Illimity Bank S p A : 3Q22 Results presentation script

illimity Bank S.p.A.

3Q22 Results Conference Call

Friday, 11 November 2022, 09:00 a.m. CEST

MODERATORS: CORRADO PASSERA, CHIEF EXECUTIVE OFFICER

SILVIA BENZI, CHIEF FINANCIAL OFFICER

ENRICO FAGIOLI, HEAD OF GROWTH CREDIT DIVISION

ANDREA CLAMER, HEAD OF DISTRESSED CREDIT DIVISION

CARLO PANELLA, HEAD OF DIRECT BANKING DIVISION

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Corrado Passera - CEO

Good morning and thank you for joining us.

With me, today, I have:

• Silvia Benzi, for the first time as our new CFO, one of the pillars of illimity, right from the beginning
• Enrico Fagioli, Head of Growth Credit Division
• Andrea Clamer, Head of Distressed Credit Division
• and Carlo Panella, Head of Direct Banking Division

A few weeks ago, illimity celebrated its 4th birthday.

Over the first four years, the illimiters have achieved impressive results, remarkably impressive given the two black swans we had to navigate.

Whenever we came face to face with any challenge we responded effectively and, where necessary, we positively refined and strengthened our strategy.

Today, we will highlight the 2022 results and illustrate our vision for the future. Let me start on slide 2.

Slide 2 - Three main messages

Three main messages

1st Message - In the first 9 months of this year, we met our budget forecasts. We reported 19 million euro net profit in 3Q, bringing the nine months to 51 million.

2nd message - The guidance for 2022: the positive trends are set to continue in Q4, which will bring the net result for 2022 to at least 75 million with a ROE of approximately 10%. This estimate includes 20 million euro of nonrecurring losses from our three tech ventures.

3rd message - Our strategy is more valid now than ever. We are confident we will generate growth and profitability, structurally among the highest in the industry. At the beginning of 2023, we will assess the additional opportunities and challenges the new landscape will bring.

Slide 3 - 9m22 on track; over €75mln net profit expected in FY22

Our third quarter results, and the forecast for 4Q22 are in line with our budget forecasts, even if we faced the second black swan, after the 2022 targets had been set for months.

And I note again here that the net profit of at least 75 million euro - which we expect at year end - already includes the 20 million euro of pre-tax losses from our 3 tech investments: Bilty, Quimmo and Hype. This figure will be drastically lower in 2023 and then it will turn into profits in 2024. I will come back to this point shortly.

Slide 4 - All-round solid 3Q22 results

So far this year, our solid numbers were further strengthened by:

• Very strong growth - in excess of 34% - in loans and investments across all business lines, reaching 3.3 billion as of the end of September;

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• A very low risk profile, with the gross organic NPE ratio down to 0.7%;
• Very robust liquidity, worth half a billion euro;
• A very solid capital base, with a CET1 ratio totalling 18%.

These numbers, for a financial services start-up are rarely seen, especially if we combine them with a two- digit ROE!

Slide 5 - We look ahead with confidence

And now, if we look beyond 2022, our confidence is supported by 3 main items

• Our core businesses are already very successful, and each of them has a solid growth plan with endless opportunities
• Our operations set up is substantially complete, which means from now on the more we grow, the more visible the operational leverage gains will be. We will see these as early as 2023.
• We expect our three tech ventures - Bilty, Quimmo and Hype - to be close to breakeven in 2023 and to be profitable by 2024, thus boosting growth and generating substantial value for our shareholders.

Slide 6 - Successful and profitable core businesses

Enrico and Andrea will further elaborate how profitable and cost effective our core businesses are. We are talking about revenue of approximately 215 million euro over the 9 months, with an aggregate Cost/Income ratio of around 36%.

Let me just highlight a few points:

• Our Growth Credit Division is now an established player with net customer loans advancing at a 54% annual growth, by far the highest in the sector. Also, a very high asset quality with Gross NPE ratio contained at 0.9%. Its origination capabilities will progressively benefit also our SGR.
• The Investment banking Division heavily complements our SME offer. Despite operating for only several months, it has already achieved considerable results.
• The Distressed Credit Division is now one of the top three private investors in the Italian NPE market with over 2.5 billion investments in NPE, 155 million euro worth of revenue and outstanding profitability. The division has also developed a distinctive presence in the real estate and renewable energy segments.

Slide 7 - Optimal sizing reached by 2022, scalability visible from 2023

2023, as planned, will mark the start of our scaling phase:

• Our core businesses have reached their critical mass.
• Much of our investment in digitalisation has already been completed
• By the end of 2022, our HQ functions will achieve optimal sizing and the cost base will be highly scalable.

Slide 8 - Tech ventures set to create high value without diverting attention from core business

We invested a small portion of our core business profits and approximately 10% of our equity, in three tech ventures: Bilty, Quimmo and Hype, because:

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• All of them will create high value for our shareholders. We are open to explore ways of capitalizing on their value - in part or in full - as a way of accelerating new equity creation,
• They are or they have the potential to be leaders in their market segments.
• They feature structurally high growth rates, efficient use of capital and scalability that are superior to our core businesses and should therefore command higher valuation once fully established.

I want to emphasize that these tech ventures do not divert any attention from our core businesses

Let me briefly go over the rationale of each venture

Slide 9 - Bilty: Unique fully-fledged digital platform bank for small corporates

BILTY is a strategic project and a pillar of our business plan: it combines two of our distinctive competitive

strengths: quality credit for SMEs and a quality technology platform.

• Bilty is a fully-fledged bank for small corporates, much more than a monoliner. Bilty was built to sell more than just one or two products, which some competitors are doing. Bilty will completely replace traditional banks with tens of thousands of small corporates.
• It serves a potentially enormous market of more than 1 million target companies
• The beta-testing stage was a success, taking only a few months longer than expected due to further enriching the offering, the credit engines and the origination channels.

• The investment to set up and launch Bilty was significant but was certainly worth it. The total investment in the year will likely reach 12 million euro.

• Nearing break-even is set for 2023 and being fully profitable in 2024

Slide 10 - Quimmo: Leading real estate digital brokerage platform on market

Quimmo is already a leading real estate digital brokerage platform in Italy. It is not a new activity for us, but rather an integral part of our business model because it deals with remarketing the assets that the Distressed Credit Division sells on the market.

• This activity was incorporated because it will bring greater value to illimity if kept separate.
• Although it is already a market leader, we see significant room for growth in the judicial sector of the market and we are preparing to exploit the potential of a highly attractive, large free market.
• Quimmo has been profitable for many years, unlike most of its peers. This year's margins have been used enter the free market.

Slide 11 - Hype: The Top fintech challenger in Italy

And lastly Hype. Hype is a separate investment we own with the Sella group. It is not part of either shareholder group as it is a stand-alone company developing along its own path

• Hype is the top retail fintech in Italy with over 1.7 million customers (it has more active customers than its four competitors combined).
• During the first 18 months, we invested primarily in structure and technology and now we will begin some fundamental promotional initiatives
• Revenue is growing at a notable rate
• A new CEO will be announced shortly, further strengthening the management team
• Break-evenis expected by the end of 2024

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These three tech ventures will create significant extra value and, as I mentioned earlier, they do NOT divert attention from our core business.

Now, moving to my last slide…

Slide 12 - A passionate and committed team

As we enter our 5th year, it is very easy to see what makes illimity special and unique: it is our passionate and committed people.

Here on this slide, you can see some of the faces of the incredibly talented and highly motivated illimiters. We are a very strong and cohesive team.

We are the team who transformed a Power Point Presentation into a credible and profitable bank, in just 4 years, which is truly remarkable.

The illimity team - is heavily committed - as I am - to achieve our targets, no matter what it takes. We started this bank together and the business plan targets are a personal goal for each and every one of us. There is nothing that will stop us. We believe in our vision, our values and our potential.

I now hand over to Silvia to look at quarterly results in detail.

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