UBI Banca Group

have branches (Poland, Spain and Germany), with a significant diversification by business
sector 22 .
The extension of that business generated natural growth in operating relationships with other
correspondents, mainly Turkish, but also in Spain, where intragroup synergies are being
developed with UBI Banca International.
The following is reported with regard to equity investments:
• the liquidation period for Tex Factor Spa was concluded with the redemption of shares to shareholders,
in accordance with a resolution passed by an extraordinary shareholders meeting of the Company itself
held on 11 th February 2011. UBI Factor derecognised its investment with a profit of €84 thousand;
• Siderfactor Spa was placed in voluntary liquidation with a resolution passed by an extraordinary
shareholders meeting on 12 th December 2011, with effect from 11 th January 2012. The liquidation
should be completed in 2012 with the disposal of all the assets and the extinction of the liabilities
recognised.
The year 2011 ended with a profit of €8.6 million, a decrease compared to €18.6 million the
year before, the result primarily of recognised higher impairment losses.
Net operating income amounted to €29.7 million, down on 2010 (-€1.9 million; -5.9%), the
aggregate result of growth in operating expenses (+€3.2 million to €24.9 million) only partly
offset by an improvement in income (+€1.3 million to €54.6 million).
The trend for income was the result of net interest income, which rose to €38.3 million (+€3.5
million; +10%) – due to increases in advances and a focus on more profitable business – and
other net operating income and expense, which increased to €3.6 million (+€1.5 million mainly
for recoveries of expenses; +68.8%), while net commission income fell to €12.6 million (-€3.6
million; -22.2%), mainly as a result of greater sums paid to Group banks on the basis of a
commercial co-operation agreement signed in 2008.
On the expenses front, on the other hand, other administrative expenses increased to €12.3
million (+€2.5 million; +24.9%), attributable primarily to legal expenses for litigation
concerning amounts owed by the health department of the Regional Government of Latium
and also expenses for the migration to the new IT platform. Personnel expense, which
increased to €11.7 million (+€0.6 million; +5.1%), included a provision for 2011 performance
bonuses and the relative contributions of €0.2 million, while the increase in depreciation and
amortisation related almost entirely to intangible assets.
As a consequence, the cost:income ratio worsened by almost five percentage points, rising from
40.7% to 45.6%.
Net impairment losses on loans rose from €3.1 million to €14.8 million (+€11.7 million),
attributable principally to loans to public administrations, no longer considered core business
for the Company. They included €9.5 million relating to the exposure to Fondazione Centro
San Raffaele del Monte Tabor, details of which are given in the previous section “Banking
business with customers: lending”.
As concerns volumes of business, despite the discontinuation of business with public
administrations, the turnover for business generated during the year amounted to €8.2 billion
(+8.6%), including €7.8 billion of factoring business (+10%).
Consequently, advances to customers rose to approximately €2.9 billion (including 3% for the
Polish branch), an increase of 4.5% compared to €2.7 billion twelve months before.
The performance within net deteriorated assets, which increased from €17.3 million to €63.6
million (+€46.3 million), was as follows:
non-performing loans increased from €11.5 million to €36.5 million (+€25 million, including
€21.5 million relating to the classification of the exposure to San Raffaele, already
mentioned, as non-performing);
22 Negotiations to acquire the Turkish company Strateji Factoring Hizmetleri A.S. were interrupted because of a change in the
orientation by some of the shareholders in the company being acquired, who wished to make changes to some terms of the contract
and to policies, which were not considered acceptable to UBI Factor and the Parent in terms of legitimacy and feasibility. However,
this did not affect the validity of the existing commercial agreement with Strateji Factoring concerning export factoring, which
benefited in 2011 from increases in volumes of business.
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