1

September 2019

2

NPL Industryo 330 Bn€ is the total number of Italian NPL and UtP to be managed.

o The NPL industry shows a large number of operators (49 services and 984 Credit Recovery Agencies), which register a double digit growth of

revenues.

o Recovery performance is around 3% on yearly basis and doesn’t seem to correlate with secured incidence in CAGS portfolios.

o The NPL portfolio aging has a strong impact in NPL recovery yearly performance (7,8% <1 year vs 2% from 1 to 3 years of portfolio aging).

NPL transactions and pipelineo NPL portfolio disposals will go on to support the achievement of the NPL ratio European target: expected at 46 Bn€ in 2019 and 43 Bn€ in 2020

with a growing incidence of secondary market.

o The market share of secured NPL transaction is growing yoy (~50% of the market in 2018 and 2019).

o 66% of NPL transaction volumes are concentrated on the top 10 Originator Sellers.

o 2019 UtP pipeline could reach 29 Bn€ due to several big deals.

MARKET WATCH NPL

Italian Banks NPE’s scenarioo Bank NPE at Q2 2019 (168 Bn€) has diminished steadily since 2015 achieving, to date a total reduction of 51%.

o Italy has one of the strongest reductions in NPE ratio amongst other European countries, but it still has one of the biggest NPE ratios (8%).

o The pace of deterioration of performing loan back to the pre-crisis levels but the switch from UtPs to NPLs remains high.

o The UtPs have come down less than Bad Loans even if the banks have reduced the stock by 53 Bn€ from 2015 end.

3MARKET WATCH NPL

4

12 13 21 18 12 14 7 7 6 6 5 5 5 5 4 4 4

127117 116 104 99 94 91 86 83 79 76 7453 58

76 94 11313 15

1515

1778

107

125

156

184 201201 203

192173

167 164

132123

100 92 90

157

194

237

283

327341

325 326

302

278266 260

223211

182172 168

8,9%

10,8%

13,3%

16,7% 17,1% 17,0%16,3% 16,3%

15,3%14,3%

13,6% 13,3%

11,5%11,0%

9,5%9,0% 9,0%

-1%

4%

9%

14%

19%

24%

0,0

50,0

100,0

150,0

200,0

250,0

300,0

350,0

400,0

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Est Q2

2019

Bad Loans

Restructured

Watchlist

Unlikely to Pay

Past Due

NPE RATIO

Classification of impaired Loans updated in 2015

MARKET WATCH NPL Sources: Banca d’Italia, based on Statistical Database; NPE ratios revised on EBA guidelines; Q2 2019 Forecast: Banca IFIS internal estimation

Bank NPE - Bn€ and Percentages

-8%

-51%

5MARKET WATCH NPL Sources: EBA “Risk Dashboard” report, NPL ratios based on weighted average

Q4 2015

Q1 2019

1,0 1,0 1,0 0,9

0,9 0,8 0,8

0,7 0,7 0,7 0,7

Q4

2015

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

47% 4% 6% 19% 17% 3% 19% 6%

GR FR ES PT IT DE IE EU

41% 3% 4% 10% 8% 1% 5% 3%

-11,3%

-32,5%-43,4%

-49,9% -50,9%-57,6%

-72,7%

-46,6%

NPL Ratios recalculated bases on the solution implemented by the EBA to disseminate information on EU’s largest banks, as established by Decision EBA/DC/130

Note that the terms “non-performing exposure (NPE) and “non-performing loan” (NPL) are used interchangely in the EBA “Risk Dashboard”

European Landscape - Bank NPE ratios* - PercentagesEuropean Non Performing Loans – Tn€

34% 33% 34% 34% 33% 33% 33% 30% 30% 28% 26%Italy %

6

1,5%

1,5%

2,5%

4,3%

3,4%

3,1%

4,2%

4,5%

4,0%

3,1%

2,2%

1,8%

1,3%

1,3%

11

12

18

31

33

32

39

49

42

40

35

27

22

17

MARKET WATCH NPL

16

19

35

64

53

49

68

71

59

42

29

23

18

18

Sources: Banca IFIS internal estimation based on Banca d’Italia statistical Database

Deterioration

rate %

PerformingNon

Performing

UTP &

Past due

0,9%

0,9%

1,2%

1,9%

2,0%

1,8%

2,3%

3,0%

2,7%

2,7%

2,4%

1,9%

1,5%

1,2%

Bad Loan

New non performing

flow Bn€

Deterioration rate: annual flow of adjusted non-performing loans/Stock of performing loans at

the previous year (2019 annualized Banca IFIS internal estimation)

Danger rate: annualized flow of new adjusted bad loans/Stock of performing loans at the previous year (2019

annualized Banca IFIS internal estimation)

Danger

rate %

New NPL flow

Bn€

7MARKET WATCH NPL Sources: Banca IFIS internal analysis based on Banca d’Italia statistical Database

1,86% 1,80% 1,28%2,11% 2,22% 2,07%

2,95%

4,68%

2,67%3,35%

11,08%

6,44%

3,70% 4,23%

2,01%1,11% 1,35%

7,62%

2,21% 1,71% 2,03%

Deterioration rate

Corporate

Industrial Service Construction Real Estate Trade Agriculture

2006 2015 2019

1,17% 1,28% 0,89% 1,24% 1,16% 1,31% 1,58%

4,20%

2,40%3,01%

8,79%

6,36%

3,69% 3,51%

1,73%1,15% 1,14%

4,36%

2,51%1,56% 1,44%

Danger rate Corporate Industrial Service Construction Real Estate Trade Agriculture

Deterioration rate corporate - %

Danger rate corporate - %

Deterioration rate: Annual flow of adjusted non-performing loans/Stock of performing loans at the previous year (2019 annualized estimate data) Danger rate: Annualized flow of new adjusted bad loans/Stock of performing loans at the previous year (2019 annualized estimate data)

8

78

107125

156

184201 201 203

192173 167 164

132123

100 92 90 88

63

3752

6580 85 89 87

77 72 66 6453

43 40 32 32 32 3223

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 JUL'19 EST 2019

Gross Bad Loans Net Bad Loans

MARKET WATCH NPL Sources: Banca d’Italia, based on Statistical Database; Forecast: Banca IFIS internal estimation

Bank Gross Bad Loan/Total Asset by debtor type

Bank Bad Loan - Bn€ and Percentages

4,1%

8,1%9,9%

13,4%

16,2%18,0% 18,4% 18,5% 17,9%

16,6% 16,1% 15,6%

12,9% 12,1%

9,9% 9,3% 9,2% 8,9%

6,3%

3,8%5,1% 5,9%

6,8% 7,5% 7,9% 7,8% 7,8% 7,4% 7,0% 6,7% 6,7%5,6% 5,2% 4,4% 4,2% 4,0% 4,0%

2,9%

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Jul'19 Est 2019

NPL Ratio Corporate NPL Ratio Individual

53% 52% 48% 49% 54% 56% 57% 62% 63% 62% 62% 68% 68% 67% 68% 66% 65% 64% 64%

-12%

Coverage

rate %

9MARKET WATCH NPL Sources: Banca d’Italia, based on Statistical Database; Forecast: Banca IFIS internal estimation

4,6%4,9%

6,2%

7,7%

9,3%9,0%

8,4% 8,3%

7,5% 7,3%6,9% 6,7% 6,5% 6,3% 6,0% 5,9% 5,9%

4,4%

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Est Q2 2019 Est 2019

UtP Ratio

19% 18% 21% 23% 27% 27% 33% 34% 34% 34% 34% 38% 38% 38% 39% 39% 39% 39%

Bank UtP - Bn€ and Percentages

Bank Gross UtP/Total Asset

-42%

Coverage

rate %

6674

91

109

131 127117 116

10499 94 91 86 83 79 76 74

555460

7183

96 92

79 7769 65 62

57 54 52 48 47 4533

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 EST Q2

2019

EST 2019

Gross UtP Net UtP

10MARKET WATCH NPL Sources: Banca d’Italia, based on Statistical Database; Est Q2 2019 forecast: Banca IFIS internal estimation

Bank Gross Bad Loans – Percentages of Corporate and Secured loans (% on total Bad Loans)

76% 75% 76% 78% 79% 79% 79% 79% 79% 78% 78% 78% 77% 77% 76% 75% 75%

24% 25% 24% 22% 21% 21% 21% 21% 21% 22% 22% 22% 23% 23% 24% 25% 25%

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

NPL Individual

NPL Corporate

31% 30% 31%36%

43% 44% 44% 47% 45% 46%53% 53%

44%48%

42% 41% 40%

69% 70% 69% 64% 57% 56% 56% 53% 55% 54% 47% 47% 56% 52% 58% 59% 57%

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 EST Q2 2019

NPL Unsecured

NPL Secured

78 107 125 156 184 201 201 203 192 173 167 164 132 123 100 92 90Gross Bad

Loan, Bn€

11MARKET WATCH NPL

12

19 17

71 66

11

35

26

46

17

2015 2016 2017 2018 2019 Est 2020 Est

Estimation

Pipeline

Actual

43

43 50 64 8347 27

55 25

2015 2016 2017 2018 2019 2020

# Deals

MARKET WATCH NPL Sources: Banca IFIS NPL Market Database – Press releases and news – Banca IFIS internal estimation

% Secondary

% GACS

NPL Transactions - Bn€, Percentages

n.a.0% 3% 45% 43% 17%

40%31% 51% 4% 2% 35%

Bn€

13MARKET WATCH NPL Sources: Banca IFIS NPL Market Database – Press releases and news

7%19%

11% 8%17%

55%

49%

14%12%

20%

36%13%

4% 16%

36%

0%

5%

42%

45%

19%

2%

14%

30%19%

8%

2015 2016 2017 2018 2019 Est

Mixed mostly Unsecured

Mixed mostly Secured

Mixed

Unsecured

Secured

NPL Transactions by portfolio type - Bn€ and Percentages

19 17 71 67 46

14MARKET WATCH NPL Sources: Banca IFIS NPL Market Database – Press releases and news – Banca IFIS interna estimation

NPL Transactions: Estimated avg prices - Bn€ and Percentages

YearGBV

Bn€

Estimated

avg price %

Market Value

Bn€

2019 46 1227%

2018

2017

66 1726%

71 1319%

15MARKET WATCH NPL Sources: Banca IFIS NPL Market Database – Press releases and news

33,6 31,2

16,3 13,8

9,0

4,2 4,2 3,8 3,7 3,0

Unicredit MPS Banco BPM Intesa Sanpaolo Veneto Banks BPER Creval Cassa

Centrale Banca

Iccrea Banca Caricesena;

Carim; Carismi

Mainly Unsecuerd Mailnly Secured Mixed Unsecured Secured

29,2

16,4

12,3 10,8 9,8 9,0

5,4 4,5 4,4 4,1

Quaestio Capital

Management Sgr

Banca IFIS Fortress; PIMCO Lindorf-Intrum -

CarVal Investors

Credito Fondiario AMCO (ex SGA) Christofferson Robb Anacap MBCredit Solution Cerberus

2015- 2019 NPL Transactions Top Originator Sellers - Bn€

2015- 2019 NPL Transactions Top Buyers - Bn€

16MARKET WATCH NPL Sources: Banca IFIS NPL Market Database – Press releases and news

Buyer Bn€ GBV Servicer Seller

Illimity 0,7 Illimity Banco BPM

Illimity 0,2 Illimity Confidential

Illimity 0,2 Illimity Monte dei Paschi di Siena

Illimity 0,3 Illimity Unicredit

Unipol Rec 1,3 Unipol Rec BPER

SPF Investment Management LP 1,1 n.a. Unicredit

Varde, Barclays, Guber Banca 0,7 Guber Banca Cassa Centrale Banca

Banca IFIS 0,4 Banca IFIS Confidential

Banca IFIS 0,3 Banca IFIS Findomestic Banca

Guber Banca 0,4 Guber Banca Confidential

Guber Banca 0,3 Guber Banca Monte dei Paschi di Siena

Bain Capital Credit 0,6 Aquileia Capital Services Monte dei Paschi di Siena

Sagitter 0,3 Sagitter Mediocredito Italiano

Barclays Bank, Guber Banca 0,2 Guber Banca Unicredit

WRM Group 0,2 Green Vir srl Intesa Sanpaolo

Confidential and other minus 4,1 n.a. n.a.

Total 11,3

17MARKET WATCH NPL Sources: Banca IFIS NPL Market Database – Press releases and news

Seller Project Ongoing On plan Announced Bn€ GBV

Unicredit Capri 0,3 0,3

Unicredit n.a. 0,2 0,2

Unicredit Matera 0,8 0,8

Unicredit Roma 1,4 1,4

Unicredit Sandokan II 0,8 0,8

BPER n.a. 2,0 2,0

Banca Popolare di Bari n.a. 2,0 2,0

Christofferson Robb; Bayview ex Beyond the Clouds 2,0 2,0

UBI n.a. 0,7 1,0 1,7

REV Gestione Crediti n.a. 1,5 1,5

Intesa Sanpaolo Rep 1,4 1,4

Iccrea Banca n.a. 1,2 1,2

Cariparma n.a. 1,0 1,0

Banche Popolari - Luzzatti n.a. 1,0 1,0

Gruppo Carige n.a. 0,9 0,9

Hypo Alpe Adria Bank Terzo 0,8 0,8

Banco Desio n.a. 0,5 0,5

Unipol n.a. 0,4 0,4

Cassa Centrale Banca n.a. 0,4 0,4

Banca Agricola Popolare di Ragusa n.a. 0,4 0,4

Creval n.a. 0,3 0,3

Confidential and other minus n.a. 3,5 0,0 10,7 14,2

13,2 6,2 15,6 34,9

18MARKET WATCH NPL Sources: Banca IFIS NPL Market Database – Press releases and news

10

1

28

29

2018 2019

Pipeline

Actual

5 10# Deals

UtP Transactions - Bn€, Percentages

3

Year Seller Project Buyer Bn€ GBV

2018

Veneto banks n.a. AMCO (ex SGA) 9,0

Credit Agricole - Cariparma Valery Bain Capital Credit 0,5

Monte dei Paschi di Siena Alfa 2 Algebris 0,3

Monte dei Paschi di Siena Alfa 2 GWM and Farallon 0,1

Gruppo Carige n.a. Bain Capital Credit 0,4

10,2

2019

Monte dei Paschi di Siena Papa2 Cerberus 0,5

Monte dei Paschi di Siena Quebec Illimity 0,5

Intesa Sanpaolo e Unicredit n.a. Pillarstone (KKR) 0,3

1,2

Total Actual 11,4

Year Seller Project Potential Buyer Bn€ GBV

2019

Pipeline

Unicredit n.a. Dea Capital, Clessidra 13,3

Unicredit Dawn n.a. 1,0

Intesa Sanpaolo Levante n.a. 0,3

Intesa Sanpaolo n.a. Prelios 3,0

Monte dei Paschi di Siena Lima Bofa Merrill Lynch 0,1

Monte dei Paschi di Siena n.a. SGA (Partnership) 7,0

Monte dei Paschi di Siena n.a. n.a. 0,2

MultiSeller n.a. n.a. 2,0

Gruppo Carige Carige CDP 0,3

Gruppo Carige n.a. AMCO (ex SGA), Illimity, DoValue 0,9

28,1

19MARKET WATCH NPL

20MARKET WATCH NPL Sources: Banca IFIS NPL Market Database – Press releases and news – Banca IFIS interna estimation

90 Bn€ bad Loan*

UtP*74 Bn€

166 Bn€

Volume

transactions

from 2015 to

August 2019

11 Bn€

10 Bn€

Recovery and

final write-off on

recovery

UtP Recovery

return to preform**1 Bn€

246 Bn€ Italy Gross Bad Loan*

Italy Gross UtP*

330

84 Bn€

NPL Recovery NPL Volume

UtP Volume

Banks Gross NPE

**UtP recovery/return to perform based on Bank of Italy transition matrix *Bad Loan at Q2’19; UtP at Q2’19 Banca IFIS estimation

164 177 11

21MARKET WATCH NPL Sources: Banca IFIS internal analysis based on NPL Market Database - Press releases and news; Statistical Database Aida; Credit recovery agencies with deposited balance sheets

984852 associated

to Unirec

970 Mln€Revenues

+14% vs PY

~7.600Employees

49Servicers

~1,1 Bn€Revenues

+15% vs PY

~5.700

Servicers

Credit Recovery Agencies

Employees

22MARKET WATCH NPL Sources: Banca IFIS NPL Market Database – Press releases and news – Banca IFIS internal estimation

Top ten servicersBank of Italy

SurveillanceRating Bn€ AUM % AUM

DoValue 115/106 S&P, Fitch 82 25%

Credito Fondiario Bank Fitch 41 12%

Cerved Credit Management 106 Fitch 40 12%

Prelios 106 S&P, Fitch 24 7%

IFIS NPL, FBS 106 Fitch 23 7%

Intrum Italia 115 Fitch 11 3%

Phoenix Asset Management 115 n.a. 10 3%

Guber Bank Fitch 9 3%

Sistemia 115 Fitch 8 2%

MB Credit Solutions 106 n.a. 8 2%

Total top ten 256 78%

Total on the market 330

23MARKET WATCH NPL

Sources: Banca IFIS NPL Market Database – Press releases and news

2018 2019

Lindorff / Intrum

Acquisition of

100% of PwC Mass

Credit Collection

Arrow

Acquisition of 100%

of Parr Credit and

Europa Investimenti

Anacap + Pimco

Acquisition of a majority

stake in PAM

Kruk

Acquisition of

51% of Agecredit

Banca IFIS

Acquisition of 90% of FBS

Cerberus

Acquisition of 57%

of Offi cine CST

Hoist Finance

Acquisition of 100%

of Maran

Financial Group

Acquisition

of Generale Gestione

Crediti Se.Tel. Servizi

Illimity

Acquisition of 70%

of IT Auction

IBL Banca

Acquisition of 9.9%

of Frontis NPL

MCS - DSO

(a BC Partners company)

Acquisition of 80%

of Serfin

Acquisitions

IBL Banca +

Europa Factor

Joint venture for the

creation of the new

Servicer Credit FactorJoint Venture

Intesa + Lindorff /

Intrum

Joint venture for

the NPL platform of

Intesa Sanpaolo

Cerved + Studio

legale La Scala

Joint venture for the

creation of a specialized

NPL law firm

Credito Fondiario

+ Banco BPM

Creation of a Joint venture for

the management and

disposals of Banco BPM NPLs

Npl Re Solutions +

Axactor

Joint venture to

manage NPL and

UTP

Credito Fondiario

+ Banca IFIS

Evaluation phase

Opportunity

assessment

Cerved

Evaluation phase

MCS - DSO

(a BC Partners company)

Acquisition of Sistemia

subject to approval

24MARKET WATCH NPL Sources: Moody’s; UNIREC_IX_rapporto_annuale

Reco

very

Rate

4,80%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

50% 55% 60% 65% 70% 75% 80%

% Secured

Correlation Index=0,4

3,10% 3,30%

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

GACS Unirec C/III Cessionari

Reco

very

Rate

*The correlation index was calculated on the GACS : R 0.40. The control

test confirms no correlation

Annual recovery rate

GACS performance

The performance data both managed by GACS

and Unirec associated agencies are aligned

around a range between 3.1% and 3.30% on

the gross book value

The statistical analysis of performance on

portfolios with GACS shows that there is no

direct correlation between recovery rate and %

of guaranteed credits

25

0%

5%

10%

15%

20%

First recovery by originator bank Further recovery by assigned servicer

MARKET WATCH NPL Sources: UNIREC_IX_rapporto_annuale; Bank of Italy: Notes on Financial Stability and Supervision no. 13

Reco

very

Rate

Reco

very

Rate

7,8%

2,0%

3,2%

0,0%

5,0%

10,0%

~ 13-16%

~ 3%

<1 year from 1 to 3 years > 3 years

Credits with an aging of less than 1 year have a

better recovery performance, equal to 7,8%

Credits between 1 and 3 years of vintage, have a

much lower recovery rates equal to 2,0%

As the aging of bad loans rises, recovery rates

fall. Further recovery by assigned servicer is

less effective than the first recovery by

originator bank due to several re-works

Unirec – Recovery rates of C / III Assignee for aging

Average Annual Recovery rate by servicing phase

26

This publication is edited by Banca IFIS. The information contained herein, obtained

from sources believed to be reliable by Banca IFIS, are not necessarily complete, and their accuracy

cannot be guaranteed. This publication is provided merely for purposes of illustration and information

and does not in any way represent financial and investment advice.

MARKET WATCH NPL

27