Consolidated Half-Yearly Financial Report at 30 June 2017

CONSOLIDATED HALF-YEARLY FINANCIAL REPORT AT 30 JUNE 2017

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NATIONAL NETWORK

BANCA INTERMOBILIARE BRANCHES

Turin head office and branch 10121 Via Gramsci, 7 Alba branch 12051 Via Belli, 1 Arzignano branch 36071 Piazza Marconi, 21 Asti branch 14100 Via Bonzanigo, 34 Bassano del Grappa branch 36061 Via Bellavitis, 5 Bergamo branch 24121 Via F. Petrarca, 3 Bologna branch 40124 Via De Pignattari, 1 Chivasso branch 10034 Via Teodoro II, 2 Cuneo branch 12100 Corso Nizza, 2 Florence branch 50132 Piazza Frà Girolamo Savonarola, 22 Genoa branch 16121 Via XX Settembre, 31/4 Ivrea branch 10015 Via Palestro, 16 Milan branch 20123 Via Meravigli, 4 Milan branch 21121 Corso Matteotti, 5 Modena branch 41100 Via Farini, 56 Naples branch 80133 Via Medina, 40 Padua branch 35137 Corso Milano, 22 Pavia branch 27100 Piazza Belli, 9 Pesaro branch 61100 Via Giusti, 6 Piacenza branch 29100 Via San Siro, 18 Pordenone branch 33170 C.so Vittorio Emanuele II 21/G Rome branch 00198 Via Donizetti, 14 Thiene branch 36016 Via Montegrappa, 6/L Treviso branch 31100 Piazza Sant’Andrea, 6 Varese branch 21100 Via Leopardi, 1 Venice branch 30124 Palazzo Bembo - San Marco, 4793 Verona branch 37121 Corso Cavour, 39 Vicenza branch 36100 Contrà Ponte San Michele, 3

PARENT COMPANY

Veneto Banca S.p.A. in administrative compulsory liquidation Montebelluna (TV) Piazza G.B. Dall’Armi, 1

THE COMPANIES OF BANCA INTERMOBILIARE

Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. Lugano Contrada di Sassello, 10 Symphonia SGR S.p.A. Turin Via Gramsci, 7 Bim Fiduciaria S.p.A. Turin Via Gramsci, 7 Bim Vita S.p.A. Turin Via Gramsci, 7 Bim Insurance Brokers S.p.A. Turin Via Gramsci, 7 Bim Immobiliare S.r.l. Turin Via Gramsci, 7 Patio Lugano S.A. Lugano Contrada di Sassello, 10

CONTACTS

Our website www.bancaintermobiliare.com Banca Intermobiliare telephone number +3901108281

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CONSOLIDATED HALF-YEARLY FINANCIAL REPORT

AT 30 JUNE 2017

Board of Directors of 31 July 2017

BANCA INTERMOBILIARE DI INVESTIMENTI E GESTIONI Registered office: Via Gramsci, 7 – 10121 Torino Share capital € 156,209,463 fully paid-up Bank Code No. 3043.7 – Banks Register No. 5319 Turin company register office no. 02751170016 Chamber of Commerce of Turin REA No. 600548 - Tax ID Code/ VAT No. 02751170016 Registered in the Register of Banks with no. 5319 A subscriber to the National Compensation Fund and to the Interbank Deposit Protection Fund

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Introduction

Preparation criteria for the Consolidated Half-Yearly Financial Report The “Consolidated Half-Yearly Financial Report at 30 June 2017” is made up of the “Half-Yearly Report on Operations” and the “Condensed Consolidated Half-Yearly Financial Statements” which include the consolidated financial statements and the notes to the same.

Banca Intermobiliare prepared its interim financial statements considering valid the “going concern” assumption (that is that the company as a functional unit is destined to continue to function for at least 12 months after the reporting date), despite the urgent provisions putting into administrative compulsory liquidation (Liquidazione Coatta Amministrativa - L.C.A.) the parent company Veneto Banca S.p.A. introduced with Italian Law Decree no. 99 of 25 June 2017 (hereinafter Veneto Banca S.p.A. in administrative compulsory liquidation or Veneto Banca S.p.A. L.C.A.)

In the context of the “Half-Yearly Report on Operations” - in order to allow a clearer reading of the economic and financial results in relation to the tables indicated in Bank of Italy Circular no. 262/05 - the reclassified accounts have been prepared in tables which introduce some new items and combinations and for which analytical information has been provided in accordance with CONSOB requirements laid down in its Communication no. 6064293 of 28 July 2006, underneath the reclassified financial statements.

The “Condensed Consolidated Half-Yearly Financial Statements” were prepared according to the prescriptions of Art. 154-ter of Italian Legislative Decree no. 58 of 24 February 1998 and applying the IAS/IFRS international accounting standards issued by the International Accounting Standards Board and the related interpretations of the International Financial Reporting Interpretations Committee (IFRIC), endorsed by the European Commission, as established by Community Regulation no. 1606 of 19 July 2002. In particular, the Condensed Consolidated Half-Yearly Financial Statements, subjected to limited auditing, were prepared in compliance with the prescriptions of IAS 34, which governs interim financial statements.

Following the reclassification of the “Equity Investment” in Banca Intermobiliare di Investimenti e Gestioni (Suisse) S. A. under “Non-current assets and disposal groups held for sale”, for better presentation of the financial report the reclassified accounting statements and the related notes to the statements of the Consolidated Half-Yearly Financial Report were prepared restating the figures for 2016 (“2016 pro-forma”), with respect to what was published in the half-yearly report at 30.06.2016, and the accounting tables of the consolidated financial statements, provided for in Bank of Italy Circular no. 262, were prepared restating the comparative figure as provided for in IFRS 5, only for the economic components.

In the present Consolidated Half-Yearly Financial Report at 30 June 2017 the balance sheet and the income statement of the individual financial statements of the parent company Banca Intermobiliare S.p.A. have also been published.

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Summary

Half-Yearly Report on Operations page 3 Highlights page 6 The macroeconomic scenario page 10 Main Consolidated Banca Intermobiliare data page 14 Reclassified consolidated financial statements page 16 Summary of operating results page 20 2017-2021 Business Plan page 23 Significant subsequent events page 26 Business outlook page 27 Total customer deposits page 28 Loans and other receivables from customers page 31 Results of equity investments page 36 Market Disclosures page 40 Management and auditing activities page 46 Development and organisation activities page 49 The operating structure and personnel page 51 Other aspects page 52

Condensed Consolidated Half-Yearly Financial Statements page 55 Consolidated financial statements page 55 Consolidated balance sheet page 56 Consolidated income statement page 58 Consolidated statement of comprehensive income page 59 Consolidated statement of changes in equity page 60 Consolidated cash flow statement page 61

Notes to the statements page 63 Accounting policies page 64 Trend of consolidated balance sheet aggregates page 77 Consolidated economic results page 96 Comprehensive income page 103 Segment Reporting page 104 Risk management page 106 Related-party transactions page 111

Balance sheet and income statement of the separate financial statements of Banca Intermobiliare S.p.A. page 115

Attestation of the General Manager and of the Corporate Financial Reporting Manager page 119

Independent Auditors’ report on the consolidated financial statements page 121

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Highlights

Administration and Control Bodies of Banca Intermobiliare

Board of Directors

Chairperson Maurizio LAURI

Director with assignments Giorgio GIRELLI

Directors Paolo CICCARELLI Simona HEIDEMPERGHER Alessandro POTESTÀ Michele ODELLO Daniela TOSCANI Alessandra ZUNINO DE PIGNIER

Board of Statutory Auditors

Chairperson Luca Maria MANZI

Regular Auditors Elena NEMBRINI Enrico Maria RENIER

Alternate Auditors Alide LUPO Michele PIANA

General Manager Stefano GRASSI

Financial Reporting Manager Mauro VALESANI

Independent auditors PricewaterhouseCoopers S.p.A.

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Administrative compulsory liquidation of Veneto Banca S.p.A.

Following the decisions of the European Authorities and in accordance with Italian Law Decree no. 99 of 25 June 2017, the Ministry of the Economy and Finance, on the proposal of the Bank of Italy, made Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. subject to administrative compulsory liquidation. The Bank of Italy appointed as liquidators of Veneto Banca S.p.A., the lawyers Alessandro Leproux, Prof. Giuliana Scognamiglio and Fabrizio Viola, and the Supervisory Committee of the same, who, implementing the ministerial indications, are overseeing: i) the continuation, where necessary, of the company’s business or of certain branches of activity for the technical time necessary to implement the planned sales; ii) the disposal of corporate assets and liabilities in accordance with the binding offer formulated by the transferee identified as Intesa Sanpaolo S.p.A., which will take over the relationships of the transferor without a break; iii) the sale to Società per la Gestione di Attività S.G.A (in which the public has a stake) of impaired loans and other assets not disposed of. In the context of the said decree, Banca Intermobiliare, as confirmed on its website by the Bank of Italy with news of 26 June 2017, does not come within the perimeter of Art. 3 among the assets acquired by Intesa Sanpaolo S.p.A., and is continuing its operations in an orderly manner, ensuring the continuity of the existing relationships with its customers. With reference to the sale of corporate assets and liabilities - pursuant to the aforementioned point ii) - Veneto Banca L.C.A. and Intesa Sanpaolo are performing the activities to complete the precise attribution of the various assets. It cannot be ruled out that this activity may also involve some intercompany relationships held by BIM with Veneto Banca.

Activities of Veneto Banca in L.C.A. for the sale of the equity investment in Banca Intermobiliare

With a press release of 6 July 2017, Veneto Banca in L.C.A. announced the launch of the activities for the sale of the stake held in BIM. Following the non-binding offers received, the liquidators, with the aid of their financial advisor Lazard & Co S.r.l., selected a limited number of entities, all of high international standing, which have expressed an interest in acquiring the equity investment held by Veneto Banca in BIM in the current configuration of the corporate perimeter of the company - including the total portfolio of impaired loans. Access to the data (Data Room) began on 24 July 2017. To protect all the stakeholders, the Board of Directors of BIM chose as financial advisor Deutsche Bank AG.

Activity of supervision, coordination and control of Veneto Banca

Veneto Banca, as the Parent Company, has always performed its role of supervision, coordination and control over Banca Intermobiliare and, directly, over its subsidiaries. This activity consisted both of issuing internal regulations (policies, regulations, procedures, etc.), and of performing, on behalf of the whole group, various operating and control functions. The placing in administrative compulsory liquidation and the operation for the sale of corporate assets and liabilities to Intesa Sanpaolo determined, for Banca Intermobiliare, the need to review all its regulations and to accelerate the process of re-internalising the functions in “outsourcing” with Veneto Banca. In this regard Intesa Sanpaolo has guaranteed the continuation of the activities performed in outsourcing by Veneto Banca, while the Board of Directors of BIM has appointed external consultants to perform a review of all the corporate regulations in order to adjust them, by the end of the current 7

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year, to BIM’s new operating structure on a “stand-alone” basis given the placing in administrative compulsory liquidation of the Parent Company and providing for the updating at the same time of the associated corporate processes and procedures, also in the light of the planned migration to a new corporate information technology system. Alongside this the process of re-internalising the functions performed by the former Parent Company has accelerated. This activity was already planned in the context of the guidelines approved at the beginning of the year, and must lead, within the second half of 2017, to performing directly the currently outsourced activities.

Structure of Banca Intermobiliare

Parent company The issuer Banca Intermobiliare S.p.A. is controlled by right by Veneto Banca S.p.A. in L.C.A.

Banca Intermobiliare: subsidiaries and associated companies • Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A., Symphonia SGR S.p.A., Bim Fiduciaria S.p.A., Bim Immobiliare S.r.l., Immobiliare D S.r.l. and Paomar Terza S.r.l. are controlled by right by Banca Intermobiliare S.p.A., which holds directly all their share capital; • Bim Vita S.p.A. is equally owned by Banca Intermobiliare (50%) and Fondiaria-Sai (50%) now UnipolSai (UGF Group) and is subject to the control of the latter pursuant to contractual commitments. • Bim Insurance Brokers S.p.A. is controlled by Banca Intermobiliare S.p.A. which holds 51% of the share capital. • Patio Lugano S.A. (real estate company), is a wholly-owned subsidiary (100%) of Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. and therefore, indirectly, of Banca Intermobiliare S.p.A.

The following diagram represents the shareholdings of Banca Intermobiliare by business area. The full equity investments in Immobiliare D S.r.l. and Paomar Terza S.r.l, which were acquired for the purpose of credit collection, have not been included:

Symphonia BIM Fiduciaria BIM Insurance BIM BIM Suisse S.A. S.p.A. 100% SGR S.p.A Broker S.p.A. Immobiliare S.r.l. 100% 100% 51% 100%

BIM Vita S.p.A. Patio Lugano S.A. 50% 100%

Banche Asset management Servizi Fiduciari Assicurazioni Società Immobiliari

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Membership of the Banking Group and registration in the Register - Art. 60-64 Consolidated Banking Act

In the light of the placing in administrative compulsory liquidation of Veneto Banca S.p.A. and therefore of the associated measures related to cancellation of the same from the register of banking groups, Banca Intermobiliare is preparing everything necessary for its registration in the Register of Banking Groups. In particular the perimeter of the banking group is being defined; this will certainly include the subsidiaries Symphonia SGR and Bim Fiduciaria, both subject to the management and coordination activity of Banca Intermobiliare under the terms of Italian Legislative Decree 385/1993 (Consolidated Banking Act), while the position of the other companies controlled by BIM is being assessed. These currently do not belong to the former Veneto Banca banking group and are subject to the management and coordination activity of Banca Intermobiliare under the terms of the civil law pursuant to articles 2497 ff. of the Italian Civil Code.

Prudential supervision of Banca Intermobiliare

Currently the competent authorities are carrying out a process of assessing the qualification of Banca Intermobiliare as a significant supervised subject for the purpose of a possible classification of the Bank as less significant. In this context the direct supervision of the ECB on the supervised subject would end one month after notification of the decision. At the same time the Bank would become subject to the direct supervision of the Bank of Italy.

Consolidation scope

On 9 and 10 February 2017, the Board of Directors of Banca Intermobiliare approved the guidelines of the strategic development plan which defined Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. and Bim Insurance Brokers S.p.A. as non-strategic investments. On 31 May 2017 the Board of Directors decided not to proceed with the disposal of BIM Insurance Brokers S.p.A. On the basis of the conditions provided for in the international accounting standard IFRS 5, Banca Intermobiliare therefore reclassified its controlling stake in BIM Suisse, including its subsidiary Patio Lugano S.A., from the item “Equity Investments” to the item “Non-current assets and disposal groups held for sale”.

Equity investments of the former Veneto Banca Group Holding company: • Banca Intermobiliare di Investimenti e Gestioni S.p.A. Wholly-owned subsidiaries (100%), fully consolidated: • Symphonia SGR S.p.A. • Bim Fiduciaria S.p.A. Subsidiaries at 100%, consolidated according to IFRS 5: • Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. • Patio Lugano S.A.

Equity investments not of the former Veneto Banca Group Wholly-owned subsidiaries (100%), fully consolidated: • Bim Immobiliare S.r.l. • Immobiliare D S.r.l. • Paomar Terza S.r.l. Partially-owned subsidiaries (less than 100%), fully consolidated • Bim Insurance Brokers S.p.A. Affiliated companies measured using the equity method: • Bim Vita S.p.A.

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The macroeconomic scenario

The performance of the financial markets during the first half of the year continued to be favourable in the presence of monetary policies of the Central Banks overall still very accommodating, despite the two interest rate rises implemented by the American FED. The growth prospects of the global economy remain positive and improving for 2017, although some of the factors for improvement gradually weakened. This is valid, in particular, for the prospects of a clear improvement in the growth profile of the United States due to implementation of the expansive economic and fiscal programme of the new Trump administration. The evident political difficulties, not only in the economic/financial field, shown up to now by the new president have, in fact, not yet allowed the implementation of any of these expansive measures. The improvement of the growth profile of the emerging countries could also slow down during the year, in the light of the weakness, recorded in this first half of the year, in the price of a number of raw materials, in particular of oil on which many economies, including leading ones, are very dependent. In Europe the result of the Dutch general election and the French presidential election was positive, lessening the risk of a populist drift against the European Union and the single currency. This had a positive effect on the value of the euro, which generally rose against the other main currencies, while it had a differentiated effect on the bond markets. The German one, reacting to a possible European political risk, first strengthened before then weakening after the positive result of the elections, while the opposite effect regarded the bond markets of the peripheral countries, including the Italian, Dutch and French ones. On the growth front, estimates published by the leading international research institutes (IMF, OCSE and World Bank) were positive. For the IMF, the global economy in 2017 is expected to grow by 3.5%, a sharp improvement compared to 2016 (+3.1%); for 2018 the growth forecast is 3.6%. The increase in the forecasts is boosted by improvements in the manufacturing sector and in international trade, by the continual support of economic policy in China and by expectations of an expansive fiscal policy and deregulation in the United States. In the medium term, the risks for the global economy are, according to the IMF, associated with the slow growth of productivity, the great inequality in income distribution and, above all, the possible adoption of protectionist policies which would impede global economic integration and cooperation. In the industrialised countries, growth is expected to be 2% in 2017 and the same in 2018: in the USA growth is forecast this year at 2.3% and at 2.5% in 2018 while in the Euro area at 1.7% and 1.6%. In Japan the growth forecast is 1.2% for 2017 and 0.6% for 2018. As regards the emerging countries, growth is expected to be 4.5% this year and 4.8% in 2018, owing mainly to the improvement in the economic conditions in countries that export raw materials. At the same time the improvement on the employment front also continued: the unemployment rate in the United States in May declined further to 4.3% from 4.7% at the end of December 2016. The improvement continued also in Europe, where the unemployment rate in May went down to 9.3% from 9.6% at the end of December 2016. The consumer price trend continues to remain under the target levels set by the Central Banks although, with the exception of Japan, the risk of deflation seems to have disappeared. For the IMF, consumer prices are expected to rise in 2017 in both the industrialised and the emerging countries: + 2% in 2017 (compared to 0.8% in 2016) for the former and +4.7% for the latter (+4.4% in 2016). The figures reported show, in the United States, the annualised figure for May at 1.9%, down compared to the figure at the end of December (+2.1%), while the “core” figure was 1.7%, lower than the figure at the end of December (2.2%). On the European front, in May, the annualised change in prices was 1.4%, higher than the figure at the end of December (+1.1%), while the “core” figure, although positive (+0.9%), was unchanged compared to the figure at the end of December (+0.9%). In Japan the figure for May was 0.4%, up compared to the figure at the end of December (0.3%) while the “core” figure was unchanged in May (0%), down compared to the figure at the end of December (0.1%). In the emerging countries the inflation trend showed, instead, a general and sharp drop. In Brazil inflation in May was 3.6% compared to 6.3% at the end of December, in Russia 4.1% 10

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compared to 5.4% in December, in China 1.5% compared to 2.1% at the end of December and in India 2.2% compared to 3.4% at the end of December. On the subject of monetary policies, the American FED continues to be the first and only, among the leading bodies, to have continued in the implementation of a moderately restrictive monetary policy. During the period considered, in fact, it raised the level of official interest rates twice, taking them to a range of 1%-1.25% compared to 0.5%-0.75% at the end of December. In addition, the FED also announced the operational details of the programme of gradual reduction, before the end of the year, of the enormous dimensions reached by its budget, owing to the repeated Quantitative Easing programmes. Before the end of the year, a programme to reduce the FED’s budget will be launched, for an amount of $/bln 10 per month, of which 6 made up of government securities and 4 of mortgage-backed securities. Subsequently, the monthly reduction programme may reach a maximum of $/bln 50 per month, of which 30 made up of government securities and 20 of mortgage-backed securities. On the European front, although the current extraordinary expansive Quantitative Easing measures have remained unchanged, the market is beginning to ask itself about both the timing of the change in the monthly quantity of securities purchased by the ECB, and the change in the level of interest rates. On the first aspect it is probable that the gradual reduction of purchases will occur from January 2018 onwards. Until then the Quantitative Easing will continue at a rate of € 60 billion a month. As regards instead a possible rise in interest rates, currently steady at -0.4%, this will happen, according to the indications provided up to now by the ECB, only after the end of the bond purchases. Despite this, in a recent speech, the governor Draghi mentioned the fact that the deflationary forces in the Euro area have been replaced by reflationary forces, thus leading operators to believe that the change in the ECB’s expansive monetary policies may already be announced in the autumn. On the corporate front, the season of publication of profits by the American companies included in the Standard & Poor’s 500 for the period related to the first quarter of 2017, was positive and showed growth compared to the corresponding period of 2016 of 15%. 73% of companies reported profits higher than analysts’ estimates while 20% reported profits lower than the estimates; 7% reported profits in line with expectations. In sectoral terms, the largest rise was achieved in the technological sector and in the sector of raw materials, where the profits reported grew by 21%. The largest drop instead regarded the telephone sector, where profits fell by 5%. On the basis of the most recent estimates, for 2017 as a whole, profits for stocks featured in the S&P500 index are expected to rise by 12% on turnover growth of 5.8%. In Europe, the latest estimates available for 2017 envisage profits rising by 10.7% for the Eurostoxx50 index on turnover growth of 4.2%. The best results are forecast in the energy sector, up by 58%, and in the food sector, up by 43%, while the least positive are forecast in the insurance sector, where profits are expected to grow by 1.9% and in the banking sector, up by 2.3%. On the front of sovereign debt, we can note the downgrading of Italian public debt by the Canadian agency DBRS, one of the four large global rating agencies, which reduced it from A- to BBB+, with outlook however stable. The Canadian agency’s decision, which was besides late compared to the other agencies (Standard & Poor’s, Moody’s and Fitch), was motivated by the weakness of the current and potential growth profile, low competitiveness and low work productivity, uncertainty on the ability of the current government to implement the reforms necessary for relaunching growth, the persistent vulnerability and weakness of the banking system and the failure to reduce public debt. To justify instead the stable outlook recognised for Italy, DBRS notes our strong points which go from the high level of the primary surplus, among the highest in Europe, to the careful and flexible management of the public debt held mainly by domestic investors, the low level of private debt, among the lowest in the world, a well-finance pension system, the diversification and large dimensions of our economy. In the same way, on the Chinese front, we can note the first cut of the creditworthiness of Chinese debt in the last thirty years by Moody’s, which lowered it to A1 from Aa3, but, at the same time, improved the outlook from negative to stable. The last time that Moody’s cut the Chinese rating was in November 1989, not long after the bloody repression of the mass protests in Tienanmen Square, in Beijing. The reasons for the cut in creditworthiness are due to expectations of a deterioration of the financial solidity of the country in the next few years, owing to the continuous increase in the debt and the slowdown of the economy. On the European political front, the two most important electoral appointments, that is the general election in the Netherlands and the French presidential election had a positive outcome. In the first case 11

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a clear victory of the outgoing prime minister, the liberal Rutte, was recorded. He won 21.3% of the votes and 33 seats in parliament. The extreme-right populist candidate Wilders, in favour of a referendum on the Netherlands staying in the European Union and in the single currency, won however 13% of the votes and 20 seats in parliament, undoubtedly reduced compared to the polls which at some times indicated that he would win, but still the second party in the popular vote. In France, the outcome of the presidential election saw a clear win of the centrist candidate Macron (already winner of the first round with 24%), who obtained 66% of the votes against the extreme-right candidate Le Pen, who obtained 34 %. The result of the subsequent parliamentary election also saw a clear victory of the new president who, with his political movement “En Marche”, obtained an absolute majority in Parliament, with 350 seats out of 577. We can note finally on the British front the outcome of the early general election called by the outgoing Conservative prime minister Theresa May: the Conservative party did not obtain an absolute majority of seats and lost 12 compared to those on which she could count previously. May’s objective, therefore, which was to increase the vote for her party and have more freedom of movement in the negotiations with the European Union on Brexit, was not achieved. It is therefore probable that the election result, while not cancelling the decision of last year’s referendum on the United Kingdom leaving the European Union, will weaken the political line of the Conservative party, pushing it towards a softer attitude in relations with Europe. In this framework of reference, the global equity markets recorded positive results in the period considered: at the general level, the global index (MSCI WORLD) ended the period up 7% in local currency and 1.2% in euro. The American S&P500 index rose by 8.2%, the EuroStoxx50 rose by 4.6% and the Japanese TOPIX rose by 6.1%. In the emerging countries the global index (MSCI EMG MKTS) rose 13.7% in local currency and 8.4% in euro. The best result was obtained by the Korean index Kospi 200, up 19.9%, while the worst market was the Russian one, with the RTS index down 13.1%. From a sectoral point of view the best results were recorded in the technological sector (+16.2%) and in the health sector (+12.7%), while the worst were recorded in the energy sector (-12.8%) and in the telephone sector (-4.4%). The trend of raw materials was negative, with the CRB general index down 9.2%: the highest increase regarded livestock (+12.5%) while the largest downside figure was in the energy sector (-18.8%). Oil fell by 14.3% while gold rose by 7.8%. On the bond markets the trend of government securities during the period was varied: the American Treasury Bond index for maturities between 5 and 10 years rose by 2.1%, with the gross yield of ten- year bonds coming out at the end of the period at 2.3% from 2.4% at the end of 2016. On the European front instead the euro area index for maturities between 5 and 10 years fell by 0.5% with the German 10-year bond yield moving to 0.5% from 0.2% at the end of 2016. On the most risky segments of the bond market the trend was positive: the index of High-Yield European corporate bonds rose 4.1%, the index of Investment-Grade European corporate bonds 0.7% and the global index of government bonds of emerging countries 6.2%. On the currency markets, finally, the euro rose generally against all currencies: the highest rise was recorded against the American dollar (+8.2%) and the Canadian dollar (+4.5%).

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The global growth estimates for 2017 have risen slightly (+3.3%), with good indications also for 2018 (+3.5%). In the USA some signs of deceleration can be noted but the basic trend remains solid, although the political uncertainty may delay the implementation of the measures promised by Trump in the election campaign. In the Euro Area domestic demand is driving the recovery, which is increasingly visible and widespread, and investments could regain force thanks to the drop in the political risk after Macron’s success in France. The British elections have reduced the probability of a ’Hard Brexit’, although the uncertainty may affect the economic prospects. On the front of the emerging countries, in China the slowdown expected for the second half of the year could be slighter than the forecasts while the growth of India remains solid, although the effects of structural reforms may sacrifice a little the short-term trends in favour of medium- and long-term ones. In Russia a slowdown is possible in the second half of the year, while in Brazil the new political uncertainties could slow down the recovery, already not particularly brilliant. The profit growth estimates for 2017 at the global level remain good (+14.4%) and quite good for 2018 (+10.7%), with marginal increases in the trend of revisions. Some caution emerges in the trend of production prices, but there could be possible room for improvement if the tax changes are approved in the USA (as of today not incorporated in the estimates). The general context of global economic recovery could support the most cyclical geographical areas (Euro area, Japan and emerging countries). On the inflation front, the drop in prices of raw materials reduces the pressure on prices, in itself already not very robust for structural (demographic) and cyclical reasons, although the expectations had perhaps fallen too much. This context enables the Central Banks to review their monetary policies gradually: the American FED will begin by the end of the year to reduce its balance sheet assets (so-called “QT”), while the European ECB will have to review its Quantitative Easing plan with probable reduction of purchases (so-called “tapering”). The Japanese BoJ and the English BoE seem still oriented to maintaining an expansive attitude, as also most of the central banks of the emerging countries. On the front of interest rates, in consideration of the economic situation, the yields of government securities should remain likely to rise, above all after the recent, and to some extent unexpected, falls in yields had reached levels inconsistent with the improvement of global growth prospects. On the front of systemic risk, the geopolitical tensions between the USA and North Korea show no signs of decreasing and we cannot exclude a negative escalation of the events. The tensions in the United States also continue to weaken Trump’s popularity and therefore his rapidity of political action. The French elections significantly reduced the political risk in the Eurozone where, at this point, attention shifts to the next Italian elections, expected in the beginning of 2018. The valuations of the main equity indices tend to be aligned to their historical averages, with the American ones slightly higher; this superficial observation, however, does not take into account still significant differences among the various segments and, in any case, there are no particularly evident excesses. There remain, in fact, still interesting multiples on the most “value” segments of the market, which should also have room for improvement on the front of profits. From a geographical point of view, the Japanese market maintains quite a markdown compared to the other markets, as also the emerging countries, although these differences tend to reflect different levels of profitability. In relative terms, stock markets still show a significant advantage over government and corporate bonds. The sentiment on the equity markets is not particularly optimistic, although the volatility has fallen significantly and in a generalised way also on other asset classes. On corporate bonds yields remain interesting in relative terms compared to government bonds, although it is still difficult to imagine a further compression of the spreads, which are already near the bottom of the historical ranges. The yields offered by the bonds of emerging countries remain interesting, above all on issues in local currencies, also in the light of the gradual improvements of the fundamentals.

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Main Consolidated Banca Intermobiliare data

Summary Data

RECLASSIFIED ECONOMIC FIGURES (Thousands of €.) 1 30.06.2017 30.06.2016 Change Change 30.06.2016 pro-forma absolute % Net interest income 6,158 11,302 (5,144) -45.5% 11,486 Operating income 44,326 46,158 (1,832) -4.0% 48,125 Operating profit (loss) 3,720 1,266 2,454 193.8% 632 Profit (loss) before non-recurring components (21,604) (14,542) (7,062) -48.6% (15,176) Profit (loss) before tax (23,282) (16,834) (6,448) -38.3% (17,468) Consolidated profit (loss) for the period (24,857) (14,661) (10,196) -69.5% (14,661)

FINANCIAL AND OPERATING FIGURES (in €/million) 30.06.2017 31.12.2016 Change Change absolute % Total deposits 8,710 9,372 (662) -7.1% Direct deposits 1,097 1,450 (353) -24.3% Indirect deposits 7,613 7,922 (309) -3.9% - of which assets under administration 2,643 2,708 (65) -2.4% - of which client assets under management 4,876 5,125 (249) -4.9% - of which fiduciary assets deposited externally 94 89 5 5.6% Loans to customers 722 843 (121) -14.4% - of which performing loans to customers 403 508 (105) -20.7% - of which net impaired assets 278 296 (18) -6.0% Total Assets 1,935 2,599 (664) -25.5%

CAPITAL (in €/million) AND CAPITAL RATIOS UNDER BASEL III 30.06.2017 31.12.2016 Change Change absolute % Consolidated equity 213.9 237.2 (23.0) -9.7% Own Funds 144.3 159.8 (15.5) -9.7% Surplus of Own Funds 45.3 54.1 (8.8) -16.3% Capital conservation buffer 15.5 8.3 7.2 86.7% Total RWAs 1,329 1,412 (82.9) -5.9% CET1 - Fully Phased 2 10.66% 11.52% (0.86) N/a CET1 - Phased in 10.74% 11.13% (0.39) N/a T1 - Additional Tier 1 Capital 10.74% 11.13% (0.39) N/a TCR - Total Capital Ratio 10.86% 11.32% (0.46) N/a Index of capitalisation 1.36 1.41 (0.06) -4.1%

1 The economic figures have been reclassified compared to the income statement required by Bank of Italy Circular no. 262 of 2005 as currently applicable so as to achieve better representation of the results. One should refer to the notes beneath the table of the reclassified consolidated income statement. 2 The CET1 – Fully Phased - was calculated not applying the exceptions deriving from the transitional provisions provided for in Bank of Italy Circular14 no. 285.

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3 PROFITABILITY INDICES 30.06.2017 30.06.2016 Change 30.06.2016 pro forma points % Net interest income/Operating income 13.9% 24.5% -10.6 23.9% Net fees and commissions/Operating income 54.2% 63.8% -9.6 64.5% Result of operations/Operating income 8.4% 2.7% 5.6 1.3% Cost/Income ratio (including other operating expenses (income)) 91.6% 97.3% -5.6 98.7% Net profit (loss)/Average net equity (ROE) -22.0% -9.0% -13.0 -9.0% Net profit (loss)/Total Assets (ROA) -2.2% -0.9% -1.2 -0.9%

CREDIT QUALITY RATIOS 30.06.2017 31.12.2016 Change points % Performing exposures/Loans to customers 55.8% 60.2% (4.4) Net impaired assets/Loans to customers 38.5% 35.1% 3.4 - of which Net bad loans/Loans to customers 21.9% 19.0% 2.9 - of which net probable defaults/Loans to customers 16.5% 15.4% 1.1 Coverage rate of performing Exposures 0.6% 0.6% - Coverage rate of impaired Exposures 56.3% 53.1% 3.2 - of which due to bad loans 65.3% 64.1% 1.2 - of which due to probable defaults 33.7% 27.0% 6.7

OPERATING STRUCTURE 30.06.2017 31.12.2016 Change Change absolute % Number of employees and collaborators (total) 4 561 580 (19) -3.3% - of which Private Bankers 152 164 (12) -7.3% Number of Banca Intermobiliare branches 28 29 (1) -3.4%

INDICATORS PER EMPLOYEE (Thousands of €.) 5 30.06.2017 31.12.2016 Change Change Absolute % Net Operating Income/Average No. of staff 190 184 6 3.3% Personnel expenses/Average No. of employees 91 86 5 4.6% Total assets/Total No. of staff 3,449 4,512 (1,063) -23.6%

30.06.2017 31.12.2016 Absolute Change % change Number of outstanding ordinary shares (excluding treasury shares) 149,627,772 149,627,772 - - Unit equity on shares outstanding 1.43 1.59 (0.16) -9.8% Price per ordinary share during the year Minimum 1.16 1.00 0.16 15.8% Average 1.42 1.60 (0.17) -10.9% Maximum 1.52 2.24 (0.72) -32.1% Basic EPS – EUR (0.318) (0.624) 0.306 -49.0% Diluted EPS – EUR (0.318) (0.624) 0.306 -49.0%

3 The profitability indices ROE and ROA were annualised. 4 The number of employees and collaborators has been indicated net of the staff in the shareholdings classified according to IFRS 5. 5 The indicators per employee were annualised and calculated net of the numbers referable to the shareholdings 15classified according to IFRS 5.

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Reclassified consolidated financial statements

Reclassified consolidated income statement 6 (Thousands of €) 30.06.2017 30.06.2016 Absolute Change % 30.06.2016 pro-forma Change Interest and similar income items 16,200 23,082 (6,882) -29.8% 23,333 Interest and similar expense items (10,042) (11,780) 1,738 14.8% (11,847) Net interest income 6,158 11,302 (5,144) -45.5% 11,486 Fee and commission income 33,480 40,773 (7,293) -17.9% 42,719 Fee and commission expenses (9,450) (11,336) 1,886 16.6% (11,698) Net fee and commission income 24,030 29,437 (5,407) -18.4% 31,021 Dividends 312 681 (369) -54.2% 681 Net gains (losses) on trading instruments 4,752 2,599 2,153 82.8% 2,798 Transactions on AFS securities and financial liabilities 8,948 2,544 6,404 251.7% 2,544 Net gains (losses) on hedging instruments 126 (405) 531 N/a (405) Net gains (losses) on financial operations 14,138 5,419 8,719 160.9% 5,618 Operating income 44,326 46,158 (1,832) -4.0% 48,125 Personnel expenses (21,768) (23,363) 1,595 6.8% (24,928) Other administrative expenses (19,080) (20,052) 972 4.8% (20,866) Operating amortisation and depreciation (1,271) (1,338) 67 5.0% (1,601) Other operating expenses (income) 1,513 (139) 1,652 N/a (98) Operating expenses (40,606) (44,892) 4,286 9.5% (47,493) Operating profit (loss) 3,720 1,266 2,454 193.8% 632 Write-downs of loans (24,041) (12,863) (11,178) -86.9% (12,863) Net provisions for risks and charges (2,136) (3,727) 1,591 42.7% (3,727) Profit (Loss) of investee companies measured at equity 853 782 71 9.1% 782 Profit (loss) before non-recurring components (21,604) (14,542) (7,062) -48.6% (15,176) Write-downs on financial instruments (1,678) (2,292) 614 26.8% (2,292) Profit (loss) before tax (23,282) (16,834) (6,448) -38.3% (17,468) Income tax for the period 207 2,813 (2,606) -92.6% 2,813 Profit of current operations after tax (23,075) (14,021) (9,054) -64.6% (14,655) Profit (Loss) of assets held for sale, net of tax (1,818) (671) (1,147) -170.9% (37) Consolidated profit (loss) (24,893) (14,692) (10,201) -69.4% (14,692) Result pertaining to non-controlling interests 36 31 5 16.1% 31 Consolidated Profit (Loss) of group (24,857) (14,661) (10,196) -69.5% (14,661)

6 In order to provide a clearer representation of the results, the reclassified economic results differ from the Bank of Italy formats with the following reclassifications: the costs relating to the variable component of remuneration of the private bankers who are employees and other minor costs were reclassified from “Personnel expenses” to “Fee and commission expenses” (for €/thou. 503 at 30.06.2017 and for €/thou. 1,222 at 30.06.2016). 16

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Reclassified consolidated balance sheet 7 (Thousands of €) 30.06.2017 31.12.2016 Absolute Change % 31.12.2016 pro-forma Change Cash 1,624 1,670 (46) -2.8% 1,669 Loans: - Loans to customers for performing loans 402,613 508,194 (105,581) -20.8% 507,719 - Loans to customers other 319,325 335,366 (16,041) -4.8% 335,366 - Loans to banks 144,371 371,245 (226,874) -61.1% 371,245 Financial assets: - Held for trading 153,428 97,374 56,054 57.6% 97,374 - Available for sale 475,827 835,237 (359,410) -43.0% 834,780 - Hedging derivatives 2,044 1,327 717 54.0% 1,327 Fixed assets: - Equity investments 13,677 14,020 (343) -2.4% 14,020 - Intangible and tangible 96,907 97,809 (902) -0.9% 97,779 - Goodwill 49,446 49,446 - - 49,446 Property held for sale 21,900 21,900 - - 21,900 Non-current assets held for sale 63,621 71,902 (8,281) -11.5% 73,480 Other asset items 190,481 193,318 (2,837) -1.5% 193,229 Total Assets 1,935,264 2,598,808 (663,544) -25.5% 2,599,334 Payables: - Due to banks 302,786 509,294 (206,508) -40.5% 509,294 - Due to customers 1,010,264 1,285,540 (275,276) -21.4% 1,286,040 Securities in issue 174,516 304,978 (130,462) -42.8% 304,978 Financial liabilities: - Held for trading 78,314 67,969 10,345 15.2% 67,969 - Hedging derivatives 7,254 14,758 (7,504) -50.8% 14,758 Specific provisions 32,332 30,791 1,541 5.0% 30,744 Non-current liabilities held for sale 28,489 38,102 (9,613) -25.2% 38,914 Other liability items 87,462 110,176 (22,714) -20.6% 109,437 Shareholders’ equity 213,847 237,200 (23,353) -9.8% 237,200 Total liabilities 1,935,264 2,598,808 (663,544) -25.5% 2,599,334

7 In order to provide a clearer representation, the reclassified balance sheet details differ from the Bank of Italy formats for the reclassification of assets arising from loan recovery operations from item 160 “Other assets” to the item “Property held for sale” (€. 21,900 at 30.06.2017 and at 31.12.2016). 17

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Quarterly consolidated/reclassified income statement data (Thousands of €) 2017 2016 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 Interest and similar income items 6,669 9,531 7,365 11,964 12,886 10,196 Interest and similar expense items (4,130) (5,912) (2,925) (5,874) (6,980) (4,800) Net interest income 2,539 3,619 4,440 6,090 5,906 5,396 Fee and commission income 16,608 16,921 22,343 18,190 19,800 20,717 Fee and commission expenses (4,863) (4,636) (5,105) (4,643) (5,349) (5,885) Net fee and commission income 11,745 12,285 17,238 13,547 14,451 14,832 Dividends 294 18 122 814 658 23 Net gains (losses) on trading instruments 3,025 1,727 1,648 246 1,908 691 Transactions on AFS securities and financial liabilities 4,698 4,250 697 141 1,723 821 Net gains (losses) on hedging instruments 50 76 (37) 265 (190) (215) Net gains (losses) on financial operations 8,067 6,071 2,430 1,466 4,099 1,320 Operating income 22,351 21,975 24,108 21,103 24,456 21,548 Personnel expenses (11,046) (10,722) (10,970) (9,839) (11,709) (11,490) Other administrative expenses (8,841) (10,241) (12,225) (8,930) (10,391) (9,602) Operating amortisation and depreciation (635) (636) (673) (673) (620) (710) Other operating expenses (income) 1,100 415 (1,668) 390 (453) 315 Operating expenses (19,422) (21,184) (25,536) (19,052) (23,173) (21,487) Operating profit (loss) 2,929 791 (1,428) 2,051 1,283 61 Write-downs of loans (22,665) (1,376) (64,970) (13,786) (11,022) (1,841) Net provisions for risks and charges (2,135) (1) (12,713) (1,240) (3,802) 75 Net profit (loss) of subsidiaries carried at equity 509 344 519 179 457 325 Profit (loss) before non-recurring components (21,362) (242) (78,592) (12,796) (13,084) (1,380) Write-downs on financial instruments (473) (1,205) 284 (749) (1,513) (779) Profit (loss) before tax (21,835) (1,447) (78,308) (13,545) (14,597) (2,159) Income tax for the period 94 113 11,675 3,033 2,778 13 Profit (Loss) of current operations after tax (21,741) (1,334) (66,633) (10,512) (11,819) (2,146) Profit (Loss) of assets held for sale, net of tax (1,097) (721) (649) (792) (552) (175) Consolidated profit (loss) (22,838) (2,055) (67,282) (11,304) (12,371) (2,321) Loss attributable to non-controlling interests 14 22 (77) (47) 14 17 Consolidated Profit (Loss) of group (22,824) (2,033) (67,359) (11,351) (12,357) (2,304)

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Quarterly consolidated/reclassified balance sheet data (Thousands of €) Financial Financial 2016 year 2017 year 30.06 31.03 31.12 30.09 30.06 31.03 Cash 1,624 1,474 1,670 1,618 1,758 1,815 Loans: - Loans to customers for performing loans 402,613 468,328 508,194 621,374 645,772 708,324 - Loans to customers other 319,325 325,616 335,366 370,165 404,762 392,078 - Loans to banks 144,371 141,738 371,245 184,717 215,491 199,986 Financial assets: - Held for trading 153,428 113,894 97,374 282,577 288,922 287,566 - Available for sale 475,827 755,947 835,237 934,531 960,086 977,473 - Hedging derivatives 2,044 2,140 1,327 242 248 87 Fixed assets: - Equity investments 13,677 14,294 14,020 13,755 13,491 14,162 - Intangible and tangible 96,907 97,373 97,809 98,567 99,027 99,172 - Goodwill 49,446 49,446 49,446 49,446 49,446 49,446 Property held for sale 21,900 21,900 21,900 21,900 21,900 21,900 Non-current assets held for sale 63,621 69,268 71,902 102,988 126,241 108,752 Other asset items 190,481 194,757 193,318 183,121 201,661 183,915 Total Assets 1,935,264 2,256,175 2,598,808 2,865,001 3,028,805 3,044,676 Payables: - Due to banks 302,786 331,265 509,294 651,899 760,671 457,943 - Due to customers 1,010,264 1,177,809 1,286,040 1,299,171 1,297,321 1,581,840 Securities in issue 174,516 246,675 304,978 336,488 350,235 378,277 Financial liabilities: - Held for trading 78,314 81,298 67,969 118,177 123,089 142,412 - Hedging derivatives 7,254 15,807 14,758 16,872 12,119 13,447 Specific provisions 32,332 30,527 30,791 20,993 19,786 15,731 Non-current liabilities held for sale 28,489 31,536 38,102 42,686 64,128 46,515 Other liability items 87,462 109,444 110,176 73,745 86,452 80,804 Shareholders’ equity 213,847 231,814 237,200 304,970 314,366 327,707 Total liabilities 1,935,264 2,256,175 2,598,808 2,865,001 3,028,805 3,044,676

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Summary of operating results

The first half of 2017 was characterised by the difficult corporate context of the parent company Veneto Banca up to it being placed in administrative compulsory liquidation following the decisions of the European Authorities and in accordance with the Italian Law Decree of 25 June 2017. In this context the Board of Directors of Banca Intermobiliare launched the activities defined in the context of the “Guidelines of the strategic plan”, approved on 10 February 2017, and prepared a “2017- 2021 Business Plan”, according to a “stand-alone” logic, approving it on 18 July 2017. The start of activities for the sale of the stakes held in BIM by Veneto Banca, accelerated with the start of due diligence, will enable the Bank to have in future a clear and stable governance, and therefore to resume a process of growth of assets and profitability.

The first half of 2017 ended with a consolidated gross operating income slightly down, by 4% (€/Mln 44.3 at 30.06.2017 v. €/Mln 46.2 at 30.06.2016), thanks also to the significant contribution of the results obtained by own portfolio trading. The operating profit improved sharply to €/Mln 3.7 (€/Mln 1.3 at 30.06.2016 due to the large reduction in operating costs. There was however a consolidated loss of €/Mln 24.9, compared to a loss of €/Mln 14.7 recorded at 30.06.2016, owing to value adjustments on loans in line with the Bank’s current credit policy. Performing loans fell further, down to €/Mln 402.6 (-20.7% compared to 31.12.2016), in keeping with the strategic lines aimed at greatly reducing Corporate loan exposures. The coverage rates of impaired loans continue to increase and are higher than the average figures for the Italian banking system. Own Funds are €/Mln 144.3 (surplus of Own Funds over risk-weighted assets €/Mln 45.3) and determine supervisory indicators (CET 1 Fully Phased at 10.66%) much higher than the minimum levels required by Basel III.

The total customer assets amount to €/Bln. 8.7 net of duplications and recorded a fall of 7.1% compared to the figure as at 31.12.2016. Direct deposits amounted to €/Bln 1.1 (-24.3% compared to 31.12.2016) while indirect deposits came out at €/Bln 7.6 (-3.9% compared to 31.12.2016), of which €/Bln 4.9 invested in managed products and €/Bln 2.7 invested in administered products.

Performing loans to customers, of €/Mln 402.6 (€/Mln 507,7 at 31.12.2016), were further reduced during the first half of the year by 20.7%, continuing in the activities devoted to reducing credit and counterparty risks, as repeated in the “2017-2021 Business Plan” and in the “strategic guidelines for the business plan” expressed by the Board of Directors, which had established, already during the last quarter of 2016, the cessation of new loans to corporate customers. The net performing loan exposure recorded a coverage rate of 0.6%, unchanged compared to 31.12.2016, and in line compared to the figure for the industry published on 28 April 2017 by the Bank of Italy in “ Report on financial stability 1/2017 ”.

The exposure of net impaired assets amounted to €/Mln 278 a decrease of 6% compared to 31.12.2016, owing both to the increase in write-downs made in the quarter on bad positions and probable defaults, and to a reduction in past-due exposures which went from €/Mln 7.4 gross at 31.12.2016 to the current €/Mln 1.2 gross. The coverage rate of “impaired assets” amounted to 56.3% (53.1% at 31.12.2016) higher than the average figure for the industry (51.7% referring to the category of “significant banks” and 44.8% to the category of “non-significant banks”). In the context of re-internalising management, aimed at more fruitful recovery actions, in-depth studies were launched on the impaired loan portfolio, beginning a recognition process aimed at identifying possible strategies for managing the same.

As regards prudential supervision, it is confirmed that there is adequate capital strength in relation to the criteria set out in the Basel III agreement. Own Funds, calculated on a voluntary basis, are €/Mln 144.3 (€/Mln 159.8 at 31.12.2016), while the surplus of Own Funds on the risk-weighted assets amounted to

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€/Mln 45.3 (€/Mln 54.1 at 31.12.2016). The Capital conservation buffer of €/Mln 15.5 was up compared to €/Mln 8.3 at the end of 2016. The consolidated regulatory capital ratios at 30.06.2017 (CET1 Phased in 10.74%, T1 10.74% and TCR 10.86%) are higher than the minimum levels required by the Basel III accord. Finally, it should be noted that the Fully Phased at 30.06.2017, estimated by applying the parameters that will be fully in force from 1 January 2019, came out at 10.66%.

As regards equity investments, recognised starting from 31.12.2016 as assets held for sale, we can note that - in the context of the process of selling the Swiss subsidiary (BIM Suisse) – on 31.07.2017 Banca Zarattini & Co. and Banca Intermobiliare S.p.A. signed an agreement for the sale of 100% of the share capital of BIM Suisse SA held by BIM. Execution of the transaction is subordinated to fulfilment of the following conditions: authorisation by the Swiss Supervisory Authority, completion of the purchase by BIM (or an entity indicated by BIM) of the property company Patio Lugano, as of today held by BIM Suisse, and the definition of a loan position currently being analysed. The price agreed of CHF/Mln 40.4 is subject to a “price adjustment” mechanism on the basis of the AUM at the closing date and on the basis of the economic performance of the equity investment between the date on which the agreement was signed and the closing date.

Regarding the consolidated economic results of the period the following summary information is provided.

Net interest income amounted to €/Mln 6.2 with a decrease of 45.5% YOY (€/Mln 11.3 at 30.06.2016). The contraction of net interest income was determined essentially by the drop (€/Mln 3.8) in the contribution from financial investments, also taking into account the reduction (-52.4% YOY) of total exposure in debt securities (trading book and banking book). The reduction in the portfolio of securities - which began already towards the end of 2016 - continued also in the first half of 2017, in order to limit the Bank’s exposure to market and counterparty risks, also in a strategy involving the “derisking” in relation to countries at the greatest risk. Net interest income from customers was also down, amounting to €/Mln 1.3 against €/Mln 3 at 30.06.2016. There was an improvement in income from the banking system, which went from €/Mln 0.102 at 30.06.2016 to the current €/Mln 0.441.

Net fee and commission income earned during the period amounted to €/Mln 24 with a decrease of 18.4% YOY (€/Mln 29.4 at 30.06.2016). Fee and commission income reached €/Mln 33.5 down compared to €/Mln 40.8 recorded in the first half of 2016. The contraction regarded both the administered and the managed segments following the reduction in deposits.

Net gains on financial operations came out at €/Mln 14.1, up compared to €/Mln 5.4 recorded in the first half of 2016, thanks essentially to the profits made on the sale of banking book securities of €/Mln 8.9 (€/Mln 2.5 at 30.06.2016), in the context of the aforementioned “derisking” strategy. Operations on financial instruments recognised in the trading book contributed €/Mln 4.8 (€/Mln 2.6 at 30.06.2016).

The operating income amounted to €/Mln 44.3, down by 4% compared to the first half of the previous year. The higher revenue deriving from financial operations made it possible to offset the reduction in the contribution of the other items.

The operating expenses amounting to €/Mln 40.6 (€/Mln 44.9 at 30.06.2016) decreased by 9.5% YoY, thanks both to the reduction in administrative expenses and to the improvement in other operating income and expenses. Personnel expenses amounted to €/Mln 21.8 at 30.06.2017 and were down by 6.8% compared to the first half of 2016. The decrease is attributable to the reduction in the number of employed personnel that occurred in the period (from 572 at 30.06.2016 to the current 537); the figure is measured net of resources related to the subsidiary held for sale. Other administrative expenses amounted to €/Mln 19.1, down by 4.8% compared to the first half of the previous year. The reduction in expenses was obtained thanks to a careful activity of increasing efficiency and rationalising costs. Operating income/expenses were a positive €/Mln 1.5 (a negative €/Mln 0.1 at 30.06.2016) owing mainly to contingent assets. 21

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The operating profit came out at €/Mln 3.7 (€/Mln 1.3 at 30.06.2016), an improvement compared to the first half of the previous year thanks to the containment of the operating costs which offset the drop in net operating income.

There was a loss before tax of €/Mln 23.3 (- €/Mln 16.8 at 30.06.2016) after performing value adjustments on loans of €/Mln 24 (€/Mln 12.9 at 30.06.2016), allocations to provisions for risks of €/Mln 2.1 (€/Mln 3.7 at 30.06.2016) and impairment on financial instruments of €/Mln 1.7 (€/Mln 2.3 at 30.06.2016).

Net write-downs on loans amounted to €/Mln 24, up compared to the write-downs made in the first half of the previous year which amounted to €/Mln 12.9. The provisions set aside during the period come within the context of the revisions of estimates regarding foreseeable losses, with reference both to the economic and financial situation of customers, and to the evolution of the value of the guarantees received.

There was a loss on continuing operations after tax of €/Mln 23.1, compared to a loss of €/Mln 14 at 30.06.2016. The current and deferred tax burden, which took into account the recoverability of taxes, based on long-term economic projections underlying the 2017-2021 Business Plan, was a positive €/Mln 0.2 (€/Mln 2.8 at 30.06.2016).

The Group loss for the period, therefore, came out at €/Mln 24.9 (loss of €/Mln 14.7 at 30.06.2016) after determining a negative contribution of “net gains on assets held for sale after tax” of €/Mln 1.8 and a result pertaining to non-controlling interests of €/Mln 0.036.

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2017-2021 Business Plan

On 18 July 2017 the Board of Directors of BIM approved the Business Plan, prepared according to a “stand-alone” logic, assuming that a new shareholder will acquire, very soon, in the context of the liquidation process, the majority stake held by Veneto Banca in L.C.A. The Business Plan was prepared in substantial consistency with the strategic plan guidelines (approved by the Board of Directors of BIM on 10 February 2017), which, as is known, considered – in the light of the information available at the time – a presumable exit of BIM from the perimeter of Veneto Banca before the end of summer 2017; the change in the governance had been considered decisive to enable a credible autonomous development strategy in private banking, which would take advantage of an effective retention of the network and the customers and a significant recruitment action.

Subsequently the deterioration of Veneto Banca’s situation and the related news in the press modified the context, delaying the process of selling BIM. The recently launched Veneto Banca liquidation process and the consequent impulse given to the sale of the equity investment in BIM represent as of today a turning point for the future of the company; this is the context for the decision of the Board of Directors to complete the process begun in this past first quarter with the definition of the Business Plan of an autonomous, independent BIM ready for a process of relaunching and growth, accompanied by restructuring already largely begun, for example with the complete renewal of the Top Management and the appointment of 11 new Managers out of a total of 14 making up the first line.

The Board of Directors of BIM confirms its conviction that there is in the Italian market room for growth for a high-grade Private Banking service, for customers with assets of more than €/Mln 1, who today find a weak specialised offer, since the Italian market is mainly focused on “Mass Affluent” customers (with average customer assets of around €/Mln 0.3). This market segment can evidently be served by a limited number of highly-qualified private bankers, capable of guaranteeing a really tailor- made service dedicated to customers with considerable assets and advanced financial consultancy needs. Even after the strong growth in recent years of Wealth Management, the current market, on the other hand, as stated in recent independent analyses, sees a preponderance of often standardised financial services, with clients sometimes being charged very high costs. BIM believes that the adoption of Mifid2 in January 2018 could be extremely favourable for its project of high-end Private Banking, because it will provide the client with a clear explanation of all the costs actually paid, and because it will lead to service models with a high propensity towards the provision of advice at the expense of those based on selling products with high profitability for the distributors. BIM is already in a very favourable position as regards this scenario, with a network almost entirely free from commission rebates and with a pricing system that is substantially already aligned with European Private Banking best practices, to which the Italian market will also align itself soon.

The decision – already made and implemented - to stop lending to corporate customers was confirmed and extended for the whole horizon of the plan. This business is incompatible with Private Banking and in the past has led to the accumulation of impaired loans which have over time penalised BIM. It was therefore decided that BIM will only provide “Lombard” loans to Private clients, with a rigorous and precise process of assessment of the creditworthiness regarding such loans. For the existing portfolios of impaired loans a further increase in coverage is expected, while the existing portfolios of corporate loans will be managed with a view to a gradual reduction and “run-off”.

The Board of Directors has also identified a new policy for managing the Bank’s capital geared to a “Capital Light” model, which allows a reduction in the risks that may be incurred by the capital of a private bank. The “Capital Light” bank model is expressed through: - reduction of RWAs pursued through among other things a process of selling and increasing the value of non-strategic assets, which will involve the entire property portfolio and the equity investment in BIM Suisse (sale made on 31.07.2017 but subordinated to fulfilment of certain

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conditions precedent); - low Market Risk, with a “Banking Book” of a limited size and mitigation of exposure to country risk pursued through diversification of issuers; - low Operational Risk, with a service model compliant with the regulations and particularly attentive to ex ante management; - low Credit Risk, with a portfolio concentrated exclusively on “Lombard” exposures. This model aims to be highly innovative also in respect of Italian Private banks, which often have substantial Banking Books that are mainly exposed to government bonds without any diversification of the issuing countries.

Therefore, given the highly turbulent moment in financial markets and geopolitics, BIM intends to present itself as a real safe haven in the Italian panorama, where savers can invest their savings with absolute peace of mind, where conflicts of interest are completely absent and the costs are in line with best practices.

BIM wants to achieve a high level of efficiency in its business model, quickly recovering from its current Cost Income Ratio towards best practice levels This result may be achieved either by simplifying and strongly innovating its operational and IT processes, and consequently realising significant efficiencies and significantly helping the assets under management to grow. In the plan period a first stage is provided for - expected to end in 2018 - characterised by implementation of a number of restructuring initiatives aimed at reducing overheads, and a subsequent period concentrated mainly on development. The Plan indicates for 2017 and 2018 a series of actions for restructuring, investment for innovation and making the business platform more efficient, made possible by, among other things, the renewal of the management team carried out over the last few months. The growth of assets under management will be possible through the development of new clients and through the ability to attract professionals who today seek an environment where individual clients can be treated with great personal attention and be totally disconnected from budget policies which generally direct choices towards products with higher profit margins. The main KPIs that today may be assumed for the end of 2021 are entirely consistent with the pattern of a high-end, sophisticated and exclusive Private Bank, with a growing network of staff compared to the current situation, but where it is always possible to have a direct channel between Top Management and the individual Private Banker.

Main drivers: - evolution of deposits: the addition to the network of more than 130 bankers is planned over the horizon of the plan; - asset mix with orientation to conserving and increasing the capital; - new loan disbursements limited to a total of €/Mln 365 over the horizon of the plan, of which only 10% planned in 2018, with a gradual increase in subsequent years; - reduction in operating expenses thanks to the definition of a new structure and migration to a different platform on outsourced IT systems; main savings areas identified by targeted actions on rentals, infoproviders, advice; - actions on personnel expenses thanks to the adoption of new computerised systems and processes; - RWAs are expected to be reduced from €/Mln 1,412 in 2016 to €/Mln 945 in 2021: sales have an impact of more than €/Mln 150, while the remaining reduction is achieved thanks to derisking actions; - the CET1 Ratio is expected to increase: 11.9% at 2019 and 18.6% at 2021.

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The main KPIs provide for the following targets for 2021: - AUM for about €/Bln. 15 (€/Bln 8.7 at 30.06.2017); - a network of 296 Private Bankers (152 at 30.06. 2017); - a ratio between net operating income and deposits close to 95bps (compared with the current 103bps, the annualised figure at 30.06.2017); - RoA of 125bps (compared to 76 bps annualised at 30.06.2017); - a Cost/Income Ratio in recovery from the current 96% (operational of 92% at 30.06.2017) to about 52%, taking advantage of the growth in assets and greater efficiency through the business model; - a Costs/AUM ratio down from the current 93bps (95bps operational on average AUM) to about 49bps; - a PBT Margin of 41bps.

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Significant subsequent events

We can report the following events subsequent to 30.06.2017 which were opportunely considered in preparing the present consolidated half-yearly financial report:

Start of Due Diligence During July, the liquidators of Veneto Banca L.C.A, relaunched the process of disposal of the equity investment held in BIM. Following the non-binding offers received, the liquidators, with the aid of their financial advisor Lazard & Co S.r.l., selected a limited number of entities, all of high international standing and which have expressed an interest in acquiring the equity investment held by Veneto Banca in BIM in the current configuration of the corporate perimeter of the company, including the total portfolio of impaired loans. Access to the data (Data Room) began on 24 July 2017. To protect all the stakeholders, the Board of Directors of BIM chose as financial advisor Deutsche Bank AG.

Approval of the 2017-2021 Strategic Plan On 18 July 2017 the Board of Directors of BIM approved the Business Plan, prepared according to a “stand-alone” logic, assuming that a new shareholder, very soon, will acquire in the context of the liquidation process the majority stake held by Veneto Banca in L.C.A. The Business Plan was prepared in substantial consistency with the strategic plan guidelines (approved by the Board of Directors of BIM on 10 February 2017), which, as is known, considered – in the light of the information available at the time – a presumable exit of BIM from the perimeter of Veneto Banca before the end of summer 2017. As regards the main assumptions underlying the strategic guidelines approved please see what is stated in the half-yearly report on operations, Section - 2017-2021 Business Plan, of the present Consolidated Half-Yearly Financial Report .

Signing of agreement to sell the equity investments in BIM Suisse On 31.07.2017 Banca Zarattini & Co. and Banca Intermobiliare S.p.A signed an agreement for the sale of 100% of the share capital of BIM Suisse S.A. held by BIM. Execution of the transaction is subordinated to fulfilment of the following conditions: authorisation by the Swiss Supervisory Authority, completion of the purchase by BIM (or an entity indicated by BIM) of the property company Patio Lugano, as of today held by BIM Suisse, and the definition of a loan position currently being analysed. The price agreed of CHF/Mln 40.4 is subject to a “price adjustment” mechanism on the basis of the AUM at the closing date and on the basis of the economic performance of the equity investment between the date on which the agreement was signed and the closing date. The operation also provides for the launch of a commercial partnership between BIM and Banca Zarattini & Co. in order to expand the solutions available to customers.

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Business outlook

The process of disposing of Banca Intermobiliare, relaunched in July by the liquidators of Veneto Banca L.C.A, received a strong acceleration leading, on 24 July 2017, to the aforementioned “data room” which should enable the formulation, in a short time, of binding expressions of interest and the concession of an exclusive period to a selected counterparty. The new corporate structure that will be defined will make it possible to relaunch the bank as defined in the current business plan approved by the Board of Directors on 18 July 2017.

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Total customer deposits

The total customer assets amount to €/Bln. 8.7 net of duplications and recorded a fall of 7.1% compared to the figure as at 31.12.2016. The reduction in volumes mainly involved direct deposits, down by €/Mln 0.353 (-24.3% compared to 31.12.2016); more limited, €/Mln 0.309, the decrease in indirect deposits which saw mainly a decrease in client assets under management, while the decrease in assets under administration was more limited.

Breakdown of total customer deposits (Millions of €) 30.06.2017 31.12.2016 Absolute Change % change Direct deposits 1,097 1,450 (353) -24.3% Indirect deposits 7,613 7,922 (309) -3.9% - Assets under administration 2,643 2,708 (65) -2.4% - Assets under management 4,876 5,125 (249) -4.9% - BIM Fiduciaria assets deposited externally 954 89 5 5.6% TOTAL CUSTOMER DEPOSITS 8,710 9,372 (662) -7.1%

As of 30.06.2017 the total assets consists of invested assets (87.4%) of which 56% were invested in managed products. It should be noted that the client assets attributable to the subsidiary BIM Suisse S.A., classified as held for sale starting from the annual financial statements, amount to €/Mln 272 and are made up primarily of assets under administration for €/Mln 144 and assets managed on an individual basis for €/Mln 104.

Direct deposits Consolidated direct deposits at 30.06.2017 were down by 24.3% compared to the figure at 31.12.2016. In particular there was a decline in customer current accounts of €/Mln 287 and in payables represented by bonds issued by Banca Intermobiliare and subscribed by customers of €/Mln 130. The liquidity of managed monetary assets (GPM) at 30.06.2017 in Banca Intermobiliare current accounts amounting to €/Mln 112, was deducted from direct deposits and included in invested assets among the management lines. The collected assets figure attributable to the subsidiary Bim Suisse amounted to €/Mln 24.

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Details of direct deposits (Millions of €) 30.06.2017 31.12.2016 Change Change Total Other Bim Total Other Bim absolute %

Suisse Suisse Current accounts 1,033 1,009 24 1,320 1,285 35 (287) -21.7% Duplication liquidity present in GPM (112) (112) - (176) (176) - 64 -36.4% Repurchase agreements and securities lending 1 1 - 1 1 - - - Due to customers 922 898 24 1,145 1,110 35 (223) -19.5% Securities in issue 175 175 - 305 305 - (130) -42.6% Payables representing securities 175 175 - 305 305 - (130) -42.6%

DIRECT DEPOSITS 1,097 1,073 24 1,450 1,415 35 (353) -24.3%

Indirect deposits As at 30.06.2017, invested assets stood at €/Bln. 7.6, a decrease of 3.9% compared to 31.12.2016. Assets under management amounted to €/Bln. 4.9, down during the period by €/Mln 249 (-4.9% compared to 31.12.2016); just as assets under administration fell by 2.4% coming out at €/Bln 2.6. It should be noted that the values of the above assets under management were shown net of duplications - that include the share of GPM invested in funds and the insurance policies having the individual asset management as their underlying asset – shown in the table under the item “duplication between managed products”. The indirect deposits attributable to the subsidiary Bim Suisse amounted to €/Mln 248, of which products managed by Bim €/Mln 104.

Details of total customer assets (Millions of €) 30.06.2017 31.12.2016 Change Change Bim Bim Total Other Total Other absolute % Suisse Suisse DIRECT DEPOSITS Due to customers 1,034 1,010 24 1,321 1,286 35 (287) -21.7% Duplication liquidity present in GPM (112) (112) - (176) (176) - 64 -36.4% Payables represented by securities 175 175 - 305 305 - (130) -42.6% total direct deposits 1,097 1,073 24 1,450 1,415 35 (353) -24.3% INDIRECT DEPOSITS Assets under administration 2,643 2,499 144 2,708 2,570 138 (65) -2.4% Equity under management 4,876 4,772 104 5,125 5,021 104 (249) -4.9% Management lines 2,046 1,942 104 2,215 2,112 103 (169) -7.6% Undertakings for collective investment (UCITS) 2,531 2,531 - 2,552 2,551 1 (21) -0.8% Hedge Funds 102 102 - 132 132 - (30) -22.7% Insurance products 360 360 - 406 406 - (46) -11.3% Duplication between managed products (163) (163) - (180) (180) - 17 -9.4% Total assets administered and under management 7,519 7,271 248 7,833 7,591 242 (314) -4.0% - of which products managed by BIM companies 3,854 3,750 104 4,101 3,997 104 (247) -6.0% BIM Fiduciaria assets deposited externally 94 94 - 89 89 - 5 5.6% total invested Assets 7,613 7,365 248 7,922 7,680 242 (309) -3.9%

TOTAL CUSTOMER DEPOSITS 8,710 8,438 272 9,372 9,095 277 (662) -7.1%

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Client assets under management (Millions of €) 30.06.2017 31.12.2016 Products Third Total Products Third Total of Bim party Client of Bim party Client products assets products assets Equity under management Collective Asset Management 1,509 1,022 2,531 1,528 1,024 2,552 Individual Asset Management 2,046 - 2,046 2,215 - 2,215 Hedge Funds 102 - 102 132 - 132 Insurance products 360 - 360 406 - 406 Duplication between managed products (163) - (163) (180) - (180) TOTAL ASSETS UNDER MANAGEMENT 3,854 1,022 4,876 4,101 1,024 5,125

Against the overall decrease in client assets under management of 4.9%, one can observe that this decrease mainly concerned products offered by Group companies, which went from €/Bln 4.1 to the current €/Bln 3.9 (-6%). The products of the Group companies are entirely attributable to the range of products offered by the subsidiary Symphonia SGR except for insurance products issued by the investee company Bim Vita 50% controlled together with UnipolSai (UGF Group). The products managed by third parties in the portfolios of clients of Banca Intermobiliare are solely represented by mutual funds in collective investments (UCIs) issued by “asset management companies” outside the group.

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Loans and other loans to clients

As illustrated in the annual financial statements at 31.12.2016, Banca Intermobiliare during the fourth quarter of 2016 carried out an overall analytical review of the status of the loan positions according to a rigorous provisions policy in the context of the revisions of the estimates regarding the foreseeable losses, in the light of the most up-to-date information made available, both as regards the economic and financial situation of customers, and to the evolution of the value of the guarantees received. In the first half of financial year 2017, in the light of the evolution of relations with the existing clients with credit lines and the persistent economic crisis, with particular reference to the real estate sector, the complete analytical review of the statement of credit positions continued, with particular reference to value adjustments for impairment of loans. The assessments made to calculate the result at 30 June 2017 were based on the policies currently in force. As regards the ECB inspection of the former Parent Company carried out from 10 October 2016 to 10 February 2017, Banca Intermobiliare had accepted precisely, already in the annual financial statements, the indications destined to reflect in the accounts the issues raised during the inspection. The ECB inspection team worked on single loan positions, not selected with a statistical methodology, with the consequent methodological impossibility of projecting the results of the analyses carried out on these loan positions onto the part of the portfolio not analysed, and no requests in this sense were received by the ECB. As of today, Banca Intermobiliare has still not received either from the inspection team, or from the former Parent Company Veneto Banca, the definitive results of the inspection, or even any formal request to review the management and assessment processes, and the systems of internal controls related to credit and counterparty risks, as the process of communicating the results of the inspection activities still has to be formalised. During the period, the activity of reducing loan exposure continued. These activities were provided for in the “guidelines” approved on 10 February 2017 and repeated in the “2017-2021 Business Plan” approved by the B.o.D. of BIM on 18 July 2017, where, among other things, the decision was confirmed to stop lending to corporate customers and to disburse “Lombard” loans Private clients, with a rigorous and precise process of assessing creditworthiness. In particular, as provided for in the Business Plan, the Bank is planning in any case to update its lending policies which could lead to a rise in the coverage levels of its impaired loans. These actions, to be able to have the relevant application features for IAS/IFRS purposes, must first be developed through updated parameters and assessment models compared to the current ones, in an adjustment process that can be started once the Bank has become concretely autonomous and operational. These will therefore be adopted in the first periodic disclosure after that defining and implementing the new policy. Finally, as communicated in the previous financial reports, the need was seen to launch an independent analysis on the portfolio of impaired loans, also in the light of the possible termination of the contract for the outsourcing of impaired loan management to Veneto Banca, in order to identify the possible future strategies for managing the same.

Quantitative information on loan exposures at 30.06.2017 is provided below.

Details of loans to customers (Thousands of €) 30.06.2017 31.12.2016 Change Change 31.12.2016 pro-forma Absolute % Performing loans to customers 402,613 508,194 (105,581) -20.8% 507,719 Other loans to customers 319,325 335,366 (16,041) -4.8% 335,366 Total loans to customers 721,938 843,560 (121622) -14.4% 843,085

As at 30.06.2017, loans to customers amounted to €/Mln 722 (€/Mln 843.6 al 31.12.2016) down by 14.4% owing mainly to the contraction of performing loans.

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Performing loans to customers (Thousands of €) 30.06.2017 31.12.2016 Change Change 31.12.2016 pro-forma absolute % Current account overdrafts 216,505 298,493 (81,988) -27.5% 298,493 Mortgage loans 177,646 198,381 (20,735) -10.5% 198,381 Short term borrowings 6,753 8,823 (2,070) -23.5% 8,823 Other loans 1,709 2,497 (788) -31.6% 2,022 Total performing loans 402,613 508,194 (105,581) -20.8% 507,719

Performing loans to customers amounted to 402.6 €/Mln (€/Mln 508.2 at 31.12.2016) down by 20.8%, with a coverage rate of 0.6%, unchanged compared to the 0.6% of 31.12.2016 and in line with the figure for the industry published in the aforesaid “Financial Stability Report”. The composition of the loan portfolio to customers for performing loans, according to the various forms, was as follows: 53.8% was made up of current account overdrafts (€/Mln 216.5), 44.1% of mortgage loans (€/Mln 177.6), 1.7% of short-term loans (€/Mln 6.8) and 0.4% from other loans. Loans are mainly secured by rotating pledges or property mortgages, with a suitable spread according to prudential parameters required by this loan policy and regularly monitored.

Other loans to customers (Thousands of €) 30.06.2017 31.12.2016 Change Change 31.12.2016 pro-forma absolute % Margins with clearing houses/non- banking brokers 31,068 24,883 6,185 24.9% 24,883 Net impaired assets 277,999 295,773 (17,774) -6.0% 295,773 Other positions 10,258 14,710 (4,453) -30.3% 14,710 Total other loans to customers 319,325 335,366 (16,041) -4.8% 335,366

Other loans to customers, of €/Mln 319.3 as at 30.06.2017, are down compared to €/Mln 335.4 as at 31.12.2016, mainly due to the reduction of 6% in impaired assets, amounting to €/Mln 17.8, and to the contraction in “Other positions” of €/Mln 4.5.

Net impaired assets The following provides information relating to net impaired assets according to the classification provided for by regulations issued by the Bank of Italy on regulatory reporting (Memorandum No. 272) and preparation of financial statements (Memorandum No. 262). “Bad loans” include all on- and off-balance-sheet loan exposures in relation to a party in a condition of insolvency (even if not ascertained judicially) or in substantially equivalent situations, independently of any loss forecasts formulated by the bank. “Probable defaults” consist of loan exposures, other than bad loans, for which the intermediary considers it improbable that, without recourse to actions such as enforcement of the guarantees, the debtor will fulfil its loan obligations fully. This category includes restructured loans, watch list positions (with the exception of objective watch list positions) and forborne non-performing positions. The category “past-due impaired loans” includes exposures, other than those classified as bad loans and as probable defaults, which, at the reference date of the report, are past due by more than 90 days and exceed a pre-set significance threshold. This includes therefore, in addition to objective watch list positions, any past-due loans and the other “forborne non-performing” positions not included in the previous category of probable defaults.

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Breakdown of net impaired on-balance-sheet assets (Thousands of €) 30.06.2017 31.12.2016 Change Change Net Exposure Net Exposure Absolute %

a) Bad loans 158,161 159,934 (1,773) -1.1% b) Probable defaults 118,843 129,653 (10,810) -8.3% c) Past-due loans 995 6,186 (5,191) -83.9% Net impaired assets 277,999 295,773 (17,774) -6.0%

The exposure of net impaired assets amounted to €/Mln 278 down by 6% compared to 31.12.2016 owing to the combined effect of growth of gross impaired exposures of €/Mln 4.7 and higher provisions set aside at 30.06.2017 of €/Mln 22.4. In particular gross exposures saw an increase in bad positions of €/Mln 9.2 and in probable defaults of €/Mln 1.7, and a reduction in past-due exposures of €/Mln 6.3. The change in value adjustments saw instead an increase of a total of €/Mln 22.4 of which €/Mln 11 for bad loans and €/Mln 12.5 for probable defaults. The coverage rate of “impaired assets” amounted to 56.3% (53.1% at 31.12.2016) higher than the average figure for the industry (51.7% referring to the category of “significant banks” and 44.8% to the category of “non-significant banks”).

Gross and net exposure of impaired on-balance-sheet assets (Thousands of €) 30.06.2017 Gross Specific Coverage Net Exposure exposure write-downs % a) Bad loans 455,313 (297,152) 158,161 65.3% b) Probable defaults 179,198 (60,355) 118,843 33.7% c) Past-due loans 1,172 (177) 995 15.1% Net impaired assets 635,683 (357,684) 277,999 56.3%

31.12.2016 Gross Specific Coverage Net Exposure exposure write-downs % a) Bad loans 446,069 (286,135) 159,934 64.1% b) Probable defaults 177,499 (47,846) 129,653 27.0% c) Past-due loans 7,447 (1,261) 6,186 16.9% Net impaired assets 631,015 (335,242) 295,773 53.1%

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Credit quality ratios As regards credit quality, the table below shows the coverage rates of loan exposures to customers divided into “performing assets” and “impaired assets”. The “company figures ” relating to 30.06.2017 and to 31.12.2016 were compared with the “system figures” inferable from the latest Bank of Italy publication in the “ Financial Stability Report 1/2017 ” released on 28 April 2017 and prepared on the basis of the final figures at the end of 2016. In particular, a decision was taken to compare the data of Banca Intermobiliare with the relevant category of “significant Banks” (banks supervised directly by the ECB), and with the category “non- significant Banks” (supervised by the Bank of Italy in close collaboration with the ECB).

company details system data 30.06.2017 31.12.2016 31.12.2016 Non- Significant Significant Banks Banks Performing assets 0.6% 0.6% 0.6% 0.7% Impaired assets 56.3% 53.1% 51.7% 44.8% a) Bad loans 65.3% 64.1% 63.1% 57.8% b) Probable defaults 33.7% 27.0% 33.7% 27.9% c) Past-due loans 15.1% 16.9% 24.7% 9.4%

Exposure to major risks (individual financial statements of Banca Intermobiliare) Presented below is the disclosure of the individual financial statements of Banca Intermobiliare related to “major risks” as per (EU) Regulation No. 680/2014 Annex IX which establishes the implementing technical standards on the subject of large exposures under the terms of (EU) Regulation No. 575/2013.

The supervisory body defines “major risk” as the exposure of an entity to a client or a group of connected clients, when its value is equal to or greater than 10% of its Own Funds.

Exposure to major risks (Millions of €) 30.06.2017 31.12.2016 nominal weighted nominal weighted a) Amount 1,222 214 2,072 310 b) Number 13 13 13 13

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Exposure to major risks – by category (Millions of €) 30.06.2017 31.12.2016 number Nominal weighted number nominal weighted Impaired 4 101 88 4 110 96 Clients 4 113 67 3 131 101 Former Veneto Banca Group 1 416 27 1 1,013 28 Banks 2 32 32 3 85 85 Institutions 2 560 - 2 733 - Total of major risks 13 1,222 214 13 2,072 310

As of 30.06.2017, excluding from the 13 positions 2 leading banking groups, the exposure towards the companies of the former Veneto Banca Group and the 2 institutions (Italian Ministry of the Economy and the Cassa di Compensazione e Garanzia (the Clearing House)), the remaining positions consist of 4 performing loan exposures and 4 impaired loan exposures for a total weighted exposure of approximately €/Mln 155. As regards these exposures, as of 30.06.2017, there is 1 position that exceeds the parameters referred to in art. 395 (1) of Regulation (EU) No. 575/2013 (CRR). Banca Intermobiliare had contacted the former Parent Company Veneto Banca to find out the initiatives available capable of enabling rapid repayment of the exposure within the limits of the aforementioned legislative reference. At the moment, following the evolution of the former Parent Company, BIM is assessing autonomous initiatives aimed at repayment of the position.

As regards “major risks ” in relation to the former Veneto Banca Group the following information can be provided:

Details of major risks in relation to former Veneto Banca Group (Millions of €) 30.06.2017 Exposures to former Veneto Banca Group 243 Exposures to BIM subsidiaries 173 Total of major risks in relation to former Veneto Banca Group 416

In relation to the nominal exposure to the former Veneto Banca Group we must stress that the direct position in relation to Veneto Banca and its subsidiaries (other than BIM’s subsidiaries) amounted to €/Mln 243, of which €/Mln 26 related to senior notes in Banca Intermobiliare’s portfolio, while for the remainder these were positions for securities to be received on repurchase agreements and derivatives, of €/Mln 140, which at the contractual maturity were all received or collected and replaced with direct transactions with Intesa Sanpaolo with the exception of €/Mln 3.2 of derivatives with maturity at more than one year, and interbank deposits of €/Mln 77, on which the activity by Intesa Sanpaolo continued. The remainder of the nominal exposure, of €/Mln 173, is made up of the intercompany receivable positions and the value of the equity investments of Banca Intermobiliare in its subsidiaries. In detail: BIM Immobiliare S.r.l. €/Mln 54, BIM Suisse S.A. €/Mln 25, Symphonia SGR €/Mln. 77, Immobiliare D S.r.l. €/Mln 2 and Paomar III €/Mln 15.

For further information relating to the on- and off-balance-sheet exposures to customers please see Part E “Information on risks and related hedging policies” in the explanatory notes to the consolidated Financial Statements as at 31.12.2016.

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Results of equity investments

SYMPHONIA SGR S.P.A. Established in the first half of the 1990s, Symphonia SGR has achieved placement among the major operators in the Italian assets under management sector, offering to the market a range of products and services which is rich and articulated. Symphonia SGR was acquired in 2003 by Banca Intermobiliare and in the years that followed the two asset management companies belonging to Banca Intermobiliare: BIM SGR and BIM Alternative Investments SGR (which a specialised in the handling of alternative investment funds) were merged by incorporation, on 1 January 2008 and 1 January 2010 respectively. During 2011, in view of Veneto Banca’s acquisition of the controlling interest in Banca Intermobiliare, Symphonia SGR was placed within the Veneto Banca Banking Group as one of main partners in the asset management sector. Currently, the products offered by Symphonia SGR, among the most complete in Italian asset management include: portfolio management lines, UCITS (Italian and Luxembourg law) and alternative investment products (Single and Multi-Manager Hedge Funds), distributed by the places such as the former Veneto Banca Group, Banca Intermobiliare, Banca Apulia, Banca Fideuram, SanPaolo Invest and Banca Consulia. As regards the future of the subsidiary, as already reported in the previous reports on the subject of “Guidelines of the strategic development plan”, the asset management company was considered strategic as part of the strategy of pure “Private Banking” and so it will undergo a strengthening process in order to make it more qualified and will have an increasingly active management. As a result of Italian Law Decree no. 99 of 25 June 2017, the administrative compulsory liquidation of Veneto Banca, the controlling shareholder and Parent Bank of BIM, was launched. In this context, the Liquidators accelerated the process of disposal on the market of BIM and its equity investments, including Symphonia. It is expected that the timing for concluding the procedure, coordinated by an advisor, will be short. With regard to governance, on 16 February 2017, the new Board of Directors of Symphonia was installed. For the next three years, the Board will be chaired by Nicola Rossi, while the executive powers have been assigned to Sergio Vicinanza. The Board was completed with the following Directors appointed: Alessandra Viscovi, who then resigned and was replaced by Dario Brandolini, Massimo Paolo Gentili and Pierlugi Molajoni. These appointments will strengthen the structure of Symphonia and will enable it to undertake an important path of growth and innovation, while maintaining standards of excellence that have always characterised its activity in the market of asset management. As of 30.06.2017, compared to 30.06.2016 Symphonia recognised a reduction in profit for the period and a decline in assets under management. In particular, the assets managed, gross of those received under delegated management, amounted to €/Bln. 3.56, down compared to €/Bln. 3.77 at 31.12.2016 due to outflows of managed assets of clients and the market effect. As for the profit for the period, Symphonia recorded a profit at 30.06.2017 of €/Mln. 1.8, a decrease of 32% compared to €/Mln 2.6 at 30.06.2016. Net fees and commissions amounted to €/Mln. 8.3, a reduction of 13% yoy compared to €/Mln. 9.5 at 30.06.2016). The operating costs amounted to €/Mln. 5.6 at 30.06.2017 (€/Mln. 5.4 at 30.06.2016), down by 3%. The decrease involved administrative expenses while personnel expenses remained substantially unchanged. The main summarised figures at 30.06.2017 are presented below: • Total assets under management amounted to €/Bln. 3.56 (€/Bln 3.77 at 31.12.2016); - of which there was for individual products a total of €/Bln. 1.92 (€/Bln 2.08 as at 31.12.2016) including assets under delegated management; - of which there was for UCI funds a total of €/Bln. 1.63 (€/Bln 1.69 as at 31.12.2016) including assets under delegated management; • Net fees and commissions amounted to €/Mln. 8.3 (€/Mln. 9.5 at 30.06.2016); • Profit for the period €/Mln 1.8 (€/Mln 2.6 at 30.06.2016); • Operating profit (loss)/Net operating income stood at 32.4% (43% as at 30.06.2016); • Cost/Income Ratio (including other income and charges) stood at 63.4% (56% to 30.06.2016); 36

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• Shareholders’ equity amounted to €/Mln. 48.49 (€/Mln 49.23 at 30.06.2016); • ROE at 7.3 % (10.2% at 30.06.2016).

BANCA INTERMOBILIARE DI INVESTIMENTI E GESTIONI (SUISSE) S.A. Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A., founded in 2001 is an independent private bank, governed by Swiss law with headquarters in Lugano. It handles private and institutional assets and is targeted to clients in search of a financial environment able to create and implement personalised financial solutions in line with the most current forms of management and investment. Following the adoption of the “Guidelines of the strategic development plan” by the Parent Company Banca Intermobiliare, the subsidiary Bim Suisse was classified among the activities held for sale with the aim of enhancing the value of the shareholdings deemed non-strategic. In the period the activities began in preparation for disposal and lastly, on 31 July 2017, the Board of Directors of Banca Intermobiliare di Investimenti e Gestioni S.p.A. (BIM), approved an agreement with Banca Zarattini & Co for the sale of the 100% of the share capital of BIM Suisse SA held by BIM. Execution of the transaction is subordinated to fulfilment of the following conditions: authorisation by the Swiss Supervisory Authority, completion of the purchase by BIM (or an entity indicated by BIM) of the property company Patio Lugano, as of today held by BIM Suisse, and the definition of a loan position currently being analysed. The price agreed of CHF/Mln 40.4 is subject to a “price adjustment” mechanism on the basis of the AUM at the closing date and on the basis of the economic performance of the equity investment between the date on which the agreement was signed and the closing date. The operation also provides for the launch of a commercial partnership between BIM and Banca Zarattini & Co. in order to expand the solutions available to customers.

As regards the results of the individual financial statements of Bim Suisse as at 30.06.2017, there was a loss of Chf/Mln. 1.820 an increase compared to the loss of Chf/Mln 0.536 at 30.06.2016, mainly attributable to the reduction in fees and commissions, net interest income and not gains and losses on assets held for trading.

Below are the main summarised figures as at 30.06.2017: • Net interest income amounted to Chf/Mln 0.145 (CHF/Mln 0.320 at 30.06.2016); • Net fees and commissions amounted to CHF/Mln 1.176 (CHF/Mln 1.764 at 30.06.2016); • The loss for the period amounted to CHF/Mln -1.820 (CHF/Mln -0.536 at 30.06.2016); • Operating profit (loss)/Net operating income stood at -129.5% (-20.7% at 30.06.2016); • Cost/Income ratio stood at 229.5% (120.7% at 30.06.2016); • ROE at -8.76% (-2.42% at 30.06.2016).

BIM FIDUCIARIA S.p.A. Bim Fiduciaria is owned 100% by Banca Intermobiliare. It is authorised to provide static trust services and offers consulting and assistance to private clients on financial and taxation issues, particularly risks and instruments used to protect assets and successions. The Memorandum No. 288 of 2015 enacted following the amendments envisaged by Legislative Decree No. 141/2010 ruled that trust companies controlled directly or indirectly by a bank or a financial institution, or that have taken the form of joint-stock company and have a paid-up capital of not less than twice that required by article 2327 of the Civil Code, are obliged to request permission for registration in the separate section of the register under article 106 of the Consolidated Banking Act. In compliance with this regulation, on 11.02.2016 Bim Fuduciaria filed for registration in the separate section of the Register of Financial Intermediaries provided by article 106 of the Legislative Decree No. 385 of 1 September 1993 (Consolidated Banking Act) obtaining permission on 1 March 2017. This authorisation process entailed for the Company an increase in costs both in the authorisation stage associated with advisory costs and in the continuity of supervised company which involved the establishment of a structure of units not previously required and an increase in the number of members of the Board of Directors. BIM Fiduciaria was considered strategic within the “Guidelines of the strategic development plan”, and 37

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therefore it is planned for the subsidiary to grow in order to provide clients with an increasingly professional private service. As regards the results at 30.06.2017 the trust company recorded a loss for the period of €/Mln 0.093 compared to a profit related to 30.06.2016 of €/Mln 0.028. The decrease was mainly due to lower commissions collected in the face of a reduction in assets under management. Fee and commission income decreased by about 24%, €/Mln 0.196 at 30.06.2017, against €/Mln 0.258 at 30.06.2016. Operating expenses increased, going from €/Mln 0.334 to the current €/Mln 0.412 (+7% yoy). The operating loss was €/Mln 0.090 compared to a profit at 30.06.2016 of €/Mln 0.039. The deposits under managements were reduced to €/Mln. 118 (€/Mln 423 at 30.06.2016). The considerable reduction was due mainly to the outflows attributable to financial advisers leaving the parent company resulting in interruption of relationships with their clients. Below are the main summarised figures as at 30.06.2017: • Assets under management amounted to €/Mln. 305 (€/Mln 284 at 31.12.2016); • Fee and commission income amounted to €/Mln. 0.196 (€/Mln 0.258 at 30.06.2016); • The profit on operations/net operating income was 46.2% (15.2% in 30.06.2016); • The Cost Income ratio stood at 146.2% (84.8% as at 30.06.2016); • Loss for the period €/Mln -0.093 (profit of €/Mln 0.028 at 30.06.2016);

BIM INSURANCE BROKERS S.p.A. Bim Insurance Brokers, which is controlled by Banca Intermobiliare (51%) is an insurance brokerage firm established at the end of 2006, which began operations at the beginning of 2007. It has been registered with the Registro Unico degli Intermediari di Assicurazione (RUI) [Single Registry of Insurance Brokers] since 18 May 2007 and is thus subject to control by IVASS. The company offers brokering services to provide highly professional insurance support to all clients who request it, (industrial, commercial or service companies, both private or public entities, including or individual clients who are natural persons, for issues involving private as well as professional insurance issues). Following the approval of the “guidelines of the strategic development plan” by the parent company Banca Intermobiliare, Bim Insurance Brokers after a first moment in which it was classified among assets held for sale in order to monetise the equity investments considered non-strategic, was reconsidered among companies to be kept active in the context of the Group, in order to be able to make use of its professionalism to offer private clients increasing services at 360°, this including also the insurance field. The subsidiary Bim Insurance Brokers recorded at 30.06.2017 a loss for the period of €/Mln 0.074 compared to €/Mln 0.063 at 30.06.2016. Fee and commission income reached €/Mln 0.225 (the same figure as at 30.06.2016), and Operating costs declined, going down from €/Mln 0.238 to the current €/Mln 0.220.

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BIM VITA S.p.A. BIM Vita is a Private Insurance Company, established as a result of an agreement concluded between UnipolSai and Banca Intermobiliare, with the objective of offering a complete service to clients by adding together the knowledge and values of the two entities which focus on searching for solutions to cover the needs in the areas of Protection, Pension Planning and Savings. The result of the synergy between the two institutions operating in their respective sectors is a global service which covers the entire range of individual requirements throughout one’s lifetime. The Company, in addition, aims to handle issues related to generational transitions and identify the best insurance solutions for correct succession planning. Bim Vita is owned 50% by Banca Intermobiliare and 50% by UnipolSai, and it is subject to the direction and coordination of the UGF Group and the control of the Italian insurance authority (Istituto per la vigilanza sulle assicurazioni private e di interesse collettivo) (IVASS). The Company has a specific range of products, broken down into the following classes of insurance: • Savings area “Rendita Garantita di BIM” [BIM Guaranteed Annuity] “Patrimonio Garantito di BIM VITA” [BIM VITA Guaranteed Assets] • Investment area “Freefinance di BIM VITA” “Freefunds di BIM VITA” “Freefunds Base Selection” “B-TWIN di BIM VITA” • Pensions area “Fondo pensione aperto BIM VITA” [BIM VITA open pension fund]

During the period, the investee company Bim Vita had net premiums of €/Mln 38.75 (€/Mln 45.44 at 30.06.2016), and technical reserves of €/Mln 602.97 (€/Mln 728.81 at 30.06.2016). The financial statements at 30.06.2017 (prepared according to the IASs/IFRSs) showed a profit for the period of €/Mln 1.71 against €/Mln 1.56 at 30.06.2016.

As regards the results of the other subsidiaries for the period, there were no significant economic impacts or significant capital movements.

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Market Disclosures

As explicitly required by the Financial Stability Forum in April 2008, with the publication of the first update of the Bank of Italy Circular No. 262 on 18 November 2009, below is a summary of the main quantitative information for the period from 01.01.2017 to 30.06.2017, regarding the credit and market risks and the relevant additional information. For information of a qualitative nature one should refer to Part E “Information on risks and related hedging policies” in the Explanatory Notes to the annual financial statements at 31.12.2016 repeated in the present notes to the statements of the consolidated half-yearly financial report at 30.06.2017. The overall risk management of Banca Intermobiliare and its subsidiaries has been performed over the last few years by a process presided over and coordinated by the former Parent Company Veneto Banca, discussed with the Board of Directors of BIM and with the aid of the head offices of BIM and of the former Parent Company. Following Italian Law Decree no. 99, which placed Veneto Banca in administrative compulsory liquidation, the routine performance of the activities outsourced by BIM to Veneto Banca, (carried out by personnel who will be transferred to Banca Intesa Sanpaolo, including the Central Risk Management Department), has been ensured, in such a way as to enable these activities to gradually come back within BIM. The integrated measurement and control of risks by monitoring and analysing the overall risk exposure of the Bank and of the subsidiaries has therefore been ensured, in accordance with the provisions of the Supervisory Authority and international “best practice”. In particular the activities of identifying, managing and controlling the following related risks have been carried out: • credit and counterparty risk; • market risk; • liquidity risk and interest rate risk; • operational risk; • other risks; • the pricing of financial instruments which are held in the proprietary account and on behalf of third parties; • monitoring of customer transactions in relation to listed derivative instruments and OTC instruments; • internal validation; • second level controls regarding loans; • most significant transactions, Risk Appetite Framework, ICAAP; ILAAP.

Credit and counterparty risk The exposure to credit risk arises mainly from lending to customers, and to a lesser extent by exposure with loans to banks, from counterparty risk for investments in financial instruments entered in the “available for sale” and “loans and receivable” portfolios. The risk is seen as the probability that the debtor fails to fulfil its obligations thereby generating capital losses or lost revenues of income economic components. As previously stated in the section “Loans and other receivables from customers”, during the first half of 2017, Banca Intermobiliare continued the activities devoted to reducing credit and counterparty risks as stressed in the “strategic guidelines for the business plan” and repeated in the “2017-2021 Business Plan” by disbursing only “Lombard loans” through a rigorous and precise process of assessing the creditworthiness of such loans. During the period new analytical write-downs of loans were carried out in keeping with the current policies, which provide for periodic reviews of the estimates regarding foreseeable losses, with reference both to the economic and financial situation of customers, and to the evolution of the value of the guarantees received recognising in the income statement net value adjustments of €/Mln 24 (€/Mln

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12.8 at 30.06.2016). As of 30.06.2017 the coverage rates of the loan portfolio are in line with or higher than the system levels inferable from the latest Bank of Italy publication in the “Financial Stability Report 1/2017” published on 28 April 2017. the coverage rate of performing loan exposures was 0.6% at 30.06.2017 (unchanged compared to 31.12.2016). As regards the coverage rate of “impaired assets” it was 56.3% at 30.06.2017 (53.1% at 31.12.2016). As illustrated above in relation to the ECB inspection, the Bank incorporated, into the 2016 annual financial statements, the issues raised during the inspection. As of today, Banca Intermobiliare has still not received the definitive results of the inspection, or even any formal request to review the management and assessment processes, and the systems of internal controls related to credit and counterparty risks, as the process of communicating the results of the inspection activities still has to be formalised. In particular, as provided for in the Business Plan, the Bank is planning in any case to update its lending policies which could lead to a rise in the coverage levels of its impaired loans. These actions, to be able to have the relevant application features for IAS/IFRS purposes, must first be developed through updated parameters and assessment models compared to the current ones, in an adjustment process that can be started once the Bank has become concretely autonomous and operational. These will therefore be adopted in the first periodic disclosure after that defining and implementing the new policy.

Market risk This derives from trading on own account in financial instruments held mainly by the Parent Company Banca Intermobiliare, considering that also some subsidiaries have an exposure which is altogether limited and residual to the said risk. The risk may occur if losses are recorded in the face of market swings. Risk management is run within supervisory and operational limits defined by the Board of Directors and the monitoring activities remain outsourced to the Central Risk Management Department of the former Parent Company Veneto Banca. With reference to market risks, when the guidelines of the strategic development plan were approved, it was decided that Banca Intermobiliare would maintain a low market risk, with a limited size banking book with very short durations and low country risk exposure through investments in Government bonds diversified in terms of the issuers. During the period, the market risk relating to Banca Intermobiliare’s proprietary account was always below the supervisory limits set forth in the Financial Risk Policy, as regards the “trading book” and the “Banking Book”. The Value at Risk of the trading position fluctuated between €/Mln 0.258 and €/Mln 1.058. The Value at Risk at 30.06.2017 was €/Mln 0.816 (€/Mln 0.264 at 31.12.2016). The average value observed in the first half of 2017 was €/Mln 0.542 (€/Mln 1.145 in 2016).

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VaR Trading Book at 30.06.2017 1.200.000

1.000.000

800.000

600.000

400.000

200.000

Value at Risk (99%) related to the period 01.01.2017 - 30.06.2017, holding period of 10 days.

The Value at Risk of the banking book was between €/Mln 4.067 and €/Mln 15.191. The Value at Risk at 30.06.2017 was €/Mln 4.067 (€/Mln 15.257 at 31.12.2016). The average value observed in the first half of 2017 was €/Mln 9.072 (€/Mln 13.488 in 2016).

VaR Banking Book at 30.06.2017 16.000.000 14.000.000 12.000.000 10.000.000 8.000.000 6.000.000 4.000.000 2.000.000 0

Value at Risk (99%) related to the period 01.01.2017 - 30.06.2017, holding period of 10 days.

The most significant exposure of the portfolio, at an overall level, consisted of the Italian Government securities (Government securities and Government agency securities), whose (“trading book” and “banking book”) fair value as at 30.06.2017 totalled an overall amount of €/Mln. 412.667 (€/Mln 602.979 at the end of 2016).

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Liquidity risk Exposure to liquidity risk comes from funding and loan operations performed by the Bank as well as the presence in proprietary portfolios of unlisted financial instruments, and manifests itself in its failure to perform its payment obligations due to an inability to gather funds or critical aspects relating to the unfreezing of illiquid financial assets. Banca Intermobiliare has a system of internal management limits regarding liquidity and funding risk, that is specifically calibrated to reflect the type of business and the risk profile associated with it. Within this system of limits, the management of the liquidity position of Banca Intermobiliare is the responsibility of the Financial Markets Department of BIM, while monitoring of these is assigned to the Central Risk Management Department of the former Parent Bank in combination with the Internal Reference Person in Banca Intermobiliare on the basis of an existing outsourcing contract. From the periodic monitoring activity it emerges that the operational liquidity position of Banca Intermobiliare in the period between the beginning of the year and the publication date of the decree did not encounter any particular stressful stages; the operating limits and the supervisory thresholds for the various time buckets, were regularly complied with and maintained at safe levels. As regards the regulatory LCR index, no significant signs of tension were recorded during the first half of 2017, although we can note, however, a significant reduction in deposits. At 30.06.2017 the Liquidity Coverage Ratio (LCR) was equal to 93.4% compared to a figure of 136.4% at 31.12.2016, compared to a regulatory limit set at 80% starting from 1 January 2017 and up to 31 December 2017 and at 100% starting from 1 January 2018.

Exchange rate risk The strategies underlying the investment policies of the trading book which is exposed to exchange rate risk are essentially the following: - Trading on foreign currencies in the short term through the use of spot contracts; - Trading on foreign currencies through purchase/sale of options and trading of Forex Swap and forward contracts. The price risk of the trading book is monitored in terms of Value at Risk. Risk exposure in foreign currency during the period was mainly represented by buying and selling options on foreign exchange, Forex Swaps and Spot-Forwards within the trading portfolio. A limit was placed in terms of VaR and a stop loss on a daily and monthly basis was placed on the proprietary account trading position. Risk exposure in foreign currency during the first half of 2017 within the proprietary trading portfolio was insignificant. Any other exposures to exchange rate risk that arose in the first half of 2017 were centralised at the former Parent Company and netted at the end of each day.

Operational risk The exposure to operational risk is seen as the risk of sustaining losses that derive from the inadequacy or malfunctioning of procedures, human resources and internal systems or by exogenous events. This typology also includes losses caused by fraud, human error, interruptions in operations, unavailability of systems, contractual default or natural catastrophes. It also includes legal risk. Risk was managed in the period through a company system, governed by the Central Risk Management Department, for detecting and measuring operational risk, taking care and managing the gathering of data on operational loss through a “Loss Data Collection” process. We can also note the presence of a contingency plan (“Business Continuity and Disaster Recovery Plan”) with the objective of preparing organisational oversight systems and technological infrastructures which aim to reduce - within limits considered acceptable – any damages deriving from sensational events, thereby guaranteeing that the re- activation of critical processes and the coordination of activities until the restoration of full operations occurs in accordance with the established time periods and methods. The planned migration to a new information technology platform, considered more functional to the needs and to the business model to which BIM aspires, will enable better oversight of the processes aimed at mitigating operational risks. Further reviews are also in progress of the Bank’s operating structure in relation to which please see the specific paragraph “development and organisation activities”. 43

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Structured loan products considered risky by the market

Below is some additional information on investments that the market considers to be highly risky because of the financial crisis that originated from American sub-prime mortgage loans and on derivative trading with customers. Below is information at 30.06.2017 on: i) structured loan products – no existing position. ii) operations through Special Purpose Entities (SPE) – no existing position. iii) transactions on derivatives with customers and related counterparty risk - fair value calculation of OTC financial instruments, including those traded with customers, is carried out using valuation models and methods that are explained in the Explanatory Notes to the annual financial statements which you are referred to. The activity of Banca Intermobiliare in Over the Counter derivatives with customers expects and requires the signature of a specific margin agreement by the client who intends to deal in derivatives; the risk exposure is monitored through the “degree of risk”, represented by the ratio between the margins required and the equity available at the Institute, which must not normally exceed 50%, and with constant monitoring of the leverage taken. The main types of Over the Counter derivatives traded with customers are represented by “fx options”, “commodity options”, “interest rate swaps”, “credit default swaps” and “forward contracts on exchange”. In relation to daily margining, considering as reference perimeter only the trading in derivatives with clients as at 30.06.2017, Banca Intermobiliare presented a negative fair value to clients of €/Mln 4.7 (negative fair value of €/Mln 4.8 at 31.12.2016). In addition, there were margins paid by clients of €/Mln 13.9 (€/Mln 12.3 at 31.12.2016).

As regards the distribution to Retail clients of complex products and illiquid products according to the CONSOB definitions, the bank made some important changes to the internal regulations with a view to simplifying and making totally objective the process of managing these types of financial instruments introducing very precise limitations on their trading, limiting their distribution to clients in possession of adequate characteristics in terms of knowledge and risk propensity. An extremely important aspect was the bank’s choice to appoint, as single information provider relating to the classification of this type of instrument, a leading company at the global level for providing financial information services in order to guarantee maximum transparency and objectivity of the parameters used to identify and classify these types of financial products.

Disclosure required by Communication no. DEM/RM 11070007 of 5 August 2011

Following the publication on 28 July 2011 by the European Securities and Markets Authority (ESMA) of document 2011/266 which was taken up by CONSOB on 5 August 2011, we provide the information required regarding the exposures to bonds issued by central and local governments and government entities (“sovereign debt”). Banca Intermobiliare as at 30.06.2017 had an exposure (nominal value) of €/Mln 402. (€/Mln 585 as at 31.12.2016) of which €/Mln 355 entered in the portfolio of “Financial assets available for sale” and €/Mln 46 entered in the portfolio of “Financial assets held for trading”. The exposures shown mainly refer to debt securities issued by the Italian government (government securities, securities issued by government entities), for 99.6 % of total Sovereign exposure. As regards the methodology applied to fair value calculation, please refer to the information in Part E in the Explanatory Notes to the Annual Consolidated Financial Statements at 31.12.2016

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Sovereign credit risk exposure (Thousands of €)

Activities 30.06.2017 31.12.2016 Issuing country - entity Nominal Fair Nominal Fair IAS Book value Book value value Value value Value Italy HFT 44,898 45,677 45,677 13,147 13,567 13,567 AFS 355,350 366,990 366,990 570,821 589,412 589,412 Total 400,248 412,667 412,667 583,968 602,979 602,979 Germany HFT 310 322 322 129 145 145 AFS ------Total 310 322 322 129 145 145 Spain HFT 469 501 501 425 470 470 AFS ------Total 469 501 501 425 470 470 Other EU countries HFT 751 790 790 264 279 279 AFS ------Total 751 790 790 264 279 279 Other countries HFT 8 11 11 8 10 10 AFS ------Total 8 11 11 8 10 10 Overall on-balance-sheet exposure HFT 46,436 47,301 47,301 13,973 14,471 14,471 AFS 355,350 366,990 366,990 570,821 589,412 589,412 Total 401,786 414,291 414,291 584,794 603,883 603,883

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Management and auditing activities

Administration and control bodies

The Board of Directors of Banca Intermobiliare, in office for the corporate years 2016/2018 (and therefore until the Shareholders’ Meeting called to approve the financial statements at 31 December 2018), was appointed by the Shareholders’ Meeting of 18 October 2016, following the acquisition by Fondo Atlante – an investment fund managed by Quaestio Capital Management SGR S.p.A. Unipersonale – of a majority stake of the share capital of Veneto Banca S.p.A. - the direct parent company of BIM - representing approximately 97.64%.

The Shareholders’ Meeting also passed the following resolutions: - establishing that the new Board of Directors would be composed of 9 (nine) members; - electing the following persons as members of the Board of Directors (also establishing their fees) for the years 2016-2017-2018 (and thus until the Shareholders’ Meeting called to approve the financial statements as at 31 December 2018): Lauri Maurizio, Anselmi Beniamino, Girelli Giorgio Angelo, Toscani Daniela, Zunino De Pignier Alessandra, Provaggi Giampaolo (independent director), Chiodaroli Anna Maria (independent director), Heidempergher Simona (independent director), Odello Michele.

On 18 October 2016, the Board of Directors proceeded to: • Appoint Maurizio Lauri as Chairperson of the Board of Directors; • Appoint Giampaolo Provaggi as Deputy Chairperson of the Board of Directors; • Appoint Giorgio Girelli as a Director with assignments.

On 7 November 2016, Beniamino Anselmi announced his renunciation of his office as member of the Board of Directors of Banca Intermobiliare with immediate effect. The shareholders’ meeting of 21.04.2017 supplemented the Board with the appointment of Mr Alessandro Potestà, already co-opted on 18 January 2017.

On 16 May 2017, Giampaolo Provaggi resigned from his position as director and Deputy Chairperson of the Board of Directors of Banca Intermobiliare di Investimenti e Gestioni S.p.A. On 24 May 2017 the Board of Directors coopted Paolo Ciccarelli as director.

On 21 June 2017 Anna Maria Chiodaroli resigned from the position of director and from the Committees on which she sat.

On 18 July 2017 the Board of Directors of BIM ascertained the existence of the requisites of independence provided for in the Corporate Governance Code of Listed Companies and in Art. 148, paragraph 3, of the Consolidated Law on Finance (T.U.F.) held by the following non-executive directors: Paolo Ciccarelli, Simona Heidempergher, Michele Odello, Alessandro Potestà, Daniela Toscani, Maria Alessandra Zunino De Pignier.

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In light of the above changes in the Board of Directors is currently composed of the following:

Maurizio LAURI Chairperson Giorgio GIRELLI Director with assignments Paolo CICCARELLI Independent director Simona HEIDEMPERGHER Independent director Alessandro POTESTA’ Independent director Michele ODELLO Independent director Daniela TOSCANI Independent director Maria Alessandra ZUNINO DE PIGNIER Independent director

As a consequence of the changes that had occurred in the composition of the Board of Directors, the Board of Directors, with resolutions passed on 24 May and 18 July 2017, determined as follows the current composition of the Committees within the board:

Control and Risks Committee Appointments Committee Paolo Ciccarelli (Chairperson) Alessandro Potestà (Chairperson) Simona Heidempergher Simona Heidempergher Daniela Toscani Michele Odello

Committee of independent directors for Remuneration Committee transactions with related parties Simona Heidempergher (Chairperson) Simona Heidempergher (Chairperson) Paolo Ciccarelli Michele Odello Daniela Toscani Maria Alessandra Zunino De Pignier

On 24 February 2017 the Board of Directors appointed Stefano Grassi as the new General Manager .

The Board of Statutory Auditors in office for the period 2016-2018 (and therefore until the Shareholders’ Meeting which will be called to approve the financial statements for the year ending 31 December 2018), appointed by the Shareholders’ Meeting of BIM held on 5 April 2016, is made up as follows:

Luca Maria MANZI Chairperson Elena NEMBRINI Regular statutory auditor Enrico Maria RENIER Regular statutory auditor Alide LUPO Alternate statutory auditor Michele PIANA Alternate statutory auditor

PricewaterhouseCoopers S.p.A is the independent auditors for the financial years from 2012 to 2020.

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Information on controlling community credit institution

The issuer Banca Intermobiliare S.p.A. is controlled by right by Veneto Banca S.p.A. in liquidation, with registered office in Montebelluna (TV) in Piazza G.B. Dall’Armi no. 1, following the urgent provisions putting into administrative compulsory liquidation Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. contained in Italian Law Decree no. 99 of 25 June 2017.

For more details, please refer to the documents published on the website of Banca Intermobiliare at: http://www.bancaintermobiliare.com/corporate-governance/comunicati-obbligatori.html

Adaptation to conditions under art. 36, Consob Regulations no. 16191/2007 (Listing of parent companies’ shares set up and regulated by the laws of countries which do not belong to the European Union)

Pursuant to art. 2.6.2, paragraph 8, of the Stock Market Regulations applicable to the Markets Organised and Managed by Borsa Italiana, Banca Intermobiliare is compliant with the conditions established by paragraph 1 of art. 36 of the CONSOB Regulation 16191/2007, with reference to the subsidiary Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. – Lugano, governed by Swiss Law. Patio Lugano S.A., directly controlled by Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A., is not significantly relevant under art. 36 of the CONSOB Regulation 16191/2007.

Declaration under art. 37, CONSOB Regulation no. 16191/2007 (Conditions that prevent the listing of shares of subsidiaries subject to management and coordination control of other companies)

Pursuant to article 2.6.2, paragraph 9 of the Regulation for the Markets Organised and Managed by Borsa Italiana S.p.A., that none of the inhibiting conditions indicated under article 37 of Consob Regulation 16191/2007 applies to Banca Intermobiliare (since it has been subject to the management and coordination of Veneto Banca S.p.A. since 25 February 2011).

Report on corporate governance and Ownership arrangements

The Annual Report on Corporate Governance and Ownership Structures (2016 Edition), approved by the Board of Directors of Banca Intermobiliare in accordance with art. 123-bis , paragraphs 1 and 2, of Legislative Decree 58/1998, was published on the website of the Issuer ( corporate governance Section), pursuant to paragraph 3 of the same article.

Regulatory simplification process adopted pursuant to Consob resolution no.18079 of 20 January 2012

Pursuant to article 3 of CONSOB resolution 18079 of 20 January 2012, Banca Intermobiliare di Investimenti e Gestioni accepts the opt out regime as provided by articles 70, paragraph 8 and 71, paragraph 1-bis of CONSOB Regulation 11971/99, and is therefore entitled to omit the disclosures required in Annex 3B of the aforementioned CONSOB Regulation in the event of significant mergers, demergers, capital increases through contributions in kind, acquisitions and sales.

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Development and organisation activities

Project of re-internalising the functions in “outsourcing”

Italian Law Decree no. 99, which placed Veneto Banca in administrative compulsory liquidation, stated that the activities outsourced by BIM to Veneto Banca are ensured in such a way as to enable the gradual return of these activities to BIM. This in any case determined, for Banca Intermobiliare, the need to accelerate the process of re-internalisation of the said functions, an activity already provided for in the guidelines approved at the beginning of the year.

Project of migration of the information technology system

On 5 June 2017, the Board of Directors of Banca Intermobiliare, launched the project of migration of the information technology system, conferring delegated powers on the General Manager and the Director with assignments to negotiate a letter of intent with CSE (Consorzio Servizi Bancari Soc. Cons. a r.l.) and to launch the project work related to the migration itself. An activity to analyse the solutions that can be provided was therefore launched, aimed at conferring any appointments on CSE for outsourcing IT services in “full outsourcing”, with subsequent formalisation of distinct contracts that concern the supply of services related to the use of the IT system and BPO (Business Process Outsourcing). This operation, which became necessary in consideration of the future deconsolidation from the former Veneto Banca Group, will enable BIM to access services and procedures integrated and in line with the needs of Private clients (reporting, paperless processes, evolved Home Banking systems, advanced electronic signature, CRM, etc.), and to optimise the management activity with important benefits on operating costs.

Revision of the operating structure

After approval of the “strategic guidelines for the business plan” (approved by the Board of Directors on 10 February 2017) Banca Intermobiliare began the activities of revising the operating structure with a view to “standing alone”. The Board of Directors of BIM, therefore appointed an external advisor, to perform an activity in relation to the Bank’s operating structure following the termination of the current outsourcing contract with former parent company Veneto Banca, with consequent partial re-internalisation of several functions/activities and opening of a new series of contractual relationships for the supply of services to CSE and IT migration to a new supplier (from SEC servizi to CSE), and of the revision of access to the markets and external relationships. In particular the role of the consultant will regard: 1. project secretary (redefining the project structure and operating plan, starting from the existing draft - to be revised owing to the change that has occurred in the corporate structure – and structuring the role of PMO of the activities with preparation of the related documentation); 2. governance of operating worksites; 3. support in discussions with internal control, Supervisory and government bodies and suppliers; 4. operating support in redefining and drafting the new corporate regulations in part on the Mega application (the processes). Two stages of the project have been defined: stage 1 , already launched in the period, will be focused on the bank’s Service Model, on the operating restructuring in the light of the new corporate situation and on the revision/implementation of a new regulation of reference, while stage 2, with deferred launch, will regard the organisational revision in the light of the new outsourcer CSE.

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Assessment of the BIM Group property assets

Banca Intermobiliare S.p.A. has selected an Advisor in the context of a project of assessing its property assets in line with the Business Plan that provides among other things for gradual optimisation of the spaces occupied by its personnel and a reduction of the capital assets in a logic of a capital-light bank. The activities of assessment of the property assets provide for: i) support in identifying and rationalising needs for spaces for instrumental purposes; ii) Recognition of the status of the properties in the perimeter: support in preparing a “vendor due diligence”; iii) Indication of the best proposed selling price for each of the properties in the perimeter, also on the basis of the assessments of the market situation.

Loans Project

At the end of the first quarter of 2017, in the light of the decision by the reference shareholder to assess potential opportunities for the disposal of BIM, by Veneto Banca, it became necessary to make the Bank autonomous with respect to a series of activities carried out by the Parent Company and even more so after the same had been placed in liquidation. In this context the need was seen to begin in-depth studies on the portfolio of impaired loans, also in the light of the possible termination of the service contract. Banca Intermobiliare therefore began a process of preparing and recognising this portfolio in order to identify the possible future strategies for managing the same.

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The operating structure and personnel

On 30.06.2017, the workforce at Banca Intermobiliare and its subsidiaries amounted to 580 resources, of which 537 employees consisting of 35 senior executives, 247 middle managers and 255 office staff. There is a total of 152 private bankers (whether employees or not). The figures shown in the table include 19 resources belonging to the investee BIM Suisse classified as an asset held for sale.

Human resources (in units) 30.06.2017 31.12.2016 Total of which: Total of which: private bankers private bankers Employed personnel Executives 35 6 32 7 Middle Managers 247 103 255 111 Office staff 255 - 266 - Total employed personnel 537 109 553 118 Promoters and collaborators Banca Intermobiliare’s Private Bankers 43 43 46 46 Total promoters and collaborators 43 43 46 46 TOTAL HUMAN RESOURCES 580 152 599 164

As at 30.06.2017, out of a total of 537 employees, Banca Intermobiliare had seconded 57 resources to the former Parent Company Veneto Banca (65 resources at 31.12.2016); conversely, 1 resource of the former Veneto Banca Group was seconded to the offices of Banca Intermobiliare (1 resource at 31.12.2016). The employees, a total of 537 resources, down compared to the figure of 31.12.2016; 39 staff had left since the start of the year while there had been 23 new recruits. The total for private bankers is 152 (164 at 31.12.2016) of whom 109 employees (-7.6% compared to 31.12.2016) and 43 agents (-6.5% compared to 31.12.2016). The activity of recruiting commercial personnel will continue also in 2017 as was provided for in the guidelines of the strategic development plan, and confirmed with approval of the 2017-2021 business plan, for the strategic repositioning of Banca Intermobiliare in order to offer a high-end Private Banking service provided by a small number of highly-qualified private bankers, capable of guaranteeing a truly “tailor-made” service to customers with considerable assets and advanced financial consultancy needs. Therefore, the plan is to increase the number of private bankers at the end of 2021 to 296 resources compared to the current 152.

Changes in employed personnel (in units) Category Of which changes associated with 31.12.2016 Resignations New hires 30.06.2017 assets held for sale (a) Executives 32 (7) 11 (1) 35 5 (b) Middle managers 255 (24) 10 6 247 4 (c) Office staff 266 (8) 2 (5) 255 10 Total employees 553 (39) 23 - 537 19

Operating Structure Banca Intermobiliare is based in Turin, in Via Gramsci 7, where the General Management and legal and administrative offices of its subsidiaries are located with the exception of the subsidiary Banca Intermobiliare di Investimenti e Gestioni Suisse which is based in Lugano (Switzerland). The Bank has 28 branches in Italy and 5 offices of Financial Promoters located mainly in Northern and Central Italy. During the year the Savona branch was closed. 51

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Other aspects

CONSOB request to publish information under the terms of art 114 of Italian Legislative Decree no. 58/98

It should be noted that, with a specific request to publish information under the terms of art 114 of Italian Legislative Decree no. 58/98, sent on 27 April 2017, CONSOB, referring to Banca Intermobiliare’s annual report at 31 December 2016 where it mentions: - uncertainties on the subject of the going concern assumption as regards Veneto Banca and related effects also on Banca Intermobiliare’s ability to continue as a going concern; - preparation of the 2017-2020 Business Plan on the basis of approved strategic guidelines; - auditing report on the annual financial statements with a positive judgement bur with a call for disclosure on the subject of uncertainties on the going concern assumption; asked for supplements to be added to the annual and six-monthly financial reports provided for in the current art. 154-ter of the TUF and the interim reports on operations, if published on a voluntary basis, starting from the Consolidated Interim Report on Operations at 31 March 2017, and, if relevant, the related press releases on the subject of approval of the aforesaid accounting documents, with the following further information: a) the main changes that have occurred in transactions with related parties of this Bank and of the Group it heads compared to the last financial report approved pursuant of art. 154-ter of the TUF; b) the stage of implementation of any business and financial plans or strategic guidelines approved, highlighting the differences.

*****

Banca Intermobiliare, while preparing the annual financial statements and subsequent quarterly report, had highlighted some elements that could have caused doubts about Veneto Banca’s ability to continue as a going concern, indicating also the related effects on the Bank’s ability to continue as a going concern. The Board of Directors of BIM had however decided, in the light of the overall framework of reference, of the initiatives undertaken and in the process of implementation, and after completing the necessary checks, and taking into account the significant uncertainties described above, to prepare the annual financial statements of Banca Intermobiliare on the assumption of the entity being a going concern. During June, following the decisions of the European Authorities and in accordance with Italian Law Decree no. 99 of 25 June 2017, the Ministry of the Economy and Finance, on the proposal of the Bank of Italy, made Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. subject to administrative compulsory liquidation, decreeing, therefore, the absence of the assumption of these entities being going concerns. In this context the Board of Directors of Banca Intermobiliare launched the activities defined in the context of the “Guidelines of the strategic plan” approved on 10 February 2017 and prepared a “2017- 2021 Business Plan”, according to a “stand-alone” logic, approving it on 18 July 2017. The start of activities for the sale of the stakes held in BIM by Veneto Banca, accelerated with the start of due diligence, will enable the Bank to implement its process of growth of assets and profitability. While identifying the following elements of uncertainty: (i) positive conclusion of the sale of BIM with the possibility of implementing the business plan approved by the Board of Directors; (ii) decisions that the Supervisory Authority could assume in the context of the “Supervisory Review and Evaluation Process (SREP) Decision”, Banca Intermobiliare decided to prepare the present Half-Yearly Financial Report on the basis of the going-concern assumption, as argued in the Condensed Consolidated Half- Yearly Financial Statements - Section Accounting Policies, believing that the uncertainties are not of a scope and size such as to lead to not preparing the Consolidated Half-Yearly Financial Report on the basis of the going-concern assumption.

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As regards the requests of specific disclosure as above we can note the following: a) In relation to transactions between BIM and the companies of the former Veneto Banca Group the details of the receivable and payable positions in being at 30.06.2017 are presented below. The exposure in financial instruments of €/Mln 16.6 fell, compared to the €/Mln 75.9 of 31.12.2016, essentially as result of the repayment on maturity of Veneto Banca securities and residually owing to sales on the market. The net financial position with the former Veneto Banca Group shows a debt of €/Mln 24 down compared to €/Mln 49.9 of 31.12.2016 following BIM’s decision, with a view to a future “stand alone” status, to forge new relations with different counterparties in order to better optimise any borrowing and lending needs. Total other exposures, attributable to the outsourcing services and secondment of existing personnel, present a debt position of €/Mln 6.9 an increase compared to the year-end figures.

Financial exposures to former Veneto Banca Group (Thousands of €) 30.06.2017 31.12.2016 Change Change Absolute % On-balance-sheet instruments 21,820 90,046 (68,226) -75.8% Hedging derivatives (5,210) (13,431) 8,221 61.2% BIM bond loans - (675) 675 100.0% Total financial instruments 16,610 75,940 (59,330) -78.1% Amounts due from banks 92,300 331,706 (239,406) -72.2% (of which L&R) 4,735 4,812 (77) -1.6% Amounts due to banks (116,259) (381,607) 265,348 69.5% Total banking exposure (23,959) (49,901) 25,942 52.0% Other assets 1,741 2,159 (418) -19.4% Other liabilities (8,646) (5,128) (3,518) -68.6% Total other exposures (6,905) (2,969) (3,936) -132.6%

EXPOSURE TO VENETO BANCA GROUP (14,254) 23,070 (37,324) -161.8% b) In relation to the status of implementation of any business and financial plans or strategic guidelines approved, the Board of Directors of Banca Intermobiliare, as amply illustrated in the present Half-Yearly Report on Operations, approved on 18 July 2017 the 2017-2021 Business Plan, prepared according to a “stand-alone” logic, and in substantial consistency with the guidelines of the strategic plan (approved by the Board of Directors of BIM on 10 February 2017), which, as is known, considered – in the light of the information available at the time – a presumable exit of BIM from the Veneto Banca perimeter before the end of summer 2017. In approving the above Business Plan, the Board of Directors of BIM confirmed the economic and financial forecasts presented in February at the time of approving the strategic guidelines, updated over time in the final KPIs of the plan in the light of the postponement determined by the delay in the process of sale of the Bank by Veneto Banca. As things stand, assessing the overall results achieved in the first half of the year, no significant differences can be noted with respect to what was provided for in the guidelines and in the plan approved on 18 July 2017 for the period of reference.

The stage of progress is described below, at the publication date of the present Consolidated Financial Report at 30.06.2017, and therefore also with the significant events after the reporting date of the envisaged main planning initiatives: a) renewal of the Top Management completed, with the appointment of 11 new Managers out of a total of 14 making up the first line and definition of the new structure for governing and managing the subsidiary Symphonia SGR; 53

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b) in the context of disposal of non-strategic equity investments, in particular, on 31 July 2017 an agreement was signed with Banca Zarattini & Co. for the sale of 100% of the share capital of the investee BIM Suisse and the launch of a commercial partnership between BIM and the purchaser; c) activities devoted to reducing credit and counterparty risks continued, through the disbursement of only “Lombard loans” to creditworthy borrowers. In addition, in order to make the Bank autonomous with respect to the activities on loans carried out in outsourcing by the Parent Company (and even more so after the same had been placed in liquidation), the need was seen to begin in-depth studies on the portfolio of impaired loans, also in the light of the possible termination of the service contract. A process was therefore begun of preparing and recognising this portfolio in order to identify the possible future strategies for managing the same. d) in the context of a project of assessing its property assets in line with the Business Plan - which provides among other things for gradual optimisation of the spaces occupied by its personnel and a reduction of the capital assets in a logic of a capital-light bank - an Advisor was selected for the activities of assessment of the property assets and for preparing a “vendor due diligence”. e) In the context of the project of migration of the information technology system, delegated powers were conferred on the General Manager and the Director with assignments to negotiate a letter of intent with (Consorzio Servizi bancari Soc. Cons. a r.l.) and to launch the project work related to the migration itself. An activity to analyse the solutions that can be provided was therefore launched, aimed at conferring any appointments on CSE for outsourcing IT services in “full outsourcing”, with subsequent formalisation of distinct contracts that concern the supply of services related to the use of the IT system and BPO (Business Process Outsourcing). f) after approval of the “strategic guidelines for the business plan” (approved by the Board of Directors on 10 February 2017) activities began to revise the operating structure with a view to “standing alone”, appointing an external advisor, to perform an advisory activity in relation to the Bank’s operating structure following the termination of the current outsourcing contract with former parent company Veneto Banca, with consequent partial re-internalisation of several functions/activities and opening of a new series of contractual relationships for the supply of services to CSE and IT migration to a new supplier (from SEC servizi to CSE), and of the revision of access to the markets and external relationships.

Turin, 31 July 2017

For the Board of Directors The Chairperson Maurizio LAURI

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CONSOLIDATED HALF-YEARLY FINANCIAL STATEMENTS AT 30 June 2017

Consolidated financial statements

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CONSOLIDATED FINANCIAL STATEMENTS

BALANCE SHEET (Thousands of €) Assets 30.06.2017 31.12.2016 10. Cash and cash equivalents 1,624 1,669 20. Financial assets held for trading 153,428 97,374 40. Financial assets available for sale 475,827 834,780 60. Loans to banks 144,371 371,245 70. Amounts due from clients 721,938 843,085 80. Hedging derivatives 2,044 1,327 100. Equity investments 13,677 14,020 120. Property, plant and equipment 95,770 96,521 130. Intangible fixed assets 50,583 50,704

of which: goodwill 49,446 49,446 140. Tax assets a) current 39,197 16,612 b) deferred 81,864 106,103

- of which pursuant to Law 214/2011 48,925 71,634 150. Non-current assets and disposal groups held for sale 63,621 73,480 160. Other Assets 91,320 92,414 Total assets 1,935,264 2,599,334

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CONSOLIDATED FINANCIAL STATEMENTS

BALANCE SHEET (Thousands of €) Liabilities and equity items 30.06.2017 31.12.2016 10. Due to banks 302,786 509,294 20. Due to clients 1,010,264 1,286,040 30. Securities in issue 174,516 304,978 40. Financial liabilities held for trading 78,314 67,969 60. Hedging derivatives 7,254 14,758 80. Tax liabilities a) current 248 643 b) deferred 18,482 18,955 90. Liabilities associated with groups of assets held for sale 28,489 38,914 100. Other liabilities 68,732 89,839 110. Employees’ severance fund 4,503 4,807 120. Provisions for risks and charges: a) pension fund and similar obligations - - b) Other Provisions 27,829 25,937 140. Valuation reserves 28,887 26,905 170. Reserves 83,000 98,990 180. Share premium reserve - 77,823 190. Share Capital 156,209 156,209 200. Treasury shares (-) (29,731) (29,731) 210. Equity attributable to non-controlling interests (+/-) 339 375 220. Profit (Loss) for the year (24,857) (93,371) Total liabilities and equity 1,935,264 2,599,334

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CONSOLIDATED FINANCIAL STATEMENTS

INCOME STATEMENT (Thousands of €) 30.06.2017 30.06.2016 30.06.2016 Income statement items pro forma 10. Interest and similar income items 16,200 23,082 23,333 20. Interest and similar expense items (10,042) (11,780) (11,847) 30. Net interest income 6,158 11,302 11,486 40. Fee and commission income 33,480 40,773 42,719 50. Fee and commission expenses (8,947) (10,114) (10,476) 60. Net fee and commission income 24,533 30,659 32,243 70. Dividends and similar income 312 681 681 80. Net gains and losses on assets held for trading 4,752 2,599 2,798 90. Net gains and losses on hedging operations 126 (405) (405) 100. Net gains and losses on disposal or repurchase of: a) loans (183) - - b) financial assets available for sale 8,954 2,644 2,644 c) financial assets held to maturity - - - d) financial liabilities (6) (100) (100) 120. Operating income 44,646 47,380 49,347 130. Net write-downs/write-backs for impairment of loans: a) loans (24,181) (12,941) (12,941) b) financial assets available for sale (1,678) (2,292) (2,292) c) financial assets held to maturity - - - d) other financial transactions 323 78 78 140. Net gains and losses on financial operations 19,110 32,225 34,192 180. Administrative expenses: a) Personnel costs (22,271) (24,585) (26,150) b) other administrative expenses (19,080) (20,052) (20,866) 190. Net provisions for risks and charges (2,136) (3,727) (3,727) 200. Net write-downs/write-backs on property, plant and equipment (983) (1,044) (1,217) 210. Net write-downs/write-backs on intangible fixed assets (288) (294) (384) 220. Other operating expenses (income) 1,513 (90) (49) 230. Operating expenses (43,245) (49,792) (52,393) 240. Gains (Losses) on equity investments 853 782 782 270. Gains (Losses) on disposal of investments - (49) (49) 280. Profit (Loss) of continuing operations before tax (23,282) (16,834) (17,468) 290. Current operations income tax 207 2,813 2,813 300. Profit (Loss) of continuing operations after tax (23,075) (14,021) (14,655) 310. Profit (Loss) of non-current assets held for sale, net of tax (1,818) (671) (37) 320. Profit (Loss) for the year (24,893) (14,692) (14,692) 330. Profit (Loss) for the year attributable to minority interests 36 31 31 340. Profit (Loss) for the year attributable to the parent company (24,857) (14,661) (14,661)

Earnings per share (Euro) (0.16) (0.10) (0.10) Diluted earnings per share (Euro) (0.16) (0.10) (0.10)

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Thousands of €)

Items 30.06.2017 30.06.2016

10. Profit (Loss) for the year (24,893) (14,692) Other income components after tax not reversed to the income statement 20. Property, plant and equipment - - 30. Intangible fixed assets - - 40. Defined benefit plans 12 (202) 50. Non-current assets held for sale - - 60. Share of valuation reserves of investments valued with equity method - - Other income components after tax reversed to the income statement 70. Hedging of foreign investments: 80. Exchange rate differences - (123) 90. Cash flow hedges - - 100. Financial assets available for sale 2,653 (5,227) 110. Non-current assets held for sale (638) - 120. Share of valuation reserves of investments valued with equity method (46) 176 130. Total other income components after tax 1,981 (5,376) 140. Comprehensive income (Item 10+130) (22,912) (20,068) 150. Consolidated comprehensive income attributable to non-controlling interests (37) (31) 160. Consolidated comprehensive income attributable to the parent company (22,875) (20,037)

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FROM 31.12.2016 TO 30.06.2017 (Thousands of €)

Allocation previous Changes during the financial year financial year profit

Equity transactions

30.06.2017 Group Group equity at 30.06.2017 Equity attributable Changes Issue in in reserves equity to interestsminority at Reserves Changes in Change in opening balance instruments Purchase of investments Total Total consolidated Stock Stock options of new shares Dividends and treasury shares Opening balance at 31.12.2016 Opening balance at 01.01.2017 Extra dividends Extra other other allocations Change in equity profits during the year Share Capital: a) ordinary shares 156,268 x 156,268 - x x - - x x x - x 156,268 59 b) other shares - x - - x x - - x x x - x - - Share premium reserve 77,823 x 77,823 (77,823) x - - x x x x - x - - Reserves: a) of profits 101,869 - 101,869 (13,553) x (40) - - - x x - x 88,275 319 b) others (2,654) - (2,654) (1,902) x (400) - x - x - - x (4,956) - Valuation reserves 26,903 - 26,903 x x x x x x x - 1,981 28,884 (3) Equity instruments - x - x x x x - - - x - x - - Treasury shares (29,731) x (29,731) x x x - - - x x x (29,731) - Profit (Loss) for the year (93,278) - (93,278) 93,278 - x x x x x x x (24,893) (24,893) (36) Group equity 236,825 - 236,825 - - (440) ------(22,875) 213,510 x Equity attributable to non- controlling interests 375 - 375 ------(37) x 338

FROM 31.12.2015 TO 30.06.2016 (Thousands of €)

Allocation previous Changes during the financial year financial year profit

Equity transactions

30.06.2016 Group Group equity at 30.06.2016 Equity attributable Changes Issue in in reserves equity to interestsminority at Reserves Changes in Change in opening balance instruments Purchase of investments Total Total consolidated Stock Stock options of new shares Dividends and treasury shares Opening balance at 31.12.2015 Opening balance at 01.01.2016 Extra dividends Extra other other allocations Change in equity profits during the year Share Capital: a) ordinary shares 156,268 x 156,268 - x x - - x x x - x 156,209 59 b) other shares - x - - x x - - x x x - x - - Share premium reserve 70,025 x 70,025 - x 7,798 - x x x x - x 77,823 - Reserves: a) of profits 89,723 - 89,723 9,015 x 350 - - - x x - x 98,864 225 b) others 36,307 - 36,307 (28,806) x (8,204) - x - x - - x (703) - Valuation reserves 31,764 - 31,764 x x - x x x x x - (5,376) 26,388 - Equity instruments - x - x x x x x x - x - x - - Treasury shares (29,807) x (29,807) x x x - - x x x x x (29,807) - Profit (Loss) for the year (19,791) - (19,791) 19,791 - x x x x x x x (14,692) (14,661) (31) Group equity 334,205 - 334,205 - - (56) ------20,037 314,113 x Equity attributable to non- controlling interests 284 - 284 ------(31) x 253

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CONSOLIDATED CASH FLOW STATEMENT FROM 30.06.2017 TO 30.06.2016 (Thousands of €)

A. OPERATING ACTIVITIES 30.06.2017 30.06.2016 1. Operations (336) 1,638 - interest received (+) 18,153 24,630 - interest paid (-) (9,607) (9,948) - dividends and similar income 312 681 - net fees and commissions (+/-) 24,533 32,243 - personnel costs (excluding TFR provisions and shares) (21,738) (25,885) - other costs (-) (30,377) (25,841) - other income (+) 18,286 6,058 - taxes and duties - (263) - costs/revenues related to groups of assets held for sale and net of tax effects (+/- ) 102 (37) 2. Cash provided/used by financial assets: 635,167 120,307 - financial assets held for trading (56,396) (90,831) - financial assets available for sale 362,013 125,234 - amounts due from clients 103,008 129,399 - loans to banks: demand (235,360) 339 - loans to banks: other loans and receivables 461,974 (58,797) - other assets (72) 14,963 3. Cash provided/used by financial liabilities: (634,477) (117,577) - amounts due to banks: demand 19,711 (58) - amounts due to banks: other payables (226,249) 57,530 - due to clients (276,823) (147,695) - securities in issue (129,820) (56,497) - financial liabilities held for trading 10,345 38,867 - other liabilities (31,641) (9,724) Net cash provided/used by operating activities 354 4,368

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B. INVESTING ACTIVITIES 30.06.2017 30.06.2016 1. Cash provided by: - - - sales of equity investments - - -dividends received on equity investments - - c) sales/redemptions of financial assets held to maturity - - - sales of property, plant and equipment - - - sales of intangible assets - - - sales of subsidiaries and business units - - 2. Cash absorbed by: (399) (3,538) - purchase of equity investments - - - purchase of financial assets held to maturity - - - purchase of property, plant and equipment (232) (3,251) - purchase of intangible assets (167) (287) - purchase of subsidiaries and business units - - Net cash generated/absorbed by investing activities (399) (3,538) C. FUNDING ACTIVITIES - issue/purchase of treasury shares - - - issue/purchase of equity instruments: share capital increase - - - distribution of dividends and other purposes - - Net cash generated/absorbed by funding activities - - NET CASH GENERATED/ABSORBED DURING THE FINANCIAL YEAR (45) 830

RECONCILIATION Balance sheet items Amounts Amounts 30.06.2017 30.06.2016 Opening cash and cash equivalents 1,669 1,812 Net total cash provided/used during the financial year (45) 830 Cash and cash equivalents: effect of exchange-rate changes - - Net total cash generated/absorbed during the financial year 1,624 2,642

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CONSOLIDATED HALF-YEARLY

FINANCIAL STATEMENTS

AT 30 June 2017

Notes to the consolidated financial statements

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Accounting Policies

General The present Consolidated Half-Yearly Financial Report, prepared implementing art. 154-ter paragraph 2 of Italian Legislative Decree no. 58 of 24 February 1998, as recently amended by art. 1 of Italian Legislative Decree no. 25 of 15.2.2016 (transposing the “Transparency” Directive), was drawn up according to the IAS/IFRS international accounting standards, in conformity with what is indicated by IAS 34 on interim disclosure. Paragraphs 2, 3 and 4 govern the Consolidated Half-Yearly Financial Report which must be published as soon as possible and in any case within three months of the end of the first half of the financial year and must include: - the half-yearly report on operations with reference to the important events that occurred in the period including a description of the main risks and uncertainties for the second half of the year as well as disclosure on the related parties and on the further information required by CONSOB; - the Condensed Consolidated Half-Yearly Financial Statements drawn up in a consolidated form if the listed issuer is obliged to draft the consolidated financial statements, and in conformity with the international accounting standards under the terms of Regulation (EC) no. 1606/2002; - the attestation of the corporate financial reporting manager on the preparation of the accounting documents provided for in art. 154-bis para. 5, of Italian Legislative Decree no. 58/98. - the independent auditors’ report on the limited auditing.

Declaration of compliance with International Accounting Standards The consolidated half-yearly financial report of Banca Intermobiliare was prepared in accordance with the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS), as endorsed by the European Commission based on the procedures set forth under Regulation (EC) no. 1606 of 19 July 2002 and as provided for in Italian Legislative Decree 38/05. The consolidated accounts at 30 June 2017 were prepared in accordance with the prescriptions of IAS 34 on interim financial statements, and using the formats indicated in the 4th update of 14 December 2015 of Circular no. 262 of 22 December 2005 issued by the Bank of Italy and in compliance with the CONSOB regulations .

General principles of preparation The Condensed Consolidated Half-Yearly Financial Statements consist of the Balance Sheet, the Income Statement, the Statement of Comprehensive Income, the Statement of Changes in Shareholders’ Equity, the Statement of Cash Flows and the Notes to the Statements. The Consolidated financial statements and the Notes to the statements present, as well as the amounts related to the period of reference, also the corresponding comparative data, referred in particular to 31.12.2016 for the Balance sheet and to the first half of 2016 for the economic data and cash flows. The Report was drawn up using the Euro as reporting currency in accordance with the provisions of art. 5 of Italian Legislative Decree 38 of 28 February 2005. The amounts are expressed in €/thou. unless otherwise indicated.

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Consolidation scope and methods The consolidation scope of Banca Intermobiliare, determined on the basis of IFRS 10, did not change with respect to the consolidated financial statements at 31.12.2016.

Equity investments in companies controlled exclusively

Operatio Investment share nal Registere Form of % votes Company name headquar d Office control % available (1) (2) ters Investor sharehold company ing Symphonia SGR S.p.A. Turin Turin 1 Bim 100% Bim Suisse S.A. Lugano Lugano 1 Bim 100% Patio Lugano S.A. Lugano Lugano 1 Bim Suisse 100% Bim Fiduciaria S.p.A. Turin Turin 1 Bim 100% Bim Immobiliare S.r.l. Turin Turin 1 Bim 100% Immobiliare D S.r.l. Turin Turin 1 Bim 100% Paomar Terza S.r.l. Turin Turin 1 Bim 100%

Key: (1) Form of control: 1= Majority of voting rights at the shareholders’ meeting (2) Votes available at ordinary shareholders’ meetings, distinguishing between actual and potential. Unless otherwise indicated, the shareholding corresponds to the percentage votes available in ordinary shareholders’ meetings.

Investments in subsidiaries controlled exclusively with significant minority interests

Availability of Dividends paid to Third party Company name votes of third third parties interests parties % (€/thou.)

Bim Insurance Brokers S.p.A. 49.00% 49.00% -

Tangible and Cash and cash Financial Financial Shareholders’ Company name Total Assets intangible equivalents assets liabilities equity fixed assets

Bim Insurance Brokers 1,160 - 653 27 - 691

Profit Profit Profit (Loss) of Net Operatin (Loss) of (Loss) of Profit Other income Operatin groups of Comprehen Company name interest g continuing continuing (Loss) for components g income assets held sive income income expenses operations operations the year after tax for sale, net before tax after tax of tax

Bim Insurance Brokers 1 143 (220) (75) (75) - (75) 1 (74)

All controlling interests were consolidated with the line-by-line method. The equity investment in BIM Vita S.p.A. held equally with Fondiaria-Sai, now UnipolSai (UGF Group), was measured with the equity method. For the consolidation the income statements and balance sheets at 30 June 2017 of Banca

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Intermobiliare and its equity investments were used. These were opportunely reclassified and adjusted to take into account the consolidation needs.

Information on the business as a going concern The Consolidated Half-Yearly Financial Report has been prepared on the basis of the going concern assumption. In this regard, the joint coordination group of the Bank of Italy, CONSOB and ISVAP on the subject of the application of IAS/IFRS issued their document No. 2 of 6 February 2009 entitled “Information to be provided in financial reports on the going concern principle, on financial risks, on tests for the reduction in value of assets and on the uncertainties in the use of estimates” and asked Directors to perform accurate assessments on the existence of the entity as a going concern in compliance with the provisions in IAS 1. In particular, paragraphs 23-24 of IAS 1 establish that: “When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern, the entity shall disclose those uncertainties. When an entity does not prepare financial statements on a going concern basis, it shall disclose that fact, together with the basis on which it prepared the financial statements and the reason why the entity is not regarded as a going concern”. At the time of preparing the annual financial statements and subsequent quarterly report information was provided on the complex economic and financial situation of the Veneto Banca Group (of which Banca Intermobiliare was a part) and on the uncertainty on the subject of assessing the ability of the Parent Company to continue as a going concern. The Board of Directors of BIM had however decided, in the light of the overall framework of reference, of the initiatives undertaken and in the process of implementation, and after completing the necessary checks, and taking into account the significant uncertainties described above, to prepare the annual financial statements of Banca Intermobiliare on the assumption of the entity being a going concern. During June, following the decisions of the European Authorities and in accordance with Italian Law Decree no. 99 of 25 June 2017, the Ministry of the Economy and Finance, on the proposal of the Bank of Italy, made Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. subject to administrative compulsory liquidation, decreeing, therefore, the absence of the assumption of these entities being going concerns. the Bank of Italy appointed the liquidators of Veneto Banca and the Supervisory Committee of the same, who implementing the ministerial indications are overseeing: 1. the continuation, where necessary, of the company’s business or of certain branches of activity for the technical time necessary to implement the planned sales; 2. the disposal of corporate assets and liabilities in accordance with the binding offer formulated by the transferee identified as Intesa Sanpaolo S.p.A., which will take over the relationships of the transferor without a break; 3. the sale to Società per la Gestione di Attività S.G.A (in which the public has a stake) of impaired loans and other assets not disposed of. In the context of the said decree, Banca Intermobiliare, as confirmed on its website by the Bank of Italy with news of 26 June 2017, does not come within the perimeter of Art. 3 among the assets acquired by Intesa Sanpaolo S.p.A., and is continuing its operations in an orderly manner, ensuring the continuity of the existing relationships with its customers.

With a press release of 6 July 2017, Veneto Banca in L.C.A. announced the launch of the activities for the sale of the stake held in BIM. Following the non-binding offers received, the liquidators, with the aid of their financial advisor Lazard & Co S.r.l., selected a limited number of entities, all of high international standing and which have expressed an interest in acquiring the equity investment held by Veneto Banca in BIM in the current configuration of the corporate perimeter of the company, including the total portfolio of impaired loans. Access to the data (Data Room) began on 24 July 2017. To protect all the stakeholders, the Board of Directors of BIM chose as financial advisor Deutsche Bank AG. 66

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At the same time, Banca Intermobiliare continued with the activities of restructuring, relaunch and development, in particular: a) completing the renewal of the Top Management, with the appointment of 11 new Managers out of a total of 14 making up the first line and defining the new structure for governing and managing the subsidiary Symphonia SGR; b) in the context of disposal of non-strategic equity investments, in particular, on 31 July 2017 an agreement was signed with Banca Zarattini & Co. for the sale of 100% of the share capital of the investee BIM Suisse and the launch of a commercial partnership between BIM and the purchaser; c) activities devoted to reducing credit and counterparty risks continued, through the disbursement of only “Lombard loans” to creditworthy borrowers. In addition, in order to make the Bank autonomous with respect to the activities on impaired loans carried out in outsourcing by the Parent Company (and even more so after the same had been placed in administrative compulsory liquidation), the need was seen to begin an independent analysis on the portfolio of impaired loans. d) in the context of a project of assessing its property assets in line with the Business Plan - which provides among other things for gradual optimisation of the spaces occupied by its personnel and a reduction of the capital assets in a logic of a capital-light bank - an Advisor was selected for the activities of assessment of the property assets, and for preparing a “vendor due diligence”. e) In the context of the project of migration of the information technology system, delegated powers were conferred on the General Manager and the Director with assignments to negotiate a letter of intent with (Consorzio Servizi bancari Soc. Cons. a r.l.) and to launch the project work related to the migration itself. An activity to analyse the solutions that can be provided was therefore launched, aimed at conferring any appointments on CSE for outsourcing IT services in “full outsourcing”, with subsequent formalisation of distinct contracts that concern the supply of services related to the use of the IT system and BPO (Business Process Outsourcing). f) after approval of the “strategic guidelines for the business plan” (approved by the Board of Directors on 10 February 2017) activities began to revise the operating structure with a view to “standing alone”, appointing an external advisor, to perform an advisory activity in relation to the Bank’s operating structure following the termination of the current outsourcing contract with former parent company Veneto Banca, with consequent partial re-internalisation of several functions/activities and opening of a new series of contractual relationships for the supply of services to CSE and IT migration to a new supplier (from SEC servizi to CSE), and of the revision of access to the markets and external relationships.

In this context at the Board meeting of 18 July 2017, the Bank approved the “2017-2021 Business Plan”, updating the “strategic guidelines ” and the “long-term financial and economic projections” - already approved at the beginning of the year - which highlight the sustainability over time on a “stand alone” basis assuming that a new shareholder will acquire, very soon, in the context of the liquidation process, the majority stake held by Veneto Banca in L.C.A. The economic, equity and financial dimensions represent regulatory capital and liquidity ratios stably above the regulatory requirements. The update took into account the delay in the process of selling the Bank which had impacts on the assets and on the overall profitability of the business. In the context of the guidelines of the strategic development plan, a rapid exit of BIM from the perimeter of Veneto Banca had been considered decisive to enable a credible autonomous development strategy in private banking, which would take advantage of an effective retention of the network and the customers and a significant recruitment action. Subsequently the deterioration of Veneto Banca’s situation and the related news in the press modified the context, delaying the process of selling BIM. The recently launched Veneto Banca liquidation process, the consequent impulse given to the sale of the equity investment in BIM, and the significant interest manifested by the market in the acquisition, represent as of today a turning point for the future of the company; this is the context for the decision of the Board of Directors to complete process begun in this past first quarter with the definition of the Business Plan of an autonomous, independent BIM ready for a process of relaunching and growth, 67

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accompanied by restructuring already largely begun, based on the conviction that there is in the Italian market room for growth for a high-grade Private Banking service. The plan is aimed at creating a more competitive banking model in the expected market context and provides operatively for three very distinct areas of managerial action: development (devoted to sustainable commercial growth); restructuring (devoted to maximising the recoveries of operating efficiency); managing impaired loans (devoted to reducing the stock in the portfolio).

The Board of Directors has also identified a new policy for managing the Bank’s capital geared to a “Capital Light” model, which makes it possible to reduce the risks that may be incurred by the capital of a private bank. The Capital Light bank model is expressed through: - reduction of RWAs pursued through among other things a process of selling and increasing the value of non-strategic assets, which will involve the entire property portfolio and the equity investment in BIM Suisse (sale made on 31.07.2017 but subordinated to fulfilment of certain conditions precedent); - low Market Risk, with a Banking Book of a limited size and mitigation of exposure to country risk pursued through diversification of issuers; - low Operational Risk, with a service model compliant with the regulations and particularly attentive to ex ante management; - low Credit Risk, with a portfolio concentrated exclusively on Lombard exposures.

In the period, Banca Intermobiliare confirmed an operating profit, despite the uncertainty associated with the difficult situation of the Parent Company and the non-timely sale of BIM, elements which determined on the relaunch and development activities repercussions from the Bank and its subsidiaries, in terms of both funding and profitability. The loss for the period was again determined by the write- downs made in the income statement, following the process of reviewing the loan portfolio. The loss for the period, in fact, was mostly attributable to the results of the revisions of the estimates regarding the foreseeable losses, in the light of the most up-to-date information made available, both as regards the economic and financial situation of customers, and the evolution of the value of the guarantees received. The new Business Plan, as described above, prepared according to a “stand alone” logic, is dependent on the positive conclusion of the process of sale of Banca Intermobiliare with the identification of a new shareholder very soon. In this regard we can note that, with the placing in administrative compulsory liquidation of Veneto Banca, BIM can assume the role of parent bank for which, in the context of the “Supervisory Review and Evaluation Process (SREP) Decision”, the new pillar II target capital ratios must be attributed (at the moment not defined). As regards liquidity, although with a drop of direct deposits, the launch of the restructuring of BIM into a Capital-Light bank has made it possible to prevent the emergence of particular tensions. In addition we can note the certainly positive effects on the bank’s liquidity position of the planned sales of non- strategic assets and the gradual reduction in the portfolio of non-private loans and NPLs.

Therefore the element that could put in doubt the continuation of the requisite of being a going concern relate to the following factors: (i) positive conclusion of the sale of BIM very soon with the possibility on the one hand of being able to implement the business plan approved by the Board of Directors and on the other to leave the Veneto Banca Group the situation of which has a negative impact on the assets and on the related profitability of the Bank; (ii) the decisions that the Supervisory Authority could assume in the context of the “Supervisory Review and Evaluation Process (SREP) Decision”. On the other hand in the absence of a rapid sale it would be difficult for BIM to continue to operate in normal conditions of business operations. For the purposes of preparing the Half-Yearly Report the Board of Directors of the Bank has no reason to believe that the planned acquisition operation will not be completed positively. It has therefore considered that, in the light of the overall framework of reference as outlined above, of the initiatives taken and being implemented and considering the status of the information available in relation to all of the above, the uncertainties mentioned above, although they may lead to significant doubts arriving as regards the going concern assumption, are not of a scope and size such as to lead to not preparing the 68

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Consolidated Half-Yearly Financial Report on the basis of the going-concern assumption. As a consequence, the Half-Yearly Report at 30 June 2017 is prepared on the basis of the going-concern assumption. However, in a scenario in constant evolution such as the one that Bank finds itself facing, the Board of Directors reserves the right to renew, at the time of preparing the next financial statements, the analyses and assessment of the elements of uncertainty highlighted above and their significance with respect to the going-concern assumption on which the half-yearly report at 30 June 2017 is based and to take and communicate all consequent different decisions in this regard.

Disclosure on financial risks Regarding the information on financial risks, it is hereby specified that with account taken of current operations, these risks were examined both in the half-yearly report on operations in the section Market Disclosures, and in the Notes in the section – Risk management. The company carefully carried out the checks regarding the recoverability of deferred tax assets (probability test ), the assessment of goodwill ( impairment test ) and the possible existence of indicators (trigger events ) of permanent impairment losses of its assets in general and mainly of its property investments and equity investments recorded among its assets. With reference to the “probability test” and to the “impairment test on goodwill ” a description of the methods of conducting the testing activities is presented below, together with the consequent results. For the other test please see the methods presented in the Notes to the consolidated annual financial statements, Part A – Accounting policies, A.1. – General, Section 5 – Other aspects.

Probability test on deferred taxes In consideration of the fact that the strategic plan was approved, and given the significant amount of deferred tax assets recognised, in the financial statements at 31 December 2016, the analyses were updated with the aim of checking whether there was reasonable certainty of achieving taxable incomes in the future and therefore the possibility of recovering the prepaid taxes. For the purposes of recognising deferred tax assets at 30.06.2017, the Bank verified the existence of the conditions provided for in IAS 12 for their recognition on the accounts (so-called “probability test”). The deferred tax assets (DTAs) at 30.06.2017 amounted to €/Mln 81.9 and were attributable mainly to taxes payable in advance transformable into tax credits for €/Mln €/Mln 48.9 (of which €/Mln 31.7 for write-downs on loans and €/Mln 17.2 for realignment of goodwill performed according to Italian Legislative Decree 98/11). On these DTAs, called also “qualified or noble DTAs”, it was not necessary to proceed to perform a probability test given the certainty of full recovery in all circumstances. On the remaining types of DTAs, amounting to €/Mln 32.9 (of which €/Mln 10.1 for non-noble DTAs and €/Mln 22.8 related to DTAs from tax losses), instead the Bank carried out the probability test on the basis of the economic results envisaged in the 2017-2021 Business Plan. For the purposes of estimating the future taxable incomes these tests also took into account the effects deriving from the tax deduction and/or transformation into tax credits of DTAs governed by Italian Law 214/2011. In particular, in the test provided for in the international accounting standard IAS 12, for recognition of DTAs the following elements were taken into account: - economic and financial “stand alone” projections for the period 2017-2021 of the new Business Plan; - for the tax periods after 2021, not covered by the economic and financial projections, annual profits were assumed to be the same as the last year envisaged in the plan; - on the basis of the current tax legislation, the IRES fiscal loss can be counted deducting 80% of the income of the tax periods of future years with no time limits. On the basis of these considerations, the assessments made led to the belief that, although over a time horizon of 5 years (we can note that the amount of €/Mln 0.4 considers the taxable profit of the sixth year), more than that provided for in the economic and financial projections, at the end of the fiscally provided for reversal period of the DTA accounted for on the write-downs of loans and on goodwill, the capacity to absorb the DTAs deriving both from tax losses for the year and from the ACE (programme of Action for Cooperation in Economics) and from other deductible temporary differences is only partly ensured by the future profitability of the company, and therefore, the deferred tax assets were accounted 69

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for only for the portion sustainable in the plan. The portion not recognised amounted to approximately €/Mln 5.4, and is entirely referable to the tax loss accumulated during the first half of 2017. It is essential to note also that the elements considered above for the purpose of the probability test present The following reasons for uncertainty: - risk that amendments of the tax legislation, as of today unforeseeable, may in future limit the reportability of the IRES tax loss, reduce the tax rates with a consequent reduction in the amount of DTAs recoverable or entail impacts, even significant ones, on the taxable income of coming years; - risk that, for any reason not currently foreseeable, the economic results (and consequent future taxable incomes) will be less than those estimated in the economic and financial projections or that the going-concern assumption will prove unfounded. Any occurrence of the above circumstances could determine in coming years adjustments, even significant ones, of the carrying amounts of the deferred tax assets recognised in the accounts with negative effect, also significant ones, on the Bank’s economic and/or financial situation and/or capital.

Impairment test on goodwill At the moment of preparing the 2016 annual financial statements, the goodwill of Symphonia was subjected to an impairment test the result of which had confirmed the congruity of the value recognised. In consideration of approval of the 2017-2021 Business Plan, including the economic and financial projections of Symphonia, an impairment test was prepared on Symphonia’s goodwill despite the annual periodicity required by the accounting standards. The impairment test carried out was conducted on two levels.

First-level impairment test In the assessment of goodwill of Symphonia SGR the Dividend Discount Model (DDM) method was used. The method provides that the value of a company should be equal to the sum of the future cash flows generated over a specific time period and the current value of a perpetual yield defined on the basis of a sustainable dividend for the years subsequent to the plan (Terminal Value). The estimate of the economic value of the cash generating units over and above a specific time period constructed on economic and financial data deriving from actual end of year results, budgets and/or specific analyses was based on the consequent relative sustainable evolution of profitability. For the purposes of identifying the “recoverable value” of the cash generating unit subject to impairment to be compared to the relative book value, the following assessments were performed: - as input data of the model specifically calculated economic-financial and equity forecasts were created for the company to cover a time period of 4.5 years. The estimates were determined in accordance with the guidelines of the 2017-2021 Business Plan of the parent company BIM approved by the Board of Directors of BIM on 18 July 2017; - in a prudential manner no distribution of the company’s Excess Capital was provided with respect to the regulatory minimum; - the distribution is provided for of all the future distributable profits of the company being assessed; - the “long-term growth rate” used for the calculation of the Terminal Value, was set at 1%, in keeping with the estimates of medium-term growth for Italy with the rate used for the 2016 annual financial statements. - the discounting rate of cash flows of 10.96% was obtained on the basis of the Capital Asset Pricing Model by applying the following formula:

Cost of Capital = (Risk Free Rate) + (Equity Risk Premium) x (Beta of the Sector)

using in detail: i. Risk Free Rate, the gross yield of a German BUND with a residual life of 10 years, equal to 0.47% (source: Bloomberg, 30 June 2017); ii. Equity Risk Premium, reference was made to the calculation process for the year 2017 performed by Aswath Damodaran, Stern School of Business, New York ( www.stern.nyu.edu ). The Risk Premium used, that includes country risk, equals 8.4%; 70

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iii. Sector Beta, a significant sample of comparable companies was selected, which could be used to calculate an “average Beta”. Considering the high volatility in the financial markets, it was considered more appropriate to use an observation time horizon of 5 years with a weekly observation frequency. The Beta thus calculated was 1.25;

The results of the impairment test carried out, confirm a recoverable value of €/Mln 187, well above the book values of the equity investment and such as to justify the goodwill recognised in the accounts as can be seen in the table presented below with reference to the values at 30.06.2017.

(Millions of €) Goodwill Average Book value Added value recoverable amount 49.4 187 76.1 (sep. fin. state. 30.06.2017) 110.9 97.9 (cons. fin. state. 30.06.2017) 89.1

We can note that in order to test the soundness of the book value of Symphonia, a specific sensitivity analysis was implemented on the valuation using the DDM. In particular, the most important variables in relation to the specific nature of Symphonia were put under stress i.e. the assets under management (AUM) and the net profitability generated by them. It was then found that, by assuming a 15% reduction of the AUM and a 10% reduction of the contextual net profitability throughout the period of the plan, the impairment test was in any case passed, despite the consequent reduction in the recoverable value. Finally the value of the equity investment in Symphonia SGR was subjected to a further test using also measurement methods, such as multiples of M&A transactions and Stock Exchange multiples; the application of these methods did not show a lasting reduction in the value of goodwill either.

Second-level impairment test The second-level impairment test was carried out comparing the recoverable value and the book value of the Group as a whole in order to consider in the analysis the negative income flows and the positive book value of the assets which cannot be allocated (“corporate center”) according to the provisions of IAS36. The results obtained confirmed the absence of situations of impairment.

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Significant events that occurred during the first half off 2017

Administrative compulsory liquidation of the former Parent Company Veneto Banca Following the decisions of the European Authorities and in accordance with Italian Law Decree no. 99 of 25 June 2017, the Ministry of the Economy and Finance, on the proposal of the Bank of Italy, made Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. subject to administrative compulsory liquidation. We can note that in February 2017, the Board of Directors of Veneto Banca had approved a new 2017- 2021 Business Plan, which had the merger with Banca Popolare di Vicenza among the conditions for its restructuring, together with further action of capital strengthening. On 17 March 2017, in the absence of a clear expression from the controlling shareholder of its willingness to provide additional capital support, Veneto Banca informed the competent Authorities of its intention to access the “precautionary recapitalisation” (pursuant to Italian Decree Law 237/2016 as converted, with amendments, into Italian Law No 15 of 17 February 2017).

Events subsequent to the reporting date We can report the following events subsequent to 30.06.2017 which were opportunely considered in preparing the present consolidated half-yearly financial report.

Start of Due Diligence During July, the liquidators of Veneto Banca L.C.A, relaunched the process of disposal of the equity investment held in BIM. Following the non-binding offers received, the liquidators, with the aid of their financial advisor Lazard & Co. S.r.l., selected a limited number of entities, all of high international standing and which have expressed an interest in acquiring the equity investment held by Veneto Banca in BIM in the current configuration of the corporate perimeter of the company, including the total portfolio of impaired loans. To protect all the stakeholders, the Board of Directors of BIM chose as financial advisor Deutsche Bank AG.

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Business outlook The process of disposing of Banca Intermobiliare, relaunched in July by the liquidators of Veneto Banca L.C.A, received a strong acceleration leading, on 24 July 2017, to the aforementioned “data room” which should enable the formulation, in a short time, of binding expressions of interest and the concession of an exclusive period to a selected counterparty. The new corporate structure that will be defined will make it possible to relaunch the bank as defined in the current business plan approved by the Board of Directors on 18 July 2017.

Accounting standards The accounting standards used for preparing the Condensed Consolidated Half-Yearly Financial Statements at 30.06.2017 were unchanged with respect to the 2016 annual financial statements, to which you are referred for a complete presentation.

Notes to the statements The Condensed Consolidated Half-Yearly Financial Statements contain the notes to the statements related to the economic results and financial data of the restated financial statements presented in the half-yearly report on operations. In particular the accounting data were analysed in the following sections: “Trend of consolidated balance sheet aggregates” and “Consolidated economic results”. The economic results by business segments, risk management and related-party transactions are also dealt with in the present section.

Additional information Significant non-recurring events and transactions During the first half of 2017, 1 transaction of major significance with related parties was executed by Banca Intermobiliare, consisting of a Repo operation in favour of the Parent Company Veneto Banca S.p.A., approved by the Board of Directors of BIM on 19 January 2017 for an amount of about €/Mln 300. As of today these transactions have been closed.

Use of estimates and assumptions in preparing the condensed consolidated half-yearly financial statements Preparing the condensed consolidated half-yearly financial statements also requires the use of estimates and assumptions that may have a significant effect on figures entered in the balance sheet and income statement, and on the data relating to potential assets and liabilities presented in the financial statements. The processing of such estimates implies the use of available data and the adoption of subjective assessments, also founded on historic analysis, used in formulating reasonable assumptions in accounting for operations. By their nature, the estimates and assumptions used can vary from one financial year to the next and, therefore, in future years the currently recorded values may differ, even significantly, following changes in the subjective assessments used. The main areas for which subjective assessments are used by management are: • the quantification of losses due to the reduction of loan values and, in general, of other financial assets; • the determination of the fair value of financial instruments to be used for the financial statements; • the use of valuation models for the recognition of the fair value of financial instruments which are not listed on active markets; • the assessment of the sustainability of the value of goodwill and intangible fixed assets; • quantifying provisions for staff and provisions for risks and charges; • use of estimates and assumptions for determination of the current taxes and the extent to which deferred tax assets can be recovered; • demographic assumptions (relating to the estimated mortality of the insured population) and financial assumptions (deriving from the possible evolution of financial markets), used in structuring insurance products and defining the basis for calculating the additional reserves.

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Transformation of deferred tax assets into tax credits (Italian Decree Law 225/2010, art. 2, para. 55). During 2017, Banca Intermobiliare proceeded, pursuant to Art. 2, paragraph 55, of Italian Decree Law 225/2010, with the transformation of deferred tax assets (DTA) into tax credits for a total amount of €/Mln 22.7 following recognition of a loss in the previous year.

Option for tax consolidation Banca Intermobiliare exercised the option for the system of National Tax Consolidation under the terms of Art. 117 of the TUIR (Consolidated Income Tax Law) for the three years 2015, 2016, 2017. Taking into account that the provisions laid down by Art. 117 of the TUIR states that acceptance of group taxation is permitted only if between the consolidating and the consolidated company there exists a relationship of control, under the terms of Article 2359, paragraph 1, number 1, of the Civil Code, the configuration of the perimeter of companies in the consolidation includes all companies subject to control by Banca Intermobiliare S.p.A., with the following structure: - Banca Intermobiliare S.p.A. as controlling/consolidating company, - Symphonia SGR S.p.A., - Bim Fiduciaria S.p.A. - Bim Immobiliare S.r.l. - Paomar Terza S.r.l. with single member, - Immobiliare D S.r.l. single-member, - Bim Insurance Brokers S.p.A. The advantages deriving from the consolidation option consist of the right to adopt – for IRES (corporation tax) purposes – a type of taxation that consists of identifying a single group taxable income equal to the algebraic sum of the taxable incomes of the companies that are part of the same group and, consequently, a single tax liability with regard to the tax authorities due to the possibility of immediate reporting of losses in a company within the tax consolidation group, due to the possibility of offsetting consolidated tax credits with tax liabilities and the transfer, within the scope of consolidation, of unused surplus of aid to economic growth (ACE).

Fiscal transparency option Banca Intermobiliare and UnipolSai (UFG Group), acting as parent companies of the joint investment in Bim Vita S.p.A., have renewed the option for the fiscal transparency regime pursuant to Art. 115 of the Income Tax Law for the period 2016-2018. This scheme involves the transfer of taxable income (or any tax losses) generated by the investee Bim Vita to the parent companies, with simultaneous transfer of its tax debt for IRES.

Other tax audits of Banca Intermobiliare, Symphonia and BIM Vita As regards the tax audits that involved Banca Intermobiliare and its investee companies Symphonia SGR and BIM Vita, information was provided on the objections raised, on the years covered by the inspections, on the petitum and any charges payable by the company in the Section “Trend of consolidated balance sheet aggregates – Provision for Risks and Charges”

Independent auditing PricewaterhouseCoopers S.p.A. is the company appointed for independent auditing of the separate and consolidated financial statements for the financial years from 2012 to 2020. The condensed consolidated half-yearly financial statements are subject to limited auditing by the auditing firm.

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Disclosure on fair value

General principles The present chapter summarises the criteria through which Banca Intermobiliare determines the measurement at fair value of financial instruments on the basis of the accounting standard IFRS 13 which governs fair value measurement and the related disclosure. Financial instruments measured at fair value are classified on the basis of the following hierarchy of levels that reflects the significance of the inputs used in the measurements: • Level 1: quotations (without adjustments) noted on an active market– according to the definition given by IAS 39 – for the assets or liabilities being measured. • Level 2: inputs other than quoted prices pursuant to the previous point, which are observable directly (prices) or indirectly (deriving from prices) on the market. • Level 3: inputs that are not based on observable market data.

For the methods of determining the fair value and the related definitions of active or non-active market, please see the specific paragraph 18 “Criteria for determination of the fair value of financial instruments” of the “Other information” of Part A.2 of the notes to the annual Financial Statements at 31.12.2016 of Banca Intermobiliare.

Fair value hierarchy The tables below show the financial assets and liabilities measured at fair value divided into the different levels of the fair value hierarchy described above.

Accounting portfolios: distribution by fair value level at 30.06.2017 (Thousands of €) Financial assets/liabilities designated at fair value Level 1 Level 2 Level 3 Total 1. Financial assets held for trading 97,174 55,347 907 153,428 2. Financial assets designated at fair value - - - - 3. Financial assets available for sale 420,904 46,851 8,072 475,827 4. Hedging derivatives - 2,044 - 2,044 5. Property, plant and equipment - - - - 6. Intangible fixed assets - - - - Total 518,078 104,242 8,979 631,299 1. Financial liabilities held for trading 44,999 32,659 656 78,314 2. Financial liabilities designated at fair value - - - - 3. Hedging derivatives - 7,254 - 7,254 Total 44,999 39,913 656 85,568

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Accounting portfolios: distribution by fair value level at 31.12.2016 (Thousands of €) Financial assets/liabilities designated at fair value Level 1 Level 2 Level 3 Total 1. Financial assets held for trading 31,659 64,971 744 97,374 2. Financial assets designated at fair value - - - - 3. Financial assets available for sale 729,673 96,938 8,169 834,780 4. Hedging derivatives - 1,327 - 1,327 5. Property, plant and equipment - - - - 6. Intangible fixed assets - - - - Total 761,332 163,236 8,913 933,481 1. Financial liabilities held for trading 14,186 53,617 166 67,969 2. Financial liabilities designated at fair value - - - - 3. Hedging derivatives - 14,758 - 14,758 Total 14,186 68,375 166 82,727

Transfers between portfolios The table mainly lists the (residual) portfolio which was reclassified in 2008 by Banca Intermobiliare – considering the global economic crisis at the time as a rare circumstance that can justify the use of the reclassification of the portfolio – by applying the amendment to IAS 39. It should be noted that on 5 February 2016, the Board of Directors of Symphonia passed a resolution for the only unlisted equity security recognised in the category “Assets held for trading” to be reclassified, already in the financial statements for the year to 31.12.2015, into the category “Assets available for sale”, taking into account that the difficult situation in the financial markets would not have allowed trading activity to be pursued in the short term for that instrument.

Transfers between portfolios – Situation at 30.06.2017 (Thousands of €) Income components Income components reported during the Book value with no transfer Type of financial Source Target Fair value at financial period at (before taxes) instrument portfolio portfolio 30.06.2017 (before taxes) 30.06.2017 Valutation Valutation al Other al Other Debt securities HFT AFS 5,048 5,048 62 3,966 62 4,049 UCITS units HFT AFS 24,979 25,023 279 - 279 - Equity Securities HFT AFS 250 250 44 - 44 - Total 30,277 30,321 385 3,966 385 4,049

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Trend of consolidated balance sheet aggregates

Exposure to the banking system

Net financial position (Thousands of €) 30.06.2017 31.12.2016 Change Change Absolute % Loans Current accounts and demand deposits 81,633 317,753 (236,120) -74.3% Loans and time deposits 12,110 13,646 (1,536) -11.3% Income for on-demand derivative operations 25,011 17,590 7,431 42.2% Securities lending and repurchase agreements 20,882 12,269 8,613 70.2% Debt securities 4,735 9,987 (5,252) -52.6% Total loans to banks 144,371 371,245 (226,874) -61.1%

Payables Current accounts and other on-demand deposits (138,235) (119,367) (17,868) -14.9% Loans and other forward debts (17,006) (505) (16,501) -3691.9% Securities lending and repurchase agreements (134,088) (374,580) 240,492 64.2% Other payables (13,457) (14,842) 1,385 16.7% Total due to banks (302,786) (509,294) 206,508 40.5%

NET FINANCIAL POSITION (158,415) (138,049) (20,366) -14.8%

While up to last year the net financial position featured as main counterparty the former parent company Veneto Banca, during the first half of 2017, Banca Intermobiliare, with a view to a stand-alone future, forged new relationships with several counterparties in order to better optimise any borrowing and lending needs. As a consequence the net debt position at 30.06.2017, of €/Mln 158.4, is distributed over a significant number of counterparties.

In particular the net financial position with banks increased compared to the year-end figure at 31.12.2016 which had closed with a payable balance of €/Mln 138. Receivables from banks amounted to €/Mln 144.4, recording a decrease of 61.1% compared to 31.12.2016, owing mainly to the lower positive balance present in reciprocal accounts. Payables to banks amounted to €/Mln. 302.8 down compared to €/Mln 509.3 in being at 31.12.2016, mainly as a result of the lower exposure in securities lending and in repurchase agreements.

For a description of the interest rate risk and liquidity risk management strategies, one should refer to the section “Market Disclosures” – “Information on risks and factors influencing profitability” and Part E “Information on risks and related hedging policies” – the “Market Risks” section of the Explanatory Notes to the consolidated financial statements as at 31 December 2016.

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Financial instruments

Financial instruments breakdown (Thousands of €) 30.06.2017 31.12.2016 Change Change 31.12.2016 pro-forma absolute % Portfolio of securities High frequency trading (HFT) 119,805 43,602 76,203 174.8% 43,602 Trading liabilities (44,925) (14,186) (30,739) -216.7% (14,186) Available-for-sale assets (AFS) 475,827 835,237 (359,410) -43.0% 834,780 Loans&Receivables 4,735 9,987 (5,252) -52.6% 9,987 Total securities portfolio 555,442 874,640 (319,198) -36.5% 874,183 Derivatives portfolio High frequency trading (HFT) 33,623 53,772 (20,150) -37.5% 53,772 Trading liabilities (33,389) (53,783) 20,394 37.9% (53,783) Total derivatives portfolio 234 (11) 245 N/a (11)

TOTAL FINANCIAL INSTRUMENTS 555,676 874,629 (318,953) -36.5% 874,172

The total exposure in financial instruments is made up primarily of cash assets (portfolio of securities) held both for purposes of the “trading book” and “banking book”, and marginally of derivative assets (the derivatives portfolio). As of 30.06.2017, the total of financial instruments amounted to €/Mln 0.556, and was down compared to €/Bln 0.875 for the financial year ended 31.12.2016. The reduction in the portfolio of securities - which began towards the end of 2016 - continued also during the first half of 2017, in order to limit the Bank’s exposure to market and counterparty risks, thorough a Banking Book of a limited size and mitigation of exposure to country risk through diversification of issuers. In absolute terms, the investments in on-balance-sheet financial instruments recorded a decrease of 36.5%, in particular due to the reduction in assets available for sale that went from €/Bln 0.835 at 31.12.2016 to the current €/Bln 0.476. As for the derivatives portfolio, the volumes fell compared to the 2016 end-of-year figure.

Below, investments in financial instruments per type of portfolio are listed.

Financial assets held for trading (Thousands of €) 30.06.2017 31.12.2016 Change Change absolute % Trading securities - Debt securities 99,246 43,254 55,992 129.4% - Equity securities 652 333 319 95.8% - UCITS units 19,907 15 19,892 N/a Total securities portfolio 119,805 43,602 76,203 174.8% Trading derivative instruments - Financial derivatives 33,474 53,523 (20,049) -37.5% - Credit derivatives 149 249 (100) -40.2% Total derivatives portfolio 33,623 53,772 (20,149) -37.5%

TOTAL FINANCIAL ASSETS 153,428 97,374 56,054 57.6%

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“Financial assets held for trading ” consist of 78% from the “securities portfolio” (45% at 31.12.2016) and the “derivatives portfolio” for the remaining 22% (55% at 31.12.2016). The “ securities portfolio” recorded an exposure of €/Mln 119.8, 83% of which consisted of debt securities, mainly to Governments and Central Banks and of Italian and European Bank bonds with average maturity of less than three years. Banca Intermobiliare’s exposure to the Italian State is €/Mln 45.7 (€/Mln 13.5 at 31.12.2016) which represents 38% of the total portfolio of securities held for trading. Banca Intermobiliare’s exposure in financial instruments to the former Parent Company Veneto Banca is €/Mln 0.6 (€/Mln 7.4 at 31.12.2016), made up of a single security maturing in 2019. The “derivatives portfolio” , composed primarily of exchange rate derivatives traded between customers and institutional counterparties, presents an exposure in derivatives, of €/Mln 33.6, entered among trading assets, basically offset with the derivative instruments entered among trading liabilities.

Financial liabilities held for trading (Thousands of €) 30.06.2017 31.12.2016 Change Change absolute % Financial liabilities held for trading Liabilities for cash 44,925 14,186 30,739 216.7% Derivative Instruments 33,389 53,783 (20,394) -37.9% TOTAL FINANCIAL LIABILITIES HELD FOR TRADING 78,314 67,969 10,345 15.2%

“Financial liabilities held for trading ” amounted to €/Mln 78.3 up by €/Mln 68 compared to 31.12.2016. These liabilities consist of €/Mln 44.9 of liabilities for cash and €/Mln 33.4 of derivative instruments. The financial liabilities refer to technical overdrafts on equity securities and debt securities for which arbitrations are under way with trading derivatives entered among financial assets held for trading. Trading derivative instruments consist mainly of cross currency swaps balanced with similar derivative contracts on currencies, entered among financial assets held for trading.

From an economic point of view, the trading book (securities and derivatives) generated in the first half of 2017 €/Mln 5.2 of revenue (€/Mln 4.2 as at 30.06.2016), of which: net interest of €/Mln 0.5 (€/Mln 1.6 at 30.06.2016) and a net trading gain of €/Mln 4.7 (€/Mln 2.6 at 30.06.2016).

Financial assets available for sale (Thousands of €) 30.06.2017 31.12.2016 Change Change 31.12.2016 pro-forma absolute % Financial assets available for sale - Debt securities 437,257 777,481 (340,224) -43.8% 777,024 - Equity securities 8,692 12,438 (3,746) -30.1% 12,438 - UCITS units 29,878 45,318 (15,440) -34.1% 45,318 TOTAL FINANCIAL ASSETS AVAILABLE FOR SALE 475,827 835,237 (359,410) -43.0% 834,780

The “portfolio of financial assets available for sale” at 30.06.2017 recorded a decrease of 43% (amounting to €/Mln 359), which affected mainly investments related to the debt security segment. The significant reduction came in the context of the Bank’s strategy of reducing Market Risk as illustrated above. As regards the breakdown we can note, also for the “banking book”, a high concentration of debt securities, approximately 91.9% of the total of the segment. These debt securities were mainly allocated to the treasury portfolio and consisted of short/medium-term bonds of Italian and European government 79

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and issuers. Banca Intermobiliare’s exposure to the Italian State is €/Mln 367 (€/Mln 589.4 as at 31.12.2016) which represents 77% of the total portfolio of financial assets available for sale. Banca Intermobiliare’s exposure to the former Parent Company Veneto Banca is €/Mln 21.1 (€/Mln 82.6 at 31.12.2016), represented by a single security maturing in 2019.

With regard to the economic results recorded in the period, financial assets available for sale generated revenue of €/Mln 11.2 (€/Mln 6.4 at 30.06.2016), of which: net interest income of €/Mln 8.3 (€/Mln 9.3 at 30.06.2016) mitigated by the spreads relating to the existing hedges of a negative €/Mln 4.4 (a negative €/Mln 2.7 at 30.06.2016), a positive result from the sale of securities of €/Mln 8.9 (€/Mln 2.5 at 30.06.2016), net hedging gain of €/Mln 0.1 (a negative €/Mln 0.4 at 30.06.2016) and impairment of €/Mln 1.7 (€/Mln 2.3 at 30.06.2016).

Loans&Receivables (Thousands of €) 30.06.2017 31.12.2016 Change Change absolute % Debt securities Loans&Receivables - Debt securities due to banks 4,735 9,987 (5,252) -52.6% - Debt securities due to clients - - - - TOTAL DEBT SECURITIES LOANS & RECEIVABLES 4,735 9,987 (5,252) -52.6%

The Loans & Receivables portfolio consists of bank bonds, which are not listed on active markets, which have been acquired as private placements and are not held for trading. The entire exposure is recognised in the balance sheet under item 60 “Amounts due to banks”. It amounted to €/Mln 4.7 and is made up of a single bond with maturity January 2018 issued by the former Parent Company Veneto Banca.

Securities in issue (Thousands of €) 30.06.2017 31.12.2016 Change Change absolute % Bond issues - structured 19,683 34,724 (15,041) -43.3% - other 154,833 270,254 (115,421) -42.7% TOTAL BONDS 174,516 304,978 (130,462) -42.8%

Securities issued, made up entirely of bond loans issued by Banca Intermobiliare, amounted to €/Mln 174.5 down by 42.8% compared to the previous year, against the redemptions on expiry of the securities. No new bond issues were place in the period. As of 30.06.2017 fixed-rate issues represent 84% of the total debt in issue while floating-rate issues account for 16%. As regards bond issues we can note that they will reach maturity for €/Mln 38.6 by 31.12.2017, €/Mln €/Mln 109 in 2019 and €/Mln 27 in 2021.

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Hedging derivatives At 30.06.2017, the positive balances of hedging derivatives amounted to €/Mln 2 (€/Mln 1.3 at 31.12.2016), and the negative balances amounted to €/Mln 7.3 (€/Mln 14.8 at 31.12.2016). The hedging activities carried out in the period are mainly attributable to “fair value” hedging of Italian BTPs in “asset swaps” recognised among financial assets available for sale and to bond loans issued. During the first half of 2017, there was a reduction in the volumes of hedging derivative contracts following the lower exposure of the “banking book”.

The breakdown by type of instrument hedged is presented below.

Positive fair Negative fair Notional (Thousands of €) value value Value AFS - Italian BTPs in ASW 1,718 (7,133) 270,260 AFS – Other securities - (121) 11,500 OFL – Fixed-rate securities 326 - 17,390 TOTAL at 30.06.2017 2,044 (7,254) 299,150

Positive fair Negative fair Notional (Thousands of €) value value Value AFS - Italian BTPs in ASW 1,098 (14,530) 446,160 AFS – Other securities - (229) 11,500 OFL – Fixed-rate securities 229 - 17,390 TOTAL at 31.12.2016 1,327 (14,759) 475,050

For more information please see the explanatory notes to the annual financial statements at 31.12.2016 and in particular as regards the accounting aspects Part A – Accounting Policies and as regards market risks Part E – Information on risks and related hedging policies.

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Specific provisions

The specific provisions at 30.06.2017 amounted to €/Mln 32.3 up compared to the figures at 31.12.2016 owing to the higher provisions set aside for risks and charges.

Specific provisions (Thousands of €) 30.06.2017 31.12.2016 Change Change 31.12.2016 absolute % Provisions for risks and charges 27,829 25,937 1,892 7.3% 25,937 Employee severance fund 4,503 4,854 (351) -7.2% 4,807 TOTAL SPECIFIC PROVISIONS 32,332 30,791 1,541 5.0% 30,744

At 30.06.2017, “ Provisions for risks and charges ” amounted to €/Mln 27.8 (+7.3% compared to 31.12.2016) and were established primarily against probable liabilities and risks associated with various kinds of disputes related, inter alia, to customer complaints and disputes, tax disputes and contractual indemnities owed, which were measured according to actuarial criteria under the IAS 37 accounting standard. As regards the assessments which determined the existing provisions, please refer to the notes to the statements of the present Consolidated Half-Yearly Financial Report. “Employee termination indemnity fund ” at 30.06.2017 amounted to €/Mln 4.5, with a decrease of 7.2% compared to 31.12.2016. The fund is recognised in the accounts on the basis of its actuarial value determined by independent actuaries.

Provisions for risks and charges (Thousands of €) 30.06.2017 31.12.2016 Change Change absolute % Disputes and complaints against Veneto Banca 0.40% Shares 10,065 10,022 43 Other disputes and complaints against clients 7,996 6,603 1,393 21.10% Tax Disputes 4,902 4,859 43 0.90% Indemnities, charges on personnel and other 9.30% allocations 4,866 4,453 413 PROVISIONS FOR RISKS AND CHARGES 27,829 25,937 1,892 7.3%

In particular in relation to disputes and complaints received by BIM from clients regarding the trading of Veneto Banca shares the provisions related to the end of the year of €/Mln 10.1 remained essentially unchanged at 30.06.2017. We can specify that the determination of provisions for risks did not take into account Banca Intermobiliare customers that have accepted the Parent Company’s Settlement Offer the costs of which are all chargeable to Veneto Banca. The Board of Directors of Veneto Banca passed a resolution on 9 January 2017, to initiate a group settlement initiative under which the former Parent Company had proposed a pre-set flat-rate, all-inclusive compensation, by way of settlement, to a large section of its shareholder base (without this being able to be inferred, even implicitly, as recognition of liability), of 15% for each Veneto Banca share purchased or subscribed, respectively, from or at a bank of the Veneto Banca Group in the period between 1 January 2007 and 31 December 2016, net of any sales and some other kinds of operations described in the settlement offer regulations, with all charges to be paid directly by it. On 11 April 2017, the Board of Directors of Veneto Banca, after assessing the definitive result of the Settlement Offer (final acceptances of 54,374 shareholders, equivalent to 72.6% of the total), had resolved to waive the condition precedent that entailed reaching 80% of acceptances and to proceed, and consequently, it paid the compensation due to the shareholders that had accepted the Settlement Offer. 781 Banca Intermobiliare customers accepted the Settlement Offer for which against a disputed amount 82

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of €/Mln 20.5 the compensation paid was €/Mln 3.4.

In addition, with reference to the supervisory and fiscal inspections carried out on the company Banca Intermobiliare and its subsidiaries that are still pending as of 30.06.2017 the disclosure is provided below, together with the related update with respect to what was published in the dossier of the annual financial statements.

“ECB” Inspection of the Parent Company Veneto Banca and indirectly of Banca Intermobiliare In October 2016, the ECB had initiated a further inspection at the Parent Company Veneto Banca, with the aim of evaluating, with reference to the perimeter of Italian banks belonging to the Veneto Banca Group, the management of credit and counterparty risk and the risk control systems. With reference to Banca Intermobiliare, the inspectors analysed a sample of loans, with reference to the date of 30.06.2016, having a gross exposure amounting to €/Mln 536 and identified €/Mln 375 relating to impaired exposures (including 57.4% of the total impaired portfolio) and €/Mln 162 relating to the performing portfolio (representing 28.4% of total performing loans to customers). On that occasion, as would appear right in the face of evidence received from the “Regulator”, the Bank had promptly implemented the indications destined to reflect in accounting terms the findings noted during the inspection. As of today, Banca Intermobiliare has still not received either from the inspection team, or from the former Parent Company Veneto Banca, the definitive results of the inspection, or even any formal request to review the management and assessment processes, and the systems of internal controls related to credit and counterparty risks, as the process of communicating the results of the inspection activities still has to be formalised. As already stated in preparing the annual financial statements the Bank cannot exclude the possibility that, on receiving the results of the inspection, it may be required to revise more conservatively the policies, processes, and procedures associated with credit and counterparty risk, whose application to the entire loan portfolio, could presumably have a significant negative impact - currently impossible to quantify - on the financial and economic situation at the date of approval of this Consolidated Half- Yearly Financial Report. The Board of Directors of BIM in any case appointed a consultant to review the management and measurement processes, and the internal controls system related to credit and counterparty risk in the light of the best practises and on the basis of the EBA indications.

CONSOB inspection and sanctioning process Sanctioning proceedings for violation of disclosure requirements on Repo Operations It should be noted that on 23 December 2016 CONSOB notified the Bank that it was opening sanctioning proceedings following the investigations into information that emerged during the audits conducted at the Company in the period 2015-2016 and in the performance of its supervisory activities on disclosures, since it felt the obligation of transparent disclosures under CONSOB regulations had been infringed in relation to three Related Party transactions of major significance, consisting of Repurchase Agreement operations (Repo) in favour of the Parent Company Veneto Banca S.p.A. and approved by the Board of Directors of BIM. On 13 February 2017 the defensive arguments were filed. On 6 July 2017 the CONSOB Administrative Sanctions Office communicated the proposal to the Commission to impose sanctions for a total of €/Thou. 470. Within the term of 30 days rebuttals may be presented to the Commission.

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Sanctioning proceedings against corporate officers pursuant to arts. 190 and 195 of Legislative Decree No. 58 of 24 February 1998, and, by way of joint liability, against Banca Intermobiliare. It should be noted that on 19 January 2017 - following the inspection conducted in the period 2015-2016 - CONSOB notified the Bank of the launch of sanctioning proceedings against certain corporate officers, as it felt that the legislation on investment services had been infringed. After obtaining access to the records, the Bank delivered the counterclaims on 21 April 2017. In the meantime, the necessary planning activities were launched for remedying the anomalies found. In relation to the disputes described above, after also consulting its lawyer, Banca Intermobiliare decided, also for preparing the present Consolidated Half-Yearly Financial Report, not to set aside any provisions, on the basis of the arguments contained in the dossier of annual financial statements to which you are referred.

Sanctioning proceedings against corporate officers for infringements of art. 149, paragraph 1, letter a) of Legislative Decree No. 58 of 1998, and, by way of joint liability, against BIM. As a result of the findings of investigations carried out by CONSOB at BIM and Veneto Banca in 2015, as well as the subsequent preliminary activities, it was found that BIM had not complied with the obligations of procedural fairness and disclosure transparency as specified in the RPT (Related Party Transactions) Regulation for related party transactions of major significance, in relation to the sale to Veneto Banca of the shareholding of 67.22% of the share capital of Banca IPIBI (now Banca Consulia S.p.A.) After granting access to the records of the proceedings and assessing the overall defensive position expressed by the parties, CONSOB expressed its conclusions stating that the alleged infringements appeared proven and established the related penalties to be paid by the control body (former members of the Board of Statutory Auditors), totalling €/thou. 85 pursuant to art. 193, paragraph 3, of the TUF - Testo Unico di Finanza (Consolidated Law on Finance) with resolution No. 19821 of 21 December 2016. One statutory auditor lodged an appeal against the sanction imposed on him.

Sanctioning proceedings against BIM for infringement of the combined provisions of art. 114, paragraph 5, of Legislative Decree No. 58 of 1998 and art. 5 of CONSOB Regulation No. 17221/2010, art. 114, paragraph 1, of Legislative Decree No. 58/1998, as implemented by art. 109 of CONSOB Regulation n. 11971/1999 – which in turn invokes art. 66 of the same Regulation - as well as art. 114, paragraph 5, of Italian Legislative Decree No. 58/1998, in conjunction with art. 6 of Regulation No 17221/2010. As a result of the findings of investigations carried out by CONSOB at BIM in 2015, as well as the subsequent preliminary activities carried out, it was found that BIM had infringed the combined provisions of articles 114, paragraph 5, of Consolidated Law on Finance and art. 5 of the RPT Regulation and of articles 114, paragraph 5, of the aforementioned Decree and art. 6 of the aforesaid Regulation in relation to a transaction with related parties performed on 7 August 2014, consisting of the Sale to Veneto Banca of the stake of 67.22% of the share capital of Banca IPIBI Bank Financial Advisory S.p.A. held by BIM, a subsidiary of VB and subject to the management and coordination thereof. After granting access to the records of the proceedings and assessing the overall defensive position, CONSOB expressed its conclusions stating that the alleged infringements appeared proven and established the related penalties to be paid by BIM, totalling €/thou. 25, by resolution no. 19822 of 21 December 2016.

1 Tax audits of the company Banca Intermobiliare

1.1 2011 tax audit relating to the tax years 2004, 2008 and 2009 With regard to the tax audits of Banca Intermobiliare carried out during 2011, which focused on direct taxes, IRAP (Regional Business Tax) and VAT for a maximum total expense (taxes, penalties and interest) in the event of an adverse outcome of Euro/Mln 12.7, precise information is provided here on the disputes, the state of the legal proceedings, the level of existing liabilities and the allocations made by the company, also on the basis of opinions provided by independent tax consultants. 84

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The tax inspection reports were followed by the related assessment notices for 2004, 2008 and 2009 which referred to the deductibility of: trading losses on equities, the write-down of an equity investment that resulted from the enforcement of a guarantee and the non-application of VAT on a commission. Following the assessment notices related to tax year 2004 which were received at the end of 2011 (taxes, penalties and interest amounting to €/Mln 2) relating to trading losses on equities, the initial appeal made by Banca Intermobiliare and its parent company Veneto Banca, was upheld with a ruling filed on 21 February 2013. The Tax Authority - Regional Division of Piedmont - however has lodged an appeal, following which Banca Intermobiliare and Veneto Banca appeared in court to submit the cross appeal. The appeal hearing was held on 13 January 2015 and, with a judgement handed down on 12 February 2015, la Regional Tax Court confirmed the judgement of the first instance. The Office lodged an appeal to the Court of Cassation on 18 September 2015; Banca Intermobiliare presented a counter-appeal within the legal deadline. It was found that the Bank had no charges to pay. For the assessment notices related to tax year 2008 (taxes, penalties and interest amounting to €/Mln 1.1) and 2009 (taxes, penalties and interest amounting to €/Mln 9.5), relating to the write-down of the IPI security which were served in August 2012, the related appeals were made and on 22 March 2013 provisional payment of one third was made, as the petition for suspension of payment had been rejected. The amount paid on a provisional basis was approximately €/Mln 2.1. With the judgement filed on 4 November 2015 the Provincial Tax Commission accepted the combined appeals for 2008 and 2009, with the award of expenses. Banca Intermobiliare immediately requested cancellation of the registration of the assessed amounts and was reimbursed the on-third sum that had already been paid. On 4 February 2016 the Tax Authority – Piedmont Regional Division – lodged an appeal against the judgement of first instance and Banca Intermobiliare duly made its appearance in the proceedings with a deed dated 4 April 2016. As a consequence of the return of the provisional payment, the contingent asset of equal value was cancelled. This totalled €/Mln 2.1, and was identified as a contingent asset at the end of 2013, since it was considered that the condition of virtually certain reimbursement, as provided for in IAS 37, was fulfilled. It was found that the Bank had no charges to pay. With regard to the dispute concerning tax year 2008 (additional taxes and penalties for about €/Mln 0.4 subsequently reduced to €/Mln 0.06 and as of today, cancelled altogether) relating to VAT on custodian fees, the appeal filed by Banca Intermobiliare, before the Provincial Tax Commission was upheld with a judgement issued on 15 February 2013. In September 2013, an appeal by the Tax Authority, Piedmont Regional Division, was lodged, against which Banca Intermobiliare joined the proceedings. The hearing to discuss the merits of the appeal was held on 14 April 2015, following which the claim of the office was reduced to €/Mln 0.06 (28.3% of the amount originally requested) with cancellation of the penalties. With the judgement filed on 16 December 2015, the Regional Tax Commission confirmed the first-level judgement accepting Bim’s appeal and ordering the office to pay the expenses. The proposal for an appeal to the Supreme Court put forward by the Regional Inland Revenue Division was rejected by the Law Officers and, therefore, the cancellation became final. In December 2014 a notice of assessment for the 2009 tax year was served (higher taxes for about €/Mln 0.064) concerning the applicability of VAT on custodian fees, similar to the situation relating to the tax year 2008. On 6 February 2015 Banca Intermobiliare lodged an appeal and paid, on 27 February 2015, the amount of the taxes due provisionally equal to one third, for an amount of €/Mln 0.03. The hearing to discuss the merits of the case was held on 8 October 2015, while the judgement was filed on 3 November 2015 indicating that the Provincial Tax Commission had rejected the appeal, ordering the Bank to pay one third of the amount due (€/Mln 0.03). Therefore, the amounts paid to the Inland Revenue equal to two thirds of the amount due on the basis of the assessment notice of €/Mln 0.052, which had previously been recognised under Balance Sheet assets (Item 160 – Other Assets), since it was felt that the condition of virtually certain reimbursement as provided for in IAS 37§10 was fulfilled given the presence of a Contingent Asset, were recognised in the income statement (Item 220 – Other operating income/expenses), in keeping with the Bank’s intention to reach a conclusion of the disputes through the current settlement procedures used by the Financial Administration. It should be noted, however, that Banca Intermobiliare proceeded to challenge the judgement of first instance with an appeal notice served on 2 May 2016 and as at the date of approval of this document, the date for the court proceedings on the merits of the dispute has not yet been fixed. 85

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1.2 2013 Tax audit, relating to tax year 2010

In December 2013, the general tax audit for the tax year 2010 carried out by the Tax Authority – Piedmont Regional Department – was concluded (taxes, penalties and interest amounting to €Mln 2.4 subsequently reduced to €/Mln 1.5) and also concerned certain findings that had emerged in previous inspections. In particular, the findings which had already been raised for the previous years and again contested relate to the deductibility of the year’s quota of the write-down of the IPI security and the applicability of VAT on custodian fees and financial advice. The Tax Inspection Report (PVC) which was served indicated findings against the Bank for which Banca Intermobiliare considered, based also on the legal and tax opinions it solicited, that the probable economic charge could reach €/Mln 0.2, given the nature and reasons underlying the various comments. This amount was therefore allocated in the annual financial statements for the year ended 31.12.2013. The Tax Inspection Report was followed by the assessment notices served on 16 December 2015 as regards IRAP and VAT, and on 17 December 2015 as regards IRES, and they included the contents of the Tax Inspection Report in its entirety. On 12 February 2016, the Bank proceeded to submit acquiescence regarding some of the findings and at the same time to pay the related taxes, penalties and interest for a total amount of around €/Mln 0.04 and also to lodge the appeals regarding the other findings and to make the provisional payment of a third of the amount as required by law, totalling approximately €/Mln 0.57. The hearing of the Provincial Tax Commission was held on 10 November 2016. The ruling of the Commission, filed on 5 December 2016, upheld the appeal pertaining to the application of VAT on custodian fees but rejected all the other complaints. When it made the provisional payment of a third of the amount, the Bank decided not to proceed with any allocation and consequently entered the sum of €/Mln 0.57 on the assets side of the Balance Sheet (Item 160 – Other Assets) since it was felt that the condition of virtually certain reimbursement, as provided for in IAS 37 § 10, was fulfilled due to the presence of a Contingent Asset. As of the date of drafting the financial statements at 31.12.2016, bearing in mind the intervening judgement of first instance and the Bank’s intention to reach a conclusion of the disputes through the current settlement procedures used by the Financial Administration, the Bank proceeded to account for these costs in the income statement under Item 220 - Other operating income/expenses for €/Mln 0.57. In line with its desire to try to reach settlements, the Bank allocated, in the financial statements, at 31.12.2016 the sums owed after the judgement of first instance, amounting to a third of the assessed taxes and also the relevant penalties and interest totalling €/Mln 1.06. On 24 February 2017, the Bank made the related payment to the Tax Authority. As regards the Assessment Notice for IRES purposes, Banca Intermobiliare lodged an appeal on 31 May 2017, filing the same at the RTC on 26 June 2017. At the date of preparing the present report the date for the hearing of merit has not yet been set. As regards the Assessment Notice for IRAP and VAT purposes, the Office has lodged an appeal against the acceptance of the objection relating to the Depositary Bank fees. Banca Intermobiliare lodged an appeal, on 5 June 2017, filed on 14 June 2017.

1.3 2015 tax audit relating to the tax years from 2011 to 2015 During 2016 a general tax audit was conducted regarding Direct Taxes, VAT, other taxes and employment legislation for the years 2013, 2014 and 2015 with subsequent extension to the tax years 2011 and 2012. On 19 October 2016, a Tax Inspection Report for the 2011 tax year was delivered, and this was followed by the Notice of Assessment dated 30 December 2016 (taxes, penalties and interest for €/Mln 0.5), which included findings highly similar to those raised in previous years concerning the treatment of custodian fees in terms of VAT (already disputed for the years 2008, 2009 and 2010), the treatment of advisory fees in terms of VAT pursuant to the MiFID Directive (disputed for 2010) and the deductibility of an eighteenth of the write-down of the IPI Security (disputed for the years 2008 to 86

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2010). On 17 March 2017, Banca Intermobiliare presented an appeal against the Notice of Assessment; at the date of preparing the present Consolidated Interim Report on Operations a hearing date to discuss the merits of the case has not yet been set. On 14 June 2017 Banca Intermobiliare made the payment, provisionally, of the amount equal to one third of the taxes ascertained, proceeding to reduce by a corresponding amount the provisions for risks set aside at the moment of preparing the financial statements at 31.12.2016. On 12 December 2016, a Tax Inspection Report was served, relating to the tax years from 2012 to 2015 (liabilities estimated by the internal units to be of €/Mln 8.4); on this occasion also, for the years in question, the findings against the Bank concerned the treatment of advisory fees in terms of VAT pursuant to the MiFID Directive (disputed for 2010 and 2011) and the deductibility of an eighteenth of the write-down of the IPI Security (disputed for the years 2008 to 2011). In accordance with the Bank’s intention to reach a conclusion of the disputes through the current settlement procedures used by the Financial Administration, provisions were allocated for an amount equal to one third of the higher taxes indicated within the Tax Inspection Report and of the likely sanctions amounting to €/Mln 2.8. On 4 April 2017, Banca Intermobiliare presented to the Tax Authority – Piedmont Regional Department – an Application for assessment with acceptance under the terms of Italian Legislative Decree 218/1997. At the date of preparing the present Consolidated Interim Report on Operations, discussions have begun with the DRE Piedmont – Large Taxpayers Office.

2. Tax audit of Symphonia Sgr During 2015, a general audit was conducted at the subsidiary Symphonia SGR regarding direct and indirect taxation for the tax year 2013, subsequently extended partially to 2011 and 2012. This was concluded in May with the delivery of the Tax Inspection Report. The findings concerned the sale of a business unit and transfer pricing issues. On 9 December 2015, the Assessment Notice was served concerning only the transfer pricing relating solely to the tax year 2011 (taxes, penalties and interest amounting to €/thou. 11). On 5 February 2016 the company filed an appeal against the Assessment Notice with the a request for mediation due to modest amount; the hearing to deal with the merits was held on 28 November 2016. The Commission of first instance filed its judgement on 13 December 2016, upholding the company’s appeal and cancelling the Assessment Notice. The Revenues Agency served the writ of appeal on 6 June 2017.

3. Tax audit of BIM Vita under tax transparency regime The company Bim Vita, 50% owned by Banca Intermobiliare and 50% by UnipolSai, is subject to IRES taxation under the system of fiscal transparency pursuant to Art. 115 of the TUIR (Income Tax Consolidation Act). In November 2014 a tax audit of Bim Vita concerning the 2011 tax year was concluded with notification of the related Tax Inspection Report (PVC). In November and December 2016, Bim Vita and its shareholders BIM and UnipolSai were served assessment notices bearing an adjustment of the taxable income for the individual shareholders of €/thou. 55, amounting to higher IRES of €/thou. 15 The other shareholder, UnipolSai confirmed its intention to proceed with payment of the amounts requested and thus acquiesce to the assessment notice, though not agreeing in full with its findings, bearing in mind the modest amounts in question and to avoid the lengthy litigation on purely technical aspects. Acknowledging this decision of the other shareholder and given the modest amounts, Banca Intermobiliare decided to align itself with the decision taken by Unipol and proceed with concluding the assessment through acquiescence and so proceeded to allocate the amounts for the higher taxes stated by the Revenues Agency. Then, on 17 January 2017 it made the payment to the Tax Authority of the amounts due.

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Property, plant and equipment, and intangible assets

The fixed assets, totalling €/Mln 160 consisted of a shareholding in an associated company of €/Mln 13.7; property, plant and equipment and intangible fixed assets of €/Mln 96.9 and goodwill entered in previous years against a business combination for €/Mln 49.4.

Fixed assets (Thousands of €) 30.06.2017 31.12.2016 Change Change 31.12.2016 pro-forma absolute % Fixed assets: - Equity investments 13,677 14,020 (343) -2.4% 14,020 - Intangible and tangible 96,907 97,809 (902) -0.9% 97,779 - Goodwill 49,446 49,446 - - 49,446 TOTAL FIXED ASSETS 160,030 161,275 (1,245) -0.8% 161,245

The “ shareholdings ” recorded in the consolidated Financial Statements refer solely to the non- controlling shareholding in the share capital of Bim Vita S.p.A. held by Banca Intermobiliare and UnipolSai (UGF Group) at 50% each, which is subject to the control of the latter pursuant to contractual commitments. At 30.06.2017, the equity investment measured using the equity method amounted to €/Mln 13.7 (€/Mln 14 at 31.12.2016). The negative change of €/Mln 0.343 was due to the share of the decrease in the reserves of €/Mln 1.196 and the positive change in the period’s profits (of €/Mln 0.853). It should also be noted that Banca Intermobiliare and UnipolSai, acting as parent companies of the shareholding in Bim Vita, have exercised the option for the fiscal transparency regime pursuant to art. 115 of the Income Tax Law for the period 2016-2018.

The “ tangible and intangible fixed assets ” amounted to a total of €/Mln 96.9 down compared to €/Mln. 97.8 at 31.12.2016. Intangible fixed assets amounted to €/Mln 1.1 and are mainly attributable to software whereas property, plant and equipment amounted to €/Mln 95.8 of which €/Mln 93.6 relating to real estate properties (corporate headquarters and branches located in Turin, Milan, Rome, Cuneo and Bologna) and a further €/Mln 2.2 mostly regarding furniture, fittings and devices in use at the headquarters and branches.

As for the “ goodwill ”, recognised at 30.06.2017 for €/Mln 49.4 (Symphonia goodwill), although no loss indicators were observed and despite the annual periodicity of the test required by the accounting standards, impairment tests were carried out in view of approval of Banca Intermobiliare’s 2017-2021 Business Plan. The result of the test carried out was that no impairment was found. As regards the methodology used in the tests carried out please see the Section - Accounting policies of the Notes to the Statements of the present Consolidated Half-Yearly Financial Report.

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Property held for sale

For a more correct representation and easier readability of the financial statement data, Banca Intermobiliare reclassified the properties from loan recovery operations from the item “Other assets” in the balance sheet to the item “Property held for sale”. These properties were assessed according to the international accounting standard IAS 2 – Inventories. At 30.06.2017, the exposure on the balance sheet of property held for sale amounted to €/Mln 21.9 (unchanged compared to 31.12.2016).

Non-current assets/liabilities held for sale

At its meeting held on 9 and 10 February 2017, the Board of Directors approved the guidelines of the strategic development plan which define Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. and Bim Insurance Brokers S.p.A. as non-strategic investments. As from 31.12.2016 and on the basis of IFRS 5, Banca Intermobiliare reclassified its controlling stakes in BIM Suisse (including its subsidiary Patio Lugano S.A.) and in BIM Insurance Brokers S.p.A. from the item “Equity investments” to the item “Non-current assets and disposal groups held for sale”. On 31 May 2017 the Board of Directors decided not to proceed with the disposal of BIM Insurance Brokers S.p.A.

Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. Last November, after receiving informal expressions of interest shown by market counterparties for the Swiss investee, Banca Intermobiliare had given a mandate to the advisors Rothschild and Orrick to assess any possibilities of realising the same. During the period specific informative material was made available to certain selected counterparties and on 26 April 2017 the advisors received, for the Swiss bank, a number of binding offers. On 5 May 2017, Banca Intermobiliare gave Banca Zarattini & Co. an exclusive period of 30 days starting from 6 June 2017, and subsequently extended up to 31 July 2017. On 31.07.2017 Banca Zarattini & Co. and Banca Intermobiliare S.p.A signed an agreement for the sale of 100% of the share capital of BIM Suisse SA held by BIM. Execution of the transaction is subordinated to fulfilment of the following conditions: authorisation by the Swiss Supervisory Authority, completion of the purchase by BIM (or an entity indicated by BIM) of the property company Patio Lugano, as of today held by BIM Suisse, and the definition of a loan position currently being analysed. The price agreed of CHF/Mln 40.4 is subject to a “price adjustment” mechanism on the basis of the AUM at the closing date and on the basis of the economic performance of the equity investment between the date on which the agreement was signed and the closing date.

For the purposes of assessing the equity investment in BIM Suisse S.A., on the basis of the price agreed, no evidence was found of sale values less than the book value that determine situations of impairment to be accounted for in application of IFRS 5.

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Other asset and liability items

The “Other assets items” amounting to €/Mln 190.5 (€/Mln 193.3 as at 31.12.2016) consisted of “Tax assets” totalling €/Mln 121.1 (€/Mln 122.8 at 31.12.2016) and “Other Assets” totalling €/Mln 69.4 (€/Mln 70.6 at 31.12.2016).

Other asset items (Thousands of €) 30.06.2017 31.12.2016 Change Change 31.12.2016 pro-forma absolute % Tax assets 121,061 122,753 (1,692) -1.4% 122,715 a) current 39,197 16,650 22,547 135.4% 16,612 b) deferred 81,864 106,103 (24,239) -22.8% 106,103 Other Assets 69,420 70,565 (1,145) -1.6% 70,514 TOTAL OTHER ASSET ITEMS 190,481 193,318 (2,837) -1.5% 193,229

The “Tax assets” consist of “Current tax assets” for €/Mln 39.2 and “Deferred tax assets” (DTAs) for €/Mln 81.9 of which referring primarily to prepaid taxes convertible into tax credits, pursuant to art. 2, paragraph 55, of Italian Law Decree 225/2010 and subsequent regulatory changes, for €/Mln 48.9 (€/Mln 31.7 for write-downs on loans and €/Mln 17.2 for realignment of goodwill performed according to Italian Legislative Decree 98/11).

DTA - Deferred tax assets (Thousands of €) 30.06.2017 31.12.2016 Change Change absolute % Noble DTAs 48,925 71,634 (22,709) -31.7% - generated on loans 31,699 47,025 (15,326) -32.6% - generated on goodwill 17,226 24,609 (7,383) -30.0% Non-noble DTAs 10,058 11,600 (1,542) -13.3% DTAs from tax losses 22,881 22,869 12 0.1% Total DTAs - Deferred tax assets 81,864 106,103 (24,239) -22.8%

It should be noted that during the first half of 2017, steps were taken, pursuant to Art. 2, paragraph 55, of Italian Law Decree 225/2010, to convert the deferred tax assets into tax credits for Banca Intermobiliare for a total amount of €/Mln 15.3, since for the same a loss had been recognised in the previous financial year. At the moment of setting aside the deferred taxation of the half-year period to 30.06.2017, the Bank allocated non-noble DTAs, while it has not yet allocated DTAs deriving from the tax loss of the period. As regards the recoverability of deferred tax assets, a “probability test” was carried out on the basis of the 2017-2021 business plan approved by the Board of Directors of BIM on 18 July 2017 without noting impairment situations. For more information please see the section - Accounting Policies of the Notes to the Statements of the present “Condensed Consolidated Half-Yearly Financial Statements”.

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The “Other assets” amounted to €/Mln 69.4 (€/Mln 70.6 as at 31.12.2016) with a slight reduction compared to the previous year, and mainly consisted of tax receivables from the Tax Authority amounting to €/Mln 31.7 (€/Mln 44.2 at 31.12.2016), and items being processed totalling €/Mln 19.6 (€/Mln 11.3 at 31.12.2016).

Other liability items (Thousands of €) 30.06.2017 31.12.2016 Change Change 31.12.2016 pro-forma absolute % Tax liabilities 18,730 19,616 (886) -4.5% 27,756 a) current 248 661 (413) -62.5% 8,934 b) deferred 18,482 18,955 (473) -2.5% 18,822 Other liabilities 68,732 90,560 (21,828) -24.1% 85,549 TOTAL OTHER LIABILITY ITEMS 87,462 110,176 (22,714) -20.6% 113,305

The “Other liability items” amounted to €/Mln 87.5 (€/Mln 110.2 as at 31.12.2016), and included “Tax liabilities” of €/Mln 18.7 (€/Mln 19.6 as at 31.12.2016), and “Other liabilities” of €/Mln 68.7 (€/Mln 90.6 at 31.12.2016). “Other liabilities” consist mainly of taxes payable to the Tax Authority for €/Mln 29.5 (€/Mln 29.1 at 31.12.2016) and trade payables totalling €/Mln 17 (€/Mln 14.5 at 31.12.2016).

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Shareholders’ equity and regulatory aggregates

The total consolidated Shareholders’ equity of Banca Intermobiliare at 30.06.2017, including the result for the period amounted to €/Mln 213.8 against €/Mln 237.2 recorded in the previous year.

Consolidated equity (Thousands of €) 30.06.2017 31.12.2016 Change Change absolute % Share Capital 156,209 156,209 - - Treasury shares (-) (29,731) (29,731) - - Reserves 83,000 98,990 (15,990) -16.2% Share premium reserve - 77,823 (77,823) -100.0% Valuation reserves 28,887 26,905 1,982 7.4% Profit (Loss) for the year (24,857) (93,371) 68,514 73.4% Group equity 213,508 236,825 (23,317) -9.8% Equity attributable to non-controlling interests 339 375 (36) -9.6% TOTAL EQUITY 213,847 237,200 (23,353) -9.8%

The change in equity during the period, amounting to €/Mln 23.4, was determined mainly by the loss for the period of €/Mln 24.9. The loss for the period related to financial year 2016 was entirely covered by using equity reserves (€/Mln 77.8 of Share premium reserve, €/Mln 3.4 of Legal Reserve and €/Mln 1.9 of Other Reserves).

Summary of changes in consolidated equity (Thousands of €) Equity pertaining Group to non- Total equity equity controlling interests Equity at 31.12.2016 236,825 375 237,200 Valuation reserves 1,982 (1) 1,981 Valuation reserves for adjustment of the fair value of the AFS portfolio 2,654 (1) 2,653 Readjustment of reserves for companies measured with the equity method (46) (46) Valuation reserves referring to assets held for sale (638) - (638) Actuarial gains (losses) on defined benefit pension plans 12 - 12 Share premium reserve (77,823) - (77,823) Transfer of fund for purchase of treasury shares due to expiry of shareholders’ authorisation (77,823) - (77,823) Reserves (15,990) 94 (15,896) Result carried forward from previous year (15,548) 93 (15,455) Other changes (442) 1 (441) Changes on the result 68,514 (129) 68,385 Reversal of result from previous year 93,371 (93) 93,278 Profit (loss) for the period (24,857) (36) (24,893) Equity at 30.06.2017 231,508 339 213,847

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Own Funds and regulatory capital ratios

Legislative references Banca Intermobiliare calculated its own funds and the banking regulatory requirements on the basis of the Bank of Italy Circular No. 285 (Supervisory provisions for banks) of 17 December 2013 and subsequent amendments, Circular No. 286 (“Instructions for completing prudential reports for banks and stock broking companies”) and Circular No. 154 which governs the reporting schedules and technical aspects related to regulatory reporting. The regulations issued by the Bank of Italy assimilate the harmonised rules for banks and investment firms contained in Regulation (EU) no. 575/2013 (“CRR”) and in Directive 2013/36/EU (“CRD IV”) transposing into the European Union the standards defined by the Basel Committee on banking supervision (the so-called “Basel III”) to limit the risk of insolvency of financial intermediaries by defining for all financial intermediaries the rules for calculating regulatory capital, risk assets and prudential requirements.

European Regulations With the EU Regulation no. 1024/2013 of 15 October 2013, the European Central Bank (ECB) was given specific tasks relating to prudential supervision of credit institutions, in cooperation with the national supervisory authorities of the participating countries, in the framework of the Single Supervisory Mechanism (SSM). Since 4 November 2014 the ECB in collaboration with the Bank of Italy, has been responsible for the prudential supervision of “significant banks ”, as identified in the list published by the ECB on 4 September 2014.

The European prudential supervision for the former Veneto Banca and for Banca Intermobiliare With effect from 4 November 2014, Veneto Banca (in its capacity as “significant bank”), and indirectly Banca Intermobiliare as its subsidiary, were placed under the direct supervision of the European Central Bank, in cooperation with the Bank of Italy. Following the decisions of the European Authorities and in accordance with Italian Law Decree no. 99 of 25 June 2017, the Ministry of the Economy and Finance, on the proposal of the Bank of Italy, made Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. subject to administrative compulsory liquidation. Currently the competent authorities are carrying out a process of assessing the qualification of Banca Intermobiliare as a significant supervised subject for the purpose of a possible classification of the Bank as less significant. In this context the direct supervision of the ECB on the supervised subject would end one month after notification of the decision. At the same time the Bank would become subject to the direct supervision of the Bank of Italy.

In this context, Banca Intermobiliare determined capital requirements and Own Funds identified according to the Basel III rules, also preparing consolidated capital requirements and Own Funds for informative purposes and on a voluntary basis in order to give continuity of market disclosures.

Under the rules on “Own Funds” and “Capital ratios”, the calculations were made by taking into account the transitional measures currently in force, as well as the so-called “prudential filters” and regulatory adjustments and including among its Own Funds only profits certified by persons outside the entity (articles 4 (121), 26 (2) and 36 (1) point (a) of the CRR) according to the procedures confirmed by the Bank of Italy in its Communication dated 22 January 2016 “Calculability of period or end-of-year profits in Common Equity Tier 1”.

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Consolidated Own Funds of Banca Intermobiliare As of 30.06.2017 it is confirmed that there is adequate capital strength in relation to the criteria set out in the Basel III accord. Consolidated Own Funds, calculated on a voluntary basis, are €/Mln 144.3 (€/Mln 159.8 at 31.12.2016), while the surplus of Own Funds on the risk-weighted assets amounted to €/Mln 45.3 (€/Mln 54.1 at 31.12.2016). The Capital conservation buffer of €/Mln 15.5 was up compared to €/Mln 8.3 at 31.12.2016.

Consolidated regulatory aggregates (Millions of €) 30.06.2017 31.12.2016 Change Change absolute % Own Funds 144.3 159.8 (15.0) -9.4% Surplus of Own Funds 8 45.3 54.1 (9.0) -16.6% Capital conservation buffer 9 15.5 8.3 7.2 87.8% Total RWAs 1,328.8 1,411.7 (82.9) -5.9%

Consolidated Own Funds (Millions of €) 30.06.2017 31.12.2016 A. Common Equity Tier 1 (CET1) before application of prudential filters 213.5 236.8 B. CET1 prudential filters (+/-) (0.5) (0.6) C. CET1 before items to be deducted and the effects of the transitional arrangements 213.0 236.2 D. Items to be deducted from CET1 (71.4) (73.9) E. Transitional arrangements - Impact on CET1 (+/-), including non-controlling interests subject to transitional rules 1.2 (5.2) F. Total Common Equity Tier 1 (CET1) 142.7 157.2 G. Additional Tier 1 Capital (AT1) before items to be deducted and effects of transitional arrangements - - H. Items to be deducted from AT1 - - I. Transitional arrangements - Impact on AT1 (+/-), including instruments issued by subsidiaries and included in the AT1 due to transitional rules - - L. Additional Tier 1 - AT1 - - M. Tier 2 Capital (T2) before items to be deducted and effects of transitional arrangements - N. Items to be deducted from T2 - O. Transitional arrangements - Impact on T2 (+/-), including instruments issued by subsidiaries and included in the T2 due to transitional rules 1.6 2.6 P. Total Tier 2 Capital - T2 (M - N + /- O) 1.6 2.6

Q. Total Own Funds (F + L + P) 144.3 159.8

On the basis of Article 467, paragraph 2, of the CRR, implemented by the Bank of Italy with Circular No. 285, Banca Intermobiliare adopted the option of excluding from its Own Funds unrealised profits or losses relating to exposures to central governments classified under “Financial assets available for sale (AFS)”. Following the entry into force of Regulation (EU) No. 2016/445 of the ECB, 80% of realised losses were included in the CET 1 calculation in the first half of 2017, and 20% of unrealised profits were excluded.

8 Surplus of Own Funds: difference between “Own Funds” and “Risk-weighted assets” (not including own requirements for specific funds). 9 Capital conservation buffer: this is a reserve aimed at preserving the minimum level of regulatory capital in times of adverse market through the94 provision of capital resources of high quality in periods characterized by market tensions, and is equal to 0.625% of risk-weighted assets.

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Risk Weighted Assets (RWA) 10 and Consolidated capital requirements (weighted amounts) (Millions of €) Risk type 30.06.2017 30.06.2016 Absolute change Change % Credit and counterparty risk 72.5 85.6 (13.1) -15.3% Market risk 8.6 2.3 6.3 273.9% Operational risk 17.8 17.8 0.0 0.0% Other minimum requirements 7.3 7.3 0.0 0.0% Total minimum requirements 106.2 112.9 (6.7) -5.9%

Risk type 30.06.2017 30.06.2016 Absolute change Change % Credit and counterparty risk 906.7 1,069.3 (162.6) -15.2% Market risk 108.0 28.3 79.7 281.6% Operational risk 222.7 222.7 0.0 0.0% Other minimum requirements 91.4 91.4 0.0 0.0% Total RWAs 1,328.8 1,411.7 (82.9) -5.9%

During the period, the risk-weighted assets related to receivables declined by €/Mln 162.6, owing essentially to the reduction of loans to customers and to the reduction of the portfolio of AFS securities, while the market risks increased by €/Mln 79.7 in relation to the increase of the portfolio of HFT securities on the bank and of new positions in being on the subsidiary Symphonia. Following the trend in Risk Weighted Assets, the capital absorption as of 30.06.2017 decreased by €/Mln 6.7

Consolidated regulatory capital ratios 30.06.2017 31.12.2016 Change absolute CET1 - Fully Phased 10.66% 11.52% (0.86) CET1 - Phased in 10.74% 11.13% (0.39) T1 - Additional Tier 1 Capital 10.74% 11.13% (0.39) TCR - Total Capital Ratio 10.86% 11.32% (0.46) Index of capitalisation 11 1.36 1.41 (0.06)

As of 30.06.2017 the CET 1 - Phased in was 10.74%, slightly down compared to the ratio at the end of the year, while the CET 1 -Fully Phased, estimated applying the parameters indicated when fully implemented from 1 January 2019, came out at 10.66%. We can note that the consolidated regulatory capital ratios of Banca Intermobiliare are higher than the minimum levels required by the Basel III accord, in relation to 30.06.2017 (CET1 Phased in 5.75%, T1 7.25% and TCR 9.25%) and in relation to the fully phased-in requirements as at 31.12.2019 (CET1 Fully Phased in 7%, T1 8.5% and TCR 10.5%).

For further quantitative and qualitative information on capital and regulatory capital ratios, please refer to the Explanatory Notes to the consolidated financial statements Part F “Information on consolidated equity” Section 2 of the financial statements for the year ended 31 December 2016.

10 Risk-Weighted Assets including specific requirements 9511 Index of capitalisation: difference between “Own Funds” and “Total Capital Requirements”.

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Consolidated economic results

The explanatory notes and comments below include an analysis of the consolidated/reclassified economic results of Banca Intermobiliare at 30.06.2017. The comparative figures at 30.06.2016 have been placed in the “pro forma” column to reflect the reclassification of the subsidiaries Bim Suisse, including its subsidiary Patio Lugano, among the non-current assets held for sale in accordance with IFRS 5. The disclosures relating to the changes were prepared with reference to the pro-forma details; however, for completeness of information the comparative figures published in the Consolidated Half- Yearly Financial Report at 30.06.2016.

Net interest income (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % Interest income - financial assets held for trading 615 2,347 (1,732) -73.8% 2,351 - financial assets available for sale 8,308 9,282 (974) -10.5% 9,282 - on loans to banks 558 504 54 10.9% 506 - on loans to customers 6,719 10,949 (4,230) -38.6% 11,194 Total interest income 16,200 23,082 (6,882) -29.8% 23,333 Interest expenses - on payables due to banks and other financing bodies (116) (402) 286 70.6% (469) - on payables due to customers (2,384) (2,789) 405 14.6% (2,789) - securities in issue (3,023) (5,187) 2,164 41.7% (5,187) - financial liabilities held for trading (130) (722) 592 82.0% (722) - hedging differentials (4,389) (2,680) (1,709) -63.8% (2,680) Total interest expense (10,042) (11,780) 1,738 14.8% (11,847) NET INTEREST INCOME 6,158 11,302 (5,144) -45.5% 11,486

As at 30.06.2017, net interest income stood at €/Mln 6.2 with a decrease of 45.5%, YOY (€/Mln 11.3 at 30.06.2016).

Net interest income – Financial investments (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % Net interest “trading book” - financial assets held for trading 615 2,347 (1,732) -73.8% 2,351 - financial liabilities held for trading (130) (722) 592 82.0% (722) Total “trading book” interest 485 1,625 (1,140) -70.2% 1,629 Net interest “banking book” - financial assets available for sale 8,308 9,282 (974) -10.5% 9,282 - hedging differentials (4,389) (2,680) (1,709) -63.8% (2,680) Total “banking book” interest 3,919 6,602 (2,683) -40.6% 6,602 Net interest income - Financial investments 4,403 8,227 (3,824) -46.5% 8,231

Net interest income on financial investments (“trading book”, “banking book” and related “hedging differentials”) came out at €/Mln 4.4, with a decrease of 46.5% compared to €/Mln 8.2 at 30.06.2016. The decline in the period is ascribable both to lower yields on securities and to the reduction in overall 96

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exposure in (trading book and banking book) debt securities, down by €/Bln 1.124 at 30.06.2016 to €/Mln 0.5 at 30.06.2017. The reduction in the portfolio of securities – which began already towards the end of 2016 – continued also in the first half of 2017 in order to limit the Bank’s exposure to market and counterparty risks, also in a strategy involving the “derisking” in relation to countries at the greatest risk. The net interest income of the “trading book” amounted to €/Mln 0.5 (€/Mln 1.6 at 30.06.2016) and was down by 70.2%, as was the net interest income of the “banking book” which recorded a reduction of 40.6% to €/Mln 3.9 (€/Mln 6.602 at 30.06.2016).

Net interest income - Customers (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % - interest income on loans to customers 6,719 10,949 (4,230) -38.6% 11,194 - interest expenses on payables due to customers (2,384) (2,789) 405 14.5% (2,789) - interest expenses on securities in issue (3,023) (5,187) 2,164 41.7% (5,187) Net interest income - Customers 1,314 2,973 (1,661) -55.9% 3,218

Net interest income from customers (loans and direct deposits from customers) amounted to €/Mln 6.7 at 30.06.2017, down compared to 30.06.2016. A reduction in interest income from customers was recorded in the period of €/Mln 4.2 due to the contraction in balances of performing loans and due to the reduction in the Euribor rate with which they are linked. As for the charges paid to customers on direct deposits, the decrease was €/Mln 0.4 on customer deposits and €/Mln 2.2 on bond loans.

Net interest income – Banking System (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % - interest income on loans to banks 558 504 54 10.7% 506 - interest expenses on payables due to banks and other lenders (116) (402) 286 71.1% (469) Net interest income – Banking System 442 102 340 333.3% 37

Net interest income from the banking system was a positive €/Mln 0.4 at 30.06.2017, an increase compared to €/Mln 0.1 recorded in the previous year. The positive effect is mainly due to the reduction of the average net financial position in relation to banks.

Operating income (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % pro forma NET INTEREST INCOME 6,158 11,302 (5,144) -45.5% 11,486 Net fee and commission income 24,030 29,437 (5,407) -18.4% 31,021 Net gains (losses) on financial operations 14,138 5,419 8,719 160.9% 5,618 OPERATING INCOME 44,326 46,158 (1,832) -4.0% 48,125

The operating income amounted to €/Mln 44.3 a 4% reduction compared to the first half of the previous year, with the higher revenue deriving from financial operations made it possible to offset the reduction in the contribution of the other items.

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Net fee and commission income (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % Fee and commission income - trading, administration and order collection 5,927 9,316 (3,389) -36.4% 10,464 - assets under management 24,859 28,196 (3,337) -11.8% 28,920 - financial advice 970 921 49 5.3% 921 - other banking services 1,724 2,340 (616) -26.3% 2,414 Total fee and commission income 33,480 40,773 (7,293) -17.9% 42,719 Fee and commission expenses - remuneration of the commercial network and other distributors (7,784) (9,109) 1,325 14.5% (9,222) - trading and administration (1,422) (1,755) 333 19.0% (1,966) - other banking services (244) (472) 228 48.3% (510) Total fee and commission expenses (9,450) (11,336) 1,886 16.6% (11,698) TOTAL NET FEE AND COMMISSION INCOME 24,030 29,437 (5,407) -18.4% 31,021

Fee and commission income reached €/Mln 33.5 down compared to €/Mln 40.8 recorded in the first half of 2016. The contraction regarded both the administered segment and the managed segment following the reduction in deposits.

Fee and commission expenses amounted to €/Mln. 9.4 down by 16.6% compared to 30.06.2016. The item “return to commercial network,” in addition to the remuneration of the financial promoters of Banca Intermobiliare, consisted of commission returns paid to other institutional distributors. For operational purposes, as indicated at the bottom of the reclassified income statement, the variable components of the remuneration of private bankers who are employees were also reclassified under fee and commission expenses and recognised in the financial statements under “Personnel expenses”.

Commission on assets under management (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % Commission on assets under management - individual asset management 8,343 10,705 (2,362) -22.1% 11,283 - collective asset management 11,035 11,718 (683) -5.8% 11,718 - distribution of third-party services 5,481 5,773 (291) -5.1% 5,919 Total commissions on assets under 24,859 28,196 28,920 management (3,337) -11.8%

Asset management recorded fees on an individual basis of €/Mln 8.3 (-22.1% yoy), commissions on a collective basis of €/Mln 11.1 (-5.8% yoy), and fees for third party service delivery of €/Mln 5.5 (-5% yoy).

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Performance fees (Thousands of €) 30.06.2017 30.06.2016 Change Change Absolute % Performance fees - on individual asset management 274 14 260 1857.1% - on collective asset management 159 - 159 N/a Total performance fees 433 14 419 2992.9%

Net gains (losses) on financial operations (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute %

Net gains (losses) on financial operations Dividends 312 681 (369) -54.2% 681 Net gains (losses) on trading instruments 4,752 2,599 2,153 82.8% 2,798 Transactions on AFS securities and financial liabilities 8,948 2,544 6,404 251.7% 2,544 Net gains (losses) on hedging instruments 126 (405) 531 131.1% (405) Net gains (losses) on financial operations 14,138 5,419 8,719 160.9% 5,618

At 30.06.2017, net profit (loss) on financial operations came out at €/Mln 14.1 up compared to €/Mln 5.4 recorded in the first half of 2016, thanks to the profits made on sales of securities recognised among financial assets available for sale, in the context of the aforementioned “derisking” strategy.

Dividends (Thousands of €) 30.06.2017 30.06.2016 Change Change pro forma Absolute % Dividends and similar income - from financial assets held for trading 32 67 (35) -52.2% - from financial assets available for sale 280 614 (334) -54.4% TOTAL DIVIDENDS AND SIMILAR INCOME 312 681 (369) -54.2%

Dividends recorded in the period amounted to €/Mln 0.3 down compared to €/Mln. 0.7 at 30.06.2016.

Net profit (loss) on trading instruments (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % Net profit (loss) on trading - On-balance-sheet financial instruments 1,269 28 1,241 4432.1% 34 - Derivative financial instruments 2,407 1,668 739 44.3% 1,668 Total financial instruments (on-balance-sheet and derivatives) 3,676 1,696 1,980 116.7% 1,702 - Other instruments: foreign-exchange differences 1,076 903 173 19.2% 1,096 NET PROFIT (LOSS) ON TRADING INSTRUMENTS 4,752 2,599 2,153 82.8% 2,798

Net gains (losses) on trading instruments amounted at 30.06.2017 to €/Mln 4.8, an increase compared to the result of the first half of the previous year which had come out at €/Mln 2.6. In particular net gains 99

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(losses) on trading instruments (on-balance-sheet and derivatives), generated revenue of €/Mln 3.7, up compared to €/Mln 1.7 at 30.06.2016.

Profit (loss) on the sale of other financial instruments (Thousands of €) 30.06.2017 30.06.2016 Change Change Absolute % Profit (loss) on operations on AFS securities and financial liabilities - financial assets available for sale 8,954 2,644 6,310 238.7% - financial liabilities (6) (100) 94 94.0% NET PROFIT (LOSS) ON THE SALE OF OTHER FINANCIAL INSTRUMENTS 8,948 2,544 6,404 251.7%

Gains on the sale of other financial instruments recorded an excellent performance, coming out at €/Mln 8.9 at 30.06.2017, against €/Mln 2.5 at 30.06.2016. The result benefited mainly from sales of securities recognised among “financial assets available for sale” of which €/Mln 6.8 for debt securities, €/Mln 1.15 for equity securities, €/Mln for UCITS units. Net profit (loss) on “financial liabilities” refers to marginal financial operations related to the activity of repurchasing own bonds.

Net gains (losses) on hedging instruments Finally, the result of financial operations was affected positively for €/Mln 0.126 (a loss of €/Mln 0.405 at 30.06.2016) by the ineffective part related to hedging activities carried out on the fair value of some securities.

Operating profit (loss) (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % OPERATING INCOME 44,326 46,158 (1,832) -4.0% 48,125 Operating expenses (40,606) (44,892) 4,286 9.5% (47,493) OPERATING PROFIT (LOSS) 3,720 1,266 2,454 193.8% 632

At 30.06.2017, result of operations came out at €/Mln 3.7 (€/Mln 1.3 at 30.06.2016), an improvement compared to the first half of the previous year thanks to the containment of the operating costs which more than offset the drop in net operating income.

Operating expenses (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % Administrative expenses (40,848) (43,415) 2,567 5.9% (45,794) - personnel expenses (21,768) (23,363) 1,595 6.8% (24,928) - other administrative expenses (19,080) (20,052) 972 4.8% (20,866) Operating amortisation and depreciation (1,271) (1,338) 67 5.0% (1,601) Other operating expenses (income) 1,513 (139) 1,652 N/a (98) OPERATING EXPENSES (40,606) (44,892) 4,286 9.5% (47,493)

The operating expenses amounting to €/Mln 40.6 (€/Mln 44.9 at 30.06.2016) improved by 9.5% YoY, thanks both to the reduction in administrative expenses and to the improvement in other operating income and expenses.

Personnel expenses amounted to €/Mln 21.8 at 30.06.2017 and were down by 6.8% compared to the 100

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first half of 2016. The decrease is attributable to the reduction in the number of employed personnel that occurred in the period (from 572 at 30.06.2016 to the current 537); the figure is measured net of resources related to the subsidiary held for sale. Personnel costs consist of salaries and related employed personnel expenses (adjusted for the secondment of personnel into and out of the Parent Company), emoluments to directors and the board of statutory auditors; also, in order to give a better management representation, the variable part of the remuneration of employees belonging to the commercial network has been reclassified among fee and commission expenses.

Other administrative expenses amounted to €/Mln 19.1, down by 4.8% compared to the first half of the previous year. The reduction in expenses was obtained thanks to a careful activity of increasing efficiency and rationalising costs. The major cost items include charges related to the maintenance and leasing of real estate for the branches, expenditure relating to info providers and data transmission and costs relating to outsourcing and legal services and various advice.

Operating amortisation and depreciation totalled €/Mln 1.3 at 30.06.2017 and was down compared to the previous period by 5%. We can remind you that the properties from credit recovery operations which were described in the balance sheet, were recognised pursuant to the international accounting standard “IAS 2” and therefore were not depreciated.

Other operating income/expenses mainly include income from rents on properties used for purposes other than the main activity, expenses for improvements of assets owned by third parties, costs for settling disputes and transactions that exceeded the amount allocated to the provision for risks and charges, charges for the payment of penalties and interest to the tax authorities and other contingent assets and liabilities for costs and revenues which do not accrue to the period. As of 30.06.2017 other operating expenses and income were a positive €/Mln 1.5 (a negative €/Mln 0.1 at 30.06.2016) owing mainly to contingent assets.

Current profit (loss) In order to make the reclassified profit and loss account more clearly readable, the current result is shown as “ profit (loss) before non-recurring components ” which is the result of operations less write- downs on loans, net provisions for liabilities and charges and net profit (loss) of investees measured using the equity method.

Profit (loss) before non-recurring components (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % OPERATING PROFIT (LOSS) 3,720 1,266 2,454 193.8% 632 Net write-downs on loans (24,041) (12,863) (11,178) -86.9% (12,863) Net provisions for risks and charges (2,136) (3,727) 1,591 42.7% (3,727) Net profit (loss) of subsidiaries carried at equity 853 782 71 9.1% 782 PROFIT (LOSS) BEFORE NON- RECURRING COMPONENTS (21,604) (14,542) (7,062) -48.6% (15,176)

As of 30.06.2017, there was a loss before non-recurring components of €/Mln 21.6 (a loss of €/Mln 14.5 at 30.06.2016) after calculating write-downs on loans and net provisions for risks and charges, and measuring the associate (Bim Vita) using the equity method.

Net write-downs on loans amounted to €/Mln 24, up compared to the write-downs made in the first half of the previous year which amounted to €/Mln 12.9. The provisions set aside during the period were made in keeping with the current policies, which provide for periodic revisions of estimates regarding 101

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foreseeable losses, with reference both to the economic and financial situation of customers, and to the evolution of the value of the guarantees received.

As regards “net allocations to provisions for risks and charges ” of €/Mln 2.1 (€/Mln 3.7 at 30.06.2016) during the period provisions for risks were updated both for positions in being at the end of the year, and in relation to the new disputes and claims raised against the company. For more information please see what was previously illustrated in the section “Provision for risks and charges”.

“The net profit (loss) of subsidiaries measured using the equity method”, a positive €/Mln 0.9, was entirely due to the portion of the profit for the period of the equity investment in Bim Vita S.p.A. 50% of which is owned by UnipolSai (UGF Group), which was measured in the accounts using the equity method.

Profit (loss) before tax (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % PROFIT (LOSS) BEFORE NON- RECURRING COMPONENTS (21,604) (14,542) (7,062) -48.6% (15,176) Write-downs on financial instruments (1,678) (2,292) 614 26.8% (2,292) PROFIT (LOSS) BEFORE TAX (23,282) (16,834) (6,448) -38.3% (17,468)

As of 30.06.2017 “ write-downs on financial instruments” amounted to €/Mln 1.7 (€/Mln 2.3 at 30.06.2016) after the results of the impairment test performed on the AFS portfolio, according to the methods described in Part A “Accounting policies” of the Explanatory Notes to the annual Financial Statements. The write-downs in the period regarded mainly the private equity fund Charme III for €/Mln 1.5 and other securities for marginal amounts.

Profit (loss) from continuing operations after tax (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % PROFIT (LOSS) BEFORE TAX (23,282) (16,834) (6,448) -38.3% (17,468) Income tax for the period 207 2,813 (2,606) -92.6% 2,813 PROFIT (LOSS) FROM CONTINUING OPERATIONS AFTER TAX (23,075) (14,021) (9,054) -64.6% (14,655)

There was a loss on continuing operations after tax at 30.06.2017 of €/Mln 23.1 (-€/Mln 14 at 30.06.2016). The current and deferred tax burden, which took into account the recoverability of taxes, based on of the 2017-2021 business plan approved by the Board of Directors in its meeting of 18 July 2017, was a positive €/Mln 0.2.

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Profit (Loss) for the period (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % PROFIT (LOSS) FROM CONTINUING OPERATIONS AFTER TAX (23,075) (14,021) (9,054) -64.6% (14,655) Profit (Loss) of assets held for sale, net of tax (1,818) (671) (1,147) -170.9% (37) PROFIT (LOSS) FOR THE PERIOD (24,893) (14,692) (10,201) -69.4% (14,692)

There was a loss for the period to 30.06.2017 of €/Mln 24.9 (a loss of €/Mln 14.7 at 30.06.2016) after determining the losses of assets held for sale, after tax, which were €/Mln 1.8 (result for the period of the subsidiary BIM Suisse, the indirect equity investment in Patio Lugano and net of intercompany relationships).

Group Profit (Loss) for the period (Thousands of €) 30.06.2017 30.06.2016 Change Change 30.06.2016 pro forma Absolute % PROFIT (LOSS) FOR THE PERIOD (24,893) (14,692) (10,201) -69.4% (14,692) Profit attributable to non-controlling interests 36 31 5 16.1% 31 GROUP PROFIT (LOSS) FOR THE PERIOD (24,857) (14,661) (10,196) -69.5% (14,661)

The Group loss for the period was €/Mln 24.9 (a loss of €/Mln 14.7 at 30.06.2016) after determining the portion attributable to non-controlling interests (for the non-controlling interests in the subsidiary BIM Insurance Brokers S.p.A.).

Consolidated comprehensive income

During the first half of 2017, the consolidated comprehensive income of Banca Intermobiliare was a negative €/Mln 22.9 (a negative €/Mln 20.1 at 30.06.2016) of which €/Mln 22.9 attributable to components pertaining to the consolidating company and €/Mln 0.037 as a negative result pertaining to non-controlling interests.

Breakdown of comprehensive income (Thousands of €) 30.06.2017 30.06.2016 Change Change absolute % Profit (Loss) for the year (24,893) (14,692) (10,201) -69.4% Financial assets available for sale 2,653 (5,227) 7,880 150.8% Non-current assets held for sale (638) - (638) n/a Other minor changes (34) (149) 115 77.2% Comprehensive income (22,912) (20,068) (2,844) -14.2% of which pertaining to non-controlling interests (37) (31) (6) -19.4% of which pertaining to BIM (22,875) (20,037) (2,838) -14.2%

The most significant change concerned the movements in valuation reserves, and in particular the one concerning the valuation of financial assets available for sale that went from a negative €/Mln 5.2 to a positive €/Mln 2.7.

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Segment Reporting

This section describes the consolidated equity and income statement results for the period articulated according to the operating segments in which Banca Intermobiliare and its subsidiaries are divided; the segments have been identified based on the indications of IFRS 8. Based on this standard, the consolidated data of Banca Intermobiliare was represented by identifying the following operating segments: Clients , Finance , Corporate Center and “Non Core” . The “Non-Core” segment was introduced at the end of 2016, following the guidelines of the strategic plan, which provides for the disbursement of Lombard loans and the “ run off” management of the impaired loans and of non-core performing loans.

The Client Segment covers all typical transactions of private banking such as management and consulting in the area of investment services, distribution of managed savings products (in the form of individual and collective asset management portfolios), securities brokerage and ancillary activities such as lending services. The Client Segment includes the operations of the Parent Company, Banca Intermobiliare, related to the services mentioned above and in full for Symphonia SGR, BIM Fiduciaria and BIM Insurance Brokers.

The Finance Segment refers to the banking book and trading book activities, and intermediation of OTC instruments and exchanges performed on the proprietary portfolio, the management of the Treasury interbank activities, and the interest rate and liquidity risk management carried out by Banca Intermobiliare.

The Corporate Centre consists of the Parent Company’s General Management and the corporate bodies, in addition to activities in support of the Group’s governance bodies. The Corporate Centre has responsibility for the imputed interest associated with the notional treasury unit. Finally, this segment includes the operations of BIM Immobiliare, Immobiliare D and Paomar.

The “Non-Core” segment identifies all the non-performing credit positions, probable defaults, performing loans with counterparts that are corporate clients and the BIM assets held for sale and the company held for sale BIM Suisse.

Breakdown by business segment: summary economic data at 30.06.2017 (Thousands of €) 30.06.2017 OPERATING SEGMENTS Corporate Clients Finance Non-Core Total Centre Operating income 26,762 18,273 1,723 (3,020) 43,738 Net operating costs (32,117) (2,059) (6,026) - (40,202) Operating profit (loss) (5,355) 16,214 (4,303) (3,020) 3,536 Profit (loss) before non-recurring (4,616) 16,214 (5,265) (27,937) (21,604) components Results by segment (4,616) 14,536 (5,265) (27,937) (23,282)

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Breakdown by business segment: summary economic data at 30.06.2016 (Thousands of €) 30.06.2016 OPERATING SEGMENTS Corporate Clients Finance Non-Core Total Centre Operating income 32,742 13,131 (1,921) 1,755 45,707 Net operating costs (35,453) (2,204) (6,783) - (44,440) Operating profit (loss) (2,711) 10,927 (8,704) 1,755 1,266 Profit (loss) before non-recurring (1,730) 10,927 (10,783) (12,956) (14,542) components Results by segment (1,729) 8,635 (10,783) (12,956) (16,834)

The data at 30.06.2016 were restated reclassifying BIM Suisse among assets held for sale and introducing the “non-core” segment.

Clients Segment : the result of the segment went from €/Mln -1.7 in June 2016 to €/Mln -4.6 in June 2017. This trend was generated by a reduction of net operating income of more than 18% on an annual basis: both net interest income and net fees and commissions fell. As regards net interest income we can note a decrease in interest income from clients owing to the reduction of lending. As regards commissions, a contraction was recorded in trading commissions and commissions on assets under management owing mainly to the drop in deposits. Net operating expenses decreased by 9.4% on an annual basis as a result both of a decrease in personnel costs and savings on administrative expenses. The operating profit came down to €/Mln -5.4 compared to €/Mln -2.7 for 2016.

Finance Segment : the profit of the segment went from €/Mln 8.6 to €/Mln 14.5. The growth of “Net Operating Income” (+39.2% on an annual basis) was generated by the combined effect of lower interest on securities and growth of trading gains, both trends affected by the sale of securities in the portfolio. Costs fell by approximately €/Mln 0.1, bringing toe operating profit to €/Mln 16.2 compared to €/Mln 10.9 in June 2016. Write-downs on financial assets, improving on an annual basis, led to a pre-tax profit of the segment of €/Mln 14.5.

Corporate Center : the loss for the segment of approximately €/Mln -5.3 was an improvement compared to that of June 2016. The “Net operating income” improved owing to the different contribution of operating interest of the figurative treasury. Operating costs fell by more than 11%.

“Non-Core “Segment : the loss of the segment went from €/Mln -13 in June 2016 to €/Mln -27.9 owing mainly to the higher write-downs on loans accounted for in the first half of 2017.

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Risk management

Information on risks and factors influencing profitability

The overall risk management of Banca Intermobiliare and its subsidiaries has been performed over time by a process presided over and coordinated by the former Parent Company Veneto Banca, discussed with the Board of Directors of BIM and with the aid of the head offices of BIM and of the former Parent Company. Following the “Bank-Saving” Decree, which placed Veneto Banca in liquidation, the routine performance of the activities outsourced by BIM to Veneto Banca, (carried out by personnel who will be transferred to Banca Intesa Sanpaolo, including the Central Risk Management Department), has been ensured, in such a way as to enable these activities to gradually come back within BIM. The process develops on the basis of the orientation and strategic guidance in relation to the assumption of risks, and the approval of strategic and operating limits and the related guidelines, defined up to the date of the decree by the Board of Directors of the former Parent Company, in agreement with the Board of Directors of BIM. On these matters, for the purposes of preparing the Consolidated Half-Yearly Financial Report at 30.06.2017, the personnel belonging to the former Risk Management Department of Veneto Banca, on the basis of the current outsourcing contract between VB and BIM, ensured that continuity was given to the activities providing the usual reporting to the Internal Contact Persons in Banca Intermobiliare.

In particular the integrated measurement and control of risks by monitoring and analysing the overall risk exposure of the Bank and of the subsidiaries has been ensured, in accordance with the provisions of the Supervisory Authority and international “best practice”. In particular, the Bank and the investees have been supported in identifying, managing and controlling risks that have been assumed. The responsibilities of the Risk Management Department of the former Parent Bank are the following: • credit and counterparty risk; • market risk; • liquidity risk and interest rate risk; • operational risk; • other risks; • the pricing of financial instruments which are held in the proprietary account and on behalf of third parties; • monitoring of customer transactions in relation to listed derivative instruments and OTC instruments; • internal validation; • second level controls regarding loans; • most significant transactions, Risk Appetite Framework, ICAAP; ILAAP.

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Credit risk The credit operations of Banca Intermobiliare have always been mainly focused on accompanying the investment and/or asset management activities of its clients. During the first half of 2017 performing loans fell by 20.7% owing both to the loan disbursement reduction policy, adopted by the bank in the last few years, and to the reduction dues to impairment of the credit quality owing to the ongoing recession in the economy and loss in value of the collateral underlying the loans granted. In this context Banca Intermobiliare reduced the disbursement of loans and intensified the activity of “credit monitoring and recovery ”. At 30.06.2017 impaired loan assets recorded a decrease of 6% owing to the combined effect of the growth in impaired gross exposure of €/Mln 4.7 and higher provisions set aside at 30.06.2017 of €/Mln 22.4.

In economic terms in the first half of 2017 Banca Intermobiliare made write-downs on loan exposures of €/Mln 24 up by €/Mln 11.2 compared to 30.06.2016. For more information on the write-downs made please see what is illustrated in the disclosure on economic data of the present Consolidated Financial Report.

As regards “coverage ratios”, as already illustrated above, they were confirmed at 30.06.2017 as adequate for the parameters inferable from the latest Bank of Italy publication in the “Financial Stability Report 1/2017” published on 28 April 2017 and prepared on the basis of the final year-end figures. The coverage rate of performing loan exposures was 0.6% at 30.06.2017 (unchanged compared to 31.12.2016). The coverage rate of “impaired assets” was 56.3% at 30.06.2017 (53.1% at 31.12.2016). Among these we can note that the coverage rate of bad loans was 65.3%, up

On-balance-sheet exposures of loans to clients (Thousands of €) 30.06.2017 31.12.2016 Portfolio Gross Specific Type of exposures/values value Net exposure Net exposure exposure write-downs adjustments

CASH EXPOSURES Non-performing loans 455,313 (297,152) x 158,161 159,933 Probable defaults 179,200 (60,357) x 118,843 129,654 Past-due exposures 1,172 (177) x 995 6,186 Performing 446,753 x (2,815) 443,938 547,311 Total on-balance-sheet exposures 1,082,438 (357,686) (2,815) 721,937 843,084

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Market risk

General information In relation to the integrated management of risk capital of Banca Intermobiliare, specific relevance is assigned to the presence of market risks to which the Trading book and the Banking book are exposed. The management and quantification of market risks is based on a daily analysis of the sensitivity and vulnerability of the trading books to adverse market trends in relation to the following risk factors: - exchange rates; - interest rates; - volatility; - stocks and indices; - credit spreads; - correlation instruments.

In particular, the analysis is structured on different levels which differ in terms of purposes and methodology: 1. Monitoring of the operating limits as set by the Board of Directors in terms of maximum positions (stocks) for the monitoring of the overall exposure; 2. Overall limits and limits by individual operating portfolio in terms of Value at Risk and Stop Loss Stress testing; 3. stress testing.

For each type of trading asset risk assumption operating limits were defined, of both a quantitative and a qualitative nature, observance of which is monitored constantly by the personnel attributable to the former Central Risk Management Department, on the basis of the current outsourcing contract (which includes the risk management activities) between VB and BIM, performance of which... In particular, in the limits defined by the Board of Directors and implemented into the financial risk policy are based on: - Value at Risk limits; - Concentration limits through the definition of maximum positions (stocks); - Daily and monthly stop loss limits; - Maximum financial limits that limit transactions on an individual exposure.

Value at Risk The calculation of the Value at Risk, for management purposes, is done daily; the approach used is of historic simulation with the confidence interval of 99% and a time horizon of 10 days. This type of approach was chosen for three primary reasons: 1. no a priori assumptions are made with reference to the distribution of returns; 2. the correlation between risk factors is implicitly incorporated within the need for an ad hoc estimate; 3. the approach is appropriate for all types of linear and non-linear financial instruments. The historical simulation of VaR consists of a full revaluation methodology of all financial contracts on the basis of historical scenarios of risk variables and assumes that the future distribution of returns of risk factors will be equal to the historical distribution of the latter. The system used by Banca Intermobiliare for a position keeping, pricing and the risk management activity, was replaced by Murex. We must specify that the internal Value at Risk model is not used for the calculation of the capital requirements on market risks for the purposes of supervisory disclosures to the Bank of Italy, for which the standard methodology as provided for in the prudential supervisory rules is adopted.

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Market risk The market risk relating to Banca Intermobiliare’s proprietary account during the first half of 2017 was always below the Supervisory Limits set forth in the Financial Risk policy, for the “Held for Trading” book as well as the “Banking Book”. The Value at Risk of the trading position fluctuated between €/Mln 0.258 and €/Mln 1.058. The Value at Risk at 30.06.2017 was €/Mln. 0.816 (€/Mln 0.264 at 31.12.2016). The average value observed in the first half of 2017 was €/Mln 0.542 (€/Mln 1.145 in 2016).

VaR Trading Book at 30.06.2017 1.200.000

1.000.000

800.000

600.000

400.000

200.000

Value at Risk (99%) related to the period 01.01.2017 - 30.06.2017, holding period of 10 days.

VaR Banking Book at 30.06.2017 16.000.000 14.000.000 12.000.000 10.000.000 8.000.000 6.000.000 4.000.000 2.000.000 0

Value at Risk (99%) related to the period 01.01.2017 - 30.06.2017, holding period of 10 days.

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“banking book”) fair value as at 30.06.2017 totalled an overall amount of €/Mln. 412.7 (€/Mln 603 at the end of 2016).

Risk exposure in foreign currency during the first half of 2017 within the proprietary trading portfolio was insignificant. Any other exposures to exchange rate risk that arose in the first half of 2017 were centralised at the former Parent Company and netted at the end of each day.

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Related-party transactions

As reported above, following the decisions of the European Authorities and in accordance with Italian Law Decree no. 99 of 25 June 2017, the Ministry of the Economy and Finance, on the proposal of the Bank of Italy, made Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. subject to administrative compulsory liquidation. The liquidators appointed by the Bank of Italy implemented the ministerial indications and are ensuring, among other things: i) the continuation, where necessary, of the company’s business or of certain branches of activity for the technical time necessary to implement the planned sales; ii) the disposal of corporate assets and liabilities in accordance with the binding offer formulated by the transferee identified as Intesa Sanpaolo S.p.A., which will take over the relationships of the transferor without a break; iii) the sale to Società per la Gestione di Attività S.G.A (in which the public has a stake) of impaired loans and other assets not disposed of. In this context Banca Intermobiliare for the purposes of the financial statement information, identified the related parties in application of the accounting standard IAS 24 and on the basis of the legal and regulatory rules in being for the Veneto Banca Group, as described in the previous financial reports to which you are referred.

Related-party transactions On the basis of Italian Law Decree no. 99 of 25 June 2017, Banca Intermobiliare is controlled by Veneto Banca S.p.A. in L.C.A., but in reference to the sale of the corporate assets and liabilities, in accordance with the binding offer formulated by the transferee identified as Intesa Sanpaolo S.p.A., some relationships in being as of 30.06.2017 could be transferred. At present Veneto Banca L.C.A. and Intesa Sanpaolo are performing the activities to complete the precise attribution of the various assets. It cannot be ruled out that this activity may also involve some intercompany relationships held by BIM with Veneto Banca. On the basis of the perimeter identified before Italian Law Decree no. 99 of 25 June 2017 the following are the main relations involving equity and income with related parties other than directors, statutory auditors and managers with strategic responsibilities, as indicated in the next paragraph.

(Thousands of €) Receivables Financial Other financial Hedging (Thousands of €) from loans assets held for assets available Other Assets derivatives granted trading for sale A. Parent bank Former Veneto Banca S.p.A. 92,300 2,462 21,197 2,044 1,741 B. Subsidiary companies Bim Fiduciaria S.p.A. - - - - - Bim Immobiliare S.r.l. 17,360 - - - - Bim Insurance Brokers S.p.A. - - - - - Bim Suisse S.A. 28 86 - - - Immobiliare D S.r.l. 2,156 - - - 750 Paomar S.r.l 4,772 - - - - Symphonia SGR S.p.A. - - - - 3,549 C. Affiliated companies Bim Vita S.p.A. - - - - - Total related parties 146,616 2,548 21,197 2,044 6,040

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Payables for Financial Other liabilities Hedging (Thousands of €) loans/deposits Bonds issued liabilities held guarantees and derivatives received for trading commitments A. Parent bank Former Veneto Banca S.p.A. 116,259 - 1,839 7,254 8,481 B. Subsidiary companies Bim Fiduciaria S.p.A. 1,202 - - - - Bim Immobiliare S.r.l. 9 - - - - Bim Insurance Brokers S.p.A. 308 - - - - Bim Suisse S.A. 544 - 8 - - Immobiliare D S.r.l. 664 - - - - Paomar S.r.l - - - - - Symphonia SGR S.p.A. 5,145 - - - - C. Affiliated companies Bim Vita S.p.A. 7,361 - - - - Total related parties 131,492 - 1,847 7,254 8,481

The assets and liabilities indicated above are mainly due to relations of a financial nature, which are part of the normal banking operations, and connected to the need to rationally and effectively cover liquidity needs. All the transactions are carried out at arm’s length.

Other expenses Commissions Commissions Interest Interest Dividends (Thousands of €) (-)/operating (+) and other and other income expenses collected income income expenses A. Parent bank Former Veneto Banca S.p.A. 1,146 (68) 123 - 1,246 (4,345) B. Subsidiary companies Bim Fiduciaria S.p.A. - - 23 - 5 - Bim Immobiliare S.r.l. 430 - 5 - - (1,107) Bim Insurance Brokers S.p.A. - - 4 - - - Bim Suisse S.A. ------Immobiliare D S.r.l. 6 (2) - - - - Paomar S.r.l 38 - - - - - Symphonia SGR S.p.A. - (12) 63 6,817 7,168 (75) C. Affiliated companies Bim Vita S.p.A. 5 - - 1,150 1,274 - Total related parties 1,625 (82) 218 7,967 9,693 (5,527)

The interest income and interest expense represent the remuneration at market rates of the loans granted and received or the bonds underwritten and issued. The dividends received are dividends which were received during the year. Fee and commission income represents the remuneration paid to the Bank’s sales network for placement of the products of the Group companies; the other revenues refer to reimbursement of the personnel cost for Bank staff seconded to companies of the Group or of the structure of the former Veneto Banca or services provided to the latter. The other costs are entirely attributable to various administrative expenses incurred for service provided to the Bank by various Group companies.

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Transactions with executives with strategic responsibilities The loans, guarantees issued and deposits connected with Directors and Statutory Auditors and Managers with strategic responsibilities, including amounts relating to transactions set up in observance of art. 136 of Italian Legislative Decree No. 385/93 with companies in which the aforementioned persons have an interest, consist of the following:

(Thousands of €) Executives with Directors Statutory auditors strategic responsibilities (amounts in thousands of Euro) Direct Indirect Direct Indirect Direct Indirect Total authorised (credit) - - - - 260 - Loans (used) (*) - - - - 254 - Credit commitments (used) (*) ------Direct deposits (*) - - - - 414 5 Indirect deposits (*) - - - - 1,487 15 Interest income (**) ------Interest expenses (**) - - - - 2 - Fee and commission income and other income (**) ------Fee and commission expenses (**) ------(*) Balances as at 30 June 2017 (**) Collected/paid in financial year 2017

Fees of Directors, Statutory Auditors and executives with strategic responsibilities: quantitative information

The following table shows the amounts of the remuneration paid during the first half of 2017 to executives with strategic responsibilities, these being the directors, statutory auditors and the general manager:

Remuneration paid to executives with strategic responsibility (Thousands of €) 30.06.2017 Directors 686 Statutory auditors 246 Executives 2,493 Total 3,425

Emoluments due to Directors as compensation for their duties. For Statutory Auditors, the amount includes the remuneration and reimbursement of expenses. The remuneration of the managers includes the total remuneration paid as well as the employee severance indemnities matured during the period, the both fixed and variable, and the amounts paid by the Bank into the employee retirement fund.

* * * * *

Transactions of major significance During the first half of 2017, 1 transaction of major significance with related parties was executed by Banca Intermobiliare, consisting of a Repo operation in favour of the Parent Company Veneto Banca S.p.A., approved by the Board of Directors of BIM on 19 January 2017 for an amount of about €/Mln 300. As of today these transactions have been closed.

Transactions of minor significance The transactions during the period concluded with related intra-group parties and corporate executives, 113

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the close relatives of the executives and the persons controlled by the latter, fall within the normal operations of Banca Intermobiliare, and are fully compliant with the reference regulations.

Excluded transactions The ordinary or recurrent transactions that took place in 2017 with related parties, including the intra- group parties, fall within the ordinary operations of the bank and are usually carried out at arm’s length and in any case on the basis of assessments that are economically convenient to both parties, pursuant to the internal procedures which have been defined. The credit and debit balances in existence as at 30 June 2017 which apply to related parties are of an amount that is not significant overall compared to the equity of the bank. Similarly, the incidence of income and expenses involving related parties as compared to the operating result is not significant.

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SEPARATE HALF-YEARLY FINANCIAL STATEMENTS

AT 30 JULY 2017

Balance Sheet and income statement of Banca Intermobiliare

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FINANCIAL STATEMENTS

BALANCE SHEET (in Euro)

Assets 30.06.2017 31.12.2016 10. Cash and cash equivalents 1,623,582 1,669,075 20. Financial assets held for trading 133,504,429 97,356,738 40. Financial assets available for sale 474,992,316 834,638,919 60. Loans to banks 143,202,244 369,209,371 70. Amounts due from clients 765,903,788 882,200,681 80. Hedging derivatives 2,044,392 1,326,645 100. Equity investments 99,298,213 99,237,013 110. Property, plant and equipment 4,333,419 4,600,844 120. Intangible fixed assets 270,910 325,478

of which: - goodwill - - 130. Tax assets a) current 38,644,494 15,348,249

b) deferred 79,230,429 103,496,166

- of which convertible into tax credits (Law No. 214/2011) 48,924,929 71,634,201 140. Non-current assets and disposal groups held for sale 24,713,698 24,774,898 150. Other Assets 73,679,646 78,870,369 Total assets 1,841,441,560 2,513,054,446

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FINANCIAL STATEMENTS

BALANCE SHEET (in Euro)

Liabilities and equity items 30.06.2017 31.12.2016 10. Due to banks 300,666,755 511,459,837 20. Due to clients 1,017,567,534 1,320,126,602 30. Securities in issue 174,515,954 304,977,719 40. Financial liabilities held for trading 78,322,387 68,000,227 60. Hedging derivatives 7,254,146 14,758,274 80. Tax liabilities a) current - - b) deferred taxes 2,658,334 3,023,748 100. Other liabilities 64,290,868 81,399,641 110. Employees’ severance fund 4,054,248 4,409,967 120. Provisions for risks and charges:

a) pension fund and similar obligations - - b) Other Provisions 27,923,299 25,881,355 130. Valuation reserves 3,741,034 1,119,473 160. Reserves 51,419,048 56,689,684 170. Share premium reserve - 77,822,945 180. Share Capital 156,209,463 156,209,463 190. Treasury shares (-) (29,730,906) (29,730,906) 200. Profit (Loss) for the year (+/-) (17,450,604) (83,093,583) Total liabilities and equity 1,841,441,560 2,513,054,446

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FINANCIAL STATEMENTS

INCOME STATEMENT (in Euro)

Items 30.06.2017 30.06.2016

10. Interest and similar income items 16,671,897 23,776,219 20. Interest and similar expense items (10,050,980) (11,816,680) 30. Net interest income 6,620,917 11,959,539 40. Fee and commission income 19,876,910 25,452,857 50. Fee and commission expenses (3,939,749) (4,684,332) 60. Net fee and commission income 15,937,161 20,768,525 70. Dividends and similar income 8,278,290 12,982,637 80. Net gains and losses on assets held for trading 4,756,590 2,600,516 90. Net gains and losses on hedging operations 125,623 (405,372) 100. Net gains and losses on disposal or repurchase of: a) loans (182,932) 441 b) financial assets available for sale 8,954,374 2,643,977 c) financial assets held to maturity - - d) financial liabilities (5,794) (100,267) 120. Operating income 44,484,229 50,449,996 130. Net value adjustments for impairment of: a) loans (24,166,378) (12,925,458) b) financial assets available for sale (1,678,154) (2,292,267) c) financial assets held to maturity - - d) other financial transactions 322,949 77,776 140. Net gains and losses on financial operations 18,962,646 35,310,047 150. Administrative expenses: a) Personnel costs (18,867,496) (21,211,733) b) other administrative expenses (17,208,127) (18,038,078) 160. Net provisions for risks and charges (2,285,678) (3,926,717) 170. Net write-downs/write-backs on property, plant and equipment (343,252) (371,459) 180. Net write-downs/write-backs on intangible fixed assets (115,459) (132,319) 190. Other operating expenses (income) 1,158,716 117,954 200. Operating expenses (37,661,296) (43,562,352) 250. Profit (Loss) of continuing operations before tax (18,698,650) (8,252,305) 260. Current operations income tax 1,248,046 4,203,630 290. Profit (Loss) for the year (17,450,604) (4,048,675)

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CONSOLIDATED HALF-YEARLY FINANCIAL STATEMENTS

AT 30 JULY 2017

ATTESTATION OF THE GENERAL MANAGER AND OF THE CORPORATE FINANCIAL REPORTING MANAGER

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ATTESTATION OF THE CONSOLIDATED HALF-YEARLY FINANCIAL REPORT UNDER THE TERMS OF ARTICLE 81-TER OF CONSOB REGULATION NO. 11971 OF 14 MAY 1999 AS AMENDED AND SUPPLEMENTED

1. We, the undersigned, Stefano Grassi, as General Manager and Mauro Valesani, as Financial Reporting Manager of Banca Intermobiliare di Investimenti e Gestioni S.p.A. attest, taking into account also the provisions of Art. 154 bis, paragraphs 3 and 4, of Italian Legislative Decree No. 58 of February 24, 1998: • the adequacy in relation to the characteristics of the company and • the effective application of the administrative and accounting procedures for the formation of the Condensed Consolidated Half- Yearly Financial Statements during the first half of 2017.

2. The assessment of the adequacy and the effective application of the administrative and accounting procedures in preparing the Condensed Consolidated Half-Yearly Financial Statements at 30 June 2017 is based on a model defined by the Parent Company Veneto Banca S.p.A. L.C.A. in keeping with the Internal Control – Integrated Framework (CoSO), issued by the Committee of Sponsoring Organizations of the Tradeway Commission, which represents a standard of reference for defining and assessing internal control systems, generally accepted at the international level.

3. It is also attested that:

3.1 the Condensed Consolidated Half-Yearly Financial Statements: a) have been prepared according to the applicable International Accounting Standards which have been endorsed by the European Community pursuant to regulation (EC) no. 1606/2002 of the European Parliament and the Council of 19 July 2002; b) are consistent with the accounting books and entries; c) were prepared in accordance with the International Financial Reporting Standards adopted by the European Union, with the measures issued implementing art. 9 of Italian Legislative Decree 38/2005 and with the provisions of art. 154-ter of Italian Legislative Decree no. 58 of 24 February 1998 and provide a truthful and accurate representation of the economic and financial situation of the issuer as well as of the group of consolidated companies;

3.2 The Half-Yearly Report on Operations contains references to important events that occurred in the first six months of the year and to their effect on the Condensed Consolidated Half-Yearly Financial Statements, together with a description of the main risks and uncertainties for the remaining six months of the year and information on significant related-party transactions.

Turin, 31 July 2017

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CONSOLIDATED HALF-YEARLY

FINANCIAL STATEMENTS AT 30 JULY 2017

INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

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