Consolidated interim Report as at 31 March 2018 approved

Net profit for the period of € 251.0 million, the best quarter in the Group's history

CET1 ratio Phased In  at 14.61% to confirm the BPER's strong capital strength with a large capital buffer compared with the 2018 SREP set at 8.125% by the ECB. CET1 ratio Fully Phased of 11.71%

With a view to accelerating the process of improving asset quality and in line with the strategic action communicated to the market last November, the BPER Group has selected a portfolio of gross non-performing loans potentially transferable of around € 6.4 billion, approximately two thirds of total gross doubtful loans. The net values of this portfolio were aligned with those of a probable sale scenario, as envisaged by the new accounting standard IFRS 9 introduced from 1 January 2018. This action led to additional provisions for a total of more than € 1.1 billion, resulting in coverage in line with the highest levels of the Italian banking sector:
- coverage of non-performing loans at 57.4% (+8.7 bps on the end of 2017);

- coverage of bad loans at 66.5% (+7.2 bps on the end of 2017);

- coverage of unlikely-to-pay loans at 39.9% (+12.7 bps on the end of 2017)

This important intervention allows us to look with optimism at the evolution of the Group's asset quality. The Board of Directors has reviewed the targets for reducing the stock of non-performing loans in more ambitious terms compared to those contained in the NPE Strategy communicated in November last year.

The new gross NPE target ratio is now around 11.5% in 2020 and below the threshold of 10.0% in 2021.

The significant improvement in asset quality is continuing with a substantial reduction:

- in the stock of non-performing loans, which fell below the threshold of € 10.0 billion, also thanks to a write-off on bad loans for € 0.5 billion;

- in the gross NPE ratio to 19.3% from 19.8% at the end of 2017, down for the 7th consecutive quarter;

- in the net NPE ratio to 9.3% from 11.3% at the end of 2017;

- in the Texas ratio  to 98.7% (-3.2 percentage points on the end of 2017)

Net result from operations of € 325.9 million, supported in particular by the very positive trend in net commissions and the net profit from financial activities, also thanks to gains realised on debt securities. The annualised cost of credit, calculated according to the new accounting standard IFRS 9, stands at a decidedly low level of 22 bps.