REPORT AND FINANCIAL STATEMENTS 2018 Banca Sella S.p.A. Head office: Piazza Gaudenzio Sella, 1 - 13900 BIELLA (BI) - Tel. +39 015.35011 - Fax +39 015.351767 Share Capital and Reserves € 789,928,058 - ABI Code 3268 Listed on the Chamber of Commerce Companies Register of Biella and Vercelli - Tax ID Number 02224410023 - Member company of the VAT Group Maurizio Sella S.A.A., VAT no. 02675650028 - SWIFT: SELB IT 2B - Member of the Interbank Deposit Protection Fund and National Guarantee Fund Listed on the Register of Banks and Banking Groups - Subject to Management and Coordination by Banca Sella Holding S.p.A. - Website: www.sella.it - Institutional Website: www.sellagroup.eu – E-mail: [email protected] - PEC (Certified Email): [email protected] Contents Map of the Sella Group at 31 December 2018 ......................................................................................................................... 3 Corporate Officers .............................................................................................................................................................................. 4 Report on Operations ........................................................................................................................................................................ 5 Financial Statement Schedules at 31 December 2018 ....................................................................................................... 62 Notes to the Financial Statements .............................................................................................................................................. 71 Part A – Accounting Policies ......................................................................................................................................................... 72 Part B – Information on the balance sheet Assets ........................................................................................................... 130 Part B – Information on the balance sheet Liabilities ....................................................................................................... 167 Part C - Information on the Income Statement ................................................................................................................... 192 Part D - Comprehensive income ............................................................................................................................................... 216 Part E – Information on risks and related hedging policies ........................................................................................... 218 Part F – Information on consolidated equity ....................................................................................................................... 299 Part G Aggregation Operations Regarding Companies or Business Lines .......................................................... 305 Part H Transactions with related parties .............................................................................................................................. 307 Part I Payment Agreements Based on Own Equity Instruments ................................................................................ 311 Part L Segment Reporting ........................................................................................................................................................... 312 Other information ............................................................................................................................................................................ 313 Report of the Board of Statutory Auditors 317 BANCA SELLA | 2 REPORT AND FINANCIAL STATEMENTS 2018 Map of the Sella Group at 31 December 2018 BANCA SELLA HOLDING S.P.A. BANCA PATRIMONI BANCA SELLA FABRICK S.P.A. SELIR S.r.l. S.P.A. SELLA & C. S.P.A. Banca Sella Chennai FAMILY ADVISORY SIM SELLA & PARTNERS VIPERA PLC AXERVE S.P.A. SELLA Branch TECHNOLOGY SELLA FIDUCIARIA SELLA LEASING VIPERA KUBIQUE S.P.A. S.P.A. S.P.A. IMMOBILIARE VIPERA LANIFICIO CODD&DATE Srl SELLA PERSONAL SELLA SGR S.P.A. CREDIT S.P.A. CODD&DA HI‐MTF SIM VIPERA Srl SELLA BROKER S.P.A. S.P.A. DPIXEL Srl VIPERA Services Srl SMARTIKA S.P.A. BEESY Srl Private banking and investment services Services Commercial banking Open banking Operating companies of Sella Group Related companies of Sella Group Other fully consolidated companies: Finanziaria 2010 S.p.A.; Miret S.A.; Sella Synergy India P.LTD; Mars 2600 S.r.l (special purpose vehicle for Group securitisation transactions); Vipera GmbH (in liquidation) Investee companies consolidated at Net Equity: S.C.P. VDP 1; Enersel S.p.A. BANCA SELLA | 3 REPORT AND FINANCIAL STATEMENTS 2018 Corporate Officers BOARD OF DIRECTORS in office up to the approval of the 2019 financial statements Chairman Maurizio Sella Deputy Chairman Franco Sella Managing Director Claudio Musiari Director Elisabetta Galati “ Viviana Barbera “ Andrea Lanciani “ Ferdinando Parente “ Maria Clara Covini “ Pietro Sella “ Sebastiano Sella “ Helga Garuzzo “ Paolo Tosolini “ Attilio Viola BOARD OF STATUTORY AUDITORS in office up to the approval of the 2019 financial statements Regular Auditor - Chairman Paolo Piccatti “ Claudio Sottoriva “ Carlo Ticozzi Valerio Alternate Auditor Daniele Frè “ Michela Rayneri GENERAL MANAGEMENT Director General and CEO Claudio Musiari Co-General Manager and Deputy CEO Giorgio De Donno BANCA SELLA | 4 Report on Operations BANCA SELLA | 5 REPORT AND FINANCIAL STATEMENTS 2018 I. Main figures and indicators Rating The agency DBRS assigns the bank the following ratings: Rating - DBRS Long-term rating for deposits BBB Short-term rating for deposits R-2 (high) Trend Stable Staff and branches Staff and branches Changes Items 31/12/2018 31/12/2017 absolute % Employees 2,878 2,862 16 0.6% Branches 283 283 - - BANCA SELLA | 6 REPORT AND FINANCIAL STATEMENTS 2018 Summary data (amounts in thousands of euro) (*) Changes BALANCE SHEET DATA 31-12-2018 31-12-2017 absolute % Total assets 11,811,040.3 11,753,678.0 57,362.4 0.5% Financial assets (1) 1,677,342.4 1,174,896.1 502,446.3 42.8% Cash loans, excluding reverse repurchase agreements 6,986,839.5 7,001,626.4 (14,787.0) -0.2% reverse repurchase agreements - 2,135.8 (2,135.8) -100.0% Total cash loans (2) 6,986,839.5 7,003,762.2 (16,922.8) -0.2% Sureties issued 236,346.3 200,154.9 36,191.5 18.1% Equity investments 105,236.2 88,536.0 16,700.2 18.9% Tangible and intangible fixed assets 108,403.3 101,366.3 7,037.0 6.9% Direct deposits, excluding repurchase agreements payable 9,955,775.9 9,778,674.0 177,101.9 1.8% repurchase agreements payable 4,373.0 6,783.3 (2,410.3) -35.5% Total direct deposits (3) 9,960,148.9 9,785,457.3 174,691.60 1.8% Direct deposits from credit institutions 11,532.2 14,366.7 -2,834.55 -19.7% Indirect deposits valued at market prices 15,551,800.2 16,080,289.3 -528,489.15 -3.3% Global deposits valued at market prices (4) 25,523,481.3 25,880,113.4 -356,632.10 -1.4% Shareholders’ equity 750,667.6 797,404.6 (46,736.9) -5.9% Common Equity Tier 1 (CET1) 730,623.4 735,162.8 (4,539.5) -0.6% Tier 2 Capital (T2) 171,081.7 214,467.8 (43,386.0) -20.2% Total own funds 901,705.1 949,630.6 (47,925.5) -5.1% Changes RECLASSIFIED ECONOMIC DATA (5) 31-12-2018 31-12-2017 absolute % Net interest income 145,693.6 141,631.6 4,062.0 2.9% Gross income from services 289,944.5 288,934.7 1,009.8 0.3% Fee expenses (80,078.2) (74,455.2) (5,623.0) 7.6% Net revenues from services (net of fee expenses) (6) 209,866.4 213,848.0 (3,981.6) -1.9% Net banking income 355,560.0 355,479.6 80.4 0.0% Operating expenses net of recovery of stamp duties and other taxes (283,988.6) (273,761.6) (10,227.0) 3.7% Operating profit (loss) 71,571.4 81,718.0 (10,146.6) -12.4% Net value adjustments for credit risk (31,941.9) (33,885.2) 1,943.3 -5.7% Other income statement items (6,023.0) (26,730.8) 20,707.8 -77.5% Income taxes (8,461.5) (4,030.8) (4,430.7) 109.9% Profit (Loss) for the period 25,144.9 14,116.4 11,028.5 78.1% (*) Assets and liabilities held for sale and the relative economic results have been transferred to the relevant asset, liability and income statement items for better comparison between the two years; (1) Obtained from the sum of items 20, 30 and 40, only debt securities from Balance Sheet Assets; (2) Obtained from item 40 b) of the Balance Sheet Assets, excluding debt securities; (3) Obtained from the sum of items 10 b) and 10 c) of the Balance Sheet Liabilities; (4) The aggregate (stated at market prices) includes administered securities and funds and the insurance funding component and, in contrast to other funding aggregates, refers to the management parameter on a like for like basis. The figures at 31 December 2017 differ from those published as, following a revision in the indirect funding calculations, it was deemed appropriate to also consider portions of pension funds placed by the Group company Sella Gestioni SGR, previously excluded. As a consequence, the comparison period was recalculated. (5) Items from the Reclassified Income Statement; (6) The aggregate represents the sum of the following items in the Reclassified Income Statement: net fees, net gains/(losses) on trading and hedging activities, gain (loss) from sale or repurchase of financial assets measured at amortised cost and assets measured at fair value through other comprehensive income; (7) Obtained from the sum of the following items: 160, 180, 190 and 200 of the Reclassified Income Statement. BANCA SELLA | 7 REPORT AND FINANCIAL