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Section 1 - Statement of compliance with international accounting standards
The Consolidated Financial Statements as at 31 December 2023 have been drawn up in accordance with the IAS/IFRS standards in force at said date issued by the International Accounting Standards Board (IASB), together with the relevant interpretations (IFRICs and SICs). These standards were endorsed by the European Commission in accordance with the provisions in Article 6 of European Union Regulation No. 1606/2002. This regulation was implemented in Italy with Italian Legislative Decree No. 38 of 28 February 2005.
Concerning the interpretation and implementation of international accounting standards, the Banca Ifis Group referred to the \"Framework for the Preparation and Presentation and Financial Statements\", even though it has not been endorsed by the European Commission, as well as the Implementation Guidance, Basis for Conclusions, and any other documents prepared by the IASB or the IFRIC complementing the accounting standards issued.
The accounting standards adopted in preparing these Financial Statements are those in force at 31 December 2023 (including SIC and IFRIC interpretations).
The Bank also considered the communications from Supervisory Authorities (Bank of Italy, Consob, and ESMA), which provide recommendations on the disclosures to include in the financial statements concerning the most material aspects or the accounting treatment of specific transactions.
These Consolidated Financial Statements are subject to certification by the delegated corporate bodies and the Manager Charged with preparing the company\u2019s financial reports, as per Article 154 bis paragraph 5 of Italian Legislative Decree No. 58 of 24 February 1998.
The Consolidated Financial Statements are audited by PricewaterhouseCoopers S.p.A..
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page86-cflshid_40463-tag94152": { "value": "
Section 2 - Basis of preparation
The Consolidated Financial Statements consist of:
\u2022the consolidated financial statements (statement of financial position and income statement, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows);
\u2022the Notes to the Consolidated Financial Statements;
in addition, they contain the Directors' Report on the Group.
The Consolidated Financial Statements have been drawn up according to the general principles of IAS 1, referring also to IASB's \u201cFramework for the preparation and presentation of financial statements\u201d, with particular attention to the fundamental principles of substance over legal form, the concepts of relevance and materiality of information, and the accruals and going concern accounting concepts.
For the preparation of these Consolidated Financial Statements, reference was made to the format set out by Bank of Italy's Circular No. 262 of 22 December 2005, 8th update of 17 November 2022.
In line with the aforementioned Circular, items that do not show any amounts for the reference year and previous year are not shown in the tables.
In addition to the accounting data as at 31 December 2023, the financial statements provide comparative information for the last approved financial statements as at 31 December 2022.
The currency of account is the Euro and, if not indicated otherwise, amounts are expressed in thousands of Euro. The tables in the Notes may include rounded amounts; any inconsistencies and/or discrepancies in the data presented in the different tables are due to these rounding differences.
Assets and liabilities, as well as costs and revenues, have been offset only if required or permitted by an accounting standard or the relevant interpretation.
The recognition, measurement and derecognition criteria for assets and liabilities, and the procedures for recognising revenues and costs, adopted in the Consolidated Financial Statements at 31 December 2023, have remained substantively unchanged from those adopted for the preparation of the 2022 Financial Statements of the Banca Ifis Group, with the exception of the criteria for hedge accounting implemented by the Banca Ifis Group for the first time in 2023, illustrated in paragraph \"4 - Hedging transactions\u201d of Section \u201cA.2 - Main items of the financial statements\u201d.
The financial statements used to prepare the Consolidated Financial Statements are those prepared by the subsidiaries with reference to 31 December 2023, adjusted, where necessary, to adapt them to the accounting standards used by the Group.
If the information required by international accounting standards and the provisions of the aforementioned Circular is deemed insufficient to give a true and fair view, additional information necessary for this purpose is provided in the Notes to the Financial Statements.
The Financial Statements are prepared in accordance with the following general principles:
\u2022going concern: the Financial Statements are prepared on a going concern basis, having regard to the Group's business, as detailed below;
\u2022accrual accounting: the Financial Statements are prepared in accordance with accrual accounting principles;
\u2022consistency of presentation: the presentation and classification of items in the financial statements is kept constant from one year to the next unless a standard or interpretation requires a change in presentation or another presentation or classification is no longer appropriate. In the latter case, the Notes to the Financial Statements provide information on the changes made compared to the previous year;
\u2022materiality and aggregation: the balance sheet and income statement consist of items (denoted by Arabic numerals), sub-items (denoted by letters) and additional disclosure details (the \"of which\" of items and sub-items). The items, sub-items and related information details constitute the Financial Statements accounts. New items may be added to the previously described Financial Statements if their content is not traceable to any of the items already included in the schedules. The subheadings provided for in the schedules may be grouped together when one of the two following conditions is met:
\u2013the amount of the subheadings is insignificant;
\u2013grouping improves the clarity of the financial statements; in this case, the notes to the financial statements contain the grouped sub-items separately.
\u2022substance over form: transactions and other events are recognised and represented in accordance with their substance and economic reality and not merely according to their legal form;
\u2022offsetting: assets and liabilities, income and expenses are not offset unless permitted or required by an international accounting standard or interpretation thereof or by the provisions of the aforementioned Circular No. 262;
\u2022comparative information: for each balance sheet and income statement, comparative information for the previous year is provided, unless an accounting standard or interpretation permits or provides otherwise. Figures for the previous year may be adjusted where necessary to ensure comparability of information for the current year. Any non-comparability, adjustment or impossibility of the latter are reported and commented on in the Notes to the Financial Statements.
The Notes to the Financial Statements are divided into parts: A - Accounting policies, B - Information on the consolidated balance sheet, C - Information on the consolidated income statement, D - Consolidated comprehensive income, E - Information on risks and related hedging policies, F - Information on consolidated assets, G - Business combinations, H - Related-party transactions, I - Share-based payments, L - Segment reporting, M - Leasing disclosure.
Each part of the Notes is divided into sections, each of which illustrates a single aspect of management.
Information on the business as a going concern
The Bank of Italy, Consob and Isvap, with document No. 2 issued on 6 February 2009 (\"Disclosure in financial reports on the going concern assumption, financial risks, asset impairment tests and uncertainties in the use of estimates\"), together with the subsequent document No. 4 of 4 March 2010, require directors to assess with particular accuracy the existence of the company as a going concern, as per IAS 1.
Unlike in the past, present conditions on financial markets and in the real economy, together with the uncertainties in short-term forecasts, require particularly accurate assessments of the going concern assumption, as records of the Group's profitability and easy access to financial resources may no longer be sufficient in the current context.
In this regard, having examined the risks arising from the current macroeconomic environment, including in light of the current situation, geopolitical tensions and related possible macroeconomic implications including those arising from international tensions related to the Middle East, the directors believe that the Banca Ifis Group has a reasonable expectation of continuing to operate in the foreseeable future. Indeed, the directors do not believe that any risks or uncertainties have arisen that would cast doubt on the company's ability to continue as a going concern, and therefore the Consolidated Financial Statements as at 31 December 2023 have been prepared on a going concern basis.
Extraordinary tax on the \u201cextra-profits\u201d of banks under Italian Law No. 136/2023
Law No. 136 of 9 October 2023 converted Decree-Law No. 104 of 10 August 2023 (the \u201cOmnibus bis Decree\u201d or \u201cAsset Decree\u201d), introducing new measures aimed at economic operators and private individuals as well as confirming or modifying some already existing measures. The new measures adopted include the introduction, for 2023, of an extraordinary tax on net interest income (the \u201cextra-profits\u201d) of Italian banks, even if they operate in the territory of the Italian State through a permanent establishment. In particular, it establishes the application of a 40% tax rate on a taxable base configured by comparing the \"Net interest income\" under item 30 of the Income Statement of banking institutions (on the basis of the financial statement formats governed by Circular No. 262/2005 and subsequent updates of the Bank of Italy) of the tax year prior to the one in progress on 1 January 2022 and that of the tax year prior to the one in progress on 1 January 2024 only. In any event, the tax thus calculated may not exceed 0,26% of the risk-weighted assets (or \u201cRWAs\u201d) on an individual basis for each Bank. In lieu of making the payment, each bank on an individual basis may elect to allocate a certain amount, not less than 2,5 times the tax calculated as above, to a non-distributable profit reserve in equity. In such a case, if you subsequently choose to use this specific reserve for the distribution of profits (and thus make it from 'non-distributable' to 'distributable'), within 30 days of the approval of the relevant resolution, the tax originally calculated must be paid with a surcharge in proportion to the interest accrued in the meantime.
From an accounting point of view, in light of the specific characteristics of the tax in question and in particular the way in which it is determined, the provisions of IFRIC Interpretation 21 \u201cTaxes\u201d and IAS 37 \u201cProvisions, Contingent Liabilities and Contingent Assets\u201d were deemed applicable. In particular, according to IFRIC 21, a liability relating to the payment of a tax arises at the moment when the binding event occurs, i.e. when the obligation to pay the tax arises. The definition of a liability provided by IAS 37 also requires that an outflow of resources embodying economic benefits is deemed probable for the fulfilment of the obligation.
In this regard, it should be noted that, in relation to the provisions of the rule, the banks of the Banca Ifis Group (Banca Ifis and Banca Credifarma) have the realistic alternative of not paying the tax, by setting aside, when
approving their separate 2023 financial statements, a non-distributable profit reserve equal to 2,5 times the extraordinary tax. This makes the described requirement of the accounting standard not in fact fulfilled. Consequently, since the Directors of each of the Group's banks had positively concluded on the possibility of availing themselves of this option, and having verified the reasonableness of this alternative in the case at hand, as at 31 December 2023, it was deemed that there was no binding event against which to recognise a liability and related charge for either of the two banks on an individual basis and, consequently, at the level of the Group's consolidated balances.
The tax in question is quantified at 9.562.045 Euro for Banca Ifis and 1.300.962 Euro for Banca Credifarma. Therefore, the corresponding reserve allocations that the directors intend to propose to the relevant shareholders' meetings amount to 23.905.112 Euro for Banca Ifis and 3.252.404 Euro for Banca Credifarma.
It should also be noted that the provision of the last part of paragraph 5-bis of Italian Law No. 136/2023 determines an obligation to be considered new and autonomous and consisting in the maintenance of the non-distributable restriction on the reserve recorded by each bank in their respective separate 2023 financial statements. In this regard, the Directors of each bank will assess over time the substantive reasonableness of the option not to distribute based on the specific facts and circumstances.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page86-cflshid_40463-tag94151": { "value": "
Section 2 - Basis of preparation
The Consolidated Financial Statements consist of:
\u2022the consolidated financial statements (statement of financial position and income statement, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows);
\u2022the Notes to the Consolidated Financial Statements;
in addition, they contain the Directors' Report on the Group.
The Consolidated Financial Statements have been drawn up according to the general principles of IAS 1, referring also to IASB's \u201cFramework for the preparation and presentation of financial statements\u201d, with particular attention to the fundamental principles of substance over legal form, the concepts of relevance and materiality of information, and the accruals and going concern accounting concepts.
For the preparation of these Consolidated Financial Statements, reference was made to the format set out by Bank of Italy's Circular No. 262 of 22 December 2005, 8th update of 17 November 2022.
In line with the aforementioned Circular, items that do not show any amounts for the reference year and previous year are not shown in the tables.
In addition to the accounting data as at 31 December 2023, the financial statements provide comparative information for the last approved financial statements as at 31 December 2022.
The currency of account is the Euro and, if not indicated otherwise, amounts are expressed in thousands of Euro. The tables in the Notes may include rounded amounts; any inconsistencies and/or discrepancies in the data presented in the different tables are due to these rounding differences.
Assets and liabilities, as well as costs and revenues, have been offset only if required or permitted by an accounting standard or the relevant interpretation.
The recognition, measurement and derecognition criteria for assets and liabilities, and the procedures for recognising revenues and costs, adopted in the Consolidated Financial Statements at 31 December 2023, have remained substantively unchanged from those adopted for the preparation of the 2022 Financial Statements of the Banca Ifis Group, with the exception of the criteria for hedge accounting implemented by the Banca Ifis Group for the first time in 2023, illustrated in paragraph \"4 - Hedging transactions\u201d of Section \u201cA.2 - Main items of the financial statements\u201d.
The financial statements used to prepare the Consolidated Financial Statements are those prepared by the subsidiaries with reference to 31 December 2023, adjusted, where necessary, to adapt them to the accounting standards used by the Group.
If the information required by international accounting standards and the provisions of the aforementioned Circular is deemed insufficient to give a true and fair view, additional information necessary for this purpose is provided in the Notes to the Financial Statements.
The Financial Statements are prepared in accordance with the following general principles:
\u2022going concern: the Financial Statements are prepared on a going concern basis, having regard to the Group's business, as detailed below;
\u2022accrual accounting: the Financial Statements are prepared in accordance with accrual accounting principles;
\u2022consistency of presentation: the presentation and classification of items in the financial statements is kept constant from one year to the next unless a standard or interpretation requires a change in presentation or another presentation or classification is no longer appropriate. In the latter case, the Notes to the Financial Statements provide information on the changes made compared to the previous year;
\u2022materiality and aggregation: the balance sheet and income statement consist of items (denoted by Arabic numerals), sub-items (denoted by letters) and additional disclosure details (the \"of which\" of items and sub-items). The items, sub-items and related information details constitute the Financial Statements accounts. New items may be added to the previously described Financial Statements if their content is not traceable to any of the items already included in the schedules. The subheadings provided for in the schedules may be grouped together when one of the two following conditions is met:
\u2013the amount of the subheadings is insignificant;
\u2013grouping improves the clarity of the financial statements; in this case, the notes to the financial statements contain the grouped sub-items separately.
\u2022substance over form: transactions and other events are recognised and represented in accordance with their substance and economic reality and not merely according to their legal form;
\u2022offsetting: assets and liabilities, income and expenses are not offset unless permitted or required by an international accounting standard or interpretation thereof or by the provisions of the aforementioned Circular No. 262;
\u2022comparative information: for each balance sheet and income statement, comparative information for the previous year is provided, unless an accounting standard or interpretation permits or provides otherwise. Figures for the previous year may be adjusted where necessary to ensure comparability of information for the current year. Any non-comparability, adjustment or impossibility of the latter are reported and commented on in the Notes to the Financial Statements.
The Notes to the Financial Statements are divided into parts: A - Accounting policies, B - Information on the consolidated balance sheet, C - Information on the consolidated income statement, D - Consolidated comprehensive income, E - Information on risks and related hedging policies, F - Information on consolidated assets, G - Business combinations, H - Related-party transactions, I - Share-based payments, L - Segment reporting, M - Leasing disclosure.
Each part of the Notes is divided into sections, each of which illustrates a single aspect of management.
Information on the business as a going concern
The Bank of Italy, Consob and Isvap, with document No. 2 issued on 6 February 2009 (\"Disclosure in financial reports on the going concern assumption, financial risks, asset impairment tests and uncertainties in the use of estimates\"), together with the subsequent document No. 4 of 4 March 2010, require directors to assess with particular accuracy the existence of the company as a going concern, as per IAS 1.
Unlike in the past, present conditions on financial markets and in the real economy, together with the uncertainties in short-term forecasts, require particularly accurate assessments of the going concern assumption, as records of the Group's profitability and easy access to financial resources may no longer be sufficient in the current context.
In this regard, having examined the risks arising from the current macroeconomic environment, including in light of the current situation, geopolitical tensions and related possible macroeconomic implications including those arising from international tensions related to the Middle East, the directors believe that the Banca Ifis Group has a reasonable expectation of continuing to operate in the foreseeable future. Indeed, the directors do not believe that any risks or uncertainties have arisen that would cast doubt on the company's ability to continue as a going concern, and therefore the Consolidated Financial Statements as at 31 December 2023 have been prepared on a going concern basis.
Extraordinary tax on the \u201cextra-profits\u201d of banks under Italian Law No. 136/2023
Law No. 136 of 9 October 2023 converted Decree-Law No. 104 of 10 August 2023 (the \u201cOmnibus bis Decree\u201d or \u201cAsset Decree\u201d), introducing new measures aimed at economic operators and private individuals as well as confirming or modifying some already existing measures. The new measures adopted include the introduction, for 2023, of an extraordinary tax on net interest income (the \u201cextra-profits\u201d) of Italian banks, even if they operate in the territory of the Italian State through a permanent establishment. In particular, it establishes the application of a 40% tax rate on a taxable base configured by comparing the \"Net interest income\" under item 30 of the Income Statement of banking institutions (on the basis of the financial statement formats governed by Circular No. 262/2005 and subsequent updates of the Bank of Italy) of the tax year prior to the one in progress on 1 January 2022 and that of the tax year prior to the one in progress on 1 January 2024 only. In any event, the tax thus calculated may not exceed 0,26% of the risk-weighted assets (or \u201cRWAs\u201d) on an individual basis for each Bank. In lieu of making the payment, each bank on an individual basis may elect to allocate a certain amount, not less than 2,5 times the tax calculated as above, to a non-distributable profit reserve in equity. In such a case, if you subsequently choose to use this specific reserve for the distribution of profits (and thus make it from 'non-distributable' to 'distributable'), within 30 days of the approval of the relevant resolution, the tax originally calculated must be paid with a surcharge in proportion to the interest accrued in the meantime.
From an accounting point of view, in light of the specific characteristics of the tax in question and in particular the way in which it is determined, the provisions of IFRIC Interpretation 21 \u201cTaxes\u201d and IAS 37 \u201cProvisions, Contingent Liabilities and Contingent Assets\u201d were deemed applicable. In particular, according to IFRIC 21, a liability relating to the payment of a tax arises at the moment when the binding event occurs, i.e. when the obligation to pay the tax arises. The definition of a liability provided by IAS 37 also requires that an outflow of resources embodying economic benefits is deemed probable for the fulfilment of the obligation.
In this regard, it should be noted that, in relation to the provisions of the rule, the banks of the Banca Ifis Group (Banca Ifis and Banca Credifarma) have the realistic alternative of not paying the tax, by setting aside, when
approving their separate 2023 financial statements, a non-distributable profit reserve equal to 2,5 times the extraordinary tax. This makes the described requirement of the accounting standard not in fact fulfilled. Consequently, since the Directors of each of the Group's banks had positively concluded on the possibility of availing themselves of this option, and having verified the reasonableness of this alternative in the case at hand, as at 31 December 2023, it was deemed that there was no binding event against which to recognise a liability and related charge for either of the two banks on an individual basis and, consequently, at the level of the Group's consolidated balances.
The tax in question is quantified at 9.562.045 Euro for Banca Ifis and 1.300.962 Euro for Banca Credifarma. Therefore, the corresponding reserve allocations that the directors intend to propose to the relevant shareholders' meetings amount to 23.905.112 Euro for Banca Ifis and 3.252.404 Euro for Banca Credifarma.
It should also be noted that the provision of the last part of paragraph 5-bis of Italian Law No. 136/2023 determines an obligation to be considered new and autonomous and consisting in the maintenance of the non-distributable restriction on the reserve recorded by each bank in their respective separate 2023 financial statements. In this regard, the Directors of each bank will assess over time the substantive reasonableness of the option not to distribute based on the specific facts and circumstances.
", "dimensions": { "concept": "ifrs-full:DescriptionOfOtherAccountingPoliciesRelevantToUnderstandingOfFinancialStatements", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page86-cflshid_40463-tag94150": { "value": "
Section 2 - Basis of preparation
The Consolidated Financial Statements consist of:
\u2022the consolidated financial statements (statement of financial position and income statement, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows);
\u2022the Notes to the Consolidated Financial Statements;
in addition, they contain the Directors' Report on the Group.
The Consolidated Financial Statements have been drawn up according to the general principles of IAS 1, referring also to IASB's \u201cFramework for the preparation and presentation of financial statements\u201d, with particular attention to the fundamental principles of substance over legal form, the concepts of relevance and materiality of information, and the accruals and going concern accounting concepts.
For the preparation of these Consolidated Financial Statements, reference was made to the format set out by Bank of Italy's Circular No. 262 of 22 December 2005, 8th update of 17 November 2022.
In line with the aforementioned Circular, items that do not show any amounts for the reference year and previous year are not shown in the tables.
In addition to the accounting data as at 31 December 2023, the financial statements provide comparative information for the last approved financial statements as at 31 December 2022.
The currency of account is the Euro and, if not indicated otherwise, amounts are expressed in thousands of Euro. The tables in the Notes may include rounded amounts; any inconsistencies and/or discrepancies in the data presented in the different tables are due to these rounding differences.
Assets and liabilities, as well as costs and revenues, have been offset only if required or permitted by an accounting standard or the relevant interpretation.
The recognition, measurement and derecognition criteria for assets and liabilities, and the procedures for recognising revenues and costs, adopted in the Consolidated Financial Statements at 31 December 2023, have remained substantively unchanged from those adopted for the preparation of the 2022 Financial Statements of the Banca Ifis Group, with the exception of the criteria for hedge accounting implemented by the Banca Ifis Group for the first time in 2023, illustrated in paragraph \"4 - Hedging transactions\u201d of Section \u201cA.2 - Main items of the financial statements\u201d.
The financial statements used to prepare the Consolidated Financial Statements are those prepared by the subsidiaries with reference to 31 December 2023, adjusted, where necessary, to adapt them to the accounting standards used by the Group.
If the information required by international accounting standards and the provisions of the aforementioned Circular is deemed insufficient to give a true and fair view, additional information necessary for this purpose is provided in the Notes to the Financial Statements.
The Financial Statements are prepared in accordance with the following general principles:
\u2022going concern: the Financial Statements are prepared on a going concern basis, having regard to the Group's business, as detailed below;
\u2022accrual accounting: the Financial Statements are prepared in accordance with accrual accounting principles;
\u2022consistency of presentation: the presentation and classification of items in the financial statements is kept constant from one year to the next unless a standard or interpretation requires a change in presentation or another presentation or classification is no longer appropriate. In the latter case, the Notes to the Financial Statements provide information on the changes made compared to the previous year;
\u2022materiality and aggregation: the balance sheet and income statement consist of items (denoted by Arabic numerals), sub-items (denoted by letters) and additional disclosure details (the \"of which\" of items and sub-items). The items, sub-items and related information details constitute the Financial Statements accounts. New items may be added to the previously described Financial Statements if their content is not traceable to any of the items already included in the schedules. The subheadings provided for in the schedules may be grouped together when one of the two following conditions is met:
\u2013the amount of the subheadings is insignificant;
\u2013grouping improves the clarity of the financial statements; in this case, the notes to the financial statements contain the grouped sub-items separately.
\u2022substance over form: transactions and other events are recognised and represented in accordance with their substance and economic reality and not merely according to their legal form;
\u2022offsetting: assets and liabilities, income and expenses are not offset unless permitted or required by an international accounting standard or interpretation thereof or by the provisions of the aforementioned Circular No. 262;
\u2022comparative information: for each balance sheet and income statement, comparative information for the previous year is provided, unless an accounting standard or interpretation permits or provides otherwise. Figures for the previous year may be adjusted where necessary to ensure comparability of information for the current year. Any non-comparability, adjustment or impossibility of the latter are reported and commented on in the Notes to the Financial Statements.
The Notes to the Financial Statements are divided into parts: A - Accounting policies, B - Information on the consolidated balance sheet, C - Information on the consolidated income statement, D - Consolidated comprehensive income, E - Information on risks and related hedging policies, F - Information on consolidated assets, G - Business combinations, H - Related-party transactions, I - Share-based payments, L - Segment reporting, M - Leasing disclosure.
Each part of the Notes is divided into sections, each of which illustrates a single aspect of management.
Information on the business as a going concern
The Bank of Italy, Consob and Isvap, with document No. 2 issued on 6 February 2009 (\"Disclosure in financial reports on the going concern assumption, financial risks, asset impairment tests and uncertainties in the use of estimates\"), together with the subsequent document No. 4 of 4 March 2010, require directors to assess with particular accuracy the existence of the company as a going concern, as per IAS 1.
Unlike in the past, present conditions on financial markets and in the real economy, together with the uncertainties in short-term forecasts, require particularly accurate assessments of the going concern assumption, as records of the Group's profitability and easy access to financial resources may no longer be sufficient in the current context.
In this regard, having examined the risks arising from the current macroeconomic environment, including in light of the current situation, geopolitical tensions and related possible macroeconomic implications including those arising from international tensions related to the Middle East, the directors believe that the Banca Ifis Group has a reasonable expectation of continuing to operate in the foreseeable future. Indeed, the directors do not believe that any risks or uncertainties have arisen that would cast doubt on the company's ability to continue as a going concern, and therefore the Consolidated Financial Statements as at 31 December 2023 have been prepared on a going concern basis.
Extraordinary tax on the \u201cextra-profits\u201d of banks under Italian Law No. 136/2023
Law No. 136 of 9 October 2023 converted Decree-Law No. 104 of 10 August 2023 (the \u201cOmnibus bis Decree\u201d or \u201cAsset Decree\u201d), introducing new measures aimed at economic operators and private individuals as well as confirming or modifying some already existing measures. The new measures adopted include the introduction, for 2023, of an extraordinary tax on net interest income (the \u201cextra-profits\u201d) of Italian banks, even if they operate in the territory of the Italian State through a permanent establishment. In particular, it establishes the application of a 40% tax rate on a taxable base configured by comparing the \"Net interest income\" under item 30 of the Income Statement of banking institutions (on the basis of the financial statement formats governed by Circular No. 262/2005 and subsequent updates of the Bank of Italy) of the tax year prior to the one in progress on 1 January 2022 and that of the tax year prior to the one in progress on 1 January 2024 only. In any event, the tax thus calculated may not exceed 0,26% of the risk-weighted assets (or \u201cRWAs\u201d) on an individual basis for each Bank. In lieu of making the payment, each bank on an individual basis may elect to allocate a certain amount, not less than 2,5 times the tax calculated as above, to a non-distributable profit reserve in equity. In such a case, if you subsequently choose to use this specific reserve for the distribution of profits (and thus make it from 'non-distributable' to 'distributable'), within 30 days of the approval of the relevant resolution, the tax originally calculated must be paid with a surcharge in proportion to the interest accrued in the meantime.
From an accounting point of view, in light of the specific characteristics of the tax in question and in particular the way in which it is determined, the provisions of IFRIC Interpretation 21 \u201cTaxes\u201d and IAS 37 \u201cProvisions, Contingent Liabilities and Contingent Assets\u201d were deemed applicable. In particular, according to IFRIC 21, a liability relating to the payment of a tax arises at the moment when the binding event occurs, i.e. when the obligation to pay the tax arises. The definition of a liability provided by IAS 37 also requires that an outflow of resources embodying economic benefits is deemed probable for the fulfilment of the obligation.
In this regard, it should be noted that, in relation to the provisions of the rule, the banks of the Banca Ifis Group (Banca Ifis and Banca Credifarma) have the realistic alternative of not paying the tax, by setting aside, when
approving their separate 2023 financial statements, a non-distributable profit reserve equal to 2,5 times the extraordinary tax. This makes the described requirement of the accounting standard not in fact fulfilled. Consequently, since the Directors of each of the Group's banks had positively concluded on the possibility of availing themselves of this option, and having verified the reasonableness of this alternative in the case at hand, as at 31 December 2023, it was deemed that there was no binding event against which to recognise a liability and related charge for either of the two banks on an individual basis and, consequently, at the level of the Group's consolidated balances.
The tax in question is quantified at 9.562.045 Euro for Banca Ifis and 1.300.962 Euro for Banca Credifarma. Therefore, the corresponding reserve allocations that the directors intend to propose to the relevant shareholders' meetings amount to 23.905.112 Euro for Banca Ifis and 3.252.404 Euro for Banca Credifarma.
It should also be noted that the provision of the last part of paragraph 5-bis of Italian Law No. 136/2023 determines an obligation to be considered new and autonomous and consisting in the maintenance of the non-distributable restriction on the reserve recorded by each bank in their respective separate 2023 financial statements. In this regard, the Directors of each bank will assess over time the substantive reasonableness of the option not to distribute based on the specific facts and circumstances.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page86-cflshid_40463-tag94149": { "value": "
Section 2 - Basis of preparation
The Consolidated Financial Statements consist of:
\u2022the consolidated financial statements (statement of financial position and income statement, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows);
\u2022the Notes to the Consolidated Financial Statements;
in addition, they contain the Directors' Report on the Group.
The Consolidated Financial Statements have been drawn up according to the general principles of IAS 1, referring also to IASB's \u201cFramework for the preparation and presentation of financial statements\u201d, with particular attention to the fundamental principles of substance over legal form, the concepts of relevance and materiality of information, and the accruals and going concern accounting concepts.
For the preparation of these Consolidated Financial Statements, reference was made to the format set out by Bank of Italy's Circular No. 262 of 22 December 2005, 8th update of 17 November 2022.
In line with the aforementioned Circular, items that do not show any amounts for the reference year and previous year are not shown in the tables.
In addition to the accounting data as at 31 December 2023, the financial statements provide comparative information for the last approved financial statements as at 31 December 2022.
The currency of account is the Euro and, if not indicated otherwise, amounts are expressed in thousands of Euro. The tables in the Notes may include rounded amounts; any inconsistencies and/or discrepancies in the data presented in the different tables are due to these rounding differences.
Assets and liabilities, as well as costs and revenues, have been offset only if required or permitted by an accounting standard or the relevant interpretation.
The recognition, measurement and derecognition criteria for assets and liabilities, and the procedures for recognising revenues and costs, adopted in the Consolidated Financial Statements at 31 December 2023, have remained substantively unchanged from those adopted for the preparation of the 2022 Financial Statements of the Banca Ifis Group, with the exception of the criteria for hedge accounting implemented by the Banca Ifis Group for the first time in 2023, illustrated in paragraph \"4 - Hedging transactions\u201d of Section \u201cA.2 - Main items of the financial statements\u201d.
The financial statements used to prepare the Consolidated Financial Statements are those prepared by the subsidiaries with reference to 31 December 2023, adjusted, where necessary, to adapt them to the accounting standards used by the Group.
If the information required by international accounting standards and the provisions of the aforementioned Circular is deemed insufficient to give a true and fair view, additional information necessary for this purpose is provided in the Notes to the Financial Statements.
The Financial Statements are prepared in accordance with the following general principles:
\u2022going concern: the Financial Statements are prepared on a going concern basis, having regard to the Group's business, as detailed below;
\u2022accrual accounting: the Financial Statements are prepared in accordance with accrual accounting principles;
\u2022consistency of presentation: the presentation and classification of items in the financial statements is kept constant from one year to the next unless a standard or interpretation requires a change in presentation or another presentation or classification is no longer appropriate. In the latter case, the Notes to the Financial Statements provide information on the changes made compared to the previous year;
\u2022materiality and aggregation: the balance sheet and income statement consist of items (denoted by Arabic numerals), sub-items (denoted by letters) and additional disclosure details (the \"of which\" of items and sub-items). The items, sub-items and related information details constitute the Financial Statements accounts. New items may be added to the previously described Financial Statements if their content is not traceable to any of the items already included in the schedules. The subheadings provided for in the schedules may be grouped together when one of the two following conditions is met:
\u2013the amount of the subheadings is insignificant;
\u2013grouping improves the clarity of the financial statements; in this case, the notes to the financial statements contain the grouped sub-items separately.
\u2022substance over form: transactions and other events are recognised and represented in accordance with their substance and economic reality and not merely according to their legal form;
\u2022offsetting: assets and liabilities, income and expenses are not offset unless permitted or required by an international accounting standard or interpretation thereof or by the provisions of the aforementioned Circular No. 262;
\u2022comparative information: for each balance sheet and income statement, comparative information for the previous year is provided, unless an accounting standard or interpretation permits or provides otherwise. Figures for the previous year may be adjusted where necessary to ensure comparability of information for the current year. Any non-comparability, adjustment or impossibility of the latter are reported and commented on in the Notes to the Financial Statements.
The Notes to the Financial Statements are divided into parts: A - Accounting policies, B - Information on the consolidated balance sheet, C - Information on the consolidated income statement, D - Consolidated comprehensive income, E - Information on risks and related hedging policies, F - Information on consolidated assets, G - Business combinations, H - Related-party transactions, I - Share-based payments, L - Segment reporting, M - Leasing disclosure.
Each part of the Notes is divided into sections, each of which illustrates a single aspect of management.
Information on the business as a going concern
The Bank of Italy, Consob and Isvap, with document No. 2 issued on 6 February 2009 (\"Disclosure in financial reports on the going concern assumption, financial risks, asset impairment tests and uncertainties in the use of estimates\"), together with the subsequent document No. 4 of 4 March 2010, require directors to assess with particular accuracy the existence of the company as a going concern, as per IAS 1.
Unlike in the past, present conditions on financial markets and in the real economy, together with the uncertainties in short-term forecasts, require particularly accurate assessments of the going concern assumption, as records of the Group's profitability and easy access to financial resources may no longer be sufficient in the current context.
In this regard, having examined the risks arising from the current macroeconomic environment, including in light of the current situation, geopolitical tensions and related possible macroeconomic implications including those arising from international tensions related to the Middle East, the directors believe that the Banca Ifis Group has a reasonable expectation of continuing to operate in the foreseeable future. Indeed, the directors do not believe that any risks or uncertainties have arisen that would cast doubt on the company's ability to continue as a going concern, and therefore the Consolidated Financial Statements as at 31 December 2023 have been prepared on a going concern basis.
Extraordinary tax on the \u201cextra-profits\u201d of banks under Italian Law No. 136/2023
Law No. 136 of 9 October 2023 converted Decree-Law No. 104 of 10 August 2023 (the \u201cOmnibus bis Decree\u201d or \u201cAsset Decree\u201d), introducing new measures aimed at economic operators and private individuals as well as confirming or modifying some already existing measures. The new measures adopted include the introduction, for 2023, of an extraordinary tax on net interest income (the \u201cextra-profits\u201d) of Italian banks, even if they operate in the territory of the Italian State through a permanent establishment. In particular, it establishes the application of a 40% tax rate on a taxable base configured by comparing the \"Net interest income\" under item 30 of the Income Statement of banking institutions (on the basis of the financial statement formats governed by Circular No. 262/2005 and subsequent updates of the Bank of Italy) of the tax year prior to the one in progress on 1 January 2022 and that of the tax year prior to the one in progress on 1 January 2024 only. In any event, the tax thus calculated may not exceed 0,26% of the risk-weighted assets (or \u201cRWAs\u201d) on an individual basis for each Bank. In lieu of making the payment, each bank on an individual basis may elect to allocate a certain amount, not less than 2,5 times the tax calculated as above, to a non-distributable profit reserve in equity. In such a case, if you subsequently choose to use this specific reserve for the distribution of profits (and thus make it from 'non-distributable' to 'distributable'), within 30 days of the approval of the relevant resolution, the tax originally calculated must be paid with a surcharge in proportion to the interest accrued in the meantime.
From an accounting point of view, in light of the specific characteristics of the tax in question and in particular the way in which it is determined, the provisions of IFRIC Interpretation 21 \u201cTaxes\u201d and IAS 37 \u201cProvisions, Contingent Liabilities and Contingent Assets\u201d were deemed applicable. In particular, according to IFRIC 21, a liability relating to the payment of a tax arises at the moment when the binding event occurs, i.e. when the obligation to pay the tax arises. The definition of a liability provided by IAS 37 also requires that an outflow of resources embodying economic benefits is deemed probable for the fulfilment of the obligation.
In this regard, it should be noted that, in relation to the provisions of the rule, the banks of the Banca Ifis Group (Banca Ifis and Banca Credifarma) have the realistic alternative of not paying the tax, by setting aside, when
approving their separate 2023 financial statements, a non-distributable profit reserve equal to 2,5 times the extraordinary tax. This makes the described requirement of the accounting standard not in fact fulfilled. Consequently, since the Directors of each of the Group's banks had positively concluded on the possibility of availing themselves of this option, and having verified the reasonableness of this alternative in the case at hand, as at 31 December 2023, it was deemed that there was no binding event against which to recognise a liability and related charge for either of the two banks on an individual basis and, consequently, at the level of the Group's consolidated balances.
The tax in question is quantified at 9.562.045 Euro for Banca Ifis and 1.300.962 Euro for Banca Credifarma. Therefore, the corresponding reserve allocations that the directors intend to propose to the relevant shareholders' meetings amount to 23.905.112 Euro for Banca Ifis and 3.252.404 Euro for Banca Credifarma.
It should also be noted that the provision of the last part of paragraph 5-bis of Italian Law No. 136/2023 determines an obligation to be considered new and autonomous and consisting in the maintenance of the non-distributable restriction on the reserve recorded by each bank in their respective separate 2023 financial statements. In this regard, the Directors of each bank will assess over time the substantive reasonableness of the option not to distribute based on the specific facts and circumstances.
Risks and uncertainties related to estimates
Using accounting standards often requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities. In making the assumptions underlying the estimates, management considers all available information at the reporting date of these Consolidated Financial Statements, as well as hypotheses and any other factor deemed reasonable in light of past experience and foreseeable future evolutions.
By their very nature, it is therefore not possible to rule out the possibility that the assumptions made, however reasonable, may not be confirmed in the future scenarios in which the Group will find itself operating. Future results may therefore differ from the estimates made, and adjustments to the carrying value of assets and liabilities recognised in the financial statements, which cannot be foreseen or estimated at the date of this document, may be necessary. In this regard, it should be noted that adjustments in financial statement estimates may become necessary as a result of changes in the circumstances on which they were based, new information or increased experience.
The accounting policies considered most critical to the true and fair representation of the Group's financial position, results of operations and cash flows are illustrated below, both for the materiality of the amounts to be recognised in the financial statements impacted by these policies, and for the high degree of judgement required in the valuations, which implies the use of estimates and assumptions by management, with reference to the specific sections of the notes to the financial statements for detailed information on the valuation processes conducted at 31 December 2023. In particular, the aspects that required the use of complex estimates with significant assumptions are:
\u2022determination of the fair value of receivables and financial instruments not quoted in active markets;
\u2022measurement of Npl Segment loans;
\u2022measurement of the Expected Credit Loss (ECL) for receivables other than the Npl Segment and for debt securities;
\u2022estimate of provisions for risks and charges;
\u2022estimated impairment of goodwill posted;
\u2022assessment in respect of the potential recovery of deferred tax assets (DTAs).
For the types of assets listed above, the principal issues regarding risks and uncertainties associated with estimates are discussed in the following paragraphs.
Determination of the fair value of receivables and financial instruments not quoted in active markets
In the presence of receivables and financial instruments not quoted in active markets or illiquid and complex instruments, it is necessary to activate adequate valuation processes characterised with certain judgement on the choice of valuation models and related input parameters, which may sometimes not be observable in the market. There is a degree of subjectivity involved in assessing whether certain inputs are observable and categorising them within the fair value hierarchy accordingly. For qualitative and quantitative information on the method to determine the fair value of instruments measured at fair value, reference should be made to paragraph \"A.2 - Main items of the financial statements\" of these Notes to the Consolidated Financial Statements.
Measurement of Npl Segment loans
Receivables of this kind are measured with significant recourse to proprietary valuation models that are subject to ongoing verification and adjustment. Specifically, the Risk Management function, when assessing the Bank\u2019s capital adequacy (ICAAP), regularly assesses the so-called model risk, since the characteristics of the business model imply a high level of variability concerning both the amount collected and the date of actual collection.
In particular, for receivables undergoing non-judicial operations, the proprietary model in use estimates cash flows by projecting the breakdown of the amount of the receivable over time based on the historical collection profile for similar clusters. In addition, for the positions with settlement plan funding characteristics, a deterministic model based on the measurement of the future instalments of the plan, net of the historical default rate is used. Therefore, the timely and careful management of cash flows is particularly important. To ensure expected cash flows are correctly assessed, also with a view to correctly pricing the transactions undertaken, the Group carefully monitors the trend in collections compared to expected flows.
For receivables undergoing judicial operations, i.e. for positions for which the presence of a job or a pension has been verified, a model has been developed for estimating cash flows prior to obtaining the Garnishment Order. In particular, cash flows are estimated for all those positions that have obtained a decree not opposed by the debtor from 1 January 2018.
The other positions undergoing judicial operations continue to be recognised at cost until said requirements are met or a garnishment order is issued.
Upon garnishment order, future cash flows are analytically determined on the basis of the objective elements known for each individual position; in this case, therefore, the estimates applied relate mainly to the identification of the duration of the payment plan.
In addition to the above, judicial operations involve also collection efforts, i.e. foreclosure proceedings, which consist of several stages and apply to portfolios originated in corporate, banking, or real estate segments where cash flows are measured by means of the manager\u2019s analytical forecasts.
Reference should be made to the details given in Part E - \"Information on risks and related hedging policies\".
Measurement of the Expected Credit Loss (ECL) for receivables other than the Npl Segment and for debt securities
The determination of the ECL for financial assets measured at amortised cost is a complex process that requires the use of significant assumptions and estimates.
For financial assets for which no objective evidence of loss has been individually identified, i.e. for unimpaired (\"performing\") exposures, the impairment model involves the need to identify whether or not there has been a significant deterioration since the date of initial recognition of the exposure and the allocation to the three stages of credit risk under IFRS 9 of loans and debt securities classified as Financial assets at amortised cost and as Financial assets at fair value through other comprehensive income.
The IFRS 9 impairment model requires, in fact, that losses be determined with reference to the time horizon of one year for financial assets that have not undergone a significant deterioration in credit risk since initial recognition (Stage 1) rather than by reference to the entire life of the instrument if a significant deterioration or indicator of impairment has been established (Stage 2 and Stage 3).
It therefore follows that the calculation of the relevant expected losses requires an articulated estimation process that mainly concerns:
\u2022defining the parameters for a significant increase in credit risk, which are essentially based on models that consider qualitative and quantitative information for measuring the Probabilities of Default (PD) at the origination of financial assets and at the reporting date, as well as forward looking information;
\u2022the measurement of certain elements necessary for the determination of estimated future cash flows arising from non-performing loans: the expected debt collection times, the presumed realisable value of
any guarantees, the costs that it is deemed will be incurred to recover the credit exposure and lastly the likelihood of sale for positions for which there is a disposal plan.
Within the range of possible approaches to estimation models permitted by the relevant international accounting standards, the use of specific methodologies or the selection of certain estimation parameters may significantly influence the measurement of such assets. These methodologies and parameters are necessarily subject to a continuous updating process, also in light of the historical evidence available, with the aim of refining the estimates to better represent the estimated realisable value of the credit exposure. In order to cope with the uncertainty characterising the macroeconomic context and to take due account of risks that are not adequately captured by the valuation models in use, the Group resorts to prudential adjustments in determining the expected loss (referred to as \u201coverlays\u201d). The assessments performed with regard to the quantification of management overlays support the appropriateness of the measures put in place; the amount of ECL introduced through post-model adjustment was conservative compared to the sensitivity and stress analyses performed on the portfolio.
For more information on the methods and models used to determine the ECL, refer to the explanations given in paragraph \u201c2.3 Measurement of expected credit losses\u201d contained in the \"Credit risk\" section of \"Part E - Information on risks and related hedging policies\u201d of these Notes to the Consolidated Financial Statements.
Estimate of provisions for risks and charges
The companies making up the Group are party to certain types of litigation and are also exposed to numerous contingent liabilities. The complexities of the specific situations underlying the pending litigations, together with possible interpretation issues, require in certain circumstances significant judgement in estimating the liabilities that may arise upon settlement of the pending litigations. The difficulties of assessment affect both the an and the quantum, as well as the timing of the eventual manifestation of the liability, and are particularly evident when the proceedings initiated are at an early stage. These circumstances make the valuation of contingent liabilities difficult. As a result, the classification of contingent liabilities and the consequent valuation of the necessary provisions are sometimes based on non-objective elements of judgement and require the use of even complex estimation procedures.
Specifically, the Group recognises a liability when:
\u2022a legal or constructive obligation exists as a result of a past event;
\u2022it is likely that it will be necessary to spend resources which could generate economic benefits to settle the obligation;
\u2022the amount of the obligation can be reliably estimated.
Should all these conditions not be met, no liability is recognised.
The amount recognised as a provision represents the best estimate of the expense required to meet the obligation and reflects the risks and uncertainties regarding the facts and circumstances in question.
Where the cost deferral is significant, the amount of the provision is determined as the present value of the best estimate of the cost to settle the obligation. In this case a discount rate is used that reflects current market assessments.
The provisions made are periodically reviewed and, if necessary, adjusted to reflect the best current estimate. When the review finds that the cost is unlikely to be incurred, the provision is reversed.
The provisions for risks and charges on commitments and guarantees granted include the provisions for credit risk set aside for loan commitments and the other guarantees granted that fall within the scope of the impairment rules in IFRS 9. As a general rule, in this case the Bank adopts the same methods for allocating items to three credit risk Stages and calculating expected credit losses as the ones described for financial assets measured at amortised cost or at fair value through other comprehensive income.
Estimated impairment of goodwill posted
In accordance with IAS 36, goodwill must be impairment tested at least annually, to check that the value can be recovered. IAS 36 also requires, moreover, at each reporting date, including, therefore, the interim reports, an analysis aimed at identifying the presence of any loss indicators (termed \"Trigger Events\") upon the occurrence of which an impairment test must be carried out. The recoverable value is the greater of Value in Use and fair value, net of the costs of sale. As at 31 December 2023, goodwill amounts to 38,0 million Euro and is fully allocated to the Cash Generating Unit (CGU) \"Npl Segment\".
For the purposes of estimating the recoverable amount, the Group proceeded to determine the value in use by estimating both future cash flows in the explicit forecast period (determined based on the 2024-2026 economic
and equity projections for the CGU under analysis, as approved by the Parent company's Board of Directors on 8 February 2024) and the Terminal Value. In a similar fashion, the Group also estimated the discounting rate of future cash flows previously estimated. The discounting rate has been determined by the Group using the \u201cCapital Asset Pricing Model\u201d (CAPM).
The results of the impairment test conducted at 31 December 2023 led to the confirmation of the recoverability of the carrying amount.
As regards details of the impairment test conducted on goodwill at 31 December 2023, we would refer you to the more detailed information given in \"Part B - Information on the Consolidated Statement of Financial Position, Assets\", \"Section 10 - Intangible assets - Item 100\", Paragraph \"10.3 Other information\" of these Notes to the Consolidated Financial Statements.
Assessment in respect of the potential recovery of Deferred Tax Assets (DTAs)
Assets recognised in the Financial Statements include Deferred Tax Assets (DTAs) mainly generated by temporary differences between the date certain business costs are recognised in the income statement and the date on which the same costs may be deducted, rather than arising from tax loss carry-forwards.
In accordance with accounting standard IAS 12, referred to in the \"Group Impairment Policy\", a tax asset can only be recognised to the extent that it is probable that future taxable income will be available to allow for its recoverability.
Recognition of these assets and their subsequent maintenance therefore presupposes an assessment of the likelihood of their recovery. This assessment is not carried out for deferred tax assets pursuant to Law No. 214 of 22 December 2011, which can be transformed into tax credits in the event of the recognition of a \"statutory loss\", a \"tax loss\" for IRES tax purposes and a \"negative net production value\" for IRAP tax purposes, and for which the relative recovery is therefore certain regardless of the ability to generate future income.
For the remaining tax assets that cannot be transformed into tax credits, the judgement of their likelihood is supported by a valuation exercise of recoverability (referred to as the \u201cprobability test\u201d) characterised by significant elements of complexity or subjectivity. Based on the provisions of IAS 12 and the considerations made by ESMA in its paper of 15 July 2019, the aforementioned assessment of recoverability requires a careful reconnaissance of all evidence supporting the likelihood of having sufficient taxable income in the future, also taking into account the circumstances that generated the tax losses, which should be traced back to clearly identified causes that are deemed to be non-repeatable in the future on a recurring basis.
With reference to the recoverability of deferred tax assets recognised at 31 December 2023 other than those transformable pursuant to Law 2014/2011, based on the Group\u2019s estimated future taxable income, to be deemed confirmed in light of the results at 31 December 2023, no elements have emerged that could lead to deeming the DTAs in question, amounting to a total of 238,8 million Euro, to be unlikely for recovery. The aforementioned DTAs have therefore been deemed recoverable, albeit over a medium-term time horizon. Specifically, on the basis of the assessments performed and applying conservative hypotheses, with particular reference to the estimating of future income, out of the overall total of 238,8 million Euro, the 144,7 million Euro portion attributable to Law 214/2011 (equal to 60,6% of the total DTA) will be reversed by 2028 due to express regulatory provision. The portion referring to prior tax losses and aid for economic growth (\u201cACE\u201d) surpluses, totalling 41,1 million Euro (or 17,2% of the total DTA) should be fully recovered from 2026 to 2032 (of which approximately 30 million Euro by 2028). The remaining 53,1 million Euro refers mainly to financial assets measured at fair value with an impact on other comprehensive income (FVOCI) and is therefore related to the performance of the related reserve. The uncertainty is also confirmed regarding the recoverability of the DTAs relating to the subsidiary Cap.Ital.Fin. realised mainly before the entry into the tax consolidation, which therefore, out of prudence, have not been recorded for a total of 2,6 million Euro.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page87-cflshid_40959-tag94153": { "value": "
The currency of account is the Euro and, if not indicated otherwise, amounts are expressed in thousands of Euro. The tables in the Notes may include rounded amounts; any inconsistencies and/or discrepancies in the data presented in the different tables are due to these rounding differences.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page88-cflshid_41512-tag94156": { "value": "
Information on the business as a going concern
The Bank of Italy, Consob and Isvap, with document No. 2 issued on 6 February 2009 (\"Disclosure in financial reports on the going concern assumption, financial risks, asset impairment tests and uncertainties in the use of estimates\"), together with the subsequent document No. 4 of 4 March 2010, require directors to assess with particular accuracy the existence of the company as a going concern, as per IAS 1.
Unlike in the past, present conditions on financial markets and in the real economy, together with the uncertainties in short-term forecasts, require particularly accurate assessments of the going concern assumption, as records of the Group's profitability and easy access to financial resources may no longer be sufficient in the current context.
In this regard, having examined the risks arising from the current macroeconomic environment, including in light of the current situation, geopolitical tensions and related possible macroeconomic implications including those arising from international tensions related to the Middle East, the directors believe that the Banca Ifis Group has a reasonable expectation of continuing to operate in the foreseeable future. Indeed, the directors do not believe that any risks or uncertainties have arisen that would cast doubt on the company's ability to continue as a going concern, and therefore the Consolidated Financial Statements as at 31 December 2023 have been prepared on a going concern basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfUncertaintiesOfEntitysAbilityToContinueAsGoingConcern", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page88-cflshid_41512-tag94154": { "value": "
Information on the business as a going concern
The Bank of Italy, Consob and Isvap, with document No. 2 issued on 6 February 2009 (\"Disclosure in financial reports on the going concern assumption, financial risks, asset impairment tests and uncertainties in the use of estimates\"), together with the subsequent document No. 4 of 4 March 2010, require directors to assess with particular accuracy the existence of the company as a going concern, as per IAS 1.
Unlike in the past, present conditions on financial markets and in the real economy, together with the uncertainties in short-term forecasts, require particularly accurate assessments of the going concern assumption, as records of the Group's profitability and easy access to financial resources may no longer be sufficient in the current context.
In this regard, having examined the risks arising from the current macroeconomic environment, including in light of the current situation, geopolitical tensions and related possible macroeconomic implications including those arising from international tensions related to the Middle East, the directors believe that the Banca Ifis Group has a reasonable expectation of continuing to operate in the foreseeable future. Indeed, the directors do not believe that any risks or uncertainties have arisen that would cast doubt on the company's ability to continue as a going concern, and therefore the Consolidated Financial Statements as at 31 December 2023 have been prepared on a going concern basis", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page88-cflshid_41512-tag94155": { "value": "
Extraordinary tax on the \u201cextra-profits\u201d of banks under Italian Law No. 136/2023
Law No. 136 of 9 October 2023 converted Decree-Law No. 104 of 10 August 2023 (the \u201cOmnibus bis Decree\u201d or \u201cAsset Decree\u201d), introducing new measures aimed at economic operators and private individuals as well as confirming or modifying some already existing measures. The new measures adopted include the introduction, for 2023, of an extraordinary tax on net interest income (the \u201cextra-profits\u201d) of Italian banks, even if they operate in the territory of the Italian State through a permanent establishment. In particular, it establishes the application of a 40% tax rate on a taxable base configured by comparing the \"Net interest income\" under item 30 of the Income Statement of banking institutions (on the basis of the financial statement formats governed by Circular No. 262/2005 and subsequent updates of the Bank of Italy) of the tax year prior to the one in progress on 1 January 2022 and that of the tax year prior to the one in progress on 1 January 2024 only. In any event, the tax thus calculated may not exceed 0,26% of the risk-weighted assets (or \u201cRWAs\u201d) on an individual basis for each Bank. In lieu of making the payment, each bank on an individual basis may elect to allocate a certain amount, not less than 2,5 times the tax calculated as above, to a non-distributable profit reserve in equity. In such a case, if you subsequently choose to use this specific reserve for the distribution of profits (and thus make it from 'non-distributable' to 'distributable'), within 30 days of the approval of the relevant resolution, the tax originally calculated must be paid with a surcharge in proportion to the interest accrued in the meantime.
From an accounting point of view, in light of the specific characteristics of the tax in question and in particular the way in which it is determined, the provisions of IFRIC Interpretation 21 \u201cTaxes\u201d and IAS 37 \u201cProvisions, Contingent Liabilities and Contingent Assets\u201d were deemed applicable. In particular, according to IFRIC 21, a liability relating to the payment of a tax arises at the moment when the binding event occurs, i.e. when the obligation to pay the tax arises. The definition of a liability provided by IAS 37 also requires that an outflow of resources embodying economic benefits is deemed probable for the fulfilment of the obligation.
In this regard, it should be noted that, in relation to the provisions of the rule, the banks of the Banca Ifis Group (Banca Ifis and Banca Credifarma) have the realistic alternative of not paying the tax, by setting aside, when
approving their separate 2023 financial statements, a non-distributable profit reserve equal to 2,5 times the extraordinary tax. This makes the described requirement of the accounting standard not in fact fulfilled. Consequently, since the Directors of each of the Group's banks had positively concluded on the possibility of availing themselves of this option, and having verified the reasonableness of this alternative in the case at hand, as at 31 December 2023, it was deemed that there was no binding event against which to recognise a liability and related charge for either of the two banks on an individual basis and, consequently, at the level of the Group's consolidated balances.
The tax in question is quantified at 9.562.045 Euro for Banca Ifis and 1.300.962 Euro for Banca Credifarma. Therefore, the corresponding reserve allocations that the directors intend to propose to the relevant shareholders' meetings amount to 23.905.112 Euro for Banca Ifis and 3.252.404 Euro for Banca Credifarma.
It should also be noted that the provision of the last part of paragraph 5-bis of Italian Law No. 136/2023 determines an obligation to be considered new and autonomous and consisting in the maintenance of the non-distributable restriction on the reserve recorded by each bank in their respective separate 2023 financial statements. In this regard, the Directors of each bank will assess over time the substantive reasonableness of the option not to distribute based on the specific facts and circumstances.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTaxesOtherThanIncomeTaxExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page90-cflshid_42533-tag94161": { "value": "
Section 3 - Scope and methods of consolidation
Subsidiaries
The Consolidated Financial Statements of the Banca Ifis Group have been drawn up on the basis of the accounts at 31 December 2022 prepared by the directors of the companies included in the consolidation scope. The table below shows the companies belonging to the Banca Ifis Group.
1. Equity investments in exclusively controlled companies
COMPANY NAME
HEAD OFFICE
REGISTE-RED OFFICE
TYPE (1)
INVESTMENT
VOTING RIGHTS % (2)
PARTICIPATING
ENTITY
SHARE %
Ifis Finance Sp. z o.o.
Warsaw
Warsaw
1
Banca Ifis S.p.A.
100%
100%
Ifis Rental Services S.r.l.
Milan
Milan
1
Banca Ifis S.p.A.
100%
100%
Ifis Npl Investing S.p.A.
Florence, Milan and Mestre (VE)
Mestre (VE)
1
Banca Ifis S.p.A.
100%
100%
Cap.Ital.Fin. S.p.A.
Naples
Naples
1
Banca Ifis S.p.A.
100%
100%
Ifis Npl Servicing S.p.A.
Mestre (VE)
Mestre (VE)
1
Ifis Npl Investing S.p.A.
100%
100%
Revalea S.p.A.
Milan
Milan
1
Ifis Npl Investing S.p.A.
100%
100%
Ifis Finance I.F.N. S.A.
Bucharest
Bucharest
1
Banca Ifis S.p.A.
99,99%
99,99%
Banca Credifarma S.p.A.
Rome
Rome
1
Banca Ifis S.p.A.
87,74%
87,74%
Ifis NPL 2021-1 SPV S.r.l.
Conegliano (TV)
Conegliano (TV)
1
Banca Ifis S.p.A.
51%
51%
Indigo Lease S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
Ifis ABCP Programme S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
Emma S.P.V. S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
\"\"
Key
(1) Type of relationship:
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 = joint management pursuant to Article 39, paragraph 1, Italian Legislative Decree No. 136/2015
6 = joint management pursuant to Article 39, paragraph 2, Italian Legislative Decree No. 136/2015
(2) Voting rights in the Annual Shareholders' Meeting, distinguishing between effective and potential voting rights
All the companies were consolidated using the line-by-line method.
With regard to subsidiary companies, classed as such as explained below and included in the scope of consolidation at 31 December 2023, compared with the situation at the end of 2022, the only change compared to last year relates to the joining of the consolidation scope of the company Revalea S.p.A., following its acquisition during the fourth quarter of 2023 (for more details, refer to the section \"Significant events during the year\" of the Directors\u2019 Report on the Group and to \"Part G - Business combinations\").
The financial statements of the Polish subsidiary Ifis Finance Sp. z o.o. and of the Romanian subsidiary Ifis Finance I.F.N. S.A., both expressed in foreign currencies are translated into Euro by applying the year-end exchange rate to assets and liabilities. As for the income statement, the items are translated using the average exchange rate. Exchange differences arising from the application of different exchange rates for the statement of financial
position and the income statement, as well as the exchange differences from the translation of each investee company's equity, are recognised under capital reserves.
Assets and liabilities, off-balance-sheet transactions, income and expenses, as well as the profits and losses arising from relations between the consolidated companies are all eliminated.
2. Significant judgements and assumptions in determining the scope of consolidation
In order to determine the scope of consolidation, Banca Ifis assessed whether it meets the requirements of IFRS 10 for controlling investees or other entities with which it has any sort of contractual arrangements.
An entity controls another entity when the former has all the following:
\u2022power over the investee;
\u2022exposure to variable returns;
\u2022and the ability to affect the amount of its returns.
More specifically, IFRS 10 requires that, in order to have control, the investor must have the ability to direct the relevant activities of the entity, whether by operation of law or by mere fact, and must also be exposed to the variability of outcomes that result from that power.
In light of the above references, the Group must therefore consolidate all types of entities if all three control requirements are met.
Generally, there is a presumption that a majority of voting rights gives control over the investee. The Group reconsiders whether or not it has control of an investee if the facts and circumstances indicate that there have been changes in one or more of the three elements relevant to the definition of control.
In other cases, the determination of the scope of consolidation requires consideration of all factors and circumstances that give the investor the practical ability to unilaterally conduct the relevant activities of the entity (de facto control). To this end, it is necessary to consider a number of factors, such as, but not limited to:
\u2022the purpose and design of the entity;
\u2022the identification of relevant activities and how they are managed;
\u2022any rights held through contractual arrangements that grant the power to govern the relevant activities, such as the power to determine the financial and management policies of the entity, the power to exercise the majority of voting rights in the deliberative body, or the power to appoint or remove the majority of the deliberative body;
\u2022any potential voting rights that can be exercised and are considered substantial;
\u2022involvement in the entity in the role of agent or principal;
\u2022the nature and dispersion of any rights held by other investors.
For structured entities, i.e. entities for which voting rights are not considered relevant to establish control, it is deemed to exist where the Group has contractual rights to manage the relevant assets of the entity and is exposed to the variable returns of those assets.
More specifically, the structured entities that required consolidation for the purposes of the Consolidated Financial Statements as at 31 December 2023 are represented by certain vehicle companies of securitisation transactions originated by Group companies. For such vehicles, the elements considered relevant to the identification of control and the resulting consolidation are the purpose of such companies, their exposure to the results of the operation, their ability to structure operations and direct relevant activities and make critical decisions by means of servicing agreements as well as their ability to arrange for their liquidation.
The assessment carried out led the Bank to include the subsidiaries controlled by means of holding the majority of voting rights (companies with relationship type \u201c1\u201d in the table above), as well as the SPVs (Special Purpose Vehicles) set up for securitisation purposes, for which control is considered to exist in accordance with IFRS 10; in the scope of consolidation at the reporting date. These SPVs, with the exception of the vehicle Ifis NPL 2021-1 SPV S.r.l. for which the Group holds the majority of the shares, are not companies legally belonging to the Banca Ifis Group (in this regard, see the section entitled \u201cThe Banca Ifis Group\u201d, where such SPVs are not included).
Profit or loss for the year and each component of other comprehensive income are attributed to the equity holders of the Parent company and to the non-controlling interests, even if this results in the minority interests having a deficit balance. When necessary, appropriate adjustments are made to the financial statements of the subsidiaries, in order to ensure compliance with the Group's accounting standards. All assets and liabilities, equity, revenues, costs and inter-group financial flows relating to transactions between Group entities are derecognised completely during the consolidation phase.
Changes in the investment in a subsidiary that do not involve the loss of control are considered as \u201cequity transactions\u201d in accordance with paragraph 23 of IFRS 10 and are therefore recognised directly in equity.
Subsidiaries are consolidated from the date on which the Group acquires control, according to the purchase method, and cease to be consolidated from the moment control ceases.
Full consolidation consists of the acquisition \"line by line\" of the balance sheet and income statement aggregates of the controlled entities. For consolidation purposes, the carrying amount of equity interests held by the Parent company or other Group companies is eliminated against the assets and liabilities of the investees, with the corresponding fraction of shareholders' equity attributable to the Group and the portion attributable to non-controlling interests, also taking into account the cost allocation at the time control was acquired (Purchase Price Allocation).
For controlled entities, non-controlling interests in equity, net income and comprehensive income are reported separately in the respective Consolidated Financial Statements, respectively, under the headings: \u201c190. Equity attributable to non-controlling interests\u201d, \u201c340. Profit (loss) for the year attributable to non-controlling interests\u201d, \u201c190. Consolidated comprehensive income attributable to non-controlling interests\u201d.
In this regard, it should be noted that no effect on the equity, results of operations and overall profitability attributable to non-controlling interests resulted from the consolidation of the separate assets held by the vehicle companies of the securitisations originated by the Group, which were not derecognised in the separate financial statements of the originator Group banks.
The costs and revenues of the controlled entity are included in the consolidation from the date control is acquired. The costs and revenues of a transferred subsidiary are included in the income statement up to the date of transfer; the difference between the transfer consideration and the carrying amount of the subsidiary's net assets is recognised in income statement item \"280. Gains (Losses) on disposal of investments\u201d. In the event of a partial disposal of the controlled entity, which does not result in the loss of control, the difference between the consideration for the disposal and the related carrying amount is recognised as a balancing entry in equity.
Assets, liabilities, off-balance sheet transactions, income and expenses relating to transactions between consolidated companies are fully eliminated.
Company under significant influence
Associated companies, i.e. companies subject to significant influence, are considered to be non-controlled companies in which significant influence is exercised.
Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Investments in companies subject to significant influence are valued using the equity method, based on the most recent available financial statements of the associate, appropriately adjusted for any significant events or transactions.
At 31 December 2023, the companies subject to significant influence are Justlex Italia S.T.A.P.A. and Redacta S.T.A.a.r.l. with a shareholding of 20% and 33% respectively.
3. Equity investments in exclusively controlled companies with significant minority interests
3.1 Non-controlling interests, voting rights held by non-controlling interests, and dividends distributed to non-controlling interests
Company NameMinority interests %Availability of minority votes %(1)Dividends distributed to minorities
Banca Credifarma S.p.A. 12,26%12,26%-
(1) Availability of voting rights in the Annual Shareholders' Meeting.
3.2 Equity investments with significant non-controlling interests: accounting information
Company NameTotal assetsCash andcash equivalentsFinancial assetsProperty, plant and equipment and intangible assetsFinancial liabilitiesEquityNet interest incomeNet banking incomeOperating costsPre-tax profit (loss) for the period from continuing operationsProfit (loss) from current operations after taxProfit (loss) of disposal groups, net of taxesProfit (loss) for the year(1)Other comprehensive income, net of taxes(2)Comprehensive income(3)=(1) + (2)
Banca Credifarma S.p.A.719.65821.912684.7111.008564.564116.13028.50234.296(14.283)21.99314.730 - 14.730 - 14.730
4 Significant restrictions
There are no significant restrictions as per paragraph 13 of IFRS 12, i.e. statutory, contractual and regulatory restrictions on its ability to access or use the assets and settle the liabilities of the Group, nor protective rights of non-controlling interests that can significantly restrict the Group's ability to access or use the assets and settle the liabilities of the Group.
5 Other information
The reporting date of the accounts prepared by the directors of the companies included in the consolidation scope is 31 December 2023.
7.6 Significant assessments and assumptions to establish the existence of joint control or significant influence
Please refer to \"Section 3 - Scope and methods of consolidation\" in \"A.1 - General part\" of \"Part A - Accounting policies\".
7.7 Commitments in respect of interests in companies held jointly
The Banca Ifis Group has no shareholdings in jointly controlled companies, so there are no commitments as set out in this disclosure.
7.8 Commitments in respect of interests in companies subject to significant influence
There are no commitments in respect of the equity investments under this item.
B. Disclosure on structured entities (other than securitisation vehicles)
There were no unconsolidated structured companies at 31 December 2023 other than the securitisation company falling within the Banca Ifis Group's scope.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page90-cflshid_42533-tag94160": { "value": "
Section 3 - Scope and methods of consolidation
Subsidiaries
The Consolidated Financial Statements of the Banca Ifis Group have been drawn up on the basis of the accounts at 31 December 2022 prepared by the directors of the companies included in the consolidation scope. The table below shows the companies belonging to the Banca Ifis Group.
1. Equity investments in exclusively controlled companies
COMPANY NAME
HEAD OFFICE
REGISTE-RED OFFICE
TYPE (1)
INVESTMENT
VOTING RIGHTS % (2)
PARTICIPATING
ENTITY
SHARE %
Ifis Finance Sp. z o.o.
Warsaw
Warsaw
1
Banca Ifis S.p.A.
100%
100%
Ifis Rental Services S.r.l.
Milan
Milan
1
Banca Ifis S.p.A.
100%
100%
Ifis Npl Investing S.p.A.
Florence, Milan and Mestre (VE)
Mestre (VE)
1
Banca Ifis S.p.A.
100%
100%
Cap.Ital.Fin. S.p.A.
Naples
Naples
1
Banca Ifis S.p.A.
100%
100%
Ifis Npl Servicing S.p.A.
Mestre (VE)
Mestre (VE)
1
Ifis Npl Investing S.p.A.
100%
100%
Revalea S.p.A.
Milan
Milan
1
Ifis Npl Investing S.p.A.
100%
100%
Ifis Finance I.F.N. S.A.
Bucharest
Bucharest
1
Banca Ifis S.p.A.
99,99%
99,99%
Banca Credifarma S.p.A.
Rome
Rome
1
Banca Ifis S.p.A.
87,74%
87,74%
Ifis NPL 2021-1 SPV S.r.l.
Conegliano (TV)
Conegliano (TV)
1
Banca Ifis S.p.A.
51%
51%
Indigo Lease S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
Ifis ABCP Programme S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
Emma S.P.V. S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
\"\"
Key
(1) Type of relationship:
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 = joint management pursuant to Article 39, paragraph 1, Italian Legislative Decree No. 136/2015
6 = joint management pursuant to Article 39, paragraph 2, Italian Legislative Decree No. 136/2015
(2) Voting rights in the Annual Shareholders' Meeting, distinguishing between effective and potential voting rights
All the companies were consolidated using the line-by-line method.
With regard to subsidiary companies, classed as such as explained below and included in the scope of consolidation at 31 December 2023, compared with the situation at the end of 2022, the only change compared to last year relates to the joining of the consolidation scope of the company Revalea S.p.A., following its acquisition during the fourth quarter of 2023 (for more details, refer to the section \"Significant events during the year\" of the Directors\u2019 Report on the Group and to \"Part G - Business combinations\").
The financial statements of the Polish subsidiary Ifis Finance Sp. z o.o. and of the Romanian subsidiary Ifis Finance I.F.N. S.A., both expressed in foreign currencies are translated into Euro by applying the year-end exchange rate to assets and liabilities. As for the income statement, the items are translated using the average exchange rate. Exchange differences arising from the application of different exchange rates for the statement of financial
position and the income statement, as well as the exchange differences from the translation of each investee company's equity, are recognised under capital reserves.
Assets and liabilities, off-balance-sheet transactions, income and expenses, as well as the profits and losses arising from relations between the consolidated companies are all eliminated.
2. Significant judgements and assumptions in determining the scope of consolidation
In order to determine the scope of consolidation, Banca Ifis assessed whether it meets the requirements of IFRS 10 for controlling investees or other entities with which it has any sort of contractual arrangements.
An entity controls another entity when the former has all the following:
\u2022power over the investee;
\u2022exposure to variable returns;
\u2022and the ability to affect the amount of its returns.
More specifically, IFRS 10 requires that, in order to have control, the investor must have the ability to direct the relevant activities of the entity, whether by operation of law or by mere fact, and must also be exposed to the variability of outcomes that result from that power.
In light of the above references, the Group must therefore consolidate all types of entities if all three control requirements are met.
Generally, there is a presumption that a majority of voting rights gives control over the investee. The Group reconsiders whether or not it has control of an investee if the facts and circumstances indicate that there have been changes in one or more of the three elements relevant to the definition of control.
In other cases, the determination of the scope of consolidation requires consideration of all factors and circumstances that give the investor the practical ability to unilaterally conduct the relevant activities of the entity (de facto control). To this end, it is necessary to consider a number of factors, such as, but not limited to:
\u2022the purpose and design of the entity;
\u2022the identification of relevant activities and how they are managed;
\u2022any rights held through contractual arrangements that grant the power to govern the relevant activities, such as the power to determine the financial and management policies of the entity, the power to exercise the majority of voting rights in the deliberative body, or the power to appoint or remove the majority of the deliberative body;
\u2022any potential voting rights that can be exercised and are considered substantial;
\u2022involvement in the entity in the role of agent or principal;
\u2022the nature and dispersion of any rights held by other investors.
For structured entities, i.e. entities for which voting rights are not considered relevant to establish control, it is deemed to exist where the Group has contractual rights to manage the relevant assets of the entity and is exposed to the variable returns of those assets.
More specifically, the structured entities that required consolidation for the purposes of the Consolidated Financial Statements as at 31 December 2023 are represented by certain vehicle companies of securitisation transactions originated by Group companies. For such vehicles, the elements considered relevant to the identification of control and the resulting consolidation are the purpose of such companies, their exposure to the results of the operation, their ability to structure operations and direct relevant activities and make critical decisions by means of servicing agreements as well as their ability to arrange for their liquidation.
The assessment carried out led the Bank to include the subsidiaries controlled by means of holding the majority of voting rights (companies with relationship type \u201c1\u201d in the table above), as well as the SPVs (Special Purpose Vehicles) set up for securitisation purposes, for which control is considered to exist in accordance with IFRS 10; in the scope of consolidation at the reporting date. These SPVs, with the exception of the vehicle Ifis NPL 2021-1 SPV S.r.l. for which the Group holds the majority of the shares, are not companies legally belonging to the Banca Ifis Group (in this regard, see the section entitled \u201cThe Banca Ifis Group\u201d, where such SPVs are not included).
Profit or loss for the year and each component of other comprehensive income are attributed to the equity holders of the Parent company and to the non-controlling interests, even if this results in the minority interests having a deficit balance. When necessary, appropriate adjustments are made to the financial statements of the subsidiaries, in order to ensure compliance with the Group's accounting standards. All assets and liabilities, equity, revenues, costs and inter-group financial flows relating to transactions between Group entities are derecognised completely during the consolidation phase.
Changes in the investment in a subsidiary that do not involve the loss of control are considered as \u201cequity transactions\u201d in accordance with paragraph 23 of IFRS 10 and are therefore recognised directly in equity.
Subsidiaries are consolidated from the date on which the Group acquires control, according to the purchase method, and cease to be consolidated from the moment control ceases.
Full consolidation consists of the acquisition \"line by line\" of the balance sheet and income statement aggregates of the controlled entities. For consolidation purposes, the carrying amount of equity interests held by the Parent company or other Group companies is eliminated against the assets and liabilities of the investees, with the corresponding fraction of shareholders' equity attributable to the Group and the portion attributable to non-controlling interests, also taking into account the cost allocation at the time control was acquired (Purchase Price Allocation).
For controlled entities, non-controlling interests in equity, net income and comprehensive income are reported separately in the respective Consolidated Financial Statements, respectively, under the headings: \u201c190. Equity attributable to non-controlling interests\u201d, \u201c340. Profit (loss) for the year attributable to non-controlling interests\u201d, \u201c190. Consolidated comprehensive income attributable to non-controlling interests\u201d.
In this regard, it should be noted that no effect on the equity, results of operations and overall profitability attributable to non-controlling interests resulted from the consolidation of the separate assets held by the vehicle companies of the securitisations originated by the Group, which were not derecognised in the separate financial statements of the originator Group banks.
The costs and revenues of the controlled entity are included in the consolidation from the date control is acquired. The costs and revenues of a transferred subsidiary are included in the income statement up to the date of transfer; the difference between the transfer consideration and the carrying amount of the subsidiary's net assets is recognised in income statement item \"280. Gains (Losses) on disposal of investments\u201d. In the event of a partial disposal of the controlled entity, which does not result in the loss of control, the difference between the consideration for the disposal and the related carrying amount is recognised as a balancing entry in equity.
Assets, liabilities, off-balance sheet transactions, income and expenses relating to transactions between consolidated companies are fully eliminated.
Company under significant influence
Associated companies, i.e. companies subject to significant influence, are considered to be non-controlled companies in which significant influence is exercised.
Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Investments in companies subject to significant influence are valued using the equity method, based on the most recent available financial statements of the associate, appropriately adjusted for any significant events or transactions.
At 31 December 2023, the companies subject to significant influence are Justlex Italia S.T.A.P.A. and Redacta S.T.A.a.r.l. with a shareholding of 20% and 33% respectively.
3. Equity investments in exclusively controlled companies with significant minority interests
3.1 Non-controlling interests, voting rights held by non-controlling interests, and dividends distributed to non-controlling interests
Company NameMinority interests %Availability of minority votes %(1)Dividends distributed to minorities
Banca Credifarma S.p.A. 12,26%12,26%-
(1) Availability of voting rights in the Annual Shareholders' Meeting.
3.2 Equity investments with significant non-controlling interests: accounting information
Company NameTotal assetsCash andcash equivalentsFinancial assetsProperty, plant and equipment and intangible assetsFinancial liabilitiesEquityNet interest incomeNet banking incomeOperating costsPre-tax profit (loss) for the period from continuing operationsProfit (loss) from current operations after taxProfit (loss) of disposal groups, net of taxesProfit (loss) for the year(1)Other comprehensive income, net of taxes(2)Comprehensive income(3)=(1) + (2)
Banca Credifarma S.p.A.719.65821.912684.7111.008564.564116.13028.50234.296(14.283)21.99314.730 - 14.730 - 14.730
4 Significant restrictions
There are no significant restrictions as per paragraph 13 of IFRS 12, i.e. statutory, contractual and regulatory restrictions on its ability to access or use the assets and settle the liabilities of the Group, nor protective rights of non-controlling interests that can significantly restrict the Group's ability to access or use the assets and settle the liabilities of the Group.
5 Other information
The reporting date of the accounts prepared by the directors of the companies included in the consolidation scope is 31 December 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page90-cflshid_42533-tag94159": { "value": "
Section 3 - Scope and methods of consolidation
Subsidiaries
The Consolidated Financial Statements of the Banca Ifis Group have been drawn up on the basis of the accounts at 31 December 2022 prepared by the directors of the companies included in the consolidation scope. The table below shows the companies belonging to the Banca Ifis Group.
1. Equity investments in exclusively controlled companies
COMPANY NAME
HEAD OFFICE
REGISTE-RED OFFICE
TYPE (1)
INVESTMENT
VOTING RIGHTS % (2)
PARTICIPATING
ENTITY
SHARE %
Ifis Finance Sp. z o.o.
Warsaw
Warsaw
1
Banca Ifis S.p.A.
100%
100%
Ifis Rental Services S.r.l.
Milan
Milan
1
Banca Ifis S.p.A.
100%
100%
Ifis Npl Investing S.p.A.
Florence, Milan and Mestre (VE)
Mestre (VE)
1
Banca Ifis S.p.A.
100%
100%
Cap.Ital.Fin. S.p.A.
Naples
Naples
1
Banca Ifis S.p.A.
100%
100%
Ifis Npl Servicing S.p.A.
Mestre (VE)
Mestre (VE)
1
Ifis Npl Investing S.p.A.
100%
100%
Revalea S.p.A.
Milan
Milan
1
Ifis Npl Investing S.p.A.
100%
100%
Ifis Finance I.F.N. S.A.
Bucharest
Bucharest
1
Banca Ifis S.p.A.
99,99%
99,99%
Banca Credifarma S.p.A.
Rome
Rome
1
Banca Ifis S.p.A.
87,74%
87,74%
Ifis NPL 2021-1 SPV S.r.l.
Conegliano (TV)
Conegliano (TV)
1
Banca Ifis S.p.A.
51%
51%
Indigo Lease S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
Ifis ABCP Programme S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
Emma S.P.V. S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
\"\"
Key
(1) Type of relationship:
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 = joint management pursuant to Article 39, paragraph 1, Italian Legislative Decree No. 136/2015
6 = joint management pursuant to Article 39, paragraph 2, Italian Legislative Decree No. 136/2015
(2) Voting rights in the Annual Shareholders' Meeting, distinguishing between effective and potential voting rights
All the companies were consolidated using the line-by-line method.
With regard to subsidiary companies, classed as such as explained below and included in the scope of consolidation at 31 December 2023, compared with the situation at the end of 2022, the only change compared to last year relates to the joining of the consolidation scope of the company Revalea S.p.A., following its acquisition during the fourth quarter of 2023 (for more details, refer to the section \"Significant events during the year\" of the Directors\u2019 Report on the Group and to \"Part G - Business combinations\").
The financial statements of the Polish subsidiary Ifis Finance Sp. z o.o. and of the Romanian subsidiary Ifis Finance I.F.N. S.A., both expressed in foreign currencies are translated into Euro by applying the year-end exchange rate to assets and liabilities. As for the income statement, the items are translated using the average exchange rate. Exchange differences arising from the application of different exchange rates for the statement of financial
position and the income statement, as well as the exchange differences from the translation of each investee company's equity, are recognised under capital reserves.
Assets and liabilities, off-balance-sheet transactions, income and expenses, as well as the profits and losses arising from relations between the consolidated companies are all eliminated.
2. Significant judgements and assumptions in determining the scope of consolidation
In order to determine the scope of consolidation, Banca Ifis assessed whether it meets the requirements of IFRS 10 for controlling investees or other entities with which it has any sort of contractual arrangements.
An entity controls another entity when the former has all the following:
\u2022power over the investee;
\u2022exposure to variable returns;
\u2022and the ability to affect the amount of its returns.
More specifically, IFRS 10 requires that, in order to have control, the investor must have the ability to direct the relevant activities of the entity, whether by operation of law or by mere fact, and must also be exposed to the variability of outcomes that result from that power.
In light of the above references, the Group must therefore consolidate all types of entities if all three control requirements are met.
Generally, there is a presumption that a majority of voting rights gives control over the investee. The Group reconsiders whether or not it has control of an investee if the facts and circumstances indicate that there have been changes in one or more of the three elements relevant to the definition of control.
In other cases, the determination of the scope of consolidation requires consideration of all factors and circumstances that give the investor the practical ability to unilaterally conduct the relevant activities of the entity (de facto control). To this end, it is necessary to consider a number of factors, such as, but not limited to:
\u2022the purpose and design of the entity;
\u2022the identification of relevant activities and how they are managed;
\u2022any rights held through contractual arrangements that grant the power to govern the relevant activities, such as the power to determine the financial and management policies of the entity, the power to exercise the majority of voting rights in the deliberative body, or the power to appoint or remove the majority of the deliberative body;
\u2022any potential voting rights that can be exercised and are considered substantial;
\u2022involvement in the entity in the role of agent or principal;
\u2022the nature and dispersion of any rights held by other investors.
For structured entities, i.e. entities for which voting rights are not considered relevant to establish control, it is deemed to exist where the Group has contractual rights to manage the relevant assets of the entity and is exposed to the variable returns of those assets.
More specifically, the structured entities that required consolidation for the purposes of the Consolidated Financial Statements as at 31 December 2023 are represented by certain vehicle companies of securitisation transactions originated by Group companies. For such vehicles, the elements considered relevant to the identification of control and the resulting consolidation are the purpose of such companies, their exposure to the results of the operation, their ability to structure operations and direct relevant activities and make critical decisions by means of servicing agreements as well as their ability to arrange for their liquidation.
The assessment carried out led the Bank to include the subsidiaries controlled by means of holding the majority of voting rights (companies with relationship type \u201c1\u201d in the table above), as well as the SPVs (Special Purpose Vehicles) set up for securitisation purposes, for which control is considered to exist in accordance with IFRS 10; in the scope of consolidation at the reporting date. These SPVs, with the exception of the vehicle Ifis NPL 2021-1 SPV S.r.l. for which the Group holds the majority of the shares, are not companies legally belonging to the Banca Ifis Group (in this regard, see the section entitled \u201cThe Banca Ifis Group\u201d, where such SPVs are not included).
Profit or loss for the year and each component of other comprehensive income are attributed to the equity holders of the Parent company and to the non-controlling interests, even if this results in the minority interests having a deficit balance. When necessary, appropriate adjustments are made to the financial statements of the subsidiaries, in order to ensure compliance with the Group's accounting standards. All assets and liabilities, equity, revenues, costs and inter-group financial flows relating to transactions between Group entities are derecognised completely during the consolidation phase.
Changes in the investment in a subsidiary that do not involve the loss of control are considered as \u201cequity transactions\u201d in accordance with paragraph 23 of IFRS 10 and are therefore recognised directly in equity.
Subsidiaries are consolidated from the date on which the Group acquires control, according to the purchase method, and cease to be consolidated from the moment control ceases.
Full consolidation consists of the acquisition \"line by line\" of the balance sheet and income statement aggregates of the controlled entities. For consolidation purposes, the carrying amount of equity interests held by the Parent company or other Group companies is eliminated against the assets and liabilities of the investees, with the corresponding fraction of shareholders' equity attributable to the Group and the portion attributable to non-controlling interests, also taking into account the cost allocation at the time control was acquired (Purchase Price Allocation).
For controlled entities, non-controlling interests in equity, net income and comprehensive income are reported separately in the respective Consolidated Financial Statements, respectively, under the headings: \u201c190. Equity attributable to non-controlling interests\u201d, \u201c340. Profit (loss) for the year attributable to non-controlling interests\u201d, \u201c190. Consolidated comprehensive income attributable to non-controlling interests\u201d.
In this regard, it should be noted that no effect on the equity, results of operations and overall profitability attributable to non-controlling interests resulted from the consolidation of the separate assets held by the vehicle companies of the securitisations originated by the Group, which were not derecognised in the separate financial statements of the originator Group banks.
The costs and revenues of the controlled entity are included in the consolidation from the date control is acquired. The costs and revenues of a transferred subsidiary are included in the income statement up to the date of transfer; the difference between the transfer consideration and the carrying amount of the subsidiary's net assets is recognised in income statement item \"280. Gains (Losses) on disposal of investments\u201d. In the event of a partial disposal of the controlled entity, which does not result in the loss of control, the difference between the consideration for the disposal and the related carrying amount is recognised as a balancing entry in equity.
Assets, liabilities, off-balance sheet transactions, income and expenses relating to transactions between consolidated companies are fully eliminated.
Company under significant influence
Associated companies, i.e. companies subject to significant influence, are considered to be non-controlled companies in which significant influence is exercised.
Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Investments in companies subject to significant influence are valued using the equity method, based on the most recent available financial statements of the associate, appropriately adjusted for any significant events or transactions.
At 31 December 2023, the companies subject to significant influence are Justlex Italia S.T.A.P.A. and Redacta S.T.A.a.r.l. with a shareholding of 20% and 33% respectively.
3. Equity investments in exclusively controlled companies with significant minority interests
3.1 Non-controlling interests, voting rights held by non-controlling interests, and dividends distributed to non-controlling interests
Company NameMinority interests %Availability of minority votes %(1)Dividends distributed to minorities
Banca Credifarma S.p.A. 12,26%12,26%-
(1) Availability of voting rights in the Annual Shareholders' Meeting.
3.2 Equity investments with significant non-controlling interests: accounting information
Company NameTotal assetsCash andcash equivalentsFinancial assetsProperty, plant and equipment and intangible assetsFinancial liabilitiesEquityNet interest incomeNet banking incomeOperating costsPre-tax profit (loss) for the period from continuing operationsProfit (loss) from current operations after taxProfit (loss) of disposal groups, net of taxesProfit (loss) for the year(1)Other comprehensive income, net of taxes(2)Comprehensive income(3)=(1) + (2)
Banca Credifarma S.p.A.719.65821.912684.7111.008564.564116.13028.50234.296(14.283)21.99314.730 - 14.730 - 14.730
4 Significant restrictions
There are no significant restrictions as per paragraph 13 of IFRS 12, i.e. statutory, contractual and regulatory restrictions on its ability to access or use the assets and settle the liabilities of the Group, nor protective rights of non-controlling interests that can significantly restrict the Group's ability to access or use the assets and settle the liabilities of the Group.
5 Other information
The reporting date of the accounts prepared by the directors of the companies included in the consolidation scope is 31 December 2023.
5 - Equity investments
Classification criteria
This item includes interests held in associates or jointly controlled companies, which are accounted for using the equity method.
Associated companies are considered to be non-controlled companies in which significant influence is exercised. Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights (including \u201cpotential\u201d voting rights) and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Recognition criteria
The initial recognition of financial assets classified in this category takes place on the settlement date at cost, including any goodwill paid at the time of acquisition, which is therefore not subject to separate, independent recognition.
Measurement criteria
Equity investments are measured using the equity method. This method requires that the initial carrying amount is subsequently increased or decreased to recognise the Group's share of the profits and losses of the investees realised after the acquisition date. Dividends received from an investee are deducted from the carrying amount of the investment.
If it is necessary to make value adjustments arising from changes in the investee company's equity that it did not recognise in the income statement (e.g., changes arising from the fair value measurement of \"Financial assets measured at fair value through other comprehensive income\", the measurement of actuarial gains/losses of defined benefit plans), the Group's share of these changes is recognised directly in equity item \"120. Valuation reserves\u201d.
In applying the equity method, the most recent available financial statements of the associate/jointly controlled entity are used, appropriately adjusted for any significant events or transactions that occurred between the last available financial statements of the investee and the reference date of the Consolidated Financial Statements. If the investee company uses accounting principles that differ from those used by the Group, changes are made to the financial statements of the investee.
If there is objective evidence that an equity investment may be impaired, the entity shall estimate its recoverable amount, taking into account the present value of the future cash flows that it could generate, including from its ultimate disposal. If the recoverable amount is less than the carrying amount, the difference is recognised in profit or loss.
If the reasons for the impairment no longer exist as a result of an event that occurred after the recognition of the impairment loss, this is reversed through profit or loss.
Derecognition criteria
Equity investments are derecognised when there is a sale that transfers substantially all the risks and rewards associated with them.
In the presence of a situation that results in the loss of significant influence or joint control, any remaining equity investment is reclassified to the financial asset portfolios required by IFRS 9.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page90-cflshid_42533-tag94158": { "value": "
Section 3 - Scope and methods of consolidation
Subsidiaries
The Consolidated Financial Statements of the Banca Ifis Group have been drawn up on the basis of the accounts at 31 December 2022 prepared by the directors of the companies included in the consolidation scope. The table below shows the companies belonging to the Banca Ifis Group.
1. Equity investments in exclusively controlled companies
COMPANY NAME
HEAD OFFICE
REGISTE-RED OFFICE
TYPE (1)
INVESTMENT
VOTING RIGHTS % (2)
PARTICIPATING
ENTITY
SHARE %
Ifis Finance Sp. z o.o.
Warsaw
Warsaw
1
Banca Ifis S.p.A.
100%
100%
Ifis Rental Services S.r.l.
Milan
Milan
1
Banca Ifis S.p.A.
100%
100%
Ifis Npl Investing S.p.A.
Florence, Milan and Mestre (VE)
Mestre (VE)
1
Banca Ifis S.p.A.
100%
100%
Cap.Ital.Fin. S.p.A.
Naples
Naples
1
Banca Ifis S.p.A.
100%
100%
Ifis Npl Servicing S.p.A.
Mestre (VE)
Mestre (VE)
1
Ifis Npl Investing S.p.A.
100%
100%
Revalea S.p.A.
Milan
Milan
1
Ifis Npl Investing S.p.A.
100%
100%
Ifis Finance I.F.N. S.A.
Bucharest
Bucharest
1
Banca Ifis S.p.A.
99,99%
99,99%
Banca Credifarma S.p.A.
Rome
Rome
1
Banca Ifis S.p.A.
87,74%
87,74%
Ifis NPL 2021-1 SPV S.r.l.
Conegliano (TV)
Conegliano (TV)
1
Banca Ifis S.p.A.
51%
51%
Indigo Lease S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
Ifis ABCP Programme S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
Emma S.P.V. S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
\"\"
Key
(1) Type of relationship:
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 = joint management pursuant to Article 39, paragraph 1, Italian Legislative Decree No. 136/2015
6 = joint management pursuant to Article 39, paragraph 2, Italian Legislative Decree No. 136/2015
(2) Voting rights in the Annual Shareholders' Meeting, distinguishing between effective and potential voting rights
All the companies were consolidated using the line-by-line method.
With regard to subsidiary companies, classed as such as explained below and included in the scope of consolidation at 31 December 2023, compared with the situation at the end of 2022, the only change compared to last year relates to the joining of the consolidation scope of the company Revalea S.p.A., following its acquisition during the fourth quarter of 2023 (for more details, refer to the section \"Significant events during the year\" of the Directors\u2019 Report on the Group and to \"Part G - Business combinations\").
The financial statements of the Polish subsidiary Ifis Finance Sp. z o.o. and of the Romanian subsidiary Ifis Finance I.F.N. S.A., both expressed in foreign currencies are translated into Euro by applying the year-end exchange rate to assets and liabilities. As for the income statement, the items are translated using the average exchange rate. Exchange differences arising from the application of different exchange rates for the statement of financial
position and the income statement, as well as the exchange differences from the translation of each investee company's equity, are recognised under capital reserves.
Assets and liabilities, off-balance-sheet transactions, income and expenses, as well as the profits and losses arising from relations between the consolidated companies are all eliminated.
2. Significant judgements and assumptions in determining the scope of consolidation
In order to determine the scope of consolidation, Banca Ifis assessed whether it meets the requirements of IFRS 10 for controlling investees or other entities with which it has any sort of contractual arrangements.
An entity controls another entity when the former has all the following:
\u2022power over the investee;
\u2022exposure to variable returns;
\u2022and the ability to affect the amount of its returns.
More specifically, IFRS 10 requires that, in order to have control, the investor must have the ability to direct the relevant activities of the entity, whether by operation of law or by mere fact, and must also be exposed to the variability of outcomes that result from that power.
In light of the above references, the Group must therefore consolidate all types of entities if all three control requirements are met.
Generally, there is a presumption that a majority of voting rights gives control over the investee. The Group reconsiders whether or not it has control of an investee if the facts and circumstances indicate that there have been changes in one or more of the three elements relevant to the definition of control.
In other cases, the determination of the scope of consolidation requires consideration of all factors and circumstances that give the investor the practical ability to unilaterally conduct the relevant activities of the entity (de facto control). To this end, it is necessary to consider a number of factors, such as, but not limited to:
\u2022the purpose and design of the entity;
\u2022the identification of relevant activities and how they are managed;
\u2022any rights held through contractual arrangements that grant the power to govern the relevant activities, such as the power to determine the financial and management policies of the entity, the power to exercise the majority of voting rights in the deliberative body, or the power to appoint or remove the majority of the deliberative body;
\u2022any potential voting rights that can be exercised and are considered substantial;
\u2022involvement in the entity in the role of agent or principal;
\u2022the nature and dispersion of any rights held by other investors.
For structured entities, i.e. entities for which voting rights are not considered relevant to establish control, it is deemed to exist where the Group has contractual rights to manage the relevant assets of the entity and is exposed to the variable returns of those assets.
More specifically, the structured entities that required consolidation for the purposes of the Consolidated Financial Statements as at 31 December 2023 are represented by certain vehicle companies of securitisation transactions originated by Group companies. For such vehicles, the elements considered relevant to the identification of control and the resulting consolidation are the purpose of such companies, their exposure to the results of the operation, their ability to structure operations and direct relevant activities and make critical decisions by means of servicing agreements as well as their ability to arrange for their liquidation.
The assessment carried out led the Bank to include the subsidiaries controlled by means of holding the majority of voting rights (companies with relationship type \u201c1\u201d in the table above), as well as the SPVs (Special Purpose Vehicles) set up for securitisation purposes, for which control is considered to exist in accordance with IFRS 10; in the scope of consolidation at the reporting date. These SPVs, with the exception of the vehicle Ifis NPL 2021-1 SPV S.r.l. for which the Group holds the majority of the shares, are not companies legally belonging to the Banca Ifis Group (in this regard, see the section entitled \u201cThe Banca Ifis Group\u201d, where such SPVs are not included).
Profit or loss for the year and each component of other comprehensive income are attributed to the equity holders of the Parent company and to the non-controlling interests, even if this results in the minority interests having a deficit balance. When necessary, appropriate adjustments are made to the financial statements of the subsidiaries, in order to ensure compliance with the Group's accounting standards. All assets and liabilities, equity, revenues, costs and inter-group financial flows relating to transactions between Group entities are derecognised completely during the consolidation phase.
Changes in the investment in a subsidiary that do not involve the loss of control are considered as \u201cequity transactions\u201d in accordance with paragraph 23 of IFRS 10 and are therefore recognised directly in equity.
Subsidiaries are consolidated from the date on which the Group acquires control, according to the purchase method, and cease to be consolidated from the moment control ceases.
Full consolidation consists of the acquisition \"line by line\" of the balance sheet and income statement aggregates of the controlled entities. For consolidation purposes, the carrying amount of equity interests held by the Parent company or other Group companies is eliminated against the assets and liabilities of the investees, with the corresponding fraction of shareholders' equity attributable to the Group and the portion attributable to non-controlling interests, also taking into account the cost allocation at the time control was acquired (Purchase Price Allocation).
For controlled entities, non-controlling interests in equity, net income and comprehensive income are reported separately in the respective Consolidated Financial Statements, respectively, under the headings: \u201c190. Equity attributable to non-controlling interests\u201d, \u201c340. Profit (loss) for the year attributable to non-controlling interests\u201d, \u201c190. Consolidated comprehensive income attributable to non-controlling interests\u201d.
In this regard, it should be noted that no effect on the equity, results of operations and overall profitability attributable to non-controlling interests resulted from the consolidation of the separate assets held by the vehicle companies of the securitisations originated by the Group, which were not derecognised in the separate financial statements of the originator Group banks.
The costs and revenues of the controlled entity are included in the consolidation from the date control is acquired. The costs and revenues of a transferred subsidiary are included in the income statement up to the date of transfer; the difference between the transfer consideration and the carrying amount of the subsidiary's net assets is recognised in income statement item \"280. Gains (Losses) on disposal of investments\u201d. In the event of a partial disposal of the controlled entity, which does not result in the loss of control, the difference between the consideration for the disposal and the related carrying amount is recognised as a balancing entry in equity.
Assets, liabilities, off-balance sheet transactions, income and expenses relating to transactions between consolidated companies are fully eliminated.
Company under significant influence
Associated companies, i.e. companies subject to significant influence, are considered to be non-controlled companies in which significant influence is exercised.
Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Investments in companies subject to significant influence are valued using the equity method, based on the most recent available financial statements of the associate, appropriately adjusted for any significant events or transactions.
At 31 December 2023, the companies subject to significant influence are Justlex Italia S.T.A.P.A. and Redacta S.T.A.a.r.l. with a shareholding of 20% and 33% respectively.
3. Equity investments in exclusively controlled companies with significant minority interests
3.1 Non-controlling interests, voting rights held by non-controlling interests, and dividends distributed to non-controlling interests
Company NameMinority interests %Availability of minority votes %(1)Dividends distributed to minorities
Banca Credifarma S.p.A. 12,26%12,26%-
(1) Availability of voting rights in the Annual Shareholders' Meeting.
3.2 Equity investments with significant non-controlling interests: accounting information
Company NameTotal assetsCash andcash equivalentsFinancial assetsProperty, plant and equipment and intangible assetsFinancial liabilitiesEquityNet interest incomeNet banking incomeOperating costsPre-tax profit (loss) for the period from continuing operationsProfit (loss) from current operations after taxProfit (loss) of disposal groups, net of taxesProfit (loss) for the year(1)Other comprehensive income, net of taxes(2)Comprehensive income(3)=(1) + (2)
Banca Credifarma S.p.A.719.65821.912684.7111.008564.564116.13028.50234.296(14.283)21.99314.730 - 14.730 - 14.730
4 Significant restrictions
There are no significant restrictions as per paragraph 13 of IFRS 12, i.e. statutory, contractual and regulatory restrictions on its ability to access or use the assets and settle the liabilities of the Group, nor protective rights of non-controlling interests that can significantly restrict the Group's ability to access or use the assets and settle the liabilities of the Group.
5 Other information
The reporting date of the accounts prepared by the directors of the companies included in the consolidation scope is 31 December 2023.
5 - Equity investments
Classification criteria
This item includes interests held in associates or jointly controlled companies, which are accounted for using the equity method.
Associated companies are considered to be non-controlled companies in which significant influence is exercised. Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights (including \u201cpotential\u201d voting rights) and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Recognition criteria
The initial recognition of financial assets classified in this category takes place on the settlement date at cost, including any goodwill paid at the time of acquisition, which is therefore not subject to separate, independent recognition.
Measurement criteria
Equity investments are measured using the equity method. This method requires that the initial carrying amount is subsequently increased or decreased to recognise the Group's share of the profits and losses of the investees realised after the acquisition date. Dividends received from an investee are deducted from the carrying amount of the investment.
If it is necessary to make value adjustments arising from changes in the investee company's equity that it did not recognise in the income statement (e.g., changes arising from the fair value measurement of \"Financial assets measured at fair value through other comprehensive income\", the measurement of actuarial gains/losses of defined benefit plans), the Group's share of these changes is recognised directly in equity item \"120. Valuation reserves\u201d.
In applying the equity method, the most recent available financial statements of the associate/jointly controlled entity are used, appropriately adjusted for any significant events or transactions that occurred between the last available financial statements of the investee and the reference date of the Consolidated Financial Statements. If the investee company uses accounting principles that differ from those used by the Group, changes are made to the financial statements of the investee.
If there is objective evidence that an equity investment may be impaired, the entity shall estimate its recoverable amount, taking into account the present value of the future cash flows that it could generate, including from its ultimate disposal. If the recoverable amount is less than the carrying amount, the difference is recognised in profit or loss.
If the reasons for the impairment no longer exist as a result of an event that occurred after the recognition of the impairment loss, this is reversed through profit or loss.
Derecognition criteria
Equity investments are derecognised when there is a sale that transfers substantially all the risks and rewards associated with them.
In the presence of a situation that results in the loss of significant influence or joint control, any remaining equity investment is reclassified to the financial asset portfolios required by IFRS 9.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page90-cflshid_42533-tag94157": { "value": "
Section 3 - Scope and methods of consolidation
Subsidiaries
The Consolidated Financial Statements of the Banca Ifis Group have been drawn up on the basis of the accounts at 31 December 2022 prepared by the directors of the companies included in the consolidation scope. The table below shows the companies belonging to the Banca Ifis Group.
1. Equity investments in exclusively controlled companies
COMPANY NAME
HEAD OFFICE
REGISTE-RED OFFICE
TYPE (1)
INVESTMENT
VOTING RIGHTS % (2)
PARTICIPATING
ENTITY
SHARE %
Ifis Finance Sp. z o.o.
Warsaw
Warsaw
1
Banca Ifis S.p.A.
100%
100%
Ifis Rental Services S.r.l.
Milan
Milan
1
Banca Ifis S.p.A.
100%
100%
Ifis Npl Investing S.p.A.
Florence, Milan and Mestre (VE)
Mestre (VE)
1
Banca Ifis S.p.A.
100%
100%
Cap.Ital.Fin. S.p.A.
Naples
Naples
1
Banca Ifis S.p.A.
100%
100%
Ifis Npl Servicing S.p.A.
Mestre (VE)
Mestre (VE)
1
Ifis Npl Investing S.p.A.
100%
100%
Revalea S.p.A.
Milan
Milan
1
Ifis Npl Investing S.p.A.
100%
100%
Ifis Finance I.F.N. S.A.
Bucharest
Bucharest
1
Banca Ifis S.p.A.
99,99%
99,99%
Banca Credifarma S.p.A.
Rome
Rome
1
Banca Ifis S.p.A.
87,74%
87,74%
Ifis NPL 2021-1 SPV S.r.l.
Conegliano (TV)
Conegliano (TV)
1
Banca Ifis S.p.A.
51%
51%
Indigo Lease S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
Ifis ABCP Programme S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
Emma S.P.V. S.r.l.
Conegliano (TV)
Conegliano (TV)
4
Other
0%
0%
\"\"
Key
(1) Type of relationship:
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 = joint management pursuant to Article 39, paragraph 1, Italian Legislative Decree No. 136/2015
6 = joint management pursuant to Article 39, paragraph 2, Italian Legislative Decree No. 136/2015
(2) Voting rights in the Annual Shareholders' Meeting, distinguishing between effective and potential voting rights
All the companies were consolidated using the line-by-line method.
With regard to subsidiary companies, classed as such as explained below and included in the scope of consolidation at 31 December 2023, compared with the situation at the end of 2022, the only change compared to last year relates to the joining of the consolidation scope of the company Revalea S.p.A., following its acquisition during the fourth quarter of 2023 (for more details, refer to the section \"Significant events during the year\" of the Directors\u2019 Report on the Group and to \"Part G - Business combinations\").
The financial statements of the Polish subsidiary Ifis Finance Sp. z o.o. and of the Romanian subsidiary Ifis Finance I.F.N. S.A., both expressed in foreign currencies are translated into Euro by applying the year-end exchange rate to assets and liabilities. As for the income statement, the items are translated using the average exchange rate. Exchange differences arising from the application of different exchange rates for the statement of financial
position and the income statement, as well as the exchange differences from the translation of each investee company's equity, are recognised under capital reserves.
Assets and liabilities, off-balance-sheet transactions, income and expenses, as well as the profits and losses arising from relations between the consolidated companies are all eliminated.
2. Significant judgements and assumptions in determining the scope of consolidation
In order to determine the scope of consolidation, Banca Ifis assessed whether it meets the requirements of IFRS 10 for controlling investees or other entities with which it has any sort of contractual arrangements.
An entity controls another entity when the former has all the following:
\u2022power over the investee;
\u2022exposure to variable returns;
\u2022and the ability to affect the amount of its returns.
More specifically, IFRS 10 requires that, in order to have control, the investor must have the ability to direct the relevant activities of the entity, whether by operation of law or by mere fact, and must also be exposed to the variability of outcomes that result from that power.
In light of the above references, the Group must therefore consolidate all types of entities if all three control requirements are met.
Generally, there is a presumption that a majority of voting rights gives control over the investee. The Group reconsiders whether or not it has control of an investee if the facts and circumstances indicate that there have been changes in one or more of the three elements relevant to the definition of control.
In other cases, the determination of the scope of consolidation requires consideration of all factors and circumstances that give the investor the practical ability to unilaterally conduct the relevant activities of the entity (de facto control). To this end, it is necessary to consider a number of factors, such as, but not limited to:
\u2022the purpose and design of the entity;
\u2022the identification of relevant activities and how they are managed;
\u2022any rights held through contractual arrangements that grant the power to govern the relevant activities, such as the power to determine the financial and management policies of the entity, the power to exercise the majority of voting rights in the deliberative body, or the power to appoint or remove the majority of the deliberative body;
\u2022any potential voting rights that can be exercised and are considered substantial;
\u2022involvement in the entity in the role of agent or principal;
\u2022the nature and dispersion of any rights held by other investors.
For structured entities, i.e. entities for which voting rights are not considered relevant to establish control, it is deemed to exist where the Group has contractual rights to manage the relevant assets of the entity and is exposed to the variable returns of those assets.
More specifically, the structured entities that required consolidation for the purposes of the Consolidated Financial Statements as at 31 December 2023 are represented by certain vehicle companies of securitisation transactions originated by Group companies. For such vehicles, the elements considered relevant to the identification of control and the resulting consolidation are the purpose of such companies, their exposure to the results of the operation, their ability to structure operations and direct relevant activities and make critical decisions by means of servicing agreements as well as their ability to arrange for their liquidation.
The assessment carried out led the Bank to include the subsidiaries controlled by means of holding the majority of voting rights (companies with relationship type \u201c1\u201d in the table above), as well as the SPVs (Special Purpose Vehicles) set up for securitisation purposes, for which control is considered to exist in accordance with IFRS 10; in the scope of consolidation at the reporting date. These SPVs, with the exception of the vehicle Ifis NPL 2021-1 SPV S.r.l. for which the Group holds the majority of the shares, are not companies legally belonging to the Banca Ifis Group (in this regard, see the section entitled \u201cThe Banca Ifis Group\u201d, where such SPVs are not included).
Profit or loss for the year and each component of other comprehensive income are attributed to the equity holders of the Parent company and to the non-controlling interests, even if this results in the minority interests having a deficit balance. When necessary, appropriate adjustments are made to the financial statements of the subsidiaries, in order to ensure compliance with the Group's accounting standards. All assets and liabilities, equity, revenues, costs and inter-group financial flows relating to transactions between Group entities are derecognised completely during the consolidation phase.
Changes in the investment in a subsidiary that do not involve the loss of control are considered as \u201cequity transactions\u201d in accordance with paragraph 23 of IFRS 10 and are therefore recognised directly in equity.
Subsidiaries are consolidated from the date on which the Group acquires control, according to the purchase method, and cease to be consolidated from the moment control ceases.
Full consolidation consists of the acquisition \"line by line\" of the balance sheet and income statement aggregates of the controlled entities. For consolidation purposes, the carrying amount of equity interests held by the Parent company or other Group companies is eliminated against the assets and liabilities of the investees, with the corresponding fraction of shareholders' equity attributable to the Group and the portion attributable to non-controlling interests, also taking into account the cost allocation at the time control was acquired (Purchase Price Allocation).
For controlled entities, non-controlling interests in equity, net income and comprehensive income are reported separately in the respective Consolidated Financial Statements, respectively, under the headings: \u201c190. Equity attributable to non-controlling interests\u201d, \u201c340. Profit (loss) for the year attributable to non-controlling interests\u201d, \u201c190. Consolidated comprehensive income attributable to non-controlling interests\u201d.
In this regard, it should be noted that no effect on the equity, results of operations and overall profitability attributable to non-controlling interests resulted from the consolidation of the separate assets held by the vehicle companies of the securitisations originated by the Group, which were not derecognised in the separate financial statements of the originator Group banks.
The costs and revenues of the controlled entity are included in the consolidation from the date control is acquired. The costs and revenues of a transferred subsidiary are included in the income statement up to the date of transfer; the difference between the transfer consideration and the carrying amount of the subsidiary's net assets is recognised in income statement item \"280. Gains (Losses) on disposal of investments\u201d. In the event of a partial disposal of the controlled entity, which does not result in the loss of control, the difference between the consideration for the disposal and the related carrying amount is recognised as a balancing entry in equity.
Assets, liabilities, off-balance sheet transactions, income and expenses relating to transactions between consolidated companies are fully eliminated.
Company under significant influence
Associated companies, i.e. companies subject to significant influence, are considered to be non-controlled companies in which significant influence is exercised.
Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Investments in companies subject to significant influence are valued using the equity method, based on the most recent available financial statements of the associate, appropriately adjusted for any significant events or transactions.
At 31 December 2023, the companies subject to significant influence are Justlex Italia S.T.A.P.A. and Redacta S.T.A.a.r.l. with a shareholding of 20% and 33% respectively.
3. Equity investments in exclusively controlled companies with significant minority interests
3.1 Non-controlling interests, voting rights held by non-controlling interests, and dividends distributed to non-controlling interests
Company NameMinority interests %Availability of minority votes %(1)Dividends distributed to minorities
Banca Credifarma S.p.A. 12,26%12,26%-
(1) Availability of voting rights in the Annual Shareholders' Meeting.
3.2 Equity investments with significant non-controlling interests: accounting information
Company NameTotal assetsCash andcash equivalentsFinancial assetsProperty, plant and equipment and intangible assetsFinancial liabilitiesEquityNet interest incomeNet banking incomeOperating costsPre-tax profit (loss) for the period from continuing operationsProfit (loss) from current operations after taxProfit (loss) of disposal groups, net of taxesProfit (loss) for the year(1)Other comprehensive income, net of taxes(2)Comprehensive income(3)=(1) + (2)
Banca Credifarma S.p.A.719.65821.912684.7111.008564.564116.13028.50234.296(14.283)21.99314.730 - 14.730 - 14.730
4 Significant restrictions
There are no significant restrictions as per paragraph 13 of IFRS 12, i.e. statutory, contractual and regulatory restrictions on its ability to access or use the assets and settle the liabilities of the Group, nor protective rights of non-controlling interests that can significantly restrict the Group's ability to access or use the assets and settle the liabilities of the Group.
5 Other information
The reporting date of the accounts prepared by the directors of the companies included in the consolidation scope is 31 December 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page93-cflshid_44277-tag94162": { "value": "
3. Equity investments in exclusively controlled companies with significant minority interests
3.1 Non-controlling interests, voting rights held by non-controlling interests, and dividends distributed to non-controlling interests
Company NameMinority interests %Availability of minority votes %(1)Dividends distributed to minorities
Banca Credifarma S.p.A. 12,26%12,26%-
(1) Availability of voting rights in the Annual Shareholders' Meeting.
3.2 Equity investments with significant non-controlling interests: accounting information
Company NameTotal assetsCash andcash equivalentsFinancial assetsProperty, plant and equipment and intangible assetsFinancial liabilitiesEquityNet interest incomeNet banking incomeOperating costsPre-tax profit (loss) for the period from continuing operationsProfit (loss) from current operations after taxProfit (loss) of disposal groups, net of taxesProfit (loss) for the year(1)Other comprehensive income, net of taxes(2)Comprehensive income(3)=(1) + (2)
Banca Credifarma S.p.A.719.65821.912684.7111.008564.564116.13028.50234.296(14.283)21.99314.730 - 14.730 - 14.730
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page95-cflshid_44605-tag94164": { "value": "4 Significant restrictions
There are no significant restrictions as per paragraph 13 of IFRS 12, i.e. statutory, contractual and regulatory restrictions on its ability to access or use the assets and settle the liabilities of the Group, nor protective rights of non-controlling interests that can significantly restrict the Group's ability to access or use the assets and settle the liabilities of the Group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page95-cflshid_44605-tag94163": { "value": "4 Significant restrictions
There are no significant restrictions as per paragraph 13 of IFRS 12, i.e. statutory, contractual and regulatory restrictions on its ability to access or use the assets and settle the liabilities of the Group, nor protective rights of non-controlling interests that can significantly restrict the Group's ability to access or use the assets and settle the liabilities of the Group.
Section 1 - Cash and cash equivalents - Item 10
1.1 Cash and cash equivalents: breakdown
31.12.202331.12.2022
a) Cash29 37
b) Current accounts and on demand deposits at Central banks515.114 370.021
c) Current accounts and on demand deposits at banks342.390 233.076
Total857.533 603.134
\"\"
This item includes bank current accounts on demand and at 31 December 2023 amounts to 857,5 million Euro, compared with the 603,1 million Euro recorded at the end of 2022 mainly due to the growth in overnight deposits at the Bank of Italy (+145,0 million Euro).
", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page95-cflshid_44605-tag94168": { "value": "
Section 4 - Subsequent events
No significant events occurred in the period between the reporting date (31 December 2023) and the date of approval of the draft Financial Statements by the Board of Directors (7 March 2024), which could be classified as \"adjusting events\" within the meaning of IAS 10, i.e. events that lead to an adjustment of balance sheet and income statement information at the reporting date.
With reference also to what are termed \"non-adjusting events\", note the issue on 20 February 2024 of a 400 million Euro bond with a 5-year maturity (for more details see the section \"Subsequent events\" of the Directors' Report on the Group).
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page95-cflshid_44605-tag94167": { "value": "
Section 5 - Other aspects
Highlights for 2023 financial statement assessments
On 25 October 2023, ESMA published a disclosure notice (\"European common enforcement priorities for 2023 annual financial reports\") containing certain topics and recommendations with reference to both financial and sustainability reporting for FY 2023. In particular, for the financial statements prepared in accordance with IAS/IFRS, the priorities for FY 2023 are related to climate issues and their impact on key financial statement estimates, as well as the impact of the current macroeconomic environment on refinancing and other financial risks, and on the fair value measurement process and related disclosure.
The disclosure call also, with specific reference to Alternative Performance Indicators (APIs, or Alternative Performance Measures - APMs), emphasises that issuers are required to comply with the ESMA Guidelines and related Q&As, in particular when the same indicators are presented in contexts other than the Financial Statements, and draws attention to the correct application of the European Single Electronic Format (ESEF), both in relation to the marking of numerical elements in the Consolidated Financial Statements and in relation to the block marking of the related notes. With regard to APIs, please refer to the section \"APIs - Alternative Performance Indicators\" of the Directors\u2019 Report on the Group, while with regard to ESEF-related issues, please refer to the section \"European Commission Regulation 815/2019 (the European Single Electronic Format - ESEF) Regulation\" in \"Section 1 - Statement of compliance with international accounting standards\", \"A.1 - General part\" of this Part A.
The following section provides an illustration of the aspects considered as priorities for the assessments conducted for the preparation of the 2023 Annual Report and for the related disclosure, in line with the recommendations provided by ESMA.
Environmental and climatic aspects
With regards the first aspect considered as a priority by the ESMA, the consideration of environmental and climate aspects represents an important element of attention in the strategy pursued by the Banca Ifis Group, capable of influencing its operational activities, objectives and business conduct, in the awareness that it can play a leading role in the action against climate change.
With this in mind, in 2023, the Group became more aware of the impact of ESG topics on its business model, competitive environment as well as its objectives and strategies, in its role as a guide for companies and private customers in the transition process towards an economy that combines economic sustainability with environmental and social sustainability. In particular, on 3 August 2023, the Board of Directors of Banca Ifis approved the first edition of the TCFD Report (see also the section \"Significant events during the year\" of the Directors\u2019 Report on the Group), which presents useful information for investors and stakeholders to properly assess the Bank's climate-related risks and opportunities and further expands the Group's ESG reporting,
representing, among other projects, the strategy of reducing emissions financed on the loan portfolio that the Bank has defined by joining, first in Italy, the Net-Zero Banking Alliance (NZBA).
With specific reference to climate and environmental risks, the analysis of supervisory expectations gave rise to a project to integrate environmental factors into corporate strategies, governance and control systems, the risk management framework and disclosure. A further strategic objective is to incorporate the relevant risks into the company's main valuation processes.
The findings of the materiality assessment exercise indicate an overall moderate exposure to climate and environmental risks.
For specific information on the Group's environmental and climate risk management, please refer to the section \"Management of risks linked to climate change\" in Part E below.
For more detailed information on the initiatives undertaken by the Group in the area of green financing, both of a qualitative and quantitative nature, and the instruments used by the Group, refer to the Consolidated Non-Financial Statement (NFS).
Macroeconomic environment
With reference to the macroeconomic context, i.e. the second priority aspect according to the ESMA, note that in the current environment, macroeconomic forecasts are characterised by significant uncertainty factors, thus requiring significant judgement in the selection of assumptions and forecasts to be used as reference in budgetary assessments.
The high credit cost is still expected to slow down global demand for investment and durable goods.
Future projections may be impacted by possible disruptions or slowdowns in global chains, resulting in particular from attacks on shipping traffic in the Red Sea, or increases in energy prices caused by the continuation or escalation of tensions in the Middle East, could weigh on the outlook scenarios.
World and European production estimates are pointing to moderate growth, and our country's economy is also expected to move along a weak growth path.
However, there is a possibility that the lack of dynamism in world trade will persist for a long time and that this could have a negative impact on the Italian economy. In particular, there are three international risk fronts:
\u2022the weakness of China's economy;
\u2022the worsening international political tensions, which, by affecting the confidence of households and businesses, could weaken the domestic market and drive commodity prices up;
\u2022a further tightening of financing conditions with an impact on the pro-cyclical dynamics of investments.
In any case, positive signs can be derived from the following considerations:
\u2022the US and European economies have proven resilient to rising interest rates, thanks to a combination of expansionary fiscal policies, high liquidity available in the financial markets and strong demand for labour;
\u2022in the second half of 2023, inflation, consumer spending and excess demand in the labour market started a downward trend, which is expected to continue;
\u2022the wars in the Middle East and Ukraine did not cause shocks to the world economy, remaining confined to specific territories.
\u2022at the end of 2023, central banks ended the cycle of interest rate hikes that began in 2022 and are now considering the timing of a possible reduction with the aim of continuing the gradual decline in inflation and preventing an excessive contraction of domestic demand.
For more details on the Banca Ifis Group's considerations regarding the macroeconomic environment, please refer to the following sections of the Directors' Report on the Group: \"Background\", \"Information on international tensions\" and \"Outlook\".
With particular regard to the topic of measuring expected losses on credit exposures in the current macroeconomic environment, please refer to the following specific sub-section within the section \"Risks and uncertainties related to estimates\" of this \"Section 5 - Other aspects\".
With reference to the considerations, also of a forecasting nature, made on the basis of the current macroeconomic situation for the purpose of probability testing to verify the recoverability of deferred tax assets (DTAs) recognised in the Consolidated Financial Statements, reference should again be made to the specific sub-section within the section \"Risks and uncertainties related to estimates\" of this \"Section 5 - Other aspects\".
Additional information regarding the reform of reference indices for determining interest rates
On the basis of the indications contained in Bank of Italy Circular No. 262, the following is the disclosure required by IFRS 7, paragraphs 24 I and 24 J concerning the reform of interest rate benchmarks (the \u201cInterest rate benchmark reform\u201d or \u201cIBOR Reform\u201d).
The reform of the money market reference rates (IBOR) is a multi-year project covering the global markets with the aim of strengthening the integrity and representativeness of the reference rates, which have been endangered in recent years by a number of manipulation episodes and the significant reduction of trade in the interbank market.
This reform process is grounded at EU level in EU Regulation 2016/1011 of 8 June 2016 (the \"Benchmark Regulation\" or \"BMR\"), which entered into force on 30 June 2016, applicable as of 1 January 2018 and amended during 2021. The Benchmark Regulation introduced in the EU a new framework for benchmark interest rates, i.e. indices by reference to which the amount to be paid for a Financial Instrument or a Financial Contract is determined. The reference indices are, as a rule, combined with a contractually stipulated \"spread\" to determine the interest rate applied to the contract.
In compliance with the regulatory provisions set out in the BMR (Art. 28) and as confirmed by the European Securities and Markets Authority (ESMA), during the previous years, the Group adopted an internal plan to identify the actions to be taken in the event of the termination or substantial change of a reference index used for the parametrisation of a Financial Contract.
At the date of preparation of these Consolidated Financial Statements, the Banca Ifis Group has completed, for the entire scope of contracts involved, the transactions concerning the above-mentioned transition of reference rates.
Risks and uncertainties related to estimates
Using accounting standards often requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities. In making the assumptions underlying the estimates, management considers all available information at the reporting date of these Consolidated Financial Statements, as well as hypotheses and any other factor deemed reasonable in light of past experience and foreseeable future evolutions.
By their very nature, it is therefore not possible to rule out the possibility that the assumptions made, however reasonable, may not be confirmed in the future scenarios in which the Group will find itself operating. Future results may therefore differ from the estimates made, and adjustments to the carrying value of assets and liabilities recognised in the financial statements, which cannot be foreseen or estimated at the date of this document, may be necessary. In this regard, it should be noted that adjustments in financial statement estimates may become necessary as a result of changes in the circumstances on which they were based, new information or increased experience.
The accounting policies considered most critical to the true and fair representation of the Group's financial position, results of operations and cash flows are illustrated below, both for the materiality of the amounts to be recognised in the financial statements impacted by these policies, and for the high degree of judgement required in the valuations, which implies the use of estimates and assumptions by management, with reference to the specific sections of the notes to the financial statements for detailed information on the valuation processes conducted at 31 December 2023. In particular, the aspects that required the use of complex estimates with significant assumptions are:
\u2022determination of the fair value of receivables and financial instruments not quoted in active markets;
\u2022measurement of Npl Segment loans;
\u2022measurement of the Expected Credit Loss (ECL) for receivables other than the Npl Segment and for debt securities;
\u2022estimate of provisions for risks and charges;
\u2022estimated impairment of goodwill posted;
\u2022assessment in respect of the potential recovery of deferred tax assets (DTAs).
For the types of assets listed above, the principal issues regarding risks and uncertainties associated with estimates are discussed in the following paragraphs.
Determination of the fair value of receivables and financial instruments not quoted in active markets
In the presence of receivables and financial instruments not quoted in active markets or illiquid and complex instruments, it is necessary to activate adequate valuation processes characterised with certain judgement on the choice of valuation models and related input parameters, which may sometimes not be observable in the market. There is a degree of subjectivity involved in assessing whether certain inputs are observable and categorising them within the fair value hierarchy accordingly. For qualitative and quantitative information on the method to determine the fair value of instruments measured at fair value, reference should be made to paragraph \"A.2 - Main items of the financial statements\" of these Notes to the Consolidated Financial Statements.
Measurement of Npl Segment loans
Receivables of this kind are measured with significant recourse to proprietary valuation models that are subject to ongoing verification and adjustment. Specifically, the Risk Management function, when assessing the Bank\u2019s capital adequacy (ICAAP), regularly assesses the so-called model risk, since the characteristics of the business model imply a high level of variability concerning both the amount collected and the date of actual collection.
In particular, for receivables undergoing non-judicial operations, the proprietary model in use estimates cash flows by projecting the breakdown of the amount of the receivable over time based on the historical collection profile for similar clusters. In addition, for the positions with settlement plan funding characteristics, a deterministic model based on the measurement of the future instalments of the plan, net of the historical default rate is used. Therefore, the timely and careful management of cash flows is particularly important. To ensure expected cash flows are correctly assessed, also with a view to correctly pricing the transactions undertaken, the Group carefully monitors the trend in collections compared to expected flows.
For receivables undergoing judicial operations, i.e. for positions for which the presence of a job or a pension has been verified, a model has been developed for estimating cash flows prior to obtaining the Garnishment Order. In particular, cash flows are estimated for all those positions that have obtained a decree not opposed by the debtor from 1 January 2018.
The other positions undergoing judicial operations continue to be recognised at cost until said requirements are met or a garnishment order is issued.
Upon garnishment order, future cash flows are analytically determined on the basis of the objective elements known for each individual position; in this case, therefore, the estimates applied relate mainly to the identification of the duration of the payment plan.
In addition to the above, judicial operations involve also collection efforts, i.e. foreclosure proceedings, which consist of several stages and apply to portfolios originated in corporate, banking, or real estate segments where cash flows are measured by means of the manager\u2019s analytical forecasts.
Reference should be made to the details given in Part E - \"Information on risks and related hedging policies\".
Measurement of the Expected Credit Loss (ECL) for receivables other than the Npl Segment and for debt securities
The determination of the ECL for financial assets measured at amortised cost is a complex process that requires the use of significant assumptions and estimates.
For financial assets for which no objective evidence of loss has been individually identified, i.e. for unimpaired (\"performing\") exposures, the impairment model involves the need to identify whether or not there has been a significant deterioration since the date of initial recognition of the exposure and the allocation to the three stages of credit risk under IFRS 9 of loans and debt securities classified as Financial assets at amortised cost and as Financial assets at fair value through other comprehensive income.
The IFRS 9 impairment model requires, in fact, that losses be determined with reference to the time horizon of one year for financial assets that have not undergone a significant deterioration in credit risk since initial recognition (Stage 1) rather than by reference to the entire life of the instrument if a significant deterioration or indicator of impairment has been established (Stage 2 and Stage 3).
It therefore follows that the calculation of the relevant expected losses requires an articulated estimation process that mainly concerns:
\u2022defining the parameters for a significant increase in credit risk, which are essentially based on models that consider qualitative and quantitative information for measuring the Probabilities of Default (PD) at the origination of financial assets and at the reporting date, as well as forward looking information;
\u2022the measurement of certain elements necessary for the determination of estimated future cash flows arising from non-performing loans: the expected debt collection times, the presumed realisable value of
any guarantees, the costs that it is deemed will be incurred to recover the credit exposure and lastly the likelihood of sale for positions for which there is a disposal plan.
Within the range of possible approaches to estimation models permitted by the relevant international accounting standards, the use of specific methodologies or the selection of certain estimation parameters may significantly influence the measurement of such assets. These methodologies and parameters are necessarily subject to a continuous updating process, also in light of the historical evidence available, with the aim of refining the estimates to better represent the estimated realisable value of the credit exposure. In order to cope with the uncertainty characterising the macroeconomic context and to take due account of risks that are not adequately captured by the valuation models in use, the Group resorts to prudential adjustments in determining the expected loss (referred to as \u201coverlays\u201d). The assessments performed with regard to the quantification of management overlays support the appropriateness of the measures put in place; the amount of ECL introduced through post-model adjustment was conservative compared to the sensitivity and stress analyses performed on the portfolio.
For more information on the methods and models used to determine the ECL, refer to the explanations given in paragraph \u201c2.3 Measurement of expected credit losses\u201d contained in the \"Credit risk\" section of \"Part E - Information on risks and related hedging policies\u201d of these Notes to the Consolidated Financial Statements.
Estimate of provisions for risks and charges
The companies making up the Group are party to certain types of litigation and are also exposed to numerous contingent liabilities. The complexities of the specific situations underlying the pending litigations, together with possible interpretation issues, require in certain circumstances significant judgement in estimating the liabilities that may arise upon settlement of the pending litigations. The difficulties of assessment affect both the an and the quantum, as well as the timing of the eventual manifestation of the liability, and are particularly evident when the proceedings initiated are at an early stage. These circumstances make the valuation of contingent liabilities difficult. As a result, the classification of contingent liabilities and the consequent valuation of the necessary provisions are sometimes based on non-objective elements of judgement and require the use of even complex estimation procedures.
Specifically, the Group recognises a liability when:
\u2022a legal or constructive obligation exists as a result of a past event;
\u2022it is likely that it will be necessary to spend resources which could generate economic benefits to settle the obligation;
\u2022the amount of the obligation can be reliably estimated.
Should all these conditions not be met, no liability is recognised.
The amount recognised as a provision represents the best estimate of the expense required to meet the obligation and reflects the risks and uncertainties regarding the facts and circumstances in question.
Where the cost deferral is significant, the amount of the provision is determined as the present value of the best estimate of the cost to settle the obligation. In this case a discount rate is used that reflects current market assessments.
The provisions made are periodically reviewed and, if necessary, adjusted to reflect the best current estimate. When the review finds that the cost is unlikely to be incurred, the provision is reversed.
The provisions for risks and charges on commitments and guarantees granted include the provisions for credit risk set aside for loan commitments and the other guarantees granted that fall within the scope of the impairment rules in IFRS 9. As a general rule, in this case the Bank adopts the same methods for allocating items to three credit risk Stages and calculating expected credit losses as the ones described for financial assets measured at amortised cost or at fair value through other comprehensive income.
Estimated impairment of goodwill posted
In accordance with IAS 36, goodwill must be impairment tested at least annually, to check that the value can be recovered. IAS 36 also requires, moreover, at each reporting date, including, therefore, the interim reports, an analysis aimed at identifying the presence of any loss indicators (termed \"Trigger Events\") upon the occurrence of which an impairment test must be carried out. The recoverable value is the greater of Value in Use and fair value, net of the costs of sale. As at 31 December 2023, goodwill amounts to 38,0 million Euro and is fully allocated to the Cash Generating Unit (CGU) \"Npl Segment\".
For the purposes of estimating the recoverable amount, the Group proceeded to determine the value in use by estimating both future cash flows in the explicit forecast period (determined based on the 2024-2026 economic
and equity projections for the CGU under analysis, as approved by the Parent company's Board of Directors on 8 February 2024) and the Terminal Value. In a similar fashion, the Group also estimated the discounting rate of future cash flows previously estimated. The discounting rate has been determined by the Group using the \u201cCapital Asset Pricing Model\u201d (CAPM).
The results of the impairment test conducted at 31 December 2023 led to the confirmation of the recoverability of the carrying amount.
As regards details of the impairment test conducted on goodwill at 31 December 2023, we would refer you to the more detailed information given in \"Part B - Information on the Consolidated Statement of Financial Position, Assets\", \"Section 10 - Intangible assets - Item 100\", Paragraph \"10.3 Other information\" of these Notes to the Consolidated Financial Statements.
Assessment in respect of the potential recovery of Deferred Tax Assets (DTAs)
Assets recognised in the Financial Statements include Deferred Tax Assets (DTAs) mainly generated by temporary differences between the date certain business costs are recognised in the income statement and the date on which the same costs may be deducted, rather than arising from tax loss carry-forwards.
In accordance with accounting standard IAS 12, referred to in the \"Group Impairment Policy\", a tax asset can only be recognised to the extent that it is probable that future taxable income will be available to allow for its recoverability.
Recognition of these assets and their subsequent maintenance therefore presupposes an assessment of the likelihood of their recovery. This assessment is not carried out for deferred tax assets pursuant to Law No. 214 of 22 December 2011, which can be transformed into tax credits in the event of the recognition of a \"statutory loss\", a \"tax loss\" for IRES tax purposes and a \"negative net production value\" for IRAP tax purposes, and for which the relative recovery is therefore certain regardless of the ability to generate future income.
For the remaining tax assets that cannot be transformed into tax credits, the judgement of their likelihood is supported by a valuation exercise of recoverability (referred to as the \u201cprobability test\u201d) characterised by significant elements of complexity or subjectivity. Based on the provisions of IAS 12 and the considerations made by ESMA in its paper of 15 July 2019, the aforementioned assessment of recoverability requires a careful reconnaissance of all evidence supporting the likelihood of having sufficient taxable income in the future, also taking into account the circumstances that generated the tax losses, which should be traced back to clearly identified causes that are deemed to be non-repeatable in the future on a recurring basis.
With reference to the recoverability of deferred tax assets recognised at 31 December 2023 other than those transformable pursuant to Law 2014/2011, based on the Group\u2019s estimated future taxable income, to be deemed confirmed in light of the results at 31 December 2023, no elements have emerged that could lead to deeming the DTAs in question, amounting to a total of 238,8 million Euro, to be unlikely for recovery. The aforementioned DTAs have therefore been deemed recoverable, albeit over a medium-term time horizon. Specifically, on the basis of the assessments performed and applying conservative hypotheses, with particular reference to the estimating of future income, out of the overall total of 238,8 million Euro, the 144,7 million Euro portion attributable to Law 214/2011 (equal to 60,6% of the total DTA) will be reversed by 2028 due to express regulatory provision. The portion referring to prior tax losses and aid for economic growth (\u201cACE\u201d) surpluses, totalling 41,1 million Euro (or 17,2% of the total DTA) should be fully recovered from 2026 to 2032 (of which approximately 30 million Euro by 2028). The remaining 53,1 million Euro refers mainly to financial assets measured at fair value with an impact on other comprehensive income (FVOCI) and is therefore related to the performance of the related reserve. The uncertainty is also confirmed regarding the recoverability of the DTAs relating to the subsidiary Cap.Ital.Fin. realised mainly before the entry into the tax consolidation, which therefore, out of prudence, have not been recorded for a total of 2,6 million Euro.
Coming into effect of new accounting standards
Below are the new accounting standards or amendments to existing standards approved by the IASB, as well as new interpretations or amendments to existing ones published by the IFRIC, with separate disclosure of those applicable in the financial year 2023 from those that can be adopted in subsequent financial years but also reporting the changes made in 2023.
IASs/IFRSs and related SIC/IFRIC interpretations endorsed and to be applied as mandatory for the preparation of the 2023 Consolidated Financial Statements
Regulation (EU) No 2036 of 19 November 2021 - IFRS 17 \"Insurance Contracts\" and No 1491 of 8 September 2022 - Amendments to IFRS 17 \"Insurance Contracts: Initial application of IFRS 17 and IFRS 9 - Comparative Information\" (incorporated into Regulation (EU) No 1803/2023)
The new accounting standard IFRS 17 governs the accounting treatment of insurance contracts; the standard was amended on 25 June 2020 to simplify its implementation and disclosure of financial performance, as well as to postpone the first application of IFRS 17 and make it concurrent with the adoption of IFRS 9.
Finally, on 9 December 2021, an amendment to the transition rules to IFRS 17 was also issued for entities that simultaneously apply the transition to IFRS 9.
Regulation (EU) No 357 of 2 March 2022 - Amendments to IAS 1 \"Presentation of Financial Statements\" and IFRS Practice Statement 2 (incorporated into Regulation (EU) No 1803/2023)
The purpose of these amendments is to provide guidelines and examples in the application of relevance and materiality judgements to accounting policy disclosures.
Regulation (EU) No 357 of 2 March 2022 - Amendments to IAS 8 \"Accounting Policies, Changes in Accounting Estimates and Errors\" (incorporated in Regulation (EU) No 1803/2023)
The purpose of the amendment is to distinguish the concepts of \"accounting policies\" and \"accounting estimates\" by introducing a definition of an accounting estimate, which was previously not provided for. This specification is relevant in view of the different accounting regime for the two cases.
Regulation (EU) No 1392 of 11 November 2022 - Amendments to IAS 12 \"Deferred tax related to assets and liabilities arising from a single transaction\" (incorporated into Regulation (EU) No 1803/2023)
These amendments narrow the scope of the exemption under IAS 12 for transactions that give rise to equal taxable and deductible temporary differences upon initial recognition. The amendment is particularly relevant for deferred taxes on transactions such as leasing and decommissioning obligations.
Regulation (EU) No 2468 of 8 November 2023 - Amendments to IAS 12 \"International Tax Reform - Pillar Two Model Rules'\"
This follows the publication by the OECD, in December 2021, of a set of rules through which a two-pillar tax model (the Pillar One and Two).
In particular, Pillar Two introduces an overall minimum tax rate of 15% in each jurisdiction where large companies operate.
The changes introduced allow for the non-recognition of deferred taxation that would result from the implementation of the Pillar Two Framework, as well as some additional disclosure requirements for the companies concerned.
It should be noted that the accounting standards, amendments and interpretations outlined above have not had any impact on the Group; in particular, it should be noted that the Banca Ifis Group does not hold insurance products and does not fall within the scope of application of the so-called \"Pillar Two\", affecting matters that are not relevant to the Group or certain clarifications on how to interpret aspects contained in the accounting standards and related disclosures on accounting policies.
Standards issued and endorsed but whose application starts after 31 December 2023
Below is a list of the new international accounting standards or amendments to them, already endorsed by the European Commission, which are of mandatory application, but starting from a date that falls after the reference date of these Consolidated Financial Statements. The Group does not expect any significant impact deriving from the adoption of the following interpretations and amendments of existing international accounting standards to be material:
\u2022Lease Liabilities in a Sale and leaseback transaction (Amendments to IFRS 16) (from 1 January 2024);
\u2022\u201cAmendments to IAS 1 Non-current Liabilities with Covenants\u201d (from 1 January 2024).
Standards issued but not yet approved and effective
The following are the new international accounting standards or amendments to them, not yet endorsed by the European Commission, which are mandatory from a date that falls after the reference date of these Consolidated Financial Statements. The Group does not expect any significant impact deriving from the adoption of the following interpretations and amendments of existing international accounting standards to be material:
\u2022\u201cIFRS 14 Regulatory deferral accounts\u201d (application subject to the conclusion of the endorsement process, which is, at the date of this document, suspended pending the new accounting standard on \u201crate-regulated activities\u201d);
\u2022\u201cAmendments to IFRS 10 and IAS 28 Sale or contribution of assets between an investor and its associate or joint venture\u201d (deferred application until completion of the IASB project on the equity method);
\u2022\"Amendments to IAS 1 Classification of liabilities as current or non-current\" (from 1 January 2024);
\u2022\"Amendment to IAS 7 and IFRS 9 Supplier Finance Arrangements\" (from 1 January 2024);
\u2022\"Amendment to IAS 21 Lack of Exchangeability\" (from 1 January 2025).
Deadlines for the approval and publication of the Financial Statements
Pursuant to Article 154-ter of Italian Legislative Decree No. 59/98 (Consolidated Law on Finance), the Parent company must approve the Separate Financial Statements and publish the Annual Financial Report, including the draft Separate Financial Statements, the Directors' Report, and the declaration as per Article 154-bis, paragraph 5. The Board of Directors approved the Parent company\u2019s draft separate financial statements and the consolidated financial statements on 07 March 2024; the Parent company\u2019s separate financial statements will be submitted to the Shareholders\u2019 Meeting to be held on 18 April 2024 at first call for approval.
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Section 5 - Other aspects
Highlights for 2023 financial statement assessments
On 25 October 2023, ESMA published a disclosure notice (\"European common enforcement priorities for 2023 annual financial reports\") containing certain topics and recommendations with reference to both financial and sustainability reporting for FY 2023. In particular, for the financial statements prepared in accordance with IAS/IFRS, the priorities for FY 2023 are related to climate issues and their impact on key financial statement estimates, as well as the impact of the current macroeconomic environment on refinancing and other financial risks, and on the fair value measurement process and related disclosure.
The disclosure call also, with specific reference to Alternative Performance Indicators (APIs, or Alternative Performance Measures - APMs), emphasises that issuers are required to comply with the ESMA Guidelines and related Q&As, in particular when the same indicators are presented in contexts other than the Financial Statements, and draws attention to the correct application of the European Single Electronic Format (ESEF), both in relation to the marking of numerical elements in the Consolidated Financial Statements and in relation to the block marking of the related notes. With regard to APIs, please refer to the section \"APIs - Alternative Performance Indicators\" of the Directors\u2019 Report on the Group, while with regard to ESEF-related issues, please refer to the section \"European Commission Regulation 815/2019 (the European Single Electronic Format - ESEF) Regulation\" in \"Section 1 - Statement of compliance with international accounting standards\", \"A.1 - General part\" of this Part A.
The following section provides an illustration of the aspects considered as priorities for the assessments conducted for the preparation of the 2023 Annual Report and for the related disclosure, in line with the recommendations provided by ESMA.
Environmental and climatic aspects
With regards the first aspect considered as a priority by the ESMA, the consideration of environmental and climate aspects represents an important element of attention in the strategy pursued by the Banca Ifis Group, capable of influencing its operational activities, objectives and business conduct, in the awareness that it can play a leading role in the action against climate change.
With this in mind, in 2023, the Group became more aware of the impact of ESG topics on its business model, competitive environment as well as its objectives and strategies, in its role as a guide for companies and private customers in the transition process towards an economy that combines economic sustainability with environmental and social sustainability. In particular, on 3 August 2023, the Board of Directors of Banca Ifis approved the first edition of the TCFD Report (see also the section \"Significant events during the year\" of the Directors\u2019 Report on the Group), which presents useful information for investors and stakeholders to properly assess the Bank's climate-related risks and opportunities and further expands the Group's ESG reporting,
representing, among other projects, the strategy of reducing emissions financed on the loan portfolio that the Bank has defined by joining, first in Italy, the Net-Zero Banking Alliance (NZBA).
With specific reference to climate and environmental risks, the analysis of supervisory expectations gave rise to a project to integrate environmental factors into corporate strategies, governance and control systems, the risk management framework and disclosure. A further strategic objective is to incorporate the relevant risks into the company's main valuation processes.
The findings of the materiality assessment exercise indicate an overall moderate exposure to climate and environmental risks.
For specific information on the Group's environmental and climate risk management, please refer to the section \"Management of risks linked to climate change\" in Part E below.
For more detailed information on the initiatives undertaken by the Group in the area of green financing, both of a qualitative and quantitative nature, and the instruments used by the Group, refer to the Consolidated Non-Financial Statement (NFS).
Macroeconomic environment
With reference to the macroeconomic context, i.e. the second priority aspect according to the ESMA, note that in the current environment, macroeconomic forecasts are characterised by significant uncertainty factors, thus requiring significant judgement in the selection of assumptions and forecasts to be used as reference in budgetary assessments.
The high credit cost is still expected to slow down global demand for investment and durable goods.
Future projections may be impacted by possible disruptions or slowdowns in global chains, resulting in particular from attacks on shipping traffic in the Red Sea, or increases in energy prices caused by the continuation or escalation of tensions in the Middle East, could weigh on the outlook scenarios.
World and European production estimates are pointing to moderate growth, and our country's economy is also expected to move along a weak growth path.
However, there is a possibility that the lack of dynamism in world trade will persist for a long time and that this could have a negative impact on the Italian economy. In particular, there are three international risk fronts:
\u2022the weakness of China's economy;
\u2022the worsening international political tensions, which, by affecting the confidence of households and businesses, could weaken the domestic market and drive commodity prices up;
\u2022a further tightening of financing conditions with an impact on the pro-cyclical dynamics of investments.
In any case, positive signs can be derived from the following considerations:
\u2022the US and European economies have proven resilient to rising interest rates, thanks to a combination of expansionary fiscal policies, high liquidity available in the financial markets and strong demand for labour;
\u2022in the second half of 2023, inflation, consumer spending and excess demand in the labour market started a downward trend, which is expected to continue;
\u2022the wars in the Middle East and Ukraine did not cause shocks to the world economy, remaining confined to specific territories.
\u2022at the end of 2023, central banks ended the cycle of interest rate hikes that began in 2022 and are now considering the timing of a possible reduction with the aim of continuing the gradual decline in inflation and preventing an excessive contraction of domestic demand.
For more details on the Banca Ifis Group's considerations regarding the macroeconomic environment, please refer to the following sections of the Directors' Report on the Group: \"Background\", \"Information on international tensions\" and \"Outlook\".
With particular regard to the topic of measuring expected losses on credit exposures in the current macroeconomic environment, please refer to the following specific sub-section within the section \"Risks and uncertainties related to estimates\" of this \"Section 5 - Other aspects\".
With reference to the considerations, also of a forecasting nature, made on the basis of the current macroeconomic situation for the purpose of probability testing to verify the recoverability of deferred tax assets (DTAs) recognised in the Consolidated Financial Statements, reference should again be made to the specific sub-section within the section \"Risks and uncertainties related to estimates\" of this \"Section 5 - Other aspects\".
Additional information regarding the reform of reference indices for determining interest rates
On the basis of the indications contained in Bank of Italy Circular No. 262, the following is the disclosure required by IFRS 7, paragraphs 24 I and 24 J concerning the reform of interest rate benchmarks (the \u201cInterest rate benchmark reform\u201d or \u201cIBOR Reform\u201d).
The reform of the money market reference rates (IBOR) is a multi-year project covering the global markets with the aim of strengthening the integrity and representativeness of the reference rates, which have been endangered in recent years by a number of manipulation episodes and the significant reduction of trade in the interbank market.
This reform process is grounded at EU level in EU Regulation 2016/1011 of 8 June 2016 (the \"Benchmark Regulation\" or \"BMR\"), which entered into force on 30 June 2016, applicable as of 1 January 2018 and amended during 2021. The Benchmark Regulation introduced in the EU a new framework for benchmark interest rates, i.e. indices by reference to which the amount to be paid for a Financial Instrument or a Financial Contract is determined. The reference indices are, as a rule, combined with a contractually stipulated \"spread\" to determine the interest rate applied to the contract.
In compliance with the regulatory provisions set out in the BMR (Art. 28) and as confirmed by the European Securities and Markets Authority (ESMA), during the previous years, the Group adopted an internal plan to identify the actions to be taken in the event of the termination or substantial change of a reference index used for the parametrisation of a Financial Contract.
At the date of preparation of these Consolidated Financial Statements, the Banca Ifis Group has completed, for the entire scope of contracts involved, the transactions concerning the above-mentioned transition of reference rates.
Risks and uncertainties related to estimates
Using accounting standards often requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities. In making the assumptions underlying the estimates, management considers all available information at the reporting date of these Consolidated Financial Statements, as well as hypotheses and any other factor deemed reasonable in light of past experience and foreseeable future evolutions.
By their very nature, it is therefore not possible to rule out the possibility that the assumptions made, however reasonable, may not be confirmed in the future scenarios in which the Group will find itself operating. Future results may therefore differ from the estimates made, and adjustments to the carrying value of assets and liabilities recognised in the financial statements, which cannot be foreseen or estimated at the date of this document, may be necessary. In this regard, it should be noted that adjustments in financial statement estimates may become necessary as a result of changes in the circumstances on which they were based, new information or increased experience.
The accounting policies considered most critical to the true and fair representation of the Group's financial position, results of operations and cash flows are illustrated below, both for the materiality of the amounts to be recognised in the financial statements impacted by these policies, and for the high degree of judgement required in the valuations, which implies the use of estimates and assumptions by management, with reference to the specific sections of the notes to the financial statements for detailed information on the valuation processes conducted at 31 December 2023. In particular, the aspects that required the use of complex estimates with significant assumptions are:
\u2022determination of the fair value of receivables and financial instruments not quoted in active markets;
\u2022measurement of Npl Segment loans;
\u2022measurement of the Expected Credit Loss (ECL) for receivables other than the Npl Segment and for debt securities;
\u2022estimate of provisions for risks and charges;
\u2022estimated impairment of goodwill posted;
\u2022assessment in respect of the potential recovery of deferred tax assets (DTAs).
For the types of assets listed above, the principal issues regarding risks and uncertainties associated with estimates are discussed in the following paragraphs.
Determination of the fair value of receivables and financial instruments not quoted in active markets
In the presence of receivables and financial instruments not quoted in active markets or illiquid and complex instruments, it is necessary to activate adequate valuation processes characterised with certain judgement on the choice of valuation models and related input parameters, which may sometimes not be observable in the market. There is a degree of subjectivity involved in assessing whether certain inputs are observable and categorising them within the fair value hierarchy accordingly. For qualitative and quantitative information on the method to determine the fair value of instruments measured at fair value, reference should be made to paragraph \"A.2 - Main items of the financial statements\" of these Notes to the Consolidated Financial Statements.
Measurement of Npl Segment loans
Receivables of this kind are measured with significant recourse to proprietary valuation models that are subject to ongoing verification and adjustment. Specifically, the Risk Management function, when assessing the Bank\u2019s capital adequacy (ICAAP), regularly assesses the so-called model risk, since the characteristics of the business model imply a high level of variability concerning both the amount collected and the date of actual collection.
In particular, for receivables undergoing non-judicial operations, the proprietary model in use estimates cash flows by projecting the breakdown of the amount of the receivable over time based on the historical collection profile for similar clusters. In addition, for the positions with settlement plan funding characteristics, a deterministic model based on the measurement of the future instalments of the plan, net of the historical default rate is used. Therefore, the timely and careful management of cash flows is particularly important. To ensure expected cash flows are correctly assessed, also with a view to correctly pricing the transactions undertaken, the Group carefully monitors the trend in collections compared to expected flows.
For receivables undergoing judicial operations, i.e. for positions for which the presence of a job or a pension has been verified, a model has been developed for estimating cash flows prior to obtaining the Garnishment Order. In particular, cash flows are estimated for all those positions that have obtained a decree not opposed by the debtor from 1 January 2018.
The other positions undergoing judicial operations continue to be recognised at cost until said requirements are met or a garnishment order is issued.
Upon garnishment order, future cash flows are analytically determined on the basis of the objective elements known for each individual position; in this case, therefore, the estimates applied relate mainly to the identification of the duration of the payment plan.
In addition to the above, judicial operations involve also collection efforts, i.e. foreclosure proceedings, which consist of several stages and apply to portfolios originated in corporate, banking, or real estate segments where cash flows are measured by means of the manager\u2019s analytical forecasts.
Reference should be made to the details given in Part E - \"Information on risks and related hedging policies\".
Measurement of the Expected Credit Loss (ECL) for receivables other than the Npl Segment and for debt securities
The determination of the ECL for financial assets measured at amortised cost is a complex process that requires the use of significant assumptions and estimates.
For financial assets for which no objective evidence of loss has been individually identified, i.e. for unimpaired (\"performing\") exposures, the impairment model involves the need to identify whether or not there has been a significant deterioration since the date of initial recognition of the exposure and the allocation to the three stages of credit risk under IFRS 9 of loans and debt securities classified as Financial assets at amortised cost and as Financial assets at fair value through other comprehensive income.
The IFRS 9 impairment model requires, in fact, that losses be determined with reference to the time horizon of one year for financial assets that have not undergone a significant deterioration in credit risk since initial recognition (Stage 1) rather than by reference to the entire life of the instrument if a significant deterioration or indicator of impairment has been established (Stage 2 and Stage 3).
It therefore follows that the calculation of the relevant expected losses requires an articulated estimation process that mainly concerns:
\u2022defining the parameters for a significant increase in credit risk, which are essentially based on models that consider qualitative and quantitative information for measuring the Probabilities of Default (PD) at the origination of financial assets and at the reporting date, as well as forward looking information;
\u2022the measurement of certain elements necessary for the determination of estimated future cash flows arising from non-performing loans: the expected debt collection times, the presumed realisable value of
any guarantees, the costs that it is deemed will be incurred to recover the credit exposure and lastly the likelihood of sale for positions for which there is a disposal plan.
Within the range of possible approaches to estimation models permitted by the relevant international accounting standards, the use of specific methodologies or the selection of certain estimation parameters may significantly influence the measurement of such assets. These methodologies and parameters are necessarily subject to a continuous updating process, also in light of the historical evidence available, with the aim of refining the estimates to better represent the estimated realisable value of the credit exposure. In order to cope with the uncertainty characterising the macroeconomic context and to take due account of risks that are not adequately captured by the valuation models in use, the Group resorts to prudential adjustments in determining the expected loss (referred to as \u201coverlays\u201d). The assessments performed with regard to the quantification of management overlays support the appropriateness of the measures put in place; the amount of ECL introduced through post-model adjustment was conservative compared to the sensitivity and stress analyses performed on the portfolio.
For more information on the methods and models used to determine the ECL, refer to the explanations given in paragraph \u201c2.3 Measurement of expected credit losses\u201d contained in the \"Credit risk\" section of \"Part E - Information on risks and related hedging policies\u201d of these Notes to the Consolidated Financial Statements.
Estimate of provisions for risks and charges
The companies making up the Group are party to certain types of litigation and are also exposed to numerous contingent liabilities. The complexities of the specific situations underlying the pending litigations, together with possible interpretation issues, require in certain circumstances significant judgement in estimating the liabilities that may arise upon settlement of the pending litigations. The difficulties of assessment affect both the an and the quantum, as well as the timing of the eventual manifestation of the liability, and are particularly evident when the proceedings initiated are at an early stage. These circumstances make the valuation of contingent liabilities difficult. As a result, the classification of contingent liabilities and the consequent valuation of the necessary provisions are sometimes based on non-objective elements of judgement and require the use of even complex estimation procedures.
Specifically, the Group recognises a liability when:
\u2022a legal or constructive obligation exists as a result of a past event;
\u2022it is likely that it will be necessary to spend resources which could generate economic benefits to settle the obligation;
\u2022the amount of the obligation can be reliably estimated.
Should all these conditions not be met, no liability is recognised.
The amount recognised as a provision represents the best estimate of the expense required to meet the obligation and reflects the risks and uncertainties regarding the facts and circumstances in question.
Where the cost deferral is significant, the amount of the provision is determined as the present value of the best estimate of the cost to settle the obligation. In this case a discount rate is used that reflects current market assessments.
The provisions made are periodically reviewed and, if necessary, adjusted to reflect the best current estimate. When the review finds that the cost is unlikely to be incurred, the provision is reversed.
The provisions for risks and charges on commitments and guarantees granted include the provisions for credit risk set aside for loan commitments and the other guarantees granted that fall within the scope of the impairment rules in IFRS 9. As a general rule, in this case the Bank adopts the same methods for allocating items to three credit risk Stages and calculating expected credit losses as the ones described for financial assets measured at amortised cost or at fair value through other comprehensive income.
Estimated impairment of goodwill posted
In accordance with IAS 36, goodwill must be impairment tested at least annually, to check that the value can be recovered. IAS 36 also requires, moreover, at each reporting date, including, therefore, the interim reports, an analysis aimed at identifying the presence of any loss indicators (termed \"Trigger Events\") upon the occurrence of which an impairment test must be carried out. The recoverable value is the greater of Value in Use and fair value, net of the costs of sale. As at 31 December 2023, goodwill amounts to 38,0 million Euro and is fully allocated to the Cash Generating Unit (CGU) \"Npl Segment\".
For the purposes of estimating the recoverable amount, the Group proceeded to determine the value in use by estimating both future cash flows in the explicit forecast period (determined based on the 2024-2026 economic
and equity projections for the CGU under analysis, as approved by the Parent company's Board of Directors on 8 February 2024) and the Terminal Value. In a similar fashion, the Group also estimated the discounting rate of future cash flows previously estimated. The discounting rate has been determined by the Group using the \u201cCapital Asset Pricing Model\u201d (CAPM).
The results of the impairment test conducted at 31 December 2023 led to the confirmation of the recoverability of the carrying amount.
As regards details of the impairment test conducted on goodwill at 31 December 2023, we would refer you to the more detailed information given in \"Part B - Information on the Consolidated Statement of Financial Position, Assets\", \"Section 10 - Intangible assets - Item 100\", Paragraph \"10.3 Other information\" of these Notes to the Consolidated Financial Statements.
Assessment in respect of the potential recovery of Deferred Tax Assets (DTAs)
Assets recognised in the Financial Statements include Deferred Tax Assets (DTAs) mainly generated by temporary differences between the date certain business costs are recognised in the income statement and the date on which the same costs may be deducted, rather than arising from tax loss carry-forwards.
In accordance with accounting standard IAS 12, referred to in the \"Group Impairment Policy\", a tax asset can only be recognised to the extent that it is probable that future taxable income will be available to allow for its recoverability.
Recognition of these assets and their subsequent maintenance therefore presupposes an assessment of the likelihood of their recovery. This assessment is not carried out for deferred tax assets pursuant to Law No. 214 of 22 December 2011, which can be transformed into tax credits in the event of the recognition of a \"statutory loss\", a \"tax loss\" for IRES tax purposes and a \"negative net production value\" for IRAP tax purposes, and for which the relative recovery is therefore certain regardless of the ability to generate future income.
For the remaining tax assets that cannot be transformed into tax credits, the judgement of their likelihood is supported by a valuation exercise of recoverability (referred to as the \u201cprobability test\u201d) characterised by significant elements of complexity or subjectivity. Based on the provisions of IAS 12 and the considerations made by ESMA in its paper of 15 July 2019, the aforementioned assessment of recoverability requires a careful reconnaissance of all evidence supporting the likelihood of having sufficient taxable income in the future, also taking into account the circumstances that generated the tax losses, which should be traced back to clearly identified causes that are deemed to be non-repeatable in the future on a recurring basis.
With reference to the recoverability of deferred tax assets recognised at 31 December 2023 other than those transformable pursuant to Law 2014/2011, based on the Group\u2019s estimated future taxable income, to be deemed confirmed in light of the results at 31 December 2023, no elements have emerged that could lead to deeming the DTAs in question, amounting to a total of 238,8 million Euro, to be unlikely for recovery. The aforementioned DTAs have therefore been deemed recoverable, albeit over a medium-term time horizon. Specifically, on the basis of the assessments performed and applying conservative hypotheses, with particular reference to the estimating of future income, out of the overall total of 238,8 million Euro, the 144,7 million Euro portion attributable to Law 214/2011 (equal to 60,6% of the total DTA) will be reversed by 2028 due to express regulatory provision. The portion referring to prior tax losses and aid for economic growth (\u201cACE\u201d) surpluses, totalling 41,1 million Euro (or 17,2% of the total DTA) should be fully recovered from 2026 to 2032 (of which approximately 30 million Euro by 2028). The remaining 53,1 million Euro refers mainly to financial assets measured at fair value with an impact on other comprehensive income (FVOCI) and is therefore related to the performance of the related reserve. The uncertainty is also confirmed regarding the recoverability of the DTAs relating to the subsidiary Cap.Ital.Fin. realised mainly before the entry into the tax consolidation, which therefore, out of prudence, have not been recorded for a total of 2,6 million Euro.
Coming into effect of new accounting standards
Below are the new accounting standards or amendments to existing standards approved by the IASB, as well as new interpretations or amendments to existing ones published by the IFRIC, with separate disclosure of those applicable in the financial year 2023 from those that can be adopted in subsequent financial years but also reporting the changes made in 2023.
IASs/IFRSs and related SIC/IFRIC interpretations endorsed and to be applied as mandatory for the preparation of the 2023 Consolidated Financial Statements
Regulation (EU) No 2036 of 19 November 2021 - IFRS 17 \"Insurance Contracts\" and No 1491 of 8 September 2022 - Amendments to IFRS 17 \"Insurance Contracts: Initial application of IFRS 17 and IFRS 9 - Comparative Information\" (incorporated into Regulation (EU) No 1803/2023)
The new accounting standard IFRS 17 governs the accounting treatment of insurance contracts; the standard was amended on 25 June 2020 to simplify its implementation and disclosure of financial performance, as well as to postpone the first application of IFRS 17 and make it concurrent with the adoption of IFRS 9.
Finally, on 9 December 2021, an amendment to the transition rules to IFRS 17 was also issued for entities that simultaneously apply the transition to IFRS 9.
Regulation (EU) No 357 of 2 March 2022 - Amendments to IAS 1 \"Presentation of Financial Statements\" and IFRS Practice Statement 2 (incorporated into Regulation (EU) No 1803/2023)
The purpose of these amendments is to provide guidelines and examples in the application of relevance and materiality judgements to accounting policy disclosures.
Regulation (EU) No 357 of 2 March 2022 - Amendments to IAS 8 \"Accounting Policies, Changes in Accounting Estimates and Errors\" (incorporated in Regulation (EU) No 1803/2023)
The purpose of the amendment is to distinguish the concepts of \"accounting policies\" and \"accounting estimates\" by introducing a definition of an accounting estimate, which was previously not provided for. This specification is relevant in view of the different accounting regime for the two cases.
Regulation (EU) No 1392 of 11 November 2022 - Amendments to IAS 12 \"Deferred tax related to assets and liabilities arising from a single transaction\" (incorporated into Regulation (EU) No 1803/2023)
These amendments narrow the scope of the exemption under IAS 12 for transactions that give rise to equal taxable and deductible temporary differences upon initial recognition. The amendment is particularly relevant for deferred taxes on transactions such as leasing and decommissioning obligations.
Regulation (EU) No 2468 of 8 November 2023 - Amendments to IAS 12 \"International Tax Reform - Pillar Two Model Rules'\"
This follows the publication by the OECD, in December 2021, of a set of rules through which a two-pillar tax model (the Pillar One and Two).
In particular, Pillar Two introduces an overall minimum tax rate of 15% in each jurisdiction where large companies operate.
The changes introduced allow for the non-recognition of deferred taxation that would result from the implementation of the Pillar Two Framework, as well as some additional disclosure requirements for the companies concerned.
It should be noted that the accounting standards, amendments and interpretations outlined above have not had any impact on the Group; in particular, it should be noted that the Banca Ifis Group does not hold insurance products and does not fall within the scope of application of the so-called \"Pillar Two\", affecting matters that are not relevant to the Group or certain clarifications on how to interpret aspects contained in the accounting standards and related disclosures on accounting policies.
Standards issued and endorsed but whose application starts after 31 December 2023
Below is a list of the new international accounting standards or amendments to them, already endorsed by the European Commission, which are of mandatory application, but starting from a date that falls after the reference date of these Consolidated Financial Statements. The Group does not expect any significant impact deriving from the adoption of the following interpretations and amendments of existing international accounting standards to be material:
\u2022Lease Liabilities in a Sale and leaseback transaction (Amendments to IFRS 16) (from 1 January 2024);
\u2022\u201cAmendments to IAS 1 Non-current Liabilities with Covenants\u201d (from 1 January 2024).
Standards issued but not yet approved and effective
The following are the new international accounting standards or amendments to them, not yet endorsed by the European Commission, which are mandatory from a date that falls after the reference date of these Consolidated Financial Statements. The Group does not expect any significant impact deriving from the adoption of the following interpretations and amendments of existing international accounting standards to be material:
\u2022\u201cIFRS 14 Regulatory deferral accounts\u201d (application subject to the conclusion of the endorsement process, which is, at the date of this document, suspended pending the new accounting standard on \u201crate-regulated activities\u201d);
\u2022\u201cAmendments to IFRS 10 and IAS 28 Sale or contribution of assets between an investor and its associate or joint venture\u201d (deferred application until completion of the IASB project on the equity method);
\u2022\"Amendments to IAS 1 Classification of liabilities as current or non-current\" (from 1 January 2024);
\u2022\"Amendment to IAS 7 and IFRS 9 Supplier Finance Arrangements\" (from 1 January 2024);
\u2022\"Amendment to IAS 21 Lack of Exchangeability\" (from 1 January 2025).
Deadlines for the approval and publication of the Financial Statements
Pursuant to Article 154-ter of Italian Legislative Decree No. 59/98 (Consolidated Law on Finance), the Parent company must approve the Separate Financial Statements and publish the Annual Financial Report, including the draft Separate Financial Statements, the Directors' Report, and the declaration as per Article 154-bis, paragraph 5. The Board of Directors approved the Parent company\u2019s draft separate financial statements and the consolidated financial statements on 07 March 2024; the Parent company\u2019s separate financial statements will be submitted to the Shareholders\u2019 Meeting to be held on 18 April 2024 at first call for approval.
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Section 5 - Other aspects
Highlights for 2023 financial statement assessments
On 25 October 2023, ESMA published a disclosure notice (\"European common enforcement priorities for 2023 annual financial reports\") containing certain topics and recommendations with reference to both financial and sustainability reporting for FY 2023. In particular, for the financial statements prepared in accordance with IAS/IFRS, the priorities for FY 2023 are related to climate issues and their impact on key financial statement estimates, as well as the impact of the current macroeconomic environment on refinancing and other financial risks, and on the fair value measurement process and related disclosure.
The disclosure call also, with specific reference to Alternative Performance Indicators (APIs, or Alternative Performance Measures - APMs), emphasises that issuers are required to comply with the ESMA Guidelines and related Q&As, in particular when the same indicators are presented in contexts other than the Financial Statements, and draws attention to the correct application of the European Single Electronic Format (ESEF), both in relation to the marking of numerical elements in the Consolidated Financial Statements and in relation to the block marking of the related notes. With regard to APIs, please refer to the section \"APIs - Alternative Performance Indicators\" of the Directors\u2019 Report on the Group, while with regard to ESEF-related issues, please refer to the section \"European Commission Regulation 815/2019 (the European Single Electronic Format - ESEF) Regulation\" in \"Section 1 - Statement of compliance with international accounting standards\", \"A.1 - General part\" of this Part A.
The following section provides an illustration of the aspects considered as priorities for the assessments conducted for the preparation of the 2023 Annual Report and for the related disclosure, in line with the recommendations provided by ESMA.
Environmental and climatic aspects
With regards the first aspect considered as a priority by the ESMA, the consideration of environmental and climate aspects represents an important element of attention in the strategy pursued by the Banca Ifis Group, capable of influencing its operational activities, objectives and business conduct, in the awareness that it can play a leading role in the action against climate change.
With this in mind, in 2023, the Group became more aware of the impact of ESG topics on its business model, competitive environment as well as its objectives and strategies, in its role as a guide for companies and private customers in the transition process towards an economy that combines economic sustainability with environmental and social sustainability. In particular, on 3 August 2023, the Board of Directors of Banca Ifis approved the first edition of the TCFD Report (see also the section \"Significant events during the year\" of the Directors\u2019 Report on the Group), which presents useful information for investors and stakeholders to properly assess the Bank's climate-related risks and opportunities and further expands the Group's ESG reporting,
representing, among other projects, the strategy of reducing emissions financed on the loan portfolio that the Bank has defined by joining, first in Italy, the Net-Zero Banking Alliance (NZBA).
With specific reference to climate and environmental risks, the analysis of supervisory expectations gave rise to a project to integrate environmental factors into corporate strategies, governance and control systems, the risk management framework and disclosure. A further strategic objective is to incorporate the relevant risks into the company's main valuation processes.
The findings of the materiality assessment exercise indicate an overall moderate exposure to climate and environmental risks.
For specific information on the Group's environmental and climate risk management, please refer to the section \"Management of risks linked to climate change\" in Part E below.
For more detailed information on the initiatives undertaken by the Group in the area of green financing, both of a qualitative and quantitative nature, and the instruments used by the Group, refer to the Consolidated Non-Financial Statement (NFS).
Macroeconomic environment
With reference to the macroeconomic context, i.e. the second priority aspect according to the ESMA, note that in the current environment, macroeconomic forecasts are characterised by significant uncertainty factors, thus requiring significant judgement in the selection of assumptions and forecasts to be used as reference in budgetary assessments.
The high credit cost is still expected to slow down global demand for investment and durable goods.
Future projections may be impacted by possible disruptions or slowdowns in global chains, resulting in particular from attacks on shipping traffic in the Red Sea, or increases in energy prices caused by the continuation or escalation of tensions in the Middle East, could weigh on the outlook scenarios.
World and European production estimates are pointing to moderate growth, and our country's economy is also expected to move along a weak growth path.
However, there is a possibility that the lack of dynamism in world trade will persist for a long time and that this could have a negative impact on the Italian economy. In particular, there are three international risk fronts:
\u2022the weakness of China's economy;
\u2022the worsening international political tensions, which, by affecting the confidence of households and businesses, could weaken the domestic market and drive commodity prices up;
\u2022a further tightening of financing conditions with an impact on the pro-cyclical dynamics of investments.
In any case, positive signs can be derived from the following considerations:
\u2022the US and European economies have proven resilient to rising interest rates, thanks to a combination of expansionary fiscal policies, high liquidity available in the financial markets and strong demand for labour;
\u2022in the second half of 2023, inflation, consumer spending and excess demand in the labour market started a downward trend, which is expected to continue;
\u2022the wars in the Middle East and Ukraine did not cause shocks to the world economy, remaining confined to specific territories.
\u2022at the end of 2023, central banks ended the cycle of interest rate hikes that began in 2022 and are now considering the timing of a possible reduction with the aim of continuing the gradual decline in inflation and preventing an excessive contraction of domestic demand.
For more details on the Banca Ifis Group's considerations regarding the macroeconomic environment, please refer to the following sections of the Directors' Report on the Group: \"Background\", \"Information on international tensions\" and \"Outlook\".
With particular regard to the topic of measuring expected losses on credit exposures in the current macroeconomic environment, please refer to the following specific sub-section within the section \"Risks and uncertainties related to estimates\" of this \"Section 5 - Other aspects\".
With reference to the considerations, also of a forecasting nature, made on the basis of the current macroeconomic situation for the purpose of probability testing to verify the recoverability of deferred tax assets (DTAs) recognised in the Consolidated Financial Statements, reference should again be made to the specific sub-section within the section \"Risks and uncertainties related to estimates\" of this \"Section 5 - Other aspects\".
Additional information regarding the reform of reference indices for determining interest rates
On the basis of the indications contained in Bank of Italy Circular No. 262, the following is the disclosure required by IFRS 7, paragraphs 24 I and 24 J concerning the reform of interest rate benchmarks (the \u201cInterest rate benchmark reform\u201d or \u201cIBOR Reform\u201d).
The reform of the money market reference rates (IBOR) is a multi-year project covering the global markets with the aim of strengthening the integrity and representativeness of the reference rates, which have been endangered in recent years by a number of manipulation episodes and the significant reduction of trade in the interbank market.
This reform process is grounded at EU level in EU Regulation 2016/1011 of 8 June 2016 (the \"Benchmark Regulation\" or \"BMR\"), which entered into force on 30 June 2016, applicable as of 1 January 2018 and amended during 2021. The Benchmark Regulation introduced in the EU a new framework for benchmark interest rates, i.e. indices by reference to which the amount to be paid for a Financial Instrument or a Financial Contract is determined. The reference indices are, as a rule, combined with a contractually stipulated \"spread\" to determine the interest rate applied to the contract.
In compliance with the regulatory provisions set out in the BMR (Art. 28) and as confirmed by the European Securities and Markets Authority (ESMA), during the previous years, the Group adopted an internal plan to identify the actions to be taken in the event of the termination or substantial change of a reference index used for the parametrisation of a Financial Contract.
At the date of preparation of these Consolidated Financial Statements, the Banca Ifis Group has completed, for the entire scope of contracts involved, the transactions concerning the above-mentioned transition of reference rates.
Risks and uncertainties related to estimates
Using accounting standards often requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities. In making the assumptions underlying the estimates, management considers all available information at the reporting date of these Consolidated Financial Statements, as well as hypotheses and any other factor deemed reasonable in light of past experience and foreseeable future evolutions.
By their very nature, it is therefore not possible to rule out the possibility that the assumptions made, however reasonable, may not be confirmed in the future scenarios in which the Group will find itself operating. Future results may therefore differ from the estimates made, and adjustments to the carrying value of assets and liabilities recognised in the financial statements, which cannot be foreseen or estimated at the date of this document, may be necessary. In this regard, it should be noted that adjustments in financial statement estimates may become necessary as a result of changes in the circumstances on which they were based, new information or increased experience.
The accounting policies considered most critical to the true and fair representation of the Group's financial position, results of operations and cash flows are illustrated below, both for the materiality of the amounts to be recognised in the financial statements impacted by these policies, and for the high degree of judgement required in the valuations, which implies the use of estimates and assumptions by management, with reference to the specific sections of the notes to the financial statements for detailed information on the valuation processes conducted at 31 December 2023. In particular, the aspects that required the use of complex estimates with significant assumptions are:
\u2022determination of the fair value of receivables and financial instruments not quoted in active markets;
\u2022measurement of Npl Segment loans;
\u2022measurement of the Expected Credit Loss (ECL) for receivables other than the Npl Segment and for debt securities;
\u2022estimate of provisions for risks and charges;
\u2022estimated impairment of goodwill posted;
\u2022assessment in respect of the potential recovery of deferred tax assets (DTAs).
For the types of assets listed above, the principal issues regarding risks and uncertainties associated with estimates are discussed in the following paragraphs.
Determination of the fair value of receivables and financial instruments not quoted in active markets
In the presence of receivables and financial instruments not quoted in active markets or illiquid and complex instruments, it is necessary to activate adequate valuation processes characterised with certain judgement on the choice of valuation models and related input parameters, which may sometimes not be observable in the market. There is a degree of subjectivity involved in assessing whether certain inputs are observable and categorising them within the fair value hierarchy accordingly. For qualitative and quantitative information on the method to determine the fair value of instruments measured at fair value, reference should be made to paragraph \"A.2 - Main items of the financial statements\" of these Notes to the Consolidated Financial Statements.
Measurement of Npl Segment loans
Receivables of this kind are measured with significant recourse to proprietary valuation models that are subject to ongoing verification and adjustment. Specifically, the Risk Management function, when assessing the Bank\u2019s capital adequacy (ICAAP), regularly assesses the so-called model risk, since the characteristics of the business model imply a high level of variability concerning both the amount collected and the date of actual collection.
In particular, for receivables undergoing non-judicial operations, the proprietary model in use estimates cash flows by projecting the breakdown of the amount of the receivable over time based on the historical collection profile for similar clusters. In addition, for the positions with settlement plan funding characteristics, a deterministic model based on the measurement of the future instalments of the plan, net of the historical default rate is used. Therefore, the timely and careful management of cash flows is particularly important. To ensure expected cash flows are correctly assessed, also with a view to correctly pricing the transactions undertaken, the Group carefully monitors the trend in collections compared to expected flows.
For receivables undergoing judicial operations, i.e. for positions for which the presence of a job or a pension has been verified, a model has been developed for estimating cash flows prior to obtaining the Garnishment Order. In particular, cash flows are estimated for all those positions that have obtained a decree not opposed by the debtor from 1 January 2018.
The other positions undergoing judicial operations continue to be recognised at cost until said requirements are met or a garnishment order is issued.
Upon garnishment order, future cash flows are analytically determined on the basis of the objective elements known for each individual position; in this case, therefore, the estimates applied relate mainly to the identification of the duration of the payment plan.
In addition to the above, judicial operations involve also collection efforts, i.e. foreclosure proceedings, which consist of several stages and apply to portfolios originated in corporate, banking, or real estate segments where cash flows are measured by means of the manager\u2019s analytical forecasts.
Reference should be made to the details given in Part E - \"Information on risks and related hedging policies\".
Measurement of the Expected Credit Loss (ECL) for receivables other than the Npl Segment and for debt securities
The determination of the ECL for financial assets measured at amortised cost is a complex process that requires the use of significant assumptions and estimates.
For financial assets for which no objective evidence of loss has been individually identified, i.e. for unimpaired (\"performing\") exposures, the impairment model involves the need to identify whether or not there has been a significant deterioration since the date of initial recognition of the exposure and the allocation to the three stages of credit risk under IFRS 9 of loans and debt securities classified as Financial assets at amortised cost and as Financial assets at fair value through other comprehensive income.
The IFRS 9 impairment model requires, in fact, that losses be determined with reference to the time horizon of one year for financial assets that have not undergone a significant deterioration in credit risk since initial recognition (Stage 1) rather than by reference to the entire life of the instrument if a significant deterioration or indicator of impairment has been established (Stage 2 and Stage 3).
It therefore follows that the calculation of the relevant expected losses requires an articulated estimation process that mainly concerns:
\u2022defining the parameters for a significant increase in credit risk, which are essentially based on models that consider qualitative and quantitative information for measuring the Probabilities of Default (PD) at the origination of financial assets and at the reporting date, as well as forward looking information;
\u2022the measurement of certain elements necessary for the determination of estimated future cash flows arising from non-performing loans: the expected debt collection times, the presumed realisable value of
any guarantees, the costs that it is deemed will be incurred to recover the credit exposure and lastly the likelihood of sale for positions for which there is a disposal plan.
Within the range of possible approaches to estimation models permitted by the relevant international accounting standards, the use of specific methodologies or the selection of certain estimation parameters may significantly influence the measurement of such assets. These methodologies and parameters are necessarily subject to a continuous updating process, also in light of the historical evidence available, with the aim of refining the estimates to better represent the estimated realisable value of the credit exposure. In order to cope with the uncertainty characterising the macroeconomic context and to take due account of risks that are not adequately captured by the valuation models in use, the Group resorts to prudential adjustments in determining the expected loss (referred to as \u201coverlays\u201d). The assessments performed with regard to the quantification of management overlays support the appropriateness of the measures put in place; the amount of ECL introduced through post-model adjustment was conservative compared to the sensitivity and stress analyses performed on the portfolio.
For more information on the methods and models used to determine the ECL, refer to the explanations given in paragraph \u201c2.3 Measurement of expected credit losses\u201d contained in the \"Credit risk\" section of \"Part E - Information on risks and related hedging policies\u201d of these Notes to the Consolidated Financial Statements.
Estimate of provisions for risks and charges
The companies making up the Group are party to certain types of litigation and are also exposed to numerous contingent liabilities. The complexities of the specific situations underlying the pending litigations, together with possible interpretation issues, require in certain circumstances significant judgement in estimating the liabilities that may arise upon settlement of the pending litigations. The difficulties of assessment affect both the an and the quantum, as well as the timing of the eventual manifestation of the liability, and are particularly evident when the proceedings initiated are at an early stage. These circumstances make the valuation of contingent liabilities difficult. As a result, the classification of contingent liabilities and the consequent valuation of the necessary provisions are sometimes based on non-objective elements of judgement and require the use of even complex estimation procedures.
Specifically, the Group recognises a liability when:
\u2022a legal or constructive obligation exists as a result of a past event;
\u2022it is likely that it will be necessary to spend resources which could generate economic benefits to settle the obligation;
\u2022the amount of the obligation can be reliably estimated.
Should all these conditions not be met, no liability is recognised.
The amount recognised as a provision represents the best estimate of the expense required to meet the obligation and reflects the risks and uncertainties regarding the facts and circumstances in question.
Where the cost deferral is significant, the amount of the provision is determined as the present value of the best estimate of the cost to settle the obligation. In this case a discount rate is used that reflects current market assessments.
The provisions made are periodically reviewed and, if necessary, adjusted to reflect the best current estimate. When the review finds that the cost is unlikely to be incurred, the provision is reversed.
The provisions for risks and charges on commitments and guarantees granted include the provisions for credit risk set aside for loan commitments and the other guarantees granted that fall within the scope of the impairment rules in IFRS 9. As a general rule, in this case the Bank adopts the same methods for allocating items to three credit risk Stages and calculating expected credit losses as the ones described for financial assets measured at amortised cost or at fair value through other comprehensive income.
Estimated impairment of goodwill posted
In accordance with IAS 36, goodwill must be impairment tested at least annually, to check that the value can be recovered. IAS 36 also requires, moreover, at each reporting date, including, therefore, the interim reports, an analysis aimed at identifying the presence of any loss indicators (termed \"Trigger Events\") upon the occurrence of which an impairment test must be carried out. The recoverable value is the greater of Value in Use and fair value, net of the costs of sale. As at 31 December 2023, goodwill amounts to 38,0 million Euro and is fully allocated to the Cash Generating Unit (CGU) \"Npl Segment\".
For the purposes of estimating the recoverable amount, the Group proceeded to determine the value in use by estimating both future cash flows in the explicit forecast period (determined based on the 2024-2026 economic
and equity projections for the CGU under analysis, as approved by the Parent company's Board of Directors on 8 February 2024) and the Terminal Value. In a similar fashion, the Group also estimated the discounting rate of future cash flows previously estimated. The discounting rate has been determined by the Group using the \u201cCapital Asset Pricing Model\u201d (CAPM).
The results of the impairment test conducted at 31 December 2023 led to the confirmation of the recoverability of the carrying amount.
As regards details of the impairment test conducted on goodwill at 31 December 2023, we would refer you to the more detailed information given in \"Part B - Information on the Consolidated Statement of Financial Position, Assets\", \"Section 10 - Intangible assets - Item 100\", Paragraph \"10.3 Other information\" of these Notes to the Consolidated Financial Statements.
Assessment in respect of the potential recovery of Deferred Tax Assets (DTAs)
Assets recognised in the Financial Statements include Deferred Tax Assets (DTAs) mainly generated by temporary differences between the date certain business costs are recognised in the income statement and the date on which the same costs may be deducted, rather than arising from tax loss carry-forwards.
In accordance with accounting standard IAS 12, referred to in the \"Group Impairment Policy\", a tax asset can only be recognised to the extent that it is probable that future taxable income will be available to allow for its recoverability.
Recognition of these assets and their subsequent maintenance therefore presupposes an assessment of the likelihood of their recovery. This assessment is not carried out for deferred tax assets pursuant to Law No. 214 of 22 December 2011, which can be transformed into tax credits in the event of the recognition of a \"statutory loss\", a \"tax loss\" for IRES tax purposes and a \"negative net production value\" for IRAP tax purposes, and for which the relative recovery is therefore certain regardless of the ability to generate future income.
For the remaining tax assets that cannot be transformed into tax credits, the judgement of their likelihood is supported by a valuation exercise of recoverability (referred to as the \u201cprobability test\u201d) characterised by significant elements of complexity or subjectivity. Based on the provisions of IAS 12 and the considerations made by ESMA in its paper of 15 July 2019, the aforementioned assessment of recoverability requires a careful reconnaissance of all evidence supporting the likelihood of having sufficient taxable income in the future, also taking into account the circumstances that generated the tax losses, which should be traced back to clearly identified causes that are deemed to be non-repeatable in the future on a recurring basis.
With reference to the recoverability of deferred tax assets recognised at 31 December 2023 other than those transformable pursuant to Law 2014/2011, based on the Group\u2019s estimated future taxable income, to be deemed confirmed in light of the results at 31 December 2023, no elements have emerged that could lead to deeming the DTAs in question, amounting to a total of 238,8 million Euro, to be unlikely for recovery. The aforementioned DTAs have therefore been deemed recoverable, albeit over a medium-term time horizon. Specifically, on the basis of the assessments performed and applying conservative hypotheses, with particular reference to the estimating of future income, out of the overall total of 238,8 million Euro, the 144,7 million Euro portion attributable to Law 214/2011 (equal to 60,6% of the total DTA) will be reversed by 2028 due to express regulatory provision. The portion referring to prior tax losses and aid for economic growth (\u201cACE\u201d) surpluses, totalling 41,1 million Euro (or 17,2% of the total DTA) should be fully recovered from 2026 to 2032 (of which approximately 30 million Euro by 2028). The remaining 53,1 million Euro refers mainly to financial assets measured at fair value with an impact on other comprehensive income (FVOCI) and is therefore related to the performance of the related reserve. The uncertainty is also confirmed regarding the recoverability of the DTAs relating to the subsidiary Cap.Ital.Fin. realised mainly before the entry into the tax consolidation, which therefore, out of prudence, have not been recorded for a total of 2,6 million Euro.
Coming into effect of new accounting standards
Below are the new accounting standards or amendments to existing standards approved by the IASB, as well as new interpretations or amendments to existing ones published by the IFRIC, with separate disclosure of those applicable in the financial year 2023 from those that can be adopted in subsequent financial years but also reporting the changes made in 2023.
IASs/IFRSs and related SIC/IFRIC interpretations endorsed and to be applied as mandatory for the preparation of the 2023 Consolidated Financial Statements
Regulation (EU) No 2036 of 19 November 2021 - IFRS 17 \"Insurance Contracts\" and No 1491 of 8 September 2022 - Amendments to IFRS 17 \"Insurance Contracts: Initial application of IFRS 17 and IFRS 9 - Comparative Information\" (incorporated into Regulation (EU) No 1803/2023)
The new accounting standard IFRS 17 governs the accounting treatment of insurance contracts; the standard was amended on 25 June 2020 to simplify its implementation and disclosure of financial performance, as well as to postpone the first application of IFRS 17 and make it concurrent with the adoption of IFRS 9.
Finally, on 9 December 2021, an amendment to the transition rules to IFRS 17 was also issued for entities that simultaneously apply the transition to IFRS 9.
Regulation (EU) No 357 of 2 March 2022 - Amendments to IAS 1 \"Presentation of Financial Statements\" and IFRS Practice Statement 2 (incorporated into Regulation (EU) No 1803/2023)
The purpose of these amendments is to provide guidelines and examples in the application of relevance and materiality judgements to accounting policy disclosures.
Regulation (EU) No 357 of 2 March 2022 - Amendments to IAS 8 \"Accounting Policies, Changes in Accounting Estimates and Errors\" (incorporated in Regulation (EU) No 1803/2023)
The purpose of the amendment is to distinguish the concepts of \"accounting policies\" and \"accounting estimates\" by introducing a definition of an accounting estimate, which was previously not provided for. This specification is relevant in view of the different accounting regime for the two cases.
Regulation (EU) No 1392 of 11 November 2022 - Amendments to IAS 12 \"Deferred tax related to assets and liabilities arising from a single transaction\" (incorporated into Regulation (EU) No 1803/2023)
These amendments narrow the scope of the exemption under IAS 12 for transactions that give rise to equal taxable and deductible temporary differences upon initial recognition. The amendment is particularly relevant for deferred taxes on transactions such as leasing and decommissioning obligations.
Regulation (EU) No 2468 of 8 November 2023 - Amendments to IAS 12 \"International Tax Reform - Pillar Two Model Rules'\"
This follows the publication by the OECD, in December 2021, of a set of rules through which a two-pillar tax model (the Pillar One and Two).
In particular, Pillar Two introduces an overall minimum tax rate of 15% in each jurisdiction where large companies operate.
The changes introduced allow for the non-recognition of deferred taxation that would result from the implementation of the Pillar Two Framework, as well as some additional disclosure requirements for the companies concerned.
It should be noted that the accounting standards, amendments and interpretations outlined above have not had any impact on the Group; in particular, it should be noted that the Banca Ifis Group does not hold insurance products and does not fall within the scope of application of the so-called \"Pillar Two\", affecting matters that are not relevant to the Group or certain clarifications on how to interpret aspects contained in the accounting standards and related disclosures on accounting policies.
Standards issued and endorsed but whose application starts after 31 December 2023
Below is a list of the new international accounting standards or amendments to them, already endorsed by the European Commission, which are of mandatory application, but starting from a date that falls after the reference date of these Consolidated Financial Statements. The Group does not expect any significant impact deriving from the adoption of the following interpretations and amendments of existing international accounting standards to be material:
\u2022Lease Liabilities in a Sale and leaseback transaction (Amendments to IFRS 16) (from 1 January 2024);
\u2022\u201cAmendments to IAS 1 Non-current Liabilities with Covenants\u201d (from 1 January 2024).
Standards issued but not yet approved and effective
The following are the new international accounting standards or amendments to them, not yet endorsed by the European Commission, which are mandatory from a date that falls after the reference date of these Consolidated Financial Statements. The Group does not expect any significant impact deriving from the adoption of the following interpretations and amendments of existing international accounting standards to be material:
\u2022\u201cIFRS 14 Regulatory deferral accounts\u201d (application subject to the conclusion of the endorsement process, which is, at the date of this document, suspended pending the new accounting standard on \u201crate-regulated activities\u201d);
\u2022\u201cAmendments to IFRS 10 and IAS 28 Sale or contribution of assets between an investor and its associate or joint venture\u201d (deferred application until completion of the IASB project on the equity method);
\u2022\"Amendments to IAS 1 Classification of liabilities as current or non-current\" (from 1 January 2024);
\u2022\"Amendment to IAS 7 and IFRS 9 Supplier Finance Arrangements\" (from 1 January 2024);
\u2022\"Amendment to IAS 21 Lack of Exchangeability\" (from 1 January 2025).
Deadlines for the approval and publication of the Financial Statements
Pursuant to Article 154-ter of Italian Legislative Decree No. 59/98 (Consolidated Law on Finance), the Parent company must approve the Separate Financial Statements and publish the Annual Financial Report, including the draft Separate Financial Statements, the Directors' Report, and the declaration as per Article 154-bis, paragraph 5. The Board of Directors approved the Parent company\u2019s draft separate financial statements and the consolidated financial statements on 07 March 2024; the Parent company\u2019s separate financial statements will be submitted to the Shareholders\u2019 Meeting to be held on 18 April 2024 at first call for approval.
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Deadlines for the approval and publication of the Financial Statements
Pursuant to Article 154-ter of Italian Legislative Decree No. 59/98 (Consolidated Law on Finance), the Parent company must approve the Separate Financial Statements and publish the Annual Financial Report, including the draft Separate Financial Statements, the Directors' Report, and the declaration as per Article 154-bis, paragraph 5. The Board of Directors approved the Parent company\u2019s draft separate financial statements and the consolidated financial statements on 07 March 2024; the Parent company\u2019s separate financial statements will be submitted to the Shareholders\u2019 Meeting to be held on 18 April 2024 at first call for approval.
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A.2 - Main items of the financial statements
1 - Financial assets measured at fair value through profit or loss
Classification criteria
This category comprises financial assets other than Financial assets measured at fair value through other comprehensive income and Financial assets measured at amortised cost. Specifically, this line item includes:
\u2022financial assets held for trading, essentially consisting of debt and equity securities as well as the positive amount of derivative contracts held for trading;
\u2022financial assets designated at fair value, i.e. non-derivative financial assets designated as such on initial recognition if the relevant conditions are met. At initial recognition, an entity may irrevocably designate a financial asset as measured at fair value through profit or loss if, and only if, doing so would eliminate or significantly reduce a measurement or recognition inconsistency.
\u2022financial assets mandatorily measured at fair value, consisting of financial assets that are not eligible for the measurement at amortised cost or fair value through other comprehensive income based on the relevant cash flow characteristics. Specifically, this category includes:
\u2013debt instruments, securities and loans without cash flows that are solely payments of principal and interest consistent with a \"basic lending arrangement\" (so-called \"SPPI test\" failed);
\u2013UCITS units;
\u2013equity instruments for which the Group elects not to use the option under the standard to measure them at fair value through other comprehensive income (so-called \u201cOCI Option\u201d).
Derivative contracts include those embedded in complex financial instruments if the host contract is not a financial asset falling within the scope of IFRS 9, which are recognised separately if:
\u2022the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract;
\u2022a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative;
\u2022the hybrid instrument they are part of is not measured at fair value with the relevant changes recognised in profit or loss.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured
at fair value through profit or loss to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through other comprehensive income). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. In this case, the effective interest rate of the reclassified financial asset is calculated based on its fair value at the reclassification date, which is considered to be the date of initial recognition for the stage allocation for impairment purposes.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, at the date of disbursement for loans and at inception in the case of derivative contracts. At initial recognition, financial assets are measured at fair value, which is normally equal to the price paid excluding the expenses and income directly attributable to the instrument, which are recognised in profit or loss.
Measurement criteria
Even after initial recognition, financial assets are measured at fair value, and the impact of the application of this method is recognised through profit or loss.
The fair value of the financial instruments included in this portfolio is calculated based on quoted prices in active markets, prices provided by market participants, or internal valuation models generally used for pricing financial instruments that take into account all relevant risk factors and are based on observable market data.
In the case of financial assets not quoted in an active market, the cost method is used as an approximation of fair value exclusively on a residual basis and in limited circumstances, that is if all the other previously mentioned measurement methods are not applicable.
Interest is shown under item \"10. Interest receivable and similar income\u201d.
Gains and losses from trading and valuation gains and losses from the trading portfolio, including derivatives associated with financial assets/liabilities designated at fair value, are recognised in the income statement under item \u201c80. Net profit (loss) from trading\u201d. The same economic effects relating to financial assets designated at fair value and those mandatorily measured at fair value are recorded under item \"110. Net result of other financial assets and liabilities measured at fair value through profit or loss\", under \"a) financial assets and liabilities measured at fair value\u201d and \u201cb) other financial assets mandatorily measured at fair value\u201d.
Derecognition criteria
Financial assets are derecognized only when the contractual rights to the cash flows expire or when the assets are disposed of if the disposal resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
2 - Financial assets measured at fair value through other comprehensive income
Classification criteria
This category comprises financial assets that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u201cHTC&S - Held to Collect and Sell\u201d Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
In addition, this line item includes equity instruments not held for trading for which at initial recognition the entity used the option to measure them at fair value through other comprehensive income not to be reclassified to profit or loss (so-called \"OCI Option\").
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured at fair value through other comprehensive income to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. If the asset is reclassified from the category concerned to amortised cost, the fair value of the financial asset at the reclassification date is adjusted by the accumulated gain (loss) presented in the valuation reserve. If the asset is reclassified to fair value through profit or loss, the accumulated gain (loss) previously recognised within the valuation reserve is reclassified from equity to profit or loss.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. These assets are initially recognised at fair value, including transaction costs directly attributable to the instruments, if any.
Measurement criteria
After initial recognition, the assets measured at fair value through other comprehensive income that are not equity securities are measured at fair value, recognising the impact of the application of amortised cost, impairment, and any exchange rate changes through profit or loss. Gains and losses resulting from changes in fair value are recognised under a dedicated equity reserve until the financial asset is transferred: then, accrued profits and losses are reclassified to profit or loss.
The equity instruments the Group elected to classify within this category are measured at fair value, and the amounts recognised through equity (Statement of comprehensive income) are not subsequently reclassified to profit or loss - including in the event of their disposal. The relevant dividends represent the only component of the equity securities concerned that is recognised through profit or loss.
The fair value is calculated on the basis already described for financial assets measured at fair value through profit or loss.
In the case of financial assets measured at fair value through other comprehensive income that are either debt securities or receivables, at each reporting date, including interim reporting dates, the Bank assesses whether a significant increase in credit risk (impairment) has occurred pursuant to IFRS 9, recognising an impairment loss to cover the expected credit losses through profit or loss.
Conversely, equity securities are not tested for impairment.
Derecognition criteria
Derecognition of financial assets measured at fair value through comprehensive income occurs when contractual rights to cash flows expire or if the assets are sold but only if the sale has resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
3 - Financial assets measured at amortised cost
Classification criteria
This category includes financial assets (specifically loans and debt securities) that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows (\"HTC - Held to Collect\" Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration
for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
Specifically, if the above technical requirements are met, this line item includes:
\u2022loans and advances to banks, with the exception of loans and advances on demand (which are classified under \"Cash and cash equivalents\");
\u2022receivables due from customers, largely consisting of:
\u2013demand advances to customers as part of factoring operations vis-\u00e0-vis a receivables portfolio factored with recourse and still recognised in the seller\u2019s statement of financial position, or vis-\u00e0-vis receivables factored without recourse, providing no contractual clauses that eliminate the conditions for their recognition exist;
\u2013loans to customers deriving from mortgages or loans extended as part of corporate banking operations;
\u2013repurchase and reverse repurchase agreements;
\u2013receivables arising from finance leases;
\u2013salary- or pension-backed loans or payment delegations;
\u2013a portfolio of non-performing loans acquired from third-party operators (referred to as \u201cPOCI\u201d);
\u2022debt securities acquired through subscription or private placement, with fixed or determinable payments, not quoted in active markets.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, which are expected to be very infrequent, the financial assets may be reclassified from the category measured at amortised cost to one of the other two categories under IFRS 9 (Financial assets measured at fair value through other comprehensive income or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. Gains or losses arising from the difference between the amortised cost of the financial asset and the relevant fair value are measured through profit or loss if the asset is reclassified to Financial assets measured at fair value through profit or loss or, if it is reclassified to Financial assets measured at fair value through other comprehensive income, through equity, within the specific valuation reserve.
Recognition criteria
These financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. At initial recognition, the assets are measured at fair value, including transaction income or costs directly attributable to the asset. Costs meeting these characteristics, but to be reimbursed by the debtor or falling under normal internal administrative costs, are excluded.
Repurchase agreements or reverse repurchase agreements are recognised as funding or lending transactions. Specifically, repurchase agreements are recognised as payables for the amount received, while reverse repurchase agreements are recognised as receivables for the amount paid.
Measurement criteria
After initial recognition, receivables are measured at amortised cost, which is equal to the initial amount minus/plus principal repayments, impairment losses/reversals of impairment losses, and amortisation calculated using the effective interest method. The effective interest rate is calculated as the rate at which the present value of expected cash flows for the principal and interest is equal to the amount of the loan granted, including any costs/revenues directly attributable to the financial asset. This finance-based accounting method allows to spread the economic effect of costs/revenues over the expected residual life of the receivable.
The amortised cost method usually does not apply to short-term loans, as the effect would be immaterial. These are measured instead at their acquisition cost. A similar criterion applies to loans without a definite payment date or revocable loans. Furthermore, newly acquired distressed retail loans are measured at cost until the Bank has started taking action to collect the debt, as specified later on in the part concerning non-performing exposures in the Npl Segment.
At each reporting date, including interim reporting dates, the Group estimates the impairment of these assets in accordance with the impairment rules of IFRS 9.
The aforementioned assets are in fact examined with the aim of estimating the expected losses in value related to credit risk (\u201cECL\u201d - \u201cExpected Credit Losses\u201d). These losses are recognised in the income statement under item
\"130. Net credit risk losses/reversals\u201d. If it is found that there is no reasonable expectation of recovery, the gross exposure is written off: in such a case, the gross exposure is reduced by the amount considered unrecoverable, offset by the reversal of the provision to cover expected losses and impairment losses in the income statement, for the portion not covered by the provision.
In more detail, the impairment model, as described in detail in paragraph \u201c16 - Other Information\u201d of this Section A.2, provides for the classification of assets into three distinct \"Stages\" (Stage 1, Stage 2, Stage 3), depending on the evolution of the debtor's creditworthiness, to which correspond different criteria for measuring expected losses:
\u2022Stage 1: unimpaired (performing) financial assets for which no significant deterioration in credit risk has been observed since initial recognition or for which the credit risk is considered low. Impairment is based on an estimate of expected loss with a time horizon of one year;
\u2022Stage 2: unimpaired (performing) financial assets that have experienced a significant deterioration in credit risk since initial recognition (SICR - \u201cSignificant Increase in Credit Risk\u201d). Impairment is based on an estimate of the expected loss over the entire remaining life of the financial asset;
\u2022Stage 3: impaired financial assets for which there is objective evidence of impairment and which are assessed on the basis of an estimate of the expected loss over the life of the instrument.
For performing assets, expected losses are determined according to a collective process based on certain risk parameters represented by the probability of default (PD), the loss given default (LGD) and the exposure value (EAD).
For impaired assets, impairment losses are quantified on the basis of an analytical valuation process according to homogeneous risk categories - aimed at determining the present value of expected future recoverable cash flows, discounted on the basis of the original effective interest rate.
Impaired assets include exposures that have been attributed the status of non-performing, unlikely to pay or past-due/overdrawn for more than ninety days according to the definitions established by current supervisory regulations (Bank of Italy Circular No. 272 \"Accounts Matrix\") and recalled by Bank of Italy Circular No. 262, as they are considered consistent with the accounting rules set forth by IFRS 9 in terms of objective evidence of impairment.
The projected cash flows also take into account expected recovery times and the presumed net realisable value of any guarantees.
The original value of the financial assets is reinstated in subsequent years if the credit quality of the exposure improves compared to that which led to the previous write-down. The write-back is recorded in the income statement under the same heading (\"130. Net credit risk losses/reversals\") and, in any event, may not exceed the amortised cost that the asset would have had in the absence of previous adjustments.
Purchased or Originated Credit Impaired (POCI)
\u201cPurchased or Originated Credit Impaired (POCI) Financial Assets\u201d means the exposures that were impaired at the date they were acquired or originated.
POCI financial assets include also the exposures acquired as part of sales (of either individual assets or portfolios) and business combinations.
As previously mentioned, interest is accounted for by applying a credit-adjusted effective interest rate, i.e. the rate that, upon initial recognition, discounts all the asset's estimated future cash receipts at amortised cost considering also lifetime expected credit losses.
The Bank regularly reviews said expected credit losses, recognising impairment losses or gains through profit or loss. Favourable changes in lifetime ECLs are recognised as an impairment gain, even if said lifetime ECLs are lower than those incorporated into cash flow estimates at initial recognition.
\"Purchased or Originated Credit Impaired Financial Assets\" are usually allocated to Stage 3 at initial recognition.
A subsequent improvement in the counterparty's creditworthiness, which may be reflected in the present value of cash flows, shall cause the exposure to be classified within Stage 2.
These assets shall never be allocated to Stage 1, as the expected credit loss must always be calculated over a time horizon equal to their remaining useful life, whereas IFRS 9 requires an ECL estimated over a 12-month horizon for Stage 1 assets.
The Npl Segment's receivables all qualify as POCI financial assets (POCIs are the Segment's core business) and are recognised and assessed through the following steps:
\u2022at the time of purchase, receivables are recognised by allocating the portfolio's purchase price among the individual receivables it consists of through the following steps:
\u2013recognition of the individual receivables at a value equal to the contract price, which is used for the purposes of reporting to the Central Credit Register;
\u2013after verifying the documentation, if provided in the contract, the Bank returns the positions lacking documentation or beyond the statute of limitations to the seller, and measures the fair value of receivables which actually exist and can be collected; finally, after sending a notice of assignment to the debtor, the Bank can start taking action to collect the receivable;
\u2013once the collection process begins, receivables are measured at amortised cost using the effective interest rate method (the \u201cEIR\u201d or \u201cTIR\u201d);
\u2013the effective interest rate is calculated on the basis of the price paid, the transaction costs, if any, and the estimated cash flows and collection time calculated using either proprietary models or analytical estimates made by managers;
\u2013the effective interest rate as set out in the previous point is unchanged over time;
\u2013at the end of each year, interest income accrued on the basis of the original effective interest rate is recognised under Interest Income. Said interest is calculated as follows: Amortised Cost at the beginning of the year x IRR/365 x days in the year;
\u2013in addition, at the end of each financial year, the expected cash flows for each position are re-estimated;
\u2022should events occur (higher or lower revenues realised or expected compared to forecasts and/or a change in collection times) which cause a change in the amortised cost (calculated by discounting the new cash flows at the original effective rate compared to the amortised cost in the financial year), this change is also recognised under \"Credit risk losses/reversals\" on the income statement.
Derecognition criteria
Financial assets measured at amortised cost are derecognised when all contractual rights over the cash flows have expired or if they are assigned but only when all relevant risks and rewards have been substantially transferred. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Finally, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Specifically in respect of non-performing exposures, they shall be derecognised when considered unrecoverable and the Group forfeits the legal right to collect. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognitions without a forfeiture of the right to collect the receivable (i.e. \u201cwrite-off\u201d), to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, the Group identifies the exposures to be derecognised that have all of the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
Derecognitions are directly recorded under \"Net credit risk losses/reversals\" to the extent of the unadjusted remaining portion, and are recognised as a reduction of the principal. Partial or complete reversals of previous impairment losses are recognised as a reduction of \u201cNet credit risk losses/reversals\u201d.
In some cases, throughout the life of the financial assets concerned, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative and
quantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons or forbearance measures due to the counterparty's financial difficulties;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
4 - Hedge accounting
Classification criteria
With reference to hedging, the Banca Ifis Group has chosen to adopt the provisions of IFRS 9 for first-time application and not to avail itself of the option, provided by the same standard, to apply the hedge accounting rules dictated by IAS 39, in the version endorsed by the European Commission (the \u201ccarved out\u201d version), with the exception of the specific cases provided for in IFRS 9 (par. 6.1.3) and not governed by the same standard.
Risk hedging transactions are intended to neutralise, from an accounting point of view, potential recognisable losses on a particular financial instrument or group of financial instruments, attributable to a particular risk, by means of recognisable gains on a different financial instrument or group of financial instruments should that particular risk actually arise.
Only instruments involving a counterparty outside the Group can be designated as hedging instruments.
The only type of hedge used by the Group at 31 December 2023 is the specific fair value hedge (\"micro\" fair value hedge), which is intended to hedge the exposure to changes in the fair value of a balance sheet asset or liability attributable to a particular risk and, in particular, from changes in interest rates.
A derivative instrument may be considered to be a hedging instrument if there is formalised documentation of the unique relationship to the hedged item and if it is effective at the time the hedge commences and, prospectively, over the life of the hedge.
At the start of the hedging relationship there must be a formal designation and documentation of the hedging relationship, the company's risk management objectives, and the hedging strategy. This documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how to assess the effectiveness of the hedging instrument in offsetting the exposure to changes in the fair value of the hedged item.
Recognition criteria
Derivative hedging instruments are recognised at fair value, on the date the relevant contracts are entered into, and are classified as assets under item \"50. Hedging derivatives\" or on the liabilities side of the balance sheet under item \"40. Hedging derivatives\u201d depending on whether the value is positive or negative.
Measurement criteria
After initial recognition, hedging derivatives continue to be measured at fair value. Specifically, in the case of fair value hedges, the change in the fair value of the hedged item is offset by the change in the fair value of the hedging instrument. This offsetting is recognised through the recognition in the income statement of changes in value, referring both to the hedged item (as regards changes produced by the underlying risk factor) and to the hedging instrument. Any difference, representing the partial ineffectiveness of the hedge, consequently constitutes the net economic effect.
The effectiveness of the hedge depends on the extent to which changes in the fair value of the hedged instrument are offset by those of the hedging instrument. Therefore, effectiveness is appreciated by comparing the above-mentioned variations, taking into account the intent pursued at the time the hedge was implemented. Effectiveness occurs when changes in the fair value of the hedging financial instrument almost entirely neutralise changes in the hedged instrument for the hedged risk element.
Effectiveness is assessed at each balance sheet or interim reporting date using prospective tests, which justify the application of hedge accounting by demonstrating the expected effectiveness based on limits defined internally by the Group.
If the tests do not confirm the effectiveness of the hedge, hedge accounting is discontinued, the hedging derivative contract is reclassified as a trading instrument and the hedged financial instrument regains the valuation criterion corresponding to its balance sheet classification. If the hedged asset or liability is measured at amortised cost, the higher or lower value resulting from the measurement of the hedged asset or liability at fair value due to the hedge becoming ineffective is recognised in the income statement using the effective interest rate method.
In addition, the accounting for outstanding fair value hedges ceases prospectively in the following cases:
\u2022the hedging instrument matures, is terminated or exercised;
\u2022the hedged item is sold, expires or is refunded;
\u2022the decision is made to revoke the designation.
5 - Equity investments
Classification criteria
This item includes interests held in associates or jointly controlled companies, which are accounted for using the equity method.
Associated companies are considered to be non-controlled companies in which significant influence is exercised. Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights (including \u201cpotential\u201d voting rights) and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Recognition criteria
The initial recognition of financial assets classified in this category takes place on the settlement date at cost, including any goodwill paid at the time of acquisition, which is therefore not subject to separate, independent recognition.
Measurement criteria
Equity investments are measured using the equity method. This method requires that the initial carrying amount is subsequently increased or decreased to recognise the Group's share of the profits and losses of the investees realised after the acquisition date. Dividends received from an investee are deducted from the carrying amount of the investment.
If it is necessary to make value adjustments arising from changes in the investee company's equity that it did not recognise in the income statement (e.g., changes arising from the fair value measurement of \"Financial assets measured at fair value through other comprehensive income\", the measurement of actuarial gains/losses of defined benefit plans), the Group's share of these changes is recognised directly in equity item \"120. Valuation reserves\u201d.
In applying the equity method, the most recent available financial statements of the associate/jointly controlled entity are used, appropriately adjusted for any significant events or transactions that occurred between the last available financial statements of the investee and the reference date of the Consolidated Financial Statements. If the investee company uses accounting principles that differ from those used by the Group, changes are made to the financial statements of the investee.
If there is objective evidence that an equity investment may be impaired, the entity shall estimate its recoverable amount, taking into account the present value of the future cash flows that it could generate, including from its ultimate disposal. If the recoverable amount is less than the carrying amount, the difference is recognised in profit or loss.
If the reasons for the impairment no longer exist as a result of an event that occurred after the recognition of the impairment loss, this is reversed through profit or loss.
Derecognition criteria
Equity investments are derecognised when there is a sale that transfers substantially all the risks and rewards associated with them.
In the presence of a situation that results in the loss of significant influence or joint control, any remaining equity investment is reclassified to the financial asset portfolios required by IFRS 9.
6 - Property, plant and equipment
Classification criteria
The item includes property, plant and equipment held for investment purpose in accordance with IAS 40 as well as those for functional use in accordance with IAS 16.
All property (either fully owned or leased) held by the company for the purposes of obtaining rent and/or a capital gain fall under investment property.
More specifically, property, plant and equipment for functional use include:
\u2022land;
\u2022buildings;
\u2022furniture and accessories;
\u2022electronic office machines;
\u2022various machines and equipment;
\u2022vehicles;
\u2022leasehold improvements on third-party property.
Those are physical assets held for use in production, in providing goods and services or for administrative purposes, and that are expected to be used for more than one fiscal year.
This item also includes the rights of use acquired through leases and relating to the use of property, plant and equipment.
Under IFRS 16, a lease is a contract, or part of a contract, that, in exchange for a fee, transfers the right to use an asset (the underlying asset) for a period of time.
Finally, the item includes leasehold improvements on third-party property and expenses relating to identifiable and separable asset. Normally, this kind of investment is sustained in order to make a property rented from third parties suitable for use.
Recognition criteria
Property, plant and equipment are initially recognised at cost, including all directly attributable costs connected to the acquisition or to bring the asset into use.
Subsequently incurred expenses are added to the carrying amount of the asset, or recognised as separate assets, if they are likely to yield future economic benefits exceeding those initially estimated and if the cost can be measured reliably; otherwise, they are recognised in profit or loss.
For tangible assets represented by rights of use in accordance with IFRS 16, the initial recognition value corresponds to the sum of the lease liability (present value of future lease payments to be paid over the lease term), lease payments made prior to or on the effective date of the lease, initial direct costs, and any costs for dismantling or restoring the asset underlying the lease.
Measurement criteria
Property, plant and equipment and investment property are measured at cost, net of any depreciation or impairment losses.
Property, plant and equipment with a finite useful life are systematically depreciated on a straight-line basis over their useful life, with the exception of that described below.
Property, plant and equipment with an indefinite useful life, whose residual value is equal to or higher than their carrying amount, are not depreciated.
For accounting purposes, land and buildings are treated separately, even when acquired together. Land is not depreciated, as it has an indefinite useful life. Where the value of land is included in the value of a building, the former is considered separately by applying the component approach. The separate values of the land and the building are calculated by independent experts in this field and only for entirely owned properties.
The useful life, residual amounts and depreciation methods of property, plant and equipment are reviewed at the closure of each year and, if expectations are not in line with previous estimates, the depreciation rate for the current year and subsequent ones is adjusted.
If there is objective evidence that an individual asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
When an impairment loss is reversed, the new carrying amount cannot exceed the net carrying amount that would have been measured if no impairment loss had been recognised on the asset in previous years.
The usually estimated useful lives are the following:
\u2022buildings:not exceeding 34 years;
\u2022furniture:not exceeding 7 years;
\u2022electronic systems:not exceeding 5 years;
\u2022other:not exceeding 5 years;
\u2022improvements on third party property/leasehold improvements:not exceeding 5 years.
With reference to the asset consisting of the right of use, recorded pursuant to IFRS 16, it is measured using the cost model in accordance with IAS 16 Property, plant and equipment; in this case, the asset is subsequently depreciated on a straight-line basis over the term of the lease contract and subject to an impairment test if impairment indicators emerge.
Derecognition criteria
Property, plant and equipment are derecognised from the statement of financial position on disposal or when they are withdrawn from use and no future economic benefits are expected from their disposal. Any profit/loss that arises at the time the asset is derecognised (calculated as the difference between the net carrying amount of the asset and the amount received) is recognised in the Income Statement when the item is derecognised.
The right of use deriving from lease contracts is derecognised from the statement of financial position at the end of the lease.
7 - Intangible assets
Classification criteria
Intangible assets are non-monetary assets, identifiable even though they lack physical substance, that meet the requirements of identifiability, control over a resource and existence of future economic benefits. Intangible assets mainly include goodwill and software.
Recognition criteria
Intangible assets initially are recognised in the statement of financial position at cost, i.e. the purchase price and any direct cost incurred in preparing the asset for use.
In particular, costs incurred internally for the development of software projects constitute intangible assets and are only capitalised if all of the following conditions are met:
\u2022the cost attributable to the development activity can be reliably determined;
\u2022there is the intention, the availability of financial resources and the technical capacity to make the asset ready for use or sale;
\u2022it can be demonstrated that the asset is able to produce future economic benefits. Capitalised software development costs include only those expenses incurred that can be directly attributed to the development process.
Measurement criteria
Subsequent to initial recognition, intangible assets with a finite useful life are recognised at cost less amortisation determined on the basis of their estimated useful life.
If there is objective evidence that a single asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
Intangible assets with an indefinite useful life, including goodwill, are recorded at cost less any impairment losses incurred. These assets are not depreciated, but only periodically checked for impairment with respect to the carrying amount.
At each year-end or interim reporting date, if there is evidence of impairment, an estimate of the asset's recoverable amount is made. The amount of the loss, recognised in the income statement, is equal to the difference between the asset's carrying amount and its recoverable amount.
With regard to goodwill, the adequacy of the carrying amount is periodically verified. In particular, whenever there is evidence of impairment, and in any case at least once a year, an impairment test is conducted. For this purpose, the cash-generating unit to which goodwill is to be allocated is identified. This unit represents the minimum level at which goodwill is monitored for internal management purposes and must not be greater than the operating Segment determined in accordance with IFRS 8.
The amount of the impairment, if any, is determined on the basis of the difference between the carrying amount of goodwill and its recovery value, if lower. This recoverable amount is equal to the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. Value in use is the present value of the future cash flows expected from the generating units to which goodwill has been allocated. The resulting value adjustments are recorded in the income statement under item \"270. Value adjustments of goodwill\u201d. No subsequent write-back is permitted.
Derecognition criteria
An intangible asset is derecognised from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss.
8 - Non-current assets and disposal groups
Non-current assets or groups of assets/liabilities for which a process of disposal has begun and their sale is considered highly probable are classified under the item of the assets \u201cNon-current assets and disposal groups\u201d and the item of the liabilities \u201cLiabilities associated with assets held for sale\u201d. With the exception of certain types of assets (e.g. financial assets coming under the scope of application of IFRS 9), for which IFRS 5 specifically establishes that the measurement criteria of the relevant accounting standard must be applied, these assets/liabilities are otherwise measured at the lower of carrying amount and their fair value net of selling costs.
Income and expenses (net of the tax effect) attributable to asset disposal groups held for sale or recognized as such during the year, are presented in the income statement in a separate item.
9 - Current and deferred taxes
Classification criteria
The items include current and deferred tax assets and current and deferred tax liabilities related to income taxes, respectively.
Current and deferred taxes, calculated in compliance with national tax laws, are recognised in profit or loss with the exception of items directly credited or debited to equity.
Current tax liabilities are shown in the statement of financial position gross of the relevant tax advances paid.
Deferred tax assets and liabilities are recognised in the statement of financial position at pre-closing balances and without set-offs, and are included in the items \u201cTax assets\u201d and \u201cTax liabilities\u201d, respectively, except when there is a legally enforceable right to set off current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which deferred tax liabilities or assets are expected to be settled or recovered.
Under the existing tax consolidation arrangements between the Group companies, the current corporate income tax (IRES) expense for the year is included in either Other assets or Other liabilities as receivables due from/payables due to the consolidating company, La Scogliera, in accordance with tax legislation.
Recognition and measurement criteria
Deferred tax assets and liabilities are calculated based on temporary differences\u2014without time limits\u2014between the value attributed to the asset or liability according to statutory criteria and the corresponding tax base, applying
the tax rates expected to be applicable for the year in which the tax asset will be realised, or the tax liability will be settled, according to theoretical tax laws in force at the realisation date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
\u2022when the deferred tax liabilities arise from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
\u2022when the timing of the reversal of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses to the extent that it is probable that they can be recovered, based on the ability of the company concerned or the Parent company, as a result of the \"tax consolidation\" option, to continue to generate taxable profit, except:
\u2022when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
\u2022in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
10 - Provisions for risks and charges
Classification criteria
Provisions for risks and charges in respect of commitments and guarantees granted
The sub-item of provisions for risks and charges under review includes the provisions for credit risk set aside for loan commitments and the other guarantees granted that fall within the scope of the impairment rules in IFRS 9. As a general rule, in this case the Bank adopts the same methods for allocating items to three credit risk stages and calculating expected credit losses as the ones described for financial assets measured at amortised cost or at fair value through other comprehensive income.
The aggregate item therefore also includes the provisions for risks and charges set aside for other types of commitments and guarantees granted that, because of their specific characteristics, they do not fall within the scope of the impairment rules in IFRS 9.
Provisions for pensions and similar obligations
Pension funds are established in implementation of company agreements and qualify as defined benefit plans under IAS 19. The liability relating to these plans and the related current service cost are determined on the basis of actuarial assumptions by applying the \u201cProjected Unit Credit Method\u201d, which involves projecting future outflows on the basis of historical statistical analyses and the demographic curve, and discounting these flows on the basis of a market interest rate. The contributions paid in each reporting period are treated as separate units, which are recognised and valued individually for the purpose of determining the final obligation. The rate used for discounting is determined on the basis of the market yields recorded on the valuation dates of bonds of leading companies, taking into account the average residual life of the liability. The present value of the obligation at the balance sheet date is also adjusted for the fair value of any plan assets.
Actuarial gains and losses (i.e. changes in the present value of the obligation resulting from changes in actuarial assumptions and adjustments based on past experience) are recognised in the statement of comprehensive income.
Other provisions
Other reserves for risks and charges include provisions for legal or employment-related obligations or disputes, including tax disputes, arising from a past event for which it is probable that economic resources will be disbursed to fulfil the obligations, provided a reliable estimate of the amount can be made.
Criteria for measurement and recognition of income components
Provisions for risks and charges consist of liabilities of uncertain amount or maturity and are recognised in the balance sheet if:
\u2022a legal or constructive obligation exists as a result of a past event;
\u2022it is likely that it will be necessary to use resources which could generate economic benefits to settle the obligation;
\u2022the amount of the likely future outlay can be reliably estimated.
The amount recognised as a provision represents the best estimate of the financial outlay required to settle the obligation at the reporting date and reflects the risks and uncertainties inherent in the facts and circumstances examined. Where the time element is significant, provisions are discounted using current market rates. The provision and the effect of discounting are recognised in the income statement under item \"200. Net allocations to provisions for risks and charges\u201d, as well as the increase in the provision due to the passage of time.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. When the use of resources, capable of producing economic benefits to meet the obligation, becomes improbable, the provision is reversed.
In addition, each fund is only used to meet those outgoings for which it was originally established.
If it is not considered probable that financial resources will be required to be disbursed to fulfil the obligation, no provision need be recognised in the financial statements; in such a case, adequate disclosure of the possible risk of loss is required in the notes to the financial statements, unless the likelihood of using resources is considered remote or the phenomenon is not material.
11 - Financial liabilities measured at amortised cost.
Classification criteria
The item includes payables due to banks and customers and debt securities issued and is made up of the various forms of interbank funding, as well as funding from customers and through outstanding bonds, net of any buybacks.
Also included are debts entered into by the lessee under finance leases, as well as repurchase and reverse repurchase agreements for deposits and securities lent with receipt of cash collateral at the lender's full disposal. Finally, operating debts related to the provision of financial services as defined in the Consolidated Banking Act and the Consolidated Finance Act are included.
Recognition criteria
The initial recognition of these liabilities occurs upon receipt of the amounts collected or settlement of the debt securities issued and is made on the basis of the relative fair value, which is normally equal to the amount collected or the issue price, increased by any additional costs/income directly attributable to the individual funding or issuance transaction and not reimbursed by the creditor counterparty.
Repurchase agreements with a repurchase obligation are recorded in the balance sheet as funding transactions for the amount collected in the spot market.
Lease payables are recognised on the basis of the present value of future instalments still to be paid over the contractual term discounted at the interest rate implicit in the transaction or, if not determinable, the marginal financing rate.
Measurement criteria
After initial recognition at fair value, these instruments are later measured at amortised cost, using the effective interest method.
The amortised cost method does not apply to short-term liabilities, as the effect of discounting would be insignificant.
Lease payables are revalued when there is a lease modification (i.e., a change in the perimeter of the contract), which is not accounted for/considered as a separate contract.
Derecognition criteria
Financial liabilities are derecognised when they are annulled, expired, extinguished or settled. The difference between the carrying amount and the acquisition cost is recognised in profit or loss.
Liabilities are derecognised also when previously issued securities are bought back, even if such instruments will be sold again in the future. Gains and losses from such derecognition are recognised in profit or loss when the buyback price is higher or lower than the carrying amount.
Subsequent sales of the company's own bonds on the market are considered as an issuance of new debt.
12 - Financial liabilities held for trading
Classification criteria
This item includes:
\u2022financial liabilities issued with the intention of repurchasing them in the short term;
\u2022liabilities that are part of a portfolio of financial instruments that are jointly managed and for which there is a proven strategy to achieve profits in the short term;
\u2022derivative contracts with a negative fair value and not designated as hedging instruments, including those linked to assets/liabilities designated at fair value through profit or loss.
Recognition criteria
Financial liabilities held for trading are initially recognised at the date of settlement in the case of liabilities for cash, and at inception in the case of derivative contracts.
Initial recognition is made on the basis of the fair value of the liability, normally equal to the amount collected, without considering transaction costs or income directly attributable to the instrument itself, which are charged directly to the income statement.
Measurement criteria
Even after initial recognition, financial liabilities held for trading are measured at fair value at the period closure, and the impact of the application of this method is measured through profit or loss. The fair value is calculated based on the same criteria as those used for financial assets held for trading.
Derecognition criteria
Financial liabilities held for trading are derecognised when the contractual rights to the related cash flows expire or when the financial liabilities are transferred with the transfer of substantially all risks and rewards of ownership.
13 - Financial liabilities designated at fair value
It should be noted that the Group does not engage in such operations.
14 - Foreign currency transactions
Initial recognition
At initial recognition, foreign currency transactions are recognised in the money of account, applying the exchange rate at the date of the transaction.
Subsequent recognitions
At each reporting date, foreign currency monetary assets and liabilities are translated using the closing exchange rate.
Non-monetary assets and liabilities recognised at historical cost are translated at the historical exchange rate, while those measured at fair value are translated using the period-end rate. Any exchange differences arising from the settlement of monetary elements or their translation at exchange rates different from those used at initial recognition or in previous financial statements are recognised in profit or loss in the period in which they arise, excluding those relating to financial assets measured at fair value through other comprehensive income, as they are recognised in equity.
15 - Insurance assets and liabilities
It should be noted that the Group does not engage in such operations.
16 - Other information
Cash and cash equivalents
This item comprises legal tender, including foreign banknotes and divisional currencies, current accounts and \"sight\" deposits with central banks, with the exception of compulsory reserves, as well as \"sight\" claims on banks. The latter definition includes availability that can be withdrawn at any time without notice or with 24 hours or one working day's notice.
The item is recorded at face value. For foreign currencies, the face value is converted into Euro at the closing exchange rate at the end of the financial year.
Other assets
This item includes assets that cannot be allocated to other balance sheet asset items. The item may include but is not limited to:
\u2022gold, silver and precious metals;
\u2022accrued income other than that to be capitalised on the relevant financial assets, including that arising from contracts with customers in accordance with IFRS 15;
\u2022receivables related to the provision of non-financial goods or services;
\u2022tax credits related to the \"Cura Italia\" and \"Relaunch\" Decree-Laws;
\u2022tax debit items other than those recorded under item \"110. Tax assets\u201d.
Any remaining balances (of \"debit balance\") of travelling and suspended items not allocated to the relevant accounts may also be included, provided they are of an insignificant amount overall.
Other liabilities
This item includes liabilities that cannot be allocated to the other liability items in the balance sheet.
This item includes but is not limited to:
\u2022payment agreements that IFRS 2 requires to be classified as payables;
\u2022debts connected with the payment of non-financial goods and services;
\u2022accrued expenses other than those to be capitalised on the relevant financial liabilities, including those arising from contracts with customers in accordance with IFRS 15;
\u2022miscellaneous tax credit items other than those recorded under item \"60. Tax liabilities\u201d related, for example, to the activity of a tax substitute.
Severance indemnity and other employee benefits
According to IAS 19, employee benefits include all types of remuneration provided in exchange for the work performed by employees or by virtue of the termination of the employment relationship, which can be broken down into:
\u2022short-term benefits (other than termination benefits) that are expected to be settled within 12 months after the end of the financial year in which the employees were employed;
\u2022post-employment benefits such as the severance indemnity;
\u2022termination benefits due to employees following the company's decision to terminate employment before the retirement date;
\u2022long-term benefits (other than termination benefits) that are expected to be settled over a period of more than 12 months after the end of the financial year in which the employees were employed.
Pursuant to IAS 19 \u201cEmployee benefits\u201d and up to 31 December 2006, the so-called \u201cTFR\u201d (severance indemnity), post-employment benefit for employees of the Group's Italian companies, was classified as a \u201cdefined benefit plan\u201d. It therefore had to recognise this benefit by discounting it using the projected unit credit method.
Following the coming into force of the 2007 Budget Law, which brought the reform regarding supplementary pension plans - as per Italian Legislative Decree No. 252 of 5 December 2005 - forward to 1 January 2007, the employee was given a choice as to whether to allocate the post-employment benefits earned as from 1 January 2007 to supplementary pension funds or to maintain them in the company, which would then transfer it to a dedicated fund managed by INPS (the Italian National Social Security Institute).
This reform has led to changes in the accounting of post-employment benefits (severance indemnity) as for both the benefits earned up to 31 December 2006 and those earned from 1 January 2007.
In particular:
\u2022post-employment benefits earned as from 1 January 2007 constitute a \"defined-contribution plan\", regardless of whether the employee has chosen to allocate them to a supplementary pension fund or to INPS's Treasury Fund. Those benefits shall be calculated according to contributions due without applying actuarial methods;
\u2022post-employment benefits earned up to 31 December 2006 continue to be considered as a \u201cdefined-benefit plan\u201d, and as such are calculated on an actuarial basis which, however, unlike the calculation method applied until 31 December 2006, no longer requires that the benefits be proportionally attributed to the period of service rendered. This is because the employee\u2019s service is considered entirely accrued due to the change in the accounting nature of benefits earned as from 1 January 2007.
Actuarial gains/losses shall be included immediately in the calculation of the net obligations to employees through equity, to be reported in other comprehensive income.
Share-based payments
They are payments granted to employees or similar parties as remuneration for the services received that are settled in equity instruments.
The relevant international accounting standard is IFRS 2 \u2013 Share-based payments; specifically, since the Group is to settle the obligation for the service received in equity instruments (shares \u201cto the value of\u201d, i.e. a given amount is converted into a variable number of shares based on the fair value at grant date), those payments fall under \u201cequity-settled share-based payments\u201d. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognised in employee benefits expense together with a corresponding increase in equity over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The cost or revenue in the income statement represents the movement in cumulative expense recognised at the beginning and end of that year.
Treasury shares
Pursuant to regulations in force in Italy, buying back treasury shares requires a specific resolution of the shareholders' meeting and the recognition of a specific reserve in equity. Treasury shares in the portfolio are deducted from equity and measured at cost, calculated using the \u201cFifo\u201d method. Differences between the purchase price and the selling price deriving from trading in these shares during the reference year are recognised under equity reserves.
Recognition of revenues and costs
Revenues
Revenues are gross streams of economic benefits flowing to the entity as consideration for the obligation to transfer to the customer a wide range of goods and services in the ordinary course of business.
Under IFRS 15, an entity must recognise revenue based on the consideration expected to be received for goods and services provided in the ordinary course of business. In detail, the recognition of revenue must take place on the basis of the following five steps:
\u2022identification of a contract, defined as an agreement of commercial substance between two or more parties capable of generating rights and obligations;
\u2022identification of the individual obligations (\"performance obligations\") contained in the contract;
\u2022determination of the transaction price, i.e. the expected consideration for the transfer of goods or services to the customer;
\u2022allocation of the transaction price to each performance obligation, based on the stand-alone selling price of the individual obligation;
\u2022recognition of the revenue allocated to the individual obligation when it is settled, i.e. when the customer obtains control of the goods and services. This recognition takes into account the fact that certain services may be rendered at a specific time or over a period of time.
Revenue arising from contractual obligations with customers is recognised in profit or loss when it is probable that the entity will receive the consideration to which it is entitled in exchange for the goods or services transferred to the customer. This consideration must be allocated to the individual obligations under the contract and must be recognised as income in the income statement according to the timing of performance of the obligation. In detail, revenues may be recognised in the income statement:
\u2022at a point in time, when the entity performs the obligation to do by transferring the promised good or service to the customer, or
\u2022over time, as the entity performs the obligation to do by transferring the promised good or service to the customer.
The obligation to perform is considered to have been performed when the customer acquires control of the transferred good or service.
The consideration promised in the contract with the customer may include fixed amounts, variable amounts, or both. In detail, the contract price may vary as a result of reductions, discounts, rebates, incentives, performance bonuses or other similar elements. The variability of the consideration may also depend on the occurrence or non-occurrence of a future event. In the case of variable consideration, revenue is recognised in the income statement if it can be reliably estimated and only if it is highly probable that all or a significant portion of the consideration will not subsequently be reversed from the income statement.
When an entity receives consideration from a customer that it expects to refund to the customer, in whole or in part, against the revenue recognised in the income statement, it is necessary to recognise a liability, to be estimated based on expected future refunds (termed a \u201crefund liability\u201d). The estimate of this liability is updated at each balance sheet or interim reporting date and is based on the portion of the consideration that the entity expects not to be entitled to.
Costs
Costs related to obtaining and fulfilling contracts with customers are recognised in the income statement in the periods in which the corresponding revenues are recognised; costs that do not have a direct association with revenues are immediately recognised in the income statement.
Dividends
Dividends are recognised through profit or loss in the year in which the resolution concerning their distribution is passed.
Impairment of financial instruments
Under IFRS 9, the relevant impairment provisions apply to financial assets measured at amortised cost, financial assets measured at fair value through other comprehensive income that are not equity securities, and loan commitments and guarantees granted that are not measured at fair value through profit or loss.
\u201cExpected Credit Losses\u201d (ECLs) are calculated based on whether the financial instrument's credit risk has significantly increased since initial recognition.
The general impairment model requires allocating the financial instruments within the scope of IFRS 9 to three Stages, which reflect the deterioration in credit quality:
\u2022Stage 1: financial instruments that have not had a significant increase in credit risk since initial recognition or that have low credit risk at the reporting date;
\u2022Stage 2: financial instruments that have had a significant increase in credit risk since initial recognition (unless they have low credit risk at the reporting date) but that individually do not have objective evidence of impairment;
\u2022Stage 3: financial assets that have had a significant increase in credit risk since initial recognition with objective evidence of impairment at the reporting date. This coincides with non-performing exposures, i.e. those classified as bad loans, unlikely to pay, or non-performing past due exposures according to the rules of the Bank of Italy.
For further details, please refer to paragraph \"2.3 Measurement of expected losses\" in \"Section 2 - Prudential consolidation risks\" of \"Part E - Information on risks and related hedging policies\" of the Notes to the Consolidated Financial Statements.
Offsetting of financial instruments
Pursuant to IAS 32, paragraph 42, financial assets and financial liabilities are netted and shown for the net balance if the entity:
\u2022has a legal right to effect such set-off, which is currently exercisable in all circumstances, whether in the ordinary course of business or in default, insolvency or bankruptcy of the parties;
\u2022intends to settle transactions on a net settlement basis or on a gross settlement basis whose substantive effects are equivalent to a net settlement.
Business combinations
Business combinations are subject to the rules of IFRS 3.
The transfer of control of a business (or an integrated set of activities and assets operated and managed together) constitutes a business combination.
To this end, control is considered transferred when the investor is exposed or entitled to variable returns from its involvement with the investee and, at the same time, has the ability to affect those returns through its power over the entity.
IFRS 3 demands that an acquirer be identified for all business combinations. This is defined as the entity that acquires control over another entity or group of assets. If it is not possible to identify a controlling entity on the basis of the above definition of control, such as, for example, may be the case in exchanges of equity interests, the acquirer shall be identified using factors such as: the entity whose fair value is significantly greater, the entity that pays a cash consideration or the entity that issues new equity interests.
The acquisition, and therefore, the initial consolidation of the acquiree, must be recognised on the date on which the acquirer effectively acquires control over the company or assets acquired. When the transaction takes the form of a single transfer, the transfer date normally coincides with the acquisition date. However, it is important to check for the possible presence of agreements between the parties that may result in the effective transfer of control before the date of the exchange.
The consideration paid as part of a business combination must be calculated as the sum of the fair value, at the date of the exchange, of the assets acquired, the liabilities incurred or assumed and the equity instruments issued by the acquirer in exchange for control.
In transactions involving payment in cash (or when payment is made using cash-equivalent financial instruments), the price is the agreed consideration, discounted if payment is to be made in instalments over the medium or long-term. If payment is made using an instrument other than cash, such as through the issue of equity instruments, the price is equal to the fair value of the means of payment, net of the costs directly attributable to the capital issue. For the methods used to determine the fair value of financial instruments, please refer to paragraph \u201cA.4 - Fair value disclosure\u201d, with the caveat that, in the presence of shares listed on active markets, the fair value is represented by the stock market price on the date of acquisition or, in the absence thereof, by the last available price.
Adjustments subject to future events are included in the consideration of the business combination at the acquisition date, if provided for in the agreements and only if probable, able to be reliably determined and realised within twelve months of the date on which control is acquired. Instead, indemnities for a reduction of the value of the assets used are not considered insofar as they are already taken into account, either in the fair value of the equity instruments or as a reduction of the premium or increase in the discount on the initial issue (for debt instruments).
Acquisition-related costs are the costs the acquirer incurs to effectively implement a business combination. By way of example, these may include professional fees paid to auditors, experts, legal consultants, costs for appraisals and the auditing of accounts, preparation of information documents required by regulations, as well as finder\u2019s fees paid to identify potential targets to be acquired if it is contractually established that the payment is made only in the event of a successful completion of the combination, as well as the costs of registering and issuing debt and equity securities.
With the exception of the costs of issuing debt or equity securities (which shall be recognised in accordance with IAS 32), the acquirer shall recognise acquisition-related costs in the periods in which these costs are incurred and the services are received.
Business combinations are accounted for using the \u201cacquisition method\u201d, under which the identifiable assets acquired (including any intangible assets not previously recognised by the acquiree) and the identifiable liabilities assumed (including contingent liabilities) are recognised at their respective fair values at the acquisition date.
In addition, as expressly envisaged by IFRS 3, for each business combination, any non-controlling interests in the acquiree can be recognised at fair value (with a consequent increase in the consideration transferred) or proportionally to the non-controlling stake in the identifiable net assets of the acquiree.
If control is acquired in stages, the acquirer shall measure its previously held equity interest in the acquiree at its acquisition date at fair value; it shall recognise any difference compared to the previous carrying amount through profit or loss.
The surplus amount of the consideration transferred (i.e. the fair value of the assets transferred, the liabilities incurred or the equity instruments issued by the acquirer), the amount of any non-controlling interests (determined as described above) and the fair value of interests previously held by the acquirer, exceeding the fair value of the assets and liabilities acquired, shall be recognised as goodwill. Conversely, if the latter should exceed the sum of the consideration, non-controlling interests and fair value of previously held interests, the difference shall be recognised through profit or loss.
Business combinations may be accounted for provisionally by the end of the financial year in which they are performed with final balance calculated and booked within twelve months of the acquisition date.
Pursuant to IFRS 10, the acquisition of additional stakes in entities that are already controlled are considered equity transactions, i.e. transactions with shareholders acting in this same capacity. Therefore, differences between the acquisition costs and the book value of non-controlling interests acquired are recorded under Group shareholders\u2019 equity; similarly, sales of non-controlling interests without loss of control do not generate gains/losses recognised in profit or loss but rather are recognised as changes in Group equity.
Transactions implemented to obtain control over one or more entities that do not constitute a business or to obtain temporary control are not business combinations. Equally, transactions carried out for reorganisation purposes, between two or more companies or activities that already belong to the Group and not involving a change in the control structure regardless of the percentage of third-party rights before and after the transaction, are also not business combinations; these may be referred to as combinations of entities under common control. Such transactions are considered as having no economic substance. Accordingly, in the absence of an IAS/IFRS specifically applicable to the transaction and in compliance with the assumptions of IAS 8, which requires that \u2013 in the absence of a specific standard \u2013 an entity shall use its judgement in applying an accounting standard that produces relevant, reliable and prudent information able to reflect the economic substance of the transaction, such transactions are accounted for by retaining the values of the acquiree in the financial statements of the acquirer.
Mergers are the most complete form of business combination, as they entail the legal and financial merging of the entities participating in the transaction.
Whether they involve the formation of a new legal entity (merger of equals) or the absorption of one entity by another existing entity, mergers are treated in accordance with the criteria set out above. Specifically:
\u2022if the transaction involves the transfer of control of an entity, it is treated as a business combination pursuant to IFRS 3;
\u2022if the transaction does not involve the transfer of control, it is accounted for by retaining the carrying values.
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1 - Financial assets measured at fair value through profit or loss
Classification criteria
This category comprises financial assets other than Financial assets measured at fair value through other comprehensive income and Financial assets measured at amortised cost. Specifically, this line item includes:
\u2022financial assets held for trading, essentially consisting of debt and equity securities as well as the positive amount of derivative contracts held for trading;
\u2022financial assets designated at fair value, i.e. non-derivative financial assets designated as such on initial recognition if the relevant conditions are met. At initial recognition, an entity may irrevocably designate a financial asset as measured at fair value through profit or loss if, and only if, doing so would eliminate or significantly reduce a measurement or recognition inconsistency.
\u2022financial assets mandatorily measured at fair value, consisting of financial assets that are not eligible for the measurement at amortised cost or fair value through other comprehensive income based on the relevant cash flow characteristics. Specifically, this category includes:
\u2013debt instruments, securities and loans without cash flows that are solely payments of principal and interest consistent with a \"basic lending arrangement\" (so-called \"SPPI test\" failed);
\u2013UCITS units;
\u2013equity instruments for which the Group elects not to use the option under the standard to measure them at fair value through other comprehensive income (so-called \u201cOCI Option\u201d).
Derivative contracts include those embedded in complex financial instruments if the host contract is not a financial asset falling within the scope of IFRS 9, which are recognised separately if:
\u2022the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract;
\u2022a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative;
\u2022the hybrid instrument they are part of is not measured at fair value with the relevant changes recognised in profit or loss.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured
at fair value through profit or loss to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through other comprehensive income). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. In this case, the effective interest rate of the reclassified financial asset is calculated based on its fair value at the reclassification date, which is considered to be the date of initial recognition for the stage allocation for impairment purposes.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, at the date of disbursement for loans and at inception in the case of derivative contracts. At initial recognition, financial assets are measured at fair value, which is normally equal to the price paid excluding the expenses and income directly attributable to the instrument, which are recognised in profit or loss.
Measurement criteria
Even after initial recognition, financial assets are measured at fair value, and the impact of the application of this method is recognised through profit or loss.
The fair value of the financial instruments included in this portfolio is calculated based on quoted prices in active markets, prices provided by market participants, or internal valuation models generally used for pricing financial instruments that take into account all relevant risk factors and are based on observable market data.
In the case of financial assets not quoted in an active market, the cost method is used as an approximation of fair value exclusively on a residual basis and in limited circumstances, that is if all the other previously mentioned measurement methods are not applicable.
Interest is shown under item \"10. Interest receivable and similar income\u201d.
Gains and losses from trading and valuation gains and losses from the trading portfolio, including derivatives associated with financial assets/liabilities designated at fair value, are recognised in the income statement under item \u201c80. Net profit (loss) from trading\u201d. The same economic effects relating to financial assets designated at fair value and those mandatorily measured at fair value are recorded under item \"110. Net result of other financial assets and liabilities measured at fair value through profit or loss\", under \"a) financial assets and liabilities measured at fair value\u201d and \u201cb) other financial assets mandatorily measured at fair value\u201d.
Derecognition criteria
Financial assets are derecognized only when the contractual rights to the cash flows expire or when the assets are disposed of if the disposal resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
2 - Financial assets measured at fair value through other comprehensive income
Classification criteria
This category comprises financial assets that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u201cHTC&S - Held to Collect and Sell\u201d Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
In addition, this line item includes equity instruments not held for trading for which at initial recognition the entity used the option to measure them at fair value through other comprehensive income not to be reclassified to profit or loss (so-called \"OCI Option\").
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured at fair value through other comprehensive income to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. If the asset is reclassified from the category concerned to amortised cost, the fair value of the financial asset at the reclassification date is adjusted by the accumulated gain (loss) presented in the valuation reserve. If the asset is reclassified to fair value through profit or loss, the accumulated gain (loss) previously recognised within the valuation reserve is reclassified from equity to profit or loss.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. These assets are initially recognised at fair value, including transaction costs directly attributable to the instruments, if any.
Measurement criteria
After initial recognition, the assets measured at fair value through other comprehensive income that are not equity securities are measured at fair value, recognising the impact of the application of amortised cost, impairment, and any exchange rate changes through profit or loss. Gains and losses resulting from changes in fair value are recognised under a dedicated equity reserve until the financial asset is transferred: then, accrued profits and losses are reclassified to profit or loss.
The equity instruments the Group elected to classify within this category are measured at fair value, and the amounts recognised through equity (Statement of comprehensive income) are not subsequently reclassified to profit or loss - including in the event of their disposal. The relevant dividends represent the only component of the equity securities concerned that is recognised through profit or loss.
The fair value is calculated on the basis already described for financial assets measured at fair value through profit or loss.
In the case of financial assets measured at fair value through other comprehensive income that are either debt securities or receivables, at each reporting date, including interim reporting dates, the Bank assesses whether a significant increase in credit risk (impairment) has occurred pursuant to IFRS 9, recognising an impairment loss to cover the expected credit losses through profit or loss.
Conversely, equity securities are not tested for impairment.
Derecognition criteria
Derecognition of financial assets measured at fair value through comprehensive income occurs when contractual rights to cash flows expire or if the assets are sold but only if the sale has resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
3 - Financial assets measured at amortised cost
Classification criteria
This category includes financial assets (specifically loans and debt securities) that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows (\"HTC - Held to Collect\" Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration
for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
Specifically, if the above technical requirements are met, this line item includes:
\u2022loans and advances to banks, with the exception of loans and advances on demand (which are classified under \"Cash and cash equivalents\");
\u2022receivables due from customers, largely consisting of:
\u2013demand advances to customers as part of factoring operations vis-\u00e0-vis a receivables portfolio factored with recourse and still recognised in the seller\u2019s statement of financial position, or vis-\u00e0-vis receivables factored without recourse, providing no contractual clauses that eliminate the conditions for their recognition exist;
\u2013loans to customers deriving from mortgages or loans extended as part of corporate banking operations;
\u2013repurchase and reverse repurchase agreements;
\u2013receivables arising from finance leases;
\u2013salary- or pension-backed loans or payment delegations;
\u2013a portfolio of non-performing loans acquired from third-party operators (referred to as \u201cPOCI\u201d);
\u2022debt securities acquired through subscription or private placement, with fixed or determinable payments, not quoted in active markets.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, which are expected to be very infrequent, the financial assets may be reclassified from the category measured at amortised cost to one of the other two categories under IFRS 9 (Financial assets measured at fair value through other comprehensive income or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. Gains or losses arising from the difference between the amortised cost of the financial asset and the relevant fair value are measured through profit or loss if the asset is reclassified to Financial assets measured at fair value through profit or loss or, if it is reclassified to Financial assets measured at fair value through other comprehensive income, through equity, within the specific valuation reserve.
Recognition criteria
These financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. At initial recognition, the assets are measured at fair value, including transaction income or costs directly attributable to the asset. Costs meeting these characteristics, but to be reimbursed by the debtor or falling under normal internal administrative costs, are excluded.
Repurchase agreements or reverse repurchase agreements are recognised as funding or lending transactions. Specifically, repurchase agreements are recognised as payables for the amount received, while reverse repurchase agreements are recognised as receivables for the amount paid.
Measurement criteria
After initial recognition, receivables are measured at amortised cost, which is equal to the initial amount minus/plus principal repayments, impairment losses/reversals of impairment losses, and amortisation calculated using the effective interest method. The effective interest rate is calculated as the rate at which the present value of expected cash flows for the principal and interest is equal to the amount of the loan granted, including any costs/revenues directly attributable to the financial asset. This finance-based accounting method allows to spread the economic effect of costs/revenues over the expected residual life of the receivable.
The amortised cost method usually does not apply to short-term loans, as the effect would be immaterial. These are measured instead at their acquisition cost. A similar criterion applies to loans without a definite payment date or revocable loans. Furthermore, newly acquired distressed retail loans are measured at cost until the Bank has started taking action to collect the debt, as specified later on in the part concerning non-performing exposures in the Npl Segment.
At each reporting date, including interim reporting dates, the Group estimates the impairment of these assets in accordance with the impairment rules of IFRS 9.
The aforementioned assets are in fact examined with the aim of estimating the expected losses in value related to credit risk (\u201cECL\u201d - \u201cExpected Credit Losses\u201d). These losses are recognised in the income statement under item
\"130. Net credit risk losses/reversals\u201d. If it is found that there is no reasonable expectation of recovery, the gross exposure is written off: in such a case, the gross exposure is reduced by the amount considered unrecoverable, offset by the reversal of the provision to cover expected losses and impairment losses in the income statement, for the portion not covered by the provision.
In more detail, the impairment model, as described in detail in paragraph \u201c16 - Other Information\u201d of this Section A.2, provides for the classification of assets into three distinct \"Stages\" (Stage 1, Stage 2, Stage 3), depending on the evolution of the debtor's creditworthiness, to which correspond different criteria for measuring expected losses:
\u2022Stage 1: unimpaired (performing) financial assets for which no significant deterioration in credit risk has been observed since initial recognition or for which the credit risk is considered low. Impairment is based on an estimate of expected loss with a time horizon of one year;
\u2022Stage 2: unimpaired (performing) financial assets that have experienced a significant deterioration in credit risk since initial recognition (SICR - \u201cSignificant Increase in Credit Risk\u201d). Impairment is based on an estimate of the expected loss over the entire remaining life of the financial asset;
\u2022Stage 3: impaired financial assets for which there is objective evidence of impairment and which are assessed on the basis of an estimate of the expected loss over the life of the instrument.
For performing assets, expected losses are determined according to a collective process based on certain risk parameters represented by the probability of default (PD), the loss given default (LGD) and the exposure value (EAD).
For impaired assets, impairment losses are quantified on the basis of an analytical valuation process according to homogeneous risk categories - aimed at determining the present value of expected future recoverable cash flows, discounted on the basis of the original effective interest rate.
Impaired assets include exposures that have been attributed the status of non-performing, unlikely to pay or past-due/overdrawn for more than ninety days according to the definitions established by current supervisory regulations (Bank of Italy Circular No. 272 \"Accounts Matrix\") and recalled by Bank of Italy Circular No. 262, as they are considered consistent with the accounting rules set forth by IFRS 9 in terms of objective evidence of impairment.
The projected cash flows also take into account expected recovery times and the presumed net realisable value of any guarantees.
The original value of the financial assets is reinstated in subsequent years if the credit quality of the exposure improves compared to that which led to the previous write-down. The write-back is recorded in the income statement under the same heading (\"130. Net credit risk losses/reversals\") and, in any event, may not exceed the amortised cost that the asset would have had in the absence of previous adjustments.
Purchased or Originated Credit Impaired (POCI)
\u201cPurchased or Originated Credit Impaired (POCI) Financial Assets\u201d means the exposures that were impaired at the date they were acquired or originated.
POCI financial assets include also the exposures acquired as part of sales (of either individual assets or portfolios) and business combinations.
As previously mentioned, interest is accounted for by applying a credit-adjusted effective interest rate, i.e. the rate that, upon initial recognition, discounts all the asset's estimated future cash receipts at amortised cost considering also lifetime expected credit losses.
The Bank regularly reviews said expected credit losses, recognising impairment losses or gains through profit or loss. Favourable changes in lifetime ECLs are recognised as an impairment gain, even if said lifetime ECLs are lower than those incorporated into cash flow estimates at initial recognition.
\"Purchased or Originated Credit Impaired Financial Assets\" are usually allocated to Stage 3 at initial recognition.
A subsequent improvement in the counterparty's creditworthiness, which may be reflected in the present value of cash flows, shall cause the exposure to be classified within Stage 2.
These assets shall never be allocated to Stage 1, as the expected credit loss must always be calculated over a time horizon equal to their remaining useful life, whereas IFRS 9 requires an ECL estimated over a 12-month horizon for Stage 1 assets.
The Npl Segment's receivables all qualify as POCI financial assets (POCIs are the Segment's core business) and are recognised and assessed through the following steps:
\u2022at the time of purchase, receivables are recognised by allocating the portfolio's purchase price among the individual receivables it consists of through the following steps:
\u2013recognition of the individual receivables at a value equal to the contract price, which is used for the purposes of reporting to the Central Credit Register;
\u2013after verifying the documentation, if provided in the contract, the Bank returns the positions lacking documentation or beyond the statute of limitations to the seller, and measures the fair value of receivables which actually exist and can be collected; finally, after sending a notice of assignment to the debtor, the Bank can start taking action to collect the receivable;
\u2013once the collection process begins, receivables are measured at amortised cost using the effective interest rate method (the \u201cEIR\u201d or \u201cTIR\u201d);
\u2013the effective interest rate is calculated on the basis of the price paid, the transaction costs, if any, and the estimated cash flows and collection time calculated using either proprietary models or analytical estimates made by managers;
\u2013the effective interest rate as set out in the previous point is unchanged over time;
\u2013at the end of each year, interest income accrued on the basis of the original effective interest rate is recognised under Interest Income. Said interest is calculated as follows: Amortised Cost at the beginning of the year x IRR/365 x days in the year;
\u2013in addition, at the end of each financial year, the expected cash flows for each position are re-estimated;
\u2022should events occur (higher or lower revenues realised or expected compared to forecasts and/or a change in collection times) which cause a change in the amortised cost (calculated by discounting the new cash flows at the original effective rate compared to the amortised cost in the financial year), this change is also recognised under \"Credit risk losses/reversals\" on the income statement.
Derecognition criteria
Financial assets measured at amortised cost are derecognised when all contractual rights over the cash flows have expired or if they are assigned but only when all relevant risks and rewards have been substantially transferred. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Finally, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Specifically in respect of non-performing exposures, they shall be derecognised when considered unrecoverable and the Group forfeits the legal right to collect. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognitions without a forfeiture of the right to collect the receivable (i.e. \u201cwrite-off\u201d), to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, the Group identifies the exposures to be derecognised that have all of the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
Derecognitions are directly recorded under \"Net credit risk losses/reversals\" to the extent of the unadjusted remaining portion, and are recognised as a reduction of the principal. Partial or complete reversals of previous impairment losses are recognised as a reduction of \u201cNet credit risk losses/reversals\u201d.
In some cases, throughout the life of the financial assets concerned, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative and
quantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons or forbearance measures due to the counterparty's financial difficulties;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
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1 - Financial assets measured at fair value through profit or loss
Classification criteria
This category comprises financial assets other than Financial assets measured at fair value through other comprehensive income and Financial assets measured at amortised cost. Specifically, this line item includes:
\u2022financial assets held for trading, essentially consisting of debt and equity securities as well as the positive amount of derivative contracts held for trading;
\u2022financial assets designated at fair value, i.e. non-derivative financial assets designated as such on initial recognition if the relevant conditions are met. At initial recognition, an entity may irrevocably designate a financial asset as measured at fair value through profit or loss if, and only if, doing so would eliminate or significantly reduce a measurement or recognition inconsistency.
\u2022financial assets mandatorily measured at fair value, consisting of financial assets that are not eligible for the measurement at amortised cost or fair value through other comprehensive income based on the relevant cash flow characteristics. Specifically, this category includes:
\u2013debt instruments, securities and loans without cash flows that are solely payments of principal and interest consistent with a \"basic lending arrangement\" (so-called \"SPPI test\" failed);
\u2013UCITS units;
\u2013equity instruments for which the Group elects not to use the option under the standard to measure them at fair value through other comprehensive income (so-called \u201cOCI Option\u201d).
Derivative contracts include those embedded in complex financial instruments if the host contract is not a financial asset falling within the scope of IFRS 9, which are recognised separately if:
\u2022the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract;
\u2022a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative;
\u2022the hybrid instrument they are part of is not measured at fair value with the relevant changes recognised in profit or loss.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured
at fair value through profit or loss to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through other comprehensive income). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. In this case, the effective interest rate of the reclassified financial asset is calculated based on its fair value at the reclassification date, which is considered to be the date of initial recognition for the stage allocation for impairment purposes.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, at the date of disbursement for loans and at inception in the case of derivative contracts. At initial recognition, financial assets are measured at fair value, which is normally equal to the price paid excluding the expenses and income directly attributable to the instrument, which are recognised in profit or loss.
Measurement criteria
Even after initial recognition, financial assets are measured at fair value, and the impact of the application of this method is recognised through profit or loss.
The fair value of the financial instruments included in this portfolio is calculated based on quoted prices in active markets, prices provided by market participants, or internal valuation models generally used for pricing financial instruments that take into account all relevant risk factors and are based on observable market data.
In the case of financial assets not quoted in an active market, the cost method is used as an approximation of fair value exclusively on a residual basis and in limited circumstances, that is if all the other previously mentioned measurement methods are not applicable.
Interest is shown under item \"10. Interest receivable and similar income\u201d.
Gains and losses from trading and valuation gains and losses from the trading portfolio, including derivatives associated with financial assets/liabilities designated at fair value, are recognised in the income statement under item \u201c80. Net profit (loss) from trading\u201d. The same economic effects relating to financial assets designated at fair value and those mandatorily measured at fair value are recorded under item \"110. Net result of other financial assets and liabilities measured at fair value through profit or loss\", under \"a) financial assets and liabilities measured at fair value\u201d and \u201cb) other financial assets mandatorily measured at fair value\u201d.
Derecognition criteria
Financial assets are derecognized only when the contractual rights to the cash flows expire or when the assets are disposed of if the disposal resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
2 - Financial assets measured at fair value through other comprehensive income
Classification criteria
This category comprises financial assets that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u201cHTC&S - Held to Collect and Sell\u201d Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
In addition, this line item includes equity instruments not held for trading for which at initial recognition the entity used the option to measure them at fair value through other comprehensive income not to be reclassified to profit or loss (so-called \"OCI Option\").
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured at fair value through other comprehensive income to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. If the asset is reclassified from the category concerned to amortised cost, the fair value of the financial asset at the reclassification date is adjusted by the accumulated gain (loss) presented in the valuation reserve. If the asset is reclassified to fair value through profit or loss, the accumulated gain (loss) previously recognised within the valuation reserve is reclassified from equity to profit or loss.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. These assets are initially recognised at fair value, including transaction costs directly attributable to the instruments, if any.
Measurement criteria
After initial recognition, the assets measured at fair value through other comprehensive income that are not equity securities are measured at fair value, recognising the impact of the application of amortised cost, impairment, and any exchange rate changes through profit or loss. Gains and losses resulting from changes in fair value are recognised under a dedicated equity reserve until the financial asset is transferred: then, accrued profits and losses are reclassified to profit or loss.
The equity instruments the Group elected to classify within this category are measured at fair value, and the amounts recognised through equity (Statement of comprehensive income) are not subsequently reclassified to profit or loss - including in the event of their disposal. The relevant dividends represent the only component of the equity securities concerned that is recognised through profit or loss.
The fair value is calculated on the basis already described for financial assets measured at fair value through profit or loss.
In the case of financial assets measured at fair value through other comprehensive income that are either debt securities or receivables, at each reporting date, including interim reporting dates, the Bank assesses whether a significant increase in credit risk (impairment) has occurred pursuant to IFRS 9, recognising an impairment loss to cover the expected credit losses through profit or loss.
Conversely, equity securities are not tested for impairment.
Derecognition criteria
Derecognition of financial assets measured at fair value through comprehensive income occurs when contractual rights to cash flows expire or if the assets are sold but only if the sale has resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
3 - Financial assets measured at amortised cost
Classification criteria
This category includes financial assets (specifically loans and debt securities) that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows (\"HTC - Held to Collect\" Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration
for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
Specifically, if the above technical requirements are met, this line item includes:
\u2022loans and advances to banks, with the exception of loans and advances on demand (which are classified under \"Cash and cash equivalents\");
\u2022receivables due from customers, largely consisting of:
\u2013demand advances to customers as part of factoring operations vis-\u00e0-vis a receivables portfolio factored with recourse and still recognised in the seller\u2019s statement of financial position, or vis-\u00e0-vis receivables factored without recourse, providing no contractual clauses that eliminate the conditions for their recognition exist;
\u2013loans to customers deriving from mortgages or loans extended as part of corporate banking operations;
\u2013repurchase and reverse repurchase agreements;
\u2013receivables arising from finance leases;
\u2013salary- or pension-backed loans or payment delegations;
\u2013a portfolio of non-performing loans acquired from third-party operators (referred to as \u201cPOCI\u201d);
\u2022debt securities acquired through subscription or private placement, with fixed or determinable payments, not quoted in active markets.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, which are expected to be very infrequent, the financial assets may be reclassified from the category measured at amortised cost to one of the other two categories under IFRS 9 (Financial assets measured at fair value through other comprehensive income or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. Gains or losses arising from the difference between the amortised cost of the financial asset and the relevant fair value are measured through profit or loss if the asset is reclassified to Financial assets measured at fair value through profit or loss or, if it is reclassified to Financial assets measured at fair value through other comprehensive income, through equity, within the specific valuation reserve.
Recognition criteria
These financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. At initial recognition, the assets are measured at fair value, including transaction income or costs directly attributable to the asset. Costs meeting these characteristics, but to be reimbursed by the debtor or falling under normal internal administrative costs, are excluded.
Repurchase agreements or reverse repurchase agreements are recognised as funding or lending transactions. Specifically, repurchase agreements are recognised as payables for the amount received, while reverse repurchase agreements are recognised as receivables for the amount paid.
Measurement criteria
After initial recognition, receivables are measured at amortised cost, which is equal to the initial amount minus/plus principal repayments, impairment losses/reversals of impairment losses, and amortisation calculated using the effective interest method. The effective interest rate is calculated as the rate at which the present value of expected cash flows for the principal and interest is equal to the amount of the loan granted, including any costs/revenues directly attributable to the financial asset. This finance-based accounting method allows to spread the economic effect of costs/revenues over the expected residual life of the receivable.
The amortised cost method usually does not apply to short-term loans, as the effect would be immaterial. These are measured instead at their acquisition cost. A similar criterion applies to loans without a definite payment date or revocable loans. Furthermore, newly acquired distressed retail loans are measured at cost until the Bank has started taking action to collect the debt, as specified later on in the part concerning non-performing exposures in the Npl Segment.
At each reporting date, including interim reporting dates, the Group estimates the impairment of these assets in accordance with the impairment rules of IFRS 9.
The aforementioned assets are in fact examined with the aim of estimating the expected losses in value related to credit risk (\u201cECL\u201d - \u201cExpected Credit Losses\u201d). These losses are recognised in the income statement under item
\"130. Net credit risk losses/reversals\u201d. If it is found that there is no reasonable expectation of recovery, the gross exposure is written off: in such a case, the gross exposure is reduced by the amount considered unrecoverable, offset by the reversal of the provision to cover expected losses and impairment losses in the income statement, for the portion not covered by the provision.
In more detail, the impairment model, as described in detail in paragraph \u201c16 - Other Information\u201d of this Section A.2, provides for the classification of assets into three distinct \"Stages\" (Stage 1, Stage 2, Stage 3), depending on the evolution of the debtor's creditworthiness, to which correspond different criteria for measuring expected losses:
\u2022Stage 1: unimpaired (performing) financial assets for which no significant deterioration in credit risk has been observed since initial recognition or for which the credit risk is considered low. Impairment is based on an estimate of expected loss with a time horizon of one year;
\u2022Stage 2: unimpaired (performing) financial assets that have experienced a significant deterioration in credit risk since initial recognition (SICR - \u201cSignificant Increase in Credit Risk\u201d). Impairment is based on an estimate of the expected loss over the entire remaining life of the financial asset;
\u2022Stage 3: impaired financial assets for which there is objective evidence of impairment and which are assessed on the basis of an estimate of the expected loss over the life of the instrument.
For performing assets, expected losses are determined according to a collective process based on certain risk parameters represented by the probability of default (PD), the loss given default (LGD) and the exposure value (EAD).
For impaired assets, impairment losses are quantified on the basis of an analytical valuation process according to homogeneous risk categories - aimed at determining the present value of expected future recoverable cash flows, discounted on the basis of the original effective interest rate.
Impaired assets include exposures that have been attributed the status of non-performing, unlikely to pay or past-due/overdrawn for more than ninety days according to the definitions established by current supervisory regulations (Bank of Italy Circular No. 272 \"Accounts Matrix\") and recalled by Bank of Italy Circular No. 262, as they are considered consistent with the accounting rules set forth by IFRS 9 in terms of objective evidence of impairment.
The projected cash flows also take into account expected recovery times and the presumed net realisable value of any guarantees.
The original value of the financial assets is reinstated in subsequent years if the credit quality of the exposure improves compared to that which led to the previous write-down. The write-back is recorded in the income statement under the same heading (\"130. Net credit risk losses/reversals\") and, in any event, may not exceed the amortised cost that the asset would have had in the absence of previous adjustments.
Purchased or Originated Credit Impaired (POCI)
\u201cPurchased or Originated Credit Impaired (POCI) Financial Assets\u201d means the exposures that were impaired at the date they were acquired or originated.
POCI financial assets include also the exposures acquired as part of sales (of either individual assets or portfolios) and business combinations.
As previously mentioned, interest is accounted for by applying a credit-adjusted effective interest rate, i.e. the rate that, upon initial recognition, discounts all the asset's estimated future cash receipts at amortised cost considering also lifetime expected credit losses.
The Bank regularly reviews said expected credit losses, recognising impairment losses or gains through profit or loss. Favourable changes in lifetime ECLs are recognised as an impairment gain, even if said lifetime ECLs are lower than those incorporated into cash flow estimates at initial recognition.
\"Purchased or Originated Credit Impaired Financial Assets\" are usually allocated to Stage 3 at initial recognition.
A subsequent improvement in the counterparty's creditworthiness, which may be reflected in the present value of cash flows, shall cause the exposure to be classified within Stage 2.
These assets shall never be allocated to Stage 1, as the expected credit loss must always be calculated over a time horizon equal to their remaining useful life, whereas IFRS 9 requires an ECL estimated over a 12-month horizon for Stage 1 assets.
The Npl Segment's receivables all qualify as POCI financial assets (POCIs are the Segment's core business) and are recognised and assessed through the following steps:
\u2022at the time of purchase, receivables are recognised by allocating the portfolio's purchase price among the individual receivables it consists of through the following steps:
\u2013recognition of the individual receivables at a value equal to the contract price, which is used for the purposes of reporting to the Central Credit Register;
\u2013after verifying the documentation, if provided in the contract, the Bank returns the positions lacking documentation or beyond the statute of limitations to the seller, and measures the fair value of receivables which actually exist and can be collected; finally, after sending a notice of assignment to the debtor, the Bank can start taking action to collect the receivable;
\u2013once the collection process begins, receivables are measured at amortised cost using the effective interest rate method (the \u201cEIR\u201d or \u201cTIR\u201d);
\u2013the effective interest rate is calculated on the basis of the price paid, the transaction costs, if any, and the estimated cash flows and collection time calculated using either proprietary models or analytical estimates made by managers;
\u2013the effective interest rate as set out in the previous point is unchanged over time;
\u2013at the end of each year, interest income accrued on the basis of the original effective interest rate is recognised under Interest Income. Said interest is calculated as follows: Amortised Cost at the beginning of the year x IRR/365 x days in the year;
\u2013in addition, at the end of each financial year, the expected cash flows for each position are re-estimated;
\u2022should events occur (higher or lower revenues realised or expected compared to forecasts and/or a change in collection times) which cause a change in the amortised cost (calculated by discounting the new cash flows at the original effective rate compared to the amortised cost in the financial year), this change is also recognised under \"Credit risk losses/reversals\" on the income statement.
Derecognition criteria
Financial assets measured at amortised cost are derecognised when all contractual rights over the cash flows have expired or if they are assigned but only when all relevant risks and rewards have been substantially transferred. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Finally, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Specifically in respect of non-performing exposures, they shall be derecognised when considered unrecoverable and the Group forfeits the legal right to collect. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognitions without a forfeiture of the right to collect the receivable (i.e. \u201cwrite-off\u201d), to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, the Group identifies the exposures to be derecognised that have all of the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
Derecognitions are directly recorded under \"Net credit risk losses/reversals\" to the extent of the unadjusted remaining portion, and are recognised as a reduction of the principal. Partial or complete reversals of previous impairment losses are recognised as a reduction of \u201cNet credit risk losses/reversals\u201d.
In some cases, throughout the life of the financial assets concerned, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative and
quantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons or forbearance measures due to the counterparty's financial difficulties;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
4 - Hedge accounting
Classification criteria
With reference to hedging, the Banca Ifis Group has chosen to adopt the provisions of IFRS 9 for first-time application and not to avail itself of the option, provided by the same standard, to apply the hedge accounting rules dictated by IAS 39, in the version endorsed by the European Commission (the \u201ccarved out\u201d version), with the exception of the specific cases provided for in IFRS 9 (par. 6.1.3) and not governed by the same standard.
Risk hedging transactions are intended to neutralise, from an accounting point of view, potential recognisable losses on a particular financial instrument or group of financial instruments, attributable to a particular risk, by means of recognisable gains on a different financial instrument or group of financial instruments should that particular risk actually arise.
Only instruments involving a counterparty outside the Group can be designated as hedging instruments.
The only type of hedge used by the Group at 31 December 2023 is the specific fair value hedge (\"micro\" fair value hedge), which is intended to hedge the exposure to changes in the fair value of a balance sheet asset or liability attributable to a particular risk and, in particular, from changes in interest rates.
A derivative instrument may be considered to be a hedging instrument if there is formalised documentation of the unique relationship to the hedged item and if it is effective at the time the hedge commences and, prospectively, over the life of the hedge.
At the start of the hedging relationship there must be a formal designation and documentation of the hedging relationship, the company's risk management objectives, and the hedging strategy. This documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how to assess the effectiveness of the hedging instrument in offsetting the exposure to changes in the fair value of the hedged item.
Recognition criteria
Derivative hedging instruments are recognised at fair value, on the date the relevant contracts are entered into, and are classified as assets under item \"50. Hedging derivatives\" or on the liabilities side of the balance sheet under item \"40. Hedging derivatives\u201d depending on whether the value is positive or negative.
Measurement criteria
After initial recognition, hedging derivatives continue to be measured at fair value. Specifically, in the case of fair value hedges, the change in the fair value of the hedged item is offset by the change in the fair value of the hedging instrument. This offsetting is recognised through the recognition in the income statement of changes in value, referring both to the hedged item (as regards changes produced by the underlying risk factor) and to the hedging instrument. Any difference, representing the partial ineffectiveness of the hedge, consequently constitutes the net economic effect.
The effectiveness of the hedge depends on the extent to which changes in the fair value of the hedged instrument are offset by those of the hedging instrument. Therefore, effectiveness is appreciated by comparing the above-mentioned variations, taking into account the intent pursued at the time the hedge was implemented. Effectiveness occurs when changes in the fair value of the hedging financial instrument almost entirely neutralise changes in the hedged instrument for the hedged risk element.
Effectiveness is assessed at each balance sheet or interim reporting date using prospective tests, which justify the application of hedge accounting by demonstrating the expected effectiveness based on limits defined internally by the Group.
If the tests do not confirm the effectiveness of the hedge, hedge accounting is discontinued, the hedging derivative contract is reclassified as a trading instrument and the hedged financial instrument regains the valuation criterion corresponding to its balance sheet classification. If the hedged asset or liability is measured at amortised cost, the higher or lower value resulting from the measurement of the hedged asset or liability at fair value due to the hedge becoming ineffective is recognised in the income statement using the effective interest rate method.
In addition, the accounting for outstanding fair value hedges ceases prospectively in the following cases:
\u2022the hedging instrument matures, is terminated or exercised;
\u2022the hedged item is sold, expires or is refunded;
\u2022the decision is made to revoke the designation.
11 - Financial liabilities measured at amortised cost.
Classification criteria
The item includes payables due to banks and customers and debt securities issued and is made up of the various forms of interbank funding, as well as funding from customers and through outstanding bonds, net of any buybacks.
Also included are debts entered into by the lessee under finance leases, as well as repurchase and reverse repurchase agreements for deposits and securities lent with receipt of cash collateral at the lender's full disposal. Finally, operating debts related to the provision of financial services as defined in the Consolidated Banking Act and the Consolidated Finance Act are included.
Recognition criteria
The initial recognition of these liabilities occurs upon receipt of the amounts collected or settlement of the debt securities issued and is made on the basis of the relative fair value, which is normally equal to the amount collected or the issue price, increased by any additional costs/income directly attributable to the individual funding or issuance transaction and not reimbursed by the creditor counterparty.
Repurchase agreements with a repurchase obligation are recorded in the balance sheet as funding transactions for the amount collected in the spot market.
Lease payables are recognised on the basis of the present value of future instalments still to be paid over the contractual term discounted at the interest rate implicit in the transaction or, if not determinable, the marginal financing rate.
Measurement criteria
After initial recognition at fair value, these instruments are later measured at amortised cost, using the effective interest method.
The amortised cost method does not apply to short-term liabilities, as the effect of discounting would be insignificant.
Lease payables are revalued when there is a lease modification (i.e., a change in the perimeter of the contract), which is not accounted for/considered as a separate contract.
Derecognition criteria
Financial liabilities are derecognised when they are annulled, expired, extinguished or settled. The difference between the carrying amount and the acquisition cost is recognised in profit or loss.
Liabilities are derecognised also when previously issued securities are bought back, even if such instruments will be sold again in the future. Gains and losses from such derecognition are recognised in profit or loss when the buyback price is higher or lower than the carrying amount.
Subsequent sales of the company's own bonds on the market are considered as an issuance of new debt.
12 - Financial liabilities held for trading
Classification criteria
This item includes:
\u2022financial liabilities issued with the intention of repurchasing them in the short term;
\u2022liabilities that are part of a portfolio of financial instruments that are jointly managed and for which there is a proven strategy to achieve profits in the short term;
\u2022derivative contracts with a negative fair value and not designated as hedging instruments, including those linked to assets/liabilities designated at fair value through profit or loss.
Recognition criteria
Financial liabilities held for trading are initially recognised at the date of settlement in the case of liabilities for cash, and at inception in the case of derivative contracts.
Initial recognition is made on the basis of the fair value of the liability, normally equal to the amount collected, without considering transaction costs or income directly attributable to the instrument itself, which are charged directly to the income statement.
Measurement criteria
Even after initial recognition, financial liabilities held for trading are measured at fair value at the period closure, and the impact of the application of this method is measured through profit or loss. The fair value is calculated based on the same criteria as those used for financial assets held for trading.
Derecognition criteria
Financial liabilities held for trading are derecognised when the contractual rights to the related cash flows expire or when the financial liabilities are transferred with the transfer of substantially all risks and rewards of ownership", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page102-cflshid_49048-tag94173": { "value": "
1 - Financial assets measured at fair value through profit or loss
Classification criteria
This category comprises financial assets other than Financial assets measured at fair value through other comprehensive income and Financial assets measured at amortised cost. Specifically, this line item includes:
\u2022financial assets held for trading, essentially consisting of debt and equity securities as well as the positive amount of derivative contracts held for trading;
\u2022financial assets designated at fair value, i.e. non-derivative financial assets designated as such on initial recognition if the relevant conditions are met. At initial recognition, an entity may irrevocably designate a financial asset as measured at fair value through profit or loss if, and only if, doing so would eliminate or significantly reduce a measurement or recognition inconsistency.
\u2022financial assets mandatorily measured at fair value, consisting of financial assets that are not eligible for the measurement at amortised cost or fair value through other comprehensive income based on the relevant cash flow characteristics. Specifically, this category includes:
\u2013debt instruments, securities and loans without cash flows that are solely payments of principal and interest consistent with a \"basic lending arrangement\" (so-called \"SPPI test\" failed);
\u2013UCITS units;
\u2013equity instruments for which the Group elects not to use the option under the standard to measure them at fair value through other comprehensive income (so-called \u201cOCI Option\u201d).
Derivative contracts include those embedded in complex financial instruments if the host contract is not a financial asset falling within the scope of IFRS 9, which are recognised separately if:
\u2022the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract;
\u2022a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative;
\u2022the hybrid instrument they are part of is not measured at fair value with the relevant changes recognised in profit or loss.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured
at fair value through profit or loss to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through other comprehensive income). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. In this case, the effective interest rate of the reclassified financial asset is calculated based on its fair value at the reclassification date, which is considered to be the date of initial recognition for the stage allocation for impairment purposes.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, at the date of disbursement for loans and at inception in the case of derivative contracts. At initial recognition, financial assets are measured at fair value, which is normally equal to the price paid excluding the expenses and income directly attributable to the instrument, which are recognised in profit or loss.
Measurement criteria
Even after initial recognition, financial assets are measured at fair value, and the impact of the application of this method is recognised through profit or loss.
The fair value of the financial instruments included in this portfolio is calculated based on quoted prices in active markets, prices provided by market participants, or internal valuation models generally used for pricing financial instruments that take into account all relevant risk factors and are based on observable market data.
In the case of financial assets not quoted in an active market, the cost method is used as an approximation of fair value exclusively on a residual basis and in limited circumstances, that is if all the other previously mentioned measurement methods are not applicable.
Interest is shown under item \"10. Interest receivable and similar income\u201d.
Gains and losses from trading and valuation gains and losses from the trading portfolio, including derivatives associated with financial assets/liabilities designated at fair value, are recognised in the income statement under item \u201c80. Net profit (loss) from trading\u201d. The same economic effects relating to financial assets designated at fair value and those mandatorily measured at fair value are recorded under item \"110. Net result of other financial assets and liabilities measured at fair value through profit or loss\", under \"a) financial assets and liabilities measured at fair value\u201d and \u201cb) other financial assets mandatorily measured at fair value\u201d.
Derecognition criteria
Financial assets are derecognized only when the contractual rights to the cash flows expire or when the assets are disposed of if the disposal resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
2 - Financial assets measured at fair value through other comprehensive income
Classification criteria
This category comprises financial assets that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u201cHTC&S - Held to Collect and Sell\u201d Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
In addition, this line item includes equity instruments not held for trading for which at initial recognition the entity used the option to measure them at fair value through other comprehensive income not to be reclassified to profit or loss (so-called \"OCI Option\").
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured at fair value through other comprehensive income to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. If the asset is reclassified from the category concerned to amortised cost, the fair value of the financial asset at the reclassification date is adjusted by the accumulated gain (loss) presented in the valuation reserve. If the asset is reclassified to fair value through profit or loss, the accumulated gain (loss) previously recognised within the valuation reserve is reclassified from equity to profit or loss.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. These assets are initially recognised at fair value, including transaction costs directly attributable to the instruments, if any.
Measurement criteria
After initial recognition, the assets measured at fair value through other comprehensive income that are not equity securities are measured at fair value, recognising the impact of the application of amortised cost, impairment, and any exchange rate changes through profit or loss. Gains and losses resulting from changes in fair value are recognised under a dedicated equity reserve until the financial asset is transferred: then, accrued profits and losses are reclassified to profit or loss.
The equity instruments the Group elected to classify within this category are measured at fair value, and the amounts recognised through equity (Statement of comprehensive income) are not subsequently reclassified to profit or loss - including in the event of their disposal. The relevant dividends represent the only component of the equity securities concerned that is recognised through profit or loss.
The fair value is calculated on the basis already described for financial assets measured at fair value through profit or loss.
In the case of financial assets measured at fair value through other comprehensive income that are either debt securities or receivables, at each reporting date, including interim reporting dates, the Bank assesses whether a significant increase in credit risk (impairment) has occurred pursuant to IFRS 9, recognising an impairment loss to cover the expected credit losses through profit or loss.
Conversely, equity securities are not tested for impairment.
Derecognition criteria
Derecognition of financial assets measured at fair value through comprehensive income occurs when contractual rights to cash flows expire or if the assets are sold but only if the sale has resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
3 - Financial assets measured at amortised cost
Classification criteria
This category includes financial assets (specifically loans and debt securities) that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows (\"HTC - Held to Collect\" Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration
for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
Specifically, if the above technical requirements are met, this line item includes:
\u2022loans and advances to banks, with the exception of loans and advances on demand (which are classified under \"Cash and cash equivalents\");
\u2022receivables due from customers, largely consisting of:
\u2013demand advances to customers as part of factoring operations vis-\u00e0-vis a receivables portfolio factored with recourse and still recognised in the seller\u2019s statement of financial position, or vis-\u00e0-vis receivables factored without recourse, providing no contractual clauses that eliminate the conditions for their recognition exist;
\u2013loans to customers deriving from mortgages or loans extended as part of corporate banking operations;
\u2013repurchase and reverse repurchase agreements;
\u2013receivables arising from finance leases;
\u2013salary- or pension-backed loans or payment delegations;
\u2013a portfolio of non-performing loans acquired from third-party operators (referred to as \u201cPOCI\u201d);
\u2022debt securities acquired through subscription or private placement, with fixed or determinable payments, not quoted in active markets.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, which are expected to be very infrequent, the financial assets may be reclassified from the category measured at amortised cost to one of the other two categories under IFRS 9 (Financial assets measured at fair value through other comprehensive income or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. Gains or losses arising from the difference between the amortised cost of the financial asset and the relevant fair value are measured through profit or loss if the asset is reclassified to Financial assets measured at fair value through profit or loss or, if it is reclassified to Financial assets measured at fair value through other comprehensive income, through equity, within the specific valuation reserve.
Recognition criteria
These financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. At initial recognition, the assets are measured at fair value, including transaction income or costs directly attributable to the asset. Costs meeting these characteristics, but to be reimbursed by the debtor or falling under normal internal administrative costs, are excluded.
Repurchase agreements or reverse repurchase agreements are recognised as funding or lending transactions. Specifically, repurchase agreements are recognised as payables for the amount received, while reverse repurchase agreements are recognised as receivables for the amount paid.
Measurement criteria
After initial recognition, receivables are measured at amortised cost, which is equal to the initial amount minus/plus principal repayments, impairment losses/reversals of impairment losses, and amortisation calculated using the effective interest method. The effective interest rate is calculated as the rate at which the present value of expected cash flows for the principal and interest is equal to the amount of the loan granted, including any costs/revenues directly attributable to the financial asset. This finance-based accounting method allows to spread the economic effect of costs/revenues over the expected residual life of the receivable.
The amortised cost method usually does not apply to short-term loans, as the effect would be immaterial. These are measured instead at their acquisition cost. A similar criterion applies to loans without a definite payment date or revocable loans. Furthermore, newly acquired distressed retail loans are measured at cost until the Bank has started taking action to collect the debt, as specified later on in the part concerning non-performing exposures in the Npl Segment.
At each reporting date, including interim reporting dates, the Group estimates the impairment of these assets in accordance with the impairment rules of IFRS 9.
The aforementioned assets are in fact examined with the aim of estimating the expected losses in value related to credit risk (\u201cECL\u201d - \u201cExpected Credit Losses\u201d). These losses are recognised in the income statement under item
\"130. Net credit risk losses/reversals\u201d. If it is found that there is no reasonable expectation of recovery, the gross exposure is written off: in such a case, the gross exposure is reduced by the amount considered unrecoverable, offset by the reversal of the provision to cover expected losses and impairment losses in the income statement, for the portion not covered by the provision.
In more detail, the impairment model, as described in detail in paragraph \u201c16 - Other Information\u201d of this Section A.2, provides for the classification of assets into three distinct \"Stages\" (Stage 1, Stage 2, Stage 3), depending on the evolution of the debtor's creditworthiness, to which correspond different criteria for measuring expected losses:
\u2022Stage 1: unimpaired (performing) financial assets for which no significant deterioration in credit risk has been observed since initial recognition or for which the credit risk is considered low. Impairment is based on an estimate of expected loss with a time horizon of one year;
\u2022Stage 2: unimpaired (performing) financial assets that have experienced a significant deterioration in credit risk since initial recognition (SICR - \u201cSignificant Increase in Credit Risk\u201d). Impairment is based on an estimate of the expected loss over the entire remaining life of the financial asset;
\u2022Stage 3: impaired financial assets for which there is objective evidence of impairment and which are assessed on the basis of an estimate of the expected loss over the life of the instrument.
For performing assets, expected losses are determined according to a collective process based on certain risk parameters represented by the probability of default (PD), the loss given default (LGD) and the exposure value (EAD).
For impaired assets, impairment losses are quantified on the basis of an analytical valuation process according to homogeneous risk categories - aimed at determining the present value of expected future recoverable cash flows, discounted on the basis of the original effective interest rate.
Impaired assets include exposures that have been attributed the status of non-performing, unlikely to pay or past-due/overdrawn for more than ninety days according to the definitions established by current supervisory regulations (Bank of Italy Circular No. 272 \"Accounts Matrix\") and recalled by Bank of Italy Circular No. 262, as they are considered consistent with the accounting rules set forth by IFRS 9 in terms of objective evidence of impairment.
The projected cash flows also take into account expected recovery times and the presumed net realisable value of any guarantees.
The original value of the financial assets is reinstated in subsequent years if the credit quality of the exposure improves compared to that which led to the previous write-down. The write-back is recorded in the income statement under the same heading (\"130. Net credit risk losses/reversals\") and, in any event, may not exceed the amortised cost that the asset would have had in the absence of previous adjustments.
Purchased or Originated Credit Impaired (POCI)
\u201cPurchased or Originated Credit Impaired (POCI) Financial Assets\u201d means the exposures that were impaired at the date they were acquired or originated.
POCI financial assets include also the exposures acquired as part of sales (of either individual assets or portfolios) and business combinations.
As previously mentioned, interest is accounted for by applying a credit-adjusted effective interest rate, i.e. the rate that, upon initial recognition, discounts all the asset's estimated future cash receipts at amortised cost considering also lifetime expected credit losses.
The Bank regularly reviews said expected credit losses, recognising impairment losses or gains through profit or loss. Favourable changes in lifetime ECLs are recognised as an impairment gain, even if said lifetime ECLs are lower than those incorporated into cash flow estimates at initial recognition.
\"Purchased or Originated Credit Impaired Financial Assets\" are usually allocated to Stage 3 at initial recognition.
A subsequent improvement in the counterparty's creditworthiness, which may be reflected in the present value of cash flows, shall cause the exposure to be classified within Stage 2.
These assets shall never be allocated to Stage 1, as the expected credit loss must always be calculated over a time horizon equal to their remaining useful life, whereas IFRS 9 requires an ECL estimated over a 12-month horizon for Stage 1 assets.
The Npl Segment's receivables all qualify as POCI financial assets (POCIs are the Segment's core business) and are recognised and assessed through the following steps:
\u2022at the time of purchase, receivables are recognised by allocating the portfolio's purchase price among the individual receivables it consists of through the following steps:
\u2013recognition of the individual receivables at a value equal to the contract price, which is used for the purposes of reporting to the Central Credit Register;
\u2013after verifying the documentation, if provided in the contract, the Bank returns the positions lacking documentation or beyond the statute of limitations to the seller, and measures the fair value of receivables which actually exist and can be collected; finally, after sending a notice of assignment to the debtor, the Bank can start taking action to collect the receivable;
\u2013once the collection process begins, receivables are measured at amortised cost using the effective interest rate method (the \u201cEIR\u201d or \u201cTIR\u201d);
\u2013the effective interest rate is calculated on the basis of the price paid, the transaction costs, if any, and the estimated cash flows and collection time calculated using either proprietary models or analytical estimates made by managers;
\u2013the effective interest rate as set out in the previous point is unchanged over time;
\u2013at the end of each year, interest income accrued on the basis of the original effective interest rate is recognised under Interest Income. Said interest is calculated as follows: Amortised Cost at the beginning of the year x IRR/365 x days in the year;
\u2013in addition, at the end of each financial year, the expected cash flows for each position are re-estimated;
\u2022should events occur (higher or lower revenues realised or expected compared to forecasts and/or a change in collection times) which cause a change in the amortised cost (calculated by discounting the new cash flows at the original effective rate compared to the amortised cost in the financial year), this change is also recognised under \"Credit risk losses/reversals\" on the income statement.
Derecognition criteria
Financial assets measured at amortised cost are derecognised when all contractual rights over the cash flows have expired or if they are assigned but only when all relevant risks and rewards have been substantially transferred. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Finally, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Specifically in respect of non-performing exposures, they shall be derecognised when considered unrecoverable and the Group forfeits the legal right to collect. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognitions without a forfeiture of the right to collect the receivable (i.e. \u201cwrite-off\u201d), to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, the Group identifies the exposures to be derecognised that have all of the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
Derecognitions are directly recorded under \"Net credit risk losses/reversals\" to the extent of the unadjusted remaining portion, and are recognised as a reduction of the principal. Partial or complete reversals of previous impairment losses are recognised as a reduction of \u201cNet credit risk losses/reversals\u201d.
In some cases, throughout the life of the financial assets concerned, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative and
quantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons or forbearance measures due to the counterparty's financial difficulties;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
4 - Hedge accounting
Classification criteria
With reference to hedging, the Banca Ifis Group has chosen to adopt the provisions of IFRS 9 for first-time application and not to avail itself of the option, provided by the same standard, to apply the hedge accounting rules dictated by IAS 39, in the version endorsed by the European Commission (the \u201ccarved out\u201d version), with the exception of the specific cases provided for in IFRS 9 (par. 6.1.3) and not governed by the same standard.
Risk hedging transactions are intended to neutralise, from an accounting point of view, potential recognisable losses on a particular financial instrument or group of financial instruments, attributable to a particular risk, by means of recognisable gains on a different financial instrument or group of financial instruments should that particular risk actually arise.
Only instruments involving a counterparty outside the Group can be designated as hedging instruments.
The only type of hedge used by the Group at 31 December 2023 is the specific fair value hedge (\"micro\" fair value hedge), which is intended to hedge the exposure to changes in the fair value of a balance sheet asset or liability attributable to a particular risk and, in particular, from changes in interest rates.
A derivative instrument may be considered to be a hedging instrument if there is formalised documentation of the unique relationship to the hedged item and if it is effective at the time the hedge commences and, prospectively, over the life of the hedge.
At the start of the hedging relationship there must be a formal designation and documentation of the hedging relationship, the company's risk management objectives, and the hedging strategy. This documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how to assess the effectiveness of the hedging instrument in offsetting the exposure to changes in the fair value of the hedged item.
Recognition criteria
Derivative hedging instruments are recognised at fair value, on the date the relevant contracts are entered into, and are classified as assets under item \"50. Hedging derivatives\" or on the liabilities side of the balance sheet under item \"40. Hedging derivatives\u201d depending on whether the value is positive or negative.
Measurement criteria
After initial recognition, hedging derivatives continue to be measured at fair value. Specifically, in the case of fair value hedges, the change in the fair value of the hedged item is offset by the change in the fair value of the hedging instrument. This offsetting is recognised through the recognition in the income statement of changes in value, referring both to the hedged item (as regards changes produced by the underlying risk factor) and to the hedging instrument. Any difference, representing the partial ineffectiveness of the hedge, consequently constitutes the net economic effect.
The effectiveness of the hedge depends on the extent to which changes in the fair value of the hedged instrument are offset by those of the hedging instrument. Therefore, effectiveness is appreciated by comparing the above-mentioned variations, taking into account the intent pursued at the time the hedge was implemented. Effectiveness occurs when changes in the fair value of the hedging financial instrument almost entirely neutralise changes in the hedged instrument for the hedged risk element.
Effectiveness is assessed at each balance sheet or interim reporting date using prospective tests, which justify the application of hedge accounting by demonstrating the expected effectiveness based on limits defined internally by the Group.
If the tests do not confirm the effectiveness of the hedge, hedge accounting is discontinued, the hedging derivative contract is reclassified as a trading instrument and the hedged financial instrument regains the valuation criterion corresponding to its balance sheet classification. If the hedged asset or liability is measured at amortised cost, the higher or lower value resulting from the measurement of the hedged asset or liability at fair value due to the hedge becoming ineffective is recognised in the income statement using the effective interest rate method.
In addition, the accounting for outstanding fair value hedges ceases prospectively in the following cases:
\u2022the hedging instrument matures, is terminated or exercised;
\u2022the hedged item is sold, expires or is refunded;
\u2022the decision is made to revoke the designation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page102-cflshid_49048-tag94172": { "value": "
1 - Financial assets measured at fair value through profit or loss
Classification criteria
This category comprises financial assets other than Financial assets measured at fair value through other comprehensive income and Financial assets measured at amortised cost. Specifically, this line item includes:
\u2022financial assets held for trading, essentially consisting of debt and equity securities as well as the positive amount of derivative contracts held for trading;
\u2022financial assets designated at fair value, i.e. non-derivative financial assets designated as such on initial recognition if the relevant conditions are met. At initial recognition, an entity may irrevocably designate a financial asset as measured at fair value through profit or loss if, and only if, doing so would eliminate or significantly reduce a measurement or recognition inconsistency.
\u2022financial assets mandatorily measured at fair value, consisting of financial assets that are not eligible for the measurement at amortised cost or fair value through other comprehensive income based on the relevant cash flow characteristics. Specifically, this category includes:
\u2013debt instruments, securities and loans without cash flows that are solely payments of principal and interest consistent with a \"basic lending arrangement\" (so-called \"SPPI test\" failed);
\u2013UCITS units;
\u2013equity instruments for which the Group elects not to use the option under the standard to measure them at fair value through other comprehensive income (so-called \u201cOCI Option\u201d).
Derivative contracts include those embedded in complex financial instruments if the host contract is not a financial asset falling within the scope of IFRS 9, which are recognised separately if:
\u2022the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract;
\u2022a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative;
\u2022the hybrid instrument they are part of is not measured at fair value with the relevant changes recognised in profit or loss.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured
at fair value through profit or loss to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through other comprehensive income). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. In this case, the effective interest rate of the reclassified financial asset is calculated based on its fair value at the reclassification date, which is considered to be the date of initial recognition for the stage allocation for impairment purposes.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, at the date of disbursement for loans and at inception in the case of derivative contracts. At initial recognition, financial assets are measured at fair value, which is normally equal to the price paid excluding the expenses and income directly attributable to the instrument, which are recognised in profit or loss.
Measurement criteria
Even after initial recognition, financial assets are measured at fair value, and the impact of the application of this method is recognised through profit or loss.
The fair value of the financial instruments included in this portfolio is calculated based on quoted prices in active markets, prices provided by market participants, or internal valuation models generally used for pricing financial instruments that take into account all relevant risk factors and are based on observable market data.
In the case of financial assets not quoted in an active market, the cost method is used as an approximation of fair value exclusively on a residual basis and in limited circumstances, that is if all the other previously mentioned measurement methods are not applicable.
Interest is shown under item \"10. Interest receivable and similar income\u201d.
Gains and losses from trading and valuation gains and losses from the trading portfolio, including derivatives associated with financial assets/liabilities designated at fair value, are recognised in the income statement under item \u201c80. Net profit (loss) from trading\u201d. The same economic effects relating to financial assets designated at fair value and those mandatorily measured at fair value are recorded under item \"110. Net result of other financial assets and liabilities measured at fair value through profit or loss\", under \"a) financial assets and liabilities measured at fair value\u201d and \u201cb) other financial assets mandatorily measured at fair value\u201d.
Derecognition criteria
Financial assets are derecognized only when the contractual rights to the cash flows expire or when the assets are disposed of if the disposal resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
2 - Financial assets measured at fair value through other comprehensive income
Classification criteria
This category comprises financial assets that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u201cHTC&S - Held to Collect and Sell\u201d Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
In addition, this line item includes equity instruments not held for trading for which at initial recognition the entity used the option to measure them at fair value through other comprehensive income not to be reclassified to profit or loss (so-called \"OCI Option\").
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured at fair value through other comprehensive income to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. If the asset is reclassified from the category concerned to amortised cost, the fair value of the financial asset at the reclassification date is adjusted by the accumulated gain (loss) presented in the valuation reserve. If the asset is reclassified to fair value through profit or loss, the accumulated gain (loss) previously recognised within the valuation reserve is reclassified from equity to profit or loss.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. These assets are initially recognised at fair value, including transaction costs directly attributable to the instruments, if any.
Measurement criteria
After initial recognition, the assets measured at fair value through other comprehensive income that are not equity securities are measured at fair value, recognising the impact of the application of amortised cost, impairment, and any exchange rate changes through profit or loss. Gains and losses resulting from changes in fair value are recognised under a dedicated equity reserve until the financial asset is transferred: then, accrued profits and losses are reclassified to profit or loss.
The equity instruments the Group elected to classify within this category are measured at fair value, and the amounts recognised through equity (Statement of comprehensive income) are not subsequently reclassified to profit or loss - including in the event of their disposal. The relevant dividends represent the only component of the equity securities concerned that is recognised through profit or loss.
The fair value is calculated on the basis already described for financial assets measured at fair value through profit or loss.
In the case of financial assets measured at fair value through other comprehensive income that are either debt securities or receivables, at each reporting date, including interim reporting dates, the Bank assesses whether a significant increase in credit risk (impairment) has occurred pursuant to IFRS 9, recognising an impairment loss to cover the expected credit losses through profit or loss.
Conversely, equity securities are not tested for impairment.
Derecognition criteria
Derecognition of financial assets measured at fair value through comprehensive income occurs when contractual rights to cash flows expire or if the assets are sold but only if the sale has resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Recognition of revenues and costs
Revenues
Revenues are gross streams of economic benefits flowing to the entity as consideration for the obligation to transfer to the customer a wide range of goods and services in the ordinary course of business.
Under IFRS 15, an entity must recognise revenue based on the consideration expected to be received for goods and services provided in the ordinary course of business. In detail, the recognition of revenue must take place on the basis of the following five steps:
\u2022identification of a contract, defined as an agreement of commercial substance between two or more parties capable of generating rights and obligations;
\u2022identification of the individual obligations (\"performance obligations\") contained in the contract;
\u2022determination of the transaction price, i.e. the expected consideration for the transfer of goods or services to the customer;
\u2022allocation of the transaction price to each performance obligation, based on the stand-alone selling price of the individual obligation;
\u2022recognition of the revenue allocated to the individual obligation when it is settled, i.e. when the customer obtains control of the goods and services. This recognition takes into account the fact that certain services may be rendered at a specific time or over a period of time.
Revenue arising from contractual obligations with customers is recognised in profit or loss when it is probable that the entity will receive the consideration to which it is entitled in exchange for the goods or services transferred to the customer. This consideration must be allocated to the individual obligations under the contract and must be recognised as income in the income statement according to the timing of performance of the obligation. In detail, revenues may be recognised in the income statement:
\u2022at a point in time, when the entity performs the obligation to do by transferring the promised good or service to the customer, or
\u2022over time, as the entity performs the obligation to do by transferring the promised good or service to the customer.
The obligation to perform is considered to have been performed when the customer acquires control of the transferred good or service.
The consideration promised in the contract with the customer may include fixed amounts, variable amounts, or both. In detail, the contract price may vary as a result of reductions, discounts, rebates, incentives, performance bonuses or other similar elements. The variability of the consideration may also depend on the occurrence or non-occurrence of a future event. In the case of variable consideration, revenue is recognised in the income statement if it can be reliably estimated and only if it is highly probable that all or a significant portion of the consideration will not subsequently be reversed from the income statement.
When an entity receives consideration from a customer that it expects to refund to the customer, in whole or in part, against the revenue recognised in the income statement, it is necessary to recognise a liability, to be estimated based on expected future refunds (termed a \u201crefund liability\u201d). The estimate of this liability is updated at each balance sheet or interim reporting date and is based on the portion of the consideration that the entity expects not to be entitled to.
Costs
Costs related to obtaining and fulfilling contracts with customers are recognised in the income statement in the periods in which the corresponding revenues are recognised; costs that do not have a direct association with revenues are immediately recognised in the income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradingIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page102-cflshid_49048-tag94171": { "value": "
1 - Financial assets measured at fair value through profit or loss
Classification criteria
This category comprises financial assets other than Financial assets measured at fair value through other comprehensive income and Financial assets measured at amortised cost. Specifically, this line item includes:
\u2022financial assets held for trading, essentially consisting of debt and equity securities as well as the positive amount of derivative contracts held for trading;
\u2022financial assets designated at fair value, i.e. non-derivative financial assets designated as such on initial recognition if the relevant conditions are met. At initial recognition, an entity may irrevocably designate a financial asset as measured at fair value through profit or loss if, and only if, doing so would eliminate or significantly reduce a measurement or recognition inconsistency.
\u2022financial assets mandatorily measured at fair value, consisting of financial assets that are not eligible for the measurement at amortised cost or fair value through other comprehensive income based on the relevant cash flow characteristics. Specifically, this category includes:
\u2013debt instruments, securities and loans without cash flows that are solely payments of principal and interest consistent with a \"basic lending arrangement\" (so-called \"SPPI test\" failed);
\u2013UCITS units;
\u2013equity instruments for which the Group elects not to use the option under the standard to measure them at fair value through other comprehensive income (so-called \u201cOCI Option\u201d).
Derivative contracts include those embedded in complex financial instruments if the host contract is not a financial asset falling within the scope of IFRS 9, which are recognised separately if:
\u2022the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract;
\u2022a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative;
\u2022the hybrid instrument they are part of is not measured at fair value with the relevant changes recognised in profit or loss.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured
at fair value through profit or loss to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through other comprehensive income). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. In this case, the effective interest rate of the reclassified financial asset is calculated based on its fair value at the reclassification date, which is considered to be the date of initial recognition for the stage allocation for impairment purposes.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, at the date of disbursement for loans and at inception in the case of derivative contracts. At initial recognition, financial assets are measured at fair value, which is normally equal to the price paid excluding the expenses and income directly attributable to the instrument, which are recognised in profit or loss.
Measurement criteria
Even after initial recognition, financial assets are measured at fair value, and the impact of the application of this method is recognised through profit or loss.
The fair value of the financial instruments included in this portfolio is calculated based on quoted prices in active markets, prices provided by market participants, or internal valuation models generally used for pricing financial instruments that take into account all relevant risk factors and are based on observable market data.
In the case of financial assets not quoted in an active market, the cost method is used as an approximation of fair value exclusively on a residual basis and in limited circumstances, that is if all the other previously mentioned measurement methods are not applicable.
Interest is shown under item \"10. Interest receivable and similar income\u201d.
Gains and losses from trading and valuation gains and losses from the trading portfolio, including derivatives associated with financial assets/liabilities designated at fair value, are recognised in the income statement under item \u201c80. Net profit (loss) from trading\u201d. The same economic effects relating to financial assets designated at fair value and those mandatorily measured at fair value are recorded under item \"110. Net result of other financial assets and liabilities measured at fair value through profit or loss\", under \"a) financial assets and liabilities measured at fair value\u201d and \u201cb) other financial assets mandatorily measured at fair value\u201d.
Derecognition criteria
Financial assets are derecognized only when the contractual rights to the cash flows expire or when the assets are disposed of if the disposal resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
4 - Hedge accounting
Classification criteria
With reference to hedging, the Banca Ifis Group has chosen to adopt the provisions of IFRS 9 for first-time application and not to avail itself of the option, provided by the same standard, to apply the hedge accounting rules dictated by IAS 39, in the version endorsed by the European Commission (the \u201ccarved out\u201d version), with the exception of the specific cases provided for in IFRS 9 (par. 6.1.3) and not governed by the same standard.
Risk hedging transactions are intended to neutralise, from an accounting point of view, potential recognisable losses on a particular financial instrument or group of financial instruments, attributable to a particular risk, by means of recognisable gains on a different financial instrument or group of financial instruments should that particular risk actually arise.
Only instruments involving a counterparty outside the Group can be designated as hedging instruments.
The only type of hedge used by the Group at 31 December 2023 is the specific fair value hedge (\"micro\" fair value hedge), which is intended to hedge the exposure to changes in the fair value of a balance sheet asset or liability attributable to a particular risk and, in particular, from changes in interest rates.
A derivative instrument may be considered to be a hedging instrument if there is formalised documentation of the unique relationship to the hedged item and if it is effective at the time the hedge commences and, prospectively, over the life of the hedge.
At the start of the hedging relationship there must be a formal designation and documentation of the hedging relationship, the company's risk management objectives, and the hedging strategy. This documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how to assess the effectiveness of the hedging instrument in offsetting the exposure to changes in the fair value of the hedged item.
Recognition criteria
Derivative hedging instruments are recognised at fair value, on the date the relevant contracts are entered into, and are classified as assets under item \"50. Hedging derivatives\" or on the liabilities side of the balance sheet under item \"40. Hedging derivatives\u201d depending on whether the value is positive or negative.
Measurement criteria
After initial recognition, hedging derivatives continue to be measured at fair value. Specifically, in the case of fair value hedges, the change in the fair value of the hedged item is offset by the change in the fair value of the hedging instrument. This offsetting is recognised through the recognition in the income statement of changes in value, referring both to the hedged item (as regards changes produced by the underlying risk factor) and to the hedging instrument. Any difference, representing the partial ineffectiveness of the hedge, consequently constitutes the net economic effect.
The effectiveness of the hedge depends on the extent to which changes in the fair value of the hedged instrument are offset by those of the hedging instrument. Therefore, effectiveness is appreciated by comparing the above-mentioned variations, taking into account the intent pursued at the time the hedge was implemented. Effectiveness occurs when changes in the fair value of the hedging financial instrument almost entirely neutralise changes in the hedged instrument for the hedged risk element.
Effectiveness is assessed at each balance sheet or interim reporting date using prospective tests, which justify the application of hedge accounting by demonstrating the expected effectiveness based on limits defined internally by the Group.
If the tests do not confirm the effectiveness of the hedge, hedge accounting is discontinued, the hedging derivative contract is reclassified as a trading instrument and the hedged financial instrument regains the valuation criterion corresponding to its balance sheet classification. If the hedged asset or liability is measured at amortised cost, the higher or lower value resulting from the measurement of the hedged asset or liability at fair value due to the hedge becoming ineffective is recognised in the income statement using the effective interest rate method.
In addition, the accounting for outstanding fair value hedges ceases prospectively in the following cases:
\u2022the hedging instrument matures, is terminated or exercised;
\u2022the hedged item is sold, expires or is refunded;
\u2022the decision is made to revoke the designation.
12 - Financial liabilities held for trading
Classification criteria
This item includes:
\u2022financial liabilities issued with the intention of repurchasing them in the short term;
\u2022liabilities that are part of a portfolio of financial instruments that are jointly managed and for which there is a proven strategy to achieve profits in the short term;
\u2022derivative contracts with a negative fair value and not designated as hedging instruments, including those linked to assets/liabilities designated at fair value through profit or loss.
Recognition criteria
Financial liabilities held for trading are initially recognised at the date of settlement in the case of liabilities for cash, and at inception in the case of derivative contracts.
Initial recognition is made on the basis of the fair value of the liability, normally equal to the amount collected, without considering transaction costs or income directly attributable to the instrument itself, which are charged directly to the income statement.
Measurement criteria
Even after initial recognition, financial liabilities held for trading are measured at fair value at the period closure, and the impact of the application of this method is measured through profit or loss. The fair value is calculated based on the same criteria as those used for financial assets held for trading.
Derecognition criteria
Financial liabilities held for trading are derecognised when the contractual rights to the related cash flows expire or when the financial liabilities are transferred with the transfer of substantially all risks and rewards of ownership.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page102-cflshid_49048-tag94170": { "value": "
1 - Financial assets measured at fair value through profit or loss
Classification criteria
This category comprises financial assets other than Financial assets measured at fair value through other comprehensive income and Financial assets measured at amortised cost. Specifically, this line item includes:
\u2022financial assets held for trading, essentially consisting of debt and equity securities as well as the positive amount of derivative contracts held for trading;
\u2022financial assets designated at fair value, i.e. non-derivative financial assets designated as such on initial recognition if the relevant conditions are met. At initial recognition, an entity may irrevocably designate a financial asset as measured at fair value through profit or loss if, and only if, doing so would eliminate or significantly reduce a measurement or recognition inconsistency.
\u2022financial assets mandatorily measured at fair value, consisting of financial assets that are not eligible for the measurement at amortised cost or fair value through other comprehensive income based on the relevant cash flow characteristics. Specifically, this category includes:
\u2013debt instruments, securities and loans without cash flows that are solely payments of principal and interest consistent with a \"basic lending arrangement\" (so-called \"SPPI test\" failed);
\u2013UCITS units;
\u2013equity instruments for which the Group elects not to use the option under the standard to measure them at fair value through other comprehensive income (so-called \u201cOCI Option\u201d).
Derivative contracts include those embedded in complex financial instruments if the host contract is not a financial asset falling within the scope of IFRS 9, which are recognised separately if:
\u2022the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract;
\u2022a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative;
\u2022the hybrid instrument they are part of is not measured at fair value with the relevant changes recognised in profit or loss.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured
at fair value through profit or loss to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through other comprehensive income). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. In this case, the effective interest rate of the reclassified financial asset is calculated based on its fair value at the reclassification date, which is considered to be the date of initial recognition for the stage allocation for impairment purposes.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, at the date of disbursement for loans and at inception in the case of derivative contracts. At initial recognition, financial assets are measured at fair value, which is normally equal to the price paid excluding the expenses and income directly attributable to the instrument, which are recognised in profit or loss.
Measurement criteria
Even after initial recognition, financial assets are measured at fair value, and the impact of the application of this method is recognised through profit or loss.
The fair value of the financial instruments included in this portfolio is calculated based on quoted prices in active markets, prices provided by market participants, or internal valuation models generally used for pricing financial instruments that take into account all relevant risk factors and are based on observable market data.
In the case of financial assets not quoted in an active market, the cost method is used as an approximation of fair value exclusively on a residual basis and in limited circumstances, that is if all the other previously mentioned measurement methods are not applicable.
Interest is shown under item \"10. Interest receivable and similar income\u201d.
Gains and losses from trading and valuation gains and losses from the trading portfolio, including derivatives associated with financial assets/liabilities designated at fair value, are recognised in the income statement under item \u201c80. Net profit (loss) from trading\u201d. The same economic effects relating to financial assets designated at fair value and those mandatorily measured at fair value are recorded under item \"110. Net result of other financial assets and liabilities measured at fair value through profit or loss\", under \"a) financial assets and liabilities measured at fair value\u201d and \u201cb) other financial assets mandatorily measured at fair value\u201d.
Derecognition criteria
Financial assets are derecognized only when the contractual rights to the cash flows expire or when the assets are disposed of if the disposal resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
4 - Hedge accounting
Classification criteria
With reference to hedging, the Banca Ifis Group has chosen to adopt the provisions of IFRS 9 for first-time application and not to avail itself of the option, provided by the same standard, to apply the hedge accounting rules dictated by IAS 39, in the version endorsed by the European Commission (the \u201ccarved out\u201d version), with the exception of the specific cases provided for in IFRS 9 (par. 6.1.3) and not governed by the same standard.
Risk hedging transactions are intended to neutralise, from an accounting point of view, potential recognisable losses on a particular financial instrument or group of financial instruments, attributable to a particular risk, by means of recognisable gains on a different financial instrument or group of financial instruments should that particular risk actually arise.
Only instruments involving a counterparty outside the Group can be designated as hedging instruments.
The only type of hedge used by the Group at 31 December 2023 is the specific fair value hedge (\"micro\" fair value hedge), which is intended to hedge the exposure to changes in the fair value of a balance sheet asset or liability attributable to a particular risk and, in particular, from changes in interest rates.
A derivative instrument may be considered to be a hedging instrument if there is formalised documentation of the unique relationship to the hedged item and if it is effective at the time the hedge commences and, prospectively, over the life of the hedge.
At the start of the hedging relationship there must be a formal designation and documentation of the hedging relationship, the company's risk management objectives, and the hedging strategy. This documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how to assess the effectiveness of the hedging instrument in offsetting the exposure to changes in the fair value of the hedged item.
Recognition criteria
Derivative hedging instruments are recognised at fair value, on the date the relevant contracts are entered into, and are classified as assets under item \"50. Hedging derivatives\" or on the liabilities side of the balance sheet under item \"40. Hedging derivatives\u201d depending on whether the value is positive or negative.
Measurement criteria
After initial recognition, hedging derivatives continue to be measured at fair value. Specifically, in the case of fair value hedges, the change in the fair value of the hedged item is offset by the change in the fair value of the hedging instrument. This offsetting is recognised through the recognition in the income statement of changes in value, referring both to the hedged item (as regards changes produced by the underlying risk factor) and to the hedging instrument. Any difference, representing the partial ineffectiveness of the hedge, consequently constitutes the net economic effect.
The effectiveness of the hedge depends on the extent to which changes in the fair value of the hedged instrument are offset by those of the hedging instrument. Therefore, effectiveness is appreciated by comparing the above-mentioned variations, taking into account the intent pursued at the time the hedge was implemented. Effectiveness occurs when changes in the fair value of the hedging financial instrument almost entirely neutralise changes in the hedged instrument for the hedged risk element.
Effectiveness is assessed at each balance sheet or interim reporting date using prospective tests, which justify the application of hedge accounting by demonstrating the expected effectiveness based on limits defined internally by the Group.
If the tests do not confirm the effectiveness of the hedge, hedge accounting is discontinued, the hedging derivative contract is reclassified as a trading instrument and the hedged financial instrument regains the valuation criterion corresponding to its balance sheet classification. If the hedged asset or liability is measured at amortised cost, the higher or lower value resulting from the measurement of the hedged asset or liability at fair value due to the hedge becoming ineffective is recognised in the income statement using the effective interest rate method.
In addition, the accounting for outstanding fair value hedges ceases prospectively in the following cases:
\u2022the hedging instrument matures, is terminated or exercised;
\u2022the hedged item is sold, expires or is refunded;
\u2022the decision is made to revoke the designation.
12 - Financial liabilities held for trading
Classification criteria
This item includes:
\u2022financial liabilities issued with the intention of repurchasing them in the short term;
\u2022liabilities that are part of a portfolio of financial instruments that are jointly managed and for which there is a proven strategy to achieve profits in the short term;
\u2022derivative contracts with a negative fair value and not designated as hedging instruments, including those linked to assets/liabilities designated at fair value through profit or loss.
Recognition criteria
Financial liabilities held for trading are initially recognised at the date of settlement in the case of liabilities for cash, and at inception in the case of derivative contracts.
Initial recognition is made on the basis of the fair value of the liability, normally equal to the amount collected, without considering transaction costs or income directly attributable to the instrument itself, which are charged directly to the income statement.
Measurement criteria
Even after initial recognition, financial liabilities held for trading are measured at fair value at the period closure, and the impact of the application of this method is measured through profit or loss. The fair value is calculated based on the same criteria as those used for financial assets held for trading.
Derecognition criteria
Financial liabilities held for trading are derecognised when the contractual rights to the related cash flows expire or when the financial liabilities are transferred with the transfer of substantially all risks and rewards of ownership.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page102-cflshid_49048-tag94169": { "value": "
1 - Financial assets measured at fair value through profit or loss
Classification criteria
This category comprises financial assets other than Financial assets measured at fair value through other comprehensive income and Financial assets measured at amortised cost. Specifically, this line item includes:
\u2022financial assets held for trading, essentially consisting of debt and equity securities as well as the positive amount of derivative contracts held for trading;
\u2022financial assets designated at fair value, i.e. non-derivative financial assets designated as such on initial recognition if the relevant conditions are met. At initial recognition, an entity may irrevocably designate a financial asset as measured at fair value through profit or loss if, and only if, doing so would eliminate or significantly reduce a measurement or recognition inconsistency.
\u2022financial assets mandatorily measured at fair value, consisting of financial assets that are not eligible for the measurement at amortised cost or fair value through other comprehensive income based on the relevant cash flow characteristics. Specifically, this category includes:
\u2013debt instruments, securities and loans without cash flows that are solely payments of principal and interest consistent with a \"basic lending arrangement\" (so-called \"SPPI test\" failed);
\u2013UCITS units;
\u2013equity instruments for which the Group elects not to use the option under the standard to measure them at fair value through other comprehensive income (so-called \u201cOCI Option\u201d).
Derivative contracts include those embedded in complex financial instruments if the host contract is not a financial asset falling within the scope of IFRS 9, which are recognised separately if:
\u2022the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract;
\u2022a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative;
\u2022the hybrid instrument they are part of is not measured at fair value with the relevant changes recognised in profit or loss.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured
at fair value through profit or loss to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through other comprehensive income). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. In this case, the effective interest rate of the reclassified financial asset is calculated based on its fair value at the reclassification date, which is considered to be the date of initial recognition for the stage allocation for impairment purposes.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, at the date of disbursement for loans and at inception in the case of derivative contracts. At initial recognition, financial assets are measured at fair value, which is normally equal to the price paid excluding the expenses and income directly attributable to the instrument, which are recognised in profit or loss.
Measurement criteria
Even after initial recognition, financial assets are measured at fair value, and the impact of the application of this method is recognised through profit or loss.
The fair value of the financial instruments included in this portfolio is calculated based on quoted prices in active markets, prices provided by market participants, or internal valuation models generally used for pricing financial instruments that take into account all relevant risk factors and are based on observable market data.
In the case of financial assets not quoted in an active market, the cost method is used as an approximation of fair value exclusively on a residual basis and in limited circumstances, that is if all the other previously mentioned measurement methods are not applicable.
Interest is shown under item \"10. Interest receivable and similar income\u201d.
Gains and losses from trading and valuation gains and losses from the trading portfolio, including derivatives associated with financial assets/liabilities designated at fair value, are recognised in the income statement under item \u201c80. Net profit (loss) from trading\u201d. The same economic effects relating to financial assets designated at fair value and those mandatorily measured at fair value are recorded under item \"110. Net result of other financial assets and liabilities measured at fair value through profit or loss\", under \"a) financial assets and liabilities measured at fair value\u201d and \u201cb) other financial assets mandatorily measured at fair value\u201d.
Derecognition criteria
Financial assets are derecognized only when the contractual rights to the cash flows expire or when the assets are disposed of if the disposal resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
2 - Financial assets measured at fair value through other comprehensive income
Classification criteria
This category comprises financial assets that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u201cHTC&S - Held to Collect and Sell\u201d Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
In addition, this line item includes equity instruments not held for trading for which at initial recognition the entity used the option to measure them at fair value through other comprehensive income not to be reclassified to profit or loss (so-called \"OCI Option\").
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured at fair value through other comprehensive income to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. If the asset is reclassified from the category concerned to amortised cost, the fair value of the financial asset at the reclassification date is adjusted by the accumulated gain (loss) presented in the valuation reserve. If the asset is reclassified to fair value through profit or loss, the accumulated gain (loss) previously recognised within the valuation reserve is reclassified from equity to profit or loss.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. These assets are initially recognised at fair value, including transaction costs directly attributable to the instruments, if any.
Measurement criteria
After initial recognition, the assets measured at fair value through other comprehensive income that are not equity securities are measured at fair value, recognising the impact of the application of amortised cost, impairment, and any exchange rate changes through profit or loss. Gains and losses resulting from changes in fair value are recognised under a dedicated equity reserve until the financial asset is transferred: then, accrued profits and losses are reclassified to profit or loss.
The equity instruments the Group elected to classify within this category are measured at fair value, and the amounts recognised through equity (Statement of comprehensive income) are not subsequently reclassified to profit or loss - including in the event of their disposal. The relevant dividends represent the only component of the equity securities concerned that is recognised through profit or loss.
The fair value is calculated on the basis already described for financial assets measured at fair value through profit or loss.
In the case of financial assets measured at fair value through other comprehensive income that are either debt securities or receivables, at each reporting date, including interim reporting dates, the Bank assesses whether a significant increase in credit risk (impairment) has occurred pursuant to IFRS 9, recognising an impairment loss to cover the expected credit losses through profit or loss.
Conversely, equity securities are not tested for impairment.
Derecognition criteria
Derecognition of financial assets measured at fair value through comprehensive income occurs when contractual rights to cash flows expire or if the assets are sold but only if the sale has resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
12 - Financial liabilities held for trading
Classification criteria
This item includes:
\u2022financial liabilities issued with the intention of repurchasing them in the short term;
\u2022liabilities that are part of a portfolio of financial instruments that are jointly managed and for which there is a proven strategy to achieve profits in the short term;
\u2022derivative contracts with a negative fair value and not designated as hedging instruments, including those linked to assets/liabilities designated at fair value through profit or loss.
Recognition criteria
Financial liabilities held for trading are initially recognised at the date of settlement in the case of liabilities for cash, and at inception in the case of derivative contracts.
Initial recognition is made on the basis of the fair value of the liability, normally equal to the amount collected, without considering transaction costs or income directly attributable to the instrument itself, which are charged directly to the income statement.
Measurement criteria
Even after initial recognition, financial liabilities held for trading are measured at fair value at the period closure, and the impact of the application of this method is measured through profit or loss. The fair value is calculated based on the same criteria as those used for financial assets held for trading.
Derecognition criteria
Financial liabilities held for trading are derecognised when the contractual rights to the related cash flows expire or when the financial liabilities are transferred with the transfer of substantially all risks and rewards of ownership.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page103-cflshid_49554-tag94178": { "value": "
Derecognition criteria
Financial assets are derecognized only when the contractual rights to the cash flows expire or when the assets are disposed of if the disposal resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on
Derecognition criteria
Derecognition of financial assets measured at fair value through comprehensive income occurs when contractual rights to cash flows expire or if the assets are sold but only if the sale has resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Derecognition criteria
Financial assets measured at amortised cost are derecognised when all contractual rights over the cash flows have expired or if they are assigned but only when all relevant risks and rewards have been substantially transferred. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Finally, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Specifically in respect of non-performing exposures, they shall be derecognised when considered unrecoverable and the Group forfeits the legal right to collect. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognitions without a forfeiture of the right to collect the receivable (i.e. \u201cwrite-off\u201d), to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, the Group identifies the exposures to be derecognised that have all of the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
Derecognitions are directly recorded under \"Net credit risk losses/reversals\" to the extent of the unadjusted remaining portion, and are recognised as a reduction of the principal. Partial or complete reversals of previous impairment losses are recognised as a reduction of \u201cNet credit risk losses/reversals\u201d.
In some cases, throughout the life of the financial assets concerned, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative andquantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons or forbearance measures due to the counterparty's financial difficulties;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
Derecognition criteria
Equity investments are derecognised when there is a sale that transfers substantially all the risks and rewards associated with them.
In the presence of a situation that results in the loss of significant influence or joint control, any remaining equity investment is reclassified to the financial asset portfolios required by IFRS 9.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page103-cflshid_49554-tag94180": { "value": "
2 - Financial assets measured at fair value through other comprehensive income
Classification criteria
This category comprises financial assets that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u201cHTC&S - Held to Collect and Sell\u201d Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
In addition, this line item includes equity instruments not held for trading for which at initial recognition the entity used the option to measure them at fair value through other comprehensive income not to be reclassified to profit or loss (so-called \"OCI Option\").
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured at fair value through other comprehensive income to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. If the asset is reclassified from the category concerned to amortised cost, the fair value of the financial asset at the reclassification date is adjusted by the accumulated gain (loss) presented in the valuation reserve. If the asset is reclassified to fair value through profit or loss, the accumulated gain (loss) previously recognised within the valuation reserve is reclassified from equity to profit or loss.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. These assets are initially recognised at fair value, including transaction costs directly attributable to the instruments, if any.
Measurement criteria
After initial recognition, the assets measured at fair value through other comprehensive income that are not equity securities are measured at fair value, recognising the impact of the application of amortised cost, impairment, and any exchange rate changes through profit or loss. Gains and losses resulting from changes in fair value are recognised under a dedicated equity reserve until the financial asset is transferred: then, accrued profits and losses are reclassified to profit or loss.
The equity instruments the Group elected to classify within this category are measured at fair value, and the amounts recognised through equity (Statement of comprehensive income) are not subsequently reclassified to profit or loss - including in the event of their disposal. The relevant dividends represent the only component of the equity securities concerned that is recognised through profit or loss.
The fair value is calculated on the basis already described for financial assets measured at fair value through profit or loss.
In the case of financial assets measured at fair value through other comprehensive income that are either debt securities or receivables, at each reporting date, including interim reporting dates, the Bank assesses whether a significant increase in credit risk (impairment) has occurred pursuant to IFRS 9, recognising an impairment loss to cover the expected credit losses through profit or loss.
Conversely, equity securities are not tested for impairment.
Derecognition criteria
Derecognition of financial assets measured at fair value through comprehensive income occurs when contractual rights to cash flows expire or if the assets are sold but only if the sale has resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
3 - Financial assets measured at amortised cost
Classification criteria
This category includes financial assets (specifically loans and debt securities) that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows (\"HTC - Held to Collect\" Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration
for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
Specifically, if the above technical requirements are met, this line item includes:
\u2022loans and advances to banks, with the exception of loans and advances on demand (which are classified under \"Cash and cash equivalents\");
\u2022receivables due from customers, largely consisting of:
\u2013demand advances to customers as part of factoring operations vis-\u00e0-vis a receivables portfolio factored with recourse and still recognised in the seller\u2019s statement of financial position, or vis-\u00e0-vis receivables factored without recourse, providing no contractual clauses that eliminate the conditions for their recognition exist;
\u2013loans to customers deriving from mortgages or loans extended as part of corporate banking operations;
\u2013repurchase and reverse repurchase agreements;
\u2013receivables arising from finance leases;
\u2013salary- or pension-backed loans or payment delegations;
\u2013a portfolio of non-performing loans acquired from third-party operators (referred to as \u201cPOCI\u201d);
\u2022debt securities acquired through subscription or private placement, with fixed or determinable payments, not quoted in active markets.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, which are expected to be very infrequent, the financial assets may be reclassified from the category measured at amortised cost to one of the other two categories under IFRS 9 (Financial assets measured at fair value through other comprehensive income or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. Gains or losses arising from the difference between the amortised cost of the financial asset and the relevant fair value are measured through profit or loss if the asset is reclassified to Financial assets measured at fair value through profit or loss or, if it is reclassified to Financial assets measured at fair value through other comprehensive income, through equity, within the specific valuation reserve.
Recognition criteria
These financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. At initial recognition, the assets are measured at fair value, including transaction income or costs directly attributable to the asset. Costs meeting these characteristics, but to be reimbursed by the debtor or falling under normal internal administrative costs, are excluded.
Repurchase agreements or reverse repurchase agreements are recognised as funding or lending transactions. Specifically, repurchase agreements are recognised as payables for the amount received, while reverse repurchase agreements are recognised as receivables for the amount paid.
Measurement criteria
After initial recognition, receivables are measured at amortised cost, which is equal to the initial amount minus/plus principal repayments, impairment losses/reversals of impairment losses, and amortisation calculated using the effective interest method. The effective interest rate is calculated as the rate at which the present value of expected cash flows for the principal and interest is equal to the amount of the loan granted, including any costs/revenues directly attributable to the financial asset. This finance-based accounting method allows to spread the economic effect of costs/revenues over the expected residual life of the receivable.
The amortised cost method usually does not apply to short-term loans, as the effect would be immaterial. These are measured instead at their acquisition cost. A similar criterion applies to loans without a definite payment date or revocable loans. Furthermore, newly acquired distressed retail loans are measured at cost until the Bank has started taking action to collect the debt, as specified later on in the part concerning non-performing exposures in the Npl Segment.
At each reporting date, including interim reporting dates, the Group estimates the impairment of these assets in accordance with the impairment rules of IFRS 9.
The aforementioned assets are in fact examined with the aim of estimating the expected losses in value related to credit risk (\u201cECL\u201d - \u201cExpected Credit Losses\u201d). These losses are recognised in the income statement under item
\"130. Net credit risk losses/reversals\u201d. If it is found that there is no reasonable expectation of recovery, the gross exposure is written off: in such a case, the gross exposure is reduced by the amount considered unrecoverable, offset by the reversal of the provision to cover expected losses and impairment losses in the income statement, for the portion not covered by the provision.
In more detail, the impairment model, as described in detail in paragraph \u201c16 - Other Information\u201d of this Section A.2, provides for the classification of assets into three distinct \"Stages\" (Stage 1, Stage 2, Stage 3), depending on the evolution of the debtor's creditworthiness, to which correspond different criteria for measuring expected losses:
\u2022Stage 1: unimpaired (performing) financial assets for which no significant deterioration in credit risk has been observed since initial recognition or for which the credit risk is considered low. Impairment is based on an estimate of expected loss with a time horizon of one year;
\u2022Stage 2: unimpaired (performing) financial assets that have experienced a significant deterioration in credit risk since initial recognition (SICR - \u201cSignificant Increase in Credit Risk\u201d). Impairment is based on an estimate of the expected loss over the entire remaining life of the financial asset;
\u2022Stage 3: impaired financial assets for which there is objective evidence of impairment and which are assessed on the basis of an estimate of the expected loss over the life of the instrument.
For performing assets, expected losses are determined according to a collective process based on certain risk parameters represented by the probability of default (PD), the loss given default (LGD) and the exposure value (EAD).
For impaired assets, impairment losses are quantified on the basis of an analytical valuation process according to homogeneous risk categories - aimed at determining the present value of expected future recoverable cash flows, discounted on the basis of the original effective interest rate.
Impaired assets include exposures that have been attributed the status of non-performing, unlikely to pay or past-due/overdrawn for more than ninety days according to the definitions established by current supervisory regulations (Bank of Italy Circular No. 272 \"Accounts Matrix\") and recalled by Bank of Italy Circular No. 262, as they are considered consistent with the accounting rules set forth by IFRS 9 in terms of objective evidence of impairment.
The projected cash flows also take into account expected recovery times and the presumed net realisable value of any guarantees.
The original value of the financial assets is reinstated in subsequent years if the credit quality of the exposure improves compared to that which led to the previous write-down. The write-back is recorded in the income statement under the same heading (\"130. Net credit risk losses/reversals\") and, in any event, may not exceed the amortised cost that the asset would have had in the absence of previous adjustments.
Purchased or Originated Credit Impaired (POCI)
\u201cPurchased or Originated Credit Impaired (POCI) Financial Assets\u201d means the exposures that were impaired at the date they were acquired or originated.
POCI financial assets include also the exposures acquired as part of sales (of either individual assets or portfolios) and business combinations.
As previously mentioned, interest is accounted for by applying a credit-adjusted effective interest rate, i.e. the rate that, upon initial recognition, discounts all the asset's estimated future cash receipts at amortised cost considering also lifetime expected credit losses.
The Bank regularly reviews said expected credit losses, recognising impairment losses or gains through profit or loss. Favourable changes in lifetime ECLs are recognised as an impairment gain, even if said lifetime ECLs are lower than those incorporated into cash flow estimates at initial recognition.
\"Purchased or Originated Credit Impaired Financial Assets\" are usually allocated to Stage 3 at initial recognition.
A subsequent improvement in the counterparty's creditworthiness, which may be reflected in the present value of cash flows, shall cause the exposure to be classified within Stage 2.
These assets shall never be allocated to Stage 1, as the expected credit loss must always be calculated over a time horizon equal to their remaining useful life, whereas IFRS 9 requires an ECL estimated over a 12-month horizon for Stage 1 assets.
The Npl Segment's receivables all qualify as POCI financial assets (POCIs are the Segment's core business) and are recognised and assessed through the following steps:
\u2022at the time of purchase, receivables are recognised by allocating the portfolio's purchase price among the individual receivables it consists of through the following steps:
\u2013recognition of the individual receivables at a value equal to the contract price, which is used for the purposes of reporting to the Central Credit Register;
\u2013after verifying the documentation, if provided in the contract, the Bank returns the positions lacking documentation or beyond the statute of limitations to the seller, and measures the fair value of receivables which actually exist and can be collected; finally, after sending a notice of assignment to the debtor, the Bank can start taking action to collect the receivable;
\u2013once the collection process begins, receivables are measured at amortised cost using the effective interest rate method (the \u201cEIR\u201d or \u201cTIR\u201d);
\u2013the effective interest rate is calculated on the basis of the price paid, the transaction costs, if any, and the estimated cash flows and collection time calculated using either proprietary models or analytical estimates made by managers;
\u2013the effective interest rate as set out in the previous point is unchanged over time;
\u2013at the end of each year, interest income accrued on the basis of the original effective interest rate is recognised under Interest Income. Said interest is calculated as follows: Amortised Cost at the beginning of the year x IRR/365 x days in the year;
\u2013in addition, at the end of each financial year, the expected cash flows for each position are re-estimated;
\u2022should events occur (higher or lower revenues realised or expected compared to forecasts and/or a change in collection times) which cause a change in the amortised cost (calculated by discounting the new cash flows at the original effective rate compared to the amortised cost in the financial year), this change is also recognised under \"Credit risk losses/reversals\" on the income statement.
Derecognition criteria
Financial assets measured at amortised cost are derecognised when all contractual rights over the cash flows have expired or if they are assigned but only when all relevant risks and rewards have been substantially transferred. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Finally, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Specifically in respect of non-performing exposures, they shall be derecognised when considered unrecoverable and the Group forfeits the legal right to collect. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognitions without a forfeiture of the right to collect the receivable (i.e. \u201cwrite-off\u201d), to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, the Group identifies the exposures to be derecognised that have all of the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
Derecognitions are directly recorded under \"Net credit risk losses/reversals\" to the extent of the unadjusted remaining portion, and are recognised as a reduction of the principal. Partial or complete reversals of previous impairment losses are recognised as a reduction of \u201cNet credit risk losses/reversals\u201d.
In some cases, throughout the life of the financial assets concerned, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative and
quantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons or forbearance measures due to the counterparty's financial difficulties;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
5 - Equity investments
Classification criteria
This item includes interests held in associates or jointly controlled companies, which are accounted for using the equity method.
Associated companies are considered to be non-controlled companies in which significant influence is exercised. Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights (including \u201cpotential\u201d voting rights) and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Recognition criteria
The initial recognition of financial assets classified in this category takes place on the settlement date at cost, including any goodwill paid at the time of acquisition, which is therefore not subject to separate, independent recognition.
Measurement criteria
Equity investments are measured using the equity method. This method requires that the initial carrying amount is subsequently increased or decreased to recognise the Group's share of the profits and losses of the investees realised after the acquisition date. Dividends received from an investee are deducted from the carrying amount of the investment.
If it is necessary to make value adjustments arising from changes in the investee company's equity that it did not recognise in the income statement (e.g., changes arising from the fair value measurement of \"Financial assets measured at fair value through other comprehensive income\", the measurement of actuarial gains/losses of defined benefit plans), the Group's share of these changes is recognised directly in equity item \"120. Valuation reserves\u201d.
In applying the equity method, the most recent available financial statements of the associate/jointly controlled entity are used, appropriately adjusted for any significant events or transactions that occurred between the last available financial statements of the investee and the reference date of the Consolidated Financial Statements. If the investee company uses accounting principles that differ from those used by the Group, changes are made to the financial statements of the investee.
If there is objective evidence that an equity investment may be impaired, the entity shall estimate its recoverable amount, taking into account the present value of the future cash flows that it could generate, including from its ultimate disposal. If the recoverable amount is less than the carrying amount, the difference is recognised in profit or loss.
If the reasons for the impairment no longer exist as a result of an event that occurred after the recognition of the impairment loss, this is reversed through profit or loss.
Derecognition criteria
Equity investments are derecognised when there is a sale that transfers substantially all the risks and rewards associated with them.
In the presence of a situation that results in the loss of significant influence or joint control, any remaining equity investment is reclassified to the financial asset portfolios required by IFRS 9.
Impairment of financial instruments
Under IFRS 9, the relevant impairment provisions apply to financial assets measured at amortised cost, financial assets measured at fair value through other comprehensive income that are not equity securities, and loan commitments and guarantees granted that are not measured at fair value through profit or loss.
\u201cExpected Credit Losses\u201d (ECLs) are calculated based on whether the financial instrument's credit risk has significantly increased since initial recognition.
The general impairment model requires allocating the financial instruments within the scope of IFRS 9 to three Stages, which reflect the deterioration in credit quality:
\u2022Stage 1: financial instruments that have not had a significant increase in credit risk since initial recognition or that have low credit risk at the reporting date;
\u2022Stage 2: financial instruments that have had a significant increase in credit risk since initial recognition (unless they have low credit risk at the reporting date) but that individually do not have objective evidence of impairment;
\u2022Stage 3: financial assets that have had a significant increase in credit risk since initial recognition with objective evidence of impairment at the reporting date. This coincides with non-performing exposures, i.e. those classified as bad loans, unlikely to pay, or non-performing past due exposures according to the rules of the Bank of Italy.
For further details, please refer to paragraph \"2.3 Measurement of expected losses\" in \"Section 2 - Prudential consolidation risks\" of \"Part E - Information on risks and related hedging policies\" of the Notes to the Consolidated Financial Statements.
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2 - Financial assets measured at fair value through other comprehensive income
Classification criteria
This category comprises financial assets that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u201cHTC&S - Held to Collect and Sell\u201d Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
In addition, this line item includes equity instruments not held for trading for which at initial recognition the entity used the option to measure them at fair value through other comprehensive income not to be reclassified to profit or loss (so-called \"OCI Option\").
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, financial assets may be reclassified from the category measured at fair value through other comprehensive income to one of the other two categories under IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. If the asset is reclassified from the category concerned to amortised cost, the fair value of the financial asset at the reclassification date is adjusted by the accumulated gain (loss) presented in the valuation reserve. If the asset is reclassified to fair value through profit or loss, the accumulated gain (loss) previously recognised within the valuation reserve is reclassified from equity to profit or loss.
Recognition criteria
Financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. These assets are initially recognised at fair value, including transaction costs directly attributable to the instruments, if any.
Measurement criteria
After initial recognition, the assets measured at fair value through other comprehensive income that are not equity securities are measured at fair value, recognising the impact of the application of amortised cost, impairment, and any exchange rate changes through profit or loss. Gains and losses resulting from changes in fair value are recognised under a dedicated equity reserve until the financial asset is transferred: then, accrued profits and losses are reclassified to profit or loss.
The equity instruments the Group elected to classify within this category are measured at fair value, and the amounts recognised through equity (Statement of comprehensive income) are not subsequently reclassified to profit or loss - including in the event of their disposal. The relevant dividends represent the only component of the equity securities concerned that is recognised through profit or loss.
The fair value is calculated on the basis already described for financial assets measured at fair value through profit or loss.
In the case of financial assets measured at fair value through other comprehensive income that are either debt securities or receivables, at each reporting date, including interim reporting dates, the Bank assesses whether a significant increase in credit risk (impairment) has occurred pursuant to IFRS 9, recognising an impairment loss to cover the expected credit losses through profit or loss.
Conversely, equity securities are not tested for impairment.
Derecognition criteria
Derecognition of financial assets measured at fair value through comprehensive income occurs when contractual rights to cash flows expire or if the assets are sold but only if the sale has resulted in the substantial transfer of all risks and rewards associated with the assets. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Lastly, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
3 - Financial assets measured at amortised cost
Classification criteria
This category includes financial assets (specifically loans and debt securities) that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows (\"HTC - Held to Collect\" Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration
for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
Specifically, if the above technical requirements are met, this line item includes:
\u2022loans and advances to banks, with the exception of loans and advances on demand (which are classified under \"Cash and cash equivalents\");
\u2022receivables due from customers, largely consisting of:
\u2013demand advances to customers as part of factoring operations vis-\u00e0-vis a receivables portfolio factored with recourse and still recognised in the seller\u2019s statement of financial position, or vis-\u00e0-vis receivables factored without recourse, providing no contractual clauses that eliminate the conditions for their recognition exist;
\u2013loans to customers deriving from mortgages or loans extended as part of corporate banking operations;
\u2013repurchase and reverse repurchase agreements;
\u2013receivables arising from finance leases;
\u2013salary- or pension-backed loans or payment delegations;
\u2013a portfolio of non-performing loans acquired from third-party operators (referred to as \u201cPOCI\u201d);
\u2022debt securities acquired through subscription or private placement, with fixed or determinable payments, not quoted in active markets.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, which are expected to be very infrequent, the financial assets may be reclassified from the category measured at amortised cost to one of the other two categories under IFRS 9 (Financial assets measured at fair value through other comprehensive income or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. Gains or losses arising from the difference between the amortised cost of the financial asset and the relevant fair value are measured through profit or loss if the asset is reclassified to Financial assets measured at fair value through profit or loss or, if it is reclassified to Financial assets measured at fair value through other comprehensive income, through equity, within the specific valuation reserve.
Recognition criteria
These financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. At initial recognition, the assets are measured at fair value, including transaction income or costs directly attributable to the asset. Costs meeting these characteristics, but to be reimbursed by the debtor or falling under normal internal administrative costs, are excluded.
Repurchase agreements or reverse repurchase agreements are recognised as funding or lending transactions. Specifically, repurchase agreements are recognised as payables for the amount received, while reverse repurchase agreements are recognised as receivables for the amount paid.
Measurement criteria
After initial recognition, receivables are measured at amortised cost, which is equal to the initial amount minus/plus principal repayments, impairment losses/reversals of impairment losses, and amortisation calculated using the effective interest method. The effective interest rate is calculated as the rate at which the present value of expected cash flows for the principal and interest is equal to the amount of the loan granted, including any costs/revenues directly attributable to the financial asset. This finance-based accounting method allows to spread the economic effect of costs/revenues over the expected residual life of the receivable.
The amortised cost method usually does not apply to short-term loans, as the effect would be immaterial. These are measured instead at their acquisition cost. A similar criterion applies to loans without a definite payment date or revocable loans. Furthermore, newly acquired distressed retail loans are measured at cost until the Bank has started taking action to collect the debt, as specified later on in the part concerning non-performing exposures in the Npl Segment.
At each reporting date, including interim reporting dates, the Group estimates the impairment of these assets in accordance with the impairment rules of IFRS 9.
The aforementioned assets are in fact examined with the aim of estimating the expected losses in value related to credit risk (\u201cECL\u201d - \u201cExpected Credit Losses\u201d). These losses are recognised in the income statement under item
\"130. Net credit risk losses/reversals\u201d. If it is found that there is no reasonable expectation of recovery, the gross exposure is written off: in such a case, the gross exposure is reduced by the amount considered unrecoverable, offset by the reversal of the provision to cover expected losses and impairment losses in the income statement, for the portion not covered by the provision.
In more detail, the impairment model, as described in detail in paragraph \u201c16 - Other Information\u201d of this Section A.2, provides for the classification of assets into three distinct \"Stages\" (Stage 1, Stage 2, Stage 3), depending on the evolution of the debtor's creditworthiness, to which correspond different criteria for measuring expected losses:
\u2022Stage 1: unimpaired (performing) financial assets for which no significant deterioration in credit risk has been observed since initial recognition or for which the credit risk is considered low. Impairment is based on an estimate of expected loss with a time horizon of one year;
\u2022Stage 2: unimpaired (performing) financial assets that have experienced a significant deterioration in credit risk since initial recognition (SICR - \u201cSignificant Increase in Credit Risk\u201d). Impairment is based on an estimate of the expected loss over the entire remaining life of the financial asset;
\u2022Stage 3: impaired financial assets for which there is objective evidence of impairment and which are assessed on the basis of an estimate of the expected loss over the life of the instrument.
For performing assets, expected losses are determined according to a collective process based on certain risk parameters represented by the probability of default (PD), the loss given default (LGD) and the exposure value (EAD).
For impaired assets, impairment losses are quantified on the basis of an analytical valuation process according to homogeneous risk categories - aimed at determining the present value of expected future recoverable cash flows, discounted on the basis of the original effective interest rate.
Impaired assets include exposures that have been attributed the status of non-performing, unlikely to pay or past-due/overdrawn for more than ninety days according to the definitions established by current supervisory regulations (Bank of Italy Circular No. 272 \"Accounts Matrix\") and recalled by Bank of Italy Circular No. 262, as they are considered consistent with the accounting rules set forth by IFRS 9 in terms of objective evidence of impairment.
The projected cash flows also take into account expected recovery times and the presumed net realisable value of any guarantees.
The original value of the financial assets is reinstated in subsequent years if the credit quality of the exposure improves compared to that which led to the previous write-down. The write-back is recorded in the income statement under the same heading (\"130. Net credit risk losses/reversals\") and, in any event, may not exceed the amortised cost that the asset would have had in the absence of previous adjustments.
Purchased or Originated Credit Impaired (POCI)
\u201cPurchased or Originated Credit Impaired (POCI) Financial Assets\u201d means the exposures that were impaired at the date they were acquired or originated.
POCI financial assets include also the exposures acquired as part of sales (of either individual assets or portfolios) and business combinations.
As previously mentioned, interest is accounted for by applying a credit-adjusted effective interest rate, i.e. the rate that, upon initial recognition, discounts all the asset's estimated future cash receipts at amortised cost considering also lifetime expected credit losses.
The Bank regularly reviews said expected credit losses, recognising impairment losses or gains through profit or loss. Favourable changes in lifetime ECLs are recognised as an impairment gain, even if said lifetime ECLs are lower than those incorporated into cash flow estimates at initial recognition.
\"Purchased or Originated Credit Impaired Financial Assets\" are usually allocated to Stage 3 at initial recognition.
A subsequent improvement in the counterparty's creditworthiness, which may be reflected in the present value of cash flows, shall cause the exposure to be classified within Stage 2.
These assets shall never be allocated to Stage 1, as the expected credit loss must always be calculated over a time horizon equal to their remaining useful life, whereas IFRS 9 requires an ECL estimated over a 12-month horizon for Stage 1 assets.
The Npl Segment's receivables all qualify as POCI financial assets (POCIs are the Segment's core business) and are recognised and assessed through the following steps:
\u2022at the time of purchase, receivables are recognised by allocating the portfolio's purchase price among the individual receivables it consists of through the following steps:
\u2013recognition of the individual receivables at a value equal to the contract price, which is used for the purposes of reporting to the Central Credit Register;
\u2013after verifying the documentation, if provided in the contract, the Bank returns the positions lacking documentation or beyond the statute of limitations to the seller, and measures the fair value of receivables which actually exist and can be collected; finally, after sending a notice of assignment to the debtor, the Bank can start taking action to collect the receivable;
\u2013once the collection process begins, receivables are measured at amortised cost using the effective interest rate method (the \u201cEIR\u201d or \u201cTIR\u201d);
\u2013the effective interest rate is calculated on the basis of the price paid, the transaction costs, if any, and the estimated cash flows and collection time calculated using either proprietary models or analytical estimates made by managers;
\u2013the effective interest rate as set out in the previous point is unchanged over time;
\u2013at the end of each year, interest income accrued on the basis of the original effective interest rate is recognised under Interest Income. Said interest is calculated as follows: Amortised Cost at the beginning of the year x IRR/365 x days in the year;
\u2013in addition, at the end of each financial year, the expected cash flows for each position are re-estimated;
\u2022should events occur (higher or lower revenues realised or expected compared to forecasts and/or a change in collection times) which cause a change in the amortised cost (calculated by discounting the new cash flows at the original effective rate compared to the amortised cost in the financial year), this change is also recognised under \"Credit risk losses/reversals\" on the income statement.
Derecognition criteria
Financial assets measured at amortised cost are derecognised when all contractual rights over the cash flows have expired or if they are assigned but only when all relevant risks and rewards have been substantially transferred. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Finally, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Specifically in respect of non-performing exposures, they shall be derecognised when considered unrecoverable and the Group forfeits the legal right to collect. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognitions without a forfeiture of the right to collect the receivable (i.e. \u201cwrite-off\u201d), to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, the Group identifies the exposures to be derecognised that have all of the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
Derecognitions are directly recorded under \"Net credit risk losses/reversals\" to the extent of the unadjusted remaining portion, and are recognised as a reduction of the principal. Partial or complete reversals of previous impairment losses are recognised as a reduction of \u201cNet credit risk losses/reversals\u201d.
In some cases, throughout the life of the financial assets concerned, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative and
quantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons or forbearance measures due to the counterparty's financial difficulties;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
5 - Equity investments
Classification criteria
This item includes interests held in associates or jointly controlled companies, which are accounted for using the equity method.
Associated companies are considered to be non-controlled companies in which significant influence is exercised. Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights (including \u201cpotential\u201d voting rights) and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Recognition criteria
The initial recognition of financial assets classified in this category takes place on the settlement date at cost, including any goodwill paid at the time of acquisition, which is therefore not subject to separate, independent recognition.
Measurement criteria
Equity investments are measured using the equity method. This method requires that the initial carrying amount is subsequently increased or decreased to recognise the Group's share of the profits and losses of the investees realised after the acquisition date. Dividends received from an investee are deducted from the carrying amount of the investment.
If it is necessary to make value adjustments arising from changes in the investee company's equity that it did not recognise in the income statement (e.g., changes arising from the fair value measurement of \"Financial assets measured at fair value through other comprehensive income\", the measurement of actuarial gains/losses of defined benefit plans), the Group's share of these changes is recognised directly in equity item \"120. Valuation reserves\u201d.
In applying the equity method, the most recent available financial statements of the associate/jointly controlled entity are used, appropriately adjusted for any significant events or transactions that occurred between the last available financial statements of the investee and the reference date of the Consolidated Financial Statements. If the investee company uses accounting principles that differ from those used by the Group, changes are made to the financial statements of the investee.
If there is objective evidence that an equity investment may be impaired, the entity shall estimate its recoverable amount, taking into account the present value of the future cash flows that it could generate, including from its ultimate disposal. If the recoverable amount is less than the carrying amount, the difference is recognised in profit or loss.
If the reasons for the impairment no longer exist as a result of an event that occurred after the recognition of the impairment loss, this is reversed through profit or loss.
Derecognition criteria
Equity investments are derecognised when there is a sale that transfers substantially all the risks and rewards associated with them.
In the presence of a situation that results in the loss of significant influence or joint control, any remaining equity investment is reclassified to the financial asset portfolios required by IFRS 9.
6 - Property, plant and equipment
Classification criteria
The item includes property, plant and equipment held for investment purpose in accordance with IAS 40 as well as those for functional use in accordance with IAS 16.
All property (either fully owned or leased) held by the company for the purposes of obtaining rent and/or a capital gain fall under investment property.
More specifically, property, plant and equipment for functional use include:
\u2022land;
\u2022buildings;
\u2022furniture and accessories;
\u2022electronic office machines;
\u2022various machines and equipment;
\u2022vehicles;
\u2022leasehold improvements on third-party property.
Those are physical assets held for use in production, in providing goods and services or for administrative purposes, and that are expected to be used for more than one fiscal year.
This item also includes the rights of use acquired through leases and relating to the use of property, plant and equipment.
Under IFRS 16, a lease is a contract, or part of a contract, that, in exchange for a fee, transfers the right to use an asset (the underlying asset) for a period of time.
Finally, the item includes leasehold improvements on third-party property and expenses relating to identifiable and separable asset. Normally, this kind of investment is sustained in order to make a property rented from third parties suitable for use.
Recognition criteria
Property, plant and equipment are initially recognised at cost, including all directly attributable costs connected to the acquisition or to bring the asset into use.
Subsequently incurred expenses are added to the carrying amount of the asset, or recognised as separate assets, if they are likely to yield future economic benefits exceeding those initially estimated and if the cost can be measured reliably; otherwise, they are recognised in profit or loss.
For tangible assets represented by rights of use in accordance with IFRS 16, the initial recognition value corresponds to the sum of the lease liability (present value of future lease payments to be paid over the lease term), lease payments made prior to or on the effective date of the lease, initial direct costs, and any costs for dismantling or restoring the asset underlying the lease.
Measurement criteria
Property, plant and equipment and investment property are measured at cost, net of any depreciation or impairment losses.
Property, plant and equipment with a finite useful life are systematically depreciated on a straight-line basis over their useful life, with the exception of that described below.
Property, plant and equipment with an indefinite useful life, whose residual value is equal to or higher than their carrying amount, are not depreciated.
For accounting purposes, land and buildings are treated separately, even when acquired together. Land is not depreciated, as it has an indefinite useful life. Where the value of land is included in the value of a building, the former is considered separately by applying the component approach. The separate values of the land and the building are calculated by independent experts in this field and only for entirely owned properties.
The useful life, residual amounts and depreciation methods of property, plant and equipment are reviewed at the closure of each year and, if expectations are not in line with previous estimates, the depreciation rate for the current year and subsequent ones is adjusted.
If there is objective evidence that an individual asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
When an impairment loss is reversed, the new carrying amount cannot exceed the net carrying amount that would have been measured if no impairment loss had been recognised on the asset in previous years.
The usually estimated useful lives are the following:
\u2022buildings:not exceeding 34 years;
\u2022furniture:not exceeding 7 years;
\u2022electronic systems:not exceeding 5 years;
\u2022other:not exceeding 5 years;
\u2022improvements on third party property/leasehold improvements:not exceeding 5 years.
With reference to the asset consisting of the right of use, recorded pursuant to IFRS 16, it is measured using the cost model in accordance with IAS 16 Property, plant and equipment; in this case, the asset is subsequently depreciated on a straight-line basis over the term of the lease contract and subject to an impairment test if impairment indicators emerge.
Derecognition criteria
Property, plant and equipment are derecognised from the statement of financial position on disposal or when they are withdrawn from use and no future economic benefits are expected from their disposal. Any profit/loss that arises at the time the asset is derecognised (calculated as the difference between the net carrying amount of the asset and the amount received) is recognised in the Income Statement when the item is derecognised.
The right of use deriving from lease contracts is derecognised from the statement of financial position at the end of the lease.
7 - Intangible assets
Classification criteria
Intangible assets are non-monetary assets, identifiable even though they lack physical substance, that meet the requirements of identifiability, control over a resource and existence of future economic benefits. Intangible assets mainly include goodwill and software.
Recognition criteria
Intangible assets initially are recognised in the statement of financial position at cost, i.e. the purchase price and any direct cost incurred in preparing the asset for use.
In particular, costs incurred internally for the development of software projects constitute intangible assets and are only capitalised if all of the following conditions are met:
\u2022the cost attributable to the development activity can be reliably determined;
\u2022there is the intention, the availability of financial resources and the technical capacity to make the asset ready for use or sale;
\u2022it can be demonstrated that the asset is able to produce future economic benefits. Capitalised software development costs include only those expenses incurred that can be directly attributed to the development process.
Measurement criteria
Subsequent to initial recognition, intangible assets with a finite useful life are recognised at cost less amortisation determined on the basis of their estimated useful life.
If there is objective evidence that a single asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
Intangible assets with an indefinite useful life, including goodwill, are recorded at cost less any impairment losses incurred. These assets are not depreciated, but only periodically checked for impairment with respect to the carrying amount.
At each year-end or interim reporting date, if there is evidence of impairment, an estimate of the asset's recoverable amount is made. The amount of the loss, recognised in the income statement, is equal to the difference between the asset's carrying amount and its recoverable amount.
With regard to goodwill, the adequacy of the carrying amount is periodically verified. In particular, whenever there is evidence of impairment, and in any case at least once a year, an impairment test is conducted. For this purpose, the cash-generating unit to which goodwill is to be allocated is identified. This unit represents the minimum level at which goodwill is monitored for internal management purposes and must not be greater than the operating Segment determined in accordance with IFRS 8.
The amount of the impairment, if any, is determined on the basis of the difference between the carrying amount of goodwill and its recovery value, if lower. This recoverable amount is equal to the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. Value in use is the present value of the future cash flows expected from the generating units to which goodwill has been allocated. The resulting value adjustments are recorded in the income statement under item \"270. Value adjustments of goodwill\u201d. No subsequent write-back is permitted.
Derecognition criteria
An intangible asset is derecognised from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss.
Impairment of financial instruments
Under IFRS 9, the relevant impairment provisions apply to financial assets measured at amortised cost, financial assets measured at fair value through other comprehensive income that are not equity securities, and loan commitments and guarantees granted that are not measured at fair value through profit or loss.
\u201cExpected Credit Losses\u201d (ECLs) are calculated based on whether the financial instrument's credit risk has significantly increased since initial recognition.
The general impairment model requires allocating the financial instruments within the scope of IFRS 9 to three Stages, which reflect the deterioration in credit quality:
\u2022Stage 1: financial instruments that have not had a significant increase in credit risk since initial recognition or that have low credit risk at the reporting date;
\u2022Stage 2: financial instruments that have had a significant increase in credit risk since initial recognition (unless they have low credit risk at the reporting date) but that individually do not have objective evidence of impairment;
\u2022Stage 3: financial assets that have had a significant increase in credit risk since initial recognition with objective evidence of impairment at the reporting date. This coincides with non-performing exposures, i.e. those classified as bad loans, unlikely to pay, or non-performing past due exposures according to the rules of the Bank of Italy.
For further details, please refer to paragraph \"2.3 Measurement of expected losses\" in \"Section 2 - Prudential consolidation risks\" of \"Part E - Information on risks and related hedging policies\" of the Notes to the Consolidated Financial Statements.
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3 - Financial assets measured at amortised cost
Classification criteria
This category includes financial assets (specifically loans and debt securities) that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows (\"HTC - Held to Collect\" Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration
for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
Specifically, if the above technical requirements are met, this line item includes:
\u2022loans and advances to banks, with the exception of loans and advances on demand (which are classified under \"Cash and cash equivalents\");
\u2022receivables due from customers, largely consisting of:
\u2013demand advances to customers as part of factoring operations vis-\u00e0-vis a receivables portfolio factored with recourse and still recognised in the seller\u2019s statement of financial position, or vis-\u00e0-vis receivables factored without recourse, providing no contractual clauses that eliminate the conditions for their recognition exist;
\u2013loans to customers deriving from mortgages or loans extended as part of corporate banking operations;
\u2013repurchase and reverse repurchase agreements;
\u2013receivables arising from finance leases;
\u2013salary- or pension-backed loans or payment delegations;
\u2013a portfolio of non-performing loans acquired from third-party operators (referred to as \u201cPOCI\u201d);
\u2022debt securities acquired through subscription or private placement, with fixed or determinable payments, not quoted in active markets.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, which are expected to be very infrequent, the financial assets may be reclassified from the category measured at amortised cost to one of the other two categories under IFRS 9 (Financial assets measured at fair value through other comprehensive income or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. Gains or losses arising from the difference between the amortised cost of the financial asset and the relevant fair value are measured through profit or loss if the asset is reclassified to Financial assets measured at fair value through profit or loss or, if it is reclassified to Financial assets measured at fair value through other comprehensive income, through equity, within the specific valuation reserve.
Recognition criteria
These financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. At initial recognition, the assets are measured at fair value, including transaction income or costs directly attributable to the asset. Costs meeting these characteristics, but to be reimbursed by the debtor or falling under normal internal administrative costs, are excluded.
Repurchase agreements or reverse repurchase agreements are recognised as funding or lending transactions. Specifically, repurchase agreements are recognised as payables for the amount received, while reverse repurchase agreements are recognised as receivables for the amount paid.
Measurement criteria
After initial recognition, receivables are measured at amortised cost, which is equal to the initial amount minus/plus principal repayments, impairment losses/reversals of impairment losses, and amortisation calculated using the effective interest method. The effective interest rate is calculated as the rate at which the present value of expected cash flows for the principal and interest is equal to the amount of the loan granted, including any costs/revenues directly attributable to the financial asset. This finance-based accounting method allows to spread the economic effect of costs/revenues over the expected residual life of the receivable.
The amortised cost method usually does not apply to short-term loans, as the effect would be immaterial. These are measured instead at their acquisition cost. A similar criterion applies to loans without a definite payment date or revocable loans. Furthermore, newly acquired distressed retail loans are measured at cost until the Bank has started taking action to collect the debt, as specified later on in the part concerning non-performing exposures in the Npl Segment.
At each reporting date, including interim reporting dates, the Group estimates the impairment of these assets in accordance with the impairment rules of IFRS 9.
The aforementioned assets are in fact examined with the aim of estimating the expected losses in value related to credit risk (\u201cECL\u201d - \u201cExpected Credit Losses\u201d). These losses are recognised in the income statement under item
\"130. Net credit risk losses/reversals\u201d. If it is found that there is no reasonable expectation of recovery, the gross exposure is written off: in such a case, the gross exposure is reduced by the amount considered unrecoverable, offset by the reversal of the provision to cover expected losses and impairment losses in the income statement, for the portion not covered by the provision.
In more detail, the impairment model, as described in detail in paragraph \u201c16 - Other Information\u201d of this Section A.2, provides for the classification of assets into three distinct \"Stages\" (Stage 1, Stage 2, Stage 3), depending on the evolution of the debtor's creditworthiness, to which correspond different criteria for measuring expected losses:
\u2022Stage 1: unimpaired (performing) financial assets for which no significant deterioration in credit risk has been observed since initial recognition or for which the credit risk is considered low. Impairment is based on an estimate of expected loss with a time horizon of one year;
\u2022Stage 2: unimpaired (performing) financial assets that have experienced a significant deterioration in credit risk since initial recognition (SICR - \u201cSignificant Increase in Credit Risk\u201d). Impairment is based on an estimate of the expected loss over the entire remaining life of the financial asset;
\u2022Stage 3: impaired financial assets for which there is objective evidence of impairment and which are assessed on the basis of an estimate of the expected loss over the life of the instrument.
For performing assets, expected losses are determined according to a collective process based on certain risk parameters represented by the probability of default (PD), the loss given default (LGD) and the exposure value (EAD).
For impaired assets, impairment losses are quantified on the basis of an analytical valuation process according to homogeneous risk categories - aimed at determining the present value of expected future recoverable cash flows, discounted on the basis of the original effective interest rate.
Impaired assets include exposures that have been attributed the status of non-performing, unlikely to pay or past-due/overdrawn for more than ninety days according to the definitions established by current supervisory regulations (Bank of Italy Circular No. 272 \"Accounts Matrix\") and recalled by Bank of Italy Circular No. 262, as they are considered consistent with the accounting rules set forth by IFRS 9 in terms of objective evidence of impairment.
The projected cash flows also take into account expected recovery times and the presumed net realisable value of any guarantees.
The original value of the financial assets is reinstated in subsequent years if the credit quality of the exposure improves compared to that which led to the previous write-down. The write-back is recorded in the income statement under the same heading (\"130. Net credit risk losses/reversals\") and, in any event, may not exceed the amortised cost that the asset would have had in the absence of previous adjustments.
Purchased or Originated Credit Impaired (POCI)
\u201cPurchased or Originated Credit Impaired (POCI) Financial Assets\u201d means the exposures that were impaired at the date they were acquired or originated.
POCI financial assets include also the exposures acquired as part of sales (of either individual assets or portfolios) and business combinations.
As previously mentioned, interest is accounted for by applying a credit-adjusted effective interest rate, i.e. the rate that, upon initial recognition, discounts all the asset's estimated future cash receipts at amortised cost considering also lifetime expected credit losses.
The Bank regularly reviews said expected credit losses, recognising impairment losses or gains through profit or loss. Favourable changes in lifetime ECLs are recognised as an impairment gain, even if said lifetime ECLs are lower than those incorporated into cash flow estimates at initial recognition.
\"Purchased or Originated Credit Impaired Financial Assets\" are usually allocated to Stage 3 at initial recognition.
A subsequent improvement in the counterparty's creditworthiness, which may be reflected in the present value of cash flows, shall cause the exposure to be classified within Stage 2.
These assets shall never be allocated to Stage 1, as the expected credit loss must always be calculated over a time horizon equal to their remaining useful life, whereas IFRS 9 requires an ECL estimated over a 12-month horizon for Stage 1 assets.
The Npl Segment's receivables all qualify as POCI financial assets (POCIs are the Segment's core business) and are recognised and assessed through the following steps:
\u2022at the time of purchase, receivables are recognised by allocating the portfolio's purchase price among the individual receivables it consists of through the following steps:
\u2013recognition of the individual receivables at a value equal to the contract price, which is used for the purposes of reporting to the Central Credit Register;
\u2013after verifying the documentation, if provided in the contract, the Bank returns the positions lacking documentation or beyond the statute of limitations to the seller, and measures the fair value of receivables which actually exist and can be collected; finally, after sending a notice of assignment to the debtor, the Bank can start taking action to collect the receivable;
\u2013once the collection process begins, receivables are measured at amortised cost using the effective interest rate method (the \u201cEIR\u201d or \u201cTIR\u201d);
\u2013the effective interest rate is calculated on the basis of the price paid, the transaction costs, if any, and the estimated cash flows and collection time calculated using either proprietary models or analytical estimates made by managers;
\u2013the effective interest rate as set out in the previous point is unchanged over time;
\u2013at the end of each year, interest income accrued on the basis of the original effective interest rate is recognised under Interest Income. Said interest is calculated as follows: Amortised Cost at the beginning of the year x IRR/365 x days in the year;
\u2013in addition, at the end of each financial year, the expected cash flows for each position are re-estimated;
\u2022should events occur (higher or lower revenues realised or expected compared to forecasts and/or a change in collection times) which cause a change in the amortised cost (calculated by discounting the new cash flows at the original effective rate compared to the amortised cost in the financial year), this change is also recognised under \"Credit risk losses/reversals\" on the income statement.
Derecognition criteria
Financial assets measured at amortised cost are derecognised when all contractual rights over the cash flows have expired or if they are assigned but only when all relevant risks and rewards have been substantially transferred. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Finally, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Specifically in respect of non-performing exposures, they shall be derecognised when considered unrecoverable and the Group forfeits the legal right to collect. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognitions without a forfeiture of the right to collect the receivable (i.e. \u201cwrite-off\u201d), to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, the Group identifies the exposures to be derecognised that have all of the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
Derecognitions are directly recorded under \"Net credit risk losses/reversals\" to the extent of the unadjusted remaining portion, and are recognised as a reduction of the principal. Partial or complete reversals of previous impairment losses are recognised as a reduction of \u201cNet credit risk losses/reversals\u201d.
In some cases, throughout the life of the financial assets concerned, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative and
quantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons or forbearance measures due to the counterparty's financial difficulties;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
11 - Financial liabilities measured at amortised cost.
Classification criteria
The item includes payables due to banks and customers and debt securities issued and is made up of the various forms of interbank funding, as well as funding from customers and through outstanding bonds, net of any buybacks.
Also included are debts entered into by the lessee under finance leases, as well as repurchase and reverse repurchase agreements for deposits and securities lent with receipt of cash collateral at the lender's full disposal. Finally, operating debts related to the provision of financial services as defined in the Consolidated Banking Act and the Consolidated Finance Act are included.
Recognition criteria
The initial recognition of these liabilities occurs upon receipt of the amounts collected or settlement of the debt securities issued and is made on the basis of the relative fair value, which is normally equal to the amount collected or the issue price, increased by any additional costs/income directly attributable to the individual funding or issuance transaction and not reimbursed by the creditor counterparty.
Repurchase agreements with a repurchase obligation are recorded in the balance sheet as funding transactions for the amount collected in the spot market.
Lease payables are recognised on the basis of the present value of future instalments still to be paid over the contractual term discounted at the interest rate implicit in the transaction or, if not determinable, the marginal financing rate.
Measurement criteria
After initial recognition at fair value, these instruments are later measured at amortised cost, using the effective interest method.
The amortised cost method does not apply to short-term liabilities, as the effect of discounting would be insignificant.
Lease payables are revalued when there is a lease modification (i.e., a change in the perimeter of the contract), which is not accounted for/considered as a separate contract.
Derecognition criteria
Financial liabilities are derecognised when they are annulled, expired, extinguished or settled. The difference between the carrying amount and the acquisition cost is recognised in profit or loss.
Liabilities are derecognised also when previously issued securities are bought back, even if such instruments will be sold again in the future. Gains and losses from such derecognition are recognised in profit or loss when the buyback price is higher or lower than the carrying amount.
Subsequent sales of the company's own bonds on the market are considered as an issuance of new debt.
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3 - Financial assets measured at amortised cost
Classification criteria
This category includes financial assets (specifically loans and debt securities) that meet both the following conditions:
\u2022the financial asset is held within a business model whose objective is achieved by collecting contractual cash flows (\"HTC - Held to Collect\" Business Model), and
\u2022the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest consistent with a \u201cbasic lending arrangement\u201d, in which consideration
for the time value of money and credit risk are typically the most significant elements of interest (so-called \u201cSPPI test\u201d passed).
Specifically, if the above technical requirements are met, this line item includes:
\u2022loans and advances to banks, with the exception of loans and advances on demand (which are classified under \"Cash and cash equivalents\");
\u2022receivables due from customers, largely consisting of:
\u2013demand advances to customers as part of factoring operations vis-\u00e0-vis a receivables portfolio factored with recourse and still recognised in the seller\u2019s statement of financial position, or vis-\u00e0-vis receivables factored without recourse, providing no contractual clauses that eliminate the conditions for their recognition exist;
\u2013loans to customers deriving from mortgages or loans extended as part of corporate banking operations;
\u2013repurchase and reverse repurchase agreements;
\u2013receivables arising from finance leases;
\u2013salary- or pension-backed loans or payment delegations;
\u2013a portfolio of non-performing loans acquired from third-party operators (referred to as \u201cPOCI\u201d);
\u2022debt securities acquired through subscription or private placement, with fixed or determinable payments, not quoted in active markets.
Reclassifications to other categories of financial assets are allowed only if the entity changes its business model to manage the financial assets. In these cases, which are expected to be very infrequent, the financial assets may be reclassified from the category measured at amortised cost to one of the other two categories under IFRS 9 (Financial assets measured at fair value through other comprehensive income or Financial assets measured at fair value through profit or loss). The transfer value corresponds to the fair value at the time of the reclassification, which is applied prospectively from the reclassification date. Gains or losses arising from the difference between the amortised cost of the financial asset and the relevant fair value are measured through profit or loss if the asset is reclassified to Financial assets measured at fair value through profit or loss or, if it is reclassified to Financial assets measured at fair value through other comprehensive income, through equity, within the specific valuation reserve.
Recognition criteria
These financial assets are initially recognised at the date of settlement in the case of debt and equity securities, whereas loans are recognised at the date they were granted. At initial recognition, the assets are measured at fair value, including transaction income or costs directly attributable to the asset. Costs meeting these characteristics, but to be reimbursed by the debtor or falling under normal internal administrative costs, are excluded.
Repurchase agreements or reverse repurchase agreements are recognised as funding or lending transactions. Specifically, repurchase agreements are recognised as payables for the amount received, while reverse repurchase agreements are recognised as receivables for the amount paid.
Measurement criteria
After initial recognition, receivables are measured at amortised cost, which is equal to the initial amount minus/plus principal repayments, impairment losses/reversals of impairment losses, and amortisation calculated using the effective interest method. The effective interest rate is calculated as the rate at which the present value of expected cash flows for the principal and interest is equal to the amount of the loan granted, including any costs/revenues directly attributable to the financial asset. This finance-based accounting method allows to spread the economic effect of costs/revenues over the expected residual life of the receivable.
The amortised cost method usually does not apply to short-term loans, as the effect would be immaterial. These are measured instead at their acquisition cost. A similar criterion applies to loans without a definite payment date or revocable loans. Furthermore, newly acquired distressed retail loans are measured at cost until the Bank has started taking action to collect the debt, as specified later on in the part concerning non-performing exposures in the Npl Segment.
At each reporting date, including interim reporting dates, the Group estimates the impairment of these assets in accordance with the impairment rules of IFRS 9.
The aforementioned assets are in fact examined with the aim of estimating the expected losses in value related to credit risk (\u201cECL\u201d - \u201cExpected Credit Losses\u201d). These losses are recognised in the income statement under item
\"130. Net credit risk losses/reversals\u201d. If it is found that there is no reasonable expectation of recovery, the gross exposure is written off: in such a case, the gross exposure is reduced by the amount considered unrecoverable, offset by the reversal of the provision to cover expected losses and impairment losses in the income statement, for the portion not covered by the provision.
In more detail, the impairment model, as described in detail in paragraph \u201c16 - Other Information\u201d of this Section A.2, provides for the classification of assets into three distinct \"Stages\" (Stage 1, Stage 2, Stage 3), depending on the evolution of the debtor's creditworthiness, to which correspond different criteria for measuring expected losses:
\u2022Stage 1: unimpaired (performing) financial assets for which no significant deterioration in credit risk has been observed since initial recognition or for which the credit risk is considered low. Impairment is based on an estimate of expected loss with a time horizon of one year;
\u2022Stage 2: unimpaired (performing) financial assets that have experienced a significant deterioration in credit risk since initial recognition (SICR - \u201cSignificant Increase in Credit Risk\u201d). Impairment is based on an estimate of the expected loss over the entire remaining life of the financial asset;
\u2022Stage 3: impaired financial assets for which there is objective evidence of impairment and which are assessed on the basis of an estimate of the expected loss over the life of the instrument.
For performing assets, expected losses are determined according to a collective process based on certain risk parameters represented by the probability of default (PD), the loss given default (LGD) and the exposure value (EAD).
For impaired assets, impairment losses are quantified on the basis of an analytical valuation process according to homogeneous risk categories - aimed at determining the present value of expected future recoverable cash flows, discounted on the basis of the original effective interest rate.
Impaired assets include exposures that have been attributed the status of non-performing, unlikely to pay or past-due/overdrawn for more than ninety days according to the definitions established by current supervisory regulations (Bank of Italy Circular No. 272 \"Accounts Matrix\") and recalled by Bank of Italy Circular No. 262, as they are considered consistent with the accounting rules set forth by IFRS 9 in terms of objective evidence of impairment.
The projected cash flows also take into account expected recovery times and the presumed net realisable value of any guarantees.
The original value of the financial assets is reinstated in subsequent years if the credit quality of the exposure improves compared to that which led to the previous write-down. The write-back is recorded in the income statement under the same heading (\"130. Net credit risk losses/reversals\") and, in any event, may not exceed the amortised cost that the asset would have had in the absence of previous adjustments.
Purchased or Originated Credit Impaired (POCI)
\u201cPurchased or Originated Credit Impaired (POCI) Financial Assets\u201d means the exposures that were impaired at the date they were acquired or originated.
POCI financial assets include also the exposures acquired as part of sales (of either individual assets or portfolios) and business combinations.
As previously mentioned, interest is accounted for by applying a credit-adjusted effective interest rate, i.e. the rate that, upon initial recognition, discounts all the asset's estimated future cash receipts at amortised cost considering also lifetime expected credit losses.
The Bank regularly reviews said expected credit losses, recognising impairment losses or gains through profit or loss. Favourable changes in lifetime ECLs are recognised as an impairment gain, even if said lifetime ECLs are lower than those incorporated into cash flow estimates at initial recognition.
\"Purchased or Originated Credit Impaired Financial Assets\" are usually allocated to Stage 3 at initial recognition.
A subsequent improvement in the counterparty's creditworthiness, which may be reflected in the present value of cash flows, shall cause the exposure to be classified within Stage 2.
These assets shall never be allocated to Stage 1, as the expected credit loss must always be calculated over a time horizon equal to their remaining useful life, whereas IFRS 9 requires an ECL estimated over a 12-month horizon for Stage 1 assets.
The Npl Segment's receivables all qualify as POCI financial assets (POCIs are the Segment's core business) and are recognised and assessed through the following steps:
\u2022at the time of purchase, receivables are recognised by allocating the portfolio's purchase price among the individual receivables it consists of through the following steps:
\u2013recognition of the individual receivables at a value equal to the contract price, which is used for the purposes of reporting to the Central Credit Register;
\u2013after verifying the documentation, if provided in the contract, the Bank returns the positions lacking documentation or beyond the statute of limitations to the seller, and measures the fair value of receivables which actually exist and can be collected; finally, after sending a notice of assignment to the debtor, the Bank can start taking action to collect the receivable;
\u2013once the collection process begins, receivables are measured at amortised cost using the effective interest rate method (the \u201cEIR\u201d or \u201cTIR\u201d);
\u2013the effective interest rate is calculated on the basis of the price paid, the transaction costs, if any, and the estimated cash flows and collection time calculated using either proprietary models or analytical estimates made by managers;
\u2013the effective interest rate as set out in the previous point is unchanged over time;
\u2013at the end of each year, interest income accrued on the basis of the original effective interest rate is recognised under Interest Income. Said interest is calculated as follows: Amortised Cost at the beginning of the year x IRR/365 x days in the year;
\u2013in addition, at the end of each financial year, the expected cash flows for each position are re-estimated;
\u2022should events occur (higher or lower revenues realised or expected compared to forecasts and/or a change in collection times) which cause a change in the amortised cost (calculated by discounting the new cash flows at the original effective rate compared to the amortised cost in the financial year), this change is also recognised under \"Credit risk losses/reversals\" on the income statement.
Derecognition criteria
Financial assets measured at amortised cost are derecognised when all contractual rights over the cash flows have expired or if they are assigned but only when all relevant risks and rewards have been substantially transferred. Should the company retain part of the relevant risks and rewards, the financial assets will continue to be recognised, even though legal ownership has been actually transferred to a third party.
Where it is not possible to ascertain the substantial transfer of the risks and rewards, financial assets are derecognised if the company no longer has control over them. Otherwise, the financial assets are recognised proportionally to the entity\u2019s continuing involvement in the asset, measured according to the exposure to changes in the transferred assets\u2019 value and cash flows.
Finally, as for the transfer of collection rights, transferred financial assets are derecognised even if contractual rights to receive cash flows are maintained but an obligation to pay such flows to one or more entities is taken on.
Specifically in respect of non-performing exposures, they shall be derecognised when considered unrecoverable and the Group forfeits the legal right to collect. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognitions without a forfeiture of the right to collect the receivable (i.e. \u201cwrite-off\u201d), to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, the Group identifies the exposures to be derecognised that have all of the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
Derecognitions are directly recorded under \"Net credit risk losses/reversals\" to the extent of the unadjusted remaining portion, and are recognised as a reduction of the principal. Partial or complete reversals of previous impairment losses are recognised as a reduction of \u201cNet credit risk losses/reversals\u201d.
In some cases, throughout the life of the financial assets concerned, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative and
quantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons or forbearance measures due to the counterparty's financial difficulties;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page108-cflshid_52767-tag94183": { "value": "
4 - Hedge accounting
Classification criteria
With reference to hedging, the Banca Ifis Group has chosen to adopt the provisions of IFRS 9 for first-time application and not to avail itself of the option, provided by the same standard, to apply the hedge accounting rules dictated by IAS 39, in the version endorsed by the European Commission (the \u201ccarved out\u201d version), with the exception of the specific cases provided for in IFRS 9 (par. 6.1.3) and not governed by the same standard.
Risk hedging transactions are intended to neutralise, from an accounting point of view, potential recognisable losses on a particular financial instrument or group of financial instruments, attributable to a particular risk, by means of recognisable gains on a different financial instrument or group of financial instruments should that particular risk actually arise.
Only instruments involving a counterparty outside the Group can be designated as hedging instruments.
The only type of hedge used by the Group at 31 December 2023 is the specific fair value hedge (\"micro\" fair value hedge), which is intended to hedge the exposure to changes in the fair value of a balance sheet asset or liability attributable to a particular risk and, in particular, from changes in interest rates.
A derivative instrument may be considered to be a hedging instrument if there is formalised documentation of the unique relationship to the hedged item and if it is effective at the time the hedge commences and, prospectively, over the life of the hedge.
At the start of the hedging relationship there must be a formal designation and documentation of the hedging relationship, the company's risk management objectives, and the hedging strategy. This documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how to assess the effectiveness of the hedging instrument in offsetting the exposure to changes in the fair value of the hedged item.
Recognition criteria
Derivative hedging instruments are recognised at fair value, on the date the relevant contracts are entered into, and are classified as assets under item \"50. Hedging derivatives\" or on the liabilities side of the balance sheet under item \"40. Hedging derivatives\u201d depending on whether the value is positive or negative.
Measurement criteria
After initial recognition, hedging derivatives continue to be measured at fair value. Specifically, in the case of fair value hedges, the change in the fair value of the hedged item is offset by the change in the fair value of the hedging instrument. This offsetting is recognised through the recognition in the income statement of changes in value, referring both to the hedged item (as regards changes produced by the underlying risk factor) and to the hedging instrument. Any difference, representing the partial ineffectiveness of the hedge, consequently constitutes the net economic effect.
The effectiveness of the hedge depends on the extent to which changes in the fair value of the hedged instrument are offset by those of the hedging instrument. Therefore, effectiveness is appreciated by comparing the above-mentioned variations, taking into account the intent pursued at the time the hedge was implemented. Effectiveness occurs when changes in the fair value of the hedging financial instrument almost entirely neutralise changes in the hedged instrument for the hedged risk element.
Effectiveness is assessed at each balance sheet or interim reporting date using prospective tests, which justify the application of hedge accounting by demonstrating the expected effectiveness based on limits defined internally by the Group.
If the tests do not confirm the effectiveness of the hedge, hedge accounting is discontinued, the hedging derivative contract is reclassified as a trading instrument and the hedged financial instrument regains the valuation criterion corresponding to its balance sheet classification. If the hedged asset or liability is measured at amortised cost, the higher or lower value resulting from the measurement of the hedged asset or liability at fair value due to the hedge becoming ineffective is recognised in the income statement using the effective interest rate method.
In addition, the accounting for outstanding fair value hedges ceases prospectively in the following cases:
\u2022the hedging instrument matures, is terminated or exercised;
\u2022the hedged item is sold, expires or is refunded;
\u2022the decision is made to revoke the designation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page109-cflshid_53393-tag94185": { "value": "
5 - Equity investments
Classification criteria
This item includes interests held in associates or jointly controlled companies, which are accounted for using the equity method.
Associated companies are considered to be non-controlled companies in which significant influence is exercised. Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights (including \u201cpotential\u201d voting rights) and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Recognition criteria
The initial recognition of financial assets classified in this category takes place on the settlement date at cost, including any goodwill paid at the time of acquisition, which is therefore not subject to separate, independent recognition.
Measurement criteria
Equity investments are measured using the equity method. This method requires that the initial carrying amount is subsequently increased or decreased to recognise the Group's share of the profits and losses of the investees realised after the acquisition date. Dividends received from an investee are deducted from the carrying amount of the investment.
If it is necessary to make value adjustments arising from changes in the investee company's equity that it did not recognise in the income statement (e.g., changes arising from the fair value measurement of \"Financial assets measured at fair value through other comprehensive income\", the measurement of actuarial gains/losses of defined benefit plans), the Group's share of these changes is recognised directly in equity item \"120. Valuation reserves\u201d.
In applying the equity method, the most recent available financial statements of the associate/jointly controlled entity are used, appropriately adjusted for any significant events or transactions that occurred between the last available financial statements of the investee and the reference date of the Consolidated Financial Statements. If the investee company uses accounting principles that differ from those used by the Group, changes are made to the financial statements of the investee.
If there is objective evidence that an equity investment may be impaired, the entity shall estimate its recoverable amount, taking into account the present value of the future cash flows that it could generate, including from its ultimate disposal. If the recoverable amount is less than the carrying amount, the difference is recognised in profit or loss.
If the reasons for the impairment no longer exist as a result of an event that occurred after the recognition of the impairment loss, this is reversed through profit or loss.
Derecognition criteria
Equity investments are derecognised when there is a sale that transfers substantially all the risks and rewards associated with them.
In the presence of a situation that results in the loss of significant influence or joint control, any remaining equity investment is reclassified to the financial asset portfolios required by IFRS 9.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page109-cflshid_53393-tag94184": { "value": "
5 - Equity investments
Classification criteria
This item includes interests held in associates or jointly controlled companies, which are accounted for using the equity method.
Associated companies are considered to be non-controlled companies in which significant influence is exercised. Significant influence is presumed to be exercised in all cases where the company holds 20% or more of the voting rights (including \u201cpotential\u201d voting rights) and, irrespective of the share held, where there is the power to participate in the management and financial decisions of the investee companies by virtue of particular legal ties, such as shareholders' agreements, the purpose of which is for the participants in the agreement to ensure representativeness in the management bodies and to safeguard the unity of management direction, without however having control.
Recognition criteria
The initial recognition of financial assets classified in this category takes place on the settlement date at cost, including any goodwill paid at the time of acquisition, which is therefore not subject to separate, independent recognition.
Measurement criteria
Equity investments are measured using the equity method. This method requires that the initial carrying amount is subsequently increased or decreased to recognise the Group's share of the profits and losses of the investees realised after the acquisition date. Dividends received from an investee are deducted from the carrying amount of the investment.
If it is necessary to make value adjustments arising from changes in the investee company's equity that it did not recognise in the income statement (e.g., changes arising from the fair value measurement of \"Financial assets measured at fair value through other comprehensive income\", the measurement of actuarial gains/losses of defined benefit plans), the Group's share of these changes is recognised directly in equity item \"120. Valuation reserves\u201d.
In applying the equity method, the most recent available financial statements of the associate/jointly controlled entity are used, appropriately adjusted for any significant events or transactions that occurred between the last available financial statements of the investee and the reference date of the Consolidated Financial Statements. If the investee company uses accounting principles that differ from those used by the Group, changes are made to the financial statements of the investee.
If there is objective evidence that an equity investment may be impaired, the entity shall estimate its recoverable amount, taking into account the present value of the future cash flows that it could generate, including from its ultimate disposal. If the recoverable amount is less than the carrying amount, the difference is recognised in profit or loss.
If the reasons for the impairment no longer exist as a result of an event that occurred after the recognition of the impairment loss, this is reversed through profit or loss.
Derecognition criteria
Equity investments are derecognised when there is a sale that transfers substantially all the risks and rewards associated with them.
In the presence of a situation that results in the loss of significant influence or joint control, any remaining equity investment is reclassified to the financial asset portfolios required by IFRS 9.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page110-cflshid_53967-tag94191": { "value": "
6 - Property, plant and equipment
Classification criteria
The item includes property, plant and equipment held for investment purpose in accordance with IAS 40 as well as those for functional use in accordance with IAS 16.
All property (either fully owned or leased) held by the company for the purposes of obtaining rent and/or a capital gain fall under investment property.
More specifically, property, plant and equipment for functional use include:
\u2022land;
\u2022buildings;
\u2022furniture and accessories;
\u2022electronic office machines;
\u2022various machines and equipment;
\u2022vehicles;
\u2022leasehold improvements on third-party property.
Those are physical assets held for use in production, in providing goods and services or for administrative purposes, and that are expected to be used for more than one fiscal year.
This item also includes the rights of use acquired through leases and relating to the use of property, plant and equipment.
Under IFRS 16, a lease is a contract, or part of a contract, that, in exchange for a fee, transfers the right to use an asset (the underlying asset) for a period of time.
Finally, the item includes leasehold improvements on third-party property and expenses relating to identifiable and separable asset. Normally, this kind of investment is sustained in order to make a property rented from third parties suitable for use.
Recognition criteria
Property, plant and equipment are initially recognised at cost, including all directly attributable costs connected to the acquisition or to bring the asset into use.
Subsequently incurred expenses are added to the carrying amount of the asset, or recognised as separate assets, if they are likely to yield future economic benefits exceeding those initially estimated and if the cost can be measured reliably; otherwise, they are recognised in profit or loss.
For tangible assets represented by rights of use in accordance with IFRS 16, the initial recognition value corresponds to the sum of the lease liability (present value of future lease payments to be paid over the lease term), lease payments made prior to or on the effective date of the lease, initial direct costs, and any costs for dismantling or restoring the asset underlying the lease.
Measurement criteria
Property, plant and equipment and investment property are measured at cost, net of any depreciation or impairment losses.
Property, plant and equipment with a finite useful life are systematically depreciated on a straight-line basis over their useful life, with the exception of that described below.
Property, plant and equipment with an indefinite useful life, whose residual value is equal to or higher than their carrying amount, are not depreciated.
For accounting purposes, land and buildings are treated separately, even when acquired together. Land is not depreciated, as it has an indefinite useful life. Where the value of land is included in the value of a building, the former is considered separately by applying the component approach. The separate values of the land and the building are calculated by independent experts in this field and only for entirely owned properties.
The useful life, residual amounts and depreciation methods of property, plant and equipment are reviewed at the closure of each year and, if expectations are not in line with previous estimates, the depreciation rate for the current year and subsequent ones is adjusted.
If there is objective evidence that an individual asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
When an impairment loss is reversed, the new carrying amount cannot exceed the net carrying amount that would have been measured if no impairment loss had been recognised on the asset in previous years.
The usually estimated useful lives are the following:
\u2022buildings:not exceeding 34 years;
\u2022furniture:not exceeding 7 years;
\u2022electronic systems:not exceeding 5 years;
\u2022other:not exceeding 5 years;
\u2022improvements on third party property/leasehold improvements:not exceeding 5 years.
With reference to the asset consisting of the right of use, recorded pursuant to IFRS 16, it is measured using the cost model in accordance with IAS 16 Property, plant and equipment; in this case, the asset is subsequently depreciated on a straight-line basis over the term of the lease contract and subject to an impairment test if impairment indicators emerge.
Derecognition criteria
Property, plant and equipment are derecognised from the statement of financial position on disposal or when they are withdrawn from use and no future economic benefits are expected from their disposal. Any profit/loss that arises at the time the asset is derecognised (calculated as the difference between the net carrying amount of the asset and the amount received) is recognised in the Income Statement when the item is derecognised.
The right of use deriving from lease contracts is derecognised from the statement of financial position at the end of the lease.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRepairsAndMaintenanceExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page110-cflshid_53967-tag94189": { "value": "
6 - Property, plant and equipment
Classification criteria
The item includes property, plant and equipment held for investment purpose in accordance with IAS 40 as well as those for functional use in accordance with IAS 16.
All property (either fully owned or leased) held by the company for the purposes of obtaining rent and/or a capital gain fall under investment property.
More specifically, property, plant and equipment for functional use include:
\u2022land;
\u2022buildings;
\u2022furniture and accessories;
\u2022electronic office machines;
\u2022various machines and equipment;
\u2022vehicles;
\u2022leasehold improvements on third-party property.
Those are physical assets held for use in production, in providing goods and services or for administrative purposes, and that are expected to be used for more than one fiscal year.
This item also includes the rights of use acquired through leases and relating to the use of property, plant and equipment.
Under IFRS 16, a lease is a contract, or part of a contract, that, in exchange for a fee, transfers the right to use an asset (the underlying asset) for a period of time.
Finally, the item includes leasehold improvements on third-party property and expenses relating to identifiable and separable asset. Normally, this kind of investment is sustained in order to make a property rented from third parties suitable for use.
Recognition criteria
Property, plant and equipment are initially recognised at cost, including all directly attributable costs connected to the acquisition or to bring the asset into use.
Subsequently incurred expenses are added to the carrying amount of the asset, or recognised as separate assets, if they are likely to yield future economic benefits exceeding those initially estimated and if the cost can be measured reliably; otherwise, they are recognised in profit or loss.
For tangible assets represented by rights of use in accordance with IFRS 16, the initial recognition value corresponds to the sum of the lease liability (present value of future lease payments to be paid over the lease term), lease payments made prior to or on the effective date of the lease, initial direct costs, and any costs for dismantling or restoring the asset underlying the lease.
Measurement criteria
Property, plant and equipment and investment property are measured at cost, net of any depreciation or impairment losses.
Property, plant and equipment with a finite useful life are systematically depreciated on a straight-line basis over their useful life, with the exception of that described below.
Property, plant and equipment with an indefinite useful life, whose residual value is equal to or higher than their carrying amount, are not depreciated.
For accounting purposes, land and buildings are treated separately, even when acquired together. Land is not depreciated, as it has an indefinite useful life. Where the value of land is included in the value of a building, the former is considered separately by applying the component approach. The separate values of the land and the building are calculated by independent experts in this field and only for entirely owned properties.
The useful life, residual amounts and depreciation methods of property, plant and equipment are reviewed at the closure of each year and, if expectations are not in line with previous estimates, the depreciation rate for the current year and subsequent ones is adjusted.
If there is objective evidence that an individual asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
When an impairment loss is reversed, the new carrying amount cannot exceed the net carrying amount that would have been measured if no impairment loss had been recognised on the asset in previous years.
The usually estimated useful lives are the following:
\u2022buildings:not exceeding 34 years;
\u2022furniture:not exceeding 7 years;
\u2022electronic systems:not exceeding 5 years;
\u2022other:not exceeding 5 years;
\u2022improvements on third party property/leasehold improvements:not exceeding 5 years.
With reference to the asset consisting of the right of use, recorded pursuant to IFRS 16, it is measured using the cost model in accordance with IAS 16 Property, plant and equipment; in this case, the asset is subsequently depreciated on a straight-line basis over the term of the lease contract and subject to an impairment test if impairment indicators emerge.
Derecognition criteria
Property, plant and equipment are derecognised from the statement of financial position on disposal or when they are withdrawn from use and no future economic benefits are expected from their disposal. Any profit/loss that arises at the time the asset is derecognised (calculated as the difference between the net carrying amount of the asset and the amount received) is recognised in the Income Statement when the item is derecognised.
The right of use deriving from lease contracts is derecognised from the statement of financial position at the end of the lease.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page110-cflshid_53967-tag94188": { "value": "
6 - Property, plant and equipment
Classification criteria
The item includes property, plant and equipment held for investment purpose in accordance with IAS 40 as well as those for functional use in accordance with IAS 16.
All property (either fully owned or leased) held by the company for the purposes of obtaining rent and/or a capital gain fall under investment property.
More specifically, property, plant and equipment for functional use include:
\u2022land;
\u2022buildings;
\u2022furniture and accessories;
\u2022electronic office machines;
\u2022various machines and equipment;
\u2022vehicles;
\u2022leasehold improvements on third-party property.
Those are physical assets held for use in production, in providing goods and services or for administrative purposes, and that are expected to be used for more than one fiscal year.
This item also includes the rights of use acquired through leases and relating to the use of property, plant and equipment.
Under IFRS 16, a lease is a contract, or part of a contract, that, in exchange for a fee, transfers the right to use an asset (the underlying asset) for a period of time.
Finally, the item includes leasehold improvements on third-party property and expenses relating to identifiable and separable asset. Normally, this kind of investment is sustained in order to make a property rented from third parties suitable for use.
Recognition criteria
Property, plant and equipment are initially recognised at cost, including all directly attributable costs connected to the acquisition or to bring the asset into use.
Subsequently incurred expenses are added to the carrying amount of the asset, or recognised as separate assets, if they are likely to yield future economic benefits exceeding those initially estimated and if the cost can be measured reliably; otherwise, they are recognised in profit or loss.
For tangible assets represented by rights of use in accordance with IFRS 16, the initial recognition value corresponds to the sum of the lease liability (present value of future lease payments to be paid over the lease term), lease payments made prior to or on the effective date of the lease, initial direct costs, and any costs for dismantling or restoring the asset underlying the lease.
Measurement criteria
Property, plant and equipment and investment property are measured at cost, net of any depreciation or impairment losses.
Property, plant and equipment with a finite useful life are systematically depreciated on a straight-line basis over their useful life, with the exception of that described below.
Property, plant and equipment with an indefinite useful life, whose residual value is equal to or higher than their carrying amount, are not depreciated.
For accounting purposes, land and buildings are treated separately, even when acquired together. Land is not depreciated, as it has an indefinite useful life. Where the value of land is included in the value of a building, the former is considered separately by applying the component approach. The separate values of the land and the building are calculated by independent experts in this field and only for entirely owned properties.
The useful life, residual amounts and depreciation methods of property, plant and equipment are reviewed at the closure of each year and, if expectations are not in line with previous estimates, the depreciation rate for the current year and subsequent ones is adjusted.
If there is objective evidence that an individual asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
When an impairment loss is reversed, the new carrying amount cannot exceed the net carrying amount that would have been measured if no impairment loss had been recognised on the asset in previous years.
The usually estimated useful lives are the following:
\u2022buildings:not exceeding 34 years;
\u2022furniture:not exceeding 7 years;
\u2022electronic systems:not exceeding 5 years;
\u2022other:not exceeding 5 years;
\u2022improvements on third party property/leasehold improvements:not exceeding 5 years.
With reference to the asset consisting of the right of use, recorded pursuant to IFRS 16, it is measured using the cost model in accordance with IAS 16 Property, plant and equipment; in this case, the asset is subsequently depreciated on a straight-line basis over the term of the lease contract and subject to an impairment test if impairment indicators emerge.
Derecognition criteria
Property, plant and equipment are derecognised from the statement of financial position on disposal or when they are withdrawn from use and no future economic benefits are expected from their disposal. Any profit/loss that arises at the time the asset is derecognised (calculated as the difference between the net carrying amount of the asset and the amount received) is recognised in the Income Statement when the item is derecognised.
The right of use deriving from lease contracts is derecognised from the statement of financial position at the end of the lease.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page110-cflshid_53967-tag94187": { "value": "
6 - Property, plant and equipment
Classification criteria
The item includes property, plant and equipment held for investment purpose in accordance with IAS 40 as well as those for functional use in accordance with IAS 16.
All property (either fully owned or leased) held by the company for the purposes of obtaining rent and/or a capital gain fall under investment property.
More specifically, property, plant and equipment for functional use include:
\u2022land;
\u2022buildings;
\u2022furniture and accessories;
\u2022electronic office machines;
\u2022various machines and equipment;
\u2022vehicles;
\u2022leasehold improvements on third-party property.
Those are physical assets held for use in production, in providing goods and services or for administrative purposes, and that are expected to be used for more than one fiscal year.
This item also includes the rights of use acquired through leases and relating to the use of property, plant and equipment.
Under IFRS 16, a lease is a contract, or part of a contract, that, in exchange for a fee, transfers the right to use an asset (the underlying asset) for a period of time.
Finally, the item includes leasehold improvements on third-party property and expenses relating to identifiable and separable asset. Normally, this kind of investment is sustained in order to make a property rented from third parties suitable for use.
Recognition criteria
Property, plant and equipment are initially recognised at cost, including all directly attributable costs connected to the acquisition or to bring the asset into use.
Subsequently incurred expenses are added to the carrying amount of the asset, or recognised as separate assets, if they are likely to yield future economic benefits exceeding those initially estimated and if the cost can be measured reliably; otherwise, they are recognised in profit or loss.
For tangible assets represented by rights of use in accordance with IFRS 16, the initial recognition value corresponds to the sum of the lease liability (present value of future lease payments to be paid over the lease term), lease payments made prior to or on the effective date of the lease, initial direct costs, and any costs for dismantling or restoring the asset underlying the lease.
Measurement criteria
Property, plant and equipment and investment property are measured at cost, net of any depreciation or impairment losses.
Property, plant and equipment with a finite useful life are systematically depreciated on a straight-line basis over their useful life, with the exception of that described below.
Property, plant and equipment with an indefinite useful life, whose residual value is equal to or higher than their carrying amount, are not depreciated.
For accounting purposes, land and buildings are treated separately, even when acquired together. Land is not depreciated, as it has an indefinite useful life. Where the value of land is included in the value of a building, the former is considered separately by applying the component approach. The separate values of the land and the building are calculated by independent experts in this field and only for entirely owned properties.
The useful life, residual amounts and depreciation methods of property, plant and equipment are reviewed at the closure of each year and, if expectations are not in line with previous estimates, the depreciation rate for the current year and subsequent ones is adjusted.
If there is objective evidence that an individual asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
When an impairment loss is reversed, the new carrying amount cannot exceed the net carrying amount that would have been measured if no impairment loss had been recognised on the asset in previous years.
The usually estimated useful lives are the following:
\u2022buildings:not exceeding 34 years;
\u2022furniture:not exceeding 7 years;
\u2022electronic systems:not exceeding 5 years;
\u2022other:not exceeding 5 years;
\u2022improvements on third party property/leasehold improvements:not exceeding 5 years.
With reference to the asset consisting of the right of use, recorded pursuant to IFRS 16, it is measured using the cost model in accordance with IAS 16 Property, plant and equipment; in this case, the asset is subsequently depreciated on a straight-line basis over the term of the lease contract and subject to an impairment test if impairment indicators emerge.
Derecognition criteria
Property, plant and equipment are derecognised from the statement of financial position on disposal or when they are withdrawn from use and no future economic benefits are expected from their disposal. Any profit/loss that arises at the time the asset is derecognised (calculated as the difference between the net carrying amount of the asset and the amount received) is recognised in the Income Statement when the item is derecognised.
The right of use deriving from lease contracts is derecognised from the statement of financial position at the end of the lease.
7 - Intangible assets
Classification criteria
Intangible assets are non-monetary assets, identifiable even though they lack physical substance, that meet the requirements of identifiability, control over a resource and existence of future economic benefits. Intangible assets mainly include goodwill and software.
Recognition criteria
Intangible assets initially are recognised in the statement of financial position at cost, i.e. the purchase price and any direct cost incurred in preparing the asset for use.
In particular, costs incurred internally for the development of software projects constitute intangible assets and are only capitalised if all of the following conditions are met:
\u2022the cost attributable to the development activity can be reliably determined;
\u2022there is the intention, the availability of financial resources and the technical capacity to make the asset ready for use or sale;
\u2022it can be demonstrated that the asset is able to produce future economic benefits. Capitalised software development costs include only those expenses incurred that can be directly attributed to the development process.
Measurement criteria
Subsequent to initial recognition, intangible assets with a finite useful life are recognised at cost less amortisation determined on the basis of their estimated useful life.
If there is objective evidence that a single asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
Intangible assets with an indefinite useful life, including goodwill, are recorded at cost less any impairment losses incurred. These assets are not depreciated, but only periodically checked for impairment with respect to the carrying amount.
At each year-end or interim reporting date, if there is evidence of impairment, an estimate of the asset's recoverable amount is made. The amount of the loss, recognised in the income statement, is equal to the difference between the asset's carrying amount and its recoverable amount.
With regard to goodwill, the adequacy of the carrying amount is periodically verified. In particular, whenever there is evidence of impairment, and in any case at least once a year, an impairment test is conducted. For this purpose, the cash-generating unit to which goodwill is to be allocated is identified. This unit represents the minimum level at which goodwill is monitored for internal management purposes and must not be greater than the operating Segment determined in accordance with IFRS 8.
The amount of the impairment, if any, is determined on the basis of the difference between the carrying amount of goodwill and its recovery value, if lower. This recoverable amount is equal to the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. Value in use is the present value of the future cash flows expected from the generating units to which goodwill has been allocated. The resulting value adjustments are recorded in the income statement under item \"270. Value adjustments of goodwill\u201d. No subsequent write-back is permitted.
Derecognition criteria
An intangible asset is derecognised from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page110-cflshid_53967-tag94186": { "value": "
6 - Property, plant and equipment
Classification criteria
The item includes property, plant and equipment held for investment purpose in accordance with IAS 40 as well as those for functional use in accordance with IAS 16.
All property (either fully owned or leased) held by the company for the purposes of obtaining rent and/or a capital gain fall under investment property.
More specifically, property, plant and equipment for functional use include:
\u2022land;
\u2022buildings;
\u2022furniture and accessories;
\u2022electronic office machines;
\u2022various machines and equipment;
\u2022vehicles;
\u2022leasehold improvements on third-party property.
Those are physical assets held for use in production, in providing goods and services or for administrative purposes, and that are expected to be used for more than one fiscal year.
This item also includes the rights of use acquired through leases and relating to the use of property, plant and equipment.
Under IFRS 16, a lease is a contract, or part of a contract, that, in exchange for a fee, transfers the right to use an asset (the underlying asset) for a period of time.
Finally, the item includes leasehold improvements on third-party property and expenses relating to identifiable and separable asset. Normally, this kind of investment is sustained in order to make a property rented from third parties suitable for use.
Recognition criteria
Property, plant and equipment are initially recognised at cost, including all directly attributable costs connected to the acquisition or to bring the asset into use.
Subsequently incurred expenses are added to the carrying amount of the asset, or recognised as separate assets, if they are likely to yield future economic benefits exceeding those initially estimated and if the cost can be measured reliably; otherwise, they are recognised in profit or loss.
For tangible assets represented by rights of use in accordance with IFRS 16, the initial recognition value corresponds to the sum of the lease liability (present value of future lease payments to be paid over the lease term), lease payments made prior to or on the effective date of the lease, initial direct costs, and any costs for dismantling or restoring the asset underlying the lease.
Measurement criteria
Property, plant and equipment and investment property are measured at cost, net of any depreciation or impairment losses.
Property, plant and equipment with a finite useful life are systematically depreciated on a straight-line basis over their useful life, with the exception of that described below.
Property, plant and equipment with an indefinite useful life, whose residual value is equal to or higher than their carrying amount, are not depreciated.
For accounting purposes, land and buildings are treated separately, even when acquired together. Land is not depreciated, as it has an indefinite useful life. Where the value of land is included in the value of a building, the former is considered separately by applying the component approach. The separate values of the land and the building are calculated by independent experts in this field and only for entirely owned properties.
The useful life, residual amounts and depreciation methods of property, plant and equipment are reviewed at the closure of each year and, if expectations are not in line with previous estimates, the depreciation rate for the current year and subsequent ones is adjusted.
If there is objective evidence that an individual asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
When an impairment loss is reversed, the new carrying amount cannot exceed the net carrying amount that would have been measured if no impairment loss had been recognised on the asset in previous years.
The usually estimated useful lives are the following:
\u2022buildings:not exceeding 34 years;
\u2022furniture:not exceeding 7 years;
\u2022electronic systems:not exceeding 5 years;
\u2022other:not exceeding 5 years;
\u2022improvements on third party property/leasehold improvements:not exceeding 5 years.
With reference to the asset consisting of the right of use, recorded pursuant to IFRS 16, it is measured using the cost model in accordance with IAS 16 Property, plant and equipment; in this case, the asset is subsequently depreciated on a straight-line basis over the term of the lease contract and subject to an impairment test if impairment indicators emerge.
Derecognition criteria
Property, plant and equipment are derecognised from the statement of financial position on disposal or when they are withdrawn from use and no future economic benefits are expected from their disposal. Any profit/loss that arises at the time the asset is derecognised (calculated as the difference between the net carrying amount of the asset and the amount received) is recognised in the Income Statement when the item is derecognised.
The right of use deriving from lease contracts is derecognised from the statement of financial position at the end of the lease.
7 - Intangible assets
Classification criteria
Intangible assets are non-monetary assets, identifiable even though they lack physical substance, that meet the requirements of identifiability, control over a resource and existence of future economic benefits. Intangible assets mainly include goodwill and software.
Recognition criteria
Intangible assets initially are recognised in the statement of financial position at cost, i.e. the purchase price and any direct cost incurred in preparing the asset for use.
In particular, costs incurred internally for the development of software projects constitute intangible assets and are only capitalised if all of the following conditions are met:
\u2022the cost attributable to the development activity can be reliably determined;
\u2022there is the intention, the availability of financial resources and the technical capacity to make the asset ready for use or sale;
\u2022it can be demonstrated that the asset is able to produce future economic benefits. Capitalised software development costs include only those expenses incurred that can be directly attributed to the development process.
Measurement criteria
Subsequent to initial recognition, intangible assets with a finite useful life are recognised at cost less amortisation determined on the basis of their estimated useful life.
If there is objective evidence that a single asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
Intangible assets with an indefinite useful life, including goodwill, are recorded at cost less any impairment losses incurred. These assets are not depreciated, but only periodically checked for impairment with respect to the carrying amount.
At each year-end or interim reporting date, if there is evidence of impairment, an estimate of the asset's recoverable amount is made. The amount of the loss, recognised in the income statement, is equal to the difference between the asset's carrying amount and its recoverable amount.
With regard to goodwill, the adequacy of the carrying amount is periodically verified. In particular, whenever there is evidence of impairment, and in any case at least once a year, an impairment test is conducted. For this purpose, the cash-generating unit to which goodwill is to be allocated is identified. This unit represents the minimum level at which goodwill is monitored for internal management purposes and must not be greater than the operating Segment determined in accordance with IFRS 8.
The amount of the impairment, if any, is determined on the basis of the difference between the carrying amount of goodwill and its recovery value, if lower. This recoverable amount is equal to the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. Value in use is the present value of the future cash flows expected from the generating units to which goodwill has been allocated. The resulting value adjustments are recorded in the income statement under item \"270. Value adjustments of goodwill\u201d. No subsequent write-back is permitted.
Derecognition criteria
An intangible asset is derecognised from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page110-cflshid_53967-tag94190": { "value": "
Classification criteria
The item includes property, plant and equipment held for investment purpose in accordance with IAS 40 as well as those for functional use in accordance with IAS 16.
All property (either fully owned or leased) held by the company for the purposes of obtaining rent and/or a capital gain fall under investment property.
More specifically, property, plant and equipment for functional use include:
\u2022land;
\u2022buildings;
\u2022furniture and accessories;
\u2022electronic office machines;
\u2022various machines and equipment;
\u2022vehicles;
\u2022leasehold improvements on third-party property.
Those are physical assets held for use in production, in providing goods and services or for administrative purposes, and that are expected to be used for more than one fiscal year.
This item also includes the rights of use acquired through leases and relating to the use of property, plant and equipment.
Under IFRS 16, a lease is a contract, or part of a contract, that, in exchange for a fee, transfers the right to use an asset (the underlying asset) for a period of time.
Finally, the item includes leasehold improvements on third-party property and expenses relating to identifiable and separable asset. Normally, this kind of investment is sustained in order to make a property rented from third parties suitable for use.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page111-cflshid_54440-tag94192": { "value": "
7 - Intangible assets
Classification criteria
Intangible assets are non-monetary assets, identifiable even though they lack physical substance, that meet the requirements of identifiability, control over a resource and existence of future economic benefits. Intangible assets mainly include goodwill and software.
Recognition criteria
Intangible assets initially are recognised in the statement of financial position at cost, i.e. the purchase price and any direct cost incurred in preparing the asset for use.
In particular, costs incurred internally for the development of software projects constitute intangible assets and are only capitalised if all of the following conditions are met:
\u2022the cost attributable to the development activity can be reliably determined;
\u2022there is the intention, the availability of financial resources and the technical capacity to make the asset ready for use or sale;
\u2022it can be demonstrated that the asset is able to produce future economic benefits. Capitalised software development costs include only those expenses incurred that can be directly attributed to the development process.
Measurement criteria
Subsequent to initial recognition, intangible assets with a finite useful life are recognised at cost less amortisation determined on the basis of their estimated useful life.
If there is objective evidence that a single asset may be impaired, the asset\u2019s carrying amount is compared to its recoverable amount, which is the higher of an asset's fair value less costs to sell and its value in use, intended as the present value of future cash flows expected to arise from this asset. Any impairment loss is recognised in profit or loss.
Intangible assets with an indefinite useful life, including goodwill, are recorded at cost less any impairment losses incurred. These assets are not depreciated, but only periodically checked for impairment with respect to the carrying amount.
At each year-end or interim reporting date, if there is evidence of impairment, an estimate of the asset's recoverable amount is made. The amount of the loss, recognised in the income statement, is equal to the difference between the asset's carrying amount and its recoverable amount.
With regard to goodwill, the adequacy of the carrying amount is periodically verified. In particular, whenever there is evidence of impairment, and in any case at least once a year, an impairment test is conducted. For this purpose, the cash-generating unit to which goodwill is to be allocated is identified. This unit represents the minimum level at which goodwill is monitored for internal management purposes and must not be greater than the operating Segment determined in accordance with IFRS 8.
The amount of the impairment, if any, is determined on the basis of the difference between the carrying amount of goodwill and its recovery value, if lower. This recoverable amount is equal to the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. Value in use is the present value of the future cash flows expected from the generating units to which goodwill has been allocated. The resulting value adjustments are recorded in the income statement under item \"270. Value adjustments of goodwill\u201d. No subsequent write-back is permitted.
Derecognition criteria
An intangible asset is derecognised from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss.
Business combinations
Business combinations are subject to the rules of IFRS 3.
The transfer of control of a business (or an integrated set of activities and assets operated and managed together) constitutes a business combination.
To this end, control is considered transferred when the investor is exposed or entitled to variable returns from its involvement with the investee and, at the same time, has the ability to affect those returns through its power over the entity.
IFRS 3 demands that an acquirer be identified for all business combinations. This is defined as the entity that acquires control over another entity or group of assets. If it is not possible to identify a controlling entity on the basis of the above definition of control, such as, for example, may be the case in exchanges of equity interests, the acquirer shall be identified using factors such as: the entity whose fair value is significantly greater, the entity that pays a cash consideration or the entity that issues new equity interests.
The acquisition, and therefore, the initial consolidation of the acquiree, must be recognised on the date on which the acquirer effectively acquires control over the company or assets acquired. When the transaction takes the form of a single transfer, the transfer date normally coincides with the acquisition date. However, it is important to check for the possible presence of agreements between the parties that may result in the effective transfer of control before the date of the exchange.
The consideration paid as part of a business combination must be calculated as the sum of the fair value, at the date of the exchange, of the assets acquired, the liabilities incurred or assumed and the equity instruments issued by the acquirer in exchange for control.
In transactions involving payment in cash (or when payment is made using cash-equivalent financial instruments), the price is the agreed consideration, discounted if payment is to be made in instalments over the medium or long-term. If payment is made using an instrument other than cash, such as through the issue of equity instruments, the price is equal to the fair value of the means of payment, net of the costs directly attributable to the capital issue. For the methods used to determine the fair value of financial instruments, please refer to paragraph \u201cA.4 - Fair value disclosure\u201d, with the caveat that, in the presence of shares listed on active markets, the fair value is represented by the stock market price on the date of acquisition or, in the absence thereof, by the last available price.
Adjustments subject to future events are included in the consideration of the business combination at the acquisition date, if provided for in the agreements and only if probable, able to be reliably determined and realised within twelve months of the date on which control is acquired. Instead, indemnities for a reduction of the value of the assets used are not considered insofar as they are already taken into account, either in the fair value of the equity instruments or as a reduction of the premium or increase in the discount on the initial issue (for debt instruments).
Acquisition-related costs are the costs the acquirer incurs to effectively implement a business combination. By way of example, these may include professional fees paid to auditors, experts, legal consultants, costs for appraisals and the auditing of accounts, preparation of information documents required by regulations, as well as finder\u2019s fees paid to identify potential targets to be acquired if it is contractually established that the payment is made only in the event of a successful completion of the combination, as well as the costs of registering and issuing debt and equity securities.
With the exception of the costs of issuing debt or equity securities (which shall be recognised in accordance with IAS 32), the acquirer shall recognise acquisition-related costs in the periods in which these costs are incurred and the services are received.
Business combinations are accounted for using the \u201cacquisition method\u201d, under which the identifiable assets acquired (including any intangible assets not previously recognised by the acquiree) and the identifiable liabilities assumed (including contingent liabilities) are recognised at their respective fair values at the acquisition date.
In addition, as expressly envisaged by IFRS 3, for each business combination, any non-controlling interests in the acquiree can be recognised at fair value (with a consequent increase in the consideration transferred) or proportionally to the non-controlling stake in the identifiable net assets of the acquiree.
If control is acquired in stages, the acquirer shall measure its previously held equity interest in the acquiree at its acquisition date at fair value; it shall recognise any difference compared to the previous carrying amount through profit or loss.
The surplus amount of the consideration transferred (i.e. the fair value of the assets transferred, the liabilities incurred or the equity instruments issued by the acquirer), the amount of any non-controlling interests (determined as described above) and the fair value of interests previously held by the acquirer, exceeding the fair value of the assets and liabilities acquired, shall be recognised as goodwill. Conversely, if the latter should exceed the sum of the consideration, non-controlling interests and fair value of previously held interests, the difference shall be recognised through profit or loss.
Business combinations may be accounted for provisionally by the end of the financial year in which they are performed with final balance calculated and booked within twelve months of the acquisition date.
Pursuant to IFRS 10, the acquisition of additional stakes in entities that are already controlled are considered equity transactions, i.e. transactions with shareholders acting in this same capacity. Therefore, differences between the acquisition costs and the book value of non-controlling interests acquired are recorded under Group shareholders\u2019 equity; similarly, sales of non-controlling interests without loss of control do not generate gains/losses recognised in profit or loss but rather are recognised as changes in Group equity.
Transactions implemented to obtain control over one or more entities that do not constitute a business or to obtain temporary control are not business combinations. Equally, transactions carried out for reorganisation purposes, between two or more companies or activities that already belong to the Group and not involving a change in the control structure regardless of the percentage of third-party rights before and after the transaction, are also not business combinations; these may be referred to as combinations of entities under common control. Such transactions are considered as having no economic substance. Accordingly, in the absence of an IAS/IFRS specifically applicable to the transaction and in compliance with the assumptions of IAS 8, which requires that \u2013 in the absence of a specific standard \u2013 an entity shall use its judgement in applying an accounting standard that produces relevant, reliable and prudent information able to reflect the economic substance of the transaction, such transactions are accounted for by retaining the values of the acquiree in the financial statements of the acquirer.
Mergers are the most complete form of business combination, as they entail the legal and financial merging of the entities participating in the transaction.
Whether they involve the formation of a new legal entity (merger of equals) or the absorption of one entity by another existing entity, mergers are treated in accordance with the criteria set out above. Specifically:
\u2022if the transaction involves the transfer of control of an entity, it is treated as a business combination pursuant to IFRS 3;
\u2022if the transaction does not involve the transfer of control, it is accounted for by retaining the carrying values.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page112-cflshid_54958-tag94199": { "value": "Intangible assets with an indefinite useful life, including goodwill, are recorded at cost less any impairment losses incurred. These assets are not depreciated, but only periodically checked for impairment with respect to the carrying amount.
At each year-end or interim reporting date, if there is evidence of impairment, an estimate of the asset's recoverable amount is made. The amount of the loss, recognised in the income statement, is equal to the difference between the asset's carrying amount and its recoverable amount.
With regard to goodwill, the adequacy of the carrying amount is periodically verified. In particular, whenever there is evidence of impairment, and in any case at least once a year, an impairment test is conducted. For this purpose, the cash-generating unit to which goodwill is to be allocated is identified. This unit represents the minimum level at which goodwill is monitored for internal management purposes and must not be greater than the operating Segment determined in accordance with IFRS 8.
The amount of the impairment, if any, is determined on the basis of the difference between the carrying amount of goodwill and its recovery value, if lower. This recoverable amount is equal to the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. Value in use is the present value of the future cash flows expected from the generating units to which goodwill has been allocated. The resulting value adjustments are recorded in the income statement under item \"270. Value adjustments of goodwill\u201d. No subsequent write-back is permitted.
Derecognition criteria
An intangible asset is derecognised from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page112-cflshid_54958-tag94198": { "value": "Intangible assets with an indefinite useful life, including goodwill, are recorded at cost less any impairment losses incurred. These assets are not depreciated, but only periodically checked for impairment with respect to the carrying amount.
At each year-end or interim reporting date, if there is evidence of impairment, an estimate of the asset's recoverable amount is made. The amount of the loss, recognised in the income statement, is equal to the difference between the asset's carrying amount and its recoverable amount.
With regard to goodwill, the adequacy of the carrying amount is periodically verified. In particular, whenever there is evidence of impairment, and in any case at least once a year, an impairment test is conducted. For this purpose, the cash-generating unit to which goodwill is to be allocated is identified. This unit represents the minimum level at which goodwill is monitored for internal management purposes and must not be greater than the operating Segment determined in accordance with IFRS 8.
The amount of the impairment, if any, is determined on the basis of the difference between the carrying amount of goodwill and its recovery value, if lower. This recoverable amount is equal to the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. Value in use is the present value of the future cash flows expected from the generating units to which goodwill has been allocated. The resulting value adjustments are recorded in the income statement under item \"270. Value adjustments of goodwill\u201d. No subsequent write-back is permitted.
Derecognition criteria
An intangible asset is derecognised from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page112-cflshid_54958-tag94197": { "value": "Intangible assets with an indefinite useful life, including goodwill, are recorded at cost less any impairment losses incurred. These assets are not depreciated, but only periodically checked for impairment with respect to the carrying amount.
At each year-end or interim reporting date, if there is evidence of impairment, an estimate of the asset's recoverable amount is made. The amount of the loss, recognised in the income statement, is equal to the difference between the asset's carrying amount and its recoverable amount.
With regard to goodwill, the adequacy of the carrying amount is periodically verified. In particular, whenever there is evidence of impairment, and in any case at least once a year, an impairment test is conducted. For this purpose, the cash-generating unit to which goodwill is to be allocated is identified. This unit represents the minimum level at which goodwill is monitored for internal management purposes and must not be greater than the operating Segment determined in accordance with IFRS 8.
The amount of the impairment, if any, is determined on the basis of the difference between the carrying amount of goodwill and its recovery value, if lower. This recoverable amount is equal to the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. Value in use is the present value of the future cash flows expected from the generating units to which goodwill has been allocated. The resulting value adjustments are recorded in the income statement under item \"270. Value adjustments of goodwill\u201d. No subsequent write-back is permitted.
Derecognition criteria
An intangible asset is derecognised from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page112-cflshid_54958-tag94196": { "value": "Intangible assets with an indefinite useful life, including goodwill, are recorded at cost less any impairment losses incurred. These assets are not depreciated, but only periodically checked for impairment with respect to the carrying amount.
At each year-end or interim reporting date, if there is evidence of impairment, an estimate of the asset's recoverable amount is made. The amount of the loss, recognised in the income statement, is equal to the difference between the asset's carrying amount and its recoverable amount.
With regard to goodwill, the adequacy of the carrying amount is periodically verified. In particular, whenever there is evidence of impairment, and in any case at least once a year, an impairment test is conducted. For this purpose, the cash-generating unit to which goodwill is to be allocated is identified. This unit represents the minimum level at which goodwill is monitored for internal management purposes and must not be greater than the operating Segment determined in accordance with IFRS 8.
The amount of the impairment, if any, is determined on the basis of the difference between the carrying amount of goodwill and its recovery value, if lower. This recoverable amount is equal to the higher of the fair value of the cash-generating unit, net of any costs to sell, and its value in use. Value in use is the present value of the future cash flows expected from the generating units to which goodwill has been allocated. The resulting value adjustments are recorded in the income statement under item \"270. Value adjustments of goodwill\u201d. No subsequent write-back is permitted.
Derecognition criteria
An intangible asset is derecognised from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page112-cflshid_54958-tag94195": { "value": "
8 - Non-current assets and disposal groups
Non-current assets or groups of assets/liabilities for which a process of disposal has begun and their sale is considered highly probable are classified under the item of the assets \u201cNon-current assets and disposal groups\u201d and the item of the liabilities \u201cLiabilities associated with assets held for sale\u201d. With the exception of certain types of assets (e.g. financial assets coming under the scope of application of IFRS 9), for which IFRS 5 specifically establishes that the measurement criteria of the relevant accounting standard must be applied, these assets/liabilities are otherwise measured at the lower of carrying amount and their fair value net of selling costs.
Income and expenses (net of the tax effect) attributable to asset disposal groups held for sale or recognized as such during the year, are presented in the income statement in a separate item.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page112-cflshid_54958-tag94193": { "value": "
8 - Non-current assets and disposal groups
Non-current assets or groups of assets/liabilities for which a process of disposal has begun and their sale is considered highly probable are classified under the item of the assets \u201cNon-current assets and disposal groups\u201d and the item of the liabilities \u201cLiabilities associated with assets held for sale\u201d. With the exception of certain types of assets (e.g. financial assets coming under the scope of application of IFRS 9), for which IFRS 5 specifically establishes that the measurement criteria of the relevant accounting standard must be applied, these assets/liabilities are otherwise measured at the lower of carrying amount and their fair value net of selling costs.
Income and expenses (net of the tax effect) attributable to asset disposal groups held for sale or recognized as such during the year, are presented in the income statement in a separate item.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page112-cflshid_54958-tag94194": { "value": "
8 - Non-current assets and disposal groups
Non-current assets or groups of assets/liabilities for which a process of disposal has begun and their sale is considered highly probable are classified under the item of the assets \u201cNon-current assets and disposal groups\u201d and the item of the liabilities \u201cLiabilities associated with assets held for sale\u201d. With the exception of certain types of assets (e.g. financial assets coming under the scope of application of IFRS 9), for which IFRS 5 specificallyestablishes that the measurement criteria of the relevant accounting standard must be applied, these assets/liabilities are otherwise measured at the lower of carrying amount and their fair value net of selling costs.
Income and expenses (net of the tax effect) attributable to asset disposal groups held for sale or recognized as such during the year, are presented in the income statement in a separate item.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page112-cflshid_54958-tag94200": { "value": "
9 - Current and deferred taxes
Classification criteria
The items include current and deferred tax assets and current and deferred tax liabilities related to income taxes, respectively.
Current and deferred taxes, calculated in compliance with national tax laws, are recognised in profit or loss with the exception of items directly credited or debited to equity.
Current tax liabilities are shown in the statement of financial position gross of the relevant tax advances paid.
Deferred tax assets and liabilities are recognised in the statement of financial position at pre-closing balances and without set-offs, and are included in the items \u201cTax assets\u201d and \u201cTax liabilities\u201d, respectively, except when there is a legally enforceable right to set off current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which deferred tax liabilities or assets are expected to be settled or recovered.
Under the existing tax consolidation arrangements between the Group companies, the current corporate income tax (IRES) expense for the year is included in either Other assets or Other liabilities as receivables due from/payables due to the consolidating company, La Scogliera, in accordance with tax legislation.
Recognition and measurement criteria
Deferred tax assets and liabilities are calculated based on temporary differences\u2014without time limits\u2014between the value attributed to the asset or liability according to statutory criteria and the corresponding tax base, applying
the tax rates expected to be applicable for the year in which the tax asset will be realised, or the tax liability will be settled, according to theoretical tax laws in force at the realisation date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
\u2022when the deferred tax liabilities arise from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
\u2022when the timing of the reversal of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses to the extent that it is probable that they can be recovered, based on the ability of the company concerned or the Parent company, as a result of the \"tax consolidation\" option, to continue to generate taxable profit, except:
\u2022when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
\u2022in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page112-cflshid_54958-tag94201": { "value": "
9 - Current and deferred taxes
Classification criteria
The items include current and deferred tax assets and current and deferred tax liabilities related to income taxes, respectively.
Current and deferred taxes, calculated in compliance with national tax laws, are recognised in profit or loss with the exception of items directly credited or debited to equity.
Current tax liabilities are shown in the statement of financial position gross of the relevant tax advances paid.
Deferred tax assets and liabilities are recognised in the statement of financial position at pre-closing balances and without set-offs, and are included in the items \u201cTax assets\u201d and \u201cTax liabilities\u201d, respectively, except when there is a legally enforceable right to set off current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which deferred tax liabilities or assets are expected to be settled or recovered.
Under the existing tax consolidation arrangements between the Group companies, the current corporate income tax (IRES) expense for the year is included in either Other assets or Other liabilities as receivables due from/payables due to the consolidating company, La Scogliera, in accordance with tax legislation.
Recognition and measurement criteria
Deferred tax assets and liabilities are calculated based on temporary differences\u2014without time limits\u2014between the value attributed to the asset or liability according to statutory criteria and the corresponding tax base, applyingthe tax rates expected to be applicable for the year in which the tax asset will be realised, or the tax liability will be settled, according to theoretical tax laws in force at the realisation date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
\u2022when the deferred tax liabilities arise from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
\u2022when the timing of the reversal of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses to the extent that it is probable that they can be recovered, based on the ability of the company concerned or the Parent company, as a result of the \"tax consolidation\" option, to continue to generate taxable profit, except:
\u2022when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
\u2022in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page113-cflshid_55623-tag94204": { "value": "
10 - Provisions for risks and charges
Classification criteria
Provisions for risks and charges in respect of commitments and guarantees granted
The sub-item of provisions for risks and charges under review includes the provisions for credit risk set aside for loan commitments and the other guarantees granted that fall within the scope of the impairment rules in IFRS 9. As a general rule, in this case the Bank adopts the same methods for allocating items to three credit risk stages and calculating expected credit losses as the ones described for financial assets measured at amortised cost or at fair value through other comprehensive income.
The aggregate item therefore also includes the provisions for risks and charges set aside for other types of commitments and guarantees granted that, because of their specific characteristics, they do not fall within the scope of the impairment rules in IFRS 9.
Provisions for pensions and similar obligations
Pension funds are established in implementation of company agreements and qualify as defined benefit plans under IAS 19. The liability relating to these plans and the related current service cost are determined on the basis of actuarial assumptions by applying the \u201cProjected Unit Credit Method\u201d, which involves projecting future outflows on the basis of historical statistical analyses and the demographic curve, and discounting these flows on the basis of a market interest rate. The contributions paid in each reporting period are treated as separate units, which are recognised and valued individually for the purpose of determining the final obligation. The rate used for discounting is determined on the basis of the market yields recorded on the valuation dates of bonds of leading companies, taking into account the average residual life of the liability. The present value of the obligation at the balance sheet date is also adjusted for the fair value of any plan assets.
Actuarial gains and losses (i.e. changes in the present value of the obligation resulting from changes in actuarial assumptions and adjustments based on past experience) are recognised in the statement of comprehensive income.
Other provisions
Other reserves for risks and charges include provisions for legal or employment-related obligations or disputes, including tax disputes, arising from a past event for which it is probable that economic resources will be disbursed to fulfil the obligations, provided a reliable estimate of the amount can be made.
Criteria for measurement and recognition of income components
Provisions for risks and charges consist of liabilities of uncertain amount or maturity and are recognised in the balance sheet if:
\u2022a legal or constructive obligation exists as a result of a past event;
\u2022it is likely that it will be necessary to use resources which could generate economic benefits to settle the obligation;
\u2022the amount of the likely future outlay can be reliably estimated.
The amount recognised as a provision represents the best estimate of the financial outlay required to settle the obligation at the reporting date and reflects the risks and uncertainties inherent in the facts and circumstances examined. Where the time element is significant, provisions are discounted using current market rates. The provision and the effect of discounting are recognised in the income statement under item \"200. Net allocations to provisions for risks and charges\u201d, as well as the increase in the provision due to the passage of time.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. When the use of resources, capable of producing economic benefits to meet the obligation, becomes improbable, the provision is reversed.
In addition, each fund is only used to meet those outgoings for which it was originally established.
If it is not considered probable that financial resources will be required to be disbursed to fulfil the obligation, no provision need be recognised in the financial statements; in such a case, adequate disclosure of the possible risk of loss is required in the notes to the financial statements, unless the likelihood of using resources is considered remote or the phenomenon is not material.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page113-cflshid_55623-tag94203": { "value": "
10 - Provisions for risks and charges
Classification criteria
Provisions for risks and charges in respect of commitments and guarantees granted
The sub-item of provisions for risks and charges under review includes the provisions for credit risk set aside for loan commitments and the other guarantees granted that fall within the scope of the impairment rules in IFRS 9. As a general rule, in this case the Bank adopts the same methods for allocating items to three credit risk stages and calculating expected credit losses as the ones described for financial assets measured at amortised cost or at fair value through other comprehensive income.
The aggregate item therefore also includes the provisions for risks and charges set aside for other types of commitments and guarantees granted that, because of their specific characteristics, they do not fall within the scope of the impairment rules in IFRS 9.
Provisions for pensions and similar obligations
Pension funds are established in implementation of company agreements and qualify as defined benefit plans under IAS 19. The liability relating to these plans and the related current service cost are determined on the basis of actuarial assumptions by applying the \u201cProjected Unit Credit Method\u201d, which involves projecting future outflows on the basis of historical statistical analyses and the demographic curve, and discounting these flows on the basis of a market interest rate. The contributions paid in each reporting period are treated as separate units, which are recognised and valued individually for the purpose of determining the final obligation. The rate used for discounting is determined on the basis of the market yields recorded on the valuation dates of bonds of leading companies, taking into account the average residual life of the liability. The present value of the obligation at the balance sheet date is also adjusted for the fair value of any plan assets.
Actuarial gains and losses (i.e. changes in the present value of the obligation resulting from changes in actuarial assumptions and adjustments based on past experience) are recognised in the statement of comprehensive income.
Other provisions
Other reserves for risks and charges include provisions for legal or employment-related obligations or disputes, including tax disputes, arising from a past event for which it is probable that economic resources will be disbursed to fulfil the obligations, provided a reliable estimate of the amount can be made.
Criteria for measurement and recognition of income components
Provisions for risks and charges consist of liabilities of uncertain amount or maturity and are recognised in the balance sheet if:
\u2022a legal or constructive obligation exists as a result of a past event;
\u2022it is likely that it will be necessary to use resources which could generate economic benefits to settle the obligation;
\u2022the amount of the likely future outlay can be reliably estimated.
The amount recognised as a provision represents the best estimate of the financial outlay required to settle the obligation at the reporting date and reflects the risks and uncertainties inherent in the facts and circumstances examined. Where the time element is significant, provisions are discounted using current market rates. The provision and the effect of discounting are recognised in the income statement under item \"200. Net allocations to provisions for risks and charges\u201d, as well as the increase in the provision due to the passage of time.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. When the use of resources, capable of producing economic benefits to meet the obligation, becomes improbable, the provision is reversed.
In addition, each fund is only used to meet those outgoings for which it was originally established.
If it is not considered probable that financial resources will be required to be disbursed to fulfil the obligation, no provision need be recognised in the financial statements; in such a case, adequate disclosure of the possible risk of loss is required in the notes to the financial statements, unless the likelihood of using resources is considered remote or the phenomenon is not material.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page113-cflshid_55623-tag94202": { "value": "
Provisions for pensions and similar obligations
Pension funds are established in implementation of company agreements and qualify as defined benefit plans under IAS 19. The liability relating to these plans and the related current service cost are determined on the basis of actuarial assumptions by applying the \u201cProjected Unit Credit Method\u201d, which involves projecting future outflows on the basis of historical statistical analyses and the demographic curve, and discounting these flows on the basis of a market interest rate. The contributions paid in each reporting period are treated as separate units, which are recognised and valued individually for the purpose of determining the final obligation. The rate used for discounting is determined on the basis of the market yields recorded on the valuation dates of bonds of leading companies, taking into account the average residual life of the liability. The present value of the obligation at the balance sheet date is also adjusted for the fair value of any plan assets.
Actuarial gains and losses (i.e. changes in the present value of the obligation resulting from changes in actuarial assumptions and adjustments based on past experience) are recognised in the statement of comprehensive income.
Share-based payments
They are payments granted to employees or similar parties as remuneration for the services received that are settled in equity instruments.
The relevant international accounting standard is IFRS 2 \u2013 Share-based payments; specifically, since the Group is to settle the obligation for the service received in equity instruments (shares \u201cto the value of\u201d, i.e. a given amount is converted into a variable number of shares based on the fair value at grant date), those payments fall under \u201cequity-settled share-based payments\u201d. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognised in employee benefits expense together with a corresponding increase in equity over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period).The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The cost or revenue in the income statement represents the movement in cumulative expense recognised at the beginning and end of that year.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page114-cflshid_56291-tag94206": { "value": "
11 - Financial liabilities measured at amortised cost.
Classification criteria
The item includes payables due to banks and customers and debt securities issued and is made up of the various forms of interbank funding, as well as funding from customers and through outstanding bonds, net of any buybacks.
Also included are debts entered into by the lessee under finance leases, as well as repurchase and reverse repurchase agreements for deposits and securities lent with receipt of cash collateral at the lender's full disposal. Finally, operating debts related to the provision of financial services as defined in the Consolidated Banking Act and the Consolidated Finance Act are included.
Recognition criteria
The initial recognition of these liabilities occurs upon receipt of the amounts collected or settlement of the debt securities issued and is made on the basis of the relative fair value, which is normally equal to the amount collected or the issue price, increased by any additional costs/income directly attributable to the individual funding or issuance transaction and not reimbursed by the creditor counterparty.
Repurchase agreements with a repurchase obligation are recorded in the balance sheet as funding transactions for the amount collected in the spot market.
Lease payables are recognised on the basis of the present value of future instalments still to be paid over the contractual term discounted at the interest rate implicit in the transaction or, if not determinable, the marginal financing rate.
Measurement criteria
After initial recognition at fair value, these instruments are later measured at amortised cost, using the effective interest method.
The amortised cost method does not apply to short-term liabilities, as the effect of discounting would be insignificant.
Lease payables are revalued when there is a lease modification (i.e., a change in the perimeter of the contract), which is not accounted for/considered as a separate contract.
Derecognition criteria
Financial liabilities are derecognised when they are annulled, expired, extinguished or settled. The difference between the carrying amount and the acquisition cost is recognised in profit or loss.
Liabilities are derecognised also when previously issued securities are bought back, even if such instruments will be sold again in the future. Gains and losses from such derecognition are recognised in profit or loss when the buyback price is higher or lower than the carrying amount.
Subsequent sales of the company's own bonds on the market are considered as an issuance of new debt.
12 - Financial liabilities held for trading
Classification criteria
This item includes:
\u2022financial liabilities issued with the intention of repurchasing them in the short term;
\u2022liabilities that are part of a portfolio of financial instruments that are jointly managed and for which there is a proven strategy to achieve profits in the short term;
\u2022derivative contracts with a negative fair value and not designated as hedging instruments, including those linked to assets/liabilities designated at fair value through profit or loss.
Recognition criteria
Financial liabilities held for trading are initially recognised at the date of settlement in the case of liabilities for cash, and at inception in the case of derivative contracts.
Initial recognition is made on the basis of the fair value of the liability, normally equal to the amount collected, without considering transaction costs or income directly attributable to the instrument itself, which are charged directly to the income statement.
Measurement criteria
Even after initial recognition, financial liabilities held for trading are measured at fair value at the period closure, and the impact of the application of this method is measured through profit or loss. The fair value is calculated based on the same criteria as those used for financial assets held for trading.
Derecognition criteria
Financial liabilities held for trading are derecognised when the contractual rights to the related cash flows expire or when the financial liabilities are transferred with the transfer of substantially all risks and rewards of ownership.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page114-cflshid_56291-tag94205": { "value": "
11 - Financial liabilities measured at amortised cost.
Classification criteria
The item includes payables due to banks and customers and debt securities issued and is made up of the various forms of interbank funding, as well as funding from customers and through outstanding bonds, net of any buybacks.
Also included are debts entered into by the lessee under finance leases, as well as repurchase and reverse repurchase agreements for deposits and securities lent with receipt of cash collateral at the lender's full disposal. Finally, operating debts related to the provision of financial services as defined in the Consolidated Banking Act and the Consolidated Finance Act are included.
Recognition criteria
The initial recognition of these liabilities occurs upon receipt of the amounts collected or settlement of the debt securities issued and is made on the basis of the relative fair value, which is normally equal to the amount collected or the issue price, increased by any additional costs/income directly attributable to the individual funding or issuance transaction and not reimbursed by the creditor counterparty.
Repurchase agreements with a repurchase obligation are recorded in the balance sheet as funding transactions for the amount collected in the spot market.
Lease payables are recognised on the basis of the present value of future instalments still to be paid over the contractual term discounted at the interest rate implicit in the transaction or, if not determinable, the marginal financing rate.
Measurement criteria
After initial recognition at fair value, these instruments are later measured at amortised cost, using the effective interest method.
The amortised cost method does not apply to short-term liabilities, as the effect of discounting would be insignificant.
Lease payables are revalued when there is a lease modification (i.e., a change in the perimeter of the contract), which is not accounted for/considered as a separate contract.
Derecognition criteria
Financial liabilities are derecognised when they are annulled, expired, extinguished or settled. The difference between the carrying amount and the acquisition cost is recognised in profit or loss.
Liabilities are derecognised also when previously issued securities are bought back, even if such instruments will be sold again in the future. Gains and losses from such derecognition are recognised in profit or loss when the buyback price is higher or lower than the carrying amount.
Subsequent sales of the company's own bonds on the market are considered as an issuance of new debt.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page115-cflshid_56803-tag94207": { "value": "
14 - Foreign currency transactions
Initial recognition
At initial recognition, foreign currency transactions are recognised in the money of account, applying the exchange rate at the date of the transaction.
Subsequent recognitions
At each reporting date, foreign currency monetary assets and liabilities are translated using the closing exchange rate.
Non-monetary assets and liabilities recognised at historical cost are translated at the historical exchange rate, while those measured at fair value are translated using the period-end rate. Any exchange differences arising from the settlement of monetary elements or their translation at exchange rates different from those used at initial recognition or in previous financial statements are recognised in profit or loss in the period in which they arise, excluding those relating to financial assets measured at fair value through other comprehensive income, as they are recognised in equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page116-cflshid_57203-tag94209": { "value": "
Cash and cash equivalents
This item comprises legal tender, including foreign banknotes and divisional currencies, current accounts and \"sight\" deposits with central banks, with the exception of compulsory reserves, as well as \"sight\" claims on banks. The latter definition includes availability that can be withdrawn at any time without notice or with 24 hours or one working day's notice.
The item is recorded at face value. For foreign currencies, the face value is converted into Euro at the closing exchange rate at the end of the financial year.
Other assets
This item includes assets that cannot be allocated to other balance sheet asset items. The item may include but is not limited to:
\u2022gold, silver and precious metals;
\u2022accrued income other than that to be capitalised on the relevant financial assets, including that arising from contracts with customers in accordance with IFRS 15;
\u2022receivables related to the provision of non-financial goods or services;
\u2022tax credits related to the \"Cura Italia\" and \"Relaunch\" Decree-Laws;
\u2022tax debit items other than those recorded under item \"110. Tax assets\u201d.
Any remaining balances (of \"debit balance\") of travelling and suspended items not allocated to the relevant accounts may also be included, provided they are of an insignificant amount overall.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page116-cflshid_57203-tag94208": { "value": "
Severance indemnity and other employee benefits
According to IAS 19, employee benefits include all types of remuneration provided in exchange for the work performed by employees or by virtue of the termination of the employment relationship, which can be broken down into:
\u2022short-term benefits (other than termination benefits) that are expected to be settled within 12 months after the end of the financial year in which the employees were employed;
\u2022post-employment benefits such as the severance indemnity;
\u2022termination benefits due to employees following the company's decision to terminate employment before the retirement date;
\u2022long-term benefits (other than termination benefits) that are expected to be settled over a period of more than 12 months after the end of the financial year in which the employees were employed.
Pursuant to IAS 19 \u201cEmployee benefits\u201d and up to 31 December 2006, the so-called \u201cTFR\u201d (severance indemnity), post-employment benefit for employees of the Group's Italian companies, was classified as a \u201cdefined benefit plan\u201d. It therefore had to recognise this benefit by discounting it using the projected unit credit method.
Following the coming into force of the 2007 Budget Law, which brought the reform regarding supplementary pension plans - as per Italian Legislative Decree No. 252 of 5 December 2005 - forward to 1 January 2007, the employee was given a choice as to whether to allocate the post-employment benefits earned as from 1 January 2007 to supplementary pension funds or to maintain them in the company, which would then transfer it to a dedicated fund managed by INPS (the Italian National Social Security Institute).
This reform has led to changes in the accounting of post-employment benefits (severance indemnity) as for both the benefits earned up to 31 December 2006 and those earned from 1 January 2007.
In particular:
\u2022post-employment benefits earned as from 1 January 2007 constitute a \"defined-contribution plan\", regardless of whether the employee has chosen to allocate them to a supplementary pension fund or to INPS's Treasury Fund. Those benefits shall be calculated according to contributions due without applying actuarial methods;
\u2022post-employment benefits earned up to 31 December 2006 continue to be considered as a \u201cdefined-benefit plan\u201d, and as such are calculated on an actuarial basis which, however, unlike the calculation method applied until 31 December 2006, no longer requires that the benefits be proportionally attributed to the period of service rendered. This is because the employee\u2019s service is considered entirely accrued due to the change in the accounting nature of benefits earned as from 1 January 2007.
Actuarial gains/losses shall be included immediately in the calculation of the net obligations to employees through equity, to be reported in other comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page117-cflshid_57635-tag94210": { "value": "
Share-based payments
They are payments granted to employees or similar parties as remuneration for the services received that are settled in equity instruments.
The relevant international accounting standard is IFRS 2 \u2013 Share-based payments; specifically, since the Group is to settle the obligation for the service received in equity instruments (shares \u201cto the value of\u201d, i.e. a given amount is converted into a variable number of shares based on the fair value at grant date), those payments fall under \u201cequity-settled share-based payments\u201d. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognised in employee benefits expense together with a corresponding increase in equity over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The cost or revenue in the income statement represents the movement in cumulative expense recognised at the beginning and end of that year.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page117-cflshid_57635-tag94211": { "value": "
Treasury shares
Pursuant to regulations in force in Italy, buying back treasury shares requires a specific resolution of the shareholders' meeting and the recognition of a specific reserve in equity. Treasury shares in the portfolio are deducted from equity and measured at cost, calculated using the \u201cFifo\u201d method. Differences between the purchase price and the selling price deriving from trading in these shares during the reference year are recognised under equity reserves.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page117-cflshid_57635-tag94214": { "value": "
Recognition of revenues and costs
Revenues
Revenues are gross streams of economic benefits flowing to the entity as consideration for the obligation to transfer to the customer a wide range of goods and services in the ordinary course of business.
Under IFRS 15, an entity must recognise revenue based on the consideration expected to be received for goods and services provided in the ordinary course of business. In detail, the recognition of revenue must take place on the basis of the following five steps:
\u2022identification of a contract, defined as an agreement of commercial substance between two or more parties capable of generating rights and obligations;
\u2022identification of the individual obligations (\"performance obligations\") contained in the contract;
\u2022determination of the transaction price, i.e. the expected consideration for the transfer of goods or services to the customer;
\u2022allocation of the transaction price to each performance obligation, based on the stand-alone selling price of the individual obligation;
\u2022recognition of the revenue allocated to the individual obligation when it is settled, i.e. when the customer obtains control of the goods and services. This recognition takes into account the fact that certain services may be rendered at a specific time or over a period of time.
Revenue arising from contractual obligations with customers is recognised in profit or loss when it is probable that the entity will receive the consideration to which it is entitled in exchange for the goods or services transferred to the customer. This consideration must be allocated to the individual obligations under the contract and must be recognised as income in the income statement according to the timing of performance of the obligation. In detail, revenues may be recognised in the income statement:
\u2022at a point in time, when the entity performs the obligation to do by transferring the promised good or service to the customer, or
\u2022over time, as the entity performs the obligation to do by transferring the promised good or service to the customer.
The obligation to perform is considered to have been performed when the customer acquires control of the transferred good or service.
The consideration promised in the contract with the customer may include fixed amounts, variable amounts, or both. In detail, the contract price may vary as a result of reductions, discounts, rebates, incentives, performance bonuses or other similar elements. The variability of the consideration may also depend on the occurrence or non-occurrence of a future event. In the case of variable consideration, revenue is recognised in the income statement if it can be reliably estimated and only if it is highly probable that all or a significant portion of the consideration will not subsequently be reversed from the income statement.
When an entity receives consideration from a customer that it expects to refund to the customer, in whole or in part, against the revenue recognised in the income statement, it is necessary to recognise a liability, to be estimated based on expected future refunds (termed a \u201crefund liability\u201d). The estimate of this liability is updated at each balance sheet or interim reporting date and is based on the portion of the consideration that the entity expects not to be entitled to.
Costs
Costs related to obtaining and fulfilling contracts with customers are recognised in the income statement in the periods in which the corresponding revenues are recognised; costs that do not have a direct association with revenues are immediately recognised in the income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page117-cflshid_57635-tag94213": { "value": "
Recognition of revenues and costs
Revenues
Revenues are gross streams of economic benefits flowing to the entity as consideration for the obligation to transfer to the customer a wide range of goods and services in the ordinary course of business.
Under IFRS 15, an entity must recognise revenue based on the consideration expected to be received for goods and services provided in the ordinary course of business. In detail, the recognition of revenue must take place on the basis of the following five steps:
\u2022identification of a contract, defined as an agreement of commercial substance between two or more parties capable of generating rights and obligations;
\u2022identification of the individual obligations (\"performance obligations\") contained in the contract;
\u2022determination of the transaction price, i.e. the expected consideration for the transfer of goods or services to the customer;
\u2022allocation of the transaction price to each performance obligation, based on the stand-alone selling price of the individual obligation;
\u2022recognition of the revenue allocated to the individual obligation when it is settled, i.e. when the customer obtains control of the goods and services. This recognition takes into account the fact that certain services may be rendered at a specific time or over a period of time.
Revenue arising from contractual obligations with customers is recognised in profit or loss when it is probable that the entity will receive the consideration to which it is entitled in exchange for the goods or services transferred to the customer. This consideration must be allocated to the individual obligations under the contract and must be recognised as income in the income statement according to the timing of performance of the obligation. In detail, revenues may be recognised in the income statement:
\u2022at a point in time, when the entity performs the obligation to do by transferring the promised good or service to the customer, or
\u2022over time, as the entity performs the obligation to do by transferring the promised good or service to the customer.
The obligation to perform is considered to have been performed when the customer acquires control of the transferred good or service.
The consideration promised in the contract with the customer may include fixed amounts, variable amounts, or both. In detail, the contract price may vary as a result of reductions, discounts, rebates, incentives, performance bonuses or other similar elements. The variability of the consideration may also depend on the occurrence or non-occurrence of a future event. In the case of variable consideration, revenue is recognised in the income statement if it can be reliably estimated and only if it is highly probable that all or a significant portion of the consideration will not subsequently be reversed from the income statement.
When an entity receives consideration from a customer that it expects to refund to the customer, in whole or in part, against the revenue recognised in the income statement, it is necessary to recognise a liability, to be estimated based on expected future refunds (termed a \u201crefund liability\u201d). The estimate of this liability is updated at each balance sheet or interim reporting date and is based on the portion of the consideration that the entity expects not to be entitled to.
Costs
Costs related to obtaining and fulfilling contracts with customers are recognised in the income statement in the periods in which the corresponding revenues are recognised; costs that do not have a direct association with revenues are immediately recognised in the income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page117-cflshid_57635-tag94212": { "value": "
Revenues
Revenues are gross streams of economic benefits flowing to the entity as consideration for the obligation to transfer to the customer a wide range of goods and services in the ordinary course of business.
Under IFRS 15, an entity must recognise revenue based on the consideration expected to be received for goods and services provided in the ordinary course of business. In detail, the recognition of revenue must take place on the basis of the following five steps:
\u2022identification of a contract, defined as an agreement of commercial substance between two or more parties capable of generating rights and obligations;
\u2022identification of the individual obligations (\"performance obligations\") contained in the contract;
\u2022determination of the transaction price, i.e. the expected consideration for the transfer of goods or services to the customer;
\u2022allocation of the transaction price to each performance obligation, based on the stand-alone selling price of the individual obligation;
\u2022recognition of the revenue allocated to the individual obligation when it is settled, i.e. when the customer obtains control of the goods and services. This recognition takes into account the fact that certain services may be rendered at a specific time or over a period of time.
Revenue arising from contractual obligations with customers is recognised in profit or loss when it is probable that the entity will receive the consideration to which it is entitled in exchange for the goods or services transferred to the customer. This consideration must be allocated to the individual obligations under the contract and must be recognised as income in the income statement according to the timing of performance of the obligation. In detail, revenues may be recognised in the income statement:
\u2022at a point in time, when the entity performs the obligation to do by transferring the promised good or service to the customer, or
\u2022over time, as the entity performs the obligation to do by transferring the promised good or service to the customer.
The obligation to perform is considered to have been performed when the customer acquires control of the transferred good or service.
The consideration promised in the contract with the customer may include fixed amounts, variable amounts, or both. In detail, the contract price may vary as a result of reductions, discounts, rebates, incentives, performance bonuses or other similar elements. The variability of the consideration may also depend on the occurrence or non-occurrence of a future event. In the case of variable consideration, revenue is recognised in the income statement if it can be reliably estimated and only if it is highly probable that all or a significant portion of the consideration will not subsequently be reversed from the income statement.
When an entity receives consideration from a customer that it expects to refund to the customer, in whole or in part, against the revenue recognised in the income statement, it is necessary to recognise a liability, to be estimated based on expected future refunds (termed a \u201crefund liability\u201d). The estimate of this liability is updated at each balance sheet or interim reporting date and is based on the portion of the consideration that the entity expects not to be entitled to.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page118-cflshid_58216-tag94216": { "value": "
Costs
Costs related to obtaining and fulfilling contracts with customers are recognised in the income statement in the periods in which the corresponding revenues are recognised; costs that do not have a direct association with revenues are immediately recognised in the income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page118-cflshid_58216-tag94215": { "value": "
Dividends
Dividends are recognised through profit or loss in the year in which the resolution concerning their distribution is passed.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page118-cflshid_58216-tag94217": { "value": "
Impairment of financial instruments
Under IFRS 9, the relevant impairment provisions apply to financial assets measured at amortised cost, financial assets measured at fair value through other comprehensive income that are not equity securities, and loan commitments and guarantees granted that are not measured at fair value through profit or loss.
\u201cExpected Credit Losses\u201d (ECLs) are calculated based on whether the financial instrument's credit risk has significantly increased since initial recognition.
The general impairment model requires allocating the financial instruments within the scope of IFRS 9 to three Stages, which reflect the deterioration in credit quality:
\u2022Stage 1: financial instruments that have not had a significant increase in credit risk since initial recognition or that have low credit risk at the reporting date;
\u2022Stage 2: financial instruments that have had a significant increase in credit risk since initial recognition (unless they have low credit risk at the reporting date) but that individually do not have objective evidence of impairment;
\u2022Stage 3: financial assets that have had a significant increase in credit risk since initial recognition with objective evidence of impairment at the reporting date. This coincides with non-performing exposures, i.e. those classified as bad loans, unlikely to pay, or non-performing past due exposures according to the rules of the Bank of Italy.
For further details, please refer to paragraph \"2.3 Measurement of expected losses\" in \"Section 2 - Prudential consolidation risks\" of \"Part E - Information on risks and related hedging policies\" of the Notes to the Consolidated Financial Statements.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialGuaranteesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page119-cflshid_58823-tag94218": { "value": "Offsetting of financial instruments
Pursuant to IAS 32, paragraph 42, financial assets and financial liabilities are netted and shown for the net balance if the entity:
\u2022has a legal right to effect such set-off, which is currently exercisable in all circumstances, whether in the ordinary course of business or in default, insolvency or bankruptcy of the parties;
\u2022intends to settle transactions on a net settlement basis or on a gross settlement basis whose substantive effects are equivalent to a net settlement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page119-cflshid_58823-tag94219": { "value": "
Business combinations
Business combinations are subject to the rules of IFRS 3.
The transfer of control of a business (or an integrated set of activities and assets operated and managed together) constitutes a business combination.
To this end, control is considered transferred when the investor is exposed or entitled to variable returns from its involvement with the investee and, at the same time, has the ability to affect those returns through its power over the entity.
IFRS 3 demands that an acquirer be identified for all business combinations. This is defined as the entity that acquires control over another entity or group of assets. If it is not possible to identify a controlling entity on the basis of the above definition of control, such as, for example, may be the case in exchanges of equity interests, the acquirer shall be identified using factors such as: the entity whose fair value is significantly greater, the entity that pays a cash consideration or the entity that issues new equity interests.
The acquisition, and therefore, the initial consolidation of the acquiree, must be recognised on the date on which the acquirer effectively acquires control over the company or assets acquired. When the transaction takes the form of a single transfer, the transfer date normally coincides with the acquisition date. However, it is important to check for the possible presence of agreements between the parties that may result in the effective transfer of control before the date of the exchange.
The consideration paid as part of a business combination must be calculated as the sum of the fair value, at the date of the exchange, of the assets acquired, the liabilities incurred or assumed and the equity instruments issued by the acquirer in exchange for control.
In transactions involving payment in cash (or when payment is made using cash-equivalent financial instruments), the price is the agreed consideration, discounted if payment is to be made in instalments over the medium or long-term. If payment is made using an instrument other than cash, such as through the issue of equity instruments, the price is equal to the fair value of the means of payment, net of the costs directly attributable to the capital issue. For the methods used to determine the fair value of financial instruments, please refer to paragraph \u201cA.4 - Fair value disclosure\u201d, with the caveat that, in the presence of shares listed on active markets, the fair value is represented by the stock market price on the date of acquisition or, in the absence thereof, by the last available price.
Adjustments subject to future events are included in the consideration of the business combination at the acquisition date, if provided for in the agreements and only if probable, able to be reliably determined and realised within twelve months of the date on which control is acquired. Instead, indemnities for a reduction of the value of the assets used are not considered insofar as they are already taken into account, either in the fair value of the equity instruments or as a reduction of the premium or increase in the discount on the initial issue (for debt instruments).
Acquisition-related costs are the costs the acquirer incurs to effectively implement a business combination. By way of example, these may include professional fees paid to auditors, experts, legal consultants, costs for appraisals and the auditing of accounts, preparation of information documents required by regulations, as well as finder\u2019s fees paid to identify potential targets to be acquired if it is contractually established that the payment is made only in the event of a successful completion of the combination, as well as the costs of registering and issuing debt and equity securities.
With the exception of the costs of issuing debt or equity securities (which shall be recognised in accordance with IAS 32), the acquirer shall recognise acquisition-related costs in the periods in which these costs are incurred and the services are received.
Business combinations are accounted for using the \u201cacquisition method\u201d, under which the identifiable assets acquired (including any intangible assets not previously recognised by the acquiree) and the identifiable liabilities assumed (including contingent liabilities) are recognised at their respective fair values at the acquisition date.
n addition, as expressly envisaged by IFRS 3, for each business combination, any non-controlling interests in the acquiree can be recognised at fair value (with a consequent increase in the consideration transferred) or proportionally to the non-controlling stake in the identifiable net assets of the acquiree.
If control is acquired in stages, the acquirer shall measure its previously held equity interest in the acquiree at its acquisition date at fair value; it shall recognise any difference compared to the previous carrying amount through profit or loss.
The surplus amount of the consideration transferred (i.e. the fair value of the assets transferred, the liabilities incurred or the equity instruments issued by the acquirer), the amount of any non-controlling interests (determined as described above) and the fair value of interests previously held by the acquirer, exceeding the fair value of the assets and liabilities acquired, shall be recognised as goodwill. Conversely, if the latter should exceed the sum of the consideration, non-controlling interests and fair value of previously held interests, the difference shall be recognised through profit or loss.
Business combinations may be accounted for provisionally by the end of the financial year in which they are performed with final balance calculated and booked within twelve months of the acquisition date.
Pursuant to IFRS 10, the acquisition of additional stakes in entities that are already controlled are considered equity transactions, i.e. transactions with shareholders acting in this same capacity. Therefore, differences between the acquisition costs and the book value of non-controlling interests acquired are recorded under Group shareholders\u2019 equity; similarly, sales of non-controlling interests without loss of control do not generate gains/losses recognised in profit or loss but rather are recognised as changes in Group equity.
Transactions implemented to obtain control over one or more entities that do not constitute a business or to obtain temporary control are not business combinations. Equally, transactions carried out for reorganisation purposes, between two or more companies or activities that already belong to the Group and not involving a change in the control structure regardless of the percentage of third-party rights before and after the transaction, are also not business combinations; these may be referred to as combinations of entities under common control. Such transactions are considered as having no economic substance. Accordingly, in the absence of an IAS/IFRS specifically applicable to the transaction and in compliance with the assumptions of IAS 8, which requires that \u2013 in the absence of a specific standard \u2013 an entity shall use its judgement in applying an accounting standard that produces relevant, reliable and prudent information able to reflect the economic substance of the transaction, such transactions are accounted for by retaining the values of the acquiree in the financial statements of the acquirer.
Mergers are the most complete form of business combination, as they entail the legal and financial merging of the entities participating in the transaction.
Whether they involve the formation of a new legal entity (merger of equals) or the absorption of one entity by another existing entity, mergers are treated in accordance with the criteria set out above. Specifically:
\u2022if the transaction involves the transfer of control of an entity, it is treated as a business combination pursuant to IFRS 3;
\u2022if the transaction does not involve the transfer of control, it is accounted for by retaining the carrying values.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page120-cflshid_59563-tag94223": { "value": "
A.3 - Disclosure of transfers of financial assets between portfolios
No financial assets were transferred between portfolios during 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page120-cflshid_59563-tag94222": { "value": "
A.4 - Fair value disclosure
Qualitative disclosure
Fair value is the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date, under current market conditions (i.e. the exit price), regardless of the fact that said price is directly observable or that another measurement approach is used.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
IFRS 13 establishes a fair value hierarchy based on the extent to which inputs to valuation techniques used to measure the underlying assets/liabilities are observable. Specifically, the hierarchy consists of three Levels.
\u2022Level 1: the instrument's fair value is measured based on (unadjusted) quoted prices in active markets.
\u2022Level 2: the instrument's fair value is measured based on valuation models using inputs observable in active markets, such as:
\u2013quoted prices for similar assets or liabilities;
\u2013quoted prices for identical or similar assets or liabilities in non-active markets;
\u2013observable inputs such as interest rates or yield curves, implied volatility, default rates and illiquidity factors;
\u2013inputs that are not observable but supported and confirmed by market data.
\u2022Level 3: the instrument's fair value is measured based on valuation models using mainly inputs that are unobservable in active markets.
Each financial asset or liability of the Group is categorised in one of the above Levels, and the relevant measurements may be recurring or non-recurring (see IFRS 13, paragraph 93, letter a). The fair value measurement is categorised in its entirety in the same Level of the fair value hierarchy as the lowest Level input.
The choice among the valuation techniques is not optional, since these shall be applied in a hierarchical order: indeed, the fair value hierarchy gives the highest priority to (unadjusted) quoted prices available in active markets for identical assets or liabilities (Level 1 data) and the lowest priority to unobservable inputs (Level 3 data).
Measurement techniques used to measure fair value are applied consistently on an on-going basis, as described below.
A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used
In the absence of quoted prices in an active market, the fair value measurement of a financial instrument is performed using valuation techniques maximising the use of inputs observable on the market.
The use of a valuation technique is intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. In this case, the fair value measurement may be categorised in Level 2 or Level 3, according to what extent inputs to the pricing model are observable.
In the absence of observable prices in an active market for the financial asset or liability to be measured, the fair value of the financial instruments is measured using the so-called comparable approach (Level 2), requiring valuation models based on market inputs.
In this case, the valuation is not based on the quoted prices of the financial instrument being measured (identical asset), but on prices, credit spreads or other factors derived from the official quoted prices of instruments that are substantially similar in terms of risk factors and duration/return, using a given calculation method (pricing model).
In the absence of quoted prices in an active market for a similar instrument, or should the characteristics of the instrument to be measured not allow to apply models using inputs observable in active markets, it is necessary to use valuation models assuming the use of inputs that are not directly observable in the market and, therefore, requiring to make estimates and assumptions (non observable input - Level 3). In these cases, the financial instrument is measured using a given calculation method that is based on specific assumptions regarding:
\u2022the trend in future cash flows, possibly contingent on future events whose probability of occurring can be derived from historical experience or based on behavioural assumptions;
\u2022the Level of specific inputs not quoted on active markets:for the purposes of estimating them, information acquired from prices and spreads observed on the market shall have a higher priority. If these are not available, entities shall use historical data about the specific underlying risk factor or specialist research on the matter (e.g. reports by ratings agencies or primary market players).
In the cases described above, consideration is always given to the value of potentially making valuation adjustments taking into account the risk premiums that operators typically consider in pricing instruments. If not explicitly considered in the valuation model, valuation adjustments may include:
\u2022model adjustment: adjustments that take into account any deficiencies in the valuation models highlighted during calibration;
\u2022liquidity adjustment: adjustments that take into account the bid-ask spread if the model calculates a mid-price;
\u2022credit risk adjustment: adjustments related to the counterparty or own credit risk;
\u2022other risk adjustment: adjustments related to a risk premium \"priced\" in the market (e.g. relating to the complexity of valuation of an instrument).
With regard to fair value measurement, the Group adopts various methodologies, depending on the specific characteristics of the products being valued.
To measure receivables that must be measured at fair value, the method used is the Discounted Cash Flow (DCF) Model to receivables mandatorily measured at fair value, discounting the expected cash flows from each loan at a market rate determined by taking into account the risk free rate (rf) for similar maturities, the Cost of Funding (COF), the counterparty's credit risk, and the capital absorption cost.
For the measurement of unlisted equities, mainly income and financial models are used, in particular the method defined as 'Market Multiples of Comparable Companies' to which a control method such as the 'Discounted Cash Flow Model' or the 'Comparable Transactions Method' is compared. The latter method is applied to transactions that have similar economic and asset characteristics to the one being valued and adjusted for the economic and asset magnitudes of the asset being valued.
In general, where the purchase of the equity security or loan measured at fair value in the last year and market conditions have not changed significantly since the date of purchase, the purchase value is retained in the balance sheet. Factors taken into consideration that are indicative of a purchase price that is not representative of fair value include deviations of the asset's performance from forecasts and changes in the market scenario or context in which the counterparty operates.
With specific reference to the valuation of UCITS units, the approach used takes Net Asset Value (NAV) as the starting point for determining fair value. Thereafter, it must be verified whether, in determining the NAV, the fund's assets have been measured at fair value in accordance with the applicable international standards. A discount is applied to the NAV determined in this way using a structured rate as described below:
\u2022liquidity adjustment: the liquidity discount must take into account the inability to mobilise the economic commitment in the short term. This discount, which refers to a time horizon expressing the average duration of the investments in the fund, is applied to the NAV defined above inversely proportional to changes in the NAV itself. Once the investment phase is over, the discount applied will decrease proportionally from year to year until it settles at the base discount applied for the first year;
\u2022credit risk adjustment: the credit risk discount must take into account the probability of default of the underlying asset in which the fund invests;
\u2022other risk adjustment: this category includes the discount of any other significant element known to the manager of the instrument at the time of measurement.
As for over-the-counter (OTC) derivatives not quoted in active markets, their fair value is calculated based on measurement techniques that take into account all risk factors that could affect the value of the financial instrument concerned, using observable market inputs (interest rates, exchange rates, share indices, etc.) adjusted as appropriate to account for the creditworthiness of the specific counterparty, including the counterparty's credit risk (CVA, Credit Valuation Adjustment) and/or the Group's own credit risk (DVA, Debit Valuation Adjustment).
The increase in interest rates, which occurred during the year, had a significant impact on the fair value of derivatives. However, with reference to the measurement of counterparty risk (Credit Valuation Adjustment and Debit Valuation Adjustment), as of 31 December 2023, the impact on the balance sheet values of derivatives with mark-to-market, both positive and negative, is substantially nil as almost all derivative financial instruments are securitised through Credit Support Agreements (CSA). The balance at 31 December 2023 of derivatives, for which there is no counterparty risk mitigation (CSA) element, should not be considered significant and amounts to 153 thousand Euro.
As for the measurement of financial assets and liabilities measured at fair value on a non-recurring basis, the relevant portfolio consists of on-balance-sheet exposures classified as performing with a residual life exceeding one year (medium-long term). Therefore, all exposures classified as impaired, other than those of the Npl Segment, the ones with a residual life less than one year, and unsecured loans are excluded from the measurement, as, for these, the Bank believes that their amortised cost can be used as an approximation of fair value.
For non-performing loans (bad loans, unlikely to pay, past due), the fair value is conventionally assumed to be equal to the net carrying amount and is shown in Level 3. In this regard, it should be noted that, in the recent past, significant transactions of assignments of non-performing loans have been observed on the Italian market, with prices that have discounted the specific characteristics of the portfolios sold and the different yields demanded by the buyers. The fair value determined on the basis of the aforementioned transactions would therefore be characterised by a high dispersion of values, such that the identification of a reference value would not be objective.
For the purposes of measuring performing loans at fair value, given the absence of prices directly observable on active and liquid markets, entities shall use valuation techniques based on a theoretical model meeting the requirements of IAS/IFRS standards (Level 3). The approach used to determine the fair value of performing loans is the aforementioned DCF Model applied to loans with a residual maturity of more than one year, while the nominal amount is considered for other loans with short or no maturity. Future cash flows consist of the sum of principal
and interest and are discounted using a rate formed by the credit spread (coverage curve) and the 3-month Euribor rate.
As for the receivables portfolio of the Npl Segment, which purchases and manages non-performing receivables mainly due from individuals, the specified DCF Model is used to calculate fair value. In this case, the expected net cash flows are discounted at a market rate. The market rate is calculated without considering a credit spread, since the credit risk of the individual counterparties is already incorporated in the statistical model used to estimate future cash flows with regard to collective management (non-judicial operations). The model projects the relevant cash flows based on historical evidence concerning the recovery of positions in the Group's portfolio. As for individual management (judicial operations), the projections of future cash flows are based on an internal algorithm or defined by the manager according to how the underlying receivable is being processed.
For financial liabilities at amortised cost, the fair value calculated for disclosure purposes is determined by applying the following methodologies:
\u2022for medium- and long-term liabilities, the measurement is performed by discounting future cash flows using an interest rate that incorporates its own credit risk component;
\u2022for on-demand liabilities with short-term or indefinite maturity, the carrying amount is a good approximation of fair value.
A.4.2 Measurement processes and sensitivity
In compliance with IFRS 13, for financial assets and liabilities measured at fair value categorised within Level 3, the Group tests their sensitivity to changes in one or more unobservable inputs used in the fair value measurements like, by way of example and in no means exhaustive, discount rates applied to cash flows or expected cash flows themselves.
With regard to debt security exposures measured at Level 3 fair value, amounting to 94,0 million Euro at 31 December 2023, the effects of potential changes in the parameters used are deemed not significant.
For equity securities and units of UCITSs, respectively equal, at 31 December 2023, to 165,9 million Euro and 76,9 million Euro, it is generally not possible to perform any quantitative sensitivity analysis of fair value to changes in unobservable inputs, as either the fair value is derived from third-party sources, or it is the result of a model whose inputs are specific to the entity being valued (e.g. company assets) and for which the information necessary for a sensitivity analysis is not available.
A.4.3 Fair value hierarchy
Concerning recurring fair value measurements of financial assets and liabilities, the Banca Ifis Group transfers them between Levels of the hierarchy based on the following guidelines:
\u2022for debt securities and financing:
\u2013the transfer from Level 3 to Level 2 takes place when the inputs to the valuation technique used are observable at the measurement date;
\u2013the transfer from Level 3 to Level 1 is allowed when it is confirmed that there is an active market for the instrument at the measurement date;
\u2013finally, they are transferred from Level 2 to Level 3 when some inputs relevant in measuring fair value are not directly observable at the measurement date.
\u2022for equity instruments, the Level transfer takes place when:
\u2013observable inputs became available during the period (e.g. prices for identical assets and liabilities defined in comparable transactions between independent and knowledgeable parties). In this case, they are reclassified from Level 3 to Level 2;
\u2013inputs directly or indirectly observable used in measuring them are no longer available or current (e.g. no recent comparable transactions or no longer applicable multiples). In this case, the entity shall use valuation techniques incorporating unobservable inputs.
A.4.4 Other information
There is no further information to report than that presented in the preceding paragraphs.
Quantitative information
A.4.5 Fair value hierarchy
A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value Level
Financial assets/liabilities measured at fair value(in thousands of Euro)31.12.202331.12.2022
L1L2L3L1L2L3
1. Financial assets measured at fair value through profit or loss5.14412.896216.83832.39925.598164.091
a) financial assets held for trading-12.896-1.27025.598-
b) financial assets designated at fair value------
c) other financial assets mandatorily measured at fair value5.144-216.83831.129-164.091
2. Financial assets measured at fair value through other comprehensive income673.7895.37370.014631.016-66.595
3. Hedging derivatives------
4. Property, plant and equipment------
5. Intangible assets------
Total678.93318.269286.852663.41525.598230.686
1. Financial liabilities held for trading-14.005--25.982-
2. Financial liabilities designated at fair value------
3. Hedging derivatives-11.644----
Total-25.649--25.982-
\"\"
Key:
L1 = Level 1: fair value of a financial instrument quoted in an active market;
L2 = Level 2 fair value measured using valuation techniques based on observable market inputs other than the financial instrument's price;
L3 = Level 3 fair value calculated using valuation techniques based on inputs not observable in the market.
At 31 December 2023, the impact of applying the Credit Valuation Adjustment to the carrying amounts of derivatives with a positive mark-to-market is essentially nil; as for the instruments with a negative mark-to-market, there is no impact resulting from the application of the Debit Valuation Adjustment to the carrying amounts of the derivatives.
With regard to hedging derivatives, all instruments are securitised through CSAs.
Financial assets held for trading and financial liabilities held for trading at 31 December 2023 comprise only trading derivatives, all of which are classified as Level 2.
Financial assets measured at fair value through other comprehensive income mainly consist of listed securities (Level 1). With regard to securities in Level 3, the amount includes shares in the Bank of Italy with a carrying amount of 50,0 million Euro.
A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3)
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Hedging derivatives
Property, plant and equipment
Intangible assets
Total
of which: a) financial assets held for trading
of which: b) financial assets designated at fair value
of which: c) other financial assets mandatorily measured at fair value
1. Opening balance
164.091
-
-
164.091
66.595
-
-
-
2. Increases
117.950
-
-
117.950
5.266
-
-
-
2.1. Purchases
95.287
-
-
95.287
5.121
-
-
-
2.2. Profit taken to:
20.656
-
-
20.656
145
-
-
-
2.2.1. Income Statement
20.656
-
-
20.656
-
-
-
-
- of which capital gains
19.871
-
-
19.871
-
-
-
-
2.2.2. Equity
-
X
X
X
145
-
-
-
2.3. Transferred from other Levels
-
-
-
-
-
-
-
-
2.4. Other increases
2.007
-
-
2.007
-
-
-
-
3. Decreases
65.203
-
-
65.203
1.847
-
-
-
3.1. Sales
30.123
-
-
30.123
-
-
-
-
3.2. Reimbursements
24.211
-
-
24.211
-
-
-
-
3.3. Losses taken to:
10.488
-
-
10.488
1.847
-
-
-
3.3.1. Income Statement
10.488
-
-
10.488
-
-
-
-
- of which capital losses
9.150
-
-
9.150
-
-
-
-
3.3.2. Equity
-
X
X
X
1.847
-
-
-
3.4. Transferred to other Levels
-
-
-
-
-
-
-
-
3.5. Other decreases
381
-
-
381
-
-
-
-
4. Closing balance
216.838
-
-
216.838
70.014
-
-
-
\"\"
A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (Level 3)
The Banca Ifis Group does not hold liabilities measured at fair value on a recurring basis at Level 3.
A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value Levels
Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis(in thousands of Euro)31.12.202331.12.2022
CAL1L2L3CAL1L2L3
1. Financial assets measured at amortised cost11.259.7012.341.123-8.907.98610.752.6942.121.051-8.610.143
2. Property, plant and equipment held for investment purpose407 - - 407423--423
3. Non-current assets and disposal groups- - - -- - - -
Total11.260.1082.341.123-8.908.39310.753.1172.121.051-8.610.566
1. Financial liabilities measured at amortised cost11.820.6581.329.813104.63010.726.38711.130.6981.002.62664.19210.410.567
2. Liabilities associated with assets held for sale--------
Total11.820.6581.329.813104.63010.726.38711.130.6981.002.62664.19210.410.567
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Among financial assets measured at amortised cost, the amount reported under Level 1 refers to government and other listed debt securities, while the balance reported under Level 3 consists mainly of credit exposures.
Level 1 amortised cost financial liabilities relate to bonds issued by the Parent company Banca Ifis.
A.5 - Disclosure on day one profit/loss
With reference to the provisions of IFRS 7 par. 28, a financial instrument must initially be recognised at a value equal to its fair value which, unless there is evidence to the contrary, is equal to the price paid/collected in trading. The above standard governs such cases by establishing that an entity may recognise a financial instrument at a fair value other than the consideration given or received only if the fair value is evidenced:
\u2022by comparison with other observable current market transactions in the same instrument;
\u2022through valuation techniques using exclusively, as variables, data from observable markets.
In other words, the assumption under IFRS 9, whereby fair value is equal to the consideration given or received, may be overcome only if there is objective evidence that the consideration given or received is not representative of the actual market value of the financial instrument being traded.
Such evidence must be derived only from objective and non-refutable parameters, thus eliminating any hypothesis of discretion on the part of the evaluator.
The difference between the fair value and the negotiated price, only when the above conditions are met, is representative of the day one profit and is immediately recognised in the income statement.
No such transactions were carried out as part of the Group's operations during 2023.
Section 2 - Financial assets measured at fair value through profit or loss - Item 20
2.1 Financial assets held for trading: breakdown by type
Items/Amounts31.12.202331.12.2022
L1L2L3L1L2L3
A. Cash assets
1. Debt securities - - - 677--
1.1 Structured - - - ---
1.2 Other debt securities - - - 677--
2. Equity securities - - - 593--
3. UCITS units - - - ---
4. Loans - - - ---
4.1 Reverse repurchase agreements- - - ---
4.2 Other - - - ---
Total (A) - - - 1.270--
B. Derivatives
1. Financial derivatives - 12.896 - -25.598-
1.1 for trading - 12.896 - -25.598-
1.2 connected to the fair value option - - - ---
1.3 other - - - ---
2. Credit derivatives - - - ---
2.1 for trading - - - ---
2.2 connected to the fair value option - - - ---
2.3 other - - - ---
Total (B) - 12.896 - -25.598-
Total (A+B)- 12.896 - 1.27025.598-
\"\"
Financial assets held for trading come to 12,9 million Euro at 31 December 2023 (down from the figure of 26,9 million Euro at 31 December 2022) and are almost entirely referring to transactions in derivatives (the value of which has fallen compared with the figure of 25,6 million Euro at 31 December 2022) substantially hedged by mirror positions recorded under financial liabilities held for trading. The figure at 31 December 2022 for this item
included 1,3 million Euro of debt and equity securities belonging to the Group's trading portfolio, which were entirely sold in 2023.
2.2 Financial assets held for trading: breakdown by debtor/issuer/counterparty
Items/Amounts 31.12.202331.12.2022
A. Cash assets
1. Debt securities -677
a) Central Banks --
b) Public Administrations--
c) Banks -676
d) Other financial companies -1
of which: insurance companies--
e) Non-financial companies--
2. Equity securities -593
a) Banks -593
b) Other financial companies --
of which: insurance companies--
c) Non-financial companies--
d) Other issuers--
3. UCITS units --
4. Loans --
a) Central Banks--
b) Public Administrations--
c) Banks --
d) Other financial companies --
of which: insurance companies--
e) Non-financial companies--
f) Households--
Total (A) -1.270
B. Derivatives
a) Central Counterparties--
b) Other12.896 25.598
Total (B) 12.896 25.598
Total (A+B)12.896 26.868
\"\"
2.3 Financial assets designated at fair value: breakdown by type
In these Consolidated Financial Statements, this item has no value.
2.4 Financial assets designated at fair value: breakdown by debtor/issuer
In these Consolidated Financial Statements, this item has no value.
2.5 Other financial assets mandatorily measured at fair value: breakdown by type
Items/Amounts
31.12.2023
31.12.2022
L1
L2
L3
L1
L2
L3
1. Debt securities
-
-
86.919
31.129
-
41.714
1.1. Structured
-
-
-
-
-
-
1.2. Other debt securities
-
-
86.919
31.129
-
41.714
2. Equity securities
-
-
51.051
-
-
34.979
3. UCITS units
5.144
-
71.766
-
-
70.209
4. Loans
-
-
7.102
-
-
17.189
4.1 Reverse repurchase agreements
-
-
-
-
-
-
4.2. Others
-
-
7.102
-
-
17.189
Total
5.144
-
216.838
31.129
-
164.091
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
Financial assets mandatorily measured at fair value through profit or loss total 222,0 million Euro at 31 December 2023. This item consists of loans and debt securities that did not pass the SPPI test, equity securities from minority shares and UCITS units.
Debt securities classified as Level 3 are instead represented by junior, mezzanine and single-tranche securities related to securitisation transactions totalling 86,8 million Euro at 31 December 2023 (41,7 million Euro at the end of 2022).
Equity securities refer to transactions of the Equity Investment unit in minority shares of companies.
The item \"UCITS units\", totalling 76,9 million Euro as of 31 December 2023, is made up of 71,5 million Euro relating to units held by the Parent company Banca Ifis (of which 65,1 million Euro in equity and bond funds, 5,2 million Euro in real estate funds and the remainder in multi-fund sub-funds) and 5,5 million Euro relating to units held by the subsidiary Ifis Npl Investing and relating to funds specialised in the management of performing and non performing loans. The values classified at Level 1 refer to an investment by the Parent company made in 2023 in a listed equity fund.
2.6 Financial assets mandatorily measured at fair value: breakdown by debtor/issuer
31.12.202331.12.2022
1. Equity securities51.051 34.979
of which: banks- -
of which: other financial companies3.052 1.844
of which: non-financial companies48.000 33.135
2. Debt securities86.919 72.843
a) Central Banks- -
b) Public Administrations- -
c) Banks - 31.129
d) Other financial companies 86.919 41.714
of which: insurance companies- -
e) Non-financial companies- -
3. UCITS units76.910 70.209
4. Loans7.102 17.189
a) Central Banks- -
b) Public Administrations- -
c) Banks - -
d) Other financial companies71 116
of which: insurance companies- -
e) Non-financial companies7.031 17.073
f) Households- -
Total221.982 195.220
\"\"
Section 3 - Financial assets measured at fair value through other comprehensive income - Item 30
3.1 Financial assets measured at fair value through other comprehensive income: breakdown by type
Items/Amounts 31.12.202331.12.2022
L1 L2 L3 L1 L2 L3
1. Debt securities628.933 5.373 - 589.638--
1.1 Structured4.370 - - 6.006--
1.2 Other debt securities624.563 5.373 - 583.632--
2. Equity securities44.856 - 70.014 41.378-66.595
3. Loans------
Total673.789 5.373 70.014 631.016-66.595
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
The growth in debt securities owned is due to the combined effect of new subscriptions with both bank issuers (+67,8 million Euro) and non-financial issuers (+90,1 million Euro, of which +76,2 million Euro in government bonds), and the positive write-back in 2023 (+25,0 million Euro, mainly concentrated on the government bonds portfolio). This change more than offset the decrease related to normal collections and disposals.
Level 1 \u201cother debt securities\u201d refer for 460,2 million Euro to Italian and foreign Government bonds (400,3 million Euro at end 2022).
Equity securities are attributable to non-controlling interests, which amount to 114,9 million Euro at the end of December 2023, up 6,4% compared to 31 December 2022, mainly due to investments made in 2023 (+32,7 million Euro, of which 19,6 million Euro on foreign equity investments), the impact of which more than offset that of the disposals realised during the year (-22,7 million Euro). Most of the equity securities consist of shares in the Bank of Italy (50,0 million Euro) as well as interests in leading companies in the banking and insurance, energy and telecommunications sectors, both Italian and foreign.
Level 3 securities mainly include the specified shares of the Bank of Italy as well as minority interests.
With specific reference to the shares held in the share capital of the Bank of Italy (2.000 shares) corresponding to 0,7% of the entire share capital, the carrying amount of 50 million Euro is obtained by valuing each share at a unit value of 25.000 Euro. In this regard, it should be noted that these units derive from the capital increase transaction carried out by the Bank of Italy in 2013 as a result of Decree-Law No. 133 of 30 November 2013, converted by Law No. 5 of 29 January 2014, which resulted in the issuance of new quotas, for a value of 25.000 Euro per unit.
3.2 Financial assets measured at fair value through other comprehensive income: breakdown by debtor/issuer
Items/Amounts31.12.202331.12.2022
1. Debt securities634.306 589.638
a) Central Banks- -
b) Public Administrations460.187 403.247
c) Banks 93.023 107.267
d) Other financial companies 26.345 29.023
of which: insurance companies- -
e) Non-financial companies54.751 50.101
2. Equity securities114.870 107.973
a) Banks51.772 58.638
b) Other issuers:63.098 49.335
- other financial companies 9.879 13.331
of which: insurance companies3.881 6.860
- non-financial companies53.219 36.004
- other- -
3. Loans- -
a) Central Banks- -
b) Public Administrations- -
c) Banks - -
d) Other financial companies - -
of which: insurance companies- -
e) Non-financial companies- -
f) Households- -
Total749.176 697.611
\"\"
3.3 Financial assets measured at fair value through other comprehensive income: gross amount and overall impairment losses/reversals
Gross amount
Overall impairment losses/reversals
Stage 1
of which: Low credit risk instruments
Stage 2
Stage 3
Purchased or originated impaired
Stage 1
Stage 2
Stage 3
Purchased or originated impaired
Overall partial write-offs(1)
Debt securities
632.507
632.507
2.962
-
-
(1.032)
(131)
-
-
-
Loans
-
-
-
-
-
-
-
-
-
-
Total 31.12.2023
632.507
632.507
2.962
-
-
(1.032)
(131)
-
-
-
Total 31.12.2022
590.721
590.721
-
-
-
(1.083)
-
-
-
-
\"\"
(1) Amount to be reported for disclosure purposes.
Section 4 - Financial assets measured at amortised cost - Item 40
4.1 Financial assets measured at amortised cost: breakdown of receivables due from banks by type
Type of transaction/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
Stages 1 and 2Stage 3Purchased or originated impairedL1L2L3Stages 1 and 2Stage 3Purchased or originated impairedL1L2L3
A. Receivables due from Central banks 25.490 - - - - 25.490 6.145----6.145
1. Term deposits- - - XXX---XXX
2. Compulsory reserve 25.490 - - XXX6.145--XXX
3. Reverse repurchase agreements - - - XXX---XXX
4. Others - - - XXX---XXX
B. Receivables due from banks 612.077 - - 588.822 - 36.437 559.617--515.273-32.753
1. Loans35.237 - - 919 - 34.322 33.466----30.043
1.1. Current accounts - - - XXX---XXX
1.2 Term deposits 1.843 - - XXX2.605--XXX
1.3 Other loans: 33.394 - - XXX30.861--XXX
- Reverse repurchase agreements - - - XXX---XXX
- Financing for leasing 100 - - XXX273--XXX
- Other 33.294 - - XXX30.588--XXX
2. Debt securities576.840 - - 587.903 - 2.115 526.151--515.273-2.710
2.1 Structured 9.411 - - 7.296 - 2.115 9.413--7.189-2.180
2.2 Other debt securities 567.429 - - 580.607 - - 516.738--508.084-530
Total 637.567 - - 588.822 - 61.927 565.762--515.273-38.898
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
4.2 Financial assets measured at amortised cost: breakdown of receivables due from customers by type
Type of transaction/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
Stages 1 and 2Stage 3Purcha-sed or originated impairedL1L2L3Stages 1 and 2Stage 3Purcha-sed or originated impairedL1L2L3
1. Loans6.711.989 221.968 1.666.273 175.178 15.435 8.445.556 6.441.261265.3841.551.205--8.355.701
1. Current accounts73.200 6.119 202.957 XXX97.8759.887184.823XXX
2. Reverse repurchase agreements- - 4 XXX--5XXX
3. Loans/mortgages2.225.751 61.613 132.549 XXX2.202.95660.691137.196XXX
4. Credit cards, personal loans and salary-backed loans93.291 2.653 671.095 XXX37.0031.618539.587XXX
5. Financing for leasing1.352.041 10.270 12.961 XXX1.284.26213.7525.886XXX
6. Factoring2.361.896 118.218 465 XXX2.238.368165.3101.697XXX
7. Other loans605.810 23.095 646.242 XXX580.79714.126682.011XXX
2. Debt securities2.021.904 - - 1.753.065 - 196.532 1.929.082--1.605.782-212.122
2.1. Structured16.561 - - 10.808 - 5.511 13.374--10.003-2.375
2.2. Other debt securities2.005.343 - - 1.742.257 - 191.021 1.915.708--1.595.779-209.747
Total8.733.893 221.968 1.666.273 1.928.243 15.435 8.642.088 8.370.343265.3841.551.2051.605.782-8.567.823
\"\"
The item \"Impaired acquired or originated\", equal to a carrying amount of 1.665,3 million Euro at 31 December 2023, includes 1.629,2 million Euro in impaired purchased loans of the Npl Segment (which constitute the core business of this Segment; for further details, please refer to the section \"Contribution of operating Segments to Group results\" of the Directors\u2019 Report on the Group) and for 35,8 million Euro the impaired assets resulting from the business combinations carried out in previous years.
At 31 December 2023, other debt securities include 1.628,7 million Euro in Italian and foreign government securities acquired by Banca Ifis with a view to optimising Group liquidity (1.541,5 million Euro at 31 December 2022). Level 3 securities mainly include investments in securitisations and minibonds.
4.3 Financial assets measured at amortised cost: breakdown of receivables due from customers by debtor/issuer
Type of transaction/Amounts
31.12.2023
31.12.2022
Stages 1 and 2
Stage 3
Purchased or originated impaired
Stages 1 and 2
Stage 3
Purchased or originated impaired
1. Debt securities
2.021.904
-
-
1.929.082
-
-
a) Public Administrations
1.660.629
-
-
1.571.496
-
-
b) Other financial companies
273.183
-
-
265.931
-
-
of which: insurance companies
-
-
-
-
-
-
c) Non-financial companies
88.092
-
-
91.655
-
-
2. Loans to:
6.711.987
221.970
1.666.273
6.441.261
265.384
1.551.205
a) Public Administrations
266.488
76.198
66
288.171
120.305
738
b) Other financial companies
272.159
1.601
1.498
239.508
10.083
1.302
of which: insurance companies
1.024
21
-
1.566
29
-
c) Non-financial companies
5.438.696
119.771
192.978
5.208.079
113.570
182.929
d) Households
734.644
24.400
1.471.731
705.503
21.426
1.366.236
Total
8.733.891
221.970
1.666.273
8.370.343
265.384
1.551.205
\"\"
4.4 Financial assets measured at amortised cost: gross amount and overall impairment losses/reversals
Gross amount
Overall impairment losses/reversals
Overall partial write-offs(1)
Stage 1
of which: low credit risk instruments
Stage 2
Stage 3
Purchased or originated impaired
Stage 1
Stage 2
Stage 3
Purchased or originated impaired
Debt securities
2.602.573
2.602.573
-
-
-
(3.828)
-
-
-
-
Loans
6.334.587
668.619
547.479
402.475
1.666.273
(70.195)
(39.157)
(180.506)
-
(3.010)
Total 31.12.2023
8.937.160
3.271.192
547.479
402.475
1.666.273
(74.023)
(39.157)
(180.506)
-
(3.010)
Total 31.12.2022
8.426.023
3.140.222
502.085
481.150
1.593.397
(84.075)
(14.440)
(151.446)
-
(40.398)
\"\"
(1) Amount to be reported for disclosure purposes
Section 5 - Hedging derivatives - Item 50In these Consolidated Financial Statements, this item has no value
Section 1 - Financial liabilities measured at amortised cost - Item 10
1.1 Financial liabilities at amortised cost: breakdown of payables due to banks by type
Type of transaction/Amounts 31.12.202331.12.2022
CAFair ValueCAFair Value
L1L2L3L1L2L3
1. Payables due to Central banks 1.577.875 XXX2.423.647XXX
2. Payables due to banks 1.139.264 XXX998.513XXX
2.1 Current accounts and on demand deposits 19 XXX4.208XXX
2.2 Term deposits 117.309 XXX149.054XXX
2.3 Loans 1.012.077 XXX845.251XXX
2.3.1 Repurchase agreements 715.313 XXX731.791XXX
2.3.2 Other 296.764 XXX113.460XXX
2.4 Debt from buyback commitments on treasury equity instruments - XXX-XXX
2.5 Lease payables - XXX-XXX
2.6 Other payables 9.859 XXX-XXX
Total2.717.139 - - 2.717.139 3.422.160--3.422.160
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to banks come to 2,7 billion Euro, down 20,6% compared to the figure for end December 2022, mainly due to the onset maturity of short-term payables due to central banks (LTRO) and the early repayment of 500 million Euro for TLTRO, made in December 2023. At 31 December 2023, the balance of payables due to banks is mainly represented by residual TLTRO transactions in the amount of 1,6 billion Euro and repo transactions in the amount of 0,7 billion Euro. As a result of Decision ECB/2022\"37 of 27 October 2022 for FY 2023, the fees were determined on the basis of the rate provided for as of the aforementioned decision.
The fair value of payables due to banks is in line with the relevant carrying amount, considering the counterparty and the fact that interbank deposits are short- or very short-term.
1.2 Financial liabilities measured at amortised cost: breakdown of payables due to customers by type
31.12.2023
31.12.2022
Fair Value
Fair Value
Type of transaction/Amounts
CA
L1
L2
L3
CA
L1
L2
L3
1. Current accounts and on demand deposits
1.147.597
X
X
X
1.410.871
X
X
X
2. Term deposits
4.139.143
X
X
X
3.547.969
X
X
X
3. Loans
493.791
X
X
X
50.003
X
X
X
3.1 Repurchase agreements
346.317
X
X
X
50.003
X
X
X
3.2 Other
147.474
X
X
X
-
X
X
X
4. Debt from buyback commitments on treasury equity instruments
-
X
X
X
-
X
X
X
5. Lease payables
22.702
X
X
X
21.733
X
X
X
6. Other payables
11.391
X
X
X
72.767
X
X
X
Total
5.814.624
-
-
6.156.150
5.103.343
-
-
5.450.030
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to customers at 31 December 2023 total 5,8 billion Euro, up 13,9% compared to 31 December 2022. The growth is driven by both retail funding, which amounts to 4,5 billion Euro at the end of December 2023 (+7,6%), and the repurchase agreement (repo) component, which increases by 296,3 million Euro compared to 31 December 2022.
1.3 Financial liabilities measured at amortised cost: breakdown of debt securities issued by type
Type of securities/Amounts 31.12.202331.12.2022
CAFair ValueCAFair Value
L1L2 L3L1 L2 L3
A. Securities
1. Bonds 3.288.839 1.329.813 104.630 1.853.042 2.605.0901.002.62664.1921.496.168
1.1 structured bonds - - - - ----
1.2 other bonds 3.288.839 1.329.813 104.630 1.853.042 2.605.0901.002.62664.1921.496.168
2. Other securities 56 - - 56 105--105
2.1 structured - - - - ----
2.2 other 56 - - 56 105--105
Total 3.288.895 1.329.813 104.630 1.853.098 2.605.1951.002.62664.1921.496.273
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Debt securities issued amount to 3,3 billion Euro at 31 December 2023 and consist of:
\u2022securities issued by the SPV ABCP Programme for 1,1 billion Euro relating to the senior tranche;
\u2022securities issued by the Indigo Lease vehicle in the amount of 0,4 billion Euro relating to the senior tranche, following the restructuring of the transaction during the third quarter of 2023 (for more details on this, refer to \"Part E - Information on risks and related hedging policies\", \"Section 2 - Prudential consolidation risks\", paragraph \"1.1 Credit risk\", sub-section \"C. Securitisation transactions\");
\u2022securities issued by the Emma SPV for 0,4 billion Euro relating to the senior tranche;
\u20220,4 billion Euro related to subordinated loans, essentially in line with 31 December 2022;
\u2022bonds issued by Banca Ifis for 1,1 billion Euro. Compared to 31 December 2022, the following changes have occurred:
\u2013600 million Euro relating to the two senior bonds, each with a nominal amount of 300 million Euro and a maturity of 4 years and 5 years respectively, issued in January 2023 and September 2023 (for more details, refer to the section \u201cSignificant events during the year\u201d of the Directors\u2019 Report on the Group);
\u201345 million Euro related to the second tranche issued in March 2023 and related to a senior bond with a duration of 4 years and a total nominal amount of 110 million Euro;
\u2013redemption of 300 million Euro of the senior bond issued in 2018 and maturing in April 2023.
1.4 Breakdown of subordinated debts/securities
The line item \"Debt securities issued\" includes 372,7 million Euro in subordinated notes related to Euro Tier 2 bond issued in mid-October 2017 for a nominal amount of 400 million Euro.
1.5 Breakdown of structured debts
There are no structured debts in these Consolidated Financial Statements.
1.6 Lease payables
The lease payable relates for 20,1 million Euro to lease contracts of properties and cars coming under the scope of application of accounting standard IFRS 16, which came into force at 1 January 2019 and as more extensively described in \u201cPart M - Leasing disclosure\u201d of these Consolidated Financial Statements.
It also includes 2,6 million Euro for the real estate lease the former company Toscana Finanza S.p.A. entered into in 2009 for the property located in Florence, which housed the headquarters of the Npl Segment until August 2016. The term of the lease entered into with Centro Leasing S.p.A. is 18 years (from March 2009 to March 2027) and provides for the payment of 216 monthly instalments of about 28 thousand Euro, including the principal, interest and an option to buy the asset at the end of the lease for 1,9 million Euro. At the date of this document, the property is used as an additional operational headquarters of Banca Ifis.
The interest rate on lease payables reflects the average Group cost of funding, taking into account the creditworthiness of the lessee and the economic context in which the transaction occurs, accordingly with the IFRS 16.
Section 2 - Financial liabilities held for trading - item 20
2.1 Financial liabilities held for trading: breakdown by type
Type of transaction/Amounts31.12.202331.12.2022
NAFair valueFair value*NAFair valueFair value*
L1L2L3L1L2L3
A. On-balance-sheet liabilities
1. Payables due to banks ----------
2. Payables due to customers ----------
3. Debt securities ----X----X
3.1 Bonds ----X----X
3.1.1 Structured ----X----X
3.1.2 Other bonds ----X----X
3.2 Other securities ----X----X
3.2.1 Structured ----X----X
3.2.2 Other ----X----X
Total A ----------
B. Derivatives
1. Financial derivatives X-14.005-XX-25.982-X
1.1 For trading X-14.005-XX-25.982-X
1.2 Connected to the fair value option X---XX---X
1.3 Other X---XX---X
2. Credit derivatives X---XX---X
2.1 For trading X---XX---X
2.2 Connected to the fair value option X---XX---X
2.3 Other X---XX---X
Total B X-14.005-XX-25.982-X
Total (A+B)X-14.005-XX-25.982-X
\"\"
Key:
NA = Nominal or notional amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Fair value* = Fair value calculated excluding changes in value due to changes in the issuer's creditworthiness compared to the date of issuance
With regard to Level 2 trading liabilities, see the comments in \"Section 2 - Financial assets measured at fair value through profit or loss - Item 20\" of Assets.
2.2 Details of \u201cFinancial liabilities held for trading\u201d: subordinated liabilities
There are no subordinated liabilities recognised in the item of this section.
2.3 Details of \u201cFinancial liabilities held for trading\u201d: structured debts
There are no structured debts recorded in the item of this section.
Section 4 - Hedging derivatives - Item 40
4.1 Hedging derivatives: breakdown by hedge type and levels
Fair value 31.12.2023NA31.12.2023Fair value 31.12.2022NA31.12.2022
L1L2L3L1L2L3
A. Financial derivatives-11.644-355.700----
1) Fair value-11.644-355.700----
2) Cash flows --------
3) Foreign investments --------
B. Credit derivatives--------
1) Fair value--------
2) Cash flows--------
Total-11.644-355.700----
\"\"
Key:
NA = notional amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
4.2 Hedging derivatives: breakdown by hedged portfolio and type of hedge
Transactions/Hedge typeFair valueCash flowsForeign investments
SpecificGenericSpecificGeneric
debt securities and interest ratesequity securities and stock indicescurrencies and goldloans and receivablescommoditiesother
1. Financial assets measured at fair value through other comprehensive income----XXX-XX
2. Financial assets measured at amortised cost11.644X--XXX-XX
3. PortfolioXXXXXX-X-X
4. Other transactions------X-X-
Total assets11.644---------
1. Financial liabilities-X----X-X-
2. PortfolioXXXXXX-X-X
Total liabilities----------
1. Expected transactionsXXXXXXX-XX
2. Portfolio of financial assets and liabilitiesXXXXXX-X--
\"\"
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page120-cflshid_59563-tag94221": { "value": "
A.4 - Fair value disclosure
Qualitative disclosure
Fair value is the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date, under current market conditions (i.e. the exit price), regardless of the fact that said price is directly observable or that another measurement approach is used.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
IFRS 13 establishes a fair value hierarchy based on the extent to which inputs to valuation techniques used to measure the underlying assets/liabilities are observable. Specifically, the hierarchy consists of three Levels.
\u2022Level 1: the instrument's fair value is measured based on (unadjusted) quoted prices in active markets.
\u2022Level 2: the instrument's fair value is measured based on valuation models using inputs observable in active markets, such as:
\u2013quoted prices for similar assets or liabilities;
\u2013quoted prices for identical or similar assets or liabilities in non-active markets;
\u2013observable inputs such as interest rates or yield curves, implied volatility, default rates and illiquidity factors;
\u2013inputs that are not observable but supported and confirmed by market data.
\u2022Level 3: the instrument's fair value is measured based on valuation models using mainly inputs that are unobservable in active markets.
Each financial asset or liability of the Group is categorised in one of the above Levels, and the relevant measurements may be recurring or non-recurring (see IFRS 13, paragraph 93, letter a). The fair value measurement is categorised in its entirety in the same Level of the fair value hierarchy as the lowest Level input.
The choice among the valuation techniques is not optional, since these shall be applied in a hierarchical order: indeed, the fair value hierarchy gives the highest priority to (unadjusted) quoted prices available in active markets for identical assets or liabilities (Level 1 data) and the lowest priority to unobservable inputs (Level 3 data).
Measurement techniques used to measure fair value are applied consistently on an on-going basis, as described below.
A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used
In the absence of quoted prices in an active market, the fair value measurement of a financial instrument is performed using valuation techniques maximising the use of inputs observable on the market.
The use of a valuation technique is intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. In this case, the fair value measurement may be categorised in Level 2 or Level 3, according to what extent inputs to the pricing model are observable.
In the absence of observable prices in an active market for the financial asset or liability to be measured, the fair value of the financial instruments is measured using the so-called comparable approach (Level 2), requiring valuation models based on market inputs.
In this case, the valuation is not based on the quoted prices of the financial instrument being measured (identical asset), but on prices, credit spreads or other factors derived from the official quoted prices of instruments that are substantially similar in terms of risk factors and duration/return, using a given calculation method (pricing model).
In the absence of quoted prices in an active market for a similar instrument, or should the characteristics of the instrument to be measured not allow to apply models using inputs observable in active markets, it is necessary to use valuation models assuming the use of inputs that are not directly observable in the market and, therefore, requiring to make estimates and assumptions (non observable input - Level 3). In these cases, the financial instrument is measured using a given calculation method that is based on specific assumptions regarding:
\u2022the trend in future cash flows, possibly contingent on future events whose probability of occurring can be derived from historical experience or based on behavioural assumptions;
\u2022the Level of specific inputs not quoted on active markets:for the purposes of estimating them, information acquired from prices and spreads observed on the market shall have a higher priority. If these are not available, entities shall use historical data about the specific underlying risk factor or specialist research on the matter (e.g. reports by ratings agencies or primary market players).
In the cases described above, consideration is always given to the value of potentially making valuation adjustments taking into account the risk premiums that operators typically consider in pricing instruments. If not explicitly considered in the valuation model, valuation adjustments may include:
\u2022model adjustment: adjustments that take into account any deficiencies in the valuation models highlighted during calibration;
\u2022liquidity adjustment: adjustments that take into account the bid-ask spread if the model calculates a mid-price;
\u2022credit risk adjustment: adjustments related to the counterparty or own credit risk;
\u2022other risk adjustment: adjustments related to a risk premium \"priced\" in the market (e.g. relating to the complexity of valuation of an instrument).
With regard to fair value measurement, the Group adopts various methodologies, depending on the specific characteristics of the products being valued.
To measure receivables that must be measured at fair value, the method used is the Discounted Cash Flow (DCF) Model to receivables mandatorily measured at fair value, discounting the expected cash flows from each loan at a market rate determined by taking into account the risk free rate (rf) for similar maturities, the Cost of Funding (COF), the counterparty's credit risk, and the capital absorption cost.
For the measurement of unlisted equities, mainly income and financial models are used, in particular the method defined as 'Market Multiples of Comparable Companies' to which a control method such as the 'Discounted Cash Flow Model' or the 'Comparable Transactions Method' is compared. The latter method is applied to transactions that have similar economic and asset characteristics to the one being valued and adjusted for the economic and asset magnitudes of the asset being valued.
In general, where the purchase of the equity security or loan measured at fair value in the last year and market conditions have not changed significantly since the date of purchase, the purchase value is retained in the balance sheet. Factors taken into consideration that are indicative of a purchase price that is not representative of fair value include deviations of the asset's performance from forecasts and changes in the market scenario or context in which the counterparty operates.
With specific reference to the valuation of UCITS units, the approach used takes Net Asset Value (NAV) as the starting point for determining fair value. Thereafter, it must be verified whether, in determining the NAV, the fund's assets have been measured at fair value in accordance with the applicable international standards. A discount is applied to the NAV determined in this way using a structured rate as described below:
\u2022liquidity adjustment: the liquidity discount must take into account the inability to mobilise the economic commitment in the short term. This discount, which refers to a time horizon expressing the average duration of the investments in the fund, is applied to the NAV defined above inversely proportional to changes in the NAV itself. Once the investment phase is over, the discount applied will decrease proportionally from year to year until it settles at the base discount applied for the first year;
\u2022credit risk adjustment: the credit risk discount must take into account the probability of default of the underlying asset in which the fund invests;
\u2022other risk adjustment: this category includes the discount of any other significant element known to the manager of the instrument at the time of measurement.
As for over-the-counter (OTC) derivatives not quoted in active markets, their fair value is calculated based on measurement techniques that take into account all risk factors that could affect the value of the financial instrument concerned, using observable market inputs (interest rates, exchange rates, share indices, etc.) adjusted as appropriate to account for the creditworthiness of the specific counterparty, including the counterparty's credit risk (CVA, Credit Valuation Adjustment) and/or the Group's own credit risk (DVA, Debit Valuation Adjustment).
The increase in interest rates, which occurred during the year, had a significant impact on the fair value of derivatives. However, with reference to the measurement of counterparty risk (Credit Valuation Adjustment and Debit Valuation Adjustment), as of 31 December 2023, the impact on the balance sheet values of derivatives with mark-to-market, both positive and negative, is substantially nil as almost all derivative financial instruments are securitised through Credit Support Agreements (CSA). The balance at 31 December 2023 of derivatives, for which there is no counterparty risk mitigation (CSA) element, should not be considered significant and amounts to 153 thousand Euro.
As for the measurement of financial assets and liabilities measured at fair value on a non-recurring basis, the relevant portfolio consists of on-balance-sheet exposures classified as performing with a residual life exceeding one year (medium-long term). Therefore, all exposures classified as impaired, other than those of the Npl Segment, the ones with a residual life less than one year, and unsecured loans are excluded from the measurement, as, for these, the Bank believes that their amortised cost can be used as an approximation of fair value.
For non-performing loans (bad loans, unlikely to pay, past due), the fair value is conventionally assumed to be equal to the net carrying amount and is shown in Level 3. In this regard, it should be noted that, in the recent past, significant transactions of assignments of non-performing loans have been observed on the Italian market, with prices that have discounted the specific characteristics of the portfolios sold and the different yields demanded by the buyers. The fair value determined on the basis of the aforementioned transactions would therefore be characterised by a high dispersion of values, such that the identification of a reference value would not be objective.
For the purposes of measuring performing loans at fair value, given the absence of prices directly observable on active and liquid markets, entities shall use valuation techniques based on a theoretical model meeting the requirements of IAS/IFRS standards (Level 3). The approach used to determine the fair value of performing loans is the aforementioned DCF Model applied to loans with a residual maturity of more than one year, while the nominal amount is considered for other loans with short or no maturity. Future cash flows consist of the sum of principal
and interest and are discounted using a rate formed by the credit spread (coverage curve) and the 3-month Euribor rate.
As for the receivables portfolio of the Npl Segment, which purchases and manages non-performing receivables mainly due from individuals, the specified DCF Model is used to calculate fair value. In this case, the expected net cash flows are discounted at a market rate. The market rate is calculated without considering a credit spread, since the credit risk of the individual counterparties is already incorporated in the statistical model used to estimate future cash flows with regard to collective management (non-judicial operations). The model projects the relevant cash flows based on historical evidence concerning the recovery of positions in the Group's portfolio. As for individual management (judicial operations), the projections of future cash flows are based on an internal algorithm or defined by the manager according to how the underlying receivable is being processed.
For financial liabilities at amortised cost, the fair value calculated for disclosure purposes is determined by applying the following methodologies:
\u2022for medium- and long-term liabilities, the measurement is performed by discounting future cash flows using an interest rate that incorporates its own credit risk component;
\u2022for on-demand liabilities with short-term or indefinite maturity, the carrying amount is a good approximation of fair value.
A.4.2 Measurement processes and sensitivity
In compliance with IFRS 13, for financial assets and liabilities measured at fair value categorised within Level 3, the Group tests their sensitivity to changes in one or more unobservable inputs used in the fair value measurements like, by way of example and in no means exhaustive, discount rates applied to cash flows or expected cash flows themselves.
With regard to debt security exposures measured at Level 3 fair value, amounting to 94,0 million Euro at 31 December 2023, the effects of potential changes in the parameters used are deemed not significant.
For equity securities and units of UCITSs, respectively equal, at 31 December 2023, to 165,9 million Euro and 76,9 million Euro, it is generally not possible to perform any quantitative sensitivity analysis of fair value to changes in unobservable inputs, as either the fair value is derived from third-party sources, or it is the result of a model whose inputs are specific to the entity being valued (e.g. company assets) and for which the information necessary for a sensitivity analysis is not available.
A.4.3 Fair value hierarchy
Concerning recurring fair value measurements of financial assets and liabilities, the Banca Ifis Group transfers them between Levels of the hierarchy based on the following guidelines:
\u2022for debt securities and financing:
\u2013the transfer from Level 3 to Level 2 takes place when the inputs to the valuation technique used are observable at the measurement date;
\u2013the transfer from Level 3 to Level 1 is allowed when it is confirmed that there is an active market for the instrument at the measurement date;
\u2013finally, they are transferred from Level 2 to Level 3 when some inputs relevant in measuring fair value are not directly observable at the measurement date.
\u2022for equity instruments, the Level transfer takes place when:
\u2013observable inputs became available during the period (e.g. prices for identical assets and liabilities defined in comparable transactions between independent and knowledgeable parties). In this case, they are reclassified from Level 3 to Level 2;
\u2013inputs directly or indirectly observable used in measuring them are no longer available or current (e.g. no recent comparable transactions or no longer applicable multiples). In this case, the entity shall use valuation techniques incorporating unobservable inputs.
A.4.4 Other information
There is no further information to report than that presented in the preceding paragraphs.
Quantitative information
A.4.5 Fair value hierarchy
A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value Level
Financial assets/liabilities measured at fair value(in thousands of Euro)31.12.202331.12.2022
L1L2L3L1L2L3
1. Financial assets measured at fair value through profit or loss5.14412.896216.83832.39925.598164.091
a) financial assets held for trading-12.896-1.27025.598-
b) financial assets designated at fair value------
c) other financial assets mandatorily measured at fair value5.144-216.83831.129-164.091
2. Financial assets measured at fair value through other comprehensive income673.7895.37370.014631.016-66.595
3. Hedging derivatives------
4. Property, plant and equipment------
5. Intangible assets------
Total678.93318.269286.852663.41525.598230.686
1. Financial liabilities held for trading-14.005--25.982-
2. Financial liabilities designated at fair value------
3. Hedging derivatives-11.644----
Total-25.649--25.982-
\"\"
Key:
L1 = Level 1: fair value of a financial instrument quoted in an active market;
L2 = Level 2 fair value measured using valuation techniques based on observable market inputs other than the financial instrument's price;
L3 = Level 3 fair value calculated using valuation techniques based on inputs not observable in the market.
At 31 December 2023, the impact of applying the Credit Valuation Adjustment to the carrying amounts of derivatives with a positive mark-to-market is essentially nil; as for the instruments with a negative mark-to-market, there is no impact resulting from the application of the Debit Valuation Adjustment to the carrying amounts of the derivatives.
With regard to hedging derivatives, all instruments are securitised through CSAs.
Financial assets held for trading and financial liabilities held for trading at 31 December 2023 comprise only trading derivatives, all of which are classified as Level 2.
Financial assets measured at fair value through other comprehensive income mainly consist of listed securities (Level 1). With regard to securities in Level 3, the amount includes shares in the Bank of Italy with a carrying amount of 50,0 million Euro.
A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3)
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Hedging derivatives
Property, plant and equipment
Intangible assets
Total
of which: a) financial assets held for trading
of which: b) financial assets designated at fair value
of which: c) other financial assets mandatorily measured at fair value
1. Opening balance
164.091
-
-
164.091
66.595
-
-
-
2. Increases
117.950
-
-
117.950
5.266
-
-
-
2.1. Purchases
95.287
-
-
95.287
5.121
-
-
-
2.2. Profit taken to:
20.656
-
-
20.656
145
-
-
-
2.2.1. Income Statement
20.656
-
-
20.656
-
-
-
-
- of which capital gains
19.871
-
-
19.871
-
-
-
-
2.2.2. Equity
-
X
X
X
145
-
-
-
2.3. Transferred from other Levels
-
-
-
-
-
-
-
-
2.4. Other increases
2.007
-
-
2.007
-
-
-
-
3. Decreases
65.203
-
-
65.203
1.847
-
-
-
3.1. Sales
30.123
-
-
30.123
-
-
-
-
3.2. Reimbursements
24.211
-
-
24.211
-
-
-
-
3.3. Losses taken to:
10.488
-
-
10.488
1.847
-
-
-
3.3.1. Income Statement
10.488
-
-
10.488
-
-
-
-
- of which capital losses
9.150
-
-
9.150
-
-
-
-
3.3.2. Equity
-
X
X
X
1.847
-
-
-
3.4. Transferred to other Levels
-
-
-
-
-
-
-
-
3.5. Other decreases
381
-
-
381
-
-
-
-
4. Closing balance
216.838
-
-
216.838
70.014
-
-
-
\"\"
A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (Level 3)
The Banca Ifis Group does not hold liabilities measured at fair value on a recurring basis at Level 3.
A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value Levels
Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis(in thousands of Euro)31.12.202331.12.2022
CAL1L2L3CAL1L2L3
1. Financial assets measured at amortised cost11.259.7012.341.123-8.907.98610.752.6942.121.051-8.610.143
2. Property, plant and equipment held for investment purpose407 - - 407423--423
3. Non-current assets and disposal groups- - - -- - - -
Total11.260.1082.341.123-8.908.39310.753.1172.121.051-8.610.566
1. Financial liabilities measured at amortised cost11.820.6581.329.813104.63010.726.38711.130.6981.002.62664.19210.410.567
2. Liabilities associated with assets held for sale--------
Total11.820.6581.329.813104.63010.726.38711.130.6981.002.62664.19210.410.567
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Among financial assets measured at amortised cost, the amount reported under Level 1 refers to government and other listed debt securities, while the balance reported under Level 3 consists mainly of credit exposures.
Level 1 amortised cost financial liabilities relate to bonds issued by the Parent company Banca Ifis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page120-cflshid_59563-tag94220": { "value": "
A.4 - Fair value disclosure
Qualitative disclosure
Fair value is the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date, under current market conditions (i.e. the exit price), regardless of the fact that said price is directly observable or that another measurement approach is used.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
IFRS 13 establishes a fair value hierarchy based on the extent to which inputs to valuation techniques used to measure the underlying assets/liabilities are observable. Specifically, the hierarchy consists of three Levels.
\u2022Level 1: the instrument's fair value is measured based on (unadjusted) quoted prices in active markets.
\u2022Level 2: the instrument's fair value is measured based on valuation models using inputs observable in active markets, such as:
\u2013quoted prices for similar assets or liabilities;
\u2013quoted prices for identical or similar assets or liabilities in non-active markets;
\u2013observable inputs such as interest rates or yield curves, implied volatility, default rates and illiquidity factors;
\u2013inputs that are not observable but supported and confirmed by market data.
\u2022Level 3: the instrument's fair value is measured based on valuation models using mainly inputs that are unobservable in active markets.
Each financial asset or liability of the Group is categorised in one of the above Levels, and the relevant measurements may be recurring or non-recurring (see IFRS 13, paragraph 93, letter a). The fair value measurement is categorised in its entirety in the same Level of the fair value hierarchy as the lowest Level input.
The choice among the valuation techniques is not optional, since these shall be applied in a hierarchical order: indeed, the fair value hierarchy gives the highest priority to (unadjusted) quoted prices available in active markets for identical assets or liabilities (Level 1 data) and the lowest priority to unobservable inputs (Level 3 data).
Measurement techniques used to measure fair value are applied consistently on an on-going basis, as described below.
A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used
In the absence of quoted prices in an active market, the fair value measurement of a financial instrument is performed using valuation techniques maximising the use of inputs observable on the market.
The use of a valuation technique is intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. In this case, the fair value measurement may be categorised in Level 2 or Level 3, according to what extent inputs to the pricing model are observable.
In the absence of observable prices in an active market for the financial asset or liability to be measured, the fair value of the financial instruments is measured using the so-called comparable approach (Level 2), requiring valuation models based on market inputs.
In this case, the valuation is not based on the quoted prices of the financial instrument being measured (identical asset), but on prices, credit spreads or other factors derived from the official quoted prices of instruments that are substantially similar in terms of risk factors and duration/return, using a given calculation method (pricing model).
In the absence of quoted prices in an active market for a similar instrument, or should the characteristics of the instrument to be measured not allow to apply models using inputs observable in active markets, it is necessary to use valuation models assuming the use of inputs that are not directly observable in the market and, therefore, requiring to make estimates and assumptions (non observable input - Level 3). In these cases, the financial instrument is measured using a given calculation method that is based on specific assumptions regarding:
\u2022the trend in future cash flows, possibly contingent on future events whose probability of occurring can be derived from historical experience or based on behavioural assumptions;
\u2022the Level of specific inputs not quoted on active markets:for the purposes of estimating them, information acquired from prices and spreads observed on the market shall have a higher priority. If these are not available, entities shall use historical data about the specific underlying risk factor or specialist research on the matter (e.g. reports by ratings agencies or primary market players).
In the cases described above, consideration is always given to the value of potentially making valuation adjustments taking into account the risk premiums that operators typically consider in pricing instruments. If not explicitly considered in the valuation model, valuation adjustments may include:
\u2022model adjustment: adjustments that take into account any deficiencies in the valuation models highlighted during calibration;
\u2022liquidity adjustment: adjustments that take into account the bid-ask spread if the model calculates a mid-price;
\u2022credit risk adjustment: adjustments related to the counterparty or own credit risk;
\u2022other risk adjustment: adjustments related to a risk premium \"priced\" in the market (e.g. relating to the complexity of valuation of an instrument).
With regard to fair value measurement, the Group adopts various methodologies, depending on the specific characteristics of the products being valued.
To measure receivables that must be measured at fair value, the method used is the Discounted Cash Flow (DCF) Model to receivables mandatorily measured at fair value, discounting the expected cash flows from each loan at a market rate determined by taking into account the risk free rate (rf) for similar maturities, the Cost of Funding (COF), the counterparty's credit risk, and the capital absorption cost.
For the measurement of unlisted equities, mainly income and financial models are used, in particular the method defined as 'Market Multiples of Comparable Companies' to which a control method such as the 'Discounted Cash Flow Model' or the 'Comparable Transactions Method' is compared. The latter method is applied to transactions that have similar economic and asset characteristics to the one being valued and adjusted for the economic and asset magnitudes of the asset being valued.
In general, where the purchase of the equity security or loan measured at fair value in the last year and market conditions have not changed significantly since the date of purchase, the purchase value is retained in the balance sheet. Factors taken into consideration that are indicative of a purchase price that is not representative of fair value include deviations of the asset's performance from forecasts and changes in the market scenario or context in which the counterparty operates.
With specific reference to the valuation of UCITS units, the approach used takes Net Asset Value (NAV) as the starting point for determining fair value. Thereafter, it must be verified whether, in determining the NAV, the fund's assets have been measured at fair value in accordance with the applicable international standards. A discount is applied to the NAV determined in this way using a structured rate as described below:
\u2022liquidity adjustment: the liquidity discount must take into account the inability to mobilise the economic commitment in the short term. This discount, which refers to a time horizon expressing the average duration of the investments in the fund, is applied to the NAV defined above inversely proportional to changes in the NAV itself. Once the investment phase is over, the discount applied will decrease proportionally from year to year until it settles at the base discount applied for the first year;
\u2022credit risk adjustment: the credit risk discount must take into account the probability of default of the underlying asset in which the fund invests;
\u2022other risk adjustment: this category includes the discount of any other significant element known to the manager of the instrument at the time of measurement.
As for over-the-counter (OTC) derivatives not quoted in active markets, their fair value is calculated based on measurement techniques that take into account all risk factors that could affect the value of the financial instrument concerned, using observable market inputs (interest rates, exchange rates, share indices, etc.) adjusted as appropriate to account for the creditworthiness of the specific counterparty, including the counterparty's credit risk (CVA, Credit Valuation Adjustment) and/or the Group's own credit risk (DVA, Debit Valuation Adjustment).
The increase in interest rates, which occurred during the year, had a significant impact on the fair value of derivatives. However, with reference to the measurement of counterparty risk (Credit Valuation Adjustment and Debit Valuation Adjustment), as of 31 December 2023, the impact on the balance sheet values of derivatives with mark-to-market, both positive and negative, is substantially nil as almost all derivative financial instruments are securitised through Credit Support Agreements (CSA). The balance at 31 December 2023 of derivatives, for which there is no counterparty risk mitigation (CSA) element, should not be considered significant and amounts to 153 thousand Euro.
As for the measurement of financial assets and liabilities measured at fair value on a non-recurring basis, the relevant portfolio consists of on-balance-sheet exposures classified as performing with a residual life exceeding one year (medium-long term). Therefore, all exposures classified as impaired, other than those of the Npl Segment, the ones with a residual life less than one year, and unsecured loans are excluded from the measurement, as, for these, the Bank believes that their amortised cost can be used as an approximation of fair value.
For non-performing loans (bad loans, unlikely to pay, past due), the fair value is conventionally assumed to be equal to the net carrying amount and is shown in Level 3. In this regard, it should be noted that, in the recent past, significant transactions of assignments of non-performing loans have been observed on the Italian market, with prices that have discounted the specific characteristics of the portfolios sold and the different yields demanded by the buyers. The fair value determined on the basis of the aforementioned transactions would therefore be characterised by a high dispersion of values, such that the identification of a reference value would not be objective.
For the purposes of measuring performing loans at fair value, given the absence of prices directly observable on active and liquid markets, entities shall use valuation techniques based on a theoretical model meeting the requirements of IAS/IFRS standards (Level 3). The approach used to determine the fair value of performing loans is the aforementioned DCF Model applied to loans with a residual maturity of more than one year, while the nominal amount is considered for other loans with short or no maturity. Future cash flows consist of the sum of principal
and interest and are discounted using a rate formed by the credit spread (coverage curve) and the 3-month Euribor rate.
As for the receivables portfolio of the Npl Segment, which purchases and manages non-performing receivables mainly due from individuals, the specified DCF Model is used to calculate fair value. In this case, the expected net cash flows are discounted at a market rate. The market rate is calculated without considering a credit spread, since the credit risk of the individual counterparties is already incorporated in the statistical model used to estimate future cash flows with regard to collective management (non-judicial operations). The model projects the relevant cash flows based on historical evidence concerning the recovery of positions in the Group's portfolio. As for individual management (judicial operations), the projections of future cash flows are based on an internal algorithm or defined by the manager according to how the underlying receivable is being processed.
For financial liabilities at amortised cost, the fair value calculated for disclosure purposes is determined by applying the following methodologies:
\u2022for medium- and long-term liabilities, the measurement is performed by discounting future cash flows using an interest rate that incorporates its own credit risk component;
\u2022for on-demand liabilities with short-term or indefinite maturity, the carrying amount is a good approximation of fair value.
A.4.2 Measurement processes and sensitivity
In compliance with IFRS 13, for financial assets and liabilities measured at fair value categorised within Level 3, the Group tests their sensitivity to changes in one or more unobservable inputs used in the fair value measurements like, by way of example and in no means exhaustive, discount rates applied to cash flows or expected cash flows themselves.
With regard to debt security exposures measured at Level 3 fair value, amounting to 94,0 million Euro at 31 December 2023, the effects of potential changes in the parameters used are deemed not significant.
For equity securities and units of UCITSs, respectively equal, at 31 December 2023, to 165,9 million Euro and 76,9 million Euro, it is generally not possible to perform any quantitative sensitivity analysis of fair value to changes in unobservable inputs, as either the fair value is derived from third-party sources, or it is the result of a model whose inputs are specific to the entity being valued (e.g. company assets) and for which the information necessary for a sensitivity analysis is not available.
A.4.3 Fair value hierarchy
Concerning recurring fair value measurements of financial assets and liabilities, the Banca Ifis Group transfers them between Levels of the hierarchy based on the following guidelines:
\u2022for debt securities and financing:
\u2013the transfer from Level 3 to Level 2 takes place when the inputs to the valuation technique used are observable at the measurement date;
\u2013the transfer from Level 3 to Level 1 is allowed when it is confirmed that there is an active market for the instrument at the measurement date;
\u2013finally, they are transferred from Level 2 to Level 3 when some inputs relevant in measuring fair value are not directly observable at the measurement date.
\u2022for equity instruments, the Level transfer takes place when:
\u2013observable inputs became available during the period (e.g. prices for identical assets and liabilities defined in comparable transactions between independent and knowledgeable parties). In this case, they are reclassified from Level 3 to Level 2;
\u2013inputs directly or indirectly observable used in measuring them are no longer available or current (e.g. no recent comparable transactions or no longer applicable multiples). In this case, the entity shall use valuation techniques incorporating unobservable inputs.
A.4.4 Other information
There is no further information to report than that presented in the preceding paragraphs.
Quantitative information
A.4.5 Fair value hierarchy
A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value Level
Financial assets/liabilities measured at fair value(in thousands of Euro)31.12.202331.12.2022
L1L2L3L1L2L3
1. Financial assets measured at fair value through profit or loss5.14412.896216.83832.39925.598164.091
a) financial assets held for trading-12.896-1.27025.598-
b) financial assets designated at fair value------
c) other financial assets mandatorily measured at fair value5.144-216.83831.129-164.091
2. Financial assets measured at fair value through other comprehensive income673.7895.37370.014631.016-66.595
3. Hedging derivatives------
4. Property, plant and equipment------
5. Intangible assets------
Total678.93318.269286.852663.41525.598230.686
1. Financial liabilities held for trading-14.005--25.982-
2. Financial liabilities designated at fair value------
3. Hedging derivatives-11.644----
Total-25.649--25.982-
\"\"
Key:
L1 = Level 1: fair value of a financial instrument quoted in an active market;
L2 = Level 2 fair value measured using valuation techniques based on observable market inputs other than the financial instrument's price;
L3 = Level 3 fair value calculated using valuation techniques based on inputs not observable in the market.
At 31 December 2023, the impact of applying the Credit Valuation Adjustment to the carrying amounts of derivatives with a positive mark-to-market is essentially nil; as for the instruments with a negative mark-to-market, there is no impact resulting from the application of the Debit Valuation Adjustment to the carrying amounts of the derivatives.
With regard to hedging derivatives, all instruments are securitised through CSAs.
Financial assets held for trading and financial liabilities held for trading at 31 December 2023 comprise only trading derivatives, all of which are classified as Level 2.
Financial assets measured at fair value through other comprehensive income mainly consist of listed securities (Level 1). With regard to securities in Level 3, the amount includes shares in the Bank of Italy with a carrying amount of 50,0 million Euro.
A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3)
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Hedging derivatives
Property, plant and equipment
Intangible assets
Total
of which: a) financial assets held for trading
of which: b) financial assets designated at fair value
of which: c) other financial assets mandatorily measured at fair value
1. Opening balance
164.091
-
-
164.091
66.595
-
-
-
2. Increases
117.950
-
-
117.950
5.266
-
-
-
2.1. Purchases
95.287
-
-
95.287
5.121
-
-
-
2.2. Profit taken to:
20.656
-
-
20.656
145
-
-
-
2.2.1. Income Statement
20.656
-
-
20.656
-
-
-
-
- of which capital gains
19.871
-
-
19.871
-
-
-
-
2.2.2. Equity
-
X
X
X
145
-
-
-
2.3. Transferred from other Levels
-
-
-
-
-
-
-
-
2.4. Other increases
2.007
-
-
2.007
-
-
-
-
3. Decreases
65.203
-
-
65.203
1.847
-
-
-
3.1. Sales
30.123
-
-
30.123
-
-
-
-
3.2. Reimbursements
24.211
-
-
24.211
-
-
-
-
3.3. Losses taken to:
10.488
-
-
10.488
1.847
-
-
-
3.3.1. Income Statement
10.488
-
-
10.488
-
-
-
-
- of which capital losses
9.150
-
-
9.150
-
-
-
-
3.3.2. Equity
-
X
X
X
1.847
-
-
-
3.4. Transferred to other Levels
-
-
-
-
-
-
-
-
3.5. Other decreases
381
-
-
381
-
-
-
-
4. Closing balance
216.838
-
-
216.838
70.014
-
-
-
\"\"
A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (Level 3)
The Banca Ifis Group does not hold liabilities measured at fair value on a recurring basis at Level 3.
A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value Levels
Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis(in thousands of Euro)31.12.202331.12.2022
CAL1L2L3CAL1L2L3
1. Financial assets measured at amortised cost11.259.7012.341.123-8.907.98610.752.6942.121.051-8.610.143
2. Property, plant and equipment held for investment purpose407 - - 407423--423
3. Non-current assets and disposal groups- - - -- - - -
Total11.260.1082.341.123-8.908.39310.753.1172.121.051-8.610.566
1. Financial liabilities measured at amortised cost11.820.6581.329.813104.63010.726.38711.130.6981.002.62664.19210.410.567
2. Liabilities associated with assets held for sale--------
Total11.820.6581.329.813104.63010.726.38711.130.6981.002.62664.19210.410.567
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Among financial assets measured at amortised cost, the amount reported under Level 1 refers to government and other listed debt securities, while the balance reported under Level 3 consists mainly of credit exposures.
Level 1 amortised cost financial liabilities relate to bonds issued by the Parent company Banca Ifis.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page120-cflshid_59563-tag94224": { "value": "
Qualitative disclosure
Fair value is the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date, under current market conditions (i.e. the exit price), regardless of the fact that said price is directly observable or that another measurement approach is used.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
IFRS 13 establishes a fair value hierarchy based on the extent to which inputs to valuation techniques used to measure the underlying assets/liabilities are observable. Specifically, the hierarchy consists of three Levels.
\u2022Level 1: the instrument's fair value is measured based on (unadjusted) quoted prices in active markets.
\u2022Level 2: the instrument's fair value is measured based on valuation models using inputs observable in active markets, such as:
\u2013quoted prices for similar assets or liabilities;
\u2013quoted prices for identical or similar assets or liabilities in non-active markets;
\u2013observable inputs such as interest rates or yield curves, implied volatility, default rates and illiquidity factors;
\u2013inputs that are not observable but supported and confirmed by market data.
\u2022Level 3: the instrument's fair value is measured based on valuation models using mainly inputs that are unobservable in active markets.
Each financial asset or liability of the Group is categorised in one of the above Levels, and the relevant measurements may be recurring or non-recurring (see IFRS 13, paragraph 93, letter a). The fair value measurement is categorised in its entirety in the same Level of the fair value hierarchy as the lowest Level input.
The choice among the valuation techniques is not optional, since these shall be applied in a hierarchical order: indeed, the fair value hierarchy gives the highest priority to (unadjusted) quoted prices available in active markets for identical assets or liabilities (Level 1 data) and the lowest priority to unobservable inputs (Level 3 data).
Measurement techniques used to measure fair value are applied consistently on an on-going basis, as described below.
A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used
In the absence of quoted prices in an active market, the fair value measurement of a financial instrument is performed using valuation techniques maximising the use of inputs observable on the market.
The use of a valuation technique is intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. In this case, the fair value measurement may be categorised in Level 2 or Level 3, according to what extent inputs to the pricing model are observable.
In the absence of observable prices in an active market for the financial asset or liability to be measured, the fair value of the financial instruments is measured using the so-called comparable approach (Level 2), requiring valuation models based on market inputs.
In this case, the valuation is not based on the quoted prices of the financial instrument being measured (identical asset), but on prices, credit spreads or other factors derived from the official quoted prices of instruments that are substantially similar in terms of risk factors and duration/return, using a given calculation method (pricing model).
In the absence of quoted prices in an active market for a similar instrument, or should the characteristics of the instrument to be measured not allow to apply models using inputs observable in active markets, it is necessary to use valuation models assuming the use of inputs that are not directly observable in the market and, therefore, requiring to make estimates and assumptions (non observable input - Level 3). In these cases, the financial instrument is measured using a given calculation method that is based on specific assumptions regarding:
\u2022the trend in future cash flows, possibly contingent on future events whose probability of occurring can be derived from historical experience or based on behavioural assumptions;
\u2022the Level of specific inputs not quoted on active markets:for the purposes of estimating them, information acquired from prices and spreads observed on the market shall have a higher priority. If these are not available, entities shall use historical data about the specific underlying risk factor or specialist research on the matter (e.g. reports by ratings agencies or primary market players).
In the cases described above, consideration is always given to the value of potentially making valuation adjustments taking into account the risk premiums that operators typically consider in pricing instruments. If not explicitly considered in the valuation model, valuation adjustments may include:
\u2022model adjustment: adjustments that take into account any deficiencies in the valuation models highlighted during calibration;
\u2022liquidity adjustment: adjustments that take into account the bid-ask spread if the model calculates a mid-price;
\u2022credit risk adjustment: adjustments related to the counterparty or own credit risk;
\u2022other risk adjustment: adjustments related to a risk premium \"priced\" in the market (e.g. relating to the complexity of valuation of an instrument).
With regard to fair value measurement, the Group adopts various methodologies, depending on the specific characteristics of the products being valued.
To measure receivables that must be measured at fair value, the method used is the Discounted Cash Flow (DCF) Model to receivables mandatorily measured at fair value, discounting the expected cash flows from each loan at a market rate determined by taking into account the risk free rate (rf) for similar maturities, the Cost of Funding (COF), the counterparty's credit risk, and the capital absorption cost.
For the measurement of unlisted equities, mainly income and financial models are used, in particular the method defined as 'Market Multiples of Comparable Companies' to which a control method such as the 'Discounted Cash Flow Model' or the 'Comparable Transactions Method' is compared. The latter method is applied to transactions that have similar economic and asset characteristics to the one being valued and adjusted for the economic and asset magnitudes of the asset being valued.
In general, where the purchase of the equity security or loan measured at fair value in the last year and market conditions have not changed significantly since the date of purchase, the purchase value is retained in the balance sheet. Factors taken into consideration that are indicative of a purchase price that is not representative of fair value include deviations of the asset's performance from forecasts and changes in the market scenario or context in which the counterparty operates.
With specific reference to the valuation of UCITS units, the approach used takes Net Asset Value (NAV) as the starting point for determining fair value. Thereafter, it must be verified whether, in determining the NAV, the fund's assets have been measured at fair value in accordance with the applicable international standards. A discount is applied to the NAV determined in this way using a structured rate as described below:
\u2022liquidity adjustment: the liquidity discount must take into account the inability to mobilise the economic commitment in the short term. This discount, which refers to a time horizon expressing the average duration of the investments in the fund, is applied to the NAV defined above inversely proportional to changes in the NAV itself. Once the investment phase is over, the discount applied will decrease proportionally from year to year until it settles at the base discount applied for the first year;
\u2022credit risk adjustment: the credit risk discount must take into account the probability of default of the underlying asset in which the fund invests;
\u2022other risk adjustment: this category includes the discount of any other significant element known to the manager of the instrument at the time of measurement.
As for over-the-counter (OTC) derivatives not quoted in active markets, their fair value is calculated based on measurement techniques that take into account all risk factors that could affect the value of the financial instrument concerned, using observable market inputs (interest rates, exchange rates, share indices, etc.) adjusted as appropriate to account for the creditworthiness of the specific counterparty, including the counterparty's credit risk (CVA, Credit Valuation Adjustment) and/or the Group's own credit risk (DVA, Debit Valuation Adjustment).
The increase in interest rates, which occurred during the year, had a significant impact on the fair value of derivatives. However, with reference to the measurement of counterparty risk (Credit Valuation Adjustment and Debit Valuation Adjustment), as of 31 December 2023, the impact on the balance sheet values of derivatives with mark-to-market, both positive and negative, is substantially nil as almost all derivative financial instruments are securitised through Credit Support Agreements (CSA). The balance at 31 December 2023 of derivatives, for which there is no counterparty risk mitigation (CSA) element, should not be considered significant and amounts to 153 thousand Euro.
As for the measurement of financial assets and liabilities measured at fair value on a non-recurring basis, the relevant portfolio consists of on-balance-sheet exposures classified as performing with a residual life exceeding one year (medium-long term). Therefore, all exposures classified as impaired, other than those of the Npl Segment, the ones with a residual life less than one year, and unsecured loans are excluded from the measurement, as, for these, the Bank believes that their amortised cost can be used as an approximation of fair value.
For non-performing loans (bad loans, unlikely to pay, past due), the fair value is conventionally assumed to be equal to the net carrying amount and is shown in Level 3. In this regard, it should be noted that, in the recent past, significant transactions of assignments of non-performing loans have been observed on the Italian market, with prices that have discounted the specific characteristics of the portfolios sold and the different yields demanded by the buyers. The fair value determined on the basis of the aforementioned transactions would therefore be characterised by a high dispersion of values, such that the identification of a reference value would not be objective.
For the purposes of measuring performing loans at fair value, given the absence of prices directly observable on active and liquid markets, entities shall use valuation techniques based on a theoretical model meeting the requirements of IAS/IFRS standards (Level 3). The approach used to determine the fair value of performing loans is the aforementioned DCF Model applied to loans with a residual maturity of more than one year, while the nominal amount is considered for other loans with short or no maturity. Future cash flows consist of the sum of principal
and interest and are discounted using a rate formed by the credit spread (coverage curve) and the 3-month Euribor rate.
As for the receivables portfolio of the Npl Segment, which purchases and manages non-performing receivables mainly due from individuals, the specified DCF Model is used to calculate fair value. In this case, the expected net cash flows are discounted at a market rate. The market rate is calculated without considering a credit spread, since the credit risk of the individual counterparties is already incorporated in the statistical model used to estimate future cash flows with regard to collective management (non-judicial operations). The model projects the relevant cash flows based on historical evidence concerning the recovery of positions in the Group's portfolio. As for individual management (judicial operations), the projections of future cash flows are based on an internal algorithm or defined by the manager according to how the underlying receivable is being processed.
For financial liabilities at amortised cost, the fair value calculated for disclosure purposes is determined by applying the following methodologies:
\u2022for medium- and long-term liabilities, the measurement is performed by discounting future cash flows using an interest rate that incorporates its own credit risk component;
\u2022for on-demand liabilities with short-term or indefinite maturity, the carrying amount is a good approximation of fair value.
A.4.2 Measurement processes and sensitivity
In compliance with IFRS 13, for financial assets and liabilities measured at fair value categorised within Level 3, the Group tests their sensitivity to changes in one or more unobservable inputs used in the fair value measurements like, by way of example and in no means exhaustive, discount rates applied to cash flows or expected cash flows themselves.
With regard to debt security exposures measured at Level 3 fair value, amounting to 94,0 million Euro at 31 December 2023, the effects of potential changes in the parameters used are deemed not significant.
For equity securities and units of UCITSs, respectively equal, at 31 December 2023, to 165,9 million Euro and 76,9 million Euro, it is generally not possible to perform any quantitative sensitivity analysis of fair value to changes in unobservable inputs, as either the fair value is derived from third-party sources, or it is the result of a model whose inputs are specific to the entity being valued (e.g. company assets) and for which the information necessary for a sensitivity analysis is not available.
A.4.3 Fair value hierarchy
Concerning recurring fair value measurements of financial assets and liabilities, the Banca Ifis Group transfers them between Levels of the hierarchy based on the following guidelines:
\u2022for debt securities and financing:
\u2013the transfer from Level 3 to Level 2 takes place when the inputs to the valuation technique used are observable at the measurement date;
\u2013the transfer from Level 3 to Level 1 is allowed when it is confirmed that there is an active market for the instrument at the measurement date;
\u2013finally, they are transferred from Level 2 to Level 3 when some inputs relevant in measuring fair value are not directly observable at the measurement date.
\u2022for equity instruments, the Level transfer takes place when:
\u2013observable inputs became available during the period (e.g. prices for identical assets and liabilities defined in comparable transactions between independent and knowledgeable parties). In this case, they are reclassified from Level 3 to Level 2;
\u2013inputs directly or indirectly observable used in measuring them are no longer available or current (e.g. no recent comparable transactions or no longer applicable multiples). In this case, the entity shall use valuation techniques incorporating unobservable inputs.
A.4.4 Other information
There is no further information to report than that presented in the preceding paragraphs.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page126-cflshid_63589-tag94225": { "value": "
A.5 - Disclosure on day one profit/loss
With reference to the provisions of IFRS 7 par. 28, a financial instrument must initially be recognised at a value equal to its fair value which, unless there is evidence to the contrary, is equal to the price paid/collected in trading. The above standard governs such cases by establishing that an entity may recognise a financial instrument at a fair value other than the consideration given or received only if the fair value is evidenced:
\u2022by comparison with other observable current market transactions in the same instrument;
\u2022through valuation techniques using exclusively, as variables, data from observable markets.
In other words, the assumption under IFRS 9, whereby fair value is equal to the consideration given or received, may be overcome only if there is objective evidence that the consideration given or received is not representative of the actual market value of the financial instrument being traded.
Such evidence must be derived only from objective and non-refutable parameters, thus eliminating any hypothesis of discretion on the part of the evaluator.
The difference between the fair value and the negotiated price, only when the above conditions are met, is representative of the day one profit and is immediately recognised in the income statement.
No such transactions were carried out as part of the Group's operations during 2023.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognisingDifferenceBetweenFairValueAtInitialRecognitionAndAmountDeterminedUsingValuationTechniqueExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page127-cflshid_64138-tag94227": { "value": "
Section 1 - Cash and cash equivalents - Item 10
1.1 Cash and cash equivalents: breakdown
31.12.202331.12.2022
a) Cash29 37
b) Current accounts and on demand deposits at Central banks515.114 370.021
c) Current accounts and on demand deposits at banks342.390 233.076
Total857.533 603.134
\"\"
This item includes bank current accounts on demand and at 31 December 2023 amounts to 857,5 million Euro, compared with the 603,1 million Euro recorded at the end of 2022 mainly due to the growth in overnight deposits at the Bank of Italy (+145,0 million Euro).
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page127-cflshid_64138-tag94226": { "value": "
Section 1 - Cash and cash equivalents - Item 10
1.1 Cash and cash equivalents: breakdown
31.12.202331.12.2022
a) Cash29 37
b) Current accounts and on demand deposits at Central banks515.114 370.021
c) Current accounts and on demand deposits at banks342.390 233.076
Total857.533 603.134
\"\"
This item includes bank current accounts on demand and at 31 December 2023 amounts to 857,5 million Euro, compared with the 603,1 million Euro recorded at the end of 2022 mainly due to the growth in overnight deposits at the Bank of Italy (+145,0 million Euro).
4.1 Financial assets measured at amortised cost: breakdown of receivables due from banks by type
Type of transaction/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
Stages 1 and 2Stage 3Purchased or originated impairedL1L2L3Stages 1 and 2Stage 3Purchased or originated impairedL1L2L3
A. Receivables due from Central banks 25.490 - - - - 25.490 6.145----6.145
1. Term deposits- - - XXX---XXX
2. Compulsory reserve 25.490 - - XXX6.145--XXX
3. Reverse repurchase agreements - - - XXX---XXX
4. Others - - - XXX---XXX
B. Receivables due from banks 612.077 - - 588.822 - 36.437 559.617--515.273-32.753
1. Loans35.237 - - 919 - 34.322 33.466----30.043
1.1. Current accounts - - - XXX---XXX
1.2 Term deposits 1.843 - - XXX2.605--XXX
1.3 Other loans: 33.394 - - XXX30.861--XXX
- Reverse repurchase agreements - - - XXX---XXX
- Financing for leasing 100 - - XXX273--XXX
- Other 33.294 - - XXX30.588--XXX
2. Debt securities576.840 - - 587.903 - 2.115 526.151--515.273-2.710
2.1 Structured 9.411 - - 7.296 - 2.115 9.413--7.189-2.180
2.2 Other debt securities 567.429 - - 580.607 - - 516.738--508.084-530
Total 637.567 - - 588.822 - 61.927 565.762--515.273-38.898
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndBankBalancesAtCentralBanksExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page127-cflshid_64138-tag94233": { "value": "
Section 2 - Financial assets measured at fair value through profit or loss - Item 20
2.1 Financial assets held for trading: breakdown by type
Items/Amounts31.12.202331.12.2022
L1L2L3L1L2L3
A. Cash assets
1. Debt securities - - - 677--
1.1 Structured - - - ---
1.2 Other debt securities - - - 677--
2. Equity securities - - - 593--
3. UCITS units - - - ---
4. Loans - - - ---
4.1 Reverse repurchase agreements- - - ---
4.2 Other - - - ---
Total (A) - - - 1.270--
B. Derivatives
1. Financial derivatives - 12.896 - -25.598-
1.1 for trading - 12.896 - -25.598-
1.2 connected to the fair value option - - - ---
1.3 other - - - ---
2. Credit derivatives - - - ---
2.1 for trading - - - ---
2.2 connected to the fair value option - - - ---
2.3 other - - - ---
Total (B) - 12.896 - -25.598-
Total (A+B)- 12.896 - 1.27025.598-
\"\"
Financial assets held for trading come to 12,9 million Euro at 31 December 2023 (down from the figure of 26,9 million Euro at 31 December 2022) and are almost entirely referring to transactions in derivatives (the value of which has fallen compared with the figure of 25,6 million Euro at 31 December 2022) substantially hedged by mirror positions recorded under financial liabilities held for trading. The figure at 31 December 2022 for this item
included 1,3 million Euro of debt and equity securities belonging to the Group's trading portfolio, which were entirely sold in 2023.
2.2 Financial assets held for trading: breakdown by debtor/issuer/counterparty
Items/Amounts 31.12.202331.12.2022
A. Cash assets
1. Debt securities -677
a) Central Banks --
b) Public Administrations--
c) Banks -676
d) Other financial companies -1
of which: insurance companies--
e) Non-financial companies--
2. Equity securities -593
a) Banks -593
b) Other financial companies --
of which: insurance companies--
c) Non-financial companies--
d) Other issuers--
3. UCITS units --
4. Loans --
a) Central Banks--
b) Public Administrations--
c) Banks --
d) Other financial companies --
of which: insurance companies--
e) Non-financial companies--
f) Households--
Total (A) -1.270
B. Derivatives
a) Central Counterparties--
b) Other12.896 25.598
Total (B) 12.896 25.598
Total (A+B)12.896 26.868
\"\"
2.3 Financial assets designated at fair value: breakdown by type
In these Consolidated Financial Statements, this item has no value.
2.4 Financial assets designated at fair value: breakdown by debtor/issuer
In these Consolidated Financial Statements, this item has no value.
2.5 Other financial assets mandatorily measured at fair value: breakdown by type
Items/Amounts
31.12.2023
31.12.2022
L1
L2
L3
L1
L2
L3
1. Debt securities
-
-
86.919
31.129
-
41.714
1.1. Structured
-
-
-
-
-
-
1.2. Other debt securities
-
-
86.919
31.129
-
41.714
2. Equity securities
-
-
51.051
-
-
34.979
3. UCITS units
5.144
-
71.766
-
-
70.209
4. Loans
-
-
7.102
-
-
17.189
4.1 Reverse repurchase agreements
-
-
-
-
-
-
4.2. Others
-
-
7.102
-
-
17.189
Total
5.144
-
216.838
31.129
-
164.091
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
Financial assets mandatorily measured at fair value through profit or loss total 222,0 million Euro at 31 December 2023. This item consists of loans and debt securities that did not pass the SPPI test, equity securities from minority shares and UCITS units.
Debt securities classified as Level 3 are instead represented by junior, mezzanine and single-tranche securities related to securitisation transactions totalling 86,8 million Euro at 31 December 2023 (41,7 million Euro at the end of 2022).
Equity securities refer to transactions of the Equity Investment unit in minority shares of companies.
The item \"UCITS units\", totalling 76,9 million Euro as of 31 December 2023, is made up of 71,5 million Euro relating to units held by the Parent company Banca Ifis (of which 65,1 million Euro in equity and bond funds, 5,2 million Euro in real estate funds and the remainder in multi-fund sub-funds) and 5,5 million Euro relating to units held by the subsidiary Ifis Npl Investing and relating to funds specialised in the management of performing and non performing loans. The values classified at Level 1 refer to an investment by the Parent company made in 2023 in a listed equity fund.
2.6 Financial assets mandatorily measured at fair value: breakdown by debtor/issuer
31.12.202331.12.2022
1. Equity securities51.051 34.979
of which: banks- -
of which: other financial companies3.052 1.844
of which: non-financial companies48.000 33.135
2. Debt securities86.919 72.843
a) Central Banks- -
b) Public Administrations- -
c) Banks - 31.129
d) Other financial companies 86.919 41.714
of which: insurance companies- -
e) Non-financial companies- -
3. UCITS units76.910 70.209
4. Loans7.102 17.189
a) Central Banks- -
b) Public Administrations- -
c) Banks - -
d) Other financial companies71 116
of which: insurance companies- -
e) Non-financial companies7.031 17.073
f) Households- -
Total221.982 195.220
\"\"
Section 3 - Financial assets measured at fair value through other comprehensive income - Item 30
3.1 Financial assets measured at fair value through other comprehensive income: breakdown by type
Items/Amounts 31.12.202331.12.2022
L1 L2 L3 L1 L2 L3
1. Debt securities628.933 5.373 - 589.638--
1.1 Structured4.370 - - 6.006--
1.2 Other debt securities624.563 5.373 - 583.632--
2. Equity securities44.856 - 70.014 41.378-66.595
3. Loans------
Total673.789 5.373 70.014 631.016-66.595
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
The growth in debt securities owned is due to the combined effect of new subscriptions with both bank issuers (+67,8 million Euro) and non-financial issuers (+90,1 million Euro, of which +76,2 million Euro in government bonds), and the positive write-back in 2023 (+25,0 million Euro, mainly concentrated on the government bonds portfolio). This change more than offset the decrease related to normal collections and disposals.
Level 1 \u201cother debt securities\u201d refer for 460,2 million Euro to Italian and foreign Government bonds (400,3 million Euro at end 2022).
Equity securities are attributable to non-controlling interests, which amount to 114,9 million Euro at the end of December 2023, up 6,4% compared to 31 December 2022, mainly due to investments made in 2023 (+32,7 million Euro, of which 19,6 million Euro on foreign equity investments), the impact of which more than offset that of the disposals realised during the year (-22,7 million Euro). Most of the equity securities consist of shares in the Bank of Italy (50,0 million Euro) as well as interests in leading companies in the banking and insurance, energy and telecommunications sectors, both Italian and foreign.
Level 3 securities mainly include the specified shares of the Bank of Italy as well as minority interests.
With specific reference to the shares held in the share capital of the Bank of Italy (2.000 shares) corresponding to 0,7% of the entire share capital, the carrying amount of 50 million Euro is obtained by valuing each share at a unit value of 25.000 Euro. In this regard, it should be noted that these units derive from the capital increase transaction carried out by the Bank of Italy in 2013 as a result of Decree-Law No. 133 of 30 November 2013, converted by Law No. 5 of 29 January 2014, which resulted in the issuance of new quotas, for a value of 25.000 Euro per unit.
3.2 Financial assets measured at fair value through other comprehensive income: breakdown by debtor/issuer
Items/Amounts31.12.202331.12.2022
1. Debt securities634.306 589.638
a) Central Banks- -
b) Public Administrations460.187 403.247
c) Banks 93.023 107.267
d) Other financial companies 26.345 29.023
of which: insurance companies- -
e) Non-financial companies54.751 50.101
2. Equity securities114.870 107.973
a) Banks51.772 58.638
b) Other issuers:63.098 49.335
- other financial companies 9.879 13.331
of which: insurance companies3.881 6.860
- non-financial companies53.219 36.004
- other- -
3. Loans- -
a) Central Banks- -
b) Public Administrations- -
c) Banks - -
d) Other financial companies - -
of which: insurance companies- -
e) Non-financial companies- -
f) Households- -
Total749.176 697.611
\"\"
3.3 Financial assets measured at fair value through other comprehensive income: gross amount and overall impairment losses/reversals
Gross amount
Overall impairment losses/reversals
Stage 1
of which: Low credit risk instruments
Stage 2
Stage 3
Purchased or originated impaired
Stage 1
Stage 2
Stage 3
Purchased or originated impaired
Overall partial write-offs(1)
Debt securities
632.507
632.507
2.962
-
-
(1.032)
(131)
-
-
-
Loans
-
-
-
-
-
-
-
-
-
-
Total 31.12.2023
632.507
632.507
2.962
-
-
(1.032)
(131)
-
-
-
Total 31.12.2022
590.721
590.721
-
-
-
(1.083)
-
-
-
-
\"\"
(1) Amount to be reported for disclosure purposes.
Section 4 - Financial assets measured at amortised cost - Item 40
4.1 Financial assets measured at amortised cost: breakdown of receivables due from banks by type
Type of transaction/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
Stages 1 and 2Stage 3Purchased or originated impairedL1L2L3Stages 1 and 2Stage 3Purchased or originated impairedL1L2L3
A. Receivables due from Central banks 25.490 - - - - 25.490 6.145----6.145
1. Term deposits- - - XXX---XXX
2. Compulsory reserve 25.490 - - XXX6.145--XXX
3. Reverse repurchase agreements - - - XXX---XXX
4. Others - - - XXX---XXX
B. Receivables due from banks 612.077 - - 588.822 - 36.437 559.617--515.273-32.753
1. Loans35.237 - - 919 - 34.322 33.466----30.043
1.1. Current accounts - - - XXX---XXX
1.2 Term deposits 1.843 - - XXX2.605--XXX
1.3 Other loans: 33.394 - - XXX30.861--XXX
- Reverse repurchase agreements - - - XXX---XXX
- Financing for leasing 100 - - XXX273--XXX
- Other 33.294 - - XXX30.588--XXX
2. Debt securities576.840 - - 587.903 - 2.115 526.151--515.273-2.710
2.1 Structured 9.411 - - 7.296 - 2.115 9.413--7.189-2.180
2.2 Other debt securities 567.429 - - 580.607 - - 516.738--508.084-530
Total 637.567 - - 588.822 - 61.927 565.762--515.273-38.898
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
4.2 Financial assets measured at amortised cost: breakdown of receivables due from customers by type
Type of transaction/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
Stages 1 and 2Stage 3Purcha-sed or originated impairedL1L2L3Stages 1 and 2Stage 3Purcha-sed or originated impairedL1L2L3
1. Loans6.711.989 221.968 1.666.273 175.178 15.435 8.445.556 6.441.261265.3841.551.205--8.355.701
1. Current accounts73.200 6.119 202.957 XXX97.8759.887184.823XXX
2. Reverse repurchase agreements- - 4 XXX--5XXX
3. Loans/mortgages2.225.751 61.613 132.549 XXX2.202.95660.691137.196XXX
4. Credit cards, personal loans and salary-backed loans93.291 2.653 671.095 XXX37.0031.618539.587XXX
5. Financing for leasing1.352.041 10.270 12.961 XXX1.284.26213.7525.886XXX
6. Factoring2.361.896 118.218 465 XXX2.238.368165.3101.697XXX
7. Other loans605.810 23.095 646.242 XXX580.79714.126682.011XXX
2. Debt securities2.021.904 - - 1.753.065 - 196.532 1.929.082--1.605.782-212.122
2.1. Structured16.561 - - 10.808 - 5.511 13.374--10.003-2.375
2.2. Other debt securities2.005.343 - - 1.742.257 - 191.021 1.915.708--1.595.779-209.747
Total8.733.893 221.968 1.666.273 1.928.243 15.435 8.642.088 8.370.343265.3841.551.2051.605.782-8.567.823
\"\"
The item \"Impaired acquired or originated\", equal to a carrying amount of 1.665,3 million Euro at 31 December 2023, includes 1.629,2 million Euro in impaired purchased loans of the Npl Segment (which constitute the core business of this Segment; for further details, please refer to the section \"Contribution of operating Segments to Group results\" of the Directors\u2019 Report on the Group) and for 35,8 million Euro the impaired assets resulting from the business combinations carried out in previous years.
At 31 December 2023, other debt securities include 1.628,7 million Euro in Italian and foreign government securities acquired by Banca Ifis with a view to optimising Group liquidity (1.541,5 million Euro at 31 December 2022). Level 3 securities mainly include investments in securitisations and minibonds.
4.3 Financial assets measured at amortised cost: breakdown of receivables due from customers by debtor/issuer
Type of transaction/Amounts
31.12.2023
31.12.2022
Stages 1 and 2
Stage 3
Purchased or originated impaired
Stages 1 and 2
Stage 3
Purchased or originated impaired
1. Debt securities
2.021.904
-
-
1.929.082
-
-
a) Public Administrations
1.660.629
-
-
1.571.496
-
-
b) Other financial companies
273.183
-
-
265.931
-
-
of which: insurance companies
-
-
-
-
-
-
c) Non-financial companies
88.092
-
-
91.655
-
-
2. Loans to:
6.711.987
221.970
1.666.273
6.441.261
265.384
1.551.205
a) Public Administrations
266.488
76.198
66
288.171
120.305
738
b) Other financial companies
272.159
1.601
1.498
239.508
10.083
1.302
of which: insurance companies
1.024
21
-
1.566
29
-
c) Non-financial companies
5.438.696
119.771
192.978
5.208.079
113.570
182.929
d) Households
734.644
24.400
1.471.731
705.503
21.426
1.366.236
Total
8.733.891
221.970
1.666.273
8.370.343
265.384
1.551.205
\"\"
4.4 Financial assets measured at amortised cost: gross amount and overall impairment losses/reversals
Gross amount
Overall impairment losses/reversals
Overall partial write-offs(1)
Stage 1
of which: low credit risk instruments
Stage 2
Stage 3
Purchased or originated impaired
Stage 1
Stage 2
Stage 3
Purchased or originated impaired
Debt securities
2.602.573
2.602.573
-
-
-
(3.828)
-
-
-
-
Loans
6.334.587
668.619
547.479
402.475
1.666.273
(70.195)
(39.157)
(180.506)
-
(3.010)
Total 31.12.2023
8.937.160
3.271.192
547.479
402.475
1.666.273
(74.023)
(39.157)
(180.506)
-
(3.010)
Total 31.12.2022
8.426.023
3.140.222
502.085
481.150
1.593.397
(84.075)
(14.440)
(151.446)
-
(40.398)
\"\"
(1) Amount to be reported for disclosure purposes
Section 1 - Financial liabilities measured at amortised cost - Item 10
1.1 Financial liabilities at amortised cost: breakdown of payables due to banks by type
Type of transaction/Amounts 31.12.202331.12.2022
CAFair ValueCAFair Value
L1L2L3L1L2L3
1. Payables due to Central banks 1.577.875 XXX2.423.647XXX
2. Payables due to banks 1.139.264 XXX998.513XXX
2.1 Current accounts and on demand deposits 19 XXX4.208XXX
2.2 Term deposits 117.309 XXX149.054XXX
2.3 Loans 1.012.077 XXX845.251XXX
2.3.1 Repurchase agreements 715.313 XXX731.791XXX
2.3.2 Other 296.764 XXX113.460XXX
2.4 Debt from buyback commitments on treasury equity instruments - XXX-XXX
2.5 Lease payables - XXX-XXX
2.6 Other payables 9.859 XXX-XXX
Total2.717.139 - - 2.717.139 3.422.160--3.422.160
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to banks come to 2,7 billion Euro, down 20,6% compared to the figure for end December 2022, mainly due to the onset maturity of short-term payables due to central banks (LTRO) and the early repayment of 500 million Euro for TLTRO, made in December 2023. At 31 December 2023, the balance of payables due to banks is mainly represented by residual TLTRO transactions in the amount of 1,6 billion Euro and repo transactions in the amount of 0,7 billion Euro. As a result of Decision ECB/2022\"37 of 27 October 2022 for FY 2023, the fees were determined on the basis of the rate provided for as of the aforementioned decision.
The fair value of payables due to banks is in line with the relevant carrying amount, considering the counterparty and the fact that interbank deposits are short- or very short-term.
1.2 Financial liabilities measured at amortised cost: breakdown of payables due to customers by type
31.12.2023
31.12.2022
Fair Value
Fair Value
Type of transaction/Amounts
CA
L1
L2
L3
CA
L1
L2
L3
1. Current accounts and on demand deposits
1.147.597
X
X
X
1.410.871
X
X
X
2. Term deposits
4.139.143
X
X
X
3.547.969
X
X
X
3. Loans
493.791
X
X
X
50.003
X
X
X
3.1 Repurchase agreements
346.317
X
X
X
50.003
X
X
X
3.2 Other
147.474
X
X
X
-
X
X
X
4. Debt from buyback commitments on treasury equity instruments
-
X
X
X
-
X
X
X
5. Lease payables
22.702
X
X
X
21.733
X
X
X
6. Other payables
11.391
X
X
X
72.767
X
X
X
Total
5.814.624
-
-
6.156.150
5.103.343
-
-
5.450.030
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to customers at 31 December 2023 total 5,8 billion Euro, up 13,9% compared to 31 December 2022. The growth is driven by both retail funding, which amounts to 4,5 billion Euro at the end of December 2023 (+7,6%), and the repurchase agreement (repo) component, which increases by 296,3 million Euro compared to 31 December 2022.
1.3 Financial liabilities measured at amortised cost: breakdown of debt securities issued by type
Type of securities/Amounts 31.12.202331.12.2022
CAFair ValueCAFair Value
L1L2 L3L1 L2 L3
A. Securities
1. Bonds 3.288.839 1.329.813 104.630 1.853.042 2.605.0901.002.62664.1921.496.168
1.1 structured bonds - - - - ----
1.2 other bonds 3.288.839 1.329.813 104.630 1.853.042 2.605.0901.002.62664.1921.496.168
2. Other securities 56 - - 56 105--105
2.1 structured - - - - ----
2.2 other 56 - - 56 105--105
Total 3.288.895 1.329.813 104.630 1.853.098 2.605.1951.002.62664.1921.496.273
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Debt securities issued amount to 3,3 billion Euro at 31 December 2023 and consist of:
\u2022securities issued by the SPV ABCP Programme for 1,1 billion Euro relating to the senior tranche;
\u2022securities issued by the Indigo Lease vehicle in the amount of 0,4 billion Euro relating to the senior tranche, following the restructuring of the transaction during the third quarter of 2023 (for more details on this, refer to \"Part E - Information on risks and related hedging policies\", \"Section 2 - Prudential consolidation risks\", paragraph \"1.1 Credit risk\", sub-section \"C. Securitisation transactions\");
\u2022securities issued by the Emma SPV for 0,4 billion Euro relating to the senior tranche;
\u20220,4 billion Euro related to subordinated loans, essentially in line with 31 December 2022;
\u2022bonds issued by Banca Ifis for 1,1 billion Euro. Compared to 31 December 2022, the following changes have occurred:
\u2013600 million Euro relating to the two senior bonds, each with a nominal amount of 300 million Euro and a maturity of 4 years and 5 years respectively, issued in January 2023 and September 2023 (for more details, refer to the section \u201cSignificant events during the year\u201d of the Directors\u2019 Report on the Group);
\u201345 million Euro related to the second tranche issued in March 2023 and related to a senior bond with a duration of 4 years and a total nominal amount of 110 million Euro;
\u2013redemption of 300 million Euro of the senior bond issued in 2018 and maturing in April 2023.
1.4 Breakdown of subordinated debts/securities
The line item \"Debt securities issued\" includes 372,7 million Euro in subordinated notes related to Euro Tier 2 bond issued in mid-October 2017 for a nominal amount of 400 million Euro.
1.5 Breakdown of structured debts
There are no structured debts in these Consolidated Financial Statements.
1.6 Lease payables
The lease payable relates for 20,1 million Euro to lease contracts of properties and cars coming under the scope of application of accounting standard IFRS 16, which came into force at 1 January 2019 and as more extensively described in \u201cPart M - Leasing disclosure\u201d of these Consolidated Financial Statements.
It also includes 2,6 million Euro for the real estate lease the former company Toscana Finanza S.p.A. entered into in 2009 for the property located in Florence, which housed the headquarters of the Npl Segment until August 2016. The term of the lease entered into with Centro Leasing S.p.A. is 18 years (from March 2009 to March 2027) and provides for the payment of 216 monthly instalments of about 28 thousand Euro, including the principal, interest and an option to buy the asset at the end of the lease for 1,9 million Euro. At the date of this document, the property is used as an additional operational headquarters of Banca Ifis.
The interest rate on lease payables reflects the average Group cost of funding, taking into account the creditworthiness of the lessee and the economic context in which the transaction occurs, accordingly with the IFRS 16.
Section 2 - Financial liabilities held for trading - item 20
2.1 Financial liabilities held for trading: breakdown by type
Type of transaction/Amounts31.12.202331.12.2022
NAFair valueFair value*NAFair valueFair value*
L1L2L3L1L2L3
A. On-balance-sheet liabilities
1. Payables due to banks ----------
2. Payables due to customers ----------
3. Debt securities ----X----X
3.1 Bonds ----X----X
3.1.1 Structured ----X----X
3.1.2 Other bonds ----X----X
3.2 Other securities ----X----X
3.2.1 Structured ----X----X
3.2.2 Other ----X----X
Total A ----------
B. Derivatives
1. Financial derivatives X-14.005-XX-25.982-X
1.1 For trading X-14.005-XX-25.982-X
1.2 Connected to the fair value option X---XX---X
1.3 Other X---XX---X
2. Credit derivatives X---XX---X
2.1 For trading X---XX---X
2.2 Connected to the fair value option X---XX---X
2.3 Other X---XX---X
Total B X-14.005-XX-25.982-X
Total (A+B)X-14.005-XX-25.982-X
\"\"
Key:
NA = Nominal or notional amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Fair value* = Fair value calculated excluding changes in value due to changes in the issuer's creditworthiness compared to the date of issuance
With regard to Level 2 trading liabilities, see the comments in \"Section 2 - Financial assets measured at fair value through profit or loss - Item 20\" of Assets.
2.2 Details of \u201cFinancial liabilities held for trading\u201d: subordinated liabilities
There are no subordinated liabilities recognised in the item of this section.
2.3 Details of \u201cFinancial liabilities held for trading\u201d: structured debts
There are no structured debts recorded in the item of this section.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page127-cflshid_64138-tag94229": { "value": "
Section 2 - Financial assets measured at fair value through profit or loss - Item 20
2.1 Financial assets held for trading: breakdown by type
Items/Amounts31.12.202331.12.2022
L1L2L3L1L2L3
A. Cash assets
1. Debt securities - - - 677--
1.1 Structured - - - ---
1.2 Other debt securities - - - 677--
2. Equity securities - - - 593--
3. UCITS units - - - ---
4. Loans - - - ---
4.1 Reverse repurchase agreements- - - ---
4.2 Other - - - ---
Total (A) - - - 1.270--
B. Derivatives
1. Financial derivatives - 12.896 - -25.598-
1.1 for trading - 12.896 - -25.598-
1.2 connected to the fair value option - - - ---
1.3 other - - - ---
2. Credit derivatives - - - ---
2.1 for trading - - - ---
2.2 connected to the fair value option - - - ---
2.3 other - - - ---
Total (B) - 12.896 - -25.598-
Total (A+B)- 12.896 - 1.27025.598-
\"\"
Financial assets held for trading come to 12,9 million Euro at 31 December 2023 (down from the figure of 26,9 million Euro at 31 December 2022) and are almost entirely referring to transactions in derivatives (the value of which has fallen compared with the figure of 25,6 million Euro at 31 December 2022) substantially hedged by mirror positions recorded under financial liabilities held for trading. The figure at 31 December 2022 for this item
included 1,3 million Euro of debt and equity securities belonging to the Group's trading portfolio, which were entirely sold in 2023.
2.2 Financial assets held for trading: breakdown by debtor/issuer/counterparty
Items/Amounts 31.12.202331.12.2022
A. Cash assets
1. Debt securities -677
a) Central Banks --
b) Public Administrations--
c) Banks -676
d) Other financial companies -1
of which: insurance companies--
e) Non-financial companies--
2. Equity securities -593
a) Banks -593
b) Other financial companies --
of which: insurance companies--
c) Non-financial companies--
d) Other issuers--
3. UCITS units --
4. Loans --
a) Central Banks--
b) Public Administrations--
c) Banks --
d) Other financial companies --
of which: insurance companies--
e) Non-financial companies--
f) Households--
Total (A) -1.270
B. Derivatives
a) Central Counterparties--
b) Other12.896 25.598
Total (B) 12.896 25.598
Total (A+B)12.896 26.868
\"\"
2.3 Financial assets designated at fair value: breakdown by type
In these Consolidated Financial Statements, this item has no value.
2.4 Financial assets designated at fair value: breakdown by debtor/issuer
In these Consolidated Financial Statements, this item has no value.
2.5 Other financial assets mandatorily measured at fair value: breakdown by type
Items/Amounts
31.12.2023
31.12.2022
L1
L2
L3
L1
L2
L3
1. Debt securities
-
-
86.919
31.129
-
41.714
1.1. Structured
-
-
-
-
-
-
1.2. Other debt securities
-
-
86.919
31.129
-
41.714
2. Equity securities
-
-
51.051
-
-
34.979
3. UCITS units
5.144
-
71.766
-
-
70.209
4. Loans
-
-
7.102
-
-
17.189
4.1 Reverse repurchase agreements
-
-
-
-
-
-
4.2. Others
-
-
7.102
-
-
17.189
Total
5.144
-
216.838
31.129
-
164.091
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
Financial assets mandatorily measured at fair value through profit or loss total 222,0 million Euro at 31 December 2023. This item consists of loans and debt securities that did not pass the SPPI test, equity securities from minority shares and UCITS units.
Debt securities classified as Level 3 are instead represented by junior, mezzanine and single-tranche securities related to securitisation transactions totalling 86,8 million Euro at 31 December 2023 (41,7 million Euro at the end of 2022).
Equity securities refer to transactions of the Equity Investment unit in minority shares of companies.
The item \"UCITS units\", totalling 76,9 million Euro as of 31 December 2023, is made up of 71,5 million Euro relating to units held by the Parent company Banca Ifis (of which 65,1 million Euro in equity and bond funds, 5,2 million Euro in real estate funds and the remainder in multi-fund sub-funds) and 5,5 million Euro relating to units held by the subsidiary Ifis Npl Investing and relating to funds specialised in the management of performing and non performing loans. The values classified at Level 1 refer to an investment by the Parent company made in 2023 in a listed equity fund.
2.6 Financial assets mandatorily measured at fair value: breakdown by debtor/issuer
31.12.202331.12.2022
1. Equity securities51.051 34.979
of which: banks- -
of which: other financial companies3.052 1.844
of which: non-financial companies48.000 33.135
2. Debt securities86.919 72.843
a) Central Banks- -
b) Public Administrations- -
c) Banks - 31.129
d) Other financial companies 86.919 41.714
of which: insurance companies- -
e) Non-financial companies- -
3. UCITS units76.910 70.209
4. Loans7.102 17.189
a) Central Banks- -
b) Public Administrations- -
c) Banks - -
d) Other financial companies71 116
of which: insurance companies- -
e) Non-financial companies7.031 17.073
f) Households- -
Total221.982 195.220
\"\"
Section 5 - Hedging derivatives - Item 50In these Consolidated Financial Statements, this item has no value
Section 2 - Financial liabilities held for trading - item 20
2.1 Financial liabilities held for trading: breakdown by type
Type of transaction/Amounts31.12.202331.12.2022
NAFair valueFair value*NAFair valueFair value*
L1L2L3L1L2L3
A. On-balance-sheet liabilities
1. Payables due to banks ----------
2. Payables due to customers ----------
3. Debt securities ----X----X
3.1 Bonds ----X----X
3.1.1 Structured ----X----X
3.1.2 Other bonds ----X----X
3.2 Other securities ----X----X
3.2.1 Structured ----X----X
3.2.2 Other ----X----X
Total A ----------
B. Derivatives
1. Financial derivatives X-14.005-XX-25.982-X
1.1 For trading X-14.005-XX-25.982-X
1.2 Connected to the fair value option X---XX---X
1.3 Other X---XX---X
2. Credit derivatives X---XX---X
2.1 For trading X---XX---X
2.2 Connected to the fair value option X---XX---X
2.3 Other X---XX---X
Total B X-14.005-XX-25.982-X
Total (A+B)X-14.005-XX-25.982-X
\"\"
Key:
NA = Nominal or notional amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Fair value* = Fair value calculated excluding changes in value due to changes in the issuer's creditworthiness compared to the date of issuance
With regard to Level 2 trading liabilities, see the comments in \"Section 2 - Financial assets measured at fair value through profit or loss - Item 20\" of Assets.
2.2 Details of \u201cFinancial liabilities held for trading\u201d: subordinated liabilities
There are no subordinated liabilities recognised in the item of this section.
2.3 Details of \u201cFinancial liabilities held for trading\u201d: structured debts
There are no structured debts recorded in the item of this section.
Section 4 - Hedging derivatives - Item 40
4.1 Hedging derivatives: breakdown by hedge type and levels
Fair value 31.12.2023NA31.12.2023Fair value 31.12.2022NA31.12.2022
L1L2L3L1L2L3
A. Financial derivatives-11.644-355.700----
1) Fair value-11.644-355.700----
2) Cash flows --------
3) Foreign investments --------
B. Credit derivatives--------
1) Fair value--------
2) Cash flows--------
Total-11.644-355.700----
\"\"
Key:
NA = notional amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
4.2 Hedging derivatives: breakdown by hedged portfolio and type of hedge
Transactions/Hedge typeFair valueCash flowsForeign investments
SpecificGenericSpecificGeneric
debt securities and interest ratesequity securities and stock indicescurrencies and goldloans and receivablescommoditiesother
1. Financial assets measured at fair value through other comprehensive income----XXX-XX
2. Financial assets measured at amortised cost11.644X--XXX-XX
3. PortfolioXXXXXX-X-X
4. Other transactions------X-X-
Total assets11.644---------
1. Financial liabilities-X----X-X-
2. PortfolioXXXXXX-X-X
Total liabilities----------
1. Expected transactionsXXXXXXX-XX
2. Portfolio of financial assets and liabilitiesXXXXXX-X--
\"\"
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page127-cflshid_64138-tag94232": { "value": "
2.1 Financial assets held for trading: breakdown by type
Items/Amounts31.12.202331.12.2022
L1L2L3L1L2L3
A. Cash assets
1. Debt securities - - - 677--
1.1 Structured - - - ---
1.2 Other debt securities - - - 677--
2. Equity securities - - - 593--
3. UCITS units - - - ---
4. Loans - - - ---
4.1 Reverse repurchase agreements- - - ---
4.2 Other - - - ---
Total (A) - - - 1.270--
B. Derivatives
1. Financial derivatives - 12.896 - -25.598-
1.1 for trading - 12.896 - -25.598-
1.2 connected to the fair value option - - - ---
1.3 other - - - ---
2. Credit derivatives - - - ---
2.1 for trading - - - ---
2.2 connected to the fair value option - - - ---
2.3 other - - - ---
Total (B) - 12.896 - -25.598-
Total (A+B)- 12.896 - 1.27025.598-
\"\"
Financial assets held for trading come to 12,9 million Euro at 31 December 2023 (down from the figure of 26,9 million Euro at 31 December 2022) and are almost entirely referring to transactions in derivatives (the value of which has fallen compared with the figure of 25,6 million Euro at 31 December 2022) substantially hedged by mirror positions recorded under financial liabilities held for trading. The figure at 31 December 2022 for this item
2.5 Other financial assets mandatorily measured at fair value: breakdown by type
Items/Amounts
31.12.2023
31.12.2022
L1
L2
L3
L1
L2
L3
1. Debt securities
-
-
86.919
31.129
-
41.714
1.1. Structured
-
-
-
-
-
-
1.2. Other debt securities
-
-
86.919
31.129
-
41.714
2. Equity securities
-
-
51.051
-
-
34.979
3. UCITS units
5.144
-
71.766
-
-
70.209
4. Loans
-
-
7.102
-
-
17.189
4.1 Reverse repurchase agreements
-
-
-
-
-
-
4.2. Others
-
-
7.102
-
-
17.189
Total
5.144
-
216.838
31.129
-
164.091
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
Financial assets mandatorily measured at fair value through profit or loss total 222,0 million Euro at 31 December 2023. This item consists of loans and debt securities that did not pass the SPPI test, equity securities from minority shares and UCITS units.
Debt securities classified as Level 3 are instead represented by junior, mezzanine and single-tranche securities related to securitisation transactions totalling 86,8 million Euro at 31 December 2023 (41,7 million Euro at the end of 2022).
Equity securities refer to transactions of the Equity Investment unit in minority shares of companies.
The item \"UCITS units\", totalling 76,9 million Euro as of 31 December 2023, is made up of 71,5 million Euro relating to units held by the Parent company Banca Ifis (of which 65,1 million Euro in equity and bond funds, 5,2 million Euro in real estate funds and the remainder in multi-fund sub-funds) and 5,5 million Euro relating to units held by the subsidiary Ifis Npl Investing and relating to funds specialised in the management of performing and non performing loans. The values classified at Level 1 refer to an investment by the Parent company made in 2023 in a listed equity fund.
4.1 Financial assets measured at amortised cost: breakdown of receivables due from banks by type
Type of transaction/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
Stages 1 and 2Stage 3Purchased or originated impairedL1L2L3Stages 1 and 2Stage 3Purchased or originated impairedL1L2L3
A. Receivables due from Central banks 25.490 - - - - 25.490 6.145----6.145
1. Term deposits- - - XXX---XXX
2. Compulsory reserve 25.490 - - XXX6.145--XXX
3. Reverse repurchase agreements - - - XXX---XXX
4. Others - - - XXX---XXX
B. Receivables due from banks 612.077 - - 588.822 - 36.437 559.617--515.273-32.753
1. Loans35.237 - - 919 - 34.322 33.466----30.043
1.1. Current accounts - - - XXX---XXX
1.2 Term deposits 1.843 - - XXX2.605--XXX
1.3 Other loans: 33.394 - - XXX30.861--XXX
- Reverse repurchase agreements - - - XXX---XXX
- Financing for leasing 100 - - XXX273--XXX
- Other 33.294 - - XXX30.588--XXX
2. Debt securities576.840 - - 587.903 - 2.115 526.151--515.273-2.710
2.1 Structured 9.411 - - 7.296 - 2.115 9.413--7.189-2.180
2.2 Other debt securities 567.429 - - 580.607 - - 516.738--508.084-530
Total 637.567 - - 588.822 - 61.927 565.762--515.273-38.898
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
4.2 Financial assets measured at amortised cost: breakdown of receivables due from customers by type
Type of transaction/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
Stages 1 and 2Stage 3Purcha-sed or originated impairedL1L2L3Stages 1 and 2Stage 3Purcha-sed or originated impairedL1L2L3
1. Loans6.711.989 221.968 1.666.273 175.178 15.435 8.445.556 6.441.261265.3841.551.205--8.355.701
1. Current accounts73.200 6.119 202.957 XXX97.8759.887184.823XXX
2. Reverse repurchase agreements- - 4 XXX--5XXX
3. Loans/mortgages2.225.751 61.613 132.549 XXX2.202.95660.691137.196XXX
4. Credit cards, personal loans and salary-backed loans93.291 2.653 671.095 XXX37.0031.618539.587XXX
5. Financing for leasing1.352.041 10.270 12.961 XXX1.284.26213.7525.886XXX
6. Factoring2.361.896 118.218 465 XXX2.238.368165.3101.697XXX
7. Other loans605.810 23.095 646.242 XXX580.79714.126682.011XXX
2. Debt securities2.021.904 - - 1.753.065 - 196.532 1.929.082--1.605.782-212.122
2.1. Structured16.561 - - 10.808 - 5.511 13.374--10.003-2.375
2.2. Other debt securities2.005.343 - - 1.742.257 - 191.021 1.915.708--1.595.779-209.747
Total8.733.893 221.968 1.666.273 1.928.243 15.435 8.642.088 8.370.343265.3841.551.2051.605.782-8.567.823
\"\"
1.1 Financial liabilities at amortised cost: breakdown of payables due to banks by type
Type of transaction/Amounts 31.12.202331.12.2022
CAFair ValueCAFair Value
L1L2L3L1L2L3
1. Payables due to Central banks 1.577.875 XXX2.423.647XXX
2. Payables due to banks 1.139.264 XXX998.513XXX
2.1 Current accounts and on demand deposits 19 XXX4.208XXX
2.2 Term deposits 117.309 XXX149.054XXX
2.3 Loans 1.012.077 XXX845.251XXX
2.3.1 Repurchase agreements 715.313 XXX731.791XXX
2.3.2 Other 296.764 XXX113.460XXX
2.4 Debt from buyback commitments on treasury equity instruments - XXX-XXX
2.5 Lease payables - XXX-XXX
2.6 Other payables 9.859 XXX-XXX
Total2.717.139 - - 2.717.139 3.422.160--3.422.160
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to banks come to 2,7 billion Euro, down 20,6% compared to the figure for end December 2022, mainly due to the onset maturity of short-term payables due to central banks (LTRO) and the early repayment of 500 million Euro for TLTRO, made in December 2023. At 31 December 2023, the balance of payables due to banks is mainly represented by residual TLTRO transactions in the amount of 1,6 billion Euro and repo transactions in the amount of 0,7 billion Euro. As a result of Decision ECB/2022\"37 of 27 October 2022 for FY 2023, the fees were determined on the basis of the rate provided for as of the aforementioned decision.
The fair value of payables due to banks is in line with the relevant carrying amount, considering the counterparty and the fact that interbank deposits are short- or very short-term.
1.2 Financial liabilities measured at amortised cost: breakdown of payables due to customers by type
31.12.2023
31.12.2022
Fair Value
Fair Value
Type of transaction/Amounts
CA
L1
L2
L3
CA
L1
L2
L3
1. Current accounts and on demand deposits
1.147.597
X
X
X
1.410.871
X
X
X
2. Term deposits
4.139.143
X
X
X
3.547.969
X
X
X
3. Loans
493.791
X
X
X
50.003
X
X
X
3.1 Repurchase agreements
346.317
X
X
X
50.003
X
X
X
3.2 Other
147.474
X
X
X
-
X
X
X
4. Debt from buyback commitments on treasury equity instruments
-
X
X
X
-
X
X
X
5. Lease payables
22.702
X
X
X
21.733
X
X
X
6. Other payables
11.391
X
X
X
72.767
X
X
X
Total
5.814.624
-
-
6.156.150
5.103.343
-
-
5.450.030
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to customers at 31 December 2023 total 5,8 billion Euro, up 13,9% compared to 31 December 2022. The growth is driven by both retail funding, which amounts to 4,5 billion Euro at the end of December 2023 (+7,6%), and the repurchase agreement (repo) component, which increases by 296,3 million Euro compared to 31 December 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page127-cflshid_64138-tag94231": { "value": "
2.1 Financial assets held for trading: breakdown by type
Items/Amounts31.12.202331.12.2022
L1L2L3L1L2L3
A. Cash assets
1. Debt securities - - - 677--
1.1 Structured - - - ---
1.2 Other debt securities - - - 677--
2. Equity securities - - - 593--
3. UCITS units - - - ---
4. Loans - - - ---
4.1 Reverse repurchase agreements- - - ---
4.2 Other - - - ---
Total (A) - - - 1.270--
B. Derivatives
1. Financial derivatives - 12.896 - -25.598-
1.1 for trading - 12.896 - -25.598-
1.2 connected to the fair value option - - - ---
1.3 other - - - ---
2. Credit derivatives - - - ---
2.1 for trading - - - ---
2.2 connected to the fair value option - - - ---
2.3 other - - - ---
Total (B) - 12.896 - -25.598-
Total (A+B)- 12.896 - 1.27025.598-
\"\"
Financial assets held for trading come to 12,9 million Euro at 31 December 2023 (down from the figure of 26,9 million Euro at 31 December 2022) and are almost entirely referring to transactions in derivatives (the value of which has fallen compared with the figure of 25,6 million Euro at 31 December 2022) substantially hedged by mirror positions recorded under financial liabilities held for trading. The figure at 31 December 2022 for this item
included 1,3 million Euro of debt and equity securities belonging to the Group's trading portfolio, which were entirely sold in 2023.
2.2 Financial assets held for trading: breakdown by debtor/issuer/counterparty
Items/Amounts 31.12.202331.12.2022
A. Cash assets
1. Debt securities -677
a) Central Banks --
b) Public Administrations--
c) Banks -676
d) Other financial companies -1
of which: insurance companies--
e) Non-financial companies--
2. Equity securities -593
a) Banks -593
b) Other financial companies --
of which: insurance companies--
c) Non-financial companies--
d) Other issuers--
3. UCITS units --
4. Loans --
a) Central Banks--
b) Public Administrations--
c) Banks --
d) Other financial companies --
of which: insurance companies--
e) Non-financial companies--
f) Households--
Total (A) -1.270
B. Derivatives
a) Central Counterparties--
b) Other12.896 25.598
Total (B) 12.896 25.598
Total (A+B)12.896 26.868
\"\"
Section 5 - Hedging derivatives - Item 50
In these Consolidated Financial Statements, this item has no value.
2.1 Financial liabilities held for trading: breakdown by type
Type of transaction/Amounts31.12.202331.12.2022
NAFair valueFair value*NAFair valueFair value*
L1L2L3L1L2L3
A. On-balance-sheet liabilities
1. Payables due to banks ----------
2. Payables due to customers ----------
3. Debt securities ----X----X
3.1 Bonds ----X----X
3.1.1 Structured ----X----X
3.1.2 Other bonds ----X----X
3.2 Other securities ----X----X
3.2.1 Structured ----X----X
3.2.2 Other ----X----X
Total A ----------
B. Derivatives
1. Financial derivatives X-14.005-XX-25.982-X
1.1 For trading X-14.005-XX-25.982-X
1.2 Connected to the fair value option X---XX---X
1.3 Other X---XX---X
2. Credit derivatives X---XX---X
2.1 For trading X---XX---X
2.2 Connected to the fair value option X---XX---X
2.3 Other X---XX---X
Total B X-14.005-XX-25.982-X
Total (A+B)X-14.005-XX-25.982-X
\"\"
Key:
NA = Nominal or notional amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Fair value* = Fair value calculated excluding changes in value due to changes in the issuer's creditworthiness compared to the date of issuance
With regard to Level 2 trading liabilities, see the comments in \"Section 2 - Financial assets measured at fair value through profit or loss - Item 20\" of Assets.
Section 4 - Hedging derivatives - Item 40
4.1 Hedging derivatives: breakdown by hedge type and levels
Fair value 31.12.2023NA31.12.2023Fair value 31.12.2022NA31.12.2022
L1L2L3L1L2L3
A. Financial derivatives-11.644-355.700----
1) Fair value-11.644-355.700----
2) Cash flows --------
3) Foreign investments --------
B. Credit derivatives--------
1) Fair value--------
2) Cash flows--------
Total-11.644-355.700----
\"\"
Key:
NA = notional amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
4.2 Hedging derivatives: breakdown by hedged portfolio and type of hedge
Transactions/Hedge typeFair valueCash flowsForeign investments
SpecificGenericSpecificGeneric
debt securities and interest ratesequity securities and stock indicescurrencies and goldloans and receivablescommoditiesother
1. Financial assets measured at fair value through other comprehensive income----XXX-XX
2. Financial assets measured at amortised cost11.644X--XXX-XX
3. PortfolioXXXXXX-X-X
4. Other transactions------X-X-
Total assets11.644---------
1. Financial liabilities-X----X-X-
2. PortfolioXXXXXX-X-X
Total liabilities----------
1. Expected transactionsXXXXXXX-XX
2. Portfolio of financial assets and liabilitiesXXXXXX-X--
\"\"
1.3 Derivative instruments and hedging policies
1.3.1 Derivative instruments held for trading
A. Financial derivatives
Please see paragraph \"1.2 Market risks\" of this Section 2 of Part E of the Notes to the Consolidated Financial Statements.
A.1 Financial derivatives held for trading: year-end notional amounts
Underlying assets/Types of derivatives31.12.202331.12.2022
Over the counterOrganised marketsOver the counterOrganised markets
Central counterpartiesWithout central counterpartiesCentral counterpartiesWithout central counterparties
With offsetting agreementsWithout offsetting agreementsWith offsetting agreementsWithout offsetting agreements
1. Debt securities and interest rates- - 1.096.929 - --803.810-
a) Options- - 1.085.424 - --288.350-
b) Swaps- - 11.505 - --515.460-
c) Forwards- - - - ----
d) Futures- - - - ----
e) Other- - - - ----
2. Equity securities and share indexes- - 25.393 - --15.975-
a) Options- - 25.393 - --15.975-
b) Swaps- - - - ----
c) Forwards- - - - ----
d) Futures- - - - ----
e) Other- - - - ----
3. Currencies and gold- - - - ----
a) Options- - - - ----
b) Swaps- - - - ----
c) Forwards- - - - ----
d) Futures- - - - ----
e) Other- - - - ----
4. Commodities- - - - ----
5. Others- - - - ----
Total- - 1.122.322 - --819.785-
\"\"
A.2 Financial derivatives held for trading: gross positive and negative fair value - breakdown by product
Types of derivatives31.12.202331.12.2022
Over the counterOrganised marketsOver the counterOrganised markets
Central counterpartiesWithout central counterpartiesCentral counterpartiesWithout central counterparties
With offsetting agreementsWithout offsetting agreementsWith offsetting agreementsWithout offsetting agreements
1. Positive fair value\u00a0\u00a0\u00a0\u00a0
a) Options- - 12.743 - --333-
b) Interest rate swaps- - 153 - --25.265-
c) Cross currency swaps- - - - ----
d) Equity swaps- - - - ----
e) Forwards- - - - ----
f) Futures- - - - ----
g) Other- - - - ----
Total- - 12.896 - --25.598-
2. Negative fair value\u00a0\u00a0\u00a0\u00a0
a) Options- - 13.852 - --25.098-
b) Interest rate swaps- - 153 - --884-
c) Cross currency swaps- - - - ----
d) Equity swaps- - - - ----
e) Forwards- - - - ----
f) Futures- - - - ----
g) Other- - - - ----
Total- - 14.005 - --25.982-
\"\"
A.3 OTC financial derivatives held for trading: notional amounts, gross positive and negative fair value by counterparty
Underlying assets Central counterparties Banks Other financial corporations Other entities
Contracts not included in netting agreements
1) Debt securities and interest rates \u00a0\u00a0\u00a0\u00a0
- notional amount X1.091.177 - 5.752
- positive fair value X12.313 - 153
- negative fair value X14.005 - -
2) Equity securities and share indexes \u00a0\u00a0\u00a0\u00a0
- notional amount X25.393 - -
- positive fair value X430 - -
- negative fair value X- - -
3) Currencies and gold \u00a0\u00a0\u00a0\u00a0
- notional amount X- - -
- positive fair value X- - -
- negative fair value X- - -
4) Commodities \u00a0\u00a0\u00a0\u00a0
- notional amount X- - -
- positive fair value X- - -
- negative fair value X- - -
5) Other \u00a0\u00a0\u00a0\u00a0
- notional amount X- - -
- positive fair value X- - -
- negative fair value X- - -
Contracts included in netting agreements \u00a0\u00a0\u00a0\u00a0
1) Debt securities and interest rates \u00a0\u00a0\u00a0\u00a0
- notional amount - - - -
- positive fair value - - - -
- negative fair value - - - -
2) Equity securities and share indexes \u00a0\u00a0\u00a0\u00a0
- notional amount - - - -
- positive fair value - - - -
- negative fair value - - - -
3) Currencies and gold \u00a0\u00a0\u00a0\u00a0
- notional amount - - - -
- positive fair value - - - -
- negative fair value - - - -
4) Commodities \u00a0\u00a0\u00a0\u00a0
- notional amount - - - -
- positive fair value - - - -
- negative fair value - - - -
5) Other \u00a0\u00a0\u00a0\u00a0
- notional amount - - - -
- positive fair value - - - -
- negative fair value - - - -
\"\"
A.4 Residual life of OTC financial derivatives: notional amounts
Underlying assets/Residual lifeUp to 1 yearOver 1 to 5 yearsOver 5 yearsTotal
A.1 Financial derivatives on debt securities and interest rates103.879 198.050 795.000 1.096.929
A.2 Financial derivatives on equity securities and share indexes25.393 - - 25.393
A.3 Financial derivatives on exchange rates and gold- - - -
A.4 Financial derivatives on commodities- - - -
A.5 Other financial derivatives- - - -
Total 31.12.2023129.272 198.050 795.000 1.122.322
Total 31.12.2022275.380135.605408.800819.785
\"\"
B. Credit derivatives
The Banca Ifis Group does not hold credit derivatives.
1.3.2 Hedges
Qualitative information
A. Fair value hedging
The Banca Ifis Group's hedges are designed to reduce the Bank's overall exposure to interest rate risk caused by movements in the interest rate curve. Specifically, the hedging strategy is that of a \"package\" of specific hedges on fixed-rate securities in the Group's Proprietary Portfolio with which a \"HTC\" (Held to Collect) business model is associated. These are government bonds issued by the Italian government (BTPs) that pass the \"SPPI test\" prescribed by IFRS 9, and are therefore classified in the balance sheet item \"Financial assets measured at amortised cost - receivables due from customers\".
In hedge accounting, the Group applies standard IFRS 9 and, at the reference date of these Consolidated Financial Statements, only adopts specific hedges (micro fair value hedges) and not general hedges (macro fair value hedges).
Within the micro fair value hedge, debt securities on the asset side are hedged.
The main types of derivatives used are plain interest rate swaps (IRS), which are not listed on regulated markets but are traded on over-the-counter (OTC) circuits.
B. Cash flow hedging
As at 31 December 2023, the Banca Ifis Group does not engage in cash flow hedges.
C. Foreign investment hedges
As at 31 December 2023, the Banca Ifis Group does not engage in net investment hedging in a foreign entity.
D. Hedging instruments
The main causes of ineffectiveness of the model adopted by the Group for verifying the effectiveness of hedges are attributable to the following phenomena:
\u2022mismatch between the notional amount of the derivative and the underlying hedged item recognised at the time of initial designation or generated thereafter, such as in the case of any partial disposals of the hedged securities;
\u2022application of different curves on the hedging derivative and the hedged item for the purpose of performing the effectiveness test on fair value hedges. Derivatives are discounted to Overnight curves, while hedged items are discounted to the indexation curve of the hedging instrument;
\u2022inclusion in the effectiveness test of the value of the variable leg of the hedging derivative, assuming a fair value hedge.
The ineffectiveness of the hedge is promptly detected for the purposes:
\u2022determining the effect on the income statement;
\u2022assessing whether or not hedge accounting rules can continue to be applied.
The Group does not use dynamic hedges, as defined in IFRS 7, paragraph 23C.
E. Items hedged
The main types of items hedged are, at the reference date of the Financial Statements, debt securities on the asset side. They are hedged in micro fair value hedge relationships, using interest rate swaps (IRS) as hedging instruments.
The interest rate risk is generally hedged for all or most of the term of the bond.
To verify the effectiveness of the hedge, the Group uses a prospective effectiveness test measured through the ratio of the delta fair value of each hedging instrument and the related hedged item based on sensitivity analysis of 100 bps on interest rates. The verification of hedging effectiveness through the prospectus described above is performed prior to the designation of the hedging relationship, as an ex-ante estimate, and is subsequently monitored on an ongoing basis and reported periodically to senior management.
Quantitative information
A. Financial hedging derivatives
A.1 Financial hedging derivatives: year-end notional amounts
Underlying assets/Types of derivatives31.12.202331.12.2022
Over the counterOrganised marketsOver the counterOrganised markets
Central counterpartiesWithout central counterpartiesCentral counterpartiesWithout central counterparties
With offsetting agreementsWithout offsetting agreementsWith offsetting agreementsWithout offsetting agreements
1. Debt securities and interest rates--355.700-----
a) Options--------
b) Swaps--355.700-----
c) Forwards--------
d) Futures--------
g) Other--------
2. Equity securities and share indexes--------
a) Options--------
b) Swaps--------
c) Forwards--------
d) Futures--------
g) Other--------
3. Currencies and gold--------
a) Options--------
b) Swaps--------
c) Forwards--------
d) Futures--------
g) Other--------
4. Commodities--------
5. Others--------
Total--355.700-----
\"\"
A.2 Financial hedging derivatives: gross positive and negative fair value - breakdown by product
Positive and negative fair valueChange in value used to recognise hedge ineffectiveness
Types of derivativesTotal 31.12.2023Total 31.12.2022Total 31.12.2023Total 31.12.2022
Over the counterOrganised marketsOver the counterOrganised markets
Central counterpartsWithout central counterpartiesCentral counterpartsWithout central counterparties
With offsetting agreementsWithout offsetting agreementsWith offsetting agreementsWithout offsetting agreements
1. Positive fair value----------
a) Options----------
b) Interest rate swaps----------
c) Cross currency swaps----------
d) Equity swaps----------
e) Forwards----------
f) Futures----------
g) Other----------
Total----------
2. Negative fair value--11.644-------
a) Options----------
b) Interest rate swaps--11.644-------
c) Cross currency swaps----------
d) Equity swaps----------
e) Forwards----------
f) Futures----------
g) Other----------
Total--11.644-------
\"\"
A.3 OTC financial hedging derivatives: notional amounts, gross positive and negative fair value by counterparty
Underlying assetsCentral counterpartiesBanksOther financial corporationsOther entities
Contracts not included in netting agreements
1) Debt securities and interest rates
- notional amountX355.700--
- positive fair valueX---
- negative fair valueX11.644--
2) Equity securities and share indexes
- notional amountX---
- positive fair valueX---
- negative fair valueX---
3) Currencies and gold
- notional amountX---
- positive fair valueX---
- negative fair valueX---
4) Commodities
- notional amountX---
- positive fair valueX---
- negative fair valueX---
5) Other
- notional amountX---
- positive fair valueX---
- negative fair valueX---
Contracts included in netting agreements
1) Debt securities and interest rates
- notional amount----
- positive fair value----
- negative fair value----
2) Equity securities and share indexes
- notional amount----
- positive fair value----
- negative fair value----
3) Currencies and gold
- notional amount----
- positive fair value----
- negative fair value----
4) Commodities
- notional amount----
- positive fair value----
- negative fair value----
5) Other
- notional amount----
- positive fair value----
- negative fair value----
\"\"
A.4 Residual life of OTC financial hedging derivatives: notional amounts
Underlying assets/Residual lifeUp to 1 yearOver 1 to 5 yearsOver 5 yearsTotal
A.1 Financial derivatives on debt securities and interest rates-94.200261.500355.700
A.2 Financial derivatives on equity securities and share indexes----
A.3 Financial derivatives on exchange rates and gold----
A.4 Financial derivatives on commodities----
A.5 Other financial derivatives----
Total 31.12.2023-94.200261.500355.700
Total 31.12.2022----
\"\"
B. Credit hedging derivatives
The Banca Ifis Group does not hold credit derivatives designated as hedging instruments.
C. Non-derivative hedging instruments
The Banca Ifis Group does not hold any non-derivative instruments designated as hedging instruments.
D. Instruments hedged
D.1 Fair value hedges
Specific hedges: carrying amountSpecific hedges - net positions: carrying amount of assets or liabilities (before netting)Specific hedgesGeneral hedges: Carrying amount
Cumulative changes in the fair value of the hedged instrumentTermination of hedging: residual cumulative changes in fair valueChange in value used to recognise hedge ineffectiveness
A. Assets
1. Financial assets measured at fair value through other comprehensive income - hedges of:------
1.1 Debt securities and interest rates-----X
1.2 Equity securities and share indexes-----X
1.3 Currencies and gold-----X
1.4 Loans and receivables-----X
1.5 Other-----X
2. Financial assets measured at amortised cost - hedge of:378.003-12.613-12.613-
2.1 Debt securities and interest rates378.003-12.613-12.613X
2.2 Equity securities and share indexes-----X
2.3 Currencies and gold-----X
2.4 Loans and receivables-----X
2.5 Other-----X
Total 31.12.2023378.003-12.613-12.613-
Total 31.12.2022------
B. Liabilities
1. Financial liabilities measured at amortised cost - hedge of:------
1.1 Debt securities and interest rates-----X
1.2 Currencies and gold-----X
1.3 Other-----X
Total 31.12.2023------
Total 31.12.2022------
\"\"
D.2 Cash flow hedges and foreign investment hedges
As at 31 December 2023, the Banca Ifis Group does not engage in cash flow hedges or net investment hedges in a foreign entity.
E. Effects of hedging transactions on equity
As at 31 December 2023, the Banca Ifis Group does not enter into any accounting hedges, the effects of which are shown in equity.
1.3.3 Other information on derivative instruments (trading and hedging)
A. Financial and credit derivatives
A.1 OTC financial and credit derivatives: net fair values for counterparties
Central counterpartiesBanksOther financial corporationsOther entities
A. Financial derivatives
1) Debt securities and interest rates
- notional amount- 1.446.876 - 5.752
- net positive fair value- 12.313 - 153
- net negative fair value- 25.649 - -
2) Equity securities and share indexes\u00a0\u00a0\u00a0\u00a0
- notional amount- 25.393 - -
- net positive fair value- 430 - -
- net negative fair value- - - -
3) Currencies and gold\u00a0\u00a0\u00a0\u00a0
- notional amount- - - -
- net positive fair value- - - -
- net negative fair value- - - -
4) Commodities\u00a0\u00a0\u00a0\u00a0
- notional amount- - - -
- net positive fair value- - - -
- net negative fair value- - - -
5) Other\u00a0\u00a0\u00a0\u00a0
- notional amount- - - -
- net positive fair value- - - -
- net negative fair value- - - -
B. Credit derivatives\u00a0\u00a0\u00a0\u00a0
1) Protection purchase\u00a0\u00a0\u00a0\u00a0
- notional amount- - - -
- net positive fair value- - - -
- net negative fair value- - - -
2) Protection sale\u00a0\u00a0\u00a0\u00a0
- notional amount- - - -
- net positive fair value- - - -
- net negative fair value- - - -
\"\"
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2.1 Financial assets held for trading: breakdown by type
Items/Amounts31.12.202331.12.2022
L1L2L3L1L2L3
A. Cash assets
1. Debt securities - - - 677--
1.1 Structured - - - ---
1.2 Other debt securities - - - 677--
2. Equity securities - - - 593--
3. UCITS units - - - ---
4. Loans - - - ---
4.1 Reverse repurchase agreements- - - ---
4.2 Other - - - ---
Total (A) - - - 1.270--
B. Derivatives
1. Financial derivatives - 12.896 - -25.598-
1.1 for trading - 12.896 - -25.598-
1.2 connected to the fair value option - - - ---
1.3 other - - - ---
2. Credit derivatives - - - ---
2.1 for trading - - - ---
2.2 connected to the fair value option - - - ---
2.3 other - - - ---
Total (B) - 12.896 - -25.598-
Total (A+B)- 12.896 - 1.27025.598-
\"\"
Financial assets held for trading come to 12,9 million Euro at 31 December 2023 (down from the figure of 26,9 million Euro at 31 December 2022) and are almost entirely referring to transactions in derivatives (the value of which has fallen compared with the figure of 25,6 million Euro at 31 December 2022) substantially hedged by mirror positions recorded under financial liabilities held for trading. The figure at 31 December 2022 for this item
included 1,3 million Euro of debt and equity securities belonging to the Group's trading portfolio, which were entirely sold in 2023.
2.2 Financial assets held for trading: breakdown by debtor/issuer/counterparty
Items/Amounts 31.12.202331.12.2022
A. Cash assets
1. Debt securities -677
a) Central Banks --
b) Public Administrations--
c) Banks -676
d) Other financial companies -1
of which: insurance companies--
e) Non-financial companies--
2. Equity securities -593
a) Banks -593
b) Other financial companies --
of which: insurance companies--
c) Non-financial companies--
d) Other issuers--
3. UCITS units --
4. Loans --
a) Central Banks--
b) Public Administrations--
c) Banks --
d) Other financial companies --
of which: insurance companies--
e) Non-financial companies--
f) Households--
Total (A) -1.270
B. Derivatives
a) Central Counterparties--
b) Other12.896 25.598
Total (B) 12.896 25.598
Total (A+B)12.896 26.868
\"\"
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2.1 Financial assets held for trading: breakdown by type
Items/Amounts31.12.202331.12.2022
L1L2L3L1L2L3
A. Cash assets
1. Debt securities - - - 677--
1.1 Structured - - - ---
1.2 Other debt securities - - - 677--
2. Equity securities - - - 593--
3. UCITS units - - - ---
4. Loans - - - ---
4.1 Reverse repurchase agreements- - - ---
4.2 Other - - - ---
Total (A) - - - 1.270--
B. Derivatives
1. Financial derivatives - 12.896 - -25.598-
1.1 for trading - 12.896 - -25.598-
1.2 connected to the fair value option - - - ---
1.3 other - - - ---
2. Credit derivatives - - - ---
2.1 for trading - - - ---
2.2 connected to the fair value option - - - ---
2.3 other - - - ---
Total (B) - 12.896 - -25.598-
Total (A+B)- 12.896 - 1.27025.598-
\"\"
Financial assets held for trading come to 12,9 million Euro at 31 December 2023 (down from the figure of 26,9 million Euro at 31 December 2022) and are almost entirely referring to transactions in derivatives (the value of which has fallen compared with the figure of 25,6 million Euro at 31 December 2022) substantially hedged by mirror positions recorded under financial liabilities held for trading. The figure at 31 December 2022 for this item
included 1,3 million Euro of debt and equity securities belonging to the Group's trading portfolio, which were entirely sold in 2023.
2.2 Financial assets held for trading: breakdown by debtor/issuer/counterparty
Items/Amounts 31.12.202331.12.2022
A. Cash assets
1. Debt securities -677
a) Central Banks --
b) Public Administrations--
c) Banks -676
d) Other financial companies -1
of which: insurance companies--
e) Non-financial companies--
2. Equity securities -593
a) Banks -593
b) Other financial companies --
of which: insurance companies--
c) Non-financial companies--
d) Other issuers--
3. UCITS units --
4. Loans --
a) Central Banks--
b) Public Administrations--
c) Banks --
d) Other financial companies --
of which: insurance companies--
e) Non-financial companies--
f) Households--
Total (A) -1.270
B. Derivatives
a) Central Counterparties--
b) Other12.896 25.598
Total (B) 12.896 25.598
Total (A+B)12.896 26.868
\"\"
Section 2 - Financial liabilities held for trading - item 20
2.1 Financial liabilities held for trading: breakdown by type
Type of transaction/Amounts31.12.202331.12.2022
NAFair valueFair value*NAFair valueFair value*
L1L2L3L1L2L3
A. On-balance-sheet liabilities
1. Payables due to banks ----------
2. Payables due to customers ----------
3. Debt securities ----X----X
3.1 Bonds ----X----X
3.1.1 Structured ----X----X
3.1.2 Other bonds ----X----X
3.2 Other securities ----X----X
3.2.1 Structured ----X----X
3.2.2 Other ----X----X
Total A ----------
B. Derivatives
1. Financial derivatives X-14.005-XX-25.982-X
1.1 For trading X-14.005-XX-25.982-X
1.2 Connected to the fair value option X---XX---X
1.3 Other X---XX---X
2. Credit derivatives X---XX---X
2.1 For trading X---XX---X
2.2 Connected to the fair value option X---XX---X
2.3 Other X---XX---X
Total B X-14.005-XX-25.982-X
Total (A+B)X-14.005-XX-25.982-X
\"\"
Key:
NA = Nominal or notional amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Fair value* = Fair value calculated excluding changes in value due to changes in the issuer's creditworthiness compared to the date of issuance
With regard to Level 2 trading liabilities, see the comments in \"Section 2 - Financial assets measured at fair value through profit or loss - Item 20\" of Assets.
2.2 Details of \u201cFinancial liabilities held for trading\u201d: subordinated liabilities
There are no subordinated liabilities recognised in the item of this section.
2.3 Details of \u201cFinancial liabilities held for trading\u201d: structured debts
There are no structured debts recorded in the item of this section.
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4.1 Financial assets measured at amortised cost: breakdown of receivables due from banks by type
Type of transaction/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
Stages 1 and 2Stage 3Purchased or originated impairedL1L2L3Stages 1 and 2Stage 3Purchased or originated impairedL1L2L3
A. Receivables due from Central banks 25.490 - - - - 25.490 6.145----6.145
1. Term deposits- - - XXX---XXX
2. Compulsory reserve 25.490 - - XXX6.145--XXX
3. Reverse repurchase agreements - - - XXX---XXX
4. Others - - - XXX---XXX
B. Receivables due from banks 612.077 - - 588.822 - 36.437 559.617--515.273-32.753
1. Loans35.237 - - 919 - 34.322 33.466----30.043
1.1. Current accounts - - - XXX---XXX
1.2 Term deposits 1.843 - - XXX2.605--XXX
1.3 Other loans: 33.394 - - XXX30.861--XXX
- Reverse repurchase agreements - - - XXX---XXX
- Financing for leasing 100 - - XXX273--XXX
- Other 33.294 - - XXX30.588--XXX
2. Debt securities576.840 - - 587.903 - 2.115 526.151--515.273-2.710
2.1 Structured 9.411 - - 7.296 - 2.115 9.413--7.189-2.180
2.2 Other debt securities 567.429 - - 580.607 - - 516.738--508.084-530
Total 637.567 - - 588.822 - 61.927 565.762--515.273-38.898
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToBanksExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page134-cflshid_68476-tag94235": { "value": "
4.2 Financial assets measured at amortised cost: breakdown of receivables due from customers by type
Type of transaction/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
Stages 1 and 2Stage 3Purcha-sed or originated impairedL1L2L3Stages 1 and 2Stage 3Purcha-sed or originated impairedL1L2L3
1. Loans6.711.989 221.968 1.666.273 175.178 15.435 8.445.556 6.441.261265.3841.551.205--8.355.701
1. Current accounts73.200 6.119 202.957 XXX97.8759.887184.823XXX
2. Reverse repurchase agreements- - 4 XXX--5XXX
3. Loans/mortgages2.225.751 61.613 132.549 XXX2.202.95660.691137.196XXX
4. Credit cards, personal loans and salary-backed loans93.291 2.653 671.095 XXX37.0031.618539.587XXX
5. Financing for leasing1.352.041 10.270 12.961 XXX1.284.26213.7525.886XXX
6. Factoring2.361.896 118.218 465 XXX2.238.368165.3101.697XXX
7. Other loans605.810 23.095 646.242 XXX580.79714.126682.011XXX
2. Debt securities2.021.904 - - 1.753.065 - 196.532 1.929.082--1.605.782-212.122
2.1. Structured16.561 - - 10.808 - 5.511 13.374--10.003-2.375
2.2. Other debt securities2.005.343 - - 1.742.257 - 191.021 1.915.708--1.595.779-209.747
Total8.733.893 221.968 1.666.273 1.928.243 15.435 8.642.088 8.370.343265.3841.551.2051.605.782-8.567.823
\"\"
The item \"Impaired acquired or originated\", equal to a carrying amount of 1.665,3 million Euro at 31 December 2023, includes 1.629,2 million Euro in impaired purchased loans of the Npl Segment (which constitute the core business of this Segment; for further details, please refer to the section \"Contribution of operating Segments to Group results\" of the Directors\u2019 Report on the Group) and for 35,8 million Euro the impaired assets resulting from the business combinations carried out in previous years.
At 31 December 2023, other debt securities include 1.628,7 million Euro in Italian and foreign government securities acquired by Banca Ifis with a view to optimising Group liquidity (1.541,5 million Euro at 31 December 2022). Level 3 securities mainly include investments in securitisations and minibonds.
4.3 Financial assets measured at amortised cost: breakdown of receivables due from customers by debtor/issuer
Type of transaction/Amounts
31.12.2023
31.12.2022
Stages 1 and 2
Stage 3
Purchased or originated impaired
Stages 1 and 2
Stage 3
Purchased or originated impaired
1. Debt securities
2.021.904
-
-
1.929.082
-
-
a) Public Administrations
1.660.629
-
-
1.571.496
-
-
b) Other financial companies
273.183
-
-
265.931
-
-
of which: insurance companies
-
-
-
-
-
-
c) Non-financial companies
88.092
-
-
91.655
-
-
2. Loans to:
6.711.987
221.970
1.666.273
6.441.261
265.384
1.551.205
a) Public Administrations
266.488
76.198
66
288.171
120.305
738
b) Other financial companies
272.159
1.601
1.498
239.508
10.083
1.302
of which: insurance companies
1.024
21
-
1.566
29
-
c) Non-financial companies
5.438.696
119.771
192.978
5.208.079
113.570
182.929
d) Households
734.644
24.400
1.471.731
705.503
21.426
1.366.236
Total
8.733.891
221.970
1.666.273
8.370.343
265.384
1.551.205
\"\"
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page137-cflshid_70106-tag94238": { "value": "
Section 7 - Equity investments - Item 70
7.1 Equity investments: information on investments
Company nameRegistered officeHead officeType of relationshipInvestmentAvailability votes %
Investing companyShare %
A. Joint Ventures
B. Companies under significant influence (1)
1. Justlex Italia S.T.A.P.A.RomeRome4Ifis Npl Investing S.p.A.20%20%
2. Redacta S.T.A. a r.l.RavennaRavenna4Ifis Npl Servicing S.p.A.33%33%
\"\"
(1) This item includes some companies excluded from the scope of consolidation, as they are small in amount.
Type of relationship:
1 - majority of voting rights in the Annual Shareholders' Meeting
2 - dominant influence in the Annual Shareholders' Meeting
3 - agreements with other shareholders
4 - company under significant influence
5 - joint management pursuant to Article 26, paragraph 1, Italian Legislative Decree No. 87/92
6 - joint management pursuant to Article 26, paragraph 2, Italian Legislative Decree No. 87/92
7 - joint control
8 - other type of relationship
For more details on the logic of including or not including in the consolidation area the equity investments held by the Group, please refer to \"Section 3 - Scope and methods of consolidation\" of \"A.1 - General part\" of \"Part A - Accounting policies\".
7.2 Significant shareholdings: carrying amount, fair value and dividends received
In these Consolidated Financial Statements, this item has no value.
7.3 Significant shareholdings: accounting information
In these Consolidated Financial Statements, this item has no value.
7.4 Non-significant shareholdings: accounting information
Company nameCarrying amount of equity investmentsTotal assetsTotalliabilitiesTotal revenuesProfit (loss) from continuing operations, net of taxesProfit (loss) from operations, net of taxesProfit (loss) for the year(1)Other comprehensive income, net of taxes (2)Comprehensive income(3)=(1) + (2)
Joint ventures---------
Companies under significant influence (1)248.8208.16919.030336336336 -336
\"\"
(1) This item includes some companies excluded from the scope of consolidation, as they are small in amount.
7.5 Equity investments: annual changes
31.12.202331.12.2022
A. Opening balance --
B. Increases 24-
B.1 Purchases--
B.2 Reversals of impairment losses--
B.3 Revaluations--
B.4 Other changes24-
C. Decreases--
C.1 Sales--
C.2 Impairment losses/reversals--
C.3 Devaluations--
C.4 Other changes--
D. Closing balance24-
E. Total revaluations--
F. Total adjustments--
\"\"
7.6 Significant assessments and assumptions to establish the existence of joint control or significant influence
Please refer to \"Section 3 - Scope and methods of consolidation\" in \"A.1 - General part\" of \"Part A - Accounting policies\".
7.7 Commitments in respect of interests in companies held jointly
The Banca Ifis Group has no shareholdings in jointly controlled companies, so there are no commitments as set out in this disclosure.
7.8 Commitments in respect of interests in companies subject to significant influence
There are no commitments in respect of the equity investments under this item.
7.9 Significant restrictions
There are no significant restrictions with regard to the participations recorded in these Consolidated Financial Statements.
7.10 Other information
There is no further information to report than that already presented in the preceding paragraphs.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page137-cflshid_70106-tag94237": { "value": "
Section 7 - Equity investments - Item 70
7.1 Equity investments: information on investments
Company nameRegistered officeHead officeType of relationshipInvestmentAvailability votes %
Investing companyShare %
A. Joint Ventures
B. Companies under significant influence (1)
1. Justlex Italia S.T.A.P.A.RomeRome4Ifis Npl Investing S.p.A.20%20%
2. Redacta S.T.A. a r.l.RavennaRavenna4Ifis Npl Servicing S.p.A.33%33%
\"\"
(1) This item includes some companies excluded from the scope of consolidation, as they are small in amount.
Type of relationship:
1 - majority of voting rights in the Annual Shareholders' Meeting
2 - dominant influence in the Annual Shareholders' Meeting
3 - agreements with other shareholders
4 - company under significant influence
5 - joint management pursuant to Article 26, paragraph 1, Italian Legislative Decree No. 87/92
6 - joint management pursuant to Article 26, paragraph 2, Italian Legislative Decree No. 87/92
7 - joint control
8 - other type of relationship
For more details on the logic of including or not including in the consolidation area the equity investments held by the Group, please refer to \"Section 3 - Scope and methods of consolidation\" of \"A.1 - General part\" of \"Part A - Accounting policies\".
7.2 Significant shareholdings: carrying amount, fair value and dividends received
In these Consolidated Financial Statements, this item has no value.
7.3 Significant shareholdings: accounting information
In these Consolidated Financial Statements, this item has no value.
7.4 Non-significant shareholdings: accounting information
Company nameCarrying amount of equity investmentsTotal assetsTotalliabilitiesTotal revenuesProfit (loss) from continuing operations, net of taxesProfit (loss) from operations, net of taxesProfit (loss) for the year(1)Other comprehensive income, net of taxes (2)Comprehensive income(3)=(1) + (2)
Joint ventures---------
Companies under significant influence (1)248.8208.16919.030336336336 -336
\"\"
(1) This item includes some companies excluded from the scope of consolidation, as they are small in amount.
7.5 Equity investments: annual changes
31.12.202331.12.2022
A. Opening balance --
B. Increases 24-
B.1 Purchases--
B.2 Reversals of impairment losses--
B.3 Revaluations--
B.4 Other changes24-
C. Decreases--
C.1 Sales--
C.2 Impairment losses/reversals--
C.3 Devaluations--
C.4 Other changes--
D. Closing balance24-
E. Total revaluations--
F. Total adjustments--
\"\"
7.6 Significant assessments and assumptions to establish the existence of joint control or significant influence
Please refer to \"Section 3 - Scope and methods of consolidation\" in \"A.1 - General part\" of \"Part A - Accounting policies\".
7.7 Commitments in respect of interests in companies held jointly
The Banca Ifis Group has no shareholdings in jointly controlled companies, so there are no commitments as set out in this disclosure.
7.8 Commitments in respect of interests in companies subject to significant influence
There are no commitments in respect of the equity investments under this item.
7.9 Significant restrictions
There are no significant restrictions with regard to the participations recorded in these Consolidated Financial Statements.
7.10 Other information
There is no further information to report than that already presented in the preceding paragraphs.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page137-cflshid_70106-tag94236": { "value": "
Section 7 - Equity investments - Item 70
7.1 Equity investments: information on investments
Company nameRegistered officeHead officeType of relationshipInvestmentAvailability votes %
Investing companyShare %
A. Joint Ventures
B. Companies under significant influence (1)
1. Justlex Italia S.T.A.P.A.RomeRome4Ifis Npl Investing S.p.A.20%20%
2. Redacta S.T.A. a r.l.RavennaRavenna4Ifis Npl Servicing S.p.A.33%33%
\"\"
(1) This item includes some companies excluded from the scope of consolidation, as they are small in amount.
Type of relationship:
1 - majority of voting rights in the Annual Shareholders' Meeting
2 - dominant influence in the Annual Shareholders' Meeting
3 - agreements with other shareholders
4 - company under significant influence
5 - joint management pursuant to Article 26, paragraph 1, Italian Legislative Decree No. 87/92
6 - joint management pursuant to Article 26, paragraph 2, Italian Legislative Decree No. 87/92
7 - joint control
8 - other type of relationship
For more details on the logic of including or not including in the consolidation area the equity investments held by the Group, please refer to \"Section 3 - Scope and methods of consolidation\" of \"A.1 - General part\" of \"Part A - Accounting policies\".
7.2 Significant shareholdings: carrying amount, fair value and dividends received
In these Consolidated Financial Statements, this item has no value.
7.3 Significant shareholdings: accounting information
In these Consolidated Financial Statements, this item has no value.
7.4 Non-significant shareholdings: accounting information
Company nameCarrying amount of equity investmentsTotal assetsTotalliabilitiesTotal revenuesProfit (loss) from continuing operations, net of taxesProfit (loss) from operations, net of taxesProfit (loss) for the year(1)Other comprehensive income, net of taxes (2)Comprehensive income(3)=(1) + (2)
Joint ventures---------
Companies under significant influence (1)248.8208.16919.030336336336 -336
\"\"
(1) This item includes some companies excluded from the scope of consolidation, as they are small in amount.
7.5 Equity investments: annual changes
31.12.202331.12.2022
A. Opening balance --
B. Increases 24-
B.1 Purchases--
B.2 Reversals of impairment losses--
B.3 Revaluations--
B.4 Other changes24-
C. Decreases--
C.1 Sales--
C.2 Impairment losses/reversals--
C.3 Devaluations--
C.4 Other changes--
D. Closing balance24-
E. Total revaluations--
F. Total adjustments--
\"\"
7.6 Significant assessments and assumptions to establish the existence of joint control or significant influence
Please refer to \"Section 3 - Scope and methods of consolidation\" in \"A.1 - General part\" of \"Part A - Accounting policies\".
7.7 Commitments in respect of interests in companies held jointly
The Banca Ifis Group has no shareholdings in jointly controlled companies, so there are no commitments as set out in this disclosure.
7.8 Commitments in respect of interests in companies subject to significant influence
There are no commitments in respect of the equity investments under this item.
7.9 Significant restrictions
There are no significant restrictions with regard to the participations recorded in these Consolidated Financial Statements.
7.10 Other information
There is no further information to report than that already presented in the preceding paragraphs.
Section 14 - Equity attributable to non-controlling interests - Item 190
14.1 Breakdown of Item 210 \u201cEquity attributable to non-controlling interests\u201d
Company name31.12.202331.12.2022
Equity investments in consolidated companies with significant minority interests14.23812.432
1. Banca Credifarma S.p.A.14.23812.432
Other equity investments2-
Total 14.24012.432
\"\"
14.2 Equity instruments: breakdown and annual changes
There are no equity instruments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page140-cflshid_70865-tag94241": { "value": "
Section 9 - Property, plant and equipment - Item 90
9.1 Property, plant and equipment for functional use: breakdown of assets measured at cost
Assets/Amounts 31.12.202331.12.2022
1. Owned 119.555 103.784
a) Land 20.297 20.297
b) Buildings 62.580 64.847
c) Furniture 3.609 3.006
d) Electronic equipment 5.586 4.069
e) Other 27.483 11.565
2. Rights of use acquired through leases 23.293 22.133
a) Land - -
b) Buildings 19.526 19.389
c) Furniture - -
d) Electronic equipment 67 98
e) Other 3.700 2.646
Total 142.848 125.917
of which: obtained by enforcing collateral- -
\"\"
Property, plant and equipment for functional use come to 142,8 million Euro, as compared with the 125,9 million Euro booked at 31 December 2022, up 13,4%.
At the end of December 2023, the properties recognised under property, plant and equipment include the important historical building \"Villa Marocco\", located in Mestre \u2013 Venice and housing Banca Ifis's registered office. For Villa Marocco, as a valuable property, the residual value is considered higher than the book value and consequently has not been subject to depreciation but to at least annual impairment testing. To this end, they are appraised by experts specialising in luxury properties. During the year, no elements emerged that required a write-down of the carrying amount.
9.2 Property, plant and equipment held for investment purpose: breakdown of assets measured at cost
Assets/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
L1L2L3L1L2L3
1. Owned 407 - - 407 424--424
a) Land - - - - ----
b) Buildings 407 - - 407 424--424
2. Rights of use acquired through leases- - - - ----
a) Land - - - - ----
b) Buildings - - - - ----
Total 407 - - 407 424--424
of which: obtained by enforcing collateral- - - - ----
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
9.3 Property, plant and equipment for functional use: breakdown of assets written back
In these Consolidated Financial Statements, there are no property, plant and equipment for functional use that are subject to revaluation.
9.4 Property, plant and equipment held for investment purpose: breakdown of assets measured at fair value
In these Consolidated Financial Statements, there are no property, plant and equipment held for investment purposes measured at fair value.
9.5 Inventories of tangible assets covered by IAS 2: composition
In these Consolidated Financial Statements, there are no inventories of tangible assets within the meaning of IAS 2.
9.6 Property, plant and equipment for functional use: annual changes
\u00a0LandBuildingsFurnishingsElectronic equipmentOtherTotal31.12.2023
A. Gross opening balance 20.297149.8585.93013.19225.506214.783
A.1 Total net amortisation and impairment losses -(65.622)(2.924)(9.025)(11.295)(88.866)
A.2 Net opening balance 20.29784.2363.0064.16714.211125.917
B. Increases - 4.697 1.287 3.507 20.008 29.499
B.1 Purchases - 4.636 1.287 3.507 12.033 21.463
- business combinations----3939
B.2 Capitalised improvement expenses - - - - 7.958 7.958
B.3 Reversals of impairment losses - - - - - -
B.4 Fair value gains taken to: - - - - - -
a) equity - - - - - -
b) profit or loss - - - - - -
B.5 Exchange gains - - - - - -
B.6 Transfers from investment property - - XXX-
B.7 Other changes - 61 - - 17 78
C. Decreases - (6.827) (684) (2.021) (3.036) (12.568)
C.1 Sales - (848) (7) (11) (19) (885)
C.2 Depreciation - (4.307) (677) (2.003) (2.607) (9.594)
C.3 Impairment losses taken to:- - - - (110) (110)
a) equity - - - - - -
b) profit or loss - - - - (110) (110)
C.4 Fair value losses taken to: - - - - - -
a) equity - - - - - -
b) profit or loss - - - - - -
C.5 Exchange losses - - - - - -
C.6 Transfers to: - - - - - -
a) Investment property - - XXX-
b) Non-current assets and disposal groups- - - - - -
C.7 Other changes - (1.672) - (7) (300) (1.979)
D. Net closing balance 20.297 82.106 3.609 5.653 31.183 142.848
D.1 Total net amortisation and impairment losses - (69.929) (3.601) (11.028) (14.012) (98.570)
D.2 Gross closing balance 20.297 152.035 7.210 16.681 45.195 241.418
E. Measurement at cost - - - - - -
\"\"
Property, plant and equipment for functional use are measured at cost and are depreciated on a straight-line basis over their useful life, with the exclusion of land with an indefinite useful life and the \"Villa Marocco\" property, whose residual value at the end of its useful life is expected to be higher than its book value. As previously mentioned in section 9.1 of this document, the prestigious property \"Villa Marocco\" is subject to an annual impairment test.
Property, plant and equipment not yet brought into use at the reporting date are not depreciated.
9.7 Property, plant and equipment held for investment purpose: annual changes
\u00a031.12.2023
LandBuildings
A. Opening balance - 424
B. Increases - -
B.1 Purchases - -
B.2 Capitalised improvement expenses - -
B.3 Fair value gains - -
B.4 Reversals of impairment losses - -
B.5 Exchange gains - -
B.6 Transfers from property for functional use - -
B.7 Other changes - -
C. Decreases - 17
C.1 Sales - -
C.2 Depreciation - -
C.3 Fair value losses - -
C.4 Impairment losses - 17
C.5 Exchange losses - -
C.6 Transfers to: - -
a) property for functional use - -
b) Non-current assets and disposal groups - -
C.7 Other changes - -
D. Closing balance - 407
E. Measurement at fair value - 407
\"\"
9.8 Inventories of tangible assets covered by IAS 2: annual changes
In these Consolidated Financial Statements, there are no inventories of tangible assets within the meaning of IAS 2.
9.9 Commitments to purchase property, plant and equipment
There were no commitments to purchase property, plant and equipment.
1.1 Financial liabilities at amortised cost: breakdown of payables due to banks by type
Type of transaction/Amounts 31.12.202331.12.2022
CAFair ValueCAFair Value
L1L2L3L1L2L3
1. Payables due to Central banks 1.577.875 XXX2.423.647XXX
2. Payables due to banks 1.139.264 XXX998.513XXX
2.1 Current accounts and on demand deposits 19 XXX4.208XXX
2.2 Term deposits 117.309 XXX149.054XXX
2.3 Loans 1.012.077 XXX845.251XXX
2.3.1 Repurchase agreements 715.313 XXX731.791XXX
2.3.2 Other 296.764 XXX113.460XXX
2.4 Debt from buyback commitments on treasury equity instruments - XXX-XXX
2.5 Lease payables - XXX-XXX
2.6 Other payables 9.859 XXX-XXX
Total2.717.139 - - 2.717.139 3.422.160--3.422.160
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to banks come to 2,7 billion Euro, down 20,6% compared to the figure for end December 2022, mainly due to the onset maturity of short-term payables due to central banks (LTRO) and the early repayment of 500 million Euro for TLTRO, made in December 2023. At 31 December 2023, the balance of payables due to banks is mainly represented by residual TLTRO transactions in the amount of 1,6 billion Euro and repo transactions in the amount of 0,7 billion Euro. As a result of Decision ECB/2022\"37 of 27 October 2022 for FY 2023, the fees were determined on the basis of the rate provided for as of the aforementioned decision.
The fair value of payables due to banks is in line with the relevant carrying amount, considering the counterparty and the fact that interbank deposits are short- or very short-term.
1.2 Financial liabilities measured at amortised cost: breakdown of payables due to customers by type
31.12.2023
31.12.2022
Fair Value
Fair Value
Type of transaction/Amounts
CA
L1
L2
L3
CA
L1
L2
L3
1. Current accounts and on demand deposits
1.147.597
X
X
X
1.410.871
X
X
X
2. Term deposits
4.139.143
X
X
X
3.547.969
X
X
X
3. Loans
493.791
X
X
X
50.003
X
X
X
3.1 Repurchase agreements
346.317
X
X
X
50.003
X
X
X
3.2 Other
147.474
X
X
X
-
X
X
X
4. Debt from buyback commitments on treasury equity instruments
-
X
X
X
-
X
X
X
5. Lease payables
22.702
X
X
X
21.733
X
X
X
6. Other payables
11.391
X
X
X
72.767
X
X
X
Total
5.814.624
-
-
6.156.150
5.103.343
-
-
5.450.030
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to customers at 31 December 2023 total 5,8 billion Euro, up 13,9% compared to 31 December 2022. The growth is driven by both retail funding, which amounts to 4,5 billion Euro at the end of December 2023 (+7,6%), and the repurchase agreement (repo) component, which increases by 296,3 million Euro compared to 31 December 2022.
1.6 Lease payables
The lease payable relates for 20,1 million Euro to lease contracts of properties and cars coming under the scope of application of accounting standard IFRS 16, which came into force at 1 January 2019 and as more extensively described in \u201cPart M - Leasing disclosure\u201d of these Consolidated Financial Statements.
It also includes 2,6 million Euro for the real estate lease the former company Toscana Finanza S.p.A. entered into in 2009 for the property located in Florence, which housed the headquarters of the Npl Segment until August 2016. The term of the lease entered into with Centro Leasing S.p.A. is 18 years (from March 2009 to March 2027) and provides for the payment of 216 monthly instalments of about 28 thousand Euro, including the principal, interest and an option to buy the asset at the end of the lease for 1,9 million Euro. At the date of this document, the property is used as an additional operational headquarters of Banca Ifis.
The interest rate on lease payables reflects the average Group cost of funding, taking into account the creditworthiness of the lessee and the economic context in which the transaction occurs, accordingly with the IFRS 16.
Part M - Leasing disclosure
Section 1 - Lessee
Qualitative information
As lessee, the Group companies stipulate lease contracts on properties mainly to be used instrumentally. They are therefore leases of properties intended to host internal offices. As the lease business is correlated to the Group\u2019s need to offshore its offices, particularly close attention is paid to identifying the most suitable properties for use, designated in line with the economic criteria established by the company.
At 31 December 2023, there are 66 passive lease contracts for buildings and 9 for car parking spaces, the related right of use (ROU) booked at 31 December 2023 is 16,4 million Euro, whilst the corresponding lease liabilities come to 16,7 million Euro. The Group also has a property in Florence, financially leased as described in \"Part B - Information on the Consolidated Statement of Financial Position\" of these Consolidated Financial Statements and Report.
As regards the contracts for cars, the Group has passive contracts for 293 cars at 31 December 2023, which are mainly long-term hires of structure cars and fringe benefits for employees. The related rights of use at 31 December 2023 are 3,4 million Euro, while the corresponding liabilities for leasing come to 3,5 million Euro.
The Group is not exposed to outgoing cash flows, which are not already reflected in the measurement of the leasing liabilities. In greater detail, exposure deriving from the extension options are included in lease liabilities booked, insofar as the Group considers the first renewal as certain; the other situations recalled by the standard (variable payments connected with leasing, guarantees of residual value, lease commitments that are not yet operative) are not present for the contracts stipulated as lessee.
The Group books the following costs:
\u2022short-term leases in the event of assets such as properties and technologies (in particular, the mainframe hardware), when the related contracts have a maximum term of twelve months and have no option for extension;
\u2022leases of low-unit-value assets (in accordance with the option granted by paragraph 5 of IFRS 16), identified as those with a replacement value of less than 5.000 Euro, mainly related to mobile telephony.
Quantitative information
The table below provides indication on the amortisation/depreciation cost for assets consisting of the right of use, broken down by classes of underlying asset.
AMORTISATION/DEPRECIATION COSTS FOR ASSETSCOMPRISING THE RIGHT OF USE(in thousands of Euro)31.12.202331.12.2022
a) Land - -
b) Buildings 2.497 2.547
c) Furniture - -
d) Electronic equipment 157 226
e) Other 1.384 1.065
Total 4.039 3.838
\"\"
Section 2 - Lessor
Qualitative information
The Group offers fixed or variable-rate financial leasing solutions for vehicles (cars, commercial and industrial vehicles) and instrumental assets (industrial machinery, medical equipment, technological assets) to both private customers and small and medium enterprises (SMEs) through an internal commercial structure and a network of selected agents in financial assets throughout the whole of national territory. The leasing of instrumental assets is also distributed through relations with manufacturers, distributors and retailers. With reference to the specific financial leasing segments:
\u2022Automotive: in 2023, this segment recorded an increase compared to 2022 both in terms of the number of vehicles (+22%) and value financed (+28,8%). Compared to 2022, the industrial vehicle leasing segment recorded +8% over the previous year (for 2,7 billion Euro), passenger car leasing +35,3% (for 4,5 billion Euro) and finally commercial vehicle leasing +24,8% (for 1,4 billion Euro). In this segment, the Group has signed contracts for approximately 365 million Euro, namely +6% compared with the amount disbursed in 2022;
\u2022instrumental segment: down by 17,7%, compared to 2022 for a total of 8,9 billion Euro. The Group recorded a decrease of 8,3% in this segment, or -280 million Euro, compared to the market trend.
As lessor, the Parent company does not stipulate lease contracts for properties for commercial use or accommodation with third parties and/or other group companies.
In referring to the greater detail given in the section \u201cContribution of operating Segments to Group results\u201d of the Directors\u2019 Report on the Group, it is there pointed out that the lease agreements stipulated with customers enable the management of risk on the underlying assets in line with the Group\u2019s policy, as there is no provision for buy-back agreements, guarantees on residual value or variable payments. The Group therefore books the financial lease in accordance with accounting standard IFRS 16 and classifies the transactions amongst financial assets measured at amortised cost.
Quantitative information
1. Information from the statement of financial position and income statement
For information on loans connected with financial lease transactions, reference is made to the contents of \"Section 4 - Financial assets measured at amortised cost\u201d of the Assets of \u201cPart B - Information on the Consolidated Statement of Financial Position\u201d of the Consolidated Financial Statements and Report. As regards interest income on lease loans, reference is made to the contents of \u201cSection 1 - Interest - Items 10 and 20\u201d of \u201cPart C - Information on the Consolidated Income Statement\" of the Consolidated Financial Statements and Report; for commissions, refer to \u201cSection 2 - Commissions - Items 40 and 50\u201d of Part C and, finally, for other operating income, refer to \u201cSection 16 - Other operating income (costs) - Item 230\u201d against of Part C.
2. Finance leases
2.1. Classification by time frames of payments to be received and reconciliation with the leasing loans entered under assets
Time frames31.12.202331.12.2022
Payments to be received for leasingPayments to be received for leasing
Up to 1 year91.696 432.346
Over 1 to 2 years200.027 364.853
Over 2 to 3 years316.150 294.891
Over 3 to 4 years438.561 207.951
Over 4 to 5 years438.810 126.765
Over 5 years83.080 16.908
Total payments to be received for leasing1.568.324 1.443.714
RECONCILIATION WITH LOANS
Financial gains not accrued (-)(173.038) (112.873)
Residual value not guaranteed (-)--
Financing for leasing1.395.286 1.330.841
\"\"
The table shows the classification by time frame of payments receivable for leasing and the reconciliation of such payments and lease loans as lessor. The table does not show impairment losses totalling 32,9 million Euro at 31 December 2023 (32,6 million Euro in 2022).
2.2 Other information
There is no further information to report than that presented in the preceding paragraphs.
3. Operating leases
The case referred to in this disclosure is not applicable to the Banca Ifis Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page140-cflshid_70865-tag94240": { "value": "
Section 9 - Property, plant and equipment - Item 90
9.1 Property, plant and equipment for functional use: breakdown of assets measured at cost
Assets/Amounts 31.12.202331.12.2022
1. Owned 119.555 103.784
a) Land 20.297 20.297
b) Buildings 62.580 64.847
c) Furniture 3.609 3.006
d) Electronic equipment 5.586 4.069
e) Other 27.483 11.565
2. Rights of use acquired through leases 23.293 22.133
a) Land - -
b) Buildings 19.526 19.389
c) Furniture - -
d) Electronic equipment 67 98
e) Other 3.700 2.646
Total 142.848 125.917
of which: obtained by enforcing collateral- -
\"\"
Property, plant and equipment for functional use come to 142,8 million Euro, as compared with the 125,9 million Euro booked at 31 December 2022, up 13,4%.
At the end of December 2023, the properties recognised under property, plant and equipment include the important historical building \"Villa Marocco\", located in Mestre \u2013 Venice and housing Banca Ifis's registered office. For Villa Marocco, as a valuable property, the residual value is considered higher than the book value and consequently has not been subject to depreciation but to at least annual impairment testing. To this end, they are appraised by experts specialising in luxury properties. During the year, no elements emerged that required a write-down of the carrying amount.
9.2 Property, plant and equipment held for investment purpose: breakdown of assets measured at cost
Assets/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
L1L2L3L1L2L3
1. Owned 407 - - 407 424--424
a) Land - - - - ----
b) Buildings 407 - - 407 424--424
2. Rights of use acquired through leases- - - - ----
a) Land - - - - ----
b) Buildings - - - - ----
Total 407 - - 407 424--424
of which: obtained by enforcing collateral- - - - ----
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
9.6 Property, plant and equipment for functional use: annual changes
\u00a0LandBuildingsFurnishingsElectronic equipmentOtherTotal31.12.2023
A. Gross opening balance 20.297149.8585.93013.19225.506214.783
A.1 Total net amortisation and impairment losses -(65.622)(2.924)(9.025)(11.295)(88.866)
A.2 Net opening balance 20.29784.2363.0064.16714.211125.917
B. Increases - 4.697 1.287 3.507 20.008 29.499
B.1 Purchases - 4.636 1.287 3.507 12.033 21.463
- business combinations----3939
B.2 Capitalised improvement expenses - - - - 7.958 7.958
B.3 Reversals of impairment losses - - - - - -
B.4 Fair value gains taken to: - - - - - -
a) equity - - - - - -
b) profit or loss - - - - - -
B.5 Exchange gains - - - - - -
B.6 Transfers from investment property - - XXX-
B.7 Other changes - 61 - - 17 78
C. Decreases - (6.827) (684) (2.021) (3.036) (12.568)
C.1 Sales - (848) (7) (11) (19) (885)
C.2 Depreciation - (4.307) (677) (2.003) (2.607) (9.594)
C.3 Impairment losses taken to:- - - - (110) (110)
a) equity - - - - - -
b) profit or loss - - - - (110) (110)
C.4 Fair value losses taken to: - - - - - -
a) equity - - - - - -
b) profit or loss - - - - - -
C.5 Exchange losses - - - - - -
C.6 Transfers to: - - - - - -
a) Investment property - - XXX-
b) Non-current assets and disposal groups- - - - - -
C.7 Other changes - (1.672) - (7) (300) (1.979)
D. Net closing balance 20.297 82.106 3.609 5.653 31.183 142.848
D.1 Total net amortisation and impairment losses - (69.929) (3.601) (11.028) (14.012) (98.570)
D.2 Gross closing balance 20.297 152.035 7.210 16.681 45.195 241.418
E. Measurement at cost - - - - - -
\"\"
Property, plant and equipment for functional use are measured at cost and are depreciated on a straight-line basis over their useful life, with the exclusion of land with an indefinite useful life and the \"Villa Marocco\" property, whose residual value at the end of its useful life is expected to be higher than its book value. As previously mentioned in section 9.1 of this document, the prestigious property \"Villa Marocco\" is subject to an annual impairment test.
Property, plant and equipment not yet brought into use at the reporting date are not depreciated.
9.7 Property, plant and equipment held for investment purpose: annual changes
\u00a031.12.2023
LandBuildings
A. Opening balance - 424
B. Increases - -
B.1 Purchases - -
B.2 Capitalised improvement expenses - -
B.3 Fair value gains - -
B.4 Reversals of impairment losses - -
B.5 Exchange gains - -
B.6 Transfers from property for functional use - -
B.7 Other changes - -
C. Decreases - 17
C.1 Sales - -
C.2 Depreciation - -
C.3 Fair value losses - -
C.4 Impairment losses - 17
C.5 Exchange losses - -
C.6 Transfers to: - -
a) property for functional use - -
b) Non-current assets and disposal groups - -
C.7 Other changes - -
D. Closing balance - 407
E. Measurement at fair value - 407
\"\"
9.8 Inventories of tangible assets covered by IAS 2: annual changes
In these Consolidated Financial Statements, there are no inventories of tangible assets within the meaning of IAS 2.
9.9 Commitments to purchase property, plant and equipment
There were no commitments to purchase property, plant and equipment.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page140-cflshid_70865-tag94239": { "value": "
Section 9 - Property, plant and equipment - Item 90
9.1 Property, plant and equipment for functional use: breakdown of assets measured at cost
Assets/Amounts 31.12.202331.12.2022
1. Owned 119.555 103.784
a) Land 20.297 20.297
b) Buildings 62.580 64.847
c) Furniture 3.609 3.006
d) Electronic equipment 5.586 4.069
e) Other 27.483 11.565
2. Rights of use acquired through leases 23.293 22.133
a) Land - -
b) Buildings 19.526 19.389
c) Furniture - -
d) Electronic equipment 67 98
e) Other 3.700 2.646
Total 142.848 125.917
of which: obtained by enforcing collateral- -
\"\"
Property, plant and equipment for functional use come to 142,8 million Euro, as compared with the 125,9 million Euro booked at 31 December 2022, up 13,4%.
At the end of December 2023, the properties recognised under property, plant and equipment include the important historical building \"Villa Marocco\", located in Mestre \u2013 Venice and housing Banca Ifis's registered office. For Villa Marocco, as a valuable property, the residual value is considered higher than the book value and consequently has not been subject to depreciation but to at least annual impairment testing. To this end, they are appraised by experts specialising in luxury properties. During the year, no elements emerged that required a write-down of the carrying amount.
9.2 Property, plant and equipment held for investment purpose: breakdown of assets measured at cost
Assets/Amounts31.12.202331.12.2022
Carrying amountFair valueCarrying amountFair value
L1L2L3L1L2L3
1. Owned 407 - - 407 424--424
a) Land - - - - ----
b) Buildings 407 - - 407 424--424
2. Rights of use acquired through leases- - - - ----
a) Land - - - - ----
b) Buildings - - - - ----
Total 407 - - 407 424--424
of which: obtained by enforcing collateral- - - - ----
\"\"
Key:
L1 = Level 1
L2 = Level 2
L3 = Level 3
9.3 Property, plant and equipment for functional use: breakdown of assets written back
In these Consolidated Financial Statements, there are no property, plant and equipment for functional use that are subject to revaluation.
9.4 Property, plant and equipment held for investment purpose: breakdown of assets measured at fair value
In these Consolidated Financial Statements, there are no property, plant and equipment held for investment purposes measured at fair value.
9.5 Inventories of tangible assets covered by IAS 2: composition
In these Consolidated Financial Statements, there are no inventories of tangible assets within the meaning of IAS 2.
9.6 Property, plant and equipment for functional use: annual changes
\u00a0LandBuildingsFurnishingsElectronic equipmentOtherTotal31.12.2023
A. Gross opening balance 20.297149.8585.93013.19225.506214.783
A.1 Total net amortisation and impairment losses -(65.622)(2.924)(9.025)(11.295)(88.866)
A.2 Net opening balance 20.29784.2363.0064.16714.211125.917
B. Increases - 4.697 1.287 3.507 20.008 29.499
B.1 Purchases - 4.636 1.287 3.507 12.033 21.463
- business combinations----3939
B.2 Capitalised improvement expenses - - - - 7.958 7.958
B.3 Reversals of impairment losses - - - - - -
B.4 Fair value gains taken to: - - - - - -
a) equity - - - - - -
b) profit or loss - - - - - -
B.5 Exchange gains - - - - - -
B.6 Transfers from investment property - - XXX-
B.7 Other changes - 61 - - 17 78
C. Decreases - (6.827) (684) (2.021) (3.036) (12.568)
C.1 Sales - (848) (7) (11) (19) (885)
C.2 Depreciation - (4.307) (677) (2.003) (2.607) (9.594)
C.3 Impairment losses taken to:- - - - (110) (110)
a) equity - - - - - -
b) profit or loss - - - - (110) (110)
C.4 Fair value losses taken to: - - - - - -
a) equity - - - - - -
b) profit or loss - - - - - -
C.5 Exchange losses - - - - - -
C.6 Transfers to: - - - - - -
a) Investment property - - XXX-
b) Non-current assets and disposal groups- - - - - -
C.7 Other changes - (1.672) - (7) (300) (1.979)
D. Net closing balance 20.297 82.106 3.609 5.653 31.183 142.848
D.1 Total net amortisation and impairment losses - (69.929) (3.601) (11.028) (14.012) (98.570)
D.2 Gross closing balance 20.297 152.035 7.210 16.681 45.195 241.418
E. Measurement at cost - - - - - -
\"\"
Property, plant and equipment for functional use are measured at cost and are depreciated on a straight-line basis over their useful life, with the exclusion of land with an indefinite useful life and the \"Villa Marocco\" property, whose residual value at the end of its useful life is expected to be higher than its book value. As previously mentioned in section 9.1 of this document, the prestigious property \"Villa Marocco\" is subject to an annual impairment test.
Property, plant and equipment not yet brought into use at the reporting date are not depreciated.
9.7 Property, plant and equipment held for investment purpose: annual changes
\u00a031.12.2023
LandBuildings
A. Opening balance - 424
B. Increases - -
B.1 Purchases - -
B.2 Capitalised improvement expenses - -
B.3 Fair value gains - -
B.4 Reversals of impairment losses - -
B.5 Exchange gains - -
B.6 Transfers from property for functional use - -
B.7 Other changes - -
C. Decreases - 17
C.1 Sales - -
C.2 Depreciation - -
C.3 Fair value losses - -
C.4 Impairment losses - 17
C.5 Exchange losses - -
C.6 Transfers to: - -
a) property for functional use - -
b) Non-current assets and disposal groups - -
C.7 Other changes - -
D. Closing balance - 407
E. Measurement at fair value - 407
\"\"
9.8 Inventories of tangible assets covered by IAS 2: annual changes
In these Consolidated Financial Statements, there are no inventories of tangible assets within the meaning of IAS 2.
9.9 Commitments to purchase property, plant and equipment
There were no commitments to purchase property, plant and equipment.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page144-cflshid_73106-tag94243": { "value": "
Section 10 - Intangible assets - Item 100
10.1 Intangible assets: breakdown by asset type
Assets/Amounts 31.12.202331.12.2022
Finite lifeIndefinite lifeFinite lifeIndefinite life
A.1 Goodwill X38.020 X38.020
A.1.1 attributable to the Group X38.020 X38.020
A.1.2 attributable to non-controlling interests X- X-
A.2 Other intangible assets 38.647 - 26.244-
of which: software37.321 - 25.720-
A.2.1 Assets measured at cost: 38.647 - 26.244-
a) Internally generated intangible assets1.326 - 524-
b) Other assets 37.321 - 25.720-
A.2.2 Assets measured at fair value: - - --
a) Internally generated intangible assets - - --
b) Other assets - - --
Total 38.647 38.020 26.24438.020
\"\"
Goodwill, amounting to 38,0 million Euro at 31 December 2023, relates to the business combination of the former Fbs Group, acquired during 2019. More details on this can be found in section \"10.3 Other information\" below.
Other intangible assets at 31 December 2023 refer mainly to software purchase and development, amortised on a straight-line basis over the estimated useful life, which is five years from deployment. The balance at the end of 2023 amounts to 38,6 million Euro, up from the balance of 26,2 million Euro at 31 December 2022 as a result of the investments made during the year.
10.2 Intangible assets: annual changes
\u00a0GoodwillOther intangible assets: internally generatedOther intangible assets: otherTotal
FINITEINDEFFINITEINDEF
A. Opening balance39.482577-84.532-124.591
A.1 Total net amortisation and impairment losses (1.462)(53)-(58.812)-(60.327)
A.2 Net opening balance 38.020524-25.720-64.264
B. Increases - 901 - 19.487 - 20.388
B.1 Purchases - - - 19.487 - 19.487
B.2 Increases in internally generated intangible assets X901 - - - 901
B.3 Reversals of impairment losses X- - - - -
B.4 Fair value gains - - - - - -
- to equity X- - - - -
- to profit or loss X- - - - -
B.5 Exchange gains - - - - - -
B.6 Other changes - - - - - -
C. Decreases - (100) - (7.885) - (7.985)
C.1 Sales - - - - - -
C.2 Impairment losses/reversals - (100) - (7.885) - (7.985)
- Amortisation X(100) - (7.885) - (7.985)
- Impairment losses: - - - - - -
+ equity X- - - - -
+ profit or loss - - - - - -
C.3 Fair value losses: - - - - - -
- to equity X- - - - -
- to profit or loss X- - - - -
C.4 Transfer to non-current assets under disposal - - - - - -
C.5 Exchange losses - - - - - -
C.6 Other changes - - - - - -
D. Net closing balance 38.020 1.325 - 37.322 - 76.667
D.1 Total net amortisation, impairment losses and reversals of impairment losses (1.462) (153) - (66.697) - (68.312)
E. Gross closing balance 39.482 1.478 - 104.019 - 144.979
F. Measurement at cost - - - - - -
\"\"
Key:
FIN: finite useful life
INDEF: indefinite useful life
The increases in the year in terms of purchases and increases in internal intangible assets refer, respectively, to investments for the upgrading of computer systems and the related costs associated with internal activities for their development.
10.3 Other information
Information on goodwill
The application of accounting standard IFRS 3 in booking acquisitions may entail the entry of new intangible assets and the recording of goodwill.
In the case of the Banca Ifis Group, the specified acquisition of the former Fbs Group in 2019 entailed the recognition of goodwill in the amount of 38,0 million Euro, allocated to the Npl Segment at the Cash Generating Unit (CGU) level, which represents the business combination at whose level any impairment tests on goodwill must be performed to verify its recoverable amount. In line with the Group Policy, the CGUs have been identified with the operating Segments as defined in this information accompanying the Consolidated Financial Statements. The Npl Segment CGU associated with the goodwill of the former Fbs Group is the same as that adopted for the purpose of impairment testing the Group's goodwill at 31 December 2022.
In accordance with IAS 36, goodwill must be impairment tested at least annually, to check that the value can be recovered. The recoverable value is the greater of Value in Use (VIU) and fair value, net of the costs of sale.
Finally, please note that IAS 36, in order to determine the Value in Use of the intangibles subject to impairment testing, rules that reference must be made to the cash flows relative to the intangible in its current condition (at the date of impairment testing), without drawing any distinction between the cash flows referring to the asset originally noted during application of IFRS 3 and those relative to the assets in place at the time of impairment testing; this insofar as it would be difficult, particularly in the case of extraordinary transactions between businesses or changes to the asset following significant turnover of assets, customers, contracts, etc., to distinguish between the flows referring to the original asset and others.
Also, please note that the methods and assumptions underlying the goodwill impairment testing procedure and the related results defined by the management, were approved by the Board of Directors on 8 February 2024, before approval of the draft 2023 Financial Statements and the 2023 Consolidated Financial Statements.
The impairment test
The definition of Cash Generating Units (CGUs)
The estimate of the Value in Use, in order to perform impairment testing, in accordance with IAS 36 of intangible assets with undefined life (including goodwill), which do not generate cash flow except jointly with other corporate assets, requires the preliminary attribution of such intangible assets to organisational units of relatively autonomous management, able to generate flows of financial resources that are largely independent of those produced by other business areas, but inter-dependent within the organisational unit that generates them. These organisational units are called \u201cCash Generating Units\u201d (or \u201cCGUs\u201d).
The text of IAS 36 reveals the need to correlate the level at which goodwill is tested with the level of internal reporting at which the management controls the growth and reductions of said value. In these terms, the definition of said level is closely linked to the organisational models and the attribution of the management responsibilities in order to define operative guidelines and consequent monitoring. The organisational models can be regardless (and indeed in the case of the Banca Ifis Group are regardless) of the structure of the legal entities through which operations take place and, very often, are closely linked to the definition of the operating Segments that underlie the Segment reporting envisaged by IFRS 8. These considerations with reference to the criteria employed to determine the CGUs for impairment testing the goodwill are, moreover, consistent with the definition of the recoverable value of an asset - the determination of which underlies the impairment testing - according to which the amount is relevant that the company expects to recover from said asset, considering synergies with other assets.
Therefore, consistently with the logics of price formation that gave rise to the booking of goodwill, the recoverable value for the purpose of the impairment testing of the CGU to which goodwill is allocated, must include the valuation of not only external (or universal) synergies, but also internal synergies, which the specific buyer can obtain from the integration of the assets acquired in its economic combinations, evidently according to the defined business management models.
In view of the foregoing and in line with the Group Policy, the CGUs have been identified with the operating Segments as defined in the information accompanying the Consolidated Financial Statements.
It should be noted that during the year, the CGU Segment Npl, then only CGU with a goodwill allocated, was revised to include Revalea, which was acquired on 31 October 2023.
The carrying amount of the CGUs
The carrying amount of the CGUs must be determined consistently with the criterion whereby their recoverable value was estimated. For a bank, it is not possible to identify the flows generated by a CGU without considering the flows deriving from financial assets/liabilities, given that the latter represent its core business. In other words, the recoverable value of the CGU is impacted by said flows and, accordingly, their carrying amount must be determined consistently with the scope of estimate of the recoverable value and must, therefore, also include the financial assets/liabilities.
Taking this approach, the carrying amount of the CGU of the Banca Ifis Group can be determined in terms of contribution towards the consolidated equity, including any part pertaining to minorities. In any case, under the scope of the combination of the former Fbs Group performed by Banca Ifis, resulting in the recording of goodwill, there is no share of goodwill pertaining to minorities, because this has resulted in 100% control.
Therefore, the carrying amount of the CGUs comprising companies belonging to a single Segment has been determined through the sum of the individual equity contributions on a consolidated level.
The table below gives the carrying amount of the CGU Segment Npl and the portion of goodwill allocated to it before being subjected to annual impairment testing.
CARRYING AMOUNT AND GOODWILL ALLOCATED(in thousands of Euro)Amounts at 31.12.2023 (pre-impairment testing)
CGU carrying amountof which Group share of goodwillof which goodwill pertaining to minorities
Npl Segment631.25038.020-
\"\"
Criterion for determining the recoverable amount
According to IAS 36, the amount of any impairment is determined by the difference between the carrying value of the CGU, identified on the basis of the criteria described above, and its recoverable amount, if lower. Recoverable amount is defined as the greater of:
\u2022Value in Use i.e. the present value of future cash flows expected to arise from the continued use of a specific asset or CGU;
\u2022fair value less costs to sell, i.e. the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable and willing parties.
For the Npl Segment CGU, the impairment test was conducted using the Value in Use as a reference.
The Value in Use (or \u201cVIU\u201d) is the current value of estimated future cash flows deriving from the continuous use of the assets and its disposal at the end of its useful life.
Cash flows comprise cash flows generated from the business in its current condition and cash flows deriving from budget forecasts, short-term forecasts and \"Terminal Value\", adjusted for the company\u2019s specific risks.
More specifically, IAS 36 requires cash flow forecasts based on reasonable, sustainable assumptions that are specific for CGUs, which reflect the value of the CGU in its current condition and represent the best estimate management can make in regard to all existing economic circumstances during the rest of the useful life of the CGU.
For the purpose of impairment testing, reference was made to the value in use estimated according to the valuation approach that can be identified with the method known in doctrine as \u201cDiscounted Cash Flow - DCF\u201d. The method estimates the Value in Use of an asset by discounting the forecast cash flows, determined according to economic-financial forecasts prepared by the management in respect of the asset valued.
In the case of banks and financial institutions in general, the available cash flow is understood as the distributable cash flow, taking into account the equity restrictions imposed by the Supervisory Authorities or held to be appropriate to monitor the risk typical of the asset analysed. As concerns the determination of the Value in Use of the CGU in question, the choice was made to apply the Excess Capital variant of the Dividend Discount Model (\u201cDDM\u201d) valuation method. The method in question is one of the methods based on prospective cash flow, in this case represented by future dividends, recognised by most doctrine and standard practice, above all with reference to the companies or business units subject to compliance with the minimum regulatory capital requirements.
This method makes it possible to consider the current equity of the companies/business units valued, with respect to the supervisory requirements and their income prospects reflected in the forecasts. The flow of the last year of the analytical forecast is forecast perpetually through an appropriate long-term growth rate (\u201cg\u201d), in order to estimate the Terminal Value.
Future cash flows must be discounted at a rate that reflects the current valuations of the time value of money and specific risks of the business. More specifically, the discounting rates to be used must incorporate current market values with reference to the risk-free component (rf) and risk premium correlated with the share component observed over a sufficiently extensive time frame to reflect market conditions and different economic cycles, and using an appropriate Beta (\u03b2) coefficient in consideration of the risk levels of the respective operating areas.
Cash flow forecasts
Forecast cash flow is understood as the distributable cash flow, taking into account the equity restrictions imposed by the Supervisory Authorities or held to be appropriate to monitor the risk typical of the asset analysed. Therefore, future cash flows can be identified as the flows that may potentially be distributed after having satisfied the minimum allocated capital restrictions. In the forecasts of available cash flows, consideration was given to maintaining a level of CET1 in line with the supervisory provisions, of 9,00%, i.e. minimum value envisaged by the last SREP received in January 2024 (for more details, see the section \u201cSubsequent events\u201d of the Directors\u2019 Report on the Group) and relative to the Banca Ifis Group, including the target component, in view of greater exposure to risk in stress conditions. The consolidated SREP limit is considered insofar as higher thresholds are imposed internally in respect of a control context, envisaging alert and warning thresholds. The consolidated limit is respected as required by the Supervisory Body. Implicitly, this limit sets limits that exceed the regulatory minimums for the subsidiaries. The internal audits, with higher thresholds in RAF, prudently avoid any overrun.
Determination of the recoverable amount is hinged on the discounting of forecast cash flow and relates to 2024-2026 for the reference CGUs, as approved by the Parent company\u2019s Board of Directors on 8 February 2024.
Under the scope of the financial matrix measurement criteria, as is that used to estimate the Value in Use, the value of a business at the end of the analytical flow forecasting period (the \u201cTerminal Value\u201d) is generally determined by capitalising infinitely at an appropriate \u201cg\u201d rate, equal to 1,9%, the cash flow that can be achieved when \u201cfully up and running\u201d.
Flow discounting rates
The Value in Use is estimated by discounting cash flows at a rate of 10,6% that considers the current market rates referring to both the time value component and the country risk component, as well as specific risks of the assets considered.
The discounting rate has been determined using the \u201cCapital Asset Pricing Model\u201d (CAPM). On the basis of this model, the discounting rate is determined as the sum of the returns on risk-free investments and a risk premium, in turn dependent on the specific risk level of the asset (thereby meaning both the risk level of the operating Segment and the geographic risk level represented by the \u201ccountry risk\u201d).
If we take a more detailed look at the various components that go towards determining the discounting rate, we note that:
\u2022with reference to the risk free (rf) component and the risk premium, it was decided, for the 2023 Financial Statements, to use:
\u2013the risk free rate (rf) for the Npl Segment CGU is the point value of the gross yield of the Italian ten-year BTP (3,7%), measured on 29 December 2023;
\u2013as Equity Risk Premium (ERP) the Market Risk Premium figure (\"average\" figure of 7,1%) determined on the basis of the long-term yield differential between Italian equities and bonds (source: Fernandez 2023);
\u2022the Beta coefficient (\u03b2), equal to 1,0, which measures the specific riskiness of the individual company or operating Segment, was determined using the average of the betas of comparable listed players with an observation period of 2 years and a weekly survey frequency.
Results of the impairment testing
The results of the impairment testing revealed that, at 31 December 2023, the Value in Use of the Npl Segment CGU easily exceeded the respective carrying amount. There was therefore no need to impair the related impairment-tested goodwill booked.
Sensitivity analyses
As the Value in Use is determined by using estimates and assumptions that may include elements of uncertainty, as required by IAS 36, sensitivity analyses have been performed to verify the sensitivity of the results obtained to changes in certain underlying parameters and hypotheses.
More specifically, for the Npl Segment CGU (the only CGU with goodwill allocated at 31 December 2023), the impact was verified on the Value in Use of a change in the \u201cg\u201d growth rate of +/-1% (with respect to the rate used of 1,9%) and a delta of the ke of +/-1% (with respect to the rate used of 10,6%), keeping the other hypotheses unchanged. The table below shows the percentage changes in terms of Value in Use resulting from the above-mentioned changes in \"g\" and ke rates. All the scenarios analysed do not show any cases of impairment.
Data in %
Changes in the cost of capital (ke)
9,6%
10,1%
10,6%
11,1%
11,6%
Growth rate changes (g)
0,9%
3,00%
(0,63)%
(3,89)%
(6,84)%
(9,51)%
1,4%
5,45%
1,48%
(2,05)%
(5,22)%
(8,09)%
1,9%
8,20%
3,86%
-
(3,44)%
(6,53)%
2,4%
11,35%
6,53%
2,30%
(1,46)%
(4,81)%
2,9%
14,94%
9,57%
4,88%
0,78%
(2,88)%
\"\"
\"\"
\"\"
\"\"
In addition, scenarios were analysed in which the recoverable value of the CGU was tested as Excess Capital against, instead of the CET1 Ratio requirement, the Tier 1 Ratio or Total Capital Ratio.
With specific reference to the cash flows used, it should also be noted that, on the basis of the sensitivity performed on the flows and all other conditions being equal, an impairment loss would only arise in the event of a haircut on the expected flows of more than 50% (both explicit and at Terminal Value level).
Finally, consider that, all other things being equal on the basis of the sensitivity performed on the cost of capital (ke), an impairment loss result would only be determined using scenarios with a ke rate more than 11 percentage points higher than the cost of capital used for the impairment test.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page144-cflshid_73106-tag94242": { "value": "
Section 10 - Intangible assets - Item 100
10.1 Intangible assets: breakdown by asset type
Assets/Amounts 31.12.202331.12.2022
Finite lifeIndefinite lifeFinite lifeIndefinite life
A.1 Goodwill X38.020 X38.020
A.1.1 attributable to the Group X38.020 X38.020
A.1.2 attributable to non-controlling interests X- X-
A.2 Other intangible assets 38.647 - 26.244-
of which: software37.321 - 25.720-
A.2.1 Assets measured at cost: 38.647 - 26.244-
a) Internally generated intangible assets1.326 - 524-
b) Other assets 37.321 - 25.720-
A.2.2 Assets measured at fair value: - - --
a) Internally generated intangible assets - - --
b) Other assets - - --
Total 38.647 38.020 26.24438.020
\"\"
Goodwill, amounting to 38,0 million Euro at 31 December 2023, relates to the business combination of the former Fbs Group, acquired during 2019. More details on this can be found in section \"10.3 Other information\" below.
Other intangible assets at 31 December 2023 refer mainly to software purchase and development, amortised on a straight-line basis over the estimated useful life, which is five years from deployment. The balance at the end of 2023 amounts to 38,6 million Euro, up from the balance of 26,2 million Euro at 31 December 2022 as a result of the investments made during the year.
10.2 Intangible assets: annual changes
\u00a0GoodwillOther intangible assets: internally generatedOther intangible assets: otherTotal
FINITEINDEFFINITEINDEF
A. Opening balance39.482577-84.532-124.591
A.1 Total net amortisation and impairment losses (1.462)(53)-(58.812)-(60.327)
A.2 Net opening balance 38.020524-25.720-64.264
B. Increases - 901 - 19.487 - 20.388
B.1 Purchases - - - 19.487 - 19.487
B.2 Increases in internally generated intangible assets X901 - - - 901
B.3 Reversals of impairment losses X- - - - -
B.4 Fair value gains - - - - - -
- to equity X- - - - -
- to profit or loss X- - - - -
B.5 Exchange gains - - - - - -
B.6 Other changes - - - - - -
C. Decreases - (100) - (7.885) - (7.985)
C.1 Sales - - - - - -
C.2 Impairment losses/reversals - (100) - (7.885) - (7.985)
- Amortisation X(100) - (7.885) - (7.985)
- Impairment losses: - - - - - -
+ equity X- - - - -
+ profit or loss - - - - - -
C.3 Fair value losses: - - - - - -
- to equity X- - - - -
- to profit or loss X- - - - -
C.4 Transfer to non-current assets under disposal - - - - - -
C.5 Exchange losses - - - - - -
C.6 Other changes - - - - - -
D. Net closing balance 38.020 1.325 - 37.322 - 76.667
D.1 Total net amortisation, impairment losses and reversals of impairment losses (1.462) (153) - (66.697) - (68.312)
E. Gross closing balance 39.482 1.478 - 104.019 - 144.979
F. Measurement at cost - - - - - -
\"\"
Key:
FIN: finite useful life
INDEF: indefinite useful life
The increases in the year in terms of purchases and increases in internal intangible assets refer, respectively, to investments for the upgrading of computer systems and the related costs associated with internal activities for their development.
10.3 Other information
Information on goodwill
The application of accounting standard IFRS 3 in booking acquisitions may entail the entry of new intangible assets and the recording of goodwill.
In the case of the Banca Ifis Group, the specified acquisition of the former Fbs Group in 2019 entailed the recognition of goodwill in the amount of 38,0 million Euro, allocated to the Npl Segment at the Cash Generating Unit (CGU) level, which represents the business combination at whose level any impairment tests on goodwill must be performed to verify its recoverable amount. In line with the Group Policy, the CGUs have been identified with the operating Segments as defined in this information accompanying the Consolidated Financial Statements. The Npl Segment CGU associated with the goodwill of the former Fbs Group is the same as that adopted for the purpose of impairment testing the Group's goodwill at 31 December 2022.
In accordance with IAS 36, goodwill must be impairment tested at least annually, to check that the value can be recovered. The recoverable value is the greater of Value in Use (VIU) and fair value, net of the costs of sale.
Finally, please note that IAS 36, in order to determine the Value in Use of the intangibles subject to impairment testing, rules that reference must be made to the cash flows relative to the intangible in its current condition (at the date of impairment testing), without drawing any distinction between the cash flows referring to the asset originally noted during application of IFRS 3 and those relative to the assets in place at the time of impairment testing; this insofar as it would be difficult, particularly in the case of extraordinary transactions between businesses or changes to the asset following significant turnover of assets, customers, contracts, etc., to distinguish between the flows referring to the original asset and others.
Also, please note that the methods and assumptions underlying the goodwill impairment testing procedure and the related results defined by the management, were approved by the Board of Directors on 8 February 2024, before approval of the draft 2023 Financial Statements and the 2023 Consolidated Financial Statements.
The impairment test
The definition of Cash Generating Units (CGUs)
The estimate of the Value in Use, in order to perform impairment testing, in accordance with IAS 36 of intangible assets with undefined life (including goodwill), which do not generate cash flow except jointly with other corporate assets, requires the preliminary attribution of such intangible assets to organisational units of relatively autonomous management, able to generate flows of financial resources that are largely independent of those produced by other business areas, but inter-dependent within the organisational unit that generates them. These organisational units are called \u201cCash Generating Units\u201d (or \u201cCGUs\u201d).
The text of IAS 36 reveals the need to correlate the level at which goodwill is tested with the level of internal reporting at which the management controls the growth and reductions of said value. In these terms, the definition of said level is closely linked to the organisational models and the attribution of the management responsibilities in order to define operative guidelines and consequent monitoring. The organisational models can be regardless (and indeed in the case of the Banca Ifis Group are regardless) of the structure of the legal entities through which operations take place and, very often, are closely linked to the definition of the operating Segments that underlie the Segment reporting envisaged by IFRS 8. These considerations with reference to the criteria employed to determine the CGUs for impairment testing the goodwill are, moreover, consistent with the definition of the recoverable value of an asset - the determination of which underlies the impairment testing - according to which the amount is relevant that the company expects to recover from said asset, considering synergies with other assets.
Therefore, consistently with the logics of price formation that gave rise to the booking of goodwill, the recoverable value for the purpose of the impairment testing of the CGU to which goodwill is allocated, must include the valuation of not only external (or universal) synergies, but also internal synergies, which the specific buyer can obtain from the integration of the assets acquired in its economic combinations, evidently according to the defined business management models.
In view of the foregoing and in line with the Group Policy, the CGUs have been identified with the operating Segments as defined in the information accompanying the Consolidated Financial Statements.
It should be noted that during the year, the CGU Segment Npl, then only CGU with a goodwill allocated, was revised to include Revalea, which was acquired on 31 October 2023.
The carrying amount of the CGUs
The carrying amount of the CGUs must be determined consistently with the criterion whereby their recoverable value was estimated. For a bank, it is not possible to identify the flows generated by a CGU without considering the flows deriving from financial assets/liabilities, given that the latter represent its core business. In other words, the recoverable value of the CGU is impacted by said flows and, accordingly, their carrying amount must be determined consistently with the scope of estimate of the recoverable value and must, therefore, also include the financial assets/liabilities.
Taking this approach, the carrying amount of the CGU of the Banca Ifis Group can be determined in terms of contribution towards the consolidated equity, including any part pertaining to minorities. In any case, under the scope of the combination of the former Fbs Group performed by Banca Ifis, resulting in the recording of goodwill, there is no share of goodwill pertaining to minorities, because this has resulted in 100% control.
Therefore, the carrying amount of the CGUs comprising companies belonging to a single Segment has been determined through the sum of the individual equity contributions on a consolidated level.
The table below gives the carrying amount of the CGU Segment Npl and the portion of goodwill allocated to it before being subjected to annual impairment testing.
CARRYING AMOUNT AND GOODWILL ALLOCATED(in thousands of Euro)Amounts at 31.12.2023 (pre-impairment testing)
CGU carrying amountof which Group share of goodwillof which goodwill pertaining to minorities
Npl Segment631.25038.020-
\"\"
Criterion for determining the recoverable amount
According to IAS 36, the amount of any impairment is determined by the difference between the carrying value of the CGU, identified on the basis of the criteria described above, and its recoverable amount, if lower. Recoverable amount is defined as the greater of:
\u2022Value in Use i.e. the present value of future cash flows expected to arise from the continued use of a specific asset or CGU;
\u2022fair value less costs to sell, i.e. the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable and willing parties.
For the Npl Segment CGU, the impairment test was conducted using the Value in Use as a reference.
The Value in Use (or \u201cVIU\u201d) is the current value of estimated future cash flows deriving from the continuous use of the assets and its disposal at the end of its useful life.
Cash flows comprise cash flows generated from the business in its current condition and cash flows deriving from budget forecasts, short-term forecasts and \"Terminal Value\", adjusted for the company\u2019s specific risks.
More specifically, IAS 36 requires cash flow forecasts based on reasonable, sustainable assumptions that are specific for CGUs, which reflect the value of the CGU in its current condition and represent the best estimate management can make in regard to all existing economic circumstances during the rest of the useful life of the CGU.
For the purpose of impairment testing, reference was made to the value in use estimated according to the valuation approach that can be identified with the method known in doctrine as \u201cDiscounted Cash Flow - DCF\u201d. The method estimates the Value in Use of an asset by discounting the forecast cash flows, determined according to economic-financial forecasts prepared by the management in respect of the asset valued.
In the case of banks and financial institutions in general, the available cash flow is understood as the distributable cash flow, taking into account the equity restrictions imposed by the Supervisory Authorities or held to be appropriate to monitor the risk typical of the asset analysed. As concerns the determination of the Value in Use of the CGU in question, the choice was made to apply the Excess Capital variant of the Dividend Discount Model (\u201cDDM\u201d) valuation method. The method in question is one of the methods based on prospective cash flow, in this case represented by future dividends, recognised by most doctrine and standard practice, above all with reference to the companies or business units subject to compliance with the minimum regulatory capital requirements.
This method makes it possible to consider the current equity of the companies/business units valued, with respect to the supervisory requirements and their income prospects reflected in the forecasts. The flow of the last year of the analytical forecast is forecast perpetually through an appropriate long-term growth rate (\u201cg\u201d), in order to estimate the Terminal Value.
Future cash flows must be discounted at a rate that reflects the current valuations of the time value of money and specific risks of the business. More specifically, the discounting rates to be used must incorporate current market values with reference to the risk-free component (rf) and risk premium correlated with the share component observed over a sufficiently extensive time frame to reflect market conditions and different economic cycles, and using an appropriate Beta (\u03b2) coefficient in consideration of the risk levels of the respective operating areas.
Cash flow forecasts
Forecast cash flow is understood as the distributable cash flow, taking into account the equity restrictions imposed by the Supervisory Authorities or held to be appropriate to monitor the risk typical of the asset analysed. Therefore, future cash flows can be identified as the flows that may potentially be distributed after having satisfied the minimum allocated capital restrictions. In the forecasts of available cash flows, consideration was given to maintaining a level of CET1 in line with the supervisory provisions, of 9,00%, i.e. minimum value envisaged by the last SREP received in January 2024 (for more details, see the section \u201cSubsequent events\u201d of the Directors\u2019 Report on the Group) and relative to the Banca Ifis Group, including the target component, in view of greater exposure to risk in stress conditions. The consolidated SREP limit is considered insofar as higher thresholds are imposed internally in respect of a control context, envisaging alert and warning thresholds. The consolidated limit is respected as required by the Supervisory Body. Implicitly, this limit sets limits that exceed the regulatory minimums for the subsidiaries. The internal audits, with higher thresholds in RAF, prudently avoid any overrun.
Determination of the recoverable amount is hinged on the discounting of forecast cash flow and relates to 2024-2026 for the reference CGUs, as approved by the Parent company\u2019s Board of Directors on 8 February 2024.
Under the scope of the financial matrix measurement criteria, as is that used to estimate the Value in Use, the value of a business at the end of the analytical flow forecasting period (the \u201cTerminal Value\u201d) is generally determined by capitalising infinitely at an appropriate \u201cg\u201d rate, equal to 1,9%, the cash flow that can be achieved when \u201cfully up and running\u201d.
Flow discounting rates
The Value in Use is estimated by discounting cash flows at a rate of 10,6% that considers the current market rates referring to both the time value component and the country risk component, as well as specific risks of the assets considered.
The discounting rate has been determined using the \u201cCapital Asset Pricing Model\u201d (CAPM). On the basis of this model, the discounting rate is determined as the sum of the returns on risk-free investments and a risk premium, in turn dependent on the specific risk level of the asset (thereby meaning both the risk level of the operating Segment and the geographic risk level represented by the \u201ccountry risk\u201d).
If we take a more detailed look at the various components that go towards determining the discounting rate, we note that:
\u2022with reference to the risk free (rf) component and the risk premium, it was decided, for the 2023 Financial Statements, to use:
\u2013the risk free rate (rf) for the Npl Segment CGU is the point value of the gross yield of the Italian ten-year BTP (3,7%), measured on 29 December 2023;
\u2013as Equity Risk Premium (ERP) the Market Risk Premium figure (\"average\" figure of 7,1%) determined on the basis of the long-term yield differential between Italian equities and bonds (source: Fernandez 2023);
\u2022the Beta coefficient (\u03b2), equal to 1,0, which measures the specific riskiness of the individual company or operating Segment, was determined using the average of the betas of comparable listed players with an observation period of 2 years and a weekly survey frequency.
Results of the impairment testing
The results of the impairment testing revealed that, at 31 December 2023, the Value in Use of the Npl Segment CGU easily exceeded the respective carrying amount. There was therefore no need to impair the related impairment-tested goodwill booked.
Sensitivity analyses
As the Value in Use is determined by using estimates and assumptions that may include elements of uncertainty, as required by IAS 36, sensitivity analyses have been performed to verify the sensitivity of the results obtained to changes in certain underlying parameters and hypotheses.
More specifically, for the Npl Segment CGU (the only CGU with goodwill allocated at 31 December 2023), the impact was verified on the Value in Use of a change in the \u201cg\u201d growth rate of +/-1% (with respect to the rate used of 1,9%) and a delta of the ke of +/-1% (with respect to the rate used of 10,6%), keeping the other hypotheses unchanged. The table below shows the percentage changes in terms of Value in Use resulting from the above-mentioned changes in \"g\" and ke rates. All the scenarios analysed do not show any cases of impairment.
Data in %
Changes in the cost of capital (ke)
9,6%
10,1%
10,6%
11,1%
11,6%
Growth rate changes (g)
0,9%
3,00%
(0,63)%
(3,89)%
(6,84)%
(9,51)%
1,4%
5,45%
1,48%
(2,05)%
(5,22)%
(8,09)%
1,9%
8,20%
3,86%
-
(3,44)%
(6,53)%
2,4%
11,35%
6,53%
2,30%
(1,46)%
(4,81)%
2,9%
14,94%
9,57%
4,88%
0,78%
(2,88)%
\"\"
\"\"
\"\"
\"\"
In addition, scenarios were analysed in which the recoverable value of the CGU was tested as Excess Capital against, instead of the CET1 Ratio requirement, the Tier 1 Ratio or Total Capital Ratio.
With specific reference to the cash flows used, it should also be noted that, on the basis of the sensitivity performed on the flows and all other conditions being equal, an impairment loss would only arise in the event of a haircut on the expected flows of more than 50% (both explicit and at Terminal Value level).
Finally, consider that, all other things being equal on the basis of the sensitivity performed on the cost of capital (ke), an impairment loss result would only be determined using scenarios with a ke rate more than 11 percentage points higher than the cost of capital used for the impairment test.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page146-cflshid_74471-tag94244": { "value": "
10.3 Other information
Information on goodwill
The application of accounting standard IFRS 3 in booking acquisitions may entail the entry of new intangible assets and the recording of goodwill.
In the case of the Banca Ifis Group, the specified acquisition of the former Fbs Group in 2019 entailed the recognition of goodwill in the amount of 38,0 million Euro, allocated to the Npl Segment at the Cash Generating Unit (CGU) level, which represents the business combination at whose level any impairment tests on goodwill must be performed to verify its recoverable amount. In line with the Group Policy, the CGUs have been identified with the operating Segments as defined in this information accompanying the Consolidated Financial Statements. The Npl Segment CGU associated with the goodwill of the former Fbs Group is the same as that adopted for the purpose of impairment testing the Group's goodwill at 31 December 2022.
In accordance with IAS 36, goodwill must be impairment tested at least annually, to check that the value can be recovered. The recoverable value is the greater of Value in Use (VIU) and fair value, net of the costs of sale.
Finally, please note that IAS 36, in order to determine the Value in Use of the intangibles subject to impairment testing, rules that reference must be made to the cash flows relative to the intangible in its current condition (at the date of impairment testing), without drawing any distinction between the cash flows referring to the asset originally noted during application of IFRS 3 and those relative to the assets in place at the time of impairment testing; this insofar as it would be difficult, particularly in the case of extraordinary transactions between businesses or changes to the asset following significant turnover of assets, customers, contracts, etc., to distinguish between the flows referring to the original asset and others.
Also, please note that the methods and assumptions underlying the goodwill impairment testing procedure and the related results defined by the management, were approved by the Board of Directors on 8 February 2024, before approval of the draft 2023 Financial Statements and the 2023 Consolidated Financial Statements.
The impairment test
The definition of Cash Generating Units (CGUs)
The estimate of the Value in Use, in order to perform impairment testing, in accordance with IAS 36 of intangible assets with undefined life (including goodwill), which do not generate cash flow except jointly with other corporate assets, requires the preliminary attribution of such intangible assets to organisational units of relatively autonomous management, able to generate flows of financial resources that are largely independent of those produced by other business areas, but inter-dependent within the organisational unit that generates them. These organisational units are called \u201cCash Generating Units\u201d (or \u201cCGUs\u201d).
The text of IAS 36 reveals the need to correlate the level at which goodwill is tested with the level of internal reporting at which the management controls the growth and reductions of said value. In these terms, the definition of said level is closely linked to the organisational models and the attribution of the management responsibilities in order to define operative guidelines and consequent monitoring. The organisational models can be regardless (and indeed in the case of the Banca Ifis Group are regardless) of the structure of the legal entities through which operations take place and, very often, are closely linked to the definition of the operating Segments that underlie the Segment reporting envisaged by IFRS 8. These considerations with reference to the criteria employed to determine the CGUs for impairment testing the goodwill are, moreover, consistent with the definition of the recoverable value of an asset - the determination of which underlies the impairment testing - according to which the amount is relevant that the company expects to recover from said asset, considering synergies with other assets.
Therefore, consistently with the logics of price formation that gave rise to the booking of goodwill, the recoverable value for the purpose of the impairment testing of the CGU to which goodwill is allocated, must include the valuation of not only external (or universal) synergies, but also internal synergies, which the specific buyer can obtain from the integration of the assets acquired in its economic combinations, evidently according to the defined business management models.
In view of the foregoing and in line with the Group Policy, the CGUs have been identified with the operating Segments as defined in the information accompanying the Consolidated Financial Statements.
It should be noted that during the year, the CGU Segment Npl, then only CGU with a goodwill allocated, was revised to include Revalea, which was acquired on 31 October 2023.
The carrying amount of the CGUs
The carrying amount of the CGUs must be determined consistently with the criterion whereby their recoverable value was estimated. For a bank, it is not possible to identify the flows generated by a CGU without considering the flows deriving from financial assets/liabilities, given that the latter represent its core business. In other words, the recoverable value of the CGU is impacted by said flows and, accordingly, their carrying amount must be determined consistently with the scope of estimate of the recoverable value and must, therefore, also include the financial assets/liabilities.
Taking this approach, the carrying amount of the CGU of the Banca Ifis Group can be determined in terms of contribution towards the consolidated equity, including any part pertaining to minorities. In any case, under the scope of the combination of the former Fbs Group performed by Banca Ifis, resulting in the recording of goodwill, there is no share of goodwill pertaining to minorities, because this has resulted in 100% control.
Therefore, the carrying amount of the CGUs comprising companies belonging to a single Segment has been determined through the sum of the individual equity contributions on a consolidated level.
The table below gives the carrying amount of the CGU Segment Npl and the portion of goodwill allocated to it before being subjected to annual impairment testing.
CARRYING AMOUNT AND GOODWILL ALLOCATED(in thousands of Euro)Amounts at 31.12.2023 (pre-impairment testing)
CGU carrying amountof which Group share of goodwillof which goodwill pertaining to minorities
Npl Segment631.25038.020-
\"\"
Criterion for determining the recoverable amount
According to IAS 36, the amount of any impairment is determined by the difference between the carrying value of the CGU, identified on the basis of the criteria described above, and its recoverable amount, if lower. Recoverable amount is defined as the greater of:
\u2022Value in Use i.e. the present value of future cash flows expected to arise from the continued use of a specific asset or CGU;
\u2022fair value less costs to sell, i.e. the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable and willing parties.
For the Npl Segment CGU, the impairment test was conducted using the Value in Use as a reference.
The Value in Use (or \u201cVIU\u201d) is the current value of estimated future cash flows deriving from the continuous use of the assets and its disposal at the end of its useful life.
Cash flows comprise cash flows generated from the business in its current condition and cash flows deriving from budget forecasts, short-term forecasts and \"Terminal Value\", adjusted for the company\u2019s specific risks.
More specifically, IAS 36 requires cash flow forecasts based on reasonable, sustainable assumptions that are specific for CGUs, which reflect the value of the CGU in its current condition and represent the best estimate management can make in regard to all existing economic circumstances during the rest of the useful life of the CGU.
For the purpose of impairment testing, reference was made to the value in use estimated according to the valuation approach that can be identified with the method known in doctrine as \u201cDiscounted Cash Flow - DCF\u201d. The method estimates the Value in Use of an asset by discounting the forecast cash flows, determined according to economic-financial forecasts prepared by the management in respect of the asset valued.
In the case of banks and financial institutions in general, the available cash flow is understood as the distributable cash flow, taking into account the equity restrictions imposed by the Supervisory Authorities or held to be appropriate to monitor the risk typical of the asset analysed. As concerns the determination of the Value in Use of the CGU in question, the choice was made to apply the Excess Capital variant of the Dividend Discount Model (\u201cDDM\u201d) valuation method. The method in question is one of the methods based on prospective cash flow, in this case represented by future dividends, recognised by most doctrine and standard practice, above all with reference to the companies or business units subject to compliance with the minimum regulatory capital requirements.
This method makes it possible to consider the current equity of the companies/business units valued, with respect to the supervisory requirements and their income prospects reflected in the forecasts. The flow of the last year of the analytical forecast is forecast perpetually through an appropriate long-term growth rate (\u201cg\u201d), in order to estimate the Terminal Value.
Future cash flows must be discounted at a rate that reflects the current valuations of the time value of money and specific risks of the business. More specifically, the discounting rates to be used must incorporate current market values with reference to the risk-free component (rf) and risk premium correlated with the share component observed over a sufficiently extensive time frame to reflect market conditions and different economic cycles, and using an appropriate Beta (\u03b2) coefficient in consideration of the risk levels of the respective operating areas.
Cash flow forecasts
Forecast cash flow is understood as the distributable cash flow, taking into account the equity restrictions imposed by the Supervisory Authorities or held to be appropriate to monitor the risk typical of the asset analysed. Therefore, future cash flows can be identified as the flows that may potentially be distributed after having satisfied the minimum allocated capital restrictions. In the forecasts of available cash flows, consideration was given to maintaining a level of CET1 in line with the supervisory provisions, of 9,00%, i.e. minimum value envisaged by the last SREP received in January 2024 (for more details, see the section \u201cSubsequent events\u201d of the Directors\u2019 Report on the Group) and relative to the Banca Ifis Group, including the target component, in view of greater exposure to risk in stress conditions. The consolidated SREP limit is considered insofar as higher thresholds are imposed internally in respect of a control context, envisaging alert and warning thresholds. The consolidated limit is respected as required by the Supervisory Body. Implicitly, this limit sets limits that exceed the regulatory minimums for the subsidiaries. The internal audits, with higher thresholds in RAF, prudently avoid any overrun.
Determination of the recoverable amount is hinged on the discounting of forecast cash flow and relates to 2024-2026 for the reference CGUs, as approved by the Parent company\u2019s Board of Directors on 8 February 2024.
Under the scope of the financial matrix measurement criteria, as is that used to estimate the Value in Use, the value of a business at the end of the analytical flow forecasting period (the \u201cTerminal Value\u201d) is generally determined by capitalising infinitely at an appropriate \u201cg\u201d rate, equal to 1,9%, the cash flow that can be achieved when \u201cfully up and running\u201d.
Flow discounting rates
The Value in Use is estimated by discounting cash flows at a rate of 10,6% that considers the current market rates referring to both the time value component and the country risk component, as well as specific risks of the assets considered.
The discounting rate has been determined using the \u201cCapital Asset Pricing Model\u201d (CAPM). On the basis of this model, the discounting rate is determined as the sum of the returns on risk-free investments and a risk premium, in turn dependent on the specific risk level of the asset (thereby meaning both the risk level of the operating Segment and the geographic risk level represented by the \u201ccountry risk\u201d).
If we take a more detailed look at the various components that go towards determining the discounting rate, we note that:
\u2022with reference to the risk free (rf) component and the risk premium, it was decided, for the 2023 Financial Statements, to use:
\u2013the risk free rate (rf) for the Npl Segment CGU is the point value of the gross yield of the Italian ten-year BTP (3,7%), measured on 29 December 2023;
\u2013as Equity Risk Premium (ERP) the Market Risk Premium figure (\"average\" figure of 7,1%) determined on the basis of the long-term yield differential between Italian equities and bonds (source: Fernandez 2023);
\u2022the Beta coefficient (\u03b2), equal to 1,0, which measures the specific riskiness of the individual company or operating Segment, was determined using the average of the betas of comparable listed players with an observation period of 2 years and a weekly survey frequency.
Results of the impairment testing
The results of the impairment testing revealed that, at 31 December 2023, the Value in Use of the Npl Segment CGU easily exceeded the respective carrying amount. There was therefore no need to impair the related impairment-tested goodwill booked.
Sensitivity analyses
As the Value in Use is determined by using estimates and assumptions that may include elements of uncertainty, as required by IAS 36, sensitivity analyses have been performed to verify the sensitivity of the results obtained to changes in certain underlying parameters and hypotheses.
More specifically, for the Npl Segment CGU (the only CGU with goodwill allocated at 31 December 2023), the impact was verified on the Value in Use of a change in the \u201cg\u201d growth rate of +/-1% (with respect to the rate used of 1,9%) and a delta of the ke of +/-1% (with respect to the rate used of 10,6%), keeping the other hypotheses unchanged. The table below shows the percentage changes in terms of Value in Use resulting from the above-mentioned changes in \"g\" and ke rates. All the scenarios analysed do not show any cases of impairment.
Data in %
Changes in the cost of capital (ke)
9,6%
10,1%
10,6%
11,1%
11,6%
Growth rate changes (g)
0,9%
3,00%
(0,63)%
(3,89)%
(6,84)%
(9,51)%
1,4%
5,45%
1,48%
(2,05)%
(5,22)%
(8,09)%
1,9%
8,20%
3,86%
-
(3,44)%
(6,53)%
2,4%
11,35%
6,53%
2,30%
(1,46)%
(4,81)%
2,9%
14,94%
9,57%
4,88%
0,78%
(2,88)%
\"\"
\"\"
\"\"
\"\"
In addition, scenarios were analysed in which the recoverable value of the CGU was tested as Excess Capital against, instead of the CET1 Ratio requirement, the Tier 1 Ratio or Total Capital Ratio.
With specific reference to the cash flows used, it should also be noted that, on the basis of the sensitivity performed on the flows and all other conditions being equal, an impairment loss would only arise in the event of a haircut on the expected flows of more than 50% (both explicit and at Terminal Value level).
Finally, consider that, all other things being equal on the basis of the sensitivity performed on the cost of capital (ke), an impairment loss result would only be determined using scenarios with a ke rate more than 11 percentage points higher than the cost of capital used for the impairment test.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page149-cflshid_76533-tag94245": { "value": "
Section 11 - Tax assets and liabilities - Item 110 of assets and Item 60 of liabilities
National consolidated tax regime
The companies Banca Ifis S.p.A., Ifis Npl Investing S.p.A., Ifis Rental Services S.r.l., Ifis Npl Servicing S.p.A. and Cap.Ital.Fin. S.p.A., together with the ultimate Parent company La Scogliera S.A., have opted for the application of group taxation (tax consolidation) in accordance with articles 117 et seq. of Italian Presidential Decree No. 917/86.
Transactions between these companies were regulated by means of a private written agreement between the parties. This agreement will lapse after three years.
Adhesion to the tax consolidation allows the taxable income of the participating companies to be offset against each other (using the losses and the aid for economic growth (\u201cACE\u201d) realised during the adhesion period).
As envisaged by applicable regulations, adhering entities have an address for the service of notices of documents and proceedings relating to the tax periods for which this option is exercised at the office of La Scogliera, the consolidating company.
Under this tax regime, the taxable profits and tax losses reported by each entity for 2023 are transferred to the consolidating company La Scogliera.
The receivable from the tax consolidating company La Scogliera, recorded under \"Other assets\", amounts to 32,1 million Euro, while the related payable, recorded under \"Other liabilities\" in these Consolidated Financial Statements, amounts to 31,2 million Euro at 31 December 2023, of which 23,9 million Euro accrued to the subsidiary Ifis Npl Investing. The net receivable in regard to the tax consolidating company La Scogliera amounts therefore to 0,9 million Euro.
11.1 Deferred tax assets: breakdown
The main types of deferred tax assets are set out below.
Deferred tax assets31.12.202331.12.2022
With a counter entry in the profit and loss account226.905243.794
With a counter entry in equity11.92920.463
Total deferred tax assets238.834264.257
\"\"
Deferred tax assets amount to 238,8 million Euro compared to the figure of 264,3 million Euro at 31 December 2022 and consist mainly of 144,7 million Euro of assets recognised for impairment losses on receivables due from customers, potentially convertible into tax credits in accordance with Italian Law No. 214/2011 (balance reducing as a result of the releases relative to 2023), 41,1 million Euro of assets recognised for prior tax losses and aid for economic growth (\u201cACE\u201d) benefit (39,5 million Euro at 31 December 2022) and 53,1 million Euro (52,5 million Euro at 31 December 2022) in tax misalignments mainly relating to financial assets measured at fair value through other comprehensive income (FVOCI).
In accordance with the rules set forth in IAS 12 and the ESMA communication of 15 July 2019, the Banca Ifis Group recognised Deferred Tax Assets (DTAs), after verifying that the amounts so recognised are supported by a probability opinion on their recoverability. For the purpose of expressing the aforementioned opinion, current tax provisions were taken into consideration, with particular reference to the rules for transforming certain deferred tax assets into tax credits, and the Group's ability to generate future taxable income also taking into account the \"tax consolidation\" option.
As for the qualified DTAs convertible into tax credits, amounting to 144,7 million Euro at 31 December 2023, the tax regulations introduced by Law 214/2011, together with the exercise of the annual fee regime option, make their recoverability certain. This treatment is in line with the rules contained in Bank of Italy/Consob/Isvap Document No. 5 of 15 May 2012 \"Accounting treatment of deferred tax assets under Law No. 214/2011\".
For the remaining tax assets (non-transformable DTAs), totalling 94,1 million Euro, the recognition and subsequent maintenance in the financial statements are strictly dependent on the ability of the Group and/or individual companies to generate future taxable income (referred to as \"tax capability\").
Details on the assumptions used for the probability test and their outcomes are given below.
Estimated future taxable income
Future taxable income was estimated based on Banca Ifis's most recent income projections.
In view of the current uncertain environment, the last expected income without any growth assumptions was taken as a reference for long-term profitability.
Probability test results and sensitivity analysis
On the basis of the assessment carried out with the model described previously, out of the overall total of 238,8 million Euro, the 144,7 million Euro portion attributable to Law 214/2011 (equal to 60,6% of the total DTA) will be reversed by 2028 due to express regulatory provision. The portion referring to prior tax losses and aid for economic growth (\u201cACE\u201d) surpluses, totalling 41,1 million Euro (or 17,2% of the total DTA) is expected to be fully recovered from 2026 to 2032 (approximately 30 million Euro by 2028). The remaining 53,1 million Euro refers mainly to financial assets measured at fair value with an impact on other comprehensive income (FVOCI) and is therefore related to the performance of the related reserve. The uncertainty is also confirmed regarding the recoverability of the DTAs relating to the subsidiary Cap.Ital.Fin. realised mainly before the entry into the tax consolidation, which therefore, out of prudence, have not been recorded for a total of 2,6 million Euro.
11.2 Deferred tax liabilities: breakdown
The main types of deferred tax liabilities are shown below.
Deferred tax liabilities31.12.202331.12.2022
With a counter entry in the profit and loss account30.65929.218
With a counter entry in equity1.0331.119
Total deferred tax liabilities31.69230.337
\"\"
Deferred tax liabilities, amounting to 31,7 million Euro, in line with the previous year\u2019s balance, mainly include 25,3 million Euro on receivables recognised for interest on arrears that will be taxed upon collection.
11.3 Changes in deferred tax assets (recognised through profit or loss)
\u00a031.12.202331.12.2022
1. Opening balance243.794280.893
2. Increases58.46624.805
2.1 Deferred tax assets recognised in the year44.23120.377
a) relative to previous years411122
b) due to change in accounting standards --
c) reversals of impairment losses --
d) other43.82020.255
2.2 New taxes or increases in tax rates --
2.3 Other increases14.2354.428
-business combinations14.235-
3. Decreases75.35561.904
3.1 Deferred tax assets reversed during the year69.87143.775
a) reversals66.23440.338
b) impairment losses due to unrecoverability -190
c) change in accounting standards --
d) other3.6373.247
3.2 Reductions in tax rates--
3.3 Other decreases 5.48418.129
a) conversion into tax credits as per Italian Law No. 214/20115.36613.676
b) other 1184.453
4. Closing balance226.905243.794
\"\"
Concerning the changes in deferred tax assets (recognised through profit or losses), please note that:
\u2022\u201cother increases\u201d included the deferred tax assets incorporated at 31 October 2023 as a result of the business combination transaction concerning the acquisition of the company Revalea (for more details, please refer to the section \"Significant events during the year\" of the Directors' Report on the Group and to \"Part G - Business combinations\");
\u2022decreases include transformed deferred tax assets in the amount of 5,4 million Euro (see section below \"11.4 Changes in deferred tax assets pursuant to Law 214/2011\");
\u2022the deferred tax assets related to the taxable profit for the year were not included, as they were recognised under \u201cOther assets\u201d and \u201cOther liabilities\u201d respectively as a receivable and payable due from and to the tax consolidating company La Scogliera under current tax consolidation arrangements.
11.4 Changes in deferred tax assets pursuant to Law No. 214/2011
\u00a031.12.202331.12.2022
1. Opening balance172.220205.352
2. Increases5.6763.952
- business combinations5.662-
3. Decreases33.18537.084
3.1 Reversals27.81919.605
3.2 Conversion in tax credits5.36613.676
a) deriving from losses for the year77
b) deriving from tax losses5.35913.669
3.3 Other decreases -3.803
4. Closing balance144.711172.220
\"\"
11.5 Changes in deferred tax liabilities (recognised through profit or loss)
\u00a031.12.202331.12.2022
1. Opening balance29.21832.142
2. Increases3.031756
2.1 Deferred tax assets recognised in the year716719
a) relative to previous years -17
b) due to change in accounting standards --
c) other716702
2.2 New taxes or increases in tax rates --
2.3 Other increases2.31537
- business combinations2.315-
3. Decreases1.5903.680
3.1 Deferred tax liabilities reversed during the year1.5903.640
a) reversals1.5903.640
b) due to change in accounting standards --
c) other --
3.2 Reductions in tax rates --
3.3 Other decreases -40
4. Closing balance30.65929.218
\"\"
11.6 Changes in deferred tax assets (recognised through equity)
31.12.202331.12.2022
1. Opening balance20.4633.233
2. Increases317.789
2.1 Deferred tax assets recognised in the year317.789
a) relative to previous years --
b) due to change in accounting standards --
c) other317.789
2.2 New taxes or increases in tax rates --
2.3 Other increases --
3. Decreases8.537559
3.1 Deferred tax assets reversed during the year8.535557
a) reversals8.535557
b) impairment losses due to unrecoverability --
c) due to change in accounting standards --
d) other --
3.2 Reductions in tax rates --
3.3 Other decreases22
4. Closing balance11.92920.463
\"\"
11.7 Changes in deferred tax liabilities (recognised through equity)
\u00a031.12.202331.12.2022
1. Opening balance1.119313
2. Increases1.9112.303
2.1 Deferred tax assets recognised in the year1.9112.303
a) relative to previous years --
b) due to change in accounting standards --
c) other1.9112.303
2.2 New taxes or increases in tax rates --
2.3 Other increases --
3. Decreases1.9971.497
3.1 Deferred tax liabilities reversed during the year1.9971.496
a) reversals1.9971.496
b) due to change in accounting standards --
c) other --
3.2 Reductions in tax rates --
3.3 Other decreases -1
4. Closing balance1.0331.119
\"\"
11.8 Other information
Current tax assets
\u00a031.12.202331.12.2022
IRAP (regional tax on productive activities)14.65712.483
IRES on sale of receivables -21.278
IRES for cases other than assignment of receivables14.18412.578
Credits from DTA conversion15.65113.424
Other2.1091.161
Total current tax assets46.60160.924
\"\"
Current tax liabilities
\u00a031.12.202331.12.2022
IRAP balance17.52415.070
IREP balance8.5016.891
Total current tax liabilities26.02521.961
\"\"
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page156-cflshid_79320-tag94249": { "value": "
Section 13 - Other assets - Item 130
13.1 Other assets: breakdown
31.12.202331.12.2022
Tax receivables223.791270.592
of which tax credits for superbonus and other building tax bonuses208.748253.463
Accrued income and deferred expenses59.82851.808
Guarantee deposits8071.085
Debtors for invoices19.69041.662
Sundry receivables68.02034.784
of which: receivables from La Scogliera for tax consolidation32.1625.625
of which: other receivables35.85829.159
Miscellaneous provisional items30.99929.335
Portfolio of effects subject to collection41.55741.798
Total other assets444.692471.064
\"\"
\u201cTax receivables\u201d consist mainly of the portion deemed recoverable of tax credits for superbonus and other building tax bonuses (the \u201cEcobonus\u201d) for 208,7 million Euro, purchased in previous years, to which a nominal amount of 234,1 million Euro corresponds.
\u201cSundry items\u201d include 32,1 million Euro in credits due to the ultimate Parent company La Scogliera S.A. under the tax consolidation agreements (5,6 million Euro at 31 December 2022). It should be noted that the balance at 31 December 2022 for this situation was entirely collected during the first half of 2023, and therefore the balance due from the tax consolidating company at 31 December 2023 refers exclusively to advances paid in respect of 2023.
Section 8 - Other liabilities - Item 80
8.1 Other liabilities: breakdown
\u00a031.12.202331.12.2022
Payables due to suppliers133.138122.831
Payables due to personnel26.65924.648
Payables due to the Tax Office and Social Security agencies27.34614.241
Sums available to customers25.19328.320
Accrued liabilities and deferred income4.6702.416
Other items130.321140.860
of which: payables to La Scogliera for tax consolidation31.21733.680
of which other payables99.104107.180
Miscellaneous provisional items40.22758.381
Total other liabilities387.554391.697
\"\"
\u201cOther items\u201d include 31,2 million Euro for a payable due to La Scogliera S.A. deriving from the application of the tax consolidation (33,7 million Euro at 31 December 2022).
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page156-cflshid_79320-tag94248": { "value": "
Section 13 - Other assets - Item 130
13.1 Other assets: breakdown
31.12.202331.12.2022
Tax receivables223.791270.592
of which tax credits for superbonus and other building tax bonuses208.748253.463
Accrued income and deferred expenses59.82851.808
Guarantee deposits8071.085
Debtors for invoices19.69041.662
Sundry receivables68.02034.784
of which: receivables from La Scogliera for tax consolidation32.1625.625
of which: other receivables35.85829.159
Miscellaneous provisional items30.99929.335
Portfolio of effects subject to collection41.55741.798
Total other assets444.692471.064
\"\"
\u201cTax receivables\u201d consist mainly of the portion deemed recoverable of tax credits for superbonus and other building tax bonuses (the \u201cEcobonus\u201d) for 208,7 million Euro, purchased in previous years, to which a nominal amount of 234,1 million Euro corresponds.
\u201cSundry items\u201d include 32,1 million Euro in credits due to the ultimate Parent company La Scogliera S.A. under the tax consolidation agreements (5,6 million Euro at 31 December 2022). It should be noted that the balance at 31 December 2022 for this situation was entirely collected during the first half of 2023, and therefore the balance due from the tax consolidating company at 31 December 2023 refers exclusively to advances paid in respect of 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page156-cflshid_79320-tag94247": { "value": "
Section 13 - Other assets - Item 130
13.1 Other assets: breakdown
31.12.202331.12.2022
Tax receivables223.791270.592
of which tax credits for superbonus and other building tax bonuses208.748253.463
Accrued income and deferred expenses59.82851.808
Guarantee deposits8071.085
Debtors for invoices19.69041.662
Sundry receivables68.02034.784
of which: receivables from La Scogliera for tax consolidation32.1625.625
of which: other receivables35.85829.159
Miscellaneous provisional items30.99929.335
Portfolio of effects subject to collection41.55741.798
Total other assets444.692471.064
\"\"
\u201cTax receivables\u201d consist mainly of the portion deemed recoverable of tax credits for superbonus and other building tax bonuses (the \u201cEcobonus\u201d) for 208,7 million Euro, purchased in previous years, to which a nominal amount of 234,1 million Euro corresponds.
\u201cSundry items\u201d include 32,1 million Euro in credits due to the ultimate Parent company La Scogliera S.A. under the tax consolidation agreements (5,6 million Euro at 31 December 2022). It should be noted that the balance at 31 December 2022 for this situation was entirely collected during the first half of 2023, and therefore the balance due from the tax consolidating company at 31 December 2023 refers exclusively to advances paid in respect of 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page156-cflshid_79320-tag94246": { "value": "
Section 13 - Other assets - Item 130
13.1 Other assets: breakdown
31.12.202331.12.2022
Tax receivables223.791270.592
of which tax credits for superbonus and other building tax bonuses208.748253.463
Accrued income and deferred expenses59.82851.808
Guarantee deposits8071.085
Debtors for invoices19.69041.662
Sundry receivables68.02034.784
of which: receivables from La Scogliera for tax consolidation32.1625.625
of which: other receivables35.85829.159
Miscellaneous provisional items30.99929.335
Portfolio of effects subject to collection41.55741.798
Total other assets444.692471.064
\"\"
\u201cTax receivables\u201d consist mainly of the portion deemed recoverable of tax credits for superbonus and other building tax bonuses (the \u201cEcobonus\u201d) for 208,7 million Euro, purchased in previous years, to which a nominal amount of 234,1 million Euro corresponds.
\u201cSundry items\u201d include 32,1 million Euro in credits due to the ultimate Parent company La Scogliera S.A. under the tax consolidation agreements (5,6 million Euro at 31 December 2022). It should be noted that the balance at 31 December 2022 for this situation was entirely collected during the first half of 2023, and therefore the balance due from the tax consolidating company at 31 December 2023 refers exclusively to advances paid in respect of 2023.
Section 8 - Other liabilities - Item 80
8.1 Other liabilities: breakdown
\u00a031.12.202331.12.2022
Payables due to suppliers133.138122.831
Payables due to personnel26.65924.648
Payables due to the Tax Office and Social Security agencies27.34614.241
Sums available to customers25.19328.320
Accrued liabilities and deferred income4.6702.416
Other items130.321140.860
of which: payables to La Scogliera for tax consolidation31.21733.680
of which other payables99.104107.180
Miscellaneous provisional items40.22758.381
Total other liabilities387.554391.697
\"\"
\u201cOther items\u201d include 31,2 million Euro for a payable due to La Scogliera S.A. deriving from the application of the tax consolidation (33,7 million Euro at 31 December 2022).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page157-cflshid_79623-tag94251": { "value": "
Section 1 - Financial liabilities measured at amortised cost - Item 10
1.1 Financial liabilities at amortised cost: breakdown of payables due to banks by type
Type of transaction/Amounts 31.12.202331.12.2022
CAFair ValueCAFair Value
L1L2L3L1L2L3
1. Payables due to Central banks 1.577.875 XXX2.423.647XXX
2. Payables due to banks 1.139.264 XXX998.513XXX
2.1 Current accounts and on demand deposits 19 XXX4.208XXX
2.2 Term deposits 117.309 XXX149.054XXX
2.3 Loans 1.012.077 XXX845.251XXX
2.3.1 Repurchase agreements 715.313 XXX731.791XXX
2.3.2 Other 296.764 XXX113.460XXX
2.4 Debt from buyback commitments on treasury equity instruments - XXX-XXX
2.5 Lease payables - XXX-XXX
2.6 Other payables 9.859 XXX-XXX
Total2.717.139 - - 2.717.139 3.422.160--3.422.160
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to banks come to 2,7 billion Euro, down 20,6% compared to the figure for end December 2022, mainly due to the onset maturity of short-term payables due to central banks (LTRO) and the early repayment of 500 million Euro for TLTRO, made in December 2023. At 31 December 2023, the balance of payables due to banks is mainly represented by residual TLTRO transactions in the amount of 1,6 billion Euro and repo transactions in the amount of 0,7 billion Euro. As a result of Decision ECB/2022\"37 of 27 October 2022 for FY 2023, the fees were determined on the basis of the rate provided for as of the aforementioned decision.
The fair value of payables due to banks is in line with the relevant carrying amount, considering the counterparty and the fact that interbank deposits are short- or very short-term.
1.2 Financial liabilities measured at amortised cost: breakdown of payables due to customers by type
31.12.2023
31.12.2022
Fair Value
Fair Value
Type of transaction/Amounts
CA
L1
L2
L3
CA
L1
L2
L3
1. Current accounts and on demand deposits
1.147.597
X
X
X
1.410.871
X
X
X
2. Term deposits
4.139.143
X
X
X
3.547.969
X
X
X
3. Loans
493.791
X
X
X
50.003
X
X
X
3.1 Repurchase agreements
346.317
X
X
X
50.003
X
X
X
3.2 Other
147.474
X
X
X
-
X
X
X
4. Debt from buyback commitments on treasury equity instruments
-
X
X
X
-
X
X
X
5. Lease payables
22.702
X
X
X
21.733
X
X
X
6. Other payables
11.391
X
X
X
72.767
X
X
X
Total
5.814.624
-
-
6.156.150
5.103.343
-
-
5.450.030
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to customers at 31 December 2023 total 5,8 billion Euro, up 13,9% compared to 31 December 2022. The growth is driven by both retail funding, which amounts to 4,5 billion Euro at the end of December 2023 (+7,6%), and the repurchase agreement (repo) component, which increases by 296,3 million Euro compared to 31 December 2022.
1.3 Financial liabilities measured at amortised cost: breakdown of debt securities issued by type
Type of securities/Amounts 31.12.202331.12.2022
CAFair ValueCAFair Value
L1L2 L3L1 L2 L3
A. Securities
1. Bonds 3.288.839 1.329.813 104.630 1.853.042 2.605.0901.002.62664.1921.496.168
1.1 structured bonds - - - - ----
1.2 other bonds 3.288.839 1.329.813 104.630 1.853.042 2.605.0901.002.62664.1921.496.168
2. Other securities 56 - - 56 105--105
2.1 structured - - - - ----
2.2 other 56 - - 56 105--105
Total 3.288.895 1.329.813 104.630 1.853.098 2.605.1951.002.62664.1921.496.273
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Debt securities issued amount to 3,3 billion Euro at 31 December 2023 and consist of:
\u2022securities issued by the SPV ABCP Programme for 1,1 billion Euro relating to the senior tranche;
\u2022securities issued by the Indigo Lease vehicle in the amount of 0,4 billion Euro relating to the senior tranche, following the restructuring of the transaction during the third quarter of 2023 (for more details on this, refer to \"Part E - Information on risks and related hedging policies\", \"Section 2 - Prudential consolidation risks\", paragraph \"1.1 Credit risk\", sub-section \"C. Securitisation transactions\");
\u2022securities issued by the Emma SPV for 0,4 billion Euro relating to the senior tranche;
\u20220,4 billion Euro related to subordinated loans, essentially in line with 31 December 2022;
\u2022bonds issued by Banca Ifis for 1,1 billion Euro. Compared to 31 December 2022, the following changes have occurred:
\u2013600 million Euro relating to the two senior bonds, each with a nominal amount of 300 million Euro and a maturity of 4 years and 5 years respectively, issued in January 2023 and September 2023 (for more details, refer to the section \u201cSignificant events during the year\u201d of the Directors\u2019 Report on the Group);
\u201345 million Euro related to the second tranche issued in March 2023 and related to a senior bond with a duration of 4 years and a total nominal amount of 110 million Euro;
\u2013redemption of 300 million Euro of the senior bond issued in 2018 and maturing in April 2023.
1.4 Breakdown of subordinated debts/securities
The line item \"Debt securities issued\" includes 372,7 million Euro in subordinated notes related to Euro Tier 2 bond issued in mid-October 2017 for a nominal amount of 400 million Euro.
1.5 Breakdown of structured debts
There are no structured debts in these Consolidated Financial Statements.
1.6 Lease payables
The lease payable relates for 20,1 million Euro to lease contracts of properties and cars coming under the scope of application of accounting standard IFRS 16, which came into force at 1 January 2019 and as more extensively described in \u201cPart M - Leasing disclosure\u201d of these Consolidated Financial Statements.
It also includes 2,6 million Euro for the real estate lease the former company Toscana Finanza S.p.A. entered into in 2009 for the property located in Florence, which housed the headquarters of the Npl Segment until August 2016. The term of the lease entered into with Centro Leasing S.p.A. is 18 years (from March 2009 to March 2027) and provides for the payment of 216 monthly instalments of about 28 thousand Euro, including the principal, interest and an option to buy the asset at the end of the lease for 1,9 million Euro. At the date of this document, the property is used as an additional operational headquarters of Banca Ifis.
The interest rate on lease payables reflects the average Group cost of funding, taking into account the creditworthiness of the lessee and the economic context in which the transaction occurs, accordingly with the IFRS 16.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page157-cflshid_79623-tag94252": { "value": "
1.1 Financial liabilities at amortised cost: breakdown of payables due to banks by type
Type of transaction/Amounts 31.12.202331.12.2022
CAFair ValueCAFair Value
L1L2L3L1L2L3
1. Payables due to Central banks 1.577.875 XXX2.423.647XXX
2. Payables due to banks 1.139.264 XXX998.513XXX
2.1 Current accounts and on demand deposits 19 XXX4.208XXX
2.2 Term deposits 117.309 XXX149.054XXX
2.3 Loans 1.012.077 XXX845.251XXX
2.3.1 Repurchase agreements 715.313 XXX731.791XXX
2.3.2 Other 296.764 XXX113.460XXX
2.4 Debt from buyback commitments on treasury equity instruments - XXX-XXX
2.5 Lease payables - XXX-XXX
2.6 Other payables 9.859 XXX-XXX
Total2.717.139 - - 2.717.139 3.422.160--3.422.160
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to banks come to 2,7 billion Euro, down 20,6% compared to the figure for end December 2022, mainly due to the onset maturity of short-term payables due to central banks (LTRO) and the early repayment of 500 million Euro for TLTRO, made in December 2023. At 31 December 2023, the balance of payables due to banks is mainly represented by residual TLTRO transactions in the amount of 1,6 billion Euro and repo transactions in the amount of 0,7 billion Euro. As a result of Decision ECB/2022\"37 of 27 October 2022 for FY 2023, the fees were determined on the basis of the rate provided for as of the aforementioned decision.
The fair value of payables due to banks is in line with the relevant carrying amount, considering the counterparty and the fact that interbank deposits are short- or very short-term.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromBanksExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page157-cflshid_79623-tag94250": { "value": "
1.1 Financial liabilities at amortised cost: breakdown of payables due to banks by type
Type of transaction/Amounts 31.12.202331.12.2022
CAFair ValueCAFair Value
L1L2L3L1L2L3
1. Payables due to Central banks 1.577.875 XXX2.423.647XXX
2. Payables due to banks 1.139.264 XXX998.513XXX
2.1 Current accounts and on demand deposits 19 XXX4.208XXX
2.2 Term deposits 117.309 XXX149.054XXX
2.3 Loans 1.012.077 XXX845.251XXX
2.3.1 Repurchase agreements 715.313 XXX731.791XXX
2.3.2 Other 296.764 XXX113.460XXX
2.4 Debt from buyback commitments on treasury equity instruments - XXX-XXX
2.5 Lease payables - XXX-XXX
2.6 Other payables 9.859 XXX-XXX
Total2.717.139 - - 2.717.139 3.422.160--3.422.160
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to banks come to 2,7 billion Euro, down 20,6% compared to the figure for end December 2022, mainly due to the onset maturity of short-term payables due to central banks (LTRO) and the early repayment of 500 million Euro for TLTRO, made in December 2023. At 31 December 2023, the balance of payables due to banks is mainly represented by residual TLTRO transactions in the amount of 1,6 billion Euro and repo transactions in the amount of 0,7 billion Euro. As a result of Decision ECB/2022\"37 of 27 October 2022 for FY 2023, the fees were determined on the basis of the rate provided for as of the aforementioned decision.
The fair value of payables due to banks is in line with the relevant carrying amount, considering the counterparty and the fact that interbank deposits are short- or very short-term.
1.2 Financial liabilities measured at amortised cost: breakdown of payables due to customers by type
31.12.2023
31.12.2022
Fair Value
Fair Value
Type of transaction/Amounts
CA
L1
L2
L3
CA
L1
L2
L3
1. Current accounts and on demand deposits
1.147.597
X
X
X
1.410.871
X
X
X
2. Term deposits
4.139.143
X
X
X
3.547.969
X
X
X
3. Loans
493.791
X
X
X
50.003
X
X
X
3.1 Repurchase agreements
346.317
X
X
X
50.003
X
X
X
3.2 Other
147.474
X
X
X
-
X
X
X
4. Debt from buyback commitments on treasury equity instruments
-
X
X
X
-
X
X
X
5. Lease payables
22.702
X
X
X
21.733
X
X
X
6. Other payables
11.391
X
X
X
72.767
X
X
X
Total
5.814.624
-
-
6.156.150
5.103.343
-
-
5.450.030
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to customers at 31 December 2023 total 5,8 billion Euro, up 13,9% compared to 31 December 2022. The growth is driven by both retail funding, which amounts to 4,5 billion Euro at the end of December 2023 (+7,6%), and the repurchase agreement (repo) component, which increases by 296,3 million Euro compared to 31 December 2022.
1.6 Lease payables
The lease payable relates for 20,1 million Euro to lease contracts of properties and cars coming under the scope of application of accounting standard IFRS 16, which came into force at 1 January 2019 and as more extensively described in \u201cPart M - Leasing disclosure\u201d of these Consolidated Financial Statements.
It also includes 2,6 million Euro for the real estate lease the former company Toscana Finanza S.p.A. entered into in 2009 for the property located in Florence, which housed the headquarters of the Npl Segment until August 2016. The term of the lease entered into with Centro Leasing S.p.A. is 18 years (from March 2009 to March 2027) and provides for the payment of 216 monthly instalments of about 28 thousand Euro, including the principal, interest and an option to buy the asset at the end of the lease for 1,9 million Euro. At the date of this document, the property is used as an additional operational headquarters of Banca Ifis.
The interest rate on lease payables reflects the average Group cost of funding, taking into account the creditworthiness of the lessee and the economic context in which the transaction occurs, accordingly with the IFRS 16.
Part M - Leasing disclosure
Section 1 - Lessee
Qualitative information
As lessee, the Group companies stipulate lease contracts on properties mainly to be used instrumentally. They are therefore leases of properties intended to host internal offices. As the lease business is correlated to the Group\u2019s need to offshore its offices, particularly close attention is paid to identifying the most suitable properties for use, designated in line with the economic criteria established by the company.
At 31 December 2023, there are 66 passive lease contracts for buildings and 9 for car parking spaces, the related right of use (ROU) booked at 31 December 2023 is 16,4 million Euro, whilst the corresponding lease liabilities come to 16,7 million Euro. The Group also has a property in Florence, financially leased as described in \"Part B - Information on the Consolidated Statement of Financial Position\" of these Consolidated Financial Statements and Report.
As regards the contracts for cars, the Group has passive contracts for 293 cars at 31 December 2023, which are mainly long-term hires of structure cars and fringe benefits for employees. The related rights of use at 31 December 2023 are 3,4 million Euro, while the corresponding liabilities for leasing come to 3,5 million Euro.
The Group is not exposed to outgoing cash flows, which are not already reflected in the measurement of the leasing liabilities. In greater detail, exposure deriving from the extension options are included in lease liabilities booked, insofar as the Group considers the first renewal as certain; the other situations recalled by the standard (variable payments connected with leasing, guarantees of residual value, lease commitments that are not yet operative) are not present for the contracts stipulated as lessee.
The Group books the following costs:
\u2022short-term leases in the event of assets such as properties and technologies (in particular, the mainframe hardware), when the related contracts have a maximum term of twelve months and have no option for extension;
\u2022leases of low-unit-value assets (in accordance with the option granted by paragraph 5 of IFRS 16), identified as those with a replacement value of less than 5.000 Euro, mainly related to mobile telephony.
Quantitative information
The table below provides indication on the amortisation/depreciation cost for assets consisting of the right of use, broken down by classes of underlying asset.
AMORTISATION/DEPRECIATION COSTS FOR ASSETSCOMPRISING THE RIGHT OF USE(in thousands of Euro)31.12.202331.12.2022
a) Land - -
b) Buildings 2.497 2.547
c) Furniture - -
d) Electronic equipment 157 226
e) Other 1.384 1.065
Total 4.039 3.838
\"\"
Section 2 - Lessor
Qualitative information
The Group offers fixed or variable-rate financial leasing solutions for vehicles (cars, commercial and industrial vehicles) and instrumental assets (industrial machinery, medical equipment, technological assets) to both private customers and small and medium enterprises (SMEs) through an internal commercial structure and a network of selected agents in financial assets throughout the whole of national territory. The leasing of instrumental assets is also distributed through relations with manufacturers, distributors and retailers. With reference to the specific financial leasing segments:
\u2022Automotive: in 2023, this segment recorded an increase compared to 2022 both in terms of the number of vehicles (+22%) and value financed (+28,8%). Compared to 2022, the industrial vehicle leasing segment recorded +8% over the previous year (for 2,7 billion Euro), passenger car leasing +35,3% (for 4,5 billion Euro) and finally commercial vehicle leasing +24,8% (for 1,4 billion Euro). In this segment, the Group has signed contracts for approximately 365 million Euro, namely +6% compared with the amount disbursed in 2022;
\u2022instrumental segment: down by 17,7%, compared to 2022 for a total of 8,9 billion Euro. The Group recorded a decrease of 8,3% in this segment, or -280 million Euro, compared to the market trend.
As lessor, the Parent company does not stipulate lease contracts for properties for commercial use or accommodation with third parties and/or other group companies.
In referring to the greater detail given in the section \u201cContribution of operating Segments to Group results\u201d of the Directors\u2019 Report on the Group, it is there pointed out that the lease agreements stipulated with customers enable the management of risk on the underlying assets in line with the Group\u2019s policy, as there is no provision for buy-back agreements, guarantees on residual value or variable payments. The Group therefore books the financial lease in accordance with accounting standard IFRS 16 and classifies the transactions amongst financial assets measured at amortised cost.
Quantitative information
1. Information from the statement of financial position and income statement
For information on loans connected with financial lease transactions, reference is made to the contents of \"Section 4 - Financial assets measured at amortised cost\u201d of the Assets of \u201cPart B - Information on the Consolidated Statement of Financial Position\u201d of the Consolidated Financial Statements and Report. As regards interest income on lease loans, reference is made to the contents of \u201cSection 1 - Interest - Items 10 and 20\u201d of \u201cPart C - Information on the Consolidated Income Statement\" of the Consolidated Financial Statements and Report; for commissions, refer to \u201cSection 2 - Commissions - Items 40 and 50\u201d of Part C and, finally, for other operating income, refer to \u201cSection 16 - Other operating income (costs) - Item 230\u201d against of Part C.
2. Finance leases
2.1. Classification by time frames of payments to be received and reconciliation with the leasing loans entered under assets
Time frames31.12.202331.12.2022
Payments to be received for leasingPayments to be received for leasing
Up to 1 year91.696 432.346
Over 1 to 2 years200.027 364.853
Over 2 to 3 years316.150 294.891
Over 3 to 4 years438.561 207.951
Over 4 to 5 years438.810 126.765
Over 5 years83.080 16.908
Total payments to be received for leasing1.568.324 1.443.714
RECONCILIATION WITH LOANS
Financial gains not accrued (-)(173.038) (112.873)
Residual value not guaranteed (-)--
Financing for leasing1.395.286 1.330.841
\"\"
The table shows the classification by time frame of payments receivable for leasing and the reconciliation of such payments and lease loans as lessor. The table does not show impairment losses totalling 32,9 million Euro at 31 December 2023 (32,6 million Euro in 2022).
2.2 Other information
There is no further information to report than that presented in the preceding paragraphs.
3. Operating leases
The case referred to in this disclosure is not applicable to the Banca Ifis Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasePrepaymentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page158-cflshid_80264-tag94253": { "value": "1.2 Financial liabilities measured at amortised cost: breakdown of payables due to customers by type
31.12.2023
31.12.2022
Fair Value
Fair Value
Type of transaction/Amounts
CA
L1
L2
L3
CA
L1
L2
L3
1. Current accounts and on demand deposits
1.147.597
X
X
X
1.410.871
X
X
X
2. Term deposits
4.139.143
X
X
X
3.547.969
X
X
X
3. Loans
493.791
X
X
X
50.003
X
X
X
3.1 Repurchase agreements
346.317
X
X
X
50.003
X
X
X
3.2 Other
147.474
X
X
X
-
X
X
X
4. Debt from buyback commitments on treasury equity instruments
-
X
X
X
-
X
X
X
5. Lease payables
22.702
X
X
X
21.733
X
X
X
6. Other payables
11.391
X
X
X
72.767
X
X
X
Total
5.814.624
-
-
6.156.150
5.103.343
-
-
5.450.030
\"\"
Key:
CA = Carrying amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Payables due to customers at 31 December 2023 total 5,8 billion Euro, up 13,9% compared to 31 December 2022. The growth is driven by both retail funding, which amounts to 4,5 billion Euro at the end of December 2023 (+7,6%), and the repurchase agreement (repo) component, which increases by 296,3 million Euro compared to 31 December 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromCustomersExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page159-cflshid_81149-tag94254": { "value": "
1.4 Breakdown of subordinated debts/securities
The line item \"Debt securities issued\" includes 372,7 million Euro in subordinated notes related to Euro Tier 2 bond issued in mid-October 2017 for a nominal amount of 400 million Euro.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page160-cflshid_81517-tag94255": { "value": "
Section 2 - Financial liabilities held for trading - item 20
2.1 Financial liabilities held for trading: breakdown by type
Type of transaction/Amounts31.12.202331.12.2022
NAFair valueFair value*NAFair valueFair value*
L1L2L3L1L2L3
A. On-balance-sheet liabilities
1. Payables due to banks ----------
2. Payables due to customers ----------
3. Debt securities ----X----X
3.1 Bonds ----X----X
3.1.1 Structured ----X----X
3.1.2 Other bonds ----X----X
3.2 Other securities ----X----X
3.2.1 Structured ----X----X
3.2.2 Other ----X----X
Total A ----------
B. Derivatives
1. Financial derivatives X-14.005-XX-25.982-X
1.1 For trading X-14.005-XX-25.982-X
1.2 Connected to the fair value option X---XX---X
1.3 Other X---XX---X
2. Credit derivatives X---XX---X
2.1 For trading X---XX---X
2.2 Connected to the fair value option X---XX---X
2.3 Other X---XX---X
Total B X-14.005-XX-25.982-X
Total (A+B)X-14.005-XX-25.982-X
\"\"
Key:
NA = Nominal or notional amount
L1 = Level 1
L2 = Level 2
L3 = Level 3
Fair value* = Fair value calculated excluding changes in value due to changes in the issuer's creditworthiness compared to the date of issuance
With regard to Level 2 trading liabilities, see the comments in \"Section 2 - Financial assets measured at fair value through profit or loss - Item 20\" of Assets.
2.2 Details of \u201cFinancial liabilities held for trading\u201d: subordinated liabilities
There are no subordinated liabilities recognised in the item of this section.
2.3 Details of \u201cFinancial liabilities held for trading\u201d: structured debts
There are no structured debts recorded in the item of this section.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesHeldForTradingExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page163-cflshid_83822-tag94258": { "value": "Section 8 - Other liabilities - Item 80
8.1 Other liabilities: breakdown
\u00a031.12.202331.12.2022
Payables due to suppliers133.138122.831
Payables due to personnel26.65924.648
Payables due to the Tax Office and Social Security agencies27.34614.241
Sums available to customers25.19328.320
Accrued liabilities and deferred income4.6702.416
Other items130.321140.860
of which: payables to La Scogliera for tax consolidation31.21733.680
of which other payables99.104107.180
Miscellaneous provisional items40.22758.381
Total other liabilities387.554391.697
\"\"
\u201cOther items\u201d include 31,2 million Euro for a payable due to La Scogliera S.A. deriving from the application of the tax consolidation (33,7 million Euro at 31 December 2022).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page163-cflshid_83822-tag94257": { "value": "Section 8 - Other liabilities - Item 80
8.1 Other liabilities: breakdown
\u00a031.12.202331.12.2022
Payables due to suppliers133.138122.831
Payables due to personnel26.65924.648
Payables due to the Tax Office and Social Security agencies27.34614.241
Sums available to customers25.19328.320
Accrued liabilities and deferred income4.6702.416
Other items130.321140.860
of which: payables to La Scogliera for tax consolidation31.21733.680
of which other payables99.104107.180
Miscellaneous provisional items40.22758.381
Total other liabilities387.554391.697
\"\"
\u201cOther items\u201d include 31,2 million Euro for a payable due to La Scogliera S.A. deriving from the application of the tax consolidation (33,7 million Euro at 31 December 2022).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page163-cflshid_83822-tag94256": { "value": "Section 8 - Other liabilities - Item 80
8.1 Other liabilities: breakdown
\u00a031.12.202331.12.2022
Payables due to suppliers133.138122.831
Payables due to personnel26.65924.648
Payables due to the Tax Office and Social Security agencies27.34614.241
Sums available to customers25.19328.320
Accrued liabilities and deferred income4.6702.416
Other items130.321140.860
of which: payables to La Scogliera for tax consolidation31.21733.680
of which other payables99.104107.180
Miscellaneous provisional items40.22758.381
Total other liabilities387.554391.697
\"\"
\u201cOther items\u201d include 31,2 million Euro for a payable due to La Scogliera S.A. deriving from the application of the tax consolidation (33,7 million Euro at 31 December 2022).
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page163-cflshid_83822-tag94259": { "value": "
Section 9 - Post-employment benefits - Item 90
9.1 Post-employment benefits: annual changes
\u00a031.12.202331.12.2022
A. Opening balance 7.6969.337
B. Increases 1.889 1.408
B.1 Provisions for the year 1.549 1.082
B.2 Other changes340 326
- business combinations199-
C. Decreases 1.679 3.049
C.1 Payments made 465 312
C.2 Other changes 1.214 2.737
D. Closing balance 7.906 7.696
\"\"
Payments made represent the portions liquidated to employees during the year.
Other decreases include the impact of the discounting of benefits earned up to 31 December 2006 and still held in the company, which, based on the changes introduced by the new IAS 19, are recognised through valuation reserves entered as equity.
The increase recorded in 2023 for business combinations relates to the debit balances for termination indemnities transferred to the Group as a result of the fourth quarter 2023 acquisition of Revalea S.p.A. (for more details, refer to the section \"Significant events during the year\" of the Directors' Report on the Group as well as to \"Part G - Business combinations\").
9.2 Other information
Under IAS/IFRS standards, a company's liabilities regarding benefits that will be paid to employees at the conclusion of the employer/employee relationship (post-employment benefits) should be recognised based on actuarial calculations of the amount that will be paid at maturity.
Specifically, these allocations must take into account the amount already earned over the period at the reporting date, projecting it into the future in order to calculate the amount that will be paid at the conclusion of the
employer/employee relationship. This amount must then be discounted to take into account the time that will pass until payment.
Following the coming into force of the 2007 Budget Law, which brought the reform regarding supplementary pension plans - as per Italian Legislative Decree No. 252 of 5 December 2005 - forward to 1 January 2007, the employee was given a choice as to whether to allocate the post-employment benefits (severance indemnity) earned as from 1 January 2007 to supplementary pension funds or to maintain them in the company, which would then transfer it to a dedicated fund managed by INPS (the Italian National Social Security Institute).
This reform has led to changes in the accounting of post-employment benefits (severance indemnity) as for both the benefits earned up to 31 December 2006 and those earned from 1 January 2007.
In particular:
\u2022post-employment benefits (severance indemnity) earned as from 1 January 2007 constitute a \u201cdefined-contribution plan\u201d, regardless of whether the employee has chosen to allocate them to a supplementary pension fund or to INPS's Treasury Fund. Those benefits shall be calculated according to contributions due without applying actuarial methods;
\u2022the severance indemnity earned up to 31 December 2006 continues to be considered as a \"defined-benefit plan\", and as such is calculated on an actuarial basis which, however, unlike the calculation method applied until 31 December 2006, no longer requires that the benefits be proportionally attributed to the period of service rendered. This is because the employee\u2019s service is considered entirely accrued due to the change in the accounting nature of benefits earned as from 1 January 2007.
The actuarial valuation of the severance indemnity was conducted by an independent external actuary, based on the \u201caccrued benefits\u201d methodology using the \u201cProjected Unit Credit\u201d criterion, as required by IAS 19. The following table shows the main demographic, economic and financial assumptions on which the valuation at 31 December 2023 is based compared to the valuation at 31 December 2022.
Main actuarial assumptions for the valuation of the severance indemnity (\"TFR\")
Demographic assumptions (2023-2022):
Employee mortality rate
From Istat table resident population
Probability of the request for advance payment of severance indemnity
1,3%
Measure required in the case of severance indemnity advance
70,0%
Frequency of turnover
2,2%
Financial assumptions (2023-2022):
Annual discount rate
3,2%
Annual inflation rate
2,3%
\"\"
As illustrated above, the changes in some of the actuarial assumptions for the valuation of the severance indemnity at 31 December 2023, compared to the previous year, resulted in an overall increase in the provision of 0,2 million Euro, equal to the combined effect of the following elements:
\u2022changes in financial assumptions, for an overall positive net effect of 0,2 million Euro;
\u2022changes in other actuarial assumptions, for an overall insignificant net effect.
With regard to the discount rate of 3,2%, which is one of the most important assumptions used in the measurement of defined benefit plan obligations, reference was made to an average rate calculated on the basis of the duration of the settlements and using reference indices on corporate bonds in euro currency and with a maturity > 10 years as benchmarks.
In fact, IAS 19 requires that this rate should reflect the time value of money, but not the entity-specific credit risk, actuarial or investment risk, and the risk that the actual data experienced may differ in the future from the actuarial assumptions used. The standard further specifies that this rate shall be determined by reference to market yields, at the end of the reporting period, of securities of primary corporations of the country in which the entity operates (referred to as the \"High Quality Corporate Bond yield\") and, alternatively, in the absence of a market for such securities, by reference to market yields of government securities.
Sensitivity analyses
As required by IAS 19, a sensitivity analysis of the severance pay obligation was conducted assuming an increase or decrease in the discount rate and inflation rate of 50 basis points. The analysis is intended to show how much the balance sheet liability would vary in relation to reasonably possible fluctuations in these actuarial assumptions.
The results of the sensitivity analysis, in terms of absolute and percentage changes in the consolidated severance indemnity liability, are shown in the table below.
\u00a0Change in TFR in absolute terms (million Euro)Change in TFR in percentage terms
Modification of actuarial assumptions:\u00a0\u00a0
Discounting rate\u00a0\u00a0
+ 0,5% (259,1)(3,3)%
- 0,5%286,53,6%
Inflation rate
+ 0,5%220,12,8%
- 0,5% (217,2)(2,7)%
\"\"
10.5 Defined-benefit corporate pension funds
1. Illustration of fund characteristics and related risks
The item includes the provision related to the post-retirement medical plan in favour of certain employees of the Banca Ifis Group, introduced in the third quarter of 2023: this is a defined benefit plan that provides for healthcare and other benefits to employees, even after retirement.
Specifically, the Banca Ifis Group has provided, for all Group managerial staff, insurance cover for the reimbursement of medical expenses (RSMO) valid and effective until the age of 85. This cover is therefore in continuity with the cover in place during employment, even after retirement. The only condition for access is the termination of employment with the Parent company or other Group companies due to retirement. The policypremium will be borne by the Bank with an annual contribution from the retired manager. Therefore, the Group is responsible for the costs and risks associated with the provision of such benefits.
2. Changes in net defined benefit liabilities (assets) and redemption rights during the year
Since the post-retirement medical plan was introduced during the third quarter of 2023, the opening balances at January 2023 of the net defined benefit liabilities are nil. At 31 December 2023, due to the activation of the plan and the related accruals for the second half of 2023, this fund amounts to 196 thousand Euro.
3. Disclosure of fair value of plan assets
There is no information to be reported in this paragraph.
4. Description of the main actuarial assumptions
For this fund, as a supplementary defined-benefit pension fund, the determination of the actuarial values required by the application of IAS 19 \"Employee Benefits\" is carried out by an independent actuary, using the \"Project Unit Credit Method\". The liability is recognised in the balance sheet net of any plan assets, and actuarial gains and losses calculated in the plan valuation process are recognised in the statement of comprehensive income and, therefore, in equity.
The main actuarial assumptions adopted are as follows:
\u2022discount rate of 3,2%, calculated as an average rate on the basis of the duration of the liquidations and using reference indices on corporate bonds in euro currency and with maturity > 10 years as benchmarks;
\u2022premium inflation rate of 2,3%;
\u2022annual turnover rate of 2,0%;
\u2022frequency of \u201cwaiver\u201d (non-payment of the premium component of pensioners) of 2,0%.
5. Information on amount, timing and uncertainty of cash flows
Given that the healthcare benefits are provided through a policy and that they constitute a benefit for the recipients until they reach the age of 85, the obligation subject to discounting under IAS 19 is that relating to the period in retirement and up to the age of 85.
A sensitivity analysis was also conducted on these net defined benefit liabilities, analysing what the amount of the net liabilities would be in the event of:
\u2022a change in the discount rate of +/- 0,5% (50 bps);
\u2022a change in the growth rate of payments to the insurance company of +/- 0,5% (50 bps);
\u2022a change in the inflation rate of +/- 0,5% (50 bps);
\u2022a change in the wage growth rate of +/- 0,5% (50 bps);
\u2022a change in retirement age of +/- 1 year;
\u2022a change in average longevity of +/- 1 year.
The maximum and minimum values of the net defined-benefit liabilities at 31 December 2023 resulting from the aforementioned sensitivities are 224 thousand Euro and 138 thousand Euro, respectively.
6. Multi-employer plans
There is no information to be reported in this paragraph.
7. Defined benefit plans that share risks between entities under common control
There is no information to be reported in this paragraph.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page165-cflshid_84918-tag94261": { "value": "
Section 10 - Provision for risks and charges - Item 100
10.1 Provisions for risks and charges: breakdown
Items/Components31.12.202331.12.2022
1. Provisions for credit risk related to commitments and financial guarantees granted5.3749.325
2. Provisions on other commitments and financial guarantees granted-39
3. Provisions for pensions196-
4. Other provisions for risks and charges52.60846.861
4.1 legal and tax disputes43.02937.543
4.2 personnel expenses2.5922.800
4.3 other 6.9876.518
Total58.17856.225
\"\"
At 31 December 2023, total provisions for risks and charges amount to 58,2 million Euro, up 2,0 million Euro on the previous year.
10.2 Provisions for risks and charges: annual changes
Provisions on other commitments and financial guarantees grantedProvisions for pensionsOther provisions for risks and chargesTotal 31.12.2023
A. Opening balance 39-46.86146.900
B. Increases -22210.10510.327
B.1 Provisions for the year -2148.9769.190
B.2 Changes due to the passage of time -8-8
B.3 Changes due to changes in the discount rate --- -
B.4 Other changes--1.1291.129
-business combinations--1.0291.029
C. Decreases 39264.3584.423
C.1 Used in the year --3.8153.815
C.2 Changes due to changes in the discount rate--- -
C.3 Other changes 3926543608
D. Closing balance -19652.60852.804
\"\"
10.3 Provisions for credit risk related to commitments and financial guarantees granted
Provisions for credit risk related to commitments and financial guarantees granted
Stage 1Stage 2Stage 3Purchased and/or originated impairedTotal
Loan commitments2.346 597 7 - 2.950
Guarantees granted292 44 2.088 - 2.424
Total 2.638 641 2.095 - 5.374
\"\"
At 31 December 2023, this item amounts to 5,3 million Euro, reflecting the impairment losses on irrevocable commitments to disburse funds and financial guarantees granted by the Group.
10.4 Provisions on other commitments and other guarantees given
There are no provisions for other commitments and other guarantees given in these Consolidated Financial Statements.
10.5 Defined-benefit corporate pension funds
1. Illustration of fund characteristics and related risks
The item includes the provision related to the post-retirement medical plan in favour of certain employees of the Banca Ifis Group, introduced in the third quarter of 2023: this is a defined benefit plan that provides for healthcare and other benefits to employees, even after retirement.
Specifically, the Banca Ifis Group has provided, for all Group managerial staff, insurance cover for the reimbursement of medical expenses (RSMO) valid and effective until the age of 85. This cover is therefore in continuity with the cover in place during employment, even after retirement. The only condition for access is the termination of employment with the Parent company or other Group companies due to retirement. The policy
premium will be borne by the Bank with an annual contribution from the retired manager. Therefore, the Group is responsible for the costs and risks associated with the provision of such benefits.
2. Changes in net defined benefit liabilities (assets) and redemption rights during the year
Since the post-retirement medical plan was introduced during the third quarter of 2023, the opening balances at January 2023 of the net defined benefit liabilities are nil. At 31 December 2023, due to the activation of the plan and the related accruals for the second half of 2023, this fund amounts to 196 thousand Euro.
3. Disclosure of fair value of plan assets
There is no information to be reported in this paragraph.
4. Description of the main actuarial assumptions
For this fund, as a supplementary defined-benefit pension fund, the determination of the actuarial values required by the application of IAS 19 \"Employee Benefits\" is carried out by an independent actuary, using the \"Project Unit Credit Method\". The liability is recognised in the balance sheet net of any plan assets, and actuarial gains and losses calculated in the plan valuation process are recognised in the statement of comprehensive income and, therefore, in equity.
The main actuarial assumptions adopted are as follows:
\u2022discount rate of 3,2%, calculated as an average rate on the basis of the duration of the liquidations and using reference indices on corporate bonds in euro currency and with maturity > 10 years as benchmarks;
\u2022premium inflation rate of 2,3%;
\u2022annual turnover rate of 2,0%;
\u2022frequency of \u201cwaiver\u201d (non-payment of the premium component of pensioners) of 2,0%.
5. Information on amount, timing and uncertainty of cash flows
Given that the healthcare benefits are provided through a policy and that they constitute a benefit for the recipients until they reach the age of 85, the obligation subject to discounting under IAS 19 is that relating to the period in retirement and up to the age of 85.
A sensitivity analysis was also conducted on these net defined benefit liabilities, analysing what the amount of the net liabilities would be in the event of:
\u2022a change in the discount rate of +/- 0,5% (50 bps);
\u2022a change in the growth rate of payments to the insurance company of +/- 0,5% (50 bps);
\u2022a change in the inflation rate of +/- 0,5% (50 bps);
\u2022a change in the wage growth rate of +/- 0,5% (50 bps);
\u2022a change in retirement age of +/- 1 year;
\u2022a change in average longevity of +/- 1 year.
The maximum and minimum values of the net defined-benefit liabilities at 31 December 2023 resulting from the aforementioned sensitivities are 224 thousand Euro and 138 thousand Euro, respectively.
6. Multi-employer plans
There is no information to be reported in this paragraph.
7. Defined benefit plans that share risks between entities under common control
There is no information to be reported in this paragraph.
10.6 Provisions for risks and charges - Other provisions
Legal and tax disputes
At 31 December 2023, provisions have been made for 43,0 million Euro for legal and tax disputes in respect of which the Group is deemed to have a present obligation that may lead to the use of financial resources. Information on the amount of the allocation to the provisions for risks and charges is not provided by individual dispute but by type, both in consideration of the number of disputes and in order to avoid prejudicing the Group in
the evolution of the dispute with the counterparty, either through legal proceedings or settlements. More specifically, the amount mainly breaks down as follows:
\u202221,3 million Euro for 26 disputes concerning the Factoring Area (the plaintiffs seek 41,4 million Euro in damages), mainly connected with the request for the repetition of amounts collected or payments under guarantee in relation to factoring positions without recourse. Compared to 31 December 2022, 2 new cases were received with a corresponding provision of 2,0 thousand Euro, while 4 cases were closed with a total provision of 140 thousand Euro;
\u20228,9 million Euro (the plaintiffs seek 14,4 million Euro in damages) for 18 disputes deriving from the business unit acquired from the former Aigis Banca and mainly the Corporate Banking & Lending Area of the Commercial and Corporate Banking Segment. During the year, a dispute whose associated provision for risks and charges amounted to 40 thousand Euro was closed, and, in addition, utilisations of 0,8 million Euro were recorded on disputes still outstanding at 31 December 2023;
\u20226,5 million Euro (the plaintiffs seek 54,0 million Euro in damages) for 6 disputes concerning the Corporate Banking & Lending Area deriving from the former Interbanca. With respect to 31 December 2022, a new case was notified, the corresponding provision amounting to 3,3 million Euro;
\u20221,2 million Euro (the plaintiffs seek 1,5 million Euro in damages) for 15 disputes concerning the Leasing Area and tax receivables. In 2023, 6 cases were closed, the provision for risks and charges for which amounts to 246 thousand Euro at 31 December 2022, while no new disputes were received during the year;
\u20222,6 million Euro (the plaintiffs seek 7,2 million Euro in damages) for 50 disputes of Ifis Npl Investing. In 2023, 34 disputes were closed for a provision of 261 thousand Euro and 17 new cases were received, for which the provision made at 31 December 2023 was 99 thousand Euro;
\u20221,0 million Euro relating to various disputes concerning Banca Credifarma (the plaintiffs seek 5,3 million Euro). During the year, the company was notified of a new dispute, the associated provision for risks and charges of which amounted to 500 thousand Euro at 31 December 2023, while 2 cases were settled, the associated provision for which amounted to 21 thousand Euro at 31 December 2022;
\u2022729 thousand Euro (the plaintiffs seek 10,3 million Euro in damages) for 18 disputes regarding the company Revalea;
\u2022666 thousand Euro (the plaintiffs seek 3,4 million Euro) mainly for disputes with customers and agents relating to Cap.Ital.Fin. During 2023, 6 cases were closed with a provision of 55 thousand Euro at 31 December 2022 and 20 cases were opened with a provision of 47 thousand Euro;
\u202230 thousand Euro (the plaintiffs seek the same amount in damages) for disputes concerning the investee Ifis Rental Services.
Personnel expenses
At 31 December 2023, provisions are entered for staff for 2,6 million Euro (2,8 million Euro at 31 December 2022) of which 2,0 million Euro relating to the Solidarity Fund.
Other provisions for risks and charges
At 31 December 2023, \u201cOther provisions\u201d are in place for 7,0 million Euro, a rise on the figure recorded at 31 December 2022. The item mainly consists of 3,9 million Euro for Supplementary Customer Indemnity in connection with the Leasing Area's operations, 1,5 million Euro for the risks linked to the assignment of receivables under the scope of securitisations of bad loans guaranteed by Italian Treasury Department (\u201cGACS\u201d) and 0,7 million Euro for risks linked to miscellaneous complaints.
Contingent liabilities
The most significant potential liabilities existing at 31 December 2023, for which a negative outcome is held to be merely \u201cpossible\u201d are detailed below by way of information only. The amount sought in association with these contingent liabilities totals 478,4 million Euro at 31 December 2023.
During the fourth quarter of 2022, Banca Ifis was sued by the bodies of two bankruptcy proceedings, which requested that it be ordered to pay 389,3 million Euro in one case and 47,7 million Euro in the other, as compensation for damages for the unlawful forbearance in its capacity as lender, albeit marginal, of the companies now in proceedings. The first claim was made jointly and severally with 23 other institutions, while the second claim was made jointly and severally with 8 other institutions. The Group, supported by its legal advisers, evaluated the risk of defeat as \u201cpossible\u201d and, therefore, it did not allocate funds to the provisions for risks and charges.
Tax litigation - income tax
Dispute concerning the assumed \"permanent establishment\" in Italy of the Polish company Ifis Finance Sp. z o.o.
Following a tax audit for the years 2013/2017, Notices of Assessment were served for the years 2013/2017 in which the \"concealed permanent establishment\" of Ifis Finance Sp. z o.o., the subsidiary based in Poland, was contested.
The Financial Police Force hypothesised that the office in Poland was used in the Group's strategies more as a branch/office for the promotion and sale of services offered, de facto, by the Parent company Banca Ifis rather than constituting an independent and autonomous legal entity in the exercise of its activity.
2013-2014-2015:
\u2022on 12 November 2020, the Venice Provincial Tax Commission fully upheld the appeal filed by Banca Ifis (ruling No. 266/2021) against the notices of IRES, IRES surcharge and IRAP tax assessment for the years 2013/2014/2015 issued by the Italian Revenue Agency. The Commission in fact declared that it was a \u201clegitimate right of the Italian Parent company, seeking to expand its banking and factoring services business in Poland, to determine the operative strategy of the Parent company established to this end\u201d;
\u2022on 14 October 2021, the Revenue Agency was notified of the filing of the appeal with the Veneto Regional Tax Commission (\"CTR\");
\u2022on 2 December 2021, the Bank filed its rebuttal arguments in defence of its positions as confirmed by the Provincial Tax Commission;
\u2022with judgement No. 201/2023, filed on 27 February 2023, the Veneto Court of Tax Appeals of second instance rejected the appeal of the Revenue Agency, thus confirming the first instance sentence (favourable to the Bank) and awarded 5 thousand Euro in expenses ex lege in favour of the Bank. At present, the Revenue Agency has not yet appealed in Cassation.
2016:
\u2022in June 2022, the Notices of Assessment for 2016 were also served, containing the same objections and arguments as in the previous years, with the addition of the disputes of costs recorded in 2016 that were deemed to be outside the accrual period;
\u2022the Notice of Assessment for 2016 was challenged within the time limits provided for by the legislation, and at the same time one third of the taxes were paid pending judgement. The Venice Tax Commission, with ruling No. 111/2024 filed on 8 February 2024, upheld the appeal filed by the Bank.
2017:
\u2022in September 2022, the Notices of Assessment for 2017 were also served containing the same objections and arguments as for the previous year. These deeds were challenged within the terms of the law.
Tax litigation - value added tax (VAT)
On 29 November 2023, a Notice of Assessment was served in which the Revenue Agency contested the Parent company, Banca Ifis's failure to pay VAT in the amount of 170 thousand Euro on 88 contracts for not having carried out adequate preventive controls on the presence of the conditions in the presence of which the client would have been able to deduct the VAT on the car, not deeming sufficient for these purposes the issuance of the letter of intent through which the client declared that he was entitled, as a habitual exporter, to receive the invoice under the non-taxable regime.
The Notice of Assessment in question will be challenged within the time limits provided for by the legislation, and at the same time one third of the taxes will be paid pending judgement.
Regarding that described previously, the Group, supported by the opinions of its tax advisers, evaluated the risk of defeat possible, but not probable, and therefore it did not allocate funds to the provisions for risks and charges.
1. Commitments and financial guarantees granted
Nominal amount of commitments and financial guarantees granted
Total 31.12.2023
Total 31.12.2022
Stage 1
Stage 2
Stage 3
Purchased and/or originated impaired
1. Loan commitments
1.085.982
36.812
28.704
-
1.151.498
1.149.969
a) Central Banks
-
-
-
-
-
-
b) Public Administrations
1
-
-
-
1
1
c) Banks
235
-
-
-
235
-
d) Other financial companies
138.815
2
1.248
-
140.065
157.987
e) Non-financial companies
779.330
31.921
24.898
-
836.149
765.413
f) Households
167.601
4.889
2.558
-
175.048
226.568
2. Guarantees granted
65.915
132.415
17.322
-
215.652
467.356
a) Central Banks
-
-
-
-
-
-
b) Public Administrations
-
-
-
-
-
-
c) Banks
19
-
-
-
19
80.537
d) Other financial companies
4.626
189
-
-
4.815
6.235
e) Non-financial companies
58.726
132.043
17.188
-
207.957
376.583
f) Households
2.544
183
134
-
2.861
4.001
\"\"
2. Other commitments and guarantees granted
Nominal amount
31.12.202331.12.2022
Other guarantees granted 32.688 20.960
of which: non-performing loans - 11
a) Central Banks - -
b) Public Administrations - -
c) Banks - -
d) Other financial companies - -
e) Non-financial companies 32.688 20.960
f) Households - -
Other commitments 56.930 40.646
of which: non-performing loans - -
a) Central Banks - -
b) Public Administrations - -
c) Banks - -
d) Other financial companies 53.011 40.646
e) Non-financial companies 3.919 -
f) Households - -
\"\"
1.5 Operational risks
Qualitative information
A. General aspects, management procedures and measurement methods concerning operational risk
Operational risk is the risk of losses arising from inadequate or dysfunctional processes, human resources, internal systems or external events. This definition does not include strategic risk and reputational risk, but it does include legal risk (i.e. the risk of losses deriving from failure to comply with laws or regulations, contractual or extra-contractual liability, or other disputes), IT risk, risk of non-compliance, fraud risk, risk of money laundering and terrorist financing, and the risk of financial misstatement.
The main sources of operational risk are operational errors, inefficient or inadequate operational processes and controls, internal and external frauds, the outsourcing of business functions, the quality of physical and logical security, inadequate or unavailable hardware or software systems, the growing reliance on automation, staff below strength relative to the size of the business, and inadequate human resources management and training policies.
The Banca Ifis Group has adopted for a while now - consistently with the relevant regulatory provisions and industry best practices - an operational risk management framework. This consists in a set of rules, procedures, resources (human, technological and organisational), and controls aiming to identify, assess, monitor, prevent or mitigate all existing or potential operational risks in the various organisational units, as well as to communicate them to the competent levels. The key processes for the proper management of operational risk are represented:
\u2022by the Loss Data Collection activity, i.e. the structured collection and census of losses deriving from operational risk events, which is consolidated thanks also to the constant activity by the Risk Management function to disseminate among the corporate structures a culture oriented towards the awareness and proactive management of operational risks;
\u2022by the prospective self-assessment of risk exposure through the execution of periodic Risk Self Assessment and Model Risk Self Assessment campaigns, aimed at obtaining an overall view of risks in terms of frequency and/or potential financial impact and the related organisational safeguards.
With specific reference to the monitoring of the evolution of ICT and Security risk and the assessment of the effectiveness of ICT resource protection measures, the Banca Ifis Group, in compliance with the regulatory requirement2 has opted for a shared responsibility model, assigning tasks to the Risk Management and Compliance corporate control functions, in relation to the roles, responsibilities and competences of each of the two functions. In particular, the Risk Management function conducts ICT and security risk analysis processes in accordance with the organisational and methodological framework approved by the Board of Directors in order, for example, to verify compliance with the ICT and security risk propensity level, the related risk objectives that the Group intends to achieve, and the resulting operational limits. If the level of ICT and security risk exceeds the defined threshold value, in order to bring it back within the acceptable risk threshold, measures are identified to deal with it, which flow into the \"Treatment Plan\" that identifies responsibilities for implementing individual corrective actions.
The results of the above-mentioned analyses are reported in the \"Summary Report on the ICT and Security Risk Situation\" subject to annual approval by the CEO in his capacity as the body with management functions.
In addition, according to its operational risk management framework (including the ICT and Security risk), the Group defines a set of measures that can promptly identify the presence of vulnerabilities in the exposure of the Bank and its subsidiaries to operational risks. These measures are continuously monitored and disclosed in periodic reports through synthetic risk measures that are shared with the competent structures and bodies: events such as the breach of certain thresholds or the emergence of anomalies trigger specific escalation processes aimed at defining and implementing appropriate mitigation actions. In addition, as part of the definition of the Risk Appetite Framework (RAF), the preparation of the Recovery Plan and ICAAP reporting, Risk Management function performs analyses by which it assesses its exposure to exceptional but plausible operational risk events. These analyses, referred to as stress analyses, contribute to verifying the resilience of the Group by simulating the impacts of adverse situations in terms of riskiness under the assumption of adverse scenarios.
In order to prevent and manage operational risk, the Parent company's Risk Management function, in collaboration with the other corporate functions, is involved in supervising the risks connected with the supply contracts with
2 On 2 November 2022, the Bank of Italy issued the 40th update of the \"Supervisory Provisions for Banks\", amending Chapter 4 \"The Information System\" and Chapter 5 \"Business Continuity\" of Part One, Title IV, to implement the \"Guidelines on Information Technology (ICT) Risk Management and Security\" (EBA/GL/2019/04) issued by the EBA. On this occasion, some work was also carried out to reconcile and update the internal references in Section I of Chapter 3 \"The Internal Controls System\"
third parties and the outsourcing of simple, essential or important operational functions and in assessing the risks associated with the introduction of new products and services and the preliminary assessment of the operative impact of the massive changes to the product contractual and economic conditions.
Concerning the companies of the Banca Ifis Group, please note that the management of operational risks is guaranteed by the strong involvement of the Parent company, which makes decisions in terms of strategies, also in respect of risk management.
To calculate capital requirements against operational risks, the Group adopted the Basic Indicator Approach.
Alongside operational risk, reputational risk is also managed.
Reputational risk represents the current or prospective risk of a decrease in profits or capital deriving from a negative perception of the Group's image by customers, counterparties, shareholders, investors or the Supervisory Authorities.
Reputational risk is considered a second-level risk, as it is generated by the manifestation of other types of risk, such as the risk of non-compliance, strategic risk and in particular operational risks.
As in the case of operational risk, the Parent's Risk Management function is responsible for managing reputational risk: it defines the Group's overall framework - in accordance with the relevant regulations as well as industry best practices - for the management of reputational risk, with the goal of identifying, assessing, and monitoring the reputational risks that the Group's Companies or organisational units assume or may assume. The framework involves conducting a forward-looking Reputational Risk Self-Assessment, and defining and monitoring a set of risk measures over time. The principles and guidelines that the Banca Ifis Group intends to adopt in the area of operational and reputational risk management are expressed in the \"Group Policy for Operational and Reputational Risk Management\" applied and disseminated, to the extent of its competence, to all organisational units of the Bank and Group companies. Similarly, with regard to the fundamentals inspiring IT risk management, there is a \"Group Policy for ICT and Security Risk Management\" in force, which operates both at the level of the Parent company Banca Ifis and its subsidiaries.
Quantitative information
This section provides a summary view of the results of the Loss Data Collection process at 31 December 2023 conducted at the Banca Ifis Group level. Operational events are subdivided by Event Type.
85% of the gross operating losses recognised in 2023, including provisions made, were attributable to events classified within Event Type categories ET_07 \"Execution, Delivery and Process Management\", ET_04 \"Customers, Products and Professional Practices\" and ET_02 \"External Fraud\". Total net operating losses amount to approximately 50% and, as a result, 50% of the gross operating losses recognised in 2023 were recovered. Below are the details per Event Type.
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10.1 Provisions for risks and charges: breakdown
Items/Components31.12.202331.12.2022
1. Provisions for credit risk related to commitments and financial guarantees granted5.3749.325
2. Provisions on other commitments and financial guarantees granted-39
3. Provisions for pensions196-
4. Other provisions for risks and charges52.60846.861
4.1 legal and tax disputes43.02937.543
4.2 personnel expenses2.5922.800
4.3 other 6.9876.518
Total58.17856.225
\"\"
At 31 December 2023, total provisions for risks and charges amount to 58,2 million Euro, up 2,0 million Euro on the previous year.
10.2 Provisions for risks and charges: annual changes
Provisions on other commitments and financial guarantees grantedProvisions for pensionsOther provisions for risks and chargesTotal 31.12.2023
A. Opening balance 39-46.86146.900
B. Increases -22210.10510.327
B.1 Provisions for the year -2148.9769.190
B.2 Changes due to the passage of time -8-8
B.3 Changes due to changes in the discount rate --- -
B.4 Other changes--1.1291.129
-business combinations--1.0291.029
C. Decreases 39264.3584.423
C.1 Used in the year --3.8153.815
C.2 Changes due to changes in the discount rate--- -
C.3 Other changes 3926543608
D. Closing balance -19652.60852.804
\"\"
1.5 Operational risks
Qualitative information
A. General aspects, management procedures and measurement methods concerning operational risk
Operational risk is the risk of losses arising from inadequate or dysfunctional processes, human resources, internal systems or external events. This definition does not include strategic risk and reputational risk, but it does include legal risk (i.e. the risk of losses deriving from failure to comply with laws or regulations, contractual or extra-contractual liability, or other disputes), IT risk, risk of non-compliance, fraud risk, risk of money laundering and terrorist financing, and the risk of financial misstatement.
The main sources of operational risk are operational errors, inefficient or inadequate operational processes and controls, internal and external frauds, the outsourcing of business functions, the quality of physical and logical security, inadequate or unavailable hardware or software systems, the growing reliance on automation, staff below strength relative to the size of the business, and inadequate human resources management and training policies.
The Banca Ifis Group has adopted for a while now - consistently with the relevant regulatory provisions and industry best practices - an operational risk management framework. This consists in a set of rules, procedures, resources (human, technological and organisational), and controls aiming to identify, assess, monitor, prevent or mitigate all existing or potential operational risks in the various organisational units, as well as to communicate them to the competent levels. The key processes for the proper management of operational risk are represented:
\u2022by the Loss Data Collection activity, i.e. the structured collection and census of losses deriving from operational risk events, which is consolidated thanks also to the constant activity by the Risk Management function to disseminate among the corporate structures a culture oriented towards the awareness and proactive management of operational risks;
\u2022by the prospective self-assessment of risk exposure through the execution of periodic Risk Self Assessment and Model Risk Self Assessment campaigns, aimed at obtaining an overall view of risks in terms of frequency and/or potential financial impact and the related organisational safeguards.
With specific reference to the monitoring of the evolution of ICT and Security risk and the assessment of the effectiveness of ICT resource protection measures, the Banca Ifis Group, in compliance with the regulatory requirement2 has opted for a shared responsibility model, assigning tasks to the Risk Management and Compliance corporate control functions, in relation to the roles, responsibilities and competences of each of the two functions. In particular, the Risk Management function conducts ICT and security risk analysis processes in accordance with the organisational and methodological framework approved by the Board of Directors in order, for example, to verify compliance with the ICT and security risk propensity level, the related risk objectives that the Group intends to achieve, and the resulting operational limits. If the level of ICT and security risk exceeds the defined threshold value, in order to bring it back within the acceptable risk threshold, measures are identified to deal with it, which flow into the \"Treatment Plan\" that identifies responsibilities for implementing individual corrective actions.
The results of the above-mentioned analyses are reported in the \"Summary Report on the ICT and Security Risk Situation\" subject to annual approval by the CEO in his capacity as the body with management functions.
In addition, according to its operational risk management framework (including the ICT and Security risk), the Group defines a set of measures that can promptly identify the presence of vulnerabilities in the exposure of the Bank and its subsidiaries to operational risks. These measures are continuously monitored and disclosed in periodic reports through synthetic risk measures that are shared with the competent structures and bodies: events such as the breach of certain thresholds or the emergence of anomalies trigger specific escalation processes aimed at defining and implementing appropriate mitigation actions. In addition, as part of the definition of the Risk Appetite Framework (RAF), the preparation of the Recovery Plan and ICAAP reporting, Risk Management function performs analyses by which it assesses its exposure to exceptional but plausible operational risk events. These analyses, referred to as stress analyses, contribute to verifying the resilience of the Group by simulating the impacts of adverse situations in terms of riskiness under the assumption of adverse scenarios.
In order to prevent and manage operational risk, the Parent company's Risk Management function, in collaboration with the other corporate functions, is involved in supervising the risks connected with the supply contracts with
2 On 2 November 2022, the Bank of Italy issued the 40th update of the \"Supervisory Provisions for Banks\", amending Chapter 4 \"The Information System\" and Chapter 5 \"Business Continuity\" of Part One, Title IV, to implement the \"Guidelines on Information Technology (ICT) Risk Management and Security\" (EBA/GL/2019/04) issued by the EBA. On this occasion, some work was also carried out to reconcile and update the internal references in Section I of Chapter 3 \"The Internal Controls System\".
third parties and the outsourcing of simple, essential or important operational functions and in assessing the risks associated with the introduction of new products and services and the preliminary assessment of the operative impact of the massive changes to the product contractual and economic conditions.
Concerning the companies of the Banca Ifis Group, please note that the management of operational risks is guaranteed by the strong involvement of the Parent company, which makes decisions in terms of strategies, also in respect of risk management.
To calculate capital requirements against operational risks, the Group adopted the Basic Indicator Approach.
Alongside operational risk, reputational risk is also managed.
Reputational risk represents the current or prospective risk of a decrease in profits or capital deriving from a negative perception of the Group's image by customers, counterparties, shareholders, investors or the Supervisory Authorities.
Reputational risk is considered a second-level risk, as it is generated by the manifestation of other types of risk, such as the risk of non-compliance, strategic risk and in particular operational risks.
As in the case of operational risk, the Parent's Risk Management function is responsible for managing reputational risk: it defines the Group's overall framework - in accordance with the relevant regulations as well as industry best practices - for the management of reputational risk, with the goal of identifying, assessing, and monitoring the reputational risks that the Group's Companies or organisational units assume or may assume. The framework involves conducting a forward-looking Reputational Risk Self-Assessment, and defining and monitoring a set of risk measures over time. The principles and guidelines that the Banca Ifis Group intends to adopt in the area of operational and reputational risk management are expressed in the \"Group Policy for Operational and Reputational Risk Management\" applied and disseminated, to the extent of its competence, to all organisational units of the Bank and Group companies. Similarly, with regard to the fundamentals inspiring IT risk management, there is a \"Group Policy for ICT and Security Risk Management\" in force, which operates both at the level of the Parent company Banca Ifis and its subsidiaries.
Quantitative information
This section provides a summary view of the results of the Loss Data Collection process at 31 December 2023 conducted at the Banca Ifis Group level. Operational events are subdivided by Event Type.
85% of the gross operating losses recognised in 2023, including provisions made, were attributable to events classified within Event Type categories ET_07 \"Execution, Delivery and Process Management\", ET_04 \"Customers, Products and Professional Practices\" and ET_02 \"External Fraud\". Total net operating losses amount to approximately 50% and, as a result, 50% of the gross operating losses recognised in 2023 were recovered. Below are the details per Event Type.
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Section 13 - Group Equity - Items 120, 130, 140, 150, 160, 170 and 180
13.1 \"Share capital\" and \"Treasury shares\": breakdown
Item31.12.202331.12.2022
170Share capital (in thousands of Euro)53.81153.811
Number of ordinary shares53.811.09553.811.095
Nominal amount of ordinary shares1 euro1 euro
180Treasury shares (in thousands of Euro)(21.817)(22.104)
Number of treasury shares1.343.0181.377.981
\"\"
13.2 Share capital - number of Parent company shares: annual changes
Items/TypesOrdinaryOther
A. Shares held at the beginning of the year53.811.095-
- fully paid-up53.811.095-
- not fully paid-up--
A.1 Treasury shares (-)(1.377.981)-
A.2 Outstanding shares: opening balance52.433.114-
B. Increases34.963-
B.1 New issues--
- paid:--
- business combinations--
- conversion of bonds--
- exercise of warrants--
- other--
- free:--
- in favour of employees--
- in favour of directors--
- other--
B.2 Sale of treasury shares--
B.3 Other changes34.963-
C. Decreases--
C.1 Annulments--
C.2 Buybacks of treasury shares--
C.3 Company sell-offs--
C.4 Other changes--
D. Outstanding shares: closing balance52.468.077-
D.1 Treasury shares (+)1.343.018-
D.2 Shares held at the end of the year53.811.095-
- fully paid-up53.811.095-
- not fully paid-up--
\"\"
Other increases in the number of shares refer to the allocation of shares during the year as part of remuneration mechanisms for the Banca Ifis Group's Top Management, which were included in treasury shares at the start of the year.
13.3 Share capital: other information
The share capital is composed of 53.811.095 ordinary shares with a nominal value of 1 Euro each, bearing no rights, liens and obligations, including those relating to dividend distribution and capital redemption.
13.4 Profit reserves: other information
Items/Components31.12.202331.12.2022
Legal reserve20.17419.588
Extraordinary reserve592.709595.081
Buyback reserve21.81722.104
Other profit reserves857.946792.025
Total profit reserves 1.492.6461.428.798
Stock option reserve2.058950
Other reserves, not \u201cprofit reserves\u201d10.72011.196
Total item 150 Reserves1.505.4241.440.944
\"\"
Pursuant to Article 1, paragraph 147 of the 2014 Stability Law (Italian Law No. 147 of 27 December 2013) and Article 1, paragraph 704 of the 2020 Budget Law (Italian Law No. 160 of 27 December 2019), the Banca Ifis Group has realigned the spread between the statutory value and tax value on certain properties. The amount corresponding to the higher values following the realignment, net of the substitute tax, generated a 15,3 million Euro untaxed reserve.
In addition, following the 2017 merger of Interbanca S.p.A. into Banca Ifis S.p.A., in accordance with Article 172 paragraph 5 of the Consolidated Law on Income Tax, the surviving entity restored the merging entity's deferred tax reserves as follows:
\u20224,6 million Euro special reserve as per Article 15 paragraph 10 of Italian Law No. 516 of 07/08/1982;
\u20222,3 million Euro revaluation reserve as per Italian Law No. 408/90.
Finally, there were an additional 20,7 million Euro in deferred tax reserves recognised by Banca Ifis and arising from the merger of Interbanca, in accordance with the following laws: No. 576/75, No. 83/72 and No. 408/90, that had been previously recognised as share capital of the latter.
13.5 Equity instruments: breakdown and annual changes
The Banca Ifis Group does not hold any equity instruments.
13.6 Other information
There is no further information to report than that presented in the preceding paragraphs.
Section 1 - Consolidated Equity
A. Qualitative information
Managing equity concerns a set of policies and decisions necessary to establish capital levels that are consistent with the assets and risks taken by the Group. The Banca Ifis Group is subject to the capital adequacy requirements established by the so-called Basel Committee (CRR/CRD IV).
The Board of Directors constantly monitors that the Bank meets the minimum supervisory requirements, and therefore the capital adequacy ratios, as well as complies with the capital limits set out in the Risk Appetite Framework (RAF).
Furthermore, also in accordance with the European Central Bank (ECB)'s recommendation of 28 January 2015, the Bank ensures compliance with capital adequacy ratios through a pay-out policy linked to the achievement of the above minimum capital requirements, as well as the careful assessment of the potential impact of extraordinary financial operations (share capital increases, convertible loans, etc.).
The Group's capital adequacy is further assessed and monitored every time an extraordinary operation is planned. In this case, based on available information regarding the operation to be implemented, the Bank estimates the impact on capital adequacy ratios as well as the RAF, and considers any measures necessary to meet the requirements.
Transactions on treasury shares
At 31 December 2022, Banca Ifis held 1.377.981 treasury shares recognised at a market value of 22,1 million Euro and a nominal amount of 1.377.981 Euro.
During the year, Banca Ifis, as variable pay, awarded the Top Management 34.963 treasury shares at an average price of 9,39 Euro, for a total of 341 thousand Euro and a nominal amount of 34.963 Euro, making profits of 54 thousand Euro that, in compliance with IAS/IFRS standards, were recognised under the premium reserve.
During the year, there were no further transactions on treasury shares other than those mentioned above.
Considering the above operations, the stock at the end of the year was 1.343.018 treasury shares, with an equivalent value of 21,8 million Euro and a nominal amount of 1.343.018 Euro.
It should be noted that the Banca Ifis Group does not hold, directly or indirectly, any shares in the ultimate Parent company La Scogliera S.A..
B. Quantitative information
B.1 Consolidated equity: breakdown by type of entity
Equity itemsPrudential consolidationInsurance firmsOther entitiesConsolidation eliminations and adjustmentsTotal
1. Share capital59.589 -6.000(6.000)59.589
2. Share premiums85.728 -114.010(114.010)85.728
3. Reserves1.519.065 -62.680(71.304)1.510.441
3.5 (Interim dividends)(62.962) - - -(62.962)
4. Equity - - - - -
5. (Treasury shares) (21.817) - - -(21.817)
6. Valuation reserves:(39.185) -(12) -(39.197)
- Equity securities measured at fair value through other comprehensive income(14.369) - - -(14.369)
- Hedging of equity securities measured at fair value through other comprehensive income - - - --
- Financial assets (other than equity securities) measured at fair value through other comprehensive income(18.990) - - -(18.990)
- Property, plant and equipment - - - - -
- Intangible assets - - - - -
- Foreign investment hedges - - - - -
- Cash flow hedges - - - - -
- Hedging instruments [non-designated items] - - - - -
- Exchange differences (6.146) - - - (6.146)
- Non-current assets under disposal - - - - -
- Financial liabilities measured at fair value through profit or loss (changes in own credit risk) - - - - -
- Actuarial gains (losses) on defined benefit pension plans 320 - (12) -308
- Share of valuation reserves of equity accounted investments - - - - -
- Specific revaluation laws - - - - -
7. Profit (loss) for the year (+/-) of the Group and non-controlling interests153.280 -8.636 -161.916
Total1.693.699 -191.314(191.314)1.693.699
\"\"
The above table shows the components of equity, combining those of the Group and those of third parties, broken down by type of businesses included in the scope of consolidation. More in detail:
\u2022the column \"Prudential consolidation\" shows the amount resulting from the consolidation of the entities that form part of the prudential consolidation and including the economic effects of transactions carried out with other entities included in the scope of consolidation;
\u2022the column \"Other entities\" shows the amounts resulting from the consolidation, including the economic effects of transactions carried out with entities that form part of the Banking Group;
\u2022the column \u201cConsolidation eliminations & adjustments\u201d shows the adjustments necessary to obtain the reported amount.
B.2 Valuation reserves for financial assets measured at fair value through other comprehensive income: breakdown
Assets/Amounts Prudential consolidationInsurance companiesOther entitiesConsolidation eliminations & adjustmentsTotal
Positive reserveNegative reservePositive reserveNegative reservePositive reserveNegative reservePositive reserveNegative reservePositive reserveNegative reserve
1. Debt securities1.167 (20.157) - - - - - -1.167 (20.157)
2. Equity securities2.507 (16.876) - - - - - -2.507 (16.876)
3. Loans - - - - - - - - - -
Total 31.12.20233.674 (37.033) - - - - - -3.674 (37.033)
Total 31.12.20224.718(55.352) - - - - - -4.718(55.352)
\"\"
B.3 Valuations reserves for financial assets measured at fair value through other comprehensive income: annual changes
Debt securitiesEquity securitiesLoans
1. Opening balance (35.811)(14.823)-
2. Increases29.63211.549 -
2.1 Fair value gains28.5805.136 -
2.2 Credit risk losses80X -
2.3 Reclassification to profit or loss of negative reserves from sale624X -
2.4 Transfers to other components of equity (equity securities) -5.253 -
2.5 Other changes3481.160 -
3. Decreases (12.811) (11.095) -
3.1 Fair value losses (911) (9.467) -
3.2 Reversals of credit risk losses - - -
3.3 Reclassification to profit or loss of positive reserves from sale (3.280)X -
3.4 Transfers to other components of equity (equity securities) - - -
3.5 Other changes (8.620) (1.628) -
4. Closing balance (18.990) (14.369) -
\"\"
B.4 Valuation reserves for defined benefit plans: annual changes
Valuation reserves for defined benefit plans show a positive balance at 31 December 2023 of 308 thousand Euro, comprising a positive balance of 290 thousand Euro attributable to the Parent company and a positive balance of 18 thousand Euro attributable to minorities. The worsening in the item compared to the positive value of 399 thousand Euro at the end of the previous year derives from the net actuarial losses accrued in 2023 on the severance indemnity (\u201cTFR\u201d) of the Group companies and the Parent company\u2019s provisions for pensions, mainly as a result of the downward revision of the underlying assumptions (such as the discount rate and inflation rate) due to the changed macroeconomic environment.
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Section 13 - Group Equity - Items 120, 130, 140, 150, 160, 170 and 180
13.1 \"Share capital\" and \"Treasury shares\": breakdown
Item31.12.202331.12.2022
170Share capital (in thousands of Euro)53.81153.811
Number of ordinary shares53.811.09553.811.095
Nominal amount of ordinary shares1 euro1 euro
180Treasury shares (in thousands of Euro)(21.817)(22.104)
Number of treasury shares1.343.0181.377.981
\"\"
13.2 Share capital - number of Parent company shares: annual changes
Items/TypesOrdinaryOther
A. Shares held at the beginning of the year53.811.095-
- fully paid-up53.811.095-
- not fully paid-up--
A.1 Treasury shares (-)(1.377.981)-
A.2 Outstanding shares: opening balance52.433.114-
B. Increases34.963-
B.1 New issues--
- paid:--
- business combinations--
- conversion of bonds--
- exercise of warrants--
- other--
- free:--
- in favour of employees--
- in favour of directors--
- other--
B.2 Sale of treasury shares--
B.3 Other changes34.963-
C. Decreases--
C.1 Annulments--
C.2 Buybacks of treasury shares--
C.3 Company sell-offs--
C.4 Other changes--
D. Outstanding shares: closing balance52.468.077-
D.1 Treasury shares (+)1.343.018-
D.2 Shares held at the end of the year53.811.095-
- fully paid-up53.811.095-
- not fully paid-up--
\"\"
Other increases in the number of shares refer to the allocation of shares during the year as part of remuneration mechanisms for the Banca Ifis Group's Top Management, which were included in treasury shares at the start of the year.
13.3 Share capital: other information
The share capital is composed of 53.811.095 ordinary shares with a nominal value of 1 Euro each, bearing no rights, liens and obligations, including those relating to dividend distribution and capital redemption.
13.4 Profit reserves: other information
Items/Components31.12.202331.12.2022
Legal reserve20.17419.588
Extraordinary reserve592.709595.081
Buyback reserve21.81722.104
Other profit reserves857.946792.025
Total profit reserves 1.492.6461.428.798
Stock option reserve2.058950
Other reserves, not \u201cprofit reserves\u201d10.72011.196
Total item 150 Reserves1.505.4241.440.944
\"\"
Pursuant to Article 1, paragraph 147 of the 2014 Stability Law (Italian Law No. 147 of 27 December 2013) and Article 1, paragraph 704 of the 2020 Budget Law (Italian Law No. 160 of 27 December 2019), the Banca Ifis Group has realigned the spread between the statutory value and tax value on certain properties. The amount corresponding to the higher values following the realignment, net of the substitute tax, generated a 15,3 million Euro untaxed reserve.
In addition, following the 2017 merger of Interbanca S.p.A. into Banca Ifis S.p.A., in accordance with Article 172 paragraph 5 of the Consolidated Law on Income Tax, the surviving entity restored the merging entity's deferred tax reserves as follows:
\u20224,6 million Euro special reserve as per Article 15 paragraph 10 of Italian Law No. 516 of 07/08/1982;
\u20222,3 million Euro revaluation reserve as per Italian Law No. 408/90.
Finally, there were an additional 20,7 million Euro in deferred tax reserves recognised by Banca Ifis and arising from the merger of Interbanca, in accordance with the following laws: No. 576/75, No. 83/72 and No. 408/90, that had been previously recognised as share capital of the latter.
13.5 Equity instruments: breakdown and annual changes
The Banca Ifis Group does not hold any equity instruments.
13.6 Other information
There is no further information to report than that presented in the preceding paragraphs.
Section 14 - Equity attributable to non-controlling interests - Item 190
14.1 Breakdown of Item 210 \u201cEquity attributable to non-controlling interests\u201d
Company name31.12.202331.12.2022
Equity investments in consolidated companies with significant minority interests14.23812.432
1. Banca Credifarma S.p.A.14.23812.432
Other equity investments2-
Total 14.24012.432
\"\"
14.2 Equity instruments: breakdown and annual changes
There are no equity instruments.
Section 1 - Consolidated Equity
A. Qualitative information
Managing equity concerns a set of policies and decisions necessary to establish capital levels that are consistent with the assets and risks taken by the Group. The Banca Ifis Group is subject to the capital adequacy requirements established by the so-called Basel Committee (CRR/CRD IV).
The Board of Directors constantly monitors that the Bank meets the minimum supervisory requirements, and therefore the capital adequacy ratios, as well as complies with the capital limits set out in the Risk Appetite Framework (RAF).
Furthermore, also in accordance with the European Central Bank (ECB)'s recommendation of 28 January 2015, the Bank ensures compliance with capital adequacy ratios through a pay-out policy linked to the achievement of the above minimum capital requirements, as well as the careful assessment of the potential impact of extraordinary financial operations (share capital increases, convertible loans, etc.).
The Group's capital adequacy is further assessed and monitored every time an extraordinary operation is planned. In this case, based on available information regarding the operation to be implemented, the Bank estimates the impact on capital adequacy ratios as well as the RAF, and considers any measures necessary to meet the requirements.
Transactions on treasury shares
At 31 December 2022, Banca Ifis held 1.377.981 treasury shares recognised at a market value of 22,1 million Euro and a nominal amount of 1.377.981 Euro.
During the year, Banca Ifis, as variable pay, awarded the Top Management 34.963 treasury shares at an average price of 9,39 Euro, for a total of 341 thousand Euro and a nominal amount of 34.963 Euro, making profits of 54 thousand Euro that, in compliance with IAS/IFRS standards, were recognised under the premium reserve.
During the year, there were no further transactions on treasury shares other than those mentioned above.
Considering the above operations, the stock at the end of the year was 1.343.018 treasury shares, with an equivalent value of 21,8 million Euro and a nominal amount of 1.343.018 Euro.
It should be noted that the Banca Ifis Group does not hold, directly or indirectly, any shares in the ultimate Parent company La Scogliera S.A..
B. Quantitative information
B.1 Consolidated equity: breakdown by type of entity
Equity itemsPrudential consolidationInsurance firmsOther entitiesConsolidation eliminations and adjustmentsTotal
1. Share capital59.589 -6.000(6.000)59.589
2. Share premiums85.728 -114.010(114.010)85.728
3. Reserves1.519.065 -62.680(71.304)1.510.441
3.5 (Interim dividends)(62.962) - - -(62.962)
4. Equity - - - - -
5. (Treasury shares) (21.817) - - -(21.817)
6. Valuation reserves:(39.185) -(12) -(39.197)
- Equity securities measured at fair value through other comprehensive income(14.369) - - -(14.369)
- Hedging of equity securities measured at fair value through other comprehensive income - - - --
- Financial assets (other than equity securities) measured at fair value through other comprehensive income(18.990) - - -(18.990)
- Property, plant and equipment - - - - -
- Intangible assets - - - - -
- Foreign investment hedges - - - - -
- Cash flow hedges - - - - -
- Hedging instruments [non-designated items] - - - - -
- Exchange differences (6.146) - - - (6.146)
- Non-current assets under disposal - - - - -
- Financial liabilities measured at fair value through profit or loss (changes in own credit risk) - - - - -
- Actuarial gains (losses) on defined benefit pension plans 320 - (12) -308
- Share of valuation reserves of equity accounted investments - - - - -
- Specific revaluation laws - - - - -
7. Profit (loss) for the year (+/-) of the Group and non-controlling interests153.280 -8.636 -161.916
Total1.693.699 -191.314(191.314)1.693.699
\"\"
The above table shows the components of equity, combining those of the Group and those of third parties, broken down by type of businesses included in the scope of consolidation. More in detail:
\u2022the column \"Prudential consolidation\" shows the amount resulting from the consolidation of the entities that form part of the prudential consolidation and including the economic effects of transactions carried out with other entities included in the scope of consolidation;
\u2022the column \"Other entities\" shows the amounts resulting from the consolidation, including the economic effects of transactions carried out with entities that form part of the Banking Group;
\u2022the column \u201cConsolidation eliminations & adjustments\u201d shows the adjustments necessary to obtain the reported amount.
B.2 Valuation reserves for financial assets measured at fair value through other comprehensive income: breakdown
Assets/Amounts Prudential consolidationInsurance companiesOther entitiesConsolidation eliminations & adjustmentsTotal
Positive reserveNegative reservePositive reserveNegative reservePositive reserveNegative reservePositive reserveNegative reservePositive reserveNegative reserve
1. Debt securities1.167 (20.157) - - - - - -1.167 (20.157)
2. Equity securities2.507 (16.876) - - - - - -2.507 (16.876)
3. Loans - - - - - - - - - -
Total 31.12.20233.674 (37.033) - - - - - -3.674 (37.033)
Total 31.12.20224.718(55.352) - - - - - -4.718(55.352)
\"\"
B.3 Valuations reserves for financial assets measured at fair value through other comprehensive income: annual changes
Debt securitiesEquity securitiesLoans
1. Opening balance (35.811)(14.823)-
2. Increases29.63211.549 -
2.1 Fair value gains28.5805.136 -
2.2 Credit risk losses80X -
2.3 Reclassification to profit or loss of negative reserves from sale624X -
2.4 Transfers to other components of equity (equity securities) -5.253 -
2.5 Other changes3481.160 -
3. Decreases (12.811) (11.095) -
3.1 Fair value losses (911) (9.467) -
3.2 Reversals of credit risk losses - - -
3.3 Reclassification to profit or loss of positive reserves from sale (3.280)X -
3.4 Transfers to other components of equity (equity securities) - - -
3.5 Other changes (8.620) (1.628) -
4. Closing balance (18.990) (14.369) -
\"\"
B.4 Valuation reserves for defined benefit plans: annual changes
Valuation reserves for defined benefit plans show a positive balance at 31 December 2023 of 308 thousand Euro, comprising a positive balance of 290 thousand Euro attributable to the Parent company and a positive balance of 18 thousand Euro attributable to minorities. The worsening in the item compared to the positive value of 399 thousand Euro at the end of the previous year derives from the net actuarial losses accrued in 2023 on the severance indemnity (\u201cTFR\u201d) of the Group companies and the Parent company\u2019s provisions for pensions, mainly as a result of the downward revision of the underlying assumptions (such as the discount rate and inflation rate) due to the changed macroeconomic environment.
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page170-cflshid_87501-tag94263": { "value": "
Section 13 - Group Equity - Items 120, 130, 140, 150, 160, 170 and 180
13.1 \"Share capital\" and \"Treasury shares\": breakdown
Item31.12.202331.12.2022
170Share capital (in thousands of Euro)53.81153.811
Number of ordinary shares53.811.09553.811.095
Nominal amount of ordinary shares1 euro1 euro
180Treasury shares (in thousands of Euro)(21.817)(22.104)
Number of treasury shares1.343.0181.377.981
\"\"
13.2 Share capital - number of Parent company shares: annual changes
Items/TypesOrdinaryOther
A. Shares held at the beginning of the year53.811.095-
- fully paid-up53.811.095-
- not fully paid-up--
A.1 Treasury shares (-)(1.377.981)-
A.2 Outstanding shares: opening balance52.433.114-
B. Increases34.963-
B.1 New issues--
- paid:--
- business combinations--
- conversion of bonds--
- exercise of warrants--
- other--
- free:--
- in favour of employees--
- in favour of directors--
- other--
B.2 Sale of treasury shares--
B.3 Other changes34.963-
C. Decreases--
C.1 Annulments--
C.2 Buybacks of treasury shares--
C.3 Company sell-offs--
C.4 Other changes--
D. Outstanding shares: closing balance52.468.077-
D.1 Treasury shares (+)1.343.018-
D.2 Shares held at the end of the year53.811.095-
- fully paid-up53.811.095-
- not fully paid-up--
\"\"
Other increases in the number of shares refer to the allocation of shares during the year as part of remuneration mechanisms for the Banca Ifis Group's Top Management, which were included in treasury shares at the start of the year.
13.3 Share capital: other information
The share capital is composed of 53.811.095 ordinary shares with a nominal value of 1 Euro each, bearing no rights, liens and obligations, including those relating to dividend distribution and capital redemption.
13.4 Profit reserves: other information
Items/Components31.12.202331.12.2022
Legal reserve20.17419.588
Extraordinary reserve592.709595.081
Buyback reserve21.81722.104
Other profit reserves857.946792.025
Total profit reserves 1.492.6461.428.798
Stock option reserve2.058950
Other reserves, not \u201cprofit reserves\u201d10.72011.196
Total item 150 Reserves1.505.4241.440.944
\"\"
Pursuant to Article 1, paragraph 147 of the 2014 Stability Law (Italian Law No. 147 of 27 December 2013) and Article 1, paragraph 704 of the 2020 Budget Law (Italian Law No. 160 of 27 December 2019), the Banca Ifis Group has realigned the spread between the statutory value and tax value on certain properties. The amount corresponding to the higher values following the realignment, net of the substitute tax, generated a 15,3 million Euro untaxed reserve.
In addition, following the 2017 merger of Interbanca S.p.A. into Banca Ifis S.p.A., in accordance with Article 172 paragraph 5 of the Consolidated Law on Income Tax, the surviving entity restored the merging entity's deferred tax reserves as follows:
\u20224,6 million Euro special reserve as per Article 15 paragraph 10 of Italian Law No. 516 of 07/08/1982;
\u20222,3 million Euro revaluation reserve as per Italian Law No. 408/90.
Finally, there were an additional 20,7 million Euro in deferred tax reserves recognised by Banca Ifis and arising from the merger of Interbanca, in accordance with the following laws: No. 576/75, No. 83/72 and No. 408/90, that had been previously recognised as share capital of the latter.
13.5 Equity instruments: breakdown and annual changes
The Banca Ifis Group does not hold any equity instruments.
13.6 Other information
There is no further information to report than that presented in the preceding paragraphs.
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Section 13 - Group Equity - Items 120, 130, 140, 150, 160, 170 and 180
13.1 \"Share capital\" and \"Treasury shares\": breakdown
Item31.12.202331.12.2022
170Share capital (in thousands of Euro)53.81153.811
Number of ordinary shares53.811.09553.811.095
Nominal amount of ordinary shares1 euro1 euro
180Treasury shares (in thousands of Euro)(21.817)(22.104)
Number of treasury shares1.343.0181.377.981
\"\"
13.2 Share capital - number of Parent company shares: annual changes
Items/TypesOrdinaryOther
A. Shares held at the beginning of the year53.811.095-
- fully paid-up53.811.095-
- not fully paid-up--
A.1 Treasury shares (-)(1.377.981)-
A.2 Outstanding shares: opening balance52.433.114-
B. Increases34.963-
B.1 New issues--
- paid:--
- business combinations--
- conversion of bonds--
- exercise of warrants--
- other--
- free:--
- in favour of employees--
- in favour of directors--
- other--
B.2 Sale of treasury shares--
B.3 Other changes34.963-
C. Decreases--
C.1 Annulments--
C.2 Buybacks of treasury shares--
C.3 Company sell-offs--
C.4 Other changes--
D. Outstanding shares: closing balance52.468.077-
D.1 Treasury shares (+)1.343.018-
D.2 Shares held at the end of the year53.811.095-
- fully paid-up53.811.095-
- not fully paid-up--
\"\"
Other increases in the number of shares refer to the allocation of shares during the year as part of remuneration mechanisms for the Banca Ifis Group's Top Management, which were included in treasury shares at the start of the year.
13.3 Share capital: other information
The share capital is composed of 53.811.095 ordinary shares with a nominal value of 1 Euro each, bearing no rights, liens and obligations, including those relating to dividend distribution and capital redemption.
13.4 Profit reserves: other information
Items/Components31.12.202331.12.2022
Legal reserve20.17419.588
Extraordinary reserve592.709595.081
Buyback reserve21.81722.104
Other profit reserves857.946792.025
Total profit reserves 1.492.6461.428.798
Stock option reserve2.058950
Other reserves, not \u201cprofit reserves\u201d10.72011.196
Total item 150 Reserves1.505.4241.440.944
\"\"
Pursuant to Article 1, paragraph 147 of the 2014 Stability Law (Italian Law No. 147 of 27 December 2013) and Article 1, paragraph 704 of the 2020 Budget Law (Italian Law No. 160 of 27 December 2019), the Banca Ifis Group has realigned the spread between the statutory value and tax value on certain properties. The amount corresponding to the higher values following the realignment, net of the substitute tax, generated a 15,3 million Euro untaxed reserve.
In addition, following the 2017 merger of Interbanca S.p.A. into Banca Ifis S.p.A., in accordance with Article 172 paragraph 5 of the Consolidated Law on Income Tax, the surviving entity restored the merging entity's deferred tax reserves as follows:
\u20224,6 million Euro special reserve as per Article 15 paragraph 10 of Italian Law No. 516 of 07/08/1982;
\u20222,3 million Euro revaluation reserve as per Italian Law No. 408/90.
Finally, there were an additional 20,7 million Euro in deferred tax reserves recognised by Banca Ifis and arising from the merger of Interbanca, in accordance with the following laws: No. 576/75, No. 83/72 and No. 408/90, that had been previously recognised as share capital of the latter.
13.5 Equity instruments: breakdown and annual changes
The Banca Ifis Group does not hold any equity instruments.
13.6 Other information
There is no further information to report than that presented in the preceding paragraphs.
Section 14 - Equity attributable to non-controlling interests - Item 190
14.1 Breakdown of Item 210 \u201cEquity attributable to non-controlling interests\u201d
Company name31.12.202331.12.2022
Equity investments in consolidated companies with significant minority interests14.23812.432
1. Banca Credifarma S.p.A.14.23812.432
Other equity investments2-
Total 14.24012.432
\"\"
14.2 Equity instruments: breakdown and annual changes
There are no equity instruments.
Section 1 - Consolidated Equity
A. Qualitative information
Managing equity concerns a set of policies and decisions necessary to establish capital levels that are consistent with the assets and risks taken by the Group. The Banca Ifis Group is subject to the capital adequacy requirements established by the so-called Basel Committee (CRR/CRD IV).
The Board of Directors constantly monitors that the Bank meets the minimum supervisory requirements, and therefore the capital adequacy ratios, as well as complies with the capital limits set out in the Risk Appetite Framework (RAF).
Furthermore, also in accordance with the European Central Bank (ECB)'s recommendation of 28 January 2015, the Bank ensures compliance with capital adequacy ratios through a pay-out policy linked to the achievement of the above minimum capital requirements, as well as the careful assessment of the potential impact of extraordinary financial operations (share capital increases, convertible loans, etc.).
The Group's capital adequacy is further assessed and monitored every time an extraordinary operation is planned. In this case, based on available information regarding the operation to be implemented, the Bank estimates the impact on capital adequacy ratios as well as the RAF, and considers any measures necessary to meet the requirements.
Transactions on treasury shares
At 31 December 2022, Banca Ifis held 1.377.981 treasury shares recognised at a market value of 22,1 million Euro and a nominal amount of 1.377.981 Euro.
During the year, Banca Ifis, as variable pay, awarded the Top Management 34.963 treasury shares at an average price of 9,39 Euro, for a total of 341 thousand Euro and a nominal amount of 34.963 Euro, making profits of 54 thousand Euro that, in compliance with IAS/IFRS standards, were recognised under the premium reserve.
During the year, there were no further transactions on treasury shares other than those mentioned above.
Considering the above operations, the stock at the end of the year was 1.343.018 treasury shares, with an equivalent value of 21,8 million Euro and a nominal amount of 1.343.018 Euro.
It should be noted that the Banca Ifis Group does not hold, directly or indirectly, any shares in the ultimate Parent company La Scogliera S.A..
B. Quantitative information
B.1 Consolidated equity: breakdown by type of entity
Equity itemsPrudential consolidationInsurance firmsOther entitiesConsolidation eliminations and adjustmentsTotal
1. Share capital59.589 -6.000(6.000)59.589
2. Share premiums85.728 -114.010(114.010)85.728
3. Reserves1.519.065 -62.680(71.304)1.510.441
3.5 (Interim dividends)(62.962) - - -(62.962)
4. Equity - - - - -
5. (Treasury shares) (21.817) - - -(21.817)
6. Valuation reserves:(39.185) -(12) -(39.197)
- Equity securities measured at fair value through other comprehensive income(14.369) - - -(14.369)
- Hedging of equity securities measured at fair value through other comprehensive income - - - --
- Financial assets (other than equity securities) measured at fair value through other comprehensive income(18.990) - - -(18.990)
- Property, plant and equipment - - - - -
- Intangible assets - - - - -
- Foreign investment hedges - - - - -
- Cash flow hedges - - - - -
- Hedging instruments [non-designated items] - - - - -
- Exchange differences (6.146) - - - (6.146)
- Non-current assets under disposal - - - - -
- Financial liabilities measured at fair value through profit or loss (changes in own credit risk) - - - - -
- Actuarial gains (losses) on defined benefit pension plans 320 - (12) -308
- Share of valuation reserves of equity accounted investments - - - - -
- Specific revaluation laws - - - - -
7. Profit (loss) for the year (+/-) of the Group and non-controlling interests153.280 -8.636 -161.916
Total1.693.699 -191.314(191.314)1.693.699
\"\"
The above table shows the components of equity, combining those of the Group and those of third parties, broken down by type of businesses included in the scope of consolidation. More in detail:
\u2022the column \"Prudential consolidation\" shows the amount resulting from the consolidation of the entities that form part of the prudential consolidation and including the economic effects of transactions carried out with other entities included in the scope of consolidation;
\u2022the column \"Other entities\" shows the amounts resulting from the consolidation, including the economic effects of transactions carried out with entities that form part of the Banking Group;
\u2022the column \u201cConsolidation eliminations & adjustments\u201d shows the adjustments necessary to obtain the reported amount.
B.2 Valuation reserves for financial assets measured at fair value through other comprehensive income: breakdown
Assets/Amounts Prudential consolidationInsurance companiesOther entitiesConsolidation eliminations & adjustmentsTotal
Positive reserveNegative reservePositive reserveNegative reservePositive reserveNegative reservePositive reserveNegative reservePositive reserveNegative reserve
1. Debt securities1.167 (20.157) - - - - - -1.167 (20.157)
2. Equity securities2.507 (16.876) - - - - - -2.507 (16.876)
3. Loans - - - - - - - - - -
Total 31.12.20233.674 (37.033) - - - - - -3.674 (37.033)
Total 31.12.20224.718(55.352) - - - - - -4.718(55.352)
\"\"
B.3 Valuations reserves for financial assets measured at fair value through other comprehensive income: annual changes
Debt securitiesEquity securitiesLoans
1. Opening balance (35.811)(14.823)-
2. Increases29.63211.549 -
2.1 Fair value gains28.5805.136 -
2.2 Credit risk losses80X -
2.3 Reclassification to profit or loss of negative reserves from sale624X -
2.4 Transfers to other components of equity (equity securities) -5.253 -
2.5 Other changes3481.160 -
3. Decreases (12.811) (11.095) -
3.1 Fair value losses (911) (9.467) -
3.2 Reversals of credit risk losses - - -
3.3 Reclassification to profit or loss of positive reserves from sale (3.280)X -
3.4 Transfers to other components of equity (equity securities) - - -
3.5 Other changes (8.620) (1.628) -
4. Closing balance (18.990) (14.369) -
\"\"
B.4 Valuation reserves for defined benefit plans: annual changes
Valuation reserves for defined benefit plans show a positive balance at 31 December 2023 of 308 thousand Euro, comprising a positive balance of 290 thousand Euro attributable to the Parent company and a positive balance of 18 thousand Euro attributable to minorities. The worsening in the item compared to the positive value of 399 thousand Euro at the end of the previous year derives from the net actuarial losses accrued in 2023 on the severance indemnity (\u201cTFR\u201d) of the Group companies and the Parent company\u2019s provisions for pensions, mainly as a result of the downward revision of the underlying assumptions (such as the discount rate and inflation rate) due to the changed macroeconomic environment.
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1. Commitments and financial guarantees granted
Nominal amount of commitments and financial guarantees granted
Total 31.12.2023
Total 31.12.2022
Stage 1
Stage 2
Stage 3
Purchased and/or originated impaired
1. Loan commitments
1.085.982
36.812
28.704
-
1.151.498
1.149.969
a) Central Banks
-
-
-
-
-
-
b) Public Administrations
1
-
-
-
1
1
c) Banks
235
-
-
-
235
-
d) Other financial companies
138.815
2
1.248
-
140.065
157.987
e) Non-financial companies
779.330
31.921
24.898
-
836.149
765.413
f) Households
167.601
4.889
2.558
-
175.048
226.568
2. Guarantees granted
65.915
132.415
17.322
-
215.652
467.356
a) Central Banks
-
-
-
-
-
-
b) Public Administrations
-
-
-
-
-
-
c) Banks
19
-
-
-
19
80.537
d) Other financial companies
4.626
189
-
-
4.815
6.235
e) Non-financial companies
58.726
132.043
17.188
-
207.957
376.583
f) Households
2.544
183
134
-
2.861
4.001
\"\"
2. Other commitments and guarantees granted
Nominal amount
31.12.202331.12.2022
Other guarantees granted 32.688 20.960
of which: non-performing loans - 11
a) Central Banks - -
b) Public Administrations - -
c) Banks - -
d) Other financial companies - -
e) Non-financial companies 32.688 20.960
f) Households - -
Other commitments 56.930 40.646
of which: non-performing loans - -
a) Central Banks - -
b) Public Administrations - -
c) Banks - -
d) Other financial companies 53.011 40.646
e) Non-financial companies 3.919 -
f) Households - -
\"\"
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Section 1 - Interest - Items 10 and 20
1.1 Interest receivable and similar income: breakdown
Items/Technical formsDebt securitiesLoansOther transactionsTotal 31.12.2023Total 31.12.2022
1. Financial assets measured at fair value through profit or loss:4.399 348 - 4.747 2.865
1.1. Financial assets held for trading2 - - 2 18
1.2. Financial assets designated at fair value- - - - -
1.3. Other financial assets mandatorily measured at fair value4.397 348 - 4.745 2.847
2. Financial assets measured at fair value through other comprehensive income13.704 - X13.704 6.149
3. Financial assets measured at amortised cost:93.266 652.025 - 745.291 507.745
3.1. Receivables due from banks22.755 26.111 X48.866 16.610
3.2. Receivables due from customers70.511 625.914 X696.425 491.135
4. Hedging derivativesXX1.449 1.449 -
5. Other assetsXX9.236 9.236 12.339
6. Financial liabilitiesXXX- -
Total111.369 652.373 10.685 774.427 529.098
of which: interest income on impaired financial assets- 183.291 - 183.291 180.328
of which: interest income on financial leasesX82.243 X82.243 52.567
\"\"
As for \"Financial assets measured at fair value through profit or loss\", the amounts refer to debt securities and loans that failed the SPPI test, whereas in the case of \"Financial assets measured at fair value through other comprehensive income\", the reported amounts are securities, mainly government bonds, in the portfolio.
Interest income from receivables due from customers at amortised cost referring to debt securities is associated mainly with the senior tranche of a securitisation of bad loans guaranteed by Italian Treasury Department (\u201cGACS\u201d) that the Group, as well as with the securities portfolio, established as a use of liquidity.
The item \"Hedging derivatives\" in the column \"Other transactions\" shows the positive or negative amount of differentials or margins accrued on the aforementioned derivatives that correct the interest income recognised on the hedged financial instruments (which, for the Banca Ifis Group, are certain government securities valued at amortised cost hedged with a micro fair value hedge strategy).
With reference to the interest income on impaired financial assets totalling 183,2 million Euro at 31 December 2023, it should be noted that 172,8 million Euro (161,5 million Euro at 31 December 2022) is related to the specific activity of the Npl Segment, dedicated to non-recourse acquisition and managing distressed retail loans. The remainder relates to interest income on non-performing loans acquired as a result of the various business combinations in recent years.
1.2 Interest receivable and similar income: other information
1.2.1 Interest income on foreign currency financial assets
31.12.202331.12.2022
Interest income on foreign currency financial assets9.0597.422
1.3 Interest due and similar expenses: breakdown
Items/Technical formsPayablesSecuritiesOthertransactionsTotal 31.12.2023Total 31.12.2022
1. Financial liabilities measured at amortised cost(276.379)(66.565)X(342.944)(112.404)
1.1 Payables due to central banks(67.566)XX(67.566)(1.177)
1.2 Payables due to banks(41.922)XX(41.922)(6.246)
1.3 Payables due to customers(166.891)XX(166.891)(71.806)
1.4 Debt securities issuedX(66.565)X(66.565)(33.175)
2. Financial liabilities held for trading- - - - -
3. Financial liabilities designated at fair value- - - - -
4. Other liabilities and provisionsXX(6)(6)(1)
5. Hedging derivativesXX- - -
6. Financial assetsXXX(109)(1.828)
Total(276.379)(66.565)(6)(343.059)(114.233)
of which: interest expense on lease payables(415) XX(415) (284)
\"\"
The increase in interest expenses compared to the previous year is mainly related to the increase in the average cost of the Group's funding. In particular, with reference to customer deposits, we note the upward rate manoeuvres on the Rendimax product, carried out during 2023, and the increased preference of customers for time deposits with longer maturities.
1.4 Interest due and similar expenses: other information
1.4.1 Interest expense on foreign currency liabilities
31.12.202331.12.2022
Interest expense on foreign currency liabilities(5.090)(3.034)
1.5 Hedging differentials
ITEMS31.12.202331.12.2022
A. Positive differentials on hedging transactions:7.243 -
B. Negative differentials on hedging transactions:5.794 -
C. Balance (A-B)1.449 -
\"\"
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1.1 Interest receivable and similar income: breakdown
Items/Technical formsDebt securitiesLoansOther transactionsTotal 31.12.2023Total 31.12.2022
1. Financial assets measured at fair value through profit or loss:4.399 348 - 4.747 2.865
1.1. Financial assets held for trading2 - - 2 18
1.2. Financial assets designated at fair value- - - - -
1.3. Other financial assets mandatorily measured at fair value4.397 348 - 4.745 2.847
2. Financial assets measured at fair value through other comprehensive income13.704 - X13.704 6.149
3. Financial assets measured at amortised cost:93.266 652.025 - 745.291 507.745
3.1. Receivables due from banks22.755 26.111 X48.866 16.610
3.2. Receivables due from customers70.511 625.914 X696.425 491.135
4. Hedging derivativesXX1.449 1.449 -
5. Other assetsXX9.236 9.236 12.339
6. Financial liabilitiesXXX- -
Total111.369 652.373 10.685 774.427 529.098
of which: interest income on impaired financial assets- 183.291 - 183.291 180.328
of which: interest income on financial leasesX82.243 X82.243 52.567
\"\"
As for \"Financial assets measured at fair value through profit or loss\", the amounts refer to debt securities and loans that failed the SPPI test, whereas in the case of \"Financial assets measured at fair value through other comprehensive income\", the reported amounts are securities, mainly government bonds, in the portfolio.
Interest income from receivables due from customers at amortised cost referring to debt securities is associated mainly with the senior tranche of a securitisation of bad loans guaranteed by Italian Treasury Department (\u201cGACS\u201d) that the Group, as well as with the securities portfolio, established as a use of liquidity.
The item \"Hedging derivatives\" in the column \"Other transactions\" shows the positive or negative amount of differentials or margins accrued on the aforementioned derivatives that correct the interest income recognised on the hedged financial instruments (which, for the Banca Ifis Group, are certain government securities valued at amortised cost hedged with a micro fair value hedge strategy).
With reference to the interest income on impaired financial assets totalling 183,2 million Euro at 31 December 2023, it should be noted that 172,8 million Euro (161,5 million Euro at 31 December 2022) is related to the specific activity of the Npl Segment, dedicated to non-recourse acquisition and managing distressed retail loans. The remainder relates to interest income on non-performing loans acquired as a result of the various business combinations in recent years.
1.2 Interest receivable and similar income: other information
1.2.1 Interest income on foreign currency financial assets
31.12.202331.12.2022
Interest income on foreign currency financial assets9.0597.422
1.5 Hedging differentials
ITEMS31.12.202331.12.2022
A. Positive differentials on hedging transactions:7.243 -
B. Negative differentials on hedging transactions:5.794 -
C. Balance (A-B)1.449 -
\"\"
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1.1 Interest receivable and similar income: breakdown
Items/Technical formsDebt securitiesLoansOther transactionsTotal 31.12.2023Total 31.12.2022
1. Financial assets measured at fair value through profit or loss:4.399 348 - 4.747 2.865
1.1. Financial assets held for trading2 - - 2 18
1.2. Financial assets designated at fair value- - - - -
1.3. Other financial assets mandatorily measured at fair value4.397 348 - 4.745 2.847
2. Financial assets measured at fair value through other comprehensive income13.704 - X13.704 6.149
3. Financial assets measured at amortised cost:93.266 652.025 - 745.291 507.745
3.1. Receivables due from banks22.755 26.111 X48.866 16.610
3.2. Receivables due from customers70.511 625.914 X696.425 491.135
4. Hedging derivativesXX1.449 1.449 -
5. Other assetsXX9.236 9.236 12.339
6. Financial liabilitiesXXX- -
Total111.369 652.373 10.685 774.427 529.098
of which: interest income on impaired financial assets- 183.291 - 183.291 180.328
of which: interest income on financial leasesX82.243 X82.243 52.567
\"\"
As for \"Financial assets measured at fair value through profit or loss\", the amounts refer to debt securities and loans that failed the SPPI test, whereas in the case of \"Financial assets measured at fair value through other comprehensive income\", the reported amounts are securities, mainly government bonds, in the portfolio.
Interest income from receivables due from customers at amortised cost referring to debt securities is associated mainly with the senior tranche of a securitisation of bad loans guaranteed by Italian Treasury Department (\u201cGACS\u201d) that the Group, as well as with the securities portfolio, established as a use of liquidity.
The item \"Hedging derivatives\" in the column \"Other transactions\" shows the positive or negative amount of differentials or margins accrued on the aforementioned derivatives that correct the interest income recognised on the hedged financial instruments (which, for the Banca Ifis Group, are certain government securities valued at amortised cost hedged with a micro fair value hedge strategy).
With reference to the interest income on impaired financial assets totalling 183,2 million Euro at 31 December 2023, it should be noted that 172,8 million Euro (161,5 million Euro at 31 December 2022) is related to the specific activity of the Npl Segment, dedicated to non-recourse acquisition and managing distressed retail loans. The remainder relates to interest income on non-performing loans acquired as a result of the various business combinations in recent years.
1.2 Interest receivable and similar income: other information
1.2.1 Interest income on foreign currency financial assets
31.12.202331.12.2022
Interest income on foreign currency financial assets9.0597.422
2.1 Commission income: breakdown
Type of services/Amounts31.12.202331.12.2022
a) Financial instruments- 7
1. Placement of securities- 2
1.1 On a firm and/or irrevocable commitment basis- 2
1.2 Without irrevocable commitment- -
2. Receipt and transmission of orders and execution of orders on behalf of customers- 5
2.1 Receipt and transmission of orders for one or more financial instruments- -
2.2 Execution of orders on behalf of clients- 5
3. Other commissions related to activities linked to financial instruments- -
of which: trading on own account- -
of which: individual portfolio management- -
b) Corporate finance253 174
1. Mergers and acquisitions advisory services- -
2. Treasury services- -
3. Other commissions related to corporate finance services253 174
c) Investment advisory activities- -
d) Clearing and settlement- -
e) Collective portfolio management- -
f) Custody and administration- -
1. Depository bank- -
2. Other commissions related to custody and administration activities- -
g) Central administrative services for collective portfolio management- -
h) Fiduciary activities- -
i) Payment services8.846 8.841
1. Current accounts3.875 3.690
2. Credit cards359 498
3. Debit cards and other payment cards854 1.104
4. Bank transfers and other payment orders163 175
5. Other fees related to payment services3.595 3.374
j) Distribution of third-party services5.360 6.687
1. Collective portfolio management- -
2. Insurance products5.349 6.679
3. Other products11 8
of which: individual portfolio management- -
k) Structured finance- -
l) Servicing for securitisation transactions1.417 1.634
m) Loan commitments- -
n) Guarantees given1.584 1.749
of which: credit derivatives- -
o) Loans90.799 84.151
of which: for factoring transactions64.908 59.969
p) Trading in currencies- -
q) Commodities- -
r) Other commission income4.012 3.251
of which: for management of multi-lateral trading facilities- -
of which: for management of organised trading facilities- -
Total112.271 106.494
\"\"
Commissions linked to financing operations amount to 90,8 million Euro, an increase of 7,9% compared to the amount recorded for the previous year (84,2 million Euro).
Section 3 - Dividends and similar income - Item 70
3.1 Dividends and similar income: breakdown
Items/Income31.12.202331.12.2022
DividendsSimilar incomeDividendsSimilar income
A. Financial assets held for trading ----
B. Other financial assets mandatorily measured at fair value-2.818303155
C. Financial assets measured at fair value through other comprehensive income13.354-9.393-
D. Equity investments----
Total13.3542.8189.696155
\"\"
Section 6 - Profit (loss) from sale or buyback - Item 100
6.1 Profit (loss) from sale or buyback: breakdown
Items/Income items31.12.202331.12.2022
ProfitLossesNet resultProfitLossesNet result
Financial assets
1. Financial assets measured at amortised cost13.112 (210) 12.902 16.238(993)15.245
1.1 Receivables due from banks- - - ---
1.2 Receivables due from customers13.112 (210) 12.902 16.238(993)15.245
2. Financial assets measured at fair value through other comprehensive income4.333 (1.677) 2.656 400(488)(88)
2.1 Debt securities4.333 (1.677) 2.656 400(488)(88)
2.2 Loans- - - ---
Total assets (A)17.445 (1.887) 15.558 16.638(1.481)15.157
Financial liabilities measured at amortised cost
1. Payables due to banks- - - ---
2. Payables due to customers- - - ---
3. Debt securities issued1.099 (72) 1.027 117(86)31
Total liabilities (B)1.099 (72) 1.027 117(86)31
\"\"
Net gains from the sale or repurchase of financial assets and liabilities total 16,6 million Euro at 31 December 2023 (net gains of 15,2 million Euro at 31 December 2022), and consist mainly of 10,4 million Euro from the sale of loans in the Npl Segment (all belonging to the so-called POCI category, which is the Segment\u2019s core business) as well as 4,8 million Euro related to securities transactions in the proprietary portfolio.
Section 7 - Net result of other financial assets and liabilities measured at fair value through profit or loss - Item 110
7.1 Net change in other financial assets and liabilities measured at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value
In these Consolidated Financial Statements, this item has no value.
7.2 Net change in other financial assets and liabilities measured at fair value through profit or loss: breakdown of financial assets mandatorily measured at fair value
Transactions/Income itemsCapital gains (A)Gains on sale (B)Capital losses (C)Losses on sale (D)Net result [(A+B)-(C+D)]
1. Financial assets20.851 3.751 (10.937) (420) 13.245
1.1 Debt securities2.397 894 (1.449) (420) 1.422
1.2 Equity instruments9.313 785 (3.602) - 6.496
1.3 UCITS units8.653 - (3.328) - 5.325
1.4 Loans488 2.072 (2.558) - 2
2. Financial assets: exchange differencesXXXX-
Total20.851 3.751 (10.937) (420) 13.245
\"\"
The net positive result of other financial assets and liabilities measured at fair value through profit or loss is 13,2 million Euro at 31 December 2023 (essentially in line with the 31 December 2022 figure) and is primarily represented by the net positive change in the 2023 fair value of UCITS fund units for 5,3 million Euro and equity securities for 6,5 million Euro.
16.2 Other operating income: breakdown
Amounts/Income31.12.202331.12.2022
a) Recovery of third party expenses15.44615.111
b) Rental income12388
c) Income from the realisation of property, plant and equipment1.6061.653
d) Other income11.30210.571
e) Gain on a bargain purchase8.536-
Total37.01327.423
\"\"
Other net operating income, which amounts to 37,0 million Euro at the end of 2023, increases by 35,0% compared to 31 December 2022 mainly due to the fact that the balance at 31 December 2023 benefited from the gain on bargain purchase of 8,5 million Euro arising from the acquisition of Revalea (for more details, refer to the section \"Significant events during the year\" of the Directors' Report on the Group and \"Part G - Business combinations\"). Excluding this non-recurring component of income, this item referred 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, as well as recoveries of expenses associated with leasing operations.", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page177-cflshid_90260-tag94270": { "value": "
1.3 Interest due and similar expenses: breakdown
Items/Technical formsPayablesSecuritiesOthertransactionsTotal 31.12.2023Total 31.12.2022
1. Financial liabilities measured at amortised cost(276.379)(66.565)X(342.944)(112.404)
1.1 Payables due to central banks(67.566)XX(67.566)(1.177)
1.2 Payables due to banks(41.922)XX(41.922)(6.246)
1.3 Payables due to customers(166.891)XX(166.891)(71.806)
1.4 Debt securities issuedX(66.565)X(66.565)(33.175)
2. Financial liabilities held for trading- - - - -
3. Financial liabilities designated at fair value- - - - -
4. Other liabilities and provisionsXX(6)(6)(1)
5. Hedging derivativesXX- - -
6. Financial assetsXXX(109)(1.828)
Total(276.379)(66.565)(6)(343.059)(114.233)
of which: interest expense on lease payables(415) XX(415) (284)
\"\"
The increase in interest expenses compared to the previous year is mainly related to the increase in the average cost of the Group's funding. In particular, with reference to customer deposits, we note the upward rate manoeuvres on the Rendimax product, carried out during 2023, and the increased preference of customers for time deposits with longer maturities.
1.4 Interest due and similar expenses: other information
1.4.1 Interest expense on foreign currency liabilities
31.12.202331.12.2022
Interest expense on foreign currency liabilities(5.090)(3.034)
1.5 Hedging differentials
ITEMS31.12.202331.12.2022
A. Positive differentials on hedging transactions:7.243 -
B. Negative differentials on hedging transactions:5.794 -
C. Balance (A-B)1.449 -
\"\"
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page178-cflshid_90777-tag94272": { "value": "
Section 2 - Commissions - Items 40 and 50
2.1 Commission income: breakdown
Type of services/Amounts31.12.202331.12.2022
a) Financial instruments- 7
1. Placement of securities- 2
1.1 On a firm and/or irrevocable commitment basis- 2
1.2 Without irrevocable commitment- -
2. Receipt and transmission of orders and execution of orders on behalf of customers- 5
2.1 Receipt and transmission of orders for one or more financial instruments- -
2.2 Execution of orders on behalf of clients- 5
3. Other commissions related to activities linked to financial instruments- -
of which: trading on own account- -
of which: individual portfolio management- -
b) Corporate finance253 174
1. Mergers and acquisitions advisory services- -
2. Treasury services- -
3. Other commissions related to corporate finance services253 174
c) Investment advisory activities- -
d) Clearing and settlement- -
e) Collective portfolio management- -
f) Custody and administration- -
1. Depository bank- -
2. Other commissions related to custody and administration activities- -
g) Central administrative services for collective portfolio management- -
h) Fiduciary activities- -
i) Payment services8.846 8.841
1. Current accounts3.875 3.690
2. Credit cards359 498
3. Debit cards and other payment cards854 1.104
4. Bank transfers and other payment orders163 175
5. Other fees related to payment services3.595 3.374
j) Distribution of third-party services5.360 6.687
1. Collective portfolio management- -
2. Insurance products5.349 6.679
3. Other products11 8
of which: individual portfolio management- -
k) Structured finance- -
l) Servicing for securitisation transactions1.417 1.634
m) Loan commitments- -
n) Guarantees given1.584 1.749
of which: credit derivatives- -
o) Loans90.799 84.151
of which: for factoring transactions64.908 59.969
p) Trading in currencies- -
q) Commodities- -
r) Other commission income4.012 3.251
of which: for management of multi-lateral trading facilities- -
of which: for management of organised trading facilities- -
Total112.271 106.494
\"\"
Commissions linked to financing operations amount to 90,8 million Euro, an increase of 7,9% compared to the amount recorded for the previous year (84,2 million Euro).
2.2 Commission expense: breakdown
Services/Amounts31.12.202331.12.2022
a) Financial instruments(827) (263)
of which: trading in financial instruments(827) (263)
of which: placement of financial instruments- -
of which: individual portfolio management- -
- Own- -
- Delegated to third parties- -
b) Clearing and Settlement- -
c) Collective portfolio management- -
1. Own- -
2. Delegated to third parties- -
d) Custody and administration(176) (148)
e) Collection and payment services(1.764) (1.828)
of which: credit cards, debit cards and other payment cards- -
f) Servicing for securitisation transactions(694) (1.316)
g) Loan commitments- -
h) Financial guarantees received(172) (1.103)
of which: credit derivatives- -
i) Out-of-office canvassing of financial instruments, services and products(2.360) (1.912)
j) Trading in currencies- -
k) Other commissions payable(8.057) (6.411)
Total(14.050) (12.981)
\"\"
", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page178-cflshid_90799-tag94271": { "value": "
2.1 Commission income: breakdown
Type of services/Amounts31.12.202331.12.2022
a) Financial instruments- 7
1. Placement of securities- 2
1.1 On a firm and/or irrevocable commitment basis- 2
1.2 Without irrevocable commitment- -
2. Receipt and transmission of orders and execution of orders on behalf of customers- 5
2.1 Receipt and transmission of orders for one or more financial instruments- -
2.2 Execution of orders on behalf of clients- 5
3. Other commissions related to activities linked to financial instruments- -
of which: trading on own account- -
of which: individual portfolio management- -
b) Corporate finance253 174
1. Mergers and acquisitions advisory services- -
2. Treasury services- -
3. Other commissions related to corporate finance services253 174
c) Investment advisory activities- -
d) Clearing and settlement- -
e) Collective portfolio management- -
f) Custody and administration- -
1. Depository bank- -
2. Other commissions related to custody and administration activities- -
g) Central administrative services for collective portfolio management- -
h) Fiduciary activities- -
i) Payment services8.846 8.841
1. Current accounts3.875 3.690
2. Credit cards359 498
3. Debit cards and other payment cards854 1.104
4. Bank transfers and other payment orders163 175
5. Other fees related to payment services3.595 3.374
j) Distribution of third-party services5.360 6.687
1. Collective portfolio management- -
2. Insurance products5.349 6.679
3. Other products11 8
of which: individual portfolio management- -
k) Structured finance- -
l) Servicing for securitisation transactions1.417 1.634
m) Loan commitments- -
n) Guarantees given1.584 1.749
of which: credit derivatives- -
o) Loans90.799 84.151
of which: for factoring transactions64.908 59.969
p) Trading in currencies- -
q) Commodities- -
r) Other commission income4.012 3.251
of which: for management of multi-lateral trading facilities- -
of which: for management of organised trading facilities- -
Total112.271 106.494
\"\"
Commissions linked to financing operations amount to 90,8 million Euro, an increase of 7,9% compared to the amount recorded for the previous year (84,2 million Euro).
Part L - Segment reporting
In accordance with standard IFRS 8, a company must provide information that allows users of the financial statements to assess the nature and effects on such of the business it pursues and the economic contexts in which it operates.
The contribution therefore needs to be highlighted as made by the various \"operating Segments\" to forming the Group\u2019s economic result.
Identification of the \"operating Segments\" of this Part L is consistent with the methods adopted by the Corporate Management to take operative decisions and is based on internal reporting, used in order to allocate the resources to the various segments and analyse the relevant performance. With this in mind, and also in order to improve the representation of the Group's profitability, operating Segments are also highlighted that fall below the quantitative thresholds laid down in par. 13 of IFRS 8.
For FY 2023, the operating Segments taken as a reference for the provision of the information under review are as follows:
\u2022Commercial & Corporate Banking Segment, that represents the Group's commercial offer dedicated to businesses and also includes personal loans with the assignment of one-fifth of salary or pension. The Segment consists of the Factoring, Leasing and Corporate Banking & Lending Business Areas;
\u2022Npl Segment, dedicated to non-recourse factoring and managing distressed loans, servicing and managing non-performing, secured loans;
\u2022Governance & Services and Non-Core Segment, which provides the Segments operating in the Group's core businesses with the financial resources and services necessary to perform their respective activities. The Segment includes treasury and proprietary securities desk activities, as well as some corporate loans portfolio assigned for run-off insofar as held to be non-strategic to the Group's growth.
For a description of the configuration of the above-mentioned operating Segments, please refer to the information contained in the \"Results by operating Segments\" section of the Directors' Report on the Group.
The following tables provide detailed income statement and balance sheet data by Segment at 31 December 2023 compared with the corresponding figures for the previous year.
To allow a more immediate reading of the results, reclassified economic data is prepared within this Part L.
Analytical details of the restatements and reclassifications made with respect to the financial statements envisaged by Bank of Italy Circular 262 are provided in separate tables published among the annexes (see the section \u201cAnnexes\" of this \"2023 Consolidated Financial Statements and Report\"), also in compliance with the requirements of Consob Communication No. 6064293 of 28 July 2006.
Reclassifications and aggregations of the economic data concern the following:
\u2022net credit risk losses/reversals of the Npl Segment are reclassified to interest receivable and similar income (and therefore to \"Net interest income\") to the extent to which they represent the operations of this business and are an integral part of the return on the investment;
\u2022net allocations to provisions for risks and charges are excluded from the calculation of \"Operating costs\";
\u2022cost and revenue items deemed as \"non-recurring\" (e.g. because they are directly or indirectly related to business combination transactions, such as the \"gain on a bargain purchase\" in accordance with IFRS 3), are excluded from the calculation of \"Operating costs\", and are therefore reversed from the respective items as per Circular 262 (e.g. \"Other administrative expenses\", \"Other operating income/costs\") and included in a specific item \"Non-recurring income and costs\";
\u2022the following is included under the single item \"Net credit risk losses/reversals\":
\u2013net credit risk losses/reversals relating to financial assets measured at amortised cost (with the exception of those relating to the Npl Segment mentioned above) and to financial assets measured at fair value through other comprehensive income;
\u2013net allocations to provisions for risks and charges for credit risk relating to commitments and guarantees granted;
\u2013profits (losses) from the sale/repurchase of loans at amortised cost other than those of the Npl Segment.
The balance sheet components were aggregated without reclassification.
The Segments of the economic-equity numericals are attributed on the basis of homogeneous allocation criteria in order to take into account both the specificity of the various Segments and the need to guarantee effective monitoring of business performance over time.
Moreover, considering the foregoing, the Segment information in relation to the items of the reclassified income statement shows the results at the level of the net profit.
STATEMENT OF FINANCIAL POSITION DATA
(in thousands of Euro)
COMMERCIAL & CORPORATE BANKING SEGMENT
NPL SEGMENT
GOVERNANCE & SERVICES AND NON-CORE SEGMENT
CONS.
GROUP TOTAL
TOTAL COMMERCIAL & CORPORATE BANKING SEGMENT
of which: FACTORING AREA
of which: LEASING AREA
of which: CORPORATE BANKING & LENDING AREA
Other financial assets mandatorily measured at fair value through profit or loss
Amounts at 31.12.2023
107.169
975
-
106.194
41.735
73.078
221.982
Amounts at 31.12.2022
75.412
2.071
-
73.341
42.489
77.319
195.220
% Change
42,1%
(52,9)%
-
44,8%
(1,8)%
(5,5)%
13,7%
Financial assets measured at fair value through other comprehensive income
Amounts at 31.12.2023
1.333
-
-
1.333
-
747.843
749.176
Amounts at 31.12.2022
1.695
-
-
1.695
-
695.916
697.611
% Change
(21,4)%
-
-
(21,4)%
-
7,5%
7,4%
Receivables due from customers (1)
Amounts at 31.12.2023
6.763.468
2.844.805
1.552.204
2.366.459
1.646.158
2.212.509
10.622.134
Amounts at 31.12.2022
6.514.989
2.755.592
1.472.177
2.287.221
1.519.864
2.152.078
10.186.932
% Change
3,8%
3,2%
5,4%
3,5%
8,3%
2,8%
4,3%
Goodwill
Amounts at 31.12.2023
-
-
-
-
38.020
-
38.020
Amounts at 31.12.2022
-
-
-
-
38.020
-
38.020
% Change
-
-
-
-
0,0%
-
0,0%
\"\"
(1) In the Governance & Services and Non-Core Segment, at 31 December 2023, there were government securities amounting to 1.628,7 million Euro (1.541,5 million Euro at 31 December 2022).
The remaining balance sheet items, other than those shown in the above table, are allocated to the Governance & Services and Non-Core Sector, from which the corresponding economic items are reallocated to the other Sectors, on a direct or indirect basis.
RECLASSIFIED INCOME STATEMENT DATA(in thousands of Euro)
COMMERCIAL & CORPORATE BANKING SEGMENT
NPL SEGMENT
GOVER-NANCE & SERVICES AND NON-CORE SEGMENT
CONS.
GROUP TOTAL
TOTAL COMMERCIAL & CORPORATE BANKING SEGMENT
of which: FACTORING AREA
of which: LEASING AREA
of which: CORPORATE BANKING & LENDING AREA
Net interest income
232.171
106.251
50.985
74.935
281.381
52.645
566.197
Net commission income
96.798
67.742
11.072
17.984
3.483
(2.060)
98.221
Gains (Losses) on the disposal of financial assets
-
-
-
-
10.384
-
10.384
Other components of net banking income
15.670
(1.096)
-
16.766
(715)
14.859
29.814
Net banking income
344.639
172.897
62.057
109.685
294.533
65.444
704.616
Net credit risk losses/reversals
(60.716)
(28.886)
(4.329)
(27.501)
(103)
8.412
(52.407)
Net profit (loss) from financial activities
283.923
144.011
57.728
82.184
294.430
73.856
652.209
Operating costs
(163.890)
(93.234)
(33.039)
(37.617)
(191.931)
(50.020)
(405.841)
Net allocations to provisions for risks and charges
(4.501)
(2.751)
(919)
(831)
147
(2.524)
(6.878)
Non-recurring expenses and income
-
-
-
-
(2.919)
-
(2.919)
Gains (losses) on disposal of investments
-
-
-
-
-
986
986
Pre-tax profit (loss) for the period from continuing operations
115.532
48.026
23.770
43.736
99.727
22.298
237.557
Income taxes for the year relating to current operations
(36.787)
(15.292)
(7.569)
(13.926)
(31.588)
(7.266)
(75.641)
Profit (loss) for the year
78.745
32.734
16.201
29.810
68.139
15.032
161.916
Profit (loss) for the year attributable to non-controlling interests
-
-
-
-
-
(1.806)
(1.806)
Profit (loss) for the year attributable to the Parent company
78.745
32.734
16.201
29.810
68.139
13.226
160.110
\"\"
For a more detailed analysis of the results of the operating Segments, please refer to the section \u201cContribution of operating Segments to Group results\u201d of the Directors\u2019 Report on the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page179-cflshid_91445-tag94273": { "value": "
Section 3 - Dividends and similar income - Item 70
3.1 Dividends and similar income: breakdown
Items/Income31.12.202331.12.2022
DividendsSimilar incomeDividendsSimilar income
A. Financial assets held for trading ----
B. Other financial assets mandatorily measured at fair value-2.818303155
C. Financial assets measured at fair value through other comprehensive income13.354-9.393-
D. Equity investments----
Total13.3542.8189.696155
\"\"
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page180-cflshid_91941-tag94275": { "value": "Section 4 \u2013 Net profit (loss) from trading \u2013 Item 80
4.1 Net profit (loss) from trading: breakdown
Transactions/Income items
Capital gains (A)
Profit from trading (B)
Capital losses (C)
Losses from trading (D)
Net result [(A+B) - (C+D)]
1. Financial assets held for trading
29
290
-
(53)
266
1.1 Debt securities
29
-
-
(26)
3
1.2 Equity instruments
-
290
-
(27)
263
1.3 UCITS units
-
-
-
-
-
1.4 Loans
-
-
-
-
-
1.5 Other
-
-
-
-
-
2. Financial liabilities held for trading
-
-
-
-
-
2.1 Debt securities
-
-
-
-
-
2.2 Payables
-
-
-
-
-
2.3 Other
-
-
-
-
-
3. Financial assets and liabilities: exchange differences
X
X
X
X
(887)
4. Derivatives
90.902
38.831
(76.380)
(58.038)
(4.685)
4.1. Financial derivatives:
90.902
38.831
(76.380)
(58.038)
(4.685)
- On debt securities and interest rates
47.889
31.078
(36.362)
(54.367)
(11.762)
- On equity instruments and share indexes
43.013
7.753
(40.018)
(3.671)
7.077
- On currencies and gold
X
X
X
X
-
- Other
-
-
-
-
-
4.2 Derivatives on loans
-
-
-
-
-
of which: natural hedges connected to the fair value option
X
X
X
X
-
Total
90.931
39.121
(76.380)
(58.091)
(5.306)", "dimensions": { "concept": "ifrs-full:DisclosureOfTradingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page180-cflshid_91941-tag94274": { "value": "Section 4 \u2013 Net profit (loss) from trading \u2013 Item 80
4.1 Net profit (loss) from trading: breakdown
Transactions/Income items
Capital gains (A)
Profit from trading (B)
Capital losses (C)
Losses from trading (D)
Net result [(A+B) - (C+D)]
1. Financial assets held for trading
29
290
-
(53)
266
1.1 Debt securities
29
-
-
(26)
3
1.2 Equity instruments
-
290
-
(27)
263
1.3 UCITS units
-
-
-
-
-
1.4 Loans
-
-
-
-
-
1.5 Other
-
-
-
-
-
2. Financial liabilities held for trading
-
-
-
-
-
2.1 Debt securities
-
-
-
-
-
2.2 Payables
-
-
-
-
-
2.3 Other
-
-
-
-
-
3. Financial assets and liabilities: exchange differences
X
X
X
X
(887)
4. Derivatives
90.902
38.831
(76.380)
(58.038)
(4.685)
4.1. Financial derivatives:
90.902
38.831
(76.380)
(58.038)
(4.685)
- On debt securities and interest rates
47.889
31.078
(36.362)
(54.367)
(11.762)
- On equity instruments and share indexes
43.013
7.753
(40.018)
(3.671)
7.077
- On currencies and gold
X
X
X
X
-
- Other
-
-
-
-
-
4.2 Derivatives on loans
-
-
-
-
-
of which: natural hedges connected to the fair value option
X
X
X
X
-
Total
90.931
39.121
(76.380)
(58.091)
(5.306)Section 5 \u2013 Net result from hedging \u2013 Item 90
5.1 Net result from hedging: breakdown
Income components/Values31.12.202331.12.2022
A. Income related to:
A.1 Fair value hedging derivatives- -
A.2 Financial assets hedged (fair value)12.613 -
A.3 Financial liabilities hedged (fair value)- -
A.4 Cash flow hedging derivatives- -
A.5 Foreign currency assets and liabilities- -
Total income from hedges (A)12.613 -
B. Charges relating to:
B.1 Fair value hedging derivatives(12.713) -
B.2 Financial assets hedged (fair value)- -
B.3 Financial liabilities hedged (fair value)- -
B.4 Cash flow hedging derivatives- -
B.5 Foreign currency assets and liabilities- -
Total charges from hedges (B)(12.713) -
C. Net result from hedging (A - B)(100) -
of which: result of hedges of net positions- -
\"\"
Section 7 - Net result of other financial assets and liabilities measured at fair value through profit or loss - Item 110
7.1 Net change in other financial assets and liabilities measured at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value
In these Consolidated Financial Statements, this item has no value.
7.2 Net change in other financial assets and liabilities measured at fair value through profit or loss: breakdown of financial assets mandatorily measured at fair value
Transactions/Income itemsCapital gains (A)Gains on sale (B)Capital losses (C)Losses on sale (D)Net result [(A+B)-(C+D)]
1. Financial assets20.851 3.751 (10.937) (420) 13.245
1.1 Debt securities2.397 894 (1.449) (420) 1.422
1.2 Equity instruments9.313 785 (3.602) - 6.496
1.3 UCITS units8.653 - (3.328) - 5.325
1.4 Loans488 2.072 (2.558) - 2
2. Financial assets: exchange differencesXXXX-
Total20.851 3.751 (10.937) (420) 13.245
\"\"
The net positive result of other financial assets and liabilities measured at fair value through profit or loss is 13,2 million Euro at 31 December 2023 (essentially in line with the 31 December 2022 figure) and is primarily represented by the net positive change in the 2023 fair value of UCITS fund units for 5,3 million Euro and equity securities for 6,5 million Euro.
Section 16 - Other operating income (costs) - Item 230
16.1 Other operating costs: breakdown
Type of expense/Amounts31.12.202331.12.2022
a) Transactions with customers (104)(51)
b) Capital losses (829)(1.179)
c) Other expenses (2.475)(6.401)
Total (3.408)(7.631)
\"\"
16.2 Other operating income: breakdown
Amounts/Income31.12.202331.12.2022
a) Recovery of third party expenses15.44615.111
b) Rental income12388
c) Income from the realisation of property, plant and equipment1.6061.653
d) Other income11.30210.571
e) Gain on a bargain purchase8.536-
Total37.01327.423
\"\"
Other net operating income, which amounts to 37,0 million Euro at the end of 2023, increases by 35,0% compared to 31 December 2022 mainly due to the fact that the balance at 31 December 2023 benefited from the gain on bargain purchase of 8,5 million Euro arising from the acquisition of Revalea (for more details, refer to the section \"Significant events during the year\" of the Directors' Report on the Group and \"Part G - Business combinations\"). Excluding this non-recurring component of income, this item referred 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, as well as recoveries of expenses associated with leasing operations.
1.2.3 Currency risk
Qualitative information
A. General aspects, management procedures and measurement methods of the currency risk
The assumption of currency risk, intended as an operating element that could potentially improve cash management performance, is not part of the Group's policies. The Banca Ifis Group's foreign currency operations largely involve collections and payments associated with factoring operations and in hedging assets in foreign currencies, like units of UCITS. In this sense, the assets in question are generally hedged with deposits and/or loans from other banks in the same currency, thus eliminating for the most part the risk of losses associated with exchange rate fluctuations. In some cases, synthetic instruments are used as hedging instruments.
A residual currency risk arises as a natural consequence of the mismatch between the clients' borrowings and the Capital Markets function's funding operations in foreign currency. Such mismatches are mainly a result of the difficulty in correctly anticipating financial trends connected with factoring operations, with particular reference to cash flows from account debtors vis-\u00e0-vis the maturities of loans granted to customers, as well as the effect of interest on them.
However, the Capital Markets function strives to minimise such mismatches every day, constantly realigning the size and timing of foreign currency positions.
Currency risk related to the Bank's business is assumed and managed according to the risk policies and limits set by the Parent company's Board of Directors, with precise delegations of power limiting the autonomy of those authorised to operate, as well as especially strict limits on the daily net currency position.
The business functions responsible for ensuring the currency risk is managed correctly are: the Capital Markets function, which, amongst other duties, directly manages the Bank's funding operations and currency position; the Risk Management function, responsible for selecting the most appropriate risk indicators and monitoring them with reference to pre-set limits; and the Top Management, which every year, based on the Capital Markets function's proposals, shall consider these suggestions and make proposals to Banca Ifis's Board of Directors regarding policies on funding and the management of currency risk, as well as suggest appropriate actions during the year in order to ensure that operations are conducted consistently with the risk policies approved by the Group.
As regards the subsidiaries Ifis Finance Sp. z o.o. and Ifis Finance I.F.N. S.A., which operate on the Polish and Romanian markets, respectively, exposures in Polish zloty and leu from factoring activities are financed by funding in the same currency.
With the acquisition of the Polish subsidiary, Banca Ifis has assumed the currency risk represented by the initial investment in Ifis Finance Sp. z o.o.\u2019s share capital for an amount of 21,2 million Zloty and the subsequent share capital increase for an amount of 66 million Zloty.
As instead for the Rumanian subsidiary Ifis Finance I.F.N. S.A., Banca Ifis assumed the exchange rate risk on its own at the time of its incorporation through the initial payment into the share capital totalling 14,7 million Romanian Leu and at the time of the payments of 9,6 million Leu, 24,7 million Leu and 49,0 million Leu as a capital increase respectively during the second half of 2022 and the first and second half of 2023.
Furthermore, Banca Ifis owns a 4,68% interest in India Factoring and Finance Solutions Private Limited, worth 20 million Indian rupees and with a market value of 3,0 million Euro at the historical exchange rate. In 2015 the Bank tested said interest for impairment, recognising a 2,4 million Euro charge in profit or loss. Starting from 2016, the fair value was adjusted through equity, bringing the value of the equity interest to 487 thousand Euro at 31 December 2023.
The Risk Management function is committed to monitoring the set limits, aimed at verifying that the Group's exchange rate risk remains low. As at 31 December 2023, the total net position amounts to about 4,1 million Euro (or about 0,2% of own funds), with a maximum single-currency exposure of 1,9 million Euro.
B. Hedging of currency risk
Considering the size of this investment and the foregoing on the management method, the Bank did not deem it necessary to hedge the ensuing currency risk.
Quantitative information
1. Distribution of assets, liabilities and derivatives by currency
Items
Currencies
US DOLLAR
UK STERLING
JAPANESE YEN
CANADIAN DOLLAR
SWISS FRANC
OTHER CURRENCIES
A. Financial assets
149.114
8.916
752
37
2.769
96.417
A.1 Debt securities
-
-
-
-
-
-
A.2 Equity securities
1.551
3.600
-
-
1.537
3.294
A.3 Loans to banks
39.519
1.296
116
37
1.232
12.958
A.4 Loans to customers
108.044
4.020
636
-
-
80.165
A.5 Other financial assets
-
-
-
-
-
-
B. Other assets
-
-
-
-
-
46
C. Financial liabilities
150.603
8.648
704
-
2.700
29.813
C.1 Payables due to banks
75.672
8.644
704
-
2.700
29.589
C.2 Payables due to customers
74.931
4
-
-
-
224
C.3 Debt securities
-
-
-
-
-
-
C.4 Other financial liabilities
-
-
-
-
-
-
D. Other liabilities
2
5
-
-
-
2.253
E. Financial derivatives
- Options
+ long positions
-
-
-
-
-
-
+ short positions
-
-
-
-
-
-
- Other
+ long positions
-
-
-
-
-
-
+ short positions
-
-
-
-
-
45.927
Total assets
149.114
8.916
752
37
2.769
96.463
Total liabilities
150.605
8.653
704
-
2.700
77.993
Imbalance (+/-)
(1.491)
263
48
37
69
18.470
\"\"
2. Internal models and other methods for the sensitivity analysis
The Banca Ifis Group does not have internal models for currency risk.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page185-cflshid_94625-tag94278": { "value": "
Section 12 - Administrative expenses - Item 190
12.1 Personnel expenses: breakdown
Type of expense/Sectors31.12.202331.12.2022
1) Employees(157.447)(144.991)
a) salaries and wages(110.607)(103.437)
b) social security contributions(30.171)(29.050)
c) post-employment benefits(3.179)(4.613)
d) pension expense(41)(27)
e) allocations for post-employment benefits(3.441)(1.082)
f) allocations to pensions and similar provisions: (222) -
- defined contribution plans - -
- defined benefit plans(222) -
g) payments made to supplementary external funds:(1.600) -
- defined contribution plans(1.600)-
- defined benefit plans- -
h) costs arising from share-based payment agreements(1.108)(755)
i) other employee benefits(7.075)(6.028)
2) Other serving employees(407)(443)
3) Directors and Statutory Auditors(5.948)(5.399)
4) Retired personnel - -
Total(163.802)(150.834)
\"\"
Personnel expenses, at 163,8 million Euro, increase by 8,6%, which can be attributed to the increase in personnel, higher variable remuneration and incremental costs attributable to 2023 linked to the renewal of the National Collective Bargaining Agreement (NCBA) for bank employees. The number of Group employees at 31 December 2023 is 1.940, as compared with 1.874 resources at 31 December 2022.
The items \"allocations for post-employment benefits\" and \"allocations to pensions and similar provisions - defined benefit\" also include interest accrued during the year due to the passage of time.
12.2 Average number of employees by category
Employees:31.12.202331.12.2022
Employees:1.907,01.861,5
a) managers97,592,0
b) middle managers 587,5556,5
c) other employees1.222,01.213,0
Other personnel --
\"\"
12.3 Defined-benefit corporate pension funds: costs and revenues
The balance at 31 December 2023 of the Banca Ifis Group's provisions for defined-benefit corporate pension funds amounts to 222 thousand Euro, and refers to pension funds started up in the year. For more information on defined-benefit pension funds, please see \u201cSection 10 - Provisions for risks and charges - Item 100\" in Part B of these Notes to the Consolidated Financial Statements.
12.4 Other employee benefits
The cost of other employee benefits for FY 2023 amounts to 7,1 million Euro, up from 6,0 million Euro compared with the previous year.
This item mainly includes costs related to the Group's welfare system, such as meal vouchers, employee benefit policies, and costs related to professional training and refresher courses.
12.5 Other administrative expenses: breakdown
Other administrative expenses at 31 December 2023 amount to 260,9 million Euro, an increase compared to 31 December 2022 (+7,6%) mainly due to the presence of \"non-recurring expenses\" of 11,5 million Euro in 2023, which are directly or indirectly related to the acquisition and integration of the company Revalea into the Group. Net of these non-recurring components, the change in this item is due to the contrasting effect in some items, as summarised in the table below.
Type of expense/Amounts
31.12.2023
31.12.2022
Expenses for professional services
(117.671)
(122.234)
Legal and consulting services
(87.106)
(82.505)
Fees to auditing firms
(1.016)
(1.149)
Outsourced services
(29.549)
(38.581)
Direct and indirect taxes
(40.141)
(42.769)
Expenses for purchasing goods and other services
(91.591)
(77.418)
Software assistance and hire
(19.074)
(17.705)
Advertising and inserts
(14.195)
(9.172)
Customer information
(12.404)
(10.399)
Interbank Deposit Protection Fund (\u201cFITD\u201d) and Single Resolution Fund
(11.193)
(11.902)
Property expenses
(7.495)
(6.328)
Securitisation costs
(6.014)
(4.213)
Business travel and transfers
(4.204)
(2.326)
Postage and archiving of documents
(3.733)
(5.428)
Car fleet management and maintenance
(3.247)
(2.667)
Telephone and data transmission expenses
(3.160)
(3.251)
Other sundry expenses
(6.871)
(4.026)
Non-recurring administrative expenses
(11.455)
-
Total other administrative expenses
(260.857)
(242.421)
\"\"
The sub-item \u201cLegal and consulting services\u201d comes to 87,1 million Euro at 31 December 2023, up 5,6% on the figure recorded for last year. The change in the item is mainly attributable to the cost of judicial recovery activities for non-performing loans, which amounts to 42,6 million Euro at 31 December 2023, the growth of which compared to the balance of 36,5 million Euro in the previous year more than offset the absence of certain costs associated with the implementation of the Banca Ifis Group's strategic projects closed in 2022, as well as the costs associated with the integration of the subsidiaries Farbanca and Credifarma.
\"Outsourced services\", amounting to 29,5 million Euro at 31 December 2023, record a slight decrease (-23,4%) on the figure of the previous year, and mainly refer to the lesser non-judicial collections made.
\u201cDirect and indirect taxes\u201d come to 40,1 million Euro, a reduction on the figure at 31 December 2022. The item mainly consists of the registration tax incurred for the judicial recovery of non-performing loans for an amount of 26,1 million Euro at 31 December 2023, down 10,3% on the previous year (in line with the reduction in underlying legal collections) and includes costs for stamp duty for 12,6 million Euro, the recharging of which to customers is included in the item \"Other operating income\".
\u201cExpenses for purchasing goods and other services\u201d amount to 91,6 million Euro, up 18,3% from the 77,4 million Euro at 31 December 2022. The top factors that mainly influence the result are:
\u2022costs for software support and rental, which increase by 7,7% compared to FY 2022, due almost entirely to increased support for the Group's software;
\u2022costs for advertising, which increase from 9,2 million Euro to 14,2 million Euro in December 2023, for the preparation of new mainstream advertising campaigns during the year and the organisation of and participation in events to celebrate the 40th anniversary of the founding of Banca Ifis;
\u2022customer information expenses, which amount to 12,4 million Euro, an increase of 19,3% compared to 2022, mainly due to the type of purchases of impaired portfolios made in the previous year;
\u2022the costs connected with the contribution to the Interbank Deposit Protection Fund (\u201cFITD\u201d) and Single Resolution Fund (SRF) that at 31 December 2023 amount to 11,2 million Euro, a 6,0% decrease on the December 2022 figure.
\"Non-recurring administrative expenses\", amounting to 11,5 million Euro, represent administrative costs directly or indirectly related to the acquisition of Revalea (for more details see the section \"Significant events during the year\" in the Directors' Report on the Group and \"Part G - Business combinations\").
Section 13 - Net allocations to provisions for risks and charges - Item 200
13.1 Net allocation to provisions for credit risk related to loan commitments and financial guarantees granted: breakdown
Net allocation to provisions for credit risk related to loan commitments and financial guarantees granted total a positive 3,8 million Euro at 31 December 2023, reflecting the estimated risk on the commitments made.
13.2 Net allocation to provisions for other commitments and other guarantees given: breakdown
In these Consolidated Financial Statements, this item has no value.
13.3 Net allocations to other provisions for risks and charges: breakdown
For more details, see Part B, \u201cSection 10 - Provisions for risks and charges - Item 10\u201d of the Liabilities, in these Notes to the Consolidated Financial Statements.
Section 14 - Net impairment losses/reversals on property, plant and equipment - Item 210
14.1 Net impairment losses on property, plant and equipment: breakdown
Assets/Income itemsAmortisation (a)Impairment losses (b)Reversals of impairment losses (c)Net result(a + b - c)
A. Property, plant and equipment
1. for functional use(9.594) (110) - (9.704)
- owned (5.328) (110) - (5.438)
- rights of use acquired through leases (4.266) - - (4.266)
2. Held for investment- (17) - (17)
- owned - (17) - (17)
- rights of use acquired through leases - - - -
3. InventoriesX- - -
Total(9.594) (127) - (9.721)
\"\"
Section 15 - Net impairment losses/reversals on intangible assets - Item 220
15.1 Net impairment losses on intangible assets: breakdown
Assets/Income items
Amortisation (a)
Impairment losses (b)
Reversals of impairment losses(c)
Net result(a + b - c)
A. Intangible assets
of which: software
(7.885)
-
-
(7.885)
A.1 Owned
(7.985)
-
-
(7.985)
- Internally generated
(100)
-
-
(100)
- Other
(7.885)
-
-
(7.885)
A.2 Rights of use acquired through leases
-
-
-
-
Total
(7.985)
-
-
(7.985)
16.1 Other operating costs: breakdown
Type of expense/Amounts31.12.202331.12.2022
a) Transactions with customers (104)(51)
b) Capital losses (829)(1.179)
c) Other expenses (2.475)(6.401)
Total (3.408)(7.631)
\"\"
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page185-cflshid_94625-tag94276": { "value": "
Section 12 - Administrative expenses - Item 190
12.1 Personnel expenses: breakdown
Type of expense/Sectors31.12.202331.12.2022
1) Employees(157.447)(144.991)
a) salaries and wages(110.607)(103.437)
b) social security contributions(30.171)(29.050)
c) post-employment benefits(3.179)(4.613)
d) pension expense(41)(27)
e) allocations for post-employment benefits(3.441)(1.082)
f) allocations to pensions and similar provisions: (222) -
- defined contribution plans - -
- defined benefit plans(222) -
g) payments made to supplementary external funds:(1.600) -
- defined contribution plans(1.600)-
- defined benefit plans- -
h) costs arising from share-based payment agreements(1.108)(755)
i) other employee benefits(7.075)(6.028)
2) Other serving employees(407)(443)
3) Directors and Statutory Auditors(5.948)(5.399)
4) Retired personnel - -
Total(163.802)(150.834)
\"\"
Personnel expenses, at 163,8 million Euro, increase by 8,6%, which can be attributed to the increase in personnel, higher variable remuneration and incremental costs attributable to 2023 linked to the renewal of the National Collective Bargaining Agreement (NCBA) for bank employees. The number of Group employees at 31 December 2023 is 1.940, as compared with 1.874 resources at 31 December 2022.
The items \"allocations for post-employment benefits\" and \"allocations to pensions and similar provisions - defined benefit\" also include interest accrued during the year due to the passage of time.
12.2 Average number of employees by category
Employees:31.12.202331.12.2022
Employees:1.907,01.861,5
a) managers97,592,0
b) middle managers 587,5556,5
c) other employees1.222,01.213,0
Other personnel --
\"\"
12.3 Defined-benefit corporate pension funds: costs and revenues
The balance at 31 December 2023 of the Banca Ifis Group's provisions for defined-benefit corporate pension funds amounts to 222 thousand Euro, and refers to pension funds started up in the year. For more information on defined-benefit pension funds, please see \u201cSection 10 - Provisions for risks and charges - Item 100\" in Part B of these Notes to the Consolidated Financial Statements.
12.4 Other employee benefits
The cost of other employee benefits for FY 2023 amounts to 7,1 million Euro, up from 6,0 million Euro compared with the previous year.
This item mainly includes costs related to the Group's welfare system, such as meal vouchers, employee benefit policies, and costs related to professional training and refresher courses.
12.5 Other administrative expenses: breakdown
Other administrative expenses at 31 December 2023 amount to 260,9 million Euro, an increase compared to 31 December 2022 (+7,6%) mainly due to the presence of \"non-recurring expenses\" of 11,5 million Euro in 2023, which are directly or indirectly related to the acquisition and integration of the company Revalea into the Group. Net of these non-recurring components, the change in this item is due to the contrasting effect in some items, as summarised in the table below.
Type of expense/Amounts
31.12.2023
31.12.2022
Expenses for professional services
(117.671)
(122.234)
Legal and consulting services
(87.106)
(82.505)
Fees to auditing firms
(1.016)
(1.149)
Outsourced services
(29.549)
(38.581)
Direct and indirect taxes
(40.141)
(42.769)
Expenses for purchasing goods and other services
(91.591)
(77.418)
Software assistance and hire
(19.074)
(17.705)
Advertising and inserts
(14.195)
(9.172)
Customer information
(12.404)
(10.399)
Interbank Deposit Protection Fund (\u201cFITD\u201d) and Single Resolution Fund
(11.193)
(11.902)
Property expenses
(7.495)
(6.328)
Securitisation costs
(6.014)
(4.213)
Business travel and transfers
(4.204)
(2.326)
Postage and archiving of documents
(3.733)
(5.428)
Car fleet management and maintenance
(3.247)
(2.667)
Telephone and data transmission expenses
(3.160)
(3.251)
Other sundry expenses
(6.871)
(4.026)
Non-recurring administrative expenses
(11.455)
-
Total other administrative expenses
(260.857)
(242.421)
\"\"
The sub-item \u201cLegal and consulting services\u201d comes to 87,1 million Euro at 31 December 2023, up 5,6% on the figure recorded for last year. The change in the item is mainly attributable to the cost of judicial recovery activities for non-performing loans, which amounts to 42,6 million Euro at 31 December 2023, the growth of which compared to the balance of 36,5 million Euro in the previous year more than offset the absence of certain costs associated with the implementation of the Banca Ifis Group's strategic projects closed in 2022, as well as the costs associated with the integration of the subsidiaries Farbanca and Credifarma.
\"Outsourced services\", amounting to 29,5 million Euro at 31 December 2023, record a slight decrease (-23,4%) on the figure of the previous year, and mainly refer to the lesser non-judicial collections made.
\u201cDirect and indirect taxes\u201d come to 40,1 million Euro, a reduction on the figure at 31 December 2022. The item mainly consists of the registration tax incurred for the judicial recovery of non-performing loans for an amount of 26,1 million Euro at 31 December 2023, down 10,3% on the previous year (in line with the reduction in underlying legal collections) and includes costs for stamp duty for 12,6 million Euro, the recharging of which to customers is included in the item \"Other operating income\".
\u201cExpenses for purchasing goods and other services\u201d amount to 91,6 million Euro, up 18,3% from the 77,4 million Euro at 31 December 2022. The top factors that mainly influence the result are:
\u2022costs for software support and rental, which increase by 7,7% compared to FY 2022, due almost entirely to increased support for the Group's software;
\u2022costs for advertising, which increase from 9,2 million Euro to 14,2 million Euro in December 2023, for the preparation of new mainstream advertising campaigns during the year and the organisation of and participation in events to celebrate the 40th anniversary of the founding of Banca Ifis;
\u2022customer information expenses, which amount to 12,4 million Euro, an increase of 19,3% compared to 2022, mainly due to the type of purchases of impaired portfolios made in the previous year;
\u2022the costs connected with the contribution to the Interbank Deposit Protection Fund (\u201cFITD\u201d) and Single Resolution Fund (SRF) that at 31 December 2023 amount to 11,2 million Euro, a 6,0% decrease on the December 2022 figure.
\"Non-recurring administrative expenses\", amounting to 11,5 million Euro, represent administrative costs directly or indirectly related to the acquisition of Revalea (for more details see the section \"Significant events during the year\" in the Directors' Report on the Group and \"Part G - Business combinations\").
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page185-cflshid_94647-tag94277": { "value": "
12.1 Personnel expenses: breakdown
Type of expense/Sectors31.12.202331.12.2022
1) Employees(157.447)(144.991)
a) salaries and wages(110.607)(103.437)
b) social security contributions(30.171)(29.050)
c) post-employment benefits(3.179)(4.613)
d) pension expense(41)(27)
e) allocations for post-employment benefits(3.441)(1.082)
f) allocations to pensions and similar provisions: (222) -
- defined contribution plans - -
- defined benefit plans(222) -
g) payments made to supplementary external funds:(1.600) -
- defined contribution plans(1.600)-
- defined benefit plans- -
h) costs arising from share-based payment agreements(1.108)(755)
i) other employee benefits(7.075)(6.028)
2) Other serving employees(407)(443)
3) Directors and Statutory Auditors(5.948)(5.399)
4) Retired personnel - -
Total(163.802)(150.834)
\"\"
Personnel expenses, at 163,8 million Euro, increase by 8,6%, which can be attributed to the increase in personnel, higher variable remuneration and incremental costs attributable to 2023 linked to the renewal of the National Collective Bargaining Agreement (NCBA) for bank employees. The number of Group employees at 31 December 2023 is 1.940, as compared with 1.874 resources at 31 December 2022.
The items \"allocations for post-employment benefits\" and \"allocations to pensions and similar provisions - defined benefit\" also include interest accrued during the year due to the passage of time.
12.2 Average number of employees by category
Employees:31.12.202331.12.2022
Employees:1.907,01.861,5
a) managers97,592,0
b) middle managers 587,5556,5
c) other employees1.222,01.213,0
Other personnel --
\"\"
12.3 Defined-benefit corporate pension funds: costs and revenues
The balance at 31 December 2023 of the Banca Ifis Group's provisions for defined-benefit corporate pension funds amounts to 222 thousand Euro, and refers to pension funds started up in the year. For more information on defined-benefit pension funds, please see \u201cSection 10 - Provisions for risks and charges - Item 100\" in Part B of these Notes to the Consolidated Financial Statements.
12.4 Other employee benefits
The cost of other employee benefits for FY 2023 amounts to 7,1 million Euro, up from 6,0 million Euro compared with the previous year.
This item mainly includes costs related to the Group's welfare system, such as meal vouchers, employee benefit policies, and costs related to professional training and refresher courses.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page186-cflshid_95140-tag94279": { "value": "
12.5 Other administrative expenses: breakdown
Other administrative expenses at 31 December 2023 amount to 260,9 million Euro, an increase compared to 31 December 2022 (+7,6%) mainly due to the presence of \"non-recurring expenses\" of 11,5 million Euro in 2023, which are directly or indirectly related to the acquisition and integration of the company Revalea into the Group. Net of these non-recurring components, the change in this item is due to the contrasting effect in some items, as summarised in the table below.
Type of expense/Amounts
31.12.2023
31.12.2022
Expenses for professional services
(117.671)
(122.234)
Legal and consulting services
(87.106)
(82.505)
Fees to auditing firms
(1.016)
(1.149)
Outsourced services
(29.549)
(38.581)
Direct and indirect taxes
(40.141)
(42.769)
Expenses for purchasing goods and other services
(91.591)
(77.418)
Software assistance and hire
(19.074)
(17.705)
Advertising and inserts
(14.195)
(9.172)
Customer information
(12.404)
(10.399)
Interbank Deposit Protection Fund (\u201cFITD\u201d) and Single Resolution Fund
(11.193)
(11.902)
Property expenses
(7.495)
(6.328)
Securitisation costs
(6.014)
(4.213)
Business travel and transfers
(4.204)
(2.326)
Postage and archiving of documents
(3.733)
(5.428)
Car fleet management and maintenance
(3.247)
(2.667)
Telephone and data transmission expenses
(3.160)
(3.251)
Other sundry expenses
(6.871)
(4.026)
Non-recurring administrative expenses
(11.455)
-
Total other administrative expenses
(260.857)
(242.421)
\"\"
The sub-item \u201cLegal and consulting services\u201d comes to 87,1 million Euro at 31 December 2023, up 5,6% on the figure recorded for last year. The change in the item is mainly attributable to the cost of judicial recovery activities for non-performing loans, which amounts to 42,6 million Euro at 31 December 2023, the growth of which compared to the balance of 36,5 million Euro in the previous year more than offset the absence of certain costs associated with the implementation of the Banca Ifis Group's strategic projects closed in 2022, as well as the costs associated with the integration of the subsidiaries Farbanca and Credifarma.
\"Outsourced services\", amounting to 29,5 million Euro at 31 December 2023, record a slight decrease (-23,4%) on the figure of the previous year, and mainly refer to the lesser non-judicial collections made.
\u201cDirect and indirect taxes\u201d come to 40,1 million Euro, a reduction on the figure at 31 December 2022. The item mainly consists of the registration tax incurred for the judicial recovery of non-performing loans for an amount of 26,1 million Euro at 31 December 2023, down 10,3% on the previous year (in line with the reduction in underlying legal collections) and includes costs for stamp duty for 12,6 million Euro, the recharging of which to customers is included in the item \"Other operating income\".
\u201cExpenses for purchasing goods and other services\u201d amount to 91,6 million Euro, up 18,3% from the 77,4 million Euro at 31 December 2022. The top factors that mainly influence the result are:
\u2022costs for software support and rental, which increase by 7,7% compared to FY 2022, due almost entirely to increased support for the Group's software;
\u2022costs for advertising, which increase from 9,2 million Euro to 14,2 million Euro in December 2023, for the preparation of new mainstream advertising campaigns during the year and the organisation of and participation in events to celebrate the 40th anniversary of the founding of Banca Ifis;
\u2022customer information expenses, which amount to 12,4 million Euro, an increase of 19,3% compared to 2022, mainly due to the type of purchases of impaired portfolios made in the previous year;
\u2022the costs connected with the contribution to the Interbank Deposit Protection Fund (\u201cFITD\u201d) and Single Resolution Fund (SRF) that at 31 December 2023 amount to 11,2 million Euro, a 6,0% decrease on the December 2022 figure.
\"Non-recurring administrative expenses\", amounting to 11,5 million Euro, represent administrative costs directly or indirectly related to the acquisition of Revalea (for more details see the section \"Significant events during the year\" in the Directors' Report on the Group and \"Part G - Business combinations\")", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page188-cflshid_95904-tag94280": { "value": "
Section 13 - Net allocations to provisions for risks and charges - Item 200
13.1 Net allocation to provisions for credit risk related to loan commitments and financial guarantees granted: breakdown
Net allocation to provisions for credit risk related to loan commitments and financial guarantees granted total a positive 3,8 million Euro at 31 December 2023, reflecting the estimated risk on the commitments made.
13.2 Net allocation to provisions for other commitments and other guarantees given: breakdown
In these Consolidated Financial Statements, this item has no value.
13.3 Net allocations to other provisions for risks and charges: breakdown
For more details, see Part B, \u201cSection 10 - Provisions for risks and charges - Item 10\u201d of the Liabilities, in these Notes to the Consolidated Financial Statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page189-cflshid_96016-tag94282": { "value": "Section 14 - Net impairment losses/reversals on property, plant and equipment - Item 210
14.1 Net impairment losses on property, plant and equipment: breakdown
Assets/Income itemsAmortisation (a)Impairment losses (b)Reversals of impairment losses (c)Net result(a + b - c)
A. Property, plant and equipment
1. for functional use(9.594) (110) - (9.704)
- owned (5.328) (110) - (5.438)
- rights of use acquired through leases (4.266) - - (4.266)
2. Held for investment- (17) - (17)
- owned - (17) - (17)
- rights of use acquired through leases - - - -
3. InventoriesX- - -
Total(9.594) (127) - (9.721)
\"\"
Section 15 - Net impairment losses/reversals on intangible assets - Item 220
15.1 Net impairment losses on intangible assets: breakdown
Assets/Income items
Amortisation (a)
Impairment losses (b)
Reversals of impairment losses(c)
Net result(a + b - c)
A. Intangible assets
of which: software
(7.885)
-
-
(7.885)
A.1 Owned
(7.985)
-
-
(7.985)
- Internally generated
(100)
-
-
(100)
- Other
(7.885)
-
-
(7.885)
A.2 Rights of use acquired through leases
-
-
-
-
Total
(7.985)
-
-
(7.985)", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page189-cflshid_96016-tag94281": { "value": "Section 14 - Net impairment losses/reversals on property, plant and equipment - Item 210
14.1 Net impairment losses on property, plant and equipment: breakdown
Assets/Income itemsAmortisation (a)Impairment losses (b)Reversals of impairment losses (c)Net result(a + b - c)
A. Property, plant and equipment
1. for functional use(9.594) (110) - (9.704)
- owned (5.328) (110) - (5.438)
- rights of use acquired through leases (4.266) - - (4.266)
2. Held for investment- (17) - (17)
- owned - (17) - (17)
- rights of use acquired through leases - - - -
3. InventoriesX- - -
Total(9.594) (127) - (9.721)
\"\"
Section 15 - Net impairment losses/reversals on intangible assets - Item 220
15.1 Net impairment losses on intangible assets: breakdown
Assets/Income items
Amortisation (a)
Impairment losses (b)
Reversals of impairment losses(c)
Net result(a + b - c)
A. Intangible assets
of which: software
(7.885)
-
-
(7.885)
A.1 Owned
(7.985)
-
-
(7.985)
- Internally generated
(100)
-
-
(100)
- Other
(7.885)
-
-
(7.885)
A.2 Rights of use acquired through leases
-
-
-
-
Total
(7.985)
-
-
(7.985)
Section 19 - Value adjustments of goodwill - Item 270
19.1 Value adjustments of goodwill: breakdown
The balance of the item at 31 December 2023 is nil, while the comparative figures for 2022 refer to the full write-down of goodwill allocated to the Polish subsidiary Ifis Finance Sp z o.o. for 762 thousand Euro.
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page189-cflshid_96016-tag94285": { "value": "
Section 16 - Other operating income (costs) - Item 230
16.1 Other operating costs: breakdown
Type of expense/Amounts31.12.202331.12.2022
a) Transactions with customers (104)(51)
b) Capital losses (829)(1.179)
c) Other expenses (2.475)(6.401)
Total (3.408)(7.631)
\"\"
16.2 Other operating income: breakdown
Amounts/Income31.12.202331.12.2022
a) Recovery of third party expenses15.44615.111
b) Rental income12388
c) Income from the realisation of property, plant and equipment1.6061.653
d) Other income11.30210.571
e) Gain on a bargain purchase8.536-
Total37.01327.423
\"\"
Other net operating income, which amounts to 37,0 million Euro at the end of 2023, increases by 35,0% compared to 31 December 2022 mainly due to the fact that the balance at 31 December 2023 benefited from the gain on bargain purchase of 8,5 million Euro arising from the acquisition of Revalea (for more details, refer to the section \"Significant events during the year\" of the Directors' Report on the Group and \"Part G - Business combinations\"). Excluding this non-recurring component of income, this item referred 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, as well as recoveries of expenses associated with leasing operations.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page189-cflshid_96016-tag94284": { "value": "
16.1 Other operating costs: breakdown
Type of expense/Amounts31.12.202331.12.2022
a) Transactions with customers (104)(51)
b) Capital losses (829)(1.179)
c) Other expenses (2.475)(6.401)
Total (3.408)(7.631)
\"\"
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page189-cflshid_96016-tag94283": { "value": "
16.1 Other operating costs: breakdown
Type of expense/Amounts31.12.202331.12.2022
a) Transactions with customers (104)(51)
b) Capital losses (829)(1.179)
c) Other expenses (2.475)(6.401)
Total (3.408)(7.631)
\"\"
", "dimensions": { "concept": "ifrs-full:DisclosureOfClaimsAndBenefitsPaidExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page190-cflshid_96516-tag94286": { "value": "16.2 Other operating income: breakdown
Amounts/Income31.12.202331.12.2022
a) Recovery of third party expenses15.44615.111
b) Rental income12388
c) Income from the realisation of property, plant and equipment1.6061.653
d) Other income11.30210.571
e) Gain on a bargain purchase8.536-
Total37.01327.423
\"\"
Other net operating income, which amounts to 37,0 million Euro at the end of 2023, increases by 35,0% compared to 31 December 2022 mainly due to the fact that the balance at 31 December 2023 benefited from the gain on bargain purchase of 8,5 million Euro arising from the acquisition of Revalea (for more details, refer to the section \"Significant events during the year\" of the Directors' Report on the Group and \"Part G - Business combinations\"). Excluding this non-recurring component of income, this item referred 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, as well as recoveries of expenses associated with leasing operations.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page191-cflshid_96959-tag94287": { "value": "Section 21 - Income taxes for the year relating to current operations - Item 300
21.1 Income taxes for the year relating to current operations: breakdown
Income items/Sectors31.12.202331.12.2022
1.Current taxes (-)(57.837)(56.130)
2.Changes in current taxes of previous years (+/-)1.559672
3.Reductions in current taxes for the year (+) --
3.bisReductions in current taxes for the year for tax credits as per Italian Law No. 214/2011 (+) -13.669
4.Changes in deferred tax assets (+/-)(20.237)(31.044)
5.Changes in deferred tax liabilities (+/-)8742.924
6.Tax expense for the year (-) (-1+/-2+3+3 bis+/-4+/-5)(75.641)(69.909)
\"\"
21.2 Reconciliation between theoretical tax charges and effective tax charges for the year
Items/Components31.12.202331.12.2022
Pre-tax profit (loss) for the period from continuing operations237.557211.796
IRES - theoretical tax charges (27,5%) (86.427) (58.244)
- effect of lower tax rate 707465
- effect of non-taxable income and other decreases - permanent35.50419.258
- effect of non-deductible charges and other increases - permanent (6.476) (15.618)
- non-current corporate income tax (IRES)1.201394
IRES - Effective tax charges (55.491) (53.745)
IRAP - theoretical tax charges (5,57%) (17.506) (11.798)
- effect of lower tax rate 389270
- effect of income/charges that are not part of the taxable base (4.112) (4.914)
- non-current corporate income tax (IRAP)1.079278
IRAP - Effective tax charges (20.150) (16.164)
Other taxes --
Effective tax charges for the year (75.641) (69.909)
\"\"
FY 2023 income tax comes to 75,6 million Euro and the tax rate is 31,84%, compared with the 33,01% of last year", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page192-cflshid_97443-tag94288": { "value": "
24.1 Disclosure of government grants as per Article 1, paragraph 125 of Italian Law No. 124 of 4 August 2017 (the \u201cAnnual Law on the Market and Competition\u201d)
Italian Law No. 124 of 4 August 2017 (Annual Market and Competition Law), under Art. 1, paragraphs 125-129, introduced various measures aimed at increasing the transparency of contributions by administrations and public companies, including listed, in the favour of third sector subjects and businesses in general.
Specifically, with respect to the financial reporting process, the law requires all businesses to disclose subsidies, grants, paid positions, and economic benefits of any kind received from the following entities in the notes to the Annual and Consolidated Financial Statements:
\u2022public administrations and entities with equivalent status (Article 2-bis, Italian Legislative Decree No. 33/2013);
\u2022entities owned, either de jure or de facto, directly or indirectly, by public administrations; and
\u2022state-owned enterprises.
Said disclosures are required if the amounts received during the reporting period exceeded 10 thousand Euro.
Consistently with the clarification issued by Italy's Council of State with opinion No. 1.149 of 1 June 2018 and the guidance provided by trade associations (Assonime), the disclosure requirements do not apply to the following:
\u2022prices for the business provision of professional and other services and supplies or other appointments coming under the scope of the core business. Indeed, these amounts received do not come under the scope of donations/public support policies;
\u2022tax expenditures available to all businesses that meet specific conditions, based on pre-established general requirements, which are also the subject of specific disclosures;
\u2022extension of subsidised loans to customers, as these involve funds of third parties (e.g. interest rate subsidies from the public administration) and not funds of the bank that acts as intermediary.
For information on subsidies, contributions, paid assignments and economic advantages of any kind received by Group companies, please refer to the National Register of State Aid, \u201cTransparency\u201d section.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGovernmentGrantsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page192-cflshid_97443-tag94289": { "value": "
Section 25 - Earnings per share
25.1 Average number of ordinary diluted shares
Earnings per share and diluted earnings per share
31.12.2023
31.12.2022
Net profit for the year attributable to the Parent company (in thousands of Euro)
160.110
141.086
Average number of outstanding shares (1)
52.456.037
52.685.625
Average number of ordinary diluted shares
52.456.037
52.685.625
Consolidated earnings per share for the year (units of Euro)
3,05
2,68
Consolidated diluted earnings per share for the year (units of Euro)
3,05
2,68
\"\"
(1) Outstanding shares are net of treasury shares held in the portfolio.
25.2 Other information
There is no further information to report.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page196-cflshid_99402-tag94290": { "value": "
Section 1 - Accounting consolidation risks
Quantitative information
The gross exposures reported in the following tables account for the positive impact of the breakdown of the difference between the fair value as measured in the business combination and the carrying amount of the receivables recognised by the subsidiaries over time.
A. Credit quality
A.1 Non-performing and performing credit exposures: amounts, impairment losses, trend, and economic breakdown
A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying amounts)
Portfolio/QualityBad loansUnlikely to payNon-performing past dueexposuresPerforming past due exposuresOther performing exposuresTotal
1. Financial assets measured at amortised cost1.301.527 444.023 109.533 230.248 9.174.370 11.259.701
2. Financial assets measured at fair value through other comprehensive income- - - - 634.306 634.306
3. Financial assets designated at fair value- - - - - -
4. Other financial assets mandatorily measured at fair value2.466 4.564 - - 86.991 94.021
5. Financial assets under disposal- - - - - -
Total 31.12.20231.303.993 448.587 109.533 230.248 9.895.667 11.988.028
Total 31.12.20221.152.704486.402147.606225.0479.420.60511.432.364
\"\"
Excluded from this table are on-demand receivables from banks (which are classified under the item \"Cash and cash equivalents\", in accordance with Bank of Italy instructions), equity securities and UCITS units.
A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net amounts)
Portfolio/QualityNon-performingPerformingTotal(net exposure)
Gross exposureOverall impairment losses/reversalsNet exposure Overall partial write-offs (1)Gross exposureOverall impairment losses/reversalsNet exposure
1. Financial assets measured at amortised cost2.035.592 180.510 1.855.082 3.149 9.517.793 113.174 9.404.619 11.259.701
2. Financial assets measured at fair value through other comprehensive income- - - - 635.469 1.163 634.306 634.306
3. Financial assets designated at fair value- - - - XX- -
4. Other financial assets mandatorily measured at fair value7.030 - 7.030 - XX86.991 94.021
5. Financial assets under disposal- - - - - - - -
Total 31.12.20232.042.622 180.510 1.862.112 3.149 10.153.262 114.337 10.125.916 11.988.028
Total 31.12.20221.938.159151.4481.786.7113.7309.665.62496.5539.645.65311.432.364
\"\"
(1) Amount to be reported for disclosure purposes
Excluded from this table are on-demand receivables from banks (which are classified under the item \"Cash and cash equivalents\", in accordance with Bank of Italy instructions), equity securities and UCITS units.
Portfolio/Quality
Low creditquality assets
Other assets
Accumulated capital losses
Net exposure
Net exposure
1. Financial assets held for trading
2. Hedging derivatives
-
-
12.896
Total 31.12.2023
-
-
12.896
Total 31.12.2022
9
4
26.271
\"\"
Equity securities are not included in this table.
B. Disclosure on structured entities (other than securitisation vehicles)
There were no unconsolidated structured companies at 31 December 2023 other than the securitisation company falling within the Banca Ifis Group's scope.
Section 2 - Prudential consolidation risks
1.1 Credit risk
Qualitative information
1. General aspects
In accordance with the guidelines approved by the Parent company's Governing Body and the changes in the supervisory regulatory framework, the Group seeks to strengthen its competitive position in the market offered to small and medium enterprises (SMEs). The aim is to increase its market share in the following segments: trade receivables, including for entities with specialist needs such as pharmacies, leasing, tax receivables, and distressed loans, providing high-quality and highly customisable financial services while keeping credit risk under control and profitability in line with the level of quality offered. The Private segment is also a complementary reference market for the Banking Group\u2019s credit business, in respect of the strategic guidelines defined over time by the 2022-2024 Business Plan and the related implementing initiatives. Operations related to the pharmaceutical segment are carried out by the subsidiary Banca Credifarma, a banking operator specialising in granting advances, medium- to long-term loans and financial services to pharmacies.
As at the date of these Consolidated Financial Statements, the Banking Group's business activities are conducted in the following areas:
\u2022the factoring business is characterised by the direct assumption of risks related to granting advances and loans, as well as guarantees, if any, on trade receivables of mainly SMEs. As part of its operations, the factoring Area purchases receivables due from public health service and local authorities outright;
\u2022Corporate Lending and Structured Finance operations, which focus on offering medium and long-term financing and secured and unsecured products to support companies operating in Italy in their organic or inorganic growth through extraordinary operations to reposition or expand their business, establish alliances or pursue integrations, promote restructuring processes, or introduce new investors and partners into the company. The clients of this unit are usually corporations;
\u2022investments in non-financial companies and in units of intermediaries;
\u2022medium/long-term loans to SMEs operating in the main production sectors, covered by the public guarantee, conceived by the Ministry of Economic Development (MED) of the Central Guarantee Fund;
\u2022the leasing Area targets mainly small economic operators as well as SMEs. In general, finance leases help independent contractors and businesses finance company cars and commercial vehicles as well as facilitate equipment investments for businesses and resellers. Meanwhile, long-term leases mainly focus on equipment finance - specifically on office and IT products and, to a lesser extent, industrial and healthcare equipment;
\u2022the acquisition of non-performing loans (Npls) by the subsidiaries Ifis Npl Investing and Revalea, mainly from retail customers;
\u2022servicing (master and special services), management of Npl portfolios with collection both judicial and non-judicial, consultancy in due diligence activities and authorised investors in Npl transactions, managed by the company Ifis Npl Servicing;
\u2022the granting of loans to retail customers, including through the definition and refinancing of transferred non-performing loans, to be settled through salary- or pension-backed loan schemes, managed by the subsidiary Cap.Ital.Fin.;
\u2022short- and medium-term lending to pharmacies by the subsidiary Banca Credifarma, including through the disposal of receivables due from Italy's National Health Service as well as public- and private-sector healthcare providers;
\u2022management of the proprietary portfolio, carried out mainly via financial investments in bonds, mostly government bonds, and listed equities;
\u2022securitisation activities, which are aimed at segment operators, in particular originators and investors, by offering finance through investments in asset-backed securities (ABS) and other exposures to securitisation schemes, and by taking on the roles of arranger and sponsor in the context of such transactions with a view to cross-selling. Investments are mainly concentrated in senior and mezzanine tranches with underlying performing assets and with a favourable trade-off in terms of expected profitability compared to risk weighting.
Given the particular business of the Group's companies, credit risk is the most important element to consider as far as the general risks assumed by the Group are concerned. Maintaining an effective credit risk management is a strategic objective for the Banca Ifis Group, pursued by adopting integrated tools and processes that ensure
proper credit risk management at all stages (appraisal, lending, monitoring and management, and interventions on troubled loans).
2. Credit risk management policies
As part of its lending operations, the Banca Ifis Group is exposed to the risk that an unexpected change in the creditworthiness of a counterparty may cause an unforeseen change in the relevant credit exposure, requiring to write off all or part of the receivables. This risk is always inherent in conventional lending operations, regardless of the form of financing.
The main reasons for non-compliance are the lack of the borrower's independent capacity to service and repay the debt (due to lack of liquidity, insolvency, etc.) and the occurrence of circumstances that affect the borrower's economic and financial conditions, such as the \"country risk\".
With regard to impaired purchased receivables (POCI), an additional risk to which the Group is exposed is the risk of inadequate collection, i.e., losses incurred due to the failure to collect receivables from defaulting counterparties.
2.1 Organisational aspects
The standards and guidelines that the Banca Ifis Group intends to give in respect of the concession of credit are set out in the \"Group Credit Policy\" applied and given out, insofar as competent, to all the organisational units of the Bank and Group companies involved in the assumption and management of credit.
Inside, we find:
\u2022the roles and responsibilities of the corporate bodies and organisational structures involved in the loan process;
\u2022the definition of the credit strategies and rules with reference to segments of customers, counterparties and types of comparable transactions, the limits of reliance assigned to non-banking counterparties, the limits to exposure assigned to the various types of economic businesses, the identification of the Most Significant Transactions (MSTs) for the preventive verification that they are indeed consistent with the risk limits and objectives defined in the Group Risk Appetite Framework (RAF), the limits to the risk assigned to transactions with related parties and/or company representatives, pursuant to Art. 136 of the Consolidated Law on Banking. The monitoring, review and update of the credit rules and strategies involve:
\u2013the Parent company\u2019s Large Risks & Monitoring organisational unit, in coordinating the process of formulating proposed reviews and updates to the credit policies to be submitted for the approval of the Parent company's Board of Directors;
\u2013the Parent company\u2019s Risk Management Department in monitoring the results achieved by the Group in terms of volumes and overall effective positioning on the credit market in line with the defined credit strategies;
\u2022the most qualifying elements in the credit process, with specific reference:
\u2013to the definition of risk categories to be assigned to customers, according to the different risk profile that can be attributed to the technical loan forms involved, closely linked to the operative processes connected with the \"Group System of delegated powers\" on the assumption of the credit risk;
\u2013to the examination of all useful information, both internal and external, functional to the determination of the customer's credit rating and future solvency of the debtor, measuring the credit risk firstly using normal sources for the repayment of exposure and, thereafter, considering the use of the accessory guarantees connected with the credit intervention;
\u2022the monitoring and review of the model used to define credit faculties or the matrix of faculties for granting credit and the related limits;
\u2022the structuring of the credit process, in its comprehensive cycle, into two macro processes of \"investigation and disbursement of credit\" and \"monitoring and collection of debt\".
On an operative level, the various Group companies structure the specific operating procedures for the application of credit rules into Organised Procedures or Operative Notes.
Within the Banca Ifis Group, the corporate bodies of Banca Ifis and the banks and other financial subsidiaries play a key role in managing and controlling credit risk, ensuring an appropriate supervision of credit risk within the scope of their responsibilities by identifying strategic guidelines as well as risk management and control policies, assessing their efficiency and effectiveness over time, and defining the duties and responsibilities of the corporate functions involved in the relevant processes.
Under the current organisational structure, specific central areas are involved in credit risk management and governance, ensuring, with the appropriate level of segregation, the performance of management operations as well as first and second line of defence controls by adopting adequate processes and IT applications.
Overall, despite some differences deriving from the various products/portfolios, the lending process follows a shared organisational approach with various operational stages and roles, responsibilities, and controls at different levels.
Specifically, Banca Ifis's organisational structure consists of the following Business Units, dedicated to different activities, centralised in the Co-General Manager Chief Commercial Officer (COO):
\u2022Commercial & Corporate Banking Underwriting dedicated, both with reference to the initial granting of credit and renewal and review activities, to assessing the creditworthiness of the counterparties as well as the risk inherent in the transactions and approving credit facilities in compliance with the powers assigned to it by the Board of Directors and formalised in the Group's System of Delegated Authorities for the assumption of credit risk;
\u2022Commercial Banking, dedicated to the promotion of financing services to domestic and foreign companies and to the care of the correct relationship with the counterparties developed directly or indirectly, as well as the debtors (domestic or foreign) acquired as part of the operations carried out;
\u2022Corporate & Investment Banking, dedicated to Structured Finance transactions or investments in performing non-financial companies and intermediaries;
\u2022Pharmacies, directly manages existing portfolio relationships with domestic pharmacy counterparties in close cooperation with the organisational units of the subsidiary Banca Credifarma;
\u2022Insurance, dedicated to the insurance products offered to its customers;
\u2022Leasing and Rental, dedicated to offering and managing leasing and renting products;
\u2022Marketing & Business Strategy, supporting the business units reporting to the Co-General Manager Chief Commercial Officer;
\u2022Tax Credit, dedicated to the purchase of tax credits from companies in insolvency proceedings, in voluntary liquidation and from performing companies;
\u2022Individuals, dedicated to the development of products, services and business opportunities related to transactional and funding banking services in relation to the Private customer segment;
\u2022Anti-Fraud, dedicated to overseeing the transversal coordination of the Group structures that manage the offer of products to customers with respect to the execution of controls on the prevention and assessment of fraud attempts and the implementation of response actions.
Finally, at the reporting date the lending process include the operations of the following subsidiaries:
\u2022Ifis Npl Investing S.p.A., company dedicated to the acquisition and transfer of non-performing loans (Npls), mainly originated by financial institutions and banks;
\u2022Ifis Npl Servicing S.p.A., company specialising in the management of Npls and servicing and recovery activities on behalf of third parties;
\u2022Revalea S.p.A., a company set up in 2022 from the spin-off of Npls arising from the acquisition of non-performing loan portfolios and acquired by the Banca Ifis Group in October 2023, as part of the long-term partnership signed with the Mediobanca Group for the management of Npls (for more details, see the section \"Significant events during the year\" in the Directors' Report on the Group);
\u2022Cap.Ital.Fin. S.p.A., which provides salary- or pension-backed loans, payment delegation as well as salary or pension deductions and distributes financial products such as mortgages and personal loans;
\u2022Banca Credifarma S.p.A., a banking operator mainly targeting the pharmacy and healthcare sectors and operating in the business of granting advances, medium and long-term loans and financial services to pharmacies;
\u2022Ifis Finance Sp. z o.o. and Ifis Finance I.F.N. S.A., factoring companies operating in Poland and Romania respectively;
\u2022Ifis Rental Services S.r.l., an unregulated entity specialising in operating leases.
Ordinary credit organisational aspects
Each organisational unit develops and manages business relationships and opportunities in its respective segment by working together with the branches located throughout Italy, in accordance with the strategic guidelines and objectives set by the Board of Directors.
As for the lending process, each business unit identifies the opportunities for new transactions in accordance with the lending policies in force and the defined risk appetite; in this context, it examines loan applications and
formalises a proposal to be submitted to the competent decision-making bodies, ensuring lending policies and controls are implemented correctly and analysing the applicant's creditworthiness in accordance with existing internal regulations.
The proposals to grant lines of credit and/or purchase receivables are submitted to the competent decision-making bodies, which, based on the powers delegated to them, express their decision - which always refers to the overall exposure towards the counterparty (or any related groups).
Banca Ifis's branches have no independent decision-making power for the purposes of assuming credit risk; branches manage ordinary operations with customers under the constant monitoring of the central structures in accordance with the limits and procedures established by the Head Office's competent bodies.
In carrying out their operations, the subsidiaries can independently take certain decisions within the operational and organisational limits defined by the Parent company Banca Ifis.
The line of credit is then finalised: the Bank finalises the agreement, obtains guarantees, if any, and grants the credit line. Throughout these stages, the business units are aided by specific supporting units responsible for preparing the agreement in accordance with the terms of the approval as well ensuring all activities leading to the granting of the credit facility are properly carried out.
The operational management of receivables, carried out for performing customers, mainly consists in the ordinary management and monitoring conducted by dedicated structures at each of the Group's companies with the aim of constantly and pro-actively reviewing borrowers. In addition, a specific organisational unit within the Parent company performs monitoring activities at the Group level to identify counterparties with performance issues, so as to anticipate problems and provide adequate reporting to the competent corporate functions.
If the credit position is in an objective situation of distress, it is transferred to specific functions specialised in managing and recovering non-performing exposures.
Purchased impaired credit (POCI) organisational aspects
\"Purchased or Originated Credit Impaired (POCI) Financial Assets\" means the exposures that were non-performing at the date they were acquired or originated.
POCI financial assets include also the exposures acquired as part of sales (of either individual assets or portfolios) and business combinations.
Interest is accounted for by applying a credit-adjusted effective interest rate, i.e. the rate that, upon initial recognition, discounts all the asset's estimated future cash collections considering also lifetime expected credit losses (\u201cECL lifetime\u201d).
The Bank regularly reviews said expected credit losses, recognising impairment losses or gains through profit or loss. Favourable changes in lifetime ECLs are recognised as an impairment gain, even if said lifetime ECLs are lower than those incorporated into cash flow estimates at initial recognition.
POCIs are conventionally presented at initial registration in Stage 3.
If, as a result of an improvement in the counterparty's credit standing, the POCI assets become \"performing\", they are allocated to Stage 2.
Such assets are never classified in Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual maturity (in other words, a \"lifetime\" horizon must always be maintained and not a 12-month horizon, as is the case for Stage 1 positions).
\u201cAcquired impaired assets\" include loans acquired by the subsidiaries Ifis Npl Investing, Ifis Npl Servicing and Revalea acquired at values significantly lower than their nominal amount, as well as impaired assets resulting from the various IFRS 3 business combinations carried out by the Banca Ifis Group (such as those relating to the former GE Capital Interbanca Group, the former Fbs Group, the companies Credifarma S.p.A., Cap.Ital.Fin. S.p.A., Farbanca S.p.A. and Revalea S.p.A. as well as the former Aigis Banca business). These non-performing assets are included within the POCI perimeter on the basis of the existence, for each individual relationship, of impaired credit quality at the time of the relative acquisition, as required by IFRS 9.
With reference to the process for the acquisition of non-performing loan portfolios (POCI) adopted by the structures of the Npl Segment, similar organisational stages are envisaged as for ordinary credit, which can be summarised as follows:
\u2022origination: the Bank identifies the counterparties from which it plans to purchase the portfolios and assesses the economic expediency of said transactions;
\u2022due diligence, as part of which highly-skilled analysts assess the quality of the portfolio being transferred and the relevant organisational impact. Once the due diligence is completed, the Group sets the terms and
conditions for offering/acquiring the receivables portfolio and how to manage it (individual or collective method), assessing the relevant impact on operating structures;
\u2022Approval: this stage includes the preparation of the file, the decision-making process, and the implementation of the approval by the competent decision-making body;
\u2022finalisation: the parties prepare and finalise the purchase agreement, and the relevant consideration is paid.
Purchases are made directly by originators and/or SPVs (primary market) or, in some circumstances, by operators who have purchased on the primary market and who intend to dispose of their investment for various reasons (secondary market). Receivables - deriving from traditional consumer credit operations, credit cards and special purpose loans - are mainly unsecured; there are also current account balances in the event of transfers by banks.
Right after the acquisition, pending the completion of information retrieval operations to help decide the most appropriate debt recovery method, the receivable is classified in a so-called \"staging\" area and measured at cost with no contribution to profit or loss.
After this phase, which normally lasts 6-12 months, the positions are directed towards the form of management most appropriate to their characteristics (non-judicial and judicial operations), which carries out an activity closely related to the transformation into paying positions and the collection of receivables.
Collection operations for receivables deriving from purchases of distressed retail loans are the responsibility of resources within the subsidiaries Npl Investing, Ifis Npl Servicing and Revalea, as well as of a broad and proven network of debt collection companies and financial agents operating across Italy.
The non-judicial operations consist mainly in the activation of the credit through the debtor's subscription of bills of exchange or voluntary settlement plans; the judicial operations consist, instead, in the transformation through legal action aimed at obtaining from the court the garnishment order of one-fifth of the pension or salary (the existence of which is the necessary prerequisite for the start of this form of transformation) or the sale on the market of the asset to guarantee the credit (secured management). Specific information regarding these operations is provided below.
Finally, there is also an assessment of the expediency of selling non-performing loan (Npl) portfolios, mainly represented by processing codes, statute-barred loans or loans owned by deceased debtors, to be submitted for approval to the competent decision-making bodies, consistently with the established profitability targets and after analysing the relevant accounting, reporting, legal, and operational impacts. To do so, it relies on the in-depth inquiries conducted by the Parent company's competent business functions within their area of expertise.
Non-judicial operations
As for the positions not eligible for judicial operations, after completing the groundwork for processing them, they are classified in a \"collective\" portfolio pending that the recovery process through call centres or recovery networks can culminate with a collection of settlement plans referred to above (in the form of a proposal/acceptance from customer to bank). At this stage, the positions are measured at amortised cost, calculated as the present value of expected cash flows determined on the basis of a proprietary statistical model developed by the Risk Management function on the basis of historical internal data, referred to as \"curve model\"; this model projects collection expectations onto clusters of homogeneous receivables based on the recovery profile historically observed (macro region, amount of credit, seniority of the file with respect to the DBT date, transferor), in addition to prudential adjustments, such as, by way of example, the cap of simulated cash flows for debtors who are older than the life expectancy present in the mortality tables provided by Istat. This method of valuing debt collection flows means that the expected collection profile is decreasing as time passes with respect to the date of purchase of the credit, until the asset value of the credit is reduced to zero when it reaches the tenth year from the date of purchase.
As already indicated in the 2022 Consolidated Financial Statements, the curve model during 2021 has been refined as the models are reviewed biennially in order to lengthen and update the time series, verify cluster tightness and statistical robustness, take into account any new management methods, and evaluate macroeconomic effects. In the course of FY 2023, the re-estimation activity was started, aimed at updating the historical series, assessing relevant changes in the processes to be taken into account in the definition of the perimeter and for the quantification of the Recovery Rates, and carrying out a fine-tuning of the methodological system (e.g. revision of the long list, model development methodologies, smoothing techniques and queue management).
Expectations of collection also take into account the probability of obtaining a settlement plan net of the relative probability of default.
There are two types of settlement (collection) plans that can be entered into:
\u2022bills of exchange: the set of credit positions for which the debtor has signed a settlement plan supported by the issue of bills of exchange. It should be noted that the volume of bills of exchange (internal collection) in the portfolio has been steadily decreasing, since, as a strategic choice, amicable plans with this payment method are no longer collected. Any new collection is therefore exclusively the result of purchased paying practices;
\u2022Demonstrations of Will: the practices for which the recovery process has led to the collection of a voluntary formalised settlement plan by the debtor.
The moment the position obtains a paying settlement plan (\"active plans\"), i.e. after having observed the payment of at least three times the value of the average instalment of the plan, the cash flows of the \"curve model\" are replaced by the cash flows of the \"deterministic model\", which projects the future instalments of the settlement plan agreed with the debtor net of the historically observed default rate and taking into account also in this case a cap to the simulated cash flows if the age of the debtor exceeds what is indicated in the mortality tables of Istat in relation to life expectancy.
Positions that do not obtain a paying settlement plan remain valued by means of the \"curve model\"; this means that as time passes, the probability of collection is reduced also by means of the plan and consequently the expected cash flows are reduced down until zeroing.
As already started in 2021, again in 2022 and 2023, management took part in a new closure method, known as \"balance and write-off of positions\", in order to anticipate recovery while granting a reduction in the amount due (write-off) to the debtor. This method of collection does not replace the methods described above, but involves certain campaigns on specific positions identified by management.
Judicial operations
Positions that meet the requirements (presence of a job or a pension) for judicial processing are initiated in the relevant operations. This also includes (minority) practices that are processed in a logic of real estate attachment of property.
Judicial processing, understood as real estate enforcement action against third parties, is characterised by several legal steps aimed at obtaining an enforcement title, which as a whole usually last 18-24 months (the durations and the relative volatility depend on the court in which the case is handled) and are thus as follows:
\u2022obtaining a court order,
\u2022writ,
\u2022attachment of property and
\u2022garnishment order.
These positions are measured at amortised cost, calculated as the present value of expected cash flows determined on the basis of two proprietary models developed by the Risk Management function on the basis of historical internal data, referred to as \u201cpre-garnishment order Legal Factory model\u201d and \u201cgarnishment model\u201d.
The pre-garnishment order model during 2021 has been recalibrated because, just as was the case for the curve models, the models are reviewed biennially in order to lengthen the time series, verify cluster tightness and statistical robustness, take into account any new management methods, and evaluate macroeconomic effects. FY 2023 saw the start of re-estimation activities aimed at updating the time series, assessing relevant changes in processes to be taken into account in the definition of the scope, quantifying target variables (e.g. modules duration, migration probability, instalment, expenses, rate of potential aggravation) as well as fine-tuning the methodological framework (e.g. revision of the long list of each module, clustering techniques and quantification of estimates).
In addition to the above, judicial operations involve also collection efforts, i.e. foreclosure proceedings, which consist of several stages and apply to portfolios originated in corporate, banking, or real estate segments.
2.2 Management, measurement and control systems
Credit risk is constantly monitored by means of procedures and instruments that can rapidly identify particular anomalies.
Over time, the Banca Ifis Group has implemented instruments and procedures allowing to specifically evaluate and monitor risks for each type of customer and product.
If the applicant passes the evaluation process and is granted a credit facility, the Group starts monitoring the credit risk on an ongoing basis, ensuring repayments are made on time and the relationship remains regular, reviewing the information that the Italian banking system reports to the Central Credit Register or select databases as well as the reputational profile, and examining the underlying causes for each one of these aspects.
Concerning portfolio monitoring operations, as previously mentioned, receivables due from customers are monitored by specific units within the mentioned business units that are responsible for constantly and proactively reviewing borrowers (first line of defence); a specific organisational unit conducts additional monitoring at a centralised level, using mainly performance analysis models -- including models developed by the Parent's Risk Management function -- to identify any potential issues through specific early warning indicators.
Credit risk exposures to companies are assigned a rating based on models developed in-house. These models are differentiated by segment to ensure that appropriate models are applied on homogeneous population from the point of view of characteristics and risk level. There are therefore models for corporations, differentiated by two size clusters, and a model for partnerships and sole proprietorships. The rating models are composed of different modules that investigate different areas of information depending on the type of counterparty and are integrated with qualitative information of different nature.
The rating class represents a fundamental driver for the calculation of write-downs on performing loans; in addition to directly linking the expected loss to the specific risk level of the individual counterparty, rating models enable the activation of the quantitative stage allocation criterion, which, by comparing the riskiness at the time of granting and the current riskiness, makes it possible to assess the significant increase in risk and thus the Stage 2 allocation of the position. The framework for determining expected loss also includes satellite models functional to the introduction of forward-looking elements into the estimates of risk parameters in full compliance with the requirements of IFRS 9.
Risk Management plays a crucial role as part of the second line of defence in measuring and monitoring operations.
Concerning credit risks, the Risk Management function:
\u2022oversees, monitors and assesses credit risks, carrying out audits and analysis in accordance with the relevant guidelines; specifically, it:
\u2013assesses credit quality, ensuring compliance with credit guidelines and strategies by continuously monitoring credit risk indicators;
\u2013constantly monitors exposure to credit risk and compliance with the operating limits assigned to the operating structures in relation to the assumption of credit risk;
\u2013verifies, by means of second-level controls, the correct implementation of performance monitoring on individual exposures, in particular on non-performing exposures, and assesses the consistency of classifications and the adequacy of provisions;
\u2013monitors exposure to concentration risk and the performance of exposures classified as \"Large Exposures\";
\u2022performs quantitative analyses to support the business units in using risk measures;
\u2022oversees the supervision of the value of collateral as well as personal and financial guarantees;
\u2022analyses consistency with the Group's RAF in the areas of asset quality and credit cost.
The Banca Ifis Group pays particular attention to the concentration of credit risk with reference to all the Group's companies, both at an individual and consolidated level. Banca Ifis's Board of Directors has mandated the Top Management to take action to contain major risks. In line with the directives of the Board, those positions that are at risk and engage the Group to a considerable extent are subject to systematic monitoring.
Concerning the credit risk associated with investments in securities and equity, the Group constantly monitors their credit quality, and Parent company Banca Ifis's Board of Directors and Top Management receive regular reports on this matter.
In the context of Basel 3 principles for calculating capital requirements against first-pillar credit risks, Banca Ifis chose to adopt the Standardised Approach. To calculate capital requirements for single-name concentration risk, which falls under second-pillar risks, the Group adopts the Granularity Adjustment method as per Annex B, Title III of Circular No. 285 of 17 December 2013, with a capital add-on calculated using the ABI method to measure geo-segmental concentration risk.
In order to assess its vulnerabilities in terms of capital and liquidity management, the Parent company Banca Ifis has developed quantitative and qualitative techniques with which it assesses its exposure to exceptional but plausible events. These analyses, known as stress tests, measure the impact in terms of risk deriving from a combination of changes in economic-financial variables under adverse scenarios on the Bank and its subsidiaries. These analyses significantly concern credit risk.
The stress tests allow to assess the Group's resiliency by simulating and estimating the impact of adverse circumstances, providing crucial insights into its exposure to risks, the adequacy of the relevant mitigation and control systems, and it ability to deal with unexpected losses -- including in a forward-looking manner and in terms
of planning. In order to perform stress tests, the Group has internally developed methodologies that allow, also by exploiting synergies with satellite models used under IFRS 9, to project asset quality in line with adverse macroeconomic scenarios and assess the impact in terms of various credit quality indicators, such as the incidence of impaired credit or the increase in loan adjustments.
For regulatory purposes, the Parent company Banca Ifis conducts stress tests when defining the Risk Appetite Framework (RAF) and preparing the Recovery Plan as well as the ICAAP and ILAAP report at least on an annual basis, as required by applicable prudential supervisory regulations. In this context, it assesses, among other things, the sustainability of lending strategies under adverse market conditions.
2.3 Measurement of expected credit losses
First of all, it should be noted that, with reference to the calculation of expected losses, during the year the process of revising and fine-tuning the models in use continued with the aim of more accurately reflecting the expected losses of unimpaired (performing) exposures, also as a result of the historical evidence available and the persistent uncertainties in the macroeconomic context of reference. This process also included a series of managerial adjustments (so-called \"post-model adjustments\" or \"overlays\") in order to factor in certain valuation elements not adequately captured by the models in use.
In addition to the changes introduced in the models and criteria for calculating expected losses, the changes introduced during 2023 as part of the ongoing model revision process are illustrated below, depending on the type of intervention (SICR valuation, estimation of forward-looking information, other model changes, and use of any management overlays).
It should be noted that the significant economic impacts as a result of these changes are deemed to be insignificant.
According to IFRS 9, all financial assets not measured at fair value through profit or loss and other than the POCI, for which reference is made to the information given previously, represented by debt securities and loans, and off-balance sheet exposures (commitments and guarantees granted) must be subject to the impairment model based on expected losses (ECL - Expected Credit Losses).
The most significant aspects that characterise this approach, concern:
\u2022the classification of loans into three different levels (or \"Stages\") to which different methods correspond for calculating the losses to be recorded; Stage 1 includes performing positions that have not undergone a significant increase in credit risk otherwise placed in Stage 2; Stage 3 includes all positions classified as non-performing, bad loans, unlikely-to-pay, non-performing past due in accordance with the criteria and rules specifically adopted by the Group;
\u2022the calculation of the expected loss calculated at 12 months for Stage 1 or for the entire useful life of the credit (lifetime) for Stages 2 and 3;
\u2022the requirement to use a Point-in-Time, rather than a Through-the-Cycle, approach for regulatory purposes;
\u2022forecast information regarding the future dynamics of macroeconomic factors (forward looking) considered to have the potential to influence the debtor's situation.
In this context, the Group has adopted a method for determining the \"significant\" increase in credit risk with respect to the initial recognition date, which involves classifying the instruments in Stages 1 and 2, combining statistical (quantitative) and performance (qualitative) elements, as part of the estimate of impairment of performing loans. Please note that no probation period is applied for the exit of performing positions from Stage 2.
To identify the \"significant\" increase in credit risk, the Banca Ifis Group applies the following quantitative and qualitative transfer criteria to the loan portfolio according to the type of counterparty defined by segmenting receivables into portfolios:
\u2022the only quantitative transfer criteria is what is termed \u201cPD comparison\u201d for which, in order to identify the \"significant increase in credit risk\" on exposures within rated portfolios (Italian companies), the Group used an approach backed by quantitative analyses, under which the exposure is allocated to Stage 2 if the change in the one-year PD between the origination and the measurement date exceeds a given threshold. The decision to use a 1-year PD comparison instead of a lifetime approach, also determined in consideration of the solution provided by the impairment engine's outsourcer, is supported by analyses that show a high correlation between the SICR metrics calculated from a lifetime perspective and those calculated from a 1-year perspective. This threshold is assigned on the basis of the origination rating (where available) of each relationship and is represented by the number of rating downgrade notches by which the credit risk of the relationship is to be considered significantly increased. Therefore, if the rating
at the reference date exceeds the threshold, i.e. the origination rating plus the number of notches associated with it, the report is allocated to Stage 2;
\u2022qualitative transfer criteria:
\u2013\"Rebuttable presumption \u2013 30 days past due\": IFRS 9 establishes that, regardless of how the entity assesses significant increases in credit risk, there is a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due. The entity can rebut this presumption if it has reasonable and supportable information that demonstrates that the credit risk has not increased significantly since initial recognition even though the contractual payments are more than 30 days past due. However, the Ifis Group has not pursued this option;
\u2013Forbearance: according to this criterion, a financial instrument is allocated to Stage 2 when the Group classifies the exposure as forborne;
\u2013\"Watchlist\": the criterion envisages the transfer to Stage 2 of positions already under examination, as part of the process for defining especially risky positions during credit monitoring;
\u2013Two additional backstop elements called \"ECB Backstops\" were also introduced during the year: positions with PD at the reporting date 200% higher than at the origination date or with PD at the reporting date 20% higher.
According to IFRS 9, an entity may assume that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date, that is:
\u2022it has a low risk of default;
\u2022the borrower is considered, in the short term, to have a strong capacity to meet its obligations;
\u2022the lender expects, in the longer term, that adverse changes in economic and business conditions might reduce the ability of the borrower to fulfil its obligations.
The measurement of expected credit losses (ECLs) accounts for cash shortfalls, the probability of default (PD), and the time value of money. Specifically, the Group measures the loss allowance for the financial instrument as:
\u2022expected losses within 12 months for positions that have not suffered a significant deterioration in creditworthiness (Stage 1); in other words, the Group estimates non-payments resulting from possible default events within the following 12 months, weighted by the probability that such events will occur;
\u2022expected \"Lifetime\" losses for positions that have suffered a significant deterioration in creditworthiness (Stage 2); in this case, the Group estimates the cash shortfalls resulting from default events that are possible over the expected life of the financial instrument, weighted by the probability of that default occurring and discounted at the measurement date.
To ensure its collective impairment calculations are in the closest possible compliance with regulatory requirements, the Group has defined a specific methodological framework subject to backtesting at least annually as well as to validation by the function in charge of validating internal models. This involved developing quantitative methods and analyses based on proprietary datasets as well as qualitative methods and analyses to essentially model the following risk parameters and the methodological aspects relevant to the calculation of impairment under IFRS 9:
\u2022estimation of the Probability of Default (PD), which expresses the probability of a default event occurring in the credit position over a given time frame. The estimation methodology involves using an appropriate estimator to calculate the Cumulative Default Rate (hereinafter also CDR), i.e. the historically observed probability of a default event occurring within a given time horizon. CDRs are then interpolated using an appropriate functional form;
\u2022estimation of Loss Given Default (LGD), which expresses the estimated loss percentage in the event of default of the credit position. A \"workout LGD\" approach based on internal data was chosen; therefore, this parameter is defined on the basis of historical recovery evidence observed for each perimeter where possible;
\u2022definition of Stage allocation transfer logic, which includes the recalibration of SICR thresholds;
\u2022calculation of expected losses including point-in-time elements: the credit parameters are calibrated on a horizon that considers the entire economic cycle, therefore, in accordance with IFRS 9, a PIT (point-in-time) adjustment is necessary to reflect the current condition in the parameters;
\u2022calculation of expected losses including forward-looking elements: the credit parameters are calibrated to a horizon that considers the entire economic cycle; therefore, in accordance with IFRS 9, it is necessary
to include forward-looking elements to reflect expectations on the future development of the economic cycle.
The time series underlying the estimation of risk parameters are updated annually; calibrations involving the forward-looking scenario component may be undertaken several times during the year on the basis of changes in the environment. As far as EAD is concerned, there is no internal modelling, and the value of EAD is equal to the book value adjusted by the application of the credit conversion factor.
Concerning the exposures to banks, central governments, and public-sector entities (low default portfolios), the Group used default rates associated with migration matrices based on public information provided by the ratings agency Moody's or external providers.
As for the securities portfolio, considering the methodological complexity associated with developing a dedicated model, the Group decided to use the calculation of impairment under IFRS 9 that the outsourcer of the computer system provides at consortium level (i.e. estimating risk parameters, calculating the Stage allocation and ECLs). Specifically, the formula used to calculate the impairment of the tranches allocated to Stage 1 and Stage 2 is consistent with the approach to credit exposures. The stage allocation of performing debt securities requires using an external rating of the issue or, if this is not available, the issuer; in short, the securities are allocated to the different stages based on specific transfer criteria associated with this type of portfolio. In the area of securities, in contrast to the loan portfolio, the \"low credit risk exemption\" is applied only to the portion of securities in the portfolio belonging to the investment grade category. Exposures are allocated to Stage 3 if credit risk has deteriorated to the point that the security is considered impaired, i.e. classified as non-performing, including in the case of financial instruments in default.
In developing the above methods, the Group has considered multiple solutions, the current and prospective complexity of its portfolio, as well as how to maintain and update risk parameters.
The development of multi-period logics on risk parameters, already present for PD, was introduced in 2023 also for LGD (limited to performing loans) for greater adherence to the standard IFRS 9, with non-significant impacts considering the portfolio\u2019s characteristics (i.e. short maturities). LGD was estimated on historical proprietary evidence, with the exception of some residual trades to particular types of counterparties (banks, central governments and territorial entities) for which, in the absence of objective historical data, a sector LGD was used. Cash flows used in the estimation of LGD are discounted to the EIR, and CCFs are applied on a constant basis until maturity.
The Group has adopted econometric models (based on the stress test framework - \u201csatellite\u201d models), aimed at forecasting the evolution of the institute\u2019s risk factors (i.e. mainly PD and migrations between statuses for credit risk) on the basis of a joint forecast of the evolution of the economic and financial indicators (macroeconomic scenario).
The satellite models used meet the need to identify the existence of a significant relationship between the general economic conditions (i.e. macroeconomic and financial variables) and a proxy variable of the risk factor (target variable) i.e. the credit rating of counterparties (which represents the respectively probability of default as a summary of the PD factor), which in its aggregate form at an institute level is represented by a careful calibration of the deterioration rates recorded by the Bank of Italy.
By exploiting the identified relationship between target variable and macroeconomic factors, it is therefore possible to obtain forecast values of deterioration rates by applying future projections of explanatory variables retrieved from authoritative sources, for which consistency is assessed with the institutional scenarios published, for example by the EBA, Bank of Italy and ECB. In compliance with IFRS 9, the Risk Management function employs macroeconomic scenarios describing three contexts characterised by increasing levels of forecast severity and criticality: an \"upside\" scenario, a \"baseline\" scenario and an \"adverse\" scenario. These scenarios produce three different satellite model forecasts, making weighting necessary: for the current year, it was decided to limit the weight of the upside scenario and to balance the weights of the baseline and adverse scenarios in view of the uncertainty of the macroeconomic environment, which sees on the one hand, in the geopolitical context, one of the main factors of instability, and on the other, the possible onset of non-negligible risks connected with the evolution of the global economic activity.
The Risk Management function has therefore included the forecasts defined by its satellite models in the structures at the end of the PD lifetime, exploiting the Merton framework. Indeed, the migration matrices between credit states of each perimeter were defined and, through the application of the macroeconomic shifts output by the satellite models, the stressed projections of the matrices were obtained, allowing the derivation of scaling factors calculated on the stressed default rates to be applied to the PD curves as per the defined methodology.
The satellite models developed for PD were also applied in a mirror-image manner to the Danger Rate, i.e. the migration between credit states, used in LGD, which in its point-in-time & forward-looking configuration gives a multi-period structure to LGD.
For Stage 3 exposures that are not individually tested for impairment, the Group defines a lifetime provision in line with the concept of expected credit loss. The LGD metric, defined in line with the metrics adopted for performing loans, is then applied to calculate the collective losses of Stage 3 exposures.
Measurement of expected losses (ECL)
With reference to the inclusion of Forward Looking factors feeding into the IFRS 9 provisioning process, using the recently updated satellite models, the Risk Management function updated the macroeconomic scenarios during 2023, retrieving them from the EBA's February 2023 publication of macroeconomic projections for the stress test exercise, thereafter updating such scenarios at year end, to allow for a measurement of receivables that is as compliant as possible with the accounting standard.
The current macroeconomic environment incorporates the repercussions of the uncertain geopolitical environment and is affected by the tightening of monetary and credit conditions for businesses and households resulting from the sharp rise in monetary policy interest rates. The Group adopts three scenarios to reflect the uncertainty of the macroeconomic environment:
\u2022Baseline scenario: this is the main reference scenario that envisages weak but still growing global economic activity, with Italian GDP changing close to zero in 2024. Inflation falls slowly, eroding purchasing power that accumulated savings struggle to sustain. Rising interest rates are manifesting themselves in reduced liquidity, a fall in loans and real estate investments. This increases the burden of servicing public debt, severely limiting the possibility of expansionary fiscal policies.
\u2022Adverse scenario: this is the severe but plausible scenario according to which the global geopolitical situation is expected to worsen due in part to a new theatre of war with consequences for energy and commodity prices, which are expected to rise again and, while not reaching peak levels, will nevertheless dampen the decline in inflation. Inflation that does not come down induces central banks to proceed with further policy rate hikes, despite the fact that several countries are experiencing severe slowdowns and even spillover effects on economic activity. Italian GDP would contract between late 2023 and early 2024, with a carry-over effect that would bring annual growth in 2024 to -0,5%.
\u2022Positive scenario: this is a benign scenario determined on the basis of the distribution of historical data. Given the uncertain macroeconomic environment, the Group has conservatively set a negligible weight of 5% for this scenario.
FINANCIAL INDICATORSFINANCIAL YEAR END (%)Base caseAdverse scenarioPositive scenario
202420252026202420252026202420252026
Italian real GDP growth y/y, %0,40,80,9(0,5)0,50,55,04,14,1
Italian unemployment, %7,77,57,38,08,59,06,75,95,2
Euribor 3M, %4,03,63,14,53,93,4(0,5)(0,5)(0,5)
BTP 10 years, %4,65,05,05,55,35,30,90,90,9
Brent barrel growth y/y, %(1,4)1,80,912,91,80,9(0,3)(0,3)(0,3)
Italian inflation, %2,42,12,24,22,52,30,20,30,3
\"\"
As regards the probability of occurrence of the scenarios, the baseline scenario is characterised by a 50% probability of occurrence, the adverse scenario by a 45% probability and the ameliorative scenario by a 5% probability in order to reflect the uncertain macroeconomic context.
In order to provide information that enables a clear understanding of the elements of judgement used by management and their impact, sensitivity analyses were carried out. The inclusion of forward-looking factors for the measurement of expected losses is, in fact, a particularly complex exercise, as it requires the formulation of macroeconomic forecasts, the selection of scenarios and their relative probabilities of occurrence, and the definition of a model capable of expressing the relationship between the aforementioned macroeconomic factors and the default rates of the exposures under assessment.
For this reason, in order to be able to appreciate the impact on expected losses resulting from the selection of different macroeconomic scenarios, and in compliance with the recommendations formulated by ESMA, most recently in its document of 13 May 2022, sensitivity analyses are provided below, in terms of ECL. These analyses were conducted by assigning a 100% weighting to each individual macroeconomic scenario (\"baseline\",
\"worsening\", \"improving\") with respect to the multi-scenario approach followed for the purpose of preparing this Report.
The selection of a multi-factor sensitivity, obtained by varying several parameters simultaneously and implicit in the choice of considering alternative macroeconomic scenarios, is justified by the fact that there are innumerable interrelationships between the different macroeconomic factors such that a sensitivity analysis based on a single factor would be less representative (e.g. the change in GDP would be correlated with changes in many other macroeconomic variables).
The basis for sensitivity analyses is represented by expected losses (ECLs) on the Group's credit exposures to customers - cash loans and guarantees. In particular, this is the ECL determined on the basis of the models in use, and thus not including the post-model adjustments discussed below.
More specifically, the 100% \u201cadverse\u201d weighting would lead to an impact on provisions of approximately +0,7%, the 100% \u201cbaseline\u201d weighting would lead to an impact of approximately -0,4%, while the 100% \u201cpositive\u201d weighting would lead to an impact of approximately -1,8% (in a wide range of up to 0,7 million Euro).
The Covid-19-related health emergency in early March 2020 generated unprecedented impacts on global economic growth. This circumstance prompted intermediaries to consider possible impacts on credit risk produced by such extraordinary risk factors not adequately captured by the expected loss (ECL) calculation models in use. This, coupled with the need to capture expectations of a rapid deterioration in macroeconomic conditions from a forward-looking perspective, led the Group to introduce prudential adjustments (\u201cmanagement overlays\u201d) over time in the determination of expected losses (ECL); these adjustments were aimed in particular at capturing the risks associated with exposures to counterparties belonging to the most potentially vulnerable economic sectors.
After 2021 and in particular during 2022 and 2023, as a result of geopolitical tensions related to the Russia-Ukraine conflict and the conflict in the Middle East, the inflationary scenario and the slowdown in economic growth, the prudential adjustments applied and previously described were replaced and restated with the aim of factoring in the risks emerging from the macroeconomic context of reference. In particular, a number of new prudential adjustments were introduced to take into account the macroeconomic context strongly influenced by geopolitical tensions, the impact of rising energy prices, inflationary dynamics, and the significant increase in interest rates in order to intercept risk factors relating to counterparties belonging to sectors considered particularly exposed to new emerging risks; in particular, companies in the manufacturing, agricultural, transport and energy trading sectors. The approach and criteria used have been made progressively more analytical and consistent over time through refinements introduced to reflect the Group's improved perception of the evolution of related risks.
In addition, in 2023, in order to better capture the portfolio's riskiness, the correlation between management overlay and allocation to the different risk stages was increased, reserving an amount higher than Stage 2, consistent with the higher riskiness inherent in this exposure perimeter, while also taking into account expert-based assessments of specific positions allocated here.
Consequently, as at 31 December 2023, the total amount of the described prudential adjustments (management overlay) was approximately 52,3 million Euro, almost equally divided between adjustments to hedge multiple risk factors (particularly related to inflationary, geopolitical and energy supply risks) and adjustments to hedge adverse macroeconomic expectations, the quantifications of which are also supported by stress scenario and sensitivity analyses as well as expert-based assessments. As at 31 December 2023, an additional 12,8 million Euro of prudential adjustments were also provided for to protect positions specifically identified to take into account their possible deterioration, which can be estimated in a reasonably short time horizon and is not captured by current models (\"expert-based\" valuations).
Finally, with regard to the determination of expected losses on exposures classified in Stage 3, i.e. non-performing exposures, the quantification of those losses is determined analytically on the basis of collection forecasts, formulated by the servicer, discounted on the basis of the original effective interest rates and the relevant collection time-line.
2.4 Credit risk mitigation techniques
Credit risk mitigation techniques include instruments that contribute to reducing the loss that the Group would incur in the event of counterparty default; specifically, they refer to guarantees received from customers, both collateral and personal, and to any contracts that may lead to a reduction in credit risk.
In general, as part of the process of granting and managing credit, for certain types of lines, the release by customers of suitable guarantees to reduce their risk is encouraged. They can be represented by:
\u2022collateral encumbering assets, such as pledges on financial assets, mortgages on real estate (residential/non-residential); and/or
\u2022personal guarantees (typically sureties) on a third party where the person (natural or legal) acts as guarantor of the customer's debt position in the event of insolvency.
In particular:
\u2022as part of factoring operations, when the type and/or quality of factored receivables do not fully satisfy requirements or, more generally, the invoice seller is not sufficiently creditworthy, the bank's established practice is to hedge the credit risk assumed by the Group by obtaining additional surety bonds from the shareholders or directors of the invoice seller. As for the account debtors in factoring relationships, wherever the Bank believes that the elements available to assess the account debtor do not allow to properly measure/assume the related credit risk, or the proposed amount of risk exceeds the limits identified during the debtor\u2019s assessment, the Bank adequately hedges the risk of default of the account debtor. Guarantees issued by correspondent factors and/or insurance policies underwritten with specialised operators are the main hedge against non-domestic account debtors in non-recourse operations;
\u2022in loans to businesses, where possible, suitable guarantees are acquired from the Central Guarantee Fund or other companies coming under the public scope, such as SACE S.p.A.;
\u2022in regard to Structured Finance, collateral is acquired according to the counterparty's standing as well as the term and type of the facility. Said collateral includes mortgage guarantees, liens on plant and equipment, pledges, surety bonds, credit insurance, and collateral deposits;
\u2022as for finance leases, the credit risk is mitigated by the leased asset. The lessor maintains the ownership until the purchase option is exercised, ensuring a higher recovery rate in the event the client defaults;
\u2022as for operations concerning distressed loans and purchases of tax receivables arising from insolvency proceedings, as well as the relevant business model, generally no action is implemented to hedge credit risks;
\u2022salary-backed loans have low risk, considering the particular characteristics of this product: it requires having insurance against the customer's risk of death and/or loss of employment as well as imposing a lien on the severance indemnity (\u201cTFR\u201d) earned by the customer as additional collateral for the loan.
\u2022lending to pharmacies involves an advance as well as a transfer or debt collection mandate, with the possibility of deducting subsequent advances from existing credit facilities.
In line with that established by the Liquidity Decree (Italian Decree Law No. 23 of 8 April 2020), the Group has benefited from the guarantees offered by the state Guarantee Fund for the type of customer and loans envisaged by the Decree, with cover that can reach 100%. This guarantee enables a reduction in the RWAs relative to the credit risk, proportionally to the share of exposure covered by the Fund.
The acquired Npl portfolios include positions secured by mortgages on properties with a lower level of risk than the total portfolio acquired.
When calculating the overall credit limit for an individual customer and/or legal and economic group, the Bank considers specific criteria when weighing the different categories of risks and guarantees. Specifically, when measuring collateral, it applies prudential \"spreads\" differentiated by type of guarantee.
The Group continuously verifies the quality and adequacy of the guarantees acquired on the loan portfolio, with second level monitoring carried out by the Parent company\u2019s Risk Management Department and carried out under the scope of the Single File Review (SFR).
3. Non-performing credit exposures
3.1 Management strategies and policies
The Group adopts a business model that has peculiar features compared to most other Italian banking institutions, which largely operate as general banks.
This peculiarity of the business is reflected in the processes and management structures, generating flows and stock dynamics that are reflected in assets and related indicators.
Nonetheless, the Parent company believes that adopting \"systemic\" operational and structural ratios, and maintaining its indicators at the highest level of excellence, is a mark of quality and a value to be pursued as a specific goal in order to strengthen its corporate structure as well as improve its internal processes.
Among these, the quality of assets is a top priority that must be expressed both in the ability to provide credit, minimizing the risks of deterioration of exposures, and in the ability to manage non-performing exposures, optimising recovery performance in terms of amount and timing of recovery.
In this sense, the Group's action is oriented in two directions:
\u2022constant efforts to improve not only the processes for selecting and granting loans, but also the processes for managing performing loans, referring, where appropriate, to the commercial and/or selection policies of individual transactions, in order to contain the generation of non-performing loans in the best possible way;
\u2022the definition of quantitative objectives (such as maximum limits) in terms of non-performing exposures as well as pre-established actions to be implemented according to appropriate application criteria and priorities, in order to ensure compliance with the established limits over time.
In managing these aspects, the Group must, however, necessarily take into account the different segments of business and related types of credit, classifying solutions and actions consistent with the specificities of the individual segments, in order to ensure the best result in terms of value protection and speed of solution.
In view of the above, the Group has maintained the following two indicators as performance indicators and explicit objectives to be pursued with careful and proactive management when updating its annual operating plan for the management of short and medium/long-term Npls, presented to the Bank of Italy in March 2023:
\u2022\"Gross Npe ratio\", consisting of the ratio of \"gross non-performing exposures\" to \"total receivables due from customers\";
\u2022\"Net Npe ratio\", consisting of the ratio of \"non-performing exposures net of related adjustments\" to \"total receivables due from customers\".
With reference to receivables due from customers for cash in place at 31 December 2023, excluding the positions stemming from the acquisition and management of non-performing exposures of third party originators managed by the subsidiaries Ifis Npl Investing, Ifis Npl Servicing and Revalea, as well as the portfolios of retail loans, also in consideration of the uncertainty surrounding the global economic performance, the levels of Npe ratio are in line with the last Npl management plan defined early 2023. Regardless of the current outlook, the pursuit of the objective of a general limitation in the stock of non-performing loans remains and is expected to take place through a differentiated strategy in relation to the specificity of the individual portfolios concerned (taking into account the type of counterparty and the specificity of the individual products). In general, the action that will be taken is essentially based on the following goals, which it has been pursuing for some time now:
\u2022containment of the default rate in order to reduce the inflow of non-performing positions by extending and strengthening the monitoring of lending aimed at anticipating, and possibly preventing, deterioration of positions;
\u2022improvement of the \"performing\" rates of return through a more significant use of forbearance measures in relation to counterparties that show signs of financial difficulty;
\u2022leveraging the expertise within the Banca Ifis Group at the reference date of the Financial Statements and the virtuous collection processes currently in place to maximise collection rates;
\u2022reducing the stock of non-performing loans by considering selective sales of individual significant positions as well as applying existing write-off policies.
The non-performing positions or the performing positions that in any case present significant problems are handled directly by specific organisational units established at each company of the Group, which:
\u2022assess the counterparty's willingness and ability to repay the debt in order to establish the most appropriate recovery strategy;
\u2022manage judicial and non-judicial proceedings concerning debt collection operations;
\u2022define potential modifications to the administrative status as well as the quantification of \"doubtful individual outcomes\" for the positions assigned to it, submitting them to the competent decision maker;
\u2022monitor the amount of exposures classified as bad loans and the relevant debt collection operations.
3.2 Write-offs
As specified by IFRS 9, a total or partial write-off is an event that results in derecognition when there is no longer a reasonable expectation that the financial asset will be recovered. It may occur before the lawsuit for recovery of the financial asset has concluded and does not necessarily imply a waiver of the legal right to collect the debt.
A receivable is derecognised when it is considered unrecoverable and the Group forfeits the legal right to collect it. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognition without a forfeiture of the right to collect the receivable, to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, at least every half-year, the Bank identifies the exposures to be derecognised that have all specific characteristics defined for each product.
At the Group level, relationships to be subject to derecognition are identified which simultaneously present the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
The derecognition of bad debts is a good management practice. It allows structures to concentrate on receivables that are still recoverable, guarantees an adequate representation of the ratio between anomalous receivables and total receivables and ensures a correct representation of balance sheet assets.
At an organisational level, the operating methods used by the various Group structures to eliminate credit exposures and to report to Top Management are described in detail in the Group\u2019s credit monitoring and recovery policies.
3.3 Purchased or originated credit impaired financial assets
Organisational aspects
For organisational aspects relating to impaired financial assets acquired or originated, please refer to the specific paragraph above in subsection \"2.1 Organisational aspects\" of this \"Section 2 - Prudential consolidation risks\".
Quantitative information
The outstanding nominal amount of Ifis Npl Investing S.p.A.'s proprietary portfolio is 20.001,5 million Euro. At the time of purchase, the nominal amount of these receivables was approximately 21.316,5 million Euro, and they were acquired for 1.215,6 million Euro, i.e. an average price equal to 5,7% of the historical nominal amount. In 2023, 202,7 million Euro were acquired for 24,1 million Euro, i.e. an average price equal to 11,9%. The POCI outstanding portfolio has a weighted average ageing of 59 months compared to their original acquisition date.
With regard to the ownership portfolio of the newly acquired Revalea S.p.A., the residual nominal amount at 31 December 2023 is 6.146,0 million Euro. With regard to the consideration paid, at the Banca Ifis Group level, the price paid in October 2023 for the acquisition of the entire company (including loans) is reported, for which reference should be made to \"Part G - Business combinations\".
As regards the individual phases of processing of Npl receivables, as described in paragraph \u201c2.1 Organisational aspects\u201d above in relation to credit risk, the carrying amount at 31 December 2023 of the positions in out-of-court management comes to 487 million Euro, whilst the carrying amount of the positions under legal management1 comes to 932 million Euro.
Finally, Ifis Npl Investing and Revalea seize market opportunities in accordance with the business model by selling portfolios of positions yet to be processed to third parties. In 2023, 10 significant sales of portfolios were made to leading players operating in Npl purchases. Overall, receivables were sold with an amount of 2.319,9 million Euro, for an overall consideration of 21,2 million Euro.
4. Financial assets subject to business renegotiations and forborne exposures
Throughout the life of the financial assets, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised (so-called \"modification without derecognition\") or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative and quantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
1 Legal management including garnishment actions with third parties, corporate positions, MIPOs and bankruptcy procedure.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons and forbearance measures due to the counterparty's financial difficulties:
\u2013the former, intended to \"retain\" the customer, involve a borrower that is not in financial distress. This case includes all renegotiations aimed at adjusting the cost of debt to market conditions. These transactions result in changes to the original contractual terms, usually at the request of the borrower, that concern aspects associated with the cost of debt, giving rise to an economic benefit for the borrower. Generally, the Group believes that, whenever it enters into a renegotiation in order to avoid losing the client, this renegotiation shall be considered as substantial, since, in its absence, the customer could obtain financing from another intermediary and the Group would see estimated future revenue decline;
\u2013the latter, offered for \"credit risk reasons\" (forbearance measures), are part of the Group's attempt to maximise the recovery of the cash flows of the original receivable. Following the modifications, usually the underlying risks and rewards have not been substantially transferred: therefore, the accounting presentation that provides the most relevant information to users of the financial statements (expect for the following discussion about objective factors) is the one made through \"modification accounting\" - whereby the difference between the carrying amount and the present value of modified cash flows discounted at the original interest rate is recognised through profit or loss - rather than derecognition;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
As at 31 December 2023, the impact on the Banca Ifis Group of trade renegotiations or concessions constituting \"modification without derecognition\" under IFRS 9 is essentially nil.
Quantitative information
A. Credit quality
A.1 Non-performing and performing credit exposures: amounts, impairment losses, trend, and economic breakdown
A.1.1 Prudential consolidation - Breakdown of financial assets by past due buckets (carrying amounts)
Portfolios/risk stages
Stage 1
Stage 2
Stage 3
Purchased or originated impaired
From 1 day to 30 days
From over 30 days to 90 days
Over 90 days
From 1 day to 30 days
From over 30 days to 90 days
Over 90 days
From 1 day to 30 days
From over 30 days to 90 days
Over 90 days
From 1 day to 30 days
From over 30 days to 90 days
Over 90 days
1. Financial assets measured at amortised cost
69.762
-
-
8.296
41.351
106.295
3.721
12.446
83.806
1.396
6.886
1.617.762
2. Financial assets measured at fair value through other comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
3. Financial assets under disposal
-
-
-
-
-
-
-
-
-
-
-
-
Total 31.12.2023
69.762
-
-
8.296
41.351
106.295
3.721
12.446
83.806
1.396
6.886
1.617.762
Total 31.12.2022
80.402
1.058
570
12.634
29.123
104.227
6.847
11.525
130.058
1.223
928
1.516.607
\"\"
A.1.2 Prudential consolidation - Financial assets, loan commitments and financial guarantees granted: overall impairment losses/reversals and overall provisions
Reason/Risk stageOverall impairment losses/reversalsTotal provisions on loan commitments and financial guarantees grantedTot.
Stage 1 assetsStage 2 assetsStage 3 assetsPurchased or originated impaired financial assets
Due from banks and Central Banks on demandFinancial assets measured at amortised costFinancial assets measured at fair value through other comprehensive incomeFinancial assets under disposalof which: individual impairmentof which: collective impairmentDue from banks and Central Banks on demandFinancial assets measured at amortised costFinancial assets measured at fair value through other comprehensive incomeFinancial assets under disposalof which: individual impairmentof which: collective impairmentDue from banks and Central Banks on demandFinancial assets measured at amortised costFinancial assets measured at fair value through other comprehensive income Financial assets under disposalof which: individual impairmentof which: collective impairmentFinancial assets measured at amortised costFinancial assets measured at fair value through other comprehensive income Financial assets under disposalof which: individual impairmentof which: collective impairmentStage 1Stage 2Stage 3Commitments to disburse funds and fin. guarantees issued impaired acquired or originated
Opening balance of total impairment losses/reversals of impairment losses946 80.130 1.083 - - 82.159 - 14.277 - - - 14.277 - 146.755 - - 146.755 - - - - - - 3.832 2.962 2.521 10 252.516
Increases from purchased ororiginated financial assets- - - - - - - - - - - - - 6.433 - - 6.433 - XXXXX- - - - 6.433
Derecognitions other than write-offs(169) (4.562) - - - (4.731) - (852) - - - (852) - (13.234) - - (13.234) - (8) - - (8) - (1.770) (37) (33) - (20.665)
Net credit risk losses/reversals (+/-)(9) 16.831 (37) - - 16.785 - 928 117 - - 1.045 - 29.702 - - 29.815 (113) (302.866) - - (302.866) - (631) (2.686) (493) - (259.144)
Contractual modifications without derecognition- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes in estimation method- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Write-offs not recognised directly through profit or loss- - - - - - - - - - - - - (5.541) - - (5.541) - (3.386) - - (3.386) - - - - - (8.927)
Other changes397 (19.441) (14) - - (19.058) - 24.540 14 - - 24.554 - 12.800 - - 12.636 164 306.260 - - 306.260 - 1.207 402 100 (10) 326.255
Closing balance of total impairment losses/reversals of impairment losses1.165 72.958 1.032 - - 75.155 - 38.893 131 - - 39.024 - 176.915 - - 176.864 51 - - - - - 2.638 641 2.095 - 296.468
Reversals from collections on financialassets written off- - - - - - - - - - - - - 217 - - 217 - 259 - - 259 - - - - - 476
Write-offs recognised directly throughprofit or loss- - - - - - - - - - - - - (8.676) - - (8.676) - (168.422) - - (168.422) - - - - - (177.098)
\"\"
A.1.3 Prudential consolidation - Financial assets, loan commitments and financial guarantees granted: transfers between different credit risk stages (gross and nominal amounts)
Portfolios/risk stagesGross amounts/nominal amount
Transfers between Stage 1 and Stage 2Transfers between Stage 2 and Stage 3Transfers between Stage 1 and Stage 3
From Stage 1 to Stage 2From Stage 2 to Stage 1From Stage 2 to Stage 3From Stage 3 to Stage 2From Stage 1 to Stage 3From Stage 3 to Stage 1
1. Financial assets measured at amortised cost 336.403 261.650 37.980 16.530 77.867 40.726
2. Financial assets measured at fair value through other comprehensive income 2.962 - - - - -
3. Financial assets under disposal - - - - - -
4. Loan commitments and financial guarantees granted 98.988 10.712 753 15.735 9.686 5.612
Total 31.12.2023438.353 272.362 38.733 32.265 87.553 46.338
Total 31.12.2022398.030190.85569.24625.41686.60632.272
\"\"
A.1.4 Prudential consolidation - On- and off-balance-sheet credit exposures to banks: gross and net amounts
Types of exposures/Amounts Gross exposure Overall impairment losses/reversals and overall allocations Net exposure Overall partial write-offs
First stageSecond stageThird stageImpaired acquired or originatedFirst stageSecond stageThird stageImpaired acquired or originated
A. On-balance-sheet credit exposures
A.1 On demand858.372 858.372 - - - 1.165 1.165 - - - 857.207 -
a) Non-performing- X- - - - X- - - - -
b) Performing858.372 858.372 - X- 1.165 1.165 - X- 857.207 -
A.2 Other731.288 731.046 242 - - 1.612 1.611 1 - - 729.676 -
a) Bad loans - X- - - - X- - - - -
- of which forborne exposures - X- - - - X- - - - -
b) Unlikely to pay - X- - - - X- - - - -
- of which forborne exposures - X- - - - X- - - - -
c) Non-performing past due exposures- X- - - - X- - - - -
- of which forborne exposures - X- - - - X- - - - -
d) Performing past due exposures596 354 242 X- 1 - 1 X- 595 -
- of which forborne exposures - - - X- - - - X- - -
e) Other performing exposures730.692 730.692 - X- 1.611 1.611 - X- 729.081 -
- of which forborne exposures - - - X- - - - X- - -
Total (A)1.589.660 1.589.418 242 - - 2.777 2.776 1 - - 1.586.883 -
B. Off-balance-sheet credit exposures \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
a) Non-performing - X- - - - X- - - - -
b) Performing 874.174 235 - X- - - - X- 874.174 -
Total (B)874.174 235 - - - - - - - - 874.174 -
Total (A+B)2.463.834 1.589.653 242 - - 2.777 2.776 1 - - 2.461.057 -
\"\"
\"On-demand\" credit exposures include on-demand loans to banks classified under \"Cash and cash equivalents\".
On-balance-sheet exposures include all on-balance-sheet financial assets due from customers regardless of the portfolio they are included in (measured at amortised cost, measured at fair value through other comprehensive Income, designated at fair value, mandatorily measured at fair value, under disposal).
A.1.5 Prudential consolidation - On- and off-balance-sheet credit exposures to customers: gross and net amounts
Types of exposures/Amounts Gross exposure Overall impairment losses/reversals and overall allocations Netexposure Overall partial write-offs
Stage 1 Stage 2 Stage 3Purchased or originated impairedStage 1 Stage 2 Stage 3Purchased or originated impaired
A. On-balance-sheet credit exposures
a) Bad loans 1.388.864 X- 103.794 1.282.604 84.874 X- 84.874 - 1.303.990 3.010
- of which forborne exposures187.728 X- 5.893 181.835 5.216 X- 5.216 - 182.512 1
b) Unlikely to pay532.628 X- 182.378 345.686 84.118 X- 84.118 - 448.510 -
- of which forborne exposures120.283 X- 34.043 82.975 16.706 X- 16.706 - 103.577 -
c) Non-performing past due exposures 117.079 X- 112.252 4.827 7.927 X- 7.927 - 109.152 -
- of which forborne exposures3.079 X- 2.307 772 630 X- 630 - 2.449 -
d) Performing past due exposures 234.513 67.178 148.300 X13.442 4.860 269 4.590 X- 229.653 -
- of which forborne exposures3.805 - 3.612 X193 192 - 192 X- 3.613 -
e) Other performing exposures 9.084.000 8.596.526 385.302 X19.714 105.642 72.106 33.537 X- 8.978.358 -
- of which forborne exposures86.004 - 78.288 X7.716 6.280 - 6.280 X- 79.724 -
Total (A)11.357.084 8.663.704 533.602 398.424 1.666.273 287.421 72.375 38.127 176.919 - 11.069.663 3.010
B. Off-balance-sheet credit exposures
a) Non-performing 45.426 X- 45.426 - 2.099 X- 2.095 - 43.327 -
b) Performing 1.882.507 1.269.327 228.610 X- 3.276 2.638 641 X- 1.879.231 -
Total (B)1.927.933 1.269.327 228.610 45.426 - 5.375 2.638 641 2.095 - 1.922.558 -
Total (A+B)13.285.017 9.933.031 762.212 443.850 1.666.273 292.796 75.013 38.768 179.014 - 12.992.221 3.010
\"\"
On-balance-sheet exposures include all on-balance-sheet financial assets due from customers regardless of the portfolio they are included in (measured at amortised cost, measured at fair value through other comprehensive Income, designated at fair value, mandatorily measured at fair value, under disposal).
A.1.6 Prudential consolidation - On-balance-sheet credit exposures to banks: trends in gross non-performing exposures
There are no impaired cash credit exposures to banks in these Consolidated Financial Statements.
A.1.7 Prudential consolidation - On-balance-sheet credit exposures to customers: trends in gross non-performing exposures
Reason/Categories Bad loans Unlikely to pay Non-performing past dueexposures
A. Opening gross exposure 1.221.578554.428157.069
- of which: transferred and not derecognised 5442.2496.196
B. Increases 978.720515.233165.643
B.1 income from performing exposures 1.74882.51291.966
B.2 income from financial assets impaired purchased or originated 223.73141.024351
-from business combinations210.762--
B.3 transfers from other categories of exposures exposures 53.22348.73937
B.4 contractual modifications without derecognition ---
B.5 other increases 700.018342.95873.289
C. Decreases 811.433537.033205.633
C.1 outflows to performing exposures 92417.95745.655
C.2 write-offs 16.550--
C.3 collections 303.622168.0987.928
C.4 proceeds from sales 10.3455786
C.5 losses on sale 9436-
C.6 transfers to other categories of exposures exposures 2.44053.07146.488
C.7 contractual modifications without derecognition - - -
C.8 other decreases 477.458297.293105.556
D. Closing gross exposure 1.388.865532.628117.079
- of which: transferred and not derecognised 811.433537.033205.633
\"\"
On-balance-sheet exposures include all on-balance-sheet financial assets due from customers regardless of the portfolio they are included in (measured at amortised cost, measured at fair value through other comprehensive Income, designated at fair value, mandatorily measured at fair value, under disposal).
A.1.7bis Prudential consolidation - On-balance-sheet credit exposures to customers: trends in gross forborne exposures broken down by credit quality
Reason/Categories
Forborne exposures: non-performing
Forborne exposures: performing
A. Opening gross exposure
275.752
85.823
- of which: transferred and not derecognised
1.357
14.768
B. Increases
349.249
78.639
B.1 inflows from non-forborne performing exposures
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
85
56.982
B.2 inflows from forborne performing exposures
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
15.461
X
B.3 inflows from non-performing forborne exposure
X
9.302
B.4 inflows from non-forborne non-performing exposures
21.132
157
B.5 other increases
312.571
12.198
C. Decreases
313.911
74.653
C.1 outflows to non-forborne performing exposures
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
X
29.515
C.2 outflows to forborne performing exposures
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
9.302
X
C.3 outflows to non-performing forborne exposures
X
15.461
C.4 write-offs
283
-
C.5 collections
159.073
14.515
C.6 proceeds from sales
59
-
C.7 losses on sale
-
-
C.8 other decreases
145.194
15.162
D. Closing gross exposure
311.090
89.809
- of which: transferred and not derecognised
764
231
\"\"
A.1.8 Prudential consolidation - On-balance-sheet non-performing exposures to banks: trends in overall impairment losses/reversals
There are no impaired cash credit exposures to banks in these Consolidated Financial Statements.
A.1.9 Prudential consolidation - On-balance-sheet non-performing exposures to customers: trends in overall impairment losses/reversals
Reason/CategoriesBad loansUnlikely to payNon-performing past due exposures
Totalof which: forborne exposuresTotalof which: forborne exposuresTotalof which: forborne exposures
A. Opening balance of total impairment losses/reversals of impairment losses 68.874 3.180 68.091 11.945 9.790 844
- of which: transferred and not derecognised 569 - 2.110 300 1.053 160
B. Increases 40.442 2.669 55.471 15.976 5.553 655
B.1 impairment losses/reversals from impaired financial assets purchased or originated 5.177 X1.061 X195 X
B.2. other impairment losses 18.602 449 50.576 14.343 5.147 654
B.3 losses on sale - - - - - -
B.4 transfers from other categories of impaired exposures 114 21 1.572 190 16 1
B.5 contractual modifications without derecognitions - - - - - -
B.6 other increases 16.549 2.199 2.262 1.443 195 -
C. Decreases 24.442 633 39.444 11.215 7.416 869
C.1 reversals of impairment losses from measurement 7.954 284 31.206 10.161 3.078 661
C.2 impairment reversals from collection 3.898 66 2.401 1.027 225 19
C.3 gains on disposal - - - - - -
C.4 write-offs 8.927 283 - - - -
C.5 transfers to other categories of impaired exposures 15 - 115 22 1.572 189
C.6 contractual modifications without derecognitions - - - - - -
C.7 other decreases 3.648 - 5.722 5 2.541 -
D. Closing balance of total impairment losses/reversals of impairment losses 84.874 5.216 84.118 16.706 7.927 630
- of which: transferred and not derecognised 753 6 2.175 294 459 48
\"\"
A.2 Classification of exposures based on external and internal ratings
A.2.1 Prudential consolidation - Breakdown of financial assets, loan commitments and financial guarantees granted by external rating class (gross amounts)
For the purposes of calculating capital requirements against credit risk, Banca Ifis uses the external credit assessment institution (ECAI) Fitch Ratings exclusively for the positions recognised under \"Exposures to Central Governments and Central Banks\". Banca Ifis also uses the ECAI Cerved rating for corporate counterparties, having certain specific characteristics of size and use, in order to calculate capital absorption for supervisory purposes. These positions are included in the \"Exposure to Companies\" classes.
No external ratings are used for other asset classes.
A.2.2 Prudential consolidation - Breakdown of financial assets, loan commitments and financial guarantees granted by internal rating class (gross amounts)
The Banca Ifis Group does not use internal ratings for the purposes of calculating capital absorption. The Group has implemented a managerial internal ratings system on the corporate segments. This has been developed on proprietary databases and has the following components:
\u2022a \"financial\" module, to assess the company's operating/financial soundness;
\u2022a \"central credit register\" module, presenting the evolution of counterparty risk vis-\u00e0-vis the banking industry;
\u2022an \"internal performance\" module, monitoring the performance of the relationships between the counterparty and the Group;
\u2022a \"socio-demographic\" module aimed at assessing the risk profile on the basis of biographical information.
These models are differentiated by segment to ensure that appropriate models are applied on homogeneous population from the point of view of characteristics and risk level. There are therefore models for corporations, differentiated by two size clusters, and a model for partnerships and sole proprietorships.
A.3 Breakdown of guaranteed credit exposures by guarantee type
A.3.1 Prudential consolidation - Guaranteed on- and off-balance-sheet credit exposures to banks
Gross exposureNet exposureCollateral guarantees (1)Personal guarantees (2)Total(1)+(2)
Credit derivativesUnsecured loans
Property - mortgagesProperty - lease financingSecuritiesOther collateralCLNOther derivativesGeneral governmentsBanksOther financial corporationsOther entities
Central counterpartiesBanksOther financial corporationsOther entities
1. Guaranteed on-balance-sheet credit exposures: 100 100 - - - 100 - - - - - - - - - 100
1.1 totally guaranteed 100 100 - - - 100 - - - - - - - - - 100
- of which non-performing - - - - - - - - - - - - - - - -
1.2 partially guaranteed - - - - - - - - - - - - - - - -
- of which non-performing - - - - - - - - - - - - - - - -
2. Guaranteed off-balance-sheet credit exposures: - - - - - - - - - - - - - - - -
2.1 totally guaranteed - - - - - - - - - - - - - - - -
- of which non-performing - - - - - - - - - - - - - - - -
2.2 partially guaranteed - - - - - - - - - - - - - - - -
- of which non-performing - - - - - - - - - - - - - - - -
\"\"
A.3.2 Prudential consolidation - Guaranteed on- and off-balance-sheet credit exposures to customers
Gross exposure
Net exposure
Collateral guarantees (1)
Personal guarantees (2)
Total (1)+(2)
Credit derivatives
Unsecured loans
Property - mortgages
Property - lease financing
Securities
Other collateral
CLN
Other derivatives
General governments
Banks
Other financial corporations
Other entities
Central counterparties
Banks
Other financial corporations
Other entities
1. Guaranteed on-balance-sheet credit exposures:
3.672.265
3.541.846
443.098
-
-
1.719.710
-
-
-
-
-
739.681
651
7.438
398.262
3.308.840
1.1 totally guaranteed
2.566.740
2.480.129
358.414
-
-
1.590.554
-
-
-
-
-
155.567
651
7.372
367.567
2.480.125
- of which non-performing
225.250
169.351
82.120
-
-
21.607
-
-
-
-
-
11.428
-
76
54.120
169.351
1.2 partially guaranteed
1.105.525
1.061.717
84.684
-
-
129.156
-
-
-
-
-
584.114
-
66
30.695
828.715
- of which non-performing
64.403
39.912
5.335
-
-
85
-
-
-
-
-
24.729
-
-
1.957
32.106
2. Guaranteed off-balance-sheet credit exposures:
57.567
57.376
-
-
195
7.733
-
-
-
-
-
186
-
51
37.697
45.862
2.1 totally guaranteed
43.982
43.831
-
-
195
7.551
-
-
-
-
-
-
-
51
35.415
43.212
- of which non-performing
1.851
1.851
-
-
-
-
-
-
-
-
-
-
-
-
1.851
1.851
2.2 partially guaranteed
13.585
13.545
-
-
-
182
-
-
-
-
-
186
-
-
2.282
2.650
- of which non-performing
2.019
2.019
-
-
-
-
-
-
-
-
-
-
-
-
465
465
\"\"
A.4 Prudent consolidation - Financial and non-financial assets through the enforcement of guarantees received
As at 31 December 2023, the Banca Ifis Group does not have any cases referred to in the disclosure in this paragraph.
B. Concentration and distribution of credit exposures
B.1 Prudential Consolidation - Breakdown of on- and off-balance-sheet credit exposures to customers by segment
Exposures/CounterpartiesGeneral governmentsFinancial companiesFinancial companies (of which: insurance companies)Non-financial corporationsHouseholds
Net exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversals
A. On-balance-sheet credit exposures
A.1 Bad loans 83 551 1.027 52 - - 166.205 79.071 1.136.677 5.199
- of which forborne exposures - - 69 - - - 9.027 4.732 173.416 484
A.2 Unlikely to pay 10.413 1.855 1.225 5.615 20 4 104.519 67.975 332.353 8.672
- of which forborne exposures - - 62 119 - - 21.273 14.660 82.242 1.927
A.3 Non-performing past due exposures 65.707 161 456 63 1 - 29.179 3.565 13.810 4.138
- of which forborne exposures 51 - - - - - 518 87 1.881 542
A.4 Performing exposures 2.386.255 2.183 657.515 7.570 811 - 5.445.442 93.518 718.799 7.233
- of which forborne exposures - - 3.653 581 - - 69.647 5.514 10.036 378
Total (A) 2.462.458 4.750 660.223 13.300 832 4 5.745.345 244.129 2.201.639 25.242
B. Off-balance-sheet credit exposures
B.1 Non-performing exposures- - 648 - - - 39.994 2.092 2.685 7
B.2 Performing exposures1 - 196.048 1.195 - - 1.507.983 2.062 175.199 19
Total (B) 1 - 196.696 1.195 - - 1.547.977 4.154 177.884 26
Total (A+B) 31.12.20232.462.459 4.750 856.919 14.495 832 4 7.293.322 248.283 2.379.523 25.268
Total (A+B) 31.12.20222.382.6486.391988.90712.7271.35546.473.218206.9002.313.46823.714
\"\"
B.2 Prudential consolidation - Geographical breakdown of on- and off-balance-sheet credit exposures to customers
Exposures/Geographic areasItalyOther European countriesAmericaAsiaRest of the World
Net exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversals
A. On-balance-sheet credit exposures
A.1 Bad loans1.303.342 88.471 568 32 32 - 8 - 42 -
A.2 Unlikely to pay445.640 83.982 2.862 136 5 - - - 3 -
A.3 Non-performing past due exposures 106.279 7.736 2.760 177 2 - 111 14 - -
A.4 Performing exposures 8.591.095 103.815 518.283 6.535 65.866 668 14.174 294 18.593 86
Total (A)10.446.356 284.004 524.473 6.880 65.905 668 14.293 308 18.638 86
B. Off-balance-sheet credit exposures
B.1 Non-performing exposures35.797 2.092 7.530 7 - - - - - -
B.2 Performing exposures1.727.299 3.163 151.173 113 - - 640 - 119 -
Total (B)1.763.096 5.255 158.703 120 - - 640 - 119 -
Total (A+B) 31.12.202312.209.452 289.259 683.176 7.000 65.905 668 14.933 308 18.757 86
Total (A+B) 31.12.202211.603.833243.590502.8245.55331.26730719.6882776295
\"\"
B.3 Prudential consolidation - Geographical breakdown of on- and off-balance-sheet credit exposures to banks
Exposures/Geographic areasItalyOther European countriesAmericaAsiaRest of the World
Net exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversals
A. On-balance-sheet credit exposures
A.1 Bad loans- - - - - - - - - -
A.2 Unlikely to pay- - - - - - - - - -
A.3 Non-performing past due exposures - - - - - - - - - -
A.4 Performing exposures 1.352.001 2.223 234.882 554 - - - - - -
Total (A)1.352.001 2.223 234.882 554 - - - - - -
B. Off-balance-sheet credit exposures
B.1 Non-performing exposures- - - - - - - - - -
B.2 Performing exposures873.744 - 430 - - - - - - -
Total (B)873.744 - 430 - - - - - - -
Total (A+B) 31.12.20232.225.745 2.223 235.312 554 - - - - - -
Total (A+B) 31.12.20221.539.2482.232264.382601------
\"\"
B.4 Major exposures
\u00a0\u00a031.12.202331.12.2022
a)Amount (carrying amount)5.616.6904.686.151
b)Amount (weighted value)1.132.447943.766
c)Number107
\"\"
The overall weighted amount of Large exposures at the weighted amount at 31 December 2023, comprising 10 positions, mainly consists, at a weighted value level, of 210 million Euro in tax assets, 193 million Euro in exposure to counterparties not included in the prudential scope of consolidation and the remaining 729 million Euro in positions vs supervised intermediaries, mainly relating to reverse repurchase agreements, derivatives and securities.
Disclosure regarding sovereign debt
Consob Communication No. DEM/11070007 of 5 August 2011, drawing on ESMA document No. 2011/266, regulated disclosures by listed companies of their exposures to sovereign debt and market performance, the management of exposures to sovereign debt, and their operating and financial impact.
In accordance with the requirements of the aforementioned Consob Communication, it should be noted that at 31 December 2023 the carrying amount of sovereign debt exposures is 2.121 million Euro, net of the negative valuation reserve of 18,8 million Euro.
These securities, with a nominal amount of 2.109 million Euro have a weighted residual average life of 33 months.
The fair values used to measure the exposures to sovereign debt securities at 31 December 2023 are considered to be Level 1.
Pursuant to the above Consob Communication, besides the exposure to sovereign debt, it is also necessary to consider receivables disbursed to and due from the Italian National Administration. These exposures at 31 December 2023 amount to 342 million Euro, of which 85 million Euro related to tax credits.
C. Securitisation transactions
This section does not include securitisation transactions in which the originator is a bank belonging to the same prudential group and the total liabilities issued (e.g. ABS securities, loans during the warehousing phase, etc.) by the vehicle companies are subscribed at the time of issue by one or more companies belonging to the same prudential group. In other words, self-securitisations fully subscribed by companies belonging to the Banca Ifis Group's prudential consolidation, such as those of the vehicle Ifis NPL 2021-1 SPV S.r.l., are discussed in a later section to which reference should be made.
Qualitative information
The Banca Ifis Group has prepared a \"Group Policy for the Management of Securitisation Transactions in the Role of Originator/Promoter/Investor\", with which it regulates the process of managing securitisation transactions in the event that it intervenes in the role of \"originator\" (i.e. a party that participated in the original contract that created the obligations that originated the securitised exposures or that acquired the exposures of a third party and subsequently proceeds to their securitisation) of \"investor\" (i.e. a person underwriting the securities) or \"sponsor\" (i.e. a person structuring the transaction as defined in Art. 2 of EU Regulation 2017/2402). For each potential case, the policy sets out the responsibilities of the organisational units and corporate bodies, with reference to both the due diligence process and the ongoing monitoring of the transaction.
Outstanding securitisation transactions at 31 December 2023 are listed below.
Ifis ABCP Programme securitisation
In 2016, Banca Ifis launched a three-year revolving securitisation of trade receivables due from account debtors. After Banca Ifis (originator) initially reassigned the receivables for 1.254,3 million Euro, in 2018, the vehicle named Ifis ABCP Programme S.r.l. issued 850 million Euro, increased to 1.000 million Euro, worth of senior notes subscribed for by the investment vehicles owned by the banks that co-arranged the transaction, simultaneously with the two-year extension of the revolving period. An additional tranche of senior notes, with a maximum nominal amount of 150 million Euro, initially issued for 19,2 million Euro, and that was subsequently adjusted based on the composition of the assigned portfolio, was subscribed for by Banca Ifis. In 2019, this portion was first partially repaid by the vehicle, then sold to a third-party bank for a total residual value of 98,9 million Euro. The difference between the value of the receivables portfolios and the senior notes issued represents the credit granted to the notes' bearers, which consists in a deferred purchase price.
Banca Ifis acts as servicer, performing the following tasks:
\u2022following collection operations and monitoring cash flows on a daily basis;
\u2022reconciling the closing balance at every cut-off date;
\u2022verifying, completing and submitting the service report with the information on the securitised portfolio requested by the vehicle and the banks at every cut-off date.
As part of the securitisation programme, the Bank sends the amount it collects to the vehicle on a daily basis, while the new portfolio is assigned approximately six times each month; this ensures a short time lapse between the outflows from the Bank and the inflows associated with the payment of the new assignments.
Only part of the securitised receivables due from account debtors are recognised as assets - especially for the portion that the Bank has purchased outright, resulting in the transfer of all risks and rewards to the buyer. Therefore, the tables in the quantitative disclosure show only this portion of the portfolio.
In compliance with IAS/IFRS accounting standards, currently the securitisation process does not involve the substantial transfer of all risks and rewards, as it does not meet derecognition requirements. In addition, the vehicle Ifis ABCP Programme S.r.l. was consolidated because, following an analysis of the requirements set forth in IFRS 10, it was found to be subject to the control of Banca Ifis (for further details, see \"Section 3 - Scope and methods of consolidation\" of the paragraph \u201cA.1 - General part\u201d of \"Part A - Accounting policies\" of these Notes to the Consolidated Financial Statements).
The maximum theoretical loss for Banca Ifis is represented by the losses that could potentially arise within the portfolio of assigned receivables, and the impact would be the same as if the securitisation programme did not exist; therefore, the securitisation has been accounted for as follows:
\u2022the securitised receivables purchased outright were recognised under \"receivables due from customers\", subitem \"factoring\";
\u2022the funds raised from the issue of senior notes subscribed for by third parties were recognised under \"debt securities issued\u201d of the balance sheet liabilities;
\u2022the interest on the receivables was recognised under the same item of the income statement \"interest receivable and similar income\";
\u2022the interest on the notes was recognised under \"interest due and similar expenses\", sub-item \"debt securities issued\";
\u2022the arrangement fees were fully recognised in profit or loss in the year in which the programme was launched.
Emma securitisation
The securitisation transaction called Emma, prepared by the former Farbanca (now renamed Banca Credifarma following the merger by incorporation of the former Credifarma in April 2022), became part of the Banca Ifis Group as a result of the acquisition of control of this company during 2020.
In March 2018, the former Farbanca autonomously completed this securitisation for a total nominal amount of 460 million Euro. The loan portfolio transferred regarded performing exposures relative to secured credit, mortgage and unsecured loans, characterised by average seasoning of 7 years. The transaction, structured by Banca IMI (Intesa Sanpaolo Group) was completed with the acquisition of loans by the SPV pursuant to Italian Law No. 130/1999, called Emma S.P.V. S.r.l. The securities were issued in three classes: a senior class for an amount of 322 million Euro (fully subscribed by institutional investors through private placement), a mezzanine class of 46 million Euro and a junior class of 96 million Euro (both subscribed fully by the former Farbanca).
This transaction was restructured during June 2021. The restructuring, which provided for the extension of the revolving period and a size increase in the transaction up to a total of 540 million Euro, was carried out with the involvement of the Parent company Banca Ifis and Intesa Sanpaolo as co-arrangers. Following this restructuring, the securities were issued in three partly paid classes: the senior class, with a nominal amount of 397,5 million Euro, was fully subscribed by Duomo Funding Plc while the mezzanine and junior classes, with a nominal amount respectively of 53,0 million Euro and 90,1 million Euro, were fully subscribed the former Farbanca (now Banca Credifarma), which also fulfils the retention obligations in accordance with the CRR, as originator.
As a result of the revolving structure of the transaction, a further 312 new loans were assigned during 2023, for a total equivalent value of 104,7 million Euro (residual outstanding stipulated amount, including unpaid principal and interest and expenses on past due and unpaid instalments); the outstanding amount of senior, mezzanine and junior securities at 31 December 2023 is 397,5 million Euro, 53 million Euro and 83,5 million Euro, respectively.
The above securitisation transaction does not meet the requirements for derecognition in accordance with IFRS 9, not configuring a substantial transfer of all risks and related benefits. Therefore, the assets transferred and not cancelled with reference to the loans concerned by said securitisation, not meeting the requirements envisaged for derecognition, were \u201crestored\u201d to the consolidated accounts of the Banca Ifis Group.
Indigo lease securitisation
In 2016, the Banca Ifis Group, through the originator company, the former Ifis Leasing S.p.A. (incorporated into Banca Ifis since May 2018) finalised a securitisation that involved selling a portfolio of performing loans totalling 489 million Euro to the special purpose vehicle Indigo Lease S.r.l.
The securitisation was rated by the agencies Moody's and DBRS, which will also perform the annual monitoring throughout the term of the transaction.
The initial purchase price of the assigned receivables portfolio, equal to 489 million Euro, was paid by the vehicle to the merged entity, the former Ifis Leasing using funds raised from the issue of senior notes for an amount of 366 million Euro. These received an AA3 (sf) rating from Moody's and an AA (sf) rating from DBRS, and their redemption is connected to the collections realised on the receivables portfolio. In addition, the vehicle issued 138 million Euro in junior notes that were acquired by the former Ifis Leasing and did not receive a rating. In addition, the latter received a specific servicing mandate to collect and manage the receivables.
During 2017, following the transaction restructuring, a revolving system was launched involving monthly assignments of new credit to the SPV, until July 2021. At the same time, the maximum nominal amount of the senior and junior notes was increased respectively to 609,5 and 169,7 million Euro. In the same period, Banca Ifis acquired all the senior notes issued by the vehicle. Following the May 2018 merger of the former Ifis Leasing, for incorporation into Banca Ifis, the latter also became the subscriber of the junior notes.
A second restructuring took place in June 2021, with confirmation of the nominal amount of the securities and simultaneous extension of the revolving period until July 2023.
In July 2023, Banca Ifis finalised the restructuring of the securitisation, which entailed the extension of the revolving period for a further two years and an increase in the principal outstanding amount of the senior securities, as well as the derating and delisting of the same from the Luxembourg Stock Exchange (as of 20 July 2023), in addition to obtaining STS (Securitisation \"Simple, Transparent and Standardised\") status pursuant to EU Regulation 2017/2402 (Securitisation Regulation).
As part of the transaction, Banca Ifis sold to UniCredit Bank AG the entire amount of senior securities, corresponding to a nominal amount of 609,5 million Euro and a principal amount outstanding of 400 million Euro. The junior securities, with a principal amount outstanding of 147,6 million Euro, were fully retained by Banca Ifis as originator. Therefore, as of July 2023 Indigo Lease is no longer a self-securitisation.
The above securitisation transaction does not meet the requirements for derecognition in accordance with IFRS 9, not configuring a substantial transfer of all risks and related benefits. Therefore, the assets transferred and not cancelled with reference to the loans concerned by said securitisation, not meeting the requirements envisaged for derecognition, were \u201crestored\u201d to the consolidated accounts of the Banca Ifis Group.
Other securitisations
As at 31 December 2023, the Banca Ifis Group holds a portfolio of securities issued by securitisation vehicles for a total of 287,1 million Euro, of which 200,2 million Euro measured at amortised cost and 86,9 million Euro measured at fair value with impact on the income statement. Such data includes:
\u2022multi-originator securitisations in which the Group assumed, together with other banks, also the role of originator. The Group subscribed for securities with a carrying amount as at 31 December 2023 of 44,1 million Euro (at 31 December 2022, the carrying amount was 52,0 million Euro). For more details, please refer to paragraph \"C. Financial assets sold and derecognised in full\" below, within subsection \"D. Disposal transactions\" of this \"Section 2 - Prudential consolidation risks\" of Part E .
\u2022single-tranche securities and securities with underlying non-financial assets with a total carrying amount at 31 December 2023 of 84,1 million Euro.
Quantitative information
C.1 Prudential consolidation - Exposures from the main \"own\" securitisations broken down by type of securitised asset and type of exposure
Type of securitised asset/ExposureOn-balance-sheet exposuresGuarantees grantedCredit lines
SeniorMezzanineJuniorSeniorMezzanineJuniorSeniorMezzanineJunior
Carrying amountImpairment losses/ reversalsCarrying amountImpairment losses/ reversalsCarrying amountImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversals
A. Derecognised in full4.928119---------------
- Receivables due from customers4.928119---------------
B. Partly derecognised------------------
C. Not derecognised --54.1202.901297.7624.501------------
- Receivables due from customers--54.1202.901297.7624.501------------
\"\"
C.2 Prudential consolidation - Exposures from the main \"third-party\" securitisations broken down by type of securitised asset and type of exposure
Type of securitised asset/ExposureOn-balance-sheet exposuresGuarantees grantedCredit lines
SeniorMezzanineJuniorSeniorMezzanineJuniorSeniorMezzanineJunior
Carrying amountImpairment losses/ reversalsCarrying amountImpairment losses/ reversalsCarrying amountImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversals
Financial and non-financial assets 243.076 986 43.292 438 577 - - - - - - - 179 2 - - - -
Total 243.076 986 43.292 438 577 - - - - - - - 179 2 - - - -
\"\"
C.3 Prudential consolidation - Interests in special purpose vehicles for the securitisation
Securitisation name / Special purpose vehicle name Registered office Consolidation (1)Assets (2)Liabilities (2)
ReceivablesDebt securitiesOther SeniorMezzanineJunior
Ifis ABCP Programme S.r.l.Conegliano (TV)100%1.391.859-49.6591.050.775--
Indigo Lease S.r.l.Conegliano (TV)100%504.940-30.642400.000-147.671
Emma S.P.V. S.r.l.Conegliano (TV)100%486.535-55.641397.45953.00083.499
\"\"
(1) Consolidation method referred to the so-called \"prudential\" perimeter
(2) The figures shown are gross of any intercompany transactions
C.4 Prudential consolidation - Non-consolidated securitisation vehicles
As at 31 December 2023, there are no cases referred to in this paragraph for the Banca Ifis Group.
C.5 Prudential consolidation - Servicer activities \u2013 own securitisations: collection of securitised loans and redemption of securities issued by the SPV for securitisation
ServicerVehicle companySecuritised assets (end-of-period figure)Receivables collected during the yearPercentage share of redeemed securities (end-of-period figure)
SeniorMezzanineJunior
ImpairedNot impairedImpairedNot impairedImpaired assetsNot impaired assetsImpaired assetsNot impaired assetsImpaired assetsNot impaired assets
Banca CredifarmaARCOBALENO FINANCE 6.70416.77219311.163----1,70%98,30%
Banca CredifarmaCREDIARC 31.6734.7961282.898----4,22%95,78%
\"\"
It should be noted that both the Arcobaleno and Crediarc transactions are characterised by the absence of formalised business plans in the agreements:
\u2022the Arcobaleno transaction concerned performing unsecured loans. The expected cash flows, therefore, were (with the exception of the positions relating to the counterparty in default) time-stamped to the maturity dates of the individual instalments of the amortisation schedules. The failure of debtors to meet agreed payments under individual loan agreements therefore represents a deviation from collection forecasts, resulting in exposures with delayed repayments.
\u2022Crediarc's portfolio is divided into 2 macro aggregates. The first is only performing mortgages. For this cluster, therefore, the expected receipts correspond to the progressively accrued instalments, as per the original repayment schedules. Deviations from the expected cash flows are therefore represented by the outstanding debts at the time of recognition. The second cluster is represented by unlikely to pay and non-performing loans. The net carrying amount (given by the nominal amount of the receivable net of the write-down made) attributed to these receivables represents their estimated realisable value over a 10-year period: it is important to note that the values shown have not been discounted.
C.6 Prudential consolidation - Consolidated securitisation vehicles
Refer to the information in Table C.3.
D. Disposals
A. Financial assets sold and not derecognised in full
Qualitative information
Transfer transactions that did not result in the derecognition of the underlying financial assets are represented by:
\u2022securitisation transactions of credit exposures to customers;
\u2022repurchase agreements (repos) on securities owned, mainly classified in the portfolios \"Financial assets measured at fair value through other comprehensive income\" and \"Financial assets measured at amortised cost\".
In the case of repurchase agreements, the non-derecognition of the security, which is the subject of a spot sale, derives from the fact that the Group retains substantially all the risks and rewards associated with the security, having the obligation to repurchase it forward at a contractually agreed price. The securities being transferred therefore continue to be shown in the accounting portfolios to which they belong; the consideration for the transfer is recognised under \u201cFinancial liabilities measured at amortised cost: a) payables due to banks or b) payables due to customers\u201d, depending on the type of counterparty. In this regard, it should be noted that the following tables do not represent repurchase agreements on securities not recorded in the balance sheet, if the availability of the same results from reverse repurchase agreements (please refer to the section \"Other information\" in Part B of these consolidated notes to the financial statements).
For securitisation transactions, described in section \"C. Securitisation transactions\" above, the non-derecognition follows the Group's subscription of the tranches of junior securities or similar exposures, which entail the risk of first losses for the Group and, likewise, the benefit associated with the return on the portfolio of transferred assets. In exchange for the transfer, the consideration received is recognised as a balancing entry to a liability to the special purpose vehicle, net of any tranches of securities subscribed or drawdowns of forms of liquidity support in favour of the vehicle in order to make principal payments. The loan thus recorded to the special purpose vehicle will be reduced by the sums collected by the originator, as \"servicer\", and transferred to the same vehicle.
Quantitative information
D.1. Prudential consolidation - Financial assets sold and fully recognised and associated financial liabilities: carrying amounts
Financial assets sold and fully recognisedAssociated financial liabilities
Carrying amountof which: securitisedof which: subject to repurchase agreementsof which non-performingCarrying amountof which: securitisedof which: subject to repurchase agreements
A. Financial assets held for trading - - - X- - -
1. Debt securities - - - X- - -
2. Equity securities - - - X- - -
3. Loans - - - X- - -
4. Derivatives - - - X- - -
B. Other financial assets mandatorily measured at fair value - - - - - - -
1. Debt securities - - - - - - -
2. Equity securities - - - X- - -
3. Loans - - - - - - -
C. Financial assets designated at fair value - - - - - - -
1. Debt securities- - - - - - -
2. Loans- - - - - - -
D. Financial assets measured at fair value through other comprehensive income 2.542 - 2.542 - 2.371 - 2.371
1. Debt securities 2.542 - 2.542 - 2.371 - 2.371
2. Equity securities - - - X- - -
3. Loans - - - - - - -
E. Financial assets measured at amortised cost 2.383.135 1.735.702 647.433 492.849 2.776.585 1.717.326 1.059.259
1. Debt securities647.433 - 647.433 - 1.059.259 - 1.059.259
2. Loans1.735.702 1.735.702 - 492.849 1.717.326 1.717.326 -
Total 31.12.20232.385.677 1.735.702 649.975 492.849 2.778.956 1.717.326 1.061.630
Total 31.12.20222.115.9001.303.465812.4356.8112.176.8861.395.092781.794
\"\"
D.2 Prudent consolidation - Financial assets sold and partly recognised and associated financial liabilities: carrying amounts
In these Consolidated Financial Statements, this item has no value.
D.3 Prudential consolidation - Disposal transactions with liabilities having recourse only to assets sold and not derecognised in full: fair value
Recorded in fullRecordedpartlyTotal
31.12.202331.12.2022
A. Financial assets held for trading ----
1. Debt securities ----
2. Equity securities ----
3. Loans ----
4. Derivatives ----
B. Other financial assets mandatorily measured at fair value ----
1. Debt securities ----
2. Equity securities ----
3. Loans ----
C. Financial assets designated at fair value ----
1. Debt securities ----
2. Loans ----
D. Financial assets measured at fair value through other comprehensive income 2.542-2.542-
1. Debt securities 2.542-2.542-
2. Equity securities ----
3. Loans ----
E. Financial assets measured at amortised cost (fair value)2.383.135-2.383.135507.406
1. Debt securities 647.433-647.433-
2. Loans 1.735.702-1.735.702507.406
Total financial assets 2.385.677-2.385.677507.406
Total associated financial liabilities 2.778.955-XX
Net balance at 31.12.2023393.278-2.385.677X
Net balance at 31.12.2022507.406-X507.406
\"\"
B. Financial assets sold and not derecognised in full with recognition of continuing involvement
The Group has not entered into any disposal transactions for which disclosure is required under IFRS 7.
C. Financial assets sold and derecognised in full
Qualitative information
At 31 December 2023, the Group held securitised securities and mutual fund units acquired as a result of transactions involving the sale of financial assets that were derecognised in full during 2023 and in previous years. These transactions involved the transfer of financial assets, consisting of loans, by the Group, to securitisation special purpose entities or mutual funds and their derecognition in accordance with IFRS 9, following verification that the originator itself (the Parent company Banca Ifis) had substantially transferred the risks and rewards of the transferred assets and had simultaneously retained no control over those assets. Instead of these derecognised assets, securitised securities or fund units received in the same transactions have been recognised as financial assets.
In relation to the provisions contained in the Bank of Italy's Communication of 23 December 2019, transposed in the 7th update of Circular 262, below is the disclosure relating to multi-originator disposal transactions of loan
portfolios, in particular of \"unlikely to pay\" portfolios, attributable to the transfer of loans to a mutual fund with allocation of the relative shares to the transferring intermediaries.
Quantitative information
The following table provides details of the funds held, showing the fund management company and the carrying amount at 31 December 2023.
Fund name
Carrying amount at
31.12.2023 (in thousands of Euro)
Asset management company
City Regeneration Fund
6.579
Redo SGR
IDeA Corporate Credit Recovery I - Loans sub-fund
2.744
Dea Capital Alternative Funds SGR
IDeA Corporate Credit Recovery II - Loans sub-fund
2.525
Dea Capital Alternative Funds SGR
IDeA Corporate Credit Recovery II - Shipping sub-fund
1.551
Dea Capital Alternative Funds SGR
BCC NPLs 2020
38.032
BCC NPLs 2020 S.r.l
BCC NPLs 2021
6.075
BCC NPLs 2021 S.r.l
\"\"
\"\"
\"\"
Transactions concluded during the year
City Regeneration Fund
A closed-end real estate alternative investment fund reserved for professional investors established in November 2020 with the objective of making sustainable investments in real estate initiatives aimed at urban regeneration and having a social impact, with a focus on Social Housing, Senior Living and Student Housing.
In November 2023, Banca Ifis sold its claim against a single debtor, classified as unlikely to pay, which owns the largest urban regeneration project in Italy, with a nominal amount of 9,2 million Euro and a carrying amount of 5,9 million Euro. For this transaction, Banca Ifis received units of the City Regeneration Fund, entered at a fair value of 6,3 million Euro.
At 31 December 2023, the Banca Ifis Group's share is 1,9% of the total value of the Fund's subscriptions and its carrying amount is 6,6 million Euro.
Transactions concluded in previous years
IDeA CCR I Fund - Credit sub-fund
Fund established in January 2016, with the objective of purchasing non-performing loans and instruments claimed by banks from companies involved in restructuring processes.
Banca Ifis became a shareholder in July 2019, as part of the last closing realised by the fund, through the subscription of units worth 15,9 million Euro, in conjunction with the sale to the fund of receivables and equity instruments owed to an operator in the automotive segment. Banca Ifis's share of the Fund is 13,66% of the sub-fund. No distributions were made from the sub-fund during 2023. The sub-fund's management team is focused on selling the last asset in the portfolio from which the final redemption of units will be derived. The carrying amount at 31 December 2023 is 2,7 million Euro.
IDeA CCR II Fund - Credit sub-fund
Fund established in 2017, a replica of the CCR I fund launched previously, with the objective of purchasing non-performing loans and instruments claimed by banks from companies involved in restructuring processes.
In 2017, Banca Ifis subscribed units for a total initial value of 8,8 million Euro in conjunction with the assignment to the Fund of its claim against a single debtor operating in the manufacturing sector.
At the time of subscription, Banca Ifis's shareholding in the sub-fund was 3,72%. As a result of the subsequent closings implemented by the Fund, in which Banca Ifis did not participate, the Fund's shareholding in the sub-fund was reduced to 1,07% at 31 December 2023
Over the years, distributions have been made in favour of shareholders. The carrying amount at 31 December 2023 is 2,5 million Euro.
IDeA CCR II Fund - Shipping sub-fund
Sub-fund established in 2018 within the CCR II Fund launched in 2017, specifically for non-performing loans arising from transactions with ship operators. The sub-fund is denominated in US dollars.
The subscription of the sub-fund's shares by Banca Ifis took place in December 2018 with an investment of 37,7 million Dollar, an amount coinciding with the price of the sale of ship mortgage-backed loans to as many operators. Banca Ifis's shareholding represents 19,34% of the sub-fund's units.
Over the years, the Fund has made significant distributions from the proceeds realised through the restructuring of receivables, repossession of ships and the subsequent sale of part of them, greatly anticipating the recovery expected by shareholders. The carrying amount at 31 December 2023 is 1,6 million Euro.
Alternative investment funds in non-performing loans
In 2019, a disposal took place of non-performing retail loans worth a nominal amount of approximately 15,7 million Euro and with a carrying amount of 1,9 million Euro. For this transaction, the Banca Ifis Group received units of three mutual investment funds (Masaccio, Value Italy Credit 2 and Ares 1) entered at an initial fair value of 7,6 million Euro. The carrying amount at 31 December 2023 of such funds is 5,5 million Euro.
In addition to the above, again with a view to pursuing de-risking activities, Banca Ifis participated in two multi-originator securitisation transactions in 2020 and 2021, respectively.
\u201cBCC NPLs 2020\u201d securitisation
multi-originator transaction whereby, in November 2020, 90 banks, 88 of which belong to the Iccrea Cooperative Banking Group and two banks outside the group (Banca Ifis and Banca Popolare Valconca), completed the sale of an equal number of portfolios of non-performing loans classified as bad loans at the date of sale for a total credit claim of 2,3 billion Euro (of which 249,0 million Euro related to the portfolio sold by Banca Ifis) in favour of a vehicle company (\"BCC NPLs 2020 S.r.l.\") set up pursuant to Law 130/1999 through the realisation of a securitisation of bad loans guaranteed by Italian Treasury Department (\u201cGACS\u201d) pursuant to L.D. No. 18 of 14 February 2016.
BCC NPLs 2020 S.r.l. financed acquisitions of the loans portfolio by issuing asset-backed securities, in accordance with the combined provisions of Articles 1 and 5 of Italian Law No. 130, for a total nominal amount of approximately 585 million Euro, structured into the following classes:
\u2022520 million Euro of senior securities (of which a nominal 55 million Euro subscribed by Banca Ifis), maturing in January 2045 and with Baa2 and BBB ratings issued by Moody's Italia S.r.l. and Scope, respectively;
\u202241 million Euro in mezzanine notes maturing in January 2045, with rating Caa2 and CC assigned respectively by Moody\u2019s Italia S.r.l. and Scope;
\u202224 million Euro in junior notes maturing in January 2045, unrated.
The mezzanine securities and the junior securities were subscribed by independent investors having no relationship and/or ties with the originator banks, it being understood that each originator bank undertook to maintain a share of at least 5% of the nominal amount of each tranche of Securities issued in the context of the Transaction. The share of mezzanine and junior securities subscribed by Banca Ifis is 245 thousand Euro and 143 thousand Euro, respectively.
In the context of this transaction, the Parent company Banca Ifis benefited from the accounting and prudential derecognition of the transferred assets. The carrying amount at 31 December 2023 is 37,9 million Euro for senior units, 0,2 million Euro for mezzanine units, and junior units are of negligible value.
\u201cBCC NPLs 2021\u201d securitisation:
multi-originator transaction whereby, in November 2021, 77 Banks, 74 of which belong to the Iccrea Cooperative Banking Group and 3 banks outside the group (Banca Ifis, Cassa di Risparmio di Asti and Guber Banca), completed the sale of an equal number of portfolios of non-performing loans classified as bad loans at the date of sale for a total credit claim of 1,3 billion Euro (of which 86,9 million Euro related to the portfolio sold by Banca Ifis) in favour of a vehicle company (\"BCC NPLs 2021 S.r.l.\") set up pursuant to Law 130/1999 through the realisation of a securitisation of bad loans guaranteed by Italian Treasury Department (\u201cGACS\u201d) pursuant to L.D. No. 18 of 14 February 2016.
BCC NPLs 2021 S.r.l. financed acquisitions of the loans portfolio by issuing asset-backed securities, in accordance with the combined provisions of Articles 1 and 5 of Italian Law No. 130, for a total nominal amount of 336,5 million Euro, structured into the following classes:
\u2022284 million Euro of Senior Securities (of which a nominal 7,8 Euro subscribed by Banca Ifis), maturing in April 2046 and with Baa2, BBB and BBB ratings issued by Moody's Italia S.r.l., Scope and Arc Rating S.A., respectively;
\u202239,5 million Euro in Mezzanine Notes maturing in April 2046, with rating Caa2, CCC and CCC+ assigned respectively by Moody's Italia S.r.l., Scope and Arc Rating S.A., respectively;
\u202213 million Euro in Junior Notes maturing in April 2046, unrated.
The Mezzanine Securities and the Junior Securities were subscribed by independent investors having no relationship and/or ties with the originator banks, it being understood that each originator bank undertook to maintain a share of at least 5% of the nominal amount of each tranche of Securities issued in the context of the Transaction. The share of Mezzanine and Junior Securities subscribed by the Parent company Banca Ifis is 131 thousand Euro and 43 thousand Euro, respectively.
In the context of this transaction, Banca Ifis benefited from the accounting and prudential derecognition of the transferred assets. The carrying amount at 31 December 2023 is 6,1 million Euro for senior units while the mezzanine units and junior units are of irrelevant value.
D. Covered bond transactions
The Banca Ifis Group did not engage in any covered bond transactions.
E. Prudential consolidation - models for measuring credit risk
The Banca Ifis Group does not have internal portfolio models on credit risk (VaR methodology).
1.2 Market risks
1.2.1 Interest rate risk and price risk - supervisory trading book
Qualitative information
A. General aspects
In 2023, the investment strategy continued, as regulated in the \"Banca Ifis Proprietary Portfolio Management Policy\" and in the \u201cPolicy for Managing Securitisation & Structured Solutions investment operations\u201d is structured to coincide with the risk appetite formulated by the Board of Directors under the scope of the Risk Appetite Framework (RAF) and laid out in the \"Group Market Risk Management Policy\", as well as with the system of objectives and limits.
Consistent with the conservative \"stance\" outlined in the above-mentioned documents, for most of the year the overall investment strategy focused on risk containment, implemented mainly by seeking out securities characterised by high liquidity and a strategy of steady returns over the medium term.
The component relating to the \"trading book\" from which the market risk in question originates was marginal with respect to the total investments in the banking book both in absolute terms of the risk values recorded and with respect to the established limits. The trading book mainly comprises options and futures deriving from hedging transactions and ancillary enhancements to the investment strategy in assets that are part of the \u201cbanking book\u201d and \u201cdiscretionary trading\u201d portfolio, characterised by short-term speculation and marginal exposure.
The trading book also contains residual transactions from the Corporate Banking operations, as part of which clients were offered derivative contracts hedging the financial risks they assumed. In order to remove market risk, all outstanding transactions are hedged with \"back to back\" trades, in which the Bank assumes a position opposite to the one sold to corporate clients with independent market counterparties.
B. Management procedures and measurement methods concerning interest rate risk and price risk
The guidelines on the assumption and monitoring of market risk are laid out on a Group level in the \u201cGroup Market Risk Management Policy\u201d, which also indicates, for the purpose of a more rigorous and detailed representation of the process activities, the metrics used for the measuring and monitoring of this risk.
In particular, the measurement and assessment of market risks is based on the various characteristics (in terms of time frame, investment instruments, etc.) of the investment strategies used in the documents \u201cBanca Ifis Proprietary Portfolio Management Policy\u201d and \u201cPolicy for Managing Securitisation & Structured Solutions investment operations\u201d, which defines and details the strategies to be pursued in terms of portfolio structure, operative instruments and assets.
Under this scope, the monitoring of the consistency of the Group\u2019s portfolio risk profiles in respect of the risk/return objectives is based on a system of limits (both strategic and operational), which envisages the combined use of various different indicators. More specifically, the following are defined:
\u2022Maximum Acceptable Loss;
\u2022Maximum negative gross financial impact;
\u2022VaR (Value at Risk) limit;
\u2022limits of sensitivity and Greeks;
\u2022any limits to the type of financial instruments admitted;
\u2022any composition limits.
Respect for the limits assigned to each portfolio is checked daily.
The summary indicator used to assess exposure to the risks in question is the Value at Risk (VaR), which represents market best practice for monitoring risks arising from financial market operations. It should be noted, however, that VaR and the limits derived from it, while not used by the Group as a proprietary internal model for determining capital requirements, are used on an ongoing basis for management assessment purposes. In a broader perspective relative to financial market operations, the banking portfolio is also prudentially monitored according to the logic of market risks and subject to specific limits, i.e., the positions to which an HTC&S (Held to Collect and Sell) business model is associated and recorded at fair value with impact on overall profitability (FVOCI), as well as the positions recorded at fair value with impact on the income statement (FVTPL), whose changes in value could have significant impacts on the Group's reserves (and consequently on the carrying amounts) and/or income statement.
VaR is a statistical measure to estimate the loss that could occur as a result of adverse movements in risk factors.
Specifically, the VaR is measured using a confidence interval of 99% and a holding period of 1 day; it expresses the \u201cthreshold\u201d of daily losses that, on the basis of probabilistic hypotheses may only be surpassed in 1% of cases. The approach used to calculate the VaR is historical simulation. With this approach, the portfolio is re-valued, applying all variations to the risk factors recorded the previous year (256 observations). The values thus obtained are compared with the current portfolio value, determining the relevant series of hypothetical gains or losses. The VaR is the average of the second and third worst results.
The VaR is also divided, for monitoring purposes, amongst the risk factors referring to the portfolio.
In addition to the risk indications deriving from the VaR, the Expected Shortfall (ES), which expresses the daily loss that exceeds the VaR figure, and the Stressed VaRs, which represent VaR calculated in a particularly turbulent historical period, which in the specific case corresponds to the Italian debt crisis of 2011-2012 and the 2020 Covid-19 pandemic, are also used for monitoring purposes.
The forecasting capacity of the risk measurement model used is verified through a daily backtesting analysis in which the VaR for the positions in the portfolio at t-1 is compared with the profit and loss generated by such positions at t.
During 2023, VaR utilisation was well below the assigned limit at all times, partly as a result of the reduction in volatility experienced by the various asset classes, as can be seen in the chart below. The figure at the end of 2023 stood at 1,7 million Euro, against a risk appetite level of approximately 9 million Euro.
Quantitative information
1. Supervisory trading book: breakdown by residual maturity (re-pricing date) of on-balance-sheet financial assets and liabilities and financial derivatives - Currency: Euro
Type/Residual maturityon demandup to 3 monthsover 3 to 6 monthsover 6 months to 1 yearover 1 to 5 yearsover 5 to 10 yearsover 10 yearsindefinite life
1. On-balance-sheet assets - - - - - - - -
1.1 Debt securities - - - - - - - -
- with early redemption option - - - - - - - -
- other - - - - - - - -
1.2 Other assets - - - - - - - -
2. On-balance-sheet liabilities - - - - - - - -
2.1 Repurchase agreements - - - - - - - -
2.2 Other liabilities - - - - - - - -
3. Financial derivatives \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
3.1 With underlying security \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
- Options \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
+ long positions - - - - - 12.313 - -
+ short positions - - - - - - - -
- Other \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
+ long positions - - - - - - - -
+ short positions - - - - - - - -
3.2 Without underlying security \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
- Options \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
+ long positions - 17.365 4.793 63 398 975 4 -
+ short positions - 816 - 61 373 14.633 7.714 -
- Other derivatives\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
+ long positions - - 6.439 1.041 4.025 - - -
+ short positions - - 6.439 1.041 4.025 - - -
\"\"
2. Supervisory trading book: distribution of equity exposures and equity indices by major market listing countries
The Banca Ifis Group has no cases for which the disclosures in this paragraph are applicable.
3. Supervisory trading book: internal models and other methods for the sensitivity analysis
The Banca Ifis Group does not have internal models for the regulatory trading book.
1.2.2 Interest rate risk and price risk - banking portfolio
Qualitative information
A. General aspects, management procedures and measurement methods concerning the interest rate risk and the price risk
The assumption of a significant interest rate risk is in principle unrelated to the management of the Group. In terms of breakdown of the balance sheet with reference to the types of risk in question, in respect of the liabilities, the main funding source is still the on-line savings accounts and the Rendimax current account, structured into the technical forms of fixed-rate customer deposit accounts for the restricted component and the non index-linked variable rate that can be unilaterally revised by the Group in respect of the rules and contracts, for the technical forms of unrestricted demand and on-call current accounts. The other main components of funding concern fixed-rate bond funding, variable-rate securitisation operations, repurchase agreements at both fixed and variable rate and loans with the Eurosystem (referred to as TLTRO and LTRO) at variable rates.
As for the assets, loans to customers still largely have floating rates as far as both trade receivables and corporate financing are concerned.
As for the operations concerning distressed retail loans carried out by the subsidiaries Ifis Npl Investing, Revalea and Ifis Npl Servicing, the first two are characterised by a business model focused on acquiring receivables at prices lower than their nominal amount, there is a potential interest rate risk associated with the uncertainty about when the receivables will be collected.
At 31 December 2023, the comprehensive bond portfolio mainly comprises government securities for a percentage of 66%; the modified average duration and average maturity of the portfolio are respectively 2,2 years and 2,9 years.
The Capital Markets function is appointed to guarantee the rate risk management, which, in line with the risk appetite established, defines what action is necessary to pursue this. The Risk Management function is responsible for proposing the risk appetite, identifying the most appropriate risk indicators and monitoring the relevant performance of the assets and liabilities in connection with the pre-set limits. Top Management makes annual proposals to the Parent company Banca Ifis Board as to the policies on lending, funding and the management of interest rate risk, as well as suggesting appropriate actions by which to ensure that operations are carried out consistently with the risk policies approved by the Group.
The Risk Management function periodically reports to the Parent company's Board of Directors on the interest rate risk position by means of a specific monthly report prepared for the Parent company's management.
The interest rate risk falls under the category of second-pillar risks. The guidelines on the assumption and monitoring of market risk are laid out on a Group level in the \u201cGroup Banking Book Interest Rate Risk Management Policy\u201d, which also indicates, for the purpose of a more rigorous and detailed representation of the process activities, the metrics used for the measuring and monitoring of the risk in question. Monitoring is performed at the consolidated level.
Starting from 2023, the Banca Ifis Group hedges the interest rate risk. In particular, the Group adopts a \"fair value hedge\" strategy, in which the hedging instruments are IRS plain vanilla derivative contracts and the \"hedged items\" are certain government bonds (in this case Italian BTPs) measured at amortised cost.
The classification of the bonds held as \u201cFinancial assets measured at fair value through other comprehensive income\u201d introduces the risk that the Group's reserves may fluctuate as a result of the change in their fair value. There is also a residual portion in equity securities, which belong to the major European indexes and are highly liquid, including \u201cFinancial assets measured at fair value through other comprehensive income\u201d. A part share of these assets are economically hedged through derivatives that are part of the trading book, not represented in the accounts through hedge accounting.
Below is the sensitivity analysis for the main balance sheet items, both assets and liabilities, with evidence of the effect of a 1 basis point movement up or down, also showing the relative duration alongside.
Macro item (figures in thousands of Euro)Sensitivity -1bpsSensitivity +1bpsDuration
1. On-balance-sheet assets2.466(2.466)1,61
1.1 Debt securities639(639)1,80
1.2 Loans to banks5(5)0,05
1.3 Loans to customers1.822(1.822)1,69
2. On-balance-sheet liabilities(1.204)1.2040,98
2.1 Payables due to customers and securities issued(1.126)1.1261,18
2.2 Payables due to banks(78)780,28
3.1 Hedging derivatives - variable leg6(6)0,17
3.2 Hedging derivatives - fixed leg(191) 191 4,80
Total1.077(1.077)0,60
\"\"
From a managerial viewpoint, the above assets are specifically monitored as regulated in the \"Group Market Risk Management Policy\u201d and the \u201cGroup Rates Risk Management Policy\u201d.
The following table shows the sensitivity analysis with reference to the impact at the level of the economic item \"Net interest income\", and consequently at the level of the pre-tax result for the year, of a change of 20 basis points up or down, set forth at the level of the associated interest-bearing asset components.
Macro item (figures in thousands of Euro)Sensitivity -20 bpsSensitivity +20 bps
Debt securities(2.278)2.274
Loans to banks(1.582)1.579
Loans to customers(10.043)10.029
Payables due to customers and securities issued 7.486(7.475)
Payables due to banks4.322(4.315)
Hedging derivatives(578)577
Total(2.672)2.669
\"\"
Quantitative information
1. Banking book: breakdown by residual maturity (re-pricing date) of financial assets and liabilities - Currency: Euro
Type/Residual maturityon demandup to 3 monthsover 3 to 6 monthsover 6 months to 1 yearover 1 to 5 yearsover 5 to 10 yearsover 10 yearsIndefinite life
1. On-balance-sheet assets3.356.102 4.200.712 1.232.532 585.500 2.154.643 956.014 133.025 -
1.1 Debt securities9.872 1.051.781 526.365 296.105 834.803 539.518 48.915 -
- with early redemption option-147.977 41.727 120.356 204.992 82.757 21.909 -
- other9.872 903.804 484.638 175.749 629.811 456.761 27.006 -
1.2 Loans to banks853.739 31.146 6 13 71 ---
1.3 Loans to customers2.492.491 3.117.785 706.161 289.382 1.319.769 416.496 84.110 -
- current a/c102.771 4.758 6.072 14.239 98.145 26.446 5.878 -
- other loans2.389.720 3.113.027 700.089 275.143 1.221.624 390.050 78.232 -
- with early redemption option239.320 1.555.419 469.474 86.025 6.101 3.816 346 -
- other2.150.400 1.557.608 230.615 189.118 1.215.523 386.234 77.886 -
2. On-balance-sheet liabilities1.239.133 2.838.278 1.311.916 1.138.815 3.198.545 45.980 1.855.650 -
2.1 Due to customers1.239.004 944.577 865.171 1.040.122 1.643.179 5.139 2.400 -
- current a/c657.659 37.649 34.926 50.620 68.241 ---
- other payables581.345 906.928 830.245 989.502 1.574.938 5.139 2.400 -
- with early redemption option--------
- other581.345 906.928 830.245 989.502 1.574.938 5.139 2.400 -
2.2 Payables due to banks112 1.893.690 99.938 98.692 466.350 40.841 207 -
- current a/c19 -------
- other payables93 1.893.690 99.938 98.692 466.350 40.841 207 -
2.3 Debt securities17 11 346.807 1 1.089.016 -1.853.043 -
- with early redemption option----372.744 ---
- other17 11 346.807 1 716.272 -1.853.043 -
2.4 Other liabilities --------
- with early redemption option--------
- other--------
3. Financial derivatives
3.1 With underlying security
- Options
+ long positions--------
+ short positions--------
- Other derivatives
+ long positions--------
+ short positions--------
3.2 Without underlying security
- Options
+ long positions--------
+ short positions--------
- Other derivatives
+ long positions-339.700 16.000 -----
+ short positions----94.200 261.500 --
4. Other off-balance-sheet transactions
+ long positions 173.056 -------
+ short positions 90.316 2.532 2.056 1.263 48.850 28.039 --
\"\"
1. Banking book: breakdown by residual maturity (re-pricing date) of financial assets and liabilities - Currency: Other currencies
Type/Residual maturityon demandup to 3 monthsover 3 to 6 monthsover 6 months to 1 yearover 1 to 5 yearsover 5 to 10 yearsover 10 yearsIndefinite life
1. On-balance-sheet assets83.607 124.774 9.533 -----
1.1 Debt securities--------
- with early redemption option--------
- other--------
1.2 Loans to banks10.276 37.996 ------
1.3 Loans to customers73.331 86.778 9.533 -----
- current a/c--------
- other loans73.331 86.778 9.533 -----
- with early redemption option78 7.022 ------
- other73.253 79.756 9.533 -----
2. On-balance-sheet liabilities74.970 117.309 -62 ----
2.1 Due to customers74.970 --62 ----
- current a/c74.970 -------
- other payables---62 ----
- with early redemption option--------
- other---62 ----
2.2 Payables due to banks-117.309 ------
- current a/c--------
- other payables-117.309 ------
2.3 Debt securities--------
- with early redemption option--------
- other--------
2.4 Other liabilities --------
- with early redemption option--------
- other--------
3. Financial derivatives
3.1 With underlying security
- Options
+ long positions--------
+ short positions--------
- Other derivatives
+ long positions--------
+ short positions--------
3.2 Without underlying security
- Options
+ long positions--------
+ short positions--------
- Other derivatives
+ long positions--------
+ short positions--------
4. Other off-balance-sheet transactions
+ long positions -8.757 ------
+ short positions -8.757 ------
\"\"
2. Banking book: internal models and other methods for the sensitivity analysis
The Banca Ifis Group does not have internal models for the banking book.
1.2.3 Currency risk
Qualitative information
A. General aspects, management procedures and measurement methods of the currency risk
The assumption of currency risk, intended as an operating element that could potentially improve cash management performance, is not part of the Group's policies. The Banca Ifis Group's foreign currency operations largely involve collections and payments associated with factoring operations and in hedging assets in foreign currencies, like units of UCITS. In this sense, the assets in question are generally hedged with deposits and/or loans from other banks in the same currency, thus eliminating for the most part the risk of losses associated with exchange rate fluctuations. In some cases, synthetic instruments are used as hedging instruments.
A residual currency risk arises as a natural consequence of the mismatch between the clients' borrowings and the Capital Markets function's funding operations in foreign currency. Such mismatches are mainly a result of the difficulty in correctly anticipating financial trends connected with factoring operations, with particular reference to cash flows from account debtors vis-\u00e0-vis the maturities of loans granted to customers, as well as the effect of interest on them.
However, the Capital Markets function strives to minimise such mismatches every day, constantly realigning the size and timing of foreign currency positions.
Currency risk related to the Bank's business is assumed and managed according to the risk policies and limits set by the Parent company's Board of Directors, with precise delegations of power limiting the autonomy of those authorised to operate, as well as especially strict limits on the daily net currency position.
The business functions responsible for ensuring the currency risk is managed correctly are: the Capital Markets function, which, amongst other duties, directly manages the Bank's funding operations and currency position; the Risk Management function, responsible for selecting the most appropriate risk indicators and monitoring them with reference to pre-set limits; and the Top Management, which every year, based on the Capital Markets function's proposals, shall consider these suggestions and make proposals to Banca Ifis's Board of Directors regarding policies on funding and the management of currency risk, as well as suggest appropriate actions during the year in order to ensure that operations are conducted consistently with the risk policies approved by the Group.
As regards the subsidiaries Ifis Finance Sp. z o.o. and Ifis Finance I.F.N. S.A., which operate on the Polish and Romanian markets, respectively, exposures in Polish zloty and leu from factoring activities are financed by funding in the same currency.
With the acquisition of the Polish subsidiary, Banca Ifis has assumed the currency risk represented by the initial investment in Ifis Finance Sp. z o.o.\u2019s share capital for an amount of 21,2 million Zloty and the subsequent share capital increase for an amount of 66 million Zloty.
As instead for the Rumanian subsidiary Ifis Finance I.F.N. S.A., Banca Ifis assumed the exchange rate risk on its own at the time of its incorporation through the initial payment into the share capital totalling 14,7 million Romanian Leu and at the time of the payments of 9,6 million Leu, 24,7 million Leu and 49,0 million Leu as a capital increase respectively during the second half of 2022 and the first and second half of 2023.
Furthermore, Banca Ifis owns a 4,68% interest in India Factoring and Finance Solutions Private Limited, worth 20 million Indian rupees and with a market value of 3,0 million Euro at the historical exchange rate. In 2015 the Bank tested said interest for impairment, recognising a 2,4 million Euro charge in profit or loss. Starting from 2016, the fair value was adjusted through equity, bringing the value of the equity interest to 487 thousand Euro at 31 December 2023.
The Risk Management function is committed to monitoring the set limits, aimed at verifying that the Group's exchange rate risk remains low. As at 31 December 2023, the total net position amounts to about 4,1 million Euro (or about 0,2% of own funds), with a maximum single-currency exposure of 1,9 million Euro.
B. Hedging of currency risk
Considering the size of this investment and the foregoing on the management method, the Bank did not deem it necessary to hedge the ensuing currency risk.
Quantitative information
1. Distribution of assets, liabilities and derivatives by currency
Items
Currencies
US DOLLAR
UK STERLING
JAPANESE YEN
CANADIAN DOLLAR
SWISS FRANC
OTHER CURRENCIES
A. Financial assets
149.114
8.916
752
37
2.769
96.417
A.1 Debt securities
-
-
-
-
-
-
A.2 Equity securities
1.551
3.600
-
-
1.537
3.294
A.3 Loans to banks
39.519
1.296
116
37
1.232
12.958
A.4 Loans to customers
108.044
4.020
636
-
-
80.165
A.5 Other financial assets
-
-
-
-
-
-
B. Other assets
-
-
-
-
-
46
C. Financial liabilities
150.603
8.648
704
-
2.700
29.813
C.1 Payables due to banks
75.672
8.644
704
-
2.700
29.589
C.2 Payables due to customers
74.931
4
-
-
-
224
C.3 Debt securities
-
-
-
-
-
-
C.4 Other financial liabilities
-
-
-
-
-
-
D. Other liabilities
2
5
-
-
-
2.253
E. Financial derivatives
- Options
+ long positions
-
-
-
-
-
-
+ short positions
-
-
-
-
-
-
- Other
+ long positions
-
-
-
-
-
-
+ short positions
-
-
-
-
-
45.927
Total assets
149.114
8.916
752
37
2.769
96.463
Total liabilities
150.605
8.653
704
-
2.700
77.993
Imbalance (+/-)
(1.491)
263
48
37
69
18.470
\"\"
2. Internal models and other methods for the sensitivity analysis
The Banca Ifis Group does not have internal models for currency risk.
1.3 Derivative instruments and hedging policies
1.3.1 Derivative instruments held for trading
A. Financial derivatives
Please see paragraph \"1.2 Market risks\" of this Section 2 of Part E of the Notes to the Consolidated Financial Statements.
A.1 Financial derivatives held for trading: year-end notional amounts
Underlying assets/Types of derivatives31.12.202331.12.2022
Over the counterOrganised marketsOver the counterOrganised markets
Central counterpartiesWithout central counterpartiesCentral counterpartiesWithout central counterparties
With offsetting agreementsWithout offsetting agreementsWith offsetting agreementsWithout offsetting agreements
1. Debt securities and interest rates- - 1.096.929 - --803.810-
a) Options- - 1.085.424 - --288.350-
b) Swaps- - 11.505 - --515.460-
c) Forwards- - - - ----
d) Futures- - - - ----
e) Other- - - - ----
2. Equity securities and share indexes- - 25.393 - --15.975-
a) Options- - 25.393 - --15.975-
b) Swaps- - - - ----
c) Forwards- - - - ----
d) Futures- - - - ----
e) Other- - - - ----
3. Currencies and gold- - - - ----
a) Options- - - - ----
b) Swaps- - - - ----
c) Forwards- - - - ----
d) Futures- - - - ----
e) Other- - - - ----
4. Commodities- - - - ----
5. Others- - - - ----
Total- - 1.122.322 - --819.785-
\"\"
A.2 Financial derivatives held for trading: gross positive and negative fair value - breakdown by product
Types of derivatives31.12.202331.12.2022
Over the counterOrganised marketsOver the counterOrganised markets
Central counterpartiesWithout central counterpartiesCentral counterpartiesWithout central counterparties
With offsetting agreementsWithout offsetting agreementsWith offsetting agreementsWithout offsetting agreements
1. Positive fair value\u00a0\u00a0\u00a0\u00a0
a) Options- - 12.743 - --333-
b) Interest rate swaps- - 153 - --25.265-
c) Cross currency swaps- - - - ----
d) Equity swaps- - - - ----
e) Forwards- - - - ----
f) Futures- - - - ----
g) Other- - - - ----
Total- - 12.896 - --25.598-
2. Negative fair value\u00a0\u00a0\u00a0\u00a0
a) Options- - 13.852 - --25.098-
b) Interest rate swaps- - 153 - --884-
c) Cross currency swaps- - - - ----
d) Equity swaps- - - - ----
e) Forwards- - - - ----
f) Futures- - - - ----
g) Other- - - - ----
Total- - 14.005 - --25.982-
\"\"
A.3 OTC financial derivatives held for trading: notional amounts, gross positive and negative fair value by counterparty
Underlying assets Central counterparties Banks Other financial corporations Other entities
Contracts not included in netting agreements
1) Debt securities and interest rates \u00a0\u00a0\u00a0\u00a0
- notional amount X1.091.177 - 5.752
- positive fair value X12.313 - 153
- negative fair value X14.005 - -
2) Equity securities and share indexes \u00a0\u00a0\u00a0\u00a0
- notional amount X25.393 - -
- positive fair value X430 - -
- negative fair value X- - -
3) Currencies and gold \u00a0\u00a0\u00a0\u00a0
- notional amount X- - -
- positive fair value X- - -
- negative fair value X- - -
4) Commodities \u00a0\u00a0\u00a0\u00a0
- notional amount X- - -
- positive fair value X- - -
- negative fair value X- - -
5) Other \u00a0\u00a0\u00a0\u00a0
- notional amount X- - -
- positive fair value X- - -
- negative fair value X- - -
Contracts included in netting agreements \u00a0\u00a0\u00a0\u00a0
1) Debt securities and interest rates \u00a0\u00a0\u00a0\u00a0
- notional amount - - - -
- positive fair value - - - -
- negative fair value - - - -
2) Equity securities and share indexes \u00a0\u00a0\u00a0\u00a0
- notional amount - - - -
- positive fair value - - - -
- negative fair value - - - -
3) Currencies and gold \u00a0\u00a0\u00a0\u00a0
- notional amount - - - -
- positive fair value - - - -
- negative fair value - - - -
4) Commodities \u00a0\u00a0\u00a0\u00a0
- notional amount - - - -
- positive fair value - - - -
- negative fair value - - - -
5) Other \u00a0\u00a0\u00a0\u00a0
- notional amount - - - -
- positive fair value - - - -
- negative fair value - - - -
\"\"
A.4 Residual life of OTC financial derivatives: notional amounts
Underlying assets/Residual lifeUp to 1 yearOver 1 to 5 yearsOver 5 yearsTotal
A.1 Financial derivatives on debt securities and interest rates103.879 198.050 795.000 1.096.929
A.2 Financial derivatives on equity securities and share indexes25.393 - - 25.393
A.3 Financial derivatives on exchange rates and gold- - - -
A.4 Financial derivatives on commodities- - - -
A.5 Other financial derivatives- - - -
Total 31.12.2023129.272 198.050 795.000 1.122.322
Total 31.12.2022275.380135.605408.800819.785
\"\"
B. Credit derivatives
The Banca Ifis Group does not hold credit derivatives.
1.3.2 Hedges
Qualitative information
A. Fair value hedging
The Banca Ifis Group's hedges are designed to reduce the Bank's overall exposure to interest rate risk caused by movements in the interest rate curve. Specifically, the hedging strategy is that of a \"package\" of specific hedges on fixed-rate securities in the Group's Proprietary Portfolio with which a \"HTC\" (Held to Collect) business model is associated. These are government bonds issued by the Italian government (BTPs) that pass the \"SPPI test\" prescribed by IFRS 9, and are therefore classified in the balance sheet item \"Financial assets measured at amortised cost - receivables due from customers\".
In hedge accounting, the Group applies standard IFRS 9 and, at the reference date of these Consolidated Financial Statements, only adopts specific hedges (micro fair value hedges) and not general hedges (macro fair value hedges).
Within the micro fair value hedge, debt securities on the asset side are hedged.
The main types of derivatives used are plain interest rate swaps (IRS), which are not listed on regulated markets but are traded on over-the-counter (OTC) circuits.
B. Cash flow hedging
As at 31 December 2023, the Banca Ifis Group does not engage in cash flow hedges.
C. Foreign investment hedges
As at 31 December 2023, the Banca Ifis Group does not engage in net investment hedging in a foreign entity.
D. Hedging instruments
The main causes of ineffectiveness of the model adopted by the Group for verifying the effectiveness of hedges are attributable to the following phenomena:
\u2022mismatch between the notional amount of the derivative and the underlying hedged item recognised at the time of initial designation or generated thereafter, such as in the case of any partial disposals of the hedged securities;
\u2022application of different curves on the hedging derivative and the hedged item for the purpose of performing the effectiveness test on fair value hedges. Derivatives are discounted to Overnight curves, while hedged items are discounted to the indexation curve of the hedging instrument;
\u2022inclusion in the effectiveness test of the value of the variable leg of the hedging derivative, assuming a fair value hedge.
The ineffectiveness of the hedge is promptly detected for the purposes:
\u2022determining the effect on the income statement;
\u2022assessing whether or not hedge accounting rules can continue to be applied.
The Group does not use dynamic hedges, as defined in IFRS 7, paragraph 23C.
E. Items hedged
The main types of items hedged are, at the reference date of the Financial Statements, debt securities on the asset side. They are hedged in micro fair value hedge relationships, using interest rate swaps (IRS) as hedging instruments.
The interest rate risk is generally hedged for all or most of the term of the bond.
To verify the effectiveness of the hedge, the Group uses a prospective effectiveness test measured through the ratio of the delta fair value of each hedging instrument and the related hedged item based on sensitivity analysis of 100 bps on interest rates. The verification of hedging effectiveness through the prospectus described above is performed prior to the designation of the hedging relationship, as an ex-ante estimate, and is subsequently monitored on an ongoing basis and reported periodically to senior management.
Quantitative information
A. Financial hedging derivatives
A.1 Financial hedging derivatives: year-end notional amounts
Underlying assets/Types of derivatives31.12.202331.12.2022
Over the counterOrganised marketsOver the counterOrganised markets
Central counterpartiesWithout central counterpartiesCentral counterpartiesWithout central counterparties
With offsetting agreementsWithout offsetting agreementsWith offsetting agreementsWithout offsetting agreements
1. Debt securities and interest rates--355.700-----
a) Options--------
b) Swaps--355.700-----
c) Forwards--------
d) Futures--------
g) Other--------
2. Equity securities and share indexes--------
a) Options--------
b) Swaps--------
c) Forwards--------
d) Futures--------
g) Other--------
3. Currencies and gold--------
a) Options--------
b) Swaps--------
c) Forwards--------
d) Futures--------
g) Other--------
4. Commodities--------
5. Others--------
Total--355.700-----
\"\"
A.2 Financial hedging derivatives: gross positive and negative fair value - breakdown by product
Positive and negative fair valueChange in value used to recognise hedge ineffectiveness
Types of derivativesTotal 31.12.2023Total 31.12.2022Total 31.12.2023Total 31.12.2022
Over the counterOrganised marketsOver the counterOrganised markets
Central counterpartsWithout central counterpartiesCentral counterpartsWithout central counterparties
With offsetting agreementsWithout offsetting agreementsWith offsetting agreementsWithout offsetting agreements
1. Positive fair value----------
a) Options----------
b) Interest rate swaps----------
c) Cross currency swaps----------
d) Equity swaps----------
e) Forwards----------
f) Futures----------
g) Other----------
Total----------
2. Negative fair value--11.644-------
a) Options----------
b) Interest rate swaps--11.644-------
c) Cross currency swaps----------
d) Equity swaps----------
e) Forwards----------
f) Futures----------
g) Other----------
Total--11.644-------
\"\"
A.3 OTC financial hedging derivatives: notional amounts, gross positive and negative fair value by counterparty
Underlying assetsCentral counterpartiesBanksOther financial corporationsOther entities
Contracts not included in netting agreements
1) Debt securities and interest rates
- notional amountX355.700--
- positive fair valueX---
- negative fair valueX11.644--
2) Equity securities and share indexes
- notional amountX---
- positive fair valueX---
- negative fair valueX---
3) Currencies and gold
- notional amountX---
- positive fair valueX---
- negative fair valueX---
4) Commodities
- notional amountX---
- positive fair valueX---
- negative fair valueX---
5) Other
- notional amountX---
- positive fair valueX---
- negative fair valueX---
Contracts included in netting agreements
1) Debt securities and interest rates
- notional amount----
- positive fair value----
- negative fair value----
2) Equity securities and share indexes
- notional amount----
- positive fair value----
- negative fair value----
3) Currencies and gold
- notional amount----
- positive fair value----
- negative fair value----
4) Commodities
- notional amount----
- positive fair value----
- negative fair value----
5) Other
- notional amount----
- positive fair value----
- negative fair value----
\"\"
A.4 Residual life of OTC financial hedging derivatives: notional amounts
Underlying assets/Residual lifeUp to 1 yearOver 1 to 5 yearsOver 5 yearsTotal
A.1 Financial derivatives on debt securities and interest rates-94.200261.500355.700
A.2 Financial derivatives on equity securities and share indexes----
A.3 Financial derivatives on exchange rates and gold----
A.4 Financial derivatives on commodities----
A.5 Other financial derivatives----
Total 31.12.2023-94.200261.500355.700
Total 31.12.2022----
\"\"
B. Credit hedging derivatives
The Banca Ifis Group does not hold credit derivatives designated as hedging instruments.
C. Non-derivative hedging instruments
The Banca Ifis Group does not hold any non-derivative instruments designated as hedging instruments.
D. Instruments hedged
D.1 Fair value hedges
Specific hedges: carrying amountSpecific hedges - net positions: carrying amount of assets or liabilities (before netting)Specific hedgesGeneral hedges: Carrying amount
Cumulative changes in the fair value of the hedged instrumentTermination of hedging: residual cumulative changes in fair valueChange in value used to recognise hedge ineffectiveness
A. Assets
1. Financial assets measured at fair value through other comprehensive income - hedges of:------
1.1 Debt securities and interest rates-----X
1.2 Equity securities and share indexes-----X
1.3 Currencies and gold-----X
1.4 Loans and receivables-----X
1.5 Other-----X
2. Financial assets measured at amortised cost - hedge of:378.003-12.613-12.613-
2.1 Debt securities and interest rates378.003-12.613-12.613X
2.2 Equity securities and share indexes-----X
2.3 Currencies and gold-----X
2.4 Loans and receivables-----X
2.5 Other-----X
Total 31.12.2023378.003-12.613-12.613-
Total 31.12.2022------
B. Liabilities
1. Financial liabilities measured at amortised cost - hedge of:------
1.1 Debt securities and interest rates-----X
1.2 Currencies and gold-----X
1.3 Other-----X
Total 31.12.2023------
Total 31.12.2022------
\"\"
D.2 Cash flow hedges and foreign investment hedges
As at 31 December 2023, the Banca Ifis Group does not engage in cash flow hedges or net investment hedges in a foreign entity.
E. Effects of hedging transactions on equity
As at 31 December 2023, the Banca Ifis Group does not enter into any accounting hedges, the effects of which are shown in equity.
1.3.3 Other information on derivative instruments (trading and hedging)
A. Financial and credit derivatives
A.1 OTC financial and credit derivatives: net fair values for counterparties
Central counterpartiesBanksOther financial corporationsOther entities
A. Financial derivatives
1) Debt securities and interest rates
- notional amount- 1.446.876 - 5.752
- net positive fair value- 12.313 - 153
- net negative fair value- 25.649 - -
2) Equity securities and share indexes\u00a0\u00a0\u00a0\u00a0
- notional amount- 25.393 - -
- net positive fair value- 430 - -
- net negative fair value- - - -
3) Currencies and gold\u00a0\u00a0\u00a0\u00a0
- notional amount- - - -
- net positive fair value- - - -
- net negative fair value- - - -
4) Commodities\u00a0\u00a0\u00a0\u00a0
- notional amount- - - -
- net positive fair value- - - -
- net negative fair value- - - -
5) Other\u00a0\u00a0\u00a0\u00a0
- notional amount- - - -
- net positive fair value- - - -
- net negative fair value- - - -
B. Credit derivatives\u00a0\u00a0\u00a0\u00a0
1) Protection purchase\u00a0\u00a0\u00a0\u00a0
- notional amount- - - -
- net positive fair value- - - -
- net negative fair value- - - -
2) Protection sale\u00a0\u00a0\u00a0\u00a0
- notional amount- - - -
- net positive fair value- - - -
- net negative fair value- - - -
\"\"
1.4 Liquidity risk
Qualitative information
A. General aspects, management procedures and measurement methods of the liquidity risk
The liquidity risk refers to the possibility that the Group fails to service its debt obligations due to the inability to raise funds or sell enough assets on the market to address liquidity needs. The liquidity risk also refers to the inability to secure new adequate financial resources, in terms of amount and cost, to meet its operating needs and opportunities, hence forcing the Group to either slow down or stop its operations, or incur excessive funding costs in order to service its obligations, significantly affecting its profitability.
At 31 December 2023, financial sources mainly consisted of equity, online funding (Rendimax product), consisting of on-demand and time deposits, medium/long-term bonds issued as part of the EMTN programme, medium/long-term securitisation transactions, as well as funding from corporate customers. Funding in the form of repurchase agreements, entered into with leading banks, continued to be a significant source of funding in 2023. Finally, with regard to the Eurosystem's funding (TLTRO), it remained an important form of funding at the end of 2023. However, also in view of the fact that 2024 will see the natural end of maturity of these instruments, it was decided to bring forward the redemption of 500 million Euro already to the end of 2023, bringing the amount used from approximately 2 billion Euro to about 1,5 billion Euro.
The Group's activities consist of factoring operations, which focus mainly on trade receivables and receivables due from Italy's public administration maturing within the year, and medium/long-term receivables deriving mainly from Leasing, Corporate banking, Structured Finance and Workout, Restructuring & Recovery operations; security portfolio management, mainly comprising eligible and readily liquid Italian government securities are also important.
As for the Group's operations concerning the Npl Segment and the unit relative to purchases of tax receivables arising from insolvency proceedings, the characteristics of the business model imply a high level of variability concerning both the amount collected and the date of actual collection. Therefore, the timely and careful management of cash flows is particularly important. To ensure expected cash flows are correctly assessed, also with a view to correctly pricing the transactions undertaken, the Group carefully monitors the trend in collections compared to expected flows.
The Group is constantly striving to improve the state of its financial resources, in terms of both size and cost, so as to have available liquidity reserves adequate for current and future business volumes.
The amount of high-quality liquidity reserves (mainly consisting of the balance of the management account with the Bank of Italy and the free portion of eligible securities) makes it possible to meet regulatory requirements (with respect to the limits of LCR and NSFR) and internal requirements relating to prudent management of liquidity risk.
The objective of the Group's operational liquidity management is to ensure the Banca Ifis Group's ability to meet its cash payment commitments over the short-term time horizon. The essential condition for normal business continuity in banking is the maintenance of a sustainable imbalance between cash inflows and outflows in the short term. From a management point of view, the reference metric in this respect is the difference between the net cumulative cash flow and the Counterbalancing Capacity, i.e. the liquidity reserve to cope with short-term stress conditions, in addition to the regulatory measure of the Liquidity Coverage Ratio (LCR). From a very short-term perspective, the Group adopts the intraday liquidity analysis and monitoring system with the aim of ensuring the normal development of the Bank's treasury day and its ability to meet its intraday payment commitments.
The Group's structural liquidity management aims to ensure the financial balance of the structure by maturity over the time horizon of more than one year. Maintaining an adequate ratio of medium- to long-term liabilities to assets is aimed at avoiding pressure on short-term funding sources, both current and prospective. The reference metrics refer to the regulatory indicator of the Net Stable Funding Ratio (NSFR) and, management-wise, to the gap ratios, which measure both the ratio of total funding and loans with maturities over 1 year and over 3 and 5 years.
The main indicators used by the Banca Ifis Group to assess its liquidity profile are as follows:
\u2022Liquidity Coverage Ratio (LCR), which is the short-term liquidity indicator and corresponds to the ratio of the amount of High Quality Liquidity Assets to total net cash outflows over the next 30 calendar days. As of 2018, the indicator is subject to a minimum regulatory requirement of 100%;
\u2022Net Stable Funding Ratio (NSFR), which is the 12-month structural liquidity indicator and corresponds to the ratio of the available amount of stable funding to the required amount of stable funding. For this indicator, the regulatory minimum requirement has been set at 100% as of 2021.
Below are the two indicators in the reporting year compared with the previous year.
4Q 2022
1Q 2023
2Q 2023
3Q 2023
4Q 2023
LCR
542%
869%
1.073%
1.229%
1.149%
NSFR
123%
130%
127%
133%
133%
\"\"
Both indicators thus remain well above regulatory limits, confirming a more than adequate liquidity position in terms of both operational and structural liquidity.
With specific reference to climatic and environmental risk factors, the materiality analysis conducted led to their quantification as non-material, due to the low impact of these factors in terms of available cash reserves and related cash outflows on the Group's funding.
The corporate functions of the Parent company responsible for ensuring the correct application of the liquidity policy are the Capital Markets function, which is responsible for the direct management of liquidity, the Risk Management function, which is responsible for proposing the risk appetite, identifying the most appropriate risk indicators and monitoring their performance in relation to the set limits and supporting the activities of Top Management. The latter has the task, with the support of the Capital Markets function, of proposing funding and liquidity risk management policies to the Board of Directors on an annual basis and suggesting during the course of the year any appropriate measures to ensure that activities are carried out in full compliance with approved risk policies.
As part of the continuous process to update procedures and policies concerning liquidity risk, and taking into account the changes in the relevant prudential regulations, the Parent uses an internal liquidity risk governance, monitoring, and management framework at the Group level.
In compliance with supervisory provisions, the Group also has a Contingency Funding Plan aimed at protecting it from losses or threats arising from a potential liquidity crisis and guaranteeing business continuity even in the midst of a serious emergency arising from its own internal organisation and/or the market situation.
The liquidity risk position is periodically reported by the Risk Management function to the Banca Ifis Board of Directors.
With reference to the Polish and Rumanian subsidiaries, treasury operations are coordinated by the Parent company.
Quantitative information
1. Breakdown by residual contractual duration of financial assets and liabilities - Currency: Euro
Items/Duration
on demand
over 1 to 7 days
over 7 to 15 days
over 15 days to 1 month
over 1 to 3 months
over 3 to 6 months
over 6 months to 1 year
over 1 to 5 years
Over 5 years
indefinite life
On-balance-sheet assets
1.141.409
44.222
222.142
666.533
1.536.141
657.607
953.894
5.055.817
2.077.891
34.359
A.1 Government bonds
483
-
56.522
219.596
239.376
28.947
82.557
973.300
508.000
-
A.2 Other debt securities
10.163
892
602
4.911
6.165
19.246
118.840
819.958
389.858
-
A.3 UCITS units
75.359
-
-
-
-
-
-
-
-
-
A.4 Loans
1.055.404
43.330
165.018
442.026
1.290.600
609.414
752.497
3.262.559
1.180.033
34.359
- banks
335.407
231
482
537
2.834
7
14
71
-
27.328
- customers
719.997
43.099
164.536
441.489
1.287.766
609.407
752.483
3.262.488
1.180.033
7.031
On-balance-sheet liabilities
1.098.601
51.059
219.351
390.325
989.459
911.420
2.415.721
3.264.936
2.287.386
-
B.1 Deposits and current accounts
1.094.512
48.275
67.627
147.037
779.725
500.767
990.511
1.583.336
-
-
- banks
19
-
-
-
-
-
-
-
-
-
- customers
1.094.493
48.275
67.627
147.037
779.725
500.767
990.511
1.583.336
-
-
B.2 Debt securities
17
-
-
18.283
11
349.998
53.537
1.013.951
1.853.043
-
B.3 Other liabilities
4.072
2.784
151.724
225.005
209.723
60.655
1.371.673
667.649
434.343
-
Off-balance-sheet transactions
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
C.1 Financial derivatives with exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.2 Financial derivatives without exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
583
-
-
-
-
-
-
-
-
-
- short positions
14.005
-
-
-
-
-
-
-
-
-
C.3 Deposits and loans to be received
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.4 Commitments to disburse funds
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
46.448
-
-
4.083
3.574
4.188
8.282
72.392
34.089
-
- short positions
90.316
-
-
1.666
866
2.056
1.263
48.850
28.039
-
C.5 Financial guarantees granted
-
-
-
-
-
-
-
-
-
-
C.6 Financial guarantees received
-
-
-
-
-
-
-
-
-
-
C.7 Credit derivatives with exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.8 Credit derivatives without exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
\"\"
1. Breakdown by residual contractual duration of financial assets and liabilities - Currency: Other currencies
Items/Duration
on demand
over 1 to 7 days
over 7 to 15 days
over 15 days to 1 month
over 1 to 3 months
over 3 to 6 months
over 6 months to 1 year
over 1 to 5 years
Over 5 years
indefinite life
On-balance-sheet assets
24.874
46.924
14.239
25.927
99.862
10.096
-
76
-
-
A.1 Government bonds
-
-
-
-
-
-
-
-
-
-
A.2 Other debt securities
-
-
-
-
-
-
-
-
-
-
A.3 UCITS units
1.551
-
-
-
-
-
-
-
-
-
A.4 Loans
23.323
46.924
14.239
25.927
99.862
10.096
-
76
-
-
- banks
13.903
38.031
-
-
-
-
-
-
-
-
- customers
9.420
8.893
14.239
25.927
99.862
10.096
-
76
-
-
On-balance-sheet liabilities
74.970
101.187
3.166
12.956
-
-
-
62
-
-
B.1 Deposits and current accounts
74.970
101.187
3.166
12.956
-
-
-
-
-
-
- banks
-
101.187
3.166
12.956
-
-
-
-
-
-
- customers
74.970
-
-
-
-
-
-
-
-
-
B.2 Debt securities
-
-
-
-
-
-
-
-
-
-
B.3 Other liabilities
-
-
-
-
-
-
-
62
-
-
Off-balance-sheet transactions
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
C.1 Financial derivatives with exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.2 Financial derivatives without exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.3 Deposits and loans to be received
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
8.757
-
-
-
-
-
-
-
-
- short positions
-
8.757
-
-
-
-
-
-
-
-
C.4 Commitments to disburse funds
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.5 Financial guarantees granted
-
-
-
-
-
-
-
-
-
-
C.6 Financial guarantees received
-
-
-
-
-
-
-
-
-
-
C.7 Credit derivatives with exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.8 Credit derivatives without exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
\"\"
Self-securitisation transactions
Ifis Npl 2021-1 Spv
In March 2021, Banca Ifis realised for financing purposes, through its subsidiary Ifis Npl Investing, the very first securitisation in Italy of a non-performing portfolio mainly comprising unsecured loans backed by Garnishment Orders. The transaction is an innovative solution for this type of non-performing exposure, where the debt collection procedure through compulsory enforcement (attachment of one fifth of the salary) is at an advanced stage. The transaction aimed to collect funding for Ifis Npl Investing of up to 350 million Euro in liquidity on the institutional market, without deconsolidating the underlying credits. The loan portfolios concerned by the transaction (a portfolio of secured loans and an unsecured portfolio backed by Garnishment Orders) owned by the subsidiary Ifis Npl Investing, was transferred to a newly-established SPV called Ifis Npl 2021-1 Spv S.r.l., which issued senior, mezzanine and junior notes. These tranches were initially fully subscribed by Ifis Npl Investing, and subsequently the senior tranches (net of the 5% retained by Ifis Npl Investing as originator pursuant to the retention rule) were sold to Banca Ifis.
At 31 December 2023 the Banca Ifis Group had therefore subscribed all the notes issued by the vehicle. It should be noted that the senior tranches held by Banca Ifis were used for long term repo transactions with leading banking counterparties.
On the basis of the contractual terms underlying the securitisation in question, there is no substantial accounting transfer (\u201cderecognition\" in accordance with IFRS 9) of all the risks and rewards relating to the receivables being sold to the vehicle company.
Securitisation transactions
As for the securitisations outstanding at 31 December 2023 and their purpose, see the comments in the section on credit risks.
1.5 Operational risks
Qualitative information
A. General aspects, management procedures and measurement methods concerning operational risk
Operational risk is the risk of losses arising from inadequate or dysfunctional processes, human resources, internal systems or external events. This definition does not include strategic risk and reputational risk, but it does include legal risk (i.e. the risk of losses deriving from failure to comply with laws or regulations, contractual or extra-contractual liability, or other disputes), IT risk, risk of non-compliance, fraud risk, risk of money laundering and terrorist financing, and the risk of financial misstatement.
The main sources of operational risk are operational errors, inefficient or inadequate operational processes and controls, internal and external frauds, the outsourcing of business functions, the quality of physical and logical security, inadequate or unavailable hardware or software systems, the growing reliance on automation, staff below strength relative to the size of the business, and inadequate human resources management and training policies.
The Banca Ifis Group has adopted for a while now - consistently with the relevant regulatory provisions and industry best practices - an operational risk management framework. This consists in a set of rules, procedures, resources (human, technological and organisational), and controls aiming to identify, assess, monitor, prevent or mitigate all existing or potential operational risks in the various organisational units, as well as to communicate them to the competent levels. The key processes for the proper management of operational risk are represented:
\u2022by the Loss Data Collection activity, i.e. the structured collection and census of losses deriving from operational risk events, which is consolidated thanks also to the constant activity by the Risk Management function to disseminate among the corporate structures a culture oriented towards the awareness and proactive management of operational risks;
\u2022by the prospective self-assessment of risk exposure through the execution of periodic Risk Self Assessment and Model Risk Self Assessment campaigns, aimed at obtaining an overall view of risks in terms of frequency and/or potential financial impact and the related organisational safeguards.
With specific reference to the monitoring of the evolution of ICT and Security risk and the assessment of the effectiveness of ICT resource protection measures, the Banca Ifis Group, in compliance with the regulatory requirement2 has opted for a shared responsibility model, assigning tasks to the Risk Management and Compliance corporate control functions, in relation to the roles, responsibilities and competences of each of the two functions. In particular, the Risk Management function conducts ICT and security risk analysis processes in accordance with the organisational and methodological framework approved by the Board of Directors in order, for example, to verify compliance with the ICT and security risk propensity level, the related risk objectives that the Group intends to achieve, and the resulting operational limits. If the level of ICT and security risk exceeds the defined threshold value, in order to bring it back within the acceptable risk threshold, measures are identified to deal with it, which flow into the \"Treatment Plan\" that identifies responsibilities for implementing individual corrective actions.
The results of the above-mentioned analyses are reported in the \"Summary Report on the ICT and Security Risk Situation\" subject to annual approval by the CEO in his capacity as the body with management functions.
In addition, according to its operational risk management framework (including the ICT and Security risk), the Group defines a set of measures that can promptly identify the presence of vulnerabilities in the exposure of the Bank and its subsidiaries to operational risks. These measures are continuously monitored and disclosed in periodic reports through synthetic risk measures that are shared with the competent structures and bodies: events such as the breach of certain thresholds or the emergence of anomalies trigger specific escalation processes aimed at defining and implementing appropriate mitigation actions. In addition, as part of the definition of the Risk Appetite Framework (RAF), the preparation of the Recovery Plan and ICAAP reporting, Risk Management function performs analyses by which it assesses its exposure to exceptional but plausible operational risk events. These analyses, referred to as stress analyses, contribute to verifying the resilience of the Group by simulating the impacts of adverse situations in terms of riskiness under the assumption of adverse scenarios.
In order to prevent and manage operational risk, the Parent company's Risk Management function, in collaboration with the other corporate functions, is involved in supervising the risks connected with the supply contracts with
2 On 2 November 2022, the Bank of Italy issued the 40th update of the \"Supervisory Provisions for Banks\", amending Chapter 4 \"The Information System\" and Chapter 5 \"Business Continuity\" of Part One, Title IV, to implement the \"Guidelines on Information Technology (ICT) Risk Management and Security\" (EBA/GL/2019/04) issued by the EBA. On this occasion, some work was also carried out to reconcile and update the internal references in Section I of Chapter 3 \"The Internal Controls System\".
third parties and the outsourcing of simple, essential or important operational functions and in assessing the risks associated with the introduction of new products and services and the preliminary assessment of the operative impact of the massive changes to the product contractual and economic conditions.
Concerning the companies of the Banca Ifis Group, please note that the management of operational risks is guaranteed by the strong involvement of the Parent company, which makes decisions in terms of strategies, also in respect of risk management.
To calculate capital requirements against operational risks, the Group adopted the Basic Indicator Approach.
Alongside operational risk, reputational risk is also managed.
Reputational risk represents the current or prospective risk of a decrease in profits or capital deriving from a negative perception of the Group's image by customers, counterparties, shareholders, investors or the Supervisory Authorities.
Reputational risk is considered a second-level risk, as it is generated by the manifestation of other types of risk, such as the risk of non-compliance, strategic risk and in particular operational risks.
As in the case of operational risk, the Parent's Risk Management function is responsible for managing reputational risk: it defines the Group's overall framework - in accordance with the relevant regulations as well as industry best practices - for the management of reputational risk, with the goal of identifying, assessing, and monitoring the reputational risks that the Group's Companies or organisational units assume or may assume. The framework involves conducting a forward-looking Reputational Risk Self-Assessment, and defining and monitoring a set of risk measures over time. The principles and guidelines that the Banca Ifis Group intends to adopt in the area of operational and reputational risk management are expressed in the \"Group Policy for Operational and Reputational Risk Management\" applied and disseminated, to the extent of its competence, to all organisational units of the Bank and Group companies. Similarly, with regard to the fundamentals inspiring IT risk management, there is a \"Group Policy for ICT and Security Risk Management\" in force, which operates both at the level of the Parent company Banca Ifis and its subsidiaries.
Quantitative information
This section provides a summary view of the results of the Loss Data Collection process at 31 December 2023 conducted at the Banca Ifis Group level. Operational events are subdivided by Event Type.
85% of the gross operating losses recognised in 2023, including provisions made, were attributable to events classified within Event Type categories ET_07 \"Execution, Delivery and Process Management\", ET_04 \"Customers, Products and Professional Practices\" and ET_02 \"External Fraud\". Total net operating losses amount to approximately 50% and, as a result, 50% of the gross operating losses recognised in 2023 were recovered. Below are the details per Event Type.
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A. Credit quality
A.1 Non-performing and performing credit exposures: amounts, impairment losses, trend, and economic breakdown
A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying amounts)
Portfolio/QualityBad loansUnlikely to payNon-performing past dueexposuresPerforming past due exposuresOther performing exposuresTotal
1. Financial assets measured at amortised cost1.301.527 444.023 109.533 230.248 9.174.370 11.259.701
2. Financial assets measured at fair value through other comprehensive income- - - - 634.306 634.306
3. Financial assets designated at fair value- - - - - -
4. Other financial assets mandatorily measured at fair value2.466 4.564 - - 86.991 94.021
5. Financial assets under disposal- - - - - -
Total 31.12.20231.303.993 448.587 109.533 230.248 9.895.667 11.988.028
Total 31.12.20221.152.704486.402147.606225.0479.420.60511.432.364
\"\"
Excluded from this table are on-demand receivables from banks (which are classified under the item \"Cash and cash equivalents\", in accordance with Bank of Italy instructions), equity securities and UCITS units.
A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net amounts)
Portfolio/QualityNon-performingPerformingTotal(net exposure)
Gross exposureOverall impairment losses/reversalsNet exposure Overall partial write-offs (1)Gross exposureOverall impairment losses/reversalsNet exposure
1. Financial assets measured at amortised cost2.035.592 180.510 1.855.082 3.149 9.517.793 113.174 9.404.619 11.259.701
2. Financial assets measured at fair value through other comprehensive income- - - - 635.469 1.163 634.306 634.306
3. Financial assets designated at fair value- - - - XX- -
4. Other financial assets mandatorily measured at fair value7.030 - 7.030 - XX86.991 94.021
5. Financial assets under disposal- - - - - - - -
Total 31.12.20232.042.622 180.510 1.862.112 3.149 10.153.262 114.337 10.125.916 11.988.028
Total 31.12.20221.938.159151.4481.786.7113.7309.665.62496.5539.645.65311.432.364
\"\"
(1) Amount to be reported for disclosure purposes
Excluded from this table are on-demand receivables from banks (which are classified under the item \"Cash and cash equivalents\", in accordance with Bank of Italy instructions), equity securities and UCITS units.
Portfolio/Quality
Low creditquality assets
Other assets
Accumulated capital losses
Net exposure
Net exposure
1. Financial assets held for trading
2. Hedging derivatives
-
-
12.896
Total 31.12.2023
-
-
12.896
Total 31.12.2022
9
4
26.271
\"\"
Equity securities are not included in this table.
1.1 Credit risk
Qualitative information
1. General aspects
In accordance with the guidelines approved by the Parent company's Governing Body and the changes in the supervisory regulatory framework, the Group seeks to strengthen its competitive position in the market offered to small and medium enterprises (SMEs). The aim is to increase its market share in the following segments: trade receivables, including for entities with specialist needs such as pharmacies, leasing, tax receivables, and distressed loans, providing high-quality and highly customisable financial services while keeping credit risk under control and profitability in line with the level of quality offered. The Private segment is also a complementary reference market for the Banking Group\u2019s credit business, in respect of the strategic guidelines defined over time by the 2022-2024 Business Plan and the related implementing initiatives. Operations related to the pharmaceutical segment are carried out by the subsidiary Banca Credifarma, a banking operator specialising in granting advances, medium- to long-term loans and financial services to pharmacies.
As at the date of these Consolidated Financial Statements, the Banking Group's business activities are conducted in the following areas:
\u2022the factoring business is characterised by the direct assumption of risks related to granting advances and loans, as well as guarantees, if any, on trade receivables of mainly SMEs. As part of its operations, the factoring Area purchases receivables due from public health service and local authorities outright;
\u2022Corporate Lending and Structured Finance operations, which focus on offering medium and long-term financing and secured and unsecured products to support companies operating in Italy in their organic or inorganic growth through extraordinary operations to reposition or expand their business, establish alliances or pursue integrations, promote restructuring processes, or introduce new investors and partners into the company. The clients of this unit are usually corporations;
\u2022investments in non-financial companies and in units of intermediaries;
\u2022medium/long-term loans to SMEs operating in the main production sectors, covered by the public guarantee, conceived by the Ministry of Economic Development (MED) of the Central Guarantee Fund;
\u2022the leasing Area targets mainly small economic operators as well as SMEs. In general, finance leases help independent contractors and businesses finance company cars and commercial vehicles as well as facilitate equipment investments for businesses and resellers. Meanwhile, long-term leases mainly focus on equipment finance - specifically on office and IT products and, to a lesser extent, industrial and healthcare equipment;
\u2022the acquisition of non-performing loans (Npls) by the subsidiaries Ifis Npl Investing and Revalea, mainly from retail customers;
\u2022servicing (master and special services), management of Npl portfolios with collection both judicial and non-judicial, consultancy in due diligence activities and authorised investors in Npl transactions, managed by the company Ifis Npl Servicing;
\u2022the granting of loans to retail customers, including through the definition and refinancing of transferred non-performing loans, to be settled through salary- or pension-backed loan schemes, managed by the subsidiary Cap.Ital.Fin.;
\u2022short- and medium-term lending to pharmacies by the subsidiary Banca Credifarma, including through the disposal of receivables due from Italy's National Health Service as well as public- and private-sector healthcare providers;
\u2022management of the proprietary portfolio, carried out mainly via financial investments in bonds, mostly government bonds, and listed equities;
\u2022securitisation activities, which are aimed at segment operators, in particular originators and investors, by offering finance through investments in asset-backed securities (ABS) and other exposures to securitisation schemes, and by taking on the roles of arranger and sponsor in the context of such transactions with a view to cross-selling. Investments are mainly concentrated in senior and mezzanine tranches with underlying performing assets and with a favourable trade-off in terms of expected profitability compared to risk weighting.
Given the particular business of the Group's companies, credit risk is the most important element to consider as far as the general risks assumed by the Group are concerned. Maintaining an effective credit risk management is a strategic objective for the Banca Ifis Group, pursued by adopting integrated tools and processes that ensure
proper credit risk management at all stages (appraisal, lending, monitoring and management, and interventions on troubled loans).
2. Credit risk management policies
As part of its lending operations, the Banca Ifis Group is exposed to the risk that an unexpected change in the creditworthiness of a counterparty may cause an unforeseen change in the relevant credit exposure, requiring to write off all or part of the receivables. This risk is always inherent in conventional lending operations, regardless of the form of financing.
The main reasons for non-compliance are the lack of the borrower's independent capacity to service and repay the debt (due to lack of liquidity, insolvency, etc.) and the occurrence of circumstances that affect the borrower's economic and financial conditions, such as the \"country risk\".
With regard to impaired purchased receivables (POCI), an additional risk to which the Group is exposed is the risk of inadequate collection, i.e., losses incurred due to the failure to collect receivables from defaulting counterparties.
2.1 Organisational aspects
The standards and guidelines that the Banca Ifis Group intends to give in respect of the concession of credit are set out in the \"Group Credit Policy\" applied and given out, insofar as competent, to all the organisational units of the Bank and Group companies involved in the assumption and management of credit.
Inside, we find:
\u2022the roles and responsibilities of the corporate bodies and organisational structures involved in the loan process;
\u2022the definition of the credit strategies and rules with reference to segments of customers, counterparties and types of comparable transactions, the limits of reliance assigned to non-banking counterparties, the limits to exposure assigned to the various types of economic businesses, the identification of the Most Significant Transactions (MSTs) for the preventive verification that they are indeed consistent with the risk limits and objectives defined in the Group Risk Appetite Framework (RAF), the limits to the risk assigned to transactions with related parties and/or company representatives, pursuant to Art. 136 of the Consolidated Law on Banking. The monitoring, review and update of the credit rules and strategies involve:
\u2013the Parent company\u2019s Large Risks & Monitoring organisational unit, in coordinating the process of formulating proposed reviews and updates to the credit policies to be submitted for the approval of the Parent company's Board of Directors;
\u2013the Parent company\u2019s Risk Management Department in monitoring the results achieved by the Group in terms of volumes and overall effective positioning on the credit market in line with the defined credit strategies;
\u2022the most qualifying elements in the credit process, with specific reference:
\u2013to the definition of risk categories to be assigned to customers, according to the different risk profile that can be attributed to the technical loan forms involved, closely linked to the operative processes connected with the \"Group System of delegated powers\" on the assumption of the credit risk;
\u2013to the examination of all useful information, both internal and external, functional to the determination of the customer's credit rating and future solvency of the debtor, measuring the credit risk firstly using normal sources for the repayment of exposure and, thereafter, considering the use of the accessory guarantees connected with the credit intervention;
\u2022the monitoring and review of the model used to define credit faculties or the matrix of faculties for granting credit and the related limits;
\u2022the structuring of the credit process, in its comprehensive cycle, into two macro processes of \"investigation and disbursement of credit\" and \"monitoring and collection of debt\".
On an operative level, the various Group companies structure the specific operating procedures for the application of credit rules into Organised Procedures or Operative Notes.
Within the Banca Ifis Group, the corporate bodies of Banca Ifis and the banks and other financial subsidiaries play a key role in managing and controlling credit risk, ensuring an appropriate supervision of credit risk within the scope of their responsibilities by identifying strategic guidelines as well as risk management and control policies, assessing their efficiency and effectiveness over time, and defining the duties and responsibilities of the corporate functions involved in the relevant processes.
Under the current organisational structure, specific central areas are involved in credit risk management and governance, ensuring, with the appropriate level of segregation, the performance of management operations as well as first and second line of defence controls by adopting adequate processes and IT applications.
Overall, despite some differences deriving from the various products/portfolios, the lending process follows a shared organisational approach with various operational stages and roles, responsibilities, and controls at different levels.
Specifically, Banca Ifis's organisational structure consists of the following Business Units, dedicated to different activities, centralised in the Co-General Manager Chief Commercial Officer (COO):
\u2022Commercial & Corporate Banking Underwriting dedicated, both with reference to the initial granting of credit and renewal and review activities, to assessing the creditworthiness of the counterparties as well as the risk inherent in the transactions and approving credit facilities in compliance with the powers assigned to it by the Board of Directors and formalised in the Group's System of Delegated Authorities for the assumption of credit risk;
\u2022Commercial Banking, dedicated to the promotion of financing services to domestic and foreign companies and to the care of the correct relationship with the counterparties developed directly or indirectly, as well as the debtors (domestic or foreign) acquired as part of the operations carried out;
\u2022Corporate & Investment Banking, dedicated to Structured Finance transactions or investments in performing non-financial companies and intermediaries;
\u2022Pharmacies, directly manages existing portfolio relationships with domestic pharmacy counterparties in close cooperation with the organisational units of the subsidiary Banca Credifarma;
\u2022Insurance, dedicated to the insurance products offered to its customers;
\u2022Leasing and Rental, dedicated to offering and managing leasing and renting products;
\u2022Marketing & Business Strategy, supporting the business units reporting to the Co-General Manager Chief Commercial Officer;
\u2022Tax Credit, dedicated to the purchase of tax credits from companies in insolvency proceedings, in voluntary liquidation and from performing companies;
\u2022Individuals, dedicated to the development of products, services and business opportunities related to transactional and funding banking services in relation to the Private customer segment;
\u2022Anti-Fraud, dedicated to overseeing the transversal coordination of the Group structures that manage the offer of products to customers with respect to the execution of controls on the prevention and assessment of fraud attempts and the implementation of response actions.
Finally, at the reporting date the lending process include the operations of the following subsidiaries:
\u2022Ifis Npl Investing S.p.A., company dedicated to the acquisition and transfer of non-performing loans (Npls), mainly originated by financial institutions and banks;
\u2022Ifis Npl Servicing S.p.A., company specialising in the management of Npls and servicing and recovery activities on behalf of third parties;
\u2022Revalea S.p.A., a company set up in 2022 from the spin-off of Npls arising from the acquisition of non-performing loan portfolios and acquired by the Banca Ifis Group in October 2023, as part of the long-term partnership signed with the Mediobanca Group for the management of Npls (for more details, see the section \"Significant events during the year\" in the Directors' Report on the Group);
\u2022Cap.Ital.Fin. S.p.A., which provides salary- or pension-backed loans, payment delegation as well as salary or pension deductions and distributes financial products such as mortgages and personal loans;
\u2022Banca Credifarma S.p.A., a banking operator mainly targeting the pharmacy and healthcare sectors and operating in the business of granting advances, medium and long-term loans and financial services to pharmacies;
\u2022Ifis Finance Sp. z o.o. and Ifis Finance I.F.N. S.A., factoring companies operating in Poland and Romania respectively;
\u2022Ifis Rental Services S.r.l., an unregulated entity specialising in operating leases.
Ordinary credit organisational aspects
Each organisational unit develops and manages business relationships and opportunities in its respective segment by working together with the branches located throughout Italy, in accordance with the strategic guidelines and objectives set by the Board of Directors.
As for the lending process, each business unit identifies the opportunities for new transactions in accordance with the lending policies in force and the defined risk appetite; in this context, it examines loan applications and
formalises a proposal to be submitted to the competent decision-making bodies, ensuring lending policies and controls are implemented correctly and analysing the applicant's creditworthiness in accordance with existing internal regulations.
The proposals to grant lines of credit and/or purchase receivables are submitted to the competent decision-making bodies, which, based on the powers delegated to them, express their decision - which always refers to the overall exposure towards the counterparty (or any related groups).
Banca Ifis's branches have no independent decision-making power for the purposes of assuming credit risk; branches manage ordinary operations with customers under the constant monitoring of the central structures in accordance with the limits and procedures established by the Head Office's competent bodies.
In carrying out their operations, the subsidiaries can independently take certain decisions within the operational and organisational limits defined by the Parent company Banca Ifis.
The line of credit is then finalised: the Bank finalises the agreement, obtains guarantees, if any, and grants the credit line. Throughout these stages, the business units are aided by specific supporting units responsible for preparing the agreement in accordance with the terms of the approval as well ensuring all activities leading to the granting of the credit facility are properly carried out.
The operational management of receivables, carried out for performing customers, mainly consists in the ordinary management and monitoring conducted by dedicated structures at each of the Group's companies with the aim of constantly and pro-actively reviewing borrowers. In addition, a specific organisational unit within the Parent company performs monitoring activities at the Group level to identify counterparties with performance issues, so as to anticipate problems and provide adequate reporting to the competent corporate functions.
If the credit position is in an objective situation of distress, it is transferred to specific functions specialised in managing and recovering non-performing exposures.
Purchased impaired credit (POCI) organisational aspects
\"Purchased or Originated Credit Impaired (POCI) Financial Assets\" means the exposures that were non-performing at the date they were acquired or originated.
POCI financial assets include also the exposures acquired as part of sales (of either individual assets or portfolios) and business combinations.
Interest is accounted for by applying a credit-adjusted effective interest rate, i.e. the rate that, upon initial recognition, discounts all the asset's estimated future cash collections considering also lifetime expected credit losses (\u201cECL lifetime\u201d).
The Bank regularly reviews said expected credit losses, recognising impairment losses or gains through profit or loss. Favourable changes in lifetime ECLs are recognised as an impairment gain, even if said lifetime ECLs are lower than those incorporated into cash flow estimates at initial recognition.
POCIs are conventionally presented at initial registration in Stage 3.
If, as a result of an improvement in the counterparty's credit standing, the POCI assets become \"performing\", they are allocated to Stage 2.
Such assets are never classified in Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual maturity (in other words, a \"lifetime\" horizon must always be maintained and not a 12-month horizon, as is the case for Stage 1 positions).
\u201cAcquired impaired assets\" include loans acquired by the subsidiaries Ifis Npl Investing, Ifis Npl Servicing and Revalea acquired at values significantly lower than their nominal amount, as well as impaired assets resulting from the various IFRS 3 business combinations carried out by the Banca Ifis Group (such as those relating to the former GE Capital Interbanca Group, the former Fbs Group, the companies Credifarma S.p.A., Cap.Ital.Fin. S.p.A., Farbanca S.p.A. and Revalea S.p.A. as well as the former Aigis Banca business). These non-performing assets are included within the POCI perimeter on the basis of the existence, for each individual relationship, of impaired credit quality at the time of the relative acquisition, as required by IFRS 9.
With reference to the process for the acquisition of non-performing loan portfolios (POCI) adopted by the structures of the Npl Segment, similar organisational stages are envisaged as for ordinary credit, which can be summarised as follows:
\u2022origination: the Bank identifies the counterparties from which it plans to purchase the portfolios and assesses the economic expediency of said transactions;
\u2022due diligence, as part of which highly-skilled analysts assess the quality of the portfolio being transferred and the relevant organisational impact. Once the due diligence is completed, the Group sets the terms and
conditions for offering/acquiring the receivables portfolio and how to manage it (individual or collective method), assessing the relevant impact on operating structures;
\u2022Approval: this stage includes the preparation of the file, the decision-making process, and the implementation of the approval by the competent decision-making body;
\u2022finalisation: the parties prepare and finalise the purchase agreement, and the relevant consideration is paid.
Purchases are made directly by originators and/or SPVs (primary market) or, in some circumstances, by operators who have purchased on the primary market and who intend to dispose of their investment for various reasons (secondary market). Receivables - deriving from traditional consumer credit operations, credit cards and special purpose loans - are mainly unsecured; there are also current account balances in the event of transfers by banks.
Right after the acquisition, pending the completion of information retrieval operations to help decide the most appropriate debt recovery method, the receivable is classified in a so-called \"staging\" area and measured at cost with no contribution to profit or loss.
After this phase, which normally lasts 6-12 months, the positions are directed towards the form of management most appropriate to their characteristics (non-judicial and judicial operations), which carries out an activity closely related to the transformation into paying positions and the collection of receivables.
Collection operations for receivables deriving from purchases of distressed retail loans are the responsibility of resources within the subsidiaries Npl Investing, Ifis Npl Servicing and Revalea, as well as of a broad and proven network of debt collection companies and financial agents operating across Italy.
The non-judicial operations consist mainly in the activation of the credit through the debtor's subscription of bills of exchange or voluntary settlement plans; the judicial operations consist, instead, in the transformation through legal action aimed at obtaining from the court the garnishment order of one-fifth of the pension or salary (the existence of which is the necessary prerequisite for the start of this form of transformation) or the sale on the market of the asset to guarantee the credit (secured management). Specific information regarding these operations is provided below.
Finally, there is also an assessment of the expediency of selling non-performing loan (Npl) portfolios, mainly represented by processing codes, statute-barred loans or loans owned by deceased debtors, to be submitted for approval to the competent decision-making bodies, consistently with the established profitability targets and after analysing the relevant accounting, reporting, legal, and operational impacts. To do so, it relies on the in-depth inquiries conducted by the Parent company's competent business functions within their area of expertise.
Non-judicial operations
As for the positions not eligible for judicial operations, after completing the groundwork for processing them, they are classified in a \"collective\" portfolio pending that the recovery process through call centres or recovery networks can culminate with a collection of settlement plans referred to above (in the form of a proposal/acceptance from customer to bank). At this stage, the positions are measured at amortised cost, calculated as the present value of expected cash flows determined on the basis of a proprietary statistical model developed by the Risk Management function on the basis of historical internal data, referred to as \"curve model\"; this model projects collection expectations onto clusters of homogeneous receivables based on the recovery profile historically observed (macro region, amount of credit, seniority of the file with respect to the DBT date, transferor), in addition to prudential adjustments, such as, by way of example, the cap of simulated cash flows for debtors who are older than the life expectancy present in the mortality tables provided by Istat. This method of valuing debt collection flows means that the expected collection profile is decreasing as time passes with respect to the date of purchase of the credit, until the asset value of the credit is reduced to zero when it reaches the tenth year from the date of purchase.
As already indicated in the 2022 Consolidated Financial Statements, the curve model during 2021 has been refined as the models are reviewed biennially in order to lengthen and update the time series, verify cluster tightness and statistical robustness, take into account any new management methods, and evaluate macroeconomic effects. In the course of FY 2023, the re-estimation activity was started, aimed at updating the historical series, assessing relevant changes in the processes to be taken into account in the definition of the perimeter and for the quantification of the Recovery Rates, and carrying out a fine-tuning of the methodological system (e.g. revision of the long list, model development methodologies, smoothing techniques and queue management).
Expectations of collection also take into account the probability of obtaining a settlement plan net of the relative probability of default.
There are two types of settlement (collection) plans that can be entered into:
\u2022bills of exchange: the set of credit positions for which the debtor has signed a settlement plan supported by the issue of bills of exchange. It should be noted that the volume of bills of exchange (internal collection) in the portfolio has been steadily decreasing, since, as a strategic choice, amicable plans with this payment method are no longer collected. Any new collection is therefore exclusively the result of purchased paying practices;
\u2022Demonstrations of Will: the practices for which the recovery process has led to the collection of a voluntary formalised settlement plan by the debtor.
The moment the position obtains a paying settlement plan (\"active plans\"), i.e. after having observed the payment of at least three times the value of the average instalment of the plan, the cash flows of the \"curve model\" are replaced by the cash flows of the \"deterministic model\", which projects the future instalments of the settlement plan agreed with the debtor net of the historically observed default rate and taking into account also in this case a cap to the simulated cash flows if the age of the debtor exceeds what is indicated in the mortality tables of Istat in relation to life expectancy.
Positions that do not obtain a paying settlement plan remain valued by means of the \"curve model\"; this means that as time passes, the probability of collection is reduced also by means of the plan and consequently the expected cash flows are reduced down until zeroing.
As already started in 2021, again in 2022 and 2023, management took part in a new closure method, known as \"balance and write-off of positions\", in order to anticipate recovery while granting a reduction in the amount due (write-off) to the debtor. This method of collection does not replace the methods described above, but involves certain campaigns on specific positions identified by management.
Judicial operations
Positions that meet the requirements (presence of a job or a pension) for judicial processing are initiated in the relevant operations. This also includes (minority) practices that are processed in a logic of real estate attachment of property.
Judicial processing, understood as real estate enforcement action against third parties, is characterised by several legal steps aimed at obtaining an enforcement title, which as a whole usually last 18-24 months (the durations and the relative volatility depend on the court in which the case is handled) and are thus as follows:
\u2022obtaining a court order,
\u2022writ,
\u2022attachment of property and
\u2022garnishment order.
These positions are measured at amortised cost, calculated as the present value of expected cash flows determined on the basis of two proprietary models developed by the Risk Management function on the basis of historical internal data, referred to as \u201cpre-garnishment order Legal Factory model\u201d and \u201cgarnishment model\u201d.
The pre-garnishment order model during 2021 has been recalibrated because, just as was the case for the curve models, the models are reviewed biennially in order to lengthen the time series, verify cluster tightness and statistical robustness, take into account any new management methods, and evaluate macroeconomic effects. FY 2023 saw the start of re-estimation activities aimed at updating the time series, assessing relevant changes in processes to be taken into account in the definition of the scope, quantifying target variables (e.g. modules duration, migration probability, instalment, expenses, rate of potential aggravation) as well as fine-tuning the methodological framework (e.g. revision of the long list of each module, clustering techniques and quantification of estimates).
In addition to the above, judicial operations involve also collection efforts, i.e. foreclosure proceedings, which consist of several stages and apply to portfolios originated in corporate, banking, or real estate segments.
2.2 Management, measurement and control systems
Credit risk is constantly monitored by means of procedures and instruments that can rapidly identify particular anomalies.
Over time, the Banca Ifis Group has implemented instruments and procedures allowing to specifically evaluate and monitor risks for each type of customer and product.
If the applicant passes the evaluation process and is granted a credit facility, the Group starts monitoring the credit risk on an ongoing basis, ensuring repayments are made on time and the relationship remains regular, reviewing the information that the Italian banking system reports to the Central Credit Register or select databases as well as the reputational profile, and examining the underlying causes for each one of these aspects.
Concerning portfolio monitoring operations, as previously mentioned, receivables due from customers are monitored by specific units within the mentioned business units that are responsible for constantly and proactively reviewing borrowers (first line of defence); a specific organisational unit conducts additional monitoring at a centralised level, using mainly performance analysis models -- including models developed by the Parent's Risk Management function -- to identify any potential issues through specific early warning indicators.
Credit risk exposures to companies are assigned a rating based on models developed in-house. These models are differentiated by segment to ensure that appropriate models are applied on homogeneous population from the point of view of characteristics and risk level. There are therefore models for corporations, differentiated by two size clusters, and a model for partnerships and sole proprietorships. The rating models are composed of different modules that investigate different areas of information depending on the type of counterparty and are integrated with qualitative information of different nature.
The rating class represents a fundamental driver for the calculation of write-downs on performing loans; in addition to directly linking the expected loss to the specific risk level of the individual counterparty, rating models enable the activation of the quantitative stage allocation criterion, which, by comparing the riskiness at the time of granting and the current riskiness, makes it possible to assess the significant increase in risk and thus the Stage 2 allocation of the position. The framework for determining expected loss also includes satellite models functional to the introduction of forward-looking elements into the estimates of risk parameters in full compliance with the requirements of IFRS 9.
Risk Management plays a crucial role as part of the second line of defence in measuring and monitoring operations.
Concerning credit risks, the Risk Management function:
\u2022oversees, monitors and assesses credit risks, carrying out audits and analysis in accordance with the relevant guidelines; specifically, it:
\u2013assesses credit quality, ensuring compliance with credit guidelines and strategies by continuously monitoring credit risk indicators;
\u2013constantly monitors exposure to credit risk and compliance with the operating limits assigned to the operating structures in relation to the assumption of credit risk;
\u2013verifies, by means of second-level controls, the correct implementation of performance monitoring on individual exposures, in particular on non-performing exposures, and assesses the consistency of classifications and the adequacy of provisions;
\u2013monitors exposure to concentration risk and the performance of exposures classified as \"Large Exposures\";
\u2022performs quantitative analyses to support the business units in using risk measures;
\u2022oversees the supervision of the value of collateral as well as personal and financial guarantees;
\u2022analyses consistency with the Group's RAF in the areas of asset quality and credit cost.
The Banca Ifis Group pays particular attention to the concentration of credit risk with reference to all the Group's companies, both at an individual and consolidated level. Banca Ifis's Board of Directors has mandated the Top Management to take action to contain major risks. In line with the directives of the Board, those positions that are at risk and engage the Group to a considerable extent are subject to systematic monitoring.
Concerning the credit risk associated with investments in securities and equity, the Group constantly monitors their credit quality, and Parent company Banca Ifis's Board of Directors and Top Management receive regular reports on this matter.
In the context of Basel 3 principles for calculating capital requirements against first-pillar credit risks, Banca Ifis chose to adopt the Standardised Approach. To calculate capital requirements for single-name concentration risk, which falls under second-pillar risks, the Group adopts the Granularity Adjustment method as per Annex B, Title III of Circular No. 285 of 17 December 2013, with a capital add-on calculated using the ABI method to measure geo-segmental concentration risk.
In order to assess its vulnerabilities in terms of capital and liquidity management, the Parent company Banca Ifis has developed quantitative and qualitative techniques with which it assesses its exposure to exceptional but plausible events. These analyses, known as stress tests, measure the impact in terms of risk deriving from a combination of changes in economic-financial variables under adverse scenarios on the Bank and its subsidiaries. These analyses significantly concern credit risk.
The stress tests allow to assess the Group's resiliency by simulating and estimating the impact of adverse circumstances, providing crucial insights into its exposure to risks, the adequacy of the relevant mitigation and control systems, and it ability to deal with unexpected losses -- including in a forward-looking manner and in terms
of planning. In order to perform stress tests, the Group has internally developed methodologies that allow, also by exploiting synergies with satellite models used under IFRS 9, to project asset quality in line with adverse macroeconomic scenarios and assess the impact in terms of various credit quality indicators, such as the incidence of impaired credit or the increase in loan adjustments.
For regulatory purposes, the Parent company Banca Ifis conducts stress tests when defining the Risk Appetite Framework (RAF) and preparing the Recovery Plan as well as the ICAAP and ILAAP report at least on an annual basis, as required by applicable prudential supervisory regulations. In this context, it assesses, among other things, the sustainability of lending strategies under adverse market conditions.
2.3 Measurement of expected credit losses
First of all, it should be noted that, with reference to the calculation of expected losses, during the year the process of revising and fine-tuning the models in use continued with the aim of more accurately reflecting the expected losses of unimpaired (performing) exposures, also as a result of the historical evidence available and the persistent uncertainties in the macroeconomic context of reference. This process also included a series of managerial adjustments (so-called \"post-model adjustments\" or \"overlays\") in order to factor in certain valuation elements not adequately captured by the models in use.
In addition to the changes introduced in the models and criteria for calculating expected losses, the changes introduced during 2023 as part of the ongoing model revision process are illustrated below, depending on the type of intervention (SICR valuation, estimation of forward-looking information, other model changes, and use of any management overlays).
It should be noted that the significant economic impacts as a result of these changes are deemed to be insignificant.
According to IFRS 9, all financial assets not measured at fair value through profit or loss and other than the POCI, for which reference is made to the information given previously, represented by debt securities and loans, and off-balance sheet exposures (commitments and guarantees granted) must be subject to the impairment model based on expected losses (ECL - Expected Credit Losses).
The most significant aspects that characterise this approach, concern:
\u2022the classification of loans into three different levels (or \"Stages\") to which different methods correspond for calculating the losses to be recorded; Stage 1 includes performing positions that have not undergone a significant increase in credit risk otherwise placed in Stage 2; Stage 3 includes all positions classified as non-performing, bad loans, unlikely-to-pay, non-performing past due in accordance with the criteria and rules specifically adopted by the Group;
\u2022the calculation of the expected loss calculated at 12 months for Stage 1 or for the entire useful life of the credit (lifetime) for Stages 2 and 3;
\u2022the requirement to use a Point-in-Time, rather than a Through-the-Cycle, approach for regulatory purposes;
\u2022forecast information regarding the future dynamics of macroeconomic factors (forward looking) considered to have the potential to influence the debtor's situation.
In this context, the Group has adopted a method for determining the \"significant\" increase in credit risk with respect to the initial recognition date, which involves classifying the instruments in Stages 1 and 2, combining statistical (quantitative) and performance (qualitative) elements, as part of the estimate of impairment of performing loans. Please note that no probation period is applied for the exit of performing positions from Stage 2.
To identify the \"significant\" increase in credit risk, the Banca Ifis Group applies the following quantitative and qualitative transfer criteria to the loan portfolio according to the type of counterparty defined by segmenting receivables into portfolios:
\u2022the only quantitative transfer criteria is what is termed \u201cPD comparison\u201d for which, in order to identify the \"significant increase in credit risk\" on exposures within rated portfolios (Italian companies), the Group used an approach backed by quantitative analyses, under which the exposure is allocated to Stage 2 if the change in the one-year PD between the origination and the measurement date exceeds a given threshold. The decision to use a 1-year PD comparison instead of a lifetime approach, also determined in consideration of the solution provided by the impairment engine's outsourcer, is supported by analyses that show a high correlation between the SICR metrics calculated from a lifetime perspective and those calculated from a 1-year perspective. This threshold is assigned on the basis of the origination rating (where available) of each relationship and is represented by the number of rating downgrade notches by which the credit risk of the relationship is to be considered significantly increased. Therefore, if the rating
at the reference date exceeds the threshold, i.e. the origination rating plus the number of notches associated with it, the report is allocated to Stage 2;
\u2022qualitative transfer criteria:
\u2013\"Rebuttable presumption \u2013 30 days past due\": IFRS 9 establishes that, regardless of how the entity assesses significant increases in credit risk, there is a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due. The entity can rebut this presumption if it has reasonable and supportable information that demonstrates that the credit risk has not increased significantly since initial recognition even though the contractual payments are more than 30 days past due. However, the Ifis Group has not pursued this option;
\u2013Forbearance: according to this criterion, a financial instrument is allocated to Stage 2 when the Group classifies the exposure as forborne;
\u2013\"Watchlist\": the criterion envisages the transfer to Stage 2 of positions already under examination, as part of the process for defining especially risky positions during credit monitoring;
\u2013Two additional backstop elements called \"ECB Backstops\" were also introduced during the year: positions with PD at the reporting date 200% higher than at the origination date or with PD at the reporting date 20% higher.
According to IFRS 9, an entity may assume that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date, that is:
\u2022it has a low risk of default;
\u2022the borrower is considered, in the short term, to have a strong capacity to meet its obligations;
\u2022the lender expects, in the longer term, that adverse changes in economic and business conditions might reduce the ability of the borrower to fulfil its obligations.
The measurement of expected credit losses (ECLs) accounts for cash shortfalls, the probability of default (PD), and the time value of money. Specifically, the Group measures the loss allowance for the financial instrument as:
\u2022expected losses within 12 months for positions that have not suffered a significant deterioration in creditworthiness (Stage 1); in other words, the Group estimates non-payments resulting from possible default events within the following 12 months, weighted by the probability that such events will occur;
\u2022expected \"Lifetime\" losses for positions that have suffered a significant deterioration in creditworthiness (Stage 2); in this case, the Group estimates the cash shortfalls resulting from default events that are possible over the expected life of the financial instrument, weighted by the probability of that default occurring and discounted at the measurement date.
To ensure its collective impairment calculations are in the closest possible compliance with regulatory requirements, the Group has defined a specific methodological framework subject to backtesting at least annually as well as to validation by the function in charge of validating internal models. This involved developing quantitative methods and analyses based on proprietary datasets as well as qualitative methods and analyses to essentially model the following risk parameters and the methodological aspects relevant to the calculation of impairment under IFRS 9:
\u2022estimation of the Probability of Default (PD), which expresses the probability of a default event occurring in the credit position over a given time frame. The estimation methodology involves using an appropriate estimator to calculate the Cumulative Default Rate (hereinafter also CDR), i.e. the historically observed probability of a default event occurring within a given time horizon. CDRs are then interpolated using an appropriate functional form;
\u2022estimation of Loss Given Default (LGD), which expresses the estimated loss percentage in the event of default of the credit position. A \"workout LGD\" approach based on internal data was chosen; therefore, this parameter is defined on the basis of historical recovery evidence observed for each perimeter where possible;
\u2022definition of Stage allocation transfer logic, which includes the recalibration of SICR thresholds;
\u2022calculation of expected losses including point-in-time elements: the credit parameters are calibrated on a horizon that considers the entire economic cycle, therefore, in accordance with IFRS 9, a PIT (point-in-time) adjustment is necessary to reflect the current condition in the parameters;
\u2022calculation of expected losses including forward-looking elements: the credit parameters are calibrated to a horizon that considers the entire economic cycle; therefore, in accordance with IFRS 9, it is necessary
to include forward-looking elements to reflect expectations on the future development of the economic cycle.
The time series underlying the estimation of risk parameters are updated annually; calibrations involving the forward-looking scenario component may be undertaken several times during the year on the basis of changes in the environment. As far as EAD is concerned, there is no internal modelling, and the value of EAD is equal to the book value adjusted by the application of the credit conversion factor.
Concerning the exposures to banks, central governments, and public-sector entities (low default portfolios), the Group used default rates associated with migration matrices based on public information provided by the ratings agency Moody's or external providers.
As for the securities portfolio, considering the methodological complexity associated with developing a dedicated model, the Group decided to use the calculation of impairment under IFRS 9 that the outsourcer of the computer system provides at consortium level (i.e. estimating risk parameters, calculating the Stage allocation and ECLs). Specifically, the formula used to calculate the impairment of the tranches allocated to Stage 1 and Stage 2 is consistent with the approach to credit exposures. The stage allocation of performing debt securities requires using an external rating of the issue or, if this is not available, the issuer; in short, the securities are allocated to the different stages based on specific transfer criteria associated with this type of portfolio. In the area of securities, in contrast to the loan portfolio, the \"low credit risk exemption\" is applied only to the portion of securities in the portfolio belonging to the investment grade category. Exposures are allocated to Stage 3 if credit risk has deteriorated to the point that the security is considered impaired, i.e. classified as non-performing, including in the case of financial instruments in default.
In developing the above methods, the Group has considered multiple solutions, the current and prospective complexity of its portfolio, as well as how to maintain and update risk parameters.
The development of multi-period logics on risk parameters, already present for PD, was introduced in 2023 also for LGD (limited to performing loans) for greater adherence to the standard IFRS 9, with non-significant impacts considering the portfolio\u2019s characteristics (i.e. short maturities). LGD was estimated on historical proprietary evidence, with the exception of some residual trades to particular types of counterparties (banks, central governments and territorial entities) for which, in the absence of objective historical data, a sector LGD was used. Cash flows used in the estimation of LGD are discounted to the EIR, and CCFs are applied on a constant basis until maturity.
The Group has adopted econometric models (based on the stress test framework - \u201csatellite\u201d models), aimed at forecasting the evolution of the institute\u2019s risk factors (i.e. mainly PD and migrations between statuses for credit risk) on the basis of a joint forecast of the evolution of the economic and financial indicators (macroeconomic scenario).
The satellite models used meet the need to identify the existence of a significant relationship between the general economic conditions (i.e. macroeconomic and financial variables) and a proxy variable of the risk factor (target variable) i.e. the credit rating of counterparties (which represents the respectively probability of default as a summary of the PD factor), which in its aggregate form at an institute level is represented by a careful calibration of the deterioration rates recorded by the Bank of Italy.
By exploiting the identified relationship between target variable and macroeconomic factors, it is therefore possible to obtain forecast values of deterioration rates by applying future projections of explanatory variables retrieved from authoritative sources, for which consistency is assessed with the institutional scenarios published, for example by the EBA, Bank of Italy and ECB. In compliance with IFRS 9, the Risk Management function employs macroeconomic scenarios describing three contexts characterised by increasing levels of forecast severity and criticality: an \"upside\" scenario, a \"baseline\" scenario and an \"adverse\" scenario. These scenarios produce three different satellite model forecasts, making weighting necessary: for the current year, it was decided to limit the weight of the upside scenario and to balance the weights of the baseline and adverse scenarios in view of the uncertainty of the macroeconomic environment, which sees on the one hand, in the geopolitical context, one of the main factors of instability, and on the other, the possible onset of non-negligible risks connected with the evolution of the global economic activity.
The Risk Management function has therefore included the forecasts defined by its satellite models in the structures at the end of the PD lifetime, exploiting the Merton framework. Indeed, the migration matrices between credit states of each perimeter were defined and, through the application of the macroeconomic shifts output by the satellite models, the stressed projections of the matrices were obtained, allowing the derivation of scaling factors calculated on the stressed default rates to be applied to the PD curves as per the defined methodology.
The satellite models developed for PD were also applied in a mirror-image manner to the Danger Rate, i.e. the migration between credit states, used in LGD, which in its point-in-time & forward-looking configuration gives a multi-period structure to LGD.
For Stage 3 exposures that are not individually tested for impairment, the Group defines a lifetime provision in line with the concept of expected credit loss. The LGD metric, defined in line with the metrics adopted for performing loans, is then applied to calculate the collective losses of Stage 3 exposures.
Measurement of expected losses (ECL)
With reference to the inclusion of Forward Looking factors feeding into the IFRS 9 provisioning process, using the recently updated satellite models, the Risk Management function updated the macroeconomic scenarios during 2023, retrieving them from the EBA's February 2023 publication of macroeconomic projections for the stress test exercise, thereafter updating such scenarios at year end, to allow for a measurement of receivables that is as compliant as possible with the accounting standard.
The current macroeconomic environment incorporates the repercussions of the uncertain geopolitical environment and is affected by the tightening of monetary and credit conditions for businesses and households resulting from the sharp rise in monetary policy interest rates. The Group adopts three scenarios to reflect the uncertainty of the macroeconomic environment:
\u2022Baseline scenario: this is the main reference scenario that envisages weak but still growing global economic activity, with Italian GDP changing close to zero in 2024. Inflation falls slowly, eroding purchasing power that accumulated savings struggle to sustain. Rising interest rates are manifesting themselves in reduced liquidity, a fall in loans and real estate investments. This increases the burden of servicing public debt, severely limiting the possibility of expansionary fiscal policies.
\u2022Adverse scenario: this is the severe but plausible scenario according to which the global geopolitical situation is expected to worsen due in part to a new theatre of war with consequences for energy and commodity prices, which are expected to rise again and, while not reaching peak levels, will nevertheless dampen the decline in inflation. Inflation that does not come down induces central banks to proceed with further policy rate hikes, despite the fact that several countries are experiencing severe slowdowns and even spillover effects on economic activity. Italian GDP would contract between late 2023 and early 2024, with a carry-over effect that would bring annual growth in 2024 to -0,5%.
\u2022Positive scenario: this is a benign scenario determined on the basis of the distribution of historical data. Given the uncertain macroeconomic environment, the Group has conservatively set a negligible weight of 5% for this scenario.
FINANCIAL INDICATORSFINANCIAL YEAR END (%)Base caseAdverse scenarioPositive scenario
202420252026202420252026202420252026
Italian real GDP growth y/y, %0,40,80,9(0,5)0,50,55,04,14,1
Italian unemployment, %7,77,57,38,08,59,06,75,95,2
Euribor 3M, %4,03,63,14,53,93,4(0,5)(0,5)(0,5)
BTP 10 years, %4,65,05,05,55,35,30,90,90,9
Brent barrel growth y/y, %(1,4)1,80,912,91,80,9(0,3)(0,3)(0,3)
Italian inflation, %2,42,12,24,22,52,30,20,30,3
\"\"
As regards the probability of occurrence of the scenarios, the baseline scenario is characterised by a 50% probability of occurrence, the adverse scenario by a 45% probability and the ameliorative scenario by a 5% probability in order to reflect the uncertain macroeconomic context.
In order to provide information that enables a clear understanding of the elements of judgement used by management and their impact, sensitivity analyses were carried out. The inclusion of forward-looking factors for the measurement of expected losses is, in fact, a particularly complex exercise, as it requires the formulation of macroeconomic forecasts, the selection of scenarios and their relative probabilities of occurrence, and the definition of a model capable of expressing the relationship between the aforementioned macroeconomic factors and the default rates of the exposures under assessment.
For this reason, in order to be able to appreciate the impact on expected losses resulting from the selection of different macroeconomic scenarios, and in compliance with the recommendations formulated by ESMA, most recently in its document of 13 May 2022, sensitivity analyses are provided below, in terms of ECL. These analyses were conducted by assigning a 100% weighting to each individual macroeconomic scenario (\"baseline\",
\"worsening\", \"improving\") with respect to the multi-scenario approach followed for the purpose of preparing this Report.
The selection of a multi-factor sensitivity, obtained by varying several parameters simultaneously and implicit in the choice of considering alternative macroeconomic scenarios, is justified by the fact that there are innumerable interrelationships between the different macroeconomic factors such that a sensitivity analysis based on a single factor would be less representative (e.g. the change in GDP would be correlated with changes in many other macroeconomic variables).
The basis for sensitivity analyses is represented by expected losses (ECLs) on the Group's credit exposures to customers - cash loans and guarantees. In particular, this is the ECL determined on the basis of the models in use, and thus not including the post-model adjustments discussed below.
More specifically, the 100% \u201cadverse\u201d weighting would lead to an impact on provisions of approximately +0,7%, the 100% \u201cbaseline\u201d weighting would lead to an impact of approximately -0,4%, while the 100% \u201cpositive\u201d weighting would lead to an impact of approximately -1,8% (in a wide range of up to 0,7 million Euro).
The Covid-19-related health emergency in early March 2020 generated unprecedented impacts on global economic growth. This circumstance prompted intermediaries to consider possible impacts on credit risk produced by such extraordinary risk factors not adequately captured by the expected loss (ECL) calculation models in use. This, coupled with the need to capture expectations of a rapid deterioration in macroeconomic conditions from a forward-looking perspective, led the Group to introduce prudential adjustments (\u201cmanagement overlays\u201d) over time in the determination of expected losses (ECL); these adjustments were aimed in particular at capturing the risks associated with exposures to counterparties belonging to the most potentially vulnerable economic sectors.
After 2021 and in particular during 2022 and 2023, as a result of geopolitical tensions related to the Russia-Ukraine conflict and the conflict in the Middle East, the inflationary scenario and the slowdown in economic growth, the prudential adjustments applied and previously described were replaced and restated with the aim of factoring in the risks emerging from the macroeconomic context of reference. In particular, a number of new prudential adjustments were introduced to take into account the macroeconomic context strongly influenced by geopolitical tensions, the impact of rising energy prices, inflationary dynamics, and the significant increase in interest rates in order to intercept risk factors relating to counterparties belonging to sectors considered particularly exposed to new emerging risks; in particular, companies in the manufacturing, agricultural, transport and energy trading sectors. The approach and criteria used have been made progressively more analytical and consistent over time through refinements introduced to reflect the Group's improved perception of the evolution of related risks.
In addition, in 2023, in order to better capture the portfolio's riskiness, the correlation between management overlay and allocation to the different risk stages was increased, reserving an amount higher than Stage 2, consistent with the higher riskiness inherent in this exposure perimeter, while also taking into account expert-based assessments of specific positions allocated here.
Consequently, as at 31 December 2023, the total amount of the described prudential adjustments (management overlay) was approximately 52,3 million Euro, almost equally divided between adjustments to hedge multiple risk factors (particularly related to inflationary, geopolitical and energy supply risks) and adjustments to hedge adverse macroeconomic expectations, the quantifications of which are also supported by stress scenario and sensitivity analyses as well as expert-based assessments. As at 31 December 2023, an additional 12,8 million Euro of prudential adjustments were also provided for to protect positions specifically identified to take into account their possible deterioration, which can be estimated in a reasonably short time horizon and is not captured by current models (\"expert-based\" valuations).
Finally, with regard to the determination of expected losses on exposures classified in Stage 3, i.e. non-performing exposures, the quantification of those losses is determined analytically on the basis of collection forecasts, formulated by the servicer, discounted on the basis of the original effective interest rates and the relevant collection time-line.
2.4 Credit risk mitigation techniques
Credit risk mitigation techniques include instruments that contribute to reducing the loss that the Group would incur in the event of counterparty default; specifically, they refer to guarantees received from customers, both collateral and personal, and to any contracts that may lead to a reduction in credit risk.
In general, as part of the process of granting and managing credit, for certain types of lines, the release by customers of suitable guarantees to reduce their risk is encouraged. They can be represented by:
\u2022collateral encumbering assets, such as pledges on financial assets, mortgages on real estate (residential/non-residential); and/or
\u2022personal guarantees (typically sureties) on a third party where the person (natural or legal) acts as guarantor of the customer's debt position in the event of insolvency.
In particular:
\u2022as part of factoring operations, when the type and/or quality of factored receivables do not fully satisfy requirements or, more generally, the invoice seller is not sufficiently creditworthy, the bank's established practice is to hedge the credit risk assumed by the Group by obtaining additional surety bonds from the shareholders or directors of the invoice seller. As for the account debtors in factoring relationships, wherever the Bank believes that the elements available to assess the account debtor do not allow to properly measure/assume the related credit risk, or the proposed amount of risk exceeds the limits identified during the debtor\u2019s assessment, the Bank adequately hedges the risk of default of the account debtor. Guarantees issued by correspondent factors and/or insurance policies underwritten with specialised operators are the main hedge against non-domestic account debtors in non-recourse operations;
\u2022in loans to businesses, where possible, suitable guarantees are acquired from the Central Guarantee Fund or other companies coming under the public scope, such as SACE S.p.A.;
\u2022in regard to Structured Finance, collateral is acquired according to the counterparty's standing as well as the term and type of the facility. Said collateral includes mortgage guarantees, liens on plant and equipment, pledges, surety bonds, credit insurance, and collateral deposits;
\u2022as for finance leases, the credit risk is mitigated by the leased asset. The lessor maintains the ownership until the purchase option is exercised, ensuring a higher recovery rate in the event the client defaults;
\u2022as for operations concerning distressed loans and purchases of tax receivables arising from insolvency proceedings, as well as the relevant business model, generally no action is implemented to hedge credit risks;
\u2022salary-backed loans have low risk, considering the particular characteristics of this product: it requires having insurance against the customer's risk of death and/or loss of employment as well as imposing a lien on the severance indemnity (\u201cTFR\u201d) earned by the customer as additional collateral for the loan.
\u2022lending to pharmacies involves an advance as well as a transfer or debt collection mandate, with the possibility of deducting subsequent advances from existing credit facilities.
In line with that established by the Liquidity Decree (Italian Decree Law No. 23 of 8 April 2020), the Group has benefited from the guarantees offered by the state Guarantee Fund for the type of customer and loans envisaged by the Decree, with cover that can reach 100%. This guarantee enables a reduction in the RWAs relative to the credit risk, proportionally to the share of exposure covered by the Fund.
The acquired Npl portfolios include positions secured by mortgages on properties with a lower level of risk than the total portfolio acquired.
When calculating the overall credit limit for an individual customer and/or legal and economic group, the Bank considers specific criteria when weighing the different categories of risks and guarantees. Specifically, when measuring collateral, it applies prudential \"spreads\" differentiated by type of guarantee.
The Group continuously verifies the quality and adequacy of the guarantees acquired on the loan portfolio, with second level monitoring carried out by the Parent company\u2019s Risk Management Department and carried out under the scope of the Single File Review (SFR).
3. Non-performing credit exposures
3.1 Management strategies and policies
The Group adopts a business model that has peculiar features compared to most other Italian banking institutions, which largely operate as general banks.
This peculiarity of the business is reflected in the processes and management structures, generating flows and stock dynamics that are reflected in assets and related indicators.
Nonetheless, the Parent company believes that adopting \"systemic\" operational and structural ratios, and maintaining its indicators at the highest level of excellence, is a mark of quality and a value to be pursued as a specific goal in order to strengthen its corporate structure as well as improve its internal processes.
Among these, the quality of assets is a top priority that must be expressed both in the ability to provide credit, minimizing the risks of deterioration of exposures, and in the ability to manage non-performing exposures, optimising recovery performance in terms of amount and timing of recovery.
In this sense, the Group's action is oriented in two directions:
\u2022constant efforts to improve not only the processes for selecting and granting loans, but also the processes for managing performing loans, referring, where appropriate, to the commercial and/or selection policies of individual transactions, in order to contain the generation of non-performing loans in the best possible way;
\u2022the definition of quantitative objectives (such as maximum limits) in terms of non-performing exposures as well as pre-established actions to be implemented according to appropriate application criteria and priorities, in order to ensure compliance with the established limits over time.
In managing these aspects, the Group must, however, necessarily take into account the different segments of business and related types of credit, classifying solutions and actions consistent with the specificities of the individual segments, in order to ensure the best result in terms of value protection and speed of solution.
In view of the above, the Group has maintained the following two indicators as performance indicators and explicit objectives to be pursued with careful and proactive management when updating its annual operating plan for the management of short and medium/long-term Npls, presented to the Bank of Italy in March 2023:
\u2022\"Gross Npe ratio\", consisting of the ratio of \"gross non-performing exposures\" to \"total receivables due from customers\";
\u2022\"Net Npe ratio\", consisting of the ratio of \"non-performing exposures net of related adjustments\" to \"total receivables due from customers\".
With reference to receivables due from customers for cash in place at 31 December 2023, excluding the positions stemming from the acquisition and management of non-performing exposures of third party originators managed by the subsidiaries Ifis Npl Investing, Ifis Npl Servicing and Revalea, as well as the portfolios of retail loans, also in consideration of the uncertainty surrounding the global economic performance, the levels of Npe ratio are in line with the last Npl management plan defined early 2023. Regardless of the current outlook, the pursuit of the objective of a general limitation in the stock of non-performing loans remains and is expected to take place through a differentiated strategy in relation to the specificity of the individual portfolios concerned (taking into account the type of counterparty and the specificity of the individual products). In general, the action that will be taken is essentially based on the following goals, which it has been pursuing for some time now:
\u2022containment of the default rate in order to reduce the inflow of non-performing positions by extending and strengthening the monitoring of lending aimed at anticipating, and possibly preventing, deterioration of positions;
\u2022improvement of the \"performing\" rates of return through a more significant use of forbearance measures in relation to counterparties that show signs of financial difficulty;
\u2022leveraging the expertise within the Banca Ifis Group at the reference date of the Financial Statements and the virtuous collection processes currently in place to maximise collection rates;
\u2022reducing the stock of non-performing loans by considering selective sales of individual significant positions as well as applying existing write-off policies.
The non-performing positions or the performing positions that in any case present significant problems are handled directly by specific organisational units established at each company of the Group, which:
\u2022assess the counterparty's willingness and ability to repay the debt in order to establish the most appropriate recovery strategy;
\u2022manage judicial and non-judicial proceedings concerning debt collection operations;
\u2022define potential modifications to the administrative status as well as the quantification of \"doubtful individual outcomes\" for the positions assigned to it, submitting them to the competent decision maker;
\u2022monitor the amount of exposures classified as bad loans and the relevant debt collection operations.
3.2 Write-offs
As specified by IFRS 9, a total or partial write-off is an event that results in derecognition when there is no longer a reasonable expectation that the financial asset will be recovered. It may occur before the lawsuit for recovery of the financial asset has concluded and does not necessarily imply a waiver of the legal right to collect the debt.
A receivable is derecognised when it is considered unrecoverable and the Group forfeits the legal right to collect it. For instance, this occurs when insolvency proceedings are settled, the borrower dies without heirs, a court issues a final ruling that the debt does not exist, etc.
As for total or partial derecognition without a forfeiture of the right to collect the receivable, to avoid continuing to recognise receivables that, even though they are still managed by debt collection structures, are highly unlikely to be recovered, at least every half-year, the Bank identifies the exposures to be derecognised that have all specific characteristics defined for each product.
At the Group level, relationships to be subject to derecognition are identified which simultaneously present the following characteristics:
\u2022the receivable has been written off;
\u2022the receivable has been classified as a bad loan for more than 5 years;
\u2022the counterparty has filed for bankruptcy, been put into administrative liquidation (LCA), or is subject to any insolvency proceedings.
The derecognition of bad debts is a good management practice. It allows structures to concentrate on receivables that are still recoverable, guarantees an adequate representation of the ratio between anomalous receivables and total receivables and ensures a correct representation of balance sheet assets.
At an organisational level, the operating methods used by the various Group structures to eliminate credit exposures and to report to Top Management are described in detail in the Group\u2019s credit monitoring and recovery policies.
3.3 Purchased or originated credit impaired financial assets
Organisational aspects
For organisational aspects relating to impaired financial assets acquired or originated, please refer to the specific paragraph above in subsection \"2.1 Organisational aspects\" of this \"Section 2 - Prudential consolidation risks\".
Quantitative information
The outstanding nominal amount of Ifis Npl Investing S.p.A.'s proprietary portfolio is 20.001,5 million Euro. At the time of purchase, the nominal amount of these receivables was approximately 21.316,5 million Euro, and they were acquired for 1.215,6 million Euro, i.e. an average price equal to 5,7% of the historical nominal amount. In 2023, 202,7 million Euro were acquired for 24,1 million Euro, i.e. an average price equal to 11,9%. The POCI outstanding portfolio has a weighted average ageing of 59 months compared to their original acquisition date.
With regard to the ownership portfolio of the newly acquired Revalea S.p.A., the residual nominal amount at 31 December 2023 is 6.146,0 million Euro. With regard to the consideration paid, at the Banca Ifis Group level, the price paid in October 2023 for the acquisition of the entire company (including loans) is reported, for which reference should be made to \"Part G - Business combinations\".
As regards the individual phases of processing of Npl receivables, as described in paragraph \u201c2.1 Organisational aspects\u201d above in relation to credit risk, the carrying amount at 31 December 2023 of the positions in out-of-court management comes to 487 million Euro, whilst the carrying amount of the positions under legal management1 comes to 932 million Euro.
Finally, Ifis Npl Investing and Revalea seize market opportunities in accordance with the business model by selling portfolios of positions yet to be processed to third parties. In 2023, 10 significant sales of portfolios were made to leading players operating in Npl purchases. Overall, receivables were sold with an amount of 2.319,9 million Euro, for an overall consideration of 21,2 million Euro.
4. Financial assets subject to business renegotiations and forborne exposures
Throughout the life of the financial assets, and specifically of receivables, the parties to the agreement subsequently agree to modify the original contractual terms. When, during the life of an instrument, the contractual terms are modified, the Group shall assess whether the original asset must continue to be recognised (so-called \"modification without derecognition\") or, conversely, the original instrument must be derecognised and a new financial instrument recognised in its place.
Generally, modifications of a financial asset result in its derecognition and the recognition of a new asset when they are \"substantial\". The \"substantiality\" of the modification shall be assessed considering both qualitative and quantitative factors. In some cases, it will become apparent, without conducting complex analyses, that the changes introduced substantially modify the characteristics and/or contractual cash flows of a specific asset, whereas in other cases, additional analyses (including quantitative analyses) will be required to appreciate their impact and assess whether to derecognise the asset and recognise a new financial instrument.
1 Legal management including garnishment actions with third parties, corporate positions, MIPOs and bankruptcy procedure.
The (quali-quantitative) analyses aimed at defining the \"substantiality\" of the contractual modifications made to a financial asset shall therefore consider:
\u2022the purposes for which the modifications were made: for instance, renegotiations for business reasons and forbearance measures due to the counterparty's financial difficulties:
\u2013the former, intended to \"retain\" the customer, involve a borrower that is not in financial distress. This case includes all renegotiations aimed at adjusting the cost of debt to market conditions. These transactions result in changes to the original contractual terms, usually at the request of the borrower, that concern aspects associated with the cost of debt, giving rise to an economic benefit for the borrower. Generally, the Group believes that, whenever it enters into a renegotiation in order to avoid losing the client, this renegotiation shall be considered as substantial, since, in its absence, the customer could obtain financing from another intermediary and the Group would see estimated future revenue decline;
\u2013the latter, offered for \"credit risk reasons\" (forbearance measures), are part of the Group's attempt to maximise the recovery of the cash flows of the original receivable. Following the modifications, usually the underlying risks and rewards have not been substantially transferred: therefore, the accounting presentation that provides the most relevant information to users of the financial statements (expect for the following discussion about objective factors) is the one made through \"modification accounting\" - whereby the difference between the carrying amount and the present value of modified cash flows discounted at the original interest rate is recognised through profit or loss - rather than derecognition;
\u2022the existence of specific objective factors affecting the substantial modifications of the characteristics and/or contractual cash flows of the financial instrument (including, but not limited to, the modification of the type of counterparty risk the entity is exposed to) that are believed to require derecognising the asset because of their impact (estimated to be significant) on the original contractual cash flows.
As at 31 December 2023, the impact on the Banca Ifis Group of trade renegotiations or concessions constituting \"modification without derecognition\" under IFRS 9 is essentially nil.
Quantitative information
A. Credit quality
A.1 Non-performing and performing credit exposures: amounts, impairment losses, trend, and economic breakdown
A.1.1 Prudential consolidation - Breakdown of financial assets by past due buckets (carrying amounts)
Portfolios/risk stages
Stage 1
Stage 2
Stage 3
Purchased or originated impaired
From 1 day to 30 days
From over 30 days to 90 days
Over 90 days
From 1 day to 30 days
From over 30 days to 90 days
Over 90 days
From 1 day to 30 days
From over 30 days to 90 days
Over 90 days
From 1 day to 30 days
From over 30 days to 90 days
Over 90 days
1. Financial assets measured at amortised cost
69.762
-
-
8.296
41.351
106.295
3.721
12.446
83.806
1.396
6.886
1.617.762
2. Financial assets measured at fair value through other comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
3. Financial assets under disposal
-
-
-
-
-
-
-
-
-
-
-
-
Total 31.12.2023
69.762
-
-
8.296
41.351
106.295
3.721
12.446
83.806
1.396
6.886
1.617.762
Total 31.12.2022
80.402
1.058
570
12.634
29.123
104.227
6.847
11.525
130.058
1.223
928
1.516.607
\"\"
A.1.2 Prudential consolidation - Financial assets, loan commitments and financial guarantees granted: overall impairment losses/reversals and overall provisions
Reason/Risk stageOverall impairment losses/reversalsTotal provisions on loan commitments and financial guarantees grantedTot.
Stage 1 assetsStage 2 assetsStage 3 assetsPurchased or originated impaired financial assets
Due from banks and Central Banks on demandFinancial assets measured at amortised costFinancial assets measured at fair value through other comprehensive incomeFinancial assets under disposalof which: individual impairmentof which: collective impairmentDue from banks and Central Banks on demandFinancial assets measured at amortised costFinancial assets measured at fair value through other comprehensive incomeFinancial assets under disposalof which: individual impairmentof which: collective impairmentDue from banks and Central Banks on demandFinancial assets measured at amortised costFinancial assets measured at fair value through other comprehensive income Financial assets under disposalof which: individual impairmentof which: collective impairmentFinancial assets measured at amortised costFinancial assets measured at fair value through other comprehensive income Financial assets under disposalof which: individual impairmentof which: collective impairmentStage 1Stage 2Stage 3Commitments to disburse funds and fin. guarantees issued impaired acquired or originated
Opening balance of total impairment losses/reversals of impairment losses946 80.130 1.083 - - 82.159 - 14.277 - - - 14.277 - 146.755 - - 146.755 - - - - - - 3.832 2.962 2.521 10 252.516
Increases from purchased ororiginated financial assets- - - - - - - - - - - - - 6.433 - - 6.433 - XXXXX- - - - 6.433
Derecognitions other than write-offs(169) (4.562) - - - (4.731) - (852) - - - (852) - (13.234) - - (13.234) - (8) - - (8) - (1.770) (37) (33) - (20.665)
Net credit risk losses/reversals (+/-)(9) 16.831 (37) - - 16.785 - 928 117 - - 1.045 - 29.702 - - 29.815 (113) (302.866) - - (302.866) - (631) (2.686) (493) - (259.144)
Contractual modifications without derecognition- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes in estimation method- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Write-offs not recognised directly through profit or loss- - - - - - - - - - - - - (5.541) - - (5.541) - (3.386) - - (3.386) - - - - - (8.927)
Other changes397 (19.441) (14) - - (19.058) - 24.540 14 - - 24.554 - 12.800 - - 12.636 164 306.260 - - 306.260 - 1.207 402 100 (10) 326.255
Closing balance of total impairment losses/reversals of impairment losses1.165 72.958 1.032 - - 75.155 - 38.893 131 - - 39.024 - 176.915 - - 176.864 51 - - - - - 2.638 641 2.095 - 296.468
Reversals from collections on financialassets written off- - - - - - - - - - - - - 217 - - 217 - 259 - - 259 - - - - - 476
Write-offs recognised directly throughprofit or loss- - - - - - - - - - - - - (8.676) - - (8.676) - (168.422) - - (168.422) - - - - - (177.098)
\"\"
A.1.3 Prudential consolidation - Financial assets, loan commitments and financial guarantees granted: transfers between different credit risk stages (gross and nominal amounts)
Portfolios/risk stagesGross amounts/nominal amount
Transfers between Stage 1 and Stage 2Transfers between Stage 2 and Stage 3Transfers between Stage 1 and Stage 3
From Stage 1 to Stage 2From Stage 2 to Stage 1From Stage 2 to Stage 3From Stage 3 to Stage 2From Stage 1 to Stage 3From Stage 3 to Stage 1
1. Financial assets measured at amortised cost 336.403 261.650 37.980 16.530 77.867 40.726
2. Financial assets measured at fair value through other comprehensive income 2.962 - - - - -
3. Financial assets under disposal - - - - - -
4. Loan commitments and financial guarantees granted 98.988 10.712 753 15.735 9.686 5.612
Total 31.12.2023438.353 272.362 38.733 32.265 87.553 46.338
Total 31.12.2022398.030190.85569.24625.41686.60632.272
\"\"
A.1.4 Prudential consolidation - On- and off-balance-sheet credit exposures to banks: gross and net amounts
Types of exposures/Amounts Gross exposure Overall impairment losses/reversals and overall allocations Net exposure Overall partial write-offs
First stageSecond stageThird stageImpaired acquired or originatedFirst stageSecond stageThird stageImpaired acquired or originated
A. On-balance-sheet credit exposures
A.1 On demand858.372 858.372 - - - 1.165 1.165 - - - 857.207 -
a) Non-performing- X- - - - X- - - - -
b) Performing858.372 858.372 - X- 1.165 1.165 - X- 857.207 -
A.2 Other731.288 731.046 242 - - 1.612 1.611 1 - - 729.676 -
a) Bad loans - X- - - - X- - - - -
- of which forborne exposures - X- - - - X- - - - -
b) Unlikely to pay - X- - - - X- - - - -
- of which forborne exposures - X- - - - X- - - - -
c) Non-performing past due exposures- X- - - - X- - - - -
- of which forborne exposures - X- - - - X- - - - -
d) Performing past due exposures596 354 242 X- 1 - 1 X- 595 -
- of which forborne exposures - - - X- - - - X- - -
e) Other performing exposures730.692 730.692 - X- 1.611 1.611 - X- 729.081 -
- of which forborne exposures - - - X- - - - X- - -
Total (A)1.589.660 1.589.418 242 - - 2.777 2.776 1 - - 1.586.883 -
B. Off-balance-sheet credit exposures \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
a) Non-performing - X- - - - X- - - - -
b) Performing 874.174 235 - X- - - - X- 874.174 -
Total (B)874.174 235 - - - - - - - - 874.174 -
Total (A+B)2.463.834 1.589.653 242 - - 2.777 2.776 1 - - 2.461.057 -
\"\"
\"On-demand\" credit exposures include on-demand loans to banks classified under \"Cash and cash equivalents\".
On-balance-sheet exposures include all on-balance-sheet financial assets due from customers regardless of the portfolio they are included in (measured at amortised cost, measured at fair value through other comprehensive Income, designated at fair value, mandatorily measured at fair value, under disposal).
A.1.5 Prudential consolidation - On- and off-balance-sheet credit exposures to customers: gross and net amounts
Types of exposures/Amounts Gross exposure Overall impairment losses/reversals and overall allocations Netexposure Overall partial write-offs
Stage 1 Stage 2 Stage 3Purchased or originated impairedStage 1 Stage 2 Stage 3Purchased or originated impaired
A. On-balance-sheet credit exposures
a) Bad loans 1.388.864 X- 103.794 1.282.604 84.874 X- 84.874 - 1.303.990 3.010
- of which forborne exposures187.728 X- 5.893 181.835 5.216 X- 5.216 - 182.512 1
b) Unlikely to pay532.628 X- 182.378 345.686 84.118 X- 84.118 - 448.510 -
- of which forborne exposures120.283 X- 34.043 82.975 16.706 X- 16.706 - 103.577 -
c) Non-performing past due exposures 117.079 X- 112.252 4.827 7.927 X- 7.927 - 109.152 -
- of which forborne exposures3.079 X- 2.307 772 630 X- 630 - 2.449 -
d) Performing past due exposures 234.513 67.178 148.300 X13.442 4.860 269 4.590 X- 229.653 -
- of which forborne exposures3.805 - 3.612 X193 192 - 192 X- 3.613 -
e) Other performing exposures 9.084.000 8.596.526 385.302 X19.714 105.642 72.106 33.537 X- 8.978.358 -
- of which forborne exposures86.004 - 78.288 X7.716 6.280 - 6.280 X- 79.724 -
Total (A)11.357.084 8.663.704 533.602 398.424 1.666.273 287.421 72.375 38.127 176.919 - 11.069.663 3.010
B. Off-balance-sheet credit exposures
a) Non-performing 45.426 X- 45.426 - 2.099 X- 2.095 - 43.327 -
b) Performing 1.882.507 1.269.327 228.610 X- 3.276 2.638 641 X- 1.879.231 -
Total (B)1.927.933 1.269.327 228.610 45.426 - 5.375 2.638 641 2.095 - 1.922.558 -
Total (A+B)13.285.017 9.933.031 762.212 443.850 1.666.273 292.796 75.013 38.768 179.014 - 12.992.221 3.010
\"\"
On-balance-sheet exposures include all on-balance-sheet financial assets due from customers regardless of the portfolio they are included in (measured at amortised cost, measured at fair value through other comprehensive Income, designated at fair value, mandatorily measured at fair value, under disposal).
A.1.6 Prudential consolidation - On-balance-sheet credit exposures to banks: trends in gross non-performing exposures
There are no impaired cash credit exposures to banks in these Consolidated Financial Statements.
A.1.7 Prudential consolidation - On-balance-sheet credit exposures to customers: trends in gross non-performing exposures
Reason/Categories Bad loans Unlikely to pay Non-performing past dueexposures
A. Opening gross exposure 1.221.578554.428157.069
- of which: transferred and not derecognised 5442.2496.196
B. Increases 978.720515.233165.643
B.1 income from performing exposures 1.74882.51291.966
B.2 income from financial assets impaired purchased or originated 223.73141.024351
-from business combinations210.762--
B.3 transfers from other categories of exposures exposures 53.22348.73937
B.4 contractual modifications without derecognition ---
B.5 other increases 700.018342.95873.289
C. Decreases 811.433537.033205.633
C.1 outflows to performing exposures 92417.95745.655
C.2 write-offs 16.550--
C.3 collections 303.622168.0987.928
C.4 proceeds from sales 10.3455786
C.5 losses on sale 9436-
C.6 transfers to other categories of exposures exposures 2.44053.07146.488
C.7 contractual modifications without derecognition - - -
C.8 other decreases 477.458297.293105.556
D. Closing gross exposure 1.388.865532.628117.079
- of which: transferred and not derecognised 811.433537.033205.633
\"\"
On-balance-sheet exposures include all on-balance-sheet financial assets due from customers regardless of the portfolio they are included in (measured at amortised cost, measured at fair value through other comprehensive Income, designated at fair value, mandatorily measured at fair value, under disposal).
A.1.7bis Prudential consolidation - On-balance-sheet credit exposures to customers: trends in gross forborne exposures broken down by credit quality
Reason/Categories
Forborne exposures: non-performing
Forborne exposures: performing
A. Opening gross exposure
275.752
85.823
- of which: transferred and not derecognised
1.357
14.768
B. Increases
349.249
78.639
B.1 inflows from non-forborne performing exposures
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
85
56.982
B.2 inflows from forborne performing exposures
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
15.461
X
B.3 inflows from non-performing forborne exposure
X
9.302
B.4 inflows from non-forborne non-performing exposures
21.132
157
B.5 other increases
312.571
12.198
C. Decreases
313.911
74.653
C.1 outflows to non-forborne performing exposures
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
X
29.515
C.2 outflows to forborne performing exposures
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
9.302
X
C.3 outflows to non-performing forborne exposures
X
15.461
C.4 write-offs
283
-
C.5 collections
159.073
14.515
C.6 proceeds from sales
59
-
C.7 losses on sale
-
-
C.8 other decreases
145.194
15.162
D. Closing gross exposure
311.090
89.809
- of which: transferred and not derecognised
764
231
\"\"
A.1.8 Prudential consolidation - On-balance-sheet non-performing exposures to banks: trends in overall impairment losses/reversals
There are no impaired cash credit exposures to banks in these Consolidated Financial Statements.
A.1.9 Prudential consolidation - On-balance-sheet non-performing exposures to customers: trends in overall impairment losses/reversals
Reason/CategoriesBad loansUnlikely to payNon-performing past due exposures
Totalof which: forborne exposuresTotalof which: forborne exposuresTotalof which: forborne exposures
A. Opening balance of total impairment losses/reversals of impairment losses 68.874 3.180 68.091 11.945 9.790 844
- of which: transferred and not derecognised 569 - 2.110 300 1.053 160
B. Increases 40.442 2.669 55.471 15.976 5.553 655
B.1 impairment losses/reversals from impaired financial assets purchased or originated 5.177 X1.061 X195 X
B.2. other impairment losses 18.602 449 50.576 14.343 5.147 654
B.3 losses on sale - - - - - -
B.4 transfers from other categories of impaired exposures 114 21 1.572 190 16 1
B.5 contractual modifications without derecognitions - - - - - -
B.6 other increases 16.549 2.199 2.262 1.443 195 -
C. Decreases 24.442 633 39.444 11.215 7.416 869
C.1 reversals of impairment losses from measurement 7.954 284 31.206 10.161 3.078 661
C.2 impairment reversals from collection 3.898 66 2.401 1.027 225 19
C.3 gains on disposal - - - - - -
C.4 write-offs 8.927 283 - - - -
C.5 transfers to other categories of impaired exposures 15 - 115 22 1.572 189
C.6 contractual modifications without derecognitions - - - - - -
C.7 other decreases 3.648 - 5.722 5 2.541 -
D. Closing balance of total impairment losses/reversals of impairment losses 84.874 5.216 84.118 16.706 7.927 630
- of which: transferred and not derecognised 753 6 2.175 294 459 48
\"\"
A.2 Classification of exposures based on external and internal ratings
A.2.1 Prudential consolidation - Breakdown of financial assets, loan commitments and financial guarantees granted by external rating class (gross amounts)
For the purposes of calculating capital requirements against credit risk, Banca Ifis uses the external credit assessment institution (ECAI) Fitch Ratings exclusively for the positions recognised under \"Exposures to Central Governments and Central Banks\". Banca Ifis also uses the ECAI Cerved rating for corporate counterparties, having certain specific characteristics of size and use, in order to calculate capital absorption for supervisory purposes. These positions are included in the \"Exposure to Companies\" classes.
No external ratings are used for other asset classes.
A.2.2 Prudential consolidation - Breakdown of financial assets, loan commitments and financial guarantees granted by internal rating class (gross amounts)
The Banca Ifis Group does not use internal ratings for the purposes of calculating capital absorption. The Group has implemented a managerial internal ratings system on the corporate segments. This has been developed on proprietary databases and has the following components:
\u2022a \"financial\" module, to assess the company's operating/financial soundness;
\u2022a \"central credit register\" module, presenting the evolution of counterparty risk vis-\u00e0-vis the banking industry;
\u2022an \"internal performance\" module, monitoring the performance of the relationships between the counterparty and the Group;
\u2022a \"socio-demographic\" module aimed at assessing the risk profile on the basis of biographical information.
These models are differentiated by segment to ensure that appropriate models are applied on homogeneous population from the point of view of characteristics and risk level. There are therefore models for corporations, differentiated by two size clusters, and a model for partnerships and sole proprietorships.
A.3 Breakdown of guaranteed credit exposures by guarantee type
A.3.1 Prudential consolidation - Guaranteed on- and off-balance-sheet credit exposures to banks
Gross exposureNet exposureCollateral guarantees (1)Personal guarantees (2)Total(1)+(2)
Credit derivativesUnsecured loans
Property - mortgagesProperty - lease financingSecuritiesOther collateralCLNOther derivativesGeneral governmentsBanksOther financial corporationsOther entities
Central counterpartiesBanksOther financial corporationsOther entities
1. Guaranteed on-balance-sheet credit exposures: 100 100 - - - 100 - - - - - - - - - 100
1.1 totally guaranteed 100 100 - - - 100 - - - - - - - - - 100
- of which non-performing - - - - - - - - - - - - - - - -
1.2 partially guaranteed - - - - - - - - - - - - - - - -
- of which non-performing - - - - - - - - - - - - - - - -
2. Guaranteed off-balance-sheet credit exposures: - - - - - - - - - - - - - - - -
2.1 totally guaranteed - - - - - - - - - - - - - - - -
- of which non-performing - - - - - - - - - - - - - - - -
2.2 partially guaranteed - - - - - - - - - - - - - - - -
- of which non-performing - - - - - - - - - - - - - - - -
\"\"
A.3.2 Prudential consolidation - Guaranteed on- and off-balance-sheet credit exposures to customers
Gross exposure
Net exposure
Collateral guarantees (1)
Personal guarantees (2)
Total (1)+(2)
Credit derivatives
Unsecured loans
Property - mortgages
Property - lease financing
Securities
Other collateral
CLN
Other derivatives
General governments
Banks
Other financial corporations
Other entities
Central counterparties
Banks
Other financial corporations
Other entities
1. Guaranteed on-balance-sheet credit exposures:
3.672.265
3.541.846
443.098
-
-
1.719.710
-
-
-
-
-
739.681
651
7.438
398.262
3.308.840
1.1 totally guaranteed
2.566.740
2.480.129
358.414
-
-
1.590.554
-
-
-
-
-
155.567
651
7.372
367.567
2.480.125
- of which non-performing
225.250
169.351
82.120
-
-
21.607
-
-
-
-
-
11.428
-
76
54.120
169.351
1.2 partially guaranteed
1.105.525
1.061.717
84.684
-
-
129.156
-
-
-
-
-
584.114
-
66
30.695
828.715
- of which non-performing
64.403
39.912
5.335
-
-
85
-
-
-
-
-
24.729
-
-
1.957
32.106
2. Guaranteed off-balance-sheet credit exposures:
57.567
57.376
-
-
195
7.733
-
-
-
-
-
186
-
51
37.697
45.862
2.1 totally guaranteed
43.982
43.831
-
-
195
7.551
-
-
-
-
-
-
-
51
35.415
43.212
- of which non-performing
1.851
1.851
-
-
-
-
-
-
-
-
-
-
-
-
1.851
1.851
2.2 partially guaranteed
13.585
13.545
-
-
-
182
-
-
-
-
-
186
-
-
2.282
2.650
- of which non-performing
2.019
2.019
-
-
-
-
-
-
-
-
-
-
-
-
465
465
\"\"
A.4 Prudent consolidation - Financial and non-financial assets through the enforcement of guarantees received
As at 31 December 2023, the Banca Ifis Group does not have any cases referred to in the disclosure in this paragraph.
B. Concentration and distribution of credit exposures
B.1 Prudential Consolidation - Breakdown of on- and off-balance-sheet credit exposures to customers by segment
Exposures/CounterpartiesGeneral governmentsFinancial companiesFinancial companies (of which: insurance companies)Non-financial corporationsHouseholds
Net exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversals
A. On-balance-sheet credit exposures
A.1 Bad loans 83 551 1.027 52 - - 166.205 79.071 1.136.677 5.199
- of which forborne exposures - - 69 - - - 9.027 4.732 173.416 484
A.2 Unlikely to pay 10.413 1.855 1.225 5.615 20 4 104.519 67.975 332.353 8.672
- of which forborne exposures - - 62 119 - - 21.273 14.660 82.242 1.927
A.3 Non-performing past due exposures 65.707 161 456 63 1 - 29.179 3.565 13.810 4.138
- of which forborne exposures 51 - - - - - 518 87 1.881 542
A.4 Performing exposures 2.386.255 2.183 657.515 7.570 811 - 5.445.442 93.518 718.799 7.233
- of which forborne exposures - - 3.653 581 - - 69.647 5.514 10.036 378
Total (A) 2.462.458 4.750 660.223 13.300 832 4 5.745.345 244.129 2.201.639 25.242
B. Off-balance-sheet credit exposures
B.1 Non-performing exposures- - 648 - - - 39.994 2.092 2.685 7
B.2 Performing exposures1 - 196.048 1.195 - - 1.507.983 2.062 175.199 19
Total (B) 1 - 196.696 1.195 - - 1.547.977 4.154 177.884 26
Total (A+B) 31.12.20232.462.459 4.750 856.919 14.495 832 4 7.293.322 248.283 2.379.523 25.268
Total (A+B) 31.12.20222.382.6486.391988.90712.7271.35546.473.218206.9002.313.46823.714
\"\"
B.2 Prudential consolidation - Geographical breakdown of on- and off-balance-sheet credit exposures to customers
Exposures/Geographic areasItalyOther European countriesAmericaAsiaRest of the World
Net exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversals
A. On-balance-sheet credit exposures
A.1 Bad loans1.303.342 88.471 568 32 32 - 8 - 42 -
A.2 Unlikely to pay445.640 83.982 2.862 136 5 - - - 3 -
A.3 Non-performing past due exposures 106.279 7.736 2.760 177 2 - 111 14 - -
A.4 Performing exposures 8.591.095 103.815 518.283 6.535 65.866 668 14.174 294 18.593 86
Total (A)10.446.356 284.004 524.473 6.880 65.905 668 14.293 308 18.638 86
B. Off-balance-sheet credit exposures
B.1 Non-performing exposures35.797 2.092 7.530 7 - - - - - -
B.2 Performing exposures1.727.299 3.163 151.173 113 - - 640 - 119 -
Total (B)1.763.096 5.255 158.703 120 - - 640 - 119 -
Total (A+B) 31.12.202312.209.452 289.259 683.176 7.000 65.905 668 14.933 308 18.757 86
Total (A+B) 31.12.202211.603.833243.590502.8245.55331.26730719.6882776295
\"\"
B.3 Prudential consolidation - Geographical breakdown of on- and off-balance-sheet credit exposures to banks
Exposures/Geographic areasItalyOther European countriesAmericaAsiaRest of the World
Net exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversalsNet exposureOverall impairment losses/reversals
A. On-balance-sheet credit exposures
A.1 Bad loans- - - - - - - - - -
A.2 Unlikely to pay- - - - - - - - - -
A.3 Non-performing past due exposures - - - - - - - - - -
A.4 Performing exposures 1.352.001 2.223 234.882 554 - - - - - -
Total (A)1.352.001 2.223 234.882 554 - - - - - -
B. Off-balance-sheet credit exposures
B.1 Non-performing exposures- - - - - - - - - -
B.2 Performing exposures873.744 - 430 - - - - - - -
Total (B)873.744 - 430 - - - - - - -
Total (A+B) 31.12.20232.225.745 2.223 235.312 554 - - - - - -
Total (A+B) 31.12.20221.539.2482.232264.382601------
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B.4 Major exposures
\u00a0\u00a031.12.202331.12.2022
a)Amount (carrying amount)5.616.6904.686.151
b)Amount (weighted value)1.132.447943.766
c)Number107
\"\"
The overall weighted amount of Large exposures at the weighted amount at 31 December 2023, comprising 10 positions, mainly consists, at a weighted value level, of 210 million Euro in tax assets, 193 million Euro in exposure to counterparties not included in the prudential scope of consolidation and the remaining 729 million Euro in positions vs supervised intermediaries, mainly relating to reverse repurchase agreements, derivatives and securities.
Disclosure regarding sovereign debt
Consob Communication No. DEM/11070007 of 5 August 2011, drawing on ESMA document No. 2011/266, regulated disclosures by listed companies of their exposures to sovereign debt and market performance, the management of exposures to sovereign debt, and their operating and financial impact.
In accordance with the requirements of the aforementioned Consob Communication, it should be noted that at 31 December 2023 the carrying amount of sovereign debt exposures is 2.121 million Euro, net of the negative valuation reserve of 18,8 million Euro.
These securities, with a nominal amount of 2.109 million Euro have a weighted residual average life of 33 months.
The fair values used to measure the exposures to sovereign debt securities at 31 December 2023 are considered to be Level 1.
Pursuant to the above Consob Communication, besides the exposure to sovereign debt, it is also necessary to consider receivables disbursed to and due from the Italian National Administration. These exposures at 31 December 2023 amount to 342 million Euro, of which 85 million Euro related to tax credits.
C. Securitisation transactions
This section does not include securitisation transactions in which the originator is a bank belonging to the same prudential group and the total liabilities issued (e.g. ABS securities, loans during the warehousing phase, etc.) by the vehicle companies are subscribed at the time of issue by one or more companies belonging to the same prudential group. In other words, self-securitisations fully subscribed by companies belonging to the Banca Ifis Group's prudential consolidation, such as those of the vehicle Ifis NPL 2021-1 SPV S.r.l., are discussed in a later section to which reference should be made.
Qualitative information
The Banca Ifis Group has prepared a \"Group Policy for the Management of Securitisation Transactions in the Role of Originator/Promoter/Investor\", with which it regulates the process of managing securitisation transactions in the event that it intervenes in the role of \"originator\" (i.e. a party that participated in the original contract that created the obligations that originated the securitised exposures or that acquired the exposures of a third party and subsequently proceeds to their securitisation) of \"investor\" (i.e. a person underwriting the securities) or \"sponsor\" (i.e. a person structuring the transaction as defined in Art. 2 of EU Regulation 2017/2402). For each potential case, the policy sets out the responsibilities of the organisational units and corporate bodies, with reference to both the due diligence process and the ongoing monitoring of the transaction.
Outstanding securitisation transactions at 31 December 2023 are listed below.
Ifis ABCP Programme securitisation
In 2016, Banca Ifis launched a three-year revolving securitisation of trade receivables due from account debtors. After Banca Ifis (originator) initially reassigned the receivables for 1.254,3 million Euro, in 2018, the vehicle named Ifis ABCP Programme S.r.l. issued 850 million Euro, increased to 1.000 million Euro, worth of senior notes subscribed for by the investment vehicles owned by the banks that co-arranged the transaction, simultaneously with the two-year extension of the revolving period. An additional tranche of senior notes, with a maximum nominal amount of 150 million Euro, initially issued for 19,2 million Euro, and that was subsequently adjusted based on the composition of the assigned portfolio, was subscribed for by Banca Ifis. In 2019, this portion was first partially repaid by the vehicle, then sold to a third-party bank for a total residual value of 98,9 million Euro. The difference between the value of the receivables portfolios and the senior notes issued represents the credit granted to the notes' bearers, which consists in a deferred purchase price.
Banca Ifis acts as servicer, performing the following tasks:
\u2022following collection operations and monitoring cash flows on a daily basis;
\u2022reconciling the closing balance at every cut-off date;
\u2022verifying, completing and submitting the service report with the information on the securitised portfolio requested by the vehicle and the banks at every cut-off date.
As part of the securitisation programme, the Bank sends the amount it collects to the vehicle on a daily basis, while the new portfolio is assigned approximately six times each month; this ensures a short time lapse between the outflows from the Bank and the inflows associated with the payment of the new assignments.
Only part of the securitised receivables due from account debtors are recognised as assets - especially for the portion that the Bank has purchased outright, resulting in the transfer of all risks and rewards to the buyer. Therefore, the tables in the quantitative disclosure show only this portion of the portfolio.
In compliance with IAS/IFRS accounting standards, currently the securitisation process does not involve the substantial transfer of all risks and rewards, as it does not meet derecognition requirements. In addition, the vehicle Ifis ABCP Programme S.r.l. was consolidated because, following an analysis of the requirements set forth in IFRS 10, it was found to be subject to the control of Banca Ifis (for further details, see \"Section 3 - Scope and methods of consolidation\" of the paragraph \u201cA.1 - General part\u201d of \"Part A - Accounting policies\" of these Notes to the Consolidated Financial Statements).
The maximum theoretical loss for Banca Ifis is represented by the losses that could potentially arise within the portfolio of assigned receivables, and the impact would be the same as if the securitisation programme did not exist; therefore, the securitisation has been accounted for as follows:
\u2022the securitised receivables purchased outright were recognised under \"receivables due from customers\", subitem \"factoring\";
\u2022the funds raised from the issue of senior notes subscribed for by third parties were recognised under \"debt securities issued\u201d of the balance sheet liabilities;
\u2022the interest on the receivables was recognised under the same item of the income statement \"interest receivable and similar income\";
\u2022the interest on the notes was recognised under \"interest due and similar expenses\", sub-item \"debt securities issued\";
\u2022the arrangement fees were fully recognised in profit or loss in the year in which the programme was launched.
Emma securitisation
The securitisation transaction called Emma, prepared by the former Farbanca (now renamed Banca Credifarma following the merger by incorporation of the former Credifarma in April 2022), became part of the Banca Ifis Group as a result of the acquisition of control of this company during 2020.
In March 2018, the former Farbanca autonomously completed this securitisation for a total nominal amount of 460 million Euro. The loan portfolio transferred regarded performing exposures relative to secured credit, mortgage and unsecured loans, characterised by average seasoning of 7 years. The transaction, structured by Banca IMI (Intesa Sanpaolo Group) was completed with the acquisition of loans by the SPV pursuant to Italian Law No. 130/1999, called Emma S.P.V. S.r.l. The securities were issued in three classes: a senior class for an amount of 322 million Euro (fully subscribed by institutional investors through private placement), a mezzanine class of 46 million Euro and a junior class of 96 million Euro (both subscribed fully by the former Farbanca).
This transaction was restructured during June 2021. The restructuring, which provided for the extension of the revolving period and a size increase in the transaction up to a total of 540 million Euro, was carried out with the involvement of the Parent company Banca Ifis and Intesa Sanpaolo as co-arrangers. Following this restructuring, the securities were issued in three partly paid classes: the senior class, with a nominal amount of 397,5 million Euro, was fully subscribed by Duomo Funding Plc while the mezzanine and junior classes, with a nominal amount respectively of 53,0 million Euro and 90,1 million Euro, were fully subscribed the former Farbanca (now Banca Credifarma), which also fulfils the retention obligations in accordance with the CRR, as originator.
As a result of the revolving structure of the transaction, a further 312 new loans were assigned during 2023, for a total equivalent value of 104,7 million Euro (residual outstanding stipulated amount, including unpaid principal and interest and expenses on past due and unpaid instalments); the outstanding amount of senior, mezzanine and junior securities at 31 December 2023 is 397,5 million Euro, 53 million Euro and 83,5 million Euro, respectively.
The above securitisation transaction does not meet the requirements for derecognition in accordance with IFRS 9, not configuring a substantial transfer of all risks and related benefits. Therefore, the assets transferred and not cancelled with reference to the loans concerned by said securitisation, not meeting the requirements envisaged for derecognition, were \u201crestored\u201d to the consolidated accounts of the Banca Ifis Group.
Indigo lease securitisation
In 2016, the Banca Ifis Group, through the originator company, the former Ifis Leasing S.p.A. (incorporated into Banca Ifis since May 2018) finalised a securitisation that involved selling a portfolio of performing loans totalling 489 million Euro to the special purpose vehicle Indigo Lease S.r.l.
The securitisation was rated by the agencies Moody's and DBRS, which will also perform the annual monitoring throughout the term of the transaction.
The initial purchase price of the assigned receivables portfolio, equal to 489 million Euro, was paid by the vehicle to the merged entity, the former Ifis Leasing using funds raised from the issue of senior notes for an amount of 366 million Euro. These received an AA3 (sf) rating from Moody's and an AA (sf) rating from DBRS, and their redemption is connected to the collections realised on the receivables portfolio. In addition, the vehicle issued 138 million Euro in junior notes that were acquired by the former Ifis Leasing and did not receive a rating. In addition, the latter received a specific servicing mandate to collect and manage the receivables.
During 2017, following the transaction restructuring, a revolving system was launched involving monthly assignments of new credit to the SPV, until July 2021. At the same time, the maximum nominal amount of the senior and junior notes was increased respectively to 609,5 and 169,7 million Euro. In the same period, Banca Ifis acquired all the senior notes issued by the vehicle. Following the May 2018 merger of the former Ifis Leasing, for incorporation into Banca Ifis, the latter also became the subscriber of the junior notes.
A second restructuring took place in June 2021, with confirmation of the nominal amount of the securities and simultaneous extension of the revolving period until July 2023.
In July 2023, Banca Ifis finalised the restructuring of the securitisation, which entailed the extension of the revolving period for a further two years and an increase in the principal outstanding amount of the senior securities, as well as the derating and delisting of the same from the Luxembourg Stock Exchange (as of 20 July 2023), in addition to obtaining STS (Securitisation \"Simple, Transparent and Standardised\") status pursuant to EU Regulation 2017/2402 (Securitisation Regulation).
As part of the transaction, Banca Ifis sold to UniCredit Bank AG the entire amount of senior securities, corresponding to a nominal amount of 609,5 million Euro and a principal amount outstanding of 400 million Euro. The junior securities, with a principal amount outstanding of 147,6 million Euro, were fully retained by Banca Ifis as originator. Therefore, as of July 2023 Indigo Lease is no longer a self-securitisation.
The above securitisation transaction does not meet the requirements for derecognition in accordance with IFRS 9, not configuring a substantial transfer of all risks and related benefits. Therefore, the assets transferred and not cancelled with reference to the loans concerned by said securitisation, not meeting the requirements envisaged for derecognition, were \u201crestored\u201d to the consolidated accounts of the Banca Ifis Group.
Other securitisations
As at 31 December 2023, the Banca Ifis Group holds a portfolio of securities issued by securitisation vehicles for a total of 287,1 million Euro, of which 200,2 million Euro measured at amortised cost and 86,9 million Euro measured at fair value with impact on the income statement. Such data includes:
\u2022multi-originator securitisations in which the Group assumed, together with other banks, also the role of originator. The Group subscribed for securities with a carrying amount as at 31 December 2023 of 44,1 million Euro (at 31 December 2022, the carrying amount was 52,0 million Euro). For more details, please refer to paragraph \"C. Financial assets sold and derecognised in full\" below, within subsection \"D. Disposal transactions\" of this \"Section 2 - Prudential consolidation risks\" of Part E .
\u2022single-tranche securities and securities with underlying non-financial assets with a total carrying amount at 31 December 2023 of 84,1 million Euro.
Quantitative information
C.1 Prudential consolidation - Exposures from the main \"own\" securitisations broken down by type of securitised asset and type of exposure
Type of securitised asset/ExposureOn-balance-sheet exposuresGuarantees grantedCredit lines
SeniorMezzanineJuniorSeniorMezzanineJuniorSeniorMezzanineJunior
Carrying amountImpairment losses/ reversalsCarrying amountImpairment losses/ reversalsCarrying amountImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversals
A. Derecognised in full4.928119---------------
- Receivables due from customers4.928119---------------
B. Partly derecognised------------------
C. Not derecognised --54.1202.901297.7624.501------------
- Receivables due from customers--54.1202.901297.7624.501------------
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C.2 Prudential consolidation - Exposures from the main \"third-party\" securitisations broken down by type of securitised asset and type of exposure
Type of securitised asset/ExposureOn-balance-sheet exposuresGuarantees grantedCredit lines
SeniorMezzanineJuniorSeniorMezzanineJuniorSeniorMezzanineJunior
Carrying amountImpairment losses/ reversalsCarrying amountImpairment losses/ reversalsCarrying amountImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversalsNet exposureImpairment losses/ reversals
Financial and non-financial assets 243.076 986 43.292 438 577 - - - - - - - 179 2 - - - -
Total 243.076 986 43.292 438 577 - - - - - - - 179 2 - - - -
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C.3 Prudential consolidation - Interests in special purpose vehicles for the securitisation
Securitisation name / Special purpose vehicle name Registered office Consolidation (1)Assets (2)Liabilities (2)
ReceivablesDebt securitiesOther SeniorMezzanineJunior
Ifis ABCP Programme S.r.l.Conegliano (TV)100%1.391.859-49.6591.050.775--
Indigo Lease S.r.l.Conegliano (TV)100%504.940-30.642400.000-147.671
Emma S.P.V. S.r.l.Conegliano (TV)100%486.535-55.641397.45953.00083.499
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(1) Consolidation method referred to the so-called \"prudential\" perimeter
(2) The figures shown are gross of any intercompany transactions
C.4 Prudential consolidation - Non-consolidated securitisation vehicles
As at 31 December 2023, there are no cases referred to in this paragraph for the Banca Ifis Group.
C.5 Prudential consolidation - Servicer activities \u2013 own securitisations: collection of securitised loans and redemption of securities issued by the SPV for securitisation
ServicerVehicle companySecuritised assets (end-of-period figure)Receivables collected during the yearPercentage share of redeemed securities (end-of-period figure)
SeniorMezzanineJunior
ImpairedNot impairedImpairedNot impairedImpaired assetsNot impaired assetsImpaired assetsNot impaired assetsImpaired assetsNot impaired assets
Banca CredifarmaARCOBALENO FINANCE 6.70416.77219311.163----1,70%98,30%
Banca CredifarmaCREDIARC 31.6734.7961282.898----4,22%95,78%
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It should be noted that both the Arcobaleno and Crediarc transactions are characterised by the absence of formalised business plans in the agreements:
\u2022the Arcobaleno transaction concerned performing unsecured loans. The expected cash flows, therefore, were (with the exception of the positions relating to the counterparty in default) time-stamped to the maturity dates of the individual instalments of the amortisation schedules. The failure of debtors to meet agreed payments under individual loan agreements therefore represents a deviation from collection forecasts, resulting in exposures with delayed repayments.
\u2022Crediarc's portfolio is divided into 2 macro aggregates. The first is only performing mortgages. For this cluster, therefore, the expected receipts correspond to the progressively accrued instalments, as per the original repayment schedules. Deviations from the expected cash flows are therefore represented by the outstanding debts at the time of recognition. The second cluster is represented by unlikely to pay and non-performing loans. The net carrying amount (given by the nominal amount of the receivable net of the write-down made) attributed to these receivables represents their estimated realisable value over a 10-year period: it is important to note that the values shown have not been discounted.
C.6 Prudential consolidation - Consolidated securitisation vehicles
Refer to the information in Table C.3.
D. Disposals
A. Financial assets sold and not derecognised in full
Qualitative information
Transfer transactions that did not result in the derecognition of the underlying financial assets are represented by:
\u2022securitisation transactions of credit exposures to customers;
\u2022repurchase agreements (repos) on securities owned, mainly classified in the portfolios \"Financial assets measured at fair value through other comprehensive income\" and \"Financial assets measured at amortised cost\".
In the case of repurchase agreements, the non-derecognition of the security, which is the subject of a spot sale, derives from the fact that the Group retains substantially all the risks and rewards associated with the security, having the obligation to repurchase it forward at a contractually agreed price. The securities being transferred therefore continue to be shown in the accounting portfolios to which they belong; the consideration for the transfer is recognised under \u201cFinancial liabilities measured at amortised cost: a) payables due to banks or b) payables due to customers\u201d, depending on the type of counterparty. In this regard, it should be noted that the following tables do not represent repurchase agreements on securities not recorded in the balance sheet, if the availability of the same results from reverse repurchase agreements (please refer to the section \"Other information\" in Part B of these consolidated notes to the financial statements).
For securitisation transactions, described in section \"C. Securitisation transactions\" above, the non-derecognition follows the Group's subscription of the tranches of junior securities or similar exposures, which entail the risk of first losses for the Group and, likewise, the benefit associated with the return on the portfolio of transferred assets. In exchange for the transfer, the consideration received is recognised as a balancing entry to a liability to the special purpose vehicle, net of any tranches of securities subscribed or drawdowns of forms of liquidity support in favour of the vehicle in order to make principal payments. The loan thus recorded to the special purpose vehicle will be reduced by the sums collected by the originator, as \"servicer\", and transferred to the same vehicle.
Quantitative information
D.1. Prudential consolidation - Financial assets sold and fully recognised and associated financial liabilities: carrying amounts
Financial assets sold and fully recognisedAssociated financial liabilities
Carrying amountof which: securitisedof which: subject to repurchase agreementsof which non-performingCarrying amountof which: securitisedof which: subject to repurchase agreements
A. Financial assets held for trading - - - X- - -
1. Debt securities - - - X- - -
2. Equity securities - - - X- - -
3. Loans - - - X- - -
4. Derivatives - - - X- - -
B. Other financial assets mandatorily measured at fair value - - - - - - -
1. Debt securities - - - - - - -
2. Equity securities - - - X- - -
3. Loans - - - - - - -
C. Financial assets designated at fair value - - - - - - -
1. Debt securities- - - - - - -
2. Loans- - - - - - -
D. Financial assets measured at fair value through other comprehensive income 2.542 - 2.542 - 2.371 - 2.371
1. Debt securities 2.542 - 2.542 - 2.371 - 2.371
2. Equity securities - - - X- - -
3. Loans - - - - - - -
E. Financial assets measured at amortised cost 2.383.135 1.735.702 647.433 492.849 2.776.585 1.717.326 1.059.259
1. Debt securities647.433 - 647.433 - 1.059.259 - 1.059.259
2. Loans1.735.702 1.735.702 - 492.849 1.717.326 1.717.326 -
Total 31.12.20232.385.677 1.735.702 649.975 492.849 2.778.956 1.717.326 1.061.630
Total 31.12.20222.115.9001.303.465812.4356.8112.176.8861.395.092781.794
\"\"
D.2 Prudent consolidation - Financial assets sold and partly recognised and associated financial liabilities: carrying amounts
In these Consolidated Financial Statements, this item has no value.
D.3 Prudential consolidation - Disposal transactions with liabilities having recourse only to assets sold and not derecognised in full: fair value
Recorded in fullRecordedpartlyTotal
31.12.202331.12.2022
A. Financial assets held for trading ----
1. Debt securities ----
2. Equity securities ----
3. Loans ----
4. Derivatives ----
B. Other financial assets mandatorily measured at fair value ----
1. Debt securities ----
2. Equity securities ----
3. Loans ----
C. Financial assets designated at fair value ----
1. Debt securities ----
2. Loans ----
D. Financial assets measured at fair value through other comprehensive income 2.542-2.542-
1. Debt securities 2.542-2.542-
2. Equity securities ----
3. Loans ----
E. Financial assets measured at amortised cost (fair value)2.383.135-2.383.135507.406
1. Debt securities 647.433-647.433-
2. Loans 1.735.702-1.735.702507.406
Total financial assets 2.385.677-2.385.677507.406
Total associated financial liabilities 2.778.955-XX
Net balance at 31.12.2023393.278-2.385.677X
Net balance at 31.12.2022507.406-X507.406
\"\"
B. Financial assets sold and not derecognised in full with recognition of continuing involvement
The Group has not entered into any disposal transactions for which disclosure is required under IFRS 7.
C. Financial assets sold and derecognised in full
Qualitative information
At 31 December 2023, the Group held securitised securities and mutual fund units acquired as a result of transactions involving the sale of financial assets that were derecognised in full during 2023 and in previous years. These transactions involved the transfer of financial assets, consisting of loans, by the Group, to securitisation special purpose entities or mutual funds and their derecognition in accordance with IFRS 9, following verification that the originator itself (the Parent company Banca Ifis) had substantially transferred the risks and rewards of the transferred assets and had simultaneously retained no control over those assets. Instead of these derecognised assets, securitised securities or fund units received in the same transactions have been recognised as financial assets.
In relation to the provisions contained in the Bank of Italy's Communication of 23 December 2019, transposed in the 7th update of Circular 262, below is the disclosure relating to multi-originator disposal transactions of loan
portfolios, in particular of \"unlikely to pay\" portfolios, attributable to the transfer of loans to a mutual fund with allocation of the relative shares to the transferring intermediaries.
Quantitative information
The following table provides details of the funds held, showing the fund management company and the carrying amount at 31 December 2023.
Fund name
Carrying amount at
31.12.2023 (in thousands of Euro)
Asset management company
City Regeneration Fund
6.579
Redo SGR
IDeA Corporate Credit Recovery I - Loans sub-fund
2.744
Dea Capital Alternative Funds SGR
IDeA Corporate Credit Recovery II - Loans sub-fund
2.525
Dea Capital Alternative Funds SGR
IDeA Corporate Credit Recovery II - Shipping sub-fund
1.551
Dea Capital Alternative Funds SGR
BCC NPLs 2020
38.032
BCC NPLs 2020 S.r.l
BCC NPLs 2021
6.075
BCC NPLs 2021 S.r.l
\"\"
\"\"
\"\"
Transactions concluded during the year
City Regeneration Fund
A closed-end real estate alternative investment fund reserved for professional investors established in November 2020 with the objective of making sustainable investments in real estate initiatives aimed at urban regeneration and having a social impact, with a focus on Social Housing, Senior Living and Student Housing.
In November 2023, Banca Ifis sold its claim against a single debtor, classified as unlikely to pay, which owns the largest urban regeneration project in Italy, with a nominal amount of 9,2 million Euro and a carrying amount of 5,9 million Euro. For this transaction, Banca Ifis received units of the City Regeneration Fund, entered at a fair value of 6,3 million Euro.
At 31 December 2023, the Banca Ifis Group's share is 1,9% of the total value of the Fund's subscriptions and its carrying amount is 6,6 million Euro.
Transactions concluded in previous years
IDeA CCR I Fund - Credit sub-fund
Fund established in January 2016, with the objective of purchasing non-performing loans and instruments claimed by banks from companies involved in restructuring processes.
Banca Ifis became a shareholder in July 2019, as part of the last closing realised by the fund, through the subscription of units worth 15,9 million Euro, in conjunction with the sale to the fund of receivables and equity instruments owed to an operator in the automotive segment. Banca Ifis's share of the Fund is 13,66% of the sub-fund. No distributions were made from the sub-fund during 2023. The sub-fund's management team is focused on selling the last asset in the portfolio from which the final redemption of units will be derived. The carrying amount at 31 December 2023 is 2,7 million Euro.
IDeA CCR II Fund - Credit sub-fund
Fund established in 2017, a replica of the CCR I fund launched previously, with the objective of purchasing non-performing loans and instruments claimed by banks from companies involved in restructuring processes.
In 2017, Banca Ifis subscribed units for a total initial value of 8,8 million Euro in conjunction with the assignment to the Fund of its claim against a single debtor operating in the manufacturing sector.
At the time of subscription, Banca Ifis's shareholding in the sub-fund was 3,72%. As a result of the subsequent closings implemented by the Fund, in which Banca Ifis did not participate, the Fund's shareholding in the sub-fund was reduced to 1,07% at 31 December 2023
Over the years, distributions have been made in favour of shareholders. The carrying amount at 31 December 2023 is 2,5 million Euro.
IDeA CCR II Fund - Shipping sub-fund
Sub-fund established in 2018 within the CCR II Fund launched in 2017, specifically for non-performing loans arising from transactions with ship operators. The sub-fund is denominated in US dollars.
The subscription of the sub-fund's shares by Banca Ifis took place in December 2018 with an investment of 37,7 million Dollar, an amount coinciding with the price of the sale of ship mortgage-backed loans to as many operators. Banca Ifis's shareholding represents 19,34% of the sub-fund's units.
Over the years, the Fund has made significant distributions from the proceeds realised through the restructuring of receivables, repossession of ships and the subsequent sale of part of them, greatly anticipating the recovery expected by shareholders. The carrying amount at 31 December 2023 is 1,6 million Euro.
Alternative investment funds in non-performing loans
In 2019, a disposal took place of non-performing retail loans worth a nominal amount of approximately 15,7 million Euro and with a carrying amount of 1,9 million Euro. For this transaction, the Banca Ifis Group received units of three mutual investment funds (Masaccio, Value Italy Credit 2 and Ares 1) entered at an initial fair value of 7,6 million Euro. The carrying amount at 31 December 2023 of such funds is 5,5 million Euro.
In addition to the above, again with a view to pursuing de-risking activities, Banca Ifis participated in two multi-originator securitisation transactions in 2020 and 2021, respectively.
\u201cBCC NPLs 2020\u201d securitisation
multi-originator transaction whereby, in November 2020, 90 banks, 88 of which belong to the Iccrea Cooperative Banking Group and two banks outside the group (Banca Ifis and Banca Popolare Valconca), completed the sale of an equal number of portfolios of non-performing loans classified as bad loans at the date of sale for a total credit claim of 2,3 billion Euro (of which 249,0 million Euro related to the portfolio sold by Banca Ifis) in favour of a vehicle company (\"BCC NPLs 2020 S.r.l.\") set up pursuant to Law 130/1999 through the realisation of a securitisation of bad loans guaranteed by Italian Treasury Department (\u201cGACS\u201d) pursuant to L.D. No. 18 of 14 February 2016.
BCC NPLs 2020 S.r.l. financed acquisitions of the loans portfolio by issuing asset-backed securities, in accordance with the combined provisions of Articles 1 and 5 of Italian Law No. 130, for a total nominal amount of approximately 585 million Euro, structured into the following classes:
\u2022520 million Euro of senior securities (of which a nominal 55 million Euro subscribed by Banca Ifis), maturing in January 2045 and with Baa2 and BBB ratings issued by Moody's Italia S.r.l. and Scope, respectively;
\u202241 million Euro in mezzanine notes maturing in January 2045, with rating Caa2 and CC assigned respectively by Moody\u2019s Italia S.r.l. and Scope;
\u202224 million Euro in junior notes maturing in January 2045, unrated.
The mezzanine securities and the junior securities were subscribed by independent investors having no relationship and/or ties with the originator banks, it being understood that each originator bank undertook to maintain a share of at least 5% of the nominal amount of each tranche of Securities issued in the context of the Transaction. The share of mezzanine and junior securities subscribed by Banca Ifis is 245 thousand Euro and 143 thousand Euro, respectively.
In the context of this transaction, the Parent company Banca Ifis benefited from the accounting and prudential derecognition of the transferred assets. The carrying amount at 31 December 2023 is 37,9 million Euro for senior units, 0,2 million Euro for mezzanine units, and junior units are of negligible value.
\u201cBCC NPLs 2021\u201d securitisation:
multi-originator transaction whereby, in November 2021, 77 Banks, 74 of which belong to the Iccrea Cooperative Banking Group and 3 banks outside the group (Banca Ifis, Cassa di Risparmio di Asti and Guber Banca), completed the sale of an equal number of portfolios of non-performing loans classified as bad loans at the date of sale for a total credit claim of 1,3 billion Euro (of which 86,9 million Euro related to the portfolio sold by Banca Ifis) in favour of a vehicle company (\"BCC NPLs 2021 S.r.l.\") set up pursuant to Law 130/1999 through the realisation of a securitisation of bad loans guaranteed by Italian Treasury Department (\u201cGACS\u201d) pursuant to L.D. No. 18 of 14 February 2016.
BCC NPLs 2021 S.r.l. financed acquisitions of the loans portfolio by issuing asset-backed securities, in accordance with the combined provisions of Articles 1 and 5 of Italian Law No. 130, for a total nominal amount of 336,5 million Euro, structured into the following classes:
\u2022284 million Euro of Senior Securities (of which a nominal 7,8 Euro subscribed by Banca Ifis), maturing in April 2046 and with Baa2, BBB and BBB ratings issued by Moody's Italia S.r.l., Scope and Arc Rating S.A., respectively;
\u202239,5 million Euro in Mezzanine Notes maturing in April 2046, with rating Caa2, CCC and CCC+ assigned respectively by Moody's Italia S.r.l., Scope and Arc Rating S.A., respectively;
\u202213 million Euro in Junior Notes maturing in April 2046, unrated.
The Mezzanine Securities and the Junior Securities were subscribed by independent investors having no relationship and/or ties with the originator banks, it being understood that each originator bank undertook to maintain a share of at least 5% of the nominal amount of each tranche of Securities issued in the context of the Transaction. The share of Mezzanine and Junior Securities subscribed by the Parent company Banca Ifis is 131 thousand Euro and 43 thousand Euro, respectively.
In the context of this transaction, Banca Ifis benefited from the accounting and prudential derecognition of the transferred assets. The carrying amount at 31 December 2023 is 6,1 million Euro for senior units while the mezzanine units and junior units are of irrelevant value.
D. Covered bond transactions
The Banca Ifis Group did not engage in any covered bond transactions.
E. Prudential consolidation - models for measuring credit risk
The Banca Ifis Group does not have internal portfolio models on credit risk (VaR methodology).
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page197-cflshid_99705-tag94291": { "value": "
A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net amounts)
Portfolio/QualityNon-performingPerformingTotal(net exposure)
Gross exposureOverall impairment losses/reversalsNet exposure Overall partial write-offs (1)Gross exposureOverall impairment losses/reversalsNet exposure
1. Financial assets measured at amortised cost2.035.592 180.510 1.855.082 3.149 9.517.793 113.174 9.404.619 11.259.701
2. Financial assets measured at fair value through other comprehensive income- - - - 635.469 1.163 634.306 634.306
3. Financial assets designated at fair value- - - - XX- -
4. Other financial assets mandatorily measured at fair value7.030 - 7.030 - XX86.991 94.021
5. Financial assets under disposal- - - - - - - -
Total 31.12.20232.042.622 180.510 1.862.112 3.149 10.153.262 114.337 10.125.916 11.988.028
Total 31.12.20221.938.159151.4481.786.7113.7309.665.62496.5539.645.65311.432.364
\"\"
(1) Amount to be reported for disclosure purposes
Excluded from this table are on-demand receivables from banks (which are classified under the item \"Cash and cash equivalents\", in accordance with Bank of Italy instructions), equity securities and UCITS units.
Portfolio/Quality
Low creditquality assets
Other assets
Accumulated capital losses
Net exposure
Net exposure
1. Financial assets held for trading
2. Hedging derivatives
-
-
12.896
Total 31.12.2023
-
-
12.896
Total 31.12.2022
9
4
26.271
\"\"
Equity securities are not included in this table.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page210-cflshid_108081-tag94293": { "value": "
2.4 Credit risk mitigation techniques
Credit risk mitigation techniques include instruments that contribute to reducing the loss that the Group would incur in the event of counterparty default; specifically, they refer to guarantees received from customers, both collateral and personal, and to any contracts that may lead to a reduction in credit risk.
In general, as part of the process of granting and managing credit, for certain types of lines, the release by customers of suitable guarantees to reduce their risk is encouraged. They can be represented by:
\u2022collateral encumbering assets, such as pledges on financial assets, mortgages on real estate (residential/non-residential); and/or
\u2022personal guarantees (typically sureties) on a third party where the person (natural or legal) acts as guarantor of the customer's debt position in the event of insolvency.
In particular:
\u2022as part of factoring operations, when the type and/or quality of factored receivables do not fully satisfy requirements or, more generally, the invoice seller is not sufficiently creditworthy, the bank's established practice is to hedge the credit risk assumed by the Group by obtaining additional surety bonds from the shareholders or directors of the invoice seller. As for the account debtors in factoring relationships, wherever the Bank believes that the elements available to assess the account debtor do not allow to properly measure/assume the related credit risk, or the proposed amount of risk exceeds the limits identified during the debtor\u2019s assessment, the Bank adequately hedges the risk of default of the account debtor. Guarantees issued by correspondent factors and/or insurance policies underwritten with specialised operators are the main hedge against non-domestic account debtors in non-recourse operations;
\u2022in loans to businesses, where possible, suitable guarantees are acquired from the Central Guarantee Fund or other companies coming under the public scope, such as SACE S.p.A.;
\u2022in regard to Structured Finance, collateral is acquired according to the counterparty's standing as well as the term and type of the facility. Said collateral includes mortgage guarantees, liens on plant and equipment, pledges, surety bonds, credit insurance, and collateral deposits;
\u2022as for finance leases, the credit risk is mitigated by the leased asset. The lessor maintains the ownership until the purchase option is exercised, ensuring a higher recovery rate in the event the client defaults;
\u2022as for operations concerning distressed loans and purchases of tax receivables arising from insolvency proceedings, as well as the relevant business model, generally no action is implemented to hedge credit risks;
\u2022salary-backed loans have low risk, considering the particular characteristics of this product: it requires having insurance against the customer's risk of death and/or loss of employment as well as imposing a lien on the severance indemnity (\u201cTFR\u201d) earned by the customer as additional collateral for the loan.
\u2022lending to pharmacies involves an advance as well as a transfer or debt collection mandate, with the possibility of deducting subsequent advances from existing credit facilities.
In line with that established by the Liquidity Decree (Italian Decree Law No. 23 of 8 April 2020), the Group has benefited from the guarantees offered by the state Guarantee Fund for the type of customer and loans envisaged by the Decree, with cover that can reach 100%. This guarantee enables a reduction in the RWAs relative to the credit risk, proportionally to the share of exposure covered by the Fund.
The acquired Npl portfolios include positions secured by mortgages on properties with a lower level of risk than the total portfolio acquired.
When calculating the overall credit limit for an individual customer and/or legal and economic group, the Bank considers specific criteria when weighing the different categories of risks and guarantees. Specifically, when measuring collateral, it applies prudential \"spreads\" differentiated by type of guarantee.
The Group continuously verifies the quality and adequacy of the guarantees acquired on the loan portfolio, with second level monitoring carried out by the Parent company\u2019s Risk Management Department and carried out under the scope of the Single File Review (SFR)", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCollateralExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page224-cflshid_117116-tag94294": { "value": "
A.3 Breakdown of guaranteed credit exposures by guarantee type
A.3.1 Prudential consolidation - Guaranteed on- and off-balance-sheet credit exposures to banks
Gross exposureNet exposureCollateral guarantees (1)Personal guarantees (2)Total(1)+(2)
Credit derivativesUnsecured loans
Property - mortgagesProperty - lease financingSecuritiesOther collateralCLNOther derivativesGeneral governmentsBanksOther financial corporationsOther entities
Central counterpartiesBanksOther financial corporationsOther entities
1. Guaranteed on-balance-sheet credit exposures: 100 100 - - - 100 - - - - - - - - - 100
1.1 totally guaranteed 100 100 - - - 100 - - - - - - - - - 100
- of which non-performing - - - - - - - - - - - - - - - -
1.2 partially guaranteed - - - - - - - - - - - - - - - -
- of which non-performing - - - - - - - - - - - - - - - -
2. Guaranteed off-balance-sheet credit exposures: - - - - - - - - - - - - - - - -
2.1 totally guaranteed - - - - - - - - - - - - - - - -
- of which non-performing - - - - - - - - - - - - - - - -
2.2 partially guaranteed - - - - - - - - - - - - - - - -
- of which non-performing - - - - - - - - - - - - - - - -
\"\"
A.3.2 Prudential consolidation - Guaranteed on- and off-balance-sheet credit exposures to customers
Gross exposure
Net exposure
Collateral guarantees (1)
Personal guarantees (2)
Total (1)+(2)
Credit derivatives
Unsecured loans
Property - mortgages
Property - lease financing
Securities
Other collateral
CLN
Other derivatives
General governments
Banks
Other financial corporations
Other entities
Central counterparties
Banks
Other financial corporations
Other entities
1. Guaranteed on-balance-sheet credit exposures:
3.672.265
3.541.846
443.098
-
-
1.719.710
-
-
-
-
-
739.681
651
7.438
398.262
3.308.840
1.1 totally guaranteed
2.566.740
2.480.129
358.414
-
-
1.590.554
-
-
-
-
-
155.567
651
7.372
367.567
2.480.125
- of which non-performing
225.250
169.351
82.120
-
-
21.607
-
-
-
-
-
11.428
-
76
54.120
169.351
1.2 partially guaranteed
1.105.525
1.061.717
84.684
-
-
129.156
-
-
-
-
-
584.114
-
66
30.695
828.715
- of which non-performing
64.403
39.912
5.335
-
-
85
-
-
-
-
-
24.729
-
-
1.957
32.106
2. Guaranteed off-balance-sheet credit exposures:
57.567
57.376
-
-
195
7.733
-
-
-
-
-
186
-
51
37.697
45.862
2.1 totally guaranteed
43.982
43.831
-
-
195
7.551
-
-
-
-
-
-
-
51
35.415
43.212
- of which non-performing
1.851
1.851
-
-
-
-
-
-
-
-
-
-
-
-
1.851
1.851
2.2 partially guaranteed
13.585
13.545
-
-
-
182
-
-
-
-
-
186
-
-
2.282
2.650
- of which non-performing
2.019
2.019
-
-
-
-
-
-
-
-
-
-
-
-
465
465", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page240-cflshid_127849-tag94295": { "value": "
1.2 Market risks
1.2.1 Interest rate risk and price risk - supervisory trading book
Qualitative information
A. General aspects
In 2023, the investment strategy continued, as regulated in the \"Banca Ifis Proprietary Portfolio Management Policy\" and in the \u201cPolicy for Managing Securitisation & Structured Solutions investment operations\u201d is structured to coincide with the risk appetite formulated by the Board of Directors under the scope of the Risk Appetite Framework (RAF) and laid out in the \"Group Market Risk Management Policy\", as well as with the system of objectives and limits.
Consistent with the conservative \"stance\" outlined in the above-mentioned documents, for most of the year the overall investment strategy focused on risk containment, implemented mainly by seeking out securities characterised by high liquidity and a strategy of steady returns over the medium term.
The component relating to the \"trading book\" from which the market risk in question originates was marginal with respect to the total investments in the banking book both in absolute terms of the risk values recorded and with respect to the established limits. The trading book mainly comprises options and futures deriving from hedging transactions and ancillary enhancements to the investment strategy in assets that are part of the \u201cbanking book\u201d and \u201cdiscretionary trading\u201d portfolio, characterised by short-term speculation and marginal exposure.
The trading book also contains residual transactions from the Corporate Banking operations, as part of which clients were offered derivative contracts hedging the financial risks they assumed. In order to remove market risk, all outstanding transactions are hedged with \"back to back\" trades, in which the Bank assumes a position opposite to the one sold to corporate clients with independent market counterparties.
B. Management procedures and measurement methods concerning interest rate risk and price risk
The guidelines on the assumption and monitoring of market risk are laid out on a Group level in the \u201cGroup Market Risk Management Policy\u201d, which also indicates, for the purpose of a more rigorous and detailed representation of the process activities, the metrics used for the measuring and monitoring of this risk.
In particular, the measurement and assessment of market risks is based on the various characteristics (in terms of time frame, investment instruments, etc.) of the investment strategies used in the documents \u201cBanca Ifis Proprietary Portfolio Management Policy\u201d and \u201cPolicy for Managing Securitisation & Structured Solutions investment operations\u201d, which defines and details the strategies to be pursued in terms of portfolio structure, operative instruments and assets.
Under this scope, the monitoring of the consistency of the Group\u2019s portfolio risk profiles in respect of the risk/return objectives is based on a system of limits (both strategic and operational), which envisages the combined use of various different indicators. More specifically, the following are defined:
\u2022Maximum Acceptable Loss;
\u2022Maximum negative gross financial impact;
\u2022VaR (Value at Risk) limit;
\u2022limits of sensitivity and Greeks;
\u2022any limits to the type of financial instruments admitted;
\u2022any composition limits.
Respect for the limits assigned to each portfolio is checked daily.
The summary indicator used to assess exposure to the risks in question is the Value at Risk (VaR), which represents market best practice for monitoring risks arising from financial market operations. It should be noted, however, that VaR and the limits derived from it, while not used by the Group as a proprietary internal model for determining capital requirements, are used on an ongoing basis for management assessment purposes. In a broader perspective relative to financial market operations, the banking portfolio is also prudentially monitored according to the logic of market risks and subject to specific limits, i.e., the positions to which an HTC&S (Held to Collect and Sell) business model is associated and recorded at fair value with impact on overall profitability (FVOCI), as well as the positions recorded at fair value with impact on the income statement (FVTPL), whose changes in value could have significant impacts on the Group's reserves (and consequently on the carrying amounts) and/or income statement.
VaR is a statistical measure to estimate the loss that could occur as a result of adverse movements in risk factors.
Specifically, the VaR is measured using a confidence interval of 99% and a holding period of 1 day; it expresses the \u201cthreshold\u201d of daily losses that, on the basis of probabilistic hypotheses may only be surpassed in 1% of cases. The approach used to calculate the VaR is historical simulation. With this approach, the portfolio is re-valued, applying all variations to the risk factors recorded the previous year (256 observations). The values thus obtained are compared with the current portfolio value, determining the relevant series of hypothetical gains or losses. The VaR is the average of the second and third worst results.
The VaR is also divided, for monitoring purposes, amongst the risk factors referring to the portfolio.
In addition to the risk indications deriving from the VaR, the Expected Shortfall (ES), which expresses the daily loss that exceeds the VaR figure, and the Stressed VaRs, which represent VaR calculated in a particularly turbulent historical period, which in the specific case corresponds to the Italian debt crisis of 2011-2012 and the 2020 Covid-19 pandemic, are also used for monitoring purposes.
The forecasting capacity of the risk measurement model used is verified through a daily backtesting analysis in which the VaR for the positions in the portfolio at t-1 is compared with the profit and loss generated by such positions at t.
During 2023, VaR utilisation was well below the assigned limit at all times, partly as a result of the reduction in volatility experienced by the various asset classes, as can be seen in the chart below. The figure at the end of 2023 stood at 1,7 million Euro, against a risk appetite level of approximately 9 million Euro.
Quantitative information
1. Supervisory trading book: breakdown by residual maturity (re-pricing date) of on-balance-sheet financial assets and liabilities and financial derivatives - Currency: Euro
Type/Residual maturityon demandup to 3 monthsover 3 to 6 monthsover 6 months to 1 yearover 1 to 5 yearsover 5 to 10 yearsover 10 yearsindefinite life
1. On-balance-sheet assets - - - - - - - -
1.1 Debt securities - - - - - - - -
- with early redemption option - - - - - - - -
- other - - - - - - - -
1.2 Other assets - - - - - - - -
2. On-balance-sheet liabilities - - - - - - - -
2.1 Repurchase agreements - - - - - - - -
2.2 Other liabilities - - - - - - - -
3. Financial derivatives \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
3.1 With underlying security \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
- Options \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
+ long positions - - - - - 12.313 - -
+ short positions - - - - - - - -
- Other \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
+ long positions - - - - - - - -
+ short positions - - - - - - - -
3.2 Without underlying security \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
- Options \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
+ long positions - 17.365 4.793 63 398 975 4 -
+ short positions - 816 - 61 373 14.633 7.714 -
- Other derivatives\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
+ long positions - - 6.439 1.041 4.025 - - -
+ short positions - - 6.439 1.041 4.025 - - -
\"\"
2. Supervisory trading book: distribution of equity exposures and equity indices by major market listing countries
The Banca Ifis Group has no cases for which the disclosures in this paragraph are applicable.
3. Supervisory trading book: internal models and other methods for the sensitivity analysis
The Banca Ifis Group does not have internal models for the regulatory trading book.
1.2.2 Interest rate risk and price risk - banking portfolio
Qualitative information
A. General aspects, management procedures and measurement methods concerning the interest rate risk and the price risk
The assumption of a significant interest rate risk is in principle unrelated to the management of the Group. In terms of breakdown of the balance sheet with reference to the types of risk in question, in respect of the liabilities, the main funding source is still the on-line savings accounts and the Rendimax current account, structured into the technical forms of fixed-rate customer deposit accounts for the restricted component and the non index-linked variable rate that can be unilaterally revised by the Group in respect of the rules and contracts, for the technical forms of unrestricted demand and on-call current accounts. The other main components of funding concern fixed-rate bond funding, variable-rate securitisation operations, repurchase agreements at both fixed and variable rate and loans with the Eurosystem (referred to as TLTRO and LTRO) at variable rates.
As for the assets, loans to customers still largely have floating rates as far as both trade receivables and corporate financing are concerned.
As for the operations concerning distressed retail loans carried out by the subsidiaries Ifis Npl Investing, Revalea and Ifis Npl Servicing, the first two are characterised by a business model focused on acquiring receivables at prices lower than their nominal amount, there is a potential interest rate risk associated with the uncertainty about when the receivables will be collected.
At 31 December 2023, the comprehensive bond portfolio mainly comprises government securities for a percentage of 66%; the modified average duration and average maturity of the portfolio are respectively 2,2 years and 2,9 years.
The Capital Markets function is appointed to guarantee the rate risk management, which, in line with the risk appetite established, defines what action is necessary to pursue this. The Risk Management function is responsible for proposing the risk appetite, identifying the most appropriate risk indicators and monitoring the relevant performance of the assets and liabilities in connection with the pre-set limits. Top Management makes annual proposals to the Parent company Banca Ifis Board as to the policies on lending, funding and the management of interest rate risk, as well as suggesting appropriate actions by which to ensure that operations are carried out consistently with the risk policies approved by the Group.
The Risk Management function periodically reports to the Parent company's Board of Directors on the interest rate risk position by means of a specific monthly report prepared for the Parent company's management.
The interest rate risk falls under the category of second-pillar risks. The guidelines on the assumption and monitoring of market risk are laid out on a Group level in the \u201cGroup Banking Book Interest Rate Risk Management Policy\u201d, which also indicates, for the purpose of a more rigorous and detailed representation of the process activities, the metrics used for the measuring and monitoring of the risk in question. Monitoring is performed at the consolidated level.
Starting from 2023, the Banca Ifis Group hedges the interest rate risk. In particular, the Group adopts a \"fair value hedge\" strategy, in which the hedging instruments are IRS plain vanilla derivative contracts and the \"hedged items\" are certain government bonds (in this case Italian BTPs) measured at amortised cost.
The classification of the bonds held as \u201cFinancial assets measured at fair value through other comprehensive income\u201d introduces the risk that the Group's reserves may fluctuate as a result of the change in their fair value. There is also a residual portion in equity securities, which belong to the major European indexes and are highly liquid, including \u201cFinancial assets measured at fair value through other comprehensive income\u201d. A part share of these assets are economically hedged through derivatives that are part of the trading book, not represented in the accounts through hedge accounting.
Below is the sensitivity analysis for the main balance sheet items, both assets and liabilities, with evidence of the effect of a 1 basis point movement up or down, also showing the relative duration alongside.
Macro item (figures in thousands of Euro)Sensitivity -1bpsSensitivity +1bpsDuration
1. On-balance-sheet assets2.466(2.466)1,61
1.1 Debt securities639(639)1,80
1.2 Loans to banks5(5)0,05
1.3 Loans to customers1.822(1.822)1,69
2. On-balance-sheet liabilities(1.204)1.2040,98
2.1 Payables due to customers and securities issued(1.126)1.1261,18
2.2 Payables due to banks(78)780,28
3.1 Hedging derivatives - variable leg6(6)0,17
3.2 Hedging derivatives - fixed leg(191) 191 4,80
Total1.077(1.077)0,60
\"\"
From a managerial viewpoint, the above assets are specifically monitored as regulated in the \"Group Market Risk Management Policy\u201d and the \u201cGroup Rates Risk Management Policy\u201d.
The following table shows the sensitivity analysis with reference to the impact at the level of the economic item \"Net interest income\", and consequently at the level of the pre-tax result for the year, of a change of 20 basis points up or down, set forth at the level of the associated interest-bearing asset components.
Macro item (figures in thousands of Euro)Sensitivity -20 bpsSensitivity +20 bps
Debt securities(2.278)2.274
Loans to banks(1.582)1.579
Loans to customers(10.043)10.029
Payables due to customers and securities issued 7.486(7.475)
Payables due to banks4.322(4.315)
Hedging derivatives(578)577
Total(2.672)2.669
\"\"
Quantitative information
1. Banking book: breakdown by residual maturity (re-pricing date) of financial assets and liabilities - Currency: Euro
Type/Residual maturityon demandup to 3 monthsover 3 to 6 monthsover 6 months to 1 yearover 1 to 5 yearsover 5 to 10 yearsover 10 yearsIndefinite life
1. On-balance-sheet assets3.356.102 4.200.712 1.232.532 585.500 2.154.643 956.014 133.025 -
1.1 Debt securities9.872 1.051.781 526.365 296.105 834.803 539.518 48.915 -
- with early redemption option-147.977 41.727 120.356 204.992 82.757 21.909 -
- other9.872 903.804 484.638 175.749 629.811 456.761 27.006 -
1.2 Loans to banks853.739 31.146 6 13 71 ---
1.3 Loans to customers2.492.491 3.117.785 706.161 289.382 1.319.769 416.496 84.110 -
- current a/c102.771 4.758 6.072 14.239 98.145 26.446 5.878 -
- other loans2.389.720 3.113.027 700.089 275.143 1.221.624 390.050 78.232 -
- with early redemption option239.320 1.555.419 469.474 86.025 6.101 3.816 346 -
- other2.150.400 1.557.608 230.615 189.118 1.215.523 386.234 77.886 -
2. On-balance-sheet liabilities1.239.133 2.838.278 1.311.916 1.138.815 3.198.545 45.980 1.855.650 -
2.1 Due to customers1.239.004 944.577 865.171 1.040.122 1.643.179 5.139 2.400 -
- current a/c657.659 37.649 34.926 50.620 68.241 ---
- other payables581.345 906.928 830.245 989.502 1.574.938 5.139 2.400 -
- with early redemption option--------
- other581.345 906.928 830.245 989.502 1.574.938 5.139 2.400 -
2.2 Payables due to banks112 1.893.690 99.938 98.692 466.350 40.841 207 -
- current a/c19 -------
- other payables93 1.893.690 99.938 98.692 466.350 40.841 207 -
2.3 Debt securities17 11 346.807 1 1.089.016 -1.853.043 -
- with early redemption option----372.744 ---
- other17 11 346.807 1 716.272 -1.853.043 -
2.4 Other liabilities --------
- with early redemption option--------
- other--------
3. Financial derivatives
3.1 With underlying security
- Options
+ long positions--------
+ short positions--------
- Other derivatives
+ long positions--------
+ short positions--------
3.2 Without underlying security
- Options
+ long positions--------
+ short positions--------
- Other derivatives
+ long positions-339.700 16.000 -----
+ short positions----94.200 261.500 --
4. Other off-balance-sheet transactions
+ long positions 173.056 -------
+ short positions 90.316 2.532 2.056 1.263 48.850 28.039 --
\"\"
1. Banking book: breakdown by residual maturity (re-pricing date) of financial assets and liabilities - Currency: Other currencies
Type/Residual maturityon demandup to 3 monthsover 3 to 6 monthsover 6 months to 1 yearover 1 to 5 yearsover 5 to 10 yearsover 10 yearsIndefinite life
1. On-balance-sheet assets83.607 124.774 9.533 -----
1.1 Debt securities--------
- with early redemption option--------
- other--------
1.2 Loans to banks10.276 37.996 ------
1.3 Loans to customers73.331 86.778 9.533 -----
- current a/c--------
- other loans73.331 86.778 9.533 -----
- with early redemption option78 7.022 ------
- other73.253 79.756 9.533 -----
2. On-balance-sheet liabilities74.970 117.309 -62 ----
2.1 Due to customers74.970 --62 ----
- current a/c74.970 -------
- other payables---62 ----
- with early redemption option--------
- other---62 ----
2.2 Payables due to banks-117.309 ------
- current a/c--------
- other payables-117.309 ------
2.3 Debt securities--------
- with early redemption option--------
- other--------
2.4 Other liabilities --------
- with early redemption option--------
- other--------
3. Financial derivatives
3.1 With underlying security
- Options
+ long positions--------
+ short positions--------
- Other derivatives
+ long positions--------
+ short positions--------
3.2 Without underlying security
- Options
+ long positions--------
+ short positions--------
- Other derivatives
+ long positions--------
+ short positions--------
4. Other off-balance-sheet transactions
+ long positions -8.757 ------
+ short positions -8.757 ------
\"\"
2. Banking book: internal models and other methods for the sensitivity analysis
The Banca Ifis Group does not have internal models for the banking book.
1.2.3 Currency risk
Qualitative information
A. General aspects, management procedures and measurement methods of the currency risk
The assumption of currency risk, intended as an operating element that could potentially improve cash management performance, is not part of the Group's policies. The Banca Ifis Group's foreign currency operations largely involve collections and payments associated with factoring operations and in hedging assets in foreign currencies, like units of UCITS. In this sense, the assets in question are generally hedged with deposits and/or loans from other banks in the same currency, thus eliminating for the most part the risk of losses associated with exchange rate fluctuations. In some cases, synthetic instruments are used as hedging instruments.
A residual currency risk arises as a natural consequence of the mismatch between the clients' borrowings and the Capital Markets function's funding operations in foreign currency. Such mismatches are mainly a result of the difficulty in correctly anticipating financial trends connected with factoring operations, with particular reference to cash flows from account debtors vis-\u00e0-vis the maturities of loans granted to customers, as well as the effect of interest on them.
However, the Capital Markets function strives to minimise such mismatches every day, constantly realigning the size and timing of foreign currency positions.
Currency risk related to the Bank's business is assumed and managed according to the risk policies and limits set by the Parent company's Board of Directors, with precise delegations of power limiting the autonomy of those authorised to operate, as well as especially strict limits on the daily net currency position.
The business functions responsible for ensuring the currency risk is managed correctly are: the Capital Markets function, which, amongst other duties, directly manages the Bank's funding operations and currency position; the Risk Management function, responsible for selecting the most appropriate risk indicators and monitoring them with reference to pre-set limits; and the Top Management, which every year, based on the Capital Markets function's proposals, shall consider these suggestions and make proposals to Banca Ifis's Board of Directors regarding policies on funding and the management of currency risk, as well as suggest appropriate actions during the year in order to ensure that operations are conducted consistently with the risk policies approved by the Group.
As regards the subsidiaries Ifis Finance Sp. z o.o. and Ifis Finance I.F.N. S.A., which operate on the Polish and Romanian markets, respectively, exposures in Polish zloty and leu from factoring activities are financed by funding in the same currency.
With the acquisition of the Polish subsidiary, Banca Ifis has assumed the currency risk represented by the initial investment in Ifis Finance Sp. z o.o.\u2019s share capital for an amount of 21,2 million Zloty and the subsequent share capital increase for an amount of 66 million Zloty.
As instead for the Rumanian subsidiary Ifis Finance I.F.N. S.A., Banca Ifis assumed the exchange rate risk on its own at the time of its incorporation through the initial payment into the share capital totalling 14,7 million Romanian Leu and at the time of the payments of 9,6 million Leu, 24,7 million Leu and 49,0 million Leu as a capital increase respectively during the second half of 2022 and the first and second half of 2023.
Furthermore, Banca Ifis owns a 4,68% interest in India Factoring and Finance Solutions Private Limited, worth 20 million Indian rupees and with a market value of 3,0 million Euro at the historical exchange rate. In 2015 the Bank tested said interest for impairment, recognising a 2,4 million Euro charge in profit or loss. Starting from 2016, the fair value was adjusted through equity, bringing the value of the equity interest to 487 thousand Euro at 31 December 2023.
The Risk Management function is committed to monitoring the set limits, aimed at verifying that the Group's exchange rate risk remains low. As at 31 December 2023, the total net position amounts to about 4,1 million Euro (or about 0,2% of own funds), with a maximum single-currency exposure of 1,9 million Euro.
B. Hedging of currency risk
Considering the size of this investment and the foregoing on the management method, the Bank did not deem it necessary to hedge the ensuing currency risk.
Quantitative information
1. Distribution of assets, liabilities and derivatives by currency
Items
Currencies
US DOLLAR
UK STERLING
JAPANESE YEN
CANADIAN DOLLAR
SWISS FRANC
OTHER CURRENCIES
A. Financial assets
149.114
8.916
752
37
2.769
96.417
A.1 Debt securities
-
-
-
-
-
-
A.2 Equity securities
1.551
3.600
-
-
1.537
3.294
A.3 Loans to banks
39.519
1.296
116
37
1.232
12.958
A.4 Loans to customers
108.044
4.020
636
-
-
80.165
A.5 Other financial assets
-
-
-
-
-
-
B. Other assets
-
-
-
-
-
46
C. Financial liabilities
150.603
8.648
704
-
2.700
29.813
C.1 Payables due to banks
75.672
8.644
704
-
2.700
29.589
C.2 Payables due to customers
74.931
4
-
-
-
224
C.3 Debt securities
-
-
-
-
-
-
C.4 Other financial liabilities
-
-
-
-
-
-
D. Other liabilities
2
5
-
-
-
2.253
E. Financial derivatives
- Options
+ long positions
-
-
-
-
-
-
+ short positions
-
-
-
-
-
-
- Other
+ long positions
-
-
-
-
-
-
+ short positions
-
-
-
-
-
45.927
Total assets
149.114
8.916
752
37
2.769
96.463
Total liabilities
150.605
8.653
704
-
2.700
77.993
Imbalance (+/-)
(1.491)
263
48
37
69
18.470
\"\"
2. Internal models and other methods for the sensitivity analysis
The Banca Ifis Group does not have internal models for currency risk.
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1.4 Liquidity risk
Qualitative information
A. General aspects, management procedures and measurement methods of the liquidity risk
The liquidity risk refers to the possibility that the Group fails to service its debt obligations due to the inability to raise funds or sell enough assets on the market to address liquidity needs. The liquidity risk also refers to the inability to secure new adequate financial resources, in terms of amount and cost, to meet its operating needs and opportunities, hence forcing the Group to either slow down or stop its operations, or incur excessive funding costs in order to service its obligations, significantly affecting its profitability.
At 31 December 2023, financial sources mainly consisted of equity, online funding (Rendimax product), consisting of on-demand and time deposits, medium/long-term bonds issued as part of the EMTN programme, medium/long-term securitisation transactions, as well as funding from corporate customers. Funding in the form of repurchase agreements, entered into with leading banks, continued to be a significant source of funding in 2023. Finally, with regard to the Eurosystem's funding (TLTRO), it remained an important form of funding at the end of 2023. However, also in view of the fact that 2024 will see the natural end of maturity of these instruments, it was decided to bring forward the redemption of 500 million Euro already to the end of 2023, bringing the amount used from approximately 2 billion Euro to about 1,5 billion Euro.
The Group's activities consist of factoring operations, which focus mainly on trade receivables and receivables due from Italy's public administration maturing within the year, and medium/long-term receivables deriving mainly from Leasing, Corporate banking, Structured Finance and Workout, Restructuring & Recovery operations; security portfolio management, mainly comprising eligible and readily liquid Italian government securities are also important.
As for the Group's operations concerning the Npl Segment and the unit relative to purchases of tax receivables arising from insolvency proceedings, the characteristics of the business model imply a high level of variability concerning both the amount collected and the date of actual collection. Therefore, the timely and careful management of cash flows is particularly important. To ensure expected cash flows are correctly assessed, also with a view to correctly pricing the transactions undertaken, the Group carefully monitors the trend in collections compared to expected flows.
The Group is constantly striving to improve the state of its financial resources, in terms of both size and cost, so as to have available liquidity reserves adequate for current and future business volumes.
The amount of high-quality liquidity reserves (mainly consisting of the balance of the management account with the Bank of Italy and the free portion of eligible securities) makes it possible to meet regulatory requirements (with respect to the limits of LCR and NSFR) and internal requirements relating to prudent management of liquidity risk.
The objective of the Group's operational liquidity management is to ensure the Banca Ifis Group's ability to meet its cash payment commitments over the short-term time horizon. The essential condition for normal business continuity in banking is the maintenance of a sustainable imbalance between cash inflows and outflows in the short term. From a management point of view, the reference metric in this respect is the difference between the net cumulative cash flow and the Counterbalancing Capacity, i.e. the liquidity reserve to cope with short-term stress conditions, in addition to the regulatory measure of the Liquidity Coverage Ratio (LCR). From a very short-term perspective, the Group adopts the intraday liquidity analysis and monitoring system with the aim of ensuring the normal development of the Bank's treasury day and its ability to meet its intraday payment commitments.
The Group's structural liquidity management aims to ensure the financial balance of the structure by maturity over the time horizon of more than one year. Maintaining an adequate ratio of medium- to long-term liabilities to assets is aimed at avoiding pressure on short-term funding sources, both current and prospective. The reference metrics refer to the regulatory indicator of the Net Stable Funding Ratio (NSFR) and, management-wise, to the gap ratios, which measure both the ratio of total funding and loans with maturities over 1 year and over 3 and 5 years.
The main indicators used by the Banca Ifis Group to assess its liquidity profile are as follows:
\u2022Liquidity Coverage Ratio (LCR), which is the short-term liquidity indicator and corresponds to the ratio of the amount of High Quality Liquidity Assets to total net cash outflows over the next 30 calendar days. As of 2018, the indicator is subject to a minimum regulatory requirement of 100%;
\u2022Net Stable Funding Ratio (NSFR), which is the 12-month structural liquidity indicator and corresponds to the ratio of the available amount of stable funding to the required amount of stable funding. For this indicator, the regulatory minimum requirement has been set at 100% as of 2021.
Below are the two indicators in the reporting year compared with the previous year.
4Q 2022
1Q 2023
2Q 2023
3Q 2023
4Q 2023
LCR
542%
869%
1.073%
1.229%
1.149%
NSFR
123%
130%
127%
133%
133%
\"\"
Both indicators thus remain well above regulatory limits, confirming a more than adequate liquidity position in terms of both operational and structural liquidity.
With specific reference to climatic and environmental risk factors, the materiality analysis conducted led to their quantification as non-material, due to the low impact of these factors in terms of available cash reserves and related cash outflows on the Group's funding.
The corporate functions of the Parent company responsible for ensuring the correct application of the liquidity policy are the Capital Markets function, which is responsible for the direct management of liquidity, the Risk Management function, which is responsible for proposing the risk appetite, identifying the most appropriate risk indicators and monitoring their performance in relation to the set limits and supporting the activities of Top Management. The latter has the task, with the support of the Capital Markets function, of proposing funding and liquidity risk management policies to the Board of Directors on an annual basis and suggesting during the course of the year any appropriate measures to ensure that activities are carried out in full compliance with approved risk policies.
As part of the continuous process to update procedures and policies concerning liquidity risk, and taking into account the changes in the relevant prudential regulations, the Parent uses an internal liquidity risk governance, monitoring, and management framework at the Group level.
In compliance with supervisory provisions, the Group also has a Contingency Funding Plan aimed at protecting it from losses or threats arising from a potential liquidity crisis and guaranteeing business continuity even in the midst of a serious emergency arising from its own internal organisation and/or the market situation.
The liquidity risk position is periodically reported by the Risk Management function to the Banca Ifis Board of Directors.
With reference to the Polish and Rumanian subsidiaries, treasury operations are coordinated by the Parent company.
Quantitative information
1. Breakdown by residual contractual duration of financial assets and liabilities - Currency: Euro
Items/Duration
on demand
over 1 to 7 days
over 7 to 15 days
over 15 days to 1 month
over 1 to 3 months
over 3 to 6 months
over 6 months to 1 year
over 1 to 5 years
Over 5 years
indefinite life
On-balance-sheet assets
1.141.409
44.222
222.142
666.533
1.536.141
657.607
953.894
5.055.817
2.077.891
34.359
A.1 Government bonds
483
-
56.522
219.596
239.376
28.947
82.557
973.300
508.000
-
A.2 Other debt securities
10.163
892
602
4.911
6.165
19.246
118.840
819.958
389.858
-
A.3 UCITS units
75.359
-
-
-
-
-
-
-
-
-
A.4 Loans
1.055.404
43.330
165.018
442.026
1.290.600
609.414
752.497
3.262.559
1.180.033
34.359
- banks
335.407
231
482
537
2.834
7
14
71
-
27.328
- customers
719.997
43.099
164.536
441.489
1.287.766
609.407
752.483
3.262.488
1.180.033
7.031
On-balance-sheet liabilities
1.098.601
51.059
219.351
390.325
989.459
911.420
2.415.721
3.264.936
2.287.386
-
B.1 Deposits and current accounts
1.094.512
48.275
67.627
147.037
779.725
500.767
990.511
1.583.336
-
-
- banks
19
-
-
-
-
-
-
-
-
-
- customers
1.094.493
48.275
67.627
147.037
779.725
500.767
990.511
1.583.336
-
-
B.2 Debt securities
17
-
-
18.283
11
349.998
53.537
1.013.951
1.853.043
-
B.3 Other liabilities
4.072
2.784
151.724
225.005
209.723
60.655
1.371.673
667.649
434.343
-
Off-balance-sheet transactions
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
C.1 Financial derivatives with exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.2 Financial derivatives without exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
583
-
-
-
-
-
-
-
-
-
- short positions
14.005
-
-
-
-
-
-
-
-
-
C.3 Deposits and loans to be received
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.4 Commitments to disburse funds
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
46.448
-
-
4.083
3.574
4.188
8.282
72.392
34.089
-
- short positions
90.316
-
-
1.666
866
2.056
1.263
48.850
28.039
-
C.5 Financial guarantees granted
-
-
-
-
-
-
-
-
-
-
C.6 Financial guarantees received
-
-
-
-
-
-
-
-
-
-
C.7 Credit derivatives with exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.8 Credit derivatives without exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
\"\"
1. Breakdown by residual contractual duration of financial assets and liabilities - Currency: Other currencies
Items/Duration
on demand
over 1 to 7 days
over 7 to 15 days
over 15 days to 1 month
over 1 to 3 months
over 3 to 6 months
over 6 months to 1 year
over 1 to 5 years
Over 5 years
indefinite life
On-balance-sheet assets
24.874
46.924
14.239
25.927
99.862
10.096
-
76
-
-
A.1 Government bonds
-
-
-
-
-
-
-
-
-
-
A.2 Other debt securities
-
-
-
-
-
-
-
-
-
-
A.3 UCITS units
1.551
-
-
-
-
-
-
-
-
-
A.4 Loans
23.323
46.924
14.239
25.927
99.862
10.096
-
76
-
-
- banks
13.903
38.031
-
-
-
-
-
-
-
-
- customers
9.420
8.893
14.239
25.927
99.862
10.096
-
76
-
-
On-balance-sheet liabilities
74.970
101.187
3.166
12.956
-
-
-
62
-
-
B.1 Deposits and current accounts
74.970
101.187
3.166
12.956
-
-
-
-
-
-
- banks
-
101.187
3.166
12.956
-
-
-
-
-
-
- customers
74.970
-
-
-
-
-
-
-
-
-
B.2 Debt securities
-
-
-
-
-
-
-
-
-
-
B.3 Other liabilities
-
-
-
-
-
-
-
62
-
-
Off-balance-sheet transactions
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
C.1 Financial derivatives with exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.2 Financial derivatives without exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.3 Deposits and loans to be received
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
8.757
-
-
-
-
-
-
-
-
- short positions
-
8.757
-
-
-
-
-
-
-
-
C.4 Commitments to disburse funds
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.5 Financial guarantees granted
-
-
-
-
-
-
-
-
-
-
C.6 Financial guarantees received
-
-
-
-
-
-
-
-
-
-
C.7 Credit derivatives with exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
C.8 Credit derivatives without exchange of underlying assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
- long positions
-
-
-
-
-
-
-
-
-
-
- short positions
-
-
-
-
-
-
-
-
-
-
\"\"
Self-securitisation transactions
Ifis Npl 2021-1 Spv
In March 2021, Banca Ifis realised for financing purposes, through its subsidiary Ifis Npl Investing, the very first securitisation in Italy of a non-performing portfolio mainly comprising unsecured loans backed by Garnishment Orders. The transaction is an innovative solution for this type of non-performing exposure, where the debt collection procedure through compulsory enforcement (attachment of one fifth of the salary) is at an advanced stage. The transaction aimed to collect funding for Ifis Npl Investing of up to 350 million Euro in liquidity on the institutional market, without deconsolidating the underlying credits. The loan portfolios concerned by the transaction (a portfolio of secured loans and an unsecured portfolio backed by Garnishment Orders) owned by the subsidiary Ifis Npl Investing, was transferred to a newly-established SPV called Ifis Npl 2021-1 Spv S.r.l., which issued senior, mezzanine and junior notes. These tranches were initially fully subscribed by Ifis Npl Investing, and subsequently the senior tranches (net of the 5% retained by Ifis Npl Investing as originator pursuant to the retention rule) were sold to Banca Ifis.
At 31 December 2023 the Banca Ifis Group had therefore subscribed all the notes issued by the vehicle. It should be noted that the senior tranches held by Banca Ifis were used for long term repo transactions with leading banking counterparties.
On the basis of the contractual terms underlying the securitisation in question, there is no substantial accounting transfer (\u201cderecognition\" in accordance with IFRS 9) of all the risks and rewards relating to the receivables being sold to the vehicle company.
Securitisation transactions
As for the securitisations outstanding at 31 December 2023 and their purpose, see the comments in the section on credit risks.
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1.5 Operational risks
Qualitative information
A. General aspects, management procedures and measurement methods concerning operational risk
Operational risk is the risk of losses arising from inadequate or dysfunctional processes, human resources, internal systems or external events. This definition does not include strategic risk and reputational risk, but it does include legal risk (i.e. the risk of losses deriving from failure to comply with laws or regulations, contractual or extra-contractual liability, or other disputes), IT risk, risk of non-compliance, fraud risk, risk of money laundering and terrorist financing, and the risk of financial misstatement.
The main sources of operational risk are operational errors, inefficient or inadequate operational processes and controls, internal and external frauds, the outsourcing of business functions, the quality of physical and logical security, inadequate or unavailable hardware or software systems, the growing reliance on automation, staff below strength relative to the size of the business, and inadequate human resources management and training policies.
The Banca Ifis Group has adopted for a while now - consistently with the relevant regulatory provisions and industry best practices - an operational risk management framework. This consists in a set of rules, procedures, resources (human, technological and organisational), and controls aiming to identify, assess, monitor, prevent or mitigate all existing or potential operational risks in the various organisational units, as well as to communicate them to the competent levels. The key processes for the proper management of operational risk are represented:
\u2022by the Loss Data Collection activity, i.e. the structured collection and census of losses deriving from operational risk events, which is consolidated thanks also to the constant activity by the Risk Management function to disseminate among the corporate structures a culture oriented towards the awareness and proactive management of operational risks;
\u2022by the prospective self-assessment of risk exposure through the execution of periodic Risk Self Assessment and Model Risk Self Assessment campaigns, aimed at obtaining an overall view of risks in terms of frequency and/or potential financial impact and the related organisational safeguards.
With specific reference to the monitoring of the evolution of ICT and Security risk and the assessment of the effectiveness of ICT resource protection measures, the Banca Ifis Group, in compliance with the regulatory requirement2 has opted for a shared responsibility model, assigning tasks to the Risk Management and Compliance corporate control functions, in relation to the roles, responsibilities and competences of each of the two functions. In particular, the Risk Management function conducts ICT and security risk analysis processes in accordance with the organisational and methodological framework approved by the Board of Directors in order, for example, to verify compliance with the ICT and security risk propensity level, the related risk objectives that the Group intends to achieve, and the resulting operational limits. If the level of ICT and security risk exceeds the defined threshold value, in order to bring it back within the acceptable risk threshold, measures are identified to deal with it, which flow into the \"Treatment Plan\" that identifies responsibilities for implementing individual corrective actions.
The results of the above-mentioned analyses are reported in the \"Summary Report on the ICT and Security Risk Situation\" subject to annual approval by the CEO in his capacity as the body with management functions.
In addition, according to its operational risk management framework (including the ICT and Security risk), the Group defines a set of measures that can promptly identify the presence of vulnerabilities in the exposure of the Bank and its subsidiaries to operational risks. These measures are continuously monitored and disclosed in periodic reports through synthetic risk measures that are shared with the competent structures and bodies: events such as the breach of certain thresholds or the emergence of anomalies trigger specific escalation processes aimed at defining and implementing appropriate mitigation actions. In addition, as part of the definition of the Risk Appetite Framework (RAF), the preparation of the Recovery Plan and ICAAP reporting, Risk Management function performs analyses by which it assesses its exposure to exceptional but plausible operational risk events. These analyses, referred to as stress analyses, contribute to verifying the resilience of the Group by simulating the impacts of adverse situations in terms of riskiness under the assumption of adverse scenarios.
In order to prevent and manage operational risk, the Parent company's Risk Management function, in collaboration with the other corporate functions, is involved in supervising the risks connected with the supply contracts with
2 On 2 November 2022, the Bank of Italy issued the 40th update of the \"Supervisory Provisions for Banks\", amending Chapter 4 \"The Information System\" and Chapter 5 \"Business Continuity\" of Part One, Title IV, to implement the \"Guidelines on Information Technology (ICT) Risk Management and Security\" (EBA/GL/2019/04) issued by the EBA. On this occasion, some work was also carried out to reconcile and update the internal references in Section I of Chapter 3 \"The Internal Controls System\".
third parties and the outsourcing of simple, essential or important operational functions and in assessing the risks associated with the introduction of new products and services and the preliminary assessment of the operative impact of the massive changes to the product contractual and economic conditions.
Concerning the companies of the Banca Ifis Group, please note that the management of operational risks is guaranteed by the strong involvement of the Parent company, which makes decisions in terms of strategies, also in respect of risk management.
To calculate capital requirements against operational risks, the Group adopted the Basic Indicator Approach.
Alongside operational risk, reputational risk is also managed.
Reputational risk represents the current or prospective risk of a decrease in profits or capital deriving from a negative perception of the Group's image by customers, counterparties, shareholders, investors or the Supervisory Authorities.
Reputational risk is considered a second-level risk, as it is generated by the manifestation of other types of risk, such as the risk of non-compliance, strategic risk and in particular operational risks.
As in the case of operational risk, the Parent's Risk Management function is responsible for managing reputational risk: it defines the Group's overall framework - in accordance with the relevant regulations as well as industry best practices - for the management of reputational risk, with the goal of identifying, assessing, and monitoring the reputational risks that the Group's Companies or organisational units assume or may assume. The framework involves conducting a forward-looking Reputational Risk Self-Assessment, and defining and monitoring a set of risk measures over time. The principles and guidelines that the Banca Ifis Group intends to adopt in the area of operational and reputational risk management are expressed in the \"Group Policy for Operational and Reputational Risk Management\" applied and disseminated, to the extent of its competence, to all organisational units of the Bank and Group companies. Similarly, with regard to the fundamentals inspiring IT risk management, there is a \"Group Policy for ICT and Security Risk Management\" in force, which operates both at the level of the Parent company Banca Ifis and its subsidiaries.
Quantitative information
This section provides a summary view of the results of the Loss Data Collection process at 31 December 2023 conducted at the Banca Ifis Group level. Operational events are subdivided by Event Type.
85% of the gross operating losses recognised in 2023, including provisions made, were attributable to events classified within Event Type categories ET_07 \"Execution, Delivery and Process Management\", ET_04 \"Customers, Products and Professional Practices\" and ET_02 \"External Fraud\". Total net operating losses amount to approximately 50% and, as a result, 50% of the gross operating losses recognised in 2023 were recovered. Below are the details per Event Type.
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A. Qualitative information
Managing equity concerns a set of policies and decisions necessary to establish capital levels that are consistent with the assets and risks taken by the Group. The Banca Ifis Group is subject to the capital adequacy requirements established by the so-called Basel Committee (CRR/CRD IV).
The Board of Directors constantly monitors that the Bank meets the minimum supervisory requirements, and therefore the capital adequacy ratios, as well as complies with the capital limits set out in the Risk Appetite Framework (RAF).
Furthermore, also in accordance with the European Central Bank (ECB)'s recommendation of 28 January 2015, the Bank ensures compliance with capital adequacy ratios through a pay-out policy linked to the achievement of the above minimum capital requirements, as well as the careful assessment of the potential impact of extraordinary financial operations (share capital increases, convertible loans, etc.).
The Group's capital adequacy is further assessed and monitored every time an extraordinary operation is planned. In this case, based on available information regarding the operation to be implemented, the Bank estimates the impact on capital adequacy ratios as well as the RAF, and considers any measures necessary to meet the requirements.
Transactions on treasury shares
At 31 December 2022, Banca Ifis held 1.377.981 treasury shares recognised at a market value of 22,1 million Euro and a nominal amount of 1.377.981 Euro.
During the year, Banca Ifis, as variable pay, awarded the Top Management 34.963 treasury shares at an average price of 9,39 Euro, for a total of 341 thousand Euro and a nominal amount of 34.963 Euro, making profits of 54 thousand Euro that, in compliance with IAS/IFRS standards, were recognised under the premium reserve.
During the year, there were no further transactions on treasury shares other than those mentioned above.
Considering the above operations, the stock at the end of the year was 1.343.018 treasury shares, with an equivalent value of 21,8 million Euro and a nominal amount of 1.343.018 Euro.
It should be noted that the Banca Ifis Group does not hold, directly or indirectly, any shares in the ultimate Parent company La Scogliera S.A..
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Part G - Business combinations
Section 1 - Transactions carried out during the year
This section provides the information on business combinations required by IFRS 3 in paragraphs 59, letter a), 60 and 63. Moreover, in application of the Bank of Italy provisions set forth in Circular 262/2005 and subsequent updates, this section also conventionally includes any business combination transactions between entities subject to common control (referred to as \"business combination between entities under common control\").
1.1 Business combinations
On 31 October 2023, the Banca Ifis Group, in the context of the long-term partnership signed in May 2023 with the Mediobanca Group for the management of non-performing loans (Npls), finalised the acquisition of control of Revalea S.p.A., a company created in 2022 from the spin-off of the MBCredit Solutions business unit dedicated to the acquisition of Npl portfolios. The transaction involved 100% of Revalea's capital for a consideration of 100 million Euro, paid by Ifis Npl Investing as the acquiring party.
In accordance with the provisions of Bank of Italy Circular No. 262, the following table shows the data on the entity subject to the business combination.
Company nameTransaction date(1)(2)(3)(4)
1. Revalea S.p.A.31 October 2023100.001100%3.010 (97)
Key:
(1) = Cost of the transaction
(2) = Percentage interest acquired carrying voting rights in the annual general meeting
(3) = Total group revenues
(4) = Group net profit/loss
The transaction consolidates the Banca Ifis Group's position as a key player in the market for non-performing loans in the small-ticket unsecured segment and allows Mediobanca to exit the Npl business, no longer among the Group's core activities, while also consolidating MBCredit Solutions's specialisation in management and recovery activities, being able to count on constant business volumes for the coming years. With the completion of the transaction, the multi-year servicing agreement entered into force, under which MBCredit Solutions will continue to support Banca Ifis in the management and recovery of bad and non-performing loans. In the context of the acquisition, 18 Revalea employees joined the Banca Ifis Group team.
From an accounting point of view, the transaction falls under business combinations in accordance with the provisions of the IAS/IFRS international accounting standards and, in particular, IFRS 3, which provides for the application of the purchase method.
Pursuant to IFRS 3, the acquiring entity must identify the acquirer and the acquisition date, determine and allocate the cost of the combination to the assets acquired, liabilities assumed, including contingent liabilities, which are measured at fair value (\"Purchase Price Allocation\" - \"PPA\"), with the exception of non-current assets (or disposal groups) classified as held for sale in accordance with IFRS 5.
Any unallocated positive/negative difference represents, respectively, the \"goodwill\" to be recorded in the balance sheet as goodwill or the \"bargain purchase\" to be credited to the income statement as profit realised on the acquisition.
With regard to the Purchase Price Allocation activity, the acquisition cost is allocated through the fair value recognition of the assets and liabilities of the acquiree, including any intangible assets not previously recognised in the financial statements of the acquiree, being able to take advantage of the option provided for by IFRS 3 \u00a7 45, which grants the acquiring entity 12 months, with respect to the acquisition date, to definitively complete the PPA process.
For the purposes of applying IFRS 3 and line-by-line consolidation, the date of accounting acquisition is an essential element for the accounting of the transaction as it is the reference for both the determination of the fair values of the assets and liabilities acquired and for the acquisition of the economic results of the acquired entity in the consolidated income statement of the acquiring entity. The transaction was finalised on 31 October 2023, which is the date on which the Banca Ifis Group acquired 100% control of the company in accordance with IFRS 10.
Therefore, the first consolidation balance sheet is represented by the company's balances at 31 December 2023 and the inclusion of the company's economic contribution \"line by line\" according to the full consolidation method in the Consolidated Financial Statements of the Banca Ifis Group from 1 November 2023.
In addition, IFRS 3 requires that at the acquisition date, the difference between the cost of the combination, equal to the sum of the fair value of the consideration transferred in cash to acquire the majority interest and that of the interest already held, and the fair value of the identifiable net assets acquired, including contingent liabilities, must be determined. Specifically, any positive difference not attributed to the net assets acquired must be recognised as goodwill in the assets; otherwise, any negative difference must be recognised as badwill in the income statement, after re-measuring to ascertain the correct identification of all assets acquired and liabilities assumed.
The acquisition cost of Revalea is represented by the consideration paid for the 100% acquisition of 100 million Euro.
The allocation of the acquisition cost, through the recognition at fair value of the assets and liabilities of the acquired entity, including any intangible assets not previously recognised in the company's financial statements, was made for recognition in the financial statements as at 31 December 2023 on a provisional basis, as IFRS 3 allows for the option to complete the Purchase Price Allocation process within 12 months from the date of acquisition.
As can be seen from the tables below, the PPA process revealed, at the acquisition date, differences between the carrying amounts resulting from the company's financial statements and the relevant fair values.
With regard to Revalea's Npl portfolio, the estimate of fair value followed an integrated approach, based on the combination of two valuation methods so as to incorporate in the estimate all information inferable, and publicly available, from the transactions that took place in the market:
\u2022the application of a statistical method based on the observation of average purchase prices of unsecured Npl portfolios, taking into account the specific vintage of the portfolio under analysis;
\u2022the application of an analytical method based on the identification of the purchase price of a Npl portfolio through a securitisation structure.
The benchmark was constructed using a sample of predominantly unsecured portfolio transactions that took place in the market between 2017 and 2022, and the correlation between the purchase price versus the age of the portfolios (\"vintage\") was observed.
The valuation of the Revalea loan portfolio positions was carried out on a line-by-line basis, using the DCF methodology, based on the Banca Ifis Group's estimated gross expected cash flows.
As regards the determination of the discounting rate to be applied to cash flows, an interest rate has been identified that represents the returns expected by the market in connection with exposures with similar characteristics and taking into account the information present at the date of acquisition. In particular:
\u2022risk free rate (rf): punctual rate of return on Italian government bonds with a maturity of 30 years (monthly observations), measured on 31 October 2023;
\u2022Beta (\u03b2): determined by taking average Beta data (weekly surveys over a 5-year period of comparable listed players);
\u2022D/E (Debt/Equity ratio) aligned with Revalea's financial structure as of 31 October 2023 pre PPA;
\u2022market risk premium estimated internally and in line with the most common practice in the Italian market;
\u2022cost of debt equal to the average of the risk free rate (rf) and the one-year average of the four-year Eurirs;
\u2022cost of risk capital (ke) calculated on the basis of the Capital Asset Pricing Model (\"CAPM\");
\u2022add on of additional premium to integrate factors specific to the underlying such as the randomness of flows and the vintage of the portfolio.
The fair value measurement of Revalea\u2019s loan portfolio has resulted in a lesser value of approximately 18,8 million Euro with respect to the book value at the date of acquisition.
On the other hand, with regard to payables due to banks, based on the analyses performed, it was deemed necessary to restate the related fair value in order to align it with market conditions at the date of the change of control (31 October 2023). In this specific case, since it is a fixed-rate loan maturing in June 2027, the one-year average of the four-year Eurirs rate was taken as a reference, which is substantially in line with the duration of the debt. This fair valuation of payables due to banks resulted in their revaluation by approximately 7,0 million Euro compared to their carrying amounts.
In addition, impairment of intangible assets and other assets of 0,3 million Euro and 1,2 million Euro, respectively, emerged.
As instead regards any intangible assets not booked by Revalea and potentially able to be recorded during the business combination (e.g. trademarks, customers and contracts), the analyses carried out on such did not reveal any values that can be represented for IFRS 3 purposes.
Finally, with reference to the provisions for risks and charges, an adjustment in terms of an additional provision for risks of 0,1 million Euro emerged.
The tax effect recognised as a result of the above gains/losses is higher tax assets of 6,8 million Euro and higher tax liabilities of 2,3 million Euro.
The Banca Ifis Group, as the acquirer, on the basis of the above-mentioned acquisition cost and equity valuation at fair value, recognised a difference of 8,5 million Euro at the date of acquisition of control of Revalea, which was attributed to \"bargain purchase\" and recognised in the item \"Other operating income (costs)\" in the income statement.
The gain on bargain purchase is a direct consequence of a price paid that is already lower than the net carrying amount, as well as the specificity of the business and the transaction carried out, which allowed the seller to exit the Npl business, no longer considered among its core activities.
The following is a summary of the allocation process of the acquisition cost and the resulting bargain purchase and the main balance sheet details of the assets and liabilities acquired of the subsidiary Revalea S.p.A. at the date of aggregation and the relative fair values determined in the PPA process.
Description(in thousands of Euro)Carrying amount as at 31.10.2023Fair value adjustmentAssets and liabilities acquired at 31.10.2023
Cash and cash equivalents36.932-36.932
Financial assets measured at amortised cost 229.604(18.842)210.762
Property, plant and equipment39-39
Intangible assets299(299)-
Tax assets7.5396.78414.323
Other assets1.390(1.231)159
Assets acquired275.803(13.588)262.215
Financial liabilities at amortised cost(153.163)6.999(146.164)
Tax liabilities(68)(2.315)(2.383)
Other liabilities(3.903)-(3.903)
Post-employment benefits(199)-(199)
Provisions for risks and charges(887)(142)(1.029)
Liabilities assumed (158.220)4.542(153.678)
Net assets (A)117.583(9.046)108.537
Price of the acquisition, disbursed using liquid funds (B)100.001
Non-controlling interests (C)-
Negative value difference (gain on bargain purchase) from the acquisition (D=B+C-A)(8.536)
Analysis of acquisition cash flow
Price of the acquisition, disbursed using liquid funds(100.001)
Net funds acquired with the subsidiary (included in cash flows of investments)36.932
Net cash flow from acquisition(63.069)
\"\"
Section 2 - Transactions carried out after the end of the year
The Banca Ifis Group did not carry out any business combinations between the end of the year and the date of preparation of these Consolidated Financial Statements and Report.
Section 3 - Retrospective adjustments
In 2023, the Group did not make any retrospective adjustment to business combinations carried out in previous periods.
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Part H - Related-party transactions
In compliance with the provisions of Consob resolution No. 17221 of 12 March 2010 (as subsequently amended by means of Resolution No. 17389 of 23 June 2010) and the provisions of Bank of Italy Circular 263/2006 (Title V, Chapter 5), the \u201cGroup Policy covering transactions with related parties, associates and corporate representatives pursuant to Art. 136 of the Consolidated Law on Banking\u201d was prepared. This document is publicly available on Banca Ifis's website, www.bancaifis.it, in the \"Corporate Governance\" Section.
During 2023, there were no transactions with related parties during the financial year that materially affected the Group's financial position or results.
With regard to transactions of greater significance carried out with related parties as defined by the Group's policies pursuant to Article 4 of the Consob regulation on related party transactions, see the specific paragraph in section \"2. Information on related-party transactions\u201d in this Part H.
At 31 December 2023, the Banca Ifis Group was owned by La Scogliera S.A. and consists of the Parent company Banca Ifis S.p.A., the wholly-owned subsidiaries Ifis Finance Sp. z o.o., Ifis Rental Services S.r.l., Ifis Npl Investing S.p.A., Ifis Npl Servicing S.p.A. and Cap.Ital.Fin. S.p.A. and Revalea S.p.A. (the latter acquired in October 2023, as specified in the section \"Significant events during the year\" of the Directors' Report on the Group as well as in Part G \"Business combinations\"), by Ifis Finance I.F.N. S.A. controlled 99,99%, the 87,74% owned subsidiary Banca Credifarma S.p.A. and the vehicle Ifis Npl 2021-1 SPV S.r.l., in which the Group holds the majority of the shares.
The types of related parties, as defined by IAS 24, that are relevant for the Banca Ifis Group include:
\u2022the ultimate Parent company La Scogliera S.A.;
\u2022key management personnel of the Parent company;
\u2022close relatives of key management personnel of the Parent company and the companies controlled by (or associated to) them or their close relatives.
Here below is the information on the remuneration of key management personnel as well as transactions undertaken with the different types of related parties.
1. Information on the remuneration of key management personnel
The definition of key management personnel, as per IAS 24, includes all those persons having authority and responsibility for planning, directing and controlling the activities of the Parent company Banca Ifis, directly or indirectly, including the Bank's Directors (whether executive or otherwise).
In compliance with the provisions of the Bank of Italy's Circular No. 262 of 22 December 2005 as subsequently updated, key management personnel also include the members of the Board of Statutory Auditors.
Key management personnel in office at 31 December 2023
Figures in thousands of EuroShort-term employee benefitsPost-employment benefitsOther long-term benefitsTermination benefitsShare-based payments
Stock optionsOther share-based payments
Administrative and auditing bodies (1)4.475 -178 -475350
Other managers (2)7.217316033055591.192
Total at 31.12.202311.692317813051.0341.542
\"\"
(1) These refer to positions on the Board of Directors (or similar bodies) and the Board of Statutory Auditors of the Parent company Banca Ifis.
(2) They refer to 17 managers with the position of Co-General Manager or other Key Manager of the Parent company Banca Ifis.
The above information includes fees paid to Directors (5,1 million Euro, gross amount) and Statutory Auditors (360 thousand Euro, gross amount). Post-employment benefits amounting to 31 thousand Euro refer to the health insurance policy taken out during the year for executives terminating their employment due to retirement.
2. Information on related-party transactions
Here below are the assets, liabilities, guarantees and commitments outstanding at 31 December 2023, broken down by type of related party pursuant to IAS 24.
Related party transactions: balance sheet and off-balance sheet itemsa
Items
(figures in thousands of Euro)
Parentcompany
Key managementpersonnel
Other related parties
Total
As a % of theitem
Financial assets measured at fair value through profit or loss
-
-
14.593
14.593
6,2%
Financial assets measured at fair value through other comprehensive income
-
-
2.847
2.847
0,4%
Receivables due from customers measured at amortised cost
-
1.415
17.277
18.692
0,2%
Other assets
32.202
-
1.997
34.199
7,7%
Total assets
32.202
1.415
36.714
70.331
0,5%
Payables due to customers measured at amortised cost
-
1.205
2.088
3.293
0,1%
Other liabilities
31.229
-
4.595
35.824
9,2%
Valuation reserves
-
-
(7.220)
(7.220)
18,4%
Total liabilities
31.229
1.205
(537)
31.897
0,2%
Commitments and guarantees (off-balance sheet)
-
-
4.406
4.406
n.a.
\"\"
Related party transactions: income statement items
Items(figures in thousands of Euro)ParentcompanyKey managementpersonnelOther related partiesTotalAs a % of theitem
Interest receivable and similar income -236616840,1%
Interest due and similar expenses - (8) (3) (11)0,0%
Commission income - -29290,0%
Administrative expenses (113) (10)1 (122)0,9%
Other operating income/expenses - -2872870,9%
\"\"
The transactions with the ultimate Parent company La Scogliera S.A. concern the application of Group taxation (tax consolidation) in accordance with Arts. 117 et seq. of Italian Presidential Decree No. 917/86. Relations between the Parent company and subsidiaries included in the tax consolidation are regulated by private agreements signed between the parties. All adhering entities have an address for the service of notices of documents and proceedings relating to the tax periods for which this option is exercised at the office of La Scogliera S.A., the consolidating company. Under this tax regime, the taxable income and tax losses are transferred to the consolidating company La Scogliera S.A., which is responsible for calculating the overall Group income. With reference to \"Other assets\", at 31 December 2023 Banca Ifis recorded a receivable from the ultimate Parent company of 3,2 million Euro, Cap.Ital.Fin. a receivable of 1,3 million Euro, Ifis Rental Services a receivable of 2,0 million Euro, while Ifis Npl Investing and Ifis Npl Servicing recorded a receivable of 23,7 million Euro and 2,0 million Euro, respectively, for tax items attributable to 2023. With regard to \"Other liabilities\", at 31 December 2023, Ifis Rental Services recorded a liability of 5,4 million Euro, Ifis Npl Investing a liability of 23,9 million Euro and Ifis Npl Servicing a liability of 1,9 million Euro representing the tax liability for FY 2023.
Transactions with key management personnel relate almost entirely to mortgages, Rendimax savings and current accounts.
In general, transactions with other related parties that are part of Banca Ifis's ordinary business are conducted at arm's length. Other assets include 1,5 million Euro to a minority shareholder of the Bank as advances for the provision of goods and services.
In addition, in 2023 the Group acquired legal services from associate entities for 30,5 million Euro which has been represented as prepaid expenses according to the progress report on the managing of credit exposures related to Npl Segment.
Other information
With reference to Paragraph 8 of Article 5 \"Public disclosure of related-party transactions\" of the Consob Regulation containing provisions on related party transactions (adopted by Consob with Resolution No. 17221 of 12 March 2010, as amended), the following are the most significant transactions concluded in 2023.
Restructuring of a securitisation completed through the subsidiary Ifis NPL 2021-1 SPV s.r.l.
On 28 July 2023, with the support of JP Morgan SE as co-arrangers, Banca Ifis finalised the restructuring of the non-performing loan securitisation realised in March 2021 through the Ifis NPL 2021-1 SPV.
The restructuring of the Ifis NPL 2021-1 SPV falls within the scope of funding activities and allows Banca Ifis to raise liquidity on the institutional market without deconsolidating the underlying loans from the balance sheet of the Ifis Npl Investing subsidiary. The transaction also generated a strengthening of the Banca Ifis Group's liquidity profile, while allowing Ifis Npl Investing to increase its ability to self-finance its investment activities in new Npl portfolios.
Specifically, the securitisation restructuring involves the sale to the SPV of a new portfolio of non-performing loans owned by the subsidiary Ifis Npl Investing. The assigned portfolio mainly comprises unsecured loans backed by Garnishment Orders over one-fifth salary or subject to amicable collection.
As a result of the further sale, the SPV issued on 28 July 2023 three tranches of new senior, mezzanine and junior securities with a total nominal amount of 630 million Euro. The senior securities, with a nominal amount of 515 million Euro, were partly allocated to the repayment of existing senior securities and the remainder subscribed by Ifis Npl Investing (subsequently sold by the latter to the Parent company Banca Ifis) and are used for financing transactions through repurchase agreements (repos) on the institutional market. The mezzanine securities, which will be partly used to repay the existing mezzanine securities, and the junior securities will instead be fully subscribed by Ifis Npl Investing.
The senior bonds received investment grade ratings from three leading rating agencies (Moody's, Scope Ratings and ARC Ratings) and were listed on the ExtraMOT PRO professional segment of the Borsa Italiana market regulation.
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Part H - Related-party transactions
In compliance with the provisions of Consob resolution No. 17221 of 12 March 2010 (as subsequently amended by means of Resolution No. 17389 of 23 June 2010) and the provisions of Bank of Italy Circular 263/2006 (Title V, Chapter 5), the \u201cGroup Policy covering transactions with related parties, associates and corporate representatives pursuant to Art. 136 of the Consolidated Law on Banking\u201d was prepared. This document is publicly available on Banca Ifis's website, www.bancaifis.it, in the \"Corporate Governance\" Section.
During 2023, there were no transactions with related parties during the financial year that materially affected the Group's financial position or results.
With regard to transactions of greater significance carried out with related parties as defined by the Group's policies pursuant to Article 4 of the Consob regulation on related party transactions, see the specific paragraph in section \"2. Information on related-party transactions\u201d in this Part H.
At 31 December 2023, the Banca Ifis Group was owned by La Scogliera S.A. and consists of the Parent company Banca Ifis S.p.A., the wholly-owned subsidiaries Ifis Finance Sp. z o.o., Ifis Rental Services S.r.l., Ifis Npl Investing S.p.A., Ifis Npl Servicing S.p.A. and Cap.Ital.Fin. S.p.A. and Revalea S.p.A. (the latter acquired in October 2023, as specified in the section \"Significant events during the year\" of the Directors' Report on the Group as well as in Part G \"Business combinations\"), by Ifis Finance I.F.N. S.A. controlled 99,99%, the 87,74% owned subsidiary Banca Credifarma S.p.A. and the vehicle Ifis Npl 2021-1 SPV S.r.l., in which the Group holds the majority of the shares.
The types of related parties, as defined by IAS 24, that are relevant for the Banca Ifis Group include:
\u2022the ultimate Parent company La Scogliera S.A.;
\u2022key management personnel of the Parent company;
\u2022close relatives of key management personnel of the Parent company and the companies controlled by (or associated to) them or their close relatives.
Here below is the information on the remuneration of key management personnel as well as transactions undertaken with the different types of related parties.
1. Information on the remuneration of key management personnel
The definition of key management personnel, as per IAS 24, includes all those persons having authority and responsibility for planning, directing and controlling the activities of the Parent company Banca Ifis, directly or indirectly, including the Bank's Directors (whether executive or otherwise).
In compliance with the provisions of the Bank of Italy's Circular No. 262 of 22 December 2005 as subsequently updated, key management personnel also include the members of the Board of Statutory Auditors.
Key management personnel in office at 31 December 2023
Figures in thousands of EuroShort-term employee benefitsPost-employment benefitsOther long-term benefitsTermination benefitsShare-based payments
Stock optionsOther share-based payments
Administrative and auditing bodies (1)4.475 -178 -475350
Other managers (2)7.217316033055591.192
Total at 31.12.202311.692317813051.0341.542
\"\"
(1) These refer to positions on the Board of Directors (or similar bodies) and the Board of Statutory Auditors of the Parent company Banca Ifis.
(2) They refer to 17 managers with the position of Co-General Manager or other Key Manager of the Parent company Banca Ifis.
The above information includes fees paid to Directors (5,1 million Euro, gross amount) and Statutory Auditors (360 thousand Euro, gross amount). Post-employment benefits amounting to 31 thousand Euro refer to the health insurance policy taken out during the year for executives terminating their employment due to retirement.
2. Information on related-party transactions
Here below are the assets, liabilities, guarantees and commitments outstanding at 31 December 2023, broken down by type of related party pursuant to IAS 24.
Related party transactions: balance sheet and off-balance sheet itemsa
Items
(figures in thousands of Euro)
Parentcompany
Key managementpersonnel
Other related parties
Total
As a % of theitem
Financial assets measured at fair value through profit or loss
-
-
14.593
14.593
6,2%
Financial assets measured at fair value through other comprehensive income
-
-
2.847
2.847
0,4%
Receivables due from customers measured at amortised cost
-
1.415
17.277
18.692
0,2%
Other assets
32.202
-
1.997
34.199
7,7%
Total assets
32.202
1.415
36.714
70.331
0,5%
Payables due to customers measured at amortised cost
-
1.205
2.088
3.293
0,1%
Other liabilities
31.229
-
4.595
35.824
9,2%
Valuation reserves
-
-
(7.220)
(7.220)
18,4%
Total liabilities
31.229
1.205
(537)
31.897
0,2%
Commitments and guarantees (off-balance sheet)
-
-
4.406
4.406
n.a.
\"\"
Related party transactions: income statement items
Items(figures in thousands of Euro)ParentcompanyKey managementpersonnelOther related partiesTotalAs a % of theitem
Interest receivable and similar income -236616840,1%
Interest due and similar expenses - (8) (3) (11)0,0%
Commission income - -29290,0%
Administrative expenses (113) (10)1 (122)0,9%
Other operating income/expenses - -2872870,9%
\"\"
The transactions with the ultimate Parent company La Scogliera S.A. concern the application of Group taxation (tax consolidation) in accordance with Arts. 117 et seq. of Italian Presidential Decree No. 917/86. Relations between the Parent company and subsidiaries included in the tax consolidation are regulated by private agreements signed between the parties. All adhering entities have an address for the service of notices of documents and proceedings relating to the tax periods for which this option is exercised at the office of La Scogliera S.A., the consolidating company. Under this tax regime, the taxable income and tax losses are transferred to the consolidating company La Scogliera S.A., which is responsible for calculating the overall Group income. With reference to \"Other assets\", at 31 December 2023 Banca Ifis recorded a receivable from the ultimate Parent company of 3,2 million Euro, Cap.Ital.Fin. a receivable of 1,3 million Euro, Ifis Rental Services a receivable of 2,0 million Euro, while Ifis Npl Investing and Ifis Npl Servicing recorded a receivable of 23,7 million Euro and 2,0 million Euro, respectively, for tax items attributable to 2023. With regard to \"Other liabilities\", at 31 December 2023, Ifis Rental Services recorded a liability of 5,4 million Euro, Ifis Npl Investing a liability of 23,9 million Euro and Ifis Npl Servicing a liability of 1,9 million Euro representing the tax liability for FY 2023.
Transactions with key management personnel relate almost entirely to mortgages, Rendimax savings and current accounts.
In general, transactions with other related parties that are part of Banca Ifis's ordinary business are conducted at arm's length. Other assets include 1,5 million Euro to a minority shareholder of the Bank as advances for the provision of goods and services.
In addition, in 2023 the Group acquired legal services from associate entities for 30,5 million Euro which has been represented as prepaid expenses according to the progress report on the managing of credit exposures related to Npl Segment.
Other information
With reference to Paragraph 8 of Article 5 \"Public disclosure of related-party transactions\" of the Consob Regulation containing provisions on related party transactions (adopted by Consob with Resolution No. 17221 of 12 March 2010, as amended), the following are the most significant transactions concluded in 2023.
Restructuring of a securitisation completed through the subsidiary Ifis NPL 2021-1 SPV s.r.l.
On 28 July 2023, with the support of JP Morgan SE as co-arrangers, Banca Ifis finalised the restructuring of the non-performing loan securitisation realised in March 2021 through the Ifis NPL 2021-1 SPV.
The restructuring of the Ifis NPL 2021-1 SPV falls within the scope of funding activities and allows Banca Ifis to raise liquidity on the institutional market without deconsolidating the underlying loans from the balance sheet of the Ifis Npl Investing subsidiary. The transaction also generated a strengthening of the Banca Ifis Group's liquidity profile, while allowing Ifis Npl Investing to increase its ability to self-finance its investment activities in new Npl portfolios.
Specifically, the securitisation restructuring involves the sale to the SPV of a new portfolio of non-performing loans owned by the subsidiary Ifis Npl Investing. The assigned portfolio mainly comprises unsecured loans backed by Garnishment Orders over one-fifth salary or subject to amicable collection.
As a result of the further sale, the SPV issued on 28 July 2023 three tranches of new senior, mezzanine and junior securities with a total nominal amount of 630 million Euro. The senior securities, with a nominal amount of 515 million Euro, were partly allocated to the repayment of existing senior securities and the remainder subscribed by Ifis Npl Investing (subsequently sold by the latter to the Parent company Banca Ifis) and are used for financing transactions through repurchase agreements (repos) on the institutional market. The mezzanine securities, which will be partly used to repay the existing mezzanine securities, and the junior securities will instead be fully subscribed by Ifis Npl Investing.
The senior bonds received investment grade ratings from three leading rating agencies (Moody's, Scope Ratings and ARC Ratings) and were listed on the ExtraMOT PRO professional segment of the Borsa Italiana market regulation.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page278-cflshid_152940-tag94300": { "value": "
Part H - Related-party transactions
In compliance with the provisions of Consob resolution No. 17221 of 12 March 2010 (as subsequently amended by means of Resolution No. 17389 of 23 June 2010) and the provisions of Bank of Italy Circular 263/2006 (Title V, Chapter 5), the \u201cGroup Policy covering transactions with related parties, associates and corporate representatives pursuant to Art. 136 of the Consolidated Law on Banking\u201d was prepared. This document is publicly available on Banca Ifis's website, www.bancaifis.it, in the \"Corporate Governance\" Section.
During 2023, there were no transactions with related parties during the financial year that materially affected the Group's financial position or results.
With regard to transactions of greater significance carried out with related parties as defined by the Group's policies pursuant to Article 4 of the Consob regulation on related party transactions, see the specific paragraph in section \"2. Information on related-party transactions\u201d in this Part H.
At 31 December 2023, the Banca Ifis Group was owned by La Scogliera S.A. and consists of the Parent company Banca Ifis S.p.A., the wholly-owned subsidiaries Ifis Finance Sp. z o.o., Ifis Rental Services S.r.l., Ifis Npl Investing S.p.A., Ifis Npl Servicing S.p.A. and Cap.Ital.Fin. S.p.A. and Revalea S.p.A. (the latter acquired in October 2023, as specified in the section \"Significant events during the year\" of the Directors' Report on the Group as well as in Part G \"Business combinations\"), by Ifis Finance I.F.N. S.A. controlled 99,99%, the 87,74% owned subsidiary Banca Credifarma S.p.A. and the vehicle Ifis Npl 2021-1 SPV S.r.l., in which the Group holds the majority of the shares.
The types of related parties, as defined by IAS 24, that are relevant for the Banca Ifis Group include:
\u2022the ultimate Parent company La Scogliera S.A.;
\u2022key management personnel of the Parent company;
\u2022close relatives of key management personnel of the Parent company and the companies controlled by (or associated to) them or their close relatives.
Here below is the information on the remuneration of key management personnel as well as transactions undertaken with the different types of related parties.
1. Information on the remuneration of key management personnel
The definition of key management personnel, as per IAS 24, includes all those persons having authority and responsibility for planning, directing and controlling the activities of the Parent company Banca Ifis, directly or indirectly, including the Bank's Directors (whether executive or otherwise).
In compliance with the provisions of the Bank of Italy's Circular No. 262 of 22 December 2005 as subsequently updated, key management personnel also include the members of the Board of Statutory Auditors.
Key management personnel in office at 31 December 2023
Figures in thousands of EuroShort-term employee benefitsPost-employment benefitsOther long-term benefitsTermination benefitsShare-based payments
Stock optionsOther share-based payments
Administrative and auditing bodies (1)4.475 -178 -475350
Other managers (2)7.217316033055591.192
Total at 31.12.202311.692317813051.0341.542
\"\"
(1) These refer to positions on the Board of Directors (or similar bodies) and the Board of Statutory Auditors of the Parent company Banca Ifis.
(2) They refer to 17 managers with the position of Co-General Manager or other Key Manager of the Parent company Banca Ifis.
The above information includes fees paid to Directors (5,1 million Euro, gross amount) and Statutory Auditors (360 thousand Euro, gross amount). Post-employment benefits amounting to 31 thousand Euro refer to the health insurance policy taken out during the year for executives terminating their employment due to retirement.
2. Information on related-party transactions
Here below are the assets, liabilities, guarantees and commitments outstanding at 31 December 2023, broken down by type of related party pursuant to IAS 24.
Related party transactions: balance sheet and off-balance sheet itemsa
Items
(figures in thousands of Euro)
Parentcompany
Key managementpersonnel
Other related parties
Total
As a % of theitem
Financial assets measured at fair value through profit or loss
-
-
14.593
14.593
6,2%
Financial assets measured at fair value through other comprehensive income
-
-
2.847
2.847
0,4%
Receivables due from customers measured at amortised cost
-
1.415
17.277
18.692
0,2%
Other assets
32.202
-
1.997
34.199
7,7%
Total assets
32.202
1.415
36.714
70.331
0,5%
Payables due to customers measured at amortised cost
-
1.205
2.088
3.293
0,1%
Other liabilities
31.229
-
4.595
35.824
9,2%
Valuation reserves
-
-
(7.220)
(7.220)
18,4%
Total liabilities
31.229
1.205
(537)
31.897
0,2%
Commitments and guarantees (off-balance sheet)
-
-
4.406
4.406
n.a.
\"\"
Related party transactions: income statement items
Items(figures in thousands of Euro)ParentcompanyKey managementpersonnelOther related partiesTotalAs a % of theitem
Interest receivable and similar income -236616840,1%
Interest due and similar expenses - (8) (3) (11)0,0%
Commission income - -29290,0%
Administrative expenses (113) (10)1 (122)0,9%
Other operating income/expenses - -2872870,9%
\"\"
The transactions with the ultimate Parent company La Scogliera S.A. concern the application of Group taxation (tax consolidation) in accordance with Arts. 117 et seq. of Italian Presidential Decree No. 917/86. Relations between the Parent company and subsidiaries included in the tax consolidation are regulated by private agreements signed between the parties. All adhering entities have an address for the service of notices of documents and proceedings relating to the tax periods for which this option is exercised at the office of La Scogliera S.A., the consolidating company. Under this tax regime, the taxable income and tax losses are transferred to the consolidating company La Scogliera S.A., which is responsible for calculating the overall Group income. With reference to \"Other assets\", at 31 December 2023 Banca Ifis recorded a receivable from the ultimate Parent company of 3,2 million Euro, Cap.Ital.Fin. a receivable of 1,3 million Euro, Ifis Rental Services a receivable of 2,0 million Euro, while Ifis Npl Investing and Ifis Npl Servicing recorded a receivable of 23,7 million Euro and 2,0 million Euro, respectively, for tax items attributable to 2023. With regard to \"Other liabilities\", at 31 December 2023, Ifis Rental Services recorded a liability of 5,4 million Euro, Ifis Npl Investing a liability of 23,9 million Euro and Ifis Npl Servicing a liability of 1,9 million Euro representing the tax liability for FY 2023.
Transactions with key management personnel relate almost entirely to mortgages, Rendimax savings and current accounts.
In general, transactions with other related parties that are part of Banca Ifis's ordinary business are conducted at arm's length. Other assets include 1,5 million Euro to a minority shareholder of the Bank as advances for the provision of goods and services.
In addition, in 2023 the Group acquired legal services from associate entities for 30,5 million Euro which has been represented as prepaid expenses according to the progress report on the managing of credit exposures related to Npl Segment.
Other information
With reference to Paragraph 8 of Article 5 \"Public disclosure of related-party transactions\" of the Consob Regulation containing provisions on related party transactions (adopted by Consob with Resolution No. 17221 of 12 March 2010, as amended), the following are the most significant transactions concluded in 2023.
Restructuring of a securitisation completed through the subsidiary Ifis NPL 2021-1 SPV s.r.l.
On 28 July 2023, with the support of JP Morgan SE as co-arrangers, Banca Ifis finalised the restructuring of the non-performing loan securitisation realised in March 2021 through the Ifis NPL 2021-1 SPV.
The restructuring of the Ifis NPL 2021-1 SPV falls within the scope of funding activities and allows Banca Ifis to raise liquidity on the institutional market without deconsolidating the underlying loans from the balance sheet of the Ifis Npl Investing subsidiary. The transaction also generated a strengthening of the Banca Ifis Group's liquidity profile, while allowing Ifis Npl Investing to increase its ability to self-finance its investment activities in new Npl portfolios.
Specifically, the securitisation restructuring involves the sale to the SPV of a new portfolio of non-performing loans owned by the subsidiary Ifis Npl Investing. The assigned portfolio mainly comprises unsecured loans backed by Garnishment Orders over one-fifth salary or subject to amicable collection.
As a result of the further sale, the SPV issued on 28 July 2023 three tranches of new senior, mezzanine and junior securities with a total nominal amount of 630 million Euro. The senior securities, with a nominal amount of 515 million Euro, were partly allocated to the repayment of existing senior securities and the remainder subscribed by Ifis Npl Investing (subsequently sold by the latter to the Parent company Banca Ifis) and are used for financing transactions through repurchase agreements (repos) on the institutional market. The mezzanine securities, which will be partly used to repay the existing mezzanine securities, and the junior securities will instead be fully subscribed by Ifis Npl Investing.
The senior bonds received investment grade ratings from three leading rating agencies (Moody's, Scope Ratings and ARC Ratings) and were listed on the ExtraMOT PRO professional segment of the Borsa Italiana market regulation.
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Part I - Share-based payments
Qualitative information
1. Description of share-based payment agreements
Below are the equity-based payment arrangements, as defined by IFRS 2, for the Banca Ifis Group's staff.
A variable remuneration arrangement is in place for all employees.
Access to the variable portion for all personnel is subject to compliance with the conditions for access (so-called \"gate\") provided for by the following indicators measured at year-end:
\u2022Ratio of the final Return on Risk-Adjusted Capital (RORAC) with the Group provisional one approved by the Board of Directors (RORAC*), no less than 80%;
\u2022meeting the minimum Liquidity Coverage Ratio (LCR) requirement applicable from time to time to the Group;
\u2022meeting the minimum Net Stable Funding Ratio (NSFR) requirement applicable from time to time to the Group;
\u2022consolidated Total Capital Ratio exceeding the Overall Capital Requirement announced by the Supervisory Body as part of the \u201cCapital Decisions\u201d following the periodic Supervisory Review and Evaluation Process (SREP).
Failure to meet one of these conditions will result in variable pay not being awarded.
Without prejudice to the opening of the gates to the payment of variable remuneration described above, the variable remuneration of the Chief Executive Officer (CEO) of the Parent company is linked to the achievement of specific qualitative and quantitative performance targets.
In particular, the Chief Executive Officer is the beneficiary:
\u2022of a Short-Term Incentive (\"STI\") System;
\u2022of a 2021-2023 Long Term Incentive Plan (the \"LTI Plan\"), for which please refer to the disclosure in the specific paragraph in this section.
With reference to the Short-term Incentive (STI) System, the objectives assigned to the CEO represent a combination of quantitative and qualitative criteria, referring to the Group's results, as well as qualitative aspects relating to strategic action.
The performance scorecard includes the declination of the following KPIs:
\u2022Economic-financial KPIs with a weight of 65%, structured over three specific drivers (profitability, credit cost and efficiency), consistent with the Group's objectives;
\u2022KPI of strategy and sustainability with a weight of 35%, which aim to assess the achievement of strategic directives, as well as the achievement of corporate objectives in the ESG area.
The short-term variable remuneration cap payable to the CEO is set at 60% of fixed remuneration; variable remuneration will accrue on the basis of the degree of achievement of objectives, with variable remuneration being paid on a linear progression between 60% and 100%.
This variable component is paid in the amount of 40% with a non-deferred payment (up front) and in the amount of 60% with a deferred payment over a period of five years (starting from the year following the year in which the up front portion accrues), in accordance with the provisions of the relevant supervisory regulations for variable remuneration of particularly high amounts.
The deferred portion of variable remuneration (amounting to 60%) shall be paid as follows:
\u202255% (i.e. 33% of the total variable remuneration) in Banca Ifis shares, which may be exercised at the end of the further retention period of 1 year;
\u202245% (i.e. 27% of the total variable remuneration) in cash, subject to annual revaluation at the legal rate in force over time.
The portion of variable remuneration up front (40%) and is paid as follows:
\u202250% (i.e. 20% of the total variable remuneration) in Banca Ifis shares, which may be exercised at the end of the further retention period of 1 year;
\u202250% (i.e. 20% of total variable remuneration) paid in cash.
It is understood that the allocation of Banca Ifis shares will affect, in addition to the Chief Executive Officer and the Co-General Managers, the employees identified as most relevant pursuant to Circular No. 285/2013 and Delegated Regulation No. 923/2021 where the variable component of remuneration is above 50 thousand Euro or represent more than a third of the annual total remuneration.
For the purpose of assigning variable remuneration in financial instruments, or in Banca Ifis shares, the Bank calculates the fair value of the share - at the time of the assignment - based on the average stock market price with reference to the month prior to the date of approval of the Banca Ifis Financial Statements by the Shareholders' Meeting (or, in the case of assignment of variable remuneration for any reason subsequent to the Shareholders' Meeting, from the date of the event, this being understood to mean any dates of signing of agreements or in the absence thereof, the dates of approval by the competent bodies of the related awards). The number of shares is determined by rounding to the nearest integer.
Variable pay is subject to malus/clawback mechanisms that may cause the amount to be as low as zero if certain conditions are met.
Long Term Incentive (LTI) Plan 2021-2023 for the Chief Executive Officer, Co-General Managers and other Group employees
The Chief Executive Officer of Banca Ifis is also the recipient of a Long Term Incentive (LTI) Plan 2021-2023, approved by the Board of Directors on 24 June 2021 and by the Shareholders' Meeting of the Parent company on 28 July 2021. The Plan provides for the assignment to the CEO, free of charge, of a certain number of options that will give the right to purchase, at a unit exercise price (the \"strike price\") equal to 12,92 Euro, a corresponding number of Banca Ifis shares.
The Plan has a duration of three years (2021, 2022 and 2023) and the options will become exercisable after the aforementioned three-year vesting period and an additional year of retention, subject to the circumstance that the relationship between the Bank and the CEO is still in place, and that pre-determined quantitative and qualitative, financial and non-financial targets, linked to the Bank's long-term strategies, have been achieved.
The Plan grants the CEO of the Parent company the right to receive up to a maximum of 696.000 options at the end of the vesting period and on achievement of the objectives of the Plan.
Subsequently, as envisaged in the Plan approved by the Shareholders' Meeting of 28 July 2021, and in execution of the mandate granted to the Board of Directors on that occasion, on 9 June 2022, the latter resolved to include 13 \"additional beneficiaries\" in the Plan, assigning them the same objectives already envisaged for the Chief Executive Officer and illustrated in the 2022 Remuneration Policy. These additions to the Plan were then approved by the Shareholders' Meeting of Banca Ifis on 28 July 2022.
Also for these additional beneficiaries, represented by high-level managers of the Group (including 12 key managers and Co-General Managers), the Plan provides for the assignment of a certain number of options that will entitle them to purchase, free of charge and always at a strike price per share of 12,92 Euro, a corresponding number of Banca Ifis shares. The right to receive the options will accrue at the end of the vesting period (which for the additional beneficiaries will be two years, 2022-2023) and upon achievement of the targets set out in the Plan, up to a maximum of 320.000 options in total that can be granted to the 13 additional beneficiaries.
A further addition to this Plan, proposed by the Board of Directors and approved by the Shareholders' Meeting held on 20 April 2023 (see also the section \"Significant events during the year\" of the Directors' Report on the Group), concerned operational aspects of the Plan's mechanics (which otherwise remains unchanged in all its essential and structural elements, as already approved at the aforementioned Shareholders' Meetings). In particular, the integration consisted in recognising the possibility for beneficiaries, at the opening of each option exercise window, to postpone the exercise of all or part of any options that may have vested and may already be exercised in that window in the subsequent \"exercise windows\" provided for by the Plan.
In addition, during the first half of 2023, the resignation of an executive with strategic responsibility included in the Plan took place, with the consequent loss of his status as a beneficiary of the Plan.
As a result of the aforementioned innovations made in 2022 and 2023, at 31 December 2023 the Plan's beneficiaries total 13, of which 12 are key managers (including the Chief Executive Officer), and the maximum amount of options that can be granted is 996.000 (696.000 to the Chief Executive Officer and 300.000 to the other beneficiaries).
At an accounting level, this stock option plan has been accounted for in accordance with the provisions of IFRS 2 for equity settled transactions. In view of the difficulty of reliably assessing the fair value of the services received as consideration for stock options, reference is made to the initial fair value of the latter.
The fair value of the payments settled by the issuance of these options for the services covered by the LTI Plan is recognised as an expense in the income statement under \"Administrative Expenses: a) Personnel Expenses\" as
an offsetting entry to \"Reserves\" in Equity on an accrual basis in proportion to the vesting period over which the service is provided. For FY 2023, the corresponding cost recognised in the Income Statement amounts to 1,1 million Euro, while the corresponding equity reserve (which also includes the portion of cost accrued in FYs 2021 and 2022) totals 2,1 million Euro.
For more details on the Banca Ifis Group's equity-based payment arrangements, refer to the \u201c2023 Report on Remuneration Policy and Remuneration Paid\u201d, prepared pursuant to Article 123 ter of the TUF, available in the \u201cCorporate governance\u201d subsection of the \u201cRemuneration\u201d section of the corporate website www.bancaifis.it, where the remuneration policy valid for the Group for FY 2023 is illustrated.
Quantitative information
1. Annual changes
The table on annual changes is not presented here, since for the Banca Ifis Group, share-based payment agreements intended by way of short-term incentive (\u201cSTI\u201d) do not fall within the category concerned by said table. On the other hand, with regard to the 2021-2023 Long Term Incentive (LTI) Plan, as of the reporting date, no options associated with this plan have yet been granted; therefore, the table is currently unvalued (opening balances, changes during the year and closing balances nil).
2. Other information
If a result is achieved that equals or exceeds 100% of the annual targets assigned, the variable component of Top Management will be considered as accrued in the amount of 100% of its value; the number of shares to be attributed will be in any case calculated as described above.
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Part L - Segment reporting
In accordance with standard IFRS 8, a company must provide information that allows users of the financial statements to assess the nature and effects on such of the business it pursues and the economic contexts in which it operates.
The contribution therefore needs to be highlighted as made by the various \"operating Segments\" to forming the Group\u2019s economic result.
Identification of the \"operating Segments\" of this Part L is consistent with the methods adopted by the Corporate Management to take operative decisions and is based on internal reporting, used in order to allocate the resources to the various segments and analyse the relevant performance. With this in mind, and also in order to improve the representation of the Group's profitability, operating Segments are also highlighted that fall below the quantitative thresholds laid down in par. 13 of IFRS 8.
For FY 2023, the operating Segments taken as a reference for the provision of the information under review are as follows:
\u2022Commercial & Corporate Banking Segment, that represents the Group's commercial offer dedicated to businesses and also includes personal loans with the assignment of one-fifth of salary or pension. The Segment consists of the Factoring, Leasing and Corporate Banking & Lending Business Areas;
\u2022Npl Segment, dedicated to non-recourse factoring and managing distressed loans, servicing and managing non-performing, secured loans;
\u2022Governance & Services and Non-Core Segment, which provides the Segments operating in the Group's core businesses with the financial resources and services necessary to perform their respective activities. The Segment includes treasury and proprietary securities desk activities, as well as some corporate loans portfolio assigned for run-off insofar as held to be non-strategic to the Group's growth.
For a description of the configuration of the above-mentioned operating Segments, please refer to the information contained in the \"Results by operating Segments\" section of the Directors' Report on the Group.
The following tables provide detailed income statement and balance sheet data by Segment at 31 December 2023 compared with the corresponding figures for the previous year.
To allow a more immediate reading of the results, reclassified economic data is prepared within this Part L.
Analytical details of the restatements and reclassifications made with respect to the financial statements envisaged by Bank of Italy Circular 262 are provided in separate tables published among the annexes (see the section \u201cAnnexes\" of this \"2023 Consolidated Financial Statements and Report\"), also in compliance with the requirements of Consob Communication No. 6064293 of 28 July 2006.
Reclassifications and aggregations of the economic data concern the following:
\u2022net credit risk losses/reversals of the Npl Segment are reclassified to interest receivable and similar income (and therefore to \"Net interest income\") to the extent to which they represent the operations of this business and are an integral part of the return on the investment;
\u2022net allocations to provisions for risks and charges are excluded from the calculation of \"Operating costs\";
\u2022cost and revenue items deemed as \"non-recurring\" (e.g. because they are directly or indirectly related to business combination transactions, such as the \"gain on a bargain purchase\" in accordance with IFRS 3), are excluded from the calculation of \"Operating costs\", and are therefore reversed from the respective items as per Circular 262 (e.g. \"Other administrative expenses\", \"Other operating income/costs\") and included in a specific item \"Non-recurring income and costs\";
\u2022the following is included under the single item \"Net credit risk losses/reversals\":
\u2013net credit risk losses/reversals relating to financial assets measured at amortised cost (with the exception of those relating to the Npl Segment mentioned above) and to financial assets measured at fair value through other comprehensive income;
\u2013net allocations to provisions for risks and charges for credit risk relating to commitments and guarantees granted;
\u2013profits (losses) from the sale/repurchase of loans at amortised cost other than those of the Npl Segment.
The balance sheet components were aggregated without reclassification.
The Segments of the economic-equity numericals are attributed on the basis of homogeneous allocation criteria in order to take into account both the specificity of the various Segments and the need to guarantee effective monitoring of business performance over time.
Moreover, considering the foregoing, the Segment information in relation to the items of the reclassified income statement shows the results at the level of the net profit.
STATEMENT OF FINANCIAL POSITION DATA
(in thousands of Euro)
COMMERCIAL & CORPORATE BANKING SEGMENT
NPL SEGMENT
GOVERNANCE & SERVICES AND NON-CORE SEGMENT
CONS.
GROUP TOTAL
TOTAL COMMERCIAL & CORPORATE BANKING SEGMENT
of which: FACTORING AREA
of which: LEASING AREA
of which: CORPORATE BANKING & LENDING AREA
Other financial assets mandatorily measured at fair value through profit or loss
Amounts at 31.12.2023
107.169
975
-
106.194
41.735
73.078
221.982
Amounts at 31.12.2022
75.412
2.071
-
73.341
42.489
77.319
195.220
% Change
42,1%
(52,9)%
-
44,8%
(1,8)%
(5,5)%
13,7%
Financial assets measured at fair value through other comprehensive income
Amounts at 31.12.2023
1.333
-
-
1.333
-
747.843
749.176
Amounts at 31.12.2022
1.695
-
-
1.695
-
695.916
697.611
% Change
(21,4)%
-
-
(21,4)%
-
7,5%
7,4%
Receivables due from customers (1)
Amounts at 31.12.2023
6.763.468
2.844.805
1.552.204
2.366.459
1.646.158
2.212.509
10.622.134
Amounts at 31.12.2022
6.514.989
2.755.592
1.472.177
2.287.221
1.519.864
2.152.078
10.186.932
% Change
3,8%
3,2%
5,4%
3,5%
8,3%
2,8%
4,3%
Goodwill
Amounts at 31.12.2023
-
-
-
-
38.020
-
38.020
Amounts at 31.12.2022
-
-
-
-
38.020
-
38.020
% Change
-
-
-
-
0,0%
-
0,0%
\"\"
(1) In the Governance & Services and Non-Core Segment, at 31 December 2023, there were government securities amounting to 1.628,7 million Euro (1.541,5 million Euro at 31 December 2022).
The remaining balance sheet items, other than those shown in the above table, are allocated to the Governance & Services and Non-Core Sector, from which the corresponding economic items are reallocated to the other Sectors, on a direct or indirect basis.
RECLASSIFIED INCOME STATEMENT DATA(in thousands of Euro)
COMMERCIAL & CORPORATE BANKING SEGMENT
NPL SEGMENT
GOVER-NANCE & SERVICES AND NON-CORE SEGMENT
CONS.
GROUP TOTAL
TOTAL COMMERCIAL & CORPORATE BANKING SEGMENT
of which: FACTORING AREA
of which: LEASING AREA
of which: CORPORATE BANKING & LENDING AREA
Net interest income
232.171
106.251
50.985
74.935
281.381
52.645
566.197
Net commission income
96.798
67.742
11.072
17.984
3.483
(2.060)
98.221
Gains (Losses) on the disposal of financial assets
-
-
-
-
10.384
-
10.384
Other components of net banking income
15.670
(1.096)
-
16.766
(715)
14.859
29.814
Net banking income
344.639
172.897
62.057
109.685
294.533
65.444
704.616
Net credit risk losses/reversals
(60.716)
(28.886)
(4.329)
(27.501)
(103)
8.412
(52.407)
Net profit (loss) from financial activities
283.923
144.011
57.728
82.184
294.430
73.856
652.209
Operating costs
(163.890)
(93.234)
(33.039)
(37.617)
(191.931)
(50.020)
(405.841)
Net allocations to provisions for risks and charges
(4.501)
(2.751)
(919)
(831)
147
(2.524)
(6.878)
Non-recurring expenses and income
-
-
-
-
(2.919)
-
(2.919)
Gains (losses) on disposal of investments
-
-
-
-
-
986
986
Pre-tax profit (loss) for the period from continuing operations
115.532
48.026
23.770
43.736
99.727
22.298
237.557
Income taxes for the year relating to current operations
(36.787)
(15.292)
(7.569)
(13.926)
(31.588)
(7.266)
(75.641)
Profit (loss) for the year
78.745
32.734
16.201
29.810
68.139
15.032
161.916
Profit (loss) for the year attributable to non-controlling interests
-
-
-
-
-
(1.806)
(1.806)
Profit (loss) for the year attributable to the Parent company
78.745
32.734
16.201
29.810
68.139
13.226
160.110
For a more detailed analysis of the results of the operating Segments, please refer to the section \u201cContribution of operating Segments to Group results\u201d of the Directors\u2019 Report on the Group.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page284-cflshid_156183-tag94304": { "value": "
Part L - Segment reporting
In accordance with standard IFRS 8, a company must provide information that allows users of the financial statements to assess the nature and effects on such of the business it pursues and the economic contexts in which it operates.
The contribution therefore needs to be highlighted as made by the various \"operating Segments\" to forming the Group\u2019s economic result.
Identification of the \"operating Segments\" of this Part L is consistent with the methods adopted by the Corporate Management to take operative decisions and is based on internal reporting, used in order to allocate the resources to the various segments and analyse the relevant performance. With this in mind, and also in order to improve the representation of the Group's profitability, operating Segments are also highlighted that fall below the quantitative thresholds laid down in par. 13 of IFRS 8.
For FY 2023, the operating Segments taken as a reference for the provision of the information under review are as follows:
\u2022Commercial & Corporate Banking Segment, that represents the Group's commercial offer dedicated to businesses and also includes personal loans with the assignment of one-fifth of salary or pension. The Segment consists of the Factoring, Leasing and Corporate Banking & Lending Business Areas;
\u2022Npl Segment, dedicated to non-recourse factoring and managing distressed loans, servicing and managing non-performing, secured loans;
\u2022Governance & Services and Non-Core Segment, which provides the Segments operating in the Group's core businesses with the financial resources and services necessary to perform their respective activities. The Segment includes treasury and proprietary securities desk activities, as well as some corporate loans portfolio assigned for run-off insofar as held to be non-strategic to the Group's growth.
For a description of the configuration of the above-mentioned operating Segments, please refer to the information contained in the \"Results by operating Segments\" section of the Directors' Report on the Group.
The following tables provide detailed income statement and balance sheet data by Segment at 31 December 2023 compared with the corresponding figures for the previous year.
To allow a more immediate reading of the results, reclassified economic data is prepared within this Part L.
Analytical details of the restatements and reclassifications made with respect to the financial statements envisaged by Bank of Italy Circular 262 are provided in separate tables published among the annexes (see the section \u201cAnnexes\" of this \"2023 Consolidated Financial Statements and Report\"), also in compliance with the requirements of Consob Communication No. 6064293 of 28 July 2006.
Reclassifications and aggregations of the economic data concern the following:
\u2022net credit risk losses/reversals of the Npl Segment are reclassified to interest receivable and similar income (and therefore to \"Net interest income\") to the extent to which they represent the operations of this business and are an integral part of the return on the investment;
\u2022net allocations to provisions for risks and charges are excluded from the calculation of \"Operating costs\";
\u2022cost and revenue items deemed as \"non-recurring\" (e.g. because they are directly or indirectly related to business combination transactions, such as the \"gain on a bargain purchase\" in accordance with IFRS 3), are excluded from the calculation of \"Operating costs\", and are therefore reversed from the respective items as per Circular 262 (e.g. \"Other administrative expenses\", \"Other operating income/costs\") and included in a specific item \"Non-recurring income and costs\";
\u2022the following is included under the single item \"Net credit risk losses/reversals\":
\u2013net credit risk losses/reversals relating to financial assets measured at amortised cost (with the exception of those relating to the Npl Segment mentioned above) and to financial assets measured at fair value through other comprehensive income;
\u2013net allocations to provisions for risks and charges for credit risk relating to commitments and guarantees granted;
\u2013profits (losses) from the sale/repurchase of loans at amortised cost other than those of the Npl Segment.
The balance sheet components were aggregated without reclassification.
The Segments of the economic-equity numericals are attributed on the basis of homogeneous allocation criteria in order to take into account both the specificity of the various Segments and the need to guarantee effective monitoring of business performance over time.
Moreover, considering the foregoing, the Segment information in relation to the items of the reclassified income statement shows the results at the level of the net profit.
STATEMENT OF FINANCIAL POSITION DATA
(in thousands of Euro)
COMMERCIAL & CORPORATE BANKING SEGMENT
NPL SEGMENT
GOVERNANCE & SERVICES AND NON-CORE SEGMENT
CONS.
GROUP TOTAL
TOTAL COMMERCIAL & CORPORATE BANKING SEGMENT
of which: FACTORING AREA
of which: LEASING AREA
of which: CORPORATE BANKING & LENDING AREA
Other financial assets mandatorily measured at fair value through profit or loss
Amounts at 31.12.2023
107.169
975
-
106.194
41.735
73.078
221.982
Amounts at 31.12.2022
75.412
2.071
-
73.341
42.489
77.319
195.220
% Change
42,1%
(52,9)%
-
44,8%
(1,8)%
(5,5)%
13,7%
Financial assets measured at fair value through other comprehensive income
Amounts at 31.12.2023
1.333
-
-
1.333
-
747.843
749.176
Amounts at 31.12.2022
1.695
-
-
1.695
-
695.916
697.611
% Change
(21,4)%
-
-
(21,4)%
-
7,5%
7,4%
Receivables due from customers (1)
Amounts at 31.12.2023
6.763.468
2.844.805
1.552.204
2.366.459
1.646.158
2.212.509
10.622.134
Amounts at 31.12.2022
6.514.989
2.755.592
1.472.177
2.287.221
1.519.864
2.152.078
10.186.932
% Change
3,8%
3,2%
5,4%
3,5%
8,3%
2,8%
4,3%
Goodwill
Amounts at 31.12.2023
-
-
-
-
38.020
-
38.020
Amounts at 31.12.2022
-
-
-
-
38.020
-
38.020
% Change
-
-
-
-
0,0%
-
0,0%
\"\"
(1) In the Governance & Services and Non-Core Segment, at 31 December 2023, there were government securities amounting to 1.628,7 million Euro (1.541,5 million Euro at 31 December 2022).
The remaining balance sheet items, other than those shown in the above table, are allocated to the Governance & Services and Non-Core Sector, from which the corresponding economic items are reallocated to the other Sectors, on a direct or indirect basis.
RECLASSIFIED INCOME STATEMENT DATA(in thousands of Euro)
COMMERCIAL & CORPORATE BANKING SEGMENT
NPL SEGMENT
GOVER-NANCE & SERVICES AND NON-CORE SEGMENT
CONS.
GROUP TOTAL
TOTAL COMMERCIAL & CORPORATE BANKING SEGMENT
of which: FACTORING AREA
of which: LEASING AREA
of which: CORPORATE BANKING & LENDING AREA
Net interest income
232.171
106.251
50.985
74.935
281.381
52.645
566.197
Net commission income
96.798
67.742
11.072
17.984
3.483
(2.060)
98.221
Gains (Losses) on the disposal of financial assets
-
-
-
-
10.384
-
10.384
Other components of net banking income
15.670
(1.096)
-
16.766
(715)
14.859
29.814
Net banking income
344.639
172.897
62.057
109.685
294.533
65.444
704.616
Net credit risk losses/reversals
(60.716)
(28.886)
(4.329)
(27.501)
(103)
8.412
(52.407)
Net profit (loss) from financial activities
283.923
144.011
57.728
82.184
294.430
73.856
652.209
Operating costs
(163.890)
(93.234)
(33.039)
(37.617)
(191.931)
(50.020)
(405.841)
Net allocations to provisions for risks and charges
(4.501)
(2.751)
(919)
(831)
147
(2.524)
(6.878)
Non-recurring expenses and income
-
-
-
-
(2.919)
-
(2.919)
Gains (losses) on disposal of investments
-
-
-
-
-
986
986
Pre-tax profit (loss) for the period from continuing operations
115.532
48.026
23.770
43.736
99.727
22.298
237.557
Income taxes for the year relating to current operations
(36.787)
(15.292)
(7.569)
(13.926)
(31.588)
(7.266)
(75.641)
Profit (loss) for the year
78.745
32.734
16.201
29.810
68.139
15.032
161.916
Profit (loss) for the year attributable to non-controlling interests
-
-
-
-
-
(1.806)
(1.806)
Profit (loss) for the year attributable to the Parent company
78.745
32.734
16.201
29.810
68.139
13.226
160.110
\"\"
For a more detailed analysis of the results of the operating Segments, please refer to the section \u201cContribution of operating Segments to Group results\u201d of the Directors\u2019 Report on the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:8156005420362AE59184", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }