Groups Results 1Q2015 1Q15 Highlights The Group continued to - - PowerPoint PPT Presentation

Group’s Results – 1Q2015

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The Group continued to develop its business with Total Customers’ Deposits (Direct Deposits, AUM, Insurance Reserves and AUC) growing by 2.5 billion (+5.0%) in the quarter only and by €6 billion (+11.8%) YoY. In particular AUM was up by 1.7 billion in the quarter (+8.5%) and by €3.5 billion YoY (+18.7%) Loan to Customers, penalized by the usual seasonality (-3.1% QoQ), confirmed to be strong YoY (+6.6% corresponding to an increase of €1.3 billion) Balanced expansion of Loans and Deposits (LtD ratio at 1.01 further down from 1.06 at the end of 2014 and 1.10 at the end of 2013*) and sustainable capital position (CET1 ratio a 11.3% including the result of the period**) Sharp reduction in the exposure to Italian Government Bonds that moved in the quarter from 56% to 13% in the banking group total securities’ portfolio, with a switch in revenues from Net Interest Income to Trading. Such a choice is coherent with the scenario that materialized after the beginning of the QE, where it is rated unlikely the possibility of a future appreciation of government bonds’ yields Increase of the coverage related to Unlikely to Pay aggregate with a Coverage Ratio on Total Impaired Loans that reached 42.3% compared to 40.7% at the end of 2014 Provisioned €5.1 million for the initial contribution to the Single Resolution Fund

1Q15 Highlights

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

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Income Statement

• Euro. million

1Q14 4Q14 1Q15 % vs. 1Q14 % vs. 4Q14 Operating Income 286.7 261.1 353.1 23.2 35.2 Operating Income net of Trading and Performance Fees 247.5 247.7 253.0 2.2 2.1 Operating Costs

• 166.7
• 167.1
• 175.5

5.3 5.0 Gross Operating Profit 120.0 94.0 177.6 48.0 88.9 D&A

• 9.2
• 9.9
• 9.5

3.3

• 4.0

Net Operating Profit 110.8 84.1 168.1 51.7 99.9 Net Adj. To Loans

• 13.5
• 37.0
• 36.8

172.6

• 0.5

Provision for Risks and Charges

• 2.3
• 3.3
• 9.4

n.a. n.a. Extraord. Income/Expenses

• 1.6

0.2 5.4 n.a. n.a. Pre Tax Profit 93.4 44.0 127.3 36.3 189.3 Taxes/Minorities

• 36.4
• 20.7
• 43.3

19.0 109.2 Profit for the Period 57.0 23.3 84.0 47.4 260.5

• The Profit for the Period was

remarkably up in the quarter, mainly because of Trading performance

• «Core Revenues» components

however confirmed the growth trend thank to increasing commissions 219 223 225 231 230 232 229 244 248 250 250 248 253 210 220 230 240 250 260 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 Operating Income (net of Trading and Performance Fees)

Euro, Million

4 Euro, Million

Net Interest Income (1/3)

Net Interest Income was down by 11% QoQ following the choice of disposing a significant portion of the Italian BTPs portfolio. Such decision was taken deeming unlikely a future appreciation of government bonds’ yields given the persisting downward trend interest rates and

• f the btp-bund spread

In terms of Customers’ Spread, 1Q15 level was slightly up, over the 4Q14 low. The movement was driven by a reduction of cost of funding that was able to compensate the continuous decrease

• f the average loans’ rate

Net Interest Income Quarterly Customers’ Spread (Credem SpA management accounting) Euribor and BTP/Bund spread evolution

bps

123.6 122.2 125.6 119.4 106.2 70 80 90 100 110 120 130 1Q14 2Q14 3Q14 4Q14 1Q15

2.09 2.03 2.22 2.38 2.36 2.22 2.11 2.14 3.35 3.28 3.30 3.38 3.31 3.12 2.96 2.92 1.26 1.24 1.08 1.00 0.94 0.90 0.85 0.78 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 spread average loan rate average deposit rate 0.21% 0.23% 0.24% 0.30%0.31% 0.17% 0.08% 0.05% 280 259 236 196 159 154 146 116 50 100 150 200 250 300 0.0% 0.1% 0.2% 0.3% 0.4%

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

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Net Interest Income (2/3)

The re-mix of the securities' portfolio is quite evident by looking at the comparison with FY2013 and FY2014 situations: the exposure to Italian govies moved from 56% to 13% in a quarter while the size of the overall portfolio remained substantially unchanged «Total exposure to Italy» moved from 67% to 23% in the quarter paired with a strong increase in the exposure to EFSF, BEI and Northern European countries’ government bonds Credem’s strategy is explained by financial context where the QE had the effect of reducing massively rates in some countries (Italy among those), making it marginal the possibility

• f a further appreciation of treasury

bonds issued by such countries Variazione degli impieghi alla clientela Securities’ Portfolio Breakdown

(Credem SpA management accounting)

5,902 6,219 6,154 Banking Group* securities’ portfolio(€ mln)

(*) Excluding Credemvita

13% 15% 17% 10% 11% 10% 16% 18% 60% 62% 56% 13% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2013 2014 1Q15 Other non-Italy Other Italy

• Gov. Other/ EFSF/ EIB
• Gov. Italy

1.29 1.22 0.92 0.85 0.78 2.09 1.96 1.68 1.53 1.41

• 0.50

1.00 1.50 2.00 2.50 2012 2013 2014 4Q14 1Q15 Credem: Average deposit rate Industry: Average deposit rate 2.23 2.11 2.26 2.11 2.14 1.87 1.82 2.10 2.12 2.19 0.00 0.50 1.00 1.50 2.00 2.50 2012 2013 2014 4Q14 1Q15 Credem: spread Industry: spread 3.52 3.33 3.18 2.96 2.92 3.96 3.79 3.79 3.65 3.60

• 0.50

1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 2012 2013 2014 4Q14 1Q15 Credem: Average loan rate Industry: Average loan rate 6 %

Net Interest Income (3/3)

Evolution of Average Deposit Rate

(Credem SpA management accounting)

Even if slightly up, the spread’s comparison with the Industry is still penalizing for Credem Group’s commercial strategy, more oriented to loans’ growth, had the effect

• f

increasing the differential with the Industry in terms of average loan rate to ~68/69 bps compared to the historical ~45bps. On the

• ther hand, the already very low cost of funding

is difficult to be pushed down further

0.80% 0.74% 0.76% %

Evolution of Average Loan Rate

(Credem SpA management accounting)

• 0.46%
• 0.44%

Evolution of Average Customers’ Spread

(Credem SpA management accounting) 0.29% 0.36%

• 0.62%

Source: ABI Monthly Outlook April 2015

0.68% 0.14% %

• 0.69%
• 0.02%
• 0.68%

0.63%

• 0.05%

52 51.9 51.9 54.9 58.1 61.2 60.9 61.8 68.5 10.5 9.9 7.3 9.7 11.8 13.4 11.6 9.7 24 51.3 49.2 49.9 52.5 49.5 47.9 48.4 52.5 49.3 4 4.5 4.5 5.6 4.5 4.9 3.8 4.3 5 27.6 11.8 5 3.4 39.1 5.4 13.2 3.4 97.1 10.7 10 3 50 100 150 200 250 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 € Million Performance Fees Trading Other Banking Services Comm. Insurance Income Management & Brokerage Comm.

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Non Interest Income (1/2)

The disposal of a substantial portion of the securities’ portfolio, had a significant impact on Non Interest Income because of the Trading performance Even net of such non recurrent event, the component of revenues related to commissions continued to grow, as a result of the excellent performance of Management & Brokerage Commissions and the consistent trend showed by Banking Commissions

117.8 115.5 113.6 122.7 123.9 NII net of Trading and Performance Fees 145.8 127.7 118.7 136.8 163.1 133.8 127.4 138.9 124.7 141.7 128.3 146.8 246.9

Non Interest Income: Quarterly Evolution

11.5% 8.7% 7.5% 49.3% 49.2% 46.8% 33.1% 35.2% 38.4% 6.0% 6.9% 7.3% 0% 20% 40% 60% 80% 100% 2013 2014 1Q15 Money Market Bonds Balanced/ Flexible Equity 20,923 24,616 26,866 15,000 20,000 25,000 30,000 2013 2014 1Q15 8

Non Interest Income (2/2)

The progressive growth of Management & Brokerage Commissions was once again driven by the continuous volumes’ expansion: AUM and Insurance Reserves were up by 28% compared to FY2013 and by 10% QoQ The overall growing trend is paired with a positive «mix effect» showed by a breakdown privileging the most remunerating asset classes in term of risk/reward, obviously associated to the highest fee’s levels Evoluzione AUM and Insurance Reserves

Euro, Million

+28% Mutual Funds & SICAVs Breakdown by Asset Class (Credem SpA management accounting)

1,0021,006 885 795 750 770 785 799 500 1,000 1,500 5,993 5,740 5,5445,5195,6045,609 5,7635,792 5,200 5,400 5,600 5,800 6,000 6,200 2008 2009 2010 2011 2012 2013 2014 1Q15

113 113 109 122 121 54 52 48 45 55

50 100 150 200 1Q14 2Q14 3Q14 4Q14 1Q15 Personnel costs Other administrative costs

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Operating Costs

Euro, Million

Operating Costs evolution (+5.3% YoY) mirrors the Group’s investment strategy with Other Administrative Costs substantially stable YoY and Personnel Costs growing significantly (+6.9% YoY) The focus on distribution strengthening is evident by looking at the continuous expansion of all networks 166.7 164.2 Employees Financial Advisers Creacasa and Salary Backed Loans Agents 156.8 167.1 175.5

158 217 272 359 353 394 394 200 400 600

Operating Costs: Quarterly Evolution Distribution Networks

67% 73% 77% 77% 78% 84% 84% 50% 60% 70% 80% 90% 2009 2010 2011 2012 2013 2014 1Q15

% of loans to corporate customers in top 4 rating classes

7,484 7,667 8,114 8,296 8,742 8,367 9,834 9,217 1,941 1,935 2,001 2,042 2,014 2,029 2,100 2,098 5,534 5,845 6,282 6,241 6,127 6,091 6,235 6,242 2,577 3,323 3,324 3,370 3,056 3,061 3,339 3,278 3,000 6,000 9,000 12,000 15,000 18,000 21,000 2009 2010 2011 2012 2013 1Q14 2014 1Q15

Short-Term Loans Leasing Residential Mortgage Other Loans

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The usual seasonality penalized the aggregate QoQ that however continued to grow 6.6% YoY Residential mortgages grew for the fifth quarter in a row, while m/l term loans to corporate clients relented slightly QoQ, remaining however strongly up YoY (Leasing +3.4% YoY and Other Long Term Loans +7.1% YoY, respectively) Credit quality continued to stand at an excellent level, with more than 84% of corporate loans to customers belonging to the best 4 rating classes

Loans to Customers

17,536

€, Mil.

18,770 19,721 19,949

Loans to Customers (B.S. – Line 70)

17,536 18,884 20,643 19,938 19,938 19,548 21,508 21,695 19,548 20,834 19,995 21,347

Loans to Customers (net of Repos with Institutional and Loans to Group’s SPVs) Corporate Loans Distribution by Rating

(Credem SpA management accounting)

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Residential Mortgages: Comparison with the Industry

In the first quarter 2015 new Residential Mortgages inflows increased by more than 50% YoY, also sustained by the reduction of cost of funding Residential Mortgage’s market share stood at the top since 2008, demonstrating that the

• verall loan volumes’ growth is not limited to

the corporate segment only Inflows: +52% Residential Mortgages Inflows

(Credem SpA management accounting)

Residential Mortgages’ Stock: Market Share

Source: ABI for market shares (*) Data as at February 2015

2.10% 2.18% 2.15% 2.16% 2.22% 2.23% 2.00% 2.05% 2.10% 2.15% 2.20% 2.25% 2010 2011 2012 2013 2014 1Q15*

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Euro, Million 2011 2012 2013 2014 1Q15 Sight/ Saving Deposits 12,005 13,066 13,625 15,335 15,433 CD and Other Deposits 493 256 260 333 369 Repos 43

• Direct

Deposits 12,541 13,322 13,885 15,668 15,802 Bonds

• Institutional
• Retail

4,817 1,721 3,096 4,149 879 3,270 4,187 1,131 3,056 4,718 2,105 2,613 4,772 2,300 2,472 Direct Dep. & Retail Bonds 15,637 16,592 16,941 18,281 18,274 Insurance Reserves 2,506 2,617 3,236 4,409 4,942 Portfolio Management 3,859 3,747 3,766 4,481 5,061 Mutual Funds 3,062 2,944 3,051 3,420 3,733 SICAVs 4,454 5,047 5,314 5,882 6,064 Other and Third Parties products 3,415 4,478 5,556 6,425 7,066 AUM 14,790 16,216 17,687 20,208 21,924

Indirect Deposits growth is outstanding with an AUM increase by €1.7 billion (+8.5%) and an Insurance Reserves increase by €0.5 billion (+12.1%) in the quarter, while the aggregate «Direct Deposits & Retail Bonds» remained substantially stable Thank to the expansion of the customers’ base it was possible to combine the loan’s growth with an improvement

• f

the liquidity profile, showed by a LtD ratio that is progressively approaching 1 (now at 1.01 vs. 1.14 in 2011) Loan to Deposit Ratio (*)

(*) Loans are net of Repo with Institutional and loans to Group SPVs, Deposits include bonds to Institutional

Deposits, Bonds and AUM

1.14 1.14 1.10 1.06 1.01 1.00 1.05 1.10 1.15 2011 2012 2013 2014 1Q15

774.2 403.6 114.4 807.8 423.0 113.6 837.9 416.0 111.1 100 200 300 400 500 600 700 800 900 Gross NPLs Gross Unlikely to pay Gross Past Due € Million 1Q14 2014 1Q15

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Credit Quality

3.8

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

8.3 2.0 0.6

• The Impaired Loans aggregate remained

under control with quarterly inflows mirroring the improvement of the macro- economic scenario as well as the quality of the portfolio

• In terms of gross NPL Ratio, the gap

between Credem and the industry enlarged, evidencing the fact that at a macro level still the system is not improving its performance in terms of new impaired loans generation

3.7 9.2 1.9 0.5 3.9 9.8* 1.9 0.5

70 25 27 42 46 26 21

• 10

20 30 40 50 60 70 80 2009 2010 2011 2012 2013 2014 1Q15

Gross Impaired Loans Quarterly Average Gross Impaired Loans’ Net Inflows (€, Million)**

Source: ABI; internal calculation on Bank of Italy figures (*) Value at November 2014 (source: ABI Monthly Outlook) figures (**) FY amounts were calculated according to the following formula: (Gross Impaired Loans as at the end of the year + NPLs disposed – Gross Impaired Loans as at the end of the previous year) divided by 4

36.3 35.8 35.0 38.7 40.7 42.3 30 32 34 36 38 40 42 44 2010 2011 2012 2013 2014 1Q15 57.4 56.0 55.4 58.2 58.6 59.2 50 52 54 56 58 60 2010 2011 2012 2013 2014 1Q15 14

Net Impaired Loans have been substantially stable over the last 5 quarters, proving the high quality of the porfolio as well as the prudent provisioning policy The coverage increased significanly on NPLs (close to 60% now) but especially

• n Total Impaired Loans (from 40.7% to

42.3% QoQ)

Euro, Million 2013 1Q14 1H14 9M14 2014 1Q15 Net NPLs 318.9 327.1 337.4 334.4 341.7 Unlikely to Pay 349.6 365.1 355.9 362.8 348.9 Net Past-due 108.3 106.5 116.9 100.2 96.6 Total Net Impaired Loans 788.4 776.8 798.7 810.2 797.4 787.2

Impaired Loans’ Coverage (1/2)

Net Impaired Loans Total Impaired Loans’ Coverage (%) NPL’s Coverage (%) Net Impaired Loans

43% 42% 40% 41% 39% 37% 35% 34% 34% 27% 61% 59% 59% 57% 56% 56% 50% 48% 43% 39% 29% 16% 23% 18% 20% 19% 18% 20% 25% 16% 0% 10% 20% 30% 40% 50% 60% 70% Player 1 Credem Player 2 Player 3 Player 4 Player 5 Player 6 Player 7 Player 8 Player 9 Total Impaired Loans Coverage ratio NPLs Coverage ratio Other Impaired Loans Coverage ratio 15

Impaired Loans’ Coverage (2/2)

Impaired loans coverage (comparison with main competitors*) By increasing the coverage of Unlikely to Pay and Past Due Loans (=Other Doubtful Loans) and taking the total coverage of the resulting aggregate to 16% (from 14%), the Group stands now at the top among the other players with a similar business model

(*) Values for Credem refer to 1Q2015 while values for competitors refer to FY2014. The panel for the comparison is composed by: UBI.

• BPER. Banco Popolare. Banca Popolare di Milano. Banca Carige. Credito Valtellinese

59 27 31 52 55 70 47 37 39 41 45 39

• 10

20 30 40 50 60 70 2013 1Q14 1H14 9M14 2014 1Q15 Cost of risk Cost of risk (net of "non reccurrent" items)

21 31 70 7 19 20 35 35 62 34 27 44 59 55 10 20 30 40 50 60 70 80 20012002200320042005200620072008200920102011201220132014 16

Cost of Risk (bps)

Cost of Risk

The sharp increase of the cost of risk in the quarter was entirely due to the higher coverage of Unlikely to Pay and Past Due Loans If normalized, the cost of risk would have been 39 bps, in line with 1Q14 Cost of Risk: history (bps)

Parmalat Crack

189 8 6,022 4,494 521 21,695 194 8 5,952 4,696 373 21,347 7,000 14,000 21,000

• Fin. Assets

held for trading*

• Fin. Assets at

fair value*

• Fin. Assets
• av. for sale*
• Fin. Assets

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

2014 1Q15 2,105 3,436 435 1,500 735 15,668 2,613 4,409 2,377 2,300 2,935 443 500 735 15,802 2,472 4,942 2,405 5,000 10,000 15,000 20,000 2014 1Q15

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Assets & Liabilities

Assets (Euro, Million) Liabilities (Euro, Million) On the liabilities’ side, short term funding sources («Other- Institutional» aggregate) reduced. Also, ECB exposure decreased by €1 billion in the quarter even if the Group have room to increase its TLTRO funding by more than €3 billion Assets did not show major changes in the quarter, with just an expected reduction in Loans, because of the seasonality, and a securities’ portfolio substantially stable in volumes, but deeply different in terms of mix

(*) 1Q15 figures based on internal calculation

Equity Institutional Clientele

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Liquidity Ratios

NSFR LCR

Source: internal calculation on 31 march 2015 figures

124% 116% 122% 50% 60% 70% 80% 90% 100% 110% 120% 130% 2013 2014 1Q15E 149% 179% 172% 50% 70% 90% 110% 130% 150% 170% 190% 2013 2014 1Q15 Both ratios showed levels remarkably above future thresholds set by the regulation, with a NSFR ratio increasing significantly compared to FY14 ECB eligible securities at the end of 1Q15 were €4,2 billion (12% of Total Assets)

1,860.8 1,838.4 1,969.1 2,134.6 630 799 500 1,000 1,500 2,000 2,500 2014 1Q15 CET1 Tier Total Capital Excess Capital

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Consolidated capital ratios

Capital ratios based on a consolidation perimeter including Credemholding, penalized by third parties’ shareholders’ equity partial contribution (Credemholding hold only 77% of Credem’s equity), remain substantially stable not including 1Q15 Net Profit for the Period Including quarterly capital generation, the CET1 would be up to 11.3% in comparison with 11.1% as at the end of 2014 Credemholding consolidated capital ratios 11.1% 11.8% 11.0% (11.3% including Net profit for the Period) 12.8% (13.1% including Net profit for the Period) Capital ratios «fully phased» as at 10.2% (CET1) and 12.3% (Tier Total) not including 1Q15 Net profit for the Period

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Free Float More than 3,000

• ther shareholders

76.9% 23.1% 75.4% 24.6%

Credemholding

Source: Internal data as at 31 March 2015

• Credem is the largest privately-
• wned bank in Italy

Stable shareholders’ base

Shareholders’ Pact Cofimar S.r.l. 20.0% Max Mara Finance S.r.l. 8.3% Max Mara Fashion Group S.r.l. 8.1% Others 39.0%

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100% 100% 100% 100%

Wealth Management Retail & Commercial Banking Other

100% 100% 100.0% 100% 50% 100% 100% 100%

A business model based on Retail & Commercial Banking

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Gruppo CREDEM n° filiali e quota di mercato sportelli 19 72 27 127 39 5 8 27 3 44 2 50 32 62 5 9 7 4 1 Gruppo CREDEM n° filiali e quota di mercato sportelli

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Number of branches per region

A distribution network with a national footprint

The group has a national coverage serving 19 regions and 91 provinces of Italy

2011 2012 2013 2014 1Q15 Territorial Network Branches 560 557 544 542 543 Corporate Centres 41 42 42 42 42 Credem Points 34 31 33 35 36 Banca Euromobiliare financial stores 16 14 14 15 15 FA and Agents Financial Advisers 795 750 770 785 799 Creacasa’s Agents 272 279 250 275 275 Salary backed loans Agents 80 103 119 119

Strong presence in the Emilia-Romagna region (where is located Group’s headquarter): one of Italian wealthiest region, accounting for about 10% of Italian GDP

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Disclaimer and Contacts

Investor Relations Team

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

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 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

• perations, 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
• f 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

• bligation 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.