Section 1 - Cash and cash equivalents - Item 10

1.1 Cash and cash equivalents: breakdown

  31.12.2016 31.12.2015
a) Cash 34 34
b) On demand deposits at Central banks - -
Total 34 34
 

Section 2 - Financial assets held for trading - Item 20

2.1 Financial assets held for trading: breakdown by type

Type/Amounts 31.12.201631.12.2015
  Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
A, On-balance-sheet assets Level 1 Level 2 Level 3    
1. Debt securities   ---
1.1 Structured------
1.2 Other------
2. Equity securities------
3. UCITS units------
4. Loans------
4.1 Reverse repurchase agreements------
4.2 Other------
Total A ------
B. Derivatives ---   
1. Financial derivatives   --259
1.1 For trading-39,8937,500--259
1.2 connected to the fair value option-39,8937,500---
1.3 other------
2. Credit derivatives------
2.1 For trading------
2.2 connected to the fair value option------
2.3 other------
Total B -----259
Total (A+B)-39,8937,500--259
 

The financial assets and liabilities held for trading outstanding at 31 December 2016 were incorporated with the acquisition of the former GE Capital Interbanca Group and referred to interest rate derivatives that Interbanca S.p.A. negotiated with its Corporate clients up to 2009 to provide them with instruments to hedge risks such as fluctuations in interest rates. In order to remove market risk, all outstanding transactions are hedged with “back to back” trades, in which Interbanca assumed a position opposite to the one sold to corporate clients with independent market counterparties.

Level 3 assets include 2,0 million Euro in cross currency swaps with other banks.

 

2.2 Financial assets held for trading: breakdown by debtor/issuer

Type/Amounts 31.12.201631.12.2015
A. On-balance-sheet assets   
1, Debt securities --
a) Governments and Central banks--
b) Other public entities--
c) Banks--
d) Other issuers--
2, Equity securities --
a) Banks--
b) Other issuers:--
- insurance companies--
- financial companies--
- non-financial companies--
- other--
3, UCITS units --
4, Loans --
a) Governments and Central banks--
b) Other public entities--
c) Banks--
d) Other issuers--
Total A --
B. Derivatives   
a) Banks  
- fair value4,340259
b) Customers -
- fair value43,053-
Total B 47,393259
Total (A+B)47,393259
 

Section 4 - Available for sale financial assets – Item 40

4.1 Available for sale financial assets: breakdown by type

Type/Amounts 31.12.201631.12.2015
  Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
1. Debt securities353,150--3,216,832--
1.1 Structured------
1.2 Other353,150--3,216,832--
2. Equity securities2,47612,6472,017--4,701
2.1 At fair value2,47612,6472,017--4,030
2.2 At cost-----671
3. UCITS units-3,939----
4. Loans------
Total 355,62616,5862,0173,216,832-4,701
 

Level 1 “other debt securities” refer to Italian government bonds, either fixed-rate and very short-term bonds or floating-rate and medium-term ones.

These securities have been mainly used for short-/very short-term repurchase agreements with banks, on the MTS platform or on the Eurosystem.

The decrease in debt securities was largely attributable to the 2,9 billion Euro worth of instruments sold during the year, resulting in a 5,5 million Euro gain.

Level 3 equity instruments refer to non-controlling interests. The increase was the result of the 15,1 million Euro contribution from the former Interbanca Group and the 1,5 million Euro acquisition of an interest in Cassa di Risparmio di Cesena after paying a contribution to Italy's Interbank Deposit Protection Fund (FITD, Fondo Interbancario di Tutela dei Depositi) as payment for the bank's capital increase. During the year, the Group recognised a 4,4 million Euro write-down of the equity interests in two investees after they were tested for impairment.

 

4.2 Available for sale financial assets: breakdown by debtor/issuer

Type/Amounts31.12.201631.12.2015
1. Debt securities 353,1503,216,832
a) Governments and Central banks353,1503,216,832
b) Other public entities--
c) Banks--
d) Other issuers--
2. Equity securities 17,1404,701
a) Banks1,1354,022
b) Other issuers:16,005679
- insurance companies--
- financial companies8,878672
- non-financial companies7,1277
- other--
3. UCITS units 3,939-
4, Loans --
a) Governments and Central banks--
b) Other public entities--
c) Banks--
d) Other issuers--
Total 374,2293,221,533
   

Section 6 – Due from banks – Item 60

6.1 Due from banks: breakdown by type

Type / Amounts31.12.201631.12.2015
 BVFV Level 1FV Level 2FV Level 3BVFV Level 1FV Level 2FV Level 3
A, Due from Central banks 1,063,831--1,063,83114,446  14,446
1. Term deposits-XXX-XXX
2. Legal reserve1,019,000XXX14,446XXX
3. Repurchase agreements-XXX-XXX
4. Others44,831XXX-XXX
B. Due from banks 329,527--329,52780,906--80,906
1. Loans331,430--331,43075,896--75,896
1.1 Current accounts and on demand deposits239,590XXXXXXX
1.2 Term deposits88,034XXX-XXX
1.3 Other loans:1,903----XXX
- Reverse repurchase agreements-XXX-XXX
- Finance leases1XXX-XXX
- Other1,902XXX-XXX
2. Debt securities----5,010--5,010
2.1 Structured-XXX-XXX
2.2 Other-XXX5,010XXX
Total 1,393,358--1,393,35895,352  95,352

Key

FV= fair value

BV= book value

 

Lending to other banks is not part of the Group's core business: the excess liquidity ensures the margin required to carry out banking operations as well as the funds necessary to seize potential market opportunities.

The fair value of receivables due from banks is in line with the relevant book value, considering the fact that interbank deposits are short- or very short-term indexed-rate instruments.

Other debt securities outstanding at the end of 2015, referring to bonds issued by banks which, given their characteristics, are classified under due from banks, were repaid during 2016.

       

Section 7 – Loans to customers – Item 70

7.1 Loans to customers: breakdown by type

Type/Amounts31.12.201631.12.2015
 Carrying amountFair valueCarrying amountFair value
 PerformingNon-performingL1L2L3PerformingNon-performingL1L2L3
  AcquiredOthers    AcquiredOthers   
Loans 4,956,051562,329399,948   2,954,090354,331128,715 --3,452,700
1. Current accounts51,17425,11212,072XXX94,4568,29816,100XXX
2. Reverse repurchase agreements---XXX---XXX
3. Loans/mortgages724,7083,466154,467XXX6,9032,993-XXX
4. Credit cards. personal loans and salary-backed loans15,521305,6971,722XXX-162,495-XXX
5. Finance leases814,91424012,947XXX5833-XXX
6. Factoring2,711,340-180,244XXX2,532,819-102,389XXX
7. Other loans638,394227,81438,496XXX319,907179,71210,226XXX
Debt securities --9,884---------
8 Structured---XXX---XXX
9 Other--9,884XXX---XXX
Total4,956,051562,329409,832--5,957,8972,954,090354,331128,715--3,452,700
       

Acquired non-performing exposures mainly refer to the distressed retail loans of the NPL area. whose business is by nature closely associated with recovering impaired assets. Therefore, loans in the DRL sector are recognised under bad loans or unlikely to pay. In particular, those loans maintain the same classification as that assigned by the invoice seller, provided the latter is subject to the same law as Banca IFIS: otherwise, if the Bank has not ascertained the debtor's state of insolvency, those loans are classified as unlikely to pay.

Performing loans classified under “Other transactions” refer to tax receivables (562,1 million Euro) and the margin lending related to repurchase agreements on government bonds on the MTS platform (4,7 million Euro).

 

7.2 Loans to customers: breakdown by debtor/issuer

Type/Amounts31.12.201631.12.2015
   
 Performing Non-performing Performing Non-performing
   Acquired Others   Acquired Others
1, Debt securities:--9,884---
a) Governments------
b) Other public entities------
c) Other issuers--9,884---
- non-financial companies--9,884---
- financial companies------
- insurance companies------
- other------
2, Loans to:4,956,051562,329399,9482,954,090354,331128,715
a) Governments95,011-11,484104,088-1,041
b) Other public entities799,917142,229895,16216,580
c) Other parties4,061,123562,328346,2351,954,840354,330121,094
- non-financial companies3,344,96627,595280,9421,824,74916,747108,357
- financial companies72,2069929,969114,927956,666
- insurance companies------
- other643,951534,63435,32415,164337,4886,071
Total4,956,051562,329409,8322,954,090354,331128,715
 

7.4 Finance leases

 Future minimum lease paymentsCurrent value of future minimum lease payments
Within 1 year330,333306,193
Between 1 and 5 years619,699613,878
Over 5 years5,0934,657
Total-955,125924,728
Deferred financial profits--
Bad debt provision(41,924)(41,924)
Recognised receivables913,201882,804
 

The reported amounts refer to IFIS Leasing, a subsidiary of Interbanca.

Section 12 – Property, plant and equipment and investment property – Item 120

12.1 Property, plant and equipment for functional use: breakdown of assets measured at cost

Assets/Amounts31.12.201631.12.2015
1. Owned 105,87747,523
a) Land35,8926,738
b) Buildings62,73537,899
c) Furnishings1,780641
d) Electronic systems4,2981,480
e) Others1,172765
2. 2.2 Acquired under finance leases 3,7513,920
a) Land--
b) Buildings3,7183,862
c) Furnishings--
d) Electronic systems--
e) Others3358
Total 109,62851,443
 

The significant increase in this line item compared to the end of 2015 was largely due to the contribution from the former GE Capital Interbanca Group as well as the capitalisation of the costs for the restructuring of the property in Florence that houses the new headquarters of the NPL business area.

At the end of the period, the properties recognised under property, plant and equipment and investment property included the important historical building “Villa Marocco”, located in Mestre – Venice and housing Banca IFIS's registered office, as well as, following the acquisition of the former GE Capital Interbanca Group, two buildings in Milan, housing the registered offices of Interbanca S.p.A. and some Group companies.

Since Villa Marocco is a luxury property, it is not amortised, but it is tested for impairment at least annually. To this end, they are appraised by experts specialising in luxury properties. During the year, there were no indications requiring to test the assets for impairment.

 

12.2 Investment property: breakdown of assets measured at cost

Assets/Amounts31.12.201631.12.2015
 Carrying amountFair valueCarrying amountFair value
  L1L2L3 L1L2L3
1. Owned 720--926720--926
a) Land-   -   
b) Buildings720  926720  926
2. 2.2 Acquired under finance leases --------
a) Land-   -   
b) Buildings-   -   
Total 720--926720--926
     

12.5 Property, plant and equipment for functional use: annual changes

 LandBuildingsFurnishingsElectronic systemsOthersTotal
 31.12.2016
A. Gross opening balance 6,73843,8664,8026,4931,96163,860
A.1 Total net depreciation and impairment losses-(2,105)(4,160)(5,013)(1,139) (12,417)
A.2 Net opening balance 6,73841,7616421,48082251,443
B. Increases 29,15425,2391,3984,31175860,860
B.1 Purchases29,15425,2391,3984,31174360,845
of which: business combinations29,15415,86657166717746,435
B.2 Capitalised improvement expenses----- -
B.3 Reversals of impairment losses----66
B.4 Fair value gains taken to:------
a) equity - - - - - -
b) profit or loss - - - - - -
B.5 Exchange gains----- -
B.6 Transfers from investment property----- -
B.7 Other changes----99
C. Reductions - (547) (260) (1,493) (375) (2,675)
C.1 Sales--(2)(4)(149) (155)
C.2 Depreciation-(547)(258)(1,489)(197) (2,491)
C.3 Impairment losses taken to:------
a) equity - - - - - -
b) profit or loss - - - - - -
C.4 Fair value losses taken to:------
a) equity - - - - - -
b) profit or loss - - - - - -
C.5 Exchange losses - - - - - -
C.6 Transfers to------
a) Investment property - - - - - -
b) Assets under disposal - - - - - -
C.7 Other changes----(29) (29)
D, Net closing balance 35,89266,4531,7804,2981,205109,628
D.1 Total net depreciation and impairment losses-19,8779,15220,06997650,074
D.2 Gross closing balance 35,89286,33010,93224,3672,181159,702
E. Measurement at cost------
 

Property, plant and equipment for functional use are measured at cost and are depreciated on a straight-line basis over their useful life, with the exclusion of land with an indefinite useful life and the “Villa Marocco” property, whose residual value at the end of its useful life is expected to be higher than its book value.

As for buildings, excluding the contribution from the acquisition of the former GE Capital Interbanca Group, the purchases referred largely to the capitalisation of the costs for restructuring the property in Florence that houses the new headquarters of the NPL business area.

Property, plant and equipment not yet brought into use at the reporting date are not depreciated.

12.6 Investment property: annual changes

 31.12.2016
 LandBuildings
A. Opening balance -720
B. Increases --
B.1 Purchases--
B.2 Capitalised improvement expenses--
B.3 Fair value gains:--
B.4 Reversals of impairment losses--
B.5 Exchange gains--
B.6 Transfers from property for functional use--
B.7 Other changes--
C. Reductions --
C.1 Sales--
C.2 Depreciation--
C.3 Fair value losses--
C.4 Impairment losses--
C.5 Exchange losses--
C.6 Transfers to other asset portfolios--
a) assets for functional use--
b) non-current assets under disposal--
C.7 Other changes--
D. Closing balance -720
E. Measurement at fair value-926
 

Buildings held for investment purposes are measured at cost and refer to leased property. They are not amortised as they are destined for sale.

Section 13 – Intangible assets – Item 130

13.1 Intangible assets: breakdown by asset type

Assets/Amounts 31.12.201631.12.2015
 Finite lifeIndefinite lifeFinite lifeIndefinite life
A.1 Goodwill: X799X820
A.1.1 Attributable to owners of the parent companyX799X820
A.1.2 Non-controlling interestsX-X-
A.2 Other intangible assets 14,182-6,350-
A.2.1 Assets measured at cost:14,182-6,350-
a) Internally generated intangible assets----
b) Other assets14,182-6,350-
A.2.2 Assets measured at fair value:----
a) Internally generated intangible assets----
b) Other assets----
Total 14,1827996,350820
 

Goodwill, amounting to 799 thousand Euro, arises from the line-by-line consolidation of the Polish subsidiary IFIS Finance Sp. Z o. o..

The above-mentioned goodwill was tested for impairment in accordance with IAS 36 (Impairment Test). To do so, goodwill was allocated to the cash-generating unit corresponding to the whole company IFIS Finance, as it represents an autonomous business segment which cannot be further broken down. The test was carried out by applying the value in use method based on the projection of expected cash flows for an explicit period of 5 years. Expected cash flows were discounted based on the company’s estimated cost of capital calculated using the Capital Asset Pricing Model. Expected cash flows were estimated based on the most recently approved business plan and financial projections based on the subsidiary’s average growth trends. The terminal value was calculated assuming that the last net cash flow in the explicit planning period is replicable. The impairment test did not reveal any impairment losses to be recognised in profit or loss.

Finally, goodwill underwent a sensitivity analysis based on the cost of capital, using a fluctuation range equal to 5%; the test carried out with the control method confirmed the reliability of the reported amount.

The change in the value of goodwill compared to the previous year is attributable to the impact of changes in year-end exchange rates.

Other intangible assets at 31 December 2016 refer exclusively to software purchase and development, amortised on a straight-line basis over the estimated useful life, which is 5 years from deployment.

     

13.2 Intangible assets: annual changes

   GoodwillOther intangibleassets: internally generatedOther intangibleassets: otherTotal
 31.12.2016
  FINITEINDEFFINITEINDEF 
A. Opening balance 820--6,350-7,170
A.1 Total net depreciation and impairment losses------
A.2 Net opening balance 820--6,350-7,170
B. Increases ---11,402-11,402
B.1 Purchases---11,402-11,402
of which: business combinations--1,134-1,134
B.2 Increases in internally generated intangible assetsX-----
B.3 Reversals of impairment lossesX-----
B.4 Fair value gains:      
- to equityX-----
- to profit or lossX-----
B.5 Exchange gains------
B.6 Other changes------
C. Reductions 21--3,570-3,591
C.1 Sales------
C.2 Impairment losses and amortisation:---3,570-3,570
- Amortisation expenseX--3,570-3,570
- Impairment losses------
+ equityX-----
+ profit or loss------
C,3 Fair value losses: -----
- to equityX-----
- to profit or lossX-----
C.4 Transfer to non-current assets under disposal------
C.5 Exchange losses21----21
C.6 Other changes------
D. Net closing balance 799--14,182-14,981
D.1 Total net amortisation. impairment losses and reversals of impairment losses--- --
E. Gross closing balance 799--14,182-14,981
F. Measurement at cost---   

Key

Fin: finite useful life

Indef: indefinite useful life

Purchases refer exclusively to investments for the enhancement of IT systems. The contribution from the acquisition of the former GE Capital Interbanca Group amounted to 1,1 million Euro.

 

Section 14 – Tax assets and liabilities – Item 140 of assets and 80 of liabilities

14.1 Deferred tax assets: breakdown

The main types of deferred tax assets are set out below.

Deferred tax assets31.12.201631.12.2015
Differences from PPA253,030-
Loans to customers (Law 214/2011)192,310-
Loans to customers42,97838,058
Equipment rental1,460-
Provisions for risks and charges1,209561
Others2,193803
Total493,180 39,442
 

Deferred tax assets, amounting to 493,1 million Euro, included 253 million Euro in misalignments found during the acquisition of the former GE Capital Interbanca Group (PPA) and 228,5 million Euro in value adjustments on receivables that can be deducted in the following years.

 

14.2 Deferred tax liabilities: breakdown

The main types of deferred tax liabilities are shown below.

Deferred tax liabilities31.12.201631.12.2015
Loans to customers13,29215,257
Property. plant and equipment9,433309
Available for sale securities3945,770
Others1,31560
Total 24,43421,396
     

14.3 Changes in deferred tax assets (recognised through profit or loss)

 31.12.201631.12.2015
1. Opening balance 39,35938,342
2. Increases 458,0212,256
2.1 Deferred tax assets recognised in the year7,4942,256
a) relative to previous years30-
b) due to change in accounting standards--
c) reversals of impairment losses--
d) other7,4642,256
2.2 New taxes or increases in tax rates--
2.3 Other increases--
Business combinations450,527 
3. Decreases 4,7371,239
3.1 Deferred tax assets reversed during the year4,737782
a) reversals4,737782
b) impairment losses due to unrecoverability--
c) change in accounting standards--
d) other--
3.2 Reductions in tax rates--
3.3 Other reductions-457
a) conversion into tax credits as per Italian Law 214/2011--
b) other-457
4. Closing balance 492,64339,359
   

14.3.1Changes in deferred tax assets as per Italian Law 214/2011 (recognised through profit or loss)

 31.12.201631.12.2015
   
1. Opening balance --
2. Increases 191,417-
Business combinations191,417-
3. Decreases --
3.1 Reclassifications--
3.2 Conversion in tax credits--
a) deriving from losses for the year--
b) deriving from tax losses--
3.3 Other reductions--
4. Closing balance 191,417-
     

14.4 Changes in deferred tax liabilities (recognised through profit or loss)

 31.12.201631.12.2015
1. Opening balance 15,64311,432
2. Increases 9,5614,574
2.1 Deferred tax liabilities recognised in the year994,574
a) relative to previous years--
b) due to change in accounting standards--
c) other994,574
2,2 New taxes or increases in tax rates--
2,3 Other increases--
Business combinations9,462-
3. Decreases 1,985363
3.1 Deferred tax liabilities reversed during the year69516
a) reversals69416
b) due to change in accounting standards--
c) other1-
3.2 Reductions in tax rates--
3.3 Other reductions1,290347
4. Closing balance 23,21915,643
 

14.5 Changes in deferred tax assets (recognised through equity)

  31.12.2016 31.12.2015
1. Opening balance 63 -
2. Increases 584 63
2.1 Deferred tax assets recognised in the year 104 63
a) relative to previous years - -
b) due to change in accounting standards - -
c) other 104 63
2.2 New taxes or increases in tax rates - -
2.3 Other increases - -
Business combinations 480  
3. Decreases 110 -
3.1 Deferred tax assets reversed during the year 110 -
a) reversals 110 -
b) impairment losses due to unrecoverability - -
c) due to change in accounting standards - -
d) other - -
3.2 Reductions in tax rates - -
3.3 Other reductions - -
4. Closing balance 537 63
     

14.6 Changes in deferred tax liabilities (recognised through equity)

 31.12.201631.12.2015
1. Opening balance 5,7532,836
2. Increases 8352,948
2.1 Deferred tax liabilities recognised in the year2682,948
a) relative to previous years17-
b) due to change in accounting standards--
c) other2512,948
2.2 New taxes or increases in tax rates--
2.3 Other increases--
Business combinations567 
3. Decreases 5,37331
3.1 Deferred tax liabilities reversed during the year5,37315
a) reversals5,37315
b) due to change in accounting standards--
c) other--
3.2 Reductions in tax rates--
3.3 Other reductions-16
4. Closing balance 1,2155,753
 

Section 16 - Other assets – Item 160

16.1 Other assets: breakdown

 31.12.201631.12.2015
   
Receivables due from tax authorities57,73718,055
Prepayments and accrued income39,90519,875
Guarantee deposits1,2117,886
Securitisation transactions20301
Other items150,70136,219
Total 249,574 82,336
 

Receivables due from Italian tax authorities included 7,2 million Euro in payments on account (stamp duty and withholding taxes), 27,9 million Euro in funds placed in an escrow account pending the resolution of a dispute, and 15,0 million Euro in VAT credits claimed.

Prepayments and accrued income included 18,7 million Euro in prepayments related to the DRL segment's debt collection costs, 3,1 million Euro in interest on arrears due from the Public Administration, and 2,1 million Euro in prepaid interests in favour of customers with a fixed-term rendimax account.

Other items included a 43,9 million Euro receivable due from the parent company La Scogliera S.p.A. deriving from the tax consolidation regime as well as 26,9 million Euro in receivables due from the buyers of NPL portfolios.