Banco di Desio e della Brianza S p A : Consolidated non-financial statement 2023

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SUSTAINABILITY REPORT 2023

Consolidated non-financial statement in accordance with Legislative Decree no. 254/2016

Banco di Desio e della Brianza S.p.A. | Registered Office via Rovagnati, 1 - 20832 Desio (MB) | Tax Code no. 01181770155 | Registered with the Metropolitan Chamber of Commerce of Milan, Monza and Brianza and Lodi | Share Capital EUR 70,692,590.28 fully paid-up | Member of the Interbank Deposit Protection Fund | and of the National Guarantee Fund | Registered in the Banking Register under ABI Code no. 3440/5 | Parent Company of Gruppo Bancario Banco di Desio e della Brianza | Registered with the Banking Group Register under no. 3440/5

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Contents
Letter from the Chairman to Stakeholders	4
Executive Summary	6
Highlights 2023	6
Sustainability awards and recognitions	8
Methodological Note and Background	10
Methodological Note	10
About Us: Group Profile	13
Where we are and where we aim to be	17
Sustainability for Banco Desio	20
The Banco Desio Group's "Beyond 26" Business Plan and the Sustainable Development Goals (SDGs)	21
The plan to integrate E(SG) factors into the Bank's decision-making system	28
Stakeholder engagement and materiality analysis	30
E: Our responsibility towards the environment	38
Transition towards a sustainable, green and circular economy	38
Reduction of direct/indirect environmental impacts	41
European Taxonomy of environmentally sustainable activities	49
Sustainability in portfolio investment choices	56
ESG Framework for Credit Policies	58
Products and services with environmental purposes	60
S: Our social responsability	64
Valuing our people	64
Protection of Human Rights and Diversity	75
Quality of life and corporate welfare	80
Communication and dialogue with social partners	83
Health and Safety	84
Local development and community support	88
Responsible supply chain management	90
Quality and innovation in customer relations	93
Products and services with a social purpose	97
G: Our governance	100
Governance	100
Sustainability Governance	108
Creating shared value	112
Sustainability risk management	114
Security and data protection	117
Tax transparency	127
Appendix	131
GRI Content Index	131
Conversion factors	141
European Taxonomy: Template Annex VI	144
Glossary	145
Report of the independent auditors	146

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Letter from the Chairman to Stakeholders

[GRI 2-22]

Dear Readers,

We are pleased to present to you the seventh edition of our Sustainability Report, which once again recounts the very positive results of our ongoing commitment to pursuing the environmental, social and economic goals that reflect the founding values of the Banco Desio Group. Aware of the role we play in the financial markets, in this document we intend not to just report on our activities, but to also share our progress, to inspire and engage stakeholders on our journey towards a more sustainable and equitable world. This edition represents a significant milestone in our commitment to sustainability and spurs us on to continue innovating and making progress with continuously increasing determination to achieve a better future for all.

Through our deep-rooted local presence, we strive to create real and lasting value by collaborating with local communities, supporting innovation and promoting inclusive economic growth. Our ambition is to be not only a source of financial confidence, but also a catalyst for positive change.

Over the past few years, we have achieved remarkable results, the result of an innovative path that we have embraced and supported with conviction. Year after year, we faced the challenges emerging in the ever-changing environment, while maintaining a firm awareness of our identity and history. This has allowed us to adapt flexibly and grow while preserving the core values that distinguish us and guide Banco Desio towards an even more promising future.

We have experienced, and continue to experience, complex and delicate global upheaval: the pandemic, the Russia-Ukraine war and the Israel-Palestine conflict, with their dramatic social consequences, which have further accentuated fears and uncertainties about future outlooks, which were already adversely impacted by the effects of climate change. The resulting trends in commodity prices and procurement costs triggered the sharp rise in inflation, to which the central banks reacted by adopting restrictive monetary policies that on one hand cooled the price spiral and on the other hand widened the interest rate spread.

Due to the rate hike imposed by the European Central Bank, the banking sector ended 2023 with positive results, which, in our specific case, are supported by non-recurring items linked to the sale of the merchant acquiring business unit to Worldline Italia and the acquisition of the business unit from the BPER Group.

The economic value generated by our Group in the reporting year amounted to EUR 702 million1, compared to EUR 464 million in 2022, the economic value distributed to the various stakeholder categories thus reached EUR 439 million, compared to EUR 369 million in 2022, while the economic value retained exceeded EUR 262 million, compared to EUR 96 million in the previous year.

The significant increase in the economic value retained derives not only from the non-recurring transactions mentioned above, but also from the proposed allocation of profit that Banco Desio's Board of Directors intends to propose to the Shareholders' Meeting, called for 18 April 2024, in order to strengthen our Group's assets so as to continue to support the strategy of creating shared value for our stakeholders, which we strive to support with a view to sustainable development; the same proposal also includes the decision to allocate EUR 46.7 million to a specific restricted reserve pursuant to Art. 26 of Decree-Law no. 104 of 10 August 2023, in lieu of the payment of the extraordinary tax ("tax on extra profits"), according to the option set forth in that law.

The "Beyond 26" 2024-2026 business plan also goes in a developmental direction, in addition to acting as a continuation of the previous D23 plan, whose targets we exceeded. The new Plan is more markedly characterised by sustainability, which we refer to as "ESG Infusion", in line with the current regulatory and reference competitive context, but also and above all because sustainability is intrinsic in the DNA of Banco Desio. Banco Desio's ambition is to be recognised by the market, customers and institutions as a leading bank that is championing the transition to a sustainable economy with full respect for environmental, social and good governance values. We are currently evaluating our credit and investment policies in light of the analysis performed on our portfolios to verify their degree of alignment

1 Ref. "Creating Shared Value" disclosure below

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with the targets set by the Paris Climate Agreement. We are also structuring dedicated financial and investment products and services to this end. We are evolving our control function frameworks and embarking on a path of integrating sustainability-related risks into our business and risk management system, defining specific indicators through the integration of the Risk Appetite Framework, planning appropriate training and communication to support ongoing change and increasingly specifically incorporating sustainability elements into our management bonus system.

The year that has just ended has seen us grow considerably in both performance and size; the business unit we acquired has brought with it many new customer relationships, with the 250 colleagues who have arrived to strengthen our team and the 48 branches thanks to which we have consolidated our local presence, which now also reaches Sardegna, to which I am personally attached. As our CEO, Alessandro Decio, also mentioned recently, today we are a stronger and more solid Group.

In this sustainability report, we present our non-financial performance and, above all, how we intend to achieve the sustainability commitments we have made in the new "Beyond 26" Business Plan. Our challenge is to unite tradition and innovation, with the awareness that, without the latter, the former can result in something that is not sustainable and does not create value. We want to be a modern bank, but still recognisable due to our values, we want to be perceived as a bank that is friendly and close to its customers, ready to support them in this change as well. We have a growing ESG rating ambition, and we aim to join the major initiatives promoted by the United Nations to contribute even more decisively to the pursuit of zero direct emissions by 2030 and indirect emissions by 2050. We are developing the value proposition to offer "green" financing products to individuals and small and medium-sized enterprises, as well as services and investment products that combine a return on capital with sustainability objectives, aligned with the European taxonomy.

The direct impacts we generated throughout 2023 were highly positive, and although we grew due to the 48 bank branches acquired, the Group recorded an overall reduction in energy consumption of 2% compared to the previous period, the result of the range of energy efficiency initiatives deployed. We continue to procure electricity exclusively from certified renewable sources.

Also in terms of direct impacts, the women hiring rate stands at 51% and the hiring of people under 30 remains basically the same as in previous period at 33%.

Even after the entry of colleagues from the BPER Group, we can confirm a gender pay gap of zero and a significant increase of 29% in the training hours provided to employees compared to the previous period.

These results were possible thanks to the people working in the Banco Desio Group who are the enabling factor for its present and future success, including the enhancement of our brand in private banking.

This is why we are continuing with our plan to integrate E(SG) factors into the Bank's decision-making system, known as the ESG Masterplan, which aims to support the economic transition of the area in which we operate to a sustainable, circular and low-carbon economy. This commitment reflects our constant adaptation to emerging challenges and the need to adopt responsible business practices for a sustainable future.

Once again this year, I would like to express my deep gratitude for what has been achieved so far. This recognition is for all of those who have contributed and are contributing significantly to writing the history of our Group with their professionalism, experience and dedication. Together, we will continue to work with commitment and team spirit to meet future challenges and pursue the challenging goals we have set for ourselves.

As I said, we continue to remain aware that the complexity of the current scenario requires prudence and vision. I have no doubt that we will continue to demonstrate our ability to adapt and respond innovatively to the needs of our stakeholders. We will continue to be a fundamental point of reference, holding firm to our values even in technological innovation and digital transformation to make the banking services we offer increasingly accessible and efficient. Through collaboration and shared commitment, we intend to consolidate our role as an engine of sustainable development and well-being for the areas in which we operate.

Desio, 29 February 2024	The Chairman
	Stefano Lado

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Executive Summary

Highlights 2023

[GRI 2-6]

2023 | performance

2023 | the environment

1. Pro-formafigure net of consumption relating to the branch acquired from the BPER Group. Considering the broader scope of the Banco Desio Group at the end of 2023, the figure becomes -2% (Scope 1 and Scope 2)
2. Pro-formafigure net of consumption relating to the branch acquired from the BPER Group. Considering the broader scope of the Banco Desio Group at the end of 2023, the figure becomes -7% (Scope 1)
3. Pro-formafigure net of consumption relating to the branch acquired from the BPER Group. Considering the broader scope of the Banco Desio Group at the end of 2023, the figure becomes +27%
4. Pro-formafigure net of consumption relating to the branch acquired from the BPER Group. Considering the broader scope of the Banco Desio Group at the end of 2023, the figure becomes +2%
5. Banco Desio Group figure at the end of 2023 inclusive of the branch acquired from the BPER Group

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2023 | people

1. Target referring to new recruits
2. At least 2 new initiatives/collaborations/memberships promoting diversity, inclusion and equal opportunities

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Sustainability awards and recognitions

Banco di Desio e della Brianza has been included since 2016 in the SE Italian Banks Index of Standard Ethics, an independent sustainability rating agency based in London.

On 20 February 2024, the update of the sustainability rating by the specialised agency "Standard Ethics" was announced, with an upgrade of Banco Desio's SER corporate rating to "EE" from the previous "EE-", increasingly positioning Banco Desio among the best performers in its sector.

The Standard Ethics label has been known since 2004 in the world of "sustainable finance" and ESG (Environmental, Social and Governance) studies and aims to provide clients with a snapshot of their positioning in relation to the sustainability and corporate governance guidelines promoted by the UN, OECD and the European Union.

The Standard Ethics Rating is a Solicited Sustainability Rating (SSR) with three significant features:

• Solicited - it is issued at the recipient's request through a direct, regulated bilateral relationship.
• Standard - The rating is always comparable as the methodology and issue parameters are standardised based on predetermined guidelines and the algorithm takes into account issuer size and type. In the case of Standard Ethics, the parameters are the European Union, OECD and UN guidelines on governance and sustainability.
• Independent - The Agency offers guarantees of impartiality and independence and has no shareholding or financial relationships with the requesting party.

On 7 November 2023, the fifth edition of the "Sustainability Report Award" was held, organised by the Department of Economics and Business Sciences of the University of Pavia with the patronage of the Italian Society of Teachers of Accounting and Business Administration (SIDREA) and the collaboration of the following technical partners: Banco di Desio e della Brianza, STEAMiamoci and LSEG.

The "Sustainability Report Award" event was born in 2019, inspired by the idea of recognising commitment and rewarding Italian companies on the basis of their non-financial statements or, more generally,

sustainability reporting.

The importance of non-financial statements stems from the need to convey information on non-financial issues to various stakeholder groups, issues that take on an even more significant role in light of the new European CSRD Directive, which expands the group of companies subject to regulatory obligations, in addition to revising the methods and content of sustainability reporting.

The aim of the event was to disseminate the culture of non-financial performance reporting for the promotion of sustainable actions. It also aimed to contribute to the dissemination of fundamental principles, elements and concepts that could represent the reference standards related to non-financial communication to consolidate a sustainable corporate culture.

The reports submitted for evaluation were divided into three categories of companies, for each of which three outstanding companies were selected.

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Like in the previous edition, again this year a specific section of the Award was dedicated to Diversity & Inclusion issues, in cooperation with STEAMiamoci of Confindustria.

Aware of the increasing importance of the publication of non-financial information, especially for companies that are not subject to reporting obligations, in view of the obvious benefits that derive from it, also in terms of reducing the cost of capital, Banco Desio wanted to follow up on this initiative.

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Methodological Note and Background

Methodological Note

The Consolidated Non-Financial Statement of the Banco Desio Group (hereinafter also referred to as the Sustainability Report) aims to communicate, in a transparent manner and in accordance with internationally recognised regulatory frameworks, to its stakeholders the approach and policies defined on sustainability issues, describing the performance achieved in the year of reference in the area of social- environmental responsibility and long-term value creation.

This non-financial statement is prepared pursuant to Legislative Decree no. 254/2016 and of the Regulation approved by Consob Resolution no. 20267 of 18 January 2018 and, to the extent necessary to ensure an understanding of the company's business, its performance, its results and the impact it produces, covers environmental, social, personnel-related, human rights, active and passive anti-corruption issues, which are relevant taking into account the characteristics of the company and the expectations of the stakeholders.

The document constitutes a separate Report marked "Non-Financial Declaration" of the Group for the year 2023 in application of Art. 5 of Legislative Decree no. 254/2016.

The Sustainability Report is drawn up in compliance with the GRI Standards according to the "in accordance" option and the "Financial Services Sector Disclosures", for the aspects related to the specific sector in which the Banco Desio Group operates, also taking into account the Guidelines for Non-FinancialReporting in Banks - Reflections and working proposals in light of Legislative Decree no. 254/2016 published by the ABI (October 2018).

In defining the specific content of the various indicators, reference was also made to the documents "Guidelines on the Application in the Bank of the GRI (Global Reporting Initiative) Environmental Standards" (December 2023) and "Statement on the Determination and Distribution of Added Value" (September 2019), published by the ABI.

When drafting the contents of this non-financial disclosure, account was also taken of the indications in the European Securities and Markets Authority (ESMA) document - "European common enforcement priorities for 2023 annual financial report" of 25 October 2023.

Reporting process

The process of drawing up the document involved all the corporate functions of the Parent Company and Subsidiaries, which are responsible, each for their own area of competence, for collecting, validating and sending the information to be included in the sustainability report, based on the indications contained in the relevant internal regulations, as well as on the instructions shared in the internal communications specifically issued.

In particular, the Parent Company's Financial Reporting and Sustainability Area, reporting to the Financial Reporting Manager, carries out the activity of (i) coordinating the collection of qualitative and quantitative information and (ii) processing and consolidating the data received from the various Departments/Areas and Offices of the Parent Company and the subsidiaries falling within the scope of consolidation as specified above.

The reporting process thus defined and structured involves the use of Tagetik software for a more efficient data collection and consolidation process.

To ensure the correct use of the platform, an operating manual was provided, addressed to all the staff identified for each Department/Area/Office/Function involved in the process of reporting non-financial information, focused on the data entry process.

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