CREDEM 2016 consolidated results: solid capital ratios, dividend €15 cent per share

Credem's Board of Directors, chaired by Giorgio Ferrari, approved today FY2016 individual and consolidated financial results, by confirming in full the preliminary results already approved on February 8th, 2016. Such results will be submitted to the shareholders' meeting called on April 27th, 2017 in its first convocation and on May 1st, 2017 in its second convocation.

"In my opinion, the steady growth of our customer base during these difficult years is the most revealing evidence that the quality of our service ‐ on which we invested keenly ‐ and our undisputable solidity have become increasingly important factors for the fundamental choice of customers (whether families or enterprises) on which bank to rely on for protecting and managing their interest" Nazzareno Gregori, Credem's General Manager declared "We are therefore encouraged to continue investing on people and technology in order to improve our service model and keep our profitability sustainable over time. So, coherently with this approach, also this year we will pay a good dividend to our shareholders while continuing to self sustain our growth strategy" Gregori concluded.

Solidity and Credit Quality at the Top of the Industry

In 2016 the Group continued to stand at the top of the banking sector in terms of solidity and credit quality. CET1 Ratio(1) was 13.15%, almost doubling the ECB regulatory SREP minimum requirement for 2017 (6.75%). Also, Net Bad Loans Ratio was 1.46%, less than one third of the industry average amounting to 4.89%(3), thus confirming Group's excellent credit quality over time.

Remarkable Profitability

Within a still difficult context, the Group delivered a significant profitability, that allowed proposing to the Shareholders' Meeting a dividend of €15 cent per share, stable compared to 2015. Total dividends to be paid to shareholders will be €49.7 million, bringing the amount of total dividends paid to shareholders in the last three years at €149 million(4). The dividend will be payable as from May 17th, 2017, with shares going ex-div on May 15th, 2017 and record date on May 16th, 2017. In 2016 Net Consolidated Profit was €131.9 million after contributing a total amount of more than €37 million (gross of the fiscal effect) to the Single Resolution Fund and to the Deposit Guaranteed Scheme. Net Consolidated Profit was €166.2 million in 2015, when materially positive non recurrent component due to the sizeable repositioning of the securities' portfolio had occurred. ROE(5) in 2016 was 5.4%.

Robust Organic Growth

In 2016 the Group continued to sustain the economy, with Loans to Customers(6) increased by 4.6% YoY (+€1 billion in value) compared to the industry whose performance in 2016 was

+0.4% YoY(3). In the last three years(4) lending expanded by 18.8% (+€3.7 billion in value). Group Customers' Funding(6) grew by 7.6% YoY (+€4.4 billion in value) and by 29.9% (+€14.5 billion) over the last three years(4). In 2016 the Group gained 112 thousand new customers (7).

Important Investments on People and Technology

The Group in 2016 hired 280 people(8), out of which 65.7% were young professionals, while total staff grew by +2.5% YoY (+7.3% in 3 years). Also, a plan to hire 120 young professionals within the end of 2017 was started. A total of 340 thousand hours of training (8 days per person on average) were provided to Group's personnel in 2016.

2016 Consolidated ROE(5) was 5.4% (7% in 2015).

€69,254 at the end of 2015. In detail, Direct Deposits from Customers grew by 10.4% YoY to €21,557 million compared to €19,567 million at the end of 2015. Group Direct Deposits were

€23,957 million compared to €21,916 million at the end of 2015 (+9.3% YoY). Insurance Reserves reached €6,336 million, +14.9% compared to €5,513 million at the end of 2015. Indirect Deposits amounted to €35,017 million, +4.9% compared to €33,395 million at the end of 2015. AUM grew by 9.2% YoY to €24,617 million compared to €22,543 million at the end of 2015; in detail Portfolio Management Accounts were €6,088 million (+7.8% YoY) whereas Mutual Funds and SICAVs were €11,472 million (+13.9% YoY).

Loans to Customers were up by 4.6% YoY (overperforming the industry by almost 4 percentage points as loans increased for the industry by 0.4% YoY(3)), reaching €23,687 million compared to €22,649 million at the end of 2015 while maintaining an excellent credit quality. In detail, Residential Mortgages inflows in 2016 were €1,151 million up by 23% YoY, with a stock of €6,715 million (+5% YoY).

Net Bad Loans Ratio was 1.46% (compared to 1.58% at the end of 2015) and less than one third of the industry average amounting to 4.89%(3). Bad Loans' coverage was 59.6% (60.8% at the end of 2015), despite the disposal of non collateralized bad loans amounting approximately to €90 million. Net Non Performing Loans were €806.8 million compared to

€793 million at the end of 2015.

Credemholding phased-in CET1 Ratio (1) at the end of 2016 was 13.15% (fully phased 11.9%) and phased-in Total Capital Ratio (1) was 14.4% (fully phased 13.6%).

At the end of 2016, Credem Group's distribution networks consisted of 631 branches, corporate centers and financial stores with 6,068 employees, 855 financial advisers with mandate, 259 Creacasa agents and 102 agents with exclusive mandate for "salary backed loans".

2017 Credem Group targets are substantially in line with recent past trends that showed a significant increase in the commercial development, although the macro environment continues to be weaker than expected; also, the business will be impacted by the guidelines of the supervisory bodies in terms of capital adequacy, robust profitability and rigorous governance both in terms of risk and liquidity controls. Overall, volumes' expansion will be driven mainly by asset management while moderate, but still above industry's average, will be the increase of the loan book. Deposits from customers will likely to expand not at the same pace of AUM and loans, also as a result of the considerable availability of liquidity enhanced by the current monetary policy actions. As far as revenues generation, fees are likely to increase, in particular with reference to the asset management business. On the other hand, the net interest will be posively affected by the targeted increase in lending and low cost of funding, and negatively influenced by further pressure on customers' spread. Traditional banking fees evolution could be less performing, also due to the changing regulatory framework related to credit and debit cards payments. The current financial markets conditions paired with a substantially stable dynamic of the security proprietary portfolio, will also probably limit the contribution from financial activities. Credit risk is likely to remain stable, considering the expected evolution of the economy and the long standing approach of the Group in terms of risk appetite. It will be furthermore confirmed the significant level of spending for the ongoing commercial development, as well as for the increasingly complex regulatory framework aimed at strengthening the organizational structure and the related information technology features. It will be key to be able to control customers'

spread (in a progressively more competitive environment) and to increase loans' volumes. Equally, it will be necessary to focus on the best combination among clients' segments, types of loan and risk/returns opportunities in order to deliver a satisfactory performance. Finally, the Group must continue to sustain IT investments to support the commercial network expansion.

The Board of Directors resolved today to propose to the shareholders' meeting that will take place on April 27th, 2017, the remuneration plan based on financial instruments denominated "Piano Incentivante 2017". The purpose of such plan is to incentivize and loyalize the "key people" of the group in compliance with the regulatory framework of the banking sector. The plan will involve 4 executive officers, the General Manager, 12 executives with specific strategic duties and other 26 managers defined as "key people". The plan provides for a free of charge assignment of Credito Emiliano S.p.A.'s ordinary shares (shares' total amount is equal to 50% of the incentives and is deferred on a timeframe of at least four years). The assignment would take place whilst in employment and subject to the achievement of pre-defined set of individual and collective goals, as detailed in the "Documento Informativo" related to the plan. Being the activation of the plan subordinated to meeting future targets, all informations related to the maximum number of financial instruments to be assigned will be disclosed, in compliance with the regulation, in a time subsequent to the one when they will be available for the company. The Board of Directors, in the same session, also considering the recommendation of the Appointment and Remuneration Committee held on March 10th, 2017, checked the needed requirements for activating the "Piano Incentivante 2016", for a maximum number of Credito Emiliano S.p.A.'s ordinary shares assigned amounting to 399,151. Further details related to above mentioned plans are illustrated in tables nr. 2 and nr. 8 attached to the "Relazione annuale all'assemblea degli azionisti relativa alla politica di Remunerazione di Gruppo". The following documents: "Documento informativo relativo al Piano Incentivante 2016 basato su azioni" and "Relazione annuale all'assemblea degli azionisti relativa alle politiche di remunerazione e incentivazione di Gruppo" issued as recommended by the current regulation for the discipline about this matter, will be made available to shareholders at Credem registered office, as well as on corporate website www.credem.it - page "Chi Siamo - Assemblee" from April 6th, 2017.

***

In accordance with paragraph 2 of Article 154-bis of the Consolidated Law on Finance, the Financial Reporting Manager Paolo Tommasini declares that the accounting information, both individual and consolidated, contained in this press release correspond to documentary records, ledgers and accounting entries.

***

Find here attached the consolidated balance sheet and income statement as well as the reclassified consolidated P&L related to the unrequired disclosure on preliminary Credem Group results. As of today, the independent auditors have not yet completed the auditing of individual and consolidated operating reports. A presentation that illustrates 2016 consolidated Group results is available in the section "Investor Relations" of Credem's website www.credem.it

For additional information about Credem and the other companies in the Group, please visit Credem website www.credem.it