Strategy, Business Model and Results

Dear Shareholders,

We are pleased to announce that the integration of HVB into the UniCredit Group was substantially accomplished in the course of 2006. We are extremely satisfied with the results achieved by HVB but we are also keenly aware that we must not lose our momentum and initiative. We want to continue to be perceived as an innovation pathfinder in the financial sector, and we wish to further strengthen our position as a key player in the European financial market.

HVB has an essential role in the UniCredit Group’s ambitious growth strategy, and Germany is a key home market and top priority for the Group. In fact, Germany is the largest European market – not only from the economic point of view, but also in terms of its population and the number of entrepreneurs and high-end customers. We are confident that HVB now has the human and financial resources to compete successfully in such an important and promising market by pursuing all relevant and external growth options.

We have created specialist business divisions focused on particular customer segments in order to achieve our objective of being the leading bank in terms of customer satisfaction, quality services and profitability both in Germany and in other key markets where we operate. This has enabled us to strengthen our position as a leading bank in the corporate market and to be perceived as an innovative player in wealth management.

In order to derive the greatest benefit from the financial potential of the German market as well as the Group’s entire international network, UniCredit’s Markets & Investment Banking Division will also be headquartered in Munich. This unit has already demonstrated its ability to leverage the previous experience gained in this area by UniCredit, BA-CA and HVB.

The measures taken to rationalise costs,reduce risks and optimise capital management are another essential part of the strategy to strengthen HVB.

The corporate transactions that led to the sale to BA-CA of the stakes previously held in banks in central and eastern Europe must also be viewed in this context. The ultimate goal is to provide HVB with the financial soundness and flexibility that are necessary for it to take advantage of all opportunities that may arise to further its development as a key market player. UniCredit has announced its intention to acquire the minority interests in HVB. This again is an effort to streamline the decision-making processes and is the natural conclusion of a highly successful integration process. This transaction should be seen as a significant step to improve the operational efficiency of HVB within the Group, and certainly not as a disengagement from the German market.

The operating and business results described in this Annual Report are testimony that the strategic and operational decisions made up to this point have been well-founded. Even more important, however, has been the extraordinary commitment demonstrated by all those who work at HVB and the fact that these results were achieved despite the uncertainties and immense pressures faced by our colleagues, and I would like to express my heartfelt thanks to all of them.

We will continue to make every effort to strengthen our identity which is based on shared values and cultural diversity within the UniCredit Group.

It is not only our desire to continue to create value and achieve impressive goals. We will also strive to make our growth sustainable by leveraging the reputation of HVB and all entities in the UniCredit Group. We will only feel completely satisfied if we are able to boost the sense of belonging to HVB and the UniCredit Group and to provide everyone with the opportunity to take an active role in achieving our shared, challenging objectives.

Alessandro Profumo
Chairman of the Supervisory Board

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