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Annual Accounts and Reports As at 30 June 2020 Translation from the Italian Original Which Remains the Definitive Version CONTENTS

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Annual Accounts and Reports As at 30 June 2020 Translation from the Italian Original Which Remains the Definitive Version CONTENTS LIMITED COMPANY SHARE CAPITAL € 443,616,723.50 HEAD OFFICE: PIAZZETTA ENRICO CUCCIA 1, MILAN, ITALY REGISTERED AS A BANK. PARENT COMPANY OF THE MEDIOBANCA BANKING GROUP. REGISTERED AS A BANKING GROUP Annual Accounts and Reports as at 30 June 2020 www.mediobanca.com translation from the Italian original which remains the definitive version CONTENTS Consolidated accounts Review of operations Mediobanca Group 7 Declaration by head of company financial reporting 79 External auditors' report 83 Consolidated financial statements 95 Notes to the accounts 105 Part A - Accounting policies 108 Part B - Notes to the consolidated balance sheet 162 Part C - Notes to the consolidated profit and loss account 219 Part D - Comprehensive consolidated profit and loss account 238 Part E - Information on risks and related hedging policies 239 Part F - Information on consolidated capital 338 Part G - Combination involving Group companies or business units 346 Part H - Related party disclosure 347 Part I - Share-based payment schemes 349 Part L - Segment reporting 353 Part M - Disclosure on leasing 357 *** Annexes Consolidated financial statements 362 *** Other documents Glossary 369 www.mediobanca.com translation from the Italian original which remains the definitive version Contents 3 CONSOLIDATED ACCOUNTS REVIEW OF OPERATIONS MEDIOBANCA GROUP REVIEW OF GROUP OPERATIONS The twelve months under review reflect the unprecedented shock caused by the Covid-19 epidemic, which caused the leading global economies to stall rapidly and enter recession. Stock markets lost more than 30% in March 2020 compared to the start of the year, before gradually recovering by-end June. The most recent estimates for 2020 suggest global GDP will fall on average by 6.5%, Eurozone GDP by 9.2%, and Italian GDP by 11.6%, with the expectation that growth could resume from as early as 2021, but uncertainty over when end- 2019 levels will be recovered. Prompt intervention by the main central banks and extraordinary fiscal policy measures implemented by the governments of individual countries and by the European Union through the Next Generation EU recovery facility helped markets remain under control. The initiatives promoted by the Italian government, with the “Cura Italia”, “Liquidità” and “Rilancio” decrees, have helped business’s production capacity and household spending to recover, with clear benefits not only to the cost of risk, but also to business volumes in terms of new loans. The set of measures adopted will start to affect public finance indicators as from this year, increasing public borrowing substantially, but in this Italy is in fundamentally the same situation as all the other main global economies. The Mediobanca Group went into this severe crisis scenario better placed than the 2008 and 2011 crises: more solid capital position (CET1 ratio near all- time highs), lower exposure to leverage lending, government bonds and trading activities, higher average corporate loan book rating, householder risk (mortgage lending and consumer credit) reflecting continuous improvement over the years, and strongly reduced exposure to equity compared to 2011. Review of operations Mediobanca Group 9 The Covid-19 crisis is only in part reflected in the Group’s accounts for the twelve months, which were helped by the solid results posted by the Group in the first eight months of the year, plus the healthy trend recorded in June 2020, Net profit totalled€ 600.4m, 27% lower than last year (€823m), with just €132.8m added in 2H (vs €467.6m in 1H) but strongly impacted by various one-off items (including the RAM goodwill impairment charge). Revenues were unchanged at €2.5bn, and operating efficiency remained healthy (cost/income ratio 47.3%); profitability too continued to reflect satisfactory levels (ROAC for banking activities above 10%, ROTE 7%, which rises to 10% net of the one-off items), on a significantly improved capital position (CET1 ratio 16%). The results, as mentioned, reflect a series of one-off items, attributable in particular to the increase in the cost of risk deriving from recalculation of the expected loss based on the new macroeconomic scenario (which is particularly severe for 20201), plus the impairment charge to the RAM investment (approx. €65m) which became necessary following the sharp contraction in the company’s profitability as a result of redemptions by institutional clients and the reduced growth prospects. In view of the most recent ECB recommendations, the Board has decided not to propose a dividend for the financial year under review. For the coming years, however, if the gradual recovery expectations for the world’s economies are confirmed, the Group may resume its dividend policy and its capital optimization plans, with a target annual CET1 ratio level of 13.5%, to be achieved inter alia through share buybacks and net of the capital used to strengthen the business lines. Revenues for the twelve months remained at last year’s levels at €2,513m (30/6/19: €2,524.7m) following the reduction posted in the last four months. The main income items performed as follows: – Net interest income was up 3.3% (from €1,395.6m to €1,442.2m), on higher contributions from Consumer Banking (up 5.5%, from €898.8m to €948m) and Wealth Management (up 4.2%, from €260.2m to €271m), while Corporate and Investment Banking effectively matched last year’s performance with €271.4m (30/6/19: €272.7m); – Net fee and commission income rose by 3.1%, from €611.2m to €630.2m, on a good performance by Wealth Management (fees up 9%, from €280.9m to 1 The internal scenario estimates an 11.6% reduction in Italian GDP in 2020, with a recovery of 0.8% in 2021 and of 5.2% in 2022; these figures are -9.2%, +0.1% and +4.7% respectively for the Eurozone, and -10.8%, +7.6% and +6.0% for the United States, the other two main geographies for the Mediobanca Group. 10 Consolidated financial statements as at 30 June 2020 €306.1m) which now accounts for virtually half the Group’s total; Corporate and Investment Banking’s contribution was virtually unchanged from last year, at €225.8m (€227.6m), following the consolidation of Messier Maris et Associés for the full twelve months (adding €33.8m), which was largely responsible for the impressive growth in fees earned from advisory business (up 28.4%, from €87.5m to €112.4m); – Net treasury income fell from €196.7m to €136.3m, on reduced contributions from activities with CMS clients of €86m (€122m) and the proprietary portfolio (trading and banking book), reflecting the sharp market correction which was only in part made up by end-June 2020; the Covid-19 impact may be quantified at approx.€ 45m, mostly due to the effects of postponement or cancellation of 2019 dividends on equity derivative valuations;2 – The equity-accounted companies’ contribution to net profit decreased from €321.2m to €304.3m, with the 4Q contribution of €54.8m reflecting the profits delivered by Assicurazioni Generali in 1Q 2020. The increase in costs (up 2.3%, from €1,161.9m to €1,188.9m), chiefly reflects the consolidation of Messier Maris et Associés (up€ 18.8m, €14m of which in labour costs), enhancement of the commercial network in Wealth Management (up €14m), and the Group’s IT initiatives. The heading also includes extraordinary expenses linked to the Covid-19 emergency totalling €3.8m; while €2.6m has also been donated to charitable initiatives. Loan loss provisions were nearly 70% higher than last year (up from €222.6m to €374.9m), translating to a cost of risk for the Group of 82 bps (vs 52 bps last year); the increase was concentrated in 4Q (cost of risk up to 141 bps), due to the deterioration in households’ risk profile, and the worsening macroeconomic scenario. The Covid-19 effect can be estimated at €113m, around 30% of the total provisioning taken for the twelve months. The performance in Consumer Banking reflects the operating difficulties encountered in credit recovery and collection activities during the months of April and May in particular, plus a prudent valuation of the share of the portfolio involved in the moratoria: the increase in provisioning (up 36.5%, from €237.8m to €324.7m, €63.9m of which Covid- related) is reflected in the upward trend in the cost of risk (from 185 bps to 247 bps, with a high of 361 bps recorded in 4Q). Corporate and Investment Banking charged writedowns of €20m (compared with net writebacks of €36.2m last year), 2 The profits reported by the company as at 31 March 2020 have been increased by the writebacks subsequently recorded at end-June, as the share written down in the quarterly accounts was subsequently reversed at the interim reporting date; the difference in profit (of which Mediobanca’s pro rata share is approx. €40m) has been taken through the valuation reserves. Review of operations Mediobanca Group 11 due to provisioning being recalculated on the basis of the new macroeconomic scenario for the wholesale portfolio (impact quantifiable as€ 37m). The increase in provisioning in Wealth Management was smaller in absolute terms, with adjustments increasing from €11.8m to €20.5m, concentrated in CheBanca! (up 41.6%, from €13.7m to €19.4m, €4.4m of which Covid-related). Other charges include the increase in estimated losses on banking book securities, reflecting the new scenario, and taking account of the recent downgrade of Italian sovereign debt (provisions up €1.3m to €8.8m, €7.5m of which in 4Q). The heading also includes value adjustments for holdings in funds, which reflect negative adjustments at the year-end totalling€ 11.7m, better than at 9M (total charges €20m), for the two main seed capital investments (RAM and Cairn) in particular.
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