Mediobanca — Earnings Release 2021

Oct 27, 2021

Informazione Regolamentata n. 0187-91-2021		Data/Ora Ricezione 27 Ottobre 2021 12:04:37	Euronext Milan
Societa'	:	MEDIOBANCA
Identificativo Informazione Regolamentata	:	153374
Nome utilizzatore	:	MEDIOBANCAN12 - Pigozzi
Tipologia	:	1.2
Data/Ora Ricezione	:	27 Ottobre 2021 12:04:37
Data/Ora Inizio Diffusione presunta	:	27 Ottobre 2021 12:04:38
Oggetto	:	months ended 30/9/21 approved	MEDIOBANCA BOARD OF DIRECTORS' MEETING - Financial statements for three
Testo del comunicato

Vedi allegato.

MEDIOBANCA BOARD OF DIRECTORS' MEETING

Financial statements for three months ended 30/9/21 approved

Milan, 27 October 2021

Outstanding start to FY 2021-22 with healthy, sustainable growth across all divisions

Quarterly revenues up 13%¹ to €706m with net interest income growing (€358m, up 4% QoQ, stable YoY) and record fees of €203m (up 17% QoQ, up 7% YoY)

Strong growth in WM, with TFAs over €75bn (up 5% QoQ, up 17% YoY) Robust client activity in CIB Consumer Banking bouncing back quickly

Cost of risk declining further to 51 bps, on strong growth in assets, with overlays set aside during the pandemic still fully intact

Net profit up 31%¹ to €262m

ROTE 11%, with CET1 of 16.1%²

MB Group ESG profile and commitment continuing to improve

The Mediobanca Group has delivered an outstanding commercial performance and record results in the first three months of FY 2021-22, despite the seasonal effects related to the summer months, on the back of the increasing effectiveness of its business model as a specialized bank. The results, which are ahead of expectations, reflect:

• Higher business volumes: TFAs are now over €75bn (up 17% YoY and up 5% QoQ³ ), driven by organic growth (NNM of €1.8bn in the Premier/Private segment) and the consolidation of Bybrook (which contributed €2.1bn). Customer loans rose to €49bn (up 4% YoY and 1% QoQ), with strong growth by all divisions;
• Material growth in revenues (€706m, up 13% YoY, up 6% QoQ), with net interest income growing again and record fees:
• Net interest income totalled €358m (up 4% QoQ, stable YoY), following the rebound in Consumer Banking (up 6% QoQ, stable YoY at €226m) as a result of the improvement in new loans, in terms both of volumes (€1.8bn in 1Q FY 2021-

¹ YoY change: 3M ended 30/9/21 vs 3M ended 30/9/20.

² CET1 phase-in, int ernal calculat ion t hat differs from t he one used in t he COREP Common Report ing exercise due t o t he inclusion of the profit generat ed during t he period (not subject to aut horizat ion under Art icle 26 of t he CRR) and based on t he assumpt ion of a dividend payout of 70%. The impact of ret ained earnings on CET1 rat io is 20 bps.

³ QoQ change: 3M ended 30/9/21 vs 3M ended 30/6/21.

22 vs €1.5bn in 1Q FY 2020-21) and mix (47% personal loans in 1Q FY 2021-22 vs 40% in 1Q FY 2020-21 in Consumer Banking);

• Fees broke through the €200m threshold for the first time (up 7% YoY and up 17% QoQ €203m), on strong growth in WM (up 8% QoQ and up 27% YoY, to €96m), with a solid contribution from CIB (up 23% QoQ – and down 4% YoY – to €85m), despite the lack of jumbo deals recorded last year;
• Trading revenues €50m (up 10% QoQ and up 40% YoY).
• Excellent asset quality in both CIB, with writebacks as a result of repayments and improved ratings, and Consumer Banking, which continues to reflect default rates at their lowest-ever levels, with substantial coverage; moratoria outstanding have reduced to just 1% of the Group's total loans. The cost of risk reduced further, to 51 bps (versus 61 bpsin 1Q FY 2020-21, and 56 bpsin 4Q FY 2020-21), with overlays intact at approx. €300m; NPLs also decreased further (to 3.1% of total loans gross, and 1.1% net), as did loans classified as Stage 2 (to 7.2% of total loans gross, and 6.7% net). Coverage ratios are improving (67% for NPLs and 1.4% for performing loans (the latter rising further to 3.7% in Consumer Banking);
• Strong growth in net profit to €262m (up 31% YoY and up 29% QoQ);
• Increasing profitability: adjusted ROTE⁴ 11% (vs 10% at end-September 2020);
• High capitalization levels consolidated: CET1 ratio² 16.1% (down 20 bps QoQ), including a dividend payout of 70% of reported net profit, and -10 bps reflecting the closing of the Bybrook acquisition.

Significant progress made by all divisions: WM boosted by increased scale, Consumer Banking has bounced back quickly to pre-Covid activity levels, CIB contribution remains high, and PI contributing significantly once again.

• WM: ROAC⁵ 27%, net profit rising to €32m (up 24% QoQ and up 48% YoY), with revenues totalling €172m (up 5% QoQ and up 18% YoY) and net fees of €96m (up 8% QoQ and up 27% YoY). Revenue generating capability confirmed as high, in the Premier and Private segment in particular (NNM of €1.8bn in 3M), not least due to ongoing strengthening of the product offering (TFAs rising to €75bn, including the Bybrook acquisition which has contributed €2.1bn of AUM), and the distribution network (with 20 professionals added in 3M, making a total of 1,103 bankers, FAs and relationship managers).
• Consumer Banking: ROAC⁵ 34%, with net profit climbing to €90m (up 43% QoQ and up 26% YoY), driven by the recovery in new loans (back to near pre-Covid levels, with an improved mix compared to previous quarters) and the especially positive performance in terms of asset quality (cost of risk 160 bps, vs 183 bps in the previous quarter): risk indicators are at all-time lows, the moratoria have

⁴ ROTE calculat ed using net profit adjust ed for w rit edow ns/impairment t o equit y invest ment s and securit ies and ot her non-recurring income or expenses.

⁵ ROAC: calculat ed using adjust ed net profit (cf, foot not e 4)/average capit al allocat ed; allocat ed capit al = 9% RW As (for t he PI division: 9% RW As + capit al deduct ed from CET1).

virtually all been paid off, NPLs now represent just 1.6% of total loans net, while the coverage ratio has risen to 78% for the NPLs and to 3.7% for performing loans.

• CIB: ROAC⁵ 15%, net profit €69m (up 29% QoQ and down 19% YoY), revenues €185m, even stronger than high results delivered in 1Q FY 2020-21 (€183m), with robust commission income and trading rebound. In the three months all client businesses made material contributions to revenues, in particular Advisory and Lending/DCM. The year-on-year reduction in net profit was due to the lower writebacks compared to last year, which was boosted by the writeback for the Burgo exposure in particular. The quality of the loan book remains high.
• PI: ROAC⁵ 15%, net profit €97m (down 12% QoQ and up 87% YoY), with no significant non-recurring items.
• HF: treasury management generated an increase in funding and liquidity levels, while central Group cost control continued, as has deleveraging in leasing. The cost of funding (60 bps⁶ ) is stable QoQ, and down approx. 5 bps on the average figure for FY 2020-21, thanks to an improved mix with a growing deposits component (which continue to grow cheaper), and increased recourse to the T-LTRO (a further €1bn was used in 3M, for a total of €8.5bn). NSFR 116%; LCR 152%.

MB Group ESG profile and commitment continuing to improve. Mediobanca has been included in the first MIB ESG Index launched by Euronext and Borsa Italiana for Italian blue chip companies that demonstrate ESG best practices. MSCI has also upgraded Mediobanca's ESG rating from BB to A, in part due to the Bank's recent adherence to the Principles for Responsible Banking (PRB). The Group continues with its commitment to Environmental (E) and Social (S) issues; as for Governance (G), ESG objectives have been included in senior management's STI scorecards under the new remuneration policies.

With Renato PAGLIARO in the Chair, the Directors of Mediobanca approved the individual and consolidated financial statements for the three months ended 30 September 2021, as illustrated by Chief Executive Officer Alberto NAGEL.

*************

Consolidated results

The Group's impressive growth has continued in the first three months of the new financial year, helped by its increasingly effective business model specializing in higher value added services in the most dynamic segments coupled with strong risk governance.

Net profit for the three months totalled €261.9m, up strongly on last year (up 30.9%) and last quarter (up 28.6%), with all divisions contributing positively to the top line: Consumer Banking returned to growth, in terms of both volumes and profitability, with levels back near to full capacity. Wealth Management again showed that its growth path is healthy and

⁶ Cost of funding vs EU R 3M , reclassified t o reflect t he int roduct ion of t he durat ion model for W M funding.

sustainable, driven by organic growth and acquisitions; while Corporate and Investment Banking (CIB) outperformed last year's results in terms of revenues despite the unfavourable comparison base (last year's top line was boosted by one-off items). The contribution of Assicurazioni Generali confirmed the previous quarter's impressive results, and was double the result posted last year. Loan book quality indicators remain near their best-ever levels (gross NPLs 3.1% of total loans, stage 2 net 6.7%, and moratoria outstanding just under 1%), while loan loss provisions and cost of risk (CoR) (51 bps) both declined, with overlays intact (at above €300m). ROTE climbed to 11%, on a solid capital base (CET1 ratio 16.1%, phase-in).

The first quarter of the new financial year has seen robust commercial activity in all segments, in Consumer Banking especially, which posted new loans of €1.8bn, indirect personal loans in particular, which is the highest value added segment. The other areas also saw the previous quarters' good performance continue, in particular retail mortgages (€0.4bn) and large corporate loans (€2.6bn). The positive trend in TFAs in Wealth Management also continued, rising to €75.2bn in the three months, on Net New Money of €1.8bn in the Premier/Private segment, as well as inclusion of the assets managed by Bybrook in the scope of consolidation (AUM of €2.1bn).

These strong commercial performances are reflected in the growth in revenues (up 12.8% on last year, from €626m to €706.4m, and up 6.3% in 3M); the various income items performed as follows:

• Net interest income was up 4.3% QoQ, near last year's levels (€358.4m), driven by Consumer Banking (€226.2m, up 5.5% in 3M; stable YoY), helped by the recovery in terms of both volumes and profitability. The result was boosted by the amendment made to Article 125-sexies of the Italian Banking Act (adding approx. €3m for the quarter), which requires that upfront costs must only be refunded in cases where loans are repaid early for contracts executed after 25 July 2021. ⁷ The slight reduction in NII from Corporate and Investment Banking (down 5%, from €71.8m to €68.2m) is entirely attributable to the oneoff gain booked last year (approx. €3m, in connection with the Burgo refinancing), and was more than offset by the growth reported in Wealth Management (up 8.5%, from €67.9m to €73.7m, up 2.2% in 3M); while net interest expense incurred by the Holding Functions was largely unchanged at €13.6m;
• Net fee income recorded impressive growth, up 7.2% YoY and up 16.8% QoQ, breaking through the €200m threshold for the first time (€202.7m, increasing to almost 30% of total income); Wealth Management in particular saw a 27% increase in fee income year-onyear (from €75.5m to €95.9m; up 7.8% QoQ), with the contribution from upfront fees almost doubling (from €9m to €16.2m), roughly half of which in relation to part of the Blackrock Co-investment initiative being booked; the reduction in fees earned from Corporate and Investment Banking was minor (down from €87.8m to €84.6m), as the absence of last year's big tickets was offset by the higher number of advisory deals, including in the Mid Cap segment, and strong Lending and DCM activity;

⁷ Compass Banca had been inst ruct ed by t he Court of M ilan, w hich had upheld t he complaint made by a consumers' associat ion, t o ext end t he effect of t he so-called Lexitor ruling (i.e. repayment of upfront as w ell as recurring cost s) to all repayment s made by client s prior t o t he date on w hich t he Bank of I t aly sent it s let t er t o t he market informing part icipant s of t he Lexit or ruling (5 December 2019), and ordered t o inform client s of t heir right s. Subsequent ly, in July 2021, an amendment w as made t o Art icle 125-sexies of t he I t alian Banking Act , w hich, unlike t he Bank of I t aly's communicat ion of December 2019, allow ed Compass Banca t o limit t he refund of upfront cost s refundable in cases of early repayment t o cont ract s execut ed subsequent t o 25 July 2021. This change t o t he regulat ions impact ed posit ively on t he result s for t he t hree mont hs, adding some €3m in income from early repayment s as in t he past . Compass has decided t o ret ain t he provision set aside last year on prudent ial grounds in order t o cover t he relat ed cont ingent liabilit y, w hich at 30 Sept ember 2021 amount ed t o approximat ely €12m.

• Net treasury income for the three months totalled €50m, representing a strong, 39.7% increase on last year due to the recovery in client activities (up 22%, from €18.8m to €22.9m, in the equity segment in particular) and the growing contribution from the proprietary portfolio, of €18.6m (30/9/20: €11m), split between the trading book, adding €8.7m (€4.1m), and management of the banking book, which added €9.9m (including gains on securities of €8.7m);
• The contribution from Assicurazioni Generali (€95.1m) returned to more normal levels (vs €103.2m in 4Q FY 2020-21), and is more than twice the figure recorded this time last year (€45m), when the result was penalized by non-recurring items.

Operating costs rose by 5.1%, from €288m to €302.6m: the growth in labour costs was more contained, at just 2.9% (from €152m to €156.4m), and chiefly regards the strengthening in Wealth Management (38 new professionals recruited in 12M, 18 of whom as a result of the Bybrook business being acquired, which added labour costs of less than €1m in the first month of its consolidation); the increase in administrative expenses was more pronounced, at 7.5% (up from €136m to €146.2m), reflecting a return to normality in marketing and communication activity, in Consumer Banking in particular, an acceleration in project initiatives, and higher IT costs, albeit down 9% on last year's 4Q.

Net loan loss provisions were low, at €62.4m (CoR: 51 bps), and down sharply on both last year (€71.8m, 61 bps) and last quarter (€67.4m, 56 bps). The lower writebacks on single names in CIB (the first provisions set aside for the Burgo position was released back to earnings at end-September 2020, in an amount of €26m), plus the prudent policy implemented in order to increase the provisioning levels (NPLs covered as to 67.2%; performing loans covered as to 1.37%), were offset by the all-time low levels recorded by the risk indicators, including the performance in terms of moratoria (approx. €122m of positions in leasing resumed regular repayments in the period under review). In particular, loan loss provisions in Consumer Banking reduced from €80.6m to €52.1m (CoR down from 248 bps to 160 bps, vs €58.7m and CoR of 183 bps in 4Q last year), with entries to default status remaining minimal and helping drive further improvement in the coverage levels (NPLs: 78.4%; performing loans: 3.7%).

Net provisions for financial assets (€4.8m) are attributable to the investments in seed capital and private equity funds compulsorily recognized at fair value (down 63.5%, from €15.2m to €5.6m) and to other net adjustments for €0.7m (€1.1m of which in respect of securities held in the banking book).

* * *

Turning to the balance-sheet data, total assets increased in 3M, from €82.6bn to €85.6bn, with both lending and funding increasing; the main items reflected the following performances for the quarter:

Customer loans continued to grow, up 1% (from €48.4bn to €48.9bn), on positive contributions from Corporate and Investment Banking (€19.5bn, versus €19.3bn), Consumer Banking (€13.1bn, versus €12.9bn), and Private Banking clients (€3.4bn, compared with €3.3bn, due to the increase in CMB Monaco operations); whereas CheBanca! mortgage loans were unchanged (at €11.1bn), and a slight decrease was reported in leasing (from €1.8bn to €1.7bn);

• Gross NPLs⁸ decreased by 1.5%, from €1,597.1m to €1,573.6m, and now represent just 3.1% of total loans (30/6/21: 3.2%), near their lowest-ever level. The reduction was chiefly due to Consumer Banking, helped by the widespread improvement in the risk profile and despite the lack of sales during the three months. The reduction in net NPLs was more marked still, down 8%, from €560.2m to €515.7m, and now account for just 1.1% of total loans (1.2%), due to the increased coverage (from 64.9% to 67.2%) linked to the prudent provisioning policy adopted. Net bad debts also declined, from €72m to €67.4m, and account for 0.1% (0.2%) of total loans, with a coverage ratio rising to 87.2% (versus 85.9% at end-June 2021);
• Moratoria outstanding amount to approx. €468.4m (0.9% of total loans, gross), and now represent approx. 20% of the total amount granted during the pandemic (€2.5bn). The remaining stock is concentrated in leasing (approx. 60%) and mortgage lending (approx. 35%), whereas the share in Consumer Banking is entirely residual (€28m). ⁹ Of the moratoria outstanding, 99% have been classified as Stage 2 and 3 and are covered adequately;
• Funding increased from €56.2bn to €57.8bn, on higher deposits in Private Banking (up from €8.3bn to €9bn), which, along with the CheBanca! deposits (which now stand at €17.2bn, up from €16.9bn), represent 45% of total funding. Recourse to the T-LTRO facilities also increased (from €7.5bn to €8.5bn), in order to take further advantage of the favourable conditions. Overall the cost of funding was around 60 bps, ¹⁰ stable for the three months but almost 5 bps lower than the average figure for FY 2020-21;
• Banking book securities totalled €7.3bn, €3.5bnof which in Italian government securities (aligned with the figure reported at 30 June 2021), with a duration of approx. 3 years; the OCI reserve increased to €78m (€73m), €45.5m of which in Italian government securities, following gains of €6m; unrealized gains on the fixed assets totalled €96m;
• Net treasury assets rose from €6.4bn to €7.6bn, and include €3.2bn in deposits held with the ECB, which were up €1.3bn in the three months due to the increased take-up of the T-LTRO facilities (from €7.5bn to €8.5bn);

⁸ This it em does not include NPLs acquired by M BCredit Solut ions, w hich increased from €383.7m t o €442.8m in 3M (net ; gross dat a, €443.2m, vs €384.1m), due t o t he large-scale resumpt ion in act ivit y (loans w ort h a nominal amount of €2,714.3m, w it h an out lay of €82.6m). 9 Det ails on morat oria (gross figures):

Leasing: morat oria grant ed in connect ion w it h leases amount t o just under €670m, and more t han 85% of t hem come under t he provisions of the "Cura I t alia" decree; of t hese, €271.8m are st ill out st anding as at 30 Sept ember 2021 (14.9% of t ot al loans), w hile 98% w ill expire in December 2021. Of t he morat oria t hat have already expired, 92% of client s have resumed making regular repayment s, 1% has asked for a furt her ext ension, w hile t he ot her 7% is past due. The share classified as St age 2 has fallen t o €248.4 (€287m), w hile non-performing it ems are negligible (at €23.4m);

M ort gage lending: morat oria grant ed in connect ion w it h mort gages amount t o €643.3m, of w hich €165.3m are st ill out st anding (1.5% of t ot al loans). follow ing repayment s involving approx. 75% (€478m). Of t he morat oria t hat have already expired, 82.4% of client s have resumed making regular repayment s, 15.6% has asked for a furt her ext ension, w hile t he ot her 2% is past due. The share classified as St age 2 has reduced t o €146.3m (€168.7m), and makes up approx. 90% of t he t ot al, in addit ion t o t hose already classified as non-performing (11%, or €18.8m);

Consumer Banking: t he morat oria programme in Consumer Banking came t o an end on 31 M arch 2021; a t ot al of €28.4m (just under 3% of t he t ot al) are st ill out st anding, compared w it h a t ot al grant ed of €1.3bn; around 90% of t he exist ing st ock has been classified as st age 2;

Corporat e Finance: Corporat e Finance is not affect ed by morat oria (apart from approx. €3m at t ribut able t o fact oring), but around t hirt y applicat ions for w aivers have been received, mainly linked t o t he revision of covenants. Nonetheless, some positions have been reclassified as St age 2 on prudent ial grounds (for a t ot al of €345.7m, 2.1% of t he t ot al performing loan book). As at 30 Sept ember 2021, M ediobanca S.p.A. st ill has out st anding a t ot al of seven SACE-backed deals under t he so-called "Liquidit y" decree, involving an aggregat e exposure of €203m, unchanged versus 30 June 2021.

¹⁰ Cost of funding vs Eur 3M , rest at ed t o reflect t he int roduct ion of t he durat ion model for W M funding.

TFAs grew in the three months, from €71.5bn to €75.2bn, due to the consolidation of the assets managed by Bybrook (€2.1bn) and to NNM of €1.8bn in the Premier/Private segment; the market effect was positive, adding approx. €200m, and in part offset the last tranche of the expected outflows from institutional mandates (approx. €400m). AUA/AUM climbed by 6.2% (from €46.3bn to €49.1bn), and represent roughly two-thirds of TFAs, while deposits now reach €26.1bn (30/6/21: €25.2bn).

Capital ratios11remain at high levels:

• The CET1 ratio phase-in stands at 16.1% (30/6/21: 16.3%), reflecting the 10bps impact of closing the Bybrook acquisition and 20 bps for the higher deductions relating to the Assicurazioni Generali investment (all of which were offset by the dividend collected in October).
• The CET1 ratio fully loaded, i.e. without Danish Compromise, with the Assicurazioni Generali investment deducted in full (accounting for 110bps) and with full application of the IFRS 9 FTA effect (accounting for -10bps), was 15.0%, slightly lower than at the balance-sheet date (15.1%).
• The total capital ratio declined from 18.9% to 18.6% (17.7% fully loaded), as an effect of the amortization of Tier 2 liabilities.
• At the AGM called for 28 October 2021, shareholders will be asked to approve a new buyback scheme involving up to 3% of the company's share capital, subject to cancellation of up to 22.6 million shares already held by the Bank, and subject to authorization by the ECB.

* * *

Divisional results

1. Wealth Management¹² growing strongly and increasing in scale: net profit up 48% to €32m, ROAC¹³ @ 27%. Good performance in asset gathering: €1.8bn in NNM in the Premier & Private segment, TFAs over €75bn

The Wealth Management division reported a net profit of €32.4m in the three months, up sharply on last year (€21.9m), and reflecting improvement quarter-on-quarter as well (up 24%), confirming that the division continues to grow along the lines indicated in the Strategic Plan. The result was delivered on the back of the strong increase in assets (TFAs: up 17%, to €75.2bn; AUM/AUA: up 23% to €49.1bn, €2.1bn of which deriving from the consolidation of Bybrook), which is reflected in the increase in revenues (up 18.2%), in particular fee income (up 27%), which drove down the cost/income ratio (from 75% to 71%) and increased ROAC to 27% (vs 21% at end-June 2021, vs 20% at end-September 2020).

¹¹ CET1 phase-in, int ernal calculat ion t hat differs from the one used in t he COREP Common Report ing exercise due t o t he inclusion of the profit generat ed during t he period (not subject to aut horizat ion under Art icle 26 of t he CRR) and based on t he assumpt ion of a dividend payout of 70%. The impact of ret ained earnings on CET1 rat io is 20 bps.

¹² I ncludes t he Premier segment (CheBanca!), Privat e Banking (M BPB, CM B), Asset M anagement (M B SGR and M B M anagement Company, Cairn Capit al, RAM AI ), and t he act ivit ies of Spafid.

¹³ ROAC adjust ed for w rit edow ns/impairment t o equit y invest ment s and securit ies, and ot her non-recurring income/expenses.

The division continues on its growth path, which involves, on the one hand, ongoing reinforcement of the commercial network (which now consists of more than 1,100 people), and on the other, continued strengthening of the brand and the product offering.

In the course of the three months, the CheBanca! distribution network has exceeded 970 people, with the recruitment of nine new Premier relationship managers and 11 FAs, working alongside the 132 Private Bankers employed by Mediobanca and CMB. The growth has been concentrated on professional profiles with high portfolios and focused on the Premier client bracket, consistent with the strategic repositioning of CheBanca!

In the three months under review, Private Banking has enriched its offering in terms of portfolio management products dedicated to specific sectors, areas and themes, with the new Tactical Equity Europe product, geared towards leveraging opportunities on the European equity market from a medium-/long-term perspective, and will shortly launch the investment process of the Mediobanca BlackRock Co-Investments programme, for which a €1.4bn commitment has been raised. The "Private and Investment Bank" model has led to two M&A deals being concluded, which, as well as the contribution they make in terms of fees, have also contributed to the NNM inflows for the three months (€40m); the strong cash flows related to M&A deals on the market have also positioned MBPB well to intercept significant money motion events in terms of assets(approx. €200m).

Mediobanca SGR has continued with its activities serving the Group's Premier and Private clients with a view to renewing the range of products on offer; for instance, during the three months the Mediobanca MFS-Prudent Capital was launched, which by end-September 2021 had raised over €30m; in portfolio management, the CheBanca! network bespoke products were also launched. A new fund called Mediobanca Global Thematic Multi-Manager 100 ESG was also set up for the CheBanca! network, which will be available for distribution next quarter.

NNM for the WM division in 3M totalled €1.4bn, almost €1bn of which in Private Banking and €866m in the Premier segment, against expected outflows of €446m in institutional assets at Mediobanca SGR. Of these, approx. €900m regard deposit inflows (€686m attributable to MBPB), in part in relation to M&A deals on the domestic market; the AUM/AUA component amounts to €974m (€623m attributable to the Premier segment, €315m to Private Banking and €36m to Alternative Asset Management), in addition to the outflows recorded by MB SGR mentioned previously, due to the final tranche in the optimization of unprofitable assets.

Total Financial Assets (TFAs) totalled €75.2bn, including €2.1bn in new assets due to completion of the Bybrook acquisition and the merger of its businesses as from 1 September 2021, and approx. €200m in market effect. The Premier segment's contribution totalled €33.4bn (€16.3bn of which in AUM/AUA), Private Banking's €31.1bn (€22.1bn), and Asset Management's €22.4bn (€11.6bn of which placed within the Group). The CheBanca! network's productivity levels (per capita NNM) ranked it as one of the best performers in its reference market.

The positive results are reflected in the division's revenues and profitability, which show material improvement YoY and QoQ. Revenues totalled €172.3m, 18% higher than last year (€145.8m) and 5% higher in the last quarter. The main income items performed as follows:

Net interest income rose by 8.5%(from €67.9m to €73.7m), due to growth in the Premier segment (up 9%, from €55.5m to €60.5m) linked to the higher volumes in mortgages and deposits and to the reduction in the cost of funding which substantially offset the pressure on asset margins;

Ongoing growth in fee income which totalled €95,9m (up 27% on last year and up 7.8% in 3M), with management fees now accounting for 68% of fees receivable, slightly higher than at end-June 2021, alongside an excellent performance in upfront fees (from €9m to €16.2m), which include the first part of the Mediobanca BlackRock Co-Investments placement. All segments contributed to these outstanding results: Premier (fees up 26.8%, to €34.5m), in addition to the growth in assets (AUM/AUA up 26%), is starting to benefit from their increased marginality; Private Banking confirmed its position as the main contributor (fees up from €32m to €41.6m), with a substantial share accounted for by upfront fees (approx. 30% of the total); while fees earned by Asset Management increased from €14.5m to €17.8m, due chiefly to the consolidation of Bybrook which contributed a total of €2.7m.

GOP (€45m risk-adjusted) and net profit (€32m) were both up over 40%, reflecting the ongoing investments in distribution and technology, and also the positive trend in asset quality:

• Operating costs rose by 12.7%, from €109.1m to €123m, due to the increase in the component attributable to development of the CheBanca! network plus the increasing investments in IT. The increase in labour costs was lower, but still reflected the new recruits (concentrated in the Premier) segment and the consolidation of Bybrook (approx. €1m).
• Loan loss provisions, virtually all of which are attributable to the CheBanca! mortgage loans, were lower than twelve months ago, down from €5.9m to €4.2m (CoR down from 18 bps to 12bps) albeit slightly higher than in 4Q last year, due to the prudential increase in the coverage ratios for bad debts.

Customer loans totalled €14.5bn (€14.4bn), with the mortgage lending component totalling €11.1bn, on new loans of €359m (13.5% lower than the €415m posted at the same time last year); the share attributable to Private Banking amounted to €3.4bn (€3.3bn), because of the good contribution from CMB Monaco (where new loans rose from €2.1bn to €2.2bn).

Gross NPLs remained low at just 1.5% of total loans (€222.1m, compared with €226.1m), and mainly regard CheBanca! mortgage loans (€205.8m, 1.8% of the total); net NPLs account for around 1% of the mortgages (€106.2m, €40.1m of which bad loans), with a coverage ratio of 48.4% (68.2% of bad loans).

2. Consumer credit: net profit in 3M €90m, one of the best results ever, ROAC@ 34%. Recovery continuing in new loans, now virtually in line with pre-Covid levels (€1.8bn, vs €1.9bn at end-September 2019), reflected in an increase in the loan stock (up 1% in 1Q FY21-22). The excellent trend in default rates and credit recovery has enabled a reduction in the cost of risk to 160 bps (183 bps in 4Q last year), and, at the same time, an increase in the coverage ratios.

During the three months Compass virtually recovered its pre-Covid commercial volume levels, thanks to ongoing investment to enhance the distribution network. With two new openings the number of POS now totals 233, 54 of which are agencies, plus 49 Compass Quinto POS (specializing in the sale of salary-backed finance products). Strengthening of the digital channels has also continued, which in 1Q were responsible for managing 26% of the personal loan volumes generated by the direct channel (with more than 80% of the applications processed in one day). Compass Link, set up in May 2021, launched its activity

as agent in financial activities during the month of July, recruiting its first nine collaborators focused on the indirect sales network.

In the nine months ended on 30 September 2021, the Italian consumer credit market recorded growth of 17.5% versus the same period in 2020, a comparison base which clearly still bears the effects of the first lockdown in March 2020. Shifting the comparison base back to 2019, the market still shows a lag of some 10%, albeit not attributable to all products: personal loans were 27% higher than in 2020 (but still around 18% down on 2019), automotive finance up 24%, special purpose loans up 18%, salary-backed finance up 15% (but down 3.5% on 2019), and credit cards up 10% (down 9% on 2019).

Compass outperformed the market in this period, with its extensive franchise and established capabilities in risk assessment and pricing, recording growth in new loans of 34% driven by personal loans (up 50%), automotive finance (up 35% ), special purpose loans (up 33%), and salary-backed finance (up 4%), while credit cards remained stable. Compared to 2019 Compass is still lagging (by 7%), attributable primarily to salary-backed finance (down 33%), credit cards (down 21%), and personal loans (down 15%). Compass's market share in 2021 stands at 10%.

Customer loans grew for the second consecutive quarter, reaching €13.1bn (30/6/21: €12.9bn, the same as at end-September 2020), on new loans for the three months now fully back to pre-Covid levels (€1,805m, versus €1,857m in 2019).

Net profit for the quarter totalled €90.3m (26% higher than last year), one of the best quarterly performances ever. The positive trend in customer loans ensured that net interest income rose quarter-on-quarter (from €237.9m to €257m, in line with last year), while the excellent performance in terms of risk translated to a substantial reduction in the cost of risk, to 160 bps (from 248 bps). The virtuous trend in cost management (with the cost/income ratio decreasing from 28.1% to 27.8%) enabled the division to record one of its best-ever performances in terms of ROAC (34%). The highlights were as follows:

• Revenues rose by 8% quarter-on-quarter, from €237.9m to €257m, but were down 1% year-on-year (from €259.6m to €257m), exclusively due to the trend in fee income, given that net interest income was in line with last year's performance at €226.2m (€225.7m), helped by the positive momentum in volumes, margins and also by the lower refunds of upfront fees for early repayments.¹⁴ Fees were up 31% QoQ but down year-on-year, from €33.9m to €30.8m, due to the higher fees credited back to third party networks, in line with the higher volumes lent;
• Operating costs totalled €71.5m, down 1.9% on last year (€72.9m), due to the reduction in credit recovery costs offset by the resumption in commercial activity and by the natural increase in labour costs (up 6.8%, from €23.5m to €25.1m);
• Loan loss provisions were down 35.4%, from €80.6m to €52.1m, one of the lowest quarterly figures ever recorded, at a cost of risk of 160 bps (vs 248 bps at end-September 2020 and 183 bps in 4Q FY 2020-21), despite the increasing coverage ratios (for NPLs 78.4%; and for performing loans 3.70%) and higher overlays (which rose to €211m, following an increase of €14.2m in 1Q FY2021-22).

Gross NPLs decreased both in absolute terms (from €971.5m to €957m) and relative terms (from 6.86% of total loans to 6.67%), helped by the low default rates and the good inflows

¹⁴ Amendment t o Art icle 125-sexies of t he I t alian Banking Act , w hich – unlike t he Bank of I t aly's previous communicat ion of December 2019 – requires t he upfront cost s t o be refunded in cases of early repayment only for cont ract s execut ed subsequent t o 25 July 2021. Cf. foot not e 7.

from credit recovery activities which allowed many positions to return to performing status. The increase in the coverage ratio (from 75.8% to 78.4%) further reduced the net exposure to NPLs (from €235.4m to €206.4m, and from 1.8% of total loans to 1.6%). Net bad loans remained below €10m (representing just 0.1% of total loans), and reflect a coverage ratio of 97.6% (97.3%).

The increase in positions classified as Stage 2 (from €1,467.3m to €1,509.3m; equal to 11.3% of the total loan book) is entirely residual and is linked not only to the increase in the loan stock but also to certain non-performing positions returning to performing status. As part of the prudential policy adopted to increase the provisioning levels, the coverage ratio for the performing loan book was increased further, from 3.6% to 3.7%.

3. Corporate & Investment Banking: net profit for the quarter €69m (ROAC 15%), with a strong contribution from fee income and no non-recurring items. Loan book quality remains at best-ever levels

A net profit of €68.5m was earned in the three months, substantially in line with the average figure recorded last year (€71m), but below the 1Q FY 2020-21 result (€84.6m) which was boosted by the non-recurring income of €29m in relation to Burgo. The healthy pipeline of Investment Banking deals in the three months made up for the lack of big tickets compared to last year, with ROAC once again at high levels (15%). Two Mid-Cap deals originated in conjunction with the Private Banking team were also closed during the three months. Wholesale Banking contributed €61.8m of the profits for the quarter and Specialty Finance €6.7m, with factoring contributing €5.6m.

The M&A market scenario continues to look positive, but reflects differing performances in the various geographies: the most recent quarterly data¹⁵ show growth at global level of 7%, with the contribution from the US market (which accounts for roughly two-thirds of global M&A) up just 5%, against record volumes in Europe (up 44%), concentrated mostly in France (up 66%), with Italy strongly resisting this trend (down 59%).

In this scenario, the Mediobanca Group has achieved excellent results in advisory business, repeating last year's earnings results despite the absence of jumbo deals, i.e. by executing a much higher number of transactions. Some of the most significant include the acquisition of Borsa Italiana by Euronext, the takeover bid for Cerved launched by ION and completed successfully at the start of September, the merger between Nexi and Nets, the acquisition in France of Uperio and Bruneau by Towerbrook, and in the Mid Corporate space, the industrial combination between Inglass and Oerlikon and the disposal of a stake in Siderforgerossi to KPS.

The pipeline for the coming quarters looks to be robust, not least because of the number of deals already announced and scheduled to close in the coming months. Some of the most significant include the commercial partnership between Nexi and Alpha Bank, the sale of Erg Hydro to Enel, the disposal of Crédit Agricole Serbia to Raiffeisen, the merger between Veolia and Suez in France, plus a host of Mid Corp transactions, both to support companies in restructuring their debts and to encourage financial sponsors to take stakes in the shareholding structure of the companies concerned.

¹⁵ Source: Refinit iv – Global M ergers & Acquisit ions – announced deals.

In Capital Markets activity, Mediobanca acted as Joint Global Co-Ordinator and Joint Bookrunner in the capital increase implemented by Autogrill. And last but not least, in all the markets it covers (Italy, France, Spain/Portugal and the United Kingdom), Mediobanca has had a significant role in a number of bond issues (Enel, Nexi, FCA, Generali and EDP).

Revenues increased by 1%, from €182.5m to €184.6m, on a material contribution from all client activities, in particular Advisory and Lending/DCM, even though last year saw a record performance from Advisory fees. The main income items performed as follows:

• Net interest income decreased from €71.8m to €68.2m, exclusively because of the nonrecurring gain booked last year (€3m in relation to Burgo), and was aligned with the performance in 4Q FY 2020-21: in Wholesale Banking the higher client volumes (lending and CMS activities) offset the lower contribution from securities trading, adding €49.7m to the division's NII; conversely, the contribution from Specialty Finance grew slightly (from €17.5m to €18.5m);
• Net fee and commission income totalled €84.6m, pretty much matching the record levels seen last year (€87.8m), and well diversified between the various products (Lending: €17m; Advisory: €38.9m, €5m of which Mid Cap; Capital Markets: €13m; Specialty Finance: €15.7m);
• Net treasury income rose from €22.9m to €31.8m (up 38.9%); the trend in client trading continues to be positive (up 26%, from €18.8m to €22.7m), returning, in the equity component at least, to decent levels; while the proprietary trading portfolio doubled its profits, from €4.1m to €8.8m.

The increase in costs (up 3.1%, from €73.4m to €75.7m) reflects basic stability in Wholesale Banking (at €61.4m), with only a moderate reduction in labour costs which offset the higher expenses related to IT systems and projects, and the 17.2% increase in Specialty Finance (from €12.2m to €14.3m) due to the higher credit recovery expenses in connection with NPLs.

The performance in terms of the cost of risk remains positive, with the corporate loan book reflecting writebacks of €6.7m (compared with €24.1m last year), attributable entirely to ordinary activity (repayments, reductions in exposures and reratings), unlike last year which included part of the Burgo reversal, and €10.6m in writedowns in Specialty Finance (€6.2m), the majority of which is attributable to the NPL portfolios acquired. The coverage ratio for CIB business is largely unchanged (55% for NPLs and 0.61% for performing loans).

Customer loans grew during the three months, from €19.3bn to €19.5bn, with the Large Corporate segment rising from €16.6bn to €16.9bn, on new loans of €2.6bn, most of which was eroded by the repayments (€2.3bn, €600m of which early repayments); while customer loans in Specialty Finance totalled €2.6bn, lower than at end-June 2021 (€2.7bn), but up sharply compared to 1Q FY 2020-21 (€2.1bn) due to the higher turnover in factoring (up 32% to €2.3bn); while MBCS has resumed its purchases of NPL portfolios (which rose from €384m to €443m).

Asset quality remains at high levels: gross NPLs (which declined from €225m to €224m) remain at the lowest levels seen for a decade (1.2%); while net NPLs stood at €100.9m (€103.8m), with a coverage ratio of 55% (53.9%); the balance does not include the NPLs acquired by MBCS, as per the customary practice.

The net balance of positions classified as Stage 2 decreased from €631m to €525.6m, and make up less than 3% of total loans, due to the lower percentage of Large Corporate positions (down from €548.4m to €459.5m) following several repayments. The performing loan

coverage ratio was 0.61%, with overlays amounting to €84m, concentrated primarily in the large corporate segment.

4. Principal Investing: high contribution to Group earnings (€97m), ROAC16@15%

Principal Investing delivered a net profit of €96.7m, up 87.4% on last year due to the higher contribution from the equity method of accounting (which added €95.3m, as opposed to €44m) given that last year reflected certain one-off items for Assicurazioni Generali (including the impact of the settlement of the dispute regarding BSI). The holdings in funds contributed positively, adding €3.3m (€13.3m), the reduction being due to the 2020 figure having benefited from the recovery in valuations of the main investments in seed capital following the pandemic.

Since 30 June 2021, the book value of the Assicurazioni Generali investment has increased from €3,663.1m to €3,747.6m, on profits of €95.1m and reductions in the valuation reserves totalling €10.5m.

As for the holdings in other securities, the equity component showed a slight decrease (from €219m to €214.7m), reflecting downward adjustments totalling €4.3m taken directly through net equity. Holdings in funds rose, from €525.2m to €538.8m, following net purchases of €9.4m and positive value adjustments totalling €4m.

During the three months under review, Mediobanca executed a securities lending transaction with a leading market counterparty in respect of a total of 70 million Assicurazioni Generali shares, equal to 4.4% of the company's share capital. The deal, which has a duration of around eight months, or at least until the Annual General Meeting of Assicurazioni Generali called to reappoint the company's Board of Directors, gives rise to an increase in the voting rights held by Mediobanca without increasing the risk exposure and the capital invested in the company.

5. Holding functions: comfortable funding position, optimized composition and costs; deleveraging in leasing business still ongoing

The net loss posted by the Holding Functions division decreased by 13.6% (from €30.2m to €26.1m), due to lower operating costs which were down 3.3% (from €36.7m to €35.5m), helped also by the rationalization of certain support activities and lower provisions for financial assets of €2m (€4.5m), meaning total income was negative only by €1m (as opposed to €2.7m last year), reflecting the higher net treasury income, with net interest expense virtually unchanged.

The main segments reflected the following performances:

Treasury – funding increased (from €56.2bn to €57.8bn), in all its main components, with the cost of funding continuing to reduce: the debt security component rose to €18.8bn, mainly due to the second issue of senior non-preferred bonds (€500m); WM deposits grew to €26.3bn (€25.2bn), and represent approx. 45% of the total funding; recourse to the T-LTRO facilities also increased by approx. €1bn (to €8.5bn), taking up almost the maximum

¹⁶ ROAC adjust ed for w rit edow ns/impairment s t o equit y invest ment s and securit ies, and ot her non-recurring income (expenses).

capacity (€8.8bn). The cost of funding declined by some 5 bps (to around 60 bps) compared to last year's average, despite remaining stable quarter-on-quarter, helped by the gradual reduction in the remuneration on WM deposits and the increased recourse to the T-LTRO. As a result, despite the lower contribution from banking book securities and the high liquidity levels, treasury management succeeded in keeping net interest expense more or less flat (at €22.6m) both QoQ and YoY. The liquidity ratios remain stable and comfortably above the set requirements (LCR 152.4%; NSFR 115.7%). The valuation reserve remains in positive territory at €78.1m, despite the disposals of banking book securities, which yielded gains of €8.8m (slightly lower than last year).

Leasing – leasing operations delivered a net profit of €1.4m (€0.8m), on revenues of €10.6m (8.2% higher than last year), a cost/income ratio declining to 46.2%, and loan loss provisions of €2.2m (€3.2m). Leases outstanding in the three months reduced from €1,774.1m to €1,738.8m, on new loans of €84.4m (€76m last year); all the risk indicators show improvement (gross NPLs down from €174.5m to €171.3m; net NPLs down from €104.7m to €99.1m; loans classified as Stage 2 down from €337.7m to €324.5m).

MB Group ESG profile and commitment continuing to improve

Mediobanca has been included in the first MIB ESG index launched by Euronext and Borsa Italiana, for Italian blue chip companies that demonstrate ESG best practices. MSCI has also upgraded Mediobanca's ESG rating from BB to A, in part due to the Bank's recent adherence to the Principles for Responsible Banking (PRB).

****

• E (Environment) – the Group continues to support its clients in their passage towards the energy transition, with a stock of almost €2.1bn in ESG/green products and services, made up as follows: 86% corporate, 9% mortgages, 5% consumer credit. The DCM area's strong positioning in ESG issues has also received further confirmation, with a total of 15 deals executed since January 2021, worth over €11bn; and the increasing presence of ESG funds in Premier clients' portfolios (39% of which are now made up of SFDR Article 8 and 9 funds).
• S (Social) – the Group continues to play an active role in the communities in which it operates, through initiatives with social and also environmental impact, including:
• The Mediobanca Group Sport Camp was run for the fifth year at the "Cesare Beccaria" institute for young offenders in Milan, to give the young inmates who take part a week of sport and help instil in them the values of healthy competition, respect for the rules and fair play;
• A new rugby pitch was inaugurated in the Baggio district of Milan, the last area to be involved in the TOGETHER/INSIEME project, an initiative that has been running for several years now to promote sport for children and young people in the most vulnerable areas of society and at risk of social exclusion as a result, in certain peripheral areas of Milan;
• A total of 2,000 trees have been planted in certain areas of Milan and Monza as part of projects developed in conjunction with Reteclima and Fondazione Mission Bambini.

Mediobanca Group staff have taken part in large numbers in all these activities.

G (Governance) – quantitative ESG objectives have been included in the STI scorecards for senior management under the new Remuneration Policy, with the objective of supporting the development of ESG/green products.

The Group's sustainability performance is outlined in detail in the Consolidated Non-Financial Statement for FY 2020-21, which includes for the first time: a self-assessment in connection with the recommendations made by the Task Force on Climate-related Financial Disclosure (TCFD), the inclusion of some of the standards developed by Sustainability Accounting Standards Board (SASB), calculation of the economic value generated and distributed to stakeholders, and the Group's approach to tax issues.

****

Outlook

The results for 1Q have been satisfactory, anticipating the expected recovery by several months and in line with the rate at which the world's leading economies have been exiting the pandemic situation quicker than expected, helped by the massive monetary and fiscal policy measures that look likely to remain in place for some time.

For 2Q, improvements are expected in credit volumes, AUM and the pipeline in Advisory and Capital Markets business; however, growth will remain conditional upon the performance of financial markets, in particular for equities, which has been more volatile since the end of the summer period.

This scenario should enable growth in net interest income, and generate a flow of fees in line with the performance recorded in 1Q, driven by growth in Wealth Management in particular. Investments will continue in innovation and in enhancement of the distribution structure, as will spending on projects and the resumption of commercial activities.

The cost of risk should remain at low levels, given the solid industrial trends reflected by all divisions, the substantial overlays set aside, and the additional writebacks expected in the CIB division.

1. Restated consolidated profit and loss accounts

	3 mths	3 mths
Mediobanca Group (€m)	30/09/2020	30/09/2021	Chg. %
Net interest income	357.1	358.4	0.4%
Net treasury income	35.8	50.0	39.7%
Net fee and commission income	189.1	202.7	7.2%
Equity-accounted companies	44.0	95.3	n.m.
Total income	626.0	706.4	12.8%
Labour costs	(152.0)	(156.4)	2.9%
Administrative expenses	(136.0)	(146.2)	7.5%
Operating costs	(288.0)	(302.6)	5.1%
Loan loss provisions	(71.8)	(62.4)	-13.1%
Provisions for other financial assets	13.4	4.8	-64.2%
Other income (losses)	—	0.5	n.m.
Profit before tax	279.6	346.7	24.0%
Income tax for the period	(78.8)	(81.6)	3.6%
M inority interest	(0.7)	(3.2)	n.m.
Net profit	200.1	261.9	30.9%

2. Quarterly profit and loss accounts

Mediobanca Group		FY 20/21			FY 21/22
	I Q	II Q	III Q	IV Q	I Q
(€m)	30/09/20	31/12/20	31/03/21	30/06/21	30/09/21
Net interest income	357.1	363.3	351.0	343.6	358.4
Net treasury income	35.8	50.9	64.9	45.4	50.0
Net commission income	189.1	193.7	188.4	173.5	202.7
Equity-accounted companies	44.0	66.9	58.5	102.3	95.3
Total income	626.0	674.8	662.8	664.8	706.4
Labour costs	(152.0)	(153.0)	(163.3)	(167.0)	(156.4)
Administrative expenses	(136.0)	(150.1)	(151.2)	(165.5)	(146.2)
Operating costs	(288.0)	(303.1)	(314.5)	(332.5)	(302.6)
Loan loss provisions	(71.8)	(45.9)	(63.7)	(67.4)	(62.4)
Provisions for other fin. assets	13.4	(0.3)	19.0	16.3	4.8
Other income (losses)	—	(33.4)	(42.3)	(9.9)	0.5
Profit before tax	279.6	292.1	261.4	271.2	346.7
Income tax for the period	(78.8)	(80.1)	(67.0)	(66.4)	(81.6)
M inority interest	(0.7)	(1.5)	(1.1)	(1.1)	(3.2)
Net profit	200.1	210.5	193.3	203.7	261.9

3. Restated balance sheet

Mediobanca Group (€m)	30/09/20	30/06/21	30/09/21
Assets
Financial assets held for trading	9.612.0	11,273.7	12,217.1
Treasury financial assets	10,375.3	8,072.1	9,350.8
Banking book securities	7,462.6	7,150.4	7,308.9
Customer loans	46.803.0	48,413.8	48,889.3
Corporate	16,471.1	16,579.6	16,866.0
Specialty Finance	2,086.9	2,712.7	2,647.6
Consumer credit	12,916.7	12,942.9	13,099.1
Mortgages	10,381.9	11,062.8	11,095.9
Private banking	3,140.2	3,341.7	3,441.9
Leasing	1.806.2	1.774.1	1.738.8
Equity investments	4,301.6	4,579.0	4,679.5
Tangible and intangible assets	1,306.4	1,254.3	1,317.9
Other assets	1,997.0	1,855.4	1,791.4
Total assets	81,857.9	82,598.7	85,554.9
Liabilities
Funding	56,653.0	56,156.2	57,821.2
MB bonds	19,283.3	18,410.9	18,795.0
Retail deposits	15,745.7	16,919.7	17,162.9
Private Banking deposits	8,442.7	8,290.4	8,957.9
ECB	6.464.7	7.445.4	8,460.1
Banks and other	6,716.6	5,089.8	4,445.3
Treasury financial liabilities	4,219.1	2,890.8	3,734.5
Financial liabilities held for trading	8,352.8	10,063.6	10,232.5
Other liabilities	2,269.7	2,215.9	2.792.4
Provisions	153.7	171.1	169.1
Net equity	10,209.6	11,101.1	10,805.2
Minority interest	92.0	88.3	98.8
Profit for the period	200.1	807.6	261.9
Total liabilities	81,857.9	82,598.7	85,554.9
CET 1 capital	7,713.0	7,689.4	7,615.1
Total capital	8,925.6	8,919.2	8,782.7
RWA	47,591.8	47,159.3	47,243.4

4. Consolidated shareholders' equity

Net equity $(\epsilon m)$	30/09/20	30/06/21	30/09/21
Share capital	443.6	443.6	443.6
Other reserves	8.831.3	8.830.4	9.072.7
Valuation reserves	642.6	931.2	928.2
- of which: Other Comprehensive Income	88.7	175.8	175.1
cash flow hedge	(33.1)	(16.0)	(7.5)
equity investments	598.3	780.4	769.3
Minority interest	92.0	88.3	98.8
Profit for the period	200.1	807.6	261.9
Total Group net equity	10.209.6	11.101.1	10,805.2

5. Ratios (%) and per share data (€)

MB Group	Financial year 20/21	Financial year 21/22
	30/09/20	30/06/21	30/09/21
Ratios (%)	30/06/20
Total assets / Net equity	8.0	7.4	7.9
Loans / Funding	0.83	0.86	0.85
RWA density (%)	58.2%	57.1%	55.2%
CET1 ratio (%)	16.2%	16.3%	16.1%
Total capital (%)	18.8%	18.9%	18.6%
S&P Rating	BBB	BBB	BBB
Fitch Rating	BBB-	BBB-	BBB
M oody's Rating	Baa1	Baa1	Baa1
Cost / Income	46.0	47.1	42.8
Net bad Loans (sofferenze)/Loans ratio (%)	0.2	0.2	0.1
EPS	0.23	0.91	0.30
EPS adj.	0.24	0.96	0.29
BVPS	11.3	11.8	11.9
TBVPS	10.3	10.9	10.9
ROTE adj. (%)	9.4	9.2	11.5
DPS		0.66
No. shares outstanding (m)	887.2	887.3	887.3

6. Profit-and-loss figures/balance-sheet data by division

3m – September 21 (€m)	WM	Consumer	CIB	PI	Holding Functions	Group
Net interest income	73.7	226.2	68.2	(1.8)	(13.6)	358.4
Net treasury income	2.7	—	31.8	4.2	9.9	50.0
Net fee and commission income	95.9	30.8	84.6	—	2.5	202.7
Equity-accounted companies	—	—	—	95.3	—	95.3
Total income	172.3	257.0	184.6	97.7	(1.2)	706.4
Labour costs	(62.6)	(25.1)	(39.2)	(0.7)	(28.5)	(156.4)
Administrative expenses	(60.4)	(46.4)	(36.5)	(0.3)	(7.0)	(146.2)
Operating costs	(123.0)	(71.5)	(75.7)	(1.0)	(35.5)	(302.6)
Loan loss provisions	(4.2)	(52.1)	(3.9)	—	(2.2)	(62.4)
Provisions for other financial assets	0.9	—	0.4	3.3	0.2	4.8
Other income (losses)	—	—	(0.3)	—	0.8	0.5
Profit before tax	46.0	133.4	105.1	100.0	(37.9)	346.7
Income tax for the period	(13.5)	(43.1)	(34.4)	(3.3)	12.7	(81.6)
M inority interest	(0.1)	—	(2.2)	—	(0.9)	(3.2)
Net profit	32.4	90.3	68.5	96.7	(26.1)	261.9
Loans and advances to Customers	14,537.8	13,099.1	19,513.6	—	1,738.8	48,889.3
RWAs	5,159.9	11,783.7	20,250.7	7,054.9	2,994.2	47,243.4
No. of staff	2,072	1,447	622	10	787	4,938

Profit-and-loss figures/balance-sheet data by division

3m – September 20 (€m)	WM	Consumer	CIB	PI	Holding Functions	Group
Net interest income	67.9	225.7	71.8	(1.8)	(13.1)	357.1
Net treasury income	2.4	—	22.9	3.6	7.0	35.8
Net fee and commission income	75.5	33.9	87.8	—	3.4	189.1
Equity-accounted companies	—	—	—	44.0	—	44.0
Total income	145.8	259.6	182.5	45.8	(2.7)	626.0
Labour costs	(57.5)	(23.5)	(42.3)	(0.8)	(27.9)	(152.0)
Administrative expenses	(51.6)	(49.4)	(31.1)	(0.2)	(8.8)	(136.0)
Operating costs	(109.1)	(72.9)	(73.4)	(1.0)	(36.7)	(288.0)
Loan loss provisions	(5.9)	(80.6)	17.9	—	(3.2)	(71.8)
Provisions for other financial assets	0.4	(0.2)	1.0	13.3	(1.3)	13.4
Other income (losses)	—	—	—	—	0.0	0.0
Profit before tax	31.2	105.9	128.0	58.1	(43.9)	279.6
Income tax for the period	(9.3)	(34.0)	(43.3)	(6.5)	14.2	(78.8)
M inority interest	—	—	(0.1)	—	(0.5)	(0.7)
Net profit	21.9	71.9	84.6	51.6	(30.2)	200.1
Loans and advances to Customers	13,522.1	12,916.7	18,558.0	0.0	1,806.2	46,803.0
RWAs	4,882.4	11,649.8	19,964.7	7,889.6	3,205.3	47,591.8
No. of staff	2,034.0	1,445.0	623.0	11.0	805.0	4,918.0

7. Wealth Management

	3 mths	3 mths
Wealth Management (€m)	30/09/2020	30/09/2021	Chg.%
Net interest income	67.9	73.7	8.5%
Net trading income	2.4	2.7	12.5%
Net fee and commission income	75.5	95.9	27.0%
Equity-accounted companies	—	—	n.m.
Total income	145.8	172.3	18.2%
Labour costs	(57.5)	(62.6)	8.9%
Administrative expenses	(51.6)	(60.4)	17.1%
Operating costs	(109.1)	(123.0)	12.7%
Loan loss provisions	(5.9)	(4.2)	-28.8%
Provisions for other financial assets	0.4	0.9	n.m.
Other income (losses)	—	—	n.m.
Profit before tax	31.2	46.0	47.4%
Income tax for the period	(9.3)	(13.5)	45.2%
M inority interest	—	(0.1)	n.m.
Net profit	21.9	32.4	47.9%
Loans and advances to customers	13,522.1	14,537.8	7.5%
New loans (mortgages)	415.6	359.4	-13.5%
TFA (Stock, € bn)	64.2	75.2	17.2%
-AUM /AUA	40.0	49.1	22.8%
-Deposits	24.2	26.1	7.9%
AUC (€ bn)	5.0	6.0	20.2%
TFA (Net New M oney, € bn)	0.4	1.4	n.m.
-AUM /AUA	0.1	0.5	n.m.
-Deposits	0.3	0.9	n.m.
No. of staff	2,034	2,072	1.9%
RWAs	4,882.4	5,159.9	5.7%
Cost / income ratio (%)	74.8%	71.4%
Net bad Loans (sofferenze)/Loans ratio (%)	0.4	0.3
ROAC	20%	27%

8. Consumer Banking

	3 mths	3 mths
Consumer Banking (€m)	30/09/2020	30/09/2021	Chg.%
Net interest income	225.7	226.2	0.2%
Net trading income	—	—	n.m.
Net fee and commission income	33.9	30.8	-9.1%
Equity-accounted companies	—	—	n.m.
Total income	259.6	257.0	-1.0%
Labour costs	(23.5)	(25.1)	6.8%
Administrative expenses	(49.4)	(46.4)	-6.1%
Operating costs	(72.9)	(71.5)	-1.9%
Loan loss provisions	(80.6)	(52.1)	-35.4%
Provisions for other financial assets	(0.2)	—	n.m.
Other income (losses)	—	—	n.m.
Profit before tax	105.9	133.4	26.0%
Income tax for the period	(34.0)	(43.1)	26.8%
M inority interest	—	—	n.m.
Net profit	71.9	90.3	25.6%
Loans and advances to customers	12,916.7	13,099.1	1.4%
New loans	1,478.9	1,805.2	22.1%
No. of branches	177	179	1.1%
No. of agencies	44	54	22.7%
No. of staff	1,445	1,447	0.1%
RWAs	11,649.8	11,783.7	1.1%
Cost / income ratio (%)	28.1%	27.8%
Net bad Loans (sofferenze)/Loans ratio (%)	0.1	0.1
ROAC	27%	34%

9. Corporate & Investment Banking

	3 mths	3 mths
Corporate & Investment Banking (€m)	30/09/2020	30/09/2021	Chg.%
Net interest income	71.8	68.2	-5.0%
Net treasury income	22.9	31.8	38.9%
Net fee and commission income	87.8	84.6	-3.6%
Equity-accounted companies	—	—	n.m.
Total income	182.5	184.6	1.2%
Labour costs	(42.3)	(39.2)	-7.3%
Administrative expenses	(31.1)	(36.5)	17.4%
Operating costs	(73.4)	(75.7)	3.1%
Loan loss provisions	17.9	(3.9)	n.m.
Provisions for other financial assets	1.0	0.4	-60.0%
Other income (losses)	—	(0.3)	n.m.
Profit before tax	128.0	105.1	-17.9%
Income tax for the period	(43.3)	(34.4)	-20.6%
M inority interest	(0.1)	(2.2)	n.m.
Net profit	84.6	68.5	-19.0%
Loans and advances to customers	18,558.0	19,513.6	5.1%
of which purchased NPL (MBCreditSolutions)	376.5	443.2	17.7%
No. of staff	623	622	-0.2%
RWAs	19,964.7	20,250.7	1.4%
Cost / income ratio (%)	40.2%	41.0%
Net bad Loans (sofferenze)/Loans ratio (%)	0.0	0.0
ROAC	19%	15%

10. Principal Investing

	3 mths	3 mths
PI (€m)	30/09/2020	30/09/2021	Chg. %
Net interest income	(1.8)	(1.8)	n.m.
Net treasury income	3.6	4.2	16.7%
Net fee and commission income	—	—	n.m.
Equity-accounted companies	44.0	95.3	n.m.
Total income	45.8	97.7	n.m.
Labour costs	(0.8)	(0.7)	-12.5%
Administrative expenses	(0.2)	(0.3)	50.0%
Operating costs	(1.0)	(1.0)	n.m.
Loan loss provisions	—	—	n.m.
Provisions for other financial assets	13.3	3.3	n.m.
Other income (losses)	—	—	n.m.
Profit before tax	58.1	100.0	72.1%
Income tax for the period	(6.5)	(3.3)	-49.2%
M inority interest	—	—	n.m.
Net profit	51.6	96.7	87.4%
Equity investments	3,508.2	3,787.5	8.0%
Other investments	660.9	753.6	14.0%
RWAs	7,889.6	7,054.9	-10.6%
ROAC	13%	15%

11. Holding Functions

	3 mths	3 mths
Holding Functions (€m)	30/09/2020	30/09/2021	Chg. %
Net interest income	(13.1)	(13.6)	3.8%
Net treasury income	7.0	9.9	41.4%
Net fee and commission income	3.4	2.5	-26.5%
Equity-accounted companies	—	—	n.m.
Total income	(2.7)	(1.2)	-55.6%
Labour costs	(27.9)	(28.5)	2.2%
Administrative expenses	(8.8)	(7.0)	-20.5%
Operating costs	(36.7)	(35.5)	-3.3%
Loan loss provisions	(3.2)	(2.2)	-31.3%
Provisions for other financial assets	(1.3)	0.2	n.m.
Other income (losses)	—	0.8	n.m.
Profit before tax	(43.9)	(37.9)	-13.7%
Income tax for the period	14.2	12.7	-10.6%
M inority interest	(0.5)	(0.9)	80.0%
Net profit	(30.2)	(26.1)	-13.6%
Loans and advances to customers	1,806.2	1,738.8	-3.7%
Banking book securities	6,336.9	6,154.7	-2.9%
RWAs	3,205.3	2,994.2	-6.6%
No. of staff	805	787	-2.2%

12. Statement of comprehensive income

		3 mths	12 mths
		30/09/21	30/06/21
10.	Gain (loss) for the period	263.0	809.2
	Other income items net of tax without passing through profit and loss	4.7	47.4
20.	Equity instruments designated at fair value through other comprehensive income	(4.1)	64.1
30.	Financial liabilities designated at fair value through profit or loss (own creditworthiness changes)	(0.2)	(5.7)
40.	Hedge accounting of equity instruments designated at fair value through other comprehensive income	—	—
50.	Property. plant and equipment	—	—
60.	Intangible assets	—	—
70.	Defined-benefit plans	0.1	2.0
80.	Non-current assets and disposal groups classified as held for sale	—	—
90.	Portion of valuation reserves from investments valued at equity method	8.9	(13.0)
	Other income items net of tax passing through profit and loss	(8.3)	508.9
100.	Foreign investment hedges	(1.4)	1.4
110.	Ex change rate differences	1.1	0.5
120.	Cash flow hedges	8.7	15.2
130.	Hedging instruments (non-designated items)	—	—
140.	Financial assets (different from equity instruments) at fair value through other comprehensive Income	3.4	40.1
150.	Non-current assets and disposal groups classified as held for sale	—	—
160.	Part of valuation reserves from investments valued at equity method	(20.1)	451.8
170.	Total other income items net of tax	(3.6)	556.2
180.	Comprehensive income (Item 10+170)	259.4	1,365.4
190.	Minority interest in consolidated comprehensive income	1.2	2.3
200.	Consolidated comprehensive inc. attributable to Mediobanca S.p.A.	258.2	1,363.1

13. Parent company restated financial statements (P&L, balance sheet)

Mediobanca S.p.A. (€m)	3 mths	3 mths	Chg.%
	30/09/20	30/09/21
Net interest income	30.4	23.5	-22,7%
Net treasury income	33.1	44.4	34,1%
Net fee and commission income	91.8	87.5	-4,7%
Dividends on investments	—	—	n.m.
Total income	155.3	155.4	0,1%
Labour costs	(61.8)	(61.6)	-0,3%
Administrative expenses	(37.6)	(42.6)	13,3%
Operating costs	(99.4)	(104.2)	4,8%
Loan loss provisions	27.1	5.2	-80,8%
Provisions for other financial assets	13.0	4.2	-67,7%
Impairment on investments	—	(0.8)	n.m.
Other income (losses)	—	0.6	n.m.
Profit before tax	96.0	60.4	-37,1%
Income tax for the period	(34.5)	(21.0)	-39,1%
Net profit	61.5	39.4	-35,9%

Mediobanca S.p.A. (€m)	30/09/20	30/06/21	30/09/21
Assets
Financial assets held for trading	9,859.8	11,336.8	12,278.5
Treasury financial assets	11,433.0	10,122.1	11,617.0
Banking book securities	9,933.2	8,716.0	8,821.2
Customer loans	33,076.3	37,103.6	37,802.5
Equity Investments	4,351.0	4,475.1	4,495.3
Tangible and intangible assets	165.3	167.1	167.0
Other assets	976.6	782.8	696.3
Total assets	69,795.2	72,703.5	75,877.8
Liabilities and net equity
Funding	50,353.8	52,045.0	53,837.5
Treasury financial liabilities	4,946.2	3,826.5	4,958.2
Financial liabilities held for trading	8,764.7	10,342.4	10,500.6
Other liabilities	819.1	937.6	1,559.2
Provisions	123.9	136.5	134.6
Net equity	4,726.0	4,837.1	4,848.3
Profit of the period	61.5	578.4	39.4
Total liabilities and net equity	69,795.2	72,703.5	75,877.8

As required by Article154-bis, paragraph 2 of Italian Legislative Decree 58/98, the undersigned hereby declares that the stated accounting information contained in the report conforms to the documents, account ledgers and book entries of the company.

Head of company financial reporting

Emanuele Flappini