PRESS RELEASE PRESS RELEASE
Published by the
External Communications and Press Relations Office
Tel. 010 579 2697
Fax 010 579 4927
CARIGE GROUP: APPROVAL OF THE 2011-2014 STRATEGIC PLAN
Objective: a consolidated net profit in 2014 equal to 263 million (average annual growth of
10.1% on 2010)
ROE of 8.1%
Common Equity Ratio 8% at the end of the Plan, performed solely with organic growth of
the high quality balance sheet items
Reduction of the cost / income ratio of about 10 pp, from 60% to 50.3%
Average annual growth in volumes: 6.1% for total deposits (AFI) and 5.2% for loans
Maintenance of a contained level of the cost of credit risk at 0.50% in 2014
Maximum attention to liquidity with full compliance with the new indicators foreseen by
These are the main results of a Strategic Plan which is characterized by prudence, given the
uncertainties of the macroeconomic framework and increasingly stringent regulatory
The development of the Plan is based on the Group's organic growth and the opening of 48
new branches, it thus excludes extraordinary operations, but builds on investments made in
recent years in the sales networks, ICT, start ups, etc.
The results of the Plan allow an adequate remuneration to shareholders and at the same time
foresee for a significant renewal of personnel and a further improvement in service levels
offered to clients
For its implementation, the Plan identifies some priority strategic policies:
¯ Development of revenues and the commercial offer, with the aim of identifying the
business areas (territories, products, clients) that are still untapped potential for value
¯ Rationalization of costs and operating processes: constant emphasis on technical and
operational efficiency, especially with regard to the review of those processes that
absorb greater amounts of resources
¯ Optimization of liquidity, capital and the cost of risk, aimed at the efficient allocation
of scarce resources
¯ Focus on innovation and expertise, for the continuous improvement of processes and
products, but also on behaviours and relationship capacities of human resources
The Group reaffirms its mission to consolidate the role of banking, finance, welfare and
insurance group at the national level, with a strong presence in the individual domestic
markets, focused on retail clients, distinguishing itself for the quality of the service offered
to the client also through the inter-channelling and a progressive qualitative development of
resources and structures.
Genoa, 16 May 2011 - The Board of Directors of Banca Carige SpA, chaired by Giovanni
Berneschi approved the 2011-2014 Strategic Plan ("Strategic Plan" or "Plan") as illustrated by the
General Manager Ennio La Monica.
The 2011-2014 Strategic Plan developed by the Carige Group fits seamlessly into the basic strategic
orientation followed over the past over 15 years, through the creation of value in the medium to
long term for all stakeholders (shareholders, human resources, customers and communities ) in
order to maintain a significant independent role in the domestic banking system.
The Plan is based on an organic growth by taking advantage of existing potential within the Group,
resulting from the valuation of investments made in past years in terms of acquisitions of networks,
technological innovation, review of operational processes and sales, and the associated companies
becoming fully operational. These results will be boosted by the openings of 48 openings delineated
by the Branch Plan (Piano Sportelli) for the same period of the Plan, while no hypothesis of
extraordinary operation is contemplated.
The plan is deemed to be solid and credible, in as much as the expected results are based on
informed and prudent assumptions, leaving room for improvement as regards the evolution of
environmental scenario. The latter, it is forecasted to be very complex and uncertain in the Plan,
with a macroeconomic context characterized by low GDP growth and interest rates continuing to be
low, to which should be added petitions and constraints of a regulatory character which might
condition the growth and the profitability of Italian banks, contributing to what might be called a
ECONOMIC AND FINANCIAL VARIABLES
Real GDP (% Change) 1.2 0.9 1.0 1.4 1.0
Inflation rate (%) 1.5 2.9 1.7 1.7 2.1
ECB rate (end of period) (%) 1.00 1.75 2.00 2.25 2.50
Average Euribor 6m (%) 1.1 1.6 2.3 2.5 2.7
Customer deposits (% Change) 1.1 3.7 4.3 4.6 4.0
Loans to customers (% Change) 5.0 7.3 6.3 6.0 4.5
Fonte: consensus Research institutes
The Plan identifies four strategic priorities:
• Development of revenues and of the commercial offer, and, with the goal of identifying the
business areas (territories, products, customers) which still have untapped value potential
• Rationalisation of costs and operating processes: constant attention being paid to technical and
operational efficiency, especially with regard to the review of those processes which absorb
notable quantities of resources
• Optimization of liquidity, capital and the cost of risk, aiming the efficient allocation of scarce
• Focus on innovation and expertise, for the continuous improvement of processes and products,
as well as behaviour and relational capacities of human resources.
The strategic planning is translated into 20 strategic initiatives which have been identified by
management referring to:
¯ Distribution network and service model, in which interventions mainly aim to realign the
performance of the Extra Liguria Network to that of the Liguria Network, reducing the
variances of productivity and profitability among branch offices of the same area, as well as
to expand the distribution network by the opening of 48 branches and the development of
inter-channelling. Moreover the interventions are aimed at refining the business services
model and to focus on the private sector including by the use of the Banca Cesare Ponti
¯ Products / services portfolio, allocation efficiency and pricing policies, in which the main
intervention concerns improving the active management of credits throughout their life
cycle: from the definition of the targets and constraints of credit policies (portfolio target),
the dynamic management of the performing loans as well as the non-performing portfolio.
An intense value repricing activity shall also be implemented on the main products of the
¯ Resources, innovation and technical operational efficiency, which concerns the progressive
increase in the operational efficiency deriving from, among other things, the continuous
monitoring of the general and administrative costs and analysis of processes to identify
opportunities to save time/resources by leveraging technological innovation.
¯ Solvency, stability and low risk, in which the interventions concern the balance of the
financing structures, the remix of the deposit products which are quantifiable for the
improvement of the liquidity ratio, the development and the operation of credit rating
models and credit portfolio, and capital management activities aimed at implementing the
New Basel Agreement 3.
The following table illustrates the main equity and economic targets identified by the 2011- 2014
Strategic Plan, in which the 2010 results have been adjusted to take into account the contribution of
the branches acquired from Banca del Monte dei Paschi di Siena, which have entered the Group’s
perimeter as of 31 May 2010.
CARIGE GROUP 2010 2010PF
Direct deposits (€ bln) 26.6 26.6 32.9 5.5%
Indirect deposits (€ bln) 24.1 24.1 31.2 6.7%
Total deposits(€ bln) 50.7 50.7 64.1 6.1%
Loans to customers (€ bln) 25,4 25.4 31.1 5.2%
Net profit (€ m) 177 179 263 10.1%
Equity (€ bln) 3.5 3.5 4.0 3.4%
Cost Income 59.9% 60.0% 50.3% -9.7 pp
Cost of risk 0.45% 0.46% 0.50% +4 bps
ROE adj. (2) 6.5% 6.6% 8.1% +1.5 pp
ROTE (3) 9.9% 10.1% 11.5% +1.4 pp
Core Tier 1/Common Equity 6.0% 8.0%
Total capital ratio 9.1% 10.2%
(1) Pro form a data include the annualised result of MPS branches, with effect from 31 May 2010
(2) Equity net of the AFS reserve established against the revaluation of the equity investment in the Bank of Italy
(3) Equity net of goodwill
CAGR= com pound annual growth rate
Between 2010 and 2014, the overall volumes intermediated by the Group are expected to increase
by 5.8% per annum to over 95 billion, the Financial Intermediation Activities (AFI) to grow by
6.1% from 50,674 million in 2010 to 64,139 million in 2014 and gross loans to customers growing
from 25,373 million at the end of 2010 to 31,130 million in 2014, with an average annual increase
Over the period under consideration an evolution of the mix of AFI in favour of indirect deposits, in
which the weight of the managed component will tend to increase, it is also expected.
In particular, it is estimated that direct deposits shall rise from 26,584 million in 2010 to 32,931
million in 2014, with an annual increase of 5.5%, and regarding the same, it is expected that short-
term products will be developing at a more contained rhythm (+ 3.3% per year from 15,680 million
to 17,825 million), whilst deposits in the medium term will evolve at a growth rate of 8.5% (10,904
million to 15,106 million). In particular, growth will be supported by the increase in bond funding
from customers and from new placements in international markets.
As far as indirect deposits are concerned, a growth of 6.7% per annum in 2014 is expected rising to
31,208 million (24,091 million in 2010). More specifically, for the period under consideration,
assets under management are expected to grow by 8.3% per year from 10,342 billion in 2010 to
14,242 million in 2014, it is forecasted that within the banking insurance and pension products
component increases will be posted of +9.5% per annum to 5,941 million, mutual funds by 7.5% to
7,348 million, managed assets by 7.8% to 953 million. Assets under custody should on the contrary
experience a more moderate growth (+5.4% per year): from 13,749 million in 2010 to 16,966
million in 2014.
In function of the forecasted growth in the volumes intermediated by the Group and considering a
widening of spreads with the clients score of 49 cents by the end of the Plan, the net interest income
will increase from 713.9 million in 2010 p.f. to 1,025.4 million in 2014, corresponding to an annual
increase of 9.5%.
Net revenues from services are also expected to grow from 367.2 million in 2010 p.f. to 420.6
million in 2014, showing an annual growth of 3.5%. This compartment is supported by net
commissions (379.2 million in 2014) which shall post an annual increase equal to 5.8%, in
particular commission income in 2014 is expected to rise to 415.6 million, whilst fees and
commission expenses to 36.4 million. The contribution of financial items (dividends, profits
(losses) on trading, valuation gains / losses) is estimated at 41.4 million compared to 62.8 million in
the 2010 p.f. (CAGR: -9.9%);
Gross operating income shall reach 1,446 billion as at the end of 2014, corresponding to an average
growth of 7.5% over whole of the Plan.
Given the still difficult economic environment, net value adjustments due to impairment of loans
are expected to rise from 115.8 million in the 2010 p.f. to 155 million in 2014, representing an
average annual rate of 7.6%; similarly, the cost of risk compared to lending is conservatively
expected to rise from 0.45% to 0.5%.
On the cost side, operating costs shall show an increase from 648.3 million in 2010 p.f. to 727.8
million in 2014, growing at an annual rate of 2.9%, with staff costs increasing at an annual rate of
3.3% (1.3% core growth, excluding the branch plan and non-recurring effects). Other administrative
costs equal to 310.9 million at the end of the four-year period will increase at an average annual rate
of 3.9% in relation to the substantial investments in technology (2.9% excluding the branch plan).
Based on these forecasts, the cost/income ratio will be equal to 50.3% in 2014, down from 60% in
Profit from ordinary activities before taxes will therefore amount to 472.3 million in 2014 (+15.5%
per year), while net profit will record an evolution from 179.4 million in 2010 p.f. to 263.2 million
in 2014, equal to 10.1% per annum.
During the period covered by the Strategic Plan, the ROE (Return on equity) will increase from
5.1% in the 2010 p.f. to 6.6% in 2014. Deducing the value of the AFS revaluation reserve relating
to the equity investment in the Bank of Italy, the adjusted ROE will increase from 6.6% in 2010 p.f.
to 8.1% in 2014. The ROTE (return on tangible equity), calculated by dividing profit by assets net
of intangible assets, will increase from 10.1% in the 2010 p.f. to 11.5% in 2014 (17.5% net of the
equity investment in the Bank of Italy).
From the point of view of capitalisation, the Group's objective is to immediately align itself to the
more stringent capital requirements required by the new Basel regulations: regarding this, it has for
some time activated a capital management activity in order to achieve a Common Equity ratio of
approximately 8% already by the end of 2013, including the benefits of the conversion of the 2010-
2015 soft mandatory bond, which shall become convertible as of September 2011. Maximum
attention will be paid to the liquidity profile with the full compliance with the full set of new
indicators foreseen by Basel 3, through the collection of retail and institutional investors.
With regard to the operating resources necessary for carrying out the Plan, the organic growth
achieved by the opening of 48 branches will expand the network to 715 branches (1,155 sales
outlets planned, including insurance agencies); thanks to the gains in the efficiency of the operating
processes, human resources, including more than 500 new hires needed to cover part of the
voluntary exit programs and requirements for new openings amount to roughly 6,100 people,
technological innovation will continue to be a strategic resource to which approximately € 300
million between investments and current expenditure will be allocated.
A Deputy Auditor has succeeded to the position of Standing Auditor: following the death of
Antonio Semeria, on 12 May 2011, Domenico Sardano, his deputy, took over the office of Standing
Auditor, pursuant to art. 26 of the Articles of Association. He was appointed by the Shareholders'
Meeting held on 29 April 2011 from the list presented by the Fondazione Cassa di Risparmio di
Genova e Imperia, and voted in by the majority of the members of the meeting.
Pursuant to article 2401, paragraph 1 of the Italian Civil Code, Mr. Sardano - meeting the regulatory
requirements - shall remain in office until the next Meeting, which will provide the necessary
integration of the Board of Statutory Auditors.
Declaration of the manager responsible for preparing the company’s financial reports pursuant
to paragraph 2 of Article 154-bis of the Italian Legislative Decree no. 58/1998 (Consolidated Law
The manager responsible for preparing the company’s financial reports, Ms. Daria Bagnasco,
Deputy General Manager (Governance and Control) of Banca CARIGE S.p.A, declares, pursuant
to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting
information contained in this press release corresponds to the document results, books and
Via Cassa di Risparmio 15
16123 GENOVA GE
tel. +39 010 579 4877
fax +39 010 579 2443