Banca Ifis

Investor Presentation • May 9, 2019

1Q 2019 RESULTS

9 MAY 2019

Table of contents

Banca IFIS's growth strategy

• Banca IFIS's growth strategy

• o Continuous acquisitions of new NPL portfolios and streamlining of the recovery process
• o Broadening of lending and services to SMEs, leveraging the unique and diversified business model of the Bank

• Continuous focus on capital management and cost control

• o Strict monitoring of capital requirements, which should have bottomed in 1Q 2019
• o Cost control after the buoyant growth and acquisitions of 2015-2018, while continuing investments in IT/digitalization and in NPL business

• The majority shareholder is fully committed to supporting the strategy and growth of the Bank

Summary results

• €30mln net income
• Reversal of PPA at €17mln (€31mln in 4Q 18; €22mln in 1Q 18)

Net income Net banking income Operating costs LLP

• €130mln:
• 48% NPL business
• 31% trade receivables
• 10% leasing
• 7% corporate
• 3% others

• €74mln (€65mln in 4Q 18, €73mln in 1Q 18), including the consolidation of FBS

• Cost of risk of €13mln (€11mln in 1Q 18 and €31mln in 4Q 18, impacted by one-offs on a few large positions)

STOCK

Customer loans NPL business Funding CET1

• €7.3bn stable QoQ
• Trade receivables stable as 4Q 18 benefited from seasonality

• NPLs stable due to lack of significant small ticket disposals in the market in 1Q 19

• ERC €2.4bn

• In 1Q 19: €66mln P&L contribution vs. €57mln cash collection (ca. 87%) *

• Full NPL accounting description in appendix

• €0.96bn Wholesale

• €5.02bn customer deposits (+0.35bn QoQ)

• Rendimax: ca. +€0.3bn net deposit inflow in 1/1/19 – 30/4/19

• 10.29% La Scogliera Group Scope, well above the 8.12% SREP

• CET1 at 13.53% Banca IFIS Group Scope
• CET1 includes goodwill from the consolidation of FBS

Quarterly results

(€ mln)	1Q 18	4Q 18	1Q 19
Net interest income	119.5	140.0	115.3
Net commission income	19.8	24.5	23.8
Trading and other revenues	0.1	8.4	(9.0)
Net banking income	139.4	173.0	130.1
Loan loss provisions (LLP)	(11.0)	(31.2)	(13.1)
Net banking income – LLP	128.4	141.8	117.0
Personnel expenses	(26.8)	(28.3)	(31.4)
Other administrative expenses	(46.6)	(42.7)	(43.3)
Other net income/expenses	0.0	6.4	0.4
Operating costs	(73.4)	(64.6)	(74.4)
Pre tax profit	55.0	77.2	42.7
Taxes	(17.1)	(19.4)	(12.7)
Net income	37.9	57.8	29.9
Customer loans	6,457	7,314	7,322
of which Business NPL -	832	1 093 ,	1 125 ,
Total assets	9,521	9,382	9,864
Direct funding	6,797	6,652	6,977
of which deposits customer -	5 022 ,	4 673 ,	5 021 ,
Shareholders Equity	1,413	1,459	1,489

Focus on a few items

Data in €mln	1Q 18	4Q 18	1Q 19
PPA	21.8	30.8	16.6
FBS	0.0	0.0	8.2
Fair value adjustments*	0.0	0.0	(4.7)
Model update**	3.2	(6.0)	(9.0)
Net banking income	25.0	24.8	11.1

• * Fair value adjustments of an equity instrument stemming from debt restructuring

• ** 1Q 19 and 4Q 18 include the negative effects of the NPL model update made in 1Q2018 to consider the longer time frame for the issuance of court injunctions ("precetto" and "pignoramento").

Customer loans

Enterprises Segment

BANCA IFIS

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 (+€8mln):
  • Trade receivables (+€11mln QoQ) and leasing (+€12mln QoQ) were impacted by positive seasonality in 4Q 18
  • NPL (+€33mln) reported limited acquisitions due to lack of significant small ticket disposals carried out in the market in 1Q 19. Banca IFIS is participating in all the ongoing sell side processes of small tickets that are on the Italian market

Funding

	3Q 18	4Q 18	1Q 19
LCR	>2,000%	>600%**	>1,000%
NSFR	>100%	>100%	>100%

• 1Q 19, customer deposits came in at €5,021mln (+€348mln QoQ), driven by the Rendimax campaign launched on 17 January 2019
• The flexibility of the Rendimax customer deposit allows timely adjustments to funding requirements
  • o ~€140mln 2Y maturity and ~€150mln 5Y maturity new term deposits from 17 January 2019 to 3 May 2019
  • o No significant change in average cost of funding which remains substantially stable at ca. 1.4%
• New bond issuance to be considered only at attractive yields
• TLTRO will be reviewed based on final terms and conditions

BANCA IFIS

*TLTRO with maturity in March 2021, cost -0.4%; Collateral represented by €423mln Italian Government Bonds and ca. €378mln leasing securitization (rating AA-) ** In 4Q18, LCR Ratio was impacted by seasonality in factoring

Capital structure

1Q 19 CET1

• +0.26% due to increase in Capital Conservation Buffer from 1.9% to 2.5% due to regulation 2013/36/EU. This applies only to La Scogliera scope capital requirements; the CET1 increase is due to excess capital reduction
• +0.19% due to DTA realization and RWA decrease
• Ca. -46bps in CET1 due to the goodwill for the acquisition of FBS in Jan. 2019. The final goodwill will depend on the ongoing purchase price allocation on FBS assets and liabilities

CET1 does not include 1Q 2019 net income

Capital generation in future quarters

• Retained earnings
• Progressive winding down of former Interbanca PPA (€213mln gross of taxes as at 31 March 19, indicative maturity of ca. 3Y)
• Progressive use of DTA against future profits (€135.5mln as at 31 March 19) currently fully deducted from CET1
• Ordinary winding down of former Interbanca customer loans (€0.5bn as at 31 March 19)

8 BANCA IFIS *The application of the 2013/36/EU (CRD IV) Directive and EU Regulation 575/2013 (CRR) envisages that only 50.6% 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

Segment breakdown

Data in € mln

		Enterprises			NPL	G&S	Total
	Trade Receivables	Leasing	Corporate Banking	Tax Receivables
Net banking income	41	14	9	3	63	1	130
- of which PPA	1	-	13	-	-	2	17
Loan loss provisions (LLP)	(9)	(2)	(2)	(0)	-	0	(13)
Net banking income - LLP	31	12	7	3	63	1	117
% total	27%	10%	6%	3%	53%	1%
Net customer loans	3,595	1,412	805	142	1,125	242	7,322
RWA from counterparty risk *			4,806		1,562	114	6,482
% total		74%			24%	2%
						Counterparty RWA on other group assets (i.e. DTA, other assets, financial assets)	1,396
					Operating and market risks and CVA		1,032

Total RWA 8,910

Trade Receivables

Data in euro million*	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19
Net banking income	40	40	43	46	41
of which PPA -	1	3	1	1	1
Net banking income / average customer loans	5.0%	5.0%	5.3%	5.6%	4.8%
Loan loss provisions	(7)	(22)	(26)	(20)	(9)

• Turnover +19% YoY and -10% QoQ, as 4Q was impacted by seasonality. Confirmed strategy in trade receivables:
  • o SMEs: ca. 80% of customers are SMEs with total revenue less than €10mln
  • o Short term lending: average factoring duration of ca. 3-4 months
  • o Customer fragmentation: average ticket of ca. €400k well diversified across all major business segments
• Net banking income / average customer loans at 4.8% due to lower contribution from Pharma and from a few large clients due to seasonality
• In 2018, loan loss provisions were impacted by one-off provisions on a few large tickets. 1Q 2019 results are showing some stabilization

Leasing

Data in euro million*	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19
Net banking income	12	14	12	13	14
Net banking income / average customer loans	4.0%	4.2%	3.6%	3.8%	3.9%
Loan loss provisions	(2)	(2)	(3)	(3)	(2)

Highlights*

• New leasing -4% YoY and -19% QoQ, impacted by seasonality and the end of the fast depreciation ("Super Ammortamento"), a fiscal incentive in the equipment industry
  • o Auto leasing -15% QoQ (vs. -46.4% in the market in 1Q 19) due to the slowdown in the market
  • o Potential benefits from the reintroduction of the fast depreciation
• Customer fragmentation to minimize asset quality risk: ca. 70k clients, mainly SMEs
• Well distributed distribution network of 84 agencies: 50% north, 35% centre, 15% south
• Ca 2/3 of leasing approval within same day for auto and equipment; real time for technology. Acceptance rate of ca. 70%-75%
• Third party contracts for re-marketing of returned leasing/rentals provide clear recovery estimates

NPL Business: portfolio evolution

• 1.7mln tickets, #1.2mln borrowers
• Extensive portfolio diversification by location, type and age of borrower

NPLs acquired in 1Q: €0.1bn GBV

• In 1Q 2019, Banca IFIS carried out very few acquisitions as there were limited NPL disposals in the market of unsecured tickets, the core business of Banca IFIS
• Banca IFIS is participating in all the ongoing disposal processes of unsecured tickets, part of which have the binding phase in 2Q 19. Further disposals of unsecured tickets are expected in the coming quarters

NPLs disposed in 1Q

• There was no disposal in 1Q 19
• The €0.4bn reduction is due to disposals agreed in 4Q 18 completed in 1Q 19. P&L impact already booked in 4Q 18

NPL Business: ERC

ERC breakdown*

Data in € bn	GBV	NBV	ERC
Waiting for workout - At cost	2,9	0,2	0,4
Extrajudicial positions	9,7	0,3	0,6
Judicial positions	4,0	0,6	1,4
Total	16,6	1,1	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 1Q 19), court injunction ["precetto"] issued and order of assigments (GBV of €1bn in 1Q 19) have already been expensed in P&L
• ERC review according to management actions and periodic review of assumptions based on update of historical data
• €0.75bn cash recovery (including proceeds from disposals) in 2014-1Q 2019

NPL Business: GBV and cash recovery

Judicial recovery

Judicial recovery (€ mln)	GBV	%
Freezed*	1,822	45%
Court injunctions ["precetto"] and foreclosures	464	12%
Order of assigments	561	14%
Secured and Corporate	1,167	29%
Total	4,015	100%

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

Non judicial recovery – Voluntary plans

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

BANCA IFIS *Other Judicial positions ** Excluding FBS

NPL Business: cash recovery

• Difference between cash collection and contribution to P&L mainly due to judicial recovery:

• o #1 increase in accounting value after the issuance of court injunction ("precetto"). Legal costs are also expensed
• o #2 increase in accounting value after the issuance of foreclosure ("pignoramento"). Legal costs are also expensed
• o #3 increase in accounting value after the issuance of order of assignment. Remaining legal costs are expensed
• o Judicial actions last on average ca. 1.5-2.5 years from the acquisition date to the order of assignment

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

Cash collection to start following the issuance of the order of assignment; costs of judicial actions have already been expensed

* 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)

Consolidated operating costs

73.4 70.8 64.7 64.6 74.4 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 Operating costs (€mln) Highlights

Personnel expenses (€mln)

• Operating costs +€9.8mln vs. 4Q 18:
  • o +€2.9mln for the consolidation of FBS (+€1.9mln cost of personnel, +€1.0mln other administrative expenses and other income / expenses)
  • o +€3.4mln due to Resolution Fund (1Q 19 included €2mln annual contribution to the Resolution Fund; 4Q 18 included €1.4mln one-off release of the Resolution Fund)
  • o +€2.5mln due to higher legal costs of NPL business and other items
• In 1Q 19 cost / income ratio at 57.2% (47.4% in 2018FY)

Other administrative expenses and other income / expenses (€mln)

BANCA IFIS

Asset quality – 1Q 19

Enterprises	Gross	Coverage %	Net
Bad loans	252	73%	68
UTP	242	38%	150
Past due	101	11%	89
Total	595	48%	307

Enterprises Net of POCI	Gross	Coverage %	Net
Bad loans	225	82%	41
UTP	202	46%	110
Past due	100	11%	89
Total	527	54%	240

POCI	Gross Coverage	%	Net
Bad loans	27	0%	27
UTP	40	0%	40
Past due	0	0%	0
Total	67	0%	67

Highlights

• NPL Business not included in this analysis
• Enterprises (net of POCI): bad loans and UTP coverage at 82% and 46%, 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 %: 9.5% stable vs 31 Dec 2018
  • o Net NPE %: 5.2% stable vs 31 Dec 2018
• In addition to Enterprises Segment (highlighted in the left table), as at 31 Mar 2019, G&S had €42mln gross NPEs, of which:
  • o €25mln gross other loans (of which €4mln gross bad loans, €17mln gross UTP and €3mln gross past due)
  • o €17mln POCI

1Q 19 results

• Sound growth perspective ✓a

• o NPL: order of assignments (+5% QoQ), secured and corporate (+6% QoQ) and €1.8bn GBV in judicial recovery to increase future cash flows
• o Trade receivables and leasing: relatively stable revenue contribution, with strict monitoring of loan loss provisions

• Net income of €30mln ✓a

o Contribution of PPA down to €17mln in 1Q 19 from €31mln in 4Q 18

• CET1 of 10.3%, expected to grow in coming quarters ✓a

• o Net income generation
• o Potential PPA of FBS portfolio
• o Progressive PPA release and winding down of former Interbanca loans

Strategic guidances

• Acquisition of new unsecured NPL tickets: Banca IFIS is participating in all the ongoing disposal processes of unsecured tickets, part of which have the binding phase in 2Q 19. In addition, further disposals of unsecured tickets are expected in the coming quarters
• Streamlining recovery strategy leveraging also on Capitalfin (salary backed loans for borrowers) and FBS (know-how in secured and corporate NPLs)
• Broadening servicing business through FBS

FOCUS ON SMES

• Selective growth in lending with client diversification reducing concentration risk
• Broadening product offer to SMEs: rental in leasing, value added credit servicing in factoring, corporate finance
• Ordinary winding down of former Interbanca long term loans

• Increase capital ratios
• Streamlining and monitoring the allocated capital and the return of each business unit

• Cost control after the buoyant growth and acquisitions of 2015-2018. The investments in digitalization / IT and NPL will continue and will not be impacted

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 49.4% 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 support the growth of the Bank

Data as at 31 Mar 2019	Banca IFIS Group Scope	Capital requirements*	Excess capital	Minority stake of La Scogliera	Excess capital not included	La Scogliera Group Scope
CET1	1.2		0.6	49%	0.3	0.9
Total Capital	1.6		0.7	49%	0.4	1.2
CET1 %	13.5%	7.0%		49%		10.3%
Total Capital %	18.0%	10.5%		49%		14.0%
RWA	8.9					8.9

Data in €billion

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	1Q18	2Q18	3Q18	4Q18	1Q 19
Net interest income	119	110	100	140	115
Net commission income	20	20	20	25	24
Trading and other income	0	9	6	8	(9)
Net banking income	139	139	125	173	130
Loan loss provisions (LLP)	(11)	(29)	(29)	(31)	(13)
Net banking income – LLP	128	110	97	142	117
Personnel expenses	(27)	(29)	(28)	(28)	(31)
Other administrative expenses	(47)	(48)	(39)	(43)	(43)
Other net income/expenses	0	6	2	6	0
Operating costs	(73)	(71)	(65)	(65)	(74)
Pre-tax profit	55	39	32	77	43
Taxes	(17)	(11)	(9)	(19)	(13)
Net income	38	28	23	58	30

P&L breakdown - Data in €mln	1Q18	2Q18	3Q18	4Q18	1Q 19
Interest income	119	110	100	140	115
o/w Enterprises	59	57	57	75	53
o/w NPL Business	64	53	43	66	61
o/w G&S	(4)	(0)	(0)	(1)	1
Commission Income	20	20	20	25	24
o/w Enterprises	20	21	20	24	22
o/w NPL Business	(0)	0	0	0	1
o/w G&S	0	(1)	(0)	0	0
Trading income	0	9	6	8	(9)
o/w Enterprises	(0)	9	(1)	(5)	(8)
o/w NPL Business	1	1	6	10	0
o/w G&S	(1)	(1)	1	4	(1)
Net banking income	139	139	125	173	130
o/w Enterprises	79	86	76	94	67
o/w NPL Business	65	54	49	76	63
o/w G&S	(4)	(2)	0	3	1
o/w PPA	22	22	17	31	17
o/w Enterprises	20	20	15	29	14
o/w NPL Business	0	0	0	0	0
o/w G&S	1	2	1	2	2

Segment breakdown (2/2)

Enterprises - Data in €mln	1.1.2018	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19
Bad loans (net)	63	63	68	74	68	68
Unlikely to pay (net)	163	160	144	165	147	150
Past due loans	112	120	156	122	95	89
Total non performing loans (stage 3)	338	343	368	362	310	307
Performing loans (stage 1 and 2)	5,124	5,030	5,232	5,308	5,608	5,648
Total loans	5,462	5,373	5,600	5,669	5,918	5,955

NPL Business - Data in €mln	1.1.2018	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19
Bad loans (net)	528	563	582	676	782	818
Unlikely to pay (net)	270	268	268	266	306	301
Past due loans	0	0	1	1	0	0
Total non performing loans (stage 3)	799	831	850	943	1,088	1,120
Performing loans (stage 1 and 2)	1	1	1	2	5	6
Total loans	799	832	851	945	1,093	1,125

G&S - Data in €mln	1.1.2018	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19
Bad loans (net)	13	13	13	13	12	12
Unlikely to pay (net)	7	14	14	14	19	20
Past due loans	3	5	7	7	5	4
Total non performing loans (stage 3)	24	32	34	34	36	35
Performing loans (stage 1 and 2)	116	220	225	272	267	207
Total loans	140	252	259	305	303	242

FBS - 1Q 19 Key Figures

AuM SPV AuM Italian Banks Owned portfolio

Pre tax profit

Data in €mln	1Q 19
Net banking income - LLP	8.2
Operating costs	(2.9)
Pre-tax profit	5.4

FBS Employees: ~100

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

charges

non-convertible DTAs

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	135.5 (98.8+36.7*)
Other	• 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. For Banca IFIS they are weighted at 250% and are substantially offset by DTL

BANCA IFIS * Includes €36.7mln of 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

32.0

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 31 Mar 19, the residual amount of pretax PPA was €213mln
  • o The average maturity of the loan is ca. 3Y

Net customer loans and PPA - €mln

PPA Reversal in P&L	1Q 18	2Q 18	3Q 18	4Q 18	1Q 19	Outstanding 1Q 19
Enterprises	20	20	15	29	14	171
G&S	1	2	1	2	2	41
Total	22	22	17	31	17	213

01 La Scogliera: implications of CRD IV

Segment breakdown

Appendix

03 Focus on DTA and BS

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 1Q19 €mln	% total	Description	Average time frame	Accounting valuation	Cash proceeds
Waiting for workout - Positions at cost	2,864	17%	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	9,745	59%
- Ongoing attempt of recovery	9,393	57%	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	352	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	4,015	24%
- Freezed*	1,822	11%	Judicial process has started; but the court injunction ["precetto"] has not been issued	6-12 months	Cluster model valuation, based on probability of success of the legal proceedings	No
- Court injunctions ["precetto"] issued and foreclosures ("pignoramento")	464	3%	Court injunction ["precetto"] already issued; legal actions continue to get the order of assignment	8-12 months	#1 increase in value. Part of the legal costs are expensed in P&L	No
- Order of assignments	561	3%	Enforcement order already issued. The cash repayment plan is decided by the court and starts afterwards	2-4 months	#2 increase in value. The remaining legal costs are expensed in P&L	Yes
- Secured and Corporate	1,167	7%	Ongoing execution of real estate collaterals	4 years	Analytical valuation (expected time frame and amount to be recovered)	Yes
Total	16,624	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
Ca. 50 internal lawyers
Ca. 200 external lawyers	Internal collection agents (ca. 100 FTE) 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 • Courts estimate legal costs to be charged to the debtors	• Voluntary repayment includes one off repayment or centres and collection agents

• Order of assignments: ca. €561mln GBV
• Secured and corporate: ca. €1,167mln GBV

Internal / external call centre (ca. 130 FTE)

Internal collection agents (ca. 100 FTE) 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
• Voluntary repayment includes one off repayment or sustainable cash yields agreed with debtors through call
• No legal costs charged to debtors
• Extrajudicial workout: ca. €352mln 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
Waiting for workout - Positions at cost	2,525	2,325	3,614	2,522	2,298	2,014	1,840	3,472	2,864
Extrajudicial positions	6,047	6,573	6,702	8,050	8,050	8,145	9,667	8,956	9,745
- Ongoing attempt of recovery	5,776	6,297	6,420	7,733	7,725	7,817	9,332	8,617	9,393
- Non-judicial payment plans	271	276	283	317	325	328	335	340	352
Judicial positions	1,874	2,127	2,220	2,503	2,664	2,738	3,170	3,327	4,015
- Freezed*	1,640	1,655	1,713	1,810	1,515	1,435	1,712	1,692	1,822
- Court injunctions ["precetto"] issued and foreclosures	0	0	0	0	253	336	376	411	464
- Order of assignments	185	233	269	317	388	462	476	536	561
- Secured and Corporate	48	238	238	376	508	505	606	689	1,167
Total	10,445	11,025	12,536	13,075	13,011	12,897	14,676	15,756	16,624

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

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 €1.9 mln of customer loans (invoices to be issued) related to FBS 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
Waiting for workout - Positions at cost
Extrajudicial positions	18	15	16	28	21	13	13	17	19
- Ongoing attempt of recovery	1	1	(1)	0	2	(3)	(3)	(4)	(3)
- Non-judicial payment plans	17	14	18	28	19	16	16	21	22
Judicial positions	17	21	16	31	46	43	33	53	46
- Freezed*	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
- Secured and Corporate	0	1	1	2	3	2	7	11	9
Total	35	36	32	58	67	56	46	69	66

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

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 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 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 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 proceeding 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
• 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 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 31 March 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.