2019 Results

Excellent Performance

All Commitments Fully Delivered

and Balance Sheet Further

Strengthened

A Strong Bank for a Digital World

February 4, 2020

Fully Delivering on All Our Commitments while Further Strengthening the Balance Sheet

€4.2bn Net income, the highest since 2007 (+3.3% vs FY18, +24.2% excluding Intrum and NTV(1))

€3.4bn cash dividends, equal to 8.4% dividend yield(2) and 80% payout ratio

Operating income up 1.5%(3) and Operating costs down 2.1%(3), leading to 5.6%(3) growth in Operating

margin with a Cost/Income ratio down to 51.4%

Growth in Operating income in Q4 driven by Net interest income, Insurance income and Commissions at

their historical peak

The lowest-ever Gross NPL inflow(4) and LLPs down 12.7% vs FY18

~€34bn NPL deleveraging since the September 2015 peak(4) (~€6bn in FY19(4)) and the lowest NPL stock

and NPL ratios since 2008

83% of targeted 2018-2021 NPL deleveraging already achieved(4)

at no cost to shareholders

Common Equity(5) ratio up at 14.1%

Strong commitment to Sustainability through a variety of concrete initiatives

  1. Intrum capital gain of €443m pre-tax (€438m net of tax) booked in 4Q18 and NTV positive impact of €264m pre-tax (€246m net of tax) booked in 1Q18
  2. Based on share price at 3.2.20
  3. Delta vs FY18 data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement
  4. Excluding the ~€0.6bn one-off impact from the adoption of the new Definition of Default applied since November 2019
  5. Pro-formafully loaded Basel 3 (31.12.19 financial statements considering the total absorption of DTA related to IFRS9 FTA, goodwill realignment/adjustments to loans/non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the operations of the two former Venetian banks, the expected absorption of DTA on losses carried forward and the expected distribution of FY19 Net income of insurance companies exceeding reserves already distributed in the first quarter)

1

Despite a Challenging Environment…

Italian GDP YoY growth(1)

%

x Eurozone

0.8

0.2

2018 2019

1.9 1.2

Average 3-month Euribor rate

10-yearBTP-Bund spread(2)

Bps

Bps

250

256

243

160

139

(32)

(36)

2018

2019

Dec. Mar. Jun. Sept. Dec. Mar. Jun. Sept. Dec.

17

18

18

18

18

19

19

19

19

(1)

Source: Eurostat, ISTAT

2

(2)

Source: Bloomberg

… 2019 Commitments Fully Delivered

ISP outlook for 2019

What we delivered

FY19 results vs FY18(1)

Growth in Operating

Operating income

+1.5%

income

Operating costs

(2.1)%

Continued cost

Net income

reduction

up vs 2018

Loan loss provisions

(12.7)%

80% payout

ratio in 2019

Decrease in

Net income

+3.3%

cost of risk

+24.2% excluding Intrum and NTV(2)

Strong and sustainable value creation and

Common Equity(3)

ratio up ~50bps

distribution while maintaining a solid capital position

(1) Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement

(2) Intrum capital gain of €443m pre-tax (€438m net of tax) booked in 4Q18 and NTV positive impact of €264m pre-tax (€246m net of tax) booked in 1Q18

(3) Pro-forma fully loaded Basel 3 (31.12.19 financial statements considering the total absorption of DTA related to IFRS9 FTA, goodwill realignment/adjustments to loans/non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the operations of the two former Venetian banks, the expected absorption of DTA on losses carried forward and the expected distribution of FY19 Net income of insurance companies exceeding reserves already distributed in the first quarter)

3

The Best Net Income of the Past Eleven Years…

Net income

€ m

3,816 4,050 4,182

2,805

3,111

2,553

2,705

2,739

2,043

1,605

1,251

1,218

FY08 FY09 FY10 FY11(1) FY12 FY13(1) FY14 FY15 FY16 FY17 FY18 FY19 pro-

forma(2)

6 consecutive years of Net income growth

  1. Excluding goodwill and intangible assets impairment
  2. Management data including the contribution of the two former Venetian banks - excluding public cash contribution of €3.5bn to offset the impact of the acquisition of certain assets of the two former Venetian banks on ISP's capital ratios - and the Morval Group consolidation

4

… With Growth in Profitability and Balance Sheet Strengthened

Net income

€ m

Intrum and NTV(1) x Cost/Income, %

4,0504,182

684 +24%

3,366

31.12.18 31.12.19

53.351.4

ISP Fully Loaded(3) CET1 Ratio

%

13.6

14.1

~+0.5pp

NPL stock

€ bn

Net NPL

x Gross NPL ratio, %

x Net NPL ratio, %

64.5

-51%

36.5

31.3

34.2

16.6

14.2

30.9.15

31.12.18

31.12.19(2)

17.2

8.8

7.6

10.0

4.2

3.6

Excess capital

Pro-forma Fully Loaded CET1 Ratio Buffer vs requirements SREP + Combined Buffer(4)(5), 31.12.19, bps

~460

~280 ~+180bps

31.12.18

31.12.19

ISP

Peer average

  1. Intrum capital gain of €443m pre-tax (€438m net of tax) booked in 4Q18 and NTV positive impact of €264m pre-tax (€246m net of tax) booked in 1Q18
  2. Including ~€0.6bn gross non-recurring impact from the adoption of the new Definition of Default applied since November 2019
  3. Pro-formafully loaded Basel 3 (31.12.19 financial statements considering the total absorption of DTA related to IFRS9 FTA, goodwill realignment/adjustments to loans/non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the operations of the two former Venetian banks, the expected absorption of DTA on losses carried forward and the expected distribution of FY19 Net income of insurance companies exceeding reserves already distributed in the first quarter)
  4. Calculated as the difference between the pro-forma Fully Loaded CET1 Ratio vs requirements SREP + Combined Buffer; only top European banks that have communicated their SREP requirement
  5. Sample: BBVA, Deutsche Bank and Santander (31.12.19 data); BNP Paribas, BPCE, Commerzbank, Crédit Agricole Group, ING Group, Nordea, Société Générale and UniCredit (30.9.19 data). Source: Investor Presentations, Press Releases, Conference Calls, Financial Statements

5

Delivering High and Sustainable Cash Dividends while Strengthening Capital

Cash dividend evolution

ISP Fully Loaded(2) CET1 Ratio

€ bn

%

8.4% dividend yield(1)

3.4

3.4

3.4

13.0

13.6

14.1

9.4: ISP Fully

Loaded requirements SREP + Combined Buffer

FY17

FY18

FY19

1.1.18(3)

31.12.18

31.12.19

Rewarding shareholders with sustainable cash

dividends remains a management priority

  1. Based on share price at 3.2.20
  2. Pro-formafully loaded Basel 3 (31.12.19 financial statements considering the total absorption of DTA related to IFRS9 FTA, goodwill realignment/adjustments to loans/non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the operations of the two former Venetian banks, the expected absorption of DTA on losses carried forward and the expected distribution of FY19 Net income of insurance companies exceeding reserves already distributed in the first quarter)
  3. After IFRS9 FTA impact

6

ISP Continues to Be a Top Performing Delivery Machine…

Best-in-class credit recovery

Significant and NPL deal-makingde-risking capabilities (at no cost to

shareholders)

Cost

High strategic flexibility in

reduction

managing costs

A Wealth Management and

Revenue Protection company with

growth sound and strong financial market activities

Initiatives undertaken to accelerate Business Plan execution

  • Strategic partnership with Prelios allowing ISP to focus its internal capabilities on the Pulse(1) project and proactive early-stage credit management and to leverage best-in-class external platforms for late stages (Intrum for bad loans, Prelios for UTP)
  • Disposal of a UTP portfolio of ~€2.7bn gross exposure and ~€1.7bn valuation(2) (in line with loan book value) at no cost to shareholders
  • ~3,100 additional voluntary headcount exits by June 2021 already agreed with labour unions and fully provisioned and an additional ~1,000 applications for voluntary exits to be evaluated
  • Strengthening of financial market activities by focusing Treasury on the management of the liquidity portfolio and Banca IMI on the integrated management of the other securities portfolios, while maintaining the same Group VaR limits
  • ISP Wealth Management machine working at full speed to convert into AuM part of the €176bn of Assets under Administration and ~€70bn of household sight deposits collected in the past few years, of which €15.3bn in 2019
  • Strengthening of the non-motorP&C business through enhancement of commercial reach and strong focus on product offering with revenues up 65%(3) in 2019

(1) ISP central unit managing retail soft collection

(2) Amount reclassified in Discontinued operations as of 30.9.19

(3) Excluding credit-linked products

7

  • while Building Our Future Growth Through Multiple Strategic Actions

RBM

  • Strengthen ISP's positioning in the protection business, becoming the #2 player in the fast- growing health insurance segment
  • Enlarge ISP product range through the inclusion of RBM health policies

China

Nexi

SisalPay

▪

Capture the

▪ Secure upside in a

▪

Expand ISP's retail

opportunity from

high-growth

and small business

China's fast-growing

business that

customer base and

wealthy households

requires significant

enhance the offering

▪

Become a trusted,

investments

of products and

professional and

▪ Improve ISP's

▪

services

scalable financial

products and

Further optimise the

group, leveraging

services through

distribution model

ISP's distinctive

Nexi's digital and

while scaling up the

capabilities in

analytical capabilities

network

Wealth Management

and Protection

Further strengthening our core Wealth

… while partnering with leading players in

Management and Protection franchise…

scale-intensive businesses

8

ISP Growth: Acquisition of RBM Assicurazione Salute, a Leading Player in Health Insurance

Deal description

Market positioning

Value creation opportunity

2018 market share(3), %

  • On 20.12.19, Intesa Sanpaolo Vita announced the acquisition by July 2020 of 50% + 1 share in RBM Assicurazione Salute at a purchase price of €300m with an increase to 100% of share capital between 2026 and 2029
  • Servicing agreement with Previmedical(1), sister company of RBM, to offer Intesa Sanpaolo RBM Salute(2) customers access to the largest medical network in Italy (over 113,000 medical facilities), providing high- quality services/products and competitive prices compared to the market average

Peer 1

Intesa Sanpaolo RBM Salute

Peer 2

Peer 3

Peer 4

Peer 5

Peer 6

Peer 7

Peer 8

  • Enlarge ISP's

22.7 product range

20.8

through:

─ Inclusion of RBM

20.5

collective health

17.7

policies in ISP's

product portfolio

9.7

for large

4.9

corporates, SMEs

and small

3.7

businesses

─ Enhancement of

3.5

ISP health

3.1

insurance offering

to retail

1.5

customers

1.5

  1. Previmedical already provides health insurance services to all ISP employees in Italy
  2. RBM Assicurazioni Salute re-naming
  3. Sample: Allianz, AXA Italia, Cattolica Assicurazioni, Generali, Poste Vita, Reale Mutua, UnipolSai and Zurich Insurance

9

ISP Growth: Strengthening Our Presence in China

ISP is historically present in China…

Bank of Quingdao

  • 14% equity stake since 2008
  • €46bn of assets

Intesa Sanpaolo

  • ISP branch in Hong Kong
  • ISP branch in Shanghai
  • ISP rep. office in Beijing

Eurizon Capital HK

  • 100% equity stake since 2015

Penghua

▪ 49% equity stake since 2007 ▪ €82bn of AuM in 2019

▪ #11 player in the mutual fund market with 2.6% market share

…with Yi Tsai, the "Chinese Fideuram", just launched…

  • Completed set-upwith ~40 resources
  • Received first licence (fund distribution)
  • Launched operations with a significant development plan

…and additional initiatives in the making

New Securities

Company

  • Defined shareholder structure of a JV between ISP (51%) and local partners, also aimed at providing Yi Tsai with tailored products and services (e.g. trading)
  • Received authorisation from ECB / BankIt to set up the company

Flexible cost structure

Synergies with Yi Tsai

10

ISP Growth: Strategic Partnership with Nexi in Payment Systems

Deal description

▪ On 19.12.19, ISP and Nexi

Strategic rationale

▪ Increase scale:

announced a strategic

partnership in payment systems,

involving:

- Transfer of ISP acquiring

activities to Nexi for a ~€1bn

cash consideration

- ISP retention of client-facing

resources, maintaining a

direct relationship with

customers

- ISP purchase of a strategic

9.9% stake of Nexi's capital

for €653m

- Long-term distribution

agreement for Nexi products

through ISP channels

▪ The deal will generate a net

capital gain of ~€900m in 2020(1)

Scale in a fast-growing sector

Partner for digital and analytical skills

    • Supporting investments required in a competitive environment
    • Enabling strategic international positioning in a business dominated by large players
  • Maintain presence in a sector with high growth rate expectations, in line with the current digital payments growth trend
  • Create an industrial partnership with a leading highly-specialisedplayer to:
    • Leverage new digital and analytical capabilities
    • Secure short time-to-market for new products/initiatives for clients

(1) The capital gain might not be entirely reflected in the 2020 Net income, if allocations are identified to strengthen sustainable profitability. Transaction closing is expected to take place in

summer 2020 subject to clearance by relevant authorities

11

ISP Growth: Strategic Partnership with SisalPay in Proximity Banking

Deal description

▪

On 31.7.19 ISP and

SisalPay established a

strategic partnership to

create the first Italian

"proximity banking"

▪

network

The partnership is based

Strategic rationale

▪

Reach 13 million SisalPay retail

Additional

▪

customers

Extend the small business

outreach

customer base of Banca dei

Territori

on the creation of a

NewCo controlled by

Banca 5® (30%) and

SisalPay (70%), offering

a broad range of

payment and banking

services through the

integration of the

physical and digital

channels of the partners

Expanded product offering

Enhanced distribution network

  • Expand the current product/service offering to customers (e.g. e-commerce lockers)
  • Scale-upthe network from 17,000 to over 50,000 points of sale
  • Speed-upISP's branch optimisation plan, enabling a potential reduction beyond the
    Business Plan target

12

Our Excellent Performance Creates Benefits for All Stakeholders…

Shareholders

Employees

Cash dividends, € bn

Personnel expenses, € bn

Excess capacity of ~5,000 people being reskilled

3.4

(with ~3,000 already redeployed to priority initiatives)

5.7

FY19

FY19

2019 payout ratio: 80%

Public Sector

Households and Businesses

Taxes(1), € bn

Medium/Long-term new lending, € bn

Of which €48.4bn in Italy

2.7

58.3

FY19

FY19

~18,500 Italian companies helped to return to performing status(2) in FY19 (~112,000 since 2014)

(1)

Direct and indirect

(2)

Deriving from Non-performing loans outflow

13

  • and Allows ISP to Be the Engine of Sustainable and Inclusive Growth…

€50bn in new lending dedicated to the green economy

Link to video: https://group.intesasanpaolo.com/en/editorial-section/Intesa-Sanpaolo-The-driver-of-sustainable-and-inclusive-development

14

~8.7 million meals
~519,000 dormitory beds
~131,000 medicine prescriptions
~103,000 articles of clothing
Initiatives to reduce child poverty and support people in need well ahead of Business Plan target, delivering since 2018:

… with Many Initiatives Already Ongoing

SELECTED HIGHLIGHTS

Evaluated ~720 start-upsin 2019 (~1,300 since 2018) across 6 acceleration programs with 124 coached start-ups(235 since 2018), introducing them to selected investors and ecosystem players (~1,600 to date)

€5bn Circular Economy credit Plafond: 248 projects evaluated, of which 63 already financed for ~€760m

Launched the first Sustainability Bond focused on the Circular Economy (amount €750m)

The Circular Economy Lab for Corporate clients is running Open Innovation Programs

Supported families affected by earthquakes and natural disasters by forgiving mortgages or granting moratoria of mortgages on destroyed properties and subsidised loans (~€800m forgiven mortgages or granted moratoria in 2019 and over €135m in subsidised loans granted in 2019, ∼€335m since 2018)

Supported families and businesses affected by Genoa bridge collapse with a €4.5m plafond for unilateral mortgage forgiveness (€0.5m already forgiven) and €50m

plafond for reconstruction (€4.6m granted)

Supported families affected by flooding emergency in Venice and surroundings through a €100m plafond and a 12-monthgranted moratoria on mortgages

ISP's "Giovani e Lavoro" program underway, in

In 2019 over 560,000 visitors to ISP "Gallerie

d'Italia" museums (500,000 in 2018) and ~80,000

partnership with Generation, aimed at training and

students participating in free educational activities

introducing 5,000 young people to the Italian labour

(73,000 in 2018)

market over three years. In 2019:

▪ 3 training courses available (Food&Beverage, Retail

The Canova / Thorvaldsen exhibition at the

sales and Java programming) in 4 areas (Rome,

Gallerie d'Italia in Milan, in partnership with

Naples, Milan and Venice)

St Petersburg State Hermitage Museum and

▪ 9,300 young people, aged 18-29, applied to the

Copenhagen's Thorvaldsens Museum, is one of

▪

program

ISP Fund for Impact launched in

the most visited exhibitions in Italy (more than

Over 1,000 companies involved

100,000 visitors in the first two months)

4Q18 (~€1.25bn lending capacity)

▪

More than 700 students started a training course

230 artworks from our corporate collection

Launched in February 2019

▪

80% successful job applications for graduates

"Per Merito", the first line of credit without collateral

on loan in 2019 (140 in 2018) to Italian and

Launched P-Techinitiative in partnership with

dedicated to all Italian university students, studying in Italy

international museums

or abroad; €28m granted in the first ten months

IBM, with the objective of training young

professionals in the field of new digital jobs

Announced in January 2020 two new initiatives to support working

mothers (in Italy and India) and people over the age of 50 who have

lost their jobs or have difficulty accessing pension schemes

15

ISP Included in the Main Sustainability Indexes and Rankings

Top ranking(1) for Sustainability

The only Italian

bank listed in the Dow Jones Sustainability Indices, in the CDP Climate A List 2019 and the 2020 Corporate Knights ''Global 100 Most Sustainable Corporations in the World Index''

2019 Sustainable Development

Award by ASSOSEF(2) for promotion of the Sustainable Development Goals

70

A

AAA

100

97

61

A

AAA

100

(3)

93

58

A-

(3)

AAA

94

93

58

A-

AA

94

89

57

A-

AA

91

87

57

A-

A

90

84

57

A-

A

88

79

56

A-

A

79

75

55

(3)

B

A

77

73

55

B

A

74

71

53

B

BBB

71

70

53

B

BBB

(3)

63

66

50

B

BBB

61

65

50

C

BBB

60

64

(3)

49

C

BBB

51

60

46

C

BBB

51

58

45

C

BBB

46

53

44

C

BBB

38

44

  1. ISP peer group
  2. Associazione Europea Sostenibilità e Servizi Finanziari
  3. Natixis

Sources: Bloomberg ESG Disclosure Score (Bloomberg as of 31.1.20), CDP Climate Change Score 2019 (https://www.cdp.net/en/companies/companies-scores); MSCI ESG Score 2019 (https://www.msci.com/esg-ratings);

Robeco SAM (Bloomberg as of 31.1.20); Sustainalytics score (Bloomberg as of 31.1.20)

16

FY19: Highlights

    • Solid core economic performance:
      • €4,182m Net income, the best since 2007 (+3.3% vs FY18, +24.2% excluding Intrum and NTV(1))
      • €872m Net income in Q4
      • Operating income growth in Q4 driven by an increase in Net interest income and Insurance incomeand by the best quarter ever for Commissions
      • Strong decrease in Operating costs (-2.1%(2) vs FY18) with Cost/Income ratio down to 51.4%, leading to 5.6%(2) growth in Operating margin
      • Strong reduction in Loan loss provisions(-12.7% vs FY18), coupled with the lowest ever NPL gross inflow and cost of risk down to 53bps(vs 61bps in FY18)
    • Best-in-classcapital position with balance sheet further strengthened:
      • The lowest NPL stock and NPL ratios since 2008
      • €1.0bn(3) NPL deleveraging in Q4
      • €33.8bn(3) Gross and €20.5bn(3) Net NPL deleveragingvs the September 2015 peak (€5.8bn(3) gross and €2.9bn(3) net in FY19), well ahead of the 2018-2021Gross NPL Business Plan target
      • Common Equity(4) ratio up at 14.1%
      • Best-in-classleverage ratio: 6.7%
      • Strong liquidity position: LCR and NSFR well above 100%
  2. Intrum capital gain of €443m pre-tax (€438m net of tax) booked in 4Q18 and NTV of positive impact €264m pre-tax (€246m net of tax) booked in 1Q18
  3. Delta vs FY18 data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement
  4. Excluding the one-off impact from the adoption of the new Definition of Default applied since November 2019 (~€0.6bn gross and ~€0.5bn net)
  5. Pro-formafully loaded Basel 3 (31.12.19 financial statements considering the total absorption of DTA related to IFRS9 FTA, goodwill realignment/adjustments to loans/non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the operations of the two former Venetian banks, the expected absorption of DTA on losses carried forward and the expected distribution of FY19 Net income of insurance companies exceeding reserves already distributed in the first quarter)

17

FY19: Growth in Profitability in a Challenging Environment, Driven by Increase in Revenues and Reduction in Operating Costs and Loan Loss Provisions

FY19 P&L € m

18,083

1,184

4

Cost of risk down to 53bps

1,928

vs 61bps in FY18

(5,744)

7,962

(2,488)

8,793

(1,058)

(2,089)

6,593

(111)

7,005

Including €360m in Levies and other charges concerning the banking industry(4) (€513m pre-tax)

(1,838) (573)4,182

Net interest income

Net fees and commissions

Profits on financial assets and liabilities at fair value

Insurance income

Other operating income/expenses

Operating income

Personnel

Admin.

Δ% vs

(3.7)

0.1

31.0

9.2

n.m.

1.5

(1.2)

(5.0)

FY18(1)

+3.0% when excluding NTV positive impact(5)

Depreciation

Operating margin

Loan loss provisions

Other charges/gains(2)

Gross income

Taxes

Other(3)

Net income

0.1

5.6

(12.7)

n.m.

4.3

11.4

(7.9)

3.3

+17.4% when excluding

+24.2% when excluding

Intrum and NTV(5)

Intrum and NTV(5)

Note: figures may not add up exactly due to rounding

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement
  2. Net provisions and net impairment losses on other assets, Other income (expenses), Income (Loss) from discontinued operations
  3. Charges (net of tax) for integration and exit incentives, Effect of purchase price allocation (net of tax), Levies and other charges concerning the banking industry (net of tax), Impairment (net of tax) of goodwill and other intangible assets, Minority interests
  4. Including charges for the Resolution Fund: €229m pre-tax (€158m net of tax), charges for the Deposit Guarantee Scheme: €157m pre-tax (€109m net of tax) and €87m pre-tax (€59m net of tax) for the additional contribution to the National Resolution Fund
  5. Intrum capital gain of €443m pre-tax (€438m net of tax) booked in 4Q18 and NTV positive impact of €264m pre-tax (€246m net of tax) booked in 1Q18

18

Q4: Solid Contribution to FY19 Results, with €0.9bn Net Income and the Best Quarter Ever for Commissions

4Q19 P&L € m

308 (10)

4,567

356

(1,518)~€60m one-off impact due to the adoption of the new Definition of Default since November 2019

2,166

(731)

2,033

(285)

(693)

1,247

(93)

(317)

872

1,747

(58)

Net interest income

Net fees and commissions

Profits on financial assets and liabilities at fair value

Insurance income

Other operating income/expenses

Operating income

Personnel

Admin.

Depreciation

Operating margin

Loan loss provisions

Other charges/gains(3)

Gross income

Taxes

Other(4)

Net income

Δ% vs

0.6

7.9

73.7

29.4

n.m.

9.4

0.0

(2.9)

(0.7)

25.7

(0.7)

n.m.

(8.9)

n.m.

(63.3)

(16.0)

4Q18(1)

Operating costs -0.9%

+34.7% when excluding

+45.3% when excluding

Intrum capital gain(5)

Intrum capital gain(5)

Δ% vs

0.3

10.2

(25.8)

2.3

n.m.

1.6

6.8

20.8

9.2

(7.8)

46.5

n.m.

(28.1)

(40.9)

(62.3)

(16.5)

3Q19(2)

Note: figures may not add up exactly due to rounding

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement
  2. Data restated for the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement
  3. Net provisions and net impairment losses on other assets, Other income (expenses), Income (Loss) from discontinued operations
  4. Charges (net of tax) for integration and exit incentives, Effect of purchase price allocation (net of tax), Levies and other charges concerning the banking industry (net of tax), Impairment (net of tax) of goodwill and other intangible assets, Minority interests

(5) €443m pre-tax (€438m net of tax) booked in 4Q18

19

+€156m excluding NPL stock reduction impact

Slight Increase in Net Interest Income vs 3Q19 Despite Continuing Low Interest Rates

Quarterly comparison

Net interest income, 4Q19 vs 3Q19 € m

1,741

5

3

0

1,747

(2)

Commercial

component

3Q19 Net interest income

Volumes

Spread

Hedging(1)

Financial components

4Q19 Net interest income

Yearly comparison

Net interest income, FY19 vs FY18(2) € m

7,271

154

7,005

(249)

(134)

(37)

Commercial

component

FY18(2) Net interest income

Volumes

Spread

Hedging(1)

Financial components

FY19 Net interest income

Note: figures may not add up exactly due to rounding

(1) €191m benefit from hedging on core deposits in 2019, of which €42m in 4Q19

(2) Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line- by-line deconsolidation of the acquiring activities due to the Nexi agreement

20

~€69bn(1) Increase in Customer Financial Assets in 2019 to Fuel Wealth Management Engine

Direct deposits

€ bn

Repos

+€30.0bn(1)

415.1

426.7

425.5

4.5

12.0

24.1

391.0 414.7 421.0

31.12.18 30.9.19 31.12.19

+€15.3bn in household sight deposits in 2019 (+€4.5bn in Q4)

Assets under Management

Assets under Administration

€ bn

€ bn

+€27.4bn

330.6 351.7 358.0

+€11.1bn

165.2 172.0 176.4

31.12.18

30.9.19

31.12.19

31.12.18

30.9.19

31.12.19

+€5.5bn in AuM Net inflows in

Q4, +€7.9bn in H2

Note: figures may not add up exactly due to rounding

(1) Excluding repos

21

ISP: a Successful Wealth Management and Protection Company

Gross income breakdown(1)

FY19, %

International

Subsidiary

Banks ~10%

Corporate and

Investment Banking ~31%

~13%

~15%

Private

Banking

~10%

Insurance

AM(3)

~7%

BdT

WM(4)

~14%

Wealth Management and Protection(2) ~46%

Banca dei Territori ~27%

Note: figures may not add up exactly due to rounding

(1) Excluding Corporate Centre

(2) Private Banking includes Fideuram, Intesa Sanpaolo Private Banking, Intesa Sanpaolo Private Bank (Suisse) Morval and Siref Fiduciaria; Insurance includes Fideuram Vita, Intesa Sanpaolo Assicura, Intesa Sanpaolo Life and Intesa Sanpaolo Vita; Asset Management includes Eurizon; BdT WM includes €1,911m revenues from WM products included in Banca dei Territori (applying a C/I of ~35%)

(3) AM = Asset Management

(4) BdT WM = Banca dei Territori Wealth Management

22

Continued Strong Reduction in Operating Costs while Investing for Growth

Operating costs

Cost/Income

€ m

Administrative costs

%

2,618

2,488

-5.0%

Total Operating costs

53.3

-1.9pp

FY18(1)

FY19

51.4

9,487

9,290

Personnel costs

-2.1%

5,812

5,744

-1.2%

f(x)

FY18(1)

FY19

Investing for growth (+3% for IT,

Depreciation

Digital, Protection), while rationalising

FY18(1)

FY19

real estate and others (-5%)

1,057

1,058

+0.1%

FY18(1)

FY19

2018(1)

2019

    • ISP maintains high strategic flexibility in managing costs and remains a Cost/Income leader in Europe
    • ~3,140 headcount reduction in 2019
    • ~3,100 additional voluntary exits by June 2021 already agreed with labour unions and fully provisioned, of which ~850 at 1.1.20
    • In addition, a further ~1,000 applications for voluntary exits already received and to be evaluated
    • Further possible branch reduction in light of the Banca 5®-SisalPay strategic partnership
  2. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line-by-line deconsolidation of the acquiring activities due to

the Nexi agreement

23

Strong Reduction in Loan Loss Provisions and Cost of Risk Coupled with Robust NPL Coverage

Loan loss provisions

Cost of risk

NPL coverage ratio

€ m

bps

%

55.4% excluding the impact from

the adoption of the new DoD(1)

2,394

-12.7%

61

-8bps

54.5

54.6 +0.1pp

2,089

53

FY18

FY19

FY18

FY19

31.12.18

31.12.19

Lowest LLPs

Well on track to deliver

Robust NPL coverage will facilitate

since 2007 despite

2018-21 Business Plan

our Business Plan

increased NPL coverage

Cost of risk target (41bps)

de-risking strategy

(1) Definition of Default, applied since November 2019

24

83% of Business Plan NPL Deleveraging Target Already Achieved at No Cost to Shareholders…

NPL stock

€ bn

Net NPL

x Gross NPL ratio, %

x Net NPL ratio, %

64.5 63.1

58.1

52.1

€1.0bn deleverage in Q4

excluding the one-off

impact from the adoption

of the new DoD

36.5

31.6

31.3

26.4

34.2

33.1

29.8

25.5

16.6

14.3

14.2

12.1

30.9.15

31.12.15

31.12.16

31.12.17

31.12.18

30.9.19

31.12.19(2)

2018-2021

Business Plan

Intrum deal

Prelios deal

NPL targets

17.2

16.6

14.7

11.9

8.8

7.6

7.6

6.0(1)

10.0

9.5

8.2

6.2

4.2

3.6

3.6

2.9

  • ~€34bn(2) deleveraging vs 30.9.15 and ~€6bn(2) in 2019
  • Lowest NPL stock and NPL ratios since 2008
  1. Equal to 5% based on EBA definition
  2. Including the ~€0.6bn one-off gross impact from the adoption of the new Definition of Default applied since November 2019

25

  • with a Positive Outlook for Delivering 2021 NPL Target Well Ahead of Schedule

x NPL coverage ratio Net NPL

Gross NPL stock

€ bn

The speed of our deleveraging machine positions ISP well ahead of

the 2018-2021 NPL Business Plan target

64.5

~(11)

~(3)

~(2.7)

~+0.6

~51.6

~(20.3)

~(1.7)

~+0.5

~(15.7)

~31.3

~(4.9)

26.4

~(2.1)

34.2

~29.9

~14.2

12.1

30.9.15

Intrum deal

Prelios

New DoD

NPL stock

Organic

31.12.19

NPL

2018-2021

deal(1)

impact(2)

net of large

deleveraging

reduction

Business

deals

over the past

target over

Plan NPL

(Intrum and

17 quarters

the next 8

targets

Prelios) and

(~€1.2bn

quarters

new DoD

gross and

(~€0.6bn

impact(2)

~€0.9bn net

gross and

quarterly

~€0.3bn net

47%

average)

55%

quarterly

average)

Note: figures may not add up exactly due to rounding

(1)

Amount reclassified in Discontinued operations as of 30.9.19

(2)

One-off impact from the adoption of the new Definition of Default applied since November 2019

26

Lowest-ever NPL Gross Inflow

FY NPL Gross inflow(1) from performing loans

€ bn

Net inflow(2)

16.4

15.5

-76%

12.3

8.7

12.0

11.0

5.8

4.7

4.4

3.9

8.6

5.7

3.1

2.8

2.3

2.0

FY12(3)

FY13

FY14

FY15

FY16

FY17

FY18(4)

FY19

Excluding ~€0.6bn

one-off impact from the

(1) Inflow to NPL (Bad Loans, Unlikely to Pay and Past Due) from performing loans

adoption of new DoD(5)

  1. Inflow to NPL (Bad Loans, Unlikely to Pay and Past Due) from performing loans minus outflow from NPL into performing loans
  2. Figures recalculated to take into consideration the regulatory changes to Past Due classification criteria introduced by the Bank of Italy (90 days since 2012 vs 180 days up until 31.12.11)
  3. Including the contribution of the two former Venetian banks
  4. Definition of Default, applied since November 2019

27

Solid and Increased Capital Base, Well Above Regulatory Requirements

ISP CET1 Ratios vs requirements SREP + Combined Buffer

31.12.19, %

~+50bps vs 31.12.18

13.9

14.1

~+4.6pp

9.4

Fully Loaded CET1 Ratio Buffer vs requirements SREP + Combined Buffer(2)(3)

31.12.19, bps

~460

~280 ~180bps

ISP 2019 Fully

ISP

ISP Fully

Loaded

Phased-in

Loaded(1) CET1

requirements

CET1 Ratio

Ratio

SREP +

Combined Buffer

  • ISP CET1 Ratios already include ~20bps impact in Q1 from TRIM and IFRS16 and ~15bps impact in Q4 due to the change in regulatory treatment of Tier2 instruments issued by the insurance subsidiary

ISP buffer vs

Peer average

requirements

buffer vs

SREP +

requirements

Combined

SREP +

Buffer

Combined Buffer

  • ~€13bn excess capital due to internal capital management while paying ~€17bn in cash dividends over the past 6 years

Note: figures may not add up exactly due to rounding

  1. Pro-formafully loaded Basel 3 (31.12.19 financial statements considering the total absorption of DTA related to IFRS9 FTA, goodwill realignment/adjustments to loans/non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the operations of the two former Venetian banks, the expected absorption of DTA on losses carried forward and the expected distribution of FY19 Net income of insurance companies exceeding reserves already distributed in the first quarter)
  2. Calculated as the difference between the Fully Loaded CET1 Ratio vs requirements SREP + Combined Buffer; figures may not add up exactly due to rounding differences; only top European banks that have communicated their SREP requirement
  3. Sample: BBVA, Deutsche Bank and Santander (31.12.19 data); BNP Paribas, BPCE, Commerzbank, Crédit Agricole Group, ING Group, Nordea, Société Générale and UniCredit (30.9.19 data). Source: Investor Presentations, Press Releases, Conference Calls, Financial Statements

28

Best-in-Class Excess Capital

Fully Loaded CET1 Ratio Buffer vs requirements SREP + Combined Buffer(1)(2)(3)

bps

Fully Loaded CET1 Ratio(2), %

~560

Best-in-class leverage ratio: 6.7%

~530

~460

~+180bps

~270

~260 ∼250 ~240 ~240

Peer

average:

~200 ~200 ~190

~280bps

∼170

Peer 1

Peer 2

ISP

Peer 3

Peer 4

Peer 5

Peer 6

Peer 7

Peer 8

Peer 9 Peer 10 Peer 11

15.5

15.4

14.1(4)

12.6

14.6

11.7

12.5

15.6

12.8

12.0

13.6

11.4

ISP is a clear winner of the EBA stress test

  1. Calculated as the difference between the Fully Loaded CET1 ratio vs requirements SREP + Combined Buffer (the counter-cyclical buffer is estimated); only top European banks that have communicated their SREP requirement
  2. Sample: BBVA, Deutsche Bank and Santander (31.12.19 data); BNP Paribas, BPCE, Commerzbank, Crédit Agricole Group, ING Group, Nordea, Société Générale and UniCredit (30.9.19 data). Source: Investor Presentations, Press Releases, Conference Calls, Financial Statements
  3. Including estimated benefit from the Danish Compromise. Estimated average benefits for the French banks equal to ~20bps
  4. Pro-formafully loaded Basel 3 (31.12.19 financial statements considering the total absorption of DTA related to IFRS9 FTA, goodwill realignment/adjustments to loans/non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the operations of the two former Venetian banks, the expected absorption of DTA on losses carried forward and the expected distribution of FY19 Net income of insurance companies exceeding reserves already distributed in the first quarter)

29

Best-in-Class Risk Profile in Terms of Financial Illiquid Assets

Fully Loaded CET1(1)/Total financial illiquid assets(2)

%

65

56

44

~+40pp

41

39

35

32

28 28

Peer

22

20

average:

17

~25%

13

13

13

12

8

8

ISP(3)

Peer 1

Peer 2

Peer 3

Peer 4

Peer 5

Peer 6

Peer 7

Peer 8

Peer 9

Peer 10

Peer 11

Peer 12

Peer 13

Peer 14

Peer 15

Peer 16

Peer 17

€190bn in total financial liquid assets with LCR and NSFR well above 100%

  1. Fully Loaded CET1. BBVA, Deutsche Bank, Santander and UBS (31.12.19 data); Barclays, BNP Paribas, BPCE, Commerzbank, Crédit Agricole Group, Credit Suisse, HSBC, ING Group, Lloyds Banking Group, Nordea, Société Générale, Standard Chartered and UniCredit (30.9.19 data)
  2. Total illiquid assets include Net NPL, Level 2 assets and Level 3 assets. Sample: BBVA, Deutsche Bank, Santander and UBS (Net NPL 31.12.19 data); Barclays, BPCE, Commerzbank, Crédit Agricole Group, Credit Suisse, HSBC, ING Group, Nordea, Société Générale, Standard Chartered and UniCredit (Net NPL 30.9.19 data); BNP Paribas and Lloyds Banking Group (Net NPL 30.6.19); Level 2 assets and Level 3 assets 30.6.19 data
  3. 59% including the effect of Real Estate and Art, Culture and Historical Heritage portfolio revaluation

30

Our Business Plan Initiatives: Significant De-risking

Key highlights of Significant De-risking initiatives

1A

1B

1C

1D

Carve-out of a state-of-the-art recovery platform

Readiness for future NPL disposals at book value

Creation of "Pulse" for retail early delinquency

Proactive credit portfolio management

  • Finalised strategic partnership with Intrum on NPLs, involving ~1,000 people (of which ~600 were ISP employees):
    • 51% of the new platform owned by Intrum and 49% by Intesa Sanpaolo
    • ~€40bn of gross NPLs serviced
  • Carve-outof the recovery platform completed in December 2018, with successful transition and platform up and running
  • Disposal of a bad loan portfolio of ~€10.8bn of gross book value through the Intrum partnership, at no cost to shareholders (valuation of ~€3.1bn in line with book value for the portion of bad loans classified as disposable)
  • Disposal of an Unlikely to Pay portfolio of ~€2.7bn of gross book value(1) through the Prelios partnership, at no cost to shareholders (valued at ~€1.7bn in line with book value(1))
  • Created an internal unit dedicated to early delinquency management:
    • Involving ~350 FTEs(2) (target of ~1,000 FTEs by 2021)
    • Delivering better results than those of the branches in terms of recoveries and fewer outflows to riskier classes
  • Expansion of the new retail process to the entire Group perimeter completed
  • New Early Warning System for pre-emptive identification of deteriorating positions
  • Consolidation of the full credit value chain (from underwriting to NPL management) within CLO Area since December 2018, with key units strengthened
  • Further improvement of Unlikely to Pay management through the partnership with Prelios operating since December 2019
  • Enhancement of Portfolio Management, with the creation of a new team led by CLO area (jointly with BdT Division) focused on preventing new NPL inflows through the regular and strict monitoring of a structured set of KPIs and on efficiently managing existing NPLs
  • Active Credit Portfolio Steering unit within CFO Area completed €10bn of new transactions across different asset classes, aimed at dynamically managing the performing credit portfolio
  • New Credit Strategy framework contributed to switching €6bn to sectors with a better risk/return profile

(1)

Amount reclassified in Discontinued operations as of 30.9.19

31

(2)

Operators and remediation specialists

Our Business Plan Initiatives: Cost Reduction

Key highlights of Cost reduction initiatives

Workforce

2A reduction and renewal

  • ~7,800 voluntary exits at 31.12.19(1)
  • ~850 professionals hired since 2018(2)
  • Proactive HR "In-placement" in progress, resulting in ~3,000 people reskilled and redeployed to priority initiatives
  • Increase of resources with new flexible banking contract "Lavoro Misto" (~150 resources hired and ~200 internships activated)
  • 76 agreements with Labour Unions signed. In May agreed a further 1,600 voluntary exits by end of 2021 in addition to the 9,000 voluntary exits agreed at the end of 2017

2B Branch strategy

2C

Optimisation of

real estate

2D

Reduction of

legal entities

Reduction in

2E administrative expenses

  • Branch optimisation underway with 423 Retail branches closed in 2019 and 885 since 2018
  • Banca 5® expanded in terms of network (~4,900 tobacconist shops operational with the new commercial model, ~16,600 with advanced machines to service clients), products and client base (~56,000 app downloads, ~45,300 cards issued); cash withdrawal available for ISP clients in all Banca 5® outlets
  • Partnership with SisalPay expanding the Banca 5® network to more than 50,000 outlets and enabling a potential reduction of ISP branches beyond the Business Plan target
  • Renewal of 221 Retail branches, with welcome areas and co-working spaces
  • Project "Cash desk service evolution" ongoing: ~52% of branches with cash desk closing at 1PM and ~12% of branches fully dedicated to advisory services
  • Ongoing optimisation of real estate footprint in Italy, with a reduction of ~535,000 sqm since 2018 (of which ~439,000 sqm from branch reduction)
  • 1,543 rental agreements renegotiated since 2018
  • Merger of Banca Prossima, Banca Apulia, Banco di Napoli, Banca Nuova, CR del Friuli Venezia Giulia, CR del Veneto, CR di Forlì e della Romagna, Banca CR Firenze, CR di Pistoia e della Lucchesia, Carisbo and Mediocredito Italiano into the parent company completed
  • Merger process for the remaining legal entity underway and already approved by the ISP Board of Directors
  • Creation of a dedicated Group-level unit to manage costs (Chief Cost Management Officer)
  • Full centralisation of procurement function and consolidation of supplier relationships well underway
  • Migration of ICT systems of the two former Venetian Banks completed

(1)

Including ~1,500 voluntary exits in 4Q17

32

(2)

Including ~150 people hired with new flexible banking contract "Lavoro Misto"

Our Business Plan Initiatives: Revenue Growth (1/3)

3A Key highlights of Revenue growth initiatives - P&C Insurance

Non-motor insurance penetration of ISP client base

Product strategy

Distribution strategy

Post-sales and claim management

  • Strong focus on Retail/SME non-motor offering through:
    • Insurance Digital Wallet ("XME Protezione") with ~550,000 contracts sold since its full commercialisation in July 2018 (~405,000 in 2019); expanded "lifecyle" functionalities for a flexbile offer over time
    • Enhancement of SME offering with ~42,000 contracts sold since 2018, of which ~25,000 in 2019 (+45% vs 2018), also thanks to the commercialisation of "Tutela Business Manifattura" since July 2018
    • Development of Mid Corporate offering (employee benefits, property and liability coverage)
    • Rollout of "XME Salute" to offer customers a digital service to book medical appointments, while also providing significant discounts on healthcare services
  • Completion of Motor offering in May 2019, with the development of telematic solutions and the introduction of a non-telematic product
  • Enhancement of commercial reach and effectiveness in Banca dei Territori branches through:
    • Introduction of ~220 P&C specialists
    • Dedicated training plan (~30,000 employees obtained IVASS certificates and ~12,000 completed advanced training since 2018) with increased focus on SME products since 2019
    • Rebranding of ISP branches as "Banca Assicurazione"
    • Communication initiatives ongoing (via newspaper, TV, Internet)
  • Launched experiential space in Turin for public education on Protection
  • High standard of settlement time (3-5days faster than market average(2) in motor over the past two years)
  • Strengthening of the organisational structure for post-salesand claim management
  • Implementation of new digital multichannel platform and full re-design of operative processes
  • Implementation of new Operational Dashboard and Instant Customer Feedback to measure and improve the level of service

%

2021 target: 18%

109.2.1

77..27

5.4

2017

9M182018

9M192019

Non-motor revenues up ~65%56% in 20199M19vsvs20189M18(1)

Non-motor Gross written premiums

€ m

384558 +34+38%

405

2018

9M192019

ratio at ~76% in 9M19, Combined ratio(3) at ~76% in 2019,

than Italian market average ~15pp lower than Italian market average

  1. Excluding credit linked products
  2. Source: ANIA (the national association of insurance companies). Ref. Claims: motor third-party insurance, double signature accident report - considering only claims occurred and filled during the year

(3) P&C business

33

Our Business Plan Initiatives: Revenue Growth (2/3)

Key highlights of Revenue growth initiatives

3B PrivateBanking

3C AssetManagement

  • Completion of integration of Swiss subsidiaries with the creation of ISPB Suisse Morval and completed migration of Swiss banking activities on the
    Target IT Platform
  • Strengthening of the international Private Hub: completed transfer of UK branch in London from ISPB Italia to ISPB Suisse Morval with migration on the Target IT platform. Launched operations of organisational rationalisation. Finalised operating model in Argentina and Uruguay. Implemented MENA(1) product offering
  • Target operating model of Private activities in Luxembourg under completion: defined operational model (IT Platform, process, organisation); submitted application to ECB for IT
  • Completed feasibility study including definition of strategic options and business cases for Digital Bank, migration to Target IT Platform for banking activities (NDCE) completed for ISPB and ongoing for Fideuram Area Affari (Alfabeto 2.0 - DBMarketing)
  • Study for the digital onboarding platform for Private clients with commercial agreements with third parties completed
  • Hired ~570 Private bankers and Financial Advisors, established hub for onboarding in Fideuram and consolidated Next Generation and New
    Talent
  • New flexible banking contract "Lavoro Misto" activated
  • Strengthening of HNWI network with new branch opening (Piemonte, Liguria area, Como)
  • New products successfully launched (Ailis, Alternative, GPM Fogli) with placements of ~€8bn since their commercialisation
  • Continued product range enhancement with flexible or capital-protection, currency diversification solutions, liquidity management, commercialisation of new wealth management products and strengthening of portfolio advisory on best expertise funds for Banca dei Territori. Expansion of the product range for the Private banking Division (Eurizon Income Strategy, multi strategy and multi asset products) and for institutional and wholesale clients (e.g. Eurizon Fund Equity Innovation, Eurizon Fund Equity People, Eurizon Fund Equity Planet, investment schemes focused on global trends). Investment solutions leveraging ESG criteria; new tactic solutions - Epsilon Difesa 110 Valute Reddito - or solutions aimed at redeploying liquidity - Eurizon Investi Protetto
  • Enhanced offering of investment and service solutions for 3rd parties network (e.g. new multiasset fund with equity contrarian exposure and ESG focus and Low Tracking Error; certified training on WISE platform)
  • Further enhancement of the partnership with Poste Italiane in the investment management activities
  • Commercial office in Switzerland opened. Madrid representative office opened and awaiting the establishment of a branch; strengthening of sales footprint in Germany completed
  • Consolidation of leadership in Institutional business through the growth of the Foundation segment
  • Joint development with Banca dei Territori: redesign of the product range, development of local initiatives aimed at sustaining Asset Management products, support and enhancement of the advanced advisory platform "Valore Insieme" for Retail and Personal clients (~74,500 contracts and more than €27.3bn of AuM)
  • Launched Eurizon Italian Fund - ELTIF, the first Italian closed fund dedicated to the Italian equity market and compliant with the European Long Term Investment Funds regulation
  • Partnership with Oval Money, an Anglo-Italian fintech startup operating in the savings and digital payments sector, allowing Eurizon to activate a new digital and simplified distribution channel, focused on a client segment that is complementary to that of the traditional networks, both in Italy and abroad
  • Establishment of Eurizon Capital Real Asset SGR: partnership with Intesa Sanpaolo Vita focused on the development of a distinctive offer in illiquid alternative investments for institutional clients
  • PIR mutual funds offer: adjustment due to new regulatory framework and enhancement of the offering

(1) Middle East and North Africa

34

Our Business Plan Initiatives: Revenue Growth (3/3)

Key highlights of Revenue growth initiatives

3D

SMEs and

Corporates

3E International Banks

3F

Wealth Management

in China

  • ~60 people hired to strengthen coverage and increase skills in the C&IB international business
  • Full implementation of the new Originate-to-Share model, with several international and domestic mandates already achieved and a new partnership signed with Rubicon Capital Advisors aimed at further developing international business opportunities, with specific focus on Infrastructure and Energy businesses
  • Increased focus on International growth, with strengthened local coverage and a dedicated development program involving a higher collaboration with (i) the Head of Industries, (ii) the newly formed Global Strategic Coverage Unit and (iii) the different Investment Banking Product Desks
  • Implementation of the new dedicated unit in Banca IMI focused on the Corporate Finance offering for BdT clients
  • New Sales & Marketing Mid Corporate / SMEs unit set up
  • Continued focus on organisational enhancements, with initiatives to streamline commercial banking activities for the Italian Network
  • New Network Origination Coverage Unit to identify and promote new opportunities for MidCap clients, with specific focus on the Italian market and in particular on Investment Banking and Structured Finance products
  • Launch of new initiatives (lending to domestic and international clients) to further strengthen the C&IB Division effort towards the Circular
    Economy
  • New C&IB2B platform launched with the implementation of the first streams of full digital activities
  • Renewal of the "Impresa 4.0" initiative focused on increasing lending for capital expenditures supported by fiscal benefits
  • Launch of the digital invoicing service "Digifattura"
  • New platform "Dialogo industriale" completed and distributed to the network
  • Signed the first Bond under the Intesa Sanpaolo "Basket Bond program"
  • Continued expansion of the hub approach:
    • Integration of the Bank in Bosnia into the Croatian Bank Group completed
    • Action Plan for the development of the Slovenian bank in execution
    • New governance model in Central Europe defined and ongoing alignment of the operating model and strengthening of commercial synergies for retail and corporate segments
    • Strategic partnership between Slovakia-Czech Republic and Hungary formalised
  • Integration activities in Moldavia completed and refocusing activities ongoing in Ukraine
  • Adoption of the Core Banking System target completed in Serbia, ongoing implementation in Czech Republic and under analysis in
    Slovakia
  • Completed Data Center transfer in Italy for Hungary
  • CRM system completed in Slovakia for the corporate and SME segment
  • Continued expansion of Group's target distribution model in Slovakia, Croatia, Serbia, Hungary, Slovenia and Romania (107 branches already on the target distribution model); analysis launched in Albania and Bosnia
  • Expansion to the full commercial network of the advisory model for investment services completed in Croatia and ongoing in Slovenia.
    Pilot initiative in Slovakia and Hungary completed and expansion of the model launched
  • Expansion of digital functionalities and services ongoing in Croatia, Hungary, Egypt and Albania. Implemented the adoption of digital services in Slovenia, analysis almost finalised in Romania and launch of feasibility study in Slovakia
  • Type 1 licence ("Dealing in securities") obtained from Hong Kong Monetary Authority to enable the distribution of mutual funds by Eurizon Capital (HK) Ltd
  • Yi Tsai: license for mutual fund distribution and business permit received, preparatory activities to start the business finalised, strengthening of target operating model
  • Securities company: ECB / BankIt authorisation to set-up the company received

35

Our Business Plan Initiatives: Empowered People and Digital Transformation

Key highlights of Empowered People and Digital Transformation initiatives

  • EmpoweredPeople
  • DigitalTransformation
  • More than 80% of ISP's People participated in the capital increase reserved for employees under the 2018-2021 LECOIP 2.0 Long-term Incentive Plan
  • People Care: Launched Servizi alla Persona section on #People portal (over 300,000 visits in 7 months) and, in cooperation with specialised partners, launched pilot phase in Piemonte, Valle d'Aosta and Liguria (~5,000 colleagues) of Ascolto e Supporto del Disagio project focused on psychological, legal, fiscal and welfare assistance
  • Completed the 2nd edition of the International Talent Program with the identification of an additional 150 new talents to be trained (~250 in total), with a specific format dedicated to the Chief IT, Digital and Innovation Officer Area
  • ~11m training hours delivered (+20% vs FY18) supported by ~2,600 new digital Learning Objects (~5,600 total Learning Objects) and a new learning platform for SMEs and Corporate Clients
  • Defined the new Group banding and titling system, now aligned to international best practices
  • ~17,250 people adhering to "smart working", ~9,250 more vs 31.12.17, with the involvement of the international perimeter (~550 resources in Serbia, ~200 in Albania , ~900 in Hungary and ~1.900 in Slovakia) and launch of Smart Working Project to further enhance the initiative
  • Set-upof the "Diversity and Inclusion" structure within the COO Area at the end of 2018, with the purpose of increasing and enhancing the heritage of ISP's People in terms of multiculturality, different experiences and characteristics
  • Digital Transformation of HR activities ongoing: revision of models and processes for ISP's People development (e.g. Performance Management, Compensation, Recruiting), dematerialisation, centralisation of administrative activities, creation of dashboards for managers to make available all services on a specific mobile App, integration of systems/data of HR Insurance Division
  • Further increase of sales through digital channels at over 9% of total sales (vs 2% in 2017 and 5% in 2018)
  • Enhanced Data Lake access through the Big Data Engine Programme (~75% of data usable vs 65% in FY18); activation of CRMS High Frequency (with framework Data Governance); projects on other synthesis systems ongoing (Profitability and Accounting)
  • Further strengthening of ISP position as multichannel bank. Key results and initiatives:
    • 4th App in Europe(1), ~85% of products available via multichannel platforms and expanded product offering (e.g. XME Conto / Conto Up! / Salvadanaio / Protezione, Prestiti Personali New)
    • ~9.2m multichannel clients (vs 7.3m at 31.12.17), of which ~5.5m using the new app at least once since 2018 and ~5.5m have activated OkeySmart, the new OTP software simpler and safer than physical key and compliant with the PSD2 Directive
    • ~98,800 products sold by the Online Branch since 2018, of which ~51,000 in 2019
    • 141 remote Relationship Managers in the Online Branch already in place, with ~52,000 clients served
  • Further strengthening of ISP's position in digital banking. Key results and initiatives:
    • 34.6% of activities digitalised (vs 17.8% in FY18)
    • ~33m paperless transactions since 2018 and ~56m since the start of the initiative
    • End-to-endredesign and digitalisation of selected high-impact processes: credit extension revision finished (completed credit capacity and simplified revision in Banca dei Territori on target architecture)
    • Fast automation of selected processes through robotics ongoing
    • Digital transformation for Retail and Corporate clients: second release of new platform for Professionals and Small Enterprises, release of new Investment section and App Investo for Private clients, first release of new banking platform for Fideuram (Family&Friends activation)
  • 32 legal entities already integrated into ISP Cybersecurity Model (17 at 31.12.2018)
  • Integration of Mediocredito into ISP IT system completed, integration of Banca IMI activities ongoing
  • Digital innovation of products and services for clients, among which: Xme Banks, Xme Spensierata, Google Pay, Digital Collaboration on App
    Banking ISP

(1) Source: Forrester Digital Wave

36

Italian Economy: Recovery Will Be Facilitated by an Improving Job Market and Solid Fundamentals

Italian GDP YoY growth(1)

%

x Household disposable

income growth, %

1.1

1.6

2020 forecast: 0.4%

0.8

0.2

2016 2017 2018 2019

1.3 0.9 0.9 1.3(2)

Italian unemployment rate

Year-end, %

13.1% November

2014 peak

11.8 10.9 10.4 9.8

2016 2017 2018 2019

~+500,000 employed people since 2016

Strong fundamentals confirm the resilience of the Italian economy in a period of sluggish GDP growth

Wealth of Italian households at €10.7tn, of which €4.4tn

Households

in financial assets

  • Low level of indebtedness
  • Manufacturing companies stronger than pre-crisis level:

Corporates

- Profitability: Gross operating margin at 9.1%

- Capitalisation: Equity/Total liabilities at 41%

Italian companies well positioned to cope with a

domestic economic slowdown:

- Export-oriented companies, highly diversified in

terms of industry and size, have become powerhouses

over the past few years. Italian export growth has

outperformed that of Germany by 1.4pp in 2019 (+2.1%

vs +0.7% in Jan-Nov)

- Domestic-oriented companies to benefit from

resilient consumption driven by expansionary fiscal

policy, higher employment and disposable income

- Trade surplus reached almost €50bn (~€83bn net of

energy) in 2019(3)

Stock of assets owned by Public Sector entities of

Government

~€1.0tn(4) :

- ~€0.6tn of financial assets

- ~€0.3tn of Real Estate

- ~€0.1tn of other non-financial assets

  1. Data not adjusted for the number of working days
  2. ISP estimate
  3. First 11 months
  4. Not including infrastructure, natural resources, cultural heritage

Source: Bank of Italy; ISTAT; "Analisi dei Settori Industriali" Intesa Sanpaolo - Prometeia October 2019; GDP forecast of Consensus Economics, Consensus Forecast, January 2020

37

Despite Solid Economic Fundamentals, Italy Is Burdened by a Wider Spread than other European Countries

Macro-economic structural indicators

%

Trade balance

3

(goods)/GDP

(2)

(2)

10-year Government bond spread(2)

Bps

31.12.19

29.1.20

2019 estimate

(9)

(11)

Net

(5)

(16)

international

(80)

(106)

investment

(143)

position/GDP

2018

187

Household

166

134

122

103

net financial

wealth/GDP

2019 estimate

Private debt(1)

Government debt

Total

247

278

297

231

242

debt/GDP

155

115

134

107

149

181

135

2018

98

98

122

160 162

133

69

65

68

62

30 25

154

(1)

Households and corporate

(2)

Spread vs 10-year German Bunds

38

Source: Bloomberg, European Commission, Eurostat, National Central Banks

ISP Outlook for 2020

Growth in Operating income

Continued cost reduction

Decrease in cost of risk

  • Net income 2020:
    • Well above 2019
    • Up vs 2019 even when excluding Nexi capital gain

75% payout ratio in 2020

Strong and sustainable value creation and distribution

while maintaining a solid capital position

39

Fully Delivering on All Our Commitments while Further Strengthening the Balance Sheet

€4.2bn Net income, the highest since 2007 (+3.3% vs FY18, +24.2% excluding Intrum and NTV(1))

€3.4bn cash dividends, equal to 8.4% dividend yield(2) and 80% payout ratio

Operating income up 1.5%(3) and Operating costs down 2.1%(3), leading to 5.6%(3) growth in Operating

margin with a Cost/Income ratio down to 51.4%

Growth in Operating income in Q4 driven by Net interest income, Insurance income and Commissions at

their historical peak

The lowest-ever Gross NPL inflow(4) and LLPs down 12.7% vs FY18

~€34bn NPL deleveraging since the September 2015 peak(4) (~€6bn in FY19(4)) and the lowest NPL stock

and NPL ratios since 2008

83% of targeted 2018-2021 NPL deleveraging already achieved(4)

at no cost to shareholders

Common Equity(5) ratio up at 14.1%

Strong commitment to Sustainability through a variety of concrete initiatives

  1. Intrum capital gain of €443m pre-tax (€438m net of tax) booked in 4Q18 and NTV positive impact of €264m pre-tax (€246m net of tax) booked in 1Q18
  2. Based on share price at 3.2.20
  3. Delta vs FY18 data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement
  4. Excluding the ~€0.6bn one-off impact from the adoption of the new Definition of Default applied since November 2019
  5. Pro-formafully loaded Basel 3 (31.12.19 financial statements considering the total absorption of DTA related to IFRS9 FTA, goodwill realignment/adjustments to loans/non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the operations of the two former Venetian banks, the expected absorption of DTA on losses carried forward and the expected distribution of FY19 Net income of insurance companies exceeding reserves already distributed in the first quarter)

40

2019 Results

Detailed Information

MIL-BVA327-15051trim.13-90141/LR

Key P&L and Balance Sheet Figures

€ m

2019

Operating income

18,083

Operating costs

(9,290)

Cost/Income ratio

51.4%

Operating margin

8,793

Gross income (loss)

6,593

Net income

4,182

Note: figures may not add up exactly due to rounding

(1) Net of duplications between Direct Deposits and Indirect Customer Deposits

Loans to Customers

Customer Financial Assets(1)

of which Direct Deposits from Banking Business

of which Direct Deposits from Insurance Business and Technical Reserves

of which Indirect Customer Deposits

  • Assets under Management
  • Assets under Administration

RWA

42

31.12.19

395,229

960,677

425,512

165,838

534,349

357,998

176,351

298,524

Contents

Detailed Consolidated P&L Results

Liquidity, Funding and Capital Base

Asset Quality

Divisional Results and Other Information

43

MIL-BVA327-15051trim.13-90141/LR

2019:€4.2bn Net Income, Best Result since 2007

€ m

2018 2019 %

pro-forma(1)

Net interest income

7,271

7,005

(3.7)

Net fee and commission income

7,952

7,962

0.1

Income from insurance business

1,084

1,184

9.2

Profits on financial assets and liabilities at fair value

1,472

1,928

31.0

Other operating income (expenses)

34

4

(88.2)

Operating income

17,813

18,083

1.5

Personnel expenses

(5,812)

(5,744)

(1.2)

Other administrative expenses

(2,618)

(2,488)

(5.0)

Adjustments to property, equipment and intangible assets

(1,057)

(1,058)

0.1

Operating costs

(9,487)

(9,290)

(2.1)

Operating margin

8,326

8,793

5.6

Net adjustments to loans

(2,394)

(2,089)

(12.7)

Net provisions and net impairment losses on other assets

(187)

(254)

35.8

Other income (expenses)

506

55

(89.1)

Income (Loss) from discontinued operations

71

88

23.9

Gross income (loss)

6,322

6,593

4.3

Taxes on income

(1,650)

(1,838)

11.4

Charges (net of tax) for integration and exit incentives

(120)

(106)

(11.7)

Effect of purchase price allocation (net of tax)

(156)

(117)(2)

(25.0)

Levies and other charges concerning the banking industry (net of tax)

(378)

(360)

(4.8)

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

32

10

(68.8)

Net income

4,050

4,182

3.3

+3.0% excluding NTV positive impact booked in 1Q18(3)

+9.1% excluding NTV(3)

+17.4% excluding NTV(3) and Intrum capital gain booked in 4Q18(4)

+24.2% excluding NTV(3) and Intrum(4)

Note: figures may not add up exactly due to rounding

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line-by- line deconsolidation of the acquiring activities due to the Nexi agreement
  2. €513m pre-tax of which charges for the Resolution Fund: €229m pre-tax (€158m net of tax), charges for the Deposit Guarantee Scheme: €157m pre-tax (€109m net of tax) and €87m pre-tax (€59m net of tax) for the additional contribution to the National Resolution Fund

(3)

€264m pre-tax (€246m net of tax) deriving from the sale of the NTV stake

44

(4)

€443m pre-tax (€438m net of tax)

MIL-BVA327-15051trim.13-90141/LR

Q4 vs Q3:€872m Net Income, Best Quarter Ever for Commissions

€ m

3Q19

4Q19

Δ%

pro-forma(1)

Net interest income

1,741

1,747

0.3

Net fee and commission income

1,966

2,166

10.2

Income from insurance business

301

308

2.3

Profits on financial assets and liabilities at fair value

480

356

(25.8)

Other operating income (expenses)

5

(10)

n.m.

Operating income

4,493

4,567

1.6

Personnel expenses

(1,421)

(1,518)

6.8

Other administrative expenses

(605)

(731)

20.8

Adjustments to property, equipment and intangible assets

(261)

(285)

9.2

Operating costs

(2,287)

(2,534)

10.8

Operating margin

2,206

2,033

(7.8)

Net adjustments to loans

(473)

(693)

46.5

Net provisions and net impairment losses on other assets

(19)

(168)

784.2

Other income (expenses)

(2)

50

n.m.

Income (Loss) from discontinued operations

22

25

13.6

Gross income (loss)

1,734

1,247

(28.1)

Taxes on income

(536)

(317)

(40.9)

Charges (net of tax) for integration and exit incentives

(27)

(27)

0.0

Effect of purchase price allocation (net of tax)

(37)

(12)

(67.6)

Levies and other charges concerning the banking industry (net of tax)

(96)

(22)

(77.1)

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

6

3

(50.0)

Net income

1,044

872

(16.5)

Note: figures may not add up exactly due to rounding

(1) Data restated for the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement

45

Net Interest Income: Quarterly Increase Despite a further Decline in Interest Rates

Quarterly Analysis

Yearly Analysis

€ m

Euribor 1M; % € m

Euribor 1M; %

%

4Q19 vs 4Q18 and 3Q19

%

2019 vs 2018

1,736 1,741 1,747

-0.37-0.42-0.45

4Q18 3Q19 4Q19

pro-formapro-forma

+0.6 +0.3

  • 4Q19 up vs Q3 and 4Q18
  • Growth in average Direct deposits from banking business: +1.5% vs Q3 and +6.0% vs 4Q18

7,271 7,005

-0.37-0.40

2018 2019

pro-forma

(3.7)

  • Decrease due to NPL stock reduction, the reimbursement of an acquisition financing loan in September 2018 and lower contribution from core deposit hedging
  • 3.7% growth in average Direct deposits from banking business

46

Net Interest Income: Quarterly Increase in the Commercial Component

Quarterly Analysis

€ m

1,741

5

3

0

1,747

(2)

Commercial

component

3Q19 Volumes Spread

Hedging(1) Financial 4Q19

pro-forma

components

Yearly Analysis

€ m

Largely due to the reimbursement of an

+€156m excluding NPL

acquisition financing loan in September 2018

stock reduction impact

7,271

154

7,005

(249)

(134)

(37)

Commercial

component

2018

Volumes Spread Hedging(1) Financial 2019

pro-forma

components

Note: figures may not add up exactly due to rounding

(1) €191m benefit from hedging on core deposits in 2019, of which €42m in Q4

47

Net Fee and Commission Income: 4Q19 Best Quarter Ever

Quarterly Analysis

Yearly Analysis

€ m

%

4Q19 vs 4Q18 and 3Q19 € m

%

2019 vs 2018

7,952

7,962

2,007 1,966 2,166

4Q18 3Q19 4Q19

pro-formapro-forma

+7.9 +10.2

  • Double-digitincrease vs Q3
  • Strong growth vs Q3 even when excluding performance fees (+4.4%)
  • Strong increase vs Q3 mainly due to commissions from Management, dealing and consultancy activities (+13.3%; +€161m)
  • +€5.5bn in AuM net inflows in 4Q19

2018 2019

pro-forma

+0.1

  • Growth in commissions from Management, dealing and consultancy activities (+1.5%; +€72m), despite difficult market conditions
  • Strong acceleration in H2 (+4.7% vs 2H18) with +€7.9bn in AuM net inflows

48

Profits on Financial Assets and Liabilities at Fair Value: Excellent Performance

Quarterly Analysis

Yearly Analysis

€ m

%

4Q19 vs 4Q18 and 3Q19 € m

%

2019 vs 2018

1,472

1,928

NTV

480

356

264

205

1,208

4Q18

3Q19

4Q19

2018

2019

pro-forma

pro-forma

pro-forma

+73.7

(25.8)

+31.0

59.6% growth excluding NTV positive impact in 2018

Contributions by Activity

4Q18

3Q19

4Q19

2018

2019

pro-forma

pro-forma

pro-forma

Customers

82

117

139

359

534

Capital markets

16

13

22

458(1)

181

Trading and Treasury

100

345

198

644

1,187

Structured credit products

6

5

(3)

10

25

Note: figures may not add up exactly due to rounding

(1) Including €264m positive impact deriving from the sale of the NTV stake

49

Operating Costs: Significant Reduction on a Yearly BasisMILwhile-BVA327-15051trim.13-90141/LRInvesting for Growth

Quarterly Analysis

Yearly Analysis

% 4Q19 vs 4Q18 and 3Q19

%

2019 vs 2018

Operating Costs

Personnel Expenses

Operating Costs

Personnel Expenses

€ m

€ m

€ m 9,487

9,290

€ m

5,744

2,558

2,287

2,534

5,812

1,518

1,421

1,518

4Q18

3Q19

4Q19

4Q18

3Q19

4Q19

pro-formapro-forma

pro-formapro-forma

(0.9)

+10.8

-

+6.8

Other Administrative Expenses

Adjustments

€ m

€ m

753

605

731

287

261

285

4Q18

3Q19

4Q19

4Q18

3Q19

4Q19

pro-formapro-forma

pro-formapro-forma

(2.9)

+20.8

(0.7)

+9.2

  • 2.9% reduction in Other Administrative Expenses vs
    4Q18
  • Costs up vs Q3 due to investments and incentives to trigger growth
  • ~300 headcount reduction in Q4

2018

2019

2018

2019

pro-forma

pro-forma

(2.1)

(1.2)

Other Administrative Expenses

Adjustments

€ m 2,618

2,488

€ m

1,058

1,057

2018

2019

2018

2019

pro-forma

pro-forma

(5.0)

+0.1

  • Strong reduction (-5.0%) in Other administrative expenses
  • Cost/Income ratio down to 51.4% (vs 53.3% in FY18)
  • Increase in Adjustments due to investments to trigger growth
  • ~3,140 headcount reduction

50

Net Adjustments to Loans: Significant Annual Reduction Coupled with a Strong Decrease in NPL Stock and Gross Inflow

Quarterly Analysis

Yearly Analysis

€ m

% 4Q19 vs 4Q18 and 3Q19 € m

~€60m one-off impact due to the adoption of the new Definition of Default since November 2019

698

473

693

2,394

%

2019 vs 2018

2,089

4Q18 3Q19 4Q19

pro-formapro-forma

(0.7) +46.5

  • Seventeenth consecutive quarterly reduction in NPL stock
  • ~€1bn(1) gross NPL deleveraging in 4Q19

2018 2019

pro-forma

(12.7)

  • Lowest Net adjustments to loans since 2007
  • The lowest-ever FY gross NPL inflow(1)
  • Cost of credit down to 53bps (vs 61bps in FY18), the lowest since 2007
  • ~€6bn(1) gross NPL deleveraging on a yearly basis (~€34bn(1) since the peak of 30.9.15)

(1) Excluding ~€0.6bn one-off impact from the adoption of the new Definition of Default (DoD) since November 2019

51

Contents

Detailed Consolidated P&L Results

Liquidity, Funding and Capital Base

Asset Quality

Divisional Results and Other Information

52

Strong Growth in Customer Financial Assets

  • 31.12.19 vs 31.12.18, 30.6.19 and 30.9.19

Customer Financial Assets(1)

€ bn

+€49bn

Repos

961

951

912

939

12

5

24

16

888 923 939 956

31.12.18 30.6.19 30.9.19 31.12.19

+5.4 +2.3 +1.0

Direct Deposits from Insurance Business and

Technical Reserves

€ bn

149 158 164 166

31.12.18 30.6.19 30.9.19 31.12.19

+11.0 +5.3 +0.9

Direct Deposits from Banking Business

€ bn

423

427

Repos

415

426

24

16

12

5

391 407 415 421

31.12.18 30.6.19 30.9.19 31.12.19

+2.5 +0.6 (0.3)

Indirect Customer Deposits

€ bn

Assets under adm.

Assets under mgt.

496

515

524

534

165

171

172

176

331 344 352 358

31.12.18 30.6.19 30.9.19 31.12.19

+7.8 +3.7 +2.0

  • €27bn increase in AuM in 2019

Note: figures may not add up exactly due to rounding

53

(1) Net of duplications between Direct Deposits and Indirect Customer Deposits

Mutual Funds Mix

%

100

Fixed income,

monetary and 57% other funds

Equity,

balanced43% and flexible

funds

MIL-BVA327-15051trim.13-90141/LR

Mutual funds mix

100

100

100

45%

46%

46%

+11pp

55%

54%

54%

31.12.13

31.12.18

30.9.19

31.12.19

54

MIL-BVA327-15051trim.13-90141/LR

Funding Mix

Breakdown of Direct Deposits from Banking Business

€ bn; 31.12.19

% Percentage of total

426

338

87

Wholesale Retail Total

2080100

  • Current accounts and deposits
  • Repos and securities lending
  • Senior bonds
  • Covered bonds
  • Short-terminstitutional funding
  • Subordinated liabilities
  • Other deposits

Wholesale Retail

7310

5-

409(1)

12-

14(2)-

Placed with

7 Private Banking 2 clients

218(3)

Retail funding represents 80% of Direct deposits from banking business

Note: figures may not add up exactly due to rounding

  1. 41% placed with Private Banking clients
  2. Including €4bn in EMTN puttable and €10bn in Certificates of deposit + Commercial papers

(3) Including Certificates

55

Strong Funding Capability: Broad Access to International Markets

2020-2022 MLT Maturities

€ bn

Wholesale

ISP Main Wholesale Issues

2018

11

Retail

12

  • $2.5bn senior unsecured ($1bn 5y, $1bn 10y and $500m 30y), JPY46.6bn (~€354m) senior unsecured split between 3y-5y-10y-15y tranches, €2.25bn senior unsecured (€1.25bn 10y and €1bn 5y) and €1bn 7y covered bonds placed. On average 89% demand came from foreign investors

9

2019

9

9

€1bn covered bonds, JPY13.2bn (~€105m) senior unsecured, €3.5bn

senior unsecured, CHF250m senior unsecured, $2bn senior unsecured

and €750m green bond placed. On average 91% demand from foreign

7

223

FY20 FY21 FY22

investors; targets exceeded by 151%

February: €1bn covered bonds backed by residential mortgages

March: second senior unsecured Tokyo Pro-Bond transaction for a

total of JPY13.2bn (~€105m) split between 3y and 15y tranches

June: €2.25bn dual tranche 5/10y senior unsecured issue

September: inaugural CHF250m 5y senior unsecured issue and $2bn

triple-tranche senior unsecured issue split between $750m 5y, $750m

10y and $500m 30y

November: €1.25bn 7y senior unsecured issue and €750m 5y senior

unsecured green bond focused on the Circular Economy, under the ISP

Sustainability Bond Framework

2020

  • January: GBP350m 10y senior unsecured issue, first GBP transaction by an Italian bank since 2010

Note: figures may not add up exactly due to rounding

56

High Liquidity: LCR and NSFR Well Above Regulatory Requirements

Liquid assets(1)

€ bn

175 197 190

Unencumbered eligible assets with Central

Banks(2) (net of haircuts)

€ bn

116 118

89

31.12.18

30.9.19

31.12.19

31.12.18

30.9.19

31.12.19

    • TLTRO: ~€49bn(3)
    • Loan to Deposit ratio(4) at 93%
  2. Stock of own-account eligible assets (including assets used as collateral and excluding eligible assets received as collateral) and cash & deposits with Central Banks
  3. Eligible assets freely available (excluding assets used as collateral and including eligible assets received as collateral) and cash & deposits with Central Banks
  4. In December 2019, €17bn borrowed under the TLTRO III (out of a maximum allowance of ~€54bn) against a partial repayment of €29bn of the amount taken under the previous TLTRO II (~€60.5bn)
  5. Loans to Customers/Direct Deposits from Banking Business

57

Solid Capital Base

Phased-in Common Equity Ratio

Phased-in Tier 1 Ratio

Phased-in Total Capital Ratio

After dividends (€3.4bn in 2019)

%

Decrease in Q4 due to the change in regulatory treatment of Tier2 instruments issued by the insurance subsidiary

13.5 14.0 13.9

After dividends (€3.4bn in 2019)

%

15.2 15.6 15.3

After dividends (€3.4bn in 2019)

%

17.7 17.8 17.7

31.12.18

30.9.19(1)

31.12.19(1)

31.12.18

30.9.19(1)

31.12.19(1)

31.12.18

30.9.19(1)

31.12.19(1)

    • 14.1% pro-forma fully loaded Common Equity ratio(2)
    • 6.7% leverage ratio
  2. Considering the impact from TRIM and IFRS16 in 1Q19 (~20bps) and IFRS9 FTA + IAS19 phasing-in (impact of ~20bps in 1Q19)
  3. Pro-formafully loaded Basel 3 (31.12.19 financial statements considering the total absorption of DTA related to IFRS9 FTA, goodwill realignment/adjustments to loans/non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the operations of the two former Venetian banks, the expected absorption of DTA on losses carried forward and the expected distribution of FY19 Net income of insurance companies exceeding reserves already distributed in the first quarter)

58

Contents

Detailed Consolidated P&L Results

Liquidity, Funding and Capital Base

Asset Quality

Divisional Results and Other Information

59

MIL-BVA327-15051trim.13-90141/LR

Non-performing Loans: Sizeable Coverage

Cash coverage; %

Total NPL(1)

55.4% excluding DoD(2) one-off impact

54.5

54.8

54.6

+0.1pp

31.12.18 30.9.19 31.12.19

Bad Loans

Unlikely to Pay

Past Due

67.2

65.3

65.3

25.3% excluding DoD(2) one-off impact

36.2 37.6 38.7

25.6 25.1 16.0

31.12.18

30.9.19

31.12.19

31.12.18

30.9.19

31.12.19

31.12.18

30.9.19

31.12.19

  1. Bad Loans (Sofferenze), Unlikely to pay (Inadempienze probabili) and Past Due (Scaduti e sconfinanti)
  2. New Definition of Default since November 2019

60

Non-performing Loans: Lowest-ever Gross Inflow

Gross inflow of new NPL(1) from Performing Loans

Net inflow of new NPL(1) from Performing Loans

  • bn
    16.4 15.5

12.3

-76%

Impact from the acquisition of the two former Venetian banks

€ bn

12.0

11.0

-77%

Impact from the acquisition of the two former Venetian banks

8.7

5.8

4.7 4.4 3.9

8.6

5.7

3.1

2.3 2.0 2.8

2012(2)

2013

2014

2015

2016

2017

2018

2019(3)

2012(2)

2013

2014

2015

2016

2017

2018

2019(3)

  1. Bad Loans (Sofferenze), Unlikely to pay (Inadempienze probabili) and Past Due (Scaduti e sconfinanti)
  2. 2012 figures recalculated to take into consideration the regulatory changes to Past Due classification criteria introduced by the Bank of Italy (90 days since 2012 vs 180 days up until 31.12.11)
  3. Excluding ~€0.6bn one-off impact from the adoption of the new Definition of Default (DoD) since November 2019

61

MIL-BVA327-15051trim.13-90141/LR

Non-performing Loans: Strong Decrease in Gross Inflow vs Q3

€ m

Gross inflow of new NPL(1) from Performing Loans

1,136

848809

4Q18 3Q19 4Q19(2)

Bad Loans

Unlikely to Pay

Past Due

723

376529

23 15 11

4Q18

3Q19

4Q19

4Q18

3Q19

4Q19(3)

Note: figures may not add up exactly due to rounding

  1. Bad Loans (Sofferenze), Unlikely to pay (Inadempienze probabili) and Past Due (Scaduti e sconfinanti)
  2. Excluding €623m one-off impact from the adoption of the new Definition of Default (DoD) since November 2019
  3. Excluding €57m one-off impact from the adoption of the new Definition of Default (DoD) since November 2019
  4. Excluding €566m one-off impact from the adoption of the new Definition of Default (DoD) since November 2019

449 398 269

4Q18 3Q19 4Q19(4)

62

MIL-BVA327-15051trim.13-90141/LR

Non-performing Loans: Strong Decrease in Net Inflow vs Q3

€ m

Net inflow of new NPL(1) from Performing Loans

902

541

9

4Q18 3Q19 4Q19(2)

Bad Loans

Unlikely to Pay

Past Due

576 345

0 6 1

4Q18

3Q19

4Q19

(344)

4Q18 3Q19 4Q19(3)

Note: figures may not add up exactly due to rounding

  1. Bad Loans (Sofferenze), Unlikely to pay (Inadempienze probabili) and Past Due (Scaduti e sconfinanti)
  2. Excluding €623m one-off impact from the adoption of the new Definition of Default (DoD) since November 2019
  3. Excluding €57m one-off impact from the adoption of the new Definition of Default (DoD) since November 2019
  4. Excluding €566m one-off impact from the adoption of the new Definition of Default (DoD) since November 2019

353 320 195

4Q18 3Q19 4Q19(4)

63

MIL-BVA327-15051trim.13-90141/LR

New Bad Loans: Gross Inflow

€ bn

Group's new Bad Loans(1) gross inflow

BdT

0.7

C&IB

International

0.5

0.1

Subsidiaries

0.1

0.4

0.1

0.5

0.1

0.5

0.3

4Q18

3Q19

4Q19

BdT's new Bad Loans(1) gross inflow

C&IB's new Bad Loans(1) gross inflow

4Q18

3Q19

4Q19

3Q19

4Q19

4Q18

Total

0.5

0.3

0.5

Total

-

-

0.1

Households

0.1

0.1

0.1

Banca IMI(2)

-

-

-

SMEs

0.4

0.2

0.4

Global Corporate

-

-

0.1

Note: figures may not add up exactly due to rounding

  1. Sofferenze
  2. Capital Markets and Investment Banking

International

-

-

-

Financial Institutions

-

-

-

64

New Unlikely to Pay: Gross Inflow

€ bn

Group's gross inflow of new Unlikely to Pay

0.9

1.0

1.0

0.1

0.1

0.1

0.1

0.1

0.1

0.7

0.8

0.8

4Q18

3Q19

4Q19

MIL-BVA327-15051trim.13-90141/LR

BdT

C&IB

International

Subsidiaries

BdT's gross inflow of new Unlikely to Pay

C&IB's gross inflow of new Unlikely to Pay

4Q18

3Q19

4Q19

4Q18

3Q19

4Q19

Total

0.7

0.8

0.8

Total

0.1

0.1

0.1

Households

0.3

0.2

0.3

Banca IMI(1)

-

-

-

SMEs

0.4

0.6

0.5

Global Corporate

0.1

0.1

-

International

-

-

-

Financial Institutions

-

-

-

Note: figures may not add up exactly due to rounding

(1) Capital Markets and Investment Banking

65

Non-performing Loans: Seventeenth Consecutive Quarterly Decline in Stock

Gross NPL

Net NPL

€ bn

Bad Loans

- of which forborne

Unlikely to pay

- of which forborne

Past Due

- of which forborne

Total

€ bn

31.12.18

30.9.19

31.12.19

31.12.18

30.9.19

31.12.19

21.7

19.9

19.4

Bad Loans

7.1

6.9

6.7

2.6

2.6

2.7

- of which forborne

1.0

1.0

1.1

14.3

11.2

11.0

Unlikely to pay

9.1

7.0

6.7

6.5

4.5

4.4

- of which forborne

4.4

3.0

2.9

€0.3bn excluding DoD(1)

€0.2bn excluding DoD(1)

0.5

0.5

0.9

Past Due

0.4

0.4

0.7

-

-

0.1

- of which forborne

-

-

0.1

€30.7bn excluding DoD(1)

€13.7bn excluding DoD(1)

36.5

31.6

31.3

Total

16.6

14.3

14.2

  • 83%(1) of 2018-2021 Business Plan NPL deleveraging target already achieved
  • ~€34bn(1) NPL deleveraging since the peak of 30.9.15 (~€6bn(1) since 31.12.18, of which ~€1bn(1) in Q4), leading to the lowest NPL stock since 2008

Note: figures may not add up exactly due to rounding

(1) Excluding ~€0.6bn gross (~€0.5bn net) one-off impact from the adoption of the new Definition of Default (DoD) since November 2019

66

MIL-BVA327-15051trim.13-90141/LR

Loans to Customers: A Well-diversified Portfolio

Breakdown by business area

(data as at 31.12.19)

Repos, Capital markets and

Financial InstitutionsGlobal Corporate & Structured Finance

Non-profit

13%

21%

1%

SMEs 17%

12% International

Network

6%

1%

Other

Consumer

Finance

6%

23%

RE & Construction

Residential Mortgages

  • Low risk profile of residential mortgage portfolio
    • Instalment/available income ratio at 32%
    • Average Loan-to-Value equal to 56%
    • Original average maturity equal to ~23 years
    • Residual average life equal to ~18 years

Note: figures may not add up exactly due to rounding

67

Breakdown by economic business sector

31.12.19

Loans of the Italian banks and companies of the Group

Households

29.0%

Public Administration

1.9%

Financial companies

10.8%

Non-financial companies

32.1%

of which:

SERVICES

6.3%

DISTRIBUTION

5.4%

REAL ESTATE

3.3%

UTILITIES

2.5%

CONSTRUCTION

1.9%

METALS AND METAL PRODUCTS

1.7%

AGRICULTURE

1.5%

FOOD AND DRINK

1.3%

TRANSPORT

1.3%

MECHANICAL

1.0%

INTERMEDIATE INDUSTRIAL PRODUCTS

0.9%

FASHION

0.8%

ELECTROTECHNICAL AND ELECTRONIC

0.6%

TRANSPORTATION MEANS

0.5%

HOLDING AND OTHER

0.5%

ENERGY AND EXTRACTION

0.4%

PUBLISHING AND PRINTING

0.3%

MATERIALS FOR CONSTRUCTION

0.3%

BASE AND INTERMEDIATE CHEMICALS

0.3%

NON-CLASSIFIED UNITS

0.3%

PHARMACEUTICAL

0.2%

INFRASTRUCTURE

0.2%

FURNITURE

0.2%

OTHER CONSUMPTION GOODS

0.2%

MASS CONSUMPTION GOODS

0.1%

WHITE GOODS

0.1%

Rest of the world

10.8%

Loans of international banks and companies of the Group

11.7%

Non-performing loans

3.6%

TOTAL

100.0%

Contents

Detailed Consolidated P&L Results

Liquidity, Funding and Capital Base

Asset Quality

Divisional Results and Other Information

68

MIL-BVA327-15051trim.13-90141/LR

Divisional Financial Highlights

Data as at 31.12.19

Divisions

Banca dei

Corporate &

International

Private

Asset

(4)

Corporate

Investment

Subsidiary

Insurance

Centre /

Total

Territori

Banking(2)

Management(3)

Banking

Banks(1)

Others(5)

Operating Income (€ m)

8,473

4,162

1,998

1,971

840

1,132

(493)

18,083

Operating Margin (€ m)

3,439

3,074

1,007

1,358

683

928

(1,696)

8,793

Net Income (€ m)

1,551

1,932

723

919

518

661

(2,122)

4,182

Cost/Income (%)

59.4

26.1

49.6

31.1

18.7

18.0

n.m.

51.4

RWA (€ bn)

83.3

100.1

32.9

9.2

1.4

0.0

71.6

298.5

Direct Deposits from Banking Business (€ bn)

199.3

96.6

43.4

38.7

0.0

0.0

47.5

425.5

Loans to Customers (€ bn)

186.4

131.5

34.0

9.3

0.4

0.0

33.5

395.2

Note: figures may not add up exactly due to rounding

  1. Excluding the Russian subsidiary Banca Intesa included in C&IB
  2. Fideuram, Intesa Sanpaolo Private Banking, Intesa Sanpaolo Private Bank (Suisse) Morval, and Siref Fiduciaria
  3. Eurizon
  4. Fideuram Vita, Intesa Sanpaolo Assicura, Intesa Sanpaolo Life and Intesa Sanpaolo Vita
  5. Treasury Department, Central Structures and consolidation adjustments

69

MIL-BVA327-15051trim.13-90141/LR

Banca dei Territori:

2019 vs 2018

€ m

2018

2019

%

pro-forma(1)

Net interest income

4,437

4,187

(5.6)

Net fee and commission income

4,314

4,212

(2.4)

Income from insurance business

1

2

100.0

Profits on financial assets and liabilities at fair value

74

72

(2.7)

Other operating income (expenses)

(1)

0

n.m.

Operating income

8,825

8,473

(4.0)

Personnel expenses

(3,276)

(3,135)

(4.3)

Other administrative expenses

(2,027)

(1,890)

(6.8)

Adjustments to property, equipment and intangible assets

(8)

(9)

12.5

Operating costs

(5,311)

(5,034)

(5.2)

Operating margin

3,514

3,439

(2.1)

Net adjustments to loans

(1,405)

(1,016)

(27.7)

Net provisions and net impairment losses on other assets

(71)

(111)

56.3

Other income (expenses)

0

111

n.m.

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

2,038

2,423

18.9

Taxes on income

(766)

(848)

10.7

Charges (net of tax) for integration and exit incentives

(14)

(23)

64.3

Effect of purchase price allocation (net of tax)

(2)

(1)

(50.0)

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority

interests

0

0

n.m.

Net

income

1,256

1,551

23.5

Note: figures may not add up exactly due to rounding

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement, and the merger of Mediocredito Italiano into ISP

70

MIL-BVA327-15051trim.13-90141/LR

Banca dei Territori:

Q4 vs Q3

€ m

3Q19

4Q19

%

pro-forma(1)

Net interest income

1,058

1,005

(5.0)

Net fee and commission income

1,067

1,078

1.0

Income from insurance business

1

0

(62.5)

Profits on financial assets and liabilities at fair value

19

19

0.3

Other operating income (expenses)

(0)

0

n.m.

Operating income

2,145

2,103

(2.0)

Personnel expenses

(779)

(797)

2.4

Other administrative expenses

(458)

(528)

15.4

Adjustments to property, equipment and intangible assets

(3)

(2)

(25.2)

Operating costs

(1,239)

(1,327)

7.1

Operating margin

906

776

(14.4)

Net adjustments to loans

(259)

(208)

(19.9)

Net provisions and net impairment losses on other assets

(12)

(77)

559.0

Other income (expenses)

0

111

n.m.

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

635

601

(5.3)

Taxes on income

(232)

(182)

(21.7)

Charges (net of tax) for integration and exit incentives

(4)

(9)

93.0

Effect of purchase price allocation (net of tax)

0

0

n.m.

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority

interests

0

0

n.m.

Net

income

398

411

3.2

Note: figures may not add up exactly due to rounding

(1) Data restated for the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement and for the merger of Mediocredito Italiano into ISP

71

MIL-BVA327-15051trim.13-90141/LR

Corporate and Investment Banking: 2019 vs 2018

€ m

2018

2019

%

pro-forma(1)

Net interest income

1,773

1,899

7.1

Net fee and commission income

1,077

1,029

(4.5)

Income from insurance business

0

0

n.m.

Profits on financial assets and liabilities at fair value

1,050

1,232

17.3

Other operating income (expenses)

15

2

(86.7)

Operating income

3,915

4,162

6.3

Personnel expenses

(427)

(435)

1.9

Other administrative expenses

(628)

(623)

(0.8)

Adjustments to property, equipment and intangible assets

(30)

(30)

0.0

Operating costs

(1,085)

(1,088)

0.3

Operating margin

2,830

3,074

8.6

Net adjustments to loans

(146)

(211)

44.5

Net provisions and net impairment losses on other assets

(7)

(41)

485.7

Other income (expenses)

2

3

50.0

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

2,679

2,825

5.4

Taxes on income

(769)

(888)

15.5

Charges (net of tax) for integration and exit incentives

(8)

(5)

(37.5)

Effect of purchase price allocation (net of tax)

0

0

n.m.

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

0

0

n.m.

Net income

1,902

1,932

1.6

+14.0% excluding NTV(2)

+19.8% excluding NTV(2)

+17.0% excluding NTV(2)

+16.7% excluding NTV(2)

Note: figures may not add up exactly due to rounding

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the merger of Mediocredito Italiano into ISP
  2. €264m pre-tax positive impact (€246m net of tax) deriving from the sale of the NTV stake booked in 1Q18

72

MIL-BVA327-15051trim.13-90141/LR

Banca IMI: A Significant Contribution to Group Results

2019 Results

Banca IMI Operating Income(1)

of which: Global Markets

€ m

€ m

RWA (€ bn)

62

275

326

2,225

434

1,562

2,225

2,659

Fixed Income

Credits

Equity

Brokerage

Global

and Commodity

Markets

Global

Investment Banking &

Total

Markets

Structured Finance

Banca IMI

+

25.1

8.8

34.0

  • ~45% of Operating income is customer driven
  • 2019 average VaR at €136m
  • Cost/Income ratio at 17.8%
  • 2019 Net income at €1,415m

of which: Investment Banking & Structured Finance

€ m

320

434

78

24

12

Structured

Invest. Banking &

ECM

M&A

Debt

Advisory

Markets

Finance

Structured Finance

Note: figures may not add up exactly due to rounding

(1) Banca IMI S.p.A. and its subsidiaries

73

MIL-BVA327-15051trim.13-90141/LR

Corporate and Investment Banking:

Q4 vs Q3

€ m

3Q19

4Q19

%

pro-forma(1)

Net interest income

474

499

5.1

Net fee and commission income

239

318

32.9

Income from insurance business

0

0

n.m.

Profits on financial assets and liabilities at fair value

399

197

(50.7)

Other operating income (expenses)

0

(0)

n.m.

Operating income

1,113

1,013

(8.9)

Personnel expenses

(104)

(128)

23.1

Other administrative expenses

(154)

(169)

9.7

Adjustments to property, equipment and intangible assets

(8)

(8)

(3.8)

Operating costs

(267)

(305)

14.5

Operating margin

846

708

(16.3)

Net adjustments to loans

(64)

(27)

(57.5)

Net provisions and net impairment losses on other assets

(1)

(29)

n.m.

Other income (expenses)

0

0

n.m.

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

781

652

(16.5)

Taxes on income

(249)

(195)

(21.9)

Charges (net of tax) for integration and exit incentives

(1)

(1)

(18.8)

Effect of purchase price allocation (net of tax)

0

0

n.m.

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

0

0

n.m.

Net income

531

456

(14.0)

Note: figures may not add up exactly due to rounding

(1) Data restated for the merger of Mediocredito Italiano into ISP

74

MIL-BVA327-15051trim.13-90141/LR

International Subsidiary Banks: 2019 vs 2018

€ m

2018

2019

%

pro-forma(1)

Net interest income

1,322

1,370

3.6

Net fee and commission income

524

537

2.5

Income from insurance business

0

0

n.m.

Profits on financial assets and liabilities at fair value

172

124

(27.9)

Other operating income (expenses)

(30)

(33)

10.0

Operating income

1,988

1,998

0.5

Personnel expenses

(532)

(540)

1.5

Other administrative expenses

(332)

(346)

4.2

Adjustments to property, equipment and intangible assets

(111)

(105)

(5.4)

Operating costs

(975)

(991)

1.6

Operating margin

1,013

1,007

(0.6)

Net adjustments to loans

(121)

(77)

(36.4)

Net provisions and net impairment losses on other assets

(47)

5

n.m.

Other income (expenses)

10

9

(10.0)

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

855

944

10.4

Taxes on income

(146)

(181)

24.0

Charges (net of tax) for integration and exit incentives

(35)

(40)

14.3

Effect of purchase price allocation (net of tax)

0

0

n.m.

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

(2)

0

n.m.

Minority interests

4

0

(100.0)

Net income

676

723

7.0

Note: figures may not add up exactly due to rounding. Excluding the Russian subsidiary Banca Intesa included in C&IB

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', and international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income"

75

MIL-BVA327-15051trim.13-90141/LR

International Subsidiary Banks:

Q4 vs Q3

€ m

3Q19

4Q19

%

Net interest income

350

340

(2.9)

Net fee and commission income

134

140

4.3

Income from insurance business

0

0

n.m.

Profits on financial assets and liabilities at fair value

26

39

50.0

Other operating income (expenses)

(11)

(6)

44.5

Operating income

499

513

2.7

Personnel expenses

(134)

(143)

6.4

Other administrative expenses

(82)

(100)

21.9

Adjustments to property, equipment and intangible assets

(27)

(27)

(0.7)

Operating costs

(243)

(269)

10.9

Operating margin

256

243

(5.1)

Net adjustments to loans

(9)

(41)

338.4

Net provisions and net impairment losses on other assets

4

5

(34.5)

Other income (expenses)

1

4

269.8

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

252

211

(16.0)

Taxes on income

(46)

(40)

(13.3)

Charges (net of tax) for integration and exit incentives

(12)

(13)

3.8

Effect of purchase price allocation (net of tax)

0

0

n.m.

Levies and other charges concerning the banking industry (net of tax)

0

(0)

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

(0)

0

n.m.

Net income

(17.9)

193

159

Note: figures may not add up exactly due to rounding. Excluding the Russian subsidiary Banca Intesa included in C&IB

76

MIL-BVA327-15051trim.13-90141/LR

Private Banking:

2019 vs 2018

€ m

2018

2019

%

pro-forma(1)

Net interest income

155

177

14.2

Net fee and commission income

1,696

1,746

2.9

Income from insurance business

0

0

n.m.

Profits on financial assets and liabilities at fair value

14

42

200.0

Other operating income (expenses)

9

6

(33.3)

Operating income

1,874

1,971

5.2

Personnel expenses

(349)

(358)

2.6

Other administrative expenses

(198)

(199)

0.5

Adjustments to property, equipment and intangible assets

(46)

(56)

21.7

Operating costs

(593)

(613)

3.4

Operating margin

1,281

1,358

6.0

Net adjustments to loans

5

(2)

n.m.

Net provisions and net impairment losses on other assets

(13)

(30)

130.8

Other income (expenses)

10

9

(10.0)

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

1,283

1,335

4.1

Taxes on income

(404)

(394)

(2.5)

Charges (net of tax) for integration and exit incentives

(30)

(21)

(30.0)

Effect of purchase price allocation (net of tax)

(1)

(2)

100.0

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

0

1

n.m.

Net income

8.4

848

919

Note: figures may not add up exactly due to rounding

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', and international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income''

77

MIL-BVA327-15051trim.13-90141/LR

Private Banking:

Q4 vs Q3

€ m

3Q19

4Q19

%

Net interest income

43

45

3.7

Net fee and commission income

433

470

8.7

Income from insurance business

0

0

n.m.

Profits on financial assets and liabilities at fair value

5

9

83.3

Other operating income (expenses)

1

2

166.7

Operating income

482

526

9.2

Personnel expenses

(92)

(94)

1.7

Other administrative expenses

(53)

(57)

6.6

Adjustments to property, equipment and intangible assets

(15)

(14)

(6.2)

Operating costs

(160)

(164)

2.6

Operating margin

322

362

12.5

Net adjustments to loans

2

(1)

n.m.

Net provisions and net impairment losses on other assets

(15)

8

n.m.

Other income (expenses)

0

(0)

n.m.

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

308

368

19.5

Taxes on income

(95)

(115)

20.7

Charges (net of tax) for integration and exit incentives

(4)

(7)

59.3

Effect of purchase price allocation (net of tax)

(0)

(0)

n.m.

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

0

1

n.m.

Net income

18.4

208

246

Note: figures may not add up exactly due to rounding

78

MIL-BVA327-15051trim.13-90141/LR

Asset Management:

2019 vs 2018

€ m

2018

2019

%

pro-forma(1)

Net interest income

0

1

n.m.

Net fee and commission income

701

799

14.0

Income from insurance business

0

0

n.m.

Profits on financial assets and liabilities at fair value

(10)

5

n.m.

Other operating income (expenses)

25

35

40.0

Operating income

716

840

17.3

Personnel expenses

(70)

(81)

15.7

Other administrative expenses

(75)

(70)

(6.7)

Adjustments to property, equipment and intangible assets

(5)

(6)

20.0

Operating costs

(150)

(157)

4.7

Operating margin

566

683

20.7

Net adjustments to loans

0

0

n.m.

Net provisions and net impairment losses on other assets

2

0

(100.0)

Other income (expenses)

0

0

n.m.

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

568

683

20.2

Taxes on income

(103)

(165)

60.2

Charges (net of tax) for integration and exit incentives

0

0

n.m.

Effect of purchase price allocation (net of tax)

0

0

n.m.

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

(11)

0

n.m.

Net income

454

518

14.1

Note: figures may not add up exactly due to rounding

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', and international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income''

79

MIL-BVA327-15051trim.13-90141/LR

Asset Management:

Q4 vs Q3

€ m

3Q19

4Q19

%

Net interest income

0

0

294.2

Net fee and commission income

185

272

47.0

Income from insurance business

0

0

n.m.

Profits on financial assets and liabilities at fair value

1

1

(55.3)

Other operating income (expenses)

9

9

6.8

Operating income

195

282

44.8

Personnel expenses

(19)

(27)

40.6

Other administrative expenses

(16)

(21)

30.2

Adjustments to property, equipment and intangible assets

(1)

(1)

0.7

Operating costs

(37)

(49)

34.5

Operating margin

158

233

47.1

Net adjustments to loans

0

0

n.m.

Net provisions and net impairment losses on other assets

(0)

0

n.m.

Other income (expenses)

0

0

n.m.

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

158

233

47.2

Taxes on income

(39)

(58)

48.5

Charges (net of tax) for integration and exit incentives

(0)

(0)

(10.9)

Effect of purchase price allocation (net of tax)

0

0

n.m.

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

(0)

0

n.m.

Net

47.0

income

118

174

Note: figures may not add up exactly due to rounding

80

MIL-BVA327-15051trim.13-90141/LR

Insurance:

2019 vs 2018

€ m

2018

2019

%

pro-forma(1)

Net interest income

0

0

n.m.

Net fee and commission income

0

0

n.m.

Income from insurance business

1,119

1,144

2.2

Profits on financial assets and liabilities at fair value

0

0

n.m.

Other operating income (expenses)

(13)

(12)

(7.7)

Operating income

1,106

1,132

2.4

Personnel expenses

(84)

(90)

7.1

Other administrative expenses

(95)

(102)

7.4

Adjustments to property, equipment and intangible assets

(8)

(12)

50.0

Operating costs

(187)

(204)

9.1

Operating margin

919

928

1.0

Net adjustments to loans

0

0

n.m.

Net provisions and net impairment losses on other assets

(5)

(2)

(60.0)

Other income (expenses)

0

0

n.m.

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

914

926

1.3

Taxes on income

(245)

(247)

0.8

Charges (net of tax) for integration and exit incentives

(5)

(2)

(60.0)

Effect of purchase price allocation (net of tax)

(16)

(16)

0.0

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

0

0

n.m.

Net income

2.0

648

661

Note: figures may not add up exactly due to rounding

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', and international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income''

81

MIL-BVA327-15051trim.13-90141/LR

Insurance:

Q4 vs Q3

€ m

3Q19

4Q19

%

Net interest income

0

0

n.m.

Net fee and commission income

0

0

n.m.

Income from insurance business

299

299

0.3

Profits on financial assets and liabilities at fair value

0

0

n.m.

Other operating income (expenses)

(3)

(4)

(68.5)

Operating income

296

295

(0.3)

Personnel expenses

(22)

(26)

18.3

Other administrative expenses

(27)

(29)

6.2

Adjustments to property, equipment and intangible assets

(3)

(4)

29.8

Operating costs

(52)

(59)

12.6

Operating margin

244

236

(3.1)

Net adjustments to loans

0

0

n.m.

Net provisions and net impairment losses on other assets

(1)

(0)

(66.3)

Other income (expenses)

0

0

n.m.

Income (Loss) from discontinued operations

0

0

n.m.

Gross income (loss)

243

236

(2.8)

Taxes on income

(68)

(64)

(6.2)

Charges (net of tax) for integration and exit incentives

(0)

(2)

374.6

Effect of purchase price allocation (net of tax)

(4)

(4)

0.0

Levies and other charges concerning the banking industry (net of tax)

0

0

n.m.

Impairment (net of tax) of goodwill and other intangible assets

0

0

n.m.

Minority interests

0

0

n.m.

Net income

170

167

(2.2)

Note: figures may not add up exactly due to rounding

82

MIL-BVA327-15051trim.13-90141/LR

Quarterly P&L

€ m

1Q18

2Q18

3Q18

4Q18

pro-forma(1)

Net interest income

1,853

1,838

1,844

1,736

Net fee and commission income

2,010

1,996

1,939

2,007

Income from insurance business

294

281

271

238

Profits on financial assets and liabilities at fair value

610

448

209

205

Other operating income (expenses)

30

26

(11)

(11)

Operating income

4,797

4,589

4,252

4,175

Personnel expenses

(1,432)

(1,447)

(1,415)

(1,518)

Other administrative expenses

(620)

(608)

(637)

(753)

Adjustments to property, equipment and intangible assets

(257)

(254)

(259)

(287)

Operating costs

(2,309)

(2,309)

(2,311)

(2,558)

Operating margin

2,488

2,280

1,941

1,617

Net adjustments to loans

(483)

(694)

(519)

(698)

Net provisions and net impairment losses on other assets

(51)

(35)

(25)

(76)

Other income (expenses)

(2)

3

(2)

507

Income (Loss) from discontinued operations

17

16

19

19

Gross income (loss)

1,969

1,570

1,414

1,369

Taxes on income

(541)

(504)

(432)

(173)

Charges (net of tax) for integration and exit incentives

(19)

(16)

(31)

(54)

Effect of purchase price allocation (net of tax)

(44)

(26)

(38)

(48)

Levies and other charges concerning the banking industry (net of tax)

(126)

(93)

(90)

(69)

Impairment (net of tax) of goodwill and other intangible assets

0

0

0

0

Minority interests

13

(4)

10

13

Net income

1,252

927

833

1,038

1Q19

2Q19

3Q19

4Q19

pro-forma(2)

1,756

1,761

1,741

1,747

1,865

1,965

1,966

2,166

291

284

301

308

458

634

480

356

(1)

10

5

(10)

4,369

4,654

4,493

4,567

(1,387)

(1,418)

(1,421)

(1,518)

(556)

(596)

(605)

(731)

(260)

(252)

(261)

(285)

(2,203)

(2,266)

(2,287)

(2,534)

2,166

2,388

2,206

2,033

(369)

(554)

(473)

(693)

(30)

(37)

(19)

(168)

6

1

(2)

50

19

22

22

25

1,792

1,820

1,734

1,247

(536)

(449)

(536)

(317)

(22)

(30)

(27)

(27)

(40)

(28)

(37)

(12)

(146)

(96)

(96)

(22)

0

0

0

0

2

(1)

6

3

1,050

1,216

1,044

872

Note: figures may not add up exactly due to rounding

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement
  2. Data restated for the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement

83

Net Fee and Commission Income: Quarterly Development Breakdown

€ m

Net Fee and Commission Income

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

pro-forma(1)

Guarantees given / received

60

72

76

63

Collection and payment services

92

117

108

127

Current accounts

319

313

308

320

Credit and debit cards

64

77

84

87

Commercial banking activities

535

579

576

597

Dealing and placement of securities

221

215

147

163

Currency dealing

12

13

12

13

Portfolio management

596

569

570

569

Distribution of insurance products

378

378

364

342

Other

62

57

67

69

Management, dealing and consultancy activities

1,269

1,232

1,160

1,156

Other net fee and commission income

206

185

203

254

Net fee and commission income

2,010

1,996

1,939

2,007

pro-forma(2)

55

56

58

60

110

118

113

127

308

306

304

304

74

80

89

82

547

560

564

573

180

195

190

199

12

12

13

12

542

561

571

697

326

361

363

391

62

65

69

68

1,122

1,194

1,206

1,367

196

211

196

226

1,865

1,965

1,966

2,166

Note: figures may not add up exactly due to rounding

  1. Data restated for IFRS16, the full line-by-line consolidation of Autostrade Lombarde, and the reclassification of Risanamento operating income entirely to "Other operating income (expenses)", placement fees for certificates from "Profits on financial assets and liabilities at fair value" to "Net fee and commission income", expenses for employees transferred to Tersia (Intrum deal) to ''Other administrative expenses'', international subsidiaries charges concerning the banking industry from ''Other operating income (expenses)'' to ''Levies and other charges concerning the banking industry (net of tax)'' and to ''Taxes on income'', and the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement
  2. Data restated for the full line-by-line deconsolidation of the acquiring activities due to the Nexi agreement

84

Market Leadership in Italy

2019 Operating Income

Leader in Italy

Breakdown by business area(1)

Corporate and

Investment Banking

22%

Insurance 6%

11%

Private Banking

5%

11%

Asset Management International Subsidiary Banks

Ranking

Market share(2)

%

1

Loans

17.0

Banca

1

Deposits(3)

18.2

46% dei Territori

1 Asset Management(4)

21.1

1

Pension Funds(5)

23.0

Note: figures may not add up exactly due to rounding

(1) Excluding Corporate Centre

(2) Data as at 31.12.19

(3) Including bonds

(4) Mutual funds; data as at 30.9.19

(5) Data as at 30.9.19

85

International Subsidiary Banks: Key P&L Data by Country

Data as at 31.12.19

(Δ% vs 2018 pro-forma)

Operating Income

Operating Costs

€ m

€ m

+2.0

(14.0)

+18.7

+3.8

+1.4

(3.9)

+6.6

+3.8

+8.4

+9.6

+7.8

(3.8)

(5.0)

+28.5

(2.6)

+2.1

+3.5

(7.8)

(0.4)

+13.3

(15.5)

+24.5

510

458

352

223

265

197

139

119

169

98

74

47

46

40

45

30

22

21

19

17

9

8

Croatia

Slovakia

Egypt

Serbia

Hungary

Slovenia

Romania

Bosnia

Albania

Ukraine

Moldova

Slovakia

Croatia

Egypt

Hungary

Serbia

Slovenia

Romania

Bosnia

Ukraine

Albania

Moldova

Operating Margin

Gross Income

€ m

+6.9

(21.8)

+13.1

+4.8

+12.3

(13.7)

+7.9

+48.4

+48.5

(48.0)

(31.3)

313

235

213

167

50

29

24

20

17

1

Hungary

(4)

Croatia

Slovakia

Egypt

Serbia

Slovenia

Bosnia

Albania

Romania

Moldova

Ukraine

€ m

+6.2 +37.1 (18.8) +8.7 (2.9) +79.6 (4.5) n.m. n.m. n.m. +4.7

265

240

196

143

67

32

21

20

15

4

Hungary

Moldova

(4)

Croatia

Egypt

Slovakia

Serbia

Slovenia

Bosnia

Albania

Romania

Ukraine

Note: excluding the Russian subsidiary Banca Intesa included in C&IB

86

International Subsidiary Banks by Country: 8.6% of the Group's Total Loans

Data as at 31.12.19

Total

Total

CEE

Hungary Slovakia Slovenia Croatia Bosnia Serbia

Albania Romania Moldova Ukraine

Egypt

Oper. Income (€ m)

169

458

74

510

46

265

40

47

9

17

1,635

352

1,987

% of Group total

0.9%

2.5%

0.4%

2.8%

0.3%

1.5%

0.2%

0.3%

0.1%

0.1%

9.0%

1.9%

11.0%

Net income (€ m)

41

120

24

198

17

106

14

12

2

(4)

530

170

700

% of Group total

1.0%

2.9%

0.6%

4.7%

0.4%

2.5%

0.3%

0.3%

0.1%

n.m.

12.7%

4.1%

16.7%

Customer Deposits (€ bn)

4.3

15.3

2.2

9.1

0.8

4.1

1.2

1.0

0.2

0.1

38.3

4.9

43.2

% of Group total

1.0%

3.6%

0.5%

2.1%

0.2%

1.0%

0.3%

0.2%

0.0%

0.0%

9.0%

1.1%

10.1%

Customer Loans (€ bn)

3.2

14.4

1.8

6.9

0.8

3.3

0.4

0.9

0.1

0.1

31.7

2.3

34.0

% of Group total

0.8%

3.6%

0.5%

1.7%

0.2%

0.8%

0.1%

0.2%

0.0%

0.0%

8.0%

0.6%

8.6%

Total Assets (€ bn)

6.1

17.6

2.7

12.0

1.2

5.7

1.5

1.4

0.2

0.2

48.5

5.9

54.5

% of Group total

0.7%

2.2%

0.3%

1.5%

0.1%

0.7%

0.2%

0.2%

0.0%

0.0%

5.9%

0.7%

6.7%

Book value (€ m)

724

1,535

298

1,688

156

855

177

184

37

71

5,725

579

6,304

- goodwill/intangibles

37

113

6

31

3

45

5

3

2

3

248

8

256

Note: figures may not add up exactly due to rounding. Excluding the Russian subsidiary Banca Intesa included in C&IB

87

International Subsidiary Banks by Country: Loan Breakdown and Coverage

Data as at 31.12.19

Total

Total

CEE

Hungary Slovakia Slovenia Croatia Bosnia Serbia

Albania Romania Moldova Ukraine

Egypt

Performing loans (€ bn)

3.1

14.2

1.8

6.7

0.8

3.3

0.4

0.8

0.1

0.1

31.1

2.3

33.4

of which:

39%

60%

43%

35%

32%

22%

21%

11%

60%

22%

45%

55%

45%

Retail local currency

Retail foreign currency

0%

0%

0%

20%

15%

28%

14%

19%

1%

2%

8%

0%

8%

Corporate local currency

24%

36%

57%

21%

9%

4%

14%

35%

19%

49%

29%

27%

28%

Corporate foreign currency

37%

5%

0%

25%

44%

46%

51%

35%

20%

27%

19%

18%

19%

Bad loans(1) (€ m)

15

108

3

62

4

17

4

12

2

0

227

0

227

Unlikely to pay(2) (€ m)

46

86

26

126

8

24

7

14

0

0

337

46

383

Performing loans coverage

1.2%

0.7%

0.8%

1.6%

1.7%

1.3%

1.9%

1.5%

5.5%

0.8%

1.1%

1.4%

1.1%

Bad loans(1) coverage

71%

64%

85%

76%

75%

67%

50%

63%

33%

n.m.

69%

100%

71%

Unlikely to pay(2) coverage

48%

41%

38%

39%

43%

59%

46%

42%

100%

n.m.

43%

45%

43%

Cost of credit(3) (bps)

n.m.

30

n.m.

46

35

65

n.m.

34

n.m.

n.m.

28

n.m.

23

Note: figures may not add up exactly due to rounding. Excluding the Russian subsidiary Banca Intesa included in C&IB

(1) Sofferenze

(2) Including Past due

(3) Net adjustments to loans/Net customer loans

88

Common Equity Ratio as at 31.12.19: from Phased-into ProMIL-BVA327-forma-15051trim.13-90141/LRFully Loaded

~€ bn

~bps

Direct-deduction

relevant items

DTA on

losses carried forward(1)

1.4

46

IFRS9

transitional adjustment

(2.6)

(85)

Total

(1.2)

(39)

Cap relevant items(*)(2)

Total

0.0

14

  1. as a memo, constituents of deductions subject to cap:

- Other DTA(3)

1.2

- Investments in banking and financial companies

0.8

RWA from 100% weighted DTA(4)

(8.2)

38

Total estimated impact

13

Pro-

forma fully loaded Common Equity ratio

14.1%

Note: figures may not add up exactly due to rounding

  1. Considering the expected absorption of DTA on losses carried forward (€1.5bn as at 31.12.19)
  2. Following the application of the Danish Compromise, insurance investments are risk weighted instead of being deducted from capital. In the amount of insurance investments, the expected distribution of FY19 Net income of insurance companies exceeding reserves already distributed in the first quarter is considered, which for the sake of simplicity is left included in the benefit allocated to this caption
  3. Other DTA: mostly related to provisions for risks and charges, considering the total absorption of DTA related to IFSR9 FTA (€1.2bn as at 31.12.19) and DTA related to the non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of operations of the two former Venetian banks (€0.4bn as at 31.12.19). DTA related to goodwill realignment and adjustments to loans are excluded due to their treatment as credits to tax authorities
  4. Considering the total absorption of DTA convertible into tax credit related to goodwill realignment (€4.8bn as at 31.12.19) and adjustments to loans (€3.5bn as at 31.12.19)

89

Total Exposure(1) by Main Countries

€ m

DEBT SECURITIES

Banking Business

Insurance

Total

LOANS

AC

FVTOCI

FVTPL(2)

Total

Business(3)

EU Countries

21,282

54,959

9,294

85,535

64,513

150,048

376,662

Austria

135

132

39

306

4

310

403

Belgium

1,468

960

48

2,476

155

2,631

576

Bulgaria

0

0

0

0

83

83

25

Croatia

69

1,157

192

1,418

108

1,526

7,026

Cyprus

0

0

0

0

0

0

285

Czech Republic

108

0

0

108

0

108

604

Denmark

0

17

13

30

19

49

140

Estonia

0

0

0

0

0

0

4

Finland

0

104

39

143

37

180

148

France

1,073

4,146

340

5,559

3,410

8,969

5,093

Germany

880

2,375

2,080

5,335

1,248

6,583

4,621

Greece

36

0

32

68

0

68

1,026

Hungary

175

1,037

21

1,233

10

1,243

2,864

Ireland

888

906

435

2,229

114

2,343

390

Italy

13,696

26,041

4,947

44,684

54,400

99,084

306,314

Latvia

0

8

0

8

0

8

36

Lithuania

0

5

0

5

0

5

9

Luxembourg

133

327

201

661

2

663

5,726

Malta

0

0

0

0

0

0

181

The Netherlands

435

831

444

1,710

743

2,453

1,950

Poland

40

86

-5

121

30

151

1,036

Portugal

409

433

56

898

7

905

172

Romania

56

321

0

377

209

586

1,045

Slovakia

0

652

2

654

0

654

12,483

Slovenia

1

219

0

220

0

220

1,794

Spain

1,303

14,524

294

16,121

2,528

18,649

2,286

Sweden

0

178

151

329

2

331

205

United Kingdom

377

500

-35

842

1,404

2,246

20,220

Albania

517

6

1

524

0

524

385

Egypt

0

1,329

-5

1,324

53

1,377

2,576

Japan

0

1,585

723

2,308

85

2,393

1,254

Russia

0

194

4

198

96

294

7,212

Serbia

0

930

1

931

0

931

3,582

U.S.A.

510

5,748

344

6,602

2,577

9,179

6,995

Other Countries

1,022

3,691

946

5,659

3,084

8,743

22,851

Total

23,331

68,442

11,308

103,081

70,408

173,489

421,517

Note: management accounts. Figures may not add up exactly due to rounding

  1. Exposure to sovereign risks (central and local governments), banks and other customers. Book Value of Debt Securities and Net Loans as at 31.12.19
  2. Taking into account cash short positions
  3. Excluding securities in which money is collected through insurance policies where the total risk is retained by the insured

90

MIL-BVA327-15051trim.13-90141/LR

Exposure to Sovereign Risks(1) by Main Countries

€ m

DEBT SECURITIES

Banking Business

Insurance

Total

FVTOCI/AFS

LOANS

AC

FVTOCI

FVTPL(2)

Total

Business(3)

Reserve (4)

EU Countries

12,257

46,629

5,419

64,305

56,577

120,882

354

12,412

Austria

0

5

39

44

2

46

0

0

Belgium

547

856

1

1,404

4

1,408

-5

0

Bulgaria

0

0

0

0

63

63

1

0

Croatia

0

1,157

192

1,349

97

1,446

7

1,015

Cyprus

0

0

0

0

0

0

0

0

Czech Republic

0

0

0

0

0

0

0

0

Denmark

0

9

13

22

0

22

0

0

Estonia

0

0

0

0

0

0

0

0

Finland

0

30

21

51

3

54

0

0

France

779

2,760

24

3,563

1,944

5,507

-30

4

Germany

259

1,600

1,916

3,775

545

4,320

-5

0

Greece

0

0

32

32

0

32

0

0

Hungary

0

1,031

21

1,052

10

1,062

13

123

Ireland

540

296

-3

833

111

944

0

0

Italy

8,370

23,021

2,727

34,118

51,708

85,826

335

10,818

Latvia

0

8

0

8

0

8

0

36

Lithuania

0

5

0

5

0

5

0

0

Luxembourg

0

0

0

0

0

0

-1

0

Malta

0

0

0

0

0

0

0

0

The Netherlands

262

302

228

792

120

912

-1

0

Banking Business Government bond

Poland

40

34

-5

69

18

87

-1

0

duration: 5.5 years

Portugal

376

416

-5

787

0

787

1

0

Romania

56

321

0

377

209

586

1

8

Adjusted duration due to hedging: 0.8 years

Slovakia

0

525

2

527

0

527

1

134

Slovenia

0

212

0

212

0

212

2

207

Spain

1,028

14,022

155

15,205

1,637

16,842

36

67

Sweden

0

0

150

150

0

150

0

0

United Kingdom

0

19

-89

-70

106

36

0

0

Albania

517

6

1

524

0

524

0

1

Egypt

0

1,318

-5

1,313

53

1,366

14

0

Japan

0

1,556

688

2,244

0

2,244

1

0

Russia

0

172

3

175

0

175

4

0

Serbia

0

930

1

931

0

931

16

94

U.S.A.

14

4,826

38

4,878

9

4,887

-44

0

Other Countries

876

2,403

765

4,044

1,099

5,143

17

4,084

Total

13,664

57,840

6,910

78,414

57,738

136,152

362

16,591

Note: management accounts. Figures may not add up exactly due to rounding

  1. Exposure to central and local governments. Book Value of Debt Securities and Net Loans as at 31.12.19
  2. Taking into account cash short positions
  3. Excluding securities in which money is collected through insurance policies where the total risk is retained by the insured
  4. Net of tax and allocation to insurance products under separate management

91

MIL-BVA327-15051trim.13-90141/LR

Exposure to Banks by Main Countries(1)

€ m

DEBT SECURITIES

Banking Business

Insurance

Total

LOANS

AC

FVTOCI

FVTPL(2)

Total

Business(3)

EU Countries

2,083

4,784

1,311

8,178

3,280

11,458

24,309

Austria

125

94

0

219

0

219

98

Belgium

0

78

47

125

20

145

233

Bulgaria

0

0

0

0

0

0

0

Croatia

0

0

0

0

0

0

23

Cyprus

0

0

0

0

0

0

0

Czech Republic

0

0

0

0

0

0

0

Denmark

0

8

0

8

0

8

62

Estonia

0

0

0

0

0

0

0

Finland

0

21

18

39

0

39

79

France

176

827

213

1,216

743

1,959

3,470

Germany

18

517

130

665

114

779

2,723

Greece

0

0

0

0

0

0

1,007

Hungary

144

6

0

150

0

150

13

Ireland

0

38

-1

37

0

37

38

Italy

1,299

1,731

640

3,670

1,423

5,093

6,949

Latvia

0

0

0

0

0

0

0

Lithuania

0

0

0

0

0

0

0

Luxembourg

0

204

191

395

0

395

1,004

Malta

0

0

0

0

0

0

154

The Netherlands

95

231

7

333

223

556

227

Poland

0

52

0

52

0

52

80

Portugal

0

17

16

33

0

33

6

Romania

0

0

0

0

0

0

70

Slovakia

0

127

0

127

0

127

0

Slovenia

0

7

0

7

0

7

2

Spain

131

439

38

608

247

855

279

Sweden

0

126

1

127

0

127

9

United Kingdom

95

261

11

367

510

877

7,783

Albania

0

0

0

0

0

0

8

Egypt

0

0

0

0

0

0

115

Japan

0

10

0

10

54

64

39

Russia

0

22

0

22

0

22

107

Serbia

0

0

0

0

0

0

46

U.S.A.

242

331

231

804

1,112

1,916

767

Other Countries

67

1,012

131

1,210

823

2,033

5,832

Total

2,392

6,159

1,673

10,224

5,269

15,493

31,223

Note: management accounts. Figures may not add up exactly due to rounding

  1. Book Value of Debt Securities and Net Loans as at 31.12.19
  2. Taking into account cash short positions
  3. Excluding securities in which money is collected through insurance policies where the total risk is retained by the insured

92

MIL-BVA327-15051trim.13-90141/LR

Exposure to Other Customers by Main Countries(1)

€ m

DEBT SECURITIES

LOANS

Banking Business

Insurance

Total

Business(3)

AC

FVTOCI

FVTPL(2)

Total

EU Countries

6,942

3,546

2,564

13,052

4,656

17,708

339,941

Austria

10

33

0

43

2

45

305

Belgium

921

26

0

947

131

1,078

343

Bulgaria

0

0

0

0

20

20

25

Croatia

69

0

0

69

11

80

5,988

Cyprus

0

0

0

0

0

0

285

Czech Republic

108

0

0

108

0

108

604

Denmark

0

0

0

0

19

19

78

Estonia

0

0

0

0

0

0

4

Finland

0

53

0

53

34

87

69

France

118

559

103

780

723

1,503

1,619

Germany

603

258

34

895

589

1,484

1,898

Greece

36

0

0

36

0

36

19

Hungary

31

0

0

31

0

31

2,728

Ireland

348

572

439

1,359

3

1,362

352

Italy

4,027

1,289

1,580

6,896

1,269

8,165

288,547

Latvia

0

0

0

0

0

0

0

Lithuania

0

0

0

0

0

0

9

Luxembourg

133

123

10

266

2

268

4,722

Malta

0

0

0

0

0

0

27

The Netherlands

78

298

209

585

400

985

1,723

Poland

0

0

0

0

12

12

956

Portugal

33

0

45

78

7

85

166

Romania

0

0

0

0

0

0

967

Slovakia

0

0

0

0

0

0

12,349

Slovenia

1

0

0

1

0

1

1,585

Spain

144

63

101

308

644

952

1,940

Sweden

0

52

0

52

2

54

196

United Kingdom

282

220

43

545

788

1,333

12,437

Albania

0

0

0

0

0

0

376

Egypt

0

11

0

11

0

11

2,461

Japan

0

19

35

54

31

85

1,215

Russia

0

0

1

1

96

97

7,105

Serbia

0

0

0

0

0

0

3,442

U.S.A.

254

591

75

920

1,456

2,376

6,228

Other Countries

79

276

50

405

1,162

1,567

12,935

Total

7,275

4,443

2,725

14,443

7,401

21,844

373,703

Note: management accounts. Figures may not add up exactly due to rounding

  1. Book Value of Debt Securities and Net Loans as at 31.12.19
  2. Taking into account cash short positions
  3. Excluding securities in which money is collected through insurance policies where the total risk is retained by the insured

93

MIL-BVA327-15051trim.13-90141/LR

Disclaimer

"The manager responsible for preparing the company's financial reports, Fabrizio Dabbene, 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 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 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.

94

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Intesa Sanpaolo S.p.A. published this content on 04 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 February 2020 17:43:03 UTC