Credem approved results as of 30 september 2024

PRESS RELEASE

Today, Credem's Board of Directors, chaired by Lucio Igino Zanon di Valgiurata, approved the consolidated results as of 30 September 2024, confirming the effectiveness of the business model grounded in robust revenue diversification and the ability to sustainably create value and well-being over time for customers, individuals, shareholders, and the community.

9M24 closed with a consolidated Net Profit equal to €485.9 million (+10.7%), after the disbursement of €33 million in contribution to funds to support distressed banks and more than €4 million in provisions for the Guarantee Fund for life insurance policies, loans to customers(8) reached €34.7 billion (+0.7% YoY), and more than 134 new clients(7), total customers' funding reached €102.5 billion (10.0% YoY), Gross NPL Ratio(4) stood at 1.9%, compared to 2.7% average of significant Italian banks and to 2.3% average of European banks(5), Net NPL Ratio stood at 0.79% and annualized cost of risk(6) was equal to 6 bps. At the end of September 2024 the Banking Group Common Equity Tier 1 Ratio(2) was 17.2%, Credemholding Common Equity Tier 1 Ratio(2) was 15.8% compared to 7.6%, the minimum assigned by ECB(3), annualized ROTE(1) stood at 19.5% and annualized ROE(1) at 17.1%.

'We are entering the final part of the year, which is once again proving to be extremely challenging for the banking system with an evolving market context and an ever uncertain global scenario', Angelo Campani, Credem General Manager, declared. 'We are continuing to generate value, developing all the main aggregates and confirming once again the Group's solidity and profitability', Campani continued. 'We are well equipped to face the coming months in the best possible way, thanks to the quality and commitment of our people and a business model in which we strongly believe, based on the wide range and diversification of the offer, as well as on constant investments in innovation and digitalisation, always keeping a high attention to the sustainability of our operations,' Campani concluded.

Consolidated economic results(12)(*)

At the end of September 2024 operating income stood at €1,509.6 million, compared to €1,408.2 million of the previous year (+7.2% YoY). Within the aggregate, net interest income(13) was equal to €847.6 million compared to €788.4 million at the end of September 2023 (+7.5% YoY). Non Interest Margin(14)(15) stood at €662.0 million compared to €619.8 million in the same period of the previous year (+6.8% YoY). In detail, net commission reached €529.0 million (+7.5% YoY) of which €371.1 million in AUM fees (+12.3% YoY) and €157.9 million in banking fees (-2.2% YoY). Contribution from financial activities reached €47.8 million (- 12.3% YoY). Insurance income was €63.9 million (-2.5% YoY).

Operating costs(15) were €646.2 million compared to €601.4 million at the end of September 2023 (+7.4% YoY). In detail, the administrative expenses amounted to €209.3 million, +10.5% YoY, while staff costs were €436.9 million (+6.0% YoY).

Cost/income(16) stood at 42.8% compared to 42.7% at 30 September 2023.

Gross operating profit was €863.5 million compared to €806.8 million in the same period of the previous year (+7.0%). D&A amounted to €80.1 million compared to €78 million at the end of September 2023 (+2.6% YoY).

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Net Operating profit was €783.4 million compared to €728.8 million at 30 September 2023 (+7.5% YoY).

Provisions for risks and charges(15) were €4.6 million compared to €10.7 million in the same period of the previous year. Loan loss provisions(15) were €16.8 million compared to €9.5 million at the end of September 2023 (+76.9% YoY). Annualized cost of risk(6) was equal to 6 bps.

Net extraordinary income/charges(15) was -€41.7 million (-€61.6 million at the end of September 2023) including €33.0 million, gross of the tax effect, of the contribution to funds to support distressed banks.

Profit before taxes was €720.4 million compared to €647 million at 30 September 2023 (+11.3% YoY), while taxes for the period amounted to €234.5 million (€208 million at the end of September 2023, +12.7% YoY). Consolidated net profit stood at €485.9 million, +10.7% YoY, after the disbursement of €33 million in contributions to funds to support distressed banks and more than €4 million in provisions for the Guarantee Fund for life insurance policies.

Annualized ROTE(1) was 19.5%, annualized ROE(1) was 17.1%.

Consolidated balance sheet aggregates (8)(*)

Group Customer Funding at the end of September 2024 stood at €102,455 million compared to €93,156 million in the same period of the previous year (+10.0% YoY). Group Total Funding amounted to €119.218 million compared to €108,099 million at the end of September 2023 (+10.3% YoY). In detail, Direct Deposits from customers reached €37,667 million compared to €36,918 million as at 30 September of the previous year (+2.0% YoY). Group Direct Deposits amounted to €42,337 million compared to €42,054 million at the end of September 2023 (+0.7% YoY). Insurance reserves stood at €9,240 million, +17.5% compared to €7,863 million in the same period of the previous year. Premiums of life and non-lifeprotection products amounted to €65 million, (+0.9% YoY). Indirect Customer Deposit amounted to €55,547 million compared to €48,375 million at the end of September 2023 (+14.8% YoY). In detail, AUM amounted to €33,496 million compared to €30,644 million in the same period of the previous year (+9.3% YoY). Within the aggregate portfolio management accounts amounted to €6,376 million (+12.6% YoY), mutual funds and Sicav amounted to €14,578 million (+7.9% YoY), third-party products and other assets under management amounted to €12,542 million (+9.4% YoY).

The Group's liquidity reserves amounted to nearly €16.8 billion (€17.0 billion as of 30 June 2024) thanks to approximately €3 billion in deposits with central banks (€4.1 billion as of 30 June 2024) and €13.8 billion in ECB eligible unencumbered assets (€12.9 billion as of 30 June 2024).

Loans to customers stood at €34,674 million compared to €34,429 million in the same period of 2023, growing by 0.7% YoY (compared to the Industry(9) down by 1.4% in the same period) preserving a strong focus on asset quality. In detail, Residential Mortgages inflows amounted to €989 million with a total stock of €10,804 million (+2.4% YoY).

At the end of September 2024, the securities portfolio reached €11,609 million with an average maturity of

4.5 years. Total Italian government bonds amounted to €3.8 billion (approximately 33% of the portfolio), of which 97% in the HTC accounting category, thus reducing further volatility risks deriving from the Btp-Bund spread.

Net NPL ratio was 0.79% (compared to 0.94% at the end of September 2023) significantly lower than the industry average(9) equal to 1.49%. Gross bad loans amounted to €275.7 million and the bad loans coverage

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was 80.2% (74.2% in the same period of the previous year). Net NPL was €275 million, down by 15.4% compared to €325 million at the end of September 2023. Gross NPL amounted to €670.2 million, down by 7.3% compared to €722.8 million in the same period of the previous year. Coverage of total gross non performing loans was 59% (55% at the end of September 2023); the figure, including the shortfall(17), goes up to 60%. Gross NPL Ratio(4) stood at 1.91% (2.07% at the end of September 2023) vs an average of significant Italian banks(5) of 2.70%, and a EU average(5) of 2.30%.

Capital Ratios

Credemholding CET1 ratio(2) stood at 15.8%, at the highest levels of the industry with €1.7 billion of margin on regulatory capital requirements; 2024 minimum requirement CET1 Ratio (SREP)(3) assigned to the Group is equal to 7.6%, the lowest among banks directly supervised by ECB. Tier 1 capital ratio(2) was 16.1% and Total capital ratio(2) was 18.6%. Credem is the most solid institution at European level based on the data published in December 2023 by the European Central Bank relating to the capital requirements (SREP) of the banks directly supervised by the Frankfurt authority, with the confirmation of the Pillar 2 Requirement (P2R) at 1%, affirming the effectiveness of the business model and risk management measures(3).

Businesses and activities of the Group

• COMMERCIAL BANKING(10)
• Commercial Banking counts 412 retail branches, 46 corporate centers, and the network of 534 financial advisors, it reached €57.3 billion of funding (+8% compared to the end of September 2023) and 25.8 billion of loans (+0.02% YoY). In detail, the network of financial advisors achieved €9.5 billion of funding (+14.8%
  YoY), €774 million of loans (-2.4% YoY) and hired 35 professionals;
• the strategy of accelerated customer growth continued also in the first nine months of the year with the network of branches and company centers of Credem Banca which has acquired approximately 79,000 new customers, with an acquisition rate of 6.2%;
• the constant strengthening of the offer in a complementary and integrated way has allowed the development of all services, in particular credit and debit cards and contracts for access to banking services through the use of Internet.
• EXTENDED BANKING SERVICES, CONSUMER CREDIT & TECHNOLOGY
• Credemleasing reached €796 million of total contracts and 9M24 closed with €29.1 million of net profit
  (€28.5 million compared to the same period of 2023);
• Credemfactor recorded €3.65 billion of new gross receivables sold (turnover) and 9M24 closed with a net profit of €9.6 million (€10.5 million in the same period of the previous year);
• Avvera, the company specialized in mortgages, salary and pension-backed loans and consumer credit, reached €15.6 million of net profit (+89% YoY) and €1.6 billion of total business volume in 9M24. In detail, at 30 September 2024, Avvera brokered €502 million in mortgages, disbursed special purpose loans for about €485 million, disbursed Salary-backed loans in terms of principal for €353 million and disbursed personal loans for €237 million. The contribution of the company to the acquisition of new clientele for the Group remained relevant with approximately 50,000 new customers.

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• Credemtel, the company active in the offer of digital services to businesses and the Public Administration, has maintained and strengthened its strategic focus as a tech company for businesses, and as a digital company for the Group's innovation, acting as a center of expertise on the Bank's digital services. As at 30 September 2024 Credemtel recorded a positive growth trend with total revenues (revenues and income) of €28.9 million (+12.8% YoY) and a net profit of €4.5 million (+12.2% YoY). With effect from 1 April 2024, the merger by incorporation of Blue Eye Solutions Srl and S.A.T.A Srl was completed, two companies with which Credemtel had been collaborating for some time, operating on the market through technological/operational synergies and sharing of know-how in order to satisfy the most advanced needs of customers.
• PRIVATE BANKING
• Credem Euromobiliare Private Banking (CEPB), the Private Bank of Credem Group, at the end of September 2024 had 72 branches and financial centers present throughout the national footprint and 648 professionals. 9M24 Net Profit was €56.8 million and total business (AUM, AUC, direct funding and loans) reached €43.9 billion, with a positive market effect of approximately +4.7% and a very positive contribution from net inflows (AUM, AUC and direct funding), equal to €1.3 billion;
• the recruitment of figures with a high professional profile and per-capita portfolio continued. At the end of September the company had 356 private bankers and 292 financial advisors.
• WEALTH MANAGEMENT

●Wealth management area of the Group, which includes Euromobiliare Asset Management SGR, Euromobiliare Advisory Sim, Credem Private Equity SGR, Euromobiliare Fiduciaria, Credemvita and Credemassicurazioni, as at 30 September 2024 they generated overall profits of €100 million (+25.1% compared to €80 million at 30 September 2023). Furthermore, at the end of September 2024, over 55% of the Group's managed and insurance collection was promoted by companies that are part of the area;

●ongoing development of a wide and diversified range of investment solutions also with a focus on sustainability. At the end of September 2024, thanks also to an evolution of the investment processes of insurance products, total assets of the Group relating to investment products and services with ESG characteristics(11) reached €14.1 billion (+82% compared to the same period of 2023);

●the program of stable collaborations with international asset managers continues to strengthen the training and communication aspects towards distribution networks and customers and for the development of the range of offers.

• INNOVATION AND DIGITAL TRANSFORMATION
• Digital services: in 9M24, more than 40 million operations were made by clients through remote channels (95% of the total) and more than 800,000 virtual interactions through customer care (mail, chat, messages and other instruments such as chatbot and voicebot which use artificial intelligence).
• In July, the Board of Directors renewed its commitment to continue developing the Corporate Venture Capital (CVC) initiative launched in April 2021. In this context, the Credem Group participates with the role of investor in "Fin+Tech", the path to support the development of new technological corporates in the financial and insurance industry born from an initiative by CDP Venture Capital Sgr, which saw 13 new innovative corporates enter the program in 2024, bringing the total investments in startups to 39. The

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objective of this initiative is to identify innovative technologies and models to strengthen the Group's core business, support its evolution and generate value for the Group itself;

• in the first six months of activity Officine Credem, the new physical space dedicated to innovation inaugurated by the bank within the Parco Innovazione di Reggio Emilia (Reggio Emilia Innovation Park) to encourage interaction between corporates, startups, universities, customers and the territory following a distributed innovation model (open innovation), hosted over 21,000 people as part of initiatives both internal to the Group and external. This activity supported the Group's innovative approach and generated value for the community.
• VALUE FOR THE PEOPLE OF THE GROUP
• At the end of September 2024, nearly 85% of employees have a smart working contract with the aim of improve the balance between personal and professional life and further valorizing individuals' organizational skills and initiative;

●approximately 27,500 training days were provided in the first nine months of the year to all staff, with a view to fostering professional growth and expanding skills, focusing on regulatory (including cybersecurity), technical, and personal development training;

●furthermore, the hiring process continues with 249 individuals joining the Group as of 30 September 2024. Specifically, these new recruits will bolster the network of branches across the national territory, the virtual contact center providing assistance and consultancy via remote channels to clients, and the corporate area dedicated to the development of digital solutions and innovation.

> SUSTAINABILITY, VALUE AND WELFARE FOR THE COMMUNITY

●In May, Credem published the annual update of the Green Social and Sustainability Bond Framework and Allocation and Impact Reporting. The two documents are established in accordance with the market principles established by the International Capital Market Association (ICMA) and contain the details of the categories and criteria for the selection of environmental (green) and social (social) investments, as well as the management of the proceeds raised through the issue of ESG (Environmental, Social, and Governance) bonds and the relative environmental and social impact of the proceeds raised. Two new categories are also represented in the Allocation and Impact Reporting:

1. tax incentives Ecobonus and Superbonus, which promote energy efficiency and consumption reduction through building renovation;
2. first home loans with CONSAP Fund facilitation, to support families in buying their first home through the state guarantee fund in order to create increasingly inclusive communities;

●in July a financing product for companies called the Sustainability Linked Loan was launched, it aims to incentivise the beneficiary's achievement of pre-defined sustainability objectives in the environmental, social and governance spheres. This instrument foresees that sustainability performance is assessed using customised sustainability targets (Sustainability Performance Targets) and specific indicators (Key Performance Indicators), to evaluate the improvement of the company's sustainability profile. In the event of a positive outcome, the client is granted a bonus on the existing economic conditions.

●The strategy of enhancing the artistic and cultural heritage for the benefit of the community continues.

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Predictable evolution of management

Net Interest Income peaked in 2024, but core revenues are still supported by a solid commission component. The profitability of the income statement is also high thanks to a cost of risk that has always remained low. The uncertainty on the interest rate curve and the continuation of a still uncertain geopolitical scenario make forecasts subject to a higher degree of uncertainty. The group's business model can mitigate the negative effects on revenues of a possible downturn. We therefore expect profitability to be supported by the fee component and an adequate risk profile to be maintained.

To strengthen its diversified business model, the group will continue to invest in digital transformation and climate and environmental risks, also through product innovation to support customer needs.

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In accordance with paragraph 2 of Article 154-bis of the Consolidated Law on Finance (D. Lgs. 58/98 "Testo Unico delle disposizioni in materia di intermediazione finanziaria"), the Financial Reporting Manager Giuseppe Malato declares that the accounting information, both individual and consolidated, contained in this press release corresponds to document results, books and accounting records.

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Attached are the individual and consolidated balance sheet and income statement and the reclassified consolidated income statement. The additional periodic financial information referring to September 30, 2024 is not subject to audit. Further information on Credem and the Group companies is available on the website www.credem.it and in the Investor Relations section there is a presentation commenting on the consolidated results as at 30 September 2024.

(*) ALTERNATIVE PERFORMANCE INDICATORS

Credem Group adopts a set of Alternative Performance Measures ("APMs") in order to enhance a deeper comprehension of the information regarding the economic and financial trends. At this linkis available a table illustrating the definition and the calculation of each APM used by the Group, as well as a reconciliation with the lines in the financial reports and related comments.

NOTE:

1. Annualized figures. ROE for the period equal to 12.8%. ROE= net profit/[(previous year's equity + equity)/ 2]. Equity: algebraic sum of valuation reserves (item 120 + item 125), redeemable shares (item 130), reserves (item 150), share premiums (item 160), capital (item 170) - treasury shares (item 180), consolidated profit net of dividends distributed (or approved) by the parent company or in any case by the consolidation company (item 200); ROTE for a period equal to 14.6%. ROTE calculated as net profit/[(tangible equity previous year + tangible equity)/2]. Tangible equity: algebraic sum of valuation reserves (item 120 + item 125), redeemable shares (item 130), reserves (item 150), share premiums (item 160), capital (item 170) - treasury shares (item 180) , consolidated profit net of dividends distributed (or approved) by the parent company or in any case by the consolidation company (item 200) - intangible assets (item 100);
2. by article 11(2), 11(3), and 13(2) of the EU Regulation No. 575/2013 (CRR), banks controlled by a financial holding shall meet the requirements set by such Regulation on the basis of the consolidated statements of the financial holding. In light of these rules on capital ratios, the consolidation perimeter of the Group changed, within the framework set by the prudential supervision. Therefore, capital ratios were calculated on Credemholding, which holds 79.47% of Credem Spa share capital. Pursuant to art. 26(2) of EU Regulation No. 575/2013(CRR), 3Q24 net profit was not included in the calculation of Own Funds. The Periodic Financial Report as at 30 September 2024 has not been audited;
3. see press releaseCredem, the soundest Bank in Europe;
4. calculated as a ratio between Total Gross NPLs, €670.2 million, and Gross Loans to Customers, €35,156.4 million;
5. source:Supervisory Banking Statistics - First quarter 2024,NPL Ratio calculated excluding cash at central banks and other sight deposits;
6. calculated as Net value adjustments/write-backs due to impairment of Loans / Loans to customers (without considering the securities component);
7. the figure refers to new customers acquired by Credem, Credem Euromobiliare Private Banking and Avvera;
8. loans do not include repos, in the technical form of repurchase agreements, to the Compensation and Guarantee Fund, and at September 2024 the securities valued at amortized cost, equal to €5,903.3 million. Repurchase agreements are excluded from total direct deposits, while the contribution of the companies belonging to the banking group is included. Insurance deposits include technical provisions and financial liabilities valued at the fair value of Credemvita. For customer deposits, bonds issued on institutional markets and indirect funding of a financial nature are deducted for all reference periods. Insurance reserves are also included in total customer deposits; finally the counterpart to the capitalization of properties and cars for rent (IFRS16) is excluded for approximately €135.2 million. Total net inflows include direct and indirect funding from customer;
9. sourceABI Monthly Outlook October 2024 Press Release;Industry net NPL on net loans is updated as at August 2024;
10. management data relating to Credem's Commercial Banking Business Unit (412 retail branches, 46 business centers and the network of 534 financial advisors). The figure for loans does not include leasing and factoring;
11. included in the Art. 8 and 9 of the European directive that regulates sustainable investments (SFDR);
12. P&L reclassified figures. The reclassification was performed also considering management accounting figures that could not be directly taken from the financial statements and from the explanatory note. Some reclassifications for the year 2023 related to the introduction of IFRS17 were removed; these reclassifications had been made on the non-interest margin and operating expenses to allow for a consistent comparison with 2022;
13. includes cash-flows from assets at fair value and "Profit/Loss from Equity Investments"and the profits/losses of equity investments valued using the equity method;

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1. includes Credemvita Operating Income and "Other operating income/charges" net of extraordinary income/expenses;
2. The recovery of indirect taxes charged to clientele (€101.8 million at September 2024; €91.0 million at September 2023) was deducted both from Non Interest Margin and from Operating Costs. The contribution of the national funds of €33 million at September 2024 (€52.3 million at September 2023) was deducted from Other Administrative Costs. The fee paid to the Single Resolution Fund (€0 million at September 2024, €5.6 million at September 2023) and initially accounted in the Provisions for Risk and Charges, was included in "Extraordinary charges" (portion potentially recoverable and recorded in assets under 'security deposits'). In September 2024, the estimate of the contribution to the Life insurance guarantee fund, established by the 2023 Budget Law, amounted to €4.3 million, was accounted for the Fund for Risks and Charges, and was included among extraordinary charges. Net result from impairment related to financial assets valued at amortized cost and referred to securities
   (€1 million at September 2024, €0.7 million at September 2023) and those relating to financial assets measured at fair value with an impact on comprehensive income (- €0.6 million at September 2024; €0.1 million at September 2023) were included in the Non Interest Margin. The result deriving from bad loans and utp disposals was included in "Net adjustments to loans and other financial transactions" (€1.6 million in September 2024; €3.0 million in September 2023);
3. calculated as the ratio between operating costs and operating income, without including the value of depreciation. Calculating the figure as the ratio between (operating costs + depreciation and amortization) and operating income the ratio would be equal to 48.1%.
4. shortfall is calculated as the difference between ELBE - Expected Loss Best Estimate (which represents the best estimate of the expected loss for each credit exposure, given its stage and the current economic environment) and Net Adjustments to Loans. The shortfall amount is considered in the calculation of comprehensive coverages on Non Performing Loans both in the "Addendum to the ECB Guidance to banks on Non Performing Loans" and in the draft law proposed by the European Commission aimed at introducing minimum coverage on Non Performing Loans.

Reggio Emilia, 5 November 2024

CREDITO EMILIANO SPA

(Chairman)

Lucio Igino Zanon di Valgiurata

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