Banco BPM SpA

Investor Presentation • Feb 6, 2019

FY 2018 Group Results Presentation

6 February ²⁰¹⁹

DISCLAIMER

This presentation has been prepared by Banco BPM ("Banco BPM"); for the purposes of this notice, "presentation" means this document, any oral presentation, any question and answer session and any written or oral material discussed following the distribution of this document.

The distribution of this presentation in other jurisdictions may be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of, and observe, these restrictions. To the fullest extent permitted by applicable law, Banco BPM and its companies disclaim any responsibility or liability for the violation of such restrictions by any person.

This presentation does not constitute or form part of, and should not be construed as, any offer or invitation to subscribe for, underwrite or otherwise acquire, any securities of Banco BPM or any member of its group, nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities in Banco BPM or any member of its group, or any commitment whatsoever. This presentation and the information contained herein does not constitute an offer of securities in the United States or to any U.S. person (as defined in Regulation ^S under the U.S. Securities Act of ¹⁹³³ (the "Securities Act"), as amended), Canada, Australia, Japan or any other jurisdiction where such offer is unlawful.

The information contained in this presentation is for background purposes only and is subject to amendment, revision and updating. Certain statements in this presentation are forward-looking statements about Banco BPM. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forwardlooking statements are generally identified by the words "expects", "anticipates", "believes", "intends", "estimates" and similar expressions. By their nature, forward-looking statements involve ^a number of risks, uncertainties and assumptions which could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.

Banco BPM does not undertake any obligation to update or revise any forward-looking statements, whether as ^a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation.

None of Banco BPM, its subsidiaries or any of their respective members. Directors, officers or employees nor any other person accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or otherwise arising in connection therewith.

By participating to the presentation of the Group results and accepting ^a copy of this presentation, you agree to be bound by the foregoing limitations regarding the information disclosed in this presentation.

***

This presentation includes both accounting data (based on financial accounts) and internal management data (which are also based on estimates).

Mr. Gianpietro Val, as the manager responsible for preparing the Bank's accounts, hereby states pursuant to Article 154-bis, paragraph ² of the Financial Consolidated Act that the accounting data contained in this presentation correspond to the documentary evidence, corporate books and accounting records.

METHODOLOGICAL NOTES

• The new accounting standard IFRS ⁹ on "Financial Instruments" became effective beginning on ¹ January ²⁰¹⁸ and therefore the P&L and balance sheet results of ²⁰¹⁸ have been prepared in compliance with the new accounting standard IFRS 9, while the ²⁰¹⁷ P&L and balance sheet results had been prepared in compliance with the former accounting standard IAS 39.
• The final impact of the FTA in relation to IFRS ⁹ and IFRS ¹⁵ was defined as at ³⁰ June ²⁰¹⁸ with reference to ⁰¹ January ²⁰¹⁸ data.
• • To favor ^a more consistent comparison between the ²⁰¹⁸ and ²⁰¹⁷ P&L data, in this presentation, ²⁰¹⁸ data are complemented with the main reclassifications on adoption of the new accounting standard IFRS 9. However, it should be pointed out that the new classification and measurement criteria and the new impairment model for financial assets do not allow ^a full comparability of the two sets of data under comparison.
• • For ^a correct understanding of the Balance Sheet quarterly evolution, with accounting standards being equal, the balance sheet data as at 30/09/2018 and 31/12/2018 has been also compared with the balance sheet data as at 01/01/2018, recalculated, whenever possible, based on the new accounting standard, with all the differences and reclassifications as at 01/01/2018 duly highlighted compared to IAS ³⁹ compliant data at 31/12/2017 in appendix.
• It should be noted that, starting from 2018, the reclassified Balance Sheet scheme has been changed to include the new accounting categories of financial instruments, and that for the reclassified income statement face, the adoption of IFRS ⁹ required that some aggregates be redefined (for more details please refer to the explanatory notes of the news release of ⁷ November ²⁰¹⁸ on the approval of the consolidated results as at ³¹ December 2018).
• • It is noted that starting from 30/06/2018 ordinary and extraordinary systemic charges related to SRF and DGS have been reclassified from Other Operating Expenses to ^a dedicated item "Systemic charges after tax". Historical P&L schemes have been reclassified accordingly.
• • It is also reminded that in August 2017, Banco BPM signed ^a binding Memorandum of Understanding to sell 100% of Aletti Gestielle SGR's capital to Anima Holding. For this reason, starting from 30/09/2017, the contribution of Aletti Gestielle has been classified according to IFRS ⁵ as ^a "discontinued operation". The sale of the Company was perfected in December 2017. For this reason, in the ²⁰¹⁷ P&L statement, the contribution of Aletti Gestielle SGR and the gain realised from disposal are booked in line item "Income after tax from discontinued operation".
• Moreover, in February 2018, Banco BPM signed an agreement to sell the Custodian Banking activity and, in September the Business Unit has been officially sold. For this reason, starting from 31/03/2018, the Balance Sheet data related to this Business Unit (substantially CA and Deposits) have been classified according to IFRS ⁵ as ^a "discontinued operation" and as at 30/09/2018 they are no more included in the consolidated perimeter. In this presentation, in order to ensure ^a coherent comparison, the Direct Funding before 30/09/2018 shown in this presentation is proforma, i.e. reported excluding the data related to this Business Unit.
• Finally, in December 2018, Banco BPM accepted the binding offer submitted by Elliott and Credito Fondiario, involving, among other things, the sale of ^a portfolio of bad loans. Consequently, these loans have been re-classified from item Loans and advance to customer at Admortised Cost to item Non-current assets held for sale and discontinued operations as at 31/12/2018. Also, following the binding MoU signed on ³⁰ Nov. ²⁰¹⁸ by Banco BPM and Crédit Agricole aimed at strengthening their partnership in the consumer finance sector in Italy, the captive business of Profamily has been re-classified in the item Non-current assets held for sale and discontinued operations as at 31/12/2018.

Agenda

1	i i h l h t K H e g g s y	4
2	f i i i i P t b l t A l r o a n a s s y y	1 5
3	d i d i i d i F L t u n n g a n q u y	2 4
4	C d C d i Q l i t L F t t u s o m e r o a n s a n o c u s o n r e u a y	3 2
5	i i i C t l t P a p a o s o n	4 2
A n	n e x	4 5

STRONG RESPONSE TO ASSET QUALITY CHALLENGE: READY TO RETURN TO SUSTAINABLE PROFITABILITY

1. Include also those actions already signed in 2018 but not yet finalized and exclude RWA reduction due to AIRB model extension and review.

HUGE DERISKING TO NORMALIZE ASSET QUALITY:GROSS NPE DOWN BY €18.2BN SINCE YE 2016 (-60.7%) 1

Total NPE, gross book value

€ bn

See the following slide for details.

Notes:

• 1. Include the restatement for managerial purposes (inclusion of a portion of write-offs, in coherence with the restatement done in 2017).
• 1. Corresponding to Nominal targets (including write-offs) of €23.9bn for NPE and €12.3bn for Bad Loans.

Improvement vs.2019 Target

HUGE DERISKING TO NORMALISE ASSET QUALITY:HOW WE ACHIEVED THE MASSIVE NPE STOCK REDUCTION1

Analysis of NPE stock reduction since YE 2016 (including ACE)

€ 17.2BN NOMINAL DISPOSAL TRANSACTIONS

Since the Plan announcement (May 2016), including single name disposals¹, € bn

Internal management analysis.Note:1. Nominal amount at cut-off date.

HUGE DERISKING TO NORMALISE ASSET QUALITY:STRONG IMPROVEMENT IN NPE RATIOS, CLOSING THE GAP WITH COMPETITORS1

BAD LOAN RATIO

STRONG REDUCTION IN THE NPE RATIO GAP WITH COMPETITORS²:

• -510 bps for Gross NPE ratio
• -330 bps for Net NPE ratio

… WITH BAD LOAN RATIOS NOW OVERPERFORMING COMPETITORS

BAD LOAN RATIOS: GAP VS ITALIAN BANKING SYSTEM3

Note:

1. Include the restatement for managerial purposes (inclusion of a portion of write-offs, in coherence with the restatement done in 2017).

Financial Stability Report 1/2017 (data as at Dec.16)

1. Key Highlights

2. ABI – Monthly Outlook – January 2019 – data as November 2018. 4. Corresponding to Nominal targets of 17.9% for NPE and 9.3% for Bad Loans

HUGE DERISKING TO NORMALIZE ASSET QUALITY: HIGHLIGHTS OF ACE DEAL AND MARKET COMPARISON1

	S t t d t a u s u p a e		M k t a r e c	i o m p a r s	o n
t A m o n u	i l b k l t t- f f d t N o m n a o o a e a c o a e : v u u € 7, 3 8 5 m	B k a n	D l e a	i P r c e	1 % f B Y o o B d L a o a n s
	G b k l f 3 1 / 1 2 / 2 0 1 8 r o s s o o v a u e a s o : ( i f f f i ) € 6, 1 5 2 l. t d t h- m e x c w r e o s a n a e r c a s n		d E o s x u € 5. 1 b n	% 3 4. 3
		B a n c o B P M	C A E € 7. 4 b n	2 3. 6 %
O l l v e r a i p r c e	% f ( f i 2 3. 6 G B k V l t t o r o s s o o a u e n e o w r e f f ) o s		T t l o a	2 8. 3 %	7 2. 5 %
	R t i B B B a n g :	B k 1 a n	€ 1 7. 7 b n	1 3 %	3 3 %
S i e n o r t h r a n c e	i i f i G A C S l t t b l d b 8 F b. a p p c a o n o e e y e	B k 2 a n	€ 2 5 b n	2 0. 5 %	8 5 %
	l l t i d b F B B P M u y r e a n e y a n c o	B 3 a n	€ 1 0. 8 b n	2 8. 7 %	2 8 %
i E t q u y h t r a n c e s	% i i 9 5 U d t t b E l l t t. n e r w r e n y o % i d b 5 t B B P M r e a n e a n c o y	k A C E	t f l i l l p o r o o a o	t h i w s o a c e	l l v e o v e r a
f i R W A B t e n e	~€ b b k d f t t f f i t 1. 7 n, o o e a e r r a n s e r o e q u y t h d G A C S l r a n c e a n a p p r o v a	i 2 0 1 n O v e r	i f i f ~ % t D l / B d L B Y 7 0 r a o o s p o s a s a o a n s o o 8 l l, d i l i l l a s p o s a p r c e s c e a r y
l f P t a o r m t h i p a r n e r s p	f T b l h d b t h d Q 2 2 0 1 8 o e a u n c e y e e n o		i i i i t d t b t t l l t h p o s o n e a e s p r a c c e e v e s n e l i k k i h i f h I t t, t t t a a n m a r e a n g e s e o e z d i k i f f t i t t e r s n g e o r n o a c c o u n

SOLID ORGANIC PERFORMANCE: FUTURE PROFITABILITY SET TO BENEFIT FROM A FURTHER NORMALIZATION IN THE COST OF RISK2

Notes:

1. Exclude all one-offs and non recurrent items, as detailed on slide 53.

2. Excluding Badwill and Impairment on goodwill and client relationship after tax

SOLID ORGANIC PERFORMANCE: SUPPORTED BY STRONG VOLUMES AND SAFE LIQUIDITY PROFILE2

1. PF data exclude the volumes of the custodian bank (€2.4bn at YE 2016 and

€3.0bn at YE 2017), sold in Q3 2018.

1. Q4 2018 NSFR based on management data.

2. Key Highlights

SOLID ORGANIC PERFORMANCE: OPERATING COSTS¹ WELL AHEAD OF STRATEGIC PLAN TARGETS2

~€400m reduction since the starting point of the Strategic Plan 2016-19

Notes:

1. Internal Management Data adjusted for non-recurring items and systemic charges. All figures are pro-forma (ex Aletti Gestielle). It is noted that ²⁰¹⁸ figures do not yet benefit from the full effect of synergies coming from personnel and other administrative costs.

SOLID ORGANIC PERFORMANCE: EU-WIDE STRESS TEST 2018CONFIRMS THE BANK'S CAPACITY TO STRENGTHEN CAPITAL2

DELTA CET1 RATIO FULLY LOADED (Baseline scenario – 2020/2017)

126101312 +211EU ITALY BANCO BPM POSITIVE DIFFERENCE+119 o/w: +119bps deriving from core revenues3

Best-in-class among Italian banks in the baseline scenario of the EU-wide stress test, thanks to the earnings and internal capital generation capability, favored also by:

• a potential recovery of DTA
• wider room on thresholds for participations to be deducted

bps

Notes:

• 1. Source: EBA 2018 EU-wide Stress Test results (2/11/2018)
• 1. Cumulative core revenues (NII+Net Commissions) on 3Y base scenario / RWA

• Contribution to CET 1 FL: 17.43% for Banco BPM vs. 16.24% for Italian banks

EFFECTIVE CAPITAL MANAGEMENT ACTIONS: ROBUST CET 1 RATIO EVEN AFTER THE DERISKING PROCESS3

31/12/2016 30/09/2018 31/12/2108

CET 1 ratio Fully Loaded

• The impressive deriskingperformed by the bank has been fully compensated by the capital strengthening initiatives put in place and by the organic capital generation
• The Group's CET 1 ratio FL PF comes in at 11.5%, the high end of the range previously expected (11%/11.5%), including the capital management actions already signed and to be finalized by H1 2019: +154bps

1

See slide 43 for further details.

All Proforma ratios are prior to any expected impact from the IFRS 16 FTA. Note:

Stated

1. Not comparable with 2018 phased in ratios , due to different phasing elements.

31/12/2018Proforma

Agenda

1	i i h l h t K H e g g s y	4
2	f i i i i t b l t l P A r o a n a s s y y	1 5
3	i i i i F d d L d t n n g a n q u u y	2 4
4	C d C d i Q l i t L F t t u s o m e r o a n s a n o c u s o n r e u a y	3 2
5	C i l i i t P t a p a o s o n	4 2
A n	n e x	4 5

NET INTEREST INCOME

• Stated Net Interest Income up 8.5% y/y, benefiting from the reversal of time value on bad loans (reclassified from LLPs under IFRS 9) and PPA
• Net interest income was up 1.2% on a like-for-like basis (excluding one-offs, IFRS 9 effect and PPA), mainly driven by lower cost of funding

• In the quarterly comparison, NII on a like-for-like basis flat q/q, thanks to average volume growth and lower cost of funding that fully offset asset spread compression

• Includes approx. €32m related to TLTRO2 accrued in ²⁰¹⁶ and booked in Q1 17.

NET INTEREST SPREAD IN COMMERCIAL BANKING

• The asset spread decline in the quarter is partially explained by the significant growth in new volumes granted to high-quality customers
• Asset spread in January shows positive signs of re-pricing of new MT loans granted compared to last quarters
• A steady improvement is registered in the trend of the liability spread

Notes: Quarterly spreads for 2017 have been adjusted to reflect the adoption of new customer portfolio perimeter and segments of the new commercial network

NET FEES AND COMMISSIONS

• In 2018, fees were down 5.2%, with a good recovery in H2 18, freezing the y/y slowdown registered in H1, and with a more stable mix compared to 2017:
• traditional fees were basically stable
• management and advisory fees (-10% y/y) were affected by the negative performance in financial markets, but showed an increase in more stable running fees (+10% y/y)
• Fees and commissions were up q/q (+4.1%) benefiting from the higher diversification of fees generated across different businesses (i.e. credit fees, payment and service fees etc.). Management and advisory fees were basically flat. An amount of almost €6m booked in the quarter refers to the production generated for the full year

NET FINANCIAL RESULT

• Net Financial Result stood at €82m in 2018 (-€73m y/y)
• In Q4, the Net Financial Result was negative (-€74m), mainly due to the prudential impairment of an indirect exposure held through the FITD (-€28m), to non-trading financial assets mandatorily at Fair Value (-€12m), to corporate spread widening and hedging strategy to reduce the sensitivity to market movements
• On the other hand, market price movements had a positive effect on the HTCS reserve on debt securities (+€137m vs 30 September 2018) and, consequently, on capital ratios.

OPERATING COSTS

• In 2018, operating costs were down 4.5% y/y (stated) and 4.5% y/y on an underlying basis, thanks to strict cost control
• Operating costs were up in the quarter exclusively due to one-offs related to final integration costs and to adjustments on property not used in operations. On a like-for-like basis, operating costs were down1.6%

PERSONNEL EXPENSES

• Personnel expenses were down 2.9% y/y, mainly driven by the headcount reduction, in spite of contractual adjustments
• Personnel expenses down 2.2% q/q, coming in at €422m
• Total headcount stood at 22,247 on 31 Dec. 2018, down from 23,263 at year-end 2017 (-1,016, of which 690 on the basis of the Solidarity Fund done at the end of June and December 2018) and 24,608 at yearend 2016

OTHER ADMINISTRATIVE EXPENSES

• Other administrative expenses decreased 6.4% y/y, thanks to the strict cost control across all expense categories.
• In Q4, administrative expenses were up 4.8% q/q and 1.4% excluding one-off items (mainly related to the final part of integration costs)

LOAN LOSS PROVISIONS & COST OF CREDIT EVOLUTION

Loan Loss Provisions

1. For a proper calculation of CoR, customer loans include also loans classified as Discontinued Operations (Bad Loans related to ACE transaction and Profamily loans to be disposed)

Agenda

1	i h l i h K H t e y g g s	4
2	f i b i l i l i P t t A r o a y n a y s s	1 5
3	i i i i d d d t F L n n g a n q u u y	2 4
4	i i C t d C d t Q l t L F s o m e r o a n s a n o c s o n r e a u u u y	3 2
5	i i i C t l P t a p a o s o n	4 2
A n	n e x	4 5

DIRECT FUNDING

Healthy growth in core deposits, with concurrent decline in more expensive sources of funding

Direct funding¹ (without Repos)

Notes:

• 1. Direct funding restated according to a management logic: it includes capital-protected certificates, recognized under 'Held-for-trading liabilities', while it does not include Repos (€7.1bn at December 2018), basically transactions with Cassa di Compensazione e Garanzia).
• 2.Internal management data.

01/01/2018 PF data exclude the volumes of the custodian banking Activity (€3.7bn as at 01/01/18), sold in Q3 2018.

• (76%) Direct funding at €101.5bn, with ^a positive dynamic of C/A and sight deposits (+5.8% in the year and +0.7% in Q4)
• Weight of stable core Retail component in Deposits at 63% in December ²⁰¹⁸ (same in Sept. 2018)²
• Q4 trend impacted by ^a decrease in more expensive components, leveraging on the strong liquidity position
• New issuance activity on wholesale markets in 2018: €1.25bn of Covered Bonds (€0.75bn in Jan. ⁺ €0.5bn in Jul.) and €0.5bn of Senior bonds (in Apr.)

BOND MATURITIES: VERY MANAGEABLE AMOUNTS

The Group has maintained a robust funding structure and a balanced ALM profile, while optimizing the cost of funding

• Very limited amount of bond maturities (€2.1bn in 2019, €2.8bn in 2020 and €2.2bn in 2021)
• Retail maturities keep sustaining the growth of Deposits and AUM, supporting both NII and Commissions
• Low-cost funding source: current amount of unencumbered assets eligible for Covered bonds/ABS issuance well in excess of the maturing securities
• The solid funding and liquidity position allows the Group to time the proper market conditions to tap the institutional bond market

Note: Managerial data based on nominal amounts, including calls.

STRONG LIQUIDITY POSITION

€ bn - Internal management data, net of haircuts

Breakdown of assets encumbered with TLTRO II as at 31/12/2018

• Roughly €22bn of total unencumbered liquid securities (net of haircuts)
• In Q4 2018, long-term bilateral transactions executed for €1.8bn (net of haircuts), with underlying marketable securities and retained covered bonds

• €11bn of assets encumbered with TLTRO II are high quality marketable securities (rated ^A or higher): easy to refinance at good conditions

• Roughly €9bn of credit claims (ABACO) encumbered with TLTRO II are eligible for securitisations

• LCR >150% & NSFR >100%³

• Refers to securities lending (uncollateralized high quality liquid assets)

• Management data

• Monthly LCR of December 2018; Q4 2018 NSFR based on management data

SECURITIES PORTFOLIO

Prudent diversification, with solid liquidity and support of NII

€ b n	C hg . v s. 3 1 / 1 2 / 1 7 ( ) I A S 3 9	C hg . v s. 0 1 / 0 1 / 1 8	in C hg Q 4
i i f i S t P t l B k d e c r e s o r o o r e a o n u w	/ / 3 1 1 2 1 8	/ / 3 0 0 9 1 8	/ / 0 1 0 1 1 8	3 1 7 I / 1 2 / 1 A S 3 9	Va lu e	Va lu e	Va lu e
b t s i t ie De ec ur s	3 2. 9	3 4. 0	3 0. 3	3 0. 2	2. 6	2. 6	-1 1
ie / To ta l G o w ov s -	2 7. 5	2 8. 4	2 5. 3	2 5. 2	2. 3	2. 2	-0 8
/ ta l ia G ie I - o : n ov s w	1 7. 7	1 8. 2	2 0. 8	2 0. 7	-3 1	-3 1	-0 6
in % ie To ta l Go on s v	% 6 4. 1	% 6 4. 3	% 8 2. 1	% 8 2. 1
i ty i t ie d O d fu ds iv te i ty Eq & Pr se cu r s a n p en -e n n a e q u u	8 1.	2. 3	2. 2	2. 2	-0 3	-0 3	-0 5
T O T A L S E C U R I T I E S	3 4. 7	3 6. 2	3 2. 4	3 2. 4	2. 3	2. 3	-1 5

• Stronger diversification of Govies portfolio:
• Italian Govies at €17.7bn, 64.1% of total Govies portfolio, vs. 82,1% as at year-end ²⁰¹⁷
• Non-Italian Govies at €9.8bn: primarily USA (14.0%), France (11.5%), Spain (5.6%) and Germany (3.5%)
• Total Govies in HTCS down by €1.2bn vs. year-end 2017, thanks to ^a strong reduction of the Italian component (-€3.3bn)
• Total Govies in HTCS down by €0.2bn in Q4, with Italian component substantially stable (+€37m), but with ^a modified duration down to ~2.7 years¹
• Gross HTCS reserve on debt securities at about -€200mat YE 2018, improving by €137m in Q4

Significant decline of Govies in HTCS in H2, particularly in the Italian component

1 1. 7 6. 6	1 1. 9	1 5. 1	1 2. 9
	6. 5	8. 4	9. 9
5 6 %	5 5 %	5 6 %	7 7 %
5. 1	5.	6.	2. 9
4 4 %	4 5 %	4 4 %	2 3 %
		4	7

FOCUS ON ITALIAN GOVIES: DECLINE IN HTCS COMPONENT AND STRONG REDUCTION OF SENSITIVITY TO SPREAD EVOLUTION

1bps spread sensitivity down from about €3.5m in Q2 ²⁰¹⁸ to ^~ €1.5m in December

FVTPL

HTCS

HTC

• +€37m in Q4) HTC at €10.3bn (+€0.3bn vs. YE 2017; +€0.2bn in Q4)
• FVTPL at €0.8bn (stable vs. YE 2017; -€0.8bn in Q4)

31/12/2017 data are based on IAS 39 accounting standards.

-10.6p.p.

INDIRECT FUNDING

Big impact from market performance

Assets under Management

Notes:

2.

(*) Indirect Funding data proforma for the exclusion of the volumes related to the Depositary Banking Activity. Last wave of deconsolidated volumes in November 2018.

• 1. AuC are net of capital-protected certificates, as they have been regrouped under Direct Funding (see slide 25).
• In Q1 2018, AuC registered the outflow of one big institutional client (€4.8bn as at 31/12/2017), with a negligible margin contribution. These volumes are excluded from 31/12/2017 PF data.

303. Funding and Liquidity

Assets under Custody¹

• mainly Q4, 'Funds and Sicav' grew by €1.9bn in 2018, notwithstanding ^a substantial stability in Q4 On ^a like-for-like basis² and excluding the market

pricing effect registered in ²⁰¹⁸ (-€3.6bn, o/w-€1.9bn in Q4), AuC grew by roughly €1.7bn in the

• Net of market effect of the year, Indirect Funding grows by >€1bn in 2018, driven by AuC
• AuM strongly penalised by the market effect (-€2.8bn YTD and -€1.7bn in Q4)
• Net of the negative market trend, which impacted

year, with ^a strong recovery in Q4 (+€2.1bn)

TOTAL CORE FUNDING: VOLUME GROWTH WHEN EXCLUDING MARKET TURMOIL EFFECTS

€ b n	/ / 3 1 1 2 2 0 1 8	/ / 0 1 0 1 2 0 1 8 P F	C h g s. v 0 / 0 / 8 1 1 1	C h g v s. 0 / 0 / 8 l. 1 1 1 e c x k f f f M t t a r e e e c o t h e y e a r
i i C / A S h t D t & g e p o s s	7 8 7	7 4 4	4 3 +	4 3 +
i f i I d t d n r e c u n n g	8 4 8	9 0 1	5 3 -	1. 1 +
A U M -	5 5. 7	9. 5 1	3. 4 -	0. 6 -
1 C A U -	2 9. 2	3 1. 0	1. 9 -	1. 7 +
O C O G T T A L R E F U N D I N	6 3 6 1	6 4 1 5	0 1. -	4 5 +
l l da fo lu de he A ta Pro t rm a ex c vo	lum la d he te to t De es re p	i k ing iv i ta Ba Ac t ty os ry n	+	lu d ing he ke ic Ex t t p c m ar r e f fe t r is te d in 2 0 1 8 e c eg re on ire ing (- in In d t Fu d € 2. 8 bn c n 2 d -€ 3. 6 bn in C ) A U M A U a n

Notes:

• 1. AUC excludes Capital-protected Certificates and, as from 01/01/2018, excludes also €4.8bn of volumes related to one big-Ticket position of an institutional client who left our Group in Q1 2018. See slide 30 for details.
• 1. Internal management data.

Agenda

1	i h l i h K H t e y g g s	4
2	f i b i l i l i P t t A r o a y n a y s s	1 5
3	i i i i d d d t F L n n g a n q u u y	2 4
4	i i C t d C d t Q l t L F s o m e r o a n s a n o c s o n r e a u u u y	3 2
5	i i i C t l P t a p a o s o n	4 2
A n	n e x	4 5

NET CUSTOMER LOANS

Satisfactory increase in Performing Loans, with a strong performance in new loan granting: €20.7bn in 2018

Net Customer Loans1

• Trend of total Net Customer Loans impacted above all by the solid derisking (disposal of Bad Loans and workout) and, also, by the subscription of Exodus Senior Notes
• Even when excluding the subscription of the Exodus Senior Notes, performing loans are up by 1.4% YTD, driven by "Core customer loans"² (+1.9% YTD)
• €0.3bn Profamily loans reclassified under Discontinued Operations in Q4, net of this effect, Performing loans (excl. Exodus) and Core performing loans grow by +0.1%
• €20.7bn of new mortgage and personal loans granted in the period (€3.8bn to Households and €16.9bn to Corporates)³, o/w €6.2bn in Q4

Notes:

1. Customer loans refer to Loans and advances to customers at Amortized Cost, including also the Exodus senior notes. FY 2018 data exclude €1.3bn Bad Loans to be disposed with the ACE project and €0.3bn Profamily loans, classified as Discontinued Operations as at 31/12/2018

2. 1. Core customer loans include Mortgage Loans, Current Accounts, Cards & Personal Loans and Other technical forms.
3. 1. Internal management data. 'Corporate' includes SMEs, Large Corporates, Institutional Customers and Third Sector.

THE FINAL WAVE OF BAD LOAN DISPOSALS FURTHER BOOSTSTHE NPE STOCK REDUCTION, BOTH IN TERMS OF GBV…

€ bn – Total NPLs, gross book value

• 1. Accounting gross book value, including restatement for managerial purposes (inclusion of a portion of write-offs, in coherence with the restatement done in 2017)
• 1. Includes also the net change in Past Due.
• 1. Customer Loans and Focus on Credit Quality

... AND IN TERMS OF NBV

Net NPE

Net NPE dynamics post-ACE transaction

C H A N G E € / d %	C hg S tra te s. . v ta t in in s r g p o	ic la P g n t ( I A S 3 9 )	C hg s. . v ( I A S	3 / 2 / 1 1 1 7 3 9 )	C hg s. . v	0 / 0 / 8 1 1 1	C hg in Q 4
m a n	Va lu e	%	Va lu e	%	Va lu e	%	Va lu e	%
Ba d Lo an s	-6 3 5 8 ,	-8 0. 0 %	-4 8 9 6 ,	-7 5. 5 %	-3 6 5 0 ,	-6 9. 6 %	-1 9 3 4 ,	-5 4. 9 %
U T P	-4 3 8 5 ,	% -4 6. 5	-1 4 1 1 ,	% -2 1. 8	-1 2 2 5 ,	% -1 9. 5	-4 5 6	% -8 3
t Pa Du s e	-2 1 1	0. % -7 7	7	8. 8 %	7	8. 8 %	-6	-6 % 1
O T T A L N P E	0, 9 4 -1 5	-6 2. 0 %	-6 3 0 0 ,	-4 8. 4 %	-4 8 6 8 ,	-4 2. 0 %	-2 3 9 6 ,	-2 6. 3 %

2018 Customer Loan data refer to Loans and advances to customers measured at Amortized Cost.

• Post-ACE transaction¹, net NPE down by €11.0bn vs. the Strategic Plan starting point (o/w -€6.3bn in 2018), confirming the good performance of credit management and the normalization in asset quality trends
• Net NPE ratio down at 6.5%and Net Bad Loan ratio down at 1.5%
• Further improvements are expected to come from the ongoing workout activities and from ^a strengthened action focus on UTP

Notes:

• 1. €1.3bn net Bad Loans classified as Discontinued Operations as at 31/12/2018
• 1. As at 01/01/2018, €0.2bn Net UTP loans were reclassified from Customer Loans measured at Amortized Cost to Other Financial Assets. Also, the IFRS 9 FTA impact on net NPE for new Impairment models has translated into a reduction of €1.2bn as at 01/01/2018 (specifically in Bad Loans).

SHARP DROP IN BAD LOAN PORTFOLIO, WHILE MAINTAININGCONSERVATIVE COVERAGE LEVELS

Coverage level post-ACE transaction impacted by a higher share of secured positions and by the sharp drop in Bad Loans

• NPE coverage post-ACE at 43.1% (45.3% incl. write-offs), factoring ^a lower share of Bad Loans (-22.9 p.p. vs. pre-ACE), better than the Italian Banking System (-24.3 p.p.), as well as ^a higher share of secured positions and ^a lower vintage
• Bad Loan coverage post-ACE at 59.6%, (64.0% incl. write-offs), factoring the higher share of secured exposures (75% of total Bad Loans vs. 66% as at 31/12/ 2017) and ^a lower vintage
• UTP coverage further strengthened, at 35.0% (+270bps vs. year-end ²⁰¹⁷ and +140bps in Q4)

Note:

• 1. The IFRS 9 FTA impact on NPE coverage (specifically on Bad Loans) for new Impairment models translated into an increase of NPE Adjustments of €1.2bn as at 01/01/2018.
• 1. Bank of Italy: statistics data as Sep.2018.

FOCUS ON BAD LOANS: DETAILED ANALYSIS

• Coverage levels post ACE transaction factoring ^a material improvement in bad loan composition: higher share of secured exposures (75% vs. 66% as at 31/12/2017) and ^a lower vintage
• Secured/Unsecured composition in terms of GBV (75%/25%) well above the industry average (49%/51%)¹.

• Unsecured bad loans limited at NBV of €0.2bn

• Notes: 1. Report PWC "The Italian NPL Market– Entering a New Era", December 2018.

• 1. Collateral FV capped at nominal value.

EFFECTIVE WORKOUT ACTIVITY ON BAD LOANS

Internal management data.

Includes gains on closed positions and recoveries on single name disposals. Recovery rate calculated over average Gross Book Value of the period.

write-offs

Notes: 1. Discounted pay-off campaigns.

FOCUS ON UTP LOAN EVOLUTION: WELL AHEAD THE ORIGINAL 2019 STRATEGIC PLAN TARGETS

1. Gross ratio calculated as a % of Total Loans, including, for managerial purposes, a portion of write-offs, in coherence with the restatement done in 2017.

Breakdown of Net UTPs as at FOCUS ON UTP LOANS: HIGH SHARE OF RESTRUCTURED AND SECURED POSITIONS

	3 / 2 / 2 1 1	0 8 1
	3 1 / 1 2 / 1 8	3 / 2 / 1 1 1 7 ( ) I A S 3 9	% C hg
Re tru tu d s c re	2. 3	2. 8	-1 7. 6 %
Se d cu re -	1. 3	1. 8	-2 8. 8 %
Un d se cu re -	1. 1	1. 1	% 1. 3
O t he U T P r	2. 7	3. 6	% -2 5. 3
Se d cu re -	2. 3	3. 1	-2 7. 3 %
d Un se cu re -	0. 5	0. 5	-1 3. 6 %
	5. 0	6. 5	% -2 1. 8
/ o w :
t h No r -	6 8. 8 %	0 % 7 1.
C tre en -	% % 2 2. 8 2 1. 5
So t h la ds & Is u n -	8. 4 %	% 7. 5

• Solid level of coverage for unsecured UTP: 47.1%
• Net Restructured loans (€2.3bn) account for 46% of total net UTP: they are essentially related to formalized underlying restructuring plans and procedures (mainly under Italian credit protection procedures)
• Net unsecured UTP other than Restructured loans are limited to €0.5bn
• 69% of Net UTPs are located in the northern part of Italy

Note:

• 1. Trend since Strategic Plan starting point and YTD also impacted by IFRS 9 reclassifications (-€0.3bn at Gross level and -€0.2bn at net level as at 01/01/2018).
• 1. Calculated as a % of Total Loans including Write-offs (Nominal).

COST OF RISK OUTLOOK: BREAKDOWN OF EXISTING NPE STOCK

• • Banco BPM is committed to apply rigorous accounting rules and provisioning methodologies, factoring potential inputs from regulatory authorities

• • With reference to the existing NPE stocks, the Group will continue to reduce volumes building on its recent derisking track record average decay rate of net NPE (excluding disposals) of 32% per year since the merger - with particular focus on positions which are not (or not yet) addressed through a restructuring agreement

• •Current volumes mostly represented by recent vintages

• • Projecting current volumes using the recent deriskingtrack record, the residual NBV (excl. restructured) is expected at about 400/200m in 6/8 years

Agenda

5	i i i C t l t P a p a o s o n	4 2
4	C d C d i Q l i t L F t t u s o m e r o a n s a n o c u s o n r e u a y	3 2
3	d i d i i d i F L t u n n g a n q u y	2 4
2	f i i i i P t b l t A l r o a n a s s y y	1 5
1	i i h l h t K H e g g s y	4

Annex

⁴⁵

CET1 RATIO: EVOLUTION DETAILS

9 % 1 1.	% 1 1. 2	-1 1 7 b p s	-3 b p s	0. 0 % 1	2 8 b + p s	2 5 b + p s	1 0 1 b + p s	% 1 1. 5
3 1 / 1 2 / 2 0 1 7 R W A F L : € 8 b 7 5. n	3 0 / 0 9 / 2 0 1 8 R W A F L : € 6 2 b 5. n	to L L Ps p- up la te d to A C E re io tra t sa c n	Q 4 inc ing lu d t ive ne g a f fs on e- o	3 1 / 1 2 / 2 0 1 8 S ta te d R W A F L S t t d a e : € 6 4. 0 b n	N P L D isp l os a G A C S + Ca i ta p	J V N P L on ic ing se rv la t fo P rm l m an ag em en	Ag t re em en i t h C A w 1 Ag on os t a t io c ns	3 1 / 1 2 / 2 0 1 8 Pr Fo o rm a R W A F L P F : € 6 2. 6 b n
% 1 1. 9 in P ha d se 0 1 / 0 1 / 2 0 1 8	1 3. 2 % P ha d in se 3 0 / 0 9 / 2 0 8 1			% 1 2. 1 P ha d in se 3 1 / 1 2 / 2 0 1 8 S ta te d		ig f ina ize in lre dy d d to be l d a a s ne an Q / Q 2 2 0 9 1 1

CET 1 ratio Fully Loaded PF at 11.5%

• Satisfactory capital position, with CET ¹ ratio Fully Loaded PF at 11.5%, stable vs. 30/09/2018 but with ^a dramatically reduced risk profile of the bank (ACE project), thanks to effective capital management actions already signed and to be completed by 30/06/2019
• CET ¹ phased-in PF at 13.5%, benefitting from the 5-year phasing of the IFRS ⁹ impact

31/12/2018 Proforma ratios are prior to any expected impact from the IFRS 16 FTA. Note:

1. Higher than the +80bps impact previously estimated, with the calculation including a distribution of dividends equal to the full 85% of a higher FY 2018 net profit generated by AGOS.

2. Capital Position⁴³

CONCLUSIONS & PRELIMINARY INDICATIONS FOR 2019

FY 2018:

• Effective implementation of an accelerated path of derisking, while at the same time preserving the Group's satisfactory capital position
• Strong focus on integration, restructuring, reorganization and streamlining

FY 2019:

• Focus on core banking business, leveraging on the competitive position as Italy's third largest banking group
• The Group's profitability in FY ²⁰¹⁹ is, among other, set to benefit from ^a further normalization in the cost of credit risk, benefitting from ^a significantly improved risk profile

IN SPITE OF THE HEADWINDS IN RELATION TO THE EXTERNAL ENVIRONMENT, THE GROUP IS DETERMINED TO DELIVER A SOLID PERFORMANCE IN FY 2019 IN TERMS OF OPERATING PROFITABILITY AND CAPITAL GENERATION

Agenda

Annex

45Agenda - FY 2018 Group Results Presentation

ANNEXBANCO BPM COMPLETED A SIGNIFICANT TRANSFORMATION

ANNEXDIGITAL & OMNICHANNEL TRANSFORMATION

L h a n c u f t h D i i t l d o e « g a a n O i h l m n c a n n e f i T t r a n s o r m a o n » p r o g r a m		4 0 Or iza t ion l ≈ g an a Un i ts 3 0 0 & o ve r fes ion ls inv lve d Pro s a o i 25 Ag le Te t-u am s se p € 4 0 m ln inv tm ts es en ≈ in 2 0 8 / 2 0 9 1 1
	M in O b j t ive a ec s - -
• • O M N I C H A N N E L S E R V I C E • •	O ic ha l les & m n nn e p ap er in Cu to Jo m a s m er ur ne y s an S im l i f ic t io d d ig p a n an Ca ta log ue O he tra t io d ha ing rc s n an s r t he ac ro ss g ro up f fe ing Re te O d Co m o r an n	d- to d de ig f s en -e n re s n o d to t cu s m er en g ag em en i ta l iza t io f Pr du t n o o c f ba k d ig i ta l ic W o e n se rv es io ta t Ce te lu t c n r ev o n
• N E W D I G I T A L S E R V I C E S • O C S O F U E D N S / M E M I D • C S A P	lec tro ic inv ic ing d E n o an tra de iva b les re ce Sm d ing d d ig i t Le ar n an l ie ts c n in fo io Ne t d w rm a n an op er S / i d Ca ing lo ba M E M p s g o g	d ig i ta l t f m an ag em en o l fo bu ine ta p ro ce sse s r s ss io ig i ic fo t ls d ta l a na se rv es r l
P S D 2- D R I V E N • D I G I T A L G / B A N K I N • S P A Y M E N T • O O E V L U T I N	l i f ic t io d Re q ua a n an re ne w i ing fo M b le ba k la t o n p rm bu ine to ) s ss cu s m er s Ne P S D 2- dr ive ic ( w n se rv es ic M ha t- Se d er c n rv es an lo t De ve p m en	l f is t ing ig i ta l d D a o ex an ( fo in iv i bo t h d du ls d s r a an to P F M / B F M ) ag g re g a r, ig i D ta l Pa ts y m en

ANNEXOUTPERFORMANCE OF ORIGINAL COST SYNERGIES: DRIVERS

Optimisation of Retail Network³: 360 additional branch closures

1. Including higher Solidarity Fund exits coming from the new agreement signed in June 2017.,

2. 1. The network, consistently with the perimeter underlying the Strategic Plan, does not include:
3. WeBank, Akros, Aletti (Italy and Switzerland) and other minor.
4. 1. Indicated in the Strategic Plan as ^a level that was potentially going to be considered beyond 2019, but which had not been embedded in the Plan.

ANNEXBANCO BPM: GROUP STRUCTURE AS AT 31/12/2018

ANNEXRECLASSIFIED BALANCE SHEET AS AT 31/12/2018

	A	B	C	ME MO	Ch A/ g.	C	Ch A/ g.	B
ifie ( ) Re cla d a ts € m ss sse	31 / 12/ 20 18	30 / 09 / 20 18	01 / 18 res 01 / 20 tat ed	31 / 12/ 17 ( 20 ) IAS 39	Va lue	%	Va lue	%
Ca sh d c h e iva len ts an as qu	922	80 7	97 7	97 7	-55	6 % -5,	115	14, 3 %
Lo nd ad d a t A C an s a va nc es me as ure	108 .20 8	111 .45 3	111 .04 5	112 .68 2	-2. 83 7	% -2, 6	-3. 24 5	% -2, 9
Lo nd ad to ba nk an s a va nc es s -	4.1 93	4.6 39	4.9 37	4.9 39	-74 3	-15 1% ,	-44 5	-9, 6 %
( *) Lo nd ad to sto an s a va nc es cu me rs -	104 .01 5	106 .81 5	106 .10 8	107 .74 3	-2. 094	% -2, 0	-2. 80 0	% -2, 6
Ot he r fi ial set na nc as s	36 .85 3	38 .75 9	34 .88 5	34 .53 3	1.9 68	5, 6 %	-1. 90 6	-4, 9 %
ed th h P As set at FV L s m ea sur rou g -	5.8 69	8.0 11	6.4 17	85 5.1	-54 8	-8, % 5	-2. 142	-26 % 7 ,
As set ed at FV th h O CI s m ea sur rou g -	15. 352	15. 86 0	16. 75 0	17. 129	-1. 39 9	-8, 3 %	-50 8	-3, 2%
ed C As set at A s m ea sur -	632 15.	14. 888	718 11.	12. 22 0	3.9 15	33 4% ,	744	0 % 5,
Eq ity inv est nts u me	1.4 34	1.3 79	1.2 57	1.3 49	177	14, 1%	55	4, 0 %
d e ipm Pro rty t pe an qu en	2.7 76	2.8 48	2.7 35	2.7 35	41	% 1, 5	-72	-2, % 5
Int ibl ts an g e a sse	1.2 78	1.2 85	1.2 97	1.2 97	-19	-1, 5 %	-7	-0, 5 %
set Tax as s	5.0 12	4.8 50	4.8 97	4.5 20	115	2, 3 %	163	3, 4%
for isc ion No t a ts he ld le d d t. o rat n-c urr en sse sa an on pe s	1.5 93	45	106	106	1.4 87	n.m	1.5 48	n.m
Ot he ts r a sse	2.3 89	2.4 59	3.0 07	3.0 07	-61 8	-20 6 % ,	-70	-2, 9 %
To tal	160 .46 5	163 .88 4	160 .20 6	16 1.2 07	25 9	0, 2%	-3. 42 0	-2, 1%
	A	B	C	ME MO	Ch A/ g.	C	Ch A/ g.	B
ifie iab ilit ies ( ) Re cla d l € m ss	31 / 12/ 20 18	30 / 09 / 20 18	01 / 18 res 01 / 20 tat ed	31 / 12/ 17 ( 20 IAS 39 )	Va lue	%	Va lue	%
Du e t o b ks an	31 .63 4	30 .97 9	27 .19 9	27 .19 9	4.4 34	16, 3 %	654	2, 1%
Dir t F d ing ec un	105 .22 0	107 .99 9	107 .52 5	107 .51 0	-2. 30 5	-2, 1%	-2. 779	-2, 6 %
D its fro sto ( **) ep os m cu me rs -	90 .19 8	91 .34 0	87 .84 8	87 .84 8	2.3 50	2, 7 %	-1. 142	-1, 2%
itie fin ial lia iliti ig. D eb t s nd b de at FV ec ur s a an c es s -	15. 022	16. 659	19. 67 7	19. 662	-4. 655	% -23 7 ,	-1. 63 7	% -9, 8
Ot he r fi ial lia b iliti de ign ate d a t F V na nc es s	7.2 29	8.4 84	8.7 04	8.7 08	-1. 47 6	-17 0 % ,	-1. 25 6	-14 8 % ,
Lia ility is ion b pr ov s	1.7 05	1.5 53	1.6 17	1.5 80	88	4% 5,	152	% 9, 8
Tax lia b iliti es	505	564	692	669	-18 6	-26 9 % ,	-59	-10 4% ,
Lia ilit ies iat ith fo b ed set s h eld le as so c w as r sa	3	0	0	0	3	n.m	3	n.m
Ot he r lia b iliti es	3.8 64	3.3 63	3.5 76	3.5 76	28 8	8, 1%	502	14, 9 %
Mi rity in ter est no s	46	52	58	63	-12	% -20 8 ,	-7	% -12 7 ,
Sh ho lde rs' ity are eq u	10. 25 9	10. 890	10. 83 5	11. 900	-57 5	-5, 3 %	-63 0	-5, 8 %
To tal	160 .46 5	163 .88 4	160 .20 6	16 1.2 07	25 9	0, 2%	-3. 42 0	-2, 1%

* "Customer loans" include Exodus Senior Notes.

** In the official Balance Sheet scheme, "Deposits from customers" as at 01/01/2018 and 31/12/2017, differently from data as at 30/09/2018 and 31/12/2018, include Custodian Bank (€3.7bn), which has beenclassified as discontinued operation as at 30/06/2018 and then sold as at 30/09/2018.

50Annex

ANNEXFY 2018 MAIN P&L ITEMS: COMPARISON EXCL. IFRS 9

	2 0 c o m p	1 8 I F R S 9 t d i t l n o r e c y b l i t h 2 0 1 7 I A S 3 9 a r a e w
€ m	A	B	C
		2 0 1 8	2 0 1 7	B / C
	2 0 1 8	-I F R S 9 p re	I A S 3 9	% ha c ng e
S C O N E T I N T E R E T I N M E	2, 2 9 3	2, 0 2 1	2, 3 1 1	-0 6 %
T O T A L I N C O M E	4, 7 7 3	4, 5 8 2	4, 4 8 4	2. 2 %
O G C O S S P E R A T I N T	-2 9 3 7 ,	-2 9 3 7 ,	-2 9 2 4 ,	-4 % 5
O O O O S P R F I T F R M P E R A T I N	9 8 0 1,	8 9 1, 7	6 0 1, 5	4. % 1 7
L O A N L O S S P R O V I S I O N S	-1 9 4 1 ,	-1 7 5 0 ,	-1 6 6 1 ,	% 5. 4
P R O F I T B E F O R E T A X	-1 3 0	-1 3 0	-2 3 0	% -4 3. 4
1 N E T I N C O M E	-5 7	-5 7	5 5 8	n. s.

Note:

1. Excluding Badwill and Impairment on goodwill and client relationship after tax

ANNEXFY 2018 RECLASSIFIED P&L

2018 IFRS9 not directly comparable with 2017 IAS 39

Re cla ssi fie d i tat t nc om e s em en ( in mi llio n) eu ro	20 18 FY ( ) IFR S9	20 FY 17 ( ) IAS 39
	Sta ted	Sta ted
Ne t in te t in res co me	2, 29 2.6	2, 11 3.4
Inc e ( los s) fro inv tm ts in cia te ied at uit om m es en as so s c arr eq y	15 9.5	16 6.0
t in div ide im ila r in Ne ter t, nd d s es an co me	2, 45 2.0	2, 27 9.5
Ne t fe nd iss ion in e a co mm co me	1, 84 8.8	1, 95 0.4
Ot he tin inc et r n op era g om e	38 9.8	98 .8
Ne t fi ial sul t na nc re	82 .4	15 5.0
Ot he rat ing in r o pe co me	2, 32 0.9	2, 20 4.3
To tal in co me	4, 77 2.9	4, 48 3.8
Pe el rso nn ex pe nse s	-1, 73 2.8	-1, 78 4.9
ini ive Ot he dm str at r a ex pe nse s	-81 6.5	-87 2.4
ort iza tio nd de cia tio Am n a pre n	-24 3.5	-26 6.9
tin Op ts era g c os	-2, 79 2.8	-2, 92 4.1
fit ( los s) fro tio Pro m op era ns	98 0.1 1,	9.6 1, 55
dju Ne t a stm ts lo s t ust en on an o c om ers	-1, 94 1.1	-1, 66 1.0
t a dju stm ts ot he ts Ne en on r a sse	3.3	-14 0.2
1 isio for ris ks d c ha Ne t p rov ns an rge s	-34 5.3	-13 .8
Pro fit ( los s) o n t he di al of uit nd ot he r in stm ts sp os eq y a ve en	17 3.4	25 .7
Inc e ( los s) be for e t fro nti ing tio om ax m co nu op era ns	-12 9.7	-22 9.6
Ta n i e f nti ing tio x o nc om rom co nu op era ns	16 2.8	92 .8
Sy ste mi ha fte r ta c c rge s a x	-10 0.2	-77 .3
Inc e ( los s) a fte r ta x f di tin d o rat ion om rom sc on ue pe s	0.9	76 2.3
e ( los s) a ttr ibu ta ble to ino rity in te ts Inc om m res	9.6	9.7
t in ( los s) for th eri od clu din dw ill & Ne Ba co me e p ex g	-56 .5	55
irm f g ill a ien ion shi Im t o dw nd cl t re lat pa en oo p		7.8
irm f g dw ill a nd cl ien lat ion shi Im t o t re pa en oo p	-2. 9	-1, 01 8
t in ( s) for eri Ne los th od co me e p	-59 .4	-45 9.8

Note:

1. Net provisions for risks and charges (€345.3m) include the estimate of charges to be incurred for the closure of more than 500 branches during the year, the higher provisions reported to make them compliant with the more stringent regulations on terms and conditions to be applied to customers forfees and commissions related to underwriting, credit lines, contingency funds for complaints and litigations, from a customer care perspective.

ANNEXFY 2018 NORMALIZED RECLASSIFIED P&L & ONE-OFF ITEMS

Normalized indicated in this slide simply exclude one-off items from stated figures, while they include the

IFRS9 and PPA effects line-by-line

	20 18 FY	20 18 FY
Re cla ssi fie d i tat t nc om e s em en ( in mi llio n) eu ro			off On e-	No ing ite d n-r ec urr ms an tra ord ina tem ic ch ex es
	Sta ted	ali d No rm se		ry sys arg
t in t in Ne te res co me	2.2 92 6 ,	2.2 92 6 ,	0, 0
e ( s) fro inv in cia ied uit Inc los tm ts te at om m es en as so s c arr eq y	15 9, 5	15 9, 5	0, 0
t in ter t, div ide nd d s im ila r in Ne es an co me	2.4 52 0 ,	2.4 52 0 ,	0, 0
t fe nd iss ion in Ne e a co mm co me	1.8 48 8 ,	1.8 48 8 ,	0, 0
Ot he et tin inc r n era om e	38 9, 8	76	31 3,	nsf of ins to im nd dI al of Tra An er ura nc e r es erv es a a sp os
op g		1 ,	6	Cu sto dia k n B an
t fi ial Ne sul t na nc re	82 4 ,	11 0, 2	-27 9 ,	Im irm t o n i nd ire ct e h eld th h t he FIT D pa en ex po sur ro ug
Ot he rat ing in r o pe co me	2.3 20 9 ,	2.0 35 1 ,	28 5, 7
To tal in co me	4.7 72 9 ,	4.4 87 2 ,	28 5, 7
Pe el rso nn ex pe nse s	-1. 73 2, 8	-1. 73 2, 8	0, 0
Ot he dm ini ive str at r a ex pe nse s	-81 6, 5	-79 3, 8	-22 6 ,	Co sts fo r in teg tio nd ot he ra n a r e xp en se s
ort iza tio nd de cia tio Am n a pre n	-24 3, 5	-19 0, 8	-52 7 ,	jus ibl in ibl Ad tm ts ta nd ta ts en on ng e a ng e a sse
Op tin ts era g c os	-2. 79 2, 8	-2. 71 7, 4	3 -75 ,
fit ( los s) fro tio Pro m op era ns	1.9 80 1 ,	69 1.7 7 ,	21 0, 4
Ne t a dju stm ts lo s t ust en on an o c om ers	-1. 94 1, 1	-1. 22 7, 2	-7 13, 9	Exo du nd AC E t ct ion 's t isio s a ran sa op -up pr ov ns
dju Ne t a stm ts ot he ts en on r a sse	3, 3	3, 3	0, 0
				Co sts fo r b ch cl dju stm ts sto ran os ure s, a en on cu m er
1 Ne t p isio for ris ks d c ha rov ns an rge s	-34 5, 3	6, 2	-35 6 1,	nd itio ch for lit iga tio nd isio for co ns, arg es n a pr ov ns
				sto cu m er ca re
fit ( los s) o he di al of uit nd he r in Pro n t ot stm ts sp os eq y a ve en	3, 4 17	0, 0	173 4 ,	ita ain fro Dis f st e i vip Ca l g l o ak n A d p m po sa op an
				Po lar e V ita d o the r in sti ts po an ve m en
e ( s) for fro nti ing tio Inc los be e t om ax m co nu op era ns	-12 9, 7	55 2, 0	-68 1, 7
n i e f nti ing tio Ta x o nc om rom co nu op era ns	16 2, 8	-13 4, 7	29 6 7,	ct lin ke d t o f isc al eff ts ing ite Im pa ec on no n-r ec urr m s
Sy ste mi ha fte r ta c c rge s a x	-10 0, 2	-81 8 ,	-18 4 ,	Ext rdi ntr ibu tio n t o R olu tio n f ds rao na ry co es un
e ( los s) a fte r ta x f di tin d o rat ion Inc om rom sc on ue pe s	0, 9	0, 0	0, 9	Ot he r
e ( los s) a ttr ibu ta ble to ino rity in te ts Inc om m res	9, 6	3 7,	2, 3	Ot he r
t in ( los s) for th eri od clu din dw ill & Ne Ba co me e p ex g	-56 5	34 2,	-39 9,
irm f g dw ill a nd cl ien lat ion shi Im t o t re pa en oo p	,	8	3

Note:

1. Net provisions for risks and charges (€345.3m) include the estimate of charges to be incurred for the closure of more than 500 branches during the year, the higher provisions reported to make them compliant with the more stringent regulations on terms and conditions to be applied to customers for fees and commissions related to underwriting, credit lines, contingency funds for complaints and litigations, from a customer care perspective.

53Annex

ANNEXQ4 2018 NORMALIZED RECLASSIFIED P&L & ONE-OFF ITEMS

Normalized figures indicated in this slide simply exclude one-off items from stated figures, while they

include the IFRS9 and PPA effects line-by-line

ssi fie d i Re cla tat t nc om e s em en	Q 4 2 01 8	Q 4 2 01 8		ing ite No d n-r ec urr ms an
( in mi llio n) eu ro	Sta ted	No ali d rm se	On off e-	ina ic tra ord tem ch ex ry sys arg es
Ne t in te t in res co me	55 4, 7	55 4, 7	0, 0
Inc e ( los s) fro inv tm ts in cia te ied at uit om m es en as so s c arr eq y	50 7 ,	50 7 ,	0, 0
t in div ide im ila r in Ne ter t, nd d s es an co me	60 5, 4	60 5, 4	0, 0
t fe iss ion in Ne nd e a co mm co me	46 9, 9	46 9, 9	0, 0
tin inc Ot he et r n op era g om e	21 1 ,	21 1 ,	0, 0
t fi ial sul Ne t na nc re	-73 9 ,	-46 0 ,	-27 9 ,	Im irm to f in dir t e he ld thr h t he FIT D pa en ec xp os ure ou g
ing in Ot he rat r o pe co me	41 7, 0	44 4, 9	-27 9 ,
tal in To co me	1.0 22 4 ,	1.0 50 3 ,	-27 9 ,
Pe el rso nn ex pe nse s	-42 2, 2	-42 2, 2	0, 0
Ot he dm ini str at ive r a ex pe nse s	-20 5, 7	-19 3, 5	-12 2 ,	Co sts fo r in te tio nd ot he gra n a r e xp en se s
Am ort iza tio nd de cia tio n a pre n	-97 1 ,	-45 9 ,	2 -5 1,	Ad jus tem nts ta ibl nd in ta ibl ts on ng e a ng e a sse
Op tin ts era g c os	-72 0 5,	-66 1, 5	-63 4 ,
Pro fit ( los s) fro tio m op era ns	29 7, 4	38 8, 7	-9 1, 3
Ne t a dju stm ts lo s t ust en on an o c om ers	-98 7, 3	-32 7, 4	-65 9, 9	isio "A CE " to p u p p rov ns
Ne t a dju stm ts ot he ts en on r a sse	4, 0	4, 0	0, 0
1 t p isio for ris ks d c ha Ne rov ns an rge s	-22 8 7,	-29 9 ,	-19 7, 9	Co sts fo r b ch cl dju stm ts sto ran os ure s, a en on cu m er nd itio ch for lit iga tio nd isio for co ns, arg es n a pr ov ns sto cu m er ca re
Pro fit ( los s) o n t he di al of uit nd ot he r in stm ts sp os eq y a ve en	5, 1	0, 0	5, 1	Ot he r
e ( s) for fro nti ing tio Inc los be e t om ax m co nu op era ns	-90 8, 6	35 4 ,	-94 3, 9
n i e f nti ing tio Ta x o nc om rom co nu op era ns	32 2, 4	-0, 8	32 3, 2	Im ct link ed to fis l e ffe cts ing ite pa ca on no n-r ec urr m s
Sy mi ha fte ste r ta c c rge s a x	-0, 7	-0, 7	0, 0
e ( los s) a fte r ta x f di tin d o rat ion Inc om rom sc on ue pe s	0, 0	0, 0	0, 0
Inc e ( los s) a ttr ibu ta ble to ino rity in te ts om m res	5, 8	3, 6	2, 1	Ot he r
Ne t in ( los s) for th eri od clu din Ba dw ill & Im irm t co me e p ex g pa en of od wi ll a nd cl ien t re lat ion shi go p	-58 1, 0	37 6 ,	-6 18, 6

Note:

Annex1. Net provisions for risks and charges (€227.8 mln) include the estimate of charges to be incurred for the closure of more than 500 branches during the year, the higher provisions reported to make them compliant with the more stringent regulations on terms and conditions to be applied to customers for fees and commissions related to underwriting, credit lines, contingency funds for complaints and litigations, from a customer care perspective.

54

ANNEXQUARTERLY ANALYSIS OF STATED RECLASSIFIED P&L

Due to the application of the IFRS9 principle, 2018 figures are only partially comparable with 2017

la i f ie d in ta te t Re c ss co m e s m en	Q 4 2 01 8	Q 3 2 01 8	Q 2 2 01 8	Q1 20 18	Q 4 2 01 7	Q 3 2 01 7	Q 2 2 01 7	Q1 20 17
( in i l l io ) eu ro m n	( S 9 ) IFR	( S 9 ) IFR	( S 9 ) IFR	( S 9 ) IFR	( IAS 39 )	( IAS 39 )	( IAS 39 )	( IAS 39 )
t in t in Ne te res co me	55 4.7	55 7.8	58 5.0	59 5.1	52 8.8	52 4.9	51 1.1	54 8.6
e ( los s) fro inv tm ts in iat rrie d a t Inc om m es en ass oc es ca uit eq y	50 .7	32 .8	33 .4	42 .6	45	.2 38 .9	40 .4	41 .6
t in div ide im ila r in Ne ter est nd d s an co me ,	60 5.4	59 0.6	61 8.4	63 7.7	57 3.9	56 3.9	55 1.5	59 0.2
Ne t fe nd iss ion in e a co mm co me	46 9.9	45 1.4	45 1.0	47 6.5	47 2.1	45 8.9	50 3.6	51 5.8
tin inc Ot he et r n op era g om e	21 .1	21 4.5	130 .0	24 .2	24	.7 29 .4	14 .4	30 .3
Ne t fi ial sul t na nc re	-73 .9	46 .8	80 .2	29 .3	41	.9 13 .0	63 .3	36 .9
Ot he rat ing in r o pe co me	41 7.0	71 2.7	66 1.2	53 0.0	53 8.7	50 1.3	58 1.3	58 2.9
in To tal co me	10 22 .4	13 03 .2	12 79 .6	11 67 .7	11 12	.7 10 65 .1	11 32 .8	11 73 .1
Pe el rso nn ex pe nse s	-42 2.2	-43 1.5	-43 7.1	-44 2.1	-42 0.8	-45 0.6	-45 6.7	-45 6.7
inis tiv Ot he dm tra r a e e xp en se s	-20 5.7	-19 6.2	-20 3.1	-21 1.5	-20 4.7	-23 6.3	-23 3.1	-19 8.3
ort iza tio nd de cia tio Am n a pre n	-97 .1	-49 .5	-49 .0	-47 .9	-95	-62 .2 .5	-56 .4	-52 .9
Op tin ost era g c s	-72 5.0	-67 7.1	-68 9.2	-70 1.5	-72 1.0	-74 9.1	-74 6.2	-70 7.9
Pro fit ( los s) fro tio m op era ns	29 7.4	62 6.1	59 0.4	46 6.2	39 1.7	31 6.1	38 6.6	46 5.2
dju lo Ne t a stm ts s t ust en on an o c om ers	-98 7.3	-26 7.4	-36 0.2	-32 6.2	-67 3.1	-34 0.8	-35 4.5	-29 2.5
Ne t a dju stm ts ot he ts en on r a sse	4.0	-1. 3	-1. 6	2.2	-12	.7 -48 .3	-70 .8	-8. 4
isio for ris Ne t p ks d c ha rov ns an rge s	-22 7.8	-71 .9	-20 .7	-25 .0	-9.	2 4.6	-9. 6	0.5
fit ( los s) o n t he di l o f e ity d o the r in stm ts Pro sp osa qu an ve en	5.1	-10 .3	-1. 1	179 .7	12 .1	0.3	-3. 8	17 .1
Inc e ( los s) be for e t fro ntin uin rat ion om ax m co g o pe s	-90 8.6	27 5.2	20 6.8	29 6.9	-29 1.3	-68 .1	-52 .1	18 2.0
Tax in fro nti ing tio on co me m co nu op era ns	32 2.4	-72 .3	-61 .3	-25 .9	10 1.8	34 .8	1.1	-44 .9
Sy ste mi ha fte r ta c c rge s a x	-0. 7	-32 .1	-18 .4	-49 .0	-6.	2 -26 .1	0.0	-45 .0
e ( los s) a fte r ta x f di tin d o rat ion Inc om rom sc on ue pe s	0.0	0.9	0.0	0.0	70 0.0	16 .5	25 .8	20 .0
Inc e ( los s) a ttr ibu ta ble to ino rity in te ts om m res	5.8	0.3	2.2	1.4	0.9	1.4	4.3	3.1
t in ( los s) for th eri od clu din dw ill & Ne Ba co me e p ex g	-58 1.0	1.9 17	12 9.3	22 3.3	50 5.1	-41 .5	-21 .0	5.2 11
irm f g ill a ien ion shi Im t o dw nd cl t re lat pa en oo p

Including PPA line-by-line

ANNEXQUARTERLY ANALYSIS OF STATED RECLASSIFIED P&L

Due to the application of the IFRS9 principle, 2018 figures are only partially comparable with 2017

Re la i f ie d inc ta te t c ss om e s m en	Q 4 2 01 8	Q 3 2 01 8	Q 2 2 01 8	Q 1 2 01 8	Q 4 2 01 7	Q 3 2 01 7	Q 2 2 01 7	Q 1 2 01 7
( in i l l io ) eu ro m n	( S 9 ) IFR	( S 9 ) IFR	( S 9 ) IFR	( S 9 ) IFR	( IAS 39 )	( IAS 39 )	( IAS 39 )	( IAS 39 )
t in in Ne ter est co me	53 4.3	53 7.2	54 1.7	53 6.0	52 7.7	51 4.9	50 5.2	53 4.5
Inc ( los ) fro inv est nts in iat rrie d a t e ity om e s m me ass oc es ca qu	50 .7	32 .8	33 .4	42 .6	45 .2	38 .9	40 .4	41 .6
t in ter est d ivid d a nd im ila r in Ne en s co me ,	58 5.0	0.0 57	57 5.1	8.6 57	2.8 57	3.8 55	54 5.6	6.1 57
Ne t fe nd iss ion in e a co mm co me	46 9.9	45 1.4	45 1.0	47 6.5	47 2.1	45 8.9	50 3.6	51 5.8
tin inc Ot he et r n op era g om e	31 .6	22 5.1	140 .5	34 .6	36 .4	41 .0	25 .6	42 .2
Ne t fi ial sul t na nc re	-73 .9	46 .8	80 .2	29 .3	41 .9	13. 0	63 .3	36 .9
Oth ting inc er op era om e	42 7.6	72 3.2	67 1.7	54 0.4	55 0.4	51 2.9	59 2.5	59 4.8
in To tal co me	10 12 .6	12 93 .3	124 6.8	11 19 .0	112 3.2	10 66 .8	113 8.1	11 70 .9
Pe el rso nn ex pe nse s	-42 2.2	-43 1.5	-43 7.1	-44 2.1	-42 0.8	-45 0.6	-45 6.7	-45 6.7
Ot he dm inis tra tiv r a e e xp en ses	-20 5.7	-19 6.2	-20 3.1	-21 1.5	-20 4.7	-23 6.3	-23 3.1	-19 8.3
iza tio nd de iat ion Am ort n a pre c	-94 .6	-46 .5	-46 .1	-45 .1	-91 .7	-59 .0	-53 .3	-49 .7
Op ting sts era co	-72 2.5	-67 4.2	-68 6.3	-69 8.6	-71 7.2	-74 5.9	-74 3.1	-70 4.7
fit ( ) fro tio Pro los s m op era ns	29 0.1	61 9.1	56 0.5	42 0.4	40 6.0	32 0.8	39 5.0	46 6.2
d jus n lo Ne t a tm ts o s to sto en an cu me rs	-98 7.3	-26 7.4	-36 0.2	-32 6.2	-73 5.8	-38 2.0	-40 3.8	-33 6.6
Ne t a d jus tm ts o the ts en n o r a sse	4.0	-1. 3	-1. 6	2.2	-12 .7	-48 .3	-70 .8	-8. 4
is ion for ris Ne t p ks d c ha rov s an rge s	-22 7.8	-71 .9	-20 .7	-25 .0	-9. 2	4.6	-9. 6	0.5
fit ( los ) o he d isp l o f e ity d o the r in Pro n t stm ts s osa qu an ve en	5.1	-10 .3	-1. 1	179 .7	12. 2	0.2	-2. 8	17. 1
Inc ( los ) be for e t fro ntin ing tio om e s ax m co u op era ns	-91 5.9	26 8.2	17 6.9	25 1.1	-33 9.6	-10 4.7	-92 .1	138 .9
Tax in fro nti ing tio on co me m co nu op era ns	32 4.8	-69 .9	-51 .3	-10 .7	117 .9	47 .0	14. 4	-30 .6
Sys ic ch fte tem r ta arg es a x	-0. 7	-32 .1	-18 .4	-49 .0	-6. 2	-26 .1	0.0	-45 .0
( los ) a fte r ta x f d isc tin d o rat ion Inc om e s rom on ue pe s	0.0	0.9	0.0	0.0	70 0.0	16. 5	25 .8	20 .0
Inc ( los ) a ttr ibu ta ble to ino rity in ter est om e s m s	5.8	0.3	2.2	1.4	0.9	1.4	4.3	3.1
Ne t in ( los ) for the rio d e lud ing PP A, Ba dw ill & co me s pe xc irm t o f g dw ill a nd cl ien t re lat ion sh ip Im pa en oo	-58 6.0	16 7.3	10 9.3	192 .7	47 2.9	-65 .8	-47 .7	86 .4
ice ion ( ) a fte Pu rch Pr Al loc at PPA r ta ase x	4.9	4.7	19. 9	30 .6	32 .2	24 .3	26 .7	28 .8
Ne t in clu d ing Ba dw ill & Im irm t o f g dw ill a nd co me ex pa en oo cl ien t re lat ion sh ip	-58 1.0	17 1.9	12 9.3	22 3.3	50 5.1	-41 .5	-21 .0	115 .2

ANNEXFY 2018 RECLASSIFIED P&L – IFRS 9 AND PPA IMPACTS

	20 18 FY	o/ w	S 9 IFR	( B+ C)	20 18 FY	o/ w	FY 20 18
Re la i f ie d in ta te t c ss co m e s m en ( in i io ) l l eu ro m n	Sta ted	PP A B ad loa ns	Re cla ssi fic ati on t im ct ne pa		-IF RS 9 pre	PP A	-FR S9 d w ith t pre an ou ine lin PP A l by e
Ne t in te t in res co me	2, 29 2.6	119 .6	71 .3	190 .9	2,1 01 .6	23 .7	2, 07 8.0
Inc e ( los s) fro inv tm ts i cia tes rrie d a t om m es en n a sso ca uit eq y	159 .5				159 .5	0.0	159 .5
t in ter est div ide nd d s im ila r in Ne an co me ,	2, 45 2.0	9.6 11	.3 71	19 0.9	2, 26 1.1	23 .7	2, 23 7.4
Ne t fe nd iss ion in e a co mm co me	1, 84 8.8				1, 84 8.8	0.0	1, 84 8.8
Ot he et tin inc r n op era g om e	38 9.8	0.0			38 9.8	-42 .1	43 1.9
t fi ial sul Ne t na nc re	82 .4				82 .4	0.0	82 .4
Ot he rat ing in r o pe co me	2, 32 0.9	0.0	0.0	0.0	2, 32 0.9	-42 .1	2, 36 3.0
To tal in co me	4, 77 2.9	11 9.6	71 .3	19 0.9	4, 58 2.0	-18 .4	4, 60 0.4
Pe el rso nn ex pe nse s	-1, 73 2.8				-1, 73 2.8	0.0	-1, 73 2.8
Ot he dm inis tra tiv r a e e xp en ses	-81 6.5				-81 6.5	0.0	-81 6.5
iza tio cia tio Am ort nd de n a pre n	-24 3.5				-24 3.5	-1 1.2	-23 2.3
Op tin ost era g c s	-2, 79 2.8	0.0	0.0	0.0	-2, 79 2.8	-11 .2	-2, 78 1.6
Pro fit ( los s) fro tio m op era ns	1, 98 0.1	11 9.6	71 .3	19 0.9	1, 78 9.2	-29 .6	1, 81 8.8
Ne t a dju stm ts lo s t ust en on an o c om ers	-1, 94 1.1	-1 19. 6	-71 .3	-19 0.9	0.2 -1, 75	119 .6	86 9.8 -1,
Ne t a dju stm ts ot he ts en on r a sse	3.3				3.3	0.0	3.3
isio for ris Ne t p ks d c ha rov ns an rge s	-34 5.3				-34 5.3	0.0	-34 5.3
fit ( s) o di f e ity r in Pro los n t he l o d o the stm ts sp osa qu an ve en	173 .4				173 .4	0.0	173 .4
e ( los s) be for e t fro nti ing tio Inc om ax m co nu op era ns	-12 9.7	0.0	0.0	0.0	-12 9.7	90 .0	-21 9.7
Tax in fro nti ing tio on co me m co nu op era ns	162 .8	0.0			162 .8	-29 .9	192 .8
mi fte Sy ste ha r ta c c rge s a x	-10 0.2				-10 0.2	0.0	-10 0.2
Inc e ( los s) a fte r ta x f di tin d o rat ion om rom sc on ue pe s	0.9				0.9	0.0	0.9
e ( los s) a ibu ble ino rity in Inc ttr ta to te ts om m res	9.6				9.6	0.0	9.6
t in ( los s) for th eri od clu din dw ill & Ne Ba co me e p ex g Im irm t o f g dw ill a nd cl ien t re lat ion shi pa en oo p	-56 .5	0.0	0.0	0.0	-56 .5	60 .1	6.6 -11

ANNEXQ4 2018 RECLASSIFIED P&L – IFRS 9 AND PPA IMPACTS

	A	B	C		A- ( B+ C)	D	A- ( B+ C+ D)
	Q4 20 18	o/	IFR S 9 w	Q4 20 18		o/ w	Q4 20 18
i f ie in Re la d ta te t c ss co m e s m en ( in i l l io ) eu ro m n	Sta ted	PP A B ad loa ns	fic Re cla ssi ati on t im ct ne pa	( C) B+	Pre -IF RS9	PP A	ith -IF RS9 d w t pre an ou PP A l ine by lin e
Ne t in te t in res co me	55 4.7	21 .3	8.8	30 .1	52 4.6	-0. 9	52 5.5
e ( los s) fro inv est nts in iat rrie d a t e ity Inc om m me ass oc es ca qu	50 .7				50 .7	0.0	50 .7
Ne t in ter est div ide nd d s im ila r in an co me ,	60 5.4	21 .3	8.8	30 .1	57 5.3	-0. 9	57 6.1
Ne t fe nd issi in e a co mm on co me	46 9.9				46 9.9	0.0	46 9.9
Ot he et tin inc r n op era g om e	21 .1				21 .1	-10 .6	31 .6
Ne t fi ial sul t na nc re	-73 .9				-73 .9	0.0	-73 .9
ing in Ot he rat r o pe co me	41 7.0	0.0	0.0	0.0	41 7.0	-10 .6	42 7.6
tal in To co me	10 22 .4	21 .3	8.8	30 .1	99 2.3	.4 -11	10 03 .8
Pe el rso nn ex pe nse s	-42 2.2				-42 2.2	0.0	-42 2.2
Ot he dm inis tra tiv r a e e xp en ses	-20 5.7				-20 5.7	0.0	-20 5.7
ort iza tio nd de cia tio Am n a pre n	-97 .1				-97 .1	-2. 5	-94 .6
Op tin ost era g c s	-72 5.0	0.0	0.0	0.0	-72 5.0	-2. 5	-72 2.5
Pro fit ( los s) fro tio m op era ns	29 7.4	21 .3	8.8	30 .1	26 7.3	-13 .9	28 1.3
dju lo Ne t a stm ts s t ust en on an o c om ers	-98 7.3	-2 1.3	-8. 8	-30 .1	-95 7.2	21 .3	-97 8.4
dju Ne t a stm ts ot he ts en on r a sse	4.0				4.0	0.0	4.0
Ne t p isio for ris ks d c ha rov ns an rge s	-22 7.8				-22 7.8	0.0	-22 7.8
Pro fit ( los s) o n t he di l o f e ity d o the r in stm ts sp osa qu an ve en	5.1				5.1	0.0	5.1
e ( los s) be for e t fro ntin uin rat ion Inc om ax m co g o pe s	-90 8.6	0.0	0.0	0.0	-90 8.6	7.3	-91 5.9
Tax in fro nti ing tio on co me m co nu op era ns	32 2.4				32 2.4	-2. 4	32 4.8
mi fte Sy ste ha r ta c c rge s a x	-0. 7				-0. 7	0.0	-0. 7
Inc e ( los s) a fte r ta x f di tin d o rat ion om rom sc on ue pe s	0.0				0.0	0.0	0.0
Inc e ( los s) a ttr ibu ta ble to ino rity in te ts om m res	5.8				5.8	0.0	5.8
Ne t in ( los s) for th eri od clu din Ba dw ill & Im irm t co me e p ex g pa en of od wi ll a nd cl ien t re lat ion shi go p	-58 1.0	0.0	0.0	0.0	-58 1.0	4.9	-58 6.0

ANNEXIFRS9 RECLASSIFICATION OF ITEMS IN FY 2018

* IFRS9 Adjustments include Time value reversal of Bad Loans and Accrual interest on net UTP

ANNEXCUSTOMER LOAN ANALYSIS

Retail and SME-oriented banking group, with franchise concentrated in Northern Italy

Breakdown of net loans by customer segment at 31/12/2018

Breakdown of net loans by geographical area at 31/12/2018

• 27.3% of customer loans in relation to the Household segment.
• Corporates¹, excluding Large Corporates, account for 61.9% of the loan book and the average loan ticket is small, coming in at about €287K.
• 69.1% of the portfolio is concentrated in the wealthiest areas of the Country.

Note:

This analysis of Total Net Customer Loans excludes the Exodus Senior Notes.

1. Non-financial companies (mid-corporate and small business) and financial companies. Includes also €5.5bn of Repos, mainly with Cassa di Compensazione e Garanzia.

ANNEXFOCUS ON PERFORMING CUSTOMER LOANS

Net Performing Loan breakdown by Product as at 31/12/2018

Net Performing Loan breakdown by Product as at 30/09/2018

Net Core performing customer loans at €88.6mld, at 91% of total Performing loans

ANNEXCREDIT QUALITY DETAILS

FY 2018 data exclude Bad Loans to be disposed with the ACE project and Profamily loans, classified as Discontinued Operations as at 31/12/2018

		3 / 2 / 2 0 8 1 1 1	( S 9 ) I F R
	Gr os s e xp os ure	d j tm ts A us en	Co ve ra g e	t e Ne xp os ure
Ba d Lo an s	3. 9 3 9	2. 3 4 8	% 5 9, 6	1. 5 9 1
l i ke ly to Un p ay	7. 7 6 8	2. 7 2 0	% 3 5, 0	0 4 8 5.
Pa t Du s e	0 6 1	9 1	% 1 7, 5	8 8
No fo ing Lo n- p er rm an s	8 4 1 1. 1	0 8 5. 7	4 3, % 1	6. 7 2 7
fo ing Pe Lo r rm an s	9 6 9 7. 5	3 7 1	0, 3 8 %	9 2 8 8 7.
To ta l Cu to Lo s m er an s	1 0 9. 4 7 3	5. 4 5 8	% 5, 0	1 0 4. 0 1 5
		3 0 / 0 9 / 2 0 1 8	( I F R S 9 )
	Gr os s e xp os ure	j A d tm ts us en	Co ve ra g e	Ne t e xp os ure
Ba d Lo an s	1 0. 0 7 9	6. 5 5 3	% 6 5, 0	3. 5 2 6
Un l i ke ly to p ay	8. 2 9 3	2. 7 9 0	% 3 3, 6	5. 5 0 4
Pa t Du s e	1 1 3	2 0	1 7, 7 %	9 3
fo ing No Lo n- p er rm an s	8. 4 8 1 5	9. 3 6 3	0, 6 % 5	9. 2 3 1
fo ing Pe Lo r rm an s	9 8. 0 7 1	3 7 9	% 0, 3 9	9 7. 6 9 2
To ta l Cu to Lo s m er an s	1 1 6. 5 5 7	9. 7 4 2	8, 4 %	1 0 6. 8 1 5
	0 1 / 0 1 / 2 0 1 8 ( I F R S 9 ) ta te d re s
	Gr os s e xp os ure	A d j tm ts us en	Co ve ra g e	Ne t e xp os ure
Ba d Lo an s	1 5. 7 9 4	1 0. 5 5 2	6 6, 8 %	5. 2 4 2
Un l i ke ly to p ay	9. 2 2 3	2. 9 5 0	3 2, 0 %	6. 2 7 3
Pa t Du s e	9 5	1 5	1 5, 7 %	8 0
fo ing No Lo n- p er rm an s	2 5. 1 1 2	1 3. 5 1 7	5 3, 8 %	1 1. 5 9 5
Pe fo ing Lo r rm an s	9 4. 8 8 9	3 7 6	0, 4 0 %	9 4. 5 1 3
To ta l Cu to Lo s m er an s	1 2 0. 0 0 2	1 3. 8 9 3	1 1, 6 %	1 0 6. 1 0 8
	3 1 / 1 2 / 2 0 1	7 ( I A S 3 9 ) - E X C L U D I N	G C U S T O M E R D E B T S E C	U R I T I E S
	Gr os s e xp os ure	j A d tm ts us en	Co ve ra g e	Ne t e xp os ure
Ba d Lo an s	1 5. 7 9 4	9. 3 0 6	% 5 8, 9	6. 4 8 8
i Un l ke ly to p ay	9. 5 4 6	3. 0 8 7	3 2, 3 %	6. 4 5 9
Pa t Du s e	9 5	1 5	% 1 5, 7	8 0
fo ing No Lo n- p er rm an s	2 4 3 5. 5	2. 4 0 8 1	4 8, 8 %	3. 0 2 1 7
fo ing Pe Lo r rm an s	9 5. 0 1 8	3 0 3	% 0, 3 2	9 4. 6 7 1
To ta l Cu to Lo s m er an s	1 2 0. 4 5 3	1 2. 7 1 0	1 0, 6 %	1 0 7. 7 4 3

2018 data refer to Loans and advances to customers measured at Amortized Cost.

€ ^m

Starting from 30/06/2018, Performing loans include also the Exodus Senior Notes.

2017 data restated for the exclusion of Customer Debt Securities.

62Annex

ANNEXCAPITAL POSITION IN DETAIL

P H A S E D I N C A P I T A L ( % ) € / d P O S I T I O N m a n	3 1 / 1 2 / 2 0 1 8 P F r o o r m a	3 1 / 1 2 / 2 0 1 8 S t t d a e	3 0 / 0 9 / 2 0 8 1	R W A C O M P O S I T I O N € / bn	3 1 / 1 2 / 2 0 1 8 fo Pro	3 1 / 1 2 / 2 0 1 8 S ta te d	3 0 / 0 9 / 2 0 8 1
i C E T 1 C t l a p a	8, 4 7 5	7, 7 5 5	8, 6 5 2	( )	rm a
C i t l T 1 a p a	8, 6 0 9	8 8 9 7,	8, 8 7 7	C C O R E D I T & U N T E R P A R T Y	4. 9 5	6. 3 5	5 7.
l C i l T t t o a a p a	0, 6 3 1 1	9, 4 4 2	0, 4 4 6 1	R I S K			0
				f w ic h h: S ta da d o n r	2 8. 1	2 7. 7	2 8. 4
R W A	6 2, 8 8 2	6 4, 3 2 5	6 0 8 5, 5	S M A R K E T R I K	9 1.	9 1.	2. 4
C E T 1 R t i a o	1 3. 4 8 %	1 2. 0 6 %	1 3. 2 1 %	O P E R A T I O N A L R I S K	5. 9	5. 9	5. 9
i T 1 R t a o	% 1 3. 6 9	% 1 2. 2 6	% 1 3. 4 1	C V A	0. 2	0. 2	0. 2
t l C i t l t i T R o a a p a a o	6. 6 % 1 1	4. 6 8 % 1	9 % 1 5. 5	T O T A L	6 2. 9	6 4. 3	6 5. 5

F U L L Y P H A S E D C A P I T A L ( € / d % ) O S O P I T I N m a n	3 1 / 1 2 / 2 0 1 8 P F r o o r m a	3 1 / 1 2 / 2 0 1 8 S t t d a e	3 0 / 0 9 / 2 0 8 1	R W A C O M P O S I T I O N ( € / bn )	3 1 / 1 2 / 2 0 1 8 fo Pro rm a	3 1 / 1 2 / 2 0 1 8 S ta te d	3 0 / 0 9 / 2 0 1 8
C C i t l E T 1 a p a	2 2 4 7,	6, 4 0 6	3 0 4 7,
i T 1 C t l a p a i T t l C t l o a a p a	7, 2 2 8 8, 7 7 7	6, 4 1 0 7, 9 5 9	7, 3 0 9 8, 9 6 3	C C O R E D I T & U N T E R P A R T Y R I S K	4. 6 5	6. 0 5	6. 5 7
				f w h ic h: S da d ta o n r	2 8 7.	2 4 7.	2 8. 4
R W A	6 2, 5 9 3	6 4, 0 3 5	6 5, 2 1 8	M A R K E T R I S K	1. 9	1. 9	2. 4
C i E T 1 R t a o	4 % 1 1. 5	0. 0 0 % 1	2 0 % 1 1.	O P E R A T I O N A L R I S K	5. 9	5. 9	5. 9
i T 1 R t a o	% 1 1. 5 5	0. 0 % 1 1	2 % 1 1. 1	C V A	0. 2	0. 2	0. 2
l C i l i T t t R t o a a p a a o	4. 0 2 % 1	2. 4 3 % 1	3. 4 % 1 7	O T T A L	6 2. 6	6 4	6 2 5.

Notes:

•

•

All ratios include the net income of the period.

31/12/2018 Proforma ratios include capital management actions already signed and to be finalized by H1 2019 and are prior to any expected impact from the IFRS 16 FTA.

63Annex

CONTACTS FOR INVESTORS AND FINANCIAL ANALYSTS

I N V E S T O R R E L A T I O N S

b l i R t P o e r o e r o n a g o	3 9- 0 2- 9 4 2 0 9 0 7 7. +
T L o m u c a s s e n	3 9- 0 4 5- 8 6 7. 5 5 3 7 +
i i A R r n e s c a s s	3 9- 0 2- 9 4 2 0 9 7 7. 1 +
S i l i i L v a e o n	3 9- 0 4 8 6 6 3 5- 7. 5 1 +
i A d A t n r e a g o s	3 9- 0 2- 9 4 7 7. 2 0 9 2 +

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