Credem, shareholders meeting approved 2019 results: net profit at €201.3 million (+7.8% YoY)

PRESS RELEASE

CREDEM, SHAREHOLDERS MEETING APPROVED 2019 RESULTS: NET PROFIT AT €201.3 MILLION (+7.8% YoY)

• Innovation, people and sustainability at the center of the strategy;
• Strong growth YoY of all main aggregates: net profit +7.8%, loans(1) +4.7% and deposits(1) +9.8%;
• soundness: Credem Group among the best European banks. SREP(2) requirement at 8%, the lowest value among European commercial banks directly supervised by ECB;
• Implemented relevant initiatives to sustain clients, employees and hospital and care facilities all over the country;
• 2019 net income fully allocated to reserves, following ECB recommendations, furtherly improving its capital position and releasing €1 billion of new potential disbursements of loans reaching €8 billion of credit facilities to support households and corporate customers.

Today, Shareholders Meeting approved 2019 individual and consolidated results, with consolidated net profit at €201.3 million, +7.8% YoY.

"Today, Shareholders approved consolidated results of an extraordinarily positive year ", said Lucio Igino Zanon di Valgiurata, Chariman of Credem," that once again confirmed the bank's ability to constantly generate value and profitability over time. Women and men who work in the Group", continued Zanon, "represent the engine that enabled us to achieve such important results. We have always believed in the importance of people and we had a further confirmation also in this current difficult situation; together with the investments in technology, which enabled us to guarantee the continuity of the service while protecting everyone's health, people will be the key element that will allow us to face the great challenges expected in the next months. I want to thank in particular those who are, on a daily basis, at the forefront of the relationship with customers and guarantee constant assistance and support", added Zanon. "I also express deep appreciation for the sense of responsibility shown by the Shareholders who have accepted the dividend recommendations of the authorities, sustaining households and corporates and keeping a high commitment in pursuing activities to support the recovery of the Italian economy".

Since the beginning of the crisis, Credem responsively implemented a large number of initiatives to be close to families and corporates and to protect health and safety of employees and customers:

• loans and credit lines payments suspension (moratorium), provided by the Legislative Decree Cura Italia to micro, small and medium-sized companies;

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• accession to the ABI Credit Agreement for SME companies, that the Group voluntarily extended to all corporates, including larger ones;
• activation of a remote service to collect suspension requests of loans, mortgages, and credit facilities provided for by the DL Cura Italia or by the ABI Agreement via email or PEC;
• allocation of a of pre-approved loans plafond for SMEs to obtain additional liquidity for payments, salaries and other needs of the production cycle;
• access to the solidarity fund for first-home loans holders, therefore allowing the suspension of the amortization plan up to 18 months;
• allocation of personal loans aimed at financing personal or family needs, or of credit lines on credit cards to meet small financing needs for private customers;
• Credemassicurazioni, the non-life insurance company (owned 50% by Credem Group and 50% by Reale Mutua Assicurazioni), expanded its coverage in favor of 90 thousand subscribers of policies. The latter provide daily hospitalization compensation and extend without any formality the guarantee even in case of quarantine at home, imposed by a positive result in Coronavirus test (COVID-19), since the beginning of the emergency;
• promotion of afundraiserto support Civil Protection with the aim to purchase ventilators, lung respirators and equipment for intensive care units throughout the country; Credem will double the total amount coming from the Group accounts, up to 1 million euro (the fundraiser is added to the other initiatives carried out, independently and privately, by the Group);
• minimized the occasions of direct contact between customers and branches staff by managing meetings through digital tools (such as the extension to all customers of video call services and web collaboration, allowing clients to receive advice on products and services even remotely and with any device);
• the significant investments in technology and innovation, made during last years, allowed a considerable increase in the use of smart working, that passed from 2 thousand people (over 30% of the workforce) for 2 days a week at the end of 2019 week to over 5,400 people at the end of March 2020 (over 85% of employees), up to 5 days a week: in doing so, within few hours thousands of private homes were transformed into bank governance and customer relationship centers. Via Internet banking, remote working, video calls and contact center, all essential customer services were ensured remotely. At same time, such measures allowed branches to be less crowded and therefore safer, and only used for urgent matters.

In 2019, Credem Group reaffirmed a strong growth strategy, with particular focus on investments in innovation and technology, on the development of people as Group strategic asset and on the growing spread of sustainable activities at all levels, from investment services to initiatives for environmental protection. More in detail, the Group strengthened its bancassurance model, that proved to be essential for the Group and particularly effective in managing customers' needs, with insurance reserves growing by 6.8% YoY at €7.4 billion, and premiums of life and non-life protection products at €62 million, +17% YoY. The Group also continued to support the country's economy, with loans(1) up by 4.7% YoY (compared to the industry performance(3) which performed zero growth in the same period) reaching €26.7 billion. New residential mortgages, in particular, showed record- high inflows of €1,464 million (+66% YoY). Group's Total Funding reached an increase of 9.8% YoY and amounted to €84.6 billion, while Group Customers' Funding(1) was +9.7% YoY and amounted to

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€71.6 billion. AUM reached €28.1 billion (+12.6% YoY). Group's mutual funds and SICAVs were particularly positive (+14.9% YoY). In 2019, the high profitability was also driven by the growth of the main balance sheet aggregates, preserving asset quality that remained at the top of the Industry, with NPL Ratio(4) to 3.76% compared to 7.3% of the average of the significant Italian banks(5). Finally Coverage ratios stood at the highest levels in the Industry (Coverage ratio including shortfall(6) at 62.9% on NPL and at 85.4% on Bad Loans). Cost of Risk (7) remained remarkably low at 24 bps.

Credem Group - 10 year growth

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2010- 2019

Net profit	78	96.6	121.2	115.9	151.8	166.2	131.9	186.5	186.7	201.3	+158%
(€, million)
Operating Income	962	968	971	995	1,068	1,127	1,106	1,148	1,157	1,204.5	+25.1%
(€, million)
Loans to Customers	18,884	19,995	19,948	19,938	21,508	22,649	23,687	24,720	25,497	26,684	+41.3%
(€, million)
Total Funding	57,499	53,539	52,095	55,369	62,801	69,254	73,989	79,023	76,995	84,559	+47%
(€, million)
CET1 Ratio	8.6%	8.7%	9.4%	9.9%	11.1%	13.5%	13.2%	13.7%	12.7%	13.5%	----
People	5,544	5,519	5,604	5,609	5,763	5,899	6,068	6,140	6,195	6,202	+11.9%

Shareholders Meeting accepted the proposals of the Board of Directors held on April, 9th, to allocate 2019 net income to extraordinary reserve following ECB recommendations after COVID-19 pandemic. Shareholders responsibly conform to ECB recommendations despite the dividend proposal was already prudent compared to the relevant economic results achieved in 2019 and fully consistent with the maintenance of the Group's sound capital position. Indeed, the well-knownGroup capital soundness was recently reaffirmed by ECB, that required Credem to maintain the lowest additional capital requirement among European commercial banks under direct ECB supervision; moreover, the Group has always shown a forward-lookingapproach in allocating the majority of its profits to support loan growth and the Italian economy. In any case, the Group has always showed a prudential dividend payout, in line with its mission of creating value over time, despite managing to constantly distribute dividends in the last 10 years for a total of €500 millions, without any need to perform capital increases.

Following the decision of allocating FY19 net income to extraordinary reserves, Banking Group consolidated capital ratios strengthened furtherly, with FY19 CET1 ratio that reached 15.3%, increasing by 49 bps(8). The additional capital, deriving from the allocation of 2019 net income to

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reserves, represents the equivalent of €1 billion of new potential disbursements of loans. Therefore, the recent credit facilities put in place by the Group to support families and corporates grew, reaching over €8 billion and helping the bank to furtherly contribute to the recovery of the Italian economy. On top of that, it is to be remarked that the Group has constantly and materially supported the economy of the Country in the last 10 years, during which it has never failed to provide its contribution to support customers, with loans growing by more than 50%.

In accordance with the supervisory provisions on such matters, the Shareholders' Meeting then approved both the Group's Remuneration Policies implemented in 2019 and the one proposed for 2020, defining terms and criteria of the compensation schemes designed for the board members, employees, and staff of Credito Emiliano and all the subsidiaries, as well as the increase of the variable component on the fixed one from 1:1 to 2:1 with regard to the individual compensation designed for a specific category of employees (No 106 employees both of Credem and all subsidiaries). Furthermore, the Shareholders' Meeting also approved the treasury shares based remuneration system for the key personnel.

***

In accordance with paragraph 2 of Article 154-bis of the Consolidated Law on Finance (D. Lgs. 58/98 "Testo Unico delle disposizioni in materia di intermediazione finanziaria"), the Financial Reporting Manager Paolo Tommasini declares that the accounting information, both individual and consolidated, contained in this press release corresponds to document results, books and accounting records.

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For additional information about Credem and the other companies in the Group, please visit www.credem.it. On the Investor Relations page it is available the presentation of 2019 consolidated results.

(*) ALTERNATIVE PERFORMANCE INDICATORS

Credem Group adopts a set of Alternative Performance Measures ("APMs") in order to enhance a deeper comprehension of the information regarding the economic and financial trends. At this linkis available a table illustrating the definition and the calculation of each APM used by the Group, as well as a reconciliation with the lines in the financial reports and related comments.

NOTES:

1. Loans to Customers did not include repos with "Cassa di Compensazione e Garanzia" and, as of December 2019, securities at amortized cost (€2,956 million). Group's
   Direct Deposits include the contribution from all companies belonging to the banking group, while Insurance Reserves include Credemvita's technical reserves and financial liabilities valued at fair value. Total Customers' Funding is net of bonds issued to institutional investors and indirect deposits from financial institutions. Total Customers'
   Funding also included Insurance Reserves; finally, from 2019 the counterpart to the capitalization of properties and cars for rent (IFRS16) was excluded for approximately €153.9 million;
2. press releaseCredem- SREP 2019 requirements;
3. SourceABI Monthly Outlook January 2020; the net bad loans figure on net system loans was updated in November 2019;
4. calculated as the ratio between total problem loans of €1,024.7 million and gross loans to customers of €27,266.8 million;
5. Source:Supervisory Banking Statistics - Third Quarter 2019
6. 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. The shortfall amount is considered in the calculation of comprehensive coverages on Non Performing Loans both in the "Addendum to the ECB Guidance to banks on Non Performing Loans" and in the draft law proposed by the European Commission aimed at introducing minimum coverage on Non Performing Loans;
7. calculated as ratio between "Net value adjustments/write-backs due to impairment of Loans" (net of those included in the Non Interest Income) and "Loans to Customers-net of repos" (calculated as the average between the value at the end of the previous financial year and the value at the end of the last accounting period);
8. In case of a similar decision by Credemholding, the increase in regulatory capital ratios, given the effect of the regulatory calculation of "minorities", will be equal to
   22 bps with a FY19 CET1 ratio of 13.74%.

Reggio Emilia, April 30, 2020

CREDITO EMILIANO SPA

(Chairman)

Lucio Igino Zanon di Valgiurata

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