INTESA SANPAOLO: CONSOLIDATED RESULTS AS AT 30 SEPTEMBER 2021

CONSOLIDATED RESULTS AS AT 30 SEPTEMBER 2022

08.11.2022

THE RESULTS FOR THE FIRST NINE MONTHS OF 2022 CONFIRM THAT INTESA SANPAOLO IS ABLE TO GENERATE SOLID PROFITABILITY AND CREATE VALUE FOR ALL ITS STAKEHOLDERS EVEN IN COMPLEX CONTEXTS THANKS TO ITS WELL-DIVERSIFIED AND RESILIENT BUSINESS MODEL, WITH NET INCOME - DRIVEN BY NET INTEREST INCOME - OF €4.4 BILLION WHEN EXCLUDING RUSSIA DE-RISKING.

IN Q3 2022, EXPOSURE TO RUSSIA WAS REDUCED BY AROUND 65% (AROUND €2.3 BILLION), AND WAS DOWN TO 0.3% OF THE GROUP'S TOTAL LOANS TO CUSTOMERS.

NET INCOME FOR 9M 2022 WAS €4,367 MILLION WHEN EXCLUDING €1.3 BILLION WRITE-DOWNS FOR RUSSIA AND UKRAINE, FULLY IN LINE WITH THE 2022-2025 BUSINESS PLAN NET INCOME TARGET OF OVER €5 BILLION FOR THIS YEAR. STATED NET INCOME WAS €3,284 MILLION.
INTESA SANPAOLO IS FULLY EQUIPPED TO CONTINUE SUCCEEDING IN THE FUTURE DUE TO THE GROUP'S KEY STRENGTHS, NOTABLY UNDER THE FINANCIAL, OPERATIONAL, TECHNOLOGICAL AND ORGANISATIONAL PROFILE.

THE IMPLEMENTATION OF THE 2022-2025 BUSINESS PLAN IS PROCEEDING AT FULL SPEED, WITH THE KEY INDUSTRIAL INITIATIVES WELL UNDERWAY. THE BUSINESS PLAN FORMULA AND, SPECIFICALLY, THE 2025 NET INCOME TARGET OF €6.5 BILLION ARE CONFIRMED, WITH ADDITIONAL POTENTIAL UPSIDE DERIVING FROM THE INTEREST RATE INCREASE, HIGH FLEXIBILITY IN MANAGING OPERATING COSTS, AND THE ZERO-NPL BANK STATUS.
VALUE GENERATION FOR ALL STAKEHOLDERS IS ALSO GROUNDED IN INTESA SANPAOLO'S STRONG ESG COMMITMENT WHICH IN THE NINE MONTHS OF THE YEAR TRANSLATED, AMONG OTHER ACTIONS, INTO A ONE-OFF CONTRIBUTION OF AROUND €50 MILLION TO THE GROUP'S PEOPLE (EXCLUDING THE MANAGERS) TO MITIGATE THE IMPACT OF INFLATION AS WELL AS INTO SEVERAL HUMANITARIAN INITIATIVES TO SUPPORT PEOPLE OF THE GROUP'S SUBSIDIARY PRAVEX BANK AND THE UKRAINIAN POPULATION.

THE CAPITAL POSITION WAS SOLID AND WELL ABOVE REGULATORY REQUIREMENTS: FULLY LOADED COMMON EQUITY TIER 1 RATIO WAS 12.4% DEDUCTING FROM CAPITAL €2.3 BILLION OF DIVIDENDS ACCRUED IN 9M 2022 AND THE €3.4 BILLION BUYBACK AUTHORISED BY THE ECB, WITHOUT TAKING INTO ACCOUNT A BENEFIT OF AROUND 110 BASIS POINTS DERIVING FROM THE ABSORPTION OF DEFERRED TAX ASSETS (DTAs), OF WHICH AROUND 40 BASIS POINTS OVER THE 2022-2025 BUSINESS PLAN HORIZON.

OPERATING MARGIN WAS UP BY 2% ON 9M 2021, WITH OPERATING INCOME UP BY 0.1% AND OPERATING COSTS DOWN BY 1.8%.
CREDIT QUALITY IMPROVED:
- GROSS NPLs WERE REDUCED BY 25.5% ON YEAR-END 2021;
- NPL RATIO WAS 2.4% GROSS AND 1.3% NET, RESPECTIVELY 1.9% AND 1% ACCORDING TO THE EBA METHODOLOGY; NPL RATIO WOULD BE 2.2% GROSS AND 1.2% NET TAKING INTO ACCOUNT THE REDUCTION DUE TO THE ADDITIONAL DISPOSALS PLANNED IN 2022 ALREADY PROVISIONED FOR IN Q4 2021, RESPECTIVELY 1.7% AND 0.9% ACCORDING TO THE EBA METHODOLOGY;
- ANNUALISED COST OF RISK IN 9M 2022 STOOD AT 54 BASIS POINTS, 27 BASIS POINTS WHEN EXCLUDING ADJUSTMENTS FOR THE RUSSIA-UKRAINE EXPOSURE NET OF THE PARTIAL RELEASE OF GENERIC PROVISIONS SET ASIDE IN 2020 FOR FUTURE COVID-19 IMPACTS.
INTESA SANPAOLO CONTINUES TO OPERATE AS A GROWTH ACCELERATOR IN THE REAL ECONOMY IN ITALY: IN 9M 2022, MEDIUM/LONG-TERM NEW LENDING GRANTED BY THE GROUP TO ITALIAN HOUSEHOLDS AND BUSINESSES AMOUNTED TO AROUND €46 BILLION. IN 9M 2022, THE GROUP FACILITATED THE RETURN TO PERFORMING STATUS OF AROUND 3,200 COMPANIES, THUS SAFEGUARDING OVER 15,000 JOBS. THIS BROUGHT THE TOTAL TO OVER 136,000 COMPANIES SINCE 2014, WITH OVER 680,000 JOBS SAFEGUARDED OVER THE SAME PERIOD.

• NET INCOME OF €4,367M IN 9M 2022 WHEN EXCLUDING WRITE-DOWNS FOR THE RUSSIA-UKRAINE EXPOSURE (UP 9% VS €4,006M IN 9M 2021). STATED NET INCOME OF €3,284M
• OPERATING MARGIN UP BY 2% ON 9M 2021
• OPERATING INCOME UP BY 0.1% ON 9M 2021
• OPERATING COSTS DOWN BY 1.8% ON 9M 2021
• IMPROVEMENT IN CREDIT QUALITY TREND:
• DECREASE IN NPLs:
 GROSS NPL REDUCTION OF AROUND €54BN SINCE THE SEPTEMBER 2015 PEAK
 NPL STOCK DOWN 25.5% GROSS AND 14.8% NET ON YEAR-END 2021
 NPL TO TOTAL LOAN RATIO OF 2.4% GROSS AND 1.3% NET, RESPECTIVELY 1.9% AND 1% ACCORDING TO THE EBA METHODOLOGY; NPL RATIO WOULD BE 2.2% GROSS AND 1.2% NET TAKING INTO ACCOUNT THE REDUCTION DUE TO THE ADDITIONAL DISPOSALS PLANNED IN 2022 ALREADY PROVISIONED FOR IN Q4 2021, RESPECTIVELY 1.7% AND 0.9% ACCORDING TO THE EBA METHODOLOGY
• ANNUALISED COST OF RISK IN 9M 2022 TO 54 BASIS POINTS (FROM 59 BASIS POINTS IN 2021), 27 BASIS POINTS WHEN EXCLUDING ADJUSTMENTS FOR THE RUSSIA-UKRAINE EXPOSURE NET OF PARTIAL RELEASE OF GENERIC PROVISIONS SET ASIDE IN 2020 FOR FUTURE COVID-19 IMPACTS (FROM 25 BASIS POINTS IN 2021 WHEN EXCLUDING PROVISIONS TO ACCELERATE NPL DELEVERAGING)
• SOLID CAPITAL POSITION, WELL ABOVE REGULATORY REQUIREMENTS:
• COMMON EQUITY TIER 1 RATIO AS AT 30 SEPTEMBER 2022, AFTER DEDUCTING FROM CAPITAL (*) €2.3BN OF DIVIDENDS ACCRUED IN 9M 2022 AND THE €3.4 BN BUYBACK (°):
- 12.6 % PHASED-IN (1)
- 12.4% FULLY LOADED (2) (3) WITHOUT TAKING INTO ACCOUNT THE BENEFIT OF AROUND 110 BASIS POINTS DERIVING FROM THE ABSORPTION OF DEFERRED TAX ASSETS (DTAs), OF WHICH AROUND 40 BASIS POINTS OVER THE 2022-2025 BUSINESS PLAN HORIZON
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(*) Deducting from capital also the coupons accrued on the Additional Tier 1 issues.
(°) Amount, approved by the Shareholders' Meeting and authorised by the ECB, equivalent to the 2019 suspended dividend.
(1) Calculated including the mitigation of the impact of the first time adoption of IFRS 9.
(2) Calculated excluding the mitigation of the impact of the first time adoption of IFRS 9.
(3) Estimated pro-forma fully loaded Common Equity Tier 1 ratio of 13.6%, taking into account the total absorption of deferred tax assets (DTAs) related to goodwill realignment, loan adjustments, the first time adoption of IFRS 9 and the non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the Aggregate Set of Banca Popolare di Vicenza and Veneto Banca, as well as the expected absorption of DTAs on losses carried forward and DTAs related to the acquisition of UBI Banca and the agreement with the trade unions of November 2021, and the expected distribution on the 9M 2022 net income of insurance companies.

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Turin - Milan, 4 November 2022 - At its meeting today, the Board of Directors of Intesa Sanpaolo approved the consolidated interim statement as at 30 September 2022 (°) (7).
The results for the first nine months of 2022 confirm that Intesa Sanpaolo is able to generate solid profitability and create value for all its stakeholders even in complex contexts thanks to its well-diversified and resilient business model, with net income - driven by net interest income - of €4.4bn when excluding Russia de-risking. In Q3 2022, exposure to Russia was reduced by around 65% (around €2.3bn), and was down to 0.3% of the Group's total loans to customers (°°).
Value generation for all stakeholders is also grounded in the strong ESG commitment of Intesa Sanpaolo. In the first nine months of the year, this translated, among other actions, into a one-off contribution of around €50m to the Group's people (excluding the managers) to mitigate the impact of inflation as well as into several humanitarian initiatives to support people of the Group's subsidiary Pravex Bank and the Ukrainian population.
Net income for the nine months was €4,367m when excluding write-downs of €1.3bn for Russia and Ukraine (°°°), fully in line with the 2022-2025 Business Plan net income target of over €5bn for this year. Stated net income amounted to €3,284m. Cross-border loans to Russia are largely performing and classified in Stage 2.
Intesa Sanpaolo is fully equipped to continue succeeding in the future due to the Group's key strengths, notably under the financial, operational, technological and organisational profile. The formula of the 2022-2025 Business Plan and, specifically, the 2025 net income target of €6.5bn are confirmed. The implementation of the Plan is proceeding at full speed, with the key industrial initiatives well underway:
• massive de-risking, slashing cost of risk:
- massive deleveraging, with a €3.9bn gross NPL stock reduction in the first nine months of this year, reducing the net NPL ratio to 1% (°°°°);
- focus on modular approach and sectorial forward looking, factoring in macroeconomic scenario, and on proactive credit management;
- focus on the action plan dedicated to the Banca dei Territori Division, with strong management of underlying cost of risk and NPL inflows from performing loans, and new solutions for new needs arising in the current scenario;
- extension of cybersecurity anti-fraud protection to new products and services for retail customers, including the use of Artificial Intelligence; adoption of Open Source Intelligence solutions to empower Cyber Threat Intelligence capability;

(°) In accordance with Article 65-bis and Article 82-ter of the Issuers' Regulation, effective as of 2 January 2017, Intesa Sanpaolo opted for periodical disclosure, on a voluntary basis, of financial information as at 31 March and 30 September of each financial year, in addition to the annual report and the half-yearly report. This information consists of interim statements approved by the Board of Directors, basically providing continuity with the interim statements published in the past.
(7) Methodological note on the scope of consolidation on page 28.
(°°) After adjustments, the cross-border on-balance credit exposure to Russia amounted to €1.1bn of which €1.05bn to customers (taking into account a disposal of €0.4bn gross, €0.3bn net, finalised at the beginning of October), net of €0.9bn guarantees by Export Credit Agencies (€0.4bn off-balance, net of €0.5bn guarantees by ECA) and the on-balance credit exposure of the Russian subsidiary Banca Intesa and the Ukrainian subsidiary Pravex Bank amounted to €1.07bn of which €0.3bn to customers of the Russian subsidiary (€0.27bn off-balance). The credit exposure to Russian counterparties currently included in the SDN lists of names to which sanctions apply amounted to €0.4bn.