Banco Desio: consolidated results al 30 september 2022

PRESS RELEASE

BANCO DESIO: CONSOLIDATED RESULTS AT 30 SEPTEMBER 2022

Consolidated net profit for the third quarter of 2022 equal to Euro 64.0 million, an increase compared with the same period of 2021 (+15.2%) with an annualised ROE of 8.0% (+2.7 pts compared with Q3 2021)

Operating profit of Euro 151.5 million, an improvement on Q3 2021 (+12.9%) driven by the

increase in revenues to Euro 350.6 million (+5.6%) and by the growth in volumes

Cost/income ratio at 60.8% in Q3 2022 (-2.7 pts vs Q3 2021)

Capital solidity and asset quality confirmed

Desio, 8 November 2022 - The Board of Directors of Banco di Desio e della Brianza S.p.A. has approved the "Consolidated Quarterly Financial Report at 30 September 2022". The following table summarises the main financial indicators for the period.

• Consolidated net profit showing strong growth to Euro 64.0 million (+15.2%)
• Increase in profitability (annualised ROE of 8.0%) with stable operating costs and cost of risk under control
• Result of operations is improving (+12.9%) thanks to the growth in income (+5.6%)

PROFITABILITY  Cost/income ratio of 60.8%

• Net commission income +0.3%, despite the negative market situation, thanks to the positive contribution made by asset management (+9.4% on individual portfolio management) and the resilience of revenues from payment services and bancassurance
• Loans to ordinary customers of Euro 11.5 billion (+3.2%) with additional disbursements to households and businesses in Q3 of Euro 1.5 billion.
• Personal loans completely internalised at Fides (subsidiary)

		GROWTH		 Ecobonus/Sismabonus Credits purchased for approximately Euro 0.4 billion
					 Direct deposits up to Euro 12.9 billion (+3.6%)1
					 Indirect deposits of Euro 15.9 billion (-11.8%, of which ordinary customers down by -11.8%)
					 Low impact of non-performing loans: Gross NPL ratio2 of 3.9% (4.1% at 31 December 2021)
					and net of 2.0%
		ASSET QUALITY			 Strict loan assessment and solid levels of coverage of non-performing loans at 50.7% and
					on performing loans at 0.89%
					 Liquidity under control with an LCR indicator of 166.29%
					 Banco Desio Group's capital solidity confirmed with CET1 of 15.01%
		CAPITAL			Ratios4	Banco Desio Brianza	Banco Desio Group	Brianza Unione Group5
				CET 1	16.05%	15.01%	11.15%
		SOLIDITY3			TIER 1	16.05%	15.01%	11.97%
					Total Capital	16.05%	15.01%	13.04%

• Including repurchase agreements with institutional customers for Euro 749 million (Euro 208 million at 31 December 2021).
  2 Net of non-performing loans classified under "Assets held for sale".
  3 Based on the Bank of Italy's instructions sent to Banco di Desio e della Brianza S.p.A. and to the Parent Company Brianza Unione di Luigi Gavazzi e Stefano Lado S.A.p.A. on 18 May 2022, the following minimum capital requirements have been assigned to the Brianza Unione Group for CRR purposes, following completion of the Supervisory Review and Evaluation Process (SREP): CET1 ratio of 7.35%, binding - pursuant to art. 67-ter TUB - for 4.85% (minimum regulatory requirement of 4.50% and additional requirements of 0.35%) with the difference represented by the capital conservation buffer, Tier1 ratio of 9.00%, binding for 6.50% (minimum regulatory requirement of 6.00% and additional requirements of 0.50%) with the difference represented by the capital conservation buffer, and Total Capital Ratio of 11.15%, binding for 8.65% (minimum regulatory requirement of 8.00% and additional requirements of 0.65%) with the difference represented by the capital conservation buffer.
  4 In application of the transitional arrangements introduced by Regulation (EU) 2017/2395 of 12 December 2017 and subsequent amendments. 5 The consolidated ratios at the level of Brianza Unione of Luigi Gavazzi e Stefano Lado S.A.p.A., the parent company that holds 50.41% of Banco di Desio e della Brianza S.p.A., were calculated on the basis of the provisions of articles 11, paragraphs 2 and 3 and 13, paragraph 2 of the Capital Requirements Regulation (CRR).

Consolidated Quarterly Financial Report at 30 September 2022 | Page 1

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The Board of Directors of Banco di Desio e della Brianza S.p.A., which met on 8 November 2022, has approved the "Consolidated Quarterly Financial Report at 30 September 2022" (also referred to as the "Report"), prepared on a voluntary basis.

This Report has also been prepared in order to determine the result for the period, so that own funds and prudential coefficients can be calculated.

As regards the criteria for recognition and measurement, this Report has been prepared by applying the IAS/IFRS in force at the reference date as reported below in the section entitled "Basis of preparation".

Please note the specific information provided to explain the underlying context in which this financial report was prepared, affected by the situation caused by the conflict between Russia and Ukraine, as well as the uncertainties and significant risks related to it that could have an impact, even a material impact, on the expected results, which depend on many factors that are beyond management's control.

The figures in the tables and schedules of the Report are expressed in thousands of Euro.

The accounting schedules of this Report are subject to a limited audit by KPMG S.p.A. for the inclusion of the interim result in own funds.

Consolidated Quarterly Financial Report at 30 September 2022 | Page 2

Impacts of the war in Ukraine

The conflict between Russia and Ukraine, which began at the end of February 2022, seems destined to continue over time, bringing with it negative political and economic consequences which constitute a significant element of uncertainty for future scenarios.

In this context, prices have taken off: especially in the Eurozone, the procurement cost of energy raw materials is showing an upward trend; the climate of uncertainty and pessimism increases the fears of households and businesses of possible rationing of raw materials and difficulties in being able to afford basic necessities.

The monitoring of customers with loans continues: from an analysis of positions, a limited deterioration of existing credit lines has emerged and risk management and containment steps have been taken on them. Monitoring of the positions indirectly most exposed constitutes one of the first drivers of attention in order to guarantee the best quality of the loan portfolio over time and, at the same time, to identify the best solutions to allow companies to continue in business.

In line with the action taken during Covid, the Bank has adopted the so-called Temporary Crisis Framework (TCF) which will allow SMEs to apply for access to loans guaranteed by the MCC Fund to face the liquidity needs related to the economic and financial turmoil caused by the ongoing conflict.

Banco Desio continues to be close to the Ukrainian population with a fundraising campaign called "BANCO DESIO FOR UKRAINE" aimed at customers and with a crowdfunding initiative called "#unitedforUkraine" involving internal resources (for each euro donated, the Bank will donate two).

Consolidated Quarterly Financial Report at 30 September 2022 | Page 3

Results of the period

Key figures and ratios

The alternative performance measures (APMs) shown in this Report have been chosen to help readers understand the results of the Banco Desio Group. APMs are not envisaged by international accounting standards. They represent additional information with respect to the measurements defined in the IAS/IFRS and are in no way a substitute for them.

The method of calculating each APM is provided and the figures used have been taken from the tables or from the reclassified financial statements contained in this Report.

These APMs are based on the guidelines of the European Securities and Markets Authority (ESMA) of 5 October 2015 (ESMA/2015/1415), incorporated in Consob Communication no. 0092543 of 3 December 2015. Following the instructions contained in the update of the document entitled "ESMA 32-51-370 - Questions and answers - ESMA Guidelines on Alternative Performance Measures (APMs)", published on 17 April 2020, no changes have been made to the APMs nor have new ad hoc measures been introduced to highlight separately the effects of the Covid-19 epidemic or the conflict in Ukraine.

Table 1 - Balance sheet

	30.09.2022	31.12.2021		Change
Amounts in thousands of Euro			amount	%
Total assets	18,646,846	17,804,781	842,065	4.7%
Financial assets	3,964,852	3,797,711	167,141	4.4%
Due from banks (1)	157,056	2,115,119	-1,958,063	-92.6%
Loans to customers(1)	11,483,706	11,127,757	355,949	3.2%
Property, plant and equipment (2)	221,517	218,420	3,097	1.4%
Intangible assets	18,947	19,119	-172	-0.9%
Non-current assets and disposal groups held for sale	6,971	13,080	-6,109	-46.7%
Due to banks	3,960,725	3,815,695	145,030	3.8%
Due to customers (3) (4)	11,362,793	10,926,600	436,193	4.0%
Debt securities in issue	1,531,527	1,522,265	9,262	0.6%
Shareholders' equity (including Net profit/loss for the period)	1,104,137	1,088,741	15,396	1.4%
Own funds	1,115,176	1,131,495	-16,319	-1.4%
Total indirect deposits	15,888,318	18,018,035	-2,129,717	-11.8%
of which: Indirect deposits from ordinary customers	9,732,317	11,033,464	-1,301,147	-11.8%
of which: Indirect deposits from institutional customers	6,156,001	6,984,571	-828,570	-11.9%

1. based on Circular 262, the balance on this item includes debt securities held to collect (HTC) recognised at amortised cost, which in these summary figures are shown under financial assets; the balance does not include current accounts and demand deposits shown under Cash. At 30 September 2022, "Cash and cash equivalents" also includes the amount on demand of Euro 2,070 million relating to the liquidity in excess of the obligation to maintain the mandatory reserve, invested in overnight deposits and previously kept entirely in the Mandatory Reserve account and shown under "Loans and advances to banks".
2. the balance of this item at 30 September 2022 includes the right of use ("RoU Assets") equal to Euro 54.8 million for operating lease contracts falling within the scope of application of IFRS 16 Leases, which came into effect on 1 January 2019.
3. the balance does not include the liability for operating lease contracts falling within the scope of IFRS 16, which has been recognised in "Due to customers".
4. Including repurchase agreements with institutional customers for Euro 749 million (Euro 208 million at 31 December 2021).

Table 2 - Income statement (5)

	30.09.2022	30.09.2021		Change
Amounts in thousands of Euro			amount	%
Operating income	350,573	332,074	18,499	5.6%
of which: Net interest income	193,037	177,888	15,149	8.5%
Operating costs	199,068	197,828	1,240	0.6%
Result of operations	151,505	134,246	17,259	12.9%
Charges relating to the banking system	14,194	12,968	1,226	9.5%
Net profit (loss) from operations after tax	64,660	49,466	15,194	30.7%
Non-recurring profit (loss) after tax	-691	6,078	-6,769	n.s.
Net profit (loss) for the period	63,969	55,544	8,425	15.2%

(5) from the reclassified income statement.

Consolidated Quarterly Financial Report at 30 September 2022 | Page 4

Table 3 - Key figures and ratios

	30.09.2022	31.12.2021	Change
			amount
Capital/Total assets	5.9%	6.1%	-0.2%
Capital/Loans to customers	9.6%	9.8%	-0.2%
Capital/Due to customers	9.7%	10.0%	-0.3%
Capital / Debt securities in issue	72.1%	71.5%	0.6%
Common Equity Tier 1 (CET 1)/Risk-weighted assets (Common Equity Tier 1 ratio) (6) (7)	15.0%	15.6%	-0.5%
Core Tier 1 capital (T1)/Risk-weighted assets (Tier 1 ratio) (6) (7)	15.0%	15.6%	-0.5%
Total Own Funds/Risk-weighted assets (Total capital ratio) (6) (7)	15.0%	15.7%	-0.6%
Financial assets / Total assets	21.3%	21.3%	0.0%
Due from banks / Total assets (8)	0.8%	11.9%	-11.1%
Loans to customers / Total assets	61.6%	62.5%	-0.9%
Loans to customers / Direct customer deposits	89.1%	89.4%	-0.3%
Due to banks / Total assets	21.2%	21.4%	-0.2%
Due to customers / Total assets	60.9%	61.4%	-0.5%
Debt securities in issue / Total assets	8.2%	8.5%	-0.3%
Direct customer deposits / Total assets	69.2%	69.9%	-0.7%
	30.09.2022	30.09.2021	Change
			amount
Cost/Income ratio	56.8%	59.6%	-2.8%
(Operating costs + Charges relating to the banking system) / Operating income (Cost/Income ratio)	60.8%	63.5%	-2.7%
Net interest income / Operating income	55.1%	53.6%	1.5%
Result of operations / Operating income	43.2%	40.4%	2.8%
Profit (loss) from continuing operations after tax/Capital - annualised (9)(10)	8.1%	5.2%	2.9%
ROE (9) - annualised (10) (11)	8.0%	5.3%	2.7%
Profit (loss) from operations before tax/Total assets (ROA) - annualised (10)	0.7%	0.5%	0.2%
	30.09.2022	31.12.2021	Change
			amount
Net bad loans / Loans to customers	0.7%	0.8%	-0.1%
Net non-performing loans / Loans to customers	2.0%	2.1%	-0.1%
% Cov erage of bad loans	65.6%	63.3%	2.3%
% Cov erage of bad loans, gross of write-offs	66.5%	64.3%	2.2%
% Total cov erage of non-performing loans	50.7%	50.8%	-0.1%
% Cov erage of non-performing loans, gross of write-offs	51.3%	51.5%	-0.2%
% Cov erage of performing loans	0.89%	0.94%	-0.05%

Table 4 - Structure and productivity ratios

	30.09.2022	31.12.2021		Change
			amount	%
Number of employees	2,115	2,141	-26	-1.2%
Number of branches	232	232	0	0.0%
Amounts in thousands of Euro
Loans and adv ances to customers per employee (12)	5,396	5,152	244	4.7%
Direct deposits from customers per employee (12)	6,059	5,763	296	5.1%
	30.09.2022	30.09.2021		Change
			amount	%
Operating income per employee (12) - annualised (10)	218	212	6	2.8%
Result of operations per employee (12) - annualised (10)	94	88	6	6.8%

1. Consolidated capit al ratios for Banco Desio. The ratios for the scope of consolidation for regulatory purposes at Brianza Unione level at 30 September 2022 are: Common Equity Tier1 11.2%; Tier 1 12.0%; Total Capital Ratio 13.0%.
2. Capital ratios at 30.09.2022 are calculated in application of the t ransitional arrangements introduced by EU Regulation 2017/2395; the ratios calculated

without application of these arrangements are the following: Common Equity Tier 1 14.5%; Tier 1 14.5%; Total capit al ratio 14.5%.

1. At 30.09.2021, the caption "Loans and advances to banks" included the amount relating to the liquidity in excess of the obligation to maintain t he Mandatory Reserve, invested in overnight deposits at 30.09.2022 and therefore shown under "Cash and cash equivalents" at the reporting date.
2. net of the result for the period.
3. the amount reported at 30.09.2021 is the final figure at the end of 2021.
4. the annualised ROE at 30.09.2022 does not take into consideration the annualisation of the Net non-recurring operating profit .
5. based on the number of employees calculated as a straight average between the end of the period and the end of the preceding period.

Consolidated Quarterly Financial Report at 30 September 2022 | Page 5