Other financial liabilities: Exchange rate differences 48.651 48.615 36

4. Derivative instruments 503.137 692.972 -503.019 -698.993 -5.903 7.895

4.1 Financial derivatives 502.924 692.699 -502.532 -698.993 -5.902 7.924

- on debt securities and interest rates 293.513 614.371 -290.837 -601.750 15.297 15.589 - on equities and share indexes 28.133 78.288 -38.722 -97.206 -29.507 -4.642 - on currencies and gold 167.594 - -156.579 - 11.015 -3.483

- other 13.684 40 -16.394 -37 -2.707 460

4.2 Credit derivatives 213 273 -487 - -1 -29

Total 595.776 754.877 -580.678 -738.833 31.142 56.049

Net profit (loss) from hedging _{Table No. 34b}

Items / Components of income Jan.-Sept. 2006

Jan.-Sept. 2005

pro-forma

A. Relative income 171.647 166.569

B. Relative expense -167.521 -164.139

C. Net profit (loss) on hedging (A-B) 4.126 2.430

Profits (losses) from disposal/repurchase _{Table No. 34c}

Financial assets

1. Loans to banks - -30 -30 -

2. Loans to customers 49.190 -10.682 38.508 36.869

3. Available-for-sale financial assets 83.860 -4.493 79.367 23.142

3.1 Debt securities (*) 3.265 -2.099 1.166 15.440

3.2 Equities 79.853 -2.372 77.481 7.656

3.3 Units in O.I.C.R (collective investment instruments) 742 -22 720 46 3.4 Financing - - - - 4. Held-to-maturity financial assets - - - -

Total assets 133.050 -15.205 117.845 60.011 Financial liabilities 1. Due to banks - - - - 2. Due to customers - - - - 3. Securities in issue 1.815 -361 1.454 -614 Total liabilities 1.815 -361 1.454 -614 Total 134.865 -15.566 119.299 59.397

Net profit (loss) from trading, hedging and disposal/repurchase activities 154.567 117.876

(*) The figure for the first quarter of 2005 includes 12,6 million from securities trading and the relative hedging derivatives contracts already included originally in the fixed asset portfolio.

Transactions / Components of income

Items / Components of income

Profits Losses Losses (C)

Gains (A) Profit from trading (B)

Losses from trading (D)

Net result Jan.- Sept. 2006 Jan.-Sept. 2005 pro-forma Jan.-Sept. 2005 pro-forma

Net income on insurance operations (which includes net interest, net premiums, profit on trading activity and the balance on other income/expenses from insurance operations and various, relating to BPU Assicurazioni and BPU Assicurazioni Vita) amounted to 45,4 million compared to 49,4 in million in the comparison period.

Other operating income/expenses, calculated net of tax recoveries (reclassified under other administrative expenses) and of depreciation charges relating to expenses incurred for improvements to leased assets (reclassified under depreciation), amounted to 43 million, compared to 60 million in 2005. The latter sum nevertheless included net income of 22 million from the settlement with Banca Intesa (in relation to guarantees granted when Banca Carime was sold) and from the settlement of the litigation with IBM (which arose following the black out of 28th _{September 2003).}

Operating costs, which consist of staff costs, other administrative expenses and

net impairment losses on tangible and intangible assets, totalled 1.143 million, generally in line with the first nine months of 2005.

In detail, staff costs remained more or less unchanged at 754,4 million.

As is shown in the table the performance of the item is in reality the result of different trends: +3,7 million increase in employee costs, +0,3 million for the directors component and -4,6 million the reduction attributable to other personnel and to temporary staff in particular (see the section “The human resources of the Group”).

As already stated in the Half Year Report, staff costs include provisions, which the Group made for employment contract renewals and also 4,7 million of additional expenses relating to variable components of wages in 2005, recorded in the accounts after the end of the year.

It must also be considered that as shown in the income statement net of non recurring items, the figure for 2005 was negatively affected by a one-off item amounting to 20 million euro for the update of the estimate of redundancy costs at Banca Carime, which could no longer be capitalised under IAS.

Net of that item staff costs would have changed, however, by a modest 1,4%.

Other operating income and costs T able No. 35

F igure s in tho us a nds o f e uro

Jan.-Sept. 2006

J a n.-S e pt. 2 0 0 5

pro -fo rma

Other operating income 54.283 75.014

Charges to third parties for expenses on deposit and current accounts

10.777 12.212 Recoveries of other expenses 10.605 5.434 Recovery of insurance premiums 11.801 9.887 Recoveries of taxes 77.907 72.698 Rents and other income for property 7.524 8.897 Other income and exceptional receivables 13.213 38.065 Consolidation adjustments 363 519

Reclassification of "tax recoveries" -77.907 -72.698

Other operating expenses -11.080 -14.873

Fines and charges for late tax payments -108 -98 Shortages relating to the management of valuables -284 -224 Depreciation of improvements to leased assets -6.791 -7.930 Ordinary maintenance of investment properties

-4 -81 Other costs and exceptional payables -10.684 -14.470 Consolidation adjustments - -

Reclassification of depreciation of improvements to

leased assets 6.791 7.930

Other operating income and costs 43.203 60.141

Staff costs: composition T able No. 36

F igure s in tho us a nds o f e uro

Jan.-Sept. 2006

Jan.-Sept. 2005

pro-forma

1) Permanent empl oyees -733.218 -729.558

a) Wages and salaries -512.426 -501.688 b) Social security charges -138.210 -136.948 c) Severance indemnity -825 -800 d) P ension expense -2.893 -282 e) P rovision charge for severance payments

-34.695 -30.915 f) P rovision charge for pension and similar:

-537 -6.085 - defined contribution -493 -433 - defined service -44 -5.652 g) P ayments to outside complementary

retirement benefit plans: -16.172 -12.446 - defined contribution -15.921 -12.214 - defined service -251 -232 h) Expenses resulting from share based

payment agreements -458 -458 i) Other benefits for permanent employees -27.002 -39.936

2) Other personnel -14.124 -18.687

- Expenses for temporary agency staff -11.895 -15.594 - Other expenses -2.229 -3.093

3) Directors -7.070 -6.769

As a result of action in progress to contain costs, other administrative expenses, details of which are given in Table 37, totalled 300 million, a further reduction of 7,3 million compared to the first nine months of 2005 (-2,4%).

Net impairment losses on tangible and intangible assets increased to 88,5 million, in relation to investments in technology performed in accordance with the Industrial Plan. More than 50% of the amount is attributable to the Parent Bank (of which 14,8 million for amortisation of IT procedures). As a result of the performance reported above, the cost/income ratio, calculated as the ratio of costs to operating income, was 55,2% (58,1% in September 2005). Net of non recurring components (disposals of equity investments and loans, variable components of wages, the BPU Pramerica earn-out and the disposal of the tax collection companies), the cost/income ratio was 58,1%, which confirms the downward trend compared to 59,8% in September 2005.

As a summary of the trends described, net

operating income rose to 926 million euro an improvement of 12,6%.

Net impairment losses on loans fell to 116 million, a reduction of 15,3 million. As a percentage of net lending to customers, the item accounts for 0,31% of it annualised (0,39% annualised in the first nine months of 2005 and 0,47% for all of 2005).

After the disposal of non performing loans, the positive effect of discounting problem loans to present values reduced to 15,7 million (28,4 million in the same period of 2005).

Table No. 38

Figures in thousands of euro Cancellations Other of interest _recoveriesother of interest _recoveriesother

A. Loans to banks - -2 -105 - 37 - 300 230 - B. Loans to customers -28.619 -181.277 -42.827 15.703 73.292 290 46.974 -116.464 -131.520 C. Total -28.619 -181.279 -42.932 15.703 73.329 290 47.274 -116.234 -131.520 Gen-Set 2005 pro-forma Net impairment losses

Specific Portfolio Specific Value recoveries Portfolio Jan.-Sept. 2006

Net impairment losses on loans: composition

As a result of reclassification under specific items (see the methodological note to the reclassified consolidated income statement in the section “Reclassified consolidated accounts and reconciliations”), net provisions for liabilities and charges amounted to 3 million.

Finally the income statement benefited from profits on the disposal of equity investments amounting to 52,7 million, of which 46,5 million related to the earn-out for the period paid by Prudential International Investments Corporation for its interest in BPU Pramerica and 5,8 million related to the disposal of the tax collection companies.

This item amounted to approximately 227 million in 2005 and included profits on the following sales: Carifano (107,1 million), a minority interest in BPCI to Aviva Spa (56,8 million), Immobiliare Serico (38,6 million), Arca Merchant (4,6 million) and ABF Leasing (2,4 million), as well as the earn-out relating to BPU Pramerica (16,5 million).

Given the income items reported above and the lower cost of risk, the decrease in profit on continuing operations before tax (-6,5% to 860 million) is explained by the smaller

Other administrative expenses: composition

T able No. 37

Type o f s e rvic e /Va lue s F igure s in tho us a nds o f e uro

Jan.-Sept. 2006

Jan.-Sept. 2005

pro-forma