Dovalue

Annual Report • Mar 28, 2018

2017 CONSOLIDATED REPORTS AND ACCOUNTS

SERVICING | LENDING | SOLUTIONS

2017 CONSOLIDATED REPORTS AND ACCOUNTS

Registered office: Piazzetta Monte, 1 – 37121 Verona Share capital € 41,280,000.00 fully paid-up Bank registered in the Register of Banks ABI code no. 10639 Parent Company of the doBank Banking Group registered in the Register of Banking Groups – code no. 10639 Registered in the Company Register of Verona, Tax ID no. 00390840239 and VAT registration no. 02659940239 Member of the National Interbank Deposit Guarantee Fund www.dobank.com

CONTENTS

GOVERNING AND CONTROL BODIES _____________ 4
GROUP STRUCTURE ____________ 5
REPORT ON OPERATIONS ____________ 6
CONSOLIDATED FINANCIAL STATEMENTS ________ 31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ______ 38
PART A – ACCOUNTING POLICIES _________ 39
PART B – CONSOLIDATED BALANCE SHEET _______ 66
PART C – CONSOLIDATED INCOME STATEMENT _________ 89
PART D – CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ____ 103
PART E - INFORMATION ON RISKS AND RISK MANAGEMENT POLICIES ____ 105
PART F – CONSOLIDATED SHAREHOLDERS' EQUITY __________ 130
PART G – BUSINESS COMBINATIONS ___________ 140
PART H -RELATED-PARTY TRANSACTIONS ___________ 143
PART I – SHARE-BASED PAYMENT ________ 146
PART L – SEGMENT REPORTING __________ 148
ANNEX 1 – TABLE OF FEES FOR THE YEAR FOR SERVICES PROVIDED BY THE AUDITING FIRM AND BY ENTITIES BELONGING TO THE AUDITING FIRM NETWORK EY S.P.A. ________ 150
ANNEX 2 – COUNTRY-BY-COUNTRY REPORTING ______ 152
CERTIFICATIONS AND REPORTS ON THE CONSOLIDATED FINANCIAL STATEMENTS _____ 154
CERTIFICATION OF THE FINANCIAL REPORTING OFFICER INDEPENDENT AUDITOR'S REPORT

GOVERNING AND CONTROL BODIES

BOARD OF DIRECTORS

Chairman	Giovanni Castellaneta
CEO	Andrea Mangoni
Directors	Fabio Balbinot Edovige Catitti (2) (5)
	Francesco Colasanti (2) (4)
	Nunzio Guglielmino (3) (6)
	Giovanni Lo Storto (1) (4) (6)
	Giuseppe Ranieri (6)
	Charles Robert Spetka

BOARD OF STATUTORY AUDITORS
Chairman	Francesco Mariano Bonifacio (7)
Standing Auditors	Massimo Fulvio Campanelli (8)
	Nicola Lorito (8)
Alternate Auditors	Maurizio De Magistris
	Giovanni Parisi

EY S.p.A.

Financial Reporting Officer Mauro Goatin

At the date this Consolidated Report was approved

Note

GROUP STRUCTURE

The following chart shows the composition of the doBank Group as at December 31, 2017:

doBank was formed in 2015 from the acquisition, under the leadership of Fortress, of Italy's two largest independent servicers.

In 2016, doBank acquired 100% of Italfondiario, one of Italy's leading managers of performing and non-performing receivables on an outsourcing basis: the doBank Group was born, a market leader with more than 17 years of experience in the sector in Italy.

REPORT ON OPERATIONS

INTRODUCTION

The summary results and performance-financial indicators are based on data draw from the accounts and are used in the monitoring of performance by management and in management reporting. They are also consistent with the most commonly used metrics in the sector, ensuring the comparability of the figures presented.

The performance figures for the year ended December 31, 2017 are compared with the pro forma figures for 2016 (indicated in the tables with "2016 PF" or "31/12/2016 PF"), which were prepared on the basis of the instructions in Consob Notice no. DEM/1052803 of July 5, 2001, in order to retrospectively reflect the significant effects of the extraordinary transactions that took place in the second half of 2016 and therefore not reflected in the accounts at December 31, 2016: (i) the acquisition of 100% of Italfondiario; (ii) the derecognition of the loan portfolio (the "Romeo Transaction"); (iii) the recognition of the effects of the servicing contract for the same securitised portfolio; and (iv) the disposal of the investment in Immobiliare Veronica 84 in liquidazione on September 30, 2016, as if those transactions had taken place on January 1, 2016.

A pro forma consolidated balance sheet has not been prepared as those transactions were completed by December 31, 2016 and, consequently, are already reflected in the consolidated balance sheet at December 31, 2016 included in the 2016 Consolidated Reports and Accounts.

THE GROUP'S BUSINESS

The doBank Group is a leader in Italy in the management of primarily non-performing loans for banks, investors and public and private financial institutions (Servicing), with a portfolio under management of about €77 billion (Gross Book Value) at the end of 2017. The doBank Group also provides ancillary commercial, real estate and legal products and services (Ancillary Products) as well as engaging in other minor banking activities, which mainly regard the management, purchase and sale of non-performing loans.

Within the Group, doBank and its subsidiary Italfondiario perform Special and Master Servicing activities, while Ancillary Products connected with recovery activities are offered through other companies (IBIS and doRealEstate) or internal units (Judicial Management).

Within the Servicing business, the services offered by the doBank Group include, among others:

• "Collection and Recovery": services comprising all loan administration, management and recovery activities, utilising in court and out-of-court recovery processes for and on behalf of third parties with regard to portfolios of performing, unlikely-to-pay (UTP) and non-performing loans (NPL, bad loans);
• "Due Diligence": services including the collection and organisation of information in data room environments as well as the analysis and assessment of loan portfolios for the preparation of business plans for collection and recovery activities;
• "Structuring": services including structuring securitisation transactions under Law 130/1999 as well as performing the role of authorized entity in securitisation transactions;
• "Co-investment": activities of co-investment in loan portfolios in partnership with major financial investors, where such activities are instrumental in obtaining servicing contracts. This business involves taking minority positions in securities issued by securitisation vehicles governed by Law 130/1999.

The Ancillary Products connected with recovery activities include, among others, the collection, processing and provision of commercial, real estate and legal information relating to debtors as well as the provision of legal services. Among the minor activities, the Group also offers selected banking products, primarily linked to its Servicing activities, such as granting mortgage loans, mainly in foreclosure auctions, and managing deposit accounts for selected clients, which together are designated Ancillary Products and Other Minor Activities.

Both doBank and Italfondiario, in their capacity as special servicers, have been rated "RSS1- /CSS1-" by Fitch Ratings, and "Strong" by Standard & Poor's. The Servicer Ratings assigned to doBank and Italfondiario are the highest of those assigned to Italian operators in the sector. In addition, these ratings were assigned to doBank and Italfondiario back in 2008, before any other operator in the industry in Italy. In 2017, doBank was also assigned a Master Servicer rating of "RMS2/CMS2/ABMS2" by Fitch Ratings.

The doBank Group has long been a major partner of leading Italian and foreign financial institutions and institutional investors. The Group's customer base, which has further diversified in 2017, can be divided into two main categories that reflect the type of activity carried out: (i) Banks, for which the Group mainly performs "Collection and Recovery" activities and (ii) Investors, for which doBank also carries out "Due Diligence" and "Structuring" activities as well as "Collection and Recovery". doBank offers both groups of customers the entire range of Ancillary Products connected with Recovery activities.

MACROECONOMIC ENVIRONMENT

In 2017 the main indicators of economic activity in Italy continued to improve, albeit at growth rates that remain well below the European average.

According to the latest OECD forecasts,¹ the GDP of the euro area countries increased by 2.4% in 2017 and will expand by 2.2% in the current year and 1.9% in 2019. Italy's growth will be slower, having closed 2017 with an increase of 1.6%, which is forecast to slow to 1.5% in 2018 and 1.3% in 2019.

Nevertheless, the trend in Italian GDP in 2017 showed a significant acceleration compared with the previous year (+1.1% in 2016), buoyed by private consumption (+1.4%), the main component of domestic demand, investment and exports. The improvement in the macroeconomic environment had a positive effect on the unemployment rate, which fell to 11.2% in 2017 compared with 11.7% in 2016. However, employment levels are still below the euro-area average, which showed an unemployment rate of 9.1% in 2017.

Although fears of deflation have subsided, inflation in the euro area and in Italy remains low, slowed by the persistent moderation of wage growth. The Governing Council of the ECB is inclined to maintain expansionary monetary conditions, aiming for an inflation rate below but close to 2%, compared with the current 1%.

The Italian real estate sector, which is crucial for the special servicing of secured loans, displayed encouraging signs in 2017, such as the increase in the volume of transactions² and in the price index.³ The volume of real estate transactions grew by 3.1%, driven by offices and industrial and residential properties, while the price index rose by 1.4% during the year.

Bank lending to households and firms also expanded (+2.3% in 2017), with average rates reaching an all-time low of 2.69% (compared with 6.2% at the end of 2007);⁴ At +3.4%, the annual growth in mortgage lending for homes was higher than average. A continuing source of concern is the narrowing of the spread between the interest rate on loans and that on funding, a key factor for bank profitability: it was equal to 1.84 percentage points in 2017, compared with 1.98 points the previous year.

The quality of Italian banks' assets improved during the year, thanks to the positive impact of

¹ OECD Economic Outlook, November 2017

² PWC The Italian NPL market, December 2017; number of units sold, June 2017 figures.

³ Bloomberg, Scenari Immobiliari S.p.A., December 2017 figures

⁴ ABI Monthly Outlook, January 2018

the external environment and the focus that banks have devoted to the issue in their business strategies. Gross non-performing loans amounted to about €167 billion,⁵ down from around €200 billion at the end of 2016, thanks in part to significant sales and securitisation transactions, which help stimulate the demand for servicing services, the core business of doBank. The stock of net non-performing loans amounted to €66.3 billion,⁶ down compared with December 2016 (€86.8 billion). The ratio of NPLs to total lending shows an analogous decrease from 4.89% to 3.74% over the same period.

Finally, in 2017 there were significant changes in the systemic approach to the management of Italian banks' stock of bad loans, including the establishment of the Italian Recovery Fund (formerly Atlante II) and the activity of S.G.A. S.p.A. and REV Gestione Crediti S.p.A .. These entities have already undertaken major operations and are supplementing the activity of leading national and international investment funds, which continue to look at the Italian NPL market with interest.

⁵ Banca d'Italia, Banche e Moneta: national series, February 2018

GROUP HIGHLIGHTS

(€/000)

	Year		Change
Key data of the consolidated income statement	2017	2016 PF		%
Gross Rev enues	213,015	206,181	6,834	3%
Net Rev enues	194,928	188,414	6,514	3%
Operating expenses	(124,826)	(124,107)	(719)	1%
EBITDA	70,102	64,307	5,795	9%
EBITDA Margin	33%	31%	2%	6%
EBT	68,134	64,222	3,912	6%
EBT Margin	32%	31%	1%	3%
Net Profit (Loss) attributable to the Group	44,994	40,394	4,600	11%

(€/000)

Key data of the consolidated balance sheet	12/31/2017	12/31/2016	Change
			€	%
Loans and receiv ables with banks	49,449	52,575	(3,126)	(6)%
Tax assets	94,187	143,030	(48,843)	(34)%
Other assets	117,775	114,103	3,672	3%
Total assets	297,500	328,434	(30,934)	(9)%
Other liabilities	37,906	55,986	(18,080)	(32)%
Prov isions for risks and charges	26,579	25,371	1,208	5%
Shareholders' equity	206,697	210,744	(4,047)	(2)%

(€/000)

	12/31/2017	12/31/2016	Change		31/12/2017
Regulatory Indicators ⁽¹⁾			€	%	CRR Group
Own Funds	141,535	106,945	34,590	32%	169,066
RWA	535,492	519,347	16,145	3%	566,518
CET 1 capital ratio	26.43%	20.59%	5.84%	28%	29.84%
Total capital ratio	26.43%	20.59%	5.84%	28%	29.84%

⁽¹⁾ Following the clarifications receiv ed by the Bank of Italy on February 23, 2018, the scope of consolidation to be used solely for the purposes of prudential superv ision ("CRR Group") considers the parent company Av io S.à r.l., which is not consolidated in the accounting net equity. Further details are prov ided in the section "Shareholders' equity and capital ratios".

In order to facilitate an understanding of the doBank Group's performance and financial position, a number of alternative performance metrics ("Key Performance Indicators" or "KPIs") have been identified by the Group. They are summarised in the following table.

(€/000)

Key performance indicators	12/31/2017	12/31/2016 PF	12/31/2016
Gross Book Value (Eop) - in millions of Euro -	76,703	80,901	80,901
Collections for the period- in millions of Euro -	1,836	1,694	1,188
Collections for the period/GBV (EoP)	2.4%	2.1%	1.5%
Staff FTE/Total FTE	37%	34%	34%
Collections for the period/Servicing FTE	2,510	2,166	1,520
Cost/Income ratio	64%	66%	61%
EBITDA	70,102	64,307	58,016
EBT	68,134	64,222	78,286
EBITDA Margin	33%	31%	35%
EBT Margin	32%	31%	48%
ROE	22%	22%	28%
EBITDA – Capex	64,436	62,645	30,748
Net Working Capital	78,265	79,320	79,320
Net Financial Position of cash/(debt)	38,605	29,459	29,459

Key

Gross Book Value (EoP): Indicates the book value of the loans under management at the end of the reference period, gross of any potential write-downs due to expected loan losses.

Collections for the period: used to calculate commissions for the purpose of determining revenues from the servicing business, they illustrate the Group's ability to extract value from the portfolio under management.

Collections for the period / GBV (Gross Book Value): the ratio between total gross annual collections and the year-end GBV of the total portfolio under management. This indicator represents another metric to analyse collections calculated in relation to the effectiveness rate of collections, i.e. the yield of the portfolio under management in terms of annual collections and, consequently, commission income from management activities.

Staff FTE / Total FTE: the ratio between the number of employees (excluding interns and consultants) who perform support activities and the total number of full-time employees of the Group. The indicator illustrates the efficiency of the operating structure and the focus on management activities.

Collections for the period / Servicing FTE: the ratio between total collections for the period and the number of employees who perform servicing activities. The indicator provides an indication of the collection efficiency rate, i.e. the yield of each individual employee specialised in servicing activities in terms of annual collections on the portfolio under management.

Cost/Income ratio: calculated as the ratio between operating expenses and total operating revenues presented in the reclassified income statement. It is one of the main indicators of the Group's operating efficiency: the lower the value of the indicator, the greater the efficiency of the Group.

EBITDA and EBT: together with other relative profitability indicators, they highlight changes in operating performance and provide useful information regarding the Group's economic performance.

EBITDA Margin and EBT Margin: obtained by dividing EBITDA and EBT by Gross Revenues.

ROE (Return on Equity): obtained as the ratio between net profit for the period and the average of shareholders' equity at the start and the end of the period, it represents an economic measure of the profitability of capital.

EBITDA – Capex: calculated as EBITDA net of investments in fixed capital (including property, plant and equipment and intangible and financial assets) ("Capex"). Together with other relative profitability indicators, it highlights changes in operating performance and provides an indication on the Group's ability to generate cash.

Net Working Capital: this is represented by receivables for fees invoiced and accruing, net of payables to suppliers for invoices accounted for and falling due in the period.

Net Financial Position: this is calculated as the sum of cash, cash equivalents and highly-liquid securities, net of amounts due to banks for loans and due to customers for the current accounts opened with the Group.

GROUP RESULTS AT DECEMBER 31, 2017

Performance

The following table and comments present the reclassified consolidated income statement as at December 31, 2017 with a like-for-like comparison with the previous year, i.e. with the pro forma reclassified income statement December 31, 2016 ("2016 PF" or "31/12/2016 PF"). For the sake of a comprehensive and consistent comparison of the financial statements, the table also reports changes compared with the unadjusted situation at December 31, 2016.

(€/000)

Condensed consolidated income statement	Year			Change	Year	Change
	2017	2016 PF	Amount	%	2016	%
Serv icing rev enues	196,554	191,754	4,800	3%	160,512	22%
o/w Banks	159,763	169,305	(9,542)	(6)%	149,130	7%
o/w Investors	36,791	22,449	14,342	64%	11,382	n.s.
Co-inv estment rev enues	665	25	640	n.s.	25	n.s.
Ancillary and other rev enues	15,796	14,402	1,394	10%	3,672	n.s.
Gross Revenues	213,015	206,181	6,834	3%	164,209	30%
Outsourcing fees	(18,087)	(17,767)	(320)	2%	(17,276)	5%
Net revenues	194,928	188,414	6,514	3%	146,933	33%
Staff expenses	(83,391)	(81,570)	(1,821)	2%	(58,638)	42%
Administrativ e expenses	(41,435)	(42,537)	1,102	(3)%	(30,279)	37%
o/w IT	(17,784)	(14,253)	(3,531)	25%	(12,444)	43%
o/w Real Estate	(8,086)	(9,114)	1,028	(11)%	(6,340)	28%
o/w SG&A	(15,565)	(19,170)	3,605	(19)%	(11,495)	35%
Operating expenses	(124,826)	(124,107)	(719)	1%	(88,917)	40%
EBITDA	70,102	64,307	5,795	9%	58,016	21%
EBITDA Margin	33%	31%	2%	6%	35%	(7)%
Impairment/Write-backs on property, plant, equipment and intangible assets	(2,284)	(1,720)	(564)	33%	(588)	n.s.
Net Prov isions for risks and charges	(4,041)	1,538	(5,579)	n.s.	5,549	n.s.
Net Write-downs of loans	1,776	114	1,662	n.s.	8,186	(78)%
Net income (losses) from inv estments	2,765	179	2,586	n.s.	7,625	(64)%
EBIT	68,318	64,418	3,900	6%	78,788	(13)%
Net financial interest and commissions	(184)	(196)	12	(6)%	(502)	(63)%
EBT	68,134	64,222	3,912	6%	78,286	(13)%
Income tax for the year	(22,750)	(23,550)	800	(3)%	(26,763)	(15)%
Profit (loss) from group of assets sold and held for sale net of tax	(390)	(1,435)	1,045	(73)%	(350)	11%
Net Profit (Loss) for the year	44,994	39,237	5,757	15%	51,173	(12)%
Minorities	-	-	-	n.s.	-	n.s.
Net Profit (Loss) attributable to the Group before PPA	44,994	39,237	5,757	15%	51,173	(12)%
Economic effects of "Purchase Price Allocation"	-	1,157	(1,157)	(100)%	1,157	(100)%
Goodwill impairment	-	-	-	n.s.	-	n.s.
Net Profit (Loss) attributable to the Group	44,994	40,394	4,600	11%	52,330	(14)%
Earnings per share	0.58	0.52	0.06	11%	0.67	(14)%

The formation of EBITDA

EBITDA amounted to €70.1 million, up 9% compared with 2016 (€64.3 million) on a like-for-like basis. As a percentage of revenues, EBITDA improved by about two points from 31% in 2016 to 33% in 2017.

(€/000)

Net revenues		Year	Change		Year	Change
	2017	2016 PF	Amount	%	2016	%
Serv icing rev enues	196,554	191,754	4,800	3%	160,512	22%
o/w Banks	159,763	169,305	(9,542)	(6)%	149,130	7%
o/w Investors	36,791	22,449	14,342	64%	11,382	n.s.
Co-inv estment rev enues	665	25	640	n.s.	25	n.s.
Ancillary and other rev enues	15,796	14,402	1,394	10%	3,672	n.s.
Gross Revenues	213,015	206,181	6,834	3%	164,209	30%
Outsourcing fees	(18,087)	(17,767)	(320)	2%	(17,276)	5%
Net revenues	194,928	188,414	6,514	3%	146,933	33%

The improvement in EBITDA, which expanded by about three times the increase in revenues, was driven by the performance of gross revenues at December 31, 2017, which amounted to €213.0 million, +3% on the €206.2 million for the previous year pro forma. The good performance of servicing revenues, equal to €196.6 million (+3%), reflected both an increase in recoveries and a slight rise in average fees, due to the collection mix. These factors more than offset the decline in revenues from base fees associated with the contraction in the average gross portfolio under management and the small decrease in portfolio transfer indemnities.

The substantial increase in revenues in the Investors segment (+64%) and the decline in those in the Banks segment (-6%) is associated with the addition as from the third quarter of 2017 of revenues from the contract for the management of the Fino 1 and Fino 2 Securitisation portfolios originated by UniCredit, which had already been managed in part by the Group. The volume of recoveries on managed portfolios, equal to €1.84 billion, rose by 8%7 compared with the €1.69 billion posted in 2016.

Revenues from co-investment in 2017 benefited from revenues from the ABSs of the Romeo SPV and Mercuzio Securitisation securitisations. Revenues from ancillary products and minor activities generated by master servicing activities, administrative, property and business information services and due diligence activities, contributed €15.8 million to total gross revenues in the period, an increase of 10% compared with 2016 pro forma, thanks in part to the sharp growth registered in the last quarter of 2017.

In line with gross revenues, net revenue expanded by 3% compared with 2016. The ratio of fee and commission expense to revenues in 2017 was broadly unchanged on the previous year.

(€/000)
Operating expenses		Year	Change		Year	Change
	2017	2016 PF	Amount	%	2016	%
Staff expenses	(83,391)	(81,570)	(1,821)	2%	(58,638)	42%
Administrativ e expenses	(41,435)	(42,537)	1,102	(3)%	(30,279)	37%
o/w IT	(17,784)	(14,253)	(3,531)	25%	(12,444)	43%
o/w Real Estate	(8,086)	(9,114)	1,028	(11)%	(6,340)	28%
o/w SG&A	(15,565)	(19,170)	3,605	(19)%	(11,495)	35%
Operating expenses	(124,826)	(124,107)	(719)	1%	(88,917)	40%

Operating expenses were stable at €124.8 million, compared with €124.1 million in 2016, despite the increase in collections, confirming the operating leverage the Group enjoys. More specifically, staff expenses increased by 2% on the previous year, reflecting the impact of an increase in average cost, the direct consequence of the strengthening of top management as a result of the structural changes in the Group during the year, and the effect of the introduction of a new incentive mechanism following the listing.

This increase was almost entirely offset by reductions in administrative costs, which amounted to €41.4 million compared with €42.5 million at December 31, 2016 on a like-for-like basis (-3%).

7 The 8% growth rate regards net 2016 collections for Italfondiario. Considering gross collections, the growth rate would be +3%.

Within the overall aggregate, the significant increase in IT costs, mainly associated with nonrecurring costs and design work attributable to the upgrading of IT systems, was more than offset by savings in the real estate area (-11%) and other overheads (-19%).

The formation of EBIT and EBT

Group EBIT totalled €68.3 million, compared with €64.4 million in 2016 pro forma (+6%), while EBT was slightly lower at €68.1 million (+6% compared with 2016), as indicated in the following table.

(€/000)
EBIT and EBT	Year		Change		Year	Change
	2017	2016 PF	Amount	%	2016	%
EBITDA	70,102	64,307	5,795	9%	58,016	21%
Impairment/Write-backs on property, plant, equipment and intangible assets	(2,284)	(1,720)	(564)	33%	(588)	n.s.
Net Prov isions for risks and charges	(4,041)	1,538	(5,579)	n.s.	5,549	n.s.
Net Write-downs of loans	1,776	114	1,662	n.s.	8,186	(78)%
Net income (losses) from inv estments	2,765	179	2,586	n.s.	7,625	(64)%
EBIT	68,318	64,418	3,900	6%	78,788	(13)%
Net financial interest and commissions	(184)	(196)	12	(6)%	(502)	(63)%
EBT	68,134	64,222	3,912	6%	78,286	(13)%

Net impairment/write-backs on property, plant and equipment and intangible assets mainly regarded amortisation of software licences. The aggregate increased by 33% compared with 2016, reflecting the technology investments of the Group as part of the replacement of the IT platform and the standardisation of the information system at all of the companies in the scope of consolidation.

Net provisions for risks and charges were a negative €4.0 million, compared with a positive balance in 2016 in reflection of reversals of provisions for litigation and disputes that exceeded the actual liability. The increase was affected by the recognition of new provisions for litigation and disputes, which nevertheless represent a small percentage of the GBV under management.

Net write-downs of loans showed net write-backs of €1.8 million, mainly attributable to collections on previously written-off positions in our own portfolio.

Net income (losses) from investments amounted to €2.8 million, including the result on the sale of Gextra S.r.l. in the first half of the year in the amount of €1.6 million. The item also reports the positive effect of the equity measurement of the investment in BCC Gestione Crediti.

The formation of net profit for the year

Earnings per share (in Euro)	0.58	0.52	0.06	11%	0.67	(14)%
Net Profit (Loss) attributable to the Group	44,994	40,394	4,600	11%	52,330	(14)%
Economic effects of "Purchase Price Allocation"	-	1,157	(1,157)	(100)%	1,157	(100)%
Profit (loss) from group of assets sold and held for sale net of tax	(390)	(1,435)	1,045	(73)%	(350)	11%
Income tax for the year	(22,750)	(23,550)	800	(3)%	(26,763)	(15)%
EBT	68,134	64,222	3,912	6%	78,286	(13)%
	2017	2016 PF	Amount	%	2016	%
Net result for the year		Year		Change		Change
(€/000)

Net profit for the period, which in the absence of profit attributable to non-controlling interests, pertains entirely to the shareholders of the Parent Company, amounted to €45.0 million, up 11% on the €40.4 million posted at December 31, 2016 pro forma. The effective income tax rate was equal to 33% of EBT, compared with 37% in 2016: the improvement reflected the impact of the provisions of the "Bank Rescue" decree (Decree Law 59 of May 3, 2016), which in 2017 excluded the DTA charge, which at the end of 2016 amounted to €4.1 million.

The result for the period was also adversely impacted in the amount of €390 thousand by result posted by Gextra in the first four months in which it was included in the scope of consolidation. Earnings per share amounted to €0.58, compared with €0.52 in 2016 (+11%).

Segment Reporting

The doBank Group's business model can be analysed in two main dimensions:

• Customers;
• Business Lines.

The doBank Group's customer base can be broken down into two main categories: Banks and Investors. The business lines represent the aggregation of products/services offered by the Group and fall into two categories: Servicing and Ancillary Products and Minor Activities.

Based on these criteria, the following table reports the revenues and EBITDA of the business segments.

(€/000)

	Year 2017
Condensed consolidated income statement	Banks	Investors	Total Servicing	%	Ancillary & other	%	Total
Serv icing rev enues	159,668	34,983	194,651		1,903		196,554
o/w Banks	159,668	-	159,668		95		159,763
o/w Investors	-	34,983	34,983		1,808		36,791
Co-inv estment rev enues	-	-	-		665		665
Ancillary and other rev enues	-	-	-		15,796		15,796
Gross Revenues	159,668	34,983	194,651	91%	18,364	9%	213,015
Outsourcing fees	(14,304)	(3,134)	(17,438)		(649)		(18,087)
Net revenues	145,364	31,849	177,213	91%	17,715	9%	194,928
Staff expenses	(63,083)	(13,822)	(76,904)		(6,487)		(83,391)
Administrativ e expenses	(29,035)	(6,362)	(35,397)		(6,038)		(41,435)
o/w IT	(12,263)	(2,687)	(14,950)		(2,834)		(17,784)
o/w Real Estate	(6,019)	(1,319)	(7,338)		(748)		(8,086)
o/w SG&A	(10,753)	(2,356)	(13,109)		(2,456)		(15,565)
Operating expenses	(92,118)	(20,184)	(112,301)		(12,525)		(124,826)
EBITDA	53,246	11,665	64,912	93%	5,190	7%	70,102
EBITDA Margin	33%	33%	33%		28%		33%

In 2017, the gross revenues (€194.6 million) and EBITDA (€64.9 million) of the Servicing segment represent more than 90% of their respective totals. As from the third quarter, the FINO portfolio was reclassified from the Banks segment to the Investors segment in conjunction with the change in the majority ownership of the portfolio. For this reason, the Investor segment expanded thanks to the contribution of €17.8 million.

Group financial position

(€/000)

			Change
Main consolidated balance sheet items	12/31/2017	12/31/2016	€	%
Av ailable-for-sale financial assets	24,001	1,047	22,954	n.s.
Loans and receiv ables with banks	49,449	52,575	(3,126)	(6)%
Loans and receiv ables with customers	2,853	10,820	(7,967)	(74)%
Tax assets	94,187	143,030	(48,843)	(34)%
Other assets	127,010	120,962	6,048	5%
Total assets	297,500	328,434	(30,934)	(9)%
Due to banks	-	13,076	(13,076)	(100)%
Due to customers	12,106	11,060	1,046	9%
E.T.B. and prov ision for risks and charges	36,939	35,611	1,328	4%
Other liabilities	41,758	57,943	(16,185)	(28)%
Shareholders' equity	206,697	210,744	(4,047)	(2)%
Total liabilities and shareholders' equity	297,500	328,434	(30,934)	(9)%

Available-for-sale financial assets at December 31, 2017 increased considerably compared with 2016 as a result of the following co-investment operations:

• €7.7 million from the valuation of the outstanding of the 5% of the notes subscribed by doBank and issued by the Romeo SPV and Mercuzio Securitisation vehicles;
• €15.2 million represent the amount paid in December for the subscription of 30 units, for a total commitment of €30 million, of the restricted alternative securities investment fund Italian Recovery Fund (formerly Atlante II).

Loans and receivables with banks and customers break down as follows.

(€/000)
			Change
Loans and receivables with banks and with customers: product breakdown	12/31/2017	12/31/2016	€	%
Loans and receivables with banks
Current accounts and demand deposits	49,340	52,455	(3,115)	(6)%
Debt securities	109	120	(11)	(9)%
Total	49,449	52,575	(3,126)	(6)%
Loans and receivables with customers
Current accounts	1,338	885	453	51%
Mortgages	1,209	1,443	(234)	(16)%
Other loans	306	8,492	(8,186)	(96)%
Total	2,853	10,820	(7,967)	(74)%

Loans and receivables with banks include the liquidity on current accounts held with banks used by the group (mainly UniCredit and Banca Intesa). Despite the payment of the 2016 dividend to the majority shareholder Avio, total liquidity available decreased by just 6% compared with the start of 2017 thanks to an improvement in the speed of collection of fees.

Loans and receivables with customers contracted compared with 2016 (-€8.0 million), primarily reflecting the repayment of the bridge loan of €8.4 million granted in 2016 to the Romeo SPV against the commitment to subscribe securities, which occurred in the first part of 2017.

Tax assets at December 31, 2017 break down as follows:

(€/000)

			Change
Tax assets: breakdown	12/31/2017	12/31/2016	€	%
Current tax assets
Paid in adv ance	165	13,051	(12,886)	(99)%
Tax credits	-	36,773	(36,773)	(100)%
Tax liabilities	-	(12,102)	12,102	(100)%
Total	165	37,722	(37,557)	(100)%
Deferred tax assets
Write-down on loans	55,582	55,409	173	0%
Tax losses carried forward in the future	29,933	41,136	(11,203)	(27)%
Other assets / liabilities	286	1,086	(800)	(74)%
Prov isions	8,218	7,582	636	8%
Other items	3	95	(92)	(97)%
Total	94,022	105,308	(11,194)	(11)%
Total tax assets	94,187	143,030	(48,751)	(34)%

Current tax assets, which as at December 31, 2016 were mainly composed of tax credits, were virtually nil at December 31, 2017 as a result of the use of those assets to offset indirect taxes (VAT and withholding tax).

Deferred tax assets also decreased by €11.2 million, essentially reflecting the reversal of assets on prior-year tax losses.

As shown in the following table, the most significant other item of assets is other assets (+3% compared with 2016), which essentially include receivables for accrued fees to be collected on loan recovery activities and ancillary services associated with those activities.

Equity investments include the value of the associate BCC Gestione Crediti, which had increased at December 31, 2017 as a result of being accounted for using the equity method, which reflected improved situation of the company compared with the previous year.

(€/000)

Other assets			Change
	12/31/2017	12/31/2016	€	%
Cash and cash equiv alents	21	18	3	17%
Equity inv estments	2,879	1,608	1,271	79%
Property, plant and equipment	1,819	638	1,181	n.s.
Intangible assets	4,506	2,079	2,427	117%
Non-current assets and diposal groups held for sale	10	2,516	(2,506)	(100)%
Other assets	117,775	114,103	3,672	3%
Total	127,010	120,962	6,048	5%

Property, plant and equipment tripled compared with 2016, reflecting investments primarily in furnishings and hardware for work stations as a result of the reorganisation of Group premises and logistics at its offices around the country.

Intangible assets, which primarily include software licences, more than doubled compared with the end of 2016, reflecting the investments in technology by the Group to replace the IT platform and standardise the information system across all the consolidated companies.

Non-current assets held for sale and discontinued operations at December 31, 2017 were almost zero as a result of the disposal in April of the investment in Gextra, whose assets were classified in this category at the end of 2016 in accordance with the provisions of IFRS 5.

As shown in the following table, amounts due to banks reflect the extinguishment of loans outstanding at December 31, 2016 as a result of achieving greater financial autonomy in 2017, thanks in part to the considerable collections of fees on invoices to be collected.

(€/000)

			Change
Due to banks and to customers: product breakdown	12/31/2017	12/31/2016	€	%
Due to banks
Current accounts and demand deposits	-	2,999	(2,999)	(100)%
Loans	-	10,032	(10,032)	(100)%
Other liabilities	-	45	(45)	(100)%
Total	-	13,076	(13,076)	(100)%
Due to customers
Current accounts and demand deposits	11,759	10,850	909	8%
Loans	319	-	319	n.s.
Other liabilities	28	210	(182)	(87)%
Total	12,106	11,060	1,046	9%

Amounts due to customers are mainly composed of current accounts held by the lawyers affiliated with the Group for loan recovery activities.

(€/000)
			Change
Employee termination benefits and provision for risks	12/31/2017	12/31/2016	€	%
Employee termination benefits	10,360	10,240	120	1%
Provisions for risks and charges
Legal disputes	10,313	9,427	886	9%
Staff expenses	8,839	9,002	(163)	(2)%
Other	7,427	6,942	485	7%
Total	26,579	25,371	1,208	5%
Total ETB and provision for risks	36,939	35,611	1,328	4%

Under provisions for risks and charges, the item legal disputes regards provisions for litigation associated with loan collection activities, which increased by 9% in 2017 compared with 2016. The increase was partly associated with a new provision against creditor claims filed by previous suppliers following the termination of their contracts. The item staff expenses includes provisions to finance MBO bonuses to be paid in future years on the basis of existing remuneration policies, net of reversals for bonuses paid during the period but accruing in previous years. The size of the provision at December 31, 2017 also reflects the implementation of new remuneration policies following the listing, which for selected categories of managers have changed the structure of variable remuneration, taking account of deferred pay and the grant of equity instruments.

The final residual component of provisions for risks includes provisions for disputes for which no litigation is currently under way.

Other liabilities, as shown in the following table, mainly consist of other liabilities, which are largely composed of amounts due to suppliers, employees and tax authorities for VAT to be paid.

(€/000)

Other liabilities			Change
	12/31/2017	12/31/2016	€	%
Tax liabilities	3,852	219	3,633	n.s.
Liabilities associated with non-current assets and disposal groups held for sale	-	1,738	(1,738)	(100)%
Other liabilities	37,906	55,986	(18,080)	(32)%
Totale	41,758	57,943	(16,185)	(28)%

Tax liabilities regard liabilities for current taxes and deferred taxes in respect of the valuation reserve for AFS securities.

In parallel with the same item of assets, liabilities associated with non-current assets held for sale were equal to zero at the end of 2017 as they regarded the investment in Gextra, which was sold during the period.

Net working capital

(€/000)
Net working capital	12/31/2017		Change
		12/31/2016 PF	€	%
Trade receiv ables	99,337	102,685	(3,348)	(3)%
Trade payables	(21,072)	(23,365)	2,293	(10)%
Total	78,265	79,320	(1,055)	(1)%

The aggregate amounted to €78.3 million at the end of the period, an improvement on the €79.3 million at December 31, 2016 pro forma despite the increase in revenues, reflecting a reduction in trade receivables.

Net financial position

		Change
		€	%
21	18	3	17%
49,340	52,575	(3,235)	(6)%
1,003	1,002	1	0%
50,364	53,595	(3,231)	(6)%
-	(13,076)	13,076	(100)%
	(11,060)	(699)	6%
-	-		n.s.
38,605	29,459	9,146	31%
-	-		n.s.
-	-		n.s.
38,605	29,459	9,146	31%
	12/31/2017	12/31/2016 PF (11,759)	- - -

The Group's net financial position (which shows a positive cash position) at the end of 2017 was sharply improved in quantitative terms (€38.6 million compared with €29.5 million at the end of 2016) and qualitative terms, as external sources of financing have essentially been eliminated, confirming the Group's capacity to generate independent cash flows that can not only finance ordinary operations but also permit an opportunistic approach to potential opportunities for co-investment and acquisitions. During the year, the Group also completed a project to consolidate credit lines with the Parent Company, opening new bank facilities on better terms at three-year maturities.

Group shareholders' equity and capital ratios

Consolidated shareholders' equity at December 31, 2017 amounted to €206.7 million, compared with €210.7 million at December 31, 2016. A reconciliation with the equity of the Parent Company and the composition and changes in the aggregate compared with the end of the previous year are presented in the following tables.

(€/000)

	Shareholders' Equity before result	Net profit (loss)	Shareholders' Equity	Notes
Balance as at December 31, 2017 as per doBank S.p.A. Accounts	158,027	33,930	191,957
Elimination of the v alue of consolidated inv estments in associates:	-	-	-
- Surplus (minus) ov er the carrying v alues of consolidated subsidiaries	3,676	-	3,676	(1)
- Net profit (loss) of consolidated subsidiaries	-	10,775	10,775	(2)
Other reclassifications on consolidation	-	289	289	(3)
Balance as at December 31, 2017 attributable to the Group	161,703	44,994	206,697

Note

(1) L'importo rappresenta la differenza tra il valore di carico ed il valore del patrimonio netto delle società partecipate

(2) L'importo rappresenta il valore dei risultati dell'esercizio 2017 delle società partecipate

(3) L'importo rappresenta altre rettifiche di consolidamento dovute principalmente alla valutazione a equity della partecipazione nella società collegata BCC Gecre ed allo storno di utili e dividendi infragruppo

			Change
Equity breakdown	12/31/2017	12/31/2016	€	%
Share capital	41,280	41,280	-	n.s.
Valuation reserv es	1,350	256	1,094	n.s.
Reserv es	119,350	117,155	2,195	2%
Treasury shares	(277)	(277)	-	n.s.
Net Profit (loss) for the year	44,994	52,330	(7,336)	(14)%
Shareholders' equity	206,697	210,744	(4,047)	(2)%

(€/000)

Changes in consolidated shareholders' equity

Shareholders' equity as at December, 31 2016	210,744
Increases:	48,283
Net profit for the year	44,994
Changes in v aluation reserv es (+)	1,094
Share payments	2,195
Decreases:	(52,330)
Div idends paid	(52,330)
Changes in v aluation reserv es (-)	-
Shareholders' equity as at December, 31 2017	206,697

The change in shareholders' equity was positively impacted by net profit and by the reserve established in accordance with IFRS 2 for own equity instruments (shares) that can be granted to employees under the terms of the post-IPO remuneration policy, which provide for sharebased payments in certain cases.

The following table reports the value of own funds, risk-weighted assets and consolidated capital ratios, which were calculated on the basis of the regulatory principles set out in Directive 2013/36/EU (CRD IV) and Regulation (EU) 575/2013 (CRR) as transposed in Bank of Italy Circulars no. 285 and no. 286 of December 17, 2013 as amended.

The application of those regulatory requirements is subject to transitional arrangements under

which the new rules are applied – in most cases – in an increasing proportion until 2019, when full application will begin.

In order to permit meaningful comparison with the previous year, the scope of supervisory consolidation at December 31, 2017, has been aligned with the scope of consolidation under accounting rules.

Total capital ratio	26.43%	20.59%	5.84%	28%
CET 1 capital ratio	26.43%	20.59%	5.84%	28%
Risk Weighted Assets	535,492	519,347	16,145	3%
Own Funds	141,535	106,945	34,590	32%
Common equity TIER 1 capital (CET 1)	141,535	106,945	34,590	32%
Own Funds and capital adequacy ratios	12/31/2017	12/31/2016	Change €	%
(€/000)

Following clarifications received from the Bank of Italy on February 23, 2018, the scope of consolidation for the sole purpose of prudential supervision ("CRR Group") puts Avio S.à r.l., a Luxembourg-registered financial company and majority shareholder of doBank S.p.A. at the top of the Group. It is not consolidated in shareholders' equity under accounting rules.

For the purpose of full disclosure, the following table reports capital ratios at December 31, 2017 for the scope of consolidation of the CRR Group, which includes Avio S.à r.l.

Own Funds and capital adequacy ratios	12/31/2017
Common equity TIER 1 capital (CET 1)	169,066
Own Funds	169,066
Risk Weighted Assets	566,518
CET 1 capital ratio	29.84%
Total capital ratio	29.84%

In May 2017, the Supervisory Review and Evaluation Process (SREP) conducted by the Bank of Italy with regard to the minimum capital requirements for the Parent Company doBank was completed, the outcome of which required compliance with additional capital requirements starting with the own funds report as at June 30, 2017 (Common Equity Tier 1 Ratio of 6.59%; Tier 1 Capital Ratio of 8.38% and Total Capital Ratio of 10.75%).

At December 31, 2017, consolidated own funds, which include the share of net profit for the period that will not be distributed, equal to 30% of the total, amounted to €141.5 million, compared with risk-weighted assets of €535.5 million, most of which (62%) generated by operational risks and, to a lesser extent, credit risk.

At December 31, 2017, the doBank Group had a Total Capital Ratio of 26.43% (29.84% as CRR Group), nearly 6 percentage points better compared with 2016 and well above the minimum regulatory requirement for the period of 10.75%. The CET 1 capital ratio already fully reflects the Group's commitment to invest €30 million in the Italian Recovery Fund (formerly Atlante II).

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Main new servicing contracts

MPS

On October 17, 2017, doBank announced that it had executed a term sheet under which the doBank Group would be engaged to manage, as a special servicer, bad loans with a GBV of about €8 billion as part of a proposed assignment and securitisation of a portfolio of bad loans with an original value of about €26 billion originated by the MPS Group. The securitisation of the non-performing loans of MPS, a key element of the rescue plan for the Siena-based bank, would be one of the largest such transactions ever carried out in Europe. Under the engagement, the doBank Group would manage about 30% of the total GBV of the transaction, with a more-than-proportionate return compared with the allocation of the total portfolio. The doBank Group's servicing activities began in the first quarter of 2018.

BERENICE

On December 20, 2017, doBank announced that it had signed an agreement under which the Group will be granted an engagement to manage, as a special servicer, bad loans with a GBV of about €1 billion as part of the rescue of Cassa di Risparmio di Rimini, Cassa di Risparmio di Cesena and Cassa di Risparmio di San Miniato (denominated the "Berenice" operation) executed by the Italian Recovery Fund (formerly Atlante II).

The doBank Group began its activities in the first quarter of 2018.

The Fino Project

The Fino Project involved the securitisation under the provisions of Law 130/1999 involving a portfolio of bad loans owned by the UniCredit Group with a total original gross value of about €17.7 billion. Most of that portfolio was already under management by doBank as at the end of 2016, and was increased in January 2017 by about €2.7 billion gross. Under the provisions of the Fino Project, doBank will continue to manage the recovery of the positions.

In July 2017 UniCredit completed the operation with the assignment of the loans to two SPVs, Fino 1 Securitisation and Fino 2 Securitisation, dividing the portfolio between the two vehicles in order to enable part of the investment to benefit from a state guarantee in the form of a GACS. The majority of the securities (50.1%) were acquired by funds of the Fortress Group. UniCredit initially retained the remainder (49.9%) before reducing its position below 20% in December 2017 in an agreement with funds operated by King Street Capital Management LP.

In addition to increasing the size of the portfolio under management, the doBank Group was also engaged to perform the new activities of Master Servicer and Corporate Provider and will increase revenues from Ancillary Products thanks to the provision of master legal, commercial information and property appraisal services, performed in part by the subsidiaries doRealEstate and IBIS. The agreement on the new Fino contract was finalised at the end of July 2017.

Listing on the Milan Stock Exchange

On July 14, 2017 doBank made its début on the Milan Stock Exchange ahead of schedule in view of the strong interest displayed by the Italian and foreign institutional investors to which the initial placement was directed. The IPO was presented in a series of roadshows in the main European and US financial centres.

The offer price for the shares was €9.00 per share, representing a capitalisation of about €704 million net of treasury shares. A total of 38.2 million shares were placed (47.7% of share capital) after the greenshoe option, including 6.2 million shares for which the shareholder AVIO S.à r.l. exercised the increase option.

New post-listing remuneration policy

Following the listing on the Milan Stock Exchange, a new remuneration policy was adopted, involving the Chief Executive Officer and a selected number of other managers. For more information, see the "Governance/remuneration" section of the corporate website www.dobank.com.

Italian Recovery Fund (formerly Atlante II)

The Board of Directors of doBank approved the signing of a commitment for the investment of €30 million in the Italian Recovery Fund (formerly Atlante II) operated by Quaestio SGR, which specialises entirely in investing in the junior and mezzanine tranches of securitisations of impaired loans, in line with doBank's co-investment strategy. At December 31, 2017, doBank had paid €15.2 million of its overall commitment, with the investment to be completed in 2018.

Internal organisation model

During the first half of 2017, the Parent Company, doBank, completed its internal reorganization activities with the aim of centralising the functions of management, coordination, policy-setting and control with it. In January, it also approved the new Corporate Governance project, which provides for the simplification of the governance of the Bank and the subsidiaries, in accordance with a principle of proportionality, and the strengthening of doBank's management and coordination role as the Parent Company. This model is therefore able to provide the market with an integrated system of services mainly linked to credit recovery, as well as ensuring benefits for the Group in terms of costs/performance, while simultaneously raising the technological level of the services offered and internal processes.

IT projects

Starting on March 1, 2017, the subsidiary doSolutions S.p.A. represents the new technology hub of the Group, with the offer of information technology services, organisational support, back office and logistics services, thanks to the transfer and demerger of the associated business units by doBank and Italfondiario respectively. Furthermore, doBank migrated the IT platform from UBIS of the UniCredit Group to a proprietary platform and started the Management Control development project to implement a new model. That project was completed at the end of 2017 with the integration of all the Group companies. In the information technology area, the progressive replacement of the information system of the companies belonging to the Group continued with a view to ensuring overall standardisation.

Judicial Management

The Judicial Management Division was established during the year. The main developments of the Division included agreements for the provision of legal support for the Fino Project and with UniCredit. In the latter case, the agreements regarded the portfolio under management for that client.

Disposal of Gextra S.r.l.

In April 2017, Gextra S.r.l. was sold to a non-Group buyer. In the financial statements at December 31, 2016, the company had been classified as an asset held for sale in accordance with IFRS 5. The sale of the company was part of the Group reorganisation and generated a gain of €1.6 million, which was reflected in Group results for the year.

SIGNIFICANT EVENTS AFTER THE END OF THE YEAR

Agreement with REV Gestione Crediti S.p.A.

On January 24, 2018 doBank announced that it had signed an agreement with REV Gestione Crediti S.p.A. ("REV") under which the doBank Group was granted an engagement to manage, as a special servicer, a portfolio of bad loans worth about €2.4 billion (in terms of gross book value). The loans covered by the agreement were originated by Banca delle Marche, Banca dell'Etruria e del Lazio, Cassa di Risparmio di Ferrara and Cassa di Risparmio di Chieti. Management activities by the doBank Group began in the first quarter of 2018.

Impact of the new international accounting standards IFRS 9 and IFRS 15

During 2017 the Group undertook two projects connected with the implementation of the new accounting standards IFRS 9 - Financial Instruments and IFRS 15 - Revenues from Contracts with Customers, which took effect as from January 1, 2018.

As explained in detail in Part A of the notes to the consolidated financial statements, the quantitative impact of these new standards is nil (for IFRS 15) or insignificant (for IFRS 9).

More specifically, for IFRS 9, the small scale of the impact is a consequence of the size and the composition of the portfolio of the Group's financial assets, which account for 26% of total assets at December 31, 2017. On the composition front, only 5%, mainly represented by performing mortgage loans and current accounts with customers, was subject to a revision of the calculation of impairment under the new rules, which resulted in no increase in write-downs as a consequence of an increase in write-downs of loans and receivables with customers and a decrease in write-downs of loans and receivables with banks. Trade receivables, classified under other assets in the balance sheet, account for 33% of total assets and the impact of from the application of the new impairment rules amounted to €35 thousand.

With regards to the classification and measurement of financial assets, the most significant change regarded the Romeo SPV and Mercuzio Securitisation ABSs and the unit of the Italian Recovery Fund (formerly Atlante II), which changed from recognition of fair value changes in equity to recognition of such changes directly through profit or loss (FVTPL). The remainder of the portfolio, consisting of loans and receivables with banks for the management of Group liquidity (current accounts and deposits) and purchased receivables (mainly non-performing loans) will continue to be measured at amortised cost.

OUTLOOK FOR OPERATIONS

In line with the main strategic guidelines highlighted in the Listing Prospectus, in 2018 doBank intends to further strengthen its leadership position in the market for servicing what are mainly non-performing loan portfolios.

The Group's commercial development will be aimed at obtaining significant new management contracts from large and medium-sized banking groups and from the broader group of specialised investors. The Group therefore expects a significant increase in assets under management (in terms of Gross Book Value), also in consideration of the start of management activities for more than €11 billion in the first quarter of the year alone, and a significant increase in collections.

Finally, doBank plans to further develop its ancillary activities, thanks to the contribution of longterm agreements signed in the second half of 2017 and the acquisition of new customers, and to exploit its operating leverage, with a positive impact on EBITDA and the generation of cash in terms of EBITDA-Capex.

MAIN RISKS AND UNCERTAINTIES

In consideration of the activities it performs, and the results achieved, the financial position of the doBank Group is adequately scaled to meet its needs.

The financial policy pursued is in fact aimed at fostering the stability of the Group, which in view of its operations does not currently or prospectively intend to engage in speculative investment activity.

The main risks and uncertainties generated by current conditions in the financial markets do not represent any especially critical threats to the financial equilibrium of the Group and, as such, do not generate doubts about its operation as a going concern.

Please see Part E of the notes to the financial statements for more information on financial and operational risks.

DOBANK SHARES

One of the major events affecting the doBank Group in 2017 was its debut on the stock exchange.

The offer, which involved doBank's ordinary shares and was directed exclusively at Italian and foreign institutional investors, was completed on July 12 - ahead of schedule – owing to the strong interest displayed by investors, whom top management had met in a series of roadshows in the main European and US financial centres.

The offer price for the shares was €9.00 per share, representing a capitalisation of about €704 million net of treasury shares. A total of 38.2 million shares were placed (47.7% of share capital) after the greenshoe option, including 6.2 million shares for which the shareholder AVIO S.à r.l. exercised the increase option.

From the start of trading on the Mercato Telematico Azionario (electronic stock exchange) operated by Borsa Italiana (MTA) on July 14, the doBank stock steadily posted significant gains, closing 2017 at €13.55 per share, up 50.5% on its IPO price.

In relative terms, that performance outpaced the benchmark index (the FTSE Italia Mid Cap, which rose+6.3%8), the index of Italy's largest companies in terms of capitalisation, the FTSE MIB (+1.7%) and the other Italian IPOs carried out in 2017.⁹

doBank shares are traded under ISIN IT0001044996 and ticker symbol DOB [Bloomberg: DOB IM]. The total number of shares in circulation is 78.25 million, as well as 1.75 million treasury shares. The following chart and table report developments in doBank shares in 2017 and the main associated statistics.

Summary Data	Euro	Date
IPO Price	9.00	7/14/17
Minimum closing price	10.25	7/14/17
Maximum closing price	14.27	10/18/17
Last closing price	13.55	12/29/17
Last official price	13.49	12/29/17
Number of shares issued	80,000,000	12/29/17
of which treasury shares	1,750,000	12/29/17
Capitalization	1,079,200,000	12/29/17
Capitalization (excluding treasury shares)	1,055,592 ,500	12/29/17

8 Reference period July 14 - December 31, 2017

9 IPOs in the MTA segment of Borsa italiana

doBank's communications and relations with the financial markets are managed by the Investor Relations department, whose purpose is to facilitate understanding by the financial community of the Group's strategy and objectives, so that they can been appreciated in full by investors.

In order to ensure transparent, timely and comprehensive communication, in 2017 the Investor Relations team and top management participated in numerous meetings with analysists and investors, mainly in the form of industry conferences, road shows in leading international financial markets, specific meetings and frequent conference calls.

For more information on developments in the doBank stock and the strategy and performance of the Group, please visit the investor relations section of the corporate website www.dobank.com.

OTHER INFORMATION

Management and coordination by the Parent Company

At December 31, 2017, 50.1% of the shares of the Parent Company doBank are owned by Avio S.à r.l. a company incorporated in Luxembourg, which is jointly owned by the Fortress Group (in December 2017 it was acquired by Softbank Group Corp.) and Eurocastle Investment Limited, which is the majority shareholder.

After listing on the Milan Stock Exchange, 47.7% of the shares were placed on the market and the remaining 2.2% consists of 1,750,000 treasury shares, measured at cost, for a total of €277 thousand held by the Parent Company.

The majority shareholder does not exercise any management or coordination powers over doBank pursuant to Art. 2497 et seq. of the Civil Code, either directly or through the companies belonging to the Fortress Group and Eurocastle Investment.

The Parent Company doBank exercises its management and coordination powers over its direct subsidiaries as provided for in the legislation referred to above.

Transactions in treasury shares

During the year no shares of the Parent Company doBank were purchased or sold.

At December 31, 2017, doBank held 1,750,000 treasury shares, equal to 2.2% of total share capital. Their carrying amount is €277 thousand and they are presented in the financial statements as a direct reduction of shareholders' equity under Item 200. "Treasury shares". Item 190. "Reserves" includes the associated equity reserve in the same amount.

Research and development

The Group did not engage in research and development activities during the year.

Report on corporate governance and ownership structure

In accordance with the third paragraph of Art. 123 bis of Legislative Decree 58 of February 24, 1998 (the Consolidated Law on Financial Intermediation), a separate report from this report on operations has been prepared. It has been approved by the Board of Directors and published together with the draft financial statements for the financial year ended at December 31, 2017. This document is made available to the public in the "Governance" section of the corporate website www.dobank.com.

Together with that Report, the "Remuneration Report" has also been prepared pursuant to Art. 123 ter of the Consolidated Law.

Consolidated Non-Financial Statement

Legislative Decree 254 of December 30, 2016 and Legislative Decree 32/2007 require to doBank as a public interest entity (bank with listed shares whose size exceeds the minimum thresholds in the decree) to publish each year information on the main risks and uncertainties to which the company is exposed, indicators of non-financial performance relevant to the specific activity of the company, and information on the environment and personnel. The first reference date for this document is December 31, 2017.

doBank has elected the option provided for in the decree to prepare a separate document from this report on operations. That document is approved by the Board of Directors and published together with the draft financial statements for the financial year ended at December 31, 2017. This document is made available to the public in the "Investor Relations/Financial Reports and Presentations" section of the corporate website www.dobank.com.

Public disclosure by institutions

In compliance with Bank of Italy Circular no. 285 of December 17, 2013 as updated, doBank

has prepared the public disclosure by institutions at December 31, 2017, which is approved by the Board of Directors and published together with the draft financial statements for the financial year ended at December 31, 2017. The document is made available to the public in the "Investor Relations/Financial Reports and Presentations" section of the corporate website www.dobank.com.

Transactions with related parties

In compliance with the provisions of the "Rules for Transactions with Related Parties" referred to in Consob Resolution no. 17221 of March 12, 2010, as amended by Resolution no. 19974 of April 27, 2017, as well as the provisions on the prudential supervision of banks in Circular no. 263 of December 27, 2006, Title V, Chapter V on "Exposures and conflicts of interest with related parties" issued by the Bank of Italy, any transaction with related parties and connected persons shall be approved in accordance with the procedure approved by the Board of Directors, whose most recent update was approved at the meeting held on May 25, 2017, which entered force in conjunction with the listing on the Milan Stock Exchange on July 14, 2017.

This document is available to the public in the "Governance" section of the company website www.dobank.com.

The universe of related parties of the Group changed near the end of the year following the acquisition of the Fortress Investment Group LLC (NYSE: FIG) ("Fortress") by SoftBank Group Corp. ("SoftBank" or "SBG"). As a result of the transaction, SBG and its subsidiaries gained ownership of the shares of Fortress, which in turn held Avio S.à r.l., doBank's majority shareholder.

Pursuant to the above Consob Regulation, disclosures on transactions with related parties carried out during the year are reported below.

Transactions of greater importance

Fino 1 and Fino 2 portfolios

As indicated in the significant events of the year, in July 2017, doBank entered into Master Servicing, Special Servicing and Corporate Services agreements with the two securitisation vehicles Fino 1 Securitisation S.r.l. and Fino 2 Securitisation S.r.l., whose securities were partially subscribed by affiliates of the Fortress Group.

The information prospectus for the transaction is available to the public at the registered office of doBank S.p.A. (Piazzetta Monte 1, Verona), the doBank S.p.A. website (www.dobank.com) and the authorised storage system Spafid Connect.

Other transactions

During the course of the year, ordinary transactions were approved that mainly involved due diligence activities carried out in relation to entities affiliated with the Fortress Group.

Please see Part H of the notes to the consolidated financial statements for the disclosures provided for by IAS 24 for transactions with related parties.

Statement reconciling the condensed consolidated income statement and the statutory consolidated income statement

(€/000)
Statement reconciling the condensed consolidated income statement and the	Year		Year
statutory income statement	2017	2016 PF	2016
Servicing revenues	196,554	191,754	160,512
40 fee and commission income	194,746	189,820	158,871
220 of which: other operating expense and income	1,808	1,934	1,641
Co-investment revenues	665	25	25
10 of which: interest income and similar rev enues	665	25	25
Ancillary and other revenues	15,796	14,402	3,672
10 of which: interest income and similar rev enues	75	76	62
20 of which: Interest expense and similar charges	(135)	(4)	(2)
220 of which: other operating expense and income	15,520	14,561	4,024
40 of which: fee and commission income	688	362	181
180b of which administrativ e costs: b) other administrativ e expense Gross Revenues	(352) 213,015	(593) 206,181	(593) 164,209
Fee and commission expense	(18,087)	(17,767)	(17,276)
50 of which: fee and commission expense	(18,087)	(17,767)	(17,276)
Net revenues	194,928	188,414	146,933
Staff expenses	(83,391)	(81,570)	(58,638)
180a of which administrativ e costs: a) staff expense	(83,391)	(81,570)	(58,638)
Administrative expenses	(41,435)	(42,537)	(30,279)
180b of which administrativ e costs: b) other administrativ e expense	(43,263)	(44,740)	(34,541)
220 of which: other operating expense and income	1,828	2,203	4,262
Operating expenses	(124,826)	(124,107)	(88,917)
EBITDA	70,102	64,307	58,016
Impairment/Write-backs on property, plant, equipment and intangible assets	(2,284)	(1,720)	(588)
200 impairment / write-backs on property, plant and equipment	(364)	(288)	(82)
210 impairment / write-backs on intangible assets	(1,651)	(1,269)	(421)
220 of which: other operating expense and income	(269)	(163)	(85)
Net Provisions for risks and charges	(4,041)	1,538	5,549
180a of which administrativ e costs: a) staff expense	(780)	-	-
190 net prov isions for risks and charges	(3,243)	1,623	4,809
220 of which: other operating expense and income	(18)	(85)	740
Net Write-downs of loans	1,776	114	8,186
130 net losses / recov eries on impairment	1,601	(134)	3,198
220 of which: other operating expense and income	175	7	4,600
10 of which: interest income and similar rev enues	-	-	147
100 gains (losses) on disposal and repurchase	-	241	241
Net income (losses) from investments	2,765	179	7,625
240 profit (loss) of equity inv estments	1,271	179	(26)
270 gains (losses) on disposal of inv estments	1,494	-	7,651
EBIT	68,318	64,418	78,788
Net financial interest and commission	(184)	(196)	(502)
10 of which: interest income and similar rev enues	-	2	2
20 of which: Interest expense and similar charges	(138)	(178)	(483)
110 gains and losses on financial assets/liabilities at fair v alue through profit or loss	(1)	-	-
50 of which: fee and commission expense	(45)	(20)	(21)
EBT	68,134	64,222	78,286
Income tax for the year	(22,750)	(23,550)	(26,763)
290 income tax expense from continuing operations	(22,726)	(21,567)	(22,697)
180b of which administrativ e costs: b) other administrativ e expense	(24)	(1,983)	(4,066)
Profit (loss) from group of assets sold and held for sale net of tax	(390)	(1,435)	(350)
310 profit (loss) after tax from discontinued operations	(390)	(1,435)	(350)
Net Profit (Loss) for the year	44,994	39,237	51,173
Net Profit (Loss) attributable to the Group before PPA	44,994	39,237	51,173
Economic effects of "Purchase Price Allocation"	-	1,157	1,157
220 of which: other operating expense and income	-	1,157	1,157
Net Profit (Loss) attributable to the Group	44,994	40,394	52,330

Rome, March 13, 2018 The Board of Directors

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheet

(€/000)

Assets		12/31/2017	12/31/2016
10	Cash and cash equiv alents	21	18
40	Av ailable-for-sale financial assets	24,001	1,047
60	Loans and receiv ables with banks	49,449	52,575
70	Loans and receiv ables with customers	2,853	10,820
100	Equity inv estments	2,879	1,608
120	Property, plant and equipment	1,819	638
130	Intangible assets	4,506	2,079
	of which goodwill	-	-
140	Tax assets	94,187	143,030
	a) Current tax assets	165	37,722
	b) Deferred tax assets	94,022	105,308
	of which pursuant to Law 214/2011	55,406	55,406
150	Non-current assets and diposal groups held for sale	10	2,516
160	Other assets	117,775	114,103
	Total assets	297,500	328,434

	Liabilities and shareholders' equity	12/31/2017	12/31/2016
10	Due to banks	-	13,076
20	Due to customers	12,106	11,060
80	Tax liabilities	3,852	219
	a) Current tax liabilities	3,405	199
	b) Deferred tax liabilities	447	20
90	Liabilities associated with non-current assets and disposal groups held for sale	-	1,738
100	Other liabilities	37,906	55,986
110	Employee termination benefits	10,360	10,240
120	Prov isions for risks and charges	26,579	25,371
	a) Pensions and similar obligations	-	-
	b) Other prov isions	26,579	25,371
140	Valuation reserv es	1,350	256
170	Reserv es	119,350	117,155
190	Share capital	41,280	41,280
200	Treasury shares (-)	(277)	(277)
220	Net profit (loss) for the year (+/-)	44,994	52,330
	Total liabilities and shareholders' equity	297,500	328,434

Consolidated income statement

(€/000)

Items		12/31/2017	12/31/2016
10	Interest income and similar rev enues	740	235
20	Interest expense and similar charges	(274)	(485)
30	Net interest income	466	(250)
40	Fee and commission income	195,435	159,053
50	Fee and commission expense	(18,132)	(17,296)
60	Net fee and commission income	177,303	141,757
100	Gains (losses) on disposal and repurchase of:	-	241
	b) Av ailable-for-sale financial assets	-	241
110	Gains and losses on financial assets/liabilities at fair v alue through profit or loss	(1)	-
120	Gross income	177,768	141,748
130	Net losses/recov eries on impairment:	1,601	3,198
	a) Loans	1,601	3,333
	d) Other financial assets	-	(135)
140	Net profit from financial activities	179,369	144,946
170	Net profit from financial and insurance activities	179,369	144,946
180	Administrativ e costs:	(127,810)	(97,838)
	a) Staff expense	(84,171)	(58,638)
	b) Other administrativ e expense	(43,639)	(39,200)
190	Net prov isions for risks and charges	(3,243)	4,809
200	Impairment/write-backs on property, plant and equipment	(364)	(82)
210	Impairment/write-backs on intangible assets	(1,651)	(420)
220	Other operating expense and income	19,044	16,337
230	Operating costs	(114,024)	(77,194)
240	Profit (Loss) of equity inv estments	1,271	(26)
270	Gains (losses) on disposal of inv estments	1,494	7,651
280	Profit (loss) before tax from continuing operations	68,110	75,377
290	Income tax expense from continuing operations	(22,726)	(22,697)
300	Profit (loss) after tax from continuing operations	45,384	52,680
310	Profit (loss) after tax from discontinued operations	(390)	(350)
320	Net profit (loss) for the year	44,994	52,330
340	Profit (loss) for the year attributable to shareholders of the Parent Company	44,994	52,330

Consolidated statement of comprehensive income

(€/000)
Items		12/31/2017	12/31/2016
10.	Net profit (loss) for the year	44,994	52,330
	Other comprehensive income after tax not recyclable to profit or loss
20.	Property, plant and equipment	-	-
30.	Intangible assets	-	-
40.	Defined benefit plans	(31)	(79)
50.	Non-current assets classified as held for sale	-	-
60.	Share of v aluation reserv es of equity accounted inv estments	-	-
	Other comprehensive income after tax recyclable to profit or loss
70.	Hedges of foreign inv estment	-	-
80.	Exchange differences	-	-
90.	Cash flow hedges	-	-
100.	Av ailable-for-sale financial assets	1,125	(714)
110.	Non-current assets classified as held for sale	-	-
120.	Share of v aluation reserv es of equity accounted inv estments	-	-
130.	Total other comprehensive income after tax	1,094	(793)
140.	Comprehensive income (item 10 + 130)	46,088	51,537
150.	Consolidated comprehensiv e income attributable to non-controlling interests	-	-
160.	Consolidated comprehensive income attributable to shareholders of the Parent Company	46,088	51,537

doBank

Consolidated statement of changes in shareholders' equity

At 12/31/2016

(€/000)

				uri Ch s d th All atio f pr ofit fro an ge ng e y ea r oc n o m									to y g n
		e c		vio pre us	ye ar				Equ	ity tra	ctio nsa ns				a in p in m	g at in in s
	5 01 2 / 31 / 2 1 at s a e c n a al B	n a al b g n ni e p o n s i e g n a h C	6 01 2 / /1 1 at s a e c n a al B	s e v er s e R	er h ot d n a s d s n ut e d o y vi a Di p	s e v er s re n s i e g n a h C	s e ar h s w e n of e u s Is	y ur s a e tr of n o ti si s ui e ar q c h A s	s d n e d vi di y of ar n n io di ut or b ra ri st xt Di e	ty ui q e s in nt e e m g n ru a st h in C	s e ar h s n w o n o s e iv at iv er D	s n io pt o k c o St	ty ui q e n s nt s i e e m g st n a e v h in C	at e m o c in e v si n e 6 h 01 e 2 pr / 31 m / o 2 C 1	ta o C er nt p e ty ar ui P q 6 of e 01 s' s 2 er er / 31 d d / ol ol 2 h h 1 e e at ar ar s h h a S s	a ta s er st p re ty te ui in q g e s' n lli er ro 6 d nt 01 ol o 2 h / c e 31 n- ar / o h 2 n S 1
ita Sh l are ca p
ord ina ha ry s res -	280 41,	-	280 41,	-	-	-	-	-	-	-	-	-	-	-	280 41,	-
oth ha er s res -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Re ser v es	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
of fits pro -	10, 476	-	10, 476	-	-	-	-	-	-	-	-	-	-	-	476 10,	-
oth er -	273 ,79 1	-	273 ,79 1	) (1 67, 112	-	-	-	-	-	-	-	-	-	-	9 106 ,67	-
tion Va lua res erv es	27 1,0	-	27 1,0	-	-	-	-	-	-	-	-	-	-	1) (77	256	-
uity ins Eq tru nts me	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
ha Tre asu ry s res	) ( 277	-	) ( 277	-	-	-	-	-	-	-	-	-	-	-	( 277 )	-
Ne t p rofi t ( loss ) for the ye ar	) (1 67, 112	-	) (1 67, 112	2 167 ,11	-	-	-	-	-	-	-	-	-	33 52, 0	52, 330	-
Sh ho lde rs' e ity att ribu tab le t are qu o
sha reh old of Pa t C ers ren om pa ny	5 159 ,18	-	5 159 ,18	-	-	-	-	-	-	-	-	-	-	55 51, 9	210 ,74 4	-
Sh ho lde rs' e ity att ribu tab le t are qu o
tro lling int sts no n-c on ere	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-

At 12/31/2017

(€/000)

				All atio f pr oc n o			Ch an	s d ge	uri th ng e y
		e c		vio pre us		ity tra ctio Equ nsa					ns			of	g n
	6 01 2 / 31 / 2 1 at s a e c n a al B	n a al b g n ni e p o n s i e g n a h C	7 01 2 / /1 1 at s a e c n a al B	s e v er s e R	er h ot d n a s d s n ut e d o y vi a Di p	s e v er s re n s i e g n a h C	s e ar h s w e n of e u s Is	y ur s a e tr of n o ti si s ui e ar q c h A s	s d n e d vi di y of ar n n io di ut or b ra ri st xt Di e	ty ui q e s in nt e e m g n ru a st h in C	s e ar h s n w o n o s e iv at iv er D	s n io pt o k c o St	ty ui q e n s nt s i e e m g st n e a v h in C	at e m o c in e v si n e 7 h 01 e 2 pr / 31 m / o 2 C 1	s er d at ol ty s h e a ui ar y q e n h s' a s p to er m g 7 d o 01 ol in C 2 h in nt / e ta 31 ar e er ar / h 2 p S P 1	lli 7 ro 01 nt 2 o ty / c 31 ui n- / q 2 o e 1 n s' at to er s g d a ol in s st h in e re ta ar te er h in p S
Sh ita l are ca p
ord ina ha ry s res -	280 41,	-	280 41,	-	- -		-	-	-	-	-	-	-	-	280 41,	-
oth ha er s res -	-	-	-	-	- -		-	-	-	-	-	-	-	-	-	-
Re ser v es	-	-	-	-	- -		-	-	-	-	-	-	-	-	-	-
fro rofi ts m p -	10, 476	-	10, 476	330 52,	30) (5 2,3	-	-	-	-	-	-	-	-	-	476 10,	-
oth er -	106 ,67 9	-	106 ,67 9	-	-	-	-	-	-	-	-	95 2,1	-	-	4 108 ,87	-
lua tion Va res erv es	256	-	256	-	-	-	-	-	-	-	-	-	-	94 1,0	50 1,3	-
uity ins Eq tru nts me	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
ha Tre asu ry s res	) ( 277	-	) ( 277	-	-	-	-	-	-	-	-	-	-	-	( 277 )	-
Ne t p rofi t ( loss ) for the ye ar	330 52,	-	330 52,	30) (5 2,3	-	-	-	-	-	-	-	-	-	99 44, 4	44, 994	-
Sh ho lde rs' e ity att ribu tab le t are qu o
sha reh old of Pa t C ers ren om pa ny	4 210 ,74	-	4 210 ,74	-	30) (5 2,3	-	-	-	-	-	-	95 2,1	-	0 46, 88	206 ,69 7	-
Sh ho lde rs' e ity att ribu tab le t are qu o
tro lling int sts no n-c on ere	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-

Consolidated cash flow statement

(€/000)
Consolidated Cash Flow Statement (indirect method)	12/31/2017	12/31/2016
A. OPERATING ACTIVITIES
1. Operations:	24,517	25,856
- Profit (loss) for the year (+/-) Capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designed	44,994	52,330
- at fair v alue through profit or loss (+/-)	3	-
- Net losses/recov eries on impairment (+/-)	(1,601)	3,152
- Net write-downs/write-backs on property, plant and equipment and intangible assets (+/-)	2,014	7,940
- Prov isions and other income/expenses (+/-)	1,972	(6,070)
- Unpaid taxes and tax credits (+)	22,125	23,131
- Net write-downs/write-backs on disposal groups, net of tax (-/+)	-	(173)
- Other adjustments (+/-)	(44,990)	(54,454)
2. Liquidity generated by/used in financial assets:	102,656	191,851
- Financial assets at fair v alue	(3)	-
- Av ailable-for-sale financial assets	(22,954)	131
- Loans and receiv ables with banks: on demand	3,135	(32,298)
- Loans and receiv ables with banks: other receiv ables	-	14
- Loans and receiv ables with customers	9,620	162,694
- Other assets	112,858	61,310
3. Liquidity generated by/used in financial liabilities:	(69,178)	(190,421)
- Deposits from banks: on demand	(3,137)	10,077
- Deposits from banks: other liabilities	(10,077)	(2,000)
- Deposits from customers	1,039	(170,911)
- Other liabilities	(57,003)	(27,587)
Net liquidity generated by/used in operating activities - A (+/-)	57,995	27,286
B. Investment activities
1. Liquidity generated by:	4	-
- Sales of property, plant and equipment	4	-
2. Liquidity used in:	(5,666)	(27,268)
- Purchases of equity inv estments	-	(26,553)
- Purchases of property, plant and equipment	(1,548)	(135)
- Purchases of intangible assets	(4,118)	(580)
Net liquidity generated by/used in investment activities - B (+/-)	(5,662)	(27,268)
C. Funding activities
- Distribution of div idends and other	(52,330)	-
Net liquidity generated by/used in funding activities - C (+/-)	(52,330)	-
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS DURING THE YEAR - D=A+/-B+/-C	3	18
RECONCILIATION
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR - E	18	-
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS DURING THE YEAR - D CASH AND CASH EQUIVALENTS: EFFECT OF EXCHANGE RATE VARIATIONS - F	3 -	18 -
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR - G=E+/-D+/-F	21	18

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

PART A – ACCOUNTING POLICIES

A.1– General information

SECTION 1 – STATEMENT OF COMPLIANCE WITH INTERNATIONAL ACCOUNTING STANDARDS

The consolidated financial statements at 31 December 2017 have been prepared in compliance with the international accounting standards (IAS/IFRS) issued by the International Accounting Standards Board (IASB) and the associated interpretations of the International Financial Reporting Interpretations Committee (IFRIC) endorsed by the European Commission and in force as at December 31, 2017 and transposed into Italian legislation with Legislative Decree 38/2005, which exercised the option provided for in Regulation (EC) no. 1606 of July 19, 2002 concerning international accounting standards.

To facilitate interpretation and support the application of the standards, the following documents have been used, even if they have not all been endorsed by the European Commission:

• the Conceptual Framework for Financial Reporting;
• Implementation Guidance, Basis for Conclusions, IFRIC and any other documentation prepared by the IASB or IFRIC complementing the main standards issued;
• the interpretation documents on the application of the IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (Italian Accounting Board - OIC) and Associazione Bancaria Italiana (Italian Banking Association - ABI);
• European Securities and Markets Authority (ESMA) and Consob documents which pertain to the application of specific provisions of the IFRS.

The consolidated financial statements are accompanied by the certification of the Financial Reporting Officer pursuant to Article 154-bis of Legislative Decree 58/1998 and have been audited by the audit firm EY S.p.A. in accordance with Legislative Decree 39 of January 27, 2010.

SECTION 2 – BASIS OF PREPARATION

The consolidated financial statements have been prepared using the euro as the currency of account, in accordance with Article 5, paragraph 2, of Legislative Decree 38/2005, consist of:

• the consolidated financial statements, which include the consolidated balance sheet, the consolidated income statement, the statement of consolidated comprehensive income, the statement of changes in consolidated shareholders' equity and the consolidated statement of cash flows (prepared using the "indirect method");
• the notes to the financial statements

and are accompanied by the Consolidated Report on Operations.

The amounts stated are expressed in thousands of euros unless otherwise specified.

The schedules used and the associated rules of completing those schedules are compliant with the instructions issued in Circular 262 of the Bank of Italy on December 22, 2005 (4th update of December 15, 2015). In addition to data at December 31, 2017, the schedules also present the analogous comparative information at December 31, 2016 (which did not require adjustment of the figures published in those financial statements and do not report the items and tables of the notes to the financial statements that are not applicable to the Group.

The consolidated financial statements have been prepared on a going concern basis in accordance with the provisions of IAS 1, and in compliance with the principles of accrual accounting, the relevance and materiality of accounting information and the prevalence of economic substance over legal form and with a view to fostering consistency with future presentations.

These criteria were applied in consistently with past financial statements both for the purposes of preparing the consolidated financial statements at December 31, 2017 and in presenting

the figures for the previous financial year, with the exception of those highlighted in Part A.2 "Main items of the financial statements", with reference to the entry into force of new standards and interpretations in 2017.

SECTION 3 – SCOPE AND METHOD OF CONSOLIDATION

The following sources were used for the preparation of the consolidated financial statements at December 31, 2017:

• the draft financial statements at December 31, 2017 of the Parent Company doBank S.p.A.;
• the accounts as at December 31, 2017, approved by the competent bodies and functions of the following fully consolidated companies: doRealEstate S.p.A., Italfondiario S.p.A., IBIS S.r.l. and doSolutions S.p.A. These accounting records were reclassified and adjusted appropriately to take consolidation requirements into account and, where necessary, align them with the Group accounting policies.

All of the companies in the scope of consolidation use the euro as their currency of account and, accordingly, no translations of foreign currency amounts have been necessary.

The following section discussed the consolidation principles adopted by the Group in preparing the consolidated financial statements at December 31, 2017.

Subsidiaries

Entities in which doBank holds direct or indirect control are considered subsidiaries. Control over an entity is identified through the ability of the holding to exercise power in order to influence the variable returns to which the group is exposed through its relationship with the same.

In order to ascertain the existence of control, the following factors are considered:

• the purpose and design of the investee in order to identify the entity's objectives, the activities that determine its returns and how these activities are governed;
• power, in order to determine whether the investor has contractual rights that give it the ability to direct the relevant activities; to this end, only substantive rights that give the practical ability to govern are considered;
• the exposure in respect of the investee in order to assess whether the investor has relations with the investee whose returns of which are subject to changes that depend on the investee's performance;
• existence of potential "principal-agent" relationships.

The carrying amount of equity investments in companies consolidated on a line-by-line basis held by the Parent Company is eliminated – with the incorporation of the assets and liabilities of the investees – against the corresponding portion of shareholders' equity attributable to the Group.

Assets and liabilities, off-balance-sheet transactions, income and expense, as well as profits and losses occurring between companies within the scope of consolidation are fully eliminated, in accordance with the consolidation methods adopted.

The costs and revenues of a subsidiary are included in the consolidated figures as of the date control was acquired. The costs and revenues of a transferred subsidiary are included in the consolidated income statement until the date of the disposal, i.e. until the moment in which control over the investee is lost. The difference between the amount received for the subsidiary and the carrying amount of its net assets as of the same date is recognised in the income statement under item 270 "Gains and losses on disposal of investments" for companies subject to line-by-line consolidation.

For companies included within the scope of consolidation for the first time, the fair value of the cost incurred to obtain control over the investee, including transactions costs, is measured as of the acquisition date.

If the disposal does not involve a loss of control, the difference between the amount received in the disposal of a portion of a subsidiary and the associated carrying amount of the net assets is recognised in shareholders' equity.

Associates

An associate is an entity over which an investor has significant influence, but which is not controlled exclusively or jointly controlled. Significant influence is presumed when the investor:

• holds, directly or indirectly, at least 20% of the share capital of another entity, or
• is able, including through shareholders' agreements, to exercise significant influence through:
• o representation on the governing body of the company;
• o participation in policy-making processes, including participation in decisions about dividends or other distributions;
• o material transactions between the entity and its investee;
• o interchange of managerial personnel;
• o provision of essential technical information.

Note that only companies which are governed through voting rights can be classified as subject to significant influence.

Investments in associates are measured using the equity method. In accordance with IAS 36, the carrying amount of associated companies is tested as a single asset, comparing this with the recoverable amount (defined as the higher of its value in use and its fair value less costs of disposal).

Equity method

Equity investments in companies measured using the equity method include any goodwill (less any impairment loss) paid to purchase them. The investor's share of the profit or loss of the investee after the acquisition date is recognised in the income statement under item 240. "Profit (loss) of equity investments". Any dividends distributed reduce the carrying amount of the equity investment.

If the investor's interest in a subsidiary's losses is equal to or greater than its carrying amount, no further losses are recognised, unless the investor has assumed specific obligations to or made payments on behalf of the company.

Gains and losses on transactions with associates or joint arrangements are eliminated in proportion to the percentage interest in the company.

Any changes in the valuation reserves of associates or joint arrangements, which are recorded against the value changes in the associated item, are reported separately in the statement of comprehensive income.

At December 31, 2017, the stake in BCC Gestione Crediti was measured using the equity method.

1 – Investments in subsidiaries

The following table reports the companies included in the scope of consolidation:

			Registered			Owner relationship	Voting rights
	Company name	Headquarters	Office	Type of Relationship (1)	Held by	Holding %	% (2)
1.	doBank S.p.A.	Verona	Verona		Holding
2.	doReal Estate S.p.A.	Verona	Verona	1	doBank S.p.A.	100%	100%
3.	Italfondiario S.p.A.	Rome	Rome	1	doBank S.p.A.	100%	100%
4.	Ibis S.r.l.	Rome	Rome	1	doBank S.p.A.	100%	100%
5.	doSolutions S.p.A.	Rome	Rome	1	doBank S.p.A.	100%	100%

Notes to the table

(1) Type of relationship:

1 = majority of voting rights at ordinary shareholders' meeting

2 = dominant influence at ordinary shareholders' meeting

3 = agreements with other shareholders

4 = other types of control

5 = centralized management pursuant to Article 39, paragraph 1, of Legislative Decree 136/2015.

6 = centralized management pursuant to Article 39, paragraph 1, of Legislative Decree 136/2015.

(2) Voting rights available in general meeting. Voting rights are disclosed only if different from the percentage of ownership

Changes in the scope of consolidation

The year 2017 saw the continuation of the reorganisation of the Group, which began in the last quarter of 2016 with the acquisition of the interest in Italfondiario S.p.A..

With legal effect from March 1, 2017, Italfondiario RE S.r.l. was merged into doRealEstate S.p.A., with a view to centralising real estate operations associated with loan recovery activities in a single company.

In April 2017, Gextra S.r.l. was sold to a non-Group buyer. In the consolidated financial statements at December 31, 2016, Gextra had been recognised among assets held for sale pursuant to IFRS 5.

2 - Significant assessments and assumptions for determining the scope of consolidation

The doBank Group determines the existence of control and, as a consequence, the scope of consolidation, by ascertaining compliance with the requirements provided for in IFRS 10 with regard to entities in which it holds exposures:

• the existence of power over the entities' relevant activities;
• exposure to variable returns;
• the ability to affect the returns.

The factors considered for the purpose of this assessment depend on the entity's method of governance, its purpose and its financial structure.

This analysis led to the inclusion of the subsidiaries listed in the previous section within the scope of consolidation at December 31, 2017.

SECTION 4 – SUBSEQUENT EVENTS

In accordance with the provisions of IAS 10, following the closing date of the financial year no significant events occurred that would require an adjustment to the results presented in the consolidated financial statements.

Please see the appropriate section of the Consolidated Report on Operations for a discussion of the most significant events that occurred after the close of the year.

SECTION 5 – OTHER MATTERS

Risks and uncertainties associated with the use of estimates

The application of accounting policies sometimes involves the use of estimates and assumptions that affect the amounts recorded in the financial statements and the disclosures regarding contingent assets and liabilities. For the purposes of the assumptions underlying estimates, we consider all information available at the date of preparation of the financial statements and any hypotheses considered reasonable in the light of past experience and current conditions in the financial markets.

More specifically, estimation processes were adopted to support the carrying amount of certain items recognised in the consolidated financial statements at December 31, 2017, as required by accounting standards. These processes are essentially based on estimates of future recoverability of the values recognised and were conducted on a going concern basis. The findings of these processes supported the carrying amounts recognised at December 31, 2017. Estimates and assumptions are reviewed regularly.

in view of the presence of uncertainty in the macroeconomic and market environment, the assumptions made, even if reasonable, might not hold in future scenarios in which the Group may operate. Accordingly, future results may differ from the estimates made for the purpose of preparing the financial statements, with the consequent probable need to make adjustments that currently cannot be foreseen or estimated to the carrying amount of the assets and liabilities recognised in the financial statements.

The following sections discuss the key accounting policies for the purposes of providing a true and fair representation of the Group's financial position and performance, both with regard to the materiality of the values in the financial statements and the considerable judgement required in performing the assessments.

Estimation of accruing servicing revenues and the effects of the application of servicing contracts

Sales revenues associated with servicing contracts for the recovery of receivables managed on an agency basis for third parties are recognised on an accruals basis on based on the Group's activities over time, using management IT procedures and complex accounting processes that take account of the different contractual terms of each agency agreement. Servicing agreements contain numerous clauses specifying the rights and duties of doBank in relations with the participating banks, which can generate income on the one hand and contingent liabilities on the other connected with the possibility of non-performance of contractual obligations.

At the date of the preparation of these financial statements, revenues accrued in the period that have not yet been manifestly accepted by the client are recognised. Depending on the terms of contract and the established practice, that acceptance may take the form of the issuance of an invoice or an explicit notice.

At the date of the preparation of these financial statements, the portion of servicing revenues without such manifest acceptance amounted to 26% of total amounts to be invoiced at December 31, 2017 and 9% of item 40. Fee and commission income of the consolidated income statement. In addition, any certain or contingent liabilities must be prudentially determined in order to assess compliance with the obligations set out in the servicing agreement, taking due account of natural differences in interpretation of contractual clauses in the context of actual recovery operations.

Determination of the fair value of financial assets

In the presence of financial instruments not listed on active markets or illiquid and complex instruments, it is necessary to adopt appropriate valuation processes that require the use of a certain degree of judgement concerning the choice of valuation models and the related input parameters, which may sometimes not be observable on the market.

A degree of subjectivity is present in the assessment of the observability of certain parameters and the consequent classification in the hierarchy of inputs used in determining fair value.

With particular reference to valuation methods and the non-observable inputs that may be used in fair value measurements, please see section A.4 - Information on fair value.

Estimation of the recoverability of deferred tax assets

The Group has significant deferred tax assets mainly arising from temporary differences between the date on which certain business costs are recognised in the income statement and the date on which the same those can be deducted. Deferred tax assets are written down to the extent that they are deemed unrecoverable given the outlook for performance and the resulting expected taxable income, taking due account of tax legislation, which allows those assets to be converted into tax credits under certain conditions, regardless of the Group's ability to generate future profits. In Section 14 - Tax assets and tax liabilities under assets in Part B of these explanatory notes, information is provided on the nature and the assessments conducted with regard to the recognition of deferred tax assets.

Estimation of provisions for risks and charges

The complexity of the situations that underlie outstanding disputes, together with the problems of interpretation concerning the applicable legislation, make it difficult to estimate the liabilities that may emerge when pending litigation is settled. The valuation difficulties impact both the amount and the timing of any manifestation of the liability. These are particularly evident if the proceedings are at an early stage and/or the associated preliminary enquiry is in progress. For more information on the Group's main risk positions in respect of legal disputes (revocatory

actions in bankruptcy and pending litigation), please see Section 12 - Provisions for risks and charges in Part B - Liabilities of these explanatory notes.

New accounting standards

The Group adopted for the first time a number of accounting standards and amendments that entered force for annual reporting periods beginning on or after January 1, 2017, a summary of which is provided below, noting that those changes did not have a substantive impact on the amounts reported in the balance sheet or the income statement:

• Amendments to IAS 7: Disclosure Initiative. The changes call for disclosures concerning changes in liabilities arising from financing activities, whether connected with changes in cash flows or other changes;
• Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealized Losses. The amendment seeks to clarify how to account for deferred tax assets in respect of debt instruments measured at fair value.
• Annual Improvements to IFRS Standards 2014-2016 Cycle, aimed at clarifying certain provisions concerning the following IFRS:
• IFRS 12 Disclosure of Interests in Other Entities (application as from January 1, 2017)
• IFRS 1 First-time Adoption of International Financial Reporting Standards (application as from January 1, 2018)
• IAS 28 Investments in Associates and Joint Ventures (application as from January 1, 2018);

The European Commission also endorsed the following accounting standards that were not applied as at December 31, 2017 as the Group has not opted for early application, where permitted:

• IFRS 9 Financial Instruments (application as from January 1, 2018);
• IFRS 15 Revenue from Contracts with Customers (application as from January 1, 2018);
• IFRS 16 Leases (application as from January 1, 2019, early application is not permitted);
• Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (application as from January 1, 2018);
• Clarifications to IFRS 15 Revenue from Contracts with Customers (application as from January 1, 2018).

At December 31, 2017 the following new standards, amendments and interpretations issued by the IASB had not yet been endorsed by the European Union:

• IFRS 17 Insurance contracts (application as from January 1, 2021; early application is permitted);
• IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration (application as from January 1, 2018);
• IFRIC 23 Uncertainty over income tax treatment (application as from January 1, 2019).
• Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions (application as from January 1, 2018);
• Amendments to IAS 40: Transfers of Investment Property (application as from January 1, 2018);
• Amendments to IFRS 9: Prepayment Features with Negative Compensation (application as from January 1, 2019);
• Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures (application as from January 1, 2019);
• Annual Improvements to IFRS Standards 2015-2017 Cycle, aimed at clarifying certain provisions concerning the following IFRS (application as from January 1, 2019):
• IFRS 3 Business Combinations
• IFRS 11 Joint Arrangements
• IAS 12 Income Taxes
• IAS 23 Borrowing Costs

IFRS 9 – Financial Instruments

On November 29, 2016, Regulation (EU) no. 2016/2067 was published in the Official Journal of the European Union, introducing the new international accounting standard IFRS 9 Financial Instruments. Starting from January 1, 2018, this standard replaces IAS 39, which, for financial statements for the year ending December 31, 2017, governs the classification and measurement of financial instruments.

IFRS 9 is divided into three different areas, the impact of which on the Group is limited to the first two:

• • Classification and measurement (C&M) of financial instruments;
• • Impairment;
• • Hedge accounting.

With regard to the first area (C&M), the new standard introduces a model under which the classification of financial assets is guided, on the one hand, by the contractual characteristics of the cash flows of the instrument itself (SPPI criterion - Solely Payments of Principal and Interests) and, on the other hand, by the management intent (business model) with which the instrument is held.

The new provisions on financial assets replace the four classes envisaged under IAS 39 with the following categories determined on the basis of the two drivers indicated above:

• Financial assets measured at fair value through profit or loss;
• Financial assets measured at fair value through other comprehensive income.
• Financial assets measured at amortized cost;

Financial assets can be recognised at amortized cost or at fair value through other comprehensive income only if they pass the test on the contractual characteristics of the instrument's cash flows (SPPI test).

Equity securities are always measured at fair value through profit or loss unless the entity irrevocably elects, at initial recognition, for shares not held for trading to present changes in value in an equity reserve that will never be transferred to profit or loss, even if the financial instrument is transferred (no recycling).

With regard to the provisions on impairment, the criterion of incurred losses has been replaced with that of expected losses, moving forward the recognition of write-downs in profit or loss from the time of impairment to an earlier moment, i.e. the time of a significant increase in the credit risk and requiring in any case a write-down corresponding to the expected loss at 12 months on the entire performing portfolio without a sign of any significant increase in risk. In particular, IFRS 9 requires the recognition of expected losses according to an impairment method divided into three stages of impairment:

• 12-month expected loss (stage 1): this applies to all exposures in the absence of a

significant increase in credit risk;

• lifetime expected loss (stage 2 and stage 3): this applies when there has been a significant increase in credit risk, regardless of whether it is recognised on an individual or collective basis.

In 2017 the Group undertook a specific project with an initial assessment phase to identify the main gaps, a design phase aimed at identifying the steps necessary for the conversion to the new accounting standard and, finally, an implementation phase that is expected to be completed by the first quarter of 2018.

The entire project was developed with the direct involvement of the Administration, Finance and Control and Risk Management Functions in the definition of the guidelines and the policies preparatory to the implementation of IFRS 9, which were submitted for approval to the Board of Directors. Considering the pervasive impacts of IFRS 9, other Group units were also involved in the project within the framework of thematic working groups (mainly business units like the Banking Function and organizational and IT units).

With regard to C&M, the Group has identified the various business models adopted for financial assets, on the basis of the provisions of IFRS 9.

As regards the SPPI testing of financial assets, an internal methodology was defined on the basis of two types of decision tree, one for loans and receivables and one for debt securities. These decision trees underwent IT implementation within the accounting and management systems currently in use.

Within the scope of the Parent Company's Administration, Finance and Control Function, the SPPI test was centralised with contractual analysis and analysis of cash flows of the Group's financial assets, the results of which led to the identification of the appropriate classification of financial assets at the time of their first adoption, as summarised below:

IAS 39						IFRS 9 - C&M			FTA impact on reserves from
Classification	Measurement	As at December 31, 2017	Business Model	SPPI Test	AC	FVOCI recyclin g	FVTPL	FVOCI no recycling	Reclassification from Valuation Reserve	Delta evaluation (Cost/FV)
40. Available-for-sale financial assets		24,001			-	1,003	23,000	-	1,127	2
Debt securities		23,958			-	1,003	22,955	-	1,127	-
Gov ernment securities	FVOCI	1,003	HTC&S	pass	-	1,003	-	-	-	-
Units in collectiv e inv estment undertakings	FVOCI	15, 221	HTC&S	fail	-	-	15,221	-	(53)	-
Securitizations' ABS	FVOCI	7,734	HTC&S	fail	-	-	7,734	-	1,180	-
Equities	FVOCI/Cost	43	-	-		- -	45	-	-	2
60. Loans and receivables with banks	AC	49,449	HTC	pass		- 49,449	-	-	-	-
Liquidity in current accounts		49,171			49,171	-	-	-	-	-
Time deposits		169			169	-	-	-	-	-
Debt securities		109			109	-	-	-	-	-
70. Loans and receivables with customers	AC	2,853			2,853	-	-	-	-	-
Loans and bank accounts from banking activ ity	AC	2,29 6	HTC	pass	2,296	-	-	-	-	-
Purchased loans and receiv ables	AC	557	HTC	pass	557	-	-	-	-	-
Total financial assets		76,303			52,302	1,003	23,000	-	1,127	2

Notes

AC Amortised cost FVOCI recycling Fair Value through Other Comprehensiv e Income FVTPL Fair v alue though Profit or Loss FVOCI no recycling Fair Value through Other Comprehensiv e Income without recycling through P&L HTC Hold to Collect HTC&S Hold to Collect & Sell

With regard to the impairment, in accordance with the new logic established by IFRS 9, the Group has drawn up a specific policy that governs:

• guidelines for tracking the credit quality of the portfolios of financial assets measured at amortised cost and at fair value through other comprehensive income;
• the parameters for determining a significant increase in credit risk;
• the criteria and parameters to be used to estimate the impairment for each type of financial asset.

A number of technology upgrades are also being implemented for impairment purposes, in order to optimise and standardise operations related to the monitoring of credit quality, staging, calculation and recognition of value adjustments to financial assets.

The portfolio of loans and debt securities outstanding at December 31, 2017 amounted to €76.3 million and represents 26% of total consolidated assets. The portion of this portfolio that is not measured at fair value through profit or loss and therefore undergoes impairment testing amounts to €53.3 million (70% of financial assets). If account is taken of the fact that most of this amount regards bank current accounts classified in stage 1 (€49.2 million), the portion of financial assets exposed to a potential increase in impairment following application of the new standard declines to 5%.

This justifies the small amounts reported in the table below, which show no increase in impairment of financial assets at the moment of first-time adoption of IFRS 9 as a result of the increase of €5 thousand in write-downs of loans and receivables with customers and a decrease of the same amount in write-downs of loans and receivables with banks. Impairment of debt securities was also nil.

Trade receivables, classified under Other assets, also underwent impairment testing using the rules indicated in the new standard and incorporated in the internal policy referred to earlier. For those receivables, which amount to €99.3 million – of which €33.6 million already invoiced and €65.7 million to be invoiced – and account for 33% of assets, impairment increased by €35 thousand, equal to 0.1% of invoices issued at December 31, 2017.

IAS 39						IFRS 9		FTA impact
Classification	Measurement	As at December 31, 2017	Impairment (cumulated adjustments) -B	AC	FVOCI	Stage (1,2,3)	Impairment (cumulated adjustments) -A	Impairment gap C=A-B
40. Available-for-sale financial assets		1,003	-	-	1,003		-	-
Debt securities		1,003	-	-	1,003		-	-
Gov ernment securities	FVOCI	1,003	-	-	1,003		-	-
60. Loans and receivables with banks	AC	49,449	-	49,449	-		5	5
Liquidity in current accounts		49,171	-	49,171	-	1	-	-
Time deposits		169	-	169	-	2	3	3
Debt securities		109	-	109	-	1	1	1
70. Loans and receivables with customers	AC	2,853	472	2,853	-		467	(5)
Loans and bank accounts from banking activ ity	AC	2,296	-	2,296	-		4	4
Loans		1,094	2	1,094	-	1	2	(0)
Bank accounts		468	9	468	-	1,2	2	(7)
Liquidity in postal current accounts		610	-	610	-	1	-	-
Liquidity in ITF postal current accounts		124	-	124	-	1	-	-
Purchased loans and receiv ables	AC	557	472	557	-		463	(9)
Purchased bad loans		265	460	265	-	3	460	-
Fiscal credits		292	12	292	-	1	3	(9)
160. Other assets	AC	117,775	115	117,775	-		-	35
of which commercial credits		99,337	115	99,337	-		150	35
o/w Issued invoices		33,658	115	33,658	-	1,3	150	35
o/w Invoices to be issued		65,679	-	65,679	-	1	-	-
Total assets under impairment		152,642	587	151,639	1,003		622	35

IFRS 15 - Revenues from Contracts with Customers

On October 29, 2017 Regulation (EU) no. 2016/1905 was published in the Official Journal of the European Union. It introduced the new international accounting standard IFRS 15 Revenue from Contracts with Customers. Starting from January 1, 2018, this standard changes the set of international accounting standards and interpretations on the recognition of revenues and, in particular, IAS 18 "Revenue".

IFRS 15 establishes a new revenue recognition model that applies to all contracts with

customers with the exception of those that fall within the scope of application of other IAS/IFRS such as leases, insurance contracts and financial instruments. The main changes introduced with the standard are:

• a 5-step revenue–recognition model focused on the transfer of control and the allocation of the transaction price to each separate contractual obligation;
• two possible approaches for revenue recognition ("at a point in time" or "over time");
• a clear reference framework for the estimation of any variable consideration (contingent considerations) present in the contract (bonuses, penalties, etc.);
• the capitalisation of the costs of obtaining and fulfilling the contract under specific conditions;
• an increase in the disclosures to be provided in the notes to the financial statements.

In order to assess the qualitative and quantitative impacts of the introduction of the standard, in 2017 the doBank Group undertook an internal project that mainly involved the Administration, Finance and Control Function.

In particular, the sales contracts to be analysed underwent scoping based on their share of total sales revenues at the consolidated level.

An analysis of the contracts identified as most significant was then conducted using a checklist developed on the basis of the provisions of IFRS 15.

The conclusion for all the transactions subject to assessment is that the application of the new standard will have virtually no quantitative or process impacts.

A.2 – Main items of the Financial Statements

1 – Available-for-sale financial assets

Recognition

Available-for-sale financial assets are non-derivative financial assets that are not classified as loans and receivables, held-to-maturity investments or assets measured at fair value. Such assets are held for an undefined period of time and are held to meet possible liquidity requirements or respond to changes in interest rates, exchange rates or prices.

Classification

Money market instruments, other debt securities and equity securities can be classified as financial investments available for sale. These include share-based investments in the form of minority interests that cannot be classified as controlling interests, joint interests or equity investments in associates.

Measurement

Available-for-sale financial assets are initially recognised on the settlement date at fair value, which normally corresponds to the consideration transferred in the transaction, including costs and revenues directly attributable to the instrument itself.

Interest-bearing instruments are recognised at amortised cost using the effective interest rate method.

These assets are subsequently measured at fair value. For interest-bearing securities, interest is recognised in profit or loss using the amortised cost approach. Profit and loss from changes in fair value is recognised under item 140. "Valuation reserves" in shareholders' equity, with the exception of losses due to impairment and profits and losses on changes in monetary assets (debt securities), which are respectively recognised under item 130.b) "Net losses/recoveries on impairment of available-for-sale financial assets" and item 80. "Gains and losses on financial assets and liabilities held for trading" - until the financial asset is transferred, at which point the accumulated profits and losses are recognised in profit or loss under item 100.b) "Gains (losses) on disposal and repurchase of available-for-sale financial assets".

Fair value changes recognised under item 140. "Valuation reserves" are also recognised in the statement of comprehensive income.

Equity instruments (shares) not listed on an active market and whose fair value cannot be determined reliably due to a lack of or unreliable information for fair value measurement are carried at cost, corresponding to the last reliably measured fair value.

If there is objective evidence that the asset has experienced a lasting reduction in value (impairment), the accumulated loss, recognised directly under item 140 of shareholders' equity, "Valuation reserves", is transferred to the income statement under item 130.b) "Net losses/recoveries on impairment". For debt securities, evidence of impairment is established by circumstances indicating financial difficulties that would prejudice the collection of principal or interest.

For equity instruments, impairment is measured by considering any difficulties the issuer might have in servicing the debt as well as additional indicators such as fair value falling below cost and adverse changes in the situation in which the company operates.

More specifically, in cases in which the reduction of fair value to below cost exceeds 50% or lasts for more than 18 months, the loss of value is generally considered to be lasting.

On the other hand, if the decline in the fair value of the instrument to below cost is less than or equal to 50% but greater than 20% or lasts for less than 18 months but more than 9, the Bank analyses additional income and market information. If the results of this analysis are such to cast doubt on the possibility of recovering the original amount invested, an impairment loss is recognised.

The amount transferred to profit or loss is therefore equal to the difference between the carrying amount (purchase cost net of any previously recognised impairment losses) and the current fair value.

In the case of instruments carried at cost, the amount of the loss is determined as the difference between the carrying amount of the instruments and the present value of estimated future cash flows, discounted on the basis of the current market rate of return for similar financial assets (i.e. the recoverable amount).

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively connected with an event that occurred in a period subsequent to that in which the impairment loss was recognised, the loss is written back, recognising the corresponding amount in the same item of the income statement. However, the write-back cannot result in a carrying amount that exceeds the value that would result from the application of the amortised cost method if the loss had never been recognised.

Impairment losses for shares, recognised in profit or loss, are subsequently written back with effects in equity when the original reasons prompting the write-down no longer obtain.

Derecognition

Available-for-sale financial assets are derecognised when the assets are is transferred, with transfer of substantially all of the associated risks and rewards, or when the contractual rights expire.

2 - Loans and receivables

Recognition

Loans and receivables consist of non-derivative financial assets with customers and banks, with fixed or determinable payments and that are not listed on an active market. Loans and receivables are recognised on the date the contract is signed, which normally coincides with the date they are disbursed to the counterpart.

Loans and receivables also include, in the appropriate classification, loans involved in securitisations (subsequent to January 1, 2002) that do not meeting the requirements under IAS 39 for derecognition (see Section 18 – Other information– Derecognition).

Measurement

After initial recognition at fair value, including transaction costs directly attributable to the acquisition or to the disbursement of the financial assets (if not yet settled), loans and receivables are carried at amortised cost, using the effective interest rate method, adjusted if necessary to take account of any write-downs/write-backs resulting from the measurement process.

Profits (or losses) on loans and receivables, when not hedged, are recognised in profit or loss:

• o when the financial asset in question is eliminated, under item 100.a) "Gains
• (losses) on disposal and repurchase;
• or
• o when the financial asset has suffered impairment, under item 130.a) "Net losses/recoveries on impairment".

Interest on loans and receivables disbursed is classified under item 10. "Interest income and similar revenues" and is recognised on an accruals basis.

Loans and receivables undergo testing to identify assets that, following the occurrence of events after recognition, present objective evidence of possible impairment. These impaired loans and receivables are periodically analysed and reviewed, at least once a year.

A loan or receivable is considered impaired when it is felt that the entire amount as determined on the basis of the original contractual conditions, or an equivalent value, will probably not be recovered.

The write-downs applied to the loans and receivables are determined by discounting the expected cash flows from payments of principal and interest. For the purposes of determining the present value of the flows, the key elements used are estimated recoveries, the associated maturities and the discount rate. In order to estimate collections and the associated maturities of problem positions, detailed payment plans are used when available. If not, estimated and standard amounts determined on the basis of internal time series and sector studies are adopted, taking account of technical form, geographical location, type of guarantees and any other factors considered relevant.

All problem loans and receivables are reviewed and analysed periodically. Every subsequent change in the amount or maturity of expected cash flows that leads to a decrease with respect to the initial estimates prompts the recognition of a write-down under income statement item 130.a) "Net losses/recoveries on impairment of loans".

If the quality of the impaired loan improves and there is reasonable certainty of timely recovery of principal and interest in line with the original contractual terms, a write-back is recognised under the same item of the income statement, up to a maximum limit of the amortised cost value that the asset would have had if the previous write-downs had never been recognised. In accordance with Bank of Italy rules, set out in Circular no. 272 of July 30, 2008, as amended, impaired exposures – which correspond to the non-performing exposures referred to in the Implementing Technical Standards of the European Banking Association (ITS EBA) - are classified in the following categories:

• bad loans these comprise formally impaired loans and receivables, consisting of exposures with customers that are insolvent, even if not legally certified as such, or in comparable situations. The positions are normally measured on an analytical basis or, solely in cases in which individual impairment losses have not been recognised and cannot be identified, on the basis of collective measurement by uniform categories of exposure;
• positions unlikely to pay these are on- and off-balance-sheet exposures that do not meet the conditions necessary for classifying the debtor under bad loans and for which it has been determined that it is improbable, in the absence of actions such enforcement of guarantees, that the debtor will be able to fully settle (both principal and/or interest) their credit obligations. This assessment is carried out independently of the presence of any amounts (or instalments) past due and unpaid. Classification under positions unlikely to repay is not necessarily connected with the presence of explicit irregularities (failure to repay), but instead is associated with the existence of evidence that suggests a risk of non-payment by the debtor. Positions unlikely to repay are generally measured analytically, or by applying standard percentages to uniform groups exposures;
• past-due or over-limit exposures these represent the entire exposure to counterparties who are not classified under the previous categories but who have positions that, at the reference date, are past due or over limit. Such exposures are measured in a standard manner on the basis of historical/statistical criteria, applying (when available) the risk level determined using the appropriate risk factor adopted for the purposes of Regulation (EU) no. 575/2013 (CRR) concerning prudential requirements for credit institutions and investment companies ("loss given default" or LGD).

Collective measurement regards portfolios of unimpaired assets to which a measurable latent loss can be attributed, even though no individual objective evidence of loss has been found, taking due account of the risk factors used for the purposes of the CRR prudential regulatory requirements.

At least every three months, the Group assesses the risk of credit exposures and recognises any corresponding provisions, so that the presentation of the net value of the asset is consistent with the valuation.

For banking products, this activity is conducted for performing positions at reporting dates, applying a series of expert parameters defined by the Risk Management Unit considering the type of product, the policies applied at the time the loan is disbursed and developments in the relationship. These are revised over time to reflect a variety of factors, including internal experience.

This approach involves the application of two parameters, PD (probability of default of the counterparty) and LGD (Loss Given Default, the expected loss in the event of customer default). The product of these parameters generates a sort of theoretical expected loss to which the risk attributed to the position, and consequently, the level of provisions corresponds. For impaired positions the assessment is made on a case-by-case basis at the moment of the classification, on the basis of concrete and conservative assessments of expected recoveries, or at the moment of their revision following a modification of the risk profile. The criteria of the policy are to be considered a minimum benchmark to which exceptions can be made only in the presence of sound evidence.

The review of impaired positions is conducted at least every 3 months, in accordance with current corporate processes.

The Group's Risk Management Unit checks the overall appropriateness and consistency of the provisions, intervening in cases in which it finds shortcomings.

Write-downs for losses on loans and receivables are recognised as a reduction in the carrying amount of the loan.

Derecognition

A loan is fully or partially derecognised when it is considered definitively uncollectable, based on appropriate documentation, or is written off, or when the legal justification for the loan no longer exists.

A loan is also derecognised when:

• the contractual rights to the cash flows from the loan expire;
• the loan is transferred, transferring substantially all the risks and rewards associated with it;
• having either not transferred or retained substantially all the risks and rewards, control over the loan itself is lost.

Write-offs are recognised directly under item 130.a) "Net losses/recoveries on impairment of loans" in the income statement and are recognised as a decrease in the principal amount of the loan. Partial or full recoveries of previously written-down amounts are recognised under the same item. In the case of gains or losses on disposals, the financial effects are recognised under item 100.a) "Gains/losses on disposal and repurchase of loans". Any amounts received in respect of previously derecognised loans and receivables (even if at a time prior to the acquisition) are recognised under item 130.a) "Net losses/recoveries on impairment of loans".

3 – Equity investments

The criteria for initial recognition and subsequent measurement of equity investments are governed by IFRS 10 - Consolidated Financial Statements, IAS 27 - Separate Financial Statements, IAS 28 - Investments in Associates and Joint Ventures, and IFRS 11 - Joint Arrangements.

These standards are explained in Part A.1 - Section 3. Method and scope of consolidation, where disclosure is also provided on the assessments and assumptions made to establish the existence of control or significant influence.

The remaining equity investments - other than subsidiaries, associates and joint ventures, and any reported under Items 150. "Non-current assets and disposal groups held for sale" and 90. "Liabilities associated with non-current assets and disposal groups held for sale" - are classified among financial assets available for sale and treated accordingly (see Section 1 - Availablefor-sale financial assets).

4 – Property, plant and equipment

Recognition This item includes:

• land and buildings

• furniture and fixtures
• plant and machinery
• other machinery and equipment

and breaks down into the following categories:

• assets used in the business;
• investment property.

Assets used in the business have physical substance, are held for use in production or in the provision of goods and services or for administrative purposes and can be used for more than one financial year. Improvements to leasehold assets are improvements and incremental expenses for identifiable and separable items of property, plant and equipment. In this case, the assets are classified in specific sub-items (e.g. plant), depending on the nature of the asset in question. Normally, these investments are incurred in order to render properties leased from third parties suitable for their intended use.

Improvements and incremental expenses for identifiable and non-separable items of property, plant and equipment are recognised under Item 160. "Other assets".

Investment property refers to real estate investments pursuant to IAS 40, i.e. properties held (owned outright or held through a finance lease) in order to earn rentals and/or for capital appreciation.

Property, plant and equipment is initially recognised at cost, including all charges directly attributable to the "commissioning" of the asset (transaction costs, professional fees, direct costs to transport the asset to the assigned location, installation costs, dismantling expense).

Expenses incurred subsequently are added to the carrying amount of the asset or recognised as separate assets if it is probable that future economic benefits will be received in excess of those initially estimated and the cost can be reliably determined.

All other expenses incurred subsequently (e.g. ordinary maintenance) are recognised through profit or loss in the period in which they are incurred, under the item:

• 180.b) "Other administrative expense", if pertaining to assets used in the business; or
• 1. "Other operating expense and income", if pertaining to investment property.

Measurement

Subsequent to initial recognition, property, plant and equipment is recognised at cost net of cumulative depreciation and impairment.

Assets with defined useful lives are depreciated at constant rates over their useful life.

Assets with unlimited useful life are not depreciated.

The useful life of property, plant and equipment is reviewed at the end of each period, taking into account the conditions of use of the asset, the state of maintenance, expected obsolescence, etc. and, if these expectations differ from previous estimates, the depreciation charge for the current period and subsequent periods is adjusted.

If there is objective evidence that an individual asset may have incurred an impairment loss, the carrying amount of the asset is compared with its recoverable amount, which is equal to the higher of an assets fair value less costs to sell and its value in use, understood as the present value of expected future cash flows originated by the asset. Any write-downs are recognised under item 200. "Impairment/write-backs on property, plant and equipment" in the consolidated income statement.

If the value of a previously written-down asset is written back, the new carrying amount cannot exceed the net carrying amount that it would have had if no impairment loss had been recognised on the asset in previous years.

Derecognition

Property, plant and equipment is derecognised on disposal or when no future economic

benefits are expected from its use or disposal. Any difference between the disposal value and the carrying amount is recognised in the income statement under Item 270. "Gains and losses on disposal of investments".

5 – Intangible assets

Recognition

Intangible assets are non-monetary assets with multi-year utility, are identifiable, lack physical substance, are controlled by the company and will probably generate future economic benefits.

Intangible assets mainly comprise goodwill, software, brands and patents.

Intangible assets other than goodwill are recognised at the purchase cost, including any direct costs incurred to prepare the asset for use, net of accumulated amortisation and any impairment.

Any expenses incurred subsequent to the acquisition:

• are recognised as an increase in the initial cost if they increase the future economic benefits of the underlying assets (i.e. if they increase their value or productive capacity);
• are recognised entirely through profit or loss for the year in which they are incurred in other cases (i.e., when they do not increase the original value of the assets, but merely conserve the original functionality).

Intangible assets with a finite life are amortised on a straight-line basis over their estimated useful life.

Intangible assets with an indefinite useful life are not amortised.

Measurement

If there is objective evidence that an individual asset may have incurred an impairment loss, the carrying amount of the asset is compared with its recoverable amount, which is equal to the higher of its fair value less costs to sell and its value in use, understood as the present value of expected future cash flows originated by the asset. Any write-downs are recognised under item 210. "Impairment/write-backs on intangible assets" in the consolidated income statement.

For intangible assets with indefinite life, even if no evidence of impairment is found, the carrying amount is compared with the recoverable amount on an annual basis. If the carrying amount is greater than the recoverable amount, a loss is recognised under Item 210. "Impairment/write-backs on intangible assets" in the consolidated income statement in an amount equal to the difference between the two values.

If the value of a previously written-down intangible asset other than goodwill is written back the new carrying amount shall not exceed the net carrying amount that it would have had if no impairment loss had been recognised on the asset in previous years.

Derecognition

Intangible assets are derecognised on disposal or when no future economic benefits are expected from their use or disposal. Any difference between the disposal value and the carrying amount is recognised in the income statement under Item 270. "Gains and losses on disposal of investments".

6 - Non-current assets and disposal groups held for sale

These categories include individual non-current assets (property, plant and equipment, intangible assets, and financial assets) or groups of assets held for sale, together with the associated liabilities, as governed by IFRS 5.

The individual assets (or groups of assets held for sale) are recognised respectively under Item 150. "Non-current assets and disposal groups held for sale" and item 90. "Liabilities associated with non-current assets and disposal groups held for sale" at the lower of the carrying amount and the fair value net of disposal costs.

The positive or negative balance of income (dividends, interest, etc.) and charges (interest expense, etc.) relating to the groups of assets and liabilities held for sale, net of the associated current and deferred taxes, is recognised under item 310. "Profit (Loss) after tax from disposal groups held for sale" in the consolidated income statement.

7 - Current and deferred tax

Recognition

Tax assets and tax liabilities are recognised respectively under Item 140. "Tax assets" in assets and Item 80. "Tax liabilities" in liabilities.

In application of the "balance sheet method", items for current and deferred taxes include:

• current tax assets, i.e. excess payment of tax liabilities on the basis of current tax laws governing corporate income;
• current tax liabilities, i.e. tax liabilities to be settled on the basis of current tax laws governing corporate income;
• deferred tax assets, i.e. amounts of income taxes recoverable in future periods as a consequence of:
• temporary deductible differences (represented mainly by costs deductible in future periods on the basis of current tax laws governing corporate income);
• unutilised tax losses carried forward;
• unutilised tax credits carried forward;
• deferred tax liabilities, i.e. income tax liabilities to be settled in future periods as a consequence of temporary taxable differences (mainly represented by the deferral of taxation of revenues or the advance deduction of charges on the basis of current tax laws governing corporate income).

Current tax assets and liabilities are recognised by applying current tax rates and are recognised as charges (income) using the same accrual criteria adopted for the costs and revenues which generated them. In particular, current IRES (corporate income tax) and IRAP were calculated using the tax rates established in current tax law, using the new rate of 24% for IRES and, for doBank and Italfondiario, the surtax of 3.5 percentage points applicable to credit and financial institutions (Law 208 of December 28, 2015.

In general, deferred tax assets and liabilities arise in the cases in which the deductibility or taxability of a cost or revenue is deferred with respect to their recognition for accounting purposes.

Current tax items include payments on account (current assets) and liabilities to settle (current liabilities) for income tax for the period. Current tax liabilities and the associated receivables for payments on account still outstanding at the end of the year are recognised as a net amount in a single item.

Deferred tax assets and liabilities are recognised in the balance sheet in their full amount without offsetting.

Measurement

Deferred tax assets and liabilities are recognised on the basis of the tax rates which, as of the reporting date, are expected to be applicable in the period in which the asset will be realised or the liability will be eliminated, in accordance with current tax legislation. They are periodically reviewed in order to take account of any regulatory changes.

Deferred tax assets are only recognised if their recovery through expected future taxable income is probable, measured on the basis of the Group's ability to produce taxable income in future financial years. Deferred tax liabilities are always recognised. A requirement for the recognition of deferred tax assets is that it is considered reasonably certain in view of corporate developments that taxable income will be generated against which the temporary deductible differences will be used. In accordance with the provisions of IAS 12, the probability that future taxable income will be sufficient to utilise the deferred tax assets is subject to periodic review. If that review suggests that future taxable income will be insufficient, the deferred tax assets are reduced in a corresponding amount.

Current and deferred taxes are recognised in the consolidated income statement under item 290. "Income tax expense from continuing operations", with the exception of taxes which refer to items which are credited or debited, in the same or another financial year, directly in equity, such as, for example, those in respect of profits or losses on available-for-sale financial assets, whose changes in value are recognised directly in valuation reserves in the statement of comprehensive income.

Derecognition

Deferred tax assets and liabilities are derecognised at the time they are recovered/realised.

8 – Provisions for risks and charges

Recognition

Provisions for risks and charges consist of liabilities recognised when:

• the company has a present obligation (legal or constructive) as a result of a past event;
• it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
• a reliable estimate can be made of the amount of the obligation.

If these conditions are not met, no liability is recognised.

Measurement

The amounts allocated to provisions are determined so that they represent the best estimate of the expense required to settle the obligation. In making this estimate, the risks and uncertainties pertaining to the facts and circumstances involved are taken into account.

Specifically, when the effect of deferring the charge in time is significant, the amount of the provision is determined as the present value of the best estimate of the cost assumed necessary to extinguish the obligation. In this case, the discount rate used reflects current market assessments.

Provisions are periodically reviewed and adjusted if necessary to reflect the current best estimate. When, following a review, it is found that the charge is unlikely to be incurred, the provision is reversed.

Derecognition

A provision is used only against the charges for which it was initially recognised.

Provisions for the year, recognised under item 190. "Net provisions for risks and charges" in the income statement, include increases in provisions due to the passage of time and are reported net of any reversals.

9 - Other information

Derecognition of financial assets

Derecognition is the removal of a previously recognised financial asset or liability from the balance sheet.

Before evaluating the existence of the conditions for the derecognition of financial assets, IAS 39 establishes that it is necessary to verify whether these conditions apply to the assets in their entirety or whether they refer to only a part of them. The rules governing derecognition are applied to part of the financial assets involved in a transfer only if at least one of the following requirements is met:

• the part comprises only specifically identified cash flows from a financial asset (or group of financial assets), for example, only the interest cash flows pertaining to the asset;
• the part comprises a fully proportionate share of the cash flows identified as

percentage of the total (e.g. 90% of all cash flows from the asset);

• the part comprises a fully proportionate share of specifically identified cash flows (e.g. 90% of the cash flows on the pertinent part of the interest on the asset).

If these requirements are not met, the rules governing derecognition shall be applied to the financial asset (or group of financial assets) in its entirety.

The conditions for full derecognition of a financial asset are the natural expiry of the contractual rights to the cash flows, or the transfer of the rights to receive the cash flows from the asset to a counterparty external to the Group.

The rights to receive cash flows are also considered to have been transferred when the contractual rights to receive the cash flows of the financial asset have been retained, but a contractual obligation is assumed to pay the cash flows to one or more recipients and all three of the following conditions are met (pass-through agreements):

• there is no obligation to pay amounts not received from the original asset;
• the sale or pledging of the original asset is prohibited, unless this is to secure the obligation to pay the cash flows;
• there is an obligation to remit all cash flows collected without delay and there is no right to invest those cash flow, with the exception of investments in short-term liquid assets between the dates of collection and remittance to the recipients, on the condition that the interest earned during the period is also transferred.

In addition, derecognition of a financial asset is subordinate to verification that all the risks and rewards of ownership of the rights have been effectively transferred (true sale). In the case of the transfer of substantially all risks and rewards, the asset (or group of assets) transferred are derecognised, separately recognising the rights and obligations associated with the transfer as assets or liabilities.

Conversely, if the risks and rewards are retained, the asset (or group of assets) transferred shall continue to be recognised. In this case, a liability corresponding to the amount received as payment for the transfer shall also be recognised, and subsequently all income accrued from the asset and all charges accruing on the liability shall be recognised,

The main transactions which under these rules do not permit full derecognition of a financial asset are loan securitisations, repurchase transactions and securities lending transactions.

In the case of securitisations, the financial assets are not derecognised in the case of the purchase of equity tranches or the provision of other support to the securitisation, where the credit risk associated with the securitised portfolio is retained.

Treasury shares

Changes in treasury shares in the portfolio are recognised directly in equity, i.e. reducing the latter by the value of purchases and increasing it by the value of sales.

This means that in the case of a subsequent transfer the difference between the sales price of the treasury shares and the relative repurchase cost, net of any tax effects, is fully recognised in shareholders' equity.

Employee termination benefits (Trattamento di fine rapporto or TFR)

The provision for TFR for Italy-based employee benefits is treated as a post-employment defined benefit scheme. Its recognition in the financial statements therefore requires the estimation, carried out using actuarial techniques, of the amount of benefits accrued by employees and the discounting of those benefits.

The determination of these benefits was conducted by an external actuary, using the "projected unit credit method". This method uniformly distributes the cost of the benefit over the working life of the employee. Obligations are determined as the discounted value of average future benefit payments, proportioned on the basis of the ratio between years of service accrued and total seniority achieved at the time the benefit is disbursed.

Following the reform of the supplementary pension system with Legislative Decree 252 of

December 5, 2005, the termination benefits accrued up to December 12, 2006 (or up to a date selected by the employee between January 1, 2007 and June 30, 2007 in the event the employee elected to transfer accrued TFR to a supplementary pension scheme) remained with the company and continue to be considered "defined-benefit post-employment benefits" and are therefore subject to actuarial measurement, although using simplified actuarial assumptions that no longer take account of forecasts of future wage increases.

TFR accruing after January 1, 2007 (or after the date of election between January 1 and June 30, 2007 by the employee to transfer TFR to (i) a supplementary pension scheme or (ii) leave the TFR with the company, which in turn deposits those contributions with the Treasury Fund operated by the National Social Security Institute (INPS)) is considered to be a "defined contribution" plan.

Actuarial gains and losses, defined as the difference between the carrying amount of the liabilities and the present value of the obligation at the end of the period, are recognised in equity under Item 140. "Valuation reserves" in accordance with the provisions of the IAS 19 Revised.

Share-based payments

Share-based payments are payments made to employees or comparable persons as payment for work or other services/assets received, based on shares representing capital, which consist in the grant of rights to receive shares upon meeting quantitative/qualitative objectives.

The fair value of payments settled the issue of shares is based on their stock market price and is recognised as a cost in the income statement under Item 180.a) "Staff expense" and in the balance sheet under Item 170. "Reserves" in equity, on an accruals basis in proportion to the period in which the service is rendered.

Valuation of property owned by the subsidiaries

The properties of subsidiaries considered as inventories in their individual financial statements are classified under "Other assets". In accordance with IAS 2, inventories mainly comprise properties that are to be renovated and/or undergoing renovation and trading properties.

Properties undergoing renovation are measured at the lower of cost, increased by expenses increasing of their value and the capitalisable financial expense, and the corresponding estimated realisable value, less the direct costs to sell.

Trading properties are measured at the lower of cost and estimated realisable value, which is generally represented by the market value as determined from similar property transactions in terms of location and type. The estimated realisable value and the market value are determined on the basis of independent appraisals or any lower value at which management is prepared to sell based on urban/land registry circumstances that do not correspond to the effective state of the property and legal issues (such as the illegal occupation of the properties).

Any write-downs based on the above appraisal are charged to the appropriate item in the income statement. If the reasons prompting the write-down of the inventories' write-down should no longer obtain, write-downs recognised in previous periods are reversed through profit or loss up to the lower of cost and estimated realisable value.

RECOGNITION OF REVENUES AND COSTS

Servicing fees and revenues from ancillary products

These revenues are measured at the fair value of the consideration received or due and are recognised when they can be estimated reliably. Revenues for services provided are recognised in conjunction with the completion of the services. They are recognised only when it is probable that the economic benefits of the transaction will flow to the company. Nevertheless, when the recoverability of an amount already recognised under revenues is affected by uncertainty, the revenues originally recognised are adjusted by the unrecoverable amount or the amount whose recovery is no longer certain.

Dividends

Dividends are recognised in profit or loss in the period in which their distribution is authorised.

Costs

Costs are recognised when they are incurred, on an accruals basis. Impairment losses are recognised through profit or loss in the period in which they are ascertained.

RELEVANT IAS/IFRS DEFINITIONS

The following presents a number of concepts relevant for the purposes of the IAS/IFRS international accounting standards are outlined, in addition to those already addressed in the previous sections.

Amortised cost

The amortised cost of a financial asset or liability is the amount at which it is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and adjusted for any write-down or unrecoverability (impairment).

The effective interest rate method is a method for allocating interest income or expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the life of the financial instrument to the net carrying amount of the financial asset or liability. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts.

Fees and commissions that are considered an integral part of the effective interest rate include initial fees received for the disbursement or acquisition of a financial asset not classified as measured at fair value, such as, for example, those received as compensation for the assessment of the debtor's financial condition, the evaluation and registration of guarantees and, more generally, the completion of the transaction.

Transaction costs, in turn, include fees and commissions paid to agents (including employees filling the role of commercial agents), consultants, mediators and other operators, contributions levied by regulatory bodies and securities markets, and taxes and charges on the transfer. Transaction costs do not include lending costs or internal administrative or management costs.

Impairment of financial assets

At every reporting date, financial assets or groups of financial assets are assessed to determine if they have incurred an impairment loss.

An asset or group of financial assets has incurred a reduction in value and the impairment losses are recognised if and only if there is objective evidence of a lasting reduction in value following one or more events occurring after initial recognition of the asset and that loss event had an impact on the future cash flows from the asset that can be reliably estimated.

The impairment may also be the result not of a single event but rather of the combined effect of multiple events.

Losses expected as result of future events, regardless of the probability of occurrence, are not recognised.

If there is objective evidence for the occurrence of a loss for impairment of loans, the amount of the loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred), discounted at the original effective interest rate of the financial asset. The amount of the loss is recognised in Item 130 of the income statement under "Net losses/recoveries on impairment" and the carrying amount of the asset is reduced. For instruments classified as available-for-sale financial assets, this amount is equal to the balance of the negative valuation reserve.

The process used to estimate impairment considers all credit exposures, not only those with low credit quality, that reflect serious deterioration in the positions.

A.4 –Fair value disclosures

QUALITATIVE DISCLOSURES

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction on the principal (or most advantageous) market at the measurement date on current market terms (exit price).

In order to maximise the consistency and comparability of fair value measurements and the associated disclosures, IFRS 13 establishes a fair value hierarchy that divides the inputs used to measure fair value into three levels:

• Level 1: the fair value of the instrument is determined on the basis of quoted prices in active markets;
• Level 2: the fair value of the instrument is determined on the basis of valuation techniques that use inputs observable on active markets, such as:
• o quoted prices in active markets for similar instruments;
• o observable inputs such as interest rates or yield curves, implied volatilities, early repayment risk, default rates and illiquidity factors;
• o unobservable inputs supported and corroborated by market information.
• Level 3: the fair value of the instrument is determined on the basis of valuation techniques that mainly use unobservable inputs that therefore involve the use of internal estimates and assumptions.

This classification is intended to establish a hierarchy based on the objectivity of fair values as a function of the degree of discretion adopted, giving precedence to the use of observable market inputs. The fair value hierarchy is also defined on the basis of the inputs used in the models adopted to determine fair value and not on the basis of the valuation techniques themselves.

A.4.1 – Fair value levels 2 and 3: valuation techniques and input used

The following section provides the disclosures required under IFRS 13 on accounting portfolios, both measured at fair value on a recurring basis and not measured at fair value or measured at fair value on a non-recurring basis.

Assets and liabilities measured at fair value on a recurring basis

Asset-backed securities

ABSs are measured using a discounted cash flow model based on the estimation of cash flows paid by the instrument and the estimation of a spread for discounting.

Equity securities

Equity securities are assigned to Level 1 when a quoted price on an active market considered to be liquid is available or to Level 3 when there are no quoted prices or the prices have been suspended for an indeterminate amount of time. These instruments are classified as Level 2 only if the volume of trading on the market has fallen significantly.

For equity securities carried at cost, an impairment loss is recognised when the cost exceeds the recoverable value significantly and/or for a prolonged period of time.

Investment funds

Investment funds are classified as Level 1 if they are listed on an active market. If not, they are classified as Level 3 and are measured using a credit adjustment of the NAV, based on the specific characteristics of the individual fund.

Assets and liabilities not measured at fair value or measured at fair value on a nonrecurring basis

Financial instruments not measured at fair value, including payables and loans and receivables with customers and banks are not managed on a fair value basis.

Cash and cash equivalents

Given their short-term horizon and negligible credit risk, the carrying amount of cash and liquid assets approximates their fair value.

Loans and receivables with banks and customers

The fair value of loans and receivables with banks and customers, recognised at amortised cost, is mainly determined using a present value model, adjusted for risk. Accordingly, the carrying amount of loans and receivables with banks and customers is considered to be an appropriate approximation of their fair value, an aspect that results in their classification in level 3 of the hierarchy.

Description of valuation techniques

In order to measures position for which market sources do not provide a directly observable market price, specific valuation techniques widely used in market practice are used and described below.

Discounted cash flows

Valuation techniques based on discounted cash flows generally consist in estimating the expected future cash flows over the life of the instrument. The model requires an estimate of the cash flows and the adoption of market parameters for the discount: the discount rate or margin reflects the credit and/or lending spread requested by the market for instruments with similar risk profiles and liquidity, in order to determine a "discounted value". The fair value of the contract is equal to the sum of the discounted future cash flows.

Market approach

This is a valuation technique that uses prices generated in market transactions involving identical or similar assets, liabilities or groups of assets and liabilities.

NAV

The NAV (net asset value) is the difference between the total value of the fund's assets and its liabilities. An increase in NAV coincides with an increase in the fair value measurement. Generally, for funds classified as Level 3, the NAV represents a risk-free measurement. Therefore, in this case the NAV is adjusted to consider the default risk of the issuer.

A.4.2 – Processes and sensitivity of valuations

As required under IFRS 13, the Group verifies that the value assigned to each position appropriately reflects the current fair value. Fair value measurement of assets and liabilities is done using various techniques, among which (but not solely) discounted cash flow and internal models. On the basis of the observability of the inputs used, all measurements are classified as Level 1, Level 2 or Level 3 in the fair value hierarchy.

For financial instruments measured at fair value and classified in level 3 (the Romeo SPV and Mercuzio Securitisation ABSs), a sensitivity analysis is performed because the procedure for quantifying fair value – the discounted cash flow model – does not permit the development of alternatives concerning the unobservable inputs used in the measurement process.

For units in the Italian Resolution Fund (formerly Atlante II) acquired towards the end of the year, no sensitivity analysis was performed as the measurement of fair value was carried out using the value of the units at December 31, 2017 notified by Quaestio SGR.

A.4.3 – Fair value hierarchy

Financial instruments are associated with given fair value level on the basis of observability of the inputs used to measure them.

When the fair value is measured directly using an observable price quoted on an active market, the instrument falls in Level 1. When the fair value must be measured using a comparable approach or through the use of a pricing model, it falls in Level 2 or 3, depending on the observability of all the significant inputs used in the measurement.

When selecting between the various valuation techniques, that which maximises utilisation of observable inputs is used.

All transfers between fair value hierarchy levels are carried out with reference to the reporting date for the financial statements.

The main factors that contribute to transfers between fair value hierarchy levels (whether between Level 1 and Level 2 and within Level 3) include changes in market conditions and refinements in measurement models and the relative weights of the unobservable inputs used in measuring the fair value.

QUANTITATIVE DISCLOSURES

A.4.5 – Fair value hierarchy

The following tables report the breakdown of the portfolio of (i) financial assets and liabilities measured at fair value and (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, on the basis of the levels discussed earlier.

A.4.5.1 – Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value level

Level 1 includes, among available-for-sale financial assets, government securities (BOTs) acquired during the year in order to ensure compliance with the European regulatory requirement concerning short-term liquidity, namely the Liquidity Coverage Ratio (LCR).

Level 3 for the same item mainly includes the residual value of the notes issued by the Romeo and Mercuzio Securitisation SPVs, equal to 5% of the total value of the notes, issued in the second quarter following the sale by Romeo of the unsecured portion of the portfolio to Mercuzio Securitisation, and €15.2 million in respect of the amount paid in December for the subscription of 30 units of the restricted closed-end alternative securities investment fund denominated Italian Recovery Fund (formerly Atlante II).

(€/000)
		12/31/2017			12/31/2016
	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
1. Financial assets held for trading		- -	-	-	-	-
2. Financial assets at fair value through profit or loss	-	-	-	-	-	-
3. Available-for-sale financial assets	1,003	-	22,955	1,002	-	-
4. Hedging derivatives		- -	-	-	-	-
5. Property, plant and equipment		- -	-	-	-	-
6. Intangible assets		- -	-	-	-	-
Total	1,003	-	22,955	1,002	-	-
1. Financial liabilities held for trading		- -	-	-	-	-
2. Financial liabilities at fair value through profit or loss	-	-	-	-	-	-
3. Hedging derivatives		- -	-	-	-	-
Total	-	-	-	-	-	-

A.4.5.2 – Annual changes in assets measured at fair value on a recurring basis (level 3)

(€/000)

	Held for trading	At fair value through profit or loss	Available for-sale	Hedging derivatives	Property, plant and equipme nt	Intangible assets
1. Opening balances			-
2. Increases		- -	25,470	-	-	-
2.1. Purchases		- -	23,667	-	-	-
2.2. Profits recognized in:		- -	1,627	-	-	-
2.2.1. Income Statement		- -	-	-	-	-
of which: gains		- -	-	-	-	-
2.2.2. Equity		- -	1,627	-	-	-
2.3. Trasfer from other levels		- -	-	-	-	-
2.4. Other increases		- -	176	-	-	-
3. Decreases		- -	(2,515)	-	-	-
3.1. Sales		- -	-	-	-	-
3.2. Redemptions		- -	(2,442)	-	-	-
3.3. Losses recognized in:		- -	(73)	-	-	-
3.3.1 Income Statement		- -	-	-	-	-
of which: losses		- -	-	-	-	-
3.3.2 Equity		- -	(73)	-	-	-
3.4. Trasfer to other levels		- -	-	-	-	-
3.5. Other decreases		- -	-	-	-	-
4. Closing balances		- -	22,955	-	-	-

A.4.5.4 – Assets/Liabilities not measured at fair value or measured at fair value on a nonrecurring basis: breakdown by fair value level

(€/000)

			12/31/2017		12/31/2016
		Carrying amount Level 1 Level 2				Level 3	Carrying amount	Level 1	Level 2	Level 3
1.	Held-to-maturity financial assets	-	-		-	-	-	-	-	-
2.	Loans and receivables with banks	49,449	-		-	49,449	52,575	-	-	52,575
3.	Loans and receivables with customers	2,853	-		-	2,853	10,820	-	-	10,820
4.	Investment property		- -		-	-	-	-	-	-
5.	Non-current assets and diposal groups held for sale		- 10		-	10	2,516	-	-	2,516
Total		52,312		-	-	52,312	65,911	-	-	65,911
1.	Due to banks	-	-		-	-	13,076	-	-	13,076
2.	Due to customers	12,106	-		-	12,106	11,060	-	-	11,060
3.	Debt securities in issue	-	-		-	-	-	-	-	-
4.	Liabilities associated with non-current assets and disposal groups held for sale	-	-		-	-	1,738	-	-	1,738
Total		12,106		-	-	12,106	25,874	-	-	25,874

PART B – CONSOLIDATED BALANCE SHEET

Assets

SECTION 1 – CASH AND CASH EQUIVALENTS – ITEM 10

1.1 – Cash and cash equivalents: breakdown

Total	21	18
b) Demand deposits with Central banks	-	-
a) Cash	21	18
	12/31/2017	12/31/2016
(€/000)

SECTION 4 – AVAILABLE FOR SALE FINANCIAL ASSETS – ITEM 40

4.1 – Available for sale financial assets: breakdown by product

(€/000)

			12/31/2017			12/31/2016
		Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
1.	Debt securities	1,003	-	7,734	1,002	-	-
	1.1 Structured securities	-	-	-	-	-	-
	1.2 Other	1,003	-	7,734	1,002	-	-
2.	Equity instruments	-	-	42	-	-	45
	2.1 Measured at fair value	-	-	-	-	-	3
	2.2 Carried at cost	-	-	42	-	-	42
3.	Units in collectiv e inv estment undertakings	-	-	15,222	-	-	-
4.	Loans	-	-	-	-	-	-
Total		1,003	-	22,998	1,002	-	45

Available for sale financial assets are mainly represented by:

• €15.2 million in respect of the amount paid in December for the subscription of 30 units of the restricted closed-end alternative securities investment fund Italian Recovery Fund (formerly Atlante II);
• €7.7 million in respect of the residual amount of ABSs from the Romeo SPV and Mercuzio Securitisation securitisations. The amount subscribed by the doBank corresponded to 5% of the total notes issued by the two vehicles in the second quarter of 2017, following the assignment by Romeo of the unsecured portion of the portfolio to Mercuzio Securitisation;
• €1.0 million in respect of Italian Treasury bills (BOTs) purchased in order to meet European regulatory requirements for liquidity (the Liquidity Coverage Ratio or LCR).

The item also includes a residual amount of less than €1 thousand representing the dues for participation in the Interbank Deposit Guarantee Fund, as discussed below.

Disclosures concerning the units of the Italian Recovery Fund (formerly Atlante II)

The Italian Recovery Fund (formerly Atlante II) is a restricted closed-end securities investment fund reserved for professional investors set up in August 2016 and managed by the independent asset management company Quaestio Capital Management SGR S.p.A. Unipersonale ("Quaestio SGR"). The Fund invests solely in NPLs and instruments connected with transactions in NPLs in order to reduce the risk in line with the parameters adopted by the world's major institutional investors. The Fund is currently involved in four securitisations of nonperforming loans with a gross value of €31 billion and a total investment by the Fund of approximately €2.5 billion.

In compliance with the Fund's investment policy, at December 31, three investment transactions were carried out in the non-performing loans of Italian banks.

On December 18, 2017, doBank undertook to subscribe 30 units of the fund for a total of €30 million, of which €15.3 million were paid in December 2017, while the remainder of €14.7 million is recognised under commitments. The units paid are classified under assets available for sale and the fair value is equal to the unit value of the units as at December 31, 2017 communicated by Quaestio SGR: compared with the subscription price, a fair value decrease of €53.2 thousand (net of tax effects) was recognised in equity.

Disclosures on investments in the Voluntary Scheme

The Interbank Deposit Guarantee Fund (FITD) - which represents the national deposit guarantee scheme pursuant to Directive 2014/49/EU - with the changes to the bylaws resolved by the Extraordinary Meeting of November 26, 2015 had, among the other things, provided for the establishment of an internal Voluntary Intervention Scheme to support interventions to resolve crises at participating banks. The doBank Group is a participating member of the scheme. In 2016 the Voluntary Intervention Scheme carried out the recapitalisation of Cassa di Risparmio di Cesena, which initially envisaged a capital increase reserved for the Scheme in the amount of €280 million, with the aim of ensuring that the bank could comply with regulatory capital requirements and supporting the restructuring plan.

On January 19, 2018 the FITD informed the participating banks of the completion of the intervention on December 21, 2017, which involved:

• the recapitalisation of the three banks by the Voluntary Scheme;

• the transfer of the three banks to Credit Agricole Cariparma;

• the subscription by the Voluntary Scheme of €12 million of mezzanine securities and €158 million of junior securities from the securitisation of the NPLs of the three banks.

At the end of the operation, the Voluntary Scheme therefore holds mezzanine and junior securities in the amount of €170 million and cash of €6 million.

In line with FITD notices, the Group's share of €379 continues to be measured at fair value.

4.2 – Available for sale financial assets: breakdown by issuer/borrower

(€/000)
---------

	12/31/2017	12/31/2016
1. Debt securities	8,737	1,002
a) Gov ernments and Central banks	1,003	1,002
b) Other gov ernment entities	-	-
c) Banks	-	-
d) Other issuers	7,734	-
2. Equity instruments	42	45
a) Banks	-	3
b) Other issuers:	42	42
- Insurance companies	-	-
- Financial companies	-	-
- Non-financial companies	42	42
- Other	-	-
3. Units in investment funds	15,222	-
4. Loans	-	-
a) Gov ernments and Central banks	-	-
b) Other gov ernment entities	-	-
c) Banks	-	-
d) Other entities	-	-
Total	24,001	1,047

SECTION 6 – LOANS AND RECEIVABLES WITH BANKS – ITEM 60

6.1 – Loans and receivables with banks: breakdown by product

(€/000)

		31/12/2017				12/31/2016
	Carrying		Fair value		Carrying		Fair value
	amount	Level 1	Level 2	Level 3	amount		Level 1 Level 2 Level 3
A. Loans to central banks
1. Time deposits	-	-	-	-	-	-	-	-
2. Compulsory reserv es	-	-	-	-	-	-	-	-
3. Repurchase agreements	-	-	-	-	-	-	-	-
4. Other	-	-	-	-	-	-	-	-
B. Loans to banks
1. Loans	49,340	-	-	49,340	52,455	-	-	52,455
1.1 Current accounts and demand deposits	49,340	-	-	49,340	52,455	-	-	52,455
1.2 Time deposits	-	-	-	-	-	-	-	-
1.3 Other loans	-	-	-	-	-	-	-	-
- Repurchase agreements	-	-	-	-	-	-	-	-
- Finance leases	-	-	-	-	-	-	-	-
- Other	-	-	-	-	-	-	-	-
2. Debt securities	109	-	-	109	120	-	-	120
2.1 Structured	-	-	-	-	-	-	-	-
2.2 Other	109	-	-	109	120	-	-	120
Total	49,449	-	-	49,449	52,575	-	-	52,575

Loans and receivables with banks totalling €49.4 million mainly regard cash available on current accounts.

Changes in the period were mainly represented by the payment of dividends to the majority shareholder Avio in the amount of €52.3 million and the periodic flow of collections of fees and commission from our main customers and payments of suppliers.

In view of the short-term maturity of the exposures, and the floating rate paid on balances, it is

reasonable to conclude that the fair value of the items corresponds to their carrying amount.

SECTION 7 – LOANS AND RECEIVABLES WITH CUSTOMERS – ITEM 70

	12/31/2017							12/31/2016
		Carrying amount			Fair value			Carrying amount				Fair value
		Non-performing						Non-performing
	Performing	Purchased	Other	Level 1	Level 2	Level 3	Performing	Purchased	Other	Level 1	Level 2	Level 3
Loans
1. Current accounts	1,204	134	-	-	-	1,338	636	249	-	-	-	885
2. Repurchase agreements	-	-	-	-	-	-	-	-	-	-	-	-
3. Mortgage loans	1,092	117	-	-	-	1,209	1,171	272	-	-	-	1,443
4. Credit cards and personal loans, including wage
assignment loans	-	-	-	-	-	-	-	-	-	-	-	-
5. Finance leases	-	-	-	-	-	-	-	-	-	-	-	-
6. Factoring	-	-	-	-	-	-	-	-	-	-	-	-
7. Other loans	292	14	-	-	-	306	8,474	18	-	-	-	8,492
Debt securities							-	-	-	-	-	-
8. Structured securities	-	-	-	-	-	-	-	-	-	-	-	-
9. Other debt securities	-	-	-	-	-	-	-	-	-	-	-	-
Total	2,588	265	-	-	-	2,853	10,281	539	-	-	-	10,820

7.1 - Loans and receivables with customers: breakdown by product (€/000)

At December 31, 2017 the item, which includes €265 thousand in impaired assets represented by the residual part of the non-performing portfolio assigned by doBank in 2016, decreased compared with December 31, 2016 largely as a result of the repayment of the "bridge loan" of €8.4 million, which at December 31, 2016 was recognised under Other loans. That loan regarded the portion pertaining to doBank, equal to 5%, of the loan granted to the Romeo SPV by entities that had undertaken to subscribe the notes at the time of their issue.

Performing positions, equal to €2.6 million, mainly regard current account facilities and "auction mortgage loans".

7.2 - Loans and receivables with customers: breakdown by issuer/borrower

(€/000)
		12/31/2017		12/31/2016
		Non-performing			Non-performing
	Performing	Purchased	Other	Performing	Purchased	Other
1. Debt securities
a) Gov ernments		- -	-	-	-	-
b) Other gov ernment entities		- -	-	-	-	-
c) Other issuers		- -	-	-	-	-
- Non-financial companies	-	-	-	-	-	-
- Financial companies	-	-	-	-	-	-
- Insurance companies	-	-	-	-	-	-
- Other	-	-	-	-	-	-
2. Loans to	2,588	265	-	10,281	539	-
a) Gov ernments		- 293	-	106	-	-
b) Other gov ernment entities		- -	-	-	-	-
c) Other entities	2,295	265	-	10,175	539	-
- Non-financial companies	1,202	201	-	639	479	-
- Financial companies	-	-	-	8,364	-	-
- Insurance companies	-	-	-	-	-	-
- Other	1,093	64	-	1,172	60	-
Total	2,588	265	-	10,281	539	-

SECTION 10 – EQUITY INVESTMENTS – ITEM 100

10.1 - Equity investments: information on ownership

Name	Registered Office	Headquarters	Type of relationship	Owner Relationship Held by Holding %		Voting Rights %
A. Companies under joint control
B. Companies subject to significant influence BCC Gestione Crediti S.p.A.	Rome	Rome	Associates	Italfondiario S.p.A.	45.00%	45.00%

10.2 - Significant shareholdings: carrying amount, fair value and dividends received

(€/000)
Name	Carrying amount	Fair value	Dividends Received
A. Companies under joint control	-	-	-
B. Companies subject to significant influence
BCC Gestione Crediti S.p.A.	2,879	2,879	-
Total	2,879	2,879	-

10.3 - Significant equity investments: accounting information

(€/000)
Name	Cash and cash equivalents	Financial assets	Non financial assets	Financial liabilities	Non financial liabilities

A. Companies under joint control

B. Companies subject to significant influence

BCC Gestione Credit S.p.A. 1 13,013 99 6,508 207

Name	Total revenue	Net interest income	Write-downs and write backs of property, plant and equipment and intangible assets	Profit (loss) before tax from continuing operations	Profit (loss) after tax from continuing operations	Profit (loss) after tax from disposal groups held for sale	Net profit (loss) (1)	Other comprehe nsive income after tax (2)	Comprehensi ve income (3) = (1) + (2)
A. Companies under joint control
B. Companies subject to significant influence
BCC Gestione Credit S.p.A.	18,895	-	40	4,091	2,774	-	2,774	(6)	2,769

10.5 - Equity investments: annual change

(€/000)
	12/31/2017	12/31/2016
A. Opening balances	1,608	-
B. Increases	1,271	1,634
B1. Purchases	-	-
B2. Write-backs	-	-
B3. Rev aluations	1,271	-
B4. Other changes	-	1,634
C. Decreases	-	(26)
C1. Sales	-	-
C2. Write-downs	-	(26)
C3. Other changes	-	-
D. Closing balances	2,879	1,608
E. Total revaluations	-	-
F. Total write-downs	-	(26)

Item B.3 Revaluations reports the result of the measurement using the equity method of the investment in BCC Gestione Crediti S.p.A., 45% of which is held by the subsidiary Italfondiario S.p.A..

(€/000)

(€/000)

SECTION 12 – PROPERTY, PLANT AND EQUIPMENT – ITEM 120

12.1 – Property, plant and equipment used in the business: breakdown of assets carried at cost

	12/31/2017	12/31/2016
1. Owned assets	1,354	616
a) Land	-	-
b) Buildings	-	-
c) Furniture	727	253
d) Electronic systems	605	335
e) Other	22	28
2. Assets held under finance lease	465	21
a) Land	-	-
b) Buildings	-	-
c) Furniture	-	-
d) Electronic systems	465	21
e) Other	-	-
Total	1,819	638

12.5 – Property plant and equipment used in the business: annual change

	Land	Buildings	Furniture	Electronic systems	Other	Total
A. Gross opening balances	-	-	2,566	3,951	706	7,223
A.1 Total net reduction in v alue	-	-	(2,312)	(3,594)	(679)	(6,585)
A.2 Net opening balances	-	-	254	357	27	638
B. Increases:	-	-	594	950	5	1,549
B.1 Purchases	-	-	594	950	5	1,549
B.2 Capitalised expenditure on improv ements	-	-	-	-	-	-
B.3 Write-backs	-	-	-	-	-	-
B.4 Increases in fair v alue:	-	-	-	-	-	-
a) in equity	-	-	-	-	-	-
b) through profit or loss	-	-	-	-	-	-
B.5 Exchange gains	-	-	-	-	-	-
B.6 Transfer from properties held for inv estment	-	-	-	-	-	-
B.7 Other changes	-	-	-	-	-	-
C. Decreases	-	-	(121)	(236)	(11)	(368)
C.1 Disposals	-	-	-	(4)	-	(4)
C.2 Depreciation	-	-	(121)	(232)	(11)	(364)
C.3 Impairment losses:	-	-	-	-	-	-
a) in equity	-	-	-	-	-	-
b) through profit or loss	-	-	-	-	-	-
C.4 Reductions in fair v alue:	-	-	-	-	-	-
a) in equity	-	-	-	-	-	-
b) through profit or loss	-	-	-	-	-	-
C.5 Exchange losses	-	-	-	-	-	-
C.6 Transfers to:	-	-	-	-	-	-
a) inv estment property	-	-	-	-	-	-
b) assets held for sale	-	-	-	-	-	-
C.7 Other changes	-	-	-	-	-	-
D. Net closing balance	-	-	727	1,071	21	1,819
D.1 Total net reduction in v alue	-	-	(2,433)	(3,826)	(683)	(6,942)
D.2 Gross closing balances	-	-	3,160	4,897	704	8,761
E. Carried at cost	-	-	-	-	-	-

Depreciation charges are calculated on a straight-line basis over the residual useful life of the assets.

12.7 – Commitments to purchase property, plant and equipment

At the closing date of these financial statements, there were not commitments to purchase property, plant or equipment.

SECTION 13 – INTANGIBLE ASSETS – ITEM 130

13.1 – Intangible assets: breakdown by type of asset

		12/31/2017		12/31/2016
	Finite Life	Indefinite Life	Finite Life	Indefinite Life
A.1 Goodwill		- -	-	-
A.1.1 Attributable to shareholders of the Parent Company		- -	-	-
A.1.2 Attributable to non-controlling interests		- -	-	-
A.2 Other intangible assets	4,506	-	2,079	-
A.2.1 Assets carried at cost:	4,506	-	2,082	-
a) Intangible assets generated internally	-	-	-	-
b) Other assets	4,506	-	2,082	-
A.2.2 Assets v alued at fair v alue:		- -	(3)	-
a) Intangible assets generated internally	-	-	-	-
b) Other assets	-	-	(3)	-
Total	4,506	-	2,079	-

The item regards application software.

13.2 – Intangible assets: annual changes

(€/000)
			Other intangible assets:	Other intangible assets:
			generated internally	other
	Goodwill					Total
		Finite	Indefinite	Finite	Indefinite
		Life	Life	Life	Life
A. Gross opening balances	-	-	-	22,784	-	22,784
A.1 Total net reduction in v alue	-	-	-	(20,705)	-	(20,705)
A.2 Net opening balances	-	-	-	2,079	-	2,079
B. Increases	-	-	-	4,120	-	4,120
B.1 Purchases	-	-	-	4,118	-	4,118
B.2 Increases in intangible assets generated internally	-	-	-	-	-	-
B.3 Write-backs	-	-	-	-	-	-
B.4 Increases in fair v alue	-	-	-	-	-	-
- in equity	-	-	-	-	-	-
- through profit or loss	-	-	-	-	-	-
B.5 Exchange gains	-	-	-	-	-	-
B.6 Other changes	-	-	-	2	-	2
C. Decreases	-	-	-	1,693	-	1,693
C.1 Disposal	-	-	-	-	-	-
C.2 Write-downs	-	-	-	1,651	-	1,651
- Amortization	-	-	-	1,651	-	1,651
- Write-downs	-	-	-	-	-	-
+ in equity	-	-	-	-	-	-
+ through profit or loss	-	-	-	-	-	-
C.3 Reduction in fair v alue	-	-	-	-	-	-
- in equity	-	-	-	-	-	-
- through profit or loss	-	-	-	-	-	-
C.4 Transfer to non-current assets held for sale	-	-	-	-	-	-
C.5 Exchange losses	-	-	-	-	-	-
C.6 Other changes	-	-	-	42	-	42
D. Net closing balances	-	-	-	4,506	-	4,506
D.1 Total net write-down	-	-	-	(10,248)	-	(10,248)
E. Gross closing balance	-	-	-	14,754	-	14,754
F. Carried at cost	-	-	-	-	-	-

Amortisation charges are calculated on a straight-line basis over the residual useful life of the assets.

(€/000)

SECTION 14 – TAX ASSETS AND LIABILITIES – ITEM 140 OF ASSETS AND ITEM 80 OF LIABILITIES

14.1 - Deferred tax assets: breakdown

(€/000)

	12/31/2017				12/31/2016
	IRES	IRAP	Total	IRES	IRAP	Total
Prov isions recognized in income statement - administrativ e expenses	308	-	308	2,368	-	2,368
Prov isions recognized in income statement - Risks and charges	7,450	13	7,463	5,207	7	5,214
Prov isions recognized in equity	447	-	447	-	-	-
Write-down on loans	47,922	7,660	55,582	47,749	7,660	55,409
Other assets / liabilities	238	48	286	1,029	57	1,086
Tax losses carried forward	29,933	-	29,933	41,136	-	41,136
Other items	1	2	3	93	2	95
Total	86,299	7,723	94,022	97,582	7,726	105,308

The item reports deferred tax assets by deductible temporary difference.

Deferred tax assets include amounts in respect of loan write-downs and deferred tax assets determined specifically on the basis of the stocks of the components to which they refer le (litigation, provisions for employees).

In this regard, the Parent Company exercised the option to retain the possibility of converting deferred tax assets into tax credits pursuant to Art. 11 of Legislative Decree 59 of May 3, 2016, ratified with Law 119 of June 30, 2016. These measures introduced the optional regime in order to eliminate issues that emerged at the Community level regarding the incompatibility of the DTA transformation legislation with the rules governing state aid, ensuring that the convertibility of qualifying DTAs into tax credits is only allowed following payment of a specific fee based on the amount of those DTAs.

The law ratifying the "Bank Rescue" Decree no. 15 of February 17, 2017 changed the effective date of the fee, postponing it from 2015 to 2016 with the consequent extension of the commitment to pay an annual instalment up to the year 2030. The exercise of the option makes it possible to maintain both the possibility of transforming these qualifying DTAs (in this case DTAs deriving from write-downs of loans) into tax credits, proportional to the possible loss under accounting rules as reported in the approved financial statements, and the possibility of not deducting these amounts from own funds for prudential purposes, as the requirements of Art. 39 of the CRR (Regulation (EU) 575/2013), which provides for application of a weighting of 100% in the calculation of credit risk, are met.

With regard to deferred tax assets referred to in Law 214/2011, as a result of the express provision of Art. 56 of Decree Law 225 of 29/12/2010, the negative components corresponding to the deferred tax assets transformed into tax credits are not deductible, first offsetting on a priority basis decreases at the nearest maturity in an amount corresponding to a tax equal to the transformed DTAs. As a result of this provision, changes in the amount of deferred tax assets recognised will on begin as from 2021.

With regard to the provisions of IAS 12, deferred tax assets are subject to probability testing, taking account of forecast profits in future years and verifying that future taxable income will be available against which the deferred tax assets can be used.

In particular, for the figures at December 31, 2017, the test performed, which took account of the 2017-2019 Performance and Financial Position statement presented to the Board, found that taxable income would be sufficient to use the deferred tax assets recognised by the bank. Furthermore, as regards the tax credit deriving from the deferred tax assets referred to in Law 214/2011, the same test confirms complete use against projected operating taxation.

The criteria used for the recognition of deferred tax assets can be summarised as follows:

• deferred tax assets correspond to the amounts of income tax that can be recovered in future years regarding temporary differences;

• the prerequisite for recognising deferred tax assets is the that it is reasonable to expect that taxable income will be earned against which the deductible temporary differences can be used.

IRES and IRAP were calculated by applying the tax rates established under current law, using the new 24% tax rate for IRES purposes and, for doBank and Italfondiario, applying the 3.5 percentage-point surtax envisaged for credit and financial institutions (Law 208 of December 28, 2015).

14.2 - Deferred tax liabilities: breakdown

(€/000)

	12/31/2017
	IRES	IRAP	Total	IRES	IRAP	Total
Financial assets/ assets / liabilities	427	-	427	-	-	-
Other items	20	-	20	20	-	20
Total	447	-	447	20	-	20

The item mainly consists of deferred tax liabilities in respect of the valuation reserve for AFS securities.

14.3 – Deferred tax assets: annual changes (recognised in income statement)

(€/000)
	31/12/2017	31/12/2016
1. Importo iniziale	105,227	180,751
2. Aumenti	3,682	4,702
2.1 Imposte anticipate rilev ate nell'esercizio	3,572	2,586
a) relative a precedenti esercizi	275	-
b) dovute al mutamento di criteri contabili	-	-
c) riprese di valore	-	-
d) altre	3,297	2,586
2.2 Nuov e imposte o incrementi di aliquote fiscali	-	-
2.3 Altri aumenti	110	2,116
3. Diminuzioni	(15,335)	(80,226)
3.1 Imposte anticipate annullate nell'esercizio	(15,225)	(17,591)
a) rigiri	(14,705)	(17,307)
b) svalutazioni per sopravvenuta irrecuperabilità	-	-
c) mutamento di criteri contabili	-	-
d) altre	(520)	(284)
3.2 Riduzioni di aliquote fiscali	-	(64)
3.3 Altre diminuzioni	(110)	(62,571)
a) trasformazione in crediti di imposta di cui alla Legge n. 214/2011	-	(62,571)
b) altre	(110)	-
4. Importo finale	93,574	105,227

Item 2.1 under Increases – d) other mainly reports deferred tax assets in respect of risk provisions.

Item 3.1 under Decreases – a) reversals mainly reports the recovery of deferred tax assets in respect of prior-year tax losses in the amount of €10.9 million, and the recovery of tax assets following the reduction in the amount of temporary differences for provisions for litigation and charges for personnel.

14.3.1 – Deferred tax assets (L.214/2011): annual changes (recognised in income statement)

(€/000)

	12/31/2017	12/31/2016
1. Opening balance	55,406	117,976
2. Increases	-	-
3. Decreases	-	(62,570)
3.1 Rev ersals	-	-
3.2 Conv ersion into tax credits	-	-
a) due to loss for the year	-	-
b) due to tax losses	-	-
3.3 Other decreases	-	(62,570)
4. Closing balance	55,406	55,406

The deferred tax assets referred to in Law 214/2011 regard loan write-downs that have not yet been deducted pursuant to Art. 106, paragraph 3, of the Uniform Income Tax Code, the negative components of which are deductible for income tax purposes over a number of tax periods: Art. 16 of Legislative Decree 83 of June 27, 2015 introduced a new form of deductibility for loan write-downs that reformulates the reversal of previously-recognised deferred tax assets. The value reported represents the share that can be considered transformable into tax credits under the provisions of that law if the requirements under those regulations are met. In 2016 item 3.3 Other decreases – a) included deferred tax assets transformed into tax credits on the basis of the conditions found in the 2015 financial statements of the Parent Company, doBank.

14.4 – Deferred tax liabilities: annual changes (recognised in income statement)

(€/000)
	12/31/2017	12/31/2016
1. Opening balance	20	-
2. Increases	-	20
2.1 Deferred tax liabilities arising during the year	-	-
a) relating to previous years	-	-
b) due to changes in accounting policies	-	-
c) other	-	-
2.2 New taxes or increases in tax rates	-	-
2.3 Other increases	-	20
3. Decreases	-	-
3.1 Deferred tax liabilities derecognised during the year	-	-
a) reversals of temporary differences	-	-
b) change in accounting policies	-	-
c) other	-	-
3.2 Reduction in tax rates	-	-
3.3 Other decreases	-	-
4. Closing balance	20	20

	(€/000)

	12/31/2017	12/31/2016
1. Opening balance	81	90
2. Increases	367	-
2.1 Deferred tax assets recognised during the year	367	-
a) in respect of previous years	-	-
b) due to change in accounting policies	-	-
c) other	367	-
2.2 New taxes or increases in tax rates	-	-
2.3 Other increases	-	-
- business combinations - mergers	-	(9)
3.1 Deferred tax assets derecognised during the year	-	(9)
a) reversals of temporary differences	-	-
b) writedown of non-recoverable items	-	-
c) due to change in accounting policies	-	-
d) other	-	-
3.2 Reduction in tax rates	-	-
3.3 Other decreases	-	-
4. Closing balance	448	81

14.6 – Deferred tax liabilities: annual changes (recognised in equity)

(€/000)

	12/31/2017	12/31/2016
1. Opening balance	-	317
2. Increases	447	30
2.1 Deferred tax liabilities recognised during the year	447	30
a) relating to previous years	-	-
b) due to change in accounting policies	-	-
c) other	447	30
2.2 New taxes or increase in tax rates	-	-
2.3 Other increases	-	-
3. Decreases	(20)	(347)
3.1 Deferred tax liabilities derecognised during the year	(20)	(347)
a) reversals on temporary differences	(20)	(347)
b) due to changes in accounting policies	-	-
c) other	-	-
3.2 Reduction in tax rates	-	-
3.3 Other decreases	-	-
4. Final amount	427	-

Item 3.1 is entirely attributable to deferred taxation on the reserve for AFS securities.

14.7 – Other information

Current tax assets: breakdown

(€/000)
	12/31/2017			12/31/2016
	IRES	IRAP	Total	IRES	IRAP	Total
Payments on account	84	81	165	10,092	2,959	13,051
Tax credit pursuant to law no. 214/2011	-	-	-	30,079	4,824	34,903
Tax credit from tax return	-	-	-	1,414	454	1,868
Other credits	-	-	-	2	-	2
Tax liabilities	-	-	-	(7,801)	(4,301)	(12,102)
Total	84	81	165	33,786	3,936	37,722

Current tax liabilities: breakdown

(€/000)

	12/31/2017			12/31/2016
	IRES	IRAP	Total	IRES	IRAP	Total
Taxes for the period	11,086	4,146	15,232	201	49	250
Net payments on account	(7,820)	(4,007)	(11,827)	(40)	(11)	(51)
Total	3,266	139	3,405	161	38	199

SECTION 15 – NON-CURRENT ASSETS AND DISPOSAL GROUPS HELD FOR SALE - ITEM 150 OF ASSETS AND ITEM 90 OF LIABILITIES

15.1 – Non-current assets and disposal groups held for sale: breakdown by asset type (€/000)

		12/31/2017	12/31/2016
A. Individual assets		-	-
	A.1 Financial assets	10	10
	A.2 Equity inv estments	-	-
	A.3 Property, plant and equipment	-	-
	A.4 Intangible assets	-	-
	A.5 Other non-current assets	-	-
Total A		10	10
	of which carried at cost	-	-
	of which designated at fair v alue, Lev el 1	-	-
	of which designated at fair v alue, Lev el 2	-	-
	of which designated at fair v alue, Lev el 3	10	10
	B. Asset groups (discontinued operations)	-	-
	B.1 Financial assets held for trading	-	-
	B.2 Financial assets at fair v alue through profit or loss	-	-
	B.3 Av ailable for sale financial assets	-	-
	B.4 Held-to-maturity inv estments	-	-
	B.5 Loans and receiv ables with banks	-	302
	B.6 Loans and receiv ables with customers	-	5
	B.7 Equity inv estments	-	-
	B.8 Property, plant and equipment	-	48
	B.9 Intangible assets	-	117
	B.10 Other assets	-	2,034
Total B		-	2,506
	of which carried at cost	-	-
	of which designated at fair v alue, Lev el 1	-	-
	of which designated at fair v alue, Lev el 2	-	-
	of which designated at fair v alue, Lev el 3	-	2,506
	C. Liabilities associated with individual assets classified as held for sale	-	-
	C.1 Deposits	-	-
	C.2 Securities	-	-
	C.3 Other liabilities	-	-
Total C		-	-
	of which carried at cost	-	-
	of which designated at fair v alue, Lev el 1	-	-
	of which designated at fair v alue, Lev el 2	-	-
	of which designated at fair v alue, Lev el 3	-	-
	D. Liabilities associated with groups of assets classified as held for sale	-	-
	D.1 Deposit from banks	-	-
	D.2 Deposit from customers	-	-
	D.3 Securities issued	-	-
	D.4 Financial liabilities held for trading	-	-
	D.5 Financial liabilities at fair v alue through profit or loss	-	-
	D.6 Prov isions	-	-
	D.7 Other liabilities	-	(1,738)
Total D		-	(1,738)
	of which carried at cost	-	-
	of which designated at fair v alue, Lev el 1	-	-
	of which designated at fair v alue, Lev el 2	-	-
	of which designated at fair v alue, Lev el 3	-	(1,738)

At December 31, 2016, Non-current assets and disposal groups held for sale reported the figures for Gextra S.r.l., which was sold in April 2017.

SECTION 16 – OTHER ASSETS – ITEM 160

16.1 – Other assets: breakdown

(€/000)
	12/31/2017	12/31/2016
Consolidation assets adjustments (IC eliminations)	-	19
Accrued income other than income capitalized in associated finanical assets	1,686	1,382
Items in processing	17	288
Items deemed definitiv e but not-attributable to other items:	70,250	78,812
- Receivables maturing during the period in respect of credit management and recovery activities
on behalf of others and from servicing and adm.services carried out for third party companies	65,815	74,978
- Advances paid to suppliers	85	145
- Other residual	4,350	3,689
Tax items other than those included in item 140	9,754	3,848
Other items:	36,068	29,753
- Tangible assets closing balance (IAS 2)	953	1,138
- Receivables maturing during the period not yet collected in respect of credit management and recovery
activities on behalf of others and from servicing and adm.services carried out for third party companies	33,523	27,707
- Other items - Other	1,592	908
Total	117,775	114,102

Items deemed definitive but not attributable to other items and Other items – Receivables maturing during the period not yet collected report receivables in respect of core loan recovery activities with UniCredit and other customers and other servicing activities. These services are not considered to fall within the definition of "financial services" as indicated in Circular no. 262/2005 of the Bank of Italy and are therefore not classified under Items 60 and 70, Loans and receivables with banks and Loans and receivables with customers.

Other items – Tangible assets closing balance reports properties owned by doRealEstate.

Other information: operating receivables

(€/000) 12/31/2017 12/31/2016 76,421 73,679 16,470 17,248 742 182 6,627 9,821 Total 100,260 100,930 Outsourced administrativ e activ ities Other Loan management and collection activ ities under agency agreement - banks Loan management and collection activ ities under agency agreement - customers

Liabilities

SECTION 1 – DUE TO BANKS – ITEM 10

1.1 – Due to banks: breakdown by product

12/31/2017 12/31/2016 1. Due to central banks - - 2. Due to banks - 2.1 Current accounts and demand deposits - 2.2 Time deposits - - 2.3 Loans - 2.3.1 Repos - - 2.3.2 Other - 2.4 Liabilities for commitments to repurchase own equity instruments - - 2.5 Other liabilities - Total - Fair value - level 1 - - Fair value - level 2 - - Fair value - level 3 - Total fair value -	(€/000)
			13,076
			2,999
			10,032
			10,032
			45
			13,076
			13,076
			13,076

Due to banks is equal to zero as a result of the repayment during the third quarter of 2017 of drawings on short-term loans granted by various banks.

SECTION 2 – DUE TO CUSTOMERS – ITEM 20

2.1 – Due to customers: breakdown by product

	12/31/2016
11,759	10,850
-	-
319	-
-	-
319	-
-	-
28	210
12,106	11,060
-	-
-	-
12,106	11,060
12,106	11,060
Fair value - level 1 Fair value - level 2 Fair value - level 3 Total fair value	12/31/2017

Current accounts and demand deposits in respect of ordinary customers mainly consist of accounts held by lawyers affiliated with the Group.

SECTION 8 – TAX LIABILITIES – ITEM 80

See Section 14 of Assets.

SECTION 9 – LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS AND DISPOSAL GROUPS HELD FOR SALE – ITEM 90

See Section 15 of Assets.

SECTION 10 – OTHER LIABILITIES – ITEM 100

10.1 – Other liabilities: breakdown

(€/000)

	12/31/2017	12/31/2016
Accrued expense other than that capitalized in the associated financial liabilities	50	7
Other liabilities due to employees	4,452	9,808
Other liabilities due to other personnel	256	550
Interest and other amounts to be credited to customers	-	1,560
Av ailable amounts to be paid to others	923	3,848
Items in processing	1,241	1,443
Items deemed definitiv e but not attributable to other accounts:	28,475	31,418
- Account payable - suppliers	21,072	23,365
- Other items	7,403	8,053
Tax items different from those included in item 80	2,252	7,052
Other items	257	300
Total	37,906	55,986

Other liabilities due to employees includes provisions for unused holiday entitlement and performance bonuses, as well as liabilities for termination incentives.

Items deemed definitive but not attributable to other accounts – accounts payable – suppliers essentially report liabilities due to suppliers in respect of invoices to be received and supplies to be settled. Items deemed definitive but not attributable to other accounts – other items include liabilities to the National Social Security Institute (INPS) for employee contributions and other debtor items pending definitive allocation.

Tax items different from those included in item 80 mainly regard the VAT liability to be settled with tax authorities. At December 2016 the item also included the fee for 2016 (€2.0 million) in respect of the exercise by the Parent Company doBank of the option to retain the possibility of transforming deferred tax assets into tax credits pursuant to Art. 11 of Legislative Decree 59 of May 3, 2016, ratified with Law 119 of June 30, 2016. The law ratifying the "Bank Rescue" Decree 15 of February 17, 2017, modified the entry into force of the DTA fee, postponing it from 2015 to 2016, establishing that amounts paid in 2016 represented the fee due for that period. Consequently, the €2.0 million provisioned in 2016 and paid in 2017 settled the amount due for the year just ended and, accordingly, no new provision has been recognised.

SECTION 11 – EMPLOYEE TERMINATION BENEFITS – ITEM 110

11.1 – Employee termination benefits: annual change

(€/000)
	12/31/2017	12/31/2016
A. Opening balances	10,240	4,629
B. Increases	455	5,817
B.1 Prov ision for the period	130	108
B.2 Other increases	325	5,709
C. Decreases	(335)	(206)
C.1 Sev erance payments	(300)	(117)
C.2 Other decreases	(35)	(89)
D. Closing balances	10,360	10,240
Total	10,360	10,240

SECTION 12 – PROVISIONS FOR RISKS AND CHARGES − ITEM 120

12.1 – Provisions for risks and charges: breakdown

(€/000)
	12/31/2017	12/31/2016
1. Pensions and other post-employment benefit obligations	-	-
2. Other prov isions for risks and charges	26,579	25,371
2.1 Legal disputes	10,313	9,427
2.2 Staff expenses	8,839	9,002
2.3 Other	7,427	6,942
Total	26,579	25,371

Item 2.1 legal disputes primarily reports provisions in respect of the risks of litigation brought against the Group concerning its core activities.

Item 2.2 Staff expenses reports provisions to finance any bonuses not governed by existing agreements or determinable quantification mechanisms and MBO bonuses. The amount of this component at December 31, 2017 also reflects the new remuneration policies implemented following the listing, which for certain categories of manager envisage changes in the structure of variable remuneration, which provides for deferred amounts and the grant of equity instruments.

Item 2.3 Other mainly reports provisions for risks for which no litigation has currently been undertaken.

Risks connected with outstanding litigation

The Group operates in a legal and legislative context that exposes it to a vast range of possible litigation connected with the core business of servicing, loan recovery, potential administrative irregularities and labour litigation.

The associated risks are assessed periodically in order to quantify a specific allocation to the "Provision for risks and charges" whenever an outlay is considered probable or possible on the basis of the information that becomes available, as provided for in the specific internal policies.

12.2 – Provisions for risks and charges: annual changes

(€/000)
		Total
	Pension funds	Other provisions
A. Opening balances	-	25,371
B. Increases	-	12,370
B.1 Prov ision for the year	-	12,227
B.2 Changes due to the passage of time	-	-
B.3 Differences due to changes in discount rate	-	81
B.4 Other changes	-	62
C. Decreases	-	(11,162)
C.1 Use during the year	-	(8,612)
C.2 Differences due to changes in discount rate	-	-
C.3 Other changes	-	(2,550)
D. Closing balances	-	26,579

At the date of these financial statements, the specific interpretation of a number of contractual clauses is in dispute. The clauses regard reciprocal communication and sharing obligations within the scope of servicing agreements. While the debate does raise the possibility of incomplete compliance with the contractual provisions, the arguments presented and under assessment in the discussions suggest that that that risk is not probable. This conclusion is also supported by specific legal advice on the issue.

12.4 – Provisions for risks and charges – other provisions

(€/000)
	12/31/2017	12/31/2016
Prior-year legal expenses	-	320
Risks on Real Estate	111	130
Disputes with suppliers	1,305	-
Other Prov isions	6,011	6,492
Total	7,427	6,942

Among other items, Other provisions includes €5.4 million in provisions for risks associated with expected outlays for positions managed on an agency basis for which a counterparty has made a claim but for which litigation has not been initiated and for possible disputes regarding trade receivables due from the principals in those agency contracts. It also includes provisions for disputes with suppliers in respect of creditor claims from contract terminations.

SECTION 15 – GROUP SHAREHOLDERS' EQUITY – ITEMS 140, 160, 170, 180, 190, 200 AND 220

15.1 – "Share capital" and "Treasury shares": breakdown

Share Capital

(€/000)
	12/31/2017	12/31/2016
Ordinary shares no. 80,000,000	41,280	41,280

As part of the project to list the doBank Group, it was necessary to increase the number of shares of the bank and eliminate the par value without changing the amount of share capital itself. Accordingly, during the year the number of shares was increased from 8,000,000 to 80,000,000.

Treasury shares

	12/31/2017	12/31/2016
Ordinary shares no. 1,750,000, nominal v alue Euro 0.516 each, measured at cost	277	277

These shares, originally held by the Federalcasse Banca S.p.A. and originating in a merger, do not exceed 10% of share capital and under applicable legislation can be held by the company with no requirement for disposal.

As a result of the listing process, the number of treasury shares increased from 175,000 to 1,750,000.

15.2 – Share capital - Number of shares of the Parent Company: annual change

	Ordinary	Others
A. Shares outstanding as at the beginning of the year	8,000,000	-
- fully paid	8,000,000	-
- not fully paid	-	-
A.1 Treasury shares (-)	(175,000)	-
A.2 Shares outstanding: opening balance	7,825,000	-
B. Increases	70,425,000	-
B.1 New issues		- -
- against payment:		- -
- business combinations		- -
- bond converted		- -
- warrants exercised		- -
- other		- -
- bonus:		- -
- to employees		- -
- to directors		- -
- other		- -
B.2 Sale of treasury shares		- -
B.3 Other changes	70,425,000	-
C. Decreases		- -
C.1 Cancellation		- -
C.2 Purchase of treasury shares		- -
C.3 Disposal of businesses		- -
C.4 Other changes	-	-
D. Shares outstanding: closing balance	78,250,000	-
D.1 Treasury shares ( + )	1,750,000	-
D.2. Shares outstanding as at end of the year	80,000,000	-
- fully paid	80,000,000	-
- not fully paid	-	-

As reported in the table, no equity transactions were carried out during the period. The only change was the increase in the number of shares through a stock split.

15.4 – Profit reserves: other information

Total	10,476	10,476
Reserv e from retained earnings IAS art. 6 par. 2 Lgs. Decree 38/2005	(9,145)	(9,145)
Reserv e established in by laws for purchase of treasury shares	277	277
Reserv e from FTA IAS art. 7 par. 7 Lgs. Decree 38/2005	8,780	8,780
Tax-suspended reserv e from business combination (UniCredit Credit Management Serv ice S.p.A.)	3	3
Reserv e art. 7 Law 218/90	2,305	2,305
Legal reserv e	8,256	8,256
Reserves from allocation of profits or tax-suspended reserves	12/31/2017	12/31/2016
(€/000)

Other reserves	12/31/2017	12/31/2016
Extraordinary reserv e	92,837	104,149
Reserv e, Lgs. Decree 153/99	6,103	6,103
Legal reserv e for distributed earnings	44	44
Reserv e art. 7 Law 218/90	4,179	4,179
Reserv e from business combination (UniCredit Credit Management Serv ice S.p.A.)	4	4
Share Based Payments Reserv e	2,195	-
Consolidation reserv e	3,512	(7,800)
Total	108,874	106,679

There were no changes in Other reserves compared with December 31, 2016 as it was decided to distribute a dividend equal to consolidated net profit for 2016. Accordingly, the breakdown of the reserves shows a decrease of €11.3 million in the Extraordinary reserve and a parallel increase in the Consolidation reserve.

Finally, reserves increased by €2.2 million as a result of the establishment of the new Reserve for share-based payments, recognised in accordance with IFRS 2 following the entry into force of the new post-IPO remuneration policy, which provides for the grant of remuneration in the form of shares to certain categories of manager.

OTHER INFORMATION

1 – Guarantees issued and commitments

(€/000)

	12/31/2017	12/31/2016
1) Financial guarantees issued to	-	-
a) Banks	-	-
b) Customers	-	-
2) Commercial guarantees issued to	-	-
a) Banks	-	-
b) Customers	-	-
3) Irrev ocable commitments to disburse funds	14,706	-
a) Banks	-	-
i) usage certain	-	-
ii) usage uncertain	-	-
b) Customers	14,706	-
i) usage certain	14,706	-
ii) usage uncertain	-	-
4) Underlying commitments for credit deriv ativ es: sales of protection	-	-
5) Assets pledged as collateral for third-party obligations	-	-
6) Other commitments	-	-
Total	14,706	-

5 - Asset management and intermediation on behalf of others

(€/000)
	12/31/2017	12/31/2016
1. Management and trading on behalf of third parties
a) Purchases	-	-
1. settled	-	-
2. unsettled	-	-
b) Sales	-	-
1. settled	-	-
2. unsettled	-	-
2. Portfolio management
a) indiv idual	-	-
a) collectiv e	-	-
3. Custody and administration of securities	-	-
a) Third-party securities on deposit as part of custodian bank serv ices (excluding portfolio management)	-	-
1. Securities issued by companies included in consolidation	-	-
2. Other securities	-	-
b) Third party securities on deposit (excluding portfolio management): other	-	-
1. Securities issued by companies included in consolidation	-	-
2. Other securities	-	-
c) Third-party securities deposited with third parties	-	-
d) Securities owned by bank deposited with third parties	42,394	27,707
4. Other	-	-

The stock includes government securities and equity investments classified under item 100.

PART C – CONSOLIDATED INCOME STATEMENT

Income Statement

SECTION 1 – INTEREST – ITEMS 10 AND 20

1.1 – Interest income and similar revenues: breakdown

(€/000)

	Debt securities	Loans	Other transactions	12/31/2017	12/31/2016
1. Financial assets held for trading	-	-	-	-	-
2. Financial assets at fair v alue through profit or loss	-	-	-	-	-
3. Av ailable-for-sale financial assets	665	-	-	665	24
3. Held-to-maturity financial assets	-	-	-	-	-
5. Loans and receiv ables with banks	4	19	-	23	-
6. Loans and receiv ables with customers	-	52	-	52	196
7. Hedging deriv ativ es	-	-	-	-	-
8. Other assets	-	-	-	-	15
Total	669	71	-	740	235

The largest component of this account, Available-for-sale financial assets, reports interests on the ABSs of Romeo SPV S.r.l. and Mercuzio Securitisation established under the provisions of Law 130/1999 (the "Securitisation Act"), of which the Group holds 5% of total notes issued.

1.4 – Interest expense and similar charges: breakdown

(€/000)
	Payables	Securities	Other transactions	12/31/2017	12/31/2016
1. Due to central banks	-	-	-	-	-
2. Due to banks	(139)	-	-	(139)	(171)
3. Due to customers	(7)	-	-	(7)	(313)
4. Debt securities in issue	-	-	-	-	-
5. Financial liabilities held for trading	-	-	-	-	-
6. Financial liabilities at fair v alue through profit or loss	-	-	-	-	-
7. Other liabilities and funds	-	-	(128)	(128)	(1)
8. Hedging deriv ativ es	-	-	-	-	-
Total	(146)	-	(128)	(274)	(485)

Interest expense of amounts due to banks mainly regards interest on short-term loans granted during the year and on credit facilities.

SECTION 2 – FEE AND COMMISSION INCOME AND EXPENSE – ITEMS 40 AND 50

2.1 – Fee and commission income: breakdown

(€/000)

	12/31/2017	12/31/2016
a) Guarantees issued	-	-
b) Credit deriv ativ es	-	-
c) Management, brokerage and consulting serv ices:	-	-
1. Financial instrument trading	-	-
2. Currency trading	-	-
3. Portfolio management	-	-
3.1. Individual	-	-
3.2 Collective	-	-
4. Custody and administration of securities	-	-
5. Custodian bank	-	-
6. Placement of securities	-	-
7. Order reception and transmission	-	-
8. Adv isory serv ices	-	-
8.1 Related to inv estments	-	-
8.2 Related to financial structure	-	-
9. Distribution of third-party serv ices	-	-
9.1. Portfolio management	-	-
9.1.1. Indiv idual	-	-
9.1.2. Collectiv e	-	-
9.2. Insurance products	-	-
9.3. Other products	-	-
d) Collection and payment serv ices	47	33
e) Securitization serv icing	36,955	11349
f) Factoring	-	-
g) Tax collection serv ices	-	-
h) Management of multilateral trading facilities	-	-
i) Management of current accounts	42	44
j) Other serv ices	158,391	147,627
- Loans granted; ordinary customer loans	3	6
- Agency operations	157,697	147,621
- Other services	691	-
Total	195,435	159,053

The overall increase of €36.4 million in fee and commission income over 2016 is mainly attributable to the expansion of the scope of consolidation in the second half of 2016. The rise also reflects the improvement in performance fees, buoyed by the increase in recoveries registered by the Group.

In 2017, the composition of portfolios under management changed, mainly due to the new Fino 1 and Fino 2 contracts, with an increase in servicing services for securitisations. As a result, underlying developments in the largest item Other services – agency operations, which reports fee and commission income from the management and recovery of loans on behalf of other customers, were in line with the previous period although as noted above the figures are not entirely comparable with 2016.

2.2 – Fee and commission expense: breakdown

(€/000)
	12/31/2017	12/31/2016
a) Guarantees receiv ed	(24)	(18)
b) Credit deriv ativ es	-	-
c) Management, brokerage and consultancy serv ices:	(7)	-
1. Financial instrument trading	-	-
2. Currency trading	-	-
3. Portfolio management:	-	-
3.1 Own portfolio	-	-
3.2 Third party portfolio	-	-
4. Custody and administration of securities	(7)	-
5. Placement of financial instruments	-	-
6. Off-site distribution of financial instruments, products and services	-	-
d) Collection and payment serv ices	(259)	(27)
e) Other serv ices	(17,842)	(17,251)
- Agent operations and sundry intermediation	(17,804)	(17,050)
- Other services	(38)	(201)
Total	(18,132)	(17,296)

Item e) Other services – agent operations and sundry intermediation, which reports fee and commission expense payable to our entire network, increased compared with the previous year due to the change in the scope of consolidation in the second half of 2016 and the increase in recoveries by the network.

SECTION 6 – GAIN (LOSSES) ON DISPOSAL/REPURCHASE – ITEM 100

6.1 – Gains (Losses) on disposal/repurchase: breakdown

(€/000)
		12/31/2017			12/31/2016
	Gains	Losses	Net Result	Gains	Losses	Net Result
Financial assets
1 Loans and receiv ables with banks		- -	-	-	-	-
2 Loans and receiv ables with customers		- -	-	-	-	-
3 Av ailable-for-sale financial assets		- -	-	241	-	241
3.1 Debt securities		- -	-	241	-	241
3.2 Equity instruments		- -	-	-	-	-
3.3 Units in collective investment undertakings	-	-	-	-	-	-
3.4 Loans		- -	-	-	-	-
4 Held-to-maturity inv estments		- -	-	-	-	-
Total assets		- -	-	241	-	241
Financial liabilities
1 Due to banks		- -	-	-	-	-
2 Due to customers		- -	-	-	-	-
3 Debt securities in issue		- -	-	-	-	-
Total liabilities		- -	-	-	-	-
Total financial assets and liabilities		- -	-	241	-	241

SECTION 7 – GAINS/LOSSES ON FINANCIAL ASSETS/LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS – ITEM 110

7.1 – Net change in financial assets/liabilities at fair value through profit or loss: breakdown

(€/000)

	Unrealized profits		Realized profit Unrealized losses	Realized losses	Net result 12/31/2017
	(A)	(B)	(C)	(D)	[(A+B) -(C+D)]
1. Financial assets	-	8	(3)	(6)	(1)
1.1 Debt securities	-	8	(3)	(6)	(1)
1.2 Equity securities	-	-	-	-	-
1.3 Units in inv estment funds	-	-	-	-	-
1.4 Loans	-	-	-	-	-
2. Financial liabilities	-	-	-	-	-
2.1 Debt securities	-	-	-	-	-
2.2 Due to banks	-	-	-	-	-
2.3 Due to customers	-	-	-	-	-
3. Financial assets and liabilities in foreign currency: exchange	-	-	-	-	-
4. Credit and financial derivatives	-	-	-	-	-
Total derivatives	-	-	-	-	-
Total	-	8	(3)	(6)	(1)

SECTION 8 – NET LOSSES/RECOVERIES ON IMPAIRMENT – ITEM 130

8.1 – Net losses on impairment of loans: breakdown

(€/000)

	Write-downs (1)			Write-backs (2)
	Specific				Specific		Portfolio
	Write-offs	Other	Portfolio	Interest	Other	Interest	Other	12/31/2017 12/31/2016 (1) + (2)
A. Loans and receivables with banks	-	-	-	-	-	-	-	-	-
- Loans	-	-	-	-	-	-	-	-	-
- Debt securities	-	-	-	-	-	-	-	-	-
B. Loans and receivables with customers	-	(157)	(16)	65	1,709	-	-	1,601	3,333
Purchased non-performing loans and receiv ables	-	(1 57)	-	65	1,709	-	-	1,617	-
- Loans	-	(157)	-	65	1,709	-	-	1,617	-
- Debt securities	-	-	-	-	-	-	-	-	-
Other loans	-	-	(16)	-	-	-	-	(16)	3,333
- Loans	-	-	(16)	-	-	-	-	(16)	3,333
- Debt securities	-	-	-	-	-	-	-	-	-
C. Total	-	(157)	(16)	65	1,709	-	-	1,601	3,333

The item reports net write-backs mainly attributable to collections on previously written-off positions in our own portfolio.

8.4 – Net impairment losses on other financial transactions: breakdown

(€/000)

		Write-downs (1)			Write-backs (2)
		specific			specific	portfolio		12/31/2017
	write-offs	other	portfolio	interest	other	interest	other	(1) + (2)	12/31/2016
A. Guarantees giv en	-	-	-	-	-	-	-	-	-
B. Credit deriv ativ es	-	-	-	-	-	-	-	-	-
C. Commitments to disburse funds	-	-	-	-	-	-	-	-	-
D. Other transactions	-	-	-	-	-	-	-	-	(135)
E. Total	-	-	-	-	-	-	-	-	(135)

SECTION 11 – ADMINISTRATIVE COSTS – ITEM 180

11.1 - Staff expense: breakdown

(€/000)

	12/31/2017	12/31/2016
1) Employees	(80,952)	(56,183)
a) Wages and salaries	(57,841)	(39,112)
b) Social contributions	(14,715)	(11,587)
c) Employee termination benefits	(352)	-
d) Pension costs	-	(191)
e) Allocation to employee termination benefits prov ision	32	(544)
f) Allocation to prov ision for post-employment benefits and similar:	-	-
– defined contribution	-	-
- defined benefit	-	-
g) Payments to external supplementary pension funds:	(4,713)	(2,697)
– defined contribution	(4,713)	(2,697)
- defined benefit	-	-
h) Costs related to share-based payments	(473)	-
i) Other employee benefits	(2,890)	(2,052)
2) Other staff	(80)	(180)
3) Directors and statutory auditors	(3,139)	(2,275)
4) Retired personnel	-	-
Total	(84,171)	(58,638)

Staff expense increased compared with December 31, 2016 (€25.5 million), mainly reflecting the expansion in the scope of consolidation in the second half of 2016 and the gradual strengthening of top management and the implementation of new post-IPO remuneration policies, which have altered the structure of variable remuneration.

11.2 - Average number of employees by category

	12/31/2017	12/31/2016
Payroll employees	1,177	1,215
a) Executiv es	30	28
b) Managers	468	480
c) Other employees	679	707
Other staff	11	7
Total	1,188	1,222

11.4 – Other employee benefits

(€/000)

	12/31/2017	12/31/2016
Voluntary termination incentiv es	(781)	(517)
Seniority bonuses	167	(19)
Expense for replacement of employee canteen serv ice	(917)	(658)
Supplementary health care	(1,072)	(723)
Donations to personnel	(48)	(51)
Other	(239)	(84)
Total	(2,890)	(2,052)

11.5 – Other administrative expense: breakdown

(€/000)

	12/31/2017	12/31/2016
1) Indirect taxes and duties	(405)	(4,731)
Settled	(405)	(2,748)
Unsettled	-	(1,983)
2) Miscellaneous costs and expenses	(43,234)	(34,469)
Adv ertising marketing and communication	(528)	(186)
- Adv ertising costs - mass media communication	(191)	(49)
- Marketing and promotions	(320)	(99)
- Sponsorship	-	(22)
- Conv entions and internal communication	(17)	(16)
Expenses related to credit risk	(335)	(3,016)
- Credit recov ery expenses	(141)	(2,484)
'- Commercial information and company reports	(194)	(532)
Indirect expenses related to personnel	(2,004)	(1,132)
- Staff training	(114)	(60)
- Car rental and other personnel expenses and PFA	(557)	(292)
- Trav el expenses	(1,154)	(564)
- Rentals and property leases for personal use	(179)	(216)
Information & communication technology expenses	(18,150)	(10,431)
- Hardware costs: rent and maintenance	(3,230)	(7)
- Software costs: rent and maintenance	(3,867)	(3,990)
- ICT serv ice	(9,334)	(6,305)
- Financial infoprov ider	(1,353)	(27)
- Other ICT expenses	(366)	(102)
Consulting and professional serv ices	(7,667)	(6,507)
- Consulting on ordinary activ ities (no projects)	(4,207)	(3,078)
- Consulting for one-off projects - legislativ e compliance	(284)	(381)
- Strategy, business ev olution and organizational optimization consulting	(1,350)	(2,283)
- Legal expenses	(1,826)	(765)
Real estate expenses	(7,145)	(5,665)
- Real estate serv icing	(93)	(278)
- Furniture, machinery and equipment maintenance	(11)	(1)
- Office maintenance	(443)	(402)
- Rental of real estate	(5,047)	(4,233)
- Office cleaning	(598)	(395)
- Utilities	(953)	(356)
Other operating costs	(7,405)	(7,532)
- Surv eillance and security serv ices	(355)	(184)
- Postage and document transport	(1,027)	(409)
- Administrativ e and logistical serv ices	(4,224)	(5,230)
- Insurance	(1,365)	(709)
- Printing and stationery	(108)	(178)
- Association dues, fees and contributions to trade associations - Guarantee Schemes	(154)	(69)
- Contributions to the National Resolution Fund	(54)	(279)
- Other administrativ e expenses - Other	(118)	(474)
Total	(43,639)	(39,200)

The breakdown shows that Indirect taxes and duties reports the DTA fee of €4.1 million for 2016 only. The law ratifying the "Bank Rescue" Decree 15 of February 17, 2017, modified the entry into force of the DTA fee, postponing it from 2015 to 2016, establishing that amounts paid in 2016 represented the fee due for that period. Consequently, the amount provisioned in 2016 and paid in the first half of 2017 settled the amount due for the year just ended.

Miscellaneous costs and expenses posted a substantial increase, mainly reflecting the expansion in the scope of consolidation in the second half of 2016.

More specifically, Expenses related to credit risk – credit recovery expenses, which reports overheads and legal costs, declined by comparison with the previous year as a result of the assignment of the loan portfolio.

By contrast, rental of real estate increased compared with the previous year, as did spending on IT services associated with the changes in information systems and the listing on Borsa Italiana.

SECTION 12 – NET PROVISIONS FOR RISKS AND CHARGES – ITEM 190

12.1 – Net provisions for risks and charges: breakdown

(€/000)

	12/31/2017			12/31/2016
	Provisions	Reallocation of excess	Total	Provisions	Reallocation of excess	Total
1. Other prov isions
1.1 Legal disputes	(3,751)	1,763	(1,988)	(1,499)	6,821	5,322
- Revocatory actions in bankruptcy	-	-	-	-	-	-
- Disputes regarding employees	(335)	117	(218)	(37)	701	664
- Disputes for financial instruments and derivative contracts	-	-	-	-	-	-
- Other	(3,416)	1,646	(1,770)	(1,462)	6,120	4,658
1.2 Staff costs	-	-	-	(23)	-	(23)
1.3 Other	(1,846)	591	(1,255)	(1,561)	1,071	(490)
Total	(5,597)	2,354	(3,243)	(3,083)	7,892	4,809

Net provisions show a negative balance of €3.2 million, compared with a positive balance in 2016, which reflected the reversal of risk provisions for litigation and disputes that exceeded the actual liability. The increase reflected new provisions for litigation and disputes.

SECTION 13 – IMPAIRMENT/WRITE-BACKS ON PROPERTY, PLANT AND EQUIPMENT – ITEM 200

13.1 – Impairment on property, plant and equipment: breakdown

(€/000)
	Depreciation	Impairment losses	Write-backs	Net impairment/write
				back 12/31/2017
	(a)	(b)	(c)	(a + b - c)
A. Property, plant and equipment
A.1 Owned	(282)	-	-	(282)
- used in the business	(282)	-	-	(282)
-held for investment	-	-	-	-
A.2 Held under finance lease	(82)	-	-	(82)
- used in the business	(82)	-	-	(82)
-held for investment	-	-	-	-
Total	(364)	-	-	(364)

Depreciation charges were determined on an accrual basis in relation to the estimated useful life of the assets.

SECTION 14 – IMPAIRMENT/WRITE-BACKS ON INTANGIBLE ASSETS – ITEM 210

14.1 – Impairment on intangible assets: breakdown

(€/000)

	Depreciation and amortisation	Write-downs for impairment	Write-backs	Net impairment/write back 12/31/2017
	(a)	(b)	(c)	(a + b - c)
A. Intangible assets
A.1 Owned	(1,651)	-	-	(1,651)
- Generated internally by the company	-	-	-	-
- Other	(1,651)	-	-	(1,651)
A.2 Held under finance lease	-	-	-	-
Total	(1,651)	-	-	(1,651)

Amortisation charges were determined on an accrual basis in relation to the estimated useful life of the assets.

SECTION 15 – OTHER OPERATING EXPENSE AND INCOME – ITEM 220

15.1 - Other operating expense: breakdown

(€/000)
	12/31/2017	12/31/2016
Write-downs on leasehold improv emets (non-separable assets)	(264)	(74)
Outlays for miscellaneous charges from prev ious financial years	(280)	(2,001)
Other operating expenses from current period	(414)	(1,379)
Total	(958)	(3,454)

15.2 – Other operating income: breakdown

(€/000)

	12/31/2017	12/31/2016
Recov ery of expenses	3,104	3,442
Rev enues from contractual and repetitiv e administrativ e serv ices	9,249	4,503
Various reimbursement of charges paid in prev ious financial years	472	181
Reductions in liabilities	-	2,283
Other operating income from current period	7,177	9,382
Total	20,002	19,791

Revenues from contractual and repetitive services mainly include revenues for administrative servicing and corporate services provider activities.

Other operating income from current period primarily reports income from commercial information services connected with loan recovery activities (€4.1 million) and income from due diligence services (€2.4 million).

SECTION 16 – PROFIT (LOSS) OF EQUITY INVESTMENTS – ITEM 240

16.1 – Profit (loss) of equity investments: breakdown

(€/000)

	12/31/2017	12/31/2016
1) Jointly owned companies
A. Income	-	-
1. Rev aluations	-	-
2. Gains on disposal	-	-
3. Write-backs	-	-
4. Other Gains	-	-
B. Expense	-	-
1. Write-downs	-	-
2. Impairment loss	-	-
3. Losses on disposal	-	-
4. Other expenses	-	-
Net profit (loss)	-	-
2) Companies subject to significant influence
A. Income	1,271	-
1. Rev aluations	1,271	-
2. Gains on disposal	-	-
3. Write-backs	-	-
4. Other Income	-	-
B. Expense	-	(26)
1. Write-downs	-	(26)
2. Impairment loss	-	-
3. Losses on disposal	-	-
4. Other expenses	-	-
Net profit (loss)	1,271	(26)
Total	1,271	(26)

Revaluations reports the outcome of the measurement of the investment in BCC Gestione Crediti S.p.A. using the equity method.

SECTION 19 – GAINS (LOSSES) ON DISPOSAL OF INVESTMENTS – ITEM 270

19.1 – Gains (losses) on disposal of investments: breakdown

(€/000)

	12/31/2017	12/31/2016
A. Property
- Gains on disposal	-	-
- Losses on disposal	-	-
B. Other assets	1,494	7,651
- Gains on disposal	1,494	7,651
- Losses on disposal	-	-
Net Profit	1,494	7,651

The item reports the gain on the sale in April of the investment in Gextra S.r.l. (€1.6 million), net of the reversal of the consolidation reserve present at the sale date in the amount of €162 thousand.

SECTION 20 – INCOME TAX EXPENSE FROM CONTINUING OPERATIONS – ITEM 290

20.1 – Income tax expense from continuing operations: breakdown

(€/000)

	12/31/2017	12/31/2016
1. Current taxes ( - )	(10,839)	(7,653)
2. Adjustment to current tax of prior years (+/-)	(235)	26
3. Reduction of current taxes for the year (+)	-	-
3.bis Reduction in current tax for the year due tax credits under L.214/2011 (+)	-	-
4. Changes in deferred tax assets ( +/- )	(11,652)	(15,070)
5. Changes in deferred tax liabilities ( +/- )	-	-
6. Tax expense for the year (-) (-1+/-2+3+/-4+/-5)	(22,726)	(22,697)

20.2 – Reconciliation of theoretical tax charge to actual tax charge

(€/000)
	12/31/2017	12/31/2016
total profit (loss) before tax from continuing operations (item 280)	68,110	75,377
Theoretical tax rate	27.50%	27.50%
Theoretical computed taxes on income	(18,730)	(20,729)
1. Different tax rates	136	-
2. Non-taxable income - permanent differences	377	2,330
3. Non-deductible expenses - permanent differences	(814)	(240)
4. IRAP (regional business tax)	(4,276)	(4,120)
5. Prior years and changes in tax rates	-	-
a) Effect on current taxes	-	-
- tax loss carryforward/unused tax credit	-	-
- other effects of prev ious periods	-	(2)
b) Effect on deferred taxes	-	-
- changes in tax rate	-	(68)
- tax recov eries from prev ious years deductible costs (-)	-	-
- temporary tax adjustments non-deductible costs (+)	-	-
- establishment of new taxes (-) repeal of prev ious taxes (+)	-	-
6. Valuation adjustments and non-recognition of deferred tax assets/liabilities	-	-
- Deferred tax assets write-downs	-	-
- Deferred tax assets recognition	-	-
- Deferred tax assets non-recognition	-	(4)
- Deferred tax asset/liability non-recognition in accordance with IAS 12.39 and 12.44	-	-
7. Measurement of associates	349	-
8. Other differences	232	136
Income tax recognised in income statement	(22,726)	(22,697)

The table was prepared on the basis of a nominal IRES rate of 27.50%, while the IRAP rates were 5.57% for the region of Veneto and 4.82% for the region of Lazio.

SECTION 21 – PROFIT (LOSS) AFTER TAX FROM DISCONTINUED OPERATIONS – ITEM 310

21.1 - Profit (loss) after tax from discontinued operations: breakdown

(€/000)

	12/31/2017	12/31/2016
1. Income	800	802
2. Expenses	(1,153)	(1,152)
3. Valuation of disposal groups and related liabilities	-	-
4. Profit (loss) on disposal	-	-
5. Tax	(37)	-
Profit (Loss)	(390)	(350)

The item reports the income and expenses connected with Gextra S.r.l., which was put up for sale towards the end of the previous year and sold in April 2017.

SECTION 24 – EARNINGS PER SHARE

24.1 - Average number of ordinary shares with diluted capital

(€)
	12/31/2017	12/31/2016
Net profit of the Parent Company Av erage number of shares in circulation	33,930,033 78,250,000	41,017,846 7,825,000
Earnings per share	0.4336	5.2419

As a result of the listing process, the number of shares was increased, with the number of shares in circulation rising from 7,825,000 to 78,250,000.

PART D – CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

DETAILED BREAKDOWN OF CONSOLIDATED COMPREHENSIVE INCOME

(€/000)

			Gross amount	Income tax	Net amount
		10. Net profit (loss) for the year	X	X	44,994
		Other comprehensiv e income not recycled to profit or loss
20.		Property, plant and equipment	-	-	-
30.		Intangible assets	-	-	-
40.		Defined-benefit plans	(389)	358	(31)
50.		Non-current assets classified as held for sale	-	-	-
60.		Share of v aluation reserv es of equity accounted inv estments	-	-	-
		Other comprehensiv e income not recycled to profit or loss
70.		Hedges of foreign inv estments:	-	-	-
	a)	fair v alue changes	-	-	-
	b)	reclassification to profit or loss	-	-	-
	c)	other changes	-	-	-
80.		Exchange differences	-	-	-
	a)	fair v alue changes	-	-	-
	b)	reclassification to profit or loss	-	-	-
	c)	other changes	-	-	-
90.		Cash flow hedges	-	-	-
	a)	fair v alue changes	-	-	-
	b)	reclassification to profit or loss	-	-	-
	c)	other changes	-	-	-
100.		Av ailable for sale financial assets	-	-	-
	a)	fair v alue changes	1,552	(427)	1,125
	b)	reclassification to profit or loss	-	-	-
		- impairment losses	-	-	-
		- gains/losses on disposal	-	-	-
	c)	other changes	-	-	-
110.		Non-current assets classified as held for sale	-	-	-
	a)	fair v alue changes	-	-	-
	b)	reclassification to profit or loss	-	-	-
	c)	other changes	-	-	-
120.		Share of v aluation reserv es of equity accounted inv estments	-	-	-
	a)	fair v alue changes	-	-	-
	b)	reclassification to profit or loss	-	-	-
		- impairment losses	-	-	-
		- gains/losses on disposal	-	-	-
	c)	other changes	-	-	-
		130. Total other comprehensive income	1,163	(69)	1,094
		140. Comprehensiv e income (items 10 + 130)			46,088
		150. Consolidated comprehensiv e income attributable to non-controlling interests			-
		160. Consolidated comprehensive income attributable to shareholders of the Parent Company			46,088

PART E - INFORMATION ON RISKS AND RISK MANAGEMENT POLICIES

Introduction

The Internal Control and Risk Management System consists of the set of rules, procedures and organisational structures designed to identify, measure and monitor the main risks. Consistent with the provisions of Circular no. 285 of December 17, 2013 as updated, the doBank Banking Group assigns strategic importance to the Internal Control System, considering it not only a key element in ensuring effective risk management and the alignment of the company's strategies and policies with the principles of sound and prudent management, but also as a prerequisite for the creation of long-term value, for preserving the quality of the assets and for the appropriate allocation of capital.

The doBank Group has structured the Internal Control System so as to ensure a high level of integration and coordination among the actors within the system, in compliance with the principles of proportionality. The guidelines for the system have been set out in specific internal regulations. The detailed operating instructions and information regarding the controls carried out at the various levels of the company processes are contained in specific policies Regulations and internal procedures.

In line with the risk-based approach, the doBank Group controls and manages the risks to which it is exposed using methods and processes that are monitored and controlled by the Risk Management department, in compliance with prudential supervisory regulations. This department is permanent and independent and performs second level controls.

As regards the structure of the Risk Management department, an organisational model has been adopted which provides for its centralisation with the Parent Company, doBank, as is the case for the other control units. The full implementation of this model took place on April 1, 2017 following the corporate transactions that took place in the last quarter of 2016, which led to the creation of the Banking Group. This decision was prompted by the need to implement strong and incisive overall strategic coordination, in particular of the Group's Internal Control System, ensuring overall operational rationalisation and greater efficiency of the system. In any event, the operational features of the Group companies were incorporated in the model, adopting a proportionality principle that took account of characteristics of their activities and the size of the company involved.

With regard to risk governance, in line with supervisory requirements, the doBank Group reviews at least annually the strategic guidelines of the "Risk Appetite Framework", which are subject to approval by the Parent Company's Board of Directors, and of the risk management policies.

An integral part of the broader risk management system is the prudential control process that the doBank Group performs independently in its self-assessment of capital adequacy (ICAAP), formalised in a specific annual document (the ICAAP Report).

SECTION 1 –RISKS OF THE BANKING GROUP

1.1 – CREDIT RISK

Qualitative disclosures

General aspects

During 2017 the Parent Company, doBank, continued its credit activity, albeit with limited volumes. After routine processing, proposal and authorization activities performed in compliance with the principle of assessing creditworthiness, and in accordance with the instructions of the supervisory authorities, the Bank continue the granting and reviewing of loans, in the form of both revocable unsecured credit facilities and long-term mortgage loans for the purpose of acquiring properties in foreclosure auctions organized by Italian courts.

Credit risk management policies

Organisational aspects

Credit risk is defined as the risk for the creditor that a borrower will not discharge a financial

obligation at maturity or subsequently. Against this risk, the Parent Company doBank has adopted appropriate internal management processes (risk measurement, application processing, disbursement, control and monitoring of developments in exposures, review of credit lines, classification of exposures, intervention in the event of anomalies, criteria for the classification, measurement and management of impaired exposures) that have been defined considering the principle of proportionality and undergo periodic review.

Credit operations arising from the performance of banking activities can expose the Group to the risk of default, i.e. the risk of incurring losses due to the failure of a counterparty to perform its contractual obligations or to a reduction in the quality of the credit granted to the counterparty. This type of risk is therefore a function both of the intrinsic solvency of the debtor and of the economic conditions of the market in which the debtor operates.

The doBank Group is also exposed to the credit risk generated by servicing agreements under which Group companies accrue trade receivables in respect of counterparties, who may default due to insolvency, political and economic events, liquidity shortages, operational deficiencies or other reasons.

The Parent Company has organizational units devoted to the management and control of credit risk. The Credit Assessment unit within the Risk Management department plays a key role in assessing the creditworthiness of counterparties, actively participating in the phases of the lending process with the issue of non-binding opinions that accompany proposals for the granting and/or modification/revision of a loan before it is submitted to the competent decision-making body of the Bank for approval. The unit also participates in the position monitoring phase and, above all, when the status of an exposure could be deteriorating, delineating the overall situation of the customer and coordinating with the commercial unit in charge of managing the customer relationship. In turn, Risk Management, within the scope of its activities, ensures that the necessary second-level controls are performed to ensure the monitoring of credit exposures, the classification of those exposures and the measurement of the related provisions.

Credit risk is also addressed within the Group Risk Appetite Statement with the definition of a system of threshold values (Target, Trigger and Tolerance) that Risk Management monitors to ensure compliance.

Management, measurement and control systems

For the purposes of determining the prudential capital requirement for credit risk, the doBank Group adopts the standardized approach in accordance with prudential regulations (Regulation (EU) No. 575/2013 of the European Parliament and of the Council of June 26, 2013 - the CRR), dividing its exposures into portfolios and applying differentiated prudential treatments to each, consistent with the relevant supervisory regulations. The Group does not use external ratings assigned by external rating agencies (ECAIs), recognised for prudential purposes on the basis of specific regulations, to assess credit worthiness.

With regard to individual non-performing positions (which are marginal in number and in carrying amount), the procedures and tools supporting the activity of the workout units always enable position managers to prepare accurate forecasts of the amounts and timing of expected recoveries on the individual relationships in accordance with the state of progress in the recovery management process. These analytical evaluations take account of all the elements objectively connected with the counterparty and are in any case conducted by the position managers in compliance with the principle of sound and prudent management.

With regard to the granting of loans - a minor activity compared with the core business of the Bank and the Group, which is focused mainly on servicing activities - the Parent Company performed control activities for the entire relatively small portfolio. This approach makes it possible to promptly detect any possible deterioration in counterparty creditworthiness, thereby enabling implementation of all the activities deemed appropriate or necessary to ensure compliance with the principle of sound and prudent management of banking assets. The initiatives implemented undertaken include the updating and revision during the year of the credit policy on the granting of loans and credit lines on current accounts, which contains the guidelines for the two credit products currently offered to doBank customers.

In the second half of the year, the doBank Group activated a process for the implementation

of the principles enshrined in IFRS 9 Financial Instruments, the new accounting standard, which came into force on January 1, 2018 to replace the previous IAS 39, with impacts on the methods for the classification and measurement of financial instruments and on the principles and procedures for calculating impairment adjustments.

This process ensures the operational implementation of the principle is aligned with best practices and is as faithful as possible to the substantive intent of the provisions of IFRS 9, taking into consideration the specific nature of the core business of the doBank Group. IFRS 9 introduces a model under which the classification of financial assets is guided, on the one hand, by the contractual characteristics of the cash flows of the instruments and, on the other, by the management intent with which these instruments are held (the Group business model). Within the scope of the IFRS 9 project, the doBank Group carried out in-depth analyses aimed at identifying the main impacts, initiating implementation of the applicative and organizational measures necessary for the consistent, comprehensive and effective adoption of the provisions of the standard. In addition, internal regulations were revised in the light of the new rules, with the aim of formalising the Group's business model and defining impairment criteria.

Credit risk mitigation techniques

Medium/long-term loans, aimed primarily at consumer households for the purchase of assets in foreclosure auctions, are all secured by suitable collateral in the form of voluntary first mortgages on those assets, which can all be classified as residential buildings.

These guarantees are acquired on the basis of expert appraisals consistent with the model adopted and in compliance with the supervisory regulations in this area.

The Parent Company doBank has adjusted its policies for granting loans secured by mortgages on properties to the applicable regulatory provisions, ensuring that the acquisition and management of mortgages takes place in a manner that ensures both their effectiveness in respect of third parties and their reasonably prompt enforceability.

In order to guarantee the eligibility of mortgage guarantees on residential and non-residential properties, in compliance with supervisory regulations, the Bank verifies the absence of any correlation between the value of the property and the creditworthiness of the borrower, thus ascertaining that the borrower's capacity to repay the loan does not depend to a significant extent on the cash flows generated by the building pledged as collateral, but rather on the borrower's ability to repay the debt by drawing on other documented sources.

In order to ensure an appraisal consistent with the actual risk inherent in the secured asset, the Bank monitors the value of the mortgaged property at least once a year in the case of nonresidential properties and once every three years for residential" properties, unless more frequent checks would be warranted by market conditions subject to significant changes, revising the valuation of the property pledged as collateral when the available information indicates that its value could be significantly reduced in relation to the general price level in the reference market.

Non-performing financial assets

Monitoring positions and proposing reclassification to a higher risk category is the responsibility of the units in charge of managing the position, while the Risk Management department is responsible for verifying the appropriateness and consistency of the classifications and the suitability of provisions.

In this context, the Parent Company doBank is equipped with IT units and procedures for the management, classification and control of loans in relation to the nature and composition of its loan portfolio.

The Parent Company doBank assesses its positions using the so-called analytical approach based on the findings of its position monitoring process.

When a debtor belongs to an economic group, an assessment is conducted of the need to consider the exposures of other group entities as impaired as well if those positions are not already considered in default, with the exception of exposures involved in isolated disputes that are not correlated with the solvency of the counterparty.

The principles for the determination of provisions remain unaffected, with those provisions being assessed periodically and any time significant new information is acquired, as well as in relation to the evolution of the outlook for recovery and the strategies implemented.

The main elements considered in an accurate assessment of expected loss are the following:

• assets of the customer and any guarantors (net of any encumbrances);

• the current and prospective performance and financial position of the principal obligor;

• the existence of any repayment plans, duly agreed by all guarantors, and their regular performance;

• the value and enforceability of existing guarantees;

• collateral (most often) or unsecured guarantees obtained voluntarily or acquired through a court order.

The criteria for determining impairment losses are based on the discounting of expected cash flows in respect of principal and interest. For the purpose of determining the present value, the key elements are represented by the identification of the estimated collections, the dates on which they fall due and the discount rate to be applied. To estimate collections on problem loans, analytical forecasts are used. As regards the time component, reference is made to detailed payment plans or, in their absence, estimated values, if available.

Quantitative disclosures

A – CREDIT QUALITY

A.1 - Non-performing and performing loans: amounts, write-downs, changes, distribution by business activity/region

A.1.1 - Breakdown of financial assets by portfolio and credit quality (carrying value)

(€/000)

	Bad loans	Unlikely to pay	Non performing past-due	Other performing past-due	Performing exposures	Total
1. Av ailable-for-sale financial assets	-	-	-	-	8,737	8,737
2. Held-to-maturity financial instruments	-	-	-	-	-	-
3. Loans and receiv ables with banks	-	-	-	-	49,449	49,449
4. Loans and receiv ables with customers	265	-	-	-	2,588	2,853
5. Financial assets at fair v alue through profit or loss	-	-	-	-	-	-
6. Financial instruments classified as held for sale	-	-	-	-	-	-
Total 12/31/2017	265	-	-	-	60,774	61,039
Total 12/31/2016	539	-	-	-	64,165	64,704

A.1.2 - Breakdown of credit exposures by portfolio and credit quality (gross and net values)

(€/000)

		Non-performing assets Performing assets
	exposure Gross	write-downs Specific	exposure Net	exposure Gross	adjustments Portfolio	exposure Net	Total (net exposure)
1. Av ailable-for-sale financial assets	-	-	-	8.737	-	8.737	8.737
2. Held-to-maturity financial instruments	-	-	-	-	-	-	-
3. Loans and receiv ables with banks	-	-	-	49.449	-	49.449	49.449
4. Loans and receiv ables with customers	725	(460)	265	2.610	(22)	2.588	2.853
5. Financial assets at fair v alue through profit or loss	-	-	-	-	-	-	-
6. Financial instruments classified as held for sale	-	-	-	-	-	-	-
Total 12/31/2017	725	(460)	265	60.796	(22)	60.774	61.039
Total 12/31/2016	907	(368)	539	64.171	(6)	64.165	64.704

As provided for by Circular 262, in the following tables on credit quality, on-balance-sheet exposures include all on-balance-sheet financial assets in respect of banks or customers, regardless of the accounting portfolio in which they have been classified. Accordingly, they also include financial assets held for sale.

A.1.3 - Banking group - On and off-balance sheet credit exposures to banks: gross and net values and time past-due buckets

(€/000)
			Gross exposure
	Non-performing assets
	Up to 3 months	3 to 6 months	6 months to 1 year	More than 1 year	Performing assets	Specific write-downs	Portfolio adjustments	Net exposure
A. On balance sheet exposures
a) Bad loans	-	-	-	-	-	-	-	-
- of which: forborne exposures	-	-	-	-	-	-	-	-
b) Unlikely to pay	-	-	-	-	-	-	-	-
- of which: forborne exposures	-	-	-	-	-	-	-	-
c) Non-performing past-due	-	-	-	-	-	-	-	-
- of which: forborne exposures	-	-	-	-	-	-	-	-
d) Performing past-due	-	-	-	-	-	-	-	-
- of which: forborne exposures	-	-	-	-	-	-	-	-
e) Other performing exposures	-	-	-	-	49,449	-	-	49,449
- of which: forborne exposures	-	-	-	-	-	-	-	-
Total A	-	-	-	-	49,449	-	-	49,449
B. Off-balance sheet exposures	-	-	-	-	-	-	-	-
a) Non-performing	-	-	-	-	-	-	-	-
b) Performing	-	-	-	-	-	-	-	-
Total B	-	-	-	-	-	-	-	-
Total A+B	-	-	-	-	49,449	-	-	49,449

A.1.6 - Banking group - On and off-balance sheet credit exposure to customers: gross and net values and time past-due buckets

(€/000)
			Gross exposure
		Non-performing assets
	Up to 3 months	3 to 6 months	6 months to 1 year	More than 1 year	Performing assets	Specific writedowns	Portfolio adjustments	Net exposure
A. On balance sheet exposures
a) Bad loans	-	-	1	724	-	(460)	-	265
- of which: forborne exposures	-	-	-	-	-	-	-	-
b) Unlikely to pay	-	-	-	-	-	-	-	-
- of which: forborne exposures	-	-	-	-	-	-	-	-
c) Non-performing past-due	-	-	-	-	-	-	-	-
- of which: forborne exposures	-	-	-	-	-	-	-	-
d) Performing past-due	-	-	-	-	60	-	(5)	55
- of which: forborne exposures	-	-	-	-	-	-	-	-
e) Other performing exposures	-	-	-	-	11,287	-	(17)	11,270
- of which: forborne exposures	-	-	-	-	-	-	-	-
Total A	-	-	1	724	11,347	(460)	(22)	11,590
B. Off-balance sheet exposures	-	-	-	-	-	-	-	-
a) Non-performing	-	-	-	-	-	-	-	-
b) Performing	-	-	-	-	14,706	-	-	14,706
Total B	-	-	-	-	14,706	-	-	14,706
Total A+B	-	-	1	724	26,053	(460)	(22)	26,296

On-balance-sheet exposures include all on-balance-sheet financial assets in respect of customers, regardless of the portfolio in which they have been classified (trading, available for sale, held to maturity, loans and receivables, assets measured at fair value, financial assets held for sale), while the "gross" exposure of on-balance-sheet financial assets is equal to:

a) to the book value of final inventories before measurement for those classified as measured at fair value;

b) to the carrying amount of the financial assets gross of specific and portfolio write-downs for other assets.

A.1.7 - Banking group - On balance sheet exposures to customers: change in gross non-performing exposures

(€/000)
---------

	Bad loans	Unlikely to pay	Non performing
			past-due
A. Opening balance - gross exposure	907	-	-
- of which: assets sold but not derecognised	-	-	-
B. Increases	1,734	-	-
B.1 Transfers from performing loans	-	-	-
B.2 Transfers from other categories of non-performing exposure	-	-	-
B.3 Other increases	1,734	-	-
C. Reduction	(1,916)	-	-
C.1 Transfers to performing loans	-	-	-
C.2 Write-offs	-	-	-
C.3 Collections	(1,916)	-	-
C.4 Sales	-	-	-
C.5 Losses on disposals	-	-	-
C.6 Transfers to other categories of non-performing exposure	-	-	-
C.7 Other reductions	-	-	-
D. Closing balance-gross exposure	725	-	-
- of which: assets sold but not derecognised	-	-	-

A.1.8 - Banking group: non-performing on balance sheet credit exposures to customers: changes in overall impairment

(€/000)
		Bad loans		Unlikely to pay		Non-performing past due
	Total	- of which: exposures with forbearance	Total	- of which: exposures with forbearance	Total	- of which: exposures with forbearance
A. Total opening write-downs	367	-	-		- -	-
- of which: assets sold but not derecognised	-	-	-	-	-	-
B. Increases	173	-	-	-	-	-
B.1. Write-downs	173	-	-	-	-	-
B.2 Losses on disposals	-	-	-	-	-	-
B.3 Transfers from other categories of non-performing exposure	-	-	-	-	-	-
B.4 Other increases	-	-	-	-	-	-
C. Reductions	(80)	-	-	-	-	-
C.1 Write-backs from v aluation	(80)	-	-	-	-	-
C.2. Write-backs from collections	-	-	-	-	-	-
C.3 Gains on disposal	-	-	-	-	-	-
C.4 Write-offs	-	-	-	-	-	-
C.5 Transfers to other categories of non-performing exposure	-	-	-	-	-	-
C.6 Other reductions	-	-	-	-	-	-
D. Final gross write-downs	460	-	-	-	-	-
- of which: assets sold but not derecognised	-	-	-	-	-	-

A.2 – Classification of exposures using external and internal ratings

The Group does not use internal ratings or external ratings assigned by recognised rating agencies (ECAI) to assess creditworthiness. Accordingly, no classification in recognised.

A.2.1 – Banking group - Breakdown of on-balance-sheet and off-balance-sheet credit exposures by external rating class

The distribution of exposures by external rating is not material for the Group, given that its customers are largely unrated. Accordingly, no breakdown is reported.

A.2.2 - Banking group - Breakdown of on-balance-sheet and off-balance-sheet credit exposures by internal rating class

The Group does not use internal ratings to manage credit risk.

A.3 – Breakdown of secured credit exposures by type of guarantee

A.3.2 - Banking group - Secured credit exposures to customers

(€/000)
											Uncollateralized guarantees (2)
			Collateral (1)					Credit derivatives				Guarantees
								Other derivatives
	Net exposure	Real estate - mortgages	finance lease Real estate -	Securities	Other collateral	CLN	Governments and central banks	Other public entities	Banks	Other entities	Governments and central banks	Other public entities	Banks	Other entities	Total (1) + (2)
1. Secured on balance sheet credit exposures:
1.1 Fully secured	1,200	1,147	-	-	-	-	-	-	-	-	-	-	-	53	1,200
- of which non-performing	108	55	-	-	-	-	-	-	-	-	-	-	-	53	108
1.2 Partially secured	134	52	-	-	-	-	-	-	-	-	-	-	-	82	134
- of which non-performing	134	52	-	-	-	-	-	-	-	-	-	-	-	82	134
2. Secured off-balance sheet credit exposures:
2.1 Fully secured	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
- of which non-performing	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
2.2 Partially secured	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
- of which non-performing	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-

As provided for by the supervisory regulations, note that in the following tables on the distribution and concentration of credit exposures, on-balance-sheet and off-balance-sheet exposures include all on- and off-balance-sheet financial assets in respect of banks or customers, regardless of the accounting portfolio in which they have been classified. Accordingly, they also include financial assets held for sale.

The distribution of on- and off-balance-sheet exposures by economic sector to which debtors and issuers (for guarantees issued) belong is determined in accordance with the classification criteria set out in the document "Classificazione della clientela per settori e gruppi di attività economica" (Customer classification by sectors and groups of economic activity) published by the Bank of Italy.

B.1 - Banking group - Distribution of on- and off-balance sheet credit exposures to customers by sector (carrying amount)

Governments Other public entities Financial companies Specific write Specific write Specific write Net exposure Net exposure Net exposure adjustments adjustments Portfolio Portfolio Portfolio downs downs downs A. On balance sheet exposure A.1 Bad loans - - - - - - - - - - of which: forborne exposures - - - - - - - - - A.2 Unlikely to pay - - - - - - - - - - of which: forborne exposures - - - - - - - - - A.3 Non-performing past-due - - - - - - - - - - of which: forborne exposures - - - - - - - - - A.4 Performing exposures 1,297 - (12) - - - 7,734 - - - of which: forborne exposures - - - - - - - - - Total A 1,297 - (12) - - - 7,734 - - B. Off-balance sheet exposures B.1 Bad loans - - - - - - - - - B.2 Unlikely to pay - - - - - - - - - B.3 Other non-performing exposures - - - - - - - - - B.4 Performing exposures - - - - - - - - - Total B - - - - - - - - - Total 12/31/2017 (A+B) 1,297 - (12) - - - 7,734 - - Total 12/31/2016 (A+B) 1,108 - (3) - - - 8,365 - - (€/000) Insurance companies Non-financial companies Other Specific write Specific write Specific write Net exposure Net exposure Net exposure adjustments adjustments Portfolio Portfolio Portfolio downs downs downs A. On balance sheet exposure A.1 Bad loans - - - 201 (450) - 64 (10) - - of which: forborne exposures - - - - - - - - - A.2 Unlikely to pay - - - - - - - - - - of which: forborne exposures - - - - - - - - - A.3 Non-performing past-due - - - - - - - - - - of which: forborne exposures - - - - - - - - - A.4 Performing exposures - - - 1,192 - (9) 1,102 - - of which: forborne exposures - - - - - - - - - Total A - - - 1,393 (450) (9) 1,166 (10) B. Off-balance sheet exposures B.1 Bad loans - - - - - - - - - B.2 Unlikely to pay - - - - - - - - - B.3 Other non-performing exposures - - - - - - - - - B.4 Performing exsposures - - - 14,706 - - - - - Total B - - - 14,706 - - - - - Total 12/31/2017 (A+B) - - - 16,099 (450) (9) 1,166 (10) Total 12/31/2016 (A+B) - - - 1,123 (354) (2) 3,751 (13)	(€/000)
						adjustments
						adjustments
						(2)
						(2)
						(2)
						(2)

B.2 - Banking group - Distribution of on- and off-balance-sheet credit exposures to customers by geographical area (carrying amount)

Total 12/31/2016 (A+B)	12,690	(374)	-	-	-	-	-	-	-	-
Total 12/31/2017 (A+B)	26,296	(482)	-	-	-	-	-	-	-	-
Total B	14,706	-	-	-	-	-	-	-	-	-
B.4 Performing exposures	14,706	-	-	-	-	-	-	-	-	-
B.3 Other non-performing exposures		- -	-	-	-	-	-	-	-	-
B.2 Unlikely to pay		- -	-	-	-	-	-	-	-	-
B.1 Bad loans		- -	-	-	-	-	-	-	-	-
B. Off-balance sheet exposures
Total A	11,590	(482)	-	-	-	-	-	-	-	-
A.4 Performing exposures	11,325	(22)	-	-	-	-	-	-	-	-
A.3 Non-performing past-due		- -	-	-	-	-	-	-	-	-
A.2 Unlikely to pay		- -	-	-	-	-	-	-	-	-
A.1 Bad loans	265	(460)	-	-	-	-	-	-	-	-
A. On balance sheet exposures
	Net exposure	Total write- downs	Net exposure	Total write- downs	Net exposure	Total write- downs	Net exposure	Total write downs	Net exposure	Total write downs
	Italy		Other European			Americas		Asia	Rest of the world
(€/000)

B.3 – Banking group - Distribution of on- and off-balance-sheet credit exposures to banks by geographical area (carrying amount)

	Italy		Other European			Americas		Asia	Rest of the world
	Net exposure	Total write downs	Net exposure	Total write downs	Net exposure	Total write downs	Net exposure	Total write downs	Net exposure	Total write- downs
A. On-balance-sheet exposures
A.1 Bad loans		- -	-	-	-	-	-	-	-	-
A.2 Unlikely to pay		- -	-	-	-	-	-	-	-	-
A.3 Non-performing past-due		- -	-	-	-	-	-	-	-	-
A.4 Performing exposures	49,449	-	-	-	-	-	-	-	-	-
Total A	49,449	-	-	-	-	-	-	-	-	-
B. Off-balance-sheet exposures
B.1 Bad loans		- -	-	-	-	-	-	-	-	-
B.2 Unlikely to pay		- -	-	-	-	-	-	-	-	-
B.3 Other non-performing exposures		- -	-	-	-	-	-	-	-	-
B.4 Performing exposures		- -	-	-	-	-	-	-	-	-
Total B		- -	-	-	-	-	-	-	-	-
Total 12/31/2017 (A+B)	49,449	-	-	-	-	-	-	-	-	-
Total 12/31/2016 (A+B)	17,032	-	-	-	-	-	-	-	-	-

B.4 – Large exposures

This item reports the value (weighted and unweighted amounts) and the number of positions that constitute "large exposures" in accordance with the provisions of Circular no. 286 of December 17, 2013 "Instructions for the compilation of supervisory reports for banks and securities investment firms" issued by the Bank of Italy.

(€/000)
	12/31/2017	12/31/2016
a) Amount (carrying v alue)	231,577	292,010
b) Amount (weighted v alue)	157,278	127,708
c) Number of positions	13	6

Other quantitative disclosures on credit risk

As described in greater detail in section F below (Models for measuring credit risk), the doBank Group uses the standardised approach.

Accordingly, the loan portfolio, including impaired and performing positions and on-balancesheet exposures and guarantees, is measured using the standardised approach, which is extended to other residual asset items not classified under "loans and receivables".

With regard to the calculation of capital requirements and in particular the credit risk capital requirement, the reported amounts are given in the following table, indicating nominal and weighted values (in euros):

		12/31/2017
	Exposure amount (€)	Risk weighted exposure after application of the SMEs support factor (€)
Exposures to central government or central banks	74.512.024	72.627.171
Exposures to non-profit and public-sector entities	215.100	64.433
Exposures to supervised entities	120.057.586	25.976.919
Exposures to corporates and other entities	37.932.423	41.745.885
Retail exposures	458.709	344.032
Exposures secured by real estate	1.092.056	388.053
Past-due exposures	264.872	264.966
Short -term exposures to corporates and other parties or authorities	458.818	458.818
Exposure to collective investment undertakings	30.216.052	45.179.393
Equity exposures	1.687.536	4.139.546
Other exposures	9.797.983	9.780.044
Credit risk - Standardized Approach	276.693.159	200.969.260

Note that the exposures measured using the standardised approach also include deferred tax assets, broken down as follows:

• those that are not based on future profitability and which meet the requirements of Art. 39 of Regulation 575/2013. As mentioned above, for these components, which amount to €55.4 million, the applicable regulations provide for the application of a 100% risk weighting;

• those that are based on future profitability and originate from temporary differences, and for which the weighting applied is 250%, as provided for by Art. 48 of Regulation 575/2013, as they are within the threshold of 10% of own funds, equal to €7.7 million.

The measurement using the standardised approach of consolidated assets, which include all the activities of the doBank Banking Group, resulted in the recognition of risk weighted assets of €201.0 million, which corresponds to a consolidated capital requirement of 8% or €16.1 million.

C - SECURITISATIONS

C.1 - Securitisations

Qualitative disclosures

On September 30, 2016, the assignment of the non-performing portfolio of the Parent company doBank to the securitisation vehicle Romeo SPV S.r.l ("Romeo") was finalised. Romeo was established pursuant to Law 130/1999. Subsequently, during the second quarter of 2017, the unsecured portion of the portfolio was transferred to the vehicle Mercuzio Securitisation S.r.l. ("Mercuzio") and at the same time the issue of ABSs by both the SPVs was completed with a single tranche of securities.

doBank, as originator, has subscribed a nominal amount of notes equal to 5% of the total securities issued in order to comply with the provisions of the retention rule referred to in Regulation (EU) 575/2013 (the CRR).

In both operations, doBank plays the role of Servicer and Administrative Services Provider.

Information on securitisations

The tables below summarise the securitisations originated by the Bank whose securities were subsequently sold.

SECURITISATION NAME:	ROMEO SPV
Type of transaction:	Traditional - Self-securitization
Originator:	doBank S.p.A.
Issuer:	Romeo SPV S.r.l.
Serv icer:	doBank S.p.A.
Arranger:	-
Target transaction:	Funding
Type of assets securitised:	ordinary loans - mortgages - funding
Quality of assets securitised:	Non-performing loans
Closing date:	9/30/2016
Date of transfer to Mercuzio Securitisation:	4/7/2017
Nominal v alue of reference portfolio:	1,305,684,292 €
Net amount of pre-existing writedowns/writebacks:	90,166,017 €
Disposal Profit & Loss realized:	0 €
Portfolio disposal price:	90,166,017 €
Issue guarantees granted by the bank:	-
Issue guarantees granted by third parties:	-
Bank lines of credit:	-
Third parties lines of credit:	-
Other credit enhancements:	None
Other relev ant information:	None
Ratings Agencies: Amount of CDS or other supersenior risk transferred:	No Rating Agency -
Amount and conditions of tranching:
. ISIN	IT0005248981
. Type of security	Single tranche
. Class	A
. Rating	n.d.
. Quatation	not listed
. Issue date	5/18/2017
. Legal maturity	4/27/2037
. Call option	none
. Expected duration	11 years
. Rate	16.25%
. Subordinated lev el	none
. Reference position	128,000,000 €
. Nominal v alue at end of financial year	83,113,599 €
. Security subscribers	Romeo S.C.S; doBank S.p.A.
Distribution of securitised assets by geographic area
Italy - Northwest	193,564,332 €
- Northeast	156,835,225 €
- Central	692,852,856 €
- South and Islands	260,724,298 €
Other European countries - EU	-
- Non-EU countries	-
America	-
Rest of the World	1,707,581 €
TOTAL	1,305,684,292 €
Main economic sectors of transferred debtors:
Gov ernments	81,761 €
other public bodies	-
banks	1,428,345 €
financial companies	-
insurance	1,173,023,756 €
non-financial companies	131,150,431 €
other subjects	-
TOTAL	1,305,684,292 €

SECURITISATION NAME:	MERCUZIO SECURITISATION
Type of transaction:	Traditional - Self-securitization
Originator:	Romeo SPV S.r.l.
Issuer:	Mercuzio Securitisation S.r.l.
Serv icer:	doBank S.p.A.
Arranger:	-
Target transaction:	Funding
Type of assets securitised:	ordinary loans - mortgages - funding
Quality of assets securitised:	Non-performing loans
Closing date:	4/7/2017
Nominal v alue of reference portfolio:	1,871,733,955 €
Net amount of pre-existing writedowns/writebacks:	77,136,699 €
Disposal Profit & Loss realized:	-10,409,726 €
Portfolio disposal price:	66,726,973 €
Issue guarantees granted by the bank:	-
Issue guarantees granted by third parties:	-
Bank lines of credit:	-
Third parties lines of credit:	-
Other credit enhancements:	None
Other relev ant information:	None
Ratings Agencies:	No Rating Agency
Amount of CDS or other supersenior risk transferred:	-
Amount and conditions of tranching:
. ISIN	IT0005251126
. Type of security	Single tranche
. Class	A
. Rating	n.d.
. Quatation	not listed
. Issue date	5/30/2017
. Legal maturity	7/26/2037
. Call option	none
. Expected duration	10 years
. Rate	16.25%
. Subordinated lev el	none
. Reference position	40,000,000 €
. Nominal v alue at end of financial year	35,351,514 €
. Security subscribers	Fortress Italian NPL
	Opportunities Series Fund LLC -
	Series 7; doBank S.p.A.
Distribution of securitised assets by geographic area
Italy - Northwest	309,827,093 €
- Northeast	287,065,495 €
- Central	832,969,823 €
- South and Islands	437,609,657 €
Other European countries - EU	-
- Non-EU countries	-
America	-
Rest of the World	4,261,928 €
TOTAL	1,867,472,067 €
Main economic sectors of transferred debtors:
Gov ernments	-
other public bodies	29,349 €
banks	-
financial companies	31,574,987 €
insurance	-
non-financial companies	1,660,615,126 €
other subjects	179,514,533 €
TOTAL	1,871,733,995 €

Quantitative disclosures

C.1 - Banking group - Exposures in respect of main own securitisations by type of securitized assets and type of exposure

(€/000)
		On-balance-sheet exposure							Guarantees issued					Credit lines
	Senior		Mezzanine		Junior			Senior	Mezzanine		Junior		Senior		Mezzanine			Junior
	Carrying amount	Write-downs/Write-backs	Carrying amount	Write-downs/Write-backs	Carrying amount	Write-downs/Write-backs	Carrying amount	Write-downs/Write-backs	Carrying amount	Write-downs/Write-backs	Carrying amount	Write-downs/Write-backs	Carrying amount	Write-downs/Write-backs	Carrying amount	Write-downs/Write-backs	Carrying amount	Write-downs/Write-backs
A. Fully derecognized
Non-performing assets
- A.1 Non-performing loans	-	-	-	-	7,558	1,635	-	-	-	-	-	-	-	-	-	-	-	-
Romeo SPV S.r.l.	-	-	-	-	5,351	1,195	-	-	-	-	-	-	-	-	-	-	-	-
Mercuzio Securitisation S.r.l.	-	-	-	-	2,207	440	-	-	-	-	-	-	-	-	-	-	-	-
B. Partially derecognized
Type of activ ity	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
B. Not derecognized
Type of activ ity	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-

For the purposes of the table, the share of ABSs subscribed by the Group equal to 5% of the total is classified among the Junior exposures, despite the fact that the two securitisations transactions have a single tranche.

In order to ensure the prevalence of substance over form, in the above table of "self" securitisations, both of the aforementioned transactions are reported, despite the fact that from a formal point of view Mercuzio Securitisation S.r.l. was originated with the transfer of the portfolio from Romeo SPV S.r.l. and not directly originated by doBank.

The write-downs/write-backs show the fair value measurement that was recognised in a special equity valuation reserve.

C.3 - Banking group - Involvement in special purpose securitisation vehicles

(€/000)
				Assets			Liabilities
	Registered office	Consolidation	Loans	Debt securities	Other		Senior Mezzanine	Junior
Romeo SPV S.r.l. Mercuzio Securitisation S.r.l.	Verona Verona	NO NO	- -	5,351 2,207	- -	- -	- -	- -

C.4 - Banking group – Unconsolidated special purpose securitisation vehicles

Nature of the involvement

The securitisation vehicles Romeo SPV S.r.l. and Mercuzio Securitisation S.r.l. fall within the scope of unconsolidated securitisations as the Group's interest is limited to the subscription of 5% of the total notes issued.

Nature of the risks

The total exposures to Romeo and Mercuzio represented by the ABSs subscribed are indicated below, as well as the maximum exposure to loss deriving from the interest in the vehicles, essentially consisting of the associated carrying amount.

No liabilities or guarantees or other loans have been issued to these entities, either in the form of a contract or implicit in the form of financial support without a contractual obligation.

(€/000)

				Amounts at 12/31/2017
	Classification under assets	Total Assets (A)	Classification under liabilities	Total Liabilities (B)	Net carrying amount (C=A-B)	Maximum exposure to risk of loss (D)	Difference between exposures to risk of loss and carrying amount (E=D-C)
		7,558	-	-	7,558	7,558	-
	HFT	-	Payables	-	-	-	-
Vehicle company	FVO	-	Securities	-	-	-	-
issuing ABS	AFS	7,558	HFT	-	-	-	-
	HTM	-	FVO	-	-	-	-
	LAR	-	-	-	-	-	-

HFT= Financial assets held for trading	Payables=	Due to customers
FVO= Financial assets measured at fair value	Securities=	Securities issued
HTM= Financial assets held-to-maturity	HFT=	Financial liabilities held for trading
AFS= Financial assets available for sale	FVO=	Financial liabilities measured at fair value

L&R= Loans and Receivables

C.5 - Banking group - Servicer activities – self securitisations: collections on securitized assets and redemption of securities issued by the securitisation vehicle

(€/000)
			Securitised assets (year end figure)		Loan collections during the year		% of securities redeemed (year-end figure)
Servicer	Vehicle company						Senior		Mezzanine	Junior
		Non performing	Performing	Non performing	Performing	Non		Non		Non
						performi ng	Performing	perform ing	Performing	perform ing	Performing
	doBank S.p.A. Romeo SPV S.r.l.	1,291,388	-	26,594	-	-	-	-	-	35%	-
	doBank S.p.A. Mercuzio Securitisation S.r.l.	1,823,038	-	11,777	-	-	-	-	-	11%	-

F – BANKING GROUP – MODELS FOR MEASURING CREDIT RISK

The doBank Group uses the standardised approach, which involves the allocation of exposures to different portfolios depending on the nature of the counterparty or the technical characteristics or nature of the exposure and the application of different weights to each portfolio.

In this process, the doBank Group does not use ratings issued by recognised rating agencies.

1.2 – BANKING GROUP – MARKET RISKS

1.2.1 – Interest rate risk and price risk – supervisory trading book

Qualitative disclosures

A – General aspects

Financial risks are represented by fluctuations in the value of positions as a result of changes in market prices/factors. The doBank Group does not hold exposures exposed to such risks. The Group does not engage in trading and does not hold trading books of shares or units in collective investment undertakings.

B – Management and measurement of interest rate risk and price risk

The Group does not engage in trading and does not hold trading books of securities.

The doBank Group has therefore not implemented special management processes or advanced measurement methods for interest rate risk and price risk. Interest rate risk calculated using standard methods provided for in the applicable supervisory instructions of the Bank of Italy is monitored periodically.

Quantitative disclosures

Nothing to report.

1.2.2 - Interest rate risk and price risk – banking book

Qualitative disclosures

A – General aspects, management and measurement of interest rate risk and price risk

The particular nature of the doBank Group's balance sheet means that assessing the matching of repricing dates is not significant. This justifies the absence of specific process and methods for measuring interest rate risk.

B – Fair value hedging

Fair value hedging is not conducted in view of the nature of the Group's assets.

C – Cash flow hedging

Cash flow hedging is not conducted in view of the nature of the Group's assets.

Qualitative disclosures

(€/000)

1 - Banking book: breakdown by residual maturity (re-pricing date) of financial assets and liabilities

	On demand	Up to 3 months	3 to 6 months	6 months to 1 year	1 to 5 years	5 to 10 years	More than 10 years	Unspecified term
1. Balance sheet assets	50,837	814	3	1,011	297	207	7,871	-
1.1 Debt securities	-	-	-	1,004	57	52	7,734	-
- with prepayment option	-	-	-	-	-	-	-	-
- other	-	-	-	1,004	57	52	7,734	-
1.2 Loans to banks	49,340	-	-	-	-	-	-	-
1.3 Loans to customers	1,497	814	3	7	240	155	137	-
- current accounts	1,204	-	-	-	68	66	-	-
- other loans	293	814	3	7	172	88	137	-
- with prepayment option	-	814	3	7	55	76	137	-
- other	293	-	-	-	116	13	-	-
2. Balance sheet liabilities	11,788	30	30	62	196	-	-	-
2.1 Due to customers	11,788	30	30	62	196	-	-	-
- current accounts	11,788	-	-	-	-	-	-	-
- other loans	-	30	30	62	196	-	-	-
- with prepayment option	-	-	-	-	-	-	-	-
- other	-	30	30	62	196	-	-	-
2.2 Due to banks	-	-	-	-	-	-	-	-
- current accounts	-	-	-	-	-	-	-	-
- other liabilities	-	-	-	-	-	-	-	-
2.3 Debt securities	-	-	-	-	-	-	-	-
- with prepayment option	-	-	-	-	-	-	-	-
- other	-	-	-	-	-	-	-	-
2.4 Other liabilities	-	-	-	-	-	-	-	-
- with prepayment option	-	-	-	-	-	-	-	-
- other	-	-	-	-	-	-	-	-
3. Financial derivatives	-	-	-	-	-	-	-	-
3.1 With underlying security	-	-	-	-	-	-	-	-
- Options	-	-	-	-	-	-	-	-
+ Long positions	-	-	-	-	-	-	-	-
+ Short positions	-	-	-	-	-	-	-	-
- Other deriv ativ es	-	-	-	-	-	-	-	-
+ Long positions	-	-	-	-	-	-	-	-
+ Short positions	-	-	-	-	-	-	-	-
3.2 Without underlying security	-	-	-	-	-	-	-	-
- Options	-	-	-	-	-	-	-	-
+ Long positions	-	-	-	-	-	-	-	-
+ Short positions	-	-	-	-	-	-	-	-
- Other deriv ativ es	-	-	-	-	-	-	-	-
+ Long positions	-	-	-	-	-	-	-	-
+ Short positions	-	-	-	-	-	-	-	-
4. Other off balance sheet transactions	-	14,706	14,706	-	-	-	-	-
+ Long positions	-	-	14,706	-	-	-	-	-
+ Short positions	-	14,706	-	-	-	-	-	-

In addition to government securities of €1.0 million, Debt securities include the residual value of the ABSs of the Romeo SPV and Mercuzio Securitisation transactions.

Amounts due to customers include current accounts and demand deposits in the amount of €11.8 million.

Other off-balance-sheet transactions report the amount still to be paid in respect of the subscription of 30 units of the Italian Recovery Fund closed-end alternative investment fund (formerly Atlante II).

1.2.3 – Exchange rate risk

doBank and its subsidiaries are not exposed to exchange rate risk as they do not hold assets or liabilities denominated in foreign currencies.

1.3 – BANKING GROUP – LIQUIDITY RISK

Qualitative disclosures

A – General aspects, management and measurement of liquidity risk

Liquidity risk is the risk that the bank might not be able to meet its obligations when they fall due owing to the inability to raise funds or the presence of limits on the sale of assets. Liquidity is the ability of a bank to finance the growth of its assets and to meet its payment obligations, without incurring unacceptable losses or costs.

Referring to internationally agreed definitions, there is a distinction between Funding Liquidity Risk and Market Liquidity Risk.

Funding Liquidity Risk is the risk that the bank will not be able to raise funds to meet expected and unexpected current and future cash outflows in an economically efficient manner, without jeopardising the day-to-day operations of the bank itself.

Market Liquidity Risk is the risk that the bank will not be able to liquidate a financial asset without incurring capital losses due to an illiquid market or market disorder. The two forms of liquidity risk are often correlated and can manifest themselves upon the occurrence the same triggering factors.

Given the current operations of the Group, the processes for controlling and mitigating liquidity risk focus exclusively on Funding Liquidity Risk.

As part of its management and coordination activities, the Parent Company doBank is responsible for the adoption of a consolidated liquidity risk management system that complies with the regulatory principles of prudential supervision. In this context, responsibility for the strategic decisions on the governance and management of liquidity risk, the setting of the tolerance threshold for liquidity risk and verification of the overall reliability of the liquidity risk management system is assigned to the corporate bodies of the Parent Company.

In consideration of its organisational structure, the doBank Group has adopted a unified approach and centralised the management of liquidity risk, with the Parent Company's Treasury unit managing Group liquidity and meeting the subsidiaries' requirements in accordance with internal procedures. The Risk Management department is responsible for monitoring the exposure to risk and verifying compliance with the specified limits.

The liquidity risk management framework comprises strategies and procedures for monitoring this risk and is aimed at ensuring that a sufficient amount of liquid instruments to meet the Group's commitments is always available in the short term, including in stress scenarios. In the long term it seeks to maintain an appropriate balance in the composition of the Group's assets and liabilities.

This framework, which underwent revision and refinement in 2017, is organised into the following main phases:

• identification of liquidity risk;
• monitoring of risk exposure even under stress conditions;
• definition of the response plan for crisis situations;
• reporting and information flows.

The Parent Company doBank identifies and monitors liquidity risk on a current and forwardlooking basis. In particular, the prospective assessment takes account of probable developments in the cash flows connected with the Group's business.

For the purposes of this assessment, the Risk Management department performs a weekly survey of cash flows, preparing a maturity ladder (cumulative balances by maturity bucket), based on the reporting flows made available promptly by the Treasury unit. More specifically, all expected cash inflows and outflows are subdivided into time bands, including both reasonably certain flows and those estimated on forward-looking basis. Excesses/shortfalls are calculated for each time band, which are then summed to obtain the overall excess/shortfall for all the time bands.

This approach makes it possible to monitor the management of operating liquidity, in particular events that could impact the Group's liquidity position over a period of up to 12 months, with the primary objective of maintaining an ability to meet ordinary and extraordinary payment obligations, minimising costs. For time horizons beyond one year, monitoring is based on the NSFR indicator (Net Stable Funding Ratio) in order to verify the medium/long-term cash balance of the Group's structure.

In addition to the survey of expected cash flows, the doBank Group monitors the sustainability of short-term financial equilibrium with an early warning indicator system, which is consistent with the nature, objectives and operational complexity of the Group. It serves to identify any potential crisis situations, so as to allow organisational units to activate appropriate management measures in order to mitigate the risk as effectively as possible.

The method for identifying and monitoring liquidity risk, in particular the maturity ladder, already incorporates stress scenario in the prudential values adopted. However, the Group remains exposed to the risk of extraordinary events associated with from information/procedural issues (for example the incorrect measurement or forecasting of cash flows), the failed settlement of a significant cash flow by a counterparty or a major liquidity outflow. The Risk Management department therefore conducts stress tests in order to assess the prospective quantitative and qualitative impact of adverse events on the risk exposure. The findings of the stress tests are used to verify the Group's ability to cope autonomously with unforeseen liquidity crises in the period in which they initially occur and before undertaking structural measures to modify the asset/liability structure and to ensure the consistency of alert and warning thresholds of the indicators used.

This process is formalised in the Liquidity Risk Policy, which was reviewed and approved by the Parent Company's Board of Directors during the second half of last year. The document sets out the principles, methods, rules and processes necessary to prevent the emergence of liquidity crisis situations and the rules to be adopted when such crises occur (contingency funding and recovery plan).

This system is integrated with the Group's overall risk management framework and is consistent with the Group's risk propensity as defined by the Risk Appetite Framework.

Quantitative disclosures

1 - Distribution by residual contractual maturity of financial assets and liabilities

(€/000)

	On demand 1 to 7 days		7 to 15 days	15 days to 1 month	1 to 3 months	3 to 6 months	6 months to 1 year	1 to 5 years	More than 5 years	Unspecifi ed term
Balance sheet assets	50,848	-	-	7	27	21	1,045	533	23,892	-
A.1 Gov ernment securities	-	-	-	-	-	-	1,003	-	-	-
A.2 Other debt securities	-	-	-	-	-	-	1	57	7,786	-
A.3 Units in collectiv e inv estment undertakings	-	-	-	-	-	-	-	-	15,221	-
A.4 Loans	50,848	-	-	7	27	21	41	476	885	-
- Banks	49,340	-	-	-	-	-	-	-	-	-
- Customers	1,508	-	-	7	27	21	41	476	885	-
On balance sheet liabilities	11,786	30	-	-	-	30	62	196	-	-
B.1 Deposits and current accounts	11,758	-	-	-	-	-	-	-	-	-
- Banks	-	-	-	-	-	-	-	-	-	-
- Customers	11,758	-	-	-	-	-	-	-	-	-
B.2 Debt securities	-	-	-	-	-	-	-	-	-	-
B.3 Other liabilities		30 28	-	-	-	30	62	196	-	-
Off balance sheet transactions	-	-	-	-	-	-	29,412	-	-	-
C.1 Financial deriv ativ es with exchange of principal	-	-	-	-	-	-	-	-	-	-
- Long positions	-	-	-	-	-	-	-	-	-	-
- Short positions	-	-	-	-	-	-	-	-	-	-
C.2 Financial deriv ativ es without exchange of principal	-	-	-	-	-	-	-	-	-	-
- Long positions	-	-	-	-	-	-	-	-	-	-
- Short positions	-	-	-	-	-	-	-	-	-	-
C.3 Deposits and loans to be receiv ed	-	-	-	-	-	-	-	-	-	-
- Long positions	-	-	-	-	-	-	-	-	-	-
- Short positions	-	-	-	-	-	-	-	-	-	-
C.4 Irrev ocable commitments to disburse funds	-	-	-	-	-	-	29,412	-	-	-
- Long positions	-	-	-	-	-	-	14,706	-	-	-
- Short positions	-	-	-	-	-	-	14,706	-	-	-
C.5 Financial guarantees giv en	-	-	-	-	-	-	-	-	-	-
C.6 Financial guarantees receiv ed	-	-	-	-	-	-	-	-	-	-
C.7 Credit deriv ativ es with exchange of principal	-	-	-	-	-	-	-	-	-	-
- Long positions	-	-	-	-	-	-	-	-	-	-
- Short positions	-	-	-	-	-	-	-	-	-	-
C.8 Credit deriv ativ es without exchange of principal	-	-	-	-	-	-	-	-	-	-
- Long positions	-	-	-	-	-	-	-	-	-	-
- Short positions	-	-	-	-	-	-	-	-	-	-

1.4 – BANKING GROUP – OPERATIONAL RISKS

Qualitative disclosures

A. General aspects, management and measurement of operational risks

Operational risk is the risk of incurring losses due to the inadequacy or the failure of procedures, human resources and internal systems, or to external events. This includes, among other things, losses from fraud, human error, the interruption of operations, system unavailability, contractual breaches and natural disasters. Operational risks include legal risk, while strategic and reputational risks are not included.

The doBank Group pays close to the links between the various types of risk, identifying possible repercussions in terms of operational risks. In particular, full compliance with regulatory and contractual provisions is also relevant for the prevention and containment of operational risks. In accordance with the recommendations of the Basel Committee on Banking Supervision ("Sound Practices for the Management and Supervision of Operational Risk"), the appropriate management of operational risk means: identification, assessment, monitoring and control/mitigation of risk.

In order to equip the Group with a comprehensive set of principles and rules to ensure appropriate management, the method adopted by the Group envisages:

• the identification and assessment of the operational risk inherent in every product, activity, process and system;

• the periodic monitoring of operational risk profiles and exposures to significant losses;

• specific strategies, policies, processes and procedures to control and/or mitigate significant operational risks.

With regard to organisational aspects, the doBank Group has defined the operational risk management system as the set of policies and procedures for the control, measurement and mitigation of operational risks. Operational risk policies are common principles that establish the role of corporate bodies, the risk control function and interactions with other units in the process.

The doBank Group has set up its own risk control structure in compliance with supervisory regulations and the related activities and levels of responsibility have been defined and formalised appropriately in the Company's internal rules and regulations.

The governance structure for operational risks envisages not only the direct involvement of senior management but also an Operational Risks Committee, which was set up to:

• propose action to address risks detected or reported by the Risk Management department or by other units;

• review the operational risk reports of other Group companies;

• propose control procedures and limits on operational risks for the Parent Company and, if established, for other Group companies;

• monitor risk mitigation actions for the Parent Company and other Group companies.

The Operational Risks Committee established both at the Parent Company, doBank, and at the supervised subsidiary Italfondiario meets quarterly on the basis of a calendar set at the beginning of the year or at the request of one of the Committee members.

To control the operational risks of the doBank Group, activities are centralised with the Operational and Reputational Risks unit within the broader Risk Management department of the Parent Company.

Finally, with regard to IT risk, defined as the risk of incurring financial losses, reputational harm or loss of market share as a result of breaches of confidentiality, integrity, availability, execution of unauthorized transactions or the non-traceability of information, in accordance with the applicable supervisory provisions, the doBank Group adopts an integrated representation of business risks in which IT risk is considered as a component of operational and reputational risks. The IT risk assessment process is aimed at identifying and assessing IT risks in business processes and existing ICT controls that mitigate these risks.

Following the significant changes in the company during the last year, the Parent Company doBank decided it was appropriate to revise the method previously adopted for assessing and monitoring IT risks to ensure it was suitable for the new organisational context. In particular, a project was begun to develop a new framework for the ICT risk management process for the entire doBank Group, which has been formalised in the document " IT Risk Management

Policy", approved by the Board of Directors of doBank on December 19, 2017. This document specifies the roles and responsibilities of the various units involved and the phases of the assessment process, with an indication of the data used and the activities necessary to determine the IT risk exposure and the associated business impacts.

As part of management and coordination activity, the Risk Management department of the Parent Company is responsible for analysing and monitoring IT risks for the subsidiaries.

The analysis process provides for the assessment of IT risk as a combination of the level of exposure of IT resources to certain risk scenarios and the impacts that the materialisation of such risks could have on the business. Potential IT risk, i.e. the risk to which the service is potentially exposed, and residual IT risk, i.e. the risk to which the service is exposed once the security measures have been applied, are identified in detail. Specific reports are produced as the output of the IT risk analysis process.

The framework adopted, in line with the provisions of Circular no. 285/2013 of the Bank of Italy as updated, provides for the risk analysis process to be performed with the frequency appropriate to the type of ICT resources and risks present and in response to situations that could change the overall level of IT risk (for example, transactions of greater importance, projects related to major changes, serious incidents).

Quantitative disclosures

In order to manage operational risks, the doBank Group has implemented a structured set of processes, functions and resources dedicated to:

• the collection of internal loss data for the entities belonging to the Group;

• the determination and calculation of risk indicators for the Group's most significant entities, preparing corporate reporting;

• the control of capital at risk.

During 2017, the Parent Company doBank selected a multi-company market IT tool to manage, in a single environment, risk process analysis and activities related to other control functions. In particular, for the purposes of the key activities of the Parent Company's Risk Management department, the application will enable a self-assessment of corporate operational risks as well as registration in the same environment of operational losses and the identification of operational risks for all Group companies. This project, currently under way, will be completed in 2018.

With regard to loss data, the Parent Company's Operational and Reputational Risks unit performs an annual analysis of the chart of accounts in order to identify and update a list of accounts that could potentially include operational losses. The analysis of movements on these accounts is conducted quarterly and leads to the determination of operational losses to be recorded in a specific database for each company of the Group.

The doBank Group classifies the events in the following categories, in accordance with the New Basel Capital Accord and Regulation (EU) no. 575/2013:

• Internal fraud;
• External fraud;
• Employment practices and workplace safety;
• Customers, products and business practices;
• Damage to physical assets;

• Business disruption and system failures;

• Execution, delivery and process management.

On a quarterly basis, a monitoring report is prepared for the corporate bodies – the Board of Directors and Board of Auditors - containing an analysis of operational losses and operational capital at risk.

At December 31, 2017, the operational loss data mainly concerned the "customers" event type, accounting for approximately 76% of total operational losses.

Among the tools used by the doBank Group for the identification of operational risks, risk indicators are a forward-looking component that promptly reflects improvements or deteriorations in the risk profile as a result of changes in operating segments, in human resources, technological and organisational resources as well as in the internal control system.

Specific risk indicators have been created which are monitored on a monthly basis for doBank and for the main Group companies. These include:

• about 60 indicators grouped into different risk areas for the Parent Company doBank;

• about 20 indicators grouped into different risk areas for the doSolutions subsidiary;

• about 30 indicators for the Italfondiario subsidiary.

The data from the risk indicators are analysed on a monthly basis and compared with the previous month to justify any positive or negative changes in order to highlight any risks in corporate processes. Specific analysis reports are then produced for each company. A specific report is prepared on a quarterly basis for the Risks and Related Party Transactions Committee in addition to the Operational Risks Committee.

For the Parent Company doBank, an action plan is prepared on at least a quarterly basis for indicators that do not fall within the range established by the Operational Risks Committee. For the subsidiaries, with particular regard to Italfondiario and doSolutions, indicators that exceed the tolerance thresholds are shared with the related process owners in order to understand the underlying phenomena and initiate any corrective activities.

Finally, the Parent Company doBank has set up a reporting system that ensures timely reporting on operational risks to the corporate bodies and to the managers of the organizational units involved. The frequency and content of reporting is consistent with the level of risk and varies depending on the recipient and the intended use of the information.

For the purpose of calculating the own funds requirement for operational risks, the Group uses the Basic Indicator Approach (BIA), in compliance with the relevant supervisory provisions. Under the Basic Indicator Approach, the own funds requirement for operational risks is equal to 15% of the three-year average of the relevant indicator as established in Article 316 of Regulation 575/2013 based on the last three annual observations at the end of the financial year. At December 31, 2017, the own funds requirement for the doBank Group calculated using the BIA amounted to €26.8 million.

PART F – CONSOLIDATED SHAREHOLDERS' EQUITY

A. QUALITATIVE DISCLOSURES

Group shareholders' equity consists of the sum of the balances of the following consolidated balance sheet items:

• Capital net of treasury shares;
• Share premiums;
• Reserves;
• Valuation reserves;
• Capital instruments;
• Result for the period.

The amount of capital is the result of policies and decisions aimed at ensuring that capital is consistent with the activities and risks to which the Group is exposed, in compliance with the prudential supervisory regulations and the risk propensity defined by the Risk Appetite Framework ( RAF).

The RAF is the reference framework that identifies the Group's appetite for risk, setting ex ante the risk/return objectives that the Group intends to achieve and the consequent operating limits, taking account of the interconnections between the companies belonging to the Group, both in normal operating conditions and in possible adverse scenarios.

For regulatory purposes, the relevant balance sheet aggregate for this purpose is determined on the basis of the current instructions of the Bank of Italy as well as the "Basel III" framework contained in Directive (EU) 2013/36 (CRD IV) and in Regulation (EU) no. 575/2013 (CRR).

The monitoring of compliance with regulatory capital adequacy rules and minimum supervisory requirements, as well as the limits established by the RAF, is performed on a constant basis by the designated control units and periodically reported to the Board of Directors.

Further analysis and preventive verification of the Group's capital adequacy takes place in the assessment of "transactions of greater importance", i.e. transactions whose individual size, type or complexity could have a significant impact on the Group's operations and its financial stability, in terms of the prospective value of assets and potential losses.

Transactions in treasury shares

As of December 31, 2017, doBank held 1.750.000 treasury shares worth €277 thousand, equal to their par value.

During the year, no transactions were carried out in treasury shares. However, in 2018 sharebased payments will be made using treasury shares in accordance with the provisions of the post-IPO remuneration policies for 2017.

B. QUANTITATIVE DISCLOSURES

B.1 – Consolidated shareholders' equity: breakdown by type of entity

(€/000)

				Consolidation
	Banking	Insurance	Other	adjustments
	Group	companies	companies	and	Total
				eliminations
Share Capital	61,750	-	-	(20,470)	41,280
Share premium reserve	-	-	-	-	-
Reserves	124,969	-	-	(5,619)	119,350
Equity instruments	-	-	-	-	-
(Treasury shares)	(277)	-	-	-	(277)
Valuation reserves	364	-	-	986	1,350
- Av ailable for sale financial assets	1,125	-	-	-	1,125
- Property, plant and equipment	-	-	-	-	-
- Intangible assets	-	-	-	-	-
- Hedges of foreign inv estments	-	-	-	-	-
- Cash flow hedge	-	-	-	-	-
- Exchange difference	-	-	-	-	-
- Non-current assets classified held for sale	-	-	-	-	-
- Actuarial gains (losses) on defined benefits plans	(1,190)	-	-	986	(204)
- Valuation reserv es from inv estments accounted for using the equity method	-	-	-	-	-
- Special rev aluation laws	429	-	-	-	429
Profit (loss) for the year - non-controlling interests	44,705	-	-	289	44,994
Shareholders' equity	231,511	-	-	(24,814)	206,697

B.2 – Valuation reserves from financial assets available for sale: breakdown

(€/000)
	Banking group		Insurance companies		Other companies		Elimination and consolidation adjustments		Total 12/31/2017
	Positive reserve	Negative reserve	Positive reserve	Negative reserve	Positive reserve	Negative reserve	Positive reserve	Negative reserve	Positive reserve	Negative reserve
1 Debt securities	1,179	-	-	-	-	-	-	-		- 1,179
2 Equity securities	-	(1)	-	-	-	-	-	-		(1) -
3 Units in collectiv e inv estment undertakings	-	(53)	-	-	-	-	-	-		(53) -
4 Loans		- -	-	-	-	-	-	-		- -
Total 12/31/2017	1,179	(54)	-	-	-	-	-	-	1,179	(54)
Total 12/31/2016		- -	-	-	-	-	-	-	-	-

The substantial increase in the reserve is attributable to the measurement of the Romeo SPV and Mercuzio Securitisation ABSs.

The valuation reserve for units in collective investment undertakings reports the change in the fair value of the units subscribed in the Italian Recovery Fund (formerly Atlante II).

B.3 – Valuation reserves from financial assets available for sale: annual change

(€/000)
	Debt
	securities	Equity securities UCITS units		Loans
1. Opening balances	-	-	-	-
2. Increases	1,179	-	-	-
2.1 Increases in fair v alue	1,179	-	-	-
2.2 Rev ersal to income statement of negativ e reserv es:	-	-	-	-
for impairment	-	-	-	-
for disposal	-	-	-	-
2.3 Other changes	-	-	-	-
3. Decreases	-	(1)	(53)	-
3.1 Decreases in fair v alue	-	(1)	(53)	-
3.2 Write-downs for impairment	-	-	-	-
3.3 Rev ersal to income statement of positiv e reserves: from sale	-	-	-	-
3.4 Other changes	-	-	-	-
4. Closing balances	1,179	(1)	(53)	-

B.4 – Valuation reserves for defined benefit schemes: annual change

(€/000)
	Banking Group	Insurance Companies		Other Companies	Eliminations and consolidation adjustments	Total 12/31/2017
1. Opening balance	(173)	-	-	-	-	(173)
2. Increases	179	-	-	-	-	179
2.1 Actuarial profits	144	-	-	-	-	144
2.2 Other changes	35	-	-	-	-	35
3. Decreases	(187)	-	-	-	(23)	(210)
3.1 Actuarial losses	(186)	-	-	-	-	(186)
3.2 Other changes	(1)	-	-	-	(23)	(24)
4. Closing balance	(181)	-	-	-	(23)	(204)

SECTION 2 – OWN FUNDS AND CAPITAL RATIOS

2.1 – Regulatory framework

Bank of Italy Circular no. 285 of December 17, 2013, as updated, transposing the regulatory principles contained in Directive 2013/36/ EU (CRD IV) and Regulation (EU) no. 575/2013 (CRR), establishes that the elements of the prudential consolidation of assets and liabilities shall be calculated on the basis of the consolidation methods envisaged in the regulations governing the financial statements (Bank of Italy Circular no. 262).

From the point of view of prudential supervisory reporting, the European regulations noted above have been transposed into Italian law with Bank of Italy Circular no. 286 of December 17, 2013, as updated.

In general, the scope of prudential consolidation is defined in accordance with the prudential regulations and differs from the scope of consolidation of the consolidated financial statements, which is determined under the rules of the IAS/IFRS. Following clarifications received from the Bank of Italy on February 23, 2018, the scope of consolidation for the sole purpose of prudential supervision ("CRR Group") puts Avio S.à r.l., a Luxembourg-registered financial company and majority shareholder of doBank S.p.A. at the top of the Group. It is not consolidated in shareholders' equity under accounting rules.

The regulatory provisions concerning own funds provide for the introduction of the new regulatory framework gradually over a transitional period, generally until 2017, during which certain elements that will be computable or fully deductible under the permanent rules will have only a percentage impact.

2.2 – Own funds

A. QUALITATIVE DISCLOSURES

Pursuant to the CRR and Circular no. 285, the amount of own funds is divided between the following components:

• Tier 1 Capital, consisting in turn of:

• Common Equity Tier 1 CET1 and
• Additional Tier 1 AT1;
• Tier 2 Capital;

The sum of Tier 1 and Tier 2 capital makes up total own funds (Total Capital).

The minimum capital requirements applicable as of December 31, 2017 to the doBank Group are equal to the following capital ratios, including the capital conservation buffer, which for 2017 is equal to 1,25% of CET1:

• CET1: 5,75%;
• Tier 1 Capital: 7,25%;
• Total Capital: 9,25%.

May 2017 saw the completion of the supervisory review process (Supervisory Review and Evaluation Process - SREP) carried out by the Bank of Italy with regard to the minimum capital requirements of the Parent Company, doBank. The outcome of that process requires compliance with the following additional capital requirements starting from the own funds reporting at June 30, 2017:

• CET1: 0,84%
• Tier 1 Capital: 1,13%;
• Total Capital: 1,50%.

The countercyclical capital buffer, to be considered in addition to the SREP requirement, was set at zero by the Bank of Italy for all quarters in 2017.

With reference to the figures as at 31 December 2017, taking account of the components listed above, the minimum capital requirements for the doBank Group10 are summarised below:

Capital adequacy ratios	Minimum regulatory requirements (art. 92 CRR)	Capital conservation buffer	Minimum requirements including capital conservation buffer	SREP Requirements ¹	Minimum requiremts including SREP¹ and the capital conservation buffer	Countercyclical capital buffer	Total minimum requirements
Common Equity Tier 1 Ratio	4.50%	1.25%	5.75%	0.84%	6.59%	0.00%	6.59%
Tier 1 Capital Ratio	6.00%	1.25%	7.25%	1.13%	8.38%	0.00%	8.38%
Total Capital Ratio	8.00%	1.25%	9.25%	1.50%	10.75%	0.00%	10.75%

¹ Requirements required at the lev el of the Parent Company, also reported at the consolidated lev el for prudential purposes

1. - Common Equity Tier 1 - CET1

Common Equity Tier 1 capital consists predominantly of the following elements: share capital, share premium accounts, treasury shares, retained earnings, other reserves, other comprehensive income ("OCI") and minority interests in the qualifying amount under the provisions of the CRR.

As part of the quantification of CET1, in line with the provisions of the "Business plan strategic guidelines" for 2017-2019, a portion of accrued profit at December 31, 2017, equal to 30% of consolidated profit, based on expectations of distribution to shareholders.

The calculation of CET1 also includes prudential filters and regulatory deductions, which mainly include the following aggregates:

• goodwill and other intangible assets;

• deferred tax assets that rely on future profitability and do not arise from temporary differences: this includes the remaining deferred tax assets in respect of the negative taxable income recognised in previous years, mainly in the financial statements of the Parent Company.

10 Although the Bank of Italy has determined the SREP requirements with regard to the own funds of doBank at the individual level, pending completion of the SREP at the consolidated level the requirements at the consolidated level have also been reported here.

In 2017, different prudential treatment was adopted for the notes issued by the Romeo SPV and Mercuzio Securitisation vehicles held in the AFS portfolio in the total amount of €7,7 million. Following clarifications by the Bank of Italy regarding a specific issue raised by doBank, these notes, in the absence of tranching, are excluded from the prudential rules relating to securitisation transactions and are treated as financial instruments representing the underlying claims. As a result, their carrying amount is no longer deducted from own Funds, but is instead subject to the calculation of credit risk based on the standardised approach, applying the "look through approach" to determine the average weighting of the underlying portfolio.

With regard to deferred tax assets, note that the exercise of the option of retaining the possibility of converting deferred tax assets to tax credits pursuant to Art. 11 of Decree Law 59 of May 3, 2016 ratified with Law 119 of June 30, 2016 and amended by Law 15 of February 17, 2017, entailed the continuation of the exclusion from the calculation of the deductions from own funds of the residual value of the DTAs deriving from impairment losses on loans for which the requirements under Art. 39 of Regulation 575/2013 are met. This provision requires them to be subject to the calculation of credit risk with a weighting of 100% (for a total of €55,4 million). The entire tax credit was used.

2. - Additional Tier 1 – AT1

AT1 is primarily made up of innovative and non-innovative capital instruments net of regulatory deductions.

At December 31, 2017 the Bank had no AT1 capital.

3. - Tier 2 – T2

Tier 2 is primarily made up of subordinated liabilities in the percentage permitted under the applicable regulations, net of regulatory deductions. At December 31, 2017 the Bank had no T2 capital.

B. QUANTITATIVE DISCLOSURES

The information at December 31, 2017 reported below regards the prudential scope of consolidation determined under the provisions of the Consolidated Banking Act in order to enable meaningful comparison with the figures for the previous year.

(€/000)

		12/31/2017	12/31/2016
A.	Common Equity Tier 1 (CET1) before prudential filters	175,891	158,414
	of which grandfathered CET1 instruments	-	-
B.	CET1 prudential filters (+/-)	-	-
C.	CET1 gross of deductions and transitional adjustments (A+/-B)	175,891	158,414
D.	Items to be deducted from CET1	(34,438)	(51,573)
E.	Transitional adjustment - Effect on CET1 (+/-), including minority interests subject to transitional adjustments	82	104
F.	Common Equity Tier 1 - CET1 (C - D+/-E)	141,535	106,945
G.	Additional Tier 1 (AT1) gross of deductions and transitional adjustments	-	-
	of which grandfathered AT1 instruments	-	-
H.	Items to be deducted from AT1	-	-
I.	Transitional adjustments - Effect on AT1 (+/-), including qualifying instruments issued by
	subsidiaries and computable in AT1 due to transitional prov isions	-	-
L.	Additional Tier 1 Capital - AT1 (G-H+/-I)	-	-
M.	Tier 2 (T2) Capital gross of deductions and transitional adjustments	-	-
	of which grandfathered T2 instruments	-	-
N.	Items to be deducted from T2	-	-
O.	Transitional adjustments - Effect on T2 (+/-), including qualifying instruments issued by	-	-
	subsidiaries and computable in T2 due to transitional prov isions	-	-
P.	Tier 2 Capital (M - N +/- O)	-	-
Q.	Total Own Funds (F + L + P)	141,535	106,945

In view of the clarifications received from the Bank of Italy at the end of February 2018, following table gives the same information for the scope of consolidation of the CRR Group, which includes Avio S.à r.l. as the ultimate parent company as it is the majority shareholder of doBank.

(€/000)

		12/31/2017
A.	Common Equity Tier 1 (CET1) before prudential filters	279,758
	of which grandfathered CET1 instruments	-
B.	CET1 prudential filters (+/-)	-
C.	CET1 gross of deductions and transitional adjustments (A+/-B)	279,758
D.	Items to be deducted from CET1	(110,774)
E.	Transitional adjustment - Effect on CET1 (+/-), including minority interests subject to transitional adjustments	82
F.	Common Equity Tier 1 - CET1 (C - D+/-E)	169,066
G.	Additional Tier 1 (AT1) gross of deductions and transitional adjustments	-
	of which grandfathered AT1 instruments	-
H.	Items to be deducted from AT1	-
I.	Transitional adjustments - Effect on AT1 (+/-), including qualifying instruments issued by
	subsidiaries and computable in AT1 due to transitional prov isions	-
L.	Additional Tier 1 Capital - AT1 (G-H+/-I)	-
M.	Tier 2 (T2) Capital gross of deductions and transitional adjustments	-
	of which grandfathered T2 instruments	-
N.	Items to be deducted from T2	-
O.	Transitional adjustments - Effect on T2 (+/-), including qualifying instruments issued by	-
	subsidiaries and computable in T2 due to transitional prov isions	-
P.	Tier 2 Capital (M - N +/- O)	-
Q.	Total Own Funds (F + L + P)	169,066

Own funds are calculated under the applicable provisions of the transitional regime.

A. Common Equity Tier 1 – CET1

This item includes:

• paid-in share capital of €176.5 million;

• other reserves of €59.9 million;
• minority interests of €43.4 million.

D. Elements to deduct from CET1

This item includes:

• consolidation difference (goodwill) arising from setting the equity investment of Avio S.à r.l. in doBank S.p.A. against the associated shareholders' equity of €76.3 million;
• deferred tax assets recognised on the negative taxable income in previous years €29.9 million;
• other intangible assets €4.5 million.

E. Transitional regime – impact on CET1 (+/-)

This item reports the following transitional adjustment:

• positive filter of €82 thousand, equal to 40% of the amount in respect of defined-benefit plans (IAS 19).

2.3 – Capital Adequacy

A. QUALITATIVE DISCLOSURES

With regard to qualitative disclosures on the methods used by the Group to assess the capital adequacy of own funds in support of current and future operations, please see to "Section 1 - Consolidated Capital" of this Part F.

With regard to the scope of consolidation under the Consolidated Banking Act, at December 31, 2017, consolidated own funds amounted to €141.5 million while weighted assets came to €535.5 million, mainly in respect of operational risks and, to a lesser extent, credit risk. As regards the CRR Group prudential scope of consolidation, which has been determined following the clarification received from the Bank of Italy at the end of February 2018, consolidated own funds amount to €169.1 million, while weighted assets total €566.5 million, mainly in respect of operational risks and, to a lesser extent, credit risk.

B. QUANTITATIVE DISCLOSURES

The information reported below regards the prudential scope of consolidation determined under the provisions of the Consolidated Banking Act in order to enable meaningful comparison with the figures for the previous year. (€/000)

		Unweighted amounts		Weighted amounts/requirements
	12/31/2017	12/31/2016	12/31/2017	12/31/2016
A. Exposures
A.1 Credit and counterparty risk	276,693	283,070	200,969	146,026
1. Standardized approach	276,693	283,070	200,969	146,026
2. IRB approaches		- -	-	-
2.1 Foundation		- -	-	-
2.2 Adv anced		- -	-	-
3. Securitizations		- -	-	-
B. Capital requirements ⁽¹⁾
B.1 Credit and counterparty risk			16,078	11,682
B.2 Credit valuation adjustment risk			-	-
B.3 Settlement risk			-	-
B.4 Market risk			-	-
1. Standard approach			-	-
2. Internal models			-	-
3. Concentration risk			-	-
B.5 Operational risk			26,762	29,866
1. Basic indicator approach			26,762	29,866
2. Traditional standardized approach			-	-
3. Adv anced measurement approach			-	-
B.6 Other calculation elements			-	-
B.7 Total capital requirements			42,840	41,548
C. Exposures and capital ratios
C.1 Risk-weighted assets ⁽²⁾			535,492	519,347
C.2 Common Equity Tier 1/Risk weighted assets (CET1 capital ratio)			26%	21%
C.3 Tier 1 Capital/Risk weighted assets (Tier1 capital ratio)			26%	21%
C.4 Total own funds/Risk-weighted assets (Total capital ratio)			26%	21%
Capital conservation buffer 1.125% (starting from 1/1/2017) ₍₃₎			6,694	3,246
Total capital requirement			49,533	44,794

Notes:

(1) The capital requirements are equal to 8% of the associated risk.

(2) In items C.2, C.3 and C.4 the amount of risk-weighted assets (C.1) is determined for all banks, regardless of whether they belong to a banking group, as the produce of total capital requirements (B.7) and 12.5 (the inverse of the minimum requirement of 8%)

(3) The capital conservation buffer for 2016 was 0.625%

In view of the clarifications received from the Bank of Italy at the end of February 2018, the following table gives the same information for the scope of consolidation of the CRR Group, which includes Avio S.à r.l. as the ultimate parent company as it is the majority shareholder of doBank.

(€/000)
	Unweighted	Weighted
	amounts	amounts/requirem
	12/31/2017	12/31/2017
A. Exposures
A.1 Credit and counterparty risk	311,436	231,937
1. Standardized approach	311,436	231,937
2. IRB approaches	-	-
2.1 Foundation	-	-
2.2 Adv anced	-	-
3. Securitizations	-	-
B. Capital requirements ⁽¹⁾
B.1 Credit and counterparty risk		18,555
B.2 Credit valuation adjustment risk		-
B.3 Settlement risk		-
B.4 Market risk		-
1. Standard approach		-
2. Internal models		-
3. Concentration risk		-
B.5 Operational risk		26,766
1. Basic indicator approach		26,766
2. Traditional standardized approach		-
3. Adv anced measurement approach		-
B.6 Other calculation elements		-
B.7 Total capital requirements		45,321
C. Exposures and capital ratios
C.1 Risk-weighted assets ⁽²⁾		566,518
C.2 Common Equity Tier 1/Risk weighted assets (CET1 capital ratio)		30%
C.3 Tier 1 Capital/Risk weighted assets (Tier1 capital ratio)		30%
C.4 Total own funds/Risk-weighted assets (Total capital ratio)		30%
Capital conservation buffer 1.125% (starting from 1/1/2017) ₍₃₎		7,081
Total capital requirement		52,402

Notes:

(1) The capital requirements are equal to 8% of the associated risk.

(2) In items C.2, C.3 and C.4 the amount of risk-weighted assets (C.1) is determined for all banks, regardless of whether they belong to a banking group, as the produce of total capital requirements (B.7) and 12.5 (the inverse of the minimum requirement of 8%)

(3) The capital conservation buffer for 2016 was 0.625%

As shown in the table on the composition of exposures and capital ratios, the doBank Group, at December 31, 2017, had a total capital ratio of 26%, a significant improvement over 2016 and well above the minimum regulatory requirements for the period in question, equal to 10.75% for that ratio.

The prudential ratios at December 31, 2017 take account of the adjustments provided for under the transitional provisions in place for 2017.

The total capital ratio for the CRR Group at December 31, 2017 was 30%.

PART G – BUSINESS COMBINATIONS

SECTION1 – BUSINESS COMBINATIONS COMPLETED IN THE PERIOD

This section provides detailed information on business combinations involving companies or business units undertaken with counterparties outside the Group, which are accounted for using the purchase method as provided for under IFRS 3 "Business combinations".

Business combinations involving companies or business units already controlled directly or indirectly by doBank as part of the Group's internal reorganisations are also reported here. These transactions, which do not have economic substance, are accounted for in the financial statements of the seller and the buyer on a predecessor value basis.

1.1 – External business combinations

In 2017, no business combinations were carried out with companies outside the Group.

1.2 – Internal business combinations

In 2017 the doBank Group continued the reorganisation of its organisational and corporate structure with the following two transactions, which were completed in the first part of the year:

• doSolutions S.p.A. started operations on March 1, 2017, following capitalisation with the contribution of a business unit by doBank and the demerger of a business unit by Italfondiario. These transactions were carried out in order to assign doSolutions the information technology and back-office functions that until then had been performed by doBank and Italfondiario. The creation of doSolutions is intended to pursue the objective of integrating some of the Group's activities currently carried out on an outsourcing basis. In particular, doSolutions performs the following activities for the companies of the doBank Group:

• information technology and organisational development: functions associated with the management of information technology services and projects and management of the technology supporting processes, as well as constant monitoring of the organisational variables of business processes and the management of change management solutions in accordance with the indications of the Parent Company;
• back office and logistics: (i) management of administrative functions to support servicing activities and banking services; (ii) support in document management, correspondence and postal processes; and (iii) user support and assistance.

• Italfondiario RE S.r.l. was merged, with legal effect from March 1, 2017, into doRealEstate, a company providing real estate services related to credit recovery, of which the Parent Company holds 100%. As a preliminary initiative, on October 24, 2016 the issuer acquired 100% of the equity of Italfondiario RE S.r.l., a company previously entirely held by Italfondiario. This transaction is intended to centralise with a single company all the activities involved in repossession and the provision of administrative, management and marketing services for the real estate assets connected with the non-performing portfolios under management.

SECTION 2 – BUSINESS COMBINATIONS COMPLETED AFTER THE END OF PERIOD

No business combinations were completed after the close of 2017.

SECTION 3 – RETROSPECTIVE ADJUSTMENTS

No retrospective adjustments were made after the close of 2017.

PART H -RELATED-PARTY TRANSACTIONS

INTRODUCTION

The provisions of IAS 24 apply for the purposes of disclosures on related parties. That standard defines the concept of related party and identifies the relationship between related parties and the entity preparing the financial statements.

Pursuant to IAS 24, significant related parties for the doBank Group include:

• the Parent Company;
• associates, joint ventures and their subsidiaries;
• key management personnel;

• close family members of key management personnel and companies controlled, including jointly, by key management personnel or their close family.

For the purposes of managing transactions with related parties, reference is made to the Bank of Italy instructions in Circular no. 263/2006 (Title V, Chapter 5) as well as the provisions of Art. 136 of Legislative Decree 385/1993, under which company officers may assume obligations in respect of the bank that they administer, manage or control only under an unanimous decision of the bank's administrative body.

In compliance with the above regulations and with Consob Resolution no. 17221 of March 12, 2010, doBank has adopted the "doBank Group procedure for the management of transactions with connected persons and related parties and transactions conducted in situations of conflict of interest", published on the corporate website of doBank (www.dobank.com), which defines the principles and rules for managing the risk associated with situations of possible conflict of interest engendered by the proximity of certain parties to decision-making centres. To manage transactions with related parties, doBank has established a Risks and Related Party Transactions Committee – composed of three independent directors and a non-executive director – which is charged with the task of issuing reasoned opinions reasoned opinions to the Board of Directors regarding transactions with related parties in the cases governed by the procedure.

1. Information on remuneration of key management personnel

The following table provides information on the remuneration of key management personnel in 2017. The definition of key management personnel under IAS 24, includes those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly. This category includes the members of the Board of Directors, including the Chief Executive Officer and the Statutory Auditors of the Parent Company and all the subsidiaries, as well as the other key management personnel designated as "Relevant Personnel" pursuant to Bank of Italy Circular no. 285.

(€/000)

	12/31/2017
Short term benefits	4,992
Post-employment benefits	196
Other long term benefits	-
Sev erance indemnity	415
Share-based payments	2,195
Total	7,798

2. Related-party transactions

The following reports information on transactions with related parties pursuant to IAS 24.

During the period, low-value transactions with related parties of an ordinary nature and lesser importance were carried out, mainly attributable to contracts for the provision of services. All transactions with related parties carried out in 2017 were concluded in the interest of the Group and on market or standard conditions.

The following table shows the assets, liabilities and guarantees and commitments outstanding at December 31, 2017, with separate indication for the various types of related parties pursuant to IAS 24.

(€/000)

	12/31/2017
	Parent Company	Unconsolidated subsidiaries	Associates	Joint ventures	Key management personnel	Other related parties	Total
Av ailable-for-sale financial assets	-	-	-	-	-	-	-
Other assets	-	82	1,113	-	-	2,271	3,466
Total assets	-	82	1,113	-	-	2,271	3,466
Other liabilities	-	-	-	-	-	35	35
Total Liabilities	-	-	-	-	-	35	35

(€/000)

	12/31/2017
	Parent Company	Unconsolidated Subsidiaries	Associates	Joint Ventures	Key management personnel	Other related parties	Total
Fee and commission income /(expense)	-	-	-	-	-	653	653
Other income /(expense)	-	-	2,546	-	-	(909)	1,637
Total	-	-	2,546	-	-	(256)	2,290

Starting from November 1, 2015, the ultimate parent company is Avio S.à r.l., a company incorporated under Luxembourg law that is jointly owned by the Fortress Group (since December 2017 acquired by Softbank Group Corp.) and Eurocastle Investment. After listing on the Milan Stock Exchange, 47.7% of the shares have been placed on the market and the remaining 2.2% consists of 1,750,000 treasury shares, carried at cost, for a total of €277 thousand held by the Parent Company.

The majority shareholder, Avio S.à r.l., does not exercise management and coordination activities in respect of doBank as defined in Articles 2497 et seqq. of the Italian Civil Code.

Relationships with associated companies refer to transactions with BCC Gestione Crediti S.p.A. connected with the provision of services and the secondment of personnel to that company.

The main relationships with other related parties regard:

• Torre SGR S.p.A.: the company rents the Group of a number of properties for one of the main local offices in Rome for a fee of €2.7 million at December 31, 2017, which is included under other expense.

• FIG LLC: for due diligence revenues of €1.3 million included under other income and other assets.

PART I – SHARE-BASED PAYMENT

A. Qualitative disclosures

1. Description of payment agreements based on own equity instruments

At its meeting of June 21, 2017, the Shareholders' Meeting approved the remuneration and incentive policies of the doBank Group, which, in view of the listing on the Milan Stock Exchange on July 14, 2017, include remuneration systems that in some cases provide for the use of the Group's own financial instruments.

More specifically, the following types of remuneration are envisaged:

• part of the fixed remuneration and the entire variable portion of remuneration based on the annual Management by Objectives (MBO) incentive system for the Chief Executive Officer is paid in shares;
• the IPO Bonus 2017 system linked to the performance of the doBank shares: this linked variable component is equal to 100% of fixed remuneration, to be paid entirely in shares for a sub-category of Relevant Personnel (Beneficiaries 2:1) identified and approved by the Shareholders' Meeting.

Part of the variable component of remuneration indicated above is paid up front and part on a deferred basis. The up-front portion is paid after approval by the Shareholders' Meeting of the financial statements for the accrual period for the incentive (by the end of July).

The deferred variable portion is subject to a deferral ranging from 3 to 5 years depending on the beneficiary.

In order to ensure long-term financial stability, liquidity and the ability to generate risk-adjusted profits, in line with the Group's long-term strategic objectives, the deferred incentive is paid on condition that the gates relating to financial soundness and liquidity are achieved, measured with reference to the year prior to their vesting (vesting period).

Shares awarded up front are subject to a two-year retention period, while for the deferred portions is subject to a 1-year retention requirement, which runs from the moment they vest.

The Group uses treasury shares for the remuneration described above.

The reference price for the calculation of the number of shares to be awarded as the equivalent value of variable remuneration is determined using the average stock price in the 30 days prior to the grant date.

In order to reflect performance levels and risk actually assumed, as well as take account of individual conduct, the Group has established ex-post correction mechanisms (malus and claw-back) defined in accordance with the provisions of the relevant national collective bargaining agreements, where applicable, or any individual contracts/engagements.

For more details on the methods and terms for the award of shares, please see the documentation published on the website of the doBank Group www.dobank.com ("Governance/Remuneration" section).

B. Quantitative disclosures

1. Annual changes

The table on annual changes has not been prepared since the Group's share-based payment agreements do not meet the requirements established for that table.

2. Other information

The estimated total cost of the above remuneration in 2017, providing for share-based payments, is equal to €4.9 million and is deferred over the entire vesting period provided for in the associated remuneration policies. The charge in profit or loss for the year amounted to €2.2 million and is reflected in a specific equity reserve.

PART L – SEGMENT REPORTING

In 2017, the doBank Group operated in a single business sector, namely the management of non-performing loans.

From the point of view of the geographical scope of operations, during the year the Group carried out all of its activity in Italy.

Please see the Report on Operations for more information on the results and disclosures on the doBank Group's various areas of operation.

ANNEX 1 – TABLE OF FEES FOR THE YEAR FOR SERVICES PROVIDED BY THE AUDITING FIRM AND BY ENTITIES BELONGING TO THE AUDITING FIRM NETWORK EY S.P.A.

150 Annexes doBank

(€)
		EY S.p.A.
Type of services	Amounts in Eur (VAT and fees excluded)	doBank S.p.A.	Subsidiaries (*)
Statutory audit of the financial statements		69,030	120,587
Other serv ices		401,555	-
of which assistance and support for the listing on the Milan Stock Exchange	368,700	-
of which Comfort Letter on the 3-year Plan		32,855	-
Rev iews for tax returns		8,088	5,211
Total		478,673	125,798

(*) Banking Group company and other subsidiaries fully consolidated

ANNEX 2 – COUNTRY-BY-COUNTRY REPORTING

In relation to the obligations established by Circular no. 285 "Supervisory provisions for banks" of December 17, 2013, as updated, on country-by-country reporting introduced with Art. 89 of Directive 2013/36/EU ("CRD IV"), the following chart reports the information indicated under letters a), b), c), d), e), and f) of Annex A of Part One, Title III, Chapter 2, with reference to the situation as at December 31, 2017.

a) Name of company and nature of activity

Name: doBank Group - Parent Company: doBank S.p.A.

Activity: The doBank Group, which is specialised in the management of non-performing loans, operates throughout Italy and provides services that can be summarised in the concepts of "Servicing, Lending, Solutions".

Servicing: this consists in the management, for the purposes of recovery, of non-performing receivables on behalf of third parties or in the restoration of receivables with late payments to performing status. The service is performed for a broad range of customers, mainly located in Italy and consisting of banks, commercial and industrial companies, courts for the liquidation of assets in bankruptcy, loan-guarantee consortia, financial and insurance companies, lease companies, factoring companies and SPVs involved in securitisations. To ensure the maximum efficiency of recovery without compromising relations with the counterparty, the processes activated by doBank are oriented towards reaching of out-ofcourt agreements with debtors.

Lending: customers are offered specialised banking services such as current accounts for professionals for the online payment of court expenses, or current accounts for court offices, delegated agents and other operators authorised to manage amounts deriving from civil and criminal court proceedings or from asset custody activities and compulsory sales. In order to expand participation in foreclosure auctions, doBank also offers products such as "foreclosure auction mortgage loans" that enable customers to purchase a property at auction without drawing down their available liquidity.

Solutions: the doBank Group performs a range of services and advisory activities through its business information companies and develops effective solutions for the recovery of receivables through the sale of the properties securing those loans.

b) Turnover¹

€ 177.768.087

c)						Number of employees on a full time equivalent basis2
----	--	--	--	--	--	------------------------------------------------------	--

985

d) Profit or loss before tax³

€ 67.758.034

e) Tax on profit or loss⁴

€ 22.763.593

f) Public subsidies received⁵

None

¹ Expressed as the value of gross income reported under item 120 of the consolidated income statement at December 31, 2017.

² The "number of employees on a full time equivalent basis" is calculated as the ratio between the total number of hours worked by all employees (excluding overtime) and the total number of hours worked by a full-time employee. ³"Profit or loss before tax" is the sum of items 280 and 310 (the latter before tax) of the consolidated income statement referred to in Circular no. 262.

⁴"Tax on profit or loss" is the sum of the taxes reported under item 290 of the consolidated income statement referred to in Circular no. 262 and the income taxes pertaining to disposal groups held for sale.

⁵ "Public subsidies received" reports subsidies received directly from government departments. The item does not include operations carried out by central banks for the purpose of ensuring financial stability or operations to facilitate the transmission of monetary policy impulses. Similarly, they do not include operations qualifying as State aid transactions approved by the European Commission.

CERTIFICATIONS AND REPORTS ON THE CONSOLIDATED FINANCIAL STATEMENTS

doBank S.p.A.

Consolidated financial statements as at December 31, 2017

Independent auditor's report in accordance with article 14 of Legislative Decree n. 39, dated 27 January 2010, and article 10 of EU Regulation n. 537/2014

EY S.p.A. Via Isonzo, 11 37126 Verona Tel: +39 045 8312511 Fax: +39 045 8312550 ey.com

Independent auditor's report in accordance with article 14 of Legislative Decree n. 39, dated 27 January 2010 and article 10 of EU Regulation n. 537/2014 (Translation from the original Italian text)

To the Shareholders of doBank S.p.A.

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of doBank Group ("the Group"), which comprise the statement of financial position as at December 31, 2017, and the income statement, the statement of comprehensive income, the statement of changes in equity and the cash flows statement for the year then ended, and the notes to the consolidated financial statements.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the doBank Group as at December 31, 2017, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with the regulations issued for implementing article 9 of Legislative Decree n. 38/2005 and article 43 of Legislative Decree n. 136/2015.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

We are independent of doBank S.p.A. in accordance with the regulations and standards on ethics and independence applicable to audits of financial statements under Italian Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We identified the following key audit matter:

Key Audit Matter Audit Response

Estimate of the revenues related to servicing contracts and connected contractual obligations

The Group operates in the management and recovery of loans, mainly non-performing, under mandate of banks and financial institutions, and the related revenues are recorded on an accruals basis, through the use of IT and management information procedures and complex reporting processes on the activity carried out, considering the different contractual specificities of each mandate.

These revenues, recorded under item 40. Commission income of the consolidated income statement, for approximately 81% of the total amount are related to credit management and recovery services and for the remainder to the servicing activity for securitization transactions. The aforesaid contracts also provide for detailed rights and duties clauses for the Group in relationships with its counterparties, which may also generate contingent liabilities from any failure to meet contractual obligations.

At year-end, the Directors determine part of these revenues with a complex procedure for estimating the amounts accrued over the period, considering the detailed contractual provisions, the trend of actual recoveries, as well as any contractual indemnities to be recognized in relation to particular events or specific circumstances. At the financial year-end, the portion of servicing revenues without a clear acceptance by the counterparty amounted to 26% of the total amount of invoices to be issued and to 9% of item 40. Commission income of the consolidated income statement.

For these reasons, the estimate of the revenues related to servicing contracts and the connected contractual obligations has been considered a key audit matter.

The audit response included several procedures, the most relevant of which are outlined below:

• an understanding of the process for recognizing commission income and charges from contractual provisions and of the related key controls, as well as the testing of these controls;
• verification of the underlying assumptions of the estimation models used, as well as the carrying out of compliance procedures on the controls considered key among those detected;
• the assessment of the appropriateness of the methodology and the reasonableness of the assumptions adopted for the purposes of the estimates made;
• the execution of substantive procedures concerning the actual application of the estimation methodology and the related assumptions in determining the commission income, both fixed and variable;
• the comparison of estimates related to the previous year with the those subsequently reported and the analysis of the deviations in order to support the reliability of the estimation process.
• we assessed the adequacy of the disclosures provided in the explanatory notes.

The disclosure relating to the commission income from credit management and recovery and the methods adopted to their estimation is included in Parts A - Accounting policies, B - Information on the consolidated balance sheet and C - Information on the consolidated income statement of the notes to the consolidated financial statements.

Responsibilities of Directors and Board of Statutory Auditors for the Consolidated Financial Statements

The Directors are responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with the regulations issued for implementing article 9 of Legislative Decree n. 38/2005 and article 43 of Legislative Decree n. 136/2015, and, within the terms provided by the law, for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing doBank Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Statutory Auditors ("Collegio Sindacale") is responsible, within the terms provided by the law, for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with International Standards on Auditing (ISA Italia), we have exercised professional judgment and maintained professional skepticism throughout the audit. In addition:

• we have identified and assessed the risks of material misstatement of the consolidated financial statements, whether due to fraud or error; have designed and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• we have obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the doBank Group's internal control;

• we have evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors;

• we have concluded on the appropriateness of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the doBank Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the doBank Group to cease to continue as a going concern;
• we have evaluated the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• we have obtained sufficient appropriate audit evidence regarding the financial information of the entities or the business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We have communicated with those charged with governance, identified at an appropriate level as required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We have provided those charged with governance with a statement that we have complied with the ethical and independence requirements applicable in Italy, and we have communicated with them all matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we have determined those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We have described these matters in our auditor's report.

Additional information pursuant to article 10 of EU Regulation n. 537/14

The shareholders of doBank S.p.A., in the general meeting held on June 17, 2016, engaged us to perform the audits of the separate and consolidated financial statements of each years ending December 31, 2016 to December 31, 2024.

We declare that we have not provided prohibited non-audit services, referred to article 5, par. 1, of EU Regulation n. 537/2014, and that we have remained independent of doBank S.p.A. in conducting the audit.

We confirm that the opinion on the consolidated financial statements included in this report is consistent with the content of the additional report to the Board of Statutory Auditors ("Collegio Sindacale") in their capacity as audit committee, prepared in accordance with article 11 of the EU Regulation n. 537/2014.

Report on compliance with other legal and regulatory requirements

Opinion pursuant to article 14, paragraph 2, subparagraph e), of Legislative Decree n. 39 dated 27 January 2010 and of article 123-bis, paragraph 4, of Legislative Decree n. 58, dated 24 February 1998

The Directors of doBank S.p.A. are responsible for the preparation of the Report on Operation and of the Report on Corporate Governance and Ownership Structure of doBank Group as at December 31, 2017, including their consistency with the related consolidated financial statements and their compliance with the applicable laws and regulations.

We have performed the procedures required under audit standard SA Italia n. 720B, in order to express an opinion on the consistency of the Report on Operations and of specific information included in the Report on Corporate Governance and Ownership Structure as provided for by article 123-bis, paragraph 4, of Legislative Decree n. 58, dated 24 February 1998, with the consolidated financial statements of doBank Group as at December 31, 2017 and on their compliance with the applicable laws and regulations, and in order to assess whether they contain material misstatements.

In our opinion, the Report on Operation and the above mentioned specific information included in the Report on Corporate Governance and Ownership Structure are consistent with the consolidated financial statements of doBank Group as at December 31, 2017 and comply with the applicable laws and regulations.

With reference to the statement required by article 14, paragraph 2, subparagraph e), of Legislative Decree n. 39, dated 27 January 2010, based on our knowledge and understanding of the entity and its environment obtained through our audit, we have no matters to report.

Statement pursuant to article 4 of Consob Regulation implementing Legislative Decree n. 254, dated 30 December 2016

The Directors of doBank S.p.A. are responsible for the preparation of the non-financial information pursuant to Legislative Decree n. 254, dated 30 December 2016. We have verified that non-financial information have been approved by the Directors.

Pursuant to article 3, paragraph 10, of Legislative Decree n. 254, dated 30 December 2016, such nonfinancial information are subject to a separate compliance report signed by other auditor.

Verona – March 28, 2018

EY S.p.A. Signed by: Marco Bozzola, Partner

This report has been translated into the English language solely for the convenience of international readers.