STATEMENT OF FINANCIAL POSITION INCOME STATEMENT …

1 STATEMENT OF FINANCIAL POSITIONINCOME STATEMENTANNUAL REPORTINTESA SANPAOLOBANK LUXEMBOURG ..4 BOARD OF DIRECTORS ..5 EXTERNAL AUDITOR ..5 AUTHORIZED MANAGEMENT-MANAGEMENT BOARD .. 5 EXECUTIVE COMMITTEE .. 5 AUDIT COMMITTEE .. 5 OWNERSHIP STRUCTURE ..6 ORGANISATIONAL CHART ..6 BOARD OF DIRECTORS REPORT .. 7 FINANCIALSTATEMENTS .. 10 STATEMENT OF FINANCIAL POSITION ..11 INCOME STATEMENT ..13 STATEMENT OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOME ..14 STATEMEMNT OF CHANGES IN EQUITY ..15 STATEMENT OF CASH FLOWS ..16 INDEPENDENT AUDITOR SREPORT ..75 FINANCIALSTATEMENTS .. 10 STATEMENT OF FINANCIAL POSITION ..11 INCOME STATEMENT ..13 STATEMENT OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOME .

2 14 STATEMEMNT OF CHANGES IN EQUITY ..15 STATEMENT OF CASH FLOWS ..16 NOTES TO THE FINANCIAL STATEMENTS ..17 INTESA SAN PAOLOBANK LUXEMBOURGANNUAL REPORT 5 BOARD OF DIRECTORS CHAIRMAN OF THE BOARD Mr Fr d ric GENETVICE-CHAIRMAN Mr Walter AMBROGIDIRECTORSMr Ferdinando ANGELETTI (Managing Director & CEO)Mr Massimo TORCHIANA (Deputy CEO)Mr Marco BERTOTTIMr Andrea FARAGALLI ZENOBIMr Paul HELMINGERMr Francesco INTROZZIMr Arthur PHILIPPEMr Christian SCHAACKEXECUTIVE COMMITTEE CHAIRMANMr Ferdinando ANGELETTI MEMBERSMr Francesco INTROZZIMr Massimo TORCHIANAPERMANENT INVITEESMr Cristiano PATALOCCHIMr Paolo Enrico PERNICEAUDIT COMMITTEE CHAIRMANMr Arthur PHILIPPEMEMBERSMr Dario BERTONCINIMr Marco BERTOTTIMr Francesco CICCARELLIMr Christian SCHAACKPERMANENT INVITEESMr Stefano BUSCAGLIAMs Silvia RUMIEXTERNAL AUDITORKPMG.

3 LuxembourgAUTHORIZED MANAGEMENT- MANAGEMENT BOARD MANAGING DIRECTOR & CEOMr Ferdinando ANGELETTIDEPUTY CEOMr Massimo TORCHIANACHIEF FINANCIAL OFFICERMr Paolo Enrico PERNICECHIEF RISK & COMPLIANCE OFFICER & CORPORATE AFFAIRSMr Cristiano PATALOCCHIas of 31st December 20176 ANNUAL REPORTOWNERSHIP STRUCTURE (as of 31st December 2017)ORGANISATIONAL CHART (as of 31st December 2017)Board of DirectorsExecutive CommitteeAudit CommitteeAmsterdam BranchR. Farquhar- ThomsonLegalA. SimmsHuman Resources & OrganizationS. ContinoCorporate & FINANCIAL InstitutionsA. GreppiWealth Management & Private BankingF. Angeletti ( ) FINANCIAL MarketsM. GiubergiaAdministration & OperationsP. Pernice (*)CFOC hief Risk & Compliance Officer & Corporate AffairsC.

4 Patalocchi (*)CROH uman ResourcesS. Contino ( )OrganizationS. Contino ( ) FINANCIAL InstitutionsA. Greppi ( )Corporate Prod. DesksA. Greppi ( )International Network & Global IndustriesA. Greppi ( )Italian DeskL. ChecchinatoLuxGest & DeskF. MolaroInvestment OfficersP. SquillanteCIOB onds DeskR. DurettoEquities DeskF. UlrichProprietary Portfolio DeskM. Giubergia ( )MM & FX DeskG. WandivinitSales DeskM. BlaskovitsIT & PMM. FerrariClients DocumentationC. DucrocqOperationsD. CastellaniFinanceS. PiovesanCorporate Affairs & General SecretariatC. Patalocchi ( )Compliance OfficerS. SolitoCCORisk ManagementM. PirardManaging Director & CEOF. Angeletti (*)Management BoardInternal AuditF. Tefiku( ) = Ad Interim(*) Members of Authorized Management/Management Board approved by Sanpaolo Group SpAIntesa Sanpaolo Holding International Intesa Sanpaolo Bank Luxembourg Branch Credit Analysis, Administration & MonitoringP.

5 EliaSecretariat Legal Entity Branch100% 100% 100% LuxGest Asset Management REPORT 7 BOARD OF DIRECTORS REPORT (as at 31st December 2017)DEVELOPMENT OF THE ACTIVITYThe year 2017 started with the inauguration of Donald Trump as 45th US president vowing to follow an America first policy, and marked some difference in the relationship with key international powers like Russia and China or less aligned countries like North Korea and Iran. European scenario was also dominated by important political events, first with the launch of Brexit process on March 29th, followed by political elections in the key EU countries of France, UK and Germany, with at times rather unexpected outcomes, and by the Catalonia independence referendum of October 1st and the subsequent suspension of autonomy followed by December local the world tensions were also visible in several areas, with North Korea intensification of nuclear tests, crisis in Venezuela and severance of diplomatic ties between Qatar and its Arab this backdrop of political uncertainties.

6 The economic scenario was however characterized by rather constant positive trends on both Equity and Fixed INCOME markets around the world, which recorded the best performance in many years sustained by an ideal scenario of synchronized global growth , with no major economy in contraction for the first time since 2008 and a world GDP advancing in the region of European economy also started to show signs of strength, with positive data on exports and capex, which helped to push the Eur exchange rate back to the levels of end remained abundant during the year with short term interest rates as well as most Eurozone Government and investment grade Corporate Bonds yields staying well below generalized high liquidity and low interest rate environment, in particular in Europe, continued to put pressure on the ability of the banking sector to generate acceptable returns, while the increased attention of regulators towards treatment of non-performing loans required increased attention to capital requirements.

7 Despite the elements of weakness and risk indicated above, during 2017 Intesa Sanpaolo Bank Luxembourg (the Bank ) achieved once again a positive performance, supported by the sizable capital increase and the implementation of its renewed business model concluded in 2017, which allowed to surpass the results achieved in the previous year. More in detail at the end of 2017 the Bank successfully concluded the implementation of its 2014-2017 business plan with the finalization of few residual activities and further promoted a significant growth of its corporate lending activity. As a result the Bank achieved a more diversified balance sheet structure with a significantly reduced concentration on intra-group transactions as well as a larger contribution from the Corporate and FINANCIAL Institutions division to the overall revenues of the Bank, while at the same time maintaining and promoting its private/wealth management and its FINANCIAL markets GOVERNANCEThe Bank is 100% owned by Intesa Sanpaolo Holding International , Luxembourg is itself fully owned by Intesa Sanpaolo ( the Parent Company ).

8 As Parent Company of the Intesa Sanpaolo Banking Group, the Parent Company is responsible, pursuant to the Italian Consolidated Law on Banking, for the management and coordination of the companies belonging to the Banking Group and issues rules as required for the implementation of Bank of Italy instructions in the interest of the Group s stability. The Group s subsidiaries must comply with such the purpose of application of such rules, the Parent Company has designed reporting procedures between it and its subsidiaries, through which the latter Sanpaolo Bank Luxembourg duly complies with the requirements and provisions set forth by its Parent Company, especially in terms of assessing effective and transparent FINANCIAL Bank is an issuer under a EUR 70 billion medium term note issuance programme on the Luxembourg Stock Exchange under the guarantee of the Parent Company.

9 The notes issued under this programme by the Bank are of a minimum quota of EUR 100,000. Information on corporate governance and ownership structures in Italy is required under art. 123-bis of the Italian Consolidated Law on Banking. In compliance with this law, the Parent Company produces a separate report on this matter which can be viewed in the Governance section of the Intesa Sanpaolo website, at The Intesa Sanpaolo Banking Group has also adopted a Corporate Governance Code available on the Borsa Italiana website (under Borsa Italiana/Rules/ Corporate Governance).In Luxembourg, the Bank has chosen Luxembourg as its origin member country and therefore applies CSSF circular 12/552 as subsequently Bank has drawn up a Corporate Governance Policy in accordance with the CSSF Circular 12/552 (as amended)

10 , which requires institutions to set out in writing governance central administration arrangements and the internal controls CONTROLThe risk management process, developed in connection with local requirements and Parent Company guidelines, consists in the identification, analysis and mitigation of major risks of the Bank (compliance and reputational risk, market risks, liquidity risk, credit risk and operational risk). It includes different mitigating controls and ANNUAL REPORTThe Assets/Liabilities Committee monitors the FINANCIAL risks incurred by the Bank. The Committee performs the supervision of the Bank s investment strategies, assets/liabilities mismatching, interest rate risk, liquidity risk and the liquidity policy.