Credito Valtellinese S p A : Consolidated results as at 31 december 2020

PRESS RELEASE

CONSOLIDATED RESULTS AS AT 31 DECEMBER 2020

CREVAL ACCELERATES THE GROWTH PROCESS: NET INCOME OF 113.2 MILLION EURO, MORE

THAN DOUBLE THE NET INCOME OF 56.2 MILLION EURO IN THE 2019

ON THE BACK OF THE BUSINESS PLAN GUIDELINES IMPLEMENTATION, CREVAL RANKS TODAY AMONG THE LEADING BANKS IN TERMS OF CAPITAL STRENGTH, (FULLY LOADED CET 1 RATIO AT 19.6%) AND RISK PROFILE WITH A GROSS NPE RATIO OF 5.8%

THE 2020 FINANCIAL STATEMENTS MARK THE RETURN TO DIVIDEND DISTRIBUTION: 0.23

EURO PER SHARE FOR A TOTAL OF 16.1 MILLION EURO, IN COMPLIANCE WITH THE

SUPERVISORY AUTHORITY GUIDELINES

NET OPERATING PROFIT UP BY 8% Y/Y AND ACCELERATING IN Q4, CHARACTERIZED BY AN

INCREASE IN REVENUES AND AN ADDITIONAL DECLINE IN COSTS

OPERATING COSTS DOWN BY 9%, DRIVEN BY A STRICT DISCIPLINE THAT MADE IT POSSIBLE

TO MEET THE PLAN TARGET ONE YEAR AHEAD OF SCHEDULE

• Personnel costs: -7.7% y/y
• Other administrative expenses: -13.7% y/y

RETAIL LOANS UP BY 8.2% Y/Y THANKS TO THE BANK'S COMMITMENT TO SUPPORT

HOUSEHOLDS AND SMEs

• Personal loans: +45% y/y

RETAIL CUSTOMER DEPOSITS UP BY 3.8% Y/Y

SIGNIFICANTLY IMPROVED CREDIT QUALITY DRIVEN BY THE NPL STOCK CUTBACK (-38% Y/Y) WITH A GROSS NPE RATIO OF 5.8% (3.1% NET) THUS WIDELY EXCEEDING THE PLAN TARGET FOR 2023 (<6.5%)

TOTAL NPE COVERAGE INCREASED FURTHER IN THE FOURTH QUARTER

• Bad loan coverage: 62.8%
• UTP coverage: 42.7%
• Total NPE coverage: 48.3%

COST OF CREDIT AT 71 BPS, DOWN COMPARED TO THE PREVIOUS YEAR (100 BPS)

ORDINARY COST OF CREDIT AT 55 BPS

CAPITAL STRENGTH BOLSTERED FURTHER AND AT BEST-IN-CLASS LEVELS

• Fully loaded CET 1 ratio at 19.6%, up from 15.5% at 31/12/2019 (+410 bps y/y)
• Large excess capital well above the minimum SREP requirement

STRONG LIQUIDITY POSITION

• LCR and NSFR well above 200% and 100%, respectively
• 4.8 billion euro of unencumbered eligible assets

WITH ITS Q4 RESULTS, CREVAL MARKS A SUSTAINABLE PROFIT GROWTH TREND IN LINE

WITH THE ACHIEVEMENT OF PLAN TARGETS FOR 2021 AND 2023

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PRESS RELEASE

Sondrio, 9 February 2021 - Yesterday evening, the Board of Directors of Creval examined and approved the consolidated results as at 31 December 2020, delivering a net income of 113.2 million euro, more than double the net income of 56.2 million euro reported in financial year 2019.

The Board of Directors also decided to submit to the Shareholders approval at the next general meeting the proposal to distribute a DPS of 0.23 euro for each of the no. 70,149,688 ordinary shares (excluding no. 6 own shares), corresponding to a total amount of dividends of 16,134,428 euro, within the maximum threshold of 20 basis point of the consolidated CET 1 ratio at 31 December 2020, recommended by the Bank of Italy in its communication of 16 December 2020. The dividend will be clipped at the first available weekly ex-dividend date following the date of the Shareholders Meeting, which according to our financial calendar will be convened between 15 and 30 April 2021.

"2020 was a transformational year for Creval, that achieved a step change, as clearly reflected by all the key operating and financial indicators. Indeed, we are a renewed bank, among the most solid in Europe, with a credit quality significantly improved and a growing core business. A resilient bank oriented towards a sustainable profitability, operating along nimble and lean processes, and with an efficient organizational structure also with respect to costs, which reported an additional 4.5% reduction in Q4 last year", remarked Luigi Lovaglio, Chief Executive Officer of Creval. "Ahead of plan, and amid a highly challenging environment hit by a global pandemic, Creval displays a solid capital position, with a CET1 ratio at 19.6%, a strong liquidity, and a well rebalanced risk profile with a gross NPE ratio reduced to 5.8%. We are confidently looking ahead to the Bank's future growth proceeding on the marked path, for a constant generation of value. At last dividends are back and our outstanding capital position will guide us in the future towards a greater shareholder remuneration".

Consolidated results as at 31 December 2020

Financial year 2020 has been characterized by the Covid-19 health emergency, which caused profound economic, financial, and social repercussions. Despite the highly challenging environment, the Bank continued to put effectively in place the actions mapped out in the 2019- 2023 Business Plan "Sustainable Growth", achieving impressive results that allowed Creval to stand among the best banks in terms of risk profile and capital solidity, and to reach sustainable profitability levels that place the Bank on a development path that is in line with the net income targets for 2021 and 2023.

From an operational viewpoint, during the year Creval continued to carry out its activities, implementing all the necessary measures to guarantee the utmost protection to its People and Customers, and at the same time it did not fail to support the economy of its served territories. Commercial activities with customers progressively picked up again after having suffered a slowdown due to lockdown, and focused on the implementation of the liquidity measures made available by the Government to help households and SMEs deal with the crisis, as reflected by the performance of retail loans, which rose 8% y/y. The loan growth was supported also by personal loans, thanks to the consumer credit acceleration attained by the Bank, where lending increased by 45% over the previous year.

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Despite the macroeconomic deterioration, operating profitability held up well, with revenues gradually improving in the second half of the year, driven on the one side by net interest income, that benefitted from both the ECB measures and the growing contribution of the consumer finance business, and on the other side by the pickup of net fees and commissions thanks to the resumption of client transactions.

As to costs, the unrelenting implementation of efficiency measures, coupled with the savings generated by an operational model that is more highly focused on remote working and process digitalization, drove operating costs on a steady downtrend, leading to a decline of 9% y/y, thus making it possible to meet the Plan targets one year ahead of schedule.

Also credit quality reported a strong improvement, following the NPL stock reduction, which at the end of 2020 stood at -38% y/y, mainly driven by the NPL sales carried out throughout the year and totaling more than 800 million euro, thus hitting the Plan target.

The decline in NPEs drove down the gross NPE ratio, which at the end of 2020 stood at 5.8%, below the target set for 2023 (<6.5%). A positive contribution towards this outcome was also made by a more disciplined lending process, a stronger monitoring activity and improved NPL work-out actions, which drove the default rate down from 2.1% at the beginning of 2019 to roughly 1% at the end of 2020.

As to our capital position, at present Creval displays a more robust capital strength that confirms its positioning among the best in class within the Italian banking industry, with a fully loaded CET1 ratio of 19.6%, up by more than 400 bps compared to 31 December 2019 and well above the 2023 plan target (14.5%).

Key balance sheet items

Total direct funding came to 17.9 billion euro, compared to 19.0 billion euro at 31 December 2019. Within this line-item,retail funding(households and SMEs) added up to 11.4 billion euro, up by 3.8% y/y; corporate fundingcame to 5.0 billion euro, slightly down compared to year-end 2019 (5.1 billion euro) also on the back of the cutback in more expensive corporate deposits; wholesale and bond fundingamounted to 1.5 billion euro, down from 2.9 billion euro at 31 December 2019, driven by the reduction in repos.

Net loans and advances with customers, excluding debt securities (4.7 billion euro), stood at 15.0 billion euro, up by 3.5% over 31 December 2019 (14.5 billion euro), having benefitted in particular from a commercial activity focused on supporting the Bank's served territories through the implementation of the liquidity support measures put in place by the banking industry at large to help households and businesses tackle the Covid-19 emergency.

Within this aggregate, retail customer loans (households and SMEs) amounted to 6.5 billion euro, up by 8.2% y/y, driven also by consumer loans. Corporate loans came in at 7.5 billion euro, reporting a slight decline (-0.7%) compared to the end of 2019, mainly due to the strategy aiming at reducing non-core exposures (mainly large corporate), in keeping with the Business Plan guidelines.

Including debt securities (mainly Government bonds), total net loans and advances added up to 19.6 billion euro, slightly up (+0.6%) compared to year-end 2019.

Turning to credit quality, gross non-performing loans totaled 956 million euro, down by 38% over 31 December 2019, having benefitted from both the sale during the year of more than 800

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million euro of NPE (bad loans and UTPs), that made it possible to attain the deleveraging target under the Plan ahead of schedule, despite the challenging external economic environment, and the gradual improvement of the internal work-out activity.

Net non-performing exposures added up to 494 million euro, down by 33% compared to 31 December 2019.

The NPL to total customer loan ratio, excluding government bonds (3.8 billion euro), stood at 5.8% gross and 3.1% net, down from 9.4% and 4.7% respectively at 31 December 2019.

Net bad loans came to 113 million euro, down by 21% compared to 31 December 2019 (144 million euro), mainly driven by the disposals completed throughout the year; net unlikely-to- pay loans totaled 360 million euro, down by 34% compared to 31 December 2019 (547 million euro); net past due loans amounted to 21 million euro, down by 50% from 42 million euro at 31 December 2019.

The bad loans coverage ratio stood at 62.8%, down compared to 74.2% in the previous year, as a result of the disposals carried out throughout the year.

The coverage ratio of UTP loans was 42.7%, up compared to year-end 2019 (41.3%), and that of past dues came to 9.9%, compared to 10.7% at the end of 2019.

Consequently, the NPL coverage ratio came to 48.3%, compared to 52.3% in the previous year. It is worth pointing out that the gross bad loan to total NPL stock ratio stood at 32%, among the lowest across the leading Italian banks.

The performing loan coverage ratio (excluding government bonds) was 0.44%.

Indirect funding ran at 10.4 billion euro, up by 2.9% q/q (+0.7% y/y). Within this line-item, asset management inflows added up to 7.8 billion euro, up by 3.2% compared to the previous quarter (+3.3% y/y). Assets under administration came to 2.6 billion euro, up by 2.1% compared to the previous quarter (-6.3% y/y).

Financial assets represented by securities stood at 5.7 billion euro, down by 8% compared to 31 December 2019 (6.2 billion euro). Within this line-item, government bonds amounted to 4.4 billion euro, down by 7.4% compared to year-end 2019. The reserve of Italian government bonds measured at FVTOCI (net of tax effect) comes to a positive 3.0 million euro.

The Bank continues to enjoy a solid liquidity position, with 4.8 billion euro of eligible unencumbered assets, up compared to 3.3 billion euro at year-end 2019. The LCR and NSFR liquidity ratios are well above 200% and 100%, respectively.

The ECB funding component came to 3.5 billion euro, fully represented by TLTRO-III funds, of which 2.5 billion euro coming due in June 2023 and 1.0 billion euro coming due in December 2022.

Shareholders' equity and capital ratios

The Group's Shareholders' equity at 31 December 2020 stood at 1,774 million euro.

Under the phase-in regime, the CET1 capital was 1,979 million euro, against 8,277 million euro of risk-weighted assets (RWA). Total own funds added up to 2,142 million euro.

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