Part L - Segment reporting

The model for segment reporting is in line with the new organisational structure used by the Head Office to analyse Group results, which, following the acquisition of the former GE Capital Interbanca Group, now includes two new sectors: Corporate Banking and Leasing. In addition, since the acquisition date, the trade receivables sector has been benefiting from the contribution of IFIS Factoring.

Therefore, the organisational structure consists of the following segments: Trade receivables, Corporate banking, Leasing, NPL Area, Tax receivables, Governance and Services.

The Governance and Services segment manages the Group's financial resources and allocates funding costs to operating segments through the Group's internal transfer rate system.

 

Trade receivables

This segment includes the following business areas:

  • Crediti Commerciali Italia and Crediti Commerciali International, dedicated to supporting the trade receivables of SMEs operating in the domestic market as well as companies growing abroad or based abroad and working with Italian customers; this area includes the operations carried out in Poland by the investee IFIS Finance’s S.p. Zo.o.; these business areas operate under the Banca IFIS Impresa brand;
  • Banca IFIS Pharma and Pharmacies, operating under the brand of the same name, supporting the trade receivables of local health services’ suppliers and pharmacists.

 

Corporate Banking

This segment includes the following business areas:

  • Medium/long/term financing, supporting the company's operating cycle through services ranging from working capital financing to the support for productive investments;
  • Structured Finance, supporting companies in the legal, organisational and financial arrangement of bilateral or syndicated loans;
  • Workout & Recovery, which manages the UTPs and Bad Loans of all the portfolios of the sector's other two business areas, as well as the runoff of project finance, shipping and real estate portfolios.

 

Leasing

This sector provides finance and operating leases to small businesses and SMEs.

 

NPL Area

This is the Banca IFIS Group's segment dedicated to non-recourse factoring and managing unsecured distressed retail loans. It serves households under the CrediFamiglia brand.

The business is closely associated with recovering and collecting non-performing exposures.

The Bank manages the portfolio of acquired receivables using two different methods: non-judicial and judicial operations.

As for the portfolio managed through non-judicial operations, to measure them the Bank uses a model based on a simulation of cash flows that projects the “breakdown” of the nominal amount of the receivable

“over time” based on the historical recovery profile for similar clusters. As for the positions with funding characteristics (bills of exchange or settlement plans agreed with the debtor), the Bank uses a “deterministic” model based on the measurement of the future instalments of the settlement plan, net of the historical default rate.

Judicial operations consist in collecting debts through legal actions to secure a court order for the garnishment of one fifth of pension benefits or wages. The cash flows from judicial operations are not simulated using the model: the manager individually measures them for each individual position and enters them in the system.

 

Tax receivables

It is the segment specialised in purchasing tax receivables arising from insolvency proceedings; it operates under the Fast Finance brand and offers to buy both accrued and accruing tax receivables on which repayment has already been requested or which shall be requested in the future, and that arose during insolvency proceedings or in prior years. As a complement to its core business, this segment seldom acquires also trade receivables from insolvency proceedings.

 

Governance and services

Governance and Services provides the operating segments with the financial resources and services necessary to perform their respective business activities. The segment comprises, among other things, the resources required for the performance of the services of the Audit, Administration-Accounting, Planning, Organisation and ICT functions, as well as the structures responsible for raising, managing and allocating financial resources to the operating segments. The data includes the contribution of the former GE Capital Interbanca Group not allocated to individual segments.

     

Here below are the results achieved in 2016 by the various business segments.

STATEMENT OF FINANCIAL POSITION
(in thousands of Euro)
TRADE RECEIVABLES CORPORATE BANKINGLEASINGNPL AREATAX RECEIVABLESGOVERNANCE AND SERVICESCONS. GROUP TOTAL
Available for sale financial assets       
Amounts at 31.12.2016-----374,229374,229
Amounts at 31.12.2015-----3,221,5333,221,533
% Change-----(88.4)%(88.4)%
Due from banks       
Amounts at 31.12.2016-----1,393,3581,393,358
Amounts at 31.12.2015-----95,35295,352
% Change-----1361.3%1361.3%
Loans to customers       
Amounts at 31.12.20163,092,488905,6821,235,638562,146124,6977,5615,928,212
of which IFIS Factoring192,055-----192,055
Amounts at 31.12.20152,848,124n.a.n.a.354,352130,663103,9973,437,136
% Change8.6%n.a.n.a.58.6%(4.6)%(92.7)%72.5%
Due to banks       
Amounts at 31.12.2016-----503,964503,964
Amounts at 31.12.2015-----662,985662,985
% Change-----(24.0)%(24.0)%
Due to customers       
Amounts at 31.12.2016-----5,045,1365,045,136
Amounts at 31.12.2015-----5,487,4765,487,476
% Change-----(8.1)%(8.1)%

INCOME STATEMENT DATA

(in thousands of Euro)
TRADE RECEIVABLES CORPORATE BANKINGLEASINGNPL AREATAX RECEIVABLESGOVERNANCE AND SERVICESCONS. GROUP TOTAL
Net banking income       
Amounts at 31.12.2016174,4332,952(1,172)187,36813,990(18,972)358,599
Amounts at 31.12.2015158,671n.a.n.a.56,30020,335172,652407,958
% Change9.9%n.a.n.a.232.8%(31.2)%(111.0)%(12.1)%
Net profit (loss) from financial activities       
Amounts at 31.12.2016154,1282,889(2,682)154,74013,620(23,329)299,366
Amounts at 31.12.2015137,423n.a.n.a.52,68719,923163,675373,708
% Change12.2%n.a.n.a.193.7%(31.6)%(114.3)%(19.9)%

QUARTERLY INCOME STATEMENT DATA

(in thousands of Euro)
TRADE RECEIVABLES CORPORATE BANKINGLEASINGNPL AREATAX RECEIVABLESGOVERNANCE AND SERVICESCONS. GROUP TOTAL
Net banking income       
Fourth quarter 201653,1422,952(1,172)51,8253,126(12,546)97,327
Fourth quarter 201539,728n.a. - n.a. - 22,4028,8285,83476,792
% Change33.8%n.a.n.a.131.3%(64.6)%(315.0)%26.7%
Net profit (loss) from financial activities       
Fourth quarter 201648,0612,889(2,682)42,7803,025(12,904)81,169
Fourth quarter 201533,237n.a. - n.a. 21,8188,5425,10668,703
% Change44.6%n.a.n.a.96.1%(64.6)%(352.7)%18.1%

SEGMENT KPIs

(in thousands of Euro)
TRADE 
RECEIVABLESCORPORATE BANKINGLEASINGNPL AREATAX 
RECEIVABLESGOVERNANCE AND SERVICES
Turnover      
Amounts at 31.12.201610,549,881n.a.n.a.n.a.n.a.n.a.
Amounts at 31.12.201510,126,397n.a.n.a.n.a.n.a.n.a.
% Change4.2%-----
Nominal amount of receivables managed      
Amounts at 31.12.20163,880,8351,739,1751,273,9339,660,196172,145n.a.
Amounts at 31.12.20153,576,982n.a.n.a.8,161,005190,553n.a.
% Change8.5%--18.4%(9.7)%-
Cost of credit quality      
Amounts at 31.12.20160.8%0.0%0.1%n.a.n.a.n.a.
Amounts at 31.12.20150.9%n.a.n.a.n.a.n.a.n.a.
% Change(0.1)%n.a.n.a.---
Net bad loans/Loans to customers      
Amounts at 31.12.20161.0%3.0%0.5%57.0%0.0%n.a.
Amounts at 31.12.20151.1%n.a.n.a.45.0%0.0%n.a.
% Change(0.1)%n.a.n.a.12.1%0.0%-
Net bad loans/Equity      
Amounts at 31.12.20162.6%2.2%0.5%n.a.n.a.n.a.
Amounts at 31.12.20155.4%n.a.n.a.n.a.n.a.n.a.
% Change(2.8)%n.a.n.a.---
Coverage ratio on gross bad loans      
Amounts at 31.12.201688.5%94.0%92.2%n.a.n.a.n.a.
Amounts at 31.12.201587.9%n.a.n.a.n.a.n.a.n.a.
% Change0.7%n.a.n.a.---
Non-performing exposures/Loans to customers      
Amounts at 31.12.20166.5%19.0%3.0%n.a.n.a.n.a.
Amounts at 31.12.20154.5%n.a.n.a.n.a.n.a.n.a.
% Change2.0%n.a.n.a.---
Net non-performing loans/Equity      
Amounts at 31.12.201616.5%14.1%3.0%n.a.n.a.n.a.
Amounts at 31.12.201522.4%n.a.n.a.n.a.n.a.n.a.
% Change(6.0)%n.a.n.a.---
RWA      
Amounts at 31.12.20162,348,131929,337875,153562,14650,004263,512(4)
Amounts at 31.12.20151,970,886n.a.n.a.354,35241,61425,256
% Change19.1%n.a.n.a.58.6%20.2%943.4%

(1) Gross flow of the receivables sold by the customers in a specific period of time.

(2) Risk Weighted Assets; the amount refers exclusively to the financial items reported in the segments.

(3) Data restated after initial publication.

(4) The Governance and Services sector's RWAs include in 2016 the investment in IFIS Rental Services, a non-financial company consolidated using the equity method and that is not part of the Banking Group for supervisory purposes.

 

For a more detailed analysis of the results of the business sectors, please refer to the Directors’ Report.

 

Venice - Mestre, 16 March 2017
For the Board of Directors 

The Chairman
Sebastien Egon Fürstenberg

The C.E.O.
Giovanni Bossi