Strong franchise and market position in Italy. Prudent business strategy. Better asset quality than the peer average. Still-limited capitalization by our measure. High cost base compared to peers. Coverage of nonperforming credit lower than the system average, although this is improving. Our outlook on Italy-based UBI Banca SpA is stable. This reflects our expectation that the bank will be able to reach a risk-adjusted capital (RAC) ratio before adjustments of 5.0%-5.5% over the next two years. It also reflects our view that UBI's nonperforming loans (NPL) ratio will decline while remaining below the domestic average over our outlook horizon. Although unlikely at this stage, we could raise the long-term rating on UBI if its NPL coverage converged more closely with
