Board approves results as at 30 june 2018

• Positive trend of main economic indicators, already highlighted in 1Q18, continues:
  • net interest income increases by 6.4% Q/Q thanks to increased volumes and higher profits from securities, fees and commissions essentially stable (-0.9% Q/Q)
  • operating costs up by 1.5% Q/Q; cutbacks expected in 2019 thanks to personnel exits to be carried out by means of the solidarity fund
• Loans to customers[1] up by EUR 1.4 billion thanks to increase in new mortgages; current accounts and time deposits increased by EUR 4.1 billion from the end of December 2017
• NPE reduction continues, following the completion of the EUR 24.1 billion securitisation process according to the Restructuring Plan timeline:
  • ongoing sale of leasing and small-ticket bad loans for a maximum of EUR 3.7 billion (vs. the 2018 Restructuring Plan target of EUR 2.6 billion), with expected closure by the year-end
  • UTPs already reduced by EUR 0.9 billion and further EUR 0.8 billion already on the market, vs. a 2018 target of EUR 1.5 billion
• Improvement of all the main asset quality indicators confirmed:
  • cost of risk for 1H18 at 56 basis points (61 basis points in 1Q18)
  • NPE coverage at 56% (bad loans coverage at 69%)
  • default rate at 1.6% and danger rate at 13.5% (annualised half-yearly data)
• Transitional Common Equity Tier 1: 13.0%, equal to c. EUR 8.4 billion, slightly below vs. the previous quarter for the widened BTP-Bund spread. Total Capital ratio 14.4%
• Texas ratio[2] at c. 100%

[1] Current accounts, mortgages and other forms of lending.

[2] Gross non-performing exposures / (tangible shareholders’ equity + loan loss provisions)

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