Groups Results 1H 2016 5 August 2016 1H16 Highlights The Group - - PowerPoint PPT Presentation

5 August 2016

Group’s Results 1H 2016

2

The Group continued to pursue its growth strategy, by further consolidating the trend already ongoing in the 1Q16: 2Q16 Net Inflows increased at €1.160 million vs €840 million in 1Q16 (+38%). The YoY performance in the semester was €2 billion, up by 16% in comparison with €1.7 billion in 1H15. AUM growth accelerates: inflows reached €1 billion in 1H16 compared to €260 million at the end of 1Q16 Loans grew by 3.7% QoQ and by 4.6% YoY, in comparison with an industry’s performance still negative Operating Income, net of Trading and Performance Fees, was €251 million in 1Q16, up by 2.3% QoQ and by 4.7% YoY Annualized cost of risk at 28 bps, in conjunction with quarterly inflows of gross impaired loans and coverages substantially stable. Cost of Risk, net of non recurrent facts landed at 32 bps vs 39 in 1H15 Fully-phased CET1 ratio was 12.2%* (13.6% on Credem Group perimeter only), down by 20 bps compared to 1Q16 figure as a result of lower Valuation Reserves 1H16 Net Consolidated Profit was €70.4 million (-41% YoY), because of a lower Trading contribution

1H16 Highlights

Loans to Customers are net of Repos with Institutional sand Loans to Group’s SPVs . (*) Capital ratio related to the new group’s statutory perimeter that includes Credemholding

• Core revenues (net of Trading and

Performance Fees) grew both YoY (+4.7%) and QoQ (2.3%)

• Net

Adjustments to Loans improvement was confirmed (- 22,7% YoY)

• 2Q16 Net Profit reached €23.8

million, decreasing in comparison with previous quarter as a result of the lower contribution provided by Trading

Euro, Million 2Q15 1Q16 2Q16

% 2Q16 vs 2Q15

1H15 1H16 Operating Income 257.9 284.4 257.9 0.0% 611.1 542.3 Operating Income net of Trading and Perf. Fees 239.8 245.4 251.0 4.7% 492.8 496.4 Operating Costs

• 173.7
• 179.3
• 181.0

4.2%

• 349.2
• 360.3

D&A

• 10.0
• 10.8
• 11.5

15.0%

• 19.5
• 22.3

Net Operating Profit 74.2 94.3 65.4

• 11.9%

242.3 159.7 Net Adj. To Loans

• 27.3
• 10.4
• 21.1
• 22.7%
• 64.1
• 31.5
• Prov. for Risks

and Charges 0.0

• 1.1
• 4.3

n.s.

• 9.4
• 5.4

Extraordinary Income/Expenses

• 2.6
• 12.7
• 5.0

n.s. 3.1

• 17.7

Pre Tax Profit 44.3 70.1 35.0

• 21.0%

171.6 105.1 Taxes/Minorities

• 8.9
• 23.5
• 11.2

25.8%

• 52.2
• 34.7

Net Profit for the Period 35.4 46.6 23.8

• 32.8%

119.4 70.4

Euro, million

Income Statement

Operating Income (net of Trading and Performance Fees)

224.4 234.0 248.8 247.7 248.2

200 210 220 230 240 250 260 Avg 2012 Avg 2013 Avg 2014 Avg 2015 Avg 1H16

4

P&L non recurrent events

Statutory P&L Reclassified P&L

• 2Q16 is affected by several non recurrent

events, totalling a gross negative impact

• f about €7.5 million
• Within the reclassified P&L, the only 2 lines

affected are Provisions for risks and charges and Extraordinary Income/Expenses

Non recurrent events (Euro, million)

• Prov. for risks

and charges

• 1.4: residual provision to Single

Resolution Fund Extraordinary Income/ Expenses

• 11.2: capital gain from Visa

Europe disposal

• 17.3: fiscal agreement with the

Italian Revenue Agency

• 0.0: offsetting of Tercas

contribution

Non recurrent events (Euro, million)

Interest Margin

• 1.9: financial charges related to a

fiscal agreement with the Italian Revenue Agency (regarding Transfer Pricing between Euromobiliare SGR and Credemlux) Other operating income/charges

• 3.6: penalties related to the above

mentioned agreement with the Italian Revenue Agency Profit/Loss from Equity investm.

• 11.2: capital gain from Visa Europe

disposal Other admin. expenses

• 5.2: contribution to Tercas

transaction

• Prov. for risks

and charges

• 1.4: residual provision to Single

Resolution Fund Net value adj./ writebacks

• 5.2: writeback from Tercas

transaction Taxes on income

• 11.8: taxation related to the above

mentioned agreement with the Italian Revenue Agency

106 104 111 117 115 111

70 80 90 100 110 120 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

5

Interest rates drop penalized Interest Margin in 1Q16 (-3.3% QoQ), that was

• nly

partially sustained by the Loans’ growth occurred in 2Q16 as it was mostly concentrated in the final month of the quarter Customers’ Spread was understandably in contraction, only slightly helped by the keen activity oriented to the reduction of cost of funding

bps

Interest Margin (1/3)

Quarterly Interest Margin

Euro Million

Quarterly Customers’ Spread

(Credem SpA management accounting)

Euribor and BTP/Bund: spread evolution

2.14 2.12 2.07 2.04 2.02 1.95 2.92 2.76 2.62 2.51 2.45 2.34 0.78 0.64 0.55 0.47 0.42 0.39

0.0 0.5 1.0 1.5 2.0 2.5 3.0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Spread Average Loans rate Average Deposits rate

0.05% 0.01%

• 0.03%
• 0.09%
• 0.18% -0.22%

116 127 121 103 116 131

• 10

10 30 50 70 90 110 130 150

• 0.3%
• 0.2%
• 0.1%

0.0% 0.1%

3 month Euribor Spread BTP vs. Bund (10 years)

2.11 2.26 2.09 1.95 1.82 2.10 2.12 1.99 0.00 0.60 1.20 1.80 2.40 2013 2014 2015 2Q2016

Credem: Spread Industry: spread 3.33 3.18 2.70 2.34 3.79 3.79 3.42 3.07

• 1.00

2.00 3.00 4.00 2013 2014 2015 2Q2016

Credem: Average Loans rate Industry: Average Loans rate 1,22 0,92 0,61 0,39 1,96 1,68 1,30 1,08

• 0,60

1,20 1,80 2,40 2013 2014 2015 2Q2016

Credem: Tasso medio depositi Sistema: Tasso medio depositi

6 %

Customers’ Spread descent in 2Q16 is in line with current industry’s trends: despite the growth strategy pursued by the Group, the gap with the average loan rate showed by the sector remained stable Similarly, the reduction of cost of funding continued, even if current values are now extremely difficult to decrease furtherly. Difference between the Group and the industry remained stable on 2015 year-end level

%

Interest Margin (2/3)

Evolution of Average Loan Rate

(Credem SpA management accounting)

Evolution of Average Deposit Rate

(Credem SpA management accounting)

Evolution of Average Customers’ Spread

(Credem SpA management accounting)

Source: ABI Monthly Outlook July 2016

0,29 0,16 %

• 0,03
• 0,04
• 0,74
• 0,46
• 0,61
• 0,72
• 0,69
• 0,73
• 0,76
• 0,69

7

1H16 figures showed an increase of securities’ portfolio amounting to circa 800 million in comparison to the end of 1Q16, mostly due to the purchase

• f Italian and European securities

The exposure to «Italian risk» remained percentually stable, while

• ther

aggregates showed

• nly

minor adjustments

5,902 6,219 6,154 6,420 6,180 7,065

Interest Margin (3/3)

Securities’ Portfolio Breakdown

(Credem SpA management accounting)

Duration and breakdown by rating

(Credem SpA management reporting)

Banking Group securities’ portfolio(€ mln)

13% 15% 17% 14% 16% 16% 16% 18% 60% 38% 32% 32% 10% 11% 10% 9% 8% 7% 62% 56% 13% 39% 44% 45% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2013 2014 1Q15 2015 1Q16 2Q16

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

29% 58% 10% 3% 0% 20% 40% 60% 80% 100% Rating Distribution

Other BBB A AAA/AA

4.9 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Avg Maturity

8

Non Interest Income, net of most volatile components, went back to growth (+8.2% QoQ), mainly thank to management and brokerage fees, paired with the increase of AUM volumes as well as some

• placements. Despite the pressure induced by the competition, banking fees were marginally up in the

quarter (+1.3%) after the1Q16 reduction due to regulatory changes Insurance revenues showed a very good performance, up by 17.3% QoQ Trading performance in the quarter did not replicate the (non recurrent) 1Q16’s one, even though it took advantage from a capital gain realized by Credem Private Equity amounting to circa €8 million 146.8 136.0 133.4

246.9

136.4

154.1 137.0 150.8 169.5

130.5

146.8

139.9

Non Interest Income

Non Interest Income: Quarterly Evolution

NII (net of Trading and Perform. Fees) 68.5 74.1 71.2 67.8 69.1 74.8 24 7.6 8.6 11.5 10.4 12.2 49.3 48.9 48.6 52.2 46.0 46.6 97.1 15.9 2.9 6.5 38.8 6.4 7.9 50 100 150 200 250 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 € M i l l i

• n

Performance Fees Trading Other Banking Fees Insurance Fees Asset Management Fees

9

The growth of AUM and Insurance Reserves was very relevant in the quarter, bringing volumes above 2015 year-end balance, even though financial markets performances was certainly not helpful in stimulating customers’ action The breakdown by asset class did not show significant changes, with the sole exception

• f a slight reduction in the Equity incidence on

Third Parties products, supposingly linked to the recent market volatility

AUM and Insurance Reserves

AUM and Insurance Reserves Evolution Mutual Funds and SICAVs Breakdown by Asset Class (Group management reporting) Third Parties’ Products Breakdown by Asset Class (Group management reporting)

1% 1% 1% 2% 39% 33% 24% 26% 40% 45% 51% 51% 20% 21% 24% 22% 0% 20% 40% 60% 80% 100% 2013 2014 2015 1H16 Money Market Bonds Balanced/ Flexible Equity 12% 9% 7% 8% 49% 49% 44% 49% 33% 35% 42% 37% 6% 7% 7% 6% 0% 20% 40% 60% 80% 100% 2013 2014 2015 1H16 Money Market Bonds Balanced/ Flexible Equity

17,687 20,208 22,543 22,252 22,875 3,236 4,409 5,513 5,748 5,991 5,000 10,000 15,000 20,000 25,000 30,000 2013 2014 2015 1Q16 1H16

Insurance Reserves AUM

121 117 112 123 123 121 55 57 50 49 57 60

50 100 150 200 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

Personnel Costs Administrative Expenses

10

€, million

• The Group continued to strenghten its structure in

coeherence with its growth strategy, even though, and in line with what previously announced, the pace

• f

Operating Costs growth is progressively declining (+3.2% YoY in 1H16 vs +5.5% YoY in 1H15)

• The Group continued to strenghten its structure in

coeherence with its growth strategy. 176 174 162 172 179 181

98 158 217 272 359 353 394 376 375

Operating Costs

Operating Costs: Quarterly Evolution Employees/ Networks Employees Financial Advisers Creacasa and Salary Backed Loans Agents

1,0021,006 885 795 750 770 785 827 848 5,993 5,740 5,5445,5195,6045,609 5,763 5,899 6,048 2008 2009 2010 2011 2012 2013 2014 2015 1H16

7,484 7,667 8,114 8,296 8,742 9,834 9,527 10,328 9,758 1,941 1,935 2,001 2,042 2,014 2,100 2,156 2,175 2,257 5,534 5,845 6,282 6,241 6,127 6,235 6,280 6,392 6,528 2,577 3,323 3,324 3,370 3,056 3,339 3,485 3,755 3,901

4,000 8,000 12,000 16,000 20,000 24,000 2009 2010 2011 2012 2013 2014 1H15 2015 1H16

Short-Term Loans Leasing Residential Mortgage Other Loans

11

As anticipated after 1Q16, Loans to Customers went back to grow in 2Q16 (+3.7% QoQ) after the usual seasonality. Expansion strategy was highlighted by a 4.6% YoY growth: in detail Leasing and Other Loans were up by 4.7% and 11.9% YoY, respectively Client base’s credit standing continued to improve with 88% of corporate customers in the top 4 internal rating notches

€ Mil.

17,536 18,770 19,721 19,949 17,536 18,884 20,643 19,938 19,938 21,695 21,448 23,093 21,508 22,649 19,995 22,444 21,499 22,444

Loans to Customers

Loans to Customers (net of Repos with Institutional and Loans to Group’s SPVs)

Loans to Customers

(Balance Sheets figures)

Corporate Loans Distribution by Rating

(Credem SpA management reporting)

67% 73% 77% 77% 78% 84% 86% 88% 50% 60% 70% 80% 90% 2009 2010 2011 2012 2013 2014 2015 1H16

% of loans to corporate customers in top 4 rating classes

12 Credem over- performance (∆ %)

2.8 2.9 2.2 5.5 3.8 The Group bettered its overperformance vs the industry in comparison with the previous quarter (from +3.7% in 1Q16 to 4.9% 1H16) As volumes’ growth took place by the end of the semester, and a bad loans portfolio was disposed at the end of July, May statistics regarding market shares do not properly catch the performance realized by the Group 9.2 4.9

Loans: comparison with the Industry

Loans to Retail and Public Sectors Growth Rates Market shares on retail and corporate customers and small business (net of financial institutions)

(Credem SpA management reporting)

Source: ABI Monthly Outlook July 2016; Bankit data: data flows from «Matrice dei Conti Bankit (Bastra1)» since December 2011, Bankit Public database (Bollettino Bankit) until November 2011

4.2% 2.2%

• 1.1%
• 3.9%
• 1.3% -0.2% -0.3%

7.0% 5.1% 1.2%

• 0.1%

7.9% 5.3% 4.6%

• 5.0%
• 3.0%
• 1.0%

1.0% 3.0% 5.0% 7.0% 9.0% 2010 2011 2012 2013 2014 2015 1H16

Industry Credem

1.07% 1.16% 1.20% 1.28% 1.45% 1.58% 1.53% 1.0% 1.2% 1.4% 1.6% dec. 2010 dec. 2011 dec. 2012 dec. 2013 dec. 2014 dec. 2015 may 2016

MS on Gross Bad Loans

0.55% 0.45% 0.44% 0.43% 0.40% 0.42% 0.43% 0.3% 0.4% 0.5% 0.6% dec. 2010 dec. 2011 dec. 2012 dec. 2013 dec. 2014 dec. 2015 may 2016

MS on performing Loans

13

In 1H16 the positive evolution

• f

new residential mortgage sales continued, with inflows increasing by more than 30% YoY, and accelerating from the +21% YoY posted in 1Q16 As a result, residential mortgage stock was up by 4.0% YoY The market share reached its peak since 2008 and it has been growing steadily despite the remarkable increase

• f

competitive pressure Inflows: +32%

Residential Mortgages: comparison with the Industry

Residential Mortgages Inflows

(Credem SpA management reporting)

Residential Mortgages’ Stock: Market Share

Source of market shares: Italian Banks Association (*) Data as at March 2016

2.10% 2.18% 2.15% 2.16% 2.22% 2.26% 2.28% 2.05% 2.10% 2.15% 2.20% 2.25% 2.30% 2010 2011 2012 2013 2014 2015 2016*

14

Euro, million 2012 2013 2014 2015 1H16 Sight/ Saving Deposits 13,066 13,625 15,335 16,979 18,094 CD and Other Deposits 256 260 333 460 593 Direct Deposits 13,322 13,885 15,668 17,439 18,687 Bonds

• Institutional
• Retail

4,149 879 3,270 4,187 1,131 3,056 4,718 2,105 2,613 4,477 2,349 2,128 4,228 2,350 1,878 Direct Dep & Retail Bonds 16,592 16,941 18,281 19,567 20,566 Insurance Reserves 2,617 3,236 4,409 5,513 5,991 Portfolio Management 3,747 3,766 4,481 5,648 5,770 Mutual Funds 2,944 3,051 3,420 4,090 4,563 SICAVs 5,047 5,314 5,882 5,979 5,972 Others and Third Parties’ Products 4,478 5,556 6,425 6,826 6,570 AUM 16,216 17,687 20,208 22,543 22,875

During 2Q16 Direct Deposits continued to increase (+€1.248 million since the beginning of the year, +7.2%) while AUM was back to growth (+€332 million, +1.5%). Insurance Reserves continued to expand steadily (+€500 million since the beginning

• f the year, +8,7%)

Credem Group’s ability to grow by

• utperforming

the industry was confirmed; Loans’ expansion was once again paired by a similar and balanced increase of Deposits

Source: ABI montlhy Outlook July 2016

Deposits, Bonds and AUM

Direct Deposits & Retail Bonds: yearly growth rates

• 1.8%
• 1.2%
• 0.6%
• 1.1%

2.1% 7.9% 7.0% 10.2%

• 3.0%
• 1.0%

1.0% 3.0% 5.0% 7.0% 9.0% 11.0% 2013 2014 2015 1H2016

Industry Credem

9 6 37 35 54 59

2014 2015 Promoters Passives Detractors

15

Evolution of Retail Client Base

Retail Customers’ Acquisition Rate Credem overperformance vs the Industry in terms

• f Deposits growth rate,

is in line with the Group superior capacity

• f

attracting new customers * The expansion of the of the customers’ base continued in line with the the increase

• f

the Customer’s fulfillment, as affirmed by Customer Satisfaction inquiries and Net Promoter Score (NPS) survey

(*) Credem Group ranks well also in the net development ratio, at 5.35% at the end of 2015, in comparison with the sector average standing at 1.34% (**) Data referred to the ABI Panel. Acquisition Ratio: new clients holding a bank account at the end of the year/ total clients at the beginning of the year

Retail Customers’ Satisfaction Retail Customers’ NPS

45 53

NPS

8.04% 7.05% 6.94% 7.05% 12.21% 10.73% 11.75% 11.90% 2012 2013 2014 2015

ABI Panel** Credem

82.4% 85.4% 2014 2015

16

Service Model: Cross Selling

(**) Data referred to ABI Panel. CSR: average number of products held by customers with a bank account both at the beginning and at the end of the

Retail Customers’ Cross Selling Beyond the expansion of the number of clients, the Group is consistently strenghtening its penetration on its customers’ base The evolution of the service model on retail customers led to a sensible and continuous increase in the Cross Selling ratio that jumped at 4.72. Such level compares successfully with the industry average that remained substantially stable over the last 4 years

4.39 4.33 4.29 4.35 4.40 4.55 4.56 4.72

2012 2013 2014 2015

ABI Panel** Credem

330,441 370,765 420,036 479,856 512,681 2012 2013 2014 2015 1H2016

• No. of Online Contracts

17

Service Model: Online Offer

(*) Number of contracts and Transaction Migration: total Customers (**) Data referred to the ABI Panel. 2015 data not available.

Penetration on Total Retail Customers Service model’s evolution is necessarily linked to the development of the online

• ffer of the Group. Equally

important is to make available to customers a wide range of option to allow them to have a real multichannel experience In this context, Credem Group places itself above the industry’s standards in terms

• f

clients

• wning

and using online features (IB/ Mobile Banking)

% of migrated transactions

Number of Online Contracts and Transaction Migration* 65.5 67.6 70.4 74.2 76.5

% Online Contracts % Active Online Contracts

37.2% 40.7% 40.7% 43.9% 45.8% 2013 2014 2015

ABI Panel** Credem

24.0% 25.8% 32.4% 35.2% 36.9% 2013 2014 2015

ABI Panel** Credem

• 696
• 196
• 427

118 199 111

• 46

910 1,049 2,015 2,191 972

552 1,930 1,718 2,000

• 800
• 300

200 700 1,200 1,700 2,200

1H13 1H14 1H15 1H16

AUC Direct Deposits AUM Total Net Inflows

18

Net Inflows evolution was not affected by the recent turmoil experienced by the Italian banking sector since the beginning of 2016. Conversely, Net Inflows increased significantly YoY (+16.4%) As for the breakdown among different products line, AUM accelerated after the first quarter of the year (net inflows more than doubled, from +259 in 1Q16 to +713 in 2Q16) while the Direct Deposits increase, in comparison with the past, is an evident indicator of the uncertainty experienced by the clientele

Group’s customer funding: net inflows evolution

Net Inflows evolution

259 713 1Q16 2Q16

104 962 351 257 37 200 400 600 800 1.000 2016 2017 2018 2019 2020 19 €, million €, million

Direct Deposits growth and availability of cheap funding from ECB limit the need of new bonds’ issuance As for next maturities’ concentration, almost €1 billion retail bonds are due in 2017. Most likely, this maturities will lead to a sensible reduction of the overall cost of funding

• 750

500 750 249 100

• 200

400 600 800 1.000 2016 2017 2018 2019 2020 2021 2025 2028

Bonds issued and future maturities

Bonds Issued

(Credem SpA management account)

Bonds Maturities

(Credem SpA management account)

Retail Bonds Institutional Bonds

312 523 600 1,500 249

• 1,407

938 1,473 365 38

• 500

1,000 1,500 2,000 2,500 2010 2011 2012 2013 2014 2015 1H16

Institutional Retail

20

3.9

% on Loans (Credem) % on Loans (Industry)

10.0 1.9 0.3

• Gross NPLs on Total Loans showed a wide

gap between Credem and the Industry (more than 10 percentage points with Credem standing at 6.4% vs 16.5 of the Industry, even if with the delay of a quarter). Gross Bad Loans and Unlikely to Pay generation remained stable QoQ, while Past Due generation reduced sharply

• Quarterly Average Gross NPLs’ Inflows

showed a slight increase even if very low in absolute terms

4.2 9.7 2.1 0.3 4.1 2.1 0.2 6.3 6.2 0.7 0.6

70 25 27 42 46 26 22 27

• 10

20 30 40 50 60 70 80 2009 2010 2011 2012 2013 2014 2015 1H16

Credit Quality

Gross Non Performing Loans Quarterly Average Gross NPLs’ Inflows

(€, Million)*

Source: ABI; internal calculation on Bank of Italy figures (TDB30266) (*) 2014 amounts were calculated according to the following formula: (Gross Impaired Loans as at the end of the year, €1,334 million + NPLs disposed, €44 million – Gross Impaired Loans as at the end of the previous year, €1,285 million) divided by 4

909.7 451.0 70.0 926.8 466.2 62.9

942.7 484.2 57.5 300 600 900 Gross Bad Loans Gross Unlikely to Pay Loans Gross Past Due Loans € Million

2015 1Q16 1H16

21

Net NPLs Ratio has being fairly stable for the last 10 quarters Net Bad Loans Ratio landed at 1.63% in the 1H16 vs. 4.72% of the industry** Coverage

• n

Bad Loans increased slightly compared to 2015 year-end, while coverage on NPLs remained stable Non Performing Loans’ Coverage (%) Bad Loans’ Coverage (%)

Euro, million 2013 2014 1Q15 2015 1H16 Net Bad Loans 334.4 341.7 356.8 366.5 Unlikely to Pay 362.8 348.9 376.2 406.7 Net Past-due 100.2 96.6 60.0 48.4 Total Net NPLs 788.4 797.4 787.2 793.0 821.6 Net NPLs’ Ratio* 4.0% 3.7% 3.8% 3.5% 3.7%

Net Non Performing Loans

45.1 51.8 49.6 55.0 52.0

% of gross Bad Loans backed by Real Estate***

55.3 50.4 55.2 53.6 58.6 55.3 59.6

Non Performing Loans’ Coverage

* Loans to Customers net of Repos with Institutional and Loans to Group’s SPVs ** Source: ABI Monthly Outlook July 2016 *** Credem SpA management accounting

% of gross Bad Loans & Un. to Pay backed by Real Estate*** 36.3 35.8 35.0 38.7 40.7 42.8 44.6 44.7 30 32 34 36 38 40 42 44 46 2010 2011 2012 2013 2014 1H15 2015 1H16

57.4 56.0 55.4 58.2 58.6 59.2 60.8 61.1 50 52 54 56 58 60 62 2010 2011 2012 2013 2014 1H15 2015 1H16

22

Bad Loans Portfolio Disposal

Euro, million

1H16 Post Disposal (Pro-forma) Change % Gross Bad Loans 942.7 852.7

• 9.5%

Total Gross Loans 23,107 23,017

• 0.4%

Gross Bad Loans on Total Gross Loans 4.1% 3.7% Gross NPLs on Total Gross Loans 6.4% 6.1%

Euro, million

1H16 Post Disposal (Pro-forma) Change % Net Bad Loans 366.5 364.8

• 0.5%

Total Net Loans 22,444 22,442 0.0% Bad Loans Coverage (%) 61.1% 57.2% NPLs Coverage (%) 44.7% 41.2%

At the end of July a disposal of a Bad Loans portfolio was finalized. The portfolio amounted to circa €90 million and was composed, for the vast majority, by non collateralized credit loans The disposal affected the P&L positively and will produce a circa 10% decrease of Group’s Gross Bad Loans stock: compared to data at the end of 1H16, Gross Bad Loans

• n

Total Gross Loans would have passed from 4.1% to 3.7%, with the industry standing at 9.7% (as at 31 March 2016)

Source: internal calculation on Banca di Italia data (TDB30266)

21 31 70 7 19 20 35 35 62 34 27 44 59 55 52 10 20 30 40 50 60 70 80 23

Albeit affected by some non recurrent issues, 28 bps cost of risk is lower than historical average 1H16 figure was 50% lower than the 1H15

• ne

Net of non recurrrent items occurred in 1Q16, cost of risk would have been 32 bps

Crack Parmalat Historical Average

Cost of Risk

Cost of Risk (bps) Cost of Risk: history (bps)

59 27 31 52 55 70 60 51 52 19 28 47 37 39 41 45 39 39 37 41 28 32

• 10

20 30 40 50 60 70 2013 1Q14 1H14 9M14 2014 1Q15 1H15 9M15 2015 1Q16 1H16

Cost of risk Cost of risk (net of non recurrent items)

2,350 1,086 671 1,750 18,080 1,965 5,748 2,446 2,350 2,088 715 735 1,015 18,687 1,879 5,991 2,420 5,000 10,000 15,000 20,000

1Q16 1H16

Equity

24

Institutional Clientele

On the liabilities’ side, Direct Deposits growth (+ €600 million), was certainly

• remarkable. Also, TLTRO I

funding was partially switched towards TLTRO II with the expectation

• f

a saving on cost of funding starting from July 2016 Interbanking funding grew by €1 billion, in line with assets’ expansion On the assets’ side, Loans grew €800 million QoQ Financial Assets Available for Sale showed a similar increase

(*) Internal calculation

Assets & Liabilities

Assets (Euro, Million) Liabilities (Euro, Million)

133 6,047 5,757 419 21,642 136 6,929 6,047 471 22,444 6,000 12,000 18,000 24,000

• Fin. Assets

held for trading*

• Fin. Assets at

fair value*

• Fin. Assets av.

for sale*

• Fin. Assets

(insurance companies)** Due from banks Loans to customers

1Q16 1H16

25

NSFR LCR Loan to Deposit Ratio* 124% 116% 125% 130% 50% 70% 90% 110% 130% 150% 2013 2014 2015 1H16E 149% 179% 144% 162% 50% 70% 90% 110% 130% 150% 170% 190% 2013 2014 2015 1H16E

Liquidity Ratios

(*) Loans to Customers net of Repos with Institutional and Loans to Group’s SPVs, Deposits includes Institutional Bonds Source: internal estimates as at 30 June 2016

Both NSFR and LCR ratios at the end of June 2016 show values well above the future target thresholds set by the regulation, with NSFR in further improvement at 130% and LCR at 162% (calculated on the back of “delegated act”) ECB eligible securities net of haircut at the end of June 2016 were €5.0 billion (circa 13% of Total Assets)

1.10 1.06 1.03 0.98 0.90 0.95 1.00 1.05 1.10 2013 2014 2015 1H16

1,861 1,791 1,699 1,737 1,969 1,955 1,865 1,897

500 1,000 1,500 2,000 2,500

2014 2015 1Q16 1H16

1,864 1,834 1,777 1,817 1,958 2,010 1,962 1,993

500 1,000 1,500 2,000 2,500

2014 2015 1Q16 1H16

26

Capital Ratios evolution

Consolidated Capital Ratios on «prudential perimeter» (phased-in) Phased-in Capital Ratios remained substantially stable: RWA increase caused by Loans growth in the quarter is offset by net profit accounted within the Equity Fully phased figures show a 20 bps CET1 ratio decrease both on Credem and Credemholding, due the to AFS valuation reserves reduction following Brexit event Consolidated Capital Ratios

• n Banking Group (phased-in)

Fully phased ratios: CET1 a 12.2%; Tier Total 13.9% Fully phased ratios: CET1 at 13.6%; Tier Total 15.1%)

11.1% 11.8% 13.5% 14.8% 13.8% 15.2% 11.1% 11.7% 13.9% 15.3% 13.4% 14.6%

2013 2014

Common Equity Tier 1 (CET1) Tier Total Capital

RWA 16,734 13,252 13,007

13.9% 15.4% 13.3% 14.6%

12,746

27

Disclaimer and Contacts

The manager responsible for preparing the company’s financial reports Mr. Paolo Tommasini

• f 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 presentation includes certain forward looking statements, projections, objectives and estimates reflecting the current views of the management

• f 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

• f 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

• f 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

• r otherwise, except as may be required by applicable law. All subsequent written and oral forward-looking statements attributable to the Company
• r persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.

Investor Relations Team

Daniele Morlini – Head of IR dmorlini@credem.it +39 0522582785 Paolo Pratissoli ppratissoli@credem.it +39 0522583029 Benedetta Levi blevi@credem.it +39 0522582580