Half-yearly report of the BPM Group as at 30 June 2013 2013 Half-yearly report of the BPM Group as at 30 June 2013 2013 Half-yearly report of the BPM Group as at 30 June 2013 (*) Co-operative Bank founded in 1865 Parent Company of the BPM - Banca Popolare di Milano - Banking Group Share capital at 30.06.2013: Euro 2,865,709,760.07 Milan Companies Register No. 00715120150 Enrolled on the National Register of Co-operative Companies No. A109641 Registered office and General management: Milan – Piazza F. Meda, 4 www.bpm.it Member of the Interbank Guarantee Fund Registered Bank and Parent Company of the BPM – Banca Popolare di Milano Registered Banking Group (*) Approved by the Management Board of Banca Popolare di Milano at the meeting held on 27 August 2013 This english translation is not an official translation. This translation is for informational purposes only, has been prepared solely for the convenience of international readers and is not a substitute for the original italian document Contents Half-yearly report of the BPM Group as at 30 June 2013 Directors and Officers, General Management and Independent Auditors 7 Key figures and ratios of the BPM Group 9 Half-yearly report on operations of the BPM Group 19 Half-yearly condensed consolidated financial statements 81 Half-yearly condensed consolidated financial statements 83 Explanatory notes 91 Certification of the half-yearly condensed consolidated financial statements 259 pursuant to art. 81-ter of Consob Regulation no. 11971 dated 14 May 1999 and subsequent additions and amendments Attachments 261 Report of the Independent Auditors 285 5 Directors and Officers, Supervisory Board Management Board General Management Chairman Chairman and Independent Auditors Giuseppe Coppini Andrea C. Bonomi Deputy Chairman Managing Director and CEO Umberto Bocchino Piero Luigi Montani Directors Directors Alberto Balestreri Davide Croff Ruggiero Cafari Panico Alessandro Foti Enrico Castoldi Dante Razzano Maurizio Cavallari Carlo Frascarolo Roberto Fusilli Piero Lonardi Mario Benito Mazzoleni Flavia Daunia Minutillo Maria Luisa Mosconi Mauro Paoloni General Management Luca Raffaello Perfetti Marcello Priori Deputy General Manager Jean-Jacques Tamburini Roberto Frigerio (*) Michele Zefferino Arbitration Committee Independent Auditors Italo Ciancia Guido Mina Reconta Ernst & Young S.p.A. Anna Maria Sanchirico (*) Financial Reporting Manager Directors and Officers 7 Key figures and ratios of the BPM Group 9 Structure of the BPM Group at 30 June 2013 s.c. a r.l.(*) Investment Corporate Other Retail Banking Banking Centre activities Banca di Legnano Banca Akros BPM Ge.Se.So. S.p.A. S.p.A. Capitali I LLC. S.r.l. Banca Popolare BPM BPM di Mantova S.p.A. Ireland Plc. Luxembourg (in liquidation) S.A. WeBank S.p.A. BPM Covered Bond ProFamily S.r.l. S.p.A. (*) Banca Popolare di Milano is split into various sectors of activity: Retail Banking, Investment Banking, Corporate Centre and Corporate Banking; the other companies are shown in the table according to their main line of business. 10 Key figures and ratios of the BPM Group Consolidated reclassified financial statements: general aspects To give readers a more immediate understanding of the results for the period, a summary reclassified balance sheet and income statement have been prepared, in which line items have been aggregated and reclassified in keeping with market practice in such a way as to provide a clearer picture of performance. To allow the items in the reclassified statements to be easily reconciled with those in the official statements based on the Bank of Italy's Circular 262/05, schedules are included in the attachments that provide details of the various reclassifications and aggregations. The following aggregations have been made in the reclassified balance sheet: 1. “Financial assets carried at fair value and hedging derivatives” include the following line items: 20 “Financial assets held for trading”, 30 “Financial assets designated at fair value through profit and loss”, 40 “Financial assets available for sale”, 50 “Investments held to maturity”, 80 “Hedging derivatives” and 90 “Fair value change of financial assets in hedged portfolios”; 2. “Fixed assets” include the following line items: 100 “Investments in associates and companies subject to joint control”, 120 “Property and equipment” and 130 “Intangible assets”; 3. “Other assets” include line items: 140 “Tax assets” and 160 “Other assets”; 4. “Financial liabilities and hedging derivatives” include line items: 40 “Financial liabilities held for trading”, 50 “Financial liabilities designated at fair value through profit and loss”, 60 “Hedging derivatives” and 70 “Fair value change of financial liabilities in hedged portfolios”; 5. “Other liabilities” include line items: 80 “Tax liabilities” and 100 “Other liabilities”; 6. “Provisions for specific use” comprise line items: 110 “Employee termination indemnities” and 120 “Allowances for risks and charges”; 7. “Capital and reserves” include line items: 140 “Valuation reserves”, 150 “Redeemable shares”, 160 “Equity instruments”, 170 “Reserves”, 180 “Share premium reserve”, 190 “Share capital” and 200 “Treasury shares”. The income statement line items have been reclassified and represented as follows: 1. The profits (losses) on investments carried at equity, recorded in line item 240 “Profits (losses) on investments in associates and companies subject to joint control” have been reported on a separate line forming part of “Operating income” in the reclassified income statement, but only with respect to the component relating to the results of the investees; 2. “Net income from banking activities” includes line item 70 “Dividend and similar income”, 80 “Profits (losses) on trading”, 90 “Fair value adjustments in hedge accounting”, 100 “Profits (losses) on disposal/repurchase”, 110 “Profits (losses) on financial assets and liabilities designated at fair value” and 130 b) “Net losses/recoveries on impairment of financial assets availablefor sale”. The following have been excluded from this aggregate: line item 100 a) “Profits/losses on disposal/repurchase of loans”; 3. “Other operating expenses/income” (line item 220) booked to “Operating expenses” on the accounting schedule have been reduced by the recovered portion of “indirect taxes and duties” and increased by the “depreciation of leasehold improvements”. This item, reclassified in this way, has been included in “Operating income” in the reclassified income statement; 4. “Other administrative expenses” (line item 180 b) in the reclassified income statement have been reduced by the recovered portion of "indirect taxes and duties” discussed in point 3 above; 5. “Net adjustments to property and equipment and intangible assets” (line items 200 and 210) in the reclassified income statement have been increased by the “depreciation of leasehold improvements” discussed in point 3 above and decreased by the writedown of core deposits; 6. “Net adjustments for impairment of loans and other activities” reported after “Operating profit” in the reclassified format, include line item 130, net of the sub-item 130 b) “Net losses/recoveries on impairment of financial assets available for sale” (reclassified under “Net income from banking activities”) and line item 100 a) “Profits (losses) on disposal/repurchase of loans” (removed from “Net income from banking activities”); 7. “Profits (losses) from equity and other investments and adjustments to goodwill and intangible assets” in the reclassified format include the line item 260 “Goodwill impairment”, the writedown quota of core deposits discussed in point 5 above and a portion of the line item 240 “Profits (losses) on investments in associates and companies subject to joint control” relating to the writedown of the goodwill component included in the book value of investments carried at equity value. It also includes the line item 270 “Profits (losses) on disposal of investments”. Key figures and ratios of the BPM Group 11 BPM Group – Consolidated reclassified balance sheet (Euro/000) Assets 30.06.2013 31.03.2013 31.12.2012 30.06.2012 Change Change A – B A – C A B C D amount % amount % Cash and cash equivalents 226,984 228,473 285,892 427,010 –1,489 –0.7 –58,908 –20.6 Financial assets designated at fair value and hedging derivatives: 11,834,884 11,626,960 11,901,399 11,835,426 207,924 1.8 –66,515 –0.6 – Financial assets held for trading 1,705,445 1,798,512 1,821,675 2,136,999 –93,067 –5.2 –116,230 –6.4 – Financial assets designated at fair value through profit and loss 259,500 261,137 259,321 376,610 –1,637 –0.6 179 0.1 – Financial assets available for sale 9,639,583 9,319,355 9,539,376 9,074,075 320,228 3.4 100,207 1.1 – Hedging derivatives 217,206 227,090 256,320 221,131 –9,884 –4.4 –39,114 –15.3 – Fair value change of financial assets in hedged portfolios (+/–) 13,150 20,866 24,707 26,611 –7,716 –37.0 –11,557 –46.8 Due from banks 2,106,886 2,635,231 2,718,371 2,784,524 –528,345 –20.0 –611,485 –22.5 Loans to customers 34,038,161 35,089,999 34,790,891 34,947,529 –1,051,838 –3.0 –752,730 –2.2 Fixed assets 1,176,934 1,171,192 1,174,152 1,123,334 5,742 0.5 2,782 0.2 Other assets 1,582,527 1,870,486 1,604,300 1,503,944 –287,959 –15.4 –21,773 –1.4 Total assets 50,966,376 52,622,341 52,475,005 52,621,767 –1,655,965 –3.1 –1,508,629 –2.9 Liabilities and shareholders' equity 30.06.2013 31.03.2013 31.12.2012 30.06.2012 Change Change A – B A – C A B C D amount % amount % Due to banks 6,281,204 6,284,368 6,292,005 7,753,545 –3,164 –0.1 –10,801 –0.2