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INTESA SANPAOLO:

CONSOLIDATED RESULTS AS AT 30 SEPTEMBER 2021

THE RESULTS FOR 9M 2021 HAVE CONFIRMED INTESA SANPAOLO’S ABILITY TO RESPOND EFFECTIVELY TO THE COMPLEXITIES BROUGHT ABOUT BY THE PANDEMIC AND HAVE ALREADY MADE IT POSSIBLE TO ACHIEVE THE MINIMUM NET INCOME OF €4 BILLION ENVISAGED FOR FULL-YEAR 2021.

THE RESULTS FOR 9M 2021 REFLECT INTESA SANPAOLO’S SUSTAINABLE PROFITABILITY DERIVING FROM A SOLID CAPITAL BASE AND LIQUIDITY POSITION, A RESILIENT AND WELL-DIVERSIFIED BUSINESS MODEL, STRATEGIC FLEXIBILITY IN MANAGING OPERATING COSTS AND ASSET QUALITY. THESE FEATURES HAVE MADE IT POSSIBLE TO EFFECTIVELY MITIGATE THE IMPACT OF THE ADVERSE SCENARIO OF THE 2021 EBA/ECB STRESS TEST AND ARE REFLECTED IN A LOW RISK PROFILE BOLSTERING THE SUPPORT PROVIDED TO ITALY BY THE GROUP, WHICH IS ALSO COMMITTED TO BECOMING A REFERENCE MODEL IN TERMS OF SUSTAINABILITY AND SOCIAL AND CULTURAL RESPONSIBILITY.

VALUE GENERATION FOR ALL STAKEHOLDERS WILL BE ACCRETED BY SYNERGIES ESTIMATED AT OVER €1 BILLION DERIVING FROM THE MERGER OF UBI BANCA, SUCCESSFULLY COMPLETED WITH NO SOCIAL COSTS, AND BY OVER €6 BILLION IN 2020 AND ALMOST €500 MILLION IN 9M 2021, BOTH OUT OF PRE-TAX PROFIT, DEVOTED BY THE GROUP TO FURTHER STRENGTHENING THE SUSTAINABILITY OF RESULTS.

INTESA SANPAOLO’S INITIATIVES TO FACE THE COVID-19 IMPACTS:

- PROVIDING SAFE CONDITIONS FOR THE GROUP PEOPLE AND CUSTOMERS;

- SUPPORTING HEALTHCARE INITIATIVES WITH MORE THAN €100 MILLION DONATED;

- PROVIDING €150 MILLION FROM THE FUND FOR IMPACT (EQUAL TO 50%) TO REDUCE SOCIO-ECONOMIC DISTRESS;

- FIRST BANK IN ITALY TO SUSPEND MORTGAGE AND LOAN INSTALMENTS EVEN BEFORE THE SPECIFIC REGULATION CAME INTO FORCE (SUSPENSIONS OF PAYMENTS FOR €114 BILLION APPROVED TO DATE), AND TO SIGN THE COLLABORATION PROTOCOL WITH SACE, THUS PROVIDING IMMEDIATE SUPPORT TO ENTERPRISES UNDER THE LIQUIDITY DECREE (€42 BILLION INCLUDING THE SME FUND GRANTED TO DATE);

- UP TO €50 BILLION IN NEW LOANS MADE AVAILABLE TO ENTERPRISES AND PROFESSIONALS TO PROTECT JOBS AND MANAGE PAYMENTS DURING THE EMERGENCY.

 

THE TRENDS OF THE NEW ENVIRONMENT FIND INTESA SANPAOLO FULLY EQUIPPED, THANKS TO THE GROUP’S COMPETITIVE ADVANTAGES:

- LEADERSHIP IN WEALTH MANAGEMENT & PROTECTION;

- EFFECTIVE PROACTIVE CREDIT MANAGEMENT (PULSE) AND GROUP’S STRATEGIC PARTNERSHIPS WITH LEADING NPL INDUSTRIAL PLAYERS;

- STRONG DIGITAL PROPOSITION, WITH AROUND 12.5 MILLION MULTICHANNEL CUSTOMERS AND AROUND 7.8 MILLION CUSTOMERS USING THE INTESA SANPAOLO APP, AND STRATEGIC PARTNERSHIP WITH NEXI AS REGARDS PAYMENT SYSTEMS;

- SMART WORKING ENABLED FOR AROUND 78,000 GROUP PEOPLE AND OPTIMISATION OF THE DISTRIBUTION MODEL WITH BRANCH RATIONALISATION, THE BANCA 5 - SISALPAY STRATEGIC PARTNERSHIP (MOONEY), AND MOST CUSTOMERS WHO WILL BE SERVED THROUGH ALTERNATIVE CHANNELS;

 

- LEADERSHIP IN INCLUSION IN SUSTAINABILITY INDICES AND ESG INTERNATIONAL ASSESSMENTS, COMMITMENT TO ACHIEVING NET-ZERO EMISSIONS BY 2050 - FOR THE GROUP’S OWN EMISSIONS, ITS LENDING AND INVESTMENT PORTFOLIOS, AND ASSET MANAGEMENT - AND PARTICIPATION IN THE NET-ZERO BANKING ALLIANCE (NZBA) AND IN THE NET ZERO ASSET MANAGERS INITIATIVE (NZAMI).

THE CAPITAL POSITION WAS SOLID AND WELL ABOVE REGULATORY REQUIREMENTS EVEN UNDER THE 2021 EBA/ECB STRESS TEST ADVERSE SCENARIO: PRO-FORMA FULLY LOADED COMMON EQUITY TIER 1 RATIO WAS 15.1% AFTER THE DEDUCTION FROM CAPITAL OF €1.9 BILLION OF RESERVES DISTRIBUTED IN OCTOBER 2021 AND €2.8 BILLION OF DIVIDENDS ACCRUED IN 9M 2021.

NET INCOME WAS €4,006 MILLION. A CASH INTERIM DIVIDEND OF €1,401 MILLION WAS APPROVED, PAYABLE AS OF 24 NOVEMBER 2021. 2

NET INCOME WAS UP 28.7% ON 9M 2020, EXCLUDING THE PROVISIONAL NEGATIVE GOODWILL GENERATED IN Q3 2020 BY THE ACQUISITION OF UBI BANCA.

GROSS INCOME WAS UP 15.6% ON 9M 2020.

OPERATING MARGIN WAS UP 9.8% ON 9M 2020.

CREDIT QUALITY IMPROVED. GROSS NPLs WERE REDUCED BY 12.6% ON YEAR-END 2020 AND BY AROUND €34 BILLION SINCE THE END OF 2017 EXCEEDING BY AROUND €8 BILLION THE €26 BILLION DELEVERAGING TARGET SET FOR THE ENTIRE FOUR-YEAR PERIOD OF THE 2018-2021 BUSINESS PLAN. NPL RATIO WAS 3.8% GROSS AND 2% NET. ANNUALISED COST OF RISK IN 9M 2021 DECREASED TO 44 BASIS POINTS.

INTESA SANPAOLO CONTINUES TO OPERATE AS A GROWTH ACCELERATOR IN THE REAL ECONOMY IN ITALY: IN 9M 2021, MEDIUM/LONG-TERM NEW LENDING GRANTED BY THE GROUP TO ITALIAN HOUSEHOLDS AND BUSINESSES AMOUNTED TO AROUND €50 BILLION. IN 9M 2021, THE GROUP FACILITATED THE RETURN TO PERFORMING STATUS OF AROUND 7,300 COMPANIES, THUS SAFEGUARDING AROUND 36,000 JOBS. THIS BROUGHT THE TOTAL TO AROUND 131,000 COMPANIES SINCE 2014, WITH AROUND 655,000 JOBS SAFEGUARDED OVER THE SAME PERIOD. THE GROUP HAS MADE AVAILABLE MORE THAN €400 BILLION IN MEDIUM/LONG TERM LENDING TO BUSINESSES AND HOUSEHOLDS TO SUPPORT ITALY’S RECOVERY AND RESILIENCE PLAN.

THE GROUP’S SOCIAL AND CULTURAL RESPONSIBILITY HAS TRANSLATED, IN ITALY, INTO:

- INITIATIVES TO REDUCE CHILD POVERTY AND SUPPORT PEOPLE IN NEED, DELIVERING, SINCE 2018, AROUND 21.9 MILLION MEALS, 1.3 MILLION DORMITORY BEDS, 274,200 MEDICINE PRESCRIPTIONS AND 228,000 ITEMS OF CLOTHING;

- THE FUND FOR IMPACT, WITH AROUND €141 MILLION GRANTED, SINCE ITS LAUNCH, BY PER MERITO (THE FIRST LINE OF CREDIT WITHOUT COLLATERAL DEDICATED TO ALL ITALIAN UNIVERSITY STUDENTS), THE LAUNCH, IN JULY 2020, OF MAMMA@WORK (A SUBSIDISED LOAN TO BALANCE MOTHERHOOD AND WORK, WITH AROUND €0.8 MILLION GRANTED SINCE LAUNCH) AND, IN AUGUST 2020, OF “XME STUDIOSTATION” (LOANS TO FAMILIES TO SUPPORT DISTANCE LEARNING, WITH AROUND €1.7 MILLION GRANTED SINCE LAUNCH);

- A €6 BILLION CIRCULAR ECONOMY CREDIT PLAFOND TO SUPPORT SUSTAINABLE DEVELOPMENT, WITH AROUND €5.7 BILLION ALREADY DISBURSED; S-LOANS TO IMPROVE SMEs’ SUSTAINABILITY PROFILE (A €2 BILLION PLAFOND ALLOCATED, WITH AROUND €1 BILLION GRANTED SINCE LAUNCH);

- IN 9M 2021, OVER 290 START-UPS EVALUATED (AROUND 2,930 SINCE 2018) IN FOUR ACCELERATION PROGRAMS WITH 74 COACHED START-UPS (AROUND 460 SINCE 2018);

- “GIOVANI E LAVORO” PROGRAM UNDERWAY AIMED AT INTRODUCING 5,000 YOUNG PEOPLE TO THE ITALIAN LABOUR MARKET: IN 9M 2021, AROUND 7,000 YOUNG PEOPLE APPLIED TO THE PROGRAM (OVER 22,000 SINCE 2019), AROUND 950 STUDENTS WERE INTERVIEWED AND AROUND 450 STUDENTS TRAINED / IN TRAINING THROUGH 17 COURSES, WITH AROUND 1,800 COMPANIES INVOLVED SINCE THE LAUNCH OF THE PROGRAM (AROUND 4,500 STUDENTS INTERVIEWED AND AROUND 1,900 TRAINED / IN TRAINING SINCE 2019);

- IMPORTANT NATIONAL AND INTERNATIONAL PARTNERSHIPS: MIART, “GAZING BALL” BY JEFF KOONS, “UNDER THE SKY OF VENICE”; “SEEING THE INVISIBLE”, THE NEW PERMANENT EXHIBITION PATH AT THE GALLERIE D’ITALIA IN VICENZA IN PARTNERSHIP WITH CSAR - UNIVERSITÀ CA’ FOSCARI DEDICATED TO RUSSIAN ICONS FROM THE INTESA SANPAOLO COLLECTION, ENRICHED BY THE CELESTIAL ARCHITECTURES OF VALERY KOSHLYAKOV; THE ADVANCED TRAINING COURSE OF THE GALLERIE D’ITALIA ACADEMY IN “MANAGEMENT OF ARTISTIC HERITAGE AND CORPORATE COLLECTIONS” HAS BEEN COMPLETED. 3

 

• NET INCOME TO €4,006M IN 9M 2021, UP BY 28.7% VERSUS €3,112M IN 9M 2020 EXCLUDING THE PROVISIONAL NEGATIVE GOODWILL GENERATED IN Q3 2020 BY THE ACQUISITION OF UBI BANCA.

• GROSS INCOME UP BY 15.6% ON 9M 2020

• OPERATING MARGIN UP BY 9.8% ON 9M 2020

• NET FEE AND COMMISSION INCOME UP BY 11.5% ON 9M 2020

• OPERATING COSTS DOWN BY 2.3% ON 9M 2020

• IMPROVEMENT IN CREDIT QUALITY TREND:

• DECREASE IN NPLs

GROSS NPL REDUCTION: AROUND €34BN SINCE DECEMBER 2017 AND AROUND €47BN SINCE THE SEPTEMBER 2015 PEAK

GROSS NPL STOCK DOWN 12.6% GROSS AND 14.9% NET ON YEAR-END 2020, NPL TO TOTAL LOAN RATIO OF 3.8% GROSS AND 2% NET

• ANNUALISED COST OF RISK IN 9M 2021 DOWN TO 44 BASIS POINTS

 

• SOLID CAPITAL POSITION, WELL ABOVE REGULATORY REQUIREMENTS:

• COMMON EQUITY TIER 1 RATIO AS AT 30 SEPTEMBER 2021, AFTER THE DEDUCTION FROM CAPITAL OF €1.9BN OF RESERVES DISTRIBUTED IN OCTOBER 2021 AND €2.8BN OF DIVIDENDS ACCRUED IN 9M 2021 (°)

 

14.3% PHASED-IN (1) (2)

13.8% FULLY LOADED (1) (3)

15.1% PRO-FORMA FULLY LOADED (1) (*)

 

(°) Of which €1.4bn was approved as an interim dividend payable as of 24 November 2021.

(1) After the deduction of reserves distributed in October 2021, dividends accrued in 9M 2021 and the coupons accrued on the Additional Tier 1 issues.

 

(2) Calculated including the mitigation of the impact of the first time adoption of IFRS 9.

(3) Calculated excluding the mitigation of the impact of the first time adoption of IFRS 9.

(*) Estimated by applying the fully loaded parameters to the financial statements as at 30 September 2021, 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 on the acquisition of UBI Banca, and the expected distribution on the 9M 2021 net income of insurance companies.

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