Contribution of business sectors

The organisational structure

The model for segment reporting is in line with the organisational structure used by the Head Office to analyse Group results and is broken down into the following sectors: Trade Receivables, Non-Performing Loans (NPL), Tax Receivables, Governance and Services.

Here below are the results achieved in 2012 by the various business sectors, which will be analysed in the sections dedicated to the individual sectors.

In 2011 the Banca IFIS Group, following the acquisition of the Toscana Finanza Group, defined for the first time the scope of its operating segments as they are represented in this report,

The Non-Performing Loans and Tax Receivables sectors, which were added to the Group’s scope after the acquisition of the Toscana Finanza Group, contributed to the profit for the year 2011 starting from 30 June 2011, (the accounting date for the business combination). In the tables below, therefore, the 2011 economic data for the Non-Performing Loans and Tax Receivables sectors refer only to the second half of the year.

STATEMENT OF FINANCIAL POSITION DATA
(in thousands of euro)
TRADE RECEIVABLES NPL TAX RECEIVABLES GOVERNANCE AND SERVICES GROUP CONSOLIDATED TOTAL 
Available for sale financial assets          
Amounts at 31.12.2012 - - - 1.974.591 1.974.591
Amounts at 31.12.2011 - - - 1.685.163 1.685.163
   % Change       17,2% 17,2%
Held to maturity financial assets          
Amounts at 31.12.2012 - - - 3.120.428 3.120.428
Amounts at 31.12.2011 - - - - -
   % Change       n.a. n.a.
Due from banks          
Amounts at 31.12.2012 - - - 545.527 545.527
Amounts at 31.12.2011 - - - 315.897 315.897
   % Change       72,7% 72,7%
Due from customers          
Amounts at 31.12.2012 1.775.864 104.044 83.174 329.232 2.292.314
Amounts at 31.12.2011 1.544.963 86.735 74.737 16.046 1.722.481
   % Change 14,9% 20,0% 11,3% 1.951,8% 33,1%
Due to banks          
Amounts at 31.12.2012 - - - 557.323 557.323
Amounts at 31.12.2011 - - - 2.001.734 2.001.734
   % Change       (72,2)% (72,2)%
Due to customers          
Amounts at 31.12.2012 - - - 7.119.008 7.119.008
Amounts at 31.12.2011 - - - 1.657.224 1.657.224
   % Change       329,6% 329,6%
INCOME STATEMENT DATA
(in thousands of Euro) 
TRADE
RECEIVABLES 
NPL (1) TAX RECEIVABLES (1) GOVERNANCE AND SERVICES TOTAL CONSOLIDATED
TOTAL 
Net banking income          
   Amounts at 31.12.2012 114.276 18.578 3.789 108.274 244.917
   Amounts at 31.12.2011 73.837 8.601 2.712 36.303 121.453
  % Change 54,8% 116,0% 39,7% 198,3% 101,7%
Net profit from financial activities          
   Amounts at 31.12.2012 69.205 16.633 3.472 101.856 191.166
   Amounts at 31.12.2011 43.322 8.016 1.669 36.303 89.310
  % Change 59,7% 107,5% 108,0% 180,6% 114,0%
(1) The 2011 economic data for the NPL and Tax Receivables sectors refer only to the second half of the year
 
QUARTERLY INCOME STATEMENT DATA
(in thousands of Euro)
TRADE RECEIVABLES NPL TAX RECEIVABLES GOVERNANCE AND SERVICES GROUP CONSOLIDATED TOTAL
Net banking income          
   4th Q 2012 35.191 5.385 1.685 35.013 77.274
  4th Q 2011 23.829 4.739 2.036 7.023 37.627
   % Change 47,7% 13,6% (17,2)% 398,5% 105,4%
Profit from financial activities          
   4th Q 2012 14.763 3.592 1.518 31.240 51.112
   4th Q 2011 11.618 4.793 993 7.023 24.427
   % Change 27,1% (25,1)% 52,9% 344,8% 109,2%
KPI
(in thousands of Euro)
TRADE RECEIVABLESNPLTAX RECEIVABLESGROUP CONSOLIDATED TOTAL
Turnover (1) 
   
Amounts at 31.12.2012
4.941.541
n.a.
n.a.
n.a.
Amounts at 31.12.2011
4.643.553
n.a.
n.a.
n.a.
% Change
6,4%
-
-
-
Nominal amount of receivables managed
    
Amounts at 31.12.2012
2.352.274
3.471.413
146.231
n.a.
Amounts at 31.12.2011
2.122.981
2.451.270
93.758
n.a.
% Change
10,8%
41,6%
56,0%
-
RWA (2)
    
Amounts at 31.12.2012
1.448.097
104.044
41.495
2.428
Amounts at 31.12.2011
1.227.726
87.160
37.917
147.142
% Change
17,9%
19,4%
9,4%
(98,3)% 
(1) Gross flow of the receivables sold by the customers in a specific period of time (2) Risk Weighted Assets

Trade receivables

This item includes the activities performed by the structures dedicated to the brands:

  • Banca IFIS, dedicated to supporting the trade receivables of SMEs operating in the domestic market;
  • Banca IFIS International, for companies growing abroad or based abroad and working with Italian customers;
  • Banca IFIS Pharma, supporting the trade receivables of local health services' suppliers.

 

INCOME STATEMENT DATA
(in thousands of Euro)
31.12.2012 31.12.2011 CHANGE
ABSOLUTE %
Net interest income 18.106 (5.744) 23.850 (415,2)%
Net result from trading 96.170 79.581 16.589 20,8%
Net banking income 114.276 73.837 40.439 54,8%
Net impairment losses on loans and receivables (45.071) (30.515) (14.556) 47,7%
Net profit from financial activities 69.205 43.322 25.883 59,7%
 
Name of company Registered Office Type (1) Investment Voting rights % (2)
Held by Quota %
Companies:
- Consolidated line by line
   IFIS Finance Sp. Z o.o. Varsavia 1 Banca IFIS S.p.A. 100% 100%
   TF SEC S.r.l. in liquidazione Firenze 1 Banca IFIS S.p.A. 100% 100%
Key (1) Type: 1 = majority of voting rights in the Annual Shareholders’ Meeting 2 = dominant influence in the Annual Shareholders’ Meeting 3 = agreements with other shareholders 4 = other forms of control 5 = exclusive control as per article 26, paragraph 1, of Legislative Decree no. 87/92 6 = exclusive control as per article 26, paragraph 2, of Legislative Decree no. 87/92 7 = joint control (2) Voting rights in the Annual Shareholders’ Meeting, distinguishing between effective and potential voting rights.
 
STATEMENT OF FINANCIAL POSITION DATA
(in thousands of Euro)
31.12.2012 31.12.2011 CHANGE
ABSOLUTE %
Non-performing loans 76.711 66.199 10.512 15,9%
Substandard loans 136.124 79.184 56.940 71,9%
Restructured loans 7.910 3.897 4.013 103,0%
Past due loans 112.820 41.685 71.135 170,6%
Total impaired assets to customers 333.565 190.965 142.600 74,7%
Net performing loans 1.442.299 1.353.998 88.301 6,5%
Total due from customers (cash) 1.775.864 1.544.963 230.901 14,9%
 

The increase in past due loans is largely due to the implementation as from 1 January 2012 of the 90-day limit, instead of the 180-day one as up to 31 December 2011, pursuant to the prudential law in force. By way of comparison, it is noted that by applying the new limit of 90 days to the loans outstanding at 31 December 2011, past due loans at that date would have totalled 117.529 thousand Euro, against 129.753 thousand Euro at the end of 2012 (+10,4%).

KPI 31.12.2012 31.12.2011 CHANGE
ABSOLUTE %
Turnover 4.941.514 4.643.553 297.961 6,4%
Net banking income/ Turnover 2,3% 1,6% - 0,7%
 
KPI y/y 31.12.2012 31.12.2011 CHANGE
    ABSOLUTE %
Net banking income/Due from customers6,4%4,8%-1,6%
Value adjustment on receivables/Due from customers2,5%2,0%-0,5%
Net non-performing loans/Due from customers 4,3% 4,3% - -
Impaired assets/ Due from customers 18,8% 12,4% - 6,4%
Total RWA per sector 1.448.097 1.227.726 220.371 17,9%
 

The following table shows the nominal value of receivables purchased (operating data not recognised in the statements) for factoring transactions outstanding at the end of the year (Total Receivables), broken down into receivables with or without recourse and receivables purchased outright. Please note that the breakdown of purchased receivables in the following table is based on the contract form used by the Bank.

TOTAL RECEIVABLES  
(in thousands of Euro)
YEAR CHANGE
31.12.2012 31.12.2011 ABSOLUTE %
Receivables without recourse 127.580 146.464 (18.884) (12,9)%
   of which due from the Public Administration 10.250 10.976 (726) (6,6)%
Receivables with recourse 1.551.389 1.496.402 54.987 3,7%
   of which due from the Public Administration 453.774 464.710 (10.936) (2,4)%
Outright purchases 673.305 480.115 193.190 40,2%
   of which due from the Public Administration 615.564 397.412 218.152 54,9%
Total receivables 2.352.274 2.122.981 229.293 10,8%
   of which due from the Public Administration 1.079.588 873.098 206.490 23,7%
 

The breakdown of customers by geographic area in Italy, with a separate indication for those abroad, and the breakdown of customers by product sector are as follows:

BREAKDOWN OF CUSTOMERS BY GEOGRAPHIC AREA COMMITMENTS TURNOVER
Northern Italy 42,9% 54,7%
Central Italy 31,7% 25,3%
Southern Italy 23,5% 14,3%
Abroad 1,9% 5,7%
Total 100,0% 100,0%

Non-performing loans (NPL)

This is Banca IFIS Group’s sector currently dedicated to non-recourse factoring and managing non-performing loans. It operates under the Toscana Finanza brand.

Toscana Finanza's business is by nature closely associated with measuring impaired loans. Therefore, most loans in the NPL sector are included among non-performing and substandard loans: this classification is the logical consequence of the business model, based on how to measure those assets in the best possible way.

Therefore, loans in the NPL sector are recognised under non-performing or substandard loans. 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 substandard.

INCOME STATEMENT DATA
(in thousands of Euro)
31.12.2012 31.12.2011 (1) CHANGE
ABSOLUTE %
Net interest income 18.578 8.785 9.793 111,5%
Total net commission income - (73) 73 (100,0)%
Net result from trading - (111) 111 (100,0)%
Net banking income 18.578 8.601 9.977 116,0%
Net impairment losses on: loans and receivables (1.945) (585) (1.360) 232,5%
Net profit from financial activities 16.633 8.016 8.617 107,5%
(1) The 2011 economic data for the NPL and Tax Receivables sectors refer only to the second half of the year
 
QUARTERLY INCOME STATEMENT DATA
(in thousands of Euro)
4th Q. 2012 4th Q. 2011 CHANGE
ABSOLUTE %
Net interest income 5.385 4.302 1.083 25,2%
Total net commission income - 403 (403) (100,0)%
Net result from trading - 34 (34) (100,0)%
Net bannking income 5.385 4.739 646 13,6%
Net impairment losses on: loands and receivables (1.793) 54 (1.847) (3420,7)%
Net profit from financial activities 3.592 4.793 (1.201) (25,1)%
 
STATEMENT OF FINANCIAL POSITION DATA 
(in thousands of Euro)
31.12.2012 31.12.2011 CHANGE
ABSOLUTE %
Non-performing loans 35.974 7.822 28.152 359,9%
Substandard loans 68.070 78.913 (10.843) (13,7)%
Restructured loans - - - -
Past due loans - - - -
Total impaired assets to customers 104.044 86.735 17.309 20,0%
Net performing loans - - - -
Total due from customers (cash) 104.044 86.735 17.309 20,0%
KPI 31.12.2012 31.12.2011 CHANGE
    ABSOLUTE %
Nominal amount of receivables managed 3.471.413 2.451.270 1.020.143 41,6%
Total RWA per sector 104.044 87.160 16.884 19,4%
   

Net interest income is generated by the interest accrued according to the amortised cost method: for details, please refer to Part A of the Accounting Policies section in the Consolidated Notes.

For the sake of completeness, it should be noted that the costs relating to debt collection operations undertaken by external agencies, recognised under “other administrative expenses”, was 4.015 thousand Euro against 1.347 thousand Euro in the second Half 2011.

Impairment losses on receivables are due mainly to one-off events, including the write-down on cases expired under statute of limitations or undocumented, which were identified following work to correct the loan portfolio carried out in the fourth quarter of the year.

Over 2012, settlement of debt by counterparties was mainly by the following methods: by cash (postal orders, bank transfers etc.) or by underwriting bills of exchange. During the year, 22,5 million Euro were collected against an estimated 25,3 million Euro; funding from new bill of exchange transactions in 2012 amounted to 35,3 million Euro, against very modest initial forecasts for this type of debt settlement. The performance of the sector has thus improved markedly also thanks to a new debt collection approach, which entails a significant increase in the funding from bill of exchange transactions.

During the year five financial receivables were purchased from three different sellers at an average price of around 2% of a 1.173 million Euro par value, for 126.375 cases. 

With these purchases, the portfolio managed by the NPL sector covers 460.792 cases, for a par value of 3.471 million Euro. 

Tax receivables

It is Banca IFIS Group’s sector 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 sector acquires also trade receivables classifiable as non-performing loans.

Since the Public Administration is the counterparty, tax receivables are classified as performing; trade receivables, on the other hand, may be classified as impaired assets if required.

INCOME STATEMENT DATA
(in thousands of Euro)
31.12.2012 31.12.2011 (1) CHANGE
ABSOLUTE %
Net interest income 3.789 2.722 1.067 39,2%
Total net commission income - (10) 10 (100,0)%
Net banking income 3.789 2.712 1.077 39,7%
Net impairment losses on: loans and receivables (317) (1.043) 726 (69,6)%
Net profit from financial activities 3.472 1.669 1.803 108,0%
(1) The 2011 economic data for the NPL and Tax Receivables sectors refer only to the second half of the year
 
QUARTERLY INCOME STATEMENT DATA
(in thousands of Euro)
4th Q. 2012 4th Q. 2011 CHANGE
ABSOLUTE %
Net interest income 1.685 2.046 (361) (17,6)%
Total net commission income - (10) 10 (100,0)%
Net banking income 1.685 2.036 (351) (17,2)%
Net impairment losses on: loans and receivables (167) (1.043) 876 (84,0)%
Net profit from financial activities 1.518 993 525 52,9%
 
STATEMENT OF FINANCIAL POSITION DATA
(in thousands of Euro)
31.12.2012 31.12.2011 CHANGE
ABSOLUTE %
Non-performing loans 2.566 - 2.566 n.a.
Substandard loans - - - -
Restructured loans - - - -
Past due loans - - - -
Total impaired assets to customers 2.566 - 2.566 n.a.
Net performing loans 80.608 74.737 5.871 7,9%
Total due from customers (cash) 83.174 74.737 8.437 11,3%
 
KPI 31.12.2012 31.12.2011 CHANGE
ABSOLUTE %
Nominal amount of receivables managed 146.231 93.758 52.473 56,0%
Total RWA per sector 41.495 37.917 3.578 9,4%
 

Net interest income is generated by the interest accrued according to the amortised cost method. Impairment losses on receivables recorded for the years are due to revised collection estimates.

During the year, 17,1 million Euro were collected against an estimated 13,7 million Euro; 288 cases were acquired for an amount of 15.9 million Euro, at an average price of around 64,5% of the par value of the tax receivables net of enrolments (24,6 million Euro).

With these purchases, the portfolio managed by the sector covers 4.245 cases, for a par value of 146 million Euro.

Governance and services

Within the scope of its management and coordination activities, the Governance and Services sector exercises strategic, managerial, and technical-operational control over operating segments and subsidiaries. Furthermore, it provides the operating segments and subsidiaries with the financial resources and services necessary to perform their respective business activities. The Internal Audit, Compliance, Risk Management, Communications, Strategic Planning, Administration and Management Control, Organisation and ICT departments, as well as the structures responsible for raising, allocating (to operating segments and subsidiaries), and managing financial resources are centralised in the Parent Company. Specifically, this sector includes the effect of the securities portfolio on interest income for the year for an amount of 92,9 million euro.

INCOME STATEMENT DATA
(in thousands of Euro)
31.12.2012 31.12.2011 CHANGE
ABSOLUTE %
Net interest income 105.473 36.482 68.991 189,1%
Total net commission income (3.187) (710) (2.477) 348,9%
Dividend and net result from trading 5.988 531 5.457 1.027,7%
Net banking income 108.274 36.303 71.971 198,3%
Net impairment losses on available for sale financial assets (6.418) - (6.418) n.a.
Net profit from financial activities 101.856 36.303 65.553 180,6%
 
QUARTERLY INCOME STATEMENT DATA
(in thousands of Euro)
4th Q. 2012 4th Q. 2011 CHANGE
ABSOLUTE %
Net interest income 29.691 7.513 22.178 295,2%
Total net commission income (845) (411) (434) 105,6%
Dividend and net result from trading 6.167 (79) 6.246 (7906,3)%
Net banking income 35.013 7.023 27.990 398,5%
RNet impairment losses on available for sale financial assets (3.773) - (3.773) n.a.
Net profit from financial activities 31.240 7.023 24.217 344,8%
   
STATEMENT OF FINANCIAL POSITION DATA
(in thousands of Euro)
31.12.2012 31.12.2011 CHANGE
ABSOLUTE %
Non-performing loans
- - - -
Substandard loans
- - - -
Restructured loans
- - - -
Past due loans
- - - -
Total impaired assets to customers
- - - -
Net performing loans
329.232 16.046 313.186 1951,8%
Total due from customers (cash)
329.23216.046313.1861951,8%
FINANCIAL ASSETS
Held for trading Measured at fair value Available for sale Hedging
1. Opening balance - - 60.288 -
2. Increases - - 5.879 -
2.1 Purchases - - 725 -
2.2 Profit taken to: - - - -
2.2.1 Income statement - - - -
-of which: capital gains - - - -
2.2.2 Equity X X - X
2.3 Transfers from other levels - - - -
2.4 Other increases - - 5.154 -
3. Decreases - - 53.629 -
3.1 Sales - - - -
3.2 Redemptions - - 27.000 -
3.3 Losses taken to: - - - -
3.3.1 Income statement - - 2.889 -
- of which capital losses - - - -
3.3.2 Equity X X - X
3.4 Transfers to other levels - - 22.914 -
3.5 Other reductions - - 826 -
4. Closing balance - - 12.538 -
 
KPI 31.12.2012 31.12.2011 CHANGE
ABSOLUTE %
Total RWA per sector 2.428 147.142 (144.714) (98,3)%
 

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