Illimity Bank S p A : – 1Q21 Results – Good start to 2021 with €12.6mln net profit in 1Q21

ILLIMITY ENDS THE FIRST QUARTER OF 2021

WITH A NET PROFIT OF 12.6 MILLION EURO

(+180% OVER 1Q20, +86% OVER 4Q20)

NET CUSTOMER LOANS AND INVESTMENTS UP 34% YEAR ON YEAR TO OVER 2.2 BILLION EURO, WITH SME COMPONENT ON THE RISE

THE RESULT CONFIRMS THE SIGNIFICANT GROWTH TRAJECTORY

EXPECTED IN PROFIT FOR THE YEAR 2021

22 JUNE 2021: PRESENTATION OF THE NEW 2021-25 STRATEGIC PLAN

• Assets at 4.3 billion euro (3 billion euro at 1Q20) with net customer loans and investments exceeding 2.2 billion euro (+34% y/y)
• SME Division: net loans to customers at 869 million euro at the end of March 2021 (+56% y/y) with all business units making a positive contribution
• DCIS Division: stock of loans and investments rising by 28% year on year to 1.3 billion euro at the end of March 2021
• Direct Bank Division: illimitybank.com's direct customer funding at 1.2 billion euro (+42% y/y). HYPE customers increased to 1.4 million (+26% y/y)
• Liquidity of 1 billion euro and a robust capital base, with a CET1 ratio of 17.6% (18.0% pro-forma)

Milan, 11 May 2021 - Chaired by Rosalba Casiraghi, the Board of Directors of illimity Bank S.p.A. ("illimity" or the "Bank") yesterday approved the illimity Group's results at 31 March 2021.

illimity reported robust results in the quarter ended 31 March 2021, continuing the positive performance achieved in 2020 and posting a net profit of 12.6 million euro, its best quarterly result ever and a figure almost three times higher than that achieved in the first quarter of 2020 (4.5 million euro) and about twice the amount reported in the previous quarter (6.8 million euro).

Assets stood at over 4.3 billion euro at 31 March, a 5% increase over the previous quarter and 41% up on the figure of 3 billion euro posted at 31 March 2020. The total includes net customer loans and investments of 2.2 billion euro at 31 March 2021, a rise of 34% over the balance of

1.7 billion euro at the corresponding date in 2020 and slightly up (by 1%) over the previous quarter, despite the sale of positions and discounted payoff transactions.

The rise in volumes in the quarter was driven by the SME Division, whose net customer loans grew by 6% over the end of December 2020 (+56% compared to 31 March 2020) to reach 869 million euro at the end of March 2021. The acceleration in the growth of the business, which began in the second half of 2020, also continued decisively in the first quarter of 2021, with a positive contribution

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arriving from all business sectors - Factoring, Crossover and Acquisition Finance and Turnaround

• and benefiting from the strong demand for the state-backed loans introduced by government decrees issued as part of the pandemic crisis. The SME Division also posted profits of approximately 3 million euro in the quarter earned on credit revaluation events deriving from Turnaround transactions. In the quarter the Division posted a pre-taxprofit of 4.7 million euro.

The quality of illimity's asset portfolio remains solid, with no significant impairment occurring in the SME Division's net customer loans. Total gross organic non-performing loans at 31 March 2021 accordingly fell to 35.9 million euro (from 37.4 million euro at 31 December 2020), almost all of which arising from the business portfolio of the former Banca Interprovinciale network, while the ratio of these to total gross organic customer loans decreased to 3.0% at 31 March 2021 compared to 3.2% at the end of December 2020 and 4.2% at the end of March 2020. At the end of March 2021, loans with moratorium amounted to 49 million euro, down significantly from the December 2020 figure of 65 million euro (and compared to a peak amount requested during 2020 of 86 million euro).

The first quarter of the year is usually characterised by a somewhat sluggish dynamic of transactions on the distressed loan market. As a result of this seasonality, volumes in the DCIS Division remained more or less unchanged over the quarter ended 31 March 2021, closing at 1.3 billion euro, also due to the effect of sale of positions and discounted payoff transactions. On the basis of a solid pipeline of potential transactions which can be estimated in around 260 million euro, also this year a gradual acceleration is expected to be seen in the division's investment activity over the next few months. Operating trends remained very strong with gross cash flows exceeding expectations. The Bank continued its dynamic management strategy on existing portfolios in this quarter too, posting additional profits from disposals and closed positions of 9.5 million euro. In the quarter the division posted a pre-taxprofit of 31.4 million euro.

Total assets managed by neprix, the illimity Group's platform specialising in servicing distressed corporate loans, stood at 9.0 billion euro at 31 March 2021 in terms of the gross book value ("GBV") of the loans serviced and the real estate assets and capital goods held for sale.

At the end of March 2021, direct customer funding remained stable at approximately 2.4 billion euro compared to the December 2020 figure and up by 36% year on year. Within this total, illimitybank.com's funding reached 1.2 billion euro as at March 2021, up 7% on the previous quarter (and +42% y/y). Funding through Raisin, pan-European deposit platform, stood at 492 million euro, a 20% advance quarter on quarter (+27% y/y). Corporate customer funding on a quarterly basis declined to 719 million euro (-17% q/q, +35% y/y).

It is recalled that in December 2020 illimity made its debut on the bond market with the issue of its first senior preferred bond worth 300 million euro, with a maturity of three years and a coupon of 3.375%. Overall, illimity's total sources of funding at 31 March 2021 stood at 3.5 billion euro, up approximately 3% on the December 2020 figure and 47% year on year.

Also as the result of the above mentioned bond placement, liquidity consisting of cash, the net interbank position, high-quality liquid assets and other marketable securities - to be used to service the business growth planned for 2021 - remained at excellent levels and totalled approximately 1 billion euro at 31 March 2021.

Alongside its solid economic and capital results, illimity carried out two important strategic initiatives in the first quarter of 2021. On 1 January 2021 the Bank concluded the acquisition of an investment of 50% in HYPE, a leading player in the Italian market for mobile-based financial services platforms.

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HYPE recorded a significant growth in customer numbers, up 26% year on year to 1.4 million. Starting this quarter, therefore, illimity is recognising its joint investment in HYPE in its consolidated financial statements using the equity method, leading to a carrying amount of 85.6 million euro at 31 March 2021.

During the quarter illimity SGR completed work on the launch of its inaugural fund "illimity Credit

• Corporate Turnaround", whose first closing was announced on 1 April 2021 at a gross amount of more than 200 million euro. It is a contribution fund dedicated to investments in Unlikely To Pay
  ("UTP") loans due from SMEs with turnaround prospects. This launch consolidates illimity's market positioning in the UTP sector, a segment where the Bank is already playing a leading role through its investment in single name and portfolios exposures through its DCIS and SME Divisions.

The increase in assets, together with the effects arising from the consolidation of the investment in HYPE, led to a rise in risk-weightedassets (RWAs), which at the end of March 2021 stood at 3,018 million euro, up by 6% over the figure of 2,851 million euro at the end of 2020 and by 29% over the same period in 2020.

Lastly, CET1 capital rose to approximately 530 million euro at the end of the first quarter of 2021 compared to 509 million euro at the end of December 2020 (439 million euro at March 2020), mostly as the result of the net profit for the quarter.

These factors led the continuation of a robust CET1 ratio, which ended March 2021 at 17.6%. On the basis of unchanged assets, the Bank's pro-forma CET1 ratio, meaning that including special shares of 14.4 million euro, stood at 18.0%.

Corrado Passera, illimity's CEO, commented: "We are very satisfied about the start of 2021. The growth of our lending activity, the quality of our portfolios, the scale effect that is now emerging in various areas of our business and the resulting economic performance all confirm the choices we have made so far. In recent months, very promising activities have been launched in Open Banking (HYPE) and asset management (illimity SGR). A number of strategic developments not initially foreseen are also emerging and will be presented on 22 June with the update of our Strategic Plan.".

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Key balance sheet figures

Data in million euro
			31.03	30.06	30.09	31.12	31.03	31.03.2021 /	31.03.2021 /
Reclassified Balance sheet
			2020	2020	2020	2020	2021	31.12.2020	31.03.2020
Cash and cash equivalent				219	311	543	945	733	(22)%	234%
Due from banks and other financial institutions		657	643	645	641	676	5%	3%
Customer loans				1,662	1,766	1,831	2,205	2,234	1%	34%
- DCIS	1	investments				674	724	733	972	973	0%	44%
- DCIS	1	senior financing				334	337	331	336	316	(6)%	(5)%
- SME	2					556	613	685	817	869	6%	56%
- Cross-over & Acq. Finance	2			278	315	366	412	450	9%	62%
- High yield bond				-	13	23	4	1	(66)%	n.s.
- Turnaround				154	156	173	243	260	7%	69%
- Factoring				123	129	123	158	157	(1)%	27%
- Non-core former Banca Interprovinciale		99	92	83	80	76	(6)%	(23)%
Financial assets Held To Collect & Sell (HTCS)	3	335	286	137	91	310	240%	(7)%
- Securities Portfolio				335	286	137	91	268	193%	(20)%
- Securities Portfolio high yield bond			-	-	-	-	43	n.s	n.s.
Financial assets measured at FVTPL	4		8	12	17	19	50	173%	567%
Investments in associates and companies subject to jo	0	0	0	0	86	n.s	n.s.
Goodwill					36	36	36	36	36	--	--
Intangible assets				22	26	29	33	33	1%	55%
Other assets (Incl. Tangible and tax assets)		114	158	154	156	157	1%	39%
Total assets				3,052	3,238	3,392	4,126	4,316	5%	41%
Due to banks				468	583	541	534	627	17%	34%
Due to customers				1,901	1,913	2,123	2,552	2,568	1%	35%
Bond/Securities				10	2	2	301	302	0%	2,835%
Shareholders' Equity				537	563	575	583	665	14%	24%
Other liabilities				135	176	151	156	154	(1)%	14%
Total liabilities				3,052	3,238	3,392	4,126	4,316	5%	41%
Common Equity Tier 1 Capital				439	466	478	509	530	4%	21%
Risk Weighted Assets				2,347	2,548	2,497	2,851	3,018	6%	29%

1. DCIS: Distressed Credit Investment & Servicing Division (previously named NPL I&S)
2. This figure includes part of the net loans to existing customers of Banca Interprovinciale, which due to their features are considered consistent with illimity's SME segment
3. HTCS: Financial assets measured at fair value through comprehensive income
4. FVTPL: other financial assets at fair value through profit or loss. This item includes equity financial instruments purchased as part of a Turnaround transaction, junior tranches acquired as part of Senior Financing transactions and investments in distressed energy credit purchased as part of the DCIS division's activities.

Any failure to reconcile the stated figures arise exclusively from rounding

SME Division

Net loans to customers of the SME Division rose to 869 million euro at 31 March 2021, up by 6% over 31 December 2020 and 56% over the figure of 556 million euro at 31 March 2020, confirming the good progression in the rise in volumes beginning in the second half of last year.

Crossover and Acquisition Finance made the largest contribution to the growth in the Division's business volumes in the first quarter of 2021, disbursing new loans to customers of 63 million euro

• almost double the corresponding amount in the same period in 2020. Over 75% of new business is in state-backed loans, an instrument enabling a reduction in risk profile and capital absorption. The Bank disbursed another 12 million euro after the end of the quarter, to which should be added loans of a further 39 million euro not yet booked but already approved.

Turnaround also contributed to the advances made during the quarter, this generating new loans and investments of approximately 15 million euro. The activity continued in April with new business

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of a further 25 million euro generated in this segment, to which should be added loans of a further 3 million euro not yet booked but already approved.

Factoring made a good start to the year too, achieving a turnover of 199 million euro in the first quarter of 2021, a rise of 24% over the first quarter of 2020. At the present date illimity has established relations with approximately 130 clients and more than 650 debtors. This positive business dynamic also continued after the end of the quarter, with turnover volumes reaching 52 million euro in April 2021.

Distressed Credit Investment & Servicing ("DCIS") Division

Volumes of net loans and investments in the DCIS Division stood at 1,289 million euro at 31 March 2021, a rise of 28% over the figure of 1,007 million euro at the end of the previous year and effectively in line with that posted at 31 December 2020 (-1% q/q), also due to the effect of sale of positions and discounted payoff transactions. The volume trend in the quarter on the one hand reflects the seasonality typical of this sector, which sees a large portion of transactions in non- performing loans concentrated in the last part of the year, and on the other the dynamic management of the loan portfolio that in this quarter too led to significant profits being earned on the sale and early settlement of certain exposures, consistent with the Bank's management strategies.

Regarding investments in non-performingloan portfolios, illimity finalised purchases of 47 million euro in the first quarter of 2021, an increase over the figure of 37 million euro for the first quarter of 2020, to which should be added transactions worth a further 8 million euro not yet booked but already approved. The stock of net loans and investments stood at 973 million euro at the end of March 2021, of which approximately 70% representing secured portfolios.

Total assets managed by neprix, the illimity Group's platform specialising in servicing distressed corporate loans, remained stable at 9.0 billion euro at 31 March 2021 in terms of the gross book value ("GBV") of the loans serviced and the real estate assets and capital goods held for sale.

Lastly, Senior Financing activities continued with transactions of 12 million euro carried out during the first quarter of 2021, concluded mainly to support primary investment funds and companies specialising in the purchase of non-performing loans. In line with the amount disbursed in 2020, new senior financing disbursements consist of transactions having higher yields, enabling increased returns on equity to be achieved.

Direct Bank Division

Total direct deposits taken with the Bank's retail and corporate customers stood at approximately 2.4 billion euro, effectively in line with the figure at the end of the previous quarter and representing an increase of 36% over 31 March 2020.

As part of this total, funding by the digital direct bank illimitybank.com amounted to 1,158 million euro, a rise of approximately 7% over the figure at the end of December 2020, with around 78% of the additional funding relating to deposit accounts with an average remaining term of 28 months.

The Bank continued to attract new customers, taking the total number to around 48,000 at the end of April, with good progress also being made in terms of customer engagement: approximately 87% of the customer base is active and it is estimated that of these customers,

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