3. JUSTIFICACIÓN
5.1.3 LOS ODS Y SU RELACIÓN CON INSTRUMENTOS DE PLANEACIÓN Y DE
1.1 Debt instruments 13,295 13,100 (372) (3) 26,020 17,184
1.2 Equity instruments 343 54 (80) (1) 316 1,473
1.3 Units in UCITS 17 2 (19) (2) (2) (39) 1.4 Financing - - - - - - 1.5 Other - 2,019 - (379) 1,640 (4,112)
2. Financial liabilities held for trading - 13,176 - (3,117) 10,059 9,146
2.1 Debt instruments - 13,176 - (3,117) 10,059 9,146 2.2 Payables - - - - - - 2.3 Other - - - - - -
3. Other financial liabilities: exchange rate differences X X X X (328) 4,071 4. Derivative instruments 240,010 186,162 (255,668) (173,436) (1,303) (26,355)
4.1 Financial derivatives 240,010 186,162 (255,668) (172,893) (760) (23,801) - on deb t instruments and interest rates 239,040 183,903 (254,443) (170,550) (2,050) (25,531) - on equity instrum ents and share indices 30 103 (257) (171) (295) 133
- on currencies and gold X X X X 1,629 1,490
- other 940 2,156 (968) (2,172) (44) 107 4.2 Credit derivatives - - - (543) (543) (2,554)
Total 253,665 214,513 (256,139) (176,938) 36,402 1,368
Net hedging loss
Figures in thousands of euro 1H 2014 1H 2013
Net hedging loss (3,475) (2,350)
Profit from disposal or repurchase
Figures in thousands of euro
Financial assets
1. Loans and advances to banks - - - -
2. Loans and advances to customers 653 (915) (262) 12
3. Available-for-sale financial assets 98,304 (427) 97,877 61,993 3.1 Deb t instruments 78,582 (367) 78,215 47,932 3.2 Equity instruments - (60) (60) 14,061 3.3 Units in UCITS 19,722 - 19,722 - 3.4 Financing - - - - 4. Held-to-maturity investments - - - - Total assets 98,957 (1,342) 97,615 62,005 Financial liabilities 1. Due to banks - - - - 2. Due to customers - - - -
3. Debt securities issued 26 (3,106) (3,080) (841)
Total liabilities 26 (3,106) (3,080) (841) Total 98,983 (4,448) 94,535 61,164
Net profit (loss) on financial assets and liabilities designated at fair value
Figures in thousands of euro 1H 2014 1H 2013
Net profit (loss) on financial assets and liabilities designated at fair value (272) 1,582
127,190 61,764
1H 2013
Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities designated at fair value
Profits Losses Income from trading (B) Losses (C) Losses from trading (D) Gains (A) Net profit 1H 2014
The net result for financial activities increased more than twofold to reach €127.2 million, up from €61.8 million in the first six months of 2013, as a result of the following:
+€36.4 million from trading (+€1.4 million in 2013), attributable almost entirely to debt
instruments, benefiting from approximately €13 million of net gains and from €23.1 million of profit/losses realised on the market, of which €10.1 million resulting from the close down of all uncovered short positions on debt securities. Foreign exchange business generated €2.9 million, while the close down of credit derivatives resulted in a loss of €0.5 million and the contribution from derivatives on debt securities and interest rates was also negative at
approximately €2 million (profits, gains and accruals)3;
-€3.5 million from hedging – consisting of changes in the fair value of derivatives and the
relative items hedged – relating almost entirely to available-for-sale securities (-€2.4 million in 2013 in relation to bonds);
+€94.5 million from the disposal of available-for-sale securities and the repurchase of
financial liabilities, of which €78.2 million from the sale of €3.8 billion of Italian government
securities, €19.7 million from the disposal of units in UCITS (ETFs, i.e. European equity funds that passively replicate benchmark indexes), -€0.3 million from the disposal of deteriorated positions (restructured and impaired of the former Centrobanca, together with a packet of non-performing loans of the former B@nca 24-7 and other ordinary mainly non- performing positions) and -€3.1 million from the repurchase of securities in issue as part of normal direct business with customers.
In the first half of 2013 profits of €61.2 million euro were recognised composed as follows: +€47.9 million euro attributable to debt instruments (+€49.7 million euro from Italian government securities and -€1.8 million euro from the sale of other bonds mostly issued by banks); +14.1 from equity instruments (€11.4 million euro from the profit on Intesa Sanpaolo shares, €0.6 million euro on A2A shares and €0.5 million euro from an addition to the price for the disposal of the Cerved Group performed in 2008, all amounts subject to normalisation, in addition to €1.6 million euro from the full disposal of the interest held in Unione Fiduciaria); and finally -€0.8 million euro from the repurchase of own bond issues.
-€0.3 million from fair value movements on investments in Tages funds, from a residual
position in hedge funds and from private equity investments of the former Centrobanca (+€1.6 million in 2013);
Other net operating income/expense amounted to €53.6 million (€55.6 million in the first six months of 2013), a reflection of the
amount and stability of the
income, against slight changes in the underlying expenses.
Detailed examination of the items, which do not show any significant changes, reveals the following: a reduction in prior year income (due to the presence in the first half of 2013 of an extraordinary refund of
€1.5 million consisting of
withholding taxes on the dividends of a foreign subsidiary) and an increase in expenses (including €2.4 million due to recognition of
reimbursements to Prestitalia customers).
“Income for services to Group member companies” rose to €33.1 million (+€2 million), a reflection of the centralisation at the Parent of activities relating to the Chief Financial Officer and the Chief Risk Officer (by UBI Leasing, UBI Factor and Prestitalia), growth in volumes of business in the finance area and greater provision of some services (these included money laundering and the finance of terrorism and commercial risks). These increases were only partially offset by the impacts of the Centrobanca merger.
3 The latter item incorporates losses on interest rate derivatives in 2013 of €33.6 million, mainly the result of action taken to
restructure interest rate hedges (IRS) on bonds issued, on former B@nca 24-7 mortgages and also on the assets and liabilities of Group companies. That impact was balanced by the positive impact on the assets and liabilities of the network banks and the product companies with a more or less neutral result on the consolidated financial statements.
Other net operating income
Figures in thousands of euro 1H 2014 1H 2013
Other operating income 56,979 57,017
Recovery of expenses and other income on current accounts 1 -
Recovery of other expenses 4,904 5,347
Recoveries of taxes 3,655 3,840
Rents and other income for property management 16,704 16,153
Income for services to Group member companies 33,062 31,040
Other income and prior year income 2,308 4,477
Reclassification of "tax recoveries" (3,655) (3,840)
Other operating expenses (3,371) (1,439)
Depreciation of leasehold improvements (63) (63)
Costs relating to finance lease contracts - -
Other expenses and prior year expense (3,371) (1,439)
Depreciation on improved leaseholds for rented assets 63 63
Interest and similar income: composition
Figures in thousands of euro
Debt
instruments Financing transactionsOther 1H 2014 1H 2013
1. Financial assets held for trading 20,181 - - 20,181 28,844
2. Available-for-sale financial assets 199,255 - - 199,255 205,896
3. Held-to-maturity investments 53,026 - - 53,026 54,258
4. Loans and advances to banks 25,768 15,427 - 41,195 24,080
5. Loans and advances to customers 7,615 241,584 - 249,199 298,704
6. Financial assets designated at fair value - - - - -
7. Hedging derivatives X X 23,822 23,822 705
8. Other assets X X 14 14 14
Total interest income 305,845 257,011 23,836 586,692 612,501
Interest and similar expense: composition
Figures in thousands of euro Borrowings Securities Other liabilities 1H 2014 1H 2013
1. Due to central banks (14,417) - - (14,417) (40,833)
2. Due to banks (49,929) X - (49,929) (112,191)
3. Due to customers (14,789) X - (14,789) (34,529)
4. Debt securities issued X (450,106) - (450,106) (362,117)
5. Financial liabilities held for trading (15,949) - - (15,949) (23,979)
6. Financial liabilities designated at fair value - - - - -
7. Other liabilities and provisions X X (178) (178) (197)
8. Hedging derivatives X X - - -
Total interest expense (95,084) (450,106) (178) (545,368) (573,846)
Net interest income 41,324 38,655
Net interest income improved to €41.3 million4 (+€2.7 million compared with the first half of
2013), benefiting, amongst other things, from a moderate rise in the yield curve in the two
periods5. In detail6:
the securities portfolio generated interest income of €207.7 million (€201.5 million in 2013), due to growth in investments in debt instruments over twelve months of approximately €0.8 billion. Italian government securities continued to make a substantial contribution to net interest income (€199.3 million from the AFS portfolio and €53 million from the HTM portfolio), although these investments incorporate the costs of hedges on fixed interest rate bonds (the differentials paid on the derivatives amounted to €48.8 million, down compared with €63.6 million before);
business on the interbank market, focused mainly on intragroup activities, generated a loss of €23.2 million, a marked improvement on the loss of €128.9 million previously. This is due to both a fall in funding from banks (-€4.3 billion over twelve months), while loans grew (+€1.7 billion), and also to a vertical drop in interest expense paid on the LTRO financing (down from €40.8 million to €14.4 million, following progressive reductions in the rate for principal refinancing operations down from 0.75% at the beginning of 2013 to the current
0.15% (since 11th June 2014);
business with customers recorded expense of €143.1 million (-€33.7 million in 2013), due to the trend for the cost of debt securities issued, which UBI Banca issues now for all the ordinary and institutional customers of the Group. This item, which includes interest paid to subscribers, rose from -€362.1 million to -€450.1 million, in parallel with growth in the amount outstanding (+€7.9 billion over twelve months, correlated above all with bonds subscribed by network bank customers and with covered bonds).
4 Net interest income also includes the financial expense that UBI Banca incurs against investments in Group subsidiaries, while the
related financial income is fuelled by the item dividends.
5 The average one month Euribor rate did in fact rise in the two half-year periods from 0.119% in 2013 to 0.229% in the current year.
6 The calculation of net balances was performed by allocating interest income and expense on hedging derivatives within the different
areas of business (financial, with banks, with customers).
The commentary given here reports the contribution to net interest income by area of activity, although it must be considered that the Parent’s operations continue to involve movements across different business areas (e.g. funding from customers or from the network banks used for loans to the product companies).
The reduction in volumes of business over twelve months continued on the other hand to affect flows of interest from retail and corporate lending (down by €49.5 million in the two periods).
The net balance also includes the differentials received on hedges of own issue bonds (€72.6 million, compared with €64.3 million in the comparative period).
Fee and commission income: composition Fee and commission expense: composition
Figures in thousands of euro 1H 2014 1H 2013 Figures in thousands of euro 1H 2014 1H 2013
a) guarantees granted 3,728 3,561 a) guarantees received (15,909) (23,074)
c) management, trading and advisory services: 9,109 9,916 c) management and trading services: (11,570) (12,632)
1. trading in financial instruments 5,641 4,027 1. trading in financial instruments (1,240) (1,603)
2. foreign exchange trading 485 466 2. foreign exchange trading (3) (4)
3. portfolio management - - 3. portfolio management - -
4. custody and administration of securities 160 114 4. custody and administration of securities (722) (568)
5. depository banking - - 5. placement of financial instruments - - 6. placement of securities 26 1,617 6. financial instruments, products and services distributed through indirect networks (9,605) (10,457)
7. receipt and transmission of orders 5 1 d) collection and payment services (3,090) (2,497)
8. advisory activities 2,226 3,183 e) other services (4,889) (5,889)
8.1 on investments 2,226 3,183 Total fee and commission expense (35,458) (44,092)
9. distribution of third party services 566 508
9.1. portfolio management - -
9.2. insurance products 205 146
9.3 other products 361 362
d) collection and payment services 764 879
e) servicer activities for securitisation transactions - 6
i) current account administration 11 11
j) other services 25,738 36,123
Total fee and commission income 39,350 50,496 Net fee and commission income 3,892 6,404
Net fee and commission income fell to €3.9 million, down by €2.5 million compared with the first half of 2013, reflecting a parallel fall in both income and expense items.
Fee and commission income recorded the following: an increase in trading and financial instruments and reductions in the placement of securities and in investment advisory services, but above all a decrease in the item “other services” (-€10.4 million), which comprises commissions on lending activities (down by €9 million due precisely to a reduction in volumes of business) and on credit cards (down by €1.4 million).
Expense items, on the other hand, included lower commissions paid for the provision of financial instruments through indirect networks (credit cards and other products) placed by the network banks, but above all a reduction in the cost for the Italian government guarantee. The latter, down from €23.1 million to €15.7 million, partly incorporated the effects of the
early redemption (on 7th March 2014) for €3 billion nominal of bonds issued in the first
months of 2012 backed by that guarantee. UBI Banca had in fact issued bonds for a nominal amount of €6 billion designed to increase assets eligible for refinancing with the ECB and the expense recognised represents an annual percentage of the nominal amount of the outstanding bonds.
Because these were issued by the Parent, subscribed by the former Centrobanca and then repurchased entirely by UBI Banca, on the basis of IFRS international accounting standards, these liabilities are not recognised in the accounts, nor is the interest income and expense attributable to them. They are nevertheless included within the assets eligible for refinancing that form part of the collateral pool available to the European Central Bank.
From a quarterly viewpoint, operating income of €154.1 million compares with €217.7 million in the
same quarter of 2013 and with €347.3 million in the first three months of the year. The change compared with the previous quarter (-€193.2 million) is explained primarily by the different timing of the receipt of dividends. In detail:
dividends (€38.8 million compared with €236.6 million), which as a result of putting forward the date of the general meeting that allowed most consolidated banks and companies to distribute profits
before 31st March 2014, were penalised in the comparison with the previous period. Notwithstanding
this, it must be underlined that significant amounts were received in the second quarter mainly from the insurance companies (€14.1 million from Lombarda Vita, €7.3 million from UBI Assicurazioni, €6 million from Aviva Vita and €5 million from Aviva Assicurazioni Vita), but also from other equity investments (above all €3.1 million from SIA);
financial activities (€69.5 million compared with €57.7 million before) recorded another positive result, due primarily to: €44.1 million realised on the sale of government securities held in portfolio; €19.7 million on the sale of ETF European equities funds; and €9.8 million generated by trading in
financial instruments (largely debt securities). On the other hand, the result for both hedging and fair value movements on assets designated at fair value incurred an overall loss of €2.7 million;
other net operating income/expense
(€25.9 million compared with €27.7
million) presented no significant
changes in the two quarters, a
reflection in particular of the
performance for prior year expense which rose from €0.4 million to €3.4 million, partly in relation to recognition
of the reimbursements already
mentioned made to Prestitalia
customers;
net interest income (€16.4 million compared with €24.9 million before) was affected primarily by the effects of the cost of securities issued (+€16.2 million), a result largely of changes in average volumes issued, which explains most of the quarterly decrease for business with customers (-€17.5 million). This performance was only partially offset by the improvement in the contribution, although still negative, from interbank business, while the securities portfolio furnished net interest income of €104.7 million;
net fee and commission income (€3.5 million compared with €0.4 million before) is starting to
benefit from the partial redemption (on 7th
March 2014 for €3 billion) of government backed issues, the cost of which – recognised within guarantees received – did in fact fall from €10.1 million recorded in the first three months to €5.6 million in the second quarter.
On the costs front operating expenses totalled €166.8 million in the first half, down by €7
million compared with 2013, the result of the following performances:
• staff costs amounted to €76.4 million, up by €1.7 million, the aggregate result of different phenomena. On the one hand,
total staff numbers (-43 on average) and the relative wages decreased (-€1.8 million), which easily offset normal growth in incomes. On the other hand, the release of a provision in 2013
generated a technical
accounting effect. The table also
shows an increase (+€10.9
million) in recoveries of expenses for employees “on secondment” at other companies. These are
the effects of the partial
“transfer of contracts” relating to staff on secondment between the Parent and UBI.S, as provided
for by the trade union
agreement of 29th November
2012, which in reality are fully offset by an expense item recognised within expenses for employee staff;
• other administrative expenses fell to €79.4 million (-€8.1 million), as a result of the trend for current expenses (-€7.8 million), while indirect taxation remained almost unchanged (approximately -€0.3 million).
The table shows the main reductions in expenses which involved the following: rents payable (-€1.2 million, mainly intragroup and to the network banks, following the release of premises in via Moscova in Milan owned by BPCI); strategic and organisational advisory
Quarterly net interest income
Figures in thousands of euro 2nd Quarter 1st Quarter
Banking business with customers (80,314) (62,767)
Financial activities 104,736 102,984
Interbank business (7,965) (15,186)
Other items (71) (93)
Net interest income 16,386 24,938
2014
Staff costs: composition
Figures in thousands of euro 1H 2014 1H 2013
1) Employees (100,845) (88,526)
a) Wages and salaries (70,245) (61,554)
b) Social security charges (19,151) (16,881)
c) Post-employment benefits (3,806) (3,564)
d) Pension expense - -
e) Provision for post-employment benefits (288) (211)
f) Pensions and similar obligations (13) (15)
- defined benefit (13) (15)
g) Payments to external supplementary pension plans: (3,220) (3,146)
- defined contribution (3,220) (3,146)
i) Other employee benefits (4,122) (3,155)
2) Other staff in service (125) (118)
- Expenses for agency staff on staff leasing contracts - -
- Other expenses (125) (118)
3) Directors (3,206) (3,571)
4) Expenses for retired staff - -