At 31 December 2010 total due from customers reached 1,571.6 million Euro, an increase of 26% compared to 1,247 million Euro at the end of 2009.

Due from customers are composed as follows: 18.6% from the Public Administration (compared to 5.3% at 31 December 2009) and 81.4% from the private sector (compared to 94.7% at 31 December 2009).

Geographically, the item is composed as follows: 93.6% from customers resident in Italy and 6.4% from customers resident abroad.

Finally, it should be noted that the item includes 5 positions, for a total of 151,613 thousand Euro, who fall within the category of major risks.

Net loans to customers, excluding non-performing loans for 38.4 million Euro, totalled 1,533.2 million Euro, an increase of 25% compared to the end of 2009.

BANKING PRODUCTS

(in thousands of euro)

YEAR

ABSOLUTE

31.12.2010

31.12.2009

CHANGE

%

 

 

 

 

 

 

 

Current accounts

117,502

94,576

22,926

24.2%

Advance accounts for future receivable assignments and other financing

50,455

44,902

5,553

12.4%

Factoring advance accounts

1,361,059

1,084,524

276,535

25.5%

Loans/Mortgages

3,712

2,401

1,311

54.6%

Other transactions

443

416

27

6.5%

Total net current loans (1)

1,533,171

1,226,819

306,352

25.0%

Net non-performing loans

38,421

20,207

18,214

90.1%

Total due from customers

1,571,592

 

1,247,026

 

324,566

26.0%

(1) Total net current loans include the substandard, rescheduled and overdue loans classified, as per the Bank of Italy’s provisions, as impaired loans (please see table 7.1 in the notes to the financial statements)

The following table shows the nominal value of receivables purchased for factoring transactions existing at the end of the year (Total Receivables), broken down into receivables with or without recourse and receivables purchased on a final basis. Please note that the breakdown of purchased receivables is based on the contract form used by the bank.

TOTAL RECEIVABLES (in thousands of Euro)

YEAR

ABSOLUTE

31.12.2010

31.12.2009

CHANGE

%

 

 

 

 

 

 

 

Receivables without recourse

180,458

205,715

(25,257)

(12.3)%

of which due from the Public Administration

10,216

27,387

(17,171)

(62.7)%

Receivables with recourse

1,421,495

1,345,109

76,386

5.7%

of which due from the Public Administration

408,452

326,948

81,504

24.9%

Purchased on a final basis

461,061

175,404

285,657

162.9%

of which due from the Public Administration

291,924

62,889

229,035

364.2%

Total receivables

2,063,014

1,726,228

336,786

19.5%

of which due from the Public Administration

710,592

 

417,224

 

293,368

70.3%

The breakdown of customers by geographic area in Italy, with a separate indication for those abroad, together with the breakdown of customers by product sector are as follows:

BREAKDOWN OF CUSTOMERS BY GEOGRAPHIC AREA

COMMITMENTS

TURNOVER

Northern Italy

43.4%

52.9%

Central Italy

28.8%

22.7%

Southern Italy

21.5%

13.3%

Abroad

6.3%

11.1%

Total

100.00%

100.00%

BREAKDOWN OF CUSTOMERS BY PRODUCT SECTOR (1)

COMMITMENTS

TURNOVER

51

Agriculture, forestry and fish products

0.8%

0.5%

52

Energy products

0.5%

0.9%

53

Minerals and ferrous and non-ferrous metals

0.9%

1.2%

54

Minerals and mineral based products

0.7%

1.0%

55

Chemical products

0.2%

3.7%

56

Products in metal excluding machines and equipment

5.5%

6.4%

57

Agricultural and industrial machines

1.9%

2.1%

58

Electronic office equipment

0.4%

0.4%

59

Electrical material and supplies

2.0%

4.6%

60

Transportation vehicles

3.7%

6.8%

61

Food and beverage products

0.9%

1.5%

62

Textile, leather, shoe and clothing products

2.8%

2.2%

63

Paper, printing and publishing

0.4%

0.7%

64

Rubber and plastic products

0.9%

1.3%

65

Other industrial products

1.0%

1.2%

66

Construction and public works

13.3%

12.8%

67

Wholesale and retail trade, recoveries and repair

10.4%

14.6%

68

Hotel and public establishment services

0.7%

1.1%

69

Internal transportation services

1.6%

2.7%

70

Maritime and air transportation services

0.1%

0.1%

71

Transportation related services

0.8%

1.3%

72

Telecommunications services

0.5%

0.9%

73

Other services for sale

17.8%

19.4%

000

Non classifiable

32.2%

12.6%

 

of which non-resident subjects

6.3%

11.2%

 

of which financial institutions

4.9%

1.1%

 

of which others(2)

21.0%

0.3%

 

Total

100.0%

100.0%

(1) List in accordance with Bank of Italy’s Circular no. 140 of 11/02/91.

(2) This item includes Banca IFIS’s commitments with public sector entities and not-for-profit organisations.

Impaired loans

Total non-performing loans to customers at 31 December 2010, net of value adjustments, was 38,421 thousand Euro, against 20,207 thousand Euro at 31 December 2009 (+90.1%). This increase is a direct consequence of adverse economic trends. Thanks to its adoption of a business model ideal for transferring risk from customers to their better-structured debtors, the Bank is able to mitigate its exposure to customer default. Nevertheless, the negative economic trends have also led to widespread deterioration in the more creditworthy debtor counterparties, hence exposing the Bank to a meaningful worsening of its assets, even if partially expected. The ratio of net non-performing loans to equity at 31 December 2010 equalled 18.6%, an increase compared to 13% at 31 December 2009. Gross of any value adjustments, non-performing loans amounted to 105,481 thousand Euro, against 62,862 thousand Euro at the end of 2009 (+67.8%). Banca IFIS enters its gross non-performing loans, recognised in the financial statements net of the related specific value adjustments, up to the point in which all legal credit collection procedures have been entirely completed. Thanks also to the strategy of risk spreading, the total amount of non-performing loans is, on average, contained. At 31 December 2010, 445 non-performing loans, for a net, average amount of 86 thousand Euro, were registered, as highlighted in the table below. The coverage ratio on gross non-performing loans was 63.6% compared to 67.9% at the end of 2009; the decrease is partly due to expected complete recoveries being made on some new non–performing loans due relating to assigned debtors.

Total substandard loans, net of value adjustments, stood at 76,810 thousand Euro, down compared to 129,984 thousand Euro at the end of 2009 (-40.9%). These amounts also take into account the inclusion in this category of the so-called ‘objective substandard loans’, following new instructions introduced by the Bank of Italy in 2010. These objective substandard loans, given Banca IFIS’s specific activity, do not represent particularly problematic positions. Specifically, “objective substandard loans with recourse” refer to loans to assignors whose assigned debtors are very late in paying. The Bank believes that these positions are not objectively problematic, as the assigned debtor’s delay in payment does not necessarily signify that the assignor too is in financial difficulty. Where the Bank recognises the assignor’s difficulty in fulfilling its commitments as well, the position is already automatically classified under substandard loans. In order to ensure a consistent comparison, these new provisions were also applied to results at 31 December 2009.

Rescheduled loans at 31 December 2010 totalled 7,251 thousand Euro, compared to 3,544 thousand Euro at the end of 2009, up by 104.6% due to the rescheduling of a credit position.

At 31 December 2010 net overdue loans amounted to 98,446 thousand Euro (49,377 thousand Euro at the end of 2009) and included amounts due from the Public Administration for full definitive purchase factoring activities (36,911 thousand Euro). Considering the quality of receivables and the counterparties involved, no value adjustments were considered necessary on these positions. Overdue loans too have been affected by the application of the new provisions introduced by the Bank of Italy and results at 31 December 2009 were duly reclassified.

Total net impaired loans for the year totalled 220,928 thousand Euro, against 203,112 thousand Euro at the end of 2009 (+8.8%).

CREDIT QUALITY

(in thousands of Euro)

YEAR

ABSOLUTE

31.12.2010

31.12.2009

CHANGE

%

 

 

 

 

 

 

 

Non-performing loans

38,421

20,207

18,214

90.1%

Substandard loans

76,810

129,984

(53,174)

(40.9)%

Rescheduled loans

7,251

3,544

3,707

104.6%

Overdue loans

98,446

49,377

49,069

99.4%

Total net deteriorated loans to customers

220,928

203,112

17,816

8.8%

Net performing loans

1,350,664

1,043,914

306,750

29.4%

Total due from customers (cash)

1,571,592

 

1,247,026

 

324,566

26.0%

Class of non-performing loans

No. of non-performing loans

Gross amount

Total adjustments

Net amount

% Hedging

From 1 to 200,000

399

55,416

(42,840)

12,576

77.3%

From 200,001 to 500,000

29

12,313

(3,700)

8,613

30.0%

From 500,001 to 1,000,000

13

19,198

(9,721)

9,477

50.6%

From 1,000,001 to 2,000,000

3

7,650

(2,677)

4,973

35.0%

> 2,000,001

1

10,904

(8,122)

2,782

74.5%

Total

445

105,481

(67,060)

38,421

63.6%

The ratio of non-performing loans to total loans rose from 1.6% to 2.4% if value adjustments are taken into consideration, and from 4.8% to 6.4% in terms of gross amounts.

Considering the reclassification of substandard loans at 31 December 2009, the ratio of substandard loans to total loans improved from 10.4% to 4.9% if value adjustments are taken into consideration, and from 10.3% to 4.8% in terms of gross amounts.

IMPAIRED LOANS (in thousands of Euro)

NPLs

SUBST. LOANS

RESCHED-ULED LOANS

OVERDUE LOANS

TOTAL

 

 

 

 

 

 

BALANCE AT 31/12/2010

 

Nominal amount of impaired loans

105,481

79,270

7,818

98,724

291,293

Incidence on total loans at nominal amount

6.4%

4.8%

0.5%

6.0%

17.7%

Impairment losses

67,060

2,460

567

278

70,365

Incidence on impaired loans on nominal amount

63.6%

3.1%

7.3%

0.3%

28.2%

Carrying amount of impaired loans

38,421

76,810

7,251

98,446

220,928

Incidence on net total loans

2.4%

4.9%

0.5%

6.3%

14.1%

 

 

BALANCE AT 31/12/2009

 

Nominal amount of impaired loans

62,862

133,146

4,119

49,473

249,600

Incidence on total loans at nominal amount

4.8%

10.3%

0.3%

3.8%

19.2%

Impairment losses

42,655

3,162

575

96

46,488

Incidence on impaired loans on nominal amount

67.9%

2.4%

14.0%

0.2%

18.6%

Carrying amount of impaired loans

20,207

129,984

3,544

49,377

203,112

Incidence on net total loans

1.6%

10.4%

0.3%

4.0%

16.3%