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Annual Report 2022
Consolidated Financial Statements
Parent Company’s Draft Financial Statements
Due to certain technical limitations, some information included in the notes to the consolidated financial statements when extracted from the XHTML
format to an XBRL instance may not be reproduced in an identical manner with respect to the corresponding information presented in the consolidated
financial statements in XHTML format.
This is an English translation of the original Italian document “Bilanci 2022”. In cases of conflict between the English lang uage document and the Italian
document, the interpretation of the Italian language document prevails. The Italian original is available on group.intesasanpaolo.com.
This document contains certain forward-looking statements, projections, objectives, estimates and forecasts reflecting the Intesa Sanpaolo
management’s current views with respect to certain future events. Forward-looking statements, projections, objectives, estimates and forecasts are
generally identifiable by the use of the words “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “goal” or “target”
or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements include, but are not
limited to, all statements other than statements of historical facts, including, without limitation, those regarding Intesa Sanpaolo’s future financial position
and results of operations, strategy, plans, objectives, goals and targets and future developments in the markets where Intesa Sanpaolo participates or is
seeking to participate.
Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements as a prediction of actual
results. The Intesa Sanpaolo Group’s ability to achieve its projected objectives or results is dependent on many factors which are outside management’s
control. Actual results may differ materially from (and be more negative than) those projected or implied in the forward-looking statements. Such forward-
looking information involves risks and uncertainties that could significantly affect expected results and is based on certain key assumptions.
All forward-looking statements included herein are based on information available to Intesa Sanpaolo as of the date of approval of this document. Intesa
Sanpaolo undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or
otherwise, except as may be required by applicable law. All subsequent written and oral forward-looking statements attributable to Intesa Sanpaolo or
persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.
Ordinary Shareholders' Meeting
of 28 April 2023
Report and consolidated financial statements
of the Intesa Sanpaolo Group 2022
Report and Parent Company’s
financial statements 2022
Intesa Sanpaolo S.p.A. Registered Office: Piazza S. Carlo, 156 10121 Torino Italy Secondary Registered Office: Via Monte di Pietà,
8 20121 Milano Italy Share Capital Euro 10.368.870.930,08 Torino Company Register and Fiscal Code No. 00799960158 “Intesa
Sanpaolo” VAT Group representative Vat Code No. 11991500015 (IT11991500015) Included in the National Register of Banks No.
5361 ABI Code 3069.2 Member of the National Interbank Deposit Guarantee Fund and of the National Guarantee Fund and Parent
Company of the banking group “Intesa Sanpaolo” included in the National Register of Banking Groups
5
Contents
The Intesa Sanpaolo Group
7
Board of Directors, Manager responsible for preparing the Company’s financial reports and
Independent Auditors
11
Letter from the Chairman
13
INTESA SANPAOLO GROUP REPORT ON OPERATIONS AND
CONSOLIDATED FINANCIAL STATEMENTS
Introduction
17
REPORT ON OPERATIONS
Overview of 2022
Income statement figures and Alternative Performance Measures
22
Balance sheet figures and Alternative Performance Measures
24
Alternative Performance Measures and other measures
25
Overview of 2022
28
The macroeconomic context and the banking system
73
Economic results and balance sheet aggregates
81
Breakdown of consolidated results by business area and geographical area
127
Corporate Governance and remuneration policies
165
Intesa Sanpaolo stock
181
Alternative Performance Measures and Other information
Alternative Performance Measures
189
Other information
194
Forecast for 2023
195
INTESA SANPAOLO GROUP CONSOLIDATED FINANCIAL STATEMENTS
Consolidated financial statements
Consolidated balance sheet
200
Consolidated income statement
202
Statement of consolidated comprehensive income
203
Changes in consolidated shareholders’ equity
204
Consolidated statement of cash flows
206
Notes to the consolidated financial statements
Part A – Accounting policies
209
Part B – Information on the consolidated balance sheet
301
Part C – Information on the consolidated income statement
390
Part D – Consolidated comprehensive income
413
Part E – Information on risks and relative hedging policies
414
Part F – Information on consolidated capital
582
Part G – Business combinations
587
Part H – Information on compensation and transactions with related parties
595
Part I – Share-based payments
601
Part L – Segment reporting
607
Part M – Disclosure of leases
611
Contents
6
Certification of the Consolidated financial statements pursuant to Art. 154 bis of
Legislative Decree 58/1998
617
Independent Auditors’ Report on the Consolidated financial statements
619
Attachments to the Consolidated financial statements
629
REPORT AND PARENT COMPANY’S FINANCIAL STATEMENTS
REPORT ON OPERATIONS
Financial highlights, Alternative Performance Measures and other measures
664
The Parent Company Intesa Sanpaolo results
668
Other information
679
Forecast for 2023
680
Proposals to the Shareholders' Meeting
681
PARENT COMPANY’S FINANCIAL STATEMENTS
Financial statements
Balance sheet
688
Income statement
690
Statement of comprehensive income
691
Changes in shareholders’ equity
692
Statement of cash flows
694
Notes to the Parent Company’s financial statements
Part A – Accounting policies
699
Part B – Information on the Parent Company’s balance sheet
761
Part C – Information on the Parent Company’s income statement
819
Part D – Comprehensive income
837
Part E – Information on risks and relative hedging policies
838
Part F – Information on capital
896
Part G – Business combinations
899
Part H – Information on compensation and transactions with related parties
900
Part I – Share-based payments
907
Part L – Segment reporting
913
Part M – Disclosure of leases
914
Certification of the Parent Company’s financial statements pursuant to art. 154 bis of
Legislative Decree 58/1998
919
Independent Auditors’ Report on the Parent Company’s financial statements
921
Attachments to the Parent Company’s financial statements
931
Glossary
963
Contacts
979
Financial calendar
983
Contents
7
The Intesa Sanpaolo Group
8
The Intesa Sanpaolo Group: presence in Italy
9
The Intesa Sanpaolo Group: international presence
10
11
Board of Directors, Manager responsible for preparing
the Company’s financial reports and Independent
Auditors
Board of Directors
Chair Gian Maria GROS-PIETRO
Deputy Chair Paolo Andrea COLOMBO
Managing Director and Chief Executive Officer Carlo MESSINA
(a)
Directors Franco CERUTI
Roberto FRANCHINI
(*)
Anna GATTI
Liana LOGIURATO
Maria MAZZARELLA
Fabrizio MOSCA
(*)
Milena Teresa MOTTA
(*)
Luciano NEBBIA
Bruno Maria PARIGI
Bruno PICCA
Alberto Maria PISANI
(**)
Livia POMODORO
Maria Alessandra STEFANELLI
Paola TAGLIAVINI
Daniele ZAMBONI
Maria Cristina ZOPPO
(*)
Manager responsible for preparing
the company’s financial reports Fabrizio DABBENE
Independent Auditors EY S.p.A.
(a) General Manager
(*) Member of the Management Control Committee
(**) Chair of the Management Control Committee
12
13
Letter from the Chair
Distinguished Shareholders,
The year 2022 opened with the expectation of a substantial global recovery after the damage caused by the pandemic.
The sharp increase in previously suppressed demand and the gradual easing of restrictions on the movement of
people fuelled the recovery of production, but also a steady rise in prices, particularly for energy. The outbreak of the
war in Ukraine dramatically changed the scenario: the collapse in supplies from the countries involved in the conflict
was accompanied by transport blockades and subsequent sanction packages, which hit the structural supply flows for
many economies. The continuation of the conflict dealt a severe blow to international economic stability, reshaping
geopolitical scenarios, amplifying the energy crisis and fuelling inflation beyond expectations. In Europe, the energy
crisis and the fear of energy rationing, for both industrial and civil uses, prompted a highly effective reaction, both in the
individual countries and at EU level. The results were substantial. Energy supplies were secured, their prices fell, and
the most pessimistic economic forecasts did not materialise.
In Italy the developments were positive. Services were boosted by the renewed mobility of people, after the damage
inflicted by previous restrictions. Tourism, in particular, benefited from the record number of tourists in Italy, exceeding
pre-pandemic levels. Tax incentives supported the construction sector, contributing to improving energy efficiency and
the enhancement of the overall building stock. The launch of the National Recovery and Resilience Plan (NRRP)
encouraged businesses to invest. Industrial production grew, despite difficulties in the supply of commodities,
components and energy. In the first 11 months of 2022, deflated turnover for industry grew by 2.6% compared to the
same period in 2021. The level of production was only 0.5% lower than in the first 11 months of 2019. The same
comparison shows a decrease of -1% for Spain, -4.9% for France, and -5.7% for Germany. Two structural features of
the Italian industry contributed to this result: the greater percentage diversification of sales in terms of products, sector s
and market outlets, and the shorter length of supply chains, which suffered less from the logistical disruptions in 2022.
As a result, Italy’s GDP growth forecast for 2022 has been repeatedly revised upwards, and the latest figure released
is +3.9%, versus +3.5% in the EU and the Eurozone.
Many challenges lie ahead also in 2023. Indeed, questions are still open about a truce being reached in Ukraine, how
to protect vulnerable population groups from inflation-related reductions in purchasing power, and health security
linked to the evolution of the COVID-19 pandemic. At the same time, however, the plans to support the green
transition, initiated in the United States (Inflation Reduction Act) and in Europe (Next Generation EU), are expected to
translate into a new stimulus for global growth in the second half of the year. This should provide a particularly strong
boost to Italian industry, which has sector specialisation in manufacturing related to capital goods, from machinery to
plant and equipment to infrastructure.
The year 2023 will be characterised, both in Europe and the US, by interest rate hikes, which central banks intend to
use to stop the inflationary stimulus generated by supply shocks and prevent it from starting a wage-price spiral. The
monetary squeeze, which in Italy will be accompanied by the reduction of incentives for building renovations, will tend
to reduce the appetite for investment. However, on the one hand, the prices of many inputs, starting with energy, have
begun to fall and, on the other hand, some of the cost increases suffered by manufacturing businesses have been
passed on downstream, limiting the shrinkage in margins. With the liquidity accumulated in the past quarters,
businesses will be able to seize the opportunities that have opened up as a result of the reorganisation of the global
industrial system, and in particular the need to invest in energy transition and digitalisation. The forecast presented by
the European Commissioner for Economy, Paolo Gentiloni, on 13 February 2023 is for EU GDP growth of 0.8%, an
increase of 0.5% on the figure announced in November 2022, which confirms the improvement in the economic
situation that is already underway. The Commission’s GDP growth forecast for Italy in 2023 is also 0.8%.
As Italy’s leading Bank, in 2022 we made a robust contribution to GDP growth in all its components. We will perform a
role of providing stimulus and support in the even broader and more challenging area of technological transition and
the changes envisaged under the NRRP: a goal that is clearly stated and quantified in the 2022-2025 Business Plan.
In these difficult years, institutions, citizens and businesses have shown growing awareness of the need to make the
transition to a sustainable and digitalised economy, capable of ensuring the resilience of social, environmental and
economic systems.
The financial system is in a position to support and promote the dual transformation – digital and environmental –
facilitating a technological shift that serves people, the environment and the common good.
The spread of open banking, digital operations and artificial intelligence solutions is gradually changing the
relationships, not only between banks and customers, but also between financial service providers and third-party
companies, with clear benefits in terms of efficiency and financial inclusion. At the same time, the lessons learned to
date demonstrate the need to ensure effective controls on IT architectures and safeguards to protect data
confidentiality, competition and customers.
14
The Bank is deploying all the necessary resources, including its long years of experience, in the implementation of the
2022-2025 Business Plan. The goal is to create sustainable, long-term value for the benefit of shareholders, our
people, our customers, the community and the environment, in line with a balanced and resilient growth model. Based
on these objectives, the ISP Group supports customers and communities, with particular attention to those in greatest
need.
The economic value generated in 2022 – 20.6 billion euro – was distributed as follows: 79% to stakeholders, of which
38% to the people that work for us, 16% to Shareholders, and the remainder to suppliers, the government, entities,
institutions and communities. A part of the profit has also been allocated to support high social impact projects and
help people experiencing significant social and economic vulnerability through the Allowance for charitable, social and
cultural contributions.
The Group has joined the Net-Zero alliances on banking, investment, and insurance and has also committed to
achieving Net-Zero on its own emissions by 2030. To date, Intesa Sanpaolo has allocated around 400 billion euro to
businesses, public entities and households to help them access the funds allocated by the NRRP and implement green
transition projects. In addition, the “ESG Lab” has been developed to provide a service to companies that want to
rethink their businesses with a view to sustainability. In support of businesses, Intesa Sanpaolo has developed a
proprietary ESG Score model that allows customers to identify their ESG profile and helps them develop projects for
mitigating climate, physical and transition risks, while also improving transparency towards their stakeholders and
regulatory authorities. The Group is also working to integrate ESG factors into its operating and business models, as
well as its governance and risk framework. The Business Plan has set the target of equal presence of men and women
in the new appointments of senior leaders. In this context, the Bank has received major recognition, as the top bank in
Europe, the second worldwide, and the only Italian bank included in the Refinitiv Global Diversity and Inclusion Index,
in addition to the distinction of being the first major Italian bank to obtain the Gender Equality Certification.
The transformation initiated by Intesa Sanpaolo towards a sustainable model relies on cutting-edge technology
solutions, such as the Intesa Sanpaolo Mobile app, recognised by Forrester as the world’s l eading banking app in the
fourth quarter of 2022. The launch of the digital bank IsyBank, serving the most technologically advanced customers,
and the artificial intelligence lab in Turin, bear witness to Intesa Sanpaolo’s commitment to digitalisation. Thi s
commitment is not only aimed at customers, but also at finding solutions for transforming the internal operating model.
This includes, for example, the digital platform for the Bank’s analytical cost management and the digital process
transformation project. The Group also promotes dialogue between industry leaders, fintechs and academic research
centres, in addition to supporting the development of innovative entities all over the world, through Neva SGR.
Our support for the younger generation is expressed by offering them current accounts and subsidised loans, and by
sponsoring initiatives to promote training and access to the world of work. These include the “Giovani e Lavoro”
Programme, the support provided to young families with school-age children through the “Per Crescere” impact loan,
the no-collateral financing for all university students through the “Per Merito” loan, and “Mamma@work” which offers
young working mothers the opportunity to obtain subsidised loans, to help them balance their family and working
needs.
Intesa Sanpaolo is also a major cultural player, able to partner with the world’s leading museums, and in 2022, we lent
around 300 artworks for temporary exhibitions. In the same year, in Turin we opened the new museum of photography,
in the 17th century Piazza San Carlo building, and in Naples the new museum housed in the building constructed by
Marcello Piacentini in Via Toledo, with artworks ranging from Attic vases, to Caravaggio, to Gemito. Together with the
other venues in Milan and Vicenza, our museums were visited by almost 500,000 people last year. For us, investment
in culture is an essential part of a set of goals focused on all social and environmental aspects.
The results for 2022 reflect the resilience of Intesa Sanpaolo, which can count on a solid capital base that is well above
the prudential requirement, a strong liquidity position, a diversified business model, careful management of operating
costs, the quality of its assets, and attention to its people. Intesa Sanpaolo has also demonstrated that it was able to
effectively mitigate the risks that characterised 2022.
In consideration of a Group consolidated net income of 4,354 million euro and a Parent Company net income of 4,284
million euro, a proposal is being made to the Ordinary Shareholders’ Meeting to distribute cash dividends on the 2022
net income, for a total of 3,048 million euro, which, taking into account the interim dividend of 1,400 million euro paid
last November, results in a proposal to distribute a remaining dividend of 1,648 million euro.
The Board of Directors also decided to execute the purchase of own shares for annulment (buyback) of the remaining
amount of 1.7 billion euro authorised by the ECB. The related purchase programme, which started on 13 February, is
expected to be concluded by 12 May 2023. This will complete the execution of the resolution passed by the
Shareholders’ Meeting of 29 April 2022, and Shareholders will see their share of the total dividends of Intesa Sanpaolo
increase without having to make any investment.
Gian Maria Gros-Pietro
15
Intesa Sanpaolo Group
Report on operations and
consolidated financial statements
16
17
Introduction
As set forth by Legislative Decree 38 of 28 February 2005, the Intesa Sanpaolo Group’s Consolidated financial statements
have been prepared in compliance with the IAS/IFRS issued by the International Accounting Standards Board (IASB) and the
related interpretations of the International Financial Reporting Standards - Interpretations Committee (IFRS-IC), endorsed by
the European Commission as provided for by EC Regulation 1606 of 19 July 2002.
The Consolidated financial statements as at 31 December 2022 have been prepared based on the “Instructions for the
preparation of the separate and consolidated financial statements of banks and financial companies, which are parent
companies of banking groups” issued by the Bank of Italy, in the exercise of powers set forth by Art. 43 of Legislative Decree
136/2015, with Regulation of 22 December 2005, which issued Circular 262/2005, as updated and supplemented. These
Instructions set out compulsory financial statement forms, as well as the contents of the Notes to the consolidated financial
statements.
In particular, for the 2022 Financial Statements, account was taken of the 7th update of the above-mentioned Circular
1
and of
the supplements included in the Communication from the Bank of Italy dated 21 December 2021 with regard to the impacts of
COVID-19 and measures in support of the economy.
The Consolidated financial statements are made up of the Balance sheet, the Income statement, the Statement of
comprehensive income, the Changes in shareholders’ equity, the Statement of cash flows, the Notes to the consolidated
financial statements and the related comparative information; the Report on operations prepared by the Directors, on the
economic results achieved and on the Group’s balance sheet and financial position has also been included.
The Report on operations contains financial information taken from or attributable to the Consolidated financial statements, as
well as other information – for example, figures on quarterly trends, and certain Alternative Performance Measures – not
taken from or directly attributable to the Consolidated financial statements. In this regard, see the chapter Alternative
Performance Measures in the Report on operations and please note that with specific regard to the aftermath of the COVID-
19 pandemic and the military conflict between Russia and Ukraine, in line with the ESMA guidance, no new measures have
been added, nor have any changes been made to the measures used.
As a result of the COVID-19 pandemic, please note that, in accordance with the guidance provided by the Authorities, detailed
information has been presented, both in the Report on operations and in the introductory chapter “Overview of 2022”, and in
Parts A, B, C and E of the Notes to the financial statements, on the main impacts of the pandemic on operations, the
business, the risk profile, and the choices made concerning the valuation of assets for the purposes of the 2022 Financial
Statements, essentially in line with the presentation adopted in the 2021 Financial Statements.
With regard to the ongoing military conflict between Russia and Ukraine, on the other hand, in accordance with the
recommendations issued by ESMA and Consob in light of the multiple implications that have emerged as a result of the new
scenario, including the related macroeconomic repercussions, these Consolidated Financial Statements contain a detailed
disclosure that repeats and updates the disclosures already provided in the interim reports. Specifically, the Report on
Operations contains a specific paragraph in the introductory chapter describing the risk control actions adopted and the
measures implemented, together with the ISP Group’s approach to the main related accounting is sues. These are then
discussed further in the Notes to the Consolidated Financial Statements, in Part A, which addresses the issues advocated by
the Regulators, and in Part E, credit risk, where details are provided of the outstanding exposures and the valuation choices
made.
In support of the comments on the results for the year, the Report on operations also presents reclassified income statement
and balance sheet schedules.
In the reclassified statements, the figures are normally restated, where necessary and if they are material, for comparison on
a like-for-like basis. In particular, the amounts are provided as consistently as possible with reference to the different periods
covered, above all in relation to intervening changes in the scope of consolidation. This uniformity is achieved through
“restated” figures, which include/exclude the values of the companies that entered or left the scope of consolidation.
With regard to the acquisition of the UBI Banca Group and the related corporate transactions, in order to adequately support
the comments on performance with like-for-like comparative data, the “redetermination” of the 2021 income statement figures
presented in the financial statements as at 31 December 2022 has been maintained, based on the accounting and operating
information, to take account of (i) the effects of the sales of branches to BPER and Banca Popolare di Puglia e Basilicata that
took place in the first and second quarters of 2021 and were related to the acquisition, and (ii) the entry of the insurance
companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects attributable to the branche s
sold. The redeterminations, described in detail below in this Report, only concerned the figures for the first and second
quarters of 2021. Accordingly, to present the figures for 2021 “redetermined” on the basis of accounting and management
information, reclassified income statements have been prepared in addition to those prepared on the basis of the stated
figures at the end of the various periods, and the detail tables have been expanded upon or duplicated with separate
indication of the “Redetermined figures”. With regard to the balance sheet figures, the restatements made in the 2021
Financial Statements have been retained in the 2022 Financial Statements, based on the accounting information, in order to:
− exclude, on a line-by-line basis, the balance sheet figures relating to the UBI and ISP branches sold in the first and
second quarters of that year, the values of which had been recognised in the caption Non-current assets held for sale
and discontinued operations in the reclassified balance sheet;
1
The 8th update issued on 17 November 2022, which consists of a full revision of the Circular to take into account the new IFR S 17 “Insurance
Contracts”, will apply from the financial statements for the periods ending on or after 31 December 2023.
Introduction
18
− include, on a line-by-line basis, the balance sheet figures of the insurance companies Assicurazioni Vita (formerly Aviva
Vita), Lombarda Vita and Cargeas
2
, consolidated with effect from the second quarter of 2021. You are reminded that for
these companies it was not deemed necessary to “redetermine” the balance sheet figures in order to exclude – on the
basis of management data – the items (investments and technical reserves) linked to production from the customers of
the branches sold to third parties, as was done in the income statement, since said items were of non-material amounts
and hence not relevant for comparability.
Breakdowns of restatements and reclassifications made as compared to the layout established in Bank of Italy Circular 262 –
in addition to the aforementioned “redeterminations” – are provided in separate tables included in the attachments, as also
required by Consob in its Communication 6064293 of 28 July 2006.
Information on corporate governance and ownership structures required by Art. 123 bis of the Consolidated Law on Finance is
set forth, as permitted, in a separate report, approved by the Board of Directors and published together with these financial
statements, which can be viewed in the Governance/Company documents section of the Intesa Sanpaolo website, at
group.intesasanpaolo.com.
The Consolidated Non-financial Statement prepared pursuant to Legislative Decree 254 of 30 December 2016, which
describes the environmental, social and personnel-related matters, has been published – as permitted – as a separate report
together with these financial statements and is available for consultation in the Sustainability/Sustainability reporting section of
the same website.
The Report on remuneration policy and compensation paid required by Art. 123 ter of the Consolidated Law on Finance and
the disclosure required by Basel Pillar 3 are also published and made available on the website in accordance with the related
approval processes.
2
Assicurazioni Vita (formerly Aviva Vita) and Lombarda Vita were merged into Intesa Sanpaolo Vita on 31 December 2021. Cargeas Assicurazioni was
merged into Intesa Sanpaolo Assicura, a wholly owned subsidiary of Intesa Sanpaolo Vita, on 1 October 2022.
19
Report on operations
20
21
Overview of 2022
22
Income statement figures and Alternative
Performance Measures
(°)
(°) For more detailed information on the Alternative Performance Measures, see the specific chapter of the Report on operations. Concerning the
aftermath of the COVID-19 pandemic and the conflict between Russia and Ukraine, in accordance with the ESMA guidelines, no new measures have
been added, nor have any changes been made to the measures normally used.
2022
2021
Redetermined figures
23
2022
2021
Redetermined figures
24
Balance sheet figures and Alternative
Performance Measures
(°)
(°) For more detailed information on the Alternative Performance Measures, see the specific chapter of the Report on operations. Concerning the
aftermath of the COVID-19 pandemic and the conflict between Russia and Ukraine, in accordance with the ESMA guidelines, no new measures have
been added, nor have any changes been made to the measures normally used.
31.12.2022
31.12.2021
25
Alternative Performance Measures and
other measures
(°)
(°) For more detailed information on the Alternative Performance Measures, see the specific chapter of the Report on operations. Concerning the
aftermath of the COVID-19 pandemic and the conflict between Russia and Ukraine, in accordance with the ESMA guidelines, no new measures have
been added, nor have any changes been made to the measures normally used.
31.12.2022
31.12.2021
26
2022 (Income statement figures)
31.12.2022 (Balance sheet figures)
2021 (Income statement figures)
31.12.2021 (Balance sheet figures)
27
Operating structure
31.12.2022
31.12.2021
Changes
amount
Number of employees (f)
95,574
97,687
-2,113
Italy
73,283
75,289
-2,006
Abroad
22,291
22,398
-107
Number of financial advisors
5,709
5,654
55
Number of branches (g)
4,565
4,719
-154
Italy
3,611
3,740
-129
Abroad
954
979
-25
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
(f) The workforce indicated refers to the exact number of employees at the end of the period, counting part-time workers as equal to 1 unit.
(g) The figure includes Retail/Exclusive Branches, Non-Profit Sector Branches, Agribusiness Branches, SME Branches and Corporate Branches.
2022 (Income statement figures)
31.12.2022 (Balance sheet figures)
2021 (Income statement figures)
31.12.2021 (Balance sheet figures)
28
Overview of 2022
Economic trends and the geopolitical scenario
Global GDP growth slowed in 2022 across both advanced and emerging economies. The inflationary crisis intensified,
particularly in Europe, and prompted many central banks to rapidly remove the monetary stimuli introduced in previous years.
The Fed’s monetary policy quickly became restrictive. The Euro area was hit by the effects of a spike in natural gas prices, a
repercussion of the Russian invasion of Ukraine and of the resulting deterioration in political and economic relations between
the European Union and Russia. The almost total disruption of gas imports from Russia was tackled with a combination of
reduced consumption, increased production from renewable and other fossil sources, and increased imports from other
suppliers. This strategy averted the need for rationing of supplies, but it did not prevent steep rises in gas prices in the
European market. However, the recessionary impact of the shock was almost entirely offset by public support measures for
households and businesses and the fall in the household saving rate. Accordingly, Euro area GDP increased by 3.5% in
2022, while inflation rose far above the levels expected before the war (annual average of 8.4%).
In Italy, the preliminary ISTAT estimate puts annual GDP growth in 2022 at 3.9%, about half a point lower than forecast before
the war. The reduction in growth was due to the sharp deterioration in the trade balance, which was reflected domestically in a
decline in real household income (harmonised inflation rose to 8.7% on an annual basis) and a fall in company profit margins.
In Italy, too, the final impact was mitigated by fiscal measures and a reduction in household savings. Nevertheless, GDP
growth slowed during the year and was down slightly on a quarterly basis at the end of 2022.
In the countries with ISP subsidiaries, the third quarter GDP increased by 3.2% in Central and South-Eastern Europe
(CEE/SEE) and decreased by more than 6% in Eastern Europe (EE), where the fall ranged from -3.7% in Russia to -30.8% in
Ukraine. Inflation hit particularly hard. Consumer prices in 2022 rose to an average of 13.6% (from 4.5% in the previous year)
in the Central Eastern Europe (CEE) and South Eastern Europe (SEE) and to 14.4% from 6.9% in 2021 in the EE area.
The European Central Bank raised official rates rapidly from July 2022, initiating a tightening phase that will carry on into the
early part of 2023. The year 2022 ended with a deposit facility rate (DFR) of 2.00% and a rate on main refinancing operations
(Refi) of 2.5%
3
. In addition, the ECB discontinued the net purchases of securities under the Pandemic Emergency Purchase
Programme (PEPP) and those of the Asset Purchase Programme (APP). The discontinuation of the net purchases, the rise in
interest rates and the worsening growth outlook led to a widening of risk premiums on BTPs, with the spread against the
BUND rising from 128 basis points in December 2021 to 190 at the end of 2022.
The banking business is feeling the impact of the energy crisis and inflationary environment through various channels,
including the rise in interest rates and its positive effects on bank margins and restrictive effects on the supply of credit, and
the increased risks arising from the complex geopolitical and economic situation. In the second half of 2022, interest rates on
new loans to non-financial companies rose rapidly, while the fixed rate on home mortgages to households had already started
to increase in the first half of the year. Interest rates on deposits were more resistant, particularly on overnight deposits. As a
result, the spread between lending and funding rates increased significantly.
The credit market in 2022 was characterised by two phases, starting with an improvement in growth up to the summer,
supported by business demand due to financial requirements for day-to-day management, driven by higher prices for energy
and other inputs. This phase was followed by a rapid slowdown in the last quarter, due to the progressive tightening of supply
conditions in line with the restrictive monetary policy stance and the increase in perceived risks, while on bank balance sheets
the side, the good liquidity and funding position was maintained and the capital base remained solid. Loans to Italian
households continued to grow at a robust pace, driven by loans for home purchases, which grew at a rate of 5%, the highest
of the decade, with the momentum slowing down in the last quarter. With regard to credit quality, there were no signs of
deterioration. With the rapid rise in interest rates, the long and strong growth in deposits, which had lasted for more than a
decade, came to a halt towards the end of the year. In the difficult inflationary environment, companies and households
started to use part of the funds accumulated in bank accounts in previous years.
3
A new ECB rate increase of 50 basis points was implemented on 2 February 2023.
Report on operations – Overview of 2022
29
The impact for the ISP Group of the military conflict between Russia and Ukraine
The ISP subsidiaries in Russia and Ukraine
The Group is present in Russia and Ukraine through two subsidiaries:
– Joint-Stock Company Banca Intesa (Banca Intesa Russia), 47% owned by Intesa Sanpaolo and 53% by Intesa Sanpaolo
Holding International (Luxembourg). This is a Moscow-based corporate bank, part of the IMI Corporate & Investment
Banking Division, which operates with 27 branches and 907 staf f. The Group’s presence in Russia dates back 48 years
(at the time as a Representative Office). The bank participates in the financing of large national and international Russian
projects but also offers a full range of banking services for small and medium-sized enterprises, retail customers and
companies. The regional branch network extends from Kaliningrad to Vladivostok;
– Pravex Bank Joint-Stock Company, 100%-owned by Intesa Sanpaolo. This is a small commercial bank based in Kyiv,
part of the International Subsidiary Banks Division, which operates with 43 branches mainly in the Kyiv region and
employs 735 people. Intesa Sanpaolo acquired the bank in 2008 and has been operating in the country continuously
since that date.
Despite the critical situation, particularly for Pravex, both entities are continuing to operate with the support of the Parent
Company structures, albeit with the objective limits dictated by the war and the continued high international tensions, which
are also leading to the substantial blockage of gas supplies from the Russian Federation to Western Europe.
Intesa Sanpaolo’s continuing control over the two entities has been maintained, on the basis of the following observations:
– in accounting/administrative terms, through the precise and timely acquisition for consolidation purposes of the
accounting situation as at 31 December 2022 of the Russian subsidiary (as detailed further below, for Pravex, it was
decided to maintain the accounting statement produced for the September consolidation, considering the specific
operating difficulties of the subsidiary and also in light of the substantial immateriality of its balance sheet data at Group
level);
– in terms of statutory regulations, with specific regard to the Russian subsidiary, the Parent Company was able to exercise
its power to determine the composition of the corporate bodies and to appoint the management body members of Banca
Intesa Russia at the Shareholders’ Meeting of 8 July 2022. The turnover involving the Board and the Audit Commit tee
was the result of appointments proposed by the Parent Company that passed the approval process of the Russian
Central Bank, while the Board appointed by the Parent Company before the conflict remains in place for the Ukrainian
subsidiary;
– in terms of steering the business, the two entities continue to move ahead with their commercial business following the
instructions of the Parent Company. Specifically, in its corporate operations, Banca Intesa Russia complied with the
instructions received, immediately after the conflict broke out, to gradually reduce its existing credit exposure. In lending,
that bank is not subject to external “interference”, and follows the instructions of the Parent Company also in cases
where, due to the slight materiality of the disbursements, based on its existing powers, it would be entitled to make
autonomous decisions on its action;
– in terms of coordination and control, as the Parent Company’s control functions (including the support function of the
Manager responsible for preparing the Company’s financial reports, namely Administrative and Financial Governance)
continue to carry out their roles through the regular receipt and analysis of the planned information flows, interacting with
the structures of the subsidiaries through the communication channels available, in line with any limitations that may
arise over time, also handled using contingency solutions.
Risk management
Upon the outbreak of the conflict, on 24 February 2022, Intesa Sanpaolo, in accor dance with the provisions of the “Crisis
Management Model”, activated its Emergency Unit to monitor the situation and assess the potential risks and consequent
impacts on the Group.
The Emergency Unit, which has representatives from all the Governance Areas and Business Divisions, approved the
creation of two Task Forces, with steering and monitoring powers, to address the immediate priorities, improve the
effectiveness of the decision-making and escalation process and empower the operational teams:
– The Risk Management and Control Task Force with the objectives of:
o monitoring, assessing and identifying the actions to mitigate the financial risks arising from the Ukraine-Russia
emergency;
o applying strict procedures for compliance with the sanctions imposed by the competent authorities;
– The Operational Resilience Task Force with the objectives of:
o ensuring the Group’s business continuity;
o managing the security of employees and their families;
o safeguarding the operating model and cybersecurity;
o organising and maintaining continuous cross-function communications.
Intesa Sanpaolo’s top management also participates in the two Task Forces, which are chaired respectively by the Chief Risk
Officer and the Head of the International Subsidiary Banks Division.
On 7 March 2022, Intesa Sanpaolo also set up the Russia-Ukraine Conflict Crisis Unit, a technical unit with advisory functions,
responsible for examining particularly significant/complex operations, due to their exposure and structure, through a cross-
function approach, assessing the main credit, legal, operational, compliance and reputational risks and carefully identifying
the remedial actions, in accordance with the general principle of maximum prudence and in line with the Group’s ESG and
impact values.
The Crisis Unit, chaired by the Chief Lending Officer, was made up of the Chief Compliance Officer and the Group General
Counsel, as well as the Division Heads for the discussion of operations pertaining to their business unit. The Crisis Unit
Report on operations – Overview of 2022
30
operated in this manner until 30 June. However, once the emergency phase had passed, in a situation in which the crisis had
become structural in nature, it was decided to reinstate the ordinary approval processes.
The Task Forces meet throughout the year with the aim, among other things, of preparing reports for the top management,
which are also provided to the ECB’s Joint Supervisory Team (JST) as necessary.
The situation is continuously monitored both at Parent Company level and in all the Group banks directly involved in the
conflict or close to it, where direct and continuous contacts are being maintained.
Regular reports have been provided to the board committees and the Board of Directors.
For further details on the impact of the conflict on the risk profile of the Intesa Sanpaolo Group, see the information provided
below on the Risk Management and Control Task Force and in the paragraph “The main accounting aspects and the
approach adopted by the Intesa Sanpaolo Group”.
The Risk Management and Control Task Force
One of the first actions taken at the beginning of the emergency was to block new operations that could lead to increased ris k
towards counterparties resident in Russia, Belarus and Ukraine. In this context, a revision has also been completed of the
ratings of counterparties that the Bank has identified as cross-border on-balance sheet credit exposures to Russia.
With regard to credit risk monitoring in particular, the actions consisted of:
– a detailed assessment of the exposures to the two countries where the crisis is underway, to ensure better monitoring of
future changes in the risk profile. In some cases, a deleveraging operation was performed through the sale on the market
of several exposures;
– the prompt provision of specific customisations of existing credit products to support energy-intensive small and medium-
sized enterprises and of those with revenues largely derived from exports to Russia and Ukraine, together with new
financial solutions to cope with rising energy prices;
– the centralisation of the decision-making process, still being adopted, with reference to: i) Russian/Belarusian entities;
and ii) entities of any nationality controlled (directly or indirectly) by Russian/Belarusian counterparties.
Immediately after the outbreak of the conflict, a new initiative designed to prevent flows into non-performing status was
launched, under the Credit Action Plan, in order to carry out a diagnostic analysis of the counterparties that could be more
affected by the current geopolitical crisis. The initiative concerned the performing counterparties of the Banca dei Territori and
IMI Corporate & Investment Banking Divisions with significant operations with the Russia and Ukraine markets, i.e.
counterparties with foreign movements to/from Russia and Ukraine above a defined threshold with respect to total
outflows/receipts to/from abroad over the last 13 months. The aim of the initiative was to assess each counterparty for the
need for any extraordinary credit measures to deal with the problems related to the current conflict. The results of the
initiative, which ended at the end of March, showed that around 95% of the critical positions can be overcome without
extraordinary credit measures and only a residual portion (0.02%) was classified as non-performing loans. In the second
quarter, the initiative was repeated and focused on those counterparties that, in the initiative in the first quarter, had displayed
some problems with the goal of providing an updated diagnostic analysis of the counterparties. The results of the initiative
substantially confirmed the results of the first quarter.
In the third and fourth quarters, there were no new specific initiatives under the Credit Action Plan dedicated to the Russia-
Ukraine crisis. However, as part of the actions to prevent the flows into non-performing status of positions showing signs of
difficulty, but without any past-due positions, specific diagnostic checks are still underway and planned for the near future on
the vulnerable sectors (identified on the basis of sector trends) and energy-intensive sectors particularly affected by the
increase in the cost of energy, partly linked to the current geopolitical crisis.
The conflict between Russia and Ukraine has led to the imposition of heavy sanctions on Russia, adopted on a progressive
basis by the Western countries. To ensure regulatory compliance, Intesa Sanpaolo immediately launched initiatives,
monitored through a specific dashboard at Group level, aimed at overseeing the changes in the lists of sanctioned persons
and entities at European and international level, identifying sanctioned persons and entities for the purpose of blocking
positions and payments, complying with the specific ban on accepting deposits above the threshold set by the European
regulations, and identifying and blocking financial instruments subject to sanctions. As at 31 December 2022, the exposure to
Russian counterparties subject to sanctions included in the OFAC SDN and/or EU asset freeze lists amounted to 0.38 billion
euro (0.4 billion euro at the end of the half year).
The three main rating agencies Fitch, Moody’s and Standard & Poor’s have progressively downgraded Russia’s credit rating
to the point of withdrawing their ratings. This resulted in a consequent adjustment to the internal sovereign and transfer
ratings assigned by ISP.
Since the beginning of the conflict, the Group has continued to carefully monitor the evolution of the fallout of the Russian-
Ukrainian crisis on the real economy and the main financial variables, also by conducting specific scenario analyses and
stress tests to assess the potential impacts in terms of profitability and capital adequacy. These analyses focus both on the
direct effects, such as the deterioration of the situation of counterparties in the countries involved, and the indirect effects,
including the effects on the Group’s other customers deriving from the possible changes in the economic and financial
environment, also considering the rising energy costs and the possible reduction in the availability of certain energy sources.
Although the situation is constantly evolving, leaving aside extreme scenarios of conflict escalation that could lead to
outcomes that are difficult to assess, these analyses have found that the Group would be able to ensure compliance – also
through the implementation of specific actions – with the regulatory requirements and the stricter limits set internally.
Report on operations – Overview of 2022
31
The Operational Resilience Task Force
From the earliest stages of the conflict, contacts were established and maintained with all staff of Pravex Bank, also
supporting the expatriation of employees and their family members where required. The people were taken in by the Group’s
other banks in countries bordering Ukraine (Romania, Moldova, Slovakia and Hungary) and then transferred, on a voluntary
basis, to Italy, where they are housed in Group flats and assisted for all their needs
4
. Specific workstations for Ukrainian
colleagues were set up in one of the buildings where the Group operates in Bergamo. As the conflict persists, colleagues
continue to be hosted outside their country and especially in Italy.
With regard to business continuity in Ukraine, the systems have been operational at all times. A backup copy of the data was
set up already in January at a data centre in Lviv and later, following regulatory changes by the National Bank of Ukraine, a
backup copy of the data was also set up outside the country, initially at a cloud data centre in Poland. From September, the
backup copy of the data was moved to a cloud data centre in Germany.
The intensification of attacks in several parts of Ukraine from the second half of June gave rise to the need for the daily
updating of the methods of assessment for the opening of individual branches, supporting the decision-making process on the
basis of specific indicators and always taking staff safety into account. The number of branches open from the beginning of
the conflict has varied over time. In the early stages of the conflict, an average of around half of the Pravex Bank branches
distributed throughout the country were open. From April onwards, the number of branches open daily gradually increased to
an average of about 36 branches until the beginning of October, when the intensification of the attacks again led to the
reduction in the number of branches that could be opened safely. From the end of October, the number of open branches
returned to an average of around 36 branches on a daily basis, depending on the availability of electricity throughout the
country.
A total of six branches have been damaged in the fighting since the beginning of the conflict: two branches in Kharkiv, one i n
Mariupol, one in Kyiv and one in Kremenchuk. The Kherson branch also suffered damage in December.
At Banca Intesa Russia, the systems remained active at all times and the branches always continued to work without any
operational problems, also thanks to the new agreements signed with local providers, to compensate for the interruption of
services offered by Western providers after the start of the conflict.
Monitoring was also set up on the operations of Banca Comerciala Eximbank, the Group’s Moldovan subsidiary. Specifically,
following the worsening geopolitical situation and thanks to the authorisation granted by the Central Bank of Moldova at the
beginning of April for the transfer of data out of the country, a physical backup of the data centre in Romania was carried out,
followed by a cloud-based data backup in Germany.
With regard to cybersecurity, from the beginning of 2022, as the first signs of increased instability in the Ukrainian situation
emerged, the Group increased its threat intelligence activities and strengthened its cybersecurity controls throughout the
Intesa Sanpaolo Group, particularly in terms of security checks and authentication methods for accessing the corporate
network. Alert levels were also raised through specific analyses of indicators of compromise collected from external info-
sharing sources, to detect any cyber threats and determine the appropriate countermeasures to be implemented.
Numerous security controls were already in place and standardised in all the Group companies, such as strict access control
policies based on the principle of minimum privilege to carry out the activities requested, the controlled provision of access
credentials to company infrastructures and tools and the use of strong authentication (multi-factor authentication) for access
to the corporate network. The control and surveillance str uctures were also strengthened. The connections with the Group’s
most at-risk banks have been reduced, through selective opening of only vital and critical services and continuous monitoring.
E-mails with attachments and/or links to websites have also been analysed as possible sources for spreading malicious
attacks. After the initial blocking of e-mails containing attachments and originating from the Group’s most at-risk banks,
additional preventive control systems were implemented that allowed those e-mails to be sent to the Parent Company with a
low level of risk.
Specific educational initiatives on cyber risks, with a focus on phishing, are regularly implemented to further raise awareness
among all the Group’s staff. The initiatives involved posting news on the Group intranet, sending information to staff, and
adding a warning message upon login to the company computers. A warning message was also added to all e-mails from
outside the Group, and a compulsory training course on cybersecurity was provided to staff in the second quarter of 2022.
Lastly, with regard to the issues related to energy supply, in July, in response to the potential electricity and gas supply
problems in Italy during the winter, Intesa Sanpaolo set up an internal working group with the aim of further strengthening the
business continuity solutions for managing the scenario of unavailability of infrastructure services.
The following activities were carried out: i) checks on the safeguards present in the Group’s main offices and the Da ta
Centers that ensure the availability of electricity in the event of a blackout by energy operators (ongoing checks on the
adequacy of backup batteries and generators); ii) updating of the procedures for managing power outages, also in the local
network and the museum venues; iii) due diligence on the main suppliers that provide critical services essential to Intesa
Sanpaolo to verify their continuity safeguards specifically in the case of blackouts; iv) additions to the contracts with suppliers
to ensure the advance procurement of fuel and guarantee its delivery within 24 hours; v) distribution of information notes to
staff in the event of blackouts; and vi) drafting of specific guidelines for the preventive management of the scenario for all the
Group’s international legal entities. In addition, meetings were held with the Bank of Italy to analyse solutions for ensuring the
availability of electricity and fuel for the operators of the national financial system.
The additional costs incurred for business continuity and losses resulting from physical damage to premises/branches located
in the conflict zone form part of the monitoring of the exposure to operational risk, including that relating to the Risk Appetite
Framework.
4
For more details see the information on “The Intesa Sanpaolo Group’s initiatives for Ukraine and to mitigate the impacts of the inflation scenario”
provided below in this section.
Report on operations – Overview of 2022
32
The Intesa Sanpaolo Group’s initiatives for Ukraine and to mitigate the impacts of the inflation scenario
In response to the severe humanitarian crisis that affected the entire population of Ukraine, Intesa Sanpaolo immediately too k
action by making available 10 million euro to provide relief and shelter for the people and families affected, 60% of which was
allocated to initiatives in Ukraine and at the borders, and 40% to interventions in Italy.
Collaboration agreements were signed with national and international humanitarian organisations to implement projects for
humanitarian protection, accommodation, direct economic support, health and psychological assistance, distribution of basic
necessities and integration of Ukrainian refugees in Italy. The agreements involved:
− UNHCR - UN Refugee Agency, for the provision of essential goods including food, emergency shelter, blankets and
hygiene products, in addition to direct financial assistance to people, to meet their basic expenses. The initiative supports
the Ukrainian authorities in setting up reception centres and also performs activities to protect against exploitation and
abuse. The support for UNHCR was further strengthened by the crowdfunding initiative on the digital platform
ForFunding.it, a fundraising initiative that citizens and businesses contributed to and where Intesa Sanpaolo doubled the
amount donated for every donation made;
− Caritas Italiana, through the “A.P.R.I. Accogliere Promuovere Proteggere Integrare i Profughi Ucraini in Italia” (Welcome,
Promote, Protect, Integrate Ukrainian Refugees in Italy) project to support the Caritas diocesan network in welcoming
refugees throughout Italy, with services ranging from initial hospitality to integration with the aim of promoting their social
and economic inclusion;
− CESVI, to support refugees with a focus on families with children, disabled and elderly people in Ukraine, Romania and
Hungary;
− Banco Farmaceutico Onlus, with the “Pharma4Ucraina” project for the free distribution of emergency medicines and to
contribute to the costs for their transport and delivery to the Ukrainian population;
− CIR - Consiglio Italiano Rifugiati (Italian Refugee Council), for the legal and structured support for the protection of single
children and single-parent families;
− Vicariate of Rome, for relief and shelter initiatives for the Ukrainian community, also thanks to the actions of the Next Gen
Together project, aimed at “bringing the suburbs closer to the centre” and focusing on respect and equal rights;
− Confederazione Nazionale delle Misericordie d’Italia for the accommodation of 34 boys and girls aged between 9 months
and 18 years in the “Casa della Stella” shelter in the village of Fosciandora in Tuscany. The project involves
educational/school activities, extra-curricular activities and medical assistance;
− FEBA (European Federation of Food Banks), to ensure the adequate supply of food to the Ukrainian Food Bank for the
period July 2022-March 2023, not only through the management of donations but also through the direct purchase of
food;
− AVSI, in partnership with AVSI Polska, to increase the employment and employability levels of 150 refugee women and
the socio-educational integration of 50 children in their care (children and foster children);
− Azione Contro la Fame (Action Against Hunger), to provide access to safe water and proper sanitation (WASH) for
Ukrainian refugees and host communities in Moldova;
− the NGO Bambini nel Deserto Onlus, in support of Ukrainian health care with the project “Ambulanze Ucraina 2022/23”,
which involves the purchasing of second-hand emergency vehicles (ambulances, vans, pickups and other vehicles), the
complete repair and upgrading of the vehicles and their delivery to the Ukrainian civil authorities on the border with
Poland;
− Robert F. Kennedy Human Rights Italy, for raising awareness of human rights among students and programmes for the
integration of Ukrainian refugees into the Italian labour market.
A crowdfunding initiative was also set up on the Group’s digital platform ForFunding.it in favour of the Fond azione RAVA with
the aim of supporting the purchasing of medicines and first aid equipment for children’s hospitals in Ukraine. Intesa Sanpaol o
also contributed to this initiative with a direct donation, in addition to the funds raised through the crowdfunding platform.
The Group’s International Subsidiary Banks Division is particularly involved in several initiatives, both implemented directl y
and through several of its subsidiaries in Eastern Europe, involving:
− a fundraiser in 5 countries for several local NGOs;
− the provision of banking services on favourable terms (zero withdrawal, transfer and account management fees);
− the suspension of loan and mortgage payments for two months;
− the introduction of the Ukrainian language on the digital platforms of several of the subsidiaries in Eastern Europe.
The Intesa Sanpaolo Charity Fund provided support to two organisations directly present in Ukraine:
− Médecins Sans Frontières, for the distribution of emergency medical supplies to hospitals, the training of health workers
in the management of mass influxes of injured people, as well as the provision of basic health and mental health care;
− Fondazione Soleterre, for the provision of shelter and continuity of care for children with cancer, to facilitate their safe
and rapid evacuation and to set up the collaboration with hospitals in Italy that have offered to admit the children who
need hospital care.
A total of 6,400 hours of paid leave were donated to employees willing to volunteer to host refugees or work outside Italy with
NGOs and non-profit organisations for humanitarian and social purposes (1,600 hours already used).
Intesa Sanpaolo joined the Italian Banking Association initiative for a voluntary donation of 10 euro by bank employees, to
which an equivalent donation was added by the Bank.
Intesa Sanpaolo is also offering hospitality in Italy to Pravex Bank employees and their families by providing 40 Group-owned
flats and residential facilities in Bergamo. These are mainly female bank staff and their children, as well as the families of
male employees who are prevented from leaving the country by martial law. The people are mostly from the eastern parts of
Ukraine and the capital Kyiv. A total of 208 colleagues (of whom 179 are currently still present) and their family members
accepted the invitation to come to Italy. The guests were initially taken in by Caritas and Intesa Sanpaolo provided them wit h
the main services and basic economic needs. Other initiatives have also been identified to support and facilitate the
Report on operations – Overview of 2022
33
integration of the families of Pravex Bank staff in Bergamo, including sports activities, support for administrative activities, and
ensuring access to schooling by providing devices for remote learning at Ukrainian schools.
In order to provide significant and tangible support in response to the growing social needs generated by the conflict-induced
crisis, particularly in terms of energy costs and the general increase in prices, the Intesa Sanpaolo Group has developed a
package of aid for businesses and households through:
– a 22 billion euro credit line allocated to SMEs, with a special focus on those engaged in the search for solutions such as
industrial reconversion, energy independence and the transition to renewable energy, with funds at subsidised rates for:
o the coverage of higher energy costs;
o the suspension of principal repayments on loans for up to 24 months;
o investments in renewable energy (SACE-guaranteed loans of up to 20 years);
– 8 billion euro credit line in support of households, with 3 initiatives:
o personal loans - up to 20 years, for ISEE (Equivalent Financial Situation Index) incomes up to 40 thousand euro - at
subsidised rates;
o support in managing difficult situations through flexible mortgage and loan options;
o purchases and bills payable in instalments at zero interest.
Lastly, the Bank also sought to offer tangible support and a sign of its care and attention to the Group’s employees (in Ital y
and abroad) and their families by providing them a donation of 500 euro on 9 September 2022. The measure concerned 82
thousand people employed as at 30 June 2022, excluding those classified as managers or having equivalent remuneration,
for a total outlay of 48 million euro
5
.
On 22 November, as part of the negotiations on the changes in the organisation of work practices, a trade union agreement
was signed, which provided for an additional sum of 500 euro to be paid to all the Group’s non-managerial personnel
operating in Italy (over 70 thousand people), amounting to 36 million euro, to be paid in conjunction with the December salary.
Both payments benefited from the exemption from tax (and social security contributions) for the sums paid (or reimbursed) in
2022 by the employer to the employees for the self-certified use for the payment for household expenses for electricity, water
and gas related to consumption in 2022. The measure was introduced by Article 12 of the “Aiuti-bis” Decree (Law Decree no.
115 of 9 August 2022, converted by Law no. 142 of 21 September 2022) within an amount limit subsequently raised to
3 thousand euro by the “Aiuti-quater” Decree (Law Decree no. 176 of 18 November 2022, converted with amendments by
Law no. 6 of 13 January 2023).
The main accounting aspects and the approach adopted by the Intesa Sanpaolo Group
At the end of 2021, the outlook for 2022 appeared to be generally optimistic due to the reasonable hope of containing the
COVID-19 pandemic and the clear benefits that the public interventions were having on the world’s major economies. The
critical issues arising from shortages of certain components in global production chains and the general rise in prices were not
sufficient to lead to risks of a global recession, although the steady rise in inflation prompted the major central banks to
gradually reconsider the continuation of “accommodative” monetary policies. Although in 2022 the pandemic was, and also
currently, appears to be more controllable and hopefully receding further, it should nevertheless be emphasised that it
contributes to maintaining a climate of uncertainty that has not been completely dispelled. The overall optimistic scenario
resulting from the evolution of the COVID-19 pandemic was completely overtaken by the sudden emergence of the
Russian/Ukrainian conflict, which erupted at the end of February 2022 and was also followed by a general escalation of other
pre-existing geopolitical tensions. These events, combined with the further rise in inflation and the widespread tightening of
monetary policies, are increasing uncertainty about the future scenarios the Group will have to face. In this regard, it should
be noted that, from the perspective of the measurement of credit exposures in accordance with IFRS 9, scenarios – such as
the current one – characterised by significantly new elements (and therefore not identifiable in recent periods) are very difficult
to capture in the modelling process, making it extremely difficult to produce forecasts for specific portfolio risks in such
circumstances. These considerations support the Bank’s decision to adopt post-model adjustments, increasing the ECLs on a
managerial basis, in order to incorporate a suitable estimate of the uncertainties mentioned above.
In the context described, the main accounting issues resulting from the ongoing conflict and the approach adopted by the
Intesa Sanpaolo Group to address them are briefly outlined below, while the details regarding the “Impacts of the COVID 19
pandemic” are provided in the following section.
On 24 February 2022, the gradually escalating tension between Russia and Ukraine erupted into a conflict, the intensity and
size of which had not been seen in Europe since the end of the Second World War.
5
In light of the exemption from taxation (and social security contributions) under the “Aiuti-bis” Decree (Law Decree no. 115 of 9 August 2022, converted
by Law no. 142 of 21 September 2022) and the “Aiuti-quater” Decree (Law Decree no. 176 of 18 November 2022, converted with amendments by Law
no. 6 of 13 January 2023), the amount of the cost actually incurred by the Bank for the donation provided decreases to 41 million euro, due to the
reversal of the related social security contributions.
Report on operations – Overview of 2022
34
The extremely serious situation resulting from the conflict was immediately closely monitored and assessed by Intesa
Sanpaolo, also in light of the guidance provided by the regulators on the subject
6
, given that the Group has:
− a direct presence with two subsidiaries in the warring countries (Pravex Bank Public Joint-Stock Company and Banca
Intesa Russia) and is therefore particularly exposed to the consequences of the conflict;
− cross-border exposures stemming from its corporate and investment banking activities.
In its lending activities, the IMI C&IB Division has over time financed counterparties resident in the Russian Federation. More
than two-thirds of the loans to Russian customers disbursed before the conflict involved leading industrial groups, which have
established commercial relationships with customers belonging to the main international supply chains, a significant amount
of which derives from commodity exports. At the outbreak of hostilities, loans to Russian customers represented around 1% of
the Intesa Sanpaolo Group’s total loans to customers (net of Export Credit Agency - ECA guarantees).
In view of the above, it should be noted that during the year the Group has taken active steps to significantly reduce the credit
risks associated with the Russian-Ukrainian conflict. Specifically, during the year, the gross on-balance sheet exposure to the
total counterparties resident in Russia and Ukraine (customers, banks and securities) decreased by 2,493 million euro (-47%
compared to the end of the previous year), mainly due to the final disposal of two major exposures (for 2.2 billion euro in the
third quarter and 0.3 billion euro in the fourth quarter). In detail, there was a reduction of 2,899 million euro (-61% compared to
the end of 2021) in gross credit exposures to customers, only partly offset by the increase in Banca Intesa Russia’s amounts
due from banks in relation to the liquidity that has become available from the progressive repayment of loans to customers.
The significant de-risking manoeuvre and the major adjustments to the residual positions contributed to more than halving the
overall net exposure (customers, banks and securities) as at 31 December 2022 to counterparties resident in Russia and
Ukraine, which amounted to 2,158 million euro, down by 3,087 million euro compared to 31 December 2021 (-59%).
At the end of the year, the remaining exposures amounted, in terms of gross values, to 372 million euro (205 million euro net)
for Banca Intesa Russia (figures as at 31 December 2022, as described below) and 1,257 million euro (963 million euro net)
for cross-border exposures to customers resident in Russia (net of ECA guarantees). These were accompanied by exposures
to banks totalling 797 million euro (782 million euro net) and in securities totalling 73 million euro (41 million euro net)
7
.
Exposures to customers resident in Ukraine amounted to 216 million euro (103 million euro n et
8
), of which 112 million euro
(book value nil in net terms) related to the subsidiary Pravex Bank (figures as at 30 September 2022, as described below).
These were accompanied by exposures to banks and in securities totalling 74 million euro (64 million euro net). The majority
of the exposures to Russian
9
and Ukrainian counterparties essentially consist of loans to customers subject to measurement
in accordance with IFRS 9 “Financial Instruments”.
In this regard, the Intesa Sanpaolo Group has conducted a normative analysis of the international accounting standards to
check for any guidance or criteria for the measurement of the expected credit loss (below also ECL) in crisis/war situations
like the current one. The analyses of IFRS 9 and the related Annexes show no indications or examples aimed at setting out
specific guidelines for the measurement of Expected Credit Losses in contexts of war or defining specific methods of
increasing credit risk due to sudden, serious geopolitical crises such as the current one. The most pertinent references to the
current scenario seem to be those set out in the Application Guidance of the standard. These allow/suggest the use of
collective assessment to verify the existence of a Significant Increase in Credit Risk (SICR) with a view to staging the credit
exposures
10
, as well as, in line with the treatment set out for capturing the critical issues of another recent emergency
situation (COVID-19
11
), using the management overlay in calculating the ECL, to define the most suitable methods to
incorporate the aspects linked to the ongoing conflict into provisions.
The Group has therefore decided, since the Interim Statement as at 31 March 2022, to adopt a measurement approach
strongly driven by the emergence of geopolitical risk applied on the basis of the country of residence of the counterparties,
both for the determination of the SICR and the calculation of the ECL through the application of management overlays. This
was considered the most appropriate way to incorporate the provisions for country and geopolitical risk related to the current
conflict that would otherwise not be properly captured by the risk measurement systems normally used. As already noted, with
specific reference to the cross-border exposures, the Russian companies financed before the outbreak of the conflict all had
high ratings and therefore, for most of them, their business outlook does not include any increased risks other than those
generated by the geopolitical situation. Consequently, for these companies, the main current risk is transfer risk, i.e. the risk
that they will fail to honour their debt repayment commitments, not because of aspects directly related to their business, bu t
because of government-imposed restrictions. This type of risk was captured both through a revision of the ratings of Russian
counterparties and the consequent downgrading to classes with higher risk and classification in Stage 2 or Stage 3 and the
6
See in particular the documents “ESMA Public Statement: ESMA coordinates regulatory response to the war in Ukraine and its impact on EU financial
markets” of 14 March 2022 and “ESMA Public Statement: Implications of Russia’s invasion of Ukraine on half-yearly financial reports” of 13 May 2022,
the contents of which were further confirmed by the guidance regarding the Russian-Ukrainian crisis contained in the recent “ESMA Public Statement:
European common enforcement priorities 2022 annual financial reports” of 28 October 2022, and “CONSOB draws the attention of supervised issuers to
the impact of the war in Ukraine in relation to inside information and financial reporting – 22 March 2022” and lastly CONSOB’s “Warning Notice no. 3/22
of 19 May 2022”.
7
There were also off-balance risks to customers of 126 million euro (113 million euro net) at Banca Intesa Russia, 232 million euro (186 million euro net)
in cross-border exposures to resident customers (net of ECA) and a total of 155 million euro (152 million euro net) relating to positions with Russian
resident banks.
8
The cross-border exposures to customers resident in Ukraine are, for the corporate part, backed by guarantees provided by US persons, while, for the
household part, they mainly relate to exposures disbursed by the subsidiary VUB to households with permanent residence in Slovakia.
9
For these purposes, the small exposures to Belarusian counterparties have for simplicity been treated and disclosed together with the exposures to the
Russian Federation.
10
In particular, see IFRS 9 B5.5.1, IFRS 9 B5.5.4, IFRS 9 B5.5.5, IFRS 9 B5.5.18 and IFRS 9 B5.5.52.
11
IFRS 9 and COVID-19 - Accounting for expected credit losses applying IFRS 9 Financial Instruments in the light of current uncertainty resulting from
the COVID-19 pandemic.
Report on operations – Overview of 2022
35
introduction of management overlays consisting of the application of an estimated loss rate based on the risk of the country of
residence and considering the elements of uncertainty and risk connected with the conflict, in relation to potential additional
worsening of the counterparties’ creditworthiness.
These choices build on what was already implemented in the Interim Statement as at 31 March 2022 and confirmed in the
Half-yearly Report as at 30 June 2022 and the Interim Statement as at 30 September 2022, maintaining substantially the
same approach. Indeed, the choices are characterised by rationales strongly guided by the uncertainties and elements of risk,
in view of the continuing conflict, and in particular, during the year:
− the consistency of the ratings for the remaining performing exposures to counterparties directly exposed to the
Russia/Ukraine geopolitical risk was updated in order to capture the risk profile in the ratings updated as much as
possible. In addition, with regard to cross-border exposures, the assessments were strengthened by introducing specific
management overlays and additional prudential margins;
− in that context, already starting from 30 June this year, the deterioration of specific positions – classified among unlikely-
to-pay exposures (Stage 3) and, as a result, subject to analytical assessment – was recognised;
− the positions of the two subsidiaries resident in Russia and Ukraine were written down significantly, in consideration of
the inevitable repercussions on the entities resident in the countries directly involved in the conflict.
Before describing the valuation choices relating to the two subsidiaries in more detail, a few preliminary remarks need to be
made about how Pravex Bank and Banca Intesa Russia contributed to the preparation of the consolidated financial
statements as at 31 December 2022. In particular, for the 2022 financial statements, while it was possible to consolidate an
accounting situation aligned to that of the Parent Company for Banca Intesa Russia (therefore, consolidated with reference to
the results as at 31 December 2022), for Pravex, the worsening of the situation in the city of Kyiv from October onwards led to
the conclusion that – in order to contain the “operational” risk – it was more appropriate to maintain the accounting situation
produced by Pravex as at 30 September 2022 for the December consolidation. Consequently, for the financial statements as
at 31 December 2022, the balance sheet and income statement results of Pravex were included through the line-by-line
consolidation of a consolidation package, prepared in compliance with the IAS/IFRS, referring to 30 September 2022 and
translated at the exchange rate as at 31 December 2022. However, it is worth recalling that the balance sheet balances of the
Ukrainian subsidiary are substantially immaterial in the context of those of the Intesa Sanpaolo Group. The above-mentioned
consolidation methods are also supported by the results shown by balance sheet data as at 31 December 2022, which do not
highlight in terms of overall aggregates significant changes compared to the figures as at 30 September 2022.
With regard to the valuation choices, for Pravex Bank, the absolutely serious situation in all of Ukraine resulted in the
definition, for the purpose of measuring the Bank’s loan portfolio, of a specific ap proach, significantly based on prudent
rationales, in light of the continuation of the conflict and the consequent repercussions on the Ukrainian economy. For the
purposes of the 2022 consolidated financial statements, as was already the case in the Interim Statement as at
30 September, it was deemed appropriate to confirm the decision to fully write down Pravex Bank’s on-balance sheet loans to
customers, with consequent classification to Stage 3, in continuity with the Interim Statement as at 30 September, thus
updating the previous management overlay applied to the portfolio in the Half-yearly Report of around 70% (1% as at 31
December 2021).
As a result of that choice, for the purposes of the Group’s consolidated financial statements, the equity of the s ubsidiary has
been reduced to zero.
Also for Banca Intesa Russia, an approach to classifying and measuring performing loans was adopted that strongly
considers the geopolitical risk deriving from the ongoing crisis. Therefore, the assessments carried out as at 31 December on
the loans of the subsidiary included a centrally determined prudent factor that takes account of the worsening of the domesti c
economic situation in light of the continuation of the conflict and the increased isolation of the Russian economy. As a result of
the provisions made and the above-mentioned reduction in exposures, the total coverage of performing loans of the Russian
subsidiary amounted to around 41% of their gross value, up on 30% recognised in the Half-yearly Report (1% as at 31
December 2021). Moreover, in light of the further progressive deterioration of relations between the main Western countries
(including Italy) and the Russian Federation, additional provisions were made when preparing the financial statements, mainly
to confirm the write-down to zero of the equity of the subsidiary, as already applied in the Interim Statement as at 30
September.
The above-mentioned significant adjustments made to the credit exposures of Banca Intesa Russia and Pravex Bank, on a
prudential basis, reflect the war situation that generates the need for careful consideration of the above-mentioned country
risk, with appropriate measurement of the risk that the capital invested abroad is exposed to, connected to the possibility that
political or economic circumstances may result in non-repayment of the loan (irrespective of the specific credit risk of the
individual counterparty).
The real estate assets of the two subsidiaries were also subject to valuation: given the extreme uncertainty surrounding the
current war scenario and the current absence of a real estate market in Ukraine, it was considered prudent to confirm the
write-off of the value of Pravex Bank’s investment and branch assets and other properties used in operatio ns. The sole
exception was the Kyiv headquarters, for which it was decided, in view of its strategic function for the banking business, th e
current control that can be exercised over the condition of the building, and its location, to keep its value unchanged. On the
other hand, with regard to Banca Intesa Russia’s small real estate asset portfolio, essentially consisting of the Moscow
headquarters, no items were identified that required a write-down.
With regard to Banca Intesa Russia’s securities portfolio (Pravex’s residual portfolio was duly repaid at the end of 2022), the
valuations were made using the prices recorded on the Russian secondary market, with consequent classification in fair value
level 2 due to the low liquidity of the reference market. A similar approach was adopted for the small securities exposures of
the Parent Company and entities of the Group’s insurance segment.
Report on operations – Overview of 2022
36
Overall, these valuation processes and the losses associated with the de-risking of the Russian exposures led to the
recognition in the year, before tax, of net charges totalling 1,415 million euro (of which 74 million euro in the fourth quarter of
the year), with 1,298 million euro relating to adjustments to loans, 36 million euro to securities and 81 million euro to oth er
balance sheet items, including the above-mentioned provision of 80 million euro made upon consolidation of the subsidiary
Banca Intesa Russia mainly to zero out its equity contribution to the Group’s consolidated financial statements.
With regard to the verification of the appropriateness of the value of intangible assets, and goodwill in particular, the
developments in the geopolitical situation resulting from the outbreak of the Russian-Ukrainian conflict were carefully
considered, in line with the guidance provided by the supervisory authorities and industry bodies. More specifically, the
impairment testing took into account the updated macroeconomic scenario prepared by Intesa Sanpaolo’s Research
Department, which was influenced, on the one hand, by the tensions linked to the Russian-Ukrainian conflict and the
consequent inflationary pressures and, on the other, by the ECB’s adoption of a restrictive monetary policy that also had
repercussions on the volatility of financial markets.
The method adopted to carry out the goodwill impairment tests for the 2022 Annual Report was the same as that used in
previous years, based on the calculation of the value in use, i.e. the current value of future cash flows that the Group is
expected to generate. To this end, individual estimates made internally for the period 2023-2027 have been used that, for the
years up to 2025, take into account the forecasts in the 2022-2025 Business Plan, approved by the Board of Directors on 4
February 2022, updated to take into account the change in the macroeconomic situation, whereas the flows for the years
2026 and 2027 have been estimated through inertial tracking of the flows for 2025, based on the forecasts relating to the
macroeconomic scenario, without considering the effect of additional managerial initiatives compared to that already
incorporated in the Business Plan. The results of the impairment test as at 31 December 2022 showed no need to recognise
any goodwill impairment or adjustments to intangible assets with an indefinite life (brand name) with regard to any of the
CGUs in the Intesa Sanpaolo Group. The positive results were also confirmed by sensitivity analyses, which also took into
account an adverse scenario. In particular, the values in use of each of the CGUs to which goodwill was allocated as at 31
December 2022 were found to be higher than their respective carrying amounts. With regard to the direct consequences of
the Russia-Ukraine conflict on the Group’s goodwill, you are reminded that the goodwill relating t o the Ukrainian subsidiary
Pravex Bank, considered an autonomous CGU, had already been reduced to zero in the 2008 Financial Statements and the
equity investment in the 2022 Financial Statements has a nil value. In the case of the Russian subsidiary Joint-Stock
Company Banca Intesa (Banca Intesa Russia), in addition to not having allocated goodwill and having a recognition value
reduced to nil, its weight in the IMI Corporate & Investment Banking CGU is completely marginal.
With regard to the brand name allocated to the Banca dei Territori CGU, it was considered that the CGU no longer had any
remaining goodwill allocated to it and, as a result, the recoverable amount of the specific intangible could not be tested as part
of the impairment testing of the goodwill based on total cash flows at the level of the CGU. It was therefore decided, in line
with the approach adopted for the 2021 Annual Report, to conduct a specific, autonomous valuation of the intangible based
on the fair value resulting from an appraisal commissioned from an independent expert who confirmed that the fair value of
the intangible was higher than its carrying amount.
Lastly, with regard to the intangible assets with finite useful lives, for which the IAS/IFRS require that the impairment test
should only be performed when the presence of loss indicators is detected, the analyses performed did not identify any critical
issues or impairment indicators that would require a specific recalculation of the recoverable amount of the assets recognise d
in the financial statements.
With regard to the verification of the recoverable amount of the deferred taxes, the tests found that they were fully recoverable
even under an adverse scenario.
Impacts of the COVID-19 pandemic
The early weeks of 2022 were marked in Italy by a new wave of infections caused by the rapid spread of the Omicron variant,
which began in late 2021 and led to the extension of the state of emergency until 31 March 2022 (Christmas Decree - Law
Decree no. 221 of 24 December 2021). The Group consequently updated its internal rules in response to the progressive
reconfiguration of the COVID-19 regulations by the Italian Government. Specifically:
− the obligation of minimum presence was removed, allowing return to the office solely on a voluntary basis and within the
limit of 50% per office, alongside the limitation of business trips and meetings. The mandatory minimum presence of 40%
was reinstated in the head office premises only from 7 March, with the initial easing of the rise in infections;
− for the branches, customer access, only in the red and orange zones mandatorily by prior appointment, has remained
subject to compliance with social distancing requirements, the use of appropriate personal protective equipment, hygiene
measures and limited in the number to the maximum capacity set in advance and indicated at the entrance;
− for the people in situations of vulnerability or with severe disabilities, the deadline for smart working was further extende d
to 31 March 2022;
− the change in the quarantine regime, reconfigured in relation to the vaccination status of the person concerned,
(Law Decree no. 229 of 30 December 2021 and Explanatory Circulars of the Ministry of Health of 30 December 2021 and
4 February 2022), necessitated a revision of the internal operating instructions for the return to the workplace of positive
cases and close contacts;
− from 1 February 2022, access to certain services, including banking and financial services, was restricted to people with
at least a “basic” Green Pass (Law Decree no. 1 of 7 January 2022), whereas from 15 February 2022, for the over 50s,
access to workplaces was limited to holders of the “Super Green Pass” only (provision introduced by Law Decree no. 1 of
7 January 2022).
Law Decree no. 24 of 24 March 2022
12
, issued in relation to the end of the state of emergency from 1 April, established the
following, in addition to the elimination of the coloured risk zones and precautionary quarantines for close contacts:
12
Converted into Law no. 52 of 19 May 2022, published in the Official Gazette on 23 May.
Report on operations – Overview of 2022
37
− the obligation until 30 April to use the “basic” Green Pass for all workers, regardless of their age, to access workplaces
(abolition of the Super Green Pass for the over 50s);
− the elimination from 1 April of the requirement for the “basic” Green Pass for customers to access banking, financial and
commercial services;
− the use of respiratory protective equipment in workplaces until 30 April.
As a result, the internal company rules were revised to incorporate the mandatory contents of the legislative provisions and to
adopt a more prudent approach, where possible and appropriate, based on the health situation, particularly with regard to
situations of vulnerability. Specifically:
a) a number of precautionary measures were temporarily maintained (temperature measurement, hygiene, distancing and
capacity) particularly for meetings, events/conferences and in presence training, while the obligation to complete the
questionnaire prior to return to work premises after an absence of more than fifteen days was removed, and unrestricted
access to branches was maintained for customers in compliance with the measures on hand hygiene, distancing and use
of appropriate personal protection equipment, as well as the previously established restrictions on maximum capacity;
b) with regard to situations of vulnerability, for fragile and disabled people and for cases of exemption from vaccination
(based on the requirements set out in the Ministerial Decree of 3 February 2022 or in the Ministry of Health Circular of
8 October 2021), the use of remote working was extended until 30 June 2022, subject to the presentation of a suitable
certificate, with a subsequent extension to 1 September pending a possible update of the related legal provisions;
c) the obligation to report a positive result from a molecular/antigen test to employers and to comply with home isolation for
7/10 days based on vaccination status was maintained, only allowing re-entry following a negative molecular/antigenic
swab test at the end of the isolation period;
d) in compliance with the law, the self-monitoring regime for staff who had had close contacts with people who have tested
positive for COVID-19 was introduced, with the obligation to wear an FFP2 mask for 10 days.
From 1 May, with the removal of the legal obligation for workers to show the green pass to access workplaces established by
Law Decree 24/2022, the related checks were discontinued with the suspension of body temperature measurement on
entrance and the resulting deactivation of the thermal scanners and QR code readers, where present. However, the ban on
entering company premises with a fever (over 37.5°) or other COVID-19-related symptoms was maintained.
In relation to the use of safety measures, the ISP Group, on a prudential basis, maintained the requirement – in addition to
keeping an inter-personal distance of one metre and complying with proper hygiene practices – to wear protective masks
(surgical or FFP2) within company premises, also after 30 April. From 15 June
13
, this obligation was changed to a
recommendation, particularly at times of gathering, subject to the rules on distancing and hygiene and the obligation to wear
FFP2 masks for 10 days in the event of contact with someone who is COVID-19 positive.
In the branches, on the other hand, since 1 May, the use of a mask remained still recommended for customers entering
company premises, without any need to make an appointment, but with a maximum number of admissions stated on signs
displayed.
The Emergency Unit, which was set up at the beginning of the pandemic, was operational until April 2022 when, at the last
meeting, it was decided to suspend regular meetings and only convene it when necessary. However, the continuous
monitoring of the evolution of the pandemic is still being maintained.
Also bearing in mind the cyclical recurrence of waves of infection, during the second half of 2022 ISP maintained several
essential recommendations aimed at the adoption of prudent and conscious behaviour by employees and customers on
company premises (inter-personal distance of 1 metre, hygiene, the recommendation to use personal protective equipment
indoors, particularly at times of gathering, and, solely for employees, a ban on entering company premises when their
temperature exceeds 37.5° or in the event of symptoms ascribed to COVID-19 infection by their general practitioner, as well
as the reporting of positive cases diagnosed through molecular/antigen tests according to the dedicated company procedure),
maintaining the already existing minimum presence arrangements (at least 40% of the working days at the assigned work
premises) for the head offices until 31 December 2022.
At the same time, the company regulations were brought into line with the changes in the relevant provisions:
− the Ministry of Health Circular of 31 August 2022, which provided for the reduction of compulsory isolation for people
testing positive for COVID-19, regardless of their vaccination status, as follows:
o after 5 days for cases that have always been asymptomatic or have become asymptomatic for at least 2 days,
following a negative antigen or molecular test at the end of the isolation period;
o at the end of the 14th day after the first positive swab test, irrespective of the test being carried out, for people still
testing positive, with an obligation to wear an FFP2 mask for 10 days (this last provision also applied to cases of
“close contact” with people who have tested positive);
− Law 142 of 21 September 2022 converting the “Aiuti bis” Decree, which introduced the extension of th e use of remote
working until 31 December 2022 for frail workers. ISP, which had already provisionally extended the application of the
measures originally due to expire on 1 September to 30 September, extended the use of remote working until
31 December 2022 for i) frail workers, disabled people and people who are exempt from vaccination (with a certificate
issued by the competent medical-legal bodies), ii) vulnerable people, iii) workers with children in conditions of severe
vulnerability/disability, and iv) cases of pregnancies involving special clinical situations. A further extension to 31 March
2023 has been provided for all the persons mentioned above, maintaining a prudential approach compared to the
provisions included in the budget law for 2023.
Lastly, on 1 January 2023, the Group’s internal regulations were updated to take into account the new provisions on the
management of cases and COVID-19 contacts introduced by the Ministry of Health Circular of 31 December 2022, which
established:
– for cases that have always been asymptomatic or have become asymptomatic for at least 2 days, the end of isolation
after 5 days from the first positive test or from the onset of symptoms, regardless of whether an antigenic or molecular
13
On 28 April, the Ministry of Health issued an Order – effective until the date of entry into force of the law converting Law Decree 24/2022 and in any
case no later than 15 June 2022 – that restricted the obligation to use protective equipment in enclosed spaces to specific and limited cases.
Report on operations – Overview of 2022
38
test has been performed (mandatory only for immunocompromised individuals);
– for cases that have always been asymptomatic (since the date of the swab test), the possibility of interrupting the
isolation even earlier than 5 days in the event of a negative antigenic or molecular test performed at a health
facility/pharmacy;
– the compulsory use of FFP2 protective masks after the isolation until ten days after the onset of symptoms or the first
positive test (in the case of asymptomatic individuals), with a recommendation to avoid high-risk persons and/or crowded
environments (precautions that are no longer required following a negative antigenic or molecular test);
– in the case of people who have had close contacts with people who have tested positive, the obligation to wear FFP2
masks, indoors or in crowds, until the fifth day following the date of the last close contact.
Again in 2022, the use of remote working by the head-office structures continued to be an integral part of a new model of
working based on strengthening individual responsibility and achieving a better work-life balance through the “Next Way of
Working” project, aimed at promoting the structural use of flexible working arrangements, based on alternating work in the
office and from home. This included the following actions:
– real estate and technological interventions aimed at constructing new workspaces designed to enhance the time in the
office, by creating coworking opportunities to help strengthen the sense of belonging, increase networking, and support
the staff in the gradual adoption of hybrid working arrangements through the use of advanced collaboration tools.
More specifically, in 2022, the Next Way of Working model was extended to the offices in Vicenza, Brescia, Varese,
Rome and Assago, where the redesigning of work spaces has been completed and environments dedicated to staff well-
being (energy corners) have been created. In Milan, work was completed in several spaces in Via Verdi 8, Viale Stelvio
and Via Manzoni. In December, an intervention was also initiated and completed in Verona, limited to a small group of
structures and people.
The preparations are continuing for the creation of the interior spaces of the complex in Via Melchiorre Gioia 22 in Milan,
while the planning is still being completed for Bergamo.
The renovation of the spaces was accompanied by the implementation of technological tools (release of the space
booking function in the planning and reservation tool), together with specific communication campaigns.
The progressive extension of the Next Way of Working model throughout Italy will continue in 2023;
– the new flexible work initiatives that have been introduced from 1 January 2023, on a voluntary basis, to increase
flexibility in working arrangements, superseding all previous regulations on flexible work related to the health emergency
situation:
o the possibility of signing an individual agreement by 31 January 2023 allowing staff to work from home up to a
maximum of 120 days per year (140 days for those working in shifts), with no more monthly limits, when planned
and authorised in advance. These limits do not apply for people with certified disabilities or serious illnesses, or frail
individuals;
o the launch of a trial in around 200 branches aimed at ensuring the use of a minimum number of flexible working
days;
o award of a daily meal voucher allowance in electronic form for each day worked from home;
o the possibility of working between Monday and Friday on 4 days for 9 hours (short week, with variable day off) with
equal pay, subject to company organisation and technical and production requirements, as well as alternating short
weeks with weeks of 7.5 hours per day on 5 days. The short week will also be tested in twelve large branches;
o the possibility, for staff not working in shifts, of having flexible working hours, starting the working day between 7
a.m. and 10 a.m., with consequent shifting of the finishing time, in agreement with their supervisor and subject to
technical, organisational and production requirements.
In terms of the extraordinary measures to support the Italian economy, businesses and households, at the end of
December 2022 Intesa Sanpaolo – the first bank in Italy to grant moratoria, anticipating the specific regulatory provisions –
had processed around 956 thousand requests for suspension of payments, for a volume of 117 billion euro
14
, mainly relating
to Article 56 of the “Cura Italia” Law Decree 18/2020. Applications from business customers accounted for 77% of the total
volumes.
With regard to the expiry of the moratoria pursuant to Law Decree 18/2020, the measures were further extended until
31 December 2021 by Law Decree no. 73/2021 (“Sostegni bis”) of 25 May 2021, subject to certain restrictions (including the
requirement for the customer to make an explicit request by 15 June 2021).
At domestic level, as at 31 December 2022, there were around 80 million euro of outstanding moratoria (4.8 billion euro at th e
end of 2021), of which 47% attributable to business customers, in addition to around 40 million euro of terminated moratoria
that will reach the term for the resumption of payments in subsequent months, almost entirely relating to business customers
(6.7 billion euro at December 2021). As a result of the phase-out of the EBA provisions concerning the exemption from
forbearance classification (EBA compliant moratoria), in December 2022 the total amount of outstanding moratoria eligible for
qualification as such under the EBA Guidelines was 412 thousand euro (1.1 billion euro at the end of 2021).
The expired moratoria that had already met the conditions for the resumption of payments at the end of the year amounted to
35.9 billion euro (34.7 billion euro at the end of 2021). The rate of new defaults on this portfolio at the end of the twelve
months of 2022 was around 4.5% (2.7% at the end of 2021). The cumulative default flows observed, when compared to the
total exposures with moratoria originally granted, was less than 3%. The level of significant past-due positions was also still
low.
The Intesa Sanpaolo Group supported the legislative and non-legislative measures adopted to combat the crisis generated by
the COVID-19 pandemic, both in Italy and in the various countries where it operates.
At consolidated level, the exposure value of the outstanding moratoria as at 31 December 2022 was 80 million euro
(4.9 billion euro as at December 2021), substantially attributable to the domestic perimeter, against expired moratoria of
14
The total moratoria granted up to 31 December 2022, including the former UBI Banca Group and considering the sale of branches carried out in the
first half of 2021. Net of renewals, redemptions and terminations, the amount was 36.1 billion euro.
Report on operations – Overview of 2022
39
39.6 billion euro (around 47 billion euro at the end of 2021). Like at domestic level, also at consolidated level the outstanding
moratoria qualifying as such under the EBA Guidelines amounted to 412 thousand euro (1.1 billion euro at the end of 2021).
With reference to the specific measures to support the production system, Intesa Sanpaolo, the first Bank in Italy to sign the
collaboration protocol with SACE, has provided an overall credit line of 50 billion euro dedicated to loans for businesses.
Overall, at the end of 2022, a total of 49 billion euro
15
of loans backed by government guarantee had been granted, also
through the SME Fund, since the start of the pandemic (in application of the “Liquidità” Law Decree no. 23 of 8 April 2020), of
which 13 billion euro SACE and 36 billion euro SME Fund (43 billion euro, of which 11 billion euro SACE and 32 billion euro
SME Fund, in December 2021).
At consolidated level, also considering the operations in the other countries where the Group has a presence, the residual
debt of exposures subject to government guarantee schemes, for which the process has been completed for both the
acquisition of guarantees and for disbursement, which may not coincide with each other, totalled 33.2 billion euro at the end
of December 2022 (40 billion euro at the end of December 2021).
In relation to the measures established by the “Rilancio” Decree (Law Decree 34/2020) for the relaunch of the construction
sector
16
, the Group has developed specific solutions not only for those who want to transfer their tax credit directly but also for
businesses that use invoice discounts for the purchase of tax credits and the related settlement, with predefined prices and a
dedicated advisory service through a partnership with the company Deloitte. The process of acquiring tax credits is subject to
comprehensive controls that allow the Bank to demonstrate the effective fulfilment of the specific due diligence requirements.
In 2022, a series of legislative/interpretative measures were issued in this regard (Law Decree no. 115 of 9 August 2022 “Aiuti
bis”, converted with amendments by Law no. 141 of 21 September 2022; Italian Revenue Agency Circular no. 33/E of 6
October 2022; Law D ecree no. 176 of 18 November 2022 “Aiuti quater”, converted with amendments by Law no. 6 of 13
January 2023) aimed, on the one hand, at introducing simplifications regarding the joint and several liability of the supplie r
and the assignees and, on the other, at revising the rules governing the assignment and use of tax credits with the aim of
revitalising the market by facilitating their circulation. In light of these measures, ISP made a further development to the
offering that allows part of the purchased tax credits to be sold to third parties which undertake to purchase them within the
limits of their own tax liabilities that may be offset overtime.
From the start of operations to the end of 2022, credits amounting to 19.4 billion euro (13.2 billion euro finalised and 6.2 billion
euro signed) had already been formally acquired, while those in the process of being acquired amounted to a further 6.5
billion euro. Net of the offsets made (around 1 billion euro) and deferrals recognised (1.2 billion euro), 11 billion euro in tax
credits were recognised as at 31 December 2022, included in caption 130 Other Assets of the balance sheet.
The Group’s future operations in this area may be affected by the changes introduced by Law Decree no. 11 of
16 February 2023.
At last April’s Shareholders’ Meeting, a booklet was published – also available on the Group’s website, in the Newsroom
section – detailing all the objectives that it was possible to achieve through the donation of 100 million euro to the National
Health System made by Intesa Sanpaolo at the outbreak of the COVID-19 pandemic. Of the total amount made available,
donations of 88.5 million euro were managed through the Department of Civil Protection, on the basis of a specific
collaboration protocol, while the remaining 11.5 million euro of donations were allocated directly by Intesa Sanpaolo to
specific beneficiaries: ASST Papa Giovanni XXIII of Bergamo and the Veneto Region. Overall, the sums were primarily
allocated to the permanent structural strengthening of the National Health Service and the bodies responsible for dealing with
emergencies.
In 2022, as Italy came out from the health emergency, the effects on the performance of the Group’s balance sheet
aggregates specifically attributable to the pandemic eased off considerably, due to the gradual establishment of a scenario of
general uncertainty generated by Russia’s invasion of Ukraine.
The development of direct deposits from banking business continues to be driven by the short-term component, in particular
current accounts, where customers are choosing to place their liquidity while waiting to invest, but the sharp acceleration i n
2020, following the outbreak of the health emergency, has gradually subsided in the following years. As at 31 December
2022, direct deposits from banking business were down 2.1% compared to the beginning of the year.
With regard to indirect customer deposits, the performance of assets under management, which in 2021 had benefited from
the renewed climate of confidence generated by the economic recovery after the closures caused by the health emergency,
was affected in 2022 by the increased volatility of the markets due to the various factors of concern related to the Russia-
Ukraine military conflict and the rise in inflation – which are undermining the continuation of the post pandemic recovery –
compounded by the effects of the reversal of European monetary policy. At the end of the year, assets under management of
the companies of the Asset Management Division, net of duplications, were down 14.2% compared to 31 December 2021.
On the basis of management data, in the insurance business the uncertain scenario led to a decline in gross premiums in the
life segment over the twelve months (-14% compared to December 2021). The net flows were also negative, as they were
also affected by an upturn in liquidations due to higher mortality as a result of COVID-19.
In contrast, the non-life business posted growth of 2%, driven by the non-motor segment (+7%).
With regard to the impact of the pandemic on the Group’s operating income, within net interest income, starting from the third
quarter, the benefits of the TLTRO III transactions with the ECB, correlated to the negative rates applied
17
, began to
15
Including the former UBI Banca Group and considering the sale of branches carried out in the first half of 2021.
16
This essentially consists of the 110% tax deduction (so-called Superbonus) for the energy and seismic upgrading of buildings, together with the
possibility, extended to all the main construction and energy-related tax deductions, for taxpayers to opt for a corresponding discount on the price by the
supplier, or for the transfer of a tax credit to third parties (including banks) equivalent to the deduction. The second option also applies for the
beneficiaries of tax credits awarded by the measures issued to deal with the COVID-19 emergency.
17
Note that in the period from 24 June 2020 to 23 June 2022 – the special interest rate period – the interest rate applied to TLTROs was -1%. From
24 June 2022 to 22 November 2022 the interest rate applied and settled on maturity was the average rate on deposits with the Central Bank (Deposit
Facility Rate) calculated for the entire duration of the operation, whereas from 23 November 2022 the rate applied is equal to the rate in effect for the
Report on operations – Overview of 2022
40
significantly decrease following the repeated hikes to official interest rates by the European Central Bank, effective on 27 July
(50 basis points), 14 September (75 basis points), 2 November (75 basis points) and 21 December 2022 (50 basis points).
Overall, the consolidated income statement for 2022 recorded interest income from TLTRO III transactions of 615 million
euro, compared to 1,187 million euro in 2021. This decrease was only partially offset in the fourth quarter by the interest
accrued on the reinvestment of surplus cash in deposit transactions with the ECB, favoured by the return of the related rates
(Deposit Facility Rate) to positive territory.
Net fee and commission income decreased by 6.4% to 8,919 million euro. This aggregate was affected by a lower
contribution from the management, dealing and consultancy activities segment, due to the market volatility, which particularly
impacted the revenue items related to assets under management.
Despite the performance of premiums described above, income from insurance business increased by 4.7% to 1,705 million
euro due to the higher contribution from the technical margin, in both the life and non-life business, against a decline in the
net investment result, particularly in the life insurance business.
During the year, the costs incurred by the Intesa Sanpaolo Group for interventions related to the pandemic amounted to
19.7 million euro in terms of current expenses, down by over 17 million euro compared with 37 million euro for 2021, while no
investments were made compared to around 6 million euro in 2021.
With regard to adjustments to loans, in 2022 the management overlays to cover the vulnerability of the moratoria were
essentially reduced to nil, due to the progressive increase in moratoria that have reached the deadline for resuming payments
without displaying any significant problem issues. Nevertheless, total adjustments increased to 3,113 million euro, compared
to 2,766 million euro for 2021, as they incorporated the valuation effects described above related to the Russia-Ukraine risk.
period. As a result of the latest monetary policy decisions, the Deposit Facility Rate rose from -0.50% to 0%, effective on 27 July 2022, from 0% to 0.75%
effective on 14 September 2022, from 0.75% to 1.50% on 2 November and from 1.50% to 2% from 21 December 2022.
Report on operations – Overview of 2022
41
Consolidated results of Intesa Sanpaolo
The commentary on the consolidated results for 2022 refers to the reclassified income statement, which – in continuation of
the approach adopted in the 2021 Annual Report and the Interim Reports of 2022 – presents figures for the first two quarters
of 2021 that have been “redetermined”, on the basis of management figures, in order to enable a like-for-like comparison, by:
i) excluding the income statement results, on a line-by-line basis, for the UBI Banca branches sold in the first three months of
2021 and the UBI and ISP branches sold in the second quarter of 2021, by convention synthetically allocated to the caption
Income (loss) from discontinued operations and ii) including the figures, on a line-by-line basis, for the insurance companies
Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas
18
, which entered the scope of consolidation from the
second quarter of 2021, after stripping out the income statement results linked to the business from the customers of the
branches sold to BPER, with the allocation of the net result to the caption Minority interests, and therefore without impact on
the net income for the period.
The year 2022 ended with a consolidated net income of 4,354 million euro, up from 4,185 million euro for 2021 (+169 millio n
euro; +4%).
The improvement was due to the positive performance of the operating margin, which absorbed the weight of the valuation
effects related to both the conflict between Russia and Ukraine and the macroeconomic scenario. On the one hand, risk
adjustments were made to Russian and Ukrainian counterparties, almost entirely attributable to on-balance-sheet and off-
balance-sheet credit exposures, for a total of 1,415 million euro, of which 74 million euro in the fourth quarter (1,145 million
euro net of tax, of which 62 million euro referred to the fourth quarter). On the other hand, to prevent possible deteriorations in
credit quality in relation to prospective risk elements inherent in the current scenario, adjustments were made to performing
loans, mainly in the fourth quarter, for a total of 1,174 million euro gross, mainly relating to the management overlays
prudentially applied where greater potential vulnerabilities were identified, but also due to de-risking measures, including that
relating to the real estate leasing portfolio, and the application of a deterioration factor to the prudent macroeconomic scenario
adopted for the forward-looking estimate of ECLs. These higher adjustments were only partially mitigated by the recoveries in
management overlays to cover the vulnerability of the moratoria.
Operating income rose to 21,470 million euro (+677 million euro;
+3.3%), driven by the positive performance of net interest income,
which largely offset the negative performance of other revenue
items.
Against a backdrop of repeated hikes in key interest rates decided
by the ECB from July onwards, net interest income increased by
20.2% to 9,500 million euro, representing 44.2% of income. This
growth was driven both by the positive performance of customer
dealing and of interest on financial assets, and was accompanied
by a reduction in negative differentials on hedging derivatives
together with an increase in other net interest income. Following
the change in European monetary policy, the contribution from
relations with banks fell, due to the significant decline from the
third quarter onwards in the benefits, in terms of negative rates
applied, of the TLTROs with the ECB, only partially offset in the
fourth quarter by the interest accrued on the reinvestment of excess liquidity in deposits with the ECB.
Net fee and commission income decreased by 6.4% to 8,919 million euro. The volatility of the financial markets negatively
affected the management, dealing and consultancy segment, which recorded a 13.8% decrease in total income, particularly in
relation to dealing and placement of securities and portfolio management, against an essentially stable contribution from the
distribution of insurance products. In contrast, there were increases in the contributions from commercial banking activities
(+5.4%), driven by all the captions with the sole exception of current accounts, and other net fee and commission income
(+9.6%), mainly on loans.
Income from insurance business, which includes the cost and revenue captions of the insurance business of the Group’s life
and non-life companies, improved by 4.7% to 1,705 million euro, representing the combined effect of an increase in the
technical margin and a reduction in the net investment result.
Profits (losses) on financial assets and liabilities designated at fair value decreased by 15.7% to 1,378 million euro, reflecting
the decrease in transactions in securities in the second half of the year. The decrease was essentially attributable to the
“Profits (losses) on dividends and on disposal of assets measured at fair value through other c omprehensive income and
disposal of assets at amortised cost”.
Other operating income (expenses), which include the profits on investments carried at equity and other income and
expenses from continuing operations, showed a balance of -32 million euro, compared with +97 million euro for the previous
year. Within this caption, profits on investments carried at equity fell from 97 million euro to 40 million euro, while
otheroperating income/expenses amounted to -72 million euro (nil in 2021).
18
Assicurazioni Vita (formerly Aviva Vita) and Lombarda Vita were merged into Intesa Sanpaolo Vita as of 31 December 2021. Cargeas Assicurazioni
was merged into Intesa Sanpaolo Assicura, a wholly owned subsidiary of Intesa Sanpaolo Vita, as of 1 October 2022.
Report on operations – Overview of 2022
42
Also as a result of the synergies deriving from the integration of the former UBI Banca Group, operating costs decreased
further to 10,934 million euro (-46 million euro; -0.4%), despite the inflationary environment and the increased amortisation
and depreciation related to investments for growth.
More specifically, personnel expenses remained stable at
6,742 million euro, despite the reduction in the average
workforce (-2,600 people; -2.6%), having incorporated an increase
in the variable component of remuneration linked to the results
achieved by the Group, the costs related to the new long-term
incentive plans launched at the end of the first half of the year and
the disbursement of 36 million euro as per the trade union
agreement of 22 November to mitigate the impact of inflation.
Administrative expenses fell by 2.7% to 2,912 million euro. The
reduction concerned in particular property management, due to the
progressive reduction of space resulting from the plans to merge
and streamline the sales network, IT services, as a result of the
restructuring of the agreements following the integration of UBI
Sistemi e Servizi (the services company of the former UBI Group),
and legal and professional services. In contrast, amortisation and
depreciation increased to 1,280 million euro (+3%), mainly due to higher investments in technology.
As a result of the revenue and cost performance described above, the operating margin improved to 10,536 million euro
(+723 million euro; +7.4%) and the cost/income ratio decreased by almost two percentage points from 52.8% to 50.9%.
Net adjustments to loans totalled 3,113 million euro, compared to 2,766 million euro in 2021, which also included 1,615 million
euro in additional provisions to accelerate the de-risking process (+347 million euro; +12.5%).
As stated in the introduction, this caption includes (i) the valuation effects relating to the Russia-Ukraine risk totalling 1,298
million euro, of which only 9 million euro referred to the fourth quarter; and (ii) the adjustments of 1,174 million euro, of which
965 million euro in the fourth quarter, to prudentially factor in the prospective risk elements inherent in the current scenario.
These adjustments – mainly relating to the management overlays prudentially applied where greater potential vulnerabilities
were identified, but also tode-risking measures, including that relating to the real estate leasing portfolio, and the application
of a deterioration factor to the prudent macroeconomic scenario adopted for the forward-looking estimate of ECLs – were only
partially mitigated by the reduction of the management overlays to cover the vulnerability of the moratoria (721 million euro),
given the essentially complete absorption of moratoria without significant impacts on the performance of non-performing
positions. As a result of the collective assessment approach adopted, the increase in the caption was essentially concentrate d
in Stage 2 (+1,168 million euro), Stage 1 (+238 million euro), and net provisions for risks and charges for credit risk
associated with commitments and financial guarantees given (+306 million euro), against a decrease in adjustments on Stage
3 exposures (-1,341 million euro).
The cost of risk, represented as the ratio of net adjustments to net loans, consequently stood at 70 basis points (30 basis
points when excluding adjustments for the Russia-Ukraine exposure and the additional adjustments for overlays and to favour
de-risking, net of the release of generic provisions set aside in 2020 for expected COV ID-19 impacts), which compares with
59 basis points for 2021 (25 basis points when excluding the additional provisions to accelerate the de-risking process).
Other net provisions and net impairment losses on other assets for a total of 281 million euro were also recognised, down
significantly on 851 million euro recorded in the comparison year. Specifically, 175 million euro was attributable to net
impairment losses (151 million euro in 2021), including for the Russia and Ukraine risk assessments on securities and real
estate (37 million euro), while the remaining 106 million euro related to provisions for risks and charges, largely for legal
disputes and the write-off of the value of the Russian equity investment in the consolidated financial statements (80 million
euro). In 2021, the net provisions for risks and charges totalled 700 million euro, which included allocations of around 295
million euro, made in the second and fourth quarter, for risks and charges in the insurance segment (excess of claims ove r
earned premiums and estimated provision for future charges on outstanding policies).
Other income (expenses), which include realised profits (losses) on investments, equity investments and financial assets at
amortised cost other than loans, as well as income and expenses not strictly related to operations, amounted to 202 million
euro. The amount included 195 million euro of gain on the disposal of Intesa Sanpaolo Formazione in June and a one-off
contribution of 41 million euro to Intesa Sanpaolo’s empl oyees (excluding those classified as managers or having equivalent
remuneration). In 2021 this caption was 332 million euro, mainly attributable to the capital gains of 194 million euro realised
on the sale in the first quarter by Fideuram Bank Luxembourg to State Street of the custodian bank business line and of 97
million euro on the sale of the former UBI Banca acquiring business line to Nexi in October.
There was no income from discontinued operations, compared to 58 million euro recognised in 2021 following the
reclassification in the caption of the contribution of the branches sold in the first half of that year.
As a result of the accounting entries described above, gross income amounted to 7,344 million euro, up from 6,586 million
euro in 2021 (+758 million euro; +11.5%).
Taxes on income increased to 2,059 million euro, from 1,605 million euro in 2021 (+454 million euro; +28.3%), resulting in an
increase in the tax rate from 24.4% to 28%. Although deferred tax assets of 320 million euro were recognised in the fourth
quarter relating to tax losses carried forward of the former UBI Banca, the change reflected the higher taxable income for th e
year, as well as the fact that the 2021 tax expense had benefited from the tax realignment of intangible assets (around 460
million euro compared to 117 million euro in 2022).
After tax, charges for integration and exit incentives of 140 million euro were recognised, down from the previous 439 millio n
euro (which included 210 million euro related to the voluntary exits under the agreement of 16 November 2021), together with
the negative effects of purchase price allocation of 211 million euro (39 million euro in 2021).
Report on operations – Overview of 2022
43
As usual, the amount of charges aimed at maintaining the stability of the banking industry was significant and growing:
576 million euro after tax (836 million euro gross) compared to 512 million euro net (746 million euro gross) in 2021. These
charges essentially consisted of:
(i) 254 million euro net (369 million euro gross) for the ordinary contributions to the single resolution fund for the Group’s
Italian and international banks (recognised in the first quarter for the most significant portion relating to the Italian banks),
down from 262 million euro net (382 million euro gross) in 2021, which included an additional component (69 million euro
net; 103 million euro gross);
(ii) 289 million euro net (424 million euro gross) for the contribution to the deposit guarantee funds, paid in the second half of
the year for the most significant portion relating to the Group’s Italian Banks. The amount is higher than the 230 million
euro net (340 million euro gross) in 2021 due to the increased extraordinary contributions payable by the Group’s Italian
banks.
After the allocation of the net income of 4 million euro to minority
interests (net loss of 194 million euro in 2021), the consolidated
income statement for 2022 closed, as already stated, with net
income of 4,354 million euro, up 4% on 4,185 million euro posted
in 2021.
Compared to the previous quarter, the income statement for the
fourth quarter showed an increase in operating income to
5,674 million euro (+659 million euro; +13.1%), driven by the
significant growth in net interest income (+28.4% to 3,064 million
euro). The latter benefited from the positive performance of almost
all the components, particularly customer dealing and relations
with banks (as a result of the reinvestment of excess liquidity in
deposits with the ECB at steadily rising positive interest rates).
With regard to the other revenue items: net fee and commission
income increased (+3.2% to 2,222 million euro), as a result of the recovery in the management, dealing and consultancy
segment; the income from insurance business fell (-7.8% to 402 million euro), due to the reduction in the technical margin; the
profits (losses) on financial assets and liabilities designated at fair value were almost reduced to nil, reflecting the offsetting
contributions from the various components; and other operating income (expenses) remained unchanged, notwithstanding
higher profits on investments carried at equity.
Operating costs increased to 3,130 million euro (+490 million euro; +18.6%). This trend was common to all the categories:
personnel expenses (+17.7%), which incorporated both the increased weight of the variable component, and the above-
mentioned disbursement of 36 million euro, with a substantially stable average workforce; administrative expenses (+24.5%),
due to the combined effect of a degree of seasonality characterising the final months of the year, the inflationary environment,
as well as several advertising/promotional initiatives of the Parent Company typical of the autumn period; and amortisation
and depreciation (+9.9%), in relation to increased investments, mainly in intangible assets.
As a result of the revenue and cost performance described above, the operating margin rose to 2,544 million euro from
2,375 million euro in the third quarter (+169 million euro; +7.1%), while the cost/income ratio increased from 52.6% to 55.2%.
Net adjustments to loans more than doubled to 1,185 million euro, from 496 million euro in the previous three months,
including 9 million euro in Russia-Ukraine risk-related adjustments, after the 196 million euro reported in the third quarter. The
change (+689 million euro) – caused, as mentioned above, by prudential valuations aimed at capturing the risks of the
prospective scenario, also through specific management overlays, and favouring de-risking – included 237 million euro for
non-performing exposures (Stage 3), in particular for unlikely-to-pay loans; 291 million euro for performing loans (Stage 2 and
Stage 1); and 139 million euro for net provisions for risks and charges for credit risk associated with commitments and
financial guarantees given.
Other net provisions and net impairment losses on other assets increased from 45 million euro to 113 million euro, reflecting a
decrease in net provisions for risks and charges and an increase in net adjustments to other assets.
The caption other income (expenses) showed net income of 55 million euro (4 million euro in the previous three months).
As a result of the accounting entries described above, gross income in the fourth quarter decreased from 1,838 million euro t o
1,301 million euro.
The change in taxable income and the recognition of deferred tax assets of 320 million euro relating to tax losses carried
forward of the former UBI Banca gave rise to taxes on income of 50 million euro (562 million euro in the third quarter).
Net of tax, the following were recognised: charges for integration and exit incentives of 78 million euro, up from 23 million euro
in the previous three months, also due to the discounting of the exit allowances; negative effect of purchase price allocation of
59 million euro (51 million euro); charges aimed at maintaining the stability of the banking industry of 32 million euro
(266 million euro in the third quarter, which already included the estimated ordinary and extraordinary contribution to the
deposit guarantee funds of the Group’s Italian banks for 2022).
After the allocation to minority interests of net income of 12 million euro (6 million euro in the third quarter), the consolidated
income statement for the fourth quarter of 2022 closed with net income of 1,070 million euro, up 15.1% on 930 million euro for
the previous quarter.
Report on operations – Overview of 2022
44
With regard to the balance sheet aggregates, loans to customers
came to 446.9 billion euro as at 31 December 2022, from 465.9
billion euro at the end of 2021 (-19 billion euro; -4.1%). The
decrease, essentially attributable to the fourth quarter (-26.9 billion
euro, or -5.7%), was more significant for commercial banking loans
and also reflected actions to optimise the Group’s RWAs in view of
the regulatory changes (EBA Guidelines) applicable as of
1 January 2023.
More specifically, commercial banking loans fell to 419.7 billion
euro (-14.4 billion euro, -3.3% over the twelve months; -19.2 billion
euro, -4.4% over the three months) as a result of reductions in the
corporate segment, the exposures to Russian counterparties and
lease receivables, with the latter having been sold through a
securitisation completed in the fourth quarter
19
. These actions
were accompanied by a decrease in medium/long-term loans to
businesses by the Banca dei Territori and, in the short-term component, the reduction in loans of a financial nature, consisting
of repurchase agreements: in December their stock amounted to 15.4 billion euro, down 2.3 billion euro (-12.8%) over the
twelve months and 6.7 billion euro (-30.3%) over the three months.
The other components of the aggregate continued the downward trend already seen during the year, with loans represented
by securities decreasing to 6.2 billion euro (-11% compared to the end of 2021) and net non-performing loans falling to
5.5 billion euro (-22.3%). The proportion of the latter thus came to 2.3% in gross terms and 1.2% in net terms (respectively,
3.2% and 1.5% at the end of 2021)
20
. As a result of the disposals completed during the year, characterised by a coverag e
level higher than the average for the respective category, the coverage ratio for non-performing loans stood at 48.4% in
December 2022, compared to 53.6% at the end of 2021. In contrast, the coverage ratio on performing loans rose to 0.59%
(0.54% at the end of 2021).
On the funding side, direct deposits from banking business
amounted to 545.4 billion euro at the end of 2022, down by around
11.9 billion euro from 557.2 billion euro twelve months earlier
(-2.1%). This reduction reflects an ongoing trend also at industry
level. The negative trend in bonds, which fell to 52.4 billion euro
(-16.2%), due to issuance volumes that were consistently lower
than maturing stocks, was accompanied by reductions, mainly
concentrated in the fourth quarter, in other technical forms, such
as: current accounts and deposits, which decreased to 433 billion
euro (-2.5% year-on-year) but still accounted for over 79% of the
total direct deposits from banking business; certificates of deposit,
which fell to 2.1 billion euro (-28.6% over the twelve months); and
financial funding in the form of repurchase agreements and
securities lending, which more than halved to 1.3 billion euro.
Only other deposits were up at 44.2 billion euro (+36.5%), due
both to margins from customers trading in derivatives, the values of which increased as a result of the rise in interest rates,
and to the positive performance of the fair value component, almost entirely made up of investment certificates, which
increased to 16.6 billion euro (+36.6%).
Subordinated liabilities remained essentially stable at 12.5 billion euro (-1%), reflecting the combined effect of new issuances
of around 2 billion euro and maturities of 1.3 billion euro, with the remaining difference consisting of repurchases and the
effects of the end-of-period accounting valuations.
19
See in this regard the information provided in the paragraph “Highlights” below.
20
Based on the EBA definition, as at 31 December 2022 the proportion of non-performing loans was 1.9% in gross terms and 1% in net terms
(respectively, 2.4% and 1.2% in December 2021).
Report on operations – Overview of 2022
45
Direct deposits from insurance business – which also include the
technical reserves, namely the amounts owed to customers that
have taken out traditional policies or policies with significant
insurance risk – totalled 173.6 billion euro in December 2022,
compared to 204.5 billion euro in December 2021 (-30.9 billion
euro; -15.1%). The fall, which mainly occurred in the first nine
months of the year in connection with the widespread climate of
uncertainty, concerned both the main components.
The financial liabilities designated at fair value, consisting of unit-
linked products, decreased to 71.6 billion euro (-15.5%), having
been affected by the volatility of the financial markets; technical
reserves fell to 100.1 billion euro (15.4%), entirely attributable to
the life business, which account for almost all the reserves.
Only other insurance deposits, which include subordinated
liabilities, moved in the opposite direction, rising to 1.9 billion euro
(+26.3%) with the change mainly concentrated in the fourth quarter.
Indirect customer deposits, which were affected by negative performance on the markets in 2022, closed the year down at
674.7 billion euro, from 725.1 billion euro at the end of 2021 (-7%; -50.4 billion euro), despite the recovery in the fourth quarter
(+4.9%; +31.3 billion euro). This performance was common to both the macro components of the aggregate, although to
different degrees. Assets under administration fell by 1.2% to 244.5 billion euro, corresponding to 36.2% of the total. Assets
under management, on the other hand, fell by 9.9% to 430.2 billion euro, equal to 63.8% of the total. Within assets under
management, all the most significant captions were adversely affected by the situation in the markets: funds (-15% to
149.8 billion euro), technical reserves and insurance financial liabilities (-7.8% to 171.9 billion euro), portfolio management
schemes (-10.2% to 73.6 billion euro) and pension funds (-4.8% to 12 billion euro). Only relations with institutional customers
posted an increase (+12.5%, to 22.9 billion euro).
Report on operations – Overview of 2022
46
Results of the Business Units
The Intesa Sanpaolo Group organisational structure is based on six business segments: Banca dei Territori, IMI Corporate &
Investment Banking, International Subsidiary Banks, Asset Management, Private Banking and Insurance. In addition, there is
the Corporate Centre, which is responsible for guidance, coordination and control of the entire Group, as well as for the
Treasury and ALM operations.
As can be seen in the chart, the share of operating income attributable to each business segment (excluding the Corporate
Centre) confirmed that commercial banking activities in Italy continue to account for the majority (43.2% of the operating
income of the business areas), although significant contributions were also provided by corporate and investment banking
(21.2%), commercial banking activity abroad (10.9%), private banking (12.1%), insurance business (7.9%) and asset
management (4.7%).
Where necessary and where material, the division figures have been restated to reflect the changes in scope of the business
units to enable a like-for-like comparison.
In 2022, the operating income of the Banca dei Territori Division –
which oversees the traditional lending and deposit collecting
activities in Italy and the related financial services – decreased
slightly to 8,813 million euro (-0.5%). The growth in net interest
income (+0.6%), essentially due to the improvement in the margin
with customers, driven by the performance of market interest rates
in the final part of the year, only partially offset the decrease in net
fee and commission income (-1.4%), impacted by the
unfavourable market environment.
Operating costs, equal to 6,397 million euro, were down by 1.6%,
thanks to savings on personnel expenses, due to the reduction in
the workforce following the voluntary exits plan agreed, and the
containment of administrative expenses, mainly for services
rendered by third parties and legal expenses, as well as those for
services in the real estate sector. As a result of the changes
described above, the operating margin increased to 2,416 million
euro (+2.6%). Gross income also rose to 1,121 million euro
(+10.7%), having benefited from lower provisions and net impairment losses on other assets.
Net income came to 471 million euro, up 49.1% on 316 million euro for 2021.
The balance sheet figures of the Division at the end of 2022 showed a slight decrease in total intermediated volumes of loans
and deposits from the beginning of the year (-0.7%). In detail, loans to customers decreased to 247.5 billion euro (-1.2%),
mainly due to the performance of medium/long-term loans to businesses, only partly offset by the increase in loans to private
individuals.
Direct deposits from banking business were essentially stable at 291.1 billion euro (-0.2%) in relation to the declining trend in
securities issued. In contrast, amounts due to customers increased slightly due to the growth in deposits from households and
retail companies, which exceeded the fall in amounts due to businesses.
Report on operations – Overview of 2022
47
In 2022, the operating income of the IMI Corporate & Investment
Banking Division decreased to 4,333 million euro (-6.5%). The
change was mainly attributable to the Profits (losses) on financial
assets and liabilities designated at fair value, which fell to
1,047 million euro (-20.5%), due to the lower gains on the sale of
HTCS debt securities.
Net interest income was also down, to 2,132 million euro (-2.3%),
mainly due to the lower contribution from the global markets
securities portfolio. In contrast, net fee and commission income
increased by 1.9% to 1,156 million euro, due to the performance of
the commercial banking and structured finance segments, which
offset lower fee and commission income from investment banking,
negatively affected by the negative macroeconomic scenario.
Operating costs increased by 3.4% to 1,418 million euro,
attributable to administrative and personnel expenses. The above
revenue and cost performance led to a reduction of 10.7% in the
operating margin, to 2,915 million euro. As a result of the
significant net adjustments to loans posted in relation to the events regarding Russia and Ukraine, gross income fell to 1,220
million euro (-62.3%).
Net income came to 681 million euro (-69.7%).
The Division’s intermediated volumes were down compared to the beginning of the ye ar (-8%). In detail, loans to customers,
amounting to 132.9 billion euro, were down (-12.9%, or -19.6 billion euro), due to the actions aimed at lowering the Group’s
RWAs, in line with the EBA guidelines applicable as of 1 January 2023. In contrast, direct deposits from banking business
remained stable at 94.8 billion euro.
In 2022, the operating income of the International Subsidiary
Banks Division – which is responsible for the Group’s operations
on international markets through commercial banking subsidiaries
and associates that mainly carry out retail banking activities –
came to 2,227 million euro, up by 12.9% on the previous year
(+16.3% at constant exchange rates) due to the performance of all
the main components: net interest income (+19.1% to
1,592 million euro), net fee and commission income (+5.1% to
574 million euro), other net operating expenses (+78.9% to -68
million euro), and profits (losses) on financial assets and liabilities
designated at fair value (+1.6% to 129 million euro).
Operating costs of 1,118 million euro increased (+4.3%; +6.5% at
constant exchange rates) due to the changes in administrative and
personnel expenses. As a result of the above revenue and cost
trends, the operating margin increased by 23.2%, amounting to
1,109 million euro. Gross income, amounting to 779 million euro
(+15.2%), benefited from lower net provisions and net impairment
losses on other assets and higher other income, which partly offset the higher net adjustments to loans for events involving
Russia and Ukraine.
The Division closed 2022 with net income of 504 million euro (+8.9%).
The Division’s intermediated volumes grew at the end of December 2022 (+4.5%, equal to +4.1 billion euro) compared to the
beginning of the year owing to both direct deposits from banking business (+5.6%), in the component of amounts due to
customers, and loans to customers (+3.2%). Lending performance was mainly attributable to the subsidiaries operating in
Slovakia, Serbia and Croatia, while the growth in deposits was attributable to the subsidiaries operating in Croatia and
Slovakia, to a lesser extent, those in Slovenia and Serbia.
Report on operations – Overview of 2022
48
The Private Banking Division – which serves the top customer
segment (Private and High Net Worth Individuals) creating value
by offering top products and services – generated gross income of
1,555 million euro, down by 86 million euro (-5.2%) on the
previous year, which included – within other income – the gain of
194 million euro on the sale of the custodian bank business line of
Fideuram Bank (Luxembourg).
The operating margin increased by 73 million euro (+4.9%), due to
the growth in operating income (+80 million euro) – due to the net
interest income (+202 million euro) partially offset by the net fee
and commission income (-116 million euro) – only partly offset by
higher operating costs (+7 million euro).
The Division closed 2022 with net income of 1,034 million euro,
down by 3.9% compared to 2021.
As at 31 December 2022, assets gathered, which also include the
contribution of the trust mandates for SIREF Fiduciaria, amounted
to 272.5 billion euro (-21.4 billion euro since the beginning of the
year). This trend was due to the market performance that had a negative effect on assets, only partially offset by positive net
inflows. The assets under management component amounted to 150.1 billion euro (-16.7 billion euro).
The Asset Management Division – whose mission is to develop
the best asset management solutions targeted at the Group’s
customers and is present on the open market segment through the
subsidiary Eurizon Capital SGR and its investees – posted
operating income of 962 million euro in 2022, a decrease (-28.4%)
on the previous year due to the performance of net fee and
commission income (-369 million euro), mainly affected by the
decrease in performance fees collected in the period.
The performance of operating costs (-7.1%) is mainly attributable
to the reduction in personnel expenses and administrative
expenses, attributable to the effects of the synergies deriving from
the integration with Pramerica finalised at the end of June 2021.
As a result of the above revenue and cost trends, the operating
margin came to 740 million euro, down by around 33% on the
previous year. The Division closed 2022 with net income of
550 million euro (-30.1%).
As at 31 December 2022, assets managed by the Asset
Management Division amounted to nearly 304 billion euro, down by 50.2 billion euro (-14.2%) compared to the beginning of
the year. This was attributable to the impairment of assets managed relating to the negative performance of the markets.
In 2022, the Insurance Division – made up of Intesa Sanpaolo
Vita, Intesa Sanpaolo Life, Fideuram Vita, Intesa Sanpaolo
Assicura (which absorbed Cargeas Assicurazioni from
1 October 2022) and Intesa Sanpaolo RBM Salute (in addition to
Intesa Sanpaolo Insurance Agency), with the mission of
synergically developing the insurance product offer targeting
Group customers – posted income from insurance business of
1,616 million euro, up (+1.9%) on the previous year. This trend is
attributable to the increase in the technical margin, which more
than offset the reduction in the net investment result.
Gross income, amounting to 1,320 million euro, showed strong
growth (+58.1%), due to the increase in operating income, the
reduction in operating costs, notably administrative expenses, and
the performance of other net provisions that registered releases of
90 million euro in 2022 (significant provisions were made in 2021,
which included 295 million euro representing the claims in excess
of premiums accrued and the estimated future charges also
generated as a result of the greater use of benefits by insured persons on conclusion of the long periods of lockdown). Net
income came to 870 million euro (+22.2%).
The Corporate Centre posted an operating margin of 580 million euro compared to -461 million euro in the previous year,
essentially attributable to the increase in operating income, and in particular in net interest income, mainly related to the
absence of the cost of excess liquidity due to the rise in interest rates in the second half of 2022. Operating costs recorded a
decrease, attributable to synergies on administrative expenses. Gross income amounted to 609 million euro compared to a
loss of 1,924 million euro in 2021, which included significant net adjustments to loans (net recoveries in 2022), lower other
income and higher net provisions. In 2022, net income came to 244 million euro compared to -1,416 million euro in the
previous year.
Report on operations – Overview of 2022
49
Highlights
Details are provided below of the significant events during 2022 and some of the key subsequent events.
In early 2022, the final steps were implemented for the completion of the integration of UBI Banca:
– as already detailed in the 2021 Annual Report, in mid-February 2022 the project was completed for the integration of IW
Bank, which involved the partial demerger of the entire banking business line of the company and its transfer to the
parent company Fideuram - Intesa Sanpaolo Private Banking (first demerger) and, concurrently, from the latter to Intesa
Sanpaolo (second demerger, involving a set of assets consisting of performing loans of the above-mentioned banking
business line and the related funding and personnel), together with the amendment to IW Bank’s articles of association,
with the change of name to IW Private Investments SIM S.p.A. and the withdrawal of the authorisation to carry out
banking activities.
As a result of the demerger, IW Private Investments SIM is now dedicated to the investment services offering (advisory
and placement services) for which specific authorisation was obtained from Consob, by order of 1 December 2021. The
signing of the deeds took place on 11 January 2022 with legal effect from 14 February 2022 and completion of the IT
migration over the weekend of 12-13 February;
– with regard to UBI Leasing on the other hand, after having received the ECB authorisation for the merger of the company
into the Parent Company on 13 December 2021 and filed the merger plan with the Turin Company Register on
26 January 2022, as envisaged by Article 2501-ter of the Italian Civil Code, the transaction was approved by the Board of
Directors of Intesa Sanpaolo on 1 March 2022 and by the Extraordinary Shareholders’ Meeting of UBI Leasing on 2
March. The deed of merger was signed on 19 April 2022 with legal effect from 16 May and accounting and tax effects
from 1 January 2022. Given that the merger involved a wholly owned subsidiary, the merger of UBI Leasing took place in
accordance with Article 2505 of the Italian Civil Code;
– on 21 January 2022, the transfer was completed from Intesa Sanpaolo to Fideuram Bank (Luxembourg) of the total
shareholding in UBI Trustee, a company of the former UBI Banca Group based in Luxembourg and specialised in trust
services for HNWI (High Net Worth Individuals) and UHNWI (Upper High Net Worth Individuals) customers.
In addition, as announced in the previous annual report, in order to better focus and enhance the core businesses and
expertise acquired following the merger of UBI Banca – where there was already a business line set up to manage collateral
lending activities (the former “Monte dei Pegni”) – a new company has been set up, called Acantus S.p.A., authorised by
order of the Bank of Italy dated 18 January 2022 to grant loans to the public in the form of collateral loans, pursuant to Articles
106 and following of Legislative Decree no. 395/1993 (Consolidated Law on Banking).
After the signing on 20 May of the agreement with the Trade Unions, on 14 July 2022, the contribution from Intesa Sanpaolo
to Acantus of the going concern consisting of the aggregate of assets, human resources and legal relationships organised to
carry out the collateral lending business was formalised, with legal effect from 25 July. As a result of said contribution, which
was financed through a dedicated capital increase, the Transferee fully and generally took over all the Transferor’s assets
constituting the going concern, as well as all contracts (with particular reference to collateralised lending contracts). Acantus
intends to operate in line with the principles of protection of people in vulnerable conditions adopted by Intesa Sanpaolo,
offering a possibility of accessing credit when conventional banking channels do not allow it and as a safety net to curb
recourse to unconventional lending solutions. The nine branches transferred to Acantus are located in Lombardy and Lazio:
they are either dedicated structures or offices within premises where an Intesa Sanpaolo branch is already present, but with
independent entrances to ensure the full separation of banking operations from those related to collateral lending. As a result
of the contribution, the immateriality limits that previously allowed the company to be consolidated at equity
21
have been
exceeded, and therefore from the third quarter the company has come under the scope of line-by-line consolidation.
Lastly, the deed of merger by incorporation of Cargeas Assicurazioni S.p.A. – an insurance company operating in the non-life
business with which the former UBI Group had a commercial partnership – into Intesa Sanpaolo Assicura S.p.A. (both wholly
owned subsidiaries of Intesa Sanpaolo Vita S.p.A.) was signed on 28 September 2022. The merger took legal effect from
1 October, with accounting and tax effects from 1 January 2022. The transaction, authorised by IVASS with order of 22 June
(published on 29 July 2022), was approved by the two Boards of Directors on 22 June. As a result, as of 1 October all the
insurance contracts taken out by Cargeas Assicurazioni are managed by Intesa Sanpaolo Assicura, with their characteristics
remaining unchanged.
The merger of VUB Leasing A.S. (VUBL) into its parent company Vseobecna Uverova Banka A.S. (VUB), Group Companies
both operating in Slovakia, authorised by the ECB on 12 November 2021, became effective on 1 January 2022. The
transaction involved the demerger of VUBL’s finance lease and consumer credit portfolio and its transfer, at the same time as
the merger into the parent company VUB, while VUBL’s operating lease portfolio was transferred to a newly created joint
stock company, called VUB Operating Leasing A.S., which became operational on 1 January 2022.
On 11 January 2022, the partnership announced in August 2021 between Reyl & Cie S.A. and 1875 Finance Holding A.G.
(1875 Finance), a multifamily office and independent asset manager for private and institutional customers based in Geneva,
was finalised following the authorisations received from the Swiss (FINMA) and Luxembourg (CSSF) supervisory authorities.
The operation was completed through the acquisition by Reyl of a 40% interest in 1875 Finance. The partnership allows the
two companies to create opportunities for transversal development and consequently play an active role in accelerating the
consolidation of the asset management industry in Switzerland.
Within the partnership established in 2021 between Fideuram - Intesa Sanpaolo Private Banking and the Swiss group Reyl
(details of which are provided in the 2021 Annual Report), in January 2022, after having received clearance from the Swiss
supervisory authority FINMA, the merger of Intesa Sanpaolo Private Bank (Suisse) Morval into Reyl & Cie S.A. took place,
21
As at 31 December 2021, the company was called New CO 123 S.p.A.
Report on operations – Overview of 2022
50
with legal effectiveness and accounting and tax effects from 1 January 2022. The merged entity kept the name of the
absorbing company Reyl & Cie S.A.
As already mentioned in the 2021 Annual Report, the Act containing the Government Budget for the year 2022 and the Multi-
year Budget for the three-year period 2022-2024 amended the provisions on the capital of the Bank of Italy, establishing that
each investor cannot, directly or indirectly, have a holding in excess of 5% – compared to the previous limit of 3% – and that,
as before, any holdings in excess of that limit do not give entitlement to economic or equity rights. Partly as a result of this
change in the law, the sale of holdings accelerated significantly in January and February 2022: a total of 23 transactions were
completed in the first two months of the year, resulting in the sale of additional holdings, representing 9.9% of the capital, for a
price corresponding to the book value (aligned to the nominal value of 25 thousand euro per unit).
At the end of the above-mentioned sales, the Intesa Sanpaolo Group came to hold a total of 15,000 units, equal to exactly 5%
of the capital of the Bank of Italy, in line with the maximum limits set out by law, for a value of 375 million euro.
On 4 February 2022, the 2022-2025 Business Plan was approved and presented to the financial community. The related
documentation (press release and presentation) is available on the Group’s website, in the Investor R elations section. The
specific paragraph below provides a description of the implementation activities carried out during 2022.
On 15 February 2022, Intesa Sanpaolo and Nextalia SGR, on behalf of the Nextalia Private Equity Fund, entered into a
binding agreement to create a new company, which will be a leader in education and digital learning, leveraging on Intesa
Sanpaolo’s innovative learning infrastructure. The company, named Digit’Ed, intends to target both the business segment, i.e.
large companies, small and medium-sized enterprises, public sector and professional associations, and the consumer
segment, also in collaboration with prestigious Italian and international institutions, responding to the growing needs of th e
training market, linked to digital transformation, the development of know-how and re-skilling.
The binding agreement provided for the transfer by Intesa Sanpaolo of Intesa Sanpaolo Formazione, the Group company
focused on training initiatives aimed at the growth of enterprises and local economies, in favour of which – ahead of the
aforementioned transfer – it was also envisaged that the Parent Company would transfer a specific business line dedicated to
the design and provision of training services and products for Group employees based in Italy.
The agreement is part of an overall operation in which the newco Digit’Ed (controlled by Nextalia Holdco, a company wholly
owned by the Nextalia Private Equity Fund) will be an aggregator of the best entities operating in the sector.
Following the signing, on 17 June, of the agreement with the trade unions to govern the transfer of Intesa Sanpaolo
Formazione’s personnel and the related Intesa Sanpaolo business line, on 22 June 2022, the Intesa Sanpaolo business line
dedicated to the design and provision of training services for Group employees was transferred to Intesa Sanpaolo
Formazione.
On 29 June 2022 – following the outcome of the Bank of Italy’s authorisation process for the outsourcing, the above-
mentioned trade union procedure and the completion of the IT activities for the transfer and the sale – the first phase of the
transaction was completed, with the sale of Intesa Sanpaolo Formazione to Altaformazione, previously acquired by Digit’Ed.
The equity investment in Intesa Sanpaolo Formazione was then derecognised, with the recording of a gain in the consolidated
income statement of around 195 million euro gross of tax. Also on 29 June, Intesa Sanpaolo, in keeping with the aims of the
2022-2025 Business Plan, reinvested part of the consideration received for the sale of Intesa Sanpaolo Formazione into the
capital of Digit’Ed, acquiring a 20% holding. The equity interest in Digit’Ed has been classified as an investment in an
associate subject to significant influence in accordance with IAS 28.
Alongside the corporate transactions described above, agreements were signed to initiate a multi-year commercial
partnership, starting from the closing date, under which Intesa Sanpaolo Formazione will provide, among other things, trainin g
content and services to Intesa Sanpaolo and the Group companies.
On 26 April 2022, the transaction was completed for the transfer to Mooney S.p.A. of the Banca 5 business line dedicated to
the production of products/services distributed by the Mooney Group, as part of the strategic partnership agreements in place
since 2019 (see in this regard the details provided in the Report on operations of the 2021 Consolidated Financial
Statements). The shares of the transferee company Mooney were transferred to Mooney Group S.p.A. on 3 May 2022, with
settlement through the issuance of a “Pay in kind (PIK)” credit note to Banca 5. A gain, gross of the related tax effect, of
around 12 million euro was recognised against the derecognition of the business line transferred and the fair value recognition
of the credit note.
Following the agreement signed in December 2021, and already mentioned in the 2021 Annual Report, on 14 July 2022
Intesa Sanpaolo, through Banca 5 S.p.A., and Enel, through its wholly owned subsidiary Enel X S.r.l., finalised the acquisition
from Schumann Investments S.A., a company controlled by the international private equity fund CVC Capital Partners Fund
VI, of 70% of the share capital of Mooney Group S.p.A., the holding company of a fintech group operating in proximity banking
and payments services, established in 2019 in partnership with the CVC fund through the Sisal Group.
More specifically, after having obtained the required authorisations – including from the Presidency of the Council of Ministers,
in accordance with the golden power legislation, the Antitrust authorities and the Bank of Italy – Enel X acquired 50% of
Mooney Group’s share capital, whereas Banca 5, which previously owned a 30% stake, increased its investment to 50%,
placing Mooney under the joint control of both parties.
As part of the overall project, on 25 July 2022 Mooney Group acquired a business line consisting of all of Enel X’s financial
services operations in Italy, marketed under the Enel X Pay brand. The sale of the business line was accompanied by a
partial transfer of credit notes between the two shareholders of Mooney Group, which brought the exposure of the two Groups
to an equal level.
Through the equal partnership of the two Groups and the integration of Mooney Group with the above-mentioned set of Enel
Group companies operating in the payments and financial services market, a joint European-based fintech has been created
that will help strengthen Mooney Group’s growth strategy, with the possible identification of new initiat ives and the
consolidation of its position in the payments market.
Report on operations – Overview of 2022
51
The transaction involved a total investment for the ISP Group, for the acquisition of the capital and rebalancing of the cred it
notes, of around 100 million euro.
On 29 April 2022, the Shareholders’ Meeting of Intesa Sanpaolo was held, validly constituted, on single call, to pass
resolutions as those in attendance through the appointed representative – in accordance with Article 106, paragraph 4, of Law
Decree 18 dated 17 March 2020, converted by Law 27 dated 24 April 2020, as subsequently amended – counted 2,901
holders of voting rights attached to 10,884,970,586 ordinary shares without nominal value equal to 56.02013% of the share
capital. The Shareholders’ Meeting voted in favour of all the items on the agenda.
In the ordinary session, the resolutions concerned the 2021 Financial Statements, the distribution of dividend and part of th e
Share Premium Reserve; the appointment of the members of the Board of Directors and of the Management Control
Committee for the financial years 2022-2023-2024; the remuneration policies and incentive plans; and own share purchases
for annulment (buyback), to serve the incentive plans and for trading purposes.
In the extraordinary session, the resolutions concerned the annulment of own shares without reducing the share capital and
the consequent amendment of Article 5 (Share Capital) of the Articles of Association, as well as the mandate to the Board of
Directors to approve the share capital increases without payment and with payment to service the approved incentive plans.
The contents of the individual resolutions and the related majority of votes by which they were passed are set out in detail in
the press release published on the Group’s website www.group.intesasanpaolo.com
22
.
The new Board of Directors of Intesa Sanpaolo, in its first meeting held on 29 April, unanimously appointed Carlo Messina as
Managing Director and CEO, conferring on him the powers necessary and appropriate to ensure consistent management of
the Company.
On 6 May 2022, the Board by unanimous resolution – except for the abstention of the members involved – established the
Nomination Committee, the Remuneration Committee, the Risks and Sustainability Committee and the Committee for
Transactions with Related Parties, whose powers and responsibilities are in accordance with the provisions of the Articles of
Association and the supervisory regulations in force. All the Committees are chaired by independent Directors. The names of
the members and related information are available in the section Governance, Committees of the Board of Directors, of the
Group’s website.
With specific regard to the delegated powers approved by the Shareholders’ Meeting of 29 April 2022 for share capital
increases to serve the incentive plans authorised in the ordinary session, it should be noted that, in order to enhance the role
of the Group’s people as key enablers in the achievement of the 2022-2025 Business Plan’s objectives, through a tool
facilitating a broad-based shareholding in the capital of the Bank, on 15 February the Parent Company’s Board of Directors
resolved to submit to the Shareholders’ Meeting the following two long-term incentive plans, based on financial instruments of
Intesa Sanpaolo S.p.A. and reserved for all Group employees:
– the 2022-2025 Performance Share Plan, reserved for Group’s Management, which provides for the assignment of newly
issued ordinary shares of Intesa Sanpaolo deriving from a share capital increase without payment, subject to
performance conditions in relation to specific key objectives to be achieved over the course of the Business Plan;
– the 2022-2025 Leveraged Employee Co-Investment Plan LECOIP 3.0, reserved for employees of the Group in Italy,
belonging to the Professional cluster, which provides for: i) the assignment of newly issued ordinary shares of Intesa
Sanpaolo deriving from a share capital increase without payment (Free Shares) for an amount equivalent to the Variable
Result Bonus advance for 2022 (employees may opt to receive the advance in cash and, therefore, not to participate in
LECOIP 3.0); ii) the assignment, also free of charge, of additional newly issued Intesa Sanpaolo ordinary shares deriving
from the same capital increase without payment (Matching Shares) based on the role held and seniority; iii) the
subscription, in set proportions with respect to the free shares received, of newly issued Intesa Sanpaolo ordinary shares
deriving from a share capital increase with payment reserved for employees, at a discounted issue price (Discounted
Shares) against market value.
On 13 June 2022, the period ended for exercising the right to withdraw from the subscription to the offer, expired on
30 May 2022, of the Certificates issued by J.P. Morgan and reserved for Professionals employed by the Group in Italy under
the 2022-2025 LECOIP 3.0 Plan. A total of 45,629 employees, corresponding to 66.43% of those eligible, have participated in
LECOIP 3.0 for a countervalue of the assigned shares (Free Shares and Matching Shares) of 139,931,221 euro.
On 21 June 2022, Intesa Sanpaolo’s Board of Directors exercised the powers granted to it by the Shareholders’ Meeting to
carry out the capital increases, for the benfit of the Group’s employees, functional to implementing the 2022-2025 LECOIP 3.0
Plan
23
.
On 30 June 2022, on the basis of the arithmetic average price of the Intesa Sanpaolo ordinary shares recorded on each
working day in the preceding 30 calendar days – equal to 1.9080 euro – a total of 33,745,462 Free Shares, 39,591,828
Matching Shares, and 386,972,658 Discounted Shares subscribed were assigned to the Group’s employees. Consequently,
73,337,290 Certificates issued by J.P. Morgan, i.e. financial instruments corresponding to the abovementioned sum of Free
Shares plus Matching Shares, were assigned to Group employees.
The following was also carried out on the same day:
22
The Articles of Association with the amendments approved by the Extraordinary Shareholders’ Meeting were registered in the Turin Company
Register on 7 June 2022, in relation to the mandates to the Board of Directors to approve the increases of share capital functional to implementing the
Long-Term Incentive Plans, and on 1 July 2022, with regard to the annulment of own shares, once the European Central Bank had issued the
authorisations necessary to initiate the procedure for registration in the company register and proceed with the purchase of own shares associated with
the annulment.
23
More specifically:
- a share capital increase without payment for a maximum amount of 350,000,000 euro, through the issuance of a maximum number of 160,000,000
Intesa Sanpaolo ordinary shares;
- a share capital increase with payment, with the exclusion of the option right pursuant to Article 2441, paragraph 8, of the Italian Civil Code, for a
maximum amount, net of a discount at issuance, of 850,000,000 euro, through the issue of a maximum number of 387,000,000 Intesa Sanpaolo ordinary
shares, applying a maximum discount of 19.5% to the stock market price calculated as the average of the prices recorded in the 30 days prior to the
issue date.
Report on operations – Overview of 2022
52
– the execution of:
o a share capital increase without payment – pursuant to Article 2349, paragraph 1, of the Italian Civil Code – for
83,200,000 euro, through the issuance of 160,000,000 Intesa Sanpaolo ordinary shares, using the Extraordinary
Reserve;
o a share capital increase with payment, with the exclusion, pursuant to Article 2441, paragraph 8 of the Italian Civil
Code, of the option right in favour of the Intesa Sanpaolo Group’s employees, for an amount of
201,225,782.16 euro, through the issuance of 386,972,658 Intesa Sanpaolo ordinary shares at a price of 1.5671
euro (applying a discount of 17.867% to the abovementioned arithmetic average of the price recorded in the
preceding 30 calendar days), of which 0.52 euro to be allocated to share capital and 1.0471 euro to share premium;
– for the Performance Share Plan, the assignment of rights to the managers that, at the end of the Plan, will accrue in
Intesa Sanpaolo shares, provided that the conditions laid down in the Plan’s regulations are met and in compliance with
the number and value limits established by the Shareholders’ Meet ing of 29 April 2022.
A total of 546,972,658 Intesa Sanpaolo ordinary shares were therefore issued without nominal value, having regular
entitlement as coupon 47. Intesa Sanpaolo’s share capital consequently increased from 10,084,445,147.92 euro (represent ed
by 19,430,463,305 ordinary shares) to 10,368,870,930.08 euro, divided into 19,977,435,963 ordinary shares without nominal
value
24
.
The share capital increase with payment led to an increase in the Intesa Sanpaolo Group’s consolidated shareholders’ equity
of 606.4 million euro, of which 201.2 million euro in share capital and 405.2 million euro in share premium reserve.
With regard to the purchase of own shares for annulment (buyback) – approved by the Shareholders’ Meeting of 29 April
2022 and authorised by the ECB through the notification received on 24 June 2022 – the Board of Directors resolved, on 24
June 2022, to execute the programme for an initial amount of 1,700 million euro and to defer to a subsequent date the
decisions regarding the remaining authorised amount (the authorisation concerned a maximum total outlay of 3,400 million
euro for a number of Intesa Sanpaolo ordinary shares not exceeding 2,615,384,615).
The execution of the programme, entrusted to a third-party intermediary engaged, with full independence and without any
involvement of the Intesa Sanpaolo Group, to carry out the transactions on the regulated market Euronext Milan managed by
Borsa Italiana, took place in the period from 4 July to 11 October 2022.
Specifically, from 4 to 29 July 2022, Intesa Sanpaolo purchased 322,814,884 shares, at an average price of 1.6865 euro per
share, for a total countervalue of 544,435,613.66 euro. The purchased shares, without nominal value, were annulled on
3 August 2022 with no reduction in the share capital. As a result, the share capital remained unchanged at 10,368,870,930.08
euro, while the number of shares decreased from 19,977,435,963 to 19,654,621,079.
From 1 August to 2 September, the purchases involved 387,343,682 Intesa Sanpaolo ordinary shares without nominal value,
at an average price of 1.7594 euro, for a total countervalue of 681,490,110.75 euro. The related annulment took place on
7 September 2022. Also in this case, the share capital remained unchanged at 10,368,870,930.08 euro, while the shares into
which it is divided decreased from 19,654,621,079 to 19,267,277,397.
Lastly, during the period from 5 September to 11 October 2022, a total of 278,474,237 ordinary shares without nominal value
were purchased at an average price of 1.7024 euro, for a total value of 474,074,275.03 euro. These shares were annulled on
14 October 2022
25
. While the share capital remained unchanged at 10,368,870,930.08 euro, the number of shares went from
19,267,277,397 to 18,988,803,160.
Overall, from the launch of the programme on 4 July to its closure on 11 October 2022, Intesa Sanpaolo purchased
988,632,803 shares, equal to around 4.95% of its pre-annulment share capital, at an average purchase price of 1.7195 euro
per share, for a total countervalue of 1,699,999,999.44 euro.
On 13 February 2023, the execution was initiated of the programme of purchase of own shares for annulment (buyback) for
the remaining maximum outlay of 1,700 million euro and for a number of shares not exceeding 1,626,751,812, as approved
by the Board of Directors of Intesa Sanpaolo on 3 February 2023. The programme will be concluded by 12 May 2023, in
compliance with the terms approved at the Intesa Sanpaolo Shareholders’ Meeting of 29 April 2022, which establish that the
purchase of own shares and their annulment should take place by the ex-right date of the dividend related to the financial
statements for the year ending 31 December 2022, namely by 22 May 2023.
From 12 to 14 September 2022, on the other hand, a share buyback programme was implemented to service plans for the
assignment of Intesa Sanpaolo ordinary shares free of charge to employees and Financial Advisors of the Group
26
. The
purchases relate to: (i) the Intesa Sanpaolo Group share-based incentive plan for 2021 reserved for Risk Takers who accrue
a bonus in excess of the so-called “materiality threshold”
27
, as well as for those who are paid a “particularly high” amount
28
,
and for those who, among Middle Management or Professionals that are not Risk Taker s, accrue “relevant bonuses”
29
; (ii) the
Privredna Banka Zagreb (PBZ) Group share-based incentive plan for 2021 and the outstanding portions in financial
instruments deriving from previous plans; (iii) the long-term incentive plans reserved for the Financial Advisors of the
Networks of the Fideuram - Intesa Sanpaolo Private Banking Group. The programme was implemented also in order to grant,
when certain conditions occur, severance payments upon early termination of employment.
In the three days during which the programme was executed, a total of 46,216,652 Intesa Sanpaolo ordinary shares were
purchased, through the IMI Corporate & Investment Banking Division. These represent around 0.24% of the share capital of
the Parent Company at the date. The average price was 1.8932 euro per share, for a total countervalue of 87,496,321.48
24
At the same time, the related formalities were completed at the Turin Company Register, with the filing of the share capital increase certificate (1 July)
and the registration of the Articles of Association with the new share capital composition (5 July 2022).
25
The Articles of Association with the new composition of the share capital following the annulment were filed with the Turin Company Register on
19 October 2022.
26
During the period of execution of the programme, the purchases of own shares for annulment (buybacks) were suspended.
27
Equal to 50 thousand euro or one third of the total remuneration (unless otherwise provided for by specific local regulations).
28
Pursuant to the Group Remuneration and Incentive Policies, for the three-year period 2019-2021 a variable remuneration exceeding 400 thousand
euro constitutes a “particularly high” amount.
29
Exceeding 80 thousand euro (unless otherwise provided for by specific local regulations) and 100% of the fixed remuneration.
Report on operations – Overview of 2022
53
euro. The Parent Company purchased 12,967,930 shares at an average price of 1.8938 euro per share, for a countervalue of
24,558,315.42 euro.
The transactions were executed in compliance with provisions included in Articles 2357 and following and 2359-bis and
following of the Italian Civil Code and within the limits determined in the resolutions passed by the competent corporate
bodies. Specifically, in the case of the Parent Company Intesa Sanpaolo, the transactions were executed in accordance with
the terms approved by the Shareholders’ Meeting of 29 April 2022.
Pursuant to Article 132 of the Consolidated Law on Finance and Article 144-bis of the Issuers’ Regulation and subsequent
amendments, purchases were executed on the regulated market Euronext Milan managed by Borsa Italiana in accordance
with trading methods laid down in the market rules for these transactions.
Moreover, purchases were arranged in compliance with the conditions and the restrictions under Article 5 of Regulation (EU)
no. 596/2014 of the European Parliament and of the Council of 16 April 2014, and Articles 2, 3, and 4 of Commission
Delegated Regulation (EU) 2016/1052 of 8 March 2016.
The number of shares purchased daily did not exceed 25% of the daily average volume of the Intesa Sanpaolo ordinary
shares traded in August 2022, which was equal to 108.1 million shares, and 15% of the volume traded on the Euronext Milan
market on each of the days when purchases were executed – in accordance with the constraint added in the programme to
the above-mentioned regulatory conditions and restrictions.
In line and in keeping with the transactions carried out in 2020 and 2021 regarding the acquiring businesses of Intesa
Sanpaolo and UBI Banca, in 2022 the Group undertook a project initiative aimed at expanding the strategic partnership with
the Nexi Group at international level, through the transfer to Nexi Payments of the merchant acquiring business line of the
Croatian subsidiary PBZ Card. Similarly to the two previous transactions, the agreement provides for: i) the sale of the PBZ
Card acquiring business line (including all agreements with the Croatian merchants) to the Nexi Group; and ii) the
establishment of a commercial partnership between PBZ Group and the buyer on an exclusive basis in line with the terms of
the transactions concluded in Italy, starting in 2022 and lasting for 25 years. The transaction is due to be completed by the
first half of 2023.
As a result of the changes in the market conditions and in the strategic orientation within the ISP Group, it was decided to
reorganise the activities carried out by several companies.
On 28 June, the documents (merger plans and explanatory reports) relating to the following corporate transactions were
published on the authorised storage mechanism and on the Group’s website:
– merger by incorporation of Intesa Sanpaolo Agents4You S.p.A. into Intesa Sanpaolo S.p.A.
This is a company of the former Banca Popolare di Vicenza Group dedicated to financial agency activities pursuant to
Article 128-quater of the Consolidated Law on Banking, without its own personnel. In view of the termination of the
agency agreement that the company had in place with the Parent Company and the consequent termination of the
company’s mission, as part of the integration of the former UBI Banca Group, a reorganisation of the marketing activities
was undertaken with the gradual convergence of the Agents4You network of agents into Prestitalia. The transaction,
which received ECB authorisation on 27 July 2022, was approved by the Board of Directors of Intesa Sanpaolo on 13
September and by the Extraordinary Shareholders’ Meeting of Intesa Sanpaolo Agents4You on 14 September. The deed
of merger was signed on 18 October 2022 with legal effect from 1 November and accounting and tax effects from 1
January 2022. As a merger involving a wholly owned company, it was carried out in the simplified manner provided for in
Article 2505 of the Italian Civil Code;
– merger by incorporation of Intesa Sanpaolo Smart Care S.r.l. into Intesa Sanpaolo S.p.A.
This is a company specialising in the provision of ancillary services for several insurance products offered by Group
companies. It has no employees but operates with staff seconded from Intesa Sanpaolo. Prior to the merger, which
received the ECB authorisation on 15 August 2022, the following were carried out: (i) the assumption by ISP of the
interest held by Intesa Sanpaolo Vita S.p.A. (48.99%, against the 51.01% held directly by ISP), by notarial deed dated 30
September 2022 recorded in the Torino Company Register on 5 October, as well as (ii) the sale by the merged company
of capital assets and technological devices to Intesa Sanpaolo Assicura S.p.A. (a company of the Insurance Division),
which will carry out the new operations, with the transaction taking effect from 31 October 2022.
On 1 September, the merger plan was filed with the Torino Company Register. The transaction was approved by the
Board of Directors of Intesa Sanpaolo and the Shareholders’ Meeting of Intesa Sanpaolo Smart Care on 17 October
2022. The deed of merger was signed on 9 November 2022, with legal effect from 21 November and accounting and tax
effects from 1 January 2022. Given that this transaction also involved a wholly owned company, the merger took place in
the simplified manner provided for in Article 2505 of the Italian Civil Code.
Also with a view to the structural streamlining of the Group:
– on 29 June 2022, the respective Boards of Directors approved the plan for the merger by incorporation of Sanpaolo
Invest SIM S.p.A., a company specialising in financial advisory services and the distribution of financial services and
products through a network of advisors operating out-of-branch, into the parent company Fideuram - Intesa Sanpaolo
Private Banking S.p.A., a transaction that, in addition to cost savings, is expected to generate significant synergies
between the sales networks of the two entities. The European Central Bank notified its authorisation of the transaction on
9 September 2022. The one shareholder’s extraordinary meetings of the two companies approved the merger on 3
October. The deed of merger was signed on 2 November, with effect from 5 December 2022 and, as a merger involving
a wholly owned company, it was carried out in the simplified manner provided for in Article 2505 of the Italian Civil Code;
– on 20 December 2022, the Board of Directors of Intesa Sanpaolo approved the merger by incorporation of the wholly
owned subsidiary Intesa Sanpaolo Provis S.p.A., on the basis of the merger plan filed with the Torino Company Register,
pursuant to Article 2501-ter of the Italian Civil Code, on 18 November. The extraordinary shareholders’ meeting of the
merged company also adopted a similar resolution on 20 December. The latter is a registered financial intermediary
pursuant to Article 106 of Legislative Decree 385 of 1 September 1993 (Consolidated Banking Law), which acts as the
Group’s specialist centre for the management of legal lease credit recovery procedures and the value enhancement and
sale of real estate and movable assets underlying terminated leases. The transaction was cleared by the Bank of Italy on
Report on operations – Overview of 2022
54
26 October and obtained authorisation from the European Central Bank on 7 November 2022. The deed of merger is due
to be signed by mid-April 2023, with effect by that month. As a merger involving a wholly owned company, it will be
carried out in the simplified manner provided for in Article 2505 of the Italian Civil Code.
On 30 June 2022, Fideuram - Intesa Sanpaolo Private Banking, through its Luxembourg subsidiary Fideuram Bank
(Luxembourg) S.A., completed the acquisition of 100% of Compagnie de Banque Privée Quilvest S.A. (CBPQ) – a
Luxembourg-based private bank, wholly owned by the holding company Quilvest Wealth Management, with branches in
Belgium, which serves a solid base of European and non-European High Net Worth Individuals – for a price of 184 million
euro.
This transaction, which follows on from the agreement signed on 17 September 2021, has led to the creation of an additional
European hub of the Private Banking Division, alongside Reyl & Cie in Switzerland, for European and international customers,
which will enable the development of private banking activities in areas with promising growth prospects, such as Luxembourg
and Belgium.
Following the approval by the European Central Bank of 30 November 2022, on 1 January 2023 the Extraordinary
Shareholders’ Meetings of the two companies approved the merger by incorporation of Fideuram Bank (Luxembourg) into
CBPQ, which took the name Intesa Sanpaolo Wealth Management, with statutory and accounting effects on the same date.
The new company has 200 employees and serves around 3,700 European and non-European HNWI customers, with over 10
billion euro of assets under management. It will also rely on an Italian and international management team, with solid
expertise in offering wealth management services to international investors.
In addition, during the second quarter of 2022, the Group made use of the provisions set out in Article 15 of Law Decree
no. 185/2008 and realigned the tax values of certain intangible assets recognised as a result of extraordinary transactions and
corporate reorganisations, as well as the acquisition of controlling interests, carried out during 2021. These realignments
generated a benefit to the consolidated income statement in the second quarter totalling 117 million euro, of which: 43 million
euro attributable to Intesa Sanpaolo (in relation to the merger of UBI Banca); 13 million euro to Intesa Sanpaolo Private
Banking (in relation to the demerger from UBI Banca of the “Top Private” business line); 14 million euro to Eurizon Capital
(following the merger of Pramerica SGR); 20 million euro to Fideuram - Intesa Sanpaolo Private Banking (in relation to the
acquisition of the controlling interest in Reyl & Cie); and 27 million euro to Intesa Sanpaolo Vita (as a result of the acquisition
of 100% of Cargeas).
The higher values of intangible assets recognised in the annual financial statements as a result of an extraordinary
transaction (business contribution, merger or demerger) may be subject to tax realignment pursuant to Article 15, paragraph
10 of Law Decree no. 185/2008, subject to the payment of a 16% substitute tax, made as a single payment by the deadline
for the payment of the final income taxes for the year in which the transaction was carried out (2021), therefore by 30 June
2022. The substitute tax, like the direct taxes it replaces, is not deductible for the purposes of IRES (corporate income tax),
IRAP (regional tax on business activities) and any additional taxes. The effects of the realignment start from the tax period in
which the substitute tax is paid (i.e., from 2022). The deduction of the amortisation of the intangible assets subject to
realignment is made starting from the tax period following the period in which the substitute tax is paid (i.e., in the present
case, from 2023).
Unlike the tax realignment pursuant to Article 110, paragraphs 8 and 8-bis, of Law Decree no. 104/2020, the realignment rules
applied do not require the establishment of any tax suspension constraint over the pre-existing reserves and, therefore, do not
require any shareholders’ meeting resolution.
In the insurance segment, on 19 July 2022, the agreement was announced through which Intesa Sanpaolo Vita and Reale
Group entered into a partnership that envisages the transfer of a business line of Blue Assistance – Reale Group’s service
company specialising in healthcare assistance – to the new company InSalute Servizi. The latter, which will be 65% owned by
Intesa Sanpaolo Vita and 35% by Blue Assistance, will operate within Intesa Sanpaolo’s Insurance Division and will be
dedicated to the management of claims and the development of a network of affiliated healthcare facilities (TPAs - Third Party
Administrators) in support of Intesa Sanpaolo RBM Salute’s insurance offer. The closing of the transaction i s expected to take
place during 2023, subject to obtaining the necessary authorisations
30
.
InSalute Servizi will be engaged in the management of health and welfare services for Intesa Sanpaolo’s captive customers,
supplementary health funds, welfare funds, mutuals, companies and other entities operating in the supplementary health and
welfare sectors, confirming the strategy of Intesa Sanpaolo’s Insurance Division and its development plan for health
insurance, launched in 2020 with the acquisition of RBM Salute. In parallel with this new joint venture, the service company of
the Reale Group will continue its activities with the Intesa Group insurance companies and the non-captive business, without
any change in commitment to the planned strategies.
On 3 August 2022, Intesa Sanpaolo carried out the sale of its 25% equity investment in Innolva S.p.A. (a 75% subsidiary of
Tinexta) to a leading global company specialising in credit and business information systems. The equity investment had been
acquired in return for the transfer, into Innolva, of the equity investment in Intesa Sanpaolo Forvalue S.p.A. (renamed
Forvalue), as part of the strategic partnership launched in 2021 with the Tinexta Group, a leading company in Digital Trust,
Cyber Security and Innovation & Marketing services, listed on the Euronext Star Milan segment organised and managed by
Borsa Italiana (see in this regard the details provided in the Report on operations of the 2021 Consolidated financial
statements).
In order to ensure that Intesa Sanpaolo maintained control over the operations of Forvalue, which remained in the Tinexta
Group as a result of its transfer to the subsidiary Warrant Hub, specialised in advising businesses on subsidised finance
transactions and support for innovation and development projects, Intesa Sanpaolo agreed with Tinexta to reinvest the
amount received from the sale of the equity investment in Innolva to acquire a minority interest in Warrant Hub, Forvalue’s
30
The company, which was established in 2022 with the original name of Newco TPA S.p.A., in the third quarter, ahead of the finalisation of the
partnership agreement, changed its name to InSalute Servizi. It is included in the scope of line-by-line consolidation as it is wholly owned by Intesa
Sanpaolo Vita.
Report on operations – Overview of 2022
55
new parent company. At the end of the transaction, completed on 10 November 2022, Intesa Sanpaolo held a 12%
investment in the share capital of Warrant Hub, classified under interests subject to significant influence pursuant to IAS 28.
After the banking licence was obtained, the third quarter saw the completion of the formal steps and activities for the
operational launch, in early October, of Alpian S.A., Switzerland’s first digital private bank, based in Geneva, developed to
provide private banking and financial advisory services for mass affluent customers exclusively through a mobile service. This
is a hybrid model that combines a secure, state-of-the-art banking experience with the support of Alpian’s financial advisors,
giving mass affluent customers access to a service normally reserved for customers of a traditional private bank.
The start-up, which is 14.9% owned by Fideuram - Intesa Sanpaolo Private Banking S.p.A. and 12.8% by Reyl & Cie S.A.,
which is in turn 69% owned by Fideuram ISPB, has entered into a strategic partnership with the latter to accelerate the
development of the digital wealth management offering for its customers.
On 28 September 2022 – following the authorisation received from the ECB on 16 September – the plans were filed with the
Torino Company Register and the Treviso-Belluno Company Register for the partial demerger of Intesa Sanpaolo in favour of
the wholly owned vehicle companies Tatooine LeaseCo S.r.l. and Dagobah LeaseCo S.r.l., approved by the Board of
Directors of Intesa Sanpaolo on 21 June 2022 and by the boards of directors of the two companies on 23 June 2022.
The demergers form part of two securitisations involving receivables arising from finance lease agreements mainly classified
as bad loans, together with the immovable and movable property and legal asset and liability relationships subject
to/associated with those finance lease agreements.
These are simplified partial demergers – pursuant to Article 2505, paragraph 2, and Article 2506-ter, last paragraph, of the
Italian Civil Code – involving a set of specific financial assets and liabilities related to the securitisations, immovable and
movable property subject to the lease agreements giving rise to the receivables of the demerged company, and all the
connected legal relationships, not included in the securitisation. The two transactions were approved on 17 October 2022 by
the Board of Directors of Intesa Sanpaolo, and on 18 October 2022 by the Shareholders’ Meetings of the two beneficiary
companies.
The demerger deeds were signed: i) for the demerger to Dagobah LeaseCo, on 22 November, effective from 28 November,
also for accounting and tax purposes; and ii) for the demerger to Tatooine LeaseCo, on 2 December, effective from 12
December 2022, also for accounting and tax purposes.
On 24 October 2022, the Slovak subsidiary Vseobecna Uverova Banka A.S. (VUB) completed the purchase of 5.26% of VUB
Generali Dochodkova Spravcovska Spolocnost A.S. (VUB Generali), a joint venture established in 2004 with the Generali
Group to develop the offer of voluntary contribution pension funds in Slovakia. Given that, over the years, VUB Generali had
pursued its development mainly through the distribution activities of VUB and the associated business generated by the
network of agents already partnered with VUB for the dealing in other banking products, it was decided to discontinue the joint
venture by acquiring a further stake in the company from Generali in order take control of the company. In addition to the
purchase of a 5.26% interest in the share capital, the transaction was structured with a cross put and call option mechanism
that, if exercised, will allow VUB to increase its interest up to 100% of the share capital of VUB Generali.
Through an accelerated bookbuilding reserved for qualified Italian and foreign institutional investors
31
, on 14 and 15
November 2022 Intesa Sanpaolo completed the sale of all the approximately 67 million shares, listed on Euronext Milan,
constituting the 5.1% stake held in Nexi and classified under financial assets measured at fair value through other
comprehensive income (FVOCI) in accordance with IFRS 9. In the transaction, ISP was supported by the IMI CIB Division, as
bookrunner, assisted by two other leading international investment banks (JP Morgan and Bank of America) in order to
ensure the participation of US institutional investors in the procedure. The sale took place at the price of 8.7 euro per share,
for a total value of 584 million euro. In line with the provisions of IFRS 9 on FVOCI investments, the transaction did not have
an impact on Intesa Sanpaolo’s income statement. The sale did not affect the long-term strategic partnership with Nexi, which
is also being extended outside Italy (see above).
As part of Intesa Sanpaolo’s capital optimisation, in November the sale was carried out, vi a a securitisation, of a performing
portfolio consisting mainly of real estate lease receivables, for a total of around 3.7 billion euro in terms of GBV. The mai n
objective of the sale was the accounting and prudential derecognition of the portfolio sold, with the aim of optimising the
Group’s Risk Weighted Assets. The portfolio sold to the special purpose vehicle consisted of the lease instalments due and
the redemption value, while Intesa Sanpaolo retained the lease agreements, the credit components relating to VAT and
ancillary/insurance expenses, as well as the underlying assets, mainly consisting of real estate. Intesa Sanpaolo also retained
the role of servicer for the securitisations.
On 9 December 2022, Intesa Sanpaolo noted the announcement made by the EBA (European Banking Authority) regarding
the information from the 2022 EU-wide Transparency Exercise.
In order to ensure a sufficient and appropriate level of information to market participants, the Transparency Exercise, based
on COREP/FINREP reporting data, has been conducted annually since 2016.
The templates were centrally filled in by the EBA and sent afterwards for verification by banks and supervisors. Banks had th e
chance to correct any errors detected and to resubmit correct data through the regular supervisory reporting channels, and to
add specific information as required to further clarify individual data.
On 15 December 2022, Intesa Sanpaolo disclosed the notification of the ECB’s final decision concerning the capital
requirement that the Bank has to meet, on a consolidated basis, as of 1 January 2023, following the results of the Supervisory
31
Accelerated bookbuilding is a procedure through which very large shareholdings of companies are sold to institutional investors. The shares are sold
over a very short period of time to institutional investors and not directly to the market (which may not be able to absorb too high a quantity shares in a
short time). ABB procedures usually envisage, for the investors purchasing the shares, a discount on the last closing price recorded on the listing market.
Report on operations – Overview of 2022
56
Review and Evaluation Process (SREP). The overall capital requirement to be met in terms of Common Equity Tier 1 ratio is
currently 8.91%.
This is the result of:
– the SREP requirement in terms of Total Capital ratio of 9.72% comprising a minimum Pillar 1 capital requirement of 8%,
of which 4.5% is CET1, and an additional Pillar 2 capital requirement of 1.72%, of which 0.97% is CET1 applying the
regulatory amendment introduced by the ECB and effective from 12 March 2020;
– additional requirements, entirely in terms of Common Equity Tier 1 ratio, relating to:
o a Capital Conservation Buffer of 2.5%,
o an O-SII (Other Systemically Important Institutions) Buffer of 0.75%,
o a Countercyclical Capital Buffer of 0.19%
32
.
Lastly, to complete the disclosure for 2022, the continuation is confirmed of the voluntary exits plan in accordance with the
trade union agreements of 29 September 2020 and 16 November 2021.
Total voluntary exits were 2,019 over the twelve months – 80 in the fourth quarter, 928 in the third quarter, 111 in the second
quarter and 900 in the first quarter – for a total of 4,858 exits from the beginning of 2021 against the 9,200 exits envisaged by
the first quarter of 2025 under the two above-mentioned trade union agreements.
With regard to the hiring under those agreements, since the beginning of 2021, there have been about 1,300 new hires, with
4,600 envisaged by the end of 2025.
In addition, on 1 January 2023, the amendments to the Articles of Association of Banca 5 S.p.A. took effect, with the
company’s new name of Isybank S.p.A. This is the first formal step in the project underway to cre ate a new digital bank within
the Group, as envisaged in the 2022-2025 Business Plan.
The amendments, approved by the ECB on 10 October 2022, were approved by the Extraordinary Shareholders’ Meeting of
Banca 5 of 28 October 2022.
Lastly, as part of the agreements between Risanamento, a company controlled by Intesa Sanpaolo with a 48.88% stake, and
LendLease, a leading international operator, for the development of the real estate initiative called Milano Santa Giulia, on 2
February 2023 the Board of Directors of Intesa Sanpaolo approved a complex transaction, whose structure and procedures
are currently being agreed between the parties, aimed at enabling the following, as part of a plan to ensure the economic and
financial equilibrium of the Risanamento Group pursuant to Article 56 of the Insolvency Code (“IC”): (i) the obtainment by the
Risanamento Group of the financial resources necessary to fulfil its commitments made to the public authorities and third
parties in relation to the completion of both the reclamation of the area and the execution of the Olympic infrastructure works
under the Variant Agreement; and (ii) the transfer of the Milano Santa Giulia area at values in line with its book value to a
mutual fund, whose units will be held by the lending banks or their assignees, with the concurrent novation to the
aforementioned fund of the financial debt due to the lending banks (or their assignees) from the Risanamento Group and the
payment to Risanamento, under particular terms and conditions, of the additional amount with respect to the values referred
to above.
32
Calculated taking into account the exposure as at 31 December 2022 in the various countries where the Group has a presence, as well as the
respective requirements set by the competent national authorities and relating to 2024, where available, or the most recent update of the reference
period (requirement was set at zero per cent in Italy for 2022 and for the first quarter of 2023).
Report on operations – Overview of 2022
57
The 2022-2025 Business Plan
In recent years, the Intesa Sanpaolo Group has demonstrated its ability to generate value for all its stakeholders, achieving
significant results even in difficult external contexts, in particular during the recent COVID-19 crisis and the recent conflict in
Ukraine.
Today, Intesa Sanpaolo is one of the leading players in the industry and is well positioned to capture future opportunities,
thanks to a number of strengths, including indisputable capital strength, a flexible business model, a well-established
international network, continuous investment in technology, and a leading ESG position.
The year 2022 saw the full launch of the main industrial initiatives of the 2022-2025 Business Plan, which projects the Bank
over the next ten years, confirming the target of net income of 6.5 billion euro in 2025 and a 70% dividend payout in each year
of the Business Plan.
The expectation of rising interest rates, the Bank’s high strategic flexibility in managing costs, the massive deleveraging
already achieved – through which the lowest-ever NPL stock and ratios have been achieved – are driving forces for further
growth, even in the currently highly complex environment.
The Group’s ambition is to be a Wealth Management, Protection & Advisory leader in Europe, distinguished by zero NPLs, a
strong digital push and a focus on commissions, while continuing to excel in ESG and offering the best professional
experience for its People.
These objectives will be achieved through a strategy centred on four fundamental pillars of the Plan and implemented thanks
to the quality of the Bank’s People:
– massive upfront de-risking, slashing cost of risk;
– structural cost reduction enabled by technology;
– growth in commissions, driven by Wealth Management, Protection & Advisory;
– significant ESG commitment, with world-class positioning in social impact and strong focus on climate.
Massive upfront de-risking, slashing Cost of risk
In 2022, Intesa Sanpaolo improved the quality of its assets both through credit risk transfers and capital efficiency measures.
Compared to the end of 2021, the Group reduced the stock of gross non-performing loans by 4.6 billion euro, bringing the
gross and net NPL ratios, calculated according to the EBA methodology, to 1.9% and 1% respectively.
Since the beginning of the year, the Active Credit Portfolio Steering (ACPS) unit has further expanded its credit risk coverage
schemes, carrying out a new synthetic securitisation on a portfolio of around 7.5 billion euro of corporate loans in the fourth
quarter of 2022. This was one of the largest overall transactions carried out in Europe during 2022, as well as the first
synthetic securitisation on a portfolio of around 2.3 billion of corporate loans and project financing in the infrastructure sector
with the best ESG score.
In the fourth quarter, the first sale was also completed of a portfolio of 3.7 billion euro in performing loans deriving from
leases. In 2022, the unit carried out credit risk transfer transactions for a total amount of over 20 billion euro on various asset
classes. The ACPS unit also further strengthened the capital efficiency initiatives and improved credit strategies, shifting
around 20 billion euro of new lending to lower risk/higher return sectors, and broadened the scope of alternative financial
solutions for “high-risk” customers.
The development of the credit strategies continued, with the full integration of the ESG Sectoral Strategy (ESG Heatmap) and
the start of activities to extend the framework to the Group’s international subsidiary banks, starting with Banca Intesa
Beograd and VUB Banka. The ESG-Climate Credit Framework project has set itself the objective of integrating ESG-Climate
metrics into the underwriting process. The launch of the New Sector Framework project on the other hand aims to evolve the
main credit processes (regarding credit granting and proactive credit management) by adding sector information.
The implementation continued of the plan for the IT developments for the New Credit Granting Programme (ONE), with the
aim of extending the use of the new digital process, to expand its scope and the products managed.
Within the proactive management of other risks, anti-fraud cybersecurity protection was extended to new products and
services for retail customers, also using Artificial Intelligence (AI) solutions. Open source intelligence solutions have bee n
adopted to enhance the intelligence capacity on IT threats. The Anti Financial Crime Digital HUB (AFC Digital Hub) was
launched, aimed at combating money laundering and terrorism, at national and international level, through the use of
increasingly advanced technologies.
With regard to the de-risking initiatives, during 2022 the sales of the non-performing loan portfolios identified at the end of
2021 and beginning of 2022 as part of the Group’s de-risking initiatives were substantially completed. All NPL portfolios that
as at 31 December 2021 were classified under assets held for sale pursuant to IFRS 5 were sold.
With regard to the portfolios held for sale that in the 2021 Financial Statements were not reclassified pursuant to IFRS 5, but
were recognised in accordance with the provisions of IFRS 9, i.e. factoring in a probabilistic scenario of sale at market prices,
the following is noted:
– at the end of April, the sale of bad loans for a GBV of 3.9 billion euro (NBV of 0.9 billion euro) was completed through a
securitisation with a request for the “GACS” government guarantee issued by the Ministry of the Economy and Finance in
June;
– for the remaining portfolio, mainly consisting of small-ticket UTP loans, the sale perimeter was specifically identified with
a gross value of around 800 million euro. The structure of the transaction, which envisages the sale to two Alternative
Investment Funds (AIFs), through a solution that guarantees credit management policies aimed at returning the
borrowers to performing status, was approved by the Board of Directors on 25 November 2022 and its closing is
indicatively expected, also through several waves of contributions to the funds, during the first half of 2023. As a result,
the specifically identified portfolio, valued at 0.75 billion euro gross and 0.37 billion euro net at the end of the year (of
which 10 million euro has since been transferred to performing status), was reclassified to assets held for sale pursuant
to IFRS 5.
In addition to the above, a further de-risking initiative was implemented in 2022.
Report on operations – Overview of 2022
58
On 15 March 2022, the Board of Directors of Intesa Sanpaolo approved the transfer to the Back2Bonis fund
33
of a credit
exposure of Intesa Sanpaolo, classified as unlikely-to-pay (NBV 216 million euro), in exchange for the subscription of new
units of the fund, in which Intesa Sanpaolo was the second largest investor with a share of around 29% of the units, classified
under interests in associates pursuant to IAS 28. The closing of the transaction took place on 11 April 2022 and, at the time of
closing, Intesa Sanpaolo derecognised the exposure and simultaneously recognised the units received from the fund at fair
value, as the initial recognition value, therefore maintaining the classification as under significant influence. Given that the
transfer value agreed with the asset management company (supported by the specific fairness analysis) was in line with the
NBV of the exposure transferred, the transaction did not have any profit and loss impacts.
Structural Cost reduction, enabled by technology
The new Digital Bank (Isybank) h as been incorporated and is now fully up and running. The “Domain Isy Tech” unit with
around 340 dedicated specialists is operational and the agreement with Thought Machine has been signed. The management
team has been strengthened with the hiring of the new head of Isybank and the new heads of the Sales & Marketing Digital
Retail Department and Domain Isy Tech.
Ahead of the launch of the Digital Bank, the target offering and functionalities of Isybank have been defined, as well as the
roadmap for the migration of ISP customers. The technological master plan has also been drawn up and its implementation
has begun.
The implementation is continuing of the Next Way of Working project, which is aimed at achieving a better work-life balance
and involves adapting work spaces to the needs of the increased use of remote working. In addition, the four-day working
week has been introduced on a voluntary basis with equal pay
34
.
Work also continued on the streamlining of the retail network, with the closure of over 550 branches from the fourth quarter of
2021. At the same time, the real estate scale back continued in Italy, with the release of around 354,000 square metres of
owned or leased property since the fourth quarter of 2021. At total of 43 owned real estate assets were also sold for a total
value of around 33 million euro.
The insourcing of core IT skills began with the hiring of around 500 staff. The artificial intelligence laboratory in Turin (AI Lab)
is already operational (Centai Institute established). The digital platform for analytical cost management was launched and is
fully operational. A total of 27 efficiency initiatives have already been identified, through the integrated use of advanced
analytics and benchmarking analysis. Tools have also been selected to support negotiations and the search for potential
suppliers.
Around 2,000 voluntary exits were completed from the beginning of 2022 (around 4,858 exits since 2021), which will further
contribute to the cost containment.
The project work is continuing for the adoption of the target platform of the new core banking system in all the countries of the
International Subsidiary Banks Division.
In the area of digital process transformation, the processes have been identified and E2E transformation activities have been
initiated, using both Smart Process Automation and traditional re-engineering methods (in particular for the procurement
processes, customer onboarding, hereditary succession process management, bank account closing process and control
management processes).
The excellence of the technological solutions developed by the Group was again highlighted by the recognition of the Intesa
Sanpaolo Mobile App as the best banking services app in the world, ranking first among all the banking apps assessed by the
US research company Forrester.
Growth in Commissions, driven by Wealth Management, Protection & Advisory
The new dedicated service model for Exclusive customers has been fully implemented. The advanced advisory paid service
“Valore Insieme”, for affluent and exclusive customers, was enhanced with new insurance and asset management products,
and, partly as a result of this, around 43 thousand new contracts were signed and 14.5 billion euro of financial asset inflow s
were achieved in 2022.
Support to relationship managers was improved with the introduction of new Robo4Advisor functions for generating
investment advice on selected products (funds, certificates and insurance products). The BlackRock Aladdin Wealth and
Aladdin Risk platforms have also been adopted for the investment services.
New features have been developed for the UHNWI (Ultra High Net Worth Individuals) customer advisory tools, while the
service model for family offices has been strengthened and a project is underway for the integration of ESG principles into the
new single advanced advisory service model. A project has been launched for the development of the credit offering for the
distribution networks of Fideuram ISPB and Intesa Sanpaolo Private Banking. The offering of alternative funds from leading
international operators is being expanded through partnerships with specialist platforms.
The online investment and trading platform (formerly IW Bank) of Fideuram ISPB has been successfully integrated and is fully
operational, with new functions designed to facilitate customers in carrying out operations independently. The strengthening
of the Private Banking division at international level continued with the acquisition of Compagnie de Banque Privée Quilvest
S.A. (CBPQ) and the integration of Reyl (completion of the IT migration and streamlining of the presence in Latin America). In
addition, Alpian – Switzerland’s first digital private bank – has been operational since the beginning of October, with a mobile-
only platform that includes multi-currency services, asset management and support from experienced financial advisors.
The merger of the two Private Banks in Luxembourg was completed on 1 January 2023, creating “Intesa Sanpaolo Wealth
Management”, a second hub (in addition to the Swiss one) with over 200 people and 11 billion euro in assets that will
contribute to the growth of international commission income.
A number of new asset management and insurance products dedicated to the Group’s distribution networks were launched,
including a specific offering for customers with excess liquidity. The strengthening of the ESG asset management and
insurance product offering also continued, with the proportion of Eurizon’s total assets under management growing to 54%.
33
Credit fund established in 2019 by the Prelios Group and AMCO with the aim of creating a multi-originator platform to manage positions classified as
unlikely-to-pay with underlying real estate.
34
For more details, see the information provided in the previous disclosure on “Impacts of the COVID-19 pandemic”.
Report on operations – Overview of 2022
59
The Caring Programme was launched, which involves a suite of insurance, asset management and personal support services
designed for the needs of senior customers. The non-life offering was also enhanced with dedicated health protection
solutions and products for corporate customers. The further development of the protection and health business has also been
guaranteed by the operations of “InSalute Servizi”, a new third-party administrator in collaboration with Reale Group.
There were numerous initiatives dedicated to companies and financial institutions:
– the digital platform “IncentNow” was launched and webinars and workshops were initiated to provide information to
customer companies on the opportunities offered by public tenders related to the National Recovery and Resilience Plan;
– advisory initiatives were developed with a focus on Infrastructure, TMT (Technology, Media & Telecommunications) and
Energy corporate customers, linked to selected themes and post-pandemic recovery plans;
– continued strengthening of origination activities, both in Italy and abroad, also by reinforcing the Originate-to-Share
model;
– there was strong growth in ESG advisory services to companies to steer the energy transition through a scalable
approach, with a focus on the energy, infrastructure and Automotive & Industrials sectors;
– the enhancement of the digital platforms serving Corporate customers is underway, with a focus on Cash and Trade
services and the Global Markets offering also through the launch of Cardea, an innovative digital platform for financial
institutions.
The growth continued in digital payments, which amounted to 137 million at the end of the year (around 51 million in
December 2021). The agreement signed with ENEL for the joint acquisition of the Fintech Mooney Group S.p.A. will enable
the Intesa Sanpaolo Group to acquire new customers and expand its digital service model internationally. Intesa Sanpaolo
was also the first bank in Europe that activated Huawei Pay for PagoBancomat cards, through the Huawei Wallet App, thus
expanding the offering of payment services for our retail customers and supporting the plan to develop the national network.
The Bank launched an ESG value proposition initiative for the corporate and SME segments of the Group Banks in Slovakia,
Hungary, Croatia, Serbia and Egypt, setting the priority sectors of the commercial strategy, and synergies are being
developed between the IMI Corporate & Investment Banking Division and the Group Banks in Slovakia, the Czech Republic,
Croatia and Hungary. The Local Distribution Agreement concluded in Slovakia, Serbia, Slovenia and Croatia.
The strengthening continued of the service model for customers shared with Banca dei Territori and the master cooperation
agreement on Bancassurance was signed with a leading insurance group for the distribution of products at five local banks
(Slovakia, Croatia, Hungary, Serbia and Slovenia). The expansion of digital services in several countries where the Group has
a presence is also continuing in the Corporate & SME, Retail and Wealth Management segments.
Significant ESG commitment, with a world-class position in Social Impact and strong focus on climate
Intesa Sanpaolo has confirmed its status as the engine of Italy’s real and social economies through the provision of
medium/long-term lending to households and businesses.
The Bank is pursuing and strengthening its social commitment through numerous initiatives, including interventions in favour
of the needy, social lending and the commitment to develop one of the largest social housing programmes in Italy.
The Bank also maintained its strong commitment to developing culture and supporting the promotion of innovation.
In addition, considerable attention was given to the green economy, circular economy and green transition, also in relation to
the 2021-2026 National Recovery and Resilience Plan.
Net-zero targets were implemented in all the business units.
ESG governance has been strengthened: since April 2022, the Risks Committee has been transformed into the Risks and
Sustainability Committee and has acquired more responsibility for ESG issues.
For more information, see the paragraph below on Sustainability and Group strategy on Environmental, Social and
Governance issues.
Innovation, digital transformation and cybersecurity
Recognising the strategic role of digitalisation and multi-channelling, Intesa Sanpaolo has committed over the coming years to
extending the technological infrastructure to the entire Group, creating the new Isybank Digital Bank and strengthening the
digital payments business. The Group devotes maximum attention to the protection of customer information and the Plan’s
objectives include extending anti-fraud cybersecurity protection to new products and services for retail customers, also
through the use of Artificial Intelligence (AI).
The Group recognises the strategic value of innovation for the growth of the new economy and is committed to promoting
around 800 innovation projects over the period of the new Business Plan, of which 201 were launched in 2022 by Intesa
Sanpaolo Innovation Center. Particular attention is given to the growth of high-potential start-ups through non-financial
services (e.g. acceleration programmes) and the connection to venture capital funds, also thanks to NEVA SGR.
The main initiatives implemented in 2022 for the growth of start-ups and the development of innovation ecosystems included
the following: in Turin, the third class of the “Torino Cities of the Future Accelerator” Programme managed by Techstars has
been completed and the fourth class is underway, with 35 start-ups accelerated since its launch in 2019 (with 11 Italian
teams), 51 million euro in capital raised and over 310 new staff hired after acceleration; in Florence, the second class of t he
three-year “Italian Lifestyle Accelerator Program”, managed by Nana Bianca, was launched, with 6 Italian start-ups
accelerated (over 210 candidates, 85% Italian) and around 2 million in capital raised; in Naples, the implementation continue d
of the “Terra Next” Bioeconomy Accelerator Programme, promoted with Cassa Depositi e Prestiti with the support of Cariplo
Factory and several local scientific partners, and with the patronage of the Ministry of Environment and Energy Security, wit h
the acceleration of 8 start-ups (around 130 applications received, 83% of which Italian); and lastly, in Venice, the new three-
year “Argo” programme (in the Hospitality and Tourism sector) sponsored by Banca dei Territori and Intesa Sanpaolo
Innovation Center, developed by Cassa Depositi e Prestiti, Lventure and with the collaboration of the Ministry of Tourism, was
launched at the end of December 2022, and will involve 10 start-ups each year.
Also in the area of development of innovation ecosystems, the first edition was completed of the UP2Stars initiative,
developed by Banca dei Territori with the support of the Intesa Sanpaolo Innovation Center. The initiative was aimed at 40
start-ups (around 490 applications) for the development of 4 vertical pillars (Digital/Industry 4.0; Bioeconomy, with a focus on
Agritech and Foodtech; Medtech/Healthcare; and Aerospace). In October, two start-up acceleration programmes were also
Report on operations – Overview of 2022
60
completed for customers, in which support was provided in the form of coaching and mentoring (over 15 start-ups accelerated
in 2022).
In Action ESG Climate is the initiative developed by the Insurance Division, with the support of Intesa Sanpaolo Innovation
Center, created to promote the development of new solutions for combating climate change and supporting the green
transition through technological innovation and the development of new business models. The programme concluded with the
recognition of the three best projects presented, which were awarded a total contribution of 500,000 euro.
In the area of applied research, 14 multidisciplinary projects are being developed, of which 8 in the area of neuroscience and
6 in AI and robotics. The three-year collaboration was also renewed between the IMT High School of Lucca and Neuro
Scienze Lab, for research projects based on neuroscientific models for management and business.
To promote the acceleration of business transformation, over 25 companies were involved in open innovation programmes
and support was completed for the “Bando Evoluzioni” of Fondazione Compagnia di San Paolo and Fondazione Cariplo for
the digitalisation of the Non-Profit Sector. In 2022, four programmes were launched for the companies involved, focused on
the transition to a circular economy, and a “Climate Innovation Tech Tour” was held in Tel Aviv in support of customers and
start-ups.
In keeping with its focus on the spreading of an innovation culture, the Bank launched a collection of podcasts on innovation
(“A Prova di Futuro”), made available for free on Intesa Sanpaolo’s website. These were also accompan ied by 32 positioning
and match-making events
35
, with around 2,200 participants, and the publication of 15 reports on technology innovation and
sector trends (including a report on the decarbonisation related to the European Central Bank Climate Program).
Lastly, Neva SGR plans to invest around 100 million euro in start-ups over the course of the 2022-2025 Business Plan. In
particular, in 2022, the fundraising of the Neva First Fund (launched in 2020) and the Neva First Italia Fund (launched in
2021) was successfully concluded with total funds raised of 250 million euro. Over 54 million euro of investments were made
in support of start-ups in 2022. Lastly, the Innovation Ecosystem Development Fund was launched in 2022. It raised 15 million
euro and made its first investment in Tech4Planet, in collaboration with CDP and the Milan Polytechnic, together with the
Polytechnics of Bari and Turin, which has the aim of supporting the birth of new start-ups conceived within the laboratories
and research centres.
The Group’s people as its most important asset
The Group continued its commitment to strengthening its human capital through a series of dedicated initiatives, underscoring
the fact that people are the most important resource for achieving its Plan objectives and the enabler for its future success.
This is why Intesa Sanpaolo has set itself the objectives of continuous empowerment, growth and satisfaction of its
employees and will continue to invest in its talents, fostering diversity and inclusion, and creating a unique ecosystem of skills
in line with the Bank’s evolution.
The hiring continued of professionals, together with the reskilling and training of in-house staff, to ensure that sufficient skills
are maintained and developed to meet the challenges t he Group will face in the coming years. To support the Group’s growth
and generational change, 4,600 permanent hires will be made over the period of the Plan (around 1,300 professionals already
hired in 2021 and in 2022). The reskilling/upskilling of around 8,000 people to be deployed towards priority and strategic
initiatives is also envisaged (around 2,000 already involved in 2022). Numerous well-being and safety initiatives are also
provided for, together with new long-term incentive plans to engage the Group’s people in achieving the Plan objectives.
The Group has developed an innovative strategy dedicated to its talents and aimed at around 1,000 talents and key people.
The International Talent Program continues, with the selection of new talents that will start the programme by the first quarter
of 2023, while over 140 people have already completed training and 180 others are being trained, in addition to around 430
key middle management staff who have been engaged in targeted development and training initiatives.
To respond to the needs for flexibility and work-life balance of the Group’s employees, a new organisational framework has
been set up that provides greater flexibility in terms of daily work schedule, smart working and the introduction of a four-day
working week on a voluntary basis with no change in remuneration
36
.
Intesa Sanpaolo and Nextalia SGR set up the newco Digit’Ed, a new leading company in Italy in training, which aims to
become an international leader in training and digital learning. In an environment that requires the continuous evolution of
skills and flexibility, training continues to be an important vehicle for people’s growth, supported by an innovative learnin g
infrastructure that includes the use of the latest technologies. The objective is to reach 50 million hours delivered over the
course of the Plan. Around 12.6 million hours of training were provided in 2022, of which over 640,000 hours on ESG issues.
Particular attention is paid to people’s well-being, for which live webinars, podcasts, video content and other thematic
initiatives are continuously organised. In addition, the new long-term incentive plan to support the Business Plan targets and
foster individual entrepreneurship was implemented.
To promote female talent within fair and inclusive working environments, the initiatives continued for the development of
female professionals and managers, including programmes of job rotation, shadowing, training and empowerment.
The 2022 Diversity & Inclusion goals were set and shared for every organisational unit, including the implementation of the
new commitment related to gender equality to access to senior leadership roles and the monitoring was initiated of the 2022
targets for each Division and Governance Area. The partnershi p with ISPROUD, the Group’s first community of employees,
which now includes LGBTQ+ and allied people, was launched as part of the process of reflection and dialogue on these
issues.
The attention given by Intesa Sanpaolo to its people was recognised through the achievement of two important awards, Top
Employer 2023, for the second year running, given to our bank by the Top Employers Institute, and first place in LinkedIn’s
Top Companies 2022 ranking.
In addition, the Group was recognised in the Refinitiv Global Diversity and Inclusion Index as the top bank in Europe, the
second at global level, and the only Italian bank ranked among the 100 most inclusive and diversity-conscious workplaces.
35
Positioning event: an event where a key player discusses innovation issues. Match-making event: an event that facilitates the matching of supply and
demand in innovation.
36
See in this regard the information on the impacts of the COVID-19 pandemic.
Report on operations – Overview of 2022
61
Intesa Sanpaolo is also the first major Italian banking group to ob tain the “Prassi di Riferimento (PDR) 125:2022” certification
for gender equality, envisaged by the National Recovery and Resilience Plan (NRRP), thanks to its commitment to diversity
and inclusion.
In 2022, Intesa Sanpaolo made two one-off contributions to the Group’s staff to mitigate the impact of inflation and deal with
the current price rises, for a total amount of 77 million euro
37
.
Sustainability and Group strategy on Environmental, Social and Governance issues
Intesa Sanpaolo is aware that, as a global financial player and one of the leading banking groups in Europe, it has a
significant impact in terms of environmental and social sustainability, in the short and long term, through both its direct and
indirect activities.
In general terms, the Group adopts a holistic approach to ESG issues, which is based on:
– defining a Group ESG strategy in line with the guidelines provided by the Corporate Bodies, supported by the internal
governance structures, with the coordination of the ESG Control Room. In this regard, at the time of the renewal of the
Bodies, the name of the Risks Committee was changed to the Risks and Sustainability Committee, with the
strengthening of its powers in relation to sustainability;
– its own regulatory framework, which includes the “Guidelines for the governance of environmental, social and
governance (ESG) risks of the Group” and voluntary policies on conduct (Code of Ethics, “Principles on Human Rights”).
In 2022, the Rules for the classification of sustainable credit products and transactions were also issued, aimed at
improving internal and external transparency in relation to sustainable products and transactions;
– integrating ESG risks into the overall Risk Management framework and in relation to the traditional risk categories (credit
risk, market risk, liquidity risk, operational risks and reputational risks).
In 2022, the Intesa Sanpaolo Group laid the foundations for and initiated the activities to pursue the objectives stated in t he
2022-2025 Business Plan, in which ESG issues represent one of the four pillars for solid and sustainable value creation and
for further strengthening Intesa Sanpaolo’s leadership in sustainability.
The plan confirms the commitment in the social and cultural domains, already present in the previous business plan (2018 -
2021), based on responding to social needs through, for example, new initiatives for seniors and young people (including one
of the most extensive social housing programmes in Italy and the creation of seniors community hubs), support for financial
inclusion, through cumulative social lending flows of 25 billion euro, and the continued promotion of culture, for example by
doubling the exhibition spaces of the Gallerie d’Italia by 2025.
Within the Business Plan, the Group has stepped up its commitment to the green transition, supporting individuals and
businesses through dedicated products and encouraging the transition from a linear to a circular economy, in addition to
reducing its own and financed emissions over the entire value chain.
The Group can play a key role in steering capital towards a sustainable economy. With regard to climate change, in addition
to directly managing its environmental footprint, the Bank can exert strong influence on activities and behaviour that it cannot
control directly, in particular those of its customers and suppliers, supporting them in the transition to a low-carbon economy.
With regard to the preservation of natural capital, the 2022-2025 Business Plan envisages the development of a specific
biodiversity policy and a major reforestation project, with the target of over 100 million trees planted directly or through loans
to customers. Intesa Sanpaolo has also designed the Group’s new offering in the voluntary CO
2
market, aimed at supporting
customers in reducing gross CO
2
emissions, managing residual emissions, and protecting and safeguarding forest areas.
In 2022, a particularly important aspect in relation climate change was the setting of the main targets associated with the
commitments made in the Net-Zero alliances. Specifically, following the Group’s subscription to the Net-Zero Banking Alliance
(NZBA), Net-Zero Asset Managers Initiative (NZAMI), Net-Zero Asset Owner Alliance (NZAOA) and Net-Zero Insurance
Alliance (NZIA) in February 2022, the targets for 2030 for the main emission-intensive sectors (Oil & Gas, Power Generation,
Automotive and Coal Mining) were published in the 2022-2025 Business Plan. In October 2022, Eurizon Capital SGR,
Fideuram Asset Management SGR, Fideuram Asset Management Ireland and the Intesa Sanpaolo Vita Insurance Group also
published their first interim targets.
In 2022, Intesa Sanpaolo maintained a strong focus on sustainability as demonstrated by its top positioning in the main
indices and rankings: it is the only Italian bank included in the Dow Jones Sustainability Indices World and Europe, the CDP
Climate A List 2022 and the Corporate Knights 2023 “Global 100 Most Sustainable Corporations in the World” index; it is also
ranked first among its peers by Sustainalytics and Bloomberg (ESG Disclosure Score); in 2022, and again in January 2023,
Intesa Sanpaolo maintained its position in the Bloomberg Gender Equality Index; and in September 2022 it was ranked as the
second bank worldwide in the Refinitiv Diversity & Inclusion Index. Intesa Sanpaolo also received a number of sustainability-
related awards: in the 2022 ranking of Institutional Investors it maintained its first place in Europe for ESG aspects, and i n
February 2023 it was included in the S&P Global Sustainability Yearbook 2023 - Top 10% ESG Score 2022.
The Group’s commitment to sustainability is also manifested through its participation in all the main international initiativ es of
the United Nations, including the Global Compact, concerning the financial sector, which form part of the achievement of the
UN Sustainable Development Goals. These consist of the Principles for Responsible Banking, the Principles for Sustainable
Insurance, and the Principles for Responsible Investment. Intesa Sanpaolo supports the recommendations of the Task Force
on Climate-related Financial Disclosures (TCFD) and has published a TCFD Report, which includes specific climate
disclosures in accordance with these Recommendations. In addition, the Bank has adopted the Stakeholder Capitalism
Metrics developed by the World Economic Forum, a set of ESG indicators and disclosures that evidence the commitment to
long-term value creation and the contribution to the UN Sustainable Development Goals.
During the year, several strategic and significant projects were carried out for the Group on sustainability issues, coordinated
by the ESG Control Room.
37
See in this regard the information provided in the previous disclosure on “The Intesa Sanpaolo Group’s initiatives for Ukraine and to mitigate the
impacts of the inflation scenario”.
Report on operations – Overview of 2022
62
In 2019, with the aim of consolidating Intesa Sanpaolo’s leadership in sustainability, the Group launched a Programme called
ISP4ESG, a wide-ranging high-impact initiative, led by the Strategic Support Department and the CFO Governance Area, with
the objective of integrating ESG into the Bank’s business model and strategy, generating a concrete impact within the
company and on society and leading to the establishment of the ESG Control Room in 2020. Various initiatives were
coordinated under the programme, including the drafting of the Action Plan in 2021 in response to the 13 expectations
identified by the ECB in the “Guide on climate-related and environmental risks”, followed in 2022 by the Group’s activities
relating to the ECB’s Thematic Review. It also contributed significantly to the development of the 2022-2025 Business Plan,
which includes ESG/Climate as one of its four pillars. The main activities carried out in 2022 included the setting and
publication of the targets aligned to Net-Zero for 2030, also included in the 2022-2025 Business Plan (NZ Target Setting
project); the supervision of the activities aimed at setting the targets of the Group companies that joined the other Net-Zero
alliances (e.g. NZAMI, NZAOA, NZIA); the implementation of the ESG-Climate Credit Framework project for the introduction
of ESG factors in the assessment of the Group’s loan portfolio; and the launch of t he EU Taxonomy Green Enhancement
project to introduce rules and processes for classification of credit transactions in line with the regulatory requirements of the
EU Taxonomy and to actively steer the loan portfolio, with the aim of improving the expected green asset ratio.
The continuous evolution of the European regulations on ESG and sustainability reporting
38
, together with the requirements
arising from the subscription to the various voluntary reporting standards (TCFD, SASB, PRB and WEF), prompted Intesa
Sanpaolo to launch a multi-year project in 2021 focused on the Group ESG Reporting, aimed at creating an integrated and
transversal approach able to respond to the new regulatory requirements and emerging best practices.
In 2022, the project focused on the analysis of the impacts for the purposes of the Principles for Responsible Banking (PRB),
the preparation of the Quantitative Templates and Qualitative Tables envisaged by Pillar 3 for ESG, the monitoring of the
Group’s ESG performance, through the launch of the ESG KPI monitoring process, and the 2023 Budget process for the
relevant ESG KPIs.
Support for ESG/climate transition
The new 2022-2025 Business Plan contains a strong focus on climate, which includes the Group’s commitment to facilitate
the transition to a low-emission economy through concrete actions to mitigate its direct and indirect emissions, and by
supporting green initiatives and projects for its customers. Specifically, the Group has made a programme of disbursements of
76 billion euro (2021-2026) available for the European Green Deal and the National Recovery and Resilience Plan, dedicated
to the green and circular economy and ecological transition, of which around 32 billion euro has already been disbursed in
2021 and 2022. It has also provided new green credit to individuals totalling 12 billion euro, of which around 2.6 billion euro
was disbursed in 2022 for green mortgages to retail customers.
The commitment to the circular economy has been confirmed in the new Plan with the promotion of the diffusion of this model,
the renewal of the partnership with the Ellen MacArthur Foundation and Cariplo Factory, in addition to the announcement of 8
billion euro in credit lines for the circular economy. In 2022, 420 projects for an amount of 9.1 billion euro were assessed and
validated, 4.7 billion euro in 230 transactions were granted (of which over 2.6 billion euro related to green finance), and 3.1
billion euro disbursed (of which 2.2 billion euro related to green finance). To support customers in the ESG/climate transition,
the Bank provides its corporate customers with Skills4ESG, an online training platform dedicated to sustainability issues, an d
the New ESG Labs (the first 8 have already been activated in Venice, Padua, Brescia, Bergamo, Cuneo, Bari-Taranto, Rome,
and Naples-Palermo), in collaboration with specialist partners such as Circularity, Nativa, CE Lab and others. An accelerated
ESG advisory service to companies is also envisaged, aimed at guiding them towards the energy transition through a flexible
and scalable approach. At the international subsidiary banks, a value proposition has been launched for the corporate and
SME segments of the Group banks in Slovakia, Hungary, Croatia, Serbia and Egypt. To support SMEs seeking to improve
their sustainability profile, Intesa Sanpaolo offers the S-Loans, made up of 5 product lines: S-Loan ESG, S-Loan Diversity, S-
Loan Climate Change, S-Loan Agribusiness and S-Loan Tourism. A total of 2.2 billion euro was granted in 2022 (3.5 billion
euro since the launch in 2020). The offer was expanded in October 2021 with the Digital Loan (D-Loan) aimed at improving
the digitalisation of companies (22 million euro disbursed since launch) and the Suite Loan, launched in December 2021,
aimed at upgrading hotel facilities and accommodation services (10 million euro disbursed since launch). For the S-Loans and
the Skills4ESG training platform dedicated to corporate customers, the Bank won the Milano Finanza Banking Awards in
March 2022.
Sustainable investment products and sustainable insurance
Intesa Sanpaolo, mindful of the significant regulatory developments and strategic priorities of the EU in the area of sustainable
finance, has committed in its 2022-2025 Business Plan to further strengthening its offering of sustainable investment
products, for both asset management and insurance, which combine financial criteria with environmental, social and
governance (ESG) aspects and contribute to the achievement of climate objectives. Specifically, it has set itself the objective
of increasing the assets under management in funds classified according to Articles 8 and 9 of the Sustainable Finance
Disclosure Regulation (SFDR) to around 156 billion euro and reaching 60% of total assets under management in sustainable
investment products
39
. Eurizon offers a diversified range across all the asset classes of funds classified according to Articles 8
and 9 of the SFDR, with penetration having increased to 54% of total assets under management. It has also launched two
“Eurizon Step 50 Objective Net Zero” funds that invest in companies with targets of net zero greenhouse gas emissions by
2050.
38
Including, in particular, the Corporate Sustainability Reporting Directive (CSRD) and the related European Sustainability Reporting Standards of the
European Financial Reporting Advisory Group (EFRAG), EBA Guidelines on ESG Reporting, EU Taxonomy (and related disclosure requirements),
Sustainable Finance Disclosure Regulation (SFDR), and ECB Guidance on Environmental and Climate Risk Management.
39
Eurizon perimeter – Funds pursuant to Articles 8 and 9 SFDR 2088.
Report on operations – Overview of 2022
63
With a view to enhancing its ESG offering, Fideuram has committed to developing dedicated advisory services and launched
a comprehensive ESG certification training programme for its bankers, with over 51,000 hours of training provided to around
3,060 participants, and for employee private bankers and agents, with around 13,900 hours provided to over 1,040
participants.
Engagement with issuers and customers is part of the efforts made by the Group Companies to contribute to the change
towards sustainability. In the area of stewardship, in 2022 Eurizon Capital SGR took part in 254 shareholders’ mee tings (73%
of which were of issuers listed outside Italy) and 538 engagement initiatives (50% of which were on ESG issues). The Private
Banking Division also held 47 customer events (28 in person and 19 digital) during the year, with a total of 11,150 participants
(5,000 in-person and 6,150 digital).
In line with the Group’s objectives and the increasingly strategic importance of integrating ESG factors also for the insuran ce
sector, the Insurance Division has committed to developing a dedicated ESG offering for the non-life business and expanding
the ESG/climate offering within the Group’s life insurance range. Specifically, it plans to strengthen the unit-linked/multi-line
offering that includes ESG investment options and implement a process of reduction in carbon intensity towards net-zero for
direct investments.
Support to address social needs
Intesa Sanpaolo is committed to generating a social impact over the coming years, continuing the commitment and attention
that it has always dedicated to the needs of the people and communities in which it operates. In its 2022-2025 Business Plan,
the Group announced investments and donations of 500 million euro in favour of young and vulnerable people. In addition,
the focus remained high on the humanitarian emergency resulting from the Russia-Ukraine conflict, resulting in multiple
initiatives in favour of the population of Ukraine and the staff of the subsidiary Pravex Bank.
Intesa Sanpaolo, which has always been keen to invest in young people, also to promote employment and the right to
education, supports “Giovani e Lavoro”, the programme created through the partnership between Intesa Sanpaolo and
Generation Italy, with the objective of providing free training courses, over the period of the 2022-2025 Business Plan, to over
3,000 young people aged between 18 and 29 who are unemployed, in order to help them gain the skills that companies are
seeking. In 2022, the programme received applications from over 7,500 young candidates, with over 1,650 students
interviewed and over 770 students trained/being trained through 30 courses and 6 training programmes. Around 3,000
students have been trained since 2019 and roughly 2,300 companies have been involved since the start of the Programme.
The second edition of the Generation4Universities programme, aimed at helping talented final year university students in
making their first step into the world of work, which involved around 100 students from 36 universities and 31 leading Italia n
companies as potential employers, ended in July.
In the area of inclusive education programmes, during the year the partnerships were strengthened with leading Italian
universities and schools (over 1,000 schools and around 4,200 students in 2022), to support merit and social mobility, and th e
School4Life project was launched to combat early school leaving, with companies and schools working closely with students,
teachers and families. Another important initiative is “Tesi in Azienda”, which is aimed at guiding students in choosing the
most relevant subjects in the world of work and which involved around 150 students in 2022.
The Digital Re-start programme implemented by the Private Banking Division is also aimed at training and reintegrating
unemployed people aged between 40 and 50 into the labour market, by funding 75 scholarships for the masters course in
data analysis. There were a total of 50 participants in the first two editions that ended in 2022, with 29 having found new jobs,
and the third edition is now underway.
Intesa Sanpaolo has always been attentive to the issues of inclusion and the fight against poverty, and one of the main
objectives of the new Plan is the expansion of the food and shelter programme for people in need, which will enable the
implementation of over 50 million interventions, providing concrete help in Italy and abroad. During the year, over 21.3 million
interventions were carried out (also in support of the humanitarian emergency in Ukraine), including 15.9 million meals, over
2.2 million dormitories/beds, around 3 million medicine prescriptions, and around 264 thousand items of clothing.
The Plan’s initiatives, dedicated to the needs of the people and communities in which the Group operates, include one of the
most extensive social housing projects in Italy, aimed at young people and the elderly, which will create social housing and
accommodation (around 6,000-8,000 units over the Plan period) for students or young workers and for seniors on low
incomes. The design of the initiative was completed in 2022 and the implementation phase of the project for the achievement
of the objectives will begin shortly.
Financial inclusion and support to production
In 2022, Intesa Sanpaolo’s support to the Italian economy was again incisive, with the Bank providing over 81 bill ion euro of
new medium/long-term lending to the real economy, of which over 58 billion euro in Italy. In addition, Intesa Sanpaolo made
available over 400 billion euro in medium/long term lending to businesses and households in support of Italy’s National
Recovery and Resilience Plan (NRRP), with the aim of strengthening the country’s growth over the period 2021-2026.
The Group’s 2022-2025 Business Plan envisages major initiatives in the area of social inclusion, which is a key factor in
achieving a fair and inclusive transition. Specifically, it has committed to providing new social lending of around 25 billion euro
in support of non-profit activities and vulnerable people who have difficulty accessing forms of credit or have been affected by
natural disasters, as well as urban regeneration. Over 9.3 billion euro was disbursed in 2022 for social lending and urban
regeneration.
These included in particular the loans provided in support of non-profit organisations totalling 339 million euro and 53 million
euro funds made available within the Fund for Impact, which provides direct support to households and individuals to ensure
broader and more sustainable access to credit, with dedicated programmes such as: “per Merito”, the first unsecured credit
line dedicated to all university students, “Mamma@work”, a subsidised loan aimed at working mothers to help balance
motherhood and work in the early years of their children’s lives, “per Crescere”, for the training and education of school-age
Report on operations – Overview of 2022
64
children aimed at vulnerable families, “per avere Cura”, to support families caring for non-self-sufficient people, and other
solutions (e.g. “Obiettivo Pensione”, “per Esempio” and “XME StudioStation”).
Lastly, in the new Business Plan loans were announced for urban regeneration, including interventions in sustainable
infrastructure and services, hospitals, broadband networks and smart mobility. In 2022, Intesa Sanpaolo made commitments
for over 616 million euro of new loans to support investments in student housing, services and sustainable infrastructure, in
addition to the most important urban regeneration initiatives underway in Italy. Academic initiatives have also been promoted
for the development of ESG valuation methods for the impact of urban regeneration interventions.
Commitment to Net-Zero and management of climate change risk
As a sign of its commitment to combating climate change, Intesa Sanpaolo has chosen to pursue the “Net Zero” by 2050
target – for its own emissions, for its lending and investment portfolios and for its asset management and insurance business
– by joining all the Net-Zero alliances promoted by the UNEP Finance Initiative: NZBA, NZAMI, NZAOA and NZIA.
In the 2022-2025 Business Plan, the Group has set the reduction targets for 2030 emissions aligned to Net-Zero for the oil &
gas, power generation, automotive and coal mining sectors, which, at the time of publication in February 2022, represented
over 60% of the financed emissions of the portfolio of non-financial companies in the sectors identified by the NZBA. In
relation to the targets described above, the Group has drawn up its first transition plan, in compliance with the requirements of
the NZBA and following the guidance from the Glasgow Financial Alliance for Net-Zero (GFANZ).
Intesa Sanpaolo is also committed to bringing its own emissions to Net-Zero in 2030, also by purchasing 100% energy from
renewable sources in the Group (this target was already achieved in Italy in 2021).
In 2022, Intesa Sanpaolo also worked to obtain the validation of the emission reduction targets from the “Science Based
Target initiative” (SBTi), a partnership between CDP, the United Nations Global Compact (UNGC), the World Resources
Institute (WRI), and the WWF. The SBTi certifies targets as “science based” if they are in line with the latest scientific
evidence for achieving the goals of the Paris Agreement.
In October 2022, the wealth management companies Eurizon Capital SGR, Fideuram Asset Management SGR, Fideuram
Asset Management Ireland and the Intesa Sanpaolo Vita Insurance Group also published their first interim targets, aimed at
achieving net greenhouse gas neutrality of the assets under management by 2050. The targets will be monitored and
extended in line with the requirements of the various Net-Zero initiatives.
The Bank has also joined various task forces of the Net-Zero Alliances and the Glasgow Financial Alliance for Net-Zero
(GFANZ), contributing to important publications and case studies (Intesa Sanpaolo’s targets were included in the first “NZBA
2022 Progress Report” as case studies on target setting and transition finance). In June 2022, Intesa Sanpaolo became an
investor signatory of CDP and in October Eurizon signed up to the CDP Science-Based Targets campaign, further promoting
transparency on climate and environmental issues. In November 2022, Intesa Sanpaolo attended COP27, the UN Climate
Change Conference, in Sharm El Sheik, as the only Italian bank.
Intesa Sanpaolo’s climate strategy is based on a clear awareness of the risks and opp ortunities associated with climate
change. The range of risks and opportunities related to climate change are identified and analysed by Intesa Sanpaolo’s CFO
Area and CRO Area, with the support and involvement of the various Governance Areas and Divisions, where relevant, in
order to integrate them into the normal risk assessment and monitoring processes (which lead to the management of climate
risk, in the form of mitigation and adaptation) and credit strategies.
The management of the enterprise risk is implemented through the overarching Risk Appetite Framework (RAF).
For a more detailed description of the climate change risks and their integration into the Group’s RAF, see Part E of the Not es
to the consolidated financial statements.
Economic value generated and distributed
The economic value generated by the Group during the year is calculated in accordance with ABI (Italian Banking
Association) instructions and consistent with international reference standards. The calculation is made by reclassifying
consolidated income statement items recorded in the financial statements, as required under Bank of Italy Circular 262.
The economic value generated, which reached almost 20.6 billion euro in 2022, came from net income from banking and
insurance activities – which therefore takes into account the impairment losses on loans and other financial assets – plus the
realised gains and losses on investments in associates and companies subject to joint control, investments and other
operating income. The amount of the economic value generated expresses the value of the wealth produced, most of which
distributed among the stakeholders with which the Group interacts in various ways on a day-to-day basis. Specifically:
− employees and other staff benefited from over 37% of the economic value generated, for a total of 7.7 billion euro. In
addition to staff pay, the total also includes payments to the network of financial advisors, together with 77 million euro i n
bonuses paid to the Group’s non-executive staff to mitigate the impact of inflation;
− suppliers received around 14% of the economic value generated, for a total of 2.8 billion euro in payment for goods and
services;
− The Government, Organisations and Institutions recorded a total flow of funds of over 2.2 billion euro, around 11% of the
economic value generated, of which over 1.1 billion euro referring to indirect taxes and duties, and over 800 million euro
to levies and other charges concerning the banking industry, consisting of contributions to resolution and guarantee
funds. There were also numerous social and cultural initiatives and other actions taken also to support the charity funds
and issue disbursements by way of social and cultural contributions;
− over 16% of the economic value generated was allocated to Shareholders, holders of equity instruments and minority
interests, largely in terms of the proposed dividend, for a total of around 3.4 billion euro. Specifically, the proposed
remaining dividend is 1,648 million euro (after the 1,400 million euro interim dividend paid in November 2022, for a total
of 3,048 million euro from the 2022 net income). For more details in this regard see the Proposals to the Shareholders’
Meeting in the Intesa Sanpaolo S.p.A. financial statements.
Report on operations – Overview of 2022
65
The remaining amount of the economic value generated, of around 4.4 billion euro, was withheld by the corporate system and
mainly comprises amortisation and depreciation, deferred tax assets and liabilities, allocations to reserves, and provisions for
risks and charges.
Economic value
millions
of euro
Economic value generated
20,575
100.0%
Economic value distributed
-16,168
78.6%
Employees and other staff
-7,718
37.5%
Suppliers
-2,823
13.7%
Government, Organisations and Institutions,
Community
-2,244
10.9%
Shareholders, Holders of equity instruments
and Third Parties
-3,383
16.5%
Economic value retained
4,407
21.4%
* * *
With regard to the aspects relating to the Group’s people and innovation, digital transformation and cybersecurity, see
paragraph The 2022-2025 Business Plan above.
Sustainability and ESG issues are covered in depth in the Consolidated Non-financial Statement (CNFS) drafted in
accordance with Italian Legislative Decree 254/2016, a separate report from the Annual Financial Report and available on the
Group’s website.
Since September 2019, Intesa Sanpaolo has published a voluntary Half-Yearly Consolidated Non-financial Statement
containing the key indicators.
In addition, as already illustrated above, Intesa Sanpaolo supports the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) by publishing the TCFD Report, which includes specific climate disclosures in accordance with
those recommendations.
Lastly, from 31 December 2022, the Pillar 3 document contains the ESG disclosure required by Article 449a CRR.
Progetto Cultura
Progetto Cultura is the multi-year programme of initiatives through which Intesa Sanpaolo actively expresses its commitment
to promoting art and culture, providing a responsible, di rect and tangible contribution to Italy’s cultural and social growth. The
activities are conceived and implemented by the Art, Culture and Historical Heritage Department in dialogue with major public
and private, national and international institutions and museums. The cultural sector has been acknowledged as playing a key
role in fostering more innovative, sustainable, and inclusive societies. In this regard, Progetto Cultura – an integral part of the
Business Plan and one of the Group’s identifying features – is a key factor in consolidating Intesa Sanpaolo’s leadership in
ESG and strengthening its position as an impact bank.
Gallerie d’Italia
Gallerie d’Italia is Intesa Sanpaolo’s museum network with four venues: Milan, Naples, Turin and Vicenza.
New museum venues in Naples and Turin
In May 2022, the Gallerie expanded with the creation of the new venue in Naples and the opening of the fourth museum in
Turin. The two major architectural projects, under the direction of Michele De Lucchi, transformed two of the Bank’s historic
buildings into museums, the former Banco di Napoli building in Via Toledo and Palazzo Turinetti in Piazza San Carlo.
The Gallerie d’Italia in Naples has trebled the spaces available compared to the previous venue, putting it on a par with the
major national and international museums. The exhibition offering ranges from archaeology to contemporary art and is divided
into three thematic itineraries on the first and second floors, with a total of over 690 artworks from the Intesa Sanpaolo
collections. The exhibition “From Caravaggio to Gemito” (curated by Fernando Mazzocca) presents paintings and sculptures
from Naples and southern Italy from the beginning of the 17th to the early 20th century, including Caravaggio’s masterpiece
the Martyrdom of St. Ursula. Also on display, for the first time in its entirety, is the collection of Attic and Magna Graecia
pottery consisting of around 500 artworks, and a collection of vases is presented in a dossier exhibition linking them to
artefacts from the National Archaeological Museum in Naples (curated by Fabrizio Paolucci). The third itinerary is dedicated to
the collection of modern and contemporary art, exhibited in rotation: the first display (curated by Luca Massimo Barbero)
features a selection of artworks including Fontana, Burri, Richter and Sol LeWitt. The spacious entrance foyer leads to the
large central hall used for temporary exhibitions and cultural initiatives, while the first floor houses teaching rooms and a
library.
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66
The identity o f the Gallerie d’Italia in Turin is linked to photography, the digital world and the culture of the image, to which
three vast underground floors are dedicated, accessible via a staircase that has already become a new “icon” of the city.
Photography plays the leading role as a tool for investigating current events (through exhibitions commissioned by the Bank,
with a particular focus on ESG issues), as a historical document (with the promotion of the Intesa Sanpaolo Publifoto Archive
and the exhibition “Great Italian Photography”), and as a source of reflection (through discussions and studies). The Publifoto
Archive – consisting of 7 million images from the 1930s to the 1990s – is available to scholars and researchers and is housed
in a room with a glass wall that allows visitors to observe the archivists at work. An interactive wall (Archivio Vivo) has also
been installed, which currently provides access to 15,000 digitised photos. The underground spaces also house a large
immersive hall (40 x 14 m, 17 4k projectors) and teaching rooms. On the upper floor, in the rooms richly decorated in the late
Baroque style, a set of 41 artworks from the Group’s art collections from the 14th to the 18th century is on display (curated by
Fernando Mazzocca, Alessandro Morandotti and Gelsomina Spione), including the nine 17th-century paintings from the
ancient Oratory of the Compagnia di San Paolo.
The opening of the two new venues was accompanied by the creation of new museum brand identity, with the launch of the
new logo, designed by architect De Lucchi under the supervision of President Emeritus Giovanni Bazoli, as an “Iconic and
universal sign, capable of representing not only a comprehensive museum system, but also an identity, a sense of belonging
and a philosophy”.
Visitors
In 2022, the Gallerie d’Italia welcomed almost 480,000 visitors. Admission is free up to the age of 18.
Exhibition projects: permanent collections, temporary exhibitions, and exhibitions in other venues
The Gallerie d’Italia host a selection of over 35,000 artworks from Intesa Sanpaolo’s art collections in prestigious historic
buildings. In 2022, the exhibition itineraries were set up in the new museums in Turin and Naples. The Vicenza permanent
collections were involved in two promotion proje cts: the addition of the “Seeing the Invisible” section dedicated to Russian
icons, with a focus on the theme of Orthodox festivals, including 18 panels from the 17th and 18th centuries; and the new
display of The Fall of the Rebel Angels, a precious 18th-century marble sculpture recently attributed to Francesco Bertos. In
Milan, a plan is being drawn up for the exhibition and promotion of the Agrati collection, one of the most prestigious privat e
collections of contemporary art in Italy and the world, now part of the Group’s art assets.
The Gallerie d’Italia propose temporary exhibitions based on original scientific projects, produced with the support of leadi ng
curators, in partnership with national and international museums, and featuring loans from all over the world (as well as
artworks from the Group’s own collections).
The first half of the year saw the continuation of 7 exhibitions inaugurated at the end of 2021: Grand Tour (in Milan); Venezia
che impresa! (Venice, what a feat!), the first exhibition of Argilla (Clay) and Valery Koshlyakov (in Vicenza); two exhibitions
dedicated to the Publifoto Archive, Prima della prima (in Milan) and Come saremo (How we will be) (in Vicenza); and Cima da
Conegliano (at the Skyscraper in Turin).
Starting from May, 14 exhibitions were opened:
In Milan: I Marmi Torlonia. Collezionare capolavori (The Torlonia Marbles. Collecting Masterpieces), curated by Salvatore
Settis, Carlo Gasparri, in collaboration with the Ministry of Culture-Special Superintendency of Rome and the Torlonia
Foundation; Dai Medici ai Rothschild. Mecenati, collezionisti e filantropi (From the Medici to the Rothschilds. Patrons,
collectors, philanthropists), curated by Fernando Mazzocca and Sebastian Schütze, in partnership with Alte Nationalgalerie in
Berlin and Musei del Bargello in Florence; Collezione Henraux 1960-1970 (Henraux Collection 1960-1970), curated by
Edoardo Bonaspetti, in partnership with Fondazione Henraux; and Matthias Schaller. Das Meisterstück; Gabriella Benedini.
Athanor, curated by Paolo Bolpagni.
In Naples: La fragilità e la forza (Fragility and strength), the final exhibition of the 19th edition of Restituzioni curated by Carlo
Bertelli, Giorgio Bonsanti and Carla Di Francesco, under the High Patronage of the President of the Italian Republic; and
Artemisia Gentileschi a Napoli (Artemisia Gentileschi in Naples), curated by Antonio Ernesto Denunzio and Giuseppe Porzio,
with special advisor Gabriele Finaldi, in partnership with the National Gallery, London.
In Turin: Paolo Pellegrin. La fragile meraviglia. Un viaggio nella natura che cambia (Paolo Pellegrin. Fragile wonder. A
Journey into a changing nature), curated by Walter Guadagnini with the contribution of Mario Calabresi; Dalla guerra alla luna
1945-1969. Sguardi dall’Archivio Publifoto Intesa Sanpaolo (From the war to the moon 1945-1969. Views from the Intesa
Sanpaolo Publifoto Archive), curated by Giovanna Calvenzi and Aldo Grasso; Lisetta Carmi. Suonare forte (Lisetta Carmi.
Playing loud), curated by Giovanni Battista Martini (first exhibition of the “Great Italian Photography” series curated by Roberto
Koch); and Gregory Crewdson. Eveningside, curated by Jean-Charles Vergne.
In Vicenza: Christoph Niemann. Illustrissimo, in collaboration with Festival Illustri; Pigafetta e la prima navigazione attorno al
mondo (Antonio Pigafetta and the first voyage around the world), curated by Valeria Cafà and Andrea Canova, in
collaboration with the City of Vicenza, Associazione Pigafetta 500, the National Committee for the celebrations of Antonio
Pigafetta, and Università Cattolica del Sacro Cuore; and Argilla. Storie di viaggi (Clay. Stories about Journeys), second
installation of the educational exhibition project mainly focused on inclusion, curated by Monica Salvadori, Monica Baggio and
Luca Zamparo, in collaboration with the University of Padua - Department of Cultural Heritage under the MemO Project.
The production of exhibitions at venues other than the Gallerie d’Italia within partnership projects also i ncluded: during Miart,
Milan: Tra pennelli e immagini virtuali (From brushes to virtual images) dedicated to five young emerging Italian artists,
curated by Luca Beatrice, at Fiera Milano City, in collaboration with Intesa Sanpaolo Private Banking; during Artissima, Turin:
exhibition of a set of Gregory Crewdson’s photographs at the Oval Lingotto, in conjunction with the Eveningside exhibition at
the Gallerie d’Italia in Turin (at the same time, presentation in the museum of the Collective Individuals video artworks
exhibition curated by Leonardo Bigazzi); during Roma Arte in Nuvola: presentation of an installation by Francesca Leone in
the new “La Nuvola” Convention Centre, in continuity with an exhibition on the artist hosted at the Gallerie d’Italia in Milan in
2021; during the International Festival of Photography Cortona On The Move, the exhibition Transformations in the Fortezza
del Girifalco, with photographs by Walter Niedermayr dedicated to the architectural transformation of Palazzo Turinetti in
Turin; and the co-production with Fondazione Cassa di Risparmio di Cuneo of the exhibition Tiziano, Tintoretto, Veronese. I
colori della fede, curated by Giovanni Carlo Francesco Villa and father Gianmatteo Caputo, in the Complesso Monumentale di
San Francesco in Cuneo in celebration of the thirty years of the Cuneo Foundation.
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Educational and inclusive activities and cultural initiatives
A key part of the Gallerie d’Italia’s programming is the relationship with schools and the theme of inclu sion, with the proposal
of activities – visit itineraries and workshops – aimed at students and people in situations of vulnerability, carried out with the
support of Civita Mostre e Musei. In 2022, a total of 1,550 educational workshops were held involving around 33,000 children
and young people from local schools of all levels, in addition to 260 programmes specifically created for vulnerable groups
with the participation of 3,680 people living with disability and social hardship. All the educational activities are free.
In addition, 815 itineraries and activities for adults and families and 295 cultural events (meetings, workshops, book
presentations, concerts, readings, press conferences), attended by a total of around 30,000 people, were organised during
the year.
Over 120 young art historians work permanently at the Gallerie d’Italia, under the partnership with Civita Mostre e Musei.
Gallerie d’Italia kitchens
With a view to supporting Italian creativity, talent and excellence also in the area of gastronomy, the Gallerie d’Italia have
opened their spaces to professional experienced chefs. In 2022, “Luminist”, a bistro café of the chef Giuseppe Iannotti (2
Michelin stars), was opened in Naples; in Turin, the bistro café of the Costardi Bros, the Piedmontese brothers who are
masters of risotto, was opened in within the historic “Caffè San Carlo”; and in Milan, the spaces of Vòce Aimo e Nadia (2
Michelin stars) were expanded with the addition of an exclusive room, “La Finestra sul Giardino di Alessandro”.
Galleria di Palazzo degli Alberti in Prato and Casa Museo dell’Antiquariato Ivan Bruschi in Arezzo
The management of the two museum venues in Tuscany forms part of Progetto Cultura.
The Galleria di Palazzo degli Alberti in Prato was inaugurated in March 2022. Intesa Sanpaolo, the owner of the historic
Palazzo degli Alberti, promoted and executed the reopening of the Gallery, responding to the request from the
Superintendency of Florence, Pistoia and Prato of ensuring that the precious collection housed in the building (now owned by
Banca Popolare di Vicenza in compulsory administrative liquidation and declared by the Ministry of Culture to be indivisible
and bound to the building) be made available to the public. The museum, entrusted to Civita Mostre e Musei, is open to the
public exclusively on weekends. Educational activities have been developed that will be offered to local schools in 2023.
The Casa Museo Ivan Bruschi in Arezzo, managed by Fondazione Bruschi, is now part of the Group’s cultural and
architectural assets as a result of the merger of UBI Banca. Opened in 2002, the museum is based in the medieval Palazzo
del Capitano and promotes art and antiques. Around 8,000 artworks belonging to Ivan Bruschi are exhibited there. The
museum also houses a set of Intesa Sanpaolo artworks on loan. In 2022, the Foundation celebrated 20 years since the
opening of the museum with 7 temporary exhibitions, as well as lectures, concerts, theatre performances, book presentations
and educational activities.
Restituzioni
Since 1989, Intesa Sanpaolo has been committed to safeguarding and promoting Italy’s artistic and architectural heritage with
Restituzioni, considered to be the largest restoration programme in the world, curated by the Bank together with the Ministry
of Culture. In 2022, the 19th edition was completed, which enabled the restoration of over 200 artworks from over 80
museums, churches and archaeological sites throughout Italy, with the collaboration of 54 conservation bodies, 80 restoration
laboratories and hundreds of art historians. As already mentioned, the final exhibition, La fragilità e la forza, was hosted in the
new Gallerie d’Italia in Naples. The side events included a series of seminars on restoration in synergy with the Academy of
Fine Arts of Naples. The 20th edition of Restituzioni was also launched, with the call open to 110 conservation bodies
(hundreds of restoration project proposals have already been received to date). In the area of monumental Restituzioni, two
major Renaissance artworks were recovered: the restoration was completed and officially presented of the monumental
painting Cena di san Gregorio Magno by Paolo Veronese, kept in the Sanctuary of Monte Berico in Vicenza (accompanied by
a programme of guided tours of the site and conferences entitled Aspettando Veronese); and restoration work was carried out
on the marble monument Madonna del Parto by Jacopo Sansovino kept in the Basilica of Sant’Agostino in Campo Marzio in
Rome.
Art Assets
The Group’s art collections contain around 35,000 artworks. Due to its size, completeness and quality, it is considered one o f
the largest corporate collections in the world, and is the subject of assiduous study, conservation and promotion by Progetto
Cultura, with the aim of sharing it with the public.
Restoration
In 2022, a total of 197 of the Bank’s art assets were restored (the artworks included in the itineraries of the new Gallerie
d’Italia in Turin and Naples, 25 marble sculptures from the “Henraux collection” and 10 paintings from the Bigongiari collect ion
formerly belonging to the Cassa di Risparmio di Pistoia e Pescia, in addition to part of the artworks loaned for temporary
exhibitions). From a sustainability perspective, the restorations are carried out using innovative and environmentally friendly
products.
Promotion
The promotion of the Group’s art assets takes place primarily within the museum itineraries at the Gallerie d’Italia, whose
exhibition projects in 2022 have been described above.
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Artwork Loans
The Bank’s artworks are regularly requested on loan for temporary exhibitions by museums and national and international
institutions. During the year, 277 artworks participated in 61 exhibitions in Italian venues (including Palazzo Reale, Milan;
Galleria Nazionale d’Arte Moderna-Ca’ Pesaro, Venice; Mart, Trento and Rovereto; and Centro per l’arte contemporanea
Luigi Pecci, Prato) and in international venues (such as Petit Palais, Paris; Rijks Museum, Amsterdam; and Hauser & Wirth
Gallery, New York).
Loans for use
One of the ways for ensuring that artworks are available to the public is through loans for use, and five new loans were
agreed in 2022 (with BPER Banca; Fondazione Bruschi, Arezzo; the Museo Diocesano Carlo M. Martini-Fondazione
Sant’Ambrogio per la cultura cristiana, Milan; the Municipality of Castellamonte, Turin; and the Fondazione della Comunità
Bergamasca) for a total of around 60 artworks.
Exhibition displays in the Bank’s premises
Two projects were carried out in collaboration with the Real Estate and Logistics Department:
– offices of Fideuram - Intesa Sanpaolo Private Banking: 18 branches and two buildings in Florence of particular historical-
architectural interest were fitted out, based on specific studies designed to jointly promote the buildings and the artworks,
selected according to their chronological, geographical and historical-artistic relevance;
– Intesa Sanpaolo House, the Group’s offices in Luxembourg: artworks by leading 20th century Italian artists and emerging
artists, selected from the Bank’s modern and contemporary art collections, were displayed at an event presenting
Progetto Cultura and the corporate collection organised in collaboration with Intesa Sanpaolo Bank Luxemburg, the IMI
Corporate & Investment Banking Division, the Italian Embassy in Luxembourg and the Cavour Foundation.
Promotional initiatives throughout Italy
Initiatives were organised in various cities across the country to promote parts of the Group’s collections of particular
relevance to the history and identity of their communities, organised in collaboration with local institutions, including:
– exhibition projects in the Pistoia venues of Fondazione Pistoia Musei-Fondazione Cassa di Risparmio di Pistoia, with
artworks formerly belonging to Cassa di Risparmio di Pistoia e Pescia (now belonging to Intesa Sanpaolo, on loan to
Fondazione Caript), consisting of the new layout of the “Collezioni del Novecento” in Palazzo De’ Rossi and the
exhibition In fabula. Capolavori restaurati dalla collezione Bigongiari in the Antico Palazzo dei Vescovi;
– the exhibition Collezione Henraux 1960-1970 in Querceta di Seravezza (Lucca) at the Henraux Foundation, which brings
together sculptures from the historic Henraux collection, including a set of 19 marble sculptures from the Intesa Sanpaolo
collections;
– the new display at the Royal Palace in Naples of the 18th century nativity scene formerly belonging to the Banco di
Napoli (now belonging to Intesa Sanpaolo, on loan to the local Superintendency);
– the exhibition Habitat. Le forme e i modi della Natura dedicated exclusively to a selection of 40 artworks from the Intesa
Sanpaolo Group’s modern and contemporary art collections, displayed at Palazzo Bisaccioni in Jesi, the historical
headquarters of Cassa di Risparmio di Jesi (now part of the Group) and current headquarters of Fondazione Cassa di
Risparmio di Jesi.
Diogene Project.
The Diogene Project is the assessment programme launched in 2019 that involves the verification of the location, state of
preservation and clustering of the artworks making up the Bank’s art assets – divided into two classes, the “valuable art
assets” (around 9,000 assets) and the “other assets of historical and decorative interest” (around 24,000 assets) – located in
the Bank’s various premises inside and outside Italy. The following were completed in 2022: the assessment of the former
UBI Banca art assets (around 5,000 assets, of which over 600 valuable art assets); the analysis of Intesa Sanpaolo’s asset
register relating to the “other assets of historical and decorative interest” class; and the assessment of Intesa Sanpaolo’s
“other assets of historical and decorative interest” present in the Milan, Turin and Sarmeola storage facilities. Assessments
are currently being carried out on the decorative elements and art assets housed in 83 Intesa Sanpaolo buildings and 20
former UBI buildings.
Fair Value and Art Advisory
The internal regulations require constant monitoring of the solidity of the economic value of the collections with respect to their
market, through the remeasurement of the fair value of the carrying amount of the artworks within the “valuable art assets”
class, conducted together with the Administration and Tax Department. The related scenario analyses were carried out during
the year. Investigations (provenance, attribution, etc.) were conducted on both the “valuable” artworks and “other ass ets of
historical and decorative interest”, focusing on impairment (also in support of the Diogene Project). Work continued on the
management of new acquisitions resulting from market purchases or donations (in particular the artworks that entered the
collection following the photographic exhibitions at the Gallerie d’Italia - Torino), accompanied by the constant analysis of new
acquisition proposals. The Bank’s collections were promoted through project initiatives at prestigious market events such as
the contemporary Miart, Artissima and Arte in Nuvola art fairs, in collaboration with and in support of the Group’s Art Advisory
activities.
“Energy Lines” conference.
The 6th edition of the “Energy Lines” conference programme dedicated to the topic of restoration of contemporary artworks
took place in 2022, in collaboration with Fondazione Centro Conservazione e Restauro La Venaria Reale and IGIIC-Italian
Group International Institute for Conservation. The new edition, held online on the Artissima platform in Turin, was an
opportunity to reflect on the restoration and archiving of photographic materials.
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Historical archive
Intesa Sanpaolo’s Historical Archive, one of the most important bank archives in Europe, holds 20 kilometres of documents
from 1380 to the early 2000s, and, among the photographic collections, it manages the Publifoto Archive. It is responsible for
the preservation, cataloguing, promotion and public use of the extensive archive collections inherited from the banks that ha ve
merged into the Group.
New acquisitions, protection, conservation and restoration
In 2022, the work on the former UBI Banca archives led to the acquisition of additional documentation (2,587 boxes and 250
historical registers) and the work on the other Group archives resumed, with the acquisition of 106 boxes and 460
registers/documents. The acquisitions also involved photographs (6,113), museum items (771) and books (the database
increased by 2,959 bibliographic records in the year).
Around 22,000 new documents were uploaded through the innovative PAD-Digital Archives Project, which guarantees the
long-term preservation of digital documents from the Bank’s various structures, and work continued on the restoration of past
documents of historical interest (from the Training, Internal Communications, and Research structures)
The restoration involved around 1,870 items made up of photographs, documents, objects and volumes.
Inventorying and cataloguing
The inventorying of the former UBI Group archives concerned 1,798 boxes, 749 folders, 1,016 registers/documents, and
2,362 record cards, along with 1,014 boxes, 7 metres of registers, 338 items, and 490 record cards for the Group’s other
archives.
The following inventory projects continued: Carte dei Vertici (3,600 record cards); Carte Personale Comit e Cariplo (785
record cards and 195 folders); Fondo dell’ufficio Cause e Procedimenti del Servizio Legale e Tributario della Comit (313 files);
Patrimonio IMI (473 folders); and Carte dell’arte, dedicated to the search for documents relating to the Group’s art assets
(inventorying of 131 folders and indexing of 32 record cards for 51 reports processed).
The Historical Map, the digital environment that reconstructs the history of the Group’s banks, was updated (2 78 banks
covered in 2022).
Online consultation, study rooms and research activities for the Departments
The approximate figures for the consultation sites were around 51,000 visits for the inventory publication site, 12,000 for t he
Historical Map and 6,700 for the World Map.
The study rooms of the Archives in Milan and Rome were open, with 305 in-person consultation days, 69 remote users, 203
study requests and 40 theses in progress in the year 2022.
The projects that use the innovative LOD-Linked Open Data for data publication continued, namely Fondo EGELI, the data on
the confiscation of Jewish property during the Nazi-Fascist persecution (5,271 record cards), and Archivi che imprese!, the
data sources on loans to industry in the 20th century (11,733 record cards). An informational video on the LODs was
produced and presented for the first time at the European Association for Banking History’s international workshop entitled
Digital rebirth of historical datasets.
Other important work included the search for documents in support of other Departments and International Subsidiary Banks,
as well as the scale back activities with the Real Estate Department – emptying and disposal – for the offices and archives in
the former UBI premises (Bergamo, Brescia, Jesi), the Group’s premises or external storage facilities.
Promotion
The materials of the Historical Archive were promoted during the exhibitions Dai Medici ai Rothschild (at the Gallerie d’Italia in
Milan, in the section dedicated to Raffaele Mattioli), Quando lo spazio è arte (at the Gallerie d’Italia in Milan, as part of
MuseoCity), Storie restituite (in the Municipality of Bollate, dedicated to the Fondo Egeli); in the podcasts L’ebreo onorario as
part of the Holocaust Memorial Day; and at the Festivaletteratura in Mantua, the Festival della Cultura Americana in Rome,
and the Archivi Aperti event in Milan.
Two transfers were completed: the precious library of the Monte di Pietà in Milan was transferred to the Fondazione Banca
del Monte di Lombardia and the archives of the Cassa di Risparmio di Tortona were transferred to the Fondazione Cassa di
Risparmio di Tortona.
The collaborations continued with archives, cultural institutions and universities on projects promoting and enhancing the data
sources, including Fondazione Einaudi in Rome and Fondazione 1563 per l’Arte e la Cultura in Turin. The research project
with La Sapienza University of Rome in collaboration with the University of Buenos Aires entitled Italy/Argentina,
Argentina/Italy, which also led to the staging of an exhibition at the Galata Museo del Mare in Genoa, was concluded.
Publifoto Archive
The Publifoto Archive has found a permanent home in the new Galler ie d’Italia in Turin, with over 100 pallets of material
transferred from Milan to Turin, including 3,200 boxes of valuable vintage prints.
The materials of the Publifoto Archive also underwent restoration (990 photos), digitalisation (13,690) and publication in LOD
format (10,000 record cards).
On the promotion front, the Publifoto images featured in exhibitions at the Gallerie d’Italia (in particular Dalla guerra alla luna
in Turin) and were included in exhibitions at other venues (such as the Museo Nazionale Romano-Terme di Diocleziano in
Rome and Palazzo Ducale in Martina Franca). Other important highlights included the Archivi Aperti event in Milan, the
Archivissima festival and La Notte degli Archivi in Turin, in addition to the Update. Formarsi con gli archivi series of meetings
organised by Archivissima and hosted at the Gallerie d’Italia in Turin, which showcases the Publifoto Archive alongside other
archives.
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Art & People Project
The Bank’s historical-artistic assets are a valuable resource to be used for the benefit of the community as a whole, as well as
specifically for the Bank’s employees. This is the philosophy behind the Art & People project, in which the Art, Culture and
Historical Heritage Department collaborates with the Bank’s other structures in planning initiatives for Intesa Sanpaolo’s
employees (in 2022: “Insuperabili con Arte” in collaboration with Disability Management and the cross-functional working
group “inSUPERabili”; “Art Experience” in collaboration with Talent Management; and “Arte e inclusione” in collaboration with
Diversity & Inclusion and the ISProud Community).
Digital promotion
The new website gallerieditalia.com was unveiled, updated in terms of graphics and content, with the live release of the
platform in synergy with the current standards of Intesa Sanpaolo’s own websites.
Initiatives have been produced on the web and social channels of Gallerie d’Italia and the Group to promote exhibitions, the
Bank’s art assets and archive collections, the cul tural partnerships and other Progetto Cultura events, which help in reaching
a wider public and fostering inclusion, and provide additional insights. There was a good response in terms of views and
interactions
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Alongside the activities on the Gallerie d’Italia and the proprietary platforms, the work involved the dissemination of content on
the company intranet to increase staff engagement (115 news items, 19 articles on Mosaico and Mosaico International, and
31 clips).
For the projects of the new museum sites, the Gallerie d’Italia App has been developed – currently for the Turin site –
containing a digital guide that provides an “enhanced” visitor experience offering information, exclusive content and
information accessible to different target audiences (4,500 downloads).
National and international partnerships
Progetto Cultura maintains a network of partnerships with major Italian organisations, to support their activities, as well as the
joint production of initiatives, within relationships increasingly based on synergy and sharing. Below are some of the main
collaborations carried out during the year, based on dialogue and shared work with bank foundations, local authorities,
superintendencies, universities, museums and cultural institutions in Italy.
– An agreement has been signed through which Intesa Sanpaolo will be the main partner of the “Bergamo Brescia Italian
Capital of Culture 2023” event alongside the Bergamo Brescia Committee (composed of the Fondazione Cariplo, the
Foundations of the Comunità Bresciana and the Comunità Bergamasca, and the Municipalities of Bergamo and Brescia).
On 2 March 2022, the Gallerie d’Italia in Milan hosted the presentation of the planning dossier “La città illuminata”
attended by the Minister Dario Franceschini, organised with the support of the Bank and curated by the ASK Research
Centre of the Bocconi University.
– The Bank is the main partner of the most important modern and contemporary art fairs in Italy, including Miart in Milan
(26th edition in 2022), Artissima in Turin (29th edition), Roma Arte in Nuvola in Rome (2nd edition), and the International
Festival of Photography Cortona On The Move, which it participates in by contributing its own original content (see
Gallerie d’Italia - Exhibition Projects).
– Numerous collaborations are in place with prestigious Italian museums to support exhibitions and activities: Castello di
Rivoli Museo d’Arte Contemporanea in Rivoli; Palazzo Strozzi in Florence (in particular, the Bank was the main partner o f
the major exhibition Donatello. Il Rinascimento); the National Archaeological Museum and the Museo e Real Bosco di
Capodimonte in Naples, Pinacoteca di Brera and Museo Poldi Pezzoli in Milan; and Fondazione Torlonia in Rome. The
exhibitions include those of Fondazione Cassa di Risparmio di Forlì in the Musei di San Domenico in Forlì (Maddalena in
2022); of Fondazione Cassa di Risparmio di Padova e Rovigo in the Palazzo del Monte di Pietà in Padua and Palazzo
Roverella in Rovigo (Kandinskij; L’occhio in gioco; Robert Capa); of the Municipality of Vicenza as part of the “Grandi
Mostre in Basilica Palladiana” exhibition (I creatori dell’Egitto eterno, in collaboration with the Egyptian Museum in Turin);
of the City of Milan in the city hall of Palazzo Marino every Christmas (La carità e la bellezza); as well as the Raffaello
exhibition at the Musei Reali in Turin and the Michelangelo exhibition at the Gallerie dell’Accademia in Florence (in
collaboration with Intesa Sanpaolo Innovation Center). In addition, under a multi-year plan in cooperation with
Compagnia di San Paolo, support was provided to the Fondazione Museo delle Antichità Egizie, Fondazione 1563 per
l’Arte e la Cultura, Polo del ’900 and Filarmonica Teatro Regio in Turin, as well as to the international study conference “Il
genio universale di Canova” (in Possagno, Bassano del Grappa and Vicenza).
– As part of the promotion of books and reading, support was provided to the Turin International Book Fair (34th edition)
and related initiative s (“Un libro tante scuole” and “Portici di carta”), as well as Circolo dei lettori in Milan and La Grande
Invasione-Festival della lettura in Ivrea (10th edition).
40
The most significant initiatives (data provided by the Communication and Corporate Image Department) included: social and digital content (organic
on the Bank’s channels, adv campaign): Promotion of the new Gallerie d’Italia-Torino and inaugural exhibitions Pellegrin, Dalla guerra alla luna): 35.2
million impressions, 1.2 million interactions; Promotion of the new Gallerie d’Italia-Napoli: 26.6 million impressions, 734 thousand interactions and
Restituzioni Inaugural Exhibition: 324 thousand impressions; Pigafetta Exhibition: 4.7 million impressions, 2.7 thousand interactions; Crewdson
Exhibition: 25.3 million impressions, 17.4 thousand interactions; Torlonia Exhibition: 18 million impressions, 2.5 million interactions; Artemisia Exhibition:
23.5 million impressions, 26.2 thousand interactions; #INSIDE (seminars on the themes of the exhibitions of Gallerie d’Italia-Torino/Naples): first half:
social content and web adv: 7.8 million impressions; second half, focus on live appointments in Turin: social adv content: 7.9 million impressions;
Executive Course in Management of Artistic and Cultural Heritage and Corporate Collections: 2nd edition: 16.7 million impressions; 3rd edition launch:
12.7 million impressions; Partnership with Artissima and Miart: 69.3 thousand impressions and Amplify promotion 156.4 thousand views; various
accessibility and inclusion initiatives at the Gallerie d’Italia: organic content on the Bank’s channels: 120.4 thousand impressions, Amplify promotion 300
thousand views.
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– In the area of photography, in addition to the Cortona Festival, the initiatives included support for CAMERA-Centro
Italiano per la Fotografia (of which the Bank is a founding partner), the ATP 50 Game Changing photography exhibition
organised by the City of Turin during the Nitto ATP Finals, the first edition of the prize for young photographers organised
by the Paul Thorel Foundation of Naples, and the signing of a memorandum of understanding for the staging of an
international photography festival in Turin starting from 2023.
– For the promotion of the archive collections, support for the Archivissima Festival and La Notte degli Archivi in Turin (5th
edition) and Museimpresa-Associazione Italiana Archivi e Musei d’Impresa.
– Intesa Sanpaolo supports projects for the restoration and redevelopment of public spaces and monuments through
donations in the form of art bonuses, including, for 2022: restoration and expansion of the Pollini Conservatory in Padua
(with Fondazione Cassa di Risparmio di Padova e Rovigo and the Municipality of Padua); refurbishment of the Teatro
Ringhiera in Milan (with Fondazione Cariplo and the Municipality of Milan); support for the international competition for
the restyling of the Artemio Franchi Stadium in Florence (with Fondazione Cassa di Risparmio di Firenze and the
Municipality of Florence); restoration of the historic garden of the Bonoris Castle in Montichiari; maintenance of the
Municipal Castle in Barolo (through participation in the charity auction “Barolo en primeur” promoted by the Fondazione
Cassa di Risparmio di Cuneo).
– The Group also participated in social projects, including the restyling of the social areas of the Neonatal Intensive Care
Unit of the University Neonatology Complex of the Sant’Anna Hospital in Turin (the “Spazi Neonati” project of the Città
della Salute e della Scienza di Torino), and in various initiatives in favour of non-profit associations (AGDP-Associazione
Genitori e Persone con sindrome di Down, Milan; Fondazione Theodora, Milan, in support of children in hospital; and
Fondazione Piemontese per la Ricerca sul Cancro).
Also worth noting are the international collaborations (in synergy with International Affairs), with a view to cultural diplomacy
and in line with the Group’s international orientation. These include the partnership with the National Gallery in London for the
implementation of the cultural project and exhibition dedicated to Artemisia Gentileschi; the exhibition of a 17th century
Flemish painting in the Intesa Sanpaolo collection in the residence of the Italian Ambassador in Belgium, to mark the “Italy-
Belgium reinforced political dialogue”; and the promotion, with an event at the Italian Embassy in Paris, of the painting by
Giovanni Boldini in the Intesa Sanpaolo collection on loan for the exhibition at the Petit Palais.
Training and projects for young people
Progetto Cultura devotes initiatives to young people that take the form of expressive and educational opportunities related to
professions in the world of art and culture.
Within the “Gallerie d’Italia Academy”, the second edition was held of the Executive Course in the “Management of artistic-
cultural assets and corporate collections” (with Fondazione Compagnia di San Paolo and Fondazione Cariplo, Intesa
Sanpaolo Formazione, Fondazione 1563 per l’Arte e la Cultura, Ministero della Cultura-Fondazione Scuola dei beni e delle
attività culturali): over 440 applications, 30 participating students, 8 scholarships provided by the Foundations, 60 lecturers,
and 162 hours of lessons (in person, in the Gallerie d’Italia venues, and via webinar). The third edition of the course, which
will take place in 2023, was also launched (over 150 applications have already been received).
Among the initiatives of “Officina delle Idee”, the following continued: the “Euploos Project” in collaboration with Gallerie degli
Uffizi in Florence, which involves a multidisciplinary work group made up of young art historians, photographers and computer
scientists, for the creation of a digital catalogue of the 70,000 drawings preserved by the Gabinetto dei Disegni e delle
Stampe degli Uffizi (1,754 scientific record cards and 3,250 photographs published in 2022); the educational projects
involving the provision of the Bank’s artworks to the Laboratorio per il Restauro dei Disegni e delle Stampe at the Fondazion e
Centro Conservazione e Restauro “La Venaria Reale”, as part of the Degree Course in Conservation and Restoration of
Cultural Assets at the University of Turin (50 works from the 20th century on paper, a collection of negatives from the
Publifoto Archive and 23 historical machines from the Historical Archive collections were restored in 2022). New initiatives
were launched: two research projects dedicated to the enhancement of the primary sources of the Historical Archive entrusted
to two young researchers from the University of Milan and the University of Genoa; and a three-year project involving students
from the Photography Course at the IED-Istituto Europeo di Design in Turin, invited to document the impact of the new
Gallerie d’Italia on the local area (the first stage, entitled Sono qui. Bureau Metamorfosi, concluded in 2022 with the exhibition
in the Portici of Piazza San Carlo of a selection of 26 photos taken by 21 students).
Publishing and musical initiatives
The publications for the initiatives of Progetto Cultura are made by Edizioni Gallerie d’Italia - Skira. In 2022, a total of 16
volumes were published, including exhibition catalogues, the multimedia series Vox Imago (now in its 19th edition with Verdi’s
Macbeth), photography books (Fotografia. Due secoli di storia e immagini curated by Walter Guadagnini and A Time of
Distance in collaboration with Cortona On The Move), research projects and studies on collections (including the second
edition of Collezionisti e valore dell’arte in Italia in collaboration with Intesa Sanpaolo Private Banking and the Research
Department) and the “silent book” La luna al museo consisting solely of illustrations in a perspective of accessibility (produced
in collaboration with the Ministero della Cultura-Fondazione Scuola dei beni e delle attività culturali).
Of note was also the release of the prestigious two-volume work I presidenti e la presidenza del Consiglio dei ministri
nell’Italia repubblicana edited by Sabino Cassese, Alberto Melloni and Alessandro Pajno, in collaboration with Fscire-
Fondazione per Le Scienze Religiose Giovanni XXIII published by Laterza with the support of the Bank.
The collaborations continued with major musical institutions for the organisation of concert seasons (Società del Quartetto,
Milan; Palazzo Marino in Musica, Milan; Festival Milano Musica; Stresa Festival; and Festival L’arca di Noa in Arona). In the
area of music education, training projects for young performers were promoted, with a focus on young people from
disadvantaged groups, as well as specific initiatives for young listeners (Esperienza Orchestra with the Philharmonic
Report on operations – Overview of 2022
72
Orchestra of Teatro Regio in Turin, and programmes with Associazione Alessandro Scarlatti in Naples and the Società del
Quartetto in Milan).
Main risks and uncertainties
The main information on risks and uncertainties to which the Intesa Sanpaolo Group is exposed are described in the Report
on operations and in the Notes to the consolidated financial statements.
In the introduction to this chapter, as usual, a summary description is provided of the macroeconomic situation (discussed in
more detail in the specific chapter of the Report) with the main risks associated with the international geopolitical scenario to
be read in conjunction with the forward-looking guidance contained in the chapter on the business outlook.
In accordance with the instructions contained in the ESMA public statement of 13 May 2022 and in the most recent public
statement “European common enforcement priorities for 2022 annual financial reports” of 28 October 2022:
−
a description is provided in this chapter of the aspects of risk for the ISP Group related to the military conflict between
Russia and Ukraine, as well as the COVID-19 pandemic. Further information in this regard, referring in particular to the
valuation impacts of the exposures to the two warring countries, is included in Part E – Information on risks and relative
hedging policies of the Notes to the consolidated financial statements. Parts A, B, C and E of the Notes to the
consolidated financial statements also contain the information required by the Bank of Italy Communication of 21
December 2021 concerning the additions to Circular 262 in relation to the impacts of COVID-19 and the measures in
support of the economy;
−
in light of the change in the scenario in terms of interest rates and inflation following the outbreak of the Russian-
Ukrainian conflict, Part B of the Notes to the consolidated financial statements, in the paragraph on impairment tests,
provides details of the management assessments regarding the scenario and earnings forecasts used at the end of 2022
in the fairness assessment of the values of the intangible assets and goodwill;
−
information on risks at a general level, and in particular on financial risks (credit risks and market risks), operational risks
and the risks of insurance companies is contained as always in Part E of the Notes to the consolidated financial
statements which also provides further information regarding climate risk. The main issues related to climate risk referre d
to in the recent ESMA public statement are reported in aggregate form in Part E of the Notes to the consolidated financial
statements, while the more strictly strategic aspects are discussed in the paragraph above on “Sustainability and Group
strategy on Environmental, Social and Governance issues” in this chapter of the Report on operations.
Lastly, with reference to the capital position, the related information is contained, in addition to the Report on operations, in
the specific paragraph dedicated to own funds and solvency ratios, in Part F of Notes to the consolidated financial statements.
As usual, further details are provided in the update of the Basel 3 Pillar 3 Disclosure.
With regard to the going concern assumption, the Directors of Intesa Sanpaolo re-affirm that they have a reasonable certainty
that the Company and the Group will continue in operational existence in the foreseeable future and consequently the 2022
Financial Statements have been prepared on a going concern basis. The Directors have not detected any uncertainties in the
consolidated balance sheet and financial structure of the Group or in the performance of operations that question the going
concern assumption.
73
The macroeconomic context
and the banking system
74
75
The macroeconomic context and the banking system
The macroeconomic context
The economy and the financial and currency markets
We estimate that world GDP growth in 2022 was at 2.7%, after the 6.0% rebound in 2021. Growth in world trade also slowed
down sharply. The deceleration of growth was widespread across all geographies, affecting both advanced and emerging
economies. In China, the volatility of the economy was heightened by the policies adopted to manage the pandemic crisis.
The inflationary crisis further intensified, particularly in Europe, and prompted many central banks to rapidly remove the
monetary stimuli introduced in previous years. In particular, the FED’s monetary policy quickly became restrictive during 2022,
thus beginning to dampen the most interest-rate-sensitive components of domestic demand, such as residential construction.
The FED funds rate range was raised during the year from 0-0.25% to 4.25-4.50%, and the central bank started reducing its
portfolio of government and corporate securities, after having stopped increasing it from March.
In 2022, the Euro area was hit by the effects of a spike in natural gas prices, a repercussion of the Russian invasion of
Ukraine and of the resulting deterioration in political and economic relations between the European Union and Russia. The
almost total disruption of gas imports from Russia was tackled with a combination of reduced consumption, increased
production from renewable and other fossil sources, and increased imports from other suppliers. This strategy averted the
need for rationing of supplies, but it did not prevent steep rises in gas prices in the European market. The drastic deterioration
in terms of trade as a result of the crisis was reflected in a fall of around 4 percentage points in the aggregate trade balance.
However, the recessionary impact of the shock was almost entirely offset by public support measures for households and
businesses and the fall in the average household saving rate back towards pre-pandemic levels. As a result, GDP grew by
3.5% in 2022, well above the potential growth estimates. In 2022, inflation rose to levels well above those expected a year
ago before the war, with the average annual change at 8.4%. Much of the greater increase was attributable to the direct and
indirect effects of higher natural gas prices, but statistical analyses now also point to demand factors making a significant
contribution to the underlying inflation dynamics.
In Italy, the preliminary ISTAT estimate puts GDP growth in 2022 at 3.9% y/y, about half a point lower than forecast before the
war. The reduction in growth was due to the sharp deterioration in the trade balance (equal at around 4 percentage points of
GDP in 2022, also for Italy), which was reflected internally in a decline in real household income (harmonised inflation rose to
8.7% on an annual basis) and a fall in company profit margins. The final impact was mitigated by fiscal measures (cut in
excise duty, corporate tax credits, household subsidies, suspension of several system-wide cost components, etc.) and the
marked reduction in the average household saving rate. The unemployment rate fell to 8.2%. Nonetheless, GDP growth
gradually slowed down over the course of 2022, and was moderately negative on a quarterly basis at the end of 2022,
reflecting the weakening industrial production and construction activity. In 2022, the performance of real estate prices was
very positive in nominal terms, although weakening from the third quarter, when the ISTAT index recorded a 3.0% y/y
increase, down from the peak of 5.2% in the second quarter. Italy achieved all the intermediate targets set in the NRRP,
obtaining the release of all the payment tranches under the plan. However, actual expenditure was lower than initially
estimated.
The European Central Bank raised official rates rapidly from July 2022, initiating a tightening phase that will carry on into the
early part of 2023. Last year ended with a deposit facility rate (DFR) of 2.00% and a rate on main refinancing operations (refi)
of 2.5%. At its meeting at the end of 2022, the ECB announced that the increases would continue at a robust pace in early
2023, and a new rate increase of 50 basis points was promptly implemented on 2 February. With regard to unconventional
measures, the ECB discontinued the net purchases linked to the Pandemic Emergency Purchase Programme (PEPP) at the
end of March 2022, and those of the Asset Purchase Programme (APP) at the end of June. In October, it also announced
changes to the terms of the TLTRO III operations aimed at encouraging early repayment by the borrowing banks. To reduce
the risk of severe local market turbulence during the monetary tightening phase, the ECB decided to apply flexibility in
reinvesting the maturities of the PEPP portfolio and announced the new Transmission Protection Instrument (TPI). The TPI
can be activated to support jurisdictions that meet minimum conditions of compliance with EU regulations on public accounts
and macroeconomic imbalances, as well as their commitments under the NRRP.
The rise in market interest rates in the Eurozone partly anticipated the monetary policy tightening. Subsequently, the speed of
ECB rate hikes caused rate curves to flatten considerably. Indeed, the increase in rates since December 2021 was around 3.4
percentage points on the two-year IRS maturity but only 2.6 points on the 10-year IRS maturity. The discontinuation of net
bond purchases, rising interest rates and worsening growth prospects led to a sharp widening of risk premiums on BTPs, with
the spread increasing from 128 basis points in December 2021 to 190 basis points one year later. The government crisis and
the elections led to strains in the government debt market from July and further disengagement of foreign investors from July.
These strains receded in the last two months in the face of evidence that the new government was adopting prudent fiscal
policies that were generally consistent with the EU recommendations.
Foreign exchange markets were affected by the increased volatility of real growth and rate spreads. The euro/dollar exchange
rate fell from 1.13 to 0.98 and then recovered in the last two months to 1.06. The Pound sterling and the Japanese yen were
also subject to high volatility.
International equity markets were bearish overall in 2022, driven mostly by exogenous shocks, including the war between
Russia and Ukraine, the energy crisis, rising inflationary pressures, restrictive policies adopted by central banks, and the
resumption of COVID infections in China.
Report on operations – The macroeconomic context and the banking system
76
The first half of the year saw a general increase in risk aversion: the outbreak of the war between Russia and Ukraine at the
end of February introduced a strong element of uncertainty for the economic outlook and for listed companies, particularly in
the Eurozone. After hitting the lows of the year at the end of September, the stock indices then partially recovered in the final
quarter of 2022.
The more constructive approach adopted by investors was driven, first, by overall positive and above-expected quarterly
results, with listed companies able to defend their profitability margins despite a challenging business environment, and
second, by expectations that inflation may peak in the early part of 2023.
The Euro Stoxx index ended the year down by -13.2%, the CAC 40 slightly outperformed, closing at -8.1%, while the DAX fell
by -11.5%, and the IBEX 35 outperformed, closing the year at -4.5%. Outside the Eurozone, the Swiss SMI market index
closed the period at -15.7%, while the FTSE 100 index in the UK ended the year up slightly (+1.7%).
The US equity market fell sharply: the S&P 500 index ended the period at -20.6%, while the Nasdaq Composite technology
stocks index underperformed (-34.7%). The main stock markets in Asia also recorded declines: the NIKKEI 225 index closed
2022 at -9.4%, while the Chinese SSE Composite market index ended the period at -15.5%.
Overall, the Italian equity market performed in line with Eurozone benchmarks, with the FTSE MIB index ending the year at -
12.2%, in line with the FTSE Italia All Share index (-13.0%). Mid-cap stocks underperformed, ending the period down -27.7%.
Despite a partial recovery in the final part of the year, European corporate bond markets ended 2022 down, with risk
premiums (measured as asset swap spread-ASW) up sharply.
The monetary policies of the central banks have been among the main drivers of market performance since January, when
expectations of less monetary stimulus from the ECB weighed on spreads. Investor sentiment then gradually worsened due to
Russia’s invasion of Ukraine, concerns about the outlook for the business cycle, and above all the sudden price increases tha t
prompted the European Central Bank and Federal Reserve to adopt a more aggressive stance on interest rates. In this
context, spreads reached their highs at the end of June, followed by an essentially sideways phase, before partially
recovering in November (iBoxx IG Euro Corporates index).
Investment grade corporate bonds saw their spreads increase to 98 basis points from 63 at the beginning of the year, after
peaking at 136 at the end of June 2022. High-yield bonds also performed negatively, with spreads rising to 427 basis points
compared to the 301 at the beginning of the year. In both cases, the data show stronger resilience of non-financial securities
(IHS Markit iBoxx indices).
The primary market was affected by the rise in interest rates, with a contraction in new issuances. In this context, according to
Bloomberg data, sustainable finance-related (ESG) issuances fell by 27% from 2021 (to around 250 billion euro) after the
continuous growth recorded in recent years. The breakdown by type of bond shows that the fall was mainly due to the
decrease in social bonds (-67% compared to 2021) and sustainability-linked bonds (-47), while issuances of green bonds
were substantially in line with the previous year (around 180 billion euro). The rise in interest rates also had an effect in terms
of the placement price of ESG securities, with the gra dual erosion of the “greenium” from issuances of “sustainable” securities
compared to securities with the same characteristics, but not linked to ESG.
The emerging economies and markets
After the strong rebounds in 2021, the Emerging Countries experienced slowdowns in their growth rate, mainly in the first
quarter of 2022, whereas strong negative signals emerged from the second quarter due to the impacts of the Russian
invasion of Ukraine. The largest increases in GDP were recorded among the Emerging and Developing Economies (3.7% in
2022 according to IMF estimates), with Russia, however, posting an estimated GDP decline of 3.4% in 2022 due to the effects
of the war. The IMF’s growth estimate for the Middle East and Central Asia is higher (5.0% i n 2022), but more modest for sub-
Saharan Africa (+3.6%).
In the regions with ISP subsidiaries – based on the available data updated to the third quarter of 2022 – there was an
increase in GDP of around 3.2% in Central and South-Eastern Europe (CEE/SEE) and a decrease of over 6% in Eastern
Europe (EE), with performance at individual country level in the third quarter ranging from +1.4% in Slovakia to +5.2% in
Croatia in the first area, and from -3.7% in Russia to -30.8% in Ukraine in the second area. Growth in the third quarter was
more subdued in all the European areas compared to the second quarter.
In 2022, the effects of the conflict in Ukraine and the strong demand associated with the recovery pushed energy commodity
prices to record levels with consequent effects on inflation, particularly in Eastern European (EE) countries, where the latest
available data show increases of over 13%. In the regions with ISP subsidiaries, consumer prices in 2022 rose to an average
of 13.6% (from 4.5% in the previous year) in the Central Eastern Europe (CEE) and South Eastern Europe (SEE) area
(ranging from 6.7% in Albania to 15.7% in the Czech Republic) and to 14.5% from 6.9% in 2021 in the EE area. In Egypt,
prices began rising again to +13.1% from +5.2% in 2021. In many countries, inflation rates were beyond the central bank
target ranges.
The expansionary measures adopted by central authorities to contain the economic effects of the pandemic and support
economic recovery are starting to be phased out in some countries. With regard to the countries with ISP subsidiaries, a
phase of rises in key interest rates has been initiated, especially for Eastern Europe, in light of the high inflationary
environment, while the abundant liquidity previously injected into the system to deal with the decline in consumption and
investment is starting to be phased out.
In this context, monetary policies were tilted towards tightening. In Hungary, the policy rate was raised to 13% from 2.4% at
the beginning of 2022 and in Poland, the National Bank kept the key interest rate unchanged at 6.75% for the fourth time in a
row at its January 2023 meeting. At its last meeting in 2022, the Czech National Bank kept the key interest rate at 7.0%, the
same as the rate decided by Romania in January 2023. In Serbia and Albania, the key interest rates are 5.25% and 2.75%
respectively. In Russia, the central bank (CBR), after raising the policy rate to 20% on 28 February 2022, started to reduce it
by 300 basis points (to 17%) in April and by another 600 basis points (to 11%) in two steps in May. In early June, the CBR
lowered the key interest rate again to 9.5%, then to 8.0% in July and finally to 7.5% in September. In Moldova, the central
bank raised the key interest rate six times in 2022, by 1,500 basis points, to 21.5%, before lowering it to 20.0% in December.
Report on operations – The macroeconomic context and the banking system
77
Lastly, in Egypt, the Central Bank, after keeping the policy rate unchanged in 2021, increased it in March 2022 by 100 basis
points (to 10.25%), in May by 200 basis points (to 12.25%), by another 200 basis points in October to 14.25%, and finally by
300 basis points in December to 17.25%.
2022 was a year of investor caution. The main drivers of the financial markets were the outbreak of the military conflict
between Russia and Ukraine in February, the continuation of the critical issues that emerged during the Covid-19 pandemic,
which are still affecting supply chains, the progressive rise in prices at global level (in particular on the energy component,
also for geopolitical reasons), the change of course in terms of monetary policies of the main central banks, which are
primarily focused on bringing inflation back to target levels by means of less favourable financial market conditions, and th e
risk of a period of stagnation in the world economy. International sentiment is still being particularly influenced by the
uncertainties surrounding China’s growth trajectory because – despite the recent relaxation of strict infection containment
measures – the prolonged zero Covid strategy adopted by Beijing has put the world’s second largest economy under severe
strain. With regard to the equity markets, last year saw widespread downward price corrections (MSCI World index -19.46%,
MSCI Emerging Markets -22.37%). For the basket of Emerging Markets, losses were reported on the MSCI Eastern Europe (-
82.86%) and Asia ex-Japan (-21.54%) indices, while the Latin America index remained stable overall (-0.07%), following
erratic movements over the months. The equity index for Eastern Europe was particularly affected by the heightened
geopolitical tensions and military escalation between Moscow and Kyiv. Asian equities were weighed down in particular by the
negative performance in China (-23.60%). For South America, there was a modest positive change in Brazil (+1.66%),
supported, on the one hand, by the improvement in the health situation and the rise in commodity prices, and adversely
affected, on the other hand, by months of political uncertainty due to the presidential elections at the end of October and while
awaiting the formation of the new government by President Lula.
In the countries with ISP subsidiaries in the CEE/SEE area, share prices were mostly negative, except for Bosnia-
Herzegovina (+7.62%) and Serbia (+2.40%). The falls were particularly notable in Hungary (-33.72%), Poland (-29.28%),
Slovenia (-25.79%) and the Czech Republic (-18.56%). Outside the CEE/SEE region, Russia and Egypt also recorded falls of
39.18% and 25.33% respectively. With regard to Moscow in particular, it is highly likely that the negative performance would
have been more substantial without the capital controls and if the Russian Central Bank had maintained stock market
operations.
With regard to the foreign exchange markets, the Nominal Emerging Market Economies Dollar Index, which expresses the
performance of the US currency against a basket of emerging currencies, appreciated in response to increase in the cost of
money by the Federal Reserve during 2022, despite the decrease in the last two months of the year on the assumption of a
slowdown in interventions to avoid excessively penalising the economy. The dollar posted significant gains against the
Turkish lira (+40.34%), which was negatively affected by the risks of an accommodative monetary policy despite high inflation.
In relation to the Asian currencies, the dollar strengthened against the Chinese renminbi (+8.58%) and the Indian rupee
(+11.08%). With respect to the Latin American currencies, it strengthened against the Argentinean peso (+72.13%) and the
Colombian peso (+19.23%), whilst weakening moderately against the Brazilian real (-5.10%), the Mexican peso (-4.94%) and
the Peruvian sol (-4.57%).
In the countries with ISP subsidiaries, in the EE area the US dollar returned to almost the same level as a year ago against
the Russian rouble (-2.76%), despite the large depreciation of the Russian currency in February. Indeed, the lost ground was
recovered in the two following months, with movements remaining sideways in the second half of the year. Among the CEE
and SEE countries outside the Eurozone, the Euro appreciated against the Ukrainian hryvnia (+28.01%), the Hungarian forint
(+8.14%) and the Polish zloty (+2.33%). In contrast, it depreciated against the Albanian lek (-5.47%) and the Czech koruna (-
2.87%). The Euro remained broadly stable against the Serbian dinar, the Bulgarian and Romanian leu, as well as the Croatian
kuna ahead of the accession to the Eurozone from 1 January 2023.
The international expectation of widespread interest rate hikes to counter inflationary pressures led to a gradual rise in
medium- and long-term yields last year. There were modest changes in the rates offered by China in light of a central bank
ready to adopt accommodative interventions to foster growth conditions for the economy. Yields in Turkey, on the other hand,
fell substantially.
Report on operations – The macroeconomic context and the banking system
78
The Italian banking system
Interest rates and spreads
In 2022 increases in key monetary policy rates began to be passed through to bank interest rates. In the second half of the
year, interest rates on new loans to non-financial companies rose rapidly, more than double for loans up to 1 million euro
compared to the beginning of the year, while the rate on larger loans quadrupled. Interest rates on loans to households for
home purchases also increased significantly, particularly the fixed rate, which returned to being higher than the variable rate
by 0.9 points in the second half of 2022, after two years of substantial alignment between the two rates. As a result of the
increases in new transactions, the average interest rate on bank loan stock also rose faster in the latter part of 2022, to 3.2%
(+1.1 percentage points compared to the end of 2021).
Interest rates on deposits were more resistant, particularly the average rate on overnight deposits, which only increased
slightly towards the end of the year. The stickiness of the interest rate for the on-demand component influenced the trend of
the average deposit rate, which only rose slightly. In contrast, interest rates on new time deposits were more reactive, with
significant increases from July. The overall cost of funding from customers also began to rise very gradually, reflecting
moderate upward movements in the average rate on bonds. As a result, the spread between lending and funding rates
increased significantly, rising to levels not seen since 2009.
After eleven years in negative territory, the mark-down on on-demand deposits turned positive from September 2022. In
contrast, with the sharp rise in Euribor rates, the mark-up on short-term lending rates fell significantly towards the end of 2022.
Loans
The credit market in 2022 was characterised by two phases, initially with an improvement in growth up to the summer,
followed by a slowdown in the final months. This reflected the progressive tightening of supply conditions in line with the
restrictive monetary policy stance and the increase in perceived risks, while on the bank balance sheets side, the good
liquidity and funding position was maintained and the capital base remained solid.
Credit demand from businesses revived in the middle months of the year due to financial needs related to day-to-day
management, in the face of rising operating costs as a result of higher prices for energy and other inputs. The particular
nature of the demand triggered a rebound in short-term loans, which returned to growth in February after around ten years of
decline. As credit conditions tightened and interest rates rose, short-term lending to non-financial companies slowed down
rapidly. In contrast, medium- and long-term loans remained weak throughout 2022, with rates of change hovering around zero
and in negative territory at year-end, reflecting the strong increase during the pandemic due to the support of government-
guaranteed loans.
Loans to households continued to grow at a robust pace in 2022. Once again, this performance was driven by loans for home
purchases, which grew at a rate of 5%, the highest in the last decade, with the momentum slowing down in the last quarter.
Disbursements for new mortgages decreased slightly compared to the considerable volumes recorded in 2021, but the
cumulative flows for the year were high in historical terms. The rapid and significant increase in the fixed rate on loans led to a
reversal of the rate preferences on mortgages, 66% of which were taken out at variable rates in the last quarter, up from 17%
in the first quarter of 2022 and the previous two years. Consumer credit recovered, although at a rather moderate pace
compared to the strong growth recorded before the pandemic.
With regard to credit quality, there were no particular signs of deterioration. The stock of non-performing loans net of
adjustments amounted to 1.2% of total loans in September for the significant banks, stable compared to mid-year, but down
further compared to 1.4% at the end of 2021. In the third quarter of 2022, the default rate in terms of annualised flow of non-
performing loans in relation to total performing loans remained at a record low of 1.1%. De-risking by banks continued,
consolidating the decisive actions already implemented.
Funding from customers
With the shift in monetary policy and the rapid rise in interest rates, the long and strong growth of bank deposits, which ha d
lasted more than a decade, came to a halt in the autumn of 2022. After the peaks reached in 2021 and the subsequent
gradual slowdown, the growth rate for total deposits fell to zero, following the deceleration in the overnight deposits
component, which recorded a slightly negative annual change towards the end of 2022. This trend reflects that of the
overnight deposits of non-financial companies, which declined in the autumn months. From the beginning of the year to
December, the net flow of total deposits of non-financial companies was EUR 6 billion negative, compared to an inflow of 42
billion euro in 2021, indicating that companies have started to use some of the funds accumulated in bank accounts in
previous years. Household deposits also slowed down during the year, but remained slightly up in the last quarter. Within the
deposit aggregate, as expected, an increasingly evident trend has emerged, of savings shifting from demand to time
deposits. As regards time deposits, there was a return to growth towards the end of the year, after a long period of weakness.
The recovery was driven by the rise in interest rates paid on these instruments. Bank bonds also showed improvement over
the course of the year, although they were still in decline on average, closing in December with a zero change.
Report on operations – The macroeconomic context and the banking system
79
Indirect deposits and asset management
The rise in market yields prompted renewed interest in direct investment in government securities and corporate bonds. For
assets under administration, there was a turnaround, with a return to growth in debt securities held by households in custody
at Banks.
In 2022, assets under management were negatively affected by the sharp rise in interest rates and the adverse performance
of the stock market indices. Mutual funds recorded moderate net inflows mainly in the first four months of the year, primaril y
due to inflows into the equity segment. Portfolio management schemes were characterised by weak net inflows, supported by
the retail segment. For life insurance, the trend was downward, as a result of the decrease in new business for both traditional
policies and high financial content policies.
Report on operations – The macroeconomic context and the banking system
80
81
Economic results and balance
sheet aggregates
82
83
Economic results
General aspects
A condensed reclassified consolidated income statement has been prepared to give a more immediate understanding of
results. The figures are normally restated, where necessary and if they are material, for comparison on a like-for-like basis. In
particular, the amounts are provided as consistently as possible with reference to the different periods covered, above all in
relation to intervening changes in the scope of consolidation. This uniformity is achieved through “restated” figures, which
include/exclude the values of the companies that entered or left the scope of consolidation. In 2021, as a result of the
acquisition of the UBI Banca Group, the restated figures were also accompanied by the “redetermined” figures in order to
align/supplement them through management figures.
In line with the 2021 Financial Statements, the restatement on a like-for-like basis of the comparative figures firstly involved
the figures for the first quarter of 2021 due to the incorporation of the line-by-line income statement results of Reyl & Cie S.A.,
RB Participations S.A. and Asteria Investment Managers S.A. (Reyl Group), which entered the line-by-line scope of
consolidation in the second quarter of 2021 following the acquisition by Fideuram - Intesa Sanpaolo Private Banking of control
of RB Participations S.A. and Reyl & Cie S.A., which in turn controls Asteria Investment Managers S.A.
Moreover, also in line with the 2021 Financial Statements:
− to ensure an appropriate commentary on the performances of the items affected, in the first three quarters of 2021,
administrative and personnel expenses were restated for an immaterial amount to reflect the inhousing in 2021 of
activities previously outsourced by the UBI Banca Group, resulting in the re-hiring of personnel who had been transferred
or seconded to external services;
− for all four quarters of 2021 and the first quarter of 2022, the costs of several incentive systems for employees of the
Group’s distribution networks were reclassified, and consequently restated, from personnel expenses to fee and
commission expense (the systems in question are funded by fee and commission income generated by the networks in
question on the basis of deterministic quantification criteria correlated to the revenues at issue). With effect from the
second quarter of 2022, these costs have been reclassified from personnel expenses to fee and commission expense by
analogy to the accounting treatment of incentive systems for non-employee financial advisors.
Starting on 30 September 2022, the figures for the four quarters of 2021 and the first two quarters of 2022 were restated, to
take into account:
− the entry into the scope of consolidation of Compagnie de Banque Privée Quilvest (Fideuram Group) at the end of June
2022, resulting in the start of the consolidation of the income statement figures from July 2022, and
− the contribution to Intesa Sanpaolo Formazione of the Intesa Sanpaolo business line dedicated to the design and
provision of training services and products for Group employees based in Italy, which was carried out in preparation for
the disposal of Intesa Sanpaolo Formazione, finalised at the end of June 2022, with the attribution by convention of net
income to the caption Minority interests, and thus without an impact on net income for the previous periods.
With regard to the acquisition of the UBI Banca Group and the related corporate transactions, with effect from the Interim
Statement as at 31 March 2021, in order to provide a uniform comparison of the income statement figures, including with
regard to the effects of the sale of branches to BPER and Banca Popolare di Puglia e Basilicata undertaken in the first quarter
of 2021 and those planned (and subsequently sold) in the second quarter of that year, use was also made of management
figures, in relation to the nature of the necessary restatements. Accordingly, to present the figures “redetermined” on the basis
of accounting and management records, schedules were produced in addition to those defined on the basis of stated figures
at the end of the various periods, restated where necessary, and the related detail tables have been expanded upon or
duplicated with separate indication of the “Redetermined figures”.
The second quarter of 2021 saw the finalisation of the acquisition by Intesa Sanpaolo Vita of 100% of the share capital of
Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas
41
, with which UBI had started multi-year partnerships
and which were previously consolidated using the equity method as a function of the equity interests held. The income
components of these insurance companies were also affected by the sale of the UBI branches to BPER, which resulted in the
loss of the margins on the policies sold to customers of those branches. Accordingly, in order to provide a representation, o n
a like-for-like basis, of the comparative figures for income statement results, line by line, relating to the insurance companies
acquired in the second quarter of 2021, it was necessary to use, including for the case in question, management figures to
quantify the effects of the aforementioned business associated with customers of the branches sold to BPER.
41
Assicurazioni Vita (formerly Aviva Vita) and Lombarda Vita were merged into Intesa Sanpaolo Vita on 31 December 2021. Cargeas Assicurazioni was
merged into Intesa Sanpaolo Assicura, a wholly owned subsidiary of Intesa Sanpaolo Vita, on 1 October 2022.
Report on operations –Economic results
84
Due to the foregoing, and in order to adequately support the comments on performance with comparative data on a like-for-
like basis, in the Financial Statements as at 31 December 2022 the “redetermination” of the 2021 values used in the relevant
Financial Statements is maintained. In detail, it concerned:
− for the first quarter of 2021:
o the line-by-line exclusion of the income results relating to the UBI branches sold in the first quarter of 2021 and the
UBI and ISP branches sold in the second quarter of 2021, by convention synthetically allocated to the caption
Income (Loss) from discontinued operations of the “redetermined” schedule;
o the line-by-line inclusion of the figures of the insurance companies Assicurazioni Vita (formerly Aviva Vita),
Lombarda Vita and Cargeas, suitably “redetermined” on the basis of management information to exclude the income
statement results linked to production from the customers of the branches sold to BPER, with the attribution by
convention of net income to the caption Minority interests in the “redetermined” income statement, and thus without
an impact on net income for the period;
o the elimination of the contribution to the item Other operating income (expenses) of the result attributable to the
insurance companies Assicurazioni Vita (formerly Aviva Vita) and Lombarda Vita (previously consolidated using the
equity method), with the attribution by convention of net income to the caption Minority interests in the
“redetermined” income statement (hence with no impacts on net income), already used to synthetically allocate the
income effects of the line-by-line results of the above companies;
− for the second quarter of 2021:
o the line-by-line exclusion of the income results relating to the UBI and ISP branches sold in the second quarter of
2021, by convention synthetically allocated to the caption Income (Loss) from discontinued operations of the
“redetermined” schedule;
o the line-by-line inclusion of the insurance company Cargeas’ figures for the months of April and May, with the
attribution by convention of net income to the caption Minority interests, and thus without an impact on net income
for the period.
There were no redeterminations of the figures for the third and fourth quarters of 2021 or all four quarters of 2022.
Certain aggregations and reclassifications are then made with respect to the model provided in Circular 262 of the Bank of
Italy. Breakdowns of restatements, aggregations and reclassifications – in addition to the aforementioned “redeterminations” –
are provided in separate tables included in the attachments to the financial statements, as also required by Consob in its
Communication 6064293 of 28 July 2006.
The reclassifications and aggregations of captions of the reclassified consolidated income statement refer to:
− dividends relating to shares or units in portfolio and dividends collected or paid within the framework of securities lending,
which have been reallocated to the caption Profits (losses) on financial assets and liabilities designated at fair value;
− Profits (losses) on financial assets and liabilities pertaining to insurance companies (measured pursuant to IAS 39, by
virtue of the Group's exercise of the option to defer application of IFRS 9), which include the shares of Net interest
income, Dividends and Income from financial assets and liabilities relating to insurance business, have been reclassified,
along with net premiums and the balance of income and expenses from insurance business, to the specific caption
Income from insurance business, to which the effect of the adjustment of the technical reserve has also been attributed,
in respect of the component borne by the insured parties, relating to the impairment of the securities held in the portfolios
of the Group's insurance companies. The claims paid, net of the premiums issued to cover them, which correspond to
the drawdown of the provisions made in 2021 in relation to the financial imbalances which were also generated as a
result of the greater use of benefits by insured persons on conclusion of the long periods of lockdown, have been
included in the caption Other net provisions and net impairment losses on other assets;
− differentials on derivatives, classified to the trading book and contracted to hedge transactions in foreign currencies,
which have been allocated among Net interest income owing to the close correlation;
− periodic fees and commissions on current accounts with positive balances applied to customers (excluding the retail
customers and SMEs segment), in accordance with the provisions of the term sheets, which are accounted for as interest
income, inasmuch as they cover the financing cost incurred by the Bank;
− Profits (losses) on trading, Fair value adjustments in hedge accounting, Profits (losses) on other financial assets and
liabilities measured at fair value through profit or loss, Profits (losses) on disposal or repurchase of financial assets
measured at fair value through other comprehensive income and on sale or repurchase of financial liabilities, which have
been reallocated to the single caption Profits (losses) on financial assets and liabilities designated at fair value, except for
the amounts relating to adjustments on certain portions of loans mandatorily measured at fair value, which relate to
measurements of credit positions and are therefore reported in the caption Net adjustments to loans in order to provide a
single presentation of the adjustments relating to the same position;
− the share of the premium on the issue of the certificates paid to the networks for their placement, which is reclassified
from Profits (Losses) on trading and Profits (Losses) on assets and liabilities designated at fair value to Net fee and
commission income;
− the return components of the insurance policies taken out to cover contractual indemnities and retention plans for
financial advisors, which are deducted directly from Profits (Losses) on financial assets and liabilities designated at fair
value, in accordance with the valuation effect of the assets in question, rather than being presented – as attributable to
the advisors – among Other net provisions and net impairment losses on other assets (for valuation effects) or among
Net fee and commission income or Other operating income (expenses), depending on the type of insurance policy used
(for effects from realisation);
− the operating income of entities operating in sectors entirely distinct from banking and finance, synthetically reallocated to
Other operating income (expenses), including that of the entities not subject to management and coordination within the
framework of the Group (Risanamento and its subsidiaries);
− the costs of several incentive systems for employees of the Group’s distribution networks, where funded by fee and
commission income generated by the networks in question on the basis of deterministic quantification criteria correlated
Report on operations –Economic results
85
to the revenues concerned, which are reclassified from Personnel expenses to fee and commission expense by analogy
to the accounting treatment of incentive systems for non-employee financial advisors;
− the costs of a one-off contribution to Intesa Sanpaolo people, excluding those classified as managers or having
equivalent remuneration, not linked to performance but granted to mitigate the impact of inflation, which were reclassified
from Personnel expenses to Other income (expenses);
− the administrative expenses relative to recoveries of expenses, taxes and duties, which are deducted from the caption
instead of being included among Other income (expenses), and, with regard to the CIB Group, the expenses associated
with the “bank tax” paid quarterly to the Hungarian treasury, along with the new extraordinary windfall tax, levied by
Hungary on bank profits which - given their nature - are accounted for as Taxes on income;
− profits and losses on disposal or repurchase of financial assets measured at amortised cost (loans and debt securities
representing loans), which have been allocated to Net adjustments to loans;
− Net losses/recoveries for credit risk associated with financial assets measured at amortised cost and financial assets
measured at fair value through other comprehensive income, the effects on the income statement of the changes in
contracts and the net provisions for risks and charges for credit risk relating to commitments and guarantees given,
attributed to the single item Net adjustments to loans. The caption also includes amounts relating to credit risk
adjustments to several portions of loans mandatorily designated at fair value, which, as they relate to the measurement
of credit positions, are reclassified to the caption Net adjustments to loans to permit unitary representation of adjustments
relating to the same position;
− the reversal in the time value of Employee termination indemnities and Allowances for risks and charges, which has been
included among Net interest income, as a phenomenon deriving directly from the application of the amortised cost
criterion, in the absence of changes in projected future cash flows, in keeping with the treatment of the time value of
financial assets measured at amortised cost;
− Net losses/recoveries for credit risk associated with financial assets measured at amortised cost other than loans and net
impairment losses on equity investments, as well as property and equipment and intangible assets (including property
and other assets, also those resulting from the enforcement of guarantees or purchase at auction and intended for sale
on the market in the near future), which have been reclassified to Other net provisions and net impairment losses on
other assets, which consequently include – in addition to the provisions for risks and charges other than those relating to
commitments and guarantees – the valuation effects of the assets other than loans, with the sole exception of impairment
losses on intangible assets that have been reclassified to Impairment (net of tax) of goodwill and other intangible assets;
− realised profits (losses) on financial assets measured at amortised cost other than loans, on equity investments and on
other investments, which have been reallocated to Other income (expenses). Accordingly, in addition to the income and
expenses not strictly related to operations, this caption represents the summary of the effects from the realisation of
assets other than loans. Profits (Losses) realised on debt securities represent an exception; in view of their business
model, which involves management closely correlated with the other financial instruments, they are classified to Profits
(Losses) on financial assets and liabilities designated at fair value;
− Charges (net of tax) for integration and exit incentives, which are reclassified from Personnel expenses, Administrative
expenses and other captions of the income statement to a separate caption;
− the purely accounting Effects of purchase price allocation, net of the tax effect, which are indicated in a specific caption.
They normally represent adjustments to and any impairment losses on financial assets and liabilities as well as property,
equipment and intangible assets which are measured at fair value as provided for by IFRS 3;
− Levies and other charges aimed at maintaining the stability of the banking industry, which are reclassified, after tax, to
the specific caption;
− Goodwill impairment and impairment losses on other intangible assets, which – where present – are shown, as stated
above, net of tax.
As indicated in the introduction, in order to ensure a uniform comparison, the analysis of income performance below is based
on figures redetermined to also take into account the inclusion of the UBI Group and the reallocation of the contribution fro m
the going concerns object of disposal to income (loss) from discontinued operations, as well as the inclusion of the
contribution of the insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas, net of the
effects attributable to the branches object of disposal.
Report on operations –Economic results
86
Reclassified income statement
(millions of euro)
2022
2021
Changes
amount
%
Net interest income
9,500
7,971
1,529
19.2
Net fee and commission income
8,919
9,621
-702
-7.3
Income from insurance business
1,705
1,586
119
7.5
Profits (Losses) on financial assets and liabilities designated at fair value
1,378
1,636
-258
-15.8
Other operating income (expenses)
-32
111
-143
Operating income
21,470
20,925
545
2.6
Personnel expenses
-6,742
-6,794
-52
-0.8
Administrative expenses
-2,912
-2,987
-75
-2.5
Adjustments to property, equipment and intangible assets
-1,280
-1,241
39
3.1
Operating costs
-10,934
-11,022
-88
-0.8
Operating margin
10,536
9,903
633
6.4
Net adjustments to loans
-3,113
-2,772
341
12.3
Other net provisions and net impairment losses on other assets
-281
-848
-567
-66.9
Other income (expenses)
202
332
-130
-39.2
Income (Loss) from discontinued operations
-
-
-
-
Gross income (loss)
7,344
6,615
729
11.0
Taxes on income
-2,059
-1,604
455
28.4
Charges (net of tax) for integration and exit incentives
-140
-439
-299
-68.1
Effect of purchase price allocation (net of tax)
-211
-39
172
Levies and other charges concerning the banking industry (net of tax)
-576
-525
51
9.7
Impairment (net of tax) of goodwill and other intangible assets
-
-
-
-
Minority interests
-4
177
-181
-
-
Net income (loss)
4,354
4,185
169
4.0
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
Report on operations –Economic results
87
Reclassified income statement – Redetermined figures
(millions of euro)
2022
2021
Changes
Redetermined
figures
amount
%
Net interest income
9,500
7,905
1,595
20.2
Net fee and commission income
8,919
9,527
-608
-6.4
Income from insurance business
1,705
1,629
76
4.7
Profits (Losses) on financial assets and liabilities designated at fair value
1,378
1,635
-257
-15.7
Other operating income (expenses)
-32
97
-129
Operating income
21,470
20,793
677
3.3
Personnel expenses
-6,742
-6,743
-1
-
Administrative expenses
-2,912
-2,994
-82
-2.7
Adjustments to property, equipment and intangible assets
-1,280
-1,243
37
3.0
Operating costs
-10,934
-10,980
-46
-0.4
Operating margin
10,536
9,813
723
7.4
Net adjustments to loans
-3,113
-2,766
347
12.5
Other net provisions and net impairment losses on other assets
-281
-851
-570
-67.0
Other income (expenses)
202
332
-130
-39.2
Income (Loss) from discontinued operations
-
58
-58
Gross income (loss)
7,344
6,586
758
11.5
Taxes on income
-2,059
-1,605
454
28.3
Charges (net of tax) for integration and exit incentives
-140
-439
-299
-68.1
Effect of purchase price allocation (net of tax)
-211
-39
172
Levies and other charges concerning the banking industry (net of tax)
-576
-512
64
12.5
Impairment (net of tax) of goodwill and other intangible assets
-
-
-
-
Minority interests
-4
194
-198
Net income (loss)
4,354
4,185
169
4.0
Redetermined figures have been prepared to take into account the reallocation, based on management data, of the contribution from the going concerns object of
disposal to income (loss) from discontinued operations, as part of the acquisition of the UBI Gro up, as well as the inclusion of the contribution of insurance
companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects attributable to the branches object of disposal.
Report on operations –Economic results
88
Quarterly development of the reclassified income statement
(millions of euro)
2022
2021
Fourth
quarter
Third
quarter
Second
quarter
First
quarter
Fourth
quarter
Third
quarter
Second
quarter
First
quarter
Net interest income
3,064
2,387
2,092
1,957
1,955
2,000
2,002
2,014
Net fee and commission income
2,222
2,153
2,255
2,289
2,518
2,323
2,381
2,399
Income from insurance business
402
436
465
402
410
365
438
373
Profits (Losses) on financial assets and liabilities
designated at fair value
-2
51
560
769
111
380
346
799
Other operating income (expenses)
-12
-12
-12
4
18
26
18
49
Operating income
5,674
5,015
5,360
5,421
5,012
5,094
5,185
5,634
Personnel expenses
-1,921
-1,632
-1,613
-1,576
-1,826
-1,636
-1,654
-1,678
Administrative expenses
-865
-695
-718
-634
-869
-716
-730
-672
Adjustments to property, equipment and intangible
assets
-344
-313
-309
-314
-337
-301
-298
-305
Operating costs
-3,130
-2,640
-2,640
-2,524
-3,032
-2,653
-2,682
-2,655
Operating margin
2,544
2,375
2,720
2,897
1,980
2,441
2,503
2,979
Net adjustments to loans
-1,185
-496
-730
-702
-1,222
-543
-599
-408
Other net provisions and net impairment losses on
other assets
-113
-45
-63
-60
-415
-82
-218
-133
Other income (expenses)
55
4
147
-4
78
63
-7
198
Income (Loss) from discontinued operations
-
-
-
-
-
-
-
-
Gross income (loss)
1,301
1,838
2,074
2,131
421
1,879
1,679
2,636
Taxes on income
-50
-562
-670
-777
-78
-614
-78
-834
Charges (net of tax) for integration and exit incentives
-78
-23
-23
-16
-291
-41
-55
-52
Effect of purchase price allocation (net of tax)
-59
-51
-47
-54
46
-51
-18
-16
Levies and other charges concerning the banking
industry (net of tax)
-32
-266
-12
-266
-23
-210
-83
-209
Impairment (net of tax) of goodwill and other intangible
assets
-
-
-
-
-
-
-
-
Minority interests
-12
-6
8
6
104
20
62
-9
Net income (loss)
1,070
930
1,330
1,024
179
983
1,507
1,516
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
Report on operations –Economic results
89
Quarterly development of the reclassified income statement – Redetermined figures
(millions of euro)
2022
2021
Fourth
quarter
Third
quarter
Second
quarter
First
quarter
Fourth
quarter
Third
quarter
Second
quarter
Redetermined
figures
First
quarter
Redetermined
figures
Net interest income
3,064
2,387
2,092
1,957
1,955
2,000
1,997
1,953
Net fee and commission income
2,222
2,153
2,255
2,289
2,518
2,323
2,369
2,317
Income from insurance business
402
436
465
402
410
365
456
398
Profits (Losses) on financial assets and
liabilities designated at fair value
-2
51
560
769
111
380
346
798
Other operating income (expenses)
-12
-12
-12
4
18
26
21
32
Operating income
5,674
5,015
5,360
5,421
5,012
5,094
5,189
5,498
Personnel expenses
-1,921
-1,632
-1,613
-1,576
-1,826
-1,636
-1,652
-1,629
Administrative expenses
-865
-695
-718
-634
-869
-716
-734
-675
Adjustments to property, equipment and
intangible assets
-344
-313
-309
-314
-337
-301
-299
-306
Operating costs
-3,130
-2,640
-2,640
-2,524
-3,032
-2,653
-2,685
-2,610
Operating margin
2,544
2,375
2,720
2,897
1,980
2,441
2,504
2,888
Net adjustments to loans
-1,185
-496
-730
-702
-1,222
-543
-599
-402
Other net provisions and net impairment
losses on other assets
-113
-45
-63
-60
-415
-82
-220
-134
Other income (expenses)
55
4
147
-4
78
63
-7
198
Income (Loss) from discontinued operations
-
-
-
-
-
-
10
48
Gross income (loss)
1,301
1,838
2,074
2,131
421
1,879
1,688
2,598
Taxes on income
-50
-562
-670
-777
-78
-614
-81
-832
Charges (net of tax) for integration and exit
incentives
-78
-23
-23
-16
-291
-41
-55
-52
Effect of purchase price allocation (net of tax)
-59
-51
-47
-54
46
-51
-18
-16
Levies and other charges concerning the
banking industry (net of tax)
-32
-266
-12
-266
-23
-210
-83
-196
Impairment (net of tax) of goodwill and other
intangible assets
-
-
-
-
-
-
-
-
Minority interests
-12
-6
8
6
104
20
56
14
-
-
Net income (loss)
1,070
930
1,330
1,024
179
983
1,507
1,516
Redetermined figures have been prepared to take into account the reallocation, based on management data, of the contribution from the going concerns object of disposal to
income (loss) from discontinued operations, as part of the acquisition of the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita
(formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects attributable to the branches object of disposal.
Operating income
In 2022, the Intesa Sanpaolo Group achieved a solid operating performance against the backdrop of a complex, challenging
scenario. Operating income amounted to 21,470 million euro, up by 3.3% from 20,793 million euro in 2021. This result was
driven by the increase in net interest income, which benefited from the ECB’s increase in interest rates in the second half o f
the year, and, to a lesser extent, income deriving from insurance business, which more than offset the decline in net fee and
commission income and profits (losses) on financial assets and liabilities designated at fair value, as well as the negative
impact of other net operating costs.
Report on operations –Economic results
90
Net interest income
(millions of euro)
2022
2021
Adjustments
2021
Redetermined
figures
Changes
(Redetermined figures)
amount
%
Relations with customers
8,954
7,854
-72
7,782
1,172
15.1
Securities issued
-1,817
-1,685
-
-1,685
132
7.8
Customer dealing
7,137
6,169
-72
6,097
1,040
17.1
Instruments measured at amortised cost which do not
constitute loans
686
533
-
533
153
28.7
Other financial assets and liabilities designated at fair value
through profit or loss
-22
-53
-
-53
-31
-58.5
Other financial assets designated at fair value through other
comprehensive income
860
640
-
640
220
34.4
Financial assets and liabilities
1,524
1,120
-
1,120
404
36.1
Relations with banks
668
720
-
720
-52
-7.2
Differentials on hedging derivatives
-435
-601
-
-601
-166
-27.6
Other net interest income
606
563
6
569
37
6.5
Net interest income
9,500
7,971
-66
7,905
1,595
20.2
Figures restated, where necessary and material, considering the changes in the scope of consolidation. Redetermined figures have been prepared to take into account the
reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from discontinued operations, as part of the acquisition of
the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects
attributable to the branches object of disposal.
Net interest income was 9,500 million euro, up (+20.2%) on 2021.
In particular, there was a greater contribution by customer dealing
(+17.1%, equal to +1,040 million euro), due to the increase in
interest income on business with customers, and by financial
assets (+36.1%, equal to +404 million euro), thanks to positive
trends in other financial assets measured at fair value through
other comprehensive income and securities measured at
amortised cost, and the reduction in financial liabilities measured
at fair value through profit or loss. Among other components,
negative differentials on hedging derivatives improved by 27.6%,
while net interest income on relations with banks declined (-7.2%).
As regards the latter, starting from the third quarter, the benefits of
the TLTRO III transactions with the ECB, correlated to the
negative rates applied
42
, began to significantly decrease following
the repeated hikes to official interest rates by the European
Central Bank, effective on 27 July (50 basis points), 14 September
(75 basis points), 2 November (75 basis points) and 21 December
2022 (50 basis points). Overall, in 2022 interest income from
TLTRO III transactions amounted to 615 million euro, compared to
1,187 million euro in 2021. This decrease was only partially offset
in the fourth quarter by the interest accrued on the reinvestment of
surplus cash in deposit transactions with the ECB, favoured by the return of the related rates (Deposit Facility Rate) to
positive territory.
At the end of December 2022 outstanding TLTRO III refinancing amounted to a nominal 96.06 billion euro, compared to
131.84 billion euro in December 2021, due to the early repayments made in 2022
43
.
42
Note that in the period from 24 June 2020 to 23 June 2022 – the special interest rate period – the interest rate applied to TLTROs was -1%. From 24
June 2022 to 22 November 2022 the interest rate applied and settled on maturity was the average rate on deposits with the Central Bank (Deposit
Facility Rate) calculated for the entire duration of the operation, whereas from 23 November 2022 the rate applied is equal to the rate in effect for the
period. As a result of the latest monetary policy decisions, the Deposit Facility Rate rose from -0.50% to 0%, effective on 27 July 2022, from 0% to 0.75%
effective on 14 September 2022, from 0.75% to 1.50% on 2 November and from 1.50% to 2% from 21 December 2022.
43
Early repayment of a nominal 17 billion euro obtained by Intesa Sanpaolo in the December 2019 auction with maturity of December 2022, made at the
end of the first half of the year; partial repayment of a nominal 14 billion euro obtained by ISP in the March 2020 auction with maturity of March 2023,
made for 10 billion euro in November and for 4 billion euro in December; and repayment of 4.78 billion euro of total funds obtained by the Group’s
international subsidiary banks in the fourth quarter of the year.
Report on operations –Economic results
91
(millions of euro)
2022
Changes %
Fourth
quarter
(a)
Third
quarter
(b)
Second
quarter
(c)
First
quarter
(d)
(a/b)
(b/c)
(c/d)
Relations with customers
2,725
2,332
2,000
1,897
16.9
16.6
5.4
Securities issued
-494
-466
-436
-421
6.0
6.9
3.6
Customer dealing
2,231
1,866
1,564
1,476
19.6
19.3
6.0
Instruments measured at amortised cost which do not
constitute loans
215
174
150
147
23.6
16.0
2.0
Other financial assets and liabilities designated at fair value
through profit or loss
58
8
-35
-53
-34.0
Other financial assets designated at fair value through
other comprehensive income
237
233
209
181
1.7
11.5
15.5
Financial assets and liabilities
510
415
324
275
22.9
28.1
17.8
Relations with banks
253
36
172
207
-79.1
-16.9
Differentials on hedging derivatives
-114
-81
-115
-125
40.7
-29.6
-8.0
Other net interest income
184
151
147
124
21.9
2.7
18.5
Net interest income
3,064
2,387
2,092
1,957
28.4
14.1
6.9
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
The flow of net interest income recorded in the fourth quarter of 2022 accelerated significantly compared to the previous
quarters, mainly due to the greater contribution of interest income on business with customers and the increase in relations
with banks, which benefited from the ECB’s increase in interest rates.
(millions of euro)
2022
2021
Changes
Redetermined
figures
amount
%
Banca dei Territori
3,957
3,932
25
0.6
IMI Corporate & Investment Banking
2,132
2,182
-50
-2.3
International Subsidiary Banks
1,592
1,337
255
19.1
Private Banking
419
217
202
93.1
Asset Management
-
-1
-1
Insurance
-
-
-
-
Total business areas
8,100
7,667
433
5.6
Corporate Centre
1,400
238
1,162
Intesa Sanpaolo Group
9,500
7,905
1,595
20.2
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents. Redetermined figures have been
prepared to take into account the reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from discontinued
operations, as part of the acquisition of the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita
and Cargeas, net of the effects attributable to the branches object of disposal.
Report on operations –Economic results
92
The Banca dei Territori Division, which accounts for 48.8% of
operating business area results, recorded net interest income of
3,957 million euro, up on 2021 (+0.6%, or +25 million euro), due to
the improvement in the margin with customers, supported by th e
performance of market rates. The International Subsidiary Banks
also made an increasing contribution to net interest income
(+19.1%, or +255 million euro), due primarily to the favourable
performance of subsidiaries operating in Hungary and Slovakia,
along with the Private Banking Division (+93.1%, or +202 million
euro), whose assets benefited from higher rates. On the other
hand, IMI Corporate & Investment Banking recorded a decrease (-
2.3%, or -50 million euro), mainly due to the lower contribution of
the securities portfolio in the Global Market context.
The increase in the net interest income of the Corporate Centre
was largely due to the absence of the cost of excess liquidity due
to the rise in rates in the second half of 2022.
Net fee and commission income
(millions of euro)
2022
2021
Changes
Income
Expense
Net
Income
Expense
Net
amount
%
Guarantees given / received
472
-226
246
401
-197
204
42
20.6
Collection and payment services
767
-144
623
717
-160
557
66
11.8
Current accounts
1,386
-
1,386
1,443
-
1,443
-57
-4.0
Credit and debit cards
871
-457
414
787
-417
370
44
11.9
Commercial banking activities
3,496
-827
2,669
3,348
-774
2,574
95
3.7
Dealing and placement of securities
1,000
-318
682
1,308
-267
1,041
-359
-34.5
Currency dealing
16
-7
9
21
-4
17
-8
-47.1
Portfolio management
3,655
-945
2,710
4,111
-967
3,144
-434
-13.8
Distribution of insurance products
1,587
-
1,587
1,622
-
1,622
-35
-2.2
Other
435
-193
242
462
-173
289
-47
-16.3
Management, dealing and consultancy activities
6,693
-1,463
5,230
7,524
-1,411
6,113
-883
-14.4
Other net fee and commission income
1,265
-245
1,020
1,221
-287
934
86
9.2
Net fee and commission income
11,454
-2,535
8,919
12,093
-2,472
9,621
-702
-7.3
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
Report on operations –Economic results
93
(millions of euro)
2022
2021
Adjustments
2021
Redetermined
figures
Changes
(Redetermined figures)
Net fee and
commission
income
Net fee and
commission
income
amount
%
Guarantees given / received
246
204
-2
202
44
21.8
Collection and payment services
623
557
-5
552
71
12.9
Current accounts
1,386
1,443
-29
1,414
-28
-2.0
Credit and debit cards
414
370
-6
364
50
13.7
Commercial banking activities
2,669
2,574
-42
2,532
137
5.4
Dealing and placement of securities
682
1,041
-26
1,015
-333
-32.8
Currency dealing
9
17
-4
13
-4
-30.8
Portfolio management
2,710
3,144
-2
3,142
-432
-13.7
Distribution of insurance products
1,587
1,622
-15
1,607
-20
-1.2
Other
242
289
-2
287
-45
-15.7
Management, dealing and consultancy
activities
5,230
6,113
-49
6,064
-834
-13.8
Other net fee and commission income
1,020
934
-3
931
89
9.6
Net fee and commission income
8,919
9,621
-94
9,527
-608
-6.4
Figures restated, where necessary and material, considering the changes in the scope of consolidation. Redetermined figures have been prepared to take into account the
reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from discontinued operations, as part of the acquisition of
the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects
attributable to the branches object of disposal.
The net fee and commission income earned in 2022 amounted to
8,919 million euro, down (-6.4%) from the 9,527 million euro
recorded in 2021.
This result was due to the reduction in fees and commissions on
management, dealing and consultancy activities (-13.8%, or -834
million euro), which was negatively affected by the downtrend in
financial markets. In detail, there was a decrease in the
contribution relating to portfolio management schemes (-13.7%, or
-432 million euro) – where performance fees amounted to 44
million euro compared to 367 million euro in 2021 – securities
dealing and placement (-32.8%, or -333 million euro) and, to a
lesser extent, other management and dealing commissions (-
15.7%, or -45 million euro).
Commercial banking activities recorded an increase (+5.4%, or
+137 million euro), due above all to increases on collection and
payment services (+71 million euro), debit and credit card service
(+50 million euro) and guarantees given/received (+44 million
euro). A positive contribution was also made by other net fee and
commission income (+9.6%, or +89 million euro), the increase in
which was due to the rise in the positive components, markedly
those relating to loans granted, and the decline in the negative
components, relating above all to other banking services.
Report on operations –Economic results
94
(millions of euro)
2022
Changes %
Fourth
quarter
(a)
Third
quarter
(b)
Second
quarter
(c)
First
quarter
(d)
(a/b)
(b/c)
(c/d)
Guarantees given / received
59
86
54
47
-31.4
59.3
14.9
Collection and payment services
164
156
164
139
5.1
-4.9
18.0
Current accounts
344
348
348
346
-1.1
-
0.6
Credit and debit cards
109
114
108
83
-4.4
5.6
30.1
Commercial banking activities
676
704
674
615
-4.0
4.5
9.6
Dealing and placement of securities
167
134
153
228
24.6
-12.4
-32.9
Currency dealing
-
4
3
2
33.3
50.0
Portfolio management
670
660
676
704
1.5
-2.4
-4.0
Distribution of insurance products
406
357
421
403
13.7
-15.2
4.5
Other
52
59
56
75
-11.9
5.4
-25.3
Management, dealing and consultancy activities
1,295
1,214
1,309
1,412
6.7
-7.3
-7.3
Other net fee and commission income
251
235
272
262
6.8
-13.6
3.8
Net fee and commission income
2,222
2,153
2,255
2,289
3.2
-4.5
-1.5
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
The caption was higher in the fourth quarter of 2022 than in the third, but lower than in the first and second. The increase in
the fourth quarter is mainly due to the increase in management, dealing and consultancy activities, only partly offset by the
decline in commercial banking activity.
(millions of euro)
2022
2021
Changes
Redetermined
figures
amount
%
Banca dei Territori
4,744
4,809
-65
-1.4
IMI Corporate & Investment Banking
1,156
1,135
21
1.9
International Subsidiary Banks
574
546
28
5.1
Private Banking
1,980
2,096
-116
-5.5
Asset Management
913
1,282
-369
-28.8
Insurance
3
2
1
50.0
Total business areas
9,370
9,870
-500
-5.1
Corporate Centre
-451
-343
108
31.5
Intesa Sanpaolo Group
8,919
9,527
-608
-6.4
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents. Redetermined figures have
been prepared to take into account the reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from
discontinued operations, as part of the acquisition of the UBI Group, as well as the inclusion of the contribution of insuran ce companies Assicurazioni Vita (formerly
Aviva Vita), Lombarda Vita and Cargeas, net of the effects attribu table to the branches object of disposal.
Report on operations –Economic results
95
With regard to business areas, the Banca dei Territori Division,
which accounts for approximately half the fee and commission
income of the business units, recorded a decrease (-1.4%, or -65
million euro), specifically fee and commission income deriving from
asset management and bancassurance, conditioned by the
unfavourable market context. A decline in fee and commission
income was also reported by Asset Management (-28.8%, or -369
million euro) and Private Banking (-5.5%, or -116 million euro),
negatively affected by the unfavourable tone of the financial
markets, which affected assets under management and
performance. Conversely, moderate increases were reported by
IMI Corporate & Investment Banking (+1.9%, or +21 million euro),
due to the performance recorded in the commercial banking and
structured finance segments, as well as by the International
Subsidiary Banks (+5.1%, or +28 million euro), essentially
attributable to the subsidiaries operating in Slovakia, Croatia and
Serbia.
The increase in the fee and commission expense of the Corporate
Centre is mainly due to the larger consolidation entries attributable to the placement of ISP bonds by the Private Banking
Division.
In application of IFRS 15, which requires a breakdown of revenues from contracts with customers (except for revenues from
lease contracts, insurance contracts and financial instruments), a breakdown of fee and commission income and expense by
business area is provided below.
(millions of euro)
Banca
dei
Territori
IMI Corporate
&
Investment
Banking
International
Subsidiary
Banks
Private
Banking
Asset
Management
Insurance
Corporate
Centre
(a)
Total
Guarantees given
97
326
45
2
-
-
2
472
Collection and payment services
438
125
197
6
-
-
1
767
Current accounts
1,198
33
145
10
-
-
-
1,386
Credit and debit cards
587
4
263
17
-
-
-
871
Commercial banking activities
2,320
488
650
35
-
-
3
3,496
Dealing and placement of securities
1,233
220
18
275
337
-
-1,083
1,000
Currency dealing
5
2
4
3
-
-
2
16
Portfolio management
100
2
27
1,883
1,914
-
-271
3,655
Distribution of insurance products
877
-
32
678
-
3
-3
1,587
Other
218
31
11
188
-
-
-13
435
Management, dealing and
consultancy activities
2,433
255
92
3,027
2,251
3
-1,368
6,693
Other net fee and commission
income
328
597
92
25
181
-
42
1,265
Fee and commission income
5,081
1,340
834
3,087
2,432
3
-1,323
11,454
Fee and commission expense
-337
-184
-260
-1,107
-1,519
-
872
-2,535
Net fee and commission income
2022
4,744
1,156
574
1,980
913
3
-451
8,919
Net fee and commission income
2021
(redetermined figures)
4,809
1,135
546
2,096
1,282
2
-343
9,527
Changes amount
-65
21
28
-116
-369
1
108
-608
Changes %
-1.4
1.9
5.1
-5.5
-28.8
50.0
31.5
-6.4
(a) The Corporate Centre has been attributed the intersector netting.
Figures restated, where necessary and material, considering the changes in the scope of consolidation. Redetermined figures have been prepared to take into account the
reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from discontinued operations, as part of the acquisition of
the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects
attributable to the branches object of disposal.
Report on operations –Economic results
96
Income from insurance business
(millions of euro)
Captions (a)
2022
2021
Changes
Life
Non-
life
Total
Life
Non-
life
Total
amount
%
Technical margin
190
424
614
87
311
398
216
54.3
Net insurance premiums (b)
9,071
1,095
10,166
9,442
1,252
10,694
-528
-4.9
Net charges for insurance claims and surrenders (c)
-9,622
-420
-10,042
-9,576
-707
-10,283
-241
-2.3
Net charges for changes in technical reserves (d)
819
-
819
-1,493
-1
-1,494
2,313
Gains (Losses) on investments pertaining to insured parties on
insurance products (e)
19
-
19
1,756
-
1,756
-1,737
-98.9
Net fees on investment contracts (f)
386
-2
384
422
-
422
-38
-9.0
Commission expenses on insurance contracts (g)
-573
-214
-787
-555
-184
-739
48
6.5
Other technical income and expense (h)
90
-35
55
91
-49
42
13
31.0
Net investment result
995
14
1,009
1,128
18
1,146
-137
-12.0
Operating income from investments
-10,242
14
-10,228
9,006
18
9,024
-19,252
Net interest income
2,356
7
2,363
1,876
1
1,877
486
25.9
Dividends
497
6
503
376
7
383
120
31.3
Gains/losses on disposal
-2,635
1
-2,634
2,544
11
2,555
-5,189
Valuation gains/losses
-10,374
-
-10,374
4,309
-
4,309
-14,683
Portfolio management fees paid (i)
-86
-
-86
-99
-1
-100
-14
-14.0
Gains (losses) on investments pertaining to insured parties
11,237
-
11,237
-7,878
-
-7,878
19,115
Insurance products (j)
-104
-
-104
-1,753
-
-1,753
-1,649
-94.1
Investment’s unrealized capital gains/losses
pertaining to insured parties on insurance products (k)
169
-
169
-48
-
-48
217
Investment products (l)
11,172
-
11,172
-6,077
-
-6,077
17,249
Income from insurance business gross of consolidation effects
1,185
438
1,623
1,215
329
1,544
79
5.1
Consolidation effects
82
-
82
42
-
42
40
95.2
Income from insurance business
1,267
438
1,705
1,257
329
1,586
119
7.5
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
(a) The table illustrates the economic components of the insurance business broken down into those regarding:
- products considered to be insurance products according to IAS/IFRS, which include contracts where the risk insured is considered significant or in which the decision of the
return on the contracts is not market-based but depends on the insurance company's choices;
- investment products, which include financial products without a significant insurance risk. The latter are accounted for in the consolidated financial statements as financial
movements.
(b) The caption includes premiums issued only for products considered to be insurance products according to IAS/IFRS, net of the portions ceded to reinsurers. For the non-life
insurance business, the change in the premiums reserve is also included.
(c) The caption includes the amounts paid (claims, surrenders and maturities) and the change in claims reserves and reserves for amounts to be paid, net of portions ceded to
reinsurers.
(d) The caption includes the change in technical reserves, net of the portions ceded to reinsurers.
(e) The caption includes the portion of the profit/loss from investments (for insurance products) pertaining to insured parties, including the impact of shadow accounting.
(f) The caption includes net fees on investment products; specifically, charges paid by customers, management fees received by the financial units and fee expenses reversed by
the insurance companies to the sales network and management companies.
(g) The caption includes commission expenses on insurance products (including unit and index-linked insurance products and pension funds) paid to the sales network.
(h) Residual caption comprising fee income on insurance product management fee income (unit and index-linked insurance products and pension funds), rebates, net interest
income on current accounts of the insurance company and on subordinated loans and other income and technical charges.
(i) The caption includes fees paid to management companies for the management of traditional insurance products (separate management) portfolios and pension funds. This
also includes fees from consolidated funds underlying insurance units.
(j) The caption includes the portion of the profit/loss from investments (for insurance products) pertaining to insured parties, without the impact of shadow accounting.
(k) The caption includes the portion of unrealized capital gains/losses pertaining to insured parties on insurance products (shadow accounting).
(l) The caption refers to the valuation of financial liabilities designated at fair value which represent the amount payable to insured parties for investment products.
Report on operations –Economic results
97
(millions of euro)
Captions (a)
2022
2021
Redetermined figures
Changes
Life
Non-
life
Total
Life
Non-
life
Total
amount
%
Technical margin
190
424
614
51
354
405
209
51.6
Net insurance premiums (b)
9,071
1,095
10,166
9,848
1,343
11,191
-1,025
-9.2
Net charges for insurance claims and surrenders (c)
-9,622
-420
-10,042
-10,319
-734
-11,053
-1,011
-9.1
Net charges for changes in technical reserves (d)
819
-
819
-1,266
3
-1,263
2,082
Gains (Losses) on investments pertaining to insured parties on
insurance products (e)
19
-
19
1,860
-
1,860
-1,841
-99.0
Net fees on investment contracts (f)
386
-2
384
435
-
435
-51
-11.7
Commission expenses on insurance contracts (g)
-573
-214
-787
-598
-204
-802
-15
-1.9
Other technical income and expense (h)
90
-35
55
91
-54
37
18
48.6
Net investment result
995
14
1,009
1,157
25
1,182
-173
-14.6
Operating income from investments
-10,242
14
-10,228
8,896
25
8,921
-19,149
Net interest income
2,356
7
2,363
1,978
4
1,982
381
19.2
Dividends
497
6
503
388
7
395
108
27.3
Gains/losses on disposal
-2,635
1
-2,634
2,449
11
2,460
-5,094
Valuation gains/losses
-10,374
-
-10,374
4,180
5
4,185
-14,559
Portfolio management fees paid (i)
-86
-
-86
-99
-2
-101
-15
-14.9
Gains (losses) on investments pertaining to insured parties
11,237
-
11,237
-7,739
-
-7,739
18,976
Insurance products (j)
-104
-
-104
-1,857
-
-1,857
-1,753
-94.4
Investment’s unrealized capital gains/losses
pertaining to insured parties on insurance products (k)
169
-
169
-48
-
-48
217
Investment products (l)
11,172
-
11,172
-5,834
-
-5,834
17,006
Income from insurance business gross of consolidation effects
1,185
438
1,623
1,208
379
1,587
36
2.3
Consolidation effects
82
-
82
42
-
42
40
95.2
Income from insurance business
1,267
438
1,705
1,250
379
1,629
76
4.7
Redetermined figures have been prepared to take into account the reallocation, based on management data, of the contribution from the going concerns object of disposal to
income (loss) from discontinued operations, as part of the acquisition of the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita
(formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects attributable to the branches object of disposal.
(a) The table illustrates the economic components of the insurance business broken down into those regarding:
- products considered to be insurance products according to IAS/IFRS, which include contracts where the risk insured is considered significant or in which the decision of the
return on the contracts is not market-based but depends on the insurance company's choices;
- investment products, which include financial products without a significant insurance risk. The latter are accounted for in the consolidated financial statements as financial
movements.
(b) The caption includes premiums issued only for products considered to be insurance products according to IAS/IFRS, net of the portions ceded to reinsurers. For the non-life
insurance business, the change in the premiums reserve is also included.
(c) The caption includes the amounts paid (claims, surrenders and maturities) and the change in claims reserves and reserves for amounts to be paid, net of portions ceded to
reinsurers.
(d) The caption includes the change in technical reserves, net of the portions ceded to reinsurers.
(e) The caption includes the portion of the profit/loss from investments (for insurance products) pertaining to insured parties, including the impact of shadow accounting.
(f) The caption includes net fees on investment products; specifically, charges paid by customers, management fees received by the financial units and fee expenses reversed by
the insurance companies to the sales network and management companies.
(g) The caption includes commission expenses on insurance products (including unit and ind ex-linked insurance products and pension funds) paid to the sales network.
(h) Residual caption comprising fee income on insurance product management fee income (unit and index-linked insurance products and pension funds), rebates, net interest
income on current accounts of the insurance company and on subordinated loans and other income and technical charges.
(i) The caption includes fees paid to management companies for the management of traditional insurance products (separate management) portfolios and pension funds. This
also includes fees from consolidated funds underlying insurance units.
(j) The caption includes the portion of the profit/loss from investments (for insurance products) pertaining to insured parties, without the impact of shadow accounting.
(k) The caption includes the portion of unrealized capital gains/losses pertaining to insured parties on insurance products (shadow accounting).
(l) The caption refers to the valuation of financial liabilities designated at fair value which represent the amount payable to insured parties for investment products.
Report on operations –Economic results
98
Income from insurance business includes the cost and revenue
captions of the insurance business of the Group’s life and non-life
companies. In 2022, it was 1,705 million euro, up 4.7% on 2021
(1,629 million euro). The change is due to the increase in the
technical margin (+51.6%, or +209 million euro) in both the life
business, which benefited from the increase in technical reserves,
and the non-life business, due to the decrease in the number of
claims. Conversely, there was a decline in the net investment
result (-14.6%, or -173 million euro), consisting of the operating
income from investments, net of retrocession to policyholders.
(millions of euro)
Captions (a)
2022
Changes %
Fourth
quarter
(a)
Third
quarter
(b)
Second
quarter
(c)
First
quarter
(d)
(a/b)
(b/c)
(c/d)
Technical margin
136
181
155
142
-24.9
16.8
9.2
Net insurance premiums (b)
3,582
1,823
2,220
2,541
96.5
-17.9
-12.6
Net charges for insurance claims and surrenders
(c)
-2,561
-2,246
-2,576
-2,659
14.0
-12.8
-3.1
Net charges for changes in technical reserves (d)
-1,101
466
917
537
-49.2
70.8
Gains (Losses) on investments pertaining to
insured parties on insurance products (e)
328
181
-328
-162
81.2
Net fees on investment contracts (f)
80
116
77
111
-31.0
50.6
-30.6
Commission expenses on insurance contracts (g)
-205
-188
-179
-215
9.0
5.0
-16.7
Other technical income and expense (h)
13
29
24
-11
-55.2
20.8
Net investment result
238
235
290
246
1.3
-19.0
17.9
Operating income from investments
1,058
-1,378
-6,126
-3,782
-77.5
62.0
Net interest income
674
563
635
491
19.7
-11.3
29.3
Dividends
155
102
172
74
52.0
-40.7
Gains/losses on disposal
-1,134
-605
-753
-142
87.4
-19.7
Valuation gains/losses
1,387
-1,421
-6,157
-4,183
-76.9
47.2
Portfolio management fees paid (i)
-24
-17
-23
-22
41.2
-26.1
4.5
Gains (losses) on investments pertaining to insured
parties
-820
1,613
6,416
4,028
-74.9
59.3
Insurance products (j)
-458
-164
369
149
Investment’s unrealized capital gains/losses
pertaining to insured parties on insurance
products (k)
121
-1
8
41
-80.5
Investment products (l)
-483
1,778
6,039
3,838
-70.6
57.3
Income from insurance business gross of
consolidation effects
374
416
445
388
-10.1
-6.5
14.7
Consolidation effects
28
20
20
14
40
-
42.9
Income from insurance business
402
436
465
402
-7.8
-6.2
15.7
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
For notes, see the previous table
Report on operations –Economic results
99
Income from insurance business, including both the life and non-life businesses, was lower in the fourth quarter of 2022 than
in the third and second quarters, and in line with the first quarter.
(millions of euro)
Business
2022
2021
Periodic
premiums
Single
premiums
Total
of which
new
business
Total
Adjustments
Total
Redetermined
figures
Life insurance business
358
8,716
9,074
8,718
9,446
410
9,856
Premiums issued on traditional products
163
6,100
6,263
6,101
5,093
371
5,464
Premiums issued on unit-linked products
191
1,887
2,078
1,888
3,550
33
3,583
Premiums issued on capitalisation products
4
4
8
4
18
2
20
Premiums issued on pension funds
-
725
725
725
785
4
789
Non-life insurance business
1,255
181
1,436
279
1,342
63
1,405
Premiums issued
1,255
181
1,436
279
1,342
63
1,405
Premiums ceded to reinsurers
-140
-25
-165
-37
-78
-8
-86
Net premiums issued from insurance products
1,473
8,872
10,345
8,960
10,710
465
11,175
Business on index-linked contracts
-
-
-
-
-
-
-
Business on unit-linked contracts
74
7,074
7,148
7,083
8,862
111
8,973
Total business from investment contracts
74
7,074
7,148
7,083
8,862
111
8,973
Total business
1,547
15,946
17,493
16,043
19,572
576
20,148
Figures restated, where necessary and material, considering the changes in the scope of consolidation. Redetermined figures have been prepared to take into account the
reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from discontinued operations, as part of the acquisition of
the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects
attributable to the branches object of disposal.
In 2022 business in the insurance segment amounted to 17.5 billion euro, down on the business recorded in 2021 (20.1 billion
euro). The decline is mainly due to unit-linked policies, both Class III policies of a primarily financial nature (-1.8 billion euro)
and those of a primarily insurance nature (-1.5 billion euro). On the other hand, there was a slight increase in the non-life and
health businesses (+2.2%) compared to 2021. New business totalled 16 billion euro, accounting for over 90% of the total
premium inflows of the Group's insurance companies, coming mainly from new single-premium contracts.
Profits (Losses) on financial assets and liabilities designated at fair value
(millions of euro)
2022
2021
Adjustments
2021
Redetermined
figures
Changes
(Redetermined
figures)
amount
%
Profits (losses) on trading and on financial instruments
under fair value option
605
560
-
560
45
8.0
Profits (losses) on hedges under hedge accounting
33
36
-
36
-3
-8.3
Profits (losses) on assets mandatorily measured at fair
value through profit or loss
125
168
-1
167
-42
-25.1
Profits (losses) on dividends and on disposal of assets
measured at fair value through other comprehensive
income and disposal of assets at amortised cost
589
945
-
945
-356
-37.7
Profits (losses) on the buyback of financial liabilities
26
-73
-
-73
99
Profits (Losses) on financial assets and liabilities
designated at fair value
1,378
1,636
-1
1,635
-257
-15.7
Figures restated, where necessary and material, considering the changes in the scope of consolidation. Redetermined figures have been prepared to take into
account the reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from discontinued operations,
as part of the acquisition of the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda
Vita and Cargeas, net of the effects attributable to the branches object of disposal.
Report on operations –Economic results
100
In 2022 profits on financial assets and liabilities designated at fair
value, amounting to 1,378 million euro, decreased on 2021.
The decrease, amounting to -15.7%, was mainly due to the profits
(losses) on dividends and on disposal of assets measured at fair
value through other comprehensive income and disposal of assets
at amortised cost (-37.7%, or -356 million euro), as a result of lower
gains on the sale of HTCS debt securities, primarily Italian
government bonds. Positive contributions were made by profits
(losses) on the repurchase of financial liabilities (+26 million euro,
compared to -73 million euro in 2021), due to the repurchases of
own debt securities on the secondary market, and profits (losses)
on trading and financial instruments under fair value option (+8%,
or +45 million euro), due to the greater profits associated with the
trading portfolio and certificates business, which benefited from the
positive impact of the debt value adjustment (DVA).
There were declines in profits (losses) on assets mandatorily
measured at fair value through profit or loss (-25.1%, or -42 million
euro) and, to a lesser extent, profits (losses) on hedges under
hedge accounting (-3 million euro).
(millions of euro)
2022
Changes %
Fourth
quarter
(a)
Third
quarter
(b)
Second
quarter
(c)
First
quarter
(d)
(a/b)
(b/c)
(c/d)
Profits (losses) on trading and on financial instruments under
fair value option
3
70
226
306
-95.7
-69.0
-26.1
Profits (losses) on hedges under hedge accounting
-12
-1
44
2
Profits (losses) on assets mandatorily measured at fair value
through profit or loss
-15
25
49
66
-49.0
-25.8
Profits (losses) on dividends and on disposal of assets
measured at fair value through other comprehensive income
and disposal of assets at amortised cost
11
-68
243
403
-39.7
Profits (losses) on the buyback of financial liabilities
11
25
-2
-8
-56.0
-75.0
Profits (Losses) on financial assets and liabilities
designated at fair value
-2
51
560
769
-90.9
-27.2
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
The result for the fourth quarter of 2022 was a loss of 2 million euro, compared to gradually declining profits in the previous
quarters. This performance was due above all to the lower profits on disposals of debt securities and the certificates business,
inclusive of the negative impact of the DVA during the quarter, despite the positive contribution from the sale of HTCS
securities.
Other operating income (expenses)
In 2022, other operating expenses came to 32 million euro, compared to 97 million euro of operating income in 2021,
recording a decrease of 129 million euro. This caption includes both operating income and expenses – including those of
subsidiaries not subject to management and coordination operating in sectors completely distinct from banking and finance –
and profits on investments carried at equity. The decrease was due to both the recognition in 2022 of other operating
expenses of 72 million euro (compared to a nil value in 2021) and the decrease in dividends and profits on investments
carried at equity, which amounted to 40 million euro (97 million euro in 2021).
Report on operations –Economic results
101
Operating costs
(millions of euro)
2022
2021
Adjustments
2021
Redetermined
figures
Changes
(Redetermined figures)
amount
%
Wages and salaries
4,757
4,696
-40
4,656
101
2.2
Social security charges
1,187
1,203
-11
1,192
-5
-0.4
Other
798
895
-
895
-97
-10.8
Personnel expenses
6,742
6,794
-51
6,743
-1
-
Information technology expenses
838
864
6
870
-32
-3.7
Management of real estate assets
expenses
317
351
-1
350
-33
-9.4
General structure costs
399
395
-1
394
5
1.3
Professional and legal expenses
299
322
7
329
-30
-9.1
Advertising and promotional expenses
152
142
-
142
10
7.0
Indirect personnel costs
157
134
-
134
23
17.2
Other costs
577
619
-3
616
-39
-6.3
Indirect taxes and duties
202
196
-1
195
7
3.6
Recovery of expenses and charges
-29
-36
-
-36
-7
-19.4
Administrative expenses
2,912
2,987
7
2,994
-82
-2.7
Property and equipment
566
581
-
581
-15
-2.6
Intangible assets
714
660
2
662
52
7.9
Adjustments
1,280
1,241
2
1,243
37
3.0
Operating costs
10,934
11,022
-42
10,980
-46
-0.4
Figures restated, where necessary and material, considering the changes in the scope of consolidation. Redetermined figures have been prepared to take into account the
reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from discontinued operations, as part of the acquisition of
the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects
attributable to the branches object of disposal.
In 2022, operating costs amounted to 10,934 million euro, down
slightly, by 0.4%, on 2021.
Personnel expenses of 6,742 million euro were essentially stable
due to the offsetting of the savings on negotiated exits and the
higher costs of the variable component of remuneration relating to
the achievement of more than positive results (overperformance)
by the Group and the one-off contribution to Intesa Sanpaolo
personnel (executives excluded) of approximately 36 million euro
as per the labour union agreement in the fourth quarter to mitigate
the impact of inflation.
Administrative expenses amounted to 2,912 million euro, down by
2.7%. There were widespread savings, in particular in terms of
property management expenses, due to the decrease in space as
a result of the merging and streamlining plans, IT service
expenses, legal and professional fees and other expenses.
Adjustments to property, equipment and intangible assets, which
in accordance with IFRS 16 also include the share relating to
rights of use acquired under operating leases, increased (+3%) on
2021, due to the intangible assets, specifically software.
The cost/income ratio for 2022 came to 50.9%, an improvement of
nearly two percentage points compared to 2021 (52.8%).
Report on operations –Economic results
102
(millions of euro)
2022
Changes %
Fourth
quarter
(a)
Third
quarter
(b)
Second
quarter
(c)
First
quarter
(d)
(a/b)
(b/c)
(c/d)
Wages and salaries
1,367
1,131
1,163
1,096
20.9
-2.8
6.1
Social security charges
327
287
288
285
13.9
-0.3
1.1
Other
227
214
162
195
6.1
32.1
-16.9
Personnel expenses
1,921
1,632
1,613
1,576
17.7
1.2
2.3
Information technology expenses
227
207
213
191
9.7
-2.8
11.5
Management of real estate assets expenses
97
74
74
72
31.1
-
2.8
General structure costs
100
98
105
96
2.0
-6.7
9.4
Professional and legal expenses
91
69
73
66
31.9
-5.5
10.6
Advertising and promotional expenses
70
30
34
18
-11.8
88.9
Indirect personnel costs
49
37
39
32
32.4
-5.1
21.9
Other costs
181
138
136
122
31.2
1.5
11.5
Indirect taxes and duties
58
48
50
46
20.8
-4.0
8.7
Recovery of expenses and charges
-8
-6
-6
-9
33.3
-
-33.3
Administrative expenses
865
695
718
634
24.5
-3.2
13.2
Property and equipment
145
138
139
144
5.1
-0.7
-3.5
Intangible assets
199
175
170
170
13.7
2.9
-
Adjustments
344
313
309
314
9.9
1.3
-1.6
Operating costs
3,130
2,640
2,640
2,524
18.6
-
4.6
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
The quarterly analysis shows an increase in operating costs in the fourth quarter due to the customary seasonal effects,
above all at the level of administrative expenses.
(millions of euro)
2022
2021
Changes
Redetermined
figures
amount
%
Banca dei Territori
6,397
6,499
-102
-1.6
IMI Corporate & Investment Banking
1,418
1,372
46
3.4
International Subsidiary Banks
1,118
1,072
46
4.3
Private Banking
921
914
7
0.8
Asset Management
222
239
-17
-7.1
Insurance
385
402
-17
-4.2
Total business areas
10,461
10,498
-37
-0.4
Corporate Centre
473
482
-9
-1.9
Intesa Sanpaolo Group
10,934
10,980
-46
-0.4
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents. Redetermined figures have been
prepared to take into account the reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from discontinued
operations, as part of the acquisition of the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita
and Cargeas, net of the effects attributable to the branches object of disposal.
Report on operations –Economic results
103
At the level of operating costs, the Banca dei Territori Division,
which accounts for 61% of all costs for the business areas,
reported considerable savings compared to 2021 (-1.6%, or -102
million euro) thanks to lower personnel expenses, in relation to
negotiated exits, and administrative expenses, mainly for services
rendered by third parties and legal expenses, as well as services
relating to real estate. There were also declines in Asset
Management (-7.1%, or -17 million euro), attributable to the
containment of administrative expenses and personnel expenses,
and in Insurance (-4.2%, or -17 million euro), due solely to
administrative expenses. By contrast, there were cost increases in
IMI Corporate & Investment Banking (+3.4%, or +46 million euro)
and International Subsidiary Banks (+4.3%, or +46 million euro) in
relation to greater administrative and personnel expenses. Private
Banking recorded a slight increase in operating costs (+0.8%, or
+7 million euro).
Finally, the Corporate Centre reported a decline in costs of 1.9%,
or -9 million euro, due to synergies on administrative expenses.
Operating margin
The operating margin in 2022 amounted to 10,536 million euro, up 7.4% on the figure recorded in 2021, thanks to the
increase in revenues and the reduction in operating costs.
Net adjustments to loans
(millions of euro)
2022
2021
Adjustments
2021
Redetermined
figures
Changes
(Redetermined
figures)
amount
%
Bad loans
-534
-1,783
6
-1,777
-1,243
-69.9
Unlikely to pay
-1,091
-1,209
-
-1,209
-118
-9.8
Past due loans
-230
-210
-
-210
20
9.5
Stage 3 loans
-1,855
-3,202
6
-3,196
-1,341
-42.0
of which debt securities
-
-
-
-
-
-
Stage 2 loans
-999
169
-
169
-1,168
of which debt securities
-7
-5
-
-5
2
40.0
Stage 1 loans
-45
193
-
193
-238
of which debt securities
-3
24
-
24
-27
Net losses/recoveries on impairment of loans
-2,899
-2,840
6
-2,834
65
2.3
Profits/losses from changes in contracts without
derecognition
-5
-29
-
-29
-24
-82.8
Net provisions for risks and charges for credit risk
associated with commitments and financial guarantees
given
-209
97
-
97
-306
Net adjustments to loans
-3,113
-2,772
6
-2,766
347
12.5
Figures restated, where necessary and material, considering the changes in the scope of consolidation. Redetermined figures have been prepared to take into account the
reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from discontinued operations, as part of the acquisition of
the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects
attributable to the branches object of disposal.
Report on operations –Economic results
104
Net adjustments to loans amounted to 3,113 million euro, up by
12.5% from the 2,766 million euro recorded in 2021. This growth
reflects (i) the valuation effects relating to the Russia-Ukraine risk
totalling 1,298 million euro; and (ii) the adjustments of 1,174 million
euro, of which 965 million euro in the fourth quarter, to prudentially
factor in the prospective risk elements inherent in the current
scenario. These adjustments – mainly relating to the management
overlays prudentially applied where greater potential vulnerabilities
were identified, but also to de-risking measures, including that
relating to the real estate leasing portfolio, and the application of a
deterioration factor to the prudent macroeconomic scenario
adopted for the forward-looking estimate of ECLs – were only
partially mitigated by the reduction of the management overlays to
cover the vulnerability of the moratoria (721 million euro), given the
essentially complete absorption of moratoria without significant
impacts on the performance of non-performing positions.
The performance of the caption reflects greater adjustments to
loans in Stage 2 of 1,168 million euro and in Stage 1 for 238
million euro and greater provisions for commitments and
guarantees given by 306 million euro (209 million euro in net
provisions in the current year, compared to writebacks of 97 million
euro recorded in 2021). Conversely, non-performing loans in
Stage 3 declined (-1,341 million euro), as a result of a reduction in adjustments to bad loans (-1,243 million euro) and unlikely-
to-pay loans (-118 million euro), only slightly mitigated by increases on past-due loans (+20 million euro).
In December 2022, the ratio of gross non-performing loans to total loans was 2.3%, substantially in line with the September
and June figures and improving on both the March 2022 figure and the December 2021 figure, due in part to the sale of
approximately 4 billion euro in non-performing loans in the second quarter.
The cost of credit, expressed as the ratio of net adjustments to net loans, amounted to 70 basis points in 2022 (30 basis
points when excluding the adjustments for the Russia-Ukraine exposure, the additional adjustments to capture the elements
of risk inherent in the current scenario and those relating to the overlays and to favour derisking, net of the release of generic
provisions set aside in 2020 for the expected impacts of COVID-19), compared to 59 basis points for 2021 (25 basis points
when excluding the additional provisions to accelerate the reduction in non-performing loans).
The coverage of non-performing loans in December 2022 amounted to 48.4%. In detail, bad loans required net adjustments
of 534 million euro – compared to 1,777 million euro in 2021 – with a coverage ratio of 69.2%. The modest value of
adjustments to bad loans is due to both the limited inflows and deleveraging of non-performing exposures. Net adjustments to
unlikely-to-pay loans, totalling 1,091 million euro, were down (-9.8%) from 1,209 million euro recorded in 2021; the coverage
ratio for these positions amounted to 38.5%. Net adjustments to past-due loans amounted to 230 million euro (210 million
euro in 2021), with a coverage ratio of 25.2%. The coverage ratio for forborne positions within the non-performing loans
category was 40.7%. Finally, the coverage of performing loans was 0.6% and incorporates the physiological risk inherent in
the loan portfolio, including the provisions during 2022 for the Russia-Ukraine conflict (on this subject, see the opening
chapter of this Report).
Report on operations –Economic results
105
(millions of euro)
2022
Changes %
Fourth
quarter
(a)
Third
quarter
(b)
Second
quarter
(c)
First
quarter
(d)
(a/b)
(b/c)
(c/d)
Bad loans
-230
-199
-95
-10
15.6
Unlikely to pay
-327
-140
-422
-202
-66.8
Past due loans
-62
-43
-91
-34
44.2
-52.7
Stage 3 loans
-619
-382
-608
-246
62.0
-37.2
of which debt securities
-
-
-
-
-
-
-
Stage 2 loans
-388
-209
-137
-265
85.6
52.6
-48.3
of which debt securities
11
-9
-4
-5
-20.0
Stage 1 loans
-28
84
13
-114
of which debt securities
-5
-
2
-
-
-
Net losses/recoveries on impairment of loans
-1,035
-507
-732
-625
-30.7
17.1
Profits/losses from changes in contracts without
derecognition
-13
9
2
-3
Net provisions for risks and charges for credit risk
associated with commitments and financial guarantees
given
-137
2
-
-74
-
Net adjustments to loans
-1,185
-496
-730
-702
-32.1
4.0
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
At the quarterly level, the fourth quarter of 2022 recorded higher net adjustments to loans than the other quarters of the year,
mainly due to the effect of the higher adjustments to loans in Stage 3 and Stage 2.
Other net provisions and net impairment losses on other assets
(millions of euro)
2022
2021
Adjustments
2021
Redetermined
figures
Changes
(Redetermined
figures)
amount
%
Other net provisions
-106
-698
-2
-700
-594
-84.9
Net impairment losses on instruments measured at amortised
cost and on instruments designated at fair value through other
comprehensive income
-22
-28
-
-28
-6
-21.4
Net impairment losses on other assets
-142
-118
-
-118
24
20.3
Net Losses/Recoveries pertaining to insurance companies
pursuant to IAS 39
-11
-4
-1
-5
6
Other net provisions and net impairment losses on other
assets
-281
-848
-3
-851
-570
-67.0
Figures restated, where necessary and material, considering the changes in the scope of consolidation. Redetermined figures have been prepared to take into account the
reallocation, based on management data, of the contribution from the going concerns object of disposal to income (loss) from discontinued operations, as part of the acquisition of
the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects
attributable to the branches object of disposal.
Report on operations –Economic results
106
Within the layout of the reclassified income statement, this caption
primarily consists of other net provisions for risks and charges and
net impairment losses on other assets and on securities measured
at amortised cost and at fair value. In 2022, other net provisions
and net impairment losses on other assets amounted to 281
million euro, down sharply from 851 million euro in 2021, which
included the provision of 295 million euro in the insurance context,
representing the amount by which claims exceeded the premiums
accrued and the estimated prospective costs, as well as provisions
for legal expenses of 180 million euro.
The main components of the 2022 figure were other net provisions
(106 million euro), largely relating to legal disputes and the write-
off of the value of the Russian equity investment in the
consolidated financial statements (80 million euro), and the net
adjustments to other assets (142 million euro), largely attributable
to the Parent Company.
(millions of euro)
2022
Changes %
Fourth
quarter
(a)
Third
quarter
(b)
Second
quarter
(c)
First
quarter
(d)
(a/b)
(b/c)
(c/d)
Other net provisions
-30
-40
-27
-9
-25.0
48.1
Net impairment losses on instruments measured at amortised
cost and on instruments designated at fair value through
other comprehensive income
41
2
-31
-34
-8.8
Net impairment losses on other assets
-125
-4
-4
-9
-
-55.6
Net Losses/Recoveries pertaining to insurance companies
pursuant to IAS 39
1
-3
-1
-8
-87.5
Other net provisions and net impairment losses on other
assets
-113
-45
-63
-60
-28.6
5.0
Figures restated, where necessary and material, considering the changes in the scope of consolidation.
The value for the fourth quarter of 2022 was up on the previous quarters, especially due to higher net adjustments to other
assets, mainly recognised by the Parent Company.
Report on operations –Economic results
107
Other income (expenses)
In this caption of the reclassified income statement, the “profits (losses) on financial assets measured at amortised cost ot her
than loans, equity investments and other investments” are aggregated together with other income and expenses not strictly
linked to operations.
In 2022, other income amounted to 202 million euro, including a capital gain of 195 million euro from the disposal of Intesa
Sanpaolo Formazione and a one-off contribution of 41 million euro to Intesa Sanpaolo people, excluding those classified as
managers or having equivalent remuneration, to mitigate the impact of inflation, as well as the charges for relief and shelte r
initiatives for the Ukrainian population. The figure was lower than the 332 million euro recorded in 2021, which included the
capital gain recorded with the sale of the custodian bank business unit of Fideuram Bank Luxembourg (194 million euro) and
the income on the transfer of the former UBI acquiring business to Nexi (97 million euro).
Income (Loss) from discontinued operations
In the reporting period there were no income or losses from discontinued operations, whereas income from discontinued
operations in 2021 amounted to 58 million euro, due to the contribution of the branches object of disposal.
Gross income (loss)
In 2022 income before tax from continuing operations came to 7,344 million euro, up by 11.5% compared to 2021.
Taxes on income
Current and deferred taxes came to 2,059 million euro (including a benefit of 320 million euro due to the recognition of
deferred tax assets relating to tax losses carried forward of the former UBI Banca), for an effective tax rate of 28%, higher
than in 2021 (24.4%), which had benefited from the tax realignment of intangible assets.
Charges (net of tax) for integration and exit incentives
The caption declined to 140 million euro from 439 million euro in 2021, which included 210 million euro of exit incentives
pursuant to the agreement signed on 16 November 2021, also as a result in 2022 of the release of the discounting effect of
allowances relating to charges for integration and exit incentives for personnel, against the rise in the reference interest rate
curve.
Effect of purchase price allocation (net of tax)
This caption comprises amounts attributable to the revaluation of loans, debts, real estate and the recognition of new
intangible assets, in application of IFRS 3, upon recognition of acquisition of investments and/or aggregate assets. In 2022,
this caption recorded costs of 211 million euro, compared to the 39 million euro recorded in the previous year.
Levies and other charges concerning the banking industry (net of tax)
The caption includes the levies imposed by legislative provisions and/or aimed at maintaining the stability of the banking
industry and consequently outside the company management. In 2022, these charges came to 576 million euro, compared to
the 512 million euro recorded in 2021.
The charges recognised during the reporting period may be broken down as follows: 254 million euro attributable to resolution
funds, 289 million euro to deposit guarantee funds, 19 million euro to levies recognised by international subsidiary banks, 1 0
million euro to the Atlante Fund and 4 million euro to the Voluntary Scheme of the Deposit Protection Fund.
Minority interests
In 2022, the caption included, with a negative sign, 4 million euro of net profits attributable to minority interests relating to
companies within the scope of line-by-line consolidation, compared to a positive value of 194 million euro relating to net
losses of companies in the insurance segment in 2021.
Net income (loss)
Despite the sudden changes of scenario, the Intesa Sanpaolo Group closed 2022 with a net income of 4,354 million euro,
which confirms its diversified and resilient business model. Excluding value adjustments for the events relating to Russia and
Ukraine, net income would have amounted to 5.5 billion euro, with an increase of approximately 31% instead of 4%, thanks to
a sound revenue performance, driven by the interest component, and focused management of operating costs.
108
Balance sheet aggregates
General aspects
A reclassified condensed Balance sheet has been prepared to permit a more immediate understanding of the Group's assets
and liabilities. The format adopted includes not only the figures for the reporting period, but also the comparative figures. In
the interest of consistent comparison, the figures for previous periods are normally restated, where necessary and material,
including to account for changes in the scope of consolidation.
Compared to the end of 2021, a restatement – already carried out during the year for all four quarters of 2021 and the first
quarter of 2022 – has been applied following the inclusion in the scope of consolidation of the Luxembourg private bank
Compagnie de Banque Privée Quilvest (Fideuram Group) at the end of June 2022
44
.
Instead, with reference to the specific business line dedicated to the design and provision of training services and products for
Group employees, contributed by Intesa Sanpaolo to Intesa Sanpaolo Formazione in preparation for the transaction to
dispose of the latter (both transactions were finalised at the end of June 2022), no restatements were made of the balance
sheet figures of the business line sold, since said items were of negligible amounts and hence not relevant for comparability.
In line with the 2021 Financial Statements, the quarterly balance sheet figures for 2021 were also restated to:
− include the line-by-line balance sheet figures of Reyl & Cie S.A., RB Participations S.A. and Asteria Investment
Managers S.A. (Reyl Group), which entered the scope of consolidation in the second quarter of 2021 following the
acquisition by Fideuram - Intesa Sanpaolo Private Banking of control of RB Participations S.A. and Reyl & Cie S.A.,
which in turn controls Asteria Investment Managers S.A.;
− include, on a line-by-line basis, the balance sheet figures of the insurance companies Assicurazioni Vita (formerly Aviva
Vita), Lombarda Vita and Cargeas
45
, consolidated with effect from the second quarter of 2021.
In order to obtain easily comparable quarterly figures specifically with regard to the acquisition of the UBI Banca Group and
the related corporate transactions, in 2021 balance sheet figures concerning the UBI and ISP branches sold during the first
and second quarter of 2021 had already been excluded line by line. In the reclassified balance sheet, those figures were b y
convention allocated to the caption Non-current assets held for sale and discontinued operations. The restatement was
carried out based on the accounting records.
As regards the inclusion of the insurance companies Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and Cargeas,
whose balance sheet values were restated as illustrated above, please note that it was not deemed necessary to
“redetermine” the balance sheet figures so as to exclude - on the basis of management data - the items (investments and
technical reserves) linked to production from the customers of the branches sold to third parties, as was done in the income
statement, since said items were of negligible amounts and hence not relevant for comparability.
As a result of the above, since the restatements of the balance sheet data were - as normally happens - based on accounting
records, no reclassified “redetermined” balance sheet schedules were prepared.
Certain aggregations and reclassifications are then made with respect to the model provided in Circular 262/2005 of the Bank
of Italy. Breakdowns of restatements, aggregations and reclassifications are provided in separate tables included in the
attachments to the financial statements, as also required by Consob in its Communication 6064293 of 28 July 2006.
Aggregations and reclassifications of captions of the reclassified balance sheet refer to:
− the separate presentation of financial assets constituting Due from banks and Loans to customers, regardless of the
accounting portfolios to which they have been allocated;
− the separate presentation of financial assets not constituting loans, divided into financial assets measured at amortised
cost, financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive
income, net of the amounts reclassified to Due from banks and Loans to customers;
− the separate presentation of financial assets and liabilities pertaining to the insurance business, measured pursuant to
IAS 39, in application of the deferral approach, by the Group's insurance companies;
− the aggregation in one single caption of Property, equipment and intangible assets, broken down into the sub-captions
Assets owned and Rights of use acquired under leases;
− the inclusion of Hedging derivatives and Fair value change of financial assets/liabilities in hedged portfolios under
Other assets/ Other liabilities;
− the inclusion of the Technical insurance reserves reassured with third parties under Other assets;
− the separate presentation of Due to banks at amortised cost;
− the aggregation of Due to customers at amortised cost and Securities issued into one caption;
− the aggregation into one caption (Allowances for risks and charges) of allowances for specific purposes
(Employee termination indemnities, Allowances for risks and charges, Allowances for commitments and financial
guarantees given);
44
Since it was included in the scope of consolidation at the end of June 2022, without contributing to the Group’s income statement figures, in the Half-
yearly Report, the consolidation – and hence the restatement – affected balance sheet figures only. Accordingly, as at 31 December 2022 income
statement figures had been restated for all of 2021 and the first two quarters of 2022, whereas balance sheet figures had been restated for all of 2021
and the first quarter of 2022.
45
Assicurazioni Vita (formerly Aviva Vita) and Lombarda Vita were merged into Intesa Sanpaolo Vita as of 31 December 2021. Cargeas Assicurazioni
was merged into Intesa Sanpaolo Assicura, a wholly owned subsidiary of Intesa Sanpaolo Vita, as of 1 October 2022.
Report on operations – Balance sheet aggregates
109
− the reclassification of Lease payables to a specific sub-caption of Other liabilities;
− the presentation of Reserves as an aggregate and net of any treasury shares.
In addition, as already occurred in December 2021, the following should be noted:
− in view of the payment of the 2021 interim dividend by the Parent Company, a specific caption was added to the
reclassified balance sheet, within the captions of shareholders' equity, for consistency with the corresponding accounting
schedule;
− following the update to Bank of Italy Circular 262, which provides that the caption “Cash and cash equivalents” of the
accounting schedule include all “demand” loans, in the technical forms of current accounts and deposits, to banks and
central banks (with the exception of the reserve requirement), the specific caption Cash and cash equivalents, previously
included in Other assets, was opened accordingly in the reclassified balance sheet.
Report on operations – Balance sheet aggregates
110
Reclassified balance sheet
(millions of euro)
Assets
31.12.2022
31.12.2021
Changes
amount
%
Cash and cash equivalents
112,924
15,693
97,231
Due from banks
31,273
162,139
-130,866
-80.7
Loans to customers
446,854
465,871
-19,017
-4.1
Loans to customers measured at amortised cost
444,244
464,075
-19,831
-4.3
Loans to customers designated at fair value through other comprehensive income
and through profit or loss
2,610
1,796
814
45.3
Financial assets measured at amortised cost which do not constitute loans
52,690
43,325
9,365
21.6
Financial assets at fair value through profit or loss
46,546
51,638
-5,092
-9.9
Financial assets at fair value through other comprehensive income
48,008
67,058
-19,050
-28.4
Financial assets pertaining to insurance companies measured at fair value
pursuant to IAS 39
172,725
206,800
-34,075
-16.5
Financial assets pertaining to insurance companies measured at amortised cost
pursuant to IAS 39
80
85
-5
-5.9
Investments in associates and companies subject to joint control
2,013
1,652
361
21.9
Property, equipment and intangible assets
20,335
20,141
194
1.0
Assets owned
18,841
18,616
225
1.2
Rights of use acquired under leases
1,494
1,525
-31
-2.0
Tax assets
18,273
18,808
-535
-2.8
Non-current assets held for sale and discontinued operations
638
1,422
-784
-55.1
Other assets
23,324
16,184
7,140
44.1
Total Assets
975,683
1,070,816
-95,133
-8.9
Liabilities
31.12.2022
31.12.2021
Changes
amount
%
Due to banks at amortised cost
137,476
165,262
-27,786
-16.8
Due to customers at amortised cost and securities issued
528,795
545,101
-16,306
-3.0
Financial liabilities held for trading
46,512
56,308
-9,796
-17.4
Financial liabilities designated at fair value
8,795
3,674
5,121
Financial liabilities pertaining to insurance companies measured at amortised cost
pursuant to IAS 39
2,544
2,139
405
18.9
Financial liabilities pertaining to insurance companies measured at fair value
pursuant to IAS 39
71,744
84,770
-13,026
-15.4
Tax liabilities
2,306
2,292
14
0.6
Liabilities associated with non-current assets held for sale and discontinued operations
15
30
-15
-50.0
Other liabilities
9,696
21,974
-12,278
-55.9
of which lease payables
1,321
1,398
-77
-5.5
Technical reserves
100,117
118,296
-18,179
-15.4
Allowances for risks and charges
5,862
6,816
-954
-14.0
of which allowances for commitments and financial guarantees given
711
508
203
40.0
Share capital
10,369
10,084
285
2.8
Reserves
43,756
44,856
-1,100
-2.5
Valuation reserves
-1,939
-709
1,230
Valuation reserves pertaining to insurance companies
-696
476
-1,172
Interim dividend
-1,400
-1,399
1
0.1
Equity instruments
7,211
6,282
929
14.8
Minority interests
166
379
-213
-56.2
Net income (loss)
4,354
4,185
169
4.0
Total liabilities and shareholders' equity
975,683
1,070,816
-95,133
-8.9
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
Report on operations – Balance sheet aggregates
111
Quarterly development of the reclassified balance sheet
(millions of euro)
Assets
2022
2021
31/12
30/9
30/6
31/3
31/12
30/9
30/6
31/3
Cash and cash equivalents
112,924
118,368
18,370
18,666
15,693
16,250
15,623
14,652
Due from banks
31,273
39,734
138,555
158,521
162,139
164,909
148,223
128,207
Loans to customers
446,854
473,746
471,649
468,995
465,871
463,917
463,904
465,231
Loans to customers measured at amortised cost
444,244
470,866
469,338
466,416
464,075
461,525
461,955
463,699
Loans to customers designated at fair value through
other comprehensive income and through profit or
loss
2,610
2,880
2,311
2,579
1,796
2,392
1,949
1,532
Financial assets measured at amortised cost which do
not constitute loans
52,690
49,056
49,850
56,111
43,325
41,286
42,615
44,857
Financial assets at fair value through profit or loss
46,546
51,671
51,943
52,875
51,638
59,926
59,827
55,458
Financial assets at fair value through other
comprehensive income
48,008
52,209
59,213
65,016
67,058
63,806
66,660
61,039
Financial assets pertaining to insurance companies
measured at fair value pursuant to IAS 39
172,725
173,252
180,637
196,949
206,800
205,631
206,138
206,388
Financial assets pertaining to insurance companies
measured at amortised cost pursuant to IAS 39
80
80
80
81
85
82
80
79
Investments in associates and companies subject to
joint control
2,013
1,990
1,902
1,633
1,652
1,738
1,707
1,708
Property, equipment and intangible assets
20,335
19,947
19,965
19,891
20,141
19,415
19,459
18,916
Assets owned
18,841
18,401
18,389
18,345
18,616
17,803
17,819
17,161
Rights of use acquired under leases
1,494
1,546
1,576
1,546
1,525
1,612
1,640
1,755
Tax assets
18,273
19,391
18,745
18,610
18,808
18,805
19,014
19,582
Non-current assets held for sale and discontinued
operations
638
1,123
1,303
1,556
1,422
3,181
1,566
3,173
Other assets
23,324
22,438
20,103
16,461
16,184
14,482
14,675
14,514
Total Assets
975,683
1,023,005
1,032,315
1,075,365
1,070,816
1,073,428
1,059,491
1,033,804
Liabilities
2022
2021
31/12
30/9
30/6
31/3
31/12
30/9
30/6
31/3
Due to banks at amortised cost
137,476
158,971
152,413
180,234
165,262
179,552
164,875
151,787
Due to customers at amortised cost and securities
issued
528,795
536,726
536,958
539,278
545,101
525,546
520,960
513,930
Financial liabilities held for trading
46,512
53,856
55,227
58,729
56,308
57,535
57,336
53,547
Financial liabilities designated at fair value
8,795
6,501
4,753
3,848
3,674
3,266
3,361
3,116
Financial liabilities pertaining to insurance companies
measured at amortised cost pursuant to IAS 39
2,544
2,244
2,297
2,280
2,139
2,563
2,518
2,414
Financial liabilities pertaining to insurance companies
measured at fair value pursuant to IAS 39
71,744
72,812
74,454
80,086
84,770
83,093
83,010
82,040
Tax liabilities
2,306
3,581
2,806
2,296
2,292
2,627
2,497
3,310
Liabilities associated with non-current assets held for
sale and discontinued operations
15
89
92
37
30
1,404
78
3,585
Other liabilities
9,696
20,020
28,532
23,553
21,974
24,984
31,700
26,301
of which lease payables
1,321
1,368
1,417
1,389
1,398
1,523
1,574
1,713
Technical reserves
100,117
99,751
104,809
113,471
118,296
118,616
119,475
119,943
Allowances for risks and charges
5,862
5,525
5,709
6,481
6,816
6,873
7,042
7,437
of which allowances for commitments and financial
guarantees given
711
563
561
562
508
534
548
576
Share capital
10,369
10,369
10,369
10,084
10,084
10,084
10,084
10,084
Reserves
43,756
44,509
46,216
48,995
44,856
46,508
46,671
47,529
Valuation reserves
-1,939
-1,898
-1,603
-1,320
-709
-569
-476
-738
Valuation reserves pertaining to insurance companies
-696
-762
-523
120
476
677
661
777
Interim dividend
-1,400
-
-
-1,399
-1,399
-
-
-
Equity instruments
7,211
7,203
7,204
7,220
6,282
6,279
6,269
6,202
Minority interests
166
224
248
348
379
384
407
1,024
Net income (loss)
4,354
3,284
2,354
1,024
4,185
4,006
3,023
1,516
Total Liabilities and Shareholders' Equity
975,683
1,023,005
1,032,315
1,075,365
1,070,816
1,073,428
1,059,491
1,033,804
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
Report on operations – Balance sheet aggregates
112
BANKING BUSINESS
Loans to customers
Loans to customers: breakdown
(millions of euro)
31.12.2022
31.12.2021
Changes
%
breakdown
%
breakdown
amount
%
Current accounts
22,970
5.1
21,768
4.7
1,202
5.5
Mortgages
242,299
54.3
250,941
53.9
-8,642
-3.4
Advances and other loans
154,477
34.6
161,449
34.6
-6,972
-4.3
Commercial banking loans
419,746
94.0
434,158
93.2
-14,412
-3.3
Repurchase agreements
15,366
3.4
17,621
3.8
-2,255
-12.8
Loans represented by securities
6,246
1.4
7,015
1.5
-769
-11.0
Non-performing loans
5,496
1.2
7,077
1.5
-1,581
-22.3
Loans to customers
446,854
100.0
465,871
100.0
-19,017
-4.1
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
As at 31 December the Group’s loans to customers came to
approximately 447 billion euro, down (-4.1%) compared to the
beginning of the year, due to the actions aimed at lowering the
Group’s RWAs, in line with the EBA guidelines applicable as of
1 January 2023. These actions resulted in the containment of the
credit on negative EVA corporate positions or those no longer
justified in relation to the capital absorbed, and in the sale of
performing loans of the lease segment, in pursuit of the creation
and distribution of shareholder value.
In detail, the decline in loans to customers during the year was
driven by commercial banking loans (-3.3%, or -14.4 billion euro),
and in particular by the reduction in mortgage loans (-3.4%, or -8.6
billion euro) and advances and other loans (-4.3%, or -7 billion
euro), only partly offset by the performance of current accounts
(+5.5%, or +1.2 billion euro). In addition, there was a significant
decline in repurchase agreements (-12.8%, or -2.3 billion euro)
and non-performing loans (-22.3%, or -1.6 billion euro). The latter
amounted to 5.5 billion euro, a figure that decreased compared to
the beginning of the year due to the de-risking initiatives
undertaken during the year
46
. Finally, loans represented by
securities declined by 11% (-0.8 billion euro).
In the domestic medium/long-term loan market, disbursements to households in 2022 (including the small business accounts
having similar needs to family businesses) amounted to 22 billion euro, while disbursements to businesses under the Banca
dei Territori scope (including customers with turnover of up to 350 million euro) came to 16.1 billion euro. Loans granted by
the new Agribusiness department amounted to 2.1 billion euro. The medium/long-term disbursements to customers of the IMI
Corporate & Investment Banking Division amounted to 17.4 billion euro, excluding the international portion. Overall
disbursements within Italy, inclusive of the loans to the non-profit sector, disbursements through third-party networks and
through the former UBI Leasing and Prestitalia reached 58.4 billion euro. If the Group’s foreign operations are included,
medium/long-term disbursements totalled 81.4 billion euro.
As at 31 December 2022, the Intesa Sanpaolo Group’s share of the Italian domestic market was 19% for total loans to
customers.
46
For more details, see the information provided in the opening chapter of this Report.
Report on operations – Balance sheet aggregates
113
(millions of euro)
31.12.2022
31.12.2021
Changes
amount
%
Banca dei Territori
247,522
250,592
-3,070
-1.2
IMI Corporate & Investment Banking
132,927
152,543
-19,616
-12.9
International Subsidiary Banks
40,212
38,970
1,242
3.2
Private Banking
15,104
14,450
654
4.5
Asset Management
282
783
-501
-64.0
Insurance
-
-
-
-
Total business areas
436,047
457,338
-21,291
-4.7
Corporate Centre
10,807
8,533
2,274
26.6
Intesa Sanpaolo Group
446,854
465,871
-19,017
-4.1
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents and discontinued
operations.
In the analysis by business area, the Banca dei Territori Division,
which accounts for approximately 57% of the aggregate of the
Group’s business areas, recorded a decrease year-to-date (-1.2%,
or -3.1 billion euro), mainly attributable to the performance of
medium/long-term loans to SMEs. In line with the goals of
containing RWAs, the IMI Corporate & Investment Banking
Division recorded a decrease (-12.9%, or -19.6 billion euro),
mainly attributable to decreased operations with global corporate
customers and in the global markets segment, as well as the
reduction in loans for structured finance transactions and to
international customers. The loans of the International Subsidiary
Banks Division grew (+3.2%, or +1.2 billion euro), due specifically
to the greater contribution of the subsidiaries operating in Slovakia,
Serbia and Croatia. Turning to the other divisions, whose loans are
of relatively modest amounts in light of their specific businesses,
the loans of the Private Banking Division increased (+4.5%),
whereas those of the Asset Management Division declined sharply
(-64%).
Loans on central assets of the Corporate Centre increased sharply (+26.6%) in relation to repurchase agreements with
central counterparties.
Report on operations – Balance sheet aggregates
114
Loans to customers: credit quality
(millions of euro)
31.12.2022
31.12.2021
Change
Net exposure
%
breakdown
Net exposure
%
breakdown
Net exposure
Bad loans
1,131
0.2
2,130
0.5
-999
Unlikely to pay
3,952
0.9
4,325
0.9
-373
Past due loans
413
0.1
622
0.1
-209
Non-Performing Loans
5,496
1.2
7,077
1.5
-1,581
Non-performing loans in Stage 3 (subject to
impairment)
5,463
1.2
7,038
1.5
-1,575
Non-performing loans designated at fair value
through profit or loss
33
-
39
-
-6
Performing loans
435,026
97.4
451,760
97.0
-16,734
Stage 2
43,865
9.8
54,389
11.7
-10,524
Stage 1
390,278
87.4
396,372
85.1
-6,094
Performing loans designated at fair value through
profit or loss
883
0.2
999
0.2
-116
Performing loans represented by securities
6,246
1.4
7,015
1.5
-769
Stage 2
815
0.2
865
0.2
-50
Stage 1
5,431
1.2
6,150
1.3
-719
Loans held for trading
86
-
19
-
67
Total loans to customers
446,854
100.0
465,871
100.0
-19,017
of which forborne performing
6,920
8,103
-1,183
of which forborne non-performing
2,063
2,644
-581
Loans to customers classified as non-current
assets held for sale (*)
368
1,206
-838
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
(*) As at 31 December 2022, this item includes 358 million euro of non-performing loans and 10 million euro of performing loans to be sold. As at 31 December 2021, the amount
was entirely referred to non-performing loans to be sold, also inclusive of single name exposures.
Benefiting from the de-risking initiatives undertaken, as at 31 December 2022, the Group’s net non-performing loans
amounted to 5.5 billion euro, an all-time low. The reduction from the beginning of the year (-22.3%) confirms the virtuous trend
already recorded in previous years. The non-performing assets percentage of total net loans to customers amounted to 1.2%
(1% according to the EBA definition), a low proportion and further improving compared to December 2021 (1.5%, 1.2%
according to the EBA definition), with a coverage ratio for non-performing loans of 48.4%.
In further detail, at the end of December 2022, bad loans came to 1.1 billion euro (-46.9% year to date), net of adjustments,
and represented 0.2% of total net loans. As at that same date, the coverage ratio came to 69.2%. Loans included in the
unlikely-to-pay category amounted to 4 billion euro, down by 8.6%, accounting for 0.9% of total net loans to customers, with a
coverage ratio of 38.5%. Past due loans amounted to 413 million euro (-33.6% on December 2021), with a coverage ratio of
25.2%. Within the non-performing loan category, forborne exposures, generated by forbearance measures for borrowers
experiencing difficulty in meeting their financial obligations, amounted to 2.1 billion euro, with a coverage ratio of 40.7%, while
forborne exposures in the performing loans category amounted to 6.9 billion euro.
The coverage ratio of performing loans amounted to 0.59% (0.54% in December 2021), also in relation to the provision of 1.3
billion euro allocated in 2022 for the Russia-Ukraine conflict (on this subject, see the opening chapter of this Report).
Report on operations – Balance sheet aggregates
115
(millions of euro)
Captions
31.12.2022
31.12.2021
Change
Gross
exposure
Total
adjustments
Net
exposure
Gross
exposure
Total
adjustments
Net
exposure
Net
exposure
Bad loans
3,667
-2,536
1,131
7,194
-5,064
2,130
-999
Unlikely to pay
6,423
-2,471
3,952
7,281
-2,956
4,325
-373
Past due loans
552
-139
413
774
-152
622
-209
Non-Performing Loans
10,642
-5,146
5,496
15,249
-8,172
7,077
-1,581
Non-performing loans in Stage 3 (subject to
impairment)
10,597
-5,134
5,463
15,202
-8,164
7,038
-1,575
Non-performing loans designated at fair value through
profit or loss
45
-12
33
47
-8
39
-6
Performing loans
437,616
-2,590
435,026
454,213
-2,453
451,760
-16,734
Stage 2
45,801
-1,936
43,865
56,129
-1,740
54,389
-10,524
Stage 1
390,932
-654
390,278
397,085
-713
396,372
-6,094
Performing loans designated at fair value through
profit or loss
883
-
883
999
-
999
-116
Performing loans represented by securities
6,274
-28
6,246
7,039
-24
7,015
-769
Stage 2
838
-23
815
882
-17
865
-50
Stage 1
5,436
-5
5,431
6,157
-7
6,150
-719
Loans held for trading
86
-
86
19
-
19
67
Total loans to customers
454,618
-7,764
446,854
476,520
-10,649
465,871
-19,017
of which forborne performing
7,473
-553
6,920
8,616
-513
8,103
-1,183
of which forborne non-performing
3,480
-1,417
2,063
4,568
-1,924
2,644
-581
Loans to customers classified as non-current assets
held for sale (*)
754
-386
368
4,504
-3,298
1,206
-838
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
(*) As at 31 December 2022, this item refers to non-performing loans and in residual measure (10 million euro) to performing loans to be sold. As at 31 December 2021, the
amount was entirely referred to non-performing loans to be sold, also inclusive of single name exposures.
As at 31 December 2022 the Group's gross non-performing loans amounted to 10.6 billion euro, a decrease of 4.6 billion euro
(-30.2%) over the twelve months. Therefore, they declined to 2.3% of the total from 3.2% at the end of 2021 (1.9% and 2.4%,
respectively, if expressed in accordance with the EBA definitions).
The change mainly reflects the disposal of the portfolios held for sale that in the 2021 Financial Statements were not
reclassified pursuant to IFRS 5, but were recognised in accordance with the provisions of IFRS 9, i.e. factoring in a
probabilistic scenario of sale at market prices (for a description, see the opening chapter of this Report).
The process of reducing non-performing loans continues to benefit from inflows from performing loans, which remained at low
levels.
Gross inflows in 2022 totalled 3.8 billion euro, of which 1.1 billion euro in the fourth quarter. Gross inflows relating to
exposures to Russia and Ukraine totalled 0.5 billion euro, of which 0.2 billion euro in the third quarter and 0.3 billion euro in
the second. In 2021 gross inflows amounted to 3.5 billion euro.
In net terms, that is, net of outflows to performing loans, inflows amounted to 2.8 billion euro – including the aforementioned
0.5 billion euro related to exposures to Russia and Ukraine
47
– with 0.8 billion euro attributable to the fourth quarter. In 2021
net inflows from performing loans totalled 2.5 billion euro.
The table shows that the decrease in gross non-performing loans was comprised of 3.5 billion euro in bad loans (-49%), 0.9
billion euro in unlikely-to-pay exposures (-11.8%) and 0.2 billion euro in past due positions (-28.7%).
At the end of 2022, loans classified under assets held for sale, mostly consisting of non-performing loans, amounted to 754
million euro gross and 368 million euro net. All NPL portfolios that as at 31 December 2021 were classified under assets held
for sale pursuant to IFRS 5 (4.5 billion euro gross, 1.2 billion euro net) were sold.
47
0.2 billion euro net of value adjustments.
Report on operations – Balance sheet aggregates
116
Other banking business financial assets and liabilities: breakdown
(millions of euro)
Type of financial instruments
Other financial assets
designated at fair value
through profit or loss
Other financial assets
designated at fair value
through other
comprehensive income
Instruments measured at
amortised cost which do
not constitute loans
TOTAL
financial
assets
Financial liabilities
held for trading
(*)
Debt securities issued by
Governments
31.12.2022
7,511
33,959
29,523
70,993
X
31.12.2021
20,361
49,575
24,845
94,781
X
Changes amount
-12,850
-15,616
4,678
-23,788
X
Changes %
-63.1
-31.5
18.8
-25.1
X
Other debt securities
31.12.2022
3,075
12,701
23,167
38,943
X
31.12.2021
3,020
14,210
18,480
35,710
X
Changes amount
55
-1,509
4,687
3,233
X
Changes %
1.8
-10.6
25.4
9.1
X
Equities
31.12.2022
1,352
1,348
X
2,700
X
31.12.2021
1,192
3,273
X
4,465
X
Changes amount
160
-1,925
X
-1,765
X
Changes %
13.4
-58.8
X
-39.5
X
Quotas of UCI
31.12.2022
3,739
X
X
3,739
X
31.12.2021
3,943
X
X
3,943
X
Changes amount
-204
X
X
-204
X
Changes %
-5.2
X
X
-5.2
X
Due to banks and to customers
31.12.2022
X
X
X
X
-7,241
31.12.2021
X
X
X
X
-22,262
Changes amount
X
X
X
X
-15,021
Changes %
X
X
X
X
-67.5
Financial derivatives
31.12.2022
29,933
X
X
29,933
-30,540
31.12.2021
20,897
X
X
20,897
-23,241
Changes amount
9,036
X
X
9,036
7,299
Changes %
43.2
X
X
43.2
31.4
Credit derivatives
31.12.2022
936
X
X
936
-935
31.12.2021
2,225
X
X
2,225
-2,332
Changes amount
-1,289
X
X
-1,289
-1,397
Changes %
-57.9
X
X
-57.9
-59.9
TOTAL 31.12.2022
46,546
48,008
52,690
147,244
-38,716
TOTAL 31.12.2021
51,638
67,058
43,325
162,021
-47,835
Changes amount
-5,092
-19,050
9,365
-14,777
-9,119
Changes %
-9.9
-28.4
21.6
-9.1
-19.1
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
(*) The amount of the item does not include certificates which are included in the direct deposits from banking business table.
The table above shows the breakdown of other financial assets and liabilities, excluding insurance companies. Financial
liabilities held for trading do not include certificates, which are included in the direct deposits from banking business
aggregates.
The Intesa Sanpaolo Group’s other financial assets, excluding those of the insurance companies, amounted to 147.2 billion
euro, down by 14.8 billion euro compared to the beginning of the year (-9.1%). Financial liabilities held for trading of 38.7
billion euro also moved in the same direction, declining by 19.1%.
The performance of total financial assets is mainly attributable to the reduction in government debt securities (-23.8 billion
euro), classified under assets measured at fair value through profit or loss and comprehensive income, also associated with
the reduction in short selling of securities of around 15 billion euro, partially offset by the increase in financial derivatives (+9
billion euro) and other debt securities (+3.2 billion euro). The improvement in financial liabilities held for trading was mainly
attributable to amounts due to banks and customers (-15 billion euro), only partly offset by financial derivatives (+7.3 billion
euro).
Financial assets measured at fair value through profit or loss amounted to approximately 46.5 billion euro, down by 5.1 billi on
euro (-9.9%), essentially due to debt securities issued by governments (-12.9 billion euro), partly offset by financial derivatives
(+9 billion euro).
Report on operations – Balance sheet aggregates
117
Instruments measured at amortised cost which do not constitute loans amounted to 52.7 billion euro, marking a net increase
(+21.6%), fully due to debt securities as a result, on one hand, of the creation of a government bond portfolio with limited
credit risk by the Treasury Department of the Parent Company and, on the other, of several disposals as part of a portfolio
recomposition towards more liquidable securities issued by counterparties with higher credit standing. HTC debt securities
have primarily been classified to Stage 1 (94%).
Conversely, financial assets measured at fair value through other comprehensive income amounted to 48 billion euro, down
by 28.4% compared to the beginning of the year, owing to both debt securities issued by governments and, to a lesser extent,
equity instruments and other debt securities. HTCS debt securities have been classified almost exclusively to Stage 1
(99.6%).
Debt securities: stage allocation
(millions of euro)
Debt securities: stage allocation
Other financial assets
designated at fair value
through other
comprehensive income
Instruments measured at
amortised cost which do not
constitute loans
TOTAL
Stage 1
31.12.2022
46,475
49,502
95,977
31.12.2021
63,584
39,467
103,051
Changes amount
-17,109
10,035
-7,074
Changes %
-26.9
25.4
-6.9
Stage 2
31.12.2022
185
3,180
3,365
31.12.2021
201
3,844
4,045
Changes amount
-16
-664
-680
Changes %
-8.0
-17.3
-16.8
Stage 3
31.12.2022
-
8
8
31.12.2021
-
14
14
Changes amount
-
-6
-6
Changes %
-
-42.9
-42.9
TOTAL 31.12.2022
46,660
52,690
99,350
TOTAL 31.12.2021
63,785
43,325
107,110
Changes amount
-17,125
9,365
-7,760
Changes %
-26.8
21.6
-7.2
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
Report on operations – Balance sheet aggregates
118
Customer financial assets
(millions of euro)
31.12.2022
31.12.2021
Changes
%
breakdown
%
breakdown
amount
%
Direct deposits from banking business
545,386
44.6
557,248
43.4
-11,862
-2.1
Direct deposits from insurance business and
technical reserves
173,597
14.2
204,479
15.9
-30,882
-15.1
Indirect customer deposits
674,705
55.2
725,137
56.5
-50,432
-7.0
Netting (a)
-171,682
-14.0
-202,963
-15.8
-31,281
-15.4
Customer financial assets
1,222,006
100.0
1,283,901
100.0
-61,895
-4.8
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
(a) Netting refers to components of indirect deposits which are also included in direct customer deposits (financial liabilities of the insurance business designated at fair value,
technical reserves).
As at 31 December 2022, customer financial assets, after netting, amounted to 1,222 billion euro, down year to date (-4.8%,
or -61.9 billion euro), due to indirect customer deposits (-7%, or -50.4 billion euro), and direct deposits from insurance and
banking business (-5.6%, or -42.8 billion euro).
Direct deposits from banking business
The table below sets out amounts due to customers, securities issued, including those designated at fair value and
certificates, which represent an alternative form of funding to bonds.
(millions of euro)
31.12.2022
31.12.2021
Changes
%
breakdown
%
breakdown
amount
%
Current accounts and deposits
432,976
79.4
444,203
79.7
-11,227
-2.5
Repurchase agreements and securities lending
1,284
0.2
2,691
0.5
-1,407
-52.3
Bonds
52,364
9.6
62,452
11.2
-10,088
-16.2
Certificates of deposit
2,094
0.4
2,931
0.5
-837
-28.6
Subordinated liabilities
12,474
2.3
12,599
2.3
-125
-1.0
Other deposits
44,194
8.1
32,372
5.8
11,822
36.5
of which designated at fair value (*)
16,591
3.0
12,147
2.2
4,444
36.6
Direct deposits from banking business
545,386
100.0
557,248
100.0
-11,862
-2.1
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
(*) Figures relating to investment certificates and other forms of funding included in the Balance sheet under “Financial liabilities held for trading” and “Financial liabilities
designated at fair value”. Specifically:
- as at 31 December 2022, this caption consisted of 7,796 million euro of certificates classified under “Financial liabilities held for trading” and 8,795 million euro of certificates
(8,791 million euro) and other forms of funding (4 million euro) classified under “Liabilities designated at fair value”;
- as at 31 December 2021, this caption consisted of 8,473 million euro of certificates classified under “Financial liabilities held for trading” and 3,674 million euro of certificates
(3,670 million euro) and other forms of funding (4 million euro) classified under “Liabilities designated at fair value”.
Report on operations – Balance sheet aggregates
119
The Group’s direct deposits from banking business exceeded 545
billion euro, down year to date (-2.1%, or -11.9 billion euro).
The trend is attributable to the decline in current accounts and
deposits (-11.2 billion euro), also influenced by the performance of
savings certificates, and in bond funding (-10.1 billion euro). Other
funding increased (+11.8 billion euro), reflecting the higher number
of certificates issued and the higher margins paid on derivative
contracts with central counterparties and counterparties under
customer netting agreements, due to the increase in the positive
fair value of the derivatives, the values of which increased due to
the significant rise in interest rates during the year.
As at 31 December 2022, the Intesa Sanpaolo Group's direct
deposits (deposits and bonds) represented a share of the
domestic market of 21.9%.
(millions of euro)
31.12.2022
31.12.2021
Changes
amount
%
Banca dei Territori
291,089
291,697
-608
-0.2
IMI Corporate & Investment Banking
94,785
94,844
-59
-0.1
International Subsidiary Banks
54,364
51,504
2,860
5.6
Private Banking
50,447
55,895
-5,448
-9.7
Asset Management
26
21
5
23.8
Insurance
-
-
-
-
Total business areas
490,711
493,961
-3,250
-0.7
Corporate Centre
54,675
63,287
-8,612
-13.6
Intesa Sanpaolo Group
545,386
557,248
-11,862
-2.1
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents and discontinued operations.
In the analysis of funding by sector, the Banca dei Territori
Division, which accounts for over 59% of the aggregate
attributable to the Group’s operating units, came in slightly below
the levels of the beginning of the year (-0.2%, or -0.6 billion euro),
in view of the declining trend in securities issued. The IMI
Corporate & Investment Banking Division was substantially stable
(-0.1%, or -0.1 billion euro), as a result of the decrease in amounts
due to global corporate, financial institutions and international
customers, offset by the increase in the funding through
certificates and, to a lesser extent, in securities issued.
International Subsidiary Banks recorded growth (+5.6%, or +2.9
billion euro), primarily attributable to the subsidiaries operating in
Croatia and Slovakia, and, to a lesser extent, those in Slovenia
and Serbia. On the other hand, Private Banking funding declined (-
9.7%, or -5.4 billion euro), especially in the fourth quarter in
relation to time deposits.
The decrease in Corporate Centre funding (-13.6%) is attributable
to the maturities of wholesale securities.
Report on operations – Balance sheet aggregates
120
Indirect customer deposits
(millions of euro)
31.12.2022
31.12.2021
Changes
%
breakdown
%
breakdown
amount
%
Mutual funds
(a)
149,790
22.2
176,313
24.3
-26,523
-15.0
Open-ended pension funds and individual pension plans
11,986
1.8
12,585
1.8
-599
-4.8
Portfolio management
73,591
10.9
81,911
11.3
-8,320
-10.2
Technical reserves and financial liabilities of the insurance
business
171,872
25.5
186,343
25.7
-14,471
-7.8
Relations with institutional customers
22,926
3.4
20,378
2.8
2,548
12.5
Assets under management
430,165
63.8
477,530
65.9
-47,365
-9.9
Assets under administration and in custody
244,540
36.2
247,607
34.1
-3,067
-1.2
Indirect customer deposits
674,705
100.0
725,137
100.0
-50,432
-7.0
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
(a) This caption does not include funds held by Group insurance companies and managed by the Group’s asset management companies, whose values are included in the
technical reserves, and the funds established by third parties and managed by Group companies, whose values are included in assets under administration and in custody.
As at 31 December 2022, indirect customer deposits amounted to
around 675 billion euro, down by 7% year to date. This trend,
conditioned by the negative financial market performance, affected
above all assets under management and, to a lesser extent,
assets under administration.
Assets under management, which at over 430 billion euro
accounted for around two-thirds of the total aggregate, were down
(-9.9%, or -47.4 billion euro). Over half of the decrease was
attributable to mutual funds (-26.5 billion euro), and the remainder
to technical reserves and financial liabilities of the insurance
business (-14.5 billion euro), portfolio management schemes
(-8.3 billion euro), open pension funds and individual pension
policies (-0.6 billion euro). Relations with institutional customers
grew (+2.5 billion euro). The new life business of the insurance
companies of the Intesa Sanpaolo Group, including pension
products, amounted to 15.8 billion euro. Assets under
administration decreased (-1.2%, or -3.1 billion euro), largely
attributable to securities and third-party products in custody.
Amounts due from and to banks - net interbank position
Due to the increase in interest rates, starting in September, excess liquidity is no longer deposited on the account of the
Reserve Requirement aggregate under “Due from banks”, but in on-demand deposits (overnight deposits) that are reported in
the caption “Cash and cash equivalents”. As at 31 December 2022, that amount came to approximately 89 billion euro.
The net interbank position as at 31 December 2022, considering the above, came to a negative balance of around 17 billion
euro, higher than that of around 3 billion euro recorded at the beginning of the year. The change reflects a significant
reduction in due from banks (-25.8%), against a lesser decline in due to banks of 16.8%. This latter was driven by early
repayments, correlated with TLTRO operations undertaken during the year
48
.
48
At the end of December 2022, the TLTRO III refinancing was outstanding for a nominal amount of 96.06 billion euro, compared to 131.84 billion euro
twelve months earlier, due to: the early repayment of a nominal 17 billion euro obtained by Intesa Sanpaolo in the December 2019 auction with maturity
of December 2022, made at the end of the first half of the year; the partial repayment of a nominal 14 billion euro obtained by ISP in the March 2020
auction with maturity of March 2023, made for 10 billion euro in November and for 4 billion euro in December; the repayment of a nominal 4.78 billion
euro of total funds obtained by the Group’s international subsidi ary banks in the fourth quarter.
In January 2023 the Group made a further early repayment of a nominal 20 billion euro.
Report on operations – Balance sheet aggregates
121
INSURANCE BUSINESS
Financial assets and liabilities pertaining to insurance companies pursuant to IAS 39
(millions of euro)
Type of financial
instruments
Financial assets pertaining to insurance companies measured at
fair value pursuant to IAS 39
Financial assets
pertaining to
insurance
companies
measured at
amortised cost
pursuant to IAS 39
TOTAL
Financial
assets
pertaining
to
insurance
companies
measured
pursuant to
IAS 39
Financial
liabilities
pertaining to
insurance
companies
measured
pursuant to IAS 39
(*)
Financial
assets held for
trading and
hedging
derivatives
Financial
assets
designated at
fair value
Financial
assets
available
for sale
Debt securities issued by
Governments
31.12.2022
101
3,375
55,587
-
59,063
X
31.12.2021
123
3,772
71,782
-
75,677
X
Changes amount
-22
-397
-16,195
-
-16,614
X
Changes %
-17.9
-10.5
-22.6
-
-22.0
X
Other debt securities
31.12.2022
557
996
15,497
-
17,050
X
31.12.2021
668
1,021
16,758
-
18,447
X
Changes amount
-111
-25
-1,261
-1,397
X
Changes %
-16.6
-2.4
-7.5
-7.6
X
Equities
31.12.2022
-
3,016
1,995
-
5,011
X
31.12.2021
-
3,510
2,262
-
5,772
X
Changes amount
-
-494
-267
-
-761
X
Changes %
-
-14.1
-11.8
-
-13.2
X
Quotas of UCI
31.12.2022
143
78,025
12,514
-
90,682
X
31.12.2021
171
92,017
13,621
-
105,809
X
Changes amount
-28
-13,992
-1,107
-
-15,127
X
Changes %
-16.4
-15.2
-8.1
-
-14.3
X
Due from banks and
loans to customers
31.12.2022
-
805
-
80
885
X
31.12.2021
-
739
-
85
824
X
Changes amount
-
66
-
-5
61
X
Changes %
-
8.9
-
-5.9
7.4
X
Due to banks
31.12.2022
X
X
X
X
X
-629
(**)
31.12.2021
X
X
X
X
X
-623
(**)
Changes amount
X
X
X
X
X
6
Changes %
X
X
X
X
X
1.0
Financial derivatives
31.12.2022
114
-
-
-
114
-179
(***)
31.12.2021
356
-
-
-
356
-103
(***)
Changes amount
-242
-
-
-
-242
76
Changes %
-68.0
-
-
-
-68.0
73.8
Credit derivatives
31.12.2022
-
-
-
-
-
-
(***)
31.12.2021
-
-
-
-
-
-
(***)
Changes amount
-
-
-
-
-
-
Changes %
-
-
-
-
-
-
TOTAL 31.12.2022
915
86,217
85,593
80
172,805
-808
TOTAL 31.12.2021
1,318
101,059
104,423
85
206,885
-726
Changes amount
-403
-14,842
-18,830
-5
-34,080
82
Changes %
-30.6
-14.7
-18.0
-5.9
-16.5
11.3
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
(*) This amount does not include "Financial liabilities of the insurance business designated at fair value" included in the table on direct deposits from insurance business.
(**) Value included in the Balance sheet under “Financial liabilities pertaining to insurance companies measured at amortised cost pursuant to IAS 39".
(***) Value included in the Balance sheet under “Financial liabilities pertaining to insurance companies measured at fair val ue pursuant to IAS 39".
Report on operations – Balance sheet aggregates
122
Financial assets and liabilities pertaining to insurance companies pursuant to IAS 39, summarised in the table above,
amounted to 172.8 billion euro and 808 million euro, respectively. Financial assets decreased year-to-date (-16.5%, or -
34.1 billion euro) as a result of the downtrend in financial assets available for sale (-18%, or -18.8 billion euro), markedly
government debt securities, and in financial assets designated at fair value (-14.7%, or -14.8 billion euro), particularly quotas
of UCI. Financial assets held for trading and hedging derivatives also declined, although the contribution was modest in extent
(-30.6%).
Direct deposits from insurance business and technical reserves
(millions of euro)
31.12.2022
31.12.2021
Changes
%
breakdown
%
breakdown
amount
%
Financial liabilities of the insurance business designated at
fair value IAS 39 (*)
71,565
41.2
84,667
41.4
-13,102
-15.5
Index-linked products
-
-
-
-
-
-
Unit-linked products
71,565
41.2
84,667
41.4
-13,102
-15.5
Technical reserves
100,117
57.7
118,296
57.9
-18,179
-15.4
Life business
98,463
56.7
116,540
57.0
-18,077
-15.5
Mathematical reserves
97,821
56.4
99,110
48.5
-1,289
-1.3
Technical reserves where the investment risk is borne by the
policyholders (**) and reserves related to pension funds
8,589
4.9
9,217
4.5
-628
-6.8
Other reserves
-7,947
-4.6
8,213
4.0
-16,160
Non-life business
1,654
1.0
1,756
0.9
-102
-5.8
Other insurance deposits (***)
1,915
1.1
1,516
0.7
399
26.3
Direct deposits from insurance business and technical
reserves
173,597
100.0
204,479
100.0
-30,882
-15.1
Figures restated, where necessary and material, considering the changes in the scope of consolidation and discontinued operations.
(*) Values included in the Balance Sheet under Financial liabilities pertaining to insurance companies measured at fair value pursuant to IAS 39.
(**) This caption includes unit- and index-linked policies with significant insurance risk.
(***) Values included in the Balance Sheet under Financial liabilities pertaining to insurance companies measured at amortised cost pursuant to IAS 39. The caption includes
subordinated liabilities.
Direct deposits from insurance business amounted to 173.6 billion
euro as at 31 December 2022, down (-15.1%, or -30.9 billion euro)
compared to December 2021. The trend is attributable to both the
decline in financial liabilities designated at fair value, consisting of
unit-linked products (-15.5%, or -13.1 billion euro), and the
decrease in technical reserves (-15.4%, or -18.2 billion euro),
which represent amounts due to customers who have taken out
traditional policies or policies with significant insurance risk,
attributable to the life business, which make up almost all
reserves. During the year, the market context had a significant
negative effect on the fair values of financial instruments and thus
of insurance AFS reserves, while also affecting the share
attributable to insured parties included in the sub-caption other
reserves. There was an increase in other insurance funding
(+26.3%, or +0.4 billion euro), which includes subordinated
liabilities.
Report on operations – Balance sheet aggregates
123
NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS AND RELATED
LIABILITIES
This caption contains assets and related liabilities which no longer refer to continuing operations as they are being dispose d
of. As at 31 December 2022, assets held for sale amounted to 638 million euro and the associated liabilities to 15 million euro.
Assets held for sale at 31 December 2022 mainly include the non-performing loan portfolios of Intesa Sanpaolo, which will be
sold as part of the Group’s de-risking strategies. Overall, non-performing loans allocated to assets held for sale amounted to
368 million euro net of adjustments. This caption also includes the following reclassifications: the equity investment in Zhong
Ou Asset Management Co. Ltd., for which the sale is expected to be finalised in the coming months, once the authorisation
process has been completed, and the assets and liabilities relating to PBZ Card’s merchant acquiring business line, which will
be transferred to the Nexi Group in the first half of 2023.
SHAREHOLDERS’ EQUITY
As at 31 December 2022, the Group’s shareholders’ equity, including the net income for the period, came to 61,655 million
euro compared to the 63,775 million euro at the beginning of the year. The change was due to the decline in valuation
reserves, partly mitigated by the increase in equity instruments. The aggregate includes 4,354 million euro in net income
accrued in the year and reflects the payment of the remaining dividends on 2021 net income in May 2022 (1.5 billion euro),
the interim dividend on 2022 net income paid in November 2022 (1.4 billion euro), and the purchases of own shares for
annulment (buyback), to the extent finalised as at 31 December 2022 (1.7 billion euro).
Valuation reserves
(millions of euro)
Reserve
31.12.2021
Change
of the period
Reserve
31.12.2022
Financial assets designated at fair value through other comprehensive income (debt
instruments)
-332
-1,442
-1,774
Financial assets designated at fair value through other comprehensive income
(equities)
-147
-111
-258
Property and equipment
1,598
151
1,749
Foreign investment hedges
-
-10
-10
Cash flow hedges
-607
141
-466
Foreign exchange differences
-1,088
-159
-1,247
Non-current assets held for sale and discontinued operations
-
-
-
Financial liabilities designated at fair value through profit or loss
(change in its creditworthiness)
-77
32
-45
Actuarial profits (losses) on defined benefit pension plans
-417
179
-238
Portion of the valuation reserves connected with investments carried at equity
53
-14
39
Legally-required revaluations
308
3
311
Valuation reserves (excluding valuation reserves pertaining to insurance
companies)
-709
-1,230
-1,939
Valuation reserves pertaining to insurance companies
476
-1,172
-696
Bank valuation reserves were negative (-1,939 million euro) and worsening on 31 December 2021 (-709 million euro),
primarily due to reserves on debt securities (-1,442 million euro). Valuation reserves for property and equipment increased by
151 million euro, mainly due to the reclassification to other reserves of taxation linked to the tax realignment of propertie s
carried out in 2019, which became final once the three-year observation period was over. The valuation reserves of the
insurance companies amounted to a negative 696 million euro, compared with a positive 476 million euro at the end of 2021.
Report on operations – Balance sheet aggregates
124
Reconciliation of the Parent Company’s shareholders’ equity and net incom e (loss) with consolidated
shareholders’ equity and net income (loss)
(millions of euro)
Shareholders’
equity
of which
Net income (loss)
as at
31.12.2022
Parent Company’s balances as at 31 December 2022
54,054
4,284
Effect of consolidation of subsidiaries subject to control
1,141
4,307
Effect of valuation at equity of companies subject to joint control and other
significant equity investments
-207
40
Elimination of adjustments to equity investments and recognition of impairment of goodwill
6,755
297
Dividends collected during the period
-
-4,568
Other
-88
-6
Consolidated balances as at 31 December 2022
61,655
4,354
OWN FUNDS AND CAPITAL RATIOS
(millions of euro)
Own funds and capital ratios
31.12.2022
31.12.2021
IFRS 9
"Fully loaded"
IFRS 9
"Transitional"
IFRS 9
"Transitional"
Own funds
Common Equity Tier 1 capital (CET1) net of regulatory adjustments
40,019
40,772
47,247
Additional Tier 1 capital (AT1) net of regulatory adjustments
7,207
7,207
6,264
TIER 1 CAPITAL
47,226
47,979
53,511
Tier 2 capital net of regulatory adjustments
9,127
8,381
8,941
TOTAL OWN FUNDS
56,353
56,360
62,452
Risk-weighted assets
Credit and counterparty risks
259,924
259,528
288,691
Market and settlement risk
10,338
10,338
12,792
Operational risks
25,486
25,486
25,305
Other specific risks (a)
91
91
115
RISK-WEIGHTED ASSETS
295,839
295,443
326,903
% Capital ratios
Common Equity Tier 1 capital ratio
13.5%
13.8%
14.5%
Tier 1 capital ratio
16.0%
16.2%
16.4%
Total capital ratio
19.0%
19.1%
19.1%
(a) The caption includes all other elements not contemplated in the foregoing captions that are considered when calculating total capital requirements.
Own Funds, risk-weighted assets and the capital ratios as at 31 December 2022 were calculated according to the harmonised
rules and regulations for banks and investment companies contained in Directive 2013/36/EU (CRD IV) and in Regulation
(EU) 575/2013 (CRR) of 26 June 2013, as amended respectively by Directive 2019/878/EU (CRD V) and by Regulation (EU)
2019/876 (CRR II), which transpose the banking supervision standards defined by the Basel Committee (the Basel 3
Framework) to European Union laws, and on the basis of the related Bank of Italy Circulars.
The Intesa Sanpaolo Group chose to take the "static approach" to adopting IFRS 9 envisaged in Regulation (EU) 2017/2395.
This approach permits the re-inclusion in Common Equity of a gradually decreasing amount, ending 31 December 2022 (95%
in 2018, 85% in 2019, 70% in 2020, 50% in 2021 and 25% in 2022), of the impact of IFRS 9, calculated net of the tax effect,
based on the comparison of the IAS 39 adjustments as at 31 December 2017 and the IFRS 9 adjustments as at 1 January
2018, excluding the reclassification of financial instruments, and after eliminating the shortfall as at 31 December 2017.
Regulation (EU) 2017/2395 also lays down the reporting obligations that entities are required to comply with, while charging
the EBA with issuing specific guidelines on this subject. In implementation of the Regulation, the EBA issued specific
guidelines according to which banks that adopt a transitional treatment of the impact of IFRS 9 (such as the static approach
mentioned above) are required to publish, with quarterly frequency, the fully loaded consolidated figures (as if the transitional
treatment had not been applied) and the transitional consolidated figures for Common Equity Tier 1 (CET1) capital, Tier 1
capital, total capital, total risk-weighted assets, capital ratios and the leverage ratio.
Report on operations – Balance sheet aggregates
125
Own funds
As at 31 December 2022, taking account of the transitional treatment adopted to mitigate the impact of IFRS 9, Own Funds
amounted to 56,360 million euro; as at that same date, considering the full inclusion of the impact of IFRS 9, Own Funds
stood at 56,353 million euro. Own funds calculated considering the full impact of IFRS 9 (i.e., on a “fully-loaded” basis) take
account of the provisions of the 2019 Budget Act calling for the adjustments upon first-time adoption of the Standard to be
applied in instalments for tax purposes, with the recognition of the resulting DTAs. These DTAs have been considered at 75%
of their book value for the purposes of calculating transitional own funds, in accordance with Article 473bis of the CRR with
regard to the application of the static approach, whereas they have been fully included among deductible elements in fully-
loaded own funds. The impact of such DTAs on fully-loaded own funds is nonetheless temporary since they will be phased
out by 2028.
In addition, the Group has not yet adopted the new IFRS 9 transitional rules relating to adjustments to loans after
31 December 2019 or the reintroduction of the prudential filter for exposures to central governments classified to the FVOCI
category, both introduced by the European Commission in Regulation (EU) 2020/873 of 24 June 2020.
Own funds also take into account the applicable amount, subject to deduction from CET1, related to the minimum coverage of
losses on non-performing exposures, known as Minimum Loss Coverage, based on the provisions of Regulation (EU)
2019/630 of 17 April 2019.
As at 31 December 2022, own funds take account of the deduction following the authorisation from the ECB to purchase own
shares for annulment (buyback), as approved by the Shareholders' Meeting on 29 April 2022, for a total of 3.4 billion euro,
whose progress was previously illustrated in this document.
For the purposes of calculating own funds as at 31 December 2022 the net income for 2022 was considered, less the related
dividend - calculated considering a payout ratio of 70%, equal to that envisaged in the 2022-2025 Business Plan - and other
foreseeable charges
49
.
Risk-weighted assets
As at 31 December 2022, taking account of the transitional treatment adopted to mitigate the impact of IFRS 9, risk-weighted
assets came to 295,443 million euro, resulting primarily from credit and counterparty risk and, to a lesser extent, operational
and market risk. As at that same date, considering the full inclusion of the impact of IFRS 9, risk-weighted assets stood at
295,839 million euro.
Common Equity Tier 1 Capital and risk-weighted assets as at 31 December 2022 take account of the impact of the application
of the “Danish Compromise” (Art. 49.1 of Regulation (EU) 575/2013), as per the specific authori sation received from the ECB
in 2019, according to which insurance investments are treated as risk-weighted assets instead of being deducted from capital.
With regard to the performance of risk-weighted assets, mention should be made of the aforementioned actions to optimise
the Group’s RWAs in view of the regulatory changes (EBA Guidelines) applicable as of 1 January 2023. These actions
resulted in the containment of the credit on negative EVA corporate positions or those no longer justified in relation to the
capital absorbed.
Solvency ratios
On the basis of the foregoing, solvency ratios as at 31 December 2022, calculated taking account of the transitional treatmen t
of the impact of IFRS 9 (IFRS 9 Transitional), amounted to a Common Equity ratio of 13.8%, a Tier 1 ratio of 16.2% and a
Total capital ratio of 19.1%. Considering the full inclusion of the impact of IFRS 9 (IFRS 9 Fully Loaded), solvency ratios as at
31 December 2022 were as follows: a Common Equity ratio of 13.5%, a Tier 1 ratio of 16.0% and a Total capital ratio of
19.0%.
Finally, on 15 December 2022, Intesa Sanpaolo announced that it had received notification of the ECB’s final decision
concerning the capital requirement that the Bank has to meet, on a consolidated basis, as of 1 January 2023, following the
results of the Supervisory Review and Evaluation Process (SREP). The overall requirement to be met in terms of Common
Equity Tier 1 ratio is currently 8.91% (8.95% to be met in 2022), inclusive of the Capital Conservation Buffer, O-SII Buffer and
Countercyclical Capital Buffer
50
requirements.
49
Coupons accrued on the Additional Tier 1 issues (312 million) and proposed allocation to the Allowance for charitable, social and cultural contributions
(18 million).
50
The Countercyclical Capital Buffer is calculated taking into account the exposure as at 31 December 2022 in the various countries where the Group
has a presence, as well as the respective requirements set by the competent national authorities and relating to 2024, where available, or the most
recent update of the reference period (requirement was set at zero per cent in Italy for 2022 and for the first quarter of 2023).
Report on operations – Balance sheet aggregates
126
Reconciliation of Shareholders’ equity and Common Equity Tier 1 capital
(millions of euro)
Captions
31.12.2022
31.12.2021
Group Shareholders' equity
61,655
63,775
Minority interests
166
291
Shareholders' equity as per the Balance Sheet
61,821
64,066
Interim dividend (a)
1,400
1,399
Adjustments for instruments eligible for inclusion in AT1 or T2 and net income for the period
- Other equity instruments eligible for inclusion in AT1
-7,207
-6,263
- Minority interests eligible for inclusion in AT1
-
-1
- Minority interests eligible for inclusion in T2
-
-1
- Ineligible minority interests on full phase-in
-166
-286
- Ineligible net income for the period (b)
-3,165
-3,031
- Own shares included under regulatory adjustments (c)
169
266
- Buyback of own shares (d)
-
-
- Other ineligible components on full phase-in
-100
-194
Common Equity Tier 1 capital (CET1) before regulatory adjustments
52,752
55,955
Regulatory adjustments (including transitional adjustments) (d)
-11,980
-8,708
Common Equity Tier 1 capital (CET1) net of regulatory adjustments
40,772
47,247
(a) As at 31 December 2022 and 31 December 2021 the Shareholders’ Equity as per the Balance Sheet does not include the interim dividend, of 1,400 million euro and 1,399
million euro respectively (net of the amount not distributed in respect of own shares held at the record date).
(b) Common Equity Tier 1 capital as at 31 December 2022 includes the net income as at that date, less the related dividend, calculated considering a payout of 70%, equal to that
envisaged in the 2022-2025 Business Plan and other foreseeable charges (accrued coupon on Additional Tier 1 instruments net of the tax effects and charity allowance).
(c) The amount includes, in addition to the book value of own shares, also the part of unused plafond for which the Group received authorisation for repurchase (other than
buyback).
(d) Adjustments for the transitional period as at 31 December 2022 take account of - among other cases - i) the prudential filter, which allows re-inclusion in Common Equity of a
portion of the impact of IFRS 9 (25% in 2022) set to decrease progressively until 2022; ii) the book value of own shares and the amount of own shares for which the Group
received authorisation for repurchase (buyback) for 1.7 billion.
Performance of risk-weighted assets
(millions of euro)
Risk-weighted assets as at 31.12.2021
326,903
Credit and counterparty risk
-29,163
Market and settlement risk
-2,454
Operational risks
181
Other specific risks
-24
Risk-weighted assets as at 31.12.2022
295,443
In 2022 credit risk-weighted assets decreased by 29.2 billion euro, mainly due to de-risking and strategies to optimise
profitability with respect to the risk profile (capital absorption). The decline in market risk-weighted assets (-2.5 billion euro)
reflects a decrease in the risk of the trading book, which more than offset the introduction in the first quarter of the new EBA
guidelines for foreign exchange risk. Operational risks showed a slight increase in risk-weighted assets of approximately 0.2
billion euro, attributable to the regular updating of the time series of the AMA approach. Other specific risk-weighted assets
were essentially stable.
127
Breakdown of consolidated
r esults by business ar ea
and
geographical area
128
129
Breakdown of consolidated results by business area
and geographical area
The Intesa Sanpaolo Group organisational structure is based on six Business Units. In addition, there is the Corporate Centre,
which is charged with providing guidance, coordination and control for the entire Group.
The Intesa Sanpaolo Group’s segment reporting is based on the elements that management uses to make its own operating
decisions (the “management approach”) and is therefore consistent with the disclosure requirements of IFRS 8.
In addition to reflecting the operating responsibilities assigned in accordance with the Group’s organisational structure, th e
business areas are an aggregation of business lines similar in the type of products and services they se ll.
Division figures for the comparative periods have been restated to reflect the changes in scope of the Business Units,
where necessary and if they are material. In particular, the restatement – as well as the allocation to the divisions, in the
single Divisions of ISP, UBI Banca and the other entities of the former UBI Group, starting in the Half-yearly Report as at
30 June 2021 – regarded:
- based on the “redetermined” figures approach described for the consolidated data, the exclusion of the income results
relating to the UBI branches sold in the first quarter of 2021 and the UBI and ISP branches sold in the second quarter of
2021, by convention synthetically allocated to the caption Income (loss) from discontinued operations of the Corporate
Centre;
- the inclusion in the Insurance Division of the income statement (based on the “redetermined” figures approach described
for the consolidated data) and balance sheet results of Assicurazioni Vita (formerly Aviva Vita), Lombarda Vita and
Cargeas
51
(net of the effects attributable to the branches object of disposal, as indicated in the comments on the
consolidated income statement results), which entered the line-by-line scope of consolidation due to the finalisation of the
acquisition of 100% of the capital;
- the inclusion in the Private Banking Division, of the income statement and balance sheet results of the Reyl Group, which
entered the line-by-line scope of consolidation in the second quarter of 2021 due to the finalisation of the acquisition of
the majority shareholding by Fideuram - Intesa Sanpaolo Private Banking, as well as the income statement and balance
sheet results of the Luxembourg private bank Compagnie de Banque Privée Quilvest, which entered the scope of
consolidation at the end of June 2022;
- the allocation of the income statement and balance sheet results of UBI Leasing to the divisions, following the merger by
incorporation into the Parent Company in the second quarter of 2022;
- the reclassification from the caption Personnel expenses to the caption Net fee and commission income, of the charges
relating to several incentive systems for employees of the Banca dei Territori Division and the Private Banking Division,
where funded through fee and commission income generated based on deterministic quantification criteria correlated
with that income, in line with the accounting treatment envisaged for the incentive systems for non-employee financial
advisors;
- the contribution to Intesa Sanpaolo Formazione of the Intesa Sanpaolo business line dedicated to the design and
provision of training services and products for Group employees based in Italy, which was carried out in preparation for
the disposal of Intesa Sanpaolo Formazione, finalised at the end of June 2022.
51
Assicurazioni Vita (formerly Aviva Vita) and Lombarda Vita were merged into Intesa Sanpaolo Vita on 31 December 2021. Cargeas Assicurazioni was
merged into Intesa Sanpaolo Assicura, a wholly owned subsidiary of Intesa Sanpaolo Vita, on 1 October 2022.
The Intesa Sanpaolo Group
Banca dei
Territori
IMI Corporate &
Investment
Banking
Insurance
International
Subsidiary
Banks
Asset
Management
Private Banking
Corporate
Centre
(*)
(*)
Includes the Group’s Treasury and the NPE Head Office Department
Report on operations - Breakdown of consolidated results by business area and geographical area
130
The table below shows the main data summarising the trend of the business areas of the Intesa Sanpaolo Group in 2022
compared to the like-for-like comparison data, based on the “redetermined” figures approach described for the consolidated
data.
The following itemised analysis of the business areas contains a description of the products and services offered, the type of
customers served and the initiatives carried out in the year; it also illustrates income statement figures and the main balan ce
sheet aggregates. Finally, for each business area, the capital absorbed based on Risk Weighted Assets (RWAs) was also
calculated. RWAs were determined in accordance with the provisions in force (Circular 285) issued by the Bank of Italy
following the implementation of Directive 2013/36/EU (CRD IV) and Regulation (EU) 575/2013 (CRR) of 26 June 2013,
amended by Regulation (EU) 2019/876 of 20 May 2019, known as CRR II, which transpose the banking supervision
standards defined by the Basel Committee (the Basel 3 Framework) to European Union laws. Absorbed capital also takes
account of the regulatory changes introduced by the ECB with effect from 12 March 2020, allowing the Pillar 2 requirement to
be met partially using equity instruments not classified as Common Equity Tier 1. For each Division, the absorbed capital is
supplemented, where necessary, with management data on "economic" capital to take into account the risks not covered by
the regulatory metric.
Report on operations - Breakdown of consolidated results by business area and geographical area
131
(millions of euro)
Banca
dei
Territori
IMI
Corporate
&
Investment
Banking
International
Subsidiary
Banks
Private
Banking
Asset
Management
Insurance
Corporate
Centre
Total
Operating income
2022
8,813
4,333
2,227
2,475
962
1,607
1,053
21,470
2021 (Redetermined figures)
8,853
4,636
1,972
2,395
1,344
1,572
21
20,793
% change
-0.5
-6.5
12.9
3.3
-28.4
2.2
3.3
Operating costs
2022
-6,397
-1,418
-1,118
-921
-222
-385
-473
-10,934
2021 (Redetermined figures)
-6,499
-1,372
-1,072
-914
-239
-402
-482
-10,980
% change
-1.6
3.4
4.3
0.8
-7.1
-4.2
-1.9
-0.4
Operating margin
2022
2,416
2,915
1,109
1,554
740
1,222
580
10,536
2021 (Redetermined figures)
2,354
3,264
900
1,481
1,105
1,170
-461
9,813
% change
2.6
-10.7
23.2
4.9
-33.0
4.4
7.4
Net income (loss)
2022
471
681
504
1,034
550
870
244
4,354
2021
316
2,247
463
1,076
787
712
-1,416
4,185
% change
49.1
-69.7
8.9
-3.9
-30.1
22.2
4.0
(millions of euro)
Banca
dei
Territori
IMI
Corporate
&
Investment
Banking
International
Subsidiary
Banks
Private
Banking
Asset
Management
Insurance
Corporate
Centre
Total
Loans to customers
31.12.2022
247,522
132,927
40,212
15,104
282
-
10,807
446,854
31.12.2021
250,592
152,543
38,970
14,450
783
-
8,533
465,871
% change
-1.2
-12.9
3.2
4.5
-64.0
-
26.6
-4.1
Direct deposits from banking
business
31.12.2022
291,089
94,785
54,364
50,447
26
-
54,675
545,386
31.12.2021
291,697
94,844
51,504
55,895
21
-
63,287
557,248
% change
-0.2
-0.1
5.6
-9.7
23.8
-
-13.6
-2.1
Risk-weighted assets
31.12.2022
81,689
101,831
35,056
12,757
1,798
-
62,312
295,443
31.12.2021
93,821
112,719
34,403
11,617
1,836
-
72,507
326,903
% change
-12.9
-9.7
1.9
9.8
-2.1
-
-14.1
-9.6
Absorbed capital
31.12.2022
7,017
8,767
3,745
1,127
181
5,096
3,641
29,574
31.12.2021
8,059
9,704
3,640
1,014
196
4,137
4,013
30,763
% change
-12.9
-9.7
2.9
11.1
-7.7
23.2
-9.3
-3.9
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents and discontinued operations.
Redetermined figures have been prepared to take into account the reallocation, based on management data, of the contribution from the going concerns object of disposal to
income (loss) from discontinued operations, as part of the acquisition of the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita
(formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects attributable to the branches object of disposal.
Report on operations - Breakdown of consolidated results by business area and geographical area
132
BUSINESS AREAS
Banca dei Territori
(millions of euro)
Income statement
2022
2021
Changes
amount
%
Net interest income
3,957
3,932
25
0.6
Net fee and commission income
4,744
4,809
-65
-1.4
Income from insurance business
-
-
-
-
Profits (Losses) on financial assets and liabilities designated at fair value
120
105
15
14.3
Other operating income (expenses)
-8
7
-15
Operating income
8,813
8,853
-40
-0.5
Personnel expenses
-3,430
-3,506
-76
-2.2
Other administrative expenses
-2,964
-2,988
-24
-0.8
Adjustments to property, equipment and intangible assets
-3
-5
-2
-40.0
Operating costs
-6,397
-6,499
-102
-1.6
Operating margin
2,416
2,354
62
2.6
Net adjustments to loans
-1,238
-1,234
4
0.3
Other net provisions and net impairment losses on other assets
-68
-118
-50
-42.4
Other income (expenses)
11
11
-
-
Income (Loss) from discontinued operations
-
-
-
-
Gross income (loss)
1,121
1,013
108
10.7
Taxes on income
-375
-320
55
17.2
Charges (net of tax) for integration and exit incentives
-42
-180
-138
-76.7
Effect of purchase price allocation (net of tax)
-32
-38
-6
-15.8
Levies and other charges concerning the banking industry (net of tax)
-214
-190
24
12.6
Impairment (net of tax) of goodwill and other intangible assets
-
-
-
-
Minority interests
13
31
-18
-58.1
Net income (loss)
471
316
155
49.1
(millions of euro)
31.12.2022
31.12.2021
Changes
amount
%
Loans to customers
247,522
250,592
-3,070
-1.2
Direct deposits from banking business
291,089
291,697
-608
-0.2
Risk-weighted assets
81,689
93,821
-12,132
-12.9
Absorbed capital
7,017
8,059
-1,042
-12.9
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents and discontinued
operations.
Banca dei Territori’s operating income was 8,813 million euro in 2022, amounting to 41% of the Group’s consolidated
operating income, showing a slight decrease (-0.5%) on the previous year.
In detail, net interest income grew by 0.6%, essentially due to the improvement in the margin with customers, driven by the
performance of market interest rates towards the end of the year. Net fee and commission income was down 1.4%,
specifically that deriving from assets under management and bancassurance, impacted by the unfavourable market context.
This was partly offset by the increase in fees on placements of certificates and commercial banking fees in the collection an d
payment services component, including electronic services, and loans and guarantees. Among the other revenue items,
which however provide a marginal contribution to the Division’s income, profits (losses) on financial assets and liabilities
designated at fair value increased (+15 million euro), while other operating income (expenses) decreased (-15 million euro).
Operating costs, equal to 6,397 million euro, were down by 1.6%, thanks to savings on personnel expenses, mainly
attributable to the reduction in the workforce following negotiated exits and the containment of administrative expenses,
mainly for services rendered by third parties and legal expenses, as well as those relating to service costs in the real estate
sector. As a result of the foregoing, the operating margin amounted to 2,416 million euro, up 2.6% on 2021. Gross income
rose to 1,121 million euro, compared to 1,013 million euro in the previous year (+10.7%), benefiting from lower provisions and
net impairment losses on other assets. Lastly, after allocation to the Division of taxes of 375 million euro, charges for
Report on operations - Breakdown of consolidated results by business area and geographical area
133
integration of 42 million euro, the effects of purchase price allocation for 32 million euro, levies and other charges concerning
the banking industry of 214 million euro and the loss attributable to minority interests of 13 million euro, net income came to
471 million euro, a figure 49.1% higher than the 316 million euro in 2021.
In quarterly terms, the operating margin decreased in the fourth quarter compared with the third, attributable to the natural
increase in operating costs typical of year-end, which more than offset the growth in revenues. Gross income and net income
were impacted by adjustments.
The balance sheet figures at the end of December 2022 showed a slight decrease in total intermediated volumes of loans and
deposits from the beginning of the year (-0.7%). In detail, loans to customers, amounting to 247,522 million euro, decreased
(-1.2%, equal to -3.1 billion euro), mainly due to the performance of medium/long-term loans to businesses, only partly offset
by the increase in loans to private individuals. Direct deposits from banking business, equal to 291,089 million euro, amounted
to levels slightly down from the beginning of the year (-0.2%, equal to -0.6 billion euro) in relation to the declining trend in
securities issued. In contrast, amounts due to customers increased slightly due to the growth in deposits from households and
retail companies, which exceeded the fall in amounts due to businesses.
Report on operations - Breakdown of consolidated results by business area and geographical area
134
Traditional lending and deposit collection operations in Italy and associated financial services.
To serve Retail, Exclusive, and Small and Medium Enterprise customers, including Agribusiness
and non-profits, creating value through:
– widespread local coverage;
– focus on the characteristics of local markets, and the needs of customer segments serviced;
– development of service levels to customers using different channels in order to improve the
efficiency of the commercial offering;
– development and management of products and services for the target customers, as well as of leasing, factoring and subsidised
finance products for the Group in Italy;
– the centrality of the roles of the officers responsible for the Regional Governance Centres, Area Governance Centres and
branches as points of reference for the Group at local level.
Overseeing the Retail sector, which consists of the segments Individuals, Affluent and Retail
Companies, the Exclusive sector (retail customers with high asset and wealth standing and
complex financial needs) and the SME area (small businesses, businesses and top businesses
with high complexity and potential for growth).
Serving agriculture and agribusiness.
Aimed at developing the initiatives of Impact Bank and serving non-profit organisations.
Banca 5: dedicated to proximity services through Mooney points of sale located throughout the
country.
Prestitalia: a financial intermediary operating in the Italian market of consumer credit, specialising
in the salary-backed loans segment.
Over 3,300 branches, including Retail and Business branches, distributed broadly throughout Italy,
the Agribusiness branches dedicated to companies operating in agribusiness, and Impact
branches dedicated to the non-profit sector. The territorial structure is divided into 14 Governance
Centres: Agribusiness, Impact and 12 Regional Governance Centres. In the latter, (to favour the
commercial focus and guarantee a better control of the service level) there are three Commercial
Managers, specialised for "commercial territory" (Retail, Exclusive and SME), which report directly to the Regional Director and that
coordinate around 300 commercial areas. In 2022, the Isybank Department was established, as part of the strategic initiatives to
develop the new Digital Bank, set out in the Business Plan, and the Digital Branch Department, to oversee commercial relations with
customers via the telephone channel and other related channels (chat, video calls) and the remote offering.
Organisational structure
Wealth Management &
Protection Sales &
Marketing; Digital Retail
Sales & Marketing and SME
Sales & Marketing
Departments
Mission
Agribusiness Department
Impact Department
Product companies
Distribution structure
Report on operations - Breakdown of consolidated results by business area and geographical area
135
Individuals and Retail Companies Sales & Marketing, SME Sales & Marketing
The advanced advisory paid service “Valore Insieme”, launched in 2017, proposes a global
advisory model over all of the customer’s assets, including real estate, also assisting
customers in planning the transfer of wealth to their loved ones. In 2022, several
improvements were made to the advisory platform and the range of the offering dedicated to
the customers subscribing to the “Valore Insieme” service w as expanded, with the addition of
new internal funds and funds from the best third-party investment houses, in addition to the innovative “Crescita Guidata”
internal fund within the “Patrimonio PRO
Insurance
” policy aimed at containing volatility, which replaced “Valore PRO
Insurance
” from
July, and with the new “Eurizon GP Multimanager Exclusive” multimanager portfolio management, available solely for the
holders of the Exclusive Package.
With the goal of assisting customers in transforming from savers to investors, products were conceived to meet the needs of
customers interested in reducing their excess liquidity on current accounts, also by gradually entering the markets, with a view
to increased diversification of customers’ portfolios. In this context, the Target Service on the “Eurizon Next” funds was
created, which allows for the automatic transfer of units initially invested in a conservative entry fund to one or more funds in
the range with greater diversification. The new “Eurizon Next Strategia Azionaria Dinamica” fund was also introduced for the
“Eurizon Next” mutual fund range. The range of ESG assets under management was expanded with the “Eurizon Step 50
Futuro Sostenibile ESG”, “Epsilon STEP 30 Megatrend”, “Eurizon STEP 50 Obiettivo Net Zero” and “Eurizon Equity Circular
Economy” funds. To strengthen the digital savings strategy, a new range of “Eurizon Investo Smart ESG” mutual funds was
made available for subscription via App and Internet Banking. Within the products with tax benefits, the “Eur izon Step 70 PIR
Italia” Individual Savings Plan was launched. In addition, products with total or partial protection of capital at maturity o r over
time have been developed, and the range of bond mutual funds with preset amount distribution has been expan ded: “Epsilon
Difesa 100 Azioni Reddito 4 anni”, “Epsilon Difesa 100 Azioni”, “Epsilon Difesa 100 Riserva”, “Epsilon Difesa 100 Credito”,
“Eurizon Opportunità Obbligazionaria Plus” and “Epsilon Imprese Difesa 100 ESG”, with the latter aimed at businesses. In the
second half of the year, the placement of the portfolio management schemes “GP Strategia Valore”, “GP Strategia Valore Più”
and “GP Strategia Valore Azioni Più” was resumed with a new entry threshold of 1 million euro, consisting of benchmark
portfolio management schemes characterised by active management, a multimanager component, and control of volatility.
New internal funds of the “Prospettiva Sostenibile” unit-linked policy have been created within the insurance-based investment
products: the “Sviluppo nel Tempo 40” fund with gradual entry into the markets, “Base Protetta 100”, whose objective is to
increase the value of the units and protect 100% of the invested capital, and “Sviluppo nel Tempo 50”, which provides gradual
entry into the equity component to reach up to 50% through automatic monthly switches. The multi-line policy “Patrimonio
Stabilità
Insurance
” was also created, which allows customers to choose the combination most in line with their financial profiles,
due to a Class I guarantee component and a selection of 9 Class III internal funds. “Patrimonio Domani
Insurance
”, the new Class
I whole life insurance investment product of Intesa Sanpaolo Vita, has also been available since 24 October. The policy is part
of the “Soluzione Domani” programme, dedicated to customers aged over 65 and aimed at offering our senior customers and
their caregivers products and services designed to improve the quality of their current and future life. The placement of
certificates also continued, with a range differentiated in terms of type of structure, protection, time horizon and currency.
Particularly noteworthy is the popularity of the protected maturity solutions, which, also due to the market conditions,
exceeded more than 80% of the total amount placed. With the aim of improving the efficiency and quality of the financial
advice, new Robo4Advisor functionalities were introduced for the entire Banca dei Territori network in 2022, enabling the
generation of tailored investment advice for individual customers.
2022 was characterised by a steady rise in market interest rates, which led to an increase in
the conditions offered to customers on fixed-rate Domus mortgage loans. With regard to
floating rates, the Euribor quotations increased significantly in the second half of the year as
a result of the ECB’s interventions on key interest rates. In this interest rate scenario, Intesa
Sanpaolo has provided numerous solutions based on customer needs, also offering the
possibility of choosing a floating-rate mortgage with a contractually established cap to protect against any future increases in
the Euribor. The offering of loans in the “Green” range continued, with dedicated interest rate conditions for those purchasi ng
properties with high energy efficiency (class ≥ B) or renovating properties in order to increase their energy efficiency. Intesa
Sanpaolo also increased the focus of its offering on young people, offering mortgages with coverage from the Primary
Residence Guarantee Fund for the whole of 2022 and, from December, in parallel with the change in regulations in favour of
people under the age of 36, it relaunched a fixed-rate offering dedicated to high LTV mortgages.
The package of measures the Bank has put in place for households to deal with the problem
of “high bills” includes, starting from October, the “OGGI INSIEME” loan at special fixed-rate
conditions, with no additional costs and repayable over up to 20 years, for customers aged
between 18 and 75 and households resident in Italy, with an ISEE (Equivalent Financial
Situation Index) of up to 40,000 euro and a net average monthly income of at least 500 euro,
who need subsidised loans to meet current expenses (rent, medical expenses, mobility, bills). This was accompanied, in
addition to the commitment to suspend or reschedule instalments, by a promotional initiative on the “XME SpensieRata”
product, which allows customers holding the credit line and new subscribers to pay expenses already accrued in instalments
or to be granted new zero-rate cash loans with 3- or 6-month repayment plans.
“XME Protezione” is a flexible multi-guarantee solution that allows customers to purchase
insurance coverage (modules) in the areas they need, relating to the home and family. In
May, the health offering “XME Protezione” was enriched with a new module dedicated to
dental health, which provides the insured, in the event of illness or injury, with the direct
payment of benefits or the payment of an indemnity for dental, implant, prosthetic or
orthodontic treatment. From July, two new “XME Protezione” modules were added to the “Soluzione Domani” programme,
which was created with the aim of accompanying senior and caregiver customers during the life cycle through transversal
Mortgages
Investment and Pension
Funds
Personal loans
Protection and Welfare
Report on operations - Breakdown of consolidated results by business area and geographical area
136
advice on protection, investment and loans. The first is the “Support and Assistance” module which, in the event of an
emergency, gives customers the peace of mind of being able to rely on swift and expert intervention by a professional who
prepares and activates the individual plan for the benefits they need and continuously monitors its progress. The second is
the “Caregiver” module, for policyholders who actively care for their family members aged over 65, which covers risks arising
from unforeseen events preventing them from providing care and assistance to their care recipients. With regard to the
development of insurance coverage for the business world, the “Tutela Business - Uffici e Studi” policy has been set up for
professional firms and practices, aimed at protecting assets and ensuring business continuity, as well as the “RC Ambientale”
policy, which not only protects businesses from the risk of environmental damage, but also promotes a focus on
environmental protection, fosters a culture of prevention, and provides instruments for managing and resolving crisis
situations.
Intesa Sanpaolo continues to bring young people closer to the banking world through
personalised, free solutions, such as “XME Conto UP!”, a curre nt account for children under
the age of 18, and “XME Conto under 35”. As regards mortgages, in order to strengthen its
positioning in relation to young people, the bank further decreased the costs of its “Mutuo
Giovani”, raising the maximum age to 35 year s and 11 months, with the Bank bearing the
substitute tax also for customers with ISEE (Equivalent Financial Situation Index) higher than 40,000 euro. For the offering of
mortgages guaranteed by the Primary Residence Guarantee Fund, the Bank eliminated the preliminary and instalment
collection fees. The “Giovani e Lavoro” project continued. This project supports the employment of young people aged 18 to
29, offering targeted training, free of charge, both for young people and for the participating businesses, favouring the
effective matching of labour demand and supply. With the “Generation4Universities” project, the focus moves to young
university students, providing a training course at partner companies, which, when completed, offer internship opportunities to
the participants. Intesa Sanpaolo is a partner of the Carta Giovani Nazionale (Italian Youth Card), the initiative promoted b y
the Presidency of the Council of Ministers - Youth Policy and Universal Civil Service Department, which is targeted to Italian
and European young people resident in Italy, aged 18 to 35, reserving special conditions on its products and services.
To support the increased use of cards and digital payments, the promotional initiatives
dedicated to transactional products continued, such as the option for “Valore Insieme”
customers who signed up for the “Exclusive Package” to receive the no-fee “Exclusive Credit
Card”. In addition to being a payment instrument, the “Exclusive Credit Card” can be used to
access a wide range of exclusive services and benefits, travel and pet insurance coverage
free of charge, and preferential treatment at Hub branches and online. Intesa Sanpaolo is the first bank in Europe that
activated Huawei Pay for PagoBancomat cards, through the Huawei Wallet App (or with the latest version of the Intesa
Sanpaolo Mobile App also directly from the Bank’s App), in July, thus expanding the offering for retail customers and
supporting the plan to develop the national network.
Also for business customers, promotions on POS continued. Since 30 June 2022, these became mandatory for all merchants
and independent professionals, in addition to enabling the Instant Issuing service also for commercial cards, which allows the
digital card to be used immediately after its purchase, thus without having to wait for the physical card. Since 5 December,
XPay Web, Nexi’s new e-commerce solution, has also been available, which allows corporate and freelance customers t o
accept payments for products and services sold from their virtual shop, their website or app. By integrating a range of servi ces
into a single platform, XPay Web simplifies collections for merchants as it allows them to manage and accept all the main
payment methods: cards, bank transfers and Bancomat Pay. Easy integration with e-commerce platforms and the possibility
of activating additional services already included make the product customisable for every business need.
In 2022, the development of multi-channel and digital banking continued, with the
introduction of new multi-channel customer journeys and the expansion of those available, to
improve the offering and the customer experience, increasing the remote usability of the
services offered by the digital channels. Almost all the products in the retail catalogue,
including current accounts, credit, debit and prepaid cards, including customised cards,
personal loans, the “ViaggiaConMe” policy and non-banking products, such as smartphones, tablets and PCs, can be
purchased via Internet Banking and/or the App. On 28 February the option was activated for users to open an administered
deposit or update their MIFID Questionnaire fully autonomously, using the Intesa Sanpaolo Mobile App or Internet Banking.
The US research company Forrester Research judged the Intesa Sanpaolo Mobile App as the “Global Mobile Banking Apps
Leader”, the absolute leader among all banking apps assessed in the world, with the best functionalities and customer
experience.
In 2022, the Business Customer Digital Transformation Programme further reinforced the way the Bank interacts with
businesses to deliver products and services through a digital and omnichannel experience. In 2022, a number of important
steps were taken in the path towards the transition to fully digital and dematerialised processes, including the full extension of
the Commercial Cards Customer Journey and Short-term Loans and Unsecured Commitments Allocation Customer Journey
digital processes to all customers with digital identities, enabling the launch of the pilot phase for the discontinuation of the
paper-based process for both the customer journeys. These projects will be further expanded in 2023. In addition, the
development of digitalisation of business customers continued with the new version of the Inbiz App, which allows for the
mobile signature of digital contracts and the execution of new types of payment. Specifically, postal payment slips - both blank
and pre-filled, and CBILL/PagoPA slips for payments to the public administration can be launched. For the latter, the details
can be filled out simply by scanning the QR-code printed on the bill. A new digital platform, “Incent Now”, fruit of the
partnership with Deloitte, is available free of charge for corporate and public entity customers, as well as for the sales
network, to use the funds of Italy’s National Recovery and Resilience Plan (NRRP). In addition, the “Digitalizziamo” Project
was launched in October, which supports Italian enterprises capable of digitally transforming their businesses. The most
deserving enterprises will be selected to participate in the celebratory events and will be able to benefit from digital services
and advice provided by the partners.
In April the Digital Branch Department was created, to oversee commercial relations with customers via the telephone
Multichannel Project
Young people
Transactional products
and digital payments
Report on operations - Breakdown of consolidated results by business area and geographical area
137
channel and other related channels (chat, video calls) and the remote offering.
In 2022, new cooperation agreements were signed with leading industry associations with
the shared goal of supporting businesses in tackling the high energy costs: these include the
agreements with Confapi, Anita Confindustria, Finco and Ucimu. The commitment to the
agrifood sector was renewed through a new agreement with Coldiretti, aimed at assisting
businesses in relation to the measures envisaged by the NRRP and supporting the plans for
investment and the relaunch of the entire sector through dedicated loans. Similar attention was devoted to the tourism sector,
through an agreement with the key associations, namely Confindustria Alberghi, Federalberghi, Federterme and Faita
Federcamping, aimed at facilitating access to public incentives in support of investment programmes for the renovation and
improvement of facilities, also with a view to sustainability. The commitment to micro and small businesses in the trade,
tourism, and craft sectors was also relaunched, through agreements with Confcommercio, Confesercenti, Federalberghi, and
Confartigianato, with specific solutions aimed, for example, at promoting an increase in the use of electronic money for thei r
members, thanks to the refund of fees charged on transactions made for amounts of up to 15 euro (POS micropayments) until
December 2023. The Bank’s commitment to businesses, in line with the NRRP initiatives, also continued with the signing of
agreements with the Special Economic Zones, aimed at favouring new production sites, also through reshoring, with a strong
focus on the new paradigms of sustainability and the circular economy.
In April, the agreement was renewed between Intesa Sanpaolo and the company SACE SRV of the SACE Group for the
offering of the international credit recovery service to corporate customers, and in September 2022, the agreement was
renewed between the Italian Trade Agency (ICE) and Intesa Sanpaolo for the international promotion and expansion of Italian
businesses. The Agreement is based on mutual collaboration and aims to cont inue to support the needs of the Group’s
corporate customers in their international business projects with advisory, training and information services. In the second half
of 2022, two new funding agreements were signed with the EIB for a total of 600 million euro for investment projects for SMEs
and Midcaps, with a focus on environmental sustainability and climate action investment projects, which will continue in 2023.
At the end of June, the Bank also completed the sale of Intesa Sanpaolo Formazione, which changed its name at the same
time to Digit’Ed. Under this new guise, Digit’Ed represents a new leader in training and digital learning, with which the Ban k
has entered into an important partnership aimed at supporting customers by guiding them in the development of their
businesses, in challenging and continuously evolving economic and financial scenarios.
In line with the NRRP, Intesa Sanpaolo has established a credit line, in support of the Italian
economy over the entire duration of the plan, for a total of 400 billion euro of medium/long-
term loans, of which 270 billion euro will go to businesses. Through “Motore Italia”, the
programme supporting the relaunch of the entire Italian production system, based on the key
priorities of the NRRP, the Bank supports measures mainly in areas related to the Recovery
Plan such as the green and circular economy and green transition, infrastructure and transport, and urban regeneration
projects. In line with the goal of supporting the relaunch of the entire Italian production system, “Motore Italia” includes the
“Motore Italia Digitale” offering, dedicated to the digital transition of businesses, as well as the “Motore Italia Transizio ne
Energetica” programme launched in 2022 to support sustainable investmen ts ranging from renewable energy to energy
efficiency to the circular economy. Various instruments have been made available: loans to reduce energy dependency,
instruments to mitigate rising commodity prices, and specialist advisory services to facilitate access to tenders and the
implementation of complex projects. In keeping with the launch of the dedicated offering, Intesa Sanpaolo, together with
SACE, has made a credit line of 10 billion euro available to facilitate investments in renewable energy by all enterprises, in
particular SMEs, in the agribusiness and non-profit sector. In addition, in September 2022, Intesa Sanpaolo, to support SMEs
in all the production sectors in dealing with higher costs related to energy prices and to encourage investment in renewable
energy, allocated an additional credit line of 2 billion euro, as an extraordinary measure to support production cycles affected
by the energy, economic and geopolitical crisis. Also in this area, with the aim of supporting liquidity needs for payments and
guaranteeing the continuity of production of SMEs, specific credit lines have been established for businesses, with favourabl e
terms and backed by guarantees from the Guarantee Fund for SMEs and SACE. The financing is intended to cover
incremental costs and enables the payment of energy bills with a deferral of payments of up to 36 months and with a 1-year
grace period. In addition, in 2022, a dedicated offering was launched for Special Economic Zones and Simplified Logistics
Zones. This consists of a set of financial and non-financial solutions to support the promotion of local businesses in these
areas, established at government level with the aim of relaunching business investment and local development. With regard
to the Superbonus, in 2022 the Bank provided continuity and support to businesses and households, within the limits of its tax
capacity, even when the market demand slowed down. In October 2022, Intesa Sanpaolo signed the first credit reassignment
agreement aimed at increasing its tax capacity and providing further support to the construction sector in particular. Intesa
Sanpaolo’s commitment to promoting gender equality includes a series of initiatives aimed at enhancing support for women
entrepreneurs, including the “S-Loan Diversity” products, consisting of dedicated financial solutions to support businesses in
promoting women in the socio-economic context. In the second half of the year, Intesa Sanpaolo participated in the sector
contracts of the Fifth Tender of the Ministry of Agriculture under the NRRP, making 1 billion euro available. The measure is
intended to support sector contracts, aimed at implementing investment programmes, based on agricultural production, that
cover the various segments of the agrifood and agri-energy sector on a multi-regional basis, through an agreement signed by
several beneficiaries.
The “Sviluppo Filiere” programme is designed to support businesses of all sectors and sizes
by facilitating access to credit and focusing on the relationship between the lead companies
and their network of direct and indirect suppliers and/or their reseller network, enabling a
better understanding of the financial needs of the individual sectors. In this context, the Bank
decided to develop offerings dedicated to the sectors that felt the greatest impact of the
NRRP, containing products and services to support the specific characteristics of the various businesses, also with regard to
ESG and digitalisation.
Loans
Agreements
Sviluppo Filiere Sviluppo Filiere
Report on operations - Breakdown of consolidated results by business area and geographical area
138
Agribusiness Department
The Agribusiness Department, Intesa Sanpaolo Group’s centre of excellence for agriculture and agrifood sectors, aims to
promote the link with local areas and tap the potential of one of Italy’s most important production sectors: in agrifood, Ita ly is in
third place in terms of added value among large European countries. The Department avails of 223 branches located
throughout Italy, containing specialists, concentrated in the most agricultural areas of the country, at the service of over
76,000 customers. The Agribusiness Department positions itself as the main qualified interlocutor to assist operators in all
phases of development, and to support investments to promote new business projects, with specific attention to the criteria o f
sustainability and the circular economy. The Department’s activities contributed to the signing of several important
agreements: in March, Intesa Sanpaolo and the Federazione Nazionale Agroalimentare (Agrocepi) signed a memorandum of
understanding to offer all of the members support solutions for the recovery and growth of the agrifood sector; in June, the
agreement with Coldiretti was renewed and a substantial credit line of 3 billion euro was made available to its member
companies to support them in the process of transformation towards the Italian agriculture of the future, in line with the public
initiatives and, in particular, the first NRRP tenders dedicated to the agricultural sector; and a new agreement was signed with
the Consorzio Tutela del Grana Padano DOP and the Consorzio del Formaggio Parmigiano Reggiano to strengthen access to
credit for companies in the dairy supply chain. Due to the success of the revolving pledge, several changes were introduced,
ranging from expanding the loans that may be backed by this guarantee to expanding the family of agrifood products that can
be pledged.
Impact Department
The Impact Department is dedicated to managing non-profit customers and coordinating the activation and management of
social impact funds created to foster the financial inclusion of individuals, households and non-profit organisations. In
particular, the Fund for Impact, with a value of 300 million euro, disburses loans of up to 1.5 billion euro to those with a good
plan for life and for work who have difficulty in accessing ordinary credit. This is accompanied by the Solidarity and
Development Fund, with a value of over 50 million euro, which enables loans to non-profit organisations with important
projects, which would otherwise be excluded from the credit. To acquire new customers, various initiatives were activated,
with joint “Conto-POS” Welcome Packs offered various solutions, alternative to each other, based on the customers’ operating
requirements. During the year, initiatives and events were also organised for customers in order to present the Bank’s offering
in support of the energy transition in the non-profit sector, with a specific focus on the Renewable Energy Communities, and
to provide information on the opportunities offered by the NRRP tenders for support to the social economy. The Bank also
provided financial support to non-profit organisations affected by the high energy costs and involved in the NRRP initiatives.
The introduction of the RIM (Impact Detector), a qualitative-quantitative questionnaire addressed to non-profit customers,
enabled the measurement of the social impact and positive outcomes generated by a portion (about 154 million euro) of the
loans approved for the non-profit sector between January and September 2022 for the implementation of 453 impact
initiatives. In the area of donations, in 2022 the For Funding platform again confirmed its leadership in Italian crowdfunding in
support of non-profit sector projects, encouraging donations throughout the country for a total of 12.5 million euro.
Product companies
In 2019, Banca 5 and SisalPay set up a newco, named Mooney, with the objective of offering banking products and payment
and transactional services at merchants located throughout the entire country. The network, which has been fully operational
since the beginning of 2020, adds to the offering of products and services of Banca 5 and SisalPay. At the end of 2021,
through its subsidiary Banca 5, Intesa Sanpaolo and Enel, through its subsidiary Enel X, signed an agreement to acquire 70%
of the share capital of Mooney Group from CVC Capital Partners. In 2022, the activities continued to prepare for the
finalisation of the operation, which occurred in mid-July. Specifically, after obtaining the required authorisations, Enel X
acquired 50% of the capital of Mooney, while Banca 5, which already held 30%, increased its investment to 50%. Thanks to
the partnership between Intesa Sanpaolo and Enel, Mooney will accelerate its growth and development in the sector of
proximity services, digital payments, mobility and energy services. As at 31 December 2022, Mooney had around 46,500
points of sale throughout Italy, of which around 40,000 licensed to offer banking services, including withdrawals and credit
transfers (reserved to customers of Intesa Sanpaolo).
During the year, a series of activities were also undertaken in preparation for the renaming of the company to Isybank, which
took place at the beginning of 2023.
Prestitalia is the “product company" of the Intesa Sanpaolo Group for salary-backed loans and advances on employee
termination indemnities. A financial company that operates in the consumer credit market, highly specialised in salary-backed
loans, it is one of the leading operators in the sector, with an average stock of around 2.1 billion euro. As at 31 December, it
disbursed loans totalling 770 million euro through over 35,000 applications finalised. The range of products includes” XME
Prestito Pensionati INPS”, “XME Anticipo TFS” (a product reserved to former government employees in terested in using all or
part of their severance indemnity without waiting the long time periods typical of the public authorities) and “XME Prestito
Cessione del Quinto”, which offers a solution for government employees as well as one reserved for private sector
employees.
In 2022, the process of streamlining the Network of Agents began, with the voluntary integration within Prestitalia of worker s
from Agents4You (74 operational to date). The objective of synergy, as well as developing business linked to the salary-
backed loans product, is to expand the commercial offering, expanding the catalogue to include certain products such as
protection and payment services, and to favour the acquisition of new customers: from the end of November, the agents
supporting the Intesa Sanpaolo branches have been able to offer customers current accounts, payment cards and POS
terminals.
Report on operations - Breakdown of consolidated results by business area and geographical area
139
IMI Corporate & Investment Banking
(millions of euro)
Income statement
2022
2021
Changes
amount
%
Net interest income
2,132
2,182
-50
-2.3
Net fee and commission income
1,156
1,135
21
1.9
Income from insurance business
-
-
-
-
Profits (Losses) on financial assets and liabilities designated at fair value
1,047
1,317
-270
-20.5
Other operating income (expenses)
-2
2
-4
Operating income
4,333
4,636
-303
-6.5
Personnel expenses
-528
-506
22
4.3
Other administrative expenses
-870
-845
25
3.0
Adjustments to property, equipment and intangible assets
-20
-21
-1
-4.8
Operating costs
-1,418
-1,372
46
3.4
Operating margin
2,915
3,264
-349
-10.7
Net adjustments to loans
-1,564
20
-1,584
Other net provisions and net impairment losses on other assets
-131
-45
86
Other income (expenses)
-
-
-
-
Income (Loss) from discontinued operations
-
-
-
-
Gross income (loss)
1,220
3,239
-2,019
-62.3
Taxes on income
-519
-991
-472
-47.6
Charges (net of tax) for integration and exit incentives
-21
-24
-3
-12.5
Effect of purchase price allocation (net of tax)
-
20
-20
Levies and other charges concerning the banking industry (net of tax)
-
-
-
-
Impairment (net of tax) of goodwill and other intangible assets
-
-
-
-
Minority interests
1
3
-2
-66.7
Net income (loss)
681
2,247
-1,566
-69.7
(millions of euro)
31.12.2022
31.12.2021
Changes
amount
%
Loans to customers
132,927
152,543
-19,616
-12.9
Direct deposits from banking business (a)
94,785
94,844
-59
-0.1
Risk-weighted assets
101,831
112,719
-10,888
-9.7
Absorbed capital
8,767
9,704
-937
-9.7
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents and discontinued
operations.
(a) The item includes certificates.
In 2022, the IMI Corporate & Investment Banking Division recorded operating income of 4,333 million euro (representing
20% of the Group’s consolidated total), down 6.5% compared to 2021.
In detail, net interest income, equal to 2,132 million euro, decreased by 2.3%, mainly due to the decreased contribution of the
global markets securities portfolio. Net fee and commission income, amounting to 1,156 million euro, increased by 1.9%, due
to the performance of the commercial banking and structured finance segments, which offset lower fee and commission
income from investment banking, negatively affected by the negative macroeconomic scenario.
Profits (losses) on financial assets and liabilities designated at fair value, equal to 1,047 million euro, decreased (-270 million
euro; -20.5%), mainly due to the lower gains on the sale of HTCS debt securities.
Operating costs amounted to 1,418 million euro, an increase of 3.4%, attributable to administrative and personnel expenses.
As a result of the above revenue and cost trends, the operating margin came to 2,915 million euro, down 10.7% on the
previous year. Gross income, equal to 1,220 million euro, recorded a sharp decrease (-62.3%) due to the significant net
adjustments to loans posted in relation to the events regarding Russia and Ukraine. Finally, net income came to 681 million
euro (-69.7%).
Report on operations - Breakdown of consolidated results by business area and geographical area
140
The IMI Corporate & Investment Banking Division showed a decrease in the operating margin in the fourth quarter of 2022
compared to the third, due to the seasonal nature of operating costs typical of year-end and the negative contribution from the
financial assets and liabilities designated at fair value, which were affected by lower earnings from debt securities and the
negative impact from the debt value adjustment (DVA). In contrast, gross income and net income increased, due to the
reduction in net adjustments to loans and provisions and adjustments to other assets recognised in the fourth quarter.
The Division’s intermediated volumes were down compared to the beginning of the year (-8%). In detail, loans to customers,
amounting to 132,927 million euro, were down (-12.9%, or -19.6 billion euro), due to the actions aimed at lowering the Group’s
RWAs, in line with the EBA guidelines applicable as of 1 January 2023. These actions resulted in the containment of the
credit on negative EVA corporate positions or those no longer justified in relation to the capital absorbed. In particular, the
decline in loans was attributable to decreased operations with global corporate customers and in the global markets segment,
as well as the reduction in loans for structured finance transactions and to international customers. Direct deposits from
banking business, totalling 94,785 million euro, were essentially stable (-0.1%, or -0.1 billion euro), as a result of the decrease
in amounts due to global corporate, financial institutions and international customers, offset by the increase in the funding
through certificates and, to a lesser extent, in securities issued.
Report on operations - Breakdown of consolidated results by business area and geographical area
141
Corporate and transaction banking, investment banking, public finance and capital markets, in Italy
and abroad.
To act as a strategic, global partner in supporting companies and financial institutions in achieving
balanced, sustainable growth, including at the international level, through a specialised network of
hubs, branches, representation offices and subsidiaries that engage in corporate banking
operations. To foster collaboration between the public and private sectors with the aim of
supporting the creation of infrastructure and sustainable investments, including by pursuing
international growth opportunities in countries of strategic interest to the Group. To provide all customers of the Intesa Sanpaolo
Group with specialised skills in the areas of Investment Banking, Structured Finance, Capital Markets and Transaction Banking.
The Department develops and manages relationships with Italian and foreign corporates with
diversified needs and multinational presence, and with domestic Public Entities. It ensures the
provision of a global, integrated offering of products and services by specific economic sector for
customers under its remit, integrating traditional commercial banking products and services with
those of investment banking and capital markets, pursuing cross-selling of products and services
overseen by the IMI Corporate & Investment Banking Division, by other Divisions and by the Group's product companies. It avails
itself centrally of the commercial action of the Industry units, and locally of the Italian network (Areas) and of the international network
of the International Department. The coverage is also completed through two units specifically dedicated to strategic investment
banking deals to support industries (Global Strategic Coverage) and geographical areas (Network Origination Coverage).
The specialisation by industry includes all industrial sectors: Automotive & Industrials; Basic Materials & Healthcare; Energy; Food &
Beverage and Distribution; Infrastructure & Real Estate Partners; Retail and Luxury; Telecom, Media and Technology. A team with
specific expertise is dedicated to developing Public Finance customers.
The Department ensures the international development of the Division in agreement with the other
relationship and product structures, ensures the correct management of operational and
commercial activities of the hubs, international branches and representative offices and oversees
the management of the international subsidiary banks (Intesa Sanpaolo Bank Luxembourg, Intesa
Sanpaolo Bank Ireland, Intesa Sanpaolo Brasil - Banco Multiplo, Banca Intesa - Russia and Intesa
Sanpaolo IMI Securities Corp.), ensuring their overall coordination.
The Department is responsible for commercial relationships with financial institutions on domestic
and international markets, with a dedicated service model organised by customer segment
(i.e., Banks, Insurance Companies, Asset Managers, Financial Sponsors, Sovereign Funds and
Governments).
Commercial development activity, which is particularly diversified and innovative, takes the form of
proposing integrated solutions that facilitate the cross-selling of Capital Markets, Investment
Banking, Commercial Banking and Transaction Banking products.
The Department is responsible for transaction banking products and services for the entire Group.
It develops a wide range of digital products and services to meet customers’ investment and
working capital optimisation needs in Italy and abroad.
The scope of this structure includes capital markets, structured finance, M&A advisory and primary
market (equity and debt capital markets) supporting all Group customers, including medium-sized
enterprises.
Moreover, portfolio management and ownership risk are monitored through direct or indirect
access to the markets.
In Italy, the IMI Corporate & Investment Banking Division has a total of 25 branches dedicated to
corporate customers and public customers. At the international level, it operates in 25 countries in
support of the cross-border operations of its customers through a specialised network of hubs,
branches, representative offices and subsidiaries that engage in corporate banking activity.
In line with the objectives of the 2022-2025 Business Plan, the IMI Corporate & Investment Banking Division updated its
organisational structure, applicable from the start of 2023, by identifying three areas of coordination of the business:
- Client Coverage & Advisory Coordination Area, to strengthen oversight of customer advisory and origination activities, organised
into Global Corporate, Institutional Clients and Corporate Finance & Advisory;
- Distribution Platforms & GTB Coordination Area, to focus on the management of the Italian and international network, increasing
commercial synergies on working capital and centralising loan distribution in a single hub, organised into the Italian Network,
International Network, Global Transaction Banking and Syndication & Risk Sharing;
Global Banking & Sovereign
Institutions Department
Global Transaction Banking
Department
Organisational structure
Mission
Distribution structure
Global Markets & Investment
Banking
Global Corporate
Department
International Department
Business
Report on operations - Breakdown of consolidated results by business area and geographical area
142
- Global Banking & Markets Coordination Area, to consolidate the best in class management of market risks and hedging
strategies, accelerating new business development within Global Markets and strengthening the hub for structuring and
managing the lending book, organised into Global Markets Trading & Investments, Global Markets Sales & Platforms, Global
Credit Structuring, Global Primary Markets & Solutions and Corporate Finance Mid-Cap.
Report on operations - Breakdown of consolidated results by business area and geographical area
143
Global Corporate Department
In 2022, the Global Corporate Department confirmed its role as strategic and financial partner to its Italian and international
customers, supporting them by organising and participating in a number of financing and investment banking transactions,
thanks to its specialised expertise linked to the Industry model and the origination ability of two teams dedicated to developing
strategic investment banking and structured finance operations. During the year, the measures continued to support corporate
customers to manage the economic and financial consequences of the health emergency and the new geopolitical scenario.
The Bank intends to continue to play an active role in supporting the revival of the Italian economy, supporting the National
Recovery and Resilience Plan, including through development of its production chains, an indispensable driver for Italy and
the heart of its economic and productive system. The Group participated in numerous syndicated loans, including those in
favour of Alstom, Athenahealth, Fabbrica Italiana Sintetici, Axpo Holding, Open Fiber, UPL, Industrie De Nora,
HeidelbergCement, Saipem, IP, Saras, CityFibre, Atlantia, Edizione, Merlin Properties, Candy and Alperia. In 2022, the
Department strengthened its coverage on ESG issues, with dedicated resources to offer the best service and support to
customers in their sustainability strategies and energy transitions, by offering financial instruments. Due to its specialise d
expertise on ESG issues, the Group participated in various syndicated loans, including those in favour of ENEL, Teva
Pharmaceutical Industries, OVS, El Corte Ingles, Telefonica, Marcegaglia, Pirelli, Start Romagna, Orsero, Aena, Prysmian,
ENI, EDP, ERG, CEPSA, Tages, Cogenio and Vena Energy. Numerous bilateral ESG loans were concluded, including those
for Iren, Italgas and Came. Attention should also be drawn to support for acquisition financing in important transactions
completed during the year, such as the acquisition of Acciai Speciali Terni by Arvedi, of a share of Pluto Train 2 by Global
Infrastructure Partners, and of a majority stake in La Doria by Investindustrial and in Atlantia by a consortium made up of
Edizione and Blackstone following the takeover bid on the company’s shares. The Bank participated in project financing
transactions, including the financing for the implementation of the first phase of the new Terminal 1 of the John F. Kennedy
International (“JFK”) Airport, and the financing of Aquila Capital, Open Fiber, Milione, Dunas Transmissao de Energia, Doral
and Green Arrow. Regarding M&A, the Group acted, inter alia, as financial advisor in the acquisition of a portfolio of
photovoltaic plants of NextEnergy Capital by Tages Capital, the acquisition of a majority share of a portfolio of photovoltaic
plants of Acea by Equitix, the acquisition of Performance in Lighting by Gewiss and the merger of several Tuscan utility
companies into Alia Servizi Ambientali. In debt capital markets operations, the Bank acted as Bookrunner in numerous issues,
including APRR, Carnival, Cellnex, Fabbrica Italiana Sintetici, Ford Motor Credit, General Motors Financial, Keurig Dr Pepper,
RCI Banque, Stellantis, TotalEnergies, RWE, Var Energy, Electricite De France, Arcelormittal, Iberdrola, Leasys and Estra,
and as Placement Agents in the second issue ever of Alia Servizi Ambientali. The Bank also successfully completed the
placement of “green” bonds, including those issued by A2A (acting as Global Coordinator), Hera, Iberdrola, Suez, Terna
(hybrid), Volkswagen and Ferrovie dello Stato, as well as of “sustainability-linked” bonds, including those issued by A2A,
ENEL, Snam, Webuild (in the latter case, also acting as ESG Structuring Advisor) and Carrefour. In the Equity Capital
Markets business, the Bank acted, moreover, as Sponsor for the listing of Iveco Group on the Euronext Milan, as part of the
spin-off from CNH Industrial, as Coordinating Broker of the takeover bid on shares and dealer manager for the purchase of
convertible bonds in the acquisition of Falck Renewables by Infrastructure Investments Fund, as Joint Bookrunner in the
capital increase of Nordex, as Coordinating Broker of the takeover bid on the shares of Atlantia and as Joint Global
Coordinator in the capital increase of Saipem.
International Department
During the year, the Department followed and still follows with the utmost attention the political and economic situation
created as a result of the breakout of war in Ukraine, to limit the impacts of the crisis on the international network, also in light
of the series of increasingly harsh international sanctions. The Department also continued providing its support in monitorin g
the evolution of the COVID-19 emergency on the entire international network of the IMI Corporate & Investment Banking
Division, both in the areas where the pandemic has shown signs of declining and in the areas where, instead, the effects
worsened. The international business development project “Accelerate” continued, extended also to Global Transaction
Banking products, for which the specific initiative “Horizon” is underway. In line with the 2022-2025 Business Plan, greater
emphasis and attention was focused on initiatives and counterparties operating in the ESG area, also to support international
customers with greater awareness of those issues, to confirm Intesa Sanpaolo’s position among the main global players
offering ESG-driven products and services. During the year, the structure was completed of the new European Hub, based in
Milan, which oversees the operations of the Intesa Sanpaolo branches in the European Union (Frankfurt, Madrid, Paris,
Warsaw and Amsterdam, the latter following its transfer from Intesa Sanpaolo Bank Luxembourg to Intesa Sanpaolo, effective
in January 2022).
The Division’s current international network is present in 25 countries through 16 wholesale branches (including the hubs), 9
representative offices (in addition to the Brussels office at Group level, reporting to European Regulatory & Public Affairs and
in charge of managing relations with supranational regulators), 4 corporate banks (Intesa Sanpaolo Bank Ireland, Intesa
Sanpaolo Bank Luxembourg, Intesa Sanpaolo Brasil S.A. and Banca Intesa - Russia), in addition to Intesa Sanpaolo IMI
Securities Corporation in New York.
Report on operations - Breakdown of consolidated results by business area and geographical area
144
Global Banking & Sovereign Institutions Department
In a particularly complex, extraordinary market scenario, the Department continued to assist its customers in important
operating and extraordinary finance deals, confirming the significant growth trend in operations and results in recent years. In
the banking sector, the Group continued to provide advice, arranging and financing in transactions to optimise and strengthen
capital structure, both on the equity and debt markets, as well as in the refinancing and sale of performing and problem
assets. Among others, as regards the domestic market, we note the roles of Sole Financial Advisor in the tender offer of
Sparkasse on Civibank, Joint Bookrunner in two BPER issues - “SNP” and “T2”, Arranger in the state-guaranteed (GACS)
securitisation of ICCREA and the securitisation of the Luzzatti consortium of banks, as well as Joint Bookrunner in a pool lo an
for Nexi. On the international markets, the Group acted as Joint Lead Manager and Active Bookrunner in the multi-tranche
issue of Toronto Dominion Bank and Joint Bookrunner in the senior non-preferred issue of BBVA and participated in
numerous issues in USD, EUR and GBP for leading global banking groups including HSBC, DB, UBS, BNP, CACIB, GS and
JP Morgan, as well as the capital increase of Credit Suisse. Significant results were also achieved in the South Europe
market, where Intesa Sanpaolo acted as Joint Bookrunner in the senior preferred notes issued by the National Bank of
Greece and was involved in two major trade finance transactions, of strategic importance, supporting infrastructure projects
(Mediterranean Electric Highway) and projects to diversify natural gas supply sources in Greece. In the last quarter, Intesa
Sanpaolo was the Lead Manager for the first social bond distributed exclusively on the Fideuram - Intesa Sanpaolo Private
Banking networks, issued under the Citigroup Social Bond Framework for Affordable Housing. Operations with non-bank
financial institutions and governments continued to achieve highly positive results, due to effective positioning on customers
and a product mix in line with the current market context. Within this framework, important business continued with
government customers, committed to managing the new debt deriving from measures in support of the economy, in a post-
pandemic scenario marked by geopolitical instability. Of note are the roles on behalf of the Ministry of the Economy and
Finance in the placement of BTP (specifically the two new BTP Italia, the new 30-year BTP and the new CCTEU maturing in
October 2030) and, internationally, loans dedicated to government entities in the Middle East. The support to banking
foundations and the growing dialogue with the main pension funds also continued, with specific regard to investment
activities, capital markets and risk management. With regard to the asset managers, the subscription facility activities were
further developed, such as the operations with Apollo, Tristan Capital and Angelo Gordon, which contributed to increasing the
Bank’s visibility in the context of asset-based financing with the leading international players, with which NAV financing
operations are also being developed. Also worth noting was the involvement in portfolio financing transactions through the
underwriting of senior tranches of securitisations, both at international level, in collaboration with sponsors and origination
platforms within lending programmes aimed at European SMEs (including Varde Partners/Beka Finance, where the
underlying loans are guaranteed by the EIF, and Varadero Capital/Funding Circle), and at domestic level, with companies
operating in SME loans backed by the Guarantee Fund (transactions were carried out with Opyn, Banca Progetto, and Cefin
Gruppo MOL). In the near-banking sector, the funding mix through which Intesa Sanpaolo supported the main operators, in
particular Agos, Compass and the salary-backed loan providers, changed during the year due to the significant increase in the
cost of funding, which heavily impacted the relative affordability of the various funding instruments. In this context, there was a
gradual reduction in the use of securitisations compared to the initial months of the year (during which several transactions
were completed, such as those with Sigla, Dynamica, Fincontinuo and Spefin), down to essentially zero in the second half of
the year. Also worth mentioning, for the same reason, is the significant increase, particularly in the second half of 2022, i n
repo funding transactions on non-ECB eligible assets (including those with IBL Banca, Banca Progetto, and Banca Ifis). In the
insurance area, 2022 maintained the results from previous years despite a challenging market environment that significantly
impacted insurance company financial statements. The activities focused mainly on derivative hedges on the separate
management of the life business, structures for third-party retail products and indirect risk activities, mainly with Allianz Trade,
in addition to capital management aspects, particularly due to the sudden rise in interest rates. In the real estate sector, the
oversight of Italian and foreign institutional investors continues, with a focus on transactions respecting ESG issues and
innovation in the real estate field, both with regard to income-generating investments and selected urban regeneration
projects. In that area, as Mandated Lead Arranger, the Group structured a sustainability-linked loan to support the initial
phase of redevelopment of the railway station of Porta Romana in Milan, promoted by Coima SGR, the loan to support the
redevelopment project of the Genoa waterfront, promoted by Orion Capital Managers, and various redevelopment works in
the student housing and private rented sector asset classes promoted by international operators through Italian real estate
funds. Lastly, we note the effective collaboration with the Private Banking Division, which showed important results, including,
specifically, the placement of the Technoprobe, Generalfinance and Erredue IPOs. Transactions with financial institutions on
emerging markets continued to be managed consistently with the reference context, with a selective strategy focused on risk
management. The pivotal role of the Bank’s willingness to support exports and commercial operations of its industria l and
financial customers was confirmed, with the assumption of risk concentrated mainly in Africa, Asia and Latam, while the
activities performed in the countries of the former CIS area were heavily impacted by the continuation of the conflict in
Ukraine. With regard to Structured Deals, the extreme volatility of commodity prices and the consolidation of these prices at
historically high levels are continuing to have a negative impact on the development of new transactions. It is important to
note the utmost attention the Bank dedicates to managing operations being executed with Russian counterparties, both in
commodities financing and in export loans guaranteed by ECAs. Lending for supply chain financing remains significant,
especially at the New York branch, but is gradually increasing in the rest of Europe and in Asia. As regards activities linked to
Private Equity funds, the Group recorded a large number of operations concluded with its customers in the reference period,
in a scenario where the changed conditions of the financial markets partially slowed the origination of transactions based on
bond instruments, while on generally domestic operations in the mid-market segment, there are currently no significant
impacts compared to the positive trend recorded since the end of last year. In the Italian market, the Bank acted as Financial
Advisor, MLA and Joint Bookrunner in the bond issue in support of Bain Capital and BC Partners for the acquisition of
Fedrigoni, world leader in the field of labels, self-adhesive materials and high value-added paper for luxury packaging. The
Bank also acted as MLA and Bookrunner for the acquisition financing in support of CVC and CDP Equity for the acquisition of
Maticmind, a leading Italian IT company focused on proprietary intelligence technologies and integrated solutions in the areas
of networking, cybersecurity, data centres, cloud services and IoT. In the international markets, where the Bank continued to
consolidate its presence, it acted as Mandated Lead Arranger and Bookrunner in the financing of Sagemcom, a leading
Report on operations - Breakdown of consolidated results by business area and geographical area
145
French company operating in the production of internet, audio, video and energy communication terminals, by Charterhouse,
and as Senior Underwriter in the financing for the acquisition of Cordenpharma, a German company operating in the
pharmaceutical sector, by Astorg. In the United States, the Group acted as Joint Lead Arranger and Joint Bookrunner in the
financing of the strategic combination between Citrix and TIBCO in the software sector by Vista Equity Partners and Elliott
Investment Management. Of note in the Fund Financing area was the continued growth in funding transactions aimed directly
at Private Equity funds completed during the year, including the transaction in favour of the Nextalia Private Equity fund in
which the Bank acted as Global Coordinator, MLA and Bookrunner for an ESG-linked credit line. Internationally, where the
strongest growth was recorded, Intesa Sanpaolo participated, as Lender and co-Arranger, in some of the most important
credit lines aimed at the main fundraising private equity funds during the year, including Permira, KKR and Apollo. With regard
to Sovereign Wealth Funds and Pension Funds, the Bank further strengthened its relations with the leading international
players in the sector and with new funds (Khazanah, Aware Super and Australian Super), participating in operations in their
reference sectors, especially Energy, Infra and TMT, in all main global geographic areas. Transactions carried out directly
with sovereign funds included the renewal of the participation (as MLA) in the syndicated loan to PIF, the largest lending
operation to a sovereign fund realised to date, the role of Joint Bookrunner in PIF’s Green Bond issue, aimed at contributing
to decarbonisation in Saudi Arabia, and in the bond issues of the Mubadala fund, the support to QIA in the Public Purchase
and Exchange Offer on Coima Res, and the participation in a capital call financing in favour of the ACMP Holdings fund. The
Group also participated, with leading roles as Underwriter, MLA and Bookrunner, in the loans for the acquisition of a stake in
Cetin (telecommunications infrastructure) by GIC and the acquisition of the energy operator Spark Infrastructure by a
consortium formed by KKR, OTPP and PSP, the acquisition of VTG (rail vehicle leasing) by GIP and ADIA, the acquisition of
Brisa (Portuguese motorways) by APG, and the acquisition from Telefonica of a stake in a Fiber Co by a leading consortium
of investors. Lastly, we also note the transactions carried out with the subsidiaries of sovereign funds, such as the refinancing
of the water company Yorkshire Water/Kelda (GIC), the refinancing of Deutsche Glasfaser (OMERS), a company that
develops fibre optic lines in Germany, the refinancing of Società Gasdotti Italia (OTPP and SLAM) and the refinancings in
favour of Saudi Electricity Company (PIF) and CEPSA (Mubadala). These new transactions join a portfolio of transactions
that, over the last few years, have reached an amount that positions the Group as a qualified and recognised operator in the
global Sovereign Wealth Funds and Pension Funds market.
Global Transaction Banking Department
During 2022, the Global Transaction Banking Department assisted both SMEs and international corporates in conducting their
business - in compliance with the regulations in force - during the period of extreme geopolitical crisis that took shape at the
beginning of the year and the market developments in the second half. The Department launched the programmes linked to
the 2022-2025 Business Plan, regarding the initiatives under its responsibility, to strengthen the international value
proposition - also due to the decision to enter into partnerships with third parties, and through an ever increasing drive
towards product and process innovation - and support advisory services to customers through its network of specialists in
payment solutions, cash management and trade finance. All the initiatives were launched to expand the international offering
of cash management and trade finance, as well as the revision of the operating model, to streamline delivery times in
response to customer needs. The establishment of the partnership with Kyriba also continued, on supply chain aspects and
company cash management. The digitalisation of the portfolio of services has steadily continued, also with a view to providing
ESG support for companies. The Department is also participating in system-wide initiatives for the digital evolution of the
banking system on initiatives such as CBDCs (for the digital euro) and digital assets.
Global Markets & Investment Banking
The deterioration of the global geopolitical situation and the countering of inflationary movements by Central Banks heavily
influenced the markets during 2022, affecting all asset classes. With regard to the Global Market Securities Department,
market liquidity in the Loans and Equity segments fell significantly, with rare and temporary exceptions. Due to the increase s
in volatility and interest rates, primary and secondary market lending suffered during 2022, only partially recovering at the end
of the year. As a result of the same factors, the results for the equity operations were extremely positive, particularly in the
equity derivatives component and in trading on Asian markets, while the cash segment declined, but in line with the main
reference markets. High volatility favoured an increase in volumes traded on the foreign exchange and commodity markets. In
the foreign exchange segment, concerns about the conflict in the first half of the year led to a focus on conservative
currencies at the expense of emerging currencies, a trend that reversed to a certain extent in the second half of the year. With
regard to commodities, the main activity was concentrated on the energy sector and the precious metals sector, most notably
gold. In the area of interest rates, the successive rises led to a major repricing of yield expectations, with customers
consequently adopting a cautious stance. The increases, together with the expansion of the product range and the support for
the networks, generated a considerable rise in the placement of certificates compared to the previous year, in addition to
contributing to significant growth in activity on bonds thanks to the flows managed by Market Hub, which recorded significant
overall year-on-year growth in values and volumes traded.
In 2022, the activities carried out by the Global Market Solutions and Financing Department confirmed the Division’s
leadership position both in support for customers in the management of financial risk, including with innovative ESG-linked
solutions, and in the securitisation and asset-based financing sectors. The unit structured, financed and distributed solutions
for its customers inside and outside the Group, designed to optimise funding and economic and regulatory capital,
deconsolidate performing and non-performing assets and improve the net financial position of its customers. The unit also
consolidated the Division’s international presence, supporting corporate and financial institution customers inside and outside
Europe with risk management and financially, as well as important foreign investors in the acquisition of granular portfolios in
Italy and in the main international jurisdictions. In 2022, the Finance & Investments Department, in the light of the continuing
restrictive monetary policy conditions and a possible recessionary scenario, pursued a strategy of portfolio reallocation among
Report on operations - Breakdown of consolidated results by business area and geographical area
146
European, foreign and emerging market government securities. The corporate securities portfolio was also subject to
measures to reduce exposure, with the aim of further optimising the relationship between risk-weighted assets and
prospective returns. Management of the DVA was focused on the new regime of volatility, maintaining low coverage ratios,
which were increased near the end of the first half of the year, in light of the stabilisation of the financial markets. In 2022,
despite a less favourable market situation, the portfolio still held up well, and the management focused on careful risk control
with a view to optimisation. In the context of uncertainty, also in the primary market, with a sharp reduction in volumes
compared to the previous year, the Equity Capital Markets team maintained its usual oversight of the Italian market, carrying
out an ABB of Zignago Vetro shares and a Reverse ABB on Banco BPM shares (in both cases as Sole Bookrunner), an ABB
of Nexi on behalf of Intesa Sanpaolo (Joint Bookrunner), and the capital increase offered in option by Saipem (Joint Global
Coordinator). The Division also acted as Sponsor for the listing of Iveco Group and Revo Insurance on Euronext Milan. At
international level, it participated in the capital increases offered in option by Bank of Qingdao, Nordex and Credit Suisse (as
Joint Bookrunner in all the transactions). In the area of public takeover bids, it confirmed its leadership acting as the
coordinator for the collection of acceptances in eight different bids, including Atlantia in particular. Lastly, in 2022, it was
specialist or corporate broker for over 50 companies listed on the Italian market. Despite the difficult environment that also
characterised the bond markets, the Debt Capital Markets team maintained its leadership position in Italy in terms of volume
in the role of Joint Bookrunner. In the Corporate segment, the Division acted as Joint Bookrunner in several issues, including
the sustainability-linked bonds of Enel, Snam, Webuild, A2A and Carrefour, the green bonds of Suez SA, Hera, A2A, General
Motors and Coca-Co la HBC, and the senior unsecured bonds of Stellantis, APRR, Autostrade per l’Italia, Ford Motor, McAfee,
Carnival, Var Energi, and Leasys. In the Financial Institutions area, the Division acted as Joint Bookrunner for several issues,
including the covered bonds of Credit Agricole Italia, VUB Banka and Slovenska Sporitelna, the Additional Tier 1 bonds of
Intesa Sanpaolo, Deutsche Bank and BNP Paribas, the senior non-preferred bonds of BBVA and Intesa Sanpaolo, the Tier 2
bonds of BPER Banca and Intesa Sanpaolo, the senior preferred bonds of Illimity Bank and NBG, the social senior preferred
bond of ICS, and the placement of the Quarzo ABS. In the SSA segment, it was the dealer for the Italian Government in the
issue of the BTP Italia reserved for both retail and institutional customers, as well as Joint Bookrunner in the issue of the 30-
year BTP and the CCTEU. It acted as Joint Bookrunner in the senior unsecured issues of Ferrovie dello Stato and Amco.
Intesa Sanpaolo also acted as Sole Bookrunner in the placement of the Citigroup and Mediobanca retail issues. The Division
provided its M&A Advisory services in many of the most significant transactions in Italy, including, in the TMT sector, to th e
ION Group, in the acquisition of Cerved Group through a voluntary takeover bid, to IDI, in the acquisition of BFC Media
through a mandatory takeover bid, and to Engineering in the acquisition of Atlantic Technologies; in the Industrial &
Healthcare sector, to Marcegaglia, in the acquisition of the Long Products Business Unit of the Finnish multinational
Outokumpu, to Gewiss in the acquisition of Performance in Lighting, to NB Renaissance in the acquisition of Neopharmed
Gentili and to NB Capital in the acquisition of Fedrigoni; in the Consumer & Retail sector, to Investindustrial, in the acquisition
of La Doria through a mandatory takeover bid and to CDP Equity, in the merger of Autogrill and Dufry; in the Energy sector, t o
Next Energy Capital, in the sale of a 149MW photovoltaic portfolio, to Falck, through the issuance of a fairness opinion on the
sale of a 60% stake held in Falck Renewables; and in the Financial Institutions sector, to Sparkasse in the acquisition of
Banca di Cividale (Civibank) through a voluntary full takeover bid and to P.N. 1898 in the acquisition of Banca Finnat
Euroamerica through a mandatory full takeover bid. In 2022, the Structured Finance team confirmed its leadership on the
Italian market and successfully continued its business on the international market, maintaining its selective approach i n
origination, to support investments in all reference sectors. The originate to share approach and the geographical
diversification resulted in the conclusion of numerous financing transactions to support important Italian and international
industrial operators and financial investors in various infrastructure and public utility services sectors, in line with the growth
strategy of the Division, both in terms of volumes and positioning, with specific attention to ESG/Circular/Green issues. In the
international market, there was a healthy volume of transactions in the Eurozone in the Infrastructure sector in 2022, although
it slowed down as a result of uncertainties related to the conflict, high inflationary pressure, and rising base interest rates. The
TMT and Transport sectors were highly stressed, while the Renewables assets continued to be the main catalysts for
greenfield investments. The process of repositioning the scope of operations was also completed, with a focus on developing
the UK market, monitoring the Middle East market, and consolidating the relationship with major non-European infrastructure
funds. Market conditions in Asia were also considerably more volatile. The renewable energy sector remained the most
dynamic, with Australia and India among the main markets, as well as US Structured Finance, whose primary trend was a
sharp increase in applications for loans on the back of the Energy Transition process that has been impacting the energy
market in the last few years. The Mid-Cap Corporate Finance Department gradually expanded, becoming competence centre
and point of reference for Corporate Finance transactions for business customers of the Banca dei Territori Division and
Domestic Corporate & Institutional Clients of the Banks in the International Subsidiary Banks Division. In addition to numerous
M&A Advisory and Structured Finance transactions, the Department, in the Equity Capital Markets, and in a particularly
complex market scenario, managed to conclude the IPO of Technoprobe, the largest IPO ever realised on the Growth
segment of all the European markets of Euronext, the IPO of Generalfinance, the first on the STAR segment in 2022, and the
IPO of Erredue, the third largest in 2022 on the Euronext Growth Milan segment. Efforts to increase synergies with the Private
Banking Division also continued during the year.
Report on operations - Breakdown of consolidated results by business area and geographical area
147
International Subsidiary Banks
(millions of euro)
Income statement
2022
2021
Changes
amount
%
Net interest income
1,592
1,337
255
19.1
Net fee and commission income
574
546
28
5.1
Income from insurance business
-
-
-
-
Profits (Losses) on financial assets and liabilities designated at fair value
129
127
2
1.6
Other operating income (expenses)
-68
-38
30
78.9
Operating income
2,227
1,972
255
12.9
Personnel expenses
-573
-549
24
4.4
Other administrative expenses
-431
-410
21
5.1
Adjustments to property, equipment and intangible assets
-114
-113
1
0.9
Operating costs
-1,118
-1,072
46
4.3
Operating margin
1,109
900
209
23.2
Net adjustments to loans
-345
-157
188
Other net provisions and net impairment losses on other assets
-20
-74
-54
-73.0
Other income (expenses)
35
7
28
Income (Loss) from discontinued operations
-
-
-
-
Gross income (loss)
779
676
103
15.2
Taxes on income
-191
-144
47
32.6
Charges (net of tax) for integration and exit incentives
-44
-43
1
2.3
Effect of purchase price allocation (net of tax)
-
-
-
-
Levies and other charges concerning the banking industry (net of tax)
-40
-26
14
53.8
Impairment (net of tax) of goodwill and other intangible assets
-
-
-
-
Minority interests
-
-
-
-
Net income (loss)
504
463
41
8.9
(millions of euro)
31.12.2022
31.12.2021
Changes
amount
%
Loans to customers
40,212
38,970
1,242
3.2
Direct deposits from banking business
54,364
51,504
2,860
5.6
Risk-weighted assets
35,056
34,403
653
1.9
Absorbed capital
3,745
3,640
105
2.9
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents and discontinued
operations.
The International Subsidiary Banks Division is responsible for the Group’s activities in foreign markets through commercial
banking subsidiaries and associates, mainly active in retail banking.
In 2022, the Division’s operating income came to 2,227 million euro, up 12.9% compared to the previous y ear (+16.3% at
constant exchange rates). A detailed analysis shows that net interest income came to 1,592 million euro (+19.1%), mainly due
to the favourable performance of CIB Bank (+143 million euro) and, to a lesser extent, VUB Banka (+48 million euro), Banca
Intesa Beograd, including Intesa Leasing Beograd (+26 million euro) and Bank of Alexandria (+23 million euro). Net fee and
commission income, equal to 574 million euro, was up (+5.1%), mainly due to PBZ – including Intesa Sanpaolo Bank
(Slovenia) and Intesa Sanpaolo Banka Bosna i Hercegovina (+16 million euro) – VUB Banka (+16 million euro) and Banca
Intesa Beograd (+10 million euro). Within other income components, there was a significant increase in other net operating
costs (+30 million euro) attributable to the subsidiaries operating in Slovakia, Egypt and Hungary, and a slight increase in the
profits (losses) on financial assets and liabilities designated at fair value (+2 million euro).
Operating costs of 1,118 million euro increased (+4.3%; +6.5% at constant exchange rates) mainly due to the changes in
administrative and personnel expenses.
As a result of the above revenue and cost trends, the operating margin increased by 23.2%, amounting to 1,109 million euro.
Gross income, amounting to 779 million euro (+15.2%), benefited from lower net provisions and net impairment losses on
other assets and higher other income, which partly offset the higher net adjustments to loans for events involving Russia and
Ukraine. The Division closed 2022 with net income of 504 million euro (+8.9%).
Report on operations - Breakdown of consolidated results by business area and geographical area
148
At the quarterly level, in the fourth quarter of 2022 the operating margin increased compared with the third quarter, as a result
of the growth in operating income, which more than offset the increase in operating costs, typical of year-end. In contrast,
gross income and net income were adversely impacted by the increase in net adjustments to loans.
The Division’s intermediated volumes grew at the end of December 2022 (+4.5%, equal to +4.1 billion euro) compared to the
beginning of the year owing to both direct deposits from banking business (+5.6%), in the component of amounts due to
customers, and loans to customers (+3.2%). Lending performance was mainly attributable to the subsidiaries operating in
Slovakia, Serbia and Croatia, while the growth in deposits was attributable to the subsidiaries operating in Croatia and
Slovakia, to a lesser extent, those in Slovenia and Serbia.
In 2022, the International Subsidiary Banks Division continued developing activities, with a business model focused on growth
in fee and commission income in the main European subsidiaries, and a continuous focus on wealth management in China.
Specifically, the reshaping of the service model for wealth management continued for affluent and private customers,
strengthening commercial oversight, with a focus on ESG issues, the dissemination of financial education topics and the
development of innovative and regulatory advisory processes.
In the bancassurance area, the Master Cooperation Agreement was finalised with a leading insurance group for the
distribution of insurance products at 5 banks (in Slovakia, Croatia, Hungary, Serbia and Slovenia), and 4 out of 5 Local
Distribution Agreements were signed (in Slovakia, Serbia, Slovenia and Croatia).
With regard to increasing fee and commission income, the development of commercial initiatives continued in synergy with
the IMI Corporate & Investment Banking Division on the Group Banks in Slovakia, Czech Republic, Hungary and Croatia.
With regard to the reshaping and strengthening of the customer service model shared with the Banca dei Territori Division,
the commercial actions continued in Italy and the optimisation of the loan approval process was completed.
As for the focus on new business opportunities relating to the ESG transition, an ESG Business Positioning initiative was
launched for the Corporate and SME segments in Slovakia, Hungary, Croatia, Serbia and Egypt. Specifically, quick wins were
launched to encourage the use of Green and Circular credit lines; the S-Loan offering was structured and made available in
Slovakia, Hungary and Serbia; and priority sectors to be targeted by ESG commercial strategy were defined.
In digital banking, on the Corporate&SME side, the Italy-Hungary interconnection was activated and the “Confirming”
(Factoring) product was launched on an additional five geographic areas in the scope of the Division (Slovakia, Serbia,
Romania, Slovenia and Albania), completing the first deal in Slovakia. Limited to Retail&WM, the activities to acquire
prospects in Albania were completed and the expansion continued of functionalities in the credit, wealth management and
commercial areas in the main countries where the Division operates.
Regarding the drive towards IT convergence, work is underway on the progressive deployment of the target platform
applications in the remaining banks within the scope, according to the project timetable.
Lastly, with regard to wealth management in China, the business activities of Yi Tsai continued, by strengthening the network
and expanding the product mix.
Report on operations - Breakdown of consolidated results by business area and geographical area
149
It is responsible for the Group’s operations on the international markets through commercial bank
subsidiaries and associates.
Guidance, coordination and support for international subsidiaries, which engage primarily in retail
banking operations. The Division is responsible for setting the Group’s strategic development
guidelines in terms of its direct presence on international markets, involving systematic exploration
and analysis of new growth opportunities on markets already served and new markets, the
coordination of international subsidiary banks’ operations and the management of the relationships
between international subsidiary banks and the Parent Company’s cent ral units and the branches or other foreign offices of the IMI
Corporate & Investment Banking Division.
Presence in Croatia, Bosnia-Herzegovina and Slovenia.
Presence in Slovakia, Hungary and the Czech Republic.
Presence in Albania, Romania, Serbia, Egypt, Ukraine and Moldova.
901 branches in 12 countries.
Business
Mission
Organisational structure
South-Eastern Europe Hub
(SEE HUB)
Central Europe Hub
(CE HUB)
Other banks
Distribution structure
Report on operations - Breakdown of consolidated results by business area and geographical area
150
South-Eastern Europe Hub (SEE HUB)
In 2022, the operating income of the Privredna Banka Zagreb group amounted to 448 million euro, up on 2021 (+1.9%), due
to the favourable performance of net fee and commission income and the reduction in other net operating costs. Operating
costs of 196 million euro increased (+6.3%), due to administrative and personnel expenses. The operating margin came to
252 million euro (-1.3%). Gross income amounted to 242 million euro (+15.4%), benefiting from the lower provisions and net
adjustments to loans and other assets, and net income was 188 million euro (+15.5%).
Intesa Sanpaolo Banka Bosna i Hercegovina closed 2022 with an operating margin of 22 million euro, down on the
previous year (-1.8%). This performance was due to the increase in operating costs, only partly offset by the increase in
operating income. Gross income, amounting to 18 million euro, and net income, which came to 14 million euro, were down
(-11% and -13.5%, respectively), mainly due to higher net adjustments to loans.
Intesa Sanpaolo Bank (Slovenia) reported operating income of 83 million euro, up on 2021 (+19.8%), due to the growth in
net interest income and, to a lesser extent, in net fee and commission income. Operating costs increased (+6.3%) on the
previous year. The operating margin increased by 42%. In contrast, gross income and net income, amounting to 24 million
euro and 16 million euro respectively, were down (-5% and -7.6%), mainly due to higher provisions and net adjustments to
loans and other assets and to lower other income.
Central Europe Hub (CE HUB)
The VUB Banka Group reported an operating margin of 279 million euro, up on 2021 (+17.7%) as a result of the growth in
operating income (+10%), which more than offset the increase in operating costs (+1.7%). Gross income, amounting to
247 million euro, showed a significant increase (+48.4%), due to lower adjustments to loans and higher other income. Net
income came to 169 million euro (+48.9%).
The CIB Bank Group recorded operating income of 329 million euro, a significant increase on 2021 (+58.9%) due to the
positive performance of net interest income. Operating costs rose by 2.1%. Net income amounted to 92 million euro, and
more than doubled on the previous year.
Other banks
Intesa Sanpaolo Bank Albania reported an operating margin of 20 million euro, up on 2021 (+7.4%), due to the growth in
revenues, particularly net interest income, which more than offset the increase in operating costs. Net income came to
11 million euro and more than doubled compared to the previous year, benefiting from lower provisions and net adjustments
to loans and other assets.
Intesa Sanpaolo Bank Romania reported an operating margin of 12 million euro, up on 2021 (+23.8%), due to higher
operating income (+12%), particularly net interest income, which more than offset the higher operating costs. The company
closed 2022 with net income of 5.1 million euro, well above the figure for 2021 (1.9 million euro).
Banca Intesa Beograd, including Intesa Leasing Beograd, reported an operating margin of 205 million euro, up 21% on
2021. Operating income increased by 17% and operating costs were up by 10.9%. Gross income amounted to 160 million
euro (+22.2%), and net income was 110 million euro (+22.8%).
Bank of Alexandria, which was adversely affected by the depreciation of the Egyptian pound, reported an operating margin
of 230 million euro, up by 5.9% on the previous year (+16% at constant exchange rates). Operating income of 384 million
euro increased (+3.5%; +13.4% at constant exchange rates), mainly due to the performance of net interest income. Operating
costs rose slightly (+0.2%; +9.8% at constant exchange rates). Net income came to 129 million euro, up by 9.5% on 2021
(+19.9% at constant exchange rates).
Pravex. Despite the extremely serious/uncertain situation in Ukraine, Pravex was again consolidated on a line-by-line basis in
December 2022. Nonetheless, in light of the objective logistics difficulties and execution difficulties of the administrative
structures of the local bank, also with regard to IT channels, the Group’s decision was to carry out line-by-line consolidation
using the figures of September 2022, making adjustments in connection with the write-down of specific assets of the bank,
especially loans to customers, debt securities and properties. With specific regard to the income statement balances, for
operating income and costs, the September 2022 figures have been consolidated and, for net adjustments to loans and the
other provisions, the valuation effects determined with the Group’s head office structures have been taken into account.
Eximbank generated an operating margin of 6.5 million euro, more than treble the figure for 2021, mainly due to the positive
performance of operating income (+63.6%). Net income, amounting to 3.4 million euro, almost trebled compared to the
previous year.
Report on operations - Breakdown of consolidated results by business area and geographical area
151
Private Banking
(millions of euro)
Income statement
2022
2021
Changes
amount
%
Net interest income
419
217
202
93.1
Net fee and commission income
1,980
2,096
-116
-5.5
Income from insurance business
-
-
-
-
Profits (Losses) on financial assets and liabilities designated at fair value
60
56
4
7.1
Other operating income (expenses)
16
26
-10
-38.5
Operating income
2,475
2,395
80
3.3
Personnel expenses
-486
-473
13
2.7
Other administrative expenses
-354
-365
-11
-3.0
Adjustments to property, equipment and intangible assets
-81
-76
5
6.6
Operating costs
-921
-914
7
0.8
Operating margin
1,554
1,481
73
4.9
Net adjustments to loans
-12
3
-15
Other net provisions and net impairment losses on other assets
13
-37
50
Other income (expenses)
-
194
-194
Income (Loss) from discontinued operations
-
-
-
-
Gross income (loss)
1,555
1,641
-86
-5.2
Taxes on income
-444
-483
-39
-8.1
Charges (net of tax) for integration and exit incentives
-37
-40
-3
-7.5
Effect of purchase price allocation (net of tax)
-21
-22
-1
-4.5
Levies and other charges concerning the banking industry (net of tax)
-21
-15
6
40.0
Impairment (net of tax) of goodwill and other intangible assets
-
-
-
-
Minority interests
2
-5
7
Net income (loss)
1,034
1,076
-42
-3.9
(millions of euro)
31.12.2022
31.12.2021
Changes
amount
%
Assets under management
(1)
150,112
166,830
-16,718
-10.0
Risk-weighted assets
12,757
11,617
1,140
9.8
Absorbed capital
1,127
1,014
113
11.1
(1) Figures restated in line with consolidated reporting criteria of indirect customer deposits.
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents and discontinued
operations.
The Private Banking Division serves the top customer segment (Private and High Net Worth Individuals), creating value by
offering top products and services. The Division coordinates the operations of Fideuram – Intesa Sanpaolo Private Banking,
Intesa Sanpaolo Private Banking, Fideuram Asset Management SGR, IW Private Investments SIM, SIREF Fiduciaria,
Fideuram Asset Management (Ireland), Fideuram Bank (Luxembourg), the Swiss banking group Reyl (present in Switzerland,
the United Kingdom, Singapore, the United Arab Emirates and Malta) and, from 30 June 2022, Compagnie de Banque Privée
Quilvest S.A., a Luxembourg private bank with branches in Belgium. Moreover, with the goal of offering a large, dedicated
range of products, availing of digital solutions that will be expanded over time, the new Direct Banking business unit was
created to meet the needs of customers that wish to autonomously handle their investments and on-line trading.
In 2022, the Division achieved gross income of 1,555 million euro, down by 86 million euro (-5.2%) on the figure for the
previous year, which included the capital gain of 194 million euro realised on the sale of the business line related to the
activities of Custodian Bank of Fideuram Bank (Luxembourg), recorded under Other income. The operating margin increased
by 73 million euro (+4.9%), due to the growth in operating income (+80 million euro), only partly offset by higher operating
costs (+7 million euro). The trend in revenues is attributable to net interest income, which increased by 202 million euro
(+93.1%) in a scenario of rising interest rates, and, to a lesser extent, to profits (losses) on financial assets and liabilities
designated at fair value (+4 million euro). In contrast, net fee and commission income (-116 million euro) was penalised by the
unfavourable climate in the financial markets, which affected assets under management and performance, and other net
operating income was also down (-10 million euro). The Division closed 2022 with net income of 1,034 million euro, down by
3.9% compared to 2021.
Report on operations - Breakdown of consolidated results by business area and geographical area
152
The values of assets gathered have been recognised in accordance with the reporting criteria for indirect customer deposits
used in the Intesa Sanpaolo Group's consolidated financial statements, involving in particular the elimination of customer
current accounts correlated with investment transactions, bonds and certificates that, despite being part of customers' assets,
are already included in direct customer deposits. In addition, third-party products were reallocated from assets under
management to assets under administration.
As at 31 December 2022, assets gathered, which also include the contribution of the trust mandates for SIREF Fiduciaria,
amounted to 272.5 billion euro (-21.4 billion euro since the beginning of the year). This trend was due to the market
performance that had a negative effect on assets, only partially offset by positive net inflows. The assets under management
component amounted to 150.1 billion euro (-16.7 billion euro).
In 2022, the following corporate transactions were carried out:
– the merger by incorporation of Intesa Sanpaolo Private Bank (Suisse) Morval into Reyl & Cie;
– the acquisition by Fideuram Bank (Luxembourg) of UBI Trustee;
– the partial demerger of IW Bank in favour of Fideuram – Intesa Sanpaolo Private Banking of a going concern composed of
banking relationships and banking assets;
– the partial demerger of Fideuram – Intesa Sanpaolo Private Banking in favour of Intesa Sanpaolo of assets composed of
performing mortgages and the related funding and personnel;
– the transformation of IW Bank into an investment company (Società di Intermediazione Mobiliare);
– the acquisition by Fideuram – Intesa Sanpaolo Private Banking of an investment of 14.9% in the share capital of Alpian, a
Swiss digital bank in the start-up phase, with registered offices in Geneva, in which Reyl & Cie already had a stake;
– the sale of the investment in Morval Vonwiller Advisors;
– the acquisition by Fideuram Bank (Luxembourg) of Compagnie de Banque Privée Quilvest S.A.;
– the merger by incorporation of Sanpaolo Invest SIM into Fideuram – Intesa Sanpaolo Private Banking with retention of the
Sanpaolo Invest distribution network.
Report on operations - Breakdown of consolidated results by business area and geographical area
153
Generating new inflows of assets and managing them, using a network of financial advisors and in-
house private bankers serving a customer base with high savings potential.
Taking care of customers’ well-being and protecting all of their assets through top notch advisory
services.
A relationship based on listening, satisfaction and trust between the customer and the private
banker is what makes the business model of the Private Banking Division unique.
Dedicated to the production, management and distribution of financial products and services to
high profile customers, using a network of 4,951 Fideuram and Sanpaolo Invest financial advisors.
Bank dedicated to private customers (with over 1 million euro in financial assets), providing
financial services which are designed to preserve and increase wealth and provide continuity,
using a network of 939 in-house private bankers and 108 freelance bankers with agency contracts.
Company specialising in financial advisory and planning services for individuals and households,
with a distinctive commercial offering in trading. It operates using a network of 557 financial
advisors.
Swiss bank dedicated to developing international private customers, which operates through a
group of companies specialising in wealth management and private banking. It operates using a
total network of 52 private bankers.
Company specialised in the provision of fiduciary services.
Luxembourg bank which, following the acquisition of the Wealth Management and Private Banking
business line of Intesa Sanpaolo Bank Luxembourg, operates through a network of 8 private
bankers.
Luxembourg bank with branches in Belgium, which operates using a total network of 33 private
bankers.
Company that manages a wide range of mutual funds, individual portfolios and other investment
instruments for private and institutional investors.
Company that manages Luxembourg and Italian mutual funds and products designed by the
Group’s insurance companies.
Network of 261 branches in Italy, 7 branches abroad and 6,648 financial advisors.
IW Private Investments
(Italy)
Reyl & Cie
(Switzerland)
SIREF Fiduciaria
(Italy)
Fideuram Bank
(Luxembourg)
Business
Mission
Organisational structure
Fideuram
(Italy)
Intesa Sanpaolo
Private Banking
(Italy)
Distribution structure
Compagnie de Banque
Privée Quilvest
(Luxembourg)
Fideuram Asset
Management
(Italy)
Fideuram Asset
Management
(Ireland)
Report on operations - Breakdown of consolidated results by business area and geographical area
154
Asset Management
(millions of euro)
Income statement
2022
2021
Changes
amount
%
Net interest income
-
-1
-1
Net fee and commission income
913
1,282
-369
-28.8
Income from insurance business
-
-
-
-
Profits (Losses) on financial assets and liabilities designated at fair value
-21
-4
17
Other operating income (expenses)
70
67
3
4.5
Operating income
962
1,344
-382
-28.4
Personnel expenses
-110
-120
-10
-8.3
Other administrative expenses
-106
-112
-6
-5.4
Adjustments to property, equipment and intangible assets
-6
-7
-1
-14.3
Operating costs
-222
-239
-17
-7.1
Operating margin
740
1,105
-365
-33.0
Net adjustments to loans
-
-
-
-
Other net provisions and net impairment losses on other assets
-
1
-1
Other income (expenses)
-
-
-
-
Income (Loss) from discontinued operations
-
-
-
-
Gross income (loss)
740
1,106
-366
-33.1
Taxes on income
-184
-297
-113
-38.0
Charges (net of tax) for integration and exit incentives
-1
-8
-7
-87.5
Effect of purchase price allocation (net of tax)
-4
-4
-
-
Levies and other charges concerning the banking industry (net of tax)
-
-
-
-
Impairment (net of tax) of goodwill and other intangible assets
-
-
-
-
Minority interests
-1
-10
-9
-90.0
Net income (loss)
550
787
-237
-30.1
(millions of euro)
31.12.2022
31.12.2021
Changes
amount
%
Assets under management
303,829
354,048
-50,219
-14.2
Risk-weighted assets
1,798
1,836
-38
-2.1
Absorbed capital
181
196
-15
-7.7
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents and discontinued
operations.
The Asset Management Division pursues the mission of developing the best asset management solutions aimed at the
Group's customers and its presence on the open market segment through the subsidiary Eurizon Capital SGR and its
subsidiaries.
Operating income for 2022, amounting to 962 million euro, was down by 28.4% on the previous year, due to the performance
of net fee and commission income (-369 million euro), which was impacted by the decrease in performance fees collected
during the period and, to a lesser extent, in management fees related to the decrease in assets managed and placement.
Within the other revenue components, the Chinese subsidiary Penghua, consolidated at equity, provided a positive
contribution to operating income of 69 million euro, which was 4 million euro higher than in the previous year, while the
contribution from the fair value measurement of the financial portfolio in which cash and cash equivalents of the Division ar e
invested was -21 million euro (-4 million euro in 2021). The performance of operating costs (-7.1%) is mainly attributable to
the reduction in personnel expenses and administrative expenses, attributable to the effects of the synergies deriving from the
integration with Pramerica finalised at the end of June 2021. As a result of the above revenue and cost trends, the operating
margin came to 740 million euro, down 33% on the previous year. The Division closed 2022 with net income of 550 million
euro (-30.1%).
As at 31 December 2022, assets managed by the Asset Management Division amounted to nearly 304 billion euro, down by
50.2 billion euro (-14.2%) compared to the beginning of the year. This trend is attributable to the impairment of assets
managed relating to the negative performance of the markets, in addition to net outflows (-4 billion euro), attributable to
mutual funds (‐4.3 billion euro) and portfolio management schemes for retail and private customers (-0.9 billion euro), only
partially offset by overall positive net flows on products dedicated to institutional customers and insurance/pension products
Report on operations - Breakdown of consolidated results by business area and geographical area
155
(+1.2 billion euro).
As at 31 December 2022, Eurizon Capital’s Italian market share of assets under management was 17.1% (gross of
duplications). Excluding the closed-end funds segment, in which the company has a limited presence, the share of assets
under management at the end of December rose to 17.8%.
Report on operations - Breakdown of consolidated results by business area and geographical area
156
Asset management.
To provide collective (UCI) and individual asset management products to the Group’s internal
banking networks and develop its presence on the open market through specific distribution
agreements with other networks and institutional investors.
Specialised in active asset management on behalf of both retail customers (mutual funds and
portfolio management schemes) and institutional customers, to which it offers a wide range of
investment products and services.
Specialised in portfolio management on quantitative bases. It is a 100% subsidiary of Eurizon
Capital SGR.
Specialised in alternative investments. It is controlled by Eurizon Capital SGR, which holds 51% of
the voting right and 20% of the company’s share capital, and an investee of Intesa Sanpaolo Vita
(40% of capital) and the Poste Italiane Group (40% of the capital).
The company manages and distributes Luxembourg UCI products aimed at retail and institutional
customers and offers a wide range of services dedicated to institutional investors. It specialises in
limited tracking error (LTE) management, factor-based and money market products. It is a 100%
subsidiary of Eurizon Capital SGR.
A company wholly owned by Eurizon Capital SGR, established to develop consulting activities on
financial instruments, portfolio management and distribution in the Asian market.
A Slovak asset management company, 100%-owned by Eurizon Capital SGR, which heads up
Eurizon Asset Management Hungary and Eurizon Asset Management Croatia d.o.o. (Eastern
European asset management hub). It promotes and manages Slovak mutual funds targeted to the
local market.
A Croatian asset management company and wholly owned subsidiary of the Slovak company
Eurizon Asset Management Slovakia. It promotes and manages Croatian mutual funds and offers
individual portfolio management services to retail and institutional customers.
A Hungarian asset management company and wholly owned subsidiary of the Slovak company
Eurizon Asset Management Slovakia. It promotes and manages Hungarian mutual funds and
offers individual portfolio management services to retail and institutional customers.
An English company controlled by Eurizon Capital SGR through a 65% interest, which conducts
research and provides investment and advisory services.
Chinese fund manager 49%-owned by Eurizon Capital SGR.
Business
Mission
Organisational structure
Eurizon Capital SGR
(Italy)
Epsilon SGR
(Italy)
Eurizon Capital
Real Asset SGR
(Italy)
Eurizon Capital S.A.
(Luxembourg)
Eurizon Capital Asia Limited
(Hong Kong)
Eurizon Asset Management
Slovakia
(Slovakia)
Eurizon Asset Management
Croatia d.o.o.
(Croatia)
Eurizon Asset Management
Hungary
(Hungary)
Eurizon SLJ Capital
(England)
Penghua Fund Management
Company Limited
(China)
Report on operations - Breakdown of consolidated results by business area and geographical area
157
Insurance
(millions of euro)
Income statement
2022
2021
Changes
amount
%
Net interest income
-
-
-
-
Net fee and commission income
3
2
1
50.0
Income from insurance business
1,616
1,586
30
1.9
Profits (Losses) on financial assets and liabilities designated at fair value
-
-
-
-
Other operating income (expenses)
-12
-16
-4
-25.0
Operating income
1,607
1,572
35
2.2
Personnel expenses
-148
-142
6
4.2
Other administrative expenses
-217
-240
-23
-9.6
Adjustments to property, equipment and intangible assets
-20
-20
-
-
Operating costs
-385
-402
-17
-4.2
Operating margin
1,222
1,170
52
4.4
Net adjustments to loans
-
-
-
-
Other net provisions and net impairment losses on other assets
90
-335
425
Other income (expenses)
8
-
8
-
Income (Loss) from discontinued operations
-
-
-
-
Gross income (loss)
1,320
835
485
58.1
Taxes on income
-347
-210
137
65.2
Charges (net of tax) for integration and exit incentives
-14
-42
-28
-67
Effect of purchase price allocation (net of tax)
-65
-52
13
25.0
Levies and other charges concerning the banking industry (net of tax)
-
-
-
-
Impairment (net of tax) of goodwill and other intangible assets
-
-
-
-
Minority interests
-24
181
-205
Net income (loss)
870
712
158
22.2
(millions of euro)
31.12.2022
31.12.2021
Changes
amount
%
Direct deposits from insurance business
(1)
173,600
204,481
-30,881
-15.1
Risk-weighted assets
-
-
-
-
Absorbed capital
5,096
4,137
959
23.2
(1) Including the subordinated securities issued by the companies.
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents and discontinued
operations.
The Insurance Division includes Intesa Sanpaolo Vita, Intesa Sanpaolo Life, Fideuram Vita, Intesa Sanpaolo Assicura
(which absorbed Cargeas Assicurazioni from 1 October 2022) and Intesa Sanpaolo RBM Salute, with the mission of
synergically developing the insurance product mix targeting Group customers. The scope of the Insurance Division also
includes Intesa Sanpaolo Insurance Agency.
In 2022, the Division reported income from insurance business of 1,616 million euro, up (+1.9%, equal to +30 million euro) on
the previous year. This trend is attributable to the increase in the technical margin, in both the life business and the non-life
business, which more than offset the reduction in the net investment result. Gross income, amounting to 1,320 million euro,
showed strong growth (+58.1%), due to the increase in operating income, the reduction in operating costs, notably
administrative expenses, and the performance of other net provisions that registered releases of 90 million euro in 2022; in
contrast, significant provisions were made in 2021, which included 295 million euro representing the claims in excess of
premiums accrued and the estimated future charges also generated as a result of the greater use of benefits by insured
persons on conclusion of the long periods of lockdown.
The cost/income ratio, at 24%, remained at very good levels, lower than those recorded in the previous year.
Lastly, net income came to 870 million euro (+22.2%) after the attribution of taxes of 347 million euro, charges for integration
and exit incentives of 14 million euro, effects of purchase price allocation for 65 million euro (up on the same period of
comparison due to the effects of the acquisition of the insurance companies of the former UBI Banca Group) and the minority-
Report on operations - Breakdown of consolidated results by business area and geographical area
158
interest share of net income of 24 million euro. With regard to this last caption, in 2021 it incorporated the attribution by
convention of the net income pertaining to the insurance companies of the former UBI Group.
Direct deposits from insurance business, equal to 173.6 billion euro, decreased (-15.1%, equal to -30.9 billion euro) on the
beginning of the year, attributable to both financial liabilities designated at fair value, comprised of unit-linked products, and
technical reserves, notably in the life business.
The Division’s collected premiums for life policies and pension products, amounting to 16.2 billion euro, decreased by around
14% compared to the previous year, due to unit-linked products (-41%), as a result of the uncertainty on the financial markets.
In contrast, the collected premiums for traditional products increased (+39%), including the Class I component of multi-line
policies, due to the placement in the fourth quarter of the Class I credit line dedicated to senior customers. Pension products
recorded an increase of 1%.
Collected premiums for the protection business totalled 1.4 billion euro, up slightly on 2021 (around +2%). Premiums in the
non-motor business (excluding CPI – Credit Protection Insurance) rose by 7%, mainly driven by the Business and Accident
Lines of Business (LoB) (+25% and +24%, respectively), against a decrease in the other components (motor and credit-
related).
Report on operations - Breakdown of consolidated results by business area and geographical area
159
Life and Non-Life Insurance.
Develop the offering of insurance products for the Group's customers.
Insurance parent company specialised in offering insurance, pension and personal and asset
protection services within Banca dei Territori. The company is the sole owner of Intesa Sanpaolo
Life, Intesa Sanpaolo Assicura and Intesa Sanpaolo Insurance Agency and has a 73.8% interest
in Intesa Sanpaolo RBM Salute. Lastly, it holds 40% of Eurizon Capital Real Asset SGR, a
company operational since 31 December 2019, controlled by Eurizon Capital SGR (Asset
Management Division), which holds 51% of the voting rights and 20% of the capital.
Specialised in life insurance products with a higher financial content, such as unit-linked products.
Specialised in offering insurance, pension and personal and asset protection products in service of
the Private Banking Division.
Dedicated to the non-life business, it offers customers a wide range of products capable of
covering personal injury, damage to vehicles and to the home and loan protection.
Specialised in the health care business.
Agency that performs insurance mediation activities of both life and non-life products.
Intesa Sanpaolo Life
Organisational structure
Intesa Sanpaolo Vita
Business
Mission
Fideuram Vita
Intesa Sanpaolo RBM Salute
Intesa Sanpaolo Assicura
Intesa Sanpaolo Insurance
Agency
Report on operations - Breakdown of consolidated results by business area and geographical area
160
Corporate Centre
The Corporate Centre is responsible for guidance, coordination and control of the whole Group, as well as for the NPE
Department, Treasury and Strategic ALM.
The Corporate Centre Departments generated an operating margin of 580 million euro in 2022, compared to -461 million euro
in the previous year. That performance is essentially attributable to the growth in operating income, specifically in the
component of net interest income, mainly relating to the elimination of the cost of excess liquidity as a result of the rise in
interest rates in the second half of 2022. Operating costs recorded a decrease, attributable to synergies on administrative
expenses. Gross income amounted to 609 million euro compared to a loss of 1,924 million euro in 2021, which included
significant net adjustments to loans (net recoveries in 2022), lower other income and higher net provisions. In 2022, net
income came to 244 million euro compared to -1,416 million euro in the previous year. The income statement of the Corporate
Centre includes almost all of the charges imposed by legislative provisions and/or aimed at maintaining the stability of the
banking industry and consequently outside the company management, essentially related to the resolution funds. These
charges amounted - after tax - to 301 million euro, compared with 281 million euro in 2021.
Treasury services
The Group Treasury and Finance includes treasury services in euro and foreign currencies, and the integrated management
of liquidity requirements/surpluses, financial risks (ALM) and settlement risks.
In 2022, Intesa Sanpaolo confirmed its systemic role as a “critical participant” in the ECB’s settlement systems (Target2 for
cash and Target2 Securities for securities), keeping its domestic and European market shares stable.
After the slowdowns in the last two years due to the pandemic, 2022 was a very important year for all the project activities
related to the creation of the new European settlement platform for “Target Services”. The technical migration of the T2S
Service to the new platform was completed. Specifically, the go-live of the new ancillary EBA Clearing CGS (Continuous
Gross Settlement) system for settling SEPA credit transfers was completed in July; the testing and training phase of the
Consolidation for the T2 Service continued; and software development continued for the ECMS (centralised management of
collateral), the last of the “Target Services” in the ECB’s new centralised platform.
The year 2022 was characterised by the end of the extraordinary situation attributable to the pandemic and by Russia’s
invasion of Ukraine in the early months of the year. The sudden and partially unexpected rise of inflation, which reached an
annual figure above 10% in Europe, forced the European Central Bank to accelerate the normalisation of its monetary policy.
After the completion of the Pandemic Emergency Purchase Programme (PEPP) in March and the Asset Purchase
Programme (APP) at the end of June, the ECB accelerated the increases in the official rates. The first increase of 50 basis
points in July, which ended the season of negative interest rates, was followed by two increases of 75 basis points in the
September and October meetings and another increase of 50 basis points in December, resulting in a cumulative increase of
250 basis points in less than six months. A new interest rate increase of 50 basis points was decided on 2 February 2023.
The markets suffered from significant volatility and the key interest rates for the money market rose sharply (the 1-year
Euribor rose from -0.501% at the end of 2021 to over 3.25% at the end of December 2022) as well as the cost curves of the
Bank’s funds, although there was only a marginal widening in terms of credit spread.
Intesa Sanpaolo has maintained a solid liquidity position and, despite the considerable uncertainty in the markets, has alwa ys
shown stability in relation to outstanding short-term securities funding.
In the United States, the Federal Reserve began to raise interest rates to combat inflation, which was much higher than
forecast in 2021. In the Central Bank’s seven meetings, the rates rose, starting from March, by 425 basis points, reaching the
range of 4.25% to 4.50% at the end of the year. However, liquidity on the dollar market remained abundant throughout the
year, without significant consequences linked to the outbreak of the Russian-Ukrainian conflict.
With regard to funding, in 2022, the total amount of the Group’s medium/long-term issues placed on the domestic market, via
its own networks and direct listings, was 12 billion euro, of which 7.7 billion euro in certificates and 4.3 billion euro in issues
placed through the Private Banking Division. Among the securities placed, there was a prevalence of the component
consisting of structured financial instruments (62%), mainly comprised of index-linked structures. A breakdown by average
maturity shows that 60% is comprised of instruments with maturities up to 5 years, 22% of 6- and 7-year securities, and the
remaining 18% of 8- and 10-year securities. The bonds placed through the Private Banking Division amounted to 4.33 billion
euro overall – as noted above. In detail, the following bonds were placed: 2.79 billion euro of fixed-rate and floating-rate
senior preferred bonds with a maturity of 2 to 5 years, 862 million euro of T2 bonds with a maturity of 10 years in June and
677 million euro of T2 bonds with a maturity of 10 years in October. The T2 bonds are reserved for professional customers
and eligible counterparties.
A total of 5.8 billion euro in unsecured institutional funding transactions were placed during the year.
A public issue of 1 billion euro of AT1 securities was carried out in March. This comprises fixed-rate subordinated instruments
with a perpetual term, redeemable in advance by the issuer starting from the tenth year (and at each subsequent interest
payment date). Based on the contractual terms, payment of interest is at the issuer’s total discretion (though subject to
several regulatory restrictions). Moreover, where the Common Equity Tier 1 (CET1) ratio of the Group or of Intesa Sanpaolo
falls below 5.125%, the nominal value of the instruments will be temporarily reduced by the amount needed to restore the
trigger level (5.125% of CET1), taking into account also the other instruments with similar characteristics.
A public fixed-rate senior non-preferred issue for 1 billion euro with 5-year maturity was finalised in September. The security is
a “Green” security, for the purpose of funding all green projects in line with the Green Bond & Sustainability Framework:
“Renewable Energy”, “Energy Efficiency”, “Green Buildings”, “Clean Transportation” and “Circular Economy”. Moreover, also
in September, a public transaction targeted to the UK market was finalised. This is a fixed-rate subordinated T2 issue of
400 million GBP (equal to around 460 million euro) with 10-year maturity.
Report on operations - Breakdown of consolidated results by business area and geographical area
161
The first public issue of a social bond was completed in October. This consists of an issue of a fixed-rate senior preferred
bond for 750 million euro with maturity of January 2030. The proceeds from the issue will be used to fund loans that come
under the eligible Social categories established in the Green, Social & Sustainability Bond Framework of June 2022: “Access
to Essential Services”, “Socioeconomic Advancement and Empowerment”, “Employment generation and programmes
designed to prevent and/or alleviate unemployment stemming from crises” and “Affordable Housing”.
An issue aimed at the US market was completed in November. This is a fixed-rate bond for a total amount of 2 billion USD
(equal to 1.936 billion euro) issued in two tranches: senior preferred of 750 million USD with 3-year maturity and senior non-
preferred of 1.250 billion USD with 11-year maturity redeemable in advance in the tenth year.
Lastly, private placements were made in EUR, JPY, RON and AUD for a total value of 250 million euro.
With regard to the Covered Bond issue programmes, as part of the programme guaranteed by ISP CB Pubblico, the 10th
retained series was decreased by 100 million euro in January and was redeemed in full in advance for 150 million euro in
June. In June, the 12th series was partially extinguished for an amount of 225 million euro, bringing the remaining nominal
amount to 1.050 billion euro.
Under the covered bond programme guaranteed by ISP CB Ipotecario, the 17th series matured in January for an amount of
1 billion euro. In February, the 28th series was issued for an amount of 1 billion euro. The security is a floating rate, 7-year
security listed on the Luxembourg Stock Exchange with an Aa3 rating from Moody’s, was fully subscribed by the Parent
Company and is eligible for the Eurosystem. The 13th series matured in December for an amount of 1.250 billion euro.
In March, the subsidiary VUB Banka carried out an issuance of covered bonds. These are fixed-rate securities for an amount
of 500 million euro, with 5-year maturity.
As part of the programme guaranteed by ISP OBG, the 47th retained series was issued in September, for an amount of
10 million euro. The security is a floating rate, 30-year security listed on the Luxembourg Stock Exchange with an A (high)
rating from DBRS, was fully subscribed by the Parent Company and is eligible for the Eurosystem.
Lastly, with regard to the programme guaranteed by UBI Finance, the 30th series was decreased by 200 million euro in
January and fully extinguished in advance in February, for 100 million euro. In April, the 3rd series was fully paid off, for the
remaining 11.3 million euro outstanding. In May, the 29th series was extinguished in advance, for a total of 600 million euro.
Also in May, the 28th series was partially extinguished for an amount of 100 million euro, subsequently for an amount of
175 million euro in September, then for an amount of 100 million euro in October and finally for an amount of 125 million euro
in November, bringing the remaining nominal amount to 200 million euro.
A retained securitisation was structured in December. This is the third securitisation on a portfolio of loans disbursed to
companies belonging to the small business, SME and Corporate segment, relating to both unsecured loans and loans backed
by mortgage collateral. The vehicle company Giada Sec issued two classes of securities for a total of 15.2 billion euro, full y
subscribed by Intesa Sanpaolo. Only the senior class, amounting to 10.25 billion euro, with an A rating from DBRS and A1
from Moody’s, was made eligible with the Eurosystem.
For the management of collateral, Intesa Sanpaolo also uses the A.Ba.Co. (Collateralised Bank Assets) procedure, which
allows bank loans disbursed to non-financial companies to be used to secure loan transactions with the Bank of Italy: at
31 December 2022 the amount outstanding, gross of the haircuts applicable to loans lodged as pledge by the Group,
amounted to 17.7 billion euro.
During the first half of 2022, the expected attenuation of the effects of the pandemic gave way to the unexpected war in
Eastern Europe. Due to the inflationary scenario inflamed by the acceleration of commodities prices, Central Banks focused
on gradually reducing monetary stimulus measures, which triggered volatility on the credit markets. During the first half of the
year, portfolio turnover was aimed to reduce the core government component, which reached extremely high levels of
spreads, below those of swap rates; the Italy component was dynamically managed nearing the election of the President of
the Republic and subsequently kept below the investment limits. The non-government component maintained low exposure to
the corporate market, due to the market uncertainties and the expected reductions in quantitative stimulus by the ECB. In the
second half of the year, the persistent inflationary pressures continued to push interest rates upwards, despite a temporary
decrease in July. The expected tightening of monetary policy from the main Central Banks continued to weigh on all risky
assets, while Italian debt suffered also due to the early end of the current government. Portfolio turnover was aimed at
reducing the Italian government component and some components in the non-government portfolio, in order to compress the
use of capital and reduce the risk profile of the portfolios in a phase of growing uncertainty and volatility. In the repo business,
Italian government bond volumes were significantly higher than in the previous year, while interest rates were lower than the
depo facility rate.
The spread between core nation and Italian government bond rates steadily widened during the year.
Strategic ALM
With regard to the Group’s Asset & Liability Management (ALM), operational management of the financial risks of the Group’s
banking book is carried out by Group Treasury and Finance under the supervision of the CRO Area. Interest rate risk is
monitored and managed by examining the sensitivity of the market value of the various positions in the banking book to
parallel shifts in the interest rate curve and the sensitivity of net interest income to the market views; moreover, specific
scenario analysis techniques on rate developments are used, as well as performance scenarios for specific positions. The
strategic choices on interest rate risk are made by the Group Financial Risk Committee, Asset & Liability Committee - ALCO
session, within the limits established by the Board of Directors: the Group Treasury & Finance structure plays an instrumental
role in the active management of interest rate risk within the limits assigned and supports the Committee’s decision-making
activity by formulating analyses and proposals. The structural component of liquidity risk is managed, based on the liquidity
policies defined at Group level, as part of the Group’s funding plan, which monitors the current and future short and long-term
liquidity balances, defining the funding plan on the various channels and instruments (domestic/international, retail/corporate,
secured/unsecured, preferred/non preferred/subordinate). The funding plan optimises the various forms of funding in
compliance with the liquidity indicators (LCR, NSFR and the other RAF indicators), the rating targets, the various regulatory
Report on operations - Breakdown of consolidated results by business area and geographical area
162
capital buckets and the MREL buffers, in line with the loan-deposit targets of the Business Units. The structural component of
foreign exchange risk is managed, based on the policies on the matter defined at Group level, by monitoring th e Group’s
overall position, also with a view to optimising the capital ratios.
Chief IT, Digital and Innovation Officer Governance Area
Under the new 2022-25 Business Plan, as part of the broader objective of building “a strong bank for a sustainable world”, the
Chief IT, Digital and Innovation Officer Governance Area is continuing the process – already started with the previous
business plan – of digitalisation, innovation and multi-channelling.
In 2022, the Area continuously evolved to increase the effectiveness of the digitalisation process through the progressive and
comprehensive overhaul of the IT platform and the development of processes, as well as efficiency improvements in the
operating model, the transition to the cloud, and the strengthening of IT security controls.
The project was launched for the creation of the new Digital Bank “Isybank”; the partnership was signed with the leading
fintech company Thought Machine enabling the use of cutting-edge, cloud-native technologies adaptable to multi-currency
and multi-country customers; the service model and the offering structure were defined, and the functionalities are being
developed that will enable Isybank (starting from 2023) to serve retail customers who do not normally use branches.
To provide effective support for the IT transformation process, the Area launched the New DSI programme (aimed at
transforming the IT operating model by aligning it with the best practices of the IT structures of digital players in the market)
and the Falcon programme (aimed at re-insourcing IT capabilities by hiring more than 1,800 resources over the period of the
plan). During the year, new ways of working were introduced, the transformation of the first pilot structures was carried out
and specific roles were introduced for the monitoring and development of capabilities (New DSI), with 504 hires, mainly aimed
at the Isybank project, in line with the planned schedule (Falcon).
As part of the agreement signed with TIM and Google for the migration of a significant p art of Intesa Sanpaolo’s information
system onto Google’s cloud services (which will meet the higher international standards of security and confidentiality of
information), the migration continued of the applications onto the Google Cloud Platform (to date 83 applications have been
migrated and 27 new applications have been created directly on the cloud), for which Italy’s Milan Region has been created
and the Turin Region is being completed, which will provide Italian households and businesses with secure and sustainable
access to the technological and economic advantages of cloud computing, making a key contribution to the acceleration of
Italy’s digitalisation. The development also continued of the Opening Future portal, a communication hub developed by the
Group in collaboration with Google Cloud and Noovle (cloud company of the TIM Group) aimed at increasing and spreading a
digital culture and building green IT in Italy.
The digital process transformation was initiated, using both Smart Process Automation and traditional re-engineering
methods. Specifically, in 2022, the analyses were started on the procurement processes, customer onboarding, hereditary
succession process management, bank account closing process and control management processes.
In the area of cybersecurity, anti-fraud protection was extended to include new products and services for retail customers,
including the use of Artificial Intelligence, and Open Source Intelligence solutions were adopted to enhance the cyber threat
intelligence capability. The protection of access to applications both on a remote basis and within corporate workstations has
been enhanced by enabling multi-factor authentication, while also improving the user experience through streamlined
processes.
In 2022, Intesa Sanpaolo’s ongoing commitment to innovation of the methods of interaction with customers continued,
releasing additional developments to further integrate the contact channels and improve the range and user experience. As a
result of these efforts, the Intesa Sanpaolo App was once more recognised by Forrester as “Overall Digital Experience
Leader”, ranking first among all the EMEA banking apps, and has been cited as best practice in various categories of the
banking apps rated in the world. The Intesa Sanpaolo Mobile App is used as a gateway by over 12 million multi-channel
customers, with around 1.5 billion logins and 146 million transactions a year, and supports the purchase of products and
services on the Group’s digital channels, which account for almost 40% of Banca dei Territori’s total sales.
For the Fideuram ISPPB customers, the migration to MyKey has been initiated, and within the Open Digital Bank – which
enables the expansion of the Bank’s product offering both with third-party products/services and through the sale of own
products/services on third-party channels – the second release of the SmartHub portal has been carried out, offering digitally
advanced customers a set of systems integrated with the Bank and a customised user experience, allowing them to automate
their administrative, operational and business processes, with high security standards, and to create new business. Intesa
Sanpaolo was recognised by Global Finance, an influential US magazine, as Outstanding Innovator in Open Banking for
SmartHub.
In addition, in the Business and Corporate area, the digitalisation was completed of the new Loan Granting process, which
enabled a stable and significant reduction in average approval times; the remote signing of contracts on Inbiz has become a
target process for Intesa Sanpaolo and consequently a routine tool in the bank-customer relationship, transforming Inbiz from
a transactional platform into a relationship portal and also generating positive ESG impacts (by cutting paper consumptio n
and reducing CO2 emissions associated with paper-based file management); the digital onboarding model was also extended
to the Head Office Global Corporate customers; and, in the area of payments, the scope of the new digital payment products
and services was expanded with a view to multi-channelling (activation of the Customer Journey for new Commercial Cards).
Lastly, new functionalities of Robo(4)Advisor by BlackRock were introduced on the BlackRock Aladdin platform (adopted in
2021) to generate investment advice on selected products (funds, insurance products and certificates) to support relationship
managers. The following investment services modules were adopted: Aladdin Wealth for BdT and Fideuram (first and second
releases), Aladdin Enterprise for FAM/FAMI, Luxembourg Eurizon Capital S.A., London Eurizon SLJ Capital, and Aladdin
Risk.
Within the International Subsidiary Bank Division, the new core banking system was introduced in Egypt and digital
functionalities and services were implemented in Serbia and Hungary.
As part of the measures envisaged by the developments in the regulatory framework, the multi-year initiative aimed at
improving the structure of anti-money laundering safeguards continued, reducing the Bank’s exposure to risks and aligning
the Group’s Anti Financial Crime model to international best practices. With a view to improving the effectiveness of the
Report on operations - Breakdown of consolidated results by business area and geographical area
163
analyses through specialist staff and uniform processes, the Competence Centre has been introduced to provide more
support to the Branches in Transaction Monitoring and Know Your Customers processes.
GEOGRAPHICAL AREAS
(millions of euro)
Italy
Europe
Rest of
the World
Total
Operating income
2022
16,716
3,819
935
21,470
2021 (Redetermined figures)
16,411
3,521
861
20,793
% change
1.9
8.5
8.6
3.3
Loans to customers
31.12.2022
365,428
63,173
18,253
446,854
31.12.2021
383,765
62,328
19,778
465,871
% change
-4.8
1.4
-7.7
-4.1
Direct deposits from banking business
31.12.2022
466,841
71,010
7,535
545,386
31.12.2021
480,993
68,136
8,119
557,248
% change
-2.9
4.2
-7.2
-2.1
Breakdown by geographical area is carried out with reference to the location of Group entities.
Figures restated, where necessary and material, considering the changes in the scope of consolidation and in business unit constituents and discontinued operations.
Redetermined figures have been prepared to take into account the reallocation, based on management data, of the contribution from the going concerns object of disposal to
income (loss) from discontinued operations, as part of the acquisition of the UBI Group, as well as the inclusion of the contribution of insurance companies Assicurazioni Vita
(formerly Aviva Vita), Lombarda Vita and Cargeas, net of the effects attributable to the branches object of disposal.
With regard to the subdivision by geographical areas of operations, carried out with regard to the location of the entities
comprising the Group, activities continued to be concentrated primarily in the Italian market. Italy accounted for 78% of
revenues, 82% of loans to customers and 86% of direct deposits from banking business.
With regard to operating performance in 2022, loans to customers and direct deposits from banking business were down in
Italy and in the rest of the world, but were up in Europe.
Revenues, on the other hand, increased in all the geographical areas: Italy, Europe and rest of the world.
For details on the Group’s presence in Italy and abroad, refer to the graphic representation at the beginning of this document
(The Intesa Sanpaolo Group: presence in Italy - international presence).
165
Corporate governance
and
remuneration policies
166
167
Corporate Governance and remuneration policies
Corporate Governance
Intesa Sanpaolo adheres to the Corporate Governance Code for listed companies, and adopts a one-tier corporate
governance system in line with the principles contained therein, as well as, in general, with national and international best
practices, which aim to ensure, also in accordance with the Supervisory Authority provisions, effective and transparent
distribution of the roles and responsibilities of its Corporate Bodies and a proper balance of strategic supervision,
management and control functions.
For a more detailed description of the corporate governance syst em, reference should be made to the “Report on Corporate
Governance and Ownership Structures” – available in the “Governance” section of the Company’s website – prepared in
accordance with Article 123-bis of the Consolidated Law on Finance, which requires issuers to provide the market yearly with
detailed information, identified by the said Article, on their ownership structures, their compliance with a corporate governance
code, their corporate bodies structure and operation as well as their corporate governance practices.
Shareholder base
According to records in the Shareholders’ Register and the most recent available information, shareholders with stakes
represented by shares with voting rights exceeding 3% of capital – threshold that, if exceeded, requires disclosure to both the
company and Consob
52
, pursuant to current Italian regulations (Article 120 of the Consolidated Law on Finance) – are shown
in the table below
53
.
Shareholder
Ordinary
shares
% held
Compagnia di San Paolo
1,188,947,304
6.261%
Fondazione Cariplo
961,333,900
5.063%
One-tier governance system
Intesa Sanpaolo adopts the one-tier governance system and therefore operates through a Board of Directors, within which
guidance and strategic supervision powers converge; the control functions are carried out by the Management Control
Committee, established within the Board of Directors, made up entirely of Independent Directors appointed by the
Shareholders' Meeting; the Managing Director and C EO supervises the company’s management to the extent of his assigned
powers, in compliance with the general planning and strategic guidelines set forth by the Board of Directors.
The practical application of the one-tier system to the Bank’s structure is marked by a clear division of roles and
responsibilities between the Governing Bodies:
– the Board of Directors of the Company is assigned the guidance and strategic supervision duties and the duty to resolve
on all the relevant corporate deeds;
– the internal Board Committees support the Board of Directors in carrying out its functions in order to facilitate the taking
of fully informed decisions;
– the Management Control Committee performs the powers and functions conferred by the current regulations upon the
body with the control function and upon the internal control and audit committee, pursuant to Legislative Decree 39/2010;
– the Managing Director and CEO performs the day-to-day management function, within the scope of the powers
delegated by the Board of Directors;
− the Managers support the Managing Director and CEO in performing the day-to-day management function as Managerial
Committees, in performing the tasks and powers assigned to them by the Board of Directors and detailed within the
scope of specific Regulations which govern the functioning thereof.
52
Pursuant to Article 119-bis, paragraph 7 of the Issuers’ Regulation, companies and licensed parties holding shares as assets under management may
use the exemption from the disclosure obligations if the managed shares are more than 3% and less than 5%.
53
The 2021 Annual Report also stated that (i) JP Morgan Chase & Co. had declared (Form 120 B) on 21 December 2021 that it held an aggregate
interest of 4.571%, of which only 0.963% was represented by voting rights attached to shares, and that (ii) BlackRock Inc. held a 5.005% interest in the
share capital of Intesa Sanpaolo, plus, as per Form 120 B of 4 December 2020, an aggregate investment of 5.066% as assets under management.
Report on operations – Corporate Governance and remuneration policies
168
The Shareholders’ Meeting
In the one-tier system adopted by the Bank, the ordinary Shareholders’ Meeting resolves, amongst other things, on:
− the approval of the financial statements and allocation of net income;
− the appointment, revocation and determination of remuneration with respect to the positions of Board Member, Chair and
Deputy Chair of the Board of Directors and Chair and members of the Management Control Committee;
− the approval of the Board Members' and personnel's remuneration policies, as well as the plans based on financial
instruments;
− the appointment of the statutory audit mandate and the determination of the relative fees, upon the reasoned proposal of
the Management Control Committee and, where the conditions are met, the revocation or amendment of said mandate,
upon consultation with the same Committee;
− the other matters entrusted to its authority by the current regulations or by the Articles of Association.
The Board of Directors, the Managing Director and the Board Committees
The Board of Directors is composed of a minimum of 15 up to a maximum of 19 members, including non-shareholders,
appointed by the Shareholders' Meeting on the basis of slates submitted by Shareholders. Board Members remain in office for
three financial years until the date of the next Shareholders' Meeting called to approve the financial statements and the
proposal for allocation of net income in accordance with Article 2364 of the Italian Civil Code and may be re-elected.
The Shareholders’ Meeting of Intesa Sanpaolo, held on 29 April 2022, set the number of members of the Board of Directors at
19 and appointed the Board of Directors for the 2022/2023/2024 financial years, electing as its Chair Gian Maria Gros-Pietro
and as its Deputy Chair Paolo Andrea Colombo. The election took place on the basis of slates of candidates meeting the
requirements established by law and by the Articles of Association.
The Board of Directors is responsible for corporate management: it may therefore undertake all transactions considered
necessary, useful or appropriate in achieving the corporate purpose, relating to both ordinary and extraordinary
administration. The Board has guidance and strategic supervision duties over the Company and the duty to pass resolutions
on all the most important corporate actions.
With regard to its corporate management duties, the Board of Directors, without prejudice to the powers reserved for it,
delegates to the Managing Director the necessary and appropriate powers to ensure consistency in day-to-day management,
in implementation of the guidelines decided by the same Board. The Board of Directors determines the content, limits and
methods of exercise of the powers granted to the Managing Director and CEO and establishes the methods whereby the
Board of Directors is to receive information concerning the delegated activity.
The Board of Directors' meeting held on 29 April 2022 appointed Carlo Messina as Managing Director, thereby granting him
the necessary and appropriate powers to ensure consistency with day-to-day management, in implementation of the
guidelines decided by the Board.
The Managing Director is the Chief Executive Officer and General Manager and supervises the company’s management to
the extent of his assigned powers, in compliance with the general planning and strategic guidelines set forth by the Board of
Directors. He determines and issues operational directives and is responsible for personnel management.
The Board of Directors has established four internal committees, the prerogatives and duties of which comply with the
provisions of the Articles of Association and the Supervisory regulations in force:
– Nomination Committee: it performs investigative and consulting functions to support the Board of Directors in the process
of appointment or co-option of the Board Members to ensure that the composition of the body, in terms of size and
professionalism, makes it possible to fulfil its duties efficiently, as part of the process for the appointment of members of
the Bodies of the main subsidiaries; the Committee also performs the other duties assigned to it pursuant to the law or by
the Board of Directors.
– Remuneration Committee: it proposes and advises on remuneration and incentive matters, thereby supporting the Board
of Directors, and performs the other duties assigned to it pursuant to the law or by the Board of Directors.
– Risks and Sustainability Committee: it supports the Board of Directors in the performance of strategic supervision
functions regarding risks, the internal control system and sustainability, and performs the other duties assigned to it
pursuant to the law or by the Board of Directors.
– Committee for Transactions with Related Parties: it carries out the tasks assigned to it by the rules on transactions with
related parties and associated entities; in particular, it issues its opinion on the transactions that fall within the scope of
application of the rules and of the internal regulations.
Report on operations – Corporate Governance and remuneration policies
169
The Management Control Committee
The Management Control Committee, established as part of the Board of Directors, consists of 5 members of the Board of
Directors elected by the Meeting of 29 April 2022, who appointed as its Chair Alberto Maria Pisani. All Committee members
meet the independence requirements defined by the Articles of Association.
The Management Control Committee performs the duties assigned by current legislation to the control body of a parent
company of a banking group heading a financial conglomerate and issuing listed shares and also operates as the Internal
Control and Audit Committee pursuant to Article 19, paragraph 2, letter c) of Legislative Decree no. 39/2010.
The Management Control Committee oversees, amongst other things:
– compliance with legal and regulatory provisions and the Articles of Association and the principles of correct management;
– the adequacy, efficiency and functionality of the company's organisational structure and administrative-accounting
system and its suitability to correctly represent the company operations;
– the adequacy, efficiency and functionality of the internal control system and risk management process.
The Committee may, after notifying the Chair of the Board of Directors, convene the Shareholders' Meeting whenever it
deems it necessary for the performance of its duties or if, during its activities, it detects objectionable facts of significant
severity and requiring urgent measures.
The operating structure
Divisions, Governance Areas and Head Office Departments reporting directly to the Managing Director and CEO
The Parent Company is divided into six Divisions, comprising business line aggregations with similar characteristics in terms
of products and services provided and in terms of regulatory framework, nine Governance Areas and one Head Office
Department in a direct reporting line to the Managing Director and CEO, which exercise guidance, coordination, control,
support and service functions at Group level, as detailed below.
– Divisions
o Banca dei Territori Division;
o IMI Corporate & Investment Banking Division;
o International Subsidiary Banks Division;
o Private Banking Division;
o Asset Management Division;
o Insurance Division.
– Governance Areas/Head Office Departments reporting directly to the Managing Director and CEO
o Chief Operating Officer Governance Area;
o Chief IT, Digital and Innovation Officer Governance Area;
o Chief Cost Management Officer Governance Area;
o Chief Lending Officer Governance Area;
o Chief Financial Officer Governance Area;
o Chief Risk Officer Governance Area;
o Chief Compliance Officer Governance Area;
o Chief Governance Officer Governance Area;
o Chief Institutional Affairs and External Communication Officer Governance Area;
o Strategic Support Head Office Department.
In addition to the aforesaid structures, the Chief Audit Officer reports directly to the Board of Directors to ensure his/her
necessary autonomy and independence.
The duties assigned to the Governance Areas and the Strategic Support Head Office Department are outlined below:
Chief Operating Officer (COO) Governance Area
The Chief Operating Officer (COO) Governance Area is responsible for:
– supporting the Managing Director and CEO in defining the Group's general policies within the scope of Human Resource
Development and Management, in line with the company's strategies and objectives, with a view to renewing and
creating value, as well as in compliance with current regulations;
– ensuring the remuneration governance process, supporting the Corporate Bodies in the definition and approval of the
Remuneration Policies, as envisaged by Intesa Sanpaolo Group's “Guidelines on Remuneration, Incentive s and
Identification of Risk Takers”, also ensuring, for the Group, the monitoring and governance of labour costs, in line with the
company's strategies and objectives;
– proposing to the Managing Director and CEO the definition and evolution of organisational models aimed at enhancing
the Group's organisational effectiveness and efficiency, in line with the company's strategies and objectives, ensuring
implementation thereof;
– ensuring, for the Group, the definition of the guidelines and policies relating to trade union affairs and welfare and their
implementation, in line with the company’s strategies and objectives and in compliance with current regulations;
– ensuring, for the Group, the definition of the guidelines and policies relating to corporate and physical security and their
implementation;
– encouraging people's development and training, improving the quality of corporate life, developing an inclusive and
attentive approach towards diversity, including through dedicated initiatives;
Report on operations – Corporate Governance and remuneration policies
170
– ensuring, for the Group, the monitoring of compliance risk with reference to the areas of Protection of Health and Safety
in the workplace, pursuant to Legislative Decree no. 81/2008 and Environmental Protection, pursuant to Legislative
Decree no. 152/2006.
Chief IT, Digital and Innovation Officer (CITDIO) Governance Area
The Chief IT, Digital and Innovation Officer (CITDIO) Governance Area is responsible for:
− supporting, in line with the Business Owners' requirements, the definition and development of innovation initiatives,
technologies and solutions;
− ensuring the implementation of the initiatives identified by the Business Owners in line with the objectives of the Business
Plan by directing actions within a logic of digital transformation and innovation;
− defining the Group's ICT strategy, policies and guidelines - including architectural, methodological and technological
standards -, in line with corporate objectives and priorities, and overseeing their implementation;
− overseeing the complexity of IT systems, operations and processes with a view to the continuous innovation of
technological solutions, in order to guarantee the Group's constant projection towards a dimension that is evolved and
consistent with digitalisation advances, in compliance with the expenditure and investment levels assigned;
− coordinating the definition and implementation of the data governance system to ensure a high level of quality and meet
regulatory and business requirements;
− ensuring, for the Group, the definition and implementation of the guidelines and policies on cybersecurity, IT security and
business continuity in line with the company's strategies and objectives and in compliance with current regulations;
− ensuring the information flows to the Corporate Bodies provided for by the Internal Control System and the governance
documents within the respective areas of responsibility.
Chief Cost Management Officer (CCMO) Governance Area
The Chief Cost Management Officer (CCMO) Governance Area is responsible for:
− consistently with corporate strategies and objectives, assisting the Corporate Bodies in defining guidelines and policies
on cost management, property, logistics and procurement of the Group;
− coordinating the implementation of guidelines and policies on cost management, property, logistics and procurement by
the relevant Group business units, also in the various corporate contexts;
− collaborating with the Chief Financial Officer Governance Area and the Chief IT Digital and Innovation Officer
Governance Area contributing to the definition of the investment initiatives promoted by the same CITDIO Area, by the
Divisions/Business Units and by the other Governance Areas, in line with the objectives of the Business Plan;
− ensuring, through the appropriate control methods, compliance with the guidelines and policies in the aforementioned
areas, ensuring, in accordance with the Business Plan, cost management results as well as the service levels offered
within the property, logistics and procurement scope.
Chief Lending Officer (CLO) Governance Area
The Chief Lending Officer (CLO) Governance Area is responsible for:
− making material lending decisions, directly or submitting them to the relevant bodies in relation to the assumption and
management of the Group's credit risks, authorising them directly within the scope of their responsibility, including
through compliance opinions;
− ensuring the proactive management of credit and guaranteeing the management and the monitoring of the Group's non-
performing loans, within the respective area of responsibility;
− ensuring the correct classification and valuation for financial reporting purposes of positions under its responsibility that
are classified as non-performing loans;
− managing the stocks and flows of bad loans managed within the Group;
− conceiving and managing transactions for the sale of individual NPE positions or portfolios, credit exposures and other
assets within scope, with the collaboration of other competent functions;
− performing monitoring and control on outsourced activities, including monitoring the performance KPIs of Outsourcers,
directly making decisions, or submitting them to the competent Bodies, regarding proposals exceeding the powers
delegated to the Outsourcers;
− contributing to the process of formulating the proposal of the Credit Strategies in the analysis of the impacts on the
granting of loans and their definition in relation to the relevant credit management variables, without prejudice to the
finalisation powers within the remit of the Chief Financial Officer Governance Are a;
− coordinating the implementation of Credit Policies by the relevant Group business units, also in the various corporate
contexts;
− analysing the evolution of the cost of credit within the Group, also taking into account the application of the aforesaid
Credit Strategies;
− allocating and validating the ratings to the relevant positions, also providing support in the definition of the rating
allocation processes and tools;
− defining the reference regulations on credit matters, the requirements for the development of credit instruments and
contributing to the formulation of the proposals for the assignment of credit granting and management powers, without
prejudice to the finalisation powers within the remit of the Chief Risk Officer Governance Area;
− promoting initiatives aimed at disseminating and developing a credit culture;
− ensuring, consistently with the guidelines of the Chief Risk Officer Governance Area and in compliance with the Credit
Policies, the first level systematic supervision of the relevant credit portfolio, identifying phenomena referring to specific
credit aggregates characterised by high levels of anomalies for which to activate the appropriate risk mitigation
measures.
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171
Chief Financial Officer (CFO) Governance Area
The Chief Financial Officer (CFO) Governance Area is responsible for:
− assisting the Corporate Bodies in defining, in accordance with the Group corporate strategies and objectives, the
guidelines and policies on administration and tax, planning and management control, treasury and finance, studies and
research, active management of the loan portfolio, relations with investors and rating agencies, and social and
environmental responsibility;
− coordinating the implementation of said guidelines and policies by the relevant Group business units, and in other
corporate areas as appropriate;
− overseeing Asset and Liability Management (ALM) activities, the management of the Treasury securities portfolio, the
Funding Plan, the integrated management of liquidity risks as well as financial and regulatory risks, ensuring the
satisfaction of funding requirements at Group level;
− defining the Group's future qualitative and quantitative objectives through strategic planning, budgeting, capital
management, internal assessment of capital adequacy and liquidity position (ICAAP/ILAAP), monitoring of the Recovery
and Resolution Plan and carrying out the continuous analysis of the economic and financial results;
− overseeing studies and research on investments, economy and markets;
− overseeing the Credit Portfolio Management at Group level, supporting the Divisions in the active management of credit
risk, with the aim of improving the risk-return profile of the loan portfolio in order to create value for shareholders, through
targeted credit strategies and participation in market operations on performing and non-performing loan portfolios;
− ensuring the management of communications and relations with investors, financial analysts and rating agencies and
overseeing Environmental, Social, Governance (ESG) and sustainability aspects within the Group, in particular with
regard to the related planning, management and reporting activities.
The Chief Financial Officer Governance Area also includes the Manager responsible for preparing the Company’s financial
reports, who ensures the accurate and timely presentation of income statement and balance sheet results of the Bank and of
the entire Group, as well as compliance with the relative accounting and supervisory obligations, performing quality control of
the processes governing administrative and financial reporting disclosures to the market, pursuant to the appropriate
regulations. The Area also ensures compliance with tax obligations.
Chief Risk Officer (CRO) Governance Area
The Chief Risk Officer (CRO) Governance Area is responsible for:
− governing the macro-process of definition, approval, control and implementation of the Group's Risk Appetite Framework
(RAF) with the support of the other corporate functions involved;
− consistent with corporate strategies and objectives, assisting the Bodies in defining and implementing risk management
guidelines and policies;
− coordinating the implementation of guidelines and policies on risk management by the relevant Group business units,
also in the various corporate contexts;
− measuring and controlling the Group’s exposure to the various types of risk, also verifying the implementation of the
guidelines and policies mentioned in the above paragraph;
− performing level II monitoring and controls on credit quality, the composition and evolution of the various loan portfolios
and the proper classification and measurement of individual exposures (“single name” controls);
− performing level II monitoring and controls to monitor non-credit risks;
− continuously and iteratively validating risk measurement and management systems – used both to calculate capital
requirements and for non-regulatory purposes, to assess their compliance with regulatory provisions, company
operational needs and reference market demands and to manage the internal validation process at Group level.
Chief Compliance Officer (CCO) Governance Area
The Chief Compliance Officer (CCO) Governance Area is responsible for:
− ensuring monitoring of the Group regulatory compliance risk, including conduct risk, both with regard to the operational
risk component and the reputational risk, also through the implementation of a graduated compliance model for the
regulations encompassing specific forms of specialized supervision;
− defining, in line with corporate strategies and objectives, guidelines and policies regarding compliance with the Group
standards, integrating the compliance risk assessment and management model within the Risk Appetite Framework;
− coordinating the implementation of guidelines and policies on compliance with regulations by the relevant Group
business units, and in the various corporate departments;
− collaborating with the other corporate control functions in order to achieve effective integration of the risk management
process;
− managing relations with the Corporate Bodies and Supervisory Authorities on compliance issues;
− ensuring, for the Group, the monitoring of compliance risk with reference to the area of Personal Data Protection,
pursuant to Legislative Decree no. 101/2018.
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172
Chief Governance Officer (CGO) Governance Area
The Chief Governance Officer (CGO) Governance Area is responsible for:
− ensuring assistance and advice to the Corporate Bodies in defining the strategies concerning extraordinary finance
transactions for the Group, in line with the corporate objectives;
− overseeing, closely with the Business Divisions, the analysis of the evolutionary trends of the domestic and international
markets of relevance to the Group, to identify potential targets and/or partnerships and/or extraordinary corporate
transactions in line with the Group's growth and/or rationalisation strategies;
− ensuring compliance with the guidelines and policies regarding the governance of the investment portfolio and the
achievement of results in line with the Business Plan, safeguarding the best protection of the Group's interests;
− ensuring assistance and legal advice to the Corporate Bodies of the Parent Company and to Top Management,
overseeing the proper implementation of corporate and supervisory regulations on the subject of governance and
institutional obligations at Group level;
− managing the activities associated with the functioning of all the Corporate Bodies and providing support for the related
processes;
− overseeing the legal risk at Group level, managing litigation and the related operational risk and defining, in these areas,
the guidelines through directives and instructions;
− providing legal advice and assistance to the Group's structures, following regulatory and case law literature, including at
European and international level, ensuring the correct regulatory framework of all new initiatives and supporting the
compliance function in the identification and interpretation for the purposes of managing the risk of non-compliance;
− ensuring the protection and enhancement of the cultural, archival and historical-artistic heritage of the Group, according
to programmatic guidelines that enhance its institutional profile.
Chief Institutional Affairs and External Communication Officer (CIAECO) Governance Area
The Chief Institutional Affairs and External Communication Officer (CIAECO) Governance Area is responsible for:
− promoting a coordinated, dynamic and result-oriented approach in the management of the Group's institutional and
external relations in order to support the growth and development of the Group's activities;
− overseeing the Group's institutional relations, promoting and directing relations with institutions, regulators and
supervisors, at the national, European and international level;
− overseeing external relations for the Group, promoting solid relations with stakeholders and reference partners and
national and international media;
− supporting the reputation and promoting the Group's image and identity by disseminating its ethical, social and cultural
values, in line with the company's mission.
Chief Audit Officer (CAO)
The Chief Audit Officer (CAO), who reports directly to the Board of Directors (and, on its behalf, to its Chair), functionall y
reporting to the Management Control Committee, without prejudice to the appropriate sharing of information with the
Managing Director and CEO, is responsible for:
– ensuring constant and independent auditing of the regular performance of the Bank and Group operations and processes
for the purpose of preventing or identifying any anomalous or risky conduct or situation, assessing the operations of the
internal control system and its adequacy in guaranteeing the effectiveness and efficiency of company processes,
safeguarding asset value and loss protection, and the reliability and completeness of accounting and management
reports, and the compliance of transactions with corporate governance policies and with internal and external
regulations;
– providing consultancy to the Group’s departments, also through participat ion in projects, for the purpose of adding value
and improving effectiveness of control, risk management, compliance and internal governance processes;
– ensuring supervision of the internal control system of the Group’s subsidiaries, also by exercising gove rnance of, and
guidance to, the respective Internal Audit functions;
– supporting corporate governance and ensuring that Top Management, the Corporate Bodies and the competent
Authorities (European Central Bank, Bank of Italy, Consob, etc.) promptly and systematically receive information on the
status of the control system and on the outcome of activities performed and on the progress of any corrective measures;
– supporting the “231 Model” Surveillance Body in ensuring constant and independent verification of the regular
performance of operations and processes, to prevent or detect anomalous and risky conduct or events, and in monitoring
the compliance and effectiveness of the rules in the 231 Model;
– ensuring the proper conduct of the internal process for managing whistleblowing reports.
The Strategic Support Head Office Department is responsible for:
– assisting the Managing Director and CEO in all his internal and external activities, including in the respective institutiona l
and representative areas;
– guaranteeing specialist support to the Managing Director and CEO by gathering, evaluating and reviewing the
documentation of strategic relevance and preparing technical analyses, including with reference to the activities of the
Bodies within the Board with a particular focus on the optimal operation of the Steering Committee;
– overseeing selected initiatives in Italy and abroad, assisting the Managing Director and CEO in extraordinary
transactions, in negotiations and in the most impactful corporate projects in which he is directly involved;
– supporting the Chair of the Steering Committee in the performance of his duties;
– coordinating specific interdivisional and interfunctional activities ensuring the coherence and development of synergies
with respect to the Group's strategic guidelines;
– facilitating relations with and between the Governance Areas and the Business Units in order to strengthen cooperation
mechanisms.
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Remuneration and incentive policies
Over the last few years, international bodies and regulators have paid increasing attention to the issue of remuneration across
different sectors, including, in particular, that of listed companies, banks and banking groups, as well as insurance, assets
under management and investment firms, with the aim of guiding operators towards the adoption of remuneration policies and
remuneration systems that are consistent with the principles – intensified following the economic and financial crisis –
governing the process for drawing up and approving the remuneration and incentive policies, the compensation structure and
their transparency.
The regulatory framework has undergone a significant evolution - which is still ongoing - both at the European level and at the
national level, in each of the above-mentioned sectors
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.
With reference to listed companies, Art. 123-ter of the Consolidated Law on Finance (“CLF”) provides for the obligation to
prepare and make available to the public a report on remuneration, divided into two sections (the first illustrating the
company’s policy in relation to remuneration and the procedures used for the adoption and implementation of this policy, the
second providing information on the remuneration paid), to be drawn up including the information set out in the Issuers’
Regulation, and to be submitted to the Shareholders’ Meeting resolution. Until 2019, the Shareholders’ Meeting was called
upon to issue its opinion with an advisory vote on the first section of the policy; in 2019, in implementation of the so-called
Shareholders’ Rights Directive II (Directive (EU) 2017/828), Article 123-ter of the CLF was amended thereby requiring, among
other things, that the Shareholders’ Meeting cast a binding vote on the first section of the repo rt and an advisory vote on the
second section. In 2020, the Issuers' Regulations - in the part relating to the report on remuneration policy and compensation
paid - was also amended in implementation of the Shareholders' Rights Directive, with the aim of enhancing transparency vis-
à-vis shareholders. Also in terms of the self-governance of listed companies, remuneration is regulated by the Corporate
Governance Code, which in January 2020 was superseded by the new “Corporate Governance Code”, applicable from the
first financial year after 31 December 2020.
In the banking sector, remuneration and incentive policies and practices are the subject of specific regulations at European
and national level. These regulations have changed significantly over time. More specifically, and among other things, in
implementation of the so-called CRD III (Directive 2010/76/EU) and taking into account the guidelines and criteria defined
internationally (including the principles and standards of the Financial Stability Board, the methodologies of the Basel
Committee on Banking Supervision, and the Guidelines issued by CEBS), the Bank of Italy, with a measure dated 30 March
2011, issued Supervisory Provisions containing a harmonised set of regulations of remuneration policies, systems and
practices in banks and banking groups, relating to the processing and control process, the remuneration structure and the
disclosure obligations to the public, thereby requiring, among other things, the approval of the remuneration and incentive
policies by the shareholders’ meeting, in order to achieve remuneration systems in line with the long-term corporate strategies
and objectives connected with company results, appropriately adjusted to take into account all risks, consistently with the
capital and liquidity levels required to fulfil the activities undertaken and, in any case, such as to avoid distorted incentives that
could lead to regulatory violations or excessive risk-taking for the bank and the system as a whole.
The Bank of Italy intervened once again in the matter with the two recommendations contained in the communications dated 2
March 2012 and 13 March 2013, highlighting in general the need for banks to establish a strategy that is aligned to the
objective of preserving the stability of the business, also from a forward-looking perspective, as well as maintaining the
conditions of capital adequacy and prudent management of liquidity risk. Subsequently, in 2014, the Supervisory Provisions
on remuneration policies and practices - contained in Bank of Italy Circular no. 285/2013 - were revised to implement the
regulations contained in the so-called CRD IV (Directive 2013/36/EU). In implementation of CRD IV, in 2014, the European
Commission issued the Regulatory Technical Standards (RTS) relating to qualitative and quantitative criteria for the
identification of categories of personnel whose professional activities have a material impact on the institution’s risk prof ile
(so-called "Risk Takers"). In December 2015, the EBA, based on the provisions contained in CRD IV, published the update of
the “Guidelines on sound remuneration policies”, drawn up by its predecessor CEBS, defining in detail the rules relating to t he
remuneration structure, remuneration policies and the related governance and implementation processes. The indications of
these Guidelines were implemented by the Bank of Italy which, in 2018, updated the regulations on remuneration policies and
practices referred to in Circular 285. Lastly, in 2019 CRD V (Directive 2019/878/EU) and Regulation (EU) 2019/876 (CRR II)
were issued. Following the adoption of CRD V, the EBA revised (i) the regulatory technical standards (RTS) on the criteria to
identify Risk Takers, which formed the basis for Commission Delegated Regulation (EU) 2021/923 published on 9 June 2021;
and (ii) the Guidelines on sound remuneration policies, publishing a new version in July 2021, applicable as of 31 December
2021. The Bank of Italy implemented CRD V and the essential contents of the new EBA Guidelines with the 37th update of
Circular 285/2013, published on 24 November 2021.
With regard to the insurance sector, ISVAP (now IVASS), with Regulation No. 39 of 9 June 2011, laid down the principles
regarding the decision-making processes, structure and disclosure obligations for the remuneration policies of insurance
companies. Regulation No. 39 was subsequently replaced by IVASS Regulation No. 38 of 3 July 2018 on the corporate
governance of insurance companies and groups, which implements the Solvency II Directive (Directive 2009/138/EC) and the
guidelines issued by the European Insurance and Occupational Pensions Authority (EIOPA) on the corporate governance
system, and incorporates the provisions of ISVAP Regulation No. 39 of 9 June 2011 concerning remuneration policies.
Furthermore, on 5 July 2018 IVASS sent a Letter to the market regarding the guidelines on the application of the principle of
proportionality in the corporate governance system.
With regard to the asset management sector, the provisions of the Joint Bank of Italy/Consob Regulation on remuneration
(issued pursuant to Article 6, paragraph 2-bis, of the Consolidated Law on Finance) – updated on 27 April 2017 to transpose
54
Please note that the regulatory framework described in this paragraph is up to date as at the date of approval of this document while the following
paragraphs refer to the provisions of the 2022 Group Remuneration and Incentive Policies approved by the Intesa Sanpaolo Shar eholders’ Meeting held
on 29 April 2022.
Report on operations – Corporate Governance and remuneration policies
174
the rules on remuneration and incentive policies and practices set out in Directive 2014/91/EU (UCITS V Directive) into Italian
law and included, from December 2019, in the Bank of Italy Regulation implementing Articles 4-undecies and 6, paragraph 1,
sub-paragraphs b) and c-bis) of the Consolidated Law on Finance – also apply to asset management companies belonging to
banking groups, differently according to whether or not the asset management company is classed as significant.
The aforementioned Regulation was last updated on 23 December 2022 and, on that occasion, its scope of application was
extended to investment firms and Directive (EU) 2019/2034 of 27 November 2019 on the prudential supervision of investment
firms was transposed. Directive 2019/2034 is accompanied by, among others, Commission Delegated Regulation (EU)
2021/2154, which sets out regulatory technical standards specifying the criteria to identify categories of staff whose
professional activities have a material impact on the risk profile of the investment firm (“risk takers”), effective as of 12
December 2021.
That being said, Intesa Sanpaolo has always extensively focused its attention on remuneration matters, on relative regulation
compliance and on maximum transparency to the market.
Procedures for adoption and implementation of the remuneration policies
The role of Corporate Bodies
The Shareholders’ Meeting
The Articles of Association require the Shareholders’ Meeting to approve the Board Members' and personnel's remuneration
policies, as well as the plans based on financial instruments.
In this context, it shall approve the criteria for determining the severance payments to be granted in the event of early
termination of the employment agreement or early termination of office, including the limits set for such payments as provide d
by the regulations currently in force and shall also determine, with the qualified majority threshold defined by the supervisory
regulations in force, a ratio between the variable and fixed individual remuneration of the personnel above the ratio of 1:1, but
in any case not exceeding the maximum established by the same regulations.
The Shareholders’ Meeting determines the remuneration for the members of the Board of Directors and the Management
Control Committee and the remuneration for the offices of Chair and Deputy Chair of the Board of Directors and Chair of the
Management Control Committee.
In addition, the Shareholders’ Meeting resolves with a non-binding vote on the annual disclosure of the remuneration paid
pursuant to Article 123-ter of the Consolidated Law on Finance.
The Board of Directors
The Board of Directors may determine, in addition to the fixed remuneration determined by the Shareholders' Meeting and in
compliance with the remuneration policies approved by the Shareholders' Meeting, the remuneration of the Board Members to
whom the Board itself assigns further special duties in compliance with the Articles of Association, including the office of
Managing Director and General Manager.
The Board of Directors is responsible for the drafting of the remuneration and incentive policy to be submitted to the
Shareholders' Meeting and the definition of the remuneration and incentive systems for persons for whom the supervisory
regulations require that this task be performed by the body with strategic supervision functions, including the identification of
parameters used to evaluate performance objectives and the definition of the variable remuneration deriving from the
application of said systems.
The Board of Directors is tasked with determining the remuneration due to the Manager responsible for preparing the
Company’s financial reports pursuant to Article 154-bis of Legislative Decree 58 of 24 February 1998, as well as to all other
Top Risk Takers of the Group and the higher-level Executives of the Corporate Control Functions, in accordance with the
provisions of the current legislation.
The Remuneration Committee
The Remuneration Committee was set up by the Board of Directors in order to support with all activities concerning
remuneration.
The Committee supports the Board of Directors in preparing proposals to submit to the Shareholders’ Meeting.
The Committee is responsible for formulating remuneration proposals for the Managing Director and CEO and for the
members of the Board of Directors to whom additional special offices are assigned pursuant to the Articles of Association, as
well as with regard to the remuneration systems for the Group Top Risk Takers and the higher-level Executives of the
Corporate Control Functions, also taking into account the proposal of the Risks and Sustainability Committee and the
Management Control Committee insofar as within its competence.
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175
The Risks and Sustainability Committee
Without prejudice to the responsibilities of the Remuneration Committee, the Risks and Sustainability Committee supports the
Board of Directors by analysing the Remuneration and Incentive Policies to verify their link with current and prospective ris ks
and the capital strength and levels of liquidity of the Group, with specific regard to the performance targets (KPIs) assigned by
the Incentive System to the Group Top Risk Takers not belonging to the Corporate Control Functions and similar roles
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.
In order to strengthen the independence of the Corporate Control Functions, the Risks and Sustainability Committee (together
with the Management Control Committee) expresses its opinion on the Incentive System for the Chief Risk Officer and the
Head of the Internal Validation and Controls Head Office Department.
The Management Control Committee
In order to strengthen the independence of the Corporate Control Functions, the Management Control Committee expresses
its opinion on the Incentive System for the Top Risk Takers belonging to the Company Control Functions, the higher-level
personnel and similar roles. This opinion is expressed in a joint meeting with the Risks and Sustainability Committee with
regard to the Incentive System for the Chief Risk Officer and the Head of the Internal Validation and Controls Head Office
Department.
The Chief Operating Officer and the Corporate Control Functions
As mentioned above, the Shareholders' Meeting is responsible for approving remuneration policies for employees upon
proposal of the Board of Directors and with the involvement of the Remuneration Committee.
The Chief Operating Officer is responsible for drawing up the aforementioned remuneration policies, that undergo the relative
approval procedure, involving the following, to the extent of their responsibilities, as envisaged by the Regulations:
– the Chief Risk Officer Governance Area, in order to ensure consistency of the remuneration policies and resulting
incentive systems with the Group’s Risk Appetite Framework (RAF);
– the Planning and Control Head Office Department, in order to ensure consistency of the remuneration policies and
resultant incentive systems with:
o the strategic short-and medium-long term objectives of the Companies and of the Group;
o the level of capitalisation and liquidity of the Companies and of the Group;
– the Chief Compliance Officer Governance Area, in order to verify compliance of the remuneration policies and resulting
incentive systems with rules, regulations, codes of ethics and standards of conduct applicable to the Group.
The Chief Audit Officer, in accordance with the guidelines of the Supervisory Authority, verifies compliance of the
remuneration implementation procedures with the relevant policies, informing the Board of Directors and the Shareholders'
Meeting on the results of the verifications conducted.
Remuneration of the members of the Board of Directors
Remuneration of Board Members
The Bank’s Articles of Association envisage that the members of the Board of Directors be entitled, in addition to the
reimbursement of expenses incurred due to their office, to a fixed remuneration for the services rendered, which is determined
for the entire period of their office by the Shareholders’ Meeting at the time of their appointment. Upon appointment, the
Shareholders’ Meeting also determines the supplementar y remuneration of the offices of Chair and Deputy Chair of the Board
of Directors.
An insurance policy for administrative liability is signed in favour of the members of the Board of Directors according to th e
terms submitted to the Shareholders’ Meeting.
Remuneration of the Managing Director and CEO
Pursuant to the Articles of Association, the Managing Director also acts as the General Manager of Intesa Sanpaolo.
The Managing Director and General Manager is entitled to receive a fixed and variable remuneration determined by the Board
of Directors in line with the remuneration policies approved by the Shareholders' Meeting.
The Board of Directors, upon the proposal of the Remuneration Committee, determined the remuneration of the Managing
Director. This amount is in addition to the amount due as a Board Member. The Managing Director, in his capacity as General
Manager, is entitled to receive the gross annual remuneration, the short and long-term incentive system and the
supplementary pension scheme, and to receive the additional fringe benefits for the position determined by the Board of
Directors in accordance with the Remuneration and Incentive Scheme Policies for employees.
Remuneration for participation in the Management Control Committee
Under the Articles of Association, the Shareholders’ Meeting is required, at the time of the appointment of the Management
Control Committee and for the entire term of office thereof, to set a specific remuneration for the Board Members of that
Committee, consisting exclusively of a fixed amount, which is equal for each Member and higher for the Chair.
Remuneration for participation in the other Board Committees
With regard to the work carried out by Board Members as members of the Board Committees, the Board of Directors,
pursuant to the Articles of Association, establishes an additional fixed remuneration for said Board Members, in line with th e
Remuneration and Incentive Policies approved by the Shareholders’ Meeting. The Board of Directors supplemented the
remuneration for the position of Board Member with an attendance fee in relation to the actual participation of the members in
the work of the Committees, with a further annual gross fixed remuneration for the Chairs of such Committees.
55
“Similar roles” to the Corporate Control Functions for the purposes of the Remuneration Discipline means the Manager responsible for preparing the
Company’s financial reports and, until November 2022, also the Head of the Safety and Protection Head Office Department in hi s capacity as Data
Protection Officer. As of December 2022, following an organisational change that saw the role of Data Protection Officer moved to the Chief Compliance
Officer Governance Area, the only role similar to the Corporate Control Functions is the Manager responsible for preparing th e Company’s financial
reports.
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176
Remuneration policy for employees and staff not bound by an employment agreement
The remuneration policies of the Intesa Sanpaolo Group are based on the following principles:
a) alignment of the conduct held by management and personnel to the interests of all Stakeholders, with a focus on creating
value for Shareholders, as well as on the social impact generated on the Communities;
b) correlation between remuneration and risks undertaken, through:
– direction of management and personnel conduct towards the achievement of objectives within a framework of rules
aimed at controlling corporate risks;
– remuneration systems aligned with prudent financial and non-financial risk management policies (including legal and
reputational risks), in line with what is defined in the Group's Risk Appetite Framework;
– the definition of a sufficiently high fixed component to allow the variable portion to decline significantly, even down to
zero, upon occurrence of pre-defined conditions;
c) orientation towards medium-long term objectives, taking into account the Group Risk Tolerance through the definition of
a set of Incentive Systems that allow performance to be oriented over a period of accrual longer than one year and to
share the medium-long term results consequent to the implementation of the Business Plan;
d) merit, to guarantee better matching with actual performance and the managerial quality identified, through:
– remuneration flexibility linking the variable component to the results achieved and risks assumed;
– focus on key staff members with high managerial skills, to whom competitive salary brackets compared with the
reference market are reserved;
– differentiation of the best performances to which variable bonus levels significantly in excess of the average are to
be assigned;
e) equity, in order to promote proper conduct and standardise treatment in terms of remuneration, through:
– the correlation between the person’s fixed remuneration and the level of responsibility managed, measured through
the adoption of a Global Banding system
56
, certified by a leading consultancy firm or the seniority/professional role;
– differentiation of target salaries and the ratio of the variable component to the total remuneration according to the
relevant professional category and/or geographical market, with Banding bracket or seniority/professional role being
equal;
f) gender neutrality, through:
– ensuring equal pay for equal work, regardless of gender;
– focus on the gender pay gap and its evolution over time;
g) sustainability, to limit expense deriving from application of the policy to values compatible with the available economic
and financial means, through:
– mechanisms to adjust allocations to the overall incentive provisions according to corporate profitability and the
Group’s results;
– selective reviews of fixed remuneration based on strict market benchmarks;
– the determination of appropriate caps on both total incentives and the amount of individual bonuses;
h) compliance with legislative and regulatory provisions, with the codes of conduct and other self-regulatory instruments
with a focus on the Risk Takers (and, among these, on the so-called Top Risk Takers, including the Key Managers) and
on the Corporate Control Functions;
i) fairness in customer relations.
Remuneration of Group employees is broken down into the following:
a) fixed and/or recurring component;
b) variable and/or non-recurring component.
a.1 Fixed remuneration
The fixed component of remuneration for employees is determined on the basis of pre-established non-discretionary criteria
such as contract conditions, role held, responsibilities assigned and the employee’s specific experience and skills.
In full compliance with the provisions of law, the fixed component includes:
– the gross annual remuneration reflecting the staff member’s professional experience and s eniority of service;
– allowances tied to the role held, not connected to any type of performance indicator and assigned in a non-discretionary
manner to the Risk Takers
57
and to the Middle Management
58
belonging to the Corporate Control Functions and simila r
roles and to the heads of commercial roles within the scope of the physical and digital distribution network of the Banca
dei Territori Division;
– allowances paid to expatriate personnel in order to cover for any differences in cost, quality of life and/or remuneration
levels of the target reference market;
– allowances and/or fees deriving from offices held in corporate bodies, provided that these are not reversed to the
companies to which they belong;
– any benefits designed to increase employee motivation and loyalty of the resources and assigned on a non-discretionary
basis. The benefits paid to Group employees may be of a contractual nature (e.g., supplementary pension, health
benefits, etc.) or the result of remuneration policy decisions (e.g., company car) and, therefore, have different treatment
with respect to different categories of personnel.
a.2 Recurring remuneration
For Non-employee Financial Advisors (hereinafter also “Financial Advisors”) and Financial Agents, the “recurring” component
consists of commissions, which make up the stable and ordinary portion of remuneration.
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The Global Banding System adopted by the Intesa Sanpaolo Group is based on the grouping in homogeneous categories of managerial positions that
are similar by levels of complexity/responsibility managed, measured using the international IPE (International Position Evaluation) methodology.
57
Italy, Slovakia and Croatia.
58
Italy, Egypt and China.
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177
In particular, for Financial Advisors, commissions remunerate their activity of placement, management and assistance to
customers, and cover the costs they incur in carrying out their activities. For Financial Advisors given additional
responsibilities of commercial coordination and supervision of specific activities and/or teams of Financial Advisors, the
“recurring” remuneration consists of supervision commissions, for coordinating and supervising a team of Financial Advisors
operating within their area of expertise, and of development commissions, for the development and growth in size of the team
of Financial Advisors they supervise.
With reference to Prestitalia’s
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Financial Agents, the recurring remuneration is divided into three components: ordinary,
recurring and additional commissions, which are constant by production segments, as detailed in the Report on
Remuneration.
In addition, with reference to Financial Agents with accessory roles (Team Leaders), an additional coordination fee is provided
for the performance of the task of supervising the commercial activity.
b.1 Variable remuneration
The variable component is linked to employee's performance and aligned to the results actually achieved and the risks
prudentially assumed, and consists of:
– short-term variable component, paid through the annual Incentive Systems and the Broad-based Short-Term Plan (PVR);
– long-term variable component, paid through the PSP (Performance Share Plan), targeted at the Intesa Sanpaolo Group
Management, including the Top Risk Takers and the remaining Group Risk Takers – in Italy and abroad, the LECOIP 3.0
Plan, targeted at the Intesa Sanpaolo Group Professionals – in Italy – and any other long-term incentive plans (e.g. Multi-
year loyalty plan for some employees from the UBI Top Private Network);
– the carried interest, i.e. the share in the profits of the UCITS or AIF received by personnel as compensation for the
management of the UCITS or AIF
60
;
– any variable short- and long-term components, tied to the period of employment in the company (stability, non-
competition, one-off retention agreements) or extraordinary agreements (entry bonus);
– any discretionary benefits.
The assignment of guaranteed bonuses is not envisaged, with the sole exception of limited cases of recently hired employees
(signing bonus), without prejudice to thorough assessment and analysis of market practice, solely for the first year.
The distinction of the variable remuneration in a sho rt-term and a long-term component promotes both attraction and retention
of resources, allows performance to be oriented over a period of accrual longer than one year and to share the medium-long
term results consequent to the implementation of the Business Plan.
b.2 Non-recurring remuneration
For the Financial Advisors, the “non-recurring” component is represented by the commissions paid as annual incentives, with
the aim of driving the sales activity to reach specific targets, taking into account both the lo ng-term company strategies and
objectives of the Networks they belong to and the correctness of customer relations.
Moreover:
– for around 5,000 Financial Advisors of the Fideuram, Sanpaolo Invest SIM and IW SIM Networks, a 2022-2025 Long-
Term Incentive Plan has been designed;
– for new Non-employee Financial Advisors of Fideuram, Intesa Sanpaolo Private Banking, Sanpaolo Invest SIM and IW
SIM a specific non-recurring component is envisaged as part of the recruitment offer.
The remuneration pay mix
In accordance with the regulatory guidelines, the Intesa Sanpaolo Group traditionally adopts a pay mix that is appropriately
“balanced” between the fixed (or recurring) component and the variable (or non-recurring) component, in order to:
– allow flexible management of labour costs, as the variable portion may significantly decline, even down to zero,
depending on the performance actually achieved during the year in question;
– discourage behaviour focused on the achievement of short-term results, particularly if these involve taking on greater
risk.
In order to achieve the above objectives, it is standard Group practice to establish ex ante limitations in terms of balanced
maximums for variable remuneration, through the definition of specific caps on the increase of bonuses in relation to any over-
performance.
As a general rule of thumb, the aforesaid cap to the variable remuneration was determined:
– at 100% of fixed remuneration for roles not included amongst Corporate Control Functions, save as otherwise specified
in the Report on Remuneration;
– at 33% of fixed remuneration for roles belonging to the Corporate Control Functions and similar roles, as well as to the
Group Human Resources Function.
The calculation of the variable remuneration takes into account both the short-term component relating to the Incentive
System or PVR and the long-term component assigned through the long-term Incentive Plans (PSP Plan and LECOIP 3.0
Plan), as well as any variable components linked to seniority or exceptional components. In particular, the PSP and LECOIP
3.0 Plans have an impact on the pro-rata variable remuneration for the entire accrual period.
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It should be noted that until March 2022, Intesa Sanpaolo Agents4you was active, whose recurring commissions remunerated the placement of
banking and insurance products under mandate; an additional coordination fee was also paid to Team Leaders for their ancillary responsibility of
supervising the commercial activity.
60
The portion of pro rata profit assigned to personnel by virtue of any investments made by them in the UCITS or AIF, provided that they are
proportional to the actual percentage of participation in the UCITS or AIF and not exceeding the return recognised to the other investors. For a proper
implementation of the regulation, managers must therefore be able to clearly identify the portions of profit which exceed the pro rata profit of the
investments and that qualify as carried interest.
Report on operations – Corporate Governance and remuneration policies
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The maximum limit established by the general criteria (1:1) has been raised to 2:1, as provided for by CRD IV, permitted by
the Bank of Italy’s Supervisory Provisions and approved by the Shareholders’ Meeting, for Group Risk Takers
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not belonging
to the Corporate Control Functions and similar roles for specific and limited professional sectors and highly profitable business
segments
62
, as well as non-employee Financial Advisors who are recipients of the recruitment offer in order to attract new key
resources from the market for the growth and development of the Networks, as these have a significant effect on the Group’s
average annual total net funding.
Furthermore, starting from 2019, using the option granted by the Supervisory Provisions, the maximum limit on the variable
remuneration has been raised above 2:1 up to a maximum of 4:1 for personnel in the “Investments” category of the Group’s
asset management companies, who work exclusively for the same Asset Management Company.
However, in terms of cap compliance between fixed and variable remuneration (1:1), appropriate pay mix differentiations were
identified with reference to the various professional or business segments, in line with the results obtained by means of
specific benchmark analyses related to the leading European global banks that also ensure compliance with the internal
equity principle, given the use of common benchmarks for each cluster.
The adequacy of the amounts is further verified in comparison to market practices, with ongoing participation in national and
international remuneration surveys; for management roles and other particular business positions, the comparison is based
on specific Peer Groups, in order to evaluate the competitive alignment with the most appropriate reference market.
In relation to market data, the Intesa Sanpaolo Group aims to align the overall remuneration with median values,
notwithstanding the possibility to make the appropriate differentiations for particularly critical positions and/or resources with
high management skills.
The correlation between remuneration, risk and performance is ensured for all employees through:
– the use of a balanced pay mix, as the fixed component is sufficiently high to allow the variable portion, which is never
guaranteed, to decline significantly, even down to zero, upon occurrence of the conditions specified below;
– the application of the principle of merit, under which significantly higher-than-average bonuses are awarded for the best
performances;
– the introduction, on the basis of the “financial sustainability principle”, of a structured mechanism for funding the variabl e
component (bonus pool), which correlates the amount to be allocated to incentives for all company segments to the
performance of a Group parameter, currently identified as Gross Income;
– the use of a solidarity mechanism between Group and Division results, according to which the amount of total bonuses
paid to the employees of each Division depends in part on the Group’s overall performance (reflected in the size of the
bonus pool) and in part on the performance of the specific Division, measured in terms of the degree of expected
contribution to the Group’s Gross Income;
– the observance of the access conditions provided for in international and national regulations, namely:
o at Group level, the achievement of capital adequacy and liquidity levels and, in any event, compliance with the limits
envisaged in the RAF;
o at individual level, the propriety of conduct (e.g. absence of disciplinary measures resulting in one or more days of
suspension);
– the measurement of performance across multiple dimensions, both quantitative (profitability, growth, productivity, cost of
risk/sustainability) and qualitative (strategic actions or projects – including, also for 2022, the transversal Group KPI
“Environmental, Social and Governance (ESG)” – and managerial qualities), and covering different scopes
(Group/Department/Individual). The following are some examples of indicators for performance drivers:
o Profitability: Operating Income/Risk Weighted Assets, Income from Ordinary Insurance Business/Mathematical
Reserves;
o Growth: Net Funding, Medium/Long-Term Disbursements, Income from Insurance Business;
o Productivity: Cost/Income, Reduction in operating costs, Full Combined Ratio;
o cost of risk/sustainability: Gross NPL Ratio, Gross flows from performing to NPE, Operating Losses/Operating
Income, Concentration Risk, Maintaining Liquidity Coverage Ratio levels;
– the use of corrective mechanisms that act as de-multipliers of the bonus accrued according to the risks taken and the
relevant cluster.
It is expressly prohibited for individual employees to undertake personal hedging or insurance strategies on the remuneration
or other aspects that may alter or undermine the effects of the alignment with company risk inherent in the remuneration
mechanisms described.
Remuneration may not be paid in forms, instruments or methods aimed at avoiding provisions of law.
The termination of the employment agreement involving personnel with state pension or seniority pension rights and/or
“Assicurazione generale obbligatoria” (AGO) pension treatment does not result in loss of the right to payment of the entitled
amounts, even deferred. In all other cases, the Bank has the right to award any amounts, depending on the specific
situations, upon termination of the employment agreement, also through consensual retrenchment agreements providing
termination payments. Furthermore, individual prior agreements may be entered into for the determination of the remuneration
to be granted in the event of early termination of the relationship, provided that these agreements must comply with all the
61
Excluding the non-executive members of the Board of Directors of Intesa Sanpaolo and the Group Risk Takers operating in Slovakia, Slovenia,
Moldova and Romania.
62
Private Bankers, chains of Investment Banking, Insurance and Private Banking investment managers, Treasury and Finance, commercial chain of the
Asset Management Division dedicated to the non-captive market, Heads managing and developing products of the Insurance Division, Heads of the
Global Banking & Sovereign Institutions Department structures, Global Relationship Managers of the Global Corporate Department and the Global
Banking & Sovereign Institutions Department, Heads of the Corporate and Financial Institutions Desks of the Hubs present in the International
Department as well as Mortgage Specialists and Personal Bankers within the Všeobecná Úverová Banka (VUB) Network.
Report on operations – Corporate Governance and remuneration policies
179
conditions set out in the Remuneration Policies and in the Supervisory Provisions
63
. In recent years, the Bank has signed
specific agreements with the trade unions with regard to the “solidarity fund”, applied to employees of all levels, including
executives, which also govern the treatment of sums payable to personnel upon termination of the employment agreement in
the event of extraordinary transactions and/or company reorganisations.
According to the Supervisory Provisions on remuneration, any type and/or form of severance payment agreed in view of or
upon early termination of the employment agreement or early termination of office for the amount exceeding the provisions of
the National Collective Bargaining Agreement concerning payments related to the indemnity for failed notice constitutes the
so-called severance, including any compensation paid according to the non-competition agreement limited to the portion
exceeding the last year of fixed remuneration.
In the Intesa Sanpaolo Group, the principles for the definition of these payments - inspired to both the correlation between
severance pay and ongoing performance criteria and the control of potential litigations – are:
– ensuring compliance with regulatory capital adequacy requirements;
– no reward for failure;
– unobjectability of individual behaviour (consistency with compliance breaches’ criteria).
Pursuant to these criteria and the Supervisory Provisions on remuneration, when negotiating this kind of remunerations, the
Group defined that those payments:
– are equal, as a maximum amount, to 24 months of fixed salary, and are determined in a different manner for each
cluster, in order to take into due consideration the overall evaluation of the work of the person and having particular
regard to the Group’s capitalisation, liquidity and profitability levels and to the presence or absence of individual
sanctions imposed by the Supervisory Authority;
– are paid according to the methods set for short-term variable remuneration, for each cluster;
– are included in the calculation of the ratio between the respective variable remuneration and the fixed remuneration of
the last year of employment in the company, not including the sums agreed upon and paid:
o based on a non-competition agreement, for the portion which, for each year of duration of the agreement, does not
exceed the last year of fixed remuneration;
o within an agreement reached in order to settle a current or potential dispute (wherever reached), if calculated
according to a predefined calculation formula approved by the Shareholders’ Meeting in advance.
63
In 2022, following a resolution approved by the Board of Directors, on the proposal of the Remuneration Committee and taking into account the Chief
Compliance Officer's opinion, in line with the practices commonly used among competitors and the leading Italian listed companies, an agreement
containing specific conventional regulations on employment termination was entered into with the Managing Director and CEO. Specifically, in line with
the provisions of the Remuneration Policies, this agreement provides, for Good Leavers, for the disbursement, in addition to the indemnity in lieu of the
notice period required by law and the collective bargaining agreement, of an amount by way of severance of between 12 and 24 months of fixed
remuneration depending on the average of the overall Performance Scorecard score relating to the Group's annual Incentive System for the three years
preceding the date of termination of the employment agreement. If this average is less than 80%, no severance payment will be due to the Managing
Director and CEO.
180
181
Intesa Sanpaolo stock
182
183
Intesa Sanpaolo stock
Stock price performance
After a first half of 2022 characterised by growing concerns about the business cycle and a general rise in investor risk
aversion due to the increase in inflationary pressures, bottlenecks in global supply chains, and the outbreak of the war
between Russia and Ukraine, the European banking industry recovered much of the lost ground in the second half of the
year, benefiting from solid results and the normalisation of interest rates. In 2022, the European banking index posted
negative performance of 4.6%, outperforming the Euro Stoxx index (-14.4% in the period).
The Italian banking index performed in line with the European sector, with a fall of 4.6%. Concerns about the economic
outlook that had led this index to lose more than 30% in July 2022 were mitigated by the rise in interest rates, to which Italian
commercial banks are positively sensitive. In 2022, the Italian banking index outperformed the FTSE MIB index by 8.8%.
During the year, the price of Intesa Sanpaolo ordinary shares moved in correlation with the banking sector indices, with an
upward trend until the first ten days of February, when it reached its peak, followed by a sharp decline until the beginning of
March and a fluctuating trend until the end of the third quarter, during which it reached its minimum in mid-July, and a
recovery in the last quarter, closing the year 8.6% lower than at the end of 2021.
Intesa Sanpaolo’s capitalisation dropped to 39.5 billion euro at the end of December 2022, from 44.2 billion euro at the end of
2021.
6,624
7,066
7,507
7,949
8,390
8,832
9,274
9,715
10,157
10,598
11,040
11,482
11,923
12,365
12,806
13,248
1.50
1.60
1.70
1.80
1.90
2.00
2.10
2.20
2.30
2.40
2.50
2.60
2.70
2.80
2.90
3.00
Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22
Index FTSE Italia All
-Share Banks
Ordinary stock closing price
Intesa Sanpaolo ordinary share price Index FTSE Italia All-Share Banks
Intesa Sanpaolo ordinary shares price and banking index
Report on operations – Intesa Sanpaolo stock
184
Earnings per share
Intesa Sanpaolo's share capital consists solely of ordinary shares.
Net income attributable to ordinary shares was determined considering the dividends proposed and then allocating the
residual portion of net income, in the hypothetical assumption of its total distribution, in equal weight to all outstanding shares.
The Earnings Per Share (EPS) indicator is presented both in the “basic” and in the “diluted” formula: basic EPS is calculated
by dividing income theoretically attributable to holders of shares by the weighted average number of the shares outstanding
(excluding own shares repurchased); diluted EPS takes into account the effect of any future issues.
Ordinary Shares
31.12.2022
31.12.2021
31.12.2020
31.12.2019
31.12.2018
Weighted average number of shares
19,315,541,610
19,377,549,407
18,240,491,151
17,474,056,021
16,772,376,006
Income attributable to the various categories of
shares (millions of euro)
4,354
4,185
3,277
4,182
4,050
Basic EPS (euro)
0.23
0.22
0.18
0.24
0.24
Diluted EPS (euro)
0.23
0.22
0.18
0.24
0.24
Price/book value
The index reflects the value attributed by the market to the share capital of a listed company, and hence indirectly to the
company’s overall assets. Although it measures the confidence which financial analysts and the financial community have in
the company’s income prospects and capital position, the index is sign ificantly affected by the external factors that influence
stock prices.
Also for the Intesa Sanpaolo Group, the level and performance of the index – as at 31 December 2022 calculated on both
average figures and year-end figures – were influenced by the dynamics of the market and its industry sector. The
comparative figures for the years 2018 to 2021 shown in the table are annual averages.
(millions of euro)
31.12.2022
2022
2021
2020
2019
2018
Market capitalisation
39,459
38,433
44,535
34,961
36,911
44,947
Group’s shareholders’ equity
61,655
62,715
64,823
60,920
54,996
53,646
Price / book value
0.64
0.61
0.69
0.57
0.67
0.84
Payout ratio
This ratio is the relationship between the amount allocated for the remuneration of shareholders and the total amount of net
income produced.
(millions of euro)
2022
2021
2020
2019
2018
Net consolidated income
(*)
4,354
4,185
3,505
4,182
4,050
Dividends
(**)
3,048
2,932
2,626
-
3,449
Payout ratio
70%
70%
75%
0%
85%
(*) For the purpose of calculating the payout, the consolidated net income for 2020, equal to 3,277 million euro, was adjusted, excluding the items related to the
acquisition of UBI Banca consisting of the effects of purchase price allocation, including negative goodwill (+2,062 million euro) and charges for integration (-1,378
million euro), as well as the write-off of goodwill of the Banca dei Territori Division (-912 million euro).
(**) For 2021 and 2020 the amounts allocated were partially from reserves. In November 2021, an allocation was distributed totalling 1,399 million euro (net of the
undistributed portion for own shares held at the record date, for a total of 2.2 million euro). In November 2022, an allocation was distributed totalling 1,400 mil lion
euro (net of the undistributed portion for own shares held at the record date, for a total of 1.8 million euro).
In compliance with the instructions from the Supervisory Authority and in line with the provisions of the 2022-2025 Business
Plan – which envisages a payout of 70% in each year of the Plan – the Board of Directors of Intesa Sanpaolo resolved the
following for the year 2022:
– on 4 November 2022, in compliance with the provisions of paragraph 4 of Article 2433-bis of the Italian Civil Code, the
distribution of an interim dividend for 2022 totalling 1,400 million euro, corresponding to a unit dividend of 7.38 euro cent s
per outstanding ordinary share (excluding own shares held at the record date). The dividend was paid out on 23
November 2022 (with coupon presentation on 21 November and record date on 22 November);
Report on operations – Intesa Sanpaolo stock
185
– on 3 February 2023, the allocation of a remaining dividend of 8.68 euro cents per share
64
to the 18,988,803,160 ordinary
shares constituting the share capital, for a total of 1,648 million euro.
Based on the above, the total dividends for 2022 would amount to 3,048 million euro, corresponding to a payout ratio of 70%
of consolidated net income.
With regard to the year 2021:
– on 3 November 2021, the Board of Directors, in compliance with the provisions of paragraph 4 of Article 2433-bis of the
Italian Civil Code, approved the distribution of an interim dividend for 2021 totalling 1,399 million euro, corresponding to a
unit dividend of 7.21 euro cents per ordinary share (excluding own shares held at the record date). The dividend was
paid out on 24 November 2021;
– the Shareholders’ Meeting of 29 April 2022 decided to allocate a total remaining amount of 1,533 million euro
(corresponding to 7.89 euro cents per share) to the 19,430,463,305 ordinary shares constituting the share capital, of
which 1,300 million euro as dividends from net income (corresponding to 6.69 euro cents per share) and 233 million euro
as a partial distribution of the free portion of the share premium reserve (corresponding to 1.20 euro cents per share).
Based on the above, the dividend for the year 2021 was set at a total of 15.1 euro cents per share, for a total dividend of
2,932 million euro and a payout ratio of 70% of consolidated net income.
For 2020, the Shareholders’ Meeting of 28 April 2021 approved the cash distribution of 3.57 euro cents per share, partly from
the share premium reserve, for a total dividend payout of 694 million euro, equal to the maximum allowed by the European
Central Bank Recommendation of 15 December 2020, within the limit of 20 basis points of the consolidated Common Equity
Tier 1 ratio at 31 December 2020. This allocation was then accompanied by an additional cash distribution, approved by the
Shareholders’ Meeting of 14 October 2021, for a total of 1,932 million euro, corresponding to a unit amount of 9.96 euro cents
for each of the outstanding ordinary shares (excluding own shares held at the record date), which was paid out on 20 October
2021. The overall dividend paid out on the result for 2020 consequently amounted to 2,626 million euro, which, in relation to
the 2020 consolidated net income – adjusted to take into account the components relating to the acquisition of UBI Banca, as
well as the related adjustment of the goodwill of the Banca dei Territori – resulted in a payout ratio for 2020 of 75%.
With regard to the year 2019, you are reminded that following the revision on 31 March 2020 of the proposals to the
Shareholders’ Meeting approved by the Board of Dire ctors on 25 February 2020, the net income for 2019 – after the
allocations to the Allowance for charitable, social and cultural contributions – was assigned to the extraordinary reserve, in
accordance with the Recommendation of the European Central Bank of 27 March 2020 regarding dividend policies during the
Covid-19 pandemic.
Lastly, you are reminded that the 2022-2025 Business Plan, approved by the Board of Directors on 4 February 2022,
indicated that one of the main objectives was solid and sustainable value creation and distribution. In this regard, in addition
to a 70% payout ratio for each year of the plan, an additional return of capital to Shareholders has been envisaged, to be
achieved through the buyback of own shares and their subsequent annulment, for a total of 3.4 billion euro, substantially
equivalent to the suspended dividend for 2019. As described in the “Highlights” paragraph of the introductory chapter of this
Report, the programme was implemented for an initial amount of 1,700 million euro in the period from 4 July to 11 October
2022 with the purchase and subsequent annulment of 988,632,803 shares. The purchase programme for the remaining
maximum amount of 1,700 million euro, approved by the Board of Directors on 3 February 2023, was launched on 13
February and will be completed by 12 May 2023.
As a result of this action, Shareholders will see their share of the total dividends of Intesa Sanpaolo increase without having to
make any investment.
64
The amount of the dividend per share could increase considering the execution of the programme of purchase of own shares for annulment, which
started on 13 February 2023. Intesa Sanpaolo will communicate the final amount of the dividend per share at the end of the programme, and in any case
by 18 May 2023.
Report on operations – Intesa Sanpaolo stock
186
Dividend yield
This indicator measures percentage return on the shares, calculated as the ratio between dividends allocated for the year and
market price in the reference year. This return, determined on the basis of average annual stock prices, maintained
sustainable levels over time, also in view of financial market trends. The dividend yield for 2019 was affected – as noted
above – by the Recommendations of the European Central Bank in the aftermath of the Covid-19 pandemic.
Since 2018, Intesa Sanpaolo’s share capital has consisted solely of ordi nary shares.
(in euro)
2022
2021
2020
2019
2018
Dividend per share (*)
0.161
0.151
0.135
-
0.197
Average stock price
2.024
2.292
1.799
2.108
2.567
Dividend yield
7.95%
6.59%
7.50%
-
7.67%
(*) The amount of the 2022 dividend per share could increase considering the execution of the programme of purchase of own shares for annulment which started
on 13 February 2023.
Rating
Summarised below are the main actions on the ratings of Intesa Sanpaolo decided by the international agencies in 2022:
– S&P Global Ratings confirmed Intesa Sanpaolo’s ratings and outlook, on both 31 January 2022 (following the update of
the methodological criteria applied to Financial Institutions) and 27 April 2022 (following a similar rating action on Italian
sovereign debt on 22 April). On 29 July 2022, the outlook was revised from “Positive” to “Stable”, following a similar
action on the outlook for Italy’s debt on 26 July;
– on 9 August 2022, Moody’s confirmed Intesa Sanpaolo’s ratings, changing the outlook from “Stable” to “Negative”,
following a similar action on the Italian sovereign outlook on 5 August;
– DBRS Morningstar confirmed Intesa Sanpaolo’s ratings and trend on 1 June 2022;
– Fitch Ratings confirmed Intesa Sanpaolo’s ratings and out look on 29 November 2022.
The ratings assigned to Intesa Sanpaolo by the main international agencies, which were unchanged as at the data of
approval of these financial statements, are shown below.
RATING AGENCY
DBRS
Morningstar
Fitch
Ratings
Moody's
S&P Global
Ratings
Short-term debt
R-1 (low)
(1)
F2
P-2
A-2
Long-term debt (senior preferred unsecured)
BBB (high)
BBB
Baa1
BBB
Outlook / Trend Long-term debt
Stable
Stable
Negative
Stable
Viability
-
bbb
-
-
(1) Stable trend.
An always updated information about Intesa Sanpaolo's ratings can be found in the Investor Relations section of the Intesa Sanpaolo website, at
www.group.intesasanpaolo.com.
187
Alternative Performance
Measures and Other
information
188
189
Alternative Performance Measures
Introduction
Pursuant to Article 16 of Regulation 1095/2010/EU, the European Securities and Markets Authority (ESMA) has issued
specific Guidelines
65
on the presentation criteria for Alternative Performance Measures (APMs) included by European issuers
in regulated information (including the report on operations in the annual financial statements, in the half-yearly report and in
the interim statements), where such measures are not defined or provided for in the rules on financial reporting. These
guidelines, in force since 3 July 2016, are designed to promote the utility and transparency of APMs included in the regulated
information, by confirming a shared approach to the use of such measures, in order to improve their comparability, reliability,
comprehensibility and consistency over time, with resulting benefits for end users. Consob
66
has transposed the Guidelines in
Italy and incorporated them into its supervisory practices.
According to the definition provided in the ESMA Guidelines, an Alternative Performance Measure is a financial measure of
historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified
in the applicable financial reporting framework. APMs are typically based on financial statement line captions prepared in
accordance with applicable financial reporting rules. What sets them apart is that APMs are not defined in the financial
reporting framework, yet their use is still widespread, with the role of conveying a view of the entity’s performance that is
closer to the management’s perspective than would be possible using only the defined measures.
Measures published in application of prudential rules, including those laid down in the Regulation and Directive on capital
requirements (CRR/CRD IV), physical or non-financial measures and social and environmental measures do not come within
the narrow definition of APMs.
Intesa Sanpaolo’s Alternative Performance Measures
In accordance with Legislative Decree 38 of 28 February 2005, Intesa Sanpaolo prepares its financial statements in
compliance with the IAS/IFRS issued by the International Accounting Standards Board (IASB) and the related interpretations
of the International Financial Reporting Standards – Interpretations Committee (IFRS-IC), endorsed by the European
Commission as provided for by EC Regulation 1606 of 19 July 2 002, based on the “Instructions for the preparation of the
separate and consolidated financial statements of banks and financial companies, which are parent companies of banking
groups” issued by the Bank of Italy (Circular 262/2005 as amended), and disclo sed in detail in Part A of the Notes to the
financial statements.
To facilitate the understanding of the income statement and balance sheet figures, Intesa Sanpaolo also uses various
Alternative Performance Measures (APMs) to provide a clear, concise and immediate account of the operating results and the
financial position and performance achieved. Intesa Sanpaolo’s APMs – commonly used in banking and finance – are also
used by the management in decision-making processes of both operational and strategic nature.
It should be noted in this regard that the Alternative Performance Measures used are complementary to the measures defined
within the IFRS framework. The measures – described below in accordance with the above-mentioned ESMA Guidelines –
include the margins of the reclassified income statement and the aggregates of the reclassified balance sheet, in addition to
other measures calculated on the basis of the figures presented in the financial statements. The figures used are thoroughly
reconciled with the related figures defined in the IFRS framework through the disclosures provided in the Report on
operations and reconciliation statements included in the Attachments to the Financial Statements. The figures used are
normally restated to enable like-for-like comparison when this restatement is necessary and material. Following the
acquisition of the former UBI Banca Group and the related corporate transactions, in order to be able to provide like-for-like
comparison figures in 2021 it was also necessary to use “redetermined” figures to accompany the restated figures in order to
align/supplement them using management information. Those redeterminations have been retained in the 2022 Consolidated
Financial Statements in relation to the 2021 comparative figures.
With regard to the scenario resulting from the Covid-19 pandemic and the military conflict between Russia and Ukraine, in
accordance with the ESMA guidelines, no new measures have been added, nor have any changes been made to the
measures normally used.
65
Guidelines on Alternative Performance Measures (APMs) - ESMA/2015/1415en.
66
Consob Communication No. 0092543 of 3 December 2015.
Report on operations – Alternative performance measures and Other information
190
Margins of the reclassified income statement
With regard to the reclassified income statement, the following aggregates and margins have been identified as Alternative
Performance Measures.
Operating income: this aggregate includes core income and other income/expenses strictly correlated with operating activity.
It is calculated as the sum of the following captions of the reclassified income statement:
- Net interest income;
- Net fee and commission income;
- Income from insurance business;
- Profits (Losses) on financial assets and liabilities designated at fair value;
- Other operating income (expenses).
Operating costs: this aggregate includes costs and expenses relating to the operating activity presented in the following
captions of the reclassified income statement:
- Personnel expenses;
- Administrative expenses;
- Adjustments to property, equipment and intangible assets.
Operating margin: obtained from the difference between Operating income and Operating costs, as described above, it
represents the result of operations.
Gross income: operating margin that takes into account the effects of adjustments, provisions and impairment losses and
realised gains/losses on loans and other assets. It is obtained by subtracting/adding the following captions of the reclassified
income statement to the operating margin:
- Net adjustments to loans;
- Other net provisions and net impairment losses on other assets;
- Other income (expenses);
- Income (Loss) from discontinued operations.
Lastly, net income or loss includes income components outside the company management (taxes, levies and charges aimed
at maintaining the stability of the banking industry), items of an “accounting” nature (effects of the purchase price allocat ion
and impairment of goodwill and other intangible assets), as well as expenses related to restructuring/reorganisation
processes. The following captions of the reclassified income statement are considered:
- Taxes on income;
- Charges (net of tax) for integration and exit incentives;
- Effect of purchase price allocation (net of tax);
- Levies and other charges concerning the banking industry (net of tax);
- Impairment (net of tax) of goodwill and other intangible assets;
- Minority interests.
For detailed information on the breakdown of the individual captions of the reclassified income statement cited above, see the
chapter “Economic results and balance sheet aggregates” of this Report on operations. Reconciliations of the individual
captions of the reclassified income statement with the captions of the financial statements are presented in an attachment to
the financial statements, as also required by Consob in its Communication 6064293 of 28 July 2006.
Aggregates of the reclassified balance sheet
With regard to the reclassified balance sheet, which is primarily intended to provide a summary with respect to the financial
statements, the following have been identified as Alternative Performance Measures, while the chapter “Economic results and
balance sheet aggregates” of this Report provides details of the remaining captions of the reclassified balance sheet derived
directly from the financial statements. Reconciliations of the individual captions of the reclassified balance sheet with the
captions of the financial statements are presented in an attachment to the financial statements, as also required by Consob in
its Communication 6064293 of 28 July 2006.
Due from banks
The aggregate includes the captions typical of lending business with banks.
This caption mainly consists of amounts Due from banks included in the Financial assets measured at amortised cost. It also
includes any amounts due from banks classified under Financial assets held for trading, Financial assets designated at fair
value, Financial assets mandatorily measured at fair value and Financial assets measured at fair value through other
comprehensive income.
Loans to customers
The aggregate includes the captions typical of lending business with customers.
It mainly consists of amounts due from customers classified as Financial assets measured at amortised cost, attributable to
loans to customers and, to a lesser extent, exposures in securities (issued by non-financial companies, public entities and
others) representing loans to customers. It also includes portions of loans to customers classified under Financial assets held
for trading, Financial assets designated at fair value, Financial assets mandatorily measured at fair value and Financial assets
measured at fair value through other comprehensive income.
Report on operations – Alternative performance measures and Other information
191
Other banking business financial assets and liabilities
This aggregate comprises financial assets and liabilities of banking business (thereby excluding financial assets and liabilities
pertaining to the insurance companies) other than those described above. In detail, the following captions of the reclassified
balance sheet assets are included, as defined below: Financial assets measured at amortised cost which do not constitute
loans; Financial assets at fair value through profit or loss and Financial assets at fair value through other comprehensive
income. The aggregate also includes Financial liabilities held for trading in reclassified balance sheet liabilities, considered net
of investment certificates, as they are included in direct deposits from banking business.
Financial assets measured at amortised cost which do not constitute loans
The aggregate includes portions of Financial assets measured at amortised cost (both amounts due from banks and loans to
customers) not held for financing purposes. These are essentially debt securities of banks, governments, financial institutions
and insurance companies.
Financial assets at fair value through profit or loss
These include Financial assets held for trading, designated at fair value and mandatorily measured at fair value, other than
those representing loans to customers and due from banks, which are classified to the specific aggregates described above.
The breakdown of this caption is provided in the detail table included in the chapter “Economic results and balance sheet
aggregates”.
Financial assets at fair value through other comprehensive income
These include Financial assets measured at fair value through other comprehensive income, except for portions that
represent loans to customers and due from banks, which are classified to the specific aggregates described above. The
breakdown of this caption is provided in the detail table included in the chapter “Economic results and balance sheet
aggregates”.
Customer financial assets
The aggregate represents total financial assets deposited by customers of the Group, in the various types of direct deposits
from banking and insurance business and indirect deposits, as defined further below. In order to avoid duplications, the
aggregate is constructed by netting those components of indirect customer deposits that also constitute types of direct
deposits.
Direct deposits from banking business
The aggregate includes captions relating to funding from customers. In addition to the financial liabilities measured at
amortised cost represented by amounts Due to customers (net of lease payables reclassified to Other liabilities) and
Securities issued, it also includes funding – in the form of investment certificates and, to a marginal extent, other instruments -
classified under the captions Financial liabilities held for trading and Financial liabilities designated at fair value.
Direct deposits from insurance business and technical reserves
The aggregate, which is composed of the funding captions relating to the insurance business, includes the Financial liabilities
pertaining to insurance companies measured at fair value pursuant to IAS 39 (given the application of the deferral approach
by the Group’s insurance companies). Direct deposits from insurance business also include Technical reserves, which
represent the amount due to customers who have taken out traditional policies or policies with significant insurance risk.
Finally, it includes subordinated liabilities pertaining to insurance companies measured at amortised cost pursuant to IAS 39
(in respect of the aforementioned application of the deferral approach).
Indirect customer deposits
The aggregate refers to investment and distribution activity – for securities, mutual funds, portfolio management schemes and
insurance – carried out on behalf of third parties or in connection with the management of securities portfolios. The assets are
measured at market value. Indirect customer deposits are broken down into Assets under management (mutual funds,
portfolio management schemes, insurance policies, pension funds and individual pension policies) and Assets under
administration (all securities under administration and custody not attributable to assets under management: government
bonds, Equities, Third-party bonds, etc.).
For all the Alternative Performance Measures indicated above, detailed disclosures regarding the aggregates are provided in
the text and tables in the Report on operations and attachments to the financial statements, together with the statements
reconciling the official financial statements prescribed by the Bank of Italy with the reclassified financial statements. Where the
comparative figures have been restated and/or redetermined
67
, a detailed reconciliation is provided in the attachments to the
financial statements.
67
As mentioned above, the use of redetermined figures only took place when the former UBI Banca Group was acquired.
Report on operations – Alternative performance measures and Other information
192
Other Alternative Performance Measures
In addition to the Alternative Performance Measures represented by the margins of the reclassified income statement and the
aggregates of the reclassified balance sheet described above, Intesa Sanpaolo also publishes the following APMs.
Profitability ratios
Cost/income ratio
The measure is calculated as the ratio of operating costs (personnel expenses, administrative expenses and adjustments to
property, equipment and intangible assets) to the operating income presented in the Reclassified income statement and
provides a synthetic overview of operating efficiency. For information regarding the breakdown of the captions included in the
numerator and denominator of this ratio, see the above and the reconciliation statements attached to the financial statements
for a detailed reconciliation.
ROE – Return On Equity
This measure is calculated as the ratio of the net income or loss to shareholders’ equity and represents the profitability
generated by the shareholders’ equity available. Specifically:
- the net income or loss presented in the Income statement is used in the numerator; in exceptional cases only, net
income or loss may be adjusted to account for any non-recurring components, which are thoroughly identified within the
framework of each of the measures affected. In the interim situations, net income or loss is annualised (except for any
non-recurring components, not annualised);
- in the denominator, the shareholders’ equity considered is the amount pertaining to the Group at the end of the
year/period and does not take into account the AT1 capital instruments and the net income or loss for the year/period.
ROA – Return On Assets
The measure is calculated by comparing the net income or loss to total assets and provides an overview of the profitability o f
company assets. Specifically:
- the net income or loss presented in the Income statement is used in the numerator; in exceptional cases only, net
income or loss may be adjusted to account for any non-recurring components, which are thoroughly identified within the
framework of each of the measures affected. In the interim situations, net income or loss is annualised (except for any
non-recurring components, not annualised);
- in the denominator, period/year-end total assets are used.
Price/Book value
The measure, which reflects the value attributed by the market to Intesa Sanpaolo, and thus indirectly to its overall assets, is
calculated by comparing the market capitalisation to shareholders’ equity. It is published on the basis of a time series
consisting of average data from the last 5 years/periods, in addition to the calculation on the basis of period-end values at the
reporting date. Specifically:
- the average capitalisation for the reporting period/year is used in the numerator. Average capitalisation is calculated on
the basis of the average price of the shares (arithmetic average of the daily closing prices of trading on Borsa Italiana),
multiplied by the weighted number of shares during the reporting period/year.
In addition to average capitalisation, the period/year-end capitalisation is also published, which is used to calculate the
price/book value on the basis of period/year-end figures. Period/year-end capitalisation is calculated by multiplying the
closing price of trading on Borsa Italiana on the last trading day, multiplied by the number of shares at the end of the
period/year;
- the average shareholders’ equity attributable to the Group, calculated as the semi-sum of shareholders’ equity at the
beginning and end of the period/year, is used in the denominator. In addition to ave rage shareholders’ equity, the value
of shareholders’ equity at the end of the period/year is published in order to calculate the price/book value on the basis of
period/year-end figures.
Payout ratio
This measure, published in table form in the Annual Report based on a time series consisting of data from the last 5 financial
years, is the ratio between the amount assigned for the remuneration of shareholders and the total amount of the net income
produced. Specifically:
- the amount of cash dividends that have been proposed or approved for distribution to the shareholders, inclusive of any
amounts arising from the distribution of available reserves, is used in the numerator;
- the net income or loss presented in the consolidated income statement is used in the denominator, only exceptionally
adjusted to account for any non-recurring items, which are duly identified.
Dividend Yield
This measure, published in table form in the Annual Report based on a time series consisting of data from the last 5 financia l
years, refers to the percentage return on the shares, calculated as the ratio between the dividend and the market price.
Specifically:
- the amount of the divided per share proposed/approved is used in the numerator;
- the average price of the share, calculated as the annual arithmetic average of the daily closing prices of trading on Borsa
Italiana, is used in the denominator.
Report on operations – Alternative performance measures and Other information
193
Risk ratios
Net bad loans/Loans to customers
The measure is calculated as the ratio of Bad loans to total Loans to customers, thus providing an overview of the loan
portfolio quality. The figures are taken from the financial statements, i.e. net of the related adjustments, and do not include
loans to be sold that are recognised as assets held for sale. For the definition of the aggregate Loans to customers, see the
above.
Net non-performing loans/Loans to customers
The measure is calculated as the ratio of the amount of Non-performing loans (bad loans, unlikely-to-pay loans and past due
loans) to total Loans to customers, thus providing an overview of the loan portfolio quality. The figures are taken from the
financial statements, i.e. net of the related adjustments, and do not include loans to be sold that are recognised as assets
held for sale. For the definition of the aggregate Loans to customers, see the above.
Cumulated adjustments on bad loans/Gross bad loans to customers
This measure is calculated as the ratio of the total amount of cumulated adjustments on Bad loans to customers to the
amount of Bad loans to customers gross of adjustments, thus providing an overview of the coverage ratio for bad loans. The
values do not include loans to be sold that are recognised as assets held for sale. For the definition of the aggregate Loans to
customers, see the above.
Cumulated adjustments on non-performing loans/Gross non-performing loans
This measure is calculated as the ratio of the amount of cumulated adjustments on Non-performing loans (bad loans, unlikely-
to-pay loans and past due loans) of the reclassified Income statement to the amount of Non-performing loans gross of the
related adjustments, thus providing an overview of the coverage ratio for Non-performing loans. The values do not include
loans to be sold that are recognised as assets held for sale. For the definition of the aggregate Loans to customers, see the
above.
Cost of credit/Cost of risk
This measure is calculated as the ratio of the amount of net adjustments to loans for the period/year in the reclassified income
statement to the amount of Loans to customers at period/year-end, thus providing an overview of the level of adjustments on
the portfolio during the period/year. To enable a valuation more closely linked to ordinary operations, this measure may be
accompanied by a version of the same measure calculated with the isolation of particularly significant non-recurring elements,
specified in detail.
For the definition of the aggregate Loans to customers, see the above. In the interim situations, the numerator is annualised
(except for any non-recurring components, not annualised).
Other measures
Loan-to-deposit ratio
This measure is calculated as the ratio of Loans to customers to the amount of Direct deposits from banking business, thus
providing an overview of the structure of the customer lending and deposit activity. For the definitions of the aggregates Loans
to customers and Direct deposits from banking business, see the above.
Absorbed capital
Absorbed capital is a measure of the risk capital associated with each Group Division in relation to its specific operations. For
each Division, the absorbed capital is calculated on the basis of the Risk Weighted Assets (RWAs) measured in accordance
with the applicable regulations and supplemented, where necessary, with management data on “economic” capital
68
to take
into account the risks not covered by the regulatory metric.
68
Economic capital consists of an internal estimate of the maximum “unexpected” loss the Group may incur in a given time horizon and considering the
desired level of confidence. It aims to quantify the potential economic losses related to the individual risks to which the Group is exposed.
Report on operations – Alternative performance measures and Other information
194
Other information
With regard to information to be included in the annual report as required by specific provisions please note the following:
- the list of Group companies and subsidiaries is provided in the Notes to the consolidated financial statements (Part A,
Section 3 - Scope of consolidation and consolidation methods and Part B, Assets - Section 7), in accordance with the
provisions of the Bank of Italy;
- Part E - Information on risks and relative hedging policies of the Notes to the consolidated financial statements, in the
introductory section on the Manager responsible for preparing the Company’s financial reports, also provides information
on the certification of compliance, during the year 2022, with the conditions required by Article 15 of Consob Market
Regulation 20249/2017 (as amended) for the listing of shares of companies controlling companies established and
regulated under the laws of non-EU countries;
- to enable a comprehensive understanding, all the information relating to the Bank’s and the Group’s connections and
transactions with related parties, not only that required by IAS 24 but also that required by Article 5, paragraph 8, of
Consob Regulation 17221 of 12 March 2010 (adopted pursuant to Article 2391-bis of the Italian Civil Code), is provided
in Part H of the Notes to the consolidated financial statements;
- the information on the own shares of the Parent Company Intesa Sanpaolo held and traded at consolidated level is
provided in Part F of the Notes to the consolidated financial statement s;
- with regard to the information on the Corporate Governance system and the ownership structure of Intesa Sanpaolo,
pursuant to Article 123-bis of the Consolidated Law on Finance, in addition to the summary provided in the chapter
“Corporate Governance and remuneration policies” of this Report, see the document “Report on Corporate Governance
and Ownership Structures” available in the Governance section of the Group’s website, at
www.group.intesasanpaolo.com;
- with regard to the information on the remuneration paid to members of the Management and control bodies, General
Managers and Key Managers and on the Parent Company shares held by them, as well as the assignment of financial
instruments to board members and general managers or employees pursuant to Article 123-ter of the Consolidated Law
on Finance, in addition to the summary provided in the chapter “Corporate Governance and remuneration policies” of this
Report, see the specific “Report on remuneration policy and compensation paid” published in the “Governance” section
of the Group’s website;
- the public disclosure concerning Basel 3 Pillar 3 contained in a specific separate file, is published on the Group’s website
in the Governance, Risk Management section;
- the Country-by-Country Reporting required by Article 89 of the Directive 2013/36/EU of the European Parliament and of
the Council (CRD IV) is also published on the Group’s website in the Governance, Risk Management section;
- lastly, with regard to the non-financial information required by Legislative Decree 254 of 30 December 2016
implementing Directive 2014/95/EU, Intesa Sanpaolo has opted to present this information in a separate report prepared
at consolidated level, called “Consolidated Non-Financial Statement”, which is available for consultation in the
“Sustainability” section of the Group’s website. A summary of the main contents of this document is provided in the
paragraph “Sustainability and Group strategy on Environmental, Social and Governance issues” of the opening chapter
of this Report.
195
Forecast for 2023
The recovery in the world economy appears to be strongly influenced by the outcome of the war between Russia and
Ukraine, possible new waves of Covid-19 infections due to the termination of China’s zero Covid policy, and the intensity and
duration of the monetary tightening policies in the advanced economies.
In many advanced economies, real GDP growth rates are expected to slow down sharply in 2023. Inflation is forecast to fall in
both the US and the Eurozone. The phase of monetary tightening is likely to come to an end in the United States, where the
FED funds rate should settle at 5.0-5.25%, while it is expected to continue throughout the first half of the year in the
Eurozone. Markets are factoring in an end point for the deposit rate of between 3.5% and 3.75%, while the Central Bank has
signalled that the rises will still be “significant” in early 2023. The prospect of the monetary policy tightening phase comi ng to
an end will keep the spread between long-term and short-term rates very compressed.
In this context, forecasts of economic performance made in the baseline scenario were also cautious for all the countries with
ISP subsidiaries. With regard to GDP, the forecast for the Central and South-Eastern Europe (CEE/SEE) region, after the
slowdown in 2022, is a growth rate of 1.0% in 2023.
In Russia, GDP is expected to be still in decline in 2023, although less than in 2022, whereas it is forecast to rise by 4.4% in
Egypt (IMF estimate) due to the effect of the launch of the major infrastructure projects announced by the local authorities.
Also for the countries with ISP subsidiaries, the economic outlook remains strongly conditioned by risks associated with the
duration of the ongoing conflict and possible new waves of Covid-19.
With regard to the Italian banking industry, a further slowdown in short-term loans to businesses is envisaged in 2023, while
for medium/long-term loans, following continued weakness in the first half of the year, a gradual return to a positive trend
could be buoyed by the knock-on effects on private investments resulting from the NRRP projects. However, financing needs
may be partly met using the considerable cash buffers accumulated by businesses in the two-year period 2020-21 and
deposited with banks, as well as bond issues and self-financing. Loans to households are projected to continue to slow down,
due to rising interest rates, the expected decline in real estate transactions, and the significant weakening of house prices.
For direct deposits, a moderate decrease of current accounts is expected to continue throughout 2023, as a result of a
combination of several factors, including the use of deposited cash by businesses and households and the reallocation of
savings to more remunerative forms. The shifting of funds towards time deposits, supported by more attractive interest-rate
offerings, will continue. The return of positive yields will continue to favour the diversification of household investments
towards government and corporate bonds, resulting in lower deposit levels. For bank bonds, after more than a decade of
declines, 2023 will see a return to growth. With the repayment of the TLTRO IIIs, banks are again turning to the wholesale
institutional market, through diversified short- and medium- to long-term funding channels and instruments. Bond issuances
will also be driven by the placement of MREL instruments, as well as green and social bonds.
With the completion of the rise of policy rates in 2023, asset management and life insurance are expected to recover. Inflows
of investments to these segments may be fuelled by the stock of cash on bank deposits. Another determining factor will be
the demand for advice in financial investment choices. In 2023, moderately positive inflows are expected for mutual funds and
portfolio management schemes, with a possible recovery for bond funds. For life insurance, collected premiums are expected
to increase. In particular, the level reached by yields is making it possible to meet pent-up demand for traditional policies,
which are again seen on the rise. At the same time, the offering will continue the strategy focused on hybrid products and
class III policies.
With regard to the Intesa Sanpaolo Group, the industrial initiatives of the 2022-2025 Business Plan are well underway and the
net income target of 6.5 billion euro for 2025 is confirmed, with clear and strong upside deriving from the increase of interest
rates.
For 2023, the operating margin is expected to significantly increase – as a result of solid growth in revenues driven by net
interest income (net interest income growth of around 2.5 billion euro in 2023 on 2022, assuming yearly average Euribor
1-month at 2.5%), coupled with a continuous focus on cost management – and net adjustments to loans are expected to
strongly decrease, leading to a net income well above the 2022 net income – calculated excluding the Russia/Ukraine
de-risking – of 5.5 billion euro.
A strong value distribution is envisaged:
− a cash payout ratio of 70% of the consolidated net income for each year of the Business Plan;
− distribution to shareholders of 1.7 billion euro through a buyback, already underway (launched on 13 February 2023 and
to be completed by 12 May 2023);
− any additional distribution to be evaluated on a yearly basis.
196
A solid capital position is envisaged, with the fully phased-in Common Equity Tier 1 ratio expected to be close to 13% at the
end of 2023 considering regulatory headwinds, above 13% in 2024 and above 13.5% in 2025 pre Basel 4 (above 13% post
Basel 4, at around 14% including DTA absorption), taking into account the cash payout ratio of 70% and not considering any
additional distribution – confirming the Basel 3/Basel 4 fully phased-in Common Equity Tier 1 ratio target of above 12% over
the 2022-2025 Business Plan time horizon.
The Board of Directors
Turin, 28 February 2023
197
Intesa Sanpaolo Gr oup
Consolidated ﬁnancial
statements
198
199
Consolidated ﬁnancial
statements
Consolidated financial statements
200
Consolidated balance sheet
(millions of euro)

Assets |  | 31.12.2022 | 31.12.2021
10. Cash and cash equivalents |  | 112,924 | 14,756
20. Financial assets measured at fair value through profit or loss |  | 47,577 | 52,731
| a) financial assets held for trading | 42,522 | 47,181
| b) financial assets designated at fair value | 1 | 4
| c) other financial assets mandatorily measured at fair value | 5,054 | 5,546
30. Financial assets measured at fair value through other comprehensive income |  | 49,716 | 67,580
| Financial assets pertaining to insurance companies, measured at fair value pursuant |  |
35. to IAS 39 |  | 172,725 | 206,800
40. Financial assets measured at amortised cost |  | 528,078 | 668,866
| a) due from banks | 32,884 | 163,937
| b) loans to customers | 495,194 | 504,929
| Financial assets pertaining to insurance companies measured at amortised cost |  |
45. pursuant to IAS 39 |  | 80 | 85
50. Hedging derivatives |  | 10,062 | 1,732
60. Fair value change of financial assets in hedged portfolios (+/-) |  | -9,752 | 392
70. Investments in associates and companies subject to joint control |  | 2,013 | 1,652
80. Technical insurance reserves reassured with third parties |  | 163 | 208
90. Property and equipment |  | 10,505 | 10,792
100. | Intangible assets | 9,830 | 9,342
| of which: |  |
| - goodwill | 3,626 | 3,574
110. | Tax assets | 18,273 | 18,808
| a) current | 3,520 | 3,555
| b) deferred | 14,753 | 15,253
120. | Non-current assets held for sale and discontinued operations | 638 | 1,422
130. | Other assets | 22,851 | 13,837
Total assets |  | 975,683 | 1,069,003

Changes
amount
%
98,168
-5,154
-9.8
-4,659
-9.9
-3
-75.0
-492
-8.9
-17,864
-26.4
-34,075
-16.5
-140,788
-21.0
-131,053
-79.9
-9,735
-1.9
-5
-5.9
8,330
-10,144
361
21.9
-45
-21.6
-287
-2.7
488
5.2
52
1.5
-535
-2.8
-35
-1.0
-500
-3.3
-784
-55.1
9,014
65.1
-93,320
-8.7
Consolidated financial statements
201
Consolidated balance sheet
(millions of euro)

Liabilities and Shareholders' Equity 31.12.2022 |  |  | 31.12.2021
10. Financial liabilities measured at amortised cost |  | 667,586 | 710,055
| a) due to banks | 137,482 | 165,258
| b) due to customers | 454,025 | 458,239
| c) securities issued | 76,079 | 86,558
| Financial liabilities pertaining to insurance companies measured at amortised cost |  |
15. pursuant to IAS 39 |  | 2,550 | 2,146
20. Financial liabilities held for trading |  | 46,512 | 56,306
30. Financial liabilities designated at fair value | Financial liabilities pertaining to insurance companies measured at fair value pursuant | 8,795 | 3,674
35. to IAS 39 |  | 71,744 | 84,770
40. Hedging derivatives |  | 5,346 | 4,868
50. Fair value change of financial liabilities in hedged portfolios (+/-) |  | -8,031 | 53
60. Tax liabilities |  | 2,306 | 2,285
| a) current | 297 | 363
| b) deferred | 2,009 | 1,922
| Liabilities associated with non-current assets held for sale and discontinued |  |
70. operations |  | 15 | 30
80. Other liabilities |  | 11,060 | 15,639
90. Employee termination indemnities |  | 852 | 1,099
100. | Allowances for risks and charges | 5,010 | 5,716
| a) commitments and guarantees given | 711 | 508
| b) post-employment benefits | 139 | 290
| c) other allowances for risks and charges | 4,160 | 4,918
110. | Technical reserves | 100,117 | 118,296
120. | Valuation reserves | -1,939 | -709
125. | Valuation reserves pertaining to insurance companies | -696 | 476
130. | Redeemable shares | - | -
140. | Equity instruments | 7,211 | 6,282
150. | Reserves | 15,827 | 17,706
155. | Interim dividend (-) | -1,400 | -1,399
160. | Share premium reserve | 28,053 | 27,286
170. | Share capital | 10,369 | 10,084
180. | Treasury shares (-) | -124 | -136
190. | Minority interests (+/-) | 166 | 291
200. | Net income (loss) (+/-) | 4,354 | 4,185
Total liabilities and shareholders’ equity |  | 975,683 | 1,069,003

Changes
amount
%
-42,469
-6.0
-27,776
-16.8
-4,214
-0.9
-10,479
-12.1
404
18.8
-9,794
-17.4
5,121
-13,026
-15.4
478
9.8
-8,084
21
0.9
-66
-18.2
87
4.5
-15
-50.0
-4,579
-29.3
-247
-22.5
-706
-12.4
203
40.0
-151
-52.1
-758
-15.4
-18,179
-15.4
1,230
-1,172
-
929
14.8
-1,879
-10.6
1
767
2.8
285
2.8
-12
-8.8
-125
-43.0
169
4.0
-93,320
-8.7
Consolidated financial statements
202
Consolidated income statement
(millions of euro)

|  | 2022 | 2021
10. Interest and similar income |  | 13,232 | 10,473
| of which: interest income calculated using the effective interest rate method | 12,708 | 10,039
20. Interest and similar expense |  | -3,547 | -2,480
30. Interest margin |  | 9,685 | 7,993
40. Fee and commission income |  | 11,285 | 12,087
50. Fee and commission expense |  | -2,708 | -2,723
60. Net fee and commission income |  | 8,577 | 9,364
70. Dividend and similar income |  | 225 | 161
80. Profits (Losses) on trading |  | -149 | 503
90. Fair value adjustments in hedge accounting |  | 33 | 36
100. | Profits (Losses) on disposal or repurchase of: | -48 | 758
| a) financial assets measured at amortised cost | 167 | 201
| b) financial assets measured at fair value through other |  |
| comprehensive income | -243 | 611
| c) financial liabilities | 28 | -54
| Profits (Losses) on other financial assets and liabilities measured at fair value through profit |  |
110. | or loss | 755 | 71
| a) financial assets and liabilities designated at fair value | 957 | -42
| b) other financial assets mandatorily measured at fair value | -202 | 113
| Profits (Losses) on financial assets and liabilities pertaining to insurance companies pursuant |  |
115. | to IAS 39 | 1,234 | 4,754
120. | Net interest and other banking income | 20,312 | 23,640
130. | Net losses/recoveries for credit risks associated with: | -2,624 | -2,843
| a) financial assets measured at amortised cost | -2,579 | -2,813
| b) financial assets measured at fair value through other comprehensive income | -45 | -30
135. | Net losses/recoveries pertaining to insurance companies pursuant to IAS 39 | -160 | -26
140. | Profits (Losses) on changes in contracts without derecognition | -5 | -29
150. | Net income from banking activities | 17,523 | 20,742
160. | Net insurance premiums | 10,358 | 10,557
170. | Other net insurance income (expense) | -9,398 | -13,525
180. | Net income from banking and insurance activities | 18,483 | 17,774
190. | Administrative expenses: | -11,579 | -12,012
| a) personnel expenses | -6,793 | -7,187
| b) other administrative expenses | -4,786 | -4,825
200. | Net provisions for risks and charges | -349 | -374
| a) commitments and guarantees given | -209 | 97
| b) other net provisions | -140 | -471
210. | Net adjustments to / recoveries on property and equipment | -700 | -659
220. | Net adjustments to / recoveries on intangible assets | -984 | -934
230. | Other operating expenses (income) | 934 | 980
240. | Operating expenses | -12,678 | -12,999
250. | Profits (Losses) on investments in associates and companies subject to joint control | 232 | 138
260. | Valuation differences on property, equipment and intangible assets measured at fair value | -46 | -21
270. | Goodwill impairment | - | -
280. | Profits (Losses) on disposal of investments | 16 | 289
290. | Income (Loss) before tax from continuing operations | 6,007 | 5,181
300. | Taxes on income from continuing operations | -1,630 | -1,138
310. | Income (Loss) after tax from continuing operations | 4,377 | 4,043
320. | Income (Loss) after tax from discontinued operations | - | -
330. | Net income (loss) | 4,377 | 4,043
340. | Minority interests | -23 | 142
350. | Parent Company’s net income (loss) | 4,354 | 4,185
| Basic EPS - Euro | 0.23 | 0.22
| Diluted EPS - Euro | 0.23 | 0.22

Changes
amount
%
2,759
26.3
2,669
26.6
1,067
43.0
1,692
21.2
-802
-6.6
-15
-0.6
-787
-8.4
64
39.8
-652
-3
-8.3
-806
-34
-16.9
-854
82
684
999
-315
-3,520
-74.0
-3,328
-14.1
-219
-7.7
-234
-8.3
15
50.0
134
-24
-82.8
-3,219
-15.5
-199
-1.9
-4,127
-30.5
709
4.0
-433
-3.6
-394
-5.5
-39
-0.8
-25
-6.7
-306
-331
-70.3
41
6.2
50
5.4
-46
-4.7
-321
-2.5
94
68.1
25
-
-273
-94.5
826
15.9
492
43.2
334
8.3
-
334
8.3
-165
169
4.0
Consolidated financial statements
203
Statement of consolidated comprehensive income
(millions of euro)

|  | 2022 | 2021
10. Net income (Loss) | Other comprehensive income (net of tax) that may not be reclassified to the income | 4,377 | 4,043
| statement | 240 | 23
20. Equity instruments designated at fair value through other comprehensive income |  | -114 | -37
| Financial liabilities designated at fair value through profit or loss (change in own credit |  |
30. rating) |  | 32 | 26
40. Hedging of equity instruments designated at fair value through other comprehensive income |  | - | -
50. Property and equipment |  | 141 | 30
60. Intangible assets |  | - | -
70. Defined benefit plans |  | 181 | 4
80. Non current assets classified as held for sale |  | - | -
90. Share of valuation reserves connected with investments carried at equity | Other comprehensive income (net of tax) that may be reclassified to the income | - | -
| statement | -2,721 | -543
100. | Hedges of foreign investments | -10 | -
110. | Foreign exchange differences | -219 | 103
120. | Cash flow hedges | 237 | 127
130. | Hedging instruments (not designated elements) | - | -
| Financial assets (other than equities) measured at fair value through other comprehensive |  |
140. | income | -1,447 | -530
| Financial assets measured at fair value through other comprehensive income, pertaining |  |
145. | to Insurance companies | -1,268 | -286
150. | Non-current assets held for sale and discontinued operations | - | -
160. | Share of valuation reserves connected with investments carried at equity | -14 | 43
170. | Total other comprehensive income (net of tax) | -2,481 | -520
180. | Total comprehensive income (captions 10 + 170) | 1,896 | 3,523
190. | Total consolidated comprehensive income pertaining to minority interests | -53 | -135
200. | Total consolidated comprehensive income pertaining to the Parent Company | 1,949 | 3,658

Changes
amount
%
334
8.3
217
77
6
23.1
-
111
-
177
-
-
2,178
10
-322
110
86.6
-
917
982
-
-57
1,961
-1,627
-46.2
-82
-60.7
-1,709
-46.7
Consolidated financial statements
204
Changes in consolidated shareholders’ equity as at 31 December 2022

|  |  |  |  |  |  |  |  |  |  |  |  | (millions of euro)
|  |  |  |  |  |  |  | 31.12.2022 |  |  |  |  |  |
|  |  | Share |  |  | Valuation | Valuation | Equity | Interim | Treasury | Net | Shareholders' | Group | Minority
| Share capital | premium | Reserves | reserves | reserves | instruments | dividend | shares | income | equity | shareholders' | interests
|  |  | reserve |  |  |  | attributable |  |  |  | (loss) |  | equity |
|  |  |  |  |  |  | to |  |  |  |  |  |  |
| ordinary | other |  | retained | other |  | insurance |  |  |  |  |  |  |
| shares | shares |  | earnings |  |  | companies |  |  |  |  |  |  |
AMOUNTS AS AT 31.12.2021 | 10,223 | - | 27,309 | 16,936 | 1,089 | -757 | 476 | 6,282 | -1,399 | -136 | 4,043 | 64,066 | 63,775 | 291
Changes in opening balances | - | - | - | - | - | - | - | - | - | - | - | - | - | -
AMOUNTS AS AT 1.1.2022 | 10,223 | - | 27,309 | 16,936 | 1,089 | -757 | 476 | 6,282 | -1,399 | -136 | 4,043 | 64,066 | 63,775 | 291
ALLOCATION OF NET INCOME OF THE PREVIOUS YEAR (a) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves | - | - | - | 1,311 | - | - | - | - | - | - | -1,311 | - | - | -
Dividends and other allocations | - | - | - | - | - | - | - | - | 1,399 | - | -2,732 | -1,333 | -1,316 | -17
CHANGES IN THE PERIOD |  |  |  |  |  |  |  |  |  |  |  |  |  |
Changes in reserves | - | - | 595 | - | -185 | 3 | - | - | - | - | - | 413 | 413 | -
Operations on shareholders' equity |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issue of new shares | 285 | - | 405 | - | - | - | - | - | - | 1,795 | - | 2,485 | 2,485 | -
Purchase of treasury shares | - | - | - | - | - | - | - | - | - | -1,783 | - | -1,783 | -1,783 | -
Interim dividend | - | - | - | - | - | - | - | - | -1,400 | - | - | -1,400 | -1,400 | -
Dividends | - | - | -233 | - | - | - | - | - | - | - | - | -233 | -233 | -
Changes in equity instruments | - | - | - | - | - | - | - | 929 | - | - | - | 929 | 929 | -
Derivatives on treasury shares | - | - | - | - | - | - | - | - | - | - | - | - | - | -
Stock options | - | - | - | - | - | - | - | - | - | - | - | - | - | -
Changes in equity investments | - | - | - | - | - | - | - | - | - | - | - | - | - | -
Other Total comprehensive income for the | 29 | - | -8 | -3,240 | - | - | - | - | - | - | - | -3,219 | -3,164 | -55
period | - | - | - | - | - | -1,309 | -1,172 | - | - | - | 4,377 | 1,896 | 1,949 | -53
SHAREHOLDERS’ EQUITY AS AT 31.12.2022 | 10,537 | - | 28,068 | 15,007 | 904 | -2,063 | -696 | 7,211 | -1,400 | -124 | 4,377 | 61,821 | 61,655 | 166
- Group | 10,369 | - | 28,053 | 14,923 | 904 | -1,939 | -696 | 7,211 | -1,400 | -124 | 4,354 | 61,655 |  |
- minority interests | 168 | - | 15 | 84 | - | -124 | - | - | - | - | 23 | 166 |  |

(a) Includes dividends and amounts allocated to the charity allowance of the Parent Company, as well as those relating to consolidated companies, pertaining to minorities.
Consolidated financial statements
205
Changes in consolidated shareholders’ equity as at 31 December 2021

|  |  |  |  |  |  |  |  |  |  |  |  | (millions of euro)
|  |  |  |  |  |  |  | 31.12.2021 |  |  |  |  |  |
|  |  | Share |  |  | Valuation | Valuation | Equity | Interim | Treasury | Net | Shareholders' | Group | Minority
| Share capital | premium | Reserves | reserves | reserves | instruments | dividend | shares | income | equity | shareholders' | interests
|  |  | reserve |  |  |  | attributable |  |  |  | (loss) |  | equity |
|  |  |  |  |  |  | to |  |  |  |  |  |  |
| ordinary | other |  | retained | other |  | insurance |  |  |  |  |  |  |
| shares | shares |  | earnings |  |  | companies |  |  |  |  |  |  |
AMOUNTS AS AT 31.12.2020 | 10,241 | - | 27,463 | 16,790 | 992 | -570 | 809 | 7,441 | - | -130 | 3,285 | 66,321 | 65,871 | 450
Changes in opening balances | - | - | - | - | - | - | - | - | - | - | - | - | - | -
AMOUNTS AS AT 1.1.2021 | 10,241 | - | 27,463 | 16,790 | 992 | -570 | 809 | 7,441 | - | -130 | 3,285 | 66,321 | 65,871 | 450
ALLOCATION OF NET INCOME OF THE PREVIOUS YEAR (a) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves | - | - | - | 2,736 | - | - | - | - | - | - | -2,736 | - | - | -
Dividends and other allocations | - | - | - | - | - | - | - | - | - | - | -549 | -549 | -549 | -
CHANGES IN THE PERIOD |  |  |  |  |  |  |  |  |  |  |  |  |  |
Changes in reserves | - | - | 7 | - | 97 | - | - | - | - | - | - | 104 | 100 | 4
Operations on shareholders' equity |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issue of new shares | - | - | - | - | - | - | - | - | - | 63 | - | 63 | 63 | -
Purchase of treasury shares | - | - | - | - | - | - | - | - | - | -69 | - | -69 | -69 | -
Interim dividend | - | - | - | - | - | - | - | - | -1,399 | - | - | -1,399 | -1,399 | -
Dividends | - | - | -161 | -1,932 | - | - | - | - | - | - | - | -2,093 | -2,093 | -
Changes in equity instruments | - | - | - | - | - | - | - | -1,159 | - | - | - | -1,159 | -1,159 | -
Derivatives on treasury shares | - | - | - | - | - | - | - | - | - | - | - | - | - | -
Stock options | - | - | - | - | - | - | - | - | - | - | - | - | - | -
Changes in equity investments | - | - | - | - | - | - | - | - | - | - | - | - | - | -
Other Total comprehensive income for the | -18 | - | - | -658 | - | - | - | - | - | - | - | -676 | -648 | -28
period | - | - | - | - | - | -187 | -333 | - | - | - | 4,043 | 3,523 | 3,658 | -135
SHAREHOLDERS’ EQUITY AS AT 31.12.2021 | 10,223 | - | 27,309 | 16,936 | 1,089 | -757 | 476 | 6,282 | -1,399 | -136 | 4,043 | 64,066 | 63,775 | 291
- Group | 10,084 | - | 27,286 | 16,617 | 1,089 | -709 | 476 | 6,282 | -1,399 | -136 | 4,185 | 63,775 |  |
- minority interests | 139 | - | 23 | 319 | - | -48 | - | - | - | - | -142 | 291 |  |

(a) Includes dividends and amounts allocated to the charity allowance of the Parent Company, as well as those relating to consolidated companies, pertaining to minorities.
Consolidated financial statements
206
Consolidated statement of cash flows
(millions of euro)

| 2022 | 2021
A. OPERATING ACTIVITIES |  |
1. Cash flow from operations | 11,169 | 10,854
Net income (loss) (+/-) | 4,377 | 4,043
Gains/losses on financial assets held for trading and on other financial assets/liabilities measured |  |
at fair value through profit and loss (-/+) | 1,523 | -49
Gains/losses on financial assets pertaining to insurance companies measured at amortised cost |  |
pursuant to IAS 39 (-/+) | -957 | -1,670
Gains/losses on hedging activities (-/+) | -33 | -36
Gains/losses on hedging activities pertaining to insurance companies measured at amortised cost |  |
pursuant to IAS 39 (-/+) | - | -
Net losses/recoveries for credit risk (+/-) | 3,147 | 3,621
Adjustments to/net recoveries on property, equipment and intangible assets (+/-) | 1,684 | 1,592
Net provisions for risks and charges and other costs/revenues (+/-) | 918 | 374
Net insurance premiums to be collected (-) | -5 | 13
Other insurance revenues/charges to be collected (-/+) | -827 | 3,266
Taxes, duties and tax credits to be paid/collected(+/-) | 1,373 | 1,638
Net adjustments to/recoveries on discontinued operations net of tax effect (+/-) | - | -
Other adjustments (+/-) | -31 | -1,938
2. Cash flow from / used in financial assets | 151,669 | -36,147
Financial assets held for trading | 1,472 | 6,276
Financial assets designated at fair value | 3 | -27
Other financial assets mandatorily measured at fair value | 290 | -1,068
Financial assets measured at fair value through other comprehensive income | 14,858 | -9,351
Financial assets pertaining to insurance companies, measured at fair value pursuant to IAS 39 | 21,464 | 4,678
Financial assets measured at amortised cost | 139,249 | -32,999
Financial assets pertaining to insurance companies measured at amortised cost pursuant to IAS 39 | 9 | 302
Other assets | -25,676 | -3,958
3. Cash flow from / used in financial liabilities (*) | -60,562 | 34,098
Financial liabilities measured at amortised cost | -44,404 | 45,278
Financial liabilities pertaining to insurance companies measured at amortised cost pursuant to IAS 39 | 403 | 112
Financial liabilities held for trading | -8,904 | -2,581
Financial liabilities designated at fair value | 6,140 | 626
Financial liabilities pertaining to insurance companies measured at fair value pursuant to IAS 39 | -1,702 | -276
Other liabilities | -12,095 | -9,061
Net cash flow from (used in) operating activities | 102,276 | 8,805
B. INVESTING ACTIVITIES |  |
1. Cash flow from | 455 | 166
Sales of investments in associates and companies subject to joint control | 295 | 4
Dividends collected on investments in associates and companies subject to joint control | 79 | 48
Sales of property and equipment | 78 | 96
Sales of intangible assets | 3 | 18
Sales of subsidiaries and business branches | - | -
2. Cash flow used in | -993 | -2,392
Purchases of investments in associates and companies subject to joint control | -217 | -54
Purchases of property and equipment | -576 | -775
Purchases of intangible assets | -1,272 | -1,117
Purchases of subsidiaries and business branches | 1,072 | -446
Net cash flow from (used in) investing activities | -538 | -2,226
C. FINANCING ACTIVITIES |  |
Issues/purchases of treasury shares | -1,118 | -6
Share capital increases | 616 | -1,532
Dividend distribution and other | -2,966 | -4,041
Disposal/acquisition of minority interests in subsidiaries | -50 | -14
Net cash flow from (used in) financing activities | -3,518 | -5,593
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 98,220 | 986
RECONCILIATION |  |
Financial statement captions |  |
Cash and cash equivalents at beginning of period | 14,756 | 13,733
Net increase (decrease) in cash and cash equivalents | 98,220 | 986
Cash and cash equivalents: foreign exchange effect | -52 | 37
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 112,924 | 14,756

LEGEND: (+) from (–) used in
(*) With regard to the disclosure required by par. 44 B of IAS 7, it is noted that the changes in liabilities deriving from financing activities amount to 60.562 million euro (cash flow
used) and comprise -63.190 million euro in cash flows, -6.140 million euro in fair value changes and +8.768 million euro in other changes.
The significant increase in Cash and cash equivalents at the end of the financial year is linked to the different ways in which
excess liquidity is used. Due to the rise in interest rates, it is no longer deposited in the Reserve Requirement account
reported in the caption “Financial assets measured at amortised cost – Due from banks”, but in overnight deposits under
“Current accounts and on-demand deposits with Central Banks” in the amount of approximately 89 billion euro.
207
Notes to the consolidated
ﬁnancial statements
208
209
Part A – Accounting policies
A.1 – GENERAL CRITERIA
SECTION 1 – DECLARATION OF COMPLIANCE WITH IAS/IFRS
As set forth by Legislative Decree 38 of 28 February 2005, the Intesa Sanpaolo Group’s consolidated financial statements
have been prepared in compliance with the IAS/IFRS issued by the International Accounting Standards Board (IASB) and the
related interpretations of the International Financial Reporting Standards - Interpretations Committee (IFRS-IC) and endorsed
by the European Commission as provided for by EC Regulation 1606 of 19 July 2002.
The consolidated financial statements as at 31 December 2022 have been prepared based on the “Instructions for the
preparation of the separate and consolidated financial statements of banks and financial companies, which are parent
companies of banking groups” issued by the Bank of Italy, in the exercise of powers set forth by Article 43 of Legislative
Decree 136/2015
(
)
, with Regulation of 22 December 2005, which issued Circular 262/2005, and with the subsequent
updates of 18 November 2009, 21 January 2014, 22 December 2014, 15 December 2015, 22 December 2017, 30 November
2018 and 29 October 2021
70
.
These Instructions set out compulsory financial statement forms, as well as the contents of the Notes to the consolidated
financial statements.
The financial statements have been prepared using the IAS/IFRS in force as at 31 December 2022 (including the SIC and
IFRIC interpretation documents) as listed in the attachments to these financial statements.
The table below shows the new standards or amendments to existing ones, together with the related European Commission
endorsement regulations, which came into force in 2022.
IFRS endorsed as at 31.12.2022 in force since 2022
Regulation
endorsement
Amendments
Effective date
1080/2021
Amendments to IAS 16 Property, Plant and Equipment, IAS 37
Provision, Contingent Liabilities and Contingent Assets, IAS 41
Agricolture, IFRS 1 First-time Adoption of International Reporting
Standards, IFRS 3 Business Combinations and IFRS 9 Financial
Instruments
01/01/2022
First financial year starting on or after 01/01/2022
As shown in the table above, starting on 1 January 2022, the provisions of Regulation (EU) no. 1080/2021 of 28 June 2021,
which implements several less material amendments, published by the IASB on 14 May 2020, to the international accounting
standards IAS 16 Property, Plant and Equipment, IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IFRS 3
Business Combinations are effective.
The amendments relate to:
‒ IAS 16 – Cost components: the amendments, which are not pertinent to the Group, introduce a prohibition on deducting
from the cost of property, plant and equipment the amounts received from the sale of articles produced while the
company was preparing the asset for the intended use. The company must recognise such proceeds from sales and the
related costs in the income statement;
‒ IAS 37 – Onerous contracts: it is clarified that to assess whether a contract is onerous, all costs directly related to the
contract, rather than incremental costs necessary for fulfilling the contract, must be included in the estimate. Accordingly,
the assessment of whether a contract is onerous includes the incremental costs (for example, the cost of the direct
materials used in processing), as well as all costs that the entity cannot avoid as a consequence of entering into the
contract (for example, the portion of personnel expenses and depreciation of the machinery employed to fulfil the
contract);
‒ IFRS 3 – References to the Conceptual Framework: several references were updated to the new version of the
Conceptual Framework of 2018 which, nonetheless, do not entail changes to the pre-existing accounting methods. In
addition, the prohibition on recognising contingent assets (i.e., assets whose existence will only be confirmed by
uncertain future events) in business combinations was explicitly stated (previously, this prohibition was explicitly stated
only in the Basis for Conclusions).
69
Art. 43 of Legislative Decree 136/2015 confirmed to the Bank of Italy the powers concerning the layouts of financial statements already previously
attributed to the same Authority by Legislative Decree 38/2005.
70
The 8th update of 17 November 2022, which amends Circular no. 262 to take account of the new IFRS 17 Insurance Contracts, which will be effective
from 1 January 2023, will apply from the financial statements for the periods ending on or after 31 December 2023.
Notes to the consolidated financial statements – Part A – Accounting policies
210
The Regulation in question also endorses the customary annual improvements, the Annual Improvements to IFRS Standards
2018-2020 Cycle, which clarify the formulation or correct errors, oversights or conflicts between the requirements of the
Standards. Those minor amendments included changes to IFRS 9 Financial Instruments, providing several clarifications on
the fees and commissions to be included in the 10% test for derecognising financial liabilities. In that regard, it is specified that
only fees paid or collected between the parties are to be included, not fees directly attributable to third parties.
The Regulation introduces several changes and clarifications of little significance which, therefore, do not have significant
impacts on the Group.
The table below shows the new standards and amendments to existing ones, together with the related EU endorsement
regulations, which will become mandatory on 1 January 2023 – for financial statements reflecting the calendar year – or after
this date, and for which the Intesa Sanpaolo Group has not exercised the option of early adoption.
IFRS endorsed as at 31.12.2022 applicable subsequent to 31.12.2022
Regulation
endorsement
Title
Effective date
2036/2021
IFRS 17 Insurance Contracts
01/01/2023
First financial year starting on or after 01/01/2023
Regulation
endorsement
Amendments
Effective date
2036/2021
Amendments to IFRS 17 Insurance Contracts
01/01/2023
First financial year starting on or after 01/01/2023
357/2022
Amendments to IAS 1 Presentation of Financial Statements -
Disclosures of Accounting Policies
01/01/2023
First financial year starting on or after 01/01/2023
357/2022
Amendments to IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors - Definition of Accounting Estimates
01/01/2023
First financial year starting on or after 01/01/2023
1392/2022
Amendments to IAS 12 Income Taxes - Deferred Tax related to Assets
and Liabilities arising from a Single Transaction
01/01/2023
First financial year starting on or after 01/01/2023
1491/2022
Amendments to IFRS 17 Insurance Contracts - Initial Application of
IFRS 17 and IFRS 9 - Comparative Information
01/01/2023
First financial year starting on or after 01/01/2023
With reference to endorsement regulations that implement changes to existing accounting standards or new IAS/IFRS,
Regulation no. 2036/2021 of 19 November 2021 which endorses the new accounting standard IFRS 17 “Insurance
Contracts”, and the subsequent Regulation no. 1491/2022 of 8 September 2022, adopting the amendments to IFRS 17 –
Initial Application of IFRS 17 and IFRS 9 – Comparative Information, are here reported for their particular relevance. For the
disclosure relating to the adoption of IFRS 17 In surance Contracts and IFRS 9 Financial Instruments by the Group’s
insurance companies, refer to the specific paragraph.
Starting on 1 January 2023, Regulation no. 357/2022 and Regulation no. 1392/2022, illustrated below, will be applicable.
Regulation no. 357/2022 of 2 March 2022 – Amendments to IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
Regulation no. 357/2022 of 2 March 2022 adopts several narrow scope amendments and additional clarifications to support
entities in deciding which accounting policy information must be disclosed (amendments to IAS 1) and distinguishing between
accounting policies and estimates (amendments to IAS 8). Therefore, it is not expected to have significant impacts on the
Group, even though it could be a useful reference for analyses and for improving financial statement disclosure.
More specifically, the Regulation introduces amendments to the following accounting standards:
• IAS 1 Presentation of Financial Statements
These are narrow-scope amendments to IAS 1 Presentation of Financial Statements and to the IFRS Practice Statement 2
“Making Materiality Judgements”, which provide guidance to assist companies in deciding which accounting policy inform ation
must be disclosed and, thus, improving their disclosure, to make it more useful for investors and other primary users of
financial statements.
The amendments to IAS 1 require that companies provide material accounting policy information, replacing the previous term
“significant”, which is not defined in the IFRS and, therefore, could lack clarity. Accounting policy information is material if,
when considered together with other information included in the financial statements, it can reasonably be expected to
influence decisions made by the primary users of financial statements. In other words, accounting policy information is
material if it enables users to understand the information reported in the financial statements on material transactions.
Instead, it is not necessary to illustrate the accounting policies relating to immaterial transactions or events and, in any case,
that information must not obscure material information.
In any event, entity-specific information is more useful than standardised information or information that only duplicates or
summarises the requirements of the IFRS.
Several amendments were also made to Practice Statement 2, which provides guidance on how to apply the concept of
materiality to accounting policy information;
Notes to the consolidated financial statements – Part A – Accounting policies
211
• IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
The amendments to IAS 8 aim to provide further clarifications on how to distinguish changes in accounting policies from
changes in accounting estimates. This distinction is important because the changes in accounting estimates are applied
prospectively only to future transactions and events, while changes in accounting policies are generally applied retrospectively
to past transactions and other events. Nonetheless, in the past, entities had difficulty in distinguishing between the two cases
based on the provisions of IAS 8.
In that regard, a definition of accounting estimate was added, which previously was not provided – “accounting estimates are
monetary amounts in financial statements that are subject to measurement uncertainty” – and other amendments were
introduced to provide greater clarifications. The entity may need to change an accounting estimate if changes occur in the
circumstances on which the accounting estimate was based or as a result of new information, new developments or more
experience. By its nature, a change in an estimate does not relate to prior periods and is not the correction of an error. It may
only influence the income statement results of current or future periods (for example, following a change in the estimated
useful life of a depreciable asset).
Corrections of errors are distinguished from changes in accounting estimates: accounting estimates by their nature are
approximations that may need revision as additional information becomes known. For example, the gain or loss recognised
on the outcome of a contingency is not the correction of an error.
Regulation no. 1392/2022 - Amendments to IAS 12 Income Taxes – Deferred Tax Related to Assets and Liabilities Arising
from a Single Transaction
With Regulation no. 1392/2022 of 11 August 2022, the European Commission adopted the amendment to IAS 12 Income
Taxes “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction”, published by the IASB on 7 May
2021. The amendments clarify how companies have to account for deferred taxes on transactions such as leases and
decommissioning obligations and aim to reduce diversity in the reporting of deferred tax assets and liabilities on those
transactions
71
. The cases that could be material for the ISP Group are related to the accounting for lease transactions in
which the lessee initially recognises in the balance sheet the right of use and the corresponding lease liability, which are
generally of equal amounts. Based on the applicable tax legislation, equal amounts of taxable and deductible temporary
differences may arise at the time of initial recognition of the assets and the liabilities. The amendments in question specified
that, in those cases, entities must recognise any resulting deferred tax liability and asset (therefore, the exemption set out in
paragraphs 15 and 24 of IAS 12 - which permits omitting the recognition of deferred tax assets and liabilities in the case of
transactions which, on the whole, do not impact profit - does not apply to those cases).
The amendments in question are immaterial, in terms of quantitative impact, for Intesa Sanpaolo and for the Italian companies
of the Group, as, under the tax provisions applicable in Italy (in accordance with the “IFRS 16 Tax Decree”), both the right of
use and the lease liability are fully relevant for tax purposes (statutory value and tax value are aligned), and the resultin g
income statement components recognised in the financial statements (depreciation, amortisation and interest) are treated
accordingly based on the tax provisions. That approach is valid not only for new leases, following the initial application of
IFRS 16, but also for transactions existing at the time of FTA, following the tax realignment implemented, as permitted by the
tax decree. Therefore, no taxable or deductible temporary differences arise.
As regards any impacts on the Group’s international companies, the analyses conducted did not show any significant aspects
to be highlighted.
Adoption of IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments by the Group’s Insurance
Companies
This paragraph provides disclosure on the main impacts expected from the introduction of the new IFRS 17 Insurance
Contracts, as well as the application of IFRS 9 Financial Instruments for the Group’s Insurance Companies, in relation to the
requirements of IAS 8, paragraphs 30 and 31, and in accordance with the guidance from the European Securities and
Markets Authority (ESMA)
72
. The interaction between the two standards - IFRS 17 and IFRS 9 - which the companies of the
Insurance Division will apply simultaneously and for the first time from 1 January 2023 is also illustrated.
Note that the disclosure on the transition to the new standards will be provided in the 2023 Interim Statement, which will be
the first financial report published following the first-time adoption of the two standards, and will contain the information
required by the IFRSs and by the ESMA.
The new IFRS 17 published by the IASB in May 2017 and subject to subsequent amendments published on 25 June 2020
and 9 December 2021, was endorsed by Regulation (EU) No. 2036/2021 of 19 November 2021 and will be effective from 1
January 2023. The European endorsement regulation makes it possible, on an optional basis, to exempt intergenerationally-
mutualised and cash flow matched contracts from the application of the obligation of grouping into annual cohorts set out by
IFRS 17. Moreover, with Regulation no. 1491/2022 of 8 September 2022, several narrow-scope amendments were introduced
for the preparation of comparative information upon initial application of IFRS 17 and IFRS 9.
Note that IFRS 9 Financial Instruments, issued by the IASB in July 2014 and endorsed by the European Commission through
Regulation No. 2067/2016, replaced IAS 39 in the requirements for the classification and measurement of financial
instruments with effect from 1 January 2018.
The Intesa Sanpaolo Group, as a financial conglomerate primarily engaged in banking activities, has exercised the option of
adopting the Deferral Approach (or Temporary Exemption), according to which the financial assets and liabilities of the
subsidiary insurance companies continue to be recognised in accordance with the provisions of IAS 39, until the entry into
71
According to the definitions in IAS 12, taxable/deductive temporary differences are temporary differences between carrying amounts and tax amounts
which, when determining the taxable income (tax loss) of future periods, will result in taxable/deductible amounts in the future when the carrying amount
of the asset is recovered or the liability is settled.
72
This refers to the ESMA Public Statement of 13 May 2022 “Transparency on implementation of IFRS 17 Insurance Contracts”, also referred to in the
more recent ESMA Public Statement “European common enforcement priorities for 2022 annual financial reports” of 30 October 2022 and, for IFRS 9,
the ESMA Public Statement of 10 November 2016 “Issues for consideration in implementing IFRS 9: Financial Instruments”.
Notes to the consolidated financial statements – Part A – Accounting policies
212
force of the new financial reporting standard on insurance contracts (IFRS 17) on 1 January 2023. The deferral of the
adoption of IFRS 9 by the companies of the Insurance Division thus means that, starting from 1 January 2018, different
accounting standards need to be applied for the financial assets and liabilities within the Group’s consolidated financial
statements.
In this context, from 1 January 2023, the Group Insurance Division will apply IFRS 9 and IFRS 17 together for the first time.
The implementation of IFRS 9 by the Insurance Division is consistent with the accounting policies defined by the Intesa
Sanpaolo Group to ensure the correct and uniform application of the new standard at consolidated level.
IFRS 17 Insurance Contracts
Overview of IFRS 17
IFRS 17 replaces IFRS 4, which, from the time of its initial publication, was considered an interim standard and – as such – its
objectives did not include establishing a single approach for the presentation of insurance contracts, referring to the
accounting models set out in local regulations of the individual countries. Addressing this aspect – together with better
disclosure regarding the operating performance of the insurance contracts – therefore forms the basis of the new standard.
The main provisions of the standard are illustrated below:
‒ initial recognition of the insurance liability: when the contract is signed with the policyholder, the insurance entity
recognises a liability whose amount represents the sum of the present value of the expected contractual cash flows
(Present Value Future Cash Flows – “PVFCF”), also including an appropriate Risk Adjustment (“RA”) to cover non-
financial risks and the Contractual Service Margin (“CSM”), which represents the present value of the future profits on
insurance contracts;
‒ grouping of contracts: the application of IFRS 17 involves the identification of “portfolios” of insurance contracts (groups
of contracts that are subject to similar risks and managed together). Each portfolio is further subdivided into gr oups
consisting of contracts with similar characteristics in terms of expected profitability, thus distinguishing between profitable
contracts (with a positive contractual service margin) and onerous contracts (with a negative contractual service margin);
‒ the measurement models envisaged by the standard: IFRS 17 envisages a measurement model known as General
Model (“GM”) applicable in principle to all contracts, except for contracts with direct participation features, for which the
Variable Fee Approach (“VFA”) is applied, if the eligibility criteria based on the nature of the participation features are
met. There is also an optional simplified model (Premium Allocation Approach – “PAA”) for the valuation of the Liability
for Remaining Coverage (“LRC”, similar to the reserve for unearned premiums or premium carry-forward) for contracts
with a coverage period of one year or less and for all contracts where the valuation is not materially different from that
resulting from the application of the General Model;
‒ transition: upon first-time adoption, IFRS 17 requires that all contracts in the portfolio are accounted for as if the rules
introduced had always been in force; this transition approach is referred to as the Full Retrospective Approach (“FRA”).
Given that its application can be very complex due to the unavailability of the time series of the attributes required to
manage the breadth of the data model envisaged by IFRS 17, which enables its full application, the standard allows the
possibility of using two other approaches, optional to each other:
o the Modified Retrospective Approach (“MRA”), which approximates the results obtained from the FRA using a
retrospective approach, including some simplifications regarding the estimation of the CSM, the level of aggregation
of the contracts, the use of annual cohorts and the discount rates to be used;
o the Fair Value Approach (“FVA”), according to which the CSM/Loss Component (in the case of onerous contracts) is
calculated as the difference between the fair value of the group of contracts to which it refers and the value of the
Fulfilment Cash Flows at the same date (consisting of the sum of the PVFCF and RA);
‒ subsequent measurement of the insurance liability: IFRS 17 requires an update to the measurement at each reporting
period of the above elements (cash flows and contractual service margin), to verify the consistency of the estimates with
the current market conditions. The effects of any updates are recorded in the financial statements at the first reporting
date: in profit or loss for changes relating to current events or events that have already occurred or as a reduction of the
contractual service margin (CSM) when the changes relate to future events. Solely with regard to changes in financial
variables (and not the others, i.e. mainly related to policyholder behaviour), it is left to the entities to decide – for each
grouping of contracts – whether to present the effects of the changes through profit or loss or through other
comprehensive income (the so called OCI option);
‒ measurement of the insurance revenue: IFRS 17 requires the presentation in profit or loss of the earnings “by margins”
achieved during the life of the policies, i.e. when the entity provides the services to the insured, and does not therefore
require the recognition of any revenue at the time of entering into the contract. With regard to that aspect, the standard is
asymmetrical, as, for groups of onerous contracts, it requires immediate recognition of losses through profit or loss;
‒ measurement of the performance: with a view to providing disclosure that ensures better comparability of the
performance of the insurance companies, a distinct and separate presentation is required of the two main components
that typically contribute to making up the earnings of insurance undertakings: the first, which represents the profit from
the insurance service provided (the “technical margin”) and the second, which brings together all the financial
components (results of investments, effects of financial variables used in the valuations of the contracts, etc.). Changes
in the future estimates of premiums linked to the outstanding contracts at the reporting date (cash flows to be received)
and payments (cash flows to be paid) are recognised in profit or loss over the entire remaining contractual lifetime of the
policies concerned.
Notes to the consolidated financial statements – Part A – Accounting policies
213
With reference to the representation of IFRS 17 in the consolidated financial statements of banks leading financial
conglomerates, note that on 17 November 2022 the Bank of Italy published the 8th update to Circular no. 262 of 22
December 2005, which will be applicable starting from financial statements as at 31 December 2023.
In order to reduce the burden of preparation for banks, in drafting the update, the Bank of Italy considered the equivalent
provisions issued by IVASS
73
with reference to IAS/IFRS insurance financial statements, providing a reference to the
provisions issued by IVASS for the aspects relating to insurance contracts pertaining to consolidated insurance companies.
The changes introduced regard the alignment of the consolidated financial statement and the related disclosure in the notes
to the consolidated financial statements to the provisions of IFRS 17, which amended IAS 1 and IFRS 7, and the alignment
with the provisions issued by IVASS. Specifically, in the consolidated balance sheet, the captions “Insurance liabilities” and
“Insurance assets” provide information on the insurance contracts issued and reinsurance contracts held. With reference to
the consolidated income statement, income from insurance business shall distinguish between income/expenses for
insurance services and net financial income/expenses relating to insurance contracts issued and reinsurance contracts held.
The notes to the consolidated financial statements are aligned, according to the provisions issued by IVASS, to present
disclosure on the nature and extent of risks arising from insurance contracts, pursuant to the provisions of IFRS 17. The Ban k
of Italy did not make changes regarding the presentation of IFRS 9 amounts. Therefore, financial instruments belonging t o
insurance companies (including insurance products to which IFRS 9 is applied) in the financial statement forms pursuant to
Circular 262 shall be presented along with those of the bank and, where necessary, specific evidence shall be provided in the
tables of the Notes.
Implementation Project for the Insurance Division: organisational and information system impacts
Within the Intesa Sanpaolo Group, IFRS 17 is applicable to the insurance products and investment products with discretionary
participation features of the Insurance Division.
The IFRS 17 implementation project for the Insurance Division started in June 2019 and is divided into several strands that
have been set up uniformly for all the companies of the Insurance Division, taking into account the specific business
characteristics of each company:
‒ definition of the methodological framework: the key topics have been identified, corresponding to the related approaches
set out in the Technical Papers, in terms of product classification, determination of future cash flows and calculation of
the CSM;
‒ evolution of information systems: the “Big Picture” of this project, which includes the mapping of applications and their
IT interfaces, established in December 2020, has been maintained and implemented also for the insurance companies
subsequently acquired, and envisages the same IT structure for all the companies of the Insurance Division, taking into
account their specific characteristics. Moreover, the analysis and preparation of the business requirements have been
carried out. As at 30 June 2022, the implementation had been completed aimed at including the part of the processes
relating to the calculation of the forward-looking measures introduced by IFRS 17 (mainly cash flows, risk adjustment and
CSM) into the accounting and financial reporting process. Lastly, the IT developments for the actuarial engines have
been completed;
‒ training activities: these activities were planned for the entire duration of the project and allocated across the technical
and operational areas and top management, and envisage specific sessions dedicated to the directors of the companies
of the Insurance Division and the Parent Company;
‒ changes to processes and internal procedures: the target operating model has been formalised, i.e. the design and
formalisation of the systems, organisational processes and the offices responsible for them, in order to control the new
process for preparing the financial statements;
‒ transition and parallel running in 2022: the work on the quantification of the opening balances as at 1 January 2022 and
the calculation of the comprehensive income for 2022 has been completed. The production in the IT systems of the
comparative information for the quarters of 2022 has been started for all the companies of the Insurance Division.
From an organisational perspective, in addition to the process for the preparation of the financial statements, the IFRS 17
project includes the implementation of systems and processes related to planning and control and asset and liability
management, in order to ensure the Group companies’ management capabilities according to the new metrics introduced by
IFRS 17.
During 2022 a specific project was also launched at the Parent Company, which involved several departments in the CFO and
COO areas, and operates in full synergy with the Insurance Division and the related project to implement IFRS 17 with regard
to the presentation of the balance sheet and income statement amounts typical of IFRS 17 in the Consolidated financial
statements of Intesa Sanpaolo pursuant to IFRS 10.
Lastly, periodic meetings were held with the Independent Auditors EY to enable discussion of the methodological choices
identified in the project.
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Reference is made to ISVAP Regulation no. 7 of 13 July 2007, as amended by Order no. 121 of 7 June 2022.
Notes to the consolidated financial statements – Part A – Accounting policies
214
Group methodological choices
The main methodological choices faced by the Group concerned the definition of the discount curve, the quantification of the
cash flows according to IFRS 17, and the quantification of the CSM for the consolidated financial statements of the Intesa
Sanpaolo Group, which differs from the CSM of the Insurance Division, to take the actual distribution/management costs into
account in the future flows of insurance liabilities rather than the fees settled between Group companies.
The main methodological choices made by the Intesa Sanpaolo Group are reported below:
‒ Level of aggregation and carve-out option on cohorts: the level of aggregation enables the definition of the granularity to
be used to assess the profitability of a group of contracts, by grouping in the same portfolio contracts that:
o have similar risks and are managed together;
o have the same expected profitability upon issue (profitability bucket);
o belong to the same generation (annual cohort).
With reference to the first point, the Group has adopted the choice of aggregating the contracts belonging to the Non-Life
Business based on the Solvency II Line of Business (“LoB”) they belong to. For the Life Business, groups of contracts
are aggregated by grouping in a single portfolio products included in the same Separate Management, Multi-Line
products for each Separate Management, Unit-Linked products, products linked to Pension Funds and pure risk products
(e.g. temporary death policies).
With regard to contracts relating to Multi-Line products or linked to a Separate Management, the Group has decided to
exercise the option not to apply the Annual Cohort requirement (so-called “carve-out”), as allowed in the IFRS 17
Endorsement Regulation at European level, and therefore to aggregate these types of contracts only based on the
concept of similar risks and uniform management and belonging to the same profitability bucket.
‒ Discount curve: the Group has decided to use a bottom-up approach, which involves using risk-free rates with the
addition of a liquidity premium, estimated based on the ris k premium inherent in each company’s securities portfolio,
broken down by individual separate management, unit-linked portfolio, pension funds and free portfolio.
‒ Risk adjustment: it is determined using a Value at Risk (VaR) approach that estimates the uncertainty of the non-financial
risks based on the 75th percentile of the specific distribution of each risk considered.
‒ Variable Fee Approach (VFA): as noted above, the VFA is a mandatory model required by the standard for contracts
involving significant discretionary participation features for the policyholders. To determine whether discretionary
participation features are significant, both a qualitative and quantitative test is performed to verify the requirements.
Within the Insurance Division’s products, all the insurance Linked contracts and all the contracts linked to a separate
management, both individual and Multi-Line, are measured using the Variable Fee Approach.
‒ Premium Allocation Approach (PAA): as already mentioned, the PAA is an optional method applicable to contracts with a
duration of less than one year or to contracts with a duration of more than one year for which it is demonstrated that the
application of the PAA model does not lead to results that are significantly different from those that would be obtained
with the general model. The Group has decided to apply this model solely to the Non-Life Business, with the general rule
being to use the PAA model for insurance policies with a duration of one year or less.
‒ Coverage units: these are the drivers used to determine the CSM release to profit or loss, taking into account the amount
of service provided to the policyholders and the expected duration of the group of contracts. The coverage units are
determined differently based on whether they relate to Life Business or Non-Life Business. Specifically, for the Non-Life
Business, the coverage units are identified by the earned premiums for the period, while for the Life Business, they are
identified by the insured capitals for the period with respect to the whole life insured capitals, which represent the
company’s commitment to the policyholders during the valuation period.
‒ Contract boundaries: the determination of the contract boundaries is used to establish whether a particular contractual
option is to be included in the cash-flow projection as soon as the contract is issued or whether the exercise of that option
will result in the generation of a new group of contracts.
The IFRS 17 contract boundaries include all the contractual options that establish the conditions for exercising the option
in terms of pricing, already at the time when the contracts are issued. If the exercise of the option does not have
conditions predetermined upon issue and the conditions are only defined at a later date or at the time of exercise by the
policyholder, they are not included in the IFRS 17 contract boundaries and are not projected in the cash flows of the host
contract; the exercise of the option generates a new group of contracts different from that of the host contract.
- Transition approach: the Group has decided to use all three transition approaches envisaged by the standard based on
the availability of the historical data required by the standard for determining the CSM at the FTA date. Specifically, the
Full Retrospective Approach is used for the most recent generations of contracts, except for the acquired companies
(ISP RBM Salute and former UBI), for which the Fair Value Approach is used. For multi-line life contracts and older non-
life contracts the Modified Retrospective Approach is used, while for the remaining products and annuities the Fair Value
Approach is used. The main simplifications used by the Group in applying the Modified Retrospective Approach are:
o use of annual cohorts: the Group adopts the simplifications set out in the standard and aggregates the annual
cohorts into a single Unit of Account for the Life and Non-Life Businesses;
o discount rate: calculation of the discount rates using the median of the last 5 curves reconstructed for the years of
valuation prior to the transition date;
o no calculation of the closing balances for the previous periods.
‒ Quantification of the CSM for the Consolidated financial statements: under IFRS 17, in order to quantify cash flows, the
management of intragroup transactions entails the need to “replace” the intragroup costs projected by the Insurance
Division in the estimate of its standalone accounting values (typically fees paid to the banking distribution network) with
the costs incurred by the Group with third parties. That operation may entail the recognition of expected profit (CSM)
which differs between the individual Group companies and the Group as a whole. The ESMA, in its annual statement on
priorities for financial reports
74
, highlights the importance of consistently applying the consolidation requirements
pursuant to IFRS 10 in order to guarantee the correct application of IFRS 17 in the consolidated financial statements.
Specifically, the ESMA notes that where banks of the group distribute insurance products, the consolidated CSM will
often differ from the insurance CSM.
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ESMA Public Statement “European common enforcement priorities for 2022 annual financial reports” of 30 October 2022, referred to above.
Notes to the consolidated financial statements – Part A – Accounting policies
215
‒ Impacts of IFRS 17 on Alternative Performance Measures: as a result of the changes introduced by the application of the
new standard, the Group is assessing the best methods for presenting the insurance business in the reclassified balance
sheet and income statement.
‒ Interaction between IFRS 17 and IFRS 9 and use of the OCI option: in some cases, the interaction between IFRS 17 and
IFRS 9 may generate accounting mismatches between the way insurance contracts and related financial assets are
accounted for. In order to reduce these mismatches, IFRS 17 allows for a disaggregation of financial income and
expenses from insurance contracts between the profit or loss (financial result) and other comprehensive income (OCI).
The choice of disaggregation is made at portfolio level for the insurance contracts and must be made consistently with
the valuation approach used for the assets. In particular:
o with regard to contracts valued using the General Model and the Premium Allocation Approach, the financial
revaluation of future cash flows and risk adjustment at historical rates is recognised through profit or loss, while the
difference between the revaluation at historical and current rates is recognised through other comprehensive
income;
o for contracts valued under the Variable Fee Approach, IFRS 17 requires the financial result of insurance contracts to
be disaggregated between profit or loss and other comprehensive income. In essence, the difference between the
financial result of insurance contracts and the financial result through profit or loss arising from the underlying
financial instruments is reclassified to other comprehensive income (mirroring).
In accordance with IFRS 9, the Insurance Division finalised the definition of the “to be” business model: Hold To Collect
and Sell for debt financial instruments, except for those connected to linked products and open pension funds (to which
the “Other” Business Model will be applied). With regard to the classification of equity instruments that come under the
scope of IFRS 9, the Insurance Division will apply their fair value measurement through profit or loss. As a result, in order
to reduce potential accounting mismatches, the Group has decided to adopt the OCI option on all the insurance contract
portfolios, except for the unit-linked policies not connected to multi-line products and open pension funds.
For more details on financial assets, see the paragraph below on the adoption of IFRS 9 by the Group’s Insurance
Companies.
Main differences between the IFRS 17 framework and Solvency II
The main differences between IFRS 17 and Solvency II in relation to the valuation of insurance liabilities primarily relate to the
identification of the contract boundaries, the determination of the discount curve, and the method of calculation of the Prudent
Margin (respectively Risk Adjustment or Risk Margin). In particular:
‒ with regard to the contract boundaries, the main differences concern both the determination criteria and the frequency of
the valuation. Under Solvency II, the contract boundaries are based on a risk approach for the company and are
determined at each valuation date; under IFRS 17, they are based on the possibility of re-pricing by the company and are
determined when the contracts are issued;
‒ with regard to the discount curves, the main difference concerns the approach and granularity used for the calculation of
the discount curve. Specifically, for Solvency II there is a single discount curve composed of a risk-free base curve plus a
liquidity premium (volatility adjustment), defined by the EIOPA on the basis of an average market benchmark portfolio. In
the IFRS 17 framework, on the other hand, the discount curves for each identified portfolio can be calculated on the basis
of specific reference asset pools;
‒ for the Prudent Margin, the difference between Risk Margin and Risk Adjustment is due to both a different calculation
approach and a different scope of identified risks. The Solvency II Risk Margin is calculated using a Cost of Capital
approach, applied to the company’s capital requirement assessed with a 95% percentile, considering the technical risks,
credit risk and operational risk. For the IFRS 17 Risk Adjustment, the standard does not envisage a standard approach,
but only its determination on the basis of specific non-financial risks.
Note that no impacts are expected on the Solvency II synthetic indicator for the Insurance Group following the introduction of
IFRS 17.
Income statement and balance sheet impacts
The new standard envisages the introduction of new balance sheet figures and different ways of recognising the profitability of
insurance products in the companies’ financial statements, which will lead to both balance sheet impacts upon first-time
adoption of the standard and volatility in the income statement once the standard is being implemented.
Specifically, upon transition to the new standard – 1 January 2022 - the captions previously recognised pursuant to IFRS 4
(technical reserves) and IFRS 3 (Value of Business Acquired, VoBA, recognised upon purchase price allocation – PPA - as
intangible assets with a finite useful life), which do not meet the requirements for recognition pursuant to the new IFRS 17 will
be reversed, and new IFRS 17 insurance liabilities will be recognised in the components Present Value of Future Cash Flows,
Risk Adjustment and CSM. The cumulative effect of first-time adoption of IFRS 17 (impact as at 1 January 2022 and delta in
the 2022 income statement) will be recognised as at 1 January 2023 as a balancing entry for a specific retained earnings
reserve (also called “First-time adoption reserve”).
The balance sheet impact upon first-time adoption mainly depends on the level of market rates at the transition date (a lower
rate level corresponds to a higher negative balance sheet impact), as well as the transition approaches adopted. On the other
hand, the income statement result is closely related to how the CSM is released over time and how it is adjusted following
revisions to the operational and financial assumptions included in the cash flow and risk adjustment.
Based on the analyses and implementations carried out, the following effects are estimated:
‒ the total impact to be recognised in shareholders’ equity upon transition to the new accounting standard as at 1 January
2022 is estimated to be around -1 billion euro net of tax, and is attributable:
o on one hand, to the impact of the different measurement criteria for insurance liabilities pursuant to IFRS 17, in place
of the previous criterion set out by IFRS 4, whose effect is attributable mainly to the measurement of separate
management that has high guaranteed minimum yields; and
o on the other, to the derecognition of the Value of Business Acquired (VoBA) recognised pursuant to IFRS 3 upon PPA
following business combinations;
‒ the amount of the CSM calculated at consolidated level at the transition date - 1 January 2022 - is 9.3 billion euro;
Notes to the consolidated financial statements – Part A – Accounting policies
216
‒ at the date of initial application of the standard - 1 January 2023 - the overall impact, which is currently under
calculation, is estimated to be not significantly different from the amount estimated as at 1 January 2022;
‒ the related prudential impacts estimated as at 1 January 2023 amount to around -20 bps on CET1, considering the
application of the “Danish Compromise”. For regulatory purposes, note that the Intesa Sanpaolo Group, as a “financial
conglomerate”, has been authorised to apply the “Danish Compromise”, which allo ws for the 370% weighting of
significant investments in insurance subsidiaries instead of their deduction from CET1.
IFRS 9 Financial Instruments
The companies of the Insurance Division have participated, through the Insurance Parent Company Intesa Sanpaolo Vita, in
the Intesa Sanpaolo Group project launched in September 2015 and aimed at investigating the various areas of influence of
IFRS 9, defining its qualitative and quantitative impacts, and identifying and implementing the necessary application and
organisational measures. In particular, account has been taken of the objective of pursuing the uniform adoption of the
accounting standard, also in the presence of insurance operations linked in particular to the specific characteristics of
products under separate management.
Classification and Measurement
In order to comply with the provisions of IFRS 9 – which introduces a model where the classification of financial assets is
guided, on the one hand, by the contractual cash flow characteristics of the instruments and, on the other hand, by the
management intent for which they are held – the methods for performing the test on the contractual cash flow characteristics
(known as the SPPI Test) have been drawn up, while the definition of the “to be” business models has been finalised.
With regard to the SPPI test on financial assets, the Insurance Division will adopt the approach defined at Intesa Sanpaolo
Group level and used from 2018. The analysis has also been completed of the composition of the securities and loans
portfolios currently in place, to identify their correct classification at the time of first-time adoption (FTA) of the new standard.
With regard to debt securities, a detailed examination of the cash flow characteristics of instruments classified in the Financial
assets available for sale category according to IAS 39 and at amortised cost has been carried out in order to identify the
assets that have not passed the SPPI test and will therefore be measured at fair value through profit or loss in accordance
with IFRS 9. According to the analyses conducted in the Insurance Division, only a non-material percentage of the debt
securities – with respect to the portfolio as a whole – failed the SPPI test, mainly consisting of structured securities.
In addition, the investment funds (open-ended and closed-end funds) will be mandatorily measured at fair value through profit
or loss, with a consequent future increase in the income statement volatility for these instruments, which are currently
classified as Financial assets available for sale.
With regard to the classification of equity instruments in the scope of IFRS 9, the Insurance Division does not intend to
exercise the option to classify the equity instruments at fair value through other comprehensive income (FVTOCI without
recycling to profit or loss) upon first-time adoption of the standard.
Lastly, with regard to loans, their overall contribution to the Division’s financial assets is not significant and, since the y mainly
consist of current accounts and other short-term technical forms, no failures of the SPPI test or particular impacts are
expected upon FTA.
With regard to the second driver of classification of the financial assets (business model), i.e. the intention with which financial
assets are held, the following is noted. For debt securities, the companies of the Insurance Division will adopt mainly a Hold
To Collect and Sell business model, with the exception of portfolios connected to unit-linked products and open pension
funds, for which an “Other” Business Model will be adopted, with measurement of the assets at fair value through profit or
loss. In this regard, for debt securities, no significant changes are expected with respect to the classification according to IAS
39, except for marginal cases relating to:
‒ debt securities currently classified as Financial assets available for sale that do not pass the SPPI test. This
reclassification has no impact on the total shareholders’ equity determined in accordance with IFRS 9;
‒ debt securities currently classified under Loans & Receivables which, depending on the result of the SPPI test, will be
classified either at fair value through profit or loss or at fair value through other comprehensive income. This
reclassification will have a non-material impact.
With regard to loans, whose immaterial contribution to the Division’s financial asse ts as a whole has already been noted, the
Hold to Collect business model will be used.
Lastly, in relation to the business models under which the financial assets are held, the Business Model Rules are under
update, in order to define and set out the com ponents of the business model for the Group’s Insurance Division, specifying
the role with reference to the classification model governed by IFRS 9.
With regard to the financial liabilities, no changes are envisaged with respect to the current methods of classification and
measurement of the financial liabilities in accordance with IAS 39. Specifically, the Group adopted the option to designate a s
liabilities at fair value the financial products issued by the insurance companies that do not fall within the scope of IFRS 17.
This was decided in order to eliminate or reduce possible “accounting mismatches” in relation to connected assets also
measured at fair value.
Impairment
With regard to impairment, a common approach and a process centralised within Int esa Sanpaolo’s Risk Management
structure have been established by the Parent Company Intesa Sanpaolo for the quantification of the expected credit loss for
all the Group companies. Accordingly, for a full description of the choices adopted by the Group regarding the application of
impairment in accordance with IFRS 9, see the Accounting Policies and the description provided in Part E of the Notes to the
financial statements concerning risk management.
Notes to the consolidated financial statements – Part A – Accounting policies
217
For the purpose of completeness, it is noted that the “Rules on the measurement of expected credit loss in accordance with
IFRS 9 (Impairment Policy)” will also be applicable to the Insurance Division, with reference to the methodological guideline s
defined by the Intesa Sanpaolo Group in application of IFRS 9 and approved by the competent levels of governance.
Please note in this regard that, for the companies of the Insurance Division, the application of the new expected credit loss es
model is mainly relevant for the portfolio of debt securities classified in the category Fair value through other comprehensive
income. For loans, on the other hand, it is not significant.
The main elements underlying the approach can be considered to be the following:
‒ method of tracking the credit quality of portfolios of financial assets measured at amortised cost and at fair value through
other comprehensive income;
‒ definition of the parameters for determining the significant increase in credit risk, for the purposes of the correct allocation
of performing exposures to Stage 1 or Stage 2, based on the change in lifetime probability of default since the time of
initial recognition of the financial instrument. With regard to the impaired exposures, on the other hand, given the
alignment of the definitions of accounting and regulatory default, the current criteria for classifying exposures as
“impaired” can be considered identical to the criteria for classifying exposures in Stage 3;
‒ definition of models – including forward-looking information – for the staging (with respect to the use of lifetime PD as a
relative indicator of impairment) and for the calculation of the one-year ECL (to be applied to Stage 1 exposures) and
lifetime ECL (to be applied to Stage 2 and Stage 3 exposures). In order to take into account forward-looking information
and the macroeconomic scenarios in which the Group may find itself operating, the “Most likely scenario + Add-on”
approach has been adopted.
With regard to the staging for securities, it must be considered that sales and purchases after initial recognition (made using
the same ISIN) may form part of the ordinary management of the positions (with the consequent need to identify a
methodology to be adopted for identifying the sales and repayments in order to determine the remaining quantities of the
individual transactions that need to be allocated a credit quality/rating upon origination to be compared with that parameter at
the reporting date). In this regard, in line with the choice adopted by the Intesa Sanpaolo Group from 2018, the Insuranc e
Division will also use the “first-in-first-out” or “FIFO” method (for the recognition of the recorded ECL in the income statement,
in the event of sales or repayments) which helps in providing a more transparent management of the portfolio, also for the
front office operators, while also enabling the continued updating of the credit rating based on new purchases.
Moreover, a key element for the estimation of the expected losses is the inclusion of forward-looking factors and, in particular,
macroeconomic scenarios. From a methodological perspective, the approach adopted by the Intesa Sanpaolo Group is the
“Most likely scenario + Add-on”. Under this approach, the calculation of the expected credit loss (ECL) and the stage
assignment use the credit loss determined for the baseline scenario, which is considered the most likely scenario and is also
used for other purposes within the Group (for example, for preparing the budget and the business plan), to which an add-on is
applied to reflect the effects from the non-linearity of the variables used for the conditioning of the macro-economic
parameters. A similar approach will therefore also be applied to the companies of the Insurance Division.
Lastly, with regard only to the initial application of the standard - i.e. 1 January 2023 - for performing debt securities
recognised at fair value through other comprehensive income, it was decided to use the low credit risk exemption set out in
IFRS 9, based on which exposures that, at the date of transition to the new standard, had an investment grade (or similar)
rating were identified as exposures with low credit risk and, therefore, to be considered in Stage 1.
Hedge accounting
With regard to hedge accounting, IFRS 9 introduces changes solely to general hedging and are closely tied to the Group’s
choice of exercising the opt-in / opt-out option (i.e., the possibility of implementing the new IFRS 9 rather than continuing to
apply the former IAS 39). The Intesa Sanpaolo Group, on the basis of detailed studies on the management of the hedging
transactions, decided to exercise the opt-out during the IFRS 9 FTA, and has maintained this choice to date. In light of this,
the hedging transactions for the Insurance Division will also continue to be managed in accordance with IAS 39 (carve-out),
currently in force.
Organisational and information system impacts
The adoption of IFRS 9 entails organisational and information system changes for the Insurance Division.
The main organisational impacts have been identified and relate to the revision and adaptation of existing operating
processes, the design and implementation of new processes, and the expansion of the skills available within the various
operations, administration and control structures.
With regard to the information systems, work was carried out on the securities management applications of the insurance
companies to adapt them to the requirements of the standard, and a monthly exchange of flows has been set up between the
insurance companies and the relevant Intesa Sanpaolo structures in relation to staging and expected credit losses for
securities classified at fair value through other comprehensive income.
Restatement of comparative information and parallel running
As illustrated above, insurance companies were able to defer the date of adoption of IFRS 9 up to 1 January 2023, which is
thus the initial application date of the standard. With regard to preparation of comparative periods, pursuant to IFRS 9 it i s
permitted, but not required, to restate the comparison periods. For financial instruments derecognised before the date of initial
application (i.e. prior to 1 January 2023 for insurance companies) restatement is not permitted, even in the event of voluntary
restatement of the comparison period. Vice versa, under IFRS 17, it is required that the comparison period be restated.
With regard to the methods of presentation of the effects of first-time adoption of IFRS 9, the Insurance Division will exercise
the option established in paragraph 7.2.15 of IFRS 9, according to which – subject to the retrospective application of the new
measurement and presentation rules required by the standard – there is no requirement for the compulsory restatement on a
like-for-like basis of the comparative information in the financial statements of first-time adoption of the new standard. In
particular, the Insurance Division will adopt the Classification Overlay for the entire portfolio of financial assets in accordance
with the provisions of paragraph C28A and following of IFRS 17 – as amended by the IASB on 9 December 2021 and
endorsed by the European Commission with Regulation No. 1491/2022 of 8 September 2022 – regarding companies
adopting IFRS 9 and IFRS 17 simultaneously for the first time.
Notes to the consolidated financial statements – Part A – Accounting policies
218
The Classification Overlay allows the application of the classification and measurement requirements as envisaged by IFRS 9
for the preparation of comparative periods using reasonable and supportable information. The exercise of that option will
make it possible to present the comparative period on a like-for-like basis, also with reference to financial instruments already
derecognised as at 1 January 2023 (for which restatement would not be permitted according to the ordinary rules of transition
to IFRS 9). Moreover, as permitted by Regulation no. 1491, the Classification Overlay will be adopted without applying the
ECL requirements.
In the second half of 2022, the companies in the Insurance Division finished quantifying the opening balances as at 1 January
2022, and producing the comparative figures for the quarters of 2022 in accordance with the Classification Overlay.
Income statement and balance sheet impacts
Overall, the impact on the shareholders’ equity deriving from first-time adoption of IFRS 9 by the companies in the Insurance
Division was estimated as immaterial both as at 1 January 2022 and as at 1 January 2023.
In light of the not material impact on the shareholders’ equity deriving from first-time adoption, there are no expected impacts
on CET1 in terms of bps.
The table below shows the new international financial reporting standards or amendments to existing standards that have not
yet been endorsed by the European Commission.
IFRS not endorsed as at 31.12.2022
Standard/
Interpretation
Amendments
Date of issue
IAS 1
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as
Current or Non-current
23/01/2020
IAS 1
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as
Current or Non-current - Deferral of Effective Date
15/07/2020
IAS 1
Amendments to IAS 1 Presentation of Financial Statements: Non-current Liabilities with
Covenants
31/10/2022
IFRS 16
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
22/09/2022
As regards the IASB documents amending existing accounting standards pending endorsement, the following is noted:
- Amendments to IAS 1 “Classification of Liabilities as Current or Non-Current”, published on 23 January 2020 to propose
certain narrow-scope amendments to IAS 1 “Presentation of Financial Statements” in order to clarify how to classify payables
and other liabilities as current or non-current. The proposal in question clarifies - without amending - the current requirements
of IAS 1; the clarifications aim to promote consistency in applying IAS 1 across companies to determine whether, in the
statement of financial position, payables and other liabilities with an uncertain settlement date are to be classified as current
(due or potentially to be paid within one year) or non-current. A subsequent publication dated 15 July 2020 postponed the
date of entry into force of the amendments by one year, until 1 January 2023 instead of 2022, without introducing additional
amendments.
- Amendments to IAS 1 “Non-current Liabilities with Covenants”
On 31 October the IASB published an additional narrow-scope amendment to IAS 1 “Presentation of Financial Statements”,
which aims to improve the information provided by entities on liabilities with covenants and the classification of those liabilities
as current or non-current. The IASB expects the amendments to improve the information provided by entities, enabling
investors to understand the risk that those liabilities could become repayable early.
IAS 1 requires that an entity may classify a liability as non-current only where the entity has the right at the reporting date to
defer settlement of the liability for at least 12 months. Nonetheless, an entity’s ability to do so is often subject to c ompliance
with covenants. For example, an entity may have a non-current payable that could become repayable within 12 months if the
entity fails to comply with a covenant (for example, a working capital ratio) in the subsequent 12 months.
The amendments to IAS 1 specify that covenants to be met after the reporting date do not influence the classification of the
payable as current or non-current at the reporting date. Conversely, the entity is required to provide information on these
covenants in the notes to the financial statements.
The amendments take effect for financial years starting on or after 1 January 2024, with early adoption permitted, following
endorsement by the European Commission.
Considering the content of the amendments illustrated above, which are immaterial for the financial sector, as well as the
obligation to apply the templates prescribed in Bank of Italy Circular 262/05, the proposed narrow-scope amendments to IAS
1 are not specifically significant for the Group.
- Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback”
With the publication of the narrow-scope amendments “Lease Liability in a Sale and Leaseback” on 22 September 2022, the
IASB introduced several narrow-scope amendments to IFRS 16 regarding the recognition of only sale and leaseback
transactions by the seller-lessee. Sale and leaseback transactions are transactions in which an entity sells one of its assets
and then immediately leases it back from the new owner. In this regard, transactions in which the transfer of the asset meets
the requirements of IFRS 15 to be recognised as a sale of an asset are analysed.
This amendment was requested by the IFRIC, which found a regulatory gap in terms of recognition of rights of use and lease
liabilities in sale and leaseback transactions in the event of variable lease payments that do not depend on an index or rate,
for example, those based on a percentage of sales of the seller-lessee generated by use of the asset.
Notes to the consolidated financial statements – Part A – Accounting policies
219
In this regard, the amendments provide several clarifications and let the individual entities define an accounting policy for the
method of measuring the liability arising from the leaseback.
Application of these amendments will be mandatory from 1 January 2024 - following endorsement by the European
Commission, and with the possibility of early implementation – with retrospective application to sale and leaseback
transactions entered into following the date of first-time adoption of IFRS 16, i.e. 1 January 2019 for the Group.
In that regard, there have been few, immaterial sale and leaseback transactions entered into by the Intesa Sanpaolo Group
since 2019 and, currently, there are no cases covered by the amendments.
Notes to the consolidated financial statements – Part A – Accounting policies
220
SECTION 2 – GENERAL PREPARATION PRINCIPLES
The Consolidated financial statements are made up of the Balance sheet, the Income statement, the Statement of
comprehensive income, the Changes in shareholders’ equity, the Statement of cash flows, the Notes to the consolidated
financial statements and the related comparative information; the Report on operations prepared by the Directors, on the
economic results achieved and on the Intesa Sanpaolo Group’s balance sheet and financial position has also been included.
In compliance with the provisions of Article 5 of Legislative Decree 38/2005, the financial statements have been drawn up in
euro as functional currency.
The amounts indicated in the Consolidated financial statements and in the Notes to the consolidated financial statements as
well as those in the Report on operations are expressed in millions of euro, unless otherwise specified.
The financial statements are prepared with the application of the general principles set out by IAS 1 and the specific financial
reporting standards endorsed by the European Commission and illustrated in Part A.2 of these Notes to the consolidated
financial statements, as well as in compliance with the general assumptions set forth by the Conceptual Framework for the
preparation and presentation of Financial Statements issued by IASB.
No exceptions to the application of IAS/IFRS have been made.
The Report on operations and the Notes to the consolidated financial statements contain all information required by the
IAS/IFRS, by current regulations, by the Bank of Italy, by Consob (Italian Securities and Exchange Commission) and by the
European Securities and Markets Authority - ESMA, in addition to other information which is not compulsory but is
nonetheless deemed to be necessary in order to give a true and fair presentation of the Group’s situation. In addition, account
was taken of documents providing interpretation and support with the application of accounting standards in relation to the
impacts of COVID-19 and the outbreak of the Russia-Ukraine crisis, issued by European regulatory and supervisory
authorities and the standard-setters illustrated in further detail in Section 5 - Other aspects.
The balance sheets and the related details in the Notes present, in accordance with IFRS 5, among components related to
discontinued operations, mainly portfolios of non-performing loans that will be subject to sale as part of the Group’s de-risking
strategies. This caption also includes the following reclassifications: the equity investment in Zhong Ou Asset Management
Co. Ltd., for which the sale is expected to be finalised in the coming months, once the authorisation process has been
completed, and the assets and liabilities relating to PBZ Card’s merchant acquiring business line, which will be transferred to
the Nexi Group in the first half of 2023.
The financial statement forms and the Notes to the financial statements show, in addition to the figures for the reference
period, the comparative figures as at 31 December 2021.
The Attachments include the reconciliation statements to the balance sheet and income statement figures originally published
in the 2021 financial statements, together with specific reconciliations between the latter and the reclassified statements
(restated and redetermined) included in the Report on operations accompanying these financial statements.
Contents of financial statement forms
Balance sheet and income statement
The compulsory forms of the balance sheet and income statement are made up of captions, subcaptions and further detailed
information (specified as the “of which” items in the captions and subcaptions).
Following the Group’s decision to exercise the option of adopting the Deferral Approach, provided for by IFRS 9 "Financial
Instruments" also for banking-led financial conglomerates, under which the financial assets and liabilities of subsidiary
insurance companies continue to be recognised in the financial statements in accordance with IAS 39, specific balance sheet
and income statement captions have been added to the consolidated financial statement layouts established in Circular 262
to present the valuation of assets and liabilities pertaining to insurance companies and the related profit or loss effects
measured in accordance with IAS 39.
In the interests of completeness, it should be noted that with regard to the compulsory forms defined by the Bank of Italy,
captions which do not have amounts for the reporting year and the previous year have also been shown. In the income
statement revenues are indicated without sign, whereas costs are preceded by the minus sign.
Statement of comprehensive income
The statement of comprehensive income shows, starting from the net income/(loss) for the year, the income components
recognised as a balancing entry in valuation reserves, net of the tax effect, in compliance with international financial reporting
standards.
Consolidated comprehensive income is represented by providing separate recognition of the income components that will not
be reversed to the income statement in the future and those which, conversely, could later be reclassified to income/(loss) for
the year under specific conditions. The statement also distinguishes between the portion of income pertaining to the Parent
Company and that pertaining to minority interests. Similarly to the balance sheet and the income statement, with respect to
the compulsory forms defined by the Bank of Italy, captions which do not present amounts for the reporting year and the
previous year are in any case included. Negative amounts are preceded by the minus sign.
Notes to the consolidated financial statements – Part A – Accounting policies
221
Changes in shareholders’ equity
The statement of changes in shareholders’ equity presents shareholders’ equity accounts and changes which occurred in the
reference year and in the previous year, broken down in share capital, reserves, reserves from retained earnings, valuation
reserves and net income. Treasury shares are deducted from shareholders’ equity. The table is presented by inverting the
rows and the columns with respect to the same form provided for by the updating of Bank of Italy Circular 262/2005.
Statement of cash flows
The statement of cash flows registered in the reference year and in the previous year is prepared using the indirect method,
on the basis of which cash flows from operating activities are represented by net income adjusted for the effects of non-cash
transactions.
Cash flows are broken down into flows from operating activities, from investing activities and from financing activities.
In the form, cash flows generated in the year are indicated without sign, whereas cash flows absorbed are preceded by the
minus sign.
Contents of the Notes to the consolidated financial statements
The Notes to the consolidated financial statements include the information provided for by International Financial Reporting
Standards and Circular 262 issued by the Bank of Italy on 22 December 2005 and subsequently amended, applicable for the
preparation of these financial statements. As already mentioned in relation to the financial statements, as a result of the
application of the Deferral Approach by the Group’s insurance companie s, the disclosures in the explanatory notes envisaged
by Circular 262 have been supplemented with the tables required by the previous 4th update of Circular 262 to present the
information required by IAS 39.
Notes to the consolidated financial statements – Part A – Accounting policies
222
SECTION 3 – SCOPE OF CONSOLIDATION AND CONSOLIDATION METHODS
Scope of consolidation
The Consolidated financial statements include Intesa Sanpaolo and the companies that it directly and indirectly controls and
consider in the scope of consolidation – as specifically set out by IAS/IFRS – also the companies operating in dissimilar
sectors from the Parent Company as well as private equity investments. Similarly, structured entities are included when the
requisite of effective control recurs, even if there is no stake in the compan y.
Companies are considered subsidiaries where Intesa Sanpaolo is exposed to, or has rights to, variable returns from its
involvement with them, and has the ability to affect those returns by exercising its own power over the entity in question.
Control only exists if all of the following conditions are met:
− the power to direct the relevant activities of the subsidiary;
− the exposure, or rights, to variable returns from the involvement with the investee;
− the ability to use the power over the investee to affe ct the amount of the investor’s returns.
Companies are considered as subject to joint control if control is directly or indirectly contractually shared by the Parent
Company with one or more other parties external to the Group, or where the decisions about the relevant activities require the
unanimous consent of all the parties sharing control.
Companies are considered associates, that is subject to significant influence, when Intesa Sanpaolo, directly or indirectly,
holds 20% or more of the voting rights (including “potential” voting rights) or when the Parent Company – despite a lower
percentage of voting rights due to specific legal agreements such as the participation of voting syndicates – has the power of
participating in the determination of the financial and operating policies of the company.
Certain companies in which the Parent Company holds an equity stake exceeding 20% of voting share capital are excluded
from the scope of consolidation and are classified based on the provisions of IFRS 9, since they are of limited absolute
amount, or since Intesa Sanpaolo, directly or indirectly, exclusively holds rights on a portion of the rewards of the investment,
and does not have access to management policies and may exercise limited governance rights to safeguard its economic
interest.
Equity investments held, directly or through funds, in companies involved in the venture capital business are also excluded
from the line-by-line scope of consolidation. These equity investments are included in the category of Financial assets
measured at fair value through profit or loss.
Companies for which the shares have been received as pledges with voting rights exceeding 20% are not consolidated, in
consideration of the substance underlying the pledge, which has the purpose of guaranteeing loans and not of exercising
control and direction over financial and economic policies in order to benefit from the economic return on the shares.
Intesa Sanpaolo does not perform management and coordination activity over Risanamento S.p.A. and its subsidiaries
pursuant to Article 2497 et seq. of the Italian Civil Code.
With respect to 31 December 2021, the changes in the line-by-line consolidation area involved the entry of:
− Newco TPA S.p.A. (now named InSalute Servizi S.p.A.), a newly-incorporated company in the Insurance Group,
100% owned by Intesa Sanpaolo Vita;
− Compagnie de Banque Privée Quilvest (CBPQ), 100%-owned by Fideuram Bank (Luxembourg) S.A.;
− VUB Operating Leasing A.S., previously consolidated using the equity method;
− Acantus S.p.A. (transferee of ISP’s pledged loans business line belonging to the former UBI Group), following the
exceeding of the immateriality limits that previously allowed its consolidation at equity;
− VUB Generali Dochodkova Spravcovska Spolocnost A.S, following the acquisition of an additional share of 5.26% by
VSEOBECNA UVEROVA BANKA A.S. (the total investment now amounts to 55.26%). The company was previously
consolidated at equity;
− Eurizon Capital Real Asset SGR S.p.A., following the exceeding of the immateriality limits that previously allowed its
consolidation at equity;
and the exit of:
− Intesa Sanpaolo Private Bank (Suisse) Morval, merged by incorporation into Reyl & Cie S.A.;
− VUB Leasing A.S., which was discontinued following its demerger into Vseobecna Uverova Banka A.S. for finance
leases and into VUB Operating Leasing (mentioned above) for operating leases;
− UBI Leasing S.p.A., merged by incorporation into Intesa Sanpaolo S.p.A.;
− PBZ Stambena Stedionica d.d., merged by incorporation into PBZ – Privredna Banka Zagreb d.d.;
− Intesa Sanpaolo (Qingdao) Service Company Limited, which is now consolidated using the equity method in view of the
negligible amounts of the balance sheet aggregates;
− Cargeas Assicurazioni S.p.A., merged by incorporation into Intesa Sanpaolo Assicura S.p.A.;
− Intesa Sanpaolo Smart Care S.r.l., merged by incorporation into Intesa Sanpaolo S.p.A.;
− Sanpaolo Invest SIM S.p.A., merged by incorporation into Fideuram-Intesa Sanpaolo Private Banking S.p.A.;
In the interest of completeness, it should also be noted that Mooney Group continues to be consolidated at equity for the
purposes of the accounting scope of consolidation, but is included in the prudential scope of consolidation using the
proportional method; in July, Banca 5 S.p.A. acquired an additional 20% stake in the above-mentioned company, bringing the
total interest to 50% (subject to joint control).
Lastly, for completeness, please note the following changes of name:
- Intesa Sanpaolo International Value Services Ltd. into Intesa Sanpaolo International Value Services d.o.o.;
- IW Bank S.p.A. into IW Private Investments Società di Intermediazione Mobiliare S.p.A.
Notes to the consolidated financial statements – Part A – Accounting policies
223
The following table lists the investments in exclusively controlled companies at 31 December 2022.
1. Exclusively controlled companies
Companies
Place of
business
Registered
office
Type of
relation-
ship (a)
INVESTMENT
Votes
available
(b)
Direct ownership
%
held
1
Acantus S.p.A.
Milano
Milano
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 800,000
2
Anti Financial Crime Digital HUB S.c.a.r.l. (c)
Torino
Torino
1
Intesa Sanpaolo Innovation Center S.p.A.
10.00
Capital Eur 100,000
Intesa Sanpaolo S.p.A.
60.00
70.00
3
Asteria Investment Managers S.A. (d)
Geneva
Geneva
1
REYL & Cie S.A.
100.00
Capital Chf 14,000,000
4
Banca 5 S.p.A.
Milano
Milano
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 30,000,000
5
Banca Comerciala Eximbank S.A.
Chisinau
Chisinau
1
Intesa Sanpaolo S.p.A.
100.00
Capital Mdl 1,250,000,000
6
Banca Intesa AD Beograd
Novi Beograd
Beograd
1
Intesa Sanpaolo Holding International S.A.
100.00
Capital Rsd 21,315,900,000
7
Bank of Alexandria S.A.E.
Cairo
Cairo
1
Intesa Sanpaolo S.p.A.
80.00
Capital Egp 5,000,000,000
8
Banka Intesa Sanpaolo d.d. (e)
Koper
Koper
1
Intesa Sanpaolo S.p.A.
48.13
Capital Eur 22,173,218
Privredna Banka Zagreb d.d.
51.00
99.13
9
CBP Quilvest PE Fund GP S.a r.l. (c)
Luxembourg
Luxembourg
1
Compagnie de Banque Privée Quilvest S.A.
100.00
Capital Usd 20,000
10
Cib Bank Ltd.
Budapest
Budapest
1
Intesa Sanpaolo S.p.A.
100.00
Capital Huf 50,000,000,003
11
CIB Insurance Broker Ltd.
Budapest
Budapest
1
Cib Bank Ltd.
100.00
Capital Huf 10,000,000
12
CIB Leasing Ltd.
Budapest
Budapest
1
Cib Bank Ltd.
100.00
Capital Huf 53,000,000
13
CIB Rent Operative Leasing Ltd.
Budapest
Budapest
1
Cib Bank Ltd.
100.00
Capital Huf 5,000,000
14
Colline e oltre S.p.A. (c)
Pavia
Pavia
1
Intesa Sanpaolo S.p.A.
51.00
Capital Eur 50,000
15
Compagnia Italiana Finanziaria - CIF S.r.l.
Milano
Milano
1
IN.FRA - Investire nelle Infrastrutture S.r.l.
61.45
Capital Eur 10,000
16
Compagnie de Banque Privée Quilvest S.A.
Luxembourg
Luxembourg
1
Fideuram Bank Luxembourg S.A.
100.00
Capital Eur 32,537,000
17
Consorzio Studi e ricerche fiscali Gruppo Intesa Sanpaolo (c)
Roma
Roma
1
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
7.50
Capital Eur 258,228
Eurizon Capital SGR S.p.A.
5.00
Intesa Sanpaolo Vita S.p.A.
7.50
Intesa Sanpaolo S.p.A.
80.00
100.00
18
Duomo Funding Plc (f)
Dublin
Dublin
2
Intesa Sanpaolo S.p.A.
-
19
Epsilon SGR S.p.A.
Milano
Milano
1
Eurizon Capital SGR S.p.A.
100.00
Capital Eur 5,200,000
20
Etoile François Premier S.a.r.l. (g)
Paris
Paris
1
Risanamento Europa S.r.l.
100.00
Capital Eur 5,000
21
Eurizon Asset Management Croatia D.O.O.
Zagreb
Zagreb
1
Eurizon Asset Management Slovakia Sprav.
Spol. A.S.
100.00
Capital Hrk 5,000,000
22
Eurizon Asset Management Hungary Ltd.
Budapest
Budapest
1
Eurizon Asset Management Slovakia Sprav.
Spol. A.S.
100.00
Capital Huf 600,000,000
23
Eurizon Asset Management Slovakia Sprav. Spol. A.S.
Bratislava
Bratislava
1
Eurizon Capital SGR S.p.A.
100.00
Capital Eur 4,093,560
24
Eurizon Capital Asia Limited (già Eurizon Capital (HK) limited) (c)
Hong Kong
Hong Kong
1
Eurizon Capital SGR S.p.A.
100.00
Capital Hkd 78,000,000
25
Eurizon Capital Real Asset SGR S.p.a.
Milano
Milano
1
Eurizon Capital SGR S.p.A.
19.98
51,00 (*)
Capital Eur 4,166,667
Intesa Sanpaolo Vita S.p.A.
40.01
24,50 (*)
59.99
75,50 (*)
Notes to the consolidated financial statements – Part A – Accounting policies
224
Companies
Place of
business
Registered
office
Type of
relation-
ship (a)
INVESTMENT
Votes
available
(b)
Direct ownership
%
held
26
Eurizon Capital S.A.
Luxembourg
Luxembourg
1
Eurizon Capital SGR S.p.A.
100.00
Capital Eur 7,974,600
27
Eurizon Capital SGR S.p.A.
Milano
Milano
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 99,000,000
28
Eurizon Slj Capital Ltd.
London
London
1
Eurizon Capital SGR S.p.A.
65.00
Capital Gbp 1,001,000
29
Exelia S.r.l. (c)
Brasov
Brasov
1
Intesa Sanpaolo Holding International S.A.
100.00
Capital Ron 8,252,600
30
Exetra S.p.A. (h)
Milano
Milano
1
Intesa Sanpaolo S.p.A.
85.00
Capital Eur 158,000
31
Fideuram Intesa Sanpaolo Private Banking S.p.A.
Roma
Torino
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 300,000,000
32
Fideuram Asset Management (Ireland) Dac
(già Fideuram Asset Management (Ireland) Ltd.)
Dublin
Dublin
1
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
100.00
Capital Eur 1,000,000
33
Fideuram Asset Management SGR S.p.A.
Milano
Milano
1
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
99.52
Capital Eur 25,870,000
34
Fideuram Asset Management Uk Ltd (c)
London
London
1
Fideuram Asset Management (Ireland) Dac
100.00
Capital Gbp 1,000,000
35
Fideuram Bank ( Luxembourg) S.A.
Luxembourg
Luxembourg
1
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
100.00
Capital Eur 40,000,000
36
Fideuram Vita S.p.A.
Roma
Roma
1
Intesa Sanpaolo S.p.A.
80.01
Capital Eur 357,446,836
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
19.99
100.00
37
Fondo Sviluppo ecosistemi di Innovazione (c)
Torino
Torino
1
Intesa Sanpaolo Innovation Center S.p.A.
100.00
Capital Eur 15,000,000
38
Gap Manco Sarl (c)
Luxembourg
Luxembourg
1
REYL & Cie S.A.
100.00
Capital Eur 12,500
39
Iberia Distressed Assets Manager Sarl (c)
Luxembourg
Luxembourg
1
REYL Finance (MEA) Ltd.
100.00
Capital Eur 12,500
40
IIF SME Manager Ltd. (c)
George Town
George Town
1
Asteria Investment Managers S.A.
100.00
Capital Usd 1,000
41
IMI Capital Market USA Corp.
New York
New York
1
IMI Investments S.A.
100.00
Capital Usd 5,000
42
IMI Finance Luxembourg S.A. (c)
Luxembourg
Luxembourg
1
Intesa Sanpaolo Holding International S.A.
100.00
Capital Eur 100,000
43
IMI Investments S.A.
Luxembourg
Luxembourg
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 21,660,000
44
IMMIT - Immobili Italiani S.r.l.
Bergamo
Bergamo
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 185,680,000
45
Immobiliare Cascina Rubina S.r.l. (g)
Milano
Milano
1
Risanamento S.p.A.
100.00
Capital Eur 10,000
46
IN.FRA - Investire nelle Infrastrutture S.r.l.
Milano
Milano
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 10,000
47
Iniziative Logistiche S.r.l.
Milano
Milano
1
IN.FRA - Investire nelle Infrastrutture S.r.l.
60.02
Capital Eur 10,000
48
Insalute Servizi S.p.A.
Torino
Torino
1
Intesa Sanpaolo Vita S.p.A.
100.00
Capital Eur 500,000
49
Intesa Invest A.D. Beograd (c)
Beograd
Beograd
1
Banca Intesa AD Beograd
100.00
Capital Rsd 236,975,800
50
Intesa Leasing (Closed Joint-Stock Company)
Moscow
Moscow
1
Joint-Stock Company Banca Intesa
100.00
Capital Rub 3,000,000
51
Intesa Leasing d.o.o. Beograd
Beograd
Beograd
1
Banca Intesa AD Beograd
100.00
Capital Rsd 960,374,301
52
Intesa Sanpaolo (Qingdao) Service Company (c)
Qingdao
Qingdao
1
Intesa Sanpaolo S.p.A.
100.00
Capital CNY 80,000,000
53
Intesa Sanpaolo Assicura S.p.A.
Torino
Torino
1
Intesa Sanpaolo Vita S.p.A.
100.00
Capital Eur 27,912,258
Notes to the consolidated financial statements – Part A – Accounting policies
225
Companies
Place of
business
Registered
office
Type of
relation-
ship (a)
INVESTMENT
Votes
available
(b)
Direct ownership
%
held
54
Intesa Sanpaolo Bank Albania Sh.A.
Tirana
Tirana
1
Intesa Sanpaolo S.p.A.
100.00
Capital All 5,562,517,674
55
Intesa Sanpaolo Bank Ireland Plc
Dublin
Dublin
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 400,500,000
56
Intesa Sanpaolo Bank Luxembourg S.A.
Luxembourg
Luxembourg
1
Intesa Sanpaolo Holding International S.A.
100.00
Capital Eur 1,389,370,555
57
Intesa Sanpaolo Banka d.d. Bosna I Hercegovina
Sarajevo
Sarajevo
1
Privredna Banka Zagreb d.d.
99.99
100,00
(**)
Capital Bam 44,782,000
58
Intesa Sanpaolo Brasil S.A. - Banco Multiplo
Sao Paulo
Sao Paulo
1
Intesa Sanpaolo S.p.A.
99.90
Capital Brl 945,428,281
Intesa Sanpaolo Holding International S.A.
0.10
100.00
59
Intesa Sanpaolo Casa S.p.A. (c)
Milano
Milano
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 1,000,000
60
Intesa Sanpaolo Expo Institutional Contact S.r.l. (c)
Milano
Milano
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 50,000
61
Intesa Sanpaolo Funding LLC (già Intesa Funding LLC)
New York
Wilmington
Delaware
1
Intesa Sanpaolo S.p.A.
100.00
Capital Usd 25,000
62
Intesa Sanpaolo Harbourmaster III S.A.
Luxembourg
Luxembourg
1
Intesa Sanpaolo Holding International S.A.
100.00
Capital Eur 5,500,000
63
Intesa Sanpaolo Highline S.r.l. (c)
Torino
Torino
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 500,000
64
Intesa Sanpaolo Holding International S.A.
Luxembourg
Luxembourg
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 2,157,957,270
65
Intesa Sanpaolo House Luxemburg S.A.
Luxembourg
Luxembourg
1
Intesa Sanpaolo Holding International S.A.
100.00
Capital Eur 24,990,317
66
Intesa Sanpaolo Imi Securities Corp.
New York
New York
1
IMI Capital Market USA Corp.
100.00
Capital Usd 44,500,000
67
Intesa Sanpaolo Innovation Center S.p.a.
Torino
Torino
1
Intesa Sanpaolo S.p.A.
99.99
Capital Eur 9,254,940
Intesa Sanpaolo Vita S.p.A.
0.01
100.00
68
Intesa Sanpaolo Insurance Agency S.p.A.
Torino
Torino
1
Intesa Sanpaolo Vita S.p.A.
100.00
Capital Eur 500,000
69
Intesa Sanpaolo International Value Services d.o.o.
Zagreb
Zagreb
1
Intesa Sanpaolo Holding International S.A.
100.00
Capital Hrk 100,000
70
Intesa Sanpaolo Life Designed activity company (già Intesa
Sanpaolo Life Ltd.)
Dublin
Dublin
1
Intesa Sanpaolo Vita S.p.A.
100.00
Capital Eur 625,000
71
Intesa Sanpaolo Private Argentina S.A. (c)
Buenos Aires
Buenos Aires
1
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
4.97
Capital Ars 13,404,506
REYL & Cie S.A.
95.03
100.00
72
Intesa Sanpaolo Private Banking S.p.A.
Milano
Milano
1
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
100.00
Capital Eur 117,497,424
73
Intesa Sanpaolo Provis S.p.A.
Milano
Milano
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 6,725,000
74
Intesa Sanpaolo RBM Salute S.p.A. (i)
Venezia
Venezia
1
Intesa Sanpaolo Vita S.p.A.
73.79
Capital Eur 305,208,000
75
Intesa Sanpaolo RE.O.CO. S.p.A.
Milano
Milano
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 13,000,000
76
Intesa Sanpaolo Rent Foryou S.p.A.
Torino
Torino
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 630,000
77
Intesa Sanpaolo Romania S.A. Commercial Bank
Bucarest
Bucarest
1
Intesa Sanpaolo S.p.A.
99.73
Capital Ron 1,216,639,410
Intesa Sanpaolo Holding International S.A.
0.27
100.00
Notes to the consolidated financial statements – Part A – Accounting policies
226
Companies
Place of
business
Registered
office
Type of
relation-
ship (a)
INVESTMENT
Votes
available
(b)
Direct ownership
%
held
78
Intesa Sanpaolo Serviços e Empreendimentos Ltda em
liquidação (c)
São Paulo
São Paulo
1
Intesa Sanpaolo S.p.A.
100.00
Capital Brl 3,283,320
79
Intesa Sanpaolo Servitia S.A.
Luxembourg
Luxembourg
1
Intesa Sanpaolo Holding International S.A.
100.00
Capital Eur 1,500,000
80
Intesa Sanpaolo Vita S.p.A.
Milano
Torino
1
Intesa Sanpaolo S.p.A.
99.99
Capital Eur 320,422,509
81
Inveniam S.A. en Liquidation ©
Geneva
Geneva
1
REYL Private Office Luxembourg S.a.r.l.
100.00
Capital Chf 50,000
82
ISP CB Ipotecario S.r.l. (c)
Milano
Milano
1
Intesa Sanpaolo S.p.A.
60.00
Capital Eur 120,000
83
ISP CB Pubbico S.r.l. (c)
Milano
Milano
1
Intesa Sanpaolo S.p.A.
60.00
Capital Eur 120,000
84
ISP OBG S.r.l. (c)
Milano
Milano
1
Intesa Sanpaolo S.p.A.
60.00
Capital Eur 42,038
85
IW Private Investments SIM S.p.A.
Milano
Milano
1
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
100.00
Capital Eur 67,950,000
86
Joint-Stock Company Banca Intesa
Moscow
Moscow
1
Intesa Sanpaolo Holding International S.A.
53.02
Capital Rub 10,820,180,800
Intesa Sanpaolo S.p.A.
46.98
100.00
87
Lux Gest Asset Management S.A.
Luxembourg
Luxembourg
1
Intesa Sanpaolo Bank Luxembourg S.A.
100.00
Capital Eur 200,000
88
Milano Santa Giulia S.p.A. (g)
Milano
Milano
1
Risanamento S.p.A.
100.00
Capital Eur 139,041
89
Morval Bank & Trust Cayman Ltd. (c)
Grand
Cayman
Grand
Cayman
1
REYL & Cie S.A.
100.00
Capital Usd 7,850,000
90
MSG Comparto Quarto S.r.l. (e)
Milano
Milano
1
Milano Santa Giulia S.p.A.
100.00
Capital Eur 20,000
91
MSG Comparto Secondo S.r.l. (g)
Milano
Milano
1
Milano Santa Giulia S.p.A.
100.00
Capital Eur 50,000
92
MSG Comparto Terzo S.r.l. (g)
Milano
Milano
1
Milano Santa Giulia S.p.A.
100.00
Capital Eur 20,000
93
Neva S.G.R. S.p.A. (già Imi Fondi Chiusi S.p.A.) (c)
Torino
Torino
1
Intesa Sanpaolo Innovation Center S.p.A.
100.00
Capital Eur 2,000,000
94
OOO Intesa Realty Russia in Liquidation (c)
Moscow
Moscow
1
Intesa Sanpaolo S.p.A.
100.00
Capital Rub 10,000
95
Oro Italia Trading S.p.A. in liquidazione (c)
Arezzo
Arezzo
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 500,000
96
PBZ Card d.o.o.
Zagreb
Zagreb
1
Privredna Banka Zagreb d.d.
100.00
Capital Hrk 43,422,200
97
PBZ Leasing d.o.o.
Zagreb
Zagreb
1
Privredna Banka Zagreb d.d.
100.00
Capital Hrk 15,000,000
98
Porta Nuova Gioia (j)
Milano
Milano
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 7,054,350
99
Portugal Real Estate Opportunities Manager Sarl (c)
Luxembourg
Luxembourg
1
REYL Finance (MEA) Ltd.
100.00
Capital Eur 12,500
100
Pravex Bank Joint-Stock Company
Kiev
Kiev
1
Intesa Sanpaolo S.p.A.
100.00
Capital Uah 979,089,724
101
Prestitalia S.p.A.
Bergamo
Bergamo
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 205,722,715
102
Private Equity International S.A.
Luxembourg
Luxembourg
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 101,000,000
103
Privredna Banka Zagreb d.d.
Zagreb
Zagreb
1
Intesa Sanpaolo Holding International S.A.
100.00
Capital Hrk 1,876,574,700
104
Qingdao Yicai Fund Distribution Co. Ltd.
Qingdao
Qingdao
1
Intesa Sanpaolo S.p.A.
100.00
Capital Cny 591,000,000
105
RB Participations S.A.
Geneva
Geneva
1
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
100.00
Capital Chf 100,000
Notes to the consolidated financial statements – Part A – Accounting policies
227
Companies
Place of
business
Registered
office
Type of
relation-
ship (a)
INVESTMENT
Votes
available
(b)
Direct ownership
%
held
106
Recovery Property Utilisation and Services Zrt.
Budapest
Budapest
1
Cib Bank Ltd.
100.00
Capital Huf 20,000,000
107
REYL & Cie (Malta) Holding Ltd. (c)
Valletta
Valletta
1
REYL & Cie S.A.
100.00
Capital Eur 730,000
108
REYL & Cie (Malta) Ltd. (c)
Valletta
Valletta
1
REYL & Cie (Malta) Holding Ltd.
100.00
Capital Eur 730,000
109
REYL & Cie S.A. (k)
Geneva
Geneva
1
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
39.00
Capital Chf 31,500,001
RB Participations S.A.
30.00
69.00
110
REYL & CO (UK) Llp. (c)
London
London
1
REYL & CO Holdings Ltd.
100.00
Capital Gbp 2,500,000
111
REYL & CO Holdings Ltd. (c)
London
London
1
REYL & Cie S.A.
100.00
Capital Gbp 2,400,000
112
REYL Finance (MEA) Ltd. (c)
Dubai
Dubai
1
REYL & Cie S.A.
100.00
Capital Usd 2,875,000
113
REYL Overseas AG (c)
Zurich
Zurich
1
REYL & Cie S.A.
100.00
Capital Chf 2,000,000
114
REYL Private Office Luxembourg Sarl (c)
Luxembourg
Luxembourg
1
REYL & Cie S.A.
100.00
Capital Eur 50,000
115
REYL Singapore Holding Pte. Ltd. (c)
Singapore
Singapore
1
REYL & Cie S.A.
75.00
Capital Sgd 1,201
116
REYL Singapore Pte. Ltd. (c)
Singapore
Singapore
1
REYL & Cie S.A.
76.00
Capital Sgd 500,000
REYL Singapore Holding Pte. Ltd.
24.00
100.00
117
Ri. Rental S.r.l. (g)
Milano
Milano
1
Risanamento S.p.A.
100.00
Capital Eur 10,000
118
Risanamento Europa S.r.l. (g)
Milano
Milano
1
Risanamento S.p.A.
100.00
Capital Eur 10,000
119
Risanamento S.p.A. (g)
Milano
Milano
1
Intesa Sanpaolo S.p.A.
48.88
Capital Eur 197,951,784
120
Romulus Funding Corporation (f)
New York
New York
2
Intesa Sanpaolo S.p.A.
-
121
Società Benefit Cimarosa 1 S.p.A. (c)
Milano
Milano
1
Intesa Sanpaolo S.p.A.
100.00
Capital Eur 100,000
122
Società Italiana di Revisione e Fiduciaria – S.I.RE.F. S.p.A.
Milano
Milano
1
Fideuram Intesa Sanpaolo Private Banking
S.p.A.
100.00
Capital Eur 2,600,000
123
SRM Studi e Ricerche per il Mezzogiorno (c)
Napoli
Napoli
1
Intesa Sanpaolo S.p.A.
60.00
20,00 (*)
Capital Eur 90,000
124
Sviluppo Comparto 3 S.r.l. (g)
Milano
Milano
1
Milano Santa Giulia S.p.A.
100.00
Capital Eur 50,000
125
UBI Finance S.r.l. (c)
Milano
Milano
1
Intesa Sanpaolo S.p.A.
60.00
Capital Eur 10,000
126
UBI Trustee S.A. (c)
Luxembourg
Luxembourg
1
Fideuram Bank Luxembourg S.A.
100.00
Capital Eur 250,000
127
Vseobecna Uverova Banka A.S.
Bratislava
Bratislava
1
Intesa Sanpaolo Holding International S.A.
100.00
Capital Eur 430,819,064
Notes to the consolidated financial statements – Part A – Accounting policies
228
Companies
Place of
business
Registered
office
Type of
relation-
ship (a)
INVESTMENT
Votes
available
(b)
Direct ownership
%
held
128
VUB Generali Dochodkova Spravcovska Spolocnost A.S. (l)
Bratislava
Bratislava
1
Vseobecna Uverova Banka A.S.
55.26
Capital Eur 10,090,976
129
VUB Operating Leasing
Bratislava
Bratislava
1
Vseobecna Uverova Banka A.S.
100.00
Capital Eur 25,000
(a)
Type of relationship:
1 - majority of voting rights at Ordinary Shareholders' Meeting;
2 - other forms of control.
(b)
Where different from the % portion, the availability of the votes in the Ordinary Shareholders' Meeting is indicated, distinguishing between the effective (*) and potential (**) voting rights,
where applicable.
(c)
Company consolidated using the equity method given its limited materiality.
(d)
The subsidiary Asteria Investment Managers SA (“Asteria”) is 80% owned by Reyl & Cie SA following the acquisition of the minority interests from the minority sharehol ders. The remaining
20% of the share capital consists of treasury shares. These treasury shares are due to be cancelled in early 2023, resulting in an adjustment of Asteria’s total share capital, after which Reyl &
Cie will hold a 100% equity investment. Asteria absorbed the subsidiary Obviam AG with accounting effect from 31 December 2022 (which was previously consolidated at equity due to its
low materiality).
(e)
Minority shareholders are subject to a legal commitment to purchase the remaining 0.7% of share capital.
(f)
Company controlled pursuant to IFRS 10, although the Group does not hold any equity stake in the company capital.
(g)
Company not subject to the management and coordination activities pursuant to art. 2497 and following of the Italian Civil Code.
(h)
In the event of liquidation of the equity investment, the minority shareholder has the right to sell, and Intesa Sanpaolo is required to purchase, the entire minority investment.
(i)
Please note that there are put and call option agreements on 26.1% of share capital held by minority shareholders.
(j)
A closed-end alternative real estate investment fund managed by COIMA SGR S.p.A.
(k)
Please note that there are put and call option agreements on 31% of share capital held by minority shareholders.
(l)
Please note that there are put and call option agreements on 44.74% of share capital held by minority shareholders.
2. Significant evaluations and assumptions in determining the scope of consolidation
As stated above, companies are considered subsidiaries where Intesa Sanpaolo is exposed to, or has rights to, variable
returns from its involvement with them, and has the ability to affect those returns by exercising its own power over the entity in
question.
Control only exists if all of the following conditions are met:
− the power to direct the relevant activities of the subsidiary;
− the exposure, or rights, to variable returns from the involvement with the investee;
− the ability to use the power over the investee to affect the amount of the investor’s returns.
In particular, the Group considers the following factors in evaluating the existence of control:
− the purpose and the structure of the investee in order to identify its aims and relevant activities, or the activities that
significantly affect the investee’s returns, and how those activities are governed;
− power, in order to understand whether the Group has the contractual right to manage the relevant activities;
− the exposure to variable returns from the investee in order to evaluate whether the return recognised by the Group is
subject to variations depending on the investee's returns.
Furthermore, in order to evaluate the existence of control, potential principal-agent relationships are taken into consideration.
In order to evaluate whether the investee is acting as a principal or an agent, the Group takes account of the following factors:
− the decision-making power on the relevant activities of the subsidiary;
− the rights of other parties;
− the payments to which the Group is entitled;
− the Group's exposure to variable returns resulting from any investment in the investee.
IFRS 10 identifies relevant activities as activities of the investee that significantly affect the investee's returns.
In general terms, when the relevant activities are managed through voting rights, the following factors determine evidence
of control:
− direct ownership, or indirect ownership through its subsidiaries, of more than half the voting rights of an entity, unless in
exceptional circumstances it can be clearly demonstrated that such ownership does not constitute control;
− ownership of half, or less, of the votes which can be cast at the shareholders' meeting, and the practical ability
unilaterally to govern the relevant activities through:
o the control of more than half the voting rights as enshrined in an agreement with other investors;
o the power to determine the financial and operational policies of the entity, as conferred by the Articles of Association
or by contract;
o the power to nominate or remove the majority of the members of the Board of Directors or of the equivalent
corporate governance body;
o the power to cast the majority of the votes at meetings of the Board of Directors or of the equivalent corporate
governance body.
Notes to the consolidated financial statements – Part A – Accounting policies
229
In order to exercise power, it is necessary for the rights that the Group has over the investee to be material; to be material, the
Group must have the ability to use its rights when decisions relating to relevant activities are taken.
The existence and the effect of potential voting rights, where material, are taken into consideration in evaluating whethe r
power exists to shape the managerial and financial policies of another entity.
Sometimes the Group has "de facto" control over certain entities when it possesses rights to determine unilaterally the
relevant activities of the investee, even though it does not have the majority of the voting rights.
On the contrary, cases may emerge where the Group, though holding more than half of the voting rights, does not control the
investee since, consequently to agreements with other investors, the exposure to variable returns from the involvement with
the investees is not considered significant.
Subsidiaries can also include "structured entities" in which the voting rights are not the dominant factor in deciding who
controls the entity; this includes special purpose vehicles (SPEs/SPVs) and investment funds. Structured entities are
considered to be controlled where:
− the Group has powers enshrined in contractual rights allowing it to govern the relevant activities; and
− the Group is exposed to the variable returns deriving from such activities.
Notes to the consolidated financial statements – Part A – Accounting policies
230
3. Investments in subsidiaries with significant minority interests
3.1 Minority interests, minority voting rights and dividends distributed to minority shareholders
Companies
Minority
interests
%
Minority
voting
rights
% (1)
Dividends
distributed to
minority
shareholders
1
Bank of Alexandria (2)
20.00
20.00
16
2
Banka Intesa Sanpaolo D.D.
0.87
0.87
3
Compagnia Italiana Finanziaria - CIF S.r.l.
38.55
38.55
4
Eurizon Capital Real Asset SGR S.p.A.
40.01
24.50
5
Eurizon SLJ Capital Limited
35.00
35.00
1
6
Exetra S.p.A.
15.00
15.00
7
Fideuram Asset Management SGR S.p.A.
0.48
0.48
8
Iniziative Logistiche S.r.l.
39.98
39.98
9
Intesa Sanpaolo Banka D.D. Bosna I Hercegovina
0.01
10
Intesa Sanpaolo RBM Salute S.p.A.
26.21
26.21
11
Intesa Sanpaolo Vita S.p.A.
0.01
0.01
12
Reyl & Cie S.A.
31.00
31.00
13
Risanamento S.p.A.
51.12
14
VUB Generali Dochodkova Spravcovska Spolocnost A.S.
44.74
44.74
(1) Available voting rights at Ordinary Shareholders' Meeting.
(2) Dividend approved but not distributed
3.2 Investments in companies with significant minority interests: financial highlights
(millions of euro)
Companies
Total assets
Cash and cash equivalents
Financial assets
Property, equipment and intangible
assets
Financial liabilities
Shareholders' equity
Interest margin
Net interest and other banking income
Operating expenses
Income (loss) before tax
from continuing
operations
Income (loss) after tax from continuing
operations
Income (loss) after tax from discontinued
operations
Net income (loss)
(1)
Other comprehensive income (net of tax)
(2)
Consolidated comprehensive income
(3) = (1) + (2)
1
Bank of Alexandria
5,171
86
4,808
162
4,249
628
353
408
-177
191
129
-
129
-319
-190
4. Significant restrictions
In terms of significant restrictions, it is noted that the Intesa Sanpaolo Group is subject to supervisory rules provided by
Directive 2013/36/EU (CRD IV) and Regulation (EU) 575/2013 (CRR), amended by Directive 2019/878/EU (CRD V) and
Regulation (EU) 2019/876 (CRR II), respectively, and controls financial institutions subject to the same or similar regulations
aiming to maintain an adequate level of regulatory capital in relation to risks taken; therefore, the ability of subsidiary banks or
financial institutions to distribute capital or dividends is dependent on the fulfilment of the regulatory thresholds set in those
regulations.
Referring, for more details, to Part A - Section 5 of the consolidated financial statements, in compliance with the provisions of
IFRS 12, in this section we note the limitations currently imposed by Russian regulations which – in substance – impose
restrictions on repayments and payments to parties resident in unfriendly countries.
Those limitations specifically affect the subsidiary Banca Intesa Russia, which, in 2022, was unable to directly route the
repayments of past due instalments referring to intragroup exposures to the creditor banks and, therefore, routed the
resources allocated for those repayments (for a total of around 29 million euro at the end of 2022) to specific accounts in
Russia.
It must also be noted that the current legal restrictions on transferring monetary resources beyond the country’s borders do
not prejudice in any way the ownership of the amounts (due to the creditor banks), nor, as argued in greater detail in Part A –
Section 5, do they constitute an obstacle to maintaining control over the Russian subsidiary.
Notes to the consolidated financial statements – Part A – Accounting policies
231
Lastly, within the Group, there are insurance companies subject to the Solvency Capital Requirements of Insurance
companies established by the Solvency II legislation.
5. Other information
In preparing the Intesa Sanpaolo consolidated financial statements, the financial statements of all subsidiaries have the sam e
financial year-end, except for that reported below for the Ukrainian subsidiary Pravex Bank in the following paragraph on
Consolidation methods.
Consolidation methods
Full consolidation
This method involves the “line by line” aggregation of the individual amounts reported in the balance sheets and income
statements of the subsidiary companies concerned. Following the allocation to minority shareholders of their interests, in a
specific caption, in equity and in the result for the period, the residual value is eliminated against the book value of the
subsidiaries concerned.
Any positive differences arising on consolidation, after the allocation to the assets and liabilities of the consolidated subsidiary,
are recorded under Intangible assets as goodwill or other intangible assets. Negative differences are recognised in the
income statement.
Assets, liabilities, income and expenses between consolidated companies are totally eliminated.
Business combinations must be accounted for using the "acquisition method" in accordance with IFRS 3, whereby identifiable
assets acquired or liabilities assumed (including contingent liabilities) are recognised at their fair value at the acquisition date.
Moreover, for each business combination, any minority interest in the acquired company can be recognised at fair value or in
proportion to the minority investment in the net identifiable assets of the acquired company. Any excess of the consideration
transferred (being the fair value of the assets sold, the liabilities incurred and the equity instruments issued) over the fair value
recognition of minority interests with respect to the fair value of the assets acquired and the liabilities assumed is recognised
as goodwill. If the consideration is lower, the difference is taken to the income statement.
The "acquisition method" is applied starting from the acquisition date, that is from the moment in which control of the acquired
company is obtained. Therefore, the economic results of a subsidiary acquired in the reference period are included in the
Consolidated financial statements starting from the acquisition date. Likewise, economic results of a subsidiary sold are
included in the Consolidated financial statements until the date in which control ceased.
The difference between sale price and book value at the date of disposal (including foreign exchange differences recorded in
shareholders’ equity on consolidation, over time) is accounted for in the income statement.
Where necessary – and without prejudice to absolutely marginal cases – the financial statements of companies which are
drawn up using different accounting criteria are restated to be compliant with the standards used by the Group.
With regard to the Ukrainian subsidiary Pravex Bank, as a result of the worsening of the situation in Kyiv (where the
subsidiary’s offices are located) since mid-October 2022, due to the repeated Russian bombings of the main Ukrainian power
plants, it was decided, with a view to reducing “operational” risk, that it was best to retain, in December’s consolidation, the
accounting values produced by Pravex for the consolidation of September 2022. Thus, for the financial statements as at 31
December, the balance sheet and income statement results of Pravex were included based on a consolidation package,
drawn up in compliance with the IAS/IFRSs, as set out in the Group Accounting Policies, related to 30 September 2022, using
the exchange rate as at 31 December 2022 for conversion into Euro. The decision to use the data as at 30 September 2022
for the line-by-line consolidation of Pravex, also taken in light of the slight materiality of the subsidiary, and motivated by
objective operational restrictions, is also based on the indications in IFRS 10, though for specific cases
75
.
Measurement using the equity method
Associates and companies subject to joint control are consolidated with the equity method.
The equity method requires the initial recognition of the equity investment at cost and its subsequent value adjustment based
on the stake in the shareholders’ equity of the company.
Any difference between the value of the equity investment and the shareholders’ equity of the company involved is recorded
in the book value of the company.
The valuation of the portion of shareholders’ equity does not consider any potential votin g rights.
The portion of the company’s results for the period pertaining to the Group is recorded in a specific caption of the consolid ated
income statement.
75
IFRS 10 states that, where it is not possible to use the subsidiary’s data updated to the same reporting date as the consolidated financial statements, it
is permitted to use the previous accounting data, provided that previous date is no more than 3 months prior. For more details, see the following
paragraphs of IFRS 10: IFRS 10.B92 “The financial statements of the parent and its subsidiaries used in the preparation of the consolidated financial
statements shall have the same reporting date. When the end of the reporting period of the parent is different from that of a subsidiary, the subsidiary
prepares, for consolidation purposes, additional financial information as of the same date as the financial statements of the parent to enable the parent to
consolidate the financial information of the subsidiary, unless it is impracticable to do so.” IFRS 10.B93 “If it is impracticable to do so, the parent shall
consolidate the financial information of the subsidiary using the most recent financial statements of the subsidiary adjusted for the effects of significant
transactions or events that occur between the date of those financial statements and the date of the consolidated financial statements. In any case, the
difference between the date of the subsidiary’s financial statements and that of the consolidated financial statements shall be no more than three
months, and the length of the reporting periods and any difference between the dates of the financial statements shall be the same from period to
period.”
Notes to the consolidated financial statements – Part A – Accounting policies
232
If there is evidence of impairment, the recoverable amount of the investment is estimated, considering the present value of the
future cash flows which may be generated by the investment, including the final disposal value. If the recoverable amount is
lower than the carrying value, the difference is recorded in the income statement.
For consolidation of companies subject to joint control and investments in associates, the most recent approved (annual or
interim) figures have been used. In certain marginal cases, the companies do not apply IAS/IFRS and, therefore, for such
companies it was verified that the adoption of IAS/IFRS would not have produced significant effects on the Intesa Sanpaolo
Group’s Consolidated financial statements.
Conversion of financial statements in currencies other than the euro
The financial statements of the companies which do not operate in the eurozone are translated into euro applying to the
assets and liabilities in the balance sheet the spot exchange rate at period-end and to the income statement the average
exchange rate.
Foreign exchange differences from the conversion of the financial statements of such companies, deriving from the
application of different foreign exchange rates to assets and liabilities and the income statement, are recorded in Valuation
reserves under shareholders' equity. Foreign exchange differences on the shareholders' equity of the subsidiaries are also
recorded in Valuation reserves.
All foreign exchange differences are reversed to the income statement of the year in which the foreign operation is sold.
Notes to the consolidated financial statements – Part A – Accounting policies
233
SECTION 4 – SIGNIFICANT EVENTS AFTER THE REPORTING DATE
On 1 January 2023, the amendments to the Articles of Association of Banca 5 S.p.A. took effect, with the company’s new
name of Isybank S.p.A. This is the first formal step in the project underway to create a new digital bank within the Group, as
envisaged in the 2022-2025 Business Plan.
Also on 1 January 2023 the Extraordinary Shareholders’ Meetings of the two companies approved the merger by
incorporation of Fideuram Bank (Luxembourg) S.A. into Compagnie de Banque Privée Quilvest S.A., which took the name
Intesa Sanpaolo Wealth Management, with statutory and accounting effects on the same date.
With reference to the purchase of own shares for annulment (buyback) for a maximum total outlay of 3,400 million euro and a
number of shares not exceeding 2,615,384,615 Intesa Sanpaolo ordinary shares - approved by the Intesa Sanpaolo
Shareholders’ Meeting of 29 April 2022 and authorised by the ECB through the notification received on 24 June 2022 - which
was carried out under an initial programme launched on 4 July and concluded on 11 October 2022 for an outlay of
1,700 million euro and the purchase of 988,632,803 shares (all of them annulled)
76
, on 6 February 2023 Intesa Sanpaolo
announced the launch of the buyback for the remaining maximum outlay of 1,700 million euro and a number of shares not
exceeding 1,626,751,812, as resolved by the Bank’s Board of Directors on 3 February 2023.
The programme, assigned to an appointed third-party intermediary, operating in full independence and without any
involvement of the Intesa Sanpaolo Group, to carry out the operations on the regulated market Euronext Milan of Borsa
Italiana, was launched on 13 February 2023, and will be completed by 12 May 2023, in compliance with the terms approved
at the Intesa Sanpaolo Shareholders’ Meeting of 29 April 2022, which establish that the purchase of own shares and their
annulment should take place by the ex-right date of the dividend related to the financial statements for the year ending
31 December 2022, namely by 22 May 2023.
Intesa Sanpaolo will communicate, by 18 May 2023, the final amount of the remaining dividend per share based on the
number of shares annulled following the completion of the programme.
SECTION 5 - OTHER ASPECTS
RISKS, UNCERTAINTIES AND IMPACTS OF THE RUSSIAN/UKRAINIAN CRISIS AND THE COVID-19 PANDEMIC
Introduction
In terms of risk management, 2022 saw both positive aspects, such as the regression of the impacts deriving from the
COVID-19 pandemic and the consequences on customer solvency, and negative aspects, mainly attributable to the Russia-
Ukraine conflict and the consequences of that scenario, in terms of hikes in the prices of energy sources, the lack of certain
commodities and the resulting increase in prices.
The preparation of the consolidated financial statements in accordance with IFRS requires that the management make
estimates and assumptions that affect the amount reported in the financial statements concerning assets, liabilities, income
and expenses recognised in the financial year, as well as other comprehensive income, as indicated in greater detail in the
specific paragraph of these Notes (Part A – A2: Main financial statement captions - Use of estimates and assumptions in
preparing financial reports). The main areas of uncertainty in the estimates made by the management, which are based on
historical experience and other assumptions that are deemed reasonable, include those relating to loan losses, the fair value
of financial instruments (including derivatives), corporate income taxes, employee benefits, goodwill and intangible assets,
impairment of non-financial assets, derecognition of financial assets and liabilities and provisions for risks and charges.
The situation described above has caused and continues to cause greater volatility and uncertainty in the financial sector an d
markets, which has also been reflected in key areas for determination of estimates. Scenarios with significantly new elements
that were not found in recent periods are very difficult to capture in the modelling of credit assessments, making it extremely
difficult to produce forecasts for specific portfolio risks in such circumstances.
The estimation methodologies set out in the Group’s policies provide that, in certain circumstances – such as the current ones
– the need may arise to make temporary adjustments (valuation increases) to the results of the models adopted, as a
precaution. That need may arise as a result of external events that are unexpected, which the Bank cannot control and have
potential consequences, also on a large scale, on the measurement of the ECL of the Bank’s portfolios as a result of elements
that are not adequately captured by the IFRS 9 models used. It must be noted that the IFRS 9 estimation methodologies are
founded on experience-based assumptions, and are strongly anchored to historical observations, which are considered over a
congruous time horizon and in a sufficiently stable backdrop. At the same time, the estimation methodologies must also reflec t
forward-looking conditions and adopt reasonable, sustainable approaches and forecasts (without undue cost and effort). They
must be appropriately assessed in the event of increased uncertainty on the future scenario and on the possible impacts of
the events in question.
The guidelines provided by regulators for the COVID-19 pandemic and the conflict in Ukraine (reported in greater detail in the
specific sections below) allow/invite intermediaries to adopt a flexible approach and to use their own expert judgment in
making decisions in exceptional, unexpected contexts, bearing in mind that the guidelines provided do not constitute a
“relaxation” of the rules but rather the granting of further necessary discretion in the context of extremely specific events.
These considerations supported the Bank’s decision to adopt post-model adjustments, increasing the Expected Credit Losses
(ECL) on a managerial basis, in order to incorporate a suitable estimate of the uncertainties mentioned above. The Bank
therefore used estimates, assumptions and judgments that reflect this uncertainty. In the current situation of uncertainty, the
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Detailed information on the initial programme is provided in the paragraph “Highlights” in the Report on operations.
Notes to the consolidated financial statements – Part A – Accounting policies
234
Group's assessments are also supported, as detailed below, by sensitivity analyses, subject to specific disclosure, to provid e
users of the financial statements a more complete and transparent understanding of these phenomena.
The current context, in terms of both the macroeconomic profile and the evolution of the Russian-Ukrainian conflict, is thus
marked by significant uncertainties, which were considered in drawing up the financial statements. Specifically, the potentia l
direct and indirect risks of that context were taken into consideration in order to measure credit positions, through prudential
adjustments to exposures to Russian and Ukrainian counterparties and the strengthening of coverage for non-performing
positions and all performing positions which, while not showing specific impairment, may suffer the consequences of a
negative evolution of the macroeconomic context and the Russian-Ukrainian conflict.
Thus, the following is set out below:
− first, several indications on the scenarios used by the Group in preparing the financial statements in this specific context,
the related sensitivity analyses and the issue of impairment testing of goodwill and deferred taxation;
− subsequently, the issues relating to the Russian-Ukrainian conflict are covered;
− lastly, the issue of COVID-19 is covered
77
.
Reference is also made to the relevant Sections of the Notes to the consolidated financial statements (as indicated below) fo r
a more detailed examination, including quantitative data, of the effects of the above situations, which are summarised below.
Specifically, a more complete analysis of the approach to measuring credit positions, also with specific regard to describing
the modelling used and the management overlays used in this specific context is provided in Part E - Section 2 - Credit risk
management policies. Given the importance of these issues, it is also noted that the Report on operations contains a section
specifically dedicated to “The impact for the ISP Group of the military conflict between Russia and Ukraine”, which
summarises, inter alia, the initiatives of the Intesa Sanpaolo Group in favour of Ukraine, as well as the aspects regarding the
framework of sanctions against the Russian Federation and cybersecurity. An equivalent section on the “Impacts of the
COVID-19 pandemic” has also been included in the Report on operations.
Intesa Sanpaolo Group macroeconomic scenarios for the 2022 financial statements
With regard to the macroeconomic scenario used in the models for determining expected credit losses, note that in June
2020, following the indications from the regulators and standard setters, the Group anchored its macroeconomic forecasts to
the projections published by the central banks. In light of the context described to this point and considering the lesser
uncertainties that characterise the process of estimating the projections (compared to the extremely serious scenario at the
start of the pandemic), the Group decided to return to using the scenarios produced internally by the Parent Company’s
Research Department as input to the ECL models in December 2021, thus restoring substantial uniformity between the
scenarios used in the other measurement/forecasting processes (impairment tests, budgeting, etc.), especially with regard to
the Business Plan launched in 2022. This choice, confirmed during 2022, also seems reasonable in light of the convergence
between the forecasts produced internally by the Research Department and the forecasts drawn up periodically by the
ECB/Bank of Italy.
For a table illustration of the scenarios actually used in the valuation of loans, please refer to the specific section of Part E of
these Notes which also contains, as specified below, further details on the sensitivity of the ECL to changes in
macroeconomic scenarios.
Instead, the medium-term forecasting scenario of reference to determine the value in use of the CGUs for impairment testing
is set out in Section 10 of Part B.
Sensitivity analysis in the light of alternative scenarios
As in the previous years, and as recommended by the regulators (see, for example, ESMA: “European common enforcement
priorities for 2021 annual financial reports” and the ESMA guidelines on the Russian/Ukrainian crisis illustrated in the spec ific
section), in the Notes to the consolidated financial statements, the Group provides the various sensitivity analyses in order to
supplement its disclosures. These analyses related to the issues indicated below, to provide users of the financial statement s
with a greater understanding of the Group’s valuation choices in this s pecific context. Therefore, reference should be made to
the following parts of these Notes regarding:
− the effects of a change in one or more non-observable parameters used in the valuation techniques adopted to
determine the fair value, the financial assets and liabilities measured at fair value level 3 (Part A - A.4.2 Valuation
processes and sensitivity);
− sensitivity analysis for real estate assets measured at fair value. The analysis essentially concerned the properties of the
Parent Company Intesa Sanpaolo, which represent the Core perimeter of the Group's real estate assets (Part A - A.4.5
Fair value hierarchy - Sensitivity of property valuations);
− sensitivity of the Value in use of Cash Generating Units for which intangible assets with indefinite useful lives remain
(Part B – Assets: Section 10 Intangible assets);
− sensitivity to changes in interest rates of net defined benefit liabilities (Part B - Liabilities: Section 10.5 Post-employment
defined benefit plans);
− sensitivity analysis of IFRS 9 ECL in order to analyse the variability with respect to individual alternative scenarios (Part E
- Section 2 Credit risk management and policies);
− sensitivity of net interest income, assuming a change in interest rates, and sensitivity analysis of the banking book to
price risk for listed assets recognised in the HTCS category (Part E - Banking book: interest rate risk and price risk);
− scenario analysis relating to the evolution of stock prices, interest rates, credit spreads, foreign exchange rates and
commodity prices for trading activity (Part E - Trading book: interest rate risk and price risk);
77
Based on the indications provided in the specific communications from the Bank of Italy: “impacts of COVID-19 and measures to support the economy
and amendments to IAS/IFRS”.
Notes to the consolidated financial statements – Part A – Accounting policies
235
− sensitivity of the fair value of the portfolio of financial assets of insurance companies with respect to interest rate
movements, credit spreads and equity prices (Part E - Insurance risks: Financial risks).
Measurement of goodwill in the current scenario
In the current challenging market environment, measuring the recoverable amount of intangible assets is also particularly
difficult. Therefore, also for the Financial Statements as at 31 December 2022, the effects of the current situation were
carefully considered in conducting the annual impairment testing of goodwill. For more details of impairment testing on
goodwill and brand name, reference is made to Part B - Information on the consolidated balance sheet (See Part B – Assets:
Section 10 Intangible assets - Information on intangible assets and goodwill).
Probability test on deferred taxation in the current scenario
As provided for by IAS 12, a deferred tax asset (or DTA) must be recognised for all deductible temporary differences to the
extent that it is probable that taxable income will be earned that can offset the deductible temporary differences. Deferred tax
assets are then divided into “eligible” deferred tax assets and “ineligible” deferred tax assets. While for the former Italian
regulations set out a specific mechanism for conversion into tax credits which legitimises, in and of itself, their recognition in
the financial statements (see Part B – As sets: Section 11 Deferred Tax Assets and Liabilities), the amount of “ineligible”
deferred tax assets is tested to determine whether it is likely that taxable income will be earned in the future that will ensure
their recovery (probability test). The Group carried out that test also in the current situation. For a more detailed illustration,
refer to Part B – Assets: Section 11 Deferred Tax Assets and Liabilities - Probability test on deferred taxation.
RISKS, UNCERTAINTIES AND IMPACTS OF THE RUSSIAN/UKRAINIAN CRISIS
On 24 February 2022, the gradually escalating tension between Russia and Ukraine erupted into a conflict, the intensity and
size of which had not been seen in Europe since the end of the Second World War. The extremely serious situation resulting
from the conflict was immediately closely monitored and assessed by Intesa Sanpaolo, also in light of the guidance provided
by the regulators on the subject, given that the Group has:
− a direct presence with two subsidiaries in the warring countries, Pravex Bank Public Joint-Stock Company (Pravex) and
Joint-Stock Company Banca Intesa (Banca Intesa Russia), and is therefore particularly exposed to the consequences of
the conflict;
− cross-border exposures stemming from its corporate and investment banking activities.
In its lending activities, the IMI C&IB Division has over time financed counterparties resident in the Russian Federation. More
than two-thirds of the loans to Russian customers disbursed before the conflict involve leading industrial groups, which have
established commercial relationships with customers belonging to the main international supply chains, a significant amount
of which derives from commodity exports. At the outbreak of hostilities, loans to Russian customers represented around 1% of
the Intesa Sanpaolo Group’s total loans to customers, net of Export Credit Agency - ECA guarantees. Due to the existence of
those guarantees, the credit risk on those exposures can be considered as not referring to either Russia or Ukraine.
That being said, in this section we note some information relating to the Russian and Ukrainian subsidiaries:
− Banca Intesa Russia
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: this is a Moscow-based corporate bank, 47% owned by Intesa Sanpaolo and 53% by Intesa
Sanpaolo Holding International, part of the IMI Corporate & Investment Banking Division. It operates with 27 branches
and 907 staff;
− Pravex is a small commercial bank, wholly owned by Intesa Sanpaolo and based in Kyiv, part of the International
Subsidiary Banks Division. It operates with 43 branches (mainly in the Kyiv region) and 735 staff.
Specific regulations issued by the EU Regulators on the Russian-Ukrainian crisis
As a result of the unexpected evolution of the Russian-Ukrainian crisis, as well as the resulting tensions that arose in relations
between the Russian Federation and the EU and NATO countries (including Italy), the main regulators issued a series of
specific measures to provide guidance on this issue. The most significant is the public statement issued by ESMA on 13 May
2022, symmetrically adopted also by CONSOB with regard to the priority accounting aspects. This public statement is based,
and provides greater details, on the previous document of 14 March 2022 (ESMA PUBLIC STATEMENT: ESMA coordinates
regulatory response to the war in Ukraine and its impact on EU financial markets – 14 March 2022). That public statement
was additionally confirmed by the “ESMA Enforcement Priorities 2022” of 28 October 2022.
In the context of the Russian-Ukrainian war, as previously for COVID-19, specific recommendations are provided for the
financial statement aspects most strongly impacted by the war regarding:
Control and going concern
− assess at Group level the going concern situation. This assessment must take account of all the information available on
the future, including expected profitability and any restrictions on immediate access to financial resources;
− assess the continuing control over the subsidiaries located in the regions involved in the conflict;
− consider existing financial restrictions on assets;
− carefully assess whether control was effectively lost in the event of disposal.
Valuation process and classification of positions
− update the valuation based on significant judgements, assumptions about the future and other tools for assessing
uncertainty;
78
In addition to the marginal company OOO Intesa Realty Russia, consolidated at equity, considering its slight materiality.
Notes to the consolidated financial statements – Part A – Accounting policies
236
− in assessing the impairment of debt securities and loans, as well as of leases and trade receivables and contract assets,
consider the effect of the war on whether there has been a significant increase in credit risk (SICR)
79
and on the
measurement of expected credit losses (ECL) taking into account forward-looking information;
− when assessing whether recognition of impairment or write-down of assets is necessary, take into account decisions to
discontinue, dispose of, or suspend operations, or cancel investments in Ukraine, Russia or Belarus;
− focus on the classification of non-current assets held for sale and/or discontinued operations pursuant to IFRS 5.
Financial reporting
− use caution in presenting the impacts of the conflict separately in the financial statement forms, given its extensiveness.
Instead, it would be preferable to provide in the notes the qualitative and quantitative information on significant impacts,
the judgements and assumptions applied in recognising, measuring and presenting assets and liabilities, and their
related economic effects;
− adjust and potentially expand the level of detail of the information provided in the financial statements. It is also
recommended to update the disclosures on sensitivity analyses, both in general and with specific reference to exposures
to Russia and Ukraine;
− provide adequate information on the scenarios considered, updating the impairment tests on non-financial assets (such
as intangible assets with indefinite life and deferred tax assets).
Specific attention must obviously be paid to the impacts on the financial statements of any significant events occurring afte r
the end of the reporting period, to provide relevant supplementary information.
Control and going concern
Despite the critical situation, particularly for Pravex, the two subsidiaries resident in the warring countries are continuing to
operate with the support of the Parent Company structures, albeit with the objective limits dictated by the war and the
continued high international tensions.
Intesa Sanpaolo’s continuing control over the two entities has also been confirmed. This can be identified based on several
aspects:
− in accounting/administrative terms, by acquiring the accounts for consolidation purposes. Specifically, as illustrated in
greater detail in Part A: Section 3 - Scope of consolidation and consolidation methods, for the Russian subsidiary, the
accounts as at 31 December 2022 were acquired accurately and in a timely manner, while for Pravex, it was decided to
maintain the accounts produced for consolidation as at 30 September 2022, considering the specific operating difficulties
of the subsidiary, as well as in light of the substantial immateriality of its balance sheet figures at Group level;
− in terms of statutory regulations. With specific regard to the Russian subsidiary, the Parent Company was able to
exercise its power to determine, in compliance with Russian regulations, the composition of the corporate bodies and to
appoint the management body m embers of Banca Intesa Russia at the Shareholders’ Meeting of 8 July 2022. The
turnover involving the Board and the Audit Committee was the result of appointments proposed by the Parent Company
that passed the approval process of the Russian Central Bank, while the Board appointed before the conflict remains in
place for the Ukrainian subsidiary;
− in terms of steering the business, the two entities continue to move ahead with their commercial business following the
instructions of the Parent Company. Specifically, in its corporate operations, Banca Intesa Russia complied with the
instructions received, immediately after the conflict broke out, to gradually reduce its existing credit exposure. In lending,
that bank is not subject to external “interference”, a nd follows the instructions of the Parent Company also in cases
where, due to the slight materiality of the disbursements, based on its existing powers, it would be entitled to make
autonomous decisions on its action;
− in terms of coordination and control, as the Parent Company’s control functions (including the support function of the
Manager responsible for preparing the Company’s financial reports, namely Administrative and Financial Governance)
continue to carry out their roles through the regular receipt and analysis of the planned information flows, interacting with
the structures of the subsidiaries through the communication channels available, in line with any limitations that may
arise over time, also handled using contingency solutions.
Moreover, the conclusions regarding the maintenance of control over Banca Intesa Russia are not invalidated by the
limitations currently set by Russian regulations which, substantially, impose restrictions to repayments and payments to
parties resident in “unfriendly” countries. Aware of the restrictions imposed by the specific regulatory framework, Banca Intesa
Russia credited to specific Russian accounts, as provided by law, the monetary resources for the repayment of intragroup
exposures that matured in the meantime.
The potential use of the resources credited to those accounts – equal to around 29 million euro at the end of December 2022
– is limited to several specific purposes within Russia. In this context, it must be considered that, also based on specific le ga l
opinions acquired, the current limitations do not constitute the “expropriation” of the amounts in any way (nor are they even
indicators of a loss of control over the subsidiary’s assets). Rather, they derive from the temporary legal “freezing” of the free
availability of amounts which, based on economic rights, would otherwise be available for their owner.
Also with regard to the issue of control over assets, note the two significant de-risking operations for a total of 2.5 billion euro
in loans to leading counterparties in the Russian Federation. Those operations were completed with the collection of the
consideration agreed from the acquiring counterparties.
79
Where it is difficult to identify the effect at instrument level, it may be necessary to perform the assessment on a collective basis, on groups of financial
instruments.
Notes to the consolidated financial statements – Part A – Accounting policies
237
Valuation process and classification of positions
In referring to Part E (Section 2 “Risks of the prudential consolidation”) of these Consolidated financial statements for a more
complete examination of the aspects of managing and measuring the Group’s exposures to Russian
80
and Ukrainian
counterparties, it is noted that, as a result of the outbreak of the conflict, considering the presence of credit exposures of the
Group to counterparties exposed to country risk related to the conflict (specifically, resident counterparties or counterparties
controlled by residents in the Russian Federation), for the purpose of drawing up the financial reporting, a regulatory analysis
was conducted of the international accounting standards to verify any indications or rationales underlying the measurement of
the Expected Credit Loss in crisis scenarios such as th e current one. The analysis of IFRS 9 “Financial Instruments” and the
related Annexes shows no indications or examples aimed at setting out guidelines for the measurement of Expected Credit
Losses in contexts of war or determining specific methods of increasing credit risk due to sudden, serious geopolitical crises
such as the current one. Rather, the standard offers general indications on calculating the ECL within this framework
81
.
Therefore, in light of the significant uncertainty about the direct or indirect effects of the conflict and based on the indications
provided by the various regulators on the outbreak of the COVID-19 pandemic (see below), which also contained elements of
clear unpredictability, it was deemed consistent with the indications of the standard to identify:
− in the collective assessment, the methods for capturing the SICR, specifically if it is not possible to measure a specific
level of credit risk for the single counterparties;
− in using management overlays, for the purpose of calculating the ECL, the most suitable method for incorporating
provisions linked to country and geopolitical risk relating to the ongoing conflict.
For the purposes of the financial statements as at 31 December 2022, the main choices regarding the staging assignment
and calculation of the ECL adopted by the Group in the 2022 interim reporting for performing loans to Russian and Ukrainian
counterparties were confirmed. In light of that indicated in the previous paragraph, for these loans, the Group decided to
adopt an approach strongly guided by the emergence of geopolitical risk, thus impacted by the counterparties’ country of
residence, both to determine the SICR and to calculate the ECL, also by applying management overlays. Moreover, with
specific reference to the cross-border exposures, the Russian companies financed before the outbreak of the conflict all had
high ratings and therefore, for most of them, their business outlook does not include any increased risks other than those
generated by the geopolitical situation. Consequently, for these companies, the main current risk is transfer risk, i.e. the risk
that they will fail to honour their debt repayment commitments, not because of aspects directly related to their business, but
because of government-imposed restrictions.
This was considered the most appropriate way to incorporate the provisions for country and geopolitical risk related to the
current conflict that would otherwise not be properly captured by the risk measurement systems normally used. These choices
were applied consistently to both the exposures of Pravex and of Banca Intesa Russia and cross-border positions mainly at
the Parent Company and the international subsidiary banks of the IMI CIB Division and, for smaller amounts, the banks of the
International Subsidiary Banks Division. For a more detailed examination of the main application methods of those
approaches, refer to that illustrated in greater detail in Part E - Information on risks and relative hedging policies
82
of the
Notes.
With regard to the classification of exposures to Russian and Ukrainian counterparties in the various risk stages set out in
IFRS 9, for cross-border counterparties, the constant updating of the ratings entailed their classification in Stage 2, just based
on the ordinary staging processes, except for a few Russian counterparties, for which the status of Unlikely-to-Pay was
established. The Group’s approach entailed classifying perf orming exposures to customers of Banca Intesa Russia in Stage
2. Instead, with regard to exposures to customers of Pravex, the absolutely serious situation in all of Ukraine resulted in the
definition, for the purpose of classifying and measuring the bank’s loan portfolio, of a specific approach, significantly based on
prudent rationales, in light of the worsening of the conflict and the consequent repercussions on the Ukrainian economy. For
the purposes of the financial statements as at 31 December, it was deemed appropriate to fully write down Pravex’s on-
balance sheet loans to customers, with consequent classification to Stage 3. This measure reflects the ongoing war situation
that requires considering country risk, with appropriate measurement of the risk that the capital invested abroad is exposed to,
connected to the possibility that political or economic circumstances may result in non-repayment of the loan or in a write-
down of the investment made in the country. In essence, the risk of insolvency of public and private operators linked to their
geographical area of origin is independent from their intent. Lastly, these choices also consider the limited volume of loans of
the subsidiary.
The real estate assets and the financial investments in Russian securities of the two subsidiaries were also assessed, with
marginal impacts at Group level, also in light of their limited materiality.
With regard to the classification of non-current assets held for sale and/or discontinued operations pursuant to IFRS 5, the
Group did not classify any exposures to Russian or Ukrainian counterparties in that manner, as the conditions under IFRS 5
were not met.
80
For these purposes, the small exposures to Belarusian counterparties have for simplicity been treated and disclosed together with the exposures to
the Russian Federation.
81
In particular, see IFRS 9 B5.5.1, IFRS 9 B5.5.4, IFRS 9 B5.5.5, IFRS 9 B5.5.18 and IFRS 9 B5.5.52.
82
Section 2 – Risk of the prudential consolidation 1.1 Credit risk.
Notes to the consolidated financial statements – Part A – Accounting policies
238
Financial reporting
In line with the approach adopted in the interim statements published during the year, the Group presents the impacts of the
conflict by providing in the Notes to the consolidated financial statements (in this Section or in the references indicated)
qualitative and quantitative information on significant impacts, the judgements and assumptions applied in recognising,
measuring and presenting assets and liabilities, and their related economic effects, without opting for separate presentation.
That being said, a summary is provided below of the remaining exposures of the Group to counterparties resident in Russia or
Ukraine and the related economic impacts, referring, also in this case, to that set out in Part E - Information on risks and
relative hedging policies of these Notes to the consolidated financial statements for more detailed analyses.
At the end of the year, the remaining exposures to counterparties resident in Russia or Ukraine (net of the share covered by
Export Credit Agency guarantees) amounted, in terms of gross values, to 372 million euro (205 million euro net) for Banca
Intesa Russia and 1,257 million euro (963 million euro net) for cross-border exposures to customers resident in Russia (net of
ECA guarantees). These were accompanied by exposures to banks totalling 797 million euro (782 million euro net) and in
securities totalling 73 million euro (41 million euro net). Exposures to customers resident in Ukraine amounted to 216 million
euro (103 million euro net), of which 112 million euro (book value nil in net terms) related to the subsidiary Pravex Bank.
These were accompanied by exposures to banks and in securities totalling 74 million euro (64 million euro net), for a total of
2,789 million euro.
The significant de-risking exercise set up during 2022 (which involved the finalisation of two significant positions for a total of
2,515 million euro in gross value) and the major adjustments to the residual positions contributed to more than halving the
overall net exposure (customers, banks and securities) as at 31 December 2022 to counterparties resident in Russia and
Ukraine, which amounted to 2,158 million euro, down by 3,087 million euro compared to 31 December 2021 (-59%).
Moreover, the Parent Company and two subsidiaries disbursed loans to Banca Intesa Russia for a residual book value of
211 million euro, to support the bank’s operations, and also made available 200 million euro originally intended for a capital
increase. The concrete implementation of that capital increase was suspended due to the war. The loan of 211 million euro is
still supporting the operations of the bank, which, despite the difficulties caused by the context, achieved a positive operating
result in 2022. For the amount originally intended for a capital increase, the decisions will depend on the development of th e
war and the Russian regulations which currently impose temporary restrictions to repayments and payments to parties
resident in “unfriendly” countries.
Overall, the valuation processes and the losses associated with the de-risking of the Russian exposures led to the recognition
in the year, before tax, of net charges totalling 1,415 million euro, with 1,298 million euro relating to adjustments to loans,
36 million euro to securities and 81 million euro to other balance sheet items, including the provision of 80 million euro made
upon consolidation of the subsidiary Banca Intesa Russia to zero out its equity contribution to the Group’s consolidated
financial statements and factor in the impact of the limitations to the repatriation of intragroup funds by Banca Intesa Russia,
given the local regulatory restrictions.
Lastly, the Sections of Part E of these Notes dedicated to the single types of risk (market and liquidity, insurance and
operational risk) set out the information on the relevant aspects resulting from the limited impacts – where present – of the
Russian-Ukrainian crisis.
Notes to the consolidated financial statements – Part A – Accounting policies
239
RISKS, UNCERTAINTIES AND IMPACTS OF THE COVID-19 PANDEMIC
In its communication of 15 December 2020 concerning the “impacts of COVID-19 and measures to support the economy and
amendments to IAS/IFRS” (subject to a subsequent limited update on 21 December 2021), the Bank of Italy, supplemented
the provisions governing bank financial statements set out in “Circular 262 - Bank financial statements: layouts and
preparation”, with the aim of providing the market information on the effects that the COVID-19 outbreak and the consequent
measures to support the economy have had on the strategies, objectives and risk management policies, and on the operating
performance and financial position of intermediaries. In defining the additions, the Bank of Italy took into account the
documents published in 2020 and 2021 by the European regulatory and supervisory bodies and by the standard setters
aimed at clarifying the methods of application of the IAS/IFRS in the context of the pandemic. The following table shows the
most relevant documents and their scope of application.
Main topic
Issuing body
Date
Title
Classifications
Measurement
Financial
reporting
EBA
25.3.20
Statement on the application of the prudential framework
regarding Default, Forbearance and IFRS 9 in light of COVID-19
measures
X
ESMA
25.3.20
Public Statement. Accounting implications of the COVID-19
outbreak on the calculation of expected credit losses in
accordance with IFRS 9
X
IFRS Foundation
27.3.20
IFRS 9 and COVID-19 - Accounting for expected credit losses
applying IFRS 9 Financial Instruments in the light of current
uncertainty resulting from the COVID-19 pandemic
X
ECB
1.4.20
IFRS 9 in the context of the coronavirus (COVID-19) pandemic
X
EBA
2.4.20
Guidelines on legislative and non legislative moratoria on loan
repayments applied in the light of the COVID-19 crisis
X
ESMA
20.5.20
Implications of the COVID-19 outbreak on the half-yearly financial
reports
X
EBA
2.6.20
Guidelines on reporting and disclosure of exposures subject to
measures applied in response to the COVID-19 crisis
X
X
ESMA
28.10.20
European common enforcement priorities for 2020 annual
financial reports
X
EBA
2.12.20
Guidelines amending Guidelines EBA/GL/2020/02 on legislative
and non legislative moratoria on loan repayments applied in the
light of the COVID-19 crisis
X
ECB
4.12.20
Identification and measurement of credit risk in the context of the
coronavirus (COVID-19) pandemic
X
X
ESMA
29.10.21
European common enforcement priorities for 2021 annual
financial reports
X
X
X
ESMA
16.12.21
Report on the application of the IFRS 7 and IFRS 9 requirements
regarding banks’ expected credit losses (ECL)
X
X
X
The measures adopted by the regulators were aimed essentially at clarifying the treatment of moratoria, indicating the
minimum conditions for clear financial reporting, uniformly guiding the definition of prospective scenarios and allowing
flexibility in defining credit assessments.
That being said, during 2022 the health crisis gradually and steadily improved, linked to the increasing immunity reached by
the population, both due to the vaccination campaigns and the high number of cases, in addition to decreased seriousness of
the variants of the virus in circulation. That trend made it possible to gradually eliminate the restrictive measures, with a
resulting recovery in the economic activities that had remained negatively affected by that context (such as tourism). During
2022 – in line with the developments in the health situation, and with the economic recovery under way – there was a gradual
resumption of payments for exposures that had benefited from the support measures such as moratoria. As a result, during
2022, the Group reduced the measures implemented to ensure that credit assessments were consistent with the specific
context of the pandemic.
Loan classification and valuation in the COVID-19 scenario
The COVID-19 pandemic had a significant impact on the issues of classification of credit exposures, specifically the aspects
linked to payment moratoria, as well as for the purpose of determining the Expected Credit Loss (ECL) pursuant to IFRS 9.
In terms of classification of credit exposures, the COVID-19 outbreak resulted in the need, also recognised by the banking
system and institutions (governments and regulators), to offer general payment suspension measures (moratoria) to already
performing customers, using simplified procedures and without any penalties for the parties involved – both banks and
customers. These measures, partly governed by national regulations and partly decided autonomously by the banks, were the
subject of a specific regulation, summarised in the EBA Guidelines (“Guidelines on legislative and non-legislative moratoria on
loan repayments applied in the light of the COVID-19 crisis”). In summary, the granting by banks and financial intermediaries -
according to the aforementioned Guidelines - of legislative moratoria, or even private ones, did not automatically constitute a
default event, with consequent classification of the loan as non-performing, or a forbearance measure, with resulting transfer
to Stage 2. The EBA set out the conditions also regarding the duration and time limit of the concession for the purposes of
applying the exemption. Those conditions gradually stopped applying during 2021. With regard to the Italian scenario, the
latest regulatory measure in terms of moratoria was the “Sostegni bis” Law Decree, which granted the option to benefit from
Notes to the consolidated financial statements – Part A – Accounting policies
240
an additional extension of legislative moratoria expiring as at 30 June 2021 up to 31 December 2021. The suspension from 1
July onwards only related to the principal, while the interest gradually accruing had to be paid. Considering that no additional
legislative measures were decided, any further extensions of existing moratoria/granting of new suspensions during 2022 thus
followed the ordinary credit processes, assessing whether the measure should be considered as forbearance.
With regard to loan valuation, the Group adopted a prudent approach since the Interim Statement at 31 March 2020 regarding
the adjustment of the ECL results stemming from the IFRS 9 models in use, in the context of the uncertain but expected
further worsening of economic conditions, while taking into account the effects of the public support measures made promptly
available by the national authorities and supported by the accommodative policy of the ECB. This approach was gradually
made more sophisticated and consistent over time, by defining management overlays that were gradually refined, reflecting
the best perception of the evolution of the crisis. With regard to adjustments to loans, in 2022, the management overlays
covering the vulnerability of the moratoria were gradually eliminated, given the progressive increase in moratoria that have
reached the deadline for resuming payments without displaying any significant problem issues (as at 31 December 2022 the
existing moratoria were substantially eliminated, and remaining exposures amounted to only 80 million euro).
* * *
To complete the disclosure, in line with the provisions of said Communication of 21 December 2021 of the Bank of Italy, which
supplements Circular 262, also see the quantitative information on any loans subject to COVID-19 support measures and the
related net adjustments for credit risk published, respectively:
− in Part B – Information on the consolidated balance sheet – Assets, in the tables:
o 3.3a Loans measured at fair value through other comprehensive income subject to COVID-19 support measures:
gross amount and total adjustments;
o 4.4a Loans measured at amortised cost subject to COVID-19 support measures: gross amount and total
adjustments;
− in Part C – Information on the consolidated income statement:
o 8.1a Net adjustments for credit risk associated with loans measured at amortised cost subject to COVID-19 support
measures: breakdown;
o 8.2a Net adjustments for credit risk associated with loans measured at fair value through other comprehensive
income subject to Covid-19 support measures: breakdown;
Lastly, for quantitative information on transfers between different stages of credit risk and loans subject to COVID-19 support
measures broken down by category of non-performing exposures, refer to the following tables in Part E (Section 2 “Risks of
the prudential consolidation”) in these consolidated financial statements:
− A.1.3a Loans subject to COVID-19 support measures: transfers between stages of credit risk (gross amounts);
− A.1.5a Loans subject to COVID-19 support measures: gross and net amounts.
CHANGES IN CONTRACTS DUE TO COVID-19
The detailed information required by the specific instructions of Circular 262 of the Bank of Italy on changes in contracts due
to COVID-19 in light of the provisions of IFRS 9 and IFRS 16 is provided below.
Changes in contracts and derecognition (IFRS 9)
The moratoria granted by the Group due to the pandemic, in line with the EBA guidelines, complied with some specific
requirements. More specifically, these:
− were offered without distinction to a large group of (performing) borrowers or following legislative provisions;
− did not provide a waiver of contractual interest or principal but solely a deferral/extension of payments.
Since the granted moratoria provided solely a deferral/extension of the period in which payments are due, the application of a
moratorium did not entail the derecognition of the loan.
Amendment to IFRS 16
Although the subject in question is not relevant for the Group, it is specified that with reference to lease contracts (on the
lessee side), having assessed the nature of the existing contracts and the active role played by the Bank in supporting the
economy, Intesa Sanpaolo decided no t to apply the “practical expedient” introduced under IFRS 16 - Leases on discounts
and deferral of payments on existing lease contracts payables.
Notes to the consolidated financial statements – Part A – Accounting policies
241
ADDITIONAL INFORMATION ON THE INTEREST RATE BENCHMARK REFORM
Based on the instructions in Circular 262, this section sets out the disclosure in accordance with IFRS 7, paragraphs 24 I and
24 J relating to the Interest Rate Benchmark Reform (IBOR Reform).
Specifically, the table below shows the quantitative information on financial instruments – divided into financial assets,
financial liabilities and derivative contracts – which still had to transition to an alternative benchmark rate as at 31 December
2022, broken down by significant interest rate benchmark index subject to IBOR Reform. The Group considers a contract as
not having transitioned to an alternative benchmark when the interest under the contract is linked to a benchmark index that is
still impacted by the IBOR Reform, even if this includes an adequate fallback clause for managing the cessation of the
existing benchmark.
(millions of euro)
Loans and
advances -
gross value
Debt
securities
(assets) -
nominal value
Deposits
(liabilities) -
nominal value
Debt
securities
issued
(liabilities) -
nominal value
Derivatives -
notional
Referenced to EONIA
-
-
-
-
-
Referenced to LIBOR USD
9,712
1,393
1,052
412
520,237
of which expiring after 30.06.2023
8,767
1,361
680
287
361,471
Referenced to LIBOR other currency (all
tenors)
60
-
-
-
-
of which: GBP
4
-
-
-
-
of which: JYP
-
-
-
-
-
of which: CHF
56
-
-
-
-
of which: EUR
-
-
-
-
-
Other IBORs
50
59
-
-
-
Total
9,822
1,452
1,052
412
520,237
The disclosure does not include financial instruments linked to the Euribor, as that parameter was reformed in November
2019, through the adoption of a hybrid calculation method, which fully meets the requirements for critical benchmarks set out
in the Benchmark Regulation EU 2016/1011 and the IOSCO principles. Therefore, it is not deemed that there is uncertainty on
the timing or the amount of cash flows linked to the Euribor, and the financial instruments linked to this benchmark are not
considered as instruments impacted by the reform.
This disclosure on the IBOR Reform presents the instruments linked to the LIBOR in the residual currencies (mainly USD
LIBOR). The exposure in debt securities issued by the Group is attributable to its Fix-to-Float issues currently linked to the
floating USD LIBOR (as the period in which these issues provided fixed-rate returns has ended). As illustrated in greater detail
below, the transition has been essentially completed for the instruments linked to benchmarks that were subject to transition
as at 31 December 2021.
Referring to Part E - Information on risks and relative hedging policies - for a more detailed analysis on the nature and risks
the Group is exposed to with regard to the financial instruments impacted by the IBOR Reform and the methods for managing
the transition, in light of the regulatory changes and the activities implemented by the Group, no critical issues arose in
completing the transition by the set deadlines, nor are any critical issues expected for the future wind-down of the USD
LIBOR. Specifically, to manage the stock of existing instruments, the Group set out the mass adoption of the new Risk Free
Rates (RFR) on the financial instruments newly subscribed, thus abandoning the use of the benchmarks impacted by the
reform and stabilising the stock of transactions to be transitioned, on the one hand, while setting up the solutions for the
transition to the new RFR, defined based on the main international recommendations, capable of minimising the financial
impacts of the transition, on the other.
With reference to the benchmarks being wound down as at 31 December 2021, the transition activities have been
successfully completed for all these benchmarks. Specifically, with regard to the remaining derivative contracts still
outstanding as at 31 December 2021 with an underlying EONIA benchmark rate (EONIA OIS), as well as the contracts with
the EONIA as the collateral benchmark remuneration rate, no positions were open as at 31 December 2022.
It is also noted that the exposures relating to derivative contracts linked to the Libor to be wound down as at 31 December
2021 (mainly in relation to those expressed in GBP, CHF, JPY and EUR) were no longer present from the initial months of
2022. On financial instruments other than derivatives, linked to the GBP, JPY and CHF Libor, the actions have been
completed to transition them to their respective RFRs or to other benchmarks set out in the contracts, with the exception of
residual positions in CHF and GBP Libor of an international subsidiary, for which the corresponding measures have been
planned.
Notes to the consolidated financial statements – Part A – Accounting policies
242
With reference to instruments linked to the USD LIBOR, the transition must be carried out by 30 June 2023 (the last date of
publication of only the 1-week and 2-month USD LIBOR rates was 31 December 2021). Therefore, for the purpose of
managing the transition to the new RFR, only the financial instruments with maturities after that date are concerned, the
details of which are shown separately in the table. The date on which the USD LIBOR will no longer be used does not give
rise to specific uncertainties except for those linked to trading timescales, which could be deferred by the counterparties.
In any event, phases similar to those that were implemented for financial instruments linked to other benchmarks wound down
as at 31 December 2021, both for on-balance sheet assets and liabilities and for derivative contracts, are expected to follow.
Specific analyses relating to debt securities under assets (third-party issues) and liabilities (own issues) of the Group are still
under way, with specific regard to the respective fallback clauses of each bond, also in relation to the reference legislation.
On financial instruments linked to the USD LIBOR, the Group continues to record a gradual decrease in loans, while for
derivative instruments, it has acted to reduce its exposures also through transactions with equal and opposite sensitivity. This
resulted in an increase in the number of transactions and in the total notional amount, against a gradual reduction in the
exposure to that benchmark in terms of risk measures.
Financial instruments linked to other IBORs, which were of insignificant amount as at 31 December 2022, are mainly
represented by loans and debt securities linked to the Canadian Dollar Offered Rate (CDOR), whose transition should be
finalised by 28 June 2024 - the date of wind-down of that benchmark. The date on which the CDOR will no longer be used
does not give rise to specific uncertainties except for those linked to trading timescales, which could be deferred by the
counterparties.
For a full overview of the disclosure required by IFRS 7, paragraph 24H, on the uncertainty arising from interest rate
benchmark reform on hedging relationships and the notional amount of hedging derivatives, refer to the specific section set
out in Part E – Information on risks and relative hedging policies.
OTHER ASPECTS
Option for the national fiscal consolidation provisions
Intesa Sanpaolo and the Group’s Italian companies have adopted the "national fiscal consolidation", set forth by Articles 117-
129 of the Combined Tax Regulations, introduced by Legislative Decree 344/2003. It provides an option, based on which the
total net income or fiscal loss of every subsidiary taking part in the fiscal consolidation procedure – together with withholding
tax, tax deductions and tax credits – is transferred to the parent company, which determines a single taxable income or loss
carried forward (that is the result of the sum of its own income/loss and of the income/loss of the participating subsidiaries)
and, consequently, a sole tax debit/credit. Based on this option, Group companies that opted for the “national fiscal
consolidation” determine the tax charge pertaining to them and the corresponding taxable income is transferred to the Parent
Company.
Set up of a VAT Group
Intesa Sanpaolo and all of the Group companies that meet the requirements for participation opted to set up the VAT Group,
governed by Articles from 70-bis to 70-duodecies of Presidential Decree 633/1972.
This option takes effect from 1 January 2019 and has a duration of three years, automatically renewed each year, unless
revoked.
As a result of this option, the tax will not apply to either the provision of services and sales of goods between participating
parties, with a few exceptions. Sales of goods and provision of services by a participating party to an external party shall be
considered made out by the Group. Sales of goods and provision of services by an external party to a participating party shall
be considered made to the Group.
“Cooperative compliance” regime
Intesa Sanpaolo applied for and obtained from the Italian Revenue Agency admission to the “cooperative compliance” regime
set out in Legislative Decree 128/2015. The admission is effective from the tax period 2017.
The purpose of this regime is to promote the use of enhanced forms of communication and cooperation based on the
reciprocal trust between the tax authorities and the taxpayer, as well as favouring the prevention and resolution of tax
disputes, in the common interest of the parties.
Under the regime, Intesa Sanpaolo is required to maintain an appropriate system of recognition, measurement and
management of tax risk as well as act in a cooperative and transparent manner, and the Italian Revenue Agency is required
to promote a relationship based on the principles of transparency, cooperation and fairness. The gradual adoption of this
regime by the main Italian subsidiaries is now also under way.
In addition to Intesa Sanpaolo, the following companies applied for admission and were admitted to the regime: Fideuram -
Intesa Sanpaolo Private Banking S.p.A. (with effect from 2018), as well as Intesa Sanpaolo Vita, Intesa Sanpaolo Assicura,
Fideuram Vita, Eurizon SGR and Epsilon SGR (with effect from 2019). Intesa Sanpaolo Private Banking S.p.A., Fideuram
Asset Management SGR, Sanpaolo Invest SIM
83
and S.I.RE.F were admitted in 2021 with effect from 2020.
Auditing
EY S.p.A. audited the Consolidated financial statements, in execution of the Shareholders' Meeting resolution of 30 April
2019, which appointed the company as independent auditor for the years from 2021 to 2029, included.
83
Sanpaolo Invest SIM was incorporated into Fideuram ISPPB on 5 December 2022.
Notes to the consolidated financial statements – Part A – Accounting policies
243
Other aspects
A reformulation of the rules on the transparency of government grants laid down in Article 1, paragraphs 125-129 of Law No.
124/2017 has been introduced in Article 35 of Decree Law 34/2019 (the “Growth” Decree), converted by Law 58/2019. This
reformulation indicates that the scope of transparency obligations applies to information regarding grants, subsidies,
advantages, contributions or aid, in cash or in kin d, “not of a general character and which do not represent consideration,
remuneration or compensation” effectively disbursed by public authorities and the entities indicated in Article 2-bis of
Legislative Decree 33/2013.
In the light of this reformulation, additional interpretative clarification provided in Assonime Circular No. 32 of 23 December
2019 has confirmed that the transparency obligation applies to awards of economic benefits arising from a bilateral
relationship between a public entity and a specific beneficiary. Sums received by a company as consideration for a service
rendered, as remuneration for an assignment received or as compensation for damages are expressly excluded. Economic
advantages received in application of a general regime, such as tax or contribution relief accessible to all parties who meet
certain conditions, are also excluded.
In consideration of the above, there were no cases to report in 2022 for the Group’s Italian companies.
In the interest of completeness, reference should also be made to the National State Aid Registry, available for public
consultation on the relevant website, in which aid measures and the related individual aid packages granted and recorded in
the system by the managing entities are published, although, given the foregoing, for the Group’s Italian companies the
circumstances indicated therein for the year 2022 are not subject to financial statement transparency obligations pursuant to
paragraphs 125 and 125-bis.
Notes to the consolidated financial statements – Part A – Accounting policies
244
A.2 – MAIN FINANCIAL STATEMENT CAPTIONS
To ensure uniformity in the accounting policies used for the financial statements, the Intesa Sanpaolo Group has adopted an
internal set of rules and policies for the various operational and organisational areas.
The methodological document used for the application of the accounting standards is the Group Accounting Policies, which
describes the application models adopted by the Group, within the framework of the standards and the legislation applicable
to the various companies/subsidiaries, and sets out the choices made when the regulations envisage alternative or optional
accounting treatments.
With regard to the valuation processes, the Group, in the document “Guidelines for the valuation of Balance Sheet Items”, has
drawn up the principles and regulatory framework for the valuation of the balance sheet items and the roles and
responsibilities of the Corporate Bodies, the Manager responsible for preparing the Company’s financial reports and the
Parent Company’s corporate functions involved in the valuation process; the prerequisites for the existing valuation processes
and the control system necessary to ensure proper valuation; the general valuation processes based on accounting standards
specific to the various categories of balance sheet items being measured (assets and liabilities); and the rules for guidance
and coordination of Group Companies on the valuation of balance sheet items.
The guidelines and policies also include the Business Model Rules, the Rules on the measurement of expected credit loss in
accordance with IFRS 9 (Impairment Policy), and the “Rules for Valuation of Financial Instruments at Fair Value” (former Fair
Value Policy), in addition to more specific documents relating to non-performing loans, equity investments, and the
management of hedging financial instruments.
Finally, with regard to prudential supervision, the Group has drawn up a specific document called Harmonised Prudential
Supervision Rules.
In general, these documents are approved by the competent Corporate Bodies. They are updated by the management
structures in response to needs arising both from external factors (e.g. changes in regulations) and from internal factors within
the Group (e.g. new operations and products). Those documents are subject to a specific approval process, based on the
significance and scope of the changes made.
The criteria adopted by the subsidiary insurance companies are discussed in a specific chapter at the bottom of this section.
In fact, as a result of the I ntesa Sanpaolo Group’s decision, as a financial conglomerate primarily engaged in banking
activities, to exercise the option of adopting the Deferral Approach, the financial assets and liabilities of the subsidiary
insurance companies are recognised in accordance with the provisions of IAS 39, while awaiting the entry into force of the
new international financial reporting standard on insurance contracts, IFRS 17, along with IFRS 9, starting 1 January 2023
84
.
1. Financial assets measured at fair value through profit or loss (FVTPL)
Classification criteria
This category contains the financial assets not classified as Financial assets measured at fair value through other
comprehensive income or as Financial assets measured at amortised cost. This caption includes in particular:
- financial assets held for trading, essentially consisting of debt securities and equity instruments and the positive value of
derivative contracts held for trading;
- financial assets mandatorily measured at fair value through profit or loss, consisting of financial assets that do not meet
the requirements for measurement at amortised cost or at fair value through other comprehensive income. These are
financial assets whose contractual terms do not solely envisage payments of principal and interest on the principal
amount outstanding (SPPI Test not passed) or that are not held under a Hold to Collect business model or a Hold to
Collect and Sell business model;
- financial assets designated at fair value, i.e. financial assets that are defined as such upon initial recognition and when
the conditions apply. In relation to this case, an entity may irrevocably designate a financial asset as measured at fair
value through profit or loss only if it eliminates or significantly reduces a measurement inconsistency.
This caption therefore includes:
- debt securities and loans that are included in an Other/Trading business model (i.e., that do not come under the Hold to
Collect or Hold to Collect and Sell business models) or that do not pass the SPPI Test, including the portions of
syndicated loans subscribed or other types of loans that are originally intended to be sold and are not part of a Hold to
Collect and Sell business model;
- equity instruments – that do not qualify as investments in subsidiaries, associates or joint ventures – held for trading
purposes or for which the option was not exercised, upon initial recognition, to designate them at fair value through other
comprehensive income;
- quotas of UCI (Undertakings for Collective Investment).
This caption also includes the derivatives, recognised under financial assets held for trading, which are presented as assets if
the fair value is positive and as liabilities if the fair value is negative. The positive and negative current values arising from
84
Regulation no. 2036/2021 of 19 November 2021 which endorses the new accounting standard IFRS 17 “Insurance Contracts” was published in the
Official Journal of the EU on 23 November 2021. In this regard we note that on 25 June 2020, the IASB published the final version of the "Amendments
to IFRS 17 Insurance Contracts" which confirmed the deferral of the date of first-time mandatory adoption of the Standard to 1 January 2023 (instead of
1 January 2022 previously proposed in the ED 2019/4), with the concurrent possibility of an extension to the same date of the “Deferral approach” in the
application of IFRS 9. This was endorsed by the European Commission with the publication of Regulation 2097/2020 “Extension o f the Temporary
Exemption from Applying IFRS 9 (amendmen ts to IFRS 4)” on 15 December 2020.
Notes to the consolidated financial statements – Part A – Accounting policies
245
transactions with the same counterparty – also between derivatives allocated to the trading book and hedging derivatives, as
envisaged by the Bank of Italy Circular 262 – may be offset only when the legal right to offset amounts recognised for
accounting purposes currently exists and the net settlement of positions subject to offsetting is carried out.
Derivatives also include those embedded in combined financial contracts – where the host contract is a financial liability –
which are subject to separate accounting when:
- their economic characteristics and risks are not closely related to the characteristics of the host contract;
- the embedded instruments, even though separate, fully meet the definition of derivative;
- the combined instruments are not measured at fair value with changes in fair value recognised through profit or loss.
According to the general rules established by IFRS 9 on the reclassification of financial assets (except for equity instruments,
for which no reclassification is permitted), reclassifications to other categories of financial assets are not permitted unless the
entity changes its business model for those financial assets. In such cases, which are expected to be highly infrequent, the
financial assets may be reclassified from those measured at fair value through profit or loss to one of the other two categories
established by IFRS 9 (Financial assets measured at amortised cost or Financial assets measured at fair value through other
comprehensive income). The transfer value is the fair value at the time of the reclassification and the effects of the
reclassification apply prospectively from the reclassification date. In this case, the effective interest rate of the reclassified
financial asset is determined based on its fair value at the reclassification date and that date is considered as the initial
recognition date for the credit risk stage assignment for impairment purposes.
For more information regarding the classification criteria for the financial instruments see the paragraph below
“Classification drivers for the financial assets”.
Recognition criteria
Initial recognition of financial assets occurs at settlement date for debt securities and equity instruments, at disbursement date
for loans and at trade date for derivative contracts.
On initial recognition, financial assets measured at fair value through profit or loss are recognised at fair value, without
considering transaction costs or revenues directly attributable to the instrument.
Measurement criteria
After initial recognition, the financial assets measured at fair value through profit or loss are recorded at fair value. The effects
of the application of this measurement criterion are recorded in the income statement.
For the determination of the fair value of financial instruments quoted on active markets, market quotations are used. If the
market for a financial instrument is not active, standard practice estimation methods and valuation techniques are used which
consider all the risk factors correlated to the instruments and that are based on market elements such as: valuation of quoted
instruments with the same characteristics, calculation of discounted cash flows, option pricing models, recent comparable
transactions, etc. For equities and derivative instruments that have equities as underlying assets, which are not quoted on an
active market, the cost approach is used as the estimate of fair value only on a residual basis and in a small number of
circumstances, i.e., when all the measurement methods referred to above cannot be applied, or when there are a wide range
of possible measurements of fair value, in which cost represents the most significant estimate.
For more information regarding the criteria for the determination of fair value, see the Section “A.4 – Information on
Fair Value”.
Derecognition criteria
Financial assets are derecognised solely if the sale leads to the substantial transfer of all the risks and rewards connected to
the assets. Conversely, if a significant part of the risks and rewards relative to the disposed financial assets is maintained,
they continue to be recorded in the financial statements, even though their title has been transferred.
When it is not possible to ascertain the substantial transfer of risks and rewards, the financial assets are derecognised where
no control over the assets has been maintained. If this is not the case, when control, even partial, is maintained, the asset s
continue to be recognised for the entity’s continuing involvement, measured by the expos ure to changes in value of assets
sold and to variations in the relevant cash flows.
Lastly, disposed financial assets are derecognised if the entity retains the contractual rights to receive the cash flows of the
asset, but signs a simultaneous obligation to pay such cash flows, and only such cash flows, without significant delay to third
parties.
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2. Financial assets measured at fair value through other comprehensive income (FVOCI)
Classification criteria
This category includes the financial assets that meet both the following conditions:
- the financial asset is held under a business model whose objective is achieved both through the collection of expected
contractual cash flows and through sale (Hold to Collect and Sell business model), and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding (“SPPI Test” passed).
This caption also includes equity instruments, not held for trading, for which the option was exercised upon initial recognition
of their designation at fair value through other comprehensive income.
In particular, this caption includes:
- debt securities that can be attributed to a Hold to Collect and Sell business model and that have passed the SPPI test;
- equity interests, that do not qualify as investments in subsidiaries, associates or joint ventures and are not held for
trading, for which the option has been exercised of their designation at fair value through other comprehensive income;
- loans that are attributable to a Hold to Collect and Sell business model and have passed the SPPI Test, including the
portions of syndicated loans subscribed or other types of loans that are originally intended to be sold and are part of a
Hold to Collect and Sell business model.
According to the general rules established by IFRS 9 on the reclassification of financial assets (except for equity instruments,
for which no reclassification is permitted), reclassifications to other categories of financial assets are not permitted unless the
entity changes its business model for those financial assets.
In such cases, which are expected to be highly infrequent, the financial assets may be reclassified from those measured at
fair value through other comprehensive income to one of the other two categories established by IFRS 9 (Financial assets
measured at amortised cost or Financial assets measured at fair value through profit or loss). The transfer value is the fair
value at the time of the reclassification and the effects of the reclassification apply prospectively from the reclassification date.
In the event of reclassification from this category to the amortised cost category, the cumulative gain (loss) recognised in the
valuation reserve is allocated as an adjustment to the fair value of the financial asset at the reclassification date. In the event
of reclassification to the fair value through profit or loss category, the cumulative gain (loss) previously recognised in th e
valuation reserve is reclassified from shareholders’ equity to net income (loss).
For more information regarding the classification criteria for the financial instruments see the paragraph below
“Classification drivers for the financial assets”.
Recognition criteria
Initial recognition of financial assets occurs at settlement date for debt securities and equity instruments and at disbursement
date for loans. On initial recognition, assets are recorded at fair value, including transaction costs and revenues directly
attributable to the instrument.
Measurement criteria
After initial recognition, the Assets classified at fair value through other comprehensive income, other than equity instruments,
are measured at fair value, with the recognition in profit or loss of the impact resulting from the application of the amortised
cost, the impairment effects and any exchange rate effect, whereas the other gains and losses resulting from a change in fair
value are recognised in a specific shareholders’ equity reserve until the financ ial asset is derecognised. Upon the total or
partial sale, the cumulative gain or loss in the valuation reserve is transferred, in whole or in part, to the income statement.
Equity instruments, for which the choice has been made to classify them in this category, are measured at fair value and the
amounts recognised in other comprehensive income cannot be subsequently transferred to profit or loss, not even if they are
sold. The only component related to these equities that is recognised through profit or loss is their dividends.
Fair value is determined on the basis of the criteria already described for Financial assets measured at fair value through
profit or loss.
For the equity instruments included in this category, which are not quoted on an active market, the cost approach is used as
the estimate of fair value only on a residual basis and in a small number of circumstances, i.e., when all the measurement
methods referred to above cannot be applied, or when there are a wide range of possible measurements of fair value, in
which cost represents the most significant estimate.
For more information regarding the criteria for the determination of fair value, see the Section “A.4 – Information on
Fair Value”.
Financial assets measured at fair value through other comprehensive income – both in the form of debt securities and loans –
are subject to the verification of the significant increase in credit risk (impairment) required by IFRS 9, in the same way a s
Assets measured at amortised cost, with the consequent recognition through profit or loss of a value adjustment to cover the
expected losses. More specifically, for instruments classified as Stage 1 (i.e., financial assets at origination, when not
impaired, and instruments for which there has not been a significant increase in credit risk since the initial recognition date), a
12-month expected loss is recognised on the initial recognition date and at each subsequent reporting date. For instruments
classified as Stage 2 (performing for which there has been a significant increase in credit risk since the initial recognition date)
and as Stage 3 (credit-impaired exposures), a lifetime expected loss for the financial instrument is recognised.
Equity instruments are not subject to the impairment process.
See the paragraph below “Impairment of financial assets” for more details.
Notes to the consolidated financial statements – Part A – Accounting policies
247
Derecognition criteria
Financial assets are derecognised solely if the sale leads to the substantial transfer of all the risks and rewards connected to
the assets. Conversely, if a significant part of the risks and rewards relative to the disposed financial assets is maintained,
they continue to be recorded in the financial statements, even though their title has been transferred.
When it is not possible to ascertain the substantial transfer of risks and rewards, the financial assets are derecognised where
no control over the assets has been maintained. If this is not the case, when control, even partial, is maintained, the asset s
continue to be recognised for th e entity’s continuing involvement, measured by the exposure to changes in value of assets
sold and to variations in the relevant cash flows.
Lastly, disposed financial assets are derecognised if the entity retains the contractual rights to receive the cash flows of the
asset, but signs a simultaneous obligation to pay such cash flows, and only such cash flows, without significant delay to third
parties.
3. Financial assets measured at amortised cost
Classification criteria
This category includes the financial assets (in particular loans and debt securities) that meet both the following conditions:
- the financial asset is held under a business model whose objective is achieved through the collection of expected
contractual cash flows (Hold to Collect business model), and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding (“SPPI Test” passed).
More specifically, the following are recognised in this caption:
- loans to banks in their various forms that meet the requirements referred to above;
- loans to customers in their various forms that meet the requirements referred to above;
- debt securities that meet the requirements referred to above.
This category also includes the operating loans and receivables connected to the provision of financial activities and servic es
as defined by the Consolidated Law on Banking and the Consolidated Law on Finance (e.g. for the distribution of financial
products and servicing activities).
According to the general rules established by IFRS 9 on the reclassification of financial assets, reclassifications to other
categories of financial assets are not permitted unless the entity changes its business model for those financial assets. In
such cases, which are expected to be highly infrequent, the financial assets may be reclassified from the amortised cost
category to one of the other two categories established by 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 is the fair value at
the time of the reclassification and the effects of the reclassification apply prospectively from the reclassification date. Gains
and losses resulting from the difference between the amortised cost of a financial asset and its fair value are recognised
through profit or loss in the event of reclassification to Financial assets measured at fair value through profit or loss and under
Shareholders’ equity, in the specific valuation reserve, in the event of reclassification to Financial assets measured at fai r
value through other comprehensive income.
For more information regarding the classification criteria for the financial instruments see the paragraph below
“Classification drivers for the financial assets”.
Recognition criteria
Initial recognition of the financial asset occurs at settlement date for debt securities and at disbursement date for loans. On
initial recognition, assets are recorded at fair value, including transaction costs and revenues directly attributable to
the instrument.
In particular, for loans, the disbursement date is usually the same as the date of signing of the contract. Should this not be the
case, a commitment to disburse funds is made along with the subscription of the contract, which will cease to exist upon
disbursement of the loan. The loan is recognised based on its fair value, equal to the amount disbursed or subscription price,
inclusive of the costs/revenues directly attributable to the single loan and determinable from inception, even when settled at a
later date. Costs that, even with the aforementioned characteristics, are reimbursed by the borrower or are classifiable as
normal internal administrative costs are excluded.
Repurchase agreements and reverse repurchase agreements are recognised as funding or lending transactions. Specifically,
repurchase agreements are recognised as payables for the spot amount received, whereas reverse repurchase agreements
are recognised as receivables for the spot amount paid.
Measurement criteria
After the initial recognition, these financial assets are measured at amortised cost, using the effective interest method. Th e
assets are recognised in the balance sheet at an amount equal to their initial carrying amount less principal repayments, plus
or minus the cumulative amortisation (calculated using the effective interest method) of the difference between this initial
amount and the amount at maturity (typically attributable to costs/income directly attributable to the individual asset) and
adjusted by any provision for losses. The effective interest rate is the rate that exactly discounts estimated future cash
payments of the asset, as principal and interest, to the amount disbursed inclusive of the costs/revenues attributable to that
financial asset. This measurement method uses a financial approach and allows distribution of the economic effect of the
costs/income directly attributable to a financial asset over its expected lifetime.
The amortised cost method is not used for assets, measured at historical cost, whose short duration makes the effect of
discounting negligible, or for assets without a definite maturity or revocable loan s.
The measurement criteria, as described in more detail in the paragraph “Impairment of financial assets”, are closely linked t o
Notes to the consolidated financial statements – Part A – Accounting policies
248
the inclusion of these instruments in one of the three stages of credit risk established by IFRS 9, the last of which (Stage 3)
consists of non-performing financial assets and the remaining (Stages 1 and 2) of performing financial assets.
With regard to the accounting representation of the above measurement effects, the adjustments for this type of asset are
recognised in profit or loss:
- on initial recognition, for an amount equal to the 12-month expected credit loss;
- on subsequent measurement of the asset, when the credit risk has not increased significantly since initial recognition, in
relation to changes in the amount of adjustments for the 12-month expected credit losses;
- on subsequent measurement of the asset, when the credit risk has increased significantly since initial recognition, in
relation to the recognition of adjustments for expected credit losses over the contractually agreed remaining lifetime of
the asset;
- on subsequent measurement of the asset, where – after a significant increase in credit risk has occurred since initial
recognition – the increase is no longer “significant” due to the alignment of the cumulative value adjustments to take
account of the change from a lifetime expected credit loss to a 12-month expected credit loss for the instrument.
These financial assets, when they are performing, are subject to an assessment, aimed at establishing the value adjustments
to be recognised in the financial statements, at the level of individual loan (or “tranches” of securities), according to the risk
parameters consisting of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD), derived from
the AIRB models, and duly adjusted to take account of the provisions of IFRS 9.
If, in addition to a significant increase in credit risk, there is also objective evidence of impairment, the amount of the loss is
measured as the difference between the carrying amount of the asset – classified as “non-performing”, like all the other
relationships with the same counterparty – and the present value of the estimated future cash flows, discounted using the
original effective interest rate. The amount of the loss, to be recognised through profit or loss, is established based on
individual measurement or determined according to uniform categories and, then, individually allocated to each position, and,
as detailed in the paragraph “Impairment of financial assets”, takes account of forward-looking information and possible
alternative recovery scenarios.
Non-performing assets include financial assets classified as bad, unlikely-to-pay or past due by over ninety days according to
the rules issued by the Bank of Italy, in line with the IAS/IFRS and EU Supervisory Regulations.
The expected cash flows take into account the expected recovery times and the estimated realisable value of any guarantees.
The original effective rate of each asset remains unchanged over time even if the relationship has been restructured with a
variation of the contractual interest rate and even if the relationship, in practice, no longer bears contractual interest.
If the reasons for impairment are no longer applicable following an event subsequent to the registration of impairment,
recoveries are recorded in the income statement. The size of the recovery must not lead the carrying value of the financial
asset to exceed the amortised cost had no impairment losses been recognised in previous periods.
Recoveries on impairment with time value effects are recognised in net interest income.
In some cases, during the lifetime of these financial assets, and of loans in particular, the original contractual conditions may
be subsequently modified by the parties to the contract. When the contractual clauses are subject to change during the
lifetime of an instrument, it is necessary to verify whether the original asset should continue to be recognised in the balance
sheet or whether, instead, the original instrument needs to be derecognised and a new financial instrument needs to be
recognised.
In general, changes to a financial asset lead to its derecognition and the recognition of a new asset when they are
“substantial”. The assessment of the “substantial nature” of the change must be made using both qualitative and quantitative
information. In some cases, in fact, it may be clear, without resorting to complex analysis, that the changes introduced
substantially modify the characteristics and/or contractual flows of a particular asset while, in other cases, further analysis
(including quantitative analysis) will need to be carried out to assess the effects of the changes and verify whether or not to
derecognise the asset and recognise a new financial instrument.
The qualitative and quantitative analyses aimed at defining the “substantial nature” of contractual changes made to a financial
asset must therefore consider:
- the purposes for which the changes were made: e.g. renegotiations for commercial reasons and forbearance measures
due to financial difficulties of the counterparty:
o the former, aimed at “retaining” the customer, involve a borrower that is not in financial difficulty. This category
includes all renegotiations aimed at aligning the cost of the debt to market conditions. These operations involve a
change in the original conditions of the contract, usually requested by the borrower and relating to aspects
concerning the cost of the debt, with a consequent economic benefit for the borrower. In general, whenever the bank
carries out a renegotiation to avoid losing its customer, that renegotiation should be considered as substantial
because, if it were not carried out, the customer could borrow from another intermediary and the bank would incur a
decrease in expected future revenues;
o the latter, carried out for “reasons of credit risk” (forbearance measures), relate to the bank’s attempt to maximise
the recovery of the cash flows of the original loan. The underlying risks and rewards, following the changes, are not
normally substantially transferred and, consequently, the accounting representation that provides the most relevant
information for the readers of the financial statements (apart from the triggers discussed below) is “modification
accounting” – which involves the recognition through profit or loss of the difference between the carrying value and
the present value of the modified cash flows discounted at the original interest rate – rather than derecognition;
- the presence of specific triggers that affect the contractual characteristics and/or cash flows of the financial instrument
(such as, for example, a change in currency or a modification of the type of risk the financial instrument is exposed to,
when correlated to equity and commodity parameters), which are considered to result in derecognition due to their impact
(expected to be significant) on the original contractual cash flows.
Conversely, the amendments to financial assets following the Interest Rate Benchmark Reform (so-called IBOR Reform),
relating to the change in the basis for determining contractual cash flows (the replacement of the existing interest rate
benchmark with an alternative benchmark rate), do not constitute a derecognition event, but are to be considered a
modification from an accounting standpoint. Such amendments, if made as a direct consequence of the IBOR Reform and
Notes to the consolidated financial statements – Part A – Accounting policies
249
applied on equivalent economic bases, are represented with a prospective adjustment of the effective interest rate - by
applying paragraph B5.4.5 of IFRS 9 instead of modification accounting, with impacts on net interest income in future periods.
Derecognition criteria
Financial assets are derecognised solely if the sale leads to the substantial transfer of all the risks and rewards connected to
the assets. Conversely, if a significant part of the risks and rewards relative to the disposed financial assets is maintained,
they continue to be recorded in the financial statements, even though their title has been transferred.
When it is not possible to ascertain the substantial transfer of risks and rewards, the financial assets are derecognised where
no control over the assets has been maintained. If this is not the case, when control, even partial, is maintained, the asset s
continue to be recognised for the entity’s continuing involvement, measured by the exposure to changes in value of asse ts
sold and to variations in the relevant cash flows.
Lastly, disposed financial assets are derecognised if the entity retains the contractual rights to receive the cash flows of the
asset, but signs a simultaneous obligation to pay such cash flows, and only such cash flows, without significant delay to third
parties.
4. Hedging transactions
The Intesa Sanpaolo Group has exercised the option, provided for on the introduction of IFRS 9, of continuing to fully apply
the provisions of IAS 39 on hedge accounting (in the carved-out version endorsed by the European Commission) for each
type of hedge (both for micro hedges and macro hedges).
Classification criteria: type of hedge
Hedging transactions are aimed at neutralising potential losses on a specific item or group of items, attributable to a certain
risk, if such a risk should actually occur.
The following types of hedging transactions are used:
- fair value hedge, which has the objective of covering exposure to changes in the fair value (attributable to the different
risk categories) of assets and liabilities in the balance sheet, or on a portion of these, of groups of assets/liabilities, of
binding commitments and portfolios of financial assets and liabilities, including core deposits, as permitted by IAS 39
endorsed by the European Commission. Fair value macro hedges are aimed at reducing fluctuations in the fair value, as
a result of interest rate risk, of a sum of money flowing from a portfolio of financial assets or liabilities. Net amounts
resulting from mismatches between assets and liabilities cannot be subject to macro hedges;
- cash flow hedge, which has the objective of covering exposure to variability in future cash flows attributable to particular
risks associated with balance sheet captions. This type of hedge is essentially used to stabilise the interest flow on
floating rate funding to the extent that the latter finances fixed rate investments. In certain circumstances, similar
transactions are carried out with respect to some types of floating rate investments;
- hedges of net investments in foreign currency, which refer to the coverage of the risks of net investments in foreign
operations expressed in their original currency.
Only hedging transactions which involve counterparties outside the Group may qualify for hedge accounting.
The choice made by the Group to take advantage of the possibility of continuing to fully apply the IAS 39 rules for hedging
relationships means that the equity instruments classified as Financial assets measured at fair value through other
comprehensive income (FVOCI) cannot be measured as hedged items for price or exchange rate risk, since these
instruments are not recognised through profit or loss, not even if they are sold (except for dividends that are recognised
through profit or loss).
Recognition criteria
Hedging derivatives, like all derivatives, are initially recognised and subsequently measured at fair value.
A relationship qualifies as a hedging relationship, and is appropriately reported in the financial statements only if, all of the
following conditions are met:
- at the inception of the hedge, the hedging relationship is formally designated and documented, including the company’s
risk management objectives and strategy in undertaking the hedge. This documentation includes the identification of the
hedging instrument, the item or transaction hedged, the nature of the risk being hedged, and how the entity will assess
the hedging instrument’s effectiveness in offsetting the exposures to changes in the fair value of the item hedged or in
the cash flows attributable to the risk hedged;
- the hedge is expected to be highly effective;
- the planned transaction hedged, to hedge the cash flows, is highly probable and has an exposure to changes in cash
flows that could have effects on the income statement;
- the effectiveness of the hedge can be reliably measured;
- the hedge is measured on an ongoing basis and is considered highly effective for all the financial years in which it was
designated.
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250
Measurement criteria
Hedging derivatives are measured at fair value. In particular:
- in the case of fair value hedges, the change in the fair value of the hedged item is offset by the change in fair value of the
hedging instrument. Offsetting is recognised via the registration in the income statement of the gains and losses referred
to both the hedged item (with regard to the variations produced by the underlying risk factor), and the hedging
instrument. Any difference, which represents the partial ineffectiveness of the hedge, is therefore the net economic effect.
In case of fair value macro hedges, fair value changes related to the hedged risk of assets and liabilities in hedged
portfolios are allocated to the balance sheet under caption 60. “Fair value change of financial assets in hedged portfolios”
or under caption 50. “Fair value change of financial liabilities in hedged portfolios”;
- in the case of cash flow hedges, changes in fair value of the derivative are recorded in equity, for the effective portion of
the hedge, and these are registered in the income statement only when, with reference to the hedged item, there is a
variation in the flows to be offset or if the hedge is ineffective;
- hedges of net investments in foreign currency are treated in the same way as cash flow hedges.
The effectiveness of the hedge depends on the extent to which changes in the fair value of the hedged item or the relating
expected cash flows are offset by those of the hedging instrument. Therefore, effectiveness is appraised by comparing the
aforementioned changes, considering the intent pursued by the entity at the time in which it entered the hedging transaction.
A hedge is effective when the variations in fair value (or cash flows) of the hedging financial instrument almost completely
neutralise, that is within the 80-125% range, the changes in the fair value of the hedged item, for the type of risk being
hedged.
Effectiveness is assessed at every close of annual or interim financial statements using:
- prospective tests, which justify the application of hedge accounting, since these prove the expected effectiveness of
the hedge;
- retrospective tests, which demonstrate the effectiveness of the hedge for the reference period, or measure how much the
effective results diverge from perfect coverage.
Fair value hedge accounting is discontinued prospectively in the following cases:
– the hedging instrument expires or is sold, terminated, or exercised;
– the hedge no longer meets the hedge accounting criteria described above;
– the entity revokes the designation.
If such assessments do not confirm hedge effectiveness, from that moment hedge accounting is discontinued, the derivative
is reclassified in instruments held for trading and the hedged item is measured on the basis of its classification in the balance
sheet. If the assets or liabilities hedged are measured at amortised cost, the higher or lower value resulting from the fair value
measurement due to the hedge becoming ineffective is recognised through profit or loss, using the effective interest rate
method. When a fair value macrohedging relationship is discontinued, the cumulative change in fair value losses carried
under caption 60 "Fair value change of financial assets in hedged portfolios" or caption 50. “Fair value change of financial
liabilities in hedged portfolios” are transferred to the income statement among interest in come or expense over the residual
life of the original hedging relationships, without prejudice to verification that the requirements have been met.
An entity must discontinue cash flow hedge accounting prospectively in each of the following circumstances:
a) the hedging instrument expires or is sold, terminated, or exercised (for this purpose the replacement or exchange of one
hedging instrument with another hedging instrument is not a conclusion or termination if that replacement or exchange
forms part of a n entity’s documented hedging strategy). In this case the total profit (or loss) on the hedging instrument
continues to be recognised directly in shareholders’ equity until the end of the reporting period in which the hedge
became effective and it continues to be recognised separately until the programmed transaction, being hedged, occurs;
b) the hedge no longer meets the criteria for hedge accounting. In this case the total profit or loss on the hedging instrument
is recognised directly in shareholders’ equit y starting from the reporting period in which the hedge became effective and
continues to be recognised separately in shareholders’ equity until the programmed transaction occurs;
c) it is no longer considered that the future transaction will occur, in which case any related total profit or loss on the
hedging instrument recognised directly in equity starting from the reporting period in which the hedge became effective
must be recognised through profit or loss;
d) the entity revokes the designation. For hedges of a programmed transaction, total profits or losses on the hedging
instrument recognised directly in shareholders’ equity starting from the reporting period in which the hedge became
effective continue to be recognised separately in shareholders’ equity un til the programmed transaction occurs or it is
expected that it will no longer occur.
As an exception to the provisions of IAS 39 discontinuation following an update of the documentation of the hedging
relationship (due to modification of the hedged risk, the hedged underlying or the hedging derivative, or of the method for
verifying hedge effectiveness) does not apply in the case of modifications required as a direct consequence of the Interest
Rate Benchmark Reform (so-called IBOR Reform) and applied on equivalent economic bases.
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251
5. Investments in associates and companies subject to joint control
Classification, recognition and measurement criteria
The caption includes investments in companies subject to joint control and associates.
Entities are considered to be companies subject to joint control if control is contractually shared between the Group and one
or more other parties, or where the decisions about the relevant activities require the unanimous consent from all parties
sharing control.
Companies are considered subject to significant influence (associates) when the Group holds 20% or more of the voting rights
(including “potential” voting rights) or if it – with a lower equity stake – has the power of participating in the determination of
financial and management policies of the company based on specific juridical relations, such as the participation in voting
syndicates.
Certain companies in which the Group holds a stake exceeding 20% are not considered subject to significant influence sinc e
it solely has economic rights on a portion of the returns generated by the investment, but does not have access to
management policies and may exercise governance rights limited to the safeguarding of its economic interests.
The investments in associates and companies subject to joint control are measured at cost and accounted for according to
the equity method. If there is evidence of impairment, the recoverable amount of the investment is estimated, considering the
present value of the future cash flows which may be generated by the investment, including the final disposal value.
If the recoverable amount is lower than the carrying value, the difference is recorded in the income statement.
If the reasons for impairment are no longer applicable following an event subsequent to the registration of impairment,
recoveries are recorded in the income statement.
Derecognition criteria
Investments in associates and companies subject to joint control are derecognised when the contractual rights to the cash
flows from the assets expire or when the investment is sold, substantially transferring all the risks and rewards connected to
the assets.
6. Property and equipment
Classification criteria
Property and equipment include land, owner-occupied property, investment property, valuable art assets, technical plants,
furniture and fittings and any type of equipment that are expected to be used during more than one period.
Property and equipment held for use in the production or supply of goods and services are classifie d as “Property and
equipment used in operations”, in accordance with IAS 16. Real estate owned for investment purposes (to obtain rental
income or gains on the capital invested) is classified as “Investment property” based on IAS 40.
This caption also includes property and equipment classified in accordance with IAS 2 - Inventories, which refer both to assets
resulting from the enforcement of guarantees or from purchase at auction that the company intends to sell in the near future,
without carrying out major renovation work, and which do not meet the requirements for classification in the previous
categories, and to the real estate portfolio of the Group’s real estate companies, including building sites, properties under
construction, properties completed for sale and real estate development initiatives, held for sale.
Finally, this caption also includes the rights of use acquired through leases and relating to the use of an item of property and
equipment (for the lessee companies) and the assets leased under operating leases (for the lessor companies).
Recognition criteria
Property and equipment are initially measured at cost which comprises in addition to their purchase price any costs directly
attributable to the purchase and required for them to be operational.
Extraordinary maintenance expenses which lead to a rise in future economic benefits are attributed to increase the value of
assets, while other ordinary maintenance costs are recorded in the income statement.
Measurement criteria
Property and equipment are measured at cost, net of depreciation and impairment losses, except for owner-occupied
properties and valuable art assets, which are measured according to the revaluation model.
The investment properties are measured with the fair value method.
For the property and equipment subject to assessment according to the revaluation model:
- if the carrying value of an asset is increased following a revaluation, the increase must be recognised in the Statement of
comprehensive income and accumulated in the shareholders’ equity under the caption revaluation reserve; conversely, in
the case where an impairment loss on the same asset recognised previously in the income statement is recovered, it
must be recognised as income;
- if the carrying value of an asset is decreased following the revaluation, the decrease must be recognised in the
Statement of comprehensive income to the extent in which there are possible credit balances in the revaluation reserve
referring to this asset; otherwise, this reduction is recorded in the income statement.
Property and equipment are systematically depreciated, adopting the straight-line method over their useful life. The
depreciable amount is the cost of the goods (or the net value recalculated if the method adopted for the valuation is the
revaluation model) net of the residual value at the end of the depreciation period, if significant. Buildings are depreciated for a
portion deemed to be suitable to represent their deterioration over time following their use, considering extraordinary
maintenance expenses, which are recognised in the carrying value of the assets. In order to determine the useful life of the
various types of assets and the corresponding depreciation rates, the Group’s real estate assets have bee n divided into four
clusters: (i) historical properties (useful life of 65 years), (ii) Entire buildings (useful life of 33 years), (iii) Banking branches
(useful life of 20 years) and (iv) Other properties (useful life of 20 years). These clusters do not include the New Intesa
Notes to the consolidated financial statements – Part A – Accounting policies
252
Sanpaolo Headquarters in Turin, for which the useful life was estimated through a specific analysis which considered the
innovative characteristics of the work, featuring strategic importance and extensive architectonic value, built using complex
technologies, and having few, or even zero peers not only within the Group’s real estate assets but also in general. Other
property and equipment is depreciated based on the following useful lives: furniture from 5 to 10 years, plants from 4 to 10
years, hardware and IT equipment for a period from 4 to 8 years and, lastly, other assets from 3 to 13 years.
The following are not depreciated:
- land, irrespective of whether acquired individually or embedded in the value of buildings, since it has an indefinite useful
life;
- the valuable art assets, the other historical, artistic and decorative assets, since their useful life cannot be estimated an d
their value is normally destined to increase over time;
- the investment properties, as required by IAS 40, are measured at fair value through profit or loss and therefore they
must not be depreciated.
If there is some evidence that property and equipment measured at cost may have been impaired, the carrying amount of the
asset and its recoverable amount are compared. Any impairment losses are recorded in the income statement.
If the reasons for impairment cease to exist, a value recovery is recorded and may not exceed the value that the asset would
have had, net of depreciation, determined in the absence of previous impairment losses.
With regard to the property and equipment recognised in accordance with IAS 2, these are measured at the lesser of cost and
net realisable value, without prejudice to the comparison between the asset’s carrying amount and its recoverable amount
where there is an indication that the asset may have been impaired. Any impairment losses are recorded in the income
statement.
Property and equipment consisting of the right-of-use of assets subject to leases
According to IFRS 16, a lease is a contract or part of a contract that conveys the right to use an asset (the underlying asset)
for a period of time in exchange for consideration.
According to IFRS 16, leases are accounted for on the basis of the right of use model, where, at the initial date, the lessee
has a financial obligation to make payments due to the lessor to compensate for its right of use of the underlying asset during
the lease term.
When the asset is made available to the lessee for use (initial date), the lessee recognises both the liability and the asset
consisting of the right of use.
In particular, the right of use acquired with a lease is measured as the sum of the present value of the future payments over
the term of the contract, the lease payments made at or before the commencement date, the lease incentives received, if any,
the initial direct costs and any estimated costs of dismantling or restoring the underlying asset.
The financial liability recognised corresponds to the present value of the payments to be made for the lease.
With regard to the discount rate, based on the requirements of IFRS 16, the Group uses the implicit interest rate for each
lease contract, when it is available. For leases from the lessee’s point of view, in some cases, for example for rental
agreements, the implicit interest rate cannot always be readily determined without using estimates and assumptions (the
lessee does not have enough information about the unguaranteed residual value of the leased asset). In these cases, the
Group has developed a methodology for setting the incremental interest rate as an alternative to the implicit interest rate and
has decided to adopt the Funds Transfer Pricing (FTP) method. This is based on an unsecured and amortising rate curve,
which envisages lease payments for the lease contract that are typically constant over the lease term, rather than a single
payment upon maturity. The FTP method takes into account the creditworthiness of the lessee, the term of the lease, as well
as the economic environment in which the transaction takes place and is therefore in line with the requirements of the
standard.
The lease term is determined taking into accoun t:
- periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option;
- periods covered by an option to terminate the lease if the lessee is reasonably certain to exercise that option.
During the course of the lease term a lessee shall:
- measure the right-of-use at cost less accumulated depreciation and accumulated impairment losses determined and
recognised based on the provisions of IAS 36 “Impairment of assets”, adjusted to take account of any remeasurement of
the lease liability;
- increase the liability arising from the lease following the accrual of interest expense calculated at the interest rate implicit
in the lease or alternatively at the incremental borrowing rate, and decrease it for payments of principal and interest
made.
If changes are made to the lease payments, then the lease liability must be remeasured and the impact of the remeasurement
of the liability is recognised against the right-of-use asset.
Derecognition criteria
Property and equipment are derecognised from the balance sheet on disposal or when the asset is permanently withdrawn
from use and no future economic benefits are expected from its disposal.
Notes to the consolidated financial statements – Part A – Accounting policies
253
7. Intangible assets
Classification criteria
Intangible assets consist of goodwill and other intangible assets governed by IAS 38. They may include the rights of use
acquired under a lease and relating to the use of an intangible asset (for lessees) and assets leased under an operating leas e
(for lessors).
Intangible assets are recognised as such if they may be identified and stem from legal or contractual rights. Intangible assets
include goodwill, which represents the positive difference between purchase price and fair value of assets and liabilities
pertaining to the acquired company.
Recognition and measurement criteria
Intangible assets are recognised at cost, adjusted for any accessory charges only if it is probable that the future economic
benefits attributable to the assets will be realised and if the cost of the asset may be reliably determined. If this is not the case,
the cost of the intangible asset is recorded in the income statement in the year in which it was incurred.
For assets with finite useful life, the cost is amortised on a straight-line basis or in decreasing portions determined on the
basis of the economic benefits expected from the asset. Assets with indefinite useful life are not subject to systematic
amortisation, but are periodically subjected to impairment testing.
If there is any indication that an asset may have suffered impairment losses, the asset’s recoverable amount is estimated.
The impairment loss, which is recorded in the income statement, is equal to the difference between the carrying value of the
assets and the recoverable amount.
In particular, intangible assets include:
- Technology-related intangible assets, such as software applications, which are amortised on the basis of their expected
technological obsolescence and over a maximum period of seven years. An exception is the core banking system
platforms, whose useful life is estimated on a case-by-case basis, and, as a result, amortised over longer periods (from
10 to 15 years). Moreover, the costs incurred for the development of software are considered as intangible assets and
are recognised under assets only when all the following conditions are met: i) the cost attributable to the intangible asset
during its development can be measured reliably, ii) there is the intention, the availability of financial resources and the
technical ability of making the intangible asset available for use or sale, iii) the future economic benefits to be generated
by the asset can be demonstrated. Software development capitalised costs only comprise the costs directly attributable
to the development process. Capitalised software development costs are amortised systematically over the estimated
useful life of the relevant product/service so as to reflect the pattern in which the asset’s future economic benefits are
expected to be consumed by the entity from the beginning of production over the product's estimated life;
- customer-related intangibles generally represented, in business combinations, by asset management relations, non-
financial activities related to provision of services and insurance portfolios. Such assets, with a finite life, are originally
measured by the discounting, using a rate representing the time value of money and the asset’s specific risks, of the
income margins on the ongoing relations at the time of the business combination over a period which expresses their
residual, contractual or estimated life. For asset management relations and non-financial activities related to provision of
services, they are amortised on a straight-line basis over the period of greater significance of the expected economic
benefits in case of relations which do not have a predetermined duration and, for relations from insurance contracts,
generally in decreasing portions corresponding to the duration of the contract in case of relations with predetermined
expiry (residual lives of the policies);
- marketing-related intangibles represented by the measurement of the brand name which is also recorded at the time of
business combinations. This asset is considered as having indefinite life since it is deemed to contribute for an indefinite
period of time to the formation of income flows.
Lastly, intangible assets include goodwill.
With respect to business combinations, goodwill may be recorded when the positive difference between the consideration
transferred and the fair value recognition, if any, of minority interests, and the fair value of shareholders’ equity acquire d is
representative of the future income-generation potential of the equity investment.
If this difference is negative (badwill) or if goodwill may not be attributed considering future income-generation potential of the
equity investments, the same difference is directly recorded in the income statement.
Once a year (or every time that there is evidence of impairment losses), an impairment test is carried out for goodwill. This
requires the identification of the Cash Generating Unit (or CGU) to which goodwill is allocated. The cash-generating units of
the Intesa Sanpaolo Group correspond to the operating divisions presented in segment reporting. Any impairment losses are
determined on the basis of the difference between the recognition value of goodwill and its recoverable amount, if lower.
The recoverable amount is equal to the higher between the fair value of the cash-generating unit, less any cost to sell, and
the relative value in use. The consequent adjustments are posted in the income statement.
With regard to the intangible asset represented by the brand name, if the reference CGU does not have any goodwill
allocated, then an independent and specific valuation is made of the intangible on the basis of the fair value certified by the
appraisal of an independent expert. If the fair value of the brand name is not higher than its carrying amount, the recoverable
amount of the CGU is estimated, calculated based on future cash flows.
It is also noted that, where a CGU which is allocated both goodwill and a brand name has a value in use lower than the
carrying amount, by an amount that exceeds the total value of the intangibles with indefinite life allocated, without prejudice to
the full write-down of goodwill, an autonomous valuation of the brand name is carried out based on the fair value stated in the
specific appraisal.
Derecognition criteria
Intangible assets are derecognised from the balance sheet on disposal and if no future economic benefits are expected.
Notes to the consolidated financial statements – Part A – Accounting policies
254
8. Other assets
Other assets essentially consist of items awaiting classification and items not attributable to the other balance-sheet captions,
including receivables arising from the supply of goods and non-financial services, sundry tax items other than those
recognised in their own caption (e.g., connected to withholding agent activities), gold, silver and precious metal, the tax credits
connected with the “Cura Italia” and “Rilancio” Law Decrees and accrued income other than that capitalised on the related
financial assets, including the income resulting from contracts with customers in accordance with IFRS 15, paragraphs 116
and following. As required by paragraphs 91 and following of IFRS 15, the costs incurred for the acquisition and fulfilment of
long-term contracts with customers are capitalised and amortised when they are incremental and are expected to be
recovered.
9. Non-current assets held for sale and discontinued operations
Non-current assets/liabilities for which a disposal process has commenced and for which disposal is deemed to be extremely
probable are recorded in assets under Non-current assets held for sale and discontinued operations and in liabilities under
Liabilities associated with non-current assets held for sale and discontinued operations. These assets/liabilities are measured
at the lower of the carrying amount and fair value less cost to sell, except for some type of assets (e.g., financial assets within
the scope of IFRS 9) for which IFRS 5 specifically establishes that the measurement principles of the applicable accounting
standard must be used.
Non-current assets held for sale and discontinued operations may include portfolios of assets for which there are no prices in
an active market. In such case, where an agreement has been reached with the purchaser, they are measured at fair value by
referring to the sale prices resulting from that agreement. Where there is no agreement, they are measured using specific
valuation techniques based on the asset and, where necessary, by employing external fairness opinions.
The income and charges (net of tax effect) attributable to non-current assets held for sale and discontinued operations or
recorded as such in the year are recognised in the income statement in a separate caption.
10. Current and deferred tax
Taxes on income, calculated according to domestic tax regulations, are accounted for as a cost on an accruals basis, in line
with the method followed to include, in the financial statements, the costs and income that generated them. Therefore, they
represent the balance of current and deferred income taxes for the year. Current tax assets and liabilities include the balances
of the Group companies due to the relevant Italian and foreign tax authorities relating to direct taxation. More specifically,
these captions include the net balance of tax liabilities from previous years and the current year, calculated on the basis of a
prudent estimate of the tax charges due for the year, assessed according to the tax regulations currently in force, and the
current tax assets represented by advances, by withholding taxes borne or other tax credits. The risk inherent in such
proceedings and the risks inherent in proceedings where preliminary disbursements have not been requested are evaluated
in applying the principles contained in IAS 37 regarding the best estimate of the economic resources required.
Considering the Group’s adoption of the na tional fiscal consolidation provisions, tax positions which may be referred to the
Group companies are managed separately from an administrative standpoint.
Deferred taxation is calculated according to the balance sheet liability method, taking into account the tax effect of the
temporary differences between the book value of the assets and liabilities and their value for taxation purposes, which will
determine taxable income or deductible amounts in the future. To this end, “taxable temporary differences” are differences
which will give rise to taxable income in future years while “deductible temporary differences” are those which will give ris e to
deductible amounts in future years.
Deferred tax liabilities are calculated by applying the tax rates currently in force to taxable temporary differences that are likely
to generate a tax burden, and to the deductible temporary differences for which it is likely that there will be future taxabl e
amounts at the time when the related tax deductibility occurs (so-called probability test). Deferred tax assets and liabilities
related to the same tax and due in the same period are offset.
If deferred tax assets and liabilities refer to items affecting the Income statement, the balancing entry is represented by taxes
on income.
Where deferred tax assets and liabilities relate to transactions that have been recorded in shareholders’ equity without
affecting earnings (such as adjustments on IAS/IFRS first-time adoption, measurements of financial assets recognised at fair
value through other comprehensive income or of cash flow hedge derivative contracts), the balancing entry is made in
shareholders’ equity, under specific reserves where so provided (e.g. valuation reserves).
Latent taxation on equity reserves that will becom e taxable "however used" is charged against shareholders’ equity.
Deferred taxation relating to revaluations arising on conversion to the euro, credited directly to a specific reserve named
“Reserve pursuant to Article 21 of Legislative Decree 213/98”, whi ch qualify for deferred taxation, is charged directly against
this reserve. No provision is made for reserves subject to latent taxation only in the event of distribution, since the size of the
available reserves which have already been taxed leads to the belief that no transactions will be undertaken which may cause
taxation of the untaxed reserves.
Deferred tax liabilities referred to companies included in the fiscal consolidation are reported in their financial statements, in
application of the accrual basis principle and in consideration of the fact that the effects of fiscal consolidation are limited to
the settlement of current tax positions.
Latent taxation on shareholders' equity items of consolidated companies is not recorded in the financial statements if it is
unlikely that any tax liability will actually arise, also bearing in mind the permanent nature of the investment.
Notes to the consolidated financial statements – Part A – Accounting policies
255
11. Allowances for risks and charges
Allowances for risks and charges for commitments and guarantees given
This sub-caption of the allowances for risks and charges contains the allowances for credit risk recognised for loan
commitments and guarantees given that come under the scope of the IFRS 9 impairment rules. For these cases, in general,
the methods described for financial assets measured at amortised cost or at fair value through other comprehensive income
are adopted for the assignment to the three credit risk stages and the calculation of the expected credit loss.
This aggregate also includes allowances for risks and charges made to cover other types of commitments and guarantees
given that, due to their specific characteristics, do not fall under the scope of impairment pursuant to IFRS 9.
Post-employment benefits
Company post-employment benefits are based on agreements and qualify as defined benefit plans. Liabilities related to such
plans and the relative cost of current service are determined on the basis of actuarial assumptions based on the Projected
Unit Credit Method. This method sets out that future obligations are forecast using past time-series analyses and the
demographic curve and that such future cash flows are discounted based on a market interest rate. The provisions made in
each year of service are considered separately and give rise to an additional unit of benefit entitlement for the purposes of the
final obligation. The discounting rate is determined on the basis of market returns, surveyed as at the date of measurement,
on high-quality corporate bonds, taking account of the residual average life of the liability. The present value of the liability at
the reporting date is also adjusted by the fair value of any plan assets.
Actuarial profits and losses (namely the changes in the current value of the obligation resulting from changes in the actuarial
assumptions and adjustments based on past experience) are recognised in the statement of comprehensive income.
Other allowances
Other allowances for risks and charges record provisions related to legal obligations or connected to labour relationships or to
litigations, also of a fiscal nature, originating from a past event for which a disbursement will probably arise to settle th e
obligations, provided that the amount of the disbursement may be estimated reliably.
Consequently, a provision is recognised when, and only when:
- there is a present obligation (legal or constructive) as a result of a past event;
- it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
- a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the
reporting date and takes into account the risks and uncertainties that inevitably surround many events and circumstances.
Where time value is significant, provisions are discounted using current market rates. Provisions and increases due to time
value are recorded in the income statement.
If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation or
when the obligation is settled, the provision should be reversed.
The caption also includes long-term benefits to employees, whose charges are determined with the same actuarial criteria
described for post-employment benefits. Actuarial profits and losses are all immediately recognised in the income statement.
12. Financial liabilities measured at amortised cost
Classification criteria
Amounts Due to banks, Due to customers and Securities issued include various forms of funding on the interbank market and
with customers, repurchase agreements with commitment to repurchase and funding via certificates of deposit, bonds issued
and other funding instruments in circulation, net of any amounts repurchased.
It also includes the payables recorded by the entity in the capacity of lessee in lease transactions.
Recognition criteria
Initial recognition of these financial liabilities occurs at the date of subscription of the contract, which usually coincides with the
time of collection of the sums deposited or the issue of debt securities.
Initial recognition is based on the fair value of the liabilities, normally equal to the amount collected or the issue price,
increased by any additional charges/revenues directly attributable to the single funding or issuing transaction.
Internal administrative costs are excluded.
Lease payables are recognised at the present value of the future lease payments, discounted using the implicit interest rate of
the transaction or, where it cannot be determined, the marginal financing rate.
Measurement criteria
After initial recognition, financial liabilities are measured at amortised cost with the effective interest method.
An exception is made for short-term liabilities, where time value is immaterial, which are stated at collected amount.
Lease payables are remeasured when there is a lease modification (e.g. a change in the contract which is not accounted
for/considered as a separate contract); the effect of the remeasurement will be a corresponding adjustment to the right-of-use
asset.
Derecognition criteria
Financial liabilities are derecognised from the balance sheet when they have expired or extinguished. Derecognition also
occurs for repurchase of previously-issued bonds. The difference between book value of the liability and amount paid for
repurchase is recorded in the income statement.
Placement of own securities, after their repurchase, is considered a new issue with recognition at the new placement price.
Notes to the consolidated financial statements – Part A – Accounting policies
256
13. Financial liabilities held for trading
Recognition criteria
These financial instruments are recognised at the subscription or issue date at the fair value of the instrument, without taking
into account directly attributable transaction costs or revenues.
This liability category includes, in particular, the negative fair value of trading derivatives, as well as embedded derivatives
with a negative fair value separated from liabilities measured at amortised cost.
It also includes liabilities determined by short selling generated by trading of securities and certificates forming part of the
trading business model.
Measurement criteria
All financial liabilities held for trading are measured at fair value through profit or loss.
Derecognition criteria
Financial liabilities held for trading are derecognised when the contractual rights to the related cash flows expire or when the
financial liability is disposed of with the substantial transfer of all the risks and rewards connected to it.
14. Financial liabilities designated at fair value
Classification criteria
Financial liabilities designated at fair value are recorded under this caption, on the basis of the fair value option given t o
companies by IFRS 9 and in compliance with the cases contemplated in the reference regulations.
This category of liabilities includes certificates that form part of the banking book business model.
Recognition criteria
These liabilities are recorded at fair value as at the date of issue, including the value of any embedded derivatives, net of
placement fees paid.
Measurement criteria
These liabilities are measured at fair value according to the following rules established by IFRS 9:
- changes in fair value attributable to changes in own credit risk must be recognised in the statement of comprehensive
income (shareholders’ equity);
- the remaining changes in fair value must be recognised in the income statement.
The amounts recognised in the statement of comprehensive income are not subsequently recycled to the income statement.
This method of accounting must not be applied when recognition of the effects of own credit risk on shareholders’ equity
results in or accentuates an accounting mismatch in the income statement. In this case, gains and losses associated with the
liability, including those resulting from changes in own credit risk, must be recognised in the income statement.
Derecognition criteria
The financial liabilities designated at fair value are derecognised when the contractual rights to the related cash flows expire
or when the financial liability is disposed with the substantial transfer of all the risks and rewards connected to it.
15. Foreign currency transactions
Definition
The foreign currency is a currency that is not the functional currency of the entity, which is in turn the currency of the primary
economic environment in which the entity operates.
Initial recognition
Foreign currency transactions are recorded, on initial recognition, in the functional currency, by applying to the foreign
currency amount the spot exchange rate at the date of the transaction.
Subsequent measurement
At every close of annual or interim financial statements, captions in foreign currency are measured as follows:
- foreign currency monetary items are translated using the closing rate;
- non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate at the date of the transaction;
- non-monetary items that are measured at fair value in a foreign currency are translated using the closing rates.
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from
those at which they were translated on initial recognition during the period or in previous financial statements are recognised
through profit or loss in the period in which they arise.
When a gain or loss on a non-monetary item is recognised directly in equity, any exchange component of that gain or loss is
recognised directly in equity. Conversely, when a gain or loss on a non-monetary item is recognised through profit or loss, any
exchange component of that gain or loss is recognised through profit or loss.
Notes to the consolidated financial statements – Part A – Accounting policies
257
With regard to the “Conversion of financial statements in currencies other than the euro” for the purposes of consolidation and
accounting for the related foreign exchange differences, reference is made to the specific paragraph of Part A: Section 3 -
Scope of consolidation and consolidation methods of these Notes to the consolidated financial statements.
16. Other information
Own shares
Any own shares held are directly deducted from equity. Similarly, their original cost and the profits or losses deriving from their
subsequent sale are recorded in equity.
Accruals, prepayments and deferrals
Accruals, prepayments and deferrals for the year that include income and charges for the year, accrued on assets and
liabilities, are shown in the financial statements as an increase or decrease of the assets and liabilities to which they are
related.
Leasehold improvements
The costs sustained for restructuring property belonging to third parties are capitalised in consideration of the fact that for the
duration of the rental contract the using company has control of the assets and may receive their future economic benefits.
These costs, recorded in Other assets as provided for by the instructions of the Bank of Italy, are amortised over a period
which must not exceed the duration of the rental contract.
Employee termination indemnities
Employee termination indemnities qualify as a “post-employment benefit” classified as:
- a “defined contribution plan” to the extent of the portions accruing from 1 January 2007 (the date the reform of the
supplementary pension schemes came into force pursuant to Legislative Decree 252 of 5 December 2005) when the
employee opted for the complementary pension scheme or decided to allocate such portions to the INPS (the Italian
Social Security Institute) Treasury fund. Therefore, the amounts, recorded under personnel expenses, are determined on
the basis of amounts due without the application of actuarial calculation;
- a “defined benefit plan” to the extent of the portions of employee termination indemnities accrued until 31 December
2006.
These amounts are recognised at their actuarial value determined using the “Projected Unit Credit Method”, without
applying the pro-rata of the service rendered. Indeed, the current service cost of employee termination indemnities is
almost entirely accrued and its revaluation in the years to come is not expected to generate significant benefits
for employees.
For the purposes of discounting, the rate used is the market yield of high-quality corporate bonds taking into account the
average remaining life of the liability, weighted based on the percentage amount paid and advanced, for each maturity, with
respect to the total to be paid and advanced until the expiry of the entire obligation.
The plan’s costs are recorded under personnel expenses, while actuarial profits and losses are recognised in the statement of
comprehensive income.
Share-based payments
Share-based payments are recorded in the income statement, with a corresponding increase in shareholders’ equity, on the
basis of the fair value of financial instruments attributed at assignment date, dividing the charge over the period set forth by
the plan.
In the case of options, the fair value is calculated using a model which considers, in addition to information such as strike
price and expiry date of the option, spot price of the shares and their expected volatility, expected dividends and the risk-free
interest rate, as well as the specific characteristics of the plan. The pricing model values the option and the probability o f
realisation of the condition on the basis of which the options have been assigned.
The combination of the two values supplies the fair value of the assigned instrument.
Any decrease in the number of financial instruments granted is accounted for as a cancellation of such instruments.
Employee benefits
Employee benefits are defined as all forms of consideration given by an entity in exchange for service rendered by
employees. Employee benefits are divided into:
- short-term benefits (other than termination benefits or equity compensation benefits) that are expected to be paid in full
within twelve months after the end of the period in which the employees render the related service and recognised in full
through profit or loss when they become due (this category includes, for example, wages, sal aries and “extraordinary”
benefits);
- post-employment benefits payable after the conclusion of employment that require the entity to provide future benefits to
employees. These include employee termination indemnities and pension funds, which are in turn divided into defined
contribution plans and defined benefit plans or company pension funds;
- termination benefits, i.e. compensation that the company recognises to the staff members upon termination of the
employment agreement, following the company's decision to terminate the employment relationship prior to the normal
retirement date;
- long-term benefits, other than those above, that are not expected to be paid in full within twelve months after the end of
the period in which the employee rendered their service.
Notes to the consolidated financial statements – Part A – Accounting policies
258
Offsetting of financial instruments
According to IAS 32, paragraph 42, financial assets and financial liabilities are offset and the net amount presented in the
financial statements when an entity:
- has a legal enforceable right of set off which is currently exercisable in all circumstances, both in the ordinary course of
business or in the event of default, insolvency or bankruptcy of the parties;
- intends to settle the transactions on a net basis or on a gross settlement basis whose substantive effects are equivalent
to a net settlement.
For derivative instruments covered by netting agreements that meet the above requirements, Bank of Italy Circular 262 also
requires the offsetting to be performed between trading and hedging derivatives, with the mismatches to be presented on a
net basis. The net balance is usually allocated to the trading book rather than to the hedging derivatives, based on the actual
amount of the mismatch between trading and hedging derivatives.
In compliance with the requirements of IFRS 7, more detailed information is provided in the tables contained in Part B – Other
information of these Notes to the financial statements, which present the following:
- the carrying amounts of assets and liabilities that meet the requirements of IAS 32, paragraph 42, before and after
offsetting;
- the exposures subject to master netting agreements that have not been offset but have the potential to be offset following
specific circumstances;
- the collateral associated with them.
Tax credits related to the “Cura Italia” and “Rilancio” Law Decrees acquired as a result of transfer by direct
beneficiaries or previous purchasers (e.g. ecobonus)
Law Decrees no. 18/2020 (“Cura Italia” Decree) and no. 34/2020 (“Rilancio” Decree) introduced tax incentives relat ed to both
investment expenditure (e.g. ecobonus and seismicbonus) and current expenditure (e.g. rents for non-residential premises).
Additionally, the government once again intervened on the issue through Law Decree no. 50/2022 (“Decreto Aiuti”), mainly b y
remodulating the base of potential re-assignees.
These tax incentives apply to households or businesses, are linked to a percentage of the expenditure incurred (in some
cases up to 110%) and are granted in the form of tax credits or tax deductions (with option for conversion into tax credits).
The main features of these tax credits are: i) the possibility of using them for offsetting; ii) their transferability to thi rd-party
purchasers; and iii) their non-refundability by the Treasury.
The accounting for tax credits acquired from a third party (transferee of the tax credit) is not covered by a specific international
accounting standard. IAS 8 requires, in cases where there is a circumstance not explicitly addressed by an IAS/IFRS
accounting standard, that management develop an accounting policy to ensure relevant and reliable disclosure of such
transactions.
To this end, the Intesa Sanpaolo Group, in view of the guidance provided by the Authorities, in the document “Accounting
treatment of tax credits connected with the “Cura Italia” and “Rilancio” Law Decrees acquired following the assignment by the
direct beneficiaries or previous purchasers” published on 5 January 2021 by the Coordination Committee between the Bank of
Italy, Consob and IVASS concerning the application of IAS/IFRS has adopted an accounting policy that refers to the
accounting rules established by IFRS 9, applying the provisions that are consistent with the characteristics of the transaction.
The Group attributes:
– to a Hold to Collect business model the credits that are acquired within the limits of its tax capacity, given the objective of
holding them for future offsetting. Those credits are recognised at amortised cost and the profitability is recognised on a
pro-rata basis under net interest income in the income statement;
– to a Hold to Collect and Sell business model the excess credits acquired in relation to its tax capacity and, therefore, held
for subsequent reassignment. Those credits are measured at fair value through other comprehensive income. Given the
particular nature of these instruments, their fair value fluctuations are linked to the changes in interest rates to the extent
that these reflect on the definition of the purchase prices. The profitability is recognised on a pro-rata basis under net
interest income in the income statement.
The accounting framework set out in IFRS 9 for calculating expected credit losses is not deemed applicable to this specific
case. The ECL need not be calculated on these tax credits, as no refund is expected from the tax authorities, as the extinction
of the instrument is linked to the offsetting of the bearer’s tax payables. Moreover, in cases where reassignment is planned,
the sale will be finalised by collecting the price of the instrument, without recognising a receivable due from the assignee.
Lastly, considering the operating methods implemented by the Group, the risk of non-use of the tax credits, i.e. the risk that
the Bank lacks the tax capacity, , to achieve the benefits associated with the asset, can be reasonably deemed as inexistent.
Specifically:
– with regard to the Hold to Collect business model, the amounts acquired are consistent with the overall tax capacity,
constantly monitored, so that the Bank can offset its payables;
– with regard to the Hold to Collect and Sell business model, for the credits acquired, reassignment agreements are
gradually entered into for excess volumes, binding on the customer, with multiple counterparties, whose tax capacity is
verified in advance.
As specified in the joint document from the Authorities, as mentioned above, given that the purchased tax credits do not
qualify as tax assets, public subsidies, intangible assets or financial assets under the international accounting standards, the
most appropriate classification, for their presentation in the financial statements, is the residual classification under Other
Assets in the balance sheet.
Notes to the consolidated financial statements – Part A – Accounting policies
259
TLTRO III
The TLTRO III (Targeted Longer Term Refinancing Operations) seek to preserve favourable bank lending conditions and
support the defined monetary policy stance. Several of the parameters that characterise these operations, established by the
ECB on 6 June 2019, were subsequently recalibrated in several steps, initially improving them for banks in light of the
economic effects of the COVID-19 emergency and, recently - on 27 October 2022 - to “normalise” funding costs in order to
exert downward pressure on inflation and contribute to restoring price stability over the medium term. The amount of funding
that each bank can obtain depends on the amount of loans granted to non-financial companies and households at particular
reporting dates (so-called eligible loans). The single tranches could be subscribed on a quarterly basis, from September 2019
up to December 2021, and each operation has a duration of three years.
The interest rate for each operation is set at a level equal to the average interest rate on the Eurosystem’s main refinancin g
operations (MROs), except for the special interest rate period from 24 June 2020 to 23 June 2022, when a rate of 50 basis
points lower applied. Banks granting net eligible loans above a preset benchmark net lending level can receive an interest
rate reduction. Specifically, the favourable rate applied is equal to the average rate on deposits with the central bank (Deposit
Facility Rate or DFR) for the entire duration of the respective operation, except for the special interest rate period where an
additional reduction of 50 basis points was added. The interest is paid in arrears at the maturity date of each TLTRO III
transaction or at the time of early repayment.
As stated, on 27 October 2022, in addition to further increasing interest rates, as part of a trend of interest rate hikes begun in
July 2022, the Governing Council of the ECB decided to recalibrate the conditions applicable to TLTRO III financing.
Specifically, it maintained the existing interest rate calculation method up to 22 November. This method provided that, in
“ordinary” periods (i.e. periods other than special interest rate periods defined above) the applicable i nterest rate would equal
the average of interest rates calculated over the duration of the instrument, entailing an “adjustment” to the interest rate, which
would be determined by applying the interest rate in force each time, only in ordinary periods. Starting on 23 November 2022
(up to the date of maturity or early redemption of each existing TLTRO III) the interest rate is indexed to average applicabl e
key ECB interest rates for each operation in that period (equal to the DFR rate for banks that reached the defined
benchmarks).
Lacking specific provisions in the reference accounting standards on how to account for this case and clear indications from
IFRIC, which had been consulted on the accounting treatment of the TLTRO III, the Intesa Sanpaolo Group defined its own
accounting policy, applied consistently and with continuity over time, also following the changes made to contractual
conditions: the Group applies to TLTRO operations the accounting treatment defined by IFRS 9 for floating-rate financial
instruments - considering the refinancing conditions defined by the ECB as floating market rates as part of the monetary
policy measures of the Eurosystem - recognising the interest applicable in each case, to be estimated based on the
probability of achieving the net lending targets set.
A requirement for the recognition of the favourable interest rates – in keeping with the approach already adopted for TLTRO II
– is a reliable estimate of the achievement of the benchmark net lending, which the Group performs through forecast reports
on the lending performance monitored at set dates, approved by an appropriate level of management. These benchmarks –
referring in particular to volumes as at 31 March 2021 and 31 December 2021 – were in fact achieved.
In the event of changes to the forecasts on the achievement of those targets, the IFRS 9 provisions on the revision of cash
flow estimates apply.
According to the Group’s accounting policies, the revision of the conditions of the instrument by the ECB is considered as a
change to a floating rate pursuant to par. B5.4.5 of IFRS 9, with a forward-looking adjustment to the interest rate, considering
the fact that the ECB has the option to change interest rates at its discretion in defining monetary policy rates (as it did in April
and December 2020, introducing the special interest rate periods and, more recently, in October 2022, in the terms illustrate d
above). The interest is therefore recognised periodically based on the interest rate of the instrument for each period (-0.5%
until 24 June 2020, -1% until 23 June 2022, and, thereafter, based on existing conditions, illustrated below) as required by
paragraph B5.4.5 of IFRS 9.
Following the increases in interest rates approved by the Governing Council of the ECB starting in July 2022, it was
necessary to redetermine the effective interest rate applicable to each operation, starting from the date of recalibration of the
interest rates, with the goal of reallocating the benefit resulting from the specific mechanism of the average of interest rates in
the reference period of the benefit. Lastly, the recalibration of the conditions applicable to TLTRO III financing defined on 27
October 2022 entailed the recognition of the residual benefit up to the date of the changes to contractual conditions (i.e., up to
22 November 2022). That approach is in line with that adopted in the past for recognising interest during special periods (i.e.,
recognition of the additional benefit of -50 bps in the period from June 2020 - June 2022), as it was considered as the
“monetary policy” floating rate applicable in the reference period. Starting on 23 November 2022, interest on existing TLTRO
III financing is recognised based on the DFR in force at each time.
As previously noted in the 2021 Financial Statements, on 6 January 2021, ESMA issued a Public Statement with the aim of
promoting transparency in the banks’ IFRS financial reports concerning the accounting treatment of TLTRO III: in light of the
significant numerical impacts of the operations in question and of the level of judgment required for defining the accounting
policy, ESMA highlighted the importance of providing in the financial statements an adequate level of transparency on the
accounting treatment of operations.
Therefore, in line with the requests from ESMA and in addition to the disclosure on the accounting policies adopted to
recognise the TLTRO III operations, the ISP Group provides information also on the resulting quantitative impacts of the
recognition of interest.
Recognition of revenues and costs
Revenues are gross flows of economic benefits deriving from the performance of the company's ordinary business and are
recognised when control of the goods or services is transferred to the customer, at an amount that represents the amount of
consideration that the company considers it is entitled to. In particular, revenues are recognised by applying a model that
must meet the following criteria:
Notes to the consolidated financial statements – Part A – Accounting policies
260
- identification of the contract, defined as an agreement in which the parties are committed to perform their respective
obligations;
- identification of the individual performance obligations contained in the contract;
- determination of the transaction price, i.e. the expected consideration for the transfer of the goods or services to the
customer;
- allocation of the transaction price to each performance obligation, based on the sale prices of the individual obligation;
- recognition of revenues when (or as) the performance obligation is satisfied by transferring a promised good or service to
a customer.
The transaction price is the amount to which an entity expects to be entitled in exchange for the transfer of goods and
services promised. It may include fixed or variable amounts or both. Revenues from variable fees are recognised in the
income statement if they can be reliably estimated and only if it is highly likely that all or a significant part of this fee will not
need to be reversed from the income statement in future periods. Where there is a high level of uncertainty related to th e
nature of the consideration, it will be recognised only when this uncertainty is resolved.
Revenues may be recognised:
- at a specific point in time, when the entity satisfies a performance obligation by transferring a promised good or service to
the customer, or
- over time, as the entity satisfies a performance obligation by transferring a promised good or service to the customer.
The good is transferred when, or in the period when, the customer acquires control of the good.
In particular:
- interest is recognised on accrual on the basis of the contractual interest rate or the effective interest rate in the case of
application of amortised cost. Interest income (or interest expense) includes differentials and positive (or negative)
margins accrued up to the reporting date, relating to financial derivatives:
a) hedging interest-generating assets and liabilities;
b) classified in the balance sheet in the trading book, though related to financial assets and/or liabilities designated at
fair value through profit or loss (fair value option) in management terms;
c) related in management terms to assets and/or liabilities classified in the trading book and providing for the
settlement of differentials or margins with different maturities;
- overdue interest, which may be provided for by the relevant contracts is recorded in the income statement solely at the
time of collection;
- dividends are posted in the income statement when their distribution is approved, unless this date is not known or the
information is not immediately available, in which case they may be recognised when they are collected;
- commission income from services is recorded, on the basis of the existence of contractual agreements, in the period in
which the services have been rendered. Commission income included in the amortised cost for the purposes of
determining the effective interest rate is recognised under interest;
- profits and losses from securities trading are recognised in the income statement at the date of sale, on the basis of the
difference between the consideration paid or collected and the carrying value of such instruments;
- revenues deriving from the sale of non-financial assets are recorded at the date of sale, or when the performance
obligation towards the customer is satisfied.
Costs are recognised in the income statement on an accruals basis. Costs relating to the receipt and performance of
contracts with customers are recognised in the income statement in the periods when the related revenues are recognised.
Use of estimates and assumptions in preparing financial reports
The preparation of financial reports requires the use of estimates and assumptions that may have a significant effect on the
amounts stated in the balance sheet and income statement, and on the contingent assets and liabilities reported in the
financial statements. Estimates are based on available information and subjective evaluations, also founded on past
experience, which are used to formulate reasonable assumptions in measuring operating events. Given their nature, the
estimates and assumptions used may vary from year to year, and hence it cannot be excluded that current amounts carried in
the financial statements may differ significantly in future financial years as a result of changes in the subjective evaluations
made.
If there are greater uncertainties and/or the assets being measured are particularly material, the valuation is supported by
specific fairness opinions from external appraisers/experts.
The main cases for which subjective evaluations are required to be made by corporate management include:
- the measurement of impairment losses on loans, investments, and, generally, other financial assets;
- the use of measurement models for determining the fair value of financial instruments not listed on active markets;
- the evaluation of the appropriateness of amounts stated for goodwill and other intangible assets;
- the fair value measurement of real estate and valuable art assets;
- the measurement of personnel funds and allowances for risks and charges;
- the estimates and assumptions on the collectability of deferred tax assets;
- the demographic (linked to the estimated mortality of insured people) and financial (deriving from the possible trend in
financial markets) suppositions used to structure insurance products and define the basis for calculating
integrative reserves provided for in insurance regulations, in addition to the shadow reserves, and liability adequacy test
provided for in IFRS 4.
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261
For some of the types listed above, the main factors subject to estimates by the Group and which determine the carrying
value of assets and liabilities in the financial statements can be identified. The following are noted, by way of example:
- to determine the fair value of financial instruments not listed on active markets, if the use of parameters that cannot be
obtained from the market is necessary, the main estimates regard, on one hand, development of future cash flows (or
even income flows, in the case of equities), possibly conditional on future events and, on the other, the level of specific
input parameters not listed on active markets;
- the estimates for the assignment of loans and debt securities classified as Financial assets measured at amortised cost
and Financial assets measured at fair value through other comprehensive income to the three credit risk stages required
by IFRS 9 and to calculate the related expected credit losses involve:
o the determination of the parameters for a significant increase in credit risk, essentially based on models for
measuring the probability of default (PD) upon origination of the financial assets and at the reporting date;
o the inclusion of forward-looking factors, including macroeconomic factors, for the determination of the PD and LGD;
o the determination of the likelihood of sale of impaired financial assets, through the realisation of market positions;
- to determine the future cash flow estimates from non-performing loans, a number of items are considered: the expected
recovery times, the presumed realisable value of guarantees and the costs to be sustained for the recovery of
credit exposure;
- to determine the value in use of intangible assets with an indefinite life (brand name and goodwill) with regard to the
Cash-Generating Units (CGU) comprising the Group, the future cash flows in the forecasting period of the analysis and
the flows used to determine the terminal value, generated by the CGU, are subject to estimate, separately and
appropriately discounted. Also the cost of capital is among the items subject to estimate;
- to determine the value in use of intangible assets with a finite life (asset management and insurance portfolios) with
regard to the CGUs comprising the Group, the useful life is subject to estimate, on the one hand, as well as the future
cash flows arising from the asset, on the other. The cost of capital is subject to estimate in the case of intangible assets
with a finite life as well;
- the fair value measurement of real estate and valuable art assets is based on valuations prepared by qualified
independent firms. Lease rentals, selling prices, discount rates and capitalisation rates are estimated in order to conduct
the appraisals of the properties, while to conduct the appraisals on the valuable art assets, the estimate of the value is
gathered from the performance of the exchanges of similar works (in terms of technique, size, subject) by the same
author or regional movements and schools that are close with regard to style and technique;
- to measure post-employment benefits, the present value of the obligations is subject to estimate, taking into account the
flows, appropriately discounted, arising from past time-series analyses and the demographic curve;
- to measure allowances for risks and charges, the amount of outflows necessary to fulfil the obligations is estimated,
where possible, taking into account the effective probability of having to utilise resources;
- to determine the value of deferred tax items, the likelihood of an effective future tax burden is estimated (taxable
temporary differences) and the level of reasonable certainty – if it exists – of future taxable amounts at the time when the
tax deductibility occurs (deductible temporary differences and tax losses carried forward).
The classification drivers for financial assets
The classification of the financial assets into the three categories established by the standard depends on two classification
drivers: the business model used to manage the financial instruments and the contractual cash flow characteristics of the
financial assets (or SPPI Test).
The classification of the financial assets derives from the combined effect of the two drivers mentioned above, as
described below:
- Financial assets measured at amortised cost: assets that pass the SPPI test and come under the Hold to Collect (HTC)
business model;
- Financial assets measured at fair value through other comprehensive income (FVOCI): assets that pass the SPPI test
and come under the Hold to Collect and Sell (HTCS) business model;
- Financial assets measured at fair value through profit or loss (FVTPL): this is a residual category, which includes
financial instruments that cannot be classified in the previous categories based on the results of the business model test
or the test of the contractual cash flow characteristics (SPPI test not passed).
SPPI test
For a financial asset to be classified as at amortised cost or at FVOCI – in addition to the analysis of the business model – the
contractual terms of the asset must also provide, on specified dates, for cash flows that are solely payments of principal and
interest (SPPI). This analysis must be carried out for loans and debt securities in particular.
The SPPI test must be carried out on each individual financial instrument at the time of recognition in the balance sheet.
After initial recognition, and as long as it is recognised in the balance sheet, the asset is no longer subject to new assessment
for the purposes of the SPPI test. If a financial instrument is derecognised and a new financial asset is recognised, the SPP I
test must be performed on the new asset.
For the application of the SPPI test, IFRS 9 provides the following definitions:
- Principal: this is the fair value of the financial asset at initial recognition. This value may change over the life of the
financial instrument, for example as a result of repayments of part of the principal;
- Interest: this is the consideration for the time value of money and for the credit risk associated with the principal amount
outstanding during a particular period of time. It can also include consideration for other basic lending risks and costs and
a profit margin.
In assessing whether the contractual flows of a financial asset can be defined as SPPI, IFRS 9 refers to the general concept
of a ‘basic lending arrangement’, which is independent of the legal form o f the asset. When contract terms introduce exposure
to risks or volatility in the contractual cash flows that is inconsistent with the definition of a basic lending arrangement, such as
exposure to changes in share or commodity prices, the contractual cash flows do not meet the definition of SPPI.
Notes to the consolidated financial statements – Part A – Accounting policies
262
The application of the classification driver based on contractual cash flows sometimes requires a subjective judgement and,
consequently, the establishment of internal application policies.
In cases of modified time value of money – for example, when the interest rate of the financial asset is recalculated
periodically, but the frequency of the recalculation or the frequency of payment of the coupons does not reflect the nature o f
the interest rate (such as when the interest rate is recalculated monthly on the basis of a one-year rate) or when the interest
rate is recalculated regularly on the basis of an average of particular short or medium-to-long term rates – an entity should
assess, using both quantitative and qualitative information, whether the contractual cash flows still meet the definition of SPPI
(benchmark cash flows test). If the test shows that the (undiscounted) contractual cash flows are “significantly different” from
the (also undiscounted) cash flows of a benchmark instrument (i.e. without the modified time value element), the contractual
cash flows cannot be considered to meet the definition of SPPI.
The standard requires specific analyses (“look through test”) to be performed and these are therefo re also conducted on
multiple contractually linked instruments (CLIs) that create concentrations of credit risk for debt repayment and on non-
recourse assets, for example in cases where the loan can only be enforced on specified assets of the debtor or on the cash
flows from specified assets.
The presence of contractual clauses that may change the frequency or amount of the contractual cash flows must also be
considered to determine whether those cash flows meet the requirements to be considered as SPPIs (e.g. prepayment
options, the possibility of deferring contractually agreed cash flows, embedded derivative instruments, subordinated
instruments, etc.).
However, as envisaged by IFRS 9, a contractual cash flow characteristic does not affect the classification of the financial
asset if it could have only a de minimis effect on the contractual cash flows of the financial asset (in each year and
cumulatively). Similarly, if a cash flow characteristic is not genuine, i.e. if it affects the instrument’s contr actual cash flows only
on the occurrence of an event that is extremely rare, highly abnormal and very unlikely to occur, it does not affect the
classification of the financial asset.
For operations in debt securities, the Intesa Sanpaolo Group uses the services offered by well-known info-providers for the
performance of the SPPI Tests. This choice, on one hand, provides front office staff who deal in securities with an immediate
result for the performance of the test, enabling the streamlining of purchasing processes, and, on the other hand, provides
access to market approaches shared by numerous operators and audit firms. Only in cases where the securities are not
managed by info-providers, the test is carried out manually using a proprietary tool based on an internally developed
methodology (decision-making trees).
A proprietary tool based on an internally developed methodology (decision-making trees) has also been developed for
carrying out the SPPI test for the lending processes. In particular, given the significant differences in characteristics, the
procedure differs between products related to a contractual standard (typically the retail loan portfolio) and tailor-made loans
(typically the corporate loan portfolio).
For standard products, the SPPI tes t is carried out during the structuring of the contractual standard, through the “New
Product Coordination” process, and the result of the test is applied to all the individual relationships related to the same
catalogue product. For tailor-made products, on the other hand, the SPPI test is carried out for each new credit
line/relationship submitted to the decision-making body through the use of the proprietary tool.
The decision-making trees – included in the proprietary tool – have been produced internally (both for debt securities and
loans) and capture the possible non-SPPI compliant characteristics. They take account of the instructions provided by IFRS 9,
as well as the interpretations of the standard made by the Group. The trees are used both for the implementation of the rules
of the proprietary tool and for the verification and validation of the methodology adopted by the info-providers.
Business model
With regard to the business models, IFRS 9 identifies three cases relating to the way in which cash flows and sales of
financial assets are managed:
- Hold to Collect (HTC): this is a business model whose objective is achieved by collecting the contractual cash flows of
the financial assets included in the portfolios associated to it. The inclusion of the portfolio of financial assets in this
business model does not necessarily result in the inability to sell the instruments, but the frequency, value and timing of
sales in prior periods, the reasons for the sales, and the expectations about future sales, need to be considered;
- Hold to Collect and Sell (HTCS): this is a mixed business model whose objective is achieved by collecting the contractual
cash flows of the financial assets in portfolio and (also) through the sale of the financial assets, which is an integral part
of the strategy. Both activities (collection of contractual flows and sale) are indispensable for achieving the business
model’s objective. Accordingly, sales are more frequent and significant than for an HTC business model and are an
integral part of the strategies pursued;
- Other/Trading: this is a residual category that includes both financial assets held for trading and financial assets
managed with a business model that does not come under the previous categories (Hold to Collect and Hold to
Collect and Sell). In general, this classification applies to a portfolio of financial assets whose management and
performance are measured based on fair value.
The business model reflects the way in which financial assets are managed to generate cash flows for the benefit of the entit y
and is defined by top management with the appropriate involvement of the business structures. It is observed by considering
the way in which financial assets are managed and, as a consequence, the extent to which the portfolio’s cash flows derive
from the collection of contractual flows, from the sale of the financial assets, or from both. This assessment is not perform ed
on the basis of scenarios that the entity does not reasonably expect to occur, such as ‘worst case’ or ‘stress case’ scenarios.
For example, if an entity expects that it will sell a particular portfolio of financial assets only in a stress case scenario, that
Notes to the consolidated financial statements – Part A – Accounting policies
263
scenario does not affect the entity’s assessment of the business model for those assets if the entity reasonably expects that
such a scenario will not occur.
The business model does not depend on management’s intentions regarding an individual financial instrum ent, but refers to
the way in which groups of financial assets are managed in order to achieve a specific business objective.
In summary, the business model:
- reflects the way in which financial assets are managed to generate cash flows;
- is defined by top management, with the appropriate involvement of the business structures;
- must be observable by considering the way the financial assets are managed.
In operational terms, the assessment of the business model is carried out in line with the company’s orga nisation, the
specialisation of the business functions, the risk cascading model, and the assignment of delegated powers (limits).
All relevant factors available at the date of the assessment are used in the assessment of the business model. The above
information includes the strategy, the risks and their management, the remuneration policies, the reporting, and the amount of
the sales. In the analysis of the business model, the elements investigated must be consistent with each other and, in
particular, must be consistent with the strategy pursued. Evidence of activities not in line with the strategy must be analysed
and duly justified.
In this regard, and in relation to the business models under which the financial assets are held, a specific set of “Busin ess
Model Rules” (approved by the competent levels of governance) has been drafted for the Parent Company and Banking
Group Companies. It defines and sets out the components of the business model in relation to the financial assets included in
the portfolios managed as part of the operations of the Intesa Sanpaolo Group’s business structures. In further detail, the
mapping of the business model adopted by the various structures through which the Group operates, with regard to both
loans and receivables and debt securities, takes account of the structure of the division model and the Corporate Centre; this
structure has been identified as the relevant level for formulating and representing the various business models applied by t he
Group’s risk-taking centres.
Within the Chief Risk Officer Area, the Financial and Market Risks Head Office Department of the Parent Company provides
high-level supervision of the procedure required for determining the business model within which a given set of assets is held
and verifies the need for any updates (to be incorporated, at least annually, in the Business Model Rules document).
Monitoring of the business model
The monitoring of the reference business model of the various structures through which the Group operates is performed by
the Financial and Market Risks Head Office Department, which uses indicators intended to verify the consistency of the
declared strategy with that pursued within the business models; these indicators, differentiated for the various business
models, have been developed in accordance with IFRS 9 and corporate rules and procedures.
For the Hold to Collect portfolios, the Group has set limits for frequent but not significant sales to be considered eligible
(individually or in aggregate), or for infrequent sales even if their amount is significant, and the parameters have also been
established for identifying sales as being consistent with that business model because they relate to an increase in credit risk
or for securities nearing maturity.
More specifically, within an HTC business model, sales are allowed:
- in the event of an increase in credit risk, which occurs:
o for securities, when there is a downgrade of predetermined notches with respect to the rating upon origination.
The approach adopted differentiates the number of notches according to the rating upon origination, in line with the
method used to identify significant deterioration, i.e. for the staging assignment;
o for loans, if they are sales of non-performing loans or loans classified as Stage 2;
- for securities nearing maturity (i.e., according to the Group rules, in the 6 months preceding maturity), provided that the
amount collected is close to the current value of the remaining contractual flows;
- when they are frequent but not significant in terms of value or occasional even if significant in terms of value, subject to
authorisation assessment by the competent Control bodies. In order to determine these aspects, thresholds of frequency
and significance have been set:
o frequency is defined as the percentage ratio between the number of positions sold over the year and the number of
portfolio positions;
o significance is defined as the percentage ratio between the nominal value of the sales during the current year and
the nominal value of the instruments held in the portfolio.
With regard to the determination of the “Risks” and the “Reporting” for the HTCS and Trading business models, the provisions
of the RAF and Market Risk Charter and of internal policies in the area of market risk controls apply in principle, and
measures are concurrently established for monitoring the consistency of the HTCS and Other/Trading business models.
With regard to the HTCS business model, IFRS 9 does not provide for the need for limits on the frequency or the value of the
sales. However, the Group has established indicators for debt securities only in order to ensure that they are properly
assigned to the chosen business model over time. These indicators are:
- The holding period, which measures the time for which a certain instrument has been held in portfolio;
- Turnover rate, which measures the speed with which positions in portfolio turn over during a predefined period of time.
Within the framework of the monitoring of the indicators set out above, limits and early-warning thresholds apply according to
the overall strategies pursued by the HTCS portfolio.
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264
Finally, with regard to debt or equity securities held for trading, a measure of the consistency of inclusion in the chosen
business model applies, represented by the indicator of "expected average permanence" (so-called Vintage) which measures
the observed holding period of all securities in portfolio.
The monitoring measures relating to the various business models are subject to regular reporting through technical
committees.
Amortised cost measurement
The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial
recognition net of any principal repayments, plus or minus cumulative amortisation, calculated using the effective interest rate
method, of any difference between initial amount and amount at maturity and net of any reduction for impairment.
The effective interest rate is the rate that exactly discounts future cash payments or receipts through the expected life of the
financial instrument or through the subsequent date for recalculation of the price to the present value of the financial asset or
financial liability. In the calculation of the present value, the effective interest rate is applied to the flow of future cash receipts
or payments through the entire useful life of the financial asset or liability or for a shorter period when certain conditions recur
(for example review of market interest rates).
After initial recognition, amortised cost enables allocation of revenues and costs directly by decreasing or increasing the value
of the instrument over its entire expected life via the amortisation process. The determination of amortised cost is differen t
depending on the fact that financial assets/liabilities have fixed or floating rates and – in this last case – if the volatility of the
rate is known or not beforehand. For instruments with fixed rate or fixed rate by time bands, future cash flows are quantifie d
on the basis of the known interest rate (sole or floating) over the life of the loan. For financial assets/liabilities with a floating
rate, for which the volatility is not known beforehand (for example because it is linked to an index), the determination of c ash
flows is carried out based on the last rate available. At every revision of the interest rate, the amortisation plan and the
effective interest rate for the entire life of the investment, that is, until maturity, are recalculated. Any changes are recorded in
the income statement as income or loss.
Measurement at amortised cost is applied for the financial assets measured at amortised cost and for the financial assets
measured at fair value through other comprehensive income, as well as the financial liabilities measured at amortised cost.
Financial assets and liabilities traded at market conditions are initially recognised at fair value, which normally corresponds to
the amount disbursed or paid including, for instruments measured at amortised cost, transaction costs and any directly
attributable fees.
Transaction costs include internal or external marginal costs and income attributable to the issue, the acquisition or the
disposal of a financial instrument which are not debited to the customer. These commissions, which must be directly
attributable to the single financial asset or liability, modify the original effective return, thereby the effective interest rate
associated to the transaction differs from contractual interest rate. Transaction costs do not include costs/income referred to
more than one transaction and the components related to events which may occur during the life of the financial instrument,
but which are not certain at the time of the initial agreement, such as for example: commissions for retrocession, for non-use,
for advance termination. Furthermore, amortised cost does not include costs which would be sustained independently from
the transaction (e.g. administrative and communication costs, stationery expenses), those, which though directly attributable
to the transaction are part of standard practice for the management of the financing (e.g. activities related to the loan granting
process), as well as commissions for services received following structured finance activities which would in any case have
been received independently from the subsequent financing of the transaction (e.g. facility and arrangement fees).
With reference to loans, the following costs are considered directly attributable to the financial instrument: fees paid to
distribution networks, fees paid for the origination and/or the participation in syndicated loans and lastly, up-front fees
correlated to loans disbursed at rates exceeding market rates. Income considered in the calculation of amortised cost
includes: up-front fees correlated to loans disbursed at rates below market rates, income for the participation in syndicated
loans and brokerage commissions received.
For debt securities not measured at fair value through profit or loss, the following are considered transaction costs:
commissions on contracts with brokers operating on the Italian stock exchange, commissions paid to dealers operating on the
Italian and foreign stock and bond markets defined on the basis of the commission tables. Stamp duty is not considered in
amortised cost since immaterial.
Regarding securities issued, amortised cost considers placement commissions on bond issues paid to third parties, amounts
paid to Exchanges and remuneration paid to Independent auditors for the activities performed for each single issue, while
amortised cost does not consider commissions paid to rating agencies, legal and advisory/review expenses for the annual
update of prospectuses, the costs for the use of indexes and commissions which originate during the life of the bond issue.
Amortised cost is also applied for the measurement of loss incurred by the financial instruments listed above as well as for the
measurement of instruments issued or purchased at a value other than fair value. The latter are measured at fair value,
instead of the amount collected or paid, by discounting expected future cash flows at a rate equal to the effective rate of
return of similar instruments (in terms of credit rating, contractual expiry, currency, etc.), with the simultaneous recognition in
the income statement of a financial charge or income; after initial recognition, these are measured at amortised cost with the
registration of higher or lower effective interest with respect to nominal interest. Lastly, structured liabilities that are not
measured at fair value through profit or loss, for which the embedded derivative has been separated from the financial
instrument, are also measured at amortised cost.
Notes to the consolidated financial statements – Part A – Accounting policies
265
As specified by IFRS 9, in some cases, a financial asset is considered credit-impaired at initial recognition because the credit
risk is very high, and in the case of a purchase it is purchased at a deep discount (with respect to the initial disbursement
value). If these financial assets, based on the application of the classification drivers (SPPI Test and business model), are
classified as assets measured at amortised cost or at fair value through other comprehensive income, they are classed as
Purchased or Originated Credit Impaired (POCI) assets and are subject to special treatment for the impairment process. In
addition, for the financial assets classed as POCI, the credit-adjusted effective interest rate is calculated, at the initial
recognition date, which requires the inclusion of the initial expected credit losses in the cash flow estimates. This credit-
adjusted effective interest rate is used for the application of the amortised cost and the consequent calculation of interest.
For non-performing loans arising from business combinations, the difference between the initial recognition amount (the fair
value determined in the PPA) of the POCIs and the previous carrying amount at the acquired entity is split into two
components: one related to the lower recoverable cash flows estimated at fair value, which therefore include the expected
credit losses over their entire remaining life, and the other related to the discounting of those lower recoverable cash flows.
Please note that the reversal of discounting (connected with the estimate of recoverable cash flows attributed to non-
performing loans at the moment of the PPA) is recognised, on a pro-rata basis, among interest income so as to supplement
the contractual interest rate with the higher return resulting from the lower value attributed to the recoverable cash flows,
which, as mentioned above, take into account the expected losses over the entire remaining life of the POCI assets.
The amortised cost measurement criterion is not applied to hedged financial assets/liabilities for which fair value changes
related to the risk hedged are recorded through profit or loss. The financial instrument is again measured at amortised cost in
the case of hedge termination; from that moment the fair value changes recorded before are amortised, calculating a new
effective interest rate which considers the value of the loan adjusted by the fair value of the hedged part, until the natura l
expiry of the hedge. Furthermore, as already mentioned in the paragraphs relating to financial assets and liabilities measured
at amortised cost, measurement at amortised cost is not applied to short-term assets/liabilities for which the time value is
deemed to be immaterial and to loans without a definite maturity or revocable loans.
Impairment of assets
Impairment of financial assets
At each reporting date, pursuant to IFRS 9, financial assets other than those measured at fair value through profit or loss are
subject to an assessment aimed at verifying whether there is any evidence that the carrying value of the assets may not be
fully recoverable. A similar analysis is also performed for loan commitments and for guarantees given that must be tested for
impairment under IFRS 9.
In preparation for the determination of the impairment losses, at each reporting date the financial instruments must be
assigned to the following categories (Stage Assignment or Staging):
- Stage 1: comprising financial instruments for which, from their initial recognition up to the reporting date, there is no
evidence of a significant increase in credit risk;
- Stage 2: it comprises financial assets that have had a significant increase in credit risk since initial recognition;
- Stage 3: if there is evidence of impairment, these financial assets – in line with any other assets pertaining to the same
counterparty – are considered impaired and are therefore included in Stage 3.
The impaired exposures consist of financial assets classified in the categories of bad loans, unlikely-to-pay (UTP) loans
and exposures past due by more than ninety days, defined in Bank of Italy Circular 272/2008.
Impairment of performing financial assets
For financial assets for which there is no evidence of impairment (unimpaired financial instruments), it is necessary to chec k
whether there are indicators that the credit risk of the individual transaction has increased significantly since initial recognition.
This check, in terms of classification (or, more precisely, staging) and measurement, has the following consequences:
- where these indicators exist, the financial asset is included in Stage 2. In this case, in compliance with international
accounting standards and despite the absence of an actual impairment, the measurement consists of the recognition of
value adjustments equal to the lifetime expected credit losses of the financial instrument. These adjustments are subject
to revision at each subsequent reporting date, both to periodically check their consistency with the continuously updated
loss estimates and to take account – if the indicators of “significantly increased” credit risk are no longer present – of the
change in the forecast period for the calculation of the expected credit loss;
- where these indicators do not exist, the financial asset is included in Stage 1. In this case, in compliance with
international accounting standards and despite the absence of an actual impairment, the measurement consists of the
recognition of the 12-month expected credit losses for the specific financial instrument. These adjustments are subject to
revision at each subsequent reporting date both to periodically check their consistency with the continuously updated
loss estimates and to take into account – if there are indicators that the credit risk has “significantly increased” – the
change in the forecast period for the calculation of the expected loss.
With regard to the measurement of financial assets and, in particular, the identification of the “significant increase” in credit
risk (a necessary and sufficient condition for the classification of the asset being measured as Stage 2), the following factors
constitute the key elements to be taken into account, in accordance with the standard and its operational implementation by
the Intesa Sanpaolo Group:
- the variation (beyond set thresholds) of the lifetime probabilities of default compared to the time of initial recognition of
the financial instrument. This is therefore an assessment made on a “relative” basis, which constitutes the main driver;
- the presence of a past due position that – subject to the materiality thresholds identified by the regulations – has been in
that status for at least 30 days. If these circumstances apply, the credit risk of the exposure is considered to have
“significantly increased” and the exposure is therefore transferred to Stage 2 (when the exposure was previously included
in Stage 1);
- the presence of forbearance measures, which – again on a presumption basis – result in the classification of the
exposures under those whose credit risk has “significantly increased” since initial recognition;
Notes to the consolidated financial statements – Part A – Accounting policies
266
- lastly, for banks belonging to the international scope, some of the indicators from the credit monitoring systems
specifically used by each bank are also considered for the purposes of the transfer between “stages” where appropriate.
This refers in particular to the watch lists, i.e. the credit monitoring systems that – based on the current credit quality of
the borrower – place performing exposures above a certain level of risk within a particular range.
Focusing on the main trigger out of those referred to above (i.e. the change in the lifetime probability of default), the significant
increase in credit risk (“SICR”) is determined by comparing the relative change in the lifetime probability of default record ed
between the initial recognition date of the relationship and the observation date (Lifetime PD Change) with predetermined
significance thresholds. The assignment of a Lifetime PD to the individual relationships is carried out by allocating the ratings
for each segment according to the masterscale at both the initial recognition date and the observation date. Ratings are
determined based on internal models, where available, or on business models. If there are no ratings, the Benchmark PDs
are assigned to the type of counterparty being assessed.
The significant deterioration is therefore based on the increase in the lifetime PD caused by downgrades of the position from
its origination to the reporting (observation) date, as well as the change in the forecast of the future macroeconomic factors.
The above-mentioned “relative” change in lifetime PD is an indicator of the increase or decrease in credit risk during the
reporting period. To establish whether, in accordance with IFRS 9, any increase in credit risk can be consider ed “significant”
(and therefore entail a transition between stages), it is necessary to set specific thresholds. Increases in lifetime PD below
these thresholds are not considered significant and, consequently, do not result in the transfer of individual credit
lines/tranches of debt securities from Stage 1 to Stage 2. However, this transfer is required if there are relative increases in
PD above these thresholds. The thresholds used have been estimated based on a process of simulations and optimisations
of forecast performance, carried out using granular historical portfolio data. Specific thresholds are set for the Corporate,
Retail, Large Corporate and Retail SME models and extended to the other models based on methodological affinity. The
thresholds differ in terms of residual maturity, annual granularity and rating class.
The determination of the thresholds has been calibrated to find a suitable balance between the performance indicators
relating to the ability of the thresholds to:
- detect Stage 2 positions before their transition to default;
- identify positions for which a return to Stage 1 is due to an actual improvement in credit rating.
Some specific considerations apply for the “staging” of the debt securities. Unlike loans, for this type of exposure, sales and
purchases after initial recognition (made using the same ISIN) may form part of the ordinary management of the positions
(with the consequent need to identify methods to be adopted for identifying the sales and repayments in order to determine
the remaining quantities of the individual transactions that need to be allocated a credit quality/rating upon origination to be
compared with that parameter at the reporting date). In this regard, the use of the “first-in-first-out” or “FIFO” method (for the
recognition of the recorded ECL in the income statement, in the event of sales or repayments) was considered to help in
providing a more transparent management of the portfolio, also for the front office operators, while also enabling the
continued updating of the credit rating based on new purchases.
Once the allocation of the exposures to the various credit risk stages has been established, the expected credit losses (ECL)
are determined at individual transaction or securities tranche level, using the IRB/Business models, based on the parameters
of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD), to which appropriate corrections are
made to ensure compliance with the specific requirements of IFRS 9.
The following definitions apply for PD, LGD and EAD:
- PD (Probability of Default): likelihood of migrating from performing to non-performing status over the period of one year.
In models consistent with supervisory provisions, the PD factor is typically quantified through the rating. In the Intesa
Sanpaolo Group, the PD values are derived from internal rating models where available, supplemented by external
ratings or segment/portfolio average figures;
- LGD (Loss Given Default): percentage loss in the event of default. In the models consistent with supervisory provisions, it
is quantified through the historical experience of discounted recoveries on exposures that have become non-performing;
- EAD (Exposure At Default) or credit equivalent: amount of the exposure at the time of default.
As mentioned above, in order to comply with IFRS 9, specific adjustments had to be made to these factors, including in
particular:
- adoption of a Point in Time (PIT) PD compared to the Through the Cycle (TTC) PD used for Basel purposes;
- removal of some additional components from the TTC LGD, such as indirect costs (non-recurring costs) and an
additional margin of conservatism specifically introduced for the regulatory models, as well as the component linked to
the economic downturn;
- the introduction of specific treatment in relation to the regulatory provisions, in order to estimate the accounting LGD, to
include in the modelling (in line with the indications of IFRS 9 on using entity-specific information) the estimates of
internal recoveries exceeding the regulatory threshold of the Maximum Recovery Period, i.e., the maximum time limit
beyond which the Supervisory Authority assumes that nothing will be recovered;
- the use of PDs and, where necessary, multi-period LGDs, to determine the lifetime expected loss of the financial
instrument (Stages 2 and 3);
- the use of the effective interest rate of the individual transaction in the discounting of the expected future cash flows,
unlike in the regulatory models, where the individual cash flows are discounted using the discounting rates determined in
compliance with the prudential regulations.
In relation to the multi-period EAD, in line with IFRS 9 the Intesa Sanpaolo Group refers to the plans at amortised cost for both
loans and debt securities, regardless of the measurement method used (amortised cost or fair value through other
comprehensive income). For loan commitments (margins), on the other hand, the EAD is assumed to be equal to the nominal
amount weighted according to a specific Credit Conversion Factor (CCF).
Notes to the consolidated financial statements – Part A – Accounting policies
267
The measurement of the financial assets also reflects the best estimate of the effects of current and future conditions and i n
particular the economic conditions that affect the forward-looking PDs and LGDs. IFRS 9, also based on the guidance from
the international regulators, gives particular importance to information on future macroeconomic scenarios in which the Bank
may find itself and which clearly influence the situation of the debtors, with regard both to the “risk” of migration of exposures
to lower quality classes (and therefore concerning the staging) and to the recoverable amounts (and therefore concerning the
determination of the expected loss on the exposures). In terms of method, various possible alternative approaches designed
to take account of these elements have been analysed. Of the various alternatives considered, the Intesa Sanpaolo Group
has decided to adopt the “Most likely scenario+Add-on” approach. According to this approach, the macroeconomic
conditioning of PD and LGD is carried out through a baseline scenario (“Most Likely”, in line with the approach used for other
business purposes such as, for example, the budget and business plans) and then corrected with an Add-On to include any
differences compared to downside and upside scenarios. If the overall impact of the Add-On on the risk parameters is
positive, the decision has been made to neutralise the effect for both staging and ECL calculation purposes.
The macroeconomic scenario is determined b y the Bank’s Research Department using forecasting models that are disclosed
to the market to determine the consensus. Alternative upside and downside scenarios are determined through stress tests of
the input variables of the forecasting models.
In particular, the most likely scenario and alternative scenarios are determined using a set of analytical and stand-alone
forecasting instruments that determine the forecast path for several blocks of variables, namely:
- national accounts and inflation of the top 6 Eurozone countries, the United States and Japan;
- official rates (ECB, Fed, BoJ), EUR and USD swap rate curves, and several points of the government curves;
- exchange rates for EUR, USD, JPY and GBP;
- stock market indices (DJ Eurostoxx 50 and S&P 500);
- Brent price;
- some specific data for the Italian economy (industrial production, real estate prices, employment, public finance
balances).
These forecasts are then processed using the Oxford Economics multi-country structural Global Economic Model, where they
replace the forecast paths of the baseline scenario provided by the company with the periodic updating of the database. The
model is then solved to derive a consistent global forecasting framework, including variables for which no specific models
have been developed, and to obtain a simulation environment that can be used to generate alternative scenarios. This step
may require some iterations, particularly if the forecasting framework generated internally is significantly different from the one
provided by Oxford Economics. If this is the case, further fine-tuning may be needed for specific secondary variables that the
analysts consider to be inconsistent with the forecast scenario or that have an unexplainable quarterly volatility.
The alternative paths are selected using external information. In particular:
- average annual GDP growth rates of several countries: this is the key driver for the simulation and the deviations are
determined to replicate the dispersion of the growth estimates published by Consensus Economics in the most recent
report available at the date of the simulation, considering the minimum and maximum forecasts (after applying a filter to
identify and eliminate possible outliers). If there are outliers, these are discarded and the remaining maximum and
minimum values are considered. Since consensus estimates are only available for the first two years of the simulation
period, an extrapolation of the deviations identified for the first two years is used for the third year;
- stock market indices (DJ Eurostoxx 50, S&P 500) and US residential real estate prices: the minimum and maximum
forecasts of the Thomson Reuters panel are used as a reference;
- Italian residential real estate prices: since no consensus estimates are currently available, the alternative paths are
based on the distribution of the historical quarterly changes available from 1980 to the current quarter.
The percentile value identified is used, for the most likely scenario, to determine the variations corresponding to a probabi lity
gap, calculated through statistical analysis of the historical distribution of the observations. The two (positive and negative)
changes with respect to the most-likely scenario are then used to calculate the level of the individual identified indices,
reconstructing the two alternative paths (one positive and one negative) for each of them that represent the input for the
determination of the Add-On. The probability gap used is identified based on the variability characteristics of the series, to
obtain a significant deviation from the most-likely scenario.
In addition to defining the alternative paths, a map of possible additional factors is maintained, i.e., adverse idiosyncrati c
events or scenarios, not explicitly incorporated in the time series used for the construction of the most-likely scenario or in the
alternative paths, which can generate further significant effects on expected losses.
The following is assessed for these events/scenarios:
- the possible time frame;
- the degree of inclusion in the most-likely scenario or the alternative paths;
- the potential impact, assessed in qualitative terms.
The map of additional factors also draws on the list of risk factors contained in the forecast reports of the IMF (World
Economic Outlook) and the European Commission and may change over time.
Within the assessment of the time frame for the additional factors, note is made if the factor cannot be placed within a specific
time period, which makes its incorporation into the most-likely scenario or alternative paths unfeasible.
The assessments made take account of the fact that the consensus estimates may include forecasts that already incorporate
the total or partial realisation of one or more risk factors in their estimates, which means that the alternative paths may already
incorporate these additional factors to some extent.
Where there is considerable uncertainty in the national and international macroeconomic forecasts, as well as significant
deviations in terms of best-case forecasts with respect to the TTC scenario, prudential factors may be introduced in relation to
the deviations in the minimum and maximum values of the variables based on the above-mentioned consensus or historical
figures.
The above macroeconomic scenarios (most likely and alternative scenarios) are used in internal models to determine the
point-in-time (PIT) parameters.
Notes to the consolidated financial statements – Part A – Accounting policies
268
Specifically, the time series of default rates acquired from the Bank of Italy are differentiated over the main economic macro-
sectors (e.g. consumer households, family businesses, construction) and, for each of these, specific satellite models establish
the relationships with the macroeconomic variables in order to obtain the forecast default rates. In turn, these impact the TTC
transition matrices between rating classes and thus provide the PIT transition matrices for each scenario (most likely and
alternative scenarios). These give rise to the lifetime conditional PD.
In particular, the TTC matrices are calculated using internal default rates for the Corporate, Retail SME and Retail segments,
whereas the Bank of Italy system rates are used for the Low Default segments, because the internal time series data for those
segments is less extensive. The forward-looking point-in-time matrices, on the other hand, are calculated using the system
default rates for all the segments.
A similar process is used to determine the PIT LGD grids.
Taking account of the repayment plans of the individual loans, their conditional PD and LGD, residual maturity and staging,
the impairment of performing financial assets is determined.
Impairment of non-performing financial assets
Non-performing loans are represented by bad loans, unlikely to pay and past due positions by more than 90 days.
Non-performing loans classified as bad loans are subject to the following measurement methods:
− analytical-statistical measurement, which is used for exposures of less than 2 million euro and is based on the use of
specific LGD grids, plus an Add-On to take account of information linked to the evolution of the current conditions related
to management variables highly correlated with the loss performance and forward-looking information relating to the
impact of expected future macroeconomic scenarios (as described in the previous paragraphs);
− analytical-specific measurement, which is used for customers with exposures exceeding 2 million euro and is based on
the impairment percentages allocated by the manager, following specific analysis and measurements, also based on the
evolution of the current conditions, plus an Add-On to take account of forward-looking information, and in particular
information relating to the impact of future macroeconomic scenarios (except for bad loans backed by mortgage collateral
or relating to property leases for which the impact of future scenarios is included through the method used to determine
the haircuts to the value of the properties pledged as collateral).
The measurement of unlikely-to-pay loans (UTPs) is also performed based on different approaches:
− analytical-statistical measurement, for exposures of less than 2 million euro, based on the use of specific LGD grids, plus
an Add-On to take account of the already mentioned information linked to the current conditions and the impacts of future
macroeconomic scenarios, as well as continuation in the risk status, in order to penalise positions with greater vintage or
which have no movements and/or recoveries for a particular period of time;
− analytical-specific measurement, for on-balance sheet exposures of more than 2 million euro, based on the impairment
percentages allocated by the manager, following specific analyses and assessments also based on the evolution of the
current conditions, plus an Add-On to take account, also in this case, of the impacts of future macroeconomic scenarios
and of continuation in the risk status.
For Group companies, the threshold value for analytical-statistical measurement is set by the competent bodies of the
individual companies, in coordination with the structures of Intesa Sanpaolo, at a level that is not, in any event, higher than
that set by the Parent Company.
Regardless of the division of these exposures between those subject to analytical-statistical measurement and those subject
to analytical-specific measurement (as identified above), the add-ons envisaged include the sales scenarios for the
disposable non-performing loans if the business plan and the NPL reduction plan envisage sales and those sales do not lead
to a reclassification pursuant to IFRS 5. The valuation of the disposable non-performing loans therefore considers the
possibility of also realising these loans through their sale.
Non-performing loans classified in the past-due loans category, on the other hand, are subject to analytical measurement
based on statistics, regardless of the amount of the exposure. However, also in this case, the adjustment determined based
on the LGD statistical grids is supplemented to take account of the Add-On attributable to the effect of the evolution of the
current conditions and the future macroeconomic scenarios.
Credit exposures must continue to be carried as non-performing for at least three months after they cease to meet the
requirements for being classified as such (the “probation period”). Until the conditions are met for re classification out of the
non-performing category, such exposures are retained in their respective risk classes and measured according to an
analytical-statistical or an analytical-specific approach taking account of their lower risk level.
A brief description is provided below of the methods used for the analytical-specific and analytical-statistical measurement:
- the analytical-specific measurement of bad loans and unlikely-to-pay loans above 2 million euro is a measurement
performed by the managers of the individual positions based on a qualitative and quantitative analysis of the borrower's
financial position, the riskiness of the credit relationship, the targets and strategies for reduction of the non-performing
loans, and any mitigating factors (collateral), taking into account the financial impact of the estimated recovery time.
For bad loans in particular, a series of elements are relevant, which differ according to the characteristics of the positions,
and must be thoroughly and prudently assessed, including the following, listed merely as examples:
o nature of the credit, whether preferential or unsecured;
o net asset value of the borrowers/third party collateral providers;
o complexity of existing or potential litigation and/or the underlying legal issues;
o exposure of the borrowers to the banking system and other creditors;
o last available financial statements;
Notes to the consolidated financial statements – Part A – Accounting policies
269
o legal status of the borrowers and any pending insolvency and/or individual proceedings.
In order to determine the estimated realisable value of loans secured by real estate, and to take into account both the
time series of recoveries and the forward-looking information in accordance with IFRS 9, an approach is applied focused
on the valuation of real estate based on the expected average auction price and the related reduction in the observed
price, with the calculation of average haircuts that differ according to the type of real estate collateral (residential,
commercial, industrial and land). Accordingly, to avoid duplications, a macroeconomic Add-On is not used in the
analytical-specific measurement for bad mortgage loans, because the forward-looking component is already taken into
account through the haircut.
For real-estate bad loans arising from lease contracts, in view of the particular nature of the product (lack of auctions),
the haircut is estimated as the depreciation of the asset with respect to the appraised value observed at the time of
classification as non-performing and the actual price of sale.
In addition, for unlikely-to-pay loans, the measurement is based on a qualitative and quantitative analysis of the
borrower’s financial position and on precise assessment of the risk situation.
The calculation of the impairment loss involves the valuation of the future cash flows that the borrower is considered to
be able to generate and that will also be used to service the financial debt. This estimate must be made based on two
alternative approaches:
o the going concern approach: the operating cash flows of the borrower (or the beneficial owner) continue to be
generated and are used to repay the financial debts contracted. The going concern assumption does not rule out the
realisation of collateral, but only to the extent that this can take place without affecting the borrower's ability to
generate future cash flows. The going concern approach is also used in cases where the recoverability of the
exposure is based on the possible sale of assets by the borrower or on extraordinary transactions. Similarly to the
case of bad loans, haircuts are also used in measuring real-estate collateral for unlikely-to-pay positions. For going-
concern positions, these haircuts are determined on the basis of the haircuts applied in the liquidation process
(gone-concern bad loan or UTP position), while applying a calibration factor equal to the probability of migration of
the UTP positions to the bad loan category;
o the gone concern approach: applicable in cases when it is believed that the borrower's cash flows will cease. This is
a scenario that can apply to positions that are expected to be classified as bad loans. In this context, assuming that
shareholders' interventions and/or extraordinary operations to restructure debt in turnaround situations are not
reasonably feasible, recovery of the credit is essentially based on the value of the collateral that secures the Bank's
credit claim, net of the application of a haircut (determined as for bad loans) and, alternatively, on the realisable
value of the assets, taking into account the liabilities and possible pre-emptive claims;
- the analytical-statistical measurement, performed for bad loans and unlikely-to-pay loans of less than 2 million euro and
for past-due loans has specific features according to the type of exposure involved.
With regard to bad loans, the analytical-statistical measurement is based on the Bad Loan LGD grids, where the LGD
Defaulted Asset model is mainly characterised by the differentiation of the loss rates that, in addition to the regulatory
segment, is based on the continuation in the risk status (“vintage”) and the possible activation of legal recovery
proceedings. The grids are also differentiated for the other significant analysis axes used in the model estimation
(e.g. product type, type of guarantee, geographical area, exposure band, etc.). The recovery time grids are mainly broken
down by regulatory segment and by additional significant analysis axes used in the modelling (e.g. recovery procedures,
exposure band, product type).
For unlikely-to-pay loans, the measurement is performed using statistical LGD grids estimated specifically for positions
classified as unlikely-to-pay loans, in line with the estimated LGD grids for bad loans. The estimation model for the LGD
grid for unlikely-to-pay loans is similar to the one described above for bad loans and calculates the expected loss rate of
the relationship being valued according to its characteristics. The LGD for unlikely-to-pay loans is obtained by
recalibrating the bad loan LGD using the Danger Rate module. The Danger Rate is a multiplying correction factor to
apply to the bad loan LGD, in order to take into account the loss rates that can be recorded in the various default
statuses (Unlikely-to-Pay and/or past due). The Danger Rate is estimated using the probability of migration to bad loans
for positions already in default, the loss rates observed in the pre-bad loans phase for positions migrating to bad loans,
and the loss rates observed in the pre-bad loans phase for positions that return to performing status or are extinguished.
In addition, for the two subclasses of the “Unlikely-to-Pay Loans” risk status (“Non-Forborne Unlikely-to-Pay Loans” and
“Forborne Unlikely-to-Pay Loans”), differentiated grids are estimated to take into account the characteristics of the
Forborne loans, which, in addition to having lower average loss levels due to the effect of the Forbearance Measures, are
also affected by the regulatory constraints that prevent their return to performing loan status before 12 months from the
date of the renegotiation.
For past-due loans, the methods used to determine the grids are the same as those described for the unlikely-to-pay
loans (Framework Danger Rate). In this case, the vintage factor is captured by the introduction of a differentiation based
on the duration of the past-due period (Past Due at 90 days/180 days) which produces a significant variation in the loss
rates of the grids, which are also differentiated according to regulatory segment and additional analysis axes
(e.g. product type, type of guarantee, geographical area, exposure band, etc.) common to the other non-performing loan
categories.
Also in the LGD estimation models used in the analytical-statistical measurement of non-performing exposures, several
additional components specifically included for regulatory models are removed, similar to that illustrated for performing
exposures.
Notes to the consolidated financial statements – Part A – Accounting policies
270
With regard to the inclusion of current and forward looking information, it should be noted that, for non-performing exposures,
a statistically estimated component (Add-On from macroeconomic scenario) linked to the most-likely and downside scenarios
expected over the period of the next three years is also considered, according to the criteria already described.
In fact, as required by IFRS 9, the effects of the forward-looking scenario on LGD estimates must also be considered and the
aforementioned component is aimed at capturing the non-linearity of the relationship between the macroeconomic variables
and ECL measurement, by analysing the forecast uncertainty of the variables used for the preparation of the most-likely
scenario. It is based on the methodological framework that is used for performing loans, but ignores the upside scenario from
a prudential perspective and only considers the average downside and most-likely scenarios over the period of the next three
years.
Furthermore, an additional factor is applied to the analytical/statistical measurement firmly based on internal management
variables, in particular the level of past and prospective NPL ratio, which, on the basis of long-term observation, is statistically
correlated with the loss performance. This factor makes the LGD estimate more sensitive to changes in the current and future
economic/management context.
Also in terms of future scenarios, with regard to the unlikely to pay category, which includes positions that are still performing
but show signs of difficulty, both for positions with analytical-specific measurement and those with analytical-statistical
measurement, when there are no effective forbearance measures, an additional component shall be applied (in addition to the
aforementioned add on from the macroeconomic scenario) to reduce the recoverable amount of the positions based on their
vintage in the risk status and the absence of movements and/or recoveries in a specific period of time.
With regard to the alternative recovery scenarios, the Intesa Sanpaolo Group, in relation to the objectives of reducing the
stock of outstanding non-performing loans, included in its business plans, and any commitments made to the Supervisory
Authorities, with specific regard to the NPL Strategy, considers the sale of particular portfolios as the strategy that, in certain
conditions, can maximise the cash flow recovery, also considering the recovery times.
Consequently, the “ordinary” scenario, which assumes a recovery strategy based on the collecti on of credit, typically through
legal actions, mandates to credit recovery companies and the realisation of bank collateral, is also been accompanied - where
applicable and as an alternative recovery strategy - by the scenario of the sale of the loan.
Where company plans and Group strategies identify disposal objectives and, as a result, a portfolio of non-performing loans
that may be disposed of, until the disposal objectives are reached, the loans and receivables included in that portfolio shall be
measured taking account of both the amount recoverable through operating activities and market valuations (based on
external appraisals) and/or sales prices, if already defined.
In particular, where a larger loan portfolio that may be sold represented by Group loans that are disposable (thus, for
example, positions that are not involved in disputes, as per precise indication by the management structures and which are
not subject to synthetic securitisation), in relation to the sales objectives is identified, the book value of said portfolio is
determined by weighting the recoverable amount through operating activities with the amount recoverable through sale.
More specifically, the recoverable amount of disposable non-performing loans is quantified as the average between (i) the
value in the event of sale (fair value) and (ii) the collection amount, weighted on the basis of the percentage of the loans
eligible for sale - determined as the ratio between the target volume of loans to be sold and the respective non bankruptcy-
remote portfolios having the same profile, i.e. as a percentage that adequately reflects the probability of sale of the portfolios
whose disposal is considered highly probable. The “collection amount” was determined according to the already shown
ordinary methods adopted by the Group for the impairment of non-performing loans, i.e. based on the individual measurement
of the exposures exceeding a defined threshold and based on an analytical-statistical measurement for the others. The
measurement of the value in the event of sale is carried out by an external expert, based on market valuations.
However, where the positions to be sold are specifically identified, those positions shall be measured exclusively taking
account of the market values established by external experts, based on a specific fairness opinion or, if already defined
through a binding agreement with the buyer, the sales price. Those loans are also reclassified as assets held for sale.
As already mentioned, the purchased or originated credit-impaired (POCI) financial assets have specific features in terms of
impairment. As a result, value adjustments equal to the lifetime ECL must be recognised on these instruments from their initial
recognition date and for their entire lifetime. At each subsequent reporting date, the amount of the lifetime ECL must therefore
be adjusted, with the recognition through profit or loss of the amount of any change in lifetime expected credit losses as a gain
or an impairment loss. In view of the above, POCI financial assets are initially recognised in Stage 3, subject to the possibility
of being subsequently transferred to the performing loans stage, even if an expected loss equal to the lifetime ECL will
continue to be recognised.
Lastly, with regard to non-performing loans, it is highlighted that the Intesa Sanpaolo Group uses the – full or partial – write-
off/derecognition of unrecoverable accounting positions and, in the following cases, the consequent allocation to loss of the
remainder that has not yet been adjusted:
– uncollectability of the debt, as a result of definite and precise elements (such as, for example, untraceability and
indigence of the debtor, lack of recovery from realisation of securities and real estate, negative foreclosures, bankruptcy
proceedings closed with no full compensation for the Bank, if there are no further guarantees that can be enforced etc.);
– disposal of the loan;
– waiver of the credit claim, due to the unilateral cancellation of the debt or residual amount as a result of
settlement agreements;
– no waiver of the credit claim. With regard to the full or partial write-offs without waiver of the credit claim, in order to avoid
maintaining loans on the balance sheet that have a very low possibility of recovery, despite continuing to be managed by
the recovery structures, they are fully or partially written off due to uncollectability even if the legal proceedings have not
been closed. The write-off can only involve the portion of the loan covered by provisions and, therefore, each loan can
only be written off up to the amount of its net book value. Therefore, on a periodic basis, the Group identifies the bad loan
portfolios to be subject to total or partial write-offs with the following macro-characteristics:
o percentage cover of 100% and a vintage (understood as the period of time in “bad loan” status) of >1 year;
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271
o percentage cover of >95% and a vintage (understood as the period of time in “bad loan” status) of >5 years or >8
years, respectively, for non-mortgage and mortgage loans.
Portfolios to be written off can also be identified that have similar characteristics that are different from those indicated
above, but that relate to exposures that have a marginal possibility of recovering the amount of the provision, where the
minimum amount of the provision (calculated taking into account the accumulated write-offs on the position, according to
the same rule established at prudential level by the calendar provisioning framework) is at least equal to the amount
needed to bring the value of the exposures up to their fair value estimated based on the prices recorded in the latest
sales of bad loans made by the Group.
Impairment of investments in associates and companies subject to joint control
At each reporting date the investments in associates and companies subject to joint control are subjected to an impairment
test to assess whether there is objective evidence to consider that the carrying value of such assets is not fully recoverabl e.
The process of detection of any impairment involves the verification of the presence of impairment indicators and the
determination of any write-down. The impairment indicators are essentially divided into two categories: qualitative and
quantitative indicators.
Qualitative indicators include:
- the generation of negative economic results or in any case a significant variance with respect to the targets budgeted or
established in the multi-year plans disclosed to the market;
- the announcement/initiation of insolvency proceedings or restructuring plans;
- the downgrading by more than two rating classes;
- failure to discharge payment obligations for debt securities issued fully and in a timely manner;
- use of industrial policy tools aimed at responding to a serious crisis or allowing companies to face
restructuring/reorganisation processes.
Quantitative indicators include:
- a reduction in fair value of over 30% below the carrying value or for a period of over 24 months;
- a market capitalisation lower than the company's net book value, in the case of securities listed on active markets, a
carrying value of the investment in the Parent Company's financial statements higher than the carrying value in the
consolidated financial statements of the investee's net assets and goodwill, or distribution by the investee of a dividend
that is higher than its total income.
The presence of impairment indicators results in the recognition of a write-down to the extent that the recoverable amount is
lower than the recognition value.
The recoverable amount consists of the higher of the fair value and the value in use, less costs to sell.
For an illustration of the valuation techniques used to determine fair value, see the specific Section A.4 – Information on fair
value.
Value in use is the present value of expected future cash flows from the asset; it reflects estimated expected future cash flows
from the asset, the estimate of possible changes in the amount and/or timing of cash flows, time value of money, the price
able to repay the risk of the asset and other factors, which may affect the appreciation by market participants of expected
future cash flows from the asset.
Value in use is determined by discounting future cash flows.
Impairment of non-financial assets
Property, equipment and intangible assets with definite useful life are subject to impairment testing if there is the indication
that the book value of the asset may no longer be recovered. The recoverable amount is determined with reference to the fair
value of the property and equipment or intangible assets less costs to sell or the value in use, if determinable and if it is higher
than fair value.
For property and equipment other than real estate and valuable art assets and intangible assets (other than those recognised
following business combinations) it is assumed that the carrying amount normally corresponds to the value in use, since it is
determined by a depreciation or amortisation process estimated on the basis of the effective contribution of the asset to the
production process and since the determination of fair value is extremely subjective. The two values diverge and lead to
impairment in case of damages, exit from the production process or other similar non-recurring circumstances.
As clarified in the discussion of “Property and equipment and intangible assets”, the Group measures owner-occupied
properties and valuable art assets according to the revaluation model; in this case, any impairment loss on a revalued asset
must be treated as a decrease in the revaluation up to the relevant amount, after which any difference is taken to the income
statement.
As described in the Information on fair value - Fair value of real estate and valuable art assets, for owner-occupied properties
each year a scenario analysis is conducted on trends in the real-estate market to assess whether there are any significant
deviations in the value of the assets. If significant changes are identified (+ or - 10%), an updated appraisal is prepared to
adjust the fair value of the asset to the valuations of the real estate market. If there are no significant differences, the value is
redetermined through a new expert appraisal every two years for “trophy assets” (i.e. particularly prestigious properties use d
by management functions located in the main cities where the bank is based or properties of particular historical and artistic
interest because they are listed by the Ministry for Cultural Heritage and Activities) and every three years for other owner-
occupied properties.
For the valuable art assets, the revaluation is carried out by means of a new expert appraisal every three years. However, a
scenario analysis is carried out annually to identify any appreciable changes in value in order to bring forward the valuation. If
the annual monitoring identifies a possible positive or negative value deviation of more than 15% for individual works of artists
in the bank’s collections and comparable on the basis of objective criteria (size, technique, period of production, etc.), ne w
appraisals are commissioned.
Intangible assets recognised following a business combination and in application of IFRS 3 are subjected to an impairment
test at each reporting date to assess whether there is objective evidence that the asset may have been impaired.
Notes to the consolidated financial statements – Part A – Accounting policies
272
Intangible assets with a finite life, represented by the value of the asset management portfolio and the value of the insurance
portfolio, in the presence of impairment indicators are subjected to a new valuation process to assess the recoverability of the
book values. The recoverable amount is determined on the basis of the value in use, namely the present value estimated
using a rate representing the time value of money and the asset’s specific risks, of the income margins generated by the
existing relations as at the valuation date over a period which expresses their expected residual life.
Intangible assets with an indefinite life, represented by the valuation of the brand name and goodwill, do not have
independent cash flows and therefore annually undergo an assessment of the adequacy of the value recorded under the
assets with reference to the Cash-Generating Unit (CGU) to which the values are attributed at the time of the business
combinations. The amount of any impairment is determined on th e basis of the difference between the CGU’s book value and
its recoverable amount represented by the higher of the fair value, less costs to sell, and the value in use.
The book value of the CGUs must be determined in a manner consistent with the criterion used to determine their recoverable
amount. For a banking business, the cash flows generated by a CGU cannot be identified without considering the cash flows
deriving from financial assets/liabilities, as these form part of the core business.
In other words, the recoverable amount of the CGUs is influenced by the aforementioned cash flows and therefore the CGUs’
book value must include financial assets/liabilities in accordance with the scope of the recoverable amount estimate process.
Consequently, these assets and liabilities must be properly allocated to the associated CGUs.
On this basis, the book value of Intesa Sanpaolo’s CGUs may be determined in terms of contribution to consolidated
shareholders’ equity including the minority interest.
Thus, the carrying amount of the CGUs consisting of companies that belong to a single operating division or consist of a
single legal entity (Asset Management, Private Banking, Insurance and International Subsidiary Banks) is determined by
summing the individual book values of each company in the consolidated financial statements, namely the contribution to
consolidated shareholders’ equity and corresponding to their net book value, taking into account any goodwill and intangibles
recorded upon acquisition (net of subsequent amortisations and any write-downs) and the consolidation entries. With regard
to the determination of the carrying value of the other two divisions (Banca dei Territori and IMI Corporate & Investment
Banking), given that the Parent Company and other banks contribute to the management of these divisions, and this
subdivision is not represented in the accounting information, the overall carrying value of the CGUs cannot be determined on
the basis of book values. As a consequence, the use of operational factors is required to make the subdivision following a
detailed allocation of the intangibles and goodwill to the two CGUs in accordance with the available accounting information.
The operational driver is identified as the "regulatory capital" determined by the Financial and Market Risks Department
structures for each operating division: it represents the capital absorption necessary to handle the types of risk envisaged by
the regulatory supervision rules. The resulting book values already take into account the effects of any impairment of the
individual assets, including those relating to intangible assets with a finite life.
For an illustration of the valuation techniques used to determine fair value, see Section A.4 – Information on fair value.
The value in use of a CGU is determined by estimating the present value of future cash flows that may be expected to be
generated by the CGU. These cash flows are determined by using the latest publicly available business plan or, in its
absence, through the drawing up by management of an internal forecast plan or other external information available.
The forecasting period for the analysis usually consists of a maximum of five years. The cash flow of the final year of the
forecast is projected in perpetuity, usin g an appropriate growth rate “g” for the purposes of the so-called Terminal value.
The “g” rate is determined by assuming that the growth factor is the lower of the average growth rate for the forecasting period
of the analysis and the average rate of increase in the Gross Domestic Product in the countries where the cash flows are
generated.
For the determination of the value in use, the cash flows must be discounted at a rate that reflects the present valuations o f
the time value of money and the asset’s specific risks. Specifically, the discount rates used incorporate the risk free
component and the premiums for the risk associated with the equity component observed over a sufficiently long time period
to reflect different market conditions and economic cycles. In addition, given the diverse risks of the respective operating
areas, different Beta coefficients are used for each CGU. All the resulting rates have been adjusted to take into account the
“Country Risk”.
The cash flows produced by the international subsidiaries are estimated in the currency in which they are generated and
translated into euro using the spot exchange rate as at the date of the determination of the value in use.
With regard to the intangible asset represented by the brand name, if the reference CGU does not have any goodwill
allocated and, as a result, it is not possible to test the recoverable amount of the specific intangible as part of the impairment
test of the goodwill based on total cash flows at the level of the CGU, then an independent and specific valuation is made on
the basis of the fair value certified by the appraisal of an independent expert.
Business combinations
Business combinations are governed by IFRS 3.
The transfer of control over a company (or over a group of assets managed together as a single business) is considered a
business combination.
To this end, control is deemed to have transferred when the investor is exposed to, or has rights to, variable returns from its
involvement with the investee and has the ability to affect those returns by exercising its power over the investee.
IFRS 3 requires that an acquirer be identified in any business combination. The acquirer is identified as the combining entit y
that obtains control of the other combining entities or businesses. If a controlling entity cannot be identified, following the
definition of control described above, as for example in the case of exchange of equity investments, the identification of th e
acquirer must occur considering other factors such as: the entity which has a significantly higher fair value, the entity which
pays a cash consideration, the entity which issues new shares.
The acquisition, and therefore the initial consolidation of the acquired entity, must be recognised in the books on the date in
which the acquirer effectively obtains control over the acquired company or businesses. When the combination occurs via an
exchange of voting ordinary equity instruments, the date of the exchange usually coincides with the date of the acquisition.
However, it is always necessary to verify that there are no agreements which may lead to transfer of control prior to the dat e
of the exchange.
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273
The consideration transferred as part of a business combination is equal to the sum of the fair value, at the exchange date, of
the transferred assets, the liabilities incurred or assumed and the equity instruments issued by the acquirer in return for
control.
In transactions which entail cash consideration (or when payment occurs via cash-equivalent financial instruments), the
purchase price is the agreed consideration. When settlement does not occur in the short-term, the fair value of any deferred
component is calculated by discounting the amounts payable to their present value; when payment occurs via an instrument
other than cash, therefore via the issue of financial instruments, the price is equal to the fair value of such instruments net of
the costs directly attributable to their issue. For the determination of fair value of financial instruments, see Section A.4 –
Information on fair value and note that, in the case of shares quoted on active markets, fair value is represented by Stock
Exchange price at acquisition date or, should that not be available, the last price available.
Purchase price at acquisition date includes any adjustments to the cost contingent on future events, if provided for by the
combination agreement and only if the adjustment is probable, can be measured reliably and realised within the twelve
months subsequent to the date of acquisition of control. Instead, any restoration related to any loss in the value of the assets
used as consideration is not included in purchase price since it is already considered either in the fair value of equity
instruments or as a reduction in the premium or an increase in the discount on the initial issue of debt instruments.
Acquisition costs refer to the charges incurred by the acquirer to carry out the business combination, including, for example,
professional fees paid to independent auditors, experts, legal advisors, costs for legal opinions and audit of accounts,
preparation of information documents required by the law, as well as advisory fees sustained to identify potential acquisitio n
targets if the contract provides for the payment of success fees as well as debt securities' or equities' registration and issue
costs.
Acquisition costs must be recognised as charges when incurred and when the related services are provided, except for the
costs relating to the issue of debt securities or equities which must be recognised in accordance with IAS 32.
Business combinations must be accounted for using the "acquisition method" whereby identifiable assets acquired (including
any intangible assets which had not been previously recognised by the acquired company) or liabilities assumed (including
contingent liabilities) are recognised at their fair value at acquisition date.
Moreover, as specifically required by IFRS 3, for each business combination, any minority interest in the acquired company
can be recognised at fair value (therefore increasing the consideration transferred) or in proportion to the minority investment
in the net identifiable assets of the acquired companies.
If control is achieved in stages, the acquirer recalculates its previous interest in the acquired company at the acquisition date
fair value. Any difference with respect to the previous carrying value is taken to income statement.
Excess between the consideration transferred (being the fair value of transferred assets, liabilities incurred and equity
instruments issued by the acquirer), increased, where present, by minority interests (determined as above) as well as the fai r
value of the stakes already held by the acquirer, and the fair value of acquired assets and liabilities should be recognised as
goodwill. Conversely, such difference is taken to the income statement when the latter exceed the sum of the consideration,
minority interests and the fair value of the stakes already held.
The accounting for business combination can be determined provisionally by the end of the year in which the combination is
realised and must be completed within twelve months of the acquisition date.
In accordance with IFRS 10, acquisitions of further stakes in companies which are already controlled are accounted for as a
capital transaction or as a transaction with shareholders acting in their capacity as shareholders. For this reason, the
difference between the cost of the acquisition and the book value of the minority stakes acquired is posted to group
shareholders' equity; in the same way, the sale of minority stakes without ceding control, does not generate gains or losses in
the income statement but is posted to group shareholders' equity.
The following transactions are outside the scope of business combinations: transactions aimed at acquiring control over one
or more entities which are not part of the company’s business; transactions aimed at acquiring transitory control; transactio ns
conducted for organisational purposes, therefore between two or more companies or businesses which are already part of the
Intesa Sanpaolo Group, and which do not entail changes in control, independently of the extent of minority interests in each of
the combining entities before and after the business combinations (business combinations involving entities under common
control). These transactions are considered immaterial. Therefore, since there are no specific provisions in IAS/IFRS and in
compliance with IAS 8 which requires – in the absence of a specific Standard – that the reporting entity must use its
judgement in applying an accounting policy that results in information that is relevant, reliable, prudent and that reflects the
economic substance of the transaction, these are accounted for safeguarding the continuing values in the financial
statements of the acquirer.
Mergers are examples of combinations between companies and represent the most complete business combinations, since
they imply the legal and economic unification of the merged entities.
Mergers which entail the establishment of a new legal entity and mergers by incorporation (which entail that an entity is
absorbed by another existing entity) are treated according to the criteria illustrated above, that is:
- if the transaction leads to the transfer of control of a company, it is accounted for as a business combination as provided
for by IFRS 3;
- if the transaction does not lead to the transfer of control, it is accounted for by privileging the continuity of the values.
Criteria for the preparation of segment reporting
The Intesa Sanpaolo Group’s segment reporting is based on the elements that the management uses to make its own
operating decisions (the “management approach”) and is therefore consistent with the disclosure requirements of IFRS 8.
The Intesa Sanpaolo Group's organisational model is structured according to six business segments with specific operational
responsibilities: Banca dei Territori, IMI Corporate & Investment Banking, International Subsidiary Banks, Asset Management,
Private Banking and Insurance. In addition to these operating areas there is also the Corporate Centre which is responsible
for guidance, coordination and control of the whole Group. The Corporate Centre also includes the following support
structures: Treasury, NPE Department and the Strategic Asset & Liability Management (ALM) activities.
For the purposes of preparation of the Segment Reporting, the income statement and balance sheet results attributed to the
various business sectors were calculated according to the accounting principles used in the preparation and presentation of
Notes to the consolidated financial statements – Part A – Accounting policies
274
the consolidated financial statements. Use of the same accounting standards allows segment data and consolidated data to
be effectively reconciled. To represent results more effectively and give a better understanding of the components that
generated them, the reclassified income statement for each reporting segment is presented with values that express the
contribution made by each segment to the Group’s results.
The contribution of the various Divisions and of the Corporate Centre to the Group's overall income statement results is
determined according to the methods described below:
– application of the contribution model with Internal Fund Transfer Pricing (FTP), differentiated on the basis of the maturity
of the individual transaction, for the correct attribution of net interest income;
– application, by virtue of specific contractual agreements between the Group Banks/Companies, of retrocession rules for
economic components relative to transactions which set out the distribution of results between product factories/service
units and relationship entities/customer units;
– direct cost debiting to each Business Division and to the Corporate Centre;
– application of the Group business accounting model, for the part within its remit, for the charging of the costs for the
services provided by the head-office structures of the Parent Company belonging to the Corporate Centre to the
Business Divisions and other Structures of the Corporate Centre, as well as the costs relating to the performance of
steering and control activities;
– application of customer portfolio/segmentation logics for the assignment to each Division and to the Corporate Centre of
the economic results of operations with customers and of the net adjustments to loans.
Business units' profits are shown net of the tax effect, calculated by applying the main components underlying the effective
tax rate, in line with the Group tax policy.
The economic results of the business operational segments are disclosed net of intragroup relations within each segment and
gross of intragroup relations between different business operational segments.
For each Division and for the Corporate Centre, the absorbed capital is also calculated on the basis of the Risk Weighted
Assets (RWAs) determined in accordance with the applicable regulations and supplemented, where necessary, with
management data on “economic” capital to take into account the risks not covered by the regulatory metric.
To complete business operational segment reporting, the most relevant income statement data and balance sheet aggregates
referred to the geographical areas in which the Group operates are also given. Geographical areas are defined on the basis
of the territorial breakdown of Group activities. Three main geographical areas have been identified, based on the residence
of the legal entities making up the Group: Italy, Europe and Rest of the World.
Insurance assets and liabilities
The Intesa Sanpaolo Group has decided to exercise the option of adopting the Deferral Approach, according to which the
financial assets and liabilities of the subsidiary insurance companies continue to be recognised in accordance with the
provisions of IAS 39, while awaiting the entry into force of the new international financial reporting standard on insurance
contracts (IFRS 17), from 1 January 2023
85
. For completeness, an outline is provided below of:
- the classification and measurement criteria for the financial assets and liabilities used by the Group’s insurance
companies, with more details provided in Part A “Accounting policies” of the Notes to the consolidated financial
statements of the 2017 Annual Report. However, a description has not been provided of the recognition and
derecognition criteria, because they are essentially in line with the applicable provisions of IFRS 9 and IAS 39;
- the approaches adopted for specific products of the insurance segment.
For details of the treatment of financial statement captions of the insurance companies other than those of a financial nature,
see the information provided above, as the companies of the banking group and the companies of the insurance segment use
the same accounting policies.
1. Financial assets held for trading
Classification criteria
This category includes financial assets held for trading, essentially represented by debt securities and equities and the
positive value of derivative contracts held for trading. Derivative contracts also include those embedded in combined financial
instruments which are subject to separate accounting when:
- their economic characteristics and risks are not closely related to the characteristics of the host contract;
- the embedded instruments, even though separate, fully meet the definition of derivative;
- the combined instruments are not measured at fair value with changes in fair value recognised through profit or loss.
Derivatives are stated as assets if their fair value is positive and as liabilities if their fair value is negative. The positive and
negative current values arising from transactions with the same counterparty may be offset only when the legal right to offse t
amounts recognised for accounting purposes currently exists and the net settlement of positions subject to offsetting is
carried out.
The reclassifications to other categories of financial assets are not permitted unless there is an event that is unusual and
highly unlikely to recur in the near term.
In such cases debt securities and equities not held for trading may be reclassified into other categories established by IAS 39
if the conditions for their recognition apply (Investments held to maturity, Financial assets available for sale, Loans). The
transfer value is the fair value at the time of the reclassification. On reclassification, the presence of any embedded derivative
contracts, that have to be separated, is assessed.
85
Regulation no. 2036/2021 of 19 November 2021 which endorses the new accounting standard IFRS 17 “Insurance Contracts” was published in the
Official Journal of the EU on 23 November 2021. In this regard we note that on 25 June 2020, the IASB published the final version of the "Amendments
to IFRS 17 Insurance Contracts" which confirmed the deferral of the date of first-time mandatory adoption of the Standard to 1 January 2023 (instead of
1 January 2022 previously proposed in the ED 2019/4), with the concurrent possibility of an extension to the same date of the “Deferral approach” in the
application of IFRS 9. This was endorsed by the European Commission with the publication of Regulation 2097/2020 “Extension o f the Temporary
Exemption from Applying IFRS 9 (amendments to IFRS 4)” on 15 December 2020.
Notes to the consolidated financial statements – Part A – Accounting policies
275
Measurement criteria
After initial recognition, financial assets held for trading are recorded at fair value. The effects of the application of this
measurement criterion are recorded in the income statement.
For the determination of the fair value of financial instruments quoted on active markets, market quotations are used. If the
market for a financial instrument is not active, standard practice estimation methods and valuation techniques are used which
consider all the risk factors correlated to the instruments and that are based on market elements such as: valuation of quote d
instruments with the same characteristics, calculation of discounted cash flows, option pricing models, recent comparable
transactions, etc. Equities, quotas of UCI and derivatives which have equities as underlying assets, which are not quoted on
an active market, for which it is not possible to determine a reliable fair value according to the guidelines listed above, are
maintained at cost.
2. Financial assets available for sale
Classification criteria
This category includes the financial assets that do not fall within any of the other categories such as Loans, Financial assets
held for trading, Investments held to maturity or Financial assets measured at fair value through profit or loss. In particular,
this caption is made up of i) bonds which are not held for trading and which are not included in Loans and Receivables, in
Investments held to maturity or designated at fair value through profit or loss, ii) equity investments which are not held fo r
trading and do not qualify as investments in subsidiaries, associates or entities subject to joint control, including private equity
investments and private equity funds as well as iii) the portions of syndicated loans that, from inception, are destined for sale.
In the cases provided for by the accounting standards, reclassifications are only permitted towards the category Investments
held to maturity. Moreover, debt securities may be reclassified into the category Investments held to maturity as well as under
Loans, when there is the intention to hold them in the foreseeable future and when the recognition criteria are met. The
transfer value is the fair value at the time of the reclassification.
Measurement criteria
After initial recognition, Financial assets available for sale are measured at fair value, through the recording in the incom e
statement of the value corresponding to amortised cost, while gains or losses deriving from a change in fair value are
recorded in a specific reserve in shareholders’ equity, until the financial asset is derecognised or a permanent loss occurs. On
the total or partial sale of the financial asset or on recognition of a loss, the cumulated profit or loss must be reversed, all or in
part, to the income statement.
Fair value is determined on the basis of the criteria already illustrated for financial assets held for trading.
Equities included in this category and quotas of UCI which have equities as underlying assets, which are not quoted on an
active market, for which it is not possible to determine a reliable fair value, are maintained at cost.
Financial assets available for sale are assessed to identify if they show objective evidence of an impairment loss.
If such evidence exists, the loss is measured as the difference between the carrying value of the asset and its fair value.
Should the reasons for impairment cease to exist, following an event occurred after the registration of the impairment, value
recoveries are posted through the income statement in the case of loans or debt securities, and through shareholders’ equity
in the case of equities. The size of the recovery must not lead the carrying amount of the financial asset to exceed the
amortised cost had no impairment losses been recognised in previous periods.
3. Investments held to maturity
Classification criteria
Quoted debt securities with fixed or determinable payments and fixed maturity, which the entity has the positive intention and
ability to hold to maturity, are classified in this category.
In the cases provided for by the accounting standards, reclassifications are only permitted towards the category of Financial
assets available for sale. If during a year, prior to expiry, more than an insignificant amount classified under this category is
sold or reclassified, the remaining investments held to maturity are reclassified as Financial assets available for sale and the
portfolio in question may not be used for the next two years, unless the sales and reclassifications:
- are so close to maturity or the financial asset’s call date that changes in the market interest rate would not have a
significant effect on the financial asset’s fair value;
- occur after the entity has collected substantially all of the financial asset’s original principal through scheduled payments
or prepayments; or
- are attributable to an isolated event that is beyond the entity’s control, is non-recurring and could not have been
reasonably anticipated by the entity.
Measurement criteria
After the initial recognition, Investments held to maturity are measured at amortised cost, using the effective interest method.
Profits or losses referred to investments held to maturity are recorded in the income statement when assets are derecognised
or impaired, and through the amortisation process of the difference between book value and the value reimbursable at
maturity.
Investments held to maturity are assessed to identify if they show objective evidence of an impairment loss.
If such evidence exists, the loss is measured as the difference between the carrying value of the asset and the present value
of the estimated future cash flows, discounted at the original effective interest rate. The loss is recorded in the income
statement.
If the reasons for impairment are no longer applicable following an event subsequent to the registration of impairment,
recoveries are recorded in the income statement. The size of the recovery must not lead the carrying value of the financial
asset to exceed the amortised cost had no impairment losses been recognised in previous periods.
Notes to the consolidated financial statements – Part A – Accounting policies
276
4. Loans
Classification criteria
Loans include loans to customers and due from banks, both disbursed directly and acquired from third parties, which entail
fixed or in any case determinable payments, which are not quoted on an active market and which are not classified at
inception in Financial assets available for sale.
The caption Loans also includes commercial loans, repurchase agreements with the obligation to resell at a later date, and
securities underwritten at issue or via private placements, with determined or determinable payments, not quoted in active
markets.
Reclassifications to the other categories of financial assets established in IAS 39 are not permitted.
Measurement criteria
After initial recognition, loans are measured at amortised cost, equal to initial value increased/decreased by principal
repayments, adjustments/recoveries and amortisation – calculated applying the effective interest method – of the difference
between amount disbursed and amount to be reimbursed at maturity, typically attributable to the costs/revenues directly
connected to the single loan. The effective interest rate is the rate that exactly discounts estimated future cash payments of
the loan, for principal and interest, to the amount disbursed inclusive of the costs/revenues attributable to the loan. This
measurement method uses a financial approach and allows distribution of the economic effect of the costs/revenues through
the expected residual maturity of the loan.
The amortised cost method is not used for loans whose short maturity implies that the application of the discounting approach
leads to immaterial effects. Such loans are recorded at historical cost. An analogous measurement criterion is applied to loans
with unspecified maturity or with notice period.
Loans are reassessed for the purpose of identifying those which, due to events occurred after initial recognition, show
objective evidence of possible impairment. These include bad loans, unlikely-to-pay or past due loans according to the rules
issued by the Bank of Italy, consistent with IAS/IFRS and EU supervisory regulations.
Non-performing loans undergo an individual measurement process, or the calculation of the expected loss for homogeneous
categories and analytical allocation to each position, and the amount of the adjustment of each loan is the difference betwee n
its carrying value at the time of measurement (amortised cost) and the present value of expected future cash flows,
discounted using the original effective interest rate.
Expected cash flows consider forecast recovery periods, presumed realisable value of guarantees as well as the costs
sustained for the recovery of credit exposure.
The original effective rate of each loan remains unchanged over time even if the relationship has been restructured with a
variation of the contractual interest rate and even if the relationship, in practice, no longer bears contractual interest.
The impairment loss is recorded in the income statement.
The original value of loans is reinstated in subsequent periods to the extent that the reasons which had led to the impairmen t
cease to exist, provided that such valuation is objectively attributed to an event which occurred subsequent to the impairment.
The recovery is recorded in the income statement and must not lead the carrying amount of the loan to exceed the amortised
cost had no impairment losses been recognised in previous periods.
Recoveries on impairment include time value effects.
Loans for which no objective evidence of loss has emerged from individual measurement are subject to measurement of a
collective adjustment. Such measurement occurs for homogeneous loan categories in terms of credit risk and the relative loss
percentages are estimated considering past time series and other objective elements observable at measurement date, which
enable the latent loss to be estimated for each loan category. Measurement also considers the risk connected to the
borrower’s country of residence.
Collective adjustments are recorded in the income statement.
5. Financial assets measured at fair value through profit or loss
Classification criteria
IAS/IFRS endorsed by the European Commission enable the classification as financial instruments measured at fair value
through profit and loss of any financial asset thus defined at the moment of acquisition, in compliance with the cases
contemplated in the reference regulations.
Reclassifications to the other categories of financial assets are not permitted.
The Group classifies investments with respect to insurance policies in this category.
Measurement criteria
After initial recognition, the financial instruments in question are measured at fair value. The effects of the application of this
measurement criterion are recorded in the income statement.
6. Payables and securities issued
Classification criteria
Amounts Due to banks, Due to customers and Securities issued include various forms of funding on the interbank market and
with customers, repurchase agreements with commitment to repurchase and funding via certificates of deposit, bonds issued
and other funding instruments in circulation, net of any amounts repurchased.
It also includes the payables recorded by the entity in the capacity of lessee in finance lease transactions.
Measurement criteria
After initial recognition, financial liabilities are measured at amortised cost with the effective interest method.
An exception is made for short-term liabilities, where time value is immaterial, which are stated at collected amount.
Notes to the consolidated financial statements – Part A – Accounting policies
277
7. Financial liabilities held for trading
Recognition criteria
These financial instruments are recognised at the subscription or issue date at cost, which reflects the fair value of the
instrument, without taking into account directly attributable transaction costs or revenues.
This liability category includes, specifically, the negative value of trading derivatives as well as the negative value of
embedded derivatives in combined contracts but which are not closely correlated to the latter. It also includes liabilities
determined by short selling generated by securities trading activities.
Derecognition criteria
Financial liabilities held for trading are derecognised when the contractual rights to the related cash flows expire or when the
financial liability is disposed of with the substantial transfer of all the risks and rewards connected to it.
8. Financial liabilities designated at fair value through profit or loss
Classification criteria
Financial liabilities designated at fair value through profit or loss are recorded under this caption, on the basis of the fair value
option given to companies by IAS 39, in compliance with the cases contemplated in the reference regulations.
The Group exercised the fair value option for liabilities, designating insurance products without a significant insurance risk and
which are not included under separate management, and therefore do not envisage discretionary participation features.
Investments relating to such forms of deposits, as already reported, were also designated at fair value, thereby eliminating or
considerably reducing “accounting biases” that would otherwise have arisen from measuring assets and liabilities on the basis
of different accounting criteria.
Measurement criteria
These liabilities are designated at fair value through profit or loss.
9. Insurance products
Products for which insurance risk is deemed significant include: temporary first class death policies and income and mixed
policies with guaranteed fixed conversion rates at the time of issue, and certain types of unit-linked policies and damage
cover. As regards these products, the IAS/IFRS substantially confirm the national accounting standards concerning insurance.
In brief, IFRS 4 sets forth that:
- gross premiums are to be recorded in the income statement under income; they include all amounts matured during the
year as a result of insurance contracts signed, net of cancellations; likewise, all premiums ceded to reinsurers are
recorded under current year costs;
- with respect to gross premiums, the corresponding commitment towards the insured is accrued in technical reserves,
such amount being calculated on a contract-by-contract basis in accordance with applicable local accounting principles;
- the insurance products entered under separate management are valued by applying “shadow accounting”, whereby the
differences between the carrying value and the market value of securities classified as securities available for sale are
allocated to technical reserves as regards the insured parties' portion and to shareholders’ equity as regards the
insurance companies' portion. If, on the other hand, the securities are measured at fair value through profit or loss, the
difference between the carrying value and the market value is recorded in the income statement giving rise to a change
in technical reserves equal to the amount of the insured parties’ portion;
- in determining shadow accounting, the Group uses the retrocession average rate and the minimum guaranteed rate
established in accordance with the contractual conditions of the various products associated with each
portfolio management;
- liabilities related to products with discretionary participation features are given as a whole with no distinction between th e
guaranteed component and the discretionary participation feature.
In accordance with IFRS 4, the Group assesses the prospective adequacy of the carrying amount of recorded liabilities using
the Liability Adequacy Test (LAT).
10. Financial products included under separate management
Financial products included under separate management, despite their not being subject to significant insurance risk, and
which therefore contain discretionary participation features, include the majority of life policies and mixed first branch policies,
as well as fifth branch capitalisation policies. These are accounted for according to the principles set forth in IFRS 4:
- the products are shown in the financial statements according to principles that essentially reflect those locally in force on
the subject, any premiums, payments and changes in technical reserves being recorded in the income statement;
- as stated in the previous paragraph, shadow accounting is applied to the insurance products entered under separate
management which, therefore, have discretionary participation features;
- in determining shadow accounting, the Group uses the retrocession average rate and the minimum guaranteed rate
established in accordance with the contractual conditions of the various products associated with each
portfolio management;
- liabilities related to products with discretionary participation features are given as a whole with no distinction between the
guaranteed component and the discretionary participation feature.
Notes to the consolidated financial statements – Part A – Accounting policies
278
11. Financial products not included under separate management
Financial products without a significant insurance risk and which are not included under separate management, and therefore
do not envisage discretionary participation features, are stated in the financial statements as financial liabilities and are
measured at fair value, on the basis of the envisaged option (Fair Value Option), or at amortised cost. These financial
products are essentially index-linked policies and part of the unit-linked ones, as well as policies with specific assets not
included under separate management. These products are accounted for according to the principles set forth in IAS 39, as
summarised below:
- the portion of index- and unit-linked policies that are considered investment contracts are measured at fair value,
whereas the specific asset products not included under separate management are measured at amortised cost;
- the income statement does not reflect the premiums relating to these products, but just the revenue components,
represented by fees and commissions, and the cost components, comprising provisions and other charges; it also
reflects the costs or revenues represented by the changes in the fair value of the liabilities incurred against these
contracts. More specifically, the international accounting and financial reporting standards, contained in IAS 39 and IFRS
15, provide that, for the liabilities designated at fair value, income and costs relating to the products in question be
identified and classified under two headings: (i) origination, to be recorded in the income statement at the time the
product is issued and (ii) investment and management services, to be amortised over the life of the product which
depends on how the service is provided. In addition, as regards specific asset products not included under separate
management, incremental cost and income items are included in the calculation of the amount to be amortised;
- the insurance component included in the index- and unit-linked products, where it can be unbundled, is independently
valued and recorded.
Notes to the consolidated financial statements – Part A – Accounting policies
279
A.3 – INFORMATION ON TRANSFERS BETWEEN FINANCIAL ASSET PORTFOLIOS
Following the adoption of IFRS 9, the Intesa Sanpaolo Group did not make changes to its business model for managing its
financial assets and, therefore, no transfers occurred between portfolios of financial assets.
According to the general rules established by IFRS 9 on the reclassification of financial assets (except for equity instruments,
for which no reclassification is permitted), reclassifications to other categories of financial assets are not permitted unless the
entity changes its business model for those financial assets. Such changes are expected to be extremely rare and must be
decided by the management following significant external or internal changes that can be demonstrated to external parties.
A.3.1 Reclassified financial assets: change in business model, book value and interest income
No disclosure is required since there are no reclassified financial assets recognised under balance sheet assets.
A.3.2 Reclassified financial assets: change in business model, fair value and effects on comprehensive
income
No disclosure is required since no transfers were carried out between portfolios of financial assets in 2022.
A.3.3 Reclassified financial assets: change in business model and effective interest rate
No disclosure is required since there are no reclassified financial assets recognised under balance sheet assets.
Notes to the consolidated financial statements – Part A – Accounting policies
280
A.4 – INFORMATION ON FAIR VALUE
FAIR VALUE, INDEPENDENT PRICE VERIFICATION AND PRUDENT VALUE OF FINANCIAL
INSTRUMENTS
The framework of financial measurement at fair value is based on three pillars: fair value measurement according to the
IAS/IFRS, independent price verification (IPV) and prudent value measurement. The latter two are established by the Capital
Requirement Regulation (CRR). The paragraphs below describe the methods applied by the Intesa Sanpaolo Group to
implement and use those elements.
General fair value principles
The Intesa Sanpaolo Group governs and defines the fair value measurement of financial instruments through the Group
Guidelines and Rules for Valuation of Financial Instruments at Fair Value, prepared by the Market and Financial Risk
Management Head Office Department and applied by the Parent Company and all consolidated subsidiaries, including the
Insurance Companies.
The “Guidelines for Valuation of Financial Instruments at Fair Value”, once a favourable opinion has been given by the Group
Financial Risk Committee, are revised and approved at least on an annual basis by the Board of Directors, with the support of
the Risks and Sustainability Committee. The “Rules for Valuation of Financial Instruments at Fair Value” are reviewed, revise d
and approved at least on an annual basis by the Group Financial Risk Committee, which is specifically delegated to do so by
the Management Bodies, and which also reviews material changes and updates proposed by the Market and Financial Risk
Management Head Office Department.
The “Rules for the Measurement of Unlisted Equity Investments”, drawn up by the Group M&A and Equity Investments Head
Office Department and approved by the Group Financial Risk Committee, govern the fair value measurement of unlisted
equities and financial instruments with unlisted equities as their underlying.
IFRS 13, which harmonises the measurement rules and the related disclosure, defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e. not as part of
the compulsory liquidation or a below-cost sale) as at the measurement date. Fair value is a market measurement criterion,
not specifically referring to a single bank. Underlying the definition of fair value is the assumption that the Bank is carrying out
normal operations, without any intention of liquidating its assets, significantly reducing the level of operations or carrying out
transactions at unfavourable conditions.
The bank measures the fair value of an asset or liability by adopting the assumptions that would be used by market
participants when pricing an asset or liability, presuming that they act with a view to satisfying their own economic interest in
the best way possible. Measurement at fair value presumes that the asset is sold or the liability transferred:
a. in the principal active market for the asset or liability;
b. in the absence of a major market, in the most advantageous active market for the asset or liability.
The bank is not required to conduct an exhaustive study of all possible markets to identify the major market or, in the absence
of the major market, the most advantageous market, but must take into account all the reasonably available information. If
there is no evidence to the contrary, the market that the entity normally operates in to sell the asset or transfer the liability is
assumed to be the major market or the most advantageous market, if there is no major market. The Intesa Sanpaolo Group
considers the principal market of a financial asset or liability to be the market in which the Intesa Sanpaolo Group generally
operates.
In accordance with IFRS 13, the Group considers an active market to be a market where transactions in an asset or liability
occur with sufficient frequency and volume to provide useful information for determining price on an ongoing basis. More
specifically, a financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent
actual and regularly occurring market transactions on an arm's length basis.
In specific cases, governed by the Guidelines and Rules for Valuation of Financial Instruments at Fair Value, and despite
being quoted on regulated markets, relevant research is carried out to verify the significance of the official market values. In
the event of a significant reduction in the volume or level of operations compared to normal operations for the asset or liability
(or for similar assets or liabilities) highlighted by a number of indicators (number of transactions, limited significance of market
prices, significant increase in implicit premiums for liquidity risk, widening or increase of the bid-ask spread, reduction or total
lack of market for new issuances, limited publicly-available information), analyses of the transactions or of the quoted prices
must be carried out. A reduction in the volume or the level of activity alone may not indicate that the price of a transaction or
the quoted price does not represent fair value or that the transaction in that market is not ordinary. If an entity determines that
a transaction price or quoted price does not represent fair value (e.g., non-ordinary transactions) an adjustment to the
transaction prices or listed prices is required if the entity uses those prices as the basis for fair value measurement and that
adjustment may be significant with respect to the fair value as a whole.
Notes to the consolidated financial statements – Part A – Accounting policies
281
The fair value of financial instruments
The presence of quoted prices in an active market represents the best evidence of fair value and these prices are therefore
the quoted prices to be used on a priority basis for the measurement of financial assets and liabilities. If there is no active
market, the fair value is determined using valuation techniques aimed, ultimately, at establishing the price the product woul d
have had, at the measurement date, in an arm’s length exchange motivated by normal business c onsiderations.
The choice of the above measurement methods is not optional, because they must be applied in hierarchical order: the
availability of a price stated in an active market prevents the use of one of the other measurement approaches.
Inputs of the valuation techniques
The inputs are defined as the assumptions that market participants would have used to determine the price of the asset or the
liability, including assumptions regarding risk, such as, for example, the risk relating to a particular valuation technique used to
measure fair value or the risk relating to the inputs of the valuation technique. The inputs may be observable or unobservabl e.
Observable inputs are those produced using market data, such as publicly available information on operations or actual
events, which reflect the assumptions that market participants would use in determining the price of the asset or the liability.
Unobservable inputs are those for which no market information is available and that are produced using the best available
information regarding the assumptions that market participants would use to determine the price of the asset or the liability.
Fair value hierarchy
IFRS 13 establishes a fair value hierarchy in which inputs to fair value measurement techniques are divided into three levels.
That hierarchy assigns top priority to (unadjusted) quoted prices on active markets for identical assets or liabilities
(level 1 data) and the lowest priority to unobservable inputs (level 3 data). Specifically:
– fair value level 1 applies when an instrument is measured directly on the basis of (unadjusted) quoted prices on active
markets for identical assets or liabilities to which the entity has access on the measurement date;
– fair value level 2 applies when a price has not been found on an active market and the instrument is measured according
to valuation techniques, on the basis of observable market parameters, or of the use of parameters that are not
observable but are supported and confirmed by market evidence, such as prices, spreads or other inputs;
– fair value level 3 applies when fair value is measured using various inputs, not all of which are directly drawn from
observable market parameters, and which thus entail estimates and assumptions by the valuator.
If various inputs are used to measure the fair value of an asset or liability, classification in the hierarchy is determined on the
basis of the lowest-level input used in measurement. When assigning a level in the fair value hierarchy, priority is given to the
inputs of the valuation techniques rather than the valuation techniques themselves.
The attachment “Fair Value Hierarchy Rules” to the “Rules for Valuation of Financial Instruments at Fair Value” defines, with
regard to the respective financial instrument valuation models/inputs, the basic rules that market inputs must comply with in
order to be classified as Level 2, and the significance thresholds which, when overrun, result in the assignment of Level 3.
For level 1 financial instruments, the current bid price is used for financial assets and the current ask price for financial
liabilities, struck on the principal active market at the end of the reference period.
For financial instruments with a scarcely significant bid-ask spread or for financial assets and liabilities with offsetting market
risks, mid-market prices are used (again referred to the last day of the reference period) instead of the bid or ask price.
The following are considered as level 1 financial instruments: contributed bonds (i.e. bonds for which the Composite
Bloomberg Bond Trader is available from the Information Provider Bloomberg, or, alternatively, a price on the EuroMTS
circuit, or at least three prices available from the Information Provider Bloomberg), contributed equities (i.e., quoted on the
official market of reference), contributed UCITS funds (covered by EU directives), spot exchange rates, and derivatives for
which prices are available on an active market (for example, exchange traded futures and options).
Conversely, all other financial instruments that do not belong to the above-described categories or that do not have the
contribution level defined by the Guidelines and Rules for Valuation of Financial Instruments at Fair Value are not considere d
level 1 instruments.
When no listing on an active market exists or the market is not functioning regularly, that is when the market does not have a
sufficient and continuous number of trades, and bid-ask spreads and volatility that are not sufficiently contained, the fair value
of the financial instruments is mainly determined through the use of valuation techniques whose objective is the establishment
of the price at which, in an orderly transaction, the asset is sold or the liability transferred between market participants, as at
the measurement date, under current market conditions.
In the case of instruments classified as level 2, the valuation is based on prices or credit spreads presumed from the official
listing of instruments which are similar in terms of risk factors, using a given calculation methodology (valuation model). The
use of this approach requires the identification of transactions on active markets in relation to instruments that, in terms of risk
factors, are comparable with the instrument to be measured. Level 2 calculation methodologies reproduce prices of financial
instruments quoted on active markets (model calibration) and do not contain discretional parameters – parameters for which
values may not be inferred from quotations of financial instruments present on active markets or fixed at levels capable of
reproducing quotations on active markets – that significantly influence the final measurement.
The following are measured using level 2 input models:
– bonds without official quotations expressed by an active market and whose fair value is determined through the use of an
appropriate credit spread which is estimated starting from contributed and liquid financial instruments with
similar characteristics;
– loans whose fair value is determined through the use of an appropriate credit spread which is estimated starting from
market data of financial instruments with similar characteristics;
– derivatives (including securitised derivatives) measured through specific models, fed by input parameters (such as yield,
foreign exchange and volatility curves) observed on the market;
– structured credit products (ABSs, HY CLOs, CDOs) for which significant prices are not available and whose fair value is
measured using valuation techniques that consider parameters that can be gathered from the market;
– non-contributed equity instruments measured based on direct transactions, that is significant transactions on the stock
registered in a time frame considered to be sufficiently short with respect to measurement date and in constant market
conditions, or using the "relative" valuation models based on multipliers;
Notes to the consolidated financial statements – Part A – Accounting policies
282
– non-UCITS hedge funds, provided the Level 3 instruments do not exceed a set threshold.
In case of instruments classified as level 3, the calculation of the fair value is based on valuation models which consider input
parameters not directly observable on the market, therefore implying estimates and assumptions on the part of the valuator.
In particular, the valuation of the financial instrument uses a calculation methodology which is based on specific assumptions
of:
– the development of future cash flows, which may be affected by future events that may be attributed probabilities
presumed from past experience or on the basis of the assumed behaviour;
– the level of specific input parameters not quoted on active markets, for which information acquired from prices and
spreads observed on the market is in any case preferred. Where this is not available, past data on the specific risk of the
underlying asset or specialised reports are used (e.g. reports prepared by Rating agencies or primary market players).
The following are measured using this method:
– some transactions in derivatives, bonds, or complex structured credit instruments measured using level 3 inputs;
– hedge funds in which the level 3 assets are above a set limit;
– private equity funds, private debt funds, real estate funds and closed-end funds resulting from sales of non-performing
loans valued at NAV, with possible discounts;
– shareholdings and other equities measured using models based on discounted cash flows or using equity methods;
– loans whose fair value is determined through the use of a credit spread that does not meet the criteria to be considered
level 2;
– loans with underlying equity risk, whose fair value is calculated based on the discounting of expected contractual flows.
The transfer of fair value levels of financial assets and financial liabilities measured at fair value on a recurring basis occurs,
as established by IFRS 13, as follows: the transfer between levels 2 and 3 occurs upon a change in the observability or
significance of an input to the measurements; and the transfer between levels 1 and 2 or 3 occurs upon a change in the
availability of prices in an active market.
For OTC derivatives, the initial choice of the level of fair value hierarchy depends on the degree of observability and
significance of the parameters used to determine the risk-free component. The calculation of the counterparty/issuer default
risk component may result in a transfer to level 3 when the current exposure is positive for the bank and the counterparty is in
non-performing loan status, or when the determination of default risk requires unobservable inputs and the bilateral credit
value adjustment (bCVA) component is significant when compared to the overall fair value of the netting set, or when the
counterparty's sensitivity to downgrading is significant when compared to the overall fair value of the netting set.
For non-contributed equity instruments, the change of the level occurs:
− when inputs observable on the market (e.g., prices defined based on comparable transactions on the same instrument
between independent and informed counterparties) have become available during the period. In this case, the Intesa
Sanpaolo Group reclassifies from level 3 to level 2;
− when the directly or indirectly observable elements used as the basis for the valuation cease to exist, or when they are
no longer up to date (e.g., comparable transactions that are no longer recent or multiples that are no longer applicable).
In this case, the Intesa Sanpaolo Group uses valuation techniques that use unobservable inputs.
Valuation of financial instruments
The valuation of financial instruments entails the following phases:
- identification of the sources for valuation: for each asset class, the Guidelines and Rules for Valuation of Financial
Instruments at Fair Value establish the processes that are necessary to identify market parameters and the manner
according to which such data must be extracted and used;
- validation and processing of input data for periodic valuation: this stage consists of the accurate verification, at each
accounting measurement date, of the market parameters used (verifying the integrity of data contained on the proprietary
platform with respect to the source of contribution), reliability tests (consistency of each single figure with similar or
comparable figures) and verification of concrete application means;
- certification of the measurement methods: this phase is aimed at verifying the consistency and the adherence of the
various measurement techniques used with current market practice, at highlighting any critical aspects in the
measurement models used and at determining any adjustments necessary for measurement;
- monitoring and revision of the measurement methods: the monitoring consists of the ongoing checking of the adherence
to the market of the valuation model and enables the timely discovery of any gaps, in order to initiate the necessary
checks and measures.
Identification, certification and processing of the input data for the measurements
The fair value calculation process and the need to distinguish between products which may be measured on the basis of
effective market quotes rather than through the application of measurement techniques, highlight the need to establish
univocal principles in the determination of market parameters. To this end, the Guidelines and Rules for Valuation of Financial
Instruments at Fair Value establish the processes needed to identify the market parameters, the contribution sources
considered appropriate and how the data must be received (cut-offs) and used for the measurement of financial instruments
held for any purpose in the proprietary portfolios of the Parent Company and its subsidiaries. The same sources are used in
measurements carried out for third parties under Service Level Agreements, entered into in advance. The adequacy of the
input data for the measurements is guaranteed by the respect of reference requirements, which are based on comparability,
availability and transparency of the data, or the possibility of extracting the figure from one or more info providing systems,
measuring the contribution bid-ask, and lastly, for OTC products, verifying the comparability of the contribution sources.
The use of all market parameters in Intesa Sanpaolo is subordinated to their certification by the Market and Financial Risk
Management Head Office Department, in terms of specific controls (verifying the integrity of data contained on the proprietary
platform with respect to the source of contribution), reliability tests (consistency of each single figure with similar or
comparable figures) and verification of concrete application means.
Notes to the consolidated financial statements – Part A – Accounting policies
283
Certification of measurement methods
The measurement methods used by the Intesa Sanpaolo Group are certified by the IMI CIB Risk Management Head Office
Department, with the involvement of all relevant structures. The purpose of the certification is to verify the consistency of the
methods with current market practice, to highlight any problems or limitations, and to determine any fair value adjustments, in
accordance with the applicable regulations. The certification process considers all aspects of the measurement method (basic
assumptions, mathematical derivation, any approximations, numerical algorithms used, inputs and outputs) but also all
contextual elements that are relevant to the management, including the characteristics of the associated products (payoffs,
early termination clauses, etc.), any ancillary agreements (e.g. netting or collateral agreements), the market where the
products are traded, and how they are used by end users (e.g. precision vs. performance, calculation of risk measures, etc.).
These aspects are subject to qualitative and quantitative analysis and are duly reported in the internal documentation.
The possibility of independent validation issued by high standing financial service companies is also envisaged in high ly-
complex cases and/or in presence of market turbulence (market dislocation).
At the end of the certification process, the measurement method is recorded in the Rules for Valuation of Financial
Instruments at Fair Value.
Monitoring and review of measurement methods
As required by the applicable regulations, the measurement methods used are subject to ongoing monitoring of their
performance with respect to the evolution of financial instruments, markets and methodological innovations developed by the
scientific community, in order to ensure their continuous alignment to the market, promptly highlight any inadequacies and
initiate the necessary checks and actions. The Rules for Valuation of Financial Instruments at Fair Value detail all elements
considered for the periodic monitoring and revision of the measurement methods. The functions involved in the monitoring
process are the same as those involved in the process of certification of the measurement methods mentioned above and in
the IPV process governed by the Guidelines and Rules on Independent Price Verification.
Valuation risk: fair value adjustments
The Intesa Sanpaolo Group defines valuation risk as the risk of losses arising from the valuation uncertainty for the fair value
exit price of financial instruments, due to any limitations of the measurement techniques used or particular market conditions.
The main measure of the valuation risk associated with a financial instrument are the fair value adjustments, which are
designed to take into account the valuation uncertainty or the difficulty in the disposal of specific financial positions, and may
relate to a single financial instrument or to the net position for a particular risk factor. The adjustments may be calculated as
add-ons to the valuation or included directly in the valuation. They are regularly reviewed, also considering market trends, or
the introduction of new liquid instruments, different calculation methodologies and, in general, methodological advances whic h
may also lead to significant changes in measurement methods chosen and their implementation.
In particular, the Intesa Sanpaolo Group envisages fair value adjustments for the following categories of measurement
uncertainty:
- uncertainty of input data: any valuation uncertainty related to the input data for the valuation (whether mid, bid or ask) is
measured with respect to temporary or structural conditions on the markets or in relation to the size of the values held (in
the case of concentration), and where necessary a fair value adjustment is made, quantifying the consequent impact on
the valuations;
- illiquidity of the underlying positions or risk factors: similarly to the case above, the market bid-ask spread is measured
and, where necessary, a fair value adjustment is made, quantifying the consequent impact on the valuations;
- model risk: this is based on the identification and use of variants of the same model or alternative models, with which to
carry out comparison analyses aimed at quantifying the variability of the valuations (in particular any directionality of the
price when the model changes) and the behaviour of the model in various market scenarios (stress tests). The
quantification of the fair value adjustment is based, where possible, on easily comprehensible and measurable financial
variables (e.g. vega, delta, correlation shift);
- counterparty and funding risk: counterparty and funding risks, collectively referred to as XVA, include Bilateral Credit
Value Adjustment (bCVA) and Funding Value Adjustment (FVA). The bCVA takes account of the counterparty risk
premium associated with the possibility that the counterparties may not honour their mutual commitments (for example in
the event of bankruptcy). This component derives, in turn, from two components: the Credit Value Adjustment (CVA,
negative) and the Debt Value Adjustment (DVA, positive), which consider, respectively, the scenarios where the
Counterparty goes bankrupt before the Bank (and the Bank has a positive exposure towards the Counterparty), and vice
versa the scenarios where the Bank goes bankrupt before the Counterparty (and the Bank has a negative exposure
towards the Counterparty). The Funding Value Adjustment (FVA, negative), on the other hand, takes into consideration
the funding risk premium, connected to the costs of funding the cash flows (coupons, dividends, collateral, etc.)
generated by the Bank's overall OTC derivatives portfolio. The calculation of the XVAs depends on the overall exposure
between the two counterparties, calculated using techniques for simulating the underlying risk factors of the transactions
considered, taking into account any counterparty risk mitigation arrangements (in particular netting and collateralisation
agreements), as well as any contractual clauses. The calculation of the XVAs also depends on the Loss Given Defaults
(LGDs) based on the estimated value of the expected recovery in the event of counterparty default, and the probability of
counterparty default (PD). LGDs and PDs are obtained from credit default swap market quotes or are based on internal
estimates by sector/rating used for credit risk. In addition, the FVA calculation is based on a funding curve representative
of the best market counterparties that the Bank could renegotiate transactions with, in accordance with the most IFRS 13
advantageous market principle, as there is currently no real main market for these transactions.
The management process for fair value adjustments is formalised in the Guidelines and Rules for Valuation of Financial
Instruments at Fair Value and the Rules for the Valuation of Unlisted Equity Investments with appropriate calculation
methodologies on the basis of the different configurations of the points set out above, and is carried out in the most objective,
consistent and systematic manner possible by the IMI CIB Risk Management Head Office Department and the Group M&A
and Equity Investments Head Office Department. The introduction and release of the fair value adjustments depend on the
factors described above. Such processes are a combination of quantitative elements that are rigidly specified and qualitative
elements, valued based on the different configuration over time of the risk factors which generated the adjustments. Thus, th e
Notes to the consolidated financial statements – Part A – Accounting policies
284
estimates subsequent to initial recognition are always guided by the mitigation or elimination of said risks.
For new products, the decision to apply the adjustments is taken during the new product approval process, upon the proposal
of the IMI CIB Risk Management Head Office Department.
The application of the adjustments is subject to an authorisation procedure that, above a certain warning threshold defined for
specific cases, involves both the area of the Chief Risk Officer and the Manager responsible for preparing the Company’s
financial reports.
A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used
The sections below provide a summary of the information, by type of financial instrument (securities, derivatives, structured
products, hedge funds, and loans), on the valuation models used.
I. Valuation of non-contributed debt securities
The fair value of non-contributed bonds is measured using the income approach, i.e. by calculating the present value of
expected future cash flows using an appropriate risk premium represented by the credit spread, identified on the basis of
contributed and liquid financial instruments with similar characteristics. The sources used for this measurement are the
following:
- contributed and liquid debt securities of the same issuer;
- credit default swaps on the same reference entity;
- contributed and liquid securities of an issuer with the same rating and belonging to the same sector.
In any case, the different seniority of the security to be priced is considered with regard to the issuer’s de bt structure.
In the case of Italian public issuers, a rating/maturity matrix is defined on the basis of the spread levels on government
issues, to which the spreads among the various rating/maturity classes with respect to public issues (regions, provinces,
municipalities, government entities) are applied.
When applying the spread for the pricing of the non-contributed instrument, if the estimated ‘fair’ credit curve does not
respect the same characteristics of the instrument, correction factors are considered.
Also, for bonds that are not quoted on active markets, an extra spread, estimated based on the bid/ask spread recorded
on the market, is added to the “fair” credit spread component, to take account of the higher premium demanded by the
market compared to similar contributed securities.
Finally, if the instrument includes an optional component, a further adjustment is made to the spread by adding a
component designed to capture the hedging costs of the structure and any illiquidity of the underlying assets.
This component is calculated based on the type of option, using the corresponding valuation models for derivatives
mentioned below.
Similarly, Intesa Sanpaolo’s credit spread for the Banking Group’s financial liabilities designated at fair val ue is
determined and measured based on the bonds issued by the Parent Company, with regular, periodic coupons, maturity
beyond one year and quoted on an active market in compliance with IAS/IFRS. The implicit credit rating is determined
on the basis of market prices and subsequently adjusted through interpolation models which generate credit spread
curves by type of coupon, maturity and subordination level. Similarly, the issued certificates are measured at fair value
by breaking them down into the following two components: an issued bond, measured as described above, and an
option component, measured using the corresponding derivative pricing models described below.
Finally, measurement of the financial liabilities designated at fair value of the Insurance Companies (mainly liabilities
associated with unit-linked investment contracts that do not present significant insurance risk) reflects the market value
of the underlying assets, which are determined in application of the various methods described herein.
II. Valuation of loans
Loans are measured at fair value through contributions from info providers when available or by calculating the present
value of expected future cash flows using an appropriate credit spread, identified starting from the following sources:
- contributed loans on the market;
- sector/rating-specific loan market curves;
- contributed securities of the same issuer;
- credit default swaps on the same reference entity.
In any case, the different seniority of the instrument to be priced is conside red with regard to the issuer’s debt structure.
When applying the spread for the pricing of the loan, if the estimated ‘fair’ credit curve does not respect the same
characteristics of the instrument, correction factors are considered.
Moreover, where, in determining the credit spread of the loans, reference is made to the curves created through bonds,
a Bond – Loan basis must be applied, to capture the different structure of the market, if any, and the different type of
loan.
In order to consider the premium required by the market for illiquid and/or structured instruments, several adjustments
are applied to the credit spread.
Loans with an underlying unlisted equity risk (which include financial instruments that, pursuant to IAS 32, cannot be
classed as equity, e.g. loans convertible into shares) are usually measured by discounting the cash flows provided for by
the contract. Since these are debt securities, the cash flows are normally discounted using a rate consisting of the sum
of: a risk free rate, a spread deriving from the CDS or measured on listed securities or similar disbursements, and any
additional risk premium.
In the case of non-performing loans, the fair value is determined based on the recoverable amount of the position. This
estimate is made taking into account the contractual elements that characterise the loan and may involve, for example,
the valuation of the cash flows from the sale of the real estate pledged as collateral or the valuation of any capital
instruments that may be acquired following the introduction of an equity conversion clause for the position.
Notes to the consolidated financial statements – Part A – Accounting policies
285
III. Valuation of OTC derivatives
Derivatives, if not traded on regulated markets, are Over The Counter (OTC) instruments, which are bilaterally
exchanged with market counterparties and are measured through specific measurement methods and input parameters
(such as, for example, interest rate, foreign exchange and volatility curves) observed on the market and subject to the
certification and monitoring illustrated above.
The fair value of an OTC derivative is calculated considering the risk premium related to the various underlying risk
factors. Specifically, there are two relevant cases, according to whether or not the instrument is subject to
collateralisation agreements (CSAs) aimed at mitigating the counterparty and funding risk:
a. for CSA transactions with characteristics that reduce counterparty and funding risk to a negligible level, the fair
value is calculated according to the non-arbitrage principle, by including the market risk premium related to the risk
factors underlying the contract (e.g. interest rates, volatility, etc.), and, in the most significant cases, using the rate
of remuneration for the collateral as the discount rate for the future cash flows;
b. for transactions without CSAs, or with CSAs with characteristics that do not reduce the counterparty and funding
risk to a negligible level (e.g., One Way CSAs, or with non-negligible limits or minimum transfer amounts), the fair
value of the instrument may be stated, under appropriate circumstances, as the sum of the reference (or base)
value, equal to the price of the corresponding collateralised instrument, and several additional valuation
components related to the counterparty and funding risk premium, referred to jointly as XVA (see "Valuation risk:
fair value adjustments”).
In view of the number and complexity of the OTC derivatives, a systematic reference framework has been developed
which represents the common elements (calculation algorithms, processing models, market data used, basic
assumptions of the model) that are used for their measurement.
The table below illustrates the main methods used to measure OTC derivatives based on the category of
underlying asset.
Underlying class
Valuation models
Market data and input parameters
Interest rate
Net Present Value, Black-Scholes, SABR, Libor
Market Model, Hull-White, Bivariate log-normal,
Rendistato, Hagan exact formula for CMS
Interest rate curves (deposits, FRA, Futures, OIS,
swap, basis swap, CMS, Rendistato basket),
cap/floor/swaption option volatility, correlation
between interest rates
Foreign exchange rate
Net present Value FX, Garman-Kohlhagen,
Lognormal with Uncertain Volatility (LMUV),
Stochastic Local Volatility (SLV), Local Volatility
(LV)
Interest rate curves, spot and forward FX curves,
FX volatility, "quanto" volatility and correlations
Equity
Accrual, Net present Value Equity, Generalised
Black-Scholes, Heston, Local Volatility, Jump
Diffusion
Interest rate curves, underlying asset spot rate,
expected dividends, underlying asset volatility and
correlation between underlying assets, "quanto"
volatility and correlations
Inflation
Inflation NPV, Inflation SABR, Inflation Jarrow-
Yildirim
Nominal and inflation interest rate curves, interest
and inflation rate volatility, seasonality ratios of
consumer price index, correlation between
inflation rates
Commodity
Net present Value Commodity, Generalised Black-
Scholes, Independent Forward, Local Volatility, 2-
Factors Jump Diffusion
Interest rate curves, spot rate, forwards and
futures of underlying assets, underlying asset
volatility and correlation between underlying
assets, "quanto" volatility and correlations
Loans
Net present Value, CDS Option (or log-normal
model), Contingent CDS
Probability of default, Recovery rate, credit index
volatility.
As envisaged by IFRS 13, in determining fair value the Intesa Sanpaolo Group also takes into account the effect of non-
performance risk. This risk includes changes in the counterparty credit rating and changes in the issuer’s own credit risk.
IV. Valuation model for structured credit products
With regard to asset-backed securities (ABSs), if significant prices are not available, valuation techniques are used that
take into account parameters that can be gathered from an active market (level 2 inputs) or, where parameters cannot be
observed, estimated parameters (level 2 or 3 inputs, where immaterial or material).
In this case, the cash flows are obtained from infoproviders or specialised platforms, where available, or are taken from
the business plan of the transaction, supplemented with periodic reporting, such as the case of Non-Performing Loans
(NPLs) and Unlikely to Pay (UTP); the spreads are gathered from prices available on the market/market info provider,
further strengthened by a qualitative analysis relative to the performance of the underlying assets presumed from
periodic investor reports and aimed at highlighting structural aspects that are not (or not fully) encompassed by the
analyses described above, relating to the actual future ability to pay the expected cash flows and analyses of relative
value with respect to other similar structures.
In the case of securitised high-yield loans to European corporate borrowers (CLO HY loans), valuation techniques call for
calculation of the net present value of the expected cash flows, determined through specialised platforms, discounted
Notes to the consolidated financial statements – Part A – Accounting policies
286
using market spreads. When modelling expected future flows, account is taken of all contractual aspects of the HY CLO
loans that may influence the waterfall, i.e. the distribution of cash flows from the collateral on the notes.
After this valuation, credit analyses on underlying assets are fine-tuned to incorporate further valuation elements not
included in the quantitative models. In particular, a Qualitative Credit Review is provided for and entails an accurate
analysis of credit aspects referred to the specific structure of the HY CLO and to the collateral present. This is to identif y
any present or future weaknesses which emerge from the characteristics of the underlying assets, which could have
been missed by rating agencies and as such not fully considered in the valuations described in the previous point.
V. Valuation of non-contributed equities
Level 2 equities include:
- equities measured based on direct transactions, that is significant transactions on the stock registered in a time
frame considered to be sufficiently short with respect to measurement date and in constant market conditions;
- equities measured using relative methods, based on multipliers: implied multiples in transactions in comparable
listed or unlisted companies, within a time frame deemed sufficiently short with respect to the time of measurement
and under constant market conditions (M&A multiples) or implicit multiples in the stock market prices of a sample of
comparable companies (stock market multiples).
Level 3 equities for which the “relative” models described above are not applicable in significant terms, and, therefore,
“absolute” valuation models are used, include:
- equities for which analytical models based on flows are used, which determine the value through estimates of the
cash or income flows that the company is expected to generate over time, discounted using an appropriate rate
based on the level of risk of the instrument;
- equities measured based on net worth criteria such as NAV or Adjusted Net Asset Value (ANAV), which estimates
the fair value of the various components of the assets of the investee.
Any values deemed representative of the fair value of the equity instrument deriving from contractual clauses (for
example, options) are classified in level 2 or 3 of the fair value hierarchy, according to the observability of the inputs us ed
in the valuation. Specifically, if the negotiation of the clause resulted in strike prices or pre-defined algorithms and
multiples, the instrument is classified in level 2.
The cost criterion as estimate of fair value is used to a lesser extent, where none of the previous methods are applicable
due to lack of sufficient information, and in the cases where there is a wide range of possible fair value measurements
and it is not possible to identify the most appropriate value among these.
This case also includes Equity Instruments which, in accordance with IAS 32, have the characteristics to be considered
as equities.
VI. The valuation of hedge funds
The fair value of a hedge fund corresponds to the Net Asset Value (NAV) provided by the fund administrator, to which an
adjustment can be applied, deriving from a measurement process aimed at capturing the main risk factors that the
management of the funds is subject to, which consist of the following two types:
- counterparty (broker) risk, i.e. the risk that the assets of the fund are exposed to when a single service provider is
entrusted with prime brokerage or custodian activities, subject to the risk of default;
- illiquidity risk, i.e. the risk that the assets of the fund are illiquid due to the limited prices available or due to a lack of
information on the assessment policies used by the fund.
These risks are assessed on the basis of the information contained in the documentation received periodically from the
fund managers or administrators.
The fair value hierarchy level is Level 2, provided the Level 3 instruments do not exceed a set threshold.
VII. The valuation of private debt funds
For Private Debt AIFs (Alternative Investment Funds), the investment authorisation process involves an initial due
diligence to verify the consistency between each fund's asset valuation policy and the Guidelines and Rules for Valuation
of Financial Instruments at Fair Value. The fund is subsequently valued at NAV. The fair value hierarchy level is Level 3.
VIII. Valuation of closed-end private equity funds, real estate funds and closed-end funds resulting from sales of non-
performing loans
Closed-end private equity funds are usually valued using the latest Net Asset Value approved by the asset management
company (published half yearly or quarterly), adjusted solely to take into account events that have not yet occurred at the
reference date of the NAV, such as:
- a material transaction on a portfolio company;
- the bankruptcy or liquidation of a portfolio company;
- the alignment of any listed assets to current prices;
- draw downs and distributions by the fund.
Closed-end real estate funds are valued using the last available Net Asset Value, adjusted for any subsequent call ups or
distributions and, where considered necessary, applying a discount calculated using an internal model. Specifically, this
model enables the calculation of a discount on the Net Asset Value based on five different factors: (i) the size of the
asset management company that manages the fund; (ii) the number of subscribers; (iii) the fund’s historical return; (iv)
the fund’s return for the period; and (v) the level of debt. These factors are c alibrated differently based on the business
model and the fund’s resulting risk profile, distinguishing between core, value added and opportunistic funds.
With regard to closed-end funds resulting from sales of non-performing loans, where an information set is available that
makes it possible to conduct an analysis of the business plan of the positions held by the fund, individually or by uniform
cluster, to determine the fair value of the units of the fund, in general the Bank uses the support of an independent
expert, who, among other duties, carries out a comparison of performance of the business plans of the underlying
Notes to the consolidated financial statements – Part A – Accounting policies
287
exposures, and states in its report, that the fair value determined by the expert complies with the indications from the
main regulators
86
.
Where it is not possible to apply the approach mentioned above, for each fund a comparison is made between the
expected return of the fund and a benchmark rate, defined using a model that factors in various elements, such as: i) the
fund’s valuation policies, verifying whether they are compliant with criteria consistent with the definition of fair value
pursuant to IFRS 13, ii) verification that there is an updated business plan and of the performance of the fund compared
to the available business plan, iii) the characteristics of the fund’s assets, iv) the level of the cost of funding on the ma rket
for issuing liquid instruments, v) the completeness and extensiveness of the information provided by the fund, and vi) the
fund management methods. Where the expected return of the fund is higher than the defined benchmark rate, the NAV
communicated by the asset management company is used as the fair value measure. Where, instead, the benchmark
rate is higher than the expected return of the fund, the fair value is determined based on the NAV minus a discount,
which takes account of the spread between the benchmark rate and the expected return of the fund and the average
residual life of the fund (Weighted Average Life or WAL).
Valuation of financial assets and liabilities not measured at fair value on a recurring basis
Finally, for asset and liability financial instruments measured at amortised cost, whose fair value is determined solely for the
purposes of disclosure in the notes to the financial statements, the following is noted:
- the fair value of the bonds is calculated using the methods described above;
- the fair value measurement of the other medium- and long-term asset and liability financial instruments is performed by
discounting future cash flows using the discount rate adjustment approach, which requires credit risk factors to be taken
into account in the discount rate for future cash flows;
- for short-term assets and liabilities, the book value is assumed to be a reasonable approximation of fair value.
For more information see paragraph A.4.5.4.
As required by IFRS 13, the table below highlights, for financial assets and liabilities measured at level 3 fair value,
quantitative information on the significant, unobservable inputs used in the fair value measurement.
(thousands of euro)
Financial assets/ liabilities
Valuation technique
Main non-observable input
Minimum
value of
range of
changes
Maximum
value of
range of
changes
Unit
Favourable
changes in
FV
Unfavourable
changes in
FV
Securities and loans
Discounting Cash Flows
Credit Spread
-3
6
%
7,409
-11,764
Structured securities and loans
JD model
JD parameters
-37
13
%
134
-192
Structured securities and loans
Two-factor model
Correlation
-26
32
%
4,871
-3,413
ABSs
Discounting Cash Flows
Credit Spread
-1
3
%
611
-832
CLOs Cash
Discounting Cash Flows
Credit Spread
-6
6
%
503
-523
OTC derivatives subject to FV adjustment
for CVA/DVA
CVA
Loss Given Default Rate (LGD)
0
100
%
3,388
-2,315
OTC derivatives subject to FV adjustment
for CVA/DVA
CVA
Probability of default (PD)
based on counterparty's internal
rating
CCC
A
Internal
rating
44
-78
OTC Derivatives - Equity basket option
Black - Scholes model
Equity basket correlation
-11.16
87.39
%
517
-759
OTC Derivatives - Equity Option
Black - Scholes model
Historical volatility
8.21
76.17
%
967
-1,524
OTC Derivatives - Equity Option
Marshall Olkin Model
Historical correlation
2.44
47.95
%
66
-43
OTC Derivatives - Spread option on swap
rates
Bivariate log-normal model
Correlation between swap rates
-71.70
71.04
%
0
-1
A.4.2 Valuation processes and sensitivity
For a description of the valuation processes used by the Group for instruments measured at level 3 in a recurring and non-
recurring manner, see paragraphs A.4.1 and A.4.5 respectively.
As required by IFRS 13, for the financial assets and liabilities measured at level 3 fair value, the following table lists the effects
of a change in one or more significant non-observable parameters used in the valuation techniques adopted to determine the
fair value. Note that only the total material effects at the end of the year are shown in the table.
86
See Bank of Italy/Consob/Ivass Document no. 8 “Treatment in the financial statements of sales without recourse of unlikely-to-pay loans in exchange
for units of investment funds”, published in April 2020.
Notes to the consolidated financial statements – Part A – Accounting policies
288
Financial assets/liabilities
Non-observable parameters
Sensitivity
(thousands of
euro)
Change in non-
observable
parameter
FVTPL and FVTOCI securities and loans
Credit spread
-576
1 bp
FVTPL and FVTOCI securities and loans
JD parameters
-10
1%
FVTPL and FVTOCI securities and loans
Correlation
157
1%
OTC Derivatives - Equity
Correlation between underlying equity baskets
218
10%
OTC Derivatives - Equity
Historical volatility
-1,076
10%
OTC Derivatives - Equity CPPI
Historical correlation
-24
10%
A.4.3. Fair value hierarchy (transfers between the different levels)
A description of the policy for determining when transfers occur between the different levels of fair value hierarchy (see IFRS
13, par. 95) is provided above (see “Fair value hierarchy").
A.4.4. Other information
In calculating the bCVA, the Intesa Sanpaolo Group considers the net positions in derivatives of each counterparty (see
paragraph A.4.1 above for further details on the measurement of derivatives). For other cases, the Group does not make use
of the option provided in paragraph 48 of IFRS 13, which permits an entity “to measure the fair value of a group of financial
assets and financial liabilities on the basis of the price that would be received to sell a net long position (i.e. an asset) for a
particular risk exposure or paid to transfer a net short position (i.e. a liability) for a particular risk exposure in an orderly
transaction between market participants at the measurement date under current market conditions”.
General Independent Price Verification principles
The Intesa Sanpaolo Group governs and defines the independent price verification process through the Group Guidelines and
Rules on Independent Price Verification, documents that are coordinated by the Market and Financial Risk Management
Head Office Department and applied by the Parent Company and all consolidated subsidiaries of the Banking Group.
The “Guidelines on Independent Price Verification”, once a favourable opinion has been given by the Group Financial Risk
Committee, are revised and approved at least on an annual basis by the Board of Directors, with the support of the Risks and
Sustainability Committee. The level I and II “Rules on Independent Price Verification” are revised and approved at least on a n
annual basis by the Group Financial Risk Committee, which is specifically delegated to do so by the Management Bodies, and
which also reviews material changes and updates proposed by the Market and Financial Risk Management Head Office
Department.
According to the provisions of Regulation (EU) 575/2013 (Capital Requirement Regulation – CRR), Article 4, par. 1.70 and
Article 105, par. 8, the Intesa Sanpaolo Group governs the Independent Price Verification (IPV) process, which consists of th e
regular verification of the accuracy and independence of market prices or the data input in pricing models, carried out by an
organisational unit independent from the business functions, at a frequency commensurate with the trading carried out and
the nature of the market.
The Intesa Sanpaolo Group has set up an IPV process with 3 levels of control in line with the provisions of Bank of Italy
Circular 285/2013 (Supervisory regulations for banks), incorporated into the Integrated Internal Control System, which
requires the risk management processes to be incorporated in the processes and methods for valuing the company activities,
also for accounting purposes.
Within the IPV, the level I, II and III control functions have the following main responsibilities:
- the level I control function participates in the definition of the related methodological framework and carries out the level I
implementations and controls, reporting the results to the business function and the level II control functions;
- the level II control function defines the methodological and control framework, ensures alignment with current regulations
and consistency between the IPV controls, accounting valuations and additional valuation adjustments (AVA) (carried
out, respectively, on the basis of the Guidelines and Rules for Valuation of Financial Instruments at Fair Value and the
Guidelines and Rules for Prudent Valuation of Financial Instruments at Fair Value) and supervises the level I controls
and performs the level II controls;
- the level III control function carries out internal audit controls to identify breaches of procedures and regulations, as well
as to periodically assess the completeness, adequacy, functionality (in terms of efficiency and effectiveness) and
reliability of the organisational structure of the other components of the internal control system and the IT system at
Group level, at scheduled deadlines in relation to the nature and intensity of the risks.
The level I and II IPV controls are qualitative and quantitative controls and are distinguished according to the type o f
instruments subject to control. They are applied consistently to both the input data underlying the valuations and the
valuations themselves, and ensure consistency between the management valuations and the accounting valuations carried
out in the various systems. They are characterised by completeness and suitability of application, absence of overlaps,
sequentiality and complementarity in execution. The IPV control instruments use, as far as possible, specific applications or IT
procedures, which enable extensive data analysis on a daily basis. Specifically:
- the level I controls are aimed at ensuring the validation of the market data entered into the systems and are based on an
in-depth analysis of the data obtained from external providers. If the level I controls detect that certain thresholds have
been exceeded for the data contained in the systems, or the data is not considered correct by the level I control
Notes to the consolidated financial statements – Part A – Accounting policies
289
functions, a comparison process (challenge) is activated with the involvement of the business function and the level II
control functions, in line with the degree of complexity of the report;
- the level II controls are characterized by sequentiality and complementarity in execution with the level I controls and are
designed to ensure alignment between management and accounting valuations, based on an in-depth analysis of
consensus or counterparty data and, where these are not available, through the application of pricing models associated
with the respective instruments.
The results of the IPV process are analysed, assessed and coordinated by the Financial Measurements Working Group, a
technical body set up specifically for this purpose, with the aim of facilitating integration and comparison between the business
functions and the control functions.
General prudent value principles
The framework of financial measurements is completed with the prudent valuation of financial instruments measured at fair
value, which involves the calculation of additional valuation adjustments for prudential purposes, without impacts on the fair
value calculated for accounting purposes in accordance with the IFRS.
The Intesa Sanpaolo Group governs and defines the prudent value measurement of financial instruments through the Group
Guidelines and Rules for Prudent Valuation of Financial Instruments at Fair Value, prepared by the Market and Financial Risk
Management Head Office Department and applied by the Parent Company and all the consolidated subsidiaries of the
Banking Group.
The “Guidelines on Prudent Valuation of Financial Instruments”, once a favourable opinion has been given by the Group
Financial Risk Committee, are revised and approved at least on an annual basis by the Board of Directors, with the support of
the Risks and Sustainability Committee. The “Rules for Prudent Valuation of Financial Instruments” are revised and approved
at least on an annual basis by the Group Financial Risk Committee, which is specifically delegated to do so by the
Management Bodies, and which also reviews material changes and updates proposed by the Market and Financial Risk
Management Head Office Department.
In accordance with the provisions of Regulation (EU) 575/2013 (Capital Requirements Regulation – CRR), prudent valuation
entails the calculation of specific additional valuation adjustments (AVAs) for the financial instruments measured at fair value,
aimed at capturing different sources of valuation uncertainty and ensuring the achievement of a suitable level of certainty i n
the measurement of the positions. The total value of the AVAs is deducted from the Common Equity Tier 1 capital, without
impacts on accounting fair values.
The Intesa Sanpaolo Group, in line with the criteria indicated in Delegated Regulation (EU) 2016/101, is subject to the
application of the core approach for the determination of AVAs both at individual and at consolidated level for all the positions
measured at fair value. In particular the following AVAs are considered:
- market price uncertainty: this reflects the uncertainty of the market prices, calculated at valuation exposure level;
- close-out costs: it reflects the uncertainty of the exit price calculated at valuation exposure level;
- model risks: it considers the valuation model risk which arises due to the potential existence of a range of different
models or model calibrations, which are used by market participants, and the lack of a firm exit price for the specific
product being valued;
- unearned credit spreads: it reflects the valuation uncertainty in the adjustment necessary according to the applicable
accounting framework to include the current value of expected losses due to counterparty default on derivative positions;
- investment and funding costs: it represents the valuation uncertainty in the funding costs used when assessing the exit
price according to the applicable accounting framework;
- concentrated positions: it reflects the uncertainty relating to the exit price of the positions defined as concentrated;
- future administrative costs: it considers administrative costs and future hedging costs over the expected life of the
valuation exposures for which a direct exit price is not applied for the close-out costs AVAs for concentrated positions;
- early termination: it considers the potential losses arising from non-contractual early terminations of customer trades;
- operational risks: it considers the potential losses which may be incurred consequently to the operational risks connected
to the valuation processes.
The prudent value corresponds to the exit price from the position with a level of certainty equal to 90%. Where possible, this
value is determined on the basis of a distribution of exit prices observed on the market. In all the other cases, an expert-based
approach is used, referring to the qualitative and quantitative information available.
The AVA value associated to the single position and to the single source of uncertainty in valuation thus corresponds to the
difference between the prudent value and the fair value. The total AVA is obtained by aggregating the single AVAs, taking int o
account the corresponding weighting ratios.
The “Rules for Prudent Valuation of Financial Instruments” outline, for each AVA, the definition and interpretation, the scop e
of application, the input data and the detailed calculation method for each class of financial instrument.
Notes to the consolidated financial statements – Part A – Accounting policies
290
FAIR VALUE OF REAL ESTATE AND VALUABLE ART ASSETS
Fair value of real estate assets
As extensively illustrated in the first part regarding the accounting policies, the Group has adopted the revaluation model a s
the basis of measurement for the owner-occupied properties accounted for according to IAS 16 and fair value for the
investment properties accounted for according to IAS 40.
Measurement of real estate assets
The revaluation model applied to owner-occupied properties envisages that property and equipment, whose fair value can be
reliably determined, is recorded at a revalued amount, equal to its fair value at the date of the revaluation, net of depreciation
and any accumulated impairment losses.
For the properties held for investment, the Intesa Sanpaolo Group has chosen the fair value method, according to which, after
initial recognition, all investment properties are measured at fair value.
Valuation approach
IFRS 13 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderl y
transaction between market participants at the measurement date”.
The valuation approach has been defined on the basis of the business relevance and plan for the use of the properties, which
consists of three main groups:
– “trophy assets”, i.e. particularly prestigious properties used by management functions located in the main cities where the
Bank is based or properties of particular historical and artistic interest because they are listed by the Ministry for Cultural
Heritage and Activities;
– “owner-occupied properties”;
– “investment properties”.
The properties are valued individually asset-by-asset without considering any discount, or premium, that may be agreed
during commercial negotiations if all or part of the portfolio is sold in bulk or in lots.
The Intesa Sanpaolo Group has chosen to assign the valuation activity to professionally qualified external companies with an
international structure, able to provide property valuations based on the RICS Valuation standards
87
which guarantee:
– determination of the value consistent with the fair value configuration indicated in the IAS/IFRS;
– compliance with the professional, ethical and independence requirements for experts, in line with the provisions of
international and European standards.
To determine the value of the assets, the following valuation methods are used based on the characteristics of the asset and
the conditions of the market of reference; the valuer determines the most suitable method for each individual property.
– The Discounted Cash Flow Method: the discounted cash flow method is based on the discounting (for a variable period
based on the rental/occupational situation of the property and its subsequent optimisation) of the future net proceeds
from the rental or sale of the property. At the end of this period, the value of the property is assumed to be the sale price
obtained by capitalising the income of the last year at a market rate for investments similar to the object of the estimate
or through a split sale. This method is used for the valuation of all the owner-occupied properties or real estate leased to
third parties, located in Italy.
– Comparative or Market Method: the comparative or market method is based on the comparison between the assets
examined and similar assets recently sold/purchased or offered on the same market or in competitive environments. This
criterion is based on a comparison with properties that have recently been sold or offered on the open market and, if
possible, have the same characteristics. In the absence of observations directly related to the property examined, cases
are used that are as similar as possible to the property examined, making the necessary adjustments. This method,
which also represents the basis for other valuation methods, can be adopted in particular for non-owner-occupied assets
and/or, in any case, for unrestricted and available assets in Italy and abroad.
– Direct capitalisation income approach: the income approach is based on the current value of the potential market income
of a property, obtained by capitalising the income at a market rate. This approach is applied mainly to owner-occupied
properties abroad, where a prolonged stay within the building is envisaged.
– Investment Value (Worth): the Investment Value (Worth) is defined by the International Valuation Standard as: “the value
of an asset to a particular owner or prospective owner for individual investment or o perational objectives”. This definition
is consistent with the provisions of the latest edition of the “RICS Valuation - Global Standards 2022” of the Royal
Institution of Chartered Surveyors of the United Kingdom, where the Investment Value is defined as “the value of an
asset to the owner or a prospective owner for individual investment or operational objectives”.
The Investment Value is applicable to properties built by the entity or properties with a strong business relevance subject
to significant investments for technological, construction and functional adaptation.
The Investment Value of these properties is determined on the basis of a 12+6 year plan for business use without break
options, whose annual rent is determined by applying an appropriate gross rate of return to the amount of direct and
indirect costs capitalised by the Owner, including the costs of purchasing the land.
For the purposes of valuation, if necessary and where relevant, the assumptions also include sustainability considerations,
connected with climate change and energy efficiency factors, as well as aspects linked to any specific legislation (for example,
configuration, accessibility, etc.). To date, the Group has not made substantial adjustments to fair value due to climate
change, aside from those already valued by the indicators observable on the reference market.
87
Standards set out in the Royal Institution of Chartered Surveyors of the United Kingdom document “RICS Valuation – Global Standard” (also known
as the “Red Book”): the updated version was issued in November 2021 and took effect on 31 January 2022.
Notes to the consolidated financial statements – Part A – Accounting policies
291
Frequency of valuation
Revaluations must be made with sufficient regularity to ensure that the carrying amount does not differ materially from that
which would be determined using fair value at the reporting date.
The frequency of revaluations depends upon the changes in fair values of the property and equipment being revalued. When
the fair value of a revalued asset differs materially from its carrying amount, a further revaluation is required.
Specifically, based on the market trends, different valuation frequencies have been identified that, according to the
characteristics of the assets and their location, are considered capable of capturing the significant changes in the value of
the assets.
The following distinction is made for owner-occupied properties:
– for trophy assets, the revaluation is carried out by verifying the value through a scenario analysis (market trend analysis)
every year and with a new appraisal every two years;
– for the other owner-occupied properties, the revaluation is carried out through scenario analysis (market trend analysis)
every year and through a new appraisal every three years.
If the scenario analysis identifies significant changes (+/- 10%), specific and updated appraisals must be carried out to adjust
the fair value of the asset to the valuations of the real estate market.
For investment properties, the value is determined on the basis of new appraisals each year.
Based on the rules referred to, in 2022, investment properties as well as owner-occupied properties which, based on the
scenario analysis, recorded changes on the defined threshold, were subject to periodic valuation.
Scenario analysis
As part of the annual update of the fair value of the owner-occupied properties, in the years when a revaluation of the property
is not envisaged, a scenario analysis (market trend analysis) is carried out using the best information sources available for the
various countries in which the properties are located, in order to identify deviations, using databases, in the market values
between the analysis period and the previous period.
In particular, for real estate located in Italy, the changes are defined using at least 3 different sources. The main source is that
provided by the Italian Revenue Agency, based on the specific OMI (Real Estate Market Monitor) zones. The second
publication source is Nomisma for which, for the related zoning, the same queries are conducted as those for the OMI (main
database). Lastly, the third source is based on the analyses of the changes during the year surveyed in terms of the offers
present on the real estate market.
Accordingly, the experts identify the annual deviations in rents and/or prices by related asset class for each property.
Real estate located abroad is grouped, for each country, into different clusters based on location and asset class. Specific
market analyses are conducted based on local and national knowledge of the particular target real estate market.
The market study also takes account of the following macroeconomic drivers:
– analysis of economic data (unemployment rate, GDP per capita, inflation and consumer price index); these
macroeconomic factors constitute the first economic analysis, supporting the real estate market forecasts;
– movement in average yield;
– movement in market rents;
– range of movement in unit values.
The above-mentioned market survey, together with a qualitative weighting of the macroeconomic key drivers is used to
determine a range of percentage deviation from the last assessment carried out, which is compared with the target threshold
set, identifying a synthetic percentage factor for each individual property, included in a single worksheet.
This activity is carried out close to the end of the year in order to produce a range of deviations within a reference threshold
and to enable the timely planning of the updating of the specific appraisals for the properties whose deviation exceeds the
threshold.
The permitted variation threshold is +/-10%.
If the deviations identified exceed this threshold, a new valuation will be carried out before the end of the year.
Sensitivity of valuations
Just as for financial instruments, level 3 non-financial assets and liabilities measured at fair value for which, due to the
valuation model used to determine the fair value, execution is possible, and whose results are significant, are subject to
sensitivity analysis. The analysis essentially concerned the properties of the Parent Company Intesa Sanpaolo, which
represent the Core perimeter of the Group's real estate assets.
It is noted that the sensitivity analysis was conducted by identifying the most important variables in the valuation model used
to value the various classes of real estate, represented by the discounted cash flow method. Specifically, taking account of
the trend recorded in the various asset classes of the real estate market and the parameters featuring greater
volatility/variability, for owner-occupied properties, reference was made to the net capitalisation rate (yield) and the average
medium/long-term inflation rate, while for investment properties, to the exit value. In compliance with the estimate
assumptions applied to real estate assets, for the purpose of the analysis, variation ranges were used that were consistent
with the potential trends in the market at the reporting date. For owner-occupied properties, a change of +/- 25 bps for the net
capitalisation rate and a concurrent change of -/+15 bps for the inflation rate were assumed, in relation to which average
deviations of fair value of +4.4% and -4.3% were recorded. For investment properties, a change of +/- 5% in the exit value
was assumed, in relation to which there were average deviations of fair value of +4.8% and -5.2%.
Notes to the consolidated financial statements – Part A – Accounting policies
292
Fair value of valuable art assets
The Bank’s valuable art assets are also valued using the revaluation model, which envisages that property and equipment,
whose fair value can be reliably determined, is recorded at a revalued amount, equal to its fair value at the date of the
revaluation.
Works of art included in the asset class “valuable art assets” are works of particular importance, recognised for their histo ric
and artistic value by experts and in line with the ministerial guidelines, and particularly those set out in Ministerial Decree 537
of 6 December 2017 on the exportation of works of art, such as: the state of preservation, the historical importance of the
artist, the importance of the work in terms of art criticism/history, illustrious origin, certain quality and attribution and the
declaration of interest by the Italian government.
Valuation approach
The valuation is carried out by determining the value through external appraisals, entrusted to qualified independent experts.
These values are obtained from online databases such as Artnet and Artprice, which list over 100 million works of art and
monitor the results of leading Italian and international auction houses. These are objective parameters that are compared wit h
the market as a whole, in an analysis that also involves monitoring galleries and art fairs.
In particular, the factors considered for the fair value measurement include objective factors relating to the historical-critical-
artistic value of the author, state of preservation, execution technique, size and quality of the artwork, importance of the
artwork in the production by the artist, publication of the artwork in specialist catalogues, period of execution of the artwork,
international exposure of the artworks by the artist, distinguished provenance, certainty of attribution, guarantee of authenticity
of an artwork, as well as other factors (which may change over time, depending on the evolution and tastes of the market),
such as the reputation of the museum hosting the artwork by the artist, the prestige of fairs/exhibitions/galleries/auction
houses that handle the artwork, the reputation of its critics and collectors, and the quality of the communications concernin g
the artist’s work.
Once these factors have been identified, the fair value is determined comparing them firstly with artworks similar to those
examined (in terms of period of production/year, technique, size, type of subject and state of preservation), by the same artist
and from the same period, if available (this is more feasible for modern and contemporary works) and, secondly, with works
by artists or schools and areas that are close in style, philosophy and importance in the same historical period. Where several
similar artworks are available, average values are used to take account of price volatility.
In addition to considering the trends in auction trading, starting from the most recent trading and also including unsold items in
the analysis (which are a possible indicator of the loss of market value for the artwork/artist), the valuation also considers the
current market interest in an artwork or an artist, measured by the number and quality of temporary exhibitions held in
internationally important museum spaces and accompanied by specific publications.
The valuations also take into account any declarations of historical-artistic interest formally expressed by the Italian Ministry of
Cultural Heritage and Activities (commonly referred to as "notifications"), which tie part of the artworks in the collection to
Italy's heritage and restrict their circulation to the country’s territory, reducing the price obtainable on the international market.
The pricing is also influenced by the importance of the buyers/sellers (e.g. prices paid by famous collectors or known
investors may be more significant).
The valuation approach is based on the monitoring of the objective market values of the artworks included in the category
examined, which follows three methodological approaches:
– prudent basis, analysing the average values of a variety of different information sources, based on robust, updated and
statistically representative databases: in a market of “unique” artworks, often without transactions for decades, this
approach ensures the periodic identification of any outlier values and avoids following speculative trends;
– comparison, monitoring the transactions that have taken place at a global level in a variety of distribution channels, in
order to avoid considering only certain forms of transaction and the related financial values: in a global market with global
demand, this approach enables verification of the presence of any geographical arbitrage or specific
appreciation/depreciation phenomena with potential impacts;
– recurrence, since it updates and monitors price trends over the shortest period of time that the specific features of the
market allow, i.e. the half year: in a market in which there are no public trades monitored daily, the shortness of the
measurement period ensures maximum attention and timeliness of any changes.
This approach is applied to all the "valuable art assets".
Frequency of valuation
For valuable art assets, the revaluation is carried out by means of an expert appraisal every three years. However, a scenari o
analysis is carried out annually to identify any appreciable changes in value in order to bring forward the valuation.
Based on the rules referred to, in 2022, artworks which, based on the scenario analysis, recorded changes on the defined
threshold, were subject to valuation.
Scenario analysis
In order to identify and determine the changes in the market of the artworks being valued, market trends are monitored to
detect signs of significant change that require appraisals to be made in advance with respect to the frequency established.
This monitoring is carried out on a two-fold basis:
– Monitoring of the market prices of the top artworks in terms of value held in Intesa Sanpaolo’s collections, which
represent 75% of the total value of the artworks included in the “valuable art assets” class, by verifying both the results of
the main international auctions (which are based on a calendar of precise seasonal deadlines) and the reports of the two
main world databases (Artprice and Artnet), whose analytics provide useful tools for monitoring prices;
– Monitoring the performance of the art market in general, to identify trends and changes with respect to Intesa Sanpaolo’s
“valuable art assets”, verifying both the results of the main international auctions (which are based on a calendar of
precise seasonal deadlines), and the reports of the two main world databases (Artprice and Artnet); since the works of
many artists in the Intesa Sanpaolo’s collection very rarely go up for auction due to the limited number of items left in the
market, it is important to monitor the trend of similar artists or works; accordingly, the monitoring is not just limited to the
Notes to the consolidated financial statements – Part A – Accounting policies
293
works held and their artists, but also extends to the authors and artworks related to the same area, to take into account
trend data.
If the annual monitoring identifies a potential, positive or negative, value deviation of more than 15% for individual
artworks/collections of artists in Intesa Sanpaolo’s collections and comparable on the basis of objective criteria (such as
period of production/year, size, technique, period of production, etc.), the appraisals are commissioned according to the usual
internal procedures in order to align the carrying amount.
Quantitative information
A.4.5. Fair value hierarchy
A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: fair value by level - Excluding insurance
companies
Assets / liabilities at fair value
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Financial assets measured at fair value through
profit or loss
11,311
32,672
3,594
24,262
25,080
3,389
a) Financial assets held for trading
10,331
32,008
183
22,615
24,379
187
of which: Equities
860
-
22
674
-
17
of which: quotas of UCI
264
5
21
116
-
25
b) Financial assets designated at fair value
-
1
-
-
1
3
c) Other financial assets mandatorily measured at
fair value
980
663
3,411
1,647
700
3,199
of which: Equities
122
107
242
161
116
225
of which: quotas of UCI
858
191
2,401
1,486
149
2,166
2. Financial assets measured at fair value through
other comprehensive income
41,937
7,422
357
59,084
8,004
492
of which: Equities
513
510
325
1,537
1,314
421
3. Hedging derivatives
-
10,062
-
-
1,732
-
4. Property and equipment
-
-
7,144
-
-
7,364
5. Intangible assets
-
-
-
-
-
-
Total
53,248
50,156
11,095
83,346
34,816
11,245
1. Financial liabilities held for trading
7,285
39,085
142
22,241
33,946
119
2. Financial liabilities designated at fair value
-
8,765
30
6
3,642
26
3. Hedging derivatives
-
5,346
-
-
4,868
-
Total
7,285
53,196
172
22,247
42,456
145
With regard to assets, level 3 instruments, which allow for more discretion in fair value measurement, account for a limited
portion of the portfolio, with an impact of 9.7% on total assets (8.7% as at 31 December 2021). The majority of level 3
financial assets is represented by quotas of UCIs, of which, under Financial assets mandatorily measured at fair value, 290
million euro is represented by units of the Atlante Fund and the Italian Recovery Fund put in place as part of the regulations to
support the banking system.
Over 46% of assets measured at fair value are determined based on market prices, and therefore without any discretion by
the valuator.
Property and equipment measured at level 3 fair value includes real estate assets and valuable art assets, which represent
64% of the balance sheet assets at level 3 fair value.
As at 31 December 2022, the impact of non-performance risk (Credit Value Adjustment and Debt Value Adjustment) in the
determination of the fair value of derivative contracts amounted to a reduction of 141 million euro in positive fair value and a
reduction of 79 million euro in negative fair value.
The impact of the Funding Value Adjustment in reducing the fair value amounted to 63 million euro, equal to the cost of
funding the cash flows generated by the Bank’s overall portfolio of OTC derivatives.
Determining the quantity of those adjustments is irrespective of the effects of the correlated operational hedging strategies,
where present.
As far as liabilities are concerned, level 3 instruments account for less than 1% of total liabilities.
Notes to the consolidated financial statements – Part A – Accounting policies
294
In addition to the transfers relating to financial assets and liabilities measured at level 3 as detailed below, please note that
the following transfers were made during 2022:
– from level 1 to level 2:
o financial assets held for trading for 99 million euro (book value as at 31 December 2022);
o other financial assets mandatorily measured at fair value for 51 million euro (book value as at 31 December 2022);
o financial assets measured at fair value through other comprehensive income for 131 million euro (book value as at
31 December 2022);
o financial liabilities designated at fair value for 3 million euro (book value as at 31 December 2022);
– from level 2 to level 1:
o financial assets held for trading for 100 million euro (book value as at 31 December 2022);
o financial assets measured at fair value through other comprehensive income for 47 million euro (book value as at 31
December 2022);
o financial liabilities held for trading for 4 million euro (book value as at 31 December 2022).
The transfers between fair value levels are determined by the trends in the observability of prices or market data used to
measure the instruments and by the materiality of the unobservable inputs.
The transition from level 1 to level 2 is a consequence of the disappearance of an active market for that instrument assessed
by analysing the reliability and the reciprocal consistency of the available prices according to the provisions of the Group’s
Fair Value Policy. Conversely, securities for which a mark-to-model measurement is performed using inputs that can be
observed on the market – classified, therefore, as level 2 – are transferred to level 1 when the existence of an active market is
identified.
A.4.5.1 Bis Assets and liabilities measured at fair value on a recurring basis: fair value by level - Insurance companies
(millions of euro)
Assets / liabilities at fair value
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Financial assets held for trading
297
249
356
344
293
390
of which: Equities
-
-
-
-
-
-
of which: quotas of UCI
97
-
46
122
-
49
2. Financial assets designated at fair value
through profit or loss
85,608
22
587
100,515
143
401
of which: Equities
3,016
-
-
3,510
-
-
of which: quotas of UCI
78,025
-
-
91,908
109
-
3. Financial assets available for sale
77,810
3,158
4,625
93,910
6,305
4,208
of which: Equities
1,921
7
67
2,201
7
54
of which: quotas of UCI
8,306
-
4,208
9,879
-
3,742
4. Hedging derivatives
-
13
-
-
291
-
5. Property and equipment
-
-
7
-
-
8
6. Intangible assets
-
-
-
-
-
-
Total
163,715
3,442
5,575
194,769
7,032
5,007
1. Financial liabilities held for trading
1
8
-
-
42
61
2. Financial liabilities designated at fair value
through profit or loss
-
71,565
-
-
84,667
-
3. Hedging derivatives
-
170
-
-
-
-
Total
1
71,743
-
-
84,709
61
With regard to insurance companies, level 3 instruments, which allow for more discretion in fair value measurement, account
for a limited portion of the portfolio. They amount to 3.2% of Assets (2.4% as at 31 December 2021).
94.8% of financial assets measured at fair value in the insurance segment are determined based on market prices, and
therefore without any discretion by the valuator.
Liabilities at fair value were almost entirely measured using level 2 inputs.
In addition to the transfers relating to financial assets and liabilities in the insurance segment designated at level 3 as detailed
below, please note that the following transfers were made during 2022:
– from level 1 to level 2:
o financial assets measured at fair value through profit and loss for 3 million euro (book value as at 31 December
2022);
o financial assets available for sale for 143 million euro (book value as at 31 December 2022);
– from level 2 to level 1:
o financial assets measured at fair value through profit and loss for 2 million euro (book value as at 31 December
2022);
o financial assets available for sale for 2,114 million euro (book value as at 31 December 2022).
Notes to the consolidated financial statements – Part A – Accounting policies
295
The transfers between fair value levels are determined by the trends in the observability of prices or market data used to
measure the instruments and by the materiality of the unobservable inputs.
The transition from level 1 to level 2 is a consequence of the disappearance of an active market for that instrument assessed
by analysin g the reliability and the reciprocal consistency of the available prices according to the Group’s Guidelines and
Rules for Valuation of Financial Instruments at Fair Value. Conversely, securities for which a mark-to-model measurement is
performed using inputs that can be observed on the market – classified, therefore, as level 2 – are transferred to level 1 when
the existence of an active market is identified.
A.4.5.2. Annual changes in assets measured at fair value on a recurring basis (level 3) - Excluding insurance companies
(millions of euro)
Assets measured at fair value through profit or
loss
Financial
assets
measured at
fair value
through other
comprehensive
income
Hedging
derivatives
Property
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. Initial amount
3,389
187
3
3,199
492
-
7,364
-
2. Increases
1,070
94
-
976
93
-
278
-
2.1 Purchases
390
20
-
370
60
-
76
-
2.2 Gains recognised in:
177
7
-
170
18
-
32
-
2.2.1 Income statement
177
7
-
170
-
-
5
-
- of which capital gains
152
7
-
145
-
-
-
-
2.2.2 Shareholders' equity
-
X
X
X
18
-
27
-
2.3 Transfers from other levels
38
11
-
27
14
-
-
-
2.4 Other increases
465
56
-
409
1
-
170
-
3. Decreases
-865
-98
-3
-764
-228
-
-498
-
3.1 Sales
-208
-43
-3
-162
-100
-
-48
-
3.2 Reimbursements
-5
-
-
-5
-14
-
-
-
3.3 Losses recognized in:
-264
-42
-
-222
-25
-
-181
-
3.3.1 Income statement
-264
-42
-
-222
-4
-
-165
-
- of which capital losses
-243
-35
-
-208
-1
-
-
-
3.3.2 Shareholders' equity
-
X
X
X
-21
-
-16
-
3.4 Transfers to other levels
-38
-12
-
-26
-65
-
-
-
3.5 Other decreases
-350
-1
-
-349
-24
-
-269
-
4. Final amount
3,594
183
-
3,411
357
-
7,144
-
The captions Other increases and Other decreases in Financial assets mandatorily measured at fair value mainly refer to
quotas of UCIs, and include the payments made and the reimbursements received by the Bank, with no change in the quotas
held. With regard to Property and equipment, the captions mainly include transfers of these assets from investment to
operations and vice versa.
Notes to the consolidated financial statements – Part A – Accounting policies
296
A.4.5.2. Bis Annual changes in assets measured at fair value on a recurring basis (level 3) - Insurance companies
(millions of euro)
Financial
assets
held for
trading
Financial
assets
designated
at fair value
through profit
or loss
Financial
assets
available
for sale
Hedging
derivatives
Property
and
equipment
Intangible
assets
1. Initial amount
390
401
4,208
-
8
-
2. Increases
92
186
1,091
-
-
-
2.1 Purchases
58
-
876
-
-
-
2.2 Gains recognised in:
-
-
199
-
-
-
2.2.1 Income statement
-
-
-
-
-
-
- of which capital gains
-
-
-
-
-
-
2.2.2 Shareholders' equity
X
X
199
-
-
-
2.3 Transfers from other levels
32
-
12
-
-
-
2.4 Other increases
2
186
4
-
-
-
3. Decreases
-126
-
-674
-
-1
-
3.1 Sales
-4
-
-354
-
-
-
3.2 Reimbursements
-
-
-12
-
-
-
3.3 Losses recognized in:
-68
-
-236
-
-
-
3.3.1 Income statement
-68
-
-53
-
-
-
- of which capital losses
-
-
12
-
-
-
3.3.2 Shareholders' equity
X
X
-183
-
-
-
3.4 Transfers to other levels
-54
-
-68
-
-
-
3.5 Other decreases
-
-
-4
-
-1
-
4. Final amount
356
587
4,625
-
7
-
Notes to the consolidated financial statements – Part A – Accounting policies
297
A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) - Excluding insurance
companies
(millions of euro)
Financial liabilities
held for trading
Financial liabilities
designated
at fair value
Hedging
derivatives
1. Initial amount
119
26
-
2. Increases
101
4
-
2.1 Issues
71
-
-
2.2 Losses recognised in:
-
3
-
2.2.1 Income statement
-
3
-
- of which capital losses
-
3
-
2.2.2 Shareholders' equity
X
-
-
2.3 Transfers from other levels
30
-
-
2.4 Other increases
-
1
-
3. Decreases
-78
-
-
3.1 Reimbursements
-
-
-
3.2 Repurchases
-
-
-
3.3 Gains recognised in:
-19
-
-
3.3.1 Income statement
-19
-
-
- of which capital gains
-16
-
-
3.3.2 Shareholders' equity
X
-
-
3.4 Transfers to other levels
-50
-
-
3.5 Other decreases
-9
-
-
4. Final amount
142
30
-
“Financial liabilities held for trading” refer to derivative contracts with a negative fair value.
Transfers from and to other levels described in the above tables were carried out in accordance with the guidelines described
in paragraph A.4.3 - Fair value hierarchy.
For more exhaustive information on the sensitivity of financial instruments to changes in the main input parameters, referenc e
should be made to the analyses of the trading book in Part E of these Notes to the consolidated financial statements.
Notes to the consolidated financial statements – Part A – Accounting policies
298
A.4.5.3 Bis Annual changes in liabilities measured at fair value on a recurring basis (level 3) - Insurance companies
(millions of euro)
Financial liabilities
held for trading
Financial liabilities
designated
at fair value
through profit
or loss
Hedging
derivatives
1. Initial amount
61
-
-
2. Increases
-
-
-
2.1 Issues
-
-
-
2.2 Losses recognised in:
-
-
-
2.2.1 Income statement
-
-
-
- of which capital losses
-
-
-
2.2.2 Shareholders' equity
X
X
-
2.3 Transfers from other levels
-
-
-
2.4 Other increases
-
-
-
3. Decreases
-61
-
-
3.1 Reimbursements
-
-
-
3.2 Repurchases
-
-
-
3.3 Gains recognised in:
-61
-
-
3.3.1 Income statement
-61
-
-
- of which capital gains
-
-
-
3.3.2 Shareholders' equity
X
X
-
3.4 Transfers to other levels
-
-
-
3.5 Other decreases
-
-
-
4. Final amount
-
-
-
A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: fair value
by level- Excluding insurance companies
(millions of euro)
Assets/liabilities not measured at fair value
or measured at fair value on a non-recurring basis
31.12.2022
31.12.2021
Book
value
Level 1
Level 2
Level 3
Book
value
Level 1
Level 2
Level 3
1. Financial assets measured at amortised cost
528,078
28,958
320,105
161,493
668,866
27,206
484,983
165,462
2. Investment property
-
-
-
-
-
-
-
-
3. Non-current assets held for sale and discontinued
operations
638
-
-
638
1,422
-
-
1,422
Total
528,716
28,958
320,105
162,131
670,288
27,206
484,983
166,884
1. Financial liabilities measured at amortised cost
667,586
41,748
592,888
32,270
710,055
47,030
625,414
39,759
2. Liabilities associated with non-current assets
15
-
-
15
30
-
-
30
Total
667,601
41,748
592,888
32,285
710,085
47,030
625,414
39,789
Notes to the consolidated financial statements – Part A – Accounting policies
299
A.4.5.4 Bis Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: fair
value by level - Insurance companies
(millions of euro)
Assets/liabilities not measured at fair value
or measured at fair value on a non-recurring basis
31.12.2022
31.12.2021
Book
value
Level 1
Level 2
Level 3
Book
value
Level 1
Level 2
Level 3
1. Investments held to maturity
-
-
-
-
-
-
-
-
2. Due from banks
40
-
40
-
41
-
41
-
3. Loans to customers
40
-
34
6
44
-
39
5
4. Investment property
-
-
-
-
-
-
-
-
5. Non-current assets held for sale and discontinued
operations
-
-
-
-
-
-
-
-
Total
80
-
74
6
85
-
80
5
1. Due to banks
629
-
17
556
623
-
-
650
2. Due to customers
587
-
452
135
188
-
93
95
3. Securities issued
1,334
-
1,171
-
1,335
-
1,338
-
4. Liabilities associated with non-current assets
-
-
-
-
-
-
-
-
Total
2,550
-
1,640
691
2,146
-
1,431
745
Financial assets and liabilities
For financial assets and liabilities not measured at fair value (loans and loans represented by securities, amounts due to
customers and securities issued), the Group measures fair value by calculating the present value of future cash flows at a rate
that incorporates the estimate of the main risks and uncertainties associated with the financial instrument to be measured
(discount rate adjustment approach).
In particular, the interest rate used to discount the future cash flows is determined by taking into account the following
risk factors:
– interest rate risk, which represents the rate offered by the market for each unit of capital provided to risk-free
counterparties;
– credit risk, which is the premium for having provided capital to counterparties with insolvency risk;
– the cost of liquidity connected to credit.
For fixed-rate instruments, the cash flows are those envisaged by the contracts. For floating-rate instruments, the future cash
flows are determined based on forward rates, implicit in the zero-coupon interest rate curves observed at the various fixing
dates and differentiated by indexation type.
The value of the risk premium (credit spread) is determined per individual position, through acquisition of the risk class (LGD)
and rating (PD). These amounts, together with the average residual financial life, constitute the guideline for acquisition of the
credit spread. For securities issued by Intesa Sanpaolo, the construction of the spread curve follows the rules set out in th e
Rules for Valuation of Financial Instruments at Fair Value.
The following assumptions were used in determining the fair values indicated in table A.4.5.4:
– for loans represented by securities, the same rules envisaged for the fair value measurement of other categories of
securities are used;
– for securities issued, the rules used are the same as those applied to securities under assets.
Notes to the consolidated financial statements – Part A – Accounting policies
300
A.5 – INFORMATION ON “DAY ONE PROFIT/LOSS”
Under IFRS 9, financial instruments shall be initially recognised at fair value. The fair value of a financial instrument at initial
recognition is normally the "transaction price", i.e. the fair value of the consideration given or received in relation to,
respectively, financial assets and liabilities.
The fact that, upon initial recognition, the fair value of a financial instrument normally coincides with the transaction price is
usually intuitively verifiable in the case of transactions falling under level 1 of the fair value hierarchy. Any differences between
the price and the fair value are usually attributable to the so-called commercial margins, which are considered as not falling
within the scope of Day One Profit. Therefore, commercial margins are taken to the income statement on the first subsequent
measurement of the financial instrument.
Also in the case of level 2, which is based on quotes that can be derived indirectly from the market (Comparable Approach),
the fair value and the price often coincide upon initial recognition. Any residual differences, as in the previous case, are
usually attributable to the commercial margins.
With respect to level 3 instruments, which have more discretion in fair value measurement, no definite reference benchmark is
available to compare the transaction price with. For the same reason, the calculation of any commercial margin to be taken to
the income statement is also difficult. In this event, the instrument is always initially recognised at the transaction cost,
irrespective of whether it is possible to identify commercial margins. Subsequent measurement shall not include the differenc e
between cost and fair value identified upon initial recognition (also defined as Day One Profit - DOP).
This difference shall be recognised in the income statement only when it arises from changes to the factors over which market
participants base their valuations when fixing prices (including the time effect).
Where unobservable inputs used to estimate the fair value become observable, the residual deferred Day One Profits are
recognised in the income statement. Similarly, in the event of “on the book” transactions falling under the investment division’s
activities, the Day One Profits earned on transactions - included in the above on the book management - are taken to the
income statement when transactions are carried out which substantially eliminate the risks linked to unobservable parameters
of the instrument which generated the DOP.
At the end of 2022, as at the end of 2021, the amount of the DOP deferred in the balance sheet was immaterial (around 0.1
million euro).
301
Part B - Information on the consolidated balance sheet
ASSETS
SECTION 1 - CASH AND CASH EQUIVALENTS - CAPTION 10
1.1 Cash and cash equivalents: breakdown
(millions of euro)
31.12.2022
31.12.2021
a) Cash
3,709
3,463
b) Current accounts and on demand deposits with Central Banks
105,546
7,020
c) Current accounts and on demand deposits with banks
3,669
4,273
Total
112,924
14,756
As at 31 December 2022, the aggregate “b) Current accounts and on-demand deposits with Central Banks” includes
overnight deposits, totalling approximately 89 billion euro, where the excess liquidity is placed, which due to the rise in interest
rates is no longer deposited in the Reserve Requirement account reported in the caption “Financial assets measured at
amortised cost – Due from banks”.
SECTION 2 - FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS
CAPTION 20
2.1 Financial assets held for trading: breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
A. Cash assets
1. Debt securities
9,150
1,194
52
21,798
1,324
89
1.1 Structured securities
1,016
74
-
5
1,009
42
1.2 Other debt securities
8,134
1,120
52
21,793
315
47
2. Equities
860
-
22
674
-
17
3. Quotas of UCI
264
5
21
116
-
25
4. Loans
-
32
53
-
14
4
4.1 Repurchase agreements
-
-
-
-
-
-
4.2 Other
-
32
53
-
14
4
Total (A)
10,274
1,231
148
22,588
1,338
135
B. Derivatives
1. Financial derivatives
57
29,841
35
27
20,817
52
1.1 trading
55
29,841
35
27
20,817
52
1.2 fair value option
-
-
-
-
-
-
1.3 other
2
-
-
-
-
-
2. Credit derivatives
-
936
-
-
2,224
-
2.1 trading
-
936
-
-
2,224
-
2.2 fair value option
-
-
-
-
-
-
2.3 other
-
-
-
-
-
-
Total (B)
57
30,777
35
27
23,041
52
TOTAL (A+B)
10,331
32,008
183
22,615
24,379
187
Structured securities as at 31 December 2022 consist of 1,086 million euro of fixed-rate debt securities indexed to inflation, as
an additional component, and 4 million euro of debt securities convertible into shares.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
302
The caption above includes the securities connected with securitisation transactions for a total amount of approximately
865 million euro (818 million euro Level 1 and 47 million euro Level 2), of which 627 million euro is senior, 230 million euro is
mezzanine and 8 million euro is junior.
As the gross positive fair value of the derivative instruments implemented with the legal clearing agent LCH Ltd. meets the
requirements set out for offsetting between gross positive and negative balances pursuant to IAS 32, paragraph 42, it was
subject to offsetting, with recognition of the net fair value under Financial liabilities held for trading and Financial assets held
for trading, respectively.
2.2 Financial assets held for trading: breakdown by borrower/issuer/counterparty
(millions of euro)
Captions
31.12.2022
31.12.2021
A. Cash assets
1. Debt securities
10,396
23,211
a) Central Banks
78
44
b) Public administration
7,541
20,394
c) Banks
1,186
1,149
d) Other financial companies
1,175
1,239
of which: insurance companies
85
65
e) Non financial companies
416
385
2. Equities
882
691
a) Banks
35
71
b) Other financial companies
133
96
of which: insurance companies
51
31
c) Non financial companies
714
524
d) Other issuers
-
-
3. Quotas of UCI
290
141
4. Loans
85
18
a) Central Banks
-
-
b) Public administration
-
-
c) Banks
-
-
d) Other financial companies
38
-
of which: insurance companies
-
-
e) Non financial companies
47
18
f) Households
-
-
Total A
11,653
24,061
B. Derivatives
a) Central counterparties
11,065
1,693
b) Other
19,804
21,427
Total B
30,869
23,120
TOTAL (A+B)
42,522
47,181
2.3 Financial assets designated at fair value: breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Debt securities
-
1
-
-
1
3
1.1 Structured securities
-
-
-
-
-
-
1.2 Other debt securities
-
1
-
-
1
3
2. Loans
-
-
-
-
-
-
2.1 Structured
-
-
-
-
-
-
2.2 Other
-
-
-
-
-
-
Total
-
1
-
-
1
3
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
303
The Bank has included in this category debt securities linked to financial instruments measured at fair value through profit and
loss, such as financial derivatives. On the basis of the debt securities, no hedges were arranged through credit derivatives or
similar instruments to mitigate the relevant credit risk.
The fair value change attributable to the measurement of credit risk of financial assets designated at fair value was
insignificant, both during the year and in cumulative terms.
2.4 Financial assets designated at fair value: breakdown by borrower/issuer
(millions of euro)
Captions
31.12.2022
31.12.2021
1. Debt securities
1
4
a) Central Banks
-
-
b) Public administration
1
1
c) Banks
-
-
d) Other financial companies
-
3
of which: insurance companies
-
-
e) Non financial companies
-
-
2. Loans
-
-
a) Central Banks
-
-
b) Public administration
-
-
c) Banks
-
-
d) Other financial companies
-
-
of which: insurance companies
-
-
e) Non financial companies
-
-
f) Households
-
-
Total
1
4
2.5 Other financial assets mandatorily measured at fair value: breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Debt securities
-
55
133
-
60
107
1.1 Structured securities
-
-
5
-
-
5
1.2 Other debt securities
-
55
128
-
60
102
2. Equities
122
107
242
161
116
225
3. Quotas of UCI
858
191
2,401
1,486
149
2,166
4. Loans
-
310
635
-
375
701
4.1 Repurchase agreements
-
-
-
-
-
-
4.2 Other
-
310
635
-
375
701
Total
980
663
3,411
1,647
700
3,199
The caption above includes the securities connected with securitisation transactions for a total amount of approximately
125 million euro (25 million euro Level 1 and 100 million euro Level 2), of which 44 million euro is senior, 65 million euro is
mezzanine and 16 million euro is junior.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
304
2.6 Other financial assets mandatorily measured at fair value: breakdown by borrower/issuer
(millions of euro)
Captions
31.12.2022
31.12.2021
1. Equities
471
502
of which: banks
-
-
of which: other financial companies
117
160
of which: non financial companies
355
342
2. Debt securities
188
167
a) Central Banks
-
-
b) Public administration
-
-
c) Banks
-
-
d) Other financial companies
157
158
of which: insurance companies
1
-
e) Non financial companies
31
9
3. Quotas of UCI
3,450
3,801
4. Loans
945
1,076
a) Central Banks
-
-
b) Public administration
-
-
c) Banks
29
38
d) Other financial companies
119
141
of which: insurance companies
10
10
e) Non financial companies
554
674
f) Households
243
223
Total
5,054
5,546
The aggregate “quotas of UCI” includes 290 million euro in interests held by the bank in the Atlante Fund and in the Italian
Recovery Fund (formerly Atlante Fund II), as alternative investment funds to support Italian banks in their recapitalisation
transactions and in the management of the bad loans in the sector.
Loans include credit exposures classified among financial assets mandatorily measured at fair value as they failed the test o n
the contractual characteristics of cash flows (SPPI Test) required by IFRS 9.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
305
SECTION 3 - FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
- CAPTION 30
3.1 Financial assets measured at fair value through other comprehensive income: breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Debt securities
41,424
5,227
9
57,547
6,003
18
1.1 Structured securities
1,373
-
-
-
587
-
1.2 Other debt securities
40,051
5,227
9
57,547
5,416
18
2. Equities
513
510
325
1,537
1,314
421
3. Loans
-
1,685
23
-
687
53
Total
41,937
7,422
357
59,084
8,004
492
Loans included in this caption, as illustrated in Part A – Accounting policies, refer to portions of syndicated loans underwritten
and destined to be subsequently sold.
The caption includes the securities connected with securitisations for a total amount of approximately 1,543 million euro (al l
Level 2), of which approximately 1,501 million euro is senior, 42 million euro is mezzanine and there is no junior.
The sub-caption 2. Equities includes the stakes in the capital of the Bank of Italy for an amount of 375 million euro. For the
related valuation, as in the previous years, the direct transaction method was used, considering the purchases made starting
from 2015 and continuing in subsequent years. Considering that all the main transactions were finalised at nominal value, the
use of this approach confirms the recognition value of the stakes held in the financial statements of the Group.
In addition, the value of the investment was also supported by the use of an alternative method based on the discounting of
future dividends deriving from the investment (DDM – “Dividend Discount Model”). Following the approach taken in the
previous years, the use of level 2 inputs (direct transaction prices) as the reference for determining fair value for the 2022
financial statements also resulted in the confirmation of level 2 in the fair value hierarchy.
The book value of equity instruments deriving from the recovery of impaired financial assets amounted to 50 million euro.
3.2 Financial assets measured at fair value through other comprehensive income: borrower/issuer breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
1. Debt securities
46,660
63,568
a) Central Banks
-
-
b) Public administration
35,062
50,549
c) Banks
5,487
5,699
d) Other financial companies
3,943
4,212
of which: Insurance companies
25
11
e) Non financial companies
2,168
3,108
2. Equities
1,348
3,272
a) Banks
768
1,456
b) Other issuers:
580
1,816
- other financial companies
163
1,268
of which: insurance companies
3
3
- non financial companies
407
538
- other
10
10
3. Loans
1,708
740
a) Central Banks
-
-
b) Public administration
-
-
c) Banks
100
-
d) Other financial companies
146
62
of which: insurance companies
-
-
e) Non financial companies
1,462
678
f) Households
-
-
Total
49,716
67,580
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
306
3.3 Financial assets measured at fair value through other comprehensive income: gross amount and total
adjustments
(millions of euro)
Gross amount
Total adjustments
Total
partial
write-offs
Stage 1
of which:
Instruments
with low
credit risk
Stage 2
Stage 3
Purchased
or
originated
credit-
impaired
Stage 1
Stage 2
Stage 3
Purchased
or
originated
credit-
impaired
Debt securities
46,501
564
213
36
-
-26
-28
-36
-
-
Loans
1,081
-
654
-
-
-8
-19
-
-
-
Total
31.12.2022
47,582
564
867
36
-
-34
-47
-36
-
-
Total
31.12.2021
64,126
965
231
35
-
-38
-11
-35
-
-
For the approach used to represent the gross value and the total adjustments to impaired financial assets, see the illustration
provided in Part A – Accounting policies.
3.3a Loans measured at fair value through other comprehensive income subject to COVID-19 support measures:
gross amount and total adjustments
As at 31 December 2022 this case was not present.
SECTION 3 BIS - FINANCIAL ASSETS PERTAINING TO INSURANCE COMPANIES MEASURED AT FAIR VALUE
PURSUANT TO IAS 39 - CAPTION 35
The breakdown of the IAS 39 captions included in caption 35 of the Balance Sheet Assets referring to insurance companies is
shown below.
In relation to the adoption of the Deferral Approach, in the consolidated financial statement layouts established by Bank o f
Italy Circular 262, “Caption 35 Financial assets pertaining to insurance companies measured at fair value pursuant to IAS 39”
was created, which comprises the components set out in the table below.
(millions of euro)
Breakdown of Financial assets pertaining to insurance companies measured at fair value pursuant to
IAS 39 - Caption 35
31.12.2022
31.12.2021
20. Financial assets held for trading
902
1,027
30. Financial assets designated at fair value
86,217
101,059
40. Financial assets available for sale
85,593
104,423
80. Hedging derivatives
13
291
TOTAL Caption 35
172,725
206,800
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
307
3.1 Bis Financial assets held for trading: breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
A. Cash assets
1. Debt securities
150
198
310
166
288
337
1.1 Structured securities
-
-
-
-
-
-
1.2 Other debt securities
150
198
310
166
288
337
2. Equities
-
-
-
-
-
-
3. Quotas of UCI
97
-
46
122
-
49
4. Loans
-
-
-
-
-
-
4.1 Reverse repurchase agreements
-
-
-
-
-
-
4.2 Other
-
-
-
-
-
-
Total A
247
198
356
288
288
386
B. Derivatives
1. Financial derivatives:
50
51
-
56
5
4
1.1 trading
50
35
-
55
4
4
1.2 fair value option
-
16
-
1
1
-
1.3 other
-
-
-
-
-
-
2. Credit derivatives:
-
-
-
-
-
-
2.1 trading
-
-
-
-
-
-
2.2 fair value option
-
-
-
-
-
-
2.3 other
-
-
-
-
-
-
Total B
50
51
-
56
5
4
TOTAL (A+B)
297
249
356
344
293
390
3.2 Bis Financial assets held for trading: borrower/issuer breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
A. Cash assets
1. Debt securities
658
791
a) Governments and Central Banks
101
122
b) Other public entities
-
-
c) Banks
267
329
d) Other issuers
290
340
2. Equities
-
-
a) Banks
-
-
b) Other issuers:
-
-
- insurance companies
-
-
- financial companies
-
-
- non-financial companies
-
-
- other
-
-
3. Quotas of UCI
143
171
4. Loans
-
-
a) Governments and Central Banks
-
-
b) Other public entities
-
-
c) Banks
-
-
d) Other counterparties
-
-
Total A
801
962
B. Derivatives
a) Banks
-
-
- Fair value
-
-
b) Customers
101
65
- Fair value
101
65
Total B
101
65
Total (A+B)
902
1,027
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
308
3.3 Bis Financial assets designated at fair value: breakdown
(millions of euro)
Captions/Amounts
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Debt securities
4,344
22
5
4,754
34
5
1.1 Structured securities
-
-
-
17
2
-
1.2 Other debt securities
4,344
22
5
4,737
32
5
2. Equities
3,016
-
-
3,510
-
-
3. Quotas of UCI
78,025
-
-
91,908
109
-
4. Loans
223
-
582
343
-
396
4.1 Structured
-
-
-
-
-
-
4.2 Other
223
-
582
343
-
396
Total
85,608
22
587
100,515
143
401
Cost
86,661
14
586
93,092
121
395
3.4 Bis Financial assets designated at fair value: borrower/issuer breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
1. Debt securities
4,371
4,793
a) Governments and Central Banks
3,375
3,772
b) Other public entities
11
11
c) Banks
514
471
d) Other issuers
471
539
2. Equities
3,016
3,510
a) Banks
214
239
b) Other issuers:
2,802
3,271
- insurance companies
129
120
- financial companies
50
54
- non-financial companies
1,327
1,669
- other
1,296
1,428
3. Quotas of UCI
78,025
92,017
4. Loans
805
739
a) Governments and Central Banks
-
-
b) Other public entities
-
-
c) Banks
805
739
d) Other counterparties
-
-
Total
86,217
101,059
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
309
3.5 Bis Financial assets available for sale: breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Debt securities
67,583
3,152
349
81,830
6,298
412
1.1 Structured securities
8
-
-
14
-
-
1.2 Other debt securities
67,575
3,152
349
81,816
6,298
412
2. Equities
1,921
7
67
2,201
7
54
2.1 Measured at fair value
1,921
7
67
2,201
7
54
2.2 Measured at cost
-
-
-
-
-
-
3. Quotas of UCI
8,306
-
4,208
9,879
-
3,742
4. Loans
-
-
-
-
-
-
Total
77,810
3,159
4,624
93,910
6,305
4,208
3.6 Bis Financial assets available for sale: borrower/issuer breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
1. Debt securities
71,084
88,540
a) Governments and Central Banks
55,587
71,782
b) Other public entities
283
359
c) Banks
6,495
6,214
d) Other issuers
8,719
10,185
2. Equities
1,995
2,262
a) Banks
194
206
b) Other issuers:
1,801
2,056
- insurance companies
35
37
- financial companies
-
-
- non-financial companies
1,766
2,019
- other
-
-
3. Quotas of UCI
12,514
13,621
4. Loans
-
-
a) Governments and Central Banks
-
-
b) Other public entities
-
-
c) Banks
-
-
d) Other counterparties
-
-
Total
85,593
104,423
3.7 Bis Financial assets available for sale subject to microhedging
There were no financial assets available for sale subject to microhedging referring to insurance companies.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
310
3.8 Bis Hedging derivatives: breakdown by type of hedge and level
(millions of euro)
Fair value
31.12.2022
Notional
value
Fair value
31.12.2021
Notional
value
Level 1
Level 2
Level 3
31.12.2022
Level 1
Level 2
Level 3
31.12.2021
A) Financial derivatives
-
13
-
200
-
291
-
1,046
1) fair value
-
-
-
-
-
-
-
-
2) cash flows
-
13
-
200
-
291
-
1,046
3) foreign investments
-
-
-
-
-
-
-
-
B) Credit derivatives
-
-
-
-
-
-
-
-
1) fair value
-
-
-
-
-
-
-
-
2) cash flows
-
-
-
-
-
-
-
-
Total
-
13
-
200
-
291
-
1,046
3.9 Bis Hedging derivatives: breakdown by hedged portfolio and type of hedge (book value)
(millions of euro)
Operations/Type of hedge
FAIR VALUE
CASH FLOWS
FOREIGN.
INVESTM.
Specific
Generic
Specific
Generic
Interest
rate risk
foreign
exchange
risk
Credit
risk
various
risk
Multiple
risk
1. Financial assets available for
sale
-
-
-
-
-
X
13
X
X
2. Loans
-
-
-
X
-
X
-
X
X
3. Investments held to maturity
X
-
-
X
-
X
-
X
X
4. Portfolio
X
X
X
X
X
-
X
-
X
5. Other transactions
-
-
-
-
-
X
-
X
-
Total assets
-
-
-
-
-
-
13
-
-
1. Financial liabilities
-
-
-
X
-
X
-
X
X
2. Portfolio
X
X
X
X
X
-
X
-
X
Total liabilities
-
-
-
-
-
-
-
-
-
1. Forecast transactions
X
X
X
X
X
X
-
X
X
2. Financial assets and liabilities portfolio
X
X
X
X
X
-
X
-
-
DISCLOSURE PURSUANT TO IFRS 4
As previously indicated, the Intesa Sanpaolo Group exercised the option of adopting the Deferral Approach or Temporary
Exemption, according to which the financial assets and liabilities of the subsidiary insurance companies continue to be
recognised in accordance with the provisions of IAS 39.
In particular, the Group’s insurance companies applying IAS 39 are as follows:
- Intesa Sanpaolo Vita S.p.A.;
- Intesa Sanpaolo Assicura S.p.A.;
- Intesa Sanpaolo Life Ltd.;
- Fideuram Vita S.p.A.;
- Intesa Sanpaolo RBM Salute S.p.A.
This section sets out the information required by IFRS 4 Insurance Contracts following exercise of the option, granted to
insurance companies belonging to banking-led financial conglomerates, pursuant to Regulation 2017/1988 and the
subsequent Regulation 2020/2097, of postponing the first-time adoption of IFRS 9
88
.
The Group verified the fulfilment of the requirements to apply the Temporary Exemption. The insurance companies meet the
requirement of insurance predominance, which requires that the percentage of the carrying amount of liabilities linked to
insurance business on the carrying amount of total liabilities of the entity exceeds 90% (predominance ratio). Moreover, ther e
were no transfers of financial assets other than those measured at FVTPL between Group companies using different
accounting standards.
As required by the reference regulations, the quantitative disclosure regarding the entities that will postpone the application of
IFRS 9 is provided below.
88
It is noted that the publication of Regulation 2097/2020 of 15 December 2020 endorsed the extension of the temporary exemption from applying IFRS
9 Financial Instruments to 1 January 2023, considering the IASB’s decision on 25 June 2020 to postpone the date of first-time adoption of IFRS 17
Insurance Contracts to 1 January 2023.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
311
Details of the securities of the insurance companies that pass the SPPI Test
(millions of euro)
Caption
Fair value at the
reporting date
Fair value
changes
during the
year
Other
changes
during the
year
(3)
Fair value at
the previous
reporting
date
Financial assets pertaining to insurance companies measured at fair value pursuant to IAS 39
171,920
-24,284
-9,857
206,061
of which:
Financial asset with contractual terms that give rise, on specified dates, to cash flows that are
solely payments of principal and interest on the principal amount outstanding (1)
69,674
-14,890
-1,888
86,452
Debt securities
69,674
-14,890
-1,888
86,452
Structured securities
-
-
-9
9
Other debt securities
69,674
-14,890
-1,879
86,443
Loans
-
-
-
-
Other financial assets
-
-
-
-
Financial asset other than those with contractual terms that give rise, on specified dates, to cash
flows that are solely payments of principal and interest on the principal amount outstanding (2)
17,044
-1,668
-818
19,530
Debt securities
2,086
-408
-405
2,899
Structured securities
8
-1
4
5
Other debt securities
2,078
-407
-409
2,894
Equities
1,995
-207
-60
2,262
Quotas of UCI
12,865
-1,008
-152
14,025
Loans
-
-
-
-
Derivatives
98
-45
-201
344
Other financial assets
-
-
-
-
Other financial assets connected with contracts where the investment risk is borne by the
policyholders
85,202
-7,726
-7,151
100,079
Debt securities
4,353
-437
17
4,773
Structured securities
-
-
-19
19
Other debt securities
4,353
-437
36
4,754
Equities
3,016
-552
58
3,510
Quotas of UCI
77,817
-6,811
-7,156
91,784
Loans
-
-
-
-
Derivatives
16
74
-70
12
Other financial assets
-
-
-
-
Financial assets pertaining to insurance companies measured at amortised cost pursuant to IAS
39 (*)
69
-6
-7
82
of which:
Financial asset with contractual terms that give rise, on specified dates, to cash flows that are
solely payments of principal and interest on the principal amount outstanding (1)
33
-2
-6
41
Debt securities
33
-2
-6
41
Structured securities
-
-
-
-
Other debt securities
33
-2
-6
41
Loans
-
-
-
-
Other financial assets
-
-
-
-
Financial asset other than those with contractual terms that give rise, on specified dates, to cash
flows that are solely payments of principal and interest on the principal amount outstanding (2)
36
-4
-1
41
Debt securities
36
-4
-1
41
Structured securities
-
-
-
-
Other debt securities
36
-4
-1
41
Equities
-
-
-
-
Quotas of UCI
-
-
-
-
Loans
-
-
-
-
Derivatives
-
-
-
-
Other financial assets
-
-
-
-
(*) Debt securities shows the fair value as required by the amendment to IFRS 4. These securities have been recognised in the balance sheet at amortised cost
(1) excluding financial assets that meet the definition of held for trading in IFRS 9, or are managed and whose return is measured at fair value
(2) includes all other financial assets, i.e. any financial asset:
i) with contractual terms that do not give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding;
ii) that meet the definition of held for trading in IFRS 9; or
iii) that are managed and whose return is measured at fair value
(3) Column includes movements that are not attributable to changes in fair value (purchases, sales, repayments, etc.)
The table referred to above includes the investments whose risk is fully borne by policyholders, classified under financial
assets measured at fair value.
Amounts due from banks of 805 million euro are added to the amounts indicated above.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
312
Credit risk exposure for financial instruments of the insurance companies that pass the SPPI test
(millions of euro)
Financial asset with contractual terms that give rise, on specified dates, to cash flows
that are solely payments of principal and interest on the principal amount outstanding
(1)
Credit risk rating
Current year
book value (2)
Previous year
book value (2)
Debt securities
67,265
83,261
Structured securities
Investment Grade
-
9
Other debt securities
Investment Grade
67,265
83,252
Loans
-
-
Other financial assets
-
-
(millions of euro)
Financial asset with contractual terms that give rise, on specified dates, to cash
flows that are solely payments of principal and interest on the principal amount
outstanding (1), and which do not have a low credit risk
Credit risk rating
Current year
book value (2)
Current year
market value
Previous year
book value (2)
Debt securities
2,444
2,445
3,227
Structured securities
Non-Investment
Grade
-
-
-
Other debt securities
Non-Investment
Grade
2,444
2,445
3,227
Loans
-
-
-
Other financial assets
-
-
-
(1) excluding financial assets that meet the definition of held for trading in IFRS 9, or are managed and whose return is measured at fair value.
(2) in the case of financial assets measured at amortised cost, before any impairment loss.
SECTION 4 - FINANCIAL ASSETS MEASURED AT AMORTISED COST – CAPTION 40
4.1 Financial assets measured at amortised cost: breakdown of amounts due from banks
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
Book value
Fair value
Book value
Fair value
Stage 1
and 2
Stage 3
Purchased
or
originated
credit-
impaired
Level 1
Level 2
Level 3
Stage 1
and 2
Stage 3
Purchased
or
originated
credit-
impaired
Level 1
Level 2
Level 3
A. Due from Central Banks
9,712
-
-
-
7,089
2,623
131,361
-
-
-
128,282
3,078
1. Time deposits
3,622
-
-
X
X
X
3,118
-
-
X
X
X
2. Compulsory reserve
5,427
-
-
X
X
X
126,882
-
-
X
X
X
3. Repurchase agreements
543
-
-
X
X
X
273
-
-
X
X
X
4. Other
120
-
-
X
X
X
1,088
-
-
X
X
X
B. Due from banks
23,136
36
-
1,265
18,791
3,055
32,523
53
-
1,547
28,156
2,903
1. Loans
21,478
36
-
-
18,465
3,055
30,752
53
-
-
27,914
2,903
1.1 Current accounts
-
-
-
X
X
X
-
-
-
X
X
X
1.2 Time deposits
2,449
-
-
X
X
X
1,681
-
-
X
X
X
1.3 Other loans:
19,029
36
-
X
X
X
29,071
53
-
X
X
X
- Reverse repurchase
agreements
5,397
-
-
X
X
X
9,566
-
-
X
X
X
- Finance leases
5
-
-
X
X
X
6
-
-
X
X
X
- Other
13,627
36
-
X
X
X
19,499
53
-
X
X
X
2. Debt securities
1,658
-
-
1,265
326
-
1,771
-
-
1,547
242
-
2.1 Structured
-
-
-
-
-
-
-
-
-
-
-
-
2.2 Other
1,658
-
-
1,265
326
-
1,771
-
-
1,547
242
-
TOTAL
32,848
36
-
1,265
25,880
5,678
163,884
53
-
1,547
156,438
5,981
As at 31 December 2022, the decline in the sub-caption Reserve Requirement was due to the placement of excess liquidity in
overnight deposits reported in the caption Cash and cash equivalents.
The sub-caption “Other loans - Other” includes operating loans, i.e. operations connected to the provision of financial activities
and services with no credit facilities, for an amount of 122 million euro. Those exposures are essentially performing loans
classified in Stage 1 and adjusted based on IFRS 9 .
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
313
4.2 Financial assets measured at amortised cost: breakdown of loans to customers
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
Book value
Fair value
Book value
Fair value
Stage 1
and 2
Stage 3
Purchased
or
originated
credit-
impaired
Level 1
Level 2
Level 3
Stage 1
and 2
Stage 3
Purchased
or
originated
credit-
impaired
Level 1
Level 2
Level 3
1. Loans
432,447
5,255
271
-
283,348
140,877
449,287
6,682
446
-
317,673
147,945
1.1.Current accounts
22,967
484
12
X
X
X
21,724
688
22
X
X
X
1.2. Reverse repurchase agreements
15,366
-
-
X
X
X
17,620
-
-
X
X
X
1.3. Mortgages
242,049
3,083
156
X
X
X
250,722
4,080
268
X
X
X
1.4. Credit card loans, personal loans
and transfer of one fifth of salaries
19,435
339
2
X
X
X
18,626
364
9
X
X
X
1.5. Finance leases
7,780
328
85
X
X
X
12,830
347
108
X
X
X
1.6. Factoring
10,869
52
-
X
X
X
9,453
65
-
X
X
X
1.7. Other loans
113,981
969
16
X
X
X
118,312
1,138
39
X
X
X
2. Debt securities
57,188
33
-
27,693
10,877
14,938
48,473
41
-
25,659
10,872
11,536
2.1. Structured securities
-
-
-
-
-
-
-
-
-
-
-
-
2.2. Other debt securities
57,188
33
-
27,693
10,877
14,938
48,473
41
-
25,659
10,872
11,536
Total
489,635
5,288
271
27,693
294,225
155,815
497,760
6,723
446
25,659
328,545
159,481
The sub-caption “Other loans” includes operating loans, i.e. operations connected to the provision of financial activities and
services with no credit facilities, for an amount of 740 million euro. Those exposures are essentially performing loans
classified in Stage 1 and adjusted based on IFRS 9.
Debt securities include the securities connected with securitisations for a total amount of approximately 8,495 million euro, of
which 8,475 million euro is senior notes and 20 million euro mezzanine.
4.3 Financial assets measured at amortised cost: breakdown by borrower/issuer of loans to customers
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
Stage 1 and 2
Stage 3
Purchased or
originated
credit-
impaired
Stage 1 and 2
Stage 3
Purchased or
originated
credit-
impaired
1. Debt securities
57,188
33
-
48,473
41
-
a) Public administration
32,298
13
-
27,851
15
-
b) Other financial companies
21,418
8
-
16,612
14
-
of which: insurance companies
1
-
-
6
-
-
c) Non financial companies
3,472
12
-
4,010
12
-
2. Loans:
432,447
5,255
271
449,287
6,682
446
a) Public administration
15,566
213
-
16,385
356
-
b) Other financial companies
44,781
123
1
45,872
262
1
of which: insurance companies
39
-
-
361
-
-
c) Non financial companies
193,579
3,126
150
212,387
3,555
246
d) Households
178,521
1,793
120
174,643
2,509
199
TOTAL
489,635
5,288
271
497,760
6,723
446
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
314
4.4 Financial assets measured at amortised cost: gross amount and total adjustments
(millions of euro)
Gross amount
Total adjustments
Total
partial
write-offs
Stage 1
of which:
Instruments
with low
credit risk
Stage
2
Stage 3
Purchased
or
originated
credit-
impaired
Stage 1
Stage 2
Stage 3
Purchased
or
originated
credit-
impaired
Debt
securities
54,961
-
4,062
105
-
-29
-66
-72
-
-
Loans
419,968
24
46,175
10,332
384
-659
-1,929
-5,041
-113
3,081
Total
31.12.2022
474,929
24
50,237
10,437
384
-688
-1,995
-5,113
-113
3,081
Total
31.12.2021
603,169
17
61,028
14,892
587
-753
-1,800
-8,116
-141
6,476
For the approach used to represent the gross value and the total adjustments to impaired financial assets, see the illustrati on
provided in Part A – Accounting policies.
4.4a Loans measured at amortised cost subject to COVID-19 support measures: gross amount and total adjustments
(millions of euro)
Gross value
Writedown
Write off
partial
total
Stage 1
of which:
low
credit
risk
Stage 2
Stage 3
Purchased
or
originated
credit-
impaired
Stage 1
Stage 2
Stage 3
Purchased
or
originated
credit-
impaired
1. EBA-compliant moratoria loans
-
-
-
-
-
-
-
-
-
-
2. Loans subject to outstanding moratorium
measures no longer compliant with the GL
and not considered forborne
51
-
26
27
-
-
-3
-11
-
-
3. Other loans with COVID-19-related
forbearance measures
4
-
693
156
1
-
-36
-52
-1
-
4. Newly originated loans
29,434
-
3,199
573
1
-38
-37
-176
-
-
Total
31.12.2022
29,489
-
3,918
756
2
-38
-76
-239
-1
-
Total
31.12.2021
35,182
-
9,340
545
5
-44
-248
-151
-
-
The row “EBA-compliant moratoria loans” shows the loans subject to moratoria that fall within the scope of application of the
“Guidelines on legislative and non legislative moratoria on loan repayments applied in the light of the COVID 19 crisis”,
published by the EBA (EBA/GL/2020/02), as amended. As at 31 December 2022 such loans were less than 1 million euro and
amounted to 412 thousand euro.
The row “Loans subject to outstanding moratorium measures no longer compliant with the GL and not considered forborne”
shows the outstanding loans subject to moratoria, assessed as compliant with EBA/GL/2020/02 at the date the measure was
granted, but no longer compliant at the reporting date, which were not classified by the bank as “forborne exposures” (as
defined by the supervisory reports in force) following the assessment conducted on occurrence of the event that generated
the non-compliance with EBA/GL/2020/02.
The row “Other forborne loans” contains information regarding the loans subject to the COVID-19 support measures that meet
the conditions of “forborne exposures” as defined by the current supervisory reports, and have not been included in the
category “EBA-compliant moratoria loans” since the grant date or since the date on which they no l onger comply with the
EBA/GL/2020/02.
The row “Newly originated loans” represents the exposures for which new liquidity was granted, with the support of
government guarantees.
The loans under sub-captions 1, 2 and 3 of the table above are subject to moratoria which were still in force as at
31 December 2022.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
315
SECTION 4 BIS - FINANCIAL ASSETS PERTAINING TO INSURANCE COMPANIES MEASURED AT AMORTISED
COST PURSUANT TO IAS 39 - CAPTION 45
The breakdown of the IAS 39 captions included in caption 45 of the Balance Sheet Assets referring to insurance companies is
shown below.
In relation to the adoption of the Deferral Approach, in the consolidated financial statement layouts established by Bank of
Italy Circular 262, “Caption 45 Financial assets pertaining t o insurance companies measured at amortised cost pursuant to
IAS 39” was created, which comprises the components set out in the table below:
(millions of euro)
Breakdown of financial assets pertaining to insurance companies measured at amortised cost
pursuant to IAS 39 - Caption 45
31.12.2022
31.12.2021
50. Investments held to maturity
-
-
60. Due from banks
40
41
70. Loans to customers
40
44
TOTAL Caption 45
80
85
4.1 Bis Investments held to maturity
There were no investments held maturity relating to the insurance companies.
4.4 Bis Due from banks: breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
Book value
Fair value
Book
value
Fair value
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
A. Due from Central Banks
-
-
-
-
-
-
-
-
1. Time deposits
-
-
2. Compulsory reserve
-
-
3. Reverse repurchase agreements
-
-
4. Other
-
-
B. Due from banks
40
-
40
-
41
-
41
-
1. Loans
-
-
-
-
-
-
-
-
1.1 Current accounts and deposits
-
-
1.2 Time deposits
-
-
1.3 Other loans:
-
-
- Reverse repurchase agreements
-
-
- Finance leases
-
-
- Other
-
-
2. Debt securities
40
-
40
-
41
-
41
-
2.1 Structured
-
-
2.2 Other
40
41
Total
40
-
40
-
41
-
41
-
4.5 Bis Due from banks subject to microhedging
There were no amounts due from banks subject to microhedging referring to insurance companies.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
316
4.6 Bis Loans to customers: breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
Book value
Book Value
Performing
Non Performing
Fair value
Not
impaired
Impaired
Fair value
Purchased
Other
Level 1
Level 2
Level 3
Purchased
Other
Level 1
Level 2
Level 3
Loans
5
-
-
-
4
1
8
-
-
-
8
-
1. Current accounts
-
-
-
X
X
X
-
-
-
X
X
X
2. Reverse repurchase agreements
-
-
-
X
X
X
-
-
-
X
X
X
3. Mortgages
-
-
-
X
X
X
-
-
-
X
X
X
4. Credit card loans, personal loans,
and transfer of one fifth of salaries
-
-
-
X
X
X
-
-
-
X
X
X
5. Finance leases
-
-
-
X
X
X
-
-
-
X
X
X
6. Factoring
-
-
-
X
X
X
-
-
-
X
X
X
7. Other loans
5
-
-
X
X
X
8
-
-
X
X
X
Debt securities
35
-
-
-
30
5
36
-
-
-
31
5
8. Structured securities
-
-
-
X
X
X
-
-
-
X
X
X
9. Other debt securities
35
-
-
X
X
X
36
-
-
X
X
X
Total
40
-
-
-
34
6
44
-
-
-
39
5
4.7 Bis Loans to customers: borrower/issuer breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
Performing
Non performing
Performing
Non performing
Purchased
Other
Purchased
Other
1. Debt securities
35
-
-
36
-
-
a) Governments
-
-
-
-
-
-
b) Other public entities
-
-
-
-
-
-
c) Other issuers
35
-
-
36
-
-
- non-financial companies
20
-
-
21
-
-
- financial institutions
15
-
-
15
-
-
- insurance companies
-
-
-
-
-
-
- other
-
-
-
-
-
-
2. Loans:
5
-
-
8
-
-
a) Governments
-
-
-
-
-
-
b) Other public entities
-
-
-
-
-
-
c) Other counterparties
5
-
-
8
-
-
- non-financial companies
-
-
-
-
-
-
- financial institutions
4
-
-
7
-
-
- insurance companies
-
-
-
-
-
-
- other
1
-
-
1
-
-
Total
40
-
-
44
-
-
4.8 Bis Loans to customers subject to microhedging
There were no Loans to customers subject to microhedging referring to insurance companies.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
317
SECTION 5 - HEDGING DERIVATIVES – CAPTION 50
Concerning the objectives and the strategies underlying hedging transactions see the information provided in Part E –
Information on risks and relative hedging policies, Section 2 – Market risks.
5.1 Hedging derivatives: breakdown by type of hedge and level
(millions of euro)
Fair value
31.12.2022
Notional
amount
Fair value
31.12.2021
Notional
amount
Level 1
Level 2
Level 3
31.12.2022
Level 1
Level 2
Level 3
31.12.2021
A. Financial derivatives
1. Fair Value
-
10,061
-
177,498
-
1,719
-
186,185
2. Cash flows
-
1
-
893
-
13
-
3,961
3. Foreign investments
-
-
-
28
-
-
-
-
B. Credit derivatives
1. Fair Value
-
-
-
-
-
-
-
-
2. Cash flows
-
-
-
-
-
-
-
-
Total
-
10,062
-
178,419
-
1,732
-
190,146
As the gross positive fair value of Hedging derivatives implemented with the legal clearing agent LCH Ltd. meets the
requirements set out for offsetting between gross positive and negative balances pursuant to IAS 32, paragraph 42, it was
subject to offsetting, with recognition of the net fair value under Financial liabilities held for trading.
5.2 Hedging derivatives: breakdown by hedged portfolio and type of hedge
(millions of euro)
Transactions / Type of hedge
Fair Value
Cash-flow
Foreign
investm
Specific
Generic
Specific
Generic
debt
securities
and
interest
rates
equities
and
stock
indices
foreign
exchange
rates and
gold
credit
risk
commodities
other
1. Financial assets measured at fair value
through other comprehensive income
2,566
-
263
-
X
X
X
-
X
X
2. Financial assets measured at amortised
cost
2,876
X
3
-
X
X
X
1
X
X
3. Portfolio
X
X
X
X
X
X
3,803
X
-
X
4. Other transactions
-
-
-
-
-
-
X
-
X
-
Total assets
5,442
-
266
-
-
-
3,803
1
-
-
1. Financial liabilities
476
X
60
-
-
-
X
-
X
X
2. Portfolio
X
X
X
X
X
X
14
X
-
X
Total liabilities
476
-
60
-
-
-
14
-
-
-
1. Forecast transactions
X
X
X
X
X
X
X
-
X
X
2. Financial assets and liabilities portfolio
X
X
X
X
X
X
-
X
-
-
The table indicates positive fair values of hedging derivatives, broken down in relation to asset or liability hedged and typ e
of hedge.
Considering the values gross of netting in the financial statements, these continued to refer mainly to micro fair value hedges
of debt securities under assets, as well as macro fair value hedges of loans disbursed.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
318
SECTION 6 – FAIR VALUE CHANGE OF FINANCIAL ASSETS IN HEDGED PORTFOLIOS – CAPTION 60
6.1 Fair value change of hedged assets: breakdown by hedged portfolios
(millions of euro)
Fair value change of hedged assets / Amount
31.12.2022
31.12.2021
1. Positive fair value change
-
408
1.1 of specific portfolios:
-
400
a) financial assets measured at amortised cost
-
400
b) financial assets measured at fair value through other comprehensive income
-
-
1.2 overall
-
8
2. Negative fair value change
-9,752
-16
2.1 of specific portfolios:
-9,752
-16
a) financial assets measured at amortised cost
-9,752
-16
b) financial assets measured at fair value through other comprehensive income
-
-
2.2 overall
-
-
Total
-9,752
392
The balance of the changes in value of assets subject to macrohedging against interest rate risk is recorded in this caption.
For the application the Group took advantage of the option envisaged by IFRS 9 to continue to apply the provisions permitted
by the IAS 39 carve out.
The annual change in the positive adjustment of financial assets measured at amortised cost was due to the increase in the
benchmark rates used to determine the fair value of the assets hedged by changes in the fair value for interest rate risk.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
319
SECTION 7 – INVESTMENTS IN ASSOCIATES AND COMPANIES SUBJECT TO JOINT CONTROL – CAPTION 70
7.1 Investments in associates and companies subject to joint control: information on equity interests
Companies
Registered
office
Place
of business
Type
of
relationship
(a)
INVESTMENT
Votes
available
%
(b)
Direct ownership
%
held
A. COMPANIES SUBJECT TO JOINT CONTROL
1
Apside S.p.A.
Torino
Torino
7
Intesa Sanpaolo S.p.A.
50.00
Capital Euro 10,000 in shares of Euro 1
2
Augusto S.r.l.
Milano
Milano
7
Intesa Sanpaolo S.p.A.
5.00
Capital Euro 10,000 in shares of Euro 1
3
Diocleziano S.r.l.
Milano
Milano
7
Intesa Sanpaolo S.p.A.
5.00
Capital Euro 10,000 in shares of Euro 1
4
Immobiliare Novoli S.p.A.
Firenze
Firenze
7
Intesa Sanpaolo S.p.A.
50.00
Capital Euro 15.635.514 un shares of Euro 0,60
5
Mir Capital Management S.A.
Luxembourg
Luxembourg
7
Private Equity International S.A.
50.00
Capital Euro 31.000 in shares of Euro 1
6
Mir Capital S.C.A. SICAR
Luxembourg
Luxembourg
7
Private Equity International S.A.
50.00
Capital Euro 65.365.000 in shares of Euro 1
7
Mooney Group S.p.A.
Milano
Milano
7
Banca 5 S.p.A.
50.00
Capital Euro 10.050.000 in shares of Euro 0,20
8
PBZ Croatia Osiguranje Public Limited Company
for Compulsory Pension Fund Management
Zagreb
Zagreb
7
Privredna Banka Zagreb D.D.
50.00
Capital HRK 56.000.000 in shares of HRK 1.000
9
Responsability BOP S.A.R.L.
Luxembourg
Luxembourg
7
Asteria Investment Managers
S.A.
50.00
Capital USD 20.000 in shares of USD 50
B. COMPANIES SUBJECT TO SIGNIFICANT INFLUENCE
1
1875 Finance Holding AG
Sarnen
Sarnen
4
Reyl&Cie S.A.
40.00
Capital Chf 500.000 in shares of Chf 1
2
Adriano Lease Sec S.r.l. (c)
Conegliano
Conegliano
4
Intesa Sanpaolo S.p.A.
5.00
100,00
(**)
Capital Euro 10.000 in shares of Euro 1
3
Alpian S.A.
Genève
Genève
4
Fideuram - Intesa Sanpaolo
Private Banking S.p.A.
14.91
Capital Chf 21.672.678 in shares of Chf 0,01
Reyl&Cie S.A.
12.93
27.84
4
Apulia Finance N. 4 S.r.l. in liquidazione (c)
Conegliano
Conegliano
4
Intesa Sanpaolo S.p.A.
10.00
Capital Euro 10.000 in shares of Euro 1
5
Back2Bonis
Milano
Milano
4
Intesa Sanpaolo S.p.A.
55.40
35,00 (*)
Capital Euro 776.381.183 in shares of Euro 476.671
6
Backtowork24 S.r.l. (d)
Milano
Milano
4
Intesa Sanpaolo S.p.A.
30.58
Capital Euro 2.892.691 in shares of Euro 0,01
7
Bancomat S.p.A.
Roma
Roma
4
Intesa Sanpaolo S.p.A.
31.55
Capital Euro 21.095.726 in shares of Euro 5
Banca 5 S.p.A.
0.01
31.56
8
Berica ABS 3 S.r.l. (c)
Vicenza
Vicenza
4
Intesa Sanpaolo S.p.A.
5.00
Capital Euro 10.000 in shares of Euro 1
9
Brera Sec S.r.l. (c)
Conegliano
Conegliano
4
Intesa Sanpaolo S.p.A.
5.00
Capital EUR 10.000 in shares of Euro 1
10
Camfin S.p.A. (e)
Milano
Milano
4
Intesa Sanpaolo S.p.A.
4.60
8,53 (*)
Capital EUR 110.800.000 in shares of Euro 0,2
11
Cassa di Risparmio di Fermo S.p.A.
Fermo
Fermo
4
Intesa Sanpaolo S.p.A.
33.33
Capital EUR 39.241.088 in shares of Euro 51,65
12
Centai Institute S.p.A.
Torino
Torino
4
Intesa Sanpaolo S.p.A.
49.00
Capital EUR 50.000 in shares of Euro 1
13
Clara Sec S.r.l.
Conegliano
Conegliano
4
Intesa Sanpaolo S.p.A.
5.00
Capital Euro 10.000 in shares of Euro 1
14
Compagnia Aerea Italiana S.p.A.
Roma
Fiumicino
4
Intesa Sanpaolo S.p.A.
27.49
Capital Euro 3.526.846 in shares of Euro 0,00004
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
320
Companies
Registered
office
Place
of business
Type
of
relationship
(a)
INVESTMENT
Votes
available
%
(b)
Direct ownership
%
held
15
Destination Gusto S.r.l.
Milano
Milano
4
Intesa Sanpaolo S.p.A.
49.00
Capital Euro 20.000 in shares of Euro 1
16
Digit'ed Holding S.p.A.
Milano
Milano
4
Intesa Sanpaolo S.p.A.
20.00
Capital Euro 1.173.822 in shares of Euro 1
17
Equiter S.p.A.
Torino
Torino
4
Intesa Sanpaolo S.p.A.
32.88
Capital Euro 150.004.017 in shares of Euro 1
18
Euromilano S.p.A.
Milano
Milano
4
Intesa Sanpaolo S.p.A.
43.43
Capital Euro 1.356.582 in shares of Euro 15,51
19
Europrogetti & Finanza S.r.l. in liquidazione
Roma
Roma
4
Intesa Sanpaolo S.p.A.
15.97
Capital Euro 5.636.400 in shares of Euro 1
20
Eusebi Holdings B.V.
Amsterdam
Amsterdam
4
Intesa Sanpaolo S.p.A.
47.00
Capital Euro 100 in shares of Euro 1
21
FI.NAV. Comparto A - Crediti
Roma
Roma
4
Intesa Sanpaolo S.p.A.
50.54
Capital USD 405.821.168 in shares of USD 1
22
Fondo di Rigenerazione Urbana Sicilia S.r.l. (f)
Palermo
Torino
4
Intesa Sanpaolo S.p.A.
100.00
Capital Euro 50.000 in shares of Euro 1
23
Fondo per la ricerca e l'innovazione S.r.l. (f)
Torino
Torino
4
Intesa Sanpaolo S.p.A.
100.00
Capital Euro 25.000 in shares of Euro 1
24
Fondo Sardegna Energia S.r.l. (f)
Cagliari
Torino
4
Intesa Sanpaolo S.p.A.
100.00
Capital Euro 25.000 in shares of Euro 1
25
Giada Sec S.r.l. (c)
Conegliano
Conegliano
4
Intesa Sanpaolo S.p.A.
5.00
Capital Euro 10.000 in shares of Euro 1
26
Gilda S.r.l.
Montesilvano
Montesilvano
4
Intesa Sanpaolo S.p.A.
13.05
15,00 (**)
Capital Euro 213.402 in shares of da Euro 1
27
Indaco Venture Partners SGR S.p.A. ( già Venture Capital
Partners SGR)
Milano
Milano
4
Intesa Sanpaolo S.p.A.
24.50
Capital Euro 750.000 in shares of Euro 0,50
28
Iniziative Immobiliari Industriali S.p.A. In liquidazione
Arquà Polesine
Arquà Polesine
4
Intesa Sanpaolo S.p.A.
20.00
Capital Euro 510.000 in shares of Euro 0,51
29
Intrum Italy S.p.A.
Milano
Milano
4
Intesa Sanpaolo S.p.A.
49.00
Capital Euro 600.000 in shares of Euro 0,02
30
Ism Investimenti S.p.A.
Mantova
Mantova
4
Intesa Sanpaolo S.p.A.
27.36
Capital Euro 6.654.902 in shares of Euro 1
31
Leonardo Technology S.r.l. in liquidazione
Torino
Torino
4
Intesa Sanpaolo S.p.A.
26.60
Capital Euro 242.081 in shares of Euro 1
32
Marketwall S.r.l.
Milano
Milano
4
Intesa Sanpaolo S.p.A.
33.00
Capital Euro 2.380.409 in shares of Euro 1
33
Materias S.r.l.
Napoli
Napoli
4
Intesa Sanpaolo S.p.A.
12.87
Capital Euro 29.191 in shares of Euro 1
34
Misr Alexandria for Financial Investments Mutual Fund Co.
in liquidazione
Cairo
Cairo
4
Bank of Alexandria S.A.E.
25.00
Capital EGP 30.708.000 in shares of EGP 1000
35
Misr International Towers Co.
Cairo
Cairo
4
Bank of Alexandria S.A.E.
27.86
Capital EGP 50.000.000 in shares of EGP 10
36
Monilogi SRO
Bratislava
Bratislava
4
Vseobecna Uverova Banka A.S.
30.00
Capital Euro 250.000 in shares of Euro 1
37
Montefeltro Sviluppo Soc.cons. A.r.
Urbania
Urbania
4
Intesa Sanpaolo S.p.A.
26.37
Capital Euro 73.000 in shares of Euro 10
38
Network Impresa S.p.A. in concordato preventivo
Limena
Limena
4
Intesa Sanpaolo S.p.A.
28.95
Capital Euro 562.342 in shares of Euro 1
39
Neva First - FCC
Torino
Torino
4
Intesa Sanpaolo Innovation
Center S.p.A.
42.53
Capital Euro 237.323.232 in shares of Euro 99,80
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
321
Companies
Registered
office
Place
of business
Type
of
relationship
(a)
INVESTMENT
Votes
available
%
(b)
Direct ownership
%
held
40
NEWCO - Fondo Tematico Piani Urbani Integrati S.r.l. (f)
Torino
Torino
4
Intesa Sanpaolo S.p.A.
100.00
Capital Euro 25.000 in shares of Euro 1
41
NEWCO - Fondo Tematico Turismo S.r.l. (f)
Torino
Torino
4
Intesa Sanpaolo S.p.A.
100.00
Capital Euro 25.000 in shares of Euro 1
42
Penghua Fund Management Co. Ltd.
Shenzhen
Shenzhen
4
Eurizon Capital SGR S.p.A.
49.00
Capital CNY 150.000.000 in shares of CNY 1
43
Pietra S.r.l. In liquidazione
Milano
Milano
4
Intesa Sanpaolo S.p.A.
22.22
Capital Euro 40.000 in shares of Euro 1
44
R.C.N. Finanziaria S.p.A.
Mantova
Mantova
4
Intesa Sanpaolo S.p.A.
23.96
Capital Euro 1.000.000 in shares of Euro 0,50
45
RSCT FUND - COMPARTO CREDITI
Milano
Milano
4
Intesa Sanpaolo S.p.A.
70.07
Capital Euro 383.363.831 in shares of Euro 1
46
S.F. Consulting S.r.l.
Bergamo
Bergamo
4
Intesa Sanpaolo S.p.A.
35.00
Capital Euro 93.600 in shares of Euro 0,52
47
Sicily Investments S.a.r.l.
Luxembourg
Luxembourg
4
Intesa Sanpaolo S.p.A.
25.20
Capital Euro 12.500 in shares of Euro 25
48
Slovak Banking Credit Bureau S.r.o.
Bratislava
Bratislava
4
Vseobecna Uverova Banka A.S.
33.33
Capital Euro 9.958 in shares of Euro 3.319,39
49
Sviluppo Industriale S.p.A. in Liquidazione (già Sviluppo
Industriale S.p.A. in Concordato Preventivo)
Pistoia
Pistoia
4
Intesa Sanpaolo S.p.A.
28.27
Capital Euro 628.444 in shares of Eur 22,26
50
Trinacria Capital S.a.r.l.
Luxembourg
Luxembourg
4
Intesa Sanpaolo S.p.A.
25.20
Capital Euro 12.500 in shares of Euro 25
51
UBI SPV LEASE 2016 S.r.l.
Milano
Milano
4
Intesa Sanpaolo S.p.A.
10.00
100,00
(**)
Capital Euro 10.000 in shares of Euro 1
52
Vesta OML Limited ( ex Oval Money LTD)
London
London
4
Intesa Sanpaolo S.p.A.
37.51
Capital GBP 16.692 in shares of GBP 0,0004
53
Warrant Hub S.p.A.
Correggio
Correggio
4
Intesa Sanpaolo S.p.A.
12.00
Capital Euro 113.637 in shares of Euro 1
54
Yolo Group S.p.A.
Milano
Milano
4
Intesa Sanpaolo Vita S.p.A.
1.43
Capital Euro 87.493 in shares of Euro 0,01
(a)
Type of relationship:
1 - majority of voting rights at Ordinary Shareholders' Meeting;
2 - dominant influence at Ordinary Shareholders' Meeting;
3 - agreements with other shareholders;
4 - company subject to significant influence;
5 - unitary management as defined in Art. 26.1 of "Legislative Decree 87/92";
6 - unitary management as defined in Art. 26.2 of "Legislative Decree 87/92";
7 - joint control;
8 - other relationship.
(b)
Where different from the % portion, the availability of the votes in the Ordinary Shareholders' Meeting is indicated, distinguishing between the effective (*) and potential (**)
voting rights, where applicable.
(c)
These are vehicles used for securitisation transactions within the Group.
(d)
At any moment from the date of subscription of the second capital increase (24/11/2020) to the end of the 42nd month from that date, Intesa Sanpaolo has the right to
increase, in one or more tranches, its investment in the company’s share capital, obtaining a maximum total investment of 51%. Currently, the prerequisites of IFRS 10 to
classify the interest among subsidiaries are not met.
(e)
The different value between the actual share and the number of votes in the Shareholders’ Meeting is linked to the presence of various categories of shares (A and B). Only
category A shares (also held by Intesa Sanpaolo) grant rights to vote in the Shareholders’ Meeting.
(f)
The economic effects of the investments in equity and loans underlying the fund’s operations will be borne in full by the EIB.
The illustration of the criteria and the methods for the definition of the scope of consolidation and the reasons which determine
that a company is subject to joint control or significant influence is contained in Part A – Accounting policies, to which
reference should be made.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
322
7.2 Individually material investments in associates and companies subject to joint control: book value, fair value and
dividends received
(millions of euro)
Book value
Fair value
Dividends received
(a)
A. COMPANIES SUBJECT TO JOINT CONTROL
1
Mooney Group S.p.A.
111
-
-
B. COMPANIES SUBJECT TO SIGNIFICANT INFLUENCE
1
BACK2BONIS
387
-
-
2
Penghua Fund Management Co. Ltd.
332
-
45
3
Intrum Italy S.p.A.
307
-
13
4
RSCT FUND - Comparto Crediti
256
-
-
5
FI.NAV. Comparto A - Crediti
155
-
-
6
Equiter S.p.A.
104
-
2
7
NEVA FIRST - FCC
59
-
-
TOTAL
1,711
-
60
a) Dividends are paid by Group companies accounted for using the equity method, and, though they are not included in caption “250 Profits (Losses) on equity
investments”, as they represent a decrease in caption “70 Investments in associates and companies s ubject to joint control” under Assets, they are still presented in
that table, as envisaged by the reference regulations.
7.3 Individually material investments in associates and companies subject to joint control: financial information
(millions of euro)
Cash and cash equivalents
Financial assets
Non-financial assets
Financial liabilities
Non-financial liabilities
Total revenues
Interest margin
Adjustments to/write
-backs on property,
equipment and intangible assets
Income (Loss) before tax from continuing
operations
Income (Loss) after tax from continuing
operations
Income (Loss) after tax from discontinued
operations
Net income (loss)
(1)
Other comprehensive income (net of tax)
(2)
Consolidated comprehensive income
(3) = (1) + (2)
A. COMPANIES SUBJECT TO JOINT CONTROL
Mooney Group S.p.A.
X
397
930
1,446
198
300
X
X
-48
-37
-
-37
-
-37
B. COMPANIES SUBJECT TO SIGNIFICANT
INFLUENCE
BACK2BONIS
X
748
22
24
3
11
X
X
-
-
-
-
-
-
Penghua Fund Management Co. Ltd.
X
826
198
221
249
596
X
X
181
136
-
136
-
136
Intrum Italy S.p.A.
X
65
86
9
60
163
X
X
46
35
-
35
-
35
RSCT FUND - Comparto Crediti
X
346
25
-
4
-
X
X
-
-
-
-
-
-
FI.NAV. Comparto A - Crediti
X
268
-
-
-
-
X
X
-
-
-
-
-
-
Equiter S.p.A.
X
296
8
-
3
13
X
X
10
8
-
8
-
8
NEVA FIRST - FCC
X
110
22
-
1
7
X
X
7
7
-
7
-
7
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
323
( millions of euro)
Total Shareholders' Equity
Proportionate equity
Goodwill
Other changes
Consolidated book
value
A. COMPANIES SUBJECT TO JOINT CONTROL
Mooney Group S.p.A.
-
-
111
-
111
B. COMPANIES SUBJECT TO SIGNIFICANT INFLUENCE
BACK2BONIS
725
402
-
-15
387
Penghua Fund Management Co. Ltd.
554
272
60
-
332
Intrum Italy S.p.A.
82
40
267
-
307
RSCT FUND - Comparto Crediti
375
263
-
-7
256
FI.NAV. Comparto A - Crediti
306
155
-
-
155
Equiter S.p.A.
293
97
7
-
104
NEVA FIRST - FCC
138
59
-
-
59
2,473
1,288
445
-22
1,711
The figures for these companies are updated to December 2022, for Intrum and Penghua; to 30 June 2022 for RSCT FUND,
BACK2BONIS, NEVA FIRST and FI.NAV; and to 31 December 2021 for Equiter. For Mooney Group S.p.A., the figures shown
above refer to 30 September 2022, even though the figures as at 31 December 2022 were used for the purposes of the
Group’s consolidated financial statements. The latter will be made public following approval by the company’s Shareholders’
Meeting.
7.4 Individually immaterial investments in associates and companies subject to joint control: financial information
(millions of euro)
Book value of investments in associates
and companies subject to joint control
Total assets
Total liabilities
Total revenues
Income (loss) after tax from continuing
operations
Income (Loss) after tax from discontinued
operations
Net income (loss)
(1)
Other comprehensive income (net of tax)
(2)
Consolidated comprehensive income
(3) = (1) + (2)
COMPANIES SUBJECT TO JOINT CONTROL
23
210
147
94
-1
-
-1
-
-1
COMPANIES SUBJECT TO SIGNIFICANT INFLUENCE (a)
279
4,523
3,449
222
5
-
5
-46
-41
(a) This caption includes some subsidiaries excluded from the scope of consolidation as of modest amount.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
324
7.5 Investments in associates and companies subject to joint control: annual changes
(millions of euro)
31.12.2022
31.12.2021
A. Initial amount
1,652
1,996
B. Increases
942
422
B.1 purchases
528
122
of which business combinations
-
10
B.2 recoveries
13
-
B.3 revaluations
143
163
B.4 other changes
258
137
C. Decreases
-581
-766
C.1 sales
-305
-58
C.2 impairment losses
-52
-39
C.3 write-downs
-69
-61
C.4 other changes
-155
-608
D. Final amount
2,013
1,652
E. Total revaluations
3,620
3,477
F. Total impairment losses
2,111
2,059
The sub-caption B.1 purchases includes the acquisition of the additional 20% stake in Mooney Group, Back2Bonis and other
purchases, including Warrant Hub and Digit’Ed Holding.
The sub-caption B.3 revaluations mainly includes the profits of companies carried at equity (including Penghua Fund
Management Co. Ltd.).
The sub-caption B.4 Increases - other changes includes profits on disposal/reclassifications for a total of 197 million euro,
attributable to the Isp Formazione transaction for 196 million euro and to Innolva for 1 million euro.
The sub-caption C.1 sales includes the disposal of companies carried at equity (mainly ISP Formazione and Innolva).
The sub-caption C.3 write-downs includes the losses of companies carried at equity (mainly FI.NAV and Mooney Group).
The sub-caption C.4 Decreases - other changes includes the payment of dividends (mainly Penghua and Intrum), as well as
reclassification from other portfolios of VUB Generali, which entered the line-by-line scope of consolidation following the
purchase of an additional 5.26%.
7.6 Significant evaluations and assumptions to establish the existence of joint control or significant influence
Entities are considered to be companies subject to joint control if control is contractually shared between the Group and one
or more other parties, or where the decisions about the relevant activities require the unanimous consent from all parties
sharing control.
Companies are considered subject to significant influence (associates) when the Group holds 20% or more of the voting rights
(including “potential” voting rights) or if it – with a lower equity stake – has the power of participating in the determination of
financial and management policies of the company based on specific juridical relations, such as the participation in voting
syndicates. Certain companies in which the Group holds a stake exceeding 20% are not considered subject to significant
influence since it solely has economic rights on a portion of the returns generated by the investment, but does not have
access to management policies and may exercise governance rights limited to the safeguarding of its economic interests.
7.7 Commitments referred to investments in companies subject to joint control
As at 31 December 2022, there were commitments on capital referring to MIR CAPITAL S.C.A. Sicar for a total of 35.6 million
euro; to Mooney Group S.p.A. for a total of 8 million euro; and to Apside S.p.A. for a total of 17 million euro, relating to the
subscription of equity instruments issued by the company.
7.8 Commitments referred to investments in companies subject to significant influence
As at 31 December 2022, the following commitments are noted: the recapitalisation of Bancomat S.p.A. for around 2.7 million
euro; the commitment undertaken by ISP Innovation Center S.p.A. and Neva SGR S.p.A. to pay the amounts for the call ups
of the NEVA FIRST-FCC Fund for a residual 49.5 million euro; a capital increase commitment benefiting Centai Institute
S.p.A. for 0.7 million euro; a commitment to subscribe equity instruments issued by the associate Destination Gusto S.r.l. for a
maximum of 2.5 million euro. Lastly, there is a residual commitment on Leonardo Technology S.r.l. of a modest amount.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
325
7.9 Significant restrictions
There is nothing to report in terms of significant restrictions.
7.10 Other information
For most of the companies subject to joint control or significant influence, the timing regarding the availability of the financial
statements at the end of the year is not compatible with the terms set for the closure of Intesa Sanpaolo’s consolidated
financial statements; on this point, for the application of the equity method, reference is made to the last accounting reports
available that, in most cases, include the interim statement of the first 9 months for the listed associates or the last financial
statements or half-yearly report available for the other associates. In any case, when the accounts of the associate or joint
venture used in the application of the equity method refer to a date that is different from that of Intesa Sanpaolo’s financi al
statements, adjustments are made to take into account the effects of operations or significant events which took place
between that date and the reporting date of Intesa Sanpaolo’s financial statements.
Impairment tests of investments in associates and companies subject to joint control
As required under IAS/IFRS, investments in associates and companies subject to joint control are subjected to impairment
testing to assess whether there is objective evidence to consider that the carrying value of the assets is not fully recoverable.
With reference to investments in associates and companies subject to joint control, the process of detection of any impairment
involves verification of the presence of impairment indicators and the determination of any write-down. The impairment
indicators are essentially divided into two categories: qualitative indicators, such as the generation of negative economic
results or in any case a significant variance with respect to the targets budgeted or established in the multi-year plans
disclosed to the market, the announcement/start-up of insolvency proceedings or restructuring plans, and the downgrading by
more than two classes of the rating; quantitative indicators, represented by a reduction in fair value of over 30% below the
carrying value or for a period of over 24 months, by market capitalisation lower than the company’s net book value, in the
case of securities listed on active markets or by a carrying value of the investment in the Parent Company’s financial
statements higher than the carrying value in the consolidated financial statements of the investee’s net assets and goodwill or
by distribution by the latter of a dividend that is higher than its total income. If impairment indicators are detected, the
recoverable amount, represented by the higher of the fair value less costs to sell and the value in use, is calculated and if it
proves lower than the carrying value, impairment is recognised. If, subsequently, the recoverable amount is higher than the
new carrying amount and the reasons for the impairment no longer apply following an event subsequent to the recognition of
the impairment, write-backs are recognised, through profit or loss, up to the amount of the adjustment previously recognised.
In particular, where impairment indicators were recorded with respect to investments in associates or companies subject to
joint control, analyses were carried out based, as a priority, on market methodologies (direct or comparable transactions and
market multiples) or alternatively on “fundamental” analyses mainly based on an estimate of the expected disc ounted cash
flows or on the adjusted net asset value (ANAV).
The results of these assessments led to the need to recognise adjustments, mainly referring to the investments in Intrum Ital y
(34 million euro), Mir Capital (8 million euro), RSCT Fund Comparto Crediti (4 million euro), Marketwall (3 million euro) and in
other minor investments for 3 million euro. The valuation of investments in associates or companies subject to joint control
also led to the recognition of a write-back of 13 million euro of the investment in FI.NAV. Comparto A Crediti.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
326
SECTION 8 – TECHNICAL INSURANCE RESERVES REASSURED WITH THIRD PARTIES – CAPTION 80
8.1 Technical insurance reserves reassured with third parties: breakdown
(millions of euro)
Captions
31.12.2022
31.12.2021
A. Non-life business
127
164
A1. Premiums reserves
44
37
A2. Claims reserves
83
127
A3. Other reserves
-
-
B. Life business
36
44
B1. Mathematical reserves
32
40
B2. Reserves for amounts to be disbursed
4
4
B3. Other reserves
-
-
C. Technical reserves for investment risks to be borne by the insured
-
-
C1. Reserves for contracts with disbursements connected with investment funds and market
indices
-
-
C2. Reserves from pension fund management
-
-
D. Total technical insurance reserves reassured with third parties
163
208
8.2 Change in caption 80 Technical insurance reserves reassured with third parties
The balance of this caption came to 163 million euro (208 million euro as at 31 December 2021), down by 45 million euro
compared to 31 December 2021. The change is essentially due to the decline in caption “A2. Claims reserves” as a result of a
new underwriting policy, for both renewals and new customers, preferring profitability by enabling a reduction in the portfolio’s
claims rate.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
327
SECTION 9 – PROPERTY AND EQUIPMENT – CAPTION 90
(millions of euro)
Assets/Amounts
31.12.2022
31.12.2021
1. Property and equipment used in operations measured at cost
2,483
2,530
Of which - Property and equipment used in operations - Rights of use acquired under leases
1,495
1,521
2. Investment property measured at cost
-
-
3. Property and equipment used in operations, revalued
6,381
6,574
Of which - Property and equipment used in operations, revalued - Rights of use acquired under leases
-
-
4. Investment property measured at fair value
770
798
Of which - Investment property - Rights of use acquired under leases
-
-
5. Inventories of property and equipment governed by IAS 2
871
890
Total Property and equipment caption 90
10,505
10,792
9.1 Property and equipment used in operations: breakdown of assets measured at cost
(millions of euro)
31.12.2022
31.12.2021
1. Property and equipment owned
988
1,009
a) land
-
-
b) buildings
-
-
c) furniture
194
207
d) electronic equipment
748
758
e) other
46
44
2. Rights of use acquired through the lease
1,495
1,521
a) land
1
9
b) buildings
1,218
1,331
c) furniture
-
-
d) electronic equipment
36
16
e) other
240
165
Total
2,483
2,530
of which: resulting from the enforcement of guarantees
1
2
9.2 Investment property: breakdown of assets measured at cost
There was no investment property measured at cost in the Intesa Sanpaolo Group.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
328
9.3 Property and equipment used in operations: breakdown of revalued assets
(millions of euro)
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Property and equipment owned
-
-
6,381
-
-
6,574
a) land
-
-
2,641
-
-
2,656
b) buildings
-
-
3,429
-
-
3,606
c) valuable art assets
-
-
311
-
-
312
d) electronic equipment
-
-
-
-
-
-
e) other
-
-
-
-
-
-
2. Rights of use acquired through the lease
-
-
-
-
-
-
a) land
-
-
-
-
-
-
b) buildings
-
-
-
-
-
-
c) furniture
-
-
-
-
-
-
d) electronic equipment
-
-
-
-
-
-
e) other
-
-
-
-
-
-
TOTAL
-
-
6,381
-
-
6,574
of which: resulting from the enforcement of
guarantees
-
-
-
-
-
-
9.4 Investment property: breakdown of assets measured at fair value
(millions of euro)
31.12.2022
31.12.2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Property and equipment owned
-
-
770
-
-
798
a) land
-
-
271
-
-
281
b) buildings
-
-
499
-
-
517
2. Rights of use acquired through the lease
-
-
-
-
-
-
a) land
-
-
-
-
-
-
b) buildings
-
-
-
-
-
-
TOTAL
-
-
770
-
-
798
of which: resulting from the enforcement of
guarantees
-
-
114
-
-
138
With regard to the provisions of IAS 40, paragraph 75, letters c), g) and h), there was no information worth mentioning.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
329
9.5 Inventories of property and equipment governed by IAS 2: breakdown
(millions of euro)
31.12.2022
Of which:
31.12.2021
Banking
group
Insurance
companies
Other
companies
1. Inventories of property and equipment resulting
from the enforcement of guarantees
192
181
-
11
211
a) land
13
3
-
10
18
b) buildings
179
178
-
1
192
c) furniture
-
-
-
-
-
d) electronic equipment
-
-
-
-
-
e) other
-
-
-
-
1
2. Other inventories of property and equipment
679
24
-
655
679
Total
871
205
-
666
890
of which: measured at fair value less cost to sell
6
6
-
-
1
9.6 Property and equipment used in operations: annual changes
(millions of euro)
Land
Buildings
Furniture
Electronic
equipment
Valuable art
assets
Other
Total
A. Gross initial carrying amount
2,665
5,736
2,088
6,657
312
395
17,853
A.1 Total net adjustments
-
-799
-1,881
-5,883
-
-186
-8,749
A.2 Net initial carrying amount
2,665
4,937
207
774
312
209
9,104
B. Increases
52
450
36
260
1
188
987
B.1 Purchases
-
97
33
244
-
155
529
of which business combinations
-
-
-
-
-
-
-
B.2 Capitalised improvement costs
12
37
-
-
-
-
49
B.3 Recoveries
-
-
-
-
-
-
-
B.4 Positive fair value differences recognised in:
16
11
-
-
-
-
27
a) shareholders' equity
16
11
-
-
-
-
27
b) income statement
-
-
-
-
-
-
-
B.5 Positive foreign exchange differences
-
-
-
-
-
-
-
B.6 Transfer from investment property
14
19
X
X
X
X
33
B.7 Other changes
10
286
3
16
1
33
349
C. Decreases
-75
-740
-49
-250
-2
-111
-1,227
C.1 Sales
-
-6
-
-1
-
-2
-9
of which business combinations
-
-
-
-
-
-
-
C.2 Depreciation
-
-342
-33
-221
-
-79
-675
C.3 Impairment losses recognised in:
-
-3
-5
-
-
-2
-10
a) shareholders' equity
-
-3
-
-
-
-
-3
b) income statement
-
-
-5
-
-
-2
-7
C.4 Negative fair value differences recognised in:
-9
-13
-
-
-2
-1
-25
a) shareholders' equity
-6
-9
-
-
-
-
-15
b) income statement
-3
-4
-
-
-2
-1
-10
C.5 Negative foreign exchange differences
-20
-46
-3
-5
-
-2
-76
C.6 Transfer to:
-38
-77
-
-
-
-
-115
a) investment
-36
-72
X
X
X
X
-108
b) non-current assets held for sale and discontinued
operations
-2
-5
-
-
-
-
-7
C.7 Other changes
-8
-253
-8
-23
-
-25
-317
D. Net final carrying amount
2,642
4,647
194
784
311
286
8,864
D.1 Total net adjustments
-
-967
-1,902
-6,012
-
-173
-9,054
D.2 Gross final carrying amount
2,642
5,614
2,096
6,796
311
459
17,918
E. Measurement at cost
1,852
2,450
-
-
112
-
4,414
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
330
The table above shows the values of owned assets, as well as the rights of use acquired under leases.
As explained in Part A – Fair value of real estate and valuable art assets, please note that, in accordance with the rules on
valuation frequencies:
– the properties classified as owner-occupied assets and trophy assets in the real estate portfolio were respectively subject
to full valuation at the end of 2020 and the end of 2021, and were therefore subject to scenario analysis for 2022;
– the valuable art assets were subject to scenario analyses for the year 2022, as they had been fully appraised at the end
of 2020, through external appraisals, entrusted to qualified independent experts.
Sub-captions B.4 and C.4 respectively report the positive and negative changes in fair value relating to owner-occupied real
estate (land and buildings) and valuable art assets, for which the Bank applies the revaluation model.
The Other changes, both increases and decreases, refer mainly to renegotiations and early terminations during the year of
leases (IFRS 16) and, only regarding decreases, to amortisation and depreciation recorded during the year on assets deriving
from the acquisition of business lines of the former Venetian banks, covered using the allowance for risks and charges
specifically allocated at the time.
Sub-caption E. Measurement at cost only contains property and equipment measured according to the revaluation model, in
compliance with the instructions set out in Circular 262 of the Bank of Italy.
9.6 Of which - Property and equipment used in operations - Rights of use acquired under leases: annual changes
(millions of euro)
Land
Buildings
Furniture
Electronic
equipment
Valuable art
assets
Other
Total
A. Gross initial carrying amount
9
1,968
-
36
-
193
2,206
A.1 Total net adjustments
-
-637
-
-20
-
-28
-685
A.2 Net initial carrying amount
9
1,331
-
16
-
165
1,521
B. Increases
-
356
-
52
-
150
558
B.1 Purchases
-
78
-
42
-
137
257
of which business combinations
-
-
-
-
-
-
-
B.2 Capitalised improvement costs
-
-
-
-
-
-
-
B.3 Recoveries
-
-
-
-
-
-
-
B.4 Positive fair value differences recognised in:
-
-
-
-
-
-
-
a) shareholders' equity
-
-
-
-
-
-
-
b) income statement
-
-
-
-
-
-
-
B.5 Positive foreign exchange differences
-
-
-
-
-
-
-
B.6 Transfer from investment property
-
-
X
X
X
X
-
B.7 Other changes
-
278
-
10
-
13
301
C. Decreases
-8
-469
-
-32
-
-75
-584
C.1 Sales
-
-1
-
-1
-
-
-2
of which business combinations
-
-
-
-
-
-
-
C.2 Depreciation
-
-214
-
-24
-
-69
-307
C.3 Impairment losses recognised in:
-
-1
-
-
-
-
-1
a) shareholders' equity
-
-
-
-
-
-
-
b) income statement
-
-1
-
-
-
-
-1
C.4 Negative fair value differences recognised in:
-
-
-
-
-
-1
-1
a) shareholders' equity
-
-
-
-
-
-
-
b) income statement
-
-
-
-
-
-1
-1
C.5 Negative foreign exchange differences
-
-5
-
-
-
-2
-7
C.6 Transfer to:
-
-
-
-
-
-
-
a) investment
-
-
X
X
X
X
-
b) non-current assets held for sale and discontinued
operations
-
-
-
-
-
-
-
C.7 Other changes
-8
-248
-
-7
-
-3
-266
D. Net final carrying amount
1
1,218
-
36
-
240
1,495
D.1 Total net adjustments
-
-718
-
-39
-
-34
-791
D.2 Gross final carrying amount
1
1,936
-
75
-
274
2,286
E. Measurement at cost
-
-
-
-
-
-
-
The Other changes, both increases and decreases, refer mainly to renegotiations and early terminations during the year of
leases (IFRS 16).
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
331
9.7 Investment property: annual changes
(millions of euro)
TOTAL
Land
Buildings
A. Initial carrying amount
281
517
B. Increases
41
87
B.1 Purchases
-
-
of which business combinations
-
-
B.2 Capitalised improvement costs
-
7
B.3 Positive fair value differences
3
3
B.4 Recoveries
-
-
B.5 Positive foreign exchange differences
-
-
B.6 Transfer from investment property
36
72
B.7 Other changes
2
5
C. Decreases
-51
-105
C.1 Sales
-13
-30
of which business combinations
-
-
C.2 Depreciation
-
-
C.3 Negative fair value differences
-10
-32
C.4 Impairment losses
-
-1
C.5 Negative foreign exchange differences
-
-
C.6 Transfer to
-24
-35
a) property used in operations
-14
-19
b) non-current assets held for sale and discontinued operations
-10
-16
C.7 Other changes
-4
-7
D. Final carrying amount
271
499
E. Fair value measurement
-
-
The table above shows the values of owned assets, as well as the rights of use acquired under leases.
Investment property, comprised of land and buildings, is measured at fair value, in compliance with IAS 40.
As illustrated in Part A – Fair value of real estate and valuable art assets, based on the rules on valuation frequencies, at the
end of 2022 the appraisals were updated for all the investment properties, whose effects are recognised in the sub-captions
B.3 Positive fair value differences and C.3 Negative fair value differences.
9.7 Of which - Investment property - Rights of use acquired under leases: annual changes
As at 31 December 2022, the amount for Investment property - Rights of use acquired under leases was immaterial.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
332
9.8 Inventories of property and equipment governed by IAS 2: annual changes
(millions of euro)
Assets/Amounts
Inventories of property and equipment resulting from the enforcement of
guarantees
Other
inventories of
property and
equipment
TOTAL
Land
Buildings
Furniture
Electronic
equipment
Other
A. Initial carrying amount
18
191
-
-
1
680
890
B. Increases
1
24
-
-
5
4
34
B.1 Purchases
-
-
-
-
5
-
5
B.2 Recoveries
-
1
-
-
-
-
1
B.3 Positive foreign exchange differences
1
1
-
-
-
-
2
B.4 Other changes
-
22
-
-
-
4
26
C. Decreases
-6
-36
-
-
-6
-5
-53
C.1 Sales
-5
-14
-
-
-5
-2
-26
C.2 Impairment losses
-
-17
-
-
-
-1
-18
C.3 Negative foreign exchange differences
-1
-
-
-
-
-
-1
C.4 Other changes
-
-5
-
-
-1
-2
-8
D. Final carrying amount
13
179
-
-
-
679
871
9.8 Of which: Banking group
(millions of euro)
Assets/Amounts
Inventories of property and equipment resulting from the enforcement of
guarantees
Other
inventories of
property and
equipment
TOTAL
Land
Buildings
Furniture
Electronic
equipment
Other
A. Initial carrying amount
7
190
-
-
1
26
224
B. Increases
1
24
-
-
5
3
33
B.1 Purchases
-
-
-
-
5
-
5
B.2 Recoveries
-
1
-
-
-
-
1
B.3 Positive foreign exchange differences
1
1
-
-
-
-
2
B.4 Other changes
-
22
-
-
-
3
25
C. Decreases
-5
-36
-
-
-6
-5
-52
C.1 Sales
-5
-14
-
-
-5
-2
-26
C.2 Impairment losses
-
-17
-
-
-
-1
-18
C.3 Negative foreign exchange differences
-
-
-
-
-
-
-
C.4 Other changes
-
-5
-
-
-1
-2
-8
D. Final carrying amount
3
178
-
-
-
24
205
9.8 Of which: Insurance companies
There were no inventories of property and equipment governed by IAS 2 pertaining to insurance companies of the Intesa
Sanpaolo Group.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
333
9.8 Of which: Other companies
(millions of euro)
Assets/Amounts
Inventories of property and equipment resulting from the enforcement of
guarantees
Other
inventories of
property and
equipment
TOTAL
Land
Buildings
Furniture
Electronic
equipment
Other
A. Initial carrying amount
11
1
-
-
-
654
666
B. Increases
-
-
-
-
-
1
1
B.1 Purchases
-
-
-
-
-
-
-
B.2 Recoveries
-
-
-
-
-
-
-
B.3 Positive foreign exchange differences
-
-
-
-
-
-
-
B.4 Other changes
-
-
-
-
-
1
1
C. Decreases
-1
-
-
-
-
-
-1
C.1 Sales
-
-
-
-
-
-
-
C.2 Impairment losses
-
-
-
-
-
-
-
C.3 Negative foreign exchange differences
-1
-
-
-
-
-
-1
C.4 Other changes
-
-
-
-
-
-
-
D. Final carrying amount
10
1
-
-
-
655
666
9.9 Commitments to purchase property and equipment
Commitments to purchase property and equipment in existence as at 31 December 2022 amounted to approximately 9 million
euro, mainly relating to efficiency improvement measures implemented on the systems installations in the Group’s head office
buildings. Any commitments relating to lease agreements are illustrated in Part M.
SECTION 10 - INTANGIBLE ASSETS - CAPTION 100
10.1 Intangible assets: breakdown by type of asset
(millions of euro)
31.12.2022
Of which:
31.12.2021
Banking
group
Insurance
companies
Other
companies
Finite
useful life
Indefinite
useful life
Finite
useful life
Indefinite
useful life
Finite
useful life
Indefinite
useful life
Finite
useful life
Indefinite
useful
life
Finite
useful life
Indefinite
useful life
A.1 Goodwill
X
3,626
X
2,650
X
976
X
-
X
3,574
A.1.1 Group
x
3,626
x
2,650
x
976
x
-
x
3,574
A.1.2 Minority interests
x
-
x
-
x
-
x
-
x
-
A.2 Other intangible assets
4,322
1,882
3,755
1,882
549
-
18
-
3,886
1,882
of which: software
3,013
-
2,961
-
52
-
-
-
2,533
-
A.2.1 Assets measured at cost
4,322
1,882
3,755
1,882
549
-
18
-
3,886
1,882
a) Internally generated
intangible assets
2,386
-
2,366
-
20
-
-
-
2,072
-
b) Other assets
1,936
1,882
1,389
1,882
529
-
18
-
1,814
1,882
A.2.2 Assets measured at fair
value
-
-
-
-
-
-
-
-
-
-
a) Internally generated
intangible assets
-
-
-
-
-
-
-
-
-
-
b) Other assets
-
-
-
-
-
-
-
-
-
-
Total
4,322
5,508
3,755
4,532
549
976
18
-
3,886
5,456
As at 31 December 2022, the amount for software was 3,013 million euro, of which 2,386 million euro produced internally and
627 million euro purchased externally.
The allocation of goodwill between “Cash Generating Units” is reported in the following table.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
334
(millions of euro)
CGUs/Goodwill
31.12.2022
31.12.2021
Banca dei Territori
-
-
IMI Corporate & Investment Banking
56
56
Insurance
976
976
Asset Management
1,059
1,060
Private Banking
1,535
1,482
International Subsidiary Banks
-
-
Bank of Alexandria (Egypt)
-
-
Pravex Bank (Ukraine)
-
-
GROUP TOTAL
3,626
3,574
For a breakdown of the CGUs, see the next chapter “Information on intangible assets and goodwill”.
10.2 Intangible assets: annual changes
(millions of euro)
Goodwill
Other intangible assets:
internally generated
Other intangible assets:
other
Total
Finite
useful life
Indefinite
useful life
Finite
useful life
Indefinite
useful life
A. Gross initial carrying amount
20,772
7,382
-
10,583
2,386
41,123
A.1 Total net adjustments
-17,198
-5,310
-
-8,769
-504
-31,781
A.2 Net initial carrying amount
3,574
2,072
-
1,814
1,882
9,342
B. Increases
52
1,041
-
422
-
1,515
B.1 Purchases
42
51
-
304
-
397
of which business combinations
42
-
-
73
-
115
B.2 Increases of internally generated
intangible assets
X
990
-
-
-
990
B.3 Recoveries
X
-
-
-
-
-
B.4 Positive fair value differences recognised in
-
-
-
-
-
-
- shareholders' equity
X
-
-
-
-
-
- income statement
X
-
-
-
-
-
B.5 Positive foreign exchange differences
10
-
-
-
-
10
B.6 Other changes
-
-
-
118
-
118
C. Decreases
-
-727
-
-300
-
-1,027
C.1 Sales
-
-
-
-3
-
-3
of which business combinations
-
-
-
-
-
-
C.2 Impairment losses
-
-692
-
-292
-
-984
- Amortisation
X
-684
-
-280
-
-964
- Write-downs recognised in
-
-8
-
-12
-
-20
shareholders' equity
X
-
-
-
-
-
income statement
-
-8
-
-12
-
-20
C.3 Negative fair value differences recognised in
-
-
-
-
-
-
- shareholders' equity
X
-
-
-
-
-
- income statement
X
-
-
-
-
-
C.4 Transfer to non-current assets held for sale
and discontinued operations
-
-12
-
-
-
-12
C.5 Negative foreign exchange differences
-
-
-
-4
-
-4
C.6 Other changes
-
-23
-
-1
-
-24
D. Net final carrying amount
3,626
2,386
-
1,936
1,882
9,830
D.1 Total net adjustments
-17,198
-6,002
-
-9,061
-504
-32,765
E. Gross final carrying amount
20,824
8,388
-
10,997
2,386
42,595
F. Measurement at cost
-
-
-
-
-
-
The sub-caption B.1 includes the increase for Goodwill deriving from the purchase of Compagnie de Banque Privée Quilvest
S.A. (CBPQ).
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
335
10.2 Of which: Banking group
(millions of euro)
Goodwill
Other intangible assets:
internally generated
Other intangible assets:
other
Total
Finite
useful life
Indefinite
useful life
Finite
useful life
Indefinite
useful life
A. Gross initial carrying amount
19,042
7,322
-
8,952
2,386
37,702
A.1 Total net adjustments
-16,444
-5,276
-
-7,743
-504
-29,967
A.2 Net initial carrying amount
2,598
2,046
-
1,209
1,882
7,735
B. Increases
52
1,025
-
378
-
1,455
B.1 Purchases
42
38
-
276
-
356
of which business combinations
42
-
-
73
-
115
B.2 Increases of internally generated
intangible assets
X
987
-
-
-
987
B.3 Recoveries
X
-
-
-
-
-
B.4 Positive fair value differences recognised in
-
-
-
-
-
-
- shareholders' equity
X
-
-
-
-
-
- income statement
X
-
-
-
-
-
B.5 Positive foreign exchange differences
10
-
-
-
-
10
B.6 Other changes
-
-
-
102
-
102
C. Decreases
-
-705
-
-198
-
-903
C.1 Sales
-
-
-
-3
-
-3
of which business combinations
-
-
-
-
-
-
C.2 Impairment losses
-
-678
-
-190
-
-868
- Amortisation
X
-670
-
-178
-
-848
- Write-downs recognised in
-
-8
-
-12
-
-20
shareholders' equity
X
-
-
-
-
-
income statement
-
-8
-
-12
-
-20
C.3 Negative fair value differences recognised in
-
-
-
-
-
-
- shareholders' equity
X
-
-
-
-
-
- income statement
X
-
-
-
-
-
C.4 Transfer to non-current assets held for sale
and discontinued operations
-
-12
-
-
-
-12
C.5 Negative foreign exchange differences
-
-
-
-4
-
-4
C.6 Other changes
-
-15
-
-1
-
-16
D. Net final carrying amount
2,650
2,366
-
1,389
1,882
8,287
D.1 Total net adjustments
-16,444
-5,954
-
-7,933
-504
-30,835
E. Gross final carrying amount
19,094
8,320
-
9,322
2,386
39,122
F. Measurement at cost
-
-
-
-
-
-
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
336
10.2 Of which: Insurance companies
(millions of euro)
Goodwill
Other intangible assets:
internally generated
Other intangible assets:
other
Total
Finite
useful life
Indefinite
useful life
Finite
useful life
Indefinite
useful life
A. Gross initial carrying amount
1,712
60
-
1,544
-
3,316
A.1 Total net adjustments
-736
-34
-
-939
-
-1,709
A.2 Net initial carrying amount
976
26
-
605
-
1,607
B. Increases
-
16
-
21
-
37
B.1 Purchases
-
13
-
6
-
19
of which business combinations
-
-
-
-
-
-
B.2 Increases of internally generated
intangible assets
X
3
-
-
-
3
B.3 Recoveries
X
-
-
-
-
-
B.4 Positive fair value differences recognised in
-
-
-
-
-
-
- shareholders' equity
X
-
-
-
-
-
- income statement
X
-
-
-
-
-
B.5 Positive foreign exchange differences
-
-
-
-
-
-
B.6 Other changes
-
-
-
15
-
15
C. Decreases
-
-22
-
-97
-
-119
C.1 Sales
-
-
-
-
-
-
of which business combinations
-
-
-
-
-
-
C.2 Impairment losses
-
-14
-
-97
-
-111
- Amortisation
X
-14
-
-97
-
-111
- Write-downs recognised in
-
-
-
-
-
-
shareholders' equity
X
-
-
-
-
-
income statement
-
-
-
-
-
-
C.3 Negative fair value differences recognised in
-
-
-
-
-
-
- shareholders' equity
X
-
-
-
-
-
- income statement
X
-
-
-
-
-
C.4 Transfer to non-current assets held for sale
and discontinued operations
-
-
-
-
-
-
C.5 Negative foreign exchange differences
-
-
-
-
-
-
C.6 Other changes
-
-8
-
-
-
-8
D. Net final carrying amount
976
20
-
529
-
1,525
D.1 Total net adjustments
-736
-48
-
-1,036
-
-1,820
E. Gross final carrying amount
1,712
68
-
1,565
-
3,345
F. Measurement at cost
-
-
-
-
-
-
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
337
10.2 Of which: Other companies
(millions of euro)
Goodwill
Other intangible assets:
internally generated
Other intangible assets:
other
Total
Finite
useful life
Indefinite
useful life
Finite
useful life
Indefinite
useful life
A. Gross initial carrying amount
18
-
-
87
-
105
A.1 Total net adjustments
-18
-
-
-87
-
-105
A.2 Net initial carrying amount
-
-
-
-
-
-
B. Increases
-
-
-
23
-
23
B.1 Purchases
-
-
-
22
-
22
of which business combinations
-
-
-
-
-
-
B.2 Increases of internally generated
intangible assets
X
-
-
-
-
-
B.3 Recoveries
X
-
-
-
-
-
B.4 Positive fair value differences recognised in
-
-
-
-
-
-
- shareholders' equity
X
-
-
-
-
-
- income statement
X
-
-
-
-
-
B.5 Positive foreign exchange differences
-
-
-
-
-
-
B.6 Other changes
-
-
-
1
-
1
C. Decreases
-
-
-
-5
-
-5
C.1 Sales
-
-
-
-
-
-
of which business combinations
-
-
-
-
-
-
C.2 Impairment losses
-
-
-
-5
-
-5
- Amortisation
X
-
-
-5
-
-5
- Write-downs recognised in
-
-
-
-
-
-
shareholders' equity
X
-
-
-
-
-
income statement
-
-
-
-
-
-
C.3 Negative fair value differences recognised in
-
-
-
-
-
-
- shareholders' equity
X
-
-
-
-
-
- income statement
X
-
-
-
-
-
C.4 Transfer to non-current assets held for sale
and discontinued operations
-
-
-
-
-
-
C.5 Negative foreign exchange differences
-
-
-
-
-
-
C.6 Other changes
-
-
-
-
-
-
D. Net final carrying amount
-
-
-
18
-
18
D.1 Total net adjustments
-18
-
-
-92
-
-110
E. Gross final carrying amount
18
-
-
110
-
128
F. Measurement at cost
-
-
-
-
-
-
10.3 Other information
As at 31 December 2022, there were commitments relating to investments in intangible assets, primarily software, of
approximately 25 million euro.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
338
Information on intangible assets and goodwill
The application of IFRS 3 to the accounting of acquisitions may lead to the recognition of new intangible assets and goodwill.
In the case of the Intesa Sanpaolo Group, the merger between Banca Intesa and Sanpaolo IMI and the subsequent
acquisitions led to the recognition of significant amounts for intangible assets and goodwill.
In 2022 two transactions were finalised, entailing the recognition of new intangible assets with finite useful lives and goodwill.
These transactions are briefly illustrated below, describing their effects on the amount and composition of the Group’s
intangible assets.
The acquisition by Fideuram Bank Luxembourg, a subsidiary of Fideuram - Intesa Sanpaolo Private Banking, of 100% of the
capital of Compagnie de Banque Privée Quilvest, a Luxembourg private bank wholly owned by the holding company Quilvest
Wealth Management, was finalised on 30 June 2022. Within the framework of the Purchase Price Allocation (PPA), two
specific customer relationship related intangible assets were identified and recognised, amounting to 43 million euro in
relation to indirect customer deposits (assets under management) and 30 million euro in relation to core deposits,
respectively. In addition, goodwill of approximately 42 million euro was recognised as the residual difference between the
acquisition cost and the company’s shareholders’ equity measured at its acquisition date fair value. Acc ording to IAS 36, both
goodwill and the intangible assets linked to these assets were allocated to the Private Banking CGU.
Within the International Subsidiary Banks Division, the acquisition by VUB Banka, a wholly owned subsidiary of Intesa
Sanpaolo Holding International, of 5.26% of the capital of VUB Generali, the number-four operator in the Slovak pension fund
market, in which the Intesa Sanpaolo Group previously held a 50% stake as part of a joint venture established in 2004 with
the Generali Group, was finalised on 24 October 2022. This transaction, which entailed the acquisition of control over the
company by the Intesa Sanpaolo Group pursuant to IFRS 10, was considered a business combination to be accounted for
under IFRS 3. At the end of the Purchase Price Allocation (PPA), an intangible asset not previously recognised in the financial
statements of VUB Generali attributable to customer relationship related activities, and in particular asset management, of 8 0
million euro was identified and allocated to the International Subsidiary Banks CGU. The intangible asset identified, net of the
related tax effect, offset the entire difference between the acquisition cost and the company’s assets, without the transacti on
giving rise to amounts of goodwill.
For more details on the transactions mentioned above, see Part G of these Notes.
The table below summarises the values of the intangible assets and goodwill recorded in the consolidated financial
statements at 31 December 2022 with the related changes during the period, subdivided by Cash Generating Unit (CGU),
which represent the groups of assets subject to impairment testing on goodwill in order to determine the recoverable amount.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
339
(millions of euro)
CGU
Financial
Statements
2021
Acquisition of
CBPQ
Acquisition of
VUB Generali
Amortisation
Other
changes
(1)
Financial
Statements
2022
BANCA DEI TERRITORI DIVISION
1,833
-
-
-22
-
1,811
- Asset management intangibles - distribution
201
-
-
-14
-
187
- Insurance intangibles - distribution
110
-
-
-7
-
103
- Brand name intangibles
1,507
-
-
-
-
1,507
- Intangible asset under administration
15
-
-
-1
-
14
- Intangibile Acquiring
-
-
-
-
-
-
- Goodwill
-
-
-
-
-
-
DIVISIONE IMI CORPORATE & INVESTMENT BANKING
56
-
-
-
-
56
- Goodwill
56
-
-
-
-
56
ASSET MANAGEMENT DIVISION
1,166
-
-
-6
-1
1,159
- Asset management intangibles - prod. and distribut.
106
-
-
-6
-
100
- Goodwill
1,060
-
-
-
-1
1,059
PRIVATE BANKING DIVISION
2,106
115
-
-19
15
2,217
- Asset management intangibles - prod. and distribut.
180
43
-
-14
4
213
- Insurance intangibles - distribution
47
-
-
-2
-
45
- Intangibile Core Deposits
-
30
-
-1
-
29
- Brand name intangibles
375
-
-
-
-
375
- Intangible asset under administration
22
-
-
-2
-
20
- Goodwill
1,482
42
-
-
11
1,535
INSURANCE DIVISION
1,567
-
-
-94
-
1,473
- Insurance intangibles - production
591
-
-
-94
-
497
- Goodwill
976
-
-
-
-
976
DIVISIONE INTERNATIONAL SUBSIDIARY BANKS
-
-
80
-1
-
79
- Intangible asset management - production
-
-
80
-1
-
79
BANK OF ALEXANDRIA (Egypt)
-
-
-
-
-
-
PRAVEX BANK (Ukraine)
-
-
-
-
-
-
CGU TOTAL
6,728
115
80
-142
14
6,795
- Asset management intangibles
487
43
80
-35
4
579
- Insurance intangibles
748
-
-
-103
-
645
- Intangibile Core Deposits
-
30
-
-1
-
29
- Intangible asset under administration
37
-
-
-3
-
34
- Intangibile Acquiring
-
-
-
-
-
-
- Brand name intangibles
1,882
-
-
-
-
1,882
- Goodwill
3,574
42
-
-
10
3,626
(1) Foreign exchange differences on the goodwill attributable to Eurizon Capital SLJ and on the portion of amortisation of intangibles attributable to Reyl & Cie SA.
The intangible assets with finite useful lives recognised refer to customer relationships and relate to the valuation of the
insurance portfolio (Value of Business Acquired), Assets Under Administration (AUA), Assets Under Management (AUM) and
Core Deposits. Such intangible assets were originally measured by discounting the income margin cash flows over a period
representing the residual life, contractual or estimated, of relationships existing at the time of the business combination.
For the intangible assets with a finite useful life, the amortisation for the year was recognised to the income statement (under
“220. Net adjustments to/recoveries on intangible assets”) for a total of 142 million euro gross of the tax effect.
The brand name, an intangible asset related to marketing, was also measured. This asset is considered to have an indefinite
life since it is expected to contribute for an indefinite period of time to the formation of income flows.
Based on IAS 36, both intangible assets with an indefinite useful life and goodwill are submitted to impairment testing on an
annual basis to verify recoverability of their value. In addition, intangible assets with a finite useful life must be tested for
impairment whenever there is evidence of impairment indicators. The recoverable amount consists of the higher of the fair
value and the value in use, less costs to sell.
Lastly, it should be mentioned that IAS 36, for the purpose of calculating the value in use of intangibles subject to impairment
testing, states that reference must be made to cash flows arising from intangible asset in its current condition (as at the
impairment test date), with no distinction between cash flows arising from the asset initially recognised according to IFRS 3
and those relating to the asset outstanding at the impairment test date. This because it would be difficult, especially with
regard to extraordinary transactions between businesses or changes in the asset following significant turnover in volumes,
customers, contracts, etc., to separate cash flows relating to the original asset from others.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
340
This concept can also be applied in impairment testing of goodwill to calculate the Value in use of the CGUs, for which the
cash flows have to be considered with regard to all assets and liabilities of that CGU and not only the assets and liabilities for
which goodwill was recognised on application of IFRS 3.
As in previous financial statements, given the volatility of the financial markets and the available market values for calculation
of the recoverable amount, the Value in use that represents the present value of net future cash flows from the asset (or
business) being valued was used in the impairment tests for the 2022 financial statements. In particular, for the financial
statements as at 31 December 2022, in line with the previous financial statements, the impairment test on goodwill was
conducted by applying the DCF – Discounted Cash Flow model – to which, as a check of the consistency of the results of
using the DCF model, the DDM – Dividend Discounted Model – is added. Both of these methods were based on the individual
estimates made internally for the 2023-2027 period, which for the years up to 2025 represent the forecasts in the 2022-2025
Business Plan, updated to take account of the changed macroeconomic scenario, whereas the final two years of forecasts
were estimated through inertial tracking of the flows for 2025, on the basis of internal forecasts relating to the aforementioned
macroeconomic scenario. It is noted that the tests mentioned above did not concern the Banca dei Territori, International
Subsidiary Banks, Bank of Alexandria or Pravex Bank CGUs in consideration of the absence, as of the date of the test, of
goodwill allocated to those CGUs to be subject to impairment test. These tests were also joined by an autonomous test, using
an independent expert, of the fair value of the component of the brand name attributable to Banca dei Territori, a CGU which
no longer has goodwill allocated.
The results of the impairment test as at 31 December 2022 showed no need to recognise any goodwill impairment or
adjustments to intangible assets with an indefinite life (brand name) with regard to any of the CGUs in the Intesa Sanpaolo
Group.
Lastly, the methods, assumptions and results of the impairment test procedures for intangible assets and goodwill defined by
management were approved by the Board of Directors prior to approval of the draft financial statements for 2022.
Impairment testing of intangibles
Insurance portfolio
Valuation of the insurance portfolio uses models normally applied in valuation practice. The resulting value, considered to
have a finite life, is amortised at variable rates over a period representing the residual life of the insurance contracts.
The book value of insurance intangible assets includes, among other things, the insurance portfolio of Intesa Sanpaolo Vita
and the subsidiary Intesa Sanpaolo Life DAC distributed by the networks of the Intesa Sanpaolo Group and Fideuram Vita.
The total book value also includes the intangible asset belonging to Intesa Sanpaolo RBM Salute and the value of the
component of distribution of insurance products by the former UBI Banca network and by IW Bank. During 2021, the Value of
Business Acquired (VoBA) deriving from the acquisitions of Assicurazioni Vita, Lombarda Vita and Cargeas Assicurazioni was
added to this. Assicurazioni Vita and Lombarda Vita were merged into Intesa Sanpaolo Vita as of 31 December 2021,
whereas Cargeas Assicurazioni was merged into Intesa Sanpaolo Assicura on 1 October 2022.
The intangible assets referring to the insurance portfolio were partly allocated to the Insurance CGU, partly to the Private
Banking CGU and partly to the Banca dei Territori CGU, depending on whether they refer to the value of the component of
policy production or policy distribution.
As previously stated, these are intangible assets with finite useful lives and, during the year, the amortisation for the year was
charged to the income statement, for a total amount of 103 million euro.
During the year, the analyses on the main impairment indicators were updated.
Specifically, in 2022 the Insurance Division reported strong income from insurance business of approximately 1.6 billion euro,
up slightly on the previous year (+1.9%). This trend is attributable to the increase in the technical margin, in both the lif e
business and the non-life business, which more than offset the reduction in the net investment result. In addition, in 2022 the
Division’s collected premiums for life policies and pension products amounted to 16.2 billion euro, down by around 14%
compared to the previous year, due to unit-linked products (-41%), as a result of the uncertainty on the financial markets. In
contrast, the collected premiums for traditional products increased (+39%), including the Class I component of multi-line
policies, due to the placement in the fourth quarter of the Class I credit line dedicated to senior customers. Pension products
recorded an increase of 1%. Direct deposits from insurance business exceeded 173 billion euro as at 31 December 2022,
down by approximately 15% on the previous year.
Note that, as previously stated, IAS 36 requires that intangible assets be subject to impairment tests with reference to
relationships with customers of all the CGUs at the valuation date, not only the residual relationships which were used to
determine the initial value of the intangible assets. Therefore, any possible calculation of the recoverable amount shall als o
include the new business generated at the level of the CGU following the date of recognition of the intangible assets.
In addition, the volumes of the policies underlying the measurement of the intangible assets recognised in the financial
statements are negligible if compared with the total policies of the relevant CGUs.
An analysis of the comprehensive income of the products in the portfolios did not identify any potential impairment of the
intangible asset relating to the insurance business, also considering that, as required by IAS 36, the intangible asset is tested
for impairment at the CGU level as a whole and not by individual product or business line.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
341
The following table presents a summary of the values of insurance intangibles according to the relevant CGU.
(millions of euro)
CGU
Financial
statements
2021
Amortisation
Financial
statements
2022
BANCA DEI TERRITORI DIVISION
Insurance intangibles - distribution
110
-7
103
INSURANCE DIVISION
Insurance intangibles - production
591
-94
497
PRIVATE BANKING DIVISION
Intangibile asset management - produc. and distribut.
47
-2
45
GROUP TOTAL
748
-103
645
Following the analyses conducted on the main impairment indicators, it was not necessary to carry out a thorough
recalculation of the value of the intangible asset, since the overall trend of the insurance business did not present any
particular critical issues in 2022.
Asset management and administration portfolio
The intangible asset recognised in Intesa Sanpaolo’s consolidated financial statements is regarded as having a finite useful
life. Accordingly, for the purposes of the 2022 Financial Statements, analyses were conducted on the main value indicators,
which were also monitored throughout the year (these include trends in assets, redemption rates, and net interest and other
banking income net of operating costs and tax effects). Those analyses regarded the component of the intangible assets
linked to assets under administration (AUA) and under management (AUM), represented by the capacity of the relationships
existing at the acquisition date to generate cash flows over the residual useful life of those relationships, recognised in the
financial statements following the acquisitions that were carried out over time.
More specifically, this aspect concerns the asset management portfolios of the former Venetian banks, acquired in 2017, and
of the Morval Group, acquired by Fideuram - Intesa Sanpaolo Private Banking in 2018. Subsequently, as part of the
acquisition of the UBI Group, during 2020 intangible assets were measured linked to indirect customer deposits and, in
particular, the intangible assets pertaining to assets under administration (AUA) and assets under management (AUM),
whereas during 2021 the intangible assets relating to the assets under administration and assets under management of Reyl
& Cie SA, a Swiss private bank with an international presence, were recognised.
In 2022, as stated above, new customer relationship related intangible assets were recognised in connection with the indirect
customer deposits of Compagnie de Banque Privée Quilvest (CBPQ) and VUB Generali, amounting to 43 and 80 million euro
as at the acquisition date, respectively.
As at 31 December 2022, taking account of the portion amortised in the meantime, the intangible asset linked to AUM was
allocated to the Banca dei Territori CGU (187 million euro), to the Private Banking CGU (213 million euro), to the Asset
Management CGU (100 million euro) and to the International Subsidiary Banks CGU (79 million euro). Likewise, the
intangible asset linked to AUA, taking account of the component of amortisation recorded during the year, was allocated to th e
Banca dei Territori CGU, for the component distributed by the branches deriving from UBI Banca (14 million euro), and to the
Private Banking CGU, for the component distributed to customers of IW Private Investments SIM (20 million euro) as at 31
December 2022.
As stated above, IAS 36 provides that impairment testing must not be limited only to the cash flows deriving from the assets
acquired, but should take account of all the cash flows linked to the assets of the specific CGU, also including the cash flows
generated after initial measurement of the intangible assets. On this regard, it is noted that the volumes of assets underlying
the measurement of the intangible assets recognised in the financial statements are negligible if compared with the total
assets of the CGUs.
Accordingly, in the light of the above, and regardless of the performance of the assets during the reporting period, it may be
confirmed that there were no signs of impairment of the intangible assets recognised in the financial statements and
pertaining to asset under management and asset under administration relationships.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
342
The following table presents a summary of the values of the AUM and AUA intangibles attributable to the Banca dei Territori,
Private Banking, Asset Management and International Subsidiary Banks CGUs.
CGU
Financial
statements
2021
Acquisitions
Amortisation
Other
changes
(1)
Financial
statements
2022
BANCA DEI TERRITORI DIVISION
Intangibile asset management - distribution
201
-
-14
-
187
Intangible asset under administration
15
-
-1
-
14
PRIVATE BANKING DIVISION
Intangibile asset management - produc. and distribut.
180
43
-14
4
213
Intangible asset under administration
22
-
-2
-
20
ASSET MANAGEMENT DIVISION
Intangibile asset management - produc. and distribut.
106
-
-6
-
100
INTERNATIONAL SUBSIDIARY BANKS DIVISION
Intangibile asset management - distribution
-
80
-1
-
79
GROUP TOTAL
524
123
-38
4
613
(1) Foreign exchange differences on intangible assets attributable to Reyl & Cie SA.
Core Deposits
“Core deposits” are “customer-related intangibles”, generally recorded in business combinations between banks. The
intangible value of core deposits stems from the future benefits for the acquirer deriving from the stable and lower funding
cost compared to market parameters. Basically, the acquirer may use funding for its lending and investment activities which
pays less than the interbank market interest rate. The intangible asset consists of the valuation of this future margin, known as
the “deposit premium”, which represents an asset the value of which is correlated with the performance of market rates and
the assets raised.
As stated above, total core deposits of 30 million euro were recognised as part of the acquisition of Compagnie de Banque
Privée Quilvest by Fideuram Bank Luxembourg.
No impairment indicators were considered when assessing whether the intangible asset had maintained its value, given the
limited period of time between the initial recognition of the asset and the expected interest rate scenario.
Brand name
IFRS 3 considers the “brand name” a potential, marketing related intangible asset, which may be recorded in the Purchase
Price Allocation (PPA) process.
For this purpose, please note that the term "brand” is used in accounting standards with an extensive meaning and not as a
synonym of “logo” or “name”. It is considered a general marketing term which defines a set of complementary intangible
assets (in addition to the name and the logo, also the competencies, consumer trust, service quality, etc.) which concur to
form brand equity.
With reference to acquisition of the Sanpaolo IMI Group, it was decided to limit the analysis to just two brands: the corporate
brand Sanpaolo IMI, intended as an “umbrella” brand to which the brands of the other network banks were also related, and
the brand of the subsidiary Fideuram - Intesa Sanpaolo Private Banking (former Banca Fideuram), as an autonomous brand
widely recognised on the market for the placement of financial products through a network of financial advisors. Both are
considered intangibles with indefinite useful life, since they are deemed to contribute indefinitely to the formation of income
flows. Market methods and flow-based methods (and, thus, based on fundamental analyses) were used in the valuation of the
two brands. Value was determined as the average of the values obtained using the various methods.
The amount recorded in the 2022 Financial Statements came to 1,882 million euro, of which 1,507 million euro was allocated
to the Banca dei Territori CGU and 375 million euro to the Private Banking CGU.
In general, the brand name is considered an intangible asset that has no independent cash flows and, thus, to be subject to
impairment testing as part of the verification of the retention of goodwill for the various CGUs. For the purposes of this
impairment test, with regard to the brand name allocated to the Banca dei Territori CGU, it was considered that the reference
CGU did not have any goodwill allocated and, as a result, it was not possible to test the recoverable amount of the specific
intangible as part of the impairment test of the goodwill based on total cash flows at the level of the CGU. As it was not
possible to refer, for the recoverable amount of the brand name of Banca dei Territori, to the notion of Value in Use, i.e. the
present value of net future cash flows from the assets valued, it was decided, in line with that carried out for the 2020 and
2021 Financial Statements, to conduct a specific, autonomous valuation of the specific intangible based on the fair value
resulting from the dedicated appraisal commissioned from Prof. Mauro Bini, Full Professor of Corporate Finance at Bocconi
University.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
343
Lacking specific transactions on comparable banking brand names, the fair value of the brand name allocated to the Banca
dei Territori CGU was estimated using the following methods:
- Royalty Relief;
- the implicit value in estimating brands with comparable PPAs;
- the implicit value in the public estimates of brands provided by independent third parties (Brand Finance);
- Hirose.
Royalty Relief Criterion
The Royalty Relief criterion determines the value of the brand from the present value of income deriving from the brand,
estimated as the product of a royalty rate reconstructed on the basis of implicit rates in comparable PPAs and the value of net
turnover (operating income, for banks).
The criterion of the implicit value in estimating brands with comparable PPAs
The criterion of the implicit value in estimating brands with comparable PPAs determines the value of the brand based on the
“Fair value of the brand/Operating income” multiples recorded on PPA and their fundamental drivers.
The multiple, calculated in relation to net operating income, is taken from the fair value of the brands recognised on PPA of
commercial banks from the Markables database.
Criterion of the implicit value in the public estimates of brands provided by independent third parties (Brand Finance)
Brand Finance is a UK company specialising in valuing brands. Each year, Brand Finance publishes the updated estimated
value of the brands of the top 500 global banks.
The valuation of brands carried out by Brand Finance is consistent with the Relief from Royalties criterion, widely used in
valuation to estimate the value of brands. According to this criterion, the value of the brand corresponds to the current value of
royalty flows saved. The royalty rates are determined based on the trademark license agreements of comparable companies
and applied to the specific bank brand based on the strength of the brand estimated and discounted at an opportunity cost of
capital in line with the assigned brand rating.
Hirose Criterion
This criterion is based on the comparison of the profitability of the branded company (in this case, the Banca dei Territori
CGU) and unbranded competitor companies. The income-based method adopted is attributable to the profit-split criterion.
Based on the analyses conducted, all four methods used returned a value of the Intesa Sanpaolo brand for the Banca dei
Territori CGU higher than the book value of that intangible asset, demonstrating the value of the Group’s brand and the
resulting competitive advantage it continues to provide the Group in relation to its competitors.
Instead, the brand name allocated to the Private Banking CGU was subject to impairment testing as part of the activities
regarding the verification of the recoverable amount of the goodwill allocated to that CGU.
Impairment testing of CGUs and goodwill
Definition of Cash Generating Units (CGUs)
For impairment testing purposes, the estimation of the value in use relating to intangible assets with an indefinite life
(including goodwill) that do not generate cash flows unless jointly with other business, as per IAS 36, requires the preliminary
assignment of such intangible assets to relatively independent business units, able to generate cash flows strongly
independent of those produced in other business areas, but interdependent within the business unit generating them.
In IAS/IFRS terminology, such business units are known as Cash Generating Units (CGUs). The meaning of the impairment
test is significant for identification of the CGUs.
IAS 36 indicates the necessity to correlate the level at which the goodwill is tested with the level of internal reporting at which
management controls the increases and decreases of such value. Definition of the level closely depends on the
organisational models adopted and on the managerial responsibilities governing the operating guidelines and monitoring
activity. Organisational models may ignore (and in the case of the Intesa Sanpaolo Group they do ignore) the network of legal
entities through which operations are carried out, and are instead very often closely designed around the definition of
business operating segments as envisaged by IFRS 8. Furthermore, the identification of CGUs for goodwill impairment test
purposes is consistent with the definition of the recoverable amount of an asset - which is in itself the base for impairment
tests - according to which the relevant item is the amount that the company expects to recover from that asset, considering
any synergies with other assets.
Therefore, in accordance with the criteria applied for the determination of the prices of the business combinations that gave
rise to goodwill recognition, the recoverable amount for impairment testing purposes of the CGU to which goodwill is allocate d
must include not only the value of external (or universal) synergies but also the internal ones, the reason being that the
specific acquirer may obtain additional value from the integration of activities obtained through business combinations,
according to its business model.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
344
The Intesa Sanpaolo Group’s organisational model envisages that:
- management decisions are highly centralised at the level of the heads of the operational segments;
- strategies, identification of new products or services and commercial penetration initiatives are outlined and directed
centrally for each operating division;
- planning processes and reporting systems are managed at the operational segment level;
- as a result of this centralisation, income flows are highly dependent on the policies set up at segment level, based on
balanced development of the entire division and not of the individual operating areas or legal entities considered
individually;
- specialised transversal areas are defined to provide support and develop products benefiting many subsidiaries;
- the management of financial risks is also highly centralised in order to maintain, also as a result of regulatory provisions,
a balance between the capital allocation policies and the financial risks in development of the various business lines;
- the divisions operate in homogeneous markets or sectors in terms of economic characteristics and development level.
As a result of this centralisation, income flows are highly dependent on the policies set up at the operational segment level,
based on balanced development of the entire division and not of the individual operating areas or legal entities considered
individually.
The operating divisions identified in the Intesa Sanpaolo Group are as follows:
- Banca dei Territori;
- IMI Corporate & Investment Banking;
- Insurance;
- Asset Management;
- Private Banking;
- International Subsidiary Banks.
For the foregoing reasons, the operating divisions cited above correspond, in general terms, to the Group’s CGUs, while also
representing the core business areas considered for segment reporting.
These divisions are considered representative of cash generating units since each constitutes the smallest group of assets
generating independent incoming cash flows and, as mentioned above, also the minimum level set by the Parent Company
Intesa Sanpaolo for planning and reporting processes. Therefore, this is the minimum level to which goodwill may be
allocated and monitored according to non-arbitrary criteria.
The International Subsidiary Banks Division needs specific comments, given the particular structure and conditions under
which it operates.
It should firstly be mentioned that the cash flows of the various Group companies forming this business unit are strictly
dependent upon policies formulated by the Division Governance Centres and Head Office Departments of the Parent
Company.
These policies are defined and implemented in compliance with a management plan designed to develop the entire Division
in an organised manner, and not focusing only on the individual compan ies’ strategies. Specifically, the expansion strategies
for the various operating units, the identification and development of new credit, savings and service products, limits to th e
assumption of financial risk, commercial penetration and operations specialisation initiatives are outlined and steered at
central level, following a portfolio strategy, and not devolved to the individual subsidiaries. Therefore, there is strong
interaction of the flows that, at the same time, requires both single and integrated governance of all companies in the Division,
and the central monitoring and control of operations of the overall business activities of the Division.
However, it is important to consider that not all factors affecting the correlation and interdependence of cash flows within the
Division can be controlled by the Division’s Head Office Departments.
In fact, there are circumstances outside the Group that could have varying levels of impact on the capacity to systematically
manage CGU flows and control over their generation. These are circumstances largely determined in the wider sense by the
conditions of the environment in which the various entities are located.
Indeed, for Banks operating abroad, the effects of country risk must be considered: i.e. the risk linked to economic, political
and institutional events in the country in which the subsidiary and its business activities are based.
In view of the above, if the cash flows that the Parent Company expects from activities generated by a foreign subsidiary are
deeply influenced - in terms of extent, quality and trends - by institutional, economic and political circumstances in the country
in which the subsidiary is based, this subsidiary cannot be considered an integral part of the single management model for the
CGU which it belongs to. The company in such a situation must, therefore, even if only temporarily, be excluded from the
CGU, regardless of the Group Management’s willingness to keep it within the CGU, due to the above-mentioned factors over
which the Bank and Group's management clearly have no influence. The flows of the company, in fact, would be influenced to
a greater extent by the country’s conditions than by the unitary and centralised management policy adopted by the Division
and, therefore, for impairment testing purposes, the company must be subjected to independent valuation until the conditions
for the systemic central control of cash flows of the subsidiary are restored.
With regard to the Ukrainian Pravex Bank, for the purposes of the 2008 impairment testing, careful consideration of the
economic and institutional events unfolding in Ukraine, which was undergoing a deep economic and currency crisis, and
prudent assessment of their impact on the operational variables of the subsidiary in question, especially from the point of view
of their interdependence on variables of the entire CGU, resulted in classification of this company as a completely separate
CGU, treating it separately from the Group’s International Subsidiary Banks Division. Sub sequently, Pravex Bank was
functionally allocated to Capital Light Bank (now the NPE Head Office Department), to then be moved back to the
International Subsidiary Banks Division in 2018.
With regard to the subsidiary Bank of Alexandria, for the purposes of the 2011 impairment testing the bank was separated
from the International Subsidiary Banks CGU due to a profound political crisis in Egypt.
For the purposes of the 2022 impairment testing, as no significant elements arose that cast doubt on the decision made for
the previous financial statements, and taking account of the outbreak of the military conflict between Russia and Ukraine, it
was deemed appropriate to maintain the decisions made with respect to the previous financial statements, and thus to
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
345
consider Pravex Bank and Bank of Alexandria as autonomous, distinct CGUs in conducting the impairment test for the
consolidated financial statements. However, it bears recalling that the goodwill associated with Pravex Bank and Bank of
Alexandria were fully written down in conjunction with the impairment tests for the 2008 and 2011 financial statements,
respectively, and there is no goodwill even relating to the other International Subsidiary Banks of the Division.
In Pravex Bank's and Bank of Alexandria’s cases, the separate assessment of the banks for impairment testing purposes
does not affect the Group’s intention to support the development of the subsidiaries, with specific regard to the Ukrainian
bank, within the limits permitted by the ongoing conflict.
As previously mentioned, the Banca dei Territori, International Subsidiary Banks and Bank of Alexandria and Pravex Bank
CGUs, as of the date of the test, did not possess intangible assets with an indefinite life (with the exception of the brand name
allocated to the Banca dei Territori CGU, whose recoverable amount, understood as its fair value, was confirmed by a specific
valuation drawn up by an independent expert) and, as a result, were not subject to an impairment test.
Book value of the CGUs
The book value of the CGUs must be determined in a manner consistent with the criterion used to estimate their recoverable
amount. For a banking business, the cash flows generated by a CGU cannot be identified without considering the cash flows
deriving from financial assets/liabilities, as these represent the core business. In other words, the recoverable amount of the
CGUs is influenced by the aforementioned cash flows and therefore the CGUs’ book value must include financial
assets/liabilities in accordance with the scope of the recoverable amount estimate process.
Consequently, these assets and liabilities must be properly allocated to the associated CGUs. On this basis (so-called “equity
side”), the book value of the Intesa Sanpaolo Group’s CGUs may be determ ined in terms of contribution to consolidated
shareholders’ equity including the minority interest.
Accordingly, the carrying amount of the CGUs composed of companies belonging to a single operating division was
determined by summing up the individual contributions to the balance sheet.
However, where the Parent Company or other Group companies contribute to multiple CGUs from a management standpoint,
and this division is not represented in accounting information, management values must be used. In this specific case, the
management driver was identified as each division's "regulatory capital", which represents the capital absorption necessary t o
handle the types of risk envisaged by the regulatory supervision rules.
The table below provides the book values of the CGUs and the goodwill and brand name allocations to each. The values,
determined for impairment testing purposes, include the portion of goodwill attributable to minority interests (included in the
last column with minority interests).
(millions of euro)
Values
Value as at 31.12.2022
CGU
Book
value
of which
goodwill
Group share
of which
brand name
of which
minority
interests
Banca dei Territori
18,858
-
1,507
14
IMI Corporate & Investment Banking
21,334
56
-
18
Insurance
6,702
976
-
1
Asset Management
2,656
1,059
-
6
Private Banking
5,192
1,535
375
1
International Subsidiary Banks
6,461
-
-
-
Bank of Alexandria (Egypt)
628
-
-
126
Pravex Bank (Ukraine)
-
-
-
-
TOTAL
61,831
3,626
1,882
166
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
346
Criteria for estimates of CGUs’ value in use
The value in use of CGUs is determined by estimating the present value of future cash flows that may be expected to be
generated by the CGUs. These cash flows are normally estimated by using the latest publicly available business plan or, in its
absence, through the drawing up by management of an internal forecast plan.
The forecasting period for the analysis usually consists of a maximum of five years. The cash flow of the final year of the
forecast is projected in perpetuity (through the use of perpetual return formulae, or, alternatively, temporary return formulae, if
it is not realistic to expect the assets subject to measurement to generate positive cash flows over the long term), using an
appropriate growth rate “g” for the purposes of the so-called “Terminal Value.” The “g” rate is determined by assuming as
growth factor the rate of increase in the gross domestic product of the countries in which the cash flows are generated.
Alternatively, the Terminal Value could be determined on the basis of a final sale or liquidation value.
For the determination of the value in use, the cash flows must be discounted at a rate that reflects the present valuations o f
the time value of money and the ass et’s specific risks. Specifically, the discount rates to be used must incorporate the present
market values with reference to the risk-free component and the risk premium associated with the equity component observed
over a sufficiently long time period to reflect different market conditions and economic cycles.
In addition, given the diverse risks of the respective operating areas, different Beta coefficients must be used for each CGU.
All the resulting rates have been adjusted to take into account the “Country Risk”.
Cash flow estimates
Also with regard to the calculation of the value in use of CGUs for impairment testing purposes for the 2022 financial
statements, the volatility of financial markets and the uncertainties that still characterise the future macroeconomic
environment make the definition of near-term future cash flows from operating activities and the identification of growth rates
in order to calculate the Terminal value of CGUs particularly complex.
The medium-term forecasting scenario of reference has been drawn up by the Intesa Sanpaolo Research Department taking
account of the forecasts of the main Italian and international organisations and institutions, and underlies the income
forecasts throughout the 2023-2027 period.
These forecasts are based on a reference scenario for the global economy characterised by a gradual return of inflation to
levels consistent with the definition of price stability by central banks, associated with lower real growth rates than in the years
prior to the pandemic crisis and rising nominal and real interest rate levels.
The reference scenario assumes that in 2022 global GDP growth was 2.7%, following the rebound of 6% witnessed in 2020.
In 2023 growth is expected to slow further to 2.2%, but then to accelerate again to a range of 3% to 3.5%. International trade
of goods is expected to remain essentially stagnant in 2023 (+0.6%), but then to gain momentum in 2024 at growth rates
similar to those of global GDP.
In 2022, the Euro area was hit by the effects of a spike in natural gas prices, a repercussion of the Russian invasion of
Ukraine and of the resulting deterioration in relations between the European Union and Russia. The almost total disruption of
gas imports from Russia was tackled with a combination of reduced consumption, increased production from renewable and
other fossil sources, and increased imports from other suppliers. Achieving this forced transition in such a short time means
that prices will remain structurally higher than in the pre-crisis years. Although 2023 began relatively well, due to milder
temperatures than the seasonal average and low Chinese demand, the expectation that Chinese gas demand will resume in
the second quarter could entail further price tensions by the end of the year. In the light of recent developments, the scenario
includes very conservative forecasts of gas prices in 2023, with mainly downside risks in the short term.
The drastic deterioration in terms of trade as a result of the gas crisis was reflected in a fall of around 4 percentage points in
the trade balance. The recessionary impact of the shock was almost entirely offset by public support measures for households
and businesses and the fall in the average household saving rate back towards pre-pandemic levels. As a result, GDP grew
by 3.3% in 2022, well above the potential growth estimates. In 2023 GDP growth is expected to be essentially nil (0.1%),
associated with two quarters of mild decline. Estimated annual average growth is then expected to rebound to a range o f
between 1.5% and 1.8%. The long-term scenario is weighed down by the risk that structurally higher energy prices may
reduce the European economy’s growth potential.
In 2022, inflation rose to levels well above those predicted a year ago before the war, with an estimated annual average of
8.5%. Much of the greater increase was attributable to the direct and indirect effects of higher natural gas prices, but statistical
analyses now also point to demand factors making a significant contribution to the underlying inflation dynamics. The decline
in gas prices from the summer 2022 peak suggests that inflation rates will fall in 2023. The annual average is estimated at
7.7%, a level that reflects very conservative forecasts of gas prices at the beginning of the year. The decrease in energy
prices would further reduce inflation in the following years, bringing it into line with the ECB’s price stability target in 2025.
However, the decline in underlying inflation will be much slower, as a salary increase is expected, compatible with inflation
rates of above 2% in services, considering that in 2023-24 productivity growth is unlikely to accelerate enough to offset its
effects.
In Italy, GDP growth in 2022 was 3.8%, around half a point lower than predicted before the war. The reduction in growth was
due to the sharp deterioration in the trade balance (at around 4% of GDP in 2022), which was reflected internally in a declin e
in real household income and a fall in company earnings. However, the final impact was mitigated by fiscal measures (cut in
excise duty, corporate tax credits, household subsidies, suspension of several system-wide cost components, etc.) and the
reduction in the average household saving rate. GDP growth gradually slowed down over the course of 2022, and is expected
to be negative on a quarterly basis at the end of 2022 and early 2023. It is expected to amount to an annual average of 0.6%
in 2023. A sharp acceleration is then expected in the wake of declining energy prices, assuming that aggregate demand is
supported by spending flows associated with the Next Generation EU programme (which could increase growth by 0.5% a
year), investments in the energy transition, a recovery of foreign demand and a positive trend in employment and real income.
Interest-rate-sensitive components of demand will record weaker real growth, a trend that will be accentuated in construction
due to the scaling-back of tax incentives for renovations, but without fully offsetting the foregoing factors. Accordingly, on the
whole growth continues to be expected to be above potential in the years 2024-27, although there are greater downside risks
due to higher energy costs.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
347
In the reference scenario, Italian inflation slows to 6.8% in 2023 and then to 2.4% in 2024. This reduction is due primarily to
the decrease in energy prices. The risks for 2023 are primarily to the downside, considering the recent performance of gas
prices.
The European Central Bank raised official rates rapidly from July 2022, initiating a tightening phase that will carry on into the
early part of 2023. The year 2022 ended with a deposit facility rate (DFR) of 2.00% and a rate on main refinancing operations
(Refi) of 2.5%. At its meeting at the end of 2022, the ECB announced that the increases would continue at a robust pace in
early 2023, and this is believed to entail at least a further increase in the DFR to 3.0%. In addition, given the underlying
inflation forecasts for the coming years and the very modest slowdown in final domestic demand, it is likely that the rate will be
raised further in the following months to 3.50%. However, to take account of the current context of uncertainty, the referenc e
scenario includes a progression of official rates reaching a maximum of 3.0% (DFR) and 3.5% (Refi) in 2023. Official rates are
then expected to converge gradually towards neutral levels.
The European Central Bank has also begun the progressive discontinuation of unconventional measures. Through an
amendment of conditions, it facilitated early repayment of TLTRO III loans. Net purchases of securities under the APP and
PEPP programmes were discontinued in June 2022 and March 2022, respectively. In addition, at the end of March 2023 the
APP portfolio will begin to decline through monthly reductions in reinvestments from maturing securities of 15 billion euro. In
the long term, such measures could exert upwards pressure on risk premiums and on the slope of the government yield
curve, enhancing monetary policy direction. Excess liquidity is expected to be reduced drastically in 2023.
Due to the relatively conservative assumption made regarding official rate performance, short-term interest rate forecasts are
expected to fall short of implicit market rates until the end of 2027, with the sole exception of 2024. The exceptionally high
level of surplus reserves, while falling rapidly in 2023 and 2024, will remain considerable and tend to keep very short-term
rates close to the ECB overnight deposit rate throughout the horizon of the forecast.
Estimates for the medium and long-term interest rate curve reflect the closing of the securities purchase programmes, the
speed of the monetary tightening phase already implemented, modest expectations of increases in official rates for the rest o f
2023 and the expectation of a decline in such rates in the following years. The slope of the rate curve becomes negative in
2023, but resumes growth in 2024 due to the decline in short-term rates and a marginal increase in longer-term rates. The
decline in ECB securities portfolios could provide an additional contribution to the increase in long-term interest rates, even if
the boost should be lower than that exercised in the opposite direction by the increase in the securities portfolio of the Central
Bank in previous years.
The decrease in support provided by the Eurosystem and the increase in risk-free rates could also reflect in an expansion of
sovereign risk premiums. Nonetheless, this negative factor could be at least partly offset by the reduction in net issues by the
Ministry of the Economy and Finance, in a context of improvement in public finances, and by the faster reduction in public
debt than expected in the 2022-24 period. The reference scenario incorporates a modest increase in the spread linked to only
fundamental factors (performance of the debt) and monetary policy (rates and negative net purchases). However, the
sovereign rating and risk premium level will also be very sensitive to the level of implementation of the NRRP, with regard t o
both investments and structural reforms. In this regard, the reference scenario assumes that implementation will be relatively
prompt.
With reference to the banking scenario, in 2022 the credit market saw moderate tightening of supply conditions in line with the
move towards more restrictive monetary policy and the increase in perceived risks, while on the bank balance sheets side, the
good liquidity and funding position was maintained and the capital base remained solid. In addition, credit quality did not show
any particular signs of deterioration.
Demand for credit from businesses revived due to financial needs related to day-to-day management, in the face of rising
operating costs as a result of higher prices for energy and other inputs. The particular nature of demand drove a rebound in
short-term loans, but near the end of the year they began to slow partly due to the worsening of credit conditions. In contrast,
medium- and long-term loans remained stationary, with rates of change hovering around zero, reflecting the strong increase
during the pandemic due to the support of government-backed loans.
In 2023 short-term loan performance is expected to normalise; such loans could continue to present moderately positive
changes in line with inflation performance. With regard to medium- and long-term loans, after the persistent weakness of early
2023, the recovery of GDP is expected to support a return to positive territory. As already seen in 2022, financing needs may
be partly met using the considerable cash buffer accumulated by businesses in the two-year period 2020-21 and deposited
with banks, as well as bond issues and self-financing. In particular, market conditions are expected to be more favourable for
the issues of securities, in the light of the return of interest from investors in bonds, above all after the end of the ECB rate
hike phase.
Loans to households continued to grow at a robust pace in 2022. Once again, this performance was driven by loans for home
purchases, which grew at a rate of 5%, the highest in the last decade, with a gradually more moderate trend in the fourth
quarter.
The slowdown of loans to households is expected to continue in 2023 due to the impact of the increase in mortgage rates and
the expected decline in real estate transactions, against the backdrop of house price trends that, while remaining slightly
positive, will lose the momentum gained during the pandemic, culminating in 5.2% growth in the second quarter of 2022.
In subsequent years, loans to households are expected to grow at a moderate rate, slightly higher from 2025, driven by a
possible recovery in house sales and prices. Mortgage loans will continue to play a major role in the residential property
market, which is expected to continue to be driven by the new housing and working needs that emerged following the
pandemic, renovations and energy reclassification, and the use of part of the excess savings accumulated by some segments
of households starting in 2020.
With the shift in monetary policy and the rapid rise in interest rates, the long and strong growth of bank deposits, which had
lasted more than a decade, came to a halt in the autumn of 2022. After the peaks reached in 2021 and the subsequent
gradual slowdown, the growth rate for total deposits fell to zero, following the deceleration in the overnight deposits
component, which recorded a slightly negative annual change towards the end of 2022.
In a context of much higher inflation and interest rates, a modest decrease of overnight deposits is expected to continue
throughout 2023, as a result of a combination of several factors, including the use of the considerable cash deposited with
banks in previous years by businesses and households and the reallocation of savings to more remunerative forms. In
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
348
particular, funds will continue to be shifted from overnight deposits to forms of time deposit, supported by more attractive
interest-rate offerings, a trend that had already begun to be seen in late 2022. Buoyed by the return of positive yields, 2023
and subsequent years will see renewed diversification of household financial investments into government and corporate
bonds, resulting in less dynamic bank deposits than during the exceptional phase of years of very low rates and the pandemic
crisis.
For bank bonds, after more than a decade of decline, 2023 will see a resumption of growth, which will continue in subsequent
years. With the progressive repayment of the TLTRO IIIs, alongside the use of the ECB’s more traditional refinancing
instruments, banks are again turning to the wholesale institutional market, through diversified short- and medium- to long-term
funding channels and instruments.
Increases in key monetary policy rates have begun to filter through to bank interest rates. In the second half of 2022, interest
rates on new loans to non-financial companies rose rapidly, to around double for loans up to 1 million euro compared to the
beginning of the year, while the rate on larger loans more than trebled. Interest rates on loans to households for home
purchases also increased significantly, particularly the fixed rate, which returned to being higher than the variable rate by 0.9
points in the second half of 2022, after two years of substantial alignment between the two rates. As a result of the increases
in new transactions, the average bank lending interest rates also rose faster in the latter part of 2022, to 3.2% (+1.1
percentage points compared to the end of 2021).
Interest rates on deposits were more stable in 2022, particularly the average rate on overnight deposits, which only increase d
slightly towards the end of the year. The stickiness of the interest rate for the on demand component influenced the
performance of the average interest rate on deposits, which only rose slightly. In contrast, the interest rates on new time
deposits were more responsive, with significant increases from July. The overall cost of funding from customers also began to
rise very gradually, reflecting moderate upward movements in the average rate on bonds. As a result, the spread between
lending and funding rates increased significantly, returning to levels not seen since 2009.
The increase in rates on loans will continue in 2023, following the additional expected increases of key monetary policy rates.
In subsequent years, the expected performance of monetary rates will enable a moderate reduction of rates on loans from the
levels to be reached in 2023, which will represent the maximum for the entire scenario period. Turning to borrowing rates, in
2023 and subsequent years the stickiness of overnight deposit rates will continue, whereas pricing policies are expected to
favour time deposits. The total cost of funding will increase, also driven by the effects of the recomposition towards costlier
components such as time deposits and bonds.
The banking spread will continue to widen in 2023, driven by the various rates of adjustment of lending and borrowing rates. A
moderate reduction is expected from 2024, but unit profitability of dealing will remain high compared to the last decade.
After eleven years in negative territory, in September 2022 the mark-down on on-demand deposits returned to positive levels,
and it is expected to increase further in 2023 to approximately 2%, to then decline gradually in later years, given the
expectation of falling Euribor rates.
In contrast, with the sharp rise in Euribor rates, the mark-up on short-term rates fell significantly towards the end of 2022. A
further moderate reduction is also expected in the first half of 2023, followed by a general recovery in the margin as increases
in key rates are transmitted to rates on loans. Substantial stabilisation of the mark-up is expected in the final two years of the
scenario period.
Assets under management performed weakly in 2022. For mutual funds, the inflows during the year were mainly directed
towards the equity, balanced and money-market segments. The moderate inflows to funds were driven by the negative
performance of stock market indices, against the backdrop of reduced investor confidence. Portfolio management schemes
were characterised by net outflows. Overall, life insurance declined as new business fell for both traditional and unit-linked
policies.
With the completion of the rise of rates in 2023, volumes in the asset management and life insurance industries are expected
to recover. Inflows of investments to these segments may be fuelled by the stock of cash that flowed into bank deposits in
previous years, albeit in a scenario of more attractive direct investment in fixed-income securities.
In particular, in 2023 moderately positive inflows are expected for mutual funds and portfolio management schemes, with a
possible recovery for bond fund subscriptions. In the following years, assets under management are expected to continue to
achieve positive results.
For life insurance companies, in 2023 and onwards, total collected premiums are expected to increase. In particular, the level
reached by market rates is making it possible to meet the previous demand for traditional policies, which is again on the rise.
However, on the offering side, the strategy will continue to focus on hybrid products and class III policies, set to recover
starting in 2023. This is also reflected on the demand side, where there is interest in products capable of taking advantage of
the best investment opportunities, including those more closely linked to equity instruments. From this perspective, multi-line
policies will continue to be drivers.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
349
The table below illustrates the macroeconomic variables expected in the period 2023-2027, only for Italy, as no goodwill was
recognised for the CGUs operating in foreign countries.
(values as a percentage)
Italy
2022
2023
2024
2025
2026
2027
REAL ECONOMY
Real GDP Italy
3.8
0.6
1.8
1.2
1.0
0.6
Consumer prices Italy
8.2
6.8
2.4
1.3
1.5
1.3
Period-end ECB rate
2.50
3.50
3.00
2.75
2.50
2.50
3-month Euribor rate
0.34
3.00
2.99
2.38
2.10
2.06
10-year IRS
1.92
2.82
3.11
3.28
3.27
3.23
10-year BTP
3.03
4.05
4.60
4.90
4.85
4.76
Spread vs. Bund (basis points)
187
201
190
179
174
170
BANKING SECTOR
Loans
2.3
1.5
1.9
2.2
2.6
2.7
Direct customer deposits
2.2
0.6
1.3
2.1
2.3
2.3
Average customer spread
1.93
2.87
2.80
2.60
2.52
2.49
Mutual funds
-12.9
4.7
4.1
4.1
3.9
3.6
Portfolio management
-15.1
2.8
2.9
2.9
2.8
2.5
Life technical reserves
-1.9
4.6
4.4
4.4
4.4
4.3
Scenario produced in December 2022 by the Research Department. Forecast data (estimates for 2022).
The various CGUs’ expected cash flows were subject to impairment testing, taking account of the macroeconomic scenario
described above, and were estimated by following a two-stage assessment process.
Specifically, with regard to the first forecast period, in line with the choices made for the previous Financial Statements, a
timeframe of 5 years was considered, i.e. the five-year period 2023-2027. For that period, with regard to the years up to 2025,
the forecasts set out in the 2022-2025 Business Plan, updated to take account of the changed macroeconomic scenario, were
considered. The flows for the last two years of forecasting (2026 and 2027) were estimated through inertial tracking of the
flows for 2025, based on the forecasts relating to the updated macroeconomic scenario, thus, without considering the effect o f
additional managerial leverage, compared to that incorporated into the Plan forecasts.
The net income projected for the forecast years has been adjusted, in accordance with IAS 36, to consider non-monetary
components and the minority-interest share of net income. It also excludes the effects of any reorganisation and restructuring
transactions and the capital gains on future sales of company assets. In addition, cash flows include those allocated to the
various CGUs deriving from central corporate assets. In accordance with the equity-side approach mentioned above in
relation to the determination of the carrying values of CGUs, the cash flows used for impairment testing include the flows
correlated with financial assets and liabilities, given that these represent the company's core business.
In addition, among various financial valuation techniques, such as that used for determining the value in use, the value of a
company at the end of the flow forecast period, the so-called terminal value, is normally determined by infinite compounding,
at an appropriate “g” rate, of the cash flow achievable "at full capacity”. This rate, even if subject to time variations, may be
assumed to be constant or decreasing (or increasing in rarer circumstances).
As an alternative to the terminal value estimation methodology, doctrine also envisages (i) the exit multiple approach and (ii)
the approach based on an estimation of the liquidation value of the company. Specifically, with regard to approach (i) it should
be mentioned that an exit multiple estimate has complex (and potentially subjective) elements that become even more
marked at times of market uncertainty and volatility such as now. Approach (ii) is valid only for companies due to be wound up
on termination of the forecasting period, and therefore not applicable with a view to a business as a going concern.
For the purposes of the Terminal Value, i.e. the second stage of valuation, the cash flow forecast for 2027, the last year of the
analytical projections, was used as the cash flow achievable at full capacity.
In line with the impairment tests of the previous years, the “g” rate was determined as the average growth rate of Italy’s
nominal GDP, observed and forecast in the 2008-2027 period (it should be noted that, in consideration of the impairment
made in the previous financial statements, no goodwill is allocated to the Banca dei Territori, International Subsidiary Banks,
Bank of Alexandria and Pravex Bank CGUs; consequently, it is not necessary to calculate the “g” rate for the purpose of the
goodwill test for the foreign countries where the Group operates). Nominal GDP is the sum of the real GDP growth rate and
the inflation rate. Expected real GDP and inflation figures used to calculate the "g" rate were drawn from the forecasts
prepared by the Intesa Sanpaolo Research Department described above. Each component has been calculated as the
average for the period 2008-2027. The decision made in terms of observation period for the growth rates, considering the
current particular macroeconomic situation, calls for specific consideration.
Real GDP dynamics in recent years have often been negative, due mainly to the various economic and financial crises that
affected global economies, beginning in particular with the 2008 global financial crisis, followed by the sovereign debt crisis in
2011. The trend began to be reversed as early as 2015, with the resumption of a growth process that, however, was abruptly
interrupted in 2020 by the COVID-19 pandemic, and which continues to be threatened by the energy crisis that emerged in
2022 as a consequence of the outbreak of the military conflict between Russia and Ukraine. In order to consider the various
phases of the economic cycle, the growth rate for estimating terminal value was calculated as the average GDP rates for the
2008-2027 period, inasmuch as this period was deemed sufficiently extensive to include, and thus average, a period of
severe crisis and a prospective period of a return to a scenario of moderate economic growth.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
350
Furthermore, with a prudential approach, it was checked that the “g” rate was not higher than Italy’s GDP growth rate in 2027
or, for each CGU, the growth rate of the last year of analytical forecasting.
Cash flow discounting rates
For the determination of the value in use, the cash flows must be discounted at a rate that reflects the present market
valuations, the time value of money and the asset’s specific risks.
In practice, the first characteristic (current market conditions) translates into the calculation of all parameters based on the
latest available information as at the reference date of the estimate, so as to best take into account the current market
assessments. The second characteristic (consistency between risks/flows and rates) must follow the specificity of flows used
for impairment testing of the CGUs. This rate (in its various components) must therefore be decided by observing the specific
nature of flows used to assess each CGU, in order to maintain coherence and consistency with the flows. Specifically,
consistency becomes important with regard to inflation, country risk and other risk factors that, according to IAS 36, may be
expressed in the flows or rate. It is important to point out that a characteristic common to all CGUs recording goodwill (and, in
general, intangibles with an indefinite life) is the long-term perspective of flows used to estimate the CGU’s value in use. In
fact, by its very nature, goodwill has an indefinite useful life, and therefore future cash flows are normally infinitely projectable.
This long-term perspective should be reflected in all discounting rate benchmarks by means of the appropriate selection of
each, in such a way that they express normalised conditions in the long term.
The discounting rate should normally include the cost of the various sources of funding of the asset to be assessed, in other
words the equity cost and debt cost (i.e. WACC, weighted average capital cost).
However, in the case of a banking entity, it is estimated according to an equity-side approach, that is to say by considering
only the cost of equity capital (Ke), in a manner consistent with the methods for determining cash flows, which, as stated
above, include those deriving from financial assets and liabilities.
The cost of capital is determined using the Capital Asset Pricing Model (CAPM). Based on this model, the cost of capital is
calculated as the sum of risk-free rate and a risk premium, in turn dependent on the specific risks implicit in the business
activities (i.e. both business segment risk and country risk).
The cost of capital is determined net of taxes, in order to ensure consistency with the discounted cash flows.
As the various CGUs of the Intesa Sanpaolo Group operate in different business segments and with different risk factors, the
specific costs of capital of each CGU were identified.
It should be noted that, since cash flows were determined in nominal terms, discounting rates were also determined in
nominal terms, meaning that they incorporate inflation expectations.
Entering into the details of the various components that contribute to the determination of discounting rates, it may be
remarked that:
- with regard to the choice of cash flow discounting rates, and in particular of the risk-free rate and CRP, in view of the
structure of interest rates in the current macroeconomic scenario, which will see a further increase in the long term,
continuing the progression of increases that began in the second half of 2022, it was prudentially decided to maintain the
approach that involves the use of differentiated discount rates for the discounting of cash flows expected over the explicit
forecast horizon and for the terminal value cash flow:
o concerning the risk-free component included in the cash flow discounting rate of the explicit forecast horizon, a
decision was made to use the average monthly return (December 2022) of the 10-year German Government bonds
(Bund);
o concerning the risk-free component included in the cash flow discounting rate of the terminal value (cash flow
projectable beyond the explicit forecast period), a decision was made to use the average annual return of 10-year
German government bonds (Bund) forecast for 2027, which is the last year of flow forecast period, estimated by the
Intesa Sanpaolo Research Department.
In line with the above, also for the Country Risk Premium (CRP) a methodology was considered that envisages the use
of differentiated values. In addition, it should be noted that there is no goodwill allocated to CGUs other than those
(mainly) operating in Italy - the “country risk” essentially coincides with the “Italy risk”. Therefore, in the methodological
choices for the impairment test of goodwill for the purpose of the 2022 Financial Statements, the CRP was calculated as
follows:
o concerning the CRP included in the cash flow discounting rate of the explicit forecast horizon, the average BTP-
Bund spread of December 2022 was considered;
o concerning the CRP included in the cash flow discounting rate of the terminal value, the average annual BTP-Bund
spread estimated for 2027 was considered, based on the medium-term forecast scenario mentioned previously;
- the equity risk premium – represented by the difference between stock market yield and the Return on Investment on risk-
free securities determined in reference to a sufficiently wide time horizon – was calculated on the basis of historical data,
given its higher degree of reliability and visibility and also in the light of the current macroeconomic context, which reflects
particularly volatile stock market prices not always representative of economic “fundamentals,” while a lso creating a
framework of uncertainty within which it is difficult to formulate reliable forecasts of results in order to estimate the equity
risk premium implicit in stock market quotations. Specifically, the geometric mean for the equity risk premium was used,
recorded on the US market for the period 1928-2022, adjusted for the differential between the US inflation rate and the
German inflation rate (the market used as the basis for risk-free calculation);
- the Beta coefficient, which measures the specific degree of risk of an individual company or business sector, was
calculated by identifying a sample of companies, comparable in business terms, for each CGU, and with reference to this
sample the average or median Beta figure used was that recorded on a monthly basis over a five-year period;
Summary of growth rates and discounting rates used
The following table presents a summary, for each CGU subject to impairment test, of the parameters relevant to determining
value in use: weighted average 2023-2027 growth rates for the cash flows of the various CGUs, including the allocation of
cash flows related to the central corporate assets, the “g” growth rates for terminal value purposes, and the various
discounting rates and inflation rates.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
351
RATES/PARAMETERS
Nominal growth
rates for
impairment test
(2023-2027)
NOMINAL DISCOUNTING RATES
LONG-TERM "G"
GROWTH RATES
INFLATION
RATES
CGU
2022
flows
2022
Terminal
Value
2021
flows
2021
Terminal
Value
2022
2021
2022
CGU subject to impairment test
IMI Corporate & Investment
Banking
17.81%
10.57%
11.18%
7.61%
9.37%
2.06%
1.52%
1.96%
Insurance
1.69%
10.27%
10.88%
7.12%
8.89%
2.06%
1.52%
1.96%
Asset Management
1.96%
10.12%
10.73%
6.85%
8.61%
2.06%
1.52%
1.96%
Private Banking
2.59%
10.14%
10.75%
7.28%
9.05%
2.06%
1.52%
1.96%
Impairment testing results
The outcomes of the impairment test showed how the values in use of each of the CGUs to which amounts of goodwill were
allocated as at 31 December 2022 were higher than the respective book values. Thus, it was not necessary to proceed to any
impairment of the goodwill or brand name allocated to the CGUs.
In addition, it is specified that, for the sake of completeness of the analysis, the Group's total value in use was confirmed to be
greater than the sum of the carrying amounts of the individual CGUs.
Finally, with regard to the direct consequences of the Russia-Ukraine conflict on the Group’s goodwill, it should be noted that
the goodwill relating to the Ukrainian subsidiary Pravex Bank, considered an autonomous CGU, was already fully written
down in the 2008 Financial Statements, as previously mentioned. In the case of the Russian subsidiary Joint-Stock Company
Banca Intesa (Banca Intesa Russia), in addition to not presenting allocated goodwill, its weight in the IMI Corporate &
Investment Banking CGU is absolutely immaterial on that CGU. Furthermore, as stated above, during impairment testing as at
31 December 2022 the IMI Corporate & Investment Banking CGU was found to have a recoverable amount in excess of its
book value.
Verification of the results of impairment testing using an alternative calculation method
As the value of a company or a business line may also be determined by discounting the distributable cash flows, understood
as the future cash flows estimated to be generated by the business area (the single CGUs) net of the share of income that
must be retained in equity to meet the supervisory requirements, the recoverability of the book value of the goodwill allocated
to the CGUs was verified also by discounting the aforementioned cash flows according to the excess capital version of the
Dividend Discounted Model (DDM).
With reference to the supervisory requirements, a Common Equity Tier 1 ratio of 10.25% was used, as resulting from the
Group Risk Appetite Framework (RAF), and significantly higher than the capital requirement (8.91%) communicated by the
ECB following the results of the Supervisory Review and Evaluation Process (SREP). For the Insurance CGU, a Solvency
Ratio of 170% was taken into account, as per the aforementioned RAF.
Thus, the distributable cash flows were obtained by integrating the expected cash flows determined as illustrated above,
factoring in an increase in capital surplus in relation to the above-mentioned minimum limits of capital, or a decrease in the
shares of income needed to cover the requirements deriving from the estimated growth trend in risk-weighted assets. These
flows, estimated for each CGU, were discounted by applying the same discounting rates and growth rates “g” used in applying
the Discounted Cash Flow (DCF) method.
The results of this method confirmed the results based on the calculation made using the DCF method.
Reconciliation of the results of the impairment test with the market valuation
During 2022, the Intesa Sanpaolo stock price declined (-8.6%) on the closing values at the end of 2021, underperforming the
Italian sector index (FTSE Italia All-Share Banks, approximately -4%), but outperforming the main Borsa Italiana reference
index (FTSE MIB Index, approximately -13.4%).
Specifically, after a particularly difficult start to the year following the outbreak of the military conflict between Russia and
Ukraine and the consequent deterioration of the macroeconomic scenario, in which stock prices slowed considerably, in the
second half of the year the stock recovered in part, rallying to a particularly evident degree in the fourth quarter of the year, to
close at around 2.08 euro at the end of December 2022. In early 2023 the Intesa Sanpaolo stock appreciated further, with
prices at the end of February of approximately 2.5 euro per share and a market capitalisation of approximately 47 billion eur o
(with a P/BV multiple of approximately 0.7x).
The valuations and reports by financial analysts produced during 2022 showed on average a downward revision of the target
prices compared to the 2021 values, with a performance essentially in line with the decline in Intesa Sanpaolo stock prices. In
early 2023, above all following the reporting to the market of 2022 results, target prices were generally revised upwards, with
an average value of 2.85 euro per share.
Among the strengths of Intesa Sanpaolo, analysts underscore its strong brand and its highly qualified management, which is
valued by the market. In addition, they believe that the Bank will benefit from further increases in net interest income,
considering that on average Italian banks have a positive sensitivity to increases in the Euribor rate. Intesa Sanpaolo is also
capable of generating a level of profitability that is among the highest in Italy, while also benefiting from considerable
exposure to portfolio and asset management activities, and maintains a strong capital position. In addition, it conducted a
highly successful de-risking strategy that allows it to face a possible further deterioration of the macroeconomic scenario with
greater peace of mind. On the other hand, among the main elements that could prove especially critical, analysts reiterate the
customary risk of internal political instability for Italy, with possible consequences for the BTP-Bund spread, in addition to
possible outflows of assets managed if financial market tension should resume.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
352
In any event, it bears observing that valuations expressed by financial analysts have different characteristics from the
“fundamental” assessment represented by value in use. The following may be observed regarding those valuations:
- the future cash flows forecast by analysts mainly extend to 2025, and are essentially aligned with, or marginally in excess
of, internal management estimates, whereas the forecasts used for impairment testing purposes cover a period of five
years that extends until 2027;
- the cost of the capital used (in not particularly frequent cases where this parameter is explicitly stated by analysts) is
often determined in overall terms at Group level; the cost of capital of Intesa Sanpaolo, used to discount the terminal
value cash flows, is marginally lower than the average value shown in the reports by the analysts. Analysts tend to use
discount rates implicit in stock market values, which are therefore higher on average as they are influenced by current
prices;
- similarly to the observations made for the impairment test of the 2021 Financial Statements, from the methodological
standpoint, use was often made of multiples (in terms of P/E or ROE) applied to current market prices or expected
profitability for the coming years 2023 or 2024; these are thus methods that provide a fair value, rather than a long-term
value in use.
It bears observing that the valuations in question were intended for financial investors and thus aimed to determine prices a nd
values in the short term. These valuations represent the value potentially obtainable from sale on the market of limited
amounts of securities, i.e. the disposal of a minority interest, and are therefore closely pegged to prices and to current market
conditions.
In brief, the difference in the values fro m the analysts’ estimates, which reflect on a methodological difference between the fair
value and the value in use, may be explained by the following factors:
- different unit of valuation: as stated, the fair value calculated by the analysts represents the price of a single share,
different from the value in use, which measures the Bank’s entire capital. However, there is a control premium between
the two values, which is lacking in the former case, and which is generally valued within a range of 15% to 25%;
- different time horizon of reference considered by the market: the period covered by the estimates of the cash flows, as
mentioned, has a considerable impact on the valuation of the Group; given the time horizon considered by analysts,
which in general covers a period of 3 years, and deducting the control premium, the Group’s total recoverable amount
would be, in terms of value per share, in line with that given by analysts as the target price;
- different value of the cost of capital: the analysts’ estimates, deriving from stock market prices, factor in elements external
to the Group’s ability to generate profits for the purpose of remunerating its shareholders.
Finally, it is believed that impairment tests must be performed with the awareness of the fact that the current economic
situation, penalised by the geopolitical context, impacts expected short- and medium-term cash flows from operating activities,
without however in any way affecting the Intesa Sanpaolo Group’s primary sources of income, which are a lso positively
impacted by rising interest rates, and competitive edges, as has also been demonstrated by the results of the past few years
in which forecast targets have consistently been achieved, and the income dynamics for 2022.
In this regard, it should be noted that in recent years the Group has sold businesses or equity investments that have
generated significant gains from disposal (e.g. Setefi, Allfunds Bank, Intrum, the merchant acquiring business, Fund
Administration in Luxembourg and the training business), confirming the existence of hidden value within the Group that is not
reflected in the book values but is recognised in transactions with third parties. Moreover, the resilient and well diversified
business model, which focuses on the product factories where a large part of the difference in book values is concentrated,
guarantees a primary source of income for the Group even in adverse conditions solely in relation to the scenario of the
banking sector.
Accordingly, in developing the valuation model used for the purposes of impairment testing, the following precautions were
adopted:
− projected cash flows include the financial effects of the services provided by the Corporate Centres. Moreover, the final
figures for the last few years have been essentially in line with the forecast figures;
− the cost of capital was determined analytically, based on parameters taken from the markets for each CGU, depending
on the different risk of the respective businesses, also considering analytically the various risk factors.
Lastly, the parameters and information used to test the recoverability of intangible assets with indefinite useful life are
significantly influenced by the macroeconomic environment and financial market trends, which might undergo changes that
cannot be predicted at the present time. If, in the future, the macroeconomic scenario should deteriorate with respect to the
assumptions, this would have effects on the estimate of the various CGUs’ cash flows and on the main assumptions adopted,
which could obviously yield results in the financial statements of the coming years different from those outlined in the
Financial Statements as at 31 December 2022. Nonetheless, it must be noted that the business units that have significant
amounts of goodwill (Insurance, Asset Management and Private Banking) have always had, and are expected also in the
future to have profitability that largely justifies the values of goodwill recognised.
Sensitivity analyses
Since the value in use is determined by using estimates and assumptions that may contain some level of uncertainty,
sensitivity analyses to verify the sensitivity of the results obtained to changes in the parameters and in the underlying
hypotheses, referring to the DCF method, were carried out, as required by the IAS/IFRS. These analyses are important in this
forecasting scenario characterised by a significant degree of uncertainty. In this regard, considering alternative scenarios and
stress factors in the main valuation and macro-economic variables makes it possible to evaluate the impacts on the
impairment test results related to the specific forecasting scenario.
For CGUs that present residual values of goodwill, the impact on the value in use of an increase of up to 50 bps in discount
rates and a decrease of up to 50 bps in the growth rate for terminal value purposes was verified. In addition, analyses were
conducted of changes in the Value in Use resulting from a decrease in the cash flows used for terminal value purposes. No
events of impairment would emerge in any of the CGUs tested, even in the event of an increase in discounting rates of 50
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
353
bps, and a decrease in the “g” rate of 50 bps or a decrease in the terminal value cash flow of 10%. The table below illustrat es
the sensitivity (in percentage terms) of the Value in Use of the CGUs that present goodwill to changes in the “g” rate or
discounting rate of -/+10 basis points, as well as a reduction in the cash flows used for terminal value purposes of 10%.
CHANGE IN VALUE IN USE
Sensitivity
Sensitivity
to growth rate "g"
- 10 bps
Sensitivity
to discount rate
+ 10 bps
Sensitivity
to Terminal value
cash flows
- 10%
CGU
IMI Corporate & Investment Banking
-0.82%
-1.09%
-8.49%
Insurance
-0.78%
-1.05%
-6.44%
Asset Management
-0.80%
-1.07%
-6.50%
Private Banking
-0.80%
-1.07%
-6.52%
Based on the table above, changes in the Ke (increasing) or the “g” (decreasing) values within 10 bps would lead to a general
decrease in the values in use ranging between 0.78% and 1.09%. Regarding the cash flow considered for the purpose of the
terminal value, a 10% decrease of the same would lead to reductions in the values in use ranging between 6.50% and 8.49%.
In any event, no issues of impairment would arise for any CGU at that amount of sensitivity.
Still considering stress testing, analyses were performed with the aim of determining the limits for the main inputs, beyond
which impairment testing of the CGUs would require the recognition of impairment. The following table presents the “g” growth
rates and discounting rates for each CGU that would result in a Value in Use in line with its carrying amounts, assuming equa l
cash flows to be discounted.
Sensitivity
"g" growth rate
Difference
compared
to the "g"
rate used
TV discounting
rate
Difference compared to
the Ke discounting rate
used
CGU
IMI Corporate & Investment Banking
0.10%
-198 bps
12.70%
152 bps
Insurance
-3.80%
-583 bps
15.16%
428 bps
Asset Management
-17.80%
-1.984 bps
23.62%
1.289 bps
Private Banking
-54.50%
-5.658 bps
45.27%
3.452 bps
As shown by the data contained in the table, the Values in Use of the CGUs would reduce until the book values, with
consequent impairment problems, only in correspondence with the significant worsening of the discounting rates (Ke) and the
“g” growth rates.
Finally, within the framework of analysis regarding possible changes in the cash flows of the CGUs on the basis of alternative
scenarios to those used for the purposes of this impairment test, account was taken of the impact on prospective cash flows
of the application of an alternative prospective macroeconomic scenario, consistent with the “adverse” scenario incorporated
into the Expected Credit Loss models used to measure loans pursuant to IFRS 9. This scenario envisages a general shock to
the Euro area economy, relating primarily to a very significant increase in the price of gas, with the introduction of a recession
for the years 2023 and 2024, with the resulting increase in inflation. The scenario presented above translates into a reduction
in cash flows at the Group level, which will also benefit from the provisions set aside in the 2022 Financial Statements in
response to the uncertainty in the prospective scenario and the significant reduction in risks associated with exposures to
Russian and Ukrainian counterparties following the de-risking measures taken and the provisions made, averaging 11% over
the forecasting horizon, with impacts spread across all CGUs.
Following this analysis, it was found that the reduction in cash flows over the 2023-2027 forecasting horizon, estimated as a
result of the application of an “adverse” scenario, would not entail issues of impairment for any of the Group’s CGUs.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
354
SECTION 11 – TAX ASSETS AND LIABILITIES – CAPTION 110 OF ASSETS AND
CAPTION 60 OF LIABILITIES
11.1 Deferred tax assets: breakdown
Deferred tax assets, recognised with regard to deductible temporary differences, totalled 14,753 million euro, of which 12,941
million euro refers to taxes recorded through profit or loss and 1,812 million euro to taxes with a balancing entry under
shareholders’ equity. The first of these amounts refers to losses brought forward, to the portion of tax benefits not offset in
relation to adjustments to loans and provisions for risks and charges deductible in future years, and to the benefit from
realignment of the taxable value of goodwill, trademarks and other intangible assets pursuant to Article 15, par. 10, 10-bis and
10-ter of Law Decree 185/2008. Deferred tax assets recorded as a balancing entry under shareholders’ equity almost
exclusively refer to tax on negative valuation reserves for financial assets measured at fair value through other
comprehensive income, to the cash flow hedges and to recognition of actuarial losses on personnel funds.
11.2 Deferred tax liabilities: breakdown
Deferred tax liabilities amounted to 2,009 million euro and the balancing entry is in the income statement (1,634 million euro)
as well as in shareholders' equity (375 million euro).
11.3 Changes in deferred tax assets (through profit or loss)
(millions of euro)
31.12.2022
Of which:
31.12.2021
Banking
group
Insurance
companies
Other
companies
1. Initial amount
14,287
13,739
537
11
15,771
2. Increases
1,426
1,266
160
-
2,254
2.1 Deferred tax assets recognised in the period
1,233
1,107
126
-
1,442
a) related to previous years
326
326
-
-
25
b) due to changes in accounting criteria
-
-
-
-
-
c) value recoveries
-
-
-
-
-
d) other
907
781
126
-
1,417
2.2 New taxes or tax rate increases
2
2
-
-
-
2.3 Other increases
190
156
34
-
741
2.4 Business combinations
1
1
-
-
71
3. Decreases
-2,772
-2,655
-116
-1
-3,738
3.1 Deferred tax assets eliminated in the period
-1,519
-1,405
-113
-1
-2,331
a) reversals
-1,401
-1,396
-4
-1
-2,087
b) write-offs
-
-
-
-
-1
c) due to changes in accounting criteria
-
-
-
-
-
d) other
-118
-9
-109
-
-243
3.2 Tax rate reductions
-1
-1
-
-
-
3.3 Other decreases
-1,252
-1,249
-3
-
-1,407
a) changes into tax credits
pursuant to Law no. 214/2011
-851
-851
-
-
-1,254
b) other
-401
-398
-3
-
-153
3.4 Business combinations
-
-
-
-
-
4. Final amount
12,941
12,350
581
10
14,287
Among Increases, sub-caption a) related to previous years is made up of 320 million euro for the recognition of the deferred
tax assets on part of tax losses carried forward of the former UBI Banca.
Again, among Increases, sub-caption d) other refers mainly to the recognition of convertible deferred tax assets on the portion
of the tax loss that is attributable to the reversal of accumulated adjustments to loans and goodwill and the deductible
temporary differences arising during the year, connected to provisions for risks and charges.
With regard to the insurance companies, within the framework of the Increases, sub-caption d) others primarily referred to the
recognition of deferred tax assets on the goodwill arising from the merger of Cargeas Assicurazioni S.p.A. in 2022.
Other increases mainly consist of the write-off of netting against deferred tax liabilities, applied as at 31 December 2021.
“Business combinations” include the balance contributed by Compagnie de Banque Privée Quilvest S.A. (CBPQ), which
entered the scope of consolidation in 2022.
Among Decreases, sub-caption 3.1 a) reversals mainly refer to the elimination of deferred tax assets pursuant to Law no.
214/2011 and deferred tax assets previously recorded in relation to provisions for risks and charges, as a result of their us e
during the year.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
355
Among Other decreases, sub-caption a) changes into tax credits pursuant to Law no. 214/2011 refers to the information set
out in Part C, table 21.1.
Again, among Other decreases, sub-caption b) other refers to the netting against deferred tax liabilities for the year.
11.4 Changes in deferred tax assets pursuant to Law 214/2011
(millions of euro)
31.12.2022
31.12.2021
1. Initial amount
8,758
10,010
2. Increases
470
954
3. Decreases
-1,740
-2,206
3.1 Reversals
-865
-925
3.2 Changes into tax credits
-851
-1,254
a) from losses for the year
-
-537
b) from fiscal losses
-851
-717
3.3 Other decreases
-24
-27
4. Final amount
7,488
8,758
11.5 Changes in deferred tax liabilities (through profit or loss)
(millions of euro)
31.12.2022
Of which:
31.12.2021
Banking
group
Insurance
companies
Other
companies
1. Initial amount
1,337
652
660
25
1,253
2. Increases
660
129
531
-
806
2.1 Deferred tax liabilities recognised in the period
521
15
506
-
124
a) related to previous years
-
-
-
-
-
b) due to changes in accounting criteria
-
-
-
-
-
c) other
521
15
506
-
124
2.2 New taxes or tax rate increases
-
-
-
-
-
2.3 Other increases
121
96
25
-
402
2.4 Business combinations
18
18
-
-
280
3. Decreases
-363
-275
-88
-
-722
3.1 Deferred tax liabilities eliminated in the period
-270
-182
-88
-
-629
a) reversals
-75
-74
-1
-
-35
b) due to changes in accounting criteria
-
-
-
-
-
c) other
-195
-108
-87
-
-594
3.2 Tax rate reductions
-
-
-
-
-
3.3 Other decreases
-93
-93
-
-
-93
3.4 Business combinations
-
-
-
-
-
4. Final amount
1,634
506
1,103
25
1,337
Among Increases, sub-caption c) other mainly refers to taxable temporary differences arising during the year, in relation to the
tax amortisation of the brand name and other intangible assets “realigned” in the previous year in accordance with Article 11 0,
paragraphs 8 and 8-bis of Law Decree no. 104/2020.
With regard to the insurance companies, among Increases, sub-caption c) refers primarily to deferred taxation relating to the
measurement of securities through profit or loss.
Other increases mainly consist of the write-off of netting against deferred tax assets through profit or loss applied as at 31
December 2021.
“Business combinations” include the balance contributed by Compagnie de Banque Privée Quilvest S.A. (CBPQ), which
entered the scope of consolidation in 2022.
Among Decreases, sub-caption c) other relates to the release of the deferred tax assets recognised as at 31 December 2021
on intangible assets subject to tax realignment pursuant to Article 15, paragraph 10, of Law Decree no. 185/2008.
With regard to the insurance companies, among Decreases, sub-caption c) refers primarily to deferred taxation relating to the
measurement of securities and the reduction in technical reserves.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
356
Other decreases mainly relate to the netting against deferred tax assets through profit or loss for the year.
11.6 Changes in deferred tax assets (recorded in equity)
(millions of euro)
31.12.2022
Of which:
31.12.2021
Banking
group
Insurance
companies
Other
companies
1. Initial amount
966
826
136
4
1,406
2. Increases
1,419
1,098
317
4
386
2.1 Deferred tax assets recognised in the period
1,370
1,053
317
-
240
a) related to previous years
-
-
-
-
-
b) due to changes in accounting criteria
-
-
-
-
-
c) other
1,370
1,053
317
-
240
2.2 New taxes or tax rate increases
4
-
-
4
5
2.3 Other increases
45
45
-
-
137
2.4 Business combinations
-
-
-
-
4
3. Decreases
-573
-573
-
-
-826
3.1 Deferred tax assets eliminated in the period
-467
-467
-
-
-258
a) reversals
-453
-453
-
-
-178
b) write-offs
-
-
-
-
-
c) due to changes in accounting criteria
-
-
-
-
-
d) other
-14
-14
-
-
-80
3.2 Tax rate reductions
-
-
-
-
-6
3.3 Other decreases
-106
-106
-
-
-562
3.4 Business combinations
-
-
-
-
-
4. Final amount
1,812
1,351
453
8
966
Among Increases, sub-caption c) other mainly refers to deductible temporary differences arising during the year, connected
with the results of financial assets measured at fair value through other comprehensive income and cash flow hedging
derivatives.
For the insurance companies, among Increases, sub-caption c) others refers primarily to the effects on taxation of the
measurement of securities available for sale, the measurement of which has effects on valuation reserves.
Other increases mainly refer to the write-off of netting against deferred tax liabilities recorded in equity, applied as at 31
December 2021.
Among Decreases, sub-caption a) reversals mainly refers to the elimination of deferred tax assets previously recorded in
relation to the fair value measurement of cash flow hedging derivatives and financial assets measured at fair value through
other comprehensive income following the adjustment of the valuation effects or the related realisation during the year.
Caption 3.3 Other decreases refers mainly to the netting against deferred tax liabilities recorded in equity.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
357
11.7 Changes in deferred tax liabilities (recorded in equity)
(millions of euro)
31.12.2022
Of which:
31.12.2021
Banking
group
Insurance
companies
Other
companies
1. Initial amount
585
221
363
1
1,492
2. Increases
239
239
-
-
370
2.1 Deferred tax liabilities recognised in the period
154
154
-
-
182
a) related to previous years
-
-
-
-
-
b) due to changes in accounting criteria
-
-
-
-
-
c) other
154
154
-
-
182
2.2 New taxes or tax rate increases
-
-
-
-
-
2.3 Other increases
85
85
-
-
161
2.4 Business combinations
-
-
-
-
27
3. Decreases
-449
-255
-194
-
-1,277
3.1 Deferred tax liabilities eliminated in the period
-288
-119
-169
-
-498
a) reversals
-103
-103
-
-
-12
b) due to changes in accounting criteria
-
-
-
-
-
c) other
-185
-16
-169
-
-486
3.2 Tax rate reductions
-
-
-
-
-
3.3 Other decreases
-161
-136
-25
-
-779
3.4 Business combinations
-
-
-
-
-
4. Final amount
375
205
169
1
585
Among Increases, sub-caption c) other refers to taxable temporary differences arising during the year connected with the
measurement of financial assets measured at fair value through other comprehensive income and cash flow hedging
derivatives.
Other increases mainly consist of the write-off of netting against deferred tax assets applied as at 31 December 2021.
Among Decreases, sub-caption a) reversals mainly refers to the discharge of deferred tax liabilities previously recorded in
relation to the valuation of financial assets measured at fair value through other comprehensive income.
With regard to the insurance companies, among Decreases, sub-caption c) others refers primarily to the measurement of
securities with an impact on technical reserves.
Caption 3.3 Other decreases mainly relates to the netting against deferred tax assets recorded in equity and the netting
against deferred tax assets through profit or loss.
As indicated in the accounting policies, with regard to current and deferred taxation, no provision is made in the financial
statements for reserves subject to latent taxation only in the event of distribution, since the size of the available reserve s
which have already been taxed leads to the belief that the Bank will not undertake any transactions which may cause taxation
of those untaxed reserves.
Probability test on deferred taxation
IAS 12 requires for deferred tax assets and liabilities to be recognised according to the following criteria:
− a deferred tax liability (or DTL) must be recognised, as a general rule, for all taxable temporary differences;
− a deferred tax asset (or DTA) must be recognised for all deductible temporary differences to the extent that it is probable
that taxable income will be earned that can offset the deductible temporary differences. Deferred tax assets not
recognised in the past - inasmuch as the conditions for their recognition were not met - are recognised during the year in
which those conditions arise.
Deferred tax assets are then divided into “eligible” deferred tax assets and “ineligible” deferred tax assets.
For the former, as illustrated in greater detail hereinafter, the regulations set out a specific mechanism for conversion into tax
credits which legitimises, in and of itself, their recognition in the financial statements.
Instead, the book value of “ineligible” deferred tax assets must be tested to determine whether it is likely that taxable inc ome
will be earned in the future that will ensure their recovery (probability test).
“Eligible” deferred tax assets amounted to 7,488 million euro, while “ineligible” deferred tax assets subjected to the probability
test amounted to 7,265 million euro (joined by 2,009 million euro in deferred tax liabilities).
The probability test on the “ineligible” deferred tax assets carried in the 2022 Financial Statements separately regarded, due
to the different conditions of use of the underlying temporary differences, the following cases:
− IRES deferred tax assets recognised in relation to previous tax losses. In particular, these were deferred tax assets
relating to the tax losses of Intesa Sanpaolo and the merged companies (mainly generated by the former Venetian banks
and by the companies in the former UBI Group);
− deferred tax assets recognised for tax losses of the Luxembourg subsidiary Intesa Sanpaolo Holding International
(ISPHI);
− other deferred tax assets triggered by deductible temporary differences for IRES tax purposes, arising at the Group
companies included in the consolidated financial statements (“Ot her deferred tax assets - IRES”);
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
358
− deferred tax assets triggered by deductible temporary differences for IRAP tax purposes (“Deferred tax assets - IRAP”).
In the 2022 Financial Statements, deferred tax assets relating to previous tax losses of the parent company Intesa Sanpaolo
were recognised for a total of 2,277
89
million euro, of which 1,755 million euro equal to the base IRES tax rate of 24% and
522 million euro to the additional IRES tax rate of 3.5%. Of this amount of deferred tax assets, 320 million euro consists of
deferred tax assets at 24% recognised for the first time in the financial statements as at 31 December 2022 as regards the
tax losses carried forward of the former UBI Banca (“new DTAs”; see below).
The probability test on the deferred tax assets relating to the tax losses was conducted considering the individual position of
Intesa Sanpaolo.
For the losses of the former Venetian banks, the possibility of use on an exclusively individual basis by Intesa Sanpaolo
derives from the regulations that set out the transfer (Art. 7, paragraph 3 of Law Decree no. 99/2017, converted with
amendments by Law no. 121/2017, and Art. 15 of Law Decree no. 18/2016) at the time of the purchase of the business lines
of Banca Popolare di Vicenza and Veneto Banca (in 2017) and the subsequent merger of their former subsidiaries Banca
Nuova and Banca Apulia (effective on 1 January 2018 and 1 January 2019, respectively). For the losses of UBI Banca and
the other companies in the former UBI Group merged into Intesa Sanpaolo, the same possibility is triggered by the
incorporation of those companies into Intesa Sanpaolo during 2021 and 2022.
For the purposes of the probability test, the income prospects of Intesa Sanpaolo have been estimated, for the years 2023-
2027, using the economic-financial forecasts drawn up by the Planning and Control Department (”Forecasts” or “Estimates”).
More specifically: for the years 2023-2025, the Estimates were prepared starting from the 2023 Budget, which takes into
account the update of the macroeconomic and banking scenario illustrated in the previous chapter on the impairment test of
intangible values, and reflect the dynamics underlying the 2022-2025 Business Plan (“Plan”), drawn up by the management of
Intesa Sanpaolo and submitted for approval by the Board of Directors on 4 February 2022; for 2026 and 2027, they represent
an “inertial” extrapolation of the new scenario, without considering the effects of managerial leverage (taken from the same
database used for the impairment test on intangibles in the 2022 Financial Statements); for the years following 2027, it was
prudently assumed that the gross result would remain constant, therefore, equal to that estimated for 2027 (without, therefore,
considering a growth rate “g”). The Forecasts, which benefit from the allowances for risks recognised in the 2022 Financial
Statements to reflect the uncertainties regarding the prospective scenario and the significant reduction in risks associated with
exposures to Russian and Ukrainian counterparties following the de-risking measures taken, were prudentially prepared, in
order to achieve a sufficient degree of confidence regarding the recognition of “new DTAs” relating to the prior losses of th e
former UBI Banca, assuming – in addition to the “base” scenario – a scenario less favourable – than the “base” one –
consistent with the “adverse” scenario incorporated into the Expected Credit Loss models used for the valuation of loans
pursuant to IFRS 9, which essentially provides for a general shock to the Eurozone economy, relating primarily to a very
significant increase in the price of gas, with the introduction of a recession hypothesis for the years 2023 and 2024, with the
resulting increase in inflation and a negative impact on Italian GDP (“ Adverse scenario”).
Even considering the Adverse scenario, based on the analyses conducted, total absorption of the deferred tax assets in
question – and also of the “new DTAs” recognised in the 2022 Financial Statements – could be achieved over a time horizon
deemed compatible with the “probability” of recovery required by IAS 12.
With particular regard to the “new DTAs” recognised in the 2022 Financial Statements, as at the date of the merger of UBI
Banca into Intesa Sanpaolo, UBI Banca had tax losses carried forward, largely relating to the former Good Banks (in turn
merged into UBI in 2017 and 2018) against of which UBI Banca had not recognised deferred tax assets. During the PPA, and
in the 2020 and 2021 Financial Statements, Intesa Sanpaolo had decided to adopt an approach in line with that of UBI Banca,
prudently choosing not to recognise the above deferred tax assets. However, it had been decided to reconsider the issue in
later years, based on the trend in the Bank’s income performance within the evolution of the external situation.
In 2022: i) the right to full use by Intesa Sanpaolo of the tax losses of UBI Banca (both those for which deferred tax assets had
already been recognised and the others) was confirmed by the Italian Revenue Agency in response to a specific ruling
request filed by the Parent Company (the reply was received on 11 July 2022); and ii) the Parent Company and the National
Resolution Fund (which had sold UBI Banca the equity investments in the former Good Banks) held talks aimed at regulating
in the post-merger structure the right granted to the National Resolution Fund, on the basis of the initial agreements, to
receive a part of the tax benefit that will be achieved in the future when the tax losses of the former Good Banks are
concretely used.
The favourable outcome to the above ruling request , along with several objective elements, mainly relating to changes in
interest rates and the ensuing expected performance of the net interest income of Intesa Sanpaolo, which have a positive
impact on the earnings prospects of Intesa Sanpaolo, made it possible to reconsider, when preparing the 2022 Financial
Statements, the extremely conservative attitude taken until now with regard to the recognition of new deferred tax assets on
the tax losses of the former UBI Banca.
However, even in such an improving scenario there continue to be circumstances – such as the macroeconomic framework,
which is still uncertain, due in part to the Russia-Ukraine conflict, and the wholly preliminary stage of the talks with the
National Resolution Fund – that suggest caution in recognising all the deferred tax assets in question.
On the basis of the foregoing, for the time being it was decided to quantify the amount of deferred tax assets to be recognis ed
in the 2022 income statement of Intesa Sanpaolo at 320 million euro. The possibility of recognising the residual deferred tax
assets, which in view of the outcome of the aforementioned ruling request and net of a prudential estimate of the potential
retrocession to the National Resolution Fund amount to 320 million euro, will be assessed in the upcoming financial reports,
as a function of the Bank’s earnings performance and the aforementioned talks with the National Resolution Fund.
In the 2022 Financial Statements, deferred tax assets of 44 million euro are also entered, which derive from previous years’
tax losses of the Luxembourg subsidiary Intesa Sanpaolo Holding International (ISPHI). The analyses carried out in relation t o
the income forecasts of the Luxembourg subsidiary confirm the ability of that company to use the losses against which
deferred tax assets are recognised.
89
That amount is already net of the benefit deriving from the transformation into tax credits of a total of 220 million euro (of which 110 million euro
referring to 2020 and 110 million euro referring to 2021) in deferred tax assets relating to tax losses, due to the sales, carried out by 31 December 2020
and 31 December 2021, respectively, of non-performing loans pursuant to Art. 55 of Law Decree no. 18/2020 (“Cura Italia” Decree), and Art 19 of Law
Decree no. 73/2021 (“Sostegni bis” Decree).
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
359
In conducting the probability test for the other deferred tax assets for IRES and the deferred tax assets for IRAP carried in the
Group’s Financial Statements as at 31 December 2022, deferred tax assets arising from temporary deductible differences
associated with impairment losses on loans (other than those deriving from the first-time adoption of the IFRS 9; see below),
as well as - if recognised within 2014 – from goodwill and other intangible assets with indefinite useful lives
90
(“eligible
deferred tax assets” and “eligible temporary differences”), were considered separately from others. In this regard, it bears
noting that, effective from the tax period ended 31 December 2011, deferred tax assets (for corporate income tax or IRES)
recognised to account for tax losses due to the deferred deduction of “eligible” temporary differences are eligible for
conversion into tax credits (article 2, paragraph 56-bis, of Law Decree 225 of 29 December 2010, introduced by article 9 of
Law Decree 201 of 6 December 2011). Effective from the 2013 tax period, a similar conversion is allowed where the regional
business tax (IRAP) return shows a negative net production value also in relation to IRAP deferred tax assets that pertain to
“eligible” temporary differences that have contributed to determining the negative net production value (article 2, paragraph
56-bis.1, of Law Decree 225 of 29 December 2010, introduced by Law 147/2013). The above convertibility forms – which are
in addition to that already envisaged for cases in which the separate financial statements show a loss for the year (article 2,
paragraphs 55 and 56, of Law Decree 225/2010, as most recently amended by Law 147/2013) – provide an additional,
supplementary recovery method suited to ensuring the recovery of “eligible” deferred tax assets in all situations, regardless of
the company’s future profitability. If in a given year there are surplus “eligible” temporary diffe rences with respect to taxable
income or net production value, the recovery of deferred tax assets takes the form not of a decrease in current taxes, but of
the recognition of deferred tax assets on the tax loss or the negative net production value, convertible into tax credits pursuant
to Art. 2, paragraphs 56-bis and 56-bis.1, of Law Decree 225/2010. The convertibility of deferred tax assets on tax losses and
negative net production values that result from eligible temporary differences is therefore a suitable and sufficient condition for
the recognition of “eligible” deferred tax assets, making it possible to exclude them from the area of application of the
probability test.
A limit to the straight convertibility of “eligible” deferred tax assets was intr oduced by art. 11 of Law Decree 59 of 3 May 2016,
amended by Law Decree 237 of 23 December 2016, which subordinated the transformation into tax credits of the eligible
deferred tax assets which were not matched by an actual prepayment of taxes (so-called “type 2 DTA”) to the payment of an
annual fee, equal to 1.5% of their overall value, for the years 2016-2030. Instead, no fee is due for the transformation into tax
credits of the “eligible” deferred tax assets which were matched by an actual prepayment of greater taxes (“type 1 DTA”).
Considering that the “eligible” deferred tax assets recognised by the Companies that are part of the fiscal consolidation of
Intesa Sanpaolo, as well as those included in the Parent Company’s financial statements following the acquisition of the
business lines of the former Venetian Banks and, most recently, those of the former UBI Group are all “type 1 DTA”, the
Group is not currently concretely required to pay this fee.
Article 1, paragraphs 1067 and 1068 of the 2019 Budget Act (Law 145 of 30 December 2018) envisage the deductibility (both
for IRES and IRAP purposes) over ten tax periods, starting from the one under way as at 31 December 2018, of the
adjustments to loans to customers recognised in the financial statements of banks and financial institutions on first-time
adoption of IFRS 9
91
. According to that clarified in the Explanatory Report on the Measure, deferred tax assets recognised in
financial statements in relation to the deferral of said deduction cannot be converted into tax credits based on the
aforementioned provisions of Law Decree no. 225/2010. Therefore, those taxes must be subject to probability testing.
Based on the above, the probability test on other deferred tax assets - IRES was carried out as follows:
− identifying the “other deferred tax assets - IRES”, i.e. those not relating to the tax losses of Intesa Sanpaolo or ISPHI,
which were subject to a specific test to determine whether they could be recognised in the financial statements (see
above);
− identifying “ineligible” deferred tax assets among other deferred tax assets, as they cannot be converted into tax credits
(see above);
− analysing such “ineligible” deferred tax assets and deferred tax liabilities carried in the consolidated financial statements,
distinguishing them by causal relationship and by foreseeable recovery timing;
− provisionally determining the amount of the Group's future taxable income in order to verify its ability to recover the
“ineligible” “other deferred tax assets - IRES”. The estimate of future taxable income was made, for the years 2023-2027,
using the same database used for the impairment test on intangibles in the 2022 Financial Statements (see above). For
the subsequent years, an overhang of the forecasts was cautiously assumed, without considering a growth rate “g”.
The analysis conducted indicated an IRES taxable base that was sufficient and adequate to allow recovery of the deferred tax
assets relating to IRES carried in the financial statements as at 31 December 2022.
Also for “deferred tax assets - IRAP”, the probability test was conducted analytically, referring only to the “ineligible” deferred
tax assets (for those that can be converted into tax credits, as stated, the prospective certain use based on the cases of
conversion into tax credits set out in paragraphs 56-bis and 56-bis.1 of Art. 2 of Law Decree 225/2010, effectively constitutes
a sufficient prerequisite for recognition in the financial statements, implicitly passing the related probability test). The test was
conducted by comparing the estimated forecast taxable income for IRAP purposes of Intesa Sanpaolo, estimated on the basis
of the same forecast data assumed in carrying out the probability test on tax losses, with the cancelled ineligible temporary
differences found as at 31 December 2022 and resulting in the residual IRAP taxable base for each year.
Considering that, for IRAP purposes, different from that set out for IRES tax losses, there is no carrying forward of tax losses
or the possibility of offsetting them as part of tax consolidation, if in one or more years the residual taxable base is negative,
for example, the deferred tax assets - IRAP that can be recognised in the financial statements should be limited to only the
amounts of the temporary differences that can be recovered in each year considered.
The calculations performed resulted in a positive residual IRAP taxable base in each of the years included in the reference
time horizon of the test.
In support of the positive results of the probability test please note that:
90
With art. 17 of Law Decree 83 of 27 June 2015, the convertibility into tax credits was excluded (for any reason provided for by Law Decree 225 of 29
December 2010) of the deferred tax assets relating “to the value of the goodwill and the other intangible assets entered for the first time starting from the
financial statements relating to the year underway at the date the provision comes into force”, i.e. startin g from 2015.
91
The ten-year instalment period, which should have originally concluded in 2027, was extended by one year by the 2020 Budget Act (Law no. 160 of
27 December 2019).
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
360
− the health situation is improving, resulting in a gradual easing of the containment measures adopted during the most
critical phase of the pandemic, with the consequent favourable impacts on the relevant financial performance indicator s;
− the 2022 results of Intesa Sanpaolo are better than in the previous year, with a more significant increase in the more
“stable” revenue components, confirming a solid profitability track record;
− the forecast figures that form the basis of the estimate of the future taxable income prudentially incorporate a
macroeconomic scenario less favourable than the “base” scenario, which, however, shows an improvement in all
variables relevant for tax purposes in the 2023-2027 period;
− for the purposes of additional prudence, when performing the probability test, the taxable profit for the years where no
specific estimate of future profits is available, even when there is a trend of growth in profits, is assumed to be equal (i.e.
not increasing with respect) to the taxable profit of the last year covered by the Forecasts;
− in any event, the future earnings estimates used for the probability test are updated at least annually to take account of
intervening changes in the market scenarios;
− under the current Italian regulations, tax losses can be carried forward without time limits (Article 84, Combined Tax
Regulations);
− the negative taxable income does not derive from a natural “inability” to generate taxable income, but rather from some
rules specific to the Italian tax system, which resulted in deferred tax assets whose reversals penalised and will continue
to penalise (but only up to 2029) the taxable income (accrual of adjustments to loans not deducted until 2014; accrual of
expected losses on loans to customers recognised as a result the IFRS 9 FTA; and repeated deferral of the start and end
of the recovery period for goodwill realigned for payment);
− almost all the deferred tax assets on tax losses relate to the entities acquired by Intesa Sanpaolo and arose prior to the
acquisition by Intesa Sanpaolo.
Therefore, the prospects for recovery resulting from the estimates are considered to meet the “probability of recovery”
requirement of IAS 12 and, consequently, the above-mentioned deferred tax assets can be recognised in the balance sheet
as at 31 December 2022 for their full amount.
11.8 Other information
There is no other information to be noted in addition to the above.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
361
SECTION 12 - NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS AND RELATED
LIABILITIES - CAPTION 120 OF ASSETS AND CAPTION 70 OF LIABILITIES
12.1 Non-current assets held for sale and discontinued operations: breakdown by type of asset
(millions of euro)
Captions
31.12.2022
31.12.2021
A. Non-current assets held for sale
A.1 Financial assets
368
1,206
A.2 Investments in associates and companies subject to joint control
145
145
A.3 Property and equipment
87
60
of which: resulting from the enforcement of guarantees
5
4
A.4 Intangible assets
-
8
A.5 Other
38
3
Total A
638
1,422
of which measured at cost
557
1,364
of which Fair value level 1
-
-
of which Fair value level 2
-
-
of which Fair value level 3
81
58
B. Discontinued operations
B.1 Financial assets measured at fair value through profit or loss
-
-
- Financial assets held for trading
-
-
- Financial assets designated at fair value
-
-
- Other financial assets mandatorily measured at fair value
-
-
B.2 Financial assets measured at fair value through other comprehensive income
-
-
B.3 Financial assets measured at amortised cost
-
-
B.4 Investments in associates and companies subject to joint control
-
-
B.5 Property and equipment
-
-
of which: resulting from the enforcement of guarantees
-
-
B.6 Intangible assets
-
-
B.7 Other assets
-
-
Total B
-
-
of which measured at cost
-
-
of which Fair value level 1
-
-
of which Fair value level 2
-
-
of which Fair value level 3
-
-
C. Liabilities associated with non current assets held for sale
C.1 Debts
-
-
C.2 Securities
-
-
C.3 Other
-15
-30
Total C
-15
-30
of which measured at cost
-15
-30
of which Fair value level 1
-
-
of which Fair value level 2
-
-
of which Fair value level 3
-
-
D. Liabilities associated with discontinued operations
D.1 Financial liabilities measured at amortised cost
-
-
D.2 Financial liabilities held for trading
-
-
D.3 Financial liabilities designated at fair value
-
-
D.4 Allowances
-
-
D.5 Other
-
-
Total D
-
-
of which measured at cost
-
-
of which Fair value level 1
-
-
of which Fair value level 2
-
-
of which Fair value level 3
-
-
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Assets
362
As at 31 December 2022 assets held for sale amounted to 638 million euro and consist mainly of: portfolios classified as UTP
and, to a residual extent, performing loans that will be sold in 2023, the equity investment in Zhong Ou Asset Management
Co. Ltd. (ZOAM), closing for which is expected after the completion of the authorisation process, and the assets and liabilities
relating to the PBZ Card business line dedicated to merchant acquiring activity, which will be transferred to the Nexi Group in
the coming months.
This amount is compared to the amount of 1,422 million euro recorded as at 31 December 2021, which primarily included
portfolios, or individual positions, classified as bad loans or UTP, and which were sold in 2022.
12.2 Other information
There is no other significant information to note as at 31 December 2022. We highlight the equity investment in Zhong Ou
Asset Management Co. Ltd. (ZOAM), dedicated to mutual fund management, subject to significant influence not carried at
equity and classified as held for sale.
SECTION 13 – OTHER ASSETS – CAPTION 130
13.1 Other assets: breakdown
(millions of euro)
Captions
Amounts to tax authorities
16,503
Amounts to be credited and items under processing
1,297
Cheques and other instruments held
455
Leasehold improvements
93
Transit items
9
Other
4,494
TOTAL
31.12.2022
22,851
TOTAL
31.12.2021
13,837
The sub-caption “Amounts due from tax authorities” includes tax credits related to the “Cura Italia” and “Rilancio” Law
Decrees acquired as a result of transfer by direct beneficiaries or previous purchasers for a total of approximately 11 billi on
euro.
The sub-caption “Other” includes the following main components: (i) prepayments and accrued income not reallocated of 367
million euro; (ii) costs incurred to obtain and execute contracts with customers for an amount of 524 million euro, mainly
referring to costs for bonuses capitalised by Fideuram – Intesa Sanpaolo Private Banking (and, therefore, subject to
amortisation for 68.7 million euro) as they are strictly related to the acquisition and maintenance of the funding; and (iii)
pursuant to paragraphs 116 and following of IFRS 15, operating loans, i.e. loans for operations connected with the provision
of non-financial activities and services, amounting to 150 million euro.
363
LIABILITIES
SECTION 1 – FINANCIAL LIABILITIES MEASURED AT AMORTISED COST - CAPTION 10
1.1 Financial liabilities measured at amortised cost: breakdown of amounts due to banks
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
Book
value
Fair value
Book
value
Fair value
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Due to central banks
98,444
X
X
X
134,790
X
X
X
2. Due to banks
39,038
X
X
X
30,468
X
X
X
2.1 Current accounts and on demand deposits
3,234
X
X
X
3,197
X
X
X
2.2 Time deposits
3,807
X
X
X
4,394
X
X
X
2.3 Loans
18,610
X
X
X
18,574
X
X
X
2.3.1 Repurchase agreements
12,753
X
X
X
12,160
X
X
X
2.3.2 Other
5,857
X
X
X
6,414
X
X
X
2.4 Debts for commitments to repurchase own equity
instruments
-
X
X
X
138
X
X
X
2.5 Lease liabilities
6
X
X
X
8
X
X
X
2.6 Other debts
13,381
X
X
X
4,157
X
X
X
Total
137,482
-
125,164
12,148
165,258
-
153,297
11,916
The illustration of the criteria used to determine the fair value is contained in Part A – Accounting policies.
Repurchase agreements related to assets sold not derecognised are detailed in Part E - Sales of the Notes to the financial
statements.
The caption Due to Central Banks includes the balance of TLTRO refinancing operations for a total of 96,060 million euro,
fully attributable to the TLTRO III.
The Group’s repurchase agreements shown in the table include long-term repurchase agreements with a total carrying
amount of 238 million euro, attributable to Banca Fideuram for de-risking transactions completed in previous years with the
twofold aim of both funding the bank’s operations (through repurchase transactions) and reducing the credit risks associated
with the portfolio of securities issued (also through the acquisition of financial guarantees). The transactions have a non-
replaceable underlying portfolio of Italian government securities (with maturities from 2023 to 2033) hedged against interest
rate risk through interest rate swap contracts and against credit risk through credit default swap contracts, already recorded in
the financial statements at the time of execution of the repurchase transactions and recognised under financial assets
measured at amortised cost. The nominal value and the maturity date of the repurchase agreements are the same as that of
the securities.
For recognition purposes, an assessment was conducted aimed at understanding the purpose underlying the contractual
agreements, taking into account the instructions provided by the supervisory authorities in Bank of Italy/Consob/IVASS
Document No. 6 of 8 March 2013, “Accounting treatment of ‘long-term structured repurchase agreements’.”
The analysis focused on the structure, cash flows and risks associated with the transactions and was aimed at verifying
whether the cases described above were similar to the long-term structured repurchase agreements described in the above
Document, and, in order to be compliant with the principle of the prevalence of substance over form, whether the indicators
referred in paragraph B.6 of the Guidance on Implementing IFRS 9, according to which the transaction may be considered
substantially similar to a credit derivative contract, and, in particular, a credit default swap, were present.
The case described above consists of repurchase agreements that are not concurrent with the purchases of the securities,
because they were already present in the portfolio. In addition, buying securities and entering into the related hedging
derivatives occurred with market counterparties other than those with which the repurchase agreements were entered into.
The credit risk was also closed with financial guarantees.
Consequently, the analysis shows elements of differentiation from the long-term structured repurchase agreements described
in the aforementioned Document, supporting the inapplicability of the guidelines provided in paragraph B.6 of the Guidance
on Implementing IFRS 9, with the result that the transactions must be recognised in the financial statements with the
individual contractual components shown separately.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
364
1.2 Financial liabilities measured at amortised cost: breakdown of amounts due to customers
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
Book
value
Fair value
Book
value
Fair value
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Current accounts and on demand deposits
412,667
X
X
X
423,335
X
X
X
2. Time deposits
20,309
X
X
X
19,184
X
X
X
3. Loans
5,200
X
X
X
5,716
X
X
X
3.1 Repurchase agreements
1,284
X
X
X
2,691
X
X
X
3.2 Other
3,916
X
X
X
3,025
X
X
X
4. Debts for commitments to repurchase own equity
instruments
181
X
X
X
23
X
X
X
5. Lease liabilities
1,309
X
X
X
1,379
X
X
X
6. Other debts
14,359
X
X
X
8,602
X
X
X
Total
454,025
-
435,464
18,132
458,239
-
433,309
25,130
1.3 Financial liabilities measured at amortised cost: breakdown of securities issued
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
Book
value
Fair value
Book value
Fair value
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
A. Securities
1. bonds
64,838
41,748
22,980
29
75,050
47,030
29,971
42
1.1 structured
1,806
397
1,361
29
2,262
246
2,038
42
1.2 other
63,032
41,351
21,619
-
72,788
46,784
27,933
-
2. other
11,241
-
9,280
1,961
11,508
-
8,837
2,671
2.1 structured
-
-
-
-
-
-
-
-
2.2 other
11,241
-
9,280
1,961
11,508
-
8,837
2,671
Total
76,079
41,748
32,260
1,990
86,558
47,030
38,808
2,713
1.4 Details of subordinated debts/securities
There were no subordinated debts with banks and customers as at 31 December 2022.
As at the reporting date, subordinated securities issued amounted to 12,474 million euro, entirely attributable to the Parent
Company.
1.5 Details of structured debts
As at 31 December 2022 there were no structured debts.
1.6 Lease payables
As at 31 December 2022 lease payables amounted to 1,315 million euro, of which 238 million euro maturing within one year,
622 million euro maturing within 1 to 5 years and 455 million euro maturing in over 5 years.
Lease payables comprise 1,309 million euro referring to customer counterparties and 6 million euro to bank counterparties.
These derive from the application of the financial reporting standard IFRS 16 relating to Leases, with effect from 1 January
2019.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
365
SECTION 1 BIS - FINANCIAL LIABILITIES PERTAINING TO INSURANCE COMPANIES MEASURED AT
AMORTISED COST PURSUANT TO IAS 39 - CAPTION 15
The breakdown of the IAS 39 captions included in caption 15 of the Balance sheet liabilities pertaining to insurance
companies is provided below.
In relation to the adoption of the Deferral Approach, in the consolidated financial statement layouts established by Bank of
Italy Circular 262, “Caption 15 Financial liabilities pertaining to insurance companies measured at amortised cost pursuant t o
IAS 39” was created, which comprises the components set out in the table below:
(millions of euro)
Breakdown of financial liabilities pertaining to insurance companies measured at amortised cost
pursuant to IAS 39 - Caption 15
31.12.2022
31.12.2021
10. Due to banks
629
623
20. Due to customers
587
188
30. Securities issued
1,334
1,335
Total - Caption 15
2,550
2,146
1.1 Bis Due to banks: breakdown
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
1. Due to central banks
-
-
2. Due to banks
629
623
2.1 Current accounts and deposits
6
-
2.2 Time deposits
-
-
2.3 Loans
607
607
2.3.1 Repurchase agreements
-
-
2.3.2 Financial leasing loans
-
2.3.3 Other
607
607
2.4 Debts for commitments to repurchase own equity instruments
-
-
2.5 Lease liabilities
-
2.6 Other debts
16
16
TOTAL (Book value)
629
623
Fair value - level 1
-
-
Fair value - level 2
17
-
Fair value - level 3
556
650
Total Fair value
573
650
1.2 Bis Breakdown of “Due to banks”: subordinated debts
As at 31 December 2022 subordinated debts amounted to 607 million euro, entirely attributable to Intesa Sanpaolo Vita.
1.3 Bis Breakdown of “Due to banks”: structured debts
There were no structured debts pertaining to Insurance Companies as at 31 December 2022.
1.4 Bis Due to banks subject to microhedging
There were no structured debts due to banks subject to microhedging pertaining to Insurance Companies as at 31 December
2022.
1.5 Bis Lease payables
As at 31 December 2022 there were no lease payables due to banks.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
366
1.6 Bis Due to customers: breakdown
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
1.Current accounts and deposits
-
-
2 Time deposits
-
-
3. Loans
-
-
3.1 Repurchase agreements
-
-
3.2 Financial leasing loans
-
-
3.3 Other
-
-
4. Debts for commitments to repurchase own equity instruments
360
87
5. Lease liabilities
6
7
6. Other debts
221
94
Total (Book value)
587
188
Fair value - level 1
-
-
Fair value - level 2
452
93
Fair value - level 3
135
95
Total Fair Value
587
188
The amount under Debts for commitments to repurchase own equity instruments refers to put options sold with minority
stakes of fully consolidated equity investments as underlying asset, attributable to the Put & Call Agreement for the purchase
of 26% of Intesa Sanpaolo RBM Salute S.p.A.
1.7 Bis Breakdown of “Due to customers”: subordinated debts
There were no subordinated debts due to customers pertaining to Insurance Companies as at 31 December 2022.
1.8 Bis Breakdown of “Due to customers”: structured debts
There were no structured debts due to customers pertaining to Insurance Companies as at 31 December 2022.
1.9 Bis Due to customers subject to microhedging
There were no amounts due to customers subject to microhedging pertaining to Insurance Companies as at 31 December
2022.
1.10 Bis Lease payables
As at 31 December 2022 there were lease payables due to customers of 6 million euro, all of which are due between 1 and
5 years.
These derive from the application of the financial reporting standard IFRS 16 relating to Leases, with effect from 1 January
2019.
1.11 Bis Securities issued: breakdown
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
Book
value
Fair Value
Book
value
Fair Value
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
A.Securities
1. Bonds
1,334
-
1,171
-
1,335
-
1,338
-
1.1 structured
-
-
-
-
-
-
-
-
1.2 other
1,334
-
1,171
-
1,335
-
1,338
-
2. Other
-
-
-
-
-
-
-
-
2.1 structured
-
-
-
-
-
-
-
-
2.2 Other
-
-
-
-
-
-
-
-
Total
1,334
-
1,171
-
1,335
-
1,338
-
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
367
1.12 Bis Breakdown of “Securities issued”: subordinated securities
As at 31 December 2022, a total of 1,334 million euro pertaining to insurance companies, fully attributable to level-2 other
bonds (fair value 1,171 million euro), which at the end of 2021 amounted to 1,335 million euro.
1.13 Bis Breakdown of “Securities issued”: securities subject to microhedging
There were no Securities issued subject to microhedging pertaining to Insurance Companies.
SECTION 2 – FINANCIAL LIABILITIES HELD FOR TRADING – CAPTION 20
2.1 Financial liabilities held for trading: breakdown
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
Nominal
or
notional
amount
Fair value
Fair
value
(*)
Nominal or
notional
amount
Fair value
Fair
value
(*)
Level 1
Level 2
Level 3
Level1
Level 2
Livello 3
A. Cash liabilities
1. Due to banks
4,729
4,240
-
-
4,239
19,827
22,222
40
-
22,262
2. Due to customers
3,121
3,001
-
-
3,001
-
-
-
-
-
3. Debt securities
3,000
-
2,779
-
X
3,324
-
3,459
-
X
3.1 Bonds
-
-
-
-
X
-
-
-
-
X
3.1.1 Structured
-
-
-
-
X
-
-
-
-
X
3.1.2 Other bonds
-
-
-
-
X
-
-
-
-
X
3.2 Other
3,000
-
2,779
-
X
3,324
-
3,459
-
X
3.2.1 Structured
3,000
-
2,779
-
X
3,324
-
3,459
-
X
3.2.2 Other
-
-
-
-
X
-
-
-
-
X
Total A
10,850
7,241
2,779
-
7,240
23,151
22,222
3,499
-
22,262
B. Derivatives
1. Financial derivatives
X
44
35,363
142
X
X
19
28,107
118
X
1.1 Trading
X
44
35,343
142
X
X
19
28,072
118
X
1.2 Fair value option
X
-
-
-
X
X
-
-
-
X
1.3 Other
X
-
20
-
X
X
-
35
-
X
2. Credit derivatives
X
-
943
-
X
X
-
2,340
1
X
2.1 Trading
X
-
943
-
X
X
-
2,340
1
X
2.2 Fair value option
X
-
-
-
X
X
-
-
-
X
2.3 Other
X
-
-
-
X
X
-
-
-
X
Total B
X
44
36,306
142
X
X
19
30,447
119
X
Total (A+B)
10,850
7,285
39,085
142
X
23,151
22,241
33,946
119
X
(*) Fair value calculated excluding changes in creditworthiness of the issuer after issue date.
Amounts due to banks and customers consist entirely of short selling of securities.
The aggregate 3.2.1 Other structured securities includes securitised derivatives which provide for partial or full redemption of
the premiums paid on maturity, pursuant to Bank of Italy Communication of 21 October 2014, issued by the Group throughout
2019.
Derivative instruments include 5,017 million euro in certificates with characteristics similar to financial derivative instruments
due to the prevalence of market risk in relation to the return of the premiums paid.
The changes in fair value recorded during the year due to the change in its own credit rating were positive by 229 million euro
and related to derivatives and Debt securities - Other.
The values of derivative instruments as at 31 December 2022 include the results of the offsetting of accounts between
positive and negative gross balances of hedging derivatives undertaken with the legal clearing agent LCH Ltd. as they meet
the requirements set out in IAS 32, paragraph 42.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
368
2.2 Breakdown of “Financial liabilities held for trading”: subordinated liabilities
The aggregate Financial liabilities held for trading includes subordinated liabilities represented by Due to banks for 214 million
euro and Due to customers for 36 million euro.
2.3 Breakdown of “Financial liabilities held for trading”: structured debts
As at 31 December 2022, structured debts classified under Financial liabilities held for trading amounted to 300 million euro
due to customers and 57 million euro due to banks, attributable to short selling of fixed-rate bonds indexed to inflation, as an
additional component.
SECTION 3 – FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE – CAPTION 30
3.1 Financial liabilities designated at fair value: breakdown
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
Nominal
value
Fair value
Fair
value
(*)
Nominal
value
Fair value
Fair
value
(*)
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Due to banks
-
-
-
-
-
-
-
-
-
-
1.1 Structured
-
-
-
-
X
-
-
-
-
X
1.2 Other
-
-
-
-
X
-
-
-
-
X
of which:
- commitments to disburse
funds
-
X
X
X
X
-
X
X
X
X
- financial guarantees given
-
X
X
X
X
-
X
X
X
X
2. Due to customers
5
-
4
-
4
5
-
4
-
4
2.1 Structured
5
-
4
-
X
5
-
4
-
X
2.2 Other
-
-
-
-
X
-
-
-
-
X
of which:
- commitments to disburse
funds
-
X
X
X
X
-
X
X
X
X
- financial guarantees given
-
X
X
X
X
-
X
X
X
X
3. Debt securities
9,875
-
8,761
30
8,719
3,634
6
3,638
26
3,566
3.1 Structured
9,875
-
8,761
30
X
3,634
6
3,638
26
X
3.2 Other
-
-
-
-
X
-
-
-
-
X
Total
9,880
-
8,765
30
8,723
3,639
6
3,642
26
3,570
(*) Fair value calculated excluding changes in creditworthiness of the issuer after issue date.
The Group has classified the LECOIP 3.0 for the employment agreements, terminated early, of employees of Group
companies and life policies connected to social initiatives, managed by the Bank based on fair value, under Amounts due to
customers.
Sub-caption 3.1 Debt securities - Structured comprised certificates which provide for partial or full redemption of the premiums
paid on maturity, pursuant to Bank of Italy Communication of 21 October 2014 (certificates with guaranteed or protected
capital). As they were issued after 1 January 2020, these are classified under Financial liabilities designated at fair value (Fair
Value Option), as a result of the Bank’s implementation of a business model based on a banking book approach, with the goal
of generating stable inflows.
Certificates representing Financial liabilities designated at fair value record the related changes in fair value attributable to
changes in own credit risk in the statement of comprehensive income (shareholders’ equity). Changes in the Bank’s own
credit rating during the year were negative by 47 million euro.
3.2 Breakdown of “Financial liabilities designated at fair value”: subordinated liabilities
As at 31 December 2022, the Group did not have any subordinated liabilities classified under Financial liabilities designated at
fair value.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
369
SECTION 3 BIS – FINANCIAL LIABILITIES PERTAINING TO INSURANCE COMPANIES MEASURED AT FAIR
VALUE PURSUANT TO IAS 39 - CAPTION 35
The breakdown of the IAS 39 captions included in caption 35 of the Balance sheet liabilities pertaining to insurance
companies is provided below.
In relation to the adoption of the Deferral Approach, in the consolidated financial statement layouts established by Bank of
Italy Circular 262, “Caption 35 Financial liabilities pertaining to insurance companies measured at fair value pursuant to IA S
39” was created, which comprises the components set out in the table below:
(millions of euro)
Breakdown of financial liabilities pertaining to insurance companies measured at fair value pursuant
to IAS 39 - Caption 35
31.12.2022
31.12.2021
40. Financial liabilities held for trading
9
103
50. Financial liabilities designated at fair value through profit or loss
71.565
84.667
60. Hedging derivatives
170
-
Total Caption 35
71.744
84.770
3.1 Bis Financial liabilities held for trading: breakdown
(millions of euro)
Transaction type/Amount
31.12.2022
31.12.2021
Nominal
or
notional
amount
Fair value
Fair
value
(*)
Nominal
or
notional
amount
Fair value
Fair
value
(*)
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
A. Cashl liabilities
1. Due to banks
-
-
-
-
-
-
-
-
-
-
2. Due to customers
-
-
-
-
-
-
-
-
-
-
3. Debt securities
-
-
-
-
X
-
-
-
-
X
3.1 Bonds
-
-
-
-
X
-
-
-
-
X
3.1.1 Structured
-
-
-
-
X
-
-
-
-
-
3.1.2 Other bonds
-
-
-
-
X
-
-
-
-
-
3.2 Other
-
-
-
-
X
-
-
-
-
X
3.2.1 Structured
-
-
-
-
X
-
-
-
-
-
3.2.2 Other
-
-
-
-
X
-
-
-
-
-
Total A
-
-
-
-
-
-
-
-
-
-
B. Derivatives
1. Financial derivatives
X
1
8
-
X
X
-
42
61
X
1.1 Trading
X
1
-
-
X
X
-
38
61
X
1.2 Fair value option
X
-
8
-
X
X
-
4
-
X
1.3 Other
X
-
-
-
X
X
-
-
-
X
2. Credit derivatives
X
-
-
-
X
X
-
-
-
X
2.1 Trading
X
-
-
-
X
X
-
-
-
X
2.2 Fair value option
X
-
-
-
X
X
-
-
-
X
2.3 Other
X
-
-
-
X
X
-
-
-
X
Total B
X
1
8
-
X
X
-
42
61
X
Total (A+B)
X
1
8
-
X
X
-
42
61
X
(*) Fair value calculated excluding changes in creditworthiness of the issuer after issue date.
3.2 Bis Breakdown of “Financial liabilities held for trading”: subordinated liabilities
With regard to Financial liabilities held for trading: subordinated liabilities, no amounts were recorded for Insurance
Companies as at 31 December 2022.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
370
3.3 Bis Breakdown of “Financial liabilities held for trading”: structured debts
With regard to Financial liabilities held for trading: structured debts, no amounts were recorded for Insurance Companies as at
31 December 2022.
3.4 Bis Financial liabilities measured at fair value: breakdown
(millions of euro)
Transaction type/Values
31.12.2022
31.12.2021
Nominal
value
Fair value
Fair
value
(*)
Nominal
value
Fair value
Fair
value
(*)
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1. Due to banks
-
-
-
-
-
-
-
-
-
-
1.1 Structured
-
-
-
-
X
-
-
-
-
X
1.2 Other
-
-
-
-
X
-
-
-
-
X
2. Due to customers
71,565
-
71,565
-
79,141
84,667
-
84,667
-
85,269
2.1 Structured
-
-
-
-
X
-
-
-
-
X
2.2 Other
71,565
-
71,565
-
X
84,667
-
84,667
-
X
3. Debt securities
-
-
-
-
-
-
-
-
-
-
3.1 Structured
-
-
-
-
X
-
-
-
-
X
3.2 Other
-
-
-
-
X
-
-
-
-
X
Total
71,565
-
71,565
-
79,141
84,667
-
84,667
-
85,269
(*) Fair value calculated excluding changes in creditworthiness of the issuer after issue date.
3.5 Bis Breakdown of “Financial liabilities measured at fair value”: subordinated liabilities
There were no subordinated liabilities classified under Financial liabilities measured at fair value as at 31 December 2022.
3.6 Bis Hedging derivatives: breakdown by type of hedge and level
(millions of euro)
Fair value
31.12.2022
Notional
value
Fair value
31.12.2021
Notional
value
Level 1
Level 2
Level 3
31.12.2022
Level 1
Level 2
Level 3
31.12.2021
A) Financial derivatives
-
170
-
1,241
-
-
-
-
1) fair value
-
-
-
-
-
-
-
-
2) cash flows
-
170
-
1,241
-
-
-
-
3) foreign investments
-
-
-
-
-
-
-
-
B) Credit derivatives
-
-
-
-
-
-
-
-
1) fair value
-
-
-
-
-
-
-
-
2) cash flows
-
-
-
-
-
-
-
-
Total
-
170
-
1,241
-
-
-
-
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
371
3.7 Bis Hedging derivatives: breakdown by hedged portfolio and type of hedge
(millions of euro)
Transactions/Type of hedge
FAIR VALUE
CASH FLOW
FOREIGN
INVESTM.
Specific
Generic
Specific
Generic
Interest
rate risk
Foreign
exchange
risk
Credit
risk
Price
risk
Various
risks
1. Financial assets available for sale
-
-
-
-
-
X
-
X
X
2. Loans
-
-
-
X
-
X
-
X
X
3. Investments held to maturity
X
-
-
X
-
X
-
X
X
4. Portfolio
X
X
X
X
X
-
X
-
X
5. Other transactions
-
-
-
-
-
X
-
X
-
Total assets
-
-
-
-
-
-
-
-
-
1. Financial liabilities
-
-
-
X
-
X
170
X
X
2. Portfolio
X
X
X
X
X
-
X
-
X
Total liabilities
-
-
-
-
-
-
170
-
-
1. Forecast transactions
X
X
X
X
X
X
-
X
X
2. Financial assets and liabilities portfolio
X
X
X
X
X
-
X
-
-
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
372
SECTION 4 – HEDGING DERIVATIVES – CAPTION 40
4.1 Hedging derivatives: breakdown by type of hedge and level
(millions of euro)
31.12.2022
Notional
value
31.12.2021
Notional
value
Fair value
Fair value
Level 1
Level 2
Level 3
31.12.2022
Level 1
Level 2
Level 3
31.12.2021
A) Financial derivatives
-
5,346
-
191,704
-
4,868
-
111,607
1) Fair value
-
5,093
-
178,117
-
2,814
-
102,604
2) Cash flows
-
253
-
13,408
-
2,054
-
9,003
3) Foreign investments
-
-
-
179
-
-
-
-
B. Credit derivatives
-
-
-
-
-
-
-
-
1) Fair value
-
-
-
-
-
-
-
-
2) Cash flows
-
-
-
-
-
-
-
-
Total
-
5,346
-
191,704
-
4,868
-
111,607
As at 31 December 2022 the Group had undertaken hedging transactions involving foreign investments, relating to the equity
investment in Reyl & Cie SA, based in Switzerland.
4.2 Hedging derivatives: breakdown by hedged portfolio and type of hedge
(millions of euro)
Transactions/Type of hedge
FAIR VALUE
CASH FLOW
FOREIGN
INVESTM.
Specific
Generic
Specific
Generic
debt
securities
and
interest
rates
equities
and
stock
indices
foreign
exchange
rates and
gold
credit
risk
commodities
other
1. Financial assets measured at fair value
through other comprehensive income
68
-
16
-
X
X
X
-
X
X
2. Financial assets measured at amortised
cost
972
X
161
-
X
X
X
-
X
X
3. Portfolio
X
X
X
X
X
X
3
X
210
X
4. Other transactions
-
-
-
-
-
-
X
-
X
-
Total assets
1,040
-
177
-
-
-
3
-
210
-
1. Financial liabilities
545
X
625
-
-
-
X
-
X
X
2. Portfolio
X
X
X
X
X
X
2,703
X
43
X
Total liabilities
545
-
625
-
-
-
2,703
-
43
-
1. Forecast transactions
X
X
X
X
X
X
X
-
X
X
2. Financial assets and liabilities portfolio
X
X
X
X
X
X
-
X
-
-
The table indicates negative fair values of hedging derivatives, broken down in relation to asset or liability hedged and type of
hedge.
Considering the values gross of netting in the financial statements, these continue to refer mainly to macro hedges of
portfolios of liabilities represented by core deposits and debt securities under assets.
Cash flow hedges refer to funding through floating-rate securities issued used to fund fixed-rate investments.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
373
SECTION 5 – FAIR VALUE CHANGE OF FINANCIAL LIABILITIES IN HEDGED PORTFOLIOS – CAPTION 50
5.1 Fair value change of hedged liabilities
(millions of euro)
Fair value change of hedged liabilities/Group members
31.12.2022
31.12.2021
1. Positive fair value change of financial liabilities
-
63
2. Negative fair value change of financial liabilities
-8,031
-10
Total
-8,031
53
The balance of the changes in value of liabilities subject to macrohedging against interest rate risk is recorded in this caption.
For the application, the option envisaged by IFRS 9 to continue to apply the provisions permitted by the IAS 39 carve out was
applied.
SECTION 6 – TAX LIABILITIES – CAPTION 60
For information on this section, see Section 11 of Assets.
SECTION 7 – LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED
OPERATIONS – CAPTION 70
For information on this section, see Section 12 of Assets.
SECTION 8 – OTHER LIABILITIES – CAPTION 80
8.1 Other liabilities: breakdown
(millions of euro)
Captions
Amounts to be credited and items under processing
3,256
Due to suppliers
1,884
Due to tax authorities
1,340
Amounts due to third parties
333
Personnel charges
294
Due to social security entities
223
Other
3,730
TOTAL
31.12.2022
11,060
TOTAL
31.12.2021
15,639
The sub-caption “Other” includes the following main components: (i) unallocated accrued expenses and deferred income of
755 million euro; and (ii) payables to private bankers of 660 million euro.
That sub-caption also includes, as required by paragraph 116 a) of IFRS 15, liabilities arising from contracts with customers of
112 million euro.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
374
SECTION 9 – EMPLOYEE TERMINATION INDEMNITIES – CAPTION 90
9.1 Employee termination indemnities: annual changes
(millions of euro)
31.12.2022
31.12.2021
A. Initial amount
1,099
1,200
B. Increases
117
291
B.1 Provisions in the year
18
7
B.2 Other
99
284
- of which business combinations
-
6
C. Decreases
-364
-392
C.1 Benefits paid
-101
-150
C.2 Other
-263
-242
- of which business combinations
-2
-5
D. Final amount
852
1,099
Total
852
1,099
C.1. refers to benefits paid as at 31 December 2022.
For greater detail on actuarial calculations, see Section 10.5 – Post employment defined benefit plans.
9.2 Other information
The present value of employee termination indemnities qualifying as unfunded defined benefit plans totalled 852 million euro
as at 31 December 2022, while at the end of 2021 it amounted to 1,099 million euro.
SECTION 10 – ALLOWANCES FOR RISKS AND CHARGES – CAPTION 100
10.1 Allowances for risks and charges: breakdown
(millions of euro)
Captions/Components
31.12.2022
31.12.2021
1. Allowances for credit risk associated with commitments and financial guarantees given
711
508
2. Allowances on other commitments and other guarantees given
-
-
3. Post-employment benefits
139
290
4. Other allowances for risks and charges
4,160
4,918
4.1 legal disputes
969
1,066
4.2 personnel charges
2,230
2,611
4.3 other
961
1,241
Total
5,010
5,716
There are no amounts attributable to the caption “2 – Allowances on other commitments and other guarantees given”.
The contents of 4 – Other allowances for risks and charges are illustrated in point 10.6 below.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
375
10.2 Allowances for risks and charges: annual changes
(millions of euro)
Captions
Allowances
on other
commitments
and other
guarantees
given
Post-
employment
benefits
Other
allowances
for risks and
charges
Total
A. Initial amount
-
290
4,918
5,208
B. Increases
-
18
1,098
1,116
B.1 Provisions in the year
-
13
1,063
1,076
B.2 Time value changes
-
3
1
4
B.3 Changes due to discount rate variations
-
-
-
-
B.4 Other
-
2
34
36
- of which business combinations
-
-
-
-
C. Decreases
-
-169
-1,856
-2,025
C.1 Uses in the year
-
-100
-1,549
-1,649
C.2 Changes due to discount rate variations
-
-
-129
-129
C.3 Other
-
-69
-178
-247
- of which business combinations
-
-
-
-
D. Final amount
-
139
4,160
4,299
As specified in the comment to the previous table, there are no amounts attributable to the caption “Allowances on other
commitments and other guarantees given”.
Other allowances for risks and charges include net provisions of 140 million euro to caption 200, letter b) of the income
statement and net provisions to other income statement captions, for the residual amount. Provisions include those for legal
and tax disputes (180 million euro) and those for other risks and charges (325 million euro), as well as costs included in the
income statement among personnel expenses. Uses refer almost entirely to payments.
10.3 Allowances for credit risk associated with commitments and financial guarantees given
(millions of euro)
Allowances for credit risk associated with commitments and
financial guarantees given
Stage 1
Stage 2
Stage 3
Purchased
or
originated
credit-
impaired
Total
1. Commitments to disburse funds
70
73
53
-
196
2. Financial guarantees given
82
82
351
-
515
Total
152
155
404
-
711
10.4 Allowances on other commitments and other guarantees given
As at 31 December 2022, there were no allowances on other commitments and guarantees given.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
376
10.5 Post-employment defined benefit plans
1. Illustration of the characteristics of the funds and related risks
As already illustrated in Part A – Accounting policies, for defined benefit plans, the liability of the Bank, according to IAS 19
“Employee Benefits”, is determined via the “projected unit credit method” by an independent actuary. The liability is
recognised net of any plan assets and the actuarial gains and losses calculated in the valuation process for the plans are
recognised in the statement of comprehensive income and, therefore, in shareholders’ equity.
The defined benefit plans, in which the Intesa Sanpaolo Group companies are co-obliged, can be distinguished in:
- internal supplementary pension funds;
- external supplementary pension funds.
Internal funds include:
- Three defined benefit plans in force for the London branch, relating to the former Cariplo, Banca Commerciale Italiana
and Banco Ambrosiano Veneto branches. The private pension funds have been set up by the UK employers to integrate
the levels of the local state pension, which has always been very low. The London branches of Cariplo, Banca
Commerciale Italiana and Banco Ambrosiano Veneto set up defined benefit plans for their employees at the time of their
opening, under the form of Trusts incorporated under English law and managed by Boards of Trustees, appointed partly
by the employers and partly by beneficiaries. Such funds are operational for employees hired until the end of 1999 for
Banco Ambrosiano Veneto and Cariplo and until the end of 2000 for Banca Commerciale Italiana. In general, all funds
guarantee a pension payable when the beneficiary turns 65 and the benefit is determined, with different rules for the
various funds, on the basis of the annual gross wage received in the last year of service;
- post-retirement medical plan and other benefits for employees of Bank of Alexandria (Egypt): defined benefit plans
providing health coverage and other benefits to employees, even after retirement. The bank is responsible for the costs
and risks related to the disbursement of said benefits;
- defined benefit plans in effect within Banca Intesa Beograd: these are long-term benefits established by the
Collective Contract (which refers to provisions of law in the Republic of Serbia) for employees in service to be paid upon
termination of employment.
External funds include:
- the Intesa Sanpaolo Group Defined-Benefit Pension Fund “Fondo Pensione a Prestazione definita del Gruppo Intesa
Sanpaolo”, the new name given to the former Supplementary Pension Fund for the Employees of Banco di Napoli
“Fondo Pensione Complementare per il Personale del Banco di Napoli – Sezione A”, identified as a collector of other
“defined benefit” forms under the reorganisation and rationalisation of the existing pension schemes within the Intesa
Sanpaolo Group, with protection of the rights of the (active and retired) subscribers. To this end, the “Fund” – in the
virtually separated sections – has been assigned the asset captions contained in the financial statements of the pre-
existing pension schemes, in order to ensure full coverage of the supplementary benefits. The Fund, which is a legal
entity with independently managed assets, includes the following: employees enrolled in the plan and other beneficiaries
from former Banco di Napoli; retired employees receiving Supplementary Pension Cheques, formerly the Sanpaolo IMI
internal fund; retired employees from the former Banca Nazionale delle Comunicazioni; current and retired employees of
Cassa di Risparmio in Bologna, formerly enrolled in the Complementary pension fund for the employees of said bank,
transferred to the Complementary Pension Fund for the employees of Banco di Napoli in 2004; retired employees of the
Complementary pension fund of the former Fin.Opi, transferred to the Fund in question on 1 June 2005; current and
retired employees of the former Banca Popolare del l’Adriatico, formerly enrolled in the Pension fund for the employees of
Banca Popolare dell’Adriatico, transferred to the Fund in question on 30 June 2006; retired employees of Cassa di
Risparmio di Udine e Pordenone, formerly enrolled in the Complementary pension fund for the employees of said bank,
transferred to the Fund in 2006; retired employees of Cassa di Risparmio di Forlì, formerly enrolled in the
Complementary pension fund for the employees of said bank, transferred to the Fund in question on 1 January 2007;
retired employees of the former Carive internal Fund, transferred to the Fund in question on 1 January 2008; retired
employees of the former CR Firenze FIP internal fund, transferred to the Fund in question on 1 January 2010; retired
employees of Cassa di Risparmio di Terni e Narni internal fund, transferred to the Fund in question on 1 January 2010,
for which there were no longer any beneficiaries as at 31 December 2021; retired employees of Cassa di Risparmio di
Pistoia e Pescia internal fund, transferred to the Fund in question on 1 September 2012; retired tax-collection personnel
of the Supplementary pension fund for tax-collection personnel formerly employed by Cariplo, transferred to the Fund in
question on 1 January 2015; retired employees formerly enrolled in the supplementary pension fund for employees of
Mediocredito Lombardo S.p.A., transferred to the Fund in question on 1 January 2015; retired employees formerly
enrolled in the Pension Fund for key Managers, former Key Managers and entitled parties of former Comit, transferred to
the Fund in question on 1 January 2015; retired employees formerly enrolled in the “Casse del Centro” Pension Funds, in
particular those enrolled in the Supplementary INPS benefits fund for the compulsory insurance for invalidity, old-age and
survivors for personnel of Cassa di Risparmio di Città di Castello, Supplementary INPS benefits fund for the compulsory
insurance for invalidity, old-age and survivors for personnel of Cassa di Risparmio di Foligno, Company supplementary
pension AGO fund for employees of Cassa di Risparmio di Spoleto, Supplementary/complementary pension fund for the
mandatory pension for employees of Cassa di Risparmio di Rieti, Pension fund for the Employees of Cassa di Risparmio
della Provincia di Viterbo and Company supplementary pension fund for employees of Cassa di Risparmio di Ascoli
Piceno, transferred to the Fund in question on 1 January 2015; retired employees formerly enrolled in the Company
supplementary pension fund of INPS benefits for employees of Cassa di Risparmio di Civitavecchia, transferred to the
Fund in question on 1 January 2015; retired employees formerly enrolled in the supplementary fund of SIL - Società
Italiana Leasing S.p.A., transferred to the Fund in question on 1 January 2015; retired employees formerly enrolled in the
Supplementary Pension Fund for the personnel of Banca Monte Parma, transferred to the Fund in question on 1 January
2016; employees and retired employees formerly enrolled in the Pension Fund for the personnel of the former Crediop
hired before 30 September 1989, transferred to the Fund in question on 1 January 2016; retired employees formerly
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
377
enrolled in the Supplementary Pension Fund for the personnel of Cassa di Risparmio di Mirandola, transferred to the
Fund in question on 1 April 2016; retired employees formerly enrolled in the Pension Fund for the Personnel of the
former Cassa di Risparmio di Prato transferred to the Fund in question on 1 May 2018; retired employees formerly
enrolled in the Defined Benefit Plan of the former Cassa di Risparmio di Fabriano e Cupramontana transferred to the
Fund in question on 1 May 2018; current and retired employees of the Supplementary pension fund for the personnel of
Istituto Bancario Sanpaolo di Torino, transferred to the Fund in question on 1 January 2019; retired employees of the
Supplementary pension fund for the personnel of Cassa di Risparmio di Padova e Rovigo, transferred to the Fund in
question on 1 July 2019; employees and retired employees formerly enrolled in the former UBI Banca internal Funds -
which include the Funds relating to the former Centrobanca (former Supplementary Pension Fund for employees of
Centrobanca - former Banca Centrale di Credito Popolare S.p.A.), former Banca Regionale Europea (former Fund for the
personnel of Banca Regionale Europea from the former Banca del Monte di Lombardia and the former Cassa di
Risparmio di Cuneo), former Carime (former Fund of the former Cassa di Risparmio di Calabria e Lucania, Fund of the
former Cassa di Risparmio di Puglia, Fund of the former Cassa di Risparmio Salernitana) and former Banca Adriatica
(former Retirement Fund for the personnel of the loans business line of the former Cassa di Risparmio di Macerata
S.p.A, Retirement Fund for the personnel of the former Banca Ca.Ri.Ma. transferred to Se.Ri.Ma - now Equitalia Servizi
di Riscossione S.p.A., Retirement Fund for the personnel of the former Mediocredito Fondiario Centro Italia S.p.A.,
Retirement Fund for personnel in the tax-collection segment of the former Cassa di Risparmio di Pesaro, Retirement
Fund for the personnel of the former Cassa di Risparmio di Jesi, Retirement Fund for personnel in the tax-collection
segment of the former Cassa di Risparmio di Pesaro S.p.A. transferred to the former SE.RI.T.
It is necessary to specify that if the sections of the Fund, after approval of the financial statements, show a technical
imbalance according to the statutory method, the Articles of Association envisage immediate settlement by the Banks
jointly responsible.
- Pension fund for the employees of Cariplo, a fund with legal status and full economic independence, whose aim is to
guarantee supplementary pension treatment in addition to AGO cheques to former Cariplo employees already retired on
30 June 1998;
- a defined benefit plan at the New York branch: the fund was established in 1977 by the branch of Banca Commerciale
Italiana and guarantees a pension treatment to all the employees resident in the United States who have been in service
at the Bank for at least 5 years. The benefit is considered to be accrued even if the employment relationship ceases in
advance. The benefit is calculated based on the highest average wage considering three consecutive years out of the
last 10 years of service, or, if the employment relationship ceases before, based on the average wage in the last three
years of service. The fund is no longer managed by the New York branch, but has been fully transferred to the Prudential
Fund (a defined benefit plan that manages the positions of members);
- the pension fund of Cassa di Risparmio di Firenze: fund with legal status and full economic independence, whose aim is
to guarantee supplementary pension treatment to the bank’s employees in service as at 31 December 1990 and already
enrolled in the former “contracted-out” fund;
- an employee pension plan of Reyl & Cie S.A. / Asteria Investment Managers S.A. / Obviam AG: the plan provides
supplementary benefits when the pension is due or in the event of an unfavourable event (disability and death) under the
local social security provisions (LPP); the obligations are covered by dedicated assets, managed through a contractual
relationship between the company and La Collective de Prévoyance - Copré, Geneva;
On 5 December 2017, Intesa Sanpaolo S.p.A., also in its capacity as Parent Company, signed an agreement with the Trade
Unions, as Fund Founders, for the integration of the Supplementary Pension Fund for the Personnel of Istituto Bancario
Sanpaolo di Torino into the Supplementary Pension Fund for the Personnel of Banco di Napoli – Section A (which from 1
January 2019 changed its name to the “Fondo pensione a prestazione definita del Gruppo Intesa Sanpaolo”). This agreement
also provided for the formulation of an individual capitalisation offer for the supplementary benefits to be made to the
participants, which was carried out in the second half of 2018. The subscriptions received over time led to a decrease in the
obligation, which, in the current year, amounted to around 6 million eu ro, partly covered by the Fund’s assets (around 3 million
euro) and partly through the use of Funds set up specifically for this purpose by the Bank, under the guarantee given (around
3 million euro).
On 7 October 2021, Intesa Sanpaolo S.p.A., also in its capacity as Parent Company, signed an agreement with the Trade
Unions, as Fund Founders, for the integration, from 1 July 2022, of the pension rights of the Internal Funds of the former UB I
Banca into the Intesa Sanpaolo Group Defined-Benefit Fund, which, from that date, has provided the participants with the
defined benefit pension rights envisaged by their Rules. This agreement also provided for the formulation of an individual
capitalisation offer for the supplementary benefits to be made to the participants, which was carried out in the first half of
2022, and the subscriptions received led to a decrease in the obligation of around 34 million euro. On 1 July 2022, Intesa
Sanpaolo S.p.A. transferred the liability of 38 million euro, remaining after the payments resulting from the above-mentioned
subscriptions to the offers, to the Intesa Sanpaolo Group Defined-Benefit Fund.
The streamlining process also involved the external funds of former UBI and, therefore, again on 7 October 2021, Intesa
Sanpaolo S.p.A., also in its capacity as Parent Company, signed an agreement with the Trade Unions, as Fund Founders, for
the integration, from 1 September 2022, of the pension rights of the Pension Fund of the UBI Banca Group of the former
Banca Popolare di Bergamo and its subsidiaries and the Pension Fund for the personnel of the former Banca Popolare di
Ancona and its subsidiaries into the Intesa Sanpaolo Group Defined-Benefit Fund, which, from that date, has provided the
participants with the defined benefit pension rights envisaged by their Rules. This agreement also provided for the formulation
of an individual capitalisation offer for the supplementary benefits to be made to the participants, which was carried out in July
and August 2022 and led to a decrease in the obligation of around 5 million euro.
On 9 June 2022, Intesa Sanpaolo S.p.A., also in its capacity as Parent Company, signed an agreement with the Trade
Unions, as Fund Founders, for the integration, from 1 January 2023, of the pension rights of the Pension Fund of Cassa di
Risparmio di Firenze into the Intesa Sanpaolo Group Defined-Benefit Fund, which, from that date, has provided the
participants with the defined benefit pension rights envisaged by their Rules. This agreement also provided for the formulation
of an individual capitalisation offer for the supplementary benefits to be made to the participants, which was carried out in the
last four months of 2022, and the subscriptions received led to a decrease in the obligation of around 370 million euro.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
378
With effect from 1 January 2022, following the merger of Intesa Sanpaolo Private Banking (Suisse) Morval S.A. into Reyl &
Cie S.A., the integration of the related pension plan was also finalised.
With regard to the investment and integrated risk management policies, the Funds verify the level of coverage and the
possible outcomes under various scenarios. For this purpose, various investment configurations and portfolio mixes and
allocations are defined, in order to satisfy the pension and profitability objectives as adequately as possible.
2. Changes in the year of net liabilities (assets) with defined benefits and redemption rights
(millions of euro)
Pension plan liabilities
defined benefit obligations
31.12.2022
31.12.2021
Employee
termination
indemnities
Internal
plans
External
plans
Employee
termination
indemnities
Internal
plans
External
plans
Initial amount
1,099
359
1,763
1,200
345
1,692
Current service costs
14
3
10
7
4
12
Recognised past service costs
-
-
1
-
-
-4
Interest expense
4
13
17
-
16
3
Actuarial losses due to changes in financial assumptions
-
5
-
33
3
73
Actuarial losses due to changes in demographic assumptions
1
-
16
5
-
9
Actuarial losses based on past experience
70
5
50
2
15
28
Positive exchange differences
-
-
10
-
19
10
Increases - business combinations
-
-
5
6
-
87
Participants’ contributions
X
-
13
X
-
7
Actuarial profits due to changes in financial assumptions
-207
-72
-251
-
-24
-5
Actuarial profits due to changes in demographic assumptions
-
-1
-
-
-
-12
Actuarial profits based on past experience
-1
-6
-
-
-
-1
Negative exchange differences
-
-42
-
-
-
-
Benefits paid
-101
-15
-136
-150
-19
-131
Decreases - business combinations
-2
-
-
-5
-
-
Curtailments of the fund
X
-
-
X
-
-6
Settlements of the fund
X
-34
-375
X
-
-
Other increases
28
-
41
238
1
1
Other decreases
-52
-39
-12
-237
-1
-
Final amount
853
176
1,152
1,099
359
1,763
Pension plan liabilities
defined benefit obligations
31.12.2022
31.12.2021
Employee
termination
indemnities
Internal
plans
External
plans
Employee
termination
indemnities
Internal
plans
External
plans
Unfunded plans
853
73
-
1,099
177
-
Partly funded plans
-
-
-
-
-
-
Wholly funded plans
-
103
1,152
-
182
1,763
The actuarial gains recorded for variations in financial assumptions are mainly due to the increase in the discount rate whic h
was higher than the increase in the inflation rate.
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
379
3. Information on the fair value of plan assets
The following tables show the changes in plan assets for certain defined benefit plans and their composition.
(millions of euro)
Plan assets
31.12.2022
31.12.2021
Internal
plans
External
plans
Internal
plans
External
plans
Initial amount
168
1,602
131
1,536
Return on assets net of interest
-28
-109
19
114
Interest income
3
14
2
3
Positive exchange differences
-
7
10
7
Increases - business combinations
-
5
-
61
Employer contributions
9
15
10
8
Participants’ contributions
-
13
-
7
Negative exchange differences
-9
-
-
-
Decreases - business combinations
-
-
-
-
Benefits paid
-6
-136
-4
-131
Curtailments of the fund
-
-
-
-6
Settlements of the fund
-
-375
-
-
Other changes
-
30
-
3
Final amount
137
1,066
168
1,602
(millions of euro)
Plan assets: additional information
31.12.2022
31.12.2021
Internal
plans
%
External
plans
%
Internal
plans
%
External
plans
%
Equities
-
-
314
29.5
89
53.0
456
28.5
- of which level-1 fair value
-
300
89
437
Mutual funds
-
-
80
7.5
-
-
137
8.6
- of which level-1 fair value
-
21
-
-
82
Debt securities
126
92.0
300
28.1
59
35.0
460
28.7
- of which level-1 fair value
126
300
59
460
Real estate assets and investments in real
estate companies
8
5.8
319
29.9
10
6.0
377
23.5
- of which level-1 fair value
-
-
-
-
Insurance business
-
-
-
-
-
-
-
-
- of which level-1 fair value
-
-
-
-
Other assets
3
2.2
53
5.0
10
6.0
172
10.7
- of which level-1 fair value
-
-
-
-
TOTAL ASSETS
137
100.0
1,066
100.0
168
100.0
1,602
100.0
Notes to the consolidated financial statements – Part B – Information on the consolidated balance sheet - Liabilities
380
( millions of euro)
Plan assets: additional information
31.12.2022
31.12.2021
Internal
plans
%
External
plans
%
Internal
plans
%
External
plans
%
Equities
-
-
314
29.5
89
53.0
456
28.5
- of which financial companies
-
56
89
70
- of which non financial companies
-
258
-
386
Mutual funds
-
-
80
7.5
-
-
137
8.6
Debt securities
126
92.0
300
28.1
59
35.1
460
28.7
Government bonds
89
208
59
282
- of which investment grade
89
208
59
282
- of which speculative grade
-
-
-
-
Financial companies
37
34
-
76
- of which investment grade
37
30
-
70
- of which speculative grade
-
4
-
6
Non Financial companies
-
58
-
102
- of which investment grade
-
52
-
84
- of which speculative grade
-
6
-
18
Real estate assets and investments
in real estate companies
8
5.8
319
29.9
10
6.0
377
23.5
Insurance business
-
-
-
-
-
-
-
-
Other assets
3
2.2
53
5.0
10
5.9
172
10.7
TOTAL ASSETS
137
100.0
1,066
100.0
168
100.0
1,602
100.0
The difference between net defined benefit liabilities (see the previous disclosure, Table 10.5, point 2) and the plan assets
(see the previous disclosure, Table 10.5, point 3) is recognised under the post-employment plans and, in some cases, under
other allowances for risks and charges.
4. Description of the main actuarial assumptions
The table below indicates the actuarial assumptions and interest rates used by the various funds.
Actuarial
assumptions
31.12.2022
31.12.2021
Discount
rate
Expected
rate
of return
Expected
rate of
wage rises
(a)
Annual
inflation
rate
Discount
rate
Expected
rate
of return
Expected
rate of
wage rises
(a)
Annual
inflation
rate
EMPLOYEE
TERMINATION
INDEMNITIES
from 3,2% to
3,6%
X
from 3,3% to
3,4%
2.7%
from 0,2 % to
1,4%
X
from 2,8% to
3%
2.2%
INTERNAL
PLANS
- of which Italy
-
-
-
-
0.4%
-
2.9%
2.2%
- of which Egypt
14.7%
-
6.4%
6.4%
14.6%
-
5.3%
5.3%
- of which
England
4.4%
-
2.9%
2.9%
1.9%
-
3.0%
3.0%
- of which Serbia
6.8%
-
8.0%
-
3.3%
-
5.0%
-
EXTERNAL
PLANS
- of which Italy
from 3,3% to
3,4%
5.0%
3.5%
from 2,7% to
3,3%
from 0,1% to
0,7%
3.0%
from 2,7% to
2,8%
from 1,7% to
2,2%
- of which USA
4.8%
4.8%
-
-
2.8%
2.8%
-
-