Interim Financial Report at June 30, 2016 Iccrea Banca S.P.A
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Interim T he right direction. Financial Report June 30, 2o16 Interim Financial Report at June 30, 2016 Iccrea Banca S.p.A. Iccrea Banca S.p.A. Registered office: Via Lucrezia Romana 41/47 - 00178 Rome Company Register and Tax ID no. 04774801007 - R.E.A. of Rome no. 801787 Share capital: €216,913,200 fully paid up Member of the Iccrea Banking Group Entered in the register of banking groups at no. 20016 Subject to the management and control of Iccrea Holding S.p.A. Interim report on operations at June 30, 2016 CONTENTS Interim report on operations 1. MAIN RESULTS OF THE BANK 6 2. OPERATING CONDITIONS 9 3. DEVELOPMENTS IN OPERATIONS AND THE MAIN ITEMS OF THE BALANCE SHEET AND INCOME STATEMENT 12 4. BANK OPERATIONS 18 5. SUBSEQUENT EVENTS 41 6. TRANSACTIONS WITH RELATED PARTIES 41 7. OUTLOOK FOR THE FULL YEAR 41 ICCREA BANCA – 2016 INTERIM FINANCIAL REPORT REPORT ON OPERATIONS ABOUT US THE ICCREA BANKING GROUP Iccrea Banca is the central credit institution for the The Iccrea Banking Group is a group of companies mutual banking system. Our mission, as enshrined in that share a primary objective: to support the operations our bylaws, is to make the work of mutual banks more of mutual banks and meet the needs of their local complete, intensive and effective by supporting and customers, both corporate (small and medium-sized strengthening their efforts. enterprises) and retail (households). The services and Iccrea Holding, the parent company of the Iccrea products that the Group offers through its two banks Banking Group, holds 100% of Iccrea Banca. (Iccrea Banca and Iccrea BancaImpresa) and the other Iccrea Banca is a solid organization, providing subsidiaries of the parent company, Iccrea Holding, as services in the areas of finance, electronic money and well as major partnerships with outside providers, range payment systems, while also providing credit services to from insurance (both life and non-life) to finance and support the needs of the mutual banking system. investment, and include business-strategy consulting Iccrea Banca manages the technology infrastructure and training. Thus, the companies of the Iccrea Banking to support, monitor and provide the services supporting Group do not work directly with the market, but rather the business processes of the Iccrea Banking Group. offer an integrated system of solutions for all mutual Iccrea Banca is the finance hub for the Iccrea Banking banks in their local markets, enabling them to be local Group, as well as the direct acquirer and issuer for the actors in economic and social development. Ottomila circuit, which comprises the full line of Italian and international credit, debit and pre-paid payment cards. 5 ICCREA BANCA – 2016 INTERIM FINANCIAL REPORT 1. MAIN RESULTS OF THE BANK Reclassified balance sheet Assets Jun-16 Dec-15 % change (thousands of euros) Financial assets held for trading 20. Financial assets held for trading 498,552 402,780 23.8% Financial assets designated as at fair value 30. Financial assets designated as at fair value 14,877 337,911 -95.6% through profit or loss through profit or loss Financial assets available for sale 40. Financial assets available for sale 5,589,079 6,720,078 -16.8% Financial assets held to maturity 50. Financial assets held to maturity 1,566,247 1,779,509 -12.0% Due from banks 60. Due from banks 34,725,317 31,939,294 8.7% Loans to customers 70. Loans to customers 4,055,662 4,077,715 -0.5% 90 Value adjustments of macro-hedged financial Value adjustments of financial assets 1,263 932 35.6% assets Equity investments 100. Equity investments 264,611 263,610 0.4% 110. Property and equipment 7,128 7,794 -8.6% 120. Intangible assets 7,348 8,732 -15.8% Tax assets 130. Tax assets 3,364 6,273 -46.4% Other assets 374,881 244,714 53.2% 10. Cash and cash equivalents 108,722 91,044 19.4% 80. Hedging derivatives 11,657 10,181 14.5% 150. Other assets 254,502 143,489 77.4% Total assets 47,108,328 45,789,341 2.9% Reclassified balance sheet Liabilities and shareholders’ equity Jun-16 Dec-15 % change (thousands of euros) Due to banks 10. Due to banks 12,854,979 13,670,457 -6.0% Due to customers 20. Due to customers 28,257,675 26,029,648 8.6% Securities issued 30. Securities issued 4,492,361 4,368,998 2.8% Financial liabilities held for trading 40. Financial liabilities held for trading 489,594 475,615 2.9% Financial liabilities designated as at fair value 50. Financial liabilities designated as at fair value 116,783 437,636 -73.3% through profit or loss through profit or loss Other liabilities 341,952 278,194 22.9% 80. Tax liabilities 11,469 17,988 -36.2% 60. Hedging derivatives 107,389 88,035 22.0% 100. Other liabilities 223,093 172,171 29.6% Provisions 20,131 19,121 5.3% 110. Employee termination benefits 13,281 12,769 4.0% 120. Provisions for risks and charges 6,850 6,352 7.8% Reserves 268,277 283,513 -5.4% 130. Valuation reserves 73,852 89,088 -17.1% 160. Reserves 194,425 194,425 0.0% Share capital 180. Share capital 216,913 216,913 0.0% Net profit/(loss) for the period 220. Net profit/(loss) for the period (+/-) 49,664 9,245 437.2% Total liabilities and shareholders’ equity 47,108,328 45,789,341 2.9% REPORT ON OPERATIONS Reclassified income statement (thousands of euros) Items pursuant to format Jun-16 Jun-15 % change in Bank of Italy Circular 262 of 22/12/2005 Net interest income 30,590 47,105 -35.1% 10-20 Net income (loss) on financial transactions 60,220 36,261 66.1% 80-90-100-110 Dividends 300 209 43.7% 70 Net fee and commission income 59,928 64,607 -7.2% 40-50 Other operating expenses/income 11,006 9,932 10.8% 190 Total revenues 162,044 158,114 2.5% Personnel expenses -26,454 -30,729 -13.9% 150a Other administrative expenses -69,839 -60,049 16.3% 150b Net adjustments of property and equipment and intangible assets -4,129 -4,277 -3.5% 170-180 Total operating expenses -100,423 -95,055 5.6% Gross operating profit 61,621 63,059 -2.3% Net provisions for risks and charges -526 -150 249.6% 160 Net losses for impairment of loans and other financial transactions 1,981 -1,762 -212.5% 130 a) Total provisions and adjustments 1,455 -1,912 -176.1% Net operating profit 63,076 61,147 3.2% Profit/(loss) before tax 63,076 61,147 3.2% Income tax expense from continuing operations -13,412 -21,237 -36.8% 260 Profit (loss) after tax from non-current assets held for sale 49,664 39,910 24.4% 280 Profit/(loss) after tax from disposal groups held for sale 0 0 280 Net profit/(loss) for the period 49,664 39,910 24.4% Performance indicators Lending Return on equity (ROE) In the first half of 2016, of total loans to customers, Return on equity for the first half of 2016 came to loans to banks, financial assets held to maturity and 10.2%, up from 8.5% for the first half of 2015, due financial assets available for sale, loans to customers essentially to the increase in profit for the period. accounted for 8.8% of the total, loans to banks 75.6%, ROE is calculated as the ratio of net profit for the financial assets held to maturity 3.4% and financial period to equity at the end of the period. assets available for sale 12.2%. Impieghi ROE - Return on equity 8,5% 10,2% 2015 giu-16 Crediti verso clientela Crediti verso banche Attività finanz detenute a scadenza Attività finanz disponibili per la vendita giu 2015 giu 2016 7 ICCREA BANCA – 2016 INTERIM FINANCIAL REPORT Cost-to-income ratio Earnings per share (EPS) The cost-to-income ratio for the first half of 2016 Earnings per share for the first half of 2016 came to came to 62.0%, an increase on the ratio for the first half €118.2, compared with €95.0 for the first half of 2015, of 2015 due to an increase in costs associated with and reflects the increase in net profit. contributions paid to the Resolution Fund. EPS is calculated as net profit divided by the This ratio is calculated as the ratio of operating costs number of shares that make up share capital. (administrative expenses and depreciation and amortization) to total revenues. It is an indicator of productivity expressed as the percentage of revenues EPS - Earnings per share absorbed by operating costs. Cost-to-income 118,2 95,0 giu 2015 giu 2016 62,0% Net bad debts as a proportion of total loans to 60,1% customers giu 2015 giu 2016 The ratio of net bad debts to total loans to customers at June 30, 2016 came to 0.5%, in line with 2015. Return on Assets (ROA) This indicator reflects the level of risk of the loan portfolio. Return on assets for the first half of 2016 came to 0.11%, an increase on the end of 2015 owing to the Net bad debts/Loans to customers increase in assets and net profit. ROA is calculated as the ratio of net profit to total assets and is an indicator of the return on total capital employed. ROA - Return on assets 2015 giu-16 0,11% 0,02% 2015 giu 2016 8 REPORT ON OPERATIONS to banks by the volatility of the financial markets.