Banco di Desio e della Brianza S p A : Consolidated Results as at 31 December 2022

PRESS RELEASE

BANCO DESIO: CONSOLIDATED RESULTS AS AT 31 DECEMBER 2022

Desio, 9 February 2023 - The Board of Directors of Banco di Desio e della Brianza S.p.A. approved the preliminary individual and consolidated results for the year to 31 December 2022 with the proposed allocation of the result for the year. The main income statement and balance sheet indicators for the period are summarised below.

Consolidated net profit 2022 amounting to Euro 81.5 mln, strong growth compared to the same

period in 2021 (+48.4%) with ROE at 7.8% (+2.5 pts compared to 2021)

Operating profit of Euro 213.1 million, an improvement over 2021 (+11.9%) driven by the increase in

revenues to Euro 486.1 million (+6.1%) and the growth in volumes

Cost income ratio at 59.1% (-2.3 pts compared to 2021)

Proposed allocation of Net Profit to Shareholders Euro 0.1969 per share with Dividend Yield1 at 6.6%.

 Consolidated net profit increased sharply to Euro 81.5 million (formerly Euro 54.9 million) exceeding

		the 2020-2023 business plan target a year in advance.
	 Increasing profitability (ROE at 7.8%) with stable operating expenses and cost of risk under control.
PROFITABILITY	 Operating income up (+11.9%) due to an increase in income (+6.1%).
	Cost income ratio at 59.1% (formerly 61.4%)
	 Operating income up +6.1% with net interest income up 12.2% and net commissions substantially
		stable (-2.2%) in view of the macroeconomic context
DIVIDENDS		Proposed allocation of Net Profit to Shareholders Euro 0.1969 per share with Dividend Yield at 6.6%

ECONOMIC SUPPORT AND GROWTH

RELIABILITY

CAPITAL SOUNDNESS4

• Loans to ordinary customers at Euro 11.5 billion (+2.9%) with additional disbursements to households and companies during the year amounting to Euro 2.08 billion and with a positive boost to customer lending
• Internalisation of personal loans completed on subsidiary Fides
• Direct deposits increased to Euro 12.6 billion (+1.6%)2
• Indirect deposits of Euro 17.1 billion (-5.2%, of which ordinary customers down 8.1%)
• Strong focus on innovation and digitization continuously improving customer satisfactions, already outstanding
• Incidence of impaired loans down: Gross NPL ratio at 3.3% (4.1%3 as at 31 December 2021) and net at 1.7% (formerly 2.1%)
• Rigorous credit assessment and solid coverage levels on impaired loans at 49.6% and on performing loans at 0.88%
• Liquidity under control with LCR indicator at 152.43%

 Capital solidity confirmed of Banco Desio Group
Coefficients5	Banco Desio Brianza	Banco Desio Group	Brianza Unione Group6
CET 1	15.87%	14.77%	11.03%
TIER 1	15.87%	14.77%	11.84%
Total Capital	15.87%	14.77%	12.91%

• Calculated as the ratio between the unit dividend and the average stock market value for 2022.

• Including funding repurchase agreements with institutional customers in the amount of Euro 503 million (Euro 208 million as at 31 December 2021).
  3 Net of impaired loans classified under "Assets held for sale".
  4 On the basis of the Bank of Italy's provision communicated to Banco di Desio e della Brianza S.p.A. and to the financial parent company Brianza Unione di Luigi Gavazzi e Stefano Lado S.A.p.A., on 18 May 2022, the "CRR" Brianza Unione Group was assigned the following minimum capital requirements to be complied with upon completion of the Supervisory Review and Evaluation Process (SREP): CET1 ratio of 7.35%, binding - pursuant to art. 67-ter TUB - to the extent of 4.85% (of which 4.50% for minimum regulatory requirements and 0.35% for additional requirements) and the remainder by the capital conservation buffer component, Tier1 ratio of 9.00%, binding to the extent of 6.50% (of which 6.00% for minimum regulatory requirements and 0.50% for additional requirements) and the remainder by the capital conservation buffer component and Total Capital ratio of 11.15%, binding at 8.65% (of which 8.00% against minimum regulatory requirements and 0.65% against additional requirements) and the remainder from the capital conservation buffer component.
  5 Pursuant to the transitional provisions introduced by Regulation (EU) 2017/2395 of 12 December 2017 as amended.
  6 The consolidated ratios at the level of Brianza Unione di Luigi Gavazzi e Stefano Lado S.A.p.A., the parent company of 50.41% of Banco di Desio e della Brianza S.p.A., were calculated in accordance with the provisions of articles 11(2) and (3) and 13(2) of the CRR Regulation.

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MAIN INDIVIDUAL FIGURES AS AT 31 DECEMBER 2022 OF THE PARENT COMPANY BANCO DESIO

• "Profit for the year" at Euro 88.2 million, an increase of approximately Euro 35.8 million (+68.3%), which benefited in particular from the positive trend in operations at Euro 208.0 million (+13.0%) and a lower cost of credit of Euro 34.0 million (-37.6%), partially offset by the higher impact of taxes of Euro 17.3 million (+71.9%), a non-recurring net loss of Euro 7.0 million (formerly a loss of Euro 0.7 million)
• "Operating profit" amounted to Euro 208.0 million, an increase of Euro 23.9 million compared to the comparison period (+13.0%). The core revenue items from operations increased by a total of Euro 27.6 million (+6.2%) compared to the comparison period, amounting to Euro 471.8 million. The aggregate "Operating expenses", which includes personnel expenses, other administrative expenses and net adjustments to tangible and intangible assets, amounted to approximately Euro 263.8 million (+1.4%).
• Loans to ordinary customers at around Euro 11.5 billion, up from the previous year's figure (+3.7%), positively influenced by the boost in consumer lending and medium/long-term loans impacted by the continuous derisking action implemented on the portfolio thanks to disbursements of new liquidity (mortgages and medium/long-term loans) to companies.
  "Gross impaired loans/gross loans" ratio of 3.3% (formerly 4.1%) "Net impaired loans/net loans" ratio of 1.7% (formerly 2.0%)
  "Gross non-performing loans/gross loans" ratio of 1.5% (formerly 2.2%) "Net non-performing loans/net loans" ratio of 0.5% (formerly 0.8%)
  Coverage ratio non-performing loans at 67.4% (formerly 63.3%) and before write-offs at 67.7 % (formerly 64.3%)
  Total impaired loan coverage ratio at 50.2% (formerly 51.4%) and before write-offs at 50.4% (formerly 52.1%)
  Performing loans coverage at 0.88% (formerly 0.93%)
• Total customer deposits Euro 29.7 billion (-2.4%)

of which direct deposits Euro 12.6 billion (+1.6%) Indirect deposits Euro 17.1 billion (-5.2%)

• Capital ratios well above the minimum individual requirements

		Individual
Capital ratios	Banco Desio	minimum
Brianza	requirements as
		at 31.12.2022
CET 1	15.87%	7.0%
TIER 1	15.87%	8.5%
Total Capital Ratio	15.87%	10.5%

Shareholders' equity Euro 1,118.6 million

Own Funds Euro 1,138.4 million (entirely attributed to CET1 + AT1)

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Consolidated balance sheet data

The value of loans to ordinary customers as at 31 December 2022 amounted to around Euro 11.5 billion, up from the previous year's figure (+2.9%).

As at 31 December 2022, the Group's total financial assets amounted to Euro 4.0 billion, an increase of about Euro 0.2 billion compared to the end of 2021 (+5.8%). The long-term investment policy (held-to-collect portfolio) is characterised by a significant exposure to Italian government bonds, albeit flanked by participation in primary market transactions on a select number of corporate issuers.

The net interbank position at the end of the year was a debit position of about Euro 3.1 billion, compared to the always debit position of about Euro 1.7 billion at the end of the previous year.

Total customer assets under administration stood at around Euro 29.7 billion, down from the balance at year- end 2021 (-2.4%), due to the reduction in indirect deposits (-5.2%), partially offset by the increase in direct deposits (+1.6%).

Direct deposits amounted to around Euro 12.6 billion, up 1.6% compared to 31 December 2021, due to the performance of customer deposits (+1.7%) and securities issued (+0.9%).

Indirect deposits recorded a balance of Euro 17.1 billion (-5.2%). Deposits from ordinary customers amounted to Euro 10.1 billion, a decrease of 8.1% compared to the end of the previous year, mainly attributable to the performance of assets under management (-10.1%).

Shareholders' equity attributable to the Parent Company as at 31 December 2022, including the profit for the period, totalled Euro 1,122.5 million, compared to Euro 1,088.7 million in the previous year's balance sheet. The positive change of Euro 33.8 million is attributable to the positive overall profitability for the period of Euro 52.5 million, partially offset by the allocation of the 2021 result.

On 25 January 2018, the Board of Directors of the bank, resolved to adhere to the transitional provisions introduced by Regulation (EU) 2017/2395 of 12 December 2017 aimed at mitigating the impact of the introduction of the IFRS9 accounting standard on capital and capital ratios.

At its meeting on 30 July 2020, the Board of Directors also resolved to avail itself of the option provided for in Regulation 2020/873 and thus, of the temporary treatment of unrealised gains and losses measured at fair value through other income statement components for government debt securities over the 2020-2022 period (exclusion factor of 1 in 2020, 0.70 in 2021 and 0.40 in 2022).

With reference to the Banco Desio Banking Group, Own Funds, after a pay out that takes into account the proposals for the allocation of the net profit of the Group companies subject to approval by the respective Shareholders' Meetings, as at 31 December 2022 amounted to Euro 1,132.9 million entirely attributed to CET1 + AT1, compared to Euro 1,131.5 million at the end of the previous year. The Common Equity Tier1 capital ratio was 14.8% (15.6% as at 31 December 2021). The Tier1 ratio was 14.8% (15.6% as at 31 December 2021), the Total Capital ratio was also 14.8% (15.7% as at 31 December 2021).

The calculation of the Consolidated Own Funds and prudential requirements that are subject to submission to the Bank of Italy as part of the Prudential Supervisory Reporting (COREP) and Statistical Reporting (FINREP) is performed with reference to Brianza Unione di Luigi Gavazzi e Stefano Lado S.A.p.A., which, according to European regulations, is the financial parent company of the banking group. Consolidated shareholders' equity calculated on the financial parent company Brianza Unione amounted to Euro 989.7 million as at 31 December 2022 (CET1 + AT1 at Euro 907.9 million + T2 at Euro 81.8 million) compared to Euro 973.0 million at the end of the previous year. The Common Equity Tier1 capital ratio was 11.0% (11.6% as at 31 December 2021). The Tier1 ratio was 11.8% (12.4% as at 31 December 2021), while the Total Capital ratio was also 12.9% (13.5% as at 31 December 2021).

On 18 May 2022, the Bank of Italy communicated to Banco di Desio e della Brianza S.p.A. and the financial parent company Brianza Unione di Luigi Gavazzi e Stefano Lado S.A.p.A. its decision on capital at the conclusion of the periodic Prudential Review Process ("SREP"), ordering that the Brianza Unione Group adopt the following capital ratios at the consolidated level:

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• CET 1 ratio of 7.35%, comprising a binding measure of 4.85% (of which 4.50% against the minimum regulatory requirements and 0.35% against the additional requirements determined as a result of the SREP) and the remainder from the capital conservation buffer component;
• Tier 1 ratio of 9.00%, comprising a binding measure of 6.50% (of which 6.00% against the minimum regulatory requirements and 0.50% against the additional requirements determined as a result of the SREP) and the remainder from the capital conservation buffer component;
• Total Capital ratio of 11.15%, comprising a binding measure of 8.65% (of which 8.00% against the minimum regulatory requirements and 0.65% against the additional requirements determined as a result of the SREP) and the remainder from the capital conservation buffer component.

Consolidated Income Statement

Profit for the year up by approximately Euro 26.6 million (+48.4%) benefited in particular from the positive trend in operations at 213.1 (+11.9%) and a lower cost of credit of Euro 33.4 million (-36.6%), partially offset by the higher impact of taxes of Euro 17.8 million (+67.3%), a non-recurring net loss of Euro 9.1 million (formerly a profit of Euro 1.1 million)

The main cost and revenue components of the reclassified income statement are analysed below.

Operating income

The core revenue items from operations increased by approximately Euro 27.9 million (+6.1%) compared to the comparison period, amounting to Euro 486.1 million. The trend is mainly attributable to the growth in net interest income of Euro 29.8 million (+12.2%), the net result of financial assets and liabilities of Euro 1.9 million (+22.5%) and other operating income and expenses of Euro 0.7 million (+31.1%), partially offset by the trend in net commissions, which decreased by Euro 4.4 million (-2.2%). The item dividends, which amounted to Euro 0.6 million (formerly Euro 0.7 million), remained in line with the previous period.

Operating expenses

The aggregate of operating expenses, which includes personnel expenses, other administrative expenses and net adjustments to tangible and intangible assets, amounted to about Euro 273.0 million and showed an increase of about Euro 5.3 million (+2.0%) compared to the comparison period.

Other administrative expenses and net adjustments to tangible and intangible assets increased by Euro 3.9 million (+4.7%) and Euro 0.7 million (+8.0%), respectively, compared to the comparison period; personnel expenses remained stable.

Result from operations

As a result, the result from operations as at 31 December 2022 amounted to Euro 213.1 million, an increase of Euro 22.7 million over the comparison period (+11.9%).

Result after taxes

The result from operations of Euro 213.1 million led to the current result after tax of Euro 90.6 million, up 68.4% from Euro 53.8 million in the comparison period, mainly due to:

• the lower cost of credit (given by the balance of net impairment adjustments to loans to customers and gains (losses) on the sale or repurchase of loans), which amounted to approximately Euro 57.9 million, compared to Euro 91.3 million in the comparison period;
• net value adjustments on securities owned negative by Euro 3.0 million (negative by Euro 1.2 million in the comparison period);
• net provisions for risks and charges of Euro 2.9 million (Euro 4.1 million in the comparison period);
• charges related to the banking system for ordinary contributions of approximately Euro 14.5 million (Euro 13.5 million in the comparison period);
• income tax on current operations of Euro 44.2 million (formerly Euro 26.4 million).

Non-recurring operating result after tax

As at 31 December 2022, there was a non-recurring loss after tax of Euro 9.1 million (formerly Euro 1.1 million profit). The item essentially consists of:

• Euro 3.2 million as a higher precautionary charge recognised in connection with a package of tax credits acquired from third parties and subject to seizure;

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• Euro 5.3 million for charges connected to the agreement signed with BPER Banca S.p.A. for the purchase of two Business Units consisting of a total of 48 bank branches ("Lanternina" Project);
• Euro 3.6 million related to the additional contribution to the Deposit Protection Fund - "Deposit Guarantee Scheme" requested by the FITD in December;
• Euro 3.2 million referred to the provision for operational risks related to the situation of particular legal uncertainty that re-emerged in the consumer credit sector following the Constitutional Court ruling (of 22 December 2022) that declared unconstitutionality of part of article 11-octies, paragraph 2, of the Decree Sostegni bis.

after the related positive tax effect of Euro 6.3 million. The item Income taxes from non-recurring items also includes the positive economic effect, recognised in February in the amount of Euro 1.5 million, related to a reimbursement request submitted to the Revenue Agency (IRAP for the year 2014 for the business unit transferred to the former subsidiary BPS).

Profit attributable to the Parent Company

The sum of the current result and the non-recurring profit, both after tax, considering the result attributable to minority interests, determines the profit for the period attributable to the Parent Company as at 31 December 2022 of approximately Euro 81.5 million.

***

As at 31 December 2022, the Group employed 2,115 people, a decrease of 26 resources compared to the previous year-end figure.

The distribution structure consists of 232 branches and is unchanged from the previous year-end figure.

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Proposal for the allocation of the Net Profit from the Parent Company's Individual Financial Statements approved by the Board of Directors

The Board of Directors intends to propose to the Ordinary Shareholders' Meeting the allocation of the Net Profit to the Shareholders as follows:

• Euro 0.1969 for each of the 134,363,049 ordinary shares

The proposed profit distribution with a 30.00% pay out, if approved, will allow an amount of approximately Euro 61.7 million to be allocated to equity reserves.

In accordance with the Stock Exchange calendar, the dividend will be paid on 10 May 2023, while the "ex- dividend" date, for the purposes of share prices, and the record date 7 will be 8 May and 9 May 2023, respectively.

***

The Financial Reporting Manager, Mauro Walter Colombo, declares, pursuant to paragraph 2 of article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the documented results, books and accounting records.

Desio, 9 February 2023

BANCO DI DESIO E DELLA BRIANZA S.p.A.

The Financial Reporting Manager

Mauro Walter Colombo

***

• Date of entitlement to dividend payment introduced in article 83-terdecies TUF of Legislative Decree no. 91/2012

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