 0.0 367 0.0 Total 12,017,305 100.0 11,165,382 100.0 11,131,402 100.0

Change 30/6/04 31/12/03 absolute % 30/6/03 6.1 CAPTION 10 "AMOUNTS OWED TO CREDIT INSTITUTIONS" 1,403,507 1,139,632 263,875 23.2 1,587,905 (a) repurchase agreements 262,887 60,094 202,793 ... 78,693 (b) loans of securities - - - - -

Change 30/6/04 31/12/03 absolute % 30/6/03 Deposits 705,957 617,311 88,646 14.4 1,106,542 Current accounts 60,514 88,758 - 28,244 - 31.8 86,448 Financing 135,640 130,798 4,842 3.7 130,083 Long term loans 238,509 242,671 - 4,162 - 1.7 186,139 Repurchase agreements with banks 262,887 60,094 202,793 ... 78,693 Other - - - - - Total 1,403,507 1,139,632 263,875 23.2 1,587,905 of which: - resident Euros 582,952 364,925 218,027 59.7 693,074 - resident foreign currency 97,673 106,840 - 9,167 - 8.6 142,285 - non-resident Euros 593,484 523,554 69,930 13.4 566,667 - non-resident foreign currency 129,398 144,313 - 14,915 - 10.3 185,879

Change 30/6/04 31/12/03 absolute % 30/6/03 6.2 CAPTION 20 "AMOUNTS OWED TO CUSTOMERS" 6,163,638 5,957,888 205,750 3.5 5,764,039 (a) repurchase agreements 167,975 149,468 18,507 12.4 262,727 (b) loans of securities - - - - -

102 Caption 20 “Amounts owed to customers” is the following:

Change 30/6/04 31/12/03 absolute % 30/6/03 Savings deposits 463,185 472,031 - 8,846 - 1.9 448,559 Current accounts 5,526,134 5,331,369 194,765 3.7 5,049,800 Funding from international organisations - - - - 108 Repurchase agreements 167,975 149,468 18,507 12.4 262,727 Other 6,344 5,020 1,324 26.4 2,845 Total 6,163,638 5,957,888 205,750 3.5 5,764,039 of which: - resident Euros 6,008,018 5,778,289 229,729 4.0 5,556,868 - resident foreign currency 87,132 80,322 6,810 8.5 98,338 - non-resident Euros 59,084 89,284 - 30,200 - 33.8 100,555 - non-resident foreign currency 9,404 9,993 - 589 - 5.9 8,278

Caption 30 “Debts evidenced by certificates” is the following:

Change 30/6/04 31/12/03 absolute % 30/6/03 Certificates of deposits 302,332 326,769 - 24,437 - 7.5 359,939 Bonds certificates 4,036,486 3,653,863 382,623 10.5 3,329,973 Own cheques in circulation 111,009 86,862 24,147 27.8 89,179 Total 4,449,827 4,067,494 382,333 9.4 3,779,091 of which: - resident Euros 4,222,471 3,867,440 355,031 9.2 3,598,660 - resident foreign currency 227,288 199,986 27,302 13.7 180,345 - non-resident Euros 68 68 - - 86 - non-resident foreign currency - - - - Caption 40, “Funds managed on behalf of third parties” (333 thousand euro) includes interest-bearing funds supplied by the State and other public bodies for the financing of specific projects foreseen by law; the lending transactions carried out on behalf of public bodies, exclusively at fixed remuneration, are stated at section 12.

103 SECTION 7

RESERVES

Reserves, summarised in this section, amount to 442,989 thousand euro and are represented in the balance sheet as follows:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % - Reserves for loan losses (caption 90) 5,000 1.10 18,000 3.4 13,000 2.7 - Reserves for risks and charges (caption 80) 359,873 81.30 433,676 81.8 389,073 80.5 - Reserve for termination indemnities (caption 70) 78,116 17.60 78,303 14.8 81,379 16.8 Total 442,989 100.00 529,979 100.0 483,452 100.0

30/6/04 31/12/03 30/6/03 7.1 COMPOSITION OF CAPTION 90 "RESERVES FOR LOAN LOSSES" 5.000 18.000 13.000

7.2 CHANGES IN THE "RESERVES FOR LOAN LOSSES" (CAPTION 90) 30/6/04 31/12/03 30/6/03 A. Opening balances 18.000 13.000 13.000 B. Increases - 18.000 - B1. Provisions - 18.000 - B2. Other changes - - - C. Decreases 13.000 13.000 - C1. Utilizations 13.000 13.000 - C2. Other changes - - - D. Closing balances 5.000 18.000 13.000 Change 30/6/04 31/12/03 absolute % 30/6/03 7.3 COMPOSITION OF CAPTION 80 (C) "OTHER RESERVES" 19,013 32,781 - 13,768 - 42.0 23,408 Reserves for personnel charges 6,697 19,794 - 13,097 - 66.2 9,801 Reserves for future charges 52 52 - - 52 Reserves for guarantees and commitments 2,690 2,787 - 97 - 3.5 2,366 Reserves for in-house insurance scheme - 1,570 - 1,570 ... 1,564 Reserves for leasing transactions 2,952 2,899 53 1.8 1,350 Reserves for legal proceedings 5,697 5,563 134 2.4 5,140 Reserves for re-negotiated mortgages Law 133/99 - - - - 3,135 Reserves for risks and charges - convertible bonds 925 116 809 ... -

104 A breakdown of the reserves which make up the caption reveals the following changes:

Reserves for personnel charges include provisions made for extraordinary charges relative to staff employed subject to uncertainty regarding time, amount and occurence. Provisions for the year are stated in the Income Statement at caption 80a “Administrative costs - personnel”.

30/6/04 31/12/03 30/6/03 A. Opening balance 19,794 19,790 19,790 B. Increases due to provisions 992 17,447 2,836 C. Decreases due to utilisation 14,089 17,443 12,825 D. Closing balance 6,697 19,794 9,801

Reserves for future charges. These reserves are almost exclusively destined to meet Deposit Protection Fund charges (FITD).

30/6/04 31/12/03 30/6/03 A. Opening balance 52 52 52 B. Increases due to provisions - - - C. Decreases due to utilisation - - - D. Closing balance 52 52 52

Reserves for guarantees and commitments. The reserve for guarantees and commitments was created in accordance with the provisions of Legislative Decree 87/92 and is equal to expected losses on credit commitments. 30/6/04 31/12/03 30/6/03 A. Opening balance 2,787 2,516 2,516 B. Increases due to provisions - 271 - C. Decreases due to utilisation 97 - 150 D. Closing balance 2,690 2,787 2,366

Reserves for in-house insurance scheme. Reserves for the in-house insurance scheme have been recorded in the profit & loss account.

30/6/04 31/12/03 30/6/03 A. Opening balance 1,570 1,563 1,563 B. Increases due to provisions - 500 230 C. Decreases due to utilisation 1,570 493 229 D. Closing balance - 1,570 1,564

Reserves for finance lease transactions. Provisions to this reserve are connected to the evaluation of latent credit risks present in bad leased assets.

105 30/6/04 31/12/03 30/6/03 A. Opening balance 2,899 459 459 B. Increases due to provisions 53 2,440 891 C. Decreases due to utilisation - - - D. Closing balance 2,952 2,899 1,350 Reserves for legal proceedings. Reserves for legal proceedings limit exposure to potential loss resulting from unsettled litigation. 30/6/04 31/12/03 30/6/03 A. Opening balance 5,563 4,909 4,909 B. Increases due to provisions 134 684 261 C. Decreases due to utilisation - 30 30 D. Closing balance 5,697 5,563 5,140

“The reserve for risks and charges: convertible bonds” was formed during 2003 following Carige’s subordinated hybrid loan issue 1.5 per cent 2003-2013, which offers the possibility of converting reimbursement premium into ordinary shares.

30/6/04 31/12/03 30/6/03 A. Opening balance 116 - - B. Increases due to provisions 809 116 - C. Decreases due to utilisation - - - D. Closing balance 925 116 -

CHANGES IN THE "RESERVES FOR TAXATION" (CAPTION 80 B)

30/6/04 Indirect Risks for legal Income taxes taxes proceedings Total Opening balances 87,365 21,359 2,539 111,263 Increases 38,965 * 11,729 - 50,694 Decreases 89,010 ** 21,359 - 110,369 Closing balances 37,321 11,729 2,539 51,588

* of which 14,576 thousand in provisions made to cover tax payments (‘imposta sostitutiva’) made for the release of capital gains foreseen by Law 218/90

** of which 7,288 thousand paid as first instalment of tax charge referred to above.

Income tax advances are recorded at caption 130 “other assets”. In detail: IRES: 3,961; regional tax (IRAP): 5,211 thousand euro; stamp duty: 9,659 thousand euro.

106 2003 Indirect Risks for legal Incom e taxes taxes proceedings Total Opening balances 87,581 19,223 2,630 109,434 Increases 68,271 21,359 200 89,830 Decreases 68,487 * 19,223 291 88,001 Closing balances 87,365 21,359 2,539 111,263 *

* of which 3,028,000 surplus to reserve requirem ents and subsequently destined to the income statement (see section 6, Income Statement).

CHANGES IN THE "RESERVES FOR TAXATION" (CAPTION 80 B)

30/6/03 Indirect Risks for legal Income taxes taxes proceedings Total Opening balances 87.581 19.223 2.630 109.434 Increases 59.143 10.310 69.453 Decreases 81.503 19.223 291 101.017 Closing balances 65.221 10.310 2.339 77.870

Tax reserves include the costs deriving from the cancellation of tax breaks contained in Legislative decree 153/99 (see introduction to explanatory notes) and recorded as a tax credit for litigation in course awaiting the decision of the appeal against the EU Commission’s decision lodged at the Court of Luxembourg.

Deferred tax: positive and negative effects The calculation of tax advanced and liabilities to deferred taxation was made according to tax rates which will be in force when timing differences reverse, pursuant to tax regulations at 30/6/2004. The rates applied are the follow:

33% IRPEG (IRES) and 4,25% IRAP. IRAP rate adopted is that applied in Liguria, where the Bank carries out most of its business.

The time horizon, as previously stated in section 1 of the accounting principles, was extended to an indefinite period of time on the basis that future trends in taxable income reasonably suggest that the non-recovery of tax paid can be considered extremely unlikely.

107 7.4 CHANGES IN "ASSETS IN THE FORM OF ADVANCED PAYMENT OF TAXATION" a) recorded in the income statement with counter entry 1. Opening balances 12,008 2. Increases 18,628 2.1 Advanced taxation arising during the year 18,628 2.2 Other increases - 3. Decreases 9,089 3.1 Advanced taxation written off during the year 9,089 3.2 Other decreases - 4. Closing balances 21,547

At 31/12/2003, assets representing advance payment of taxation totalled 12,008 thousand euro were recorded; to this figure 18,628 thousand euro was added during the first six months of 2004 in the form of advanced tax relative to 2004. In more detail, this consists of: - all provisions to funds for which, with the extension of the time horizon to an indefinite period of time, a recalculation of tax advanced is required; this concerns in particular: - provisions made to supplementary staff pension fund and related reserves; - provisions made to the long-service fund and related reserves; - provisions made to the charges stemming from legal proceedings; - provisions made to the fund for guarantees and commitments and related reserves; - provisions made to the fund for leasing transactions and related reserves.

The change in the temporal criterion generated increased advanced tax of 15,326 thousand.

Negative variations amount to 9,089 thousand.

In accordance with Bank of Italy instructions of 3/8/99, assets representing advanced payment of taxation relative to the timing differences originating in the first six months of 2003 and which will be reversed in forthcoming years were recorded at caption 220, "Income tax for the year". Caption 220, however, rose as a result of assets representing advanced payment of taxation recorded in previous years and reversed during the first six months of 2003.

7.4 CHANGES IN "ASSETS IN THE FORM OF ADVANCED PAYMENT OF TAXATION" b) recorded in the net value with counter entry 1. Opening balances 4,640 2. Increases - 2.1 Advanced taxation arising during the year 2.2 Other increases 3. Decreases 2,585 3.1 Advanced taxation written off during the year 2,585 3.2 Other decreases 4. Closing balances 2,055

Reduced deferred tax liabilities relative to net assets stem from the utilisation of 49,822 thousand euros of provisions to the share premium reserve to cover 4/5ths of the negative variation deriving from the securitisation of bad loans.

108 As a result, 19,960 thousand euros in tax advanced relating to net assets (IRPEG: 17,687 thousand euros; IRAP: 2,273 thousand euros) was recorded as counterpart to the share premium reserve. The balance of the reserve prior to this utilisation will be restored over the next four years. In the first half of 2004, as in previous years, in accordance with article 6 of Law 130/99, 1/5th of the negative difference referred to (6,228 thousand euros) was recorded in the Profit & Loss account; at the same time 3,643 thousand euros was destined to reconstitute in part the share premium reserve, and 2,585 thousand euros in assets in the form of tax advanced was written down.

7.5 CHANGES IN "LIABILITIES FOR TAXES PAYABLE" a) recorded in the income statement with counter entry 1. Opening balances 5,391 2. Increases 226 2.1 Deferred taxation originating in the year 226 2.2 Other increases 3. Decreases 1,341 3.1 Deferred taxation written off in the year 1,341 3.2 Other decreases 4. Closing balances 4,276

With regards to timing differences liable to tax, deferred tax liabilities amounting to around 226 thousand euro were recorded relating to:

– gains stemming from the release of investments, and property subject to tax relief in the form of instalments foreseen by article 86 of the Consolidated tax Law (220 thousand euro); – writebacks on equity securities (6,000).

Deferred tax liabilities which became relevant for tax purposes in the first half of 2004 amounted to 1,341 thousand euro. The counterpart for these increases and decreases in the deferred tax reserve is caption 220 “Income tax”, in line with tax regulations.

No provisions were made with regard to deferred tax liabilities on reserves benefiting from tax relief totalling 46,041 thousand euro as distribution is not foreseen and there is little likelihood of the conditions requiring payment arising. With regards to the above-stated, tax deferrals were recorded exclusively in the income statement in order to correlate with related timing differences. This amount includes reserves created under article 22, Legislative decree 153/99 from profits recorded for the year 2000 (5,362,000). Related tax liabilities are suspended pending the decision on litigation in course before the Tribunal of Luxembourg (see Introduction to the Explanatory Notes).

109 CHANGES IN CAPTION 80A "SUPPLEMENTARY PENSION FUND"

30/6/04 31/12/03 30/6/03 A. Opening balance 289,632 287,888 287,888 B. Increases or decreases - 360 1,744 - 93 C. Closing balance 289,272 289,632 287,795

CHANGES IN CAPTION 70 "RESERVE FOR TERMINATION INDEMNITIES" 30/6/04 31/12/03 30/6/03 A. Opening balance 78,303 84,941 84,941 B. Increases 5,727 11,431 5,265 B.1 Provisions and other changes 5,727 11,431 5,265 C. Decreases 5,914 18,069 8,827 C.1 Termination employment 2,923 5,832 2,652 C.2 Advances (Law 297/82) 1,850 9,790 6,037 C.3 Others 1,141 2,447 138 D. Closing balance 78,116 78,303 81,379

110 SECTION 8

SUBSCRIBED CAPITAL, EQUITY RESERVES, RESERVES FOR GENERAL BANKING RISKS AND SUBORDINATED LIABILITIES

This section presents liabilities captions 100, 110, 120, 130, 140, 150 and 170 and assets caption 120.

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % - Capital stock (caption 120) 1,113,327 66.3 1,113,327 65.0 1,020,550 69.6 - Additional paid-in capital (caption 130) 258,666 15.4 255,023 14.9 139,941 9.5 - Reserves (caption 140) 238,051 14.2 229,722 13.4 229,723 15.7 - Revaluation reserves (caption 150) 7,956 0.5 7,956 0.5 7,956 0.5 - Reserves for general banking risks (caption 100) - - - - 5,165 0.4 - Net income (caption 170) 60,142 3.6 106,199 6.2 62,957 4.3 Shareholders' equity 1,678,142 100.0 1,712,227 100.0 1,466,292 100.0 - Subordinated loans (caption 110) 502,055 502,055 400,000 - Own shares (caption 120 - assets) 38,824 - 5,261

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 120 "CAPITAL STOCK" 1,113,327 1,113,327 - - 1,020,550 - ordinary shares 959,898 959,898 - - 879,906 - saving shares 153,429 153,429 - - 140,644

Share capital amounting to 1,113,326,839 made up by 1,113,326,839 shares with a unitary nominal value of euro 1 was unchanged during the period.

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 130 "ADDITIONAL PAID-IN CAPITAL" 258,666 255,023 3,643 1.4 139,941

Variation for the year stems from an increase of 3,643 thousand euro corresponding to the reintegration of the reserve following utilisation made during the securitisation of bad loans carried out at the end of 2000 pursuant to article 6, Law 130/99. This change in particular corresponds to the difference between the annual charge to the reserve for the year, the reduction in value of assets sold (6,228 thousand euro) and related taxes advanced (2,585 thousand euro).

111 Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 140 "RESERVES" 238,051 229,722 8,329 3.6 229,723 a) legal reserve 77,971 67,351 10,620 15.8 67,351 b) reserve for purchase of treasury stock 38,824 - 38,824 … 5,261 c) other reserves: 121,256 162,371 - 41,115 - 25.3 157,111 - taxed extraordinary reserve 41,913 44,396 - 2,483 - 5.6 44,397 - reserve for purchase of treasury stock disposable amount 38,176 77,000 - 38,824 - 50.4 71,739 - reserve for incorporation 16,589 16,589 - - 16,589 - reserve legislative decree 17/5/99 n. 153 11,718 11,718 - - 11,718 - reserve legislative decree 21/4/93 n. 124 121 56 65 … 56 - merger reserve 12,341 12,341 - - 12,341 - reserve for dividends on own shares 267 140 127 90.7 140 - reserve art. 55 Decree 917/86 131 131 - - 131

Legal reserve increased from 67,351 thousand euros to 77,971 thousand euros by the distribution of the 2003 net profit, as decided by stockholders’ resolutions of 28/04/2004.

The extraordinary taxed reserve increased by 12,093 thousand euro subsequent to the destination of profit for 2003 as decided by stockholders’ resolutions of 28/04/2004. Reductions to the reserve totalled 14,576 thousand following the payment of tax (‘imposta sostitutiva’) required for the utilisation of capital gains subject to suspension from liability to tax foreseen by Law 218/90.

The reserve for the purchase of own shares created pursuant to article 2357 of the Italian Civil Code at 31/12/03 amounted to 77 m. After utilisations during the period of 38,824 thousand, reserve funds available at 30/6/04 totalled 38,176 thousand.

Merger reserve was formed in 1994 in accordance with art. 7 c.3 of Law 218/90 and with art. 1 of Law 489/93 and recorded no change.

The reserve foreseen by Legislative decree 153/99, constituted during the year 2000 in order to benefit from the tax benefits contained in the same decree relating to merger operations, recorded no changes during the year.

The reserve created in 2003 pursuant to Legislative decree 124/93 in relation to annual severance pay provisions destined to complementary pension solutions rose by 65 thousand following the distribution of net profit for 2003, as deliberated by the Shareholders’ Meeting of 28th April 2004.

Reserve for incorporation and the reserve foreseen by art. 55, Presidential Decree 917/86 recorded no changes during the year.

Reserve for dividends on own shares accounts for 267,000 and is related to the dividend on own shares held in portfolio at 3/05/2004 in compliance with the Meeting of Shareholders of 28/04/2004. Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 150 "REVALUATION RESERVES" 7,956 7,956 - - 7,956 Revaluation reserves (law 72/83) 1,930 1,930 - - 1,930 Revaluation reserves (law 413/91) 6,026 6,026 - - 6,026

112 Revaluation reserves, which show the same amount as at 31/12/03, benefited from the tax-break opportunities offered by article 123, item 4, Presidential Decree 917/86, as present in the balance sheets of the incorporated companies. During 1995 Carige released the revaluation reserves connected to Law 413/91, by the payment of taxes in accordance with article 22 of Law 85/95.

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 100 "RESERVES FOR GENERAL BANKING RISKS" - - 5,165

The General Banking Risks Reserve was fully utilised during the previous year.

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 110 "SUBORDINATED LOANS" 502,055 502,055 - … 400,000

The caption refers to a floating-rate subordinated bonded loan issue. No changes were recorded during the year. The issue is as follows:

Code Amount Currency Interest rate Maturity

XS0135565637 400,000 euro Euribor 3 months + 28/11/2011 annual spread of 0.80

IT0003563035 102,055 euro 1.5% + 16% at 05/12/2013 maturity

With regards to the first loan issue, reimbursement will be effected at maturity in one payment. The Bank can, however, anticipate repayment after the fifth year with Bank of Italy authorisation. In the eventuality of liquidation, the bonds will be repaid only after all other claims have been met.

The repayment ranking of the bond issue ‘Banca Carige 1.50% 2003-2013’ performed during the year in case of the Bank’s going into liquidation or receivership is as follows: the bonds will be repaid only after all other creditors subordinated or otherwise have been repaid with the exception of those creditors with an equal or more accentuated degree of subordination. Further characteristics of the issue are as follows:

- from 1st January 2006 until 31st October 2013 the bonds can be converted into shares of the Bank on a one-to- one basis; - for those bonds for which no conversion right has been exercised as at 31st October 2013, the principal shall be repaid in one payment on 5th December 2013 with a 16% premium on the nominal value.

Changes in assets caption 120 “Own shares” are described below:

113 30/6/04 31/12/03 Quantity Nominal value Amount/1000 Quantity Nominal value Amount/1000 A. Opening balances - - - 6,024,532 6,024,532 11,619 B. Increases 13,160,841 13,160,841 40,412 8,870,380 8,870,380 24,723 - Purchases 13,160,841 13,160,841 40,343 8,870,380 8,870,380 22,446 - Writebacks ------Other changes - - 69 - - 2,277 C Decreases 427,638 427,638 1,588 14,894,912 14,894,912 36,342 - Sales 427,638 427,638 1,379 14,894,912 14,894,912 36,342 - Adjustments - - 209 - - - - Other changes ------D.Closing balances 12,733,203 (1) 12,733,203 38,824 - (1) - - (1) Figure does not include 227.92 shares corresponding to 44/50 of 259 non converted shares. 30/6/03 Quantity Nominal value Amount/1000 A. Opening balances 6,024,532 6,024,532 11,619 B. Increases 2,753,400 2,753,400 7,029 - Purchases 2,753,400 2,753,400 6,274 - Writebacks - - - - Other changes - - 755 C.Decreases 6,465,567 6,465,567 13,387 - Sales 6,465,567 6,465,567 13,387 - Adjustments - - - - Other changes - - - D.Closing balances 2,312,365 (1) 2,312,365 5,261

Relative to article 16, Legislative decree 87/92, available reserves recorded at 30/06/2004 offer sufficient cover for those costs not amortised by article 10 letter 2a) and d) )of the same decree.

The table below provides the details of the Bank's total capital and prudential management requirements as requested.

114 Total capital and prudential requirements at 30/06/2004

CATEGORIES/VALUES 30/6/04 31/12/03 30/6/03 A. Total capital A.1 Tier 1 1,123,280 1,147,180 937,499 A.2 Tier 2 496,525 512,498 406,337 A.3 Deductions 216,080 190,582 168,721 A.4 Total capital 1,403,725 1,469,096 1,175,115 B. Prudential requirements B.1 Credit risks 651,506 637,107 661,470 B.2 Trading risks 73,917 69,181 63,170 including: - trading securities risks 70,838 69,181 62,307 - exchange rate risks 3,079 - 863 B.3 Subordinated loans of 3rd level - - - B.4 Other prudential requirements 25,171 33,830 33,830 B.5 Total prudential requirements 750,594 740,118 758,470 C. Capital adequacy ratios C.1 Risk-Weighted Assets (*) 10,722,771 10,573,114 10,835,286 C.2 Tier 1 % of RWA 10.48% 10.85% 8.65% C.3 Total capital % of RWA 13.09% 13.89% 10.85% (*) Total prudential requirements multiplied by the reciprocal minimum obligatory credit risk coefficient.

115 SECTION 9

OTHER LIABILITIES

Other liabilities amount to 1,087,741 thousand euro and are analysed as follows:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % - Other liabilities (caption 50) 922,290 84.8 579,839 78.0 924,365 85.3 - Accrued expenses and deferred income (caption 60) 165,451 15.2 163,572 22.0 158,872 14.7 Total 1,087,741 100.0 743,411 100.0 1,083,237 100.0

Change 30/6/04 31/12/03 absolute % 30/6/03 9.1 CAPTION 50 "OTHER LIABILITIES" 922,290 579,839 342,451 59.1 924,365 - miscellaneous accounts payable to branches 218,203 205,916 12,287 6.0 124,318 - excess of adjustment on discounted notes 259,144 151,597 107,547 70.9 225,916 - beneficiaries of outstanding invoices 32,754 30,920 1,834 5.9 24,377 - amounts due to customers 52,233 56,465 - 4,232 - 7.5 200,469 - amounts due to tax authorities on behalf of third parties 33,134 12,961 20,173 ... 28,916 - staff charges 19,928 12,819 7,109 55.5 20,420 - amounts related to securities transactions 35,264 - amounts related to writedowns on off-balance sheet transactions 118,022 5,013 113,009 ... 7,744 - amounts in transit with branches 85,379 6,698 78,681 ... 116,600 - premiums related to options transactions 7,547 5,607 1,940 34.6 3,831 - accrued costs to be recognized 696 913 - 217 - 23.8 592 - guarantee deposits from third parties 1,093 764 329 43.1 923 - amounts relating to tax collection service 515 499 16 3.2 596 - other 93,642 89,667 3,975 4.4 134,399

Change 30/6/04 31/12/03 absolute % 30/6/03 9.2 CAPTION 60 "ACCRUED EXPENSES AND DEFERRED INCOME" 165,451 163,572 1,879 1.1 158,872 Accrued expenses: 91,890 95,528 - 3,638 - 3.8 92,450 - interest expenses due to bank 4,074 3,132 942 30.1 5,740 - interest expenses due to customers 1,777 310 1,467 ... 2,071 - interest payable on debt securities 40,812 44,522 - 3,710 - 8.3 38,126 - differentials stemming from derivatives contracts 45,127 47,450 - 2,323 - 4.9 46,398 - others 100 114 - 14 - 12.3 115 Deferred income: 73,561 68,044 5,517 8.1 66,422 - premiums related to currency forward transactions 382 636 - 254 - 39.9 270 - differentials stemming from derivatives contracts 3,331 3,777 - 446 - 11.8 4,199 - discounted notes 1,409 1,702 - 293 - 17.2 1,882 - leasing rents 64,299 59,838 4,461 7.5 57,668 - others 4,140 2,091 2,049 98.0 2,403 Accrued expenses and deferred income are not applied directly to the balance sheet accounts in accordance with article 12, Legislative Decree 87/92.

116 SECTION 10

GUARANTEES AND COMMITMENTS

Guarantees and commitments amount to 1,938,678 thousand euro and are analysed below:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % - Guarantees given (caption 10) 1,150,988 59.4 1,271,681 58.3 1,323,475 61.4 - Commitments (caption 20) 787,690 40.6 910,193 41.7 830,706 38.6 Total 1,938,678 100.0 2,181,874 100.0 2,154,181 100.0

Change 30/6/04 31/12/03 absolute % 30/6/03 10.1 GUARANTEES GIVEN 1,150,988 1,271,681 - 120,693 - 9.5 1,323,475 (a) commercial guarantees 1,059,071 1,170,959 - 111,888 - 9.6 1,210,480 (b) financial guarantees 40,894 31,694 9,200 29.0 28,651 (c) assets held in guarantee 51,023 69,028 - 18,005 - 26.1 84,344 Total 1,150,988 1,271,681 - 120,693 - 9.5 1,323,475 Caption 10 is analysed below: - sureties 1,043,750 1,140,003 - 96,253 - 8.4 1,188,687 - documentary and non documentary credits 45,257 60,040 - 14,783 - 24.6 43,570 - acceptances on behalf of third parties 10,958 2,610 8,348 ... 5,818 - joint securities - - - ,,, 1,056 - other sureties on behalf of third parties 1 1 - - 1 - bond sureties on behalf of third parties 51,022 69,027 - 18,005 - 26.1 84,343

Credit commitments related to non-performing loans amount to 28,151 thousand euro. Reserves for guarantees and commitments, which amount to 2,690 thousand euro, cover all relevant risks. Change 30/6/04 31/12/03 absolute % 30/6/03 10.2 CAPTION 20 "COMMITMENTS" 787,690 910,193 - 122,503 - 13.5 830,706 (a) commitments to extend credit (certain to be called on) 371,468 458,915 - 87,447 - 19.1 434,614 (b) commitments to extend credit (not certain to be called on) 416,222 451,278 - 35,056 - 7.8 396,092 Commitments are analysed as follows: - stipulated mortgages to be granted 307,362 355,254 - 47,892 - 13.5 315,979 - derivative contracts on credits 175,488 194,087 - 18,599 - 9.6 258,223 - purchases of securities to be settled 34,653 112,074 - 77,421 - 69.1 95,818 - unused irrevocable lines of credit 83,514 104,828 - 21,314 - 20.3 77,699 - amounts to be granted to customers 100,715 14,010 86,705 ... 34,869 - stipulated leasing transactions to be granted 25,359 15,800 9,559 60.5 22,424 - commitments with Deposit Protection Fund Liabilities (FITD) 15,650 15,650 - - 12,635 - subsidiaries' shares and quotas to be received 4,880 97,874 - 92,994 - 95.0 5,412 - option on securities - - - 5,165 - deposits to be made with banks 40,069 616 39,453 ... 2,482 Total 787,690 910,193 - 122,503 - 13.5 830,706

117 Change 30/6/04 31/12/03 absolute % 30/6/03 10.3 ASSETS HELD TO GUARANTEE THE BANK'S LIABILITIES 404,059 228,857 175,202 76.6 357,774 Securities held to guarantee: - bank drafts issued by Carige 24,176 23,129 1,047 4.5 18,094 - repurchase agreements 379,883 205,728 174,155 84.7 339,680 Total 404,059 228,857 175,202 76.6 357,774

Change 30/6/04 31/12/03 absolute % 30/6/03 10.4 UNUSED LINES OF CREDIT BY THE BANK 131,614 129,712 1,902 1.5 211,974 (a) central banks 81,706 102,385 - 20,679 - 20.2 139,014 (b) other banks 49,908 27,327 22,581 82.6 72,960

118 10.5 FORWARD TRANSACTIONS 30/6/04 31/12/03 hedging trading other hedging trading other 1. Purchase/sale of: 200,000 221,092 - - 328,602 - 1.1 Securities 200,000 68,762 - - 145,439 - - purchases 34,653 - 112,074 - - sales 200,000 34,109 - 33,365 - 1.2 Currency - 152,330 - - 183,163 - - currency against currency 2,285 - - - - purchases against euro 33,271 - 45,456 - - sales against euro 116,774 - 137,707 - 2. Deposits and loans - - 227,789 - - 66,546 - to be made 139,138 - - 16,210 - to be received 88,651 - - 50,336 3. Derivatives contracts 3,798,892 3,954,775 178,055 3,541,457 3,436,316 178,885 3.1 With exchange of principal 299,490 257,841 102,055 274,227 125,636 102,171 (a) securities 142,260 300 102,055 116,997 15,980 102,171 - purchases 300 - 300 - - sales 142,260 102,055 116,997 15,680 102,171 (b) currency 157,230 257,541 - 157,230 109,656 - - currency against currency 8,267 - - - - purchases against euro 157,230 124,637 157,230 54,828 - - sales against euro 124,637 - - 54,828 - (c) other instruments ------purchases - - - - sales - - - 3.2 Without exchange of principal 3,499,402 3,696,934 76,000 3,267,230 3,310,680 76,714 (a) currency ------currency against currency - - - - purchases against euro - - - - sales against euro - - - (b) other instruments 3,499,402 3,696,934 76,000 3,267,230 3,310,680 76,714 - purchases 1,520,950 1,713,412 1,278,824 1,672,981 - - sales 1,978,452 1,983,522 76,000 1,988,406 1,637,699 76,714 Total 3,998,892 4,175,867 405,844 3,541,457 3,764,918 245,431

Deposits and financing to be made or received include exclusively short-term repurchase agreements; sale and repurchase agreements with currency as the underlying totalled 15,867 million at 30/6/04. With regards to derivatives contracts, the column ‘other transactions’ includes the notional value of options stated separately from the related underlying structured bond issue of the Bank. The notional value of options incorporated in assets or liabilities which allow either the Bank or the counterparty to transform, after a certain period of time, the interest rate stipulated in the contract from fixed to floating, or vice versa, was recorded at section 11.6 ‘Maturities of assets and liabilities’.

119 10.5 FORWARD TRANSACTIONS 30/6/03 hedging trading other 1. Purchase/sale of: 5,231 301,786 - 1.1 Securities - 211,566 - - purchases - 85,818 - - sales - 125,748 - 1.2 Currency 5,231 90,220 - - currency against currency - - - - purchases against euro 5,000 31,383 - - sales against euro 231 58,837 - 2. Deposits and loans - - 80,305 - to be made - - 37,351 - to be received - - 42,954 3. Derivatives contracts 3,620,483 3,499,801 83,114 3.1 With exchange of principal 263,559 63,829 - (a) securities 106,329 22,195 - - purchases 10,329 10,819 - - sales 96,000 11,376 - (b) currency 157,230 41,634 - - currency against currency - - - - purchases against euro 157,230 20,817 - - sales against euro - 20,817 - (c) other instruments - - - - purchases - - - - sales - - - 3.2 Without exchange of principal 3,356,924 3,435,972 83,114 (a) currency - - - - currency against currency - - - - purchases against euro - - - - sales against euro - - - (b) other instruments 3,356,924 3,435,972 83,114 - purchases 1,335,442 1,773,312 - - sales 2,021,482 1,662,660 83,114 Total 3,625,714 3,801,587 163,419

10.6 DERIVATIVES CONTRACTS ON LENDING 30/6/04 31/12/03 30/6/03 Trading Banking Trading Banking Trading Banking book book book book book book 1. Hedging purchases 45,227 - 20,918 - 28,751 - 1.1 With exchange of principal 45,227 - 20,918 - 28,751 - - Credit default product 45,227 - 20,918 - 28,751 - 2. Hedging sales 143,488 32,000 162,087 32,000 226,223 32,000 2.1 With exchange of principal 2,000 32,000 2,000 32,000 62,000 32,000 - Credit default product 2,000 32,000 2,000 32,000 62,000 32,000 2.2 Without exchange of principal 141,488 - 160,087 - 164,223 - - Total rate of return swap 141,488 - 160,087 - 164,223 - Total 188,715 32,000 183,005 32,000 254,974 32,000

120 Total principal of derivatives contracts amounts to 8,152.4 million euro (inclusive of basis swaps contracts for 1,161.2 million of euro, the notional value of which is recorded at section 10.5). Principal (1) Interest rates Exchange rates Share rates Other Total

1. Trading contracts 2,753,972 257,541 379,129 191,715 3,582,357 1.1 Non-quoted trading contracts 2,672,837 257,541 376,897 191,715 3,498,990 Forwards 4,000 - - - 4,000 Swaps (2) 2,187,747 - - - 2,187,747 Options bought 362,705 128,791 99,421 - 590,917 Options sold 118,385 128,750 277,476 - 524,611 Derivatives on credits - - - 191,715 191,715 1.2 Quoted trading contracts 81,135 - 2,232 - 83,367 Futures bought 40,000 - 1,912 - 41,912 Futures sold 41,135 - 20 - 41,155 Options bought - - 300 - 300 Options sold - - - - - 2. Hedging contracts 2,974,751 157,230 205,787 71,124 3,408,892 2.1 Non-quoted hedging contracts 2,974,751 157,230 172,000 29,000 3,332,981 Swaps (2) 2,662,833 157,230 - - 2,820,063 Options bought 311,918 - 124,000 - 435,918 Options sold - - 48,000 - 48,000 Derivatives on credits - - - 29,000 29,000 2.2 Quoted hedging contracts - - 33,787 42,124 75,911 Futures sold - - 33,787 42,124 75,911 Total 5,728,723 414,771 584,916 262,839 6,991,249 (1) Principal in basis swaps is stated once (2) Caption includes basis swaps, cross currency swaps, interest rate swaps and overnight indexed swaps.

Principal in hedging contracts (1) Swaps Options bought Options sold Derivatives Futures Total on credits 1. Assets 1,427,307 144,918 48,000 29,000 75,911 1,725,136 Loans to customers 375,741 96,918 - 472,659 Trading securities 612,566 48,000 48,000 29,000 75,911 813,477 Deposits with banks 439,000 - 439,000 2. Liabilities 1,339,180 291,000 - - - 1,630,180 Bonds 1,339,180 291,000 - 1,630,180 3. Other (2) 53,576 - - - - 53,576 Total 2,820,063 435,918 48,000 29,000 75,911 3,408,892

(1) Principal in basis swaps is stated once. (2) Non-specific hedging contracts on interest-rate risk related to customer borrowing and lending.

121 Principal in contracts classified by remaining contract life (1) Up to 12 months From 1 to 5 years More than 5 Total years 1. Trading contracts 321,942 1,993,521 1,266,894 3,582,357 1.1 Non-quoted trading contracts 238,875 1,993,221 1,266,894 3,498,990 Forwards 4,000 - - 4,000 Swaps 156,356 1,291,284 740,107 2,187,747 Options bought 39,280 217,111 334,526 590,917 Options sold 39,239 293,111 192,261 524,611 Derivatives on credits 191,715 191,715 1.2 Quoted trading contracts 83,067 300 - 83,367 Futures bought 41,912 - 41,912 Futures sold 41,155 - 41,155 Options bought 300 - 300 Options sold - - 2. Hedging contracts 810,680 1,452,806 1,145,406 3,408,892 2.1 Non-quoted hedging contracts 734,769 1,452,806 1,145,406 3,332,981 Swaps 638,769 1,217,806 963,488 2,820,063 Options bought 48,000 206,000 181,918 435,918 Options sold 48,000 48,000 Derivatives on credits 29,000 29,000 2.1 Quoted hedging contracts 75,911 - - 75,911 Futures sold 75,911 Total 1,132,622 3,446,327 2,412,300 6,991,249

(1) Principal in basis swaps is stated once.

Derivatives business is carried out exclusively with primary banking and financial institutions and for this reason provisions for counterparty risk have not been made. During the period no losses on loans-related derivatives contracts were recorded. At 30/6/04, there were no unsettled contracts. Non quoted derivatives contracts accounted for 98% of all derivatives contracts at 30/6/04.

122 Non-quoted derivatives contracts (1) Banks Financial bodies Other Total 1. Principal 6,018,872 439,895 373,204 6,831,971 2. Trading contracts (2) Positive market value 23,298 407 3,232 26,937 Negative market value 30,659 1,606 3,821 36,086 Potential credit equivalent 45,346 3,292 21,229 69,867 3. Hedging contracts Positive market value 36,914 130,541 - 167,455 Negative market value 70,174 123,644 - 193,818 Potential credit equivalent 37,374 4,176 - 41,550

(1) Principal in basis swaps is stated once. (2) The trading derivatives item includes negative market values of 7,732 thousand euros relating to options on the Bank's structured bond issues; these options are matched by a positive market value for the same amount stated at the item 'hedging contracts'.

Derivatives-related capital losses of 113,5 million euro and capital gains of 70,5 million euro were not recorded in the income statement. In particular, capital losses and gains stemming from hedging contracts related to the investment and trading securities portfolios of 38,5 million euro and 6,7 million euro respectively, were not recorded (see Section 2.3); capital losses stemming from hedging contracts related to bonds issued of 26 million euro and capital gains of 34,4 million euro, capital losses stemming from credit derivatives of 14,6 million euro and capital gains of 0,9 million euro were also not recorded.

Deferred gains and losses Losses Gains 1. Trading contracts 34,067 27,144 1.1 Non-quoted trading contracts 34,067 26,936 Forwards 3 3 Swaps 17,049 18,963 Options 16,461 6,680 Derivatives on credits 554 1,290 1.2 Quoted trading contracts - 208 Futures - 83 Options - 125 2. Hedging contracts 79,403 43,348 2.1 Non-quoted hedging contracts 79,096 43,047 Swaps 73,981 28,894 Options 4,863 14,153 Derivatives on credits 252 2.2 Quoted hedging contracts 307 301 Futures 307 301 Total 113,470 70,492

123 SECTION 11

CONCENTRATION AND DISTRIBUTION OF ASSETS AND LIABILITIES

Breakdowns of loans related to lists 11.2, 11.3, 11.5, 11.6 and 11.7 of this section include leased assets, which amount to 698,614 thuosands of euro and are exclusively connected to transactions with customers in euro. On this basis, loans to customers amount to 9,390,533 thousand euro and not to 8,691,919 thousand euro (as caption 40 of assets). 11.1 SIGNIFICANT EXPOSURES 30/6/04 31/12/03 30/6/03 (a) amount 582,256 150,000 318,006 (b) number 21 2

11.2 DISTRIBUTION OF LOANS AND ADVANCES TO CUSTOMERS, BY CATEGORY 30/6/04 31/12/03 30/6/03 (a) Governments 470,037 481,278 529,117 (b) Other public entities 602,382 588,805 560,838 (c) Non-financial businesses 5,038,920 5,111,659 4,932,933 (d) Financial institutions 1,138,623 356,147 418,803 (e) Personal businesses 428,899 469,917 455,408 (f) Other operators 1,711,672 2,095,436 1,737,346 Total 9,390,533 9,103,242 8,634,445 11.3 DISTRIBUTION OF LOANS TO RESIDENT NON-FINANCIAL BUSINESSES AND PERSONAL BUSINESSES 30/6/04 31/12/03 30/6/03 (a) 1st branch of economic activity Other market services 1,228,339 1,207,153

Wholesale and retail trade, salvage and repairs 986,643 (b) 2nd branch of economic activity

Wholesale and retail trade, salvage and repairs 987,138 1,021,269 Other market services 894,172 (c) 3rd branch of economic activity Building and construction 766,840 741,473 854,552 (d) 4th branch of economic activity Air and sea transport 290,669 314,946 353,301 (e) 5th branch of economic activity Hotel and catering services 257,479 Transport services 257,341 242,407 (f) Other branches 1,823,648 1,886,604 1,898,160 Total 5,354,113 5,428,786 5,229,235

124 11.4 DISTRIBUTION OF GUARANTEES GIVEN, BY CATEGORY OF COUNTERPART 30/6/04 31/12/03 30/6/03 (a) Governments - - - (b) Other public entities 4,286 9,772 4,725 (c) Banks 92,241 137,584 126,956 (d) Non-financial businesses 937,033 984,583 978,700 (e) Financial institutions 75,452 93,910 106,750 (f) Personal businesses 13,025 13,012 13,349 (g) Other operators 28,951 32,820 92,995 Total 1,150,988 1,271,681 1,323,475

125 11.5 GEOGRAPHIC DISTRIBUTION OF ASSETS AND LIABILITIES 30/6/04 Caption/countries Italy Other EU Other Total countries countries 1. Assets 11,393,961 1,345,967 190,260 12,930,188 1.1 Due from banks 670,227 456,783 82,840 1,209,850 1.2 Loans to customers 9,207,235 141,713 41,585 9,390,533 1.3 Securities 1,516,499 747,471 65,835 2,329,805 2. Liabilities 11,327,921 968,635 222,804 12,519,360 2.1 Due to banks 680,625 703,560 19,322 1,403,507 2.2 Deposits from customers 6,095,150 55,075 13,413 6,163,638 2.3 Securities issued 4,449,758 - 69 4,449,827 2.4 Others 102,388 210,000 190,000 502,388 3. Guarantees and commitments 1,722,822 208,379 7,477 1,938,678

11.5 GEOGRAPHIC DISTRIBUTION OF ASSETS AND LIABILITIES 31/12/03 Caption/countries Italy Other EU Other Total countries countries 1. Assets 11,516,829 564,537 87,399 12,168,765 1.1 Due from banks 578,500 332,234 28,102 938,836 1.2 Loans to customers 8,842,545 214,663 46,034 9,103,242 1.3 Securities 2,095,784 17,640 13,263 2,126,687 2. Liabilities 10,600,224 822,126 245,087 11,667,437 2.1 Due to banks 571,765 525,106 42,761 1,139,632 2.2 Deposits from customers 5,858,610 87,020 12,258 5,957,888 2.3 Securities issued 4,067,426 - 68 4,067,494 2.4 Others 102,423 210,000 190,000 502,423 3. Guarantees and commitments 2,099,321 26,596 55,957 2,181,874

11.5 GEOGRAPHIC DISTRIBUTION OF ASSETS AND LIABILITIES 30/6/03 Caption/countries Italy Other EU Other Total countries countries 1. Assets 10,951,225 962,516 136,401 12,050,142 1.1 Due from banks 685,040 232,225 23,425 940,690 1.2 Loans to customers 8,438,791 143,610 52,044 8,634,445 1.3 Securities 1,827,394 586,681 60,932 2,475,007 2. Liabilities 10,269,937 1,004,656 256,809 11,531,402 2.1 Due to banks 835,359 698,639 53,907 1,587,905 2.2 Deposits from customers 5,655,206 96,017 12,816 5,764,039 2.3 Securities issued 3,779,005 - 86 3,779,091 2.4 Others 367 210,000 190,000 400,367 3. Guarantees and commitments 1,866,636 278,898 8,647 2,154,181

Geographic distribution is analysed with reference to the counterparts’ residence.

126 11.6 MATURITIES OF ASSETS AND LIABILITIES 30/6/04 between 3 between 1 and 5 years beyond 5 years Captions/Residual life repayable up to 3 and 12 indexed indexed unspecified Total on demand months months fixed rate rate fixed rate rate duration 1. Assets 2,591,529 3,095,164 3,700,994 1,801,667 2,277,583 2,302,209 3,150,774 510,782 19,430,702 1.1 Treasury bills eligible for refinancing - 12,560 6,328 268,703 39,272 592 152,779 - 480,234 1.2 Due from banks 549,359 357,266 196,778 516 10,000 944 - 94,987 1,209,850 1.3 Loans to customers 1,848,281 496,969 1,165,561 376,153 1,387,305 1,425,528 2,275,351 415,385 9,390,533 1.4 Bonds and other fixed income securities 10,489 106,549 201,509 60,119 474,412 75,009 622,897 - 1,550,984 1.5 Off-balance sheet transactions 183,400 2,121,820 2,130,818 1,096,176 366,594 800,136 99,747 410 6,799,101 2. Liabilities 6,690,937 2,530,371 3,134,884 1,281,751 2,227,411 1,739,299 1,713,170 305 19,318,128 2.1 Due to banks 452,783 288,203 316,997 63,549 68,759 78,333 134,883 - 1,403,507 2.2 Deposits from customers 5,993,033 164,219 6,295 91 - - - - 6,163,638 2.3 Securities issued 132,025 189,977 657,239 379,217 1,725,144 515,349 850,876 - 4,449,827 - bonds 7,799 50,988 527,930 367,952 1,715,592 515,349 850,876 - 4,036,486 - certificates of deposits 13,217 138,989 129,309 11,265 9,552 - - - 302,332 - other securities 111,009 ------111,009 2.4 Subordinated liabilities - - - - - 102,055 400,000 - 502,055 2.5 Off-balance sheet transactions 113,096 1,887,972 2,154,353 838,894 433,508 1,043,562 327,411 305 6,799,101

Caption repayable on demand includes assets and liabilities with residual life of not more than 24 hours, or a business day. Unspecified duration includes compulsory reserve, overdue loans and bad loans. Sub-captions 1.5 and 2.6 include the notional value (374,9 million euro) of options incorporated in structured mortgaged loans and bond issues which allow either the Bank or the counterparty, after a certain period of time, to transform the interest rate stipulated in the contract from fixed to floating, or vice versa.

11.6 MATURITIES OF ASSETS AND LIABILITIES 31/12/03 between 3 between 1 and 5 years beyond 5 years Captions/Residual life repayable up to 3 and 12 indexed indexed unspecified Total on demand months months fixed rate rate fixed rate rate duration 1. Assets 2,948,445 3,127,916 2,890,836 1,939,863 2,015,457 1,376,800 3,176,276 479,211 17,954,804 1.1 Treasury bills eligible for refinancing 26 54,030 78,767 262,398 170,759 767 124,268 - 691,015 1.2 Due from banks 379,355 394,875 36,899 762 - 983 10,000 115,962 938,836 1.3 Loans to customers 1,902,642 742,134 1,131,305 425,865 1,476,882 559,006 2,502,159 363,249 9,103,242 1.4 Bonds and other fixed income securities 10,112 57,244 154,749 79,407 346,486 72,351 537,391 - 1,257,740 1.5 Off-balance sheet transactions 656,310 1,879,633 1,489,116 1,171,431 21,330 743,693 2,458 - 5,963,971 2. Liabilities 6,457,941 3,258,885 1,695,055 1,521,041 1,866,259 1,288,849 1,543,010 - 17,631,040 2.1 Due to banks 114,193 553,992 122,923 40,683 61,955 104,488 141,398 - 1,139,632 2.2 Deposits from customers 5,803,838 144,320 9,728 2 - - - - 5,957,888 2.3 Securities issued 172,169 309,602 264,660 433,832 1,801,553 86,922 998,756 - 4,067,494 - bonds 71,831 154,895 130,167 420,975 1,790,317 86,922 998,756 - 3,653,863 - certificates of deposits 13,476 154,707 134,493 12,857 11,236 - - - 326,769 - other securities 86,862 ------86,862 2.4 Subordinated liabilities - - - - - 102,055 400,000 - 502,055 2.5 Off-balance sheet transactions 367,741 2,250,971 1,297,744 1,046,524 2,751 995,384 2,856 - 5,963,971

127 11.6 MATURITIES OF ASSETS AND LIABILITIES 30/6/03 between 3 between 1 and 5 years beyond 5 years Captions/Residual life repayable up to 3 and 12 indexed indexed unspecified Total on demand months months fixed rate rate fixed rate rate duration 1. Assets 3,401,867 2,408,875 4,035,365 1,733,276 1,856,179 1,455,562 2,604,460 356,891 17,852,475 1.1 Treasury bills eligible for refinancing 31,354 76,569 324,611 273,757 25,396 706 92,452 - 824,845 1.2 Due from banks 416,507 263,568 90,161 1,253 6,000 99 10,000 153,102 940,690 1.3 Loans to customers 2,335,541 508,751 1,113,778 472,200 1,425,358 585,052 1,989,976 203,789 8,634,445 1.4 Bonds and other fixed income securities 47,662 10,821 344,503 83,116 381,753 102,950 506,873 - 1,477,678 1.5 Off-balance sheet transactions 570,803 1,549,166 2,162,312 902,950 17,672 766,755 5,159 - 5,974,817 2. Liabilities 5,958,649 3,668,473 2,505,726 1,466,606 1,346,976 1,384,689 1,174,733 - 17,505,852 2.1 Due to banks 174,990 874,123 281,195 42,069 52,432 105,755 57,341 - 1,587,905 2.2 Deposits from customers 5,497,063 252,488 14,485 3 - - - - 5,764,039 2.3 Securities issued 114,280 194,463 487,431 656,324 1,277,802 377,521 671,270 - 3,779,091 - bonds 9,831 41,099 324,125 640,011 1,266,116 377,521 671,270 - 3,329,973 - certificates of deposits 15,270 153,364 163,306 16,313 11,686 - - - 359,939 - other securities 89,179 ------89,179 2.4 Subordinated liabilities ------400,000 - 400,000 2.5 Off-balance sheet transactions 172,316 2,347,399 1,722,615 768,210 16,742 901,413 46,122 - 5,974,817

Change 30/6/04 31/12/03 absolute % 30/6/03 11.7 ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCY (a) Assets 434,659 443,243 - 8,584 - 1.9 479,384 1. Due from banks 150,843 78,225 72,618 92.8 128,346 2. Loans to customers 251,291 323,706 - 72,415 - 22.4 327,659 3. Securities 21,209 35,319 - 14,110 - 40.0 22,991 4. Participating interests 382 382 - - 382 5. Other 10,934 5,611 5,323 94.9 6 (b) Liabilities 550,895 457,096 93,799 20.5 615,125 1. Due to banks 227,071 251,153 - 24,082 - 9.6 328,164 2. Deposits from customers 96,536 5,957 90,579 ... 106,616 3. Securities issued 227,288 199,986 27,302 13.7 180,345 4. Other - - - - -

128 11. 8 SECURITISATION

The Bank has carried out three securitisation transactions: the first at the end of 2000 relating to bad loans; the second at the end of 2001, relating to performing loans; the third during the first six months of 2004, relating to performing loans. The subsidiary, Cassa di Risparmio di Savona, carried out one securitisation transaction at the end of 2002, relating to non performing loans. Details of these transactions are given below: a) Securitisation of bad loans: year 2000

At the end of 2000 the Bank securitised without recourse a part of its bad loans portfolio. These loans were backed either fully or in part by voluntary or legally-enforced guarantees (gross value of pro soluto credits: 292.5 million euro,ITL 566.4 bn; book value: 227.6 million euro, ITL 440.6 bn; sale price: 165.3 million euro, ITL 320 bn).

As special purpose vehicle for the transaction, Argo Finance One, a subsidiary of the Carige Group, issued the following three types of bonds:

- Class A ‘Senior’ bonds amounting to 40 million euro, floating rate destined to institutional investors; rating: Moody’s: Aaa; Fitch: AA; - Class B ‘Mezzanine’ bonds amounting to 70 million euro, floating rate, destined to institutional investors and subordinate to class A; rating: Moody’s: Aa1, Fitch: AA; class A and B securities are quoted on the Luxembourg bond market; - Class C ‘Junior’ bonds amounting to 56.5 million euro, fixed rate 4% plus variable remuneration subject to payment of coupon on classes A and B and portfolio cash flows; fully subscribed by Banca Carige, this issue is fully subordinate in principal and coupon payments to classes A and B.

The placement of the securities was carried out by Credit Suisse First Boston.

At 30th June 2004, of the three classes issued, Banca Carige held in its securities portfolio exclusively and fully the class C ‘Junior’ bonds for a value of 56.5 million euro. These securities were placed in the Bank’s investment portfolio. No writedowns have been effected on the book value of these securities in the light of the positive performance of receipts. The securitised bad loans represent the underlying for all three classes of securities issued.

Risks for the Bank resulting from this transaction are represented by: the class C bonds both for principal and interest; guarantees granted to holders of class A securities relating to interest payments; guarantees granted to holders of class B securities for both principal and interest; the credit line of 15 million euro backing the class A and B bond issues granted by Banca Carige to Argo Finance; a limited recourse mortgage bond loan of 51 million euro; an interest rate cap. The positive performance in repayment flows has meant that no writedowns were carried out. The credit line, which at 30/6/04 was unused, was recorded at balance sheet caption 20 ‘Guarantees’, whilst the limited recourse mortgage, also unused, was recorded, as required by the Bank of Italy, at caption 10 ‘Guarantees given’. The transaction proceeds according to schedule. Consequently, no value adjustments were required.

Banca Carige is the servicer for the transaction. Revenues on the credit portfolio at 30/6/2004 amounted to 111,2 million euro, of which 21,7 million euro collected during the first half of the year. These amounts are in line with the repayment schedule defined at the start of the transaction. Banca Carige bills Argo Finance One on a monthly and half-yearly basis for the service activity it performs. The half-yearly accounts are inspected by the auditors KPMG SpA. The service activity carried out by Banca Carige generated 868 thousand euro in commission revenues, 791 thousand euro in reimbursed legal costs and 1,143 thousand euro in interest received on the class C Junior bonds. On the basis of interest-rate trends and conditions contained in the contract, no additional revenues were payable on the limited recourse mortgage.

129 As a result of the positive performance recorded by the repayment schedule, Fitch on 6/3/2002 upgraded the class A securities transaction from “AA” to “AAA”; on 13 December 2002 the same institute upgraded the transaction relating to the class B securities from “AA-“ to “AA”.

The positive trend allowed for the full repayment of the class A securities (40 million) in addition to the earlier-than- scheduled repayment of part (33.9 million) of the capital relating to the class B securities. In July 2004 further class B securities for 19.6 million were repaid in advance.

The limited recourse mortgage bond loan, already reduced to 69 million in december 2003, was reduced to 51 million at the beginning of 2004. b)Securitisation of performing loans: year 2001

At the end of 2001, Banca Carige securitised its performing mortgages in order to improve liquidity in the light of considerable expansion in long-term lending to the family (mortgages, in particular).

A total of 13,858 mortgages was sold with a residual debt at 31/12/2001, the date of ceding, on the part of customers amounting to 511.5 million euro.

The portfolio subject to sale was identified on the basis of objective criteria foreseen by the relevant legislation (Law 130/99).

In particular, the bundle of credits sold were mortgages granted to private customers for the purchase or refurbishment of property.

The bundle of credits ceded were as follows:

1) index-linked, first recorded mortgages/landed property loans distributed to private individuals prior to 31/7/2001; 2) mortgages with: a fixed repayment schedule with instalment due 31/12/2001; repayments in order with schedule via current account direct debit. 3) mortgages/landed property loans not classified either as bad loans or watchlists between 31/12/93 (exclusive) and 31/12/01 (inclusive).

The bundle of credits described above was sold on 31/12/2001 to the special purpose vehicle Argo Mortgage, in which Banca Carige has a 5% indirect holding (535.5 million) via its subsidiary Columbus Carige Immobiliare (the regularity of the operation was evidenced by the signing of servicing, and guarantee and indemnity contracts in the time prescribed).

The prices of the credits ceded were calculated as the sum of the following two components:

- an initial price of 511.5 million euros equivalent to the nominal value of the credits ceded; - a deferred price of 24.0 million euro calculated on the basis of profit extraction which, in particular, took into account the excess spread after the transaction costs relating to each payment date, intrinsic risk levels of the credits, possibility of anticipated re-payment of loan and subsequent loss of interest income. This spread was actualised using market rates at 31/12/2001 on the basis of the duration of the transaction.

The payment of the first component of the price is linked to a securities issue, whilst the deferred price will be paid pro quota at each payment date in reference to the procedures foreseen in the contract and the payment priorities defined in the transaction. At 30/6/2004 deferred-price account payments totalled 5,7 million.

The remaining credit of 18,3 million with Argo Mortgage Srl related to deferred-price is recorded at the caption 40 “Loans to customers”.

130 The securities issued by Argo Mortgage are as follows:

Class Amount in Rating by Expected Contractual Effective Euribor 3 Credit millions of Moody’s/Fitch duration Maturity expected months enhancement euro (***) (*) duration (*) margin in basis points (**) A 478 Aaa/AAA March 2009 October 2036 4.3 years 26 8.0% B 22.0 Aa2/AA March 2009 October 2036 6.8 years 45 3.7% C 11.5 Baa2/BBB March 2009 October 2036 6.8 years 145 1.5% D 9.2 Not rated October 2036

(*) assuming Argo Mortgage exercises its call option in January 2009; (**) step up of applicable spread if call option is not exercised; (***) the rating was assigned by Moody’s and Fitch on the basis of due diligence. The rating will be reviewed annually on the basis of collection flows and deviance from business plans.

The class A, B and C securities are quoted on the Luxembourg bond market and have been fully subscribed exclusively by European institutional investors, Italian included.

Class B and C securities were subscribed by Banca Carige. The class D issue was subscribed fully by Banca Carige.

At 30th June 2004 Banca Carige held in its securities portfolio class B bonds for a value of 0.2 million and class D bonds for a value of 9.2 million. The latter were placed in the Bank’s investment portfolio.

Payment priority will be as follows: - the payment of senior expenses and swap interest rate, followed by: - the payment of coupon on class A securities at maturity dates prior to maturity at October 2003, followed by: - the payment of coupon on class B securities on the basis of cumulative default ratio, followed by: - the payment of coupon on class C securities with residual available amounts at each payment date to be paid into a capital accumulation account.

From the October 2003 date of payment onwards, the order of priority is as follows: - the repayment of amortisation paid on class A securities, followed, on the basis of the cumulative default ratio, by: - the payment of coupon on class B securities and the repayment of amortisation paid on class B securities, followed by: - the payment of coupon on class C securities and the repayment of amortisation relating to the same securities.

The repayment of principal and interest of class D securities is subordinate to the first three classes.

The role of servicer of the transaction was carried out on Argo Mortgage’s behalf by Banca Carige. The yearly accounts are inspected by the auditors KPMG SpA.

All proceeds relating to the securitised credits will be in the form of mortgage instalment payments made by mortgage borrowers at the counters of Banca Carige, the latter, as foreseen in the contractual documentation regulating the securitisation transaction, carrying out the role of both account bank and cash manager. Both roles are compatible with the corporate service contract signed between Banca Carige and Argo Mortgage in that Banca Carige will perform the accounting duties on behalf of the special purpose vehicle.

131 During the first half of 2004, total revenues collected amounted to 38.5 million euro, of which 22.2 million euro in capital instalments, 7.7 million euro in interest instalments, 8.6 million in advanced repayments, interest and penalty charges.In the first half of 2004 commissions on revenues for 180 million accrued.

The transaction is proceeding according to schedule, consequently no value adjustment relating to the Bank’s relations with Argo Mortgage were required.

The transaction will be monitored by the Bank of New York in its payment report and by Banca Carige in its quarterly and investor reports, and certified by the independent auditors KPMG SpA.

Banca Carige SpA provided the special purpose vehicle with the cash collateral foreseen by the transaction (quota of the tranche of class D securities totalling 7.8 million) which during the year, as a result of the regular repayment flows scheduled by the contract, reached the figure (10.8 million) projected in the contract.

The London offices of the Bank of New York will represent the bond holders as well as being agent and security trustee. The same bank’s Luxembourg offices will act as agent for Luxembourg. The Milan offices of BNP Paribas Security Services will be payment agent for the transaction. The arrangers of the transaction were CSFB and CDC IXIS.

The counterparty of the IRS contracts utilised by Argo Mortgage for cover against interest rate fluctuations latent in the securitised credits is CDC IXIS.

------

Banca Carige is also servicer in the securitisation operation (securitisation of non performing loans) carried out by the subsidiary Cassa di Risparmio di Savona pursuant to Law 130/99, with the special purpose vehicle Priamar Finance.

In relation to this operation, Banca Carige provided the SPV with a line of credit and an interest rate cap. c) Securitisation of non-performing loans carried out by Cassa di Risparmio di Savona at the end of 2002.

At the end of 2002, Cassa di Risparmio di Savona securitised the entirety of its bad loans portfolio. The advantages of this transaction can be summarised as follows: - previously illiquid asset positions with low returns can now benefit from higher-yielding market interest rates; - securitisation achieves qualitative improvements in the bank’s risk portfolio; - higher credit rating of the bank has cost benefits for the Banca Carige Group in its funding requirements on international markets.

As stated above, the entirety of the bank’s bad loans were sold en bloc to the special purpose vehicle Priamar Finance (holdings on the part of Stitching Faro of Amsterdam and Banca Carige of, respectively, 95% and 5%). The bad loans securitised were classified as such at 31/12/2001 and were still effective at 11/12/2002, backed either fully or in part by voluntary or legally-enforced guarantees.

On 14th January 2004 Banca Carige acquired a majority holding in Priamar Finance Srl which, therefore, as of 2004, is part of the Banca Carige Group.

The structure of the company’s share capital is as follows: - Banca Carige: 60 per cent; - Stitching Faro (Amsterdam): 40 per cent.

132 The portfolio subject to sale was identified on the basis of objective criteria foreseen by relevant legislation (Law 130/99 and article 58, Law decree 385/93).

The credits sold (contract date: 23/12/2002 with effect from 11.59 pm of 31/12/2002) consisted of 1,085 debt positions (equivalent to 2,238 sub-items).

The gross value of credits sold excluding previous reductions was calculated at 68.8 million. The corresponding net value was 33.7 million after previous writedowns. The sale price, fixed at 28 million, determined a loss on securitisation of 5.7 million, registered in the profit and loss account of 2002.

All the loans securitised were denominated in euro and were granted to customers resident in Italy.

All proceeds relating to the securitised credits will be collected at the counters of Banca Carige, the latter, as foreseen in the contractual documentation regulating the securitisation transaction, carrying out the role of both account bank and cash manager. Both roles are compatible with the administrative service contract signed between Banca Carige and Priamar Finance in that Banca Carige will perform the accounting duties on behalf of the special purpose vehicle.

The role of servicer of the transaction was assigned to Banca Carige by Priamar Finance. Banca Carige bills Priamar Finance on a monthly and half-yearly basis for the service activity it performs. The half-yearly accounts are inspected by the auditors KPMG SpA.

Priamar Finance is both assignee of the credits and issuer of the securities.

The London offices of the Bank of New York will represent the bond holders in addition to performing the duties of calculation agent, security trustee, and payment agent. The same bank’s Luxembourg offices will act as agent for Luxembourg.

Arranger and lead manager of the operation is WestLB.

The asset backed securities issued by Priamar Finance on 21st February 2003 are as follows:

Class Amount in millions of Expected duration Interest rate euro A 18.0 4.6 years Euribor 6 months + 0.15% B 10.2 4% plus any residual portfolio cash flows

The maturity indicated in the table is that forecasted by the business plan. The expiry date of the operation has been fixed at 31/12/2016.

The class A securities are quoted on the Luxembourg bond market; class B securities are unquoted.

Class B securities were subscribed by Cassa di Risparmio di Savona and will be placed in that bank’s investment securities portfolio.

The securities are not rated.

Payment priority will be as follows:

- the payment of coupon on class A securities, followed by the principal; on completion of this - the payment of coupon on class B securities, followed by the principal.

133 As stated above, the payment of coupon and principal relating to class B securities is fully subordinated to the class A issue.

Credit enhancement of the issue is represented, in addition to the class categorization and payment priority described above, by a line of credit, a limited recourse bond loan, and an interest cap covering interest rate risk exposure.

Banca Carige has opened a revolving credit line in favour of Priamar Finance of 2.5 million for the duration of the bond issue, renewable on a yearly basis. This line of credit will be used in the case of any temporary interruptions in repayment flows. Reimbursement of the credit to Banca Carige will be effected according to the conditions stipulated in the contract between Banca Carige and Priamar Finance. Repayment of the line of credit utilised is subordinated to the interest and capital repayments relating to the class A securities.

As stated above, Priamar Finance is covered by an interest rate cap the premium of which was paid by Banca Carige up front at the issuing of the securities.

Cassa di Risparmio di Savona has made available a limited recourse mortgage in the form of Italian government stock of around 22 million.

Risks for Cassa di Risparmio di Savona resulting from this transaction are represented by: the class B bonds both for principal and interest and a limited recourse mortgage bond loan. Risks for Banca Carige, the servicer, are: the credit line, an interest rate cap and subordinate credits related to the role of servicer.

The transaction proceeds according to schedule. Consequently, no value adjustments were required. (The proceeds at 30/6/2004 were 6,5 thousand euros). For the same reason neither the credit line, nor mortgage bond loan was used.

Given market trends, the interest rate cap was not utilised.

In the first half of the year the following amounts accrued: 35 thousand euros in servicing commission; 314 thousand euros in advanced legal costs. d) Securitisation of performing loans carried out during the first half of 2004

During June 2004 the Bank securitised part of its performing mortgage portfolio in order to balance liquidity’s position in the light of considerable expansion in long-term lending to the family.

On 30th June 2004, a total of 13,272 mortgages with a book value at the same date of 864.5 million was sold to the special purpose vehicle Argo Mortgage Srl.

The portfolio subject to sale was identified on the basis of objective criteria foreseen by relevant legislation (Law 130/1999).

The mortgages in question were granted for the purchase or renovation of residential property.

The mortgages sold had the following characteristics (details appeared in the Official Gazette of the Italian Republic of 2nd July 2004):

1) first recorded mortgages/landed property loans granted to private individuals prior to 31st December 2003 at various interest-rate solutions (floating; fixed; floating rate with interest rate ceiling; mixed with a fixed rate for the first two years followed by floating rate); 2) mortgages with a payment instalment date at 30/6/04 and with previous instalments regularly paid via direct current account debit; 3) first recorded mortgages/landed property loans not classified by Banca Carige either as watchlists or bad loans between 31st December 1994 (inclusive) and 30th June 2004 (inclusive).

134 The credits described above were sold on 30th June 2004 to the SPV Argo Mortgage 2 Srl, in which Banca Carige has a 5 per cent indirect holding through its subsidiary Columbus Carige Immobiliare SpA, for 925.6 m. The contract was completed with the signing of a servicing contract.

The above price was calculated as the sum of the following two components:

- an initial price of 864.5 m equivalent to the book value of the credits sold: - a deferred price of 61.1 m calculated on the basis of profit extraction which, in particular, took into account the excess spread present after the transaction costs relating to each payment date, intrinsic risk levels of the credits and the possibility of premature repayment of the loan and the subsequent loss of interest income. Excess spread was actualised on the basis of market rates at 30th June 2004 on the basis of the duration of the transaction.

The validity of the method chosen to calculate the deferred price component was confirmed by a leading firm of auditors.

The payment of the first component took place according to schedule on 23rd July 2004 at the same time as the issuing of the securities. The deferred price will be paid pro quota at each payment date in line with the procedures foreseen in the contract and the payment priorities defined in the transaction.

The loan granted to the SPV Argo Mortgage 2 is recorded at balance sheet caption 40 “Loans to customers”, whilst revenues generated on the sale of the credits (61.1 m) are recorded at caption 70 “ other operating income” of the profit & loss account.

As stated the transaction was completed according to schedule with the signing of the servicing contract with Banca Carige, in which the contract of guarantee and indemnity is included.

The role of servicer for the transaction will be performed by Banca Carige on Argo Mortgage 2’s behalf. The SPV will be billed by Banca Carige on a quarterly basis, which will be subject to certification by KPMG SpA on an annual basis.

All proceeds relating to the securitised credits will be in the form of mortgage instalment payments made by mortgaged borrowers at branches of Banca Carige, the latter performing the contractual roles also of account bank and cash manager. These two roles are compatible with the corporate service contract signed between Banca Carige and Argo Mortgage 2; the same contract stipulates that Banca Carige will carry out the SPV’s accounting duties.

The transaction will be monitored by Deutsche Bank of London in its payment report and by Banca Carige in its quarterly report and investor report; KPMG SpA will certify the transaction on an annual basis.

Deutsche Trustee Company Limited is debenture trustee, whilst the London branch of Deutsche Bank AG is paying agent. The paying agent for Luxembourg is the Luxembourg branch of Deutsche Bank AG.

CDX IXIS Capital Markets, UBS Limited and WestLB AGH are arrangers and joint lead managers.

The counterparty of the IRS contracts utilised by the SPV to hedge interest rate risk latent in the securitised credits is CDC IXIS.

The issuance of asset backed securities by Argo Mortgage 2 and payment of related amounts were in accordance with schedule as at 23rd July 2004. The securities issued are as follows:

Class Amount (millions Rating by Contractual Spread on Euribor of euro) Moody’s/ Fitch maturity 3 months (bps) A 808.3 Aaa/AAA October 2043 Bps 18 B 26.8 Aa2/AA- October 2043 Bps 32 C 29.35 Baa2/BBB October 2043 Bps 83

135 Initial rating was assigned by the rating agencies Moody’s and Fitch/IBCA on the basis of due diligence. The rating will be reviewed annually on the basis of collection flows and deviance from the business plan.

The bonds are quoted on the Luxembourg bond market.

Payment priority will be as follows:

- the payment of senior expenses and the IRS; - coupon payment on class A securities at maturity dates prior to January 2006, followed by: - coupon payment on class B securities on the basis of the cumulative default ratio, followed by: - coupon payment on class C securities with residual available amounts at each payment date to be paid into a capital accumulation account.

From payment date January 2006 onwards, the order of priority is as follows:

- the repayment of amortisation paid on class A securities followed, on the basis of the cumulative default ratio, by: - coupon payment on class B securities and the repayment of amortisation paid on class B securities, followed by: - coupon payment on class C securities and the repayment of amortisation relating to the same securities.

Banca Carige issued a subordinated loan in order to provide the SPV with cash collateral required to purchase a hedging derivative from CDC IXIS in addition to funds to cover start-up costs. On issuance at 23rd July 2004, the loan amounted to 22.7 m. Repayment will be made at each repayment date on the basis of available funds and payment priority with precedence over deferred price repayment.

E. Asset backed securities in portfolio at 30/6/2004

Within the trading securities portfolio at 30/6/04 are securities deriving from securitisation transactions carried out by other parties totalling 63,724 thousand euro. These securities can be classified as follows:

ASSET BACKED SECURITIES IN PORTFOLIO AT 30/6/04 DERIVING FROM STRUCTURED SECURITISED CREDITS CARRIED OUT BY OTHER PARTIES Senior Mezzanine Junior Underlying securities securities securities (a) Mortgages 17,459 983 - (b) Corporate loans 3,250 3,967 - (c) Consumer credits 5,106 - - (d) Securities - - - (e) Various other credits 7,824 - - (f) Various other non- performing credits 13,834 3,968 - Total 47,473 8,918 -

Writedowns relating to the above and carried out according to the accounting principles illustrated in section 1 of the explanatory notes amounted to 29 thousand euro. Investments made in the form of these securities during the 1st half of 2004 are accounted for at income statement captions 10 ‘Interest income’ and 60 ‘Gains (losses) from financial transactions’ and are respectively 780 thousand euro (interest income) and 61 thousand euro (losses on securities and foreign exchange). Details are given in the table below:

136 EFFECTS ON INCOME STATEMENT AT 30/6/04 STEMMING FROM ASSET BACKED SECURITIES DERIVING FROM STRUCTURED SECURITISED CREDITS CARRIED OUT BY OTHER PARTIES Senior securities Mezzanine securities Junior securities Underlying Interest Gains/Losses Writedowns Interest Gains/Losses Writedowns Interest Gains/Losses Writedowns (a) Mortgages 228 - 22 16 - - - - - (b) Corporate loans 48 - - 63 - - - - - (c) Consumer credits 67 ------(d) Securities ------(e) Various other credits 83 90 ------(f) Various other non- performing credits 220 - 7 55 - - - - - Total 646 90 29 134 - - - - -

137 SECTION 12

ADMINISTRATION AND DEALING ON BEHALF OF THIRD PARTIES

Change 30/6/04 31/12/03 absolute % 30/6/03 12.1 DEALING OF SECURITIES a) Purchases 490,532 804,129 - 313,597 - 39.0 392,814 1. settled 488,490 802,770 - 314,280 - 39.1 389,054 2. unsettled 2,042 1,359 683 50.3 3,760 b) Sales 449,968 815,080 - 365,112 - 44.8 405,210 1. settled 448,762 810,608 - 361,846 - 44.6 389,943 2. unsettled 1,206 4,472 - 3,266 - 73.0 15,267

Change 30/6/04 31/12/03 absolute % 30/6/03 12.2 PRIVATE BANKING 1,228,597 1,154,661 73,936 6.4 1,115,430 1. securities issued by the Bank - 38 - 38 - 100.0 816 2. other securities 1,228,597 1,154,623 73,974 6.4 1,114,614

The figures shown correspond to total market values of property included within administration and trading on behalf of third parties. At 30th June 2004 all management lines are delegated to third parties as foreseen by article 24 of Legislative decree 58/98. The caption also includes: euro 52,938 thousand relating to the Carige Open Pension Fund formed in 1999 pursuant to article 9 of Legislative decree 124/93 and euro 69,438 thousand relating to guaranteed asset management products in which the client purchased from the Bank an accessory put option as cover for the initial capital invested.

Change 30/6/04 31/12/03 absolute % 30/6/03 12.3 CUSTODY AND ADMINISTRATION OF SECURITIES

a) third-party securities held in deposit (private banking not included) 16,923,070 15,969,476 953,594 6.0 15,268,309 1. securities issued by the Bank 4,419,557 4,060,006 359,551 8.9 3,607,757 2. other securities 12,503,513 11,909,470 594,043 5.0 11,660,552 b) third-party securities deposited with third-parties 14,873,681 14,562,095 311,586 2.1 13,723,478 c) portfolio securities deposited with third-parties 1,501,454 1,533,005 - 31,551 - 2.1 1,678,831

Depositary bank-related securities in custody amounted to 2,609,407 thousand euro.

138 12.4 COLLECTION OF THIRD PARTY RECEIVABLES: DEBIT AND CREDIT ADJUSTMENTS 30/6/04 31/12/03 30/6/03 (a) debit adjustments 802,579 788,633 697,132 1. current accounts 70,757 12,698 11,463 2. bills portfolio 483,597 555,057 458,114 3. cash 12,797 29,748 19,812 4. other 235,428 191,130 207,743 (b) credit adjustments 1,061,722 940,230 923,049 1. current accounts 37,737 8,250 7,971 2. bills and other items for collection 1,023,901 931,898 914,998 3. other 84 82 80

30/6/04 31/12/03 absolute % 30/6/03 12.5 OTHER TRANSACTIONS 834.336 881.913 - 47.577 - 5,4 972.622 - Other banks' share of pool operations 644.248 694.000 - 49.752 - 7,2 789.256 - Total bills related to factoring transactions ("pro solvendo") 176.875 173.267 3.608 2,1 166.926 - Loans on behalf of public bodies 13.213 14.646 - 1.433 - 9,8 16.440

139 PART C INCOME STATEMENT

SECTION 1

INTEREST

Change 30/6/04 30/6/03 absolute % 2003 1.1 CAPTION 10 "INTEREST INCOME AND SIMILAR REVENUES" 268,859 278,913 - 10,054 - 3.6 546,478 (a) on deposits with banks 10,251 11,076 - 825 - 7.4 22,753 including: - deposits with central banks 1,251 1,534 - 283 - 18.4 2,802 (b) on loans and advances to customers 218,515 225,556 - 7,041 - 3.1 439,720 including: - loans using funds managed on behalf of third parties 3 2 1 50.0 6 (c) on certificates of indebtedness 39,658 42,120 - 2,462 - 5.8 82,753 (d) other interest income 435 161 274 ... 1,252 (e) positive differentials on hedging transactions - - - - -

Change 30/6/04 30/6/03 absolute % 2003 1.2 CAPTION 20 "INTEREST EXPENSE AND SIMILAR CHARGES" 103,919 119,624 - 15,705 - 13.1 221,820 (a) on deposits from banks 11,157 21,601 - 10,444 - 48.3 34,519 (b) on deposits from customers 20,006 27,398 - 7,392 - 27.0 49,653 (c) on securities issued 59,996 56,242 3,754 6.7 110,528 including: - certificates of deposits 2,723 4,395 - 1,672 - 38.0 7,826 (d) on funds managed on behalf of third parties 1 1 - - 1 (e) on subordinated liabilities 6,653 7,210 - 557 - 7.7 13,423 (f) negative differentials on hedging transactions 6,106 7,172 - 1,066 - 14.9 13,696

Change 30/6/04 30/6/03 absolute % 2003 1.3 CAPTION 10 "INTEREST INCOME AND SIMILAR REVENUES" (a) on foreign currency assets 4,081 5,428 - 1,347 - 24.8 9,925

Change 30/6/04 30/6/03 absolute % 2003 1.4 CAPTION 20 "INTEREST EXPENSE AND SIMILAR CHARGES" (a) on foreign currency liabilities 3,648 14,404 - 10,756 - 74.7 21,480

140 SECTION 2

COMMISSION Change 30/6/04 30/6/03 absolute % 2003 2.1 CAPTION 40 "COMMISSION INCOME" 90,117 85,922 4,195 4.9 179,169 (a) guarantees given 3,518 3,359 159 4.7 7,170 (b) credit risk derivatives 231 229 2 0.9 461 (c) management, dealing and consultancy services: 33,942 31,771 2,171 6.8 67,260 1. securities dealing 891 812 79 9.7 1,648 2. foreign currency dealing 1,502 1,473 29 2.0 2,848 3. asset management 3,799 3,971 - 172 - 4.3 7,684 3.1 individual 3,483 3,756 - 273 - 7.3 7,210 3.2 collective 316 215 101 47.0 474 4. custody and administration of securities 1,377 1,181 196 16.6 2,043 5. depositary bank 1,211 1,206 5 0.4 2,454 6. placement of securities 19,355 18,224 1,131 6.2 38,324 6.1 placement of quotas in mutual funds 19,280 18,153 1,127 6.2 38,161 6.2 placement of other securities 75 71 4 5.6 163 7. acceptance of orders 2,484 1,850 634 34.3 4,097 8. consultancy - - - - - 9. distribution of third party products 3,323 3,054 269 8.8 8,162 9.2 insurance products 1,140 1,466 - 326 - 22.2 4,177 9.3 other products 2,183 1,588 595 37.5 3,985 (d) collection and payment services 17,991 17,712 279 1.6 36,673 (e) servicing relating to securitisation 1,083 797 286 35.9 1,683 (f) tax and rates collection - - - - - (g) other services 33,352 32,054 1,298 4.0 65,922

The caption “other services” in more detail is as follows:

Change 30/6/04 30/6/03 absolute % 2003 - Deposits and current accounts 20,148 19,348 800 4.1 38,246 - Overdraft facilities 7,136 6,765 371 5.5 13,549 - Financing 3,775 3,748 27 0.7 9,268 - Safe deposit rentals 540 540 - - 1,162 - Others 1,753 1,653 100 6.0 3,697 Total 33,352 32,054 1,298 4.0 65,922

Change 30/6/04 30/6/03 absolute % 2003 2.2 CAPTION 40 "COMMISSION INCOME: DISTRIBUTION CHANNELS OF PRODUCTS AND SERVICES" (a) distribution at Carige branches 26,395 25,249 1,146 4.5 54,033 1. asset management 3,758 3,971 - 213 - 5.4 7,615 2. securities placement 19,322 18,224 1,098 6.0 38,269 3. services relating to third party products 3,315 3,054 261 8.5 8,149 (b) distribution at outlets other than at head office 82 - 82 ... 137 1. asset management 41 - 41 ... 69 2. securities placement 33 - 33 ... 55 3. services relating to third party products 8- 8 ... 13

141 Change 30/6/04 30/6/03 absolute % 2003 2.3 CAPTION 50 "COMMISSION EXPENSES" 7,947 7,472 475 6.4 15,627 (a) guarantees received 471 717 - 246 - 34.3 1,184 (b) credit risk derivatives - - - - - (c) management and dealing services: 2,043 1,367 676 49.5 3,238 1. securities dealing 550 612 - 62 - 10.1 1,378 2. foreign currency dealing - - - - - 3. private banking 755 233 522 ... 529 3.1 Bank's portfolio 137 140 - 3 - 2.1 266 3.2 third party's portfolio 618 93 525 ... 263 4. custody and administration of securities 674 467 207 44.3 1,155 5. placement of securities 1- 1 ... 70 6. securities, products and services not delivered at the Bank's head office 63 55 8 14.5 106 (d) collection and payment services 4,268 4,368 - 100 - 2.3 8,698 (e) other services 1,165 1,020 145 14.2 2,507

The caption "other services" in more detail is as follows:

Change 30/6/04 30/6/03 absolute % 2003 - Relations with banks 102 126 - 24 - 19.0 339 - Financing 83 - 83 ... 143 - Intermediation 709 754 - 45 - 6.0 1,511 - Others 271 140 131 93.6 514 Total 1,165 1,020 145 14.2 2,507

142 SECTION 3

GAINS FROM FINANCIAL TRANSACTIONS, NET

Change 30/6/04 30/6/03 absolute % 2003 3.1 CAPTION 60 "GAINS FROM FINANCIAL TRANSACTIONS, NET" 3,584 - 2,710 6,294 ... 9,229

30/6/04 Transactions securities currency other A.1 Revaluations 391 125,265 A.2 Write-downs 19,500 111,812 B. Other gains and losses 7,380 1,313 547 Total - 11,729 1,313 14,000 1. Government securities 1,358 2. Certificates of indebtedness - 14,137 3. Shares and other equity securities 2,574 4. Derivatives on securities as underlying - 1,524

2003 Transactions securities currency other A.1 Revaluations 751 2,521 A.2 Write-downs 6,882 592 B. Other gains and losses 8,009 3,124 2,298 Total 1,878 3,124 4,227 1. Government securities 3,403 2. Certificates of indebtedness 3,787 3. Shares and other equity securities - 1,735 4. Derivatives on securities as underlying - 3,577

30/6/03 Transactions securities currency other A.1 Revaluations 843 697 A.2 Write-downs 4,655 1,237 B. Other gains and losses - 123 1,103 662 Total - 3,935 1,103 122 1. Government securities 2,505 2. Certificates of indebtedness 3,369 3. Shares and other equity securities - 8,992 4. Derivatives on securities as underlying - 817

The positive variation in comparison to 2003 refers to the items “other operations” for 13,878,000 and “currency transactions” for 210,000. The item “securities transactions” shows a negative variation of 7,794,000.

143 Revaluations Write-downs Other gains Total and losses 1. Securities transactions 391 19,500 7,380 - 11,729 Government securities 3 1,344 2,699 1,358 Certificates of indebtedness 346 15,966 1,483 - 14,137 Shares and other equity securities 17 1,107 3,664 2,574 Securities purchases and sales to be settled - - - - Derivatives on securities as underlying 25 1,083 - 466 - 1,524 2. Currency transactions - 828 2,141 1,313 Exchange-rate gains 737 737 Currency derivatives 412 412 Forward currency transactions - 828 992 164 3. Other transactions 125,265 111,812 547 14,000 Interest rate derivatives 125,221 111,321 601 14,501 Derivatives hedging credit risk 44 491 - 54 - 501 Total 125,656 132,140 10,068 3,584

Write-drowns and gains on securities refer to own shares for 210 and 69 thousand euro. Further details of gains and losses stemming from derivatives contracts recorded or not in the income statement are given in the Board of Directors' Report and at section 10.5 of the explanatory notes.

144 SECTION 4

ADMINISTRATIVE COSTS

Change 30/6/04 30/6/03 absolute % 2003 4.1 AVERAGE NUMBER OF EMPLOYEES, BY GRADE 3,742 3,663 79 2.2 3,631 (a) managers 45 44 1 2.3 43 (b) officials 306 291 15 5.2 297 (c) other employees 3,391 3,328 63 1.9 3,291

Change 30/6/04 30/6/03 absolute % 2003 NUMBER OF OPERATING BRANCHES 393 392 1 0.3 393

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 80 A "PERSONNEL" 110,472 116,547 - 6,075 - 5.2 234,968 - wages and salaries 73,227 77,053 - 3,826 - 5.0 153,683 - social security costs 19,961 21,175 - 1,214 - 5.7 42,896 - termination indemnities 4,702 5,228 - 526 - 10.1 9,258 - pensions and similar commitments 7,258 7,140 118 1.7 17,764 - others 5,324 5,951 - 627 - 10.5 11,367

145 Change 30/6/04 30/6/03 absolute % 2003 CAPTION 80 B "OTHER ADMINISTRATIVE COSTS" 67,615 64,505 3,110 4.8 131,744 Postage and telephone 6,593 7,414 - 821 - 11.1 12,869 Maintenance of tangible and intangible fixed-assets 5,677 5,777 - 100 - 1.7 11,783 Professional fees 6,364 3,741 2,623 70.1 8,937 Advertising, promotion and publishing 2,983 2,026 957 47.2 6,675 Rental expenses 5,893 5,783 110 1.9 10,701 Donations 1,724 1,573 151 9.6 3,767 Other banking services 2,517 2,212 305 13.8 4,546 Office cleaning 1,790 1,752 38 2.2 3,544 Lighting and heating 1,912 2,419 - 507 - 21.0 4,114 EDP processing with third parties 2,527 2,576 - 49 - 1.9 5,310 Travelling and transport 1,629 1,873 - 244 - 13.0 3,650 Printing and stationery 1,385 1,487 - 102 - 6.9 2,566 Software maintenance 1,875 3,149 - 1,274 - 40.5 5,259 Hardware finance lease charges 2,188 1,750 438 25.0 3,205 Banking premises security services 1,469 1,605 - 136 - 8.5 3,177 Insurance premiums 1,017 1,388 - 371 - 26.7 2,165 Association fees 592 528 64 12.1 598 Indirect taxes 14,577 11,935 2,642 22.1 26,437 - stamp duty and stock exchange contracts 10,195 9,245 950 10.3 20,050 - "imposta sostitutiva" Presidential Decree 601/73 1,900 1,302 598 45.9 3,240 - ICI (Municipal real estate tax) 663 647 16 2.5 1,307 - local council taxes 756 491 265 54.0 1,457 - taxes paid abroad 973 194 779 ... 248 - INVIM (tax on increased value on properties) 6 16 - 10 - 62.5 32 - penalties for late tax rolls 54 5 49 ... 39 - other indirect taxes 30 35 - 5 - 14.3 64 Others 4,903 5,517 - 614 - 11.1 12,441

Item “other” includes the cost of assets of a unit value not exceeding 516 euro (Lit. 1,000,000) purchased during the year for a total price of 692 thousand euro (30/06/03: 328 thousand euro).

146 SECTION 5

DEPRECIATION AND AMORTIZATION, PROVISIONS AND RECOVERIES

Change 30/6/04 30/6/03 absolute % 2003

CAPTION 90 "DEPRECIATION AND AMORTIZATION OF INTANGIBLE AND TANGIBLE FIXED ASSETS" 64,046 60,682 3,364 5.5 123,207

Depreciation and amortization comprise the following: Change 30/6/04 30/6/03 absolute %2003 Tangible fixed assets - Properties 2,405 2,252 153 6.8 4,579 - Furniture and fittings 422 418 4 1.0 831 - Machinery and equipment 2,352 2,320 32 1.4 4,785 - Leased assets 47,138 45,246 1,892 4.2 90,279 Total (a) 52,317 50,236 2,081 4.1 100,474 Intangible fixed assets (1) - Software 4,224 3,839 385 10.0 8,703 - Installation costs 455 418 37 8.9 1,405 - Goodwill 5,271 4,336 935 21.6 8,671 - Others 1,779 1,853 - 74 - 4.0 3,954 Total (b) 11,729 10,446 1,283 12.3 22,733 Total (a+b) 64,046 60,682 3,364 5.5 123,207

1) Amounts relating to the ten-year tax on Increased Value of Immovable Property (INVIM), for 6 thousand euros, which are included under intangible fixed assets (Section 4, table 4.2 - Other decreases), are recorded at Caption 80b “Other administrative expenses”. Depreciation and amortization relative to the Bank’s tangible fixed assets portfolio take into consideration the useful life of each asset and correspond to the maximum valuations permitted by tax law.

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 100 "PROVISIONS FOR RISKS AND CHARGES" 1,009 2,663 - 1,654 - 62.1 3,966 Provisions: - convertible bonds 809 - 809 ... 116 - for in-house insurance scheme - 230 - 230 - 100.0 500 - law 133/99 - 300 - 300 ... - - other 200 2,133 - 1,933 - 90.6 3,350

147 Change 30/6/04 30/6/03 absolute % 2003 5.1 CAPTION 120 "PROVISIONS FOR LOAN LOSSES AND FOR GUARANTEES AND COMMITMENTS" 97,820 27,784 70,036 ... 66,781 (a) provisions for loan losses 97,820 27,784 70,036 ... 66,510 including: - lump-sum allowances for country risks - - - ... - - other lump-sum allowances 6,843 5,516 1,327 24.1 6,858 (b) provisions for guarantees and commitments - - - ... 271 including: - lump-sum allowances for country risks ------other lump-sum allowances - - - - -

Item (a) “Allowances for loan losses” includes 6,228 thousand euro stemming from the operation of securitisation carried out at December 2000.

Other provisions for 7,477 thousand euro , which are connected to interest on overdue loans realised during the period but retained to be not recoverable, are not recorded in the Income Statement.

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 130 "RECOVERIES OF LOANS AND REVERSALS OF PROVISIONS FOR GUARANTEES AND COMMITMENTS" 3,028 3,761 - 733 - 19.5 9,195 - bad loans-principal 1,532 1,403 129 9.2 2,189 - watchlists-principal 87 527 - 440 - 83.5 599 - interest-others 53 - 53 ... 522 - interest arrears on loans 453 380 73 19.2 790 - credits written-off 806 1,293 - 487 - 37.7 5,087 - interest credits related to tax collection services - 8 - 8 - 100.0 8 -country risks ------provisions for guarantees and commitments 97 150 - 53 - 35.3 -

These recoveries are related to previously written down credits for which the reason for writing down ceases, fully or in part, to apply.

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 140 "ADDITIONAL PROVISIONS FOR LOAN LOSSES" - - - - 18,000

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 150 "WRITE-DOWNS TO FINANCIAL FIXED ASSETS" - - - - 107

148 SECTION 6

OTHER INCOME STATEMENT CAPTIONS

Change 30/6/04 30/6/03 absolute % 2003 6.1 CAPTION 70 "OTHER OPERATING INCOME" 139,428 76,732 62,696 81.7 160,752 Gains from sale of credits 61,125 - 61,125 ... - Leasing rents 60,020 58,796 1,224 2.1 120,950 Amounts recovered from third parties 16,176 15,314 862 5.6 31,516 including: stamp duty recovered 9,233 9,313 - 80 - 0.9 18,657 Rental income 1,244 1,275 - 31 - 2.4 2,486 Repayments from leased assets 458 435 23 5.3 895 Gains from transfer and revaluation of leased assets 98 18 80 ... 245 Premiums received on options - 79 - 79 - 100.0 79 Others 307 815 - 508 - 62.3 4,581

Change 30/6/04 30/6/03 absolute % 2003 6.2 CAPTION 110 "OTHER OPERATING EXPENSES" 3,224 1,873 1,351 72.1 7,747 Recognised losses on leased assets sold 2,011 1,404 607 43.2 6,648 Leasing charges 318 352 - 34 - 9.7 848 Premiums paid on hedging options 895 117 778 ... 251

Change 30/6/04 30/6/03 absolute % 2003 6.3 CAPTION 180 "EXTRAORDINARY INCOME" 7,174 14,470 - 7,296 - 50.4 30,028 Surplus in reserves for taxation - - - - 3,028 Gains from releases: furniture and premises 758 185 573 ... 682 Gains from releases: holdings - 12,452 - 12,452 - 100.0 13,587 Gains from sale of activities - 1 - 1 - 100.0 2,494 Taxes paid abroad and tax sparing 4,514 636 3,878 ... 1,566 Recoveries for in-house insurance scheme 1,213 - 1,213 ... - Other 689 1,832 - 1,143 - 62.4 10,237 Change 30/6/04 30/6/03 absolute % 2003 6.4 CAPTION 190 "EXTRAORDINARY EXPENSES" 3,534 3,908 - 374 - 9.6 7,021 Retirement incentives 2,136 1,902 234 12.3 3,828 Losses from releases: holdings 6 - 6 ... - Losses from releases: furniture and premises 95 16 79 ... 360 Other 1,297 1,990 - 693 - 34.8 2,833

149 Variazione 30/6/04 30/6/03 assoluta % 2003 CAPTION 220 "INCOME TAXES" 14,850 46,250 - 31,400 - 67.9 67,000 Income taxes of the period 25,504 49,395 - 23,891 - 48.4 81,956 Variation of taxes paid in advance - 9,539 3,037 - 12,576 ... - 1,187 Variation of deferred taxes- 1,115 - 6,182 5,067 ... - 13,769

As stated in section 1, part A of the explanatory notes, for the purposes of calculating deferred tax assets and liabilities in addition to establishing a tax rate for the accounting period ending 30th June 2004, the temporal horizon was extended to an indefinite period as future trends in taxable income reasonably suggest that the non- recovery of tax paid can be considered extremely unlikely. Deferred tax after 2009 determined a reduced liability to tax of 15,326 thousand, of which 12,876 thousand due to temporary differences arising in previous accounting periods.

150 SECTION 7

OTHER INFORMATION REGARDING THE INCOME STATEMENT

7.1 GEOGRAPHIC DISTRIBUTION OF REVENUES

Banca Carige prevalently works in Italy; the first branch outside Italy was opened in Nice (France) on 9/7/94.

1st half 2004 Captions Italy Other countries Total 10 Interest income and similar revenues 267,563 1,296 268,859 30 Dividends and other revenues 22,388 - 22,388 40 Commission income 89,821 296 90,117 60 Gains from financial transactions, net 3,578 6 3,584 70 Other operating income 139,393 35 139,428 Total 522,743 1,633 524,376

2003 Captions Italy Other countries Total 10 Interest income and similar revenues 543,391 3,087 546,478 30 Dividends and other revenues 63,957 - 63,957 40 Commission income 178,675 494 179,169 60 Gains from financial transactions, net 9,193 36 9,229 70 Other operating income 160,712 40 160,752 Total 955,928 3,657 959,585

7.1 GEOGRAPHIC DISTRIBUTION OF REVENUES

1st half 2003 Captions Italy Other countries Total 10 Interest income and similar revenues 277,325 1,588 278,913 30 Dividends and other revenues 57,177 - 57,177 40 Commission income 85,666 256 85,922 60 Gains from financial transactions, net - 2,728 18 - 2,710 70 Other operating income 76,717 15 76,732 Total 494,157 1,877 496,034

151

REPORT OF THE INDEPENDENT AUDITORS

152

HALF YEARLY CONSOLIDATED ACCOUNTS 2004

BANCA CARIGE GROUP

155 CONSOLIDATED FINANCIAL HIGHLIGHTS

Change % 30/6/04 31/3/04 31/12/03 30/6/03 06/04 06/04 12/03 06/03 BALANCE SHEET (1) Total assets 18,002.2 17,684.9 15,918.3 15,697.2 13.1 14.7 Funding 14,650.1 14,132.5 12,897.4 12,607.2 13.6 16.2 - Customer deposits (a) 12,842.9 12,694.8 11,373.9 10,872.4 12.9 18.1 * Amounts owed to customers 7,636.0 7,627.1 6,861.1 6,665.8 11.3 14.6 * Debts evidenced by certificates 5,206.9 5,067.7 4,512.8 4,206.6 15.4 23.8 - Deposits from banks 1,289.0 916.4 1,006.0 1,334.4 28.1 -3.4 - Funds managed on behalf of third parties 1.1 1.3 0.4 0.4 175.0 175.0 - Subordinated loans 517.1 520.0 517.1 400.0/ - 29.3/ Other Financial Intermediation Activities (OFIA) (b) 15,432.9 15,134.7 14,316.9 14,393.9 7.8 7.2 - Assets under management 7,868.8 7,698.7 7,436.7 7,197.9 5.8 9.3 - Assets in custody 7,564.1 7,436.0 6,880.2 7,196.0 9.9 5.1 Total Financial Intermediation Activities (TFIA) (a+b) 28,275.8 27,829.5 25,690.8 25,266.3 10.1 11.9 Lending (2) (3) 15,547.7 15,183.8 13,737.6 13,461.3 13.2 15.5 - Loans to customers (2) (3) 11,386.1 11,166.5 10,251.3 9,733.8 11.1 17.0 - Loans to banks (2) 1,241.9 1,345.7 922.3 898.4 34.7 38.2 - Securities 2,919.7 2,671.6 2,564.0 2,829.1 13.9 3.2 * investment securities 209.7 208.8 214.7 273.7 -2.3 -23.4 * trading securities 2,710.0 2,462.8 2,349.3 2,555.4 15.4 6.0 Shareholders' equity (4) 1,495.3 1,508.0 1,504.3 1,301.0 -0.6 14.9

GROUP INSURANCE COMPANIES (1) Total premiums 337.6 131.9 670.7 319.4 5.7 Damages paid-out 201.6 96.9 403.5 208.4 -3.3 INCOME STATEMENT (1) Operating income 165.0 57.0 206.7 96.9 70.3 Income from ordinary activities 63.6 44.5 121.5 68.6 -7.2 Income before taxation 69.1 43.1 156.4 87.9 -21.4 Net income 47.8 23.4 84.7 43.7 9.4 RESOURCES (5) Number of branches 491 489 456 455 7.7 7.9 Number of employees 4,691 4,706 4,354 4,422 7.7 6.1 Insurance companies: - number of branches 413 413 416 427 -0.7 -3.3 - number of employees 386 387 377 396 2.4 -2.5 FINANCIAL RATIOS Non interest income /Gross operating income 55.00% 49.34% 50.69% 50.28% Operating costs /Gross operating income 64.07% 71.54% 72.83% 73.91% Income before taxation /Shareholders' equity (4) 4.62% 2.86% 10.40% 6.76% ROE 3.20% 1.55% 5.63% 3.36% ROAE (6) 3.19% 1.55% 6.41% 3.35% SOLVENCY RATIOS (7) Risk-weighted assets (RWA) 12,036.0 12,156.1 11,254.3 11,071.7 6.9 8.7 Tier 1 % of RWA 7.23% 7.51% 8.61% 6.87% Total capital % of RWA 9.70% 10.16% 11.67% 8.91% (1) Millions of Euros. (2) Gross of allowances for credit risks. (3) Including leased fixed assets. (4) Including reserves for general banking risks. (5) Statistics at the end of period. (6) Net income on average shareholders' equity (Return On Average Equity). (7) Ratios communicated to the Bank of Italy, excluding ratios at 31/3/2004.

156 BASIS OF CONSOLIDATION

Fondazione Cassa di Basilese WestLB (1) Risparmio di CNCE (1) (2) Insurance El Monte (1) Gefip Holding (1) Others (1) (3) Genova e Group (1) (4) Imperia (1)

43,37% 11,02% 7,47% 5,63% 2,31% 2,23% 27,97%

BANCA CARIGE SpA

SUBSIDIARIES ASSOCIATED COMPANIES

BANKING ACTIVITIES BANKING ACTIVITIES Banca del Monte di Lucca SpA (54.00%) Frankfurter Bankgesellschaft AG (47.50%)

Cassa di Risparmio di Savona SpA (95.90%)

Caricarrara Holding SpA (5) (6) (100.00%)

Cassa di Risparmio di Carrara SpA (6) (90.00%) FINANCIAL ACTIVITIES INSURANCE ACTIVITIES Ligure Leasing SpA 100,00% Carige Assicurazioni SpA (9) (98.11%)

Argo Finance One Srl (60.00%) Carige Vita Nuova SpA (100.00%) 37.50% Priamar Finance Srl (6) (60.00%)

Carige Asset Management SGR SpA (6) (99.50%) 0.50% 22,50% INSTRUMENTAL ACTIVITIES Assi90 Srl (10)

Galeazzo Srl (7) (100.00%) AG Srl (10) (100.00%) Columbus Carige Immobiliare SpA (99.98%) Savona 2000 Srl (10) (80.00%) Immobiliare Ettore Vernazza SpA (8) (90.00%) Assimilano Srl (10) (60.00%) Recina Servizi Srl (10) (25.00%) Immobiliare Carisa Srl 100,00% TRUSTEE ACTIVITIES OTHER ACTIVITIES

Centro Fiduciario SpA (76.93%) 20,00% 4.00% Autostrada dei Fiori SpA (16.62%) Banca Carige's share holding is shown in brackets. (1) Quota calculated on the basis of ordinary shares only. (2) Holding via subsidiaries Compagnie Financière Eulia (6.61%) and CDC Ixis (4.41%). Following internal reorganisation, holding of CNCEP – Caisse Nationale des Caisses d’Epargne et de Prévoyance was transferred to Eulia. (3) Direct holding of 4.989% and indirect holding of 2.480% via subsidiary WestLB (Italia) Finanziaria SpA. (4) Holding via subsidiary Basilese Life Assurance. (5) Holding via Al'Andalus Foreign Investments s.l. (6) The company was created on 21st April 2004 following the break up of the holding company Carinord 2. (7) Incorporation into the Banca Carige Group received Bank of Italy authorisation on 25th June 2004 (8) The company has a 0.02% holding in Columbus Carige Immobiliare SpA. (9) The company holds 10% of its own shares. (10) The company holds 1.25% of its own shares. (11) Insurance instrumental companies (insurance agencies).

157 CONSOLIDATED BOARD OF DIRECTORS’ REPORT

158 To the Shareholders of the Banca Carige Group Within the area there were, however, different companies, performances amongst the major economies. In Germany, domestic demand continued to drop, These consolidated financial statements have but a positive balance of trade helped to offset been prepared in accordance with Legislative falls in consumption and investments. The rise decree 87/92 in addition to the specific in the euro did not, in fact, affect growing requirements stated in the Bank of Italy’s ruling demand for German products especially from of 30/7/92 and subsequent modifications with China and south east Asia. In France, regards to the accounting procedures to be consumption and investment levels helped to followed in the preparation of consolidated boost the economy in the face of slight falls for banking statements. French products from abroad. In Spain, too, The Bank has taken advantage of article 82 of consumption on the home front was the CONSOB’s ruling 11971 of 14/5/99 and the dominant growth factor. The Spanish economy, exemption contained therein with regards to the in fact, grew at the highest level in Europe. publication of fourth quarter statements on the Investment levels were higher in the building condition that these consolidated annual sector rather than in plant and machinery. The statements are made public no later than 75 country continued to record a negative balance days after the close of the half year accounting of trade. period. The Italian economy grew at a level below the average recorded for euroland in the first six months of the year. In particular, there was an THE FIRST SIX MONTHS improvement in domestic demand for consumer IN ITALY AND ABROAD goods, particularly consumer durables, as well as in investment levels both in the building and machinery sectors. The balance of trade The world’s economy recorded generalised remained negative and was marked also by a growth during the first half of the year, fall in imports. On the employment front, there particularly in the United States and China. was a fall in demand. In fact, employment rose There was an upturn in domestic demand also in at its lowest rate in seven years, whilst Japan and in Europe and demand from Asia unemployment remained substantially and China helped to keep foreign trade unchanged at 8.5 per cent, having since 2003 buoyant. However, tensions in the Middle East fallen every half year. The consumer price index allied to rising oil prices could influence for June was 2.2 per cent, in comparison to 2.3 negatively production and price levels in the per cent in December 2003 and 1.9 per cent in following months. March 2004. In the United States, economic expansion, which Despite the less than vibrant context, the was particularly strong in the manufacturing Ligurian economy showed some signs of sector, spurred domestic demand. Exports held recovery. Although consumption levels remained back the rate of growth in comparison to the contained, there was expansion in productive end of 2003 despite the surging Asian activities, particularly in the manufacturing economies and the weak dollar. sector, which in 2003 had been the worst hit by Growth rates for the European Monetary Union the negative economic situation. In the building (EMU) were higher than expected thanks to, on industry, there was greater growth in the private the one hand, rises in net exports despite the residential sector in comparison to the sector of strong euro and, on the other, an upturn in public works. The region’s ports all had domestic demand. However, consumer increases in the levels of containers and goods confidence continues to be low as a result of handled, whilst passenger traffic fell. The series rising prices and a worsening labour market. In of events linked to Genoa as European Culture fact, unemployment figures for euroland Capital for 2004 generated an increase in the worsened in comparison to the end of 2003: the number of tourists visiting the city and the area’s unemployment rate was 9 per cent in surrounding area with immediate knock-on May in comparison to December 2003’s figure benefits for related sectors of the local economy. of 8.8 per cent. After several years of considerable growth on the property market, the first half of the year saw a

159 slowdown. A similar pattern was also recorded other members of the board are Mr Semeria on the labour market. Unemployment in the and Mr Traverso. region remained stable at 6 per cent. Inflation On 10th May, the Board of Directors of Banca for the city of Genoa was at 2 per cent. Carige approved the merger of Ligure Leasing into the Savona bank, a project already approved by the respective boards of the two companies involved. The merger was given HEADLINE EVENTS FOR THE BANCA Bank of Italy authorisation on 28th June. CARIGE GROUP IN THE FIRST HALF OF The General Meeting of Banca del Monte di THE YEAR Lucca approved the renewal of both its Board of Directors and Board of Statutory Auditors. The Board of Directors is chaired by Mr Dallari On 20th April, Argo Mortgage 2 Srl was formed (Banca del Monte di Licca Foundation); Banca as special purpose vehicle in the securitisation of Carige’s representatives on the Board are Mr performing mortgages carried out by the Group Tori as Deputy Chairman and board members leader, Banca Carige, pursuant to Law 130/99. Mr Benelli, Mr Buglioni, Mr Merella and Mr The company’s share capital is euro 10,000; 5 Remuzzi. Turning to the statutory auditors, per cent of the capital is held by Columbus Carige is represented by Mr Rosina, who also Carige Immobiliare, whilst the remaining 95 per acts as Chairman. Other members are Mr cent is held by the Dutch-registered company, Traverso and Mr Lunardi. Stitching Faro. Argo Mortgage 2’s sole director The Lucca bank opened two new branches is Mr Tori; the company’s board of statutory during the first six months of the year. auditors is chaired by Mr Costigliolo, with Mr On 16th January Cassa di Risparmio di Carrara Vignali and Ms Giribaldi as board members. was incorporated into the Banca Carige Group On 30th June 2004 the transaction referred to according to the terms and conditions stipulated above was carried out: a mortgage balance of in the contract of sale on 16th July 2003 and 864.5 m was securitised. The valuation of the following the approval of the Boards of Statutory credits sold produced an excess spread of 61.1 Auditors of Banca Carige and Cassa di m, with the amount recorded at ‘other operating Risparmio di Carrara. Banca Carige acquired revenues’ in the P&L. The securities issued by the 41.05 per cent of the share capital of the SPV Argo Mortgage 2 in July included class A holding Carinord 2 and via this achieved a 90 securities (93.5 per cent of the total issue) for per cent holding in Cassa di Risparmio di 808.3 m with ratings by Fitch and Moody’s of, Carrara. Subsequently, the transaction was respectively, AAA and Aaa; the remaining issue completed via the break up of Carinord 2: was in the form of class B securities (3.1 per Carige’s share holding in Cassa di Risparmio di cent of the total) for 26.8 m (rating: AA-/Aa2) Carrara was transferred to the newly-formed and class C securities rated BBB/Baa2 totalling Caricarrara Holding SpA, a fully-owned 29.4 m (3.4 per cent of the total amount subsidiary of Banca Carige, and the shares of issued). Carinord 2 were annulled. In the near future On 21st June 2004 Mr Rosina resigned as Carricara Holding SpA will be fully incorporated chairman and member of the Banca Carige into Banca Carige so giving the latter direct board of statutory auditors. Pursuant to the ownership of Cassa di Risparmio di Carrara. Bank’s by laws, the chairmanship of the board Sole director for Carricara Holding is Mr passed to an existing board member, Mr Sanguinetto, General Manager of Banca Semeria, whose place on the board in turn was Carige. The Board of Statutory Auditors is as filled by Mr Scotton. follows: Chairman, Mr Rosina, board members, During the period Banca Carige opened a new Mr Semeria and Mr Traverso. branch in Gavi, in neighbouring southern Following the changes to the ownership structure Piedmont. of Cassa di Risparmio di Carrara, the bank’s The shareholders of the subsidiary Cassa di general meeting of 19th February 2004 Risparmio di Savona during their AGM held on approved the following appointments: 16th April appointed a new board of statutory Chairman, Mr Gasparri (Cassa di Risparmio di auditors; representing Banca Carige is Mr Carrara Foundation); Deputy Chairman, Mr Rosina, who was appointed Chairman. The two Berneschi (Banca Carige); Managing Director,

160 Mr Coppa; board members, Mr Baldini, Mr 8,672 Carige Assicurazioni’s shares and Benelli, Mr Laviosa, Mr Sanguinetto. Banca 6,400,000 Carige Vita Nuova shares. The Carige’e representative on the Carrara bank’s acquisition brought Banca Carige’s holdings in board of statutory auditors is Mr Traverso, who the two subsidiaries to, respectively, 98.11 per is also Chairman. Other board members include cent (Carige Assicurazioni’s own share holding: Mr Vannucci and Mr Semeria. 1.25 per cent) and 100 per cent. The first six months of the year saw important In June extraordinary shareholders’ meetings of changes for the Group’s two insurance the Group’s banks and insurance companies companies. On 31st March the share capital were called in order to resolve the necessary increase of Carige Assicurazioni was completed. revisions to the companies’ by laws in the light Banca Carige, as authorised by the Bank of of changes to Italian company law in force from Italy, subscribed the residual 18,948 shares 1st January 2004. issued as part of the transaction for an Turning to key events for the other financial and investment of euro 22,263,900. The insurance instrumental companies of the Group, on 14th company’s new share capital amounts to euro January Carige finalised the acquisition of a 137,872,800 composed by 140,400 shares further 55 per cent of the share capital of with a nominal value of euro 982 each. Banca Priamar Finance Srl from Stitching Faro. Counter Carige’s holding in the subsidiary rose to value for the transaction was euro 5,500. Banca 91.932 per cent. Carige has now a 60 per cent holding in the On 19th April the general meetings of the two company. insurance companies appointed their respective On 29th January, Carige Asset Management boards of directors and statutory auditors. Mr SGR received Bank of Italy authorisation to carry Menconi was appointed Chairman of Carige out asset management business (with effect 10th Assicurazioni with Mr Berneschi as his deputy. January 2004). Other board members are Mr Alberici, Mr As a conclusion to the Group’s M&A activity Bozzano (later replaced by Mr Mussi on 14th during the first half of the year, on 25th June June following Mr Bozzano’s resignation), Mr 2004 the Bank of Italy communicated the formal Fresco, Mr Paganelli and Mr Poggio. The board enrolment of the following companies into the of statutory auditors is chaired by Mr Semeria; Banca Carige Group: Carige Asset the other members are Mr Traverso and Mr management SGR (with effect 10th January Strada. Mr Berneschi was appointed Chairman 2004); Priamar Finance (with effect 14th of Carige “Vita Nuova” with Mr Scajola as his January 2004); Carricarra Holding (with effect deputy. Other board members are Mr Menconi, 21st April 2004); Cassa di Risparmio di Carrara Mr Dadduzio, Mr Ferrero, Mr Mager and Mr (with effect 21st April 2004). Magnano. The board of statutory auditors is The Group’s number of employees rose by 346 chaired by Mr Semeria; the other members are to 5,077 at 30th June 2004, following the Mr Traverso and Mr Catalfamo. acquisition of Cassa di Risparmio di Carrara. On 14th June the purchase was completed on Excluding Carrara personnel (365), the number the part of Banca Carige of the Swiss insurance of employees for the Group actually fell by 19. group, La Basilese’s holding in the company. In Banking staff numbered 4,691, whilst insurance accordance with a previous agreement between personnel totalled 386. the parties in 1997, Banca Carige acquired

161 FINANCIAL INTERMEDIATION ACTIVITIES

Net assets for the Banca Carige Group totalled Total Financial Intermediation Activities (TFIA), 18,002.5 m, rises of 13.1 and 14.7 per cent made up by direct and indirect deposits, over December and June 2003. recorded an increase of 10.1 per cent in the first six months of the year to 28,275.8 m; in annual terms the increase is 11.9 per cent.

TOTAL FINANCIAL INTERMEDIATION ACTIVITIES (millions of euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 06/04 06/04 12/03 06/03 Total (A+B) 28.275,8 27.829,5 25.690,8 25.266,3 10,1 11,9

Direct deposits (A) 12.842,9 12.694,8 11.373,9 10.872,4 12,9 18,1 % Total 45,4% 45,6% 44,3% 43,0% Indirect deposits (OFIA) (B) 15.432,9 15.134,7 14.316,9 14.393,9 7,8 7,2 % Total 54,6% 54,4% 55,7% 57,0% - Assets under management 7.868,8 7.698,7 7.436,7 7.197,9 5,8 9,3 % Total 27,8% 27,7% 28,9% 28,5% % OFIA 51,0% 50,9% 51,9% 50,0% - Assets in custody 7.564,1 7.436,0 6.880,2 7.196,0 9,9 5,1 % Total 26,8% 26,7% 26,8% 28,5% % OFIA 49,0% 49,1% 48,1% 50,0%

Total funds amounted to 14,650.1m, up 13.6 of the period, the increases in the aggregate per cent in comparison to December 2003 and were of 5.6 per cent over 31/12/03 and 8.1 16.2 per cent over June 2003. Excluding the per cent over 30/6/03. contribution of Cassa di Risparmio di Carrara, incorporated into the Group during the course

162 FUNDING ( millions of euros ) Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03 Total (A+B+C+D) 14.650,1 14.132,5 12.897,4 12.607,2 13,6 16,2

Direct deposits (A) 12.842,9 12.694,8 11.373,9 10.872,4 12,9 18,1 -Amounts owed to customers 7.636,0 7.627,1 6.861,1 6.665,8 11,3 14,6 current accounts 6.680,0 6.508,7 6.066,5 5.739,6 10,1 16,4 repurchase agreements 344,2 503,6 254,1 412,1 35,5 - 16,5 saving deposits 604,4 607,7 534,6 510,1 13,1 18,5 loans 0,2 0,2 - 0,1 … 100,0 other borrowings 7,2 6,9 5,9 3,9 22,0 84,6 -Debts evidenced by certificates 5.206,9 5.067,7 4.512,8 4.206,6 15,4 23,8 bond certificates 4.759,3 4.626,2 4.073,5 3.721,7 16,8 27,9 certificates of deposits 336,2 347,6 351,4 387,3 - 4,3 - 13,2 outstanding cheques 111,4 93,9 88,0 97,6 26,6 14,1

-short term deposits 8.090,4 7.956,4 7.271,2 7.118,8 11,3 13,6 % Total 63,0 62,7 63,9 65,5 -long term deposits 4.752,5 4.738,4 4.102,7 3.753,6 15,8 26,6 % Total 37,0 37,3 36,1 34,5 Amounts owed to credit institutions (B) 1.289,0 916,4 1.006,0 1.334,4 28,1 - 3,4 Deposits 701,1 419,1 612,0 928,6 14,6 - 24,5 Financing 374,5 370,9 374,0 317,0 0,1 18,1 Current accounts 11,6 27,0 19,9 88,8 - 41,7 - 86,9 Repurchase agreements 201,8 99,4 - - … … Others - - 0,1 - - 100,0 …

Funds managed on behalf 1,1 1,3 0,4 0,4 175,0 175,0 of third parties (C)

Subordinated loans (D) 517,1 520,0 517,1 400,0 0,0 29,3

Direct deposits recorded an increase of 12.9 per half of the year, whilst short-term funding cent since 31/12/03 to reach 12,842.9 m. The (8,090.4 m) increased by 11.3 per cent. rise over twelve months was of 18.1 per cent. Families make up 67.3 per cent of direct Increases over six and twelve months without the deposits (30/6/03: 67 per cent); non financial contribution of Cassa di Risparmio di Carrara and family firms come next at 19.5 per cent. were, respectively, of 5.8 and 10.7 per cent. By maturities, medium/long-term borrowing (4,752.5 m) rose by 15.8 per cent in the first

DIRECT DEPOSITS(1) - DISTRIBUTION BY SECTOR(millions of Euros)

30/6/04 31/12/03 30/6/03 %%% Amounts owed to customers 7,636.0 6,861.1 6,665.8 Public Administration 314.6 4.1% 248.5 3.6 % 221.7 3.3% Financial institutions 364.6 4.8% 281.0 4.1% 406.8 6.1% Non-financial institutions and personal businesses 1,488.1 19.5% 1,282.6 18.7% 1,240.7 18.6% Private social bodies 284.3 3.7% 252.2 3.7% 237.4 3.6% Families 5,136.0 67.3% 4,706.4 68.6% 4,465.5 67% Total residents 7,587.6 99.4% 6,770.7 98.7% 6,572.1 98.6% Rest of the world 48.4 0.6% 90.4 1.3% 93.7 1.4% Total 7,636.0 100.0% 6,861.1 100.0% 6,665.8 100.0%

Debts evidenced by certificates 5,206.9 4,512.8 4,206.6

TOTAL DIRECT DEPOSITS 12,842.9 11,373.9 10,872.4 (1) Captions 20 and 30 of Liabilities and Stockholders' equity.

163 Liguria’s share of direct deposits, the region cent. Five regions – Tuscany, Latium, Sicily, accounts for the entirety of the EMTN Lombardy and Piedmont – account for 24.7 per programme, dropped from 76.6 to 69.6 per cent of the aggregate total.

DIRECT DEPOSITS (1) - GEOGRAPHIC DISTRIBUTION (millions of euros)

30/6/04 31/12/03 30/6/03 %%%

Liguria 8.945,9 69,6% 8.492,6 74,8% 8.320,2 76,6% Tuscany 1.182,6 9,2% 380,7 3,3% 336,7 3,1% Latium 689,7 5,4% 635,0 5,6% 569,0 5,2% Sicily 518,4 4,0% 485,0 4,3% 448,9 4,1% Lombardy 419,4 3,3% 391,4 3,4% 347,7 3,2% Piedmont 355,2 2,8% 333,2 2,9% 283,0 2,6% Emilia Romagna 220,0 1,7% 185,2 1,6% 177,7 1,6% Apulia 162,9 1,3% 152,3 1,3% 134,3 1,2% Veneto 116,6 0,9% 117,1 1,0% 103,7 1,0% Sardinia 113,6 0,9% 95,1 0,8% 62,3 0,6% Marches 66,6 0,5% 52,7 0,5% 45,1 0,4% Umbria 24,0 0,2% 19,9 0,2% 18,0 0,2% Total Italy 12.814,9 99,8% 11.340,2 99,7% 10.846,6 99,8% Abroad 28,0 0,2% 33,7 0,3% 25,8 0,2% Total 12.842,9 100,0% 11.373,9 100,0% 10.872,4 100,0%

(1) Balance Sheet (Liabilities) captions 20 and 30.

Amounts owed to banks totalled 1,289 m, a rise custody, which rose 9.9 per cent in the period to over 28.1 per cent in comparison to the end of 7,564.1 m, following an upturn in demand for 2003, but a fall of 3.4 per cent over June 2003. Italian government stock. Savings management This caption is predominantly in the form of rose 5.8 per cent to 7,868.8 m, with positive interbank deposits, which totalled 701.1 m, an results recorded across a range of products: increase of 14.6 per cent over 31/12/03. Sale mutual funds, asset management, and repurchase agreements also reached a bancassurance. In comparison to June 2003, significant level. The contribution of Cassa di savings management rose by 9.3 per cent, whilst Risparmio di Carrara is minimal given that assets in administration increased by 5.1 per almost the entirety was in the form of amounts cent. owed to Banca Carige. The Group’s insurance companies recorded Indirect deposits reached 15,432.9, an rises in both life assurance and accident increase of 7.8 per cent over 31st December insurance premiums; the former rose 11 per 2003, and one of 7.2 per cent over last June. cent to 87.8 m, whilst the latter increased by 3.9 Within the aggregate, during the first six months per cent to 249.7 m. of the year there was a growth in assets in

164 INDIRECT DEPOSITS (millions of euros) Change % 30/6/04 31/3/04 31/12/03 30/6/03 06/04 06/04 12/03 06/03 Total (A+B) 15.432,9 15.134,7 14.316,9 14.393,9 7,8 7,2

Assets under management (A) 7.868,8 7.698,7 7.436,7 7.197,9 5,8 9,3 - Mutual funds and unit trusts 4.571,9 4.540,0 4.369,9 4.251,8 4,6 7,5 - Private banking 2.449,2 2.365,3 2.319,5 2.271,6 5,6 7,8 including: Security management (1) 1.433,7 1.339,8 1.328,2 1.213,8 7,9 18,1 Mutual funds management 1.015,5 1.025,5 991,3 1.057,8 2,4 - 4,0 - Bancassurance products 847,7 793,4 747,3 674,5 13,4 25,7

Assets in custody (B) 7.564,1 7.436,0 6.880,2 7.196,0 9,9 5,1 - Government securities 4.108,2 3.977,1 3.524,3 3.952,3 16,6 3,9 - Others 3.455,9 3.458,9 3.355,9 3.243,7 3,0 6,5 (1) The figure includes the entire securities portfolio of the insurance subsidiaries.

Indirect deposits are concentrated amongst total. Financial institutions account for 11.7 per families, which make up 81.1 per cent of the cent of the aggregate.

INDIRECT DEPOSITS - DISTRIBUTION BY SECTOR (millions of euros)

30/6/04 31/12/03 30/6/03 %%%

Public Administration 246,2 1,6% 175,7 1,2% 178,2 1,2% Financial institutions 1.801,5 11,7% 1.562,3 10,9% 1.661,8 11,5% Non-financial institutions and personal businesses 691,3 4,5% 626,2 4,4% 602,1 4,2% Private social bodies 127,5 0,8% 110,1 0,8% 109,5 0,8% Families 12.522,2 81,1% 11.804,6 82,4% 11.815,9 82,1% Total residents 15.388,6 99,7% 14.278,9 99,7% 14.367,5 99,8% Rest of the world 44,3 0,3% 38,0 0,3% 26,4 0,2% Total 15.432,9 100,0% 14.316,9 100,0% 14.393,9 100,0%

As for direct deposits, there was increased cent in June 2003 to 79 per cent. Tuscany’s geographical diversification in indirect deposit share rose thanks to the incorporation of Cassa sources, albeit less marked than for direct di Risparmio di Carrara. deposits. Liguria’s share dropped from 81.9 per

165 INDIRECT DEPOSITS - GEOGRAPHIC DISTRIBUTION (millions of euros)

30/6/04 31/12/03 30/6/03 %%%

Liguria 12.194,1 79,0% 11.731,3 82,0% 11.792,6 81,9% Tuscany 904,6 5,9% 286,3 2,0% 290,5 2,0% Latium 550,1 3,6% 554,7 3,9% 571,3 4,0% Piedmont 437,8 2,8% 407,7 2,8% 400,3 2,8% Lombardy 418,4 2,7% 407,3 2,8% 408,9 2,8% Sicily 362,5 2,3% 370,2 2,6% 368,4 2,6% Emilia Romagna 183,7 1,2% 180,9 1,3% 178,6 1,2% Veneto 107,6 0,7% 106,7 0,7% 103,2 0,7% Marches 103,8 0,7% 107,1 0,7% 113,7 0,8% Apulia 100,4 0,7% 94,7 0,7% 97,7 0,7% Umbria 31,5 0,2% 32,4 0,2% 36,1 0,3% Sardinia 31,3 0,2% 30,4 0,2% 26,0 0,2% Total Italy 15.425,8 100,0% 14.309,7 99,9% 14.387,3 100,0% Abroad 7,1 0,0% 7,2 0,1% 6,6 0,0% Total indirect deposits 15.432,9 100,0% 14.316,9 100,0% 14.393,9 100,0%

Total lending levels for the Group amounted to 31/12/03 and 3.2 per cent higher than the total 15,357.8 m, up 13.1 per cent over six months recorded at 30/6/03. and 15.4 per cent over twelve. Excluding Within customer loans, there was a drop in the amounts related to Cassa di Risparmio di medium/long-term segment (-0.5%), which was Carrara, the rises were of 4.6 and 6.6 per cent. more than compensated for by nearly a 30 per In particular, lending to customers, totalling cent rise in short-term credits (+29.3 per cent). 11,200.5 m, recorded an increase of 11 per This rise in the short-term component can be put cent over six months and 16.8 per cent over a down to the securitisation of performing year. Excluding credits granted by Cassa di mortgages for a value of 864.5 m which, apart Risparmio di Carrara, the half year and annual from removing a substantial amount of rises were of 3.6 and 9 per cent, respectively. mortgages from the credit aggregate, led to the The interbank segment rose markedly in the first granting of a bridging loan to the SPV. The half of the year to 1,237.6 m (+34.8 per cent). volume of cash credits classified as bad loans The securities portfolio totalled 2,919.7 m, an rose 25 per cent during the period to 411 m. increase of 13.9 per cent in comparison to

166 LENDING (millions of euros) Change % 30/6/04 31/3/04 31/12/03 30/6/03 06/04 06/04 12/03 06/03 Total (A+B+C) 15.357,8 14.988,6 13.573,9 13.309,4 13,1 15,4

Loans to customers (A) 11.200,5 10.975,4 10.091,5 9.590,6 11,0 16,8 -Gross value (1) 11.386,1 11.166,5 10.251,3 9.733,8 11,1 17,0 . Current accounts 3.554,5 3.812,4 3.605,8 3.538,6 -1,4 0,4 . Discounted notes 426,0 392,3 316,1 319,3 34,8 33,4 . Mortgages 4.895,2 5.463,5 4.925,4 4.506,0 -0,6 8,6 . Parabanking (2) 822,9 789,8 787,1 758,0 4,5 8,6 - leasing 714,1 684,4 683,7 658,3 4,4 8,5 - factoring 104,6 101,2 99,2 97,6 5,4 7,2 - consumer credit loans 4,2 4,2 4,2 2,1 - 100,0 . Loans backed by pledged assets 15,3 15,2 15,0 15,0 2,0 2,0 . Others 1.261,2 325,2 273,9 300,8 360,5 319,3

-short term loans 4.504,6 3.765,6 3.484,9 3.475,0 29,3 29,6 -long term loans 6.470,5 7.032,8 6.438,5 5.962,7 0,5 8,5

. Bas loans 411,0 368,1 328,0 296,1 25,3 38,8

-Specific allowances for loan losses (-) 185,6 191,1 159,8 143,2 16,1 29,6

Loans to banks (B) 1.237,6 1.341,6 918,4 889,7 34,8 39,1 -Gross value 1.241,9 1.345,7 922,3 898,4 34,7 38,2 . Compulsory reserves 110,3 206,2 114,3 153,8 -3,5 -28,3 . Deposits 569,1 662,2 725,5 584,4 -21,6 -2,6 . Current accounts 186,8 70,6 41,2 96,2 353,4 94,2 . Repurchase agreements 327,6 363,4 - - … … . Other loans 30,2 25,6 23,8 41,7 26,9 -27,6

. Bad loans 17,9 17,7 17,5 22,3 2,3 -19,7

-Specific allowances for loan losses (-) 4,3 4,1 3,9 8,7 10,3 -50,6

Securities (C) 2.919,7 2.671,6 2.564,0 2.829,1 13,9 3,2 -Government securities 1.154,0 1.656,6 1.242,9 1.841,7 -7,2 -37,3 -Other securities 1.467,1 861,7 1.143,2 814,9 28,3 80,0 -Shares and equity securities 298,6 153,3 177,9 172,5 67,8 73,1

(1) Including bad loans. (2) Including leased fixed-assets (699.1 millions at 30/6/2004, 669.8 millions at 31/12/2003).

The Group’s customer lending is concentrated (2,240.1 m) and the public administration at amongst non-financial firms and family 10.9 per cent (1,244.1 m). businesses (6,527.9 m), which accounts for Within the non-financial and family business 57.3 per cent of the total lending aggregate; segment, retail sales services accounts for 12.5 this is followed by families at 19.7 per cent per cent of total lending at 1,425.1 m.

167 LOANS TO CUSTOMERS (1) - DISTRIBUTION BY SECTOR (millions of euros)

30/6/04 31/12/03 30/6/03 %%%

Public Administration 1.244,1 10,9% 1.177,1 11,5% 1.200,2 12,3% Financial institutions 1.107,6 9,7% 275,6 2,7% 412,1 4,2% Non-financial and personal businesses 6.527,9 57,3% 6.109,7 59,5% 5.877,3 60,4% Agriculture, farming and fishing 90,7 0,8% 87,1 0,9% 98,0 1,0% Energy products 149,7 1,3% 211,8 2,1% 175,6 1,8% Mineral and ferrous metals and non ferrous 111,3 1,0% 100,7 1,0% 122,7 1,3% Mineral and non metallic products 170,7 1,5% 96,3 0,9% 106,4 1,1% Chemical products 84,8 0,7% 75,5 0,7% 80,0 0,8% Metal products 219,3 1,9% 197,9 1,9% 164,8 1,7% Agricultural and industrial machinery 155,0 1,4% 140,9 1,4% 155,1 1,6% Office equipment 32,6 0,3% 29,7 0,3% 31,1 0,3% Electrical supplies 94,5 0,8% 93,6 0,9% 115,7 1,2% Means of transport 89,7 0,8% 70,0 0,7% 79,5 0,8% Food, drink, tobacco 202,0 1,8% 216,1 2,1% 198,6 2,0% Textiles, leather goods, clothing 107,9 1,0% 97,1 1,0% 98,6 1,0% Paper, printing and publishing 90,6 0,8% 84,8 0,8% 85,3 0,9% Rubber and plastic goods 63,4 0,6% 63,4 0,6% 72,6 0,7% Other industrial products 115,3 1,0% 109,7 1,1% 104,9 1,1% Building and public works 968,1 8,5% 862,0 8,4% 971,2 10,0% Wholesale & retail trade, salvage and repairs 1.268,9 11,1% 1.183,3 11,5% 1.147,4 11,8% Hotel and catering services 360,9 3,2% 319,8 3,1% 308,4 3,2% Transport services 141,3 1,2% 146,7 1,4% 139,1 1,4% Air and sea transport-related services 316,5 2,8% 329,7 3,2% 368,0 3,8% Transport-related services 255,4 2,2% 265,6 2,6% 250,8 2,6% Communications-related services 14,0 0,1% 13,6 0,1% 18,0 0,2% Sales-related services 1.425,1 12,5% 1.314,4 12,8% 985,5 10,1% Private social bodies 63,2 0,6% 36,7 0,4% 35,2 0,4% Families 2.240,1 19,7% 2.376,3 23,2% 1.999,5 20,5% Total residents 11.182,9 98,2% 9.975,4 97,3% 9.524,3 97,8% Rest of the world 203,1 1,8% 275,9 2,7% 209,5 2,2% Total 11.386,1 100,0% 10.251,3 100,0% 9.733,8 100,0%

(1) Balance Sheet (Assets) caption 40 inclusive of expected losses and leasing.

Turning to the geographical location of loans, from 62.3 per cent at 31/12/03) following the Liguria accounts for 63.6 per cent, but the incorporation of Cassa di Risparmio di Carrara region’s share slipped over six months (down into the Banca Carige Group. LOANS TO CUSTOMERS (1) - GEOGRAPHIC DISTRIBUTION (millions of euros)

30/6/04 31/12/03 30/6/03 %%%

Liguria 7.081,6 62,3% 6.434,1 62,9% 6.180,0 63,6% Tuscany 1.149,1 10,2% 387,2 3,8% 362,1 3,7% Lombardy 1.069,6 9,4% 1.242,0 12,1% 1.093,6 11,2% Emilia Romagna 528,7 4,6% 556,4 5,4% 552,4 5,7% Piedmont 491,0 4,3% 495,1 4,8% 470,7 4,8% Latium 364,2 3,2% 379,2 3,7% 334,5 3,4% Sicily 148,6 1,3% 166,1 1,6% 162,5 1,7% Marches 124,2 1,1% 122,1 1,2% 123,5 1,3% Veneto 118,7 1,0% 146,6 1,4% 137,7 1,4% Umbria 85,3 0,7% 82,4 0,8% 89,2 0,9% Apulia 71,9 0,6% 78,5 0,8% 71,7 0,7% Sardinia 70,1 0,6% 74,7 0,7% 62,5 0,6% Total Italy 11.303,0 99,3% 10.164,4 99,2% 9.640,4 99,0% Abroad 83,1 0,7% 86,9 0,8% 93,4 1,0% Total loans to customers 11.386,1 100,0% 10.251,3 100,0% 9.733,8 100,0%

(1) Balance Sheet (Assets) caption 40 inclusive of expected losses and leasing.

168 Outstanding derivatives contracts at the end of most part (55.8 per cent) for hedging; 28 per June 2004 amounted to a notional value of cent is in the form of balanced trading contracts, 6,672 m; 86.8 per cent of this total refers to again proof of the Group’s prudent handling of contracts with capital exchange and 13.2 per these instruments. Open trading contracts make cent of this total refers to contracts without up 16.2 per cent of the total notional value. capital exchange. Derivative usage is for the

DERIVATIVES CONTRACTS AT 30/6/2004 (millions of euros)

Principal (1) Hedging Trading Total balanced open-ended contracts (5) contracts (6) Total

- Forwards (2) - 4,0 - 4,0 4,0 - Swaps (3) 3.096,4 1.255,2 390,6 1.645,8 4.742,2 - Futures 76,0 - 83,0 83,0 159,0 - Securities options 96,0 - 102,4 102,4 198,4 - Interest rate and index options (4) 423,6 350,0 316,6 666,6 1.090,2 - Exchange-rate options - 257,5 - 257,5 257,5 - Credit default product 29,0 - 191,7 191,7 220,7 Total 3.721,0 1.866,7 1.084,3 2.951,0 6.672,0 - with exchange of principal 328,5 257,5 294,1 551,6 880,1 - without exchange of principal 3.392,5 1.609,2 790,2 2.399,4 5.791,9

(1) Principal relative to basis swaps is stated once. (2) Includes forward rate agreements. (3) Includes basis swaps, interest rate swaps, overnight indexed swaps and cross currency swaps. (4) Includes interest rate caps. (5) Contracts matched by contracts of same characteristics so giving the Group full cover against interest and exchange-rate risk. (6) Contracts entailing exposure to interest and exchange-rate risk.

Total aggregates at risk (cash credits and per cent). Leasing classified at risk reached 8.8 guarantees) amounted to 704.6 m, an increase m. of 14.4 per cent in comparison to the end of Related expected losses amounted to 197.2 m, 2003, following the collapses of the Genoa- an increase of 16 per cent over December based companies Festival Crociere and 2003. In greater detail, losses relating to cash Ferrania. Cash credits at risk totalled 663.3 m, credits totalled 189.9 m, those to guarantees up 13.4 per cent over 31/12/03, whilst and commitments 3.9 m, and those to leasing guarantees at risk amounted to 32.6 m (+40.9 activity 3.4 m.

169 CREDITS AT RISK AND TOTAL ALLOWANCES (thousands of euros)

30/6/04 31/3/04 Cash Guarantees and Leased Total Cash Guarantees and Leased Total credits commitments assets credits commitments assets

Bad loans 428.826 12.235 - 441.061 385.760 13.011 - 398.771 Watchlists 213.883 19.052 - 232.935 341.778 14.395 - 356.173 Country risk 6.778 1.344 - 8.122 7.000 83 - 7.083 Rescheduled loans 13.769 - - 13.769 13.782 - - 13.782 Bad leased assets - - 8.761 8.761 - - 8.367 8.367 Total credits at risks 663.256 32.631 8.761 704.648 748.320 27.489 8.367 784.176

Specific allowances 189.898 3.919 3.421 197.238 195.245 3.995 3.467 202.707

Total allowances 197.047 3.919 3.421 204.387 215.442 3.995 3.467 222.904 - Specific allowances for loan losses 189.898 - - 189.898 195.245 - - 195.245 - Specific allowances for guarantees and - 3.919 - 3.919 - 3.995 - 3.995 commitments - Specific allowances for leased assets - - 3.421 3.421 - - 3.467 3.467 - General allowances for loan losses 7.149 - - 7.149 20.197 - - 20.197

31/12/03 30/6/03 Cash Guarantees and Leased Total Cash Guarantees and Leased Total credits commitments assets credits commitments assets

Bad loans 345.436 13.088 - 358.524 318.307 14.158 - 332.465 Watchlists 212.714 10.069 - 222.783 214.206 8.510 - 222.716 Country risk 12.466 5 - 12.471 13.562 1.476 - 15.038 Rescheduled loans 14.123 - - 14.123 10.778 - - 10.778 Bad leased assets - - 8.138 8.138 - - 7.968 7.968 Total credits at risks 584.739 23.162 8.138 616.039 556.853 24.144 7.968 588.965

Specific allowances 163.698 4.124 2.276 170.098 151.948 4.216 2.131 158.295

Total allowances 183.695 4.124 2.276 190.095 166.592 4.216 2.131 172.939 - Specific allowances for loan losses 163.698 - - 163.698 151.948 - - 151.948 - Specific allowances for guarantees and - 4.124 - 4.124 - 4.216 - 4.216 commitments - Specific allowances for leased assets - - 2.276 2.276 - - 2.131 2.131 - General allowances for loan losses 19.997 - - 19.997 14.644 - - 14.644

Total bad loans for the Group rose 23 per cent result of an 89.2 per cent increase in guarantees over six months to 441.1 m, of which 428.8 m in this category. Cash credits rose by half a refers to cash credits and 12.2 m to guarantees percentage point to 213.9 m. and commitments. The Group’s bad customer The value of country risk positions dropped 34.9 loans/lending ratio rose slightly from 3.2 per per cent during the first six months of the year cent at 31st December 2003 to 3.6 per cent. from 12.5 to 8.1 m. Loans classified as watchlists increased by 4.6 Rescheduled loans fell 2.5 per cent over year- per cent, moving from 222.8 to 232.9 m, as a end 2003 to 13.8 m.

170 CASH CREDITS AT RISK (thousands of euros)

30/6/04 31/3/04 Gross Specific Net book % Gross Specific Net book % value allowances value value allowances value (a) (b) (b/a) (a) (b) (b/a)

Bad loans - customers 410.952 159.953 250.999 38,9 368.096 163.945 204.151 44,5 - banks 17.874 3.802 14.072 21,3 17.664 3.592 14.072 20,3 Watchlists - customers 213.053 18.847 194.206 8,8 340.955 20.569 320.386 6,0 - banks 830 513 317 61,8 823 513 310 62,3 Country risk - customers 6.172 - 6.172 - 6.520 - 6.520 - - banks 606 - 606 - 480 - 480 - Rescheduled loans - customers 13.769 2.369 11.400 17,2 13.782 2.234 11.548 16,2 Total cash credits at risk 663.256 185.484 477.772 28,0 748.320 190.853 557.467 25,5 - customers 643.946 181.169 462.777 28,1 729.353 186.748 542.605 25,6 - banks 19.310 4.315 14.995 22,3 18.967 4.105 14.862 21,6 Performing loans 11.964.813 4.414 11.960.399 0,0 11.763.905 4.392 11.759.513 0,0 - customers 10.742.186 4.414 10.737.772 0,0 10.437.145 4.392 10.432.753 0,0 - banks 1.222.627 - 1.222.627 - 1.326.760 - 1.326.760 - Total loans 12.628.069 189.898 12.438.171 1,5 12.512.225 195.245 12.316.980 1,6 - customers 11.386.132 185.583 11.200.549 1,6 11.166.498 191.140 10.975.358 1,7 - banks 1.241.937 4.315 1.237.622 0,3 1.345.727 4.105 1.341.622 0,3

31/12/03 30/6/03 Gross Specific Net book % Gross Specific Net book % value allowances value value allowances value (a) (b) (b/a) (a) (b) (b/a)

Bad loans - customers 327.981 137.327 190.654 41,9 296.040 123.707 172.333 41,8 - banks 17.455 3.383 14.072 19,4 22.267 8.195 14.072 36,8 Watchlists - customers 211.922 20.203 191.719 9,5 213.334 17.395 195.939 8,2 - banks 792 513 279 64,8 872 523 349 60,0 Country risk - customers 11.432 - 11.432 - 13.148 - 13.148 - - banks 1.034 - 1.034 - 414 - 414 - Rescheduled loans - customers 14.123 2.232 11.891 15,8 10.778 2.082 8.696 19,3 Total cash credits at risk 584.739 163.658 421.081 28,0 556.853 151.902 404.951 27,3 - customers 565.458 159.762 405.696 28,3 533.300 143.184 390.116 26,8 - banks 19.281 3.896 15.385 20,2 23.553 8.718 14.835 37,0 Performing loans 10.588.936 40 10.588.896 0,0 10.075.384 46 10.075.338 0,0 - customers 9.685.890 40 9.685.850 0,0 9.200.537 46 9.200.491 0,0 - banks 903.046 - 903.046 - 874.847 - 874.847 - Total loans 11.173.675 163.698 11.009.977 1,5 10.632.237 151.948 10.480.289 1,4 - customers 10.251.348 159.802 10.091.546 1,6 9.733.837 143.230 9.590.607 1,5 - banks 922.327 3.896 918.431 0,4 898.400 8.718 889.682 1,0

171 CREDIT COMMITMENTS (thousands of euros)

30/6/04 31/3/04 Nominal Specific % Nominal Specific % value allowances value allowances (a) (b) (b/a) (a) (b) (b/a)

Bad loans 12.235 3.919 32,0 13.011 3.995 30,7 Watchlists 19.052 - - 14.395 - - Country risk 1.344 - - 83 - - Total guarantees and 32.631 3.919 12,0 27.489 3.995 14,5 commitments at risk Performing guarantees and commitments 1.169.849 125 0,0 1.174.294 125 0,0 Total guarantees and 1.202.480 4.044 0,3 1.201.783 4.120 0,3 commitments

31/12/03 30/6/03 Nominal Specific % Nominal Specific % value allowances value allowances (a) (b) (b/a) (a) (b) (b/a)

Bad loans 13.088 4.124 31,5 14.158 4.216 29,8 Watchlists 10.069 - - 8.510 - - Country risk 5 - - 1.476 - - Total guarantees and 23.162 4.124 17,8 24.144 4.216 17,5 commitments at risk Performing guarantees and commitments 1.244.339 - - 1.373.341 - - Total guarantees and 1.267.501 4.124 0,3 1.397.485 4.216 0,3 commitments

Cash credits classified as bad loans are concentrated prevalently amongst non-financial The Group’s bad loans/lending ratio is highest firms and family businesses, which account for for loans granted to non-residents; this is 74 per cent of the aggregate total at 304.1 m. followed by non-financial firms and family Families make up 18.1 m at 74.5 m. Within the businesses with a ratio of 4.7 per cent first sector, those business segments most at risk (31/12/03: 4 per cent). Within this sector, the continue to be the building industry at 18.1 per building industry has the highest risk ratio at 7.7 cent (74.4 m) and retail sales, salvage and per cent, followed by sea and air-transport recovery at 15 per cent (61.5 m). The rise of sea services at 7.2 per cent, again as a result of the transport-related services to 22.9 m was due Group’s exposure with Festival Crociere. fully to the collapse of Festival Crociere.

172 BAD LOANS (1) - DISTRIBUTION BY SECTOR (thousands of euros)

30/6/04 31/12/03 30/6/03 %%%

Public Administration 24 0,0% 23 0,0% 22 0,0% Financial institutions 14.397 3,5% 13.720 4,2% 11.762 4,0% Non-financial and personal businesses 304.111 74,0% 242.980 74,1% 216.126 73,0% Agriculture, farming and fishing 3.730 0,9% 2.829 0,9% 3.519 1,2% Energy products 4 0,0% 237 0,1% 177 0,1% Mineral and ferrous metals and non ferrous 2.009 0,5% 1.592 0,5% 599 0,2% Mineral and non metallic products 7.700 1,9% 4.767 1,5% 4.207 1,4% Chemical products 13.973 3,4% 837 0,3% 989 0,3% Metal products 11.272 2,7% 8.965 2,7% 6.765 2,3% Agricultural and industrial machinery 7.945 1,9% 4.817 1,5% 6.738 2,3% Office equipment 1.077 0,3% 883 0,3% 1.158 0,4% Electrical supplies 2.097 0,5% 2.153 0,7% 3.235 1,1% Means of transport 2.333 0,6% 2.303 0,7% 2.710 0,9% Food, drink, tobacco 20.524 5,0% 32.703 10,0% 10.661 3,6% Textiles, leather goods, clothing 7.600 1,8% 6.790 2,1% 5.668 1,9% Paper, printing and publishing 2.493 0,6% 2.094 0,6% 2.433 0,8% Rubber and plastic goods 2.738 0,7% 2.364 0,7% 2.981 1,0% Other industrial products 3.868 0,9% 3.314 1,0% 3.349 1,1% Building and public works 74.359 18,1% 71.101 21,7% 77.459 26,2% Wholesale & retail trade, salvage and repairs 61.513 15,0% 50.713 15,5% 45.311 15,3% Hotel and catering services 11.884 2,9% 9.803 3,0% 8.888 3,0% Transport services 6.228 1,5% 5.780 1,8% 6.894 2,3% Air and sea transport-related services 22.922 5,6% 131 0,0% 156 0,1% Transport-related services 2.467 0,6% 2.039 0,6% 1.691 0,6% Communications-related services 249 0,1% 67 0,0% 264 0,1% Sales-related services 35.124 8,5% 26.698 8,1% 20.274 6,8% Private social bodies 1.911 0,5% 1.884 0,6% 1.703 0,6% Families 74.471 18,1% 56.644 17,3% 54.020 18,2% Total residents 394.914 96,1% 315.251 96,1% 283.633 95,8% Rest of the world 16.038 3,9% 12.730 3,9% 12.407 4,2% Total 410.952 100,0% 327.981 100,0% 296.040 100,0%

(1) Inclusive of expected losses. Logically Liguria accounts for the majority of the Romagna (6.4 per cent). The bad loans/lending Group’s bad loans at 59.4 per cent. Other ratio is highest in Piedmont (6.7 per cent), Sicily regions with significant non performing levels (5.1 per cent) and in Veneto and Emilia are: Tuscany (10.9 per cent); Piedmont (8 per Romagna (5 per cent each). The ratio for Liguria cent), Lombardy (7 per cent) and Emilia is 3.4 per cent.

BAD LOANS/LENDING RATIO (1) - DISTRIBUTION BY SECTOR

30/6/04 31/12/03 30/6/03

Public Administration 0,0% 0,0% 0,0% Financial institutions 1,3% 5,0% 2,9% Non-financial and personal businesses 4,7% 4,0% 3,7% - including (2): Sales-related services 2,5% 2,0% 3,9% Wholesale & retail trade, salvage and repairs 4,8% 4,3% 2,1% Building and public works 7,7% 8,2% 8,0% Hotel and catering services 3,3% 3,1% 2,9% Air and sea transport-related services 7,2% 0,0% 0,0% Private social bodies 3,0% 5,1% 4,8% Families 3,3% 2,4% 2,7% Total residents 3,5% 3,2% 3,0% Rest of the world 7,9% 4,6% 5,9% Total 3,6% 3,2% 3,0%

(1) Inclusive of expected losses. (2) Principal branches of the economy in terms of overall credit exposure.

173 BAD LOANS (1) - GEOGRAPHIC DISTRIBUTION (millions of euros)

30/6/04 31/12/03 30/6/03 %%%

Liguria 243.954 59,4% 187.486 57,3% 186.435 62,9% Tuscany 44.902 10,9% 17.169 5,2% 18.303 6,2% Piedmont 32.928 8,0% 27.914 8,5% 26.901 9,1% Lombardy 28.793 7,0% 25.057 7,6% 19.760 6,7% Emilia Romagna 26.266 6,4% 43.089 13,2% 20.591 7,0% Sicily 7.535 1,8% 6.704 2,0% 6.224 2,1% Veneto 5.973 1,5% 3.886 1,2% 2.891 1,0% Latium 4.349 1,1% 2.099 0,6% 1.551 0,5% Apulia 3.068 0,7% 2.362 0,7% 1.773 0,6% Umbria 1.116 0,3% 133 0,0% - - Marches 673 0,2% 286 0,1% 6 0,0% Sardinia 202 0,0% 90 0,0% 64 0,0% Total Italy 399.759 97,3% 316.275 96,4% 284.499 96,1% Abroad 11.193 2,7% 11.706 3,6% 11.541 3,9% Total 410.952 100,0% 327.981 100,0% 296.040 100,0%

(1) Inclusive of expected losses

BAD LOANS/LENDING RATIO (1) - GEOGRAPHIC DISTRIBUTION

30/6/04 31/12/03 30/6/03

Piedmont 6,7% 5,6% 5,7% Sicily 5,1% 4,0% 3,8% Veneto 5,0% 2,7% 2,1% Emilia Romagna 5,0% 7,7% 3,7% Apulia 4,3% 3,0% 2,5% Tuscany 3,9% 4,4% 5,1% Liguria 3,4% 2,9% 3,0% Lombardy 2,7% 2,0% 1,8% Umbria 1,3% 0,2% - Latium 1,2% 0,6% 0,5% Marches 0,5% 0,2% 0,0% Sardinia 0,3% 0,1% 0,1% Total Italy 3,5% 3,1% 3,0% Abroad 13,5% 13,5% 12,4% Total 3,6% 3,2% 3,0%

(1) Inclusive of expected losses.

174

GROUP PERSONNEL AND OPERATING STRUCTURE

The Banca Carige Group’s multi-channel of Liguria. During the period there were 3 new distribution system is based on three legs: branch openings, one by Carige and the other traditional (branches, financial advisors and two by Banca del Monte di Lucca. market makers); remote (ATMs; POS terminals, The Group’s private banking service for high home banking and on line services); mobile (the net-worth clients is available in 40 districts (a Group’s financial advisors and insurance agents total of 103 advisors), whilst corporate banking in addition to estate agents working in saw a rise in the number of its dedicated collaboration with the Group). advisors from 75 to 81, working in 36 teams. The Group’s traditional distribution system Traditional distribution is complemented by our numbered 491 bank branches at 30th June insurance subsidiaries Carige Assicurazioni and 2004 with an increasing presence outside our Carige Vita Nuova: 413 offices are distributed operating stronghold achieved in 11 other throughout the country. regions via branch openings and acquisitions. At Remote channels include 14 self-service the end of June, 50.1 per cent of total branches branches of the ‘Bancacontinua’ circuit, 588 was situated in Liguria, in particular, in the ‘Bancomat’ cash points, 14,852 POS terminals provinces of Genoa (137 branches; 27.9 per installed in retail outlets and 74,948 on line cent of the total) and Savona (60 branches; contracts (internet banking and call centre 12.2 per cent). The remaining 245 branches are contracts). distributed in the north of the country, in Mobile channels of distribution consist Lombardy, Piedmont and Emilia Romagna (102 principally of the Group’s insurance agents, branches; 20.8 per cent of the total), in the operating either as financial consultants or central regions of Tuscany, Latium, Marches and distributors of standardised banking products. Umbria (88 branches; 17.9 per cent), and in the Out of the total of 413 agents, 327 (79.2 per south, in Apulia, Sicily and Sardinia (54 cent) are involved in these activities. branches; 11 per cent of the branch network). Mobile distribution is completed by 1,481 estate Banca Carige also has a branch in Nice, agents who collaborate with the Group in the France. distribution of the banks’ mortgages. Further The acquisition of Cassa di Risparmio di Carrara details regarding distribution innovations can be made a significant contribution to the Group’s found in the Board of Directors’ Report of Banca branch network, adding a further 33 branches Carige (‘Distribution Systems and Resource principally in neighbouring Tuscany to the east Management’).

175 BRANCH NETWORK

A) BRANCHES 30/6/04 31/3/04 31/12/03 30/06/03 number % number % number % number % NORTH-WEST ITALY 317 64,6 317 64,8 314 68,9 313 68,8 Liguria 246 50,1 246 50,3 244 53,5 243 53,4 - Genoa 137 27,9 137 28,0 137 30,0 136 29,9 - Savona 60 12,2 60 12,3 60 13,2 60 13,2 - Imperia 28 5,7 28 5,7 28 6,1 28 6,2 - La Spezia 21 4,3 21 4,3 19 4,2 19 4,2 Lombardy 36 7,3 36 7,4 36 7,9 36 7,9 Piedmont 35 7,1 35 7,2 34 7,5 34 7,5 NORTH-EAST ITALY 31 6,3 31 6,3 31 6,8 31 6,8 Emilia Romagna 19 3,9 19 3,9 19 4,2 19 4,2 Veneto 12 2,4 12 2,5 12 2,6 12 2,6 CENTRAL ITALY 88 17,9 86 17,6 56 12,3 56 12,3 Tuscany 53 10,8 51 10,4 20 4,4 20 4,4 Latium 32 6,5 32 6,5 32 7,0 32 7,0 Marches 20,420,430,730,7 Umbria 1 0,2 1 0,2 1 0,2 1 0,2 SOUTH ITALY AND ISLANDS 54 11,0 54 11,0 54 11,8 54 11,9 Sicily 38 7,7 38 7,8 38 8,3 38 8,4 Apulia 9 1,8 9 1,8 9 2,0 9 2,0 Sardinia 7 1,4 7 1,4 7 1,5 7 1,5 BRANCHES ABROAD: Nice (France) 1 0,2 1 0,2 1 0,2 1 0,2 TOTAL 491 100,0 489 100,0 456 100,0 455 100,0

30/6/04 31/3/04 31/12/03 30/06/03 Private banking consultants 103 102 102 103 Corporate consultants 81 75 75 60

B) REMOTE 30/6/04 31/3/04 31/12/03 30/06/03 ATM - Bancomat 588 584 545 539 Bancacontinua (self service) 14 14 14 14 POS 14.852 14.539 13.075 12.581 On-line services (1) 74.948 72.659 68.161 56.434 (1) Internet banking and Call Center contracts.

C) MOBILE 30/6/04 31/3/04 31/12/03 30/06/03 Insurance agents (2) 327 310 303 287 Estate agents 1.481 1.457 1.425 1.327 (2) Agents of the Group's insurance subsidiaries distributing Banca Carige products.

The total number of the Carige Group’s Risparmio di Carrara. In detail, the total is employees at 30th June 2004 rose from 4,354 made up by 55 executives (1.2 per cent of the at 31st December 2003 to 4,691 following the total), 884 managers (18.8 per cent of the incorporation into the Carige Group of Cassa di total), and 3,752 clerical and ancillary members of staff; 71 per cent of staff is involved directly in market activities.

PERSONNEL

30/6/04 31/3/04 31/12/03 30/6/03 number % number % number % number % Grade Managers 55 1,2 55 1,2 55 1,3 56 1,3 Officials 884 18,8 896 19,0 875 20,1 815 18,4 Other employees 3.752 80,0 3.755 79,8 3.424 78,6 3.551 80,3 TOTAL 4.691 100,0 4.706 100,0 4.354 100,0 4.422 100,0 Activities Head-offices 1.361 29,0 1.350 28,7 1.249 28,7 1.257 28,4 Branches 3.330 71,0 3.356 71,3 3.105 71,3 3.165 71,6

176 cent). As a result of the abolition of tax credits, dividends fell from 17.6 to 3.5 m.

INCOME STATEMENT Gross operating income rose 23.7 per cent to

459.1 m.

Operating costs were 7.2 per cent higher than

the previous interim figure at 294.1 m. The Interim net profit for the Banca Carige Group at increase is for the most part a result of the 30th June 2004 totalled 47.8 m, a 9.4 per cent Group’s increased operational capacity, which increase over the end of June 2003. The rise is led to greater administrative costs of 6.9 per due, in part, to improved operating results (+70 cent (221.1 m) and increased value adjustments per cent to 164.7 m) and reduced income tax on tangible and intangible fixed assets of 7.9 charges (19.9 m in comparison to 43 m). per cent (+73 m). In particular, personal The partial lack of homogeneity in some charges rose by 3.4 per cent to 138 m, whilst captions follows the incorporation into the other administrative costs rose by 13.4 per cent Group of Cassa di Risparmio di Carrara. to 83.1 m. Net interest income for the first six months of the The operating result at 30th June 2004 was year was 11.9 per cent higher than the previous 70.3 per cent higher than December 2003 at June’s result at 206.6 m. In detail, there was 165 m. The contribution of Cassa di Risparmio rise of 4.2 per cent in interest income to 325 m di Carrara to the result was 5.7 m. and a corresponding fall in interest charges of Provisions and writedowns for the period 7.1 per cent to 118.4 m. The rise was achieved, totalled 101.4 m in comparison to 28.3 m at despite a context of falling average spreads, 30/6/03. In detail, provisions to credit risk thanks to significant increases in amounts reserves net of writebacks amounted to 99.1 m handled (in part following the incorporation of (June 2003: 24.9). Provisions for risks and Cassa di Risparmio di Carrara). charges were 33.4 per cent lower than June Service-generated or non-interest income 2003 at 2.2 m. recorded a 35.3 per cent increase to move from Profit from ordinary activities was down 7.2 per 186.7 m at the end of 2003 to 252.5 m. cent in comparison to the previous interim result The result stemmed from rises in other operating at 63.6 m. income, up 79.8 per cent to 139.5 m. This The extraordinary operating result was positive amount includes 61.1 m in excess spread at 5.5 m (30/6/03: 19.3 m). The previous half deriving from the securitisation of performing year result was marked by extraordinary mortgages carried out by Banca Carige during revenues stemming from the sale of Carige the period. Other related rises include net shares on the part of Cassa di Risparmio di commission revenues of 102 m (+13 per cent), Savona and from the sale of holdings by Group gains from financial transactions of 4.3 m, and companies in Eptaconsors and Intesa Asset profits on equity investments in the Group’s Management. insurance companies and in the associated After tax for the period (19.9 m; -53.7 per cent), companies Frankfurter Bankgesellschaft and net profit rose 9.4 per cent in comparison to last Autostrada dei Fiori totalling 3.3 m (+51.5 per June’s figure to 47.8 m.

177 INCOME STATEMENT (thousands of Euros)

Change 30/6/04 31/3/04 31/12/03 30/6/03 absolute %

10 Interest income and similar revenues 324.985 158.769 613.535 311.984 13.001 4,2 20 Interest expense and similar charges -118.381 -57.388 -238.334 -127.361 8.980 -7,1 NET INTEREST INCOME 206.604 101.381 375.201 184.623 21.981 11,9 40 Commission income 110.451 55.268 204.447 98.124 12.327 12,6 50 Commission expenses -8.487 -3.559 -16.351 -7.913 -574 7,3 60 Gains (losses) from financial transactions 4.317 4.501 10.674 -866 5.183 -598,5 30 Dividends and other revenues 3.495 260 18.536 17.626 -14.131 -80,2 170 Profit (losses) on investments carried at equity 3.260 1.269 10.030 2.152 1.108 51,5 70 Other operating income 143.668 42.051 167.518 79.981 63.687 79,6 110 Other operating expenses -4.202 -1.040 -9.199 -2.435 -1.767 72,6 NON INTEREST INCOME 252.502 98.750 385.655 186.669 65.833 35,3 GROSS OPERATING INCOME 459.106 200.131 760.856 371.292 87.814 23,7 80 Administrative costs -221.128 -105.941 -416.916 -206.761 -14.367 6,9 . Personnel -137.983 -67.957 -268.412 -133.452 -4.531 3,4 . Other administrative costs -83.145 -37.984 -148.504 -73.309 -9.836 13,4 90 Depreciation and amortization of intangible and tangible fixed assets -73.002 -37.225 -137.238 -67.654 -5.348 7,9 OPERATING COSTS -294.130 -143.166 -554.154 -274.415 -19.715 7,2 OPERATING INCOME 164.976 56.965 206.702 96.877 68.099 70,3 100 Provisions for risks and charges -2.240 -863 -4.209 -3.364 1.124 -33,4 120 Provisions for loan losses and for guarantees and commitments -103.611 -13.651 -72.588 -29.587 -74.024 … 130 Recoveries of loans and reversals of provisions for guarantees and commitments 4.532 2.024 11.295 4.715 -183 -3,9 140 Additional provisions for loan losses -35 -22 -19.744 -62 27 -43,5 150 Write-downs to financial fixed assets - - - - - … 160 Recoveries of financial fixed assets 2 - - - 2 … PROVISIONS AND WRITE-DOWNS -101.352 -12.512 -85.246 -28.298 -73.054 … 180 INCOME FROM ORDINARY ACTIVITIES 63.624 44.453 121.456 68.579 -4.955 -7,2 190 Extraordinary income 9.823 691 43.121 23.787 -13.964 -58,7 200 Extraordinary expenses -4.338 -2.082 -8.149 -4.454 116 -2,6 210 EXTRAORDINARY INCOME, NET 5.485 -1.391 34.972 19.333 -13.848 -71,6 INCOME BEFORE TAXATION 69.109 43.062 156.428 87.912 -18.803 -21,4 230 Variation of reserves for general banking risks - - -5.065 - - … 240 Income taxes -19.931 -19.124 -74.721 -43.050 23.119 -53,7 250 Minority interests -1.362 -571 -2.030 -1.137 -225 19,8 260 NET INCOME 47.816 23.367 84.742 43.725 4.091 9,4

178 INCOME STATEMENT - QUARTERLY CHANGES (thousands of Euros) 2004 2003 2nd quarter 1st quarter 4th quarter 3rd quarter 2nd quarter 1st quarter

10 Interest income and similar revenues 166.216 158.769 151.754 149.797 154.164 157.820 20 Interest expense and similar charges -60.993 -57.388 -55.141 -55.832 -59.838 -67.523 NET INTEREST INCOME 105.223 101.381 96.613 93.965 94.326 90.297 40 Commission income 55.183 55.268 57.039 49.284 50.221 47.903 50 Commission expenses -4.928 -3.559 -4.152 -4.286 -4.415 -3.498 60 Gains (losses) from financial transactions -184 4.501 6.442 5.098 -192 -674 30 Dividends and other revenues 3.235 260 1.542 -632 15.000 2.626 170 Profit (losses) on investments carried at equity 1.991 1.269 6.251 1.627 2.105 47 70 Other operating income 101.617 42.051 46.419 41.118 40.523 39.458 110 Other operating expenses -3.162 -1.040 -3.606 -3.158 -1.504 -931 NON INTEREST INCOME 153.752 98.750 109.935 89.051 101.738 84.931 GROSS OPERATING INCOME 258.975 200.131 206.548 183.016 196.064 175.228 80 Administrative costs -115.187 -105.941 -104.635 -105.520 -105.343 -101.418 . Personnel -70.026 -67.957 -69.275 -65.685 -66.842 -66.610 . Other administrative costs -45.161 -37.984 -35.360 -39.835 -38.501 -34.808 90Depreciation and amortization of intangible and - - - - - tangible fixed assets -35.777 -37.225 -35.462 -34.122 -34.628 -33.026 OPERATING COSTS -150.964 -143.166 -140.097 -139.642 -139.971 -134.444 OPERATING INCOME 108.011 56.965 66.451 43.374 56.093 40.784 100 Provisions for risks and charges -1.377 -863 -706 -139 -2.789 -575 120 Provisions for loan losses and for guarantees and commitments -89.960 -13.651 -21.128 -21.873 -12.764 -16.823 130 Recoveries of loans and reversals of provisions for guarantees and commitments 2.508 2.024 4.995 1.585 2.053 2.662 140 Additional provisions for loan losses -13 -22 -19.429 -253 28 -90 150 Write-downs to financial fixed assets ------160 Recoveries of financial fixed assets PROVISIONS AND WRITE-DOWNS -88.840 -12.512 -36.268 -20.680 -13.472 -14.826 180 INCOME FROM ORDINARY ACTIVITIES 19.171 44.453 30.183 22.694 42.621 25.958 190 Extraordinary income 9.132 691 15.470 3.864 8.887 14.900 200 Extraordinary expenses -2.256 -2.082 -2.063 -1.632 -2.281 -2.173 210 EXTRAORDINARY INCOME, NET 6.876 -1.391 13.407 2.232 6.606 12.727 INCOME BEFORE TAXATION 26.047 43.062 43.590 24.926 49.227 38.685 230 Variation of reserves for general banking risks - - -5.065 - - - 240 Income taxes -807 -19.124 -21.075 -10.596 -26.530 -16.520 250 Minority interests -791 -571 -526 -367 -485 -652 260 NET INCOME 24.449 23.367 27.054 13.963 22.212 21.513

SHAREHOLDERS’ EQUITY

Capital resources (Tier 1 and Tier 2) for the stem from, on one hand, goodwill related to the Banca Carige Group at 30/6/04 totalled acquisition of Cassa di Risparmio di Carrara 1,167.8 million, down 11 per cent in and, on the other, a greater number of own comparison to 31/12/03. This decrease follows shares held by Banca Carige in portfolio. a reduction in Tier 1 and Tier 2 capital and a Tier 2 capital was 2.5 per cent lower following rise in the item ‘reductions’. Tier 1 capital at the utilisation on the part of the Group leader of 30th June 2004 amounted to 870.2 m, down funds from credit risk reserves. Total reductions 10.2 per cent following the payment of tax amounted to 215.3 m, up 17.9 per cent in required for redeeming positive differences comparison to the end of 2003 as a result of foreseen by Law 218/90 in addition to an Banca Carige’s increased holding in Carige increase in negative elements to be considered Assicurazioni. in the calculation of core capital, increases that

179 BREAKDOWN OF TOTAL CAPITAL (thousands of Euros)

30/6/04 31/3/04 31/12/03 30/6/03

Tier 1 Capital: positive elements eligible for inclusion (a) 1.561.583 1.582.599 1.549.697 1.350.514 Share capital 1.113.327 1.113.327 1.113.327 1.020.550 Reserves 189.490 212.195 181.247 184.858 Additional paid-in capital 258.666 256.977 255.023 139.941 General banking risks fund 100 100 100 5.165

Tier 1 Capital: negative elements (b) 691.376 670.123 580.240 590.255 Goodwill 620.371 624.514 546.098 551.268 Other negative elements 71.005 45.609 34.142 38.987

Total Tier 1 Capital (c = a-b) 870.207 912.476 969.457 760.259

Supplementary capital (d) 512.936 526.880 526.081 389.072

Reductions (e) 215.265 (1) 204.908 (1) 182.644 (1) 162.470 (1)

Total core capital (c+d-e) 1.167.878 (1) 1.234.448 (1) 1.312.894 (1) 986.861 (1) (1) Includes deduction of equity investment in subsidiary Carige Assicurazioni (156,264 thousand euros) as requested by regulators and the subsidiary's subordinated loan issue subscribed by Banca Carige (44,304 thousand euros). Excluding this deduction, capital resources at 30/6/04 would amount to 1,368,446 thousand euros.

Weighted assets for credit risk amounted to related regulatory related minimum amount of 10,462 m, significantly higher than the 962.9 m. regulatory minimum of 837 m. Other weighted At 30th June 2004 the total in excess to capital assets totalled 1,574 m, again substantially requirements was 205 m (30/6/03: 412.6 m). higher than the regulatory minimum of 125.9 m. Total weighted assets reached 12,036 m with a

TOTAL CORE CAPITAL AND SOLVENCY RATIOS (1) (thousands of Euros)

30/06/04 31/03/04 31/12/03 30/06/03

Core capital Tier 1 capital 870.207 912.476 969.457 760.259 Tier 2 capital 512.936 526.880 526.081 389.072 Deductions (1) 215.265 204.908 182.644 162.470 Total capital (1) 1.167.878 1.234.448 1.312.894 986.861

Weighted assets Credit risks (1) 10.462.025 10.640.250 9.665.037 9.592.449 Market risks 1.204.238 1.011.438 1.095.775 985.763 Other prudential requirements 369.750 504.362 493.463 493.472 Total weighted assets (1) 12.036.013 12.156.050 11.254.275 11.071.684

Solvency ratios (%) Tier 1/Weighted assets for credit risk 8,32% 8,58% 10,03% 7,93% Total capital/Weighted assets for credit risk (1) 11,16% 11,60% 13,58% 10,29%

Tier 1/Total weighted assets (2) 7,23% 7,51% 8,61% 6,87% Total capital/Total weighted assets (1) (2) 9,70% 10,16% 11,67% 8,91%

(1) Amounts include writedown to holding in subsidiary Carige Assicurazioni as requested by regulators. Excluding this deduction, total capital at 30/6/04 would rise to 1,368,446 thousand euros with related rises in the total capital/weighted assets for credit risk from 11.6 to 13.08 per cent, and total capital/total weighted assets ratios from 9.70 to 11.37 per cent. (2) Total weighted assets include credit and market risks.

Solvency, calculated on the basis of the total total capital ratio, which includes also weighted capital/weighted assets for credit risk was at assets for market risks, was 9.70 per cent 30/6/04 11.16 per cent in comparison to (31/12/03: 11.67 per cent). 13.58 per cent at December 2003; the Group’s

180 CORE CAPITAL AND SOLVENCY RATIOS 1.600 15,00%

1.400 1.312,9 1.167,9 1.200 11,67%

915,4 1.000 870,2 969,5 800 724,7 10,00%

9,70% 600 9,01% 8,61% 400

200 7,13% 7,23%

0 5,00% 31/12/2002 31/12/2003 30/06/2004

Core capital Tier 1 Total capital ratio Tier 1 ratio

Total capital levels and related solvency ratios hand with financial solidity, a characteristic of have been influenced over the last few years by Banca Carige’s operational strategy. Details of expansion in the Carige Group’s retail network. risk management for the Group can be found in Expansion by the purchase of branches from the Board of Directors’ Report for Banca Carige other banks or via new branch openings has (‘Risk Management’). Consolidated net equity been financed by two share capital increases and net income derive from those of the parent and one subordinated bond loan issue. Both company, Banca Carige in the following way: channels seek expansion that goes hand-in-

Net equity Profit for the year Totals recorded in Banca Carige Financial Statements at 30/6/2004 1.683.142 60.142 Positive variations on book value 64.235 18.081 Writedowns on allocated capital gains -419 -419 Writedowns on positive differences deriving from consolidation and application of the equity method -5.771 -5.771 Effects deriving from items recorded in previous accounting periods -109.278 - Profit (loss) on investments carried at equity 3.260 3.260 Writedowns on dividends distributed by associated undertakings -990 -990 Writedowns on dividends distributed by subsidiaries -18.257 -18.236 Others -22.426 -8.251 Consolidated Totals at 30/6/2004 1.593.496 47.816

Changes in consolidated net equity from 31/12/03 to 30/6/04 are a result of the following variations:

Balance at 31/12/2003 1.643.944 Extraordinary taxed reserve for the payment of tax (‘imposta sostitutiva’) required for the utilisation of capital gains subject to suspension from liability to tax foreseen by Law 218/90. -14.576 Reintegration of share premium used in securitisation 3.643 Dividends distributed during the year to shareholders outside the Group -83.295 Variations in credit risk reserves -12.848 Variations in reserves following the first-time integration of Cassa di Risparmio di Carrara. 599 New negative differences deriving from the application of the equity method 8.224 Others -12 Consolidated net profit 47.816 Balance at 30/6/2004 1.593.495

Dealings in own shares on the part of the parent value of 13.2 m and a corresponding counter company, Banca Carige, were related to the value of 40.3 m. Sales regarded 427,638 purchase of 13,160,841 shares with a nominal

181 shares for a nominal value 0.4 m and counter company also purchased 11 new shares and value of 1.4 m. 39,200 old shares at a nominal value of euro At 30th June 2004 Banca Carige had 18,501 for an investment of euro 33,995.: 12,733,203 own shares in portfolio for a No changes were recorded in the own shares counter value of 38.8 m. portfolio of Immobiliare Vernazza: at 30/6/04 At the same date, Carige Assicurazioni held the company held 10,000 of its own shares (10 1,908 of its own shares (1.36 per cent of total per cent of total shares issued) for a counter shares) for a counter value of 3.4 m. The value of 2.3 million.

THE GROUP COMPANIES AND EQUITY INVESTMENTS

BANCA CARIGE GROUP SUBSIDIARIES: PRINCIPAL DETAILS

Name Registered Holding Equity ratio Net assets Profit/loss office Direct Total (thousands (thousands of euros) of euros) A. Fully consolidated companies

Banks 1. Banca CARIGE SpA Genoa - - - - 2. Cassa di Risparmio di Savona SpA Savona 95,90 95,90 95,90 152.682 5.035 3. Banca del Monte di Lucca SpA Lucca 54,00 54,00 54,00 26.611 1.760 4. Cassa di Risparmio di Carrara SpA Carrara (MS) - 90,00 (1) 90,00 90.468 11.451

Financial firms 5. Carige AM SGR SpA Genoa 99,50 100,00 100,00 4.869 -263 6. Ligure Leasing SpA Savona - 100,00 95,90 8.619 641 7. Argo Finance One Srl Genoa 60,00 60,00 60,00 10 - 8. Priamar Finance Srl Genoa 60,00 60,00 60,00 10 -

Property-related services providers 9. Galeazzo Srl Genoa 100,00 100,00 100,00 3.871 23 10. Columbus Carige Imm. SpA Genoa 99,98 100,00 100,00 25.086 -9 11. Imm. Ettore Vernazza SpA Genoa 90,00 100,00 100,00 5.158 477 12. Immobiliare CARISA Srl Savona - 100,00 95,90 1.788 -18

Trust company 13. Centro Fiduciario SpA Genoa 76,93 96,93 96,11 1.043 76

B. Companies consolidated by the equity method

Insurance companies 1. Carige Assicurazioni SpA Milan 98,21 99,46 99,46 160.035 1.707 2. Carige Vita Nuova SpA Genoa 100,00 100,00 100,00 50.003 1.397

Other activities 3. Assi 90 Srl (2) Genoa - 60,00 59,80 1.683 763 4. AG Srl (2) Genoa - 100,00 59,80 36 14 5. Savona 2000 Srl (2) Savona - 80,00 47,84 85 15 6. Assimilano Srl (2) Milan - 60,00 35,88 101 38

(1) Holding via Caricarrara Holding. (2) Companies providing insurance-related services.

Cassa di Risparmio di Savona ('Carisa') 30/6/03: +5.1 per cent) with more than half in recorded a rise in the volume of amounts the form of asset management (54 per cent of handled to 2,481.1 m. Financial intermediation the total). However, during the period, there was activities (direct and indirect deposits; lending to growth in assets under administration (+5.6 per customers) rose both over December 2003 cent) in part thanks to an equity investment in the (+3.1 per cent) and June 2003 (+5 per cent). Italian State’s Deposit and Loans bank ‘Cassa Customer or direct deposits totalled 1,089 m, Depositi e Prestiti’ on the part of the Carisa an increase of 3.9 per cent in comparison to Foundation. Assets under management 31/12/03 and one of 4.8 per cent in remained unchanged. Total customer lending comparison to 30/6/03. Total indirect deposits inclusive of expected losses amounted to 706.6 reached 1,392.1 m (31/12/03: +2.5 per cent; m, up 7.5 per cent in comparison to the end of

182 2003 following expansion in the bank’s There was a sharp rise in provisions and value mortgage business. The securities portfolio adjustments for the period (3.3 m) as a result of dropped 2.3 per cent to 394.6 m over six several problematical exposures. The knock-on months, but recorded an increase of 21.6 per effect was to pull ordinary profit down from 9.9 cent over twelve. Turning to the profit and loss m at 30/6/03 to 5.5 m. Extraordinary income at account, changes to principal aggregates were the end of June amounted to 0.1 m, in due to the presence of extraordinary items comparison to 12 m recorded at the end of recorded during the first six months of last year. December 2003, a period positively influenced Net interest income, despite an increase in by revenues (11.4 m) stemming from the sale of amounts handled to 18.2 m, dropped by 3 per the bank’s holding in the parent company, cent as a result of a narrowing of interest rate Banca Carige. After tax, interim profit for 2004 spreads. Service-generated income, which last amounted to 5.3 m, down on the previous half- year was boosted by extraordinary dividends, yearly result of 13.1 m. was down 13.8 per cent to 11.7 m. Excluding the positive contribution of certain Gross operating income was 7.5 per cent lower extraordinary items to last year’s result, net profit than the figure recorded at June 2003. levels for 2004 and 2003 are substantially the Significant administrative cost containments same. meant a 2.4 per cent fall in operating costs.

CASSA DI RISPARMIO DI SAVONA (millions of euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03

BALANCE SHEET Total assets 1.369,7 1.365,2 1.331,0 1.342,1 2,9 2,1 Direct deposits (A) 1.089,0 1.069,3 1.047,7 1.039,0 3,9 4,8 Indirect deposits (B) 1.392,1 1.375,2 1.358,2 1.324,8 2,5 5,1 - Assets under management 752,4 744,9 752,4 727,5 0,0 3,4 - Assets in custody 639,7 630,3 605,8 597,3 5,6 7,1 Total Financial Intermediation Activities (TFIA) (A+B) 2.481,1 2.444,5 2.405,9 2.363,8 3,1 5,0 Loans to customers (1) 706,6 684,7 657,6 640,5 7,5 10,3 Securities 394,6 388,3 403,8 324,4 -2,3 21,6 Capital and reserves (2) 147,4 147,4 146,2 146,2 0,8 0,8

PROFIT & LOSS ACCOUNT Operating income 8,9 4,6 20,2 10,8 -17,9 Ordinary income, net 5,5 3,9 16,0 9,9 -44,2 Income before taxation 6,3 4,0 30,8 21,9 -71,3 Net profit 5,3 2,5 19,5 13,1 -59,5

RESOURCES Branch network 464646460,00,0 Personnel 428 431 432 436 -0,9 -1,8 (1) Gross of expected loss. (2) Includes the general banking risk fund and excludes newly recorded profits and losses.

Banca del Monte di Lucca recorded significant deposits were down by 2.2 per cent over the growth in amounts handled: total financial previous June’s figure and 0.6 per cent in intermediation activities (direct and indirect comparison to 31st December 2003 to 268.7 deposits, loans to customers) rose 11.9 per cent m. Within this aggregate, asset management over twelve months and 5.2 per cent over six to recorded a 2.3 per cent rise (100.5 m), whilst reach 661.9 m. This positive performance was assets in custody slipped 4.8 per cent to 168.2 principally due to customer deposits, which rose m. There were rises in customer lending over in annual terms by 24.3 per cent to 393.1 m both six (+10.3 per cent) and twelve months (+ (+9.6 per cent over six months). Indirect 16.9 per cent) to 383 m. There was also a

183 significant rise in the securities portfolio, up from cent to 7.8 m in comparison to June 2003. 70.9 m at 30/6/03 and 82.3 m at 31/12/03 to There were also rises in provisions and 95.5 m. With regards to the income statement, writedowns, which at 30/6/04 totalled 1.3 m. there were increases for both net interest income Ordinary net income amounted to 2.6 m (7.9 m; +15.3 per cent over 30/6/03) and (30/6/03: 2.5 m). Falls in extraordinary net gross operating income (11.8m; +11.4 per income negatively influenced pre-tax profit, cent). There was expansion also for service- which fell by 2.9 per cent over June 2003 to 2.6 generated income, which rose 4.2 per cent to m. Net profit totalled 1.8 m (June 2003: 1.3 m). 3.8 m. Operating costs increased by 7.5 per

BANCA DEL MONTE DI LUCCA (millions of euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03

BALANCE SHEET Total assets 514,5 492,6 464,1 457,1 10,9 12,5 Direct deposits (A) 393,1 380,5 358,7 316,3 9,6 24,3 Indirect deposits (B) 268,7 271,0 270,5 274,9 -0,6 -2,2 - Assets under management 100,5 103,7 101,4 98,3 -0,8 2,3 - Assets in custody 168,2 167,3 169,1 176,6 -0,5 -4,8 Total Financial Intermediation Activities (TFIA) (A+B) 661,9 651,5 629,2 591,2 5,2 11,9 Loans to customers (1) 383,0 364,4 347,2 327,6 10,3 16,9 Securities 95,5 86,0 82,3 70,9 16,0 34,7 Capital and reserves (2) 24,3 24,0 24,0 23,8 1,0 1,9

PROFIT & LOSS ACCOUNT Operating income 3,9 2,0 6,7 3,3 20,0 Ordinary income, net 2,6 1,3 5,0 2,5 4,0 Income before taxation 2,6 1,3 5,3 2,7 -2,9 Net profit 1,8 0,7 2,5 1,3 35,6

RESOURCES Branch network 1917171711,811,8 Personnel 144 140 142 142 1,4 1,4 (1) Gross of expected loss. (2) Includes the general banking risk fund and excludes newly recorded profits and losses.

Cassa di Risparmio di Carrara closed its interim The bank’s total lending – 764.1 m - rose over statement with a 7.7 per cent increase in twelve months by 9 per cent, but actually fell in amounts handled (total financial intermediation comparison to the end of 2003 by 1.1. per cent. activities plus lending) in comparison to the The bad loans/lending ratio was 3.9 per cent. previous June; there was little significant change The bank’s securities portfolio was stable at over December 2003. In particular direct and 143.8 m. indirect deposits (TFIA) rose by 7.7 per cent to Net profit for the first six months of the year was 1,458 m, whilst lending grew by 9 per cent to 11.4 m, significantly higher than the previous 764.1 m. Within TFIA, direct deposits rose by interim result of 3.5 m following utilisation of the 13.4 per cent to 816.3 m, thanks above all to general banking risk reserve which, after the expansion in bonds. Indirect deposits recorded a bank’s incorporation into the Carige Group, was 1.2 per cent rise to reach 641.7 m. Within no longer required. indirect deposits, assets under management totalled 309.8 m (+3.3 per cent), spurred by There was a fall in net interest income (-2 per mutual funds. There was little change in the cent) to 15.8 m and a rise in service-generated assets in custody segment: 331.9 m (-0.6 per income of 8.3 per cent to 8.5 m; operating costs cent). increased by 5.6 per cent to 17.8 m.

184 Provisions dropped to 0.9 m. Ordinary net profit m; excluding the positive contribution of the for the period amounted to 5.6 m, down 9.2 per general banking risk reserve, the result for the cent over the previous June’s figure of 6.2 m. first half of the year would have been 12.2 per After tax (2.6 m), interim net profit totalled 11.4 cent lower.

CASSA DI RISPARMIO DI CARRARA (millions of euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03

BALANCE SHEET Total assets 1.208,7 1.117,2 1.031,3 914,8 17,2 32,1 Direct deposits (A) 816,3 927,0 838,5 719,7 -2,6 13,4 Indirect deposits (B) 641,7 614,0 615,0 633,8 4,3 1,2 - Assets under management 309,8 309,4 313,9 299,9 -1,3 3,3 - Assets in custody 331,9 304,6 301,1 333,9 10,2 -0,6 Total Financial Intermediation Activities (TFIA) (A+B) 1.458,0 1.541,0 1.453,5 1.353,5 0,3 7,7 Loans to customers (1) 764,1 769,0 772,4 700,9 -1,1 9,0 Securities 143,8 143,2 139,5 142,2 3,1 1,1 Capital and reserves (2) 81,8 89,6 89,6 89,6 -8,7 -8,7

PROFIT & LOSS ACCOUNT Operating income 6,5 3,4 12,7 7,1 -8,8 Ordinary income, net 5,6 3,0 10,1 6,2 -9,2 Income before taxation 5,7 3,0 10,6 6,4 -11,7 Net profit 11,4 1,6 5,6 3,5 228,7

RESOURCES Branch network 333333310,06,5 Personnel 365 366 367 367 -0,5 -0,5 (1) Gross of expected loss. (2) Includes the general banking risk fund and excludes newly recorded profits and losses. Total premiums collected by the two insurance 31/12/03 and totalled 201.6 m. Staff numbers subsidiaries, Carige Assicurazioni and Carige amounted 386 employees and during the period Vita Nuova, amounted to 337.6 m at 30th June the reorganisation of the distribution network 2004, up 5.7 per cent over December 2003. continued with the closure of 14 offices, bringing Claims paid were 3.3 per cent down on the number of insurance offices to 413.

185

BANCA CARIGE GROUP INSURANCE COMPANIES (thousands of Euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/03

Premiums issued 337.568 131.915 670.730 319.419 5,7 of which non-life car insurance 126.268 62.951 255.656 134.051 -5,8 Claims paid 201.585 96.886 403.508 208.392 -3,3 Employees 386 387 377 396 -2,5 Offices 413 413 416 427 -3,3

Following the completion in March 2004 of the with a previous agreement between the parties share capital increase carried out by Carige in 1997, Banca Carige’s holdings in the two Assicurazioni totalling 42.3 m along with the insurance subsidiaries rose to, respectively, purchase by Banca Carige of La Basilese’s 98.11 per cent in Carige Assicurazioni and 100 residual holding in the company in accordance per cent in Carige Vita Nuova. CARIGE ASSICURAZIONI (thousands of euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03

Investments 605.759 581.192 553.650 508.723 9,4 19,1 Technical reserves (1) 566.311 570.199 570.234 497.944 -0,7 13,7 Shareholders' equity 163.365 163.330 140.862 120.365 16,0 35,7 Net profit 1.836 727 2.710 1.700 8,0 Premiums issued 249.726 113.265 480.411 240.315 3,9 of which non-life car insurance 126.268 62.951 255.656 134.051 -5,8 Percentage share 50,6% 55,6% 53,2% 55,8% Claims received 73.684 27.120 141.666 64.632 14,0 of which non-life car insurance 29.249 12.608 67.062 31.042 -5,8 Claims paid (2) 162.692 75.166 335.424 172.247 -5,5 Employees 337 337 327 345 3,1 -2,3 Offices 413 413 416 427 -0,7 -3,3 (1) Excluding reinsurance. (2) Item includes expenses relating to damages paid during the year.

Carige Assicurazioni closed the half year with an measures, produced consistent growth in other 8 per cent increase in net profit (1.8 m) in non-life classes (+18 per cent) and, comparison to 2003’s interim result (1.7 m) consequently, greater equilibrium in the 2002. company’s portfolio. In 1999, third-party car Total premiums issued during the period – insurance represented 65.6% of premiums 249.7 m – rose by 3.9 per cent. A policy of issued, whilst at the end of June 2004 the share careful risk monitoring continued and brought was 50.6 per cent. Other motor-related with it a 5.8 per cent fall in third-party car premiums account for 8.6 per cent of the insurance premiums and a reduction of around portfolio; other basic classes (‘elementari’) rose 21,000 contracts. Despite this drop in third-party to 40.8 per cent. car insurance premiums, there was a 8.4 per There was a 14 per cent increase in claims cent increase in other car-related insurance during the first half of the year due exclusively to premiums. Diversification from third-party car basic classes. In fact, the qualitative insurance, supported by specific marketing improvement in the portfolio continued as shown

186 by a 5.8 per cent fall in motor insurance claims present statements result from positive (1,800 fewer claims). The claims/premiums ratio performances recorded prior to the first half of at 30th June 2004 was 64.8 per cent, down on 2004. These increases exceed financially- the previous figures of 71.8 per cent in June generated revenues for the period. There was 2003 and 67.1 per cent in December 2003. an 11 per cent growth in the premium balance Technical provisions totalled 461.2 m, slightly from 79.1 m in June 2003 to 87.8 m. With greater than previously recorded levels (+1.1 regards to the company’s product portfolio, a per cent). At 30th June 2004, there were 337 further two tranches of index linked policies were members of staff (8 more than in June 2003 and issued: Carige Index Protezione Valore, Carige 10 more than in December). Restructuring of the Index Evoluzione Valore and new unit linked distribution network continued with the closing of product, Carige Unit Dinamicamente Protetta. 27 offices since last June (3 closures during the Linked policies make up 59.3 per cent of the first half of 2004). The total number of offices at total offer and rose by 8.6 per cent during the 30/6/04 was 413. first half of the year. Distribution shares for the In the light of observations made by the Italian company’s products are as follows: bank insurance regulator ISVAP, a three-year (2004- branches, 69.1 m (78.7 per cent of the total); 2006) reorganisation plan for the company was insurance offices, 18.7 m (21.3 per cent). drawn up, which received regulatory approval in Total amounts paid out in the form of July 2004 (ISVAP’s letter dated 9th July). The reimbursements or damages amounted to 38.9 plan includes the accounting over the three-year m, an increase of 7.6 per cent over 2003’s period 2004-06 of the reductions to reinsurance figure of 36.1 m. With regards to financial treaties of previous periods in line with ISVAP’s management results, the balance of the recommendations. traditional component totalled 9.1 m, 22 per The company also deliberated the calling before cent lower than 11.6 m recorded the previous the end of September of an extraordinary June. Unit-linked product management shareholders’ meeting in order to consider a amounted to 7.8 m (June 2003: 3.3 m). proposed share capital increase of 12.2 m. At 30/6/04, there were 49 employees and 310 Within 30th September the Board of Directors of offices (June 2003: 292). the company will also deliberate the issue of a Some administrative and productive duties are subordinated loan of 2.5 m, again as performed on the behalf of the Group’s recommended by ISVAP. insurance Carige Vita Nuova, closed the year with a net companies by other associated or correlated profit of 1.5 m, 0.4 m lower than in June 2003 firms also in the form of outsourcing. In line with (1.9 m). This fall is principally the result of CONSOB’s requirements, the relations existing reductions in financially-generated revenues and between these firms and the Group are at all revaluations to reserves relating to traditional times regulated by market conditions. products. Reserve increases accountable in the

187 CARIGE VITA NUOVA (thousands of euros)

Change % 30/6/04 31/3/04 31/12/03 30/6/03 6/04 6/04 12/03 6/03

Investments (1) 1.055.344 1.017.052 1.001.843 918.922 5,3 14,8 Technical reserves (2) (3) 961.467 913.105 903.847 815.023 6,4 18,0 Shareholders' equity 49.600 53.026 49.226 49.212 0,8 0,8 Net profit 1.475 498 3.801 1.882 -21,6 Gross premiums issued 87.842 18.650 190.319 79.104 11,0 - Insurance offices 18.699 8.459 44.278 18.406 1,6 - Banking branches 69.143 10.191 146.041 60.698 13,9 * Individual policies 34.697 15.227 68.235 29.364 18,2 * Collective policies 1.023 624 5.144 1.743 -41,3 * Unit linked 52.122 2.799 116.940 47.997 8,6

Amounts paid 38.893 21.720 68.084 36.145 7,6 Employees 49 50 50 51 -2,0 -3,9 Offices 292 299 309 310 -5,5 -5,8 (1) Includes those investments in which risk levels are recognised and backed by the assured and pension funds. (2) Includes those reserves in which risk levels are recognised and backed by the assured and pension funds. (3) Excluding reinsurance.

Carige Asset Management SGR SpA, received consolidated into the Banca Carige Group in authorisation to carry out asset management 2001. In the light of the existing service contract, services and was enrolled in the registry of the company’s activities are defined by the manager trusts on January 2004. The company parent company. During the first half of 2004, will seek to achieve heightened profitability by securitisation-related revenues totalled 21.7 m, integrating all the Group’s asset management an amount which is, as in previous accounting business. It will also have autonomy in periods, significantly higher than that foreseen in developing new products and be equipped to the repayment schedule. At 30th June 2004, all offer our clients significant cost containments. class A securities had been repaid along with When fully operational, the company will part of the class B issue. manage private banking solutions both in Priamar Finance Srl is the special purpose securities and funds, collective mutual funds, vehicle formed during the securitisation of pension funds in addition to managing the outstanding bad loans carried out by Cassa di Group’s securities portfolio. As the company is Risparmio di Savona at the end of 2002. still in its start up phase, a loss of around euro Following the acquisition of 60 per cent of the 263,000 was recorded. Business activity consists company’s share capital by Banca Carige, the for the moment in the provision of individual company was incorporated into the Group. management services along with the recent Repayment flows at 30/6/04 were in line with addition of mutual funds following the creation schedule and amounted to 6.5 m, of which 0.9 of three Carige fund lines (Carige Azionario m was collected during the period. Italia, Carige Obbligazionario Internazionale, Ligure Leasing SpA, fully-owned subsidiary of Carige Bilanciata Euro). In the second half of the Cassa di Risparmio di Savona, is the object of year, the company will manage the three mutual reorganisation that consists in the company’s investment funds previously managed by Nextra closure. Remaining outstanding lease contracts SGR SpA; this will be followed by three funds were sold during March and April; the previously managed by Eptafund SGR. company’s registered offices were also sold. Argo Finance One Srl was formed in 2002 as Residual lease contracts total 0.4 m and refer to the special purpose vehicle for the securitisation bad lease positions for a net credit balance of of bad loans carried out by the parent company, 1.5 m. The merger of the company into Cassa Banca Carige. After the purchase of a 60% di Risparmio di Savona received Bank of Italy holding by the latter, Argo Finance was authorisation on 28th June 2004. The majority

188 of the company’s 18 members of staff have Immobiliare Ettore Vernazza SpA recorded an been transferred to Cassa di Risparmio di interim profit of euro 477,000, down on the Savona or Banca Carige. previous half-year result of euro 439,000. Immobiliare Carisa Srl, a fully-owned subsidiary Other subsidiaries of Cassa di Risparmio di Savona, ended the year with a loss of euro 18,000, principally the Galeazzo Srl principally manages property result of interest charges of euro 107,000 leased to Banca Carige in Lavagna (to the east payable to Carisa. of Genoa). It also manages other property Centro Fiduciario SpA continued to bring in leased to third parties in Genoa. Interim net good results despite no longer being able to profit was around euro 23,000 in comparison benefit from previously favourable legislation. to euro 68,000 euros at 30/6/03. The fall stems Gross operating income at 30/6/04 was euro from reduced current account interest revenues 118,000 (+7.1 per cent). This increase was following the distribution in 2003 of generated by increased revenues (euro extraordinary reserves (1.2 m). 413,000; +4.31 per cent). Related costs for the Columbus Carige Immobiliare SpA manages period totalled euro 295,000 (+3.2 per cent). the property leases of the Group’s subsidiaries Extraordinary income rose by euro 21,000 in as well as investing in real estate. The company spite of falls in interest rates. This rise is closed the half year with a negative result of substantially the result of reduced extraordinary euro 9,000 in comparison to a previous interim charges. Interim net profit was euro 76,000, an profit of euro 505,000 euros. increase of euro 20,000 over 30/6/03. Positive The result reflects, as in previous years, trends in economic results were sustained by an real estate sales and acquisitions destined for encouraging increase in business, evidenced by credit recovery purposes. The company a rise in the number of contracts (+1.7 per purchased for resale purposes at auction two cent). large properties, one in the extreme east of Liguria (Sarzana in the province of Spezia) and the other in Savona.

189 SIGNIFICANT EVENTS AFTER 30TH from 1st October 2004. The review puts into place four macro areas: governance and JUNE 2004 control; distribution; administration and support; production. During August the rating agency Fitch upgraded On 30th July, the respective Meetings of Ligure from AA to AAA its rating of a tranche of class B Leasing and Cassa di Risaprmio di Savona securities issued by the special purpose vehicle approved the merger of the former into Carisa. Argo Finance One Srl within the confines of the securitisation of non performing loans carried The Board of Directors of Banca Carige and the out by Banca Carige at the end of 2000. Shareholders’ Meeting of Carricara Holding On 6th September a new Banca Carige was approved on 2nd August the merger of the latter opened in Viterbo, to the north of Rome. into Banca Carige. The merger contract signed Staff levels of the Banca Carige Group at the on 1st September gives Banca Carige direct end of August totalled 4,679 employees. control over 90 per cent of Cassa di Risparmio di Carrara’s share capital.

Banca Carige’s Board of Directors in its meeting of 2nd August deliberated a structural and organisational review of the Bank with effect

Genoa, 9th September 2004 The Board of Directors

190

CONSOLIDATED BALANCE SHEET

191 CONSOLIDATED BALANCE SHEET

ASSETS Change % (thousands of E uros) 30/6/04 31/12/03 30/6/03 6/04-12/03 6/03-12/02 10 - CASH AND DE POSITS WITH CE NTR AL BANKS AND POST OFFICES 156.765 192.509 152.051 - 18,6 - 22,9 20 - TREASURY BILLS AND SIMILAR BILLS E LIGIBLE FOR R E FINANCING WITH CE NTR AL BANKS 676.155 884.964 1.030.112 - 23,6 … 30 - DUE FR OM BANKS : 1.237.622 918.431 889.682 34,8 - 32,6 (a) repayable on demand 236.500 346.689 416.911 - 31,8 - 23,9 (b) other depos its 1.001.122 571.742 472.771 75,1 - 38,8 40 - LOANS TO CUSTOMERS 10.501.410 9.421.748 8.946.387 11,5 2,3 including: - loans using funds managed on behalf of third parties 304 255 260 19,2 38,3 50 - BONDS AND OTHER DEBT SECURITIES: 1.944.985 1.501.080 1.626.518 29,6 - 7,6 (a) is s ued by public bodies 891.112 721.226 893.417 23,6 - 13,4 (b) is s ued by banks 494.830 421.719 392.461 17,3 - 8,6 including: - own s ecurities 83.631 63.930 42.352 30,8 - 5,7 (c) issued by financial ins titutions 452.961 258.709 246.512 75,1 23,6 including: - own s ecurities - - - - - (d) is s ued by others 106.082 99.426 94.128 6,7 - 4,9 60 - S HAR E S , QUOT AS AND OT HE R E QUIT Y SECURITIES 298.601 177.932 172.484 67,8 - 14,0 70 - EQUITY INVESTMENTS 81.871 77.524 82.648 5,6 - 20,4 (a) carried at equity 58.379 59.361 57.033 - 1,7 - 24,9 (b) others 23.492 18.163 25.615 29,3 - 7,9 80 - INVE STME NTS IN GR OUP COMP ANIES 206.350 172.600 152.120 19,6 - 0,2 (a) carried at equity 206.350 172.600 152.120 19,6 - 0,2 (b) others - - - - - 90 - POSITIVE DIFFERENCE ARISING FROM CONSOLIDATION 168.121 87.538 90.387 92,1 - 3,1 100 - POSITIVE DIFFERENCE ARISING FROM APPLICATION OF THE EQUITY METHOD 15.129 16.168 14.154 - 6,4 - 4,7 110 - INTANGIBLE FIXE D ASSE TS 466.978 474.210 478.129 - 1,5 - 0,5 including: - start-up cos ts 2.847 3.268 1.402 - 12,9 32,5 - goodwill 437.121 442.392 446.727 - 1,2 - 0,9 120 - TANGIBLE FIXED ASSETS 1.061.565 1.019.881 990.399 4,1 2,4 140 - OWN S HAR E S 38.824 - 5.261 ... - 79,5 (nominale value: 12,733) 150 - OT HE R AS S E T S 1.037.009 864.654 963.738 19,9 19,1 160 - ACCRUED INCOME AND PREPAID EXPENSES: 110.854 109.015 103.135 1,7 14,2 (a) accrued income 100.183 100.842 91.916 - 0,7 14,2 (b) prepaid expens es 10.671 8.173 11.219 30,6 14,4 including: - dis count on bonds is s ued 3.182 3.596 4.014 - 11,5 - 9,3

TOTAL ASSETS 18.002.239 15.918.254 15.697.205 13,1 2,0

192 LIABILITIE S AND STOCKHOLDER S' EQUITY Change % (thousands of Euros) 30/6/04 31/12/03 30/6/03 6/04-12/03 6/03-12/02 10 - AMOUNTS OWED TO CR EDIT INSTITUTIONS: 1.289.011 1.006.049 1.334.404 28,1 - 9,0 (a) repayable on demand 139.211 20.329 111.069 ... … (b) with agreed maturity dates or periods of notice 1.149.800 985.720 1.223.335 16,6 - 14,0 20 - AMOUNT S OWE D T O CUS T OME R S : 7.636.015 6.861.171 6.665.764 11,3 - 3,4 (a) repayable on demand 7.278.203 6.595.428 6.243.322 10,4 0,1 (b) with agreed maturity dates or periods of notice 357.812 265.743 422.442 34,6 - 36,1 30 - DEBTS EVIDENCED BY CERTIFICATES: 5.206.854 4.512.775 4.206.581 15,4 15,0 (a) bonds 4.759.247 4.073.476 3.721.630 16,8 18,3 (b) certificates of depos its 336.169 351.316 387.342 - 4,3 - 9,8 (c) other 111.438 87.983 97.609 26,7 20,1 40 - F UNDS MANAGE D ON B E HAL F OF T HIR D PARTIES 1.118 368 367 ... 18,4 50 - OTHER LIABILITIES 1.047.750 655.700 1.027.121 59,8 20,7 60 - ACCR UE D E XP E NS E S AND DE FE R R E D INCOME 171.758 166.822 164.836 3,0 10,5 (a) accrued expens es 96.660 97.455 96.627 - 0,8 15,1 (b) deferred income 75.098 69.367 68.209 8,3 4,6 70 - R ESER VE FOR TER MINATION INDEMNITIES 107.998 96.814 99.883 11,6 - 3,5 80 - RESERVES FOR RISKS AND CHARGES 405.518 440.194 386.602 - 7,9 - 8,1

(a) reserves for pensions and similar commitments 313.408 295.310 293.827 6,1 - 0,1 (b) res erves for tax ation 64.686 106.847 62.585 - 39,5 - 29,3 (c) consolidation reserves for future risks and charg - - - - - (d) other res erves 27.424 38.037 30.190 - 27,9 - 20,9 90 - RESERVES FOR LOAN LOSSES 7.149 19.997 14.644 - 64,2 - 100 - RESERVES FOR GENERAL BANKING RISKS 100 100 5.165 - - 110 - SUBOR DINATED LOANS 517.055 517.055 400.000 - - 130 - NEGATIVE DIFFERENCE ARISING FROM APPLICATION OF THE EQUITY METHOD 43.176 34.953 34.929 23,5 - 0,6 140 - MINORITY INTERESTS 25.667 17.362 17.353 47,8 - 1,1 150 - CAPITAL STOCK 1.113.327 1.113.327 1.020.550 - - 160 - ADDITIONAL PAID-IN CAPITAL 258.666 255.023 139.941 1,4 2,8 170 - RESERVES: 114.612 127.752 127.290 - 10,3 - 6,4 (a) legal res erve 75.788 67.351 67.351 12,5 18,4 (b) reserve for purchase of treasury stock 38.824 - 5.261 ... - 79,5 (c) statutory reserves - - - - - (d) other reserves - 60.401 54.678 - 100,0 2,2 180 - REVALUATION RESERVES 8.649 8.050 8.050 7,4 - 200 - NE T INCOME 47.816 84.742 43.725 - 43,6 - 33,9

TOTAL LIABILITIES AND STOCKHOLDER S' EQUITY 18.002.239 15.918.254 15.697.205 13,1 2,0

GUARANTEES AND COMMITMENTS

10 - GUAR ANTEES GIVEN 1.244.125 1.336.530 1.390.807 - 6,9 - 0,1 including: - acceptances 10.983 2.859 5.896 ... 38,8 - other guarantees 1.233.142 1.333.671 1.384.911 - 7,5 - 0,2 20 - COMMITMENTS 903.518 989.572 916.349 - 8,7 11,6 including: - repurchase agreements - - - -

193 CONSOLIDATED INCOME STATEMENT

Change % (thousands of Euros) 30/6/04 2003 30/6/03 6/04-6/03 6/03-6/02 10 - INTEREST INCOME AND SIMILAR REVENUES 324.985 613.535 311.984 4,2 1,3 including: - loans and advances to cus tomers 264.942 494.103 252.897 4,8 5,9 - fix ed-income s ecurities 48.855 96.379 48.548 0,6 - 15,9 20 - INTEREST EXPENSE AND SIMILAR CHARGES - 118.381 - 238.334 - 127.361 - 7,1 - 5,9 including: - amounts owed to cus tomers - 26.323 - 59.471 - 33.080 - 20,4 - 14,3 - s ecurities is s ued - 75.823 - 135.891 - 69.145 9,7 - 6,4 30 - DIVIDE NDS AND OTHE R R E VE NUE S : 3.495 18.536 17.626 - 80,2 … (a) from shares, quotas and other equity s ecurities 893 13.085 13.018 - 93,1 … (b) from equity inves tments 2.602 5.451 4.608 - 43,5 - 16,9 (c) from equity investments in group companies - - - ...... 40 - COMMIS S ION INCOME 110.451 204.447 98.124 12,6 7,3 50 - COMMISSION EXPENSES - 8.487 - 16.351 - 7.913 7,3 34,3 60 - GAINS (LOSSES) FROM FINANCIAL TRANSACTIONS, NET 4.317 10.674 - 866 ... - 73,2 70 - OTHER OPERATING INCOME 143.668 167.518 79.981 79,6 7,6 80 - ADMINISTRATIVE COSTS: - 221.128 - 416.916 - 206.761 6,9 11,6 (a) pers onnel - 137.983 - 268.412 - 133.452 3,4 13,4 including: - wages and s alaries - 91.610 - 175.162 - 87.705 4,5 11,9 - social security cos ts - 25.388 - 49.179 - 24.339 4,3 12,9 - termination indemnities - 6.269 - 10.959 - 6.182 1,4 8,2 - pens ions and s imilar commitments - 8.465 - 18.850 - 7.775 8,9 14,7 (b) other adminis trative cos ts - 83.145 - 148.504 - 73.309 13,4 8,6 90 - DE P R E CI AT I ON AND AMOR T I Z AT I ON OF I NT ANGI B L E AND TANGIBLE FIXED ASSETS - 73.002 - 137.238 - 67.654 7,9 2,3 100 - PROVISIONS FOR RISKS AND CHARGES - 2.240 - 4.209 - 3.364 - 33,4 41,1 110 - OTHER OPERATING EXPENSES - 4.202 - 9.199 - 2.435 72,6 - 62,3 120 - PR OVISIONS FOR LOAN LOSSES AND FOR GUAR ANTEES AND COMMIT ME NT S - 103.611 - 72.588 - 29.587 ... - 5,2 130 - R ECOVER IES OF LOANS AND R EVER SALS OF PR OVISIONS FOR GUAR ANTEES AND COMMITMENTS 4.532 11.295 4.715 - 3,9 - 31,9 140 - ADDITIONAL PROVISIONS FOR LOAN LOSSES - 35 - 19.744 - 62 - 43,5 - 70,3 150 - WRITE-DOWNS TO FINANCIAL FIXED ASSETS - - - ... … 160 - RECOVERIES OF FINANCIAL FIXED ASSETS 2 - - ... … 170 - PROFIT (LOSSES) ON INVESTMENTS CARRIED AT EQUITY 3.260 10.030 2.152 51,5 10,6 180 - I NCOME F R OM OR DI NAR Y ACT I V I T I E S 63.624 121.456 68.579 - 7,2 25,0 190 - EXTR AORDINARY INCOME 9.823 43.121 23.787 - 58,7 … 200 - EXTRAORDINARY EXPENSES - 4.338 - 8.149 - 4.454 - 2,6 24,7 210 - EXTR AORDINARY INCOME, NET 5.485 34.972 19.333 - 71,6 … 230 - VARIATION OF RESERVES FOR GENERAL BANKING RISKS - - 5.065 - ... - 240 - INCOME TAXES - 19.931 - 74.721 - 43.050 - 53,7 58,6 250 - MINORITY INTERESTS - 1.362 - 2.030 - 1.137 19,8 78,2 260 - NE T I NCOME 47.816 84.742 43.725 9,4 47,6

194

CONSOLIDATED EXPLANATORY ratio % Galeazzo Srl real estate 100.000 NOTES Columbus Carige SpA real estate 100.000

INTRODUCTION Immobiliare E. real estate 100.000 Vernazza SpA These consolidated financial statements have Caricarrara Holding Finance 100.000 been prepared in compliance with art. 81 of SpA Consob ruling n. 11971 of 14th May 1999 Carige Asset Finance 100.000 and with Consob ruling n. 12475 of 6th April Management Sgr SpA 2000. Ligure Leasing SpA Finance 95.901 The Balance Sheet and Income Statement Cassa di Risparmio di Bank 95.901 show amounts in thousands of euros. Savona SpA Comparison is made to the period ending Immobiliare Carisa Srl Real estate 95.901 30/6/2003. Captions which show no Centro fiduciario SpA Trust 96.110 amounts in the balance sheets of the periods company under examination have not been entered. Cassa di Risparmio di Bank 90.000 In the explanatory notes, amounts are Carrara SpA expressed in millions of euros, unless Argo Finance One Srl Finance 60.000 otherwise stated. Captions which show no Priamar Finance Srl Finance 60.000 amounts for the periods under examination Banca del Monte di Bank 54.000 have been omitted. Lucca SpA The securitisation of performing credits carried out by Banca Carige is stated at With regards to variations in the area of section 11.8 – ‘Securitisation transactions’. consolidation, on 14th January 2004 Banca The same section contains information Carige completed the purchase from regarding other securitisation transactions Stitching Faro of a further 55 per cent of carried out by Banca Carige (performing and share capital in Priamar Finance Srl. non performing loans) and by Cassa di On 16th January 2004, Banca Carige Risparmio di Savona in which the Group completed the acquisition of 41.05 per cent Leader was servicer. of Carinord 2 SpA’s share capital via which Section 12.6 “Information regarding the Bank gained control of Cassa di securitisation operations” contains details Risparmio di Carrara SpA. On 21st April regarding the securitisation operations 2004, following Bank of Italy authorisation, carried out by Argo Finance One srl and the break up of Carinord 2 was carried out Priamar Finance srl. and a new company – Carricarra Holding In addition to details provided in the SpA- was formed in which Banca Carige has explanatory notes full details are also given a 100 per cent holding. In turn, Carricarra in the Board of Directors’ report. Holding has a 90 per cent stake in Cassa di

Risparmio di Carrara. Basis of consolidation As Cassa di Risparmio di Carrara was The Consolidated Financial Statements already fully consolidated at the beginning of contains financial data relative to Banca the half year accounting period, all costs and Carige and all its subsidiaries operating revenues relating to the same bank are directly or indirectly in banking, financial and recorded in the consolidated income non-financial services. statement. The following companies were fully The following companies have been valued consolidated: according to the equity method:

Company Activity Equity Company Activity Equity

195 ratio % from the application of the equity method. Carige Vita Nuova SpA insurance 100.00 The same criteria was also applied in the Carige Assicurazioni SpA insurance 99.460 valuation of the Group’s holding in Società Assi 90 Srl Insurance 59.798 Consotile per il Diploma di Giurista connected d’Impresa Srl. AG Srl Insurance 59.798 connected Statements referred to Frankfurter Banking 47.500 Bankgesellschaft AG The consolidated balance sheet was prepared by using the financial statements of Savona 2000 Srl Insurance 47.838 the consolidated companies reclassified and connected adjusted to conform to regulations in force Assimilano Srl Insurance 35.879 and the Group’s accounting principles. connected

Autostrada dei Fiori SpA other 20.456 Reference date Recina Servizi Srl Insurance 14.949 conn Financial data from those statements used for consolidation are as at 30/6/04. The The consolidation of Carige Assicurazioni accounting of the associated companies SpA and Carige Vita Nuova was carried out under the equity method makes reference to by applying the equity method in the light of the most recently approved balance sheet. the nature of insurance companies’ activities and, subsequently, their financial statements. Consolidation principles With reference to the insurance companies of the Group the following variations in equity Subsidiaries, excluding those operating in took place: insurance, are fully consolidated. Therefore, - in March 2004 Banca Carige subscribed assets, liabilities, off-balance sheet items as 18,948 new shares (nominal value euro well as receivables and payables are 982, premium euro 193) as part of a share included. The insurance companies were capital increase of euro 18,636,396; accounted for under the equity method. - in June 2004 Banca Carige acquired from Consolidated holdings in subsidiaries are La Basiles 8,672,000 shares in Carige offset by the corresponding proportion of the Assicurazioni and 6,400,000 shares in subsidiaries’ carrying value of net assets Carige Vita Nuova; recorded in the consolidated statement for - during the first six months of the year the first time. In the event of differences Carige Assicurazioni acquired a further 19 emerging, these are put down to the own shares. subsidiaries’ assets and liabilities. Differences With reference to Carige Assicurazioni, the for the year resulting from consolidation Group’s equity ratio rose from 90.818% to pertaining to third parties are recorded at a 99.460%. specific caption. In accordance with the Bank With reference to Carige Vita Nuova SpA, of Italy’s instructions regarding consolidated the Group’s equity ratio rose from 92.809% statements, positive differences arising from to 100%. consolidation are partially offset by the The Group maintains significant direct and relative revaluation and credit risk reserve indirect holdings in the following insurance provisions of those subsidiaries to which they companies: U.C. Sport e Sicurezza (49.865 refer. In addition, these are written down per cent); Atoma Srl (39.865 per cent); against negative differences stemming from Assistars Srl (20.433 per cent); BDA SpA consolidation until the two amounts match. (11.960 per cent); Didlass Srl (11.481 per The remaining amount is considered cent). The valuation of these companies was goodwill and is charged to assets at “Positive based on the values stated in each differences arising from consolidation”. company’s financial statements as no Subsequent to the year in which significant differences would have arisen

196 consolidation was calculated, changes pertaining to the Group in subsidiaries’ net The European Commission in its decision assets are recorded in the consolidated of 11th December 2001 judged the tax statements at the relevant caption under relief foreseen by Legislative decree liabilities; changes relative to third parties are 153/99 as state aid incompatible with the recorded at caption 140 “Minority interests”. principles of the common market. Value adjustments and provisions to reserves The Italian Government lodged an appeal carried out in accordance with tax against the decision with the Court of regulations were written down; relevant European Justice. The Italian Banking deferred tax was covered by provisions. Association (ABI) also presented on 25th Significant intra-subsidiary relations have February 2002 an appeal against the been eliminated. decision at the Tribunal of Luxembourg. The accounting principles applied in the Banca Carige actively supports ABI’s preparation of financial statements of those decision and will give the necessary help companies consolidated were brought into required in preparing an effective line of line in the case of significant differences defence. being present at consolidation. On 15th June 2002 Law decree 63/2002 The value of insurance companies and those was converted into Law 212/2002 in which Banca Carige has a significant implementing the European Commission’s holding was calculated by applying the decision and suspending the tax relief equity method. In the case of a company in contained in articles 22 and 23 of which Banca Carige has a significant interest Legislative decree 153/99 from 2001 having itself to prepare a consolidated until the question is resolved. From 2001 statement, consolidated net assets were used onwards awaiting judgement on ABI’s as the basis for calculation. appeal, the Bank suspended special Positive differences arising from the increase reserve provisions. On 24th December in value of the investment are recorded 2002 Law decree 282/02 was enacted under net equity as “equity investments” for which, in carrying out the provisions of the the share that refers to fixed assets, and at EU Commission, obliged those banks “Positive differences arising from application which had benefited from Legislative of the equity method” for the part related to decree 153/99 to return the sums owed goodwill. plus interest charges within 31/12/02. Negative differences are classified under Banca Carige repaid a total of “Negative differences arising from 1,557,000. application of the equity method”. Given the nature of the case (litigation Positive or negative changes in the value of with the European Community) this the equity investment arising in the first six amount was recorded under credits. months of the year are accounted for. This The total credit is matched by adequate change is recorded at caption 170 of the provisions to tax reserves in the event of a consolidated income statement “Profit (loss) negative decision on the part of the Court on investments carried at equity”. and the subsequent loss of the credit involved. Consob request for information (Consob communication no. 1011405 b) Special rate mortgages (Law dated 15/2/2001) 133/99 and article 145 of Law accompanying 2001 Budget) Below is presented the information Italian banks are required to supply to Consob. Article 29 of Law 133/99 foresees the re- negotiation of mortgage interest rates at a a) Tax relief foreseen by articles reference rate equal to the system-wide 22 and 23 of Legislative decree average (as defined by article 145 of the 153/99 Law accompanying the 2001 budget),

197 with the subsequent charges, all or in Bank’s financial statements, the consolidated part, to be covered by the State or public financial statements, and a limited review of bodies. the half yearly report at 30 June.

c) Capitalisation of interest due (Constitutional Court Sentence 425 of 9/10/00)

The Constitutional Court’s ruling number 425 of 9/10/00 declared illegitimate the contents of article 25, Legislative decree 344/99. The article excluded from liability to legal action those clauses between banks and customers relating to capitalisation of interest due signed after the coming into effect of the Inter- ministerial Committee for Credit and Saving’s deliberation of 22/4/00, enacting Legislative decree 344/99. The Constitutional Court confined its judgement exclusively to a criticism of the government in its enactment of the above- mentioned law. In the light of the above and the inevitability of further legislation on the matter Banca Carige has declined the few requests it has received from customers for the return of interest paid over ten years as a result of the quarterly capitalisation of bank interest income. The Bank does not view the Constitutional Court’s sentence as an acceptance of the intrinsic reasonableness of article 25, Legislative decree 344/99 but merely as a criticism of the government’s enactment of amnesty-type legislation which goes beyond the confines of its powers as stated by Law 128/98. The Group leader has declined the few requests so far received by holders of accounts (open or closed) for the return of interest charged over the last ten years, calculated on a quarterly basis.

These consolidated financial statements were audited by Deloitte & Touche SpA. The selection of the Bank’s auditors for the period 2003-2005 was approved by the Shareholders’ Meeting of 31/3/03 pursuant to Legislative decree 58/98. The duties of the auditors for the period are the auditing of the

198 SECURITIES PORTFOLIO AND OFF- PART A BALANCE SHEET TRANSACTIONS ACCOUNTING PRINCIPLES EXCLUDING THOSE IN CURRENCY

Investment securities. Investment securities are SECTION 1 valued at cost, adjusted on an accruals basis for The Accounting Policies are in compliance with the difference between cost and their redemption law decree 87/92 and the Bank of Italy’s at maturity and includes unamortized issue provisions of 30/7/92 and subsequent premiums or discounts. modifications and are the same as those used In the event of long term deterioration of the previous year with the exception of the handling issuer’s solvency, the securities are written down. of securities deriving from structured securitised In the case of those securities deriving from debt transactions. structured securitised debt transactions, writing For the purposes of calculating assets and down is carried out on the basis of expected liabilities related to deferred taxes and in proceeds stemming from the underlying. addition to stabilizing the tax rate for the The original value of investment securities is accounting period ending 30th June 2004, the reinstated when the reasons for writing down evaluation method aimed at defining the cease to apply. temporal horizon was changed. Also to comply Trading securities. with the IAS 12 the temporal horizon was – trading securities quoted on organised extended beyond five years as on the basis of markets are valued either at purchase price the past experience future trends in taxable or the average market price for the last income don’t suggest that the recovery of month of the year, whichever is lower; deferred tax can be considered unlikely or – securities not quoted on unreasonable. organised markets are valued at cost Furthermore, the Bank exercised the right adjusted for market trends and issuer contained in the Budget Law 2004 (Law solvency. In the case of those securities 350/03, article 2, paragraph 26) to redeem deriving from structured securitised debt gains subject to suspension from liability to tax transactions, value adjustments are carried foreseen by Law 218/90 ('Amato Law') via the out on the basis of expected proceeds payment of tax ('imposta sostitutiva') calculated stemming from the underlying. at a rate of 9 per cent . The purchase price, determined according to the The transaction resulted in a realignment of the principle of daily weighted average, includes tax and book values of those assets revalued on adjustments for the relevant annual quota of allotment (premises, securities and equity issue premium or discount accumulated during investments). Tax due (imposta sostitutiva) is the period the securities are held. recorded at the extraordinary taxed reserve. Securities held at 1/12/91 and still in portfolio at year end 1999 are valued at cost defined as LOANS, GUARANTEES AND the value of transfer to Banca Carige at COMMITMENTS 1/12/91 and adjusted for issue premium or Loans are stated at their estimated realizable discount pursuant to Legislative decree 719/94 value and are determined according to debtors’ and subsequent changes. solvency and the debt-paying difficulty of the The original value of the securities is reinstated debtor’s home country. when the reasons for writing down cease to The valuation of loans is made under the apply. application of either an analytic or lump-sum Any securities to be transferred from the method. investment to trading portfolio will be recorded The interest on overdue loans is adjusted by the at the book value on the date of transfer portion of loans considered to be irrecoverable. calculated on the basis of the criteria applied to Reserves for loan losses, recorded under investment securities foreseen in the Bank of “Liabilities”, have been created exclusively to Italy’s communication of 12/6/01, CONSOB’s offset contingent credit risks. communication no.95001286 of 15/2/95, the Reserves for guarantees and commitments, latter modified by CONSOB’s letter dated recorded under “Liabilities” have been created 15/6/01. Securities transferred still present in to offset this particular kind of risk. portfolio at year end are evaluated according to the criteria applied to the portfolio to which they are destined

199 EQUITY INVESTMENTS Off balance sheet operations, excluding The Bank’s stock rights in relation to its those in currency. Unsettled securities subsidiaries are included under holdings. These transactions are evaluated according to the rights, in the form of securities or not, are held criteria of the portfolio to which they are for investment. destined. Unsettled trading securities Holdings, both substantial and those in Group transactions are evaluated accordingly: subsidiaries, are valued at purchase cost or sub- scription as according to Law 218/90. The cost a) with regards to commitments to purchase is written down to reflect any permanent loss in and commitments to sell which have the value. The original value is reinstated when the same underlying securities with the same reasons for writing down ceased to apply. nominal value, any positive difference between the settlement price of the FOREIGN CURRENCY ASSETS AND commitment to purchase and the settlement LIABILITIES INCLUDING OFF-BALANCE price of the commitment to sell is recorded in SHEET TRANSACTIONS the income statement; Assets, excluding equity investments, and liabilities expressed in foreign currencies are b) the residual commitments to purchase are valued applying the spot rate at 30/6/2004. evaluated at either settlement price or market Equity investments expressed in foreign price, whichever is lower; currencies are valued according to the rate in c) the residual commitments to sell are force at the time of purchase. evaluated at either settlement price or book Off-balance sheet transactions expressed in value, whichever is lower. foreign currencies are valued:

Derivative contracts on securities, interest rate – at the spot rate as of the last business etc., are evaluated accordingly: day of the period in the case of unsettled a) contracts related to underlying equity spot contracts; investments are evaluated at cost and written – at the forward exchange rate as of the down in the event of long-term deterioration last business day of the period for maturities of the is-suer's solvency; corresponding to those of the contracts b) trading derivatives contracts are being valued, in the case of forward evaluated at either cost or market value, transactions. whichever is lower. Market value of contracts

is that quoted at the last day of the business In the case of on-balance sheet assets and year. Those contracts which are not quoted liabilities linked to off-balance sheet assets and on organised markets but which can be liabilities, off-balance sheet items are accounted evaluated according to official parameters, for in a manner similar to the accounting of on- are evaluated at replacement cost at the last balance sheet items. day of the business year;

c) economically-linked trading contracts, TANGIBLE FIXED ASSETS which are closely correlated both technically Tangible assets are recorded at purchase price and financially, are evaluated in the same plus related charges, and include leased assets way. The losses which exceed connected and those assets that are to be leased. gains are recorded in the income statement; The value of tangible fixed assets includes d) hedging contracts on trading securities revaluation in accordance with Laws 575/75, are evaluated in the same way as the 72/83, 413/91 (only for some assets transferred underlying: market value is the average of by merged companies) and with reference to prices and parameters recorded in the last capital gains, Law 218/90. month of the business year. Losses which Advances to supplies for the purpose of tangible exceed gains on securities or gains which fixed assets are included under tangible fixed correspond to losses on securities are assets. recorded in the income statement; Depreciation is determined by using the straight- e) hedging contracts on assets and line method over the useful life of each category. liabilities which are evaluated at cost are in Objects of art, being assets which conserve if turn evaluated at cost. not increase their value, are not amortized.

Included in this category are leased assets, in line with the equity method.

200 Provisions for tax were calculated by each INTANGIBLE FIXED ASSETS company on the basis of forecasted tax liabilities Intangible fixed assets are, in those cases for the period. foreseen by relevant legislation, recorded with Deferred tax provisions have been made relating the consent of the Board of Statutory Auditors to those consolidated revaluations that have had and are amortized on a straight-line basis. Start- a material effect on the result for the accounting up and improvement costs in addition to period and for which subsequently liability to tax research and development costs are amortised is expected. over a period not exceeding five years. Amortisation of goodwill stemming from the OTHER TAX ASPECTS - DEFERRED TAX: purchase of branches from Banco di Sicilia, POSITIVE AND NEGATIVE EFFECTS IntesaBci and Capitalia will be carried out over The calculation of deferred tax is made on the twenty years; from 1st January 2001 for goodwill basis of the equity method with reference to the deriving from the first acquisition, from 1st timing differences existing between the value October 2001 for the second, and from 1st attributed to an asset or liability under January 2003 for the third. accounting criteria and the value attributed to The length of amortisation corresponds to the the same for the calculation of tax. average length of time of goodwill intrinsic in the Tax advanced is recorded under assets subject branches acquired. to the condition that, for prudential reasons, Amortisation rates on goodwill deriving from the there is a reasonable expectation of realising, purchase of branches from Banco di Sicilia, the over a period of five years, taxable income Intesa Group, and from the Capitalia Group sufficient for its recovery. stem from the application of an analytical model The recording of liabilities for taxes payable in which takes into account the expected returns on the future is subject to the condition that there is the branches acquired and the period of time a possibility of the liability to tax occurring. required for their integration into the Banca The treatment of deferred tax in these financial Carige Group. statements is in accordance with the Bank of The application of this methodology represents a Italy's instructions dated 3/8/99. change to the previous simplified method and benefits from heightened information flows from SUPPLEMENTARY PENSION FUND the branches during the year. Consequently, a The subsidiaries’ supplementary pension funds weighted average rate of 2.27% was applied for are managed according to regulations specific 2004. to each company. Unlike the previous amortisation rate, which was at a fixed rate, the method applied from 2002 ACCRUALS AND DEFERRALS utilises a rising-charge rate until the integration Accruals and deferrals are calculated in of the branches acquired is completed (2006 for accordance with the matching principle. the ex-Banco di Sicilia branches; 2007 for the ex-Intesa group branches; 2008 for the ex- POSITIVE CONSOLIDATION AND NET Capitalia group branches). Post-integration EQUITY DIFFERENCES amortisation will be on a fixed-charge basis. Positive consolidation and net equity differences

are amortised over five years. PAYABLES Positive net equity differences relative to majority Payables are recorded at face value with the holdings in insurance subsidiaries are amortised exception of zero coupon and one coupon debt with the consent of the Board of Statutory securities, which are recorded at a value Auditors over a longer period of time in the light corresponding to net proceeds plus accrued of the nature of insurance companies' activities interest.. and the reasonable expectation of slower

depreciation. TERMINATION INDEMNITY Consequently, positive net equity differences Termination indemnity is in accordance with stemming from the consolidation of the current legislation. insurance subsidiaries Carige Assicurazioni and

Carige Vita Nuova are amortised over fifteen RESERVES FOR RISKS AND CHARGES - years. RESERVES FOR TAXATION Differences respectively of net equity and consolidation relative to Cassa di Risparmio di

201 Savona, Banca del Monte di Lucca and Cassa di Risparmio di Carrara are amortised over twenty years.

202 SECTION 2

TAX-RELATED ADJUSTMENTS AND PROVISIONS

2.1 Tax Adjustments Not carried out.

2.2 Tax Provisions Not carried out.

203 PART B CONSOLIDATED BALANCE SHEET

SECTION 1

LOANS

The consolidated loans portfolio, summarized in this section, amounts to 11,895,797 thousands of euro and is analysed below: 30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % - Cash and deposits with central banks and pos t offices (caption 10) 156.765 1,3 192.509 1,8 152.051 1,5 -Due from banks (caption 30) 1.237.622 10,4 918.431 8,7 889.682 8,9 - L oans to customers (caption 40) 10.501.410 88,3 9.421.748 89,5 8.946.387 89,6 T otal 11.895.797 100,0 10.532.688 100,0 9.988.120 100,0

Change 30/6/04 31/12/03 abs olute % 30/6/03

CAP TION 10 "CASH AND DE P OSITS WITH CE NT R AL B ANKS AND P OS T OF F ICE S " 156.765 192.509 - 35.744 - 18,6 152.051 Cas h 156.304 191.271 - 34.967 - 18,3 151.335 Promissory notes of Bank of Italy and postal orders and cheques 5 134 - 129 - 96,3 36 Deposits with: - central banks ------pos t offices 456 1.104 - 648 - 58,7 680 T otal 156.765 192.509 - 35.744 - 18,6 152.051

The item includes 8,395,000 which refers to first-time integration of Cassa di Risparmio di Carrara.

Change 30/6/04 31/12/03 absolute % 30/6/03 1.1 CAP T ION 30 "DUE F R OM B ANKS " 1.237.622 918.431 319.191 34,8 889.682 (a) depos its with central banks 110.340 114.306 - 3.966 - 3,5 153.751 (b) bills eligible for refinancing by central banks - - - - - (c) loans for leased assets - - - - - (d) repurchase agreements 327.603 - 327.603 ... - (e) loans of securities - - - - -

204 Caption 30 detail by technical form is the following:

Change 30/6/04 31/12/03 abs olute % 30/6/03 Nominal value Depos its with central banks 110.340 114.306 - 3.966 - 3,5 153.751 -Compulsory res erves 110.340 114.306 - 3.966 - 3,5 153.751 Depos its with banks 1.131.597 808.021 323.576 40,0 744.649 -Depos its 569.131 725.486 - 156.355 - 21,6 584.406 -Repurchase agreements 327.603 - 327.603 ... - - Dis counted notes 726 1.029 - 303 - 29,4 1.728 - Overdraft facilities 186.760 41.232 145.528 ... 96.247 -Loans (financial backing) 11.385 11.098 287 2,6 17.510 -Long term loans 1.260 1.364 - 104 - 7,6 848 - B ad loans 17.874 17.455 419 2,4 22.267 - Other 16.858 10.357 6.501 62,8 21.643 1.241.937 922.327 319.610 34,7 898.400 (-) Total specific allowances 4.315 3.896 419 10,8 8.718 - bad loans 3.802 3.383 419 12,4 8.195 - other loans 513 513 - - 523 T otal 1.237.622 918.431 319.191 34,8 889.682

The item includes 68,334,000 (excluding relations with Banca Carige) which refers to first-time integration of Cassa di Risparmio di Carrara.

At 30/6/04, all non-guaranteed credits to residents outside the OECD were evaluated analytically; credit risk positions are classified as either bad loans or watchlists.

1.2 CASH CREDITS BANKS 30/6/04 31/12/03 S pecific S pecific CATEGOR IES/BALANCES Gross value Net value Gross value Net value allowances allowances A. Credits at ris ks 19.310 4.315 14.995 19.281 3.896 15.385 A.1 Bad loans 17.874 3.802 14.072 17.455 3.383 14.072 A.2 Watchlis ts 830 513 317 792 513 279 A.3 Credits undergoing restructuring ------A.4 R es tructured loans ------A.5 Non-guaranteed credits towards countries at ris k 606 - 606 1.034 - 1.034 B. Performing credits 1.222.627 - 1.222.627 903.046 - 903.046

30/6/03 S pecific CATEGOR IES/BALANCES Gross value Net value allowances A. Credits at ris ks 23.553 8.718 14.835 A.1 Bad loans 22.267 8.195 14.072 A.2 Watchlis ts 872 523 349 A.3 Credits undergoing restructuring - - - A.4 R es tructured loans - - - A.5 Non-guaranteed credits towards countries at ris k 414 - 414 B. Performing credits 874.847 - 874.847

At 30/6/04, items A.1 “Bad loans” and A.2 “Watchlists” refer entirely to country-risk positions.

205 1.3 DOUBTFUL LOANS BANKS Country risk Loans subject to R escheduled non- CATEGORIE S/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening expos ure at 31/12/03 17.455 792 - - 1.034 A.1 of which: interes t on overdue loans 1.100 - - - - B. Increases 419 38 - - 231 B. 1 ex-performing loans - - - - - B.2 interest on overdue loans 419 - - - - B.3 transfer from other doubtful loan categories - - - - - B.4 other increases - 38 - - 231 C. Decreases - - - - 659 C.1 re-performing credits - - - - - C.2 write-offs - - - - - C.3 payments received - - - - 659 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - - - - - C.6 other decreases - - - - - D. Total clos ing expos ure at 30/06/04 17.874 830 - - 606 D.1 of which: interes t on overdue loans 1.519 - - - - Country risk Loans subject to R escheduled non- CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening expos ure at 31/12/02 21.720 445 - - 967 A.1 of which: interes t on overdue loans 364 - - - - B . Increas es 1.101 502 - - 701 B. 1 ex-performing loans - - - - - B .2 interes t on overdue loans 1.100 - - - - B.3 transfer from other doubtful loan categories - 484 - - - B .4 other increas es 1 18 - - 701 C. Decreas es 5.366 155 - - 634 C.1 re-performing credits - - - - - C.2 write-offs 5.366 - - - - C.3 payments received - - - - 1 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - - - - 484 C.6 other decreases - 155 - - 149 D. T otal clos ing expos ure at 31/12/03 17.455 792 - - 1.034 D.1 of which: interes t on overdue loans 1.100 - - - -

206 Country risk Loans subject to Rescheduled non- CATE GOR IE S/BALANCE S Bad loans Watchlists res cheduling loans guaranteed loans A. Total opening expos ure at 31/12/02 21.720 445 - - 967 A.1 of which: interes t on overdue loans 364 - - - - B. Increases 547 502 - - 57 B. 1 ex-performing loans - - - - - B.2 interest on overdue loans 546 - - - - B.3 transfer from other doubtful loan categories - 484 - - - B .4 other increas es 1 18 - - 57 C. Decreases - 75 - - 610 C.1 re-performing credits - - - - - C.2 write-offs - - - - - C.3 payments received - - - - - C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - - - - 484 C.6 other decreases - 75 - - 126 D. T otal clos ing expos ure at 30/6/03 22.267 872 - - 414 D.1 of which: interes t on overdue loans 910 - - - -

1.4 TOTAL VALUE ADJUSTMENTS BANKS Country risk Loans subject to R escheduled non- P erforming CAT E GOR IE S /BALANCE S Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjus tments at 31/12/03 3.383 513 - - - - A.1 of which: interest on overdue loans 1.100 - - - - - B. Increas es 419 - - - - - B. 1 adjustments 419 - - - - - B.1.1 of which: interest on overdue loans 419 - - - - - B.2 amounts from credit risk fund ------B.3 trans fer from other loan categories ------B.4 other increases ------C. Decreases ------C.1 recoveries stemming from evaluation ------C.1.1 of which: interest on overdue loans ------C.2 recoveries stemming from payments receive ------C.2.1 of which: interest on overdue loans ------C.3 write-offs ------C.4 transfer to other loan categories ------C.5 other decreases ------D. Total clos ing adjus tments at 30/6/04 3.802 513 - - - - D.1 of which: interes t on overdue loans 1.519 - - - - -

207 Country risk Loans subject to R escheduled non- P erforming CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjus tments at 31/12/02 7.648 267 - - - - A.1 of which: interes t on overdue loans 365 - - - - - B. Increas es 1.101 296 - - - - B. 1 adjus tments 1.101 296 - - - - B.1.1 of which: interes t on overdue loans 1.100 - - - - - B.2 amounts from credit risk fund ------B.3 transfer from other loan categories ------B.4 other increases ------C. Decreases 5.366 50 - - - - C.1 recoveries stemming from evaluation - 50 - - - - C.1.1 of which: interes t on overdue loans ------C.2 recoveries stemming from payments receive ------C.2.1 of which: interes t on overdue loans ------C.3 write-offs 5.366 - - - - - C.4 transfer to other loan categories ------C.5 other decreases ------D. Total closing adjus tments at 31/12/03 3.383 513 - - - - D.1 of which: interes t on overdue loans 1.100 - - - - -

Country risk Loans subject to R escheduled non- P erforming CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjus tments at 31/12/02 7.648 267 - - - - A.1 of which: interes t on overdue loans 365 - - - - - B. Increas es 547 301 - - - - B. 1 adjus tments 547 301 - - - - B.1.1 of which: interes t on overdue loans 545 - - - - - B.2 amounts from credit risk fund ------B.3 transfer from other loan categories ------B.4 other increases ------C. Decreases - 45 - - - - C.1 recoveries stemming from evaluation - 45 - - - - C.1.1 of which: interes t on overdue loans ------C.2 recoveries stemming from payments receive ------C.2.1 of which: interes t on overdue loans ------C.3 write-offs ------C.4 transfer to other loan categories ------C.5 other decreases ------D. Total closing adjustments at 30/6/03 8.195 523 - - - - D.1 of which: interes t on overdue loans 910 - - - - - Change 30/6/04 31/12/03 absolute % 30/6/03 1.5 CAP T ION 40 "LOANS TO CUSTOMERS" 10.501.410 9.421.748 1.079.662 11,5 8.946.387 (a) bills eligible for refinancing by central banks - - - - - (b) loans for leas ed as s ets 14.994 13.917 1.077 7,7 14.142 (c) repurchase agreements - - - - - (d) loans of s ecurities - - - - -

Coption 40 detail by technical form is the following:

208 Change 30/6/04 31/12/03 abs olute % 30/6/03 Nominal value Dis counted notes 30.589 32.784 - 2.195 - 6,7 33.701 Advances with recours e 395.390 283.334 112.056 39,5 282.431 Current accounts 1.637.747 1.514.592 123.155 8,1 1.503.324 Other non-current account loans 1.916.704 2.091.211 - 174.507 - 8,3 2.042.728 L oans backed by pledged as s ets 15.349 14.981 368 2,5 15.010 Mortgage loans 4.895.245 4.925.453 - 30.208 - 0,6 4.507.074 Salary backed loans 22.861 16.977 5.884 34,7 12.938 Cons umer credit loans 4.212 4.242 - 30 - 0,7 2.144 Factoring 104.573 99.141 5.432 5,5 97.627 L oans for leas ed as s ets 14.994 13.917 1.077 7,7 14.142 B ad loans 410.952 327.981 82.971 25,3 296.067 Credits stemming from s ecuritis ation 954.435 8.728 945.707 ... 6.965 P os tal bonds 132.000 211.000 - 79.000 - 37,4 209.000 Other 151.942 37.209 114.733 ... 66.466 10.686.993 9.581.550 1.105.443 11,5 9.089.617 (-) Total specific allowances 185.583 159.802 25.781 16,1 143.230 - bad loans 159.953 137.327 22.626 16,5 123.708 -other 25.630 22.475 3.155 14,0 19.522 T otal 10.501.410 9.421.748 1.079.662 11,5 8.946.387

30/6/04 31/12/03 30/6/03 -analytic allowances 173.066 152.321 136.989 -lump-s um allowances 12.517 7.481 6.241 . country risks - - - . other 12.517 7.481 6.241 T otal 185.583 159.802 143.230

All bad loan positions are evaluated analytically as are significant watchlist and country-risk positions specified at 1.1. Other watchlists are evaluated on a lump-sum basis. Rescheduled loans were evaluated analytically calculating future flows on the basis of the difference between renegotiated interest rates and the annual average yield for interbank company loans for 2004.

Change 30/6/04 31/12/03 abs olute % 30/6/03 1.6 S E CUR E D LOANS T O CUS T OME R S 5.672.653 5.610.934 61.719 1,1 5.620.936 (a) by mortgages 3.769.016 3.847.756 - 78.740 - 2,0 3.362.000 (b) by pledges on: 130.147 152.445 - 22.298 - 14,6 165.188 1. Cas h depos its 7.773 3.592 4.181 ... 5.961 2. S ecurities 106.043 133.390 - 27.347 - 20,5 139.857 3. Other valuables 16.331 15.463 868 5,6 19.370 (c) by guarantees from: 1.773.490 1.610.733 162.757 10,1 2.093.748 1. Governments 36 50 - 14 - 28,0 64 2. Other public entities 14.026 8.084 5.942 73,5 6.818 3. B anks 23.947 13.513 10.434 77,2 15.657 4. Other operators 1.735.481 1.589.086 146.395 9,2 2.071.209

This detail does not include loans to government and public bodies.

209 1.7 CASH CREDITS CUSTOMERS 30/6/04 31/12/03 S pecific S pecific CATEGOR IES/BALANCES Gross value Net value Gross value Net value allowances allowances A. Credits at ris ks 650.800 181.169 469.631 572.937 159.762 413.175 A.1 Bad loans 417.806 159.953 257.853 335.460 137.327 198.133 A.2 Watchlis ts 213.053 18.847 194.206 211.922 20.203 191.719 A.3 Credits undergoing restructuring 1.936 - 1.936 2.406 - 2.406 A.4 R es tructured loans 11.833 2.369 9.464 11.717 2.232 9.485 A.5 Non-guaranteed credits towards countries at ris k 6.172 - 6.172 11.432 - 11.432 B. Performing credits 10.679.838 4.414 10.675.424 9.628.669 40 9.628.629

30/6/03 S pecific CATEGOR IES/BALANCES Gross value Net value allowances A. Credits at ris ks 540.784 143.184 397.600 A.1 Bad loans 303.182 123.707 179.475 A.2 Watchlis ts 213.676 17.395 196.281 A.3 Credits undergoing restructuring - - - A.4 R es tructured loans 10.778 2.082 8.696 A.5 Non-guaranteed credits towards countries at ris k 13.148 - 13.148 B. Performing credits 9.149.417 46 9.149.371

The credits presented in the table refer to balance sheet asset caption 40 "Loans and advances to customers" and to credits related to finance lease transactions which totalled 643,645 thousand euro at 30/6/04. In particular, 6,854 thousand euro is in the form of bad loans with a risk of 3,421 thousand euro covered by liabilities caption 80c "Reserves for loan losses - other reserves". Finance lease transactions are included at assets caption 120 " Tangible assets" for a total of 699,139 thousand euro. Item A.1 “Bad loans” and A.2 “iWatchlists” include a gross country-risk exposure and writedowns on country-risk positions totalling, respectively, 873,000 and 802,000 euro and 39 and 3 thousand euro. First-time consolidation of Cassa di Risparmio di Carrara affected the items stated above in the following way: gross bad loans euro 29,611,000; customer redress provisions to bad loans euro 16,694,000; gross watchlists euro 6,712,000; customer redress provisions to watchlists euro 718,000; gross rescheduled loans euro 247,000; customer redress provisions to rescheduled loans euro 1,000.

210 1.8 DOUBTFUL LOANS CUSTOMERS Country risk Loans subject to Rescheduled non- CATE GOR IES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening expos ure at 31/12/03 335.460 211.922 2.406 11.717 11.432 A.1 of which: interest on overdue loans 47.259 5.060 - - - B . Increas es 218.432 61.809 - 281 22 B. 1 ex-performing loans 140.975 51.927 - 247 - B.2 interes t on overdue loans 10.559 1.316 - - - B.3 transfer from other doubtful loan categories 30.284 - - - - B .4 other increas es 36.614 8.566 - 34 22 C. Decreas es 136.086 60.678 470 165 5.282 C.1 re-performing credits 634 9.118 - - - C.2 write-offs 109.971 56 - - - C.3 payments received 24.995 5.288 - 165 4.668 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - 30.284 - - - C.6 other decreas es 486 15.932 470 - 614 D. T otal clos ing expos ure at 30/06/04 417.806 213.053 1.936 11.833 6.172 D.1 of which: interest on overdue loans 59.697 6.212 - - -

Item B.4 ‘other increases’ includes amounts deriving from the first-time consolidation of Cassa di Risparmio di Carrara (opening gross balance) and in particular bad loans for euro 30,297,000 and watchlists of euro 5,036,000.

1.8 DOUBTFUL LOANS CUSTOMERS Country risk Loans subject to Rescheduled non- CATE GOR IES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening expos ure at 31/12/02 266.222 188.631 - 9.315 18.521 A.1 of which: interest on overdue loans 46.887 5.485 - - - B. Increas es 167.934 122.261 2.406 2.775 1.366 B. 1 ex-performing loans 91.168 113.017 2.406 2.775 - B.2 interes t on overdue loans 13.902 1.881 - - - B.3 transfer from other doubtful loan categories 48.605 16 - - - B.4 other increas es 14.259 7.347 - - 1.366 C. Decreas es 98.696 98.970 - 373 8.455 C.1 re-performing credits - 35.157 - 275 - C.2 write-offs 54.768 227 - - - C.3 payments received 43.347 7.480 - 98 4.883 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories 16 48.605 - - - C.6 other decreas es 565 7.501 - - 3.572 D. T otal clos ing expos ure at 31/12/03 335.460 211.922 2.406 11.717 11.432 D.1 of which: interest on overdue loans 47.259 5.060 - - -

211 Country risk Loans subject to R escheduled non- CATEGORIES/BALANCES Bad loans Watchlists rescheduling loans guaranteed loans A. Total opening expos ure at 31/12/02 266.222 188.631 - 9.315 18.521 A.1 of which: interes t on overdue loans 46.887 5.485 - - - B . Increas es 69.498 87.520 - 1.859 79 B. 1 ex-performing loans 21.054 81.606 - 1.859 - B.2 interest on overdue loans 6.690 1.171 - - - B.3 transfer from other doubtful loan categories 32.483 4 - - - B.4 other increas es 9.271 4.739 - - 79 C. Decreas es 32.538 62.475 - 396 5.452 C.1 re-performing credits 641 21.020 - 275 - C.2 write-offs 17.284 62 - - - C.3 payments received 14.509 2.774 - 121 13 C.4 gains from ceding - 46 - - - C.5 transfer to other doubtful loan categories 4 32.483 - - - C.6 other decreas es 100 6.090 - - 5.439 D. T otal clos ing expos ure at 30/6/03 303.182 213.676 - 10.778 13.148 D.1 of which: interes t on overdue loans 49.958 5.712 - - -

1.9 TOTAL VALUE ADJUSTMENTS CUSTOMERS Country risk Loans subject to R escheduled non- P erforming CATE GOR IE S/BALANCE S Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjus tments at 31/12/03 137.327 20.203 - 2.232 - 40 A.1 of which: interes t on overdue loans 47.259 953 - - - 3 B. Increas es 141.620 9.282 - 157 - 5.718 B. 1 adjus tments 101.837 8.157 - 155 - 981 B.1.1 of which: interest on overdue loans 7.516 - - - - 50 B.2 amounts from credit ris k fund 13.022 - - - - 13 B.3 trans fer from other loan categories 10.716 537 - - - 46 B.4 other increas es 16.045 588 - 2- 4.678 C. Decreas es 118.994 10.638 - 20 - 1.344 C.1 recoveries stemming from evaluation 374 122 - - - - C.1.1 of which: interest on overdue loans 141 2 - - - - C.2 recoveries stemming from payments receive 2.437 156 - 19 - 32 C.2.1 of which: interest on overdue loans 640 91 - - - 3 C.3 write-offs 109.875 56 - - - 363 C.4 transfer to other loan categories 46 10.304 - - - 949 C.5 other decreas es 6.262 - - 1- - D. Total closing adjus tments at 30/6/04 159.953 18.847 - 2.369 - 4.414 D.1 of which: interes t on overdue loans 58.862 866 - - - -

Items B.1 ‘Increases- writedowns’ and C.5 ‘Decreases-other changes’ include 6,228 thousand euro corresponding to the annual charge for the period of losses relating to securitisation carried out by the Group leader at the end of 2000. Item B.4 ‘other increases’ includes amounts deriving from the first-incorporation of Cassa di Risparmio di Carrara into the Carige Group in particular relating to the following customer redress provisions: writedowns to bad loans, euro 15,942,000; writedowns to watchlists, euro 587,000; writedowns to performing credits, euro 4,676,000.

212 Country risk Loans subject to R escheduled non- P erforming CAT E GOR IE S /BALANCE S Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjus tments at 31/12/02 114.369 17.702 - 2.165 - 29 A.1 of which: interest on overdue loans 46.887 1.484 - - - 7 B. Increas es 93.712 12.150 - 381 - 494 B. 1 adjus tments 71.250 12.122 - 381 - 73 B.1.1 of which: interest on overdue loans 13.706 - - - - - B.2 amounts from credit ris k fund 13.962 8 - - - 421 B.3 transfer from other loan categories 8.113 - - - - - B.4 other increases 387 20 - - - - C. Decreas es 70.754 9.649 - 314 - 483 C.1 recoveries stemming from evaluation 930 628 - 290 - - C.1.1 of which: interest on overdue loans - 39 - - - - C.2 recoveries stemming from payments receive 2.886 681 - 24 - 13 C.2.1 of which: interest on overdue loans 1.066 491 - - - 13 C.3 write-offs 54.399 227 - - - 439 C.4 transfer to other loan categories - 8.113 - - - - C.5 other decreas es 12.539 - - - - 31 D. Total closing adjus tments at 31/12/03 137.327 20.203 - 2.232 - 40 D.1 of which: interest on overdue loans 47.259 953 - - - 3

Country risk Loans subject to R escheduled non- P erforming CATE GOR IE S/BALANCE S Bad loans Watchlists rescheduling loans guaranteed loans loans A. Total opening adjus tments at 31/12/02 114.369 17.702 - 2.165 - 29 A.1 of which: interes t on overdue loans 46.887 1.484 - - - 7 B. Increas es 34.862 7.397 - 233 - 489 B. 1 adjus tments 27.756 7.383 - 233 - 458 B.1.1 of which: interest on overdue loans 6.561 6 - - - - B.2 amounts from credit risk fund 52 - - - - 10 B.3 trans fer from other loan categories 6.919 - - - - 18 B.4 other increases 135 14 - - - 3 C. Decreas es 25.524 7.704 - 316 - 472 C.1 recoveries stemming from evaluation 651 516 - 316 - - C.1.1 of which: interest on overdue loans 2 - - - - - C.2 recoveries stemming from payments receive 1.359 197 - - - 1 C.2.1 of which: interest on overdue loans 483 6 - - - 1 C.3 write-offs 17.248 54 - - - 471 C.4 transfer to other loan categories - 6.937 - - - - C.5 other decreases 6.266 - - - - - D. Total closing adjus tments at 30/6/03 123.707 17.395 - 2.082 - 46 D.1 of which: interes t on overdue loans 49.958 1.471 - - - 22

213 SECTION 2

SECURITIES

The securities held by the Bank amount to 2,919,741 thousand euro and are analysed below:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thous ands of € % Treasury bills and other bills eligible for refinancing with central banks (caption 20) 676.155 23,2 884.964 34,5 1.030.112 36,4 Bonds and other debt securities (caption 50) 1.944.985 66,6 1.501.080 58,5 1.626.518 57,5 S hares, quotas and other equity securities (caption 60) 298.601 10,2 177.932 7,0 172.484 6,1 T otal 2.919.741 100,0 2.563.976 100,0 2.829.114 100,0 of which: Inves tment s ecurities 209.732 7,2 215.697 8,4 274.539 9,7 Trading s ecurities 2.710.009 92,8 2.348.279 91,6 2.554.575 90,3

Change 30/6/04 31/12/03 abs olute % 30/6/03 2.1 INVE S T ME NT S E CUR IT IE S 209.732 215.697 - 5.965 - 2,8 274.539

30/6/04 31/12/03 30/6/03 Book Market Book Market Book Market value value value value value value 1. Certificates of indebtednes s 209.732 208.569 215.697 215.360 274.539 276.015 1.1 Government s ecurities 95.675 96.042 101.526 101.839 117.133 118.725 - lis ted 95.675 96.042 101.526 101.839 117.133 118.725 - unlisted ------1.2 Other s ecurities 114.057 112.527 114.171 113.521 157.406 157.290 - lis ted 32.240 32.088 32.243 31.961 75.483 75.552 - unlis ted 81.817 80.439 81.928 81.560 81.923 81.738 2. S hares and equity securities ------listed ------unlisted ------T otal 209.732 208.569 215.697 215.360 274.539 276.015

Book value of investment securities comprises the difference, on the basis of “pro rata temporis” criteria, between cost and redemption value, including issue premium or discount. The difference between book and market value (1,163 thousand euro) represents the potential loss for the portfolio. The positive and negative differences between book value and re-payment value at maturity total 795 thousand euros and 349 thousand euros, respectively. These differences were calculated separately for each category.

214 Book Redemption Positive Negative value value differences differences 1. L is ted certificates of indebtednes s 127.914 127.417 795 298 P ublic bodies 95.675 95.011 717 53 B anks 25.064 25.018 78 32 Other 7.175 7.388 - 213 2. Unlis ted certificates of indebtednes 81.818 81.869 - 51 P ublic bodies - - - - B anks 5.949 6.000 - 51 Other 75.869 75.869 - - T otal 209.732 209.286 795 349

2.2 CHANGE S IN INVE STME NT SE CUR ITIE S 30/6/04 31/12/03 30/6/03 A. Opening balances 215.697 241.968 241.968 B . Increas es 22 35.749 32.703 B1. P urchas es - 33.148 32.648 B2. Writebacks - - - B3. T ransfers from trading portfolio - - - B4. Other changes 22 2.601 55 C. Decreas es 5.987 62.020 132 C1. S ales 5.770 61.758 - C2. R edemptions 119 25 14 C3. Adjustments including: - - - - permanent writedowns - - - C4. T rans fers to trading portfolio - - - C5. Other changes 98 237 118 D. Closing balances 209.732 215.697 274.539

Transfers to and/or from the investment securities portfolio were carried out in accordance with the Bank of Italy’s communication of 12/6/01, CONSOB’s communication no.95001286 of 15/2/95, subsequently modified by CONSOB’s letter of 15/6/01.

215 Change 30/6/04 31/12/03 abs olute % 30/6/03 2.3 T R ADING S E CUR IT IE S 2.710.009 2.348.279 361.730 15,4 2.554.575

30/6/04 31/12/03 30/6/03 Book Market Book Market Book Market value value value value value value 1. Certificates of indebtednes s 2.411.408 2.458.657 2.170.347 2.225.255 2.382.091 2.460.759 1.1 Government securities 1.058.326 1.066.423 1.141.384 1.150.627 1.466.883 1.484.719 - lis ted 1.056.240 1.064.334 1.139.235 1.148.461 1.464.671 1.482.489 - unlis ted 2.086 2.089 2.149 2.166 2.212 2.230 1.2 Other s ecurities 1.353.082 1.392.234 1.028.963 1.074.628 915.208 976.040 - lis ted 883.979 921.581 839.299 882.259 764.027 822.162 - unlisted 469.103 470.653 189.664 192.369 151.181 153.878 2. S hares and equity s ecurities 298.601 303.925 177.932 185.705 172.484 176.696 - lis ted 297.383 302.707 175.612 183.132 168.128 172.340 - unlis ted 1.218 1.218 2.320 2.573 4.356 4.356 T otal 2.710.009 2.762.582 2.348.279 2.410.960 2.554.575 2.637.455

The difference between market value and book value represents potential non-recorded capital gains for the period and amounts to 52,573 thousand euros, of which 47,743 thousand euros related to hedging forward transactions.

2.4 CHANGE S IN TR ADING SE CUR ITIE S 30/6/04 31/12/03 30/6/03 A. Opening balances 2.348.279 2.145.739 2.145.739 B . Increas es 4.424.660 8.861.914 5.241.094 B 1. P urchas es 4.271.168 8.816.018 5.215.629 - Certificates of indebtednes s 3.571.621 7.732.418 4.574.403 . Government s ecurities 2.431.701 5.514.304 3.260.677 . other s ecurities 1.139.920 2.218.114 1.313.726 - S hares and other equity s ecurities 699.547 1.083.600 641.226 B2. Writebacks and revaluations 569 1.650 2.169 B3. Trans fers from inves tment portfolio - - - B4. Other changes 152.923 44.246 23.296 C. Decreas es 4.062.930 8.659.374 4.832.258 C1. S ales and redemptions 4.042.101 8.630.828 4.810.618 - Certificates of indebtednes s 3.460.758 7.532.887 4.153.753 . Government s ecurities 2.571.966 5.745.919 3.156.030 . other s ecurities 888.792 1.786.968 997.723 - S hares and other equity s ecurities 581.343 1.097.941 656.865 C2. Adjus tments 18.636 6.881 4.524 C3. Trans fers to inves tment portfolio - - - C5. Other changes 2.193 21.665 17.116 D. Closing balances 2.710.009 2.348.279 2.554.575

216 SECTION 3

EQUITY INVESTMENTS

Equity investments amount to 288,221 thousand euro and are analysed as follows:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % - Equity investments (caption 70) (a) - carried at equity 58.379 20,3 59.361 23,7 57.033 24,3 (b) - others 23.492 8,2 18.163 7,3 25.615 10,9 - Investments in Group companies (caption 80) (a) - carried at equity 206.350 71,5 172.600 69,0 152.120 64,8 (b) - others ------T otal 288.221 100,0 250.124 100,0 234.768 100,0

3.1 S IGNIFICANT INVE S T ME NT S

Nam e ( 1 ) ( 2 ) ( 3 ) ( 4 ) ( 5 ) ( 6 ) ( 7 ) ( 5.1) ( 5.2) A .Comp a n ie s in c lu d e d in th e b a s is o f c o n s o lid a tio n A .1 F u lly consolidated ( a ) 1. B anca CA R IGE S p AGenoa1- - - - - X XXX 2. Galeazzo S rl Genoa 1 3.871 23 A 1.1 100,00 100,00 X XXX 3. C aricarrara H olding S p A Genoa 1 89.320 - 1 A 1.1 100,00 100,00 X XXX 4. Cassa di R isp arm io di Carrara S p A Carrara 1 90.468 11.451 A 1.3 90,00 90,00 X XXX 5. Colum bus Carig e Imm. S p A Genoa 1 25.086 - 9 A 1.1 99,98 99,98 X XXX A 1.20,020,02X XXX 6. Cassa di R isp arm io di Savona S p A S avona 1 152.682 5.305 A 1.1 95,90 95,90 X XXX 7. Lig ure Leasing S p A S avona 1 8.619 641 A 1.6 100,00 100,00 X XXX 8. Imm obiliare CAR IS A S rl S avona 1 1.788 - 18 A 1.6 100,00 100,00 X XXX 9. Carig e Asset Manag em ent S.G.R. S p A Genoa 1 4.869 - 263 A 1.1 99,50 99,50 X XXX B.20,500,50X XXX 10. Im m . E ttore V e rnaz z a S p A ( b ) Genoa 1 5.158 477 A 1.1 90,00 100,00 X XXX 11. Centro F iduciario S p A Genoa 1 1.043 76 A 1.1 76,93 76,93 X XXX A 1.6 20,00 20,00 X XXX 12. A r g o Finance One S rl Genoa 1 10 - A 1.1 60,00 60,00 X XXX 13. P riam ar Finance S rl Genoa 1 10 - A 1.1 60,00 60,00 X XXX 14 B anca del Monte di Lucca S p A L ucca 1 26.611 1.760 A 1.1 54,00 54,00 X XXX A .2 P ro p ortional consolidation B. Comp anies accounted for under the eq uity method 1. Carig e Assicurazioni S p A ( c ) ( d ) M ilan 1 160.035 1.707 A 1.1 89,18 99,46 156.347 2. Carig e Vita Nuova S p A ( d ) Genoa 1 50.003 1.397 A 1.1 92,81 100,00 50.003 3. A s si 90 S rl ( a ) Genoa 1 1.683 763 B .1 37,50 37,50 X XXX B .2 22,50 22,50 4. A G S rl ( a ) Genoa 1 36 14 B .3 100,00 100,00 X XXX 5. A s s im ila n o S rl ( a ) M ilan 1 101 38 B .3 60,00 60,00 X XXX 6. S avona 2000 S rl ( a ) S avona 1 85 15 B .3 40,00 40,00 X XXX B .4 40,00 40,00 7. Frankfurter Bankg esellschaft A ( e ) F rankfurt 8 22.973 329 A 1.1 47,50 47,50 10.912 8. A utostrada dei Fiori S p A ( e ) S avona 8 232.044 23.817 A 1.1 16,62 16,62 47.467 A 1.44,004,00 9. R e c in a S e rv iz i S rl (g) R om e 8 1.480 897 B .3 25,00 25,00 X XXX C. Other substantial p articip ating interests ( e ) 1. Consorzio p e r il G iu ris ta d i Im p re s a S crl G e noa 8 15 - 31 A 1.1 22,73 22,73 20 2. Didiass S rl R om e 8 46 21 B .3 9,00 9,00 X XXX B.46,006,00 B.57,007,00 3. A s sistars S rl M ilan 8 51 1 B .3 34,17 34,17 X XXX 4. B D A S p a M ilan 8 58 - 368 B .3 20,00 20,00 X XXX 5. U .C. - S p ort e S icurez za S rl M ilan 8 13 2 B .1 25,00 25,00 X XXX B .2 25,00 25,00 6. A tom a S rl M ilan 8 44 34 B .1 25,00 25,00 X XXX B .2 15,00 15,00

(a) Captions are taken from the 30/6/2004 financial statements. (b) The company holds 10% of its own shares. (c) The company owns 1.359% of its own shares. (d) Net assets and profit were calculated on the basis of the respective Boards of Directors’ Reports at 30/6/04 adjusted to take into account the valuation of the following companies by the equity method: Assi 90 Srl; AG Srl; Assimilano Srl; Savona 2000 Srl; Recina Servizi Srl. Consequently, these companies have no autonomous consolidated value. (e) Data taken from the most recently approved balance sheet at 31/12/2003.

Key (1) Head office (3) Net Assets (2) Type of participating interest (4) Gains/Losses 1 = controlling interest pursuant to art. 2359 c.c. par. 1 no. 1 (5) Type of participating interest (majority vote at Shareholders’ Annual General Meeting) (5.1) Holding 2 = controlling interest pursuant to art. 2359 c.c. par 1 no. 2 (5.2) Participating interest expressed as a percentage (major influence at Shareholders’ Annual General Meeting) (6) Votes available at Shareholders’ Annual General 3 = controlling interest pursuant to art. 23 T.U. par. 2 no. 1 Meeting 4 = other forms of controlling interest (7) Consolidated balance sheet value 5 = joint management pursuant to art. 26 par 1 of the “decreto” 6 = joint management pursuant to art. 26 par 2 of the “decreto” 7 = joint control 8 = associated undertaking

217 Change 30/6/04 31/12/03 abs olute % 30/6/03 3.2 AMOUNT S DUE T O AND F R OM GR OUP COMP ANIE S (a) As s ets 44.844 44.394 450 1,0 45.086 1. Amounts due from banks - - - - - including: - s ubordinated - - - - - 2. Amounts due from financial ins titutions - - - - - including: - s ubordinated - - - - - 3. Amounts due from other customers 540 90 450 ... 782 including: - s ubordinated - - - - - 4. Bonds and other fixed-income securities 44.304 44.304 - - 44.304 including: - s ubordinated 44.304 44.304 - - 44.304 (b) L iabilities 40.164 55.412 - 15.248 - 27,5 28.073 1. Amounts due to banks - - - - - 2. Amounts due to financial ins titutions - - - - - 3. Amounts due to other customers 29.414 52.102 - 22.688 - 43,5 26.991 4. Securities issued 8.250 810 7.440 ... 1.082 5. S ubordinated liabilities 2.500 2.500 - - - (c) Guarantees and commitments 3.591 3.431 160 4,7 57.431 1. Guarantees 3.591 3.431 160 4,7 57.431 2. Commitments - - - - -

Change 30/6/04 31/12/03 abs olute % 30/6/03 3.3 AMOUNT S DUE T O AND F R OM OT HE R NON-GR OUP COMP ANIE S (a) As s ets 337.487 362.506 - 25.019 - 6,9 396.401 1. Amounts due from banks 252.500 291.237 - 38.737 - 13,3 305.735 including: - s ubordinated - - - - - 2. Amounts due from financial ins titutions 46.073 37.678 8.395 22,3 27.315 including: - s ubordinated - - - - - 3. Amounts due from other customers 29.945 24.632 5.313 21,6 44.258 including: - s ubordinated - - - - - 4. Bonds and other fixed-income securities 8.969 8.959 10 0,1 19.093 including: - s ubordinated 3.696 3.696 - - 3.696 (b) L iabilities 47.697 50.673 - 2.976 - 5,9 61.746 1. Amounts due to banks 16.331 18.354 - 2.023 - 11,0 38.080 2. Amounts due to financial ins titutions 9.304 17.110 - 7.806 - 45,6 10.031 3. Amounts due to other customers 13.659 7.239 6.420 88,7 7.080 4. Securities issued 8.403 7.970 433 5,4 6.555 5. S ubordinated liabilities - - - - - (c) Guarantees and commitments 79.024 86.889 - 7.865 - 9,1 264.395 1. Guarantees 79.024 80.222 - 1.198 - 1,5 263.301 2. Commitments - 6.667 - 6.667 - 100,0 1.094

Amounts due from banks include 110,340,000 of Bank of Italy Compulsory Reserve.

218 Change 30/6/04 31/12/03 a b s olu t e % 30/6/03 3.4 CAPTION 70 "EQUITY INVESTMENTS" 81.871 77.524 4.347 5,6 82.648 (a) in banks 18.602 18.162 440 2,4 18.006 1. lis ted 5.172 5.086 86 1,7 5.086 2. unlis ted 13.430 13.076 354 2,7 12.920 (b) in financial ins titutions 9.944 6.875 3.069 44,6 6.578 1. lis ted 266 - 266 ... - 2. unlis ted 9.678 6.875 2.803 40,8 6.578 (c) others 53.325 52.487 838 1,6 58.064 1. lis ted 723 723 - - 723 2. unlis ted 52.602 51.764 838 1,6 57.341

Change 30/6/04 31/12/03 a b s olu t e % 30/6/03 3.5 CAP T ION 80 "INVE S T ME NT S IN GR OUP COMP ANIE S" 206.350 172.600 33.750 19,6 152.120 (a) in banks - - - - - 1. lis ted - - - - - 2. unlis ted - - - - - (b) in financial ins titutions - - - - - 1. lis ted - - - - - 2. unlis ted - - - - - (c) others 206.350 172.600 33.750 19,6 152.120 1. lis ted - - - - - 2. unlis ted 206.350 172.600 33.750 19,6 152.120

3.6.1 INVESTMENTS IN GROUP COMPANIES 30/6/04 31/12/03 30/6/03 A. Opening balances 172.600 152.385 152.385 B . Increas es 39.224 23.963 3.456 B 1. P urchas es 27.429 20.001 - B2. R ecoveries - - - B3. R evaluations 3.408 3.633 3.291 B4. Other changes 8.387 329 165 C. Decreas es 5.474 3.748 3.721 C1. S ales - - - C2. Write-downs - - - including: - permanent write-downs - - - C3. Other changes 5.474 3.748 3.721 D. Closing balances 206.350 172.600 152.120 E . Total revaluations - - - F. T otal write-downs - - -

Details of all variations are given below:

219 PURCHASES

CAR IGE VITA NUOVA SP A P urchas e of 6,400,000 s hares of a unitary nominal value of 0.52 euros. (Variation in our s hare holding from 92.809% to 100.000% ) 2.517

CARIGE ASSICURAZIONI SPA Subscription of 18,948 new s hares of a unitary nominal value of 982 euros in addition to a unitary premium of 193 euros . (Variation in our s hare holding from 90.695% to 91.932% ) 22.264

CARIGE ASSICURAZIONI SPA P urchase of 8,672 shares of a unitary nominal value of 982 euros. (Variation in our s hare holding from 91.932% to 98.108% ) 2.648

Total purchases 27.429

REVALUATIONS

INCREASES RELATED TO COMPANIES ACCOUNTED UNDER THE EQUITY METHOD

CARIGE ASSICURAZIONI SPA 1.891

CAR IGE VITA NUOVA SPA 1.517

T otal revaluations 3.408

OT HE R INCR E AS E S

CARIGE ASSICURAZIONI SPA Interim quota related to the recovery of the reduced value of the holding following the purchase of Levante Assicurazioni SpA by Banca Carige SpA. 164

CARIGE ASSICURAZIONI SPA Negative difference arising on the purchas e of 8,672 s hares . 7.253

CAR IGE VITA NUOVA SP A Negative difference arising on the purchas e of 6,400,000 s hares . 970

T otal other increases 8.387

220 CAR IGE VITA NUOVA SP A Writing-off of dividend distributed to the P arent Company during the year. 3.180

CARIGE ASSICURAZIONI SPA Writing-off of dividend distributed to the P arent Company during the year. 2.234

CARIGE ASSICURAZIONI SPA P ositive difference arising on the purchase of further 19 own shares by the s ubs idiary 12

CARIGE ASSICURAZIONI SPA P ositive difference arising on the subscription of the capital increas e. 48

T otal other decreases 5.474

3.6.2 OTHE R P AR TICIP ATING INTE R E STS 30/6/04 31/12/03 30/6/03 A. Opening balances 77.524 103.799 103.799 B . Increas es 190.099 15.475 6.545 B1. P urchas es 186.984 364 53 B2. R ecoveries 2 - - B3. R evaluations - 5.032 4 B4. Other changes 3.113 10.079 6.488 C. Decreas es 185.752 41.750 27.696 C1. S ales 10.303 36.479 25.138 C2. Write-downs - - - including: - permanent write-downs - - - C3. Other changes 175.449 5.271 2.558 D. Closing balances 81.871 77.524 82.648 E . T otal revaluations - - - F . T otal write-downs 7.268 7.225 6.770

221 PURCHASES

AR GO MOR TGAGE 2 SR L Subscription at constitution of 500 shares of a unitary nominal value of 1 euro. (Our holding 5% ) 1

CARINORD 2 SPA P urchas e of 92,619,780 s hares of a unitary nominal value of 0.52 euros for a total price of 183,764,644 euros . (S hare holding acquired after the successive sale: 41.048%) 183.765

CENTRO SIM SPA Subscription of 33,330 s hares of a unitary nominal value of 60 euros. (Our holding 9.999% ) 2.000

INFR ASTR UTTUR E LAVOR I ITALIA SPA Payment of residual 7/10 related to the subscription of 750,000 s hares of a unitary nominal value of 1 euro, made past years. (Our holding 15.000% ) 525

FILSE SPA Payment of residual 7/10 related to the subscription of 1,904,358 new s hares of a unitary nominal value of 0.52 euros , made past year. (Our holding 12.319% ) 693

Total purchases 186.984

RECOVERIES

CE NTR O FACTOR ING S.p.A 2

Total recoveries 2

OTHER INCREASES

Participating interests stemming from the first consolidation of Cassa di Risparmio di Carrara S.p.A. 2.155

CARINORD 2 SPA Costs relating to the investment include consultancy and support services. 952

CONSORZIO PER IL GIURISTA DI IMPRESA SCRL Amount established as our contribution in covering losses recorded during 2002 6

Total other increases 3.113

222 C. DECREASES

SALES

CARINORD 2 SPA Sale of 5,192,231 shares of a unitary nominal value of 0.52 euros for a total price of 10,301,778 euros. (Sale occurring concurrently with the acquisition stated above.) 10.302

BUSINESS DATENBANKEN INTERNATIONAL GMBH Amount received from final sharing of assets of liquidation. 1

Total sales 10.303

OTHER DECREASES

CFT FINANZIARIA Reimbursement for reduction of subsidiary's capital. 46

PRIAMAR FINANCE SRL The holding is now classified at “Investments in Group subsidiaries” (previously “other investments”) 1

CARINORD 2 SPA Following the partial break up of the company, 87,427,549 Carinord 2 SpA shares purchased by Banca Carige were converted into 45,462,325 Carricarra Holding SpA shares. 174.415

BUSINESS DATENBANKEN INTERNATIONAL GMBH Loss made following the liquidation of company assets. 5

AUTOSTRADA DEI FIORI SPA Writing-off of dividends distributed for the Group share. 982

Total other decreases 175.449

223 SECTION 4

TANGIBLE AND INTANGIBLE FIXED ASSETS

Tangible and intangible fixed assets amount to 1,528,543 thousand euro and are analysed as follows:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % -Tangible fix ed as s ets (caption 120) 1.061.565 69,4 1.019.881 68,3 990.399 67,4 -Intangible fixed ass ets (caption 110) 466.978 30,6 474.210 31,7 478.129 32,6 T otal 1.528.543 100,0 1.494.091 100,0 1.468.528 100,0

4.1 CHANGES IN TANGIBLE FIXED ASSETS 30/6/04 Properties Furniture Leased Total and fittings assets A. Opening balances 325.729 24.354 669.798 1.019.881 B. Increases 18.164 3.868 92.268 114.300 B1. Purchases 6.482 2.541 91.599 100.622 B2. Recoveries - - - - B3. Revaluations - - - - B4. Other changes 11.682 1.327 669 13.678 C. Decreases 5.814 3.875 62.927 72.616 C1. Sales 1.497 92 15.782 17.371 C2. Depreciation and amortization 4.317 3.762 47.145 55.224 (a) amortization 4.317 3.762 47.145 55.224 (b) permanent write-downs - - - - C3. Other changes - 21 - 21 D. Closing balances 338.079 24.347 699.139 1.061.565 E. Total revaluations 4.530 - - 4.530 F. Total depreciation and amortization 141.364 117.268 4.722 263.354 (a) amortization 141.364 117.268 4.722 263.354 (b) permanent write-downs - - - - Item A includes 18,733 thousand euro resulting from positive difference arising from consolidation allocated to tangible fixed assets. Item C2 includes depreciation related to the same allocated difference for 419 thousand euro. Item B4 “other changes” includes the following remaining balances relating to Cassa di Risparmio di Carrara on first-time consolidation: premises: 11,496 thousand; furniture & fittings, machinery and equipment: 1,327 thousand.

224 31/12/03 Properties Furniture Leased Total and fittings assets A. Opening balances 327.130 25.725 614.271 967.126 B. Increases 12.189 6.149 171.350 189.688 B1. Purchases 12.189 6.149 170.397 188.735 B2. Recoveries - - - - B3. Revaluations - - - - B4. Other changes - - 953 953 C. Decreases 13.590 7.520 115.823 136.933 C1. Sales 5.767 335 19.608 25.710 C2. Depreciation and amortization 7.823 7.185 91.701 106.709 (a) amortization 7.823 7.185 91.701 106.709 (b) permanent write-downs - - - - C3. Other changes - - 4.514 4.514 D. Closing balances 325.729 24.354 669.798 1.019.881 E. Total revaluations 4.530 - - 4.530 F. Total depreciation and amortization 131.560 107.478 235.760 474.798 (a) amortization 131.560 107.478 235.760 474.798 (b) permanent write-downs - - - -

30/6/03 Properties Furniture Leased Total and fittings assets A. Opening balances 327.130 25.725 614.271 967.126 B. Increases 935 3.028 83.833 87.796 B1. Purchases 935 3.028 83.035 86.998 B2. Recoveries - - - - B3. Revaluations - - - - B4. Other changes - - 798 798 C. Decreases 7.083 3.556 53.884 64.523 C1. Sales 3.253 70 5.281 8.604 C2. Depreciation and amortization 3.830 3.486 46.006 53.322 (a) amortization 3.830 3.486 46.006 53.322 (b) permanent write-downs - - - - C3. Other changes - - 2.597 2.597 D. Closing balances 320.982 25.197 644.220 990.399 E. Total revaluations 4.530 - - 4.530 F. Total depreciation and amortization 127.597 113.816 13.579 254.992 (a) amortization 127.597 113.816 13.579 254.992 (b) permanent write-downs - - - -

225 4.2 CHANGE S IN INTANGIBLE FIXE D ASSE TS 30/6/04

Othe r Start-up intangible Software charges Goodwill fixed assets Total A. Opening balances 20.811 3.268 442.392 7.739 474.210 B. Increases 4.242 37 - 729 5.008 B1. P urchas es 4.210 35 - 584 4.829 B2. R ecoveries - - - - - B3. R evaluations - - - - - B4. Other changes 32 2 - 145 179 C. Decreas es 4.562 458 5.271 1.949 12.240 C1. S ales - - - - - C2. Depreciation and amortization 4.334 458 5.271 1.943 12.006 (a) amortiz ation 4.334 458 5.271 1.943 12.006 (b) permanent write-downs - - - - - C3. Other changes 228 - - 6 234 D. Closing balances 20.491 2.847 437.121 6.519 466.978 E . T otal revaluations - - - - - F. Total depreciation and amortization 24.550 1.735 26.542 17.170 69.997 (a) amortiz ation 24.550 1.735 26.542 17.170 69.997 (b) permanent write-downs - - - - -

226 31/12/03 Other Start-up intangible Software charges Goodwill fixed assets Total A. Opening balances 19.300 1.058 450.799 9.515 480.672 B. Increases 10.681 3.624 264 2.534 17.103 B1. Purchases 10.681 3.624 264 2.534 17.103 B2. Recoveries - - - - - B3. Revaluations - - - - - B4. Other changes - - - - - C. Decreases 9.170 1.414 8.671 4.310 23.565 C1. Sales - - - - - C2. Depreciation and amortization 8.911 1.414 8.671 4.277 23.273 (a) amortization 8.911 1.414 8.671 4.277 23.273 (b) permanent write-downs - - - - - C3. Other changes 259 - - 33 292 D. Closing balances 20.811 3.268 442.392 7.739 474.210 E. Total revaluations - - - - - F. Total depreciation and amortization 25.395 3.808 21.271 17.199 67.673 (a) amortization 25.395 3.808 21.271 17.199 67.673 (b) permanent write-downs - - - - -

30/6/03 Other Start-up intangible Software charges Goodwill fixed assets Total A. Opening balances 19.300 1.058 450.799 9.515 480.672 B. Increases 5.586 766 264 1.678 8.294 B1. Purchases 5.586 766 264 1.678 8.294 B2. Recoveries - - - - - B3. Revaluations - - - - - B4. Other changes - - - - - C. Decreases 4.058 422 4.336 2.021 10.837 C1. Sales - - - - - C2. Depreciation and amortization 3.943 422 4.336 2.005 10.706 (a) amortization 3.943 422 4.336 2.005 10.706 (b) permanent write-downs - - - - - C3. Other changes 115 - - 16 131 D. Closing balances 20.828 1.402 446.727 9.172 478.129 E. Total revaluations - - - - - F. Total depreciation and amortization 20.662 2.817 16.935 14.923 55.337 (a) amortization 20.662 2.817 16.935 14.923 55.337 (b) permanent write-downs - - - - -

227 SECTION 5

OTHER ASSETS

Other assets amount to 1,147,863 thousand euro and are analysed below:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % Other assets (caption 150) 1.037.009 90,3 864.654 88,8 963.738 90,3 Accrued income and prepaid expenses (caption 160) 110.854 9,7 109.015 11,2 103.135 9,7 Total 1.147.863 100,0 973.669 100,0 1.066.873 100,0

Change 30/6/04 31/12/03 absolute % 30/6/03 5.1 CAPTION 150 "OTHER ASSETS" 1.037.009 864.654 172.355 19,9 963.738 - miscellaneous accounts receivable from branches 284.636 266.275 18.361 6,9 302.494 - post-collection notes and other values 239.891 147.580 92.311 62,5 237.947 - amounts in transit between branches 71.196 2.755 68.441 ... 112.329 - current account cheques drawn on other banks 67.555 54.478 13.077 24,0 90.998 - premiums related to option transactions 42.423 38.721 3.702 9,6 32.420 - amounts to be collected from customers 24.189 27.292 - 3.103 - 11,4 22.163 - current account cheques drawn on the Bank 10.818 8.449 2.369 28,0 8.450 - accounts relating to tax collection services 205 180 25 13,9 3.259 - Bank guarantee deposits 414 346 68 19,7 304 - off balance sheet revaluations 124.772 149 124.623 ... 176 - fiscal items: 124.647 169.719 - 45.072 - 26,6 122.313 tax advances 35.175 58.721 - 23.546 - 40,1 25.070 with-holding taxes 53.055 85.797 - 32.742 - 38,2 73.172 accounts receivable from the tax authorities 30.585 19.312 11.273 58,4 17.432 termination indemnity (Law 140/97) 5.626 5.433 193 3,6 6.388 taxes paid in advance 206 456 - 250 - 54,8 251 - others 46.263 148.710 - 102.447 - 68,9 30.885

The item includes 20,106,000 euro which refers to first-time integration of Cassa di Risparmio di Carrara.

Change 30/6/04 31/12/03 absolute % 30/6/03 5.2 CAPTION 160 "ACCRUED INCOME AND PREPAID EXPENSES" 110.854 109.015 1.839 1,7 103.135 Accrued income: 100.183 100.842 - 659 - 0,7 91.916 - interest income on loans and advances to credit institutions 7.066 4.725 2.341 49,5 3.818 - interest income on loans to customers 20.265 18.447 1.818 9,9 19.829 - interest income on securities 30.060 33.751 - 3.691 - 10,9 24.921 - differentials stemming from derivatives contracts 42.197 41.395 802 1,9 43.291 - others 595 2.524 - 1.929 - 76,4 57 Prepaid expenses: 10.671 8.173 2.498 30,6 11.219 - premiums related to currency forward transactions 127 307 - 180 - 58,6 95 - differentials stemming from derivatives contracts - 10 - 10 - 100,0 - - discounts on issuing of securities 3.182 3.596 - 414 - 11,5 4.014 - administrative charges 4.056 1.585 2.471 ... 3.902 - other transactions 3.306 2.675 631 23,6 3.208

The item includes 3,556,000 euro (accrued income: 2,978,000 euro and prepaid expenses: 578,000 euro) which refers to first-time integration of Cassa di Risparmio di Carrara.

228 Change 30/6/04 31/12/03 absolute % 30/6/03 5.4 DISTRIBUTION OF SUBORDINATED ASSETS 294.827 201.011 93.816 46,7 240.259 a) loans and advances to credit institutions - - - - - b) loans and advances to customers 87.816 6.796 81.020 ... 5.379 c) bonds and other fixed-income securities 207.011 194.215 12.796 6,6 234.880

Item c) ‘bond and other debt securities’ includes 65,690 thousand euro relating to the subscription of Junior class notes issued in relation to the securitisation of bad loans carried out by Banca Carige at the end of 2000 and during 2001. It also includes 10,179,000 related to the subscription of junior bonds within the confines of the securitization operation realised by Carisa in business year 2002. The item “bonds and other fixed-income securities” includes 2,589,000 euro which refers to first-time integration of Cassa di Risparmio di Carrara.

229 SECTION 6

PAYABLES

Payables amount to 14,132,998 thousand euro and are analysed as follows:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % -Amounts owed to credit institutions (caption 10) 1.289.011 9,1 1.006.049 8,1 1.334.404 10,9 -Amounts owed to customers (caption 20) 7.636.015 54,0 6.861.171 55,4 6.665.764 54,6 -Debts evidenced by certificates (caption 30) 5.206.854 36,9 4.512.775 36,5 4.206.581 34,5 -Funds managed on behalf of third parties (caption 40) 1.118 0,0 368 - 367 - Total 14.132.998 100,0 12.380.363 100,0 12.207.116 100,0

Change 30/6/04 31/12/03 absolute % 30/6/03 6.1 CAPTION 10 "AMOUNTS OWED TO CREDIT INSTITUTIONS" 1.289.011 1.006.049 282.962 28,1 1.334.404 (a) repurchase agreements 201.752 - 201.752 - - (b) loans of securities - - - - -

Caption 10 ”Amounts owed to credit institutions” detail by technical form is the following:

Change 30/6/04 31/12/03 absolute % 30/6/03 Deposits 701.091 611.966 89.125 14,6 928.648 Current accounts 11.595 19.928 - 8.333 - 41,8 88.782 Financing 135.640 130.798 4.842 3,7 130.083 Long-term loans 238.902 243.245 - 4.343 - 1,8 186.891 Repurchase agreements 201.752 - 201.752 - - Other 31 112 - 81 - 72,3 - Total 1.289.011 1.006.049 282.962 28,1 1.334.404

The item includes 201,679,000 euro (excluding relations with Banca Carige) which refers to first-time integration of Cassa di Risparmio di Carrara.

Change 30/6/04 31/12/03 absolute % 30/6/03 6.2 CAPTION 20 "AMOUNTS OWED TO CUSTOMERS" 7.636.015 6.861.171 774.844 11,3 6.665.764 (a) repurchase agreements 344.209 254.063 90.146 35,5 412.088 (b) loans of securities - - - - -

Detail by technical form is as follows:

Change 30/6/04 31/12/03 absolute % 30/6/03 Savings deposits 604.433 534.600 69.833 13,1 510.050 Current accounts 6.680.032 6.066.532 613.500 10,1 5.739.565 Funding from international organisations - - - ... 108 Repurchase agreements 344.209 254.063 90.146 35,5 412.088 Other 7.341 5.976 1.365 22,8 3.953 Total 7.636.015 6.861.171 774.844 11,3 6.665.764

230 The item includes 529,512,000 euro which refers to first-time integration of Cassa di Risparmio di Carrara.

Caption 30 “Debts evidenced by certificates” is the following:

Change 30/6/04 31/12/03 absolute % 30/6/03 Certificates of deposits 336.169 351.316 - 15.147 - 4,3 387.341 Bonds certificates 4.759.247 4.073.476 685.771 16,8 3.721.631 Own cheques in circulation 111.438 87.983 23.455 26,7 97.609 Total 5.206.854 4.512.775 694.079 15,4 4.206.581

The item includes 281,848,000 euro which refers to first-time integration of Cassa di Risparmio di Carrara.

Caption 40 “Funds managed on behalf of third parties” (1,118 thousand euro) includes interest-bearing funds supplied by the State and other public bodies for the financing of specific projects foreseen by relevant legislation; the lending transactions carried out on behalf of public bodies, exclusively at fixed remuneration, are stated at section 12. The item includes 785,000 euro which refers to first-time integration of Cassa di Risparmio di Carrara.

231

SECTION 7

RESERVES

Reserves, summarized in this section, amount to 520,665 thousand euro and are represented in the balance sheet as follows:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % Reserves for loan losses (caption 90) 7.149 1,4 19.997 3,6 14.644 2,9 Reserves for risks and charges (caption 80) 405.518 77,9 440.194 79,0 386.602 77,2 Reserve for termination indemnities (caption 70) 107.998 20,7 96.814 17,4 99.883 19,9 Total 520.665 100,0 557.005 100,0 501.129 100,0

Change 30/6/04 31/12/03 absolute % 30/6/03 7.1 CAPTION 90 "RESERVE FOR LOAN LOSSES" 7.149 19.997 - 12.848 - 64,2 14.644

This caption includes 1,262 thousand euro relating to third parties.

7.2 CHANGES IN THE "RESERVES FOR LOAN LOSSES" (CAPTION 90) 30/6/04 31/12/03 30/6/03 A. Opening balances 19.997 14.644 14.644 B. Increases 349 19.744 62 B1. Provisions 35 19.744 62 B2. Other changes 314 - - C. Decreases 13.197 14.391 62 C1. Utilizations 13.163 14.391 62 C2. Other changes 34 - - D. Closing balances 7.149 19.997 14.644

Change 30/6/04 31/12/03 absolute % 30/6/03 7.3 COMPOSITION OF CAPTION 80 (D) "OTHER RESERVES" 27.424 38.037 - 10.613 - 27,9 30.190 Reserves for personnel charges 7.842 21.797 - 13.955 - 64,0 11.899 Reserves for future charges 52 1.361 - 1.309 - 96,2 1.519 Reserves for guarantees and commitments 4.036 4.124 - 88 - 2,1 4.224 Reserves for in-house insurance scheme - 1.570 - 1.570 - 100,0 1.564 Reserves for finance lease transactions 3.421 3.368 53 1,6 2.131 Reserves for legal proceedings 6.846 5.563 1.283 23,1 5.140 Reserves for renegotiation loan building ex L. 113/99 - - - ... 3.135 Other 5.227 254 4.973 ... 578

232 CHANGES IN THE "RESERVES FOR TAXATION" (CAPTION 80 B) 30/6/04 31/12/03 30/6/03 A. Opening balances 106.847 88.574 88.574 B. Increases 66.669 84.159 49.935 C. Decreases 108.830 65.886 75.924 D. Closing balances 64.686 106.847 62.585

Deferred tax: positive and negative effects The calculation of tax advanced and liabilities to deferred taxation was made according to tax rates which will be in force when timing differences reverse, pursuant to tax regulations at 30/6/2003. The time horizon, as previously stated in section 1 of the accounting principles, was extended to an indefinite period of time on the basis that future trends in taxable income reasonably suggest that the non-recovery of tax paid can be considered extremely unlikely.

7.4 CHANGES IN ASSETS IN THE FORM OF ADVANCED PAYMENT OF TAXATION recorded in the income statement with counter entry 1. Opening balances 14.672 2. Increases 24.554 2.1 Deferred taxation originating in the year 22.057 2.2 Other increases 2.497 3. Decreases 10.697 3.1 Deferred taxation written off in the year 10.607 3.2 Other decreases 90 4. Closing balances 28.529

Assets representing advance payment of taxation totalled 14,672 thousand euro at 31/12/03; these increased by 13,857 thousand euro. For the three banks overall time horizon deferment generated increases in advanced tax of 17,945 thousand. In accordance with Bank of Italy instructions of 3/8/99, assets in the form of tax advanced relative to timing differences arising in 2004, which will be reversed in following years, were recorded at caption 240, “Income tax for the year”; during 2004 this caption was increased by the reversal for assets in the form of advanced taxation recorded in previous years.

233 7.4 CHANGES IN ASSETS IN THE FORM OF ADVANCED PAYMENT OF TAXATION recorded in the net value with counter entry 1. Opening balances 4.640 2. Increases - 2.1 Deferred taxation originating in the year - 2.2 Other increases - 3. Decreases 2.585 3.1 Deferred taxation written off in the year 2.585 3.2 Other decreases - 4. Closing balances 2.055

Deferred tax credits relating to net equity originate from the utilisation (49,822 thousand euro) on the part of Banca Carige of the share premium reserve to cover four fifths of negative differences arising from securitisation carried out in 2000. As a result, assets of 19,960,000 in the form of taxes advanced was recorded in the consolidated statements for 2000 as counterpart in the share premium reserve. During the period one fifth of this negative differential (6,228 thousand euro) was recorded at the income statement pursuant to article 6, Law 130/99 as a result of provisions totalling 3,643 thousand euro to the share premium reserve and the related writing off of 2,585 thousand euro in tax advanced.

7.5 CHANGES IN LIABILITIES FOR TAXES PAYABLE recorded in the income statement with counter entry 1. Opening balances 9.007 2. Increases 294 2.1 Deferred taxation originating in the year 248 2.2 Other increases 46 3. Decreases 1.847 3.1 Deferred taxation written off in the year 1.847 3.2 Other decreases - 4. Closing balances 7.454

Deferred tax liabilities for the period amounted to 294,000 euro. Deferred tax liabilities cancelled in the first half of 2004 amounted to 1,847 thousand euro No provisions were made with regard to deferred tax liabilities on reserves benefiting from tax relief totalling 60,456 thousand euros as distribution is not foreseen and there is little likelihood of the conditions requiring payment arising.

CHANGES IN CAPTION 80 (A) "RESERVES FOR PENSIONS AND SIMILAR COMMITMENTS" 30/6/04 31/12/03 30/6/03 A. Opening balances 295.310 294.061 294.061 B. Net change 18.098 1.249 - 234 C. Closing balances 313.408 295.310 293.827

The closing balance represents the total of in-house funds which are destined for purposes defined by the Group’s banks; fund use is without legal personality.

234 The item “net change” includes 18,550,000 which refers to first-time integration of Cassa di Risparmio di Carrara.

CHANGES IN CAPTION 70 "RESERVE FOR TERMINATION INDEMNITIES" 30/6/04 31/12/03 30/6/03 A. Opening balances 96.814 103.515 103.515 B. Increases 18.482 13.352 6.337 C. Decreases 7.298 20.053 9.969 D. Closing balances 107.998 96.814 99.883

The item “increases” includes 11,068,000 which refers to opening balances of Cassa di Risparmio di Carrara.

235 SECTION 8

SUBSCRIBED CAPITAL, EQUITY RESERVES, RESERVES FOR GENERAL BANKING RISKS AND SUBORDINATED LIABILITIES

This section presents liabilities captions 100, 110, 130, 140, 150, 160, 170, 180, and 200 and assets captions 90, 100 and 140.

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % Capital stock (caption 150) 1.113.327 69,1 1.113.327 67,8 1.020.550 73,1 Additional paid-in capital (caption 160) 258.666 16,0 255.023 15,5 139.941 10,0 Reserves (caption 170) 114.612 7,1 127.752 7,8 127.290 9,1 Revaluation reserves (caption 180) 8.649 0,5 8.050 0,5 8.050 0,6 Reserves for general banking risks (caption 100) 100 - 100 - 5.165 0,4 Negative difference arising from application of the equity method (caption 130) 43.176 2,7 34.953 2,1 34.929 2,5 Minority interests (caption 140) 25.667 1,6 17.362 1,1 17.353 1,2 Net income (caption 200) 47.816 3,0 84.742 5,2 43.725 3,1 Total 1.612.013 100,0 1.641.309 100,0 1.397.003 100,0 Subordinated loans (caption 110) 517.055 517.055 400.000 Positive difference arising from consolidation (caption 90) 168.121 87.538 90.387 Positive difference arising from application of the equity method (caption 100) 15.129 16.168 14.154 Own shares (caption 140) 38.824 - 5.261

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 150 "CAPITAL STOCK" (*) 1.113.327 1.113.327 - - 1.020.550 - ordinary shares 959.898 959.898 - - 879.906 - saving shares 153.429 153.429 - - 140.644

Capital is made up of 1,113,326,839 ordinary shares each with a nominal value of 1 euro.

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 160 "ADDITIONAL PAID-IN CAPITAL" (*) 258.666 255.023 3.643 1,4 139.941

Variation for the period stems from the increase of 3,643,000 euro corresponding to the reintegration of the reserve following utilisation made during the securitisation of bad loans carried out at the end of 2000 pursuant to article 6, Law 130/99. This change in particular corresponds to the difference between the annual charge to the reserve for the period, the reduction in value of assets sold (6,228,000) and related taxes advanced (2,585,000).

(*) Item refers to Banca Carige SpA.

236

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 170 "RESERVES" 114.612 127.752 - 13.140 - 10,3 127.290 a) legal reserve 75.788 67.351 8.437 12,5 67.351 b) reserve for purchase of treasury stock 38.824 - 38.824 ... 5.261 d) other reserves - 60.401 - 60.401 - 100,0 54.678

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 180 "REVALUATION RESERVES" 8.649 8.050 599 7,4 8.050 Revaluation reserves pertaining to the Group 8.050 8.050 - - 8.050 Revaluation reserves pertaining to third parties 599 - 599 ... -

A total of 599 thousand was not classified as pertaining to the Group; the amount represents 10 per cent of the balance of the revaluations reserve at first-time consolidation of Cassa di Risparmio di Carrara.

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 100 "RESERVES FOR GENERAL BANKING RISKS" 100 100 - - 5.165

No change was recorded during the period in Caption 100.

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 130 "NEGATIVE DIFFERENCE ARISING FROM APPLICATION OF THE EQUITY METHOD" 43.176 34.953 8.223 23,5 34.929

The increase follows acquisitions relating to the insurance subsidiaries Carige Vita Nuova and Carige Assicurazioni (see section 3.6.1).

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 110 "SUBORDINATED LOANS" 517.055 517.055 - - 400.000

During the period Banca Carige issued a subordinated hybrid loan issue (Banca Carige 1.5 per cent 2003-2013), which offers the possibility of converting reimbursement premium into ordinary shares. The item therefore is as follows:

237 Code Amount Currency Interest rate Maturity Euribor 3 months + XS0135565637 400.000 euro 28/11/2011 annual spread of 0.80 IT0003563035 102.055 euro 1.5% + 16% at maturity 05/12/2013 Euribor 6 months + 0.80 IT0003499297 15.000 euro for the first 5 years; 30/06/2013 Euribor 6 months +1.40 for the other 5 years

Principal repayment will be made at maturity. Repayment before maturity can be effected after five years and subject to Bank of Italy approval. The bonds in question, in case of liquidation on the part of the Bank, will be repaid after all other creditors’ demands have been met.

The repayment ranking of the bond issue ‘Banca Carige 1.50% 2003-2013’ performed during the year in case of the Bank’s going into liquidation or receivership is as follows: the bonds will be repaid only after all other creditors subordinated or otherwise have been repaid with the exception of those creditors with an equal or more accentuated degree of subordination. Further characteristics of the issue are as follows:

- from 1st January 2006 until 31st October 2013 the bonds can be converted into shares of the Bank on a one-to-one basis; - for those bonds for which no conversion right has been exercised as at 31st October 2013, the principal shall be repaid in one payment on 5th December 2013 with a 16% premium on the nominal value.

The third loans was issued by Banca del Monte di Lucca. Repayment will be made entirely at maturity. The issuer can anticipate repayment after the fifth year, with Bank of Italy authorisation. In the case of the bank’s liquidation, the bonds will be repaid only after all other claims have been met.

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 200 "NET INCOME" 47.816 84.742 - 36.926 - 43,6 43.725

The caption reflects gains generated by the fully consolidated subsidiares of 19,442 thousand euros. Profit destined to third parties for the year amounted to 1,362 thousand euros

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 90 AND 100 "POSITIVE DIFFERENCE ARISING FROM CONSOLIDATION AND FROM APPLICATION OF THE EQUITY METHOD" 183.250 103.706 79.544 76,7 104.541 Positive difference arising from consolidation 168.121 87.538 80.583 92,1 90.387 Positive difference arising from the application of the equity method 15.129 16.168 - 1.039 - 6,4 14.154

Increases resulting from fully consolidated subsidiaries amounted to 15 thousand euro.

Increases resulting from fully consolidated subsidiaries are as follows:

238 30/6/04 31/12/03 30/6/03 Opening balance 87.538 93.236 93.236 Decreases 4.989 5.698 2.849 - Amortization for the period 4.989 5.698 2.849 Increases 85.572 - - - Positive difference arising from the first full consolidation of Cassa di Risparmio di Carrara 85.572 -

Closing balance 168.121 87.538 90.387

Positive difference arising from the application of the equity method are as follows:

30/6/04 31/12/03 30/6/03 Opening balance 16.168 14.859 14.859 Decreases 1.099 1.558 778 - Amortization for the period 783 1.558 778 - Interim amortization of positive difference arising from the application of the equity method on holdings in Assi 90 Srl, Ag Srl and Assimilano Srl. 316 - - Increases 60 2.867 73 - Positive difference arising from the purchase of own shares on the part of Carige Assicurazioni SpA 12 75 73 - Positive difference arising from the first-time application of the equity method on holdings in Assi 90 Srl, Ag Srl and Assimilano Srl - 2.791 - - Increase in positive difference relating to Carige Assicurazioni SpA arising on the subscription of the share capital increase. 48 1 - Closing balance 15.129 16.168 14.154

Change 30/6/04 31/12/03 absolute % 30/6/03 CAPTION 140 "OWN SHARES" 38.824 - 38.824 ... 5.261

The table below provides the details of the Bank’s total capital and prudential management requirements as requested by the Bank of Italy in its letter of 14/12/98 relating to increased transparency of bank balance sheets.

Consolidated assets and capital adequacy requirements at 30/6/04.

239 CATEGORIES/VALUES 30/6/04 31/12/03 30/6/03 A. Total capital A.1 Tier 1 870.207 969.457 760.259 A.2 Tier 2 512.936 526.081 389.072 A.3 Deductions 215.265 182.644 162.470 A.4 Total capital 1.167.878 1.312.894 986.861 B. Prudential requirements B.1 Credit risks 836.962 773.203 767.397 B.2 Trading risks 96.339 87.662 78.861 including: - trading securities risks 93.227 87.662 77.751 - exchange rate risks 3.080 - 1.110 B.3 Subordinated loans of third level - - - B.4 Other prudential requirements 29.582 39.477 39.478 B.5 Total prudential requirements 962.883 900.342 885.735 C. Capital adequacy ratios C.1 Risk-Weighted Assets (*) 12.036.038 11.254.275 11.071.686 C.2 Tier 1 % of RWA 7,23% 8,61% 6,87% C.3 Total capital % of RWA 9,70% 11,67% 8,91%

(*) Total prudential requiriments multiplied by the reciprocal minimum obligatory credit risk coefficent.

240 SECTION 9

OTHER LIABILITIES

Other liabilities amount to 1,219,508 thousand euro and are analysed as follows:

30/6/04 31/12/03 30/6/03 thousands of € % thousands of € % thousands of € % -Other liabilities (caption 50) 1.047.750 85,9 655.700 79,7 1.027.121 86,2 -Accrued expenses and deferred income (caption 60) 171.758 14,1 166.822 20,3 164.836 13,8 T otal 1.219.508 100,0 822.522 100,0 1.191.957 100,0

Change 30/6/04 31/12/03 abs olute % 30/6/03 9.1 CAP TION 50 "OTHE R LIABILITIE S" 1.047.750 655.700 392.050 59,8 1.027.121 - amounts due to cus tomers 69.258 64.443 4.815 7,5 228.574 - adjus tment differential on dis counted notes 291.167 178.227 112.940 63,4 264.439 - mis cellaneous accounts payable to branches 244.127 224.597 19.530 8,7 125.899 - amounts in trans it with branches 90.214 7.168 83.046 ... 120.863 - amounts relating to securities transactions - - - ... 36.203 - amounts due to tax authorities on behalf of third parties 37.140 14.903 22.237 ... 31.587 - beneficiaries of outstanding invoices 38.486 33.728 4.758 14,1 27.288 - staff charges 25.486 15.374 10.112 65,8 22.852 - amounts related to writedown on off-balance sheet transactions 118.336 5.301 113.035 ... 7.780 - premiums related to option trans actions 7.002 5.607 1.395 24,9 3.741 - guarantee deposits from third parties 9.870 1.044 8.826 ... 1.295 - amounts relating to tax collection s ervice 515 499 16 3,2 596 - accrued costs to be recognis ed 618 2.113 - 1.495 - 70,8 151 - other 115.531 102.696 12.835 12,5 155.853

Change 30/6/04 31/12/03 abs olute % 30/6/03 9.2 CAPTION 60 "ACCRUED EXPENSES AND DE FE R R E D INCOME " 171.758 166.822 4.936 3,0 164.836 Accrued expenses: 96.660 97.455 - 795 - 0,8 96.627 - interes t expens es due to banks 2.946 3.095 - 149 - 4,8 5.561 - interes t expens es due to cus tomers 2.657 437 2.220 ... 2.596 - interes t payable on debt s ecurities 45.862 48.534 - 2.672 - 5,5 41.758 - differentials stemming from derivatives contracts 43.106 41.697 1.409 3,4 45.219 - others 2.089 3.692 - 1.603 - 43,4 1.493 Deferred income: 75.098 69.367 5.731 8,3 68.209 - premiums related to currency forward transactions 393 636 - 243 - 38,2 271 - differentials stemming from derivatives contracts 3.331 3.777 - 446 - 11,8 4.199 - dis counted notes 1.447 1.738 - 291 - 16,7 1.906 - advanced rents and other related to finance leas e 64.299 59.838 4.461 7,5 57.763 - others 5.628 3.378 2.250 66,6 4.070

241 SECTION 10

GUARANTEES AND COMMITMENTS

Guarantees and commitments amount to 2,147,643 thousand euro and are analysed below:

30/6/04 31/12/03 30/6/03 thous ands of € % thousands of € % thousands of € %

Guarantees given (caption 10) 1.244.125 57,9 1.336.530 57,5 1.390.807 60,3 Commitments (caption 20) 903.518 42,1 989.572 42,5 916.349 39,7 T otal 2.147.643 100,0 2.326.102 100,0 2.307.156 100,0

Change 30/6/04 31/12/03 abs olute % 30/6/03 10.1 CAPTION 10 "GUAR ANT E E S GIVE N" 1.244.125 1.336.530 - 92.405 - 6,9 1.390.807 (a) commercial guarantees 1.131.297 1.233.281 - 101.984 - 8,3 1.283.045 (b) financial guarantees 61.805 34.220 27.585 80,6 23.418 (c) assets held in guarantee 51.023 69.029 - 18.006 - 26,1 84.344 T otal 1.244.125 1.336.530 - 92.405 - 6,9 1.390.807 Caption 10 is analysed below: - joint securities - - - ... 1.112 - s ureties 1.136.264 1.204.061 - 67.797 - 5,6 1.255.705 - documentary and non documentary credits 45.855 60.583 - 14.728 - 24,3 43.806 -acceptances on behalf of third parties 10.983 2.858 8.125 ... 5.840 - bond s ureties on behalf of third parties 51.022 69.027 - 18.005 - 26,1 84.343 - other sureties on behalf of third parties 1 1 - … 1

Credit commitments related to non-performing loans amount to 32,320 thousand euro. Reserve for guarantees and commitments, which amount to 4,036 thousand euro, cover all relevant risks.

Change 30/6/04 31/12/03 abs olute % 30/6/03 10.2 CAPTION 20 "COMMITMENTS" 903.518 989.572 - 86.054 - 8,7 916.349 (a) commitments to extend credit (certain to be called on) 373.979 462.116 - 88.137 - 19,1 440.700 (b) commitments to extend credit (not certain to be called on) 529.539 527.456 2.083 0,4 475.649 Commitments are analys ed as follows : - stipulated mortgages to be granted 369.947 393.440 - 23.493 - 6,0 356.378 - purchases of securities to be settled 30.319 112.223 - 81.904 - 73,0 95.955 - deposits to be made with banks 39.658 616 39.042 ... 2.482 - unus ed irrevocable lines of credit 137.485 143.389 - 5.904 - 4,1 119.974 - commitments with Deposit Protection Fund L iabilities (FITD) 19.448 18.026 1.422 7,9 14.913 - amounts to be granted to customers 100.928 14.010 86.918 ... 34.869 - derivatives contracts on credits 175.488 194.087 - 18.599 … 258.223 - options on securities - - - - 5.165 - stipulated finance lease transactions to be granted 25.359 15.800 9.559 60,5 22.978 - investments shares and quotas to be received 4.880 97.981 - 93.101 - 95,0 5.412 - others 6- 6… - T otal 903.512 989.572 - 86.060 - 8,7 916.349

242 Change 30/6/04 31/12/03 absolute % 30/6/03 10.3 ASSETS HELD TO GUARANTEE THE BANK'S LIABILITIES 458.510 217.970 240.540 ... 352.988 Securities held to guarantee: - derivatives contracts - 1.008 - 1.008 ... 1.000 - bank drafts issued by Carige 24.794 26.478 - 1.684 - 6,4 20.433 - repurchase agreements 433.716 190.484 243.232 ... 331.555 Total 458.510 217.970 240.540 ... 352.988

Change 30/6/04 31/12/03 absolute % 30/6/03 10.4 UNUSED LINES OF CREDIT BY THE BANK 160.248 141.633 18.615 13,1 226.711 (a) central banks 110.340 114.306 - 3.966 - 3,5 153.751 (b) other banks 49.908 27.327 22.581 82,6 72.960

10.5 FORWARD TRANSACTIONS 30/6/04 31/12/03 hedging trading other hedging trading other 1. Purchase/sale of: 202.001 221.625 - - 325.956 - 1.1 Securities 200.000 66.009 - - 140.145 - - purchases - 30.319 - - 112.223 - - sales 200.000 35.690 - - 27.922 - 1.2 Currency 2.001 155.616 - - 185.811 - - currency against currency - 3.243 - - - - - purchases against euro 999 34.419 - - 45.560 - - sales against euro 1.002 117.954 - - 140.251 - 2. Deposits and loans - - 227.590 - - 70.856 - to be made - - 138.939 - - 16.210 - to be received - - 88.651 - - 54.646 3. Derivatives contracts 4.191.384 3.173.391 178.055 3.868.957 2.763.316 181.694 3.1 With exchange of principal 299.490 257.841 102.055 274.227 125.636 102.171 (a) securities 142.260 300 102.055 116.997 15.980 102.171 - purchases - 300 - - 300 - - sales 142.260 - 102.055 116.997 15.680 102.171 (b) currency 157.230 257.541 - 157.230 109.656 - - currency against currency - 8.267 - - - - - purchases against euro 157.230 124.637 - 157.230 54.828 - - sales against euro - 124.637 - - 54.828 - (c) other instruments ------purchases ------sales ------3.2 Without exchange of principal 3.891.894 2.915.550 76.000 3.594.730 2.637.680 79.523 (a) currency - - - - - currency against currency ------purchases against euro ------sales against euro ------(b) other instruments 3.891.894 2.915.550 76.000 3.594.730 2.637.680 79.523 - purchases 1.681.850 1.331.720 - 1.391.324 1.345.481 - - sales 2.210.044 1.583.830 76.000 2.203.406 1.292.199 79.523 Total 4.393.385 3.395.016 405.645 3.868.957 3.089.272 252.550

With regards to derivatives contracts, the column ‘other transactions’ includes the notional value of options stated separately from the related underlying structured bond issue of the Bank. The notional value of options incorporated in assets or liabilities which allow either the Bank or the counterparty to transform, after a certain period of time, the interest rate stipulated in the contract from fixed to floating, or vice versa, was recorded at section 11.6 ‘Maturities of assets and liabilities’.

243

10.5 FORWARD TRANSACTIONS 30/6/03 hedging trading other 1. Purchase/sale of: 5.231 297.251 - 1.1 Securities - 204.437 - - purchases - 85.955 - - sales - 118.482 - 1.2 Currency 5.231 92.814 - - currency against currency - - - - purchases against euro 5.000 31.610 - - sales against euro 231 61.204 - 2. Deposits and loans - - 83.720 - to be made - - 37.351 - to be received - - 46.369 3. Derivatives contracts 3.895.983 2.930.801 85.923 3.1 With exchange of principal 263.559 63.829 - (a) securities 106.329 22.195 - - purchases 10.329 10.819 - - sales 96.000 11.376 - (b) currency 157.230 41.634 - - currency against currency - - - - purchases against euro 157.230 20.817 - - sales against euro - 20.817 - (c) other instruments - - - - purchases - - - - sales - - - 3.2 Without exchange of principal 3.632.424 2.866.972 85.923 (a) currency - - - currency against currency - - - - purchases against euro - - - - sales against euro - - - (b) other instruments 3.632.424 2.866.972 85.923 - purchases 1.437.942 1.497.812 - - sales 2.194.482 1.369.160 85.923 Total 3.901.214 3.228.052 169.643

10.6 DERIVATIVES CONTRACTS ON CREDITS 30/6/04 31/12/03 30/6/03 Trading Banking Trading Banking Trading Banking book book book book book book 1. Purchases 45.227 - 20.918 - 28.751 - 1.1 With exchange of principal 45.227 - 20.918 - 28.751 - - Credit default product 45.227 - 20.918 - 28.751 - 2. Sales 143.488 32.000 162.087 32.000 226.223 32.000 2.1 With exchange of principal 2.000 32.000 2.000 32.000 62.000 32.000 - Credit default product 2.000 32.000 2.000 32.000 62.000 32.000 2.2 Without exchange of principal 141.488 - 160.087 - 164.223 - - Total rate of return swap 141.488 - 160.087 - 164.223 - Total 188.715 32.000 183.005 32.000 254.974 32.000

Total principal of derivatives contracts amounts to 7,763.5 million euro (inclusive of basis swaps contracts for 1,091.5 milion of euro, the notional value of which is recorded at section 10.5).

244

Principal (1) Interest rate Exchange rate Share rates Other Total

1. Trading contracts 2.122.588 257.541 379.129 191.715 2.950.973 1.1 Non-quoted trading contracts 2.041.453 257.541 376.897 191.715 2.867.606 Forwards 4.000 - - - 4.000 Swaps (2) 1.645.747 - - - 1.645.747 Options bought 309.013 128.791 99.421 - 537.225 Options sold 82.693 128.750 277.476 - 488.919 Derivatives on credits - - - 191.715 191.715 1.2 Quoted trading contracts 81.135 - 2.232 - 83.367 Futures bought 40.000 - 1.912 - 41.912 Futures sold 41.135 - 20 - 41.155 Options bought - - 300 - 300 Options sold - - - - - 2. Hedging contracts 3.286.843 157.230 205.787 71.124 3.720.984 2.1 Non-quoted hedging contracts 3.286.843 157.230 172.000 29.000 3.645.073 Swaps (2) 2.939.233 157.230 - - 3.096.463 Options bought 347.610 - 124.000 - 471.610 Options sold - - 48.000 - 48.000 Derivatives on credits - - - 29.000 29.000 2.2 Quoted hedging contracts - - 33.787 42.124 75.911 Futures sold - - 33.787 42.124 75.911 Total 5.409.431 414.771 584.916 262.839 6.671.957

(1) Principal in basis swaps is stated once. (2) Caption includes basis swaps, cross currency swaps and interest rate swaps.

Principal in hedging contracts (1) Swaps Options bought Options sold Derivatives on Futures Total credits 1. Assets 1.550.307 173.110 48.000 29.000 75.911 1.876.328 Loans to customers 408.741 125.110 - 533.851 Trading securities 702.566 48.000 48.000 29.000 75.911 903.477 Deposits with banks 439.000 - 439.000 2. Liabilities 1.477.580 298.500 - - - 1.776.080 Bonds 1.477.580 298.500 - 1.776.080 3. Other (2) 68.576 - - - - 68.576 Total 3.096.463 471.610 48.000 29.000 75.911 3.720.984

(1) Principal relative to basis swaps is stated once. (2) Non-specific hedging contracts on interest-rate risk related to customer borrowing and lending.

245 Principal in contracts classified by remaining contract life (1) Up to 12 months From 1 to 5 More than 5 Total years years 1. Trading contracts 271.942 1.778.521 900.510 2.950.973 1.1 Non-quoted trading contracts 188.875 1.778.221 900.510 2.867.606 Forwards 4.000 - - 4.000 Swaps 121.356 1.076.284 448.107 1.645.747 Options bought 31.780 217.111 288.334 537.225 Options sold 31.739 293.111 164.069 488.919 Derivatives on credits 191.715 191.715 1.2 Quoted trading contracts 83.067 300 - 83.367 Futures bought 41.912 - 41.912 Futures sold 41.155 - 41.155 Options bought 300 - 300 Options sold - - 2. Hedging contracts 835.680 1.565.706 1.319.598 3.720.984 2.1 Non-quoted hedging contracts 759.769 1.565.706 1.319.598 3.645.073 Swaps 656.269 1.330.706 1.109.488 3.096.463 Options bought 55.500 206.000 210.110 471.610 Options sold 48.000 48.000 Derivatives on credits 29.000 29.000 2.1 Quoted hedging contracts 75.911 - - 75.911 Futures sold 75.911 Total 1.107.622 3.344.227 2.220.108 6.671.957

(1) Principal in basis swaps is stated once.

Derivatives business is carried out exclusively with primary banking and financial institutions and for this reason provisions for counterparty risk have not been made. At 30/6/2003, there were no unsettled contracts. Non-quoted contracts accounted for 98% of all derivatives contracts.

Non-quoted derivatives contracts (1) Banks Financial bodies Others Total 1. Principal 5.694.179 445.296 373.204 6.512.679 2. Trading contracts (2) Positive market value 13.703 359 3.232 17.294 Negative market value 28.826 1.210 3.821 33.857 Potential credit equivalent 39.950 3.292 21.229 64.471 3. Hedging contracts Positive market value 36.963 130.589 - 167.552 Negative market value 70.326 124.040 - 194.366 Potential credit equivalent 39.937 4.176 - 44.113

(1) Principal relative to basis swaps is stated once. (2) The trading contracts segment includes negative market values of 7.7 million euros relating to options incorporated into structured bond issues of the Group offset by positive market values of the same amount in the hedging derivatives segment.

Derivatives-related capital losses of 111.8 million euro and capital gains of 61.3 million euro were not recorded in the income statement. In particular, capital losses and gains stemming from hedging contracts related to the trading securities portfolio of 45.8 million euro and 6.7 million euro respectively, were not recorded (see section 2.3); capital losses and gains stemming from hedging contracts related to bonds issued of 27.3 million euro and 34.9 million euro respectively were also not recorded.

246

Deferred gains and losses Losses Gains

1. Trading contracts 23.023 16.243 1.1 Non-quoted trading contracts 23.023 16.035 Forwards 3 3 Swaps 6.254 8.302 Options 16.212 6.440 Derivatives on credits 554 1.290 1.2 Quoted trading contracts - 208 Futures - 83 Options - 125 2. Hedging contracts 88.764 45.064 2.1 Non-quoted hedging contracts 88.457 44.763 Swaps 83.190 30.513 Options 5.015 14.250 Derivatives on credits 252 2.2 Quoted hedging contracts 307 301 Futures 307 301 Total 111.787 61.307

247

SECTION 11

CONCENTRATION AND DISTRIBUTION OF ASSETS AND LIABILITIES

Breakdowns of loans related to lists 11.2, 11.3, 11.5, 11.6 and 11.7 of this section include leased assets, which amount to 699,139 thousand euro and are exclusively connected to transactions with customers in euro. On this basis, loans to customers amount to 11,200,549 thousand euro and not to 10,501,410 thousand euro (as caption 40 of assets). 11.1 SIGNIFICANT EXPOSURES 30/06/04 31/12/03 30/6/03 (a) amounts 717.281 150.000 318.006 (b)number 312

Significant exposures are those identified on the basis of “major lines of credit” as defined by the Bank of Italy.

11.2 DISTRIBUTION OF LOANS AND ADVANCES TO CUSTOMERS, BY CATEGORY 30/06/04 31/12/03 30/6/03 (a) Governments 579.847 502.116 631.315 (b) Other public entities 665.631 596.570 568.428 (c) Non-financial businesses 5.926.962 5.658.442 5.384.355 (d) Financial institutions 1.167.367 374.126 428.530 (e) Personal businesses 590.970 572.154 553.044 (f) Other operators 2.269.772 2.388.138 2.024.935 Total 11.200.549 10.091.546 9.590.607

11.3 DISTRIBUTION OF LOANS TO RESIDENT NON-FINANCIAL BUSINESSES AND PERSONAL BUSINESSES 30/06/04 31/12/03 30/6/03 (a) 1st branch of economic activity Other market services 1.403.846 1.298.059 Wholesale and retail trade, salvage and repairs 1.124.165 (b) 2nd branch of economic activity Wholesale and retail trade, salvage and repairs 1.238.410 1.158.286 Other market services 972.580 (c) 3rd branch of economic activity Building and construction 941.784 839.548 943.280 (d) 4th branch of economic activity Air and sea transport 351.166 329.702 368.779 (e) 5th branch of economic activity Hotel and catering services 310.372 311.667 300.993 (f) Other branches 2.154.966 2.061.517 2.068.526 Total 6.400.544 5.998.779 5.778.323

248 11.4 DISTRIBUTION OF GUARANTEES GIVEN, BY CATEGORY OF COUNTERPART 30/06/04 31/12/03 30/6/03 (a) Governments 1 1 1 (b) Other public entities 8.236 13.592 7.505 (c) Banks 90.691 136.034 125.406 (d) Non-financial businesses 1.016.181 1.038.938 1.035.557 (e) Financial institutions 75.607 94.065 106.750 (f) Personal businesses 17.314 16.168 16.984 (g) Other operators 36.095 37.732 98.604 Total 1.244.125 1.336.530 1.390.807 11.5 GEOGRAPHIC DISTRIBUTION OF ASSETS AND LIABILITIES

30/6/04 Caption/countries Italy Other EU Other countries Total countries 1. Assets 13.622.888 1.505.661 229.363 15.357.912 1.1 Due from banks 694.345 457.804 85.473 1.237.622 1.2 Loans to customers 11.010.711 143.890 45.948 11.200.549 1.3 Securities 1.917.832 903.967 97.942 2.919.741 2. Liabilities 13.250.046 1.170.836 229.171 14.650.053 2.1 Due to banks 366.108 903.560 19.343 1.289.011 2.2 Deposits from customers 7.558.990 57.266 19.759 7.636.015 2.3 Securities issued 5.206.775 10 69 5.206.854 2.4 Others 118.173 210.000 190.000 518.173 3. Guarantees and commitments 1.931.787 208.379 7.477 2.147.643

31/12/03 Caption/countries Italy Other EU Other countries Total countries 1. Assets 12.735.526 713.356 125.071 13.573.953 1.1 Due from banks 555.752 332.786 29.893 918.431 1.2 Loans to customers 9.828.349 216.529 46.668 10.091.546 1.3 Securities 2.351.425 164.041 48.510 2.563.976 2. Liabilities 11.826.461 823.010 247.947 12.897.418 2.1 Due to banks 438.165 525.123 42.761 1.006.049 2.2 Deposits from customers 6.758.182 87.871 15.118 6.861.171 2.3 Securities issued 4.512.691 16 68 4.512.775 2.4 Others 117.423 210.000 190.000 517.423 3. Guarantees and commitments 2.243.549 26.596 55.957 2.326.102

30/6/03 Caption/countries Italy Other EU Other countries Total countries 1. Assets 12.093.502 1.062.961 152.940 13.309.403 1.1 Due from banks 632.581 233.047 24.054 889.682 1.2 Loans to customers 9.391.761 146.076 52.770 9.590.607 1.3 Securities 2.069.160 683.838 76.116 2.829.114 2. Liabilities 11.341.687 1.005.412 260.017 12.607.116 2.1 Due to banks 581.854 698.643 53.907 1.334.404 2.2 Deposits from customers 6.552.980 96.760 16.024 6.665.764 2.3 Securities issued 4.206.486 9 86 4.206.581 2.4 Others 367 210.000 190.000 400.367 3. Guarantees and commitments 2.019.611 278.898 8.647 2.307.156

249 Geographic distribution is analysed by reference to the counterparts’ country of residence.

11.6 MATURITIES OF ASSETS AND LIABILITIES 30/6/04 between 3 between 1 and 5 years beyond 5 years Captions/Residual life Repayable up to 3 and 12 fixed fixed indexed unspecified Total on demand months months rate indexed rate rate rate duration 1. Assets 3.028.805 3.145.945 3.840.428 1.928.643 2.907.642 2.453.165 3.678.411 587.249 21.570.288 1.1 Treasury bonds eligible for refinancing - 23.812 19.914 329.063 81.427 32.610 189.329 - 676.155 1.2 Due from banks 565.850 342.751 193.940 516 10.000 944 - 123.621 1.237.622 1.3 Loans to customers 2.266.981 693.598 1.316.376 458.168 1.758.579 1.554.320 2.689.445 463.082 11.200.549 1.4 Bonds and other fixed income securities 11.094 117.196 241.604 86.286 695.977 92.206 700.622 - 1.944.985 1.5 Off-balance sheet transactions 184.880 1.968.588 2.068.594 1.054.610 361.659 773.085 99.015 546 6.510.977 2. Liabilities 7.941.997 2.597.130 2.891.951 1.624.676 2.463.235 1.744.625 1.895.012 1.286 21.159.912 2.1 Due to banks 403.897 222.361 117.057 263.721 68.759 78.333 134.883 - 1.289.011 2.2 Deposits from customers 7.288.715 340.172 6.889 239 - - - - 7.636.015 2.3 Securities issued 135.332 237.714 790.858 512.647 1.960.951 551.702 1.017.650 - 5.206.854 - bonds 9.799 91.137 648.938 490.708 1.951.213 549.802 1.017.650 - 4.759.247 - certificates of deposits 14.095 146.577 141.920 21.939 9.738 1.900 - - 336.169 - other securities 111.438 ------111.438 2.4 Subordinated liabilities - - - - - 102.055 415.000 - 517.055 2.5 Off-balance sheet transactions 114.053 1.796.883 1.977.147 848.069 433.525 1.012.535 327.479 1.286 6.510.977

Caption “repayable on demand” includes assets and liabilities with residual life of not more than 24 hours. Unspecified duration includes compulsory reserve, overdue loans and bad loans. Sub-captions 1.5 and 2.5 include the notional value of options incorporated in structured mortgaged loans and bond issues which allow either the Bank or the counterparty, after a certain period of time, to transform the interest rate stipulated in the contract from fixed to floating, or vice versa.

250 31/12/03 between 3 between 1 and 5 years beyond 5 years Captions/Residual life Repayable up to 3 and 12 fixed fixed indexed unspecified Total on demand months months rate indexed rate rate rate duration 1. Assets 3.180.058 3.108.427 2.983.281 2.030.282 2.336.253 1.499.694 3.557.956 515.605 19.211.556 1.1 Treasury bonds eligible for refinancing 6.326 61.998 93.601 322.419 204.084 32.783 163.753 - 884.964 1.2 Due from banks 351.524 390.380 36.899 762 - 983 10.000 127.883 918.431 1.3 Loans to customers 2.150.004 798.029 1.204.665 463.415 1.670.721 675.869 2.741.121 387.722 10.091.546 1.4 Bonds and other fixed income securities 15.121 60.787 171.354 92.511 432.345 88.586 640.376 - 1.501.080 1.5 Off-balance sheet transactions 657.083 1.797.233 1.476.762 1.151.175 29.103 701.473 2.706 - 5.815.535 2. Liabilities 7.189.731 3.239.093 1.671.693 1.580.899 1.979.380 1.321.108 1.730.649 32 18.712.585 2.1 Due to banks 45.367 489.846 122.106 40.887 61.957 104.488 141.398 - 1.006.049 2.2 Deposits from customers 6.601.160 247.911 11.695 373 - - - 32 6.861.171 2.3 Securities issued 175.462 349.123 337.333 473.074 1.906.792 99.669 1.171.322 - 4.512.775 - bonds 71.831 185.156 192.086 460.156 1.893.256 99.669 1.171.322 - 4.073.476 - certificates of deposits 15.648 163.967 145.247 12.918 13.536 - - - 351.316 - other securities 87.983 ------87.983 2.4 Subordinated liabilities - - - - - 102.055 415.000 - 517.055 2.5 Off-balance sheet transactions 367.742 2.152.213 1.200.559 1.066.565 10.631 1.014.896 2.929 - 5.815.535

11.6 MATURITIES OF ASSETS AND LIABILITIES 30/6/03 between 3 between 1 and 5 years beyond 5 years Captions/Residual life Repayable up to 3 and 12 fixed fixed indexed unspecified Total on demand months months rate indexed rate rate rate duration 1. Assets 3.696.242 2.307.669 4.129.044 1.786.463 2.131.762 1.506.628 2.950.949 398.264 18.907.021 1.1 Treasury bonds eligible for refinancing 32.720 82.357 357.595 334.745 60.497 17.726 144.472 - 1.030.112 1.2 Due from banks 419.127 195.203 88.586 1.253 6.000 99 10.000 169.414 889.682 1.3 Loans to customers 2.625.388 553.521 1.168.512 512.518 1.602.054 693.755 2.206.009 228.850 9.590.607 1.4 Bonds and other fixed income securities 48.058 11.920 354.034 87.484 425.468 114.307 585.247 - 1.626.518 1.5 Off-balance sheet transactions 570.949 1.464.668 2.160.317 850.463 37.743 680.741 5.221 - 5.770.102 2. Liabilities 6.669.794 3.552.242 2.494.366 1.503.584 1.509.711 1.348.430 1.298.724 - 18.376.851 2.1 Due to banks 124.325 672.264 279.826 42.448 52.436 105.764 57.341 - 1.334.404 2.2 Deposits from customers 6.247.732 400.575 16.947 510 - - - - 6.665.764 2.3 Securities issued 125.389 203.984 562.933 684.916 1.443.982 390.268 795.109 - 4.206.581 - bonds 9.857 41.099 387.102 668.425 1.429.770 390.268 795.109 - 3.721.630 - certificates of deposits 17.923 162.885 175.831 16.491 14.212 - - - 387.342 - other securities 97.609 ------97.609 2.4 Subordinated liabilities ------400.000 - 400.000 2.5 Off-balance sheet transactions 172.348 2.275.419 1.634.660 775.710 13.293 852.398 46.274 - 5.770.102

251 Change 30/6/04 31/12/03 absolute % 30/6/03 11.7 ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCY (a) Assets 443.403 446.198 - 2.795 - 0,6 462.495 1. Due from banks 134.590 75.445 59.145 78,4 122.742 2. Loans to customers 273.980 328.875 - 54.895 - 16,7 315.575 3. Securities 22.180 35.328 - 13.148 - 37,2 23.065 4. Participating interests 382 382 - - 382 Other 12.271 6.168 6.103 98,9 731 (b) Liabilities 559.262 457.270 101.992 22,3 615.082 1. Due to banks 222.503 245.314 - 22.811 - 9,3 322.511 2. Deposits from customers 109.425 11.960 97.465 ... 112.226 3. Securities issued 227.334 199.996 27.338 13,7 180.345 4. Other - - - - -

252 11. 8 SECURITISATION

The Bank has carried out three securitisation transactions: the first at the end of 2000 relating to bad loans; the second at the end of 2001, relating to performing loans; the third during the first six months of 2004, relating to performing loans. The subsidiary, Cassa di Risparmio di Savona, carried out one securitisation transaction at the end of 2002, relating to non performing loans. Details of these transactions are given below:

BANCA CARIGE’S SECURITISATION

a) Securitisation of bad loans: year 2000

At the end of 2000 the Bank securitised without recourse a part of its bad loans portfolio. These loans were backed either fully or in part by voluntary or legally-enforced guarantees (gross value of pro soluto credits: 292.5 million euro,ITL 566.4 bn; book value: 227.6 million euro, ITL 440.6 bn; sale price: 165.3 million euro, ITL 320 bn).

As special purpose vehicle for the transaction, Argo Finance One, a subsidiary of the Carige Group, issued the following three types of bonds:

- Class A ‘Senior’ bonds amounting to 40 million euro; - Class B ‘Mezzanine’ bonds amounting to 70 million euro; - Class C ‘Junior’ bonds amounting to 56.5 million euro, fully subscribed by Banca Carige, this issue is fully subordinate in principal and coupon payments to classes A and B.

The placement of the securities was carried out by Credit Suisse First Boston.

At 30th June 2004, of the three classes issued, Banca Carige held in its securities portfolio exclusively and fully the class C ‘Junior’ bonds for a value of 56.5 million euro. These securities were placed in the Bank’s investment portfolio. No writedowns have been effected on the book value of these securities in the light of the positive performance of receipts. The securitised bad loans represent the underlying for all three classes of securities issued.

Risks for the Bank resulting from this transaction are represented by: the class C bonds both for principal and interest; guarantees granted to holders of class A securities relating to interest payments; guarantees granted to holders of class B securities for both principal and interest; the credit line of 15 million euro backing the class A and B bond issues granted by Banca Carige to Argo Finance; a limited recourse mortgage bond loan of 51 million euro; an interest rate cap. The positive performance in repayment flows has meant that no writedowns were carried out. The credit line, which at 30/6/04 was unused, was recorded at balance sheet caption 20 ‘Guarantees’, whilst the limited recourse mortgage, also unused, was recorded, as required by the Bank of Italy, at caption 10 ‘Guarantees given’. The transaction proceeds according to schedule. Consequently, no value adjustments were required.

Banca Carige is the servicer for the transaction. Revenues on the credit portfolio at 30/6/2004 amounted to 111,2 million euro, of which 21,7 million euro collected during the first half of the year. These amounts are in line with the repayment schedule defined at the start of the transaction. Banca Carige bills Argo Finance One on a monthly and half-yearly basis for the service activity it performs. The half-yearly accounts are inspected by the auditors KPMG SpA. The service activity carried out by Banca Carige generated 868 thousand euro in commission revenues, 791 thousand euro in reimbursed legal costs and 1,143 thousand euro in interest received on the class C Junior bonds. On the basis of interest-rate trends and conditions contained in the contract, no additional revenues were payable on the limited recourse mortgage.

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As a result of the positive performance recorded by the repayment schedule, Fitch on 6/3/2002 upgraded the class A securities transaction from “AA” to “AAA”; on 13 December 2002 the same institute upgraded the transaction relating to the class B securities from “AA-“ to “AA”.

The positive trend allowed for the full repayment of the class A securities (40 million) in addition to the earlier-than-scheduled repayment of part (33.9 million) of the capital relating to the class B securities. In July 2004 further class B securities for 19.6 million were repaid in advance.

The limited recourse mortgage bond loan, already reduced to 69 million in december 2003, was reduced to 51 million at the beginning of 2004. b)Securitisation of performing loans: year 2001

At the end of 2001, Banca Carige securitised its performing mortgages in order to improve liquidity in the light of considerable expansion in long-term lending to the family (mortgages, in particular).

A total of 13,858 mortgages was sold with a residual debt at 31/12/2001, the date of ceding, on the part of customers amounting to 511.5 million euro.

The portfolio subject to sale was identified on the basis of objective criteria foreseen by the relevant legislation (Law 130/99).

In particular, the bundle of credits sold were mortgages granted to private customers for the purchase or refurbishment of property.

The bundle of credits ceded were as follows:

1) index-linked, first recorded mortgages/landed property loans distributed to private individuals prior to 31/7/2001; mortgages with: a fixed repayment schedule with instalment due 31/12/2001; repayments in order with schedule via current account direct debit. mortgages/landed property loans not classified either as bad loans or watchlists between 31/12/93 (exclusive) and 31/12/01 (inclusive).

The bundle of credits described above was sold on 31/12/2001 to the special purpose vehicle Argo Mortgage, in which Banca Carige has a 5% indirect holding (535.5 million) via its subsidiary Columbus Carige Immobiliare (the regularity of the operation was evidenced by the signing of servicing, and guarantee and indemnity contracts in the time prescribed).

The prices of the credits ceded were calculated as the sum of the following two components: an initial price of 511.5 million euros equivalent to the nominal value of the credits ceded; a deferred price of 24.0 million euro calculated on the basis of profit extraction which, in particular, took into account the excess spread after the transaction costs relating to each payment date, intrinsic risk levels of the credits, possibility of anticipated re-payment of loan and subsequent loss of interest income. This spread was actualised using market rates at 31/12/2001 on the basis of the duration of the transaction.

254 The payment of the first component of the price is linked to a securities issue, whilst the deferred price will be paid pro quota at each payment date in reference to the procedures foreseen in the contract and the payment priorities defined in the transaction. At 30/6/2004 deferred-price account payments totalled 5,7 million.

The remaining credit of 18,3 million with Argo Mortgage Srl related to deferred-price is recorded at the caption 40 “Loans to customers”.

The securities issued by Argo Mortgage are as follows:

Class Amount in Rating by Expected Contractual Effective Euribor 3 Credit millions of Moody’s/Fitch duration Maturity expected months enhancement euro (***) (*) duration (*) margin in basis points (**) A 478 Aaa/AAA March 2009 October 2036 4.3 years 26 8.0% B 22.0 Aa2/AA March 2009 October 2036 6.8 years 45 3.7% C 11.5 Baa2/BBB March 2009 October 2036 6.8 years 145 1.5% D 9.2 Not rated October 2036

(*) assuming Argo Mortgage exercises its call option in January 2009; (**) step up of applicable spread if call option is not exercised; (***) the rating was assigned by Moody’s and Fitch on the basis of due diligence. The rating will be reviewed annually on the basis of collection flows and deviance from business plans.

The class A, B and C securities are quoted on the Luxembourg bond market and have been fully subscribed exclusively by European institutional investors, Italian included.

Class B and C securities were subscribed by Banca Carige. The class D issue was subscribed fully by

Banca Carige.

At 30th June 2004 Banca Carige held in its securities portfolio class B bonds for a value of 0.2 million and class D bonds for a value of 9.2 million. The latter were placed in the Bank’s investment portfolio.

Payment priority will be as follows: - the payment of senior expenses and swap interest rate, followed by: - the payment of coupon on class A securities at maturity dates prior to maturity at October 2003, followed by: - the payment of coupon on class B securities on the basis of cumulative default ratio, followed by: - the payment of coupon on class C securities with residual available amounts at each payment date to be paid into a capital accumulation account.

From the October 2003 date of payment onwards, the order of priority is as follows: the repayment of amortisation paid on class A securities, followed, on the basis of the cumulative default ratio, by: - the payment of coupon on class B securities and the repayment of amortisation paid on class B securities, followed by: - the payment of coupon on class C securities and the repayment of amortisation relating to the same securities.

The repayment of principal and interest of class D securities is subordinate to the first three classes.

255 The role of servicer of the transaction was carried out on Argo Mortgage’s behalf by Banca Carige. The yearly accounts are inspected by the auditors KPMG SpA.

All proceeds relating to the securitised credits will be in the form of mortgage instalment payments made by mortgage borrowers at the counters of Banca Carige, the latter, as foreseen in the contractual documentation regulating the securitisation transaction, carrying out the role of both account bank and cash manager. Both roles are compatible with the corporate service contract signed between Banca Carige and Argo Mortgage in that Banca Carige will perform the accounting duties on behalf of the special purpose vehicle.

During the first half of 2004, total revenues collected amounted to 38.5 million euro, of which 22.2 million euro in capital instalments, 7.7 million euro in interest instalments, 8.6 million in advanced repayments, interest and penalty charges.In the first half of 2004 commissions on revenues for 180 million accrued.

The transaction is proceeding according to schedule, consequently no value adjustment relating to the Bank’s relations with Argo Mortgage were required.

The transaction will be monitored by the Bank of New York in its payment report and by Banca Carige in its quarterly and investor reports, and certified by the independent auditors KPMG SpA.

Banca Carige SpA provided the special purpose vehicle with the cash collateral foreseen by the transaction (quota of the tranche of class D securities totalling 7.8 million) which during the year, as a result of the regular repayment flows scheduled by the contract, reached the figure (10.8 million) projected in the contract.

The London offices of the Bank of New York will represent the bond holders as well as being agent and security trustee. The same bank’s Luxembourg offices will act as agent for Luxembourg. The Milan offices of BNP Paribas Security Services will be payment agent for the transaction. The arrangers of the transaction were CSFB and CDC IXIS.

The counterparty of the IRS contracts utilised by Argo Mortgage for cover against interest rate fluctuations latent in the securitised credits is CDC IXIS.

c) Securitisation of performing loans carried out during the first half of 2004

During June 2004 the Bank securitised part of its performing mortgage portfolio in order to balance liquidity’s position in the light of considerable expansion in long-term lending to the family.

On 30th June 2004, a total of 13,272 mortgages with a book value at the same date of 864.5 million was sold to the special purpose vehicle Argo Mortgage Srl.

The portfolio subject to sale was identified on the basis of objective criteria foreseen by relevant legislation (Law 130/1999).

The mortgages in question were granted for the purchase or renovation of residential property.

The mortgages sold had the following characteristics (details appeared in the Official Gazette of the Italian Republic of 2nd July 2004):

1) first recorded mortgages/landed property loans granted to private individuals prior to 31st December 2003 at various interest-rate solutions (floating; fixed; floating rate with interest rate ceiling; mixed with a fixed rate for the first two years followed by floating rate);

256 2) mortgages with a payment instalment date at 30/6/04 and with previous instalments regularly paid via direct current account debit; 3) first recorded mortgages/landed property loans not classified by Banca Carige either as watchlists or bad loans between 31st December 1994 (inclusive) and 30th June 2004 (inclusive).

The credits described above were sold on 30th June 2004 to the SPV Argo Mortgage 2 Srl, in which Banca Carige has a 5 per cent indirect holding through its subsidiary Columbus Carige Immobiliare SpA, for 925.6 m. The contract was completed with the signing of a servicing contract.

The above price was calculated as the sum of the following two components:

- an initial price of 864.5 m equivalent to the book value of the credits sold: - a deferred price of 61.1 m calculated on the basis of profit extraction which, in particular, took into account the excess spread present after the transaction costs relating to each payment date, intrinsic risk levels of the credits and the possibility of premature repayment of the loan and the subsequent loss of interest income. Excess spread was actualised on the basis of market rates at 30th June 2004 on the basis of the duration of the transaction.

The validity of the method chosen to calculate the deferred price component was confirmed by a leading firm of auditors.

The payment of the first component took place according to schedule on 23rd July 2004 at the same time as the issuing of the securities. The deferred price will be paid pro quota at each payment date in line with the procedures foreseen in the contract and the payment priorities defined in the transaction.

The loan granted to the SPV Argo Mortgage 2 is recorded at balance sheet caption 40 “Loans to customers”, whilst revenues generated on the sale of the credits (61.1 m) are recorded at caption 70 “ other operating income” of the profit & loss account.

As stated the transaction was completed according to schedule with the signing of the servicing contract with Banca Carige, in which the contract of guarantee and indemnity is included.

The role of servicer for the transaction will be performed by Banca Carige on Argo Mortgage 2’s behalf. The SPV will be billed by Banca Carige on a quarterly basis, which will be subject to certification by KPMG SpA on an annual basis.

All proceeds relating to the securitised credits will be in the form of mortgage instalment payments made by mortgaged borrowers at branches of Banca Carige, the latter performing the contractual roles also of account bank and cash manager. These two roles are compatible with the corporate service contract signed between Banca Carige and Argo Mortgage 2; the same contract stipulates that Banca Carige will carry out the SPV’s accounting duties.

The transaction will be monitored by Deutsche Bank of London in its payment report and by Banca Carige in its quarterly report and investor report; KPMG SpA will certify the transaction on an annual basis.

Deutsche Trustee Company Limited is debenture trustee, whilst the London branch of Deutsche Bank AG is paying agent. The paying agent for Luxembourg is the Luxembourg branch of Deutsche Bank AG.

CDX IXIS Capital Markets, UBS Limited and WestLB AGH are arrangers and joint lead managers.

The counterparty of the IRS contracts utilised by the SPV to hedge interest rate risk latent in the securitised credits is CDC IXIS.

257 The issuance of asset backed securities by Argo Mortgage 2 and payment of related amounts were in accordance with schedule as at 23rd July 2004. The securities issued are as follows:

Class Amount (millions Rating by Contractual Spread on Euribor of euro) Moody’s/ Fitch maturity 3 months (bps) A 808.3 Aaa/AAA October 2043 Bps 18 B 26.8 Aa2/AA- October 2043 Bps 32 C 29.35 Baa2/BBB October 2043 Bps 83

Initial rating was assigned by the rating agencies Moody’s and Fitch/IBCA on the basis of due diligence. The rating will be reviewed annually on the basis of collection flows and deviance from the business plan.

The bonds are quoted on the Luxembourg bond market.

Payment priority will be as follows:

- the payment of senior expenses and the IRS; - coupon payment on class A securities at maturity dates prior to January 2006, followed by: - coupon payment on class B securities on the basis of the cumulative default ratio, followed by: - coupon payment on class C securities with residual available amounts at each payment date to be paid into a capital accumulation account.

From payment date January 2006 onwards, the order of priority is as follows:

- the repayment of amortisation paid on class A securities followed, on the basis of the cumulative default ratio, by: - coupon payment on class B securities and the repayment of amortisation paid on class B securities, followed by: - coupon payment on class C securities and the repayment of amortisation relating to the same securities.

Banca Carige issued a subordinated loan in order to provide the SPV with cash collateral required to purchase a hedging derivative from CDC IXIS in addition to funds to cover start-up costs. On issuance at 23rd July 2004, the loan amounted to 22.7 m. Repayment will be made at each repayment date on the basis of available funds and payment priority with precedence over deferred price repayment.

CASSA DI RISPARMIO DI SAVONA’S SECURITISATION

At the end of 2002, Cassa di Risparmio di Savona securitised the entirety of its bad loans portfolio. The advantages of this transaction can be summarised as follows: previously illiquid asset positions with low returns can now benefit from higher-yielding market interest rates; securitisation achieves qualitative improvements in the bank’s risk portfolio; higher credit rating of the bank has cost benefits for the Banca Carige Group in its funding requirements on international markets.

As stated above, the entirety of the bank’s bad loans were sold en bloc to the special purpose vehicle Priamar Finance (holdings on the part of Stitching Faro of Amsterdam and Banca Carige of, respectively, 95% and 5%). The bad loans securitised were classified as such at 31/12/2001 and were still effective at 11/12/2002, backed either fully or in part by voluntary or legally-enforced guarantees.

258 On 14th January 2004 Banca Carige acquired a majority holding in Priamar Finance Srl which, therefore, as of 2004, is part of the Banca Carige Group.

The structure of the company’s share capital is as follows: Banca Carige: 60 per cent; Stitching Faro (Amsterdam): 40 per cent.

The portfolio subject to sale was identified on the basis of objective criteria foreseen by relevant legislation (Law 130/99 and article 58, Law decree 385/93).

The credits sold (contract date: 23/12/2002 with effect from 11.59 pm of 31/12/2002) consisted of 1,085 debt positions (equivalent to 2,238 sub-items).

The gross value of credits sold excluding previous reductions was calculated at 68.8 million. The corresponding net value was 33.7 million after previous writedowns. The sale price, fixed at 28 million, determined a loss on securitisation of 5.7 million, registered in the profit and loss account of 2002.

All the loans securitised were denominated in euro and were granted to customers resident in Italy.

All proceeds relating to the securitised credits will be collected at the counters of Banca Carige, the latter, as foreseen in the contractual documentation regulating the securitisation transaction, carrying out the role of both account bank and cash manager. Both roles are compatible with the administrative service contract signed between Banca Carige and Priamar Finance in that Banca Carige will perform the accounting duties on behalf of the special purpose vehicle.

The role of servicer of the transaction was assigned to Banca Carige by Priamar Finance. Banca Carige bills Priamar Finance on a monthly and half-yearly basis for the service activity it performs. The half-yearly accounts are inspected by the auditors KPMG SpA.

Priamar Finance is both assignee of the credits and issuer of the securities.

The London offices of the Bank of New York will represent the bond holders in addition to performing the duties of calculation agent, security trustee, and payment agent. The same bank’s Luxembourg offices will act as agent for Luxembourg.

Arranger and lead manager of the operation is WestLB.

The asset backed securities issued by Priamar Finance on 21st February 2003 are as follows:

Class Amount in millions of Expected duration Interest rate euro A 18.0 4.6 years Euribor 6 months + 0.15% B 10.2 4% plus any residual portfolio cash flows

The maturity indicated in the table is that forecasted by the business plan. The expiry date of the operation has been fixed at 31/12/2016.

The class A securities are quoted on the Luxembourg bond market; class B securities are unquoted.

Class B securities were subscribed by Cassa di Risparmio di Savona and will be placed in that bank’s investment securities portfolio.

The securities are not rated.

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Payment priority will be as follows:

- the payment of coupon on class A securities, followed by the principal; on completion of this - the payment of coupon on class B securities, followed by the principal.

As stated above, the payment of coupon and principal relating to class B securities is fully subordinated to the class A issue.

Credit enhancement of the issue is represented, in addition to the class categorization and payment priority described above, by a line of credit, a limited recourse bond loan, and an interest cap covering interest rate risk exposure.

Banca Carige has opened a revolving credit line in favour of Priamar Finance of 2.5 million for the duration of the bond issue, renewable on a yearly basis. This line of credit will be used in the case of any temporary interruptions in repayment flows. Reimbursement of the credit to Banca Carige will be effected according to the conditions stipulated in the contract between Banca Carige and Priamar Finance. Repayment of the line of credit utilised is subordinated to the interest and capital repayments relating to the class A securities.

As stated above, Priamar Finance is covered by an interest rate cap the premium of which was paid by Banca Carige up front at the issuing of the securities.

Cassa di Risparmio di Savona has made available a limited recourse mortgage in the form of Italian government stock of around 22 million.

Risks for Cassa di Risparmio di Savona resulting from this transaction are represented by: the class B bonds both for principal and interest and a limited recourse mortgage bond loan. Risks for Banca Carige, the servicer, are: the credit line, an interest rate cap and subordinate credits related to the role of servicer.

The transaction proceeds according to schedule. Consequently, no value adjustments were required. (The proceeds at 30/6/2004 were 6,5 thousand euros). For the same reason neither the credit line, nor mortgage bond loan was used.

Given market trends, the interest rate cap was not utilised.

In the first half of the year the following amounts accrued: 35 thousand euros in servicing commission; 314 thousand euros in advanced legal costs.

Asset backed securities in portfolio at 30/6/2004.

Within the trading securities portfolio at 30/6/2004 are securities deriving from securitisation transactions carried out by other parties totalling 75,706 thousand euro. These securities can be classified as follows:

260 C1) ASSET BACKED SECURITIES IN PORTFOLIO AT 30/6/04 DERIVING FROM STRUCTURED SECURITISED CREDITS CARRIED OUT BY OTHER PARTIES

Underlying Senior securities Mezzanine securities Junior securities (a) Mortgages 29.540 983 - (b) Corporate loans 3.250 3.967 - (c) Consumer credits 10.107 - - (d) Securities - - - (e) Various other credits 8.824 - - (f) Various other non-performing credits 14.572 4.463 - Total 66.293 9.413 -

Investments made in the form of these securities during the period are accounted for at income statement captions 10 ‘Interest income’ and 60 ‘Gains (losses) from financial transactions’ and are respectively 1,000 thousand euro (interest income) and 55 thousand euro (gains/losses on securities and foreign exchange and svalutation). Details are given in the table below:

EFFECTS ON INCOME STATEMENT STEMMING FROM ASSET BACKED SECURITIES IN PORTFOLIO AT 30/6/04 DERIVING FROM STRUCTURED SECURITISED CREDITS CARRIED OUT BY OTHER PARTIES Senior securities Mezzanine securities Junior securities Underlying Interest Gains/Losses Write-downs Interest Gains/Losses Write-downs Interest Gains/Losses Write-downs (a) Mortgages 348 5 - 43 15 - - - - - (b) Corporate loans 48 - - 63 - - - - - (c) Consumer credits 137 2 6 ------(d) Securities ------(e) Various other credits 95 90 ------(f) Various other non- performing credits 232 - - 7 62 - 2 - - - Total 860 97 - 44 140 - 2 - - -

C2) ASSET BACKED SECURITIES IN PORTFOLIO AT 30/6/04 DERIVING FROM STRUCTURED SECURITISED CREDITS CARRIED OUT BY BANCA CARIGE GROUP COMPANIES

Underlying Senior securities Mezzanine securities Junior securities (a) Mortgages - 200 9.190 (b) Corporate loans - - - (c) Consumer credits - - - (d) Securities - - - (e) Various other credits - - - (f) Various other non-performing credits - 1.016 66.679 Total - 1.216 75.869

(1) Securities recorded in the investment securities portfolio of Banca Carige.

Writedowns relating to the above carried out according to the accounting principles illustrated in section 1 of the explanatory notes. Investments made in the form of these securities during the semester are accounted for at income statement captions 10 ‘Interest income’ (1,259 thousand euros)

261 EFFECTS ON INCOME STATEMENT STEMMING FROM ASSET BACKED SECURITIES IN PORTFOLIO AT 30/6/04 DERIVING FROM STRUCTURED SECURITISED CREDITS CARRIED OUT BY BANCA CARIGE GROUP COMPANIES Senior securities Mezzanine securities Junior securities Underlying Interest Gains/Losses Write-downs Interest Gains/Losses Write-downs Interest Gains/Losses Write-downs (a) Mortgages - - - 3 - - 65 - - (b) Corporate loans ------(c) Consumer credits ------(d) Securities ------(e) Various other credits ------(f) Various other non- performing credits - - - 14 - - 8 1.185 - - Total - - - 17 - - 8 1.250 - -

262 SECTION 12

ADMINISTRATION AND DEALING ON BEHALF OF THIRD PARTIES

Change 30/6/04 31/12/03 absolute % 30/6/03 12.1 DEALING OF SECURITIES a) purchases 518.514 848.935 - 330.421 - 38,9 405.839 1. settled 516.331 847.456 - 331.125 - 39,1 401.051 2. unsettled 2.183 1.479 704 47,6 4.788 b) sales 477.820 863.375 - 385.555 - 44,7 421.348 1. settled 476.553 858.144 - 381.591 - 44,5 406.000 2. unsettled 1.267 5.231 - 3.964 - 75,8 15.348

Change 30/6/04 31/12/03 absolute % 30/6/03 12.2 PRIVATE BANKING 1.484.997 1.353.959 131.038 9,7 1.318.665 1. securities issued by the Bank - 38 - 38 - 100,0 816 2. other securities 1.484.997 1.353.921 131.076 9,7 1.317.849

The figures shown correspond to total market values of property included within administration and trading on behalf of third parties. At 30th June 2004 all management lines are delegated to third parties as foreseen by article 24 of Legislative decree 58/98. The caption also includes: euro 52,938 thousand relating to the Carige Open Pension Fund formed in 1999 pursuant to article 9 of Legislative decree 124/93 and euro 69,438 thousand relating to guaranteed asset management products in which the client purchased from the Bank an accessory put option as cover for the initial capital invested.

Change 30/6/04 31/12/03 absolute % 30/6/03 12.3 CUSTODY AND ADMINISTRATION OF SECURITIES a) third-party securities held in deposit (private banking not included) 18.783.991 17.079.348 1.704.643 10,0 16.455.324 1. securities issued by Group companies 5.261.762 4.632.359 629.403 13,6 4.076.932 2. other securities 13.522.229 12.446.989 1.075.240 8,6 12.378.392 b) third-party securities deposited with third parties 16.584.207 15.593.807 990.400 6,4 15.081.890 c) portfolio securities deposited with third parties 2.145.106 2.030.337 114.769 5,7 2.051.149

Depositary bank-related securities in custody amounted to 2,609,407 thousand euro.

263 12.4 COLLECTION OF THIRD PARTY RECEIVABLES: DEBIT AND CREDIT ADJUSTMENTS 30/6/04 31/12/03 30/06/03 (a) debit adjustments 1.114.718 919.405 815.702 1. current accounts 100.054 13.765 13.086 2. bills portfolio 726.073 643.415 530.284 3. cash 32.850 43.499 36.471 4. other 255.741 218.726 235.861 (b) credit adjustments 1.420.398 1.096.147 1.079.895 1. current accounts 97.140 9.127 9.077 2. bills and other items for collection 1.323.174 1.086.938 1.070.738 3. other 84 82 80

Change 30/6/04 31/12/03 absolute % 30/6/03 12.5 OTHER TRANSACTIONS 844.122 877.277 - 33.155 - 3,8 966.099 - Other banks' share of pool operations 653.944 689.254 - 35.310 - 5,1 782.733 - Total bills related to factoring transactions ("pro solvendo") 176.875 173.267 3.608 2,1 166.926 - Amounts managed on behalf of public bodies 13.303 14.756 - 1.453 - 9,8 16.440

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12.6 INFORMATION CONCERNING STRUCTURED SECURITISED CREDITS

At the end of 2000, Banca Carige securitised a part of its bad loan portfolio pursuant to Law 130/99 in collaboration with the special purpose vehicle, Argo Finance One; as at 31/12/2001, Argo Finance One was a member of the Banca Carige Group (Group holding: 60%). In relation to this transaction and in accordance with the Bank of Italy’s ruling the following details are given below: information required regarding transactions carried out with Argo Finance One in the form given in part D of the explanatory notes and the relative attachment to the financial statements of the transferee and issuer of asset backed securities prepared in accordance to the Bank of Italy’s guidelines contained in note no. 3019 of 5th April 2000.

1. QUALITATIVE INFORMATION 1.1 A description of the transaction and its progress

Date of transaction: 21st December 2000: with effect from 11.59 pm of 31st December 2000, the completion of the contract regarding the purchase of the credits; 27th March 2001: the issue of securities financing the purchase.

Transferor: Banca Carige SpA with its head offices in Via Cassa di Risparmio 15, Genoa.

Credits transferred: Banca Carige agreed to transfer without recourse a part of its bad loans portfolio in accordance with articles 1 and 4 of Law 130/99 backed either fully or in part by voluntary or legally-enforced guarantees at an agreed price of 165.3 million euro (ITL 320 bn). The portfolio at the date of transfer amounted to 292.5 million euro (ITL 566.4 bn), gross, corresponding to a book value for Banca Carige of 227.6 million euro (440.6 bn), net.

The portfolio subject to sale was identified on the basis of objective criteria foreseen by the relevant legislation (Law 130/99 and art. 58 Legislative Decree 385/93). The credits sold were of the following types: a) landed property loans, b) lending of various forms backed by voluntary and/or legally-enforced guarantees in the form of real estate in addition to non-mortgaged loans of various types. Credits not transferred included syndicated loans, finance lease, and credits below 25,822.84 euro. (ITL 50 million).

The state of the transaction: the transaction, started in January 2001, is progressing according to schedule. In particular, collection flows at 30th June 2004 amounted to 111.2 million euro of which 21.7 million euro during the first half of 2003.

The positive trend allowed for the full repayment of the class A securities (40 million) in addition to the earlier-than- scheduled repayment of part (33.9 million) of the capital relating to the class B securities.

1.2 The Parties involved

Purchaser of the credit: Argo Finance One, a company formed on 27th October 2000 in accordance to article 3 of Law 130/99 with its head offices in Via Cassa di Risparmio 15, Genoa. The company is enrolled with the Genoa companies register and with the register of monetary financial institutions held by the Italian exchange office – Ufficio Italiano Cambi, as foreseen by article of 106 of the Italian consolidated banking Law, and enrolled in the special list of companies foreseen by the same Law (article 107).

Servicer: The transferor Banca Carige SpA is encharged with the collection of the credits ceded in addition to the payment services foreseen by the servicing contract stipulated between Banca Carige and Argo Finance One for which it, Banca Carige, will receive commission and reimbursement of expenses incurred.

Representative of the Noteholders: The Bank of New York, London branch.

Collection account bank: Banca Carige SpA

Investment account bank/cash manager: Banca Carige SpA

Calculation agent/Paying agent: The Bank of New York, London branch

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CAP Counterparty: Banca Carige SpA

Luxembourg agent: Kredietbank S.A. Luxemburgeoise

Administrative services provider: Banca Carige SpA

Transferor’s obligations: at the transfer date, Argo Finance One, as issuer, and Banca Carige SpA as transferor, stipulated a contract of guarantee and indemnity according to the terms of which the transferor provides the issuer with specific guarantees in relation to the portfolio and accepts to bear any specific costs, expenses and liabilities of the issuer deriving from the purchase and holding of the portfolio.

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1.3 The nature of the securities issued

Limited recourse asset backed securities: the notes issued by the SPV Argo Finance One on 27th March 2001 are made up of floating-rate bonds with the following characteristics:

Class A (fully repaid in January 2003) Amount: 40 million euro Rate: floating Parameter: Euribor at 6 months + 0.60% p.a. Coupon: twice-yearly Duration: 19 years, 3 months (maturity July 2020) average expected duration 1.89 years. Re-payment: re-payment related to recovery of underlying credits Rating: Moody’s: Aaa; Fitch-Ratings: AA Listing: Luxembourg bond market

Class B Currency: euro Amount: 70 million euro Rate: floating Parameter: Euribor at 6 months + 0.45% p.a. Coupon: twice-yearly Duration: 19 years and 3 months (maturity July 2020) average expected duration 4.90 years Re-payment: re-payment related to recovery of underlying credits Rating: Moody’s: Aa1; Fitch-Ratings Ltd: AA Listing: Luxembourg bond market

Class C Currency: euro Amount: 56.5 million euro Rate: floating Parameter: 4% p.a. plus a further remuneration equal to residual yields subordinate to payment of classes A and B, and portfolio payment cash flows Coupon: twice-yearly Duration: 19 years and 3 months (maturity July 2020) average expected duration 8 years Re-payment: re-payment related to recovery of underlying credits Listing: not listed The ratings assigned refer to the probability of principal and interest re-payments at maturity. Class C notes are not rated.

The re-payment of capital can occur no sooner than 18 months after issue. After this, repayment will be made at the same time as the coupon according to the repayment schedule for an amount corresponding to available funds on the basis of the following order of priority: 1. Coupon class A notes; 2. Coupon class B notes; 3. Principal class A notes; 4. Principal class B notes; 5. Coupon class C notes; 6. Principal class C notes.

267

1.4 Other financial transactions

Banca Carige has opened a credit line in favour of Argo Finance One Srl with regards specifically to the issue of class A and B securities amounting to 15 million euro indexed at euribor 6 months plus 0.20% per annum. This credit line will guarantee the prompt payment of interest payable on the above-mentioned securities and the repayment of principal at maturity. Banca Carige also granted Argo Finance One a limited recourse mortgage to be supplied in the form of Italian state securities for a total of euro 84,316,000 with maturity at 31st July 2020. Related interest corresponds to yields on government stock collected by the issuer at each payment date in addition to a further income payment that is calculated as follows: the difference between an amount equivalent to the interest stated at euribor that would accrue on the funds provided, and an amount equivalent to the interest on Italian government stock collected by the issuer. The limited recourse mortgage supplied the issuer with government securities to be pledged in favour of class B bondholders. In light of its credit line function, the mortgage will be repaid only after these bondholders have been fully reimbursed (principal and interest). Positive performances in collection and repayment of class B securities meant that the mortgage was lowered to a nominal euro 69,000,000 in December 2003 and euro 51,000,000 in February 2004. An interest rate cap has also been stipulated between Banca Carige and Argo Finance One in order to offer Argo Finance cover against latent interest rate risk in the underlying as a result of possible misalignment between securitised assets on the one hand and liabilities in the form of securities issued on the other.

268 2. TRANSACTION AS AT 30TH JUNE 2004

Attachment 1 to the explanatory notes is summarised as follows:

Synthesis of securitised assets and securities issued

Euro Transaction as Transaction as at 30/6/04 at 31/12/03 ASSETS A. Assets securitised 89,490,622 103,306,739 - loans 89,490,622 103,306,739 B. Use of available amounts stemming from securitisation 23,278,897 16,961,069 - debt securities - others 23,278,897 16,961,069 Available amounts in liquid form 22,469,947 16,961,069 Others 808,950 887,259 TOTAL ASSETS 112,769,519 120,267,808 LIABILITIES C. Securities issued 92,648,812 105,568,706 - class A: - - - class B: 36,148,812 49,068,706 - class C: 56,500,000 56,500,000 D. Financing received - - E. Other liabilities 15,554,535 10,577,098 Balance 2001 3,815,301 306,703 Amounts payable to Banca Carige SpA 10,332,133 9,326,134 Other items 1,407,101 1,557,667 TOTAL LIABILITIES 108,203,347 116,145,804 COSTS F. Interest charges payable on securities issued 1,631,797 4,131,048 G. Transaction-related commissions and fees 1,684,553 2,653,517 - servicing 1,659,021 2,604,979 - other services 25,532 48,538 H. Other charges 4,997,445 11,369,972 - loan losses 293,705 936,798 - expected losses on loans 4,579,126 10,197,586 - other management charges 124,614 235,588 TOTAL COSTS 8,313,795 18,154,537 PROCEEDS I. Interest generated by securitised assets 4,579,126 10,197,586 L. Other proceeds 8,300,841 12,078,955 - interst income on securities 67,709 204,313 - interest income from bank deposits 63,842 120,050 - recoveries on loans (amounts collected) 8,169,290 11,754,592 TOTAL PROCEEDS 12,879,967 22,276,541

269

3. QUANTITATIVE INFORMATION

3.1 Credit–related flows Details given below relate to the situation of the securitised assets at 30/6/2004 and subsequent positive and negative variations recorded during the year.

(in millions of euros) Amount of credits purchased at 31/12/2003 103.3 Decreases related to collections for the year -21.7 Decreases from losses -0.3 Increases stemming from writebacks 8.2 Increases stemming from interest on late payment 4.6 Decreases for expected losses -4.6 Balance at 30/6/03 89.5

3.2 Cash flows Cash flows relating to amounts collected from securitised credits totalled 111.2 million euros in line with the payment scheduled defined.

The table below illustrates the flows forecasted in the offering circular for the asset backed securities for the first 12 years along with flows already collected.

(millions of euros) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Foreseen 33.2 25.3 21.8 19.2 16.5 15.1 12.9 11.0 10.1 9.1 7.7 6.9 Collected 33.8 28.0 27.7 21.7

As a result of the positive performance recorded by the repayment schedule, Fitch IBCA on 6/3/02 upgraded the class A securities transaction from “AA” to “AAA”; on 13th December 2002 the same institute upgraded the transaction relating to the class B securities from “AA-“ to “AA”.

Liabilities

There is no pre-defined payment schedule for Class A, B and C notes as this is directly dependant on the proceeds stemming from the credits sold (Class A bonds were fully repaid in January 2003). All classes have a July 2020 maturity.

3.3 Breakdown by location and risk concentration All the credits are denominated in euro and all the customers owing amounts are resident in Italy. The portfolio is made up by 1,208 customers owing amounts and includes 3,611 debt items. The composition of the portfolio at 30/6/2003 is shown by subdivisions according to amounts owed. There are some credit positions which singly account for more than 2% of the total portfolio. The five positions total 15 million euros.

Amounts owed in thousand Items Gross amounts in euros thousand euros at 30/6/2004 < 12.5 2,569 6,190 12.5 – 50 652 16,896 50 – 125 273 21,063 125 - 250 69 12,621 250 – 750 37 15,401 > 750 11 17,319 Total 3,611 89,490 4. TRANSACTION RELATED EVENTS Q3 2004

After 30th June 2004, the operation proceeded according to schedule. In July 2004 further class B securities for 19.6 million were repaid in advance.

270 PART C CONSOLIDATED INCOME STATEMENT

SECTION 1

INTEREST

Change 30/6/04 30/6/03 absolute % 2003 1.1 CAPTION 10 "INTEREST INCOME AND SIMILAR REVENUES" 324.985 311.984 13.001 4,2 613.535 (a) on deposits with banks 10.713 10.303 410 4,0 21.691 including: - deposits with central banks 1.531 1.733 - 202 - 11,7 3.167 (b) on loans and advances to customers 264.942 252.897 12.045 4,8 494.103 including: - loans using funds managed on behalf of third parties 3 2 1 50,0 6 (c) on certificates of indebtedness 48.855 48.548 307 0,6 96.379 (d) other interest income 475 236 239 ... 1.362 (e) positive differentials on hedging transactions - - - - -

Change 30/6/04 30/6/03 absolute % 2003 1.2 CAPTION 20 "INTEREST EXPENSE AND SIMILAR CHARGES" 118.381 127.361 - 8.980 - 7,1 238.334 (a) on deposits from banks 9.072 17.624 - 8.552 - 48,5 28.156 (b) on deposits from customers 26.322 33.079 - 6.757 - 20,4 59.470 (c) on securities issued 68.945 61.935 7.010 11,3 122.287 including: - certificates of deposits 2.999 4.732 - 1.733 - 36,6 8.408 (d) on funds managed on behalf of third parties 1 1 - - 1 (e) on subordinated liabilities 6.878 7.210 - 332 - 4,6 13.604 (f) negative differentials on hedging transactions 7.163 7.512 - 349 - 4,6 14.816

Change 30/6/04 30/6/03 absolute % 2003 1.3 CAPTION 10 "INTEREST INCOME AND SIMILAR REVENUES" (a) on foreign currency assets 4.282 5.653 - 1.371 - 24,3 10.010

Change 30/6/04 30/6/03 absolute % 2003 1.4 CAPTION 20 "INTEREST EXPENSE AND SIMILAR CHARGES" (a) on foreign currency liabilities 5.101 14.398 - 9.297 - 64,6 21.461

271 SECTION 2

COMMISSION

Change 30/6/04 30/6/03 absolute % 2003 2.1 CAPTION 40 "COMMISSION INCOME" 110.451 98.124 12.327 12,6 204.447 (a) guarantees given 3.845 3.676 169 4,6 8.166 (b) credit risk derivatives 231 229 2 0,9 461 (c) management, dealing and consultancy services: 39.764 35.786 3.978 11,1 75.361 1. securities dealing 1.021 927 94 10,1 1.889 2. foreign currency dealing 1.704 1.591 113 7,1 3.082 3. private banking 4.876 4.683 193 4,1 9.115 3.1 individuals 4.560 4.468 92 2,1 8.624 3.2 collective 316 215 101 47,0 491 4. custody and administration of securities 1.779 1.432 347 24,2 2.505 5. depositary bank 1.211 1.206 5 0,4 2.454 6. placement of securities 22.359 20.400 1.959 9,6 42.851 6.1 placement of quotas in mutual funds 21.501 20.325 1.176 5,8 42.675 6.2 placement of other securities 858 75 783 ... 176 7. acceptance of orders 2.977 2.048 929 45,4 4.578 8. consultancy - - - - - 9. distribution of third party products 3.837 3.499 338 9,7 8.887 9.1 private banking 92 7 85 ... 7 a) individuals 40 7 33 ... 4 b) collective 52 - 52 ... 3 9.2 insurance products 1.231 1.611 - 380 - 23,6 4.411 9.3 other products 2.514 1.881 633 33,7 4.469 (d) collection and payment services 22.763 20.674 2.089 10,1 42.480 (e) servicing relating to securitisation 1.083 797 286 35,9 1.683 (f) tax and rates collection - - - - - (g) other services 42.765 36.962 5.803 15,7 76.296

Change 30/6/04 30/6/03 absolute % 2003 2.2 CAPTION 40 "COMMISSION INCOME": "DISTRIBUTION CHANNELS OF PRODUCTS AND SERVICES" (a) distribution at Carige branches 30.954 28.582 2.372 8,3 60.716 1. asset management 4.835 4.683 152 3,2 9.046 2. securities placement 22.299 20.400 1.899 9,3 42.796 3. services relating to third party products 3.820 3.499 321 9,2 8.874 (b) distribution at outlets other than at head office 118 10 108 ... 137 1. asset management 41 - 41 - 69 2. securities placement 60 10 50 ... 55 3. services relating to third party products 17 - 17 … 13

272 Change 30/6/04 30/6/03 absolute % 2003 2.3 CAPTION 50 "COMMISSION EXPENSES" 8.487 7.913 574 7,3 16.351 (a) guarantees received 488 723 - 235 - 32,5 1.188 (b) credit risk derivatives - - - - - (c) management and dealing services 1.531 1.214 317 26,1 3.225 1. securities dealing 438 492 - 54 - 11,0 1.134 2. foreign currency dealing - - - - - 3. private banking 256 183 73 39,9 394 3.1 own portfolio 186 140 46 32,9 266 3.2 third party portfolio 70 43 27 62,8 128 4. custody and administration of securities 745 484 261 53,9 1.203 5. placement of securities 1 - 1 ... 74 6. securities, products and services not delivered at the Bank's head office 91 55 36 65,5 420 (d) collection and payment services 5.299 4.935 364 7,4 9.838 (e) other services 1.169 1.041 128 12,3 2.100

273 SECTION 3

GAINS FROM FINANCIAL TRANSACTIONS, NET

Change 30/6/04 30/6/03 absolute % 2003 3.1 CAPTION 60 "GAINS FROM FINANCIAL TRANSACTIONS, NET" 4.317 - 866 5.183 … 10.674

30/6/04 Transactions securities currency other A.1 Revaluations 593 - 1 2 5 .2 8 0 A.2 Write-downs 19.929 - 1 1 1 .8 5 3 B. Other gains and losses 8.239 1.430 557 Total - 11.097 1.430 13.984 1. Government securities 1.445 2. Certificates of indebtedness - 13.592 3. Shares and other equity securities 2.574 4. Derivatives on securities as underlying - 1.524

30/6/03 Transactions securities currency other A.1 Revaluations 2.169 - 7 3 6 A.2 Write-downs 4.711 - 1 .2 3 7 B. Other gains and losses 387 1.122 668 Total - 2.155 1.122 167 1. Government securities 2.716 2. Certificates of indebtedness 4.886 3. Shares and other equity securities - 8.940 4. Derivatives on securities as underlying - 817

2003 Operazioni su titoli su valuta altre A.1 Revaluations 1.556 - 2 .5 8 1 A.2 Write-downs 7.103 - 8 6 4 B. Other gains and losses 8.928 3.265 2.311 Total 3.381 3.265 4.028 1. Government securities 3.743 2. Certificates of indebtedness 4.899 3. Shares and other equity securities - 1.684 4. Derivatives on securities as underlying - 3.577

274 SECTION 4

ADMINISTRATIVE COSTS

Change 30/6/04 30/6/03 absolute % 2003 4.1 AVERAGE NUMBER OF EMPLOYEES, BY GRADE 4.702 4.259 443 10,4 4.225 (a) managers 55 54 1 1,9 52 (b) officials 390 338 52 15,4 344 (c) other employees 4.257 3.867 390 10,1 3.829

Change 30/6/04 30/6/03 absolute % 2003 APTION 80 A "PERSONNEL" 137.983 133.452 4.531 3,4 268.412 wages and salaries 91.610 87.705 3.905 4,5 175.162 social security costs 25.388 24.339 1.049 4,3 49.179 termination indemnities 6.269 6.182 87 1,4 10.959 pensions and similar commitments 8.465 7.775 690 8,9 18.850 others 6.251 7.451 - 1.200 - 16,1 14.262

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 80 B "OTHER ADMINISTRATIVE COSTS" 83.145 73.309 9.836 13,4 148.504 Postage and telephone 8.290 8.352 - 62 - 0,7 14.883 Maintenance of tangible and intangible fixed-assets 6.740 7.012 - 272 - 3,9 13.469 Rental expenses 6.022 5.714 308 5,4 10.283 Professional fees 7.428 4.187 3.241 77,4 9.777 Software maintenance 1.940 3.185 - 1.245 - 39,1 5.313 EDP processing with third parties 3.979 2.991 988 33,0 6.173 Lighting and heating 2.334 2.727 - 393 - 14,4 4.741 Advertising, promotion and publishing 3.730 2.627 1.103 42,0 7.898 Other banking services 3.389 2.589 800 30,9 4.944 Travelling and transport 2.030 2.237 - 207 - 9,3 4.442 Office cleaning 2.073 1.985 88 4,4 4.055 Banking premises security services 1.708 1.792 - 84 - 4,7 3.556 Hardware leasing charges 2.294 1.773 521 29,4 3.242 Insurance premiums 1.591 1.743 - 152 - 8,7 2.933 Printing and stationery 1.715 1.734 - 19 - 1,1 2.924 Donations 2.015 1.573 442 28,1 3.773 Association fees 702 559 143 25,6 662 Indirect taxes: 18.132 14.240 3.892 27,3 31.064 - stamp duty and stock exchange contracts 12.835 10.954 1.881 17,2 23.383 - "imposta sostitutiva" Presidential Decree 601/73 2.254 1.559 695 44,6 3.760 - ICI (Municipal real estate tax) 1.006 888 118 13,3 1.817 - local council taxes 866 526 340 64,6 1.517 - taxes paid abroad 973 194 779 ... 250 - other indirect taxes 137 97 40 41,2 265 - INVIM (tax on increased value on properties) 6 16 - 10 - 62,5 32 - penalties for late tax rolls 55 6 49 ... 40 Others 7.033 6.289 744 11,8 14.372

275 SECTION 5

DEPRECIATION AND AMORTIZATION, PROVISIONS AND RECOVERIES

Change 30/6/04 30/6/03 absolute % 31/12/03 CAPTION 90 "DEPRECIATION AND AMORTIZATION OF INTANGIBLE AND TANGIBLE FIXED ASSETS” 73,002 67,654 5,348 7.9 137,238

Depreciation and amortization comprise the following:

Change 30/6/04 30/6/03 absolute % 2003 Tangible fixed assets - Properties 4.317 3.830 487 12,7 7.823 - Furniture and fittings 726 486 240 49,4 986 - Machinery and equipment 3.036 3.000 36 1,2 6.199 - Leased assets 47.145 46.006 1.139 2,5 91.701 Total (a) 55.224 53.322 1.902 3,6 106.709 Intangible fixed assets - Software 4.334 3.943 391 9,9 8.911 - Installation costs 576 422 154 36,5 1.414 - Incorporation expenses ------Goodwill 5.271 4.336 935 21,6 8.671 - Goodwill arising from consolidation 4.989 2.849 2.140 75,1 5.698 - Goodwill arising from application of equity method 783 777 6 0,8 1.558 - Others 1.825 2.005 - 180 - 9,0 4.277 Total (b) 17.778 14.332 3.446 24,0 30.529

Total (a+b) 73.002 67.654 5.348 7,9 137.238

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 100 "PROVISIONS FOR RISKS AND CHARGES" 2.240 3.364 - 1.124 - 33,4 4.209 Provisions: - convertible bonds 809 - 809 ... 116 - for in-house insurance scheme - 230 - 230 - 100,0 500 - for loan renegotiations Law 133/99 - 300 - 300 - 100,0 - - others 1.431 2.834 - 1.403 - 49,5 3.593

Change 30/6/04 30/6/03 absolute % 2003 5.1 CAPTION 120 "PROVISIONS FOR LOAN LOSSES AND FOR GUARANTEES AND COMMITMENTS" 103.611 29.587 74.024 ... 72.588 (a) provisions for loan losses 103.611 29.587 74.024 ... 72.317 including: - lump-sum allowances for country risks ------other lump-sum allowances 8.059 5.961 2.098 35,2 7.452 (b) provisions for guarantees and commitments - - - - 271 including: - lump-sum allowances for country risks ------other lump-sum allowances - - - - -

276 Change 30/6/04 30/6/03 absolute % 2003 CAPTION 130 "RECOVERIES OF LOANS AND REVERSALS OF PROVISIONS FOR GUARANTEES AND COMMITMENTS" 4.532 4.715 - 183 - 3,9 11.295 - bad loans-principal 2.071 1.524 547 35,9 2.722 - watchlists-principal 128 1.069 - 941 - 88,0 1.152 - interest-others 91 - 91 ... 522 - interest arrears on loans 626 464 162 34,9 1.012 - interest credits related to tax collection services - 8 - 8 - 100,0 8 - credits written-off 1.372 1.323 49 3,7 5.181 - country risks ------provisions for guarantees and commitments 244 327 - 83 - 25,4 698

Recoveries for which the reasons for previous provisions cease, either fully or in part, to apply.

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 140 "ADDITIONAL PROVISIONS FOR LOAN LOSSES" 35 62 - 27 - 43,5 19.744

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 160 "RECOVERIES OF FINANCIAL FIXED ASSETS" 2- 2 ... -

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 230 "CHANGES IN RESERVES FOR GENERAL BANKING RISKS" - - - ... - 5.065

277 SECTION 6

OTHER INCOME STATEMENT CAPTIONS

Change 30/6/04 30/6/03 absolute % 2003 6.1 CAPTION 70 "OTHER OPERATING INCOME" 143.668 79.981 63.687 79,6 167.518 Gains from sale of credits 61.125 - 61.125 ... - Leasing rents 60.555 60.012 543 0,9 123.219 Amounts recovered from third parties 17.784 15.668 2.116 13,5 32.178 including: stamp duty recovered 11.610 10.839 771 7,1 3.059 Rental income 2.557 2.598 - 41 - 1,6 5.159 Repayments from leased assets 471 493 - 22 - 4,5 1.008 Gains from transfer and revaluation of leased assets 276 88 188 ... 699 Premiums received on options - 79 - 79 - 100,0 79 Others 900 1.043 - 143 - 13,7 5.176

Change 30/6/04 30/6/03 absolute % 2003 6.2 CAPTION 110 "OTHER OPERATING EXPENSES" 4.202 2.435 1.767 72,6 9.199 Recognised losses on leased assets sold 2.018 1.737 281 16,2 7.168 Leasing charges 1.254 581 673 ... 1.520 Premiums paid on hedging options 895 117 778 ... 251 Other 35 - 35 ... 260

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 170 "PROFIT (LOSSES) ON INVESTMENTS CARRIED AT EQUITY" 3.260 2.152 1.108 51,5 10.030 Eptaconsors SpA - - 1.307 1.307 - 100,0 - 1.307 Carige Assicurazioni SpA 1.863 1.708 155 9,1 2.768 Carige Vita Nuova Assicurazioni SpA 1.397 1.747 - 350 - 20,0 3.536 Frankfurter Bankgesellschaft AG - 4 - 4 - 100,0 161 Autostrada dei Fiori SpA - - - - 4.872

278 Change 30/6/04 30/6/03 absolute % 2003 6.3 CAPTION 190 "EXTRAORDINARY INCOME" 9.823 23.787 - 13.964 - 58,7 43.121 Surplus in reserves for taxation - 1 - 1 - 100,0 3.028 Gains from releases: holdings - 20.564 - 20.564 - 100,0 10.079 Gains from releases: furniture and premises 1.760 1.142 618 54,1 1.817 Gains from sale of investment securities - 1 - 1 - 100,0 2.494 Taxes paid abroad and tax sparing 5.460 635 4.825 ... 1.566 Adjustments stemming from consolidation - - - - 2 Recoveries for in-house insurance scheme 1.213 - 1.213 ... - Other 1.390 1.444 - 54 - 3,7 24.135

Change 30/6/04 30/6/03 absolute % 2003 6.4 CAPTION 200 "EXTRAORDINARY EXPENSES" 4.338 4.454 - 116 - 2,6 8.149 Retirement incentives 2.229 1.927 302 15,7 4.177 Losses from releases: furniture and premises 7 28 - 21 - 75,0 373 Losses from releases: holdings95- 95 ... - Adjustments stemming from consolidation 9 12 - 3 - 25,0 - Other 1.998 2.487 - 489 - 19,7 3.599

Change 30/6/04 30/6/03 absolute % 2003 CAPTION 240 "INCOME TAXES" 19.931 43.050 - 23.119 - 53,7 74.721 Current tax expenses 33.013 34.658 - 1.645 - 4,7 70.188 Changes in taxes paid in advance - 11.483 3.951 - 15.434 ... - 87 Changes in deferred taxes - 1.599 4.441 - 6.040 ... 4.620 Income tax for the year 19.931 43.050 - 23.119 - 53,7 74.721

279 SECTION 7

OTHER INFORMATION REGARDING THE INCOME STATEMENT

7.1 GEOGRAPHIC DISTRIBUTION OF REVENUES

Banca Carige prevalently works in Italy; the first branch outside Italy was opened in Nice (France) on 9/7/94.

30/6/04 Captions Italy Other countries Total 10 Interest income and similar revenues 323.689 1.296 324.985 30 Dividends and other revenues 3.495 - 3.495 40 Commission income 110.155 296 110.451 60 Gains from financial transactions, net 4.311 6 4.317 70 Other operating income 143.633 35 143.668 Total 585.283 1.633 586.916

30/6/03 Captions Italy Other countries Total 10 Interest income and similar revenues 310.396 1.588 311.984 30 Dividends and other revenues 17.626 - 17.626 40 Commission income 97.868 256 98.124 60 Gains from financial transactions, net - 884 18 - 866 70 Other operating income 79.966 15 79.981 Total 504.972 1.877 506.849

2003 Captions Italy Other countries Total 10 Interest income and similar revenues 610.448 3.087 613.535 30 Dividends and other revenues 18.536 - 18.536 40 Commission income 203.953 494 204.447 60 Gains from financial transactions, net 10.638 36 10.674 70 Other operating income 167.478 40 167.518 Total 1.011.053 3.657 1.014.710

280

REPORT OF THE INDEPENDENT AUDITORS

281