To our shareholders

The Group’s strength is in the figures. Whilst still awaiting definitive confirmation of the results at December 31^st it is clear that the outcome is good and very much in line with the industrial plan forecasts. These results are due to our staff who with dedication and professionalism have shown how, as a team, they have once again actuated the guidelines and strategic decisions of the Management.

In terms of capitalization our Bank boasts figures that rank highly in the banking system, so much so that on September 30^th the Cet 1 Ratio and the Tier 1 Ratio stood at 15,4%; the Total Capital Ratio at 18%.

The process of derisking has continued rigorously beyond the set targets and it is our intention not to desist, maintaining in the meantime high levels of coverage for impaired credit.

Our policy of territorial focus has continued with the opening in July of our Naples branch at the Azimut Group headquarters and, shortly afterwards in October, the opening of the 40th branch in Rome bringing the total number of branches to 352 in addition to the 130 “Tesorerie” (“light branches”). Also in July, our Swiss subsidiary in turn inaugurated the new branch of Manno in the Ticino Canton, the 22^nd branch which is complemented with a representative office in Verbier in the Vallese Canton. This means that the Group now operates in more than 500 premises, large and small, but each with its own mission: that of supporting the local community, first and foremost local residents and families, in their business activities and furthering the economic development of the area. This is the banking style we intend to conserve, certain of its continued relevancy today also in terms of service standards and an ever wider range of available customer options. Each sector has played its part; from the Retail Banking sector to the International Division with its own Business School, the Loans and Credit Department with a wider range of client options, our Treasury desks offering services even to small villages, the Finance and Insurance Areas with the renewed partnership with Arca Vita and Unipol which now extends to Health Care cover through UniSalute, the market leader. Last but not least our IT Division which guarantees information and data quality, always at the cutting edge of digital culture.

Careful attention to sustainability acts both as advocate and supervisor in such a way as to ensure that corporate awareness contributes to community awareness thus moving forward together as socially responsible key players towards the creation of shared values.

It is always a pleasure to receive external observations from specialized companies as we believe this scrutiny allows us to improve further. We take note of the complimentary assessments expressed regarding the BPS by the German company Statista, by the EBRD (European Bank for Reconstruction and Development) by Scope ratings, Milano Finanza in the MF Banking Awards, the London-based Standard Ethics. The BPS was awarded the prize for ‘MF Best ESG Rating Award‘. It should also be remembered that on July 27^th the Fitch Ratings agency confirmed its previous assessment-long term issuer rating BB+ with ‘stable- outlook’ considering, among other factors, satisfactory levels of capitalization, the solid liquidity profile and funding potential in addition to the concrete expectations of further improvement. On November 14^th the primary rating agency DBRS Morningstar confirmed its previous positive evaluation, investment grade BBB (low) with ‘stable’ trend. Highlighting in particular the improved asset quality, the reduced stock of impaired loans and the strengthening of core profits supported by operational efficiency and normalization of the cost of risk. All of which not only increases the Bank’s visibility but also rewards the fine work achieved.

If not a special prize, we too should award recognition to our ‘Notiziario’ which has reached its 50^th edition -a significant and encouraging milestone. Ever aware of change, it has constantly been updated to encourage discussion and reflection on a wide variety of subject matter whether it be of local interest, or important topics of scientific, historical and cultural interest as well as keeping up to date with current events. A feature on climate change entitled ‘The Changing Planet’ was published in the days before the topic became crucial, and made it possible to group together various articles in the publication ‘Habitat, una Terra per l’uomo’ which was given to all the participants of the XXXVI edition of the Sondrio International Documentary Festival held from October 29^th to November 6^th.

Several events have been organized for the younger generations, some in collaboration with local schools. Worthy of note is the memorial event organized to commemorate General Carlo Alberto Dalla Chiesa, remembering a tragic moment in our republic’s history and an example of respectful legality, courageous civil duty and a fitting tribute to the Carabinieri Regiment.

The cultural section of the 2022 Statement of Accounts of our subsidiary Banca Popolare di Sondrio (Suisse) SA hosted a monograph on Dimitri, a celebrated Swiss clown who through his travelling shows skillfully conveyed joy as well as a desire to communicate and share this harmonious experience.

Among the numerous seminars and events December 2^nd saw the conference on ‘Sviluppo e Sistema bancario’ (‘Development and the Banking System’) held in our Sala Fabio Besta Conference room in Sondrio, based on an idea by Prof. Marco Vitali. The audience greatly appreciated the excellent talks given by the well-known speakers: Prof. Stefano Zamagni e Prof. Marco Onado, Prof. Rosa Cocozza, Alfonso Scarano-engineer, Prof. Andrea Calamanti, and Giacomo Pedranzini, Prof. Gianfranco Fabi skilfully co-ordinated the speakers in his role as moderator. Our Executive Director and General Manager gave his closing speech remembering the thoughts and work of Piero Melazzini, former president and Knight of Labour and underlined the aim of the Bank to prompt critical thought and discussion on the role of the banks, in particular local banks, in the development and empowerment of the local community they serve.

As in the past, significant contributions were made to various social ends in an attempt to alleviate cases of serious hardship. In collaboration with the Pro-Valtellina Onlus foundation-the local branch of the Cariplo Foundation, with our contribution, a fund was set up to support Ukrainian refugees. Thanks to the ‘Conto Corrente Solidarietà’ (Solidarity current account) we have made contributions to the following organizations and charities: AISLA, UNICEF, AVIS, AIRC and ADMO.

Dear Shareholder, Dear Friend,

Leaving behind us a year of what can only be described as complex, to say the least, we have to move on, look towards tomorrow accept the challenges, understand and shape change.

There is no favourable wind for a ship that has no port of destination and, bearing this in mind, we have drawn up a stringent series of objectives in our ‘Industrial Plan 2022-2025 ‘Next Step’ which was approved towards the end of the last semester.

Following these directives we immediately set to work to implement them thus respecting the requirements of the market, fully aware that ecological transition is among the major challenges today, with both its pitfalls and opportunities, in order to build - necessarily - a new economic model.

As players in the digital ecosystem we are called upon to support innovation contributing to a polytechnic culture, a synthesis of humanistic, technical and scientific knowledge, distinctive values of a business culture focused on a responsible and fair economy that reinforces the prestige that ‘Made in Italy’ enjoys.

The global outlook, not only at a national and European level is fraught with uncertainty and complications yet we are confident in what we can achieve with enthusiasm and determination, defending what we believe in, encouraging discussion for growth, ever more equal, ever more inclusive for generations present and future.

As Carlo Levi once said ‘The future has an ancient heart’. We can only discover it and interpret it together.

With these thoughts and resolutions, we look forward to our forthcoming meeting in the Spring at the Annual General Meeting for which comprehensive information will follow.

Thanking you for your trust and support, we wish you a peaceful and prosperous 2023.

With best wishes,

Executive Director and General Manager
(Mario Alberto Pedranzini)

President
(Francesco Venosta)