Annual Accounts and Report as at 30 June 2011 Draft - Mediobanca

its banking business, as assessed in the course of the ICAAP process nowrequired by the regulations in force.In particular, this involves concentration risk in the Group’s corporatefinance activities towards the leading Italian industrial groups, its presencein the retail banking and consumer finance business on the domesticmarket, and its exposure to market volatility in respect of its securitiesportfolio in the wholesale banking and principal investing divisions.Outlook* * *Estimates for the current financial year are strongly constrained by therisk of a new contraction in the Eurozone economy and the notable marketinstability. This is compounded by the specific weakness in refinancingperipheral EU member states’ sovereign debt, which includes Spain andItaly, and financial institutions’ liabilities. Against this backdrop, the Groupexpects to consolidate its banking activities through moderate growth incustomer lendings (albeit with the customary rigour in risk selection) withthe support of the international franchise, which is essential for coverage incorporate and investment banking activity. The performance of equityinvestment portfolio values and the contribution from trading activity will,as always, depend closely on stock market developments and have thepotential to impact significantly on profitability.– 53