Annual report
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FINANCIAL STATE-MENTS AND REPORTS AT 31 DECEMBER 2025GENERAL MEETING DRAFT
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CONTENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 2 CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2025
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CONTENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 3 CONTENTS CONTENTS ......................................................................................................................................................................... 3 .................................................................................................. 6 COMPOSITION OF THE PARENT'S MANAGEMENT BODIES ................................................................................. 7 COMPOSITION OF THE INTERNAL COMMITTEES ................................................................................................... 8 FINANCIAL HIGHLIGHTS AT 31 DECEMBER 2025 ................................................................................................. 9 SIGNIFICANT EVENTS FROM 1 JANUARY TO 31 DECEMBER 2025................................................................ 12 THE MACROECONOMIC SCENARIO ........................................................................................................................... 16 FACTORING ........................................................................................................................................................................ 18 SALARY- AND PENSION-BACKED LOANS AND QUINTOPUOI LOANS ........................................................... 23 COLLATERALISED LENDING AND KRUSO KAPITAL ............................................................................................. 26 FUNDING AND TREASURY ACTIVITIES .................................................................................................................... 30 COMPOSITION AND STRUCTURE OF THE GROUP ................................................................................................ 32 INCOME STATEMENT RESULTS ................................................................................................................................... 34 THE MAIN STATEMENT OF FINANCIAL POSITION AGGREGATES .................................................................. 44 CAPITAL ADEQUACY ........................................................................................................................................................ 54 CAPITAL AND SHARES ................................................................................................................................................... 57 RISK MANAGEMENT AND SUPPORT CONTROL METHODS ................................................................................ 59 OTHER INFORMATION .................................................................................................................................................... 61 BUSINESS OUTLOOK AND MAIN RISKS AND UNCERTAINTIES ...................................................................... 65 CONSOLIDATED FINANCIAL STATEMENTS ...................................................................................................... 66 STATEMENT OF FINANCIAL POSITION ..................................................................................................................... 67 INCOME STATEMENT ...................................................................................................................................................... 69 STATEMENT OF COMPREHENSIVE INCOME ........................................................................................................... 70 STATEMENT OF CHANGES IN EQUITY AT 31/12/2025 ...................................................................................... 71 STATEMENT OF CHANGES IN EQUITY AT 31/12/2024 ...................................................................................... 72 STATEMENT OF CASH FLOWS (INDIRECT METHOD) .......................................................................................... 73 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...................................................................... 74
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 4 PART A - ACCOUNTING POLICIES ............................................................................................................................. 75 PART B - INFORMATION ON THE STATEMENT OF FINANCIAL POSITION ................................................. 105 PART C - INFORMATION ON THE INCOME STATEMENT .................................................................................. 144 PART D OTHER COMPREHENSIVE INCOME ...................................................................................................... 163 PART E - INFORMATION CONCERNING RISKS AND RELATED HEDGING POLICIES ............................. 164 PART F - INFORMATION ON EQUITY ....................................................................................................................... 226 PART G - BUSINESS COMBINATIONS .................................................................................................................... 235 PART H - RELATED PARTY TRANSACTIONS ......................................................................................................... 236 PART I - SHARE-BASED PAYMENT PLANS ............................................................................................................. 240 PART L - SEGMENT REPORTING ............................................................................................................................... 242 PART M - LEASE DISCLOSURE .................................................................................................................................. 244 STATEMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS ...................................................... 246 .................................................................................................................. 248 SEPARATE FINANCIAL STATEMENTS ................................................................................................................ 249 .............................................................................................. 250 ............................................ 251 FINANCIAL HIGHLIGHTS AT 31 DECEMBER 2025 ............................................................................................. 253 INCOME STATEMENT RESULTS ................................................................................................................................. 256 THE MAIN STATEMENT OF FINANCIAL POSITION AGGREGATES ................................................................ 265 CAPITAL ADEQUACY ...................................................................................................................................................... 271 OTHER INFORMATION .................................................................................................................................................. 272 PROPOSED ALLOCATION OF PROFIT FOR THE YEAR ........................................................................................ 274 SEPARATE FINANCIAL STATEMENTS ................................................................................................................ 275 STATEMENT OF FINANCIAL POSITION ................................................................................................................... 276 INCOME STATEMENT .................................................................................................................................................... 278 STATEMENT OF COMPREHENSIVE INCOME ......................................................................................................... 279 STATEMENT OF CHANGES IN EQUITY AS AT 31.12.2025 .............................................................................. 280 STATEMENT OF CHANGES IN EQUITY AS AT 31.12.2024 .............................................................................. 281 STATEMENT OF CASH FLOWS (INDIRECT METHOD) ........................................................................................ 282 NOTES TO THE SEPARATE FINANCIAL STATEMENTS ................................................................................ 283
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 5 PART B - INFORMATION ON THE STATEMENT OF FINANCIAL POSITION ................................................. 298 PART C - INFORMATION ON THE INCOME STATEMENT .................................................................................. 329 PART D OTHER COMPREHENSIVE INCOME ...................................................................................................... 346 PART E - INFORMATION CONCERNING RISKS AND RELATED HEDGING POLICIES ............................. 348 PART F - INFORMATION ON BANK EQUITY .......................................................................................................... 382 PART G - BUSINESS COMBINATIONS .................................................................................................................... 393 PART H -RELATED PARTY TRANSACTIONS ........................................................................................................... 394 PART I - SHARE-BASED PAYMENT PLANS ............................................................................................................. 398 PART L - SEGMENT REPORTING ............................................................................................................................... 400 PART M - LEASE DISCLOSURE .................................................................................................................................. 402 STATEMENTS ON THE SEPARATE FINANCIAL STATEMENTS .................................................................. 405 ................................................................................................ 406 .................................................................................................................. 408 This document in PDF format does not meet the obligations deriving from Directive 2004/109/EC (the European Single Electronic Format), for which a dedicated XHTML format has been prepared
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 6
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 7 COMPOSITION OF THE PARENT'S MANAGEMENT BODIES BOARD OF DIRECTORS Chairperson Ms. Luitgard Spögler CEO and General Manager Mr. Gianluca Garbi Directors Mr. Gianpaolo Alessandro Ms. Alessandra Grendele Mr. Daniele Pittatore Mr. Marco Cuniberti* Ms. Giuliana Grassia* Ms. Maria Gaia Soana* Mr. Andrea De Tomas* BOARD OF STATUTORY AUDITORS Chairperson Mr. Guido Paolucci Standing Auditors Ms. Lucia Abati Ms. Anna Maria Allievi Alternate Auditors Mr. Marco Armarolli INDEPENDENT AUDITORS BDO Audit Services S.r.l. (*) MANAGER IN CHARGE OF FINANCIAL REPORTING Mr. Alexander Muz (*) BDO Italia S.p.A. has transferred, with effect from 1 January 2026, a business unit to BDO Audit Services S.r.l. that includes, among other things, the legal auditing engagement with our company.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 8 COMPOSITION OF THE INTERNAL COMMITTEES SUPERVISORY BODY Chairperson Mr. Guido Paolucci Members Ms. Lucia Abati Ms. Annamaria Alievi EXECUTIVE COMMITTEE Chairperson Mr. Gianluca Garbi Members Mr. Gianpaolo Alessandro Ms. Alessandra Grendele INTERNAL CONTROL, RISK MANAGEMENT AND SUSTAINABILITY COMMIT-TEE Chairperson Mr. Marco Cuniberti Members Mr. Andrea De Tomas Mr. Daniele Pittatore Ms. Maria Gaia Soana APPOINTMENTS COMMITTEE Chairperson Ms. Maria Gaia Soana Members Mr. Marco Cuniberti Ms. Giuliana Grassia REMUNERATION COMMITTEE Chairperson Ms. Giuliana Grassia Members Mr. Andrea De Tomas Mr. Daniele Pittatore
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 9 FINANCIAL HIGHLIGHTS AT 31 DECEMBER 2025 The Banca Sistema Group comprises the Parent, Banca Sistema S.p.A., with registered office in Milan, the subsidiaries Kruso Kapital S.p.A., Largo Augusto Servizi e Sviluppo S.r.l., the Greek company Ready Pawn Single Member S.A. (hereinafter also referred to as ProntoPegno Greece) and the Portuguese company Pignus - Credito Economico Pop-ular SA (hereinafter also referred to as CEP), wholly owned subsidiaries of Kruso Kapital S.p.A.. The scope of consolidation also includes the auction house Kruso Art (Art-Rite S.r.l.), wholly owned by Kruso Kapital and outside the Banking Group, the Spanish Joint Ven-ture EBNSistema Finance S.L. and the following special purpose securitisation vehicles whose receivables are not subject to derecognition: Quinto Sistema Sec. 2019 S.r.l., Quinto Sistema Sec. 2017 S.r.l. and BS IVA SPV S.r.l. The parent, Banca Sistema S.p.A., is a company registered in Italy, at Largo Augusto 1/A, ang. via Verziere 13 - 20122 Milan. The Parent directly carries out factoring activities and operates in the salary- and pen-sion-backed loans segment through direct origination and through the sale and pur-chase of receivables generated by other specialist operators, distributing its product through a network of single-company agents and specialised brokers located throughout Italy. Through its subsidiary Kruso Kapital S.p.A., the Group carries out collateralised lending activities in Italy through a network of branches, in Greece and Portugal through the subsidiaries ProntoPegno Greece and CEP, as well as auction house activities. The Group also provides factoring services in Spain through the joint venture EBNSistema Finance. The Parent, Banca Sistema S.p.A., is listed on the Euronext STAR Milan segment of the Euronext Growth Milan market of Borsa Italiana and the subsidiary Kruso Kapital is listed in the Professional Segment of Euronext Growth Milan.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 10 KEY INDICATORS 31-Dec-25 31-Dec-24 The securities portfolio includes Financial assets measured at fair value through profit or loss, Financial assets measured at fair value through other comprehensive income 125,219 125,21982,935 82,93527,567 27,56726,722 26,722170,839 170,839121,232 121,232(33,603) (33,603)(32,452) (32,452)(47,539) (47,539)(36,678) (36,678)29,042 29,04225,199 25,19942,341 42,34125,199 25,199Personnel expense3.5%Total income40.9%Net interest income adjusted51.0%Net fee and commission income (expense)3.2%Profit for the year attributable to the owners of the Parent adjusted68.0%Other administrative expenses29.6%Profit for the year attributable to the owners of the Parent15.3%
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 11 and, as regards the HTC portfolio, only Italian government bonds. ABS securities Normalised data do not include the realisation effects of the public tender and exchange offer as subsequently described.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 12 SIGNIFICANT EVENTS FROM 1 JANUARY TO 31 DECEMBER 2025 On 16 January 2025, the European Court of Human Rights (the "Court") issued a ruling (the "Ruling") in the case initiated in 2023 by Ontier Italia law firm on behalf of the Bank. The case sought to have the Court recognize a violation of the European Conven-tion on Human Rights (the "Convention"). The alleged violations stemmed from the non-fulfilment by a financially distressed local authority (the "Local Authority") of its payment obligations, which had been confirmed by final court rulings issued long ago. Through the Ruling, the Court (among other things) explicitly declared that "the re-spondent state must, within three months, adopt appropriate measures to ensure the execution of the still-pending domestic court rulings," and that the Ruling is final and During the year, the Bank received new positive judgments and filed lawsuits with the Court similar to that closed by the judgments that found as original defaulting debtors entities belonging to the Public Administration (including other insolvent local authori-ties, but not only). The draft Budget Bill for 2026 introduced (in its current version) a European litigation". Also based on the statements made to the press by the competent Minister, European litigation also include those pending before the European Court of Human Rights. On 19 November 2025, the Bank received from a municipality the final addressee of a ruling issued by the European Court of Human Rights and in the meantime having emerged from financial distress On 21 March 2025, the Board of Directors also approved the new Corporate Governance Project, one of the initiatives undertaken by the Bank at the request of the Supervisory Authority in connection with the findings of the inspection. The new Corporate Govern-ance Project, which adds an Executive Committee to the corporate governance bodies, resolved to accelerate the replacement of part of the members of the Board of Directors and the Board of Statutory Auditors, as requested by the Bank of Italy in relation to the also resolved to adjust the remuneration of the Board of Directors to take into account ap-sections, pursuant to Article 123-ter of the Consolidated Law on Finance (TUF). At the meeting of 21 March 2025, the Board of Directors approved the new classification of some credit exposures as defaulted, in accordance with the findings made in the inspection report issued on 20 December 2024. These findings have highlighted issues
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 13 in the rules and practices followed by the Bank to classify exposures, considered by the Supervisory Authority not fully compliant with the EBA Guidelines on the application of the definition of default. To implement that decision, with effect from 31 March 2025, the Bank reclassified pru-dentially the exposures concerned, thereby increasing past due exposures to a total of Group The increase mainly concerned the non-recourse factoring of exposures to public sector entities and, therefore, due to the type of underlying receivables, there continue to be no problems in terms of credit quality and likelihood of recovery. 86% of the Baoverdue receivables, net of those referred to the Kruso Kapital Group, are attributable to public sector counterparties. Since the date of the new classification, the affected exposures have been subject to calendar provisioning. Since 31 March 2025, in application of the provisions introduced by the new Regula-tion (EU) no. 2024/1623 (CRR 3), the Group has carried out a prudential redetermina-tion of the credit risk associated with collateralised loans. This adjustment was neces-sary because, according to the interpretation given by the national Supervisory Au-thority in its inspection report, a guarantee in gold, instead of in investment, is no longer considered admissible for the purposes of credit risk mitigation in the determi-nation of RWAs. Essentially, collateralised loans are treated as if there were no under-lying collateral, regardless of historical recovery rates, which are approximately 100%. The new CRR3 applies to the Bank while, for the subsidiary Kruso Kapital, it will be applied no earlier than 1 January 2026. In response to a specific request from the Bank of Italy, the Board of Directors also approved an updated capital plan for the 20252027 period. The outcomes of the plan confirm, in substance, the profit and capital ratio targets set out in the 20242026 Business plan approved in May 2024. The capital plan also takes into account the ex-pected synthetic (SRT) and traditional securitisation transactions and the recent rulings of the European Court of Human Rights. Further managerial initiatives, new securitisa-tions, including SRT (significant risk transfer), issues of credit linked notes and new ECHR judgments are not fully counted for numerical purposes in the capital plan. The Capital Plan was submitted to the Bank of Italy at the end of March 2025, along with a descriptive report detailing the key actions required by the Supervisory Authority to address the findings communicated on 20 December. The report also includes as-sessments from the Board of Statutory Auditors and the control functions. On 13 February 2025, the liquidation of Specialty Finance Trust Holdings Ltd was com-pleted, and the company was deregistered from the UK Companies Register. On 28 March 2025, the Directors Giovanni Puglisi (Deputy Chairperson), Daniele Bonvi-cini, Maria Leddi and Francesca Granata and the Statutory Auditors Daniela Toscano
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 14 and Luigi Ruggiero resigned, in order to facilitate the implementation of the new corpo-rate governance project and the acceleration of the replacement of part of the Board of Directors and the Board of Statutory Auditors, as requested by the Bank of Italy with the letter of 20 December 2024. The resignations were tendered with effect from the date of the Shareholders' Meeting convened to approve the Financial Statements of Banca Sistema S.p.A. at 31 December 2024, or from 30 April 2025, concurrently with thing. On the same date and in order to facilitate the implementation of the new corporate governance project and to ensure the necessary continuity of the supervisory body, the Chairperson of the Board of Statutory Auditors, Lucia Abati, resigned from the office of Chairperson (but not also of the Standing Auditor), thus referring the identification of a new Chairperson of the supervisory body to the resolutions of the Shareholders' Meet-ing. On 30 April 2025, the Shareholders' Meeting appointed four new directors to replace those who had resigned, in the persons of Gianpaolo Alessandro, Andrea De Tomas, Giuliana Grassia and Maria Gaia Soana. The newly appointed directors will remain in office until the expiry of those already in office, or until the date of approval of the financial statements at 31.12.2026. On the same date, the Shareholders' Meeting also appointed the following two standing auditors, replacing those who had resigned and who will remain in office until the expiry of the one already in office, or until the date of approval of the financial statements at 31.12.2025: Anna Maria Allievi and Guido Paolucci. Mr. Guido Paolucci was also ap-pointed Chairperson of the Board of Statutory Auditors. Also on 30 April 2025, the Shareholders' Meeting approved the new governance project of the Bank, which, among other things, establishes the Executive Committee. On 27 June 2025, the Board of Directors, in accordance with the provisions of the cor-porate governance project and as already provided for in the Bank's Articles of Associ-ation, appointed, with effect from 1 July 2025, the members of the Executive Committee as follows: Gianluca Garbi (Chief Executive Officer), Gianpaolo Alessandro (Director and anti-money laundering representative), Alessandra Grendele (Director). The Chief Ex-ecutive Officer becomes the chair of the Executive Committee, in application of Article 13.4 of the Articles of Association. The Executive Committee will remain in office until the expiry of the term of office of the Board of Directors scheduled with the approval of the financial statements at 31 December 2026. On 12 September, the Bank was notified of the proposal regarding the outcome of the disciplinary proceedings initiated by the Bank of Italy following the inspection conducted in 2024. The proposal, which still needs to be approved by the competent bodies of the 310,000. The Bank submitted, within the time limits set by the regulations governing the Bank of Italy's administrative sanctioning procedure, a further defense brief in
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 15 relation to the proposed fine formulated by the Authority. On 28 October, the Bank of Italy, notified Banca Sistema of the imposition of the afore-mentioned fine. On 21 November, Banca Sistema arranged for payment of the amount due as a fine. On 8 October 2025, a tax audit initiated on 16 April 2025 by the Italian Revenue Agency was completed with the notification of the Report of Findings (PVC) by the Regional Directorate of Lombardy Large Taxpayers Office. Based on the contested findings, the thousand. On 30 June 2025, Banca CF+ S.p.A. announced that it intended to launch a voluntary public tender offer on all the ordinary shares of Banca Sistema, without this having been solicited or agreed in advance with Banca Sistema itself. With regard to the public tender offer, the independent directors, pursuant to Article 39-bis, paragraph 2, of the Consob Issuers' Regulations, have appointed Equita SIM S.p.A. as the independent expert tasked with assisting them in assessing the fairness of the consideration of the offer and preparing the reasoned opinion required by cur-rent legislation For further details and information relating to the public tender and exchange offer,
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 16 THE MACROECONOMIC SCENARIO 2025 is marked by different economic trends in different countries. In the United States, thanks to consumption and investment linked to artificial intelligence (AI), the economy continued to expand, although there has been a deterioration in household confidence and a weakening of the labour market, with a slowdown at the end of 2025 due to the temporary suspension of federal administrative activities (government shutdown). In China, domestic demand is weak but exports are recovering thanks to semiconductors and AI-related goods. An acceleration in world trade is observed despite trade tensions, with a strong redirection of flows from China towards Asia, Africa and Europe. According to OECD forecasts, global growth will show a slight decline in 2026 (2.9%). In the Euro area, GDP recorded moderate growth (+0.3%) in the final quarters of 2025, with the French and Spanish economies proving very resilient, while the situation in Germany remains stagnant. Inflation is stabilising at around 2%. Due to uncertainty linked to developments in the global environment, households are very cautious in their spending, increasing their propensity to save. Manufacturing remains weak due to pres-sure from Chinese competition. Household lending is increasing, especially for mort-gages. As a result of all these factors, ECB projections nevertheless foresee GDP growth of 1.2% in 2026. ITALY In Italy, GDP growth is reported in the final quarters of 2025 (in the third quarter +0.1%) thanks to exports and investment. Bank of Italy forecasts are quite positive as GDP growth of 0.6% is expected in 2026. In the industrial sector, despite a decline recorded over the summer, a recovery is observed, with an expansion in pharmaceuti-cal and electronic equipment production. In services too, there is broad-based growth, especially in business services and ICT, while there is a slight decline in residential construction. Non-residential construction remains stable. Business investment contin-ues to rise, with strong use of incentives. In Italy too, as across the Euro area, house-hold consumption growth is very limited, with a sharp increase in the propensity to save (11.4%, one of the highest values since 2008). Property market transactions are increasing, with a high and stable current account surplus thanks to the improvement in the balance of non-energy goods and the reduction in the energy deficit. Employ-ment has increased since autumn after a stable summer, thus contributing to a fall in unemployment to 5.8%, with moderate wage growth slightly above inflation. The lat-ter stabilised in December 2025 at 1.2%, well below the European average. The cost of funding for banks and interest rates on loans to businesses and households re-mained broadly unchanged (businesses 3.6% and mortgages to households 3.3%). Nevertheless, loans to businesses (+1.8%) and to households (+2.3%) increased. In conclusion, Italy presents a mixed picture, with highly dynamic services and a robust labour market but manufacturing under pressure and very moderate GDP growth. The Italian economy is holding up overall thanks to services and investments but remains
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 17 exposed to external risks (global trade, Asian competition, volatility in the technology sector).
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 18 FACTORING The Italian factoring market Statistics from Assifact, the Italian association of factoring providers, indicate moder-ate growth in the factoring market in 2025. In fact, the factoring market recorded of tax receivables arising from construction bonuses. Without recourse factoring is by far the most common form of factoring used by the market, accounting for approximately 83% of total turnover versus 17% for with re-course factoring transactions. In terms of amounts outstanding, these percentages are largely unchanged (79% without recourse versus 21% with recourse), thereby confirming that the assigning customers prefer completing assignments by hedging the risk associated with the assigned debtors. 59.8 billion, up by about 1.02% on an annual basis. BANCA SISTEMA AND FACTORING ACTIVITIES Banca Sistema was one of the pioneering banks in the factoring of receivables from the Public Administration, initially focused on the purchase of trade receivables from sup-pliers in the public health sector, and subsequently and gradually extended to other receivables from the entertainment sector. Since its establishment, the Bank has been able to grow in the original factoring business with a prudent risk management, and to support businesses (from large multinationals to small and medium-sized enterprises) through the provision of financial and collection services, thus contributing to the busi-lso been operating in Spain - where the company EBNSISTEMA Finance is located, owned by Banca Sistema together with the Spanish banking partner EBN Banco - mainly in the factoring segment for receivables from the Public Administration, specialising in the purchase of receivables mainly from entities in the public health sector. The Bank also offers SACE- and MCC-guaranteed loans exclusively to its factoring (for of its tax capacity and, from the last quarter of 2023, for trading purposes. The Bank, as Arranger and Senior Underwriter, coordinated and structured two innova-tive securitisations involving receivables originating from professional football clubs both at Italian and international level. The platform provides for the purchase, on a player transfers (national and international), audiovisual rights and compensatory con-tributions recognised to clubs in the event of relegation. The purchase of such loans on
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 19 a revolving basis will allow for a dynamic and efficient management of assets. This securitisation, and the subsequent ones currently being finalised, are part of Banca Sistema's strategy to expand its business model into non-traditional asset classes and represent an example of the 'originate to share' model of the Group's 2024-26 strategic plan and of the capital plan submitted to the Supervisory Authority, which on this oc-casion has also been realised thanks to a strategic partnership with international inves-tors specialising in the sports and entertainment sector who are subscribers to the junior tranche. With these transactions, the first in a series, a high level of profitability is maintained with a low absorption of RWA. This operating model fully leverages the orig-ination capabilities and improves profitability efficiency in relation to capital absorbed.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 20 The following table shows the factoring volumes by product type: Volumes were generated through both its own internal commercial network and other intermediaries with which the Group has entered into distribution agreements. The re-duction in factoring turnover is mainly attributable to lower volumes originated with healthcare companies. To the turnover figure shown above must be added the volumes loa Factoring has proven to be the ideal tool both for small and medium-sized enterprises to finance their working capital and thus trade receivables, and for large companies, such as multinationals, to improve their net financial position, mitigate country risk and receive solid support in servicing and collection activities.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 21 The following chart shows the ratio of debtors to the total exposure in the loans and receivables portfolio. The exposure to private debtors, increased significantly compared to the previous year, as required by the strategic development lines of the 2024-2026 business plan. Volumes related to the management of third-Since 2024, the Bank has continued to operate in the servicing of some limited debt transactions and structured finance of third parties, that has included credit
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 22 securitisation transactions and assistance to corporate customers in the issuance of bonds, liaising with several counterparties and institutional investors. In two securitisation transactions related to super-bonus loans, the Bank also plays the role of senior investor and co-arranger, strengthening its position in the market.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 23 SALARY- AND PENSION-BACKED LOANS AND QUINTOPUOI LOANS Assofin data also show significant growth in volumes in the consumer credit market in the final quarter of the year, particularly for salary- and pension-backed loans, in line with the trend already seen in the previous quarters of the year. At the end of 2025, the sector grew overall by 7.9%, driven by salary- and pension-backed loans, which recorded cumulative growth of 12.6% compared to 2024 and by Personal Loans (+9.3%). The mortgage sector slowed its growth compared to the first part of the year, when growth had been stronger, also driven by the high number of refinancing transactions occurring in conjunction with the repositioning of benchmark rates. Overall consolidated growth reported at the end of 2025 amounted to 22.9%. In this context, the division closed the final quarter of 2025 with performance in line down 29% compared to last year. This result essentially conditioned by the selective approach adopted by the Bank regarding volumes in order to preserve a proper level of profitability. This approach entailed renouncing part of the activity with credit interme-diaries, which are more exposed to price competition, in favour of consolidating the single-company agents channel. With regard to other products, the Retail Division worked to expand and consolidate distribution agreements for third-party products, increasing its distribution capacity and e the leasing segment. million at 31 December 2025, in line with the attrition of the without recourse portfolio acquired in previous years, accelerated by the sale in 2025 of certain loans and receiv-component relating to receivables that was originated after 1 January 2023 (and there-fore optimised in terms of margins) stood at 53% of the total. On 25 June, the Bank of Italy issued a clearance notice regarding the application sub-mitted for the implementation of the SRT transaction through synthetic securitisation of the Salary-and pension-backed loan portfolio. The transaction will therefore optimise the capital absorption of the loans and receivables portfolio and the allocation of capital in line with the targets set out in the bank's capital plan. The following table shows volumes per channel:
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 24 Below is an overview of the changes in the outstanding balance reported in the financial refers to contracts originated directly through our network, while the indirect component concerns the purchase of portfolios from third-party intermediaries. In these cases, ex-reporting date, the Bank has not taken over the financing contracts with individual cus-tomers but has only acquired the credit.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 25 CQ Loans are split between private-sector employees (18%), pensioners (48%) and public-sector employees (34%). Therefore, over 80% of the volumes refer to pensioners and employees of Public Administration, which remains the Bank's main debtor.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 26 COLLATERALISED LENDING AND KRUSO KAPITALAt 31 December 2025, Kruso Kapital held approximately 93.4 thousand policies (collat-The following chart shows the performance of outstanding loans:1 131.12.24 also includes the consolidation of CEP in the 18% yoy increase.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 27 The assets in the balance sheet, which increased by 5.1%, consist mainly of loans and receivables with customers related to the collateralised lending business (loans and re- con-clusion of the process of final allocation of the price ("PPA") for the acquisition of CEP in June 2025, goodwill decreased compared to 31.12.2024. Other intangible assets also changed compared to December 2024 due in part to the premium due for the acquisition arising from the allocation process described above. The consolidated Statement of financial position of Kruso Kapital Group at 31 December 2025 is provided below. 31.12.2025 31.12.2024% ChangeCash and cash equivalents 8,463 9,016 (553) -6.1%Financial assets measured at amortised cost 155,161 143,879 11,282 7.8% a) loans and receivables with banks 103 34 69 >100% b1) loans and receivables with customers - loans 155,058 143,845 11,213 7.8%Property and equipment 4,215 4,612 (397) -8.6%Intangible assets 43,416 43,264 152 0.4%of which: goodwill 40,070 41,155 (1,085) -2.6%Tax assets 618 404 214 53.0%Other assets 3,129 3,309 (180) -5.4%Total assets 215,002 204,484 10,518 5.1%31.12.2025 31.12.2024% ChangeFinancial liabilities measured at amortised cost 134,688 141,830 (7,142) -5.0%Financial liabilities designated at fair value 6,726 - 6,726n.a.Tax liabilities 5,602 3,998 1,604 40.1%Other liabilities 8,079 7,354 725 9.9%Post-employment benefits 848 872 (24) -2.8%Provisions for risks and charges 805 971 (166) -17.1%Share capital 24,610 24,610 - 0.0%Reserves 24,882 20,383 4,499 22.1%Valuation reserves (14) (34) 20 -58.8%Profit (loss) for the period 8,776 4,500 4,276 95.0%Total liabilities and equity 215,002 204,484 10,518 5.1%
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 28 as due to customers, and becomes a contingent asset if not collected. Financial liabilities also include amounts due to banks (around 60% from Banca Sistema credit lines, pro-gressively down). The item Financial liabilities designated at fair value through profit or loss refers exclusively to the issuances (starting from April 2025) of Credit Linked Notes, the reference underlying of which is given by a part of the portfolio of pledged receiva-bles in Italy guaranteed by gold. 58 million. The consolidated income statement of Kruso Kapital Group at 31 December 2025 is provided below. pacted by higher interest income (+23.8%), essentially linked to higher loans (in Italy) and higher margins, which more than compensated the negative impact of the premium pormillion, is also significant;
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 29 21.6 million, +51.2% YoY) driven by higher uses, the consolidation of CEP and, to a significant extent, increased contributions from loan auctions equal to 66 (56 at 31 December 2024). Credit adjustments, slightly unchanged YoY, from the first quarter of 2025 were driven by the new credit policies (for KK in Italy and CEP) which, in addition to the different classification of receivables, introduced new collective hedging percentages. Higher personnel expenses mainly related to the consolidation of CEP. The num-ber of resources is 143 as at 31/12/25 vs 144 as at 31/12/24; Higher other administrative expenses mainly due to the consolidation of CEP lion) and other operating expenses; The change in value adjustments on property and equipment/intangible assets is chased in January 2025 and to the CEP subsidiary; million); The change in Other operating income (expense) is mainly attributable to lower income from expense recoveries. The item Income from equity investments is due to the release of part of the debt relating to the portion of the deferred price (earn out) as per the contract for the acqui-sition of Art-Rite, following an agreement with the previous shareholders of the com-pany. the contribution from the item described above, which more than offset the negative -0.7 million after tax).
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 30 FUNDING AND TREASURY ACTIVITIES most exclusively through investment in Italian government bonds. 1,178 million at 31 December 2024. At 31 December 2025, the nominal amount of securities in the HTCS portfolio amounted to months (15.2 months at 31 December 2024) and a positive mark-to-illion. FUNDING At 31 December 2025, wholesale funding was about 31% of total funding (against 30% at 31 December 2024). Securitisations with salary- and pension-backed loans as collateral also completed with a partly-paid securities structure continue to allow Banca Sistema to efficiently refinance its CQS/CQP portfolio and to continue to grow its salary- and pension-backed loan business, whose funding structure is optimised by the securitisations. 2024); the above-7 million (obtained with the help of partner platforms) held with foreign entities (accounting for 82% of total deposit funding). of which from term deposits and the remaining 13% from current accounts. Retail funding accounts for 92% of the total of the customer deposits and is composed of the account SI Conto! Corrente and the product SI Conto! Deposito.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 31 The breakdown of funding by term is shown below. The average residual life is 17 months.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 32 COMPOSITION AND STRUCTURE OF THE GROUP Organisational chart - based on the divisional organisational model which assigns specific powers and autonomy in terms of lending, sales and operations to each of the Factoring and Retail Financing businesses has undergone some changes follow-ing the implementation of a comprehensive plan to strengthen the internal control sys-tem in terms of both quality and quantity, which involved hiring additional human re-sources, providing new IT and process automation tools, more intensive coordination between the Control Functions and between these and the Corporate Bodies, and the transfer of the organisational reporting of the Risk Department directly to the Board of Directors. In addition, in order to strengthen and accelerate the coordination of the Corporate Centre organisational structures, the implementation of corporate strategies tion of new artificial intelligence technologies, and the control of the cost structure of the operating machine and the achievement of a better cost-to-income ratio, the Group Coordination Department was established and the position of Deputy General Manager of the Bank was introduced. The organisational chart in force since 1 July 2025 is as follows:
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 33 HUMAN RESOURCES As at 31 December 2025, the Group had a staff of 358, broken down by contract cate-gory as follows: As at 31 December 2025, 55 people at group level were selected and hired to strengthen the control functions, to grow the business and to cover turn over, mainly with perma-nent contracts, and maternity replacements or other long absences with fixed-term contracts. Voluntary turn over (voluntary resignations by employees with permanent contracts) decreased by 1% during the year compared to the figures for the two previ-ous financial years, returning to its historical average levels. In terms of skills development, after identifying professional and technical training Bank delivered training initiatives run by external and internal trainers, with particular reference to technical training, professional training, soft skills and language training, for a total of approximately 150 days overall. Particular attention was paid to activities relating to cybersecurity, anti-money laundering and change management. The average age of Group employees is 46.7 for men and 43.4 for women. The break-down by gender is essentially balanced, with men accounting for 55.4% and women for 44.6% of the total. parency Directive ("EU Directive 2023/970") applicable from the next financial year and to set any adjustments, the Human Capital Department, with the support of qualified external consultants, carried out a series of analyses of the company situation on the matter. The analyses will continue in 2026 in order to align the relevant processes with the requirements of the Directive.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 34 INCOME STATEMENT RESULTS (1) The net trading income from Superbonus was reclassified from the item Trading income and restated in a separate item to supplement Net interest income. representing the best result achieved by the Group since its establishment. December 2024, which requires the Group not to include in its financial statements any cost or liability items relating to variable remuneration, no provisions have been made for personnel costs, the Chief Executive Officer and members of the Board of Directors arising from obligations linked to a Change of Control. Such charges, quantifiable as
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 35 pertain to subsequent financial years, depending on the decisions to be taken by the Supervisory Body. The financial year result benefited significantly from the collection, in the fourth quarter, handed down by the European Court of Human Rights (ECHR), which in the meantime had exited the insolvency procedure. The completion of the collection provided further evidence of the concrete effectiveness of the state guarantee envisaged for this type of litigation and debtors which, in this case, enabled the debtor Municipality to reach a settlement of the position, relying on the ad hoc allocation provided for by the decree linked to the 2026 Budget Law as well as its subsequent incorporation into the same Law which established a specific expendi-payment of similar rulings. positions subject to rulings by the ECHR. relates to enforceable decrees that meet the requirements to start proceedings before the ECHR but for which this process has not yet been formally initiated and which will be allocated in the budget over the coming financial years in accordance with the as-sumptions of the current accounting policy.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 36 Net interest income recorded a solid growth compared to the previous year, despite the progressive decline in market interest rates. This performance reflects the maintenance of high levels of interest income, supported by employment spreads that are still large compared to the cost of funding (which started a downward trend), given a slight con-traction in the average volumes employed. The total contribution of the Factoring Division, which includes both revenues from tra-ditional factoring transactions and those deriving from SME loans guaranteed by the me generated by the total loans and receivables portfolio. The following are added to this income: (i) the commission component associated with the factoring business; (ii) the revenues from the sale of some receivables due from private debtors; and (iii) the in-come realised on the purchase and subsequent realisation of Superbonus tax receiva-bles held for trading purposes. The component owed for late payments pursuant to Legislative Decree 231/02 (con-sisting of default interest and compensation) legally enforced at 31 December 2025
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 37 million in 2024); 21.4 million in 2024), and that recognised on an accruals basis in previous years; Starting from the first quarter of 2025, following the update of the policy relating to the accounting of default interest for Public Administration debtors in situations of financial distress or probable default, default interest was recorded for an amoun 6.3 million at 31 December relating to positions subject to judgments by the ECHR that found the Italian State liable for the debt in cases where the debtor is in default. In the draft 2026 budget law currently being debated in Parliament, the State has allocated funds for the payment of these debts. The reduction in the contribution due for late payments pur-suant to Legislative Decree 231/02 (consisting of default interest and compensation) compared to the same period in 2024 was also due to an extraordinary transfer of decrease in the stock, influenced by contractual resolutions of receivables within the legal scope. The amount of the stock of interest pursuant to Legislative Decree 231/02 accrued at 149 million ted to positions with troubled local authorities, a component for which default interest is not allocated in the financial statements, except in the case positions subject to ECHR judg-ments as stated above, whereas the loans and receivables recognised in the financial islative Decree No. 231/02 accrued and not yet recognised in the income statement is ntities such as consortia or quasi-public companies excluded from the scope of the allocation model. The contribution of interest on the salary-/pension-backed loans is down slightly on the The sustained growth of the Collateralised Lending Division was confirmed: its contri-previous year. The item includes a one-570 thousand already recognised at 30 June 2025) relating to the negative reversal of
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 38 the fair value adjustments allocated to loans and receivables with customers, upon completion of the purchase price allocation process for the company CEP. The positive contribution of the interest component from the government-backed loans to SMEs is confirmed, albeit down compared to a lower outstanding and a decrease in the yield indexed at a variable rate. The contribution of the securities portfolio increased compared to 31 December 2024 thanks to an increase in the average stock of the existing portfolio and a higher average portfolio return. The interest component from ABS securities is attributable to the yields on the senior securities in which the Bank is also the originator. ECB whose remuneration rate decreased. The decrease in interest expense is due to the lower outstanding debt and decrease in market rates. 2024 included interest paid on TLTRO III, which was fully repaid in that financial year. loans and the change of these loans at fair value, decreasing due to the dismantling of tax annuities. the previous year, due to the decrease in fees and commissions from factoring 2025 2024% ChangeFee and commission incomeFactoring activities 10,005 18,749 (8,744) -46.6%Fee and commission income - off-premises CQ 6,650 9,883 (3,233) -32.7%Collateralised loans (fee and commission income) 21,376 14,055 7,321 52.1%Collection activities 1,221 1,145 76 6.6%Servicer of securitization 4,080 1,807 2,273 >100%Other fee and commission income 1,178 921 257 27.9%Total fee and commission income 44,510 46,560 (2,050) -4.4%Fee and commission expenseFactoring portfolio placement (1,751) (1,418) (333) 23.5%Placement of other financial products (6,103) (6,489) 386 -5.9%Fees - off-premises CQ (6,166) (9,423) 3,257 -34.6%Other fee and commission expense (2,922) (2,508) (414) 16.5%Total fee and commission expense (16,942) (19,838) 2,896 -14.6%Net fee and commission income 27,568 26,722 846 3.2%
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 39 activities being offset by the increase in fees and commissions from collateralised lending as a result of a greater number of auctions during the period. Fee and commission income from factoring should be considered together with interest income, since it makes no difference from a management point of view whether profit is recognised in the commissions and fees item or in interest in the without recourse factoring business. Fee and commission income from the collateral- 7.3 million compared to the previous year thanks to the increase in the number of auctions, to the continuous growth of the business and the contribution of the newly acquired Portuguese pledge company. Fees and commissions from collection activities include revenues from the traditional service of reconciling third-party invoice receipts with the Public Administration amount-i-ness for third- Other Fee and commission income, includes commissions and fees related to current account services and auction fees related to the Art-million. Fee and commission income - off-premises CQ refers to both the commissions on the salary- and pension-backed loan (CQ) origination business and the placement of third- Fees - off-missions paid to financial advisers for the off-premises placement of the salary- and pension-backed loan product. Fees and commissions for the placement of financial products paid to third parties are attributable to returns to third-party intermediaries for the placement and management of the SI Conto! Deposito product under the passporting regime, whereas the fee and commission expense of placing the factoring portfolios is linked to the origination costs of the factoring receivables. Other fee and commission expense includes commissions for trading third-party secu-rities and for interbank collections and payment services. The item includes the income from trading Italian government bonds.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 40 The item Gain (loss) from sales or repurchases includes gains realised on sales of the and receivables portfolios. settlement agreements with the Extraordinary Liquidation Body of a failing municipality no longer apply, as well as consequent updating of the estimates of the probability of recovery of the same loan following the aforementioned judgment of the European Court of Human Rights. During the fourth quarter of 2025, there was a release of value ECHR currently awaiting ruling. The loss rate stands at 0.39% (0.6% net of the impairment gains) compared to 0.30% recorded in December 2024, excluding the aforementioned impairment gain. Value adjustments on loans during the year were affected mainly by positive effects deriving from recoveries on positions definitively closed with the release of provisions and from the release of provisions for the full collection of receivables from municipalities previously in financial distress. At the same time, the increase is mainly attributable to unfavourable court rulings. Provisions for risks also increased following the entry of certain customers into negoti-ated crisis settlement procedures, albeit only in the initial stages. The fixed remuneration component of personnel costs recorded an increase as a result of the changes in the banking contract, applied to the majority of staff, and to the increase in the number of human resources, whose average number rose from 315 to 361, due to the inclusion in November of 44 new resources from the Portuguese
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 41 company Pignus - Credito Economico Popular, which was acquired by the subsidiary Kruso Kapital. It should be noted that, in consideration of the indications provided by the Supervisory to the current year was not allocated in the financial statements for the current year.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 42 Administrative expenses increased by 29.6%, mainly due to costs related to business development and compliance with new legislation. The increase in insurance coverage expenses is linked to higher insurance premiums on factoring portfolios and for the SRT transaction on CQ portfolios.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 43 Consulting expenses consisted largely of the non-recurring costs incurred to comply with the feedback received from the Supervisory Authority and new transactions al-ready carried out or launched by the subsidiary Kruso Kapital such as the structuring and placement of the CLN, the structuring of a proposed ABS funding and risk mitiga-tion transaction and advisory services relating to the translisting from the EGM market to the MTA. IT expenses include costs for services provided by the outsourcer responsible for man-aging legacy systems, as well as those related to IT infrastructure, increasing as a re-sult of both increased investments and changes to legislation. Indirect taxes and fees increased, mainly due to the increase in contributions paid in relation to enforceable injunctions activated against public administration debtors. The impairment losses on property and equipment/intangible assets are the result of higher depreciation and amortisation for property used for business purposes, as well -of- year is due to the reduction in the contribution to the interbank fund.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 44 THE MAIN STATEMENT OF FINANCIAL POSITION AGGREGATES At 31 December 2025 total assets were down by 7.8% over the end of 2024 and equal Italian government bonds with an average duration of about 16.3 months (the average remaining duration at the end of 2024 was 15.2 months). The nominal amount of the was positive
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 45 The item loans and receivables with customers under Financial assets measured at -to- Outstanding loans for factoring receivables compared to Total loans, which excludes the amounts of the securities portfolio, were 55% (also 56% at the end of 2024). The vol- December 2024). Total financing for the current year also includes investments in senior ABS securities backed by loans originated by the Bank, in order to provide a more accurate representation of the credit risk profile and with the result of the Bank's orig-ination activity. Salary- and pension-backed loans were lower than the end of the previous year, with million at the end of 2024). Loans to enterprises guaranteed by the State are decreasing as a result of lower dis- The collateralised lending business, which is conducted through the Kruso Kapital Group, grew during the period, with loans granted at 31 December 2025 amounting to The item ABS securities also includes the investment in four ABS securities for an 92 million at the end of 2024) linked to two securitisation transactions for the purchase of tax receivables and two securitisation transactions for the purchase of sports credits, of which the Bank is a joint arranger and also holds the role of Master Servicer. HTC Securities are composed of Italian government securities with an average duration -to-market valuation of the securities at 30 September 2025 shows a pre-
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 46 The following table shows the quality of receivables in the loans and receivables with customers item, excluding the securities positions. The ratio of gross non-performing loans to total gross loans rose to 16.3% compared to 11.7% at 31 December 2024, while the ratio calculated on the net values of the same periods is 14.3% and 9.9% respectively, (the NPE figure for the 2024 financial year has been restated for comparability purposes, including senior ABS securities in which the Bank is an investor and originator, in line with the calculation scope adopted from the 2025 financial year onwards) following a decrease in the absolute value of performing loans and an increase in non-performing loans with past due status, which remain high 2024, the increase is due to the reclassification as past due of some overdue loan posi-tions, in full compliance with the feedback from and constant contacts with the Bank of Italy, which during its inspection had criticised as entirely ineffective the risk mitigation measures adopted by Banca Sistema to suspend the calculation of past due amounts. It should also be noted that following the exit from the non-performing status of a sified from bad exposures to past due exposures. Past due growth is predominantly related to the factoring portfolio without recourse to Public Administration, a sector that continues, beyond the new technical rules used to represent past due data for regulatory purposes, not to present particular problems in terms of credit quality and probability of recovery. 2 Not even the maturity of the Below is the list of Public Administration entities that, pursuant to the rules on the new definition of default, are classified, as at 31 September 2025, as being in a state of default: Municipalities of: Comune di Cuglieri; Santi Cosma E Damiano; Abriola; Acate; Accumoli; Acerno; Aci Catena; Aci Sant'Antonio; Acquafondata; Acquaro; Acquaviva Collecroce; Adrano; Africo; Agrigento; Aidone; Aieta; Ailano; Albanella; Albano Laziale; Alcara Li Fusi; Alessandria; Alessandria Del Carretto; Alessandria Della Rocca; Alessano; Alezio; Alife; Almenno San Salvatore; Altavilla Irpina; Altavilla Silentina; Alto Reno Terme; Amantea; Andria; Anguillara Sabazia; Aragona; Arce; Arcinazzo Romano; Ardore; Argusto; Arienzo; Arpaia; Arsoli; Arzano; Arzergrande; Ascea; Assemini; Atina; Aurigo; Avella; Avellino; Avola; Bagheria; Balsorano; Barano D'Ischia; Barcellona Pozzo Di Gotto; Bareggio; Bari; Baronissi; Basaluzzo; Bassano Romano; Bellegra; Belmonte Calabro; Belmonte In Sabina; Belmonte Mezzagno; Belsito; Belvedere Di Spinello; Benestare; Bergamo; Bernalda; Bianchi; Bianco; Bisacquino; Bisceglie; Bitetto; Bogliasco; Bolognetta; Bompensiere; Bompietro; Borgetto; Borghetto Santo Spirito; Borgia; Boscotrecase; Bovalino; Boville Ernica; Bracciano; Bracigliano; Brindisi; Brognaturo; Brolo; Buccheri; Buonabitacolo; Burgio; Buttigliera D'Asti; Cagli; Cagnano Amiterno; Caiazzo; Caivano; Calamonaci; Calascibetta; Calatafimi
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 47 collateral, which the Supervisory Authority has requested to calculate despite the ab-sence of any formal repayment obligation by the customer, raises any concern since the sale of the collateralised asset recovers the nominal amount of the loan and all re-lated fees. The coverage ratio of non-performing loans stands at 14.4%, down from 17.3% at 31 December 2024. The figure is affected by the higher amount of overdue receivables, as indicated above. The coverage ratio of bad loans, excluding exposures to municipalities in temporary distress, is 84.6%. Segesta; Caltavuturo; Calvanico; Calvi Risorta; Camigliano; Cammarata; Campo Nell'Elba; Campobello Di Licata; Campobello Di Mazara; Campodarsego; Campofranco; Camporotondo Etneo; Camposano; Candida; Canicattini Bagni; Capena; Capizzi; Capo D'Orlando; Cardeto; Cardito; Cariati; Carlopoli; Carmiano; Carovigno; Casal Di Principe; Casalnuovo Di Napoli; Casape; Casapesenna; Caserta; Casoria; Cassano All' Jonio; Castel Madama; Castel San Giorgio; Castel San Giovanni; Castel Volturno; Castelfranco Di Sotto; Castelfranco In Miscano; Castellammare Del Golfo; Castellana Grotte; Castellaneta; Castellina Marittima; Castello Del Matese; Castelnuovo Di Conza; Castelpagano; Casteltermini; Castelvec-chio Subequo; Castelvenere; Castelvetrano; Castiglione Del Genovesi; Castilenti; Castrofilippo; Catanzaro; Caulonia; Cellole; Centola; Centuripe; Ceppaloni; Ceranova; Cerchiara Di Calabria; Cercola; Cerenzia; Cerreto D'Esi; Cerreto Laziale; Certosa Di Pavia; Cervaro; Cervinara; Cervino; Cesa; Chiaramonte Gulfi; Chiaravalle Centrale; Cicciano; Ciro' Marina; Cisternino; Citta' Di Castello; Civitavecchia; Civitella Paganico; Civitella Roveto; Civitella San Paolo; Cogorno Ente; Colleferro; Cologno Monzese; Colonna; Colosimi; Colzate; Comiso; Comitini; Contigliano; Contursi Terme; Conversano; Copertino; Corfinio; Corigliano-Rossano; Corleone; Corsano; Cosoleto; Cotronei; Cremona; Crespina Lorenzana; Crispano; Cropalati; Crosia; Crotone; Crucoli; Cupra Marittima; Curinga; Cusano Mutri; Cutro; Davoli; Delianuova; Diamante; Domicella; Dronero; Durazzano; Duronia; Erbusco; Fabriano; Fabrizia; Faicchio; Falciano Del Massico; Falcone; Fasano; Favara; Ferrandina; Fiamignano; Ficarazzi; Figline Vegliaturo; Filadelfia; Filandari; Fiuggi; Fiumara; Fiumefreddo Bruzio; Floresta; Flumeri; Foggia; Foiano Di Val Fortore; Fontechiari; Formia; Fornelli; Francavilla Di Sicilia; Francavilla Marittima; Francavilla Sul Sinni; Francofonte; Frattamaggiore; Frosinone; Furci Siculo; Furnari; Gaggi; Gagliato; Galatone; Galatro; Gallicano Nel Lazio; Gallicchio; Gallipoli; Gasperina; Gattico-Veruno; Gela; Genzano Di Roma; Giano Vetusto; Giardinello; Giarre; Gioia Tauro; Gioiosa Ionica; Gioiosa Marea; Girifalco; Giugliano In Campania; Gizzeria; Golasecca; Grammichele; Grassano; Grisolia; Grottaminarda; Grotte; Grumo Appula; Guardavalle; Guardia Perticara; Guardia Piemontese; Guardia Sanframondi; Guidonia Montecelio; Isca Sullo Ionio; Ischia; Isola Delle Femmine; Isola Di Capo Rizzuto; Ispica; Jenne; Joppolo Giancaxio; Laganadi; Lago; Lamezia Terme; Lanciano; Lanzo Torinese; Lattarico; Laureana Di Borrello; Laurino; Lavello; Lentini; Lesina; Letino; Lettere; Liberi; Librizzi; Limbadi; Locri; Longobardi; Longobucco; Longone Sabino; Lucca Sicula; Luco Dei Marsi; Lupara; Lustra; Luzzi; Macerata Campania; Maddaloni; Maenza; Maida; Maiera'; Maierato; Maissana; Malito; Malvito; Mandatoriccio; Manocalzati; Maracalagonis; Maratea; Marcianise; Mariglianella; Marigliano; Marina Di Gioiosa Ionica; Marineo; Martirano Lombardo; Martone; Mascali; Massa D'Albe; Massa Martana; Massafra; Mazara Del Vallo; Mazzarino; Mazzarrone; Melicucco; Melissa; Melito Irpino; Menaggio; Miglierina; Mignano Monte Lungo; Milazzo; Mileto; Mirabella Imbaccari; Mirto; Molochio; Monasterace; Mondragone; Monforte San Giorgio; Mongiuffi Melia; Mongrassano; Montagnareale; Montalbano Elicona; Montalbano Jonico; Montalto Uffugo; Montauro; Monte Compatri; Montebello Ionico; Montecalvo Irpino; Montecorvino Pugliano; Montefalcione; Monteforte Irpino; Monteleone Di Puglia; Montemaggiore Belsito; Montemagno; Montemesola; Montemilone; Montepaone; Monterosso Almo; Monterosso Calabro; Monterotondo; Montesarchio; Montescudaio; Montesilvano; Montorio Romano; Morano Calabro; Napoli; Nardodipace; Naso; Nereto; Nettuno; Nicolosi; Nocera Inferiore; Nocera Terinese; Noci; Norma; Noto; Novi Velia; Novoli; Olbia; Olivadi; Oliveri; Omignano; Oppido Mamertina; Orria; Orsara Di Puglia; Orsomarso; Orte; Ortonovo; Osiglia; Ossona; Ottati; Paceco; Pago Veiano; Palagonia; Palazzolo Acreide; Palermiti; Palermo; Palma Di Montechiaro; Palmi; Palomonte; Pantigliate; Paola; Parete; Parona; Partinico; Paterno'; Patti; Pazzano; Pellezzano; Penna In Teverina; Penna Sant'Andrea; Pennadomo; Perito; Pertosa; Pescara; Pesco Sannita; Petilia Policastro; Petina; Petriolo; Petrona'; Piaggine; Piana Degli Albanesi; Pianopoli; Piazza Armerina; Pietraperzia; Pieve Ligure; Piglio; Pignataro Maggiore; Pignola; Piraino; Pisogne; Pizzo; Pizzoni; Poggio Nativo; Poggiomarino; Polia; Policoro; Polignano A Mare; Polistena; Polla; Pollena Trocchia; Pomarico; Ponte San Pietro; Pontelatone; Popoli; Porto Empedocle; Portoferraio; Portopalo Di Capo Passero; Posada; Postiglione; Potenza; Pozzuoli; Prata Sannita; Pratella; Pratola Serra; Presezzo; Presicce - Acquarica; Priverno; Prizzi; Proceno; Pulsano; Qualiano; Quartu Sant'Elena; Quartucciu; Racalmuto; Raddusa; Raffadali; Ramacca; Randazzo; Rapino; Ravanusa; Realmonte; Reggio Calabria; Riace; Riardo; Ricadi; Ricigliano; Riesi; Rieti; Rizziconi; Rocca D'Evandro; Rocca Di Neto; Rocca San Felice; Roccabernarda; Roccadaspide; Roccafiorita; Roccafluvione; Roccagorga; Roccamonfina; Roccapiemonte; Roccasecca; Roccavaldina; Roccella Ionica; Rocchetta E Croce; Rocchetta Ligure; Rodi' Milici; Rofrano; Rometta; Roseto Capo Spulico; Rosolini; Rotonda; Ruvo Di Puglia; S.Angelo D'Alife; S.Nicola Manfredi; S.Sofia D'Epiro; Salaparuta; Salemi; Salerno; Salice Salentino; Salve; San Cassiano; San Cataldo; San Demetrio Corone; San Floro; San Genesio Ed Uniti; San Giorgio Del Sannio; San Giorgio Morgeto; San Giovanni Gemini; San Giovanni In Fiore; San Giovanni La Punta; San Giovanni Rotondo; San Giovanni Valdarno; San Lorenzello; San Lucido; San Marco In Lamis; San Marco La Catola; San Martino Di Finita; San Martino Sannita; San Martino Valle Caudina; San Mauro Forte; San Nicola Arcella; San Nicola Dell'Alto; San Pietro Di Carida'; San Pietro In Cariano; San Pietro Infine; San Roberto; San Severino Lucano; San Sossio Baronia; San Valentino Torio; Sannicandro Di Bari; Sannicola; Santa Cesarea Terme; Santa Cristina D'Aspromonte; Santa Croce Camerina; Santa Flavia; Santa Maria A Vico; Santa Maria Di Licodia; Santa Paolina; Santa Teresa Di Riva; Sant'Agata Di Militello; Sant'Alessio In Aspromonte; Sant'Anastasia; Sant'Andrea Apostolo Dello Jonio; Sant'Angelo A Scala; Sant'Angelo Di Brolo; Sant'Arsenio; Santo Stefano In Aspromonte; Sant'Onofrio; Sanza; Saracena; Sarnano; Sarno; Sassano; Satriano; Savignano Irpino; Scala; Scalea; Scaletta Zanclea; Scandale; Sciolze; Scisciano; Scordia; Sellia Marina; Senise; Serradifalco; Serrata; Sesto Campano; Settimo San Pietro; Settingiano; Sgurgola; Siculiana; Siderno; Sinopoli; Siracusa; Solarino; Solofra; Somma Vesuviana; Sonnino; Sora; Sori; Soveria Simeri; Spadafora; Sparanise; Sperone; Spezzano Della Sila; Spinazzola; Statte; Stella Cilento; Stignano; Stornarella; Strongoli; Subiaco; Taranto; Taurianova; Taurisano; Teano; Telese Terme; Terlizzi; Terranova Da Sibari; Terranova Sappo Minulio; Terrasini; Terzigno; Tessennano; Tocco Caudio; Tora E Piccilli; Torano Castello; Torchiarolo; Torino; Torre Annunziata; Torre Santa Susanna; Torrenova; Torrevecchia Pia; Torriglia; Torrita Tiberina; Trabia; Trebisacce; Triggiano; Tripi; Trivigliano; Troina; Ugento; Umbriatico; Vairano Patenora; Valderice; Vallelonga; Vallepietra; Vasto; Venafro; Vernole; Veroli; Vibo Valentia; Vibonati; Vicovaro; Vietri Sul Mare; Viggiano; Vignola; Villa Castelli; Villa Literno; Villafranca Sicula; Villafranca Tirrena; Villagrande Strisaili; Villaricca; Viterbo; Vitorchiano; Vittoria; Vivaro Romano; Vizzini; Zafferana Etnea; Zagarise; Zambrone; Zerbolo'; Zungri; Comune Motta San Giovanni; Amministr. Prov. Di Rieti; Amministrazione Provinciale Di Catanzaro; Provincia Autonoma Di Trento; Provincia Di Barletta Andria Trani; Provincia Di Brindisi; Provincia Di Cosenza; Provincia Di Crotone; Provincia Di Imperia; Provincia Di Messina; Provincia Di Salerno; Provincia Di Teramo; Regione Calabria; Regione Siciliana; Roma Capitale; Comunita' Montana Del Taburno; Comunita' Montana Montepiano Reatino Quinta Zona; Comunita' Montana Trasimeno Medio Tevere; Citta' Di Trentola Ducenta; Citta' Di Villa San Giovanni; Citta' Metropolitana Di Catania; Citta' Metropolitana Di Napoli; 31Fss/Fsrf Base Usafe; A.Fo.R Azienda Forestale Regione Calabria; A.R.S.A.C.-Azienda Regionale Per Lo Sviluppo Dell'Agricoltura Calabrese; A.Spe.Co.N.Azienda Speciale Comune Di Noto; Aeroporto Valle D'Aosta A.V.D.A.; Agenzia Campana Per L'Edilizia Residenziale; Agenzia Forestale Regionale; Assemblea Regionale Siciliana; Automobile Club Palermo; Autorita' Di Sistema Portuale Del Mar Tirreno Centrale; Autorita' Di Sistema Portuale Del Mare Adriatico Settentrionale; Autorita' Portuale Di Messina; Banca D'Italia; Camera Di Commercio,Industria E Agricoltura Di Bari; Cfi Consorzio Farmaceutico Intercomunale; Cirps-Consortium; Consiglio Nazionale Delle Ricerche; Consorzio Di Bonifica Bacini Alto Ionio Reggino; Consorzio Di Bonifica Integrale Dei Bacini Settentrionali Del Cosentino; Consorzio Irriguo Alburni; H.A.F.S.E.; Inarcassa; Irccs Istituto Nazionale Tumori-Fondazione Pascale; Ist.Aut. Case Popolari Di Salerno; Istituto Nazionale Di Astrofisica - Inaf; Istituto Nazionale Per L'Assicurazione Contro Gli Infortuni Sul Lavoro - Inail; Istituto Regionale Per Lo Sviluppo Delle Attivita' Produttive; Laore Sardegna; Laziodisu-Ente Per Il Diritto Agli Studi Universitari Nel Lazio; Libero Consorzio Comunale Di Caltanissetta; U.S. Army Hospital; Università Degli Studi Della Campania L.Vanvitelli; Universita' Degli Studi Di Bari Aldo Moro; Universita' Degli Studi Di Catania; Universita' Degli Studi Di Milano - Bicocca; Universita' Degli Studi Di Napoli Federico Ii; Universita' Del Salento; E.R.S.U. -Ente Regionale Per Il Diritto Allo Studio Universitario; Asl Avezzano-Sulmona-L'Aquila; Asl Bari; Asl Benevento 1; Asl Brindisi; Asl Di Piacenza; Asl Lanciano Vasto Chieti; Asl Lecce; Asl Napoli 3 Sud; Asl Prov Foggia; Asl Rieti; Asp Di Agrigento; Asp. N. 1 Prov. Teramo; Ares Puglia - Agenzia Regionale Sanitaria Pugliese; Az. Ospedaliera Sant'Anna E San Sebastiano Di Caserta; Az. Sanitaria Proviciale Di Trapani; Az.Osp. Universitaria San Giovanni Di Dio E R.D'Aragona; Azienda Ospedaliera Bianchi Melacrino Morelli Di Reggio Calabria; Azienda Ospedaliera Di Rilievo Nazionale Antonio Cardarelli; Azienda Ospedaliera San Carlo Di Potenza; Azienda Ospedaliera Santa Maria Di Terni; Azienda Ospedaliera Universitaria G.Martino Di Messina; Azienda Ospedaliera Universitaria Renato Dulbecco; Azienda Ospedaliera:Ospedali Riuniti Papardo-Piemonte; Azienda Ospedaliero Universitaria Ospedali Riuniti Di Foggia; Azienda Ospedaliero Universitaria Vittorio Emanuele Ferrarotto San Bambino; Azienda Per La Tutela Della Salute - Ats Sardegna; Azienda Provinciale Per I Servizi Sanitari Della Provincia Autonoma Di Trento; Azienda Pubblica Di Servizi Alla Persona Catria E Nerone; Azienda Pubblica Di Servizi Alla Persona Maria Cristina Di Savoia; Azienda Pubblica Di Servizi Alla Persona Maria De Peppo Serena E Tito Pellegrino; Azienda Pubblica Di Servizi Alla Persona S.M.A.R.; Azienda Sanitaria Locale Napoli 1 Centro; Azienda Sanitaria Locale Salerno; Azienda Sanitaria Provinciale Di Catanzaro; Azienda Sanitaria Provinciale Di Cosenza; Azienda Sanitaria Provinciale Di Crotone; Azienda Sanitaria Provinciale Di Messina; Azienda Sanitaria Provinciale Di Palermo; Azienda Sanitaria Provinciale Di Ragusa; Azienda Sanitaria Provinciale Di Reggio Calabria; Azienda Sanitaria Provinciale Di Siracusa; Azienda Sanitaria Provinciale Enna; Azienda Sanitaria Provinciale Vibo Valentia; Azienda Sanitaria Regionale Molise; Azienda Sanitaria Territoriale Di Ascoli Piceno; Azienda Sanitaria Universitaria Friuli Centrale; Azienda Servizi Alla Persona Opera Pia Antonio Gatti; Azienda Socio Sanitaria Locale N.6 Del Medio Campidano; Azienda Usl Latina; A.O.U. Maggiore Della Carita'; Ente Ospedaliero Ospedali Galliera; Aou Sassari - Azienda Ospedaliera Universitaria Di Sassari.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 48 Property and equipment includes Group properties used for operations. Their carrying amount at 31 December 2024, calculated using fair value as the accounting criterion, The other capitalised costs include furniture, fittings and IT devices and equipment, as well as the right of use relating to the lease payments of the branches and company cars. the goodwill originating from the merger of the former subsidiary Solvi S.r.l. the goodwill generated by the acquisition of Atlantide S.p.A. on 3 April 2019 mer Intesa Sanpaolo collateralised lending business unit completed on 13 tion, to which reference is made; -Rite which was completed on 2 November 2022; - Credito Economico Popular SA, which was completed on 7 November 2024. With reference to the latter business combination, the process of final allocation of the purchase consideration was completed at the end of the first half of 2025, in accordance with the provisions of IFRS 3 Business Combinations. The final results of the Purchase Price Allocation (PPA) process are shown below: Purchase price (A) 11,559 CEP equity at 1 November 2024 (B) (10) Residual value to be allocated (A+B) 11,549 Loans and receivables with customers 1,055 Trademark 382 Deferred tax liabilities (352) Goodwill 10,464 The investment recognised in the financial statements relates to the joint venture with EBN Banco de Negocios S.A. in EBNSISTEMA. In the 2025 financial year, EBNSISTEMA
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 49 million acquired as compensation.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 50 Comments on the main aggregates on the liability side of the statement of financial position are shown below. Wholesale funding, which represents about 30% of the total (30% at 31 December 2024), remained stable as a percentage compared to the end of 2024, with a propor-tional decrease compared to retail funding.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 51 the lower use of reverse repurchase agreements to fund the Securities portfolio. year due to a decrease in loans through repurchase agreements, while funding from deposit and current accounts remained in line. The period-end amount of term deposits decreased from the end of 2024 (-11.9%), reflecting net negative funding (net of in-1.333 million. ceivables. The amount of bonds issued is lower than at 31 December 2024; the change is due to the trend of redemptions and/or further subscriptions of senior tranches of ABS financed by third-party investors. The bonds issued are as follows:
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 52 a variable coupon starting from 19 June 2023, issued on 18 December 2012 and 18 December 2013 (reopening date); and a fixed coupon until 25 June 2031 at 9% issued on 25 June 2021. Other bonds include the senior shares of the ABS in the securitisations subscribed by third-party institutional investors. All AT1 instruments, based on their main characteristics, are classified under equity item 140 "Equity instruments". The item Financial liabilities designated at fair value through profit or loss includes the remaining tranches of the 4 issues of Credit-linked notes (CLN) placed by the subsidiary sonnel-related charges mainly for the portion of the bonus for the first 9 months of 2024, the deferred portion of the bonus accrued in previous years, and the estimates related to the non-million. The provision also includes an estimate of charges related to possible liabilities to assignors that have yet to be settled and other estimated charges for ongoing law-CQ portfolio (Salary- and Pension-Backed Loans), there is also a provision to cover the estimated negative effect of possible early repayments on existing portfolios and port-lion. assigned debtors and which were still being allocated and items being processed during the days following year-end, as well as trade payables and tax liabilities.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 53 The reconciliation between the profit for the period and equity of the parent and the figures from the consolidated financial statements is shown below.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 54 CAPITAL ADEQUACY Provisional information concerning the regulatory capital and capital adequacy of the Banca Sistema Group is shown below. include 100% of the profit, as it is currently prohibited to distribute dividends. With pro-vided for under Article 468 of the CRR has been applied in order to neutralise price fluctuations of securities held in the HTCs category, as recorded in the valuation reserve within equity. The filter was reintroduced on 9 July 2024 and will remain in force until the 2025 financial year. Supervision (BCBS) at the end of 2017, which provides for a substantial revision of the following were published in the Official Journal of the European Union: Regulation (EU) 2024/1623 (CRR 3) amending the Capital Requirements Regulation and; Directive (EU) 2024/1619 (CRD VI), which amends the Capital Requirements Directive, on the new standards issued within the Basel framework. In particular, Regulation (EU) 2024/1623 (CRR III) of 31 May 2024 amends Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor, with application from 1 January 2025 (subject to the postponement by one year of the application of the rules pertaining to the market risk framework).
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 55 As of 31 March 2025, the Group has started adopting the new CRR 3 provisions. The most significant impact concerns the determination of credit risk relating to collateral-ised loans for the non-eligibility, based on the interpretative guidelines of the Supervi-sory Authority, of gold collateral, other than investment gold, to reduce credit risk in the determination of RWAs, with a resulting greater weighting of receivables from 0% to 75%. Therefore, loans secured by gold jewellery collateral are weighted as unsecured loans. With effect from 31 March 2025, the Bank has also reclassified past due loans, in full compliance with the feedback from the Bank of Italy, which during its inspection had criticised as entirely ineffective the risk mitigation measures previously used by Banca Sistema. Following this reclassification, calendar provisioning must be applied. At 30 June 2025, following the authorisation received from the Bank of Italy, the Group's RWAs reflect the benefits of the Significant Risk Transfer (SRT) transaction carried out on the salary-backed loan portfolio. The consolidated capital requirements to be met by the Group as at 31 December 2025 are the following: CET1 ratio of 10.16%; TIER1 ratio of 11.66%; Total Capital Ratio of 13.66%. These ratios include the Combined Buffer Requirement (CBR), i.e. 2.5% for the capital conservation buffer (CCB), 0.02% for the countercyclical capital buffer (CCyB) and 0.74% for the systemic risk buffer (SyRB), for a total buffer as at 31 December 2025 of 3.26%. With regard to the SyRB, the calculation base as of 30 June 2025 is 1.00% of the RWA referring to credit and counterparty risk towards residents in Italy. At 31 December 2025, the LCR stood at 975%, compared to 1,172% at 31 December 2024.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 56 The reconciliation of equity and CET1 is provided below:
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 57 CAPITAL AND SHARES Capital and ownership structure The share capital of Banca Sistema is composed of 80,421,052 ordinary shares, for a total paid-dend entitlement from 1 January. Based on the evidence published on Consob's website until 30/01/2026, the sharehold-ers with stakes of more than 5%, the threshold above which Italian law (art. 120 of the Consolidated Law on Finance) requires disclosure to the investee and Consob, were as follows:
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 58 Stock performanceThe shares of Banca Sistema are traded on the Mercato Telematico Azionario - Italian Equities Market (MTA) of the Italian Stock Exchange, STAR segment. The Banca Sistema stock is included in the following Italian Stock Exchange indices:FTSE Italia All-Share Capped;FTSE Italia All-Share;FTSE Italia STAR;FTSE Italia Banche;FTSE Italia Finanza;FTSE Italia Small Cap.In 2025, the share price of the stock fluctuated in a range between a minimum closing The price change on the last market day of 2025 when compared to the same day of the previous year was +33%.During 2025, average daily volumes were just over 389,000 shares, a marked increase from 2024 when volumes were around 300,000.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 59 RISK MANAGEMENT AND SUPPORT CONTROL METHODS adopted a system based on four leading principles: suitable supervision by relevant bank bodies and departments; suitable policies and procedures to manage risks (both in terms of credit risk and the granting of loans); suitable methods and instruments to identify, monitor and manage risks, with suitable measuring techniques; thorough internal controls and independent audit. ment, which ensures that capital adequacy and the degree of solvency with respect to its business are kept under constant control. The Risk and Sustainability Department continuously analyses the Group's operations to fully identify the risks the Group is exposed to (risk map). To reinforce its ability to manage corporate risks, the Group has set up a Risk, ALM and Sustainability Committee, whose mission is to help the Group define strategies, risk policies, and profitability and liquidity targets. The Risk, ALM and Sustainability Committee continuously monitors relevant risks and any new or potential risks arising from changes in the working environment or Group forward-looking operations. Pursuant to the eleventh amendment of Bank of Italy Circular no. 285/13, within the framework of the Internal Control System (Part I, Section IV, Chapter 3, Subsection II, Paragraph 5) the Parent entrusted the Internal Control and Risk Management Commit-tee with the task of coordinating the second and third level Control Departments; to that end, the Committee allows the integration and interaction between these Depart-ments, encouraging cooperation, reducing overlaps and supervising operations. With reference to the risk management framework, the Group adopts an integrated reference framework both to identify its own risk appetite and for the internal process of determining capital adequacy. This system is the Risk Appetite Framework (RAF), designed to make sure that the growth and development aims of the Group are com-patible with capital and financial solidity. The RAF comprises monitoring and alert mechanisms and related processes to take action in order to promptly intervene in the event of discrepancies with defined targets. The framework is subject to annual review based on the strategic guidelines and regu-latory changes.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 60 The ICAAP (the Internal Capital Adequacy Assessment Process) and ILAAP (Internal Liquidity Adequacy Assessment Process) allow the Group to conduct ongoing tests of its structure for determining risks and to update the related safeguards included in its RAF. With regard to protecting against credit risk, along with the well-established second level controls and the periodic monitoring put in place by the Risk and Sustainability Department, functional requirements were implemented to allow the Group to be com-pliant with the new definition of default introduced starting on 1 January 2021. Regarding the monitoring of credit risk, in February 2020 the Group, with the goal of attaining greater operating synergies, moved from a functional organisational structure to a divisional structure which aims to maximise the value of each individual line of business, making it easily comparable with its respective specialist peers. It should also be noted that, in accordance with the obligations imposed by the appli-cable regulations, each year the Group publishes its report (Pillar 3) on capital ade-quacy, risk exposure and the general characteristics of the systems for identifying, measuring and managing risks. The report is available on the website www.bancasistema.it in the Investor Relations section. late the capital requirements for Prudential Regulatory purposes. In order to evaluate - where possible - the methods set out in the Regula-tory framework or those established by trade associations. If there are no such indica-tions, standard market practices by operators working at a level of complexity and with operations comparable to those of the Group are assessed.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 61 OTHER INFORMATION REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE Pursuant to art. 123-bis, paragraph 3 of Legislative Decree no. 58 dated 24 February the document - published jointly with the draft financial statements as at and for the year ended 31 December 2025 - Sistema website (www.bancasistema.it). REMUNERATION REPORT Pursuant to art. 84-up; the document - published jointly with the draft financial statements as at and for the year ended 31 December 2025 - Banca Sistema website (www.bancasistema.it). RESEARCH AND DEVELOPMENT ACTIVITIES No research and development activities were carried out in 2025. RELATED PARTY TRANSACTIONS Related party transactions, including the relevant authorisation and disclosure proce-by the Board of Directors and published on the internet site of the Parent, Banca Sistema S.p.A. Transactions between Group companies and related parties were carried out in the in-terests of the Bank, including within the scope of ordinary operations; these transac-tions were carried out in accordance with market conditions and, in any event, based on mutual financial advantage and in compliance with all procedures. ATYPICAL OR UNUSUAL TRANSACTIONS During 2025, the Group did not carry out any atypical or unusual transactions, as de-fined in Consob Communication no. 6064293 of 28 July 2006. SIGNIFICANT EVENTS AFTER THE REPORTING DATE Following the notification received from the Bank of Italy on 13 January 2026 in relation to the completion of the 2025 Supervisory Review and Evaluation Process (SREP), Banca Sistema starting on 31 March 2026, will be required to comply with the following total capital requirements on a consolidated basis: CET1 ratio: 10.10% (9.40% until 31 December 2025);
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 62 Tier1 ratio: 11.60% (10.90% until 31 December 2025); Total capital ratio: 13.60% (12.90% until 31 December 2025). The Bank is also required to comply with the specific countercyclical capital buffer rate and the systemic risk buffer rate. These capital ratios correspond to the Overall Capital Requirement (OCR) ratios as defined in the Guidelines ABE/GL/2022/03 and CRDVI and represent the sum of the binding provisions (Total SREP Capital Requirement ratio - TSCR) and the combined buffer requirement. With reference to the measures imposed by the Bank of Italy on 20 December 2024, it is reported that, upon completion of the 2025 SREP process, the Bank of Italy has required that, within 90 days, an independent external consultant carry out a review to ascertain the actual effectiveness of the organisational measures implemented to and the subsequent further assessments by the Supervisory Authority, the restrictive measures adopted on 20 December 2024 will remain in force concerning the distribution of profits or other elements of equity, the payment of the variable component of remu-neration, the payment of coupons or dividends on AT1 instruments. In the same com-munication, reference is made to certain points of attention concerning the corporate framework mainly relating to the medium-term sustainability of the business model, the level of gross non-performing loans as a proportion of the total loans and receivables portfolio and the capital adequacy profile also in the light of the increase in RWA result-ing from the actions on the loans and receivables portfolio required by the Supervisory Authority following the 2024 inspection. The Supervisory Authority also acknowledged the remedial measures adopted by the Bank regarding the classification of past due loans, requesting that full alignment with the relevant regulatory standards continue to be maintained over time. VOLUNTARY PUBLIC TENDER AND EXCHANGE OFFER ON ALL THE SHARES lished the offer document and the information prospectus relating to the voluntary pub-lic tender and exchange offer on all the ordinary shares of Banca Sistema S.p.A. (the The Offeror, on the basis of an increase resolved by its Board meeting held on 18 Feb-Sistema share tendered to the Offer, represented by the following components: with Borsa Italiana (i.e. 6 March 2026), without prejudice to any extensions or other amendments to the Offer that may occur in accordance with applicable laws or regula-
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 63 on the basis of the ratio 1:98, for each Banca Sistema share tendered to the Offer. January 2026 the Board of Directors, having reviewed and taken into account the opin-ion of the independent directors prepared in accordance with Article 39-bis of the Issu-ersto which the fairness opinion issued by Equita SIM S.p.A., as financial advisor selected s Di-Sistema share recognised under the Offer (before the increase announced on 18 Feb-ruary 2026), to be fair from a financial standpoint, represented by the sum of: (i) the init(i.e. 6 March 2026), without prejudice to any extensions or other amendments to the Offer that may occur in accordance with applicable laws or regulations; and (ii) the the initial consideration payment date under (i) through the assignment of no. 21 shares res on the basis of the ratio 1:98, for each Share tendered to the Offer. For complete information, please refer to the documentation published on the web-sites of Banca Sistema and CF+. On 27 February 2026, the tender period ended with total acceptances reaching 70.732% of the share capital of Banca Sistema, corresponding to 69.047% of the related voting rights. Based on the results, the Offeror will proceed with the reopening of the terms, pursuant to and for the purposes of Article 40-Regulation, which will end on 13 March 2026. Furthermore, from 6 March, the legal conditions were met for CF+ to promote a total mandatory public tender and exchange offer pursuant to and in accordance with articles 102 and 106 of the Consolidated Law on Finance on all of the shares of Banca Sistema that are not already owned by CF+ as a result of the Voluntary Offer. Upon completion of the Offer, based on the acceptances received as at 6 March and assuming that the KK shares are allocated to all tendering shareholders as envisaged decrease from 70.59% to 16.34%. The disposal value for the sale of the KK shares implicit in the terms of the Offer, de-the KK shares to be allocated to those tendering their shares to the Offer as Deferred Consideration, intends to purchase from Banca Sistema the number of shares to be allocated to those tendering to the Offer for a consideration equal to their market value the KK
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 64 Group. In view of this event, an impairment test was carried out to verify the recover-ability of the goodwill allocated to Kruso Kapital S.p.A. (KK) pursuant to IAS 36, the It should also be noted that, following the completion of the transaction and the result-ing change of control as previously announced on 6 February 2026 there are poten-tial non-which may be recognised in the income statement in subsequent financial years. In this regard, please note that, as the prohibition in force from 20 December 2024, which requires the Group not to affect the financial statements with cost/liability items related to elements arising from variable remuneration, remains in effect, such charges were not recognised in the financial statements. This amount is made up as follows: Commitments as a conventional amount connected with early termination, replacing contion of the Board of Directors; relation to the retention plans for staff and the CEO; of Directors, excluding the CEO, in the event of early termination of their appointment, lease Date; and The Board of Directors of the Kruso Kapital subsidiary resolved on 3 March to initiate preliminary activities for the translisting project on Euronext Milan, with the objective of completion by June 2026. With effect from 6 March 2026, CF+ has resolved to commence the exercise of the management and coordination activities pursuant to Articles 2497 et seq. of the Italian Civil Code on Banca Sistema. After the reporting date of this Report, there were no events worthy of mention which would have had an impact on the financial position, results of operations and cash flows of the Bank and Group.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 65 BUSINESS OUTLOOK AND MAIN RISKS AND UNCERTAINTIES The measures taken to reduce capital absorption during 2025 have allowed the Bank to reduce the negative effects recorded on capital ratios in the first quarter of 2025 result-ing from the classification of certain loans as defaulted in order to take into account the findings communicated by the Bank of Italy on 20 December 2024, with regard to rules and practices adopted by the Bank, which the Supervisory Authority deemed not fully compliant with the EBA guidelines on the application of the Definition of Default. The capital ratios at the end of 2025 are, in fact, at levels more than 100 bps higher than the ratios at the end of 2024. The current capital base and the structures put in place to reduce the capital consumption of certain loans (SPVs in the football sector) will enable the Bank to support factoring operations both in the public administration seg-ment and in the entertainment segment. Future business development will depend on the strategic direction of the acquirer CF+. Milan, 6 March 2026 On behalf of the Board of Directors The Chairperson Luitgard Spögler The CEO Gianluca Garbi
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CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 66 CONSOLIDATED FINANCIAL STATEMENTS
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CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 67 STATEMENT OF FINANCIAL POSITION (Amounts in thousands of Euro) Assets 31.12.2025 31.12.202410. Cash and cash equivalents 87,791 93,43720. Financial assets measured at fair value through profit&loss 1,621-a) attività finanziarie detenute per la negoziazione a) financial assets held for trading 60-c) altre attività finanziarie obbligatoriamente valutate al fair value c) other financial assets mandatorily measured at fair value through profit or loss1,561-30. Financial assets measured at fair value through other comprehensive income 1,186,326 1,147,19740. Financial assets measured at amortised cost 2,610,862 2,873,051a) crediti verso banche a) loans and receivables with banks 19,161 23,024b) crediti verso clientela b) loans and receivables with customers 2,591,701 2,850,02750. Hedging derivatives --60. Changes in fair value of portfolio hedged items (+/-) 2,146 3,55770. Equity investments 985 98490. Property and equipment 57,582 53,433100. Intangible assets 34,116 47,233 of which: - Avviamentogoodwill 30,690 45,075110. Tax assets13,055 13,415a) correnti a) current - 1,758b) anticipate b) deferred 13,055 11,657130. Other assets 343,930 470,591Totale AttivoTotal Assets 4,338,414 4,702,898
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CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 68
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CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 69 INCOME STATEMENT (Amounts in thousands of Euro) 2025 202410. Interest and similar income 210,413 196,255of which: interest income calculated with the effective interest method 201,118 182,35320. Interest and similar expense (113,662)(146,174)30. Net interest income 96,751 50,08140. Fee and commission income 44,509 46,56050. Fee and commission expense (16,942)(19,838)60. Net fee and commission income (expense) 27,567 26,72270. Dividends and similar income 227 22780. Net trading income (expense) 28,497 34,22490. Net gains (losses) on hedge accounting 68(5)100. Gain (loss) from sales or repurchases of: 17,722 9,983 a) financial assets measured at amortised cost 6,703 6,374 b) financial assets measured at fair value through other comprehensive income11,019 3,609 c) financial liabilities --110. Net result of financial assets and liabilities designated at fair value through P&L 7-110a a) Financial assets and liabilities designated at fair value 7-120. Total income 170,839 121,232130. Net impairment losses/gains on: (10,298)(1,132) a) financial assets measured at amortised cost (10,288)(911) b) financial assets measured at fair value through other comprehensive income (10)(221)140. Gains/losses from contract amendments without derecognition 1(102)150. Net financial income (expense) 160,542 119,998190. Administrative expenses (81,142)(69,130) a) personnel expense (33,603)(32,452) b) other administrative expenses (47,539)(36,678)200. Net accruals to provisions for risks and charges (7,463)(3,425) a) commitments and guarantees issued 22 31 b) other net accruals (7,485)(3,456)210. Net impairment losses on property and equipment (3,164)(2,644)220. Net impairment losses on intangible assets (1,328)(657)230. Other operating income (expense) 1,473(2,235)240. Operating costs (91,624) (78,091)250. Gains (losses) on equity investments 190(11)270. Impairment goodwill (13,299)-290. Pre-tax profit (loss) from continuing operations 55,809 41,896300. Income taxes (24,186)(15,374)310. Post-tax profit from continuing operations 31,623 26,522320. Post-tax profit (loss) from discontinued operations --330. Profit for the year 31,623 26,522340. Profit (Loss) for the period attributable to non-controlling interests (2,581)(1,323)350. Profit for the year attributable to the owners of the parent 29,042 25,199
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CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 70 STATEMENT OF COMPREHENSIVE INCOME (Amounts in thousands of Euro)
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CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 71 STATEMENT OF CHANGES IN EQUITY AT 31/12/2025 Amounts in thousands of Euro Share capital: a) ordinary shares9,6519,6519,651 b) other sharesShare premium39,10039,10039,100Reserves176,640176,640 25,199 (3,014)198,825 a) income-related176,542176,542 25,199 (692) -201,049 b) other9898 (2,322)(2,224)Valuation reserves4,1124,112 8,94513,057Equity instruments45,50045,50045,500Treasury shares(102)(102) 102Profit (loss) for the year25,19925,199 (25,199) 29,04229,042Equity attributable to the owners of the parent300,100 300,100 (3,014) 102 37,987 335,175Equity attributable to non-controlling interests14,577 14,577 2,58617,163 Transactions on equityAllocation of prior year profitChanges during the year
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CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 72 STATEMENT OF CHANGES IN EQUITY AT 31/12/2024 Amounts in thousands of Euro Share capital: a) ordinary shares9,6519,6519,651 b) other sharesShare premium39,10039,10039,100Reserves168,667168,667 11,282 (3,309)176,640 a) income-related167,361167,361 11,282 (2,101) -176,542 b) other1,3061,306 (1,208)98Valuation reserves(12,353)(12,353) 16,4654,112Equity instruments45,50045,50045,500Treasury shares(355)(355) 253(102)Profit (loss) for the year16,50616,506 (11,282) (5,224) 25,19925,199Equity attributable to the owners of the parent266,716 266,716 (5,224) (3,309) 253 41,664 300,100Equity attributable to non-controlling interests10,633 10,633 3,94414,577 Transactions on equityAllocation of prior year profitChanges during the year
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CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 73 STATEMENT OF CASH FLOWS (INDIRECT METHOD) Amounts in thousands of Euro 20252024A. OPERATING ACTIVITIES1. Operations 163,054 98,590Profit (loss) for the year (+/-) 29,042 25,199Gains/losses on financial assets held for trading and other financial assets/liabilities measured at fair value through profit or loss (-/+) Gains/losses on hedging activities (-/+) Net impairment losses/gains due to credit risk (+/-)10,298911Net impairment losses/gains on property and equipment and intangible assets (+/-)4,492 3,301Net accruals to provisions for risks and charges and other costs/income (+/-) 7,463 3,425Taxes, duties and tax assets not yet paid (+/-)17,5897,094Other adjustments (+/-)94,17058,6602. Cash flows generated by (used for) financial assets335,845(253,893)Financial assets held for trading(60) Financial assets designated at fair value through profit or loss Other assets mandatorily measured at fair value through profit or loss(1,561) Financial assets measured at fair value through other comprehensive income(30,184)(554,730)Financial assets measured at amortised cost252,590534,791Other assets115,060(233,954)3. Cash flows generated by (used for) financial liabilities(497,048)18,807Financial liabilities measured at amortised cost(464,885)(7,054)Financial liabilities held for trading(11,616) Financial liabilities designated at fair value through profit or loss6,726 Other liabilities(27,273)25,861Net cash flows generated by (used for) operating activities1,851(136,496)B. INVESTING ACTIVITIES1. Cash flows generated by(182)-Sales of equity investments Dividends from equity investments Sales of property and equipment Sales of intangible assets(182) Sales of entities and/or business units 2. Cash flows used in(7,417)(15,592)Purchases of equity investments Purchases of property and equipment(6,891)(4,156)Purchases of intangible assets(526)(861)Purchases of entities and/or business units (10,575)Net cash flows generated by (used in) investing activities(7,599)(15,592)C. FINANCING ACTIVITIESIssues/repurchases of treasury shares102253Issues/repurchases of equity instruments Dividend and other distributions (5,224)Net cash flows generated by (used in) financing activities102(4,971)NET CASH FLOWS FOR THE PERIOD(5,646)(157,059) Cash and cash equivalents at the beginning of the year93,437250,496Total net cash flows for the year(5,646)(157,059)Cash and cash equivalents: effect of change in exchange rates Cash and cash equivalents at the end of the period87,79193,437 Amount
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 74 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 75 PART A - ACCOUNTING POLICIES A.1 GENERAL PART Section 1 - Statement of compliance with International Financial Reporting Standards The consolidated financial statements of the Banca Sistema Group at 31 December 2025 were drawn up in accordance with International Financial Reporting Standards - called IFRS - issued by the International Accounting Standards Board (IASB) and interpreta-tions of the International Financial Reporting Interpretations Committee (IFRIC) and endorsed by the European Commission, as established by EU Regulation no. 1606 of 19 July 2002, adopted in Italy by art. 1 of Legislative Decree no. 38 of 28 February 2005 and considering the Bank of Italy Circular no. 262 of 22 December 2005 as subsequently updated, regarding the forms and rules for drafting the Financial Statements of banks. In 2025, the following accounting standards or amendments to existing accounting standards came into force: Document title Effective date Approval status EU Lack of exchangeability (Amendments to IAS 21) 1 January 2025 Endorsed The above changes had no material impact on the statement of financial position and income statement. Documents endorsed by the EU at 30 November 2025: Document title Date of expected endorsement by the EU Changes to the classification and valuation of financial in-struments (Amendments to IFRS 9 and IFRS 7) 1 January 2026 Nature-dependent electricity contracts (Amendments to IFRS 9 and IFRS 7) 1 January 2026 Annual Improvements to IFRS Accounting Standards Volume 11 (Amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10 and IAS 7) 1 January 2026 Documents not yet endorsed by the EU and which will only be applicable after EU en-dorsement: Document title Date of expected endorsement
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 76 by the EU IFRS 14 Regulatory deferral accounts 1 January 2016 IFRS 18 Presentation and disclosure in financial state-ments 1 January 2027 IFRS 19 Subsidiaries without public accountability: dis-closures 1 January 2027 Amendments to IFRS accounting standards Sale or contribution of assets between an investor and its associate or joint venture (Amendments to IFRS 10 and IAS 28) Deferred until completion of the IASB project on the equity method Amendments to IFRS 19 Subsidiaries without public ac-countability: disclosures 1 January 2027 Amendments to IAS 21 Translation to a Hyperinflationary Presentation Currency 1 January 2027 The Bank is assessing the impacts on presentation and disclosure resulting from IFRS 18 and will update its financial statements and related disclosures. notes to the financial statements in accordance with the update to the Bank of Italy Circular 262. In accordance with art. 5 of Legislative Decree no. 38 of 28 February 2005, if, in ex-ceptional cases, the application of a provision imposed by the IFRS were incompatible with the true and fair representation of the financial position or results of operations, the provision would not apply. The justifications for any exceptions and their influence on the presentation of the financial position and results of operations would be explained in the Notes to the financial statements. Any profits resulting from the exception would be recognised in a non-distributable re-serve if they did not correspond to the recovered amount in the financial statements. However, no exceptions to the IFRS were applied. Section 2 - General basis of preparation The financial statements are drawn up with clarity and give a true and fair view of the financial position, profit or loss, cash flows, and changes in equity and comprise the statement of financial position, the income statement, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows and the notes to the financial statements. formance.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 77 If the information required by the IFRS and provisions contained in Circular no. 262 of 22 December 2005 and/or the subsequent updates issued by the Bank of Italy are not sufficient to give a true and fair view that is relevant, reliable, comparable and under-standable, the notes to the financial statements provide the additional information re-quired. The general principles that underlie the drafting of the financial statements are set out below: the measurements are made considering that the bank will continue as a go-ing concern, where it is stated that the Directors have not identified any un-certainties that could cast doubt in this respect; costs and income are accounted for on an accruals basis; to ensure the comparability of the data and information in the financial statements and the notes to the financial statements, the methods of presentation and classification are kept constant over time unless they are changed to present the data more appropriately; each material class of similar items is presented separately in the statement of financial position and income statement; items of a dissimilar nature or function are presented separately unless they are considered immaterial; items that have nil balances at year end or for the financial year or for the previous year are not indicated in the statement of financial position or the income statement; if an asset or liability comes under several items in the statement of financial position, the notes to the financial statements make reference to the other items under which it is recognised if it is necessary for a better understand-ing of the financial statements; the items are not offset against one another unless it is expressly requested or allowed by an IFRS or an interpretation or the provisions of the aforemen-tioned Circular no. 262 of 22 December 2005 as amended by the Bank of It-aly; the financial statements are drafted by favouring substance over form and in accordance with the principle of materiality and significance of the infor-mation; comparative data for the previous financial year are presented for each statement of financial position and income statement item; if the items are not comparable to those of the previous year, they are adapted and the non-comparability and adjustment/or impossibility thereof are indicated and commented on in the notes to the financial statements; the layout recommended by the Bank of Italy was used with reference to the information reported in the notes to the financial statements; the tables
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 78 included in this layout were not presented if they were not applicable to the Group's business. Within the scope of drawing up the financial statements in accordance with the IFRS, bank management must make assessments, estimates and assumptions that influence the amounts of the assets, liabilities, costs and income recognised during the period. The use of estimates is essential to preparing the financial statements. In particular, the most significant use of estimates and assumptions in the financial statements can be attributed to: the valuation of loans and receivables with customers: the acquisition of performing receivables from companies that supply goods and services rep-a complex activity with a high degree of uncertainty and subjectivity. Their value is estimated by using models that include numerous quantitative and qualitative elements. These include the historical data for collections, ex-pected cash flows and the related expected recovery times, the existence of indicators of possible impairment, the valuation of any guarantees, and the operate; the valuation of default interest pursuant to Legislative Decree no. 231 of 9 October 2002 on performing receivables acquired without recourse: estimat-ing the recoverable amount of default interest is complex, with a high de-gree of uncertainty and subjectivity. Internally developed valuation models are used to determine these percentages, which take numerous qualitative and quantitative elements into consideration; the estimate related to the possible impairment losses on goodwill and eq-uity investments recognised in the financial statements; the quantification and estimate made for recognising liabilities in the provi-sions for risks and charges, the amount or timing of which are uncertain; the valuation of the real estate portfolio following the transition from the cost model to the revaluation model starting from 31 December 2024. The fair value was determined through external appraisals; the recoverability of deferred tax assets; post-employment benefits and other employee benefits payable (including obligations under defined benefit plans). It should be noted that an estimate may be adjusted following a change in the circum-stances upon which it was formed, or if there is new information or more experience. Any changes in estimates are applied prospectively and therefore will have an impact on the income statement for the year in which the change takes place.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 79 In accordance with the provisions of IFRS 15, the Group considered that the conditions were met to refine the internal accounting policy in order to enable the recognition of default interest, on the basis of the results of the model adopted to date, against public administration debtors in situations of financial distress or unlikely to pay, in the pres-ence of a judgment of the European Court of Human Rights establishing the liability of the State in the event that the debtor is in default. This refinement meets the require-estimate. The change in the accounting estimate resulted in the recording of default 6.3 million. As indicated above, estimating the re-coverable amounts of default interest is a complex activity, characterised by a high degree of uncertainty and subjectivity. Internally developed valuation models are used to determine these percentages, which take numerous qualitative and quantitative ele-ments into consideration. Pursuant to the provisions of art. 5 of Legislative Decree no. 38 of 28 February 2005, the financial statements use the Euro as the currency for accounting purposes. The financial statements are expressed in thousands of Euro. Unless otherwise stated, the notes to the financial statements are expressed in thousands of Euro. Any discrepancies between the figures shown in the Directors' Report and in the Consolidated Financial Statements and between the tables in the Notes to the Consolidated Financial State-ments are due exclusively to rounding. European Directive 2004/109/EC (the "Transparency Directive") and Delegated Regu-lation (EU) 2019/815 introduced the obligation for issuers of securities listed on regu-lated markets in the European Union to prepare their annual financial report using the XHTML language, based on the ESMA-approved European Single Electronic Format (ESEF). Starting in 2022, the entire consolidated financial statements are expected to be "marked up" to ESEF taxonomy, using an integrated computer language (iXBRL).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 80 SECTION 3 - SCOPE AND METHODS OF CONSOLIDATION The consolidated financial statements include the Parent, Banca Sistema S.p.A., and the companies directly or indirectly controlled by or connected with it. The following statement shows the investments included within the scope of consolida-tion. Company Names Regis-tered office Type of Relation-ship (1) Investment % of votes available (2) Investing company % held Companies Subject to full consolidation Largo Augusto Servizi e Svi-luppo S.r.l. Italy 1 Banca Sistema 100% 100% Kruso Kapital S.p.A. Italy 1 Banca Sistema 70.59% 70.59% ProntoPegno Greece Greece 1 Kruso Kapital 70.59% 70.59% Pignus - Credito Economico Po-pular SA Portu-gal 1 Kruso Kapital 70.59% 70.59% Art-Rite S.r.l. Italy 1 Kruso Kapital 70.59% 70.59% Consolidated using the eq-uity method EBNSISTEMA Finance S.L. Spain 7 Banca Sistema 50% 50% Key: (1) Type of relationship. 1. = majority of voting rights at the ordinary Shareholders' Meeting 2. = a dominant influence in the ordinary Shareholders' Meeting 3. = agreements with other shareholders 4. = other forms of control 7. = joint control (2) Available voting rights at the ordinary Shareholders' Meeting, with separate indication of effective and potential rights The scope of consolidation also includes the following special purpose securitisation ve-hicles whose receivables are not subject to derecognition and which are consolidated using the full consolidation method: Quinto Sistema Sec. 2017 S.r.l. Quinto Sistema Sec. 2019 S.r.l. BS IVA SPV S.r.l. Changes in the scope of consolidation
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 81 Compared to the situation of the previous financial year, the scope of consolidation has changed following the liquidation of SF Trust Holding Ltd. Full consolidation method The investments in subsidiaries are consolidated using the full consolidation method. The concept of control goes beyond owning a majority of the percentage of stakes in the share capital of the subsidiary and is defined as the power of determining the man-agement and financial policies of said subsidiary to obtain benefits from its business. Full consolidation provides for line-by-line aggregation of the statement of financial po-sition and income statement aggregates from the accounts of the subsidiaries. To this end, the following adjustments were made: (a) the carrying amount of the investments held by the Parent and the corresponding part of the equity are eliminated; (b) the portion of equity and profit or loss for the year is shown in a specific caption. The results of the above adjustments, if positive, are shown - after allocation to the assets or liabilities of the subsidiary - as goodwill in item "130 Intangible Assets" on the date of initial consolidation. The resulting differences, if negative, are recognised in the income statement. Intra-group balances and transactions, including income, costs and dividends, are entirely eliminated. The financial results of a subsidiary acquired during the financial year are included in the consolidated financial statements from the date of acquisition. At the same time, the financial results of a transferred subsidiary are in-cluded in the consolidated financial statements up to the date on which the subsidiary is transferred. The accounts used in the preparation of the consolidated financial state-ments are drafted on the same date. The consolidated financial statements were drafted using consistent accounting standards for similar transactions and events. If a subsidi-ary uses accounting standards different from those adopted in the consolidated financial statements for similar transactions and events in similar circumstances, adjustments are made to the financial position for consolidation purposes. Detailed information with reference to art. 89 of Directive 2013/36/EU of the European Parliament and Council (CRD IV) is published at the link www.bancasistema.it/pillar3. Consolidation at equity Associates are consolidated at equity. The equity method provides for the initial recognition of the investment at cost and The differences between the value of the equity investment and the equity of the rele-vant investee are included in the carrying amount of the investee. In the valuation of the relevant share, any potential voting rights are not taken into consideration.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 82 The relevant share of the annual results of the investee is shown in a specific item of the consolidated income statement. If there is evidence that an equity investment may be impaired, the recoverable value of said equity investment is estimated by considering the present value of future cash flows that the investment could generate, including the final disposal value of the in-vestment. Section 4 - Subsequent events For a description of significant events occurring after the end of the financial year, No further significant events were reported in the period between the reporting date and the date of approval of the draft Financial Statements by the Board of Directors, iring an adjustment of the balance sheet and income statement information at the reporting date. Section 5 Other aspects Terms of approval and publication of the financial statements The consolidated financial statements were approved on 6 March 2026 by the Board of Directors, which authorised their disclosure to the public in accordance with the law, under IAS 10. Audit of the financial statements The separate and consolidated financial statements for the year ended 31 December 2025 have been audited by the independent auditors BDO Audit Services S.r.l. in ac-cordance with Legislative Decree No. 39 of 27 January 2010 and in execution of the shareholders' resolution of 18 April 2019, which appointed them for the nine-year pe-riod 2019-2027.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 83 A.2 INFORMATION ON THE MAIN ITEMS OF THE FINANCIAL STATEMENTS Financial assets measured at fair value through profit or loss Classification criteria Financial assets other than those classified as Financial assets measured at fair value through other comprehensive income and Financial assets measured at amortised cost are classified in this category. In particular, this item includes: financial assets held for trading; equity instruments, except for the possibility of their being classified in the new category Financial assets measured at fair value through other compre-hensive income, excluding the possibility of subsequent reclassification to profit or loss; financial assets mandatorily measured at fair value, and which have not met the requirements to be measured at amortised cost; model or as part of a mixed business model, whose aim is achieved by col-folio or also through their sale, when this is an integral part of the strategy financial assets designated at fair value, i.e. financial assets that are defined as such upon initial recognition and when the conditions apply. For this type of financial assets, upon recognition an entity may irrevocably recognise a financial asset as measured at fair value through profit or loss only if this eliminates or significantly reduces a measurement inconsistency; derivative instruments, which shall be recognised as financial assets held for trading if their fair value is positive and as liabilities if their fair value is neg-ative. Positive and negative values may be offset only for transactions exe-cuted with the same counterparty if the holder currently holds the right to offset the amounts recognised in the books and it is decided to settle the offset positions on a net basis. Derivatives also include those embedded in complex financial contracts where the host contract is a financial liability which has been recognised separately. Except for the equity instruments which cannot be reclassified, financial assets may be reclassified to other categories of financial assets only if the entity changes its own business model for management of the financial assets. In such cases, which are ex-pected to be absolutely infrequent, the financial assets may be reclassified from those measured at fair value through profit or loss to one of the other two categories
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 84 established by IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through other comprehensive income). The transfer value is the fair value at the time of the reclassification and the effects of the reclassification apply prospectively from the reclassification date. In this case, the effective interest rate of the reclassified financial asset is determined based on its fair value at the reclassification date and that date is considered as the initial recognition date for the credit risk stage assignment for impairment purposes. Recognition criteria Initial recognition of financial assets occurs at the settlement date for debt instruments and equity instruments, at the disbursement date for loans and at the subscription date for derivative contracts. On initial recognition, financial assets measured at fair value through profit or loss are recognised at fair value, without considering transaction costs or income directly at-tributable to the instrument. Measurement and recognition criteria for income components After initial recognition, the financial assets measured at fair value through profit or loss are recognised at fair value. The effects of the application of this measurement criterion are recognised in the income statement. For the determination of the fair value of fi-nancial instruments quoted on active markets, market quotations are used. If the mar-ket for a financial instrument is not active, standard practice estimation methods and measurement techniques are used which consider all the risk factors correlated to the instruments and that are based on market elements such as: measurement of quoted instruments with the same characteristics, calculation of discounted cash flows, option pricing models, recent comparable transactions, etc.. For equity and derivative instru-ments that have equity instruments as underlying assets, which are not quoted on an active market, the cost approach is used as the estimate of fair value only on a residual basis and in a small number of circumstances, i.e., when all the measurement methods referred to above cannot be applied, or when there are a wide range of possible meas-urements of fair value, in which cost represents the most significant estimate. In particular, this item includes: debt instruments held for trading; equity instruments held for trading. For more details on the methods of calculating the fair value please refer to the para-graph below "Criteria for determining the fair value of financial instruments". Derecognition criteria Financial assets are derecognised when the contractual rights on the cash flows deriving from the assets expire, or in the case of a transfer, when the same entails the substan-tial transfer of all risks and rewards related to the financial assets.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 85 Financial assets measured at fair value through other comprehensive income (FVOCI) Classification criteria This category includes the financial assets that meet both the following conditions: financial assets that are held under a business model whose aim is achieved the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal This item also includes equity instruments, not held for trading, for which the option was exercised upon initial recognition of their designation at fair value through other comprehensive income. In particular, this item includes: debt instruments that can be attributed to a Held to Collect and Sell busi-ness model and that have passed the SPPI test; equity interests, that do not qualify as investments in subsidiaries, associ-ates or joint ventures and are not held for trading, for which the option has been exercised of their designation at fair value through other comprehen-sive income. Except for the equity instruments which cannot be reclassified, financial assets may be reclassified to other categories of financial assets only if the entity changes its own business model for management of the financial assets. In such cases, which are expected to be absolutely infrequent, the financial assets may be reclassified from those measured at fair value through other comprehensive income to one of the other two categories established by IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through profit or loss). The transfer value is the fair value at the time of the reclassification and the effects of the reclassification apply prospectively from the reclassification date. In the event of reclas-sification from this category to the amortised cost category, the cumulative gain (loss) recognised in the valuation reserve is allocated as an adjustment to the fair value of the financial asset at the reclassification date. In the event of reclassification to the fair value through profit or loss category, the cumulative gain (loss) previously recognised in the valuation reserve is reclassified from equity to profit (loss). Recognition criteria Initial recognition of the financial assets is at the date of disbursement, based on their fair value including the transaction costs/income directly attributable to the acquisition
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 86 of the financial instrument. Costs/income having the previously mentioned characteris-tics that will be repaid by the debtor or that can be considered as standard internal administrative costs are excluded. The initial fair value of a financial instrument is usually the cost incurred for its acquisi-tion. Measurement and recognition criteria for income components. Following initial recognition, financial assets are measured at their fair value with any gains or losses resulting from a change in the fair value compared to the amortised cost recognised in a specific equity reserve recognised in the statement of comprehensive income up until said financial asset is derecognised or an impairment loss is recognised. For more details on the methods of calculating the fair value please refer to paragraph 17.3 below "Criteria for determining the fair value of financial instruments". Equity instruments, for which the choice has been made to classify them in this cate-gory, are measured at fair value and the amounts recognised in other comprehensive income cannot be subsequently transferred to profit or loss, not even if they are sold (the so-called OCI exemption). The only component related to these equity instruments that is recognised through profit or loss is their dividends. Fair value is determined on the basis of the criteria already described for Financial assets measured at fair value through profit or loss. For the equity instruments included in this category, which are not quoted on an active market, the cost approach is used as the estimate of fair value only on a residual basis and in a small number of circumstances, i.e., when all the measurement methods re-ferred to above cannot be applied, or when there are a wide range of possible meas-urements of fair value, in which cost represents the most significant estimate. Financial assets measured at fair value through other comprehensive income are sub-ject to the verification of the significant increase in credit risk (impairment) required by IFRS 9, with the consequent recognition through profit or loss of an impairment loss to cover the expected losses. Derecognition criteria Financial assets are derecognised when the contractual rights on the cash flows deriving from the assets expire, or in the case of a transfer, when the same entails the substan-tial transfer of all risks and rewards related to the financial assets. Financial assets measured at amortised cost Classification criteria This category includes the financial assets that meet both the following conditions:
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 87 the financial asset is held under a business model whose objective is achieved through the collection of expected contractual cash flows (Held to Collect business model); the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal In particular, this item includes: loans and receivables with banks; loans and receivables with customers; debt instruments. Except for the equity instruments which cannot be reclassified, financial assets may be reclassified to other categories of financial assets only if the entity changes its own business model for management of the financial assets. In such cases, which are ex-pected to be absolutely infrequent, the financial assets may be reclassified from the amortised cost category to one of the other two categories established by IFRS 9 (Fi-nancial assets measured at fair value through other comprehensive income or Financial assets measured at fair value through profit or loss). The transfer value is the fair value at the time of the reclassification and the effects of the reclassification apply prospec-tively from the reclassification date. Gains and losses resulting from the difference be-tween the amortised cost of a financial asset and its fair value are recognised through profit or loss in the event of reclassification to Financial assets measured at fair value through profit or loss and under equity, in the specific valuation reserve, in the event of reclassification to Financial assets measured at fair value through other comprehen-sive income. Recognition criteria Initial recognition of a receivable is at the date of disbursement based on its fair value including the costs/income of the transaction directly attributable to the acquisition of the receivable. Costs/income having the previously mentioned characteristics that will be repaid by the debtor or that can be considered as standard internal administrative costs are excluded. The initial fair value of a financial instrument is usually equivalent to the amount granted or the cost incurred by the acquisition. Measurement and recognition criteria for income components Following initial recognition, loans and receivables with customers are stated at amor-tised cost, equal to the initial recognition amount reduced/increased by principal repay-ments, by impairment losses/gains and the amortisation - calculated on the basis of the effective interest rate - of the difference between the amount provided and that repay-able at maturity, usually the cost/income directly attributed to the individual loan.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 88 The effective interest rate is the rate that discounts future payments estimated for the expected duration of the loan, in order to obtain the exact carrying amount at the time of initial recognition, which includes both the directly attributable transaction costs/in-come and all of the fees paid or received between the parties. This accounting method, based on financial logic, enables the economic effect of costs/income to be spread over the expected residual life of the receivable. The measurement criteria are strictly connected with the stage to which the receivable is assigned, where stage 1 contains performing loans, stage 2 consists of under-per-sig-sists of non-performing loans, i.e. the loans that show objective evidence of impairment. The impairment losses recognised through profit or loss for the performing loans clas-sified in stage 1 are calculated by considering an expected loss at one year, while for the performing loans in stage 2 they are calculated by considering the expected losses over the entire residual contractual lifetime of the asset (Lifetime Expected Loss). The performing financial assets are measured according to probability of default (PD), loss given default (LGD) and exposure at default (EAD) parameters, derived from internal historical series. For impaired assets, the amount of the loss, to be recognised through profit or loss, is established based on individual measurement or determined according to uniform categories and, then, individually allocated to each position, and takes ac-count of forward-looking information and possible alternative recovery scenarios. Im-paired assets include financial instruments classified as bad exposures, unlikely-to-pay or past due/overdrawn by over ninety days according to the rules issued by the Bank of Italy, in line with the IFRS and EU Supervisory Regulations. The expected cash flows take into account the expected recovery times and the estimated realisable value of any guarantees. The original effective rate of each asset remains unchanged over time even if the relationship has been restructured with a variation of the contractual interest rate and even if the relationship, in practice, no longer bears contractual interest. If the reasons for impairment are no longer applicable following an event subsequent to the recognition of impairment, impairment gains are recognised in the income statement. The impairment gains may not in any case exceed the amortised cost that the financial instrument would have had in the absence of previous impairment losses. Impairment gains with time value effects are recognised in net interest income. Factoring receivables, after their recognition, are measured at amortised cost. This amortised cost is based on the present value of the receivable's expected cash flows. For some factoring receivables relating to the Public Administration and Healthcare en-tities, the Bank recognises the total receivable including the estimated default interest ("accrual"). This component is calculated over a limited perimeter that is composed of positions for which the conditions that set in motion a legal action for collection against the assigned debtor have not yet been met. Derecognition criteria
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 89 Loans and receivables are derecognised from the financial statements when they are deemed totally unrecoverable or if transferred, when this entails the substantial transfer of all loan-related risks and rewards. Hedging transactions the market interest rate risk associated with the loan positions held by the Quinto Sistema Sec. 2019 S.r.l. vehicle. The Group has elected to continue to apply the hedge accounting requirements of IAS39 to all hedging relationships. Hedging derivatives are measured at fair value. Specifically, for fair value hedges, the change in fair value of the hedging instrument is recognised in the income statement under item "90. Net hedging income (expense)". Changes in the fair value of the hedged item that are attributable to the risk hedged by the derivative are recognised in the same income statement item as an offset to the change in the carrying amount of the hedged item. The ineffectiveness of the hedge is represented by the difference between the change in the fair value of the hedge instrument and the change in the fair value of the hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the hedged item returns to being measured according to the measurement criterion set forth in the applicable accounting standard. If the hedged item is sold or redeemed, the portion of the fair value not yet amortised is recognised income statement. If the hedging relationship ends, for reasons other than the sale of the hedged items, the cumulative revaluation/write-down recorded in items "60. Value adjustment of macro-hedged financial assets (+/--hedged finan-cial liabilities (+/-)" under liabilities, is recognised in the income statement under item maining life of the hedged financial assets or liabilities. If these are sold or redeemed, Equity investments Classification criteria This category includes equity investments in subsidiaries, associates, and joint ventures by Banca Sistema. Recognition criteria Investments in subsidiaries, associates and joint ventures are recognised at acquisition cost, which is the sum of:
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 90 the fair value at the acquisition date of the assets transferred, the liabilities assumed, and the equity instruments issued by the acquirer, in exchange for control of the acquired company; plus any cost directly attributable to the acquisition itself. Measurement criteria In the consolidated financial statements, equity investments in subsidiaries are consol-idated using the full line-by-line method. Equity investments in associates and joint ventures are both measured at equity. If there is evidence that an equity investment may be impaired, the recoverable value of said equity investment is estimated by considering the present value of future cash flows that the investment could generate, including the final disposal value of the in-vestment. Should the recoverable value prove lower than the carrying amount, the difference is The item also includes any future impairment gains where the reasons for the previous impairment losses no longer apply. Derecognition criteria Equity investments are derecognised from the financial statements when the contrac-tual rights to cash flows deriving from the investment are lost or when the investment is transferred, with the substantial transfer of all related risks and rewards. Gains and losses on the sale of equity investments are charged to the income statement under equity investments other than those measured at equity are charged to the income stat Property and equipment Classification criteria This item includes assets for permanent use, held to generate income, to be leased, or for administrative purposes, such as land, operating property, investment property, technical installations, furniture and fittings and equipment of any nature and works of art. They also include leasehold improvements to third party assets if they can be separated from the assets in question. If the above costs do not display functional or usefulness-related autonomy, but future economic benefits are expected from them, they are rec-of expected usefulness of the improvements in question and the residual duration of
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 91 Property and equipment also include payments on account for the purchase and reno-vation of assets not yet part of the production process and therefore not yet subject to depreciation. ap-preciation. The item also includes rights of use associated with leased assets and fees for use. Recognition criteria Property and equipment are initially recognised at cost, including all costs directly at-tributable to installation of the asset. Extraordinary maintenance costs and costs for improvements leading to actual improve-ment of the asset, or an increase in the future benefits generated by the asset, are attributed to the reference assets, and are depreciated based on their residual useful life. Under IFRS 16, leases are accounted for in accordance with the right-of-use model, whereby, at the commencement date, the lessee incurs an obligation to make payments to the lessor for the right to use the underlying asset for the term of the lease. When the asset is made available for use by the lessee, the lessee recognises both the liability and the right-of-use asset. Measurement criteria illustrated in paragraph 30 of IAS 16, with the exception of properties used for opera-tions that are measured according to the revaluation method. For Property and equipment subject to valuation according to the revaluation method: if the carrying amount of an asset is increased as a result of a revaluation, the increase must be recognised in the statement of comprehensive income and accumulated in equity under the revaluation reserve item; instead, in the event that it restores a write-down of the same asset previously recog-nised in the income statement, it must be recognised as income; if the carrying amount of an asset has decreased as a result of the revalua-tion, the decrease must be recognised in the statement of comprehensive in-come to the extent that there are any credit balances in the revaluation re-serve in respect of that asset; otherwise such reduction shall be accounted for in the income statement.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 92 Property and equipment are systematically depreciated each year based on their esti-mated useful life, using the straight-line basis method apart from: land, regardless of whether this was purchased separately or was incorpo-rated into the value of the building, which, insofar as it has an indefinite useful life, is not depreciated; works of art, which are not depreciated as their useful life cannot be esti-mated and their value typically appreciates over time; investment property which is recognised at fair value in accordance with IAS 40. For assets acquired during the financial year, depreciation is calculated on a daily basis from the date of entry into use of the asset. For assets transferred and/or disposed of during the financial year, depreciation is calculated on a daily basis until the date of transfer and/or disposal. At the end of each year, if there is any evidence that property or equipment that is not held for investment purposes may have suffered an impairment loss, a comparison is made between its carrying amount and its recoverable value, equal to the higher be-tween the fair value, net of any costs to sell, and the related value in use of the asset, intended as the present value of future cash flows expected from the asset. Any impair-n If the reasons that led to recognition of the impairment loss cease to apply, an impair-ment gain is recognised that may not exceed the value that the asset would have had, net of depreciation calculated in the absence of previous impairment losses. For investment property, which comes within the scope of application of IAS 40, the measurement is made at the market value determined using independent surveys and value The right-of-use asset, recognised in accordance with IFRS 16, is measured using the cost model under IAS 16 Property, plant and equipment. In this case, the asset is sub-sequently depreciated and tested for impairment if impairment indicators are present. Derecognition criteria Property and equipment is derecognised from the statement of financial position upon disposal thereof or when the asset is permanently withdrawn from use and no future economic benefit is expected from its disposal. Intangible assets Classification criteria
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 93 This item includes non-monetary assets without physical substance that satisfy the fol-lowing requirements: they can be identified; they can be monitored; they generate future economic benefits. In the absence of one of the above characteristics, the expense of acquiring or gener-ating the asset internally is recognised as a cost in the year in which it was incurred. Intangible assets include software to be used over several years and other identifiable assets generated by legal or contractual rights. Goodwill is also included under this item, representing the positive difference between the acquisition cost and fair value of the assets and liabilities acquired as part of a business combination. Specifically, an intangible asset is recognised as goodwill when the positive difference between the fair value of the assets and liabilities acquired and the acquisition cost represents the future capacity of the equity investment to generate profit (goodwill). If this difference proves negative (badwill), or if the goodwill offers no justification of the capacity to generate future profit from the assets and liabilities ac-quired, it is recognised directly in the income statement. Measurement criteria Intangible assets are systematically amortised from the time of their input into the production process. Under IAS 36, goodwill is not amortised, and an impairment test is conducted annually (or whenever there is evidence of impairment). For this purpose, goodwill is allocated to cash-generating units ("CGUs"), in compliance with limits on aggregation which may not be larger than the "business segment" identified for management reporting pur-poses. The amount of any impairment is determined based on the difference between the carrying amount of the CGU and its recoverable amount, being the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. As stated above, any consequent impairment losses are recognised in the income state-ment. Derecognition criteria An intangible asset is derecognised from the statement of financial position at the time of its disposal and if there are no expected future economic benefits. Non-current assets held for sale and disposal groups Non-current assets or groups of assets for which a disposal process has been initiated and whose sale is considered highly probable are classified under "Non-current assets held for sale and disposal groups". These assets are measured at the lower of their carrying amount and their fair value, net of disposal costs, with the exception of certain
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 94 types of assets (e.g. financial assets falling within the scope of IFRS 9) for which IFRS 5 specifically requires that the measurement criteria of the relevant accounting standard be applied. Income and expenses (net of the tax effect) relating to groups of assets being disposed of or recognised as such during the year, are shown in the income state-ment as a separate item. Financial liabilities measured at amortised cost Classification criteria This item includes Due to banks, Due to customers and Securities issued. Recognition criteria These financial liabilities are initially recognised when the deposits are received or when the debt instruments are issued. Initial recognition is based on the fair value of the liabilities, increased by the costs/income of the transaction directly attributable to the acquisition of the financial instrument. Costs/income having the previously mentioned characteristics that will be repaid by the creditor or that can be considered as standard internal administrative costs are ex-cluded. The initial fair value of a financial liability is usually equivalent to the amount collected. Measurement and recognition criteria for income components After the initial recognition, the previously mentioned financial liabilities are measured at amortised cost with the effective interest rate method. Derecognition criteria The above financial liabilities are derecognised from the statement of financial position when they expire or when they are extinguished. They are derecognised also in the event of repurchase, even temporary, of the previously-issued securities. Any difference between the carrying amount of the extinguished liability and the amount paid is rec--places its own secu-rities on the market, said transaction is considered a new issue and the liability is rec-ognised at the new placement price. Financial liabilities held for trading Classification and recognition criteria Financial instruments are recognised at the date of their subscription or issue at a value equal to their fair value, without including any transaction costs or income directly at-tributable to the instruments themselves.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 95 This category of liabilities may include liabilities originating from technical exposures deriving from security trading activities, bond instruments issued such as credit linked notes. Measurement and recognition criteria for income components The financial instruments are measured at fair value with recognition of the measure-ment results in the income statement. Derecognition criteria Financial liabilities held for trading are derecognised when the contractual rights on the related cash flows expire or when the financial liability is sold with a substantial transfer of all risks and rewards related to the liabilities. Financial liabilities designated at fair value through profit or loss Recognition criteria The financial instruments in question are recognised at the date of their subscription or issue at a value equal to their fair value, without including any transaction costs or income directly attributable to the instruments themselves. This category of liabilities includes, in particular, credit linked notes. Measurement criteria All liabilities measured at fair value are recognised at their fair value, with the result of the measurement recognised in the Income Statement. Derecognition criteria Financial liabilities measured at fair value are derecognised when the contractual rights on the related cash flows expire or when the financial liability is sold with a substantial transfer of all risks and rewards related to the liabilities. Current and deferred taxes Income taxes, calculated in compliance with prevailing tax regulations, are recognised in the income statement on an accruals basis, in accordance with the recognition in the financial statements of the costs and income that generated them, apart from those referring to the items recognised directly in equity, where the recognition of the tax is made to equity in order to be consistent. Income taxes are provided for on the basis of a prudential estimate of the current and deferred taxes. More specifically, deferred taxes are determined on the basis of the temporary differences between the carrying amount of assets and liabilities and their tax bases. Deferred tax assets are recognised in the financial statements to the extent generate positive taxable income.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 96 Deferred tax assets and liabilities are accounted for in the statement of financial position With respect to current taxes, at the level of individual taxes, advances paid are offset Provisions for risks and charges In line with the requirements of IAS 37, provisions for risks and charges cover liabilities, the amount or timing of which is uncertain, related to current obligations (legal or im-plicit), owing to a past event for which it is likely that financial resources will be used to fulfil the obligation, on condition that an estimate of the amount required to fulfil said obligation can be made at the reporting date. Where the temporary deferral in sustain-ing the charge is significant, and therefore the extent of the discounting will be signifi-cant, provisions are discounted at current market rates. The provisions are reviewed at the reporting date of the annual financial statements and the interim financial statements and adjusted to reflect the current best estimate. These are recognised under their own items in the income statement in accordance with re losses not directly chargeable to specific items in the income statement are recognised Other information Post-employment benefits According to the IFRIC, the post-employment benefits can be equated with a post--calculated via actuarial methods. Consequentially, the end of the year measurement of the item in question is made based on the accrued benefits method using the Projected Unit Credit Method. This method calls for the projection of the future payments based on historical, statis-tical, and probabilistic analysis, as well as in virtue of the adoption of appropriate de-mographic fundamentals. It allows the post-employment benefits vested at a certain date to be calculated actuarially, distributing the expense for all the years of estimated remaining employment of the existing workers, and no longer as an expense to be paid if the company ceases its activity on the reporting date.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 97 The actuarial gains and losses, defined as the difference between the carrying amount of the liability and the present value of the obligation at year end, are recognised in equity. An independent actuary assesses the post-employment benefits in compliance with the method indicated above. Repurchase agreements where the guarantee is represented by cash, are considered equivalent to swap trans-actions and, therefore, the amounts received and disbursed appear in the financial cial statements as payables for the spot price received, while those for investments are recognised as receivables for the spot price paid. Such transactions do not result in changes in the securities portfolio. Consistently, the cost of funds and the income from the investments, consisting of accrued dividends on the securities and of the difference between the spot price and the forward price thereof, are recognised for the accrual period under interest in the income statement. Other assets and liabilities Other assets and liabilities include all values that cannot be reclassified to other financial statement items. Treasury shares Treasury shares are recognised as a reduction of equity based on their acquisition cost. Gains or losses arising from their subsequent sale are always recognised directly to equity. Recognition of revenues and costs The recognition of revenue under IFRS 15 occurs when control over the goods or ser-vices subject to the contract is transferred, at an amount that reflects the consideration the enterprise receives or expects to receive from the sale. For revenue recognition purposes, the standard requires: identification of the contract: contract for the sale of goods or services (or combination of contracts); identification of the performance obligations in the contract: identification of the obligations to perform under the contract; determination of the transaction price: definition of the transaction price for the contract, considering all its components;
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 98 allocation of the transaction price to the performance obligations of the con-tract; recognition of revenue when (or to the extent to which) the performance ob-ligation is satisfied. Revenue arising from contractual obligations with customers is recognised in profit or loss when it is probable that the entity will receive the consideration to which it is enti-tled in exchange for the goods or services transferred to the customer. This considera-tion must be allocated to the individual obligations under the contract and recognised as revenue in profit or loss depending on the timing of performance of the obligation. If the entity receives consideration from the customer that it expects to refund to the customer, in whole or in part, for the revenue recognised in the profit or loss, it shall recognise a liability, which is to be estimated based on expected future refunds ("refund liability"). The estimated refund liability is updated at each annual or interim reporting date and is measured based on the portion of the consideration that the entity expects not to be entitled to. Costs related to obtaining and fulfilling contracts with customers are recognised in the profit or loss in the periods in which the corresponding revenues are recognised in ac-cordance with the matching of costs and revenues principle; costs that are not directly associated with revenues are immediately recognised in the profit or loss. Costs directly attributable to financial instruments measured at amortised cost and which can be determined from the beginning, regardless of when they are settled, are charged to the profit or loss by applying the effective interest rate. Dividends Dividends are recognised in the profit or loss when their distribution is approved. Criteria for determining the fair value of financial instruments measurement date, excluding forced transactions. Underlying the definition of fair value is a presumption that a company is a going concern without any intention or need to liquidate, to curtail materially the scale of its operations or to undertake a transaction on adverse terms. In the case of financial instruments quoted in active markets, the fair value is deter-mined based on the deal pricing (official price or other equivalent price on the last stock market trading day of the financial year of reference) of the most advantageous market to which the Group has access. For this purpose, a financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 99 length basis. In the absence of an active market, the fair value is determined using measurement techniques generally accepted in financial practice, aimed at establishing what price the financial instrument would have had, on the valuation date, in a free exchange between knowledgeable and willing parties. Such measurement techniques require, in the hier-archical order in which they are presented, the use: 1. of the most recent NAV (Net Asset Value) published by the management in-vestment company for the harmonised funds (UCITS - Undertakings for Col-lective Investment in Transferable Securities), the Hedge Funds and the SICAVs; 2. of the recent transaction prices observable in the markets; 3. of the price indications deducible from infoproviders (e.g., Bloomberg, Reu-ters); 4. of the fair value obtained from measurement models (for example, Discount-ing Cash Flow Analysis, Option Pricing Models) that estimate all the possible factors that influence the fair value of a financial instrument (cost of money, credit risk, liquidity risk, volatility, foreign exchange rates, prepayment rates, etc.) based on data observable in the market, also with regards to similar instruments on the measurement date. If market data cannot be referenced for one or more risk factors, metrics internally determined on a historical-statistical basis are used. The measurement models are subject to periodic review to guarantee complete and constant reliability; 5. of the price indications provided by the counterparty issuer adjusted if neces-sary to take into account the counterparty and/or liquidity risk (for example, the price resolved on by the Board of Directors and/or the Shareholders for the shares of unlisted cooperative banks, the unit value communicated by the management investment company for the closed-end funds reserved to insti-tutional investors or for other types of OEICs other than those cited in para-graph 1, the redemption value calculated in compliance with the issue regu-lation for the insurance contracts); 6. for the equity-linked instruments, where the measurement techniques pursu-ant to the previous paragraphs are not applicable: i) the value resulting from independent surveys if available; ii) the value corresponding to the portion of equity held resulting from the company's most recently approved financial statements; iii) the cost, adjusted if necessary to take into account significant reductions in value, where the fair value cannot be reliably determined. Based on the foregoing considerations and in compliance with the IFRS, the Group clas-sifies the measurements at fair value based on a hierarchy of levels that reflects the significance of the inputs used in the measurements. The following levels are noted:
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 100 Level 1 - prices (without adjustments) reported on an active market: the measurements of the financial instruments quoted on an active market based on quotations that can be understood from the market; Level 2 - the measurement is not based on prices of the same financial in-strument subject to measurement, but on prices or credit spreads obtained from the official prices of essentially similar instruments in terms of risk fac-tors, by using a given calculation method (pricing model). The use of this approach translates to the search for transactions present on active mar-kets, relating to instruments that, in terms of risk factors, are comparable with the instrument subject to measurement. The calculation methods (pric-ing models) used in the comparable approach make it possible to reproduce the prices of financial instruments quoted on active markets (model calibra-tion) without including discretionary parameters - i.e. parameters whose value cannot be obtained from the prices of financial instruments present on active markets or cannot be fixed at levels as such to replicate prices pre-sent on active markets - which may influence the final valuation price in a decisive manner. Level 3 - inputs that are not based on observable market data: the meas-urements of financial instruments not quoted on an active market, based on measurement techniques that use significant inputs that are not observable on the market, involving the adoption of estimates and assumptions by management (prices supplied by the issuing counterparty, taken from inde-pendent surveys, prices corresponding to the fraction of the equity held in the company or obtained using measurement models that do not use market data to estimate significant factors that condition the fair value of the finan-cial instrument). This level includes measurements of financial instruments at cost price. Business combinations A business combination is the bringing together of separate entities or businesses into one reporting entity. A business combination may give rise to an investment relationship between the parent (acquirer) and the subsidiary (acquiree). A business combination may also involve the purchase of the net assets, including any goodwill, of another entity rather than the purchase of the equity of the other entity (mergers and contribu-tions). Based on the provisions of IFRS 3, business combinations must be accounted for by applying the purchase method, which comprises the following phases: identification of the acquirer; measurement of the cost of the business combination;
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 101 allocation, at the acquisition date, of the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. More specifically, the cost of a business combination must be determined as the total fair value, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, in exchange for control of the acquiree, and all costs directly attributable to the business combination. The acquisition date is the date on which control of the acquiree is effectively obtained. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. If the business combination is carried out through several exchange transactions the cost of the combination is the aggregate cost of the individual transac-tions the date of exchange is the date of each exchange transaction (i.e. the date that each individual investment is recognised in the financial statements of the acquirer), whereas the acquisition date is the date on which control of the acquiree is obtained. The cost of a business combination is allocated by recognising the acquiree's identifiable assets, liabilities and contingent liabilities at their fair values at the acquisition date. The acquiree's identifiable assets, liabilities and contingent liabilities are recognised sep-arately at the acquisition date only if they satisfy the following criteria at that date: in the case of an asset other than an intangible asset, it is probable that any associated future economic benefits will flow to the acquirer, and its fair value can be measured reliably; in the case of a liability other than a contingent liability, it is probable that an outflow of resources embodying economic benefits will be required to set-tle the obligation, and its fair value can be measured reliably; in the case of an intangible asset or a contingent liability, its fair value can be measured reliably. The positive difference between the cost of the business combination and the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities must be accounted for as goodwill. After the initial recognition, the goodwill acquired in a business combination is measured at the relevant cost and is submitted to an impairment test at least once a year. If the difference is negative, a new measurement is made. This negative difference, if confirmed, is recognised immediately as income in the income statement.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 102 A.3 - DISCLOSURE ON TRANSFERS BETWEEN PORTFOLIOS OF FINANCIAL ASSETS A.3.1 Reclassified financial assets: change in business model, carrying amount and in-terest income No financial instruments were transferred between portfolios. A.3.2 Reclassified financial assets: change in business model, fair value and effects on comprehensive income No financial assets were reclassified. A.3.3 Reclassified financial assets: change in business model and effective interest rate No financial assets held for trading were transferred. A.4 - FAIR VALUE DISCLOSURE Qualitative disclosure A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Please refer to the accounting policies. A.4.2 Processes and sensitivity of measurements The carrying amount of financial assets and liabilities due within one year has been assumed to be a reasonable approximation of fair value, while for those due beyond one year, the fair value is calculated taking into account both interest rate risk and credit risk. A.4.3 Fair value hierarchy The following fair value hierarchy was used in order to prepare the financial statements: Level 1- Effective market quotes The valuation is the market price of said financial instrument subject to valuation, ob-tained on the basis of quotes expressed by an active market. Level 2 - Comparable Approach Level 3 - Mark-to-Model Approach A.4.4 Other Information The item is not applicable for the Group. Quantitative disclosure A.4.5 Fair value hierarchy
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 103 A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value level. Key: L1 = Level 1 L2 = Level 2 L3 = Level 3 A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level Key: CA = carrying amountL1 = Level 1 L2 = Level 2
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 104 L3 = Level 3 Nothing to report.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 105 PART B - INFORMATION ON THE STATEMENT OF FINANCIAL POSITION ASSETS Section 1 - Cash and cash equivalents Item 10 1.1 Cash and cash equivalents: breakdown Section 2 - Financial assets measured at fair value through profit or loss -Item 20 2.1 Financial assets held for trading: breakdown by product
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 106 L1 L2 L3 L1 L2 L3A. Non-derivative financial assets1. Debt instruments1.1 Stuctured instruments1.2 Other debt instruments2. Equity instruments3. Units of investment funds4. Financing4.1 Repurchase agreements4.2 OthersTotal AB. Financial derivatives1. Derivati finanziari 601.1 for trading 601.2 related to the fair value option1.3 others2. Credit derivatives2.1 for trading2.2 related to the fair value option2.3 othersTotal B 60Total (A+B) 60 31/12/2025 31/12/2024
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 107 2.2 Financial assets held for trading: breakdown by debtor/issuer/counterparty 31.12.2025 31.12.2024A. Non-derivative financial assets1. Debt instrumentsa) Central Banksb) General governmentsc) Banksd) Other financial corporationsof which: insurance companiese) Non-financial corporations2. Equity instrumentsa) Banksb) Other financial corporations:of which: insurance companiesc) Other non-financial corporationsd) other3. Units of investment funds4. Financinga) Central Banksb) General governmentsc) Banksd) Other financial corporationsof which: insurance companiese) Non-financial corporationsf) HouseholdsTotal A - -B. Derivative instrumentsa) Central counterpartiesb) others 60Total B 60Total (A+B) 60
Page 108
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 108 2.6 Other financial assets mandatorily measured at fair value through profit or loss: breakdown by debtor/issuer
Page 109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 109 Section 3 - Financial assets measured at fair value through other comprehensive income - Item 30 3.1 Financial assets measured at fair value through other comprehensive income: breakdown by product Key: L1 = Level 1 L2 = Level 2 L3 = Level 3
Page 110
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 110 3.2 Financial assets measured at fair value through other comprehensive income: breakdown by debtor/issuer 3.3 Financial assets measured at fair value through other comprehensive income: gross amount and total impairment losses
Page 111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 111 Section 4 - Financial assets measured at amortised cost - Item 40 4.1 Financial assets measured at amortised cost: breakdown by product of the loans and receivables with banks Key: L1 = Level 1 L2 = Level 2 L3 = Level 3 First and second stage Third stage of which: purchased or originated credit-impaired L1 L2 L3First and second stage Third stage of which: purchased or originated credit-impaired L1 L2L3A. Loans and receivables with Central Banks19,020 19,019 22,88622,887 1. Term deposits X X X X XX 2. Minimum reserve 19,003 X X X 22,866 X XX 3. Reverse repurchase agreements X X X X XX 4. Other 17 X X X 20 X XXB. Loans and receivables with banks141 14 136 211 1. Financing 141 14 136 211 1.1 Current accounts and demand depositsX X X X XX 1.2. Term deposits X X X X XX 1.3. Other financing: 141 X X X 136 2 X XX - Reverse repurchase agreementsX X X X XX - Finance leasesXXXXXX - Other 141 X X X 136 2 X XX 2. Debt instruments 2.1 Structured instruments 2.2 Other debt instrumentsTotal 19,161 19,033 23,022 222,898 31.12.2025 31.12.2024 Carrying amount Fair value Carrying amount Fair value
Page 112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 112 4.2 Financial assets measured at amortised cost: breakdown by product of the loans and receivables with customers Key: L1 = Level 1 L2 = Level 2 L3 = Level 3 4.3 Financial assets measured at amortised cost: breakdown by debtor/issuer of the loans and receivables with customers Key: L1 = Level 1 L2 = Level 2
Page 113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 113 L3 = Level 3 4.4 Financial assets measured at amortised cost: gross amount and total impairment losses 4.4a Loans measured at amortised cost subject to Covid-19 support measures: gross amount and total impairment losses
Page 114
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 114 Section 6 Value adjustment of macro-hedged financial assets Item 60 6.1 Value adjustment of hedged assets: breakdown by hedged portfolio
Page 115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 115 Section 7 - Equity investments - item 70 7.1 Equity investments: information on investment relationships 7.2 Non-significant equity investments: carrying amount 7.3 Significant equity investments: accounting information
Page 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 116 7.4 Non-significant equity investments: accounting information 7.5 Equity investments: changes The decrease relates to the pro-quota result for year of EBN Sistema Finance.
Page 117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 117 Section 9 Property and equipment Item 90 9.1 Operating property and equipment: breakdown of the assets measured at cost Property and equipment are recognised in the financial statements in accordance with the general acquisition cost criteria, including the related charges and any other ex-penses incurred to place the assets in conditions useful for the Bank, in addition to indirect costs for the portion reasonably attributable to assets that refer to the costs incurred, as at the end of the year. Depreciation rates: Office furniture: 12% Furnishings: 15% Electronic machinery and miscellaneous equipment: 20% Assets less than Euro 516: 100% 31.12.2025 31.12.2024 1 Owned 52,963 48,826 a) land 14,636 13,921 b) buildings 36,784 32,828 c) furniture 523 1,127 d) electronic equipment 1,020 950 e) other 2 Right-of-use assets acquired under finance lease 4,619 4,607 a) land b) buildings 3,611 3,794 c) furniture d) electronic equipment e) other 1,008 813Total 57,582 53,433of which: obtained from the enforcement of guarantees received
Page 118
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 118 9.3 Operating property and equipment: breakdown of the revalued assets
Page 119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 119 9.6 Operating property and equipment: changes In order to understand the movement of the assets in question, it is necessary to specify that the sub-item "B.4 Fair value gains" shows the effects of the change from the cost approach to the fair value basis criteria. In particular, the fair value gains were credited to a specific equity valuation reserve for 3.4 million euro; - value (properties use in operations and valuable artworks), adjusted to exclude fair value valuation effects (sub-items B.4 and C.4).
Page 120
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 120 Section 10 Intangible assets Item 100 10.1 Intangible assets: breakdown by type of asset The other intangible assets are recognised at purchase cost including related costs, and are systematically amortised over a period of 5 years. The item mainly refers to soft-ware. the goodwill originating from the merger of the former subsidiary Solvi S.r.l. the goodwill generated by the acquisition of Atlantide S.p.A. on 3 April 2019 former Intesa Sanpaolo collateralised lending business unit completed on 13 July 2020; -Rite which was completed on 2 November 2022; - Credito Economico Popular SA, which was completed on 7 November 2024. The CGU identified for the goodwill of the former Solvi and Atlantide is the Bank, for the goodwill of the former ISP the company Kruso Kapital, and for the goodwill of Art-Rite and CEP, it is the respective companies as a whole. With reference to the impairment test of KK, in line with IAS 36, the recoverable amount was determined as the higher of value in use and fair value less costs of disposal, taking into account that, in the current scenario of a future disposal due to the public tender Finite useful life Indefinite useful life Finite useful life Indefinite useful life A.1 Goodwill 30,690 x 45,075 A.2 Other intangible assets 3,426 2,157of which software 1,775 454 A.2.1 Assets measured at cost: 3,426 2,157 a) Internally developed assets 146 138 b) Other 3,280 2,019 A.2.2 Assets measured at fair value: a) Internally developed assets b) Other Total 3,426 30,690 2,157 45,07531.12.2025 31.12.2024
Page 121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 121 and exchange offer mechanism, the prospective cash flows to be used to estimate the Recoverable Amount of the asset would no longer derive from future cash flows gener-ated by the company, but from the potential proceeds from the disposal of KK shares, making the Value in Use substantially aligned with the Fair Value less costs of disposal. The updated analyses showed that the overall recoverable amount of the CGUs of the KK Group is lower than the related carrying amount, mainly due to: the level of KK market prices being lower than the values implied in previous tests; the recoverability of the value through sale rather than through continued use; the alignment of the valuation assumptions with the new post-public tender and exchange offer scenario. In the light of this evidence, an impairment loss was recognised pursuant to IAS 36. Applying the allocation order required by the standard, the adjustment was first allo-.3 million. The other goodwill impairment tests were performed on the basis of their respective -2028. The valuation methods used were the Dividend Discount Model - Excess Capital Variant for the goodwill of the former Solvi and Atlantide, the Discounted Cash Flow method for the goodwill of Art-Rite, and the Income approach for the goodwill of CEP. The main parameters used for estimation purposes were as follows: Banca Sistema CGU Art-Rite CGU CEP CGU Risk Free Rate 3.46% 3.46% 3.09% Equity Risk Premium 5.6% 0.76% 5.6% Beta 1.23 1.23 1.32 Cost of equity 10.37% 7.75% 10.48% 1.9% 1.9% 1.9% The estimated values in use obtained based on the parameters used and the growth assumptions are, for all goodwill amounts, higher than the respective equity amounts at the end of the financial year. Furthermore, considering that the value in use was determined via estimates and assumptions that may introduce elements of uncertainty, sensitivity analyses - as required by IFRS - were performed with the purpose of verifying the variations of the results previously obtained as a function of the basic assumptions and parameters. In particular, the quantitative exercise was completed by a stress test of the parameters related to the growth rate and the discount rate of the expected cash flows (quantified in an isolated or simultaneous movement of 25 bps and 50 bps, respectively), that
Page 122
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 122 confirmed the absence of impairment indicators, confirming a value in use greater than the carrying amount of goodwill in the financial statements. Considering all the above, no further conditions necessary to recognise an impairment loss on the goodwill carrying amounts in the financial statements exist.
Page 123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 123 10.2 Intangible assets: changes Key Fin: finite useful life Indef: indefinite useful life Goodwill Total FIN INDEF FIN INDEFA. Opening balance 45,075 208 6,892 52,176A.1 Total net impairment losses 70 4,872 4,942A.2 Net opening balances 45,075 138 2,019 47,233B. Increases 21 2,585 2,606B.1 Purchases 21 2,203 2,224B.2 Increases in internally developed assets XB.3 Impairment gains XB.4 Fair value gains recognised in: - equity X - profit or loss XB.5 Exchange rate gainsB.6 Other increases 382 382B.7 Business combination transactionsC. Decreases 14,385 13 1,324 15,723C.1 SalesC.2 Impairment losses 13,299 13 1,316 14,628 - Amortisation X 13 1,316 1,328 - Impairment losses: 13,299 - equity X - profit or loss 13,299C.3 Fair value losses recognised in: - equity X - profit or loss XC.4 Transfers to disposal groupsC.5 Exchange rate lossesC.6 Other decreases 1,086 9C.7 Business combination transactionsD. Net closing balance 30,690 146 3,280 34,116D.1 Total net impairment losses 13,299 83 6,188 19,570E. Gross closing balance 43,989 229 9,467 53,686F. Measurement at cost 30,690 146 3,280 34,116 Other intangible assets: internally developedOther intangible assets: other
Page 124
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 124 Section 11 Tax assets and tax liabilities Item 110 of assets and Item 60 of liabilities Below is the breakdown of the current tax assets and current tax liabilities 11.1 Deferred tax assets: breakdown 11.2 Deferred tax liabilities: breakdown
Page 125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 125 11.3 Changes in deferred tax assets (through profit or loss) 11.4 Change in deferred tax assets pursuant to Law 214/2011
Page 126
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 126 11.5 Changes in deferred tax liabilities (through profit or loss) 31.12.2025 31.12.2024 1. Opening balance 27,641 24,360 2. Increases 874 3,281 2.1 Deferred tax liabilities recognised in the year 874 3,281 a) related to previous years b) due to changes in accounting policies c) other 874 3,281 2.2 New taxes or tax rate increases 2.3 Other increases 3. Decreases 3,305- 3.1 Deferred tax liabilities derecognised in the year 3,305- a) reversals b) due to changes in accounting policies c) other 3,305 3.2 Tax rate reductions 3.3 Other decreases 4. Closing balance 25,210 27,641
Page 127
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 127 11.6 Change in deferred tax assets (through equity) 11.7 Change in deferred tax liabilities (through equity)
Page 128
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 128 31.12.2025 31.12.2024 1. Opening balance 2,509- 2. Increases 3,077 2,509 2.1 Deferred tax liabilities recognised in the year 3,077 2,509 a) related to previous years -- b) due to changes in accounting policies -- c) other 3,077 2,509 2.2 New taxes or tax rate increases -- 2.3 Other increases -- 3. Decreases -- 3.1 Deferred tax liabilities derecognised in the year -- a) reversals -- b) due to changes in accounting policies -- c) other -- 3.2 Tax rate reductions -- 3.3 Other decreases -- 4. Closing balance 5,586 2,509
Page 129
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 129 Section 13 - Other assets - Item 130 13.1 Other assets: breakdown million acquired as compensation.
Page 130
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 130 LIABILITIES Section 1 - Financial liabilities measured at amortised cost - Item 10 1.1 Financial liabilities measured at amortised cost: breakdown by product of due to banks Key: L1 = Level 1 L2 = Level 2 L3 = Level 3 1.2 Financial liabilities measured at amortised cost: breakdown by product of due to customers Key: CA = carrying amountL1 = Level 1 L1 L2 L3 L1 L2 L3 1. Current accounts and demand deposits309,445 X X X 288,186 X XX2. Term deposits 2,261,130 X X X 2,565,354 X XX3. Financing 861,843 X X X 902,212 X XX 3.1 Repurchase agreements 810,187 X X X 819,999 X XX 3.2 Other 51,656 X X X 82,213 X XX4. Commitments to repurchase own equity instruments X X X X XX5. Lease liabilities X X X X XX6. Other payables 9,101 X X X 5,643 X XXTotal 3,441,519 3,441,519 3,761,395 3,761,39531.12.2025 31.12.2024Carrying amountFair value Carrying amount Fair value
Page 131
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 131 L2 = Level 2 L3 = Level 3 1.3 Financial liabilities measured at amortised cost: breakdown by product of the secu-rities issued Key: CA = carrying amountL1 = Level 1 L2 = Level 2 L3 = Level 3 The item includes subordinated securities relating to the senior shares of the ABS in the Quinto Sistema Sec. 2019 and BS IVA securitisations subscribed by third-party institu-tional investors.
Page 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 132 Section 3 - Financial liabilities designated at fair value through profit or loss - Item 30 3.1 Financial liabilities designated at fair value through profit or loss: breakdown by product Key: NA= Nominal amount L1 = Level 1 L2 = Level 2 L3 = Level 3 since the issue date
Page 133
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 133 SECTION 4 - HEDGING DERIVATIVES 4.1 Hedging derivatives: breakdown by type of hedge and level 4.2 Hedging derivatives: breakdown by hedged portfolio and type of hedge Section 6 Tax liabilities Item 60 The breakdown as well as the change in the deferred tax liabilities were illustrated in Part B Section 11 of assets in these notes to the financial statements.
Page 134
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 134 Section 8 - Other Liabilities - Item 80 8.1 Other liabilities: breakdown Section 9 - Post-employment benefits - Item 90 9.1 Post-employment benefits: changes 9.2 Other Information The actuarial amount of post-employment benefits was calculated by an external actu-ary, who issued an appraisal. The other decreases refer to the actuarial gain accounted for during the year. The pay-ments made refer to post-employment benefits paid during the year. The technical valuations were conducted on the basis of the assumptions described in the following table: Annual discount rate 3.96% Annual inflation rate 2.00%
Page 135
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 135 Annual post-employment benefits increase rate 3.00% Annual real salary increase rate 3.17% The discount rate used for determining the present value of the obligation was calcu-lated, pursuant to IAS 19.83, from the Iboxx Corporate AA index with 10+ duration during the valuation month. To this end, a choice was made to select the yield with a duration comparable to the duration of the set of workers subject to valuation. SECTION 10 Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown
Page 136
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 136 10.2 Provisions for risks and charges: changes 10.3 Provisions for credit risk related to commitments and financial guarantees issued 10.5 Internal defined benefit pension funds Nothing to report. 10.6 Provisions for risks and charges - other provisions
Page 137
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 137 SECTION 13 Equity attributable to the owners of the Parent Items 120, 130, 140, 150, 160, 170 and 180 The share capital of Banca Sistema is composed of 80,421,052 ordinary shares, for a total paid-dend entitlement from 1 January. Based on the evidence published on Consob's website until 30/01/2026, the sharehold-ers with stakes of more than 5%, the threshold above which Italian law (art. 120 of the Consolidated Law on Finance) requires disclosure to the investee and Consob, were as follows: The breakdown of equity attributable to the owners of the parent is shown below:
Page 138
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 138 13.2 Share capital - Parent's number of shares: changes
Page 139
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 139 13.4 Income-related reserves: other information In compliance with art. 2427(7 bis) of the Italian Civil Code, below is the detail of the equity items revealing the origin and possibility of use and distributability. Key: A: for share capital increase B: to cover losses C: for distribution to shareholders 13.5 Equity instruments: breakdown and changes Therefore, the characteristics of bonds issued, which given their predominant charac-teristics are classified under equity instruments in item 140 of equity, are as follows: 31.12.2025 Possible use Available portionA) Share capital 9,651B) Equity-related reserves:Share premium reserve 39,100 A,B,C - Reserve to provide for losses - C) Income-related reserves: Legal reserve 1,930 B - Valuation reserve 13,057 - Negative goodwill 1,774 A,B,C -Retained earnings 196,332 A,B,C - Reserve for treasury sharesReserve for future capital increase -D) Other reserves (1,211)- E) Equity instruments 45,500F) Treasury sharesTotal 306,133- Profit for the year 29,042Total equity 335,175Undistributable portion - Distributable portion-
Page 140
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 140 a variable coupon starting from 19 June 2023, issued on 18 December 2012 and 18 December 2013 (reopening date); and a fixed coupon until 25 June 2031 at 9% issued on 25 June 2021.
Page 141
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 141 Section 14 - Equity attributable to non-controlling interests - Item 190 -
Page 142
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 142 Other information 1. Commitments and financial guarantees issued (other than those designated at fair value)
Page 143
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 143 3. Assets pledged as collateral for liabilities and commitments 5. Management and trading on behalf of third parties
Page 144
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 144 PART C - INFORMATION ON THE INCOME STATEMENT Section 1 Interest - Items 10 and 20 1.1 Interest and similar income: breakdown The total contribution of the Factoring Division, which includes both revenues from tra-ditional factoring transactions and those deriving from SME loans guaranteed by the me generated by the total loans and receivables portfolio. The following are added to this income: (i) the commission component associated with the factoring business; (ii) the revenues from the sale of some receivables due from private debtors; and (iii) the in-come realised on the purchase and subsequent realisation of Superbonus tax receiva-bles held for trading purposes. Subsequent to their recognition, factoring receivables are measured at amortised cost, based on the present value of the estimated cash flows of the principal, or for all re-ceivables whose recovery strategy involves legal action, based on the present value of the cash flows, in addition to the principal, of the default interest component that will accrue up to the expected date of collection on amounts considered recoverable. For prudential purposes, recovery rate percentages used for local authorities and public sector entities (with statistical data dating back to 2008) and for Local Health Authorities (ASLs) (with statistical data dating back to 2005) are calculated using a fifteenth-per-centile confidence interval. The estimated recovery percentages and expected collection dates are updated based on annual analyses in light of the progressive consolidation of Items/Technical formsDebt instrumentsFinancingOther transactions2025 20241. Financial assets measured at fair value through profit or loss:200 2001181.1 Financial assets held for trading 157 1571181.2 Financial assets designated at fair value through profit or loss1.3 Other financial assets mandatorily measured at fair value through profit or loss43 432. Financial assets measured at fair value through other comprehensive income 29,093 X 29,09322,2543. Financial assets measured at amortised cost:8,262 171,432 179,694170,5413.1 Loans and receivables with banks 2,066 X 2,0667,9343.2 Loans and receivables with customers8,262 169,366 X 177,628162,6074. Hedging derivatives X X6205. Other assets X X 1,426 1,4262,7216. Financial liabilities X X XTotal 37,555 171,432 1,426 210,413 196,254of which: interest income on impaired assetsof which: interest income on finance leasesX X
Page 145
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 145 the historical data series, which provide increasingly solid and robust estimates. In the third quarter of the current financial year, the expected rates of recovery of default interest on factoring, based on the statistical evidence that benefits from the progres-sive consolidation of the historical data series, were refined, as have the related collec-tion times used were increased. The combined update of these estimates led to an lion at 31 December 2024). This effect is a consequence of the fact that the historical series over the last few years have settled nearer to the average collection percentages and have stabilised in terms of the number of positions. As a result, the expected recovery per-centage calculated by the statistical model is now quite stable and does not fluctuate significantly. 1.3 Interest and similar expense: breakdown
Page 146
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 146 1.5 Hedging Spreads
Page 147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 147 Section 2 - Net fee and commission income - Items 40 and 50 2.1 Fee and commission income: breakdown 2025 2024 a) Financial instruments 123 1361. Placement of securities 64 611.1 Underwritten and/or on a firm commitment basis 64 611.2 Without a firm commitment basis2. Order collection and transmission, and execution of orders on behalf of customers 48 622.1 Order collection and transmission for one or more financial instruments48 622.2 Execution of orders on behalf of customers3. Other fees associated with activities related to financial instruments 11 13of which: dealing on own accountof which: individual asset management 11 13b) Corporate Financec) Investment advisory activitiesd) Clearing and settlemente) Custody and administration f) Central administrative services for collective asset management g) Fiduciary activities h) Payment services 64 711. Current accounts (1) 22. Credit cards3. Debit and other payment cards 35 304. Bank transfers and other payment orders5. Other fees related to payment services 30 39 i) Distribution of third party services 1,245 1,1222. Insurance products 1 23. Others products 1,244 1,120k) Servicing of securitisations 294 397l) Commitments to disburse fundsm) Financial guarantees issued 365 288n) Financing transactions 31,364 32,709o) Foreign currency transactionsp) Commoditiesq) Other fee and commission income 11,055 11,837Total 44,510 46,560
Page 148
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 148 Item q) Other fee and commission income consists of fees and commissions arising from collateral-backed loans, origination fees on salary- and pension-backed loan (CQ) products, as well as fees and commissions from servicing of third-party factoring trans-actions. 2.2 Fee and commission income: distribution channels of products and services
Page 149
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 149 2.3 Fee and commission expense: breakdown Section 3 Dividends and similar income item 70 3.1 Dividends and similar income: breakdown
Page 150
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 150 Section 4 Net trading income (expense) Item 80 4.1 Net trading income (expense): breakdown Gains (A)Trading income (B)Losses (C)Trading losses (D)Net trading income (expense) [(A+B) - (C+D)]1. Financial assets held for trading 29,635 277 (1,325) 28,5871.1 Debt instruments 277 (158) 1191.2 Equity instruments1.3 OEIC units1.4 Financing1.5 Other 29,635 (1,167) 28,4682. Financial liabilities held for trading2.1 Debt instruments2.2 Payables2.3 Other3. Other financial assets and liabilities: exchange rate gains (losses)X X X X(89)4. Derivatives4.1 Financial derivatives: - On debt instruments and interest rates- On equity instruments and equity indexes- On currencies and gold X X X X- Other4.2 Credit derivativesof which: natural hedges connected to the fair value option X X X XTotal 29,635 277 (1,325) 28,498
Page 151
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 151 Section 5 Net hedging income (expense) Item 90 5.1 Net hedging income (expense): breakdown
Page 152
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 152 Section 6 - Gain from sales or repurchases - Item 100 6.1 Gain from sales or repurchases: breakdown
Page 153
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 153 Section 8 - Net impairment losses/gains due to credit risk - Item 130 8.1 Net impairment losses due to credit risk related to financial assets measured at amortised cost: breakdown 8.1a Net impairment losses due to credit risk related to loans measured at amortised cost subject to Covid-19 support measures: breakdown
Page 154
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 154 8.2 Net impairment losses due to credit risk related to financial assets measured at fair value through other comprehensive income: breakdown Section 9 Gains/losses from contract amendments without derecognition Item 140 9.1 Gains (losses) from contract amendments: breakdown A. Debt instruments 10 10 221B. Financing - To customers - - To banks -Total 10 10 221 Impairment losses (1)Impairment gains (2)2025 2024Third stagePurchased or originated credit-impaired
Page 155
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 155 Section 12 Administrative expenses Item 190 12.1 Personnel expense: breakdown 12.2 Average number of employees by category Employees a) Senior managers 29 b) Middle managers (Q4 Q3) 67 c) Remaining employees 266
Page 156
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 156 12.5 Other administrative expenses: breakdown Other administrative expenses 2025 2024IT expenses 11,530 9,881Consultancy and professional services 4,438 2,955Regulatory development and compliance consultancy 1,568 1,325Legal and professional consultancy 2,427 1,175Audit expenses 443 455Credit-related expenses 18,236 11,220Insurance coverage expenses 5,732 2,292Credit recovery expenses 7,692 4,098Origination expenses 2,566 2,435Servicing and collection activities 1,915 1,922Legal dispute expenses 331 473Other operating expenses 3,336 3,316Outsourcing and consultancy expenses 940 947Additional operating expenses 1,031 1,081Vehicle management expenses 533 568Association contributions 384 361Cash transport expenses 257 180Insurance 191 179Advertising and communication expenses 2,137 1,677Real estate-related expenses 2,434 2,304Other real estate-related expenses 675 844Maintenance expenses 721 572Utility and cleaning expenses 634 502Concierge and surveillance expenses 404 386Personnel-related expenses 2,588 2,700Vehicle rental and related expenses 769 876Travel and representation reimbursements 914 934Other personnel-related expenses 498 505Agent-related expenses 407 385Indirect taxes and duties 2,842 2,626Total operating costs 47,541 36,679Resolution fund --Extraordinary charges --Total 47,541 36,679
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 157 Section 13 Net accruals to provisions for risks and charges Item 200 13.2 Net accruals for other commitments and other guarantees issued: breakdown 13.3 Net accruals to other provisions for risks and charges: breakdown Section 14 Net impairment losses on property and equipment Item 210 14.1 Net impairment losses on property and equipment: breakdown
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 158 Section 15 Net impairment losses on intangible assets Item 220 15.1 Net impairment losses on intangible assets: breakdown Section 16 Other operating income (expense) Item 230 16.1 Other operating expense: breakdown 16.2 Other operating income: breakdown
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 159 Section 17 Gains (losses) on equity investments Item 250 17.1 Gains (losses) on equity investments: breakdown Section 19 - Impairment losses on goodwill - Item 270 19.1 Impairment losses on goodwill: breakdown
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 160 Section 21 Income taxes Item 300 21.1 Income taxes: breakdown 21.2 Reconciliation between theoretical and effective tax expense
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 161 Section 23 - Profit (loss) attributable to non-controlling interests - Item 340 Section 24 - Other Information Nothing to report.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 162 Section 25 Earnings per share EPS is calculated by dividing the profit attributable to holders of ordinary shares of Banca Sistema (numerator) by the weighted average number of ordinary shares (de-nominator) outstanding during the year.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 163 PART D OTHER COMPREHENSIVE INCOME BREAKDOWN OF COMPREHENSIVE INCOME
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 164 PART E - INFORMATION CONCERNING RISKS AND RELATED HEDGING POLICIES SECTION 1 CONSOLIDATION RISKS Quantitative disclosure A. Credit quality A.1 Impaired and unimpaired loans: carrying amounts, impairment losses, per-formance and business breakdownA.1.1 Breakdown of financial assets by portfolio and by credit quality (carrying amounts) A.1.2 Breakdown of financial assets by portfolio and by credit quality (gross amount and carrying amount) 1. Financial assets measured at amortised cost 422,092 57,812 364,280 2,251,864 5,282 2,246,5812,610,8612. Financial assets measured at fair value through other comprehensive income 1,181,305 376 1,180,9291,180,9293. Financial assets designated at fair value through profit or loss4. Other financial assets mandatorily measured at fair value through profit or loss1,5611,5615. Financial assets held for saleTotal 31.12.2025 422,092 57,812 364,280 3,433,169 5,658 3,429,0713,793,351Total 31.12.2024 332,805 57,486 275,319 3,747,819 8,081 3,739,7384,015,057Non-performing PerformingTotal (carrying amount)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 165 B. Disclosure of structured entities (other than securitisation companies) B.1 Consolidated structured entities No such items existed at the reporting date. B.2. Unconsolidated structured entities No such items existed at the reporting date. B.2.1. Prudentially consolidated structured entities No such items existed at the reporting date. B.2.2. Other structured entities No such items existed at the reporting date.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 166 SECTION 2 PRUDENTIAL CONSOLIDATION RISKS 1.1 Credit risk Qualitative disclosure 1. General aspects In order to manage the significant risks to which it is or could be exposed, the Banca Sistema Group has set up a risk management system that reflects the characteristics, size and complexity of its operations. In particular, this system hinges on four core principles: suitable supervision by relevant bank bodies and departments; satisfactory risk management policies and procedures; suitable methods and instruments to identify, monitor and manage risks, with suitable measuring techniques; thorough internal controls and inde-pendent reviews. In order to reinforce its ability to manage corporate risks, the Bank established the Risk, ALM and Sustainability Committee - a committee independent of the Board of Directors, which supports the CEO in defining strategies, risk policies and profitability targets. The Risk, AML and Sustainability Committee continuously monitors the relevant risks and any new or potential risks arising from changes in the working environment or forward-looking operations. With reference to the new regulation in matters of the operation of the internal control system, in accordance with the principle of collaboration between the control functions, the Internal Control, Risk Management and Sustainability Committee (a Board commit-tee) was assigned the role of coordinating all the control functions. The Risk and Sustainability Department of the Parent is responsible for the guidance, The methods used to measure, assess and aggregate risks are approved by the Board of Directors, based on proposals from the Risk and Sustainability Department, subject to approval by the Risk, AML and Sustainability Committee. In order to measure "Pillar 1 risks", the Group has adopted standard methods to calculate the capital requirements for Prudential Regulatory purposes. In order to evaluate non-- where possible - the methods stipulated under Supervisory regulations or those established by trade associations. If there are no such indications, standard market practices by operators working at a level of complexity and with operations comparable to those of the Bank are assessed.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 167 With reference to the provisions in matters of regulatory supervision (15th update of circular no. 263 - New prudential supervisory provisions for banks), a series of obliga-tions on risk management and control, including the Risk Appetite Framework (RAF) and the regulatory instructions defined by the Basel Committee were introduced. The Bank has tied the strategic objectives to the RAF. The key ratios and the respective levels were assessed and any revisions needed were made while defining the bank's annual objectives. In particular, the RAF was designed with key objectives to verify that over time, the business grows and develops observing capital strength and liquidity obligations, im-plementing monitoring and alert mechanisms and related series of actions that allow prompt intervention in case of significant discrepancies. The structure of the RAF is based on specific indicators called Key Risk Indicators (KRI) which measure the Group's solvency in the following areas: Share capital; Liquidity; Quality of the loans and receivables portfolio; Profitability; Other specific risks the Group is exposed to. Target levels, which are adjusted according to the expected development of the busi-thresholds, that trigger discussion at Risk, AML and Sustainability Committee level and subsequent communication to the Board of Directors and the level II thresholds, that be taken are associated with the various key indicators. The level I and II thresholds are defined with scenarios of potential stress with respect to the plan's objectives and on dimensions having a clear impact for the Group. Starting from 1 January 2014, the Group used an integrated reference framework both to identify its own risk appetite and for the internal process entailing the determination of the capital adequacy (Internal Capital Adequacy Assessment Process - ICAAP). Start-ing in 2017, it also implemented the Internal Liquidity Adequacy Assessment Process (ILAAP). As concerns this matter, the Bank fulfils the public disclosure requirements with the ne 2013. This regulation, together with that contained in Regulation (EU) no. 575/2013 However, starting from 30 June 2021, the provisions of Regulation 2019/876 (CRR II) of 20 May 2019 entered into force. This Regulation amended Regulation (EU) No.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 168 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large expo-sures, and reporting and disclosure requirements. Public disclosure by institutions (Pillar 3) is therefore directly governed by: amended; Regulation (EU) 2021/637 of 15 March 2021, as amended. The prudential supervisory provisions provide for the banks the possibility to determine the weighting coefficients for the calculation of the capital requirement with respect to credit exposure within the standardised approach based on the creditworthiness ratings issued by External Credit Assessment Institutions (ECAI) of the Bank of Italy. the exposures to Central Authorities, Territorial Entities and Public Sector Institutions, whereas, as concerns the valuations related to the regulatory business and other parties The identification of a reference ECAI does not represent in any way, in subject matter or in purposes, an assessment on the merit of the opinions made by the ECAI or a support of the methodologies used, for which the External Credit Assessment Institu-tions remain solely responsible. The assessments issued by the rating agencies do not exhaust the creditworthiness assessment process that the Group performs with regard to its customers; rather they represent a further contribution to define the information framework regarding the credit quality of the customer. and income, and of the correct remuneration of the risk, are made based on documen-tation acquired by the Group; the information acquired from the Bank of Italy Central Credit Register and from other infoproviders, both when decisions are made and during the subsequent monitoring, complete the informational framework. sure; the loans and receivables portfolio predominantly consists of National Institutions of the Public Administration, such as local health authorities/Hospitals, Territorial enti-ties (Regions, Provinces and Municipalities) and Ministries that, by definition, entail a very limited default risk. are: Factoring activities (with and without recourse);
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 169 Medium-term corporate loans (with guarantee from SACE or the National Guarantee Fund - FNG) EIF Loans Acquisition without recourse of salary-/pension-backed/directly originated loans; Collateralised Lending (mainly secured by gold). 2. Credit Risk Management Policies 2.1 Organisational aspects cedure be performed carefully in accordance with the decision-making powers reserved to the decision-making bodies. In order to maintain the high credit quality of its loans and receivables portfolio, the Bank, following the divisionalisation process, has set up separate Credit Committees for the two Factoring and CQ Divisions, within which decisions may be taken up to pre-defined credit mandates, while a CEO Credit Committee has been set up for transactions that exceed the powers of the individual Divisions up to the limits delegated by the Board of Directors to the Chief Executive Officer. At the same time, the Credit Coordi-nation Committee was introduced, which makes it possible to ensure consistency in the granting of credit and close monitoring of individual positions. Level II activities relating y Department which also coordinates with the Compliance, Anti-Money Laundering and Risk Department of the Kruso Kapital subsidiary for risk-related activities. In light of the above, the analyses conducted for the granting of credit are carried out the Factoring Division, the Department performs assessments focused on the separate analysis and extension of credit to counterparties (assignor and debtor) and on manag-ing the related financial transactions. This takes place in all normal phases of the credit process, summarised as follows: formation from the counterparties under examination and within the system quantifying the proposed line of credit; upon, the contractual documentation to be signed by the counterparty is prepared by the Legal Department; fiting from the credit allows any anomalies to be identified and consequen-tially prompt intervention.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 170 Credit risk is mainly generated as a direct result of the definitive acquisition of credit from the customer company versus the insolvency of the assigned debtor. In particular, the credit risk generated by the factoring portfolio essentially consists of public entities. With regard to each credit acquired, Banca Sistema, via the Collection and Disputes Department and as provided for in the "collection policy", undertakes the activities de-scribed further on in order to verify the credit status, and whether or not there are any impediments to the payment of the invoices to be assigned, and the date scheduled for the payment thereof. Specifically, the structures of the relevant Department undertake: to verify that each credit is certain, liquid and collectable, i.e. there are no disputes or complaints and that there is no further request for clarification or information with regard to said credit and should there be any, that said re-quests are promptly satisfied; to verify that the debtor has received and recognised in its system the related deed of assignment or mandate, i.e. it is aware that the credit has been as-signed to Banca Sistema or that the collection and management mandate has been issued; to verify that the debtor, where provided for by the assignment agreement and by the purchase offer, has formalised its acceptance of the assignment of the related credit or has not rejected it in accordance with law; to verify that the debtor has received all the documentation required to pro-ceed with the payment (copy of invoice, orders, bills, transportation docu-ments, etc.) and that it has recognised the corresponding debt in its system (existence of the credit); to verify c/o the local and/or regional institutions: the existence of specific allocations, available cash; to verify the payment status of the credits via meetings c/o the Public Admin-istrations and/or debtor agencies, telephone contacts, emails, etc. in order to facilitate the ascertainment and the removal of any obstacles that could delay and/or impede payment; initiating out-of-court and legal recovery actions against assigned debtors and/or assignors. With regard to the SME Loans product, beginning in February 2017, it was decided to exit this segment of the market as well as the run-off of prior exposures in the portfolio. On this basis, credit risk is associated with the inability of the two counterparties in-volved in the loan to honour their financial commitments, i.e.: the debtor (SME); the Guarantee Fund (the Government of Italy).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 171 The type of loan follows the usual operating process concerning the preliminary assess-ment, the disbursement and the monitoring of the credit. In particular, two separate due-diligence procedures are performed on this type of loan (one by the Bank and the other by Mediocredito Centrale, so-called MCC) on the bor-rower of funds. The debtor's insolvency risk is mitigated by direct (i.e. that referring to an individual exposure), explicit, unconditional and irrevocable guarantee by the Guarantee Fund, the sole Manager of which is MCC. However, since 2020, the Bank has resumed granting loans to SMEs with National Guar-antee Fund or SACE guarantees exclusively to factoring customers. As regards the CQ Division, this activity is carried out through the direct origination of loans mainly through agents/brokers or through the acquisition of salary-/pension-backed loan portfolios. The credit risk is associated with the inability of the three coun-terparties involved in the loan process to honour their financial commitments, i.e.: the employer (ATC) / debtor the assigning finance company or bank (only in the case of receivable pur-chases) the insurance company The insolvency risk of the employer (ATC) / debtor is generated in the following cases: default of employer (e.g.: bankruptcy); the debtor losing his job (e.g.: resignation/ dismissal of the debtor) or re-duction of remuneration (e.g.: redundancy fund); death of the debtor; over-indebtedness resolution procedure/debtor restructuring plan. The risks described above are mitigated by the mandatory subscription of life and em-ployment insurance policies. In detail: the policy for credit risk requires the insurance company to provide cover in the event of loss of employment (even when it is the result of a default by the Atc); it should be noted that prior to requesting compensation from the insurance company (when possible), the post-employment benefits (TFR) is required as collateral - the life risk policy requires the insurance company to provide cover in the event of death; the possibility of acting on the heirs for any outstanding instalments prior to the event of premature death remains if they are not covered by the insurance company. The Bank is subject to the insolvency risk of the insurance company in the event that a claim is made upon a loan. In order to mitigate this risk, the Bank requires that the
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 172 outstanding loans and receivables portfolio be insured by several insurance companies observing the following terms: any new insurance company proposed by the assignors must be approved by the Bank's CEO Credit Committee; an individual company with no rating or with rating lower than Investment Grade may insure a maximum of 30% of the cases; an individual company of Investment Grade may insure a maximum of 40% of the cases. The employer insolvency risk is generated for portfolio purchases if a case is retroceded back to the employee, which must therefore, repay the credit to the Bank. The Frame-work Agreement signed with the employer provides for the possibility of returning the credit in the cases of fraud on the part of the employer/debtor or in any case, of non-observance, on the part of the employer, of the criteria underwritten in the Framework Agreement. As concerns the financial instruments held on its own account, the Bank performs se-curity purchase transactions regarding Italian government debt, which are allocated based on the investment strategy, to the HTC, HTCS and HTS portfolios. In addition, the Bank has a position in Securities Asset Management, almost all of which is invested in government bonds. With reference to the aforementioned transactions the Bank identified and selected spe-cific IT applications to manage and monitor the treasury limits on the securities portfolio and to set up the second level controls. The Treasury Department, operating within the limits allowed by the Board of Directors, conducts said transactions. 2.2 Management, measurement and control systems The Group sets effective Credit Risk Management as a strategic objective via instru-ments and processes integrated to ensure a correct credit management in all phases (processing, disbursement, monitoring and management, intervening on loans with credit quality problems). By involving the various central structures of Banca Sistema and through the speciali-sation of the resources and the segregation of duties at each decision-making level, it seeks to guarantee a high degree of efficiency and standardisation in overseeing credit risk and monitoring the individual positions. With specific reference to the monitoring of credit activities, the Bank, via the collection meetings, assesses and inspects the loans and receivables portfolio based upon the above credit risk ex-post monitoring sets the objective of promptly identifying any anomalies
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 173 and/or discontinuities and evaluating the persistence of risk profiles, in line with the strategic indications provided. Regarding the credit risk of the bond portfolio, in 2025 the purchase of Italian govern-ment bonds classified as financial assets available for sale (formerly "Available for Sale" now HTCS) continued along with the purchase of government bonds classified as assets to be held to maturity (HTC). Said financial assets, which in virtue of their classification investment activity, are sources of credit risk. This risk consito redeem, upon maturity, all or part of the bonds subscribed. Furthermore, the formation of a portfolio of highly liquid assets is also expedient for anticipating the trend of the prudential regulations in relation to the governance and management of liquidity risk. and repurchase agreements being that Italian government securities are the predomi-nant underlying instrument and the Compensation and Guarantee Fund is the counter-party. At 31 December 2025, there were no repurchase agreements in place with the Com-pensation and Guarantee Fund. The Banca Sistema Group purchased tax credits from "Eco-Sisma bonus 110%" for trading purposes, which also generated counterparty risk. It should be noted that a 2.3 Methods for measuring expected losses The general approach defined by IFRS 9 for estimating impairment is based on a process from the date of initial recognition to the reporting date. The regulatory guidance on assigning loans and receivables to the various stages under the Standard ("staging" or "stage allocation") calls for the identification of significant changes in credit risk based on the changes in a counterparty's creditworthiness since initial recognition, the ex-pected life of the financial asset and other forward-looking information that may affect credit risk. Consistently with the provisions of IFRS 9, performing loans are therefore divided into two categories: Stage 1: this bucket contains assets that do not show signs of significant de-terioration in credit quality. For this stage the expected one-year credit loss is calculated on a collective basis; Stage 2: this bucket contains assets that show signs of significant deteriora-tion in credit quality from the date of initial recognition to the reporting date. The expected loss for this bucket must be calculated on a lifetime basis, i.e. over the entire duration of the instrument, on a collective basis.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 174 2.4 Credit Risk mitigation techniques The strategies pursued by the Banking Group require that credit lines be preferably backed by appropriate guarantees and instruments to mitigate risk. The Banca Sistema Group has implemented the requirements set forth in Regulation (EU) 575/2013 for the purposes of recognising the effects of mitigating credit risk due to collateral and personal guarantees in place for credit protection. In addition to the insurance policies taken out with specialist operators for risk mitigation purposes, a particularly significant role among financial guarantees is also played by the cover pro-vided by public bodies such as SACE. As concerns credit and counterparty risk on the securities portfolio and on the repur-chase agreements, risk mitigation is pursued by a careful management of the opera-tional autonomy, establishing limits in terms of both responsibility and consistency and composition of the portfolio by type of securities. 3. Non-performing exposures The Banca Sistema Group defined its credit quality policy based on the provisions in the Bank of Italy Circular no. 272 (Accounts matrix), the main definitions of which are pro-vided on the following pages. The Supervisory Provisions for Banks assign to intermediaries specific obligations con-units in the monitoring phase of the loan granted must be deducible from the internal regulation. In particular, the terms and methods of action must be set in the event of anomalies. The criteria for measurement, management and classification of irregular loans, as well as the related responsible units, must be set through a resolution by the Board of Directors in which the methods for connecting these criteria with those required for the supervisory reports are indicated. The Board of Directors must be regularly in-formed on the performance of the irregular loans and the related recovery According to the definitions in the above--per- - In particular, the following definitions apply: Bad exposures On- and off-statement of financial position exposures (loans, securities, derivatives, etc.) owed by a party in state of insolvency (even if not judicially ascertained) or in broadly similar situations, regardless of any loss forecast formulated by the Group (cf. art. 5 bankruptcy law). The definition therefore applies regardless of the existence of any collateral or personal guarantee provided as protection against the exposures.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 175 This class also includes: a) the exposure to local institutions (municipalities and provinces) in state of financial difficulty for the portion subject to the applicable liquidation procedure; b) receivables acquired from third parties in which the main debtors are non-perform- (c) exposures to entities that qualify for classification as bad exposures and have one or more credit lines that meet the definition of non-performing exposures with forbear-ance measures. Unlikely to pay regarding the unlikelihood that, without having to resort to actions such as enforcing the guarantees, the debtor will completely (with regard to principal and/or interest) fulfil its credit obligations. This assessment is made independently of whether any sums (or instalments) are past due and not paid. It is therefore unnecessary to wait for ex-plicit symptoms of irregularity (non-repayment) if there are elements that entail a sit-uation of default risk on the part of the debtor (e.g. a crisis in the industrial sector in which the debtor operates). The set of on- and off-statement of financial position expo-conditions for classifying the debtor under bad exposures exist. The exposures to retail parties may be classified in the unlikely to pay category at the level of the individual transaction, provided that the Bank has assessed that the conditions for classifying the set of exposures to the same debtor in that category do not exist. Past due and/or overdrawn exposures These are understood to be the on-statement of financial position exposures at carrying amount and off-statement of financial position exposures (loans, securities, derivatives, etc.), other than those classified as bad exposures and unlikely to pay, that, on the reference date of the report, are past due or overdrawn. Past due and/or overdrawn exposures can also be determined by referring to the indi-vidual debtor or the individual transaction. Starting from 1 January 2021, the Banca Sistema Group applies the rules envisaged by the introduction of the new definition of default by applying the EBA Guidelines. a) Individual debtor approach The overall exposure to a debtor shall be recognised as past due and/or overdrawn, in accordance with Delegated Regulation (EU) No 171/2018 of the European Commission of 19 October 2017, if, at the date of the report, the amount of principal, interest or fees outstanding at the due date exceeds both of the following thresholds: a) absolute -retail exposures; b) relative limit
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 176 of 1% as determined by the ratio of the total past due and/or overdrawn amount to the total amount of all credit exposures to the same debtor. The thresholds must be exceeded continuously, in other words for 90 consecutive days except for certain types of commercial exposures to central authorities, local authorities and public sector entities for which the provisions of paragraphs 25 and 26 of the Guide-lines apply. The provisions set out in paragraphs 16 to 20 of the Guidelines apply when calculating the number of past due days. The provisions set out in paragraph 23(d) and paragraphs 27 to 32 of the Guidelines apply to factoring transactions. For exposures involving instalments, the rules set out in article 1193 of the Italian Civil Code apply to the allocation of payments to individual instalments that are past due, unless otherwise specifically agreed in the contract. Where credit exposures are required to be broken down by past due range, the number of past due days is counted from the date when the first default occurs for each exposure, regardless of whether the thresholds are exceeded. If a debtor has several exposures that are past due and/or overdrawn by more than 90 days, these exposures shall be reported separately in the corresponding past due ranges. b) Individual transaction approach Past due and/or overdrawn exposures to retail parties may be determined at the level of the individual transaction. Whether an individual transaction approach or an individ-ual debtor approach is chosen shall reflect internal risk management practices. An ex-posure that is past due or overdrawn shall be recognised as past due and/or overdrawn, in accordance with Delegated Regulation (EU) No 171/2018 of the European Commis-sion of 19 October 2017, if, at the date of the report, it exceeds both of the following of the total amount past due or overdrawn to the total amount of the entire credit exposure. The thresholds must be exceeded continuously, in other words for 90 con-secutive days. If the entire amount of an on-statement of financial position credit ex-posure that is past due and/or overdrawn for more than 90 days is equal to or greater than 20% of the total on-statement of financial position credit exposures to the same debtor, the total on- and off-statement of financial position credit exposures to that debtor must be considered past due and/or overdrawn (the so-The numerator and denominator are calculated using the carrying amount for securities and the on-statement of financial position credit exposure for other credit positions. In the calculation of the capital requirement for the credit and counterparty risk, Banca Sistema uses the standardised approach. This envisages that the exposures that lie ial en-due and/or overdrawn exposures at the level of the debtor party. Forborne exposures
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 177 -perform-defined by the Implementing Technical Standards (ITS). A forbearance measure represents a concession towards a debtor which faces or is an amendment of the previous terms and conditions of a contract which the debtor is considered unable to fulfil due to its financial difficulties, that would not have been granted if the debtor was not in financial difficulty; a total or partial refinancing of a problem loan that would not have been granted if the debtor was not in financial difficulty. Non-performing exposures with forbearance measures: individual on-statement of fi-nancial position exposures and revocable and irrevocable commitments to disburse funds that meet the definition of "Non-performing exposures with forbearance measures" in Annex V, Part 2, paragraph 262 of the ITS. Such exposures shall be clas-sified as bad exposures, unlikely to pay or past due and/or overdrawn exposures, as appropriate, and shall not form a separate category of impaired assets. The qualitative and quantitative criteria set out in paragraphs 49 to 55 of the EBA Guidelines for a distressed restructuring must also be considered when classifying for-borne exposures among non-performing exposures. Forborne performing exposures: this category includes other credit exposures that fall within the category of "forborne performing exposures" as defined in the ITS. 3.1 Management strategies and policies The current regulatory framework requires impaired financial assets to be classified - Bad exposures: exposures owed by a party in state of insolvency (even if not judicially ascertained) or in broadly similar situations, regardless of the loss forecasts formulated by the institution. - Unlikely to pay: exposures for which the institution considers it unlikely that the debtor will fully meet its obligations without having to resort to actions such as the enforcement of guarantees, regardless of whether there are any past due and/or overdrawn amounts. - Past due and/or overdrawn exposures: exposures, other than those classified as bad exposures or unlikely to pay, which have been continuously past due and/or overdrawn for more than 90 days.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 178 Forborne exposures, which refer to exposures that are subject to renegotiation and/or refinancing due to the customer's financial difficulties (whether evident or developing), are also classified. These exposures may constitute a subset of non-performing loans (non-performing exposures with forbearance measures) and performing loans (forborne performing exposures). The management of these exposures, in compliance with the regulatory provisions regarding timing and classification methods, is supported by spe-cific work processes and IT tools. The Group has a policy that establishes criteria and methods for recognising impairment losses by standardising the rules that, depending on the type of non-performing loan and its original technical form, define the methods and processes used to determine expected losses. The management of non-performing exposures is assigned to the Credit Departments of the Divisions, which are responsible for identifying strategies for maximising collection on individual positions and establishing the impairment losses to be recognised for those positions through a formalised process. The expected loss reflects a number of elements derived from various internal and ex-ternal assessments of the financial condition of the main debtor and any guarantors. Expected losses are continuously monitored and compared to the changes in each po-sition. The Risk Department oversees the collection of non-performing loans. In order to maximise collections, the relevant departments identify the best strategy for managing non-performing exposures, which, based on the subjective characteristics of the individual counterparty/exposure and internal policies, may include amending the contractual terms (forbearance), establishing the methods for loan collection, or assign-ing the credit to third parties (either for individual exposures or for a group of positions with similar characteristics). 3.2 Write-offs Non-performing exposures for which collection is not possible (whether in full or in part) are written off from the accounting records in compliance with the policies in force at the time and subject to approval by the Group's Board of Directors. 3.3 Purchased or originated credit-impaired financial assets - considered impaired at initial recognition because the credit risk is very high, and in the case of a purchase, it is acquired at a significant discount (compared to the original disbursement value). If the financial assets in question, based on the application of the classification drivers (i.e. SPPI test and business model), are classified among assets measured at amortised cost or at fair value through other comprehensive income, they are classified as "Purchased or Originated Credit-Impaired" (in short "POCI") and are subject to specific treatment. More specifically, impairment losses equal to the lifetime expected credit loss (ECL) are recognised from the date of initial recognition over the stage 3, although they may be subsequently reclassified to performing loans, in which
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 179 case an expected loss equal to the lifetime ECL (stage 2) will continue to be recognised. A POCI financial asset is therefore classified as such in the expected credit loss (ECL) reporting and calculation processes. 4. Financial assets subject to commercial renegotiation and forborne expo-sures In the event the debtor is experiencing financial difficulties, the contractual terms of the exposures may be amended in favour of the debtor in order to make repayment finan-cially sustainable. Depending on the subjective characteristics of the exposure and the reasons behind the debtor's financial difficulties, the amendments may be short term (temporary suspension of the payment of the principal of a loan or extension of a ma-turity) or long term (extension of the duration of a loan, adjustment of the interest rate) and result in the exposure (both performing and non-performing) being classified as accordance with EBA ITS 2013-35, as transposed in the Group's credit policies. If the forbearance measures are applied to performing exposures, these are included in the monitoring processes by the relevant departments.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 180 Quantitative disclosure A. Credit quality A.1 Impaired and unimpaired loans: carrying amounts, impairment losses, per-formance and business breakdown A.1.1 Prudential consolidation - Breakdown of financial assets by past due range (car-rying amounts) A.1.2 Prudential consolidation - Financial assets, commitments to disburse funds and financial guarantees issued: changes in impaired positions and accruals to provisions Opening total impairment losses 8 6,567 366 6,967 313 313 58,326 58,325 25 365,608Increases in purchased or originated financial assets 2,039 419 2,313 156 156 10,106 10,10612,720Derecognition other than write-offs 1 2,832 398 3,086 106 106 10,966 10,965 1 114,303Net impairment losses/gains due to credit risk (+/-) (6) (788) (10) (799) (11) (11) 3,799 3,799 (19) (3)2,967Contract amendments without derecognition Changes in estimation methodWrite-offs not recognised directly through profit or lossOther changes (10) (10) (65) (65)(75)Closing total impairment losses 1 4,976 377 5,385 352 352 61,200 61,200 (1) - (1) 6 -66,910Recoveries from collection on financial assets that have been written offWrite-offs recognised directly through profit or loss Total impairment lossesOverall accruals to provisions on commitments to disburse funds and financial guarantees issued TotalAssets included in the first stage Assets included in the second stage Assets included in the third stage Purchased or originated credit-impaired financial assets
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 181 A.1.3 Prudential consolidation - Financial assets, commitments to disburse funds and financial guarantees issued: transfers between different credit risk stages (gross amount and nominal amount) A.1.3a Loans subject to Covid-19 support measures: transfers between different credit risk stages (gross amount and nominal amount)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 182 A. Loans measured at amortised cost - 511 21,458-A.1 forborne in compliance with the EBA Guidelines --A.2 subject to existing moratoria no longer in compliance with the EBA Guidelines and not considered forborne--A.3 subject to other forbearance measures --A.4 new loans - 511 21,458-B. Loans measured at fair value through other comprehensive income- - --B.1 forborne in compliance with the EBA Guidelines --B.2 subject to existing moratoria no longer in compliance with the EBA Guidelines and not considered forborne--B.3 subject to other forbearance measures --B.4 new loans --Totale 31.12.2025 - 511 21,458-Totale 31.12.2024 608- Gross amount / Nominal amountTransfers between the first and second stageTransfers between the second and third stageTransfers between the first and third stage
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 183 A.1.4 Prudential consolidation - On- and off-statement of financial position loans and receivables with banks: gross amounts and carrying amounts
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 184 A.1.5 Prudential consolidation - On- and off-statement of financial position loans and receivables with customers: gross amounts and carrying amounts
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 185 A.1.6 Prudential consolidation - On-statement of financial position loans and receivables with banks: gross non-performing exposures A.1.6bis Prudential consolidation On-statement of financial position loans and receiv-ables with banks: breakdown of gross forborne exposures by credit quality No positions to report. Bad exposuresUnlikely to payNon-performing past due exposuresA. Opening gross balance 2- of which: positions transferred but not derecognisedB. IncreasesB.1 transfers from performing loansB.2 transfers from purchased or originated credit-impaired financial assetsB.3 transfers from other categories of non-performing exposures of which non-performing exposuresB.4 contract amendments without derecognitionB.5 other increasesC. Decreases 2C.1 transfers to performing loansC.2 write-offsC.3 collections 2C.4 gains on salesC.5 losses on salesC.6 transfers to other categories of non-performing exposuresC.7 contract amendments without derecognitionC.8 other decreasesD. Closing gross balance- of which: positions transferred but not derecognised
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 186 A.1.7 Prudential consolidation - On-statement of financial position loans and receiva-bles with customers: gross non-performing exposures
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 187 A.1.7a Loans subject to Covid-19 support measures: gross amount and carrying amount A. BAD LOANSa) Forborne in compliance with the EBA Guidelines- - - - - - - - - - --b) Subject to moratoria no longer in compliance with the EBA Guidelines and not considered forborne- - - - - - - - - - --c) Subject to other forbearance measures- - - - - - - - - - --d) New loans - - - - - - - - - - --B. UNLIKELY-TO-PAY LOANS 8,287 8,287 578 578 7,709a) Forborne in compliance with the EBA Guidelines- - - - - - - - - - --b) Subject to moratoria no longer in compliance with the EBA Guidelines and not considered forborne- - - - - - - - - - --c) Subject to other forbearance measures- - - - - - - - - - --d) New loans 8,287 - - 8,287 - 578 - - 578 - 7,709-C) IMPAIRED PAST DUE LOANSa) Forborne in compliance with the EBA Guidelines- - - - - - - - - - --b) Subject to moratoria no longer in compliance with the EBA Guidelines and not considered forborne- - - - - - - - - - --c) Subject to other forbearance measures- - - - - - - - - - --d) New loans - - - - - - - - - - --D) PERFORMING LOANSa) Forborne in compliance with the EBA Guidelines- - - - - - - - - - --b) Subject to moratoria no longer in compliance with the EBA Guidelines and not considered forborne- - - - - - - - - - --c) Subject to other forbearance measures- - - - - - - - - - --d) New loans - - - - - - - - - - --E) OTHER PERFORMING LOANS 35,473 35,473 109 109 35,364a) Forborne in compliance with the EBA Guidelines- - - - - - - - - - --b) Subject to moratoria no longer in compliance with the EBA Guidelines and not considered forborne- - - - - - - - - - --c) Subject to other forbearance measures- - - - - - - - - - --d) New loans 35,473 - 35,473 - - 109 109 - - - 7,709-TOTAL (A+B+C+D+E) 43,760 - 35,473 - 8,287 687 109 - 578 - 43,073- Gross amount Total impairment and allowances
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 188 A.1.7bis Prudential consolidation On-statement of financial position loans and receiv-ables with customers: breakdown of gross forborne exposures by credit quality A.1.8 Prudential consolidation - On-statement of financial position non-performing loans and receivables with banks: changes in impaired positions No positions to report. Non-performing exposures with forbearance measuresOther forborne exposuresA. Opening gross balance 1,217 519- of which: positions transferred but not derecognisedB. Increases 1,927 7,922B.1 transfers from performing exposures without forbearance measures3,616B.2 transfers from forborne performing exposures XB.3 transfers from non-performing exposures with forbearance measuresXB.4 transfers from non-performing exposures without forbearance measures1,909 164B.5 other increases 18 4,142C. Decreases 2,309 5,181C.1 transfers to performing exposures without forbearance measuresX 437C.2 transfers to forborne performing exposures XC.3 transfers to non-performing exposures with forbearance measuresXC.4 write-offsC.5 collections 2,309 4,744C.6 gains on salesC.7 losses on salesC.8 other decreasesD. Closing gross balance 835 3,260- of which: positions transferred but not derecognised
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 189 A.1.9 Prudential consolidation - On-statement of financial position non-performing loans and receivables with customers: changes in impaired positions
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 190 A.2 Classification of the exposures based on external and internal rating A.2.1 Prudential consolidation - Breakdown of financial assets, commitments to disburse funds and financial guarantees issued by external rating class (gross amounts) The risk categories for the external rating indicated in this table refer to the creditwor-thiness classes of the debtors/guarantors pursuant to prudential requirements. The Bank uses the standardised approach in accordance with the risk mapping of the rating agencies: banks; supervised brokers; public sector institutions; territorial entities; parties.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 191
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 192 DBRS Ratings Limitedpervised brokers, public sector institutions, territorial entities of which long-term rating of which short-term rating (for exposures to companies) Fitch Ratings of which long-term rating of which short-term rating (for exposures to companies)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 193 for exposures to companies and other parties. of which long-term rating of which short-term rating (for exposures to companies)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 194 A.3 Breakdown of guaranteed credit exposures by type of guarantee A.3.1 Prudential consolidation - Guaranteed on- and off-statement of financial position loans and receivables with banks No positions to report. A.3.2 Prudential consolidation - Guaranteed on- and off-statement of financial position loans and receivables with customers
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 195 B. Breakdown and concentration of credit exposures B.1 Prudential consolidation - Breakdown by business segment of on- and off-statement of financial position loans and receivables with customers
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 196 B.2 Prudential consolidation - Breakdown by geographical segment of on- and off-statement of financial position loans and receivables with customers
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 197 B.3 Prudential consolidation - Breakdown by geographical segment of on- and off-statement of financial position loans and receivables with banks B.4 Large exposures As at 31 December 2025, the large exposures of the Group are as follows: a) b) c) No. of positions 17. A. On-statement of financial position loans and receivablesA.1 Bad exposuresA.2 Unlikely to payA.3 Non-performing past due exposuresA.4 Performing exposures 105,096 1 200Total (A) 105,096 1 200B. Off-statement of financial position loans and receivablesB.1 Non-performing exposuresB.2 Performing exposures 2,492 1 60Total (B) 2,492 1 60Total (A+B) 31.12.2025 107,588 2 260Total (A+B) 31.12.2024 118,136 10 1,009 ItalyOther European countriesAmerica AsiaRest of the world
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 198 C. Securitisation transactions This section does not recognise securitisation transactions where the originators are banks belonging to the same prudentially consolidated group and where the total lia-bilities issued by the special purpose vehicles (e.g. ABS securities, loans in the ware-housing phase, etc.) are subscribed at the time of issue by one or more entities be-longing to the same prudentially consolidated group. Qualitative disclosure Banca Sistema has drawn up the Securitisations Policy, which provides a single set of rules governing the process of structuring, management and monitoring of securitisa-tion transactions in which the Bank acts as originator, assignor, sponsor or investor. The Policy ensures compliance with the European regulatory framework (EU Regulation 2017/2402) and national regulations by defining the roles and responsibilities of the functions involved. During the year, the Bank carried out two securitisation transactions backed by Sports Receivables originated in the context of lending activities to the professional football sector. A description of the transactions outstanding at 31 December 2025 is provided below. BSD SPORTS SPV S.r.l. securitisation During 2025, the Bank participated in the structuring of a second securitisation trans-action with similar features to the previous one both in terms of the underlying assets and the structure. For the purposes of executing the transaction, pursuant to Law 130/1999, on 7 August 2025 the special purpose vehicle BSD SPORTS SPV S.r.l. was incorporated with the purpose of purchasing sports receivables through the issuance of ABS securities. To finance the purchases, on 29 December 2025 the SPV issued two classes of notes: sk retainer. In this case too, the junior notes constitute the first line of loss absorption. The transaction has a 36-month revolving period during which collections on the secu-ritised receivables are used to purchase new portfolios. The amortisation of the notes will begin at the end of the revolving period in accordance with the contractually agreed cascading payments. The transaction cannot be classified as STS and does not constitute a resecuritisation pursuant to Article 8 of the Securitisation Regulation. ElevenPoints SPV srl securitisation
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 199 During 2025, the Bank structured the traditional securitisation transaction called Elev-enPoints, carried out through the incorporation, on 10 April 2025, of the special purpose vehicle ElevenPoint Sports SPV S.r.l. pursuant to Law 130/1999 for the purpose of pur-chasing sports receivables through the issuance of ABS securities. To finance the purchase of the receivables, the SPV issued two classes of partly paid tors for 95% and subscribed by Banca Sistema for the remaining 5%, in compliance with the risk retention requirements set out in Article 6 of Regulation 2017/2402. The junior notes represent the first loss tranche and bear any portfolio losses first. The transaction has a 36-month revolving period during which collections on the secu-ritised receivables are reinvested to purchase new portfolios. At the end of the revolving period, the amortisation of the notes will start on a sequential basis, with senior notes being repaid prior to junior notes. The transaction is not aimed at obtaining STS status and does not have the characteristics of a resecuritisation pursuant to Article 8 of the Securitisation Regulation. C.1 Prudential consolidation Exposures deriving from the main "own" securitisation transactions broken down by type of asset securitised and by type of exposure C.2 Prudential consolidation Exposures deriving from the main "third-party" securiti-sation transactions broken down by type of asset securitised and by type of exposure
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 200
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 201 D. Transfers A. Financial assets transferred and not derecognised Qualitative disclosure The financial assets transferred and not derecognised refer to Italian government secu-rities used for repurchase agreements. Said financial assets are classified in the financial statements among the available-for-sale financial assets, while the repurchase agree-ment loan is predominantly presented in due to customers. As a last resort the financial assets transferred and not derecognised comprise trade receivables used for loan trans-actions in the ECB (Abaco). Quantitative disclosure D.1. Prudential consolidation Financial assets transferred and recognised in full, and associated financial liabilities: carrying amount Carrying amountof which: subject to securitisation transactionsof which: subject to a sales contract with repurchase agreementof which: non-performingCarrying amount of which: subject to securitisation transactions of which: subject to a sales contract with repurchase agreementA. Financial assets held for trading X 1. Debt securities X 2. Equity instruments X 3. Financing X 4. Derivatives XB. Other financial assets mandatorily measured at fair value through profit or loss 1. Debt securities 2. Equity instruments X 3. FinancingC. Financial assets designated at fair value through profit or loss 1. Debt securities 2. FinancingD. Financial assets measured at fair value through other comprehensive income767,381 767,381 764,256 764,256 1. Debt securities 767,381 767,381 764,256764,256 2. Equity instruments X 3. FinancingE. Financial assets measured at amortised cost329,623 262,151 67,472 2,152 302,968 239,395 63,573 1. Debt securities 67,472 67,472 63,57363,573 2. Financing 262,151 262,151 2,152 239,395 239,395Total 31.12.2025 1,097,004 262,151 834,853 2,152 1,067,224 239,395 827,829Total 31.12.2024 287,095 287,095 2,135 179,479 179,479 Financial assets transferred and recognised in full Associated financial liabilities
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 202
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 203 E. Prudential consolidation - Models for the measurement of credit risk The Group does not have internal models for the measurement of credit risk. 1.2. Market risks The existing limit system defines a careful and balanced management of the operational autonomy, establishing limits in terms of portfolio amounts and composition by type of security. With regard to market risk, the Banca Sistema Group purchased tax credits from "Eco-Sisma bonus 110%" for trading purposes. 1.2.1 Interest rate risk and price risk - regulatory trading book Qualitative disclosure No positions to report. 1.2.2 Interest rate risk and price risk - Banking Book Qualitative disclosure A. General aspects, management procedures and methods of measuring the interest rate risk and the price risk Interest rate risk is defined as the risk that the financial assets/liabilities increase/de-crease because of movements contrary to the interest rate curve. The Bank identified the sources that generate interest rate risk with reference to the credit processes and In order to assess the interest rate risk of the banking book, the Bank, in accordance with the supervisory rules, determined the interest rate risk of the banking book in terms of potential changes in economic value (EVE) and change in net interest income (NII). The Bank manages interest rate risk measurement using two distinct approaches de-pending on the purpose: - Management purposes: The Group applies the methodologies outlined by the Bank of Italy in Circular 285, Annexes C and C-bis, and shares the resulting assessments with the Authority, ensuring a compliant and transparent risk management framework and internal control system. - Regulatory reporting purposes: The Group uses the Standardised Approach (SA) to measure interest rate risk in accordance with regulatory require-ments. This methodology, as set out in Commission Delegated Regulation
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 204 (EU) 2024/857, establishes the technical standards for managing interest rate risk on positions other than those in the trading book. With reference to the Bank's financial assets, the main sources that generate interest rate risk are loans and receivables with customers and the bond securities portfolio. As concerns the financial liabilities, relevant instead are the customer deposits and savings activities via current accounts, the deposit account, and funding on the interbank mar-ket. The Bank continuously monitors the main assets and liabilities subject to interest rate risk; furthermore, hedging instruments were used as at the reporting date.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 205 Quantitative disclosure 1. Banking book: Breakdown by residual term (by repricing date) of financial assets and liabilities EURO
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 206 on demand up to 3 monthsfrom more than 3 months up to 6 monthsfrom more than 6 months up to 1 yearfrom more than 1 year up to 5 yearsfrom more than 5 years up to 10 yearsmore than 10 yearsopen term 1. Assets 1,228,719 879,136 668,683 54,151 672,484 345,828 9861.1 Debt instruments 3 370,905 610,945 362,457 80,090 - with early repayment option 94,475 - other 3 276,430 610,945 362,457 80,0901.2 Financing to banks 83,393 19,0141.3 Financing to customers 1,145,323 489,217 57,738 54,151 310,027 265,738 986 - current accounts 61,964 52,328 - other financing 1,083,359 436,889 57,738 54,151 310,027 265,738 986 - with early repayment option67,558 191,030 21,529 52,858 305,331 168,920 986 - other 1,015,801 245,859 36,209 1,293 4,696 96,818 2. Liabilities 714,223 1,362,567 236,671 586,359 753,547 112,930 192.1 Due to customers 713,932 1,362,567 219,247 586,359 753,547 112,930 19 - current accounts 442,774 546,907 210,058 580,139 728,794 111,981 19 - other payables 271,158 815,660 9,189 6,220 24,753 949 - with early repayment option - other 271,158 815,660 9,189 6,220 24,753 9492.2 Due to banks 291 17,424 - current accounts - other payables 291 17,4242.3 Debt instruments 6,7262.4 Other liabilities 3. Financial derivatives 161,374 23,925 2,093 155,234 1,508 53.1 With underlying security3.2 Without underlying security 21,446 23,925 2,093 17,453 1,508 5 - Options 21,446 386 2,093 17,453 1,508 5 + long positions 386 2,093 17,453 1,508 5 + short positions 21,446 - Other derivatives 23,539 + posizioni lunghe 23,539 137,781 + posizioni corte 139,9284. Other off-statement of financial position transactions1,272,068 1,272,068 + long positions 1,188,896 83,172 + short positions 83,172 1,188,896
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 207 1. Banking book: Breakdown by residual term (by repricing date) of financial assets and liabilities OTHER CURRENCIES
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 208 on demandup to 3 monthsfrom more than 3 months up to 6 monthsfrom more than 6 months up to 1 yearfrom more than 1 year up to 5 yearsfrom more than 5 years up to 10 yearsmore than 10 yearsopen term 1. Assets1.1 Debt instruments - with early repayment option - other1.2 Financing to banks1.3 Financing to customers - current accounts - other financing - with early repayment option - other 2. Liabilities2.1 Due to customers - current accounts - other payables - with early repayment option - other2.2 Due to banks - current accounts - other payables2.3 Debt instruments2.4 Other liabilities 3. Financial derivatives 22,453 23,5393.1 With underlying security - Options + long positions + short positions - Other derivatives + long positions + short positions3.2 Without underlying security22,453 23,539 - Other derivatives 22,453 23,539 + long positions + short positions 22,453 23,5394. Other off-statement of financial position transactions
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 209 1.2.3 Currency risk Qualitative disclosure A. General aspects, management processes and methods of measuring the currency risk All items are in Euro, except for the security in the HTCS portfolio. The Bank's foreign exchange risk is limited in relation to the size of the relevant exposures. Quantitative disclosure 1. Breakdown of assets, liabilities and derivatives by currency of denomination
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 210
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 211 1.3 Derivatives and hedging policies 1.3.1 Derivatives held for trading A. Financial derivatives No amount was recognised for this item at the reporting date. B. Credit derivatives No amount was recognised for this item at the reporting date. 1.3.2 Hedge Accounting Qualitative disclosure The Group exercised the option under IFRS 9 to continue to apply the rules under IAS 39 in full for existing hedges. A. Fair value hedges The hedging activities implemented by the Banca Sistema Group are intended to protect the banking book from changes in the fair value of loans caused by movements in the interest rate curve (interest rate risk). The Group maintains a generic hedge (macro fair value hedge) on the segregated fixed-rate CQ loans and receivables portfolio within the QS2019 vehicle. The derivative instrument used is plain vanilla interest rate swap (IRS). B. Cash flow hedging At the date of these financial statements, no such hedges are in place. C. Hedges of foreign investments At the date of these financial statements, no such hedges are in place. D. Hedging Instruments The ineffectiveness of the hedge is recognised for the purpose of determining the effect on the income statement and assessing whether hedge accounting rules can continue to be applied. E. Hedged items The items hedged are fixed-rate loans. With regard to the existing macro hedge, the hedged loan portfolio is an open one, meaning that it is dynamically made up of the fixed-rate instruments managed at an aggregate level through the hedging derivatives entered into over time. The effective-ness of macro hedges on fixed-rate loans is periodically verified on the basis of specific prospective and retrospective tests aimed at demonstrating that the portfolio subject to possible hedging contains an amount of assets whose sensitivity profile and changes in fair value due to interest rate risk mirror those of the derivatives used for the hedge.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 212
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 213 Quantitative disclosure A. Hedging derivatives A.1 Hedging derivatives: end-of-period notional values
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 214 A.2 Hedging derivatives: gross positive and negative fair value - breakdown by product
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 215 A.3 OTC hedging derivatives: notional values, gross positive and negative fair values by counterparty
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 216 A.4 Residual life of OTC hedging derivatives: notional values B. Hedging credit derivatives No amount was recognised for this item at the reporting date. C. Non-derivative hedging instruments No amount was recognised for this item at the reporting date.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 217 D. Hedged instruments D.1 Fair value hedges D.2 Cash flow hedge and hedge of foreign investments No amount was recognised for this item at the reporting date. E. Effects of hedging transactions on equity No amount was recognised for this item at the reporting date.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 218 1.4 Liquidity risk Qualitative disclosure A. General aspects, management processes and methods of measuring the liquidity risk Liquidity risk is represented by the possibility that the Group is unable to maintain its payment commitments due to the inability to procure funds or to the inability to sell assets on the market to manage the financial imbalance. It is also represented by the inability to procure adequate new financial resources, in terms of amount and cost, with respect to operational need/advisability, that forces the Group to slow or stop the de-velopment of activity, or to incur excessive funding costs to deal with its commitments, with significant negative impacts on the profitability of its activity. The financial sources are represented by capital, funding from customers, the funds procured on the domestic and international interbank market as well from the Eurosys-tem. To monitor the effects of the intervention strategies and to limit the liquidity risk, the Group identified a specific section dedicated to monitoring the liquidity risk in the Risk Appetite Framework (RAF). Furthermore, in order to promptly detect and manage any difficulties in procuring the funds necessary to conduct its activity, every year, Banca Sistema, consistent with the prudential supervisory provisions, updates its liquidity policy and Contingency Funding Plan, i.e. the set of specific intervention strategies in case of liquidity stress, establishing procedures to procure funds in the event of an emergency. This set of strategies is of fundamental importance to attenuate liquidity risk. The aforesaid policy defines, in terms of liquidity risk, the objectives, the processes and the intervention strategies in case of liquidity stress, the organisational structures re-sponsible for implementing the interventions, the risk indicators, the relevant calcula-tion method and warning thresholds, and procedures to procure the funding sources that can be used in case of emergency. In 2025, the Bank continued to pursue a particularly prudent financial policy aimed at funding stability. To date, the financial resources available are satisfactory for the current and forward-looking volumes of activity. The Bank is continuously active ensuring a coherent busi-ness development, always in line with the composition of its financial resources. In particular, Banca Sistema, prudentially, has constantly maintained a high quantity of securities and readily liquid assets to cover all of the deposits and savings products Furthermore, the Bank uses as a source of financing the ABS securities issued as part of securitisation transactions structured for the purpose of increasing and diversifying its sources of funding.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 219 At 31 December 2025, there were three securitisation transactions in place that were structured for liquidity purposes and did not involve a transfer of risk: Quinto Sistema Sec.2017, Quinto Sistema Sec.2019 and BS IVA. The receivables assigned to the re-spective SPV are therefore fully recognised in the Bank's financial statements. The Quinto Sistema Sec.2017 transaction has as its underlying, a portfolio of receivables deriving from salary- and pension-backed loan contracts and was completed in 2017 as an auto-securitisation, i.e. all the tranches issued by the special purpose vehicle were subscribed by the Bank to increase the collateral that could be used in financing trans-actions with the Eurosystem. The senior tranche and the mezzanine tranche are dual-rated to allow for the eligibility of the senior securities at the ECB and the use of both securities in bilateral repo transactions under the GMRA framework. The characteristics of the securities issued by Quinto Sistema Sec. 2017 S.r.l. are sum-marised in the following table: In 2019, the Bank completed a second securitisation transaction with underlying receiv-ables deriving from salary- and pension-backed loan contracts. The transaction is clas-sified as a private transaction and provides for the subscription of 95% of the Senior tranche by an institutional investor. 5% of the senior tranche and 100% of the mezza-nine and junior tranches were subscribed by the Bank. The securities issued are not rated. Despite the placement of the senior tranche, the credit risk of the underlying portfolio is not transferred and the Bank keeps the receivables on its balance sheet. The characteristics of the securities issued by Quinto Sistema Sec. 2019 S.r.l. are sum-marised in the following table:
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 220 In 2020, the Bank structured a new securitisation transaction to finance the purchase of VAT receivables directly by the SPV. For this purpose, the special purpose vehicle BS IVA SPV S.r.l. was established, which issued two tranches of securities, a senior and a junior tranche. As it is a private transaction, the securities are not rated. The senior security was 95% underwritten by an institutional investor, while 5% of the senior se-curity and 100% of the junior security were underwritten by the Bank. Even in this transaction, the credit risk remains with the Bank, which keeps the receiv-ables on its balance sheet through the consolidation of the vehicle. In 2025, the BS IVA transaction was renewed to allow for the entry of a new investor and to make the structure more efficient. At 31 December 2025, the characteristics of the securities of the BS IVA SPV transaction were as follows.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 221 Quantitative disclosure 1. Breakdown of financial assets and liabilities by remaining contractual term EURO on demandfrom more than 1 day up to 7 daysfrom more than 7 days up to 15 daysfrom more than 15 days up to 1 monthfrom more than 1 month up to 3 monthsfrom more than 3 months up to 6 monthsfrom more than 6 months up to 1 yearfrom more than 1 year up to 5 yearsMore than 5 yearsOpen termAssets 1,209,855 6,807 8,633 235,477 135,827 177,443 124,201 1,288,254 714,62419,003A.1 Government securities 2,771 1,687 203,226 63 8,811 13,331 799,500 204,500A.2 Other debt instruments 383 1,899 2,282 4,564 26,096 263,168A.3 OEIC units 4 7 13 49 36 1 2A.4 Financing 1,207,084 6,803 6,939 31,855 133,816 166,314 106,305 462,656 246,95619,003 - banks 83,394 1219,003 - customers 1,123,690 6,803 6,939 31,843 133,816 166,314 106,305 462,656 246,956Liabilities 668,116 771,964 88,470 170,606 351,656 249,728 621,893 753,547 112,949B.1 Deposits and current accounts 531,429 92,438 88,448 170,553 215,596 222,653 615,282 728,794 112,000 - banks 125,665 - customers 405,764 92,438 88,448 170,553 215,596 222,653 615,282 728,794 112,000B.2 Debt instruments B.3 Other liabilities 136,687 679,526 22 53 136,060 27,075 6,611 24,753 949Off-statement of financial position transactions1,274,541 1,188,896 7,605 15,348 106,211 63,166 11,094 1,900C.1 Financial derivatives with exchange of principal7,605 14,848 23,539 54,321 - long positions 7,605 14,848 23,539 54,321 - short positionsC.2 Financial derivatives without exchange of principal - long positions - short positionsC.3 Deposits and financing to be received1,188,896 1,188,896 - long positions 1,188,896 - short positions 1,188,896C.4 Commitments to disburse funds 83,172 500 82,672 - long positions 500 82,672 - short positions 83,172C.5 Financial guarantees issued 2,473 8,845 11,094 1,900C.6 Financial guarantees receivedC.7 Credit derivatives with exchange of principal - long positions - short positionsC.8 Credit derivatives without exchange of principal
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 222 1. Breakdown of financial assets and liabilities by remaining contractual term OTHER CURRENCIES The positions shown relate to the US dollar and the Japanese Yen.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 223 1.5 Operational risks Qualitative disclosure Operational risk is the risk of loss arising from inadequate or non-functioning internal processes, human resources or systems, or from external events. This type of risk in-cludes - among other things - the ensuing losses from fraud, human errors, business disruption, unavailability of systems, breach of contract, and natural catastrophes. Op-erational risk, therefore, refers to other types of events that, under present conditions, would not be individually relevant if not analysed jointly and quantified for the entire risk category. A. General aspects, management processes and methods of measuring operational risk In order to calculate the internal capital generated by the operational risk, the Group adopts the Basic Indicator Approach, which provides for the application of a regulatory coefficient (equal to 12%) to the three-year average of the relevant indicator defined in Article 316 of Regulation (EU) no. 575/2013 of 26 June 2013. The above-said indica-tor is given by the sum (with sign) of the following elements: interest and similar income; interest and similar expense; income on shares, quotas and other variable/fixed yield securities; income for commissions/fees; expense for commissions/fees; profit (loss) from financial transactions; other operating income. Consistent with that provided for by the relevant legislation, the indicator is calculated gross of provisions and operating costs; also excluded from computation are: profits and losses on the sale of securities not included in the trading portfo-lio; income deriving from non-recurring or irregular items; income deriving from insurance. As of 2014, the Bank measured the operational risk events via a qualitative performance indicator (IROR - Internal Risk Operational Ratio) defined within the operational risk management and control process (ORF - Operational Risk Framework). This calculation method allows a score to be defined between 1 and 5, inclusive (where 1 indicates a low risk level and 5 indicates a high risk level) for each event that generates an opera-tional risk. The Bank assesses and measures the level of the identified risk by also considering the controls and the mitigating actions implemented. This method requires a first assess-k
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 224 the effectiveness and efficiency of the controls) which could reduce the gross risk, based he residual risks are mapped on a predefined scoring grid, useful for the subsequent calculation of IROR via appropriate aggregation of the scores defined for the individual operational procedure. Moreover, the Bank assesses the operational risk associated with the introduction of new products, activities, processes and relevant systems mitigating the onset of the operational risk via a preliminary evaluation of the risk profile. The Bank places strong emphasis on possible ICT risks. ICT (Information and Commu-nication Technology) and security risk is the risk of incurring losses due to breach of confidentiality, lack of integrity of systems and data, inadequacy or unavailability of systems and data, or inability to replace information technology (IT) within reasonable time and cost limits in the event of a change in the requirements of the external envi-ronment or business (agility), as well as security risks arising from inadequate or incor-rect internal processes or external events, including cyber-attacks or inadequate levels of physical security. In the supplemented representation of the business risks, this type of risk is considered, in accordance with the specific aspects, among operational, repu-tational and strategic risks. The Bank monitors the ICT and security risks based on the continuous information flows between the departments concerned defined in its IT security policies. In order to conduct consistent and complete analyses with respect to the activities per-audits conducted by the Compliance and Anti-Money Laundering Department were shared internally with the Internal Control, Risk Management and Sustainability Com-operations and processes to ensure they are properly carried out and assesses the overall effectiveness and efficiency of the internal control system put in place to oversee activities that are exposed to risks. Finally, as an additional protection against operational risk, the Bank: provides for insurance coverage on the operational risks deriving from ac-tions of third parties or caused to third parties. In order to select the insur-ance coverage, the Bank initiated specific assessment activities, with the support of a primary market broker, to identify the best offers in terms of price/conditions proposed by several insurance undertakings; provided for appropriate contractual riders to cover damages caused by in-frastructure and service suppliers; has planned an update of the Business Continuity Plan; provides for tools to counter cyber attacks via e-mail (phishing);
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 225 provides for the simulation of phishing attacks to assess the ability of users to respond; has planned a periodic update of the IT security policy.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 226 PART F - INFORMATION ON EQUITY Section 1 - Equity A. Qualitative disclosure supervisory provisions, and are oriented towards maintaining adequate levels of capi-talisation to take on risks typical to credit positions. The income allocation policy aims to strengthen the Group's capital with special empha-sis on common equity, to the prudent distribution of the operating results, and to guar-anteeing a correct balance of the financial position.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 227 B. Quantitative disclosure B.1 Equity: breakdown B.2 Valuation reserves for financial assets measured at fair value through other com-prehensive income: breakdown Prudential consolidationInsurance companiesOther companiesConsolidated adjustmentsTotal 1. Share capital 9,651 250 (250)9,651 2. Share premium 39,10039,100 3. Reserves 199,472 891 (1,538)198,825 - income-related 200,683 891 (1,538)200,036 a) legal 1,9301,930 b) established under the Articles of Association- c) treasury shares- d) other 198,753 891 (1,538)198,106 - other (1,211)(1,211) 4. Equity instruments 45,50045,500 3.5 Interim dividends (-)- 5. (Treasury shares)- 6. Valuation reserves 13,05713,057 - Equity instruments designated at fair value through other comprehensive income (503)(503) - Hedging of equity instruments designated at fair value through other comprehensive income - - Financial assets (other than equity instruments) measured at fair value through other comprehensive income 4,7044,704 - Property and equipment 9,0339,033 - Intangible assets- - Hedges of foreign investments- - Cash flow hedges- - Hedging instruments (non-designated elements)- - Exchange rate gains (losses)- - Non-current assets held for sale and disposal groups- - Financial liabilities designated at fair value through profit or loss (changes in own credit rating)- - Net actuarial gains (losses) on defined benefit pension plans(177)(177) - Shares of valuation reserves of equity-accounted investees- - Special revaluation laws- 7. Profit (loss) for the year 28,834 (1,051) 1,25829,042Total 335,614 90 (530)335,175
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 228 B.3 Valuation reserves for financial assets measured at fair value through other com-prehensive income: changes Debt instrumentsEquity instrumentsFinancing1. Opening balance (1,362) (642)2. Increases 9,058 2082.1 Fair value gains 6,226 2082.2 Impairment losses due to credit risk 10 X2.3 Reclassifications of negative reserves to profit or loss on saleX2.4 Transfers to other equity items (equity instruments)2.5 Other increases 2,8223. Decreases 2,992 693.1 Fair value losses3.2 Impairment gains due to credit risk3.3 Reclassifications of positive reserves to profit or loss: on saleX3.4 Transfers to other equity items (equity instruments)3.5 Other decreases 2,992 694. Closing balance 4,704 (503)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 229 B.4 Valuation reserves related to defined benefit plans: changes
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 230 Section 2 - Own funds and capital ratios 2.1 Own funds A. Qualitative disclosure -weighted assets (RWA) and solvency ratios were deter-mined in accordance with the European Union prudential regulatory framework, com-monly referred to as the CRD/CRR package, consisting of Directive 2013/36/EU (Capital Requirements Directive CRD) and Regulation (EU) no. 575/2013 (Capital Require-ments Regulation CRR), as subsequently amended and supplemented, inter alia, by Regulation (EU) 2019/876 (CRR II) and Regulation (EU) 2024/1623 (CRR III). The cal-culation also takes into account the Regulatory Technical Standards (RTS) and Imple-menting Technical Standards (ITS) issued by the European Commission on a proposal from the European Banking Authority (EBA) as well as the supervisory provisions issued by the Bank of Italy. In particular, reference is made to Circular no. 285 of 17 December rate, within the national regulatory framework, developments in European prudential regulation and the guidelines of the Supervisory Authorities.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 231 Reconciliation of Group equity and Own Funds (1) Regulatory filter for additional valuation adjustments (AVA) to the prudential valuation under the pro-visions of Regulation 2016/101 31.12.2025 31.12.2024 Equity 335,175 300,099 Dividends distributed and other foreseeable expenses -- Equity assuming dividends are distributed to shareholders 335,175 300,099 Regulatory adjustments (50,637) (51,456) - Deduction of intangible assets (32,362)(45,124) - Prudent valuation adjustment (1) (1,482)(1,547) - Prudential filter for insufficient coverage of NPEs (8,919)(5,134) - Prudential filter pursuant to art. 468 (4,328) 1,701 - Other adjustments (3,546)(1,352) Equity instruments not eligible for inclusion in CET1 (45,500)(45,500)Eligible equity attributable to non-controlling interests 14,461 13,318 Common Equity Tier 1 (CET1) 253,499 216,461 Equity instruments eligible for inclusion in AT1 45,500 45,500 Additional Tier 1 (AT1) capital 298,999 261,961 Tier 2 Capital 596 398 Total Own Funds 299,595 262,359
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 232 A. Quantitative disclosure 31.12.2025 A. Common Equity Tier 1 (CET1) before application of prudential filters 281,018 of which CET 1 instruments covered by transitional measures - B. CET1 prudential filters (+/-) 14,461 C. CET1 including items to be deducted and the effects of the transitional regime (A+/-B) 295,479 D. Items to be deducted from CET1 46,309 E. Transitional regime - Impact on CET (+/-) 4,328 F. Total Common Equity Tier 1 (CET1) (C-D+/-E) 253,498 G. Additional Tier 1 (AT1) including items to be deducted and the effects of the transitional regime 45,500 of which AT1 instruments covered by transitional measures - H. Items to be deducted from AT1 - I. Transitional regime - Impact on AT1 (+/-) - L. Total Additional Tier 1 (AT1) (G-H+/-I) 45,500 M. Tier 2 (T2) including items to be deducted and the effects of the transitional regime 596 of which T2 instruments covered by transitional measures - N. Items to be deducted from T2 - O. Transitional regime - Impact on T2 (+/-) - P. Total Tier 2 (T2) (M-N+/-O) 596 Q. Total Own Funds (F+L+P) 299,594
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 233 2.2 Capital adequacy A. Qualitative disclosure include 100% of the profit, as it is currently prohibited to distribute dividends.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 234 31.12.2025 31.12.2024 31.12.2025 31.12.2024A. EXPOSURES A.1 Credit and counterparty risk 6,067,500 7,405,448 1,434,497 1,420,1381. Standardised approach 6,067,500 7,405,448 1,434,497 1,420,1382. Internal ratings based approach 2.1 Basic 2.2 Advanced 3. Securitisations B. CAPITAL REQUIREMENTS B.1 Credit and counterparty risk 114,760 113,611B.2 Credit valuation adjustment risk 59 42B.3 Settlement risk B.4 Market risk 785 6591. Standard approach 785 6592. Internal models 3. Concentration risk B.5 Operational risk 18,898 16,2271. Standard approach 18,898 16,2272. Internal models 3. Concentration risk B.6 Other calculation elements B.7 Total prudential requirements 134,502 130,540C. EXPOSURES AND CAPITAL RATIOS 1,681,277 1,631,745C.1 Risk-weighted assets 1,681,277 1,631,745C.2 CET1 capital/risk-weighted assets (CET1 Capital Ratio)15.1% 13.3%C.3 Tier 1 capital/risk-weighted assets (Tier 1 Capital Ratio)17.8% 16.1%C.4 Total Own Funds/risk-weighted assets (Total Capital Ratio)17.8% 16.1% Unweighted amounts Weighted amounts/requirements
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 235 PART G - BUSINESS COMBINATIONS Section 1 - Transactions performed in the year No transactions to report. Section 2 - Transactions performed after the end of the year No transactions to report. Section 3 - Retrospective adjustments No transactions to report.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 236 PART H - RELATED PARTY TRANSACTIONS Related party transactions, including the relevant authorisation and disclosure proce-by the Board of Directors and published on the internet site of the Parent, Banca Sistema S.p.A. Transactions between Group companies and related parties were carried out in the in-terests of the Bank, including within the scope of ordinary operations; these transac-tions were carried out in accordance with market conditions and, in any event, on the basis of mutual financial advantage and in compliance with all procedures. With respect to transactions with parties who exercise management and control func-tions in accordance with art. 136 of the Consolidated Law on Banking, they are included in the Executive Committee resolution, specifically authorised by the Board of Directors and with the approval of the Statutory Auditors, subject to compliance with the obliga-tions provided under the Italian Civil Code with respect to matters relating to the conflict of interest of directors. Pursuant to IAS 24, the related parties of Banca Sistema include: shareholders with significant influence; companies belonging to the banking Group; companies subject to significant influence; key management personnel; the close relatives of key management personnel and the companies con-trolled by (or connected with) such personnel or their close relatives. 1. Disclosure on the remuneration of key management personnel The following data show the remuneration of key management personnel, as per IAS 24 and Bank of Italy Circular no. 262 of 22 December 2005 as subsequently updated, which requires the inclusion of the members of the Board of Statutory Auditors.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 237
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 238 2.Disclosure on related party transactions The following table shows the assets, liabilities, guarantees and commitments at the end of the financial year, differentiated by type of related party with an indication of the impact on each individual caption. The following table indicates the costs and income for 2023, differentiated by type of related party. Details are provided below for each of the following related parties that are shareholders exceeding the 5% stake threshold in individual Group companies.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 239
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 240 PART I - SHARE-BASED PAYMENT PLANS Qualitative disclosure As indicated in the 2025 Policies Document, Banca Sistema, having a four-year average Given the provisions of the Bank of Italy Circular, which allow banks with assets of less to the disbursement of variable remuneration in financial instruments and to solely ap-ply an "appropriate" deferral period, Banca Sistema intends to make use of this simpli-fication and apply the abovementioned cash payment schemes for the payment of var-iable remuneration starting from 2022 (without prejudice to any regulatory updates and/or the achievement of the size thresholds indicated by Circular 285). Therefore, the Bank shall apply the provisions relating to key personnel subject to per-centages and to deferral periods that may be defined in proportion to their characteris-tics, thereby ensuring a proportional alignment criterion also in relation to the provisions of the Corporate Governance Code, for longer deferral in the case of members of the Board of Directors and key management personnel (they are thus extended to all Key Personnel). Following the inspection of the Bank of Italy that started in July 2024, the Supervisory Authority has instructed that the Banca Sistema Group, until further review by the Bank of Italy, also based on the feedback that will be provided by the Bank, refrain from resolving or taking the following actions: i) the distribution of profits generated from the current 2024 financial year or other elements of equity; ii) the payment of the variable component of remuneration for the 2024 financial year and subsequent years. For the payment of coupons or dividends on Additional Tier 1 capital instruments, the limits on the Maximum Distributable Amount set by current capital conservation regu-lations must be observed. The deferred instalments of the variable component of remuneration relating to financial years prior to 2024 were regularly paid and, in particular, following the positive resolu-e re-Remuneration Policies. Disclosure of the fees paid to the independent auditors
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 241 information regarding the fees paid to the independent auditors BDO Audit Services S.r.l. and to the companies included in the same network is reported below for the following services: 1. Audit services that include: The audit of the annual accounts, for the purpose of expressing an opinion thereon. The audit of the interim accounts. 2. Certification services that include tasks whereby the auditor evaluates a specific element, the determination of which is performed by another party who is responsible thereof, through appropriate criteria, in order to express a conclusion that provides the recipient party with a degree of confidence concerning said specific element. 3. Tax advisory services. 4. Other services. The fees presented in the table, pertaining to the year, are those contracted, without index-linking (and excluding out-of-pocket expenses, any supervisory contribution and VAT). They do not include, in accordance with the cited provision, the fees paid to any sec-ondary auditors or to parties of the respective networks. Type of servicesEntity providing the serviceEntity receiving the serviceRemunerationAudit BDO Audit Services Srl Banca Sistema 243Other certifications BDO Audit Services Srl Banca Sistema 125Audit BDO Audit Services Srl LASS 16Audit BDO Audit Services Srl QS 2017 26Audit BDO Audit Services Srl Kruso Kapital 75Other certifications Network BDO Kruso Kapital 10Audit Network BDO Kruso Kapital - Greece 8Audit Network BDO CEP 28Total 531
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 242 PART L - SEGMENT REPORTING For the purposes of segment reporting as per IFRS 8, the income statement is broken down by segment as follows. Breakdown by segment as at 31 December 2025 This segment reporting includes the following divisions: Factoring Division, which includes the business segment related to the origi-nation of trade and tax receivables with and without recourse and the man-agement and recovery of default interest. In addition, the division includes the business segment related to the origination of state-guaranteed loans to SMEs disbursed to factoring customers and the management and recovery of receivables on behalf of third parties; Income statement (,000)Factoring DivisionRetail DivisionCollateralised Lending DivisionCorporate CentreGroup Total Net interest income adjusted 112,696 (1,818) 14,244 96125,219 Net fee and commission income (expense) 6,554 (622) 21,568 6827,567 Dividends and similar income174 53 - - 227 Net trading income (expense) 22 7 - -29 Gain from sales or repurchases of financial assets/liabilities12,858 4,931 - - 17,789 Total income 132,304 2,551 35,820 164 170,839 Net impairment losses on loans and receivables (9,309) (848) (141) 1(10,297) Net financial income (expense) 122,995 1,704 35,679 165 160,542Statement of Financial Position (,000)Factoring DivisionRetail DivisionCollateralised Lending DivisionCorporate CentreGroup TotalCash and cash equivalents 67,268 20,523 - -87,791Financial assets (HTS and HTCS) 910,241 277,706 - -1,187,947Loans and receivables with banks14,675 4,486 - - 19,161Loans and receivables with customers 1,837,980 598,663 155,058 -2,591,701loans and receivables with customers - loans 1,799,653 586,970 155,058 -2,541,680loans and receivables with customers - debt instruments38,327 11,693 - -50,020Due to banks - - - 69,19969,199Due to customers 25,257 - - 3,416,2623,441,519
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 243 Retail Financing Division, which includes the business segment related to the purchase of salary- and pension-backed loans (CQS/CQP) portfolios, salary- and pension-backed loans disbursed through the direct channel and distribu-tion of third-party products; Collateralised Lending Division, which includes the business segment related to collateral-backed loans and auction house activities; Corporate Division, which includes activities related to the management of activities. In particular, the cost of funding managed in the central treasury pool is allocated to the dincome from the management of the securities portfolio and income from li-quidity management (the result of asset and liability management activities) is allocated entirely to the business divisions through a pre-defined set of drivers. The division also includes income from the management of SME loan run-offs. The secondary disclosure by geographical segment has been omitted as immaterial, since the customers are mainly concentrated in the domestic market.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 244 PART M - LEASE DISCLOSURE SECTION 1 - LESSEE Qualitative disclosures The Bank has contracts that fall within the scope of IFRS 16 attributable to the following categories: 1. Property used for business and personal purposes; 2. Cars. At the end of the year, there were 54 leases, 18 of which were property leases for a dings used for business purposes such as offices and for personal use, have terms exceeding 12 months and typically have renewal and termination options that may be exercised by the lessor and the lessee as provided for by law. Contracts referring to other leases are long-term leases for cars which are generally used exclusively by the employees to whom they are assigned. These contracts have a maximum term of 5 years with monthly lease payments, no renewal option, and no option to purchase the asset. Contracts with a term of less than 12 months or those for which the replacement value application of the standard. Quantitative disclosures The following table provides a summary of the Statement of Financial Position items relating to leases expressed in Euro; for further information, please refer to Part B of the notes to the financial statements: (*) This is the right of use value net of accumulated depreciation. The following table provides a summary of the Income Statement items relating to leases; for further information, please refer to Part B of the notes to the financial state-ments:
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 245 SECTION 2 - LESSOR Qualitative disclosures At the reporting date, the Bank does not engage in leases as a lessor.
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STATEMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 246 STATEMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS Statements on the consolidated financial statements in accordance with article 81-ter of Consob Regulation no. 11971 of 14 May 1999 as amended and sup-plemented 1. The undersigned, Gianluca Garbi, CEO, and Alexander Muz, Manager in charge of financial reporting of Banca Sistema S.p.A., hereby state, having taken into account the provisions of Art. 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of 24 Feb-ruary 1998: the suitability as regards the characteristics of the bank and the effective application of the administrative and accounting procedures for the drafting of the consolidated financial statements during 2025. 2. Reference model The suitability of the administrative and accounting procedures for the drafting of the consolidated financial statements at 31 December 2025 was assessed based on an in-ternal model defined by Banca Sistema S.p.A. that was designed in a manner consistent with the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the Control Objectives for IT and Related Technol-ogy (COBIT) framework, which represent the reference standards for the internal con-trol system generally accepted on an international level. 3. Moreover, the undersigned hereby state that: 3.1 the consolidated financial statements: a) were drafted in accordance with the applicable international accounting standards endorsed by the European Union, pursuant to Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002; b) match the accounting books and records; c) are suitable for providing a true and fair view of the financial position, results of operations and cash flows of the issuer and all the companies included in the scope of consolidation. 3.2 results, as well as of the position of the issuer and the companies included in the scope of consolidation, together with a description of the main risks and uncertainties to which they are exposed.
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STATEMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 247 Milan, 6 March 2026 Gianluca Garbi Alexander Muz Chief Executive Officer ___________________________ Manager in charge of financial reporting ____________________________________
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 248
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ADS/AMR/irmRC043882025AS0143 Banca Sistema S.p.A.to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014Consolidated financial statements as at December 31, 2025As disclosed by the Directors, the accompanying consolidated financial statements of Banca Sistema Group constitute a non-official version which is not compliant with the provisions of the Commission Delegated Regulation (EU) 2019/815.has been translated into English solely for the convenience of international readers. Accordingly, only the original text in Italian language is authoritative.
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Tel: +39 02 58.20.10 www.bdo.it Viale Abruzzi, 94 20131 Milano Bologna, Brescia, Firenze, Genova, Milano, Napoli, Padova, Roma, Torino, Verona BDO Audit Services S.r.l. Sede Legale: Viale Abruzzi, 94 20131 Milano Capitale Sociale Euro 150.000 i.v. Codice Fiscale, Partita IVA e Registro Imprese di Milano n. 03060640160 R.E.A. Milano 1807540 BDO Audit Services S.r.l., società a responsabilità limitata, è membro di BDO International Limited, società di diritto inglese (company limited by guarantee), e fa parte della rete internazionale BDO, network di società indipendenti. pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 To the Shareholders of Banca Sistema S.p.A. Report on the audit of consolidated financial statements Opinion We have audited the consolidated financial statements of Banca Sistema Group (the Group), which comprise the statement of financial position as at December 31, 2025, the income statement, the statement of comprehensive income, the statement of changes in net equity and the statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material information on the accounting policies. In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at December 31, 2025, and of its financial performance and its cash flows for the year then ended in accordance with the IFRS Accounting Standards issued by the International Accounting Standards Board and endorsed by the European Union, as well as the regulation issued to implement art. 9 of Legislative Decree no. 38/05 and of art. 43 of Legislative Decree no. 136/15. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the responsibilities for the audit of the consolidated financial statements section of our report. We are independent of Banca Sistema parentin accordance with the ethical and independence requirements applicable in Italy to audits of financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter Significant Events After The Reporting Dateconsolidated financial statements that describes the voluntary public tender and exchange offer on all shares. In particular, the group informs that on January 16, 2026, CF+ SpA announced and published the offer document and the information relating to the voluntary public tender and exchange offer on all the ordinary shares of Banca Sistema S.p.A.. The offer period ended on February 27, 2026, with total acceptances reaching 70.732% of Banca Sistema S.p.A.'s share capital, corresponding to 69.047% of the related voting rights. Furthermore, following the completion of the transaction and the resulting change of control as previously announced on February 6, 2026 the Group points out that there are potential non-recurring expenses, subsequent financial years. The Group outlines also that such charges were not recognised in the financial statements, 20, 2024, which requires the Group not to include in its financial statements any cost or liability items relating to variable remuneration. Our opinion is not modified in respect of this matter.
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matters Audit procedures addressing the key audit matters CLASSIFICATION AND MEASUREMENT OF RECEIVABLES WITH CUSTOMERS FOR LOANS RECOGNISED UNDER FINANCIAL ASSETS MEASURED AT AMORTISED COST Notes to the consolidated financial statements: part A: Accounting policies (A.1 General part, Section 2 - General basis of preparation); Part A Accounting policies (Information on the main items of the - ); Part B - Information on the statement of financial position (assets measured at amortised cost Item 40); Part E- Information concerning risk and related hedging policies (Section 1 - ) Receivables with customers, recorded among financial assets measured at amortised cost as of December 31, 2025, amounting to Euro 2.592 million include loans for Euro 2.364 million of which non-performing loans amounting to Euro 364 million. In Part A - Accounting policies, relating to the main whereas the Group refers to the corresponding paragraph of the Notes of the consolidated financial statements where the criteria adopted for the classification and measurement of the aforementioned receivables are described, in compliance with the applicable accounting standards, as well as the arrangements for estimating expected losses and consequent value adjustments as a function of the allocation of credit exposures in the reference stages. In particular, for impaired credit exposures, the amount of value adjustments to be recognised in the Income Statement is defined on the basis of individual measurement or determined according to uniform categories and, then, individually allocated to each position, and takes account of forward-looking information and possible alternative recovery scenarios. In Part A Accounting Policies, General Part, Section 2 General basis of preparation, of the Notes the Group illustrates that the measurement of receivables on customers is a complex estimation activity, characterised by a high degree of uncertainty and Our main audit procedures carried out, among others, include the following activities: understanding of the internal regulations and processes put in place by the Group, in relation to the classification, monitoring of credit quality as well as the valuation of receivables with customers for loans measured at amortised cost; analysis of the adequacy of the IT environment related to IT applications that are relevant for the classification of customers receivables; procedures for reconciling data between management systems and information reported in the financial statements; comparative analysis procedures and trend analysis of receivables with customers for loans measured at amortised cost and of the coverage ratios by comparison with the data of the previous year; analysis and understanding, including with the support of our specialists, of the valuation model adopted by the Group for the purpose of determining net impairment losses; check, on a sample basis, of the classification of receivables with customers for performing loans measured at amortised cost based on the applicable regulatory framework, the internal regulations of the Bank as well as the applicable accounting standards; check, on a sample basis, of the classification and measurement of receivables with customers for non performing loans measured at amortised cost based on the applicable regulatory framework, the internal regulations of the Bank as well as the applicable accounting
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 subjectivity, in which the parent company's directors use valuation models that take into account many quantitative and qualitative elements such as, among others, the historical data relating to collections, expected cash flows and related recovery times, the existence of indicators of possible impairment losses, the assessment of any collateral and the impact of risks connected with the sectors in which the Parent company's customers operate. In view of the significance of the amount of receivables with customers for loans recognised under financial assets measured at amortised cost on the financial statements and the complexity and subjectivity of the expected loss estimation process adopted by the Group we considered that the classification and measurement of receivables with customers for loans recognised under financial assets measured at amortised cost represents a key matter within the audit of the consolidated financial statements of the Group as of December 31, 2025. standards; check of the completeness and compliance of the disclosures provided in financial statements with the applicable accounting framework and accounting standards. ACCOUNTING OF DEFAULT INTERESTS PURSUANT TO LEGISLATIVE DECREE NO. 231 OF OCTOBER 9, 2002 ON PERFORMING RECEIVABLES ACQUIRED WITHOUT RECOURSE Notes to the consolidated financial statements: Part A: Accounting policies (A.1 General part, Section 2 - General basis of preparation); Part A Accounting policies (Information on the main items of the financial - ); Part B - Information on the statement of financial position (assets measured at amortised cost Item 40) Part C - Information on the income statement Section 1 Interest and similar income: breakdown item 10 and The default interest and compensation fees recorded in the financial statements as of December 31, 2025, amount to approximately Euro 81 million. Default interest recorded on profit and loss in the financial year ended December 31, 2025 amounted to Euro 53.1 million. In Part A - Accounting policies, relating to the main consolidated financial statements it is described that, for some factoring receivables relating to the Public Administration and Healthcare entities, the Parent company recognises the total receivable including the estimated default interest ("accrual"). In Part A - Accounting policies, General Part, Section 2 General basis of preparation, of the Notes the Parent Company illustrates that the valuation of default Our main audit procedures carried out, among others, include the following activities: understanding of the internal regulations and processes related to the estimate of default interest on performing receivables acquired without recourse; procedures for reconciling data between management systems and information reported in the financial statements; comparative analysis procedures and analysis of the results with the management involved; analysis and understanding of the models used to estimate default interest, also with the support of our experts, and examination of the reasonableness of the main assumptions contained in them; check of the completeness and compliance of the disclosures provided in financial statements with the applicable accounting framework and accounting standards.
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 interest pursuant to Legislative Decree no. 231 of October 9, 2002 on performing receivables acquired without recourse: estimating the recoverable amount of default interest is complex, with a high degree of uncertainty and subjectivity. Internally developed valuation models are used to determine these percentages, which take many qualitative and quantitative elements into consideration. In view of the significance of the amount of default interest recognised in the financial statements and the high level of uncertainty and subjectivity of the estimation process adopted by the Group we have considered the accounting of default interest pursuant and compensation fees for recovery expenses to legislative decree no. 231 of October 9, 2002 on performing receivables acquired without recourse a significant key matter within the audit of the consolidated financial statements at December 31, 2025. VALUATION OF GOODWILL Notes to the consolidated financial statements: Part A - Accounting policies Part of main items of the consolidated financial - Information on the statement of financial position (Section 10 - - item 100 In the consolidated financial statements as at December 31, 2025, among the intangibles, the Group recognised a goodwill of approximately Euro 30.7 million. In Part A - Accounting policies, relating to the main angibles assetsmeasurement criteria. In particular, in compliance with IAS36 - Impairment goodwill is not amortised and an impairment test is conducted annually (or whenever there is evidence of impairment) by the Parent company. For this purpose, goodwill is allocated to cash-generating units (r CGUs). The amount of any impairment is determined based on the difference between the carrying amount of the CGU and its recoverable amount, being the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. The Parent company recognised in the consolidated financial statements at December 31, 2025 write-down of euro 13.3 million related to the CGU of Kruso Kapital Group. In particular, with reference to the impairment test of Kruso Kapital the recoverable amount has been determined as the higher between the value in use and the fair value net of costs to sell, considering the current scenario of a future sell Our main audit procedures carried out, among others, include the following activities: understanding of the impairment test process implemented by the Parent Company also considering the conclusion of the voluntary tender and exchange offer on all ordinary shares of Banca Sistema S.p.A.; understanding of the valuation model adopted by the Group for the purposes of carrying out the impairment test, corresponding to the realisation value calculated as the average of the market values of the last 3 months of the shares of the subsidiary Kruso Kapital S.p.A. connected with the future sale of these shares to CF+ as provided for in the voluntary tender and exchange offer on all shares; analysis of the reasonableness of the main assumptions adopted for the purposes of formulating the economic-financial projections and the key variables used in the evaluation model; analysis of final data relating to recent years with respect to plans in order to understand the nature of the deviations, and the related reasons, and evaluate the reliability of the process of defining economic-financial projections; verification of the mathematical accuracy of the impairment model used;
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 due to the mechanism of the public tender and exchange offer on all shares. In view of the significance of the amount of goodwill recognised in the financial statements and the estimation process adopted by the Group we have considered the valuation of goodwill a key audit matter in our audit of the consolidated financial statements of the Group at December 31 2025. examination of the sensitivity analyses and the results obtained by the Company; check of the completeness and compliance of the disclosure provided in the financial statements with respect to the provisions of the Reference Regulatory Framework and accounting standards. Responsibilities of the directors and the board of statutory auditors of Banca Sistema S.p.A. for the consolidated financial statements The directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with the IFRS Accounting Standards issued by the International Accounting Standards Board and endorsed by the European Union, as well as the regulation issued to implement art. 9 of Legislative Decree no. 38/05 and of art. 43 of Legislative Decree no. 136/15 and, within the terms established by the Italian law, for such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. appropriate use of the going concern basis in the preparation of the consolidated financial statements and for the adequacy of the related disclosures. The use of this basis of accounting is appropriate unless the directors believe that the conditions for liquidating the parent or ceasing operations exist, or have no realistic alternative but to do so. The board of statutory auditors is responsible for overseeing, within the terms established by the Italian responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISA Italia will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISA Italia, we exercised professional judgment and maintain professional skepticism throughout the audit. We also have: identified and assessed the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designed and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors; and, based on the audit evidence obtained, whether a material uncertainty exists related to ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit , future events or conditions may cause the Group to cease to continue as a going concern; evaluated the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation; obtained sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion on the consolidated financial statements. We have communicated with those charged with governance, as properly identified in accordance with ISA Italia, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We have also provided those charged with governance with a statement that we have complied with ethical and independence requirements applicable in Italy, and we have communicated all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, the measures taken to eliminate those threats or the safeguards applied. From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We Other information communicated pursuant to article 10 of Regulation (EU) 537/2014 audit of its separate and consolidated financial statements for the years ending from December 31, 2019 to December 31, 2027. We declare that we did not provide prohibited non-audit services, referred to article 5, paragraph 1, of Regulation (EU) 537/2014, and that we remained independent of the bank in conducting the audit. We confirm that the opinion on the consolidated financial statements of Banca Sistema Group included in this audit report is consistent with the content of the additional report prepared in accordance with article 11 of Regulation (EU) 537/2014, submitted to Those charged with governance. Report on other legal and regulatory requirements Opinion on the compliance with the provisions of Delegated Regulation (EU) 2019/815 The directors of Banca Sistema S.p.A. are responsible for the application of the provisions of Delegated Regulation (EU) 2019/815 of European Commission regarding the regulatory technical standards pertaining the electronic reporting format specifications (ESEF European Single Electronic Format) (hereinafter the Delegated Regulationat December 31, 2025, to be included in the annual financial report. We have performed the procedures required under Auditing Standard (SA Italia) no. 700B in order to express an opinion on the compliance of the consolidated financial statements as at December 31, 2025 with the provisions of the Delegated Regulation. In our opinion, the consolidated financial statements as at December 31, 2025 have been prepared in XHTML format and have been marked-up, in all material respects, in compliance with the provisions of Delegated Regulation.
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 Opinion and statement pursuant to article 14, paragraph 2, letters e), e-bis) and e-ter), of Legislative Decree no. 39/10 and article 123-bis, paragraph 4, of Legislative Decree no. 58/98 The directors of Banca Sistema S.p.A. operations and a report on corporate governance and ownership structure at December 31, 2025, including their consistency with the related consolidated financial statements and their compliance with the applicable laws. We have performed the procedures required under Auditing Standard (SA Italia) no. 720B in order to: express an opinion on the consistency of the report on operations and certain specific information presented in the report on corporate governance and ownership structure required by article 123-bis, paragraph 4, of Legislative Decree no. 58/98 with the consolidated financial statements; express an opinion on the compliance of the report on operations and certain specific information presented in the report on corporate governance and ownership structure required by article 123-bis, paragraph 4, of Legislative Decree no. 58/98 with the applicable law; issue a statement of any material misstatements in the report on operations and certain specific information presented in the report on corporate governance and ownership structure required by article 123-bis, paragraph 4, of Legislative Decree no. 58/98. In our opinion, the report on operations and the specific information presented in the report on corporate governance and ownership structure required by article 123-bis, paragraph 4, of Legislative Decree no. ated financial statements at December 31, 2025. Moreover, in our opinion, the report on operations and the specific information presented in the report on corporate governance and ownership structure required by article 123-bis paragraph 4 of Legislative Decree no. 58/98 have been prepared in compliance with the applicable law. With reference to the statement pursuant to Article 14, paragraph 2, letter e-ter), of Legislative Decree no. 39/10 based on our knowledge and understanding of the entity and its environment obtained through our audit, we have nothing to report. Milan, March 31, 2026 BDO Audit Services S.r.l.. Signed in the original by Annarosa Disarlo Partner As disclosed by the Directors, the accompanying consolidated financial statements of Banca Sistema Group constitute a non-official version which is not compliant with the provisions of the Commission Delegated convenience of international readers. Accordingly, only the original text in Italian language is authoritative.
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SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 249 SEPARATE FINANCIAL STATEMENTS SEPARATE FI-NANCIAL STATE- AT 31 DECEMBER 2025
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 250
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 251 BANCA SISTEMA S.P.A. This Directors' Report provides commentary on the Parent's performance and the re-lated figures and results. For other information required by the applicable legal and regulatory provisions, please see the Directors' Report in the Banca Sistema Group's consolidated financial state-ments as regards the following: composition of management bodies composition of the internal committees significant events during the year the macroeconomic scenario factoring salary- and pension-backed loans funding activities composition and organisational structure of the Group capital and shares risk management and support control methods significant events after the reporting date business outlook and main risks and uncertainties. With respect to the notes to the separate financial statements, the sections where ref-erence is made to the consolidated financial statements are provided below: Referring section of the separate finan-cial statements Section of the consolidated financial statements to which reference is made A.2 Information on the main items of the financial statements A.2 Information on the main items of the financial statements Part B Section 9 Intangible assets Item 90 Narrative section Part B Section 10 Intangible assets Item 100 Narrative section Part E Section 1 - Credit risk Part E Section 2 - Prudential consolidation risks, 1.1 Credit risk Qualitative disclosure Qualitative disclosure Part E Section 2 - Market risk Part E 1.2 Market risk 2.1- Interest rate risk and price risk - regula-tory trading book 1.2.1- Interest rate risk and price risk - reg-ulatory trading book Qualitative disclosure Qualitative disclosure Part E Section 2 - Market risk 2.2 Interest rate risk and price risk - Banking book Part E 1.2 Market risk 1.2.2 Interest rate risk and price risk - Bank-ing book Qualitative disclosure Qualitative disclosure Part E Section 2 - Market risk 2.3 Currency risk Part E 1.2 Market risk 1.2.3 Currency risk
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 252 Qualitative disclosure Qualitative disclosure Part E Section 4 - Liquidity risk Part E 1.4 Liquidity risk Qualitative disclosure Qualitative disclosure Part E Section 5 - Operational risks Part E 1.4 Operational risks Qualitative disclosure Qualitative disclosure
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 253 FINANCIAL HIGHLIGHTS AT 31 DECEMBER 2025 31-Dec-25 31-Dec-24 The securities portfolio includes Financial assets measured at fair value through profit or loss, Financial assets measured at fair value through other comprehensive income and, as regards the HTC portfolio, only Italian government bonds. are thus excluded.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 254 Normalised data do not include the realisation effects of the public tender and exchange offer as subsequently described.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 255 HUMAN RESOURCES As at 31 December 2025, the Bank had a staff of 222, broken down by contract category as follows As at 31 December 2025, 34 people were selected and hired to strengthen the control functions, to grow the business and to cover turn over, mainly with permanent con-tracts, and maternity replacements or other long absences with fixed-term contracts. Voluntary turn over (voluntary resignations by employees with permanent contracts) decreased by 1% during the year compared to the figures for the two previous financial years, returning to its historical average levels. In terms of skills development, after identifying professional and technical training Bank delivered training initiatives run by external and internal trainers, with particular reference to technical training, professional training, soft skills and language training, for a total of approximately 108 days overall. Particular attention was paid to activities relating to cybersecurity, anti-money laundering and change management. The average age of Group employees is 44.8 for men and 42.3 for women. The break-down by gender is balanced, with men accounting for 50.4% and women for 49.6% of the total. parency Directive ("EU Directive 2023/970") applicable from the next financial year and to set any adjustments, the Human Capital Department, with the support of qualified external consultants, carried out a series of analyses of the company situation on the matter. The analyses will continue in 2026 in order to align the relevant processes with the requirements of the Directive. The average age of Banca Sistema S.p.A. Bank employees is 45.2 for men and 42.8 for women. The breakdown by gender is essentially balanced with men accounting for 50.5% of the total.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 256 INCOME STATEMENT RESULTS (1) The net trading income from Superbonus was reclassified from the item Trading income and restated in a separate item to supplement Net interest income. the best result achieved by the Bank since its establishment. The result includes elements and impacts that are consequent to the final outcome of The financial year result benefited significantly from the collection, in the fourth quarter, handed down by the European Court of Human Rights (ECHR), which in the meantime had exited the insolvency procedure.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 257 The completion of the collection provided further evidence of the concrete effectiveness of the state guarantee envisaged for this type of litigation and debtors which, in this case, enabled the debtor Municipality to reach a settlement of the position, relying on the ad hoc allocation provided for by the decree linked to the 2026 Budget Law as well as its subsequent incorporation into the same Law which established a specific expendi-payment of similar rulings. relates to enforceable decrees for which no proceedings have yet been formally initiated before the ECHR but for which the appeal process has been initiated or is being initiated which will be budgeted over the coming financial years in accordance with the assump-tions of the current accounting policy.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 258 Net interest income recorded a solid growth compared to the previous year, despite the progressive decline in market interest rates. This performance reflects the maintenance of high levels of interest income, supported by employment spreads that are still large compared to the cost of funding (which started a downward trend), given a slight con-traction in the average volumes employed. The total contribution of the Factoring Division, which includes both revenues from tra-ditional factoring transactions and those deriving from SME loans guaranteed by the s-sion component associated with the factoring business; (ii) the revenues from the sale of some receivables due from private debtors; and (iii) the income realised on the pur-chase and subsequent realisation of Superbonus tax receivables held for trading pur-poses. The component owed for late payments pursuant to Legislative Decree 231/02 (con-sisting of default interest and compensation) legally enforced at 31 December 2025 million in 2024);
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 259 21.4 million in 2024), and that recognised on an accruals basis in previous years; Starting from the first quarter of 2025, following the update of the policy relating to the accounting of default interest for Public Administration debtors in situations of financial distress or probable default, default interest was recorded for an amoun 6.3 million at 31 December relating to positions subject to judgments by the ECHR that found the Italian State liable for the debt in cases where the debtor is in default. In the draft 2026 budget law currently being debated in Parliament, the State has allocated funds for the payment of these debts. The reduction in the contribution due for late payments pur-suant to Legislative Decree 231/02 (consisting of default interest and compensation) compared to the same period in 2024 was also due to an extraordinary transfer of decrease in the stock, influenced by contractual resolutions of receivables within the legal scope. The amount of the stock of interest pursuant to Legislative Decree 231/02 accrued at 149 million ted to positions with troubled local authorities, a component for which default interest is not allocated in the financial statements, except in the case of ECHR judgments as stated above, whereas the loans and receivables recognised in the financial statements amount addition, there is further default interest related to entities such as consortia or quasi-public companies excluded from the scope of the allocation model. The contribution of interest on the salary-/pension-backed loans is down slightly on the The positive contribution of the interest component from the government-backed loans to SMEs is confirmed, albeit down compared to a lower outstanding and a decrease in the yield indexed at a variable rate. The contribution of the securities portfolio increased compared to 31 December 2024 thanks to an increase in the average stock of the existing portfolio and a higher average portfolio return. The interest component from ABS securities is attributable to the yields on the senior securities in which the Bank is also the originator.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 260 ECB whose remuneration rate decreased. The decrease in interest expense is due to the lower outstanding debt and decrease in market rates. 2024 included interest paid on TLTRO III, which was fully repaid in that financial year. loans and the change of these loans at fair value, decreasing due to the dismantling of tax annuities. the previous year, due to decrease in commissions from the factoring business. Fee and commission income from factoring should be considered together with interest income, since it makes no difference from a management point of view whether profit is recognised in the commissions and fees item or in interest in the without recourse factoring business. Fees and commissions from collection activities include revenues from the traditional service of reconciling third-party invoice receipts with the Public Administration amount-i-ness for third- Fee and commission income - off-premises CQ refers to both the commissions on the salary- and pension-backed loan (CQ) origination business and the placement of third- Fees - off- 2025 2024 Change %Fee and commission incomeFactoring activities 9,095 17,343 (8,248) -47.6%Fee and commission income - off-premises CQ 6,650 9,883 (3,233) -32.7%Collection activities 5,312 2,952 2,360 1Other fee and commission income 1,005 771 234 30.4%Total fee and commission income 22,062 30,949 (8,887) -28.7%Fee and commission expenseFactoring portfolio placement (1,751) (1,418) (333) 23.5%Placement of other financial products (6,102) (6,489) 387 -6.0%Fees - off-premises CQ (6,166) (9,423) 3,257 -34.6%Other fee and commission expense (2,540) (2,351) (189) 8.0%Total fee and commission expense (16,559) (19,681) 3,122 -15.9%Net fee and commission income 5,503 11,268 (5,765) -51.2%
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 261 commissions paid to financial advisers for the off-premises placement of the salary- and pension-backed loan product. Fees and commissions for the placement of financial products paid to third parties are attributable to returns to third-party intermediaries for the placement and management of the SI Conto! Deposito product under the passporting regime, whereas the fee and commission expense of placing the factoring portfolios is linked to the origination costs of the factoring receivables. Other fee and commission expense includes commissions for trading third-party secu-rities and for interbank collections and payment services. The item includes the income from trading Italian government bonds. The item Gain (loss) from sales or repurchases includes gains realised on sales of the and receivables portfolios. in the past in relation to possible settlement agreements with the Extraordinary Liqui-dation Body of a failing municipality no longer apply, as well as consequent updating of the estimates of the probability of recovery of the same loan following the aforemen-tioned judgment of the European Court of Human Rights. During the fourth quarter of 2025, there was a simultaneous release of 2 positions from value adjustment with a the decrees by the ECHR currently awaiting ruling. The loss rate stands at 0.39% (0.6% net of the impairment gains) compared to 0.30% recorded in December 2024, excluding the aforementioned impairment gain. Value adjustments on loans during the year were affected mainly by positive effects deriving from recoveries on positions definitively
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 262 closed with the release of provisions and from the release of provisions for the full collection of receivables from municipalities previously in financial distress. At the same time, the increase is mainly attributable to unfavourable court rulings. Provisions for risks also increased following the entry of certain customers into negoti-ated crisis settlement procedures, albeit only in the initial stages. The fixed remuneration component of personnel expense recorded a decrease due to the non-allocation of the variable component attributable to the current financial year in view of the guidance provided by the Supervisory Authority; the average number of resources increased from 211 to 217.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 263 Administrative expenses increased by 31.6%, mainly due to costs related to business development and compliance with new legislation. The increase in insurance coverage expenses is linked to higher insurance premiums on factoring portfolios and for the SRT transaction on CQ portfolios.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 264 Consulting expenses consisted largely of the non-recurring costs incurred to comply with the feedback received from the supervisory authority. IT expenses include costs for services provided by the outsourcer responsible for man-aging legacy systems, as well as those related to IT infrastructure, increasing as a result of both increased investments and changes to legislation. Indirect taxes and fees increased, mainly due to the increase in contributions paid in relation to enforceable injunctions activated against public administration debtors. The impairment losses on property and equipment/intangible assets are the result of higher depreciation and amortisation for property used for business purposes, as well -of- year is due to the reduction in the contribution to the interbank fund.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 265 THE MAIN STATEMENT OF FINANCIAL POSITION AGGREGATES At 31 December 2025 total assets were down by 7.7% over the end of 2024 and equal Italian government bonds with an average duration of about 16.3 months (the average remaining duration at the end of 2024 was 15.2 months). The nominal amount of the was positive
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 266 The item loans and receivables with customers under Financial assets measured at -to- Outstanding loans for factoring receivables are down by 9.9% compared to the previ-also includes investments in senior ABS securities backed by loans originated by the Bank, in order to provide a more accurate representation of the credit risk profile. Salary- and pension-backed loans were lower than the end of the previous year, with million at the end of 2024). Loans to enterprises guaranteed by the State are decreasing as a result of lower dis- The item ABS securities also includes the investment in four ABS securities for an 92 million at the end of 2024) linked to two securitisa-tion transactions for the purchase of tax receivables and two securitisation transac-tions for the purchase of sports credits, of which the Bank is a joint arranger and also holds the role of Master Servicer. HTC Securities are composed of Italian government securities with an average dura--to-market valuation of the securities at 30 September 2025 shows a pre-
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 267 The following table shows the quality of receivables in the loans and receivables with customers item, excluding the securities positions. The ratio of gross non-performing loans to total gross loans rose to 16.2% compared to 12.1% at 31 December 2024, 14.3% and 10.2% respectively, the ratio calculated on the net values of the same periods (the NPE figure for the 2024 financial year has been restated for comparability purposes, including senior ABS securities in which the Bank is an investor and originator, in line with the calculation scope adopted from the 2025 financial year onwards) following a decrease in the absolute value of performing loans and an increase in non-performing loans with past due status, which remain high due 2024, the increase is due to the reclassification as past due of some overdue loan posi-tions, in full compliance with the feedback from and constant contacts with the Bank of Italy, which during its inspection had criticised as entirely ineffective the risk mitigation measures adopted by Banca Sistema to suspend the calculation of past due amounts. It should also be noted that following the exit from the non-performing status of a sified from bad exposures to past due exposures. Past due growth is predominantly related to the factoring portfolio without recourse to Public Administration, a sector that continues, beyond the new technical rules used to represent past due data for regulatory purposes, not to present particular problems in terms of credit quality and probability of recovery. 3 nizione di default, risultano classificati, al 30 settembre 2025, in stato di default: Comune Cuglieri; Santi Cosma E Damiano; Abriola; Acate; Accumoli; Acerno; Aci Catena; Aci Sant'Antonio; Acquafondata; Acquaro; Acquaviva Collecroce; Adrano; Africo; Agrigento; Aidone; Aieta; Ailano; Albanella; Albano Laziale; Alcara Li Fusi; Alessandria; Alessandria Del Carretto; Alessandria Della Rocca; Alessano; Alezio; Alia; Alife; Almenno San Salvatore; Altavilla Irpina; Altavilla Silentina; Alto Reno Terme; Amantea; Andria; Anguillara Sabazia; Aragona; Arce; Arcinazzo Romano; Ardore; Argusto; Arienzo; Arpaia; Arsoli; Arzano; Arzergrande; Ascea; Assemini; Atina; Aurigo; Avella; Avellino; Avola; Bagheria; Balsorano; Barano D'Ischia; Barcellona Pozzo Di Gotto; Bareggio; Bari; Baronissi; Basaluzzo; Bassano Romano; Bellegra; Belmonte Calabro; Belmonte In Sabina; Belmonte Mezzagno; Belsito; Belvedere Di Spinello; Benestare; Bergamo; Bernalda; Bianchi; Bianco; Bisacquino; Bitetto; Bogliasco; Bolognetta; Bompensiere; Bompietro; Borgetto; Borghetto Santo
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 268 The coverage ratio of non-performing loans stands at 14.1%, down from 17.2% at 31 December 2024. The figure is affected by the higher amount of overdue receivables, as indicated above. million acquired as compensation. Spirito; Borgia; Boscotrecase; Bovalino; Boville Ernica; Bracciano; Bracigliano; Brindisi; Brognaturo; Brolo; Buccheri; Buonabitacolo; Burgio; Buttigliera D'Asti; Cagli; Cagnano Amiterno; Caiazzo; Caivano; Calamonaci; Calascibetta; Calatafimi Segesta; Caltavuturo; Calvanico; Calvi Risorta; Camigliano; Cammarata; Campo Nell'Elba; Campobello Di Licata; Campobello Di Mazara; Campodarsego; Campofranco; Camporotondo Etneo; Camposano; Candida; Canicattini Bagni; Capena; Capizzi; Capo D'Orlando; Cardeto; Cardito; Cariati; Carlopoli; Carmiano; Carovigno; Casal Di Principe; Casalnuovo Di Napoli; Casape; Casapesenna; Caserta; Casoria; Cassano All' Jonio; Castel Madama; Castel San Giorgio; Castel San Giovanni; Castel Volturno; Castelfranco Di Sotto; Castelfranco In Miscano; Castellammare Del Golfo; Castellana Grotte; Castellaneta; Castellina Marittima; Castello Del Matese; Castelnuovo Di Conza; Castelpagano; Casteltermini; Castelvec-chio Subequo; Castelvenere; Castelvetrano; Castiglione Del Genovesi; Castilenti; Castrofilippo; Catanzaro; Caulonia; Cellole; Centola; Centuripe; Ceppaloni; Ceranova; Cerchiara Di Calabria; Cercola; Cerenzia; Cerreto D'Esi; Cerreto Laziale; Certosa Di Pavia; Cervaro; Cervinara; Cervino; Cesa; Chiaramonte Gulfi; Chiaravalle Centrale; Cicciano; Ciro' Marina; Cisternino; Citta' Di Castello; Cittareale; Civitavecchia; Civitella Paganico; Civitella Roveto; Civitella San Paolo; Cogorno Ente; Colleferro; Cologno Monzese; Colonna; Colosimi; Colzate; Comiso; Comitini; Contigliano; Contursi Terme; Conversano; Copertino; Corfinio; Corigliano-Rossano; Corleone; Corsano; Cosoleto; Cotronei; Cremona; Crespina Lorenzana; Crispano; Cropalati; Crosia; Crotone; Crucoli; Cupra Marittima; Curinga; Cusano Mutri; Cutro; Davoli; Delianuova; Diamante; Domicella; Dronero; Durazzano; Duronia; Erbusco; Fabriano; Fabrizia; Faicchio; Falciano Del Massico; Falcone; Fasano; Favara; Ferrandina; Fiamignano; Ficarazzi; Figline Vegliaturo; Filadelfia; Filandari; Fiuggi; Fiumara; Fiumefreddo Bruzio; Floresta; Floridia; Flumeri; Foggia; Foiano Di Val Fortore; Fontechiari; Formia; Fornelli; Francavilla Di Sicilia; Francavilla Marittima; Francavilla Sul Sinni; Francofonte; Frattamaggiore; Frosinone; Furci Siculo; Furnari; Gaggi; Gagliato; Galatone; Galatro; Gallicano Nel Lazio; Gallicchio; Gallipoli; Gasperina; Gattico-Veruno; Gela; Genzano Di Roma; Giano Vetusto; Giardinello; Giarre; Gioia Tauro; Gioiosa Ionica; Gioiosa Marea; Girifalco; Giugliano In Campania; Gizzeria; Golasecca; Grammichele; Grassano; Grisolia; Grottaminarda; Grotte; Grumo Appula; Guardavalle; Guardia Perticara; Guardia Piemontese; Guardia Sanframondi; Guidonia Montecelio; Isca Sullo Ionio; Ischia; Isola Delle Femmine; Isola Di Capo Rizzuto; Ispica; Jenne; Joppolo Giancaxio; Laganadi; Lago; Lamezia Terme; Lanciano; Lanzo Torinese; Lattarico; Laureana Di Borrello; Laurino; Lavello; Lentini; Lesina; Letino; Lettere; Liberi; Librizzi; Limbadi; Locri; Longobardi; Longobucco; Longone Sabino; Lucca Sicula; Luco Dei Marsi; Lupara; Lustra; Luzzi; Macerata Campania; Maddaloni; Maenza; Maida; Maiera'; Maierato; Maissana; Malito; Malvito; Mandatoriccio; Manocalzati; Maracalagonis; Maratea; Marcianise; Mariglianella; Marigliano; Marina Di Gioiosa Ionica; Marineo; Martirano Lombardo; Martone; Mascali; Massa D'Albe; Massa Martana; Massafra; Mazara Del Vallo; Mazzarino; Mazzarrone; Melicucco; Melissa; Melito Irpino; Menaggio; Miglierina; Mignano Monte Lungo; Milazzo; Mileto; Mirabella Imbaccari; Mirto; Molochio; Monasterace; Mondragone; Monforte San Giorgio; Mongiuffi Melia; Mongrassano; Montagnareale; Montalbano Elicona; Montalbano Jonico; Montalto Uffugo; Montauro; Monte Compatri; Montebello Ionico; Montecalvo Irpino; Montecorvino Pugliano; Montefalcione; Monteforte Irpino; Monteleone Di Puglia; Montemaggiore Belsito; Montemagno; Montemesola; Montemiletto; Montemilone; Montepaone; Monterosso Almo; Monterosso Calabro; Monterotondo; Montesarchio; Montescudaio; Montesilvano; Montorio Romano; Morano Calabro; Napoli; Nardodipace; Naso; Nereto; Nettuno; Nicolosi; Nocera Inferiore; Nocera Terinese; Noci; Norma; Noto; Novi Velia; Novoli; Olivadi; Oliveri; Omignano; Oppido Mamertina; Orria; Orsara Di Puglia; Orsomarso; Orte; Ortonovo; Osiglia; Ossona; Ottati; Paceco; Pago Veiano; Palagonia; Palazzolo Acreide; Palermiti; Palermo; Palma Di Montechiaro; Palmi; Palomonte; Pantigliate; Paola; Parete; Parona; Partinico; Paterno'; Patti; Pazzano; Pellezzano; Penna In Teverina; Penna Sant'Andrea; Pennadomo; Perito; Pertosa; Pescara; Pesco Sannita; Petilia Policastro; Petina; Petriolo; Petrona'; Piaggine; Piana Degli Albanesi; Pianopoli; Piazza Armerina; Pietraperzia; Pieve Ligure; Piglio; Pignataro Maggiore; Pignola; Piraino; Pisogne; Pizzo; Pizzoni; Poggio Nativo; Poggiomarino; Polia; Policoro; Polignano A Mare; Polistena; Polla; Pollena Trocchia; Pomarico; Ponte San Pietro; Pontelatone; Popoli; Porto Empedocle; Portoferraio; Portopalo Di Capo Passero; Posada; Postiglione; Potenza; Pozzuoli; Prata Sannita; Pratella; Pratola Serra; Presezzo; Presicce - Acquarica; Priverno; Prizzi; Proceno; Pulsano; Qualiano; Quartu Sant'Elena; Quartucciu; Racalmuto; Raddusa; Raffadali; Ramacca; Randazzo; Rapino; Ravanusa; Realmonte; Reggio Calabria; Riace; Riardo; Ricadi; Ricigliano; Riesi; Rieti; Rizziconi; Rocca D'Evandro; Rocca Di Neto; Rocca San Felice; Roccabernarda; Roccadaspide; Roccafiorita; Roccafluvione; Roccagorga; Roccamonfina; Roccapiemonte; Roccasecca; Roccavaldina; Roccella Ionica; Rocchetta E Croce; Rocchetta Ligure; Rodi' Milici; Rofrano; Rometta; Roseto Capo Spulico; Rosolini; Rotonda; Ruvo Di Puglia; S.Angelo D'Alife; S.Nicola Manfredi; S.Sofia D'Epiro; Salaparuta; Salemi; Salerno; Salice Salentino; Salve; San Cassiano; San Cataldo; San Demetrio Corone; San Floro; San Genesio Ed Uniti; San Giorgio Del Sannio; San Giorgio Morgeto; San Giovanni Gemini; San Giovanni In Fiore; San Giovanni La Punta; San Giovanni Rotondo; San Giovanni Valdarno; San Lorenzello; San Lucido; San Marco In Lamis; San Marco La Catola; San Martino Di Finita; San Martino Sannita; San Martino Valle Caudina; San Mauro Forte; San Nicola Arcella; San Nicola Dell'Alto; San Pietro Di Carida'; San Pietro In Cariano; San Pietro Infine; San Roberto; San Severino Lucano; San Sossio Baronia; San Valentino Torio; Sannicandro Di Bari; Sannicola; Santa Cesarea Terme; Santa Cristina D'Aspromonte; Santa Croce Camerina; Santa Flavia; Santa Maria A Vico; Santa Maria Di Licodia; Santa Paolina; Santa Teresa Di Riva; Sant'Agata Di Militello; Sant'Alessio In Aspromonte; Sant'Anastasia; Sant'Andrea Apostolo Dello Jonio; Sant'Angelo A Scala; Sant'Angelo Di Brolo; Sant'Arsenio; Santo Stefano In Aspromonte; Sant'Onofrio; Sanza; Saracena; Sarnano; Sarno; Sassano; Satriano; Savignano Irpino; Scafati; Scala; Scalea; Scaletta Zanclea; Scandale; Sciolze; Scisciano; Scordia; Sellia Marina; Senise; Serradifalco; Serrata; Sesto Campano; Settimo San Pietro; Settingiano; Sgurgola; Siculiana; Siderno; Sinopoli; Siracusa; Solarino; Solofra; Somma Vesuviana; Sonnino; Sora; Sori; Soverato; Soveria Simeri; Spadafora; Sparanise; Sperone; Spezzano Della Sila; Spinazzola; Statte; Stella Cilento; Stignano; Stornarella; Strongoli; Subiaco; Taranto; Taurianova; Taurisano; Teano; Telese Terme; Terlizzi; Terranova Da Sibari; Terranova Sappo Minulio; Terrasini; Terzigno; Tessennano; Tocco Caudio; Tora E Piccilli; Torano Castello; Torchiarolo; Torino; Torre Annunziata; Torre Santa Susanna; Torrenova; Torrevecchia Pia; Torriglia; Torrita Tiberina; Trabia; Trebisacce; Triggiano; Tripi; Trivigliano; Troina; Ugento; Umbriatico; Vairano Patenora; Valderice; Vallelonga; Vallepietra; Vasto; Velletri; Venafro; Vernole; Veroli; Vibo Valentia; Vibonati; Vicovaro; Vietri Sul Mare; Viggiano; Vignola; Villa Castelli; Villa Literno; Villafranca Sicula; Villafranca Tirrena; Villagrande Strisaili; Villaricca; Villata; Viterbo; Vittoria; Vivaro Romano; Vizzini; Zafferana Etnea; Zagarise; Zambrone; Zerbolo'; Zungri; Comune di Motta San Giovanni; Citta' Di Trentola Ducenta; Citta' Di Villa San Giovanni; Citta' Metropolitana Di Catania; Citta' Metropolitana Di Napoli; Amministr. Prov. Di Rieti; Amministrazione Provinciale Di Catanzaro; Provincia Autonoma Di Trento; Provincia Di Barletta Andria Trani; Provincia Di Brindisi; Provincia Di Cosenza; Provincia Di Crotone; Provincia Di Imperia; Provincia Di Messina; Provincia Di Salerno; Provincia Di Teramo; Regione Calabria; Regione Siciliana; Roma Capitale; Comunita' Montana Montepiano Reatino Quinta Zona; Comunita' Montana Trasimeno Medio Tevere; 31Fss/Fsrf Base Usafe; A.Fo.R Azienda Forestale Regione Calabria; A.R.S.A.C.-Azienda Regionale Per Lo Sviluppo Dell'Agricoltura Calabrese; A.Spe.Co.N.Azienda Speciale Comune Di Noto; Aeroporto Valle D'Aosta A.V.D.A.; Agenzia Campana Per L'Edilizia Residenziale; Assemblea Regionale Siciliana; Automobile Club Palermo; Autorita' Di Sistema Portuale Del Mar Tirreno Centrale; Autorita' Di Sistema Portuale Del Mare Adriatico Settentrionale; Autorita' Portuale Di Messina; Azienda Pubblica Di Servizi Alla Persona Catria E Nerone; Azienda Pubblica Di Servizi Alla Persona Maria Cristina Di Savoia; Azienda Pubblica Di Servizi Alla Persona Maria De Peppo Serena E Tito Pellegrino; Azienda Pubblica Di Servizi Alla Persona S.M.A.R.; Banca D'Italia; Camera Di Commercio,Industria E Agricoltura Di Bari; Casa Di Ospitalita' S.Teresa Del Bambino Gesu'; Casa Di Riposo Di G.De Benedictis; Cfi Consorzio Farmaceutico Intercomunale; Cirps-Consortium; Consiglio Nazionale Delle Ricerche; Consorzio Di Bonifica Int. Bacini Dello Jonio Cosentino; Consorzio Di Bonifica Integrale Dei Bacini Settentrionali Del Cosentino; Consorzio Irriguo Alburni; E.R.S.U. -Ente Regionale Per Il Diritto Allo Studio Universitario; H.A.F.S.E.; Inaf - Istituto Nazionale Di Astrofisica; Ipab Residence Salvatore Bellia San Luigi Gonzaga Costanzo Cutore; Irccs Istituto Nazionale Tumori-Fondazione Pascale; Ist.Aut. Case Popolari Di Salerno; Istituto Nazionale Per L'Assicurazione Contro Gli Infortuni Sul Lavoro - Inail; Istituto Regionale Per Lo Sviluppo Delle Attivita' Produttive; Istituto Rodigino Di Assistenza Sociale; Istituto Superiore - G.Caboto; Istituto Testasecca; Laziodisu-Ente Per Il Diritto Agli Studi Universitari Nel Lazio; Libero Consorzio Comunale Di Caltanissetta; Opera Pia Cardinale Ernesto Ruffini; Soc Risorse Idriche Calabresi Spa; U.S. Army Hospital; Universita' Degli Studi Della Campania L.Vanvitelli; Universita' Degli Studi Di Bari Aldo Moro; Universita' Degli Studi Di Catania; Universita' Degli Studi Di Milano - Bicocca; Universita' Del Salento; Aric-Agenzia Regionale Di Informatica E Committenza; Asl Avezzano-Sulmona-L'Aquila; Asl Bari; Asl Benevento 1; Asl Brindisi; Asl Caserta; Asl Di Piacenza; Asl Lanciano Vasto Chieti; Asl Lecce; Asl Napoli 2 Nord; Asl Napoli 3 Sud; Asl Prov Foggia; Asl Rieti; Asl Roma 4; Asp Di Agrigento; Asp. N. 1 Prov. Teramo; Az. Ospedaliera Sant'Anna E San Sebastiano Di Caserta; Az. Sanitaria Proviciale Di Trapani; Az.Osp. Universitaria San Giovanni Di Dio E R.D'Aragona; Azienda Ospedaliera A.Cardarelli; Azienda Ospedaliera Bianchi Melacrino Morelli Di Reggio Calabria; Azienda Ospedaliera Di Cosenza; Azienda Ospedaliera San Carlo Di Potenza; Azienda Ospedaliera Universitaria G.Martino Di Messina; Azienda Ospedaliera Universitaria Renato Dulbecco; Azienda Ospedaliera:Ospedali Riuniti Papardo-Piemonte; Azienda Ospedaliero Universitaria Vittorio Emanuele Ferrarotto San Bambino; Azienda Per La Tutela Della Salute - Ats Sardegna; Azienda Provinciale Per I Servizi Sanitari Della Provincia Autonoma Di Trento; Azienda Sanitaria Locale Napoli 1 Centro; Azienda Sanitaria Locale Salerno; Azienda Sanitaria Provinciale Di Catanzaro; Azienda Sanitaria Provinciale Di Cosenza; Azienda Sanitaria Provinciale Di Crotone; Azienda Sanitaria Provinciale Di Messina; Azienda Sanitaria Provinciale Di Palermo; Azienda Sanitaria Provinciale Di Ragusa; Azienda Sanitaria Provinciale Di Reggio Calabria; Azienda Sanitaria Provinciale Enna; Azienda Sanitaria Provinciale Vibo Valentia; Azienda Sanitaria Regionale Molise; Azienda Sanitaria Territoriale Di Ascoli Piceno; Azienda Sanitaria Universitaria Friuli Centrale; Azienda Servizi Alla Persona Opera Pia Antonio Gatti; Azienda Socio Sanitaria Locale N.6 Del Medio Campidano; Azienda Socio Sanitaria Territoriale Asst Mantova; Azienda Unita' Sanitaria Locale Di Modena; Azienda Usl Di Reggio Emilia; Azienda Usl Latina; A.O.U. Maggiore Della Carita'; Aou Sassari - Azienda Ospedaliera Universitaria Di Sassari; Ares Puglia - Agenzia Regionale Sanitaria Pugliese; Ares-Azienda Regionale Della Salute Regione Sardegna.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 269 Comments on the main aggregates on the liability side of the statement of financial position are shown below. Wholesale funding, which represents about 30% of the total (30% at 31 December 2024), remained stable as a percentage compared to the end of 2024, with a propor-tional decrease in the two forms of funding. the lower use of reverse repurchase agreements to fund the Securities portfolio.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 270 year due to a decrease in loans through repurchase agreements, while funding from deposit and current accounts remained in line. The period-end amount of term deposits decreased from the end of 2024 (-11.9%), reflecting net negative funding (net of in-1.333 million. ceivables. sonnel-related charges mainly for the portion of the bonus for the first 9 months of 2024, the deferred portion of the bonus accrued in previous years, and the estimates related to the non-million. The provision also includes an estimate of charges related to possible liabilities to assignors that have yet to be settled and other estimated charges for ongoing law-CQ portfolio (Salary- and Pension-Backed Loans), there is also a provision to cover the estimated negative effect of possible early repayments on existing portfolios and port-lion. assigned debtors and which were still being allocated and items being processed during the days following year-end, as well as trade payables and tax liabilities.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 271 CAPITAL ADEQUACY Provisional information concerning the regulatory capital and capital adequacy of the Bank is shown below. include 100% of the profit, as it is currently prohibited to distribute dividends. With pro-vided for under Article 468 of the CRR has been applied in order to neutralise price fluctuations of securities held in the HTCs category, as recorded in the valuation reserve within equity. The filter was reintroduced on 9 July 2024 and will remain in force until the 2025 financial year. Please refer to the same section of the consolidated financial statements for further information. 31.12.2025 Transitional31.12.2024 Transitional31.12.2025 Fully loaded31.12.2024 Fully loaded Capitale primario di classe 1 (CET1) 259,276 233,111 263,604 231,410 ADDITIONAL TIER1 45,500 45,500 45,500 45,500 Capitale di classe 1 (T1) 304,776 278,611 309,104 276,910 TIER2 - - -- Totale Fondi Propri (TC) 304,776 278,611 309,104 276,910 Totale Attività ponderate per il rischio 1,509,191 1,574,395 1,509,191 1,574,395 di cui rischio di credito 1,314,023 1,407,262 1,314,023 1,407,262 di cui rischio di mercato 9,816 8,241 9,816 8,241 di cui rischio operativo 185,353 158,893 185,353 158,893Ratio - CET1 17.2% 14.8% 17.5% 14.7%Ratio - T1 20.2% 17.7% 20.5% 17.6%Ratio - TCR 20.2% 17.7% 20.5% 17.6%
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 272 OTHER INFORMATION Report on corporate governance and ownership structure Pursuant to art. 123-bis, paragraph 3 of Legislative Decree no. 58 dated 24 February the document - published jointly with the draft financial statements as at and for the year ended 31 December 2025 - Sistema website (www.bancasistema.it). Remuneration Report Pursuant to art. 84-up; the document - published jointly with the draft financial statements as at and for the year ended 31 December 2025 - Banca Sistema website (www.bancasistema.it). Research and Development Activities No research and development activities were carried out in 2025. RELATED PARTY TRANSACTIONS Related party transactions including the relevant authorisation and disclosure proce-by the Board of Directors and published on the internet site of the Parent, Banca Sistema S.p.A. Transactions between Group companies and related parties were carried out in the in-terests of the Bank, including within the scope of ordinary operations; these transac-tions were carried out in accordance with market conditions and, in any event, based on mutual financial advantage and in compliance with all procedures. ATYPICAL OR UNUSUAL TRANSACTIONS During the year, the Group did not carry out any atypical or unusual transactions, as defined in Consob Communication no. 6064293 of 28 July 2006. SIGNIFICANT EVENTS AFTER THE REPORTING DATE Reference should be made to the corresponding section of the Directors' Report in the Banca Sistema Group's consolidated financial statements, which is deemed to be fully reported here. Upon completion of the Offer, based on the acceptances received and assuming that the KK shares are allocated to all tendering shareholders as envisaged by the Offer as
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 273 70.59% to 16.34%. The disposal value from the sale of the KK shares implicit in the terms of the Offer, obtain the KK shares to be allocated to those tendering their shares to the Offer as Deferred Consideration, intends to purchase from Banca Sistema the number of shares to be allocated to those tendering to the Offer for a consideration equal to their market t of the investment in KK. In view of this realisation event, an impairment loss was recog- It should also be noted that, following the completion of the transaction and the result-ing change of control as previously announced on 6 February 2026 there are poten-tial non-ition in force from 20 December 2024, which requires the Group not to affect the financial statements with cost/liability items related to elements arising from variable remuner-ation, remains in effect, such charges were not recognised in the financial statements. This latter amount is made up as follows: Commitments as a conventional amount connected with early termination, replacing contion of the Board of Directors; relation to the retention plans for staff and the CEO; of Directors, excluding the CEO, in the event of early termination of their appointment, s Press Release Date; and BUSINESS OUTLOOK AND MAIN RISKS AND UNCERTAINTIES Reference should be made to the corresponding section of the Directors' Report in the Banca Sistema Group's consolidated financial statements, which is deemed to be fully reported here.
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 274 PROPOSED ALLOCATION OF PROFIT FOR THE YEAR Dear Shareholders, The financial statements as at and for the year ended 31 December 2025, which we submit for your approval, show: An allocation to the Legal Reserve was not made since the limits set out in Article 2430 of the Italian Civil Code were reached. Milan, 6 March 2026 On behalf of the Board of Directors The Chairperson Luitgard Spögler The CEO Gianluca Garbi
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 275 SEPARATE FINANCIAL STATEMENTS
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SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 276 STATEMENT OF FINANCIAL POSITION (Amounts in Euros)
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SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 277
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SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 278 INCOME STATEMENT (Amounts in Euros) 2025 202410. Interest and similar income 190,389,931 181,677,397Interesse effettivoof which: interest income calculated with the effective interest method 184,266,709 167,777,22120. Interest and similar expense (110,517,720)(144,200,005)30. Net interest income 79,872,211 37,477,39240. Fee and commission income 22,062,155 30,949,09450. Fee and commission expense (16,559,021)(19,680,690)60. Net fee and commission income (expense) 5,503,134 11,268,40470. Dividends and similar income 226,667 226,66780. Net trading income (expense) 28,497,547 34,223,765--100. Gain (loss) from sales or repurchases of: 17,721,291 9,982,621 a) financial assets measured at amortised cost 6,702,711 6,373,747 b) financial assets measured at fair value through other comprehensive income11,018,580 3,608,874110.Net gain (loss) on other financial assets and liabilities measured at fair value through profit or loss(73,058) 2,250,532 b) other financial assets mandatorily measured at fair value through profit or loss(73,058) 2,250,532120. Total income 131,747,792 95,429,381130. Net impairment losses/gains on: (7,577,637)(197,606) a) financial assets measured at amortised cost (7,567,616) 23,059 b) financial assets measured at fair value through other comprehensive income (10,021)(220,665)140. Gains/losses from contract amendments without derecognition 1,269(102,127)150. Net financial income (expense) 124,171,424 95,129,648160. Administrative expenses (62,727,852)(53,289,953) a) personnel expense (24,100,222)(23,930,333) b) other administrative expenses (38,627,630)(29,359,620)170. Net accruals to provisions for risks and charges (7,030,730)(3,425,191) a) commitments and guarantees issued 22,043 30,677 b) other net accruals (7,052,773)(3,455,868)180. Net impairment losses on property and equipment (1,762,335)(1,587,245)190. Net impairment losses on intangible assets (20,091)(29,400)200. Other operating income (expense) 1,949,794(2,553,968)210. Operating costs (69,591,214) (60,885,757)220. Gains/losses from investments (1,429,498)-260. Pre-tax profit (loss) from continuing operations 53,150,712 34,243,891270. Income taxes (18,884,412)(12,224,904)280. Post-tax profit from continuing operations 34,266,300 22,018,987300. Profit for the year 34,266,300 22,018,987
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SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 279 STATEMENT OF COMPREHENSIVE INCOME (Amounts in Euros)
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SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 280 STATEMENT OF CHANGES IN EQUITY AS AT 31.12.2025 Amounts in Euros
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SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 281 STATEMENT OF CHANGES IN EQUITY AS AT 31.12.2024 Amounts in Euros
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SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 282 STATEMENT OF CASH FLOWS (INDIRECT METHOD) Amounts in Euros 2025 2024A. OPERATING ACTIVITIES1. Operations 143,719,213 89,102,021Profit (loss) for the year (+/-) 34,266,300 22,018,987Gains/losses on financial assets held for trading and other financial assets/liabilities measured at fair value through profit or loss (-/+) Gains/losses on hedging activities (-/+) Net impairment losses/gains due to credit risk (+/-)7,567,616(23,059)Net impairment losses/gains on property and equipment and intangible assets (+/-)1,782,426 1,616,645Net accruals to provisions for risks and charges and other costs/income (+/-)7,030,730 3,425,191Taxes, duties and tax assets not yet paid (+)12,579,8304,211,774Other adjustments (+/-)80,492,31157,852,4832. Cash flows generated by (used for) financial assets347,772,341(156,855,526)Financial assets held for trading(60,219) Financial assets designated at fair value through profit or loss Other assets mandatorily measured at fair value through profit or loss763,478(2,162,648)Financial assets measured at fair value through other comprehensive income(32,747,823)(561,209,947)Financial assets measured at amortised cost260,784,083614,710,826Other assets119,032,822(208,193,757)3. Cash flows generated by (used for) financial liabilities(497,458,667)(85,885,443)Financial liabilities measured at amortised cost(471,884,757)(75,997,175)Financial liabilities held for trading Financial liabilities designated at fair value through profit or loss Other liabilities(25,573,910)(9,888,268)Net cash flows generated by (used for) operating activities(5,967,113)(153,638,948)B. INVESTING ACTIVITIES1. Cash flows generated by1,429,4980Sales of equity investments1,429,498 Dividends from equity investments Sales of property and equipment0 Sales of intangible assets 0Sales of business units 2. Cash flows used in(767,961)(97,169)Purchases of equity investments (0)Purchases of property and equipment(717,331)(97,169)Purchases of intangible assets(50,630) Purchases of business units Net cash flows generated by (used in) investing activities661,537(97,169)C. FINANCING ACTIVITIES--Issues/repurchases of treasury shares101,947253,406Issues/repurchases of equity instruments Dividend and other distributions (5,224,036)Net cash flows generated by (used in) financing activities101,947(4,970,630)NET CASH FLOWS FOR THE PERIOD(5,203,629)(158,706,746)Cash and cash equivalents at the beginning of the year88,668,844247,375,590Total net cash flows for the year(5,203,629)(158,706,746)Cash and cash equivalents: effect of change in exchange rates Cash and cash equivalents at the end of the period83,465,21588,668,844 Amount
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 283 NOTES TO THE SEPARATE FINANCIAL STATEMENTS
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 284 PART A - ACCOUNTING POLICIES A.1 GENERAL PART Section 1 - Statement of compliance with International Financial Reporting Standards The Separate financial statements of Banca Sistema S.p.A. at 31 December 2025 were drawn up in accordance with International Financial Reporting Standards - called IFRS - issued by the International Accounting Standards Board (IASB) and interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and endorsed by the European Commission, as established by EU Regulation no. 1606 of 19 July 2002, adopted in Italy by art. 1 of Legislative Decree no. 38 of 28 February 2005 and consid-ering by the Bank of Italy Circular no. 262 of 22 December 2005 as subsequently up-dated, regarding the forms and rules for drafting the financial statements of banks. For details on accounting standards and amendments to existing standards that have come into effect and/or been endorsed by the European Commission, please refer to PART A ACCOUNTING POLICIES, A.1 GENERAL PART, Section 1 - Statement of compliance with International Financial Reporting Standards in the Notes to the Consol-idated Financial Statements of the Banca Sistema Group. If there is no standard or interpretation that applies specifically to a transaction, other event or circumstance, the Board of Directors uses its judgement to develop and apply an accounting standard in order to provide disclosure that: is relevant to the economic decision-making needs of users; is reliable, in that the financial statements: represent faithfully the financial position, financial performance and cash flows of the Bank; reflect the economic substance of transactions, other events and conditions, and not merely the legal form; are neutral, i.e. free from bias; are prudent; are complete in all material respects. When exercising the aforementioned judgement, the Board of Directors of the Bank has made reference to and considered the applicability of the following sources, described in descending order of importance: the provisions and application guidelines contained in the Standards and In-terpretations governing similar or related cases; the definitions, recognition criteria and measuring concepts for accounting
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 285 When expressing an opinion, the Board of Directors may also consider the most recent provisions issued by other bodies that rule on accounting standards that use a similar "Framework" in concept for developing accounting standards, other accounting litera-ture and consolidated practices in the sector. In accordance with art. 5 of Legislative Decree no. 38 of 28 February 2005, if, in ex-ceptional cases, the application of a provision imposed by the IFRS were incompatible with the true and fair representation of the financial position or results of operations, the provision would not apply. The justifications for any exceptions and their influence on the presentation of the financial position and results of operations would be explained in the Notes to the financial statements. Any profits resulting from the exception would be recognised in a non-distributable re-serve if they did not correspond to the recovered amount in the financial statements. However, no exceptions to the IFRS were applied. The financial statements were audited by BDO Italia S.p.A. Section 2 - General basis of preparation The financial statements are drawn up with clarity and give a true and fair view of the financial position, profit or loss, cash flows, and changes in equity and comprise the statement of financial position, the income statement, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows and the notes to the financial statements. formance. If the information required by the IFRS and provisions contained in Circular no. 262 of 22 December 2005 and/or the subsequent updates issued by the Bank of Italy are not sufficient to give a true and fair view that is relevant, reliable, comparable and under-standable, the notes to the financial statements provide the additional information re-quired. For the sake of completeness, please note that this financial report also consid-ers the interpretation and supporting documents regarding the application of accounting standards, including those issued in connection with the Covid-19 pandemic, as well as those issued by European regulatory and supervisory bodies and standard setters. The general principles that underlie the drafting of the financial statements are set out below: the measurements are made considering that the bank will continue as a go-ing concern, where it is stated that the Directors have not identified any un-certainties that could cast doubt in this respect; costs and income are accounted for on an accruals basis; to ensure the comparability of the data and information in the financial statements and the notes to the financial statements, the methods of
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 286 presentation and classification are kept constant over time unless they are changed to present the data more appropriately; each material class of similar items is presented separately in the statement of financial position and income statement; items of a dissimilar nature or function are presented separately unless they are considered immaterial; items that have nil balances at year end or for the financial year or for the previous year are not indicated in the statement of financial position or the income statement; if an asset or liability comes under several items in the statement of financial position, the notes to the financial statements make reference to the other items under which it is recognised if it is necessary for a better understand-ing of the financial statements; the items are not offset against one another unless it is expressly requested or allowed by an IFRS or an interpretation or the provisions of the aforemen-tioned Circular no. 262 of 22 December 2005 as amended by the Bank of It-aly; the financial statements are drafted by favouring substance over form and in accordance with the principle of materiality and significance of the infor-mation; comparative data for the previous financial year are presented for each statement of financial position and income statement item; if the items are not comparable to those of the previous year, they are adapted and the non-comparability and adjustment/or impossibility thereof are indicated and commented on in the notes to the financial statements; the layout recommended by the Bank of Italy was used with reference to the information reported in the notes to the financial statements; the tables in-cluded in this layout were not presented if they were not applicable to the Group's business. Within the scope of drawing up the financial statements in accordance with the IFRS, bank management must make assessments, estimates and assumptions that influence the amounts of the assets, liabilities, costs and income recognised during the period. The use of estimates is essential to preparing the financial statements. In particular, the most significant use of estimates and assumptions in the financial statements can be attributed to: the valuation of loans and receivables with customers: the acquisition of performing receivables from companies that supply goods and services rep-a complex activity with a high degree of uncertainty and subjectivity. Their
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 287 value is estimated by using models that include numerous quantitative and qualitative elements. These include the historical data for collections, ex-pected cash flows and the related expected recovery times, the existence of indicators of possible impairment, the valuation of any guarantees, and the operate; the valuation of default interest pursuant to Legislative Decree no. 231 of 9 October 2002 on performing receivables acquired without recourse: estimat-ing the expected recovery percentages of default interest is complex, with a high degree of uncertainty and subjectivity. Internally developed valuation models are used to determine these percentages, which take numerous qualitative and quantitative elements into consideration; the estimate related to the possible impairment losses on goodwill and eq-uity investments recognised in the financial statements; the quantification and estimate made for recognising liabilities in the provi-sions for risks and charges, the amount or timing of which are uncertain; the recoverability of deferred tax assets. It should be noted that an estimate may be adjusted following a change in the circum-stances upon which it was formed, or if there is new information or more experience. Any changes in estimates are applied prospectively and therefore will have an impact on the income statement for the year in which the change takes place. Pursuant to the provisions of art. 5 of Legislative Decree no. 38 of 28 February 2005, the financial statements use the Euro as the currency for accounting purposes. The financial statements are expressed in Euro. Unless otherwise stated, the notes to the financial statements are expressed in thousands of Euro. Any discrepancies between the figures shown in the Directors' Report and in the Separate Financial Statements and between the tables in the Notes to the Separate Financial Statements are due exclu-sively to rounding. European Directive 2004/109/EC (the "Transparency Directive") and Delegated Regu-lation (EU) 2019/815 introduced the obligation for issuers of securities listed on regu-lated markets in the European Union to prepare their annual financial report using the XHTML language, based on the ESMA-approved European Single Electronic Format
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 288 Section 3 - Subsequent events For a description of significant events occurring after the end of the financial year, With regard to IAS 10, it should be noted that no additional events occurred between the end of the financial year and the date of preparation of the financial statements that would require an adjustment to the figures presented therein. Section 4 Other aspects There are no other significant aspects to note.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 289 A.2 INFORMATION ON THE MAIN ITEMS OF THE FINANCIAL STATEMENTS Financial assets measured at fair value through profit or loss Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Financial assets measured at fair value through other comprehensive income (FVOCI) Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Financial assets measured at amortised cost Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Hedging transactions Equity investments Classification criteria This category includes equity investments in subsidiaries, associates, and joint ventures by Banca Sistema. Recognition criteria Equity investments are recognised in the financial statements at purchase cost plus any related charges. Measurement criteria If there is evidence that an equity investment may be impaired, the recoverable value of said equity investment is estimated by considering the present value of future cash flows that the investment could generate, including the final disposal value of the in-vestment and/ or other measurement elements. The amount of any impairment, calcu-lated based on the difference between the carrying amount of the investment and its iafter recognition of the impairment, impairment gains are recognised in the income statement under the same item as above to the extent of the previous impairment loss. Derecognition criteria
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 290 Equity investments are derecognised from the financial statements when the contrac-tual rights to cash flows deriving from the investment are lost or when the investment is transferred, with the substantial transfer of all related risks and rewards. Gains and losses on the sale of equity investments are charged to the income statement under investments other than those measured at equity are charged to the income statement u Property and equipment Classification criteria This item includes assets for permanent use, held to generate income, to be leased, or for administrative purposes, such as land, operating property, investment property, technical installations, furniture and fittings and equipment of any nature and works of art. They also include leasehold improvements to third party assets if they can be separated from the assets in question. If the above costs do not display functional or usefulness-related autonomy, but future economic benefits are expected from them, they are rec-of expected usefulness of the improvements in question and the residual duration of Property and equipment also include payments on account for the purchase and reno-vation of assets not yet part of the production process and therefore not yet subject to depreciation. ap-preciation. The item also includes rights of use associated with leased assets and fees for use. Recognition criteria Property and equipment are initially recognised at cost, including all costs directly at-tributable to installation of the asset. Extraordinary maintenance costs and costs for improvements leading to actual improve-ment of the asset, or an increase in the future benefits generated by the asset, are attributed to the reference assets, and are depreciated based on their residual useful life. Under IFRS 16, leases are accounted for in accordance with the right-of-use model, whereby, at the commencement date, the lessee incurs an obligation to make payments to the lessor for the right to use the underlying asset for the term of the lease. When
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 291 the asset is made available for use by the lessee, the lessee recognises both the liability and the right-of-use asset. Measurement criteria illustrated in paragraph 30 of IAS 16. More specifically, property and equipment are systematically depreciated each year based on their estimated useful life, using the straight-line basis method apart from: land, regardless of whether this was purchased separately or was incorpo-rated into the value of the building, which, insofar as it has an indefinite useful life, is not depreciated; works of art, which are not depreciated as their useful life cannot be esti-mated and their value typically appreciates over time; investment property which is recognised at fair value in accordance with IAS 40. For assets acquired during the financial year, depreciation is calculated on a daily basis from the date of entry into use of the asset. For assets transferred and/or disposed of during the financial year, depreciation is calculated on a daily basis until the date of transfer and/or disposal. At the end of each year, if there is any evidence that property or equipment that is not held for investment purposes may have suffered an impairment loss, a comparison is made between its carrying amount and its recoverable value, equal to the higher be-tween the fair value, net of any costs to sell, and the related value in use of the asset, intended as the present value of future cash flows expected from the asset. Any impair-n If the reasons that led to recognition of the impairment loss cease to apply, an impair-ment gain is recognised that may not exceed the value that the asset would have had, net of depreciation calculated in the absence of previous impairment losses. For investment property, which comes within the scope of application of IAS 40, the measurement is made at the market value determined using independent surveys and value The right-of-use asset, recognised in accordance with IFRS 16, is measured using the cost model under IAS 16 Property, plant and equipment. In this case, the asset is sub-sequently depreciated and tested for impairment if impairment indicators are present. Derecognition criteria
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 292 Property and equipment is derecognised from the statement of financial position upon disposal thereof or when the asset is permanently withdrawn from use and no future economic benefit is expected from its disposal. Intangible assets Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Non-current assets held for sale and disposal groups Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Financial liabilities measured at amortised cost Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Financial liabilities held for trading Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Financial liabilities designated at fair value through profit or loss Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Current and deferred taxes Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Provisions for risks and charges Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Other information Post-employment benefits
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 293 Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Repurchase agreements Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Other assets and liabilities Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Treasury shares Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Recognition of revenues and costs Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Dividends Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Criteria for determining the fair value of financial instruments Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here. Business combinations Please refer to Section A.2 PART RELATING TO THE MAIN FINANCIAL STATEMENT ITEMS of the Notes to the Consolidated Financial Statements of the Banca Sistema Group, which is deemed to be fully reported here.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 294 A.3 - DISCLOSURE ON TRANSFERS BETWEEN PORTFOLIOS OF FINANCIAL AS-SETS A.3.1 Reclassified financial assets: change in business model, carrying amount and in-terest income No financial instruments were transferred between portfolios. A.3.2 Reclassified financial assets: change in business model, fair value and effects on comprehensive income No financial assets were reclassified. A.3.3 Reclassified financial assets: change in business model and effective interest rate No financial assets held for trading were transferred.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 295 A.4 - FAIR VALUE DISCLOSURE Qualitative disclosure A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Please refer to the accounting policies. A.4.2 Processes and sensitivity of measurements The carrying amount of financial assets and liabilities due within one year has been assumed to be a reasonable approximation of fair value, while for those due beyond one year, the fair value is calculated taking into account both interest rate risk and credit risk. A.4.3 Fair value hierarchy The following fair value hierarchy was used in order to prepare the financial statements: Level 1- Effective market quotes The valuation is the market price of said financial instrument subject to valuation, ob-tained on the basis of quotes expressed by an active market. Level 2 - Comparable Approach Level 3 - Mark-to-Model Approach A.4.4 Other Information The item is not applicable for the Bank.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 296 Quantitative disclosure A.4.5 Fair value hierarchy A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value level. Key: L1 = Level 1 L2 = Level 2 L3 = Level 3
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 297 A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level Key: CA = carrying amount L1 = Level 1 L2 = Level 2 L3 = Level 3 Nothing to report.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 298 PART B - INFORMATION ON THE STATEMENT OF FINANCIAL POSITION ASSETS Section 1 - Cash and cash equivalents Item 10 1.1 Cash and cash equivalents: breakdown Section 2 - Financial assets measured at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product
Page 307
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 299 2.2 Financial assets held for trading: breakdown by debtor/issuer/counterparty L1 L2 L3 L1 L2 L3A. Non-derivative financial assets1. Debt instruments1.1 Stuctured instruments1.2 Other debt instruments2. Equity instruments3. Units of investment funds4. Financing4.1 Repurchase agreements4.2 OthersTotal AB. Financial derivatives1. Derivati finanziari 601.1 for trading 601.2 related to the fair value option1.3 others2. Credit derivatives2.1 for trading2.2 related to the fair value option2.3 othersTotal B 60Total (A+B) 60 31.12.2025 31.12.2024
Page 308
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 300 2.5 Other financial assets mandatorily measured at fair value through profit or loss: breakdown by product 31.12.2025 31.12.2024A. Non-derivative financial assets1. Debt instrumentsa) Central Banksb) General governmentsc) Banksd) Other financial corporationsof which: insurance companiese) Non-financial corporations2. Equity instrumentsa) Banksb) Other financial corporations:of which: insurance companiesc) Other non-financial corporationsd) other3. Units of investment funds4. Financinga) Central Banksb) General governmentsc) Banksd) Other financial corporationsof which: insurance companiese) Non-financial corporationsf) HouseholdsTotal A - -B. Derivative instrumentsa) Central counterpartiesb) others 60Total B 60Total (A+B) 60
Page 309
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 301
Page 310
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 302 2.6 Other financial assets mandatorily measured at fair value through profit or loss: breakdown by debtor/issuer Section 3 - Financial assets measured at fair value through other comprehensive income - Item 30 3.1 Financial assets measured at fair value through other comprehensive income: breakdown by product
Page 311
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 303 Key: L1 = Level 1 L2 = Level 2 L3 = Level 3 3.2 Financial assets measured at fair value through other comprehensive income: breakdown by debtor/issuer 31.12.2025 31.12.20241. Debt instruments 1,180,929 1,142,008 a) Central Banks b) General governments 1,180,929 1,142,008 c) Banks d) Other financial corporations of which: insurance companies e) Non-financial corporations2. Equity instruments 5,397 5,189 a) Banks 5,000 5,000 b) Other issuers: 397 189 - other financial corporations 189 of which: insurance companies - non-financial corporations 397 - other4. Financing a) Central Banks b) General governments c) Banks d) Other financial corporations of which: insurance companies e) Non-financial corporations f) HouseholdsTotal 1,186,326 1,147,197
Page 312
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 304 3.3 Financial assets measured at fair value through other comprehensive income: gross amount and total impairment losses Section 4 - Financial assets measured at amortised cost - Item 40 4.1 Financial assets measured at amortised cost: breakdown by product of the loans and receivables with banks Key: L1 = Level 1 L2 = Level 2 L3 = Level 3
Page 313
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 305 4.2 Financial assets measured at amortised cost: breakdown by product of the loans and receivables with customers Key: L1 = Level 1 L2 = Level 2 L3 = Level 3 4.3 Financial assets measured at amortised cost: breakdown by debtor/issuer of the loans and receivables with customers Key: L1 = Level 1 First and second stageThird stagePurchased or originated credit-impairedFirst and second stageThird stagePurchased or originated credit-impaired1. Debt securities 231,678 157,253 a) General governments 50,020 61,057 b) Other financial corporations 181,658 4,137 of which: insurance companies c) Non-financial corporations 92,0592. Financing to: 1,909,513 345,309 2,384 2,310,582 273,067 3,433 a) General governments 334,305 271,622 2,384 640,530 218,716 3,433 b) Other financial corporations 137,953 4,000 164,326 1,710 of which: insurance companies 63 2,729 32 1,572 c) Non-financial corporations 869,097 58,750 769,449 38,238 d) Households 568,158 10,937 736,277 14,403Total 2,141,191 345,309 2,384 2,467,835 273,067 3,43331.12.2025 31.12.2024
Page 314
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 306 L2 = Level 2 L3 = Level 3 4.4 Financial assets measured at amortised cost: gross amount and total impairment losses 4.4a Loans measured at amortised cost subject to Covid-19 support measures: gross amount and total impairment losses
Page 315
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 307 Section 7 - Equity investments - item 70 7.1 Equity investments: information on investment relationships 7.2 Significant equity investments: carrying amount 7.3 Significant equity investments: accounting information
Page 316
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 308 7.4 Non-significant equity investments: accounting information 7.5 Equity investments: changes The impairment relates to the adjustment of the carrying amount of the investment in Kruso Kapital to its realisable value, calculated as the average of market values over the last three months, linked to the future sale of these shares to CF+, in order to im-plement what is envisaged by the public tender and exchange offer. 31.12.2025 31.12.2024A. Opening balance 45,250 45,250B. IncreasesB.1 PurchasesB.2 Impairment gainsB.3 RevaluationsB.4 Other increasesC. Decreases (1,429)C.1 SalesC.2 Impairment lossesC.3 Write-offs (1,429)C.4 Other decreasesD. Closing balance 46,679 45,250E. Total revaluationsF. Total impairment losses
Page 317
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 309 Section 8 Property and equipment Item 80 8.1 Operating property and equipment: breakdown of the assets measured at cost Property and equipment are recognised in the financial statements in accordance with the general acquisition cost criteria, including the related charges and any other ex-penses incurred to place the assets in conditions useful for the Bank, in addition to indirect costs for the portion reasonably attributable to assets that refer to the costs incurred, as at the end of the year. Depreciation rates: Office furniture: 12% Furnishings: 15% Electronic machinery and miscellaneous equipment: 20% Assets less than Euro 516: 100% 31.12.2025 31.12.2024 1 Owned 456 352 a) land -- b) buildings -- c) furniture 218 239 d) electronic equipment 238 113 e) other -- 2 Right-of-use assets acquired under finance lease 7,258 7,210 a) land -- b) buildings 6,402 6,498 c) furniture -- d) electronic equipment -- e) other 856 712Total 7,714 7,562of which: obtained from the enforcement of guarantees received --
Page 318
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 310 8.6 Operating property and equipment: changes
Page 319
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 311 Section 9 Intangible assets Item 90 9.1 Intangible assets: breakdown by type of asset The other intangible assets are recognised at purchase cost including related costs, and are systematically amortised over a period of 5 years. The item mainly refers to soft-ware. With respect to information related to goodwill, reference should be made to Part B - Information on the statement of financial position, Section 10 Intangible assets Item 100 of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 31.12.2025 31.12.2024Finite useful life Indefinite useful life Finite useful life Indefinite useful life A.1 Goodwill 3,920 x 3,920 A.2 Other intangible assets 79 48of which software 79 48 A.2.1 Assets measured at cost: 79 48 a) Internally developed assets b) Other 79 48 A.2.2 Assets measured at fair value: a) Internally developed assets b) Other Total 79 3,920 48 3,920
Page 320
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 312 9.2 Intangible assets: changes KeyFin: finite useful life Indef: indefinite useful life
Page 321
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 313 Section 10 Tax assets and tax liabilities Item 100 of assets and Item 60 of liabilities Below is the breakdown of the current tax assets and current tax liabilities 10.1 Deferred tax assets: breakdown 10.2 Deferred tax liabilities: breakdown
Page 322
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 314 10.3 Changes in deferred tax assets (through profit or loss) 10.3 bis Change in deferred tax assets pursuant to Law 214/2011
Page 323
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 315 10.4 Changes in deferred tax liabilities (through profit or loss)
Page 324
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 316 10.5 Change in deferred tax assets (through equity) 10.6 Change in deferred tax liabilities (through equity) 31.12.2025 31.12.2024 1. Opening balance 1,374 8,089 2. Increases 249 1,171 2.1 Deferred tax assets recognised in the year 249 1,171 a) related to previous years b) due to changes in accounting policies c) other 249 1,171 2.2 New taxes or tax rate increases 2.3 Other increases 3. Decreases 1,171 7,886 3.1 Deferred tax assets derecognised in the year 1,171 7,886 a) reversals b) impairment due to non-recoverability c) due to changes in accounting policies d) other 1,171 7,886 3.2 Tax rate reductions 3.3 Other decreases 4. Closing balance 452 1,374
Page 325
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 317
Page 326
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 318 Section 12 - Other assets - Item 120 12.1 Other assets: breakdown
Page 327
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 319 LIABILITIES Section 1 - Financial liabilities measured at amortised cost - Item 10 1.1 Financial liabilities measured at amortised cost: breakdown by product of due to banks Key: L1 = Level 1 L2 = Level 2 L3 = Level 3 1.2 Financial liabilities measured at amortised cost: breakdown by product of due to customers L1 L2 L3 L1 L2 L3 1. Current accounts and demand deposits359,636 X X X 329,363 X XX2. Term deposits 2,261,130 X X X 2,565,354 X XX3. Financing 860,347 X X X 899,182 X XX 3.1 Repurchase agreements 810,187 X X X 819,999 X XX 3.2 Other 50,160 X X X 79,183 X XX4. Commitments to repurchase own equity instruments X X X X XX5. Lease liabilities X X X X XX6. Other payables 132,800 X X X 142,640 X XXTotal 3,613,913 3,613,913 3,936,5393,936,53931.12.2025 31.12.2024Carrying amountFair value Carrying amount Fair value
Page 328
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 320 Section 6 Tax liabilities Item 60 The breakdown as well as the change in the deferred tax liabilities were illustrated in Part B Section 10 of assets in these notes to the financial statements. Section 8 - Other Liabilities - Item 80 8.1 Other liabilities: breakdown Section 9 - Post-employment benefits - Item 90 9.1 Post-employment benefits: changes
Page 329
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 321 9.2 Other Information The actuarial amount of post-employment benefits was calculated by an external actu-ary, who issued an appraisal. The other decreases refer to the actuarial gain accounted for during the year. The pay-ments made refer to post-employment benefits paid during the year. The technical valuations were conducted on the basis of the assumptions described in the following table: Annual discount rate 3.96% Annual inflation rate 2.00% Annual post-employment benefits increase rate 3.00% Annual real salary increase rate 3.17% The discount rate used for determining the present value of the obligation was calcu-lated, pursuant to IAS 19.83, from the Iboxx Corporate AA index with 10+ duration during the valuation month. To this end, a choice was made to select the yield with a duration comparable to the duration of the set of workers subject to valuation. SECTION 10 Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown
Page 330
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 322 10.2 Provisions for risks and charges: changes 10.3 Provisions for credit risk related to commitments and financial guarantees issued 10.5 Internal defined benefit pension funds Nothing to report. 10.6 Provisions for risks and charges - other provisions
Page 331
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 323 SECTION 12 Bank equity Items 110, 130, 140, 150, 160, 170 and 180 The share capital of Banca Sistema is composed of 80,421,052 ordinary shares, for a total paid-dend entitlement from 1 January. A breakdown of the composition of equity is shown below:
Page 332
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 324 12.2 Share capital - Parent's number of shares: changes
Page 333
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 325 12.4 Income-related reserves: other information In compliance with art. 2427(7 bis) of the Italian Civil Code, below is the detail of the equity items revealing the origin and possibility of use and distributability. Key: A: for share capital increase B: to cover losses C: for distribution to shareholders 12.5 Equity instruments: breakdown and changes The breakdown of bonds issued, which given their predominant characteristics are clas-sified under equity instruments in item 140 of equity, is as follows: Value at 31.12.2025Possible useAvailable portionA) Share capital9,651B) Equity-related reserves:Share premium reserve39,100 A,B,C 39,100Reserve to provide for lossesC) Income-related reserves: Legal reserve1,930 B 1,930 Valuation reserve4,034 Negative goodwill1,774 A,B,C 1,774 Retained earnings190,227 A,B,C 190,227 Reserve for treasury shares Reserve for future capital increaseD) Other reserves(900) A,B,C (900)E) Equity instruments45,500F) Treasury sharesTotal291,316 - 232,131 Profit for the year 34,266Total equity325,582Undistributable portion 1,930Distributable portion230,201
Page 334
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 326 a variable coupon starting from 19 June 2023, issued on 18 December 2012 and 18 December 2013 (reopening date); and a fixed coupon until 25 June 2031 at 9% issued on 25 June 2021.
Page 335
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 327 Other information 1. Commitments and financial guarantees issued (other than those designated at fair value) 3. Assets pledged as collateral for liabilities and commitments
Page 336
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 328 4. Management and trading on behalf of third parties
Page 337
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 329 PART C - INFORMATION ON THE INCOME STATEMENT Section 1 Items 10 and 20 1.1 Interest and similar income: breakdown The total contribution of the Factoring Division, which includes both revenues from tra-ditional factoring transactions and those deriving from SME loans guaranteed by the s-sion component associated with the factoring business; (ii) the revenues from the sale of some receivables due from private debtors; and (iii) the income realised on the pur-chase and subsequent realisation of Superbonus tax receivables held for trading pur-poses. The component owed for late payments pursuant to Legislative Decree 231/02 (con-sisting of default interest and compensation) legally enforced at 31 December 2025 million in 2024); Items/Technical formsDebt instrumentsFinancingOther transactions2025 20241. Financial assets measured at fair value through profit or loss:248 248 1901.1 Financial assets held for trading 157 157 1181.2 Financial assets designated at fair value through profit or loss1.3 Other financial assets mandatorily measured at fair value through profit or loss91 91 722. Financial assets measured at fair value through other comprehensive income 29,093 X 29,093 22,2543. Financial assets measured at amortised cost: 3,804 155,911 159,715 155,9483.1 Loans and receivables with banks 1,983 X 1,983 7,9133.2 Loans and receivables with customers 3,804 153,928 X 157,732 148,0354. Hedging derivatives X X 6205. Other assets X X 1,334 1,334 2,6656. Financial liabilities X X XTotal 33,145 155,911 1,334 190,390 181,677of which: interest income on impaired assetsof which: interest income on finance leases X X
Page 338
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 330 21.4 million in 2024), and that recognised on an accruals basis in previous years; Starting from the first quarter of 2025, following the update of the policy relating to the accounting of default interest for Public Administration debtors in situations of financial distress or probable default, default interest was recorded for an amoun 6.3 million at 31 December relating to positions subject to judgments by the ECHR that found the Italian State liable for the debt in cases where the debtor is in default. In the draft 2026 budget law currently being debated in Parliament, the State has allocated funds for the payment of these debts. The reduction in the contribution due for late payments pur-suant to Legislative Decree 231/02 (consisting of default interest and compensation) compared to the same period in 2024 was also due to an extraordinary transfer of decrease in the stock, influenced by contractual resolutions of receivables within the legal scope. The amount of the stock of interest pursuant to Legislative Decree 231/02 accrued at 149 million ted to positions with troubled local authorities, a component for which default interest is not allocated in the financial statements, except in the case of ECHR judgments as stated above, whereas the loans and receivables recognised in the financial statements amount addition, there is further default interest related to entities such as consortia or quasi-public companies excluded from the scope of the allocation model. The contribution of interest on the salary-/pension-backed loans is down slightly on the
Page 339
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 331 1.3 Interest and similar expense: breakdown
Page 340
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 332 Section 2 - Net fee and commission income - Items 40 and 50 2.1 Fee and commission income: breakdown 2025 2024 a) Financial instruments 123 1361. Placement of securities 64 611.1 Underwritten and/or on a firm commitment basis 64 612. Order collection and transmission, and execution of orders on behalf of customers 48 622.1 Order collection and transmission for one or more financial instruments 48 623. Other fees associated with activities related to financial instruments 11 13of which: individual asset management 11 13 b) Corporate Finance c) Investment advisory activities d) Clearing and settlement e) Custody and administration2. Other fees related to custody and administration activities f) Central administrative services for collective asset management g) Fiduciary activities h) Payment services 66 711. Current accounts 1 22. Credit cards3. Debit and other payment cards 35 304. Bank transfers and other payment orders5. Other fees related to payment services 30 39 i) Distribution of third party services 1,245 1,1222. Insurance products 1 23. Altri prodotti 1,244 1,120k) Servicing of securitisations 583 618l) Commitments to disburse fundsm) Financial guarantees issued 369 293n) Financing transactions 9,072 17,249of which: factoring transactions 9,004 17,231o) Foreign currency transactionsp) Commoditiesq) Other fee and commission income 10,604 11,460Total 22,062 30,949
Page 341
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 333 2.2 Fee and commission income: distribution channels of products and services 2.3 Fee and commission expense: breakdown Services/Amounts 2025 2024 a) Financial instruments 101 106of which: trading in financial instruments 101 106of which: placement of financial instrumentsof which: individual asset management- Proprietary- Delegated to third parties b) Clearing and settlement 69 60 c) Custody and administration d) Collection and payment services 287 197of which: credit cards, debit cards and other payment cards e) Servicing of securitisations f) Commitments to receive funds g) Financial guarantees received 2,059 1,878of which: credit derivatives h) Off-premises distribution of securities, products and services 14,019 17,415 i) Foreign currency transactions j) Other fee and commission expense 24 25Total 16,559 19,681
Page 342
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 334 Section 3 DIVIDENDS AND SIMILAR INCOME ITEM 70 3.1 Dividends and similar income: breakdown Section 4 NET TRADING INCOME (EXPENSE) - ITEM 80 4.1 Net trading income (expense): breakdown Gains (A)Trading income (B)Losses (C)Trading losses (D)Net trading income (expense) [(A+B) - (C+D)]1. Financial assets held for trading 29,635 277 (1,325)28,5871.1 Debt instruments 277 (158)1191.2 Equity instruments1.3 OEIC units1.4 Financing1.5 Other 29,635 (1,167)28,4682. Financial liabilities held for trading2.1 Debt instruments2.2 Payables2.3 Other3. Other financial assets and liabilities: exchange rate gains (losses)X X X X(89)4. Derivatives4.1 Financial derivatives: - On debt instruments and interest rates- On equity instruments and equity indexes- On currencies and gold X X X X- Other4.2 Credit derivativesof which: natural hedges connected to the fair value option X X X XTotal 29,635 277 (1,325)28,498
Page 343
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 335 Section 6 - Gain from sales or repurchases - Item 100 6.1 Gain from sales or repurchases: breakdown
Page 344
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 336 Section 7 Net gain (loss) on other financial assets and liabilities measured at fair value through profit or loss Item 110 7.1 Change in the net value of other financial assets and liabilities measured at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value through profit or loss
Page 345
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 337 Section 8 - Net impairment losses/gains due to credit risk - Item 130 8.1 Net impairment losses due to credit risk related to financial assets measured at amortised cost: breakdown 8.1a Net impairment losses due to credit risk related to loans measured at amortised cost subject to Covid-19 support measures: breakdown
Page 346
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 338 8.2 Net impairment losses due to credit risk related to financial assets measured at fair value through other comprehensive income: breakdown Section 9 Gains/losses from contract amendments without derecognition Item 140 9.1 Gains (losses) from contract amendments: breakdown
Page 347
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 339 Section 10 Administrative expenses Item 160 10.1 Personnel expense: breakdown 10.2 Average number of employees by category Employees a) Senior managers 25 b) Middle managers (Q4 Q3) 53 c) Remaining employees 140
Page 348
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 340 10.5 Other administrative expenses: breakdown
Page 349
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 341 Section 11 Net accruals to provisions for risks and charges Item 170 11.2 Net accruals for other commitments and other guarantees issued: breakdown 11.3 Net accruals to other provisions for risks and charges: breakdown Section 12 Net impairment losses on property and equipment Item 180 12.1 Net impairment losses on property and equipment: breakdown
Page 350
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 342 Section 13 Net impairment losses on intangible assets Item 190 13.1 Net impairment losses on intangible assets: breakdown Section 14 Other operating income (expense) Item 200 14.1 Other operating expense: breakdown 14.2 Other operating income: breakdown
Page 351
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 343 SECTION 15 GAINS (LOSSES) ON EQUITY INVESTMENTS - ITEM 220 15.1 Gains (losses) on equity investments: breakdown
Page 352
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 344 Section 19 Income taxes Item 270 19.1 Income taxes: breakdown 19.2 Reconciliation between theoretical and effective tax expense
Page 353
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 345 Section 21 - Other Information Nothing to report. Section 22 Earnings per share EPS is calculated by dividing the profit attributable to holders of ordinary shares of Banca Sistema (numerator) by the weighted average number of ordinary shares (de-nominator) outstanding during the year.
Page 354
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 346 PART D OTHER COMPREHENSIVE INCOME BREAKDOWN OF COMPREHENSIVE INCOME 31.12.2025 31.12.202410. Profit (loss) for the year 34,266 22,019Items, net of tax, that will not be reclassified subsequently to profit or loss--20.Equity instruments designated at fair value through othercomprehensive income:--30.Financial liabilities designated at fair value through profit or loss (changes in own credit rating):--40.Hedging of equity instruments designated at fair value through other comprehensive income:--50. Property and equipment60. Intangible assets70. Defined benefit plans 176(230)80. Non-current assets held for sale90. Share of valuation reserves of equity-accounted investments100.Income taxes on itemsthat will not be reclassified subsequently to profit or lossItems, net of tax, that will be reclassified subsequently to profit or loss--110. Hedges of foreign investments: --120. Exchange rate gains (losses): --130. Cash flow hedges: --140. Hedging instruments (non-designated elements): --150.Financial assets (other than equity instruments) measured at fair value through other comprehensive income:6,205 10,215 a) fair value gains (losses) 4,305 4,883 b) reclassification to profit or loss 1,900 5,332 - impairment losses due to credit risk 11 220 - gains/losses on sales 1,889 5,112 c) other changes --160. Non-current assets held for sale and disposal groups: --170. Share of valuation reserves of equity-accounted investments: --180.Income taxes on items that will be reclassified subsequently to profit or loss190.Total other comprehensive income (expense) 6,381 9,985200.Comprehensive income (expense) (10+190) 40,647 32,004
Page 355
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 347
Page 356
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 348 PART E - INFORMATION CONCERNING RISKS AND RELATED HEDGING POLICIES Section 1 - Credit risk Qualitative disclosure 1. General aspects Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 2. Credit Risk Management Policies 2.1 Organisational aspects Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 2.2 Management, measurement and control systems Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 2.3 Methods for measuring expected losses Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 2.4 Credit Risk mitigation techniques Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 3. Non-performing exposures
Page 357
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 349 Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 3.1 Management strategies and policies Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 3.2 Write-offs Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 3.3 Purchased or originated credit-impaired financial assets Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 4. Financial assets subject to commercial renegotiation and forborne expo-sures Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here.
Page 358
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 350 Quantitative disclosure A. Credit quality A.1 Impaired and unimpaired loans: carrying amounts, impairment losses, per-formance and business breakdown A.1.1 Breakdown of financial assets by portfolio and by credit quality (carrying amounts) A.1.2 Breakdown of financial assets by portfolio and by credit quality (gross amount and carrying amount)
Page 359
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 351 A.1.3 Breakdown of financial assets by past due range (carrying amounts) A.1.4 Financial assets, commitments to disburse funds and financial guarantees issued: changes in impaired positions and accruals to provisions Opening total impairment losses 8 6,482 511 6,856 291 291 56,947 56,945 25 364,123Increases in purchased or originated financial assets2,035 274 2,309 156 156 10,121 10,10312,568Derecognition other than write-offs 1 2,800 398 3,054 85 85 10,863 10,862 1 114,002Net impairment losses/gains due to credit risk (+/-)(6) (803) (10) (820) (13) (13) 953 953 (19) (3)98Contract amendments without derecognition Changes in estimation methodWrite-offs not recognised directly through profit or lossOther changesClosing total impairment losses 1 4,914 775 5,291 349 349 57,158 57,139 (1) # 662,787Recoveries from collection on financial assets that have been written offWrite-offs recognised directly through profit or loss Total impairment lossesOverall accruals to provisions on commitments to disburse funds and financial guarantees issued TotalAssets included in the first stage Assets included in the second stage Assets included in the third stage Purchased or originated credit-impaired financial assets
Page 360
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 352 A.1.5 Financial assets, commitments to disburse funds and financial guarantees issued: transfers between different credit risk stages (gross amount and nominal amount)
Page 361
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 353 A.1.5a Loans subject to Covid-19 support measures: transfers between different credit risk stages (gross amount and nominal amount)
Page 362
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 354 A.1.6 On- and off-statement of financial position loans and receivables with banks: gross amounts and carrying amounts
Page 363
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 355 A.1.7 On- and off-statement of financial position loans and receivables with customers: gross amounts and carrying amounts
Page 364
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 356 A.1.7a Loans subject to Covid-19 support measures: gross amount and carrying amount
Page 365
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 357 A.1.8 On-statement of financial position loans and receivables with banks: gross non-performing exposures
Page 366
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 358 A.1.9 On-statement of financial position loans and receivables with customers: gross non-performing exposures
Page 367
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 359 A.1.9bis On-statement of financial position loans and receivables with customers: breakdown of gross forborne exposures by credit quality Non-performing exposures with forbearance measuresOther forborne exposuresA. Opening gross balance 1,217 519- of which: positions transferred but not derecognisedB. Increases 1,957 7,922B.1 transfers from performing exposures without forbearance measures3,616B.2 transfers from forborne performing exposures 30 XB.3 transfers from non-performing exposures with forbearance measuresXB.4 transfers from non-performing exposures without forbearance measures1,909 164B.5 other increases 18 4,142C. Decreases 2,309 5,181C.1 transfers to performing exposures without forbearance measuresX 437C.2 transfers to forborne performing exposures XC.3 transfers to non-performing exposures with forbearance measuresXC.4 write-offsC.5 collections 2,309 4,744C.6 gains on salesC.7 losses on salesC.8 other decreasesD. Closing gross balance 865 3,260- of which: positions transferred but not derecognised
Page 368
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 360 A.1.10 On-statement of financial position non-performing loans and receivables with banks: changes in impaired positions Not present. A.1.11 On-statement of financial position non-performing loans and receivables with customers: changes in impaired positions Totalof which: forborne exposures Totalof which: forborne exposures Totalof which: forborne exposures A. Opening total impairment losses 38,497 1 17,814 634- of which: positions transferred but not derecognised711 9B. Increases 9,009 11,901 1,386B.1 impairment losses on purchased or originated credit-impaired financial assetsX X XB.2 other impairment losses 6,813 11,863 1,087B.3 losses on salesB.4 transfers from other categories of non-performing exposures2,039 4B.5 contract amendments without derecognitionB.6 other increases 157 34 299C. Decreases 13,085 8,587 441C.1 impairment gains 3,005 5,522 31C.2 impairment gains due to collections 10,078 1,105 160C.3 gains on salesC.4 write-offsC.5 transfers to other categories of non-performing exposures2 1,814 238C.6 contract amendments without derecognitionC.7 other decreases 146 12D. Closing total impairment losses 34,421 1 21,128 1,579- of which: positions transferred but not derecognised797 6 Bad exposures Unlikely to payNon-performing past due exposures
Page 369
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 361 A.2 Classification of financial assets, commitments to disburse funds and fi-nancial guarantees issued based on external and internal rating A.2.1 Breakdown of financial assets, commitments to disburse funds and financial guar-antees issued by external rating class (gross amounts) The risk categories for the external rating indicated in this table refer to the creditwor-thiness classes of the debtors/guarantors pursuant to prudential requirements. The Bank uses the standardised approach in accordance with the risk mapping of the rating agencies: banks; supervised brokers; public sector institutions; territorial entities; parties.
Page 370
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 362 Exposuresclass 1 class 2class 3class 4 class 5 class 6A. Financial assets measured at amortised cost50,042 1,457 8 38,753 24,413 2,455,648 2,570,321- First stage 50,040 623 8 38,729 24,413 1,990,067 2,103,880- Second stage 61,608 61,608- Third stage 2 834 24 401,586 402,446- Purchased or originated credit-impaired2,387 2,387B. Financial assets measured at fair value through other comprehensive income1,181,305 1,181,305- First stage 1,181,305 1,181,305- Second stage- Third stage- Purchased or originated credit-impairedC. Financial assets held for sale- First stage- Second stage- Third stage- Purchased or originated credit-impairedTotal (A+B+C) 1,231,346 1,458 8 38,753 24,413 2,455,648 3,751,626D. Commitments to disburse funds and financial guarantees issued 5,703 649,134 654,837- First stage 5,703 622,095 627,798- Second stage- Third stage 27,039 27,039- Purchased or originated credit-impairedTotal D 5,703 649,134 654,837Total (A + B + C + D) 1,231,346 1,458 8 38,753 30,116 3,104,782 4,406,463 External rating classWithout ratingTotal
Page 371
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 363 A.3 Breakdown of guaranteed credit exposures by type of guarantee A.3.1 Guaranteed on- and off-statement of financial position loans and receivables with banks No positions to report. A.3.2 Guaranteed on- and off-statement of financial position loans and receivables with customers
Page 372
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 364 B. Breakdown and concentration of credit exposures B. Breakdown by business segment of on- and off-statement of financial position loans and receivables with customers B.2 Breakdown by geographical segment of on- and off-statement of financial position loans and receivables with customers A. On-statement of financial position loans and receivablesA.1 Bad exposures 91,626 5,648 4,548 27,290 7491,485 - of which: forborne exposures 833 1A.2 Unlikely to pay 1,455 538 35,682 16,584 4,5664,006 - of which: forborne exposures 1A.3 Non-performing past due exposures 180,925 310 4,000 182 2,729 73 18,520 912 5,622204 - of which: forborne exposuresA.4 Performing exposures 1,565,254 1,574 332,584 171 63 869,097 3,067 568,157810 - of which: forborne exposures 2,719 2 507 3Total (A) 1,839,260 8,070 336,584 353 2,792 73 927,847 47,853 579,0946,505B. Off-statement of financial position loans and receivablesB.1 Non-performing exposures 27,039B.2 Performing exposures 286,049 338,453 4 846Total (B) 286,049 365,492 4 846Total (A+B) 31.12.2025 1,839,260 8,070 622,633 353 2,792 73 1,293,339 47,857 579,9406,505Total (A+B) 31.12.2024 2,253,060 11,486 561,101 152 1,604 1,151,544 46,993 759,4025,481 General governmentsFinancial corporationsFinancial corporations(of which: insurance companies)Non-financial corporationsHouseholds
Page 373
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 365 B.3 Breakdown by geographical segment of on- and off-statement of financial position loans and receivables with banks
Page 374
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 366 a) b) c) No. of positions 20.
Page 375
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 367 C. Securitisation transactions This section does not recognise securitisation transactions where the originators are banks belonging to the same prudentially consolidated group and where the total lia-bilities issued by the special purpose vehicles (e.g. ABS securities, loans in the ware-housing phase, etc.) are subscribed at the time of issue by one or more entities be-longing to the same prudentially consolidated group. Self-securitisation transactions included in the Group's prudential consolidation are dealt with in Part E of the Notes to the consolidated financial statements. Qualitative disclosure defining the roles and responsibilities of internal functions within the securitisa-tion process, in compliance with the applicable internal and external regulations; in securitisation transactions, ensuring compliance with the relevant regulations. The policy applies to securitisation transactions structured to access alternative sources of funding, in which the Bank acts as Originator, Sponsor, or Servicer, as well Quantitative disclosure C.2 Exposures deriving from the main "third-party" securitisation transactions broken down by type of asset securitised and by type of exposure is to acquire VAT receivables held by third-party assignors. Pursuant to IFRS 9, the s financial statements. E. Transfers A. Financial assets transferred and not derecognised Qualitative disclosure
Page 376
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 368 The financial assets transferred and not derecognised refer to Italian government secu-rities used for repurchase agreements. Said financial assets are classified in the financial statements among the available-for-sale financial assets, while the repurchase agree-ment loan is predominantly presented in due to customers. As a last resort the financial assets transferred and not derecognised comprise trade receivables used for loan trans-actions in the ECB (Abaco).
Page 377
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 369 E.1. Prudential consolidation Financial assets transferred and recognised in full, and associated financial liabilities: carrying amount
Page 378
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 370 F. Models for the measurement of credit risk The Bank does not have internal models for the measurement of credit risk. Section 2 - Market risk Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. 2.1- Interest rate risk and price risk - regulatory trading book Qualitative disclosure Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here.
Page 379
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 371 2.2 Interest rate risk and price risk - Banking Book Qualitative disclosure A. General aspects, management procedures and methods of measuring the interest rate risk and the price risk Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here.
Page 380
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 372 Quantitative disclosure 1. Banking book: Breakdown by residual term (by repricing date) of financial assets and liabilities (Euro)
Page 381
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 373 on demand up to 3 monthsfrom more than 3 months up to 6 monthsfrom more than 6 months up to 1 yearfrom more than 1 year up to 5 years31.12.2025more than 10 yearsopen term 1. Assets 1.178.498 805.944 632.560 53.075 670.961 347.009 9861.1 Debt instruments 3 370.905 610.945 362.457 81.271 - with early repayment option94.475 1.181 - other 3 276.430 610.945 362.457 80.0901.2 Financing to banks 83.393 19.0141.3 Financing to customers 1.095.102 416.025 21.615 53.075 308.504 265.738 986 - current accounts 61.964 52.328 - other financing 1.033.138 363.697 21.615 53.075 308.504 265.738 986 - with early repayment option67.558 191.030 21.529 52.858 305.331 168.920 986 - other 965.580 172.667 86 217 3.173 96.818 2. Liabilities 579.535 1.362.567 236.671 586.359 753.547 112.930 192.1 Due to customers 579.244 1.362.567 219.247 586.359 753.547 112.930 19 - current accounts 442.774 546.907 210.058 580.139 728.794 111.981 19 - other payables 136.470 815.660 9.189 6.220 24.753 949 - with early repayment option - other 136.470 815.660 9.189 6.220 24.753 9492.2 Due to banks 291 17.424 - current accounts - other payables 291 17.4242.3 Debt instruments2.4 Other liabilities 3. Financial derivatives 139.948.947 23.925 2.093 155.234 1.508 53.1 With underlying security - Options - Other derivatives3.2 Without underlying security 21.446 23.925 2.093 17.453 1.508 5 - Options 21.446 386 2.093 17.453 1.508 5 + long positions 386 2.093 17.453 1.508 5 + short positions 21.446 - Other derivatives 23.5394. Other off-statement of financial position transactions1.272.068 1.272.068 + long positions 1.188.896 83.172 + short positions 83.172 1.188.896
Page 382
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 374 1. Banking book: Breakdown by residual term (by repricing date) of financial assets and liabilities (other currencies) on demandup to 3 monthsfrom more than 3 months up to 6 monthsfrom more than 6 months up to 1 yearfrom more than 1 year up to 5 years31.12.2025more than 10 yearsopen term 1. Assets 96,1891.1 Debt instruments - with early repayment option - other1.2 Financing to banks 281.3 Financing to customers 96,161 - current accounts - other financing 96,161 - with early repayment option - other 96,161 2. Liabilities2.1 Due to customers - current accounts - other payables2.2 Due to banks2.3 Debt instruments2.4 Other liabilities 3. Financial derivatives 22,453 23,5393.1 With underlying security - Options - Other derivatives3.2 Without underlying security22,453 23,539 - Options - Other derivatives 22,453 23,539 + long positions + short positions 22,453 23,5394. Other off-statement of financial position transactions + long positions + short positions
Page 383
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 375 2.3 Currency risk Qualitative disclosure A. General aspects, management processes and methods of measuring the currency risk All items are in Euro, except for the security in the HTCS portfolio. The currency risk is limited due to the size of the investment. Quantitative disclosure 1. Breakdown of assets, liabilities and derivatives by currency of denomination
Page 384
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 376
Page 385
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 377 Section 3 - Derivatives and hedging policies 3.1 Derivatives held for trading A. Financial derivatives No amount was recognised for this item at the reporting date. B. Credit derivatives No amount was recognised for this item at the reporting date. 3.2 Hedge Accounting The Bank did not perform any such transactions during the year. 3.3 Other disclosure of derivatives (held for trading and hedging) No such items existed at the reporting date.
Page 386
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 378 Section 4 - Liquidity risk Qualitative disclosure A. General aspects, management processes and methods of measuring the liquidity risk Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here.
Page 387
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 379 Quantitative disclosure 1. Breakdown of financial assets and liabilities by remaining contractual term (EURO)
Page 388
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 380 1. Breakdown of financial assets and liabilities by remaining contractual term (OTHER CURRENCIES) on demandfrom more than 1 day up to 7 daysfrom more than 7 days up to 15 daysfrom more than 15 days up to 1 monthfrom more than 1 month up to 3 months31.12.2025from more than 6 months up to 1 yearfrom more than 1 year up to 5 yearsMore than 5 yearsOpen termAssets 96,253A.1 Government securitiesA.2 Other debt instrumentsA.3 OEIC unitsA.4 Financing 96,253 - banks 28 - customers 96,225Liabilities B.1 Deposits and current accounts - banks - customersB.2 Debt instruments B.3 Other liabilities Off-statement of financial position transactions7,605 14,848 23,539 54,321C.1 Financial derivatives with exchange of principal7,605 14,848 23,539 54,321C.2 Financial derivatives without exchange of principalC.3 Deposits and financing to be receivedC.4 Commitments to disburse fundsC.5 Financial guarantees issuedC.6 Financial guarantees receivedC.7 Credit derivatives with exchange of principalC.8 Credit derivatives without exchange of principal
Page 389
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 381 Section 5 - Operational risks Qualitative disclosure Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here. A. General aspects, management processes and methods of measuring operational risk Reference should be made to the paragraph in Part E of the notes to the consolidated financial statements of the Banca Sistema Group, which is deemed to be fully reported here.
Page 390
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 382 PART F - INFORMATION ON BANK EQUITY Section 1 - Bank equity A. Qualitative disclosure The objectives pursued in the management of bank equity are inspired by the prudential supervisory provisions and are oriented towards maintaining adequate levels of capital-isation to take on risks typical to credit positions. The income allocation policy aims to strengthen the Bank's capital with special emphasis on common equity, to the prudent distribution of the operating results, and to guaran-teeing a correct balance of the financial position.
Page 391
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 383 B. Quantitative disclosure B.1 Bank equity: breakdown
Page 392
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 384 31.12.2025 31.12.2024 1. Share capital 9,651 9,651 2. Share premium 39,100 39,100 3. Reserves 193,030 174,069 - income-related 193,930 174,755 a) legal 1,930 1,930 b) established under the Articles of Association- c) treasury shares- d) other 192,000 172,825 - other (900)(686) 4. Equity instruments 45,500 45,500 3.5 Interim dividends (-) 5. (Treasury shares)(102) 6. Valuation reserves 4,034(2,347) - Equity instruments designated at fair value through other comprehensive income (503)(642) - Hedging of equity instruments designated at fair value through other comprehensive income - Financial assets (other than equity instruments) measured at fair value through other comprehensive income 4,704(1,362) - Property and equipment - Intangible assets - Hedges of foreign investments - Cash flow hedges - Hedging instruments (non-designated elements) - Exchange rate gains (losses) - Non-current assets held for sale and disposal groups - Financial liabilities designated at fair value through profit or loss (changes in own credit rating) - Net actuarial gains (losses) on defined benefit pension plans (167)(343) - Shares of valuation reserves of equity-accounted investees - Special revaluation laws 7. Profit (loss) for the year 34,266 22,019Total 325,581 287,890
Page 393
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 385 B.2 Valuation reserves for financial assets measured at fair value through other com-prehensive income: breakdown B.3 Valuation reserves for financial assets measured at fair value through other com-prehensive income: changes B.4 Valuation reserves related to defined benefit plans: changes Debt instrumentsEquity instrumentsFinancing1. Opening balance (1,362) (642)2. Increases 9,058 2082.1 Fair value gains 6,226 2082.2 Impairment losses due to credit risk 10 X2.3 Reclassifications of negative reserves to profit or loss on saleX2.4 Transfers to other equity items (equity instruments)2.5 Other increases 2,8223. Decreases 2,992 693.1 Fair value losses3.2 Impairment gains due to credit risk3.3 Reclassifications of positive reserves to profit or loss: on saleX3.4 Transfers to other equity items (equity instruments)3.5 Other decreases 2,992 694. Closing balance 4,704 (503)
Page 394
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 386
Page 395
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 387 Section 2 - Own funds and capital ratios 2.1 Own funds A. Qualitative disclosure -weighted assets (RWA) and solvency ratios were deter-mined in accordance with the European Union prudential regulatory framework, com-monly referred to as the CRD/CRR package, consisting of Directive 2013/36/EU (Capital Requirements Directive CRD) and Regulation (EU) no. 575/2013 (Capital Require-ments Regulation CRR), as subsequently amended and supplemented, inter alia, by Regulation (EU) 2019/876 (CRR II) and Regulation (EU) 2024/1623 (CRR III). The calculation also takes into account the Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS) issued by the European Commission on a pro-posal from the European Banking Authority (EBA) as well as the supervisory provisions issued by the Bank of Italy. In particular, reference is made to Circular no. 285 of 17 incorporate, within the national regulatory framework, developments in European pru-dential regulation and the guidelines of the Supervisory Authorities.
Page 396
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 388 Reconciliation of Group equity and Own Funds (1) Regulatory filter for additional valuation adjustments (AVA) to the prudential valuation under the pro-visions of Regulation 2016/101
Page 397
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 389 A. Quantitative disclosure
Page 398
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 390 2.2 Capital adequacy A. Qualitative disclosure of the profit, as it is currently prohibited to distribute dividends.
Page 399
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 391 31.12.2025 31.12.2024 31.12.2025 31.12.2024A. EXPOSURES A.1 Credit and counterparty risk 5,912,172 7,257,057 1,313,280 1,406,7331. Standardised approach 5,912,172 7,257,057 1,313,280 1,406,7332. Internal ratings based approach 2.1 Basic 2.2 Advanced 3. Securitisations B. CAPITAL REQUIREMENTS B.1 Credit and counterparty risk 105,062 112,539B.2 Credit valuation adjustment risk 59 42B.3 Settlement risk B.4 Market risk 785 6591. Standard approach 785 6592. Internal models 3. Concentration risk B.5 Operational risk 14,828 12,7111. Standard approach 14,828 12,7112. Internal models 3. Concentration risk B.6 Other calculation elements B.7 Total prudential requirements 120,735 125,952C. EXPOSURES AND CAPITAL RATIOS 1,509,191 1,574,395C.1 Risk-weighted assets 1,509,191 1,574,395C.2 CET1 capital/risk-weighted assets (CET1 Capital Ratio)17.2% 14.8%C.3 Tier 1 capital/risk-weighted assets (Tier 1 Capital Ratio)20.2% 17.7%C.4 Total Own Funds/risk-weighted assets (Total Capital Ratio)20.2% 17.7% Unweighted amounts Weighted amounts/requirements
Page 400
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 392
Page 401
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 393 PART G - BUSINESS COMBINATIONS Section 1 - Transactions performed in the year No transactions to report. Section 2 - Transactions performed after the end of the year No transactions to report. Section 3 - Retrospective adjustments No transactions to report.
Page 402
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 394 PART H -RELATED PARTY TRANSACTIONS Related party transactions, including the relevant authorisation and disclosure proce-by the Board of Directors and published on the internet site of the Parent, Banca Sistema S.p.A. Transactions between Group companies and related parties were carried out in the in-terests of the Bank, including within the scope of ordinary operations; these transac-tions were carried out in accordance with market conditions and, in any event, on the basis of mutual financial advantage and in compliance with all procedures. With respect to transactions with parties who exercise management and control func-tions in accordance with art. 136 of the Consolidated Law on Banking, they are included in the Executive Committee resolution, specifically authorised by the Board of Directors and with the approval of the Statutory Auditors, subject to compliance with the obliga-tions provided under the Italian Civil Code with respect to matters relating to the conflict of interest of directors. Pursuant to IAS 24, the related parties of Banca Sistema include: shareholders with significant influence; companies belonging to the banking Group; companies subject to significant influence; key management personnel; the close relatives of key management personnel and the companies con-trolled by (or connected with) such personnel or their close relatives. 1. Disclosure on the remuneration of key management personnel The following data show the remuneration of key management personnel, as per IAS 24 and Bank of Italy Circular no. 262 of 22 December 2005 as subsequently updated, which requires the inclusion of the members of the Board of Statutory Auditors.
Page 403
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 395
Page 404
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 396 2. Disclosure on related party transactions The following table shows the assets, liabilities, guarantees and commitments at the end of the financial year, differentiated by type of related party with an indication of the impact on each individual caption. The following table indicates the costs and income for 2023, differentiated by type of related party. Details are provided below for each of the following related parties that are shareholders exceeding the 5% stake threshold in individual Group companies.
Page 405
NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 397 In thousands of EuroAmount(Thousands of Euro)Percentage (%)ASSETSLoans and receivables with customersKruso Kapital S.p.A. 49.848 2,0%Largo Augusto Servizi E Sviluppo Srl 24.201 1,0%Pignus-Credito Economico Popular S.A. 19.889 0,8%ProntoPegno Grecia 1.208 0,0%Art-Rite 20 0,0%Total Assets 95.254 2,3%LIABILITIESDue to customersKruso Kapital S.p.A. 3.770 0,1%Art-Rite 329 0,0%49 0,0%8 0,0%Soci - SGBS 2 0,0%Other liabilitiesLargo Augusto Servizi E Sviluppo Srl 187 0,1%Pignus-Credito Economico Popular S.A. 84 0,1%Kruso Kapital S.p.A. 82 0,1%Total Liabilities 4.512 0,1%
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 398 PART I - SHARE-BASED PAYMENT PLANS Qualitative disclosure As indicated in the 2025 Policies Document, Banca Sistema, having a four-year average Given the provisions of the Bank of Italy Circular, which allow banks with assets of less to the disbursement of variable remuneration in financial instruments and to solely ap-ply an "appropriate" deferral period, Banca Sistema intends to make use of this simpli-fication and apply the abovementioned cash payment schemes for the payment of var-iable remuneration starting from 2022 (without prejudice to any regulatory updates and/or the achievement of the size thresholds indicated by Circular 285). Therefore, the Bank shall apply the provisions relating to key personnel subject to per-centages and to deferral periods that may be defined in proportion to their characteris-tics, thereby ensuring a proportional alignment criterion also in relation to the provisions of the Corporate Governance Code, for longer deferral in the case of members of the Board of Directors and key management personnel (they are thus extended to all Key Personnel). Following the inspection of the Bank of Italy that started in July 2024, the Supervisory Authority has instructed that the Banca Sistema Group, until further review by the Bank of Italy, also based on the feedback that will be provided by the Bank, refrain from resolving or taking the following actions: i) the distribution of profits generated from the current 2024 financial year or other elements of equity; ii) the payment of the variable component of remuneration for the 2024 financial year and subsequent years. For the payment of coupons or dividends on Additional Tier 1 capital instruments, the limits on the Maximum Distributable Amount set by current capital conservation regu-lations must be observed. The deferred instalments of the variable component of remuneration relating to financial years prior to 2024 were regularly paid and, in particular, following the positive resolu-e re-Remuneration Policies.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 399 Disclosure of the fees paid to the independent auditors Reference should be made to the corresponding section of the Directors' Report in the Banca Sistema Group's consolidated financial statements, which is deemed to be fully reported here.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 400 PART L - SEGMENT REPORTING For the purposes of segment reporting as per IFRS 8, the income statement is broken down by segment as follows. Breakdown by segment as at 31 December 2025 This segment reporting includes the following divisions: Income statement (,000)Factoring DivisionRetail DivisionCorporate CentreGroup Total Net interest income adjusted 110,223 (1,818) (65) 108,340 Net fee and commission income (expense) 5,768 (622) 357 5,503 Dividends and similar income 174 53 - 227 Net trading income (expense) 23 7 - 30 Gain from sales or repurchases of financial assets/liabilities 12,806 4,916 - 17,721Net gain (loss) on other financial assets and liabilities measured at fair value through profit or loss(73) - -(73) Total income 128,972 2,551 224 131,748 Net impairment losses on loans and receivables (6,730) (848) 1(7,576) Net financial income (expense) 122,242 1,704 226 124,171Statement of Financial Position (,000)Factoring DivisionRetail DivisionCorporate CentreGroup TotalCash and cash equivalents 57,487 25,978 - 83,465Financial assets (HTS and HTCS) 826,065 373,295 - 1,199,360Loans and receivables with banks 13,105 5,928 - 19,033Loans and receivables with customers 1,846,146 642,738 - 2,488,884loans and receivables with customers - loans 1,811,694 627,169 - 2,438,863loans and receivables with customers - debt instruments 34,452 15,569 - 50,020Due to banks - - 17,715 17,715Due to customers 24,159 - 3,589,754 3,613,913
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 401 Factoring Division, which includes the business segment related to the origi-nation of trade and tax receivables with and without recourse and the man-agement and recovery of default interest. In addition, the division includes the business segment related to the origination of state-guaranteed loans to SMEs disbursed to factoring customers and the management and recovery of receivables on behalf of third parties; Retail Financing Division, which includes the business segment related to the purchase of salary- and pension-backed loans (CQS/CQP) portfolios, salary- and pension-backed loans disbursed through the direct channel and distribu-tion of third-party products; Collateralised Lending Division, which includes the business segment related to collateral-backed loans and auction house activities; Corporate Division, which includes activities related to the management of activities. In particular, the cost of funding managed in the central treasury pool is allocated to the dincome from the management of the securities portfolio and income from li-quidity management (the result of asset and liability management activities) is allocated entirely to the business divisions through a pre-defined set of drivers. The division also includes income from the management of SME loan run-offs. The secondary disclosure by geographical segment has been omitted as immaterial, since the customers are mainly concentrated in the domestic market.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 402 PART M - LEASE DISCLOSURE SECTION 1 - LESSEE Qualitative disclosures The Bank has contracts that fall within the scope of IFRS 16 attributable to the following categories: 1. Property used for business and personal purposes; 2. Cars. At the end of the year, there were 42 leases, 6 of which were property leases for a total ings used for business purposes such as offices and for personal use, have terms exceeding 12 months and typically have renewal and termination options that may be exercised by the lessor and the lessee as provided for by law. Contracts referring to other leases are long-term leases for cars which are generally used exclusively by the employees to whom they are assigned. These contracts have a maximum term of 5 years with monthly lease payments, no renewal option, and no option to purchase the asset. Contracts with a term of less than 12 months or those for which the replacement value application of the standard. Quantitative disclosures The following table provides a summary of the Statement of Financial Position items relating to leases expressed in Euro; for further information, please refer to Part B of the notes to the financial statements: (*) This is the right of use value net of accumulated depreciation. The following table provides a summary of the Income Statement items relating to leases; for further information, please refer to Part B of the notes to the financial state-ments:
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 403
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 404 SECTION 2 - LESSOR Qualitative disclosures At the reporting date, the Bank does not engage in leases as a lessor.
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STATEMENTS ON THE SEPARATE FINANCIAL STATEMENTS BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 405 STATEMENTS ON THE SEPARATE FINANCIAL STATEMENTS Statements on the separate financial statements in accordance with article 81-ter of Consob Regulation no. 11971 of 14 May 1999 as amended and supple-mented 1. The undersigned, Gianluca Garbi, CEO, and Alexander Muz, Manager in charge of financial reporting of Banca Sistema S.p.A., hereby state, having taken into account the provisions of Art. 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of 24 February 1998: the suitability as regards the characteristics of the bank and the effective application of the administrative and accounting procedures for the drafting of the separate financial statements during 2025. 2. Reference model The suitability of the administrative and accounting procedures for the drafting of the separate financial statements at 31 December 2025 was assessed based on an internal model defined by Banca Sistema S.p.A. that was designed in a manner consistent with the framework developed by the Committee of Sponsoring Organi-zations of the Treadway Commission (COSO) and the Control Objectives for IT and Related Technology (COBIT) framework, which represent the reference standards for the internal control system generally accepted on an international level. 3. Moreover, the undersigned hereby state that: 3.1 the separate financial statements: a) were drafted in accordance with the applicable international accounting stand-ards endorsed by the European Union, pursuant to Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002; b) match the accounting books and records; c) are suitable for providing a true and fair view of the financial position, results of operations and cash flows of the issuer. 3.2 results, as well as of the position of the issuer, together with a description of the main risks and uncertainties to which it is exposed. Milan, 6 March 2026 Gianluca Garbi Alexander Muz Chief Executive Officer _______________________________ Manager in charge of financial reporting ________________________________
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 406
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 407
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BANCA SISTEMA GROUP REPORTS AND FINANCIAL STATEMENTS 2025 408
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ADS/AMR/irm RC043882025AS0142 Banca Sistema S.p.A.to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014Separate financial statements as atDecember 31, 2025As disclosed by the Directors, the accompanying separate financial statements of Banca Sistema S.p.A. constitute a non-official version which is not compliant with the provisions of the Commission Delegated Regulation (EU) 2019/815.report has been translated into English solely for the convenience of international readers. Accordingly, only the original text in Italian language is authoritative.
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Tel: +39 02 58.20.10 www.bdo.it Viale Abruzzi, 94 20131 Milano Bologna, Brescia, Firenze, Genova, Milano, Napoli, Padova, Roma, Torino, Verona BDO Audit Services S.r.l. Sede Legale: Viale Abruzzi, 94 20131 Milano Capitale Sociale Euro 150.000 i.v. Codice Fiscale, Partita IVA e Registro Imprese di Milano n. 03060640160 R.E.A. Milano 1807540 BDO Audit Services S.r.l., società a responsabilità limitata, è membro di BDO International Limited, società di diritto inglese (company limited by guarantee), e fa parte della rete internazionale BDO, network di società indipendenti. Report pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 To the shareholders of Banca Sistema S.p.A. Report on the audit of the separate financial statements Opinion We have audited the separate financial statements of Banca Sistema S.p.A. (the ), which comprise the statement of financial position as at December 31, 2025, the income statement, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including material information on the accounting policies. In our opinion the separate financial statements give a true and fair view of the financial position of Banca Sistema S.p.A. as at December 31, 2025 and of its financial performance and its cash flows for the year then ended in accordance with the IFRS Accounting Standards issued by the International Accounting Standards Board and endorsed by the European Union, as well as the regulation issued to implement article 9 of Legislative Decree no. 38/05 and article 43 of Legislative Decree no. 136/15. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the responsibilities for the audit of the separate financial statements section of our report. We are independent of the bank in accordance with the ethical and independence requirements applicable in Italy to audits of financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter Significant Events After The Reporting Date Report of the financial statements in which the Bank refers to the corresponding paragraph of the management Report of the consolidated financial statements, which describes the voluntary public tender and exchange offer on all shares. In particular, the Bank informs that on January 16, 2026, CF+ SpA announced and published the offer document and the information relating to the voluntary public tender and exchange offer on all the ordinary shares of Banca Sistema S.p.A.. The offer period ended on February 27, 2026, with total acceptances reaching 70.732% of Banca Sistema S.p.A.'s share capital, corresponding to 69.047% of the related voting rights. Furthermore, following the completion of the transaction and the resulting change of control as previously announced on February 6, 2026 there are potential non-recurring expenses, estimated at financial years. The Bank outlines also that such charges were not recognised in the financial statements, as the prohibition is in force from December 20, 2024, which requires the Group not to include in its financial statements any cost or liability items relating to variable remuneration.Our opinion is not modified in respect of this matter.
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the separate financial statements of the current period. These matters were addressed in the context of our audit of the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matters Audit procedures addressing the key audit matters CLASSIFICATION AND MEASUREMENT OF RECEIVABLES WITH CUSTOMERS FOR LOANS RECOGNISED UNDER FINANCIAL ASSETS MEASURED AT AMORTISED COST Notes to the financial statements: part A: Accounting policies (A.1 General part, Section 2 - General basis of preparation); Part A Accounting policies (Information on the main items of the financial statements - at ); Part B - Information on the statement of financial position (assets measured at amortised cost Item 40); Part E- Information concerning risk and related hedging policies (Section 1 - ) Receivables with customers, recorded among financial assets measured at amortised cost as of December 31, 2025, amounting to Euro 2,489 million include loans for Euro 2,257 million, of which non-performing loans amounting to Euro 348 million. In Part A - Accounting policies, relating to the main whereas the Bank refers to the corresponding paragraph of the Notes of the consolidated financial statements where the criteria adopted for the classification and measurement of the aforementioned receivables are described, in compliance with the applicable accounting standards, as well as the arrangements for estimating expected losses and consequent value adjustments as a function of the allocation of credit exposures in the reference stages. In particular, for impaired credit exposures, the amount of value adjustments to be recognised in the Income Statement is defined on the basis of individual measurement or determined according to uniform categories and, then, individually allocated to each position, and takes account of forward-looking information and possible alternative recovery scenarios. In Part A Accounting Policies, General Part, Section 2 General basis of preparation, of the Notes the Bank illustrates that the measurement of receivables on customers is a complex estimation activity, Our main audit procedures carried out, among others, include the following activities: understanding of the internal regulations and processes put in place by the Bank, in relation to the classification, monitoring of credit quality as well as the valuation of receivables with customers for loans measured at amortised cost; analysis of the adequacy of the IT environment related to IT applications that are relevant for the classification of customers receivables; procedures for reconciling data between management systems and information reported in the financial statements; comparative analysis procedures and trend analysis of receivables with customers for loans measured at amortised cost and of the coverage ratios by comparison with the data of the previous year; analysis and understanding, including with the support of our specialists, of the valuation model adopted by the Bank for the purpose of determining net impairment losses; check, on a sample basis, of the classification of receivables with customers for performing loans measured at amortised cost based on the applicable regulatory framework, the internal regulations of the Bank as well as the applicable accounting standards; check, on a sample basis, of the classification and measurement of receivables with customers for non performing loans measured at amortised cost based on the applicable regulatory framework, the internal regulations of the Bank as well as the applicable accounting standards;
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 characterised by a high degree of uncertainty and subjectivity, in which the Bank's directors use valuation models that take into account many quantitative and qualitative elements such as, among others, the historical data relating to collections, expected cash flows and related recovery times, the existence of indicators of possible impairment losses, the assessment of any collateral and the impact of risks connected with the sectors in which the Bank's customers operate. In view of the significance of the amount of receivables with customers for loans recognised under financial assets measured at amortised cost on the financial statements and the complexity and subjectivity of the expected credit loss estimation process adopted by the Bank we considered that the classification and measurement of receivables with customers for loans recognised under financial assets measured at amortised cost represents a key matter within the audit of the financial statements of the Bank as of December 31, 2025. check of the completeness and compliance of the disclosures provided in financial statements with the applicable accounting framework and accounting standards. ACCOUNTING OF DEFAULT INTERESTS PURSUANT TO LEGISLATIVE DECREE NO. 231 OF OCTOBER 9, 2002 ON PERFORMING RECEIVABLES ACQUIRED WITHOUT RECOURSE Notes to financial statements: Part A: Accounting policies (A.1 General part, Section 2 - General basis of preparation); Part A Accounting policies (A.2, Information on the main items of the financial - ); Part B - Information on the statement of financial position (assets measured at amortised cost Item 40) Part C - Information on the income statement Section 1 Interest and similar income: breakdown item 10 The default interest and compensation fees recorded in the financial statements as of December 31, 2025, amount to approximately Euro 81 million. Default interest recorded on profit and loss in the financial year ended December 31, 2025 amounted to Euro 53.1 million. In Part A - Accounting policies, relating to the main financial statements items, paragraph whereas the Bank refers to the corresponding paragraph of the Notes of the consolidated financial statements it is described that, for some factoring receivables relating to the Public Administration and Healthcare entities, the Bank recognises the total receivable including the estimated default interest ("accrual"). Our main audit procedures carried out, among others, include the following activities: understanding of the internal regulations and processes related to the estimate of default interest on performing receivables acquired without recourse; procedures for reconciling data between management systems and information reported in the financial statements; comparative analysis procedures and analysis of the results with the management involved; analysis and understanding of the models used to estimate default interest, also with the support of our experts, and examination of the reasonableness of the main assumptions contained in them; check of the completeness and compliance of the disclosures provided in financial statements with the applicable accounting framework and accounting standards.
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 In Part A - Accounting policies, General Part, Section 2 General basis of preparation, of the Notes the Bank illustrates that the valuation of default interest pursuant to Legislative Decree no. 231 of October 9, 2002 on performing receivables acquired without recourse: estimating the recoverable amount of default interest is complex, with a high degree of uncertainty and subjectivity. Internally developed valuation models are used to determine these percentages, which take many qualitative and quantitative elements into consideration. In view of the significance of the amount of default interest recognised in the financial statements and the high level of uncertainty and subjectivity of the estimation process adopted by the Bank we have considered the accounting of default interest pursuant and compensation fees for recovery expenses to legislative decree no. 231 of October 9, 2002 on performing receivables acquired without recourse a significant key matter within the audit of the financial statements at December 31, 2025. VALUATION OF EQUITY INVESTMENT HELD IN THE CONTROLLED COMPANY KRUSO KAPITAL S.P.A. Notes to the financial statements: Part A - Accounting policies (); Part B - Information on the statement of financial position, Assets (Section 7 - investments item 70) Item 70 of the balance sheet assets of the financial statements as of December 31, 2025, includes an investment in the subsidiary Kruso Kapital S.p.A. equal to Euro 27,8 million. Part A - Accounting policies, section related to main items of the financial statements, para investments describes the measurement criteria. In particular, if there is evidence that an equity investment may be impaired, the recoverable value of said equity investment is estimated by considering the present value of future cash flows that the investment could generate, including the final disposal value of the investment. The Bank noted in the financial statements for the financial year as of December 31, 2025, a write-down equal to Euro 1.4 million relating to the adjustment of the carrying amount of the investment in Kruso Kapital S.p.A. to the disposal value calculated as the average of the market values of the last 3 months, linked to the future sale of these shares to CF+, in order to follow up on the provisions of the voluntary public tender and exchange offer on all shares. Our main audit procedures carried out, among others, include the following activities: understanding of the impairment test process implemented by the Bank also considering the conclusion of the voluntary tender and exchange offer on all ordinary shares of Banca Sistema S.p.A.; understanding of the valuation model adopted by the Bank for the purposes of carrying out the impairment test, corresponding to the realisation value calculated as the average of the market values of the last 3 months of the shares of the subsidiary Kruso Kapital S.p.A. connected with the future sale of these shares to CF+ as provided for in the voluntary tender and exchange offer on all shares; check of the completeness and compliance of the disclosures provided in financial statements with the applicable accounting framework and accounting standards.
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 In view of the significance of the amount of the investment recorded in the financial statements and the estimation process adopted by the Bank we considered that the measurement of the investment in the controlled company Kruso Kapital SpA represents a key audit matter in our audit of the Bank's financial statements as at December 31, 2025 Responsibilities of the directors and the board of statutory auditors for the separate financial statements The directors are responsible for the preparation of separate financial statements that give a true and fair view in accordance with the IFRS Accounting Standards issued by the International Accounting Standards Board and endorsed by the European Union, as well as the regulation issued to implement article 9 of Legislative Decree no. 38/05 and article 43 of Legislative Decree no. 136/15 and, within the terms established by the Italian law, for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The directors are responsible for assessing the bankappropriate use of the going concern basis in the preparation of the separate financial statements and for the adequacy of the related disclosures. The use of this basis of accounting is appropriate unless the directors believe that the conditions for liquidating the bank or ceasing operations exist, or have no realistic alternative but to do so. The board of statutory auditors is responsible for overseeing, within the terms established by the Italian law, the bank responsibilities for the audit of the separate financial statements Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISA Italia will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these separate financial statements. As part of an audit in accordance with ISA Italia, we exercise professional judgment and maintain professional skepticism throughout the audit. We also have: identified and assessed the risks of material misstatement of the separate financial statements, whether due to fraud or error, designed and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the bank evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 caccounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the bankcontinue as a going concern. If we conclude that a material uncertainty exists, we are separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our However, future events or conditions may cause the bank to cease to continue as a going concern. evaluated the overall presentation, structure and content of the separate financial statements, including the disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We have communicated with those charged with governance, as properly identified in accordance with ISA Italia, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We have also provided those charged with governance with a statement that we have complied with ethical and independence requirements applicable in Italy, and we have communicated all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, the measures taken to eliminate those threats or the safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate financial statements of the current period and are Other information communicated pursuant to article 10 of Regulation (EU) 537/2014 On Aprile 18, 2019Banca Sistema S.p.A. appointed to perform the statutory audit of its separate and consolidated financial statements for the years ending from December 31, 2019 to December 31, 2027. We declare that we did not provide prohibited non audit services, referred to article 5, paragraph 1, of Regulation (EU) 537/2014, and that we remained independent of the bank in conducting the audit. We confirm that the opinion on the separate financial statements expressed in this report is consistent with the additional report to the board of statutory auditors, in its capacity as audit committee, prepared pursuant to article 11 of the aforementioned Regulation. Report on other legal and regulatory requirements Opinion on the compliance with the provisions of Delegated Regulation (EU) 2019/815 The directors of Banca Sistema S.p.A. are responsible for the application of the provisions of Delegated Regulation (EU) 2019/815 of European Commission regarding the regulatory technical standards pertaining the electronic reporting format specifications (ESEF European Single Electronic Format) (hereinafter the separate financial statements at December 31, 2025, to be included in the annual financial report. We have performed the procedures required under Auditing Standard (SA Italia) no. 700B in order to express an opinion on the compliance of the separate financial statements at December 31, 2024 with the provisions of the Delegated Regulation. In our opinion, the separate financial statements at December 31, 2025 have been prepared in XHTML format in compliance with the provisions of Delegated Regulation (EU) 2019/815.
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Banca Sistema S.p.A. | pursuant to article 14 of Legislative Decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 Opinion and statement pursuant to article 14, paragraph 2, letters e), e-bis) and e-ter), of Legislative Decree no. 39/10 and article 123-bis, paragraph 4, of Legislative Decree no. 58/98 The directors of Banca Sistema S.p.A. on operations and a report on corporate governance and ownership structure at December 31, 2025, including their consistency with the related separate financial statements and their compliance with the applicable law. We have performed the procedures required under Auditing Standard (SA Italia) n. 720B in order to: express an opinion on the consistency of the report on operations and certain specific information presented in the report on corporate governance and ownership structure required by article 123-bis, paragraph 4, of Legislative Decree no. 58/98 with the separate financial statements; express an opinion on the compliance of the report on operations and certain specific information presented in the report on corporate governance and ownership structure required by article 123-bis, paragraph 4, of Legislative Decree no. 58/98 with the applicable law; issue a statement of any material misstatements in the report on operations and certain specific information presented in the report on corporate governance and ownership structure required by article 123-bis, paragraph 4, of Legislative Decree no. 58/98. In our opinion, the report on operations and the specific information presented in the report on corporate governance and ownership structure required by article 123-bis, paragraph 4, of Legislative Decree no. 58/98 are consistent with the bankseparate financial statements at December 31, 2025. Moreover, in our opinion, the report on operations and the specific information presented in the report on corporate governance and ownership structure required by article 123-bis, paragraph 4 of Legislative Decree no. 58/98 have been prepared in compliance with the applicable law. With reference to the statement pursuant to Article 14, paragraph 2, letter e-ter), of Legislative Decree no. 39/10 based on our knowledge and understanding of the entity and its environment obtained through our audit, we have nothing to report. Milan, March 31, 2026 BDO. Audit Services S.r.l. Signed in the original by Annarosa Disarlo Partner As disclosed by the Directors, the accompanying separate financial statements of Banca Sistema S.p.A. constitute a non-official version which is not compliant with the provisions of the Commission Delegated convenience of international readers. Accordingly, only the original text in Italian language is authoritative.