Summary: UBI Banca SpA

Strong franchise and market position in North Italy. Prudent business strategy. Better asset quality than the peer average. Limited capitalization by our measures. Low profitability compared with that of peers. Coverage of nonperforming credit lower than the system average, although this is improving. S&P Global Ratings' stable outlook on Italian bank UBI Banca SpA reflects balanced risks to our ratings on UBI over the next 24 months. We anticipate that UBI will be able to gradually improve its risk-adjusted capital (RAC) ratio before adjustments so that it is comfortably above 5% by end 2020, by increasing internal capital generation and declining nonperforming exposures (NPEs). We also expect that UBI's NPE ratio will gradually decline to about 9% by end-2020, and

...Outlook: Stable S&P Global Ratings' stable outlook on Italian bank UBI Banca SpA reflects balanced risks to our ratings on UBI over the next 24 months. We anticipate that UBI will be able to gradually improve its risk-adjusted capital (RAC) ratio before adjustments so that it is comfortably above 5% by end 2020, by increasing internal capital generation and declining nonperforming exposures (NPEs). We also expect that UBI's NPE ratio will gradually decline to about 9% by end-2020, and remain slightly below the domestic average for the next 24 months. We would downgrade UBI if we expected market pressure to rise further, thus negatively affecting the bank's already-fragile profitability and capital position. This could occur if we anticipated that lower internal capital generation would result in UBI's RAC ratio declining below 5% or if we anticipated that prolonged market pressure and increased competition would jeopardize UBI's efforts to improve revenue generation and efficiency, so that...

Summary