Illimity Bank S p A : – 4Q21&FY21 Results – delivers net profit of €65.6 million in 2021 (+111% yoy) fully in line with guidance

OPERATING PROFIT OF 110.6 MILLION EURO (+147%)

NET PROFIT OF 65.6 MILLION EURO IN 2021 (+111%)

IN LINE WITH GUIDANCE

AT 10% IN 2021 ROE1 IS ONE OF THE HIGHEST IN THE SECTOR

STRONG GROWTH OF NET LOANS TO CUSTOMERS AND INVESTMENTS

(+25% ON AN ANNUAL BASIS) TO REACH 2.8 BILLION EURO

SOLID CAPITAL BASE AVAILABLE FOR GROWTH

(CET1 AT 18.8% - 19.3% PRO-FORMA)

EXCELLENT ASSET QUALITY: GROSS ORGANIC NPE RATIO OF THE BUSINESS ORIGINATED BY ILLIMITY AT 0.7% AND LOANS WITH MORATORIUM REDUCED TO ZERO WITHOUT THE NEED FOR ANY SIGNIFICANT FORBEARANCE MEASURES

SOLID PROSPECTS OF VOLUME AND PROFIT GROWTH IN 2022

B-ILTY, THE FIRST DIGITAL BUSINESS STORE FOR A MILLION

SMALL CORPORATES STARTS OPERATIONS TODAY

Milan, 11 February 2022 - 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 December 2021.

illimity fully achieved its 2021 profit guidance, posting a net profit of 65.6 million euro for 2021, more than double the figure for 2020 (31.1 million euro). ROE for 2021 amounted to ca. 10%. Net profit for the fourth quarter of 2021 rose to 19.4 million euro (from 18.8 million euro in the third quarter of 2021, +3% q/q and +187% over net profit of 6.8 million euro for the fourth quarter of 2020).

In detail, the year was characterised by:

• More than doubled operating profit of 110.6 million euro for 2021 (+147% compared to operating profit of 44.8 million euro for 2020).
• Significant business growth, with loan and investment volumes of more than 1.1 billion euro originated in 2021, representing a rise of 24% on an annual basis. Volume growth was above all driven by the Growth Credit Division, which saw an acceleration in lending and

1 ROE - Return on Equity: calculated as net profit for the year as a percentage of average shareholders' equity during the year (1/1- 31/12/2021).

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investing activity in all its business lines, while the Distressed Credit Division maintained its positioning as leading operator on the Italian market thanks to its ability to identify new investment opportunities in profitable and highly specialist market segments. In the fourth quarter alone the Bank originated volumes of 511 million euro (+120% q/q).

• A sharp increase in operating income to reach 271.2 million euro (+56% y/y) in 2021, increasingly diversified and balanced between the net interest income and other income components. Operating income reached 77.8 million euro in the fourth quarter, representing a sustained rise on both a quarterly (+17%) and annual (+34%) basis. The Distressed Credit Division confirms to be the largest contributor to revenues, generating 73% of the total revenues earned in the year.
• A visible improvement in operating leverage: the Cost income ratio fell considerably during the year to 59% compared to 74% in 2020. The Cost income ratio for the fourth quarter amounted to 62% (-11 percentage points over the fourth quarter of 2020).
• Organic credit quality remained at excellent levels: the ratio between gross doubtful organic loans and total gross organic loans originated since the start of illimity's operations stood at
  0.7% at 31 December 2021 - a figure amounting to 2.3% if the loan portfolio of the former Banca Interprovinciale is included; organic cost of risk2 stood at 4 bps for the full year 2021.
• A robust capital base with indicators positioned at the top levels of the system - a CET Ratio of 18.8% (19.3% pro-forma with the inclusion of the special shares) - and a sound liquidity position (of approximately 0.7 billion euro) despite the significant deployment in new loans and investments in the quarter.

Moreover, 2021 saw the foundations laid for solid growth in profits and profitability also in 2022, in line with the guidelines for growth included in the Strategic Plan:

• we entered a partnership agreement with the ION Group. Initially centred on the licence agreement for the use of our IT platform, we are now working to extend this to other key sectors;
• we have made additional progress on our sustainable growth path, developing our ESG values further in relations both with our customers and our staff; we have joined the United Nations Global Compact, the biggest business sustainability initiative;
• we have invested in all our activities and strengthened our presence in the key markets, amongst which we note the following:

1. illimity SGR, which has successfully completed further closings of its first Turnaround fund;

1. the capital markets activity focused on SMEs, which has already provided a visible contribution to our results;

1. the Energy desk of the Distressed Credit Division, which has consolidated its presence on the market, taking the first investment-divestment cycle to completion

2 Calculated as the ratio between loan loss provisions and net organic loans to customers at 31 December 2021 (1,704 million euro) for the segments Factoring, Cross-over, Acquisition Finance, performing Turnaround (including returns to performing loans), the loan portfolio of the former Banca Interprovinciale and Senior Financing to non-financial investors in distressed loans - though excluding UTP loans purchased as part of the Turnaround business and investments in distressed loan portfolios.

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and achieving significant economic results;

1. entry into the public procurement claims segment, a large field with limited competition and high returns;

• 1. the strengthening of our product offering and the technology platform of HYPE, Italy's leading fintech;
• we have laid the foundations for the launch of two completely new initiatives, based on technology, that will take our future profitability well above the average for the sector. In 2022 illimity will become even more "tech":
• 1. b-ilty,the first digital business store for credit and financial services developed by illimity to help SMEs to grow. b-ilty is a fully digital banking platform, conceived on the basis of the suggestions received from hundreds of small corporates and inspired by examples typical of the most globally widespread digital solutions;

1. thanks to our digital and real estate expertise, over the next few weeks we will also be launching the most innovative proptech company in Italy. An evolution of the strategy of our servicing unit which, as remarketing leader on the judicial real estate market, will enter the open real estate market, currently characterised by its large scale and significant need for innovation, with a new brand and an innovative platform.

Corrado Passera, CEO and Founder of illimity, commented: "We ended 2021 with considerable satisfaction and are starting 2022 with a great deal of confidence.

A new phase of further growth is beginning in 2022. The performing, restructuring and distressed credit markets on which we have been concentrating since we were first established are even bigger than we initially envisaged and we have shown that we have strong and sustainable competitive advantages. Our growth will be further supported by three highly technological initiatives that are already operative today: b-ilty (the first complete digital platform for credit and financial services for SMEs), our proptech NewCo (a highly innovative proptech that will begin operations over the next few weeks) and HYPE (Italy's leading fintech). These initiatives all have in common the fact that they serve large markets and meet unsatisfied needs, that they have a highly scalable operating model and that they can open up to partnerships with key players.

Lastly, the synergies we will gradually unleash with the ION Group in all our business areas will bring further acceleration to illimity's growth path.

Our results and the work we have carried out to date enable us to be confident that the growth and profitability objectives included in the 2021-25 Strategic Plan (net profit of >240 million euro) are fully within our reach. "

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Key balance sheet figures
Figures in millions of euro
Reclassified Balance sheet					31.12	31.03	30.06	30.09	31.12	31.12.2021	31.12.2021
				2020	2021	2021	2021	2021
								QoQ %	YoY %
Cash and cash equivalent					954	752	514	774	508	(34)%	(47)%
Due from banks and other financial institutions		632	657	608	543	468	(14)%	(26)%
Customer loans							2,205	2,234	2,330	2,473	2,762	12%	25%
- Distressed Credit	1	investments				972	973	943	939	923	(2)%	(5)%
- Distressed Credit	1	senior financing				336	316	311	300	336	12%	0%
- Growth Credit	2							817	869	1,006	1,165	1,434	23%	76%
- Cross-over & Acq. Finance	3				416	452	517	566	628	11%	51%
- Turnaround								243	260	303	389	438	13%	81%
- Factoring								158	157	186	211	368	75%	133%
- b-ilty								-	-	-	-	3	n.s	n.s.
- Non-core former Banca Interprovinciale			80	76	70	69	66	(4)%	(18)%
Financial assets Held To Collect & Sell (HTCS)	4	91	310	315	280	300	7%	228%
Financial assets measured at FVTPL	5			19	50	139	88	77	(13)%	314%
Investments in associates and companies subject to joint control	-	86	84	82	80	(2)%	n.s.
Goodwill								36	36	36	36	36	0%	0%
Intangible assets							33	33	37	40	49	24%	48%
Other assets (Incl. Tangible and tax assets)	6		156	157	267	330	382	16%	144%
Total assets								4,126	4,316	4,331	4,646	4,661	0%	13%
Due to banks								534	627	582	546	411	(25)%	(23)%
Due to customers							2,552	2,568	2,643	2,714	2,818	4%	10%
Bond/Securities								301	302	304	507	500	(1)%	66%
Shareholders' Equity						583	665	681	756	773	2%	33%
Other liabilities								156	154	121	123	159	29%	2%
Total liabilities								4,126	4,316	4,331	4,646	4,661	0%	13%
Common Equity Tier 1 Capital					509	530	543	625	642	3%	26%
Risk Weighted Assets					2,851	3,018	3,168	3,111	3,411	10%	20%

1. Distressed Credit Division, formerly the DCIS Division.
2. Growth Credit Division, formerly the SME Division.
3. 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 Growth Credit segment. It also includes the corporate high-yield bonds classified as HTC.
4. HTCS: financial assets measured at fair value through comprehensive income. This item includes the Bank's securities portfolio and any loans of the Distressed Credit Division which will probably be sold.
5. FVTPL: other financial assets at fair value through profit or loss. This item includes equity financial instruments purchased as part of Turnaround transactions, junior tranches of securitised non-performing loans acquired as part of Senior Financing transactions and investments in distressed energy credit purchased as part of the DC Division's activities.
6. This includes assets of ca.92 million deriving from the purchase of tax credits (the "Ecobonus" scheme) and senior notes of ca. 43 million resulting from the securitisation of a portfolio of non-performing loans classified as assets held for sale.
   Any failure of the above figures to reconcile arises exclusively from rounding.

At 31 December 2021, the Bank's total assets stood at 4.7 billion euro, a rise of 13% over the same period of the previous year and effectively unchanged over the quarter ending 30 September 2021, albeit with a different mix by virtue of a decrease in liquid items balanced by an increase in interest-earning assets.

Net customer loans and investments at December 2021 reached almost 2.8 billion euro, up by 12% over the previous quarter and by 25% over 31 December 2020. The main contribution to growth was provided by the Growth Credit Division, which saw a significant acceleration in volumes during the year - as a whole +23% on a quarterly basis and +76% over the same period of the previous year - in all business lines. The Distressed Credit Division's balance of investments and

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loans remained essentially unchanged due to the excellent performance in collections and disposals, leading to a significant positive economic contribution, in a market with a limited number of transactions due to the extension of the moratoria and some transactions of a significant amount concluded in January.

In addition, stated in the balance sheet for the first time are the net customer loans relating to b-ilty, the first digital store for small and medium-sized corporates, which saw a pilot phase involving selected businesses being carried out over the months prior to today's official commercial launch.

The quality of the Bank's loan portfolio remains highly solid and positioned at the top levels of the system. Of the total new credit originating from illimity, gross impaired positions amount to

11.1 million euro, corresponding to a ratio of gross doubtful organic loans to total gross organic loans of approximately 0.7%. If the portfolio inherited from Banca Interprovinciale is also included, the stock of gross doubtful organic loans rises to 39.6 million euro, corresponding to a ratio between gross doubtful organic loans and total gross organic loans of 2.3%, a decrease over the previous quarter's 2.5% and one of the best in the Italian banking system. The stock of net doubtful organic loans at 31 December 2021 amounted to 21.0 million euro, corresponding to a ratio of 1.2% between net doubtful organic customer loans and total net organic customer loans compared to 1.3% at the end of the previous quarter.

At the end of 2021, loans with moratorium applications totalled only 18 million euro, equal to around 1.2% of the loan portfolio of the Growth Credit Division, mostly regarding the portfolio inherited from Banca Interprovinciale. In addition, as a result of the expiry of the moratorium on loans on 31 December 2021, the moratorium balance has been largely reduced to zero, there being no requirement for any additional forbearance measures.

In the fourth quarter the Bank's liquidity position - which consists of cash, the net interbank position and high-quality liquid securities - remained highly solid, despite the significant deployment of funds for new credit and investments during the quarter, and stood at 0.7 billion euro.

At the end of 2021, illimity's securities portfolio stood at approximately 300 million euro, a rise of 13% over the figure of 265 million euro posted at the end of September 2021. The securities portfolio mark-to-market net of tax stood at negative 5.8 million euro at the end of the quarter (2.9 million euro at the end of the previous quarter). The securities portfolio, all of which classified as Held to Collect and Sell, consisted of Italian government bonds (66%) and senior bonds (25%), with the balance being subordinated bonds (9%).

The line item "Other assets" consists of balances arising from the purchase of tax credits - the government's "Ecobonus" scheme - this amounting to 92 million euro, a figure which stood at 62 million at the end of January 2022 and which following the recent changes in legislation introduced by the "Sostegni Ter" decree will only be used to offset tax charges.

illimity's total financing stood at 3.7 billion euro at 31 December 2021, a decrease of 1% over the figure at the end of September 2021.

CET1 Capital increased to 642 million euro in the fourth quarter, mainly as a result of the net profit for the quarter and the utilisation of deferred tax assets.

Risk-weightedassets (RWAs) rose by around 10% during the quarter to over 3.4 billion euro, mainly due to the significant rise in loans and investments in the fourth quarter of 2021 and the annual revision of operating risk. The ratio between the Bank's RWAs and its total assets, slightly increasing over the previous quarter, remained contained at around 70%.

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