CREDEM, 1H23 results approved: net profit +90.3%, loans +3.7%, 83,000 new clients

PRESS RELEASE

CREDEM, 1H23 RESULTS APPROVED: NET PROFIT +90.3%, LOANS +3.7%, 83,000 NEW CLIENTS

The Group is among the top five European banks for soundness according to stress tests

conducted by the European Central Bank

CONSOLIDATED

RESULTS

PROFITABILITY

• Consolidated net profit of €298.7 million (after the disbursement of €25 million in contributions to funds to support distressed banks). The result was up by 90.3% compared to the same period of the previous year(1) and was influenced by the positive trend of the net interest income and by the low cost of risk;
• ROE(2) 17.9%, ROTE(2) 20.8%;
• Operating income at €954.2 million (+38.6% compared to the end of
  June 2022(1)).

SOUNDNESS

• Indices at the top of the Industry in Italy and in Europe to protect customers and the market: Banking Group Common Equity Tier 1 Ratio(3) at 15.8%, Credemholding Common Equity Tier 1 Ratio(3) (prudential perimeter) at 14.4% compared to the minimum 7.56% assigned by the ECB(4);
• From the outcomes of the stress tests conducted by the ECB, in case of negative economic performance (adverse scenario), the impact on capital (Cet1(3)) for the Group would be less than 300 bps among the best in Italy and Europe;
• €1.4 billion of margin on regulatory capital requirements;
• Gross NPL Ratio(5) equal to 2.04%, compared to 2.91% average of Italian banks(6) and 2.24% average of European banks(6). Net NPL ratio at 0,94%;
• Annualized cost of risk(1) at 3 bps, best in class in the Industry.

BUSINESS GROWTH

• Nearly 83,000 new customers (+28.3% compared to new customers reached in the first half of 2022)(8);
• Customer loans(9) at €34.8 billion, +3,7% compared to 2022 (with a trend of almost 6 percentage points higher than the system(10), down by 2.2%);
• More than €1 billion of residential mortgages inflows (+45.1% compared to the end of June 2022);
• Customer funding net inflows of more than €2.8 billion(9), for a total amount of €93.7 billion (+8.9% YoY(1));
• Direct deposits from customers stood at 36.8 billion euros, up by more than 6% YoY(1), in sharp contrast to the system(10) which recorded a contraction of the aggregate of 2.3% in the same period.

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COMMERCIAL

BANKING

PRIVATE

BANKING

WEALTH

MANAGEMENT

PRESS RELEASE

• Commercial banking business unit(11): total funding reached €44.8 billion (+11.6% compared to June 2022(1)) and loans €25.6 billion (+3.2% YoY). Within this aggregate, in detail, the network of financial advisors achieved €8.4 billion of deposits (+9.9% YoY), €800 million of loans
  (+0.2% YoY) and hired 18 professionals from the beginning of 2023;
• New digital current account launched with an innovative service model enabling the possibility of choosing personal consultancy in a physical location or with a remote branch;
• The institute allocated 2.7 billion euro of subsidized loans for essential expenses of families and corporates affected by the flood in Emilia Romagna and Marche last May and activated moratoria on mortgages, leasing and personal loans as well as fundraising;
• Avvera (company active in mortgages, salary-backed loans and consumer finance): important contribution to the acquisition of new customers for the Group (nearly 32,000 new customers) and €1.1 million of loans disbursed and brokered (+50% compared to June 2022); €437 million of new brokered mortgage transactions (+28% YoY) and €319 million of special purpose loans disbursed (+95% YoY);
• Leasing e factoring: Credemleasing reached €570 million of total contracts, up by 2% vs the previous year. Credemfactor recorded €2.6 billion (+8.3% YoY) of gross receivables sold (turnover).
• Ongoing development of Credem Euromobiliare Private Banking, the Private bank of the Group dedicated exclusively to high net worth individual customers, whose creation was finalized last February;
• At June 2023(12), total assets (AUM, AUD, direct funding and customers loans) were equal to €39.8 billion with a total of 669 bankers;
• An important brand campaign to consolidate the institution's positioning with customers and stakeholders was launched;
• The company was selected by the Bank of Italy for innovation in financial services for the project to digitize M&A operations via blockchain.
• Ongoing development of investment solutions consistent with the needs and requirements of clients with a particular focus on sustainability: at the end of June around €8 billion of total assets of ESG investment products and services(13) were reached (+32% compared to the same period of 2022);
• The program of stable collaborations with international asset managers launched in the first half of 2023 was consolidated;
• Ongoing investments of Credem Private Equity for the growth of small and medium-sized Italian companies;
• Credemassicurazioni adopted important measures to support customers in areas affected by the flood in the month of May, including the suspension of insurance policy payments until the end of the emergency, and the activation of a contact center for free medical and psychological advisory and help to deal with housing problems;
• Credemvita continued the path of product development with a new offer specifically structured to meet customer needs in the complex market context that characterized the first part of the year.

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PRESS RELEASE

INNOVATION

PEOPLE

SUSTAINABILITY

• The development of digital services continued to facilitate the relationship between the bank and customers. More than 42 million transactions were made through digital channels (95% of the total) and more than 130,000 virtual interactions through customer service channels (mail, chat and messages);
• Credemtel, a Credem Group company active in the offer of digital services to companies and the Public Administration, entered the cyber security market signing a partnership agreement to manage the security of the technological systems of corporate clients.
• 146 hires to support the growth of the group;
• more than 85% of employees with a remote working contract;
• Ongoing training, with 18,000 days provided, an average of 2.7 days per capita, also remotely;
• One day of paid leave to Group members to carry out voluntary work in support of the areas affected by floods in May.
• The institute launched in May the second green bond issue, for institutional and professional investors, for an amount equal to €400 million. Great success from the market obtained, with requests for €2.2 billion, almost six times the offer;
• ESG evaluation criteria in remuneration policy were extended to all key personnel of the Group, as well as to executive directors;
• A mandate with Cassa Depositi e Prestiti (CDP) was signed to enable corporate clients to access the Sustainable Growth Fund to finance investments in sustainability projects, digital transition, and environmental purposes;
• A widespread experimental photovoltaic project was launched: in the three-year period 2023-2025, in the event of full success, it envisages the installation of about 60 photovoltaic systems on Group owned properties distributed throughout the country;
• Ongoing improvement of climate risk analysis on credit policies;
• Within the strategic planning of the Group, a project to define the decarbonisation strategy of the credit and securities portfolio was launched.

Today, the Board of Directors of Credem, chaired by Lucio Igino Zanon di Valgiurata, approved the results of the first half of 2023.

Strengthening of commercial banking with heavy investments in the development of solutions to integrate the digital and physical component in the relationship with both private and corporate clients, strengthening of the private banking sector with the full activity of the Group Private Bank, ongoing development of the activity of the Group companies specialized in asset management, insurance protection, loans to retail and corporate and technological services, focus on innovation, sustainability and investments in people. These were the main lines of strategic development that Credem Group followed in the first part of the year characterized by a very challenging scenario for the banking system, with the aim of further consolidating its business model characterized by the strong diversification of revenue sources and constant attention to sustainable development.

The period, in detail, closed with a consolidated net profit of €298.7 million (almost double the €157 million in the first half of 2022(1)), customer deposits(9) stood at €93.7 billion (+8.9% compared to the

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PRESS RELEASE

previous year (1)), loans(9) at €34.8 billion (+3.7% compared to the same period of 2022) and nearly 83,000 new customers (+28.3% compared to new clients reached in the first half of 2022)(8).

Credem Group was confirmed once again by the European Central Bank as one of the soundest institutions in Europe. In detail, in the context of the stress tests published on Friday July 28, aimed at verifying the European banking system's resilience to adverse scenarios, placed the Group among the best European institutions, both among those included in the sample of the European Central Bank (ECB) and among those involved by the European Banking Authority (EBA). In detail, Credem has an impact on the solidity capital ratios, deriving from a potential highly negative prospective economic scenario, of less than -300 bps, which compares with approximately -660 bps of the 41 banks in the reference sample (ECB) and with -460 bps of the 57 banks in the Euro area of the EBA scope (-480 bps the overall average).

This result adds up to the decision of the ECB in December 2022 to maintain for 2023 the Pillar 2 (P2R) requirement of Credito Emiliano at 1%, the lowest in Italy and among commercial banks in Europe, with the consequent overall 2023 SREP requirement (which indicates the minimum level of capital to be reach for the activities carried out by the Group) at 7.56%, confirming the solidity of the Group at the top of the Industry.

The General Manager Angelo Campani will present the results to the financial community tomorrow August 8 at 10 am.

"The social and economic dynamics that we experienced in the first part of the year, in which the rise in inflation and the sudden increase in interest rates continued to strongly influence households and companies, further confirming that all of us, savers, corporates, banks themselves, must learn to deal with a constant change in the scenario in which we operate", Angelo Campani, Credem General Manager, declared "In this scenario, Credem plays a decisive role. We want to strengthen clients' confidence and help them to make the appropriate decisions with a medium- and long-term view. I am indeed convinced", Campani continued, "that in this way a virtuous circle can be created, that benefits all and can help facing even the most difficult moments in a positive way. We closed one half year with extremely positive results which are the result of our broad and diversified business model, among the few present on the Italian market, which allows us to maintain significant profitability in any scenario. We will go on working with optimism and determination in the coming months", Campani concluded, "strengthened by the commitment that all people of the Group put in place every day to be a reference point for our customers".

> MAIN CONSOLIDATED RESULTS

• The first half of the year closed with a consolidated net profit at €298.7 million (+90.3% YoY(1)), after the disbursement of €25 million in contribution to funds to support distressed banks. The result was influenced by the positive trend of the net interest income and the cost of risk still at a low level;
• the Group continued to support the local economy with customer loans(9) which reached €34.8 billion, with an increase of 3.7% compared to the same period of 2022 (+€1.2 billion in absolute value), with a trend of almost six percentage points higher than the system(10) (-2.2% in the same period), preserving a strong focus on asset quality;

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PRESS RELEASE

• residential mortgages inflows were €1,098 million (+45.1% compared to the end of June 2022);
• nearly 83,000 new customers were acquired (+28.3% compared to the first half of 2022)(8) and net inflows(9) amounted to more than €2.8 billion reaching a total of €93.7 billion (+8.9% YoY(1)). Direct deposits from customers stood at 36.8 billion euros, up by more than 6% YoY(1), in sharp contrast to the system(10) which recorded a contraction of the aggregate of 2.3% in the same period;
• asset quality remained at the highest levels of the industry with Gross NPL Ratio(5) further decreasing, despite being already the lower of the market, at 2.04%, compared to the 2.91% average of the significant Italian banks and to the 2.24% average of European banks(6), with coverage levels among the highest in the industry (coverage including the shortfall(13) at 62.6% on non-performing loans). Net NPL ratio was 0.94%. The annualized cost of risk(7) was 3 bps;
• the Group reaffirmed its strong capital soundness, in favor of all stakeholders, with Banking Group CET1 Ratio(3) at 15.8% despite the strong support to the economy and to the customers' needs.
  Credemholding CET1 Ratio(3) (prudential perimeter) stood at 14.4% with 680 bps compared to the 2023 minimum regulatory level (including the additional SREP requirement(4) assigned by the European Central Bank) of 7.56%. ROTE(2) was 20.8%, ROE(2) 17.9%.

> COMMERCIAL BANKING

• Commercial Banking Business Unit(11) (512 including retail branches, corporate centres, small business centres and the network of 523 financial advisors) achieved a total of 44.8 billion euro in funding (+11.6% compared to the end of june 2022(1)) and €25.6 billion in loans (+3.2% YoY). Within this aggregate, in detail, the network of financial advisors reached €8.4 billion of funding (+9.9% YoY(1)), €800 million of loans (+0.2% YoY) and hired 18 professionals;
• the bank launched in June a new service model for individuals based on the possibility of opening a current account and requesting a loan online in complete autonomy without having to go to the branch with the possibility of choosing between personal advice in any fiscal branch, or referring exclusively to a remote branch. This evolution strategy of the omnichannel service model aims at an increasingly strong interaction between the physical and digital components;
• after the adverse weather conditions that hit various provinces of Emilia Romagna and Marche, Credem Group promptly implemented the moratoria, up to a maximum of 12 months, in favor of retail and corporate in the area concerned, holders of mortgages relating to buildings or commercial, agricultural and production activities involved, as well as the possibility of requesting the suspension of leasing and personal loans. The institute also made available a €2.7 billion plafond to support basic necessities with favorable conditions and simplified disbursement procedures;
• Avvera (company active in mortgages, salary and pension-backed loans and consumer credit): reached €1.1 billion in business volumes at the end of June 2023 (+50% YoY) thanks to a network of
  727 active agents and collaborators, in addition to 2,126 affiliated operators. People and their growth represent a cornerstone of Avvera's strategy. Since the beginning of the launch of the project for the new company, more than 113 people have been recruited (of which 10 since the beginning of the year), mostly from companies in the consumer credit market, with an average age of 39 years. In the area of mortgages, Avvera closed the first half with €437 million of new intermediated

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