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Banco BPM SpA

Investor Presentation • Aug 4, 2017

4282_ip_2017-08-04_cc087d8c-8551-452f-81a6-2fc99503f7d2.pdf

Investor Presentation

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H1 2017 Results Presentation

4 August 2017

DISCLAIMER

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

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

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

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

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

None of Banco BPM, its subsidiaries or any of their respective members. Directors, officers or employees nor any other person accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or otherwise arising in connection therewith. By participating to the presentation of the Group results and accepting a copy of this presentation, you agree to be bound by the foregoing limitations regarding the information disclosed in this presentation.

* * *

In this presentation, with a view to provide adequate information on the Group's balance sheet, financial and income statement position, reclassified accounting tables and comparative data have been prepared, on an aggregate basis, with reference to 31 December 2016 for the balance sheet and to 30 June 2017 for the profit and loss account. Such data have been obtained through the aggregation of the data referring to the former Banco Popolare Group and to the former BPM Group as at 31/12/2016 and as at 30/06/2016, with the inclusion of appropriate adjustments.

Comparative data calculated on an aggregate basis have not been subject to an external audit.

* * *

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

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

Agenda

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EXECUTIVE SUMMARY: P&L - MAIN DATA

-«CORE1» REVENUES UP€2,151m in H1 2017 (+5.6% y/y)

-OPERATING COSTS DOWN

€1,525m in H1 2017 (-5.5% y/y)Cost Income ratio: -344bps y/y, at 64%

-STRONG OPERATING PROFITABILITY€853.6m in H1 2017 (+10.2% y/y)

-NET PROFIT AT €94M / €127M ADJUSTED2VS. NEGATIVE NET RESULTS IN H1 2016

Note: 1. Net interest income + Net fees and commissions. 2. Net of non-recurring items.

  1. Executive Summary and Highlights 4

+5.6% Y/Y

EXECUTIVE SUMMARY: BALANCE SHEET - MAIN DATA


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Note: 1. Mortgages and personal loans. Corporates includes also Large Corporates, Institutionals and Third Sector. 2. Includes: negative impact from RWA on defaulted assets and Retail EAD, negative impact of the put options in bancassurance and positive impact from the asset management rationalization.

EXECUTIVE SUMMARY: RISK PROFILE KEEPS IMPROVING

Note: 1. Including write-offs, the coverage rises to 50.7% for NPLs (+520 bps y/y) and to 62.1% for Bad loans (+260bps y/y). See slides 31, 57 and 58 for details.

HIGHLIGHTS: H1 2017 RESULTS (1/2)

… supporting Net Profit, in spite of €76m of losses accountedfor Atlante and Veneto-based banks

Note: 1. NII+ Net Fees and Commissions. 2. Net of non-recurring items.

HIGHLIGHTS: H1 2017 RESULTS (2/2)

GOOD Q1 ADJUSTED OPERATING AND NET PROFIT TREND CONFIRMED ALSO IN Q2

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Note: 1. Net of non-recurring items. See slides 53 and 54 for details.

HIGHLIGHTS: RISK PROFILE KEEPS IMPROVING

NET NPL RATIO

NET FLOWS TO NPLs

HIGHLIGHTS: COMMERCIAL PERFORMANCE AND LIQUIDITY

POSITIVE TREND OF COMMERCIAL PERFORMANCE

SOUND LIQUIDITY PROFILE

LIQUIDITY RATIOS AS AT 30/06/2017

Note:1. Mortgages and personal loans.

MAIN ONGOING PROJECTS

Notes; 1. The Strategic Plan envisages the closure of 335 branches by 2019.

BPM MIGRATION ON THE GROUP'S IT PLATFORM (1/2)

BPM MIGRATION ON THE GROUP'S IT PLATFORM (2/2)

IT MIGRATION COMPLETED DURING THE WEEKEND OF 22/23 JULY

  • • The day's transactions were conducted regularly across the board (deposits, withdrawals, bank transfers, …)
  • • Advisory and sales activities were executed with no delays (Financial Advisory, Loans, Funds and Sicav, …)
  • • As of Monday, credit risk rating of Banco BPM's model is operational in the network

  • • At 07:00 p.m., 100% of branches had completed the balancing of accounts

  • • The functionalities of the digital platforms have been used regularly throughout the day: access by 30% of Retail customers, more than 20,000 business clients have accessed the YouBusiness Web, more than 40,000 YouApp downloads, ca. 65,000 Webank clients actively operating

  • • Worth noting is the trading activity (the target platform has been upgraded to include Webank's capabilities); more than 15,000 orders from Webank and You Web

Agenda

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DIRECT FUNDING

Growth in Deposits and decline in more expensive sources of funding

  • The decline in direct funding (-2.2% y/y and -2.9% YTD) has been fully driven by the more expensive components: bonds -27.5% y/y and -14.9% YTD.
  • Positive dynamic of C/A and sight deposits: +10.5% y/y and +1.9% YTD.
  • Given different customer investment propensities, the drop in the bond component continues to have a positive effect also on the growth in AuM.

Notes: 1. Direct funding restated according to a management logic: it includes certificates with guaranteed capital, recognized under 'Heldfor-trading liabilities', while it does not include Repos (€7.8bn at June 2017, basically transactions with Cassa di Compensazione e Garanzia), classified in the Accounting Report under 'Due to customers'.

ANALYSIS OF DIRECT FUNDING1

Strong perfomance of the cheapest sources of funding

Increase in the share of checking accounts and sight deposits(from 59.9% to 67.6%; +7.7 p.p. y/y), which represent less expensive funding sources, in line with the strategy to reduce the cost of funding.

Notes: 1. Direct funding restated according to a management logic: it includes certificates with guaranteed capital, recognized under Held-for-trading liabilities, while it does not include Repos (€7.8bn at June 2017, basically transactions with Cassa di Compensazione e Garanzia), classified in the Accounting Report under Due to customers.

INDIRECT FUNDING

Increase in the share of AuM: from 58.6% at 30/06/2016 to 62.0% at 30/06/2017

  • Excellent growth in AuM (+€6.2bn y/y and +€3.8bn YTD, or +11.1% and +6.5%, respectively), bringing the share to 62.0% of total Indirect Funding.
  • The AuM growth is driven mainly by the 'Funds and Sicav' sleeve (+17.1% y/y).

Notes: 1. Indirect Funding is reported net of capital-guaranteed certificates (previously included in Assets under Custody), as they have been regrouped in extended Direct Funding (see previous slides).

SIGNIFICANT POTENTIAL TOWARDS A REDUCTION IN THE COST OF FUNDING

  • In H1 2017, roughly €3.6bn of institutional and retail bonds (including the two buy-backs completed inApril and June) were redeemed, mainly at the end of March (€1.4bn), May (€0.7bn) and June (€0.7bn): further positive impact on the cost of funding expected from H2 2017.
  • The average spread of the outstanding securities maturing in H2 2017 (€3.4bn) and in 2018 (€6.7bn) is approx. 2.8%.
  • Thanks to the Group's strong liquidity position, the upcoming maturities over the next three years canbe managed with a view to optimizing the cost of funding and further increasing assets under management.

Maturities include calls.

SOUND LIQUIDITY POSITION

LCR ~160% and NSFR >100%.

Net of haircuts. Inclusive of assets received as collateral.

  1. Analysis of H1 2017 results

Gov. Bonds96,6%

FOCUS ON SECURITIES PORTFOLIO

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Classification of Italian Government bonds at 30/06/2017

  • Securities portfolio stable y/y (+0.1%) and up by 6.2% YTD. Italian govies declined by €2.7bn y/y and by €0.7bn YTD.
  • Increased diversification of the government bond portfolio, which now includes about 9% of non-Italian securities (4% at the end of March), primarily France (7%), followed by USA and Spain.
  • 54.6% of Italian Government bonds are classified as AFS and 40.4% as HTM. HFT accounts for only 5.0%.
  • The gross AFS reserve on debt securities came in at a positive value of €19m at the end of June 2017. At the beginning of August, this value reached about €100m, mainly thanks to the improvement in the reserve for Italian govies
  • The modified duration of Italian govies classified as AFS is approx. 2.6 years.

CUSTOMER LOANS

Performing loans increased during the first six months, thanks to €9.3bn of new loans

  • Decline in net customer loans driven by the de-risking process implemented by the Group: net NPLs -€2.9bn (-16.8% y/y) and -12.1% YTD.
  • Also non-core components have been declining, such as leasing (in run-off, with -18.7% y/y and -12.0% YTD) and Repos (-2.3% y/y and -11.5% YTD).
  • Net performing loans are stable over the quarter and are up by 0.9% YTD, after the drop reported in prior years (-1.6% y/y).
  • Positive trend for mortgage loans: +0.7% y/y, +1.5% YTD.
  • €9.3bn of new mortgages and personal loans granted in H1 (+9.7% y/y), of which €7.1bn to Corporates2 (+10.0% y/y) and €2.2bn to Households (+8.6% y/y).

Notes: 1. Mortgages and personal loans. 2. The Corporate segment includes also Large Corporates, Agencies, Institutionals and non-profit sector.

NET INTEREST INCOME

  • Net Interest Income fell by 3.1% y/y and 7.5% on a like-for-like basis (excluding PPA and one-offs), mainly driven by the declining contribution of financial income from the securities portfolio (-€55.1m vs H1 16), also due to the mark-to-market of the ex-BPM portfolio, and lower loan book contribution.
  • On a like-for-like basis, Net interest income registered a growth for the second consecutive quarter (+1.3% q/q), driven by both commercial and financial income.

Notes: 1. Includes approx. €32m TLTRO2 accrued in 2016 and booked in Q1 17 and a one-off interest expense of €4m linked to a tax litigation closed in Q2 2017. 2. See slides 48 and 51 for details on the change in PPA vs. Q1 2017.

NET INTEREST SPREAD TREND

NET FEES AND COMMISSIONS

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  • In Q2 2017, commissions are still robust (at €543m, basically stable q/q).
  • Among the traditional banking commissions, good performance in corporate finance and corporate service commissions.

NET FINANCIAL RESULT

  • The y/y fall in the Net financial result was mainly driven by the decline in gains from the disposal of debt securities classified in the AFS portfolio (€23m in H1 2017 vs. €152m in H1 2016).
  • The quarterly increase (+69.3%) was positively affected by dividends from equity investments booked inthe quarter (€20m, +€12m q/q) and by gains from the disposal of debt securities (€19m, +€15m q/q).
  • Over the quarter, the buyback of roughly €200m of subordinated bonds generated a slightly negative impact (-€4.1m).

OPERATING COSTS

PERSONNEL EXPENSES

  • Personnel expenses dropped by 4.8% y/y, driven by headcount reduction as well as by progressive cost efficiency actions.
  • Personnel expenses remained basically stable q/q, including the cost of 71 additional resources under the Early Retirement Plan ("Solidarity Fund").
  • Total headcount stood at 24,318 at 30 June 2017, down from 24,680 in December 2016 (-362).
  • In H2 2017, 965 resources are scheduled to exit, of which 423 on 30 September.

Notes: 1. Including certain minor one-offs amounting to approx. €1m both in H1 16 and in H1 17.

OTHER ADMINISTRATIVE EXPENSES

  • Other administrative expenses: -9.2% y/y. On a like for like basis (net of DTA fee for 2015 and increased contribution to SRF), they are substantially flat.
  • Moreover, in H1 2017, Other administrative expenses include higher integration charges and intercompany VAT for €26m. Excluding also these items, this aggregate would report a drop by 4.4% y/y
  • In the quarterly comparison, Other administrative expenses declined by 10.5% . On a like for like basis (net of DTA fee for 2015, increased contribution to SRF and higher integration charges), they are substantially flat.

Notes: 1. Management accounting data

LOAN LOSS PROVISIONS

Cost of credit risk

In bps, calculated on net customer loans

Cost of credit at 118bps in H1 2017 (annualized), from 268bps in FY 2016.

€ m

  • The conservative approach followed for the cost of credit allowed for a further strengthening of NPL coverage levels, in line with the Strategic Plan target.
  • The PPA reversal (+€44m in Q1 and +€49m in Q2) continues to be used to stabilize the Group's sound coverage levels, also in the light of accelerated disposal plans.

STRONG NPL STOCK REDUCTION AND SIGNIFICANT IMPROVEMENT IN NEW NPL FLOWS

Net flows to NPLs

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The net NPL stock dropped significantly across all the periods under consideration (-€2.9bn y/y, -€2.0bn inH1 and -€0.8bn in Q2), thanks to:

  • decrease in net flows of NPLs (-52,9% y/y);
  • internal workout and disposals over the period;
  • increase in coverage.

Decline across all non-performing classes: particularly Unlikely-to-pay loans (-€2.0bn y/y), which confirms that the current asset quality trend is normalizing.

An additional ~€2bn of unsecured Bad Loans to be disposed in Q4 2017.

SIGNIFICANT INCREASE IN COVERAGE LEVELS

Coverage in line with Strategic Plan targets

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NPL coverage

The NPL coverage increased sharply:

+520bps y/y and +280bps YTD (both at nominal level) and +80bps q/q, notwithstanding the hefty disposal of Bad Loans (€2.5bn since the beginning of 2016).

Coverage strengthened in all non-performing loan classes, particularly for Unlikely-to-pay loans (+720bps y/y).

Notes:

  1. At 31/03/2017, most write-offs that in the past were included in the Nominal values (see slides 57 and 58) have been brought back onto balance sheet. At the end of March 2017, write-offs of about €1bn are still off-balance sheet.

  2. The December and June 2016 Nominal coverage includes all the write-offs that were off-balance sheet at that time, in line with the values used in the Strategic Plan. For further details, please see slides 57 and 58.

  3. The 12 and 6-month changes are measured against the nominal values in June and December 2016, respectively (i.e. inclusive of all write-offs).

FOCUS ON BAD LOANS AND UNLIKELY-TO-PAY LOANS

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Northern Italy 72%Central Italy 20%Southern Italy and Islands 6%ROW 1% o/w Rome: 40%

UTP geographic Breakdown

%

PHASE-IN CAPITAL ADEQUACY

  • The Group's capital position as at 30/06/2017 includes two negative headwinds:
  • RWAs on defaulted assets and Retail EAD (-54bps registered in Q1 at CET 1 phase-in level)2 ;
  • Unipol's and Aviva's put options (-52bps registered in Q2 at CET 1 phase-in level).

  • At pro-forma level, the phase-in ratios at 30/06/2017 (11.92% for CET1 and 14.27% for total capital) feature a wide positive buffer over SREP requirements (8.15% for CET1 and 11.65% for total capital).

    1. Includes the disposal of Aletti Gestielle and the possible capital increase of Anima.
    1. As communicated to the market in the Q1 2017 Results presentation.

Note: The ratios are calculated including the full net income of the period, subject to ECB authorization pursuant to art. 26, paragraph 2, Reg. EU 575/2013 and to EU Decision ECB/2015/4. Considering that the final PPA calculation is completed pursuant to IFRS 3, the ECB authorization is expected to be received by 11 August.

FULLY-LOADED CET1 RATIO: EVOLUTION IN DETAIL

  • At 30/06/2017, the pro-forma fully-loaded CET1 ratio stands at 11.31%, not yet factoring in:
  • positive impact from AIRB model roll-out;
  • positive impact from reselling the stakes within the new bancassurance JV.
  • At the same time, the pro-forma ratio still includes two negative factors that emerge on a strictly temporary basis:
  • RWA on defaulted assets and Retail EAD (-52bps registered in Q1 at CET 1 fully-loaded level)1;
  • Impact from Unipol's and Aviva's exercise of the put options on Popolare Vita (-52bps) and Avipop (-22bps), respectively, to be substantially absorbed at the end of the insurance business rationalization process.

Note: The ratios are calculated including the full net income of the period, subject to ECB authorization pursuant to art. 26, paragraph 2, Reg. EU 575/2013 and to EU Decision ECB/2015/4. Considering that the final PPA calculation is completed pursuant to IFRS 3, the ECB authorization is expected to be received by 11 August.

  1. As communicated to the market in the Q1 2017 Results presentation.

Agenda

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BAD LOANS: SCOPE AT 30 JUNE 2017

(**) Collateral FV capped at Nominal value.

Note: 1. For details regarding the write-offs as at 31/12/2016, see slides 57 and 58.

NPL UNIT: MAIN KPI IN H1 2017

In H2 2017, the focus will shift to unsecured loan sales.

FOCUS ON DISPOSALS: THE RAINBOW DEAL

Percentage pricing distribution and comparison with residual secured Bad loans stock of Banco BPM

  • Disposal of Secured Bad loans, for a total of €693m
  • Price well above the one considered in the Business Plan for secured disposals
  • The comparison with Banco BPM's secured Bad loan stock shows a strong potential for value enhancement of the residual assets

Pipeline and next steps

  • 2017: finalization, preparation and completion of the sale of ~€2bn of unsecured Bad loans.
  • 2018: planned disposal of a portfolio of about €3.0/3.5bn, with possible application for the State guarantee on securitization of Bad loans (GACS). Due Diligence of the portfolio to start by September 2017.

Note: 1. Rainbow: average valuations from binding offer. 2. Positions above > €1m, measured by applying IRR comparable to those used by investors and discounting recovery costs to net present value.

Agenda

1
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THE ITALIAN ASSET MANAGEMENT MARKETKey Highlights

Over the last 15 years, the Italian asset management industry has experienced a continuous growth, with AuMreaching c. €2tr in May 2017

network.

27

5

MAIN WORKSTREAMS OF THE PROJECT

STRATEGIC RATIONALE

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TRANSACTION WITH ANIMA: 20-YEAR PARTNERSHIPTransaction Financial Data

The transaction with Anima to allow Banco BPM to receive up to €1.1bn: (i) an upfront cash consideration of €700m, (ii) excess capital distribution of c. €250m and (iii) potentially c. €150m from the sale of management of insurance reserves

Note: 1. Including the effect of a pro quota subscription of Anima's possible capital increase by Banco BPM.

Agenda

5 C
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u		 4
5
4 i
i
f
h
b
i
R
t
t
A
t
M
t
e
o
r
g
a
n
z
a
o
n
o
e
s
s
e
a
n
a
g
e
m
e
n
u
s
n
e
s
s		 3
9
3 i
F
N
P
L
U
t
o
c
u
s
o
n
n		 3
5
i
C
t
l
d
t
a
p
a
p
a
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u
 3
3
i
i
C
d
t
l
t
r
e
q
a
u
y
 3
0
i
f
i
f
l
t
A
n
a
s
s
o
o
p
e
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a
n
g
p
e
r
o
r
m
a
n
c
e
y
 2
2
f
d
i
l
i
i
d
i
d
l
F
t
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c
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s
o
n
u
n
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a
n
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a
n
s

,		 1
5
2 l
i
f
2
0
l
A
H
1
1
7
t
n
a
y
s
s
o
r
e
s
u
s		 4
1
1 i
i
i
E
t
S
d
H
h
l
h
t
e
c
e
m
m
a
r
a
n
g
g
s
x
u
v
u
y		 3

Annexes

47

CONCLUSIONS: ROUND-UP OF THE FIRST PART OF THE YEAR

G
O
I
N
T
E
R
A
T
I
N
P
R
O
C
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K
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C
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A
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X
B
P
M
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-
S
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2
2
2
3
Y
T
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M
D
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-

L
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%
O
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5
B
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B
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D
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D
1
F
T
H
E
:
T
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E-
Y
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A
R
P
L
A
N

%
%
H
I
G
H
C
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V
E
R
A
G
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L
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L
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B
A
D
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6
0
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9
:
s

O
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€
2
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~
Q
4
2
0
1
7

C
/
S
G
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S
S
€
2
2
(
0.
%
/
)
A
A
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D
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D
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P
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7
B
N
1
5
Y
Y
+
:
S
O
G
S
S
T
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A
L
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G
S
S
S
€
6
2
(
%
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A
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1
1.
1
Y
Y
+
:
O
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W
R
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€
9.
3
B
N
(
9.
7
%
Y
/
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)
+
:

(
%
)
P
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F
I
T
A
B
I
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B
Y
C
O
R
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R
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V
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N
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S
5
6
Y
/
Y
+

Agenda

1 i
i
i
t
S
d
h
l
h
t
E
H
e
c
e
m
m
a
r
a
n
g
g
s
x
u
v
u
y		 3
2 i
f
A
l
H
1
2
0
1
7
l
t
n
a
y
s
s
o
r
e
s
u
s		 1
4
f
d
i
l
i
i
d
i
d
l
F
t
o
c
u
s
o
n
u
n
n
g
q
u
y
a
n
o
a
n
s

,		 1
5
l
i
f
i
f
A
t
n
a
y
s
s
o
o
p
e
r
a
n
g
p
e
r
o
r
m
a
n
c
e
 2
2
i
i
C
d
t
l
t
r
e
q
a
u
y
 3
0
i
C
t
l
d
t
a
p
a
p
a
e
u
 3
3
3 i
F
N
P
L
U
t
o
c
s
o
n
n
u		 3
5
4 i
i
f
h
b
i
R
t
t
A
t
M
t
e
o
r
g
a
n
z
a
o
n
o
e
s
s
e
a
n
a
g
e
m
e
n
u
s
n
e
s
s		 3
9
5 C
l
i
o
n
c
u
s
o
n
s		 4
5

Annexes47

ANNEXESH1 2017 RECLASSIFIED P&L – Y/Y COMPARISON

Re
cla
ssif
ied
in
sta
tem
t
co
me
en		 H1
20
17		 o/
w		 H1
20
17		 H1
20
16		 o/
w		 H1
20
16
PF		 Ch
Y/
Y
g.		 Ch
Y/
Y
g.
(
in
mi
llio
n)
eu
ro		 Sta
ted		 PP
A		 wi
tho
ut
PP
A		 PF PP
A		 wi
tho
ut
PP
A		 wi
th
PP
A		 wi
tho
ut PP
A
Ne
t in
te
t in
res
co
me		 1,
06
0.0		 20
.0		 103
9.9		 109
4.3		 0.0 109
4.3		 -3.
1%		 -5.
0%
Inc
e (
los
s)
fro
inv
est
nts
in
iat
rrie
d a
t
om
m
me
ass
oc
es
ca
uit
eq
y		 81
.9		 0.0 81
.9		 77
.4		 0 77
.4		 %
5.9		 %
5.9
Ne
t in
ter
est
div
ide
nd
d s
im
ila
r in
an
co
me
,		 1,
14
1.9		 20
.0		 11
21
.9		 11
71
.7		 0.0 11
71
.7		 -2.
5%		 -4.
3%
Ne
t fe
nd
iss
ion
in
e a
co
mm
co
me		 1,
09
0.7		 0.0 109
0.7		 94
2.7		 0.0 94
2.7		 15
.7%		 15
.7%
Ot
he
et
tin
inc
r n
op
era
g
om
e		 44
.7		 -23
.1		 67
.8		 65
.8		 -10
.9		 76
.8		 -32
.2%		 -11
.8%
t fi
ial
sul
Ne
t
na
nc
re		 10
1.5		 0.0 10
1.5		 20
8.3		 0.0 20
8.3		 .3%
-51		 .3%
-51
Ot
he
rat
ing
in
r o
pe
co
me		 1,
23
6.9		 -23
.1		 12
60
.0		 12
16
.8		 -10
.9		 12
27
.8		 1.7
%		 2.6
%
To
tal
in
co
me		 2,
37
8.9		 -3.
0		 23
81
.9		 2,
38
8.6		 -10
.9		 2,
39
9.5		 -0.
4%		 -0.
7%
Pe
el
rso
nn
ex
pe
nse
s		 -91
7.1		 0.0 -91
7.1		 -96
3.8		 0.0 -96
3.8		 -4.
8%		 -4.
8%
Ot
he
dm
inis
tra
tiv
r a
e e
xp
en
se
s		 -49
8.7		 0.0 -49
8.7		 -54
9.0		 0.0 -54
9.0		 -9.
2%		 -9.
2%
ort
iza
tio
nd
de
cia
tio
Am
n a
pre
n		 -10
9.5		 -6.
3		 -10
3.2		 -10
1.0		 -1.
8		 -99
.2		 8.4
%		 4.0
%
Op
tin
ost
era
g c
s		 -1,
52
5.3		 -6.
3		 -15
19
.0		 -16
13
.7		 -1.
8		 -16
11
.9		 -5.
5%		 -5.
8%
Pro
fit (
los
s)
fro
tio
m
op
era
ns		 85
3.6		 -9.
3		 86
2.9		 77
4.9		 -12
.7		 78
7.6		 10
.2%		 9.6
%
Ne
t a
dju
stm
ts
lo
s t
ust
en
on
an
o c
om
ers		 -64
7.0		 93
.4		 -74
0.4		 -11
35
.5		 0.0 -11
35
.5		 -43
.0%		 -34
.8%
Ne
t a
dju
stm
ts
ot
he
ts
en
on
r a
sse		 -79
.2		 0.0 -79
.2		 .9
-17		 0.0 .9
-17		 34
2.3
%		 34
2.3
%
isio
for
ris
Ne
t p
ks
d c
ha
rov
ns
an
rge
s		 -9.
1		 0.0 -9.
1		 2.8 0.0 2.8 n.s n.s
irm
f g
dw
ill
Im
t o
pa
en
oo		 0.0 0.0 0.0 0.0 0.0 0.0 n.s n.s
Pro
fit
(
los
s) o
n t
he
di
l o
f e
ity
d o
the
r in
stm
ts
sp
osa
qu
an
ve
en		 13
.3		 -1.
0		 14
.3		 32
.5		 0.0 32
.5		 -59
.0%		 -56
.0%
e (
los
s)
be
for
fro
nti
ing
tio
Inc
e t
om
ax
m
co
nu
op
era
ns		 13
1.5		 83
.0		 48
.5		 -34
3.3		 -12
.7		 -33
0.6		 n.s n.s
Tax
in
fro
nti
ing
tio
on
co
me
m
co
nu
op
era
ns		 -45
.1		 -27
.6		 -17
.5		 110
.5		 4.1 10
6.4		 n.s n.s
e (
los
s) a
fte
x f
di
tin
d o
ion
Inc
r ta
rat
om
rom
sc
on
ue
pe
s		 0.4 0.0 0.4 -1.
5		 0.0 -1.
5		 n.s n.s
Inc
e (
los
s) a
ttr
ibu
ta
ble
to
ino
rity
in
te
ts
om
m
res		 7.4 0.0 7.4 4.2 0.0 4.2 75
.7%		 75
.7%
t in
(
los
s)
for
th
eri
od
clu
din
dw
ill
Ne
Ba
co
me
e p
ex
g		 94
.2		 55
.5		 38
.8		 -23
0.0		 -8.
6		 -22
1.4		 n.s n.s
Ba
dw
ill		 3,
07
6.1		 30
76
.1		 0 0 n.s n.s
t in
(
los
s)
for
th
eri
od
Ne
co
me
e p		 3,
0.4
17		 55
.5		 3,
4.9
11		 -23
0.0		 -8.
6		 -22
1.4		 n.s n.s

In June 2017, the results of the PPA process related to the merger with BPM were approved on a definitive basis. The badwill emerging from this process amounts to €3,076.1 million, which is €47.7 million lower in comparison with the provisional data indicated with reference to 31 March (€3,123.8 million), as a result of a fine-tuning of the Fair Value estimates for performing loans and real estate acquired.

AnnexesStarting from 30 June 2017, the effects related to the FVO are no longer recorded in the profit and loss account, but are booked directly under a specific reserve item of Shareholders' Equity. The data referring to previous periods have been restated in order to ensure a homogeneous comparison.

48

ANNEXESADJUSTED H1 2017 RECLASSIFIED P&L – Y/Y COMPARISON

Re
cla
ssi
fie
d i
tat
t
nc
om
e s
em
en		 H1
20
17		 o/
w		 H1
20
17		 H1
20
16		 o/
w		 H1
20
16
PF		 Ch
Y/
Y
g.
(
in
mi
llio
n)
eu
ro		 Sta
ted		 On
off
e-		 Ad
jus
ted		 PF On
off
e-		 Ad
jus
ted		 Ad
jus
ted
t in
te
t in
Ne
res
co
me		 06
0.0
1,		 27
.6		 03
2.4
1,		 1,
09
4.3		 0.0 1,
09
4.3		 7%
-5.
e (
s)
fro
inv
in
cia
ied
Inc
los
tm
ts
te
at
om
m
es
en
as
so
s c
arr		 81
.9		 92 .4%
19
uit
eq
y		 -10
.5		 .4 .4
77		 0.0 .4
77
t in
ter
t,
div
ide
nd
d s
im
ila
r in
Ne
es
an
co
me		 14
1.9
1,		 17.
1		 12
4.8
1,		 1,
17
1.7		 0.0 1,
17
1.7		 -4.
0%
Ne
t fe
nd
iss
ion
in
e a
co
mm
co
me		 1,
09
0.7		 0.0 1,
09
0.7		 94
2.7		 0.0 94
2.7		 15
.7%
Ot
he
et
tin
inc
r n
op
era
g
om
e		 44
.7		 0.0 44
.7		 65
.8		 0.0 65
.8		 -32
.2%
Ne
t fi
ial
sul
t
na
nc
re		 10
1.5		 0.0 10
1.5		 20
8.3		 0.0 20
8.3		 -51
.3%
Ot
he
ing
in
rat
r o
pe
co
me		 23
6.9
1,		 0.0 23
6.9
1,		 21
6.8
1,		 0.0 21
6.8
1,		 %
1.7
To
tal
in
co
me		 2,
37
8.9		 17.
1		 2,
36
1.8		 2,
38
8.6		 0.0 2,
38
8.6		 -1.
1%
Pe
el
rso
nn
ex
pe
nse
s		 -91
7.1		 -1.
3		 -91
5.8		 -96
3.8		 -0.
5		 -96
3.2		 9%
-4.
Ot
he
dm
ini
str
at
ive
r a
ex
pe
nse
s		 -49
8.7		 27
.2		 -52
5.9		 -54
9.0		 -27
.1		 -52
1.9		 0.8
%
Am
ort
iza
tio
nd
de
cia
tio
n a
pre
n		 -10
9.5		 -3.
5		 -10
5.9		 -10
1.0		 -2.
0		 -99
.0		 7.1
%
Op
tin
ts
era
g c
os		 -1,
52
5.3		 22
.3		 -1,
54
7.6		 -1,
61
3.7		 -29
.6		 -1,
58
4.1		 -2.
3%
Pro
fit (
los
s)
fro
tio
m
op
era
ns		 85
3.6		 39
.4		 81
4.1		 77
4.9		 -29
.6		 80
4.5		 1.2
%
dju
lo
Ne
t a
stm
ts
s t
ust
en
on
an
o c
om
ers		 -64
7.0		 0.0 -64
7.0		 -1,
13
5.5		 0.0 -1,
13
5.5		 -43
.0%
dju
Ne
t a
stm
ts
ot
he
ts
en
on
r a
sse		 -79
.2		 -76
.2		 -2.
9		 -17
.9		 0.0 -17
.9		 .6%
-83
Ne
t p
isio
for
ris
ks
d c
ha
rov
ns
an
rge
s		 -9.
1		 0.0 -9.
1		 2.8 0.0 2.8 n.s
irm
f g
dw
ill
Im
t o
pa
en
oo		 0.0 0.0 0.0 0.0 0.0 0.0 n.s
fit
(
s) o
di
of
uit
r in
Pro
los
n t
he
al
nd
ot
he
stm
sp
os
eq
y a
ve
en		 ts
13
.3		 13.
3		 0.0 32
.5		 12.
2		 20
.2		 n.s
e (
los
s)
be
for
e t
fro
nti
ing
tio
Inc
om
ax
m
co
nu
op
era
ns		 13
1.5		 -23
.5		 15
5.1		 -34
3.3		 -17
.4		 -32
5.9		 n.s
n i
e f
nti
ing
tio
Ta
x o
nc
om
rom
co
nu
op
era
ns		 -45
.1		 -9.
6		 -35
.5		 0.5
11		 7.6 10
3.0		 n.s
Inc
e (
los
s) a
fte
r ta
x f
di
tin
d o
rat
ion
om
rom
sc
on
ue
pe
s		 0.4 0.4 0.0 -1.
5		 -1.
5		 0.0 n.s
Inc
e (
los
s) a
ttr
ibu
ta
ble
to
ino
rity
in
te
ts
om
m
res		 7.4 0.0 7.4 4.2 0.2 4.0 85
.4%
t in
(
los
s)
for
th
eri
od
clu
din
dw
ill
Ne
Ba
co
me
e p
ex
g		 94
.2		 -32
.7		 12
7.0		 -23
0.0		 -1
1.1		 -21
8.9		 n.s

ANNEXESH1 2017 RECLASSIFIED P&L – NON RECURRING ITEMS

H1
20
17
H1
20
17
cla
ssi
fie
d i
Re
tat
t
nc
om
e s
em
en		 ing
ite
d
No
n-r
ec
urr
ms
an
(
in
mi
llio
n)
eu
ro		 Sta
ted		 Ad
jus
ted		 On
off
e-		 ina
ic
tra
ord
tem
ch
ex
ry
sys
arg
es
Ne
t in
te
t in
res
co
me		 1,
06
0.0		 1,
03
2.4		 27
.6		 TLT
RO
2 i
nte
ts
ed
in
2H
16
d t
lit
iga
tio
res
ac
cru
an
ax
n
Inc
e (
los
s)
fro
inv
tm
ts
in
cia
te
ied
at
uit
om
m
es
en
as
so
s c
arr
eq
y		 81
.9		 92
.4		 -10
.5		 Se
lm
ip
iem
sin
im
ct
aB
e L
m
ea
g
pa
Ne
t in
ter
t,
div
ide
nd
d s
im
ila
r in
es
an
co
me		 1,
14
1.9		 1,
12
4.8		 17.
1
Ne
t fe
nd
iss
ion
in
e a
co
mm
co
me		 1,
09
0.7		 1,
09
0.7		 0.0
Ot
he
et
tin
inc
r n
op
era
g
om
e		 44
.7		 44
.7		 0.0
t fi
ial
sul
Ne
t
na
nc
re		 10
1.5		 10
1.5		 0.0
Ot
he
rat
ing
in
r o
pe
co
me		 1,
23
6.9		 1,
23
6.9		 0.0
in
To
tal
co
me		 2,
37
8.9		 2,
36
1.8		 17.
1
Pe
el
rso
nn
ex
pe
nse
s		 -91
7.1		 -91
5.8		 -1.
3		 Ea
rly
Re
tire
t P
lan
m
en
Ot
he
dm
ini
ive
str
at
r a
ex
pe
nse
s		 -49
8.7		 -52
5.9		 27
.2		 fun
f th
fe
Re
d o
e 2
01
5 D
TA
e
Am
ort
iza
tio
nd
de
cia
tio
n a
pre
n		 -10
9.5		 -10
5.9		 -3.
5		 IT c
ha
rge
s
Op
tin
ts
era
g c
os		 52
5.3
-1,		 54
7.6
-1,		 22
.3
fit (
los
s)
fro
tio
Pro
m
op
era
ns		 85
3.6		 81
4.1		 39
.4
dju
lo
Ne
t a
stm
ts
s t
ust
en
on
an
o c
om
ers		 -64
7.0		 -64
7.0		 0.0
t a
dju
stm
ts
ot
he
ts
Ne
en
on
r a
sse		 -79
.2		 -2.
9		 -76
.2		 irm
f A
Im
t o
tla
nte
d V
et
o-b
ed
ba
nk
pa
en
an
en
as
s
Ne
t p
isio
for
ris
ks
d c
ha
rov
ns
an
rge
s		 -9.
1		 -9.
1		 0.0
Im
irm
t o
f g
dw
ill
pa
en
oo		 0.0 0.0 0.0
Pro
fit
(
los
s) o
n t
he
di
al
of
uit
nd
ot
he
r in
stm
ts
sp
os
eq
y a
ve
en		 13
.3		 0.0 13.
3		 al
Est
at
e i
tm
ts
d o
the
r in
stm
ts
Re
nv
es
en
an
ve
en
e (
s)
for
fro
nti
ing
tio
Inc
los
be
e t
om
ax
m
co
nu
op
era
ns		 13
1.5		 15
5.1		 -23
.5
n i
e f
nti
ing
tio
Ta
x o
nc
om
rom
co
nu
op
era
ns		 -45
.1		 -35
.5		 -9.
6		 Im
ct
lin
ke
d t
o t
lit
iga
tio
nd
ot
he
r fi
al
eff
ts
pa
ax
n a
sc
ec
ing
ite
on
no
n-r
ec
urr
m
s
Inc
e (
los
s) a
fte
r ta
x f
di
tin
d o
rat
ion
om
rom
sc
on
ue
pe
s		 0.4 0.0 0.4 Ot
he
r
Inc
e (
los
s) a
ttr
ibu
ta
ble
to
ino
rity
in
te
ts
om
m
res		 7.4 7.4 0.0
t in
(
los
s)
for
th
eri
od
clu
din
dw
ill
Ne
Ba
co
me
e p
ex
g		 94
.2		 12
7.0		 -32
.7

ANNEXESQ2 2017 RECLASSIFIED P&L – Q/Q COMPARISON

ssif
ied
in
Re
cla
sta
tem
t
co
me
en		 Q2
20
17		 o/
w		 Q2
20
17		 Q1
20
17		 o/
w		 Q1
20
17		 Ch
Q/
Q
g.		 Ch
Q/
Q
g.
(
in
mi
llio
n)
eu
ro		 Sta
ted		 PP
A		 wi
tho
ut
PP
A		 Sta
ted		 PP
A		 wi
tho
ut
PP
A		 wi
th
PP
A		 wi
tho
ut
PP
A
Ne
t in
ter
est
in
co
me		 51
1.3		 5.9 50
5.3		 54
8.7		 14.
1		 53
4.6		 -6.
8%		 -5.
5%
Inc
e (
los
s)
fro
inv
est
nts
in
iat
rrie
d a
t
om
m
me
ass
oc
es
ca
uit
eq
y		 40
.4		 0.0 40
.4		 41
.6		 0 41
.6		 0%
-3.		 0%
-3.
t in
div
ide
nd
d s
im
ila
r in
Ne
ter
est
an
co
me
,		 1.6
55		 5.9 54
5.7		 59
0.3		 14.
1		 6.2
57		 -6.
6%		 3%
-5.
Ne
t fe
nd
issi
in
e a
co
mm
on
co
me		 54
3.4		 0.0 54
3.4		 54
7.4		 0.0 54
7.4		 -0.
7%		 -0.
7%
Ot
he
et
tin
inc
r n
op
era
g
om
e		 14
.5		 -1
1.2		 25
.7		 30
.2		 -1
1.9		 42
.1		 -52
.1%		 -39
.0%
Ne
t fi
ial
sul
t
na
nc
re		 63
.8		 0.0 63
.8		 37
.7		 0.0 37
.7		 69
.3%		 69
.3%
Ot
he
rat
ing
in
r o
pe
co
me		 62
1.7		 1.2
-1		 63
2.9		 61
5.3		 1.9
-1		 62
7.1		 1.0
%		 0.9
%
To
tal
in
co
me		 1,
17
3.3		 -5.
3		 11
78
.6		 1,
20
5.6		 2.2 1,
20
3.3		 -2.
7%		 -2.
1%
Pe
el
rso
nn
ex
pe
nse
s		 -45
8.4		 0.0 -45
8.4		 -45
8.7		 0.0 -45
8.7		 1%
-0.		 1%
-0.
inis
tiv
Ot
he
dm
tra
r a
e e
xp
en
ses		 -23
5.6		 0.0 -23
5.6		 -26
3.2		 0.0 -26
3.2		 .5%
-10		 .5%
-10
Am
ort
iza
tio
nd
de
cia
tio
n a
pre
n		 -56
.5		 -3.
1		 -53
.4		 -53
.0		 -3.
2		 -49
.8		 6.7
%		 7.4
%
tin
Op
ost
era
g c
s		 -75
0.4		 -3.
1		 -74
7.4		 -77
4.9		 -3.
2		 -77
1.7		 2%
-3.		 1%
-3.
fit (
los
s)
fro
tio
Pro
m
op
era
ns		 42
2.9		 -8.
3		 43
1.2		 43
0.7		 0
-1.		 43
1.7		 8%
-1.		 -0.
1%
Ne
t a
dju
stm
ts o
n lo
s t
ust
en
an
o c
om
ers		 -35
4.5		 49
.3		 -40
3.8		 -29
2.5		 44
.1		 -33
6.6		 21
.2%		 20
.0%
Ne
t a
dju
stm
ts o
the
ts
en
n o
r a
sse		 -70
.8		 0.0 -70
.8		 -8.
4		 0.0 -8.
4		 74
7.4
%		 74
7.4
%
Ne
t p
isio
for
ris
ks
d c
ha
rov
ns
an
rge
s		 -9.
6		 0.0 -9.
6		 0.5 0.0 0.5 n.s n.s
irm
f g
ill
Im
t o
dw
pa
en
oo		 0.0 0.0 0.0 0.0 0.0 0.0 - -
Pro
fit
(
los
s) o
n t
he
di
l o
f e
ity
d o
the
r in
stm
ts
sp
osa
qu
an
ve
en		 -3.
8		 -1.
0		 -4.
7		 17
.1		 0.0 17
.1		 -12
2.1
%		 -12
7.8
%
Inc
e (
los
s)
be
for
e t
fro
ntin
uin
rat
ion
om
ax
m
co
g o
pe
s		 -15
.9		 40
.0		 -55
.8		 14
7.4		 43
.1		 10
4.3		 n.s n.s
in
fro
nti
ing
tio
Tax
on
co
me
m
co
nu
op
era
ns		 -9.
8		 -13
.3		 3.5 -35
.3		 -14
.3		 -21
.0		 -72
.4%		 6.7
%
-11
e (
s) a
fte
x f
di
tin
ion
Inc
los
r ta
d o
rat
om
rom
sc
on
ue
pe
s		 0.4 0.0 0.4 0.0 0.0 0.0 n.s n.s
e (
los
s) a
ttr
ibu
ta
ble
to
ino
rity
in
te
ts
Inc
om
m
res		 4.3 0.0 4.3 3.1 0.0 3.1 35
.6%		 35
.6%
t in
(
s)
for
eri
din
ill
Ne
los
th
od
clu
Ba
dw
co
me
e p
ex
g		 -2
1.0		 26
.7		 -47
.7		 11
5.2		 28
.8		 86
.4		 n.s n.s
Ba
dw
ill		 0.0 0.0 0.0 30
76
.1		 0.0 30
76
.1		 n.s n.s
t in
(
los
s)
for
th
eri
od
Ne
co
me
e p		 -2
1.0		 26
.7		 -47
.7		 3,
19
1.3		 28
.8		 3,
162
.6		 n.s n.s

In June 2017, the results of the PPA process related to the merger with BPM were approved on a definitive basis. The badwill emerging from this process amounts to €3,076.1 million, which is €47.7 million lower in comparison with the provisional data indicated with reference to 31 March (€3,123.8 million), as a result of a fine-tuning of the Fair Value estimates for performing loans and real estate acquired.

Starting from 30 June 2017, the effects related to the FVO are no longer recorded in the profit and loss account, but are booked directly under a specific reserve item of Shareholders' Equity. The data referring to previous periods have been restated in order to ensure a homogeneous comparison.

Annexes51

ANNEXESADJUSTED Q2 2017 RECLASSIFIED P&L – Q/Q COMPARISON

cla
ssi
fie
d i
tat
t
Re
nc
om
e s
em
en		 Q
2 2
01
7		 o/
w		 Q
2 2
01
7		 Q1
20
17		 o/
w		 1T
20
17		 Ch
Q
/
Q
g.
(
in
mi
llio
n)
eu
ro		 Sta
ted		 off
on
e-		 Ad
jus
ted		 Sta
ted		 off
on
e-		 Ad
jus
ted		 Ad
jus
ted
Ne
t in
te
t in
res
co
me		 51
1.3		 -4.
1		 51
5.4		 54
8.7		 31
.7		 7.0
51		 -0.
3%
Inc
e (
los
s)
fro
inv
tm
ts
in
cia
te
ied
at
uit
om
m
es
en
as
so
s c
arr
eq
y		 40
.4		 -10
.5		 50
.8		 41
.6		 0 41
.6		 22
.2%
t in
div
ide
im
ila
r in
Ne
ter
t,
nd
d s
es
an
co
me		 55
1.6		 -14
.6		 56
6.2		 59
0.3		 31
.7		 55
8.6		 %
1.4
Ne
t fe
nd
iss
ion
in
e a
co
mm
co
me		 54
3.4		 0.0 54
3.4		 54
7.4		 0.0 54
7.4		 -0.
7%
Ot
he
et
tin
inc
r n
op
era
g
om
e		 14
.5		 0.0 14
.5		 30
.2		 0.0 30
.2		 -52
.1%
t fi
ial
sul
t
Ne
na
nc
re		 63
.8		 0.0 63
.8		 37
.7		 0.0 37
.7		 69
.3%
ing
in
Ot
he
rat
r o
pe
co
me		 62
1.7		 0.0 62
1.7		 61
5.3		 0.0 61
5.3		 %
1.0
in
To
tal
co
me		 1,
17
3.3		 -14
.6		 11
87
.9		 1,
20
5.6		 31
.7		 1,
17
3.9		 %
1.2
Pe
el
rso
nn
ex
pe
nse
s		 -45
8.4		 -1.
3		 -45
7.1		 -45
8.7		 0.0 -45
8.7		 -0.
4%
Ot
he
dm
ini
str
at
ive
r a
ex
pe
nse
s		 -23
5.6		 0.0 -23
5.6		 -26
3.2		 27
.2		 -29
0.3		 -18
.9%
ort
iza
tio
nd
de
cia
tio
Am
n a
pre
n		 -56
.5		 -3.
5		 -53
.0		 -53
.0		 0.0 -53
.0		 0.0
%
tin
Op
ts
era
g c
os		 -75
0.4		 -4.
8		 -74
5.6		 -77
4.9		 27
.2		 -80
2.0		 0%
-7.
fit (
los
s)
fro
tio
Pro
m
op
era
ns		 42
2.9		 -19
.4		 44
2.3		 43
0.7		 58
.8		 37
1.9		 18
.9%
Ne
t a
dju
stm
ts
lo
s t
ust
en
on
an
o c
om
ers		 -35
4.5		 0.0 -35
4.5		 -29
2.5		 0.0 -29
2.5		 21
.2%
Ne
t a
dju
stm
ts
ot
he
ts
en
on
r a
sse		 -70
.8		 -67
.5		 -3.
3		 -8.
4		 -8.
8		 0.4 n.s
t p
isio
for
ris
ks
d c
ha
Ne
rov
ns
an
rge
s		 -9.
6		 0.0 -9.
6		 0.5 0.0 0.5 n.s
Im
irm
t o
f g
dw
ill
pa
en
oo		 0.0 0.0 0.0 0.0 0.0 0.0 n.s
Pro
fit
(
los
s) o
n t
he
di
al
of
uit
nd
ot
he
r in
stm
ts
sp
os
eq
y a
ve
en		 -3.
8		 -3.
8		 0.0 17
.1		 17.
1		 0.0 n.s
e (
s)
for
fro
nti
ing
tio
Inc
los
be
e t
om
ax
m
co
nu
op
era
ns		 -15
.9		 -90
.7		 74
.8		 14
7.4		 67
.1		 80
.3		 8%
-6.
Ta
n i
e f
nti
ing
tio
x o
nc
om
rom
co
nu
op
era
ns		 -9.
8		 6.2 -16
.0		 -35
.3		 -15
.8		 -19
.5		 -18
.3%
e (
los
s) a
fte
r ta
x f
di
tin
d o
rat
ion
Inc
om
rom
sc
on
ue
pe
s		 0.4 0.4 0.0 0.0 0.0 0.0 n.s
e (
s) a
ibu
ino
rity
in
Inc
los
ttr
ta
ble
to
te
ts
om
m
res		 4.3 0.0 4.3 3.1 0.0 3.1 .6%
35
t in
(
s)
for
eri
din
ill
Ne
los
th
od
clu
Ba
dw
co
me
e p
ex
g		 -2
1.0		 -84
.1		 63
.1		 11
5.2		 51
.3		 63
.9		 2%
-1.

ANNEXESQ1 2017 RECLASSIFIED P&L – NON RECURRING ITEMS

Q1
20
17		 Q1
20
17
Re
cla
ssif
ied
in
sta
tem
t
co
me
en
(
in
mi
llio
n)
eu
ro		 Sta
ted		 jus
Ad
ted		 ff
On
e-o		 No
ing
ite
d e
xtr
rdi
tem
ic
ch
n-r
ec
urr
ms
an
ao
na
ry
sys
arg
es
t in
te
t in
Ne
res
co
me		 54
8.7		 7.0
51		 31
.7		 TLT
RO
2 i
nte
ts a
d i
n H
2 2
01
6
res
cc
rue
Inc
e (
los
s)
fro
inv
est
nts
in
iat
rrie
d a
t e
ity
om
m
me
ass
oc
es
ca
qu		 41
.6		 41
.6		 0.0
t in
div
ide
im
ila
r in
Ne
ter
est
nd
d s
an
co
me
,		 59
0.3		 55
8.6		 31
.7
t fe
issi
in
Ne
nd
e a
co
mm
on
co
me		 54
7.4		 54
7.4		 0.0
tin
inc
Ot
he
et
r n
op
era
g
om
e		 30
.2		 30
.2		 0.0
t fi
ial
sul
t
Ne
na
nc
re		 37
.7		 37
.7		 0.0
ing
in
Ot
he
rat
r o
pe
co
me		 61
5.3		 61
5.3		 0.0
in
To
tal
co
me		 1,
20
5.6		 1,
17
3.9		 31
.7
Pe
el
rso
nn
ex
pe
nse
s		 -45
8.7		 -45
8.7		 0.0
inis
tiv
Ot
he
dm
tra
r a
e e
xp
en
ses		 -26
3.2		 -29
0.3		 27
.2		 Re
fun
d o
f th
e 2
01
5 D
TA
fe
e
Am
ort
iza
tio
nd
de
cia
tio
n a
pre
n		 -53
.0		 -53
.0		 0.0
tin
Op
ost
era
g c
s		 -77
4.9		 -80
2.0		 27
.2
fit (
los
s)
fro
tio
Pro
m
op
era
ns		 43
0.7		 37
1.9		 58
.8
dju
Ne
t a
stm
ts
lo
s t
ust
en
on
an
o c
om
ers		 -29
2.5		 -29
2.5		 0.0
dju
he
Ne
t a
stm
ts
ot
ts
en
on
r a
sse		 -8.
4		 0.4 -8.
8		 irm
f A
Im
t o
tla
nte
pa
en
Ne
t p
isio
for
ris
ks
d c
ha
rov
ns
an
rge
s		 0.5 0.5 0.0
Im
irm
t o
f g
dw
ill
pa
en
oo		 0.0 0.0 0.0
Pro
fit
(
los
s) o
n t
he
di
l o
f e
ity
d o
the
r in
stm
ts
sp
osa
qu
an
ve
en		 17
.1		 0.0 17.
1		 Re
al E
sta
te
inv
tm
ts a
nd
ot
he
r in
stm
ts
es
en
ve
en
Inc
e (
los
s)
be
for
e t
fro
ntin
uin
rat
ion
om
ax
m
co
g o
pe
s		 14
7.4		 80
.3		 67
.1
Tax
in
fro
nti
ing
tio
on
co
me
m
co
nu
op
era
ns		 -35
.3		 -19
.5		 .8
-15		 ct
link
ed
to
ta
x li
tig
ati
d o
the
r fis
l e
ffe
cts
Im
pa
on
an
ca
on
ing
ite
no
n-r
ec
urr
m
s
e (
los
s) a
fte
x f
di
tin
d o
ion
Inc
r ta
rat
om
rom
sc
on
ue
pe
s		 -0.
0		 0.0 0.0
e (
los
s) a
ttr
ibu
ta
ble
to
ino
rity
in
te
ts
Inc
om
m
res		 3.1 3.1 0.0
t in
(
s)
for
eri
din
ill
Ne
los
th
od
clu
Ba
dw
co
me
e p
ex
g		 115
.2		 63
.9		 51
.3

ANNEXESQ2 2017 RECLASSIFIED P&L – NON RECURRING ITEMS

Q
2 2
01
7		 Q
2 2
01
7
Re
cla
ssif
ied
in
sta
tem
t
co
me
en
(
in
mi
llio
n)
eu
ro		 Sta
ted		 Ad
jus
ted		 On
ff
e-o		 No
ing
ite
d e
xtr
rdi
tem
ic
ch
n-r
ec
urr
ms
an
ao
na
ry
sys
arg
es
Ne
t in
te
t in
res
co
me		 51
1.3		 51
5.4		 -4.
1		 lit
iga
tio
Tax
n
Inc
e (
los
s)
fro
inv
est
nts
in
iat
rrie
d a
t e
ity
om
m
me
ass
oc
es
ca
qu		 40
.4		 50
.8		 -10
.5		 Se
lm
a B
ip
iem
e L
sin
im
ct
m
ea
g
pa
Ne
t in
ter
est
div
ide
nd
d s
im
ila
r in
an
co
me
,		 55
1.6		 56
6.2		 -14
.6
t fe
nd
issi
in
Ne
e a
co
mm
on
co
me		 54
3.4		 54
3.4		 0.0
Ot
he
et
tin
inc
r n
op
era
g
om
e		 14
.5		 14
.5		 0.0
Ne
t fi
ial
sul
t
na
nc
re		 63
.8		 63
.8		 0.0
Ot
he
rat
ing
in
r o
pe
co
me		 62
1.7		 62
1.7		 0.0
To
tal
in
co
me		 1,
17
3.3		 1,
18
7.9		 -14
.6
Pe
el
rso
nn
ex
pe
nse
s		 -45
8.4		 -45
7.1		 3
-1.		 rly
tire
lan
Ea
Re
t P
m
en
Ot
he
dm
inis
tra
tiv
r a
e e
xp
en
ses		 -23
5.6		 -23
5.6		 0.0
iza
tio
cia
tio
Am
ort
nd
de
n a
pre
n		 -56
.5		 -53
.0		 -3.
5		 ha
IT c
rge
s
Op
tin
ost
era
g c
s		 -75
0.4		 -74
5.6		 -4.
8
Pro
fit (
los
s)
fro
tio
m
op
era
ns		 42
2.9		 44
2.3		 -19
.4
Ne
t a
dju
stm
ts
lo
s t
ust
en
on
an
o c
om
ers		 -35
4.5		 -35
4.5		 0.0
Ne
t a
dju
stm
ts
ot
he
ts
en
on
r a
sse		 -70
.8		 -3.
3		 -67
.5		 irm
t o
f A
tla
nte
d V
eto
ba
d b
ks
Im
pa
en
an
en
se
an
isio
for
ris
Ne
t p
ks
d c
ha
rov
ns
an
rge
s		 -9.
6		 -9.
6		 0.0
irm
f g
ill
Im
t o
dw
pa
en
oo		 0.0 0.0 0.0
fit
(
los
s) o
he
di
l o
f e
ity
d o
the
r in
Pro
n t
stm
ts
sp
osa
qu
an
ve
en		 -3.
8		 0.0 -3.
8		 inv
r in
Re
al E
sta
te
tm
ts a
nd
ot
he
stm
ts
es
en
ve
en
e (
s)
for
fro
ntin
uin
ion
Inc
los
be
e t
rat
om
ax
m
co
g o
pe
s		 -15
.9		 74
.8		 -90
.7
in
fro
nti
ing
tio
Tax
on
co
me
m
co
nu
op
era
ns		 -9.
8		 -16
.0		 6.2 Im
ct
link
ed
to
ta
x li
tig
ati
d o
the
r fis
l e
ffe
cts
pa
on
an
ca
on
ing
ite
no
n-r
ec
urr
m
s
Inc
e (
los
s) a
fte
r ta
x f
di
tin
d o
rat
ion
om
rom
sc
on
ue
pe
s		 0.4 0.0 0.4 Ot
he
r
Inc
e (
los
s) a
ttr
ibu
ta
ble
to
ino
rity
in
te
ts
om
m
res		 4.3 4.3 0.0
Ne
t in
(
los
s)
for
th
eri
od
clu
din
Ba
dw
ill
co
me
e p
ex
g		 -2
1.0		 63
.1		 -84
.1

ANNEXESRECLASSIFIED BALANCE SHEET OF BANCO BPM GROUP AS AT 30/06/2017

A B C C
hg
A
/
B		 C
hg
A
/
C
i
f
ie
(
)
Re
las
d a
ts
€ m
c
s
sse		 3
0
/
0
6
/
2
0
17		 3
1
/
1
2
/
2
0
1
6
PF		 3
0
/
0
6
/
2
0
1
6
PF		 Va
lue		 % Va
lue		 %
iva
Ca
h a
d c
h e
len
ts
s
n
as
qu		 7
9
0		 8
9
8		 7
8
7		 -1
0
8		 %
-1
2.
0		 3 %
0.
4
ina
ia
l a
ts
d
he
dg
ing
de
iva
t
ive
F
nc
sse
an
r
s		 3
8,
4
6
1		 3
6,
8
0
5		 3
9,
47
5		 6
1,
5
5		 4.
3
%		 3
3
0
-1,		 -3.
4
%
fro
Du
ba
ks
e
m
n		 4,
8
9
8		 6,
6
7
8		 5,
2
45		 -1,
7
8
1		 %
-2
6.
7		 -3
4
8		 %
-6.
6
Cu
to
loa
s
me
r
ns		 1
0
9,
4
41		 11
0,
5
5
1		 11
3,
9
0
2		 -1,
11
0		 -1.
0
%		 -4,
4
6
1		 -3.
9
%
i
inv
Eq
ty
tm
ts
u
es
en		 1,
3
4
4		 1,
5
9
5		 1,
6
3
9		 -25
1		 %
-15
7		 -2
9
5		 %
-1
8.
0
Pro
ty
d e
ip
t
p
er
an
qu
me
n		 2,
9
8
6		 2,
6
9
6		 2,
8
2
9		 2
9
0		 1
0.
8
%		 15
7		 5.
5
%
i
In
ta
b
le
ts
ng
as
se		 2,
3
9
5		 1,
8
3
4		 2,
1
9
3		 5
6
1		 %
3
0.
6		 2
0
1		 %
9.
2
No
t a
ts
he
l
d
for
le
d
n-c
urr
en
sse
sa
an
d
isc
t
inu
d o
t
ion
on
e
p
era
s		 7 7
7		 7
5		 -7
1		 -9
1.
3
%		 -6
9		 -9
1.
1
%
O
t
he
ts
r a
sse		 4
7,
7
1		 3
4
6
7,		 6,
9
8
7		 3
6
8		 0
%
5.		 27
7		 0.
4
%
1
To
ta
l		 1
6
7,
7
2
0		 1
6
8,
25
5		 17
3,
1
3
3		 -5
3
5		 %
-0.
3		 -5,
41
3		 %
-3.
1
A B C C
hg
A		 /
B		 C
hg
A		 /
C
Re
las
i
f
ie
d
l
ia
b
i
l
i
t
ies
(
€ m
)
c
s		 3
0
/
0
6
/
2
0
17		 3
/
2
/
2
0
6
1
1
1
PF		 3
0
/
0
6
/
2
0
6
1
PF		 Va
lue		 % Va
lue		 %
ba
ks
Du
to
e
n		 2
6,
2
8
6		 2
3,
27
6		 2
0,
8
0
1		 3,
0
0
1		 2.
9
%
1		 4
8
5,
5		 2
6.
4
%
i
ies
issu
Du
to
to
de
b
t s
t
d
e
cu
s
me
rs,
ec
ur
e
d
f
ina
ia
l
l
ia
b
i
l
i
t
ies
de
ig
te
d a
t
fa
ir
an
nc
s
na
lue
va		 0,
2
4
0
11		 6,
3
11
7
7		 9,
8
11
15		 -6,
3
3
5		 6
%
-5.		 -9,
5
7
5		 -8.
0
%
ina
ia
l
l
ia
b
i
l
i
t
ies
d
he
dg
ing
de
iva
t
ive
F
nc
a
n
r
s		 0,
0
0
9
1		 0,
6
8
3
1		 11,
7
5
7		 -6
4
7		 -6.
3
%		 4
8
-1,
7		 4.
9
%
-1
L
ia
b
i
l
i
ty
is
ion
p
rov
s		 1,
6
0
1		 1,
7
0
6		 1,
41
1		 -1
0
5		 -6.
1
%		 1
9
0		 1
3.
5
%
L
ia
b
i
l
i
t
ies
ia
te
d w
i
t
h a
ts
he
l
d
for
as
so
c
sse
le
sa		 0 1 0 -1 -8
9.
5
%		 0 n.s
O
t
he
l
ia
b
i
l
i
t
ies
r		 7,
1
4
0		 3,
8
1
6		 6,
0
1
2		 3,
3
2
4		 8
7.
1
%		 1,
1
2
9		 1
8.
8
%
ino
i
in
M
ty
ter
ts
r
es		 5
3		 5
8		 9
2		 -5 %
-8.
8		 -3
9		 %
-4
2.
3
S
ha
ho
l
de
' e
i
ty
re
rs
qu		 1
2,
3
9
0		 11,
9
41		 1
3,
2
45		 4
4
9		 3.
8
%		 -8
5
5		 -6.
5
%
To
ta
l		 1
6
7,
7
2
0		 1
6
8,
25
5		 17
3,
1
3
3		 -5
3
5		 -0.
3
%		 -5,
41
3		 -3.
1
%

ANNEXESCUSTOMER LOAN ANALYSIS

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

Breakdown of net loans by customer segment at 30/06/2017

Breakdown of net loans by geographical area at 30/06/2017

  • Roughly 30% of customer loans in relation to the Household segment.
  • Corporates1, excluding Large Corporates, account for roughly 60% of the loan book and the average loan ticket is small, coming in at about €270K.
  • More than 70% of the portfolio is concentrated in the wealthiest areas of the Country.

Notes: 1. Non-financial companies (mid-corporate and small business) and financial companies. Includes €5.9bn of Repos, mainly with Cassa di Compensazione e Garanzia.

ANNEXESCREDIT QUALITY: DETAILS ON NPLs

€
m
Gr oss
ex
p
os		 ure d
A		 ju
stm
ts
en		 Co ve
rag
e		 Ne
t e
xp
osu
re
d L
Ba
oa
ns		 17
26
4
,		 10
3
34
,		 5 9.
9
%		 6,
9
3
0
l
ke
ly
Un
i
to
p
ay		 10
51
1
,		 3,
3
0
8		 31 .5
%		 7,
20
3
Pa
Du
st
e		 12
8		 25 19 .6
%		 10
3
for
ing
No
Lo
n-p
er
m
an
s		 27
9
0
3
,		 13
6
67
,		 49 0
%		 14
23
7
,
/
/
31
0
3
20
17
Gr oss
ex
p
os		 ure d
A		 ju
stm
ts
en		 Co ve
rag
e		 Ne
t e
xp
osu
re
d L
Ba
oa
ns		 17
8
65
,		 10
5
3
8
,		 5 9.
0
%		 7,
3
27
l
i
ke
ly
Un
to
p
ay		 10
9
9
3
,		 3,
43
5		 31 %
.2		 7,
55
8
Pa
Du
st
e		 3
17		 26 15 .0
%		 14
7
for
No
ing
Lo
n-p
er
m
an
s		 29
0
3
2
,		 13
9
9
9
,		 48 2
%		 15
0
3
3
,
/
/
31
12
20
16		 PF
ina
l
No
m		 ite
W
r
 Gr
oss		 d
ju
it
h
A
stm
ts
en
w		 Co
it
h
ve
rag
e w		 Co
it
ho
ut
ve
rag
e w
ex
p
osu
re		 f
fs
o		 ex
p
osu
re		 A
d
ju
stm
ts
en		 f
fs
ite
wr
-o		 f
fs
ite
wr
-o		 f
fs
ite
wr
-o		 Ne
t e
xp
osu
re
d L
Ba
oa
ns		 19
57
8
,		 5,
16
6		 14
41
3
,		 6,
5
9
0		 11
75
6
,		 6
0.
0
%		 45
.7
%		 7,
8
22
l
ke
ly
Un
i
to
p
ay		 11
34
9
,		 11
34
9
,		 3,
0
9
2		 3,
0
9
2		 27
.2
%		 27
.2
%		 8,
25
7
Pa
Du
st
e		 15
3		 15
3		 28 28 %
18
.2		 %
18
.2		 12
5
for
ing
No
Lo
n-p
er
m
an
s		 31
0
8
0
,		 16
6
5,		 25
91
4
,		 9,
0
71		 87
6
14
,		 9
%
47		 37
%
.5		 16
20
4
,
/
/
3
0
0
6
20
16		 PF
ina
l
No
m		 ite
W
r
 Gr
oss		 d
ju
it
h
A
stm
ts
en
w		 it
h
Co
ve
rag
e w		 it
ho
Co
ut
ve
rag
e w
ex
p
osu
re		 f
fs
o		 ex
p
osu
re		 d
ju
A
stm
ts
en		 ite
f
fs
wr
-o		 ite
f
fs
wr
-o		 ite
f
fs
wr
-o		 Ne
t e
xp
osu
re
Ba
d L
oa
ns		 18
91
5
,		 5,
17
6		 13
73
9
,		 6,
0
8
6		 11
26
2
,		 5
9.5
%		 44
.3
%		 7,
65
3
l
ke
ly
Un
i
to
p
ay		 12
20
6
,		 12
20
6
,		 2,
97
2		 2,
97
2		 24
.3
%		 24
.3
%		 9,
23
4
Pa
Du
st
e		 27
4		 27
4		 45 45 16
.6
%		 16
.6
%		 22
8
for
ing
No
Lo
n-p
er
m
an
s		 31
3
94
,		 5,
17
6		 26
21
8
,		 9,
10
4		 14
27
9
,		 %
45
.5		 %
34
.7		 17
11
5
,

Restatement of write-offs as of Q1 2017:

At 31/03/2017, the gross exposure of bad loan provisions included approx. €3.5bn of past write-offs (out of a total of about €4.5bn). Hence, at the end of March, about €1bn write-offs have remained off-balance sheet.

ANNEXESCREDIT QUALITY: FOCUS ON WRITE-OFFS

Restatement of write-offs starting from Q1 2017: concept in a nutshell

  • At 31/12/2016, Banco BPM's combined data included write-offs totaling €5.2bn.
  • Ex-BP and Ex-BPM had different policies on «partial write-offs». The Merger has made it necessary to adopt one of the two criteria for the new Group. In accordance with the common practice used by the Italian banking system, the Group has decided to adopt the policy of ex-BPM, which allows for the inclusion of provisions on-balance sheet, in line also with the financial industry preference.
  • Indeed, write-offs have always been included in the nominal exposure and have been taken into account when calculating the bad loan and non-performing loan coverage ratios, a policy also adopted in the Strategic Plan 2016-19.
  • As a result of the afore-mentioned approach and considering disposals and/or cancellations, at 31 March 2017 €3.5bn write-offs have been brought back on-balance sheet, while about €1.0bn of write-offs remain off-balance sheet.

CONTACTS FOR INVESTORS AND FINANCIAL ANALYSTS

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

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

Registered Offices: Piazza Meda 4, I-20121 Milan, Italy Corporate Offices: Piazza Nogara 2, I-37121 Verona, Italy

[email protected](IR Section)

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