Banca Generali - Financial Report

THE BEST YEAR EVER

FINANCIAL HIGHLIGHTS

“Business growth figures confirm the validity of our strategic decisions”

DIVIDEND

1.20 €

per stock

NET PROFIT

203.6 mn €

+27%

REVENUES

465.9 mn €

+11%

TIER 1 RATIO

14.3%

TOTAL CAPITAL RATIO

15.9%

EXCESS CAPITAL

212.8 mn €

+34.8%

NET SALES

4.640 bn €

+15.3%

AUM

41.6 bn

+13.8%

DIVIDEND

1.20 €

per stock

NET PROFIT

203.6 mn €

+27%

REVENUES

465.9 mn €

+11%

>TIER 1 RATIO

14,3%

TOTAL CAPITAL RATIO

15,9%

EXCESS CAPITAL

212.8 mn €

+34.8%

NET SALES

4.640 bn €

+15.3%

AUM

41.6 bn

+13.8%

CHAIRMAN'S LETTER

Dear Shareholders,
Banca Generali had its best year ever in 2015, and we are particularly proud of our commercial, earnings and capital position results.

Last year’s excellent performance is not an isolated event. Rather, it reflects the quality of a process and strategic focus that in the past four years have nearly tripled net profits and doubled total asset volumes. The reinforcement of our financial advisor network, our focus on excellence and new products and services, as well as commitment to technological development of increasingly exclusive solutions set apart the business model adopted by the bank, which has carved out a position for itself in Italy as the number-one full-fledged private bank in terms of service quality and innovation.

Dear Shareholders,
Banca Generali had its best year ever in 2015, and we are particularly proud of our commercial, earnings and capital position results.

Business growth figures confirm the validity of our strategic decisions. In 2015, the company reported net inflows of over 4,600 million euros. The attention garnered from Private customers and highly-skilled professionals mirrors the bank’s attractiveness and growth potential. In a very competitive industry, Banca Generali further increased its market share in the networks segment from 10.2% to 12.1% over the past three years.

The focus on financial planning was welcomed by customers and was accompanied by efficient operational management. Net profit increased by 27% to 204 million euros, a new high even after extraordinary charges associated with contribution to the banking crisis Resolution Fund (BRRD) and Interbank Deposit Protection Fund (FITD). The bank also continued to strengthen its capital position, untouched by speculation concerning the solidity of the system, thanks to the quality and transparency of its assets. CET1 capital ratio was 14.3% and total capital ratio 15.9%, respectively 100% and 50% above the ECB’s minimum requirements for the company.

Based on these results, it has been proposed that a dividend of 140 million euros, or 1.20 euros per share, be distributed. Banca Generali’s shareholder remuneration policy is once more among the most generous on the market, particularly in the financial sector.

Turning to the bank’s prospects, the increasing market difficulties are heightening households’ need for specialised support, a trend favourable to companies recognised for their professionalism and reputation such as Banca Generali. After the boost provided by expansionary measures by central banks in the first half of 2015, stock exchanges encountered further uncertainty relating to the slowdown of emerging countries and falling price of oil. Volatility returned to centre stage not just on stock markets, but also bond markets, due to the increase in interest rates by the U.S. Federal Reserve in December. Aversion to risk intensified the search for fixed-income safe-haven investments, driving interest rates on many government bonds below zero, and not only for the shortest maturities. The fall in government bond yields, which also affected Italy, represents an epochal change for Italian households, traditionally accustomed to focusing on this type of solution, which is no longer sufficient to ensure sound investment performance.

Critical market issues are in addition to new challenges on the regulatory front. The introduction of the new European Directive on bank crisis resolution and bail-ins came suddenly, forcing extraordinary intervention at the end of 2015 in the cases of four local banks struggling with serious problems. The scope and media attention dedicated to the procedures heightened households’ doubts concerning the financial system, driving a new awareness on the importance of choosing a sound bank.

Against the background of the challenges of a highly complex scenario that affects the entire system, Banca Generali’s strategic focus and characteristics stand out more strongly. Its proven experience and ability in managing investments even in difficult market situations, aided by the versatility of its products and services and the professional skills of its financial advisors, allow the company to offer a comprehensive response to any households’ investment needs. The prudent management of the company is marked by the almost complete absence of non-performing loans, the clear positions in its proprietary portfolio — composed of short-term, highly-rated government securities — extremely sound capital indicators and transparency towards customers. Furthermore, the bank has never placed a single senior or subordinated bond of its own, just as it has never requested a capital increase from the market and shareholders, who instead have been able to count on significant dividends at the end of each year.

Given this capital solidity and the strong strategic drive towards advisory services focussed on protecting investments and towards the private banking business, we are looking to the future with optimism and confidence. The determination and commitment shown both by the management and employees, whom I would like to congratulate and wholeheartedly thank for their dedication, make Banca Generali a model of professionalism and integrity and a leader in the Italian asset management industry.

The Chairman
Paolo Vagnone

In 2015, consolidated net profit sharply rose to €203.6 million (+26,7%), including also €8.7 million extraordinary charges paid in December for the contribution to the new Resolution Fund for banking crises (BRRD) and Interbank Deposit Protection Fund (FITD).

TOTAL
PRIVATE
CHANNEL
CORPORATE
CHANNEL
AFFLUENT
CHANNEL

Net interest income

66.230 thousand €

Net fees

370.762 thousand €

Net banking income

465.903 thousand €

Net interest income

16.454 thousand €

Net fees

131.161 thousand €

Net banking income

1647.615 thousand €

Net interest income

21.208 thousand €

Net fees

28.996 thousand €

Result from banking activities and dividends

28.911 thousand €

Net banking income

79.115 thousand €

Net interest income

28.567 thousand €

Net fees

210.605 thousand €

Net banking income

239.172 thousand €

DIRECT
INFLOWS
INDIRECT
INFLOWS

Current accounts and demand deposits

4.655.750 thousand €

Financing

43.283 thousand €

Other Debts

140.580 thousand €

Asset management products of the Banking Group

Third-party asset management products

Third-party insurance products

Assets under administration and custody

CONSOLIDATED NET PROFIT

(€ thousand)	31.12.2015	31.12.2014	Change
			Amount	%
Net interest	66,230	107,005	-40,775	-38.1%
Net fees	370,762	257,268	113,494	44.1%
Dividends	3,120	2,570	550	21.4%
Net income (loss) from trading activities and dividends	25,790	52,370	-26,580	-50.8%
Net operating income	465,902	419,213	46,689	11.1%
Staff expenses	-80,949	-74,182	-6,767	9.1%
Other general and administrative expense	-134,020	-128,458	-5,562	4.3%
Net adjustments of property, equipment and intangible assets	-5,310	-4,420	-890	20.1%
Other operating expenses/income	44,720	41,266	3,454	8.4%
Net operating expenses	-175,559	-165,794	-9,765	5.9%
Operating profit	290,343	253,419	36,924	14.6%
Net adjustments for non-performing loans	-1,121	-7,530	6,409	-85.1%
Net adjustments of other assets	-5,350	-3,465	-1,885	54.4%
Net provisions	-45,585	-40,268	-5,317	13.2%
Gain (loss) from equity investments	-46	-18	-28	155.6%
Operating profit before taxation	238,241	202,138	36,103	17.9%
Income taxes for the year	-34,682	-44,284	9,602	-21.7%
Gains from non-current assets held for sale	0	3,051	-3,051	-100.0%
Net profit	203,559	160,905	42,654	26.5%

Asset management products of the Banking Group

(€ million)	Gruppo BG	Gruppo BG	Changes vs su
	31.12.2015	31.12.2014	31.12.2014
			Amount	%
Funds and Sicavs	11.849	8.861	2.987	33,7%
Gpf/Gpm	3.543	3.702	-159	-4,3%
Total Group’s managed assets	15.392	12.563	2.829	22,5%
Of which UCITSs attributable to the banking group GPF	1.213	1.090	123	11,3%
Total assets managed by the Banking Group, net of discretionary accounts, included in the GPF of the Banking Group	14.179	11.473	2.705	23,6%

Third-party asset management products

(€ million)	Gruppo BG	Gruppo BG	Changes vs su
	31.12.2015	31.12.2014	31.12.2014
			Amount	%
Funds and Sicavs	4.361	4.241	120	2.8%
Gpf/Gpm	186	187	0	-0,2%
Total third-party assets managed by the Group	4.547	4.428	1.20	2,7%

Third-party insurance products

(€ million)	Gruppo BG	Gruppo BG	Changes vs su
	31.12.2015	31.12.2014	31.12.2014
			Amount	%
Insurance products (unit-linked, traditional, multi-line policies, etc.)	17.263	13.694	3569	26,1%
Total third-party insurance products	17.263	13.694	3569	26,1%

Assets under administration and custody

(€ million)	Gruppo BG	Gruppo BG	Change su
	31.12.2015	31.12.2014	31.12.2014
			Amount	%
Securities portfolios of the Generali Group’s corporate customers	423	343	80	23,5%
Other customers’ securities portfolios	6.204	6366	-162	-2,5%
Indirect inflows of assets under administration and custody of the banking group (market value)	6.627	6.709	-82	-1,2%

CORPORATE SOCIAL RESPONSIBILITY

For many years, Banca Generali has been committed to integrating the operational and finan- cial aspects of its business with a focus on social responsibility and environmental issues with a view to sustainability for future generations.

Distribution of global added value

Employee
policies

Policies in support of families and young people

Environmental
policies

Consolidated balance sheet

Consolidated prodit and loss account

Statement of consolidated comprehensive income

Statement of changes in consolidated net equity

Consolidated cash flow statement

Consolidated balance sheet

Consolidated prodit and loss account

Statement of consolidated comprehensive income

Statement of changes in consolidated net equity

Consolidated cash flow statement

CONSOLIDATED BALANCE SHEET

Assets	31.12.2015	31.12.2014	Change
(€ thousand)			Amount	%

Cash and deposits	13.889	80.450	-66.561	-82,7%
HFT financial assets	28.004	32.840	-4.836	-14,7%
AFS financial assets	2.939.211	2.235.408	703.803	31,5%
HTM financial assets	423.586	1.403.123	-979.537	-69,8%
Loans to banks	419.508	285.620	133.888	46,9%
Loans to customers	1.922.020	1.794.959	127.061	7,1%
Equity investments	2.152	0	2.152	n.a.
Property and equipment	4.891	3.829	1.062	27,7%
Intangible assets	88.223	89.965	-1.742	-1,9%
of which:
- goodwill	66.065	66.065	0	0,00%
Tax receivables	61.992	40.801	21.191	51,9%
a) current	21.547	2.180	19.367	n.a.
b) prepaid	40.445	38.621	1.824	4,7%
b1) as per Law No. 214/2011	11.496	13.012	-1.516	-11,6%
Other assets	212.541	173.242	39.299	22,7%
Total Assets	6.116.017	6.140.237	-24.220	-0,4%


Net Equity and Liabilities	31.12.2015	31.12.2014	Change
(€ thousand)			Amount	%

Due to banks	333.954	1.038.889	-704.935	-67,8%
Due to customers	4.839.613	4.285.398	554.215	12,9%
HFT financial liabilities	463	2.655	-2.192	-82,6%
Tax payables	22.575	27.612	-5.037	-18,2%
a) current	9.715	17.232	-7.517	-43,6%
b) deferred	12.860	10.380	2.480	23,9%
Other liabilities	163.188	149.770	13.418	9,0%
Employee termination indemnities	4.889	5.250	-361	-6,9%
Provisions for liabilities and contingencies:	114.537	94.355	20.182	21,4%
b) other provisions	114.537	94.355	20.182	21,4%
Valuation reserves	22.424	17.983	4.441	24,7%
Reserves	247.214	196.209	51.005	26,0%
Additional paid-in capital	50.063	45.575	4.488	9,8%
Share capital	116.093	115.677	416	0,4%
Treasury shares (-)	-2.555	-41	-2.514	n.a.
Net profit for the year	203.559	160.905	42.654	26,5%
Total Net Equity and Liabilities	6.116.017	6.140.237	-24.220	-0,4 %

CONSOLIDATED PROFIT AND LOSS ACCOUNT

	31.12.2015	31.12.2014	Change
(€ thousand)			Amount	%
Interest income and similar revenues	69.743	117.712	-47.969	-40,8%
Interest expense and similar charges	-3.513	-10.707	7.194	-67,2%
Net interest income	66.230	107.005	-40.775	-38,1%
Fee income	651.960	484.619	167.341	34,5%
Fee expense	-281.198	-227.351	-53.847	23,7%
Net fees	370.762	257.268	113.494	44,1%
Dividends and similar income	3.120	2.570	550	21,4%
Net income (loss) from trading activities	4.489	4.584	-95	-2,1%
Gain (loss) from sale or repurchase of:	21.301	47.786	-26.485	-55,4%
a) receivables	1.700	3.120	-1.420	-45,5%
b) AFS financial assets	19.601	44.666	-25.065	-56,1%
Net banking income	465.902	419.213	46.689	11,1%
Net adjustments/reversals due to impairment of:	-6.471	-10.995	4.524	-41,1%
a) receivables	-1.121	-7.530	6.409	-85,1%
b) AFS financial assets	-2.845	-3.035	190	-6,3%
c)HTM financial assets	-2.575	-286	-2.289	800,3%
d)other financial transactions	70	-144	214	-148,6%
Net result of financial operations	459.431	408.218	51.213	12,5%
General and administrative expense:	-214.969	-202.640	-12.329	6,1%
a) staff expenses	-80.949	-74.182	-6.767	9,1%
b) other general and administrative expense	-134.020	-128.458	-5.562	4,3%
Net provisions for liabilities and contingencies	-45.585	-40.268	-5.317	13,2%
Net adjustments/reversals of property and equipment	-1.252	-1.423	171	-12,0%
Net adjustments/reversals of intangible assets	-4.058	-2.997	-1.061	35,4%
Other operating expenses/income	44.720	41.266	3.454	8,4%
Operating expenses	-221.144	-206.062	-15.082	7,3%
Gain (loss) from equity investments	-40	0	-40	n.a.
Gain (loss) from disposal of investments	-6	-18	12	-66,7%
Profit before income taxes	238.241	202.138	36.103	17,9%
Income taxes for the year on operating activities	-34.682	-44.284	9.602	-21,7%
Net profit after income taxes	203.559	157.854	45.705	29,0%
Income (loss) of disposal groups, net of taxes	0	3.051	-3.051	-100,0%
Net profit for the year	203.559	160.905	42.654	26,5%
Net profit (loss) for the year of the Parent Company	203.559	160.905	42.654	26,5%

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

Items	31.12.2015	31.12.2014	Change
(€ thousand)			Amount	%

Net profit for the year	203.559	160.905	42.654	26,5%
Other income net of income taxes
without reversal to Profit or Loss
Actuarial gains (losses) from defined benefit plans	70	-448	518	-115,6%
Other income net of income taxes
with reversal to Profit or Loss
Exchange differences	-8	0	-8	0,0%
AFS financial assets	4.379	12.971	-8.592	-66,2%
Total other income, net of income taxes	4.441	12.523	-8.082	-64,5%
Comprehensive income	208.000	173.428	34.572	19,9%
Consolidated comprehensive income attributable to the Parent Company	208.000	173.428	34.572	19,9%

STATEMENT OF CHANGES IN CONSOLIDATED NET EQUITY

(€ thousand)	Share capital		Share premium reserve	Reserves		Valuation reserves	Equity instruments	Interim dividends	Treasury shares	Net profit (loss) for the year	Net equity	Group net equity	Net equity of minority interests
(€ thousand)	a) ordinary shares	b) other	Share premium reserve	a) retained earnings	b) other	Valuation reserves	Equity instruments	Interim dividends	Treasury shares	Net profit (loss) for the year	Net equity	Group net equity	Net equity of minority interests

Net equity at 31.12.2014	115.677	-	45.575	188.808	7.401	17.983	-	-	-41	160.905	536.308	536.308	-
Change in opening balances	-	-	-	-	-	-	-	-	-	-	-	-	-
Amount at 01.01.2015	115.677	-	45.575	188.808	7.401	17.983	-	-	-41	160.905	536.308	536.308	-
Allocation of net income of the previous year	-	-		47.474	-	-	-	-	-	-160.905	-113.431	-113.431	-
- Reserves	-	-	-	47.474	-	-	-	-	-	-47.474	-	-	-
- Dividends and other allocations	-	-		-	-	-	-	-	-	-113.431	-113.431	-113.431	-
Change in reserves	-	-	-	-1	2.049	-	-	-	-	-	2.048	2.048	-
Transactions on net equity	416	-	4.488	-	1.483	-	-	-	-2.514	-	3.873	3.873	-
- Issue of new shares	416	-	4.488	-	-520	-	-	-	5	-	4.389	4.389	-
- Purchase of treasury shares	-	-	-	-	-	-	-	-	-2.519	-	-2.519	-2.519	-
- Interim dividends	-	-	-	-	-	-	-	-	-	-	-	-	-
- Extraordinary dividends	-	-	-	-	-	-	-	-	-	-	-	-	-
- Change in equity instruments	-	-	-	-	-	-	-	-	-	-	-	-	-
- Derivatives on treasury shares	-	-	-	-	-	-	-	-	-	-	-	-	-
- stock option	-	-	-	-	2.003	-	-	-	-	-	2.003	2.003	-
Comprehensive income	-	-	-	-	-	4.441	-	-	-	203.559	208.000	208.000	-

Net equity at 31.12.2015	116.093	-	50.063	236.281	10.933	22.424	-	-	-2.555	203.559	636.798	637.798	-
Net equity, Group	116.093	-	50.063	236.281	10.933	22.424	-	-	-2.555	203.559	636.798	-	-
Net equity, Minority interest	-	-	-	-	-	-	-	-	-	-	-	-	-



(€ thousand)	Share capital		Share premium reserve	Reserves		Valuation reserves	Equity instruments	Interim dividends	Treasury shares	Net profit (loss) for the year	Net equity	Group net equity	Net equity of minority interests
(€ thousand)	a) ordinary shares	b) other	Share premium reserve	a) retained earnings	b) other	Valuation reserves	Equity instruments	Interim dividends	Treasury shares	Net profit (loss) for the year	Net equity	Group net equity	Net equity of minority interests

Net equity at 31.12.2013	116.617	-	37.302	159.005	7.048	5.460	-	-2.400	-41	145.941	469.132	463.093	6.039
Change in opening balances	-	-	-	-	-	-	-	-	-	-	-	-	-
Amount at 01.01.2014	116.617	-	37.302	159.005	7.048	5.460	-	-2.400	-41	145.941	469.132	463.093	6.039
Allocation of net income of the previous year	-	-		31.633	-	-	-	-	-	-141.256	-109.623	-109.623	-
- Reserves	-	-	-	31.633	-	-	-	-	-	-31.633	-	-	-
- Dividends and other allocations	-	-		-	-	-	-	-	-	-109.623	-109.623	-109.623	-
Change in reserves	-	-	-	2	1.578	-	-	-	-	-	1.580	1.580	-
Transactions on net equity	1.140	-	8.273	-1.832	-1.225	-	-	-2.400	-	-4.685	1.791	7.830	-6.039
- Issue of new shares	782	-	8.273	-	-1.449	-	-	-	-	-	7.606	7.606	-
- Purchase of treasury shares	-	-	-	-	-	-	-	-	-	-	-	-	-
- Interim dividends	-	-	-	-	-	-	-	-	-	-	-	-	-
- Extraordinary dividends	-1.922	-	-	-1.832	-	-	-	2.400	-	-4.685	-6.039	-	-6.039
- Change in equity instruments	-	-	-	-	-	-	-	-	-	-	-	-	-
- Derivatives on treasury shares	-	-	-	-	-	-	-	-	-	-	-	-	-
- stock option	-	-	-	-	224	-	-	-	-	-	224	224	-
Comprehensive income	-	-	-	-	-	12.523	-	-	-	160.905	173.428	173.428	-

Net equity at 31.12.2014	115.677	-	45.575	188.808	7.401	17.983	-	-	-41	160.905	536.308	536.308	-
Net equity, Group	115.677	-	45.575	188.808	7.401	17.983	-	-	-41	160.905	536.308	-	-
Net equity, Minority interest	-	-	-	-	-	-	-	-	-	-	-	-	-

CONSOLIDATED CASH FLOW STATEMENT

Indirect method	31.12.2015	31.12.2014
(€ thousand)
A. OPERATING ACTIVITIES
1. Operations	173.820	207.183
- Net profit (loss) for the year	203.559	160.905
- Gain/loss on HFT financial assets and liabilities	117	336
- Gain/loss on hedging assets	0	0
- Net adjustments due to impairment	6.471	10.995
- Net adjustments of property, equipment and intangible assets	5.310	4.420
- Net provisions for liabilities and contingencies and other costs/revenues	20.182	22.204
- Taxes and duties not paid	-28.179	-7.569
- Adjustments of discontinued operations	0	0
- Other adjustments	-33.640	15.891
2 Liquidity generated by/used for financial assets (+/-)	-946.340	-486.723
- HFT financial assets	5.159	198.177
- Financial assets measured at fair value	0	0
- AFS financial assets	-712.180	-591.670
- Loans to banks: repayable on demand	-122.933	12.374
- Loans to banks: other receivables	-12.721	17.236
- Loans to customers	-98.444	-199.166
- Other assets	-5.221	76.326
3. Liquidity generated by/used for financial liabilities (+/-)	-142.491	-717.324
- Due to banks: repayable on demand	-4.016	-80.397
- Due to banks: other payables	-689.260	-1.112.852
- Due to customers	549.611	556.789
- Securities issued	0	0
- HFT financial liabilities	-2.655	-627
- Financial liabilities measured at fair value	0	0
- Other liabilities	3.829	-80.237
Net liquidity generated by/used for operating activities	-915.011	-996.864
B. INVESTING ACTIVITIES
1. Liquidity generated by	1.004.215	1.354.302
- Disposal of equity investments	0	0
- Dividends received	0	0
- Disposal of HTM financial assets	1.004.201	1.354.302
- Disposal of property and equipment	14	0
- Disposal of intangible assets	0	0
- Disposal of business units	0	0
1. Liquidity used for	-44.204	-184.584
- Purchase of equity investments	-2.200	0
- Purchase of HTM financial assets	-37.354	-136.392
- Purchase of property and equipment	-2.334	-1.240
- Purchase of intangible assets	-2.316	-2.239
- Purchase of business units and equity investments in subsidiaries	0	-44.713
Net liquidity generated by/used for investing activities	960.011	1.169.718
C. FUNDING ACTIVITIES
- Issue/purchase of treasury shares	1.870	7.606
- Issue/purchase of equity instruments	0	0
- Distribution of dividends and other	-113.431	-109.623
Net liquidity generated by/used for funding activities	-111.561	-102.017

NET LIQUIDITY GENERATED BY/USED IN THE YEAR	-66.561	70.837
Reconciliation
Cash and cash equivalents at year-start	80.450	9.613
Liquidity generated /used in the year	-66.561	70.837
Cash and cash equivalents – effects of exchange rate fluctuations	0	0
Cash and cash equivalents at year-end	13.889	80.450

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FY15 Results Presentation

Annual Report at 31.12.2015

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FY15 Results Presentation

Annual Report at 31.12.2015

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THE BEST YEAR EVER

FINANCIAL HIGHLIGHTS

CHAIRMAN'S LETTER

PERFORMANCES 2015

CONSOLIDATED NET PROFIT

Asset management products of the Banking Group

Third-party asset management products

Third-party insurance products

Assets under administration and custody

CORPORATE SOCIAL RESPONSIBILITY

FINANCIAL STATEMENTS

Consolidated balance sheet

Consolidated prodit and loss account

Statement of consolidated comprehensive income

Statement of changes in consolidated net equity

Consolidated cash flow statement

Consolidated balance sheet

Consolidated prodit and loss account

Statement of consolidated comprehensive income

Statement of changes in consolidated net equity

Consolidated cash flow statement

CONSOLIDATED BALANCE SHEET

CONSOLIDATED PROFIT AND LOSS ACCOUNT

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

STATEMENT OF CHANGES IN CONSOLIDATED NET EQUITY

CONSOLIDATED CASH FLOW STATEMENT

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