Bper Banca — Investor Presentation 2019

Feb 28, 2019

Disclaimer

This document has been prepared by BPER Banca S.p.A. solely for information purposes, and only in order to present its strategies and main financial figures. The information contained in this document has not been audited. No guarantee, express or implied, can be given as to the document's contents, nor should the completeness, correctness or accuracy of the information or opinions herein be relied upon. BPER Banca S.p.A., its advisors and its representatives decline all liability (for negligence or any other cause) for any loss occasioned by the use of this document or its contents.

All forecasts contained herein have been prepared on the basis of specific assumptions which could prove wrong, in which case the actual data would differ from the figures given herein. No part of this document may be regarded as forming the basis for any contract or agreement.

No part of the information contained herein may for any purpose be reproduced or published as a whole or in part, nor may such information be disseminated.

This is a translation into English of the original in Italian. The Italian text shall prevail over the English version.

BPER Banca S.p.A, head office in Modena, via San Carlo, 8/20 -Tax Code and Modena Companies Register no. 01153230360 – Company belonging to BPER BANCA VAT GROUP VAT number no. 03830780361 - Share capital Euro 1,443,925,305 ABI Code 5387.6 - Register of Banks no. 4932 - Member of the Interbank Deposit Guarantee Fund and of the National Guarantee Fund - Parent Company of the BPER Banca S.p.A. Banking Group - Register of Banking Groups no. 5387.6 - Tel. 059.2021111 - Telefax 059.2022033 - e-mail: servizio.clienti@bper.it - Certified e-mail (PEC): bper@pec.gruppobper.it - bper.it - istituzionale.bper.it

Introduction to BPER Group

Industrial Plan 2019-21

The key initiatives of Industrial Plan 2019-21

Key financial targets

Appendix

BPER Group: over 150 years of history, continuously evolving

A clear path undertaken over the past 3 years

Focus on de-risking and solid capital position

Development of the commercial

model

Simplification and optimization of the operating model

• Delayering of HQ and central

• Optimization of the branch

• Review of back-office

operations

structures¹

network

Evolution of the distribution model

• Footprint rationalization (180² branches closed) and implementation of the hub&spoke model
• Introduction of cashlight branches (143 branches involved)

• Development of a multichannel distribution model

• Set-up of BPER Credit Management (company focused on NPLs management)

• Gross NPE ratio at 13.8% (11.6% post extraordinary transactions), ~-10 pp vs the June 2016 peak

• CET1 and Tier 1 ratio fully phased FY 2018 equal to, respectively, ~11.9% and 12.0%

• Introduction of dedicated teams and service models

• Transformation of Banca di Sassari into a product factory specialized in consumer credit

• Renewal of the Bancassurance agreement with UnipolSai

• Simplification of the number of organizational units 2. Of which 50 closures of Carife

Three strategic transactions announced in February 2019

Increased scale, value creation, acceleration of de-risking and capital strength confirmed

• Acquisition of all ordinary and preference shares held by Fondazione di Sardegna in Banco di Sardegna ("BdS") in exchange of new BPER shares and with a convertible AT1 instrument issued by BPER	• Cash acquisition of 100% of Unipol Banca • Cash disposal of ~ € 1.0 billion gross bad loans portfolio to Unipol Group	• Acquisition in cash with Banca Popolare di Sondrio of 39.99% of Arca SGR • BPER's stake in Arca SGR increasing to 57%
• Significant improvement in the level of regulatory capital • Acceleration of the cost optimization process for BdS • Further simplification of the Group structure	• Acquisition of a "clean" bank with no legacy issues • Increase scale and client base. Broaden distribution footprint • Acceleration of asset quality de risking • Significant value creation	• Enhancement of Arca SGR as a key player in Italian asset management space, further strengthening its competitive positioning and contributing to developing its distribution and industrial capabilities Transaction not included
• • • Strengthening of consumer credit	partnership) together with Banca di Sassari	in 2019-21 Industrial Plan Banca" online bank, contact center, network of financial advisors)
	• Development of Arca	Acceleration of the multi-channel strategy (branches, "MyUnipol Assurbanking: development of an innovative approach to the distribution of banking products through insurance channels (Finitalia-UnipolSai SGR's distribution and industrial capabilities, also considering the possibility to open to new investors who

• Development of Arca SGR's distribution and industrial capabilities, also considering the possibility to open to new investors who can contribute to the development of the distribution channels or to the further diversification and optimization of its production and innovation capabilities

The starting point of the Industrial Plan 2019-21

Increased sales thanks to the three strategic transactions

	BPER 20181	BPER 2018 PF2	Variation
Gross customer loans (€B)	51	57	+13%
Total funding (€B)	91	148	+63%
Operating income (€M)	2,163	2,506	+16%
Pre-tax income (€M)	346	510	+48%
# Clients (M)	2.2	2.7	+23%
# Employees	11,615	13,815	+19%
# Branches	1,218	1,476	+21%
Gross NPE ratio (%)	13.8%	11.6%	-2.2pp
CET 1 ratio fully phased (%)	11.9%	11.4%	-0.5pp
Tier 1 ratio fully phased (%)	12.0%	11.8%	-0.2pp

1. FY2018 reported data

2. Pro-forma for the strategic transactions announced on the 8th February 2019: transaction with Unipol Gruppo and the acquisition of the Fondazione di Sardegna Minorities in Banco di Sardegna. The impacts exclude the increase of BPER's stakes in Arca SGR

BPER: a strong and establish Group with a solid client base

BPER data pro-forma for Unipol Banca

One of the largest banking Groups in Italy

Total assets 2018¹ (€B)

1. BNL and Cariparma at 31/12/2017 2. Data referred to BPER Banca only

A Group with a strong identity

1. Company not part of BPER Group yet. Its integration will be finalized following the Regulatory authorities' approval. Finitalia is a company fully owned by Unipol Banca

Introduction to BPER Group

Industrial Plan 2019-21

The key initiatives of Industrial Plan 2019-21

Key financial targets

Appendix

Plan reflects a macro environment characterized by expectations of slower growth and a number of uncertainities

• Slowdown in global GDP growth,
particularly in emerging and
developing countries1

• Worsening expectations for world trade trend ¹

• Slowdown in the Euro Area GDP growth²

• In December 2018³ , German industrial production decreased by 3.9%

• Weakening of the economic recovery, with expected growth below 1% for the next 2 years⁴

• Significant decrease of industrial production in 2018 (-5.5% in December) ⁵

• Commercial tensions between US and China

• Slowdown in emerging countries consumption following the dollar appreciation
• Uncertainty linked to the 2019 European elections, with nationalistic pressures in some countries
• Future relations between the European Union and the United Kingdom still to be defined

• Review of Quantitative Easing by the ECB

• High volatility of the BTP-Bund spread

• Impacts of the new budget law not immediately verifiable

Macroeconomic

outlook

Elements of attention and uncertainty

1. Source: World Bank Global Economic Prospect. Compared to June 2018, the GDP growth estimates for emerging and developing countries have been reduced respectively by 0.3, 0.5 and 0.2 pp. for 2019, 2020 and 2021 2. Source: European Central Bank 3. Source: Destatis - German Federal Statistics Institute 4. Prometeia estimates 5. Source: ISTAT estimates (Jan 2019) related to the comparison between December 2017 and 2018

Industrial Plan 2019-21

3 pillars supported by 3 levers

Digital transformation of the relationship with customers and of internal processes

People at the heart of future development

BPER as a reference model for the community

Sustainable value creation for stakeholders

Industrial Plan 2019-21 key financial targets

1. Net income including minorities contribution

2. It excludes the potential benefits connected to the extension of AIRB models to Unipol Banca and the potential conversion of €150M AT1

Introduction to BPER Group

Industrial Plan 2019-21

The key initiatives of Industrial Plan 2019-21

Key financial targets

Appendix

Strengthening of the Bancassurance agreement with Arca Vita and Arca Assicurazioni

1. Data referred to BPER Group ante extraordinary transactions. Also, it is referred to damage and health insurance products on private customers

1

Full potential of wealth management

Initiatives

Strengthening of the product factories	Strengthening and centralization in Optima1 • of the Group's investment services (asset management and advisory) • Leveraging on the Luxembourg SICAV as a multimanager for private and personal customers
Development and specialization of the distribution model	• Development of dedicated centers for private clients (25-30 centers across Italy) • Strengthening of the task force dedicated to the Key Clients • Development of the Unipol Banca network of financial advisors, also in areas with limited coverage of BPER branches
Offer innovation and rationalization	• Rationalization of the product catalogue • Development of alternative investments products for customers with an high potential

Commissions from indirect funding and life insurance

AuM/Indirect funding (private clients only)²

%

1. BPER Group company specialized in investment services and asset management

2. Data referred to BPER Group ante extraordinary transactions

16

2

Full development of Banca di Sassari as a consumer credit and payments company

Initiatives New production of personal loans

		€B
Consolidation	• Optimization and automation of internal processes to improve efficiency, effectiveness and time to market
and development of consumer credit	• Extension to the non-captive market of personal loans and salary-back loans by Banca di Sassari	2.0
	• Development of credit pre-acceptance processes
		2016-2018
Development of payment	• Redesign of the processes and of the organizational structure in order to ensure a strong development of the payments business
services	• Definition of a growth strategy on payments, even towards	€B
	non-captive customers
Development of
the distribution model	• Strengthening of direct and indirect channels, both traditional and digital	0.4

New production of salary-back loans

Strengthening of global advisory services for corporate and SME clients

	• Strengthening of multi-service specialist teams, both at central and local levels
Strengthening of the global	• Constant monitoring of customer needs to increase lead generation
advisory services	• Focus on financial and consulting needs with particular attention to the following topics: – Internationalization – Search for subsidized and / or structured sources of
	financing
Sector specialization	• Creation of a highly specialized team of professionals dedicated to the development of companies in sectors of excellence

Initiatives New production of Corporate and SME loans

€B

Stock of short-term Corporate and SME loans €B

4

Evolution of the distribution model

Footprint reorganization (-230 branches) and new branch formats

1. Of which, 73 branches converted from cashlight to cashless

1

Rationalization of the Group structure

Group structure simplification

Reduction of legal entities and governance strengthening

• Group target profile characterized by:
• Two commercial banks: it is expected the integration of Unipol Banca, Cassa di Risparmio di Bra and Cassa di Risparmio di Saluzzo in BPER Banca
• Integration of BPER Services in BPER Banca
• A full range of product factories, thanks to the reinforcement of the consumer credit's company
• Potential further integrations of smaller companies

Valorization of the Real Estate portfolio

Set-up of a specialized unit and space optimization

Initiatives Group properties

	• Centralization of all the Group Real Estate activities in a highly specialized unit of portfolio asset management
	(for business and non-business properties)
Creation of an	• Real Estate competences enrichment thanks to the
Active Real Estate	recruitment of specialists
Management unit	• Potential strategic partnership with specialized consultants and/or servicing/advisory companies
	• Proactive management of assets used as collateral for NPEs, integrated with the lending unit
	• Space optimization of business properties through space management, footprint rationalization and smart working
		Modena
Space optimization	• Valorization and remarketing of secondary HQ structures and business properties
	• Reorganization of Modena, Bologna and Ferrara hubs after the integration of Unipol Banca

3

1. Data includes: admin expenses IT running, admin expenses IT one-off and capex for IT development. It does not include the investments for the integration of Unipol Banca and Finitalia

Significant workforce reduction

Planned workforce reduction of 1.300 headcount by 2021

Exits	• ~1,700 total headcount exits: – 1,486 headcount exits through retirement and adhesion to the Solidarity Fund – 230 headcount exits through maturity of temporary hiring contracts
Personnel redeployment	• Partial personnel redeployment on more value-added activities • Increase of the ratio between "center" and "network" staff
New hires	• Recruitment of ~400 headcount – Acquisition of new competences and introduction of qualified skills to support business growth – Support of the "generational" turnover
Savings	• This plan unlocks potential running savings higher than €80 M per year – One-off costs equal to ~€180-200 M

Initiatives Group headcount evolution

5

De-risking acceleration

Evolution of the credit management process

	• Enhancement of the investigation process during underwriting, especially in the Corporate segment
Further strengthening of the underwriting	• Tighter control on new production thanks to a commercial performance evaluation system linked to the asset quality
	• Extension of the AIRB models for credit management to CR Bra, CR Saluzzo, the large Corporate segment and, potentially, to Unipol Banca
	• Proactive management of the loan portfolio with active management of the credit positons signaling potential red flags
Proactive management of the credit position	• Proactive use of forbearance, with targeted actions on specific asset classes – Industrialization of the forbearance measurement sustainability tool
	• Set- up of a dedicated unit for performing loans management

1. Data referred to BPER Group ante extraordinary transactions

De-risking acceleration

New model for NPE management

Initiatives Danger rate Evolution of the NPE management • Implementation of a new organizational set-up for the NPE management envisaging an increasing specialization by client segments (Corporate, Retail and Real Estate) • Improvement of the work-out process • Increase of the number of NPE positions outsourced – Higher recovery rate expected • Improvement and reorganization of the management and recovery processes of BPER Credit Management by client segment Extraordinary transactions • Active management of NPL portoflio – Significant reduction of the NPL stock, also thanks to the further disposals in addition to the ~€1 B NPL portfolio sold to UnipolRec • Migration to the new platform of NPL management and recovery (Laweb 4) Gross NPE ratio % % the ~€1 B UnipolRec

1. Data referred to BPER Group ante extraordinary transactions

2

Digital transformation of the relationship with customers and of internal processes

Digital transformation

New omnichannel model coupled with a strong push on innovation

	• Evolution of ICT systems to allow for the full development of a omnichannel model	%
Strong	• Channels integration into the new CRM	45
investments on the omnichannel	• Introduction of real time marketing tools
model	• Optimization of client channeling towards different channels (right channeling)
	• Renewal of the corporate banking platform
Digitalization of the sales	• Evolution of the range of products available and capable of being activated online	Unit (million)
process	• Digital lending extension to "non-clients"
Strong push on innovation leveraging on	• Development of a light banking solution on the open banking platform of Fabrick • ICT effort reduction thanks to the increasing reliance on	10
Fintech	open banking and/or white label solutions

Initiatives Penetration of Internet Banking of retail clients¹

Number of online transactions¹

1. Data referred to BPER Group ante extraordinary transactions

People at the heart of future development

People at the heart of future development

Strong employees involvement supported by investments in training and flexibility programs

Enhanced involvement of employees	• Organization of initiatives for the acknowledgment and valorization of diversity and inclusion of the whole staff (e.g. gender, age, nationality) • Continuous discussion and engagement with employees • Evolution of company welfare • Introduction of an incentive system (LTI) connected to the realization of the Industrial Plan targets	HC
Employees training and professional development	• Design of ad hoc development and coaching plans for employees – Strong focus on developing digital and leadership skills • Set-up of specific training programs for key profiles (e.g. Private banker and Corporate RM) • Valorization of the competences of employees coming from Unipol Banca
Flexibility programs	• Set-up of programs to increase the working flexibility – Possibility for some employees to work from local hubs (hub working) – Push on smart working

Initiatives Employees part of the hub working program¹

1. Data referred to BPER Group ante extraordinary transactions

BPER as a reference model for the community

BPER as a reference model for the community

3 main initiatives to support people's needs

Reduction of energy consumptions of BPER Banca by increasing the efficiency and the deployment of renewable sources

• Reduction of 10% of energy consumptions¹

Implementation of an environmental management system compliant with the UNI EN ISO regulation²

Incentive on initiatives of employees sustainable mobility, of which:

• Installment of a number of charging stations for electric vehicles
• Launch of a car pooling app for employees

#LaBancaCheSaLeggere

Promotion of cultural initiatives as driver for the social development

– Authors presentations at BPER Forum Monzani³ and in other locations

– + 20% annual increase of cultural events³

– "Nati per leggere" initiative, to initiate families to the reading activity

– ~10,000 books donated³

Promotion of financial education of new generations

– ~66,000 students involved³

– Dedicated program for kids and families

– Design and distribution of

3,000 books³

Set-up of a provider's sustainability rating system

~200 providers scored³

Management of ESG unsolicited rating for BPER Banca and request of a solicited rating:

• Standard Ethics Rating
• Target: to reach level EE by 2021
• Rating CDP

• Target: to reach level C- by 2021

• 2021 vs. 2016 2. UNI EN ISO 14001:2015 regulation (the system will not be certified) 3. Valuation on the time horizon 2019-21

Introduction to BPER Group

Industrial Plan 2019-21

The key initiatives of Industrial Plan 2019-21

Key financial targets

Appendix

Key macroeconomic forecasts

Industrial plan assumptions are conservative and reflect a slowdown of economic growth for the next 3 years

2018 financials homogeneous with 2021 targets

Overview of 2018 normalization and pro-forma process Build-up of 2018 pro-forma results

• To provide a clear and homogeneous representation of 2018 data with 2021 targets, 2018 results have pro-forma with 2021 data
• BPER Group 2018 results have been normalized for:
• The impact of non recurring items¹
• The alignment of 2018 tax rate to the one applied in 2021
• It has been prepared a pro-forma of 2018 results including the impact of extraordinary transactions announced on February 2019 B
• Acquisition of Banco di Sardegna minorities
• Acquisition of 100% of Unipol Banca
• Disposal of €1.0 B GBV of bad loans to Unipol Group
• The impact of the increase of BPER's stake in Arca Holding has not been taken into account in the numbers

A

1. Impairment on goodwill and fixed assets, losses on AQUI securitization, extraordinary contributes to "Fondi di Salvaguardia", extraordinary dividends on Nexi and capital gains on Mutine

Key 2021 financial targets

Profitability increase…

1. Net income including minorities contribution

Key 2021 financial targets

…further improvement of the assets quality and capital position

1. Excludes the potential benefit coming from the extension of AIRB model to Unipol Banca and the conversion of €150 M of AT1

Pre-tax income evolution

Enhanced operating efficiency and greater commercial effectiveness drive the increase of pretax income

Pre-tax income

€M

1. In 2018 BPER benefitted from a particularly positive impact with reference to capital gains on securities Note: figures in this page might not add exactly due to rounding differences

Operating income

Operating income growth driven by higher commissions

Net interest income and net fees and commissions

Increased commercial net interest income. Commissions growth driven by wealth management and Bancassurance

1. Includes the impact from the institutional funding 2. Spread of the commercial banks

Operating costs

Target Cost/Income lower than 59% thanks to cost base reduction (I/II)

Operating costs

Significant staff costs and administrative expenses reduction thanks to the Group's streamlining and simplification (II/II)

Note: figures in this page might not add exactly due to rounding differences

Asset quality

Gross NPE ratio lower than 9% thanks to the implementation of de-risking initiatives

Customer loans

Reduction of NPLs by ~23%, thanks to both NPL management and selected NPLs and UTPs disposal

Evolution of gross non-performing loans 2018-21

Total funding

Increase in total funding, driven by AuM and institutional funding

Institutional funding

Institutional funding issuances

Increase in institutional funding issuances, in order to also reinburce the TLTRO 2

AT1 Total Subordinated ² bond Covered bond Senior non preferred 3.3 0.2 1.2 0.3 5.0

€B Stock of inst. and inter-banking funding

Funding	2018	2021	CAGR 18-'21
Covered Bonds	2.0	4.51	30.6%
AT12	0.2	0.2	-
Subordinated bond	0.5	0.8	16.0%
Repos	2.4	5.0	26.9%
Senior non preferred		1.2	-
Institutional funding	5.1	11.7	31.4%
Funding from ECB + interbank position	11.6	6.5	(17.6%)
Total	16.7	18.2	2.9%

€750 M Covered Bonds at floating rate due in 2020

Regulatory requirements on funding and liquidity at 2021

%

€B

1. € 4.5 B of covered bonds at 2021 resulting from new issues for € 3.3 B and € 750 M maturing in 2020 2. Already included in the initial pro-forma scheme

Regulatory capital

Further capital strengthening, thanks to organic capital generation and the adoption of AIRB models

1. Over € 1 B of generated earnings gross of dividends distribution. The € 0.9 B post dividends include both the impact of badwill resulting from extraordinary operations announced in February 2019, and some one-off costs

2. Includes the impact of IFRS16, TRIM, the new definition of default and the new GL EBA

3. Includes the regulatory buffer impact, the disposal of AQUI portfolio and the PMI supporting factor

4. Extension of AIRB models to the companies of the Group and to the Large Corporate segment, excluding Unipol Banca

Profit & loss, balance sheet and KPI

Profit & Loss (€M)	2018-PF	2021	CAGR '18-'21
Net interest income	1,301	1,327	+0.7%
Net fees and commissions	939	1,043	+3.6%
Other income1	266	170	(14.0%)
Operating income	2,506	2,540	+0.4%
Operating costs	(1,615)	(1,494)	(2.6%)
Pre-provision operating income	891	1.045	+5.5%
Total provisions	(313)	(362)	+5.0%
Post-provision operating income	578	683	+5.7%
Pre-tax income	510	627	+7.1%
Net income2	366	450	+7.1%

Balance sheet (€B)	2018-PF	2021	CAGR '18-'21
Net customer loans	54	56	+1.6%
Direct funding (commercial + institutional)	59	65	+3.7%
Ratios (%)	2018-PF	2021	∆pp '18-'21
RoTE	8.9	~10.0	~+1.1
C/I ratio	64.4	<59	(>5.4)
Cost of risk	0.6	0.6	-
Tax rate	28	28	-
Gross NPE ratio	11.6	<9	~-3
NPE coverage ratio	49.3	~54	>+4.7
CET 1 ratio fully phased	11.4	~12.5	~+1.1
Dividend pay-out3		25

1. Dividends, negotiating results from financial activities, other income and expenses

2. Net income including minorities contribution

3. Data referred to the average payout across 2019-21

BPER 2021

Introduction to BPER Group

Industrial Plan 2019-21

The key initiatives of Industrial Plan 2019-21

Key financial targets

Appendix

2018 pro-forma data (I/II)

2018 data includes the impact of extraordinary transactions

1. BPER 2018 data normalized for non-recurring items

2018 pro-forma data (II/II)

2018 data includes the impact of extraordinary transactions

1. BPER 2018 data normalized for non-recurring items

Profit & Loss, balance sheet and key indicators pro-forma 2018

	(€M unless otherwise stated)	BPER	Normalized1	BPER Norm.	Extra. transac.	Combined
s s o L & Profit	Operating income	2,163	(16)	2,147	358	2,506
	Operating costs	(1,383)	30	(1,353)	(262)	(1,615)
	Pre-provision operating income	780	14	794	97	891
	Total provisions	(309)	57	(252)	(61)	(313)
	Post-provision operating income	472	71	542	36	578
	Pre-tax income	346	142	487	22	510
et e h s e c n Bala	Net income2	446	(96)	350	16	366
	Net customer loans (€B)	47	-	47	7	54
	Direct funding (commercial+ institutional) (€B)	50	-	50	9	59
	C/I ratio (%)	63.9%	-	63.0%	73.0%	64.4%
s o Rati	Cost of risk (%)	0.7%	-	0.5%	0.9%	0.6%
	RoTE (%)	-	-	8.6%	-	8.9%
	Gross NPE ratio (%)	13.8%	-	13.8%	-	11.6%

1. Impairment on goodwill and fixed assets, losses on AQUI securitization, extraordinary contributes to "Fondi di Salvaguardia", extraordinary dividends on Nexi and capital

gains on Mutine 2. Net income including minorities contribution

Contacts for Investors and Financial Analysts

Gilberto Borghi Head of Investor Relations

Via San Carlo, 8/20 - 41121 Modena - Italy +39 059 2022194

gilberto.borghi@bper.it

Alessandro Simonazzi Head of Planning & Control

Via San Carlo, 8/20 - 41121 Modena - Italy +39 059 2022014 alessandro.simonazzi@bper.it

Giulia Bruni Investor Relations

Via San Carlo, 8/20 - 41121 Modena - Italy +39 059 2022528

Nicola Sponghi Investor Relations

Via San Carlo, 8/20 - 41121 Modena - Italy

+39 059 2022219