Directors and Officers of Credito Valtellinese Board of Directors Chairman *Francesco Guicciardi Deputy Chairmen *Salvatore Vitali Vincenzo Merlino Managing Director *Giovanni De Censi Directors Bassano Baroni Franco Bettini *Michele Colombo *Mario Cotelli Pier Domenico De Filippis Emilio Rigamonti Marco Santi Giuliano Zuccoli *Members of the Executive Committee
Board of Statutory Auditors Chairman Angelo Palma Acting Auditors Roberto Campidori Fabiano Garbellini Alternate Auditors Aldo Cottica Alfonso Rapella
Board of Arbitrators Acting Arbitrators Emilio Berbenni Francesco Bertini Italo Vittorio Lambertenghi Alternate Auditors Ettore Negri Fedele Pozzoli
General Management General Manager Renato Bartesaghi Deputy General Manager Miro Fiordi Deputy General Manager Franco Sala
Independent Auditing Firm Reconta Ernst & Young S.p.A.
CONSOLIDATED BALANCE SHEET (in thousands of Euro)
Assets 30/06/2002 31/12/2001 30/06/2001
10 Cash and deposits with central banks and post offices 70.913 67.608 46.490
20 Treasury bills and similar securities eligible for refinancing with central banks 456.818 478.838 566.798
30 Due from banks: 319.519 537.741 421.075 a) repayable on demand 60.340 125.667 135.569 b) other 259.179 412.074 285.506
40 Loans to customers 6.059.244 5.830.174 5.374.274 including: - loan using public funds administered 82 86 99
50 Bonds and other debt securities: 975.210 1.058.092 1.095.058 a) issued by public bodies 786.389 759.592 828.862 b) issued by banks: 131.319 261.977 228.005 including: - own securities 11.988 11.395 21.410 c) issued by financial institutions 44.938 18.384 20.654 d) other issuers 12.564 18.139 17.537
60 Shares, quotas and other equities 186.300 111.111 143.803
70 Equity investments 69.691 64.433 49.154 a) carried at equity 49.382 22.062 2.772 b) other 20.309 42.371 46.382
90 Goodwill arising on consolidation 112.878 90.024 88.163
100 Goodwill arising on application of the equity method 735 789 777
110 Intangible fixed assets 28.146 28.394 21.692 including: - start-up costs 601 1.646 51 - goodwill 3.190 2.917 3.187
120 Tangible fixed assets 235.381 216.268 208.276 including: - assets pending financial leasing 40.051 30.806 20.285
140 Own shares 5.144 1.197 1.781 (nominal value Euro 1,897 thousand)
150 Other assets 341.671 418.791 340.963
160 Accrued income and prepayments: 66.890 91.074 78.810 a) accrued income 57.533 82.306 68.375 b) prepayments 9.357 8.768 10.435 including: - issue discounts on securities 867 1.089 1.318
Total assets 8.928.540 8.994.534 8.437.114
- 8 - Liabilities and shareholders' equity 30/06/2002 31/12/2001 30/06/2001
10 Due to banks: 397.666 673.533 660.059 a) repayable on demand 43.875 84.331 50.587 b) time deposits or with notice period 353.791 589.202 609.472
20 Due to customers: 5.237.424 4.895.188 4.418.057 a) repayable on demand 4.322.600 4.022.127 3.573.432 b) time deposits or with notice period 914.824 873.061 844.625
30 Securities issued 1.972.105 1.897.528 1.930.115 a) bonds 1.710.003 1.632.085 1.701.048 b) certificates of deposit 194.343 206.937 184.337 c) other securities 67.759 58.506 44.730
40 Public funds administered 82 86 99
50 Other liabilities 335.914 389.259 307.408
60 Accrued expenses and deferred income: 57.574 80.175 78.624 a) accrued expenses 35.721 57.232 56.337 b) deferred income 21.853 22.943 22.287
70 Provisions for termination indemnities 55.764 54.668 55.732
80 Provisions for risks and charges: 72.153 130.110 103.037 a) pensions and similar commitments 28.850 77.960 76.550 b) taxation 23.744 34.724 14.877 c) other 19.559 17.426 11.610
90 Reserve for possible loan losses 1.568 1.568 1.567
100 Reserve for general banking risks 29.283 27.420 24.904
110 Subordinated liabilities 207.758 263.774 265.556
120 Negative goodwill on consolidation 15.525 20.700 21.117
130 Negative goodwill on application of the equity method 5.752 193 162
140 Minority interests 151.554 179.504 191.582
150 Share capital 160.255 150.355 155.155
160 Share premium reserve 168.031 157.306 157.306
170 Reserves: 54.187 51.964 61.286 a) legal reserve 32.625 30.060 30.058 b) reserve for own shares 5.144 1.197 1.781 c) statutory reserves 16.418 17.572 25.986 d) other reserves - 3.135 3.461
200 Net profit (loss) for the period 5.945 21.203 5.348
Total liabilities and shareholders' equity 8.928.540 8.994.534 8.437.114
GUARANTEES AND COMMITMENTS
Items 30/06/2002 31/12/2001 30/06/2001
10 Guarantees given 625.098 563.952 555.066 including: - acceptances 7.100 6.997 9.242 - other guarantees 617.998 556.955 545.824
20 Commitments 235.222 244.084 221.746
- 9 - CONSOLIDATED INCOME STATEMENT (in Euro)
Items 1st half 2002 1st half 2001 2001
10 Interest income and similar revenues 220.536 213.035 450.764 including from: - loans to customers 180.654 162.076 351.910 - debt securities 30.552 40.361 77.375
20 Interest expense and similar charges - 95.941 - 107.969 - 216.058 including on: - deposits from customers - 49.703 - 52.605 - 105.210 - securities issued - 37.709 - 40.079 - 83.190
30 Dividends and other revenues: 2.593 2.075 2.760 a) from shares, quotas and other equities 573 237 291 b) from equity investments 2.020 1.838 2.469
40 Commission income 62.919 52.510 112.964
50 Commission expense - 5.355 - 4.379 - 9.948
60 Profits (losses) on financial transactions 1.366 404 8.315
70 Other operating income 24.070 22.156 48.366
80 Administrative expenses: - 143.125 - 118.296 - 256.320 a) payroll and related costs - 81.890 - 67.042 - 144.338 including: - wages and salaries - 52.575 - 44.811 - 93.093 - social security charges - 16.141 - 12.528 - 28.788 - termination indemnities - 4.386 - 4.029 - 9.343 - pensions and similar commitments - 2.634 - 1.553 - 4.713 b) other administrative expenses - 61.235 - 51.254 - 111.982
90 Value adjustments to tangible and intangible fixed assets - 21.886 - 16.801 - 40.277
100 Provisions for risks and charges - 2.605 - 911 - 3.801
110 Other operating expenses - 4.000 - 6.494 - 13.605
120 Value adjustments to loans and provisions for guarantees and commitments - 20.740 - 18.656 - 38.261
130 Writeback of adjustments to loans and provisions for guarantees and commitments 9.047 7.898 15.579
150 Value adjustments to financial fixed assets - 505 - 14 - 1.397
160 Writeback of adjustments to financial fixed assets 39 - -
170 Income from investments carried at equity 2.487 221 1.351
180 Profit (loss) on operating activities 28.900 24.779 60.432
190 Extraordinary income 6.390 2.939 23.666
200 Extraordinary charges - 6.226 - 2.605 - 5.106
210 Extraordinary income, net 164 334 18.560
230 Change in reserve for general banking risks - 1.863 - 976 - 3.492
240 Income taxes for the period - 19.170 - 14.125 - 36.461
250 Profit (loss) for the year pertaining to minority interests - 2.086 - 4.664 - 17.836
260 Net profit (loss) for the period 5.945 5.348 21.203
- 9 - BALANCE SHEET (in Euro)
Assets 30/06/2002 31/12/2001 30/06/2001
10 Cash and deposits with central banks and post offices 22.386.734 24.322.338 18.365.671
20 Treasury bills and similar securities eligible for refinancing with central banks 170.313.938 171.439.459 153.864.860
30 Due from banks: 1.338.700.430 1.388.738.740 1.164.959.644 a) repayable on demand 334.239.582 384.741.822 146.526.038 b) other 1.004.460.848 1.003.996.918 1.018.433.606
40 Loans to customers 2.147.083.663 2.043.587.994 1.938.342.831 including: - loan using public funds administered 81.523 86.406 98.904
50 Bonds and other debt securities: 652.842.077 686.125.095 730.853.181 a) issued by public bodies 213.131.228 192.977.122 238.259.477 b) issued by banks: 410.660.284 473.855.800 469.895.355 including: - own securities 2.021.939 2.123.763 8.419.743 c) issued by financial institutions 23.175.429 10.529.105 13.235.816 d) other issuers 5.875.136 8.763.068 9.462.533
60 Shares, quotas and other equities 73.767.959 47.791.301 57.166.291
70 Equity investments 29.271.365 29.645.874 36.558.338
80 Investments in Group companies 418.763.231 330.383.278 328.640.154
90 Intangible fixed assets 9.157.324 10.045.775 9.676.792 including: - goodwill 7.014.678 7.659.396 7.377.305
100 Tangible fixed assets 359.322.115 305.435.579 242.388.331 including: - leased assets 245.073.042 204.127.775 151.097.066 - assets pending financial leasing 36.584.478 26.835.600 15.793.974
120 Own shares 5.143.799 1.197.311 1.780.520 (nominal value 1,896,681)
130 Other assets 141.144.142 183.252.274 121.831.091
140 Accrued income and prepayments: 46.820.804 68.092.109 52.680.924 a) accrued income 42.789.940 63.579.153 48.452.796 b) prepayments 4.030.864 4.512.956 4.228.128 including: - issue discounts on securities 738.012 928.057 1.124.632
Total assets 5.414.717.581 5.290.057.127 4.857.108.628
12 Liabilities and shareholders' equity 30/06/2002 31/12/2001 30/06/2001
10 Due to banks: 1.825.547.256 1.763.466.541 1.464.842.494 a) repayable on demand 754.897.344 444.676.997 188.805.663 b) time deposits or with notice period 1.070.649.912 1.318.789.544 1.276.036.831
20 Due to customers: 1.648.025.018 1.524.796.581 1.392.310.560 a) repayable on demand 1.293.509.288 1.243.671.121 1.097.812.217 b) time deposits or with notice period 354.515.730 281.125.460 294.498.343
30 Securities issued 1.084.301.179 1.050.441.439 1.101.174.645 a) bonds 990.239.181 954.065.411 1.018.050.504 b) certificates of deposit 67.636.362 67.095.899 59.907.899 c) other securities 26.425.636 29.280.129 23.216.242
40 Public funds administered 81.523 86.406 98.904
50 Other liabilities 146.064.131 172.918.077 134.592.920
60 Accrued expenses and deferred income: 43.869.966 57.508.531 49.855.107 a) accrued expenses 34.091.349 47.184.499 42.623.409 b) deferred income 9.778.617 10.324.032 7.231.698
70 Provisions for termination indemnities 16.610.096 16.035.837 15.878.890
80 Provisions for risks and charges: 40.985.374 73.013.599 63.289.658 a) pensions and similar commitments 17.776.923 45.558.182 45.506.236 b) taxation 18.738.069 23.320.212 14.322.279 c) other 4.470.382 4.135.205 3.461.143
90 Reserve for possible loan losses 4.551.329 4.575.678 4.305.276
100 Reserve for general banking risks 44.157.065 44.157.065 44.157.065
110 Subordinated liabilities 124.159.809 167.145.309 167.145.309
120 Share capital 160.254.639 150.354.567 155.154.567
130 Share premium reserve 168.030.909 157.305.831 157.305.831
140 Reserves: 67.451.964 61.188.595 70.165.687 a) legal reserve 32.625.039 30.060.010 30.058.288 b) reserve for own shares 5.143.799 1.197.311 1.780.520 c) statutory reserves 18.225.359 18.473.507 26.887.547 d) other reserves 11.457.767 11.457.767 11.439.332
150 Revaluation reserves 22.312.910 22.312.910 22.312.910
170 Net profit (loss) for the period 18.314.413 24.750.161 14.518.805
Total liabilities and shareholders' equity 5.414.717.581 5.290.057.127 4.857.108.628
GUARANTEES AND COMMITMENTS
Items 30/06/2002 31/12/2001 30/06/2001 10 Guarantees given 377.406.577 326.323.705 317.462.115 including: - acceptances 2.464.425 2.042.524 1.880.620 - other guarantees 374.942.152 324.281.181 315.581.495
20 Commitments 135.442.737 140.819.976 106.290.746
13 INCOME STATEMENT (in Euro)
Items 1st half 2002 1st half 2001 2001
10 Interest income and similar revenues 103.815.374 114.199.291 227.976.635 including from: - loans to customers 63.771.584 64.747.105 131.452.626 - debt securities 16.572.260 22.764.445 42.977.421
20 Interest expense and similar charges - 66.439.657 - 79.999.271 - 155.560.478 including on: - deposits from customers - 15.819.052 - 19.136.706 - 36.303.891 - securities issued - 21.624.430 - 26.102.379 - 50.764.555
30 Dividends and other revenues: 23.856.749 15.720.959 16.149.026 a) from shares, quotas and other equities 428.443 171.411 174.389 b) from equity investments 3.690.742 1.092.728 1.517.817 c) from investments in Group companies 19.737.564 14.456.820 14.456.820
40 Commission income 21.842.749 20.858.910 42.927.689
50 Commission expense - 5.795.474 - 5.289.428 - 11.050.791
60 Profits (losses) on financial transactions - 11.966 238.434 2.260.141
70 Other operating income 49.804.014 34.945.523 77.032.721
80 Administrative expenses: - 49.163.526 - 47.896.328 - 93.322.721 a) payroll and related costs - 25.107.197 - 24.070.374 - 46.115.938 including: - wages and salaries - 14.955.983 - 14.921.921 - 27.803.310 - social security charges - 5.389.642 - 5.381.010 - 9.374.709 - termination indemnities - 1.177.615 - 1.437.512 - 3.277.937 - pensions and similar commitments - 1.472.903 - 1.198.891 - 2.703.369 b) other administrative expenses - 24.056.329 - 23.825.954 - 47.206.783
90 Value adjustments to tangible and intangible fixed assets - 36.493.627 - 23.734.813 - 53.756.807
100 Provisions for risks and charges - 603.700 - 201.117 - 738.455
110 Other operating expenses - 668.820 - 335.470 - 579.926
120 Value adjustments to loans and provisions for guarantees and commitments - 10.992.507 - 9.545.802 - 16.245.247
130 Writeback of adjustments to loans and provisions for guarantees and commitments 5.938.788 4.630.400 8.039.314
140 Provisions for possible loan losses - 596.897 - 485.270 - 963.644
170 Profit (loss) on operating activities 34.491.500 23.106.018 42.167.457
180 Extraordinary income 3.060.823 2.067.427 4.843.166
190 Extraordinary charges - 4.517.506 - 1.630.237 - 2.308.563
200 Extraordinary income, net - 1.456.683 437.190 2.534.603
220 Income taxes for the period - 14.720.404 - 9.024.403 - 19.951.899
230 Net profit (loss) for the period 18.314.413 14.518.805 24.750.161
12 A. Information on operations during the first half of 2002
1. Group activities The Bank has carried out banking activities by availing of an organizational structure comprising: six territorial banks, a bank operating within the sector of specialized finance, a finance company and three operating companies who carry out complementary activities. Credito Valtellinese, the Parent Bank, pursues the mission for the development of relationships with the socio-economic entities in the areas in which it operates. In order to provide a complete view of the equity and operating situation of the Credito Valtellinese Banking Group, the representation of the structure of the Group as of 30 June 2002, a brief summary of the macro-economic and lending scenario, the strategic guidelines, the corporate policies and the consolidated balance sheet-income statement values of the Group are shown below. Subsequently, a statement of the most significant data of the various companies in the Group will be presented for the purpose of highlighting the equity and financial situation.
Structure of the Credito Valtellinese Banking Group
(1) As from 1 July, included within the Area of Specialized Banks and Finance Companies.
As far as the Group’s structure as of 30 June 2002 was concerned, when compared with 31 December 2001, changes included the formation of Credito Siciliano, a bank deriving from the merger by incorporation of Banca Popolare Santa Venera and Leasingroup Sicilia into Banca Regionale Sant’Angelo, a company already forming part of the Credito Valtellinese Banking Group. The new entity is 39.42% owned directly by the Parent Bank and 35.79% by Credito Artigiano. The other main changes concern the increase by Credito Valtellinese of the equity investments in Credito Artigiano (+ 6.03%) and in Bancaperta (+ 8.88%) as well as the acquisition, again by the Parent Bank, of a direct equity investment amounting to 7.90% in Banca dell’Artigianato e dell’Industria in which Credito Artigiano already holds an interest. Lastly, Istituto Centrale delle Banche Popolari has been included among the companies carried at equity.
The financial statements of the companies indicated in the above table and those relating to Provalt S.p.A. and Leo Finanziaria Lombarda S.r.l. are consolidated together with those of the Parent Bank, Credito Valtellinese, on a line-by-line basis. The following companies have been carried at equity: - the equity investment in Ripoval S.p.A., concessionary agent for tax collection services in the province of Sondrio, with registered offices in Sondrio; Credito Valtellinese holds 50% of the share capital of this company which totals Euro 2,582,300; - the 40% interest held in the capital of Global Assistance S.p.A., an insurance company whose share capital totals Euro 2,583,000; - the equity investment in Global Assicurazioni S.p.A., an insurance company, in which Bancaperta holds a 40% interest in the share capital of Euro 100,000; - the investment Crypto S.p.A., with registered offices in Sondrio and share capital of Euro 100,000, owned via Bankadati S.I. (who holds a 15% interest) and Bancaperta (who holds a 15% interest); - the equity investment in Finanziaria Canova S.p.A., with registered offices in Milan and share capital amounting to Euro 8,267,000, in which Provalt holds an interest of 45% in the share capital; - the investment Istituto Centrale delle Banche Popolari S.p.A., with registered offices in Milan and share capital of Euro 33,148,239, of which Credito Valtellinese avails of 20% of the voting rights exercisable at ordinary shareholders’ meetings.
2. Operating context in which the Group operates With the aim of facilitating an overall evaluation of the corporate results, a brief summary of a general nature is presented below, which outlines the macro-economic and lending context in which the Group has operated. This will provide back-up to the overall evaluation of the results.
General economic scenario The world economic scenario was characterized by a significant misalignment between the macro-economic performances of the main areas - in constant, albeit, slight improvement - and the performances of the financial and share markets, on which uncertainty and instability prevail. In the United States, the Gross Domestic Product should grow during 2002 by 2.2%, instead of by the 2.1% estimated previously, and in 2003 by 2.6%, instead of by 3.4%. During May, the growth in industrial production continued, with an increase equating to 0.2%; a not dissimilar performance was registered by the index concerning the utilization of the production capacity which for some months has indicated a recovery. The data concerning the inclination of the climate of confidence of the economic operators does not offer a clear and univocal picture and confirms an irregular performance which is influenced by the permanent terrorist threat and the news concerning the financial situation and the governance of important American companies. According to recent Eurostat information, GDP for 2002 in the Euro area is up by 1.1%. During June, the exchange market distinguished itself by the heavy appreciation of the Euro against the Dollar which, during the first few days of June, touched the point of parity. Within the average monthly values of June, the quotation of the Euro came to 0.955 compared with the dollar and to 117.80 compared with the Yen.
Lending activities 1
During the first six months of 2002, a slight acceleration was witnessed in the dynamics of deposits denominated in Euro pertaining to Italian banks, comprising savings deposits, current accounts, certificates of deposit and bonds, amounting to Euro 852 billion, up 9.69% compared with the figures for June 2001. The sum total of loans disbursed by the Italian banking system came to Euro 937.5 billion, signalling a net flow of new loans of approximately Euro 48 billion compared with June 2001. The dynamics of loans appear to be sustained mainly by the component with a protracted maturity rather than that over the short term. In June 2002, in fact, the tendential growth rates of these components of bank loans came to 9.7% for the medium/long-term segment and just 1.1% for the short-term segment. Loan quality has improved. As a point of fact, the net non-performing loans/total loans ratio in April 2002 stood at a level of 2.08%, down with respect to the 2.67% reported in April 2001. Confirmation of the persistence of high loan quality is also provided by the performance of the net non-performing loans/capital for supervisory purposes ratio, which in April 2002 came to 11.4% down from 14.9% in the same period in the previous year. On the basis of ABI data, in June 2002 the average rate on loans remained at values similar to those of the previous month, standing at 5.78%; compared with June 2001, when it disclosed 6.61%, this rate registered a drop of over three quarters of a percentage point. The average rate on deposits came to 1.47%, down 57 basis points compared with the figure at the end of June 2001. In June 2002, the differential between the average rate of interest-bearing funds denominated "in Euro and in EU-12 currencies" and the average rate on ordinary customer deposits "in Euro and in EU-12 currencies " for Italy came to 3.15 percentage points, down 13 basis points compared with the 3.28% in June 2001.
1 Source — Italian Bankers’ Association (ABI): monthly analysis on the total of the banks with short and medium/long-term deposits.
3. Strategic lines and corporate policies of the Group
The salient events in which the Credito Valtellinese Banking Group was involved during the first six months of 2002, are described below.
Credito Siciliano
During the first half of 2002, Credito Siciliano was formed, a bank created from the merger by incorporation of Banca Popolare Santa Venera and Leasingroup Sicilia into Banca Regionale Sant’Angelo. By means of the merger, the Group realized part of the restructuring project targeted at the creation of a single regional bank in Sicily, with a widespread presence throughout the territory. The new bank, which possesses a significant portion of the regional market, counts on an equity of Euro 178.6 million, deposits of over Euro 2,700 million, 850 employees and 200 thousand customers; these dimensions make it one of the leading banking entities in Sicily, capable of giving a boost to the economy of the island as well as responding to the expectations expressed by the local communities. The operation will involve an increase in value for the shareholders thanks to the achievement of important synergies and economies of scale. The new organizational structure, in fact, permits Credito Siciliano to concentrate on the management of its core business, while the specialist and operating functions are handled by means of the Group companies: Bancaperta, for asset management, e-banking, bank-insurance, corporate finance and private banking activities; Deltas for the functions of planning and auditing, marketing and quality; Bankadati for computerised information services and Stelline for property services. The creation of the new bank has represented just the first part of the reorganization project for the presence of the Credito Valtellinese Banking Group in Sicily. The second stage of the project, accomplished in July 2002, anticipated the acquisition by Credito Siciliano of the entire distribution network of Cassa San Giacomo, comprising 15 agencies. The integration of the territorial networks of the three banks has resulted in the territorial network of the new bank numbering 130 branches. The Board of Directors of Credito Siciliano is made up as follows: Giovanni De Censi (Chairman), Giovanni Continella (Deputy Chairman), Luciano Camagni, Mario Cotelli, Miro Fiordi, Antonio Leonardi and Carlo Negrini (Directors). The latter has taken on the office of Managing Director. The Board of Statutory Auditors has also been redefined and the members now include: Giovanni Licciardi (Chairman), Angelo Garavaglia and Carlo Sorci (Acting Auditors), Matteo Diasio and Alessandra Foti (Alternate Auditors). The Board of Directors of Credito Siciliano has also appointed Francesco Giacobbi as General Manager, Giuseppe Contarino as substitute Deputy Manager and Renato Merlino as Deputy General Manager.
Cassa San Giacomo
Within the process for the reorganization of the presence of the Group in Sicily, during July 2002, the transfer of the network of branches of Cassa San Giacomo to Credito Siciliano was accomplished; this operation concerns 15 agencies spread throughout the provinces of Catania (11), Enna (1), Ragusa (1) and Siracusa (2). Cassa San Giacomo, who has changed its mission, despite retaining its original banking nature and thus remaining subject to the related discipline, has abandoned the traditional activities of lending in order to undertake the role of specialized bank in the areas of the handling of disputes, the administration of leasing contracts and legal consultancy. Cassa San Giacomo therefore became a highly specialized singular centre which has absorbed all the professionalism and know how required for the purposes of optimising the management of the areas of operations indicated. Besides the transfer of the branches, the project in question has anticipated the adaptation of the equity structure of the bank in order to render it sufficiently endowed with equity for the acquisition of the doubtful loans of the Group banks.
Rileno S.p.A.
During July 2002, Credito Valtellinese finalized the purchase from Deutsche Bank S.p.A. of all the shares in Rileno S.p.A., concessionary agent of the national service for tax collection in the provinces of Como and Lecco. Rileno operates via 7 branches in an area which covers 253 municipalities with 848,000 inhabitants and during the course of 2001, it realized revenues for around Euro 17 million and net profit of Euro 1.7 million. The main activities carried out by Rileno are directed at supporting the tax activities, of asset management and collection in favour of public bodies (Government, Regions, Provinces, Municipalities and other Bodies). The Company is also entrusted to: - undertake the cash management service of the local bodies; - exercise debt recovery activities. The volume of collections made by Rileno for the year 2001 amounted to around Euro 899 million, in particular: - Euro 533 million for VV.UU and SAC (forms F23 and F24); - Euro 138 million for tax roles; - Euro 75 million for municipal taxes; - Euro 153 million for local property tax. These figures place the company, within the scenario of tax collection, in third place in Lombardy and tenth place in Italy. The operation for the acquisition of the new concessions of Rileno falls within an extensive project for enhancing and expanding the tax collection activities in the provinces of Sondrio, Lecco and Como. Furthermore, Rileno, due to the know how acquired, the specialist resources it avails of and the IT organization, is in a position to ensure a qualified and penetrating presence in the area of the intermediation of payments between the public and private sector. The acquisition complies with the need to extend the presence, the know-how and the abilities matured by the Group in the sector of “Public Bodies”. The Board of Directors of Rileno is made up as follows: Gino Del Marco (Chairman), Giovanni Colombo, Giuseppe Mazzucconi, Franco Sala and Matteo Diasio (Directors). The latter also covers the role of Managing Director. The General Manager of the company is Aurelio Ghelardoni.
Aperta Sicav
The Credito Valtellinese Banking Group has invested the skills acquired over the years by Bancaperta by means of the formation, during May, of Aperta Sicav, a variable capital investment company disciplined by Luxembourg law. The initiative has made it possible to thus achieve another important result in the area of managed savings after the successes in the first half of the 1980s of the launch of stock and share-based asset management, in the 1990s of asset management in funds in collaboration with Julius Baer and the recent approval shown by the customers for the innovative insurance and multi-brand asset management. Aperta Sicav is a company subject to Luxembourg law “harmonized” with the matters established concerning EC Directives and presents the classic breakdown into “sections” (umbrella-Sicav) typical of this type of investment body. The operational management of the sections is divided up between the Credito Valtellinese Banking Group (advisor Bancaperta), UBS AG of Zurich (advisor Aperta Gestioni Patrimoniali SA and Colombo Gestioni Patrimoniali SA of Lugano) and Banque Privée Edmond De Rothschild SA. The shares of the new Sicav will be issued in the asset management lines of the Credito Valtellinese Banking Group and in the future may be placed directly with the customer on a retail basis.
Share capital increase
During February 2002, the share capital increase transaction associated with the maturity of the first portion of the “Credito Valtellinese 2% 1999-2004, index-linked, convertible, cum warrant subordinated” bond issue, was concluded. The portion maturing amounted to Euro 42,985 million, half of which – equating to Euro 21,492 million – is convertible into shares. At the end of the operation, Euro 20,625 million was converted, equating to 95.96% of the convertible portion. The full success of the operation for the conversion into shares made the issue of 3,300,024 new shares possible involving the consequent increase of the share capital from Euro 150,355 to Euro 160,255 million. The number of shares thus came to 53,418,213. Mention should also be made of the interesting yield of the bonds in question; on the basis of the revaluations of the financial indices taken as reference, the redemption price paid to the bondholders who exercised the conversion faculty came to Euro 107.37 gross for every Euro 100 of bond capital maturing.
Equity investments
During the first six-months of 2002, Credito Valtellinese increased its interest in Credito Artigiano by 6.03%, rising from 55% at the end of 2001 to 61.03% as of 30 June 2002. This increase is attributable to the following operations: - termination of the reciprocal equity interest agreements, signed in 1996, with the Cattolica Group; in particular, Credito Valtellinese acquired from Cattolica Assicurazioni S.p.A. 5% of the share capital of Credito Artigiano in addition to a nominal Euro 4.95 million in convertible shares relating to the “Credito Artigiano 1999-2004” bonded loan while the Cattolica Group acquired from Credito Valtellinese 5% of the share capital of Risparmio & Previdenza S.p.A.; - conversion, which took place in January 2002, of the “Credito Artigiano 1999-2004” bonds and purchases made on the market of shares in the subsidiary which increased the investment in Credito Artigiano by a further 1.03%. During the six-month period, in order to conclude the project for the reorganization of the equity investments of the Credito Valtellinese Banking Group in Sicily, the Parent Bank acquired from Banca Popolare Sant’Angelo S.c. a r.l. a total of 999,900 shares in Banca Regionale Sant’Angelo S.p.A., equating to 22.43% of the share capital, for an overall total of Euro 35,373,462. Following the transaction, Credito Valtellinese, by means of 22.43%, and the subsidiary Credito Artigiano by means of 76.94%, gained control of the share capital of Banca Regionale Sant’Angelo S.p.A. and together with Banca Popolare Santa Venera, total control of Leasingroup Sicilia S.p.A.. During the same period, the interest holding of Credito Valtellinese in Banca dell’Artigianato e dell’Industria S.p.A. increased by 3.53%, following the exercise of the 2nd tranche of the “B.A.I. TV 2000-2005 convertible subordinated” bond, and now comes to 7.9%. This operation follows the conversion of the 1st tranche which took place during the first quarter of 2002, which took the equity investment of the Parent Bank in B.A.I. to 4.37%. Consequent to the conversion of the bonds and the integral exercise of the associated warrants transferred by Credito Artigiano, 936,640 new B.A.I. shares were issued, which took the share capital of the subsidiary from Euro 20,350,049 to Euro 25,183,112. On conclusion of the operation, Credito Artigiano reduced its equity investments from 54.52% to 48.85% During the six-month period, the Parent Bank further increased its investment in the share capital of Istituto Centrale delle Banche Popolari, thereby gaining control of 20% (18.9% at the end of December 2001).
Banc@perta product line
During the first half of 2002, the Group further extended the offers and services available via Internet. Those subscribing to the “banc@perta service” can avail of new, absolutely innovative information and appliance functions within the Italian panorama of the home-banking services: “Credito” and “Posizione Globale” . The new functions of the “Credito” area permit the users of the service to monitor their loan situation. In particular, the customers can view the position, forward requests for new loans via Internet, vary those already outstanding and consult the information concerning the status of the loan, the repayment plan and the list of the movements. “Posizione Globale” offers the customer a concise view of its dealings with reference both to the assets (funds available) and liabilities (loans and utilizations), also displaying the positions held by one individual customer with various Group banks. Furthermore, the function allows the users to trace back from a concise display to a more analytical view including the detail of the individual dealings. The offer of services linked to Conto@perto, the on-line current account offered by Bancaperta, has also been enhanced further during the period, with the introduction of the “Tax and contributions payment” function which allows customers to carry out payment transactions concerning the F24 collection form via Internet and to link-up directly to the Ministry of Finance site. As of 30 June 2002, the “banc@perta line” had 106,393 customers registering growth of 21.53%, compared with the previous 87,545 customers at the end of December 2001. As far as the e-commerce sector is concerned, the @pertacity portal concluded its first year of activities satisfactorily. At the end of June, in fact, the number of bodies, associations, service and commercial companies as well as cottage industries and entrepreneurs who had opened a space on the Group’s portal came to 380
Evolution of the commercial structure of the Group
During the first half of 2002, the Group was involved both on the front of consolidating the corporate perimeter by means of the formation of Credito Siciliano, and in the activities for the expansion of its territorial network by means of the opening of seven new branches, which took the total number of branches to 301. The Parent Bank, Credito Valtellinese, installed itself in Missaglia (Lecco) and opened agency 5 in Como. Credito Artigiano inaugurated agency 18 in Milan and agency 12 in Rome, as well as the branch of Campi Bisenzio (Florence). Banca Popolare di Rho opened a second town agency. There were also new openings for Banca Regionale Sant’Angelo, now Credito Siciliano, which during February opened a new branch in Palermo.
Commercial activities
With regard to the commercial offer, the Group, in order to facilitate adherence to the activities for the repatriation and regularization of capital held abroad, known as a “tax shelter”, has drawn up an “ad hoc” package of products and services, managed via Bancaperta. During the first half of 2002, the Group further strengthened the technical collaboration with external partners, with which to realize innovative types of financial products. Within the sphere of long-term finance products offered to private customers, a new mortgage loan for home buyers has been introduced, conceived in order to offer loans with a duration of up to 25 years and capable of guaranteeing the maximum flexibility in the identification of a repayment plan more compliant with the various needs. Bank-insurance products offered to customers include: - “FIN+A (Insurance on loans)”: a product which is split into three specific insurance policies reserved for customers who are holders of a loan with a scheduled repayment plan. The three guarantees of FIN+A anticipate the coverage of the residual liability of the loan itself in the event of the decease of the contracting party, permanent invalidity from illness or accident and fire of the property covered by the loan. The product also anticipates premiums of a contained amount thanks to the progressive adjustment of the sums insured; - “Global Index Serie 11” and “Global Index Serie 12”: new issues of index – linked policies associated with a basket of shares which anticipate a minimum guaranteed yield on maturity, as well as the possibility of benefiting from an additional revaluation percentage linked to the performance of a basket of reference shares; - “Linea Protezione Personale”: the assistance and insurance services reserved for the customers of the Group have been extended by means of the offer of new benefits. The additional guarantees anticipate numerous medical and paramedical services, a series of conventions and agreements (particularly in the tourism sphere) and coverage in the event of theft, bag-snatching or robbery. Credito Valtellinese and Credito Artigiano have also renewed the agreement in existence with the Lombardy Region and Finlombarda S.p.A. as far as measures are concerned associated with several regional laws in Lombardy. In particular, shareholders are informed of Law 36/88 which anticipates forms of concession of a financial nature aimed at encouraging the development of activities of tourist interest, as well as the up-grading and modernization of the reception structures, and Law 1/99 which, by contrast, disciplines the granting of loans against investment programmes aimed at encouraging and providing incentive for the launch of new entrepreneurial activities.
Quality certification
During the first six-months of 2002, the annual surveillance checks carried out by the body CISQCERT at the Group companies who in the last few years have obtained quality certification, were concluded with a positive outcome. Credito Valtellinese, Credito Artigiano, Bancaperta, Bankadati S.I. and Stelline S.I. saw their respective certifications confirmed for the year 2002 as well as for the the first four-month period of 2003. On this occasion, the Group obtained the following results: 1. the changeover of the certification to the dictates of the new version of the international standards: ISO 9001:2000; a version which focuses on concepts of efficiency, efficacy, continual improvement and customer satisfaction; 2. attainment, for the territorial banks, of the certification of the Finance Process presently not considered; 3. the option of the transfer of the certification obtained by Banca Popolare Santa Venera to the newly-formed Credito Siciliano. Furthermore, during February, @pertacity.com, the electronic commerce portal of the Credito Valtellinese Banking Group, obtained the Qweb quality mark: Qweb is the certification system set up by the CISQ Federation together with Certicommerce (association furthered by the Italian Union of the Chambers of Commerce), which has the purpose of guaranteeing, for all those individuals who purchase on-line, that the certified suppliers respect the principles which regulate electronic commerce. The entities present within the portal are numerous, and are accurately selected according to strict parameters of reliability and honesty so as to guarantee the customer a high quality service.
Rating
During the month of February, Credito Valtellinese obtained confirmation of the rating previously assigned to it by the agency Fitch Ratings. The appraisal of BBB+ confirmed the satisfactory funding capacity of the Parent Bank and the capitalization which appears to be adequate with regard to the nature and the risks undertaken by the bank. Besides confirmation of the rating assigned by Fitch Ratings, Credito Valtellinese and Bancaperta also obtained the financial evaluation carried out by Moody’s, a rating agency. The Parent Bank was assigned a rating of Baa1 which places it among the best European regional banking groups. Moody’s emphasise the following as positive elements: the presence on the local market with elevated and constant shares, a high interest margin which can be sustained over time, a clear Internet strategy and a diversification of the sources of income. The rating agency has also assigned Bancaperta with the same rating allocated to the Parent Bank, in that it is the centre of all the problems linked to the virtual bank, the cash management and negotiation activities, asset management, Corporate Finance, Private Banking and Bank-insurance. The achievement of these important certifications of reliability give the Group Banks greater visibility with regard to the investors, especially international investors, thereby permitting easier access to the markets.
The ordinary shareholders’ meeting directly via web
At the time of the last ordinary shareholders’ meeting, Credito Valtellinese offered the possibility of following the presentations and reports concerning the 2001 financial statements directly via Internet. During the session transmitted via “web” it was possible to witness in real time the illustration of the reports and the financial statement data by linking up to the Internet site of Credito Valtellinese (www.creval.it). By means of this new opportunity, Credito Valtellinese wished to further promote wider participation in the main moments of corporate life.
Pension fund of the Group employees
During February, the Commission for the Supervision of Pension Funds (COVIP) approved the statute of the “Pension fund for the employees of the Credito Valtellinese Banking Group” and arranged for the enrolment in the specific register. The new Fund, first in the context of supplementary welfare in Italy due to its specific peculiarities, adopted the recent stance of the COVIP on banking groups and will allow all the employees to avail of a modern and flexible welfare solution complete with additional benefits, endowed with equity resources which will permit a financial and administrative management which is even more efficient than in the past. The new entity will see a significant increase in the participants and the assets managed and will permit all the employees of the Group to choose between four investment lines structured according to different investment policies and risk profiles
4. Performance of operations during the first half of 2002
By way of confirmation of the growth trend, the six-month period just ended also closed on a positive note for the Credito Valtellinese Banking Group.
RECLASSIFIED BALANCE SHEET (in thousands of Euro)
30/06/2002 31/12/2001 30/06/2001 Change % (1) ASSETS Cash and deposits with central banks and post offices 70.913 67.608 46.490 4,89% Due from banks 319.519 537.741 421.075 -40,58% Loans to customers 6.059.244 5.830.174 5.374.274 3,93% Dealing securities 1.555.146 1.569.329 1.723.433 -0,90% Fixed assets - securities 63.182 78.712 82.226 -19,73% - equity investments 69.691 64.433 49.154 8,16% - tangible and intangible assets 263.527 244.662 229.968 7,71% Goodwill arising on consolidation and application of the equity method 113.613 90.813 88.940 25,11% Other asset items 413.705 511.062 421.554 -19,05% Total assets 8.928.540 8.994.534 8.437.114 -0,73%
LIABILITIES AND SHAREHOLDERS' EQUITY Due to banks 397.666 673.533 660.059 -40,96% Direct deposits from customers (2) 7.209.611 6.792.802 6.348.271 6,14% Other liability items 393.488 469.434 386.032 -16,18% Reserve for specific use 129.485 186.346 160.336 -30,51% Subordinated liabilities 207.758 263.774 265.556 -21,24% Minority interests 151.554 179.504 191.582 -15,57% Shareholders' equity 438.978 429.141 425.278 2,29% Total liabilities and shareholders' equity 8.928.540 8.994.534 8.437.114 -0,73%
GUARANTEES AND COMMITMENTS Guarantees given 625.098 563.952 555.066 10,84% Commitments 235.222 244.084 221.746 -3,63%
(1) Calculated with respect to the previous year. (2) Includes the items 20 "Due to customers; 30 "Securities issued"; 40 "Public funds administered".
Funding
As of 30 June 2002, direct deposits from customers 2 came to Euro 7,417.4 million, up 5.1% compared with the figure of Euro 7,056.6 million reported in December 2001 and 12.1% compared with the figure of Euro 6,613.8 million in June 2001, thus confirming the expansive trend already highlighted in the previous accounting periods. In particular, the component “Due to customers”, which includes current accounts, savings deposits and repurchase agreements, reported growth of 7% compared with the figure in December 2001 amounting to Euro 5,237.4 million; the component “Securities issued”, which includes bonds, certificates of deposit and other securities, reached a balance of Euro 1,972.1 million, an increase of 3.9%. Direct deposits from customers also includes the item subordinated loans, which amounting to Euro 207.8 million at the end of the six-month period, disclosed a decrease of 21.2% when compared with the end of December 2001. Indirect deposits of the Group, comprising assets managed, customer securities deposited and under administration, investment funds and insurance savings, amounted to Euro 8,008.6 million at year end, registering growth of 3.4% when compared with the Euro 7,744 million as of 31 December 2001. From an analysis of its components, it emerges that custody came to Euro 4,049,6 million, managed savings to Euro 3,396.1 million and insurance savings to Euro 562.9 million. Total administered assets of the Group — formed by the direct and indirect deposits of customers — amounts to Euro 15,426 million, up 4.2% compared with the balance of Euro 14,801 million reported at the end of December 2001.
2 Includes the items: 20 “Due to customers”; 30 “Securities issued”; 40 “Public funds administered”; 110 “Subordinated liabilities”.
Loans
Cash loans granted to customers during the first six months of 2002 amounted to Euro 6,059.2 million, up 3.9% when compared with 31 December 2001. the growth in loans granted was accompanied by constant attention towards the solvency of the counterparts, also in relation to the sector of economic activities. The sum total of net non-performing loans at the end of the six-month period came to Euro 227.6 million. The quality of the loans, represented by the ratio of non-performing loans to total loans to customers, stood at 3.76%, compared with 3.83% in the previous year. As far as the loan concentration was concerned, there were no “Significant exposures”, in other words positions equal to or greater than 10% of the Capital for supervisory purposes.
Portfolio securities
The Group’s securities portfolio 3 amounted to Euro 1,618.3 million, compared with Euro 1,648 million at the end of 2001 (- 1.8%). Dealing securities came to Euro 1,555.1 million while the investment component (around Euro 63.2 million) represented 3.9% of the entire aggregate. The portfolio is invested in treasury bills and similar securities (item 20) as well as bonds and other debt securities (item 50) for an amount equating to Euro 1,432 million, which represents 88.5% of the entire portfolio. This percentage stands at 98.6% taking into consideration the SICAV shares which invest in bonds and Government securities (recorded under item 60 for an amount equating to Euro 164 million).
3 The aggregate “Portfolio securities” includes the items: 20 “Treasury bills and similar securities eligible for refinancing with central banks”; 50 “Bonds and other debt securities”; 60 “Shares, quotas and other equities”.
Other asset and liability items
Shareholders are informed that the decrease in reserves for specific destination reported as of 30 June 2002, compared with 31 December 2001, is mainly due to the establishment of the Pension fund for employees of the Group which has led to the payment to said subject of the related contributions. Consequently, among the assets, steps were taken to reverse the portion which represented the endowment equity of the same.
Shareholders’ equity
At the end of June 2002, the net consolidated shareholders’ equity 4 of the Group came to Euro 439 million as against Euro 429.1 million at the end of 2001, disclosing an increase of 2.3%, mainly attributable to the following transactions: - exercise by the holders of the right to convert the “Credito Valtellinese 2% 1999-2004” bond, which led to the issue of 3,300,024 shares for a total amount of Euro 20.6 million; - distribution of dividends and charitable donations totalling Euro 18.9 million; - consolidated result for the period of Euro 5.9 million.
4 The consolidated shareholders equity comprises the items: 100 “Reserve for general banking risks”; 120 “Negative goodwill on consolidation”; 130 “Negative goodwill on application of the equity method”; 150 “Share capital”; 160 “Share premium reserve”; 170 “Reserves (sub-items a; b; c; d)”; 200 “Net profit (loss) for the period”.
Economic operations of the Credito Valtellinese Banking Group
RECLASSIFIED INCOME STATEMENT (in thousands of Euro)
1st half 2002 1st half 2001 2001 Change % (1)
Interest income and similar revenues 220.536 213.035 450.764 3,52% Interest expense and similar charges - 95.941 - 107.969 - 216.058 -11,14%
INTEREST MARGIN 124.595 105.066 234.706 18,59% Profit from companies carried at equity and dividends 5.080 2.296 4.111 121,25% Net commission 57.564 48.131 103.016 19,60% Profits (losses) on financial transactions 1.366 404 8.315 238,12% Other net revenues 20.070 15.662 34.761 28,14% NET INTEREST AND OTHER BANKING INCOME 208.675 171.559 384.909 21,63% Administrative expenses - 143.125 - 118.296 - 256.320 20,99% a) payroll and related costs - 81.890 - 67.042 - 144.338 22,15% b) other administrative expenses - 61.235 - 51.254 - 111.982 19,47% Value adjustments to tangible and intangible fixed assets - 21.886 - 16.801 - 40.277 30,27% GROSS OPERATING RESULT 43.664 36.462 88.312 19,75% Net value adjustments to loans and provisions - 11.693 - 10.758 - 22.682 8,69% Provisions for risks and charges - 2.605 - 911 - 3.801 185,95% Net value adjustments to financial fixed assets - 466 - 14 - 1.397 3228,57% PROFIT FROM OPERATING ACTIVITIES 28.900 24.779 60.432 16,63% Extraordinary income (loss) 164 334 18.560 -50,90% GROSS PROFIT 29.064 25.113 78.992 15,73% Income taxes for the period - 19.170 - 14.125 - 36.461 35,72% Change in the reserve for general banking risks - 1.863 - 976 - 3.492 90,88% Profit for the period pertaining to minority interests - 2.086 - 4.664 - 17.836 -55,27% 5.945 Net profit (loss) for the period 5.348 21.203 11,16%
(1) Calculated with respect to the same period in the previous year.
From an analysis of the consolidated income statement data referring to the first six months of 2002, compared with the corresponding previous period (which did not include the economic results of Banca Regionale Sant’Angelo, now Credito Siciliano), it emerges that the interest margin has risen by 18.6% to Euro 124.6 million. The growth in the margin was favoured by the positive performance of volumes intermediated. Interest income came to Euro 220.5 million (+ 3.5%), while interest expense stood at Euro 95.9 million (- 11.1%). Net interest and other banking income rose 21.6% to Euro 208.7 million, compared with Euro 171.6 million during the first six months of 2001. Analyzing the revenue items, it can be seen how net commission has disclosed growth of 19.6%, passing from Euro 48.1 million in the first six months of 2001 to Euro 57.6 million in the corresponding period in 2002. The uncertainty concerning the performance of the markets has not affected the item “Profits (losses) on financial transactions” which reported an increase from Euro 404 thousand in the first six months of 2001 to Euro 1.4 million in the same period during the current year. Administrative expenses rose from Euro 118.3 million during the first half of 2001 to Euro 143.1 million (+ 21%), an increase deriving from the inclusion within the Group of Banca Regionale Sant’Angelo, now Credito Siciliano. In detail, payroll and related costs came to Euro 81.9 million, compared with Euro 67 million during the first six months of 2001, disclosing a change of 22.1%. Other administrative expenses reported growth of 19.5%, passing from Euro 51.3 million to Euro 61.2 million. Value adjustments to tangible and intangible fixed assets rose from Euro 16.8 million to Euro 21.9 million, registering an increase of 30.3% attributable in part to the inclusion within the scope of consolidation of Banca Regionale Sant’Angelo, now Credito Siciliano and the increase of the equity investment in Credito Artigiano. Consequent to the performances of the afore-mentioned items, the operating result amounted to Euro 43.7 million, up 19.7% compared with the same period in the previous year, which came to around Euro 36.5 million. Overall, allowances made to safeguard against lending risk, provision for risks and charges and net value adjustments on financial fixed assets, led to the charging to the income statement of Euro 14.8 million for the first six months of 2002. The amount is divided up among the following income statement items: - Euro 11.7 million for net value adjustments to loans and provisions for guarantees and commitments; - Euro 2.6 million for provisions against risks and charges; - Euro 466 thousand for net value adjustments to financial fixed assets. The Group ended the first six months of 2002 with a consolidated result from operating activities of Euro 28.9 million, up 16.6% compared with the corresponding figure reported in the same period last year, amounting to Euro 24.8 million. Taking into account an extraordinary net result of Euro 164 thousand, taxation of Euro 19.2 million, the change in the reserve for general banking risks for Euro 1.9 million and Euro 2.1 million of net profit pertaining to minority interests, the consolidated result for the first six months of 2002 disclosed net profit of Euro 5.9 million, compared with Euro 5.3 million in the same period during 2001 (+ 11.2%).
Development of the operating structure of the Credito Valtellinese Banking Group
During the six-month period, the territorial expansion of the Group continued; in this connection, mention is made of the opening of seven new branches during the period. The banking network as of 30 June 2002 numbered a good 301 units. In addition to the channel represented by the banking counters, the Group avails of alternative channels: 335 automatic counters, 8,528 Points of Sale, 4,983 remote banking stations, 106,393 Internet contracts, and 13,000 Phone Banking contracts. The Group workforce at the end of June 2002 numbered 2,843 employees, up 25 units when compared with 31 December 2001.
Outlook for operations
The first six months ended with results in line with forecasts and it is believed that also during the second half of the year, the pre-established objectives can be achieved. The positive performance of the volumes dealt with and the constant growth in income from services represents the basis for a further rise in the financial viability of the ordinary operations of the Group during the second part of the year. Significant events which occurred after 30 June 2002 included the start-up of the second stage of the Cassa San Giacomo project, which anticipated the transfer of its network of branches to Credito Siciliano. Furthermore, during July the transaction for the acquisition by Credito Valtellinese of all the shares in Rileno S.p.A. from Deutsche Bank was concluded, a transaction described in detailed in section 3 Strategic Guidelines and Corporate Policies of the Group. Lastly, indication is made of the cancellation of 1 million shares of Credito Valtellinese equating to Euro 3 million in terms of par value.
5. Information on the operations and on the activities of the companies in the Credito Valtellinese Banking Group
The following paragraphs contain an analysis of the performance of the individual results of each company belonging to the Group.
Credito Valtellinese
The first half of 2002 closed for the Parent Bank, Credito Valtellinese, with an improvement in the economic and equity results. With reference to volumes administered, at the end of June 2002 direct deposits from customers came to Euro 2,856.6 million, (+ 7.4% compared with the Euro 2,660.7 million reported as of June 2001) and up 4.2% compared with the balance of Euro 2,742.5 million at the end of December 2001. The indirect component, amounting to Euro 3,247.1 million, disclosed a slight decrease of 1.3% compared with Euro 3,291 million at the end of 2001. In particular, the component comprising managed assets, came to Euro 1,182 million, registering a decrease of 3.4% when compared with the balance at the end of December 2001, while direct investments in mutual funds reaching a level of Euro 146.1 million, reported a drop of 6.8%. Growth registered in insurance savings forms was good (+ 20%), deriving from the placement of innovative insurance products. Overall, funding of the Parent Bank thus reached Euro 6,103.7 million at the end of June 2002, up 1.1% compared with the end of December 2001. Loans to customers came to Euro 2,147,1 million, thus disclosing an increase of 10.8% compared with June 2001 and of 5.1% when compared with Euro 2,043.6 million at the end of December 2001. Within the sphere of credit items with customers, those referring to net non-performing positions came to Euro 44.3 million, disclosing contained growth with respect to Euro 43.4 million as of December 2001. The ratio of non-performing loans to total loans remained essentially stable, passing from 1.93% as of 31 December 2001 to 1.85% as of 30 June 2002. Passing to an analysis of the data of the individual reclassified income statement, the interest margin achieved an increase of 9.3% when compared with the first six months of 2001, amounting to Euro 37.4 million. Revenues from services, the sum total of dividends, net commission and other net proceeds, disclosed a positive performance during the period (+ 35.1% compared with the corresponding figure of the last period), totalling Euro 89 million, thanks to the positive contribution of leasing charges. Despite the particularly unfavourable performance of the financial markets, the prudent management of the risk on the securities portfolio made it possible to contain the negative incidence of “losses on financial transactions”. As a result of the afore-mentioned performances, net interest and other banking income, which summarizes the ordinary activities, amounted to Euro 126.4 million involving an increase of 26% when compared with the figure of Euro 100.3 million during the first six months of 2001. Administrative expenses during the first half of 2002 came to Euro 49.2 million (up 2.6% when compared with the same period last year). In particular, payroll and related costs amounting to Euro 25.1 million, reported growth of 4.3%, while other administrative expenses remained essentially stable compared with the first six months of last year, at Euro 24.1 million. Value adjustments to tangible and intangible fixed assets during the period under review came to Euro 36.5 million, disclosing an increase of 53.8%, this latter result is linked to the greater incidence of the amortization charged on leasing activities. The operating result came to Euro 40.7 million, as against Euro 28.7 million in the period January-June 2001, disclosing an increase of 41.9%. Profit from operating activities, which summarizes the results achieved by the items of core business operations, amounted to Euro 34.5 million, up 49.3% when compared with the balance of Euro 23.1 million in the first half of 2001. The balance of extraordinary operations (- Euro 1.5 million) and taxation pertaining to the period (Euro 14.7 million) led to net profit for the period of Euro 18.3 million, up on the first half of 2001 by 26.1%. At the end of June 2002, the Parent Bank availed of 83 operative branches.
A statement illustrating the reconciliation between the shareholders’ equity of the Parent Bank and the consolidated figure is presented below.
RECONCILIATION OF THE SHAREHOLDERS' EQUITY AND NET RESULTS OF THE PARENT BANK AND THE CORRESPONDING GROUP BALANCES (in thousands of Euro)
30/06/2002 31/12/2001 Shareholders' of which: net Shareholders' of which: Net equity results equity results Balances as per Parent Bank financial statements 480.522 18.314 460.070 24.750
Results of equity investments reported in their statutory financial statements - consolidated line-by-line 8.688 8.688 19.032 19.032 - carried at equity 2.127 2.127 1.012 1.012
Amortization of positive differences - relating to the current year (8.754) (8.754) (14.347) (14.347)
- relating to previous years (84.114) - (69.767) -
Differences with respect to the book values, relating to: - companies consolidated line-by-line 43.583 42.083 - companies carried at equity 5.724 166
Adjustment for dividends received during the year:
- relating to prior year profits - (13.580) - (9.701)
- relating to current year profits - - (44) (44)
Other consolidation adjustments: - reversal of items exclusively for tax purposes 4.437 55 4.423 392 - elimination of infraGroup gains and losses (13.235) (905) (13.487) 109
Balances as per consolidated financial statements 438.978 5.945 429.141 21.203
Credito Artigiano
The balance sheet and income statement data for the first half of 2002 confirm the growth trend highlighted in the past. Direct deposits, comprising Amounts due to customers, Securities issued and Subordinated liabilities, reached the Euro 2,720.7 million mark disclosing an increase of 14.6% when compared with the Euro 2,374,4 million reported as of 30 June 2001 and 5.6% if compared with the figure of Euro 2,575.2 million at the end of 2001. Indirect deposits came to Euro 3,509.2 million, essentially stable with respect to the figure at the end of December 2001. Managed savings came to Euro 1,126.2 million, up 1% compared with the end of December 2001, while insurance-related savings, thanks to the placement on the network of innovative bank-insurance products, amounted to Euro 222 million, an increase of 22.6% on December 2001. Overall funding, the sum total of both direct and indirect deposits totalled Euro 6,229.9 million (+ 2.3%). By way of proof of the policy supporting the local economy, loans to customers confirmed sustained performance and came to Euro 2,187.8 million, involving an increase of 15.2% when compared with June 2001, whilst being essentially stable with respect to the end of 2001. As far as the income statement items are concerned, the positive performance of the interest margin emerges, which reached the Euro 40.8 million mark, disclosing an increase of 1.9% on an annual basis. The margin from services 5 presents an increase of 2.1% when compared with the first six months of 2001, passing from Euro 26.6 million to Euro 27.1 million. The negative effect linked to the performance of the financial markets which reduced profits on financial transactions (Euro 0.4 million as against Euro 1.5 million) was more than compensated by the growth effect registered by dividends (+ 18.4%), by net commission (+ 7%) and by other net proceeds (+ 4.1%). As a consequence of the afore-mentioned performances, net interest and other banking income came to Euro 68 million, up 2% compared with the first six months of 2001. Structure costs 6, in total amounting to Euro 49.3 million, increased by 1% on an annual basis; in detail, payroll and related costs rose 4.5%, while other administrative expenses and value adjustments to tangible and intangible fixed assets fell respectively by 1.4% and 2.4%. The gross operating result came to Euro 18.7 million involving an increase of 4.6% when compared with the same period last year, disclosing growth deriving from revenue performance which was significantly better than that of costs. The result from operating activities came to Euro 13.4 million compared with Euro 12.3 million during the same period in 2001, disclosing growth of 8.5%. Net profit, after having made provision for taxation due for the period, rose 7% and amounted to Euro 7.9 million. At the end of June 2002, Credito Artigiano availed of 79 branches.
5 The margin from services comprises: 30 “Dividends and other revenues”; 40 “Commission income”; 50 “Commission expense”; 60 “Profits (Losses) on financial transactions”; 70 “Other operating income”; 110 “Other operating expenses”. 6 Structure costs include : 80 “Administrative expenses”; 90 “Value adjustments on tangible and intangible fixed assets”.
Credito Siciliano
During the first six months of 2002, Credito Siciliano was formed following the merger by incorporation of Banca Popolare Santa Venera and Leasingroup into Banca Regionale Sant’Angelo. Credito Siciliano, which has become the sole reference bank of the Credito Valtellinese Banking Group in Sicily - operating via 130 branches and 850 employees- presents its first six-month accounting period. The balance sheet and income statement components as of 30 June 2002 are therefore compared with the data taken from the pro-forma financial statements formed as a result of the aggregate of the financial statements of the companies involved in the merger transaction. Total deposits amounting to Euro 2,484 million (+ 0.9% compared with December 2001), include Euro 1,609.3 million of direct deposits (- 2% compared with December 2001) and Euro 875 million in indirect deposits (+ 6.8% compared with 31 December 2001). Loans increased, witnessing the activities carried out by the bank for the economic development of the region, and came to Euro 1,111.3 million disclosing a 5.1% increase since December 2001. The improvement in the quality of the loans granted was confirmed by the fact that the ratio of non-performing loans to total loans dropped slightly. The income statement data reveals that the interest margin, Euro 29.7 million, disclosed a reduction of 9.2% when compared with the first six months of 2001. Net interest and other banking income, influenced by the positive contribution of financial activities and other net revenues, passed from Euro 61.7 million to Euro 62.8 million (+ 1.8%). Operating costs, amounting to Euro 44.3 million, underwent slight growth (+ 2.5%). Within this aggregate, payroll and related costs (Euro 22.6 million) underwent a decrease of 4.1%, while other administrative expenses (Euro 21.7 million) reported growth of 10.4%. The gross operating result came to Euro 3.9 million (- 45.5%). Profit on operating activities, net of amortization and depreciation, adjustments and provisions, came to Euro 854 thousand. The balance of extraordinary items (+ Euro 355 thousand), utilization of the Reserve for general banking risks (Euro 600 thousand) and taxation for the period (Euro 1.8 million) contribute towards determining net profit for the period of Euro 9 thousand. At the end of June 2002, Credito Siciliano availed of 115 branches, which rose to 130 during July following the acquisition of the 15 branches of Cassa San Giacomo.
Bancaperta
Bancaperta, the Group’s web bank, also represents the Group unitary stronghold for financial subjects, with particular reference to asset management, portfolio management, private banking, corporate finance and bank-insurance products. The positions managed as of 30 June 2002 came to 46,566 for a total amount managed of Euro 2,967 million. The results achieved by Bancaperta during the first six months of the accounting period confirm the satisfactory equity and income performance already disclosed in the past. The main balance sheet indicators indicate direct deposits of Euro 400.8 million and indirect deposits of Euro 645.4 million. The income statement discloses a negative interest margin of Euro 419 thousand, an improvement with respect to the first six months of 2001. Net interest and other banking income came to Euro 35.5 million, down –21.8% compared with the first half of 2001 due to the progressive drop in leasing contracts taken care of by the bank. By contrast, net commission rose 14.3% to Euro 9.3 million compared with Euro 8.1 million during the same period of 2001. Following lower amortization/depreciation linked to leased assets, operating costs dropped 27.9% when compared with the same period last year. As a result of these performances, the operating result came to Euro 7.3 million, up 15.9% when compared with Euro 6.3 million reported during the first six months of 2001. The first six months of 2002 closed with net profit of Euro 4.5 million as against Euro 4.1 million during the first six months of 2001 registering growth of 8.5%. During the first six months of the year, Bancaperta continued with the development of all the on-web services identified by the banc@perta logo, which numbers nearly 110,000 customers. Bancaperta also manages on behalf of the bank, insurance activities, offering products and services to customers. Within the area of managed savings, Bancaperta, in collaboration with the equity Investments Global Assicurazioni S.p.A., launched new products, Gestioni Patrimoniali Assicurative (Insurance-related asset management forms), which combine the benefits of a professional management of savings with the advantages of an insurance policy.
Banca Popolare di Rho
As of 30 June 2002, the growth trend of the balance sheet aggregates was confirmed, while the comparison with income statement data felt the effect of the transfer of the Busto Arsizio branch to the Parent Bank Credito Valtellinese, which took place last November. Direct deposits from customers reached the Euro 58.4 million mark, disclosing an increase of 16.9% compared with the end of December 2001 and 38.3% if compared with the figure at the end of June 2001, while indirect deposits decreased 5.7% with respect to the end of December 2001, totalling Euro 24.3 million. With regard to lending, loans granted to customers at the end of June 2002 came to Euro 51.7 million, disclosing an increase of 13.7% with respect to the end of December 2001. From an analysis of the economic results achieved during the first six months of 2002, it emerges that the interest margin came to Euro 1.5 million, down 2.1% compared with the balance in the same period in 2001. Revenues from services disclosed a negative trend of 7.1%, reaching the Euro 537 thousand mark, as a result of the drop in the results of financial operations. The performances of the economic variables illustrated took net interest and other banking income to Euro 2.1 million, down 3.5% The dynamics of operating expenses and the increase in value adjustments to fixed assets took the gross operating result to Euro 345 thousand, down 3.1% compared with the Euro 356 thousand reported in the first half of 2001. Having deducted net adjustments to loans and provisions for Euro 178 thousand, extraordinary losses for Euro 13 thousand and taxation for Euro 60 thousand, the net profit for the first half of 2002 came to Euro 95.2 thousand, up 93.7% when compared with the same period in 2001. At the end of June 2002, Banca Popolare di Rho availed of 5 branches.
Cassa San Giacomo
Cassa San Giacomo ended the six month period on a positive note. The overall amount of direct deposits from customers came to Euro 194 million, disclosing growth of 13.6% when compared with the Euro 170.7 million at the end of June 2001 and of 2.1% with respect to December 2001. Indirect deposits amounted to Euro 70.7 million, up 2% compared with the figure of Euro 69.3 million at the end of December 2001. Overall funding, the sum total of direct and indirect deposits, registered an increase of 12.8%, passing from Euro 234.6 million in June 2001 to Euro 264.7 million in June 2002 and 2.1% if compared with the figure at the end of December 2001 (Euro 259.3 million). Loans to customer, essentially unchanged with respect to the end of 2001 (Euro 115.1 million), amounted to Euro 114.8 million at the end of the six month period. The main economic results, compared with the same period in the previous year, disclosed the following performance: the interest margin reached Euro 3.7 million (- 0.7%); net interest and other banking income, despite the negative evolution of the financial markets, remained essentially stable at Euro 5.6 million (- 1% compared with the first six months of 2001); the operating result, obtained by deducting general costs amounting to Euro 5.39 million (+ 0.2% when compared with Euro 5.38 million in the first six months of 2001), came to Euro 255 thousand (- 20.8% when compared with the same period in 2001). Gross profit came to Euro 305 thousand, disclosing growth of 22% when compared with Euro 250 thousand in the first half of last year. Having deducted income taxes, amounting to Euro 90 thousand, net income for the period came to Euro 215 thousand, up 93.7% on Euro 111 thousand in the first half of 2001. At the end of June 2002, Cassa San Giacomo availed of 15 branches, which it transferred in July to Credito Siciliano as part of the project for the territorial rationalization carried out by the Group in Sicily.
Banca dell’Artigianato e dell’Industria
Banca dell’Artigianato e dell’Industria operates by means of 4 branches and at the end of June 2002 disclosed direct deposits of Euro 69.8 million and indirect deposits of Euro 33.5 million. With regard to lending, at the end of June loans to customers amounted to Euro 74.2 million compared with Euro 49.3 million at the end of June 2001 (+ 50.4%), and Euro 64.6 million at the end of December 2001 (+ 14.8%). At income statement level, the interest margin, in the presence of substantial expansion in volumes dealt, came to Euro 1.4 million (+ 17.1%) while net interest and other banking income totalled Euro 2 million (increase on an annual basis of 34.4%). Operating costs, totalling Euro 1.9 million, disclosed an increase of 27.8% when compared with the figure for the first six months of 2001, as a result of the investments made for the opening of new branches. The gross operating result came to Euro 27 thousand. Having deducted adjustments to loans for Euro 500 thousand, up 63.4%, bearing witness to the prudent policy adopted by the bank, and provisions to cover the tax liability, the income statement disclosed a negative result of Euro 599 thousand.
Deltas
Also during the course of the first half of 2002, Deltas dedicated itself to the support of the activities for the definition and control of the unitary strategic layout of the Group and the centralized management and production of services pertaining to assistance and consultancy as well as the support of management and research activities for all the Group companies. The result for the period produced net profit of Euro 23,315, mainly in line with the forecasts formulated.
Stelline Servizi Immobiliari
During the first six months of 2002, Stelline Servizi Immobiliari continued with the management and maintenance of the real estate property and the production of services in favour of the Group banks. In particular, the company developed studies and research in the property and town planning sector, and was involved in the realization of branches and in the development of architectonic, technical plant engineering and furnishing projects. In addition to technical support activities, activities were also carried out in relation to property assistance aimed at debt recovery and restoration activities for historical and architectonic property. The financial statements of Stelline closed with balance sheet assets of Euro 33 million and equity of Euro 3.2 million. The economic result for the six-month period disclosed profit of Euro 52,640.
Bankadati Sistemi Informativi
During the first half of 2002, Bankadati Servizi Informatici, in addition to the management of the IT system of the Credito Valtellinese Banking Group, was involved in strategic projects, finalized at implementing the growth strategies of the Group, system projects, or commitments linked and restricted by the initiatives of the Italian and European banking system, and other projects, of a technical or organizational nature, aimed at improving the production system or adapting the technological components of the system itself. The important strategic project for the restructuring of the Sicilian banks, implemented during the second half of 2001 for the part falling under the responsibility of Bankadati S.I., was concluded in June 2002 and led to the formation of a single and important regional bank in Sicily, with a wide-spread presence throughout the territory: Credito Siciliano. Bankadati S.I. closed the first six months of the year with Euro 302 thousand in net profit and shareholders’ equity of Euro 3.3 million.
Aperta Gestioni Patrimoniali
Having reached its second year of activities, Aperta Gestioni Patrimoniali, entity of the Group deriving from the joint venture between Bancaperta and Colombo Gestioni Patrimoniali, continued its consultancy activities within the sphere of asset management and specialist business consultancy, offering in favour of the customer, whose requirements are in continual evolution, a service with high value added. The financial statements of Aperta Gestioni Patrimoniali closed with net profit of over SWF 132,000.
Transactions with associated companies
The total of transactions with associated companies reported as of 30 June 2002 is illustrated below. Shareholders are informed that there are no subsidiary companies also controlled jointly with others or companies subject to sole management not included in the scope of consolidation, nor parent companies.
AMOUNTS DUE TO AND FROM ASSOCIATED COMPANIES (1) (balances in thousands of euro)
Assets 30/06/2002 Due from banks 7.247 Loans to customers 177 Intangible fixed assets 353 Other assets 193 Accrued income and prepayments 248 Liabilities Due to banks 4.012 Due to customers 13.800 Other liabilities 95 Accrued expenses and deferred income 99
STATEMENT OF INCOME TRANSACTIONS WITH ASSOCIATED COMPANIES (1) (balances in thousands of euro)
1st half 2002 Interest income and similar revenues 53 Interest expense and similar charges 292 Commission income 893 Commission expense 28 Other operating income 68 Administrative expenses 2.381 Other operating expenses 46 Extraordinary income 3 Extraordinary charges 53
Dealings between the Parent Bank and its subsidiary and associated companies concerning transactions for services rendered and deposit, as well as with other related parties, fall within routine banking operations and therefore no atypical or unusual activities with respect to normal business operations have been carried out.
Form and content of the consolidated interim report
Form and content
The consolidated interim report as of 30 June 2002 has been drawn up in accordance with the provisions of the Regulations approved by the Consob under Resolution No. 11971 dated 14 May 1999 and subsequent amendments. The report includes Credito Valtellinese (the Parent Bank) and the companies operating in the lending and financial sector, or those whose primary activity is complementary to that of the Parent Bank, or in which the latter directly holds a majority interest in the share capital or avails of sufficient votes to exercise a dominant influence at ordinary shareholders’ meetings. During the first six months of 2002, the merger by incorporation of Banca Popolare Santa Venera and Leasingroup Sicilia into Banca Regionale Sant’Angelo was concluded; at the same time, the latter changed its name to Credito Siciliano. As of 31 December 2001, all the companies involved in the merger already formed part of the Credito Valtellinese Banking Group and were consolidated by the latter on a line-by-line basis. Shareholders are informed of the inclusion among the associated companies pursuant to Article 36.1 of Legislative Decree 87/92, of Istituto Centrale delle Banche Popolari S.p.A.. Among the accounting schedules included in this report, is a list of the companies included within the scope of consolidation and the equity investments carried at equity.
Consolidation principles
The consolidation principles adopted are those laid down by Legislative Decree No. 87/1992 as well as the accounting principles established by the Italian Accounting Profession in force in Italy or, in the absence thereof, those issued by the International Accounting Standards Board (I.A.S.B.). The book value of investments in subsidiary companies, whose financial statements are consolidated line-by-line, is eliminated against the related share of the shareholders’ equity. The elimination is carried out with reference to the values in effect at the time the investments were acquired. Any differences arising from such elimination: - if positive (purchase cost of the investment greater than the related share of its equity), are allocated to the consolidated balance sheet assets under the item “Goodwill arising on consolidation” or deducted from any negative differences relating to the same investment up to the extent of such differences; - if negative (purchase cost of the investment less than the related share of its equity), are recorded among the consolidated liabilities under the item “Negative goodwill arising on consolidation”. Minority shareholders are allocated the portion of shareholders’ equity and net results pertaining to them, as well as the portion of goodwill arising on consolidation pertaining to them on the basis of the equity ratios. Equity investments in associated companies, i.e. those where the interest held is between 20% and 50%, are carried at equity. For these companies: - the additional book value with respect to the share of equity pertaining to the Group, which arose at the time of acquisition, is recorded among the consolidated balance sheet assets under the item “Goodwill arising on application of the equity method”; - the lower book value with respect to the share of equity pertaining to the Group, is recorded among the consolidated liabilities under “Negative goodwill arising on application of the equity method”. Any changes in shareholders’ equity subsequent to the date taken as the basis for calculating these differences are classified under the item “Income (loss) from investments carried at equity”, if they refer to the income or loss of these investments. Other changes are recorded under the caption “Negative goodwill arising on application of the equity method”. Goodwill arising on consolidation and application of the equity method is attributable to the payment of goodwill and amortised over a period of ten years, deemed in keeping with the duration of the investment. Dividends recorded in the financial statements of the Parent Company concerning equity investments in companies included within the scope of consolidation or those carried at equity, are eliminated. The related tax credit is offset against taxation for the year. The effects of infraGroup transactions between companies included in the scope of consolidation are eliminated. Taxation relating to adjustments made at the time of consolidation are also taken into consideration, if they meet the necessary criteria. Provisions to the reserve for general banking risks made in the individual statutory financial statements of the Group companies in order to neutralize the economic effects relating to infraGroup transactions, are also eliminated. These provisions are reinstated in subsequent years as a result of the elimination of additional depreciation/amortization recorded in the statutory financial statements. Investments in which the interest held is less than 20% are carried at cost.
Equity investments in foreign currency
The conversion into Euro of the financial statements of Aperta Gestioni S.A., drawn up in Swiss francs, has been carried out utilizing the current exchange method. The exchange differences arising as a result of the conversion are included in the consolidated reserves.
Currency used for the preparation of the financial statements
The balances shown in the statements relating to the consolidated interim report are expressed in thousands of Euro. Steps were also taken to convert the balances relating to 30 June 2001 so as to provide a comparative illustration of the financial statement information.
Financial statements adopted
The consolidated interim financial statements have been prepared on the basis of the financial statements specifically drawn up which all refer to the date of 30 June 2002.
B. Accounting policies
Section 1 – Description of the accounting policies
The accounting policies adopted for the preparation of the consolidated interim financial statements are consistent with those used by the Parent Bank and the other companies in the Group.
1. Loans, guarantees and commitments
Amounts due from banks
Amounts due from banks are stated at their estimated realizable value, taking any forecast losses into account.
Loans to customers
The book value of loans, including total contractual and overdue interest accrued, coincides with their estimated realisable value. The latter value is calculated as total loans outstanding less expected losses of principal and interest, defined on the basis of a specific analysis of all non-performing and problem loans as well as the inherent risk of loss, which could emerge in the future on other loans. The original value of the loans is reinstated in subsequent accounting periods should the reasons for any adjustments (writedowns) cease to apply. Loans to customers also include those concerning leasing contracts held by the Parent Bank and by the subsidiaries Bancaperta, Credito Artigiano and Credito Siciliano determined using financial lease accounting methods in accordance with the procedures anticipated by the Bank of Italy Circular No. 166 dated 30 July 1992 and subsequent amendments. These amounts are valued taking into account the recovery value of the assets leased as well as the related depreciation.
Other amounts due
Since no losses are anticipated for other amounts due, they are stated at nominal value which coincides with their estimated realisable value.
Guarantees and commitments
Guarantees given are recorded at the total value of the commitments undertaken. Risks associated with guarantees given are covered by a specific provision to the reserve for risks and charges. Securities to be received are recorded on the basis of the settlement price; deposit and loan contracts on the basis of the amount to be disbursed. Other commitments and risks are recorded with reference to the overall value of the commitment undertaken.
2. Securities and off-balance sheet transactions (excluding foreign currency transactions)
2.1 Investment securities
Investment securities are valued at their original purchase cost, and are written down to reflect any permanent losses in value. The difference between the book value and the redemption value of the securities which represent financial fixed assets, is recorded on a "pro rata temporis" basis in relation to the investment adjusting the interest produced by the securities themselves.
2.2 Dealing securities
Securities not held as financial fixed assets are valued as follows: - securities listed on organised markets are valued at market value understood as the average of prices struck during the last month; - unlisted securities are valued at the lower of formation cost (determined on a LIFO basis) and their market value; the latter is considered to be equal to their estimated realisable value, calculated on the basis of the market prices of securities with similar characteristics listed on organised markets and the value obtained by discounting future financial flows generated by interest and principal using the appropriate market rate of interest. The solvency status of the issuer is also taken into account. Writedowns made in prior accounting periods are eliminated, should the reasons for their application cease to apply.
Off-balance sheet transactions (excluding foreign currency transactions)
Off and on balance sheet assets and liabilities are valued separately. Off-balance sheet transactions are valued as follows: - “dealing” transactions, at market value if listed or at the lower of cost and market value if unlisted; - transactions “hedging” assets and liabilities on and off the balance sheet, on a consistent basis with the criteria adopted for the valuation of the assets and liabilities hedged. Related transactions are valued on a consistent basis. Contracts for the sale or purchase of securities and off-balance sheet transactions on securities are stated at the contract settlement price. The results of the valuation, carried out using the same criteria adopted for the dealing securities portfolio, are charged to the income statement under item 60 “Profits (losses) on financial transactions”. Deposit and lending contracts are stated on the basis of the amounts to be disbursed or received.
3. Equity investments
Investments in associated companies pursuant to Article 36.1 of Legislative Decree 87/92, are valued at equity unless they are considered insignificant for the purposes defined in Article 2.3 of the afore-mentioned Decree. Other investments are carried at cost determined on a LIFO basis using annual layers.
4. Foreign currency assets and liabilities (including off-balance sheet transactions)
Assets, liabilities and spot off-balance sheet transactions not yet settled in foreign currency are translated into Euro using the period end spot exchange rates; the effect of this valuation is reflected in the income statement.
Foreign currency derivatives “Trading” derivatives outstanding at the end of the year are valued at the market rates in force as of that date. The effect of these valuations is reflected in the income statement under item 60 “Profits (losses) on financial transactions.
Forward transactions Contracts for the purchase or sale of currency and off-balance sheet transactions on currency are translated into Euro using the period end spot exchange rates, given that they are linked to the spot transactions.
5. Tangible fixed assets
Tangible fixed assets are stated at purchase cost, including related charges incurred, as adjusted upwards for some assets as a result of applying specific monetary revaluation laws. The book value of tangible fixed assets is stated net of accumulated depreciation. Maintenance expenditure which increases the value of assets is attributed to the assets to which it refers. Tangible fixed assets are systematically depreciated each year on a straight-line basis based on economic-technical valuations regarding both the degree of use and the residual periods such assets are expected to benefit.
6. Intangible fixed assets
These are stated at purchase cost, including related charges. Goodwill paid for the extraordinary acquisition of business activities is charged to the income statement on the basis of an estimated 10-year amortisation plan, while other intangible fixed assets are amortised systematically in relation to the period they are expected to benefit or over a period of five years, whichever is the shortest. Intangible fixed assets include charges associated with the access by Credito Siciliano (formerly Banca Regionale Sant’Angelo) to the benefits of the “Solidarity fund for income support, employment and the professional re-conversion and re-qualification of banking staff” established under Decree 158 dated 28 April 2000; these capitalized charges (which as of 30 June 2002 amounted to Euro 4.9 million net of amortization for the period of Euro 0.7 million) are amortized over a period of five years as anticipated by the instructions of the Bank of Italy.
7. Other policies
Repurchase agreements Repurchase agreements on securities linked to a commitment to repurchase are treated as genuine sales and repurchase transactions. The spot amounts received and paid out are treated as amounts payable and receivable. The cost of funding and income from lending, represented by coupons matured on securities, considering the amount of the issue spread, if applicable, and the difference between their spot and forward prices, are recorded on an accruals basis as interest in the income statement.
Own shares Shares of the Parent Bank held in the portfolio at the end of the period are stated at market value, and are fully covered by the specific reserve pursuant to Article 2357 ter of the Italian Civil Code
Payables Payables are stated at face value.
Other assets The item “Other assets” includes completed properties and those under construction by Stelline Servizi Immobiliari S.p.A., since they cannot really be classified as tangible fixed assets; they are stated at cost.
Securities issued Certificates of deposit and bond issues are stated at their nominal value, with the exception of “zero coupon” bonds which are stated at their issue value uplifted by the capitalised interest.
Accruals and deferrals These represent portions of costs and revenues, relating to two or more accounting periods, accrued in accordance with the matching principle.
Provision for employee termination indemnities The reserve for employee termination indemnities covers the liability to all employees accrued in accordance with current legislation and labour contracts. This liability is subject to revaluation.
Reserves for risks and charges These comprise the following reserves: pensions and similar commitments, taxation, other reserves. The pension reserve comprise the Fund for retirement pensions provided to cover the commitment to personnel who have left service. With reference to the fund for retirement pensions, shareholders are informed that the provision for the year corresponding to the contribution payable by the Bank (Group) for pensions paid during the period has been recorded in the income statement under item 80 a) “Payroll and related costs – pensions and similar commitments”, while that corresponding to the commitment concerning new pensioners is recorded under the income statement item 190 “Extraordinary expenses”. The taxation reserve comprises the provision for income taxes determined on the basis of a prudent estimate of the current and deferred tax liability. The effects of deferred taxation are determined in accordance with the income statement method. Assets for advance taxes paid are classified under item “150 – Other assets”, within the limits of that which is deemed recoverable with reasonable certainty. Liabilities for deferred taxes are recorded under item “80.b Taxation”, except for cases where their realisation is considered improbable. The amount was calculated by taking into consideration the different types of taxation (IRAP and IRPEG – regional tax on business activities and corporate income tax) separately and applying the rates which will be in force in the periods in which the timing differences are reversed, according to tax legislation current at the time of reckoning. Other reserves comprise: - the reserve for future personnel charges which includes charges associated with access by Credito Siciliano (formerly Banca Regionale Sant’Angelo) to the benefits of the “Solidarity fund for income support, employment and the professional re-conversion and re-qualification of banking staff”; - the reserve covering outstanding legal disputes and the liability which might arise due to action for revocation undertaken by bankruptcy bodies; - the reserve for guarantees given which covers anticipated losses on endorsement credits; - the reserve for miscellaneous charges which also includes provisions against risks deriving from leasing transactions.
Reserves for possible loan losses These comprise the provision made to cover the risk of loan loss which is merely potential.
Reserve for general banking risks This forms part of the equity reserves and covers the general business risk of the Group.
Accounting methods Transactions with banks are recorded at the time they are carried out, with the exception of those relating to the remittance of bills, which are by contrast recorded at the time of their settlement. Transactions with customers where settlement is through current accounts are recognised when carried out, with the exception of those relating to certain particular categories (such as “portfolio”, “foreign” and “securities”), which are booked at the time of settlement. Amounts receivable for financial leasing charges pertaining to the future and pre-invoiced to customers, are indirectly adjusted by means of the recording of the related deferred income. Interest income and expense, as well as other costs and revenues, are recorded on an accruals basis in accordance with the matching principle, with the appropriate identification of the related accruals and deferrals. Interest also comprises: - income and charges relating to off-balance sheet transactions intended to hedge assets and liabilities that generate interest; - income and charges relating to sale and repurchase transactions involving the obligation to repurchase by the transferee. Interest income also includes the portion of interest on leasing instalments accounted for using financial lease methodology.
Law 461 dated 23 December 1998 and Legislative Decree 153 dated 17 May 1999 (so-called Ciampi Law)
The tax concessions on bank merger transactions, pursuant to the Law in question, were suspended as from the 2001 tax period as a result of Legislative Decree 63 dated 15 April 2002, issued following the declaration by the European Commission of the incompatibility between said concessions and the EC norms concerning Government aid. Account was prudently taken of this suspension when determining the tax liability pertaining to the year 2001. As far as the prior situation was concerned, relating to the accounting periods 1998, 1999 and 2000 in which the Parent Bank had determined lower taxation taking into account, legitimately, the concessionary measure in question (equating to Euro 2,790 thousand), it is believed that the risk that the repetition of the concessions availed of is imposed, is fully covered.
Section 2 – Tax adjustments and provisions
2.1 Adjustments made solely for tax purposes No value adjustments were made solely for tax purposes.
2.2 Provisions made solely for tax purposes There were no provisions made solely for tax purposes.
C) INFORMATION ON THE CONSOLIDATED BALANCE SHEET
1 - Distribution of loans, by category
Loans to customers (asset item 40)
30/06/2002 31/12/2001 a) Governments 11.518 0,19% 6.021 0,10% b) other public entities 16.820 0,28% 13.044 0,22% c) non-financial businesses 3.968.828 65,50% 3.686.476 63,23% d) financial institutions 431.783 7,12% 463.502 7,95% e) personal businesses 453.550 7,49% 429.953 7,38% f) other operators 1.176.745 19,42% 1.231.178 21,12% Total 6.059.244 100,00% 5.830.174 100,00%
2 - Loans to resident non-financial and personal businesses
a) Commerce, salvage and repairs 30/06/2002 31/12/2001 b) Other services for sale 1.019.067 23,12% 1.009.229 24,56% c) Building and public works 969.066 21,98% 864.676 21,05% d) Textiles, leather and footwear, apparel 495.486 11,24% 462.131 11,25% e) Metal products excluding machines and means of tr 251.589 5,71% 245.540 5,98% f) Other 161.294 3,66% 152.658 3,71% Total 933.202 4.408.259 100,00% 4.108.689 100,00%
3 - Guarantees given (item 10 of the guarantees and commitments)
a) Governments 30/06/2002 31/12/2001 b) other public entities 1 0,00% 1 0,00% c) banks 3.701 0,59% 4.374 0,78% d) non-financial businesses 48.873 7,82% 8.620 1,53% e) financial institutions 459.725 73,55% 447.014 79,26% f) personal businesses 42.839 6,85% 35.049 6,21% g) other operators 19.654 3,14% 23.041 4,09% Total 50.305 8,05% 45.853 8,13% 625.098 100,00% 563.952 100,00%
4 - Significant exposure
a) Amount 30/06/2002 31/12/2001 b) Number - - - - 5 - Maturities of assets and liabilities
The schedule shows an imbalance between short-term assets and liabilities; this should be viewed, however, in light of the stability of customer deposits and the degree of liquidity on non-current assets. 30/06/2002 Unspecified Specified maturity maturity On demand Up to 3 months 12 months Between 1 and 5 years Beyond 5 years Items/Residual duration Fixed rate Indexed rate Fixed rate Indexed 1. Assets 2.418.290 1.563.894 774.133 741.562 2.074.242 125.038 837.582 309.610 1.1 Treasury bills eligible for refinancing - 42.757 44.033 97.611 235.491 13.571 23.355 - 1.2 Due from banks 93.618 172.889 24.109 - - - - 28.903 1.3 Loans to customers 2.287.926 1.112.276 404.783 295.280 990.478 83.858 603.936 280.707
1.4 Bonds and other debt securities 1.526 22.302 177.186 32.004 537.095 12.677 192.420 - 1.5 Off-balance sheet transactions 35.220 213.670 124.022 316.667 311.178 14.932 17.871 - 2. Liabilities 4.485.289 1.991.174 703.392 441.128 1.135.506 72.322 18.143 1.559 2.1 Due to banks 42.693 309.385 37.772 4.044 3.477 295 - - 2.2 Due to customers 4.334.988 813.084 89.352 - - - - - 2.3 Securities issued: - bonds - 114.406 270.402 323.737 958.592 40.912 1.954 - - certificates of deposit 8.856 105.583 70.777 8.048 1.079 - - - - other securities 67.759 ------2.4 Subordinated liabilities - - 48.504 23.860 135.394 - - - 2.5 Off-balance sheet transactions 30.993 648.716 186.585 81.439 36.964 31.115 16.189 1.559 31/12/2001 Unspecified Specified maturity maturity On demand Up to 3 months 12 months tween 1 and 5 years Beyond 5 years Items/Residual duration Fixed rate Indexed rate Fixed rate Indexed 1. Assets 2.706.323 2.319.024 763.979 903.883 1.975.456 135.007 656.524 281.493 1.1 Treasury bills eligible for refinancing 5.241 47.590 55.525 148.821 203.482 6.893 11.286 - 1.2 Due from banks 337.793 172.714 10.692 5.165 - - - 11.377 1.3 Loans to customers 2.312.505 1.084.386 348.701 319.890 866.227 89.932 546.563 261.970
1.4 Bonds and other debt securities 26.807 91.268 93.486 43.150 717.206 14.444 71.731 - 1.5 Off-balance sheet transactions 23.977 923.066 255.575 386.857 188.541 23.738 26.944 8.146 2. Liabilities 4.226.112 3.006.764 658.717 440.427 1.137.273 54.106 28.501 14.967 2.1 Due to banks 84.387 497.630 81.433 6.107 3.488 488 - - 2.2 Due to customers 4.025.235 826.858 39.082 4.013 - - - - 2.3 Securities issued: - bonds - 70.514 244.683 344.918 929.816 40.552 1.602 - - certificates of deposit 8.252 112.456 76.156 9.261 812 - - - - other securities 58.506 ------2.4 Subordinated liabilities - - 42.986 23.860 196.928 - - - 2.5 Off-balance sheet transactions 49.732 1.499.306 174.377 52.268 6.229 13.066 26.899 14.967 6 - Geographic distribution of assets and liabilities
30/06/2002 Italy Other EU Other countries Items/Countries countries 1. Assets 7.700.636 246.142 50.313 1.1 Due from banks 239.569 53.748 26.202 1.2 Loans to customers 6.036.755 11.608 10.881 1.3 Securities 1.424.312 180.786 13.230 2. Liabilities 7.654.075 66.387 94.573 2.1 Due to banks 269.487 62.593 65.586 2.2 Due to customers 5.204.643 3.794 28.987 2.3 Securities issued 1.972.105 - - 2.4 Other accounts 207.840 - - 3. Guarantees and commitments 792.503 51.464 16.353
31/12/2001 Italy Other EU Other countries Items/Countries countries 1. Assets 7.786.268 120.623 109.065 1.1 Due from banks 495.269 11.566 30.906 1.2 Loans to customers 5.814.230 3.055 12.889 1.3 Securities 1.476.769 106.002 65.270 2. Liabilities 7.533.572 82.840 113.697 2.1 Due to banks 515.013 76.294 82.226 2.2 Due to customers 4.857.171 6.546 31.471 2.3 Securities issued 1.897.528 - - 2.4 Other accounts 263.860 - - 3. Guarantees and commitments 780.476 14.059
7 - Assets and liabilities denominated in foreign currencies
7.1 Assets
30/06/2002 31/12/2001 a) due from banks 121.329 108.357 b) loans to customers 162.913 179.389 c) securities 4.903 57.012 d) equity investments - - e) other accounts 3.436 3.521
7.2 Liabilities
30/06/2002 31/12/2001 a) due to banks 149.982 288.365 b) due to customers 44.008 49.757 c) securities issued - - d) other accounts - - 8 - Amounts due from banks
8.1 Detail of amounts due from banks
30/06/2002 31/12/2001
Total value Total value Categories/Values Gross value adjustments Net value Gross value adjustments Net value A. Doubtful loans 185 - 57 128 201 - 62 139 A.1. Non-performing loans 2 - 2 - 2 - 2 - A.2. Problem loans ------A.3. Loans being restructured ------A.4. Restructured loans ------A.5. Unsecured loans subject to country risk 183 - 55 128 199 - 60 139 B. Performing loans 319.391 - 319.391 537.602 - 537.602 Total 319.576 - 57 319.519 537.803 - 62 537.741
8.2 Analysis of doubtful accounts due from banks
1st half 2002 Unsecured loans Non-performing Loans being Restructured subject to country Class/Categories loans Problem loans restructured loans risk Total A. Opening gross value as of 1/1/2001 2 - - - 199 201 A.1 including: default interest ------B. Increases - - - - 38 38 B.1 transfers from performing loans ------B.2 default interest ------B.3 transfers from other doubtful loan categories ------B.4 other increases - - - - 38 38 C. Decreases - - - - - 54 - 54 C.1 transfers to performing loans ------C.2 write-offs ------C.3 collections - - - - - 54 - 54 C.4 loans realized through disposals ------C.5 transfers to other doubtful loan categories ------C.6 other decreases ------D. Closing gross value as of 30/6/2002 2 - - - 183 185 D.1 including: default interest ------
8.3 Analysis of total value adjustments on amounts due from banks
Unsecured loans Loans being Restructured subject to country Class/Categories Problem loans restructured loans risk Performing loans Total A. balance of total - - - 60 - 62 A.1 including: default interest ------B. Increases - - - 12 - 12 B.1 value adjustments - - - 12 - 12 B.1.1 including: default interest ------B.2 use of reserve for possible loan losses ------B.3 from other ------B.4 other increases ------C. Decreases - - - - 17 - - 17 C.1 writebacks from valuations - - - - 13 - - 13 C.1.1 including: default interest ------C.2 writebacks from collections - - - - 4 - - 4 C.2.1 including: default interest ------C.3 write-offs ------C.4 to other categori ------C.5 other decreases ------D. balance of total - - - 55 - 57 D.1 including: default interest ------
9 - Loans to customers
9.1 Detail of cash loans to customers
30/06/2002 31/12/2001
Total value Total value Categories/Values Gross value adjustments Net value Gross value adjustments Net value A. Doubtful loans 666.956 - 328.794 338.162 670.795 - 320.608 350.187 A.1. Non-performing loans 537.157 - 309.565 227.592 521.223 - 298.097 223.126 A.2. Problem loans 112.660 - 17.298 95.362 118.741 - 18.530 100.211 A.3. Loans being restructured 171 - 17 154 1.864 - 17 1.847 A.4. Restructured loans 16.863 - 1.885 14.978 28.859 - 3.934 24.925 A.5. Unsecured loans subject to country risk 105 - 29 76 108 - 30 78 B. Performing loans 5.749.849 - 28.767 5.721.082 5.507.987 - 28.000 5.479.987 Total 6.416.805 - 357.561 6.059.244 6.178.782 - 348.608 5.830.174
10 - Secured loans to customers
30/06/2002 31/12/2001 a) Loans secured by mortgages 1.449.485 1.315.475 b) Loans secured by pledges on: 221.033 227.430 1. cash deposits 9.581 9.346 2. securities 206.007 194.393 3. other assets 5.445 23.691 c) Loans secured by guarantees from: 1.637.369 1.414.763 1. Governments 997 787 2. other public entities 1.781 1.893 3. Banks 12.953 13.207 4. Other operators 1.621.638 1.398.876 Total secured loans 3.307.887 2.957.668
Customer loans in the above table include those covered in full by guarantees and the relevant portion of those that are partly covered.
11 - Amounts due from central banks (included in asset item 30)
30/06/2002 31/12/2001 28.903 213.748 As of 30 June 2002, the balance indicated represented the amount deposited with the Bank of Italy for the Compulsory Reserve. As of 31 December 2001, this balance also included the deposit for the pre-introduction of the Euro.
12 - Composition of securities
Own securities are classified in the financial statements as follows:
30/06/2002 31/12/2001 a) Investment securities 63.182 78.712 b) Dealing securities 1.555.146 1.569.329
13 - Guarantees and commitments
13.1 Guarantees (item 10 of guarantees and commitments)
30/06/2002 31/12/2001 a) Commercial guarantees 470.696 427.188 b) Financial guarantees 154.402 136.764 c) Assets lodged in guarantee - - Total 625.098 563.952
13.2 Commitments (item 20 of guarantees and commitments)
30/06/2002 31/12/2001 a) commitments to grant finance (certain to be called on) 77.442 82.402 b) commitments to grant finance (not certain to be called on) 157.780 161.682 Total 235.222 244.084
14 - Undrawn lines of credit
30/06/2002 31/12/2001 Undrawn portion Credit received Undrawn portion Credit received a) central banks - - - - b) other banks 2.778 8.005 84 8.005 Total 2.778 8.005 84 8.005
15 - Forward transactions
30/06/2002 31/12/2001 Type of transactions Hedging Dealing Other Hedging Dealing Other 1. Purchase/sale of 1.1 Securities - purchases - 46.758 - - 30.974 - - sales - 34.424 - - 38.357 - 1.2 Currency - currency against currency - 4.565 - - - - - purchases against Euro - 183.161 - - 126.786 - - sales against Euro - 277.957 - - 142.424 - 2. Deposits and loans - to be made - - 5.258 - - 6.909 - to be received - - 9.146 - - 36.880 3. Derivative contracts 3.1 With exchange of capital a) securities - purchases 2.980 - 22.469 2.980 26.625 57.843 - sales 2.980 - - 2.980 26.488 - b) currency - currency against currency ------purchases against Euro - 700 - - 200 - - sales against Euro - 300 - - 200 - c) other instruments - purchases ------sales ------3.2 Without exchange of capital a) currency - currency against currency ------purchases against Euro ------sales against Euro - - - - - b) other instruments - purchases 420.029 162.748 - 847.285 165.348 - - sales 510.480 70.329 - 821.405 102.700 -
With regard to the first half of 2002, derivative contracts without exchange of capital, letter b "other instruments", include "basis swaps" under sales and purchases for a total of Euro 250 million.
Item 3.1 letter a) "securities", purchases - Other transactions comprises options on equity investments of subsidiary and associated companies. The valuation of derivative hedging contracts revealed gains of Euro 7,812.6 thousand and losses of Euro 3,147.5 thousand not recognised for the purpose of consistency with the financial statement reporting of the assets and liabilities hedged.
16 - Amounts due to and from Group companies All amounts due to and from Group companies were eliminated at the time of consolidation.
17 - Portfolio management
30/06/2002 31/12/2001 Assets managed on behalf of customers, entirely invested in securities, at market values 2.916.250 2.833.469
The overall value of assets managed (including liquid funds) as of 30 June 2002 amounted to Euro 2,974,118 thousand.
18 - Capital and other prudent requirements for supervisory purposes
Category/Value 30/06/2002 31/12/2001 A. Capital for supervisory purposes A.1 Tier 1 capital 421.992 457.422 A.2 Tier 2 capital 205.256 226.410 A.3 Elements to be deducted 38.152 29.037 A.4 Capital for supervisory purposes 589.096 654.795 B. Other prudent requirements for supervisory purposes B.1 Lending risk 433.025 421.461 B.2 Market risk 22.330 29.692 including: - risks on dealing portfolio 22.108 29.438 - exchange risks 222 254 B.3 Other prudent requirements for supervisory purposes - - B.4 Total prudent requirements 455.355 451.153 C. Risk assets and capital ratios C.1 Risk-weighted assets (*) 5.691.938 5.639.413 C.2 Tier 1 capital/Risk weighted assets 7,41% 8,11% C.3 Capital for supervisory purposes/Risk-weighted assets 10,35% 11,61%
(*) Total prudent requirements multiplied by the reciprocal of the compulsory minimum capital ratio for lending risk. (**) The compulsory minimum capital ratio for banking groups is 8%. D) INFORMATION ON THE INCOME STATEMENT
1 - Analysis of interest
1.1 Interest income and similar revenues (item 10 of the income statement)
1sta half 2002 1st half 2001 2001 a) on amounts due from banks 8.535 10.479 21.281 including: - deposits with central banks 1.625 1.620 3.665 b) on loans to customers 180.654 162.077 351.910 including: - loans using public funds administered - - - c) on debt securities 30.552 40.361 77.375 d) other interest income 45 118 198 e) net differential on hedging transactions 750 - - Total 220.536 213.035 450.764
1.2 Interest expense and similar charges (item 20 of the income statement)
1sta half 2002 1st half 2001 2001 a) on amounts due to banks 8.529 13.272 23.445 b) on amounts due to customers 49.703 52.605 105.210 c) on securities issued 37.709 40.079 83.190 including - on certificates of deposit 2.879 2.730 6.201 d) on public funds administered - - - e) on subordinated liabilities - - - f) net differential on hedging transactions - 2.013 4.213 Total 95.941 107.969 216.058
2 - Analysis of interest
2.1 Interest income and similar revenues on foreign currency assets
1sta half 2002 1st half 2001 2001 6.449 8.382 17.347
2.2 Interest expense and similar charges on foreign currency liabilities
1sta half 2002 1st half 2001 2001 3.963 6.895 12.570
3 - Commission
3.1 Analysis of item 40 "Commission income"
1sta half 2002 1st half 2001 2001 a) Guarantees given 2.167 1.754 4.004 b) Derivatives on loans - - - c) Management, dealing and consultancy services 25.117 22.026 45.911 1. Securities dealing 1 1 4 2. Currency dealing 2.202 2.170 4.341 3. Portfolio management 11.320 10.102 23.894 3.1 individual 11.320 10.102 23.894 3.2 collective - - - 4. Custody and administration of securities 720 818 1.526 5. Depositary bank - - - 6. Placement of securities 5.357 4.912 7.320 7. Acceptance of instructions 1.996 2.688 4.746 8. Consultancy services 551 620 1.127 9. Distribution of services to third parties 2.970 715 2.953 9.1 portfolio management - - - a) individual - - - b) collective - - - 9.2 Insurance products 2.970 715 2.953 9.3 Other products - - - d) Payment and collection services 14.346 9.149 21.979 e) Servicing services for securitization transactions - - - f) Tax collection services - - - g) Other services 21.289 19.581 41.070 Total 62.919 52.510 112.964
Detail of item 40 "Commission income": Distribution channels of products and services
1sta half 2002 1st half 2001 2001 a) at Bank branches 19.564 15.365 33.554 1. Portfolio management 11.237 9.738 23.281 2. Placement of securities 5.357 4.912 7.320 3. Third party products and services 2.970 715 2.953 b) outside Bank branches 83 364 613 1. Portfolio management 83 364 613 2. Placement of securities - - - 3. Third party products and services - - - Total 19.647 15.729 34.167
3.2 Analysis of item 50 "Commission expense"
1sta half 2002 1st half 2001 2001 a) Guarantees received 2 - 1 b) Derivatives on loans - - - c) Management and dealing services: 466 822 1.367 1. Securities dealing 29 31 95 2. Currency dealing 215 349 652 3. Portfolio management - - - 3.1 own portfolio - - - 3.2 third party portfolio - - - 4. Custody and administration of securities 222 204 382 5. Placement of securities - 238 238 6. Offer outside banking premises of securities, products and services - - - d) Payment and collection services 3.664 2.456 6.558 e) Other services 1.223 1.101 2.022 Total 5.355 4.379 9.948
4 - Analysis of profits (losses) on financial transactions of the income statement 4.1 Securities transactions
1sta half 2002 1st half 2001 2001 Revaluations 1.654 4.459 8.202 Writedowns - 5.165 - 7.994 - 7.516 Other gains/losses 4.320 4.326 7.422 Total 809 791 8.108
4.2 Currency transactions
1sta half 2002 1st half 2001 2001 Other gains/losses 1.280 1.711 2.142
4.3 Other transactions
1sta half 2002 1st half 2001 2001 Revaluations 1.103 953 585 Writedowns - 1.508 - 995 - 812 Other profits/losses - 318 - 2.056 - 1.708 Total - 723 - 2.098 - 1.935
5 - Extraordinary income and charges
5.1 Extraordinary income
1sta half 2002 1st half 2001 2001 Gains on the disposal of business activities - - 976 Out-of-period income 4.257 2.887 21.748 Gains on the disposal of tangible, intangible and financial fixed assets 1.892 52 942 Taxation 241 - - Total 6.390 2.939 23.666
5.2 Extraordinary charges
1sta half 2002 1st half 2001 2001 Adjustment of actuarial reserve for retired staff pension fund 500 852 1.132 Out-of-period expense 4.147 1.743 3.735 Losses relating to measures taken for the Interbank Guarantee Fund - - 27 Losses on the disposal of tangible, intangible and financial fixed assets 76 10 212 Taxation 1.503 - - Total 6.226 2.605 5.106 E) OTHER INFORMATION
1 - Average number of employees
1st half 2002 2001 a) Executives 46 49 b) Middle management 861 842 c) Other staff 1.923 1.892 Total (*) 2.830 2.783
(*) The middle management category, established further to the CCNL (National Collective Labour Agreement) dated 11 July 1999 involving application within the Group as from May 2000, comprises the previous categories of management and officials.
2 - Number of operative branches
30/06/2002 31/12/2001 301 295 F) SCOPE OF CONSOLIDATION
Significant investments
30/06/2002
Registered officesNature of relationship Company holding Company name investment % ownership held A. Consolidated companies A.1 Consolidated line-by-line 1 - Credito Valtellinese S.c.r.l. Sondrio 2 - Credito Artigiano S.p.A. Milan A.1.1 61,03 3 - Credito Siciliano S.p.A. Palermo A.1.1 39,42 A.1.2 35,79 4 - Banca Popolare di Rho S.p.A. Rho A.1.1 94,19 5 - Bancaperta S.p.A. Sondrio A.1.1 63,44 A.1.2 24,44 A.1.3 1,50 6 - Cassa San Giacomo S.p.A. Caltagirone A.1.1 99,17 A.1.2 0,05 7 - Banca dell'Artigianato e dell'Industria S.p.A. Brescia A.1.1 7,90 A.1.2 48,85 8 - Bankadati Servizi Informatici S.p.A. Sondrio A.1.1 80,00 A.1.2 20,00 9 - Stelline Servizi Immobiliari S.p.A. Sondrio A.1.1 80,00 A.1.2 20,00 10 - Deltas S.p.A. Sondrio A.1.1 50,00 A.1.2 50,00 11 - Provalt S.p.A. (*) Milan A.1.5 50,00 12 - Leo Finanziaria Lombarda S.r.l. Milan A.1.11 90,00 13 - Aperta Gestioni S.A. Lugano (Switzerland) A.1.5 60,00 A.2 Consolidated on a proportional basis
B. Investments carried at equity 1 - Ripoval S.p.A. Sondrio A.1.1 50,00 2 - Global Assistance S.p.A. Milan A.1.1 40,00 3 - Global Assicurazioni S.p.A. Milan A.1.5 40,00 4 - Crypto S.p.A. Sondrio A.1.5 15,00 A.1.8 15,00 5 - Finanziaria Canova S.p.A. Milan A.1.11 45,00 6 - Istituto Centrale delle Banche Popolari S.p.A. Milan A.1.1 20,00
(*) Availability of voting rights at ordinary shareholders' meetings 51%. Statement of consolidated cash flows
ORDINARY OPERATIONS Net profit 5.945 Change in the reserve for general banking risks 1.863 Value adjustments to tangible and intangible fixed assets 13.132 Amortization of goodwill arising on consolidation and application of the equity method 8.754 Net value adjustments to loans 11.693 Net value adjustments to financial fixed assets 466 Net extraordinary items - 554 Income from investments carried at equity - 2.487 Changes in reserve for termination indemnities and for pensions - 48.014 Changes in the reserve for taxation - 12.483 Changes in other reserves for risks and charges 2.133 Changes in accrued expenses and deferred income - 22.601 Changes in accrued income and prepayments 24.184 Cash generated by ordinary activities - 17.969 INVESTMENT ACTIVITIES Changes in tangible and intangible fixed assets - 31.957 Changes in other equity investments - 2.497 Changes in goodwill arising on consolidation - 31.554 Changes in securities 30.749 Changes in amounts due from banks (excluding amounts repayable on demand) 152.895 Changes in loans to customers - 240.763 Changes in other investments activities 73.414 Cash utilized in investment activities - 49.713 FUNDING ACTIVITIES Changes in amounts due to banks (excluding amounts repayable on demand) - 235.411 Changes in amounts due to customers and public funds administered 342.232 Changes in securities issued 74.577 Changes in subordinated liabilities - 56.016 Changes in Group share of capital and reserves 20.974 Changes in minority interests - 27.950 Changes in other liabilities - 53.345 Dividends and charitable payments - 18.945 Cash generated by funding activities 46.116 DECREASE IN CASH IN HAND, LIQUID FUNDS AND NET AMOUNTS DUE FROM BANKS REPAYABLE ON DEMAND - 21.566 Opening balance 108.944 Closing balance 87.378
Statement of changes in consolidated shareholders' equity
Share capital Share Legal reserve Reserve for own Statutory Retained premium shares reserves profit reserve (accumulate d losses) 31 December 2001 150.355 157.306 30.060 1.197 17.572 - Allocation of net profit - allocation to other reserves - - 2.475 - 3.698 - - charity ------dividends paid ------Share capital increase - for conversion of the first tranche of the "Credito Valtellinese 2% 1999 - 9.900 10.725 - - - - 2004" subordinated bond Other changes: - change in negative consolidation differences ------movements between reserves - - - 3.947 - 4.852 - - other changes - - 90 - - - - provision to reserve for general banking risks ------provision to reserve Law 335 dated 8.8.1995 ------Result for the period ------30 June 2002 160.255 168.031 32.625 5.144 16.418 -
Reserve for Other Negative Negative Results for Total general reserves goodwill goodwill arising the period shareholder banking risks arising on on application of s' equity consolidation the equity method 31 December 2001 27.420 3.135 20.700 193 21.203 429.141 Allocation of net profit - allocation to other reserves - - 3.968 - 53 - 2.258 - - charity - - - - - 988 - 988 - dividends paid - - - - - 17.957 - 17.957 Share capital increase - - for conversion of the first tranche of the "Credito Valtellinese 2% 1999 ------20.625 2004" subordinated bond Other changes: - - change in negative differences (1) - - - 5.175 5.506 - 331 - movements between reserves - 905 - - - - - other changes - - 72 - - - 18 - provision to reserve for general banking risks 1.863 - - - - 1.863 Result for the period - - - - 5.945 5.945 30 June 2002 29.283 - 15.525 5.752 5.945 438.978
(1) Includes the effect of the conversion of the second portion of the “Credito Artigiano T.V. convertible subordinated 1999-2004” bond, as well as the valuation at net equity of Istituto Centrale delle Banche Popolari S.p.A.. SIGNIFICANT INVESTMENTS ART. 120 CO. 4 - D. LGS. 58/98 ART. 125/126 - OF CONSOB N. 11971 /1999
HOLDING COMPANY TYPE OF FORM OF INFORMATION CONCERNING EQUITY INVESTMENTS INVESTMENT INFORMATION OWNERSHIP CONTROL Investment Registered office Total No. of Unit value of No. of shares/ % shares owned total % with voting rights (*) shares/quotas shares/quotas s owne Credito Valtellinese S.c.r.l. loan A Al Belvedere S.r.l. Valfurva (SO) 2 5164,57 2 100,000% 100,000%
Credito Valtellinese S.c.r.l. equity interests A Banca dell'Artigianato e dell'Industria S.p.A. Brescia 4.880.448 5,16 385.728 7,904% 56,755% Credito Artigiano S.p.A equity interests A Banca dell'Artigianato e dell'Industria S.p.A. Brescia 4.880.448 5,16 2.384.138 48,851%
Credito Valtellinese S.c.r.l. equity interests A Banca Popolare di Rho S.p.A. Rho (MI) 3.106.704 5,00 2.926.288 94,193% 94,193%
Credito Valtellinese S.c.r.l. equity interests A Bancaperta S.p.A. Sondrio 2.340.000 20,00 1.484.600 63,444% 89,388% Credito Artigiano S.p.A. equity interests A Bancaperta S.p.A. Sondrio 2.340.000 20,00 572.000 24,444% Credito Siciliano S.p.A. equity interests A Bancaperta S.p.A. Sondrio 2.340.000 20,00 35.100 1,500%
Credito Valtellinese S.c.r.l. equity interests A Bankadati Servizi Informatici S.p.A. Sondrio 500.000 5,00 400.000 80,000% 100,000% Credito Artigiano S.p.A. equity interests A Bankadati Servizi Informatici S.p.A. Sondrio 500.000 5,00 100.000 20,000%
Credito Valtellinese S.c.r.l. equity interests A Cassa San Giacomo S.p.A. Caltagirone (CT) 3.672.000 3,00 3.641.380 99,166% 99,220% Credito Artigiano S.p.A. equity interests A Cassa San Giacomo S.p.A. Caltagirone (CT) 3.672.000 3,00 2.000 0,054%
Credito Valtellinese S.c.r.l. equity interests E Cilme S.p.A. Zingonia (BG) 1.430.000 0,52 120.137 8,401% 11,898% Credito Artigiano S.p.A. equity interests E Cilme S.p.A. Zingonia (BG) 1.430.000 0,52 50.000 3,497%
Credito Valtellinese S.c.r.l. equity interests E Consulting S.p.A. Sondrio 150.000 1,00 7.500 5,000% 15,000% Deltas S.p.A. equity interests E Consulting S.p.A. Sondrio 150.000 1,00 15.000 10,000%
Credito Valtellinese S.c.r.l. equity interests A Credito Siciliano S.p.A. Palermo 9.582.557 10,00 3.777.428 39,420% 75,212% Credito Artigiano S.p.A. equity interests Credito Siciliano S.p.A. Palermo 9.582.557 10,00 3.429.820 35,792%
Credito Valtellinese S.c.r.l. equity interests A Deltas S.p.A. Sondrio 20.000 5,00 10.000 50,000% 100,000% Credito Artigiano S.p.A. equity interests A Deltas S.p.A. Sondrio 20.000 5,00 10.000 50,000%
Credito Valtellinese S.c.r.l. equity interests E Global Assistance S.p.A. Milano 2.583.000 1,00 1.033.200 40,000% 40,000%
Credito Valtellinese S.c.r.l. equity interests E ICBPI S.p.A. Milano 11.049.413 3,00 2.209.615 19,998% 20,000% Credito Siciliano S.p.A. equity interests E ICBPI S.p.A. Milano 11.049.413 3,00 134 0,001% Banca Pop. di Rho S.p.A. equity interests E ICBPI S.p.A. Milano 11.049.413 3,00 134 0,001%
Credito Valtellinese S.c.r.l. loan A Immobiliare Santa Rita Terza S.r.l. Milano 96.000 1000,00 96.000 100,000% 100,000%
Credito Valtellinese S.c.r.l. equity interests E Ripoval S.p.A. Sondrio 5.000 516,46 2.500 50,000% 50,000%
Credito Valtellinese S.c.r.l. equity interests A Stelline Servizi Immobiliari S.p.A. Sondrio 500.000 5,00 400.000 80,000% 100,000% Credito Artigiano S.p.A. equity interests A Stelline Servizi Immobiliari S.p.A. Sondrio 500.000 5,00 100.000 20,000%
Credito Artigiano S.p.A. loan A La Mola S.r.l. Milano 2.522.432 1000,00 2.522.432 100,000% 100,000% Credito Artigiano S.p.A. loan A Nike S.r.l. Binasco (MI) 95.000 1000,00 95.000 100,000% 100,000% Credito Artigiano S.p.A. equity interests E MMI S.p.A. Milano 3.202.000 1,00 480.300 15,000% 15,000%
Bankadati Servizi Inform. S.p.A. equity interests E Crypto S.p.A. Sondrio 100.000 1,00 15.000 15,000% 30,000% Bancaperta S.p.A. equity interests E Crypto S.p.A. Sondrio 100.000 1,00 15.000 15,000%
Bancaperta S.p.A. equity interests A Aperta Gestioni Patrimoniali S.A. Lugano 1.000 1000 Chf 600 60,000% 60,000% Bancaperta S.p.A. equity interests E Global Assicurazioni S.p.A. Milano 100.000 1,00 40.000 40,000% 40,000%
Bancaperta S.p.A. equity interests A Provalt S.p.A. Milano 500.000 1,00 250.000 50,000% 51,000% Bancaperta S.p.A. beneficial ownership A Provalt S.p.A. Milano 500.000 1,00 5.000 1,000%
Provalt S.p.A. equity interests E Finanziaria Canova S.p.A. Milano 8.267.000 1,00 3.720.150 45,000% 45,000% Provalt S.p.A. equity interests A Leo Finanziaria Lombarda s.r.l. Milano 25.000 1,00 22.500 90,000%
Credito Siciliano S.p.A. equity interests E Serv.Int. Sicilia S.r.l. Palermo 110.000 0,52 33.000 30,000% 30,000%
Stelline Servizi Immobiliari S.p.A. equity interests E Esseti Servizi Tecnici S.r.l. Sondrio 10.000 1,00 1.500 15,000% 15,000% * A = legal controlling interest E = non-controlling interest