GROUP RESULTS 1Q19 1Q19 HIGHLIGHTS Loans to to Cu Custo tomers - - PowerPoint PPT Presentation

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GROUP RESULTS 1Q19 1Q19 HIGHLIGHTS Loans to to Cu Custo tomers rs showed an an excelent gro rowth of of + 1.1 bill llion YoY (+4.6% YoY compared to +0.8% GROWTH YoY of the Industry) Wealth th Management volumes were up up

slide-1
SLIDE 1

GROUP RESULTS 1Q19

slide-2
SLIDE 2

1Q19 HIGHLIGHTS

  • Loans to

to Cu Custo tomers rs showed an an excelent gro rowth of

  • f +€1.1 bill

llion YoY (+4.6% YoY compared to +0.8% YoY of the Industry)

  • Wealth

th Management volumes were up up +€1.4 bil illio ion in in 1Q19 19 only (+4.4% vs FY18), also thanks to the market effect, with positive net inflows in february and march (+€90 million)

  • Stro

trong perfo formance of

  • f Net In

Interest In Income YoY (+ (+1.3% and and +2.2% net If Ifrs rs 16 16) and and In Insura rance Income (+ (+10 10.3% ), while the lower contribution from Financial Activities affected total revenues

  • Mate

teria ial redu ductio ion of

  • f Oper

peratin ing Cos Costs ts at at -4.5% YoY YoY (-1.0% including D&A)

  • Annuali

lized Cos Cost of

  • f ris

isk reached his isto tori rical lows lows at at 8 bps bps, with only €5 million of LLP in the quarter

  • Gro

ross NPL ra rati tio at at 4.5%, with th a fu furth rther reducti tion of

  • f th

the gro ross NPL sto tock (-€11 million in 1Q19 only, without any disposal)

  • Net Pr

Profi fit at at almost €45 45 mill llion, -€9.7 million vs 1Q18, solely due to the lower contribution of non- recurrent revenues, but above 4Q18 net profit by more than €9 million (+25.8%)

  • CET

ET1 Rati tio* gre rew +50 50 bps bps and and re reached 13 13.2% (compared to 12.7% of FY18), despite the negative impact from Ifrs 16 (around -10 bps) and without including 1Q19 Net Profit

  • Buffer of ~520

20 bps bps vs vs 20 2019 19 SREP SREP require rement

GROWTH PROFITABILITY CAPITAL

2

Loans to Customers are net of Repos and securities * Capital ratio related to the Group’s prudential perimeter (CredemHolding level)

slide-3
SLIDE 3

INCOME STATEMENT

  • Compared

to 1Q18, 1Q19 19 Opera rati ting In Income was affected by by a lo lower contri ributi tion fro from Fi Financial Ac Acti tivities, while «core» Operating Income was more in line

  • Materi

rial reducti tion of

  • f Opera

rati ting Costs ts (-4.5% YoY, also thanks to Ifrs 16 effect), shrinking even including D&A (-1.0% YoY)

  • Outs

tsta tanding credit quality ty, with th LLPs Ps limited to on

  • nly €5 mil

illi lion in the quarter (-31.2% YoY)

  • Net Pr

Profi fit at at €44 44.9 mil illi lion (- 17.8% vs 1Q18 and +25.8% vs 4Q18), solely aff ffected by by lower non-recurrent items and including the €11.8 million* contribution to the Single Resolution Fund (SRF)

3

€, million

1Q18 4Q 4Q18 1Q19

Δvs 1Q18

18

Δvs 4Q

4Q18 18

ù

Oper Operatin ing Inc ncome 309.9 29 290.0 287 287.4

  • 7.3%
  • 0.9%

Core Core Operati ting Income (net of Fin. Activities and Performance Fees) 27 274. 4.7 28 283. 3.5 27 271. 1.7

  • 1.1%
  • 4.2%

Operating Costs

  • 191.7
  • 187.5
  • 183.1
  • 4.5%
  • 2.3%

Operating Costs + D&A

  • 20

204.2

  • 20

201. 1.6

  • 20

202.2

  • 1.0%

+0.3% Net Operating Profit 105.7 88.4 85.2

  • 19.4%
  • 3.6%

Loan Loan Los Loss Pro rovis isio ions

  • 7.7
  • 35.1
  • 5.3
  • 31.2%
  • 84.9%

Net Operating Profit net of LLPs 98.0 53.3 79.9

  • 18.5%

+49.9% Provisions and Extraordinary items

  • 17.2
  • 3.8
  • 13.

3.7 n.s. n.s. Pre Tax Profit 80.8 49 49.5 66.2

  • 18.1%

+33.7% Taxes

  • 26

26.2

  • 13.

3.8

  • 21

21.3

  • 18.7%

+54.3% Net t Pro rofit it 54. 4.6 35.7 44. 44.9

  • 17.8%

+25.8%

* gross of fiscal effect

slide-4
SLIDE 4

INCOME STATEMENT: IFRS 16 IMPACT

4

€, million

1Q18 18 1Q19 19

(pre-Ifrs 16) 6)

Δ 1Q19 19 vs vs 1Q18 Q18 Ifrs frs16 16 impa impact* t* 1Q19 19

(Ifrs 16) 6)

Net et Interest Income 120.9 123.6 +2.2%

  • 1.1

122. 22.5 D& D&A

  • 12.5
  • 13.3

+6.4%

  • 5.8
  • 19.

9.1 Admin in. . Expen enses

  • 58.5
  • 58.3
  • 0.3%

+6.9

  • 51.4

Net et Pr Profit it 44.9 44.9

Starting from January 1, 2019 the new Ifrs 16 principle came into force, envisaging a different accounting treatment of lease agreements, with impacts on Net Interest Income, D&A, and Administrative Costs (Net Profit impact was substantially neutral). In summary:

  • considering the comparable figures 1Q19 vs 1Q18, Net Inte

terest Income wou would ld be be up up +2.2% YoY YoY

  • higher D&A were offs

fset by by th the decrease of

  • f Ad

Administra trati tive Costs ts, lower YoY (-0.3% 1Q19 vs 1Q18) also notwithstanding Ifrs 16 positive effect

  • furthermore, the RWA increase driven by higher tangible assets had affected CET1 ratio (~10 bps)

* Source: internal calculation based on management accounting data

slide-5
SLIDE 5

209.9 224.4 220.7 224.4 234.0 248.8 247.7 257.0 268.3 275.3 271.7 200 210 220 230 240 250 260 270 280

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q19

CORE OPERATING INCOME

+29%

CORE OPERATING INCOME (quarterly average)

5

  • Core

re* Opera rati ting In Income (net of non-recurrent components: Income from Financial Activities and Performance Fees) remained above €270 milli lion per quart rter, despite AUM negatively affected by financial markets

  • From the beginning of the crisis, core revenues grew almost 30%, proving the resil

ilience of

  • f th

the Gro roup bu busin iness mod model

* Figures in €, million. Average quarterly core operating income was calculated considering the Tltro II interest income as follows: 4Q16 includes the Tltro II benefit related to 2016, the Tltro II benefit related to 2017 is evenly divided into each quarter of 2017. Each quarter of 2018 and 2019 includes the 2018-2019 Tltro II benefit evenly split

slide-6
SLIDE 6
  • 0.33%
  • 0.33%
  • 0.32%
  • 0.32%
  • 0.31%

129 238 268 250 256

  • 0.
  • 0.
  • 0.

1Q18 2Q18 3Q18 4Q18 1Q19

3 month Euribor Spread (bps) BTP vs. Bund 10y

1.80 1.83 1.78 1.78 1.82 1.91 1.93 1.88 1.85 1.87 0.11 0.10 0.09 0.07 0.06

0.0 0.5 1.0 1.5 2.0 2.5

1Q18 2Q18 3Q18 4Q18 1Q19 Spread Average loans rate Average deposit rate

120.9 120.4 124.7 126.4 122.5 1Q18 2Q18 3Q18 4Q18 1Q19

NET INTEREST INCOME (1/3)

 Po Positi tive Net In Interest In Income perfo formance, +1.3% 1Q19 19 vs vs 1Q18 18 (+2.2% net of

  • f Ifrs

rs 16 16 impact), thanks to the strong volumes growth YoY  Custo tomers rs spread showed a gro rowth th of

  • f +4

bps bps vs vs 4Q18 18

NET INTEREST INCOME: EVOLUTION CUSTOMER SPREAD* EURIBOR AND BTP/BUND SPREAD

6

+1.3% 3% (+2.2% net Ifrs 16)

Net Interest Income: figures in €, million * Credem SpA management accounting (%)

slide-7
SLIDE 7

1.91 1.93 1.88 1.85 1.87 2.68 2.63 2.59 2.57 2.58 0.10 0.60 1.10 1.60 2.10 2.60 1Q18 2Q18 3Q18 4Q18 1Q19 Credem: average loans rate Industry: average loans rate 1.80 1.83 1.78 1.78 1.82 1.94 1.90 1.87 1.94 1.98 1.20 1.80 1Q18 2Q18 3Q18 4Q18 1Q19 Credem: spread Industry: spread 0.11 0.10 0.09 0.07 0.06 0.75 0.73 0.72 0.62 0.60

  • 0.60

1Q18 2Q18 3Q18 4Q18 1Q19 Credem: average deposit rate Industry: average deposit rate

NET INTEREST INCOME (2/3)

LOANS RATE DEPOSIT RATE

Credem SpA management accounting (%); Industry: source ABI Monthly Outlook April 2019 Starting from October 2018, the average deposit rate reported in «ABI Monthly Outlook» is calculated excluding the repurchased bonds from the total bonds issued; for such reason figures from 1Q19 showed a deviation from the time series

CUSTOMER SPREAD

  • 0.54
  • 0.71

7

  • 0.16

Discontinuity in the time series*

 Av Avera rage loans ra rate was slightly up vs 4Q18 (+2 bps), with deposit ra rate reaching a new mi minimum at at 6 bps bps  Credem Custo tomer Spread grew +4 bps bps accordingly (not comparable with the Industry figure, which included a discontinuity in the time series related to the bond rate calculation)

slide-8
SLIDE 8

33% 22% 45% 0% 20% 40% 60% 80% 100% Rating Distribution 5.8

1 2 3 4 5 6 7

Avg maturity (years)

NET INTEREST INCOME (3/3)

Total (€, mln)

6,968

SECURITIES’ PORTFOLIO BREAKDOWN

BBB AAA / AA A Credem SpA management accounting

8,396

8

7,543

  • f which

HTC (€, bn)

2.7 bn 2.7 bn

AVERAGE MATURITY AND RATING

1.5 2.1 2.1

2.7 bn

7,756

2.3

7,370

1.7

22% 18% 21% 20% 23% 43% 44% 36% 38% 34% 7% 5% 7% 7% 6% 28% 33% 36% 35% 37%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1Q18 1H18 9M18 2018 1Q19

Other non-Italy Other Govies / EFSF/ EIB Other Italy Italian Govies

2.7 bn

 Securities’ Po Port rtfo foli lio sto tood at at €7.4 bil illi lion, around -€390 million vs FY18 figure, mainly due to the reduction of «core» Europe bonds  Ita Italian govies exposure remained sta table at at €2.7 bi bill llion ion  Avera rage matu turi rity ty went furtherly down at 5.8 years

slide-9
SLIDE 9

91.0 84.6 83.6 90.6 82.2 15.5 13.9 16.2 14.4 17.1 43.2 43.5 45.3 45.5 43.8 30.3 5.9 7.7 6.5 14.5 1Q18 2Q18 3Q18 4Q18 1Q19

Performance Fees Income from Financial Activities Banking Fees Insurance Income Asset Management and Brokerage Fees

NON INTEREST MARGIN

146.8

Total (€, million) 189.0

153.8

9

153.6

151.0

163.6

157.1

158.8

149.2

164.9

«Co Core re» NIM*

*Core NIM: net of non-recurrent items (Income from Financial Activities and Performance Fees)

 Stro trong perfo rformance of

  • f In

Insura rance In Income (+ (+10 10.3% vs vs 1Q18 18), thanks to volumes’ expansion. Ba Banki king Fe Fees gre rew YoY YoY, too (+1.4%), despite the cost of excess liquidity in ECB (around €1.4 million)  Asset Management Fees were affected from lower average stock and from lack of positive non- recurrent components included in the 1Q18 figure, net of which Core NIM would be up +1.1% vs 1Q18  Total NIM was instead penalized by a lower Income from Financial Activities (-52% YoY)

slide-10
SLIDE 10

OPERATING COSTS

Employees Financial Advisors Creacasa and Salary backed loans Agents

EMPLOYEES / NETWORKS

10

192 184 176 188

OPERATING COSTS

183

  • 4.

4.5% (-0.9% net Ifrs 16)

133 123 120 129 132 59 61 56 59 51

30 80 130 180 1Q18 2Q18 3Q18 4Q18 1Q19

Payroll Administrative Expenses

5,544 5,519 5,604 5,609 5,763 5,899 6,068 6,140 6,195 6,249 2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q19 885 795 750 770 785 827 855 820 812 813 217 272 359 353 394 376 361 305 288 283

  • Opera

rati ting Costs ts showed a signifi ficant dro rop compared to to 1Q18 18 (-4.5%), both Payro roll ll (-1.1% vs 1Q18, despite the new hirings) and Administrative Expenses (-12.1%)

  • Net of Ifrs 16 impact, Costs

ts sti till ll decli lined (-0.9% 1Q19 vs 1Q18), reaff ffirming th the stro rong fo focus on

  • n such

ag aggre gregate

slide-11
SLIDE 11

LOANS TO CUSTOMERS

LOANS TO CUSTOMERS: EVOLUTION

+ 4.6% 24,248

Financial statement figures in €, million calculated as: caption 40.b of Balance Sheet (Loans to Customers) net of repos and securities. 1Q18 figure at €25,650 includes €23,905 + €205 + €1,540. 1H18: €26,528 includes €24,248 + €168 + €2,112. 9M18: €26,374 includes €24,092 + €189 + €2,093. FY18: €27,773 includes €25,497 + €0 + €2,276. 1Q19: €26,721 includes €24,995 +€0 + €1,726

Total 23,905

11

24,092 25,497 24 24,995 9,925 10,017 9,813 10,890 10,509 2,392 2,435 2,476 2,538 2,546 6,744 6,751 6,726 6,784 6,838 4,844 5,045 5,077 5,285 5,101

4,000 8,000 12,000 16,000 20,000 24,000

1Q18 1H18 9M18 2018 1Q19

Other Loans Residential Mortgage Leasing Short-Term Loans

 Loans to to Custo tomers rs grew beyo yond expecta tati tions, wi with th an an increase of

  • f +€1.1 bil

illi lion in in th the year (+4.6% YoY), lower vs FY18 merely as a result of the usual 1Q seasonality  Well ll balanced development YoY, with «Leasing» at +6.4%, «Short-Term Loans» at +5.9% and «Other Loans» at +5.3%

slide-12
SLIDE 12

90 100 110 120 130 140

2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q19

Industry Credem

LOANS TO CUSTOMERS GROWTH*

LOANS: COMPARISON WITH THE INDUSTRY

Credem over-performance YoY (Δ%)

MARKET SHARES** EVOLUTION

* Figures based at 2010 (2010: base 100). Industry: source ABI Monthly Outlook April 2019, private sector and public administration ** Market shares referred to retail, corporate customers and small business (net of financial institutions)

+0.8% YoY

+37%

3.8 2.9 4.2 2.9 2.2 3.8 9.2 5.5

12 +4.6% YoY

1.5 1.07% 1.16% 1.20% 1.28% 1.48% 1.58% 1.66% 1.77% 1.79% 1.77%

1.0% 1.3% 1.6% dec. 2010 dec. 2011 dec. 2012 dec. 2013 dec. 2014 dec. 2015 dec. 2016 dec. 2017 dec. 2018 jan. 2019

MS on Performing Loans

 The Gro roup intensifi fied its ts over-perfo formance by growing its volumes at +4.6% YoY, almost 6x compared to the Industry  Mark rket share res remain ined around 1.8%, despite the usual 1Q seasonality of the loan book

slide-13
SLIDE 13

70 130 41 285 511

  • 554
  • 389
  • 74

259 1,033 245

  • 18

840 609

  • 103

193

1Q16 1Q17 1Q18 1Q19

AUC Direct Deposits AUM + Insurance Total Net Inflows

GROUP CUSTOMERS FUNDING: NET INFLOWS BREAKDOWN

13

1Q16 1Q17 1Q18 1Q19

  • 1Q19

19 tota

  • tal Net Inflo

flows we were re pos positi tive and and reached alm lmost €20 200 mi mill llion ion

  • AU

AUM and and In Insura rance showed Febru ruary ry and and Marc rch positi tive inlfo fows (above €90 million) after January outflows

slide-14
SLIDE 14

90 110 130 150 170 190

2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q19

Industry Credem

€, million 20

2017 20 2018 1Q19

Sight / Saving Deposits 21,451 23,142 22,920 CD and Other Deposits 499 485 553 Direct Deposits 21,950 23,627 23,473 Wholesale Bonds* Retail Bonds 2,500 570 2,500 224 2,500 150 Direct Dep. & Retail Bonds 22,520 23,852 23,623 Insurance Reserves 6,815 6,889 7,068 Portfolio Management 6,828 5,587 5,773 Mutual Funds and Sicav 11,996 11,213 11,749 Others and Third Parties’ Products 8,391 8,146 8,630 AUM 27,215 24, 24,946 26 26,152 AUC 10,394 9,595 10,039

DEPOSITS, BONDS AND AUM

* Nominal value at issuance date ** Figures based at 2010 (2010: base 100). Industry: source ABI Monthly Outlook April 2019

DIRECT DEPOSITS & RETAIL BONDS**

+6.6% YoY +1.2% YoY

+66%

14

  • After the 2018 financial market negative evolution,

AUM were back to to gro rowth th, +€1.2 bil illi lion in in 1Q19 19 onl nly (+ (+4.8% vs vs FY FY18 18)

  • Also In

Insura rance Reserv rves showed a positi tive trend, +€180 million vs FY18 (+2.6%)

  • Dire

rect Deposits ts went slig ightl tly do down (-€150 million YTD) however still showing a strong

  • ver-

performance vs the Industry figure (above +5 percentage points YoY)

slide-15
SLIDE 15
  • 500

750 750 249 50 100 100

  • 200

400 600 800 1,000

2019 2020 2021 2024 2025 2026 2027 2028 127 23 2019 2020 2021

ISSUED BONDS Retail Bonds Wholesale Bonds

Credem SpA management accounting in €, million

BONDS MATURITIES

ISSUED BONDS AND FUTURE MATURITIES

15

312 523 600 1,500 249 50 100 750

1,407

938

1,473

365 38

  • 500

,000 ,500 ,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q19

Wholesale Retail

 As of January 10, 2019, Credem issued a €750 750 mil illion Covered Bo Bond with th 5 ye year matu turi rity ty (+95 bps above the mid-swap rate), replacing an expiring issuance of the same amount  €150 million senior unsecured retail bonds are still

  • utstanding

 Potential new bond issuances will be in line with future requests related to the MREL requirement

Covered Bond Tier 2 Covered Bond

slide-16
SLIDE 16

820 465 41 707 413 34 698 698 411 34 34

300 600 900

Gross Bad Loans Gross UTP Loans Gross Past Due Loans

2017 2018 1Q19

  • Gro

ross NPL PL sto tock kept decreasing (-€11 11 mil illi lion in in 1Q19 19), thanks to the continuos improvement in credit quality of the Group’s customers

  • Gro

ross NPL PL ra rati tio was 4.5% (slightly increasing vs FY18 merely driven by the seasonal denominator decrease), still among th the lo lowest in in Ita taly** and already materially below the 5% threshold defined by EBA***

CREDIT QUALITY (1/2)

3.2 % on Loans (Credem) % on Loans (Industry)* 8.5 1.8 0.2

GROSS NON PERFORMING LOANS

2.7 5.1 1.6 0.1 2. 2.7 1.6 0.1

* Source: ABI, internal calculation on Bank of Italy figures (TRI30266) ** Source: ECB, Supervisory Banking Statistics 4Q 2018 page 60 (https://www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.supervisorybankingstatistics_fourth_quarter_2018_201904~4b71b5db 1c.en.pdf) ***European Banking Auhority (EBA) Guidelines page 7 (eba.europa.eu)

4.8 4.1 0.3 0.2

GROSS NPL RATIO

16

Bad Loans Disposal

5.2% 4.4% 4.5% 8.3%

1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%

2017 2018 1Q19 2018 ITA

slide-17
SLIDE 17

70 25 27 42 46 26 22 15

  • 6
  • 23
  • 11
  • 32
  • 12

8 28 48 68

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q19

  • 1
  • 1
  • 7
  • 16
  • 22
  • 23
  • 26
  • 22
  • 11
  • 30
  • 25
  • 20
  • 15
  • 10
  • 5

5 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

Flows net of disposals. Figures calculated as follows: [Gross NPLs + Bad Loans disposed portfolio – Gross NPLs of the previous year] /4. €15 million related to 2016: (€1,403 million + €87 million –€1,431 million)/4. -€6 million related to 2017: (€1,326 million + €52 million - €1,403 million )/4. -23 million related to 2018: (€1,154 million + €79 million - €1,326 million)/4. -11 million related to 1Q19: (€1.,44 million + €79 million - € 1,304 million)/4.

CREDIT QUALITY (2/2)

2017-19 Quarterly Average: - 14 €, million

NET QUARTERLY AVERAGE GROSS NPL FLOWS 2017-2019 NET QUARTERLY FOCUS

17

  • Over th

the last 2.5 ye years rs, NP NPL fl flows* remained negati tive in in every ry quarter, with an overall re reducti tion of

  • f

alm lmost €140 mi mill llion ion from 3Q16 to 1Q19 (-10%, without considering NPL disposals)

  • Despit

ite the di diff ffere rent ma macroecon

  • nomic

ic scenario io, als lso 1Q19 19 NPL flow lows remain ined negati tive for

  • r -€11

11 mi mill llion ion

slide-18
SLIDE 18

45.1 51.5 51.8

30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60

2017 2018 1Q19

61.1 67.1 67.4

50 52 54 56 58 60 62 64 66 68 70

2017 2018 1Q19

NPL COVERAGE

BAD LOANS COVERAGE (%)

€, million 2017

2018 1Q19

Net Bad Loans

319.3 232.6 227.7

Net UTP Loans

374.9 300.2 296.6

Net Past-Due Loans

33.7 26.6 26.8

Tota

  • tal

l Net NPL PL

727.9 559.4 551.1

Net et NPL PL Ratio io*

2.9% 2.2% 2.2%

NET NON PERFORMING LOANS

* Loans to Customers net of Repos and securities ** Source: ABI Monthly Outlook April 2019, figure as of February 2019

18

NPLs COVERAGE (%)

 1Q19 19 Net Net Non Perfo form rming Loans fu furth therl rly reduced to ~€550 million  Total NPL accounti ting covera rage kept growing and reached 52 52%  Net Ba Bad Loans conti tinued to to decrease (with Net Bad Loans Loans ratio at 0.9%), showi wing an an

  • pposite trend compared to

to th the In Industry ry** ** one (with a ratio increasing, from 1.85% in December 2018 to the current 1.95%)

slide-19
SLIDE 19

67.4% 27.9% 51.8% 83.3% 38.2% 65.2%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%

Bad Loans Unlikely to Pay Loans Total NPLs

Coverage Coverage including Shortfall

NPL: COMPREHENSIVE COVERAGE

NPL PL Gross

(€, million)

Net et

(€, million)

Cove

  • verage

Shortfall* ll*

(€, million)

Cove

  • verage

incl. . Shortfall ll Bad Loans 698.2 227.7 67.4% 111.3 83. 3.3% UTP Loans 411.4 296.6 27.9% 42.2 38 38.2% Tota

  • tal

l NPL PL (1Q19) 1,143.6 551.1 51.8% 152.7 65.2%

* Shortfall is calculated as the difference between ELBE – Expected Loss Best Estimate (which represents the best estimate of the expected loss for each credit exposure, given its stage and the current economic environment) and Net Adjustments to Loans

19

+ Net NPL 551.1

  • Shortfall
  • 152.7

= NPL PL net et of

  • f Shortfall

ll 398 398.4

 Comprehensive Covera rage kept impro roving (above 83% for Bad Loans and 65% for total NPL), remaining among th the highest in the Industry  Net NP NPL includi ding Short rtfa fall ll (already fully deducted from CET1), reduced below €400 mi mill llion ion

slide-20
SLIDE 20

21 31 70 7 19 20 35 35 62 34 27 44 59 55 52 32 34 24

10 20 30 40 50 60 70 80

COST OF RISK: HISTORY

Parmalat Default Historical Average 37 bps

COST OF RISK

20

Figures in bps. Calculated as Loan Loss Provisions / Loans to Customers (net of Repos and securities)

34 27 44 59 55 52 32 34 13 24 8 42 31 39 47 45 41 30 21 13 15 8

8 18 28 38 48 58 68

2010 2011 2012 2013 2014 2015 2016 2017 1Q18 2018 1Q19

Cost of risk Cost of Risk (net of non-recurrent events)

1Q19 19 Cost of

  • f Ri

Risk was only €5 mil illi lion and and sto tood at at 8 bps bps (annuali lized), close to all-time lows and furtherly down from 13 bps of 1Q18

slide-21
SLIDE 21

144 5,336 2,276 6,980 862 25,497 187 5,457 1,726 7,217 1,762 24,995

6,000 12,000

  • Fin. Assets

through P&L*

  • Fin. Assets

HTCS*

  • Fin. Assets

HTC*

  • Fin. Assets

(insurance companies)* Due from banks Loans to customers 2018 1Q19

2,500 2,214 450 3,000 23,627 224 6,889 2,573 2,500 2,005 444 3,000 23,473 150 7,068 2,607

5,000 10,000

Bonds - Wholesale Other - Wholesale EIB/CDP ECB - Tltro II Deposits & Repos Bonds - Retail Insurance Reserves Equity 2018 1Q19

ASSETS & LIABILITIES

ASSETS

Wholesale Customers

LIABILITIES

* Source: internal calculation. Figures in €, million

21

 Compared to FY18, Loans to to Custo tomers rs were affected from the 1Q usual seasonality (about -€500 million) and the securi riti ties port rtfo foli lio showed a decrease

  • f
  • f

th the HT HTC com

  • mpon
  • nent (-€550 million)

 Both Insurance Reserves (+€240 million) and the ECB deposit (+€900 million) increased vs FY18  On the Custo tomers Fundi ding side, Deposits went slightly down (-€150 million compared to FY18) and more retail bonds expired during the quarter

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SLIDE 22

123% 121% 124% 2017 2018 1Q19E 166% 172% 220% 90% 120% 150% 180% 210% 2017 2018 1Q19E

Source: internal expected estimates as of March 30, 2019 * Loans to Customers / Total Deposits. Loans to Customers are net of Repos with Institutional and Loans to Group’s SPVs. Deposits include Institutional Bonds

LIQUIDITY RATIOS

22

100% 100%

0.98 0.97 0.96 0.80 0.85 0.90 0.95 1.00 1.05 1.10 2017 2018 1Q19

LOAN TO DEPOSIT RATIO* LCR NSFR

 Bo Both th NS NSFR and and LCR stood well above minimum regulato tory ry requirements

  • ts. NSFR at 124% allows the

Group for a gre reater fl flexi xibi bili lity ty in in setti tting fu fundi ding stra rategies  ECB unencumbered eligible securities (net of haircut) as of the end of march 2019 were €3.9 billion (9% of total assets)

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SLIDE 23

€,million

2018 1Q19 2017 FL 2018 1Q19 CET 1 1,920 1,963 1,799 1,782 1,832 Total Capital 2,267 2,311 2,106 2,093 2,142 Capital absorption from: 1,126 1,105 1,083 1,126 1,113 Credit and Counterparty 973 953 947 972 952 Market 28 27 16 29 37 Operational 125 125 121 125 125

CET 1 Ratio 13.6% 14.2% 13.3% 12.7% 13.2%

  • Tot. Capital Ratio

16.1% 16.7% 15.5% 14.9% 15.4%

RWAs 14,072 13,813 13,542 14,074 13,918

Credemholding Banking Group

CONSOLIDATED CAPITAL RATIOS

23

~ 520 0 bps Buffer vs 2019 Srep (8%)

CAPITAL AND CAPITAL RATIOS (fully phased) CET1 RATIO FULLY PHASED (CREDEMHOLDING)*

* Fully phased ratios calculated on prudential perimeter

 1Q19 19 CET1 ra rati tio at at Credemholdi ding ng level was up up +50 50 bps bps compared to to December 2018, despite the negative impact from Ifrs 16 (around -10 bps) and without considering 1Q19 Net Profit, thanks to the improvement

  • f valuation reserves

 ~520 bps bps bu buff ffer vs vs 20 2019 19 SREP SREP require rement

11.9% 13.3% 12.7% 13.2%

600 800 1,000 1,200 1,400 1,600 1,800

9.0% 10.0% 11.0% 12.0% 13.0% 14.0%

2016 2017 2018 1Q19

CET1 Ratio CET1 Capital

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SLIDE 24

DISCLAIMER AND CONTACTS

The manager responsible for preparing the company’s financial reports Mr. Paolo Tommasini of Credito Emiliano S.p.A., declares, pursuant to paragraph 2 of Article 154 bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the document results, books and accounting records.

This document has been prepared by Credito Emiliano Spa solely for information purposes and for use in presentations of the Group’s strategies and financials. The information contained herein has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Neither the company, nor its advisors or representatives shall have any liability whatsoever (in negligence nor otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this

  • document. The forward-looking information contained herein has been prepared on the basis of a number of assumptions which may prove to be incorrect and, accordingly,

actual results may vary. This document does not constitute an offer or invitation to purchase or subscribe for any shares and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. The information herein may not be reproduced or published in whole or in part, for any purpose, or distributed to any other party. By accepting this document you agree to be bound by the foregoing limitations. This presentation includes certain forward looking statements, projections, objectives and estimates reflecting the current views of the management of the Company with respect to future events. Forward looking statements, projections, objectives, estimates and forecasts are generally identifiable by the use of the words “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “goal” or “target” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts, including, without limitation, those regarding the Company’s future financial position and results of operations, strategy, plans, objectives, goals and targets and future developments in the markets where the Company participates or is seeking to participate. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward- looking statements as a prediction of actual results. The Group’s ability to achieve its projected objectives or results is dependent on many factors which are outside management’s control. Actual results may differ materially from (and be more negative than) those projected or implied in the forward-looking statements. Such forward- looking information involves risks and uncertainties that could significantly affect expected results and is based on certain key assumptions. All forward-looking statements included herein are based on information available to the Company as of the date hereof. The Company undertakes no obligation to update publicly or revise any forward- looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent written and oral forward- looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. This document should not be distributed in the United States or to U.S. persons as defined in Regulation S of the U.S. Securities Act of 1933, as amended.

Investor Relations Team Contacts

Benedetta Levi – Head of IR blevi@credem.it +39 0522-582580 Veronica Cattabiani - IR vcattabiani@credem.it +39 0522-583611

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