CDP Group: approved the consolidated results for the first half of 2018 (1)

Rome, 2 August 2018

The Board of Directors of Cassa Depositi e Prestiti S.p.A.(CDP), chaired by Mr Massimo Tononi, approved the Consolidated Half-Year Report of the CDP Group at 30 June 2018 submitted by Chief Executive Officer Fabrizio Palermo.

New lending and main initiatives

During the first half of 2018, CDP Group continued to play a key role in support of the Italian economy, in line with its mandate as a National Promotional Institution.

Parent Company CDP

The contribution of the Parent Company CDP to new lending, investments and managed resources amounted to over € 8.3 billion, decreasing if compared to the same period of the previous year, which was characterized by some transactions of significant amount2. In particular, new lending was distributed as follows: € 4.2 billion for Enterprises (50% of the total); € 2.4 billion for International Expansion (29%); € 1.8 billion for the Government, P.A. and Infrastructure sector (21%); € 0.04 billion for Real Estate (0.4%)3

CDP Group

The new lending, investments and managed resources by the Group amounted to € 12.8 billion. The amount of new lending decreased compared to the same period of the previous year (-18%), for the reasons reported above (see note 2). The greatest share of resources, amounting to € 6.5 billion (51% of the total), was employed for International expansion; € 4.4 billion (34%) went to Enterprises; € 1.8 billion (14%) went to finance the Government, PA and Infrastructure sector, while the remaining € 0.1 billion was earmarked to support Real Estate (1%).

Main initiatives

During the first half of the year, CDP completed a number of initiatives for the benefit of enterprises, local authorities and local communities.

With regard to Public Entities, a new loan renegotiation programme was launched for provinces and metropolitan cities; the subsidised financing agreements for energy efficiency upgrading projects for school and university buildings have been finalised and managed, and a new ordinary lending instrument has been launched for investments relating to the targets of the 2017-2019 Three-year Plan for ICTs in the Public Administration.

With regard to Infrastructure, lending agreements were concluded in the following areas: i) renewable energies, ii) sustainable transport, with the purchase of new commuter trains, iii) completion of investments in the motorway network.

With regard to Enterprises, activity continued in synergy both with the banking channel, via financing transactions, and with institutional investors, by subscribing for bond issues. In particular, CDP carried out the first two operations of the EFSI Thematic Investment Platform under the framework of the Juncker Plan, in support of the investment plans of Italian enterprises (mainly national Mid-cap companies). With regard to equity investments, CDP subscribed for funds operating in the impact investing sector. Moreover, in collaboration with the European Commission and other National Promotional Institutions, investments in the development of ultra-broadband infrastructure were made, in order to contribute to achievement of the targets set out in the European Digital Agenda.

To boost the capacity of Financial Institutions to grant liquidity in support of the real economy, several major initiatives were undertaken, including the signing of funding agreements with the Council of Europe Development Bank (CEB), for the application of better financing terms and conditions for both post-earthquake reconstruction projects and for SMEs investing in capital goods. Moreover, within the EFSI Thematic Investment Platform for Italian SMEs, CDP has signed an agreement with the SME Fund for the issue by CDP of a counter-guarantee on a portfolio of new guarantees issued in favour of enterprises in the creative-cultural sectors.

Furthermore, during the half-year, the Group companies have provided significant support in the areas of export, international expansion and real estate. Specifically, the SACE Group has contributed with significant operations, mainly supporting the infrastructure, aviation and banking industries.

In the Real Estate sector, substantial support was provided by the funds managed by CDP Investimenti SGR via investments in particular in social housing and in the tourism sector.

Economic results and equity

Parent Company CDP4

In the 1st half of 2018, the Gross income of the Parent Company CDP rose markedly to € 1.9 billion (+21% compared to the 1st half of the previous year), while Net interest income remained largely stable at € 1.6 billion (+2.1%).

Net income for the period reached approximately € 1.4 billion, up from the same period of the previous year (+13%), mainly thanks to the increase in net commission income and to the contribution from the equity investment portfolio.

As at 30 June 2018, the Total assets stood at approximately € 367 billion, essentially stable compared to the end of the previous year (-0.2%):

• The stock of Cash and cash equivalents fell to € 163 billion (-7% from 31 December 2017), mainly as a result of a decline in short-term investments;
• Loans to customers and banks totalled € 101 billion largely in line with the previous year’s closing figure (-1%);
• Debt securities rose to € 58 billion (+21% with respect to 31 December 2017), due to the new purchases in the Held to Collect (HTC) portfolio;
• Equity investments and shares totalled € 33 billion, slightly up compared to 31 December 2017 (+2%).

With regard to balance sheet liabilities:

• Total funding was by and large unchanged at over € 340 billion, including i) about € 254 billion of Postal funding (+0.3%); ii) € 45 billion of Bank funding (+25%), mainly generated by repurchase agreements; iii) about € 23 billion of Funding from customers, down on the 31 December 2017 figure (-33%); iv) about € 19 billion of Bond funding, which grew with respect to the closing figure of 2017 (+8%), also thanks to the success of the placement of new issues under the Debt Issuance Programme (DIP);
• Equity stood at approximately € 24 billion, slightly down compared with the end of the previous year (-3%)5

CDP Group6

In the 1st half of 2018, the Group’s profitability improved, with Gross income rising to € 1.6 billion (+12% on the first half of 2017), driven primarily by the Parent Company’s net interest income and the measurement of equity investments using the equity method of accounting.

Overall, the Group’s Net income was positive at € 2.2 billion7, albeit down from the same period of the previous year (-10%), of which € 1.4 billion pertaining to the Parent Company (-8%).

As at 30 June 2018, the Group’s Total assets stood at € 420 billion, largely unchanged from the previous year’s closing balance (+0.1% compared to 31 December 2017).

Total equity amounted to € 35.4 billion, slightly down from the end of the previous year (€ 35.9 billion), of which € 22.7 billion pertaining to the Group (€ 23.1 billion at the end of 2017)8, mainly due to the distribution of dividends, which was only partially offset by net income for the period.

Please note that the Independent Auditors are completing a limited auditing of the condensed consolidated half-year financial report as at 30 June 2018. The reclassified financial statements set out in the Annexes are not subject to auditing by the Independent Auditors.

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The Manager in charge with preparing the company's financial reports, Fabrizio Palermo, declares pursuant to Article 154-bis, paragraph 2, of the Consolidated Law on Finance that the accounting information contained in this press release corresponds to documentary evidence and the accounting books and records.

The 2018 Half-Year Financial Report, together with the certification pursuant to Article 154-bis of the Consolidated Law on Finance and the Independent Auditors’ Report will be available to the public at the Company's registered office, on the CDP website and in any other manner provided for by the applicable law, within the legal time limits.