• IMPRESE
  • DRL
  • CREDITI FISCALI
  • RACCOLTA
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Income statements items

Formation of net banking income

Net banking income rose 7,9% from 244,9 million Euro to 264,2 million Euro, thanks to the positive contribution from all the Bank's core sectors. The breakdown of net banking income was as follows: Trade Receivables sector 49,1% (46,7% at 31 December 2012), DRL sector 9,2% (7,6% at 31 December 2012), Tax Receivables sector 3,5% (1,5% at 31 December 2012), Governance and Services sector 38,2% (44,2% at 31 December 2012); for the purpose of correctly assessing operating performance, it should be noticed that in 2012 6,1 million Euro in gains on the sale of financial assets were included in the results of the Governance and Services segment.

Net banking income is made up of interest income (78,3%), commission income (21,6%) and other components (0,1%).

NET BANKING INCOME
(in thousands of Euro)
YEAR CHANGE
2013 2012 (1) ABSOLUTE %
Net interest income 206.744 179.005 27.739 15,5%
Total net commission income 57.164 59.924 (2.760) (4,6)%
Dividends and similar income 84 9 75 833,3%
Net result from trading 193 (175) 368 (210,3)%
Profit from sale or buyback of financial assets 11 6.154 (6.143) (99,8)%
Net banking income 264.196 244.917 19.279 7,9%
(1) Data restated after initial publication. See the Introductory notes on how to read the data.

The +13,5% rise in the Trade Receivables sector (129,7 million Euro compared to 114,3 million Euro in the prior-year period) was due to the higher number of financed companies – the sector's turnover exceeded 5,7 billion Euro, up 15,4% – and the increase in interest on arrears collected by the Pharma business area (7,8 million Euro compared to 5,8 million Euro in the prior-year period). It should be noted that at 31 December 2013 the Bank recognised interest on arrears – calculated from the invoice’s original maturity date – related to already collected receivables (totalling approximately 28,8 million Euro) as well as non-collected receivables (approximately 33,3 million Euro) due from the Public Administration.

The Bank, based on historical data and available information, estimates that at least 20% of interest on arrears can be recovered starting from the estimated collection date. 

During 2013, the Bank assessed its operating instruments, currently under development and consistent with business, accounting and IT processes, intended to support the management of the ATD product and, therefore, the monitoring of the relevant interest on arrears; those will be recognised based on collection estimates starting from 2014, once the mentioned operating instruments are fully implemented. As for the financial statements at 31 December 2013, in light of the above considerations, the Bank did not recognise interest on arrears in profit or loss, but deemed it appropriate to disclose the amount likely to be collected at the reporting date, totalling at least 2,5 million Euro.

As mentioned in the paragraph Introductory notes on how to read the data, the Banca IFIS Group revised its methods of accounting for receivables purchased outright within the factoring activity (hereinafter "ATD", a titolo definitivo in Italian) in order to report them more accurately in the financial statements. Specifically, although most of these receivables are short-term, the Bank measured them at amortised cost and reported them accordingly in its accounts. To allow for like-for-like comparison, the data for the previous year were reclassified, reporting Receivables due from customers under assets net of 14,4 million Euro in relevant deferred income recognised under Other liabilities, and reclassifying the seller's consideration from Commission income to Interest income for 33,1 million Euro.

Furthermore, the DRL (Distressed Retail Loans) sector rose 31,2% (24,4 million Euro compared to 18,6 million Euro in the prior-year period) thanks to the new debt collection approach, which resulted in a significant increase in bills of exchange and collections. It should be noted that net banking in-come is not representative of the DRL sector's operating performance, as it does not account for returns on loans classified as non-performing, which are recognised under impairment losses/reversals on receivables for accounting purposes.

The Tax Receivables sector grew 145,1% (9,3 million Euro compared to 3,4 million Euro in 2012) on the back of the remarkable returns on the receivables acquired after the business combination and amounts collected earlier than expected.

The Governance and Services sector was down 6,9% (100,8 million Euro compared to 108,3 million Euro at 31 December 2012). The performance reflects the higher returns in terms of interest income on the securities portfolio (126,3 million Euro compared to 92,9 million Euro in 2012), on the back of higher volumes (8,4 billion Euro at 31 December 2013 compared to 5,1 billion Euro at the end of the previous year, of which 42,4% maturing within the year), as well as the cost of retail funding exceeding core loans and held in order to guarantee an adequate level of liquidity under economic stress scenarios.

Net interest income went from 179,0 million Euro at 31 December 2012 to 206,7 million Euro at 31 December 2013 (+15,5%).

Net commission income fell by 4,6% compared to 2012. This change was the result of lower commission income on the one hand (which fell to 63,3 million Euro from 65,4 million Euro at 31 December 2012), and higher commission expense on the other (rising from 5,5 million Euro at 31 December 2012 to 6,2 million Euro).

The decrease in commission income is mainly due to the lower contribution from fees for late payments following the reduction in average payment time for account debtors.

NET COMMISSION INCOME
(in thousands of Euro)
YEAR CHANGE
  2013 2012 (1) ABSOLUTE %
Endorsement loans (2.268) (2.223) (45) 2,0%
Management and brokerage services 957 850 107 12,6%
Collection and payment services 1.035 1.155 (120) (10,4)%
Factoring services 59.203 61.179 (1.976) (3,2)%
Other services (1.763) (1.037) (726) 70,0%
Total net commission income 57.164 59.924 -2.760 (4,6)%
(1) Data restated after initial publication. See the Introductory notes on how to read the data.

Formation of net profit from financial activities

The Group's net profit from financial activities totalled 219,6 million Euro compared to 191,2 million Euro at 31 December 2012, up 14,9%. Based on the data concerning the trends in margins and impairment losses on loans and receivables, we can state that against the backdrop of a market so far characterized by recessionary pressures and volatility in business results, there are tentative signs of improvement and of a timid recovery, allowing companies to honour their debts.

FORMATION OF NET PROFIT FROM FINANCIAL ACTIVITIES
(in thousands of Euro)
YEAR CHANGE
2013 2012 ABSOLUTE %
Net banking income 264.196 244.917 19.279 7,9%
Net impairment losses on: (44.587) (53.751) 9.164 (17,0)%
Receivables (44.528) (50.862) 6.334 (12,5)%
Available for sale financial assets (59) (2.889) 2.830 (98,0)%
Net profit from financial activities 219.609 191.166 28.443 14,9%

Net impairment losses on receivables at 31 December 2013 amounted to 44,6 million Euro, compared to 50,9 million Euro in 2012 (-12,5%). They reflected the protracted adverse economic conditions, although today there are tentative signs of improvement. Net impairment losses declined over all four quarters of 2013. This item includes 3,5 million Euro in reversals of impairments losses on DRL loans (compared to 1,9 million Euro in impairment losses in 2012): as already mentioned, for the purpose of correctly assessing the sector's operating performance, they should be considered together with net banking income.

The decrease in impairment losses resulted in a significant improvement in the ratio of credit risk cost to the Group's overall average loan balance over the last 12 months, down to 240 bp from 300 bp at 31 December 2012. The ratio of non-performing loans to loans in the trade receivables sector fell to 2,6%, down 1,7% from 4,3% at 31 December 2012.

Net impairment losses on available for sale financial assets, amounting to 59 thousand Euro, refer to the fair value adjustment of a non-controlling interest.

In light of the above trends, net profit from financial activities in the Trade Receivables sector rose 17,5%, from 69,2 million Euro in 2012 to 81,3 million Euro; in the DRL sector, where it coincides with operating performance, it grew by 67,3%, from 16,6 million Euro to 27,8 million Euro; in the Tax Receivables area, it amounted to 9,7 million Euro, up 179,1% from 3,5 million Euro. Finally, net profit from financial activities in the Governance and Services sector fell 1,1% to 100,8 million Euro, compared to 101,9 million Euro in the prior year.

Formation of profit for the year

The table below shows the formation of the Group’s profit for the year starting from the previously mentioned net profit from financial activities, compared with the previous year.

FORMATION OF PROFIT FOR THE YEAR
(in thousands of Euro)
YEAR CHANGE
2013 2012 (1) ABSOLUTE %
Net profit from financial activities 219.609 191.166 28.443 14,9%
Operating costs (76.348) (68.159) (8.189) 12,0%
Pre-tax profit from continuing operations 143.261 123.007 20.254 16,5%
Income tax expense (58.420) (44.779) (13.641) 30,5%
Profit for the year 84.841 78.228 6.613 8,5%
(1) Data restated after initial publication. See the Introductory notes on how to read the data.

At 31 December 2013, operating costs rose 12,0%, from 68,2 million Euro in 2012 to 76,3 million Euro, consistently with the goal to strengthen some areas and services supporting the business and the scenario in which the Group operates.

The cost/income ratio stood at 28,9% compared to 27,8% at 31 December 2012.

OPERATING COSTS
(in thousands of Euro)
YEAR CHANGE
2013 2012 (1) ABSOLUTE %
Personnel expenses 37.094 36.110 984 2,7%
Other administrative expenses 39.022 30.927 8.095 26,2%
Allocation to provisions for risks and charges 215 1.549 (1.334) (86,1)%
Net impairment losses ontangible and intangible assets 3.004 3.229 (225) (7,0)%
Other operating income (expenses) (2.987) (3.656) 669 (18,3)%
Total operating costs 76.348 68.159 8.189 12,0%
(1) Data restated after initial publication. See the Introductory notes on how to read the data.

Personnel expenses, amounting to 37,1 million Euro, decreased by 2,7% compared to 2012. This was the result, on the one hand, of the higher number of the Group's employees, amounting to 548 at the end of the period (compared to 457 at 31 December 2013, +19,9%), and on the other, of the recognition in the financial statements at 31 December 2012 of the refunding costs related to the restructuring following the business combinations.

Other administrative expenses at 31 December 2013 reached 39,0 million Euro, compared to 30,9 million Euro in the prior year period (+26,2%).

This increase was substantially due to the following factors: first, stamp duty costs for retail funding, which rise in direct correlation to the number of operating customers and, as a result of a commercial policy decision, are not charged back to customers; then, the rise in fees paid to debt collection companies for the collection of receivables in the DRL and Tax Receivables sector, which are proportioned to the amounts recovered. Said fees are recognised under "outsourced services" and rose from 4,0 million Euro to 5,1 million Euro. Also consulting fees rose due to the re-engineering of business processes and the internal audit system (the latter to comply with new prudential regulations for banks concerning the internal audit and IT system as well as business continuity).

Please note that part of the expenses included in this item (in particular legal expenses and indirect taxes) is charged back to customers and the relevant revenue is recognised under other operating income. Net of this component, other administrative expenses totalled 35,0 million Euro, compared to 26,9 million Euro at 31 December 2012 (+30,0%).

OTHER ADMINISTRATIVE EXPENSES YEAR CHANGE
(in thousands of Euro) 2013 2012 ABSOLUTE       %
Expenses for professional services 14.694 11.246 3.448 30,7%
  Legal and consulting services 7.266 5.419 1.847 34,1%
  Auditing 402 428 -26 -6,1%
  Outsourced services 7.026 5.399 1.627 30,1%
Direct and indirect taxes 7.892 5.598 2.294 41,0%
Expenses for purchasing non-professional goods and other services 16.436 14.083 2.353 16,7%
      Property expenses 3.471 3.118 353 11,3%
     Customer information 2.260 2.081 179 8,6%
     Car fleet management and maintenance  2.102 1.977 125 6,3%
     Software assistance and hire 1.716 830 886 106,7%
     Postage of documents 1.650 1.422 228 16,0%
     Telephone and data transmission expenses 1.157 1.167 -10 -0,9%
     Advertising and inserts 978 1.004 -26 -2,6%
     Trips and business travel personnel 699 560 139 24,8%
     Other sundry expenses 2.403 1.924 479 24,9%
Total administrative expenses 39.022 30.927 8.095 26,2%
Expense recoveries  -4.002 -3.995 -7 0,2%
Total net other administrative expenses  35.020 26.932 8.088 30,0%

Net impairment losses on intangible assets largely refer to IT devices, and at 31 December 2013 stood at 1,8 million Euro, down 4,4% from 2012.

Net impairment losses on property, plant and equipment and investment property totalled 1,2 million Euro, compared to 1,4 million Euro at 31 December 2012 (-10,5%).

Other net operating income totalled 3,0 million Euro (-18,3% compared to 2012) and refers mainly to revenue from the recovery of expenses charged to third parties. The relevant cost item is included in other administrative expenses, namely under legal expenses and indirect taxes.

Pre-tax profit for the period stood at 143,3 million Euro, an increase of 16,5% compared to 31 December 2012.

Income tax expense amounted to 58,4 million Euro, compared to 44,8 million Euro at 31 December 2012 (+30,5%). As a result of the changes introduced by the Budget Law, which should be largely one-off, the Group's tax rate increased from 36,4% to 40,8%. Under previous legislation, income tax expense for 2013 would have amounted to 50,6 million Euro. For details on the regulatory changes impacting Banca IFIS, see the paragraph Impact of regulatory changes.

Profit for the year totalled 84,8 million Euro, compared to 78,2 million Euro in 2012 (+8,5%). Not accounting for the changes introduced by the Budget Law, as mentioned above, the profit for 2013

would have totalled 92,7 million Euro, whereas the profit for the fourth quarter would have been 25,6 million Euro.

In the absence of profit attributable to non-controlling interests, these results refer entirely to the Group.

(in thousands of Euro) YEAR 2013 YEAR 2012
EQUITY OF WHICH PROFIT FOR THE YEAR EQUITY OF WHICH PROFIT FOR THE YEAR(1)
Parent company balance 376.240 83.404 305.786 76.925
Difference compared to the carrying amounts of the companies consolidated line by line 4.083 1.437 3.231 1.303
- IFIS Finance Sp. Zo.o. 4.083 1.437 3.202 1.362
- TF SEC Srl single-member limited-liability company under liquidation - - 29 (59)
Group consolidated balance 380.323 84.841 309.017 78.228
(1) Data restated after initial publication. See the Introductory notes on how to read the data.
 

BANCA IFIS SPA P. IVA n. 02992620274