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 higher economic risk countries than international peers. Still modest, although improving, profitability. Large, although declining, stock of problematic exposures.. The stable outlook primarily reflects our view that UniCredit will continue to build up loss-absorbing buffers to protect senior bondholders and reduce its exposures in Italy, thereby improving the chance that it could withstand a sovereign default. In our base-case scenario, we anticipate that the NPE (nonperforming exposure) ratio will fall to 7% by 2020, the risk-adjusted capital (RAC) ratio will remain sustainably above 7% over the next two years, and
