Credem, 2016 preliminary consolidated results: solidity (CET1 13.15%), profitability (ROE 5.4%), support to the economy (loans +4.6% YoY)

Capital soundness ratio (CET1 Ratio(2)) at 13.15%, well above the ECB regulatory minimum requirement (6.75%(3));

strong credit quality with a Net Bad Loans Ratio at 1.46%, among the best performers in the industry.

Loans(4) to Customers up by 4.6% YoY (+€1 billion YoY) compared to the industry(5) whose performance in 2016 was +0.68% YoY. In detail mortgages sold were €1.151 million (+23% YoY);

Over the last three years(6) loans to households and enterprises grew by 18.8% (+€3.7 billion).

Among the few Italian banking groups with a growing headcount: 280 hirings(7) in 2016, out of which 65.7% were young professionals, total staff(7) grew by +2.5% YoY (+7.3% in 3 years);

Ongoing plan to hire 120 young professionals within the end of 2017;

340 thousand hours of training delivered in 2016, more than 8 days per person on average.

Continuous increase in the number of customers within a still

complex environment: 112 thousand new customers

(8)

acquired;

Group Customers' Funding(4) at +7.6% YoY (+€4.4 billion), over

the last three years Direct Deposits from Customers grew by 29.9% (+€14.5 billion) proving customers' trust in the bank and the wotrthiness of the services offered.

Approximately €40 million(8) IT investments in order to develop technological infrastructures and provide customers with up to date integrated software solutions on different sales channels.

Net Profit at €131.9 million, compared to €166.2 million in 2015, the latter affected by significant non recurrent components. In 2016 contribution to various national and european rescue funds amounted to approximately €37 million, gross of fiscal effect;

ROE at 5.4% in 2016.

Credem's Board of Directors, chaired by Giorgio Ferrari, approved today FY2016 individual and consolidated preliminary financial results(1). Capital soundness was among the best in the industry with CET1 Ratio(2) at 13.15%, compared with the ECB regulatory minimum requirement

of 6.75%(3), Loans(4) to Customers were up by 4.6% YoY despite a still difficult environment and with credit quality remained among the highest in the Italian banking sector (Net Bad Loans ratio at 1.46% in 2016). Investments on people continued with 280 hirings(7), customer(8) base increased (112 thousand new customers in 2016) and so did Group Customers' Funding(4) (+€4.4 billion in 2016). The Group remained focussed on innovation with remarkable investments in Information Technology amounting approximately to €40 million(8). These are the 2016 main indicators for Credem Group, that, within a global context of enduring uncertainty, kept on producing a remarkable profitability with a Net Consolidated Profit at €131.9 million after contributing a total amount above €37 million (gross of the fiscal effect) to the Single Resolution Fund and to the Deposit Guaranteed Scheme. 2016 Net Consolidated Profit was 20.6% lower compared to €166.2 million in 2015, when a significant non recurrent component due to the sizeable repositioning of the securities' portfolio had occurred. ROE remained at a satisfactory level, at 5.4%.

"I am very proud to lead a team that once again demonstrated its ability to move cohesively and aim at common challenging targets", Nazzareno Gregori, Credem's General Manager declared."Today's excellent results confirm the value of our people, who shared Group's growth strategy and implemented it through effective actions in order to meet challenging goals" Gregori continued. "We are among the most solid banking groups in the country and in the future we aim at increasing our market shares while keeping under control our excellent credit quality, as usual. Also, we will focus on preserving our profitability as well as looking for the next steps of our business model evolution, to maintain a sound positioning in the sector. Being in good shape and well capitalized allows us to anticipate trends rather than being forced to follow them. Within this context", Gregori added, "technology will have a crucial role. We must be able to pilot innovation rather than being dragged by it and we must always keep in mind that we are driven by our customers' needs in order to provide them with the best service model coherently with our capabilities and excellences" Gregori concluded.

Credem's General Manager, Mr. Nazzareno Gregori, will present 2016 Preliminary Consolidated Results on Thursday, February 9th, 2017 in a conference call starting at 10 am CET.

Operating Income was €1,106.7 million compared to €1,127 million in 2015 (-1.8% YoY). In detail, Interest Margin (10) was €455.8 million, +4.0% compared to €438.2 million in 2015. Non Interest Margin (11)(12) was €650.9 million compared to €688.8 million in 2015 (-5.5% YoY). Such downward is explained by a lower trading contribution (-44.3% YoY) due to a less intense trading activity on the securities' portfolio. Commissions and fees were overall growing 2.2% YoY, with management and brokerage fees increasing +7.3% YoY and banking commissions, that were penalized by regulatory changes, going down 5.4% YoY.

Operating Costs (12) were €713.2 million compared to €683.3 million in 2015 (+4.4% YoY) to sustain the commercial activity, to develop the IT infrastructure and to fine tune the organization that is stressed by an increasingly demanding and challenging regulatory framework. In detail, Administrative Expenses were €223.7 million (+6.0% YoY), whereas Payroll Costs were €489.5 million (+3.6% YoY).

Cost/Income Ratio (13) was 64.4% compared to 60.6% in 2015.

Gross Operating Profit was €393.5 million compared to € 443.7 million (-11.3% YoY). D&A equalled at 45.7 million compared to €40.8 million in 2015 (+12% YoY), mostly because of relevant IT investment that the Group has been implementing.

Operating Profit was €347.8 million compared to €402.9 million in 2015 (-13.7% YoY).

Provisions for Risk and Charges were €27.3 million (€17.7 million in 2015), also in consequence of legal disputes and lawsuits. Net Adjustments to Loans reduced sharply by 35.2% YoY at €73.7 million compared to €113.8 million in 2015.

Net Extraordinary Income/Charges (12) were -€50.1 million (-€32.2 million at the end of 2015) negatively affected by a total contribution of €37.4 million to the Single Resolution and Deposit Guaranteed Scheme Funds, gross of the fiscal effect, as well as by a settlement with the tax authority, and positively affected by the capital gain realized on the Visa Europe stake disposal.

Net Profit before Taxes was €196.7 million compared to € 239.2 million in 2015 (-17.8% YoY), Income Taxes were €64.8 million (€73 million in 2015, -11.2% YoY). Net Consolidated Profit was therefore €131.9 million compared to €166.2 million in 2015 (-20.6% YoY), when a significant non recurrent component due to the sizeable repositioning of the securities' portfolio had occurred.

2016 Consolidated ROE(14) was 5.4% (7% in 2015).

Group Customers' Funding at the end of 2016 was up by 7.6% YoY to €62,910 million (€58,475 million in 2015). Group's Total Funding was €73,989 million, +6.8% YoY compared to €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 0.68% YoY(5)) to €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 well below the industry average. 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. Non Performing Loans were €806.8 million compared to €793 million at the end of 2015.

Credemholding phased-in CET1 Ratio (2) at the end of 2016 was 13.15% (fully phased 11.9%) and phased-in Total Capital Ratio (2) 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".

On Dec 12th 2016, Credem Group was officially informed of the ECB final resolution regarding the capital ratios' requirements to be met within the context of the Supervisory Review and Evaluation Process (SREP). In detail, the new 2017 CET1 Ratio minimum requirement is 6.75%(3). 2016 year end CET1 Ratio(2) of 13.15%, is well above the minimum requirement. The ECB acknowledged that "Credito Emiliano broadly has in place sound, effective and complete strategies and processes for assessing, maintaining and distributing internal capital" and deemed adequate Group's liquidity level, without requesting any adjustment measure. Such a judgement furtherly strengthens Credem Group's reliability standing and represents a significant protection factor for all those subjects who maintain any kind of relationship with the Group. The ECB also fixed the minimum threshold for Tier1 Ratio at 8.25% and for Total Capital Ratio at 10.25%. Also in these cases, Group's indicator at the end of 2016 were well above the requirements, with a Tier 1 Ratio(2) at 13.15% and a Total Capital Ratio(2) at 14.44%.

Credem's General Manager, Mr. Nazzareno Gregori, will present 2016 Preliminary Consolidated Results on Thursday, February 9th, 2017 in a conference call starting at 10 am CET. To enter in the conference, attendees can call, 15 minutes before the start, the following numbers:

+39 02 69633533 (from Italy and other International countries, excluding UK and US)

+44 (0) 203 427 1903 (from UK)

+1 646 254 3388 (from US).

The presentation will be available in Italian and English by choosing a confirmation code after the access (2506235 for Italian and 7604724 for English).

The conference with a synchronized slide show will also be accessible via webcast, by visiting Credem's corporate website at the following link: http://www.credem.it/EN_Investor_Relations/Pages/Conference_call.aspx

***

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. Such disclosure does not represent a consolidated report compliant with IAS/IFRS principles. In fact, the 2016 draft consolidated report will be approved by the next Board of Directors to be held on March 16th, 2017 and in the meantime, it might be subject to changes depending on events that may occur in the meantime. Therefore, the 2016 consolidated report will be made available to the public in due time after the date of approval of March, 16th, 2017, as prescribed by the law, along with the auditors' report. A presentation that illustrates 2016 preliminary consolidated Group results will be soon 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