Banca Ifis — Investor Presentation 2021

Aug 5, 2021

5 August 2021

Index

• 1. 2Q21 results
• 1. Appendices
  2. 2.1 Segment results
  3. 2.2 Consolidated financial data
  4. 2.3 La Scogliera: implications of CRD IV
  5. 2.4 Focus on PPA

2Q21 results

Key messages – 2Q21 results

• 1
  • Net income of €28mln, +€8mln vs. 1Q21 (€48mln in 1H 21)
• Net revenues of €155mln, the highest of the last 5 quarters. Net revenues excluding PPA of €151mln at record high, proving the Bank's ability to replace PPA with core income 2
• 3
  • NPL cash collection at record high of €89mln
• Loan loss provisions at €26mln, including €14mln extra provisions in our NPL portfolio (€9mln) and our commercial portfolio (€5mln) prudently accounted for Covid-19 impact (longer timeframe/lower collections especially on high vintage exposures) 4
• CET1 at 11.44% (-0.33% vs. 1Q 21) excluding 1H21 net income (15.51% without the consolidation within La Scogliera perimeter) 5
• Banca Ifis benefits from the progressive recovery of the macroeconomic environment and the proven resilience of its business model. For 2021, we expect revenues of €540mln-560mln and net income of €80-90mln 6

Net revenues excluding PPA at record high

• Net revenues of €155mln up vs. 2Q 19 and 2Q20
• Net revenues excluding PPA of €151mln at record high, proving the Bank's ability to replace PPA with core revenues
• NPL net revenues at €65mln +11% QoQ, driven by the progressive normalization of the courts and management actions (servicing productivity)
• Commercial Banking net revenues at €74mln +15% QoQ, driven by increase in factoring, leasing and structured finance and the pick up in economic activity

Net revenues (including PPA) breakdown €mln

Digitalization process announced in 1Q21 well on track

• ✓ Ifis4Business platform to serve all customer needs (origination, interaction, transaction and after sale) for all core banking products
• ✓ Full-digital process to reduce time to yes and increase economy of scale

	Traditional	Digital
Steps	11	6
Total time for clients + Banca Ifis	55 min	17 min

Timeframe

1Q 21 – Full operational

✓Factoring: digital marketing, client onboarding + supply chain functions

July 21 – Launched (ongoing roll-out)

✓Full-digital factoring + mobile access

4Q 21 – Under implementation

• Full integration of lending products into digital/"self service" sale process

2Q 22 – Started

• Extension to leasing, rental and remaining products

NPL collection up vs. 2Q19 and 2Q20

• €89mln Npl cash collection in 2Q1 at record high
• Management action focused on increasing the productivity of the servicing and on reducing the timeframe of recovery of risky exposures
• Actual cash collection has continued to outperform internal model estimates, despite Covid-19
• In 2Q21, Banca Ifis prudently initiated a detailed review of the potential long-term impact of Covid-19 (possible longer timeframe of collection)
• The review has covered ca. 50% of the target NPL portfolio and led to provisions of ca. €9mln booked in 2Q21

Npl cash collection - €mln

Focus on moratoria*

Exposures as at 30 June 21 that asked for the extension of the moratoria**

Moratoria Original exposure Exposure 1Q21 Exposure 2Q21 Leasing 481 365 131 Clients voluntary restarted payments on €350mln moratoria (-73%) following the pick up in economic activity Note: leased assets (cars, equipment, technology) with remarketing potential and sector and borrower diversification minimize asset quality risk Mortgages 126 104 52 Mainly mortgages guaranteed by State Note: low asset quality risk on other mortages (mainly retail) Commercial lending (run off) ^{147 43 37} Clients voluntary restarted payments on €110mln moratoria (- 75%) following the pick up in economic activity Note: exposure vs. large Italian investment grade corporates granted in 2014-16 and expiring in 2023- 25 with limited asset quality risk Other moratoria 45 21 13 Total ^{799 533 233} Clients voluntary restarted payments on €566mln moratoria (-71%) following pick up in macro activity

Additional provisions due to Covid19

2020: €31mln

• €31mln of additional provisions for loan losses on sectors most impacted by Covid-19 and moratoria

1Q 21: €8mln

• €8mln provisions for additional protection from concentration risk in structured finance

2Q 21: €5mln

• €5mln provisions for some high vintage positions

* Source: management accounting data

** Moratoria expired as at 30 June 21. Clients could extend moratoria on interest only until 31 Dec 21. The figures indicate exposures that asked for the extension of the moratoria until 31 Dec 21

Preliminary 2021 guidance

• Banca Ifis benefits from the progressive recovery of the macroeconomic environment and from the normalization of the court activity
• In 2021, we expect revenues of €540mln-560mln and net income of €80-90mln
  • o Continuing sound trend in revenues in both NPL and commercial banking
  • o Expected further prudential provisions in the NPL and commercial banking portfolios shall not change the guidance
• We expect to present the 2021-24 Industrial Plan in 4Q21
• The strategy of the Bank will remain focused on core business, digitalization, cost containment and efficient capital allocation

(€ mln)	Min	Max
Revenues	540	560
Net income	80	90

Main assumptions underlying the guidance

• Progressive improvement of the macroeconomic environment
• No macroeconomic shocks triggered by new lockdowns in US/Europe or Italy involving the whole country or some regions
• Continued macroeconomic support by the Governments and Central Banks

Capital ratios evolution excluding 1H 21 net income

Transfer of La Scogliera to Losanna

• Could optimize the capital requirements, eliminating the consequences deriving from the regulatory consolidation of Banca Ifis in La Scogliera, according to the principles of Directive 2013/36/EU (CRD IV) and Regulation (EU) 575/2013 (CRR)
• Is subject to satisfaction of conditions precedent, including an opinion from the Italian internal Revenue Agency on the tax consequences of the transfer, as well as the successful completion, expected by the end of the year, of the envisaged regulatory procedures
• 2019 dividends of €59mln still to be paid are booked as debt to shareholders**

*The application of the 2013/36/EU (CRD IV) Directive and EU Regulation 575/2013 (CRR) envisages that only 50.8% of the excess capital of Banca Ifis Group Scope is included in the CET1 of La Scogliera Group Scope. Excess Capital of €0.4bn is not included in CET1 of La Scogliera Group Scope.

** At group level capital requirements are: CET1 8.12%, Total Capital 12.5%

*** 2019 dividends already excluded from capital ratios

Quarterly results

(€ mln)	1Q21	2Q21	1H20	1H21
Net interest income	115.8	117.2	169.7	233.0
Net commission income	18.8	22.1	39.8	40.9
Trading and other revenues	3.1	15.6	3.3	18.7
Net revenues	137.7	154.9	1 212.8	292.6
Loan loss provisions (LLP)	(16.1)	(26.5)	(33.3) 2	(42.6)
Net revenues – LLP	121.6	128.4	179.5	250.0
Personnel expenses	(33.8)	(33.9)	(60.7)	(67.7)
Other administrative expenses	(52.5)	(59.0)	(82.1)	(111.5)
Other net income/expenses	3 (5.0)	6.1	(12.7)	1.1
Operating costs	(91.3)	(86.9)	(155.5)	(178.2)
Gains (Losses) on disposal of investments	-	-	24.2	4 -
Pre tax profit	30.4	41.5	48.2	71.9
Taxes	(9.6)	(13.1)	(11.3)	(22.7)
Net income - attributable to the Parent company	20.1	28.2	36.8	48.3
Customer loans	9,032	9,875	8,034	9,875
- of which Npl Business	1,398	1,371	1,307	1,371
Total assets		11,841 13,269	11,252	13,269
Total funding		9,735 11,000	9,171	11,000
- of which customer deposits	5,526	5,884	4,864	5,884
- of which TLTRO	1,992	2,116	2,000	2,116
Shareholders Equity	1,572	1,574	1,497	1,574

• Net revenues benefit from the progressive improvement in judicial and extrajudicial Npl workout and in Commercial & Corporate Banking activity 1
  • Net revenues include +€4mln write back of PPA in 2Q 21 (vs. €12mln in 1Q21 and +€30mln in 4Q20)
  • Trading and other revenues include €6mln gains on equity stakes and PE funds and €5mln income on proprietary trading
• Includes €14mln write offs due to ongoing review of Covid-19 impact on our NPL portfolio (€9mln) and high vintage exposures in our commercial portfolio (€5mln) to reflect longer timeframe/lower collections 2
• Includes €4mln contributions to the Single Resolution Fund (paid in 2Q21) 3
• Capital gain due to the disposal of real estate in Milan 4

2Q21 figures include the P&L and B/S impact of the acquisition of Aigis. P&L is not material for Banca Ifis. B/S impact is on customer loans and funding

In the above numbers, net impairment losses/reversals on receivables of the Npl Segment were entirely reclassified to Interest receivable and similar income to present more fairly this particular business and because they represent an integral part of the return on the investment. Also for this reason, the provisions resulting from the ongoing analysis of the NPL portfolio due to long term Covid-19 effects have been reclassified into loan loss provisions

2Q21 Results: P&L break-down by business unit

		Commercial & Corporate banking
Data in € mln	Npl	Factoring	Leasing	Corp. Banking & Lending	Tot. Commercial & Corporate banking	Non core & G&S	Consolidated
Net interest income	63	21	12	14	46	8	117
Net commission income	1	14	3	4	21	(0)	22
Trading & other revenues	1	0	0	6	7	8	16
Net revenues	65	35	15	24	74	15	155
-Of which PPA	0	0	0	0	0	4	4
Loan loss provisions	(9)	(10) 1	(1) 2	(3)	(14)	(4)	(26)
Operating costs	(41)	(20)	(7)	(10)	(37)	(8)	(87)
Net income	10	3	5	8	16	2	28
Net income attributable to non-controlling interests							0.2
Net income attributable to the Parent company							28
Net income (%)	36%	12%	17%	28%	57%	7%	100%
Customer Loans	1,371	2,749	1,411	2,300	6,460	2,045	3 9,875
RWA1	2,132	2,275	1,271	1,518	5,063	1,112	8,307
2 Allocated capital	244	260	145	174	579	127	950

• Includes €9mln provisions due to ongoing review of Covid-19 long-term impact on our NPL portfolio 1
• Includes €5mln provisions due to the review of high vintage exposures in our commercial portfolio (€5mln) 2
• Breakdown of customer loans in Non Core & G&S 3
  • o G&S: includes €1.4bn of Italian Government bonds at amortized costs
  • o Non Core: includes €0.2bn of performing loans mainly ex Interbanca, €0.1bn retail mortgages and €0.05bn of Npl (former Interbanca + Banca Ifis)

(1) RWA Credit and counterparty risk only. It excludes RWA from operating, market risks and CVA (€1bn); (2) RWA (Credit and counterparty risk only) x CET1 2Q21.

Appendices 2

2.1 Segment results

Customer loans: Commercial & Corporate banking*

Banca Ifis's Commercial & Corporate banking portfolio includes €0.8bn towards PA; the remaining portfolio is well diversified in terms of sector, geography and size to face the potential impact of the current macroeconomic slowdown

(€ bn)	2Q21	Description
Lending NHS/PA/guaranteed to by and large state corporate
Factoring and other loans public to administration	0 8	The quality risk is limited , while there are uncertainties on the timeframe of asset payment
guaranteed by Loans 80% State (MCC)	0 8	(including portfolio) Loans SMEs 80% guaranteed by MCC/State Aigis to
chemists Factoring to	0 1	Short lending the face of chemists (Credifarma) in term
large Italian Factoring Corporations to (Revenue >€500mln)	0 5	(revenue > €500mln) The debtors are the large/top Italian corporations with a sound competitive advantage
Lending SMEs to
Factoring SMEs to	1 5	of (usually Strong and borrower diversification Average duration of ca. 4 months Average ticket €300k The debtors medium sector exposures are to corporate) , with ratings well above the ones of the sellers of the credits
Leasing SMEs to	1 4	and borrower diversification duration of exposures (escluding rental) 38k , with an average ticket Strong Average ca. 4Y Leasing sector to customers of €30k There are remarketing for all the repossessed which quality risk mitigate agreements assets asset
Lending chemists to	0 7	(Credifarma Farbanca) Medium/long lending chemists term to +
Structured finance	0 6	exposures (average ca. €12mln) Lending Private equity consisting of ticket of towards non-cyclical corporations Strong track record , with to ca. 55 no (less €50mln) significant default in the last 10Y includes also marginal investments in funds than It some PE
Total loans customer	6 5	Total loans of Commercial Banking & Corporate customer
* Source: management accounting data

Factoring*

Turnover - €bn

Data in €mln	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21
Net revenues	36	33	34	40	34	35
Net revenues / average customer loans	4.9%	4.6%	4.8%	5.7%	5.2%	5.4% 1
Loan loss provisions	(5)	(1)	(2)	(23)	4	2 (10)

• Factoring net loans +9% QoQ due to pick up in economic activity
• Factoring loans of €2.7bn included €0.8bn exposure to the Public Administration
• Net revenues / average customer loans at 5.4% 1
• 2Q21 loan loss provisions of €10mln. In 1Q21, loan loss provisions includes one-off write back of provisions due to the update of credit modelling 2

Leasing

New business - €mln

Loan loss provisions (4) (4) (7) 0 (4) (1)

• ¹¹⁰ New leasing +31% YoY and stable QoQ
  • In 2Q21, customer loans at €1,411mln, stable QoQ
  • Asset quality risk is mitigated by strong sector and borrower diversification (~ 38k customers, average ticket of ~ €30k*) and by the remarketing agreements for repossessed assets
  • Banca Ifis granted €481mln moratoria. As at 30 June 21*:
    • o ~€350mln (ca. 73% of total) terminated moratoria and started paying again, benefiting from the reopening of the economy
    • o ~€131mln (ca. 27% of total) moratoria were still in place and asked for the extension until 31 Dec 21

Npl Business*: portfolio evolution

Npl portfolio evolution

Key numbers*

• 1.9mln tickets, #1.4mln borrowers
• Extensive portfolio diversification by location, type and age of borrower

Npls acquired in 2Q: €0.1bn GBV

• In 2Q21, Banca Ifis purchased €0.1bn due to the low number of transactions in the NPL market and a selective approach
• We are currently participating /expecting to participate in NPL disposal processes of more than €3bn GBV which allows us to be selective

Npls disposed and others in 2Q

• Npls disposed and others in 2Q21: disposals (disposal price €1.8mln, capital gain €0.8mln) of portfolios that were already worked out and not strategic for Banca Ifis

Npl Business*: ERC

ERC: €2.7bn

2.5

ERC breakdown

Data in €mln	GBV	NBV	ERC
Waiting for workout - At cost	0.1	0.0	0.0
Extrajudicial positions	11.3	0.4	0.7
Judicial positions	7.9	1.0	2.0
Total	19.3	1.4	2.7

ERC assumptions

• ERC based proprietary statistical models built using internal historical data series and homogeneous clusters of borrowers
  • o Type of borrower, location, age, amount due, employment status
  • o Time frame of recovery
  • o Probability of decay
• ERC represents Banca Ifis's expectation in terms of gross cash recovery. Internal and external costs of positions in nonjudicial payment plans (GBV of €0.4bn in 2Q21), court injunctions ["precetto"] issued and order of assignments (GBV of €1.4bn in 2Q21) have already been expensed in P&L
• €1.5bn cash recovery (including proceeds from disposals) was generated in the years 2014 – 2Q21

Npl Business*: GBV and cash recovery

Cash collections

Judicial recovery

Judicial recovery (€ mln)	GBV	%	Ongoing
Freezed**	3,644	46%	processing
Court injunctions ["precetto"] and foreclosures	700	9%	Towards ODA or
Order of assignments	736	9%	secured and corporate /
Secured and Corporate	2,816	36%	future cash flows
Total	7,896	100%

Non judicial recovery – Voluntary plans

Judicial recovery – Order of Assignments

Actual vs. model cash repayments

Cash collection

• NPL cash collection at record high of €89mln, up vs. all previous quarters 1

P&L Contribution

• 2Q 21 P&L contribution benefits from increasing productivity in servicing and from reducing timeframe of recovery of riskier exposures in non judicial workout. Portfolio proved to be resilient: ~40% of order of assignments are versus public employees and retirees and Portfolio is extremely granular with ~1.4mln debtors 2

Data in € mln (escluding disposals)	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21	2018 YE	2019 YE	2020 YE
Cash collection	57	67	59	76	65	52	66	76	81	1 89	181	258	259
Contribution to P&L**	66	60	44	78	50	34	48	50	64	2 70	238	248	182
Cash collection / contribution to P&L	87%	112%	132%	97%	132%	153%	137%	152%	127%	128%	76%	104%	143%

*Source: management accounting data

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

Npl Business*: stock by recovery phase

Cluster	GBV 2Q21 €mln	% total	Description	Average time frame**	Accounting valuation	Cash proceeds
Waiting for workout - Positions at cost	107	1%	Recently acquired, under analysis to select the best recovery strategy, to be assigned either to extrajudicial or to judicial recovery	6 months	Acquisition cost
Extrajudicial positions	11,280	58%
-Ongoing attempt at recovery	10,846	56%	Managed by internal and external call centres and recovery networks. The purpose is the transformation into voluntary payment plans (or into judicial recovery if conditions arises)	NA	Statistical model (collective valuation)	No
- Non-judicial payment plans	434	2%	Sustainable cash yields agreed with debtors through call centres and collection agents	5 years	Increase in value (P&L), with valuation based on agreed plan, net of historical delinquency rate, discounted at the IRR used for acquisition	Yes
Judicial positions	7,896	41%
- Freezed***	3,644	19%	Judicial process has started; but the court injunction ["precetto"] has not been issued	6-12 months	Acquisition cost	No
- Court injunctions ["precetto"] issued and foreclosures ("pignoramento")	700	4%	Court injunction ["precetto"] already issued; legal actions continue to get the order of assignment	8-12 months	#1 increase in value at court injunction ["precetto"] and #2 increase in value at foreclosure ["Pignoramento"]. Part of the legal costs are expensed in P&L	No
- Order of assignments	736	4%	Enforcement order already issued. The cash repayment plan is decided by the court and starts afterwards	2-4 months	#3 increase in value. The remaining legal costs are expensed in P&L	Yes
- Secured and Corporate	2,816	15%	Ongoing execution of real estate collaterals	4 years	Analytical valuation (expected time frame and amount to be recovered)	Yes
Total	19,282	100%

*Source: management accounting data

** Data before Covid-19.

***Other Judicial positions

Npl Business*: GBV and NBV evolution

GBV - €mln	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21
Waiting for workout - Positions at cost	2,864	1,598	1,783	1,794	1,440	1,709	1,885	2,140	1,147	1 107
Extrajudicial positions	9,745	9,862	9,574	10,378	10,619	10,257	10,579	10,273	10,987	11,280
- Ongoing attempt at recovery	9,393	9,491	9,194	9,975	10,206	9,850	10,182	9,896	10,578	10,846
- Non-judicial payment plans	352	371	380	403	413	407	398	378	409	434
Judicial positions	4,015	4,913	5,226	5,669	5,720	6,278	6,428	7,374	7,546	7,896
- Freezed**	1,822	1,931	2,192	2,521	2,533	2,627	2,518	3,299	3,243	3,644
- Court injunctions ["precetto"] issued and foreclosures	464	487	511	543	571	595	642	713	686	700
- Order of assignments	561	609	612	639	640	672	677	676	702	736
- Secured and Corporate	1,167	1,886	1,911	1,965	1,975	2,384	2,590	2,686	2,915	2,816
Total	16,624	16,373	16,583	17,841	17,779	18,244	18,893	19,787	19,680	19,282

NBV - €mln	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	*** 2Q21
Waiting for workout - Positions at cost	174	148	160	109	65	96	104	170	112	15
Extrajudicial positions	306	313	308	356	364	355	353	339	368	393
- Ongoing attempt at recovery	162	164	154	190	193	184	185	174	188	198
- Non-judicial payment plans	144	149	154	166	171	171	169	165	180	195
Judicial positions	643	711	720	813	840	854	867	894	916	961
- Freezed**	205	207	215	274	298	304	292	296	300	330
- Court injunctions ["precetto"] issued and foreclosures	118	118	118	128	120	132	148	160	162	161
- Order of assignments	227	244	245	259	270	265	264	280	292	305
- Secured and Corporate	94	142	142	152	152	153	162	158	162	165
Total	1,123	1,172	1,188	1,278	1,269	1,305	1,324	1,404	1,396	1,369

1 The decrease in GBV of waiting for workout/positions at costs is due the beginning of the workout of a few large portfolios acquired in 2020

*Source: management accounting data

**Other Judicial positions

***Does not include customer loans (invoices to be issued) related to Ifis Npl Servicing third parties servicing activities

Npl Business*: P&L and cash evolution

P&L - €mln	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21
Waiting for workout - Positions at cost
Extrajudicial positions	19	19	19	20	17	10	11	7	22	29
- Ongoing attempt at recovery	(3)	(2)	(1)	4	(4)	(3)	(5)	(5)	(2)	6
- Non-judicial payment plans	22	21	20	17	21	13	15	12	24	23
Judicial positions	46	42	26	58	33	24	37	43	42	41
- Freezed**	0	0	0	0	0	0	0	0	0	0
- Court injunctions and foreclosures + Order of assignments	37	28	18	40	26	24	32	43	36	34
- Secured and Corporate	9	14	7	18	6	0	6	0	5	7
Total	66	60	44	78	50	34	48	50	64	70

Cash - €mln	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21
Waiting for workout - Positions at cost
Extrajudicial positions	27	32	27	38	30	23	33	37	42	47
- Ongoing attempt at recovery	4	6	4	10	4	3	4	6	6	9
- Non-judicial payment plans	23	26	23	28	26	20	29	31	36	39
Judicial positions	30	35	32	38	35	29	33	40	39	42
- Freezed**	0	0	0	0	0	0	0	0	0	0
- Court injunctions and foreclosures + Order of assignments	24	25	25	27	29	23	26	29	30	30
- Secured and Corporate	6	11	7	11	7	5	7	11	9	12
Total	57	67	59	76	65	52	66	76	81	89

Npl Business*: portfolio diversification

Breakdown of GBV by type Breakdown of GBV by borrower age

Breakdown of GBV by ticket size Breakdown of GBV by region

2.2 Consolidated financial data

Customer loans*

• 2Q21 customer loans at €9,875mln (+€843mln or +9.3% vs 1Q21), of which €278mln due to the acquisition of Aigis
• Corp. Banking & Lending increase (€386mln QoQ) driven by Aigis acquisition (€278mln)
• Non Core & GS increased by +€244mln mainly driven by the acquisition of +€226mln of Italian Government bonds at amortized cost
• Factoring increase (+€236mln QoQ) driven by the pick up in macroeconomic activity

Funding

Funding (€mln)

9,908		9,735	11,000
			612
372		259	2,116
1,995		1,992
969		900	1,323
1,100		1,058	1,065
5,472		5,526	5,884
4Q20		1Q21	2Q21
Customer deposits	Bonds	Securitization	TLTRO Other
	4Q20	1Q21	2Q21
LCR	>900%	>1,400%	>1,700%
NSFR	>100%	>100%	>100%

• Customer deposits +6% QoQ mainly due to the acquisition of Aigis
• The securitizations include €951mln of the factoring securitization and €372mln of the restructuring of the Farbanca securitization
• Banca Ifis has €2.1bn TLTRO (of which €1.9bn expiring in June 2023) out of a maximum capacity of ca. €3bn
• The increase in other funding is driven by €283mln repo
• Average cost of funding at 0.96% in 2Q21, vs 1.02% in 1Q21, 1.01% in 4Q20 and 1.45% in 4Q19

Proprietary portfolio

Strategy

• Long term «fundamental» view coupled with opportunistic trading approach
• Efficient management of excess cash (ECB deposits) / Low Duration level
• Use of enhancing and hedging strategies coupled with both risk and expected credit loss control
• Low cumulative RWA level and relevant ECB / funding eligibility

1H21 results

• In 1H21 (2Q21), the proprietary portfolio reported net revenues of €16.3mln (€10.2mln) of which €8.1mln of interest margin, +€9.3 increase vs. 1H20

Banca Ifis adopted the mechanism offsetting unrealized gains/losses measured through the FVOCI method on government assets

Type of - Data in €mln end of asset as at		Bonds		Equity	Securitization	Total
quarter	Government	Financial	Corporate
Held collect/amortized to cost	1430	182	66		113	1791
(FVOCI) Held collect and sell to	536	22	16	65		639
(HTC HTC&S) Total and	1965	205	83	65	113	2430
Held for trading						2
Total portfolio market value at	1965	205	83	65	113	2432
Percentage of total	80 8% ,	8 4% ,	3 4% ,	2 7% ,	4 6% ,	100 0% ,
Held collect/amortized Duration to cost	2 7 ,	4	4 6 ,	NA	0 1 ,	2 9 ,
(FVOCI) Held collect and sell Duration to	3 1 ,	3 8 ,	4 6 ,	NA	-	3 1 ,
duration (HTC and HTC&S) Average - YEARS	2 8 ,	4 0 ,	4 6 ,	NA	0 1 ,	3 0 ,

Asset quality – 2Q21

Asset quality (€ mln)

Consolidated ratios	4Q20	1Q21	2Q21
Gross Npe*	6.4%	6.9%	6.4%
Net Npe*	3.2%	3.4%	3.2%

Commercial & Corporate Banking	Gross Coverage	Net
Bad loans	168	75%	42
UTPs	175	46%	94
Past dues	46	12%	41
Total Npes	388	55%	176

Non Core & G&S	Gross	Coverage %	Net
Bad loans	22	35%	14
UTPs	55	45%	30
Past dues	7	34%	4
Total Npes	84	41%	49

• Npl Business not included in this analysis
• Npe ratios (excluding Npl Segment and Italian Government Bonds at amortized costs included in customer loans) reported:
  • o Gross Npe Ratio*: 6.4% (6.9 % in 1Q21)
  • o Net Npe Ratio*: 3.2% (3.4 % in 1Q21)
• The QoQ decrease in Gross and net ratios is driven by the increase in customer loans
• Gross Npes in Commercial and Corporate Banking include ~€19mln factoring technical past due mainly loans to the PA which do not represent a significant asset quality risk
• NPEs in Non Core & G&S that arose from the acquisition of former Interbanca, in accordance with IFRS 9 are qualified as POCI ("purchased or originated credit-impaired") and are booked net of provisions

Consolidated operating costs

Operating costs (€mln)

Personnel expenses (€mln)

2Q21 operating costs ~-€4.4mln vs. 1Q21:

• Personnel expenses include +€0.5mln of AIGIS personnel
• -€4.5mln QoQ in other operating costs:
  • o -€3.4mln bargain and +€1.5mln Aigis costs (of which €0.4mln of one-off risk provisions and one-off €0.4mln of IT costs)
  • o €1.5mln of indirect taxes, of which €0.5mln for proprietary trading and €1mln for building registered taxes
  • o ~-€3.7mln QoQ for the Bank Resolution fund, booked in 1Q21 paid in 2Q21)

Other adm. expenses and other income / expenses (€mln)

Seasonality in Npl and PPA and effect of Covid-19

Net interest income in Npls

Reversal of PPA ex-IB (pre-tax)

2Q21 pre tax reversal PPA at €4mln Variability due to reversal of PPA depending on the prepayment / disposal of ex-Interbanca's loans

Capital gains from Npl disposal

2.3 La Scogliera: implications of CRD IV

La Scogliera: implications of CRD IV

• The application of the 2013/36/EU (CRD IV) Directive and EU Regulation 575/2013 (CRR) envisages that 49.2% of the excess capital of the Banca Ifis Group Scope is not included in the CET1 of La Scogliera Group Scope. CET1 excess capital of €0.4bn is not included in La Scogliera Group Scope

50.8%** Banca Ifis S.p.A.

Data in €billion

Data as at 30 Jun 2021	Banca Ifis Group Scope	Capital requirements*	Excess Capital	Minority stake of La Scogliera	Excess capital not included	La Scogliera Group Scope
CET1	1.4		0.8	49.2%	0.4	1.1
Total Capital	1.8		0.9	49.2%	0.4	1.4
CET1 %	15.5%	7.0%		49.2%		11.4%
Total Capital %	19.9%	10.5%		49.2%		15.1%
RWA	9.3					9.3

La Scogliera: Focus on DTA regulatory implications

Convertible DTAs	• DTAs related to write downs of loans convertible into tax credits (under Law 214/2011) • Their recovery is certain regardless of the presence of future taxable income and is defined by fiscal law (range ca. 5%-12% per annum, with full release by 2026) • No time and amount limit in the utilization of converted DTAs • Capital requirements: 100% weight on RWA	Data in €/mln 219.4
DTAs due to tax losses (non - convertible)	• DTAs on losses carried forward (non-convertible) and DTAs on ACE (Allowance for Corporate Equity) deductions can be recovered in subsequent years only if there is positive taxable income • No time limit to the use of fiscal losses against taxable income of subsequent years • Capital requirements: 100% deduction from CET1	41.7
Other non-convertible DTAs *Includes prudentially €5.7mln of DTAs related to Ifis	• DTAs generated due to negative valuation reserves and provisions for risks and mln charges (~€31.6 as of 30 Jun 2021) • Capital requirements: deduction from CET1 or weighted in RWA depending on certain thresholds*. For Banca Ifis they would be weighted at 250% but they are partially offset by DTL (~€24.3mln as of 30 Jun 2021) Rental and Ifis Real Estate not included in the Banking Group as not a regulated entity	7.4

** As stated by CRR (article 48), these kind of DTAs are subjected to a double threshold mechanism: if their amount is less than 10% of the CET1 Capital, they are weighted at 250%; if their amount added to the total investments in financial sector subjects is less than 17.65% they are weighted. If the amount of DTAs is greater than or the first or the second threshold, the amount in excess is deducted from CET1 Capital. 35

2.4 Focus on PPA

Focus on ex-Interbanca PPA

• In 2016, following the acquisition of former Interbanca, Banca Ifis valued the performing and non performing loans of Interbanca by applying a market discount and a liquidity discount to reflect purchase price
• The purchase price allocation (PPA) is written back with the progressive maturity/the disposal of Interbanca's loans
  • As at 30 Jun 21, the residual amount of pre-tax PPA was €43mln

Net customer loans and PPA - €mln

Net customer loans PPA

PPA reversal in P&L- €mln

1Q20	2Q20	3Q20	4Q20	1Q21	2Q21	Outstanding 2Q 21
9	11	8	30*	12	4	43
	FY 20: €57mln. o/w: -€2mln Corp. Banking & Lending -€56mln Non Core & G&S			1H 21: €16mln. o/w: -€1mln Corp. Banking & Lending -€15mln Non Core & G&S		2Q 21 Outstanding, o/w: -€3mln Corp. Banking & Lending -€40mln Non Core & G&S

*In 4Q 20, the write back of PPA was mainly driven by loans and Npl disposals and prepayments

Disclaimer

• This Presentation may contain written and oral "forward-looking statements", which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number of assumptions, expectations, projections and provisional data concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the control of Banca Ifis (the "Company"). There are a variety of factors that may cause actual results and performance to be materially different from the explicit or implicit contents of any forward-looking statements and thus such forward-looking statements are not a reliable indicator of future performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. The information and opinions contained in this Presentation are provided as at the date hereof and are subject to change without notice. Neither this Presentation nor any part of it nor the fact of its distribution may form the basis of, or be relied on or in connection with, any contract or investment decision.
• The information, statements and opinions contained in this Presentation are for information purposes only and do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe for securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction of the United States or in Australia, Canada or Japan or any other jurisdiction where such an offer or solicitation would be unlawful (the "Other Countries"), and there will be no public offer of any such securities in the United States. This Presentation does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or the Other Countries.
• Data regarding PPA, asset quality ratios, cost income ratios, liquidity ratios, cost of funding, proprietary portfolio, segment reporting, business unit breakdown, commercial and corporate loan breakdown are management accounting. Data regarding NPL portfolio evolution and ERC, NPL cash recovery and NPL P&L contribution, NPL GBV and NBV evolution and breakdown, NPL P&L and cash evolution and breakdown are management accounting
• Mariacristina Taormina, Manager charged with preparing the financial reports of Banca Ifis S.p.A., pursuant to the provisions of Art. 154 bis, paragraph 5 of Italian Legislative Decree no.58 dated 24 February 1998, declares that the accounting information included into this document corresponds to the related books and accounting records.
• Neither the Company nor any member of Banca Ifis nor any of its or their respective representatives directors or employees accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss arising from its use or from any reliance placed upon it.