Strong franchise in Italy, Germany, Austria, and Central and Eastern Europe (CEE). High level of business and geographic diversification. Sound and well-balanced funding base. Significant business and credit exposure in countries with higher economic risk, compared to international peers. Still modest, although improving, profitability. Large, although declining, stock of problematic assets. The stable outlook reflects our expectation that, despite its recent strong progress, UniCredit is unlikely to reduce its stock of nonperforming exposures (NPEs) to a level more aligned with higher-rated international peers over the next 12-24 months. The stable outlook also mirrors that on Italy--we are unlikely to rate the bank above the sovereign. We consider UniCredit unlikely to pass our sovereign stress test scenario given its substantial exposure
