Banco di Desio e della Brianza S p A : Consolidated results at 31 march 2021

PRESS RELEASE

CONSOLIDATED RESULTS AT 31 MARCH 2021

The Board of Directors of Banco di Desio e della Brianza S.p.A. has approved this "Consolidated Quarterly Report at 31 March 2021"

Consolidated net profit of Euro 20.0 million with an annualised ROE of 7.8%. The operating profit rose strongly (+54.7%) thanks to an increase in revenues (+14.3%) and a reduction in costs (-2.9%); cost/income ratio of 65.7% (vs 73.6%)1. Further capital strengthening (CET1 of the Banco Desio Group +63 bps) due to continuous derisking and the positive impact of selling the investment in Cedacri which is currently being completed. NPL ratio of 5.3% (vs 5.4%) and coverage of non- performing loans at 48.2% (vs 47.5%).

• CONSOLIDATED NET PROFIT at Euro 20.0 million with an annualised ROE of 7.8%, confirming the Group's resilience. Result of operations up (+54.7%) due to the combined effect of a positive trend in income (+14.3%) and the steps taken to reduce costs (-2.9%). cost/income ratio of 65.7% (vs

PROFITABILITY 73.6%)1

• Net commission income (+6.7%) has benefited from the positive trend in revenues deriving from assets under management and bancassurance (+22.1% on distribution of UCITS and 18.0% on insurance products)
• SIGNIFICANT CAPITAL STRENGTHENING (CET1 of the Banco Desio Group +63 bps) due to the derisking carried out on the portfolio and the capital benefits of selling the investment in Cedacri which is currently being completed.

CAPITAL			Ratios3	Banco Desio Brianza	Banco Desio Group	Brianza Unione Group 4
SOLIDITY	2		CET 1	16.37%	15.30%	11.53%
			TIER 1	16.38%	15.30%	12.34%
			Total Capital	16.68%	15.59%	13.48%

SUPPORT FOR THE ECONOMY

LIQUIDITY AND ASSET QUALITY

• LOANS TO ORDINARY CUSTOMERS come to Euro 10.6 billion (+1.4%) because of the additional loans made to businesses under the "Liquidity Decree"
• DIRECT DEPOSITS are up, confirming the strong relationship with customers, equal to Euro 12.1 billion (+2.8%) and INDIRECT DEPOSITS of Euro 16.8 billion (+1.5%, of which ORDINARY CUSTOMERS +2.9%)
• Ratio of Ordinary customer loans/Direct deposits of 87.4% (vs 88.7%)
• LIQUIDITY under control with the liquidity coverage ratio (LCR) at 210.0% (vs 206.7% at 31.12.2020)
• PROPORTION OF NPLs down:
  Net doubtful loans/Net loans ratio at 1.1% (vs 1.1% at 31.12.2020) Gross doubtful loans/Gross loans ratio of 2.9% (vs 2.8%)
  Net non-performing loans/Net loans ratio of 2.9% (vs 2.9%) Gross non-performing loans/Gross loans ratio of 5.3% (vs 5.4%)
• LEVELS OF COVERAGE of non-performing and performing loans
  Doubtful loans at 62.0%, 63.2% gross of write-offs (vs 61.0% and 62.2% at 31.12.2020) Non-performing loans at 48.2% (vs 47.5%), 49.0% gross of write-offs (vs 48.4%) Performing loans at 0.67% (vs 0.72%)

• Including the charges relating to the banking system.

• 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 21 May 2020, 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 4.5% and additional requirements of 0.35%) with the difference represented by the capital conservation buffer, Tier1 ratio of 8.95%, binding for 6.45% (minimum regulatory requirement of 6.0% and additional requirements of 0.45%) with the difference represented by the capital conservation buffer, and Total Capital Ratio of 11.1%, binding for 8.6% (minimum regulatory requirement of 8% and additional requirements of 0.6%) with the difference represented by the capital conservation buffer.
  3 In application of the transitional arrangements introduced by Regulation (EU) 2017/2395 of 12 December 2017 and subsequent amendments.
  4 The consolidated ratios at Brianza Unione of Luigi Gavazzi and Stefano Lado S.A.p.A., a company that holds 49.88% of Banco di Desio and della Brianza S.p.A. (of which it holds 50.44% of the ordinary shares and 44.69% of the savings shares), were calculated on the basis of the provisions of articles 11, paragraphs 2 and 3 and 13, paragraph 2 of the CRR Regulation.

Consolidated Quarterly Report

at 31 March 2021

***

The Board of Directors of Banco di Desio e della Brianza S.p.A., which met on 6 May 2021, approved the "Consolidated quarterly report on operations at 31 March 2021" (hereinafter "Report"), which has been 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 in the section below entitled "Basis of preparation".

We highlight the specific information dedicated to the description of the context in which this financial information was prepared, strongly affected by the pandemic, 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 the 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.

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Consolidated Quarterly Report

at 31 March 2021

Results of the period

Key figures and ratios

Table 1 - Balance sheet

	31.03.2021	31.12.2020		Change
Amounts in thousands of Euro			amount	%
Total assets	17,203,379	15,663,522	1,539,857	9.8%
Financial assets	3,541,215	3,543,697	-2,482	-0.1%
Due from banks (1)	2,334,982	1,034,768	1,300,214	125.7%
Loans to customers (1)	10,617,005	10,473,228	143,777	1.4%
Property, plant and equipment (2)	219,004	222,483	-3,479	-1.6%
Intangible assets	18,451	18,513	-62	-0.3%
Non-current assets and disposal groups held for sale	118,923		118,923
Due to banks	3,391,864	2,412,244	979,620	40.6%
Due to customers (3)	10,513,071	10,203,490	309,581	3.0%
Debt securities in issue	1,633,003	1,608,927	24,076	1.5%
Shareholders' equity (including Net profit/loss for the period)	1,064,509	995,071	69,438	7.0%
Own Funds	1,097,888	1,057,064	40,824	3.9%
Total indirect deposits	16,773,565	16,520,360	253,205	1.5%
of which: Indirect deposits from ordinary customers	10,457,106	10,160,527	296,579	2.9%
of which: Indirect deposits from institutional customers	6,316,459	6,359,833	-43,374	-0.7%

(1) on the basis of Circular 262 the balance of this caption includes held to collect (HTC) debt securities measured at amortised cost, which in these key figures are shown under financial assets.

(2) the balance of this item at 31 March 2021 includes the right of use ("RoU Assets") equal to Euro 49.2 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 of this item does not include the liability recognised in Due to customers for operating lease contracts falling within the scope of application of IFRS 16, which came into effect on 1 January 2019

Table 2 - Income statement (4)

	31.03.2021	31.03.2020		Change
Amounts in thousands of Euro			amount	%
Operating income	110,447	96,642	13,805	14.3%
of which: Net interest income	62,442	51,990	10,452	20.1%
Operating costs	65,810	67,789	-1,979	-2.9%
Result of operations	44,637	28,853	15,784	54.7%
charges relating to the banking system	6,800	3,300	3,500	106.1%
Profit (loss) from continuing operations after tax	20,961	4,860	16,101	331.3%
Non-recurring profit (loss) after tax	-947	241	-1,188	n.s.
Net profit (loss) for the period	20,014	5,101	14,913	292.4%

(4) from the reclassified income statement.

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Consolidated Quarterly Report

at 31 March 2021

Table 3 - Key figures and ratios

		31.03.2021		31.12.2020		Change
						Amount
Capital/Total assets	6.2%		6.4%		-0.2%
Capital/Loans to customers	10.0%		9.5%		0.5%
Capital/Due to customers	10.1%		9.8%		0.3%
Capital / Debt securities in issue	65.2%		61.8%		3.4%
Common Equity Tier 1 (CET 1)/Risk-weighted assets (Common Equity Tier 1 ratio) (5) (6)	15.3%		14.7%		0.6%
Core Tier 1 capital (T1)/Risk-weighted assets (Tier 1 ratio) (5) (6)	15.3%		14.7%		0.6%
Total Own Funds/Risk-weighted assets (Total capital ratio) (5) (6)	15.6%		15.1%		0.5%
Financial assets/Total assets	20.6%		22.6%		-2.0%
Due from banks/Total assets	13.6%		6.6%		7.0%
Loans to customers/Total assets	61.7%		66.9%		-5.2%
Loans to customers/Direct customer deposits	87.4%		88.7%		-1.3%
Due to banks/Total assets	19.7%		15.4%		4.3%
Due to customers/Total assets	61.1%		65.1%		-4.0%
Debt securities in issue/Total assets	9.5%		10.3%		-0.8%
Direct customer deposits / Total assets	70.6%		75.4%		-4.8%
		31.03.2021		31.03.2020		Change
						Amount
Cost/Income ratio	59.6%		70.1%		-10.5%
(Operating costs + Charges relating to the banking system)/Operating income (Cost/Income ratio)	65.7%		73.6%		-7.9%
Net interest income/Operating income	56.5%		53.8%		2.7%
Result of operations/Operating income	40.4%		29.9%		10.5%
Profit (loss) from continuing operations after tax/Capital (7) (8)	7.9%		3.5%		4.4%
Profit (loss) from operations after tax/Capital (7) (R.O.E) (8) (9)	7.8%		2.4%		5.4%
Profit (loss) from continuing operations before tax/Total assets (ROA) (8)	0.7%		0.3%		0.4%
		31.03.2021		31.12.2020		Change
						Amount
Net doubtful loans/Loans to customers	1.1%		1.1%		0.0%
Net non-performing loans/Loans to customers	2.9%		2.9%		0.0%
% coverage of doubtful loans	62.0%		61.0%		1.0%
% Coverage of doubtful loans, gross of cancellations	63.2%		62.2%		1.0%
% Total coverage of non-performing loans	48.2%		47.5%		0.7%
% Coverage of non-performing loans, gross of cancellations	49.0%		48.4%		0.6%
% Coverage of performing loans	0.67%		0.72%		-0.05%
Table 4 - Structure and productivity ratios
		31.03.2021		31.12.2020		Change
					amount	%
Number of employees		2,188		2,179	9	0.4%
Number of branches		243		249	-6	-2.4%
Amounts in thousands of Euro
Loans and advances to customers per employee (10)		4,862		4,786	76	1.6%
Direct deposits from customers per employee (10)		5,563		5,397	166	3.1%
		31.03.2021		31.03.2020		Change
					amount	%
Operating income per employee (8) (10)		202		184	18	9.8%
Result of operations per employee (8) (10)		82		58	24	41.4%

1. Consolidated capital ratios for Banco Desio. The ratios for the scope of consolidation for regulatory purposes at Brianza Unione level at 31 March 2021 are:

Common Equity Tier1 11.5%; Tier 1 12.3%; Total capital ratio 13.5%.

1. Capital ratios at 31.03.2021 are calculated in application of the transitional arrangements introduced by EU Regulation 2017/2395; the ratios calculated without

application of these provisions are the following: Common Equity Tier1 14.7%; Tier 1 14.7%; Total capital ratio 15.0%

1. equity excluding net profit (loss) for the period;
2. the amount reported at 31.03.2020 is the final figure at the end of 2020;
3. the annualised ROE at 31.03.2021 does not take into consideration the annualisation of the Net non-recurring operating profit;
4. based on the number of employees calculated as a straight average between the end of the period and the end of the preceding period.

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Consolidated Quarterly Report

at 31 March 2021

Consolidated income statement

The profit for the period is up by around 14.9 million, having benefited from the positive trend in operations (54.7%) thanks to operating income that is up (14.3%) and operating costs that are down (-2.9%).

Table 5 - Reclassified consolidated income statement

Captions				change
Amounts in thousands of Euro	31.03.2021	31.03.2020	Amount	%
10+20	Net interest income	62,442	51,990	10,452	20.1%
70	Dividends and similar income	479	561	-82	-14.6%
40+50	Net commission income	43,982	41,214	2,768	6.7%
80+90+100	Net result of financial assets and liabilities	3,105	1,739	1,366	78.6%
+110
230	Other operating income/expense	439	1,138	-699	-61.4%
	Operating income	110,447	96,642	13,805	14.3%
190 a	Payroll costs	-42,891	-42,434	-457	1.1%
190 b	Other administrative costs	-20,617	-22,971	2,354	-10.2%
210+220	Net adjustments to property, plant and equipment and intangible assets	-2,302	-2,384	82	-3.4%
	Operating costs	-65,810	-67,789	1,979	-2.9%
	Result of operations	44,637	28,853	15,784	54.7%
130a+100a Cost of credit	-6,532	-16,268	9,736	-59.8%
130 b	Net adjustments to securities owned	354	-344	698	n.s.
140	Profit/losses from contractual changes without write-offs	3	-126	129	n.s.
200 a	Net provisions for risks and charges - commitments and guarantees given	672	-55	727	n.s.
200 b	Net provisions for risks and charges - other	-822	-1,344	522	-38.8%
	charges relating to the banking system	-6,800	-3,300	-3,500	106.1%
	Profit (loss) from operations before tax	31,512	7,416	24,096	324.9%
300	Income taxes on continuing operations	-10,551	-2,556	-7,995	312.8%
	Profit (loss) from continuing operations after tax	20,961	4,860	16,101	331.3%
	Provisions for risks and charges, other provisions, one-off expenses and revenue	-1,016	360	-1,376	n.s.
	Non-recurring result before tax	-1,016	360	-1,376	n.s.
	Income taxes from non-recurring items	69	-119	188	n.s.
	Non-recurring profit (loss) after tax	-947	241	-1,188	n.s.
330	Net profit (loss) for the period	20,014	5,101	14,913	292.4%
340	Net profit (loss) pertaining to minority interests	0	0	0	n.s.
350	Parent Company net profit (loss)	20,014	5,101	14,913	292.4%

The main cost and revenue items in the reclassified income statement are analysed below, with comments, where necessary, on situations where it is not possible to make a straight comparison because the accounting treatment is inconsistent.

Operating income

Core revenues increased by about Euro 13.8 million with respect to the comparative period (+14.3%), amounting to Euro

110.4 million. The trend is attributable to the growth in net interest income of 10.5 million (+20.1%), net commission income of Euro 2.8 million (+6.7%) and the net result of financial assets and liabilities of Euro 1.4 million (+78.6%), partially offset by the decrease in other operating income/expense of Euro 0.7 million (-61.4%).

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