Banca Ifis

Investor Presentation • Aug 2, 2019

1H 2019 RESULTS

2 AUG 2019

Table of contents

Main management initiatives

• Working on the industrial plan to be presented in Autumn

• o Focus on NPLs and lending / services to SMEs
• o Streamlining capital and cost allocation per business unit
• o Cost control without impacting investments in digitalization / IT and NPL

• Focus on capital strengthening, as anticipated in 1Q 2019

• o CET1 at 10.81% (+0.52% QoQ)
• o Ongoing disposal of non core real estate and RWA optimization

• Continuing growth path in 2Q 19

• o NPL cash recovery of €67mln (+19% QoQ; +66% YoY); acquisition of €0.4bn new unsecured NPL tickets + forward flow contracts of €0.3bn
• o Net banking income of Enterprise division €86mln (+29% QoQ)

Summary results

• €38mln net income
• Reversal of PPA at €21mln (€17mln in 1Q19; €31mln in 4Q 18)

Net income Net banking income Operating costs LLP

• €149mln:
• 44% NPL business
• 29% trade receivables
• 10% leasing
• 17% corporate
• 1% others

• €64mln (€74mln in 1Q 19, €65mln in 4Q 18)

• Cost of risk of €22mln including further provisions vs. a few large construction businesses

STOCK

Customer loans NPL business Funding CET1

• €7.3bn stable QoQ
• Trade receivables stable as 1Q 19

• NPLs +€48mln QoQ due to acquisition in 2Q 19

• ERC €2.4bn

• In 2Q 19: €67mln cash collection vs. €60mln P&L contribution *

• Full NPL accounting description in appendix

• €0.95bn Wholesale

• €5.07bn customer deposits (+0.05bn QoQ)

• 10.8% La Scogliera Group Scope, well above the 8.12% SREP

• 14.0% Banca IFIS Group Scope

Quarterly results

(€ mln)	1Q 19	2Q 19	1H 18	1H 19
Net interest income	115.3	118.3	229.6	233.6
Net commission income	23.8	22.7	39.8	46.5
Trading and other revenues	(9.0)	8.1	8.8	(0.9)
Net banking income	130.1	149.1	278.1	279.2
Loan loss provisions (LLP)	(13.1)	(22.0)	(40.0)	(35.0)
Net banking income – LLP	117.0	127.1	238.1	244.2
Personnel expenses	(31.4)	(32.7)	(55.5)	(64.2)
Other administrative expenses	(43.3)	(71.0)	(95.1)	(114.4)
Other net income/expenses	0.4	39.8	6.4	40.2
Operating costs	(74.4)	(64.0)	(144.2)	(138.4)
Gains (Losses) on disposal of
investments	-	(1.3)	-	(1.3)
Pre tax profit	42.7	61.8	93.9	104.5
Taxes	(12.7)	(23.5)	(27.7)	(36.2)
Net income	29.9	38.3	66.2	68.3
Customer loans	7,322	7,344	6,710	7,344
of which Business NPL -	1 125 ,	1,174	851	1,174
Total assets	9,864	9,888	9,733	9,888
Direct funding	6,977	7,171	6,937	7,171
of which deposits customer -	5 021 ,	5,069	4,841	5,069
Shareholders Equity	1,489	1,472	1,373	1,472

Non recurrent items

Data in €mln
Other admin . expenses	-31	2Q 19
Other income /expenses net	39	2Q 19
Operating costs	8	2Q 19
Taxes	-8	2Q 19
Net income	0	2Q 19

• Closing of a tax proceeding of former Interbanca with no impact on Banca IFIS's net income

BANCA IFIS In these financial statements, net impairment losses/reversals on receivables of the NPL segment were entirely reclassified to interest receivable and similar income as they represent an integral part of return on investment

Capital structure

CET1 +0.52% QoQ driven by organic growth

• Retained earnings
• Potential real estate disposal
• Progressive use of DTA against future profits (€117.0mln as at 30 June 19) currently fully deducted from CET1 (~132bps)
• Ordinary winding down of former Interbanca customer loans (€0.5bn as at 30 June 19)

*The application of the 2013/36/EU (CRD IV) Directive and EU Regulation 575/2013 (CRR) envisages that only 50.7% of the excess capital of Banca IFIS Group Scope is included in the CET1 of La Scogliera Group Scope. Excess Capital of €0.3bn is not included in CET1 of La Scogliera Group Scope ** SREP received by the Bank of Italy to be applied in 2019

6

BANCA IFIS

NPL Business: cash recovery

• In 2Q 19, cash collection includes the release of €6mln accrued cash on a €1.5bn GBV NPL portfolio. In fact, payments during the onboarding phase – which on average lasts ca. 6 months and relates to the inclusion of all NPL documentations on our system – are accrued and released when the onboarding is completed
• Cash collections of €67mln in 2Q 19 (vs. P&L impact of €60mln)
• o +19% vs. 1Q 19
• o +66% vs. 2Q 18
• o +134% vs. 2Q 17

Data in € mln (excluding disposals)	1Q 17	2Q 17	3Q 17	4Q 17	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19	2Q 19	2017 YE	2018 YE
Cash collection	25	29	30	44	40	41	45	55	57	67	128	181
* Contribution to P&L	35	36	32	58	67	56	46	69	66	60	162	238
Cash collection / contribution to P&L	70%	80%	93%	75%	60%	73%	98%	79%	87%	112%	79%	76%

BANCA IFIS Source: split according to management accounting

* It includes only interest income, excludes cost of funding and some minor items (i.e. net commission income and the gains on sales of receivables)

Segment breakdown

Data in € mln

		Enterprises			NPL	G&S	Total
	Trade Receivables	Leasing	Corporate Banking	Tax Receivables
Net banking income	83	28	35	7	128	(1)	279
- of which PPA	2	-	31	-	-	5	38
Loan loss provisions (LLP)	(27)	(5)	(2)	0	0	0	(35)
Net banking income - LLP	56	23	32	6	128	(1)	244
% total	23%	10%	13%	3%	52%	(1)%
Net customer loans	3,560	1,430	759	185	1,174	236	7,344
* RWA from counterparty risk			4,685		1,623	172	6,480
% total		72%			25%	3%
						Counterparty RWA on other group assets	1,512 **
						Operating and market risks and CVA***	989
						Total RWA	8,982

Enterprises*: growth drivers

Number of clients* Cross selling potential 1

• 83.4k clients of which 40.3K leasing, 35.9k rental and 6.7k trade receivable
• Cross selling potential integrating the different networks: less than 15% of factoring clients have leasing products; less than 2% of leasing clients have factoring products with Banca IFIS

Ongoing rationalization based on expected profitability and competitive scenario

Trade Receivables

Data in euro million*	2Q 18	3Q 18	4Q 18	1Q 19	2Q 19
Net banking income	40	43	46	41	43
of which PPA -	3	1	1	1	1
Net banking income / average customer loans	5.0%	5.3%	5.6%	4.8%	4.9%
Loan loss provisions	(22)	(26)	(20)	(9)	(18)

• Turnover +9% YoY and +3% QoQ
• Net banking income / average customer loans at 4.9%
• Loan loss provisions of €18mln including additional provisions on a few larger construction companies to reflect the evolution of the restructuring processes

Factoring*

Trade Receivables*

Enterprises

• Trade receivables focused on SMEs clients
• Ca. 95% of clients with revenues < €50mln
• Ca. 54% of outstanding and net customer loans realized with businesses with revenues < €50mln

Client by revenue	Number of operative clients	% total	Net customer loans (€ bn)	% total
Micro business A (€0-€10mln)	4 690	71%	0 9	25%
Small private owned businesses (Revenues available) not	827	12%	, 0 4 ,	11%
Small businesses (€10–€50mln)	792	12%	0 6	18%
Medium/large businesses (>50mln)	341	5%	, 1 6 ,	46%
Total	6 650	100%	3 6 ,	100%

Ca. 70% of net banking income

Ca. 45% of these 341 clients are transferred debtors (i.e. including reverse factoring) from ca. 940 SMEs In 1H 19, these 940 SME clients generated ca. €1.8bn turnover

Trade receivables*: portfolio diversification

Outstanding: with and without recourse Net customer loans by business unit

Leasing

Data in euro million*	2Q 18	3Q 18	4Q 18	1Q 19	2Q 19
Net banking income	14	12	13	14	15
Net banking income / average customer loans	4.2%	3.6%	3.8%	3.9%	4.1%
Loan loss provisions	(2)	(3)	(3)	(2)	(3)

Highlights*

• New leasing +3% YoY and stable vs QoQ
• Potential benefits from the renewal of the fast depreciation ("Super Ammortamento"), a fiscal incentive in the equipment industry

Leasing*

Segment	Number of clients (k)	GBV (€bn)	% GBV	Average exposure per client (€/k)
Auto	26	0 8 ,	65%	30
Equipment	5	0 3 ,	24%	55
Technology	9	0 1 ,	11%	15
Total	40	1 2 ,

Leasing by segment Rental by segment

Segment	Number of clients (k)	GBV (€bn)	% GBV	Average exposure per client (€/k)
Technology	35	0 2 ,	84%	5
Equipment	1	0 03 ,	16%	39
Total	36	0 2 ,

Leasing by region

Rental by region

NPL Business: portfolio evolution

	NPL portfolio evolution				Key numbers
					• 1.7mln tickets, #1.2mln borrowers
* NBV €mln	1,123			1,172	• Extensive portfolio diversification by location, type and age of borrower
	16.6	0.4	-0.6	16.4	NPLs acquired in 2Q: €0.4bn GBV
GBV					• Ca. 50% market share in unsecured tickets in 1H 19
€bn					• Strong seller knowledge from which Banca IFIS has already acquired several portfolios
					• Participating in all disposal processes of unsecured tickets
					• Acquisition of further €0.3bn of forward flows
					NPLs disposed in 2Q: €0.6bn of portfolio tails
					• Capital gain of €8mln: NBV of ca. 0.5% vs. disposal price of
					ca. 1.8%
					• Ca. 68% acquired before Dec 2016

• Ca. 86% with default date before Dec 2013

NPL Business: ERC

ERC breakdown*

Data in € bn	GBV	NBV	ERC
Waiting for workout - At cost	1.6	0.1	0.3
Extrajudicial positions	9.9	0.3	0.6
Judicial positions	4.9	0.7	1.5
Total	16.4	1.2	2.4

• ERC based proprietary statistical models built using internal historical data series and homogeneous clusters of borrowers
• o Type of borrower, location, age, amount due, employment status
• o Time frame of recovery
• o Probability of decay
• ERC represents Banca IFIS's expectation in terms of gross cash recovery. Internal and external costs of positions in non-judicial payment plans (GBV of €0.4bn in 2Q 19), court injunction ["precetto"] issued and order of assignments (GBV of €1.1bn in 1Q 19) have already been expensed in P&L
• €0.8bn cash recovery (including proceeds from disposals) in 2014 - 2Q 2019

NPL Business: GBV and cash recovery

Judicial recovery

Judicial recovery (€ mln)	GBV	%
Freezed*	1,931	39%
Court injunctions ["precetto"] and foreclosures	487	10%
Order of assignments	609	12%
Secured and Corporate	1,886	38%
Total	4,913	100%

Ongoing processing Towards ODA or secured and corporate / future cash flows

Judicial recovery - Growth of ODA and secured Actual cash repayments > expected cash repayments **

GBV, data in €mln Judicial + non judicial recovery, data in €mln

*Other Judicial positions

** Excluding FBS

NPLs acquired in 2015-2018

Consumer NPLs - GBV acquired €bn

Banking NPLs – GBV acquired €bn

• Increase in acquisition price due to competition partially offset by better NPL quality in terms of lower vintage and better documentation (i.e. credit contracts, collaterals, guarantees, appraisals of real estate assets, etc)

• Improvement of Banca IFIS's efficiency in recovery process

Progressive switch from consumer to banking NPLs. Stabilization of consumer NPL inflows Banca IFIS successfully managed to broaden his expertise

Cash repayment of acquisition price

Consolidated operating costs

Personnel expenses (€mln)

• Operating costs ~ -€10mln vs. 1Q 19, mainly due to:
• o ~ -€8mln due to the closing of a tax proceeding of former Interbanca with no impact on Banca IFIS's net income
• o ~ -€1.4mln due to FITD and Resolution Fund
• o 2Q 19 cost / income ratio at 42.9% (57.2 % at 1Q 19) also due to the closing of the tax proceeding

Customer loans

Highlights

• Focus on short term loans, very selective on long term maturities. This trend is expected to continue in coming quarters
• Customer loans substantially stable QoQ (+€22mln):
• Trade receivables (-€35mln QoQ) and leasing (+€18mln QoQ)
• NPL (+€48mln) due to the acquisition carried out in 2Q 2019

Funding

	4Q 18	1Q 19	2Q 19
LCR	>600%*	>1,000%	>1,300%
NSFR	>100%	>100%	>100%

• 2Q 19, customer deposits at €5,069mln (+€48mln QoQ)
• o + ~€0.2bn 5Y term customer deposits in 1H 2019
• o No significant change in average cost of funding which remains substantially stable at ca. 1.4%
• • ~€0.1bn further deposits in July 2019
• New bond issuance to be considered only at attractive yields
• Factoring securitization increased to €1.15bn from €1bn
• TLTRO amount and strategy under discussion

Asset quality – 2Q 19

Enterprises	Gross	Coverage %	Net
Bad loans	231	69%	72
UTP	243	43%	140
Past due	113	9%	103
Total	587	46%	315

Enterprises Net of POCI	Gross Coverage %
Bad loans	200	79%	41
UTP	204	51%	101
Past due	113	9%	103
Total	518	53%	246

POCI	Gross Coverage	%	Net
Bad loans	30	0%	30
UTP	39	0%	39
Past due	-	0%	-
Total	69	0%	69

Highlights

• NPL Business not included in this analysis
• Enterprises (net of POCI): bad loans and UTP coverage at 79% and 51%, respectively
• NPEs that arose from the acquisition of Interbanca, in accordance with IFRS 9 are qualified as POCI ("purchased or originated credit-impaired") and are booked net of provisions
• NPEs ratio in Enterprises
• o Gross NPE %: 9.4% (9.5% at 31 Mar 2019)
• o Net NPE %: 5.3% (5.2% at 31 Mar 2019)
• In addition for Enterprises Segment (highlighted in the left table), as at 30 June 2019, G&S had € 41mln gross NPEs, of which:
• o €25mln gross other loans (of which €5mln gross bad loans, €16mln gross UTP and €4mln gross past due)
• o €16mln POCI

Conclusions

• CET 1 of 10.81% (+0.52% QoQ organic capital generation and DTA use) ✓a

• Net income of €38mln in 2Q 19 ✓a

• Working on the business plan to be presented in Autumn ✓a

Segment breakdown

Appendix

03 Focus on DTA and PPA

NPL Business

• NPL Business: stock by recovery phase
• Judicial and extrajudicial workout
• NPL Business: GBV and NBV evolution
• NPL Business: P&L and cash evolution
• Accounting of extrajudicial workout
• Accounting of judicial workout
• NPL portfolio diversification

02

04

La Scogliera: implications of CRD IV

• The application of the 2013/36/EU (CRD IV) Directive and EU Regulation 575/2013 (CRR) envisages that 49.3% of the excess capital of the Banca IFIS Group Scope is not included in the CET1 of La Scogliera Group Scope. CET1 excess capital of €0.3bn is not included in La Scogliera Group Scope
• La Scogliera has communicated to Banca IFIS that it will continue to review potential transactions to achieve substantially equivalent regulatory results to the abandoned reverse merger between the Bank and La Scogliera, safeguarding the capitalization requirements of the Bank, taking into account the interests of the family shareholders of La Scogliera and providing full commitment to supporting the growth of the Bank

29 Data as at 30 June 2019 Banca IFIS Group Scope Capital requirements* Excess capital Minority stake of La Scogliera Excess capital not included La Scogliera Group Scope CET1 1.3 0.6 49% 0.3 1.0 Total Capital 1.7 0.7 49% 0.4 1.3 CET1 % 14.0% 7.0% 49% 10.8% Total Capital % 18.5% 10.5% 49% 14.5% RWA 9.0 9.0

BANCA IFIS *Capital requirements at parent company level **Net of Treasury shares

Data in €billion

03 Focus on DTA and PPA

NPL Business

• NPL Business: stock by recovery phase
• Judicial and extrajudicial workout
• NPL Business: GBV and NBV evolution
• NPL Business: P&L and cash evolution
• Accounting of extrajudicial workout
• Accounting of judicial workout
• NPL portfolio diversification

04

Segment breakdown (1/2)

Consolidated P&L - Data in €mln	2Q18	3Q18	4Q18	1Q19	2Q19
Net interest income	110	100	140	115	118
Net commission income	20	20	25	24	23
Trading and other income	9	6	8	(9)	8
Net banking income	139	125	173	130	149
Loan loss provisions (LLP)	(29)	(29)	(31)	(13)	(22)
Net banking income – LLP	110	97	142	117	127
Personnel expenses	(29)	(28)	(28)	(31)	(33)
Other administrative expenses	(48)	(39)	(43)	(43)	(71)
Other net income/expenses	6	2	6	0	40
Operating costs	(71)	(65)	(65)	(74)	(64)
Gains (Losses) on disposal of investments	-	-	-	-	(1)
Pre-tax profit	39	32	77	43	62
Taxes	(11)	(9)	(19)	(13)	(24)
Net income	28	23	58	30	38

P&L breakdown - Data in €mln	2Q18	3Q18	4Q18	1Q19	2Q19
Net interest income	110	100	140	115	118
o/w Enterprises	57	57	75	53	62
o/w NPL Business	53	43	66	61	56
o/w G&S	(0)	(0)	(1)	1	(0)
Net commission Income	20	20	25	24	23
o/w Enterprises	21	20	24	22	22
o/w NPL Business	0	0	0	1	1
o/w G&S	(1)	(0)	0	0	(0)
Trading and other income	9	6	8	(9)	8
o/w Enterprises	9	(1)	(5)	(8)	2
o/w NPL Business	1	6	10	0	8
o/w G&S	(1)	1	4	(1)	(1)
Net banking income	139	125	173	130	149
o/w Enterprises	86	76	94	67	86
o/w NPL Business	54	49	76	63	65
o/w G&S	(2)	0	3	1	(2)
o/w PPA	22	17	31	17	21
o/w Enterprises	20	15	29	14	19
o/w NPL Business	-	-	-	-	-
o/w G&S	2	1	2	2	2

Segment breakdown (2/2)

Enterprises - Data in €mln	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19	2Q 19
Bad loans (net)	63	68	74	68	68	72
Unlikely to pay (net)	160	144	165	147	150	140
Past due loans (net)	120	156	122	95	89	103
Total non performing loans (stage 3)	343	368	362	310	307	315
Performing loans (stage 1 and 2)	5,030	5,232	5,308	5,608	5,648	5,619
Total loans	5,373	5,600	5,669	5,918	5,955	5,934

NPL Business - Data in €mln	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19	2Q 19
Bad loans (net)	563	582	676	782	818	864
Unlikely to pay (net)	268	268	266	306	301	303
Past due loans (net)	0	1	1	0	0	0
Total non performing loans (stage 3)	831	850	943	1,088	1,120	1,167
Performing loans (stage 1 and 2)	1	1	2	5	6	7
Total loans	832	851	945	1,093	1,125	1,174

G&S - Data in €mln	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19	2Q 19
Bad loans (net)	13	13	13	12	12	11
Unlikely to pay (net)	14	14	14	19	20	17
Past due loans (net)	5	7	7	5	4	4
Total non performing loans (stage 3)	32	34	34	36	35	32
Performing loans (stage 1 and 2)	220	225	272	267	207	204
Total loans	252	259	305	303	242	236

Segment breakdown

Appendix

03 Focus on DTA and PPA

NPL Business

• NPL Business: stock by recovery phase
• Judicial and extrajudicial workout
• NPL Business: GBV and NBV evolution
• NPL Business: P&L and cash evolution
• Accounting of extrajudicial workout
• Accounting of judicial workout
• NPL portfolio diversification

02

04

Focus on DTA

Data in €/mln

Convertible DTA	• DTAs related to write downs of loans convertible into tax credits (under Law 214/2011) • Their recovery is certain regardless of the presence of future taxable income and is defined by fiscal law (range ca. 5%-12% per annum, with full release by 2026) • No time and amount limit in the utilization of converted DTA • Capital requirements: 100% weight on RWA	218.4
DTA due to tax losses (non convertible)	• DTAs on losses carried forward (non-convertible) and DTAs on ACE (Allowance for Corporate Equity) deductions can be recovered in subsequent years only if there is positive taxable income • No time limit to the use of fiscal losses against taxable income of subsequent years • Capital requirements: 100% deduction from CET1	117.0 (88.2+28.8*)

• Other non-convertible DTAs
• DTAs generated due to negative valuation reserves and provisions for risks and charges
• Capital requirements: deduction from CET1 or weighted in RWA depending on certain thresholds. By Law they are weighted at 250% but for Banca IFIS are substantially offset by DTL

BANCA IFIS * Includes €28.8mln of net tax credits booked as loans towards La Scogliera as part of the consolidated fiscal accounts. The tax credit stemmed from Interbanca's PPA in fiscal year 2017, following the merger of Interbanca into Banca IFIS

35.4

Focus on PPA

Description

• In 2016, following the acquisition of Interbanca, Banca IFIS valued the performing and non performing loans of Interbanca by applying a market discount and a liquidity discount to reflect purchase price
• The purchase price allocation (PPA) is written back with the progressive maturity or the disposal of Interbanca's loans
• o As at 30 June 19, the residual amount of pretax PPA is €192mln

Net customer loans and PPA - €mln

PPA Reversal in P&L	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19	2Q 19	Outstanding * 2Q 19
Enterprises	20	20	15	29	14	19	152
G&S	1	2	1	2	2	2	40
Total	22	22	17	31	17	21	192

BANCA IFIS

• The "reversal PPA" relates to the entire Enterprises segment, net of the reallocation of some positions in the Governance & Services segment of about €1mln, amounted to €152mln at 30 June 2019 (€185,7mln at 31 Dec 2018) and will make a positive contribution to the results for future years, considering that the average life of the underlying portfolio is estimated at approximately 3 years

01 La Scogliera: implications of CRD IV

Segment breakdown

03 Focus on DTA and BS

Appendix

NPL Business

• NPL Business: stock by recovery phase
• Judicial and extrajudicial workout
• NPL Business: GBV and NBV evolution
• NPL Business: P&L and cash evolution
• Accounting of extrajudicial workout
• Accounting of judicial workout
• NPL portfolio diversification

02

04

NPL Business: stock by recovery phase

Cluster	GBV 2Q19 €mln	% total	Description	Average time frame	Accounting valuation	Cash proceeds
Waiting for workout - Positions at cost	1,598	10%	Recently acquired, under analysis to select the best recovery strategy, to be assigned either to extrajudicial or to judicial recovery	6 months	Acquisition cost
Extrajudicial positions	9,862	60%
-Ongoing attempt of recovery	9,491	58%	Managed by internal and external call centres and recovery networks. The purpose is the transformation into voluntary payment plans (or into judicial recovery if conditions arises)	NA	Statistical model (collective valuation)	No
- Non-judicial payment plans	371	2%	Sustainable cash yields agreed with debtors through call centres and collection agents	5 years	Increase in value (P&L), with valuation based on agreed plan, net of historical delinquency rate, discounted at the IRR used for acquisition	Yes
Judicial positions	4,913	30%
- Freezed*	1,931	12%	Judicial process has started; but the court injunction ["precetto"] has not been issued	6-12 months	Acquisition cost	No
- Court injunctions ["precetto"] issued and foreclosures ("pignoramento")	487	3%	Court injunction ["precetto"] already issued; legal actions continue to get the order of assignment	8-12 months	#1 increase in value at court injunction ["precetto"] and #2 increase in value at foreclosure ["Pignoramento"]. Part of the legal costs are expensed in P&L	No
- Order of assignments	609	4%	Enforcement order already issued. The cash repayment plan is decided by the court and starts afterwards	2-4 months	#3 increase in value. The remaining legal costs are expensed in P&L	Yes
- Secured and Corporate	1,886	12%	Ongoing execution of real estate collaterals	4 years	Analytical valuation (expected time frame and amount to be recovered)	Yes
Total	16,373	100%

BANCA IFIS

Source: split according to management accounting. Please note that the presentation of this table has been improved compared to the past in order to better highlight the correlation regarding both the operating and financial impacts of transferring positions between different categories. *Other Judicial positions

Judicial and extrajudicial workout

Judicial workout	Extrajudicial workout
Internal lawyers	Internal / external call centre
External lawyers	Internal collection agents 40 third party collection agencies
Extrajudicial recovery voluntary payment
• Coordination between internal and external lawyers • Efficiency and knowledge in preparing court documentations • Coordination between internal and external lawyers	• Trained staff, incentive based on performance • Extensive use of IT/IA
• Pledges against 1/5 of salary or execution of RE collateral • Ca. 1.5-2.5 years to get the order of assignments	• Voluntary repayment includes one off repayment or centres and collection agents

• Courts estimate legal costs to be charged to the debtors
• Order of assignments: ca. €0.6bn GBV
• Secured and corporate: ca. €1.9bn GBV

Internal / external call centre

Internal collection agents 40 third party collection agencies

Subsidiary Capitalfin offers repayments against 1/5 of salary

• Trained staff, incentive based on performance
• Coordination between collection agents and call centres
• Extensive use of IT/IA
• Voluntary repayment includes one off repayment or sustainable cash yields agreed with debtors through call centres and collection agents
• No legal costs charged to debtors
• Extrajudicial workout: ca. €0.4bn non judicial payment plans

Recovery strategy may include judicial and extrajudicial workout

NPL Business: GBV and NBV evolution

GBV - €mln	1Q 17	2Q 17	3Q 17	4Q 17	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19	2Q 19
Waiting for workout - Positions at cost	2,525	2,325	3,614	2,522	2,298	2,014	1,840	3,472	2,864	1,598
Extrajudicial positions	6,047	6,573	6,702	8,050	8,050	8,145	9,667	8,956	9,745	9,862
- Ongoing attempt of recovery	5,776	6,297	6,420	7,733	7,725	7,817	9,332	8,617	9,393	9,491
- Non-judicial payment plans	271	276	283	317	325	328	335	340	352	371
Judicial positions	1,874	2,127	2,220	2,503	2,664	2,738	3,170	3,327	4,015	4,913
- Freezed*	1,640	1,655	1,713	1,810	1,515	1,435	1,712	1,692	1,822	1,931
- Court injunctions ["precetto"] issued and foreclosures	0	0	0	0	253	336	376	411	464	487
- Order of assignments	185	233	269	317	388	462	476	536	561	609
- Secured and Corporate	48	238	238	376	508	505	606	689	1,167	1,886
Total	10,445	11,025	12,536	13,075	13,011	12,897	14,676	15,756	16,624	16,373

NBV - €m ln	1Q 17	2Q 17	3Q 17	4Q 17	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19	** 2Q 19
Waiting for workout - Positions at cost	147	132	128	94	61	57	96	225	174	148
Extrajudicial positions	231	244	239	283	287	285	302	291	306	313
- Ongoing attempt of recovery	130	139	139	160	160	154	167	153	162	164
- Non-judicial payment plans	101	105	100	122	127	131	135	138	144	149
Judicial positions	254	325	349	423	484	509	547	577	643	711
- Freezed*	189	219	229	266	222	194	203	188	205	207
- Court injunctions ["precetto"] issued and foreclosures	0	0	0	0	52	80	94	107	118	118
- Order of assignments	63	82	95	123	148	174	183	209	227	244
- Secured and Corporate	2	25	25	33	62	61	67	73	94	142
Total	631	701	716	799	832	851	945	1,093	1,123	1,172

BANCA IFIS

Source: split according to management accounting. Please note that the presentation of this table has been improved compared to the past in order to better highlight the correlation regarding both the operating and financial impacts of transferring positions between different categories.

*Other Judicial positions **Does not include customer loans (invoices to be issued) related to FBS third parties servicing activities

NPL Business: P&L and cash evolution

P&L - €mln	1Q 17	2Q 17	3Q 17	4Q 17	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19	2Q 19
Waiting for workout - Positions at cost
Extrajudicial positions	18	15	16	28	21	13	13	17	19	19
- Ongoing attempt of recovery	1	1	(1)	0	2	(3)	(3)	(4)	(3)	-2
- Non-judicial payment plans	17	14	18	28	19	16	16	21	22	21
Judicial positions	17	21	16	31	46	43	33	53	46	42
- Freezed*	0	0	0	0	0	0	0	0	0	0
Court injunctions and foreclosures - + Order of assignments	17	20	15	28	44	41	26	42	37	28
- Secured and Corporate	0	1	1	2	3	2	7	11	9	14
Total	35	36	32	58	67	56	46	69	66	60

Cash - €mln	1Q 17	2Q 17	3Q 17	4Q 17	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19	2Q 19
Waiting for workout - Positions at cost
Extrajudicial positions	18	19	21	29	21	21	22	26	27	32
- Ongoing attempt of recovery	2	3	3	6	4	4	3	3	4	6
- Non-judicial payment plans	16	16	18	23	17	17	19	23	23	26
Judicial positions	7	10	10	15	19	20	23	29	30	35
- Freezed*	0	0	0	0	0	0	0	0	0	0
Court injunctions and foreclosures - + Order of assignments	7	8	9	12	15	17	19	22	24	25
- Secured and Corporate	0	2	0	3	4	3	4	7	6	11
Total	25	29	30	44	40	41	45	55	57	67

BANCA IFIS

Source: split according to management accounting. Please note that the presentation of this table has been improved compared to the past in order to better highlight the correlation regarding both the operating and financial impacts of transferring positions between different categories. *Other Judicial positions

Accounting of extrajudicial workout

Net banking income

Massive model gives a write off of ca. 10%-15% per year if no repayment plan is agreed

Operating costs

Operating costs of the extrajudicial plan

Cash flows are free of charge, after booking the costs of the extrajudicial plan

Accounting based on IFRS 9

• Until the completion of the onboarding process, which on average lasts 6 months, NPLs are valued at acquisition costs (i.e. expected cash recovery discounted at the IRR used for the acquisition of the portfolio)
• Once the onboarding has been completed, the NPLs are valued based on the statistical model («massive model»)
• The agreement of an extrajudicial payment plan leads to an increase in accounting value due to the increased probability of recovery. In this case the net book value of the NPL is based on the future cash flows of the voluntary plan net of the historical delinquency rate, discounted at the original IRR
• In case of default of the extrajudicial payment plan, the NPL is written off and valued based on the statistical model («massive model»)
• The costs of the onboarding are expensed in P&L; the entire costs related to the extrajudicial plans go to the P&L when the extrajudicial plans are approved and start providing their P&L contribution

Accounting of judicial workout (1/2)

Cash flows are free of charge, after booking the costs of the ODA

Accounting of judicial workout (2/2)

Accounting based on IFRS 9

Freezed

• Until the completion of the onboarding process, NPLs in judicial workout are valued at acquisition cost until the issue of court injunctions ("precetto")

#1

#1 Increase in value and cost expensed (court injunctions "precetto")

• Once the court injunctions have been issued, NPLs are valued based on internal recovery models. This leads to an incremental growth in the credit accounting value, as the probability of recovery rises significantly. The legal costs to get to court injunctions are expensed in P&L
• Legal proceedings to get to court injunctions ("precetto") last on average ca. 6-12 months

#2 Increase in value (foreclosures "pignoramento") #2

• Once the foreclosure ("pignoramento") has been issued, there is another update in the accounting value. The second part of the legal costs are expensed in P&L
• The foreclosure phase lasts on average ca. 2-3 months
• In cases of decay of foreclosure, the NPL is written-off. Probability of decay is included in risk modelling

#3 Increase in value (order of assignments) #3

• Once the ODA ("order of assignment") has been issued, there is another update in the accounting value due to the completion of the legal process. The remaining legal costs to get the ODA are expensed in P&L
• Judicial actions to get the final ODA last on average ca. 1.5-2.5 years from the acquisition date
• In case of decay of the ODA, the NPL is written-off. Probability of decay is included in risk modelling

NPL Business*: portfolio diversification

Breakdown of Gross Bad Loans by ticket size Gross NPL breakdown by region

BANCA IFIS

Data as at 30 June 2019 Source: management accounting, risk management data *Excluding FBS

Disclaimer

• This Presentation may contain written and oral "forward-looking statements", which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number of assumptions, expectations, projections and provisional data concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the control of Banca IFIS (the "Company"). There are a variety of factors that may cause actual results and performance to be materially different from the explicit or implicit contents of any forward-looking statements and thus such forward-looking statements are not a reliable indicator of future performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. The information and opinions contained in this Presentation are provided as at the date hereof and are subject to change without notice. Neither this Presentation nor any part of it nor the fact of its distribution may form the basis of, or be relied on or in connection with, any contract or investment decision.
• The information, statements and opinions contained in this Presentation are for information purposes only and do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe for securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction of the United States or in Australia, Canada or Japan or any other jurisdiction where such an offer or solicitation would be unlawful (the "Other Countries"), and there will be no public offer of any such securities in the United States. This Presentation does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or the Other Countries.
• Mariacristina Taormina, Manager charged with preparing the financial reports of Banca IFIS S.p.A., pursuant to the provisions of Art. 154 bis, paragraph 2 of Italian Legislative Decree no.58 dated 24 February 1998, declares that the accounting information included into this document corresponds to the related books and accounting records.
• Neither the Company nor any member of Banca IFIS nor any of its or their respective representatives directors or employees accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss arising from its use or from any reliance placed upon it.