Bper Banca — Investor Presentation 2018

Feb 8, 2019

FY18 consolidated results

Alessandro Vandelli - CEO 8 February 2019

Disclaimer

This document has been prepared by "BPER Banca" 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, 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.

The Manager responsible for preparing the Company's financial reports, Marco Bonfatti, declares, in accordance with art. 154 bis, para. 2, of the "Consolidated Financial Services Act" (Legislative Order No. 58/1998), that the accounting information contained in this document corresponds to documentary records, ledgers and accounting entries.

Marco Bonfatti

Manager responsible for preparing the Company's financial reports

Important methodological note

The entry into force on 1 January 2018 of the new international accounting standard IFRS 9, first application of which took place with the transitional rules, and the consequent update of Bank of Italy Circular 262, which revised, among other things, the schedules of the separate and consolidated financial statements in order to implement the new international accounting standard, means that the figures are not directly comparable with those of the previous year.

It should also be noted that, for the BPER Group, 2017 was characterized by a change in the scope of consolidation following the acquisition of 100% of Nuova Carife on 30 June 2017, an entity subsequently incorporated into BPER Banca (parent) on 20 November 2017. In this situation, to allow as direct a comparison as possible of the income statement figures with those of the previous year, the consolidated numbers at 31 December 2018 are shown on a reclassified basis, making estimates according to the previous rules with the best possible degree of approximation.

It should also be noted that as a consequence of the acquisition

of Nuova Carife mentioned above, these figures, based on the same scope of consolidation, are only comparable with those of the second half of 2017, which already included the effects. It should also be noted that the consolidated results at 30 September 2017 included significant non-recurring items, including the "badwill" generated by the acquisition of Nuova Carife, amounting to € 130.7 million, and the writedowns made to the Group's share of the Atlante Fund and to CariCesena's portion of the contribution to the FITD-SV for a total of € 61.5 million.

The consolidated balance sheet at 31 December 2017, on the other hand, has been restated at 1 January 2018 according to the new schedules that reflect the new IFRS 9 classification, making them directly comparable with the balance sheet figures at 31 December 2018. Unless stated otherwise, the figures involved in these changes are specifically defined as pro-forma and/or pro-formatted.

Agenda

BPER GROUP CONSOLIDATED RESULTS

Executive summary

Balance sheet structure

Profit and loss

Liquidity and Capital adequacy

Final remarks

ANNEXES

Executive summary

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Agenda

BPER GROUP CONSOLIDATED RESULTS

Executive summary

Balance sheet structure

Profit and loss

Liquidity and Capital adequacy

Final remarks

ANNEXES

Total funding

Total Indirect Deposits and Bancassurance Direct Funding

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Direct funding

€/mn	1 Jan 18	Sept 18	Dec 18	Chg YTD	% on total
Direct customer deposits	45,082	45,432	45,017	-0.1%	90.0%
o.w. current accounts and sight deposits	35,286	36,879	37,413	+6.0%	74.8%
o.w. bonds subscribed by retail customers	2,355	1,602	1,459	-38.0%	2.9%
o.w. other	7,441	6,951	6,144	-17.4%	12.3%
Institutional direct funding	5,165	5,752	4,980	-3.6%	10.0%
o.w. Institutional bonds	3,037	3,544	2,532	-16.6%	5.1%
Total direct funding	50,246	51,184	49,996	-0.5%	100%

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Indirect funding and Bancassurance

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Customer loans

€/mn	1 Jan 18	Sep 18	Dec 18	Chg YTD (%)
Current accounts	5,013	4,737	4,691	-6.4%
Mortgage loans	27,954	28,004	28,374	+1.5%
Other transactions	13,501	12,907	13,987	+3.6%
Net loans	46,469	45,648	47,051	+1.3%
o.w. performing	42,187	41,843	43,846	+3.9%
o.w. NPEs	4,282	3,805	3,205	-25.2%
Gross loans	52,964	50,792	51,057	-3.6%
o.w. performing	42,433	42,004	44,011	+3.7%
o.w. NPEs	10,531	8,788	7,046	-33.1%

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Non Performing Exposures (1/2)

Bad loans Unlikely to pay Past due Total

	Dec 17	1 Jan 18	Sep 18	Dec 18
Bad loans ("Sofferenze")	59.3%	67.4%	64.5%	66.6%
including write-off	63.7%	70.9%	68.3%	71.4%
Unlikely to pay	27.2%	43.6%	42.2%	35.7%
Past due	10.6%	14.1%	12.8%	12.3%
NPE	48.7%	59.3%	56.7%	54.5%
including write-off	52.6%	62.4%	59.9%	58.8%
Performing exposures	0.5%	0.6%	0.4%	0.4%
Total loans	10.1%	12.3%	10.1%	7.8%

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Non Performing Exposures (2/2)

841 821

-2.4%

1,664 1,563

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2015 2016 2017 2018

Financial assets portfolio

€/mn FVTPL FVOCI AC Total % on total Bonds 541 8,284 7,463 16,288 95.0% o.w. Italian gov 268 1,257 3,710 5,235 30.5% Equity 136 277 413 2.4% Funds and Sicav 361 361 2.1% Other* 91 91 0.5% Total as of 31.12.2018 1,129 8,561 7,463 17,152 100.0% Total as of 30.09.2018 1,414 9,022 6,206 16,642 Total as of 01.01.2018 1,293 13,547 959 15,799

Chg YTD (%) -12.7% -36.8% n.m. +8.6%

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Agenda

BPER GROUP CONSOLIDATED RESULTS

• Executive summary
• Balance sheet structure

Profit and loss

• Liquidity and Capital adequacy
• Final remarks
• ANNEXES

FY18 reclassified Profit & Loss (IFRS9)

Profit and loss

Net Interest Income

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Net Commissions

	Dec 17	Dec 18	Chg y/y (%)
Indirect deposits	191.9	206.3	+7.5%
Assets under custody (AuC)	15.0	16.4	+9.2%
Assets under management (AuM)	176.9	189.9	+7.3%
Bancassurance	41.2	60.6	+47.1%
Credit cards, collections, payments	145.7	150.6	+3.4%
Loans and guarantees	321.5	314.0	-2.3%
Other commissions	40.3	44.8	+11.0%
Total	740.6	776.3	+4.8%

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Dividends and Trading income

	Dec 17	Dec 18	Chg y/y (%)
Dividends	12.4	34.3	+176.6%
Trading income	103.1	104.0	+0.9%
Realized gain/loss	63.4	116.6	+84.0%
Plus	43.7	38.2	-12.6%
Minus	-8.5	-59.0	+593.0%
Others	4.6	8.2	+79.8%
Total	115.6	138.3	+19.7%

Profit and loss

Costs affected by net impairment adjustments on tangible assets and non-recurring other administrative expenses related to a large number of special projects realized in 2018

Operating costs breakdown ( $\epsilon$ /mn; %)

press releases

Operating costs

BPER:

Gruppo

Operating costs breakdown (€/mn; %)

Cost of credit

Agenda

BPER GROUP CONSOLIDATED RESULTS

Executive summary

Balance sheet structure

Profit and loss

Liquidity and Capital adequacy

Final remarks

ANNEXES

Liquidity

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Capital

Agenda

BPER GROUP CONSOLIDATED RESULTS

Executive summary

Balance sheet structure

Profit and loss

Liquidity and Capital adequacy

Final remarks

ANNEXES

Final remarks

• 1. Sound capital position with a CET1 ratio Fully Phased at 11.9% broadly stable vs Sept.'18
• 1. CET1 ratio Phased In at 14.3% well above minimum capital requirement by ECB
• 1. Leverage Fully Phased at 5.0% one of the lowest of the domestic banking system (6.0 Phased In)
• 1. LCR and NSFR well above 100% and unencumbered eligible assets of 6.6 €/bn out of 18.7 €/bn of eligible assets
• 1. Gross NPE ratio at 13.8% from 19.9% as of 1 Jan.'18 down by 6.1 p.p. since 1° Jan.'18
• 1. Gross NPE strong decrease of 3.5 €/bn in 2018 (-33.1%) also thanks to bad loans securitizations "4Mori Sardegna" and "AQUI" for a total amount of about 3.0 €/bn
• 1. Texas ratio strong improvement at 85% down by 16.5 p.p. since 1 Jan.'18
• 1. Net profit at 402.0 €/mn, the highest result in the history of the Group
• 1. Relevant performance of net commissions (+4.8% y/y) with a particular focus on AuM and Bancassurance business
• 1. Significant reduction of the ordinary cost of risk (47 bps annualized vs 112 bps in 2017)
• 1. Good performance of trading income (+104.0 €/mn) also thanks to realized gains on bonds in 1Q18

Agenda

BPER GROUP CONSOLIDATED RESULTS

Executive summary

Balance sheet structure

Profit and loss

Liquidity and Capital adequacy

Final remarks

ANNEXES

Customer loans

Business sector	Dec 18	% on Total	Δ % vs Dec 17
Manufacturing	7,486	14.2%	+0.5%
Wholesale and retail services, recoveries and repairs	4,550	8.6%	-12.6%
Constructions	2,501	4.7%	-30.8%
Real Estate	3,002	5.7%	-12.3%
HORECA*	1,242	2.4%	-19.5%
Agriculture, forestry and fishing	743	1.4%	-51.3%
Other	5,179	9.8%	-18.6%
Total loans to non-financial businesses	24,703	46.8%	-15.2%
Households	16,668	31.6%	+28.9%
Total loans to financial businesses	11,377	21.6%	+104.7%
Total Customers Loans	52,748	100.0%	+10.8%

Asset quality

Gross exposures (€/mn)	Dec 17		1 Jan 18 FTA Mar 18			Jun 18		Sept 18		Dec 18		Chg Y/Y		Chg 1 Jan 18
		%		%		%		%		%		%	Abs.	Chg (%)	Abs.	Chg (%)
Non Performing Exposures NPEs	10,532	19.8%	10,531	19.9%	9,868	19.3%	8,867	17.4%	8,788	17.3%	7,046	13.8%	-3,486	-33.1%	-3,485	-33.1%
Bad loans	7,109	13.4%	7,109	13.4%	6,584	12.9%	5,906	11.6%	5,834	11.5%	4,338	8.5%	-2,771	-39.0%	-2,771	-39.0%
Unlikely to pay loans	3,318	6.2%	3,318	6.3%	3,190	6.2%	2,847	5.6%	2,867	5.6%	2,638	5.2%	-680	-20.5%	-680	-20.5%
Past due loans	105	0.2%	104	0.2%	94	0.2%	114	0.2%	87	0.2%	70	0.1%	-35	-33.8%	-34	-33.8%
Gross performing loans	42,638	80.2%	42,433	80.1%	41,383	80.8%	42,145	82.6%	42,004	82.7%	44,011	86.2%	1,373	+3.2%	1,578	+3.7%
Total gross exposures	53,170	100%	52,964	100%	51,251	100.00%	51,012	100.00%	50,792	100.00%	51,057	100%	-2,113	-4.0%	-1,907	-3.6%

Adjustments to loans (€/mn)	Dec 17		1 Jan 18 FTA Mar 18		Jun 18		Sept 18		Dec 18		Chg Y/Y		Chg 1 Jan 18
	coverage (%)					coverage (%)	coverage (%)			coverage (%)		coverage (%)				coverage (%)	Abs.	Chg (%)	Abs.	Chg (%)
Adjustments to NPEs	5,129	48.7%	6,250	59.3%	5,661	57.4%	5,041	56.8%	4,983	56.7%	3,841	54.5%	-1,288	-25.1%	-2,408	-38.5%
Bad loans	4,216	59.3%	4,789	67.4%	4,377	66.5%	3,832	64.9%	3,762	64.5%	2,890	66.6%	-1,326	-31.5%	-1,899	-39.7%
Unlikely to pay loans	902	27.2%	1,445	43.5%	1,272	39.9%	1,194	41.9%	1,209	42.2%	942	35.7%	40	+4.5%	-503	-34.7%
Past due loans	11	10.6%	16	14.1%	12	13.3%	15	12.7%	12	12.8%	9	12.3%	-2	-23.0%	-7	-42.0%
Adjustments to performing loans	226	0.5%	246	0.6%	186	0.5%	169	0.4%	161	0.4%	165	0.4%	-61	-26.9%	-81	-33.0%
Total adjustments	5,355	10.1%	6,495	12.3%	5,847	11.4%	5,210	10.2%	5,144	10.1%	4,006	7.8%	-1,349	-25.2%	-2,489	-38.3%

Net exposures (€/mn)	Dec 17		1 Jan 18 FTA		Mar 18		Jun 18		Sept 18		Dec 18		Chg Y/Y		Chg 1 Jan 18
		%		%		%		%		%		%	Abs.	Chg (%)	Abs.	Chg (%)
Non Performing Exposures NPEs	5,403	11.3%	4,282	9.2%	4,207	9.3%	3,826	8.4%	3,805	8.3%	3,205	6.8%	-2,198	-40.7%	-1,077	-25.2%
Bad loans	2,893	6.1%	2,320	5.0%	2,207	4.9%	2,074	4.5%	2,072	4.5%	1,448	3.1%	-1,445	-49.9%	-872	-37.6%
Unlikely to pay loans	2,416	5.1%	1,873	4.0%	1,918	4.2%	1,653	3.6%	1,658	3.6%	1,696	3.6%	-720	-29.8%	-177	-9.5%
Past due loans	94	0.2%	89	0.2%	82	0.2%	99	0.2%	75	0.2%	61	0.1%	-33	-35.1%	-28	-32.5%
Net performing loans	42,412	88.7%	42,187	90.8%	41,197	90.7%	41,976	91.7%	41,843	91.7%	43,846	93.2%	1,434	+3.4%	1,659	+3.9%
Total Net exposures	47,815	100%	46,469	100.0%	45,404	100%	45,802	100%	45,648	100.00%	47,051	100%	-764	-1.6%	582	+1.3%

Financial Assets details

Bonds maturities and issues details

	Dec 17	Set 18	Dec 18
Wholesale bonds	3.0	3.5	2.5
o/w covered bonds	2.5	3.0	2.0
o/w subordinated bonds	0.5	0.5	0.5
Retail bonds	2.4	1.6	1.5
o/w subordinated bonds	0.4	0.3	0.3
Total bonds	5.4	5.1	4.0

Reclassified financial statement as at 31.12.18

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Reclassified consolidated balance sheet

					(in thousands of Euro)
Assets	31.12.2018	01.01.2018	31.12.2017	Change 31.12.2018- 01.01.2018	Change %
Cash and cash equivalents	459,782	420,299	420,299	39,483	9.39
Financial assets	17,152,084	15,799,267	15,661,977	1,352,817	8.56
a) Financial assets held for trading	247,219	414,294	414,294	(167,075)	$-40.33$
b) Financial assets designated at fair value	218,662	223,192	223,192	(4,530)	$-2.03$
c) Other financial assets mandatorily measured at fair value through profit or loss	662,744	655,596	689,115	7,148	1.09
d) Financial assets measured at fair value through other comprehensive income	8,560,568	13,547,372	13,395,435	(4,986,804)	$-36.81$
e) Debt securities measured at amortised cost	7,462,891	958,813	939,941	6,504,078	678.35
- banks	1,766,169	196,713	193,334	1,569,456	797.84
- customers	5,696,722	762,100	746,607	4,934,622	647.50
Loans	48,594,875	49,472,225	50,624,967	(877, 350)	$-1.77$
a) loans to banks	1,540,509	3,000,199	3,012,515	(1,459,690)	$-48.65$
b) loans to customers	47,050,942	46,468,704	47,609,130	582,238	1.25
c) Financial assets measured at fair value through other comprehensive income	3,424	3,322	3,322	102	3.07
Hedging derivatives	35,564	54,061	54,061	(18, 497)	$-34.22$
Equity investments	446,049	454,367	454,367	(8,318)	$-1.83$
Property, plant and equipment	1,063,273	1,063,483	1,063,483	(210)	$-0.02$
Intangible assets	445,689	506,627	506,627	(60, 938)	$-12.03$
- of which: goodwill	264,740	327,084	327,084	(62,344)	$-19.06$
Other assets	2,437,451	2,550,510	2,553,026	(113,059)	$-4.43$
Total assets	70,634,767	70,320,839	71,338,807	313,928	0.45

Reclassified consolidated balance sheet

					(in thousands of Euro)
Liabilities and shareholders' equity	31.12.2018	[01.01.2018]	31.12.2017	Change 31.12.2018- 01.01.2018	Change %
Due to banks	13,126,248	12,984,226	12,984,226	142,022	1.09
Direct deposits	49,996,419	50,246,932	50,246,417	(250, 513)	$-0.50$
a) Due to customers	44,594,863	42,694,078	42,694,078	1,900,785	4.45
b) Debt securities issued	5,401,556	7,552,854	7,552,339	(2,151,298)	$-28.48$
Financial liabilities held for trading	143,824	170,046	170,046	(26, 222)	$-15.42$
Hedging derivatives	92,374	23,795	23,795	68,579	288.21
Other liabilities	2,379,334	2,262,970	2,197,592	116,364	5.14
Minority interests	507,457	451,825	653,010	55,632	12.31
Shareholders' equity pertaining the Parent Company	4,389,111	4,181,045	5,063,721	208,066	4.98
a) Valuation reserves	949	204,422	75,089	(203, 473)	$-99.54$
b) Reserves	1,619,469	1,433,445	2,445,454	186,024	12.98
c) Share premium reserve	930,073	930,073	930,073
d) Share capital	1,443,925	1,443,925	1,443,925
e) Treasury shares	(7,258)	(7,258)	(7,258)
f) Profit (Loss) for the period pertaining to the Parent Company	401,953	176,438	176,438	225,515	127.82
Total liabilities and shareholder's equity	70,634,767	70,320,839	71,338,807	313,928	0.45

Reclassified consolidated income statement

					(in thousands of Euro)
Item		31.12.2018	31.12.2017	Change	Change %
$10+20$	Net interest income	1,122,437	1,124,479	(2,042)	$-0.18$
$40+50$	Net commission income	776,265	740,628	35,637	4.81
70	Dividends	34,339	12,416	21,923	176.57
80+90+100+110	Net trading income	104,022	103,134	888	0.86
$230(*)$	Other operating charges/income	44,209	58,190	(13,981)	$-24.03$
	Operating income	2,081,272	2,038,847	42,425	2.08
190 a)	Payroll	(821, 494)	(783, 478)	(38,016)	4.85
190 b) () (*)	Other administrative expenses	(442, 431)	(425, 611)	(16, 820)	3.95
210+220	Net adjustments to property, plant, equipment and intangible assets	(118, 939)	(87, 429)	(31,510)	36.04
	Operating costs	(1,382,864)	(1,296,518)	(86,346)	6.66
	Net operating income	698,408	742,329	(43,921)	$-5.92$
130a	Net impairment adjustments to financial assets at amortised cost	(225,772)	(535, 975)	310,203	$-57.88$
130 b)	Net impairment adjustments to financial assets at fair value	2,066	(104, 628)	106,694	$-101.97$
140	Profit/loss from contract modifications without derecognition	(2,956)		(2,956)	n.s.
	Net impairment adjustments to credit risk	(226, 662)	(640, 603)	413,941	$-64.62$
200	Net provisions for risks and charges	(25, 194)	(45, 891)	20,697	$-45.10$
###	Contributions to SRF, DGS, IDGF - VS	(52, 325)	(37,721)	(14, 604)	38.72
250+270+280	Gains (Losses) on disposal of investments and impairment losses on goodwill	(48,701)	(9,886)	(38, 815)	392.63
###	Gain on a bargain purchase		190,892	(190, 892)	$-100.00$
290	Profit from current operations before tax	345,526	199,120	146,406	73.53
300	Income taxes on current operations	100,264	(22, 238)	122,502	$-550.87$
330	Profit (Loss) for the period	445,790	176,882	268,908	152.03
340	Profit (Loss) for the period pertaining to minority interests	(43,837)	(444)	(43,393)
350	Profit (Loss) for the period pertaining to the Parent Company	401,953	176,438	225,515	127.82
	Captions net of:
$(\star)$	Recovery of indirect taxes	126,014	126,175	(161)	$-0.13$
$(**)$	Contributions to SRF, DGS, IDGF - VS	(52, 325)	(37,721)	(14, 604)	38.72

Reclassified consolidated income statement by quarter

Captions		1Q18	2Q18	3Q18	4Q18	1Q17	2Q17	3Q17	4Q17
$10+20$	Net interest income	293,234	280,268	276,590	272,345	288,114	282,005	280,218	274,142
$40 + 50$	Net commission income	198,120	190,936	188,025	199,184	177,373	181,851	184,802	196,602
70	Dividends	584	12,877	325	20,553	312	10,812	507	785
	80+90+100+110 Net trading income	153,634	16,431	20,879	(86, 922)	24,664	25,869	20,489	32,112
$230(*)$	Other operating charges/income	11,485	8,174	10,998	13,552	10,310	14,298	23,565	10,017
	Operating income	657,057	508,686	496,817	418,712	500,773	514,835	509,581	513,658
190 a)	Payroll	(207, 534)	(212,900)	(194, 553)	(206, 507)	(194, 125)	(191, 551)	(191, 656)	(206, 146)
190 b) () (*)	Other administrative costs	(102, 285)	(109, 981)	(104, 323)	(125, 842)	(96, 628)	(104, 864)	(107, 465)	(116, 654)
	Net adjustments to property, plant and equipment and
210+220	intangible assets	(21, 339)	(34,986)	(22, 933)	(39,681)	(18, 685)	(22,012)	(20, 653)	(26,079)
	Operating costs	(331, 158)	(357, 867)	(321, 809)	(372,030)	(309, 438)	(318, 427)	(319,774)	(348,879)
	Net operating income	325,899	150,819	175,008	46,682	191,335	196,408	189,807	164,779
130a	Net impairment adjustments to financial assets at
	amortised cost	(26, 141)	(58, 793)	(70, 272)	(70, 566)	(133, 573)	(189, 659)	(89,722)	(123, 021)
130 b	Net impairment adjustments to financial assets at fair
	value	1,763	141	150	12	(17, 381)	(54, 236)	(29,383)	(3,628)
140	Profit/loss from contract modifications without
	derecognition	$\sim$	(1, 183)	(1,536)	(237)
	Net impairment adjustments to credit risk	(24,378)	(59, 835)	(71, 658)	(70, 791)	(150, 954)	(243, 895)	(119, 105)	(126, 649)
200	Net provisions for risks and charges	(11,663)	(25, 376)	(12,091)	23,936	(1,014)	(4,154)	(2,822)	(37,901)
###	Contributions to SRF, DGS, IDGF - VS	(20, 282)	(8,670)	(23, 448)	75	(18,061)	2,114	(20, 205)	(1, 569)
250+270+280	Gains (Losses) on disposal of investments and
###	impairment losses on goodwill	2,827	2,591	3,535	(57, 654)	3,705	2,843	4,885	(21, 319)
	Gain on a bargain purchase			$\sim$	$\overline{\phantom{a}}$		130,722		60,170
290	Profit from current operations before tax	272,403	59,529	71,346	(57, 752)	25,011	84,038	52,560	37,511
300	Income taxes on current operations	(6, 918)	(2,850)	(14, 206)	124,238	(7,743)	17,926	(23, 696)	(8,725)
330	Profit (Loss) for the period	265,485	56,679	57,140	66,486	17,268	101,964	28,864	28,786
340	Profit (loss) for the period pertaining to minority interests
	Profit (Loss) for the period pertaining to	(14, 462)	183	(6,899)	(22, 659)	(2,710)	2,540	1,032	(1,306)
	the Parent Company		56,862		43,827	14,558	104,504	29,896	27,480
350		251,023		50,241
	Captions net of:
$(\star)$	Recovery of indirect taxes	31,823	31,629	31,522	31,040	29,981	31,001	31,382	33,811
$(**)$	Contributions to SRF, DGS, IDGF - VS	(20, 282)	(8,670)	(23, 448)	75	(18,061)	2,114	(20, 205)	(1,569)

Reclassified consolidated income statement pro-forma

							(in thousands of Euro)
Captions		31.12.2018	Pro-forma reclassifications	31.12.2018 pro- forma	31.12.2017	Change	Change %
$10+20$	Net interest income	1,122,437	(76, 367)	1,046,070	1,124,479	(78, 409)	$-6.97$
$40+50$	Net commission income	776,265		776,265	740,628	35,637	4.81
70	Dividends	34,339		34,339	12,416	21,923	176.57
80+90+100+110	Net trading income	104,022		104,022	103,134	888	0.86
230	Other operating charges/income	44,209		44,209	58,190	(13,981)	$-24.03$
	Operating income	2,081,272	(76, 367)	2,004,905	2,038,847	(33, 942)	$-1.66$
190 a)	Payroll	(821, 494)		(821, 494)	(783, 478)	(38,016)	4.85
190 b)	Other administrative costs	(442, 431)		(442, 431)	(425, 611)	(16, 820)	3.95
210+220	Net adjustments to property, plant and equipment and intangible assets	(118, 939)		(118, 939)	(87, 429)	(31,510)	36.04
	Operating costs	(1,382,864)		(1,382,864)	(1, 296, 518)	(86,346)	6.66
	Net operating income	698,408	(76, 367)	622,041	742,329	(120, 288)	$-16.20$
130 a)
	Net impairment adjustments to financial assets at amortised cost	(225,772)	73,411	(152, 361)	(535, 975)	383,614	$-71.57$
130 b)	Net impairment adjustments to financial assets at fair value	2,066		2,066	(104, 628)	106,694	$-101.97$
###	Net impairment adjustments to other financial assets		16,197	16,197	(15, 313)	31,510	$-205.77$
140)	Profit/loss from contract modifications without derecognition	(2,956)	2,956				n.s.
	Net impairment adjustments to credit risk	(226, 662)	92,564	(134,098)	(655, 916)	521,818	$-79.56$
200	Net provisions for risks and charges	(25, 194)	(16, 197)	(41,391)	(30,578)	(10, 813)	35.36
###	Contributions to SRF, DGS, IDGF - VS	(52, 325)		(52, 325)	(37,721)	(14, 604)	38.72
250+270
$+280$	Gains (Losses) on disposal of investments and impairment losses on goodwill	(48,701)		(48,701)	(9,886)	(38, 815)	392.63
###	Gain on a bargain purchase				190,892	(190, 892)	$-100.00$
290	Profit from current operations before tax	345,526		345,526	199,120	146,406	73.53
300	Income taxes on current operations	100,264		100,264	(22, 238)	122,502	$-550.87$
330	Profit (Loss) for the period	445,790		445,790	176,882	268,908	152.03
340	Profit (Loss) for the period pertaining to minority interests	(43,837)		(43, 837)	(444)	(43,393)
350	Profit (Loss) for the period pertaining to the Parent Company	401,953		401,953	176,438	225,515	127.82

Reclassified consolidated income statement pro-forma

									(in thousands of Euro)
Captions		1st quarter 2018 pro-forma	2nd quarter 2018 pro-formal	3rd quarter 2018 pro-forma	$4$ th 1st quarter 2018 pro-forma	2017	quarter 2nd quarter 3rd quarter 4th quarter 2017	2017	2017
$10+20$	Net interest income	267,597	259,511	259,014	259,948	288,114	282,005	280,218	274,142
$40+50$	Net commission income	198,120	190,936	188,025	199,184	177,373	181,851	184,802	196,602
70	Dividends	584	12,877	325	20,553	312	10,812	507	785
	80+90+100+110 Net trading income	153,634	16,431	20,879	(86, 922)	24,664	25,869	20,489	32,112
230	Other operating charges/income	11,485	8,174	10,998	13,552	10,310	14,298	23,565	10,017
	Operating income	631,420	487,929	479,241	406,315	500,773	514,835	509,581	513,658
190 a)	Payroll	(207, 534)	(212,900)	(194, 553)	(206, 507)	(194, 125)	(191, 551)	(191, 656)	(206, 146)
190 b)	Other administrative costs	(102, 285)	(109, 981)	(104, 323)	(125, 842)	(96, 628)	(104,864)	(107, 465)	(116, 654)
$210+220$	Net adjustments to property, plant and equipment and intangible assets	(21, 339)	(34,986)	(22, 933)	(39, 681)	(18, 685)	(22,012)	(20, 653)	(26,079)
	Operating costs	(331, 158)	(357, 867)	(321, 809)	(372,030)	(309, 438)	(318, 427)	(319,774)	(348, 879)
	Net operating income	300,262	130,062	157,432	34,285	191,335	196,408	189,807	164,779
130a	Net impairment adjustments to financial assets at amortised cost	(504)	(39,219)	(54, 232)	(58, 406)	(133, 573)	(189, 659)	(89,722)	(123, 021)
130 b)	Net impairment adjustments to financial assets at fair value	1,763	141	150	12	(17,381)	(54, 236)	(29,383)	(3,628)
###	Net impairment adjustments to other financial assets	13,964	(2,041)	6,920	(2,646)	4,647	1,787	6,446	(28, 193)
	Net impairment adjustments to credit risk	15,223	(41, 119)	(47, 162)	(61, 040)	(146, 307)	(242,108)	(112, 659)	(154, 842)
200	Net provisions for risks and charges	(25, 627)	(23,335)	(19,011)	26,582	(5,661)	(5,941)	(9,268)	(9,708)
###	Contributions to SRF, DGS, IDGF - VS	(20, 282)	(8,670)	(23, 448)	75	(18,061)	2,114	(20, 205)	(1,569)
250+270 $+280$	Gains (Losses) on disposal of investments and impairment losses on goodwill	2,827	2,591	3,535	(57, 654)	3,705	2,843	4,885	(21, 319)
###	Gain on a bargain purchase						130,722		60,170
290	Profit from current operations before tax	272,403	59,529	71,346	(57, 752)	25,011	84,038	52,560	37,511
300	Income taxes on current operations	(6,918)	(2,850)	(14, 206)	124,238	(7,743)	17,926	(23, 696)	(8,725)
330	Profit (Loss) for the period	265,485	56,679	57,140	66,486	17,268	101,964	28,864	28,786
340	Profit (Loss) for the period pertaining to minority interests	(14, 462)	183	(6,899)	(22, 659)	(2,710)	2,540	1,032	(1,306)
350	Profit (Loss) for the period pertaining to the Parent Company	251,023	56,862	50,241	43,827	14,558	104,504	29,896	27,480

Consolidated balance sheet

			(in thousands of Euro)
Assets	31.12.2018	31.12.2017	Change	Change $(\% )$
10. Cash and cash equivalents	459,782	420,299	39,483	9.39
20. Financial assets measured at fair value through profit or loss	1,128,625	1,326,601	(197, 976)	$-14.92$
a) Financial assets held for trading	247,219	414,294	(167, 075)	$-40.33$
b) Financial assets designated at fair value	218,662	223,192	(4,530)	$-2.03$
c) Other financial assets mandatorily measured at fair value through profit or loss	662,744	689,115	(26, 371)	$-3.83$
30. Financial assets measured at fair value through other comprehensive income	8,563,992	13,398,757	(4,834,765)	$-36.08$
40. Financial assets measured at amortised cost	56,054,342	51,561,586	4,492,756	8.71
a) Loans to banks	3,306,678	3,205,849	100,829	3.15
b) Loans to customers	52,747,664	48,355,737	4,391,927	9.08
50. Hedging derivatives	35,564	54,061	(18, 497)	$-34.22$
70. Equity investments	446,049	454,367	(8,318)	$-1.83$
90. Property, plant and equipment	1,063,273	1,063,483	(210)	$-0.02$
100. Intangible assets	445,689	506,627	(60, 938)	$-12.03$
of which: goodwill	264,740	327,084	(62,344)	$-19.06$
110. Tax assets	1,885,616	1,848,127	37,489	2.03
a) current	457,838	575,441	(117, 603)	$-20.44$
b) deferred	1,427,778	1,272,686	155,092	12.19
120. Non current assets and disposal groups classified as held for sale	2,800		2,800	n.s.
130. Other assets	549,035	704,899	(155, 864)	$-22.11$
Total Assets	70,634,767	71.338,807	(704, 040)	$-0.99$

Consolidated balance sheet

	(in thousands of Euro)
Liabilities and shareholders' equity	31.12.2018	31.12.2017 Change		Change (%)
10. Financial liabilities measured at amortised cost	63,122,667	63,230,643	(107, 976)	$-0.17$
a) Due to banks	13,126,248	12,984,226	142,022	1.09
b) Due to customers	44,594,863	42,694,078	1,900,785	4.45
c) Debt securities issued	5,401,556	7,552,339	(2,150,783)	$-28.48$
20. Financial liabilities held for trading	143,824	170,046	(26, 222)	$-15.42$
40. Hedging derivatives	92,374	23,795	68,579	288.21
60. Tax liabilities	62,644	106,218	(43,574)	$-41.02$
a) current	3,966	2,258	1,708	75.64
b) deferred	58,678	103,960	(45,282)	$-43.56$
80. Other liabilities	1,663,946	1,416,660	247,286	17.46
90. Provision for termination indemnities	182,793	187,536	(4,743)	$-2.53$
100. Provisions for risks and charges	469,951	487,178	(17, 227)	$-3.54$
a) Commitments and guarantees granted	63,059	46,793	16,266	34.76
b) pensions and similar commitments	131,126	137,148	(6,022)	$-4.39$
c) other provisions	275,766	303,237	(27, 471)	$-9.06$
120. Valuation reserves	949	75,089	(74, 140)	$-98.74$
150. Reserves	1,619,469	2,445,454	(825,985)	$-33.78$
160. Share premium reserve	930,073	930,073
170. Share capital	1,443,925	1,443,925
180. Treasury shares (-)	(7,258)	(7,258)
190. Minority interest(+/-)	507,457	653,010	(145, 553)	$-22.29$
200 Net Profit (Loss) for the period $(+/-)$	401,953	176,438	225,515	127.82
Total liabilities and shareholders' equity	70,634,767	71,338,807	(704, 040)	$-0.99$

Consolidated income statement

	Captions	31.12.2018	31.12.2017	Change	Change %
10.	Interest and similar income	1,375,925	1,416,396	(40, 471)	$-2.86$
20.	Interest and similar expense	(253, 488)	(291, 917)	38,429	$-13.16$
30.	Net interest income	1,122,437	1,124,479	(2,042)	$-0.18$
40.	Commission income	812,147	776,606	35,541	4.58
50.	Commission expenses	(35, 882)	(35, 978)	96	$-0.27$
60.	Net commission income	776,265	740,628	35,637	4.81
70.	Dividends and similar income	34,339	12,416	21,923	176.57
80.	Net trading income	1,812	38,015	(36,203)	$-95.23$
90.	Net hedging gains (losses)	1,621	(493)	2,114	$-428.80$
100.	Gains/losses on disposal or repurchase of:	91,925	64,374	27,551	42.80
	a) Financial assets measured at amortised cost	(77, 645)	(12, 431)	(65, 214)	524.61
	b) Financial assets measured at fair value through other comprehensive income	168,662	76,340	92,322	120.94
	c) Financial liabilities	908	465	443	95.27
110.	Net results on financial assets and liabilities measured at fair value through profit or loss	8,664	1,238	7,426	599.84
	a) financial assets and liabilities designated at fair value	(4,378)	1,238	(5,616)	$-453.63$
	b) other financial assets mandatorily measured at fair value	13,042		13,042	n.s.
	120. Net interest and other banking income	2,037,063	1,980,657	56,406	2.85
	130. Net impairment adjustments for credit risk relating to:	(223,706)	(640, 603)	416,897	$-65.08$
	a) Financial assets measured at amortised cost	(225,772)	(535, 975)	310,203	$-57.88$
	b) Financial assets measured at fair value through other comprehensive income	2,066	(104, 628)	106,694	$-101.97$
	140. Profit/loss from contractual modifications without derecognition	(2,956)		(2,956)	n.s.
150.	Net profit from financial activities	1,810,401	1,340,054	470,347	35.10
190.	Administrative costs:	(1,442,264)	(1,372,985)	(69, 279)	5.05
	a) payroll b) other administrative costs	(821, 494) (620,770)	(783, 478) (589,507)	(38,016) (31, 263)	4.85
	200. Net provisions for risks and charges	(7,794)	(45, 891)	38,097	5.30 $-83.02$
	a) Commitments and guarantees granted	16,197	(15, 313)	31,510	$-205.77$
	b) Other provisions	(23,991)	(30,578)	6,587	$-21.54$
	210. Net adjustments to property, plant and equipment	(70, 405)	(46, 124)	(24, 281)	52.64
220.	Net adjustments to intangible assets	(48, 534)	(41,305)	(7, 229)	17.50
230.	Other operating charges/income	152,823	184,365	(31,542)	$-17.11$
240.	Operating costs	(1,416,174)	(1,321,940)	(94, 234)	7.13
250.	Profit (Loss) of equity investments	13,349	18,483	(5, 134)	$-27.78$
270.	Impairment on goodwill	(62, 344)	(28, 357)	(33,987)	119.85
275.	Gain on a bargain purchase		190,892	(190, 892)	$-100.00$
280.	Gains (Losses) on disposal of investments	294	(12)	306
	290. Profit (Loss) from current operations before tax	345,526	199,120	146,406	73-53
300.	Income taxes on current operations	100,264	(22, 238)	122,502	$-550.87$
	310. Profit (Loss) from current operations after tax		176,882	268,908
	330. Net profit (Loss)	445,790	176,882	268,908	152.03
	Net profit (Loss) pertaining to minority interests	445,790			152.03
340.		(43,837)	(444)	(43,393)
	350. Profit (Loss) for the period pertaining to the Parent Company	401,953	176,438	225,515	127.82

Performance ratios

		(in thousands of Euro)
Financial ratios		31.12.2018 01.01.2018	Financial ratios		31.12.2018 01.01.2018
Structural ratios		$(*)$	Own Funds (Phased in)
Net loans to customers/total assets	66.61%	66.08%	Common Equity Tier 1 (CET1)	4,367,711	4,41
Net loans to customers/direct deposits from customers	94.11%	92.48%	Own Funds	5,278,852	5,22
Financial assets/total assets	24.28%	22.47%	Risk-weighted assets (RWA)	30,606,171	32,394
Fixed assets/total assets	2.14%	2.16%	Capital and liquidity ratios
Goodwill/total assets	0.37%	0.47%	Common Equity Tier 1 Ratio (CET1 Ratio) - Phased in	14.27%
Direct deposits/total assets	89.36%	89.92%			13
Deposits under management/indirect deposits	53.32%	55.08%	Tier 1 Ratio (T1 Ratio) - Phased in	14.37%	13
			Total Capital Ratio (TC Ratio) - Phased in	17.25%	16
Financial assets/tangible equity	3.85	3.83(1)	Common Equity Tier 1 Ratio (CET1 Ratio) - Fully Phased	11.95%	11
			Leverage Ratio - Phased in	6.0%
Total tangible assets/tangible equity	15.77	16.92(z)	Leverage Ratio - Fully Phased	5.0%
Net interbank lending/borrowing (in thousands of Euro)	(11,585,739)	(9,984,026)	Liquidity Coverage Ratio (LCR)	154.3%	$\mathbf{1}^{\circ}$
Number of employees	11,615	11,653(3)	Net Stable Funding Ratio (NSFR)	n.a.	1C
Number of national bank branches	1,218	1,218
Profitability ratios			Non-financial ratios		31.12.2018 01.01.2018
ROE	9.06%	$3.62\%$ (4)
ROTE	10.15%	$4.04\%$ (5)	Productivity ratios (in thousands of Euro)
ROA (net profit/total assets)	0.63%	0.25%	Direct deposits per employee	4,304.47	4 1
Cost to income ratio	66.44%	63.59%(6)	Loans to customers per employee	4,050.88	3,9
Net adjustments to loans/net loans to customers	0.47%	1.12%	Assets managed per employee	1,664.31	1,6
Basic EPS	0.836	0.367	Assets administered per employee	1,457.29	1,3
Diluted EPS	0.836	0.367	Core revenues per employee	163.47	16
Risk ratios			Net interest and other banking income per employee	175.38	16
Net non-performing exposures/net loans to customers	6.81%	9.21%	Operating costs per employee	121.93
Net bad loans/net loans to customers	3.08%	4.99%
Net unlikely to pay loans/net loans to customers	3.60%	4.03%
Net past due loans/net loans to customers	0.13%	0.19%
Adjustments to non-performing exposures/gross NPEs	54.52%	59.34%
Adjustments to bad loans/gross bad loans	66.62%	67.37%
Adjustments to unlikely to pay loans/gross unlikely to pay loans	35.73%	43.55%
Adjustments to past due loans/gross past due loans	12.33%	14.09%
Adjustments to performing exposures/gross perform. exposures	0.37%	0.58%
Texas ratio	84.97%	$101.50\%$ (7)

Performance ratios notes

(1) Tangible equity = total shareholders' equity net of intangible assets.

• (2) Total tangible assets = total assets net of intangible assets.
• (3) The number of employees does not include the expectations.
• (4) ROE is calculated on an annual basis.
• (5) ROTE is calculated on an annual basis.

(6) The cost/income ratio has been calculated on the basis of the layout of the reclassified income statement (operating expenses/operating income); when calculated on the basis of the layouts provided by Circular no. 262 of the Bank of Italy the cost/income ratio is at 69.52% (65.97% at 31 December 2017 as per the Consolidated Financial Statements as at 31 December 2017).

(7) The texas ratio is calculated as the relationship between total gross non-performing loans and net tangible equity, including minority interests, increased by total provisions for nonperforming loans.

(8) The ratio is calculated according to the provisions of Regulation (EU) 575/2013 (CRR), as amended by the Commission Delegated Regulation (EU) 2395/2017.

(9) The ratio is calculated according to the provisions of Regulation (EU) 575/2013 (CRR), as amended by the Commission Delegated Regulation (EU) 62/2015.

(10) See previous note. (11) The NSFR, not yet available, is in any case estimated to exceed 100% (106.7% as at 30 September 2018)

$(12)$ Core revenues = net interest income + net commission income.

(*) The comparative figures have been appropriately recalculated at 1 January 2018 to take account of the impact of first-time application of IFRS 9, with the exception of those relating to profitability ratios for which reference is made to the figures at 31 December 2017 as per the Consolidated Financial Statements as at 31 December 2017.

(**) The comparative figures have been appropriately recalculated at 1 January 2018 to take account of the impact of first-time application of IFRS 9, with the exception of those relating to the Leverage Ratio (Phased In and Fully Phased), the LCR and the NSFR and to the productivity ratios calculated on economic data for which reference is made to the figures at 31 December 2017 as per the Consolidated Financial Statements at 31 December 2017.

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

giulia.bruni@bper.it

Nicola Sponghi Investor Relations

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

+39 059 2022219

Notes

Grunno