Banca Carige S p A Cassa di Risparmio di Genova e Imperia : Approval of Consolidated Results as at 30 September 2020

PRESS RELEASE

APPROVAL OF CONSOLIDATED RESULTS

AS AT 30 SEPTEMBER 20201

In Q3 Banca Carige accelerates on its path to profit recovery

∙ SIGNS OF COMMERCIAL RECOVERY SOLIDIFY IN Q3

- THE EUR 24.1 MLN LOSS UNDERLIES AN IMPROVEMENT IN THE

AVERAGE MONTHLY TREND AS COMPARED TO THE FIRST 5 MONTHS OF ORDINARY ADMINISTRATION (EUR 97.8 MLN LOSS)

- RECOVERY IN PROFITABILITY DRIVEN BY ACCELERATED REVENUE

GROWTH: NET INTEREST INCOME AND FEE & COMMISSION INCOME RESPECTIVELY UP 39.6% AND 8.5% ON Q2

- OPERATING EXPENSES, ON A STRUCTURAL DOWNTURN, INCLUDE

COSTS INCURRED TO ADDRESS THE COVID-19 EMERGENCY

- AFTER THE DERISKING EFFORT UNDERTAKEN, THE COST OF CREDIT

REVERTS TO NORMAL LEVELS AND SETTLES AT A RATE OF 74 BPS ON AN ANNUALISED 8-MONTH BASIS (63 BPS WITH ANNUALISATION EXCLUDING PROVISIONS ALLOCATED FOR POTENTIAL IMPACTS FROM COVID-19)

∙ RISK PROFILE STILL AT BEST MARKET LEVELS FOR ITALY AND EUROPE,

AND FURTHER IMPROVING

- NPE RATIO: GROSS 5.3% AND NET 2.8%

- ADDITIONAL NPE DISPOSALS UNDER CONSIDERATION, FOR AN

AMOUNT OF APPROXIMATELY EUR 60 MLN (GROSS NPE PORTFOLIO AMOUNTS TO EUR 639 MLN; NET: EUR 324 MLN)

- AVERAGE LOAN BOOK COVERAGE RISING TO 51.1% (INCLUDING

WRITE OFFS)

- RWAs DECLINING FURTHER TO EUR 9.9 BN

- CET1r OF 12.2% AND TCr OF 14.4%, IN EXCESS OF MINIMUM

REGULATORY REQUIREMENTS

∙ COMMERCIAL MOMENTUM ACCELERATING SINCE THE BEGINNING OF

1 See notes to the reclassified Income Statement at the end of this Press Release

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THE YEAR:

• • OVERALL FUNDING FROM CUSTOMERS HELD WITH THE BRANCH NETWORK (EUR 26.7 BN AS AT 31 OCTOBER) UP 4.4% (5.5% NET OF MARKET EFFECT)
  • NET PLACEMENT OF MUTUAL FUNDS IN THE 9-MONTH PERIOD UP 5.6%, A 5 TIMES HIGHER GROWTH RATE THAN SYSTEM PERFORMANCE (+1.07%) AND 4 TIMES HIGHER THAN THE AVERAGE PERFORMANCE OF THE INDUSTRY'S TOP FIVE PLAYERS (+1.55%)
  • NEW COVID 19-RELATED LOANS TO CUSTOMERS OVER EUR 2 BN, 3
    TIMES THE GROUP'S THEORETICALMARKET SHARE AT NATIONAL
    LEVEL AND ACCOUNTING FOR 36% OF TOTAL LOANS GRANTED BY
    LIGURIA'S BANKING SYSTEM
  • COVID 19 LOANS WERE GRANTED TO APPROXIMATELY 29,000 BUSINESSES, HALF OF WHICH IN LIGURIA
• VERIFICATION OF STATUTORY REQUIREMENTS FOR DIRECTORSHIP OF
  MR. PAOLO RAVA'

Genoa, 11 November 2020 - At its meeting today, the Board of Directors of Banca Carige approved the Group's consolidated results as at 30 September 2020 for the restored course of ordinary administration starting on 1 February 2020, and hence referring to an 8-month period.

In the third quarter, the Group posted a loss of EUR 24.1 mln, a significant improvement as compared to the first five months of ordinary administration (-EUR 97.8 mln). The result was driven by a strong increase in core revenues, with an acceleration on the path to profit recovery despite the persistence of a severe and worsening pandemic crisis. As was the case for the reporting period ended 30 June, this result was achieved with the Bank relying on its pre- existing organisation and IT infrastructures.

The average monthly loss for Q3 (two-thirds lower than the average monthly loss for the prior five-month period) basically brings the Bank in line with the monthly trend projected in the

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2019-23 Strategic Plan, which had estimated a total loss of EUR 79.0 mln for 2020, prior to the unanticipated systemic impact of the pandemic.

The worsening of the health emergency over the last few weeks and increased new restrictions of movement, call for extreme caution on whether it will be possible to maintain a similar trend in the fourth quarter of 2020, which may well deviate significantly from Q3 figures. At the same time, IT investments and organisational restructuring, announced in October and planned for the first quarter of 2021, may by contrast contribute to a new, accelerated momentum in the recovery of profitability during the next financial year.

In addition to confirming the reversal of the trend in lending to and funding from customers with respect to prior years, the Bank is enhancing the traits of resilience to the external environment it had revealed in the first half of the year, confirming at the same time its industry-record commercial performance in loans granted for the Covid-19 crisis and wealth management solutions.

Tight control over credit risk is confirmed, with average loan portfolio coverage settling at 49.3% (51.1% including write-offs) and a gross and net NPE ratio of 5.3% and 2.8%, respectively; additional evidence lies in the quality of the loan portfolio, roughly 83%2 of which is rated high (excellent, good, average), with a large part secured by mortgages (approximately 95%2 for households and roughly 46%2 for businesses).

Accordingly, the RWA level, measured with the standardised approach, has decreased to EUR

9.9 bn and capital ratios continue to be in excess of regulatory requirements: the phased-in CET1 ratio rose to 12.2% and the phased-in Total Capital ratio increased to 14.4%.

2 As at 30 June 2020

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Francesco Guido, Banca Carige's Chief Executive Officer, commented: "In a condition of extreme difficulty deriving from the external context, the result of the third quarter confirms once again the great strength and value of the Women and Men across the organisation of Carige. It also testifies to the close bond between the Bank, its customers and its local areas of footprint. We are well aware of the responsibility we have in respecting our customers' trust by ensuring capacity and speed of service and making best-in-class know-howavailable. This is the direction we are heading with utmost determination."

Funding, lending and balance-sheet aggregates

Overall funding was stable during the quarter, totalling EUR 38.5 bn (EUR 38.8 bn as at 30 June 2020), with a fractional decrease in direct deposits (EUR 15.9 bn from EUR 16.5 bn as at the end of June, as a consequence of the EUR 1 bn repayment of the government-backed bond issuance at maturity in July 2020) and a steady increase in indirect deposits (EUR 22.6 bn as compared to EUR 22.3 bn as at the end of June). Direct funding from retail and corporate customers, totalling EUR 12.8 bn (with respect to EUR 12.4 bn in June) is growing, driven by the good trend in current accounts and sight deposits. The recovery of market shares on deposits in Liguria was substantial, with a 1.04% increase despite the adverse environment. Securities issued were down to EUR 3.1 bn from EUR 4.1 bn as at the end of June due to the foregoing EUR 1.0 bn government-backed bond issuance coming to maturity. Indirect funding continued to perform positively, backed by the increase in Assets under Custody (EUR 11.6 bn from EUR 11.3 bn in June) and Assets under Management (EUR 11.1 bn as compared to EUR 10.9 bn in June).

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