Operating Segments

The new regulation regarding IFRS 8 - Operating Segments focuses on the definition of segments on which reporting is required according to the “management approach”, i.e. with reference only to the internal organisation and periodic reporting to the “chief operating decision maker” to aid strategic decisions.

The Carige Group considered that the business model covers two strategic areas: geographic, given that the sales network is broken down into geographic areas, Liguria and “Extra-Liguria”; and the customer segment, given that the organisational and operational structure provides for specific service approaches (in terms of products, prices and infrastructures) targeting the various customer types.

The reference model adopted for disclosures on operating segments was the “geographic” approach, with breakdown of results and assets among the following operating segments:

  • Liguria”: operating customers at branches of the parent bank in that geographic area, together with the results of Cassa di Risparmio di Savona, prevalently located in that area;
  • Extra Liguria”: operating customers at branches of the parent bank in other regions, together with subsidiary banks located in such geographic areas;
  • “Other operating segments”: include remaining customers and the other Group companies that perform asset management, insurance (life and non-life business), financial and instrumental activities;
  • “Netting and unallocated items”: remaining segment explicitly envisaged in the regulations for reporting intra-group netting and reconciliation items compared to the accounting figures.

This report will be integrated with a summary illustration by customer segment of the income statement and balance sheet values.

Calculation criteria for income statement and balance sheet components and indicators

Calculation of the gross operating margin is based on the following criteria:

  • Net interest income is recognised by contribution, via an internal transfer rating system differentiated by product;
  • Net commissions and other components of net revenues from services are almost entirely allocated directly to the geographic/customer operating segments.

Operating costs are calculated as follows:

  • Staff costs, other administrative costs and other operating income/expense are allocated to geographic/customer segments directly or via drivers, identifying multiple cost centre levels and adopting progressive chargeback stages;
  • Steering and coordination costs incurred are allocated directly to the Corporate Centre (Other operating segments).

Balance sheet components are allocated as follows:

  • Trade receivables and amounts due to customers are allocated according to branch location (geographic operating segments) or other counterparty characteristics (customer segments);
  • Loans to and amounts owed to banks are allocated to the Finance Department (Other operating segments);
  • Securities in issue and financial liabilities designated at fair value are allocated according to branch location (geographic operating segments) or counterparty characteristics (customer segments); the share not acquired from ordinary customers is allocated to the “Other operating segments”.

Cost/income is calculated as the ratio between operating costs and the gross operating margin.

In terms of their totals, the income statement and balance sheet items correspond with their respective items in the financial statements.

So as to allow a significant time-based comparison, the data for previous periods are reprocessed in line with current disclosure approaches.

The income and equity results of the geographic operating segments in 2010 are:

  • The Liguria network recorded a gross operating income of € 422.7 million, down 0.3% on 2009; net of value adjustments, income from financial operations amounted to € 393.8 million; operating costs decreased by 3.3% compared to December 2009 and totalled to € 208.8 million.

The cost/income ratio is equal to 49.4%, in line with the 2009 figure (51%).

With regard to the trend in lending volumes, loans to customers increased to € 10,507 million (+5.7% compared to 31 December 2009), amounts due to customers reduced by 0.7% compared to the end of 2009 to reach € 6,981 million, and securities in issue and financial liabilities designated at fair value stood at € 4,142 million. Financial Intermediation Activities (FIA) amounted to € 22,949 million (+2.1% compared to 31 December 2009);

  • The Extra Liguria network – integrated in 2010 with the branches acquired from Monte dei Paschi di Siena – recorded a 0.9% increase in the gross operating margin compared to 2009 to reach € 429.9 million and income from financial operations of € 356 million (+4.7% on 2009). Operating costs amounted to € 277.6 million, essentially stable with respect to 2009.

These results are reflected in the cost/income ratio of 64.6%, compared to 65.1% in 2009.

With regard to volumes, loans to customers stood at € 11,692 million, up 11.9%% on 31 December 2009; amounts owed to customers totalled € 6,922 million (+6.1% compared to December 2009); securities in issue and financial liabilities designated at fair value, amounting to € 2,105 million decreased by 3.6% against the figure as at 31 December 2009. Financial Intermediation Activities (FIA) amounted to € 18,296 million, up 12.1% compared to 31 December 2009;

  • Other operating segments recorded operating profits of € 53.4 million (€ 119 million as at the end of 2009).

The major aggregate balance sheet items were securities in issue and financial liabilities designated at fair value for € 6,816 million (+19.6% compared to 31 December 2009), i.e. 62% of the Group total. FIA totalled € 12,708 million (+15.6% on the figure for 31 December 2009).

Business geographic areas (figures in thousands of euro)
  Liguria Outside the region of Liguria Other operating segments Netting-off and other items TOTAL
 Gross operating income (1)          
  year 2010 422,739 429,885 213,115 -53,687 1,012,052
  9 months 2010 331,511 327,746 120,061 -53,424 725,894
  year 2009 424,010 426,144 264,189 -43,458 1,070,885
Net income from financial and insurance management (2)          
  year 2010 393,756 355,964 199,812 -47,803 901,729
  9 months 2010 307,852 273,895 113,531 -51,099 644,179
  year 2009 391,114 340,049 253,430 -37,375 947,218
 Operating costs          
  year 2010 -208,834 -277,572 -146,401 -7,267 -640,074
  9 months 2010 -166,917 -216,394 -87,689 -4,496 -475,496
  year 2009 -216,070 -277,241 -134,393 -8,882 -636,586
Operating profit (Loss) from ordinary activities          
  year 2010 184,922 78,392 53,411 -55,070 261,655
  9 months 2010 140,935 57,501 25,842 -55,595 168,683
  year 2009 175,044 62,808 119,037 -46,257 310,632
 Cost income (%)           
  year 2010  49,4  64,6  68,7    63,2
  9 months 2010  50,4  66,0  73,0    65,5
  year 2009  51,0  65,1  50,9    59,3
Net interbank          
31/12/2010  -    -   -785,155 -745,065 -1,530,220
30/09/2010  -    -   1,024,951 -1,238,645 -213,694
31/12/2009  -    -   1,283,240 -630,322 652,918
Loans to customers          
31/12/2010 10,507,199 11,692,080 3,146,283 -445,963 24,899,599
30/09/2010 10,638,549 11,777,102 1,730,752 -432,190 23,714,213
31/12/2009 9,943,033 10,451,643 2,723,131 -331,382 22,786,425
Amounts owed to customers (a)          
31/12/2010 6,980,975 6,921,757 2,061,565 -372,100 15,592,197
30/09/2010 7,420,447 6,789,133 2,036,503 -591,891 15,654,192
31/12/2009 7,032,982 6,521,609 1,906,765 -399,681 15,061,675
Securities in issue and financial liabilities designated at fair value (3) (b)          
31/12/2010 4,141,660 2,104,571 6,816,039 -2,070,918 10,991,352
30/09/2010 4,042,420 2,648,106 5,402,236 -1,288,204 10,804,558
31/12/2009 4,353,263 2,183,440 5,698,711 -1,601,310 10,634,104
Other financial assets (c)          
31/12/2010 11,826,396 9,270,142 3,830,755 -836,723 24,090,570
30/09/2010 11,526,181 9,289,914 3,730,024 -742,517 23,803,602
31/12/2009 11,089,572 7,619,978 3,388,941 -872,864 21,225,627
Financial Intermediation Activities (FIA) (d= a+b+c)          
31/12/2010 22,949,031 18,296,471 12,708,357 -3,279,740 50,674,119
30/09/2010 22,989,048 18,727,154 11,168,762 -2,622,612 50,262,352
31/12/2009 22,475,817 16,325,026 10,994,418 -2,873,855 46,921,406
(1) Including income from insurance management (2) Including profits from equity investments and disposal of investments. (3) Carige Vita Nuova liabilities, designated at fair value and relating to products for which risk is borne by the insured, have not been included in this table.

Business geographic areas (% on total)
  Liguria Outside the region of Liguria Other operating segments Netting-off and other items TOTAL
Gross operating income (1)          
  year 2010 41.8 42.5 21.0 -5.3 100.0
  9 months 2010 45.7 45.2 16.5 -7.4 100.0
  year 2009 39.6 39.8 24.7 -4.1 100.0
Net income from financial and insurance management (2)          
  year 2010 43.7 39.5 22.1 -5.3 100.0
  9 months 2010 47.8 42.5 17.6 -7.9 100.0
  year 2009 41.3 35.9 26.7 -3.9 100.0
Operating costs          
  year 2010 32.6 43.4 22.8 1.2 100.0
  9 months 2010 35.1 45.5 18.5 0.9 100.0
  year 2009 33.9 43.6 21.1 1.4 100.0
Operating profit (Loss) from ordinary activities          
  year 2010 70.7 30.0 20.3 -21.0 100.0
  9 months 2010 83.6 34.1 15.3 -33.0 100.0
  year 2009 56.4 20.2 38.3 -14.9 100.0
Loans to customers          
31/12/2010 42.2 47.0 12.6 -1.8 100.0
30/09/2010 44.9 49.7 7.2 -1.8 100.0
31/12/2009 43.6 45.9 12.0 -1.5 100.0
Amounts owed to customers          
31/12/2010 44.8 44.4 13.2 -2.4 100.0
30/09/2010 47.4 43.4 13.0 -3.8 100.0
31/12/2009 46.7 43.3 12.7 -2.7 100.0
Securities in issue and financial liabilities designated at fair value (3)          
31/12/2010 37.7 19.1 61.9 -18.7 100.0
30/09/2010 37.4 24.5 50.0 -11.9 100.0
31/12/2009 40.9 20.5 53.6 -15.0 100.0
Other financial assets          
31/12/2010 49.1 38.5 15.9 -3.5 100.0
30/09/2010 48.4 39.0 15.7 -3.1 100.0
31/12/2009 52.2 35.9 16.0 -4.1 100.0
Financial Intermediation Activities (FIA)          
31/12/2010 45.3 36.1 25.1 -6.5 100.0
30/09/2010 45.7 37.3 22.2 -5.2 100.0
31/12/2009 47.9 34.8 23.4 -6.1 100.0
(1) Including income from insurance management (2) Including profits from equity investments and disposal of investments. (3) Carige Vita Nuova liabilities, designated at fair value and relating to products for which risk is borne by the insured, have not been included in this table.

 

Net income from financial management

 

Moving on to examine customer segments, ordinary customers refer to:

  • Private and Affluent, relating to key private customers and Centro Fiduciario;
  • Corporate, which includes the Middle Corporate and Large Corporate sub-segments;
  • Retail, which gathers together all business for mass market and small business customers, with regard to deposits and lending.     

At the end of 2010, the gross operating margin for the ordinary customer segment totalled € 781 million, -1.3% compared to 2009. The Private & Affluent segment recorded € 158.3 million, +9.1% on 2009, largely sustained by the commission component from indirect deposits. The Corporate segment managed to stay in line with the 2009 figure with a result of € 259.1 million, due to the contribution from medium/long-term loans and lending segment commissions. The Retail segment closed 2010 with a margin of € 363.5 million, -5.7% compared to 2009, penalised by the result for short-term positions.

The income from financial and insurance operations for the ordinary customers segment amounted to € 677.8 million, in line with the 2009 figure. The Private & Affluent segment totalled € 158.1 million, +9.2% on 2009. The Corporate segment recorded a result of € 210.7 million, +8.1% compare to the previous year and the Retail segment stood at € 309 million, down 6.8% on 2009.

Operating expense recorded a slight change over the previous year and, with regard to ordinary customers, totalled € 470.6 million. The Private & Affluent segment incurred expense of € 111.7 million, the Corporate segment recorded a value of € 98.3 million and the Retail segment closed 2010 with a total of € 260.5 million.

With reference to lending volumes, loans to ordinary customers amounted to € 20,825 million, recording an increase of € 1,205 million compared to the 2009 figure (+6.1%): this mainly refers to medium/long-term loans in the Corporate and Retail segments, which closed 2010 with totals of € 11,283 million and € 8,933 million, respectively.

With regard to direct deposits, the ordinary customers segment recorded an overall drop in volumes: amounts due to customers, totalling € 12,879 million, fell by 6.1% compared to 2009, concentrated particularly in the Retail segment which closed 2010 with a value of € 5,085 million (€ -721 million; -12.4%). The Private & Affluent remained in line with the previous year with a total of € 6,041 million. Securities in issue and financial liabilities designated at fair value totalling € 6,145 million recorded a 5.1% decrease, particularly involving the Private & Affluent segment which at the end of 2010 recorded € 4,548 million (€ -357 million; -7.3%).

Indirect deposits in the ordinary customers segment totalled € 19,578 million, recording an increase of € 2.4 billion (+13.8%), of which € 2 billion relating to the Private & Affluent segment (+14.6% on 2009) with a total of € 15,414 million recorded at the end of 2010. The FIA amounted to € 26,003 million for the Private and Affluent segment (51.3% of the Group total, +6.4% compared to 2009), € 2,934 million for the Corporate segment (+10.1% compared to 2009), and € 9,665 million for the Retail segment (19.1% of the Group total, -6% compared to 31 December 2009)

Customer segments (figures in thousands of euro)
  Private and Affluent  Corporate Retail  Total customer segments Total financial statements
Gross operating income (1)          
year 2010 158,345 259,138 363,498 780,981 1,012,052
9 months 2010 122,767 196,432 292,103 611,302 725,894
year 2009 145,189 260,209 385,604 791,002 1,070,885
Net income from financial and insurance management (2)          
year 2010 158,111 210,715 308,967 677,793 901,729
9 months 2010 122,625 162,668 246,806 532,099 644,179
year 2009 144,844 194,844 331,617 671,305 947,218
Operating costs          
year 2010 -111,712 -98,314 -260,543 -470,569 -640,074
9 months 2010 -86,900 -76,816 -213,099 -376,815 -475,496
year 2009 -104,240 -97,417 -270,421 -472,078 -636,586
Operating profit (Loss) from ordinary activities          
year 2010 46,399 112,401 48,424 207,224 261,655
9 months 2010 35,725 85,852 33,707 155,284 168,683
year 2009 40,604 97,427 61,196 199,227 310,632
Number of customers          
year 2010 190,035 19,250 1,093,370 1,302,655 1,383,866
9 months 2010 192,539 19,006 1,063,688 1,275,233 1,355,123
year 2009 187,433 18,395 1,053,238 1,259,066 1,301,492
Profit per customer (figures in euro)          
year 2010 244.2 5,839.0 44.3    
9 months 2010 185.5 4,517.1 31.7    
year 2009 216.6 5,296.4 58.1    
Cost income (%)           
year 2010 70.5 37.9 71.7   63.2
9 months 2010 70.8 39.1 73.0   65.5
year 2009 71.8 37.4 70.1   59.3
Loans to customers          
31/12/2010 609,257 11,282,604 8,933,006 20,824,867 24,899,599
30/09/2010 578,925 11,189,535 8,716,996 20,485,456 23,714,213
31/12/2009 536,732 10,684,451 8,398,612 19,619,795 22,786,425
Amounts owed to customers (a)          
31/12/2010 6,041,045 1,752,798 5,085,413 12,879,256 15,592,197
30/09/2010 6,316,207 1,628,125 5,307,166 13,251,498 15,654,192
31/12/2009 6,089,861 1,818,370 5,806,205 13,714,436 15,061,675
Securities in issue and financial liabilities designated at fair value (3) (b)          
31/12/2010 4,548,249 165,945 1,430,490 6,144,684 10,991,352
30/09/2010 4,391,380 151,922 1,405,670 5,948,972 10,804,558
31/12/2009 4,904,831 111,557 1,456,070 6,472,458 10,634,104
Other financial assets (c)          
31/12/2010  15,414,151  1,015,134  3,148,630 19,577,915 24,090,570
30/09/2010  15,246,306  1,050,166  3,134,098 19,430,570 23,803,602
31/12/2009  13,445,963  735,922  3,022,310 17,204,195 21,225,627
Financial Intermediation Activities (FIA) (d = a + b + c)          
31/12/2010  26,003,445  2,933,877  9,664,533 38,601,855 50,674,119
30/09/2010  25,953,894  2,830,213  9,846,933 38,631,040 50,262,352
31/12/2009  24,440,655  2,665,850  10,284,584 37,391,089 46,921,406
(1) Including income from insurance management (2) Including profits from equity investments and disposal of investments. (3) Carige Vita Nuova liabilities, designated at fair value and relating to products for which risk is borne by the insured, are not included in this table.

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