Credito Valtellinese S p A : Approved Consolidated Results as at 30 September 2019

PRESS RELEASE

APPROVED CONSOLIDATED RESULTS AS AT 30 SEPTEMBER 2019

NET INCOME AT 33.4 MILLION EURO AS COMPARED TO 11.4 MILLION

EURO IN THE FIRST 9M 2018

QUARTER FOCUSED ON THE FIRST ACTIONS OF THE BUSINESS PLAN AIMED AT OPTIMISING OPERATIONAL EFFICIENCY, REDUCING CREDIT RISKS AND IMPROVING COMMERCIAL EFFECTIVENESS

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OPERATING COSTS DOWN BY 17.2% Y/Y AND BY 3.8% Q/Q NET OF

BANKING INDUSTRY CHARGES

NPL STOCK KEEPS DROPPING FURTHER

• Gross NPL: -3.4% since 31/12/18 and -1.2% since 30/06/19
• Net NPL: -10.7% since 31/12/18 and -2.1% since 30/06/19

HIGH NPL COVERAGE IN VIEW OF THE PLANNED SALE OF A POOL

WITH A GBV OF ABOUT 800MLN EURO

• NPL coverage ratio: 59.3%, on the rise both compared to 30/06/19 (58.9%) and to 31/12/18 (55.9%)
• Bad loan coverage ratio: 82.7%, on the rise both compared to 30/06/19 (81.4%) and to 31/12/18 (75.1%)

EXCELLENT CAPITALIZATION, BOLSTERED FURTHER UP, WITH A

WIDE CAPITAL BUFFER

• CET 1 at 14.67% fully loaded (13.52% at 31/12/18) and 19.23% phased-in (18.34% at 31/12/18)
• Hefty excess capital over the 2019 SREP minimum requirement (8.25%1)

RISING RETAIL CUSTOMER VOLUMES IN LINE WITH THE PLAN'S

STRATEGIC GUIDELINES

• Deposits +11.3% over 31/12/18
• Loans +1.4% over 31/12/18

ROBUST LIQUIDITY POSITION

• LCR and NSFR well above regulatory requirements
• 3.7 billion euro of eligible unencumbered assets2

• Includes Capital Conservation Buffer
  2 Data at 31/10/19

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PRESS RELEASE

Sondrio, 6 November 2019 - The Board of Directors of Creval examined and approved the consolidated results as at 30 September 2019, reporting a soaring net income at 33.4 million euro, as compared to a net income of 11.4 million euro posted in the same period of 2018.

"In Q3 we have laid the foundations to be on track with the implementation of our business plan, while achieving the first tangible results. Our branch network is motivated and is focusing on strengthening our commercial activities. We have been working to enhance the operational efficiency, adopt a strong cost discipline and guarantee an efficient risk management capability. The declining costs and the improving risk indicators, in addition to the growing retail customer loans, are already visible in the results for the period, together with a significant increase in profitability compared to last year. The progressive shrinking in the bad loan stock is also conducive to a greater solidity for the bank, which reached a fully-loaded CET 1 ratio of 14.7%, and ranks among the most highly capitalized banks. All this has taken place while streamlining our processes and pursuing a more effective allocation of the bank's internal professional resources", remarked Luigi Lovaglio, CEO of Creval. "Supported by our high NPE coverage levels we can step up the pace of the NPL disposal" even ahead of the 2020 end of the year target".

Key balance sheet items

Direct customer funding, excluding repos (973 million euro), came in at 17.4 billion euro, up by 6.9% compared to 31/12/18, driven by the increase in deposits (+11.3%) that benefitted by the good performance of commercial activities. Total direct funding stood at 18.3 billion euro, down by 8.1% compared to year-end 2018, due to the progressive decline in repos since the beginning of the year (-73.7% since 31/12/18), in line with the Plan.

Net loans and receivables with retail customers grew by 1.4% over 31/12/2018, thus confirming the efficacy of the new commercial focus aimed at improving the mix of loan products devoted to households and SMEs. Total loans and receivables with customers (or Net loans to customers), excluding debt securities (5.1 billion euro), amounted to 14.6 billion euro, down by 6.8% compared to 31/12/18, in keeping with the approach aiming at reducing non-coreexposures, in particular repos (-43.9%over 31/12/2018), and more focused on the deployment of a more risk-priceadjusted lending strategy.

Including debt securities (mainly government bonds), total net loans to customers came in at

19.7 billion euro, down by 8.0% compared to year-end 2018. This line-item was impacted by the securities portfolio reduction that was started at the beginning of the year, leading to an 11.4% drop.

As part of net loans to customer, net non-performingexposures totaled 778.0 million euro, down by 10.7% compared to 31/12/18 (871 million euro).

Excluding the government bonds (4.1 billion euro) classified in the customer loans, the net NPL to customer loan ratio came in at 5.0% (11.3% gross).

In particular, bad loans came to 148 million euro, down by 27.4% compared to 31/12/18 (204 million euro); unlikely-to-payloans added up to 579 million euro, down by 4.3% compared to 31/12/18 (605 million euro); past-dueloans stood at 51 million euro, down by 17.9% compared to 31/12/18 (62 million euro).

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PRESS RELEASE

The NPL coverage ratio came to 59.3%, up both compared to 31/12/18 at 55.9% and compared to the prior quarter (58.9%).

More specifically, the coverage of the single NPL classes breaks down as follows:

• bad loans at 82.7% (75.1% at 31/12/18);
• UtPs at 41.7% (44.1% at 31/12/18);
• past dues at 11.2% (15.7% at 31/12/18).

The coverage of performing loans to customers (excluding government bonds) came in at 0.6%, in line with 31/12/18.

Indirect funding ran at 10.3 billion euro, up by 2.8% compared to 31/12/18, driven by the increase in assets under management, totaling 7.4 billion euro (+5.2% year to date). Assets under administration came to 2.9 billion euro, down by 2.7% over 31/12/18.

Financial assets represented by securities stood at 6.4 billion euro, down by 20.6% compared to 31/12/18 and by 12.9% over 30/06/2019, due to the above-mentioned reduction in the securities portfolio currently underway, in keeping with the 2019-2023 Business Plan. Breaking down this line-item, government bonds stood at 4.8 billion euro, down both compared to 31/12/18 (-23.4%) and to 30/06/2019 (-15.8%). The evaluation reserve of the portfolio of Italian government bonds measured at FVTOCI (net of tax effect) is positive by 4 million euro, on the rise compared to 31/12/18 (-20.5 million euro).

The bank continues to enjoy a solid liquidity position. Total eligible unencumbered assets added up to 3.7 billion euro and the liquidity ratios "LCR" and "NSFR" are well above the regulatory requirements.

Shareholders' equity and capital ratios

The Group's Shareholders' equity at 30 September 2019 stood at 1,636 million euro, compared to 1,566 million euro at 31 December 2018.

Under the phase-in regime, the CET1 ratio at 30 September 2019 was 1,847 million euro, against risk-weighted assets (RWA) of 9,602 million euro. Total own funds added up to 2,030 million euro.

The Bank's capital ratios are as follows:

• CET1 ratio 19.2%
• Tier 1 ratio 19.2%
• Total Capital ratio 21.1%

Our capital ratios run well above the 2019 SREP minimum requirements Creval has to comply with, namely:

• CET1 ratio 8.25%
• Tier1 ratio 9.75%

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PRESS RELEASE

- Total Capital ratio 11.75%

The fully loaded CET1 ratio3 at 30 September 2019 stood at 14.67%, up compared to both 31/12/18 (13.5%) and to the prior quarter (14.0%), giving rise to an excess capital of ~640 basis points over the 2019 SREP minimum requirement (8.25%).

Operating results

Net interest income stood at 262.7 million euro, down compared to the first 9M 2018 (274.4 million euro), mainly due to the impact from the NPL disposals carried out in 2018 and by the first-time adoption of IFRS 16 as of 1/1/2019.

In Q3 2019 it came in at 84.1 million euro, down compared to 87.3 million euro in the previous quarter, mainly driven by the increase in deposits volumes which took place in particular in the first six months of the year, by the lower contribution from the securities portfolio, as well as by the negative dynamics of Euribor rates.

In Q3 net fees and commissions stood at 62.2 million euro, in line with the prior quarter. Specifically, core banking commissions grew by 3.0%, mainly driven by the component tied to checking account management. Asset management commissions added up to 15.8 million euro, down by 7.7% q/q due to lower up-front commissions reported in Q3 2019.

On a yearly basis, net fees and commissions came to 186 million euro, down compared to 205.8 million euro of the first nine months of 2018. As to the breakdown, commissions from the traditional banking business added up to 136.1 million euro, basically in line with the same period last year (136.5 million euro). Commissions from the asset management business came to 49.9 million euro, down compared to 69.3 million euro last year, mainly due to up-front commissions tied to a special marketing campaign launched in the first part of last year.

Net income from trading, hedging, disposal and repurchase activities was 27.1 million euro, up compared to 15.9 million euro in 9M 2018, mainly driven by the capital gain from the disposal of the interest held in Nexi S.p.A..

Operating income added up 485.1 million euro, compared to 506.5 million euro reported in 9M 2018.

Personnel expenses amounted to 202.0 million euro, down by 22.3% compared to 259.8 million euro of the first nine months of 2018, which included the cost tied to the early termination plan implemented last year. In Q3 2019 they came in at 65.2 million euro, down by 1.6% compared to 66.2 million euro in the prior quarter.

Other administrative expenses added up to 113.3 million euro, down by 20.1% compared to the same period last year (141.8 million euro), as a result of savings achieved through cost- efficiency actions as well as of the adoption of IFRS 16. In Q3 2019 they came in at 38.0 million euro, up compared to 35.9 million euro in the prior quarter driven by the booking of the 8.6 million euro contribution to the Deposit Guarantee Scheme. Net of this contribution, other administrative expensed reported a 10.8% decline quarter on quarter.

• Excluding the phase-in regime of the IFRS9 FTA impact.

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This line-item includes also the contribution of 11.2 million euro to the Resolution Fund (of which

8.2 million euro reported in Q1 as an ordinary contribution, and 3 million euro in Q2 2019 as an extraordinary contribution).

Net write-down of tangible and intangible assets came in at 33.2 million euro, up compared to 19.1 million euro in 9M 2018, due to the impact from the adoption of IFRS 16.

Total operating costs stood at 348.5 million euro, well below the 420.7 million euro posted in the same period of 2018.

Net operating profit came to 136.5 million euro, up compared to 85.8 million euro reported in the first 9M of 2018.

Net write-down/write-backfor credit risk in Q3 declined to 27.4 million, coming to 129.2 million euro for the 9M. This line-item includes the recognition in Q2 2019 of non-recurring loan loss provisions aimed at strengthening the coverage ratio in view of the NPL disposal under the 2019-2023 Business Plan.

The gain on sale/repurchase of financial assets measured at amortized cost amounted to 8.3 million euro. It mainly refers to the sale of Government bonds held in portfolio carried out since the beginning of the year. This figure compares with a loss of 94.7 million euro in the same period last year, tied to the NPL disposals carried out in 9M 2018.

Provisions for risks and charges added up to 10.1 million euro, down by 3.4% compared to 10.4 million euro in the same period last year.

The gain on disposal of equity and other investments was 5.2 million euro.

The income from continuing operations before tax stood at 10.8 million euro, compared to a loss of 17.0 million euro reported in the same period last year.

Income tax for the period posted a positive contribution of 22.7 million euro, mainly as a result of the recognition of DTAs, tied to the partial reassessment of deferred taxes on past unrecognized tax losses.

The net income for the period stood at 33.4 million euro, compared to a net income of 11.4 million euro reported in 9M 2018.

Operational outlook

The 2019 growth scenario for the European economy has remained unchanged since July. The EMU GDP is expected to end the year at a rate close to 1.1%. There are still risks of downward revision due to a slowdown of the global economy and to the US/China trade tensions, which are currently cooling down.

As downside risks prevail over upside risks and inflation rates are low, the ECB decided to put into effect its summer guidance and implemented new expansionary monetary measures. Last September the ECB cut deposit rates, announced the scope of the new Quantitative Easing plan, introduced the new series of TLTROs to finance the real economy and trimmed the interest rate on deposits held by banks with the ECB.

In 9M 2019 Italy's GDP reported a muted growth and the latest estimates point to an economic growth rate in Italy close to 0.2% in 2019, and a 0.6% pickup in 2020.

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