2017 ANNUAL REPORT 2017 Annual Report

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2017 ANNUAL REPORT 2017 Annual Report (Translation from the Italian original which remains the definitive version) 2017 ANNUAL REPORT 2017 Annual Report - 2 - 2017 Annual Report - CONTENTS - DIRECTORS’ REPORT..................................................................................................................................... 9 International situation...................................................................................................................................14 The bank’s operations ...................................................................................................................................19 Organisation and workforce..........................................................................................................................20 Internal controls............................................................................................................................................24 Risk management ..........................................................................................................................................25 Compliance Unit ...........................................................................................................................................26 IT risks..........................................................................................................................................................26 Recovery plan ...............................................................................................................................................27 Business continuity and disaster recovery plans.............................................................................................27 IT Audit.........................................................................................................................................................27 Privacy - Legislative decree no. 196/2003......................................................................................................27 ISVAP Circular no. 551/d of 1 March 2005 - Instructions about the transparency of life assurance contracts .28 Law no. 262/2005 - Instructions for savings protection and financial markets regulations ..............................28 Law no. 231/2001 - Companies’ administrative liability.................................................................................28 Legislative decree no. 231 of 21 November 2007 - Prevention of the use of the financial system for the purpose of money laundering and terrorist financing ..................................................................................................28 THE BANK’S FINANCIAL POSITION............................................................................................................30 Lending.........................................................................................................................................................30 Investments ...................................................................................................................................................33 Equity investments.........................................................................................................................................36 Funding ........................................................................................................................................................36 INCOME STATEMENT...................................................................................................................................38 Net interest income........................................................................................................................................39 NET OPERATING INCOME .........................................................................................................................40 OPERATING PROFIT...................................................................................................................................41 Pre-tax profit from continuing operations......................................................................................................42 PROFIT FOR THE YEAR: ............................................................................................................................43 Cash flows ....................................................................................................................................................44 Indicators......................................................................................................................................................45 Objectives.....................................................................................................................................................47 Bank of Italy/Consob/Isvap (the Italian Insurance Companies Supervisory Authority) document no. 2 of 6 February 2009 ..............................................................................................................................................49 Bank of Italy document no. 0265719/13 of 15 March 2013.............................................................................49 Outlook.........................................................................................................................................................50 Conclusions ..................................................................................................................................................51 STATEMENT OF FINANCIAL POSITION: ASSETS......................................................................................52 STATEMENT OF FINANCIAL POSITION: LIABILITIES..............................................................................54 INCOME STATEMENT...................................................................................................................................56 STATEMENT OF COMPREHENSIVE INCOME ...........................................................................................58 STATEMENT OF CHANGES IN EQUITY FOR 2017.....................................................................................60 STATEMENT OF CHANGES IN EQUITY FOR 2016.....................................................................................61 STATEMENT OF CASH FLOWS: indirect method.........................................................................................63 NOTES TO THE FINANCIAL STATEMENTS ...............................................................................................65 PART A...............................................................................................................................................................67 ACCOUNTING POLICIES ...............................................................................................................................67 A.1 – GENERAL PART....................................................................................................................................69 Section 1 – Statement of compliance..............................................................................................................69 Section 2 - Basis of presentation....................................................................................................................70 Section 3 - Events after the reporting date......................................................................................................71 Section 4 - Other aspects...............................................................................................................................71 A2 – ACCOUNTING POLICIES ......................................................................................................................72 1 - FINANCIAL ASSETS HELD FOR TRADING.....................................................................................................72 a) Recognition .......................................................................................................................................................72 b) Classification.....................................................................................................................................................72 c) Measurement.....................................................................................................................................................72 d) Derecognition....................................................................................................................................................72 e) Recognition of costs and revenue........................................................................................................................72 - 3 - 2017 Annual Report 2 - AVAILABLE-FOR-SALE FINANCIAL ASSETS ................................................................................................ 72 a) Recognition....................................................................................................................................................... 72 b) Classification..................................................................................................................................................... 72 c) Measurement..................................................................................................................................................... 73 d) Derecognition...................................................................................................................................................
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