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1
Credito Valtellinese Società Cooperativa
Registered Offices in Piazza Quadrivio 8 — Sondrio, Italy
Tax code and Sondrio Company Registration No. 00043260140 — Register of Banks No. 489
Parent of the Credito Valtellinese Banking Group — Register of Banking Groups No. 5216.7
Website: http://www.creval.it E-mail: [email protected]
Share capital fully subscribed and paid-up EUR 1,496,509,906.50
Member of the Interbank Guarantee Fund
Condensed Interim
Consolidated Report
on Operations
as at 30 September 2012
2
Company Officers of Credito Valtellinese
Board of Directors
Chairman • Giovanni De Censi
Substitute Deputy Chairman Angelo Maria Palma
Deputy Chairman • Aldo Fumagalli Romario
Managing Director • Miro Fiordi
Directors Mario Anolli
Fabio Bresesti
Isabella Bruno Tolomei Frigerio
• Gabriele Cogliati
Michele Colombo
• Paolo De Santis
Paolo Stefano Giudici
• Franco Moro
Valter Pasqua
• Alberto Ribolla
Paolo Scarallo
• Members of the Executive Committee
Board of Statutory Auditors
Chairman Angelo Garavaglia
Standing Auditors Marco Barassi
Alfonso Rapella
Substitute Auditors Aldo Cottica
Edoardo Della Cagnoletta
Panel of Arbitrators
Permanent Arbitrators Bassano Baroni
Francesco Guicciardi
Emilio Rigamonti
Substitute Arbitrators Adriano Bassi
Silvano Valenti
General Management
General Manager Miro Fiordi
Co-General Manager Luciano Camagni
Deputy General Manager Umberto Colli
Deputy General Manager Enzo Rocca
Deputy General Manager Franco Sala
Deputy General Manager Mauro Selvetti
Manager in charge of financial reporting
Simona Orietti
Independent auditors KPMG S.p.A.
3
Contents
CONSOLIDATED HIGHLIGHTS AND ALTERNATIVE PERFORMANCE INDICATORS AS AT 30 SEPTEMBER
2012 .................................................................................................................................................. 4
ORGANISATIONAL MODEL AND BREAKDOWN OF THE CREDITO VALTELLINESE BANKING GROUP ................ 6
THE GENERAL ECONOMIC FRAMEWORK ................................................................................................... 8
The reference macroeconomic context .............................................................................................. 8
SIGNIFICANT EVENTS DURING THE THIRD QUARTER ............................................................................... 11
RECLASSIFIED CONSOLIDATED FINANCIAL STATEMENTS ................................................................ 14
COMMENTS ON THE FINANCIAL STATEMENTS .................................................................................. 16
CURRENT-YEAR OUTLOOK .................................................................................................................... 19
NOTES TO THE FINANCIAL STATEMENTS ................................................................................................ 19
4
CONSOLIDATED HIGHLIGHTS AND ALTERNATIVE PERFORMANCE INDICATORS
AS AT 30 SEPTEMBER 2012
STATEMENT OF FINANCIAL POSITION 30/09/2012 31/12/2011 % change 30/09/2011 % change
(in thousands of EUR)
Loans and receivables with customers 22,430,078 22,330,187 0.45 22,860,076 -1.88
Financial assets and liabilities 3,872,500 1,857,388 108.49 1,991,192 94.48
Equity investments 235,671 219,315 7.46 215,480 9.37
Total assets 30,538,024 28,411,490 7.48 28,315,300 7.85
Direct funding from customers 22,722,645 22,080,601 2.91 22,523,825 0.88
Indirect funding from customers 11,578,824 11,566,237 0.11 12,073,839 -4.10
of which:
- Managed funds 4,872,867 5,013,245 -2.80 5,471,577 -10.94
Total funding 34,301,469 33,646,838 1.95 34,597,664 -0.86
Equity 2,260,896 1,864,466 21.26 1,919,392 17.79
SOLVENCY RATIOS 30/09/2012 31/12/2011
Tier 1 Regulatory Capital/Risk-weighted assets 7.8% 7.3%
Regulatory Capital/Risk-weighted assets 11.2% 10.6%
FINANCIAL STATEMENT RATIOS 30/09/2012 30/06/2012 31/12/2011
Indirect funding from customers / Total funding 33.8% 34.4% 34.4%
Managed funds / Indirect funding from customers 42.1% 42.3% 43.3%
Direct funding from customers / Total liabilities 74.4% 73.1% 77.7%
Customer loans / Direct funding from customers 98.7% 103.0% 101.1%
Customer loans / Total assets 73.4% 75.4% 78.6%
CREDIT RISK 30/09/2012 30/06/2012 31/12/2011 % change
(1) % change
(2)
Net doubtful loans (in thousands of EUR) 657,099 637,394 572,722 3.09 14.73
Other net doubtful loans (in thousands of EUR) 1,570,042 1,289,067 1,098,488 21.80 42.93
Net doubtful loans / Loans and receivables with customers 2.9% 2.8% 2.6%
Other net doubtful loans / Loans and receivables with customers 7.0% 5.8% 4.9%
Hedging of doubtful loans 54.0% 54.3% 56.5%
Hedging of other doubtful loans 8.0% 8.0% 8.1%
Cost of credit (*) 0.80 0.73 0.75
(*) Calculated as the ratio between impairment losses due to deterioration of loans and year-end loans.
(1) Calculated with respect to 30 June.
(2) Calculated with respect to 31 December last year.
5
ORGANISATIONAL DATA 30/09/2012 30/06/2012 31/12/2011 % change
(1) % change
(2)
Number of employees 4,418 4,455 4,482 -0.83 -1.43
Number of branches 544 543 543 0.18 0.18
Banc@perta line users 199,591 197,620 184,977 1.00 7.90
(1) Calculated with respect to 30 June.
(2) Calculated with respect to 31 December last year.
INCOME STATEMENT DATA Q3 2012 01/01/2012
-
30/09/2012
Q3 2011 01/01/2011
-
30/09/2011
% change (1)
% change (2)
(in thousands of EUR)
Net interest income 121,371 358,206 137,012 388,878 -11.42 -7.89
Operating income 205,185 601,977 211,200 635,908 -2.85 -5.34
Operating costs (136,031) (407,522) (141,928) (424,453) -4.15 -3.99
Net financial income 69,154 194,455 69,272 211,455 -0.17 -8.04
Pre-tax profit from continuing operations 14,379 51,972 28,410 97,184 -49.39 -46.52
Post-tax profit from continuing operations 1,459 32,402 13,567 48,165 -89.25 -32.73
Profit for the period attributable to owners of the parent 2,818 31,060 11,978 44,255 -76.47 -29.82
(1) Calculated with respect to Q3 of the previous year.
(2) Calculated with respect to the period 01/01 - 30/09 of the previous year.
OTHER FINANCIAL INFORMATION 01/01/2012 - 30/09/2012
1st half of 2012 2011
Cost/Income ratio 67.7% 68.4% 63.7%
6
ORGANISATIONAL MODEL AND BREAKDOWN OF THE CREDITO
VALTELLINESE BANKING GROUP
ORGANISATIONAL MODEL OF THE CREDITO VALTELLINESE GROUP
The Credito Valtellinese Banking Group consists of territorial banks, specialised companies and special purpose
companies for the provision of services - with a view to achieving synergies and economies of scale - to all the
companies of the Group. The current group structure is graphically represented below.
Credito Valtellinese
Credito Siciliano
Carifano
Aperta SGR
Finanziaria San Giacomo
Creset Servizi Territoriali
Global Assicurazioni (*)
Global Broker (*)
Deltas
Bankadati
Stelline
(*) Insurance companies subject to management and coordination by Credito Valtellinese pursuant to Articles 2497 et sequitur of the Italian
Civil Code
Structure of the Credito Valtellinese Group
MARKET SPECIALISED FINANCE CORPORATE CENTER
Aperta Fiduciaria
Mediocreval
Lussemburgo Gestioni
The Organisational Model of the Group, defined a “company network” model, assigns the reference market share to
the territorial banks and the required operating support to the specialised and special-purpose companies.
Therefore, it is based on the full enhancement of the distinctive skills of each member, with the purpose of achieving
the maximum efficiency and competitiveness, on their functional and operational correlation, and on the adoption in
the corporate process management of the same rules and methods. This makes it possible to overcome size
restrictions and fully benefit from the advantage of proximity with regard to the areas of choice, effectively
combining specialisation and flexibility, production and distribution functions.
7
As at 30 September 2012, the Credito Valtellinese Group is present in the national territory with a network of 544
Branches, in eleven regions, through the territorial banks characterising the “Market Segment”:
- Credito Valtellinese S.c., Parent of the Group, present with its network of 368 branches, the majority of
which - 231 - in Lombardia, as well as in Valle d’Aosta, Piemonte, Veneto, Trentino Alto Adige, Emilia
Romagna, Toscana and Lazio;
- Carifano S.p.A., with a branch network of 40 branches, mainly in the Marche region, as well as in Umbria, in
Perugia and Orvieto.
- Credito Siciliano S.p.A., is present in all the provinces of Sicilia with 136 branches, and in Roma with a
branch dedicated to loans against pledge.
The following companies characterise the “Specialised Finance Sector”:
- Aperta SGR S.p.A., a fund management company, in which the asset management activities are centralised.
- Lussemburgo Gestioni S.A., Luxembourg-based management company, specialising in the management
and administration of OEIC units.
- Aperta Fiduciaria S.r.l., a company authorised to perform what is known as “static” fiduciary services,
administration of third party assets and fiduciary registration.
- Global Assicurazioni S.p.A., is a multifirm insurance agency in the bancassurance sector and, more in
general, in the sales network distribution of standard insurance policies1.
- Global Broker S.p.A., a company specialised in the insurance sector targeting the SME segment.2
- Mediocreval S.p.A., a company specialised in disbursing medium to long-term loans, business finance and
leases.
- Finanziaria San Giacomo S.p.A., specialised in the management of impaired loans mainly of the financial
intermediaries of the Group.
- Creset Servizi Territoriali S.p.A., a company specialised in the management of local tax services, treasury
and cash services on behalf of local authorities present in the territories of the Group banks.
The companies providing services complementary to banking business characterising the “Production Segment”
complete the Group:
- Deltas società consortile per Azioni, forms the “Corporate centre” of the Group, supports the Parent in
defining and governing the overall business plan, coordinates and provides support for administration,
planning, human resource management, marketing, auditing, legal affairs, compliance and risk management.
- Bankadati Servizi Informatici società consortile per Azioni, is the Group’s centre for ICT management
and development, organisation, back office and support processes.
- Stelline Servizi Immobiliari S.p.A., manages the real estate holdings of the Group companies, prepares real
estate valuations to support the disbursement of credit by the Territorial Banks and independently develops
initiatives in favour of the local communities of reference.
1
Company subject to management and coordination by Credito Valtellinese and therefore included in the consolidation scope, even if not included
in the banking group, pursuant to the supervisory provisions, in that they carry out insurance activities.
2 See previous note.
8
THE GENERAL ECONOMIC FRAMEWORK
The reference macroeconomic context3
The general economic framework
During the second and third quarter of 2012, the world economy slowed down, affected by the weakening of
activities both in advanced countries and emerging ones; international trade also vitality. Expectations of growth are
weighed down by the uncertainty regarding the budget policy of the United States, the evolution in demand in
emerging countries and the development of the sovereign debt crisis in the Eurozone. The main central banks
intensified their expansive action.
In the Eurozone, the general economic situation weakened also in the more sound economies. The €-coin indicator,
which estimates the basic component of the GDP change, disclosed that economic activities remained weak in the
Summer months. Inflation was fuelled by price increases for energy products and by the tax manoeuvres in certain
countries, but should quieten down in the coming months.
At the beginning of August, the ECB’s Executive Board reconfirmed the need to deal with the serious problem of the
bond markets, which lead to different monetary conditions in the various countries; it clarified that the premiums for
the reversibility risk of the Euro should be contrasted in a decisive manner. At the start of September, it announced
the methods for implementing the new purchase transactions for Government bonds on the secondary market,
which shall be dependent on strict conditions, concentrated on bonds with a duration of between one and three
years and not subject to limits ex-ante as to entity and duration.
The announcement relieved tension on the sovereign debt bonds of the area, which had once again started to
deteriorate in the Summer. The risk premiums reported a generalised drop, especially in those countries most
exposed to the debt crisis. However, the conditions of the financial markets remain fragile.
The climate within the markets is affected not only by the weakness of the general economic situation, but also by
the uncertainty with regard to the timescales and formalities for any requests for aid made by the countries in the
area in difficulty, as well as the conditions to be applied and the state of certain national banking systems; also, social
tension may make the implementation of the adaptation measures more complex. It is necessary to proceed
decisively and at all levels for budget rebalancing and in the structural reforms, as well as the reform of the European
architecture. The creation of a European banking union must target on breaking the link between the sovereign debt
conditions and those of the national banking systems.
In Italy, economic activities, which had dropped in the second quarter at the same rate as the first (-0.8 percent on
the previous period), continued to fall in the Summer months as well, albeit less intensely. The weakness in
consumer and investment demand reflected financial conditions which are still tense, the effects of the budget
manoeuvres on available income and the low level of confidence of households and businesses. In September, the
polls carried out care of companies provided indications of a slight mitigation of the pessimism on short-term
prospects, still not such as to portray an immediate return to growth.
Exports outside the EU continued to support production. The trend in exports was relatively favourable and
provided a positive contribution, albeit modest, to GDP growth. The pick-up in sales of goods abroad in the second
quarter was mainly directed outside the European Union; the recent polls outlined an essential retention. The
current account deficit of the balance of payments clearly decreased, also due to the drop in imports linked to the
reduction in internal demand.
The employment scenario is still unfavourable. Employment remained more or less stable in the second quarter, but
the increase in the supply of labour - concentrated among the young, women and the south of Italy - pushed the
unemployment rate over 10 percent. Gross salaries fell in real terms. The most recent information and the quality
surveys carried out care of companies confirm a still unfavourable employment scenario.
Inflation remained above 3% in the third quarter, reflecting the increase in the price of energy products and the
effects of the rises in indirect taxes resolved during 2011; the latter, which can be assessed as almost one percentage
3Adapted from the Bank of Italy Economic Bulletin No. 70 – October 2012 – published on 16 October 2012
9
point, should come to an end in the coming months. Pressure on prices should quieten down, reflecting the weakness
in demand. Almost half the inflation gap with respect to the average in the Eurozone - having fallen to 0.7 percentage
points in September - is attributable to the effects of taxation.
The Italian banking system
Up until the month of August, tension on the sovereign debt market continued to influence foreign funding of the
intermediaries, albeit to a more contained extent with respect to the close of 2011. The credit conditions of
companies improved slightly: they benefited both from the reduction in the official rates in July and from the drop in
the spreads on Government bonds observed after the ECB’s announcement of new monetary policy measures.
However tension remains, indicating a mixed conveyance of the monetary policy still in the Eurozone.
The improvement registered as from August made it possible for some banks to resume the placement of bonds in
September. Between the end of May and the end of August, non-resident deposits and the net liabilities in
repurchase agreements vis-à-vis central counterparts, which mainly represent bank funding from abroad, fell.
During the same period, net bond funding, excluding the interbank component, fell by EUR 11 billion (13 in the three
previous months).
Retail deposits remained a sound strong point of the Italian banks. In the three months ending in August, the
balances of deposits held by Italian residents increased EUR 24 billion. Their growth over twelve months rose to 4.2
percent in August (from 1.2 in May), mainly due to the sharp increase in deposits other than those in current
accounts held by households and, to a minor extent, those of financial companies.
The funding cost rose slightly. In August, the return paid to households on new deposits with a duration of up to one
year came to 2.8%, a tenth of a percentage point up with respect to May. The average interest rate paid on current
accounts of companies and households remained at 0.5%. The return on new bond issues rose for fixed-rate
securities (to 4.2%), but dropped for floating rate instruments (to 3.9%).
The decrease in loans to businesses and households continued. Lending to the private non-financial sector dropped
between the end of May and the end of August. Net of the seasonal factors and the accounting effects of securitisation
transactions, the decrease came to 1.1.% over a year for the credit of businesses and 0.8% for that of households.
The most recent trend in lending was affected above all else by weakness in demand, linked to the drop in
investments and the unfavourable economic prospects in the case of businesses, and to the deterioration of the
climate of confidence and the real estate property market in the case of households. Supply conditions relaxed with
respect to the sharp tightening at the start of the year; nevertheless, the responses of the Italian intermediaries to
the quarterly survey on bank lending in the Eurozone (Bank Lending Survey) in July disclosed residual tension in the
second quarter of the year. The investigations, more up-to-date, carried out care of businesses provide ambiguous
indications with regard to recent months; overall, they still disclose difficulties for accessing credit, greater than
those observed before the deterioration of the sovereign debt crisis in Italy.
The cost of lending continued to decrease, feeling the benefit of the effects of the reduction in the official rates in July
and the decrease in the spreads on the sovereign debt markets after the announcement of new monetary policy
measures by the ECB; the decrease in banking rates applied to households and businesses continued, becoming
bolder in August. Between the end of May and the end of August, the average cost of new loans to businesses
decreased by fourth tenths of a percentage point, to 3.3% (slightly above the levels observed in June 2011, before the
crisis intensified in the Eurozone).
In August, the cost of lending to businesses was still however greater, by around 70 basis points, than the average for
the area with which it had by contrast been constantly aligned since the launch of the EMU until the deterioration of
the sovereign debt crisis in 2011. The persistent gap, which can also be seen in the other countries exposed to
financial tension, still indicates the presence of a mixed conveyance of the monetary policy in the various economies
in the area.
Credit quality has felt the effect of the economic cycle difficulties. The ratio in the flow of new adjusted doubtful loans
and total loans rose in the second quarter to 2.1% (on the basis of seasonally-adjusted data and over a year),
reaching levels observed at the end of 2009. The increase fully reflected the deterioration of the quality of lending to
businesses - thus the indicator rose three tenths of a point, to 3.2% - in particular in the construction segment. The
rate of loans becoming doubtful in relation to households by contrast remained at 1.2 percent. Preliminary figures
show that in July and August the total exposure for debtors recorded as doubtful for the first time remained at the
high levels seen in the previous two months. The portion of loans to businesses in temporary difficulty (substandard
and restructured loans) increased compared to total loans to the sector, to 7.5% in August (7.1% in May).
10
The financial market
Tension on the sovereign debt markets in the Eurozone relaxed as from the end of July, following the declarations of
the Chairman of the ECB with regard to possible measures of an entity suitable for averting the rise in the spreads
associated with the reversibility risk of the Euro and restoring the correct functioning of the monetary policy
conveyance channels. The decrease in the premiums for the sovereign risk consolidated at the start of September,
after the definition by the ECB of the details relating to the new and final monetary transactions on the secondary
market of Government bonds.
The return spread between 10-year treasury bills (BTP) and the corresponding German bond - after having exceeded
530 basis points in July - dropped drastically, to 365 points at the end of September (59 points less with respect to
the end of June); the reduction in the differentials on shorter term maturities was even more pronounced. The above
was partly the result of the announcement of the new monetary transactions of the ECB, as well as the favourable
pronouncement of the German Constitutional Court on the European Stability Mechanism. In the first ten days of
October, the spreads remained at levels on average close to those at the end of September, but showed significant
variability, associated with the persistence of a elevated climate of uncertainty.
Premiums on the bonds of Italian businesses and banks also fell. During the second quarter, net redemptions of
bonds were registered, but in September the banks turned to the markets.
The generalised improvement in the conditions of the financial markets also concerned the share markets. In the
second quarter as a whole, the general Borsa Italiana index rose by 9%, a rise higher than that observed overall in
the Eurozone and the USA (8 and 6 percent, respectively). The variability expected with regard to market prices,
inferred from the prices of the options on stock market indices, dropped considerably. The ratio between the current
profits of the listed companies and their capitalisation decreased by around 1.5 percentage points, despite remaining
above the related average over the long-term.
The rise in share prices concerned all the main segments of the stock market. The index of the banking sector
revealed an increase of 9%, similar to that of the general index. Greater increases were registered in the areas of raw
materials and services (respectively 15% and 13%), while growth was less bold for telecommunications and
consumer goods (2% and 4%).
11
SIGNIFICANT EVENTS DURING THE THIRD QUARTER
Merger of Credito Artigiano into Credito Valtellinese
After completion of the formalities relating to the offer under option of the shares for which the right to withdraw
was exercised by the shareholders of Credito Artigiano, as per Article 2437 quater of the Italian Civil Code, the
merger deed was drawn up on 29 August 2012 for the incorporation of Credito Artigiano within the Parent Credito
Valtellinese, effective for legal purposes as from 10 September 2012.
A further transaction among those envisaged within the sphere of a more extensive project for the simplification of
the corporate structure of the Creval Group was therefore finally implemented according to the established plan; this
is an integral part of the 2011-2014 Strategic Plan, which will make it possible to accomplish the synergies and
economies of scale, whose effects are expected as from next year, on a consistent basis with the efficiency,
competitiveness and profitability objectives defined by said Plan, approved in February 2011 and subsequently up-
dated on 19 March 2012.
Following the merger, effective as from 10 September 2012, Credito Valtellinese took steps to issue 51,386,642 new
ordinary shares, lacking the indication of a par value, to be assigned to Credito Artigiano shareholders, other than the
majority shareholder, at an exchange ratio of 0.70 ordinary Credito Valtellinese shares for each ordinary Credito
Artigiano share, with a consequent share capital increase from EUR 1,316,656,659.50 to EUR 1,496,509,906.50,
represented by 427,574,259 ordinary shares lacking indication of the par value.
Agreement for the development of a strategic alliance in the asset management sphere with Asset Management
Holding
On 9 August 2012, an Outline Agreement was entered into with Asset Management Holding S.p.A., the company
which controls Anima SGR, independent operator and leader in the field of asset management in Italy, for the
development of a strategic alliance in the asset management sector; this agreement envisages the implementation of
a preferential, long-term commercial relationship between the Creval Group and the AMH Group. The transfer to
AMH of all the share capital of Aperta SGR is also envisaged as part of this agreement, along with the transfer of the
entire investment in Lussemburgo Gestioni, held by the Creval Group, a transaction which is envisaged will be
implemented by the end of the current year, as long as the necessary legal authorisations are obtained.
Wilful public takeover and exchange bid on the Credito Siciliano shares
Again within the sphere of the project for the streamlining and optimisation of the Group’s corporate structure, as
mentioned above, although occurring after the end of the third quarter, on 9 October 2012 Credito Valtellinese’s
Board of Directors resolved the launch of a wilful public takeover and exchange bid as per Article 102 of the
Consolidated Finance Law (TUF) on 1,995,906 Credito Siciliano shares, corresponding to 20.83% of the related share
capital and representing all the shares of the subsidiary not already held by Credito Valtellinese.
For each share involved in the operation, whose period of effectiveness shall start on 12 November 2012 and end on
7 December 2012, a single consideration shall be acknowledged comprising:
- a component represented by 8.50 Credito Valtellinese newly issued ordinary shares;
- a component in cash, equal to EUR 4.00.
12
In consideration of the nature of the payment, the offering was furthered after Credito Valtellinese’s extraordinary
shareholders’ meeting held on 16 June 2012 during which the Board of Directors was granted the faculty to increase
the share capital to serve said Offering.
By virtue of this assignment, on 6 November 2012 Creval’s Board of Directors authorised a share capital increase,
divisible and against payment, with the exclusion of the purchase option, for a maximum amount of EUR
22,394,065.32, to be implemented by means of the issue of a maximum of 16,965,201 ordinary shares, to be assigned
to the shareholders of Credito Siciliano taking part in the Offering, by way of partial payment.
Securitisation of commercial loans
A new multi-originator securitisation transaction was finalised on 6 August 2012, via the special purpose company
Quadrivio SME 2012 s.r.l., for a portfolio of mortgage and unsecured loans granted to businesses, artisans and family
business for a total of EUR 2.78 billion.
The transaction - the first performed by the Creval Group covering a portfolio made up exclusively of business loans -
forms part of the prudent extension of eligible assets for refinancing through the European Central Bank.
The Group's operational structure
The branch network
The commercial network of the Credito Valtellinese Group as at 30 September 2012 consisted of 544 branches,
distributed throughout eleven Italian regions, as shown below.
13
Other sales channels
Alongside its traditional branch networks, the Credito Valtellinese Group boasts a network of alternative channels
for the distribution of banking products and services. At the end of September these channels consisted of:
DISTRIBUTION CHANNELS 30.09.2012 30.09.2011
Number of ATMs 653 663
Number of Internet users (active) 199,591 179,514
Number of POS 21,118 20,612
Workforce
As at 30 September 2012, the Group workforce numbered 4,418 staff members, compared to 4,482 as at 31
December 2011, with the following breakdown of functions:
- Executives: 64
- Middle managers: 1,537
- Professional categories: 2,817
Group workforce as at 30 September 2012
14
RECLASSIFIED CONSOLIDATED FINANCIAL STATEMENTS
RECLASSIFIED FINANCIAL STATEMENTS
(in thousands of EUR)
ASSETS 30/09/2012 30/06/2012 31/12/2011 %
change (*)
% change
(**)
Cash and cash equivalents 170,575 167,204 181,775 2.02 -6.16
Financial assets held for trading 656,667 227,323 106,414 n/a n/a
Financial assets available-for-sale 2,972,485 2,774,587 1,412,554 7.13 110.43
Financial assets held to maturity 475,027 473,522 507,555 0.32 -6.41
Loans and receivables with banks 1,495,606 1,302,907 1,618,517 14.79 -7.59
Loans and receivables with customers 22,430,078 22,396,609 22,330,187 0.15 0.45
Equity investments 235,671 225,950 219,315 4.30 7.46
Property and equipment and intangible assets (1) 1,123,126 1,126,487 1,134,998 -0.30 -1.05
Non-current assets and disposal groups 3,962 3,806 - 4.10 -
Other assets (2) 974,827 1,018,340 900,175 -4.27 8.29
Total assets 30,538,024 29,716,735 28,411,490 2.76 7.48
(*) Calculated with respect to 30 June. (**) Calculated with respect to 31 December.
(1) Includes items “120.Property and equipment” and “130.Intangible assets”.
(2) Includes items “140.Tax assets" and "160.Other assets”.
LIABILITIES AND EQUITY 30/09/2012 30/06/2012 31/12/2011 %
change
(*)
% change
(**)
Due to banks 4,248,580 4,510,830 3,171,929 -5.81 33.94
Direct funding from customers (1) 22,722,645 21,737,176 22,080,601 4.53 2.91
Financial liabilities held for trading 12,805 11,925 9,527 7.38 34.41
Hedging derivatives 218,874 207,285 159,608 5.59 37.13
Liabilities associated with disposal groups 1,259 1,094 - 15.08 -
Other liabilities 813,324 799,546 601,554 1.72 35.20
Provisions for specific purpose (2) 215,356 196,819 252,765 9.42 -14.80
Equity attributable to non-controlling interests 44,285 312,037 271,040 -85.81 -83.66
Equity (3) 2,260,896 1,940,023 1,864,466 16.54 21.26
Total liabilities and equity 30,538,024 29,716,735 28,411,490 2.76 7.48
(*) Calculated with respect to 30 June.
(**) Calculated with respect to 31 December.
(1) Includes items “20. Due to customers” and “30. Securities issued”.
(2) Includes items “80. Tax liabilities”, and “110. Post employment benefits” and “120. Provisions for risks and charges”.
(3) Includes items “140. Valuation reserves”, “160. Equity instruments”, “170. Reserves”, “180. Share premium reserve”, “190. Share capital”, “200.
Treasury shares” and “220. Profit (loss) for the period”.
15
RECLASSIFIED INCOME STATEMENT (in thousands of EUR)
Items Q3 2012 01/01/2012
-
30/09/2012
Q3 2011 01/01/2011
-
30/09/2011
% change
(*)
% change
(**)
Net interest income 121,371 358,206 137,012 388,878 -11.42 -7.89
Net fee and commission income 65,091 194,555 70,451 215,297 -7.61 -9.63
Dividends and similar income 35 285 36 1,335 -2.78 -78.65
Profit of equity-accounted investees (1) 5,188 13,244 3,487 11,479 48.78 15.38
Net trading and hedging income (expense) and profit on sales/repurchases 8,462 24,212 (3,363) 8,114 n/a n/a
Other operating net income (4) 5,038 11,475 3,577 10,805 40.84 6.20
Operating income 205,185 601,977 211,200 635,908 -2.85 -5.34
Personnel expenses (80,910) (242,450) (85,754) (258,199) -5.65 -6.10
Other administrative expenses (2) (45,035) (135,429) (45,908) (136,100) -1.90 -0.49
Depreciation/amortisation and net impairment losses on property and equipment
and intangible assets (3) (10,086) (29,643) (10,266) (30,154) -1.75 -1.69
Operating costs (136,031) (407,522) (141,928) (424,453) -4.15 -3.99
Net financial income 69,154 194,455 69,272 211,455 -0.17 -8.04
Net impairment losses on loans
and other financial assets (53,215) (138,138) (40,356) (112,966) 31.86 22.28
Net accruals to provisions for risks and charges (1,410) (4,189) (748) (2,907) 88.50 44.10
Net gains (losses) on sales of investments (150) (156) 242 1,602 n/a -109.74
Pre-tax profit from continuing operations 14,379 51,972 28,410 97,184 -49.39 -46.52
Income taxes (12,920) (19,570) (14,843) (49,019) -12.96 -60.08
Post-tax profit from continuing operations 1,459 32,402 13,567 48,165 -89.25 -32.73
Post-tax profit from discontinued operations 895 2,704 1,182 3,643 -24.28 -25.78
Profit (loss) for the period attributable to non-controlling interests 464 (4,046) (2,771) (7,553) -116.74 -46.43
Profit for the period attributable to owners of the parent 2,818 31,060 11,978 44,255 -76.47 -29.82
(*) Calculated with respect to Q3 of the previous year;
(**) Calculated with respect to the period 01/01 - 30/09 of the previous year.
(1) Profit of equity-accounted investees includes the amount included in item 240 " Net gains on investments". The residual amount of that item is
included in gains on sales of investments, together with item 270 "Net gains on sales of investments";
(2) Other administrative expenses include recoveries of taxes and other recoveries recognised in item 220 "Other operating net income" (EUR 39,421
thousand as at 30 September 2012 and EUR 37,515 thousand as at 30 September 2011);
(3) Depreciation/amortisation and net impairment losses on property and equipment and intangible assets include items 200 “Depreciation and net
impairment losses on property and equipment”, 210 “Amortisation and net impairment losses on intangible assets” and the accumulated depreciation
of costs incurred for leasehold improvements included under item 220 “Other operating net income” (EUR 4,467 thousand as at 30 September 2012
and EUR 4,595 thousand as at 30 September 2011);
(4) Other income and costs correspond to item 220 "Other operating net income" net of the above reclassifications.
16
COMMENTS ON THE FINANCIAL STATEMENTS
Financial position aggregates
As at 30 September 2012, loans and receivables with customers reached EUR 22,430 million, slightly up
compared to EUR 22,330 million in December 2011; the trend reflects the weakness in demand consequent to the
uncertainty regarding economic prospects. Despite this and albeit within a context of strict control of the lending
risk, the Group banks have maintained constant attention on the support of SMEs and households in the area it
traditionally operates in.
The diagram below represents the breakdown by technical form of Gross loans and receivables with customers and
the composition of the same by segment.
The credit quality is increasingly affected by the deterioration in the economic situation. The progressive
deterioration essentially concerns loans to businesses, to a greater extent the construction industry, with an increase
in so-called “objective substandard positions” partly correlated to the reduction in available liquidity. At the end of
the third quarter, impaired loans, net of impairment losses, totalled EUR 2,227 million compared to EUR 1,671
million in December 2011. In this context, doubtful loans, net of impairment losses, totalled EUR 657 million
compared to EUR 573 million in December 2011, showing an 14.7% increase, with a 2.9% impact on the total loans
portfolio and a 54% hedging degree. Other doubtful loans amounted to EUR 1,570 million, compared to EUR 1,098
million in the previous year, with a 7% impact on the loans portfolio compared to 4.9% at the end of the year. The
increase is also related to the different classification, as from 1 January 2012, of past due exposures for more than 90
and up to 180 days.
The table below provides detailed information on the loan quality.
(in thousands of EUR)
Gross exposure Impairment losses Net exposure % hedging
as at 30.09.2012
Impaired loans
Non-performing loans 1,427,581 -770,482 657,099 54.0
Substandard loans 938,453 -103,644 834,809 11.0
Restructured exposures 187,546 -15,384 172,162 8.2
Past-due exposures 581,283 -18,212 563,071 3.1
Total impaired loans 3,134,863 -907,722 2,227,141 29.0
Performing loans 20,312,474 -109,537 20,202,937 0.5
Total loans and receivables with customers 23,447,337 -1,017,259 22,430,078
17
As at 30 September 2012, financial assets held for trading recorded an amount of EUR 656.7 million compared to
EUR 106.4 million in December 2011; the portfolio mainly consists of debt instruments.
Financial assets available-for-sale amounted to EUR 2,972.5 million, compared to EUR 1,412.6 million at the end of
December 2011, and are essentially represented by debt instruments (mainly Italian government bonds). The
portfolio also includes equity instruments and OEIC units. The negative Reserve linked to financial assets available-
for-sale, represented under equity items, presented a negative balance and amounted to EUR 172.1 million, an
improvement with respect to the negative balance of EUR 230.7 million reported as of 30 June 2012.
Financial assets held to maturity amounted to EUR 475 million compared to EUR 507.5 million at the end of 2011
and are represented by bonds and government bonds issued by banks.
As at 30 September 2012, direct customer funding totalled EUR 22,723 million, up by about 2.9% compared to EUR
22,081 million in December of the previous year, with an appreciable further change in time-based technical forms,
such as time deposits which as of the date represented 12.5% of the aggregate, compared with 5.8% in December
2011. The period end figure includes EUR 1,373 million in deposits with the Clearing House.
The diagram below shows the breakdown of direct customer funding by technical form as at 30 September 2012.
Indirect funding were more or less stable with respect to the end of 2011; the trend in the same remains affected by
market volatility. The aggregate amounts to EUR 11,579 million, including EUR 4,873 million referring to managed
funds. Total funding reached EUR 34,301 million and disclosed an increase of close to 2% when compared with
December 2011.
The diagram below shows the breakdown of indirect funding as at 30 September 2012.
18
As at 30 September 2012, Equity amounted to EUR 2,261 million. The Regulatory Capital amounted to EUR 2,364
million in connection with risk-weighted assets of EUR 21,013 million. The core capital ratio amounted to 7.8%,
compared to 7.3% in December. The total capital ratio was equal to 11.2% compared to 10.6% at the end of 2011.
Economic results
The weakness in the general economic situation and the decrease in short-term interest rates together with the drop
in volumes traded significantly affected the result of operations, which registered a deterioration with respect to the
same period in the previous year, which was however contained by the effects of repricing action and that for the
structural reduction of operating costs undertaken. The quarterly results were, vice versa, essentially solid with
respect to the previous quarter, thanks to the recovery of the interest margin.
As at 30 September 2012, the net interest income stood at EUR 358 million, down by 7.9% year-on-year, reflecting
the combined effect of the drop in short-term interests rates and trend in loans and receivables with customers, as
well as the increase in the cost of funding, also with reference to the recomposition of the deposits on demand in
favour of more onerous time-based technical forms.
Net fee and commission income amounted to EUR 195 million, showing a declining trend of 9.6% year-on-year,
mainly due to the deceleration of the commission from financial brokerage. The total is also affected negatively by
the amount of commission for liabilities guaranteed by MEF, for an amount of EUR 11 million. The quarterly
performance of the aggregate by contrast disclosed essential solidity with respect to the second quarter of 2012.
Net trading income and profit on sales/repurchases of AFS as well as net hedging income of EUR 24 million
compared to EUR 8 million in the comparison period, contributed positively.
Overall, the operating income totalled EUR 602 million and reported a decrease of 5.3% compared to EUR 636
million in the same period last year.
Operating costs, totalling EUR 407.5 million, showed a 4% decrease year-on-year, as a result of effective control
action aimed at structurally containing costs. The reduction in personnel expenses, equal to more than 6%, was more
emphasised, a percentage which would come to around 7.6% net of the extraordinary effect of around EUR 4 million
for the provision to the “Solidarity Fund” consequent to the agreement signed in August with the Trade Union
Associations. In detail, personnel expenses amounted to EUR 242.5 million, whereas other administrative expenses
stood at EUR 135 million, essentially stable with respect to September 2011.
The “cost-income ratio”, standing at 67.7%, improved with respect to 68.4% in June 2012.
The net financial income reached EUR 194.5 million, marking a decrease of 8% against EUR 211.5 million recorded
in the corresponding period of the previous year.
Net impairment losses on loans came to EUR 138 million, compared to EUR 113 million as at September 2011; the
“cost of credit”, expressed as a percentage of total loans and receivables with customers, reached approximately 80
basis points, down compared to 75 b.p. at the end of 2011.
Pre-tax profit from continuing operations amounted to approximately EUR 52 million, compared to EUR 97
million in the previous year.
Income taxes for the period were estimated as EUR 19.6 million, down considerably with respect to the same period
last year, due to the recognition of positive components totalling EUR 18.5 million, referring a) for EUR 8.5 million to
the exemption of the higher values recorded as goodwill, pursuant to Article 15, paragraph 10, of Italian Law Decree
No. 185 of 29 November 2008, and of Article 176, paragraph 2 ter, of the Consolidated Act on Income Tax; b) for
about EUR 10 million to the analytical deductibility from IRES of the IRAP shares related to personnel costs not
deducted for the tax periods as from 2007, pursuant to the Italian Law Decrees No. 201/2011 and No. 16/2012.
Post-tax profit from discontinued operations totalling EUR 2.7 million refers to the disposal of the subsidiaries
Aperta SGR and Lussemburgo Gestioni SA, approved by the Board of Directors on 9 August 2012, which is envisaged
19
will take place by the end of the current year. The operation will lead to the recognition of net income estimated as
totalling around EUR 23 million.
Profit for the period attributable to non-controlling interests amounting to EUR 4 million fix the profit for the
period attributable to owners of the parent for the period at EUR 31 million, down approximately 30% compared
to EUR 44.3 million in the first quarter of 2011.
CURRENT-YEAR OUTLOOK
The negative spiral involving the sovereign debt crisis, access to funding by the banks, credit availability and
economic growth does not seem to have significantly lessened. Overall, the general economic framework remains
negative, resulting in unfavourable conditions for bank operations, whose prospects of profitability for the current
year are limited.
NOTES TO THE FINANCIAL STATEMENTS
FORM AND CONTENT OF THE CONDENSED INTERIM CONSOLIDATED REPORT ON OPERATIONS
The Condensed Interim Consolidated Report on Operations as at 30 September 2012 provides an overview of the
situation of Credito Valtellinese and of the companies that it directly or indirectly controls, or in which it directly
holds the majority of the share capital or has a number of votes that is high enough to ensure a considerable
influence in the Ordinary Shareholders’ Meeting. This financial report was drafted pursuant to Article 154 ter,
paragraph 5 of Italian Legislative Decree No. 58 dated 24 February 1998 (the Consolidated Law on Finance), and
does not comply with IAS 34 –Interim Financial Reporting.
CONSOLIDATION PRINCIPLES
The consolidation principles used are the international financial reporting standards (IAS/IFRS) formally approved
by the European Union and mandatory at the time of preparing the interim report, including their relative
interpretations. These principles are explained in the consolidated financial statements as at 31 December 2011, to
which reference should be made for further details.
The condensed interim consolidated report was prepared on the basis of accounting schedules prepared for this
purpose by companies included in the scope of consolidation as at 30 September 2012.
The scope of consolidation did not change with respect to 31 December 2011. The investment percentages held in
the Group companies increased mainly as a result of the extraordinary transactions carried out in 2012. In detail,
reference is made to the merger of Cassa di Risparmio di Fano Spa into Credito Artigiano Spa carried out with effect
as of 1 January 2012 (with subsequent conferral of the business segment, represented by the network of “former
Carifano” branches present in the Marche and Umbria regions, in favour of a newly set-up bank, called “Nuova
Carifano S.p.A.” and wholly owned by Credito Artigiano) and the merger of Credito Artigiano into Credito Valtellinese
carried out with legal effect as from 10 September 2012.
20
ACCOUNTING POLICIES
The accounting policies used to represent corporate accounting events (recognition, classification and assessment)
have not been changed with respect to those adopted in the financial statements as at 31 December 2011, drafted
according to international financial reporting standards (to which reference should be made for further details),
except for those amended by IASB and endorsed through the issue of new EU Regulations.
With regard to the accounting position for the first three quarters of 2011 (comparison period), it is specified that
following the issue by the Bank of Italy of letter 0125853/12 dated 10 February 2012, charges for EUR 3,072
thousand were reclassified from the item “Personnel expenses” to the item “Other administrative expenses”.
Additional costs were also reclassified from the item “Other administrative expenses” to the item “Other operating
net income” for EUR 910 thousand.
The Creval Group, within company strategies focused on the development of the typical banking and financial
brokerage activities and with a view to increasing the range and the quality of the offered products and services of
investment for its customers, considered the possibility of developing its asset management externally, by signing a
strategic agreement with the Asset Management Holding (AMH) Group, leading independent operator of the sector.
Currently, the Creval Group carries out the asset management activities by means of Aperta SGR, an asset
management company, 100% controlled by Credito Valtellinese, and Lussemburgo Gestioni SA, 70% owned by the
Credito Valtellinese Group. As at 30 September 2012, assets and liabilities referring to these companies, net of intra-
group items, were classified separately from the other assets and liabilities (Non-current assets held for sale and
disposal groups and Liabilities associated with non-current assets held for sale and disposal groups) consistently
with what is provided by IFRS 5 - Non-current assets held for sale and discontinued operations. Also the costs and
revenues related to them, always net of intra-group items, were reported separately in the income statement under
“Post-tax profit from discontinued operations” (in detail, net fee and commission income for EUR 4,851 thousand,
operating expenses for EUR 1,807 thousand and income taxes for EUR 340 thousand were restated). In the income
statement, steps were taken to reclassify - on a consistent basis - the period of comparison as required by the
standard (the reclassifications concern net fee and commission income for EUR 6,113 thousand, other operating net
income for EUR 20 thousand, personnel expenses for EUR 1,319 thousand, other administrative expenses for EUR
571 thousand, depreciation and net impairment losses on property and equipment for EUR 2 thousand and income
taxes for EUR 598 thousand).
Again in compliance with the IFRS 5 accounting standard, non-current assets held for sale and disposal groups also
include an investment held for sale.
Suspended items and non-liquid portfolio items as a result of the settlement currency were not recognised in the
related financial statements items, as their effect was considered insignificant.
The condensed interim consolidated report on operations as at 30 September 2012 was not subject to audit by the
independent auditor.
THE BOARD OF DIRECTORS
Sondrio, Tuesday, 6 November 2012
21
DECLARATION OF THE MANAGER IN CHARGE OF FINANCIAL REPORTING
The undersigned manager in charge of financial reporting, Simona Orietti, pursuant to Article 154 bis of the
Consolidated Law on Finance hereby declares that the accounting information provided in this condensed interim
consolidated report on operations as at 30 September 2012 matches the information reported in the company’s
documents, books and accounting records.
The Manager in charge of financial reporting.
Simona Orietti