INTESA SANPAOLO

THE RESULTS FOR Q1 2022 HAVE CONFIRMED INTESA SANPAOLO’S ABILITY TO GENERATE SOLID PROFITABILITY AND CREATE VALUE FOR ALL ITS STAKEHOLDERS EVEN IN A CHALLENGING ENVIRONMENT, THANKS TO ITS WELL-DIVERSIFIED AND RESILIENT BUSINESS MODEL.
 
THE 2022-2025 BUSINESS PLAN IS BEING IMPLEMENTED AND THE KEY INDUSTRIAL INITIATIVES ARE UNDERWAY. THE BUSINESS PLAN FORMULA AND, SPECIFICALLY, THE 2025 NET INCOME TARGET OF €6.5 BILLION ARE CONFIRMED, WITH POTENTIAL ADDITIONAL UPSIDE DERIVING FROM AN INTEREST RATE INCREASE, HIGH FLEXIBILITY IN MANAGING OPERATING COSTS, AND ZERO-NPL BANK STATUS ALREADY ACHIEVED. 
NET INCOME FOR Q1 2022 WAS €1,670 MILLION WHEN EXCLUDING WRITE-DOWNS FOR RUSSIA AND UKRAINE, FULLY IN LINE WITH THE 2022 NET INCOME TARGET OF OVER €5 BILLION. STATED NET INCOME WAS €1,024 MILLION.
 
VALUE GENERATION FOR ALL STAKEHOLDERS IS ALSO GROUNDED ON INTESA SANPAOLO’S STRONG ESG COMMITMENT WHICH, IN THE FIRST QUARTER, TRANSLATED INTO SEVERAL HUMANITARIAN INITIATIVES TO SUPPORT PEOPLE OF THE GROUP’S SUBSIDIARY PRAVEX BANK AND THE UKRAINIAN POPULATION, AS WELL AS INTO ACTIONS TO IMPLEMENT THE ESG INITIATIVES ENVISAGED IN THE 2022-2025 BUSINESS PLAN. 
THE CAPITAL POSITION WAS SOLID AND WELL ABOVE REGULATORY REQUIREMENTS: FULLY LOADED COMMON EQUITY TIER 1 RATIO WAS 13.6% DEDUCTING FROM CAPITAL €0.7 BILLION OF DIVIDENDS ACCRUED IN Q1 2022, WITHOUT TAKING INTO ACCOUNT A BENEFIT OF AROUND 110 BASIS POINTS DERIVING FROM THE ABSORPTION OF DEFERRED TAX ASSETS (DTAS) BY 2029, OF WHICH AROUND 40 BASIS POINTS OVER THE 2022-2025 BUSINESS PLAN HORIZON, AND NEGATIVE IMPACT OF AROUND 100 BASIS POINTS DERIVING FROM THE €3.4 BILLION BUYBACK. 
OPERATING MARGIN WAS UP BY 46% ON Q4 2021, WITH OPERATING INCOME UP BY 7.8%; OPERATING COSTS WERE DOWN BY 3.2% ON Q1 2021. 

CREDIT QUALITY IMPROVED: 
- GROSS NPLs WERE REDUCED BY 31.6% ON YEAR-END 2021 TAKING INTO ACCOUNT A DISPOSAL OF €3.9 BILLION FINALISED IN APRIL THIS YEAR, WHICH WAS ALREADY PROVISIONED FOR IN Q4 2021; 
- NPL RATIO WAS 2.2% GROSS AND 1.3% NET TAKING INTO ACCOUNT THE DISPOSAL FINALISED IN APRIL THIS YEAR, RESPECTIVELY 1.7% AND 1% ACCORDING TO THE EBA METHODOLOGY; NPL RATIO WOULD BE 2% GROSS AND 1.2% NET TAKING INTO ACCOUNT THE REDUCTION DUE TO THE ADDITIONAL DISPOSALS PLANNED IN 2022 ALREADY PROVISIONED FOR IN Q4 2021, RESPECTIVELY 1.6% AND 0.9% ACCORDING TO THE EBA METHODOLOGY; 
- ANNUALISED COST OF RISK IN Q1 2022 STOOD AT 60 BASIS POINTS, 18 BASIS POINTS WHEN EXCLUDING ADJUSTMENTS FOR THE RUSSIA-UKRAINE EXPOSURE NET OF THE PARTIAL RELEASE OF GENERIC PROVISIONS SET ASIDE IN 2020 FOR FUTURE COVID-19 IMPACTS.
 
INTESA SANPAOLO CONTINUES TO OPERATE AS A GROWTH ACCELERATOR IN THE REAL ECONOMY IN ITALY: IN Q1 2022, MEDIUM/LONG-TERM NEW LENDING GRANTED BY THE GROUP TO ITALIAN HOUSEHOLDS AND BUSINESSES AMOUNTED TO AROUND €17 BILLION. IN Q1 2022, THE GROUP FACILITATED THE RETURN TO PERFORMING STATUS OF AROUND 1,200 COMPANIES, THUS SAFEGUARDING AROUND 6,000 JOBS. THIS BROUGHT THE TOTAL TO AROUND 134,000 COMPANIES SINCE 2014, WITH AROUND 672,000 JOBS SAFEGUARDED OVER THE SAME PERIOD.
NET INCOME OF €1,670M IN Q1 2022 WHEN EXCLUDING WRITE-DOWNS FOR THE RUSSIA-UKRAINE EXPOSURE (UP 10.2% VS €1,516M IN Q1 2021). STATED NET INCOME OF €1,024M. 

-OPERATING MARGIN UP BY 46% ON Q4 2021 

-OPERATING INCOME UP BY 7.8% ON Q4 2021 

-OPERATING COSTS DOWN BY 3.2% ON Q1 2021 

IMPROVEMENT IN CREDIT QUALITY TREND: 
DECREASE IN NPLs: 
-GROSS NPL REDUCTION OF AROUND €54BN SINCE THE SEPTEMBER 2015 PEAK, TAKING INTO ACCOUNT THE DISPOSAL OF €3.9BN FINALISED IN APRIL THIS YEAR AND ALREADY PROVISIONED FOR IN Q4 2021 
-NPL STOCK DOWN 31.6% GROSS AND 16.5% NET ON YEAR-END 2021, TAKING INTO ACCOUNT THE DISPOSAL FINALISED IN APRIL THIS YEAR (€3.9BN GROSS AND €0.9BN NET) 
-NPL TO TOTAL LOAN RATIO OF 2.2% GROSS AND 1.3% NET TAKING INTO ACCOUNT THE DISPOSAL FINALISED IN APRIL THIS YEAR, RESPECTIVELY 1.7% AND 1% ACCORDING TO THE EBA METHODOLOGY; NPL RATIO WOULD BE 2% GROSS AND 1.2% NET TAKING INTO ACCOUNT THE REDUCTION DUE TO THE ADDITIONAL DISPOSALS PLANNED IN 2022 ALREADY PROVISIONED FOR IN Q4 2021, RESPECTIVELY 1.6% AND 0.9% ACCORDING TO THE EBA METHODOLOGY 
-ANNUALISED COST OF RISK IN Q1 2022 TO 60 BASIS POINTS (FROM 59 BASIS POINTS IN 2021), 18 BASIS POINTS WHEN EXCLUDING ADJUSTMENTS FOR THE RUSSIA-UKRAINE EXPOSURE NET OF PARTIAL RELEASE OF GENERIC PROVISIONS SET ASIDE IN 2020 FOR FUTURE COVID-19 IMPACTS (FROM 25 BASIS POINTS IN 2021 WHEN EXCLUDING PROVISIONS TO ACCELERATE NPL DELEVERAGING); 

SOLID CAPITAL POSITION, WELL ABOVE REGULATORY REQUIREMENTS: 
COMMON EQUITY TIER 1 RATIO AS AT 31 MARCH 2022, AFTER DEDUCTING FROM CAPITAL €0.7BN OF DIVIDENDS ACCRUED IN Q1 2022 (*): 

PHASED-IN (1) 
13.6% FULLY LOADED (2) (3) WITHOUT TAKING INTO ACCOUNT THE BENEFIT OF AROUND 110 BASIS POINTS DERIVING FROM THE ABSORPTION OF DEFERRED TAX ASSETS (DTAS) BY 2029, OF WHICH AROUND 40 OVER THE 2022-2025 BUSINESS PLAN HORIZON, AND NEGATIVE IMPACT OF AROUND 100 BASIS POINTS DERIVING FROM THE €3.4BN BUYBACK (°) 

Deducting from capital also the coupons accrued on the Additional Tier 1 issues. 
(1) Calculated including the mitigation of the impact of the first time adoption of IFRS 9. 
(2) Calculated excluding the mitigation of the impact of the first time adoption of IFRS 9. 
(3) Estimated pro-forma fully loaded Common Equity Tier 1 ratio of 14.7%, taking into account the total absorption of deferred tax assets (DTAs) related to goodwill realignment, loan adjustments, the first time adoption of IFRS 9 and the non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the Aggregate Set of Banca Popolare di Vicenza and Veneto Banca, as well as the expected absorption of DTAs on losses carried forward and DTAs related to the acquisition of UBI Banca and the agreement with the trade unions of November 2021, and the expected distribution on the Q1 2022 net income of insurance companies. 
(°) Subject to ECB approval. Amount equivalent to the 2019 suspended dividend.