Illimity Bank S p A : 4Q22&FY22 results – Net profit of €75.3 mln euro in 2022 (+15% y/y) with a ROE of 9%

RESULTS AT 31 DECEMBER 2022

NET PROFIT OF 75.3 MILLION EURO (+15% Y/Y) AND AN

ROE1 OF CA. 9%

4Q22 NET PROFIT INCREASED TO 24.7 MILLION EURO

THE HIGHEST EVER

OPERATING PROFIT INCREASES TO 131 MILLION EURO (+18% Y/Y) DESPITE EXPENDITURE IN KEY INVESTMENTS FOR THE LAUNCH OF TECH INITIATIVES

REVENUE OF 324.6 MILLION EURO (+20% Y/Y)

NET CUSTOMER LOANS AND INVESTMENTS TO 3.8 BILLION EURO (+37% Y/Y) AND

ASSETS TO 6.4 BILLION EURO (+36% Y/Y)

EXCELLENT ASSET QUALITY WITH AN ORGANIC

NPE RATIO2 OF 1.4%

SOLID CAPITAL BASE WITH A CET13 RATIO OF 15.8%

660 BPS ABOVE THE SREP REQUIREMENT

HIGH LIQUIDITY LEVEL OF CA. 0.6 BILLION EURO

KEY ESG OBJECTIVES MET AND ADDITIONAL TARGETS SET THROUGH 2025

OUTLOOK FOR 2023:

CONFIRMATION OF THE STRATEGIC PLAN'S GUIDELINES

NET PROFIT EXPECTED OF 100 MILLION EURO

Milan, 10 February 2023 - Chaired by Rosalba Casiraghi, the Board of Directors of illimity Bank S.p.A. ("illimity" or the "Bank") yesterday approved the illimity Group's results at 31 December 2022 which close with a net profit of 75.3 million euro, up by 15% over 31 December 2021.

1. ROE - Return on Equity: calculated as net profit for the year as a ratio of average shareholders' equity during the year (1/1-31/12/2022).
2. Related to the business originated by illimity, excluding the loan portfolio of the former Banca Interprovinciale.
3. Phased-inCET1 ratio.

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Corrado Passera, CEO and Founder of illimity, commented: "The year just ended is confirmation of illimity's sustained and sustainable growth trajectory. Not only has the Bank posted another year of significant growth, it has once again been able to combine this with a solid level of profitability, a contained risk profile and a very robust capital base and liquidity position, with a very strong focus on ESG objectives.

We are especially proud of the results achieved despite the investments in the launch of the new tech initiatives - Bilty, Quimmo and HYPE - which will create great value for the Group.

We have completed our IT platform which will enable us to fully exploit the new data and Augmented and Artificial Intelligence technologies.

Backed by the results achieved so far we will continue to grow, remaining focused on the support for SMEs, to which we have disbursed credit of more than 2.6 billion euro, and on distressed corporate loans management with an increasing concentration on the UTP sector.

We can therefore confirm the guidelines of our strategic plan and we set ourselves a target for the current year of 100 million euro net profit".

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Main dynamics of 4Q22:

The achieved results highlight an acceleration in business dynamics in the second half of the year and in particular in 4Q22, a period in which the Group's two core businesses (SMEs and corporate distressed credit) posted a strong performance and an overall business origination which more than doubled q/q to reach 665 million euro.

More specifically, operating income rose to 91.0 million euro in 4Q22 (+22% q/q), driven by an increase in all the main components: net interest income was up by +10% q/q, despite a hike in the cost of funding; net fees and commissions rose by 40% q/q, due to robust business origination; profits from closed purchased distressed credit positions more than doubled over the previous quarter.

The quarter ended with an operating profit of 37.8 million euro, an increase of 37% q/q, and a net profit of 24.7 million euro, the highest ever.

Main dynamics of 2022:

The year was characterised by a significant rise in customer loans and investments, which reached 3.8 billion euro (+37% y/y), driven by strong business origination which reached a total of 1.7 billion euro in the year, up by 53% y/y thanks to the contribution of all the business divisions.

Operating income rose to 324.6 million euro, up by 20% y/y, driven by both the increase in net interest income (+22% y/y), which benefited on on side from an upswing in volumes and the rise in interest rates and on the other side from the growth in net fees and commissions (+73% y/y), resulting from the significant level of business origination, the acceleration in servicing mandates and the increased contribution made by investment banking activities.

Operating costs ended the year at 193.6 million euro, up by 21% y/y due to the completion of the sizing of the operating structures and investments carried out to launch the three tech initiatives.

As the result of the above dynamics, operating profit closed at 131.0 million euro, an increase of 18% y/y. The pre-taxprofit was equal to 100.9 million euro, with a net result of 75.3 million euro.

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Credit quality continued at excellent levels with an organic NPE ratio of 1.4% and a cost of risk that remained contained at 30 bps thanks to (i) a very prudent and selective approach during the onboarding phase of operations, (ii) a high guaranteed component of the loans of the Growth Credit Division of 55% and (iii) a conservative valuation of the assets with a real estate underlying in the investment portfolio of the Distressed Credit Division.

The capital base remains solid and at a high level with a phased-in CET1 ratio of 15.8% and a phased-in Total Capital Ratio of 20.4%, as well as a liquidity reserve remaining robust at 0.6 billion euro, with widely diversified sources of finance ranging from retail to corporate and institutional.

Among the key events in 2022 was the merger giving rise to ARECneprix4 which was finalised during the year; this is now the third player in the corporate UTP market with assets under management of around 10 billion euro, of which 30% non-captive. The combination of the expertise of the two companies - on the one hand an engineered, scalable and specialised approach by neprix in the management of corporate loans, and, on the other, AREC's competence in the value enhancement of real estate assets and large-scale UTP loans - has led to the birth of a total asset management company capable of identifying solutions to complex situations that generate value for all the parties involved. ARECneprix's unique and distinctive business model will generate incremental business opportunities and significant Group synergies.

In addition, investments have been completed for the set-up of the three tech initiatives, b-ilty, Quimmo and HYPE, whose negative contribution to Group's profitability was 20 million euro, but is already expected to improve significantly from the start of 2023.

Update on the Group's Sustainability Plan

Sustainability is integrated into every aspect of illimity's strategy and activities, as well as being an essential component of its corporate identity. This approach has led to the achievement of important results in 2022 thanks to illimity's sustainable growth path.

The business model, 100% cloud-based and fully digital, enables optimisation of the direct environmental impact, making illimity's emission intensity the lowest in the Italian banking sector. illimity has been carbon neutral (Scope 1 and 2 emissions) since 2021.

The illimiters are now over 850, with a well-balanced gender mix embracing three generations, coming from over 300 organisations and more than 20 different sectors. These characteristics have enabled illimity to obtain UNI PdR gender equality certification, the first in the banking sector. In addition, illimity has been included as a Great Place to Work for the fourth successive year, and for the second time entered into the Best Workplaces ranking at European level.

The considerable emphasis given to sustainability matters and the high progress made by the Bank in such areas have led to an improvement in all the most significant ESG ratings in 2022, enabling it to achieve scores in line with the best market players, despite the young age of illimity

On the basis of the significant results and with a view to constantly improving its ESG strategy the Bank approved new qualitative and quantitative targets through 20255, aiming for the pursuit of growth increasingly inspired by sustainability.

1. Effective from 01/01/2023
2. A detailed list of the ESG objectives will be available on the Bank's website by consulting the Consolidated Non-financial Statement to be published on March 20, 2023 at the following link: https://www.illimity.com/en/sustainability.

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Environmental objectives focused in particular on the pressing question of the transition towards a net-zero economy, in which the banks play, and will play, a key role in supporting and accompanying the financed companies in their energy transition process. The objectives of a social nature have been strengthened by way of diversity and inclusion commitments, gender equality certification and initiatives to increase employee awareness. Lastly, from its very beginnings, illimity is aligned to best practice on the integration of sustainability into its business strategies, processes, policies and its Group governance system, and has the aim of consolidating this positioning.

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Key balance sheet figures

Figures in millions of euro

Reclassified Balance sheet						31.12	31.03	30.06	30.09
					2021	2022	2022	2022
Reclassified Balance sheet						508	695	397	364
Cash and cash equivalent
Due from banks and other financial institutions		468	215	191	184
Customer loans								2,762	2,832	3,194	3,318
- Distressed Credit	1	investments					923	938	921	860
- Distressed Credit	1	senior financing					336	402	436	446
- Growth Credit	2								1,434	1,421	1,733	1,800
- Cross-over & Acq. Finance	3					628	643	731	809
- Turnaround								438	488	630	612
- Factoring									368	289	372	379
- b-ilty									3	7	24	38
- Investment banking								16	108
- Non-core former Banca Interprovinciale			66	64	64	64
Financial assets Held To Collect (HTC)	4			0	108	161	215
Financial Assets Held To Collect & Sell (HTCS)	5	300	424	416	396
Financial assets measured at FVTPL	6				77	82	118	150
Investments in associates and companies			80	78	76	78
subject to joint control
Goodwill									36	36	71	65
Intangible assets								49	52	56	65
Other assets (incl. Tangible and tax assets)	7		382	400	446	455
Total assets									4,661	4,922	5,127	5,291
Due to banks									411	412	539	581
Due to constumers								2,818	3,065	3,107	3,186
Bond/Securities									500	505	510	515
Shareholders' Equity							773	777	802	813
Other liabilities									159	163	169	196
Total liabilities									4,661	4,922	5,127	5,291
									3,729	3,982	4,156	4,282
Common Equity Tier 1 Capital						642	646	642	660
Risk Weighted Assets						3,411	3,662	3,974	3,678

31.12 2022

681 183 3,776 1,021 469 2,037 891 665 481 50 133 66 428 392 105

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65 70 579 6,355 1,205 3,409 653 841 246 6,355 5,267 683 4,330

Δ %	Δ %
31.12.2022 /	31.12.2022 /
30.09.2022	31.12.2022

• 31.03.2021 / Δ 31.03.2021 /
  87% 34%

(0)%	(61)%
14%	37%
19%	11%
5%	40%
13%	42%
10%	42%
9%	52%
27%	31%
29%	1,756%
23%	n.s.
2%	(1)%
99%	n.s.
(1)%	31%
(30)%	37%
(3)%	(4)%
--	80%
7%	42%
27%	52%
20%	36%
107%	193%
7%	21%
27%	31%
3%	9%
26%	55%
20%	36%
23.0%	41.2%
3%	6%
18%	27%

1. Distressed Credit Division, formerly the DCIS Division.
2. Growth Credit Division, formerly the SME Division.
3. Includes part of the net loans to existing customers of Banca Interprovinciale, which due to their features are considered consistent with illimity's Growth Credit segment. It also includes the corporate high-yield bonds classified as HTC.
4. Includes the Bank's securities portfolio classified at amortised cost.
5. HTCS: financial assets measured at fair value through comprehensive income . This item also includes ca. 18 million euro of investments in alternative debt made by the Investment Banking Division and classified as HTCS.
6. FVTPL: other financial assets at fair value through profit or loss. This item includes equity financial instruments purchased as part of Turnaround transactions, junior tranches of securitised non-performing loans acquired as part of Senior Financing transactions and investments in distressed energy credit purchased as part of the DC Division's activities.
7. This includes assets of ca.99 million deriving from the purchase of tax credits (the "Ecobonus" scheme).
   Any failure of the above figures to reconcile arises exclusively from rounding.

At 31 December 2022, the Bank's total assets stood at 6.4 billion euro, an increase of 36% over the same period of the previous year (+20% q/q).

Net customer loans and investments reached 3.8 billion euro, up by 37% over 31 December

2021 (+14% q/q). Especially:

• the Growth Credit Division saw a significant acceleration in volumes in the year, which rose overall by 42% over 2021 (+13% q/q);
• the Distressed Credit Division posted rising volumes both in senior financing (+40% y/y and +5% q/q) and investments in distressed credit (+11% y/y and +19% q/q );
• the Investment Banking Division in its first year of life achieved volumes of 133 million euro,

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