Banco BPM S p A : 18 Notes to the consolidated financial statements (Part L -- Segment reporting)

__________________________________________________________________________________________ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 487

PART L - SEGMENT REPORTING

According to IFRS 8, companies must provide information enabling users of financial statements to assess the nature and the effects on the financial statements of their business activities and the economic contexts in which they operate.

Therefore, it is necessary to highlight the contribution of the various operating segments to the formation of the Group's income.

The identification of the "operating segments" of this Section is consistent with the procedures adopted by Company Management to make operating decisions and is based on internal reporting, used for allocating resources to the various segments and analysing their performance. In that view, also to improve the representation of the Group's profitability, operating segments that are below the quantitative thresholds put forward in paragraph 13 of IFRS 8 are also highlighted.

For 2021, the operating segments taken as a reference to provide the disclosure in question are as follows:

• Retail;
• Corporate;
• Institutional;
• Private;
• Investment Banking;
• Strategic Partnerships;
• Leases;
• Corporate Centre.

The identification of Leases as an operating segment lies in the need to provide separate evidence of a run-off activity, attributable to the management of previous lease transactions of the former Banca Italease (today incorporated into Banco BPM) and the subsidiary Release1.

It should also be noted that the Investment Banking operating segment also encompasses the contribution of the subsidiary Oaklins Italy S.r.l., acquired by Banca Akros in May 2021.

For a description of the configuration of said operating segments, refer to the disclosure set out in the Section "Results by business segment" of the Report on operations of the Group.

The tables below provide the detailed income statement and balance sheet figures by segment as at 31 December 2021, compared with the corresponding figures for the previous year, as published in the 2020 Annual Report.

• Incorporated into the Parent Company on 21 February 2022, with accounting and tax effect from 1 January 2022.

Segment results - income statement figures

	2021		Total		Retail		Corporate		Institutional		Private		Investment	Strategic		Leases		Corporate
							Banking	Partnerships			Centre
Net interest income	2,041,628	1,041,503	472,599	51,219	(2,557)	53,830	(4,919)	22,228	407,725
Gains (losses) on interests in associates and joint ventures
carried at equity	231,940	-	-	-	-	-	229,608	-	2,332
	Financial margin		2,273,568		1,041,503		472,599		51,219		(2,557)		53,830	224,689		22,228		410,057
Net fee and commission income	1,911,203	1,475,885	243,007	42,585	100,394	43,424	-	(362)	6,270
Other net operating income	75,280	5,167	61	3,504	5	1,126	-	(15,985)	81,402
Net financial result	250,695	4,010	22,373	(420)	(283)	13,414	-	-	211,601
	Other operating income		2,237,178		1,485,062		265,441		45,669		100,116		57,964	-		(16,347)		299,273
	Operating income		4,510,746		2,526,565		738,040		96,888		97,559		111,794	224,689		5,881		709,330
Personnel expenses	(1,667,799)	(1,069,629)	(76,023)	(12,972)	(55,953)	(33,528)	(1,935)	(5,975)	(411,784)
Other administrative expenses	(601,151)	(722,089)	(118,711)	(28,186)	(15,909)	(58,038)	(521)	(24,762)	367,065
Net value adjustments to property, plant and equipment and
intangible assets	(246,825)	(110,248)	(4,629)	(749)	(3,423)	(356)	(190)	(1,080)	(126,150)
	Operating expenses		(2,515,775)		(1,901,966)		(199,363)		(41,907)		(75,285)		(91,922)	(2,646)		(31,817)		(170,869)
	Profit (loss) from operations		1,994,971		624,599		538,677		54,981		22,274		19,872	222,043		(25,936)		538,461
Net adjustments to loans to customers	(887,199)	(438,667)	(390,234)	(8,054)	(265)	(55)	-	(39,892)	(10,032)
Fair value gains (losses) on property, plant and equipment	(141,633)	-	-	-	-	-	-	(99,858)	(41,775)
Net adjustments to securities and other financial assets	(328)	-	-	-	-	17	-	-	(345)
Net provisions for risks and charges	(26,039)	(14,978)	(5,242)	(149)	(204)	490	-	739		(6,695)
Gains (losses) on interests in associates and joint ventures and
other investments	(18,768)	-	-	-	-	-	(18,673)	85		(180)
	Profit (loss) before tax from continuing operations		921,004		170,954		143,201		46,778		21,805		20,324	203,370		(164,862)		479,434
Taxation charge related to profit or loss from continuing
operations	(253,828)	(61,690)	(48,316)	(15,439)	(7,327)	(5,834)	2,487	38,209	(155,918)
	Profit (loss) after tax from continuing operations		667,176		109,264		94,885		31,339		14,478		14,490	205,857		(126,653)		323,516
Charges related to the banking system, net of taxes	(144,995)	(92,946)	(11,159)	(10,726)	(772)	(3,836)	-	-	(25,556)
Impact of the realignment of tax values to book values	81,709	29,967	1,850	842		242	-	-	-	48,808
Change in own credit risk on Certificates issued by the Group,
net of taxes	4,354	-	-	-	-	-	-	-	4,354
Purchase Price Allocation net of taxes (*)	(39,460)	(28,107)	167	(38)		(2,680)	-	-	671		(9,473)
Profit (loss) for the year attributable to non-controlling interests	284	-	-	-	-	-	-	-	284
	Parent Company's profit (loss) for the year		569,068		18,178		85,743		21,417		11,268		10,654	205,857		(125,982)		341,933

__________________________________________________________________________________________

488 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

	2020		Total		Retail		Corporate		Institutional		Private		Investment	Strategic		Leases		Corporate
							Banking	Partnerships			Centre
Net interest income	1,982,561	937,279	455,230	57,223	1,272	73,213	(8,801)	24,358	442,787
Gains (losses) on interests in associates and joint ventures
carried at equity	130,799	-	-	-	-	-	129,385	-	1,414
	Financial margin		2,113,360		937,279		455,230		57,223		1,272		73,213	120,584		24,358		444,201
Net fee and commission income	1,663,810	1,293,613	214,835	39,526	89,708	41,651	-	(979)	(14,544)
Other net operating income	56,005	9,237	101	3,057	7	253	-	(1,945)	45,295
Net financial result	318,642	14,094	22,874	126		(75)	10,327	11,671	-	259,625
	Other operating income		2,038,457		1,316,944		237,810		42,709		89,640		52,231	11,671		(2,924)		290,376
	Operating income		4,151,817		2,254,223		693,040		99,932		90,912		125,444	132,255		21,434		734,577
Personnel expenses	(1,581,141)	(1,012,069)	(71,015)	(8,499)	(52,422)	(25,293)	(1,853)	(6,467)	(403,523)
Other administrative expenses	(593,812)	(703,243)	(80,797)	(28,423)	(20,112)	(58,953)	(713)	(26,583)	325,012
Net value adjustments to property, plant and equipment and
intangible assets	(255,114)	(128,654)	(4,895)	(879)	(604)	(345)	-	-	(119,737)
	Operating expenses		(2,430,067)		(1,843,966)		(156,707)		(37,801)		(73,138)		(84,591)	(2,566)		(33,050)		(198,248)
	Profit (loss) from operations		1,721,750		410,257		536,333		62,131		17,774		40,853	129,689		(11,616)		536,329
Net adjustments to loans to customers	(1,336,807)	(690,545)	(497,972)	(24,015)	81	3	-	(106,248)	(18,111)
Fair value gains (losses) on property, plant and equipment	(36,721)	-	-	-	-	-	-	(13,008)	(23,713)
Net adjustments to securities and other financial assets	(1,030)	-	-	-	-	78	-	-	(1,108)
Net provisions for risks and charges	(42,294)	(7,465)	(10,886)	(400)	16	286	(26,000)	(409)	2,564
Gains (losses) on disposal of interests in associates and joint
ventures and other investments	1,190	-	-	-	-	-	-	1,340	(150)
	Profit (loss) before tax from continuing operations		306,088		(287,753)		27,475		37,716		17,871		41,220	103,689		(129,941)		495,811
Taxation charge related to profit or loss from continuing
operations	(13,518)	79,132	(7,555)	(10,372)	(4,914)	(13,495)	10,409	34,540	(101,263)
	Profit (loss) after tax from continuing operations		292,570		(208,621)		19,920		27,344		12,957		27,725	114,098		(95,401)		394,548
Charges related to company restructuring, net of taxes	(187,030)	(123,265)	(8,649)	(1,035)	(4,676)	(602)	(226)	(585)		(47,992)
Charges related to the banking system, net of taxes	(138,901)	(89,604)	(9,346)	(9,180)	(1,369)	(2,911)	-	-	(26,491)
Impact of the realignment of tax values to book values	128,324	128,324	-	-		-	-	-	-		-
Goodwill impairment	(25,100)	-	-	-	-	-	-	-	(25,100)
Change in own credit risk on Certificates issued by the Group,
net of taxes	(11,739)	-	-	-	-	-	-	-	(11,739)
Purchase Price Allocation net of taxes (*)	(41,492)	(26,186)	98	(22)	(2,887)	-	-	686		(13,181)
Profit (loss) for the year attributable to non-controlling interests	4,248	-	-	-	-	-	-	4,674	(426)
	Parent Company's profit (loss) for the year		20,880		(319,352)		2,023		17,107		4,025		24,212	113,872		(90,626)		269,619

__________________________________________________________________________________________

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 489

The following tables show the details of fee and commission income of 2021 and the previous year disaggregated by type of service provided and defined with an operating outlook, and by IFRS 8 operating segment, in line with the disclosure requirements introduced by IFRS 15.

2021				Group		Retail		Corporate		Institutional		Private		Investment	Strategic	Leases		Corporate
	Service type/Amounts						Banking	Partnerships		Centre
	SAVINGS PRODUCTS	779,857	660,149		1,095	5,516	102,564		-	-	-		10,533
	of which:
	Indirect upfront - Network	281,186	270,981		87		1,447	8,671	-	-	-	-
	Administered	8,588	8,398	30		40		120		-	-	-	-
	Portfolio management and funds	232,919	224,510		56		1,260	7,093	-	-	-	-
	Life	39,679	38,073		1		147	1,458	-	-	-	-
	Indirect running - Network	474,967	389,168		1,008	4,069	93,893		-	-	-	(13,171)
	Administered	48,549	52,751		256	1,483	7,230	-	-	-	(13,171)
	Portfolio management and funds	381,540	298,551		702	2,390	79,897		-	-	-	-
	Life	44,878	37,866		50		196	6,766	-	-	-	-
	Indirect non-Commercial Network	23,704	-		-	-	-		-	-	-	23,704
	Investment Banking	70,295	-		-		-		-		70,295	-	-		-
	Insurance protection	49,512	49,242		20		36		75		-	-	-	139
	Other fees and commissions	1,129,445	832,686		255,811	38,708	1,645		-	-	9	586
	Fee and commission income	2,029,109		1,542,077		256,926		44,260		104,284		70,295	-	9		11,258
	Fee and commission expense	(117,906)	(66,192)		(13,919)		(1,675)		(3,890)		(26,871)	-	(371)		(4,988)
	Net fee and commission income	1,911,203		1,475,885		243,007		42,585		100,394		43,424	-	(362)		6,270

__________________________________________________________________________________________

490 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2020				Total		Retail		Corporate		Institutional		Private		Investment	Strategic	Leases		Corporate
	Service type/Amounts						Banking	Partnerships		Centre
	Savings products	653,387	560,207		924	4,732	91,175		-	-	-	(3,651)
	of which:
	Indirect upfront - Network	223,579	213,390		97		986	9,106	-	-	-	-
	Administered	38,672	37,285		23		93		1,271	-	-	-	-
	Portfolio management and funds	153,022	145,379		73		815	6,755	-	-	-	-
	Life	31,885	30,726		1		78		1,080	-	-	-	-
	Indirect running - Network	421,222	346,817		827	3,746	82,069		-	-	-	(12,237)
	Administered	50,696	52,970		211	1,609	8,143	-	-	-	(12,237)
	Portfolio management and funds	328,088	257,858		554	1,960	67,716		-	-	-	-
	Life	42,438	35,989		62		177	6,210	-	-	-	-
	Indirect non-Commercial Network	8,586	-		-	-	-		-	-	-	8,586
	Investment Banking	73,730	-		-	-	-		83,013	-	-	(9,283)
	Insurance protection	38,173	37,925		25	22	60		-	-	-	141
	Other fees and commissions	1,019,341	749,822		219,251	35,030	2,395		-	-	11	12,832
	Fee and commission income	1,784,631		1,347,954		220,200		39,784		93,630		83,013	-	11		39
	Fee and commission expense	(120,821)	(54,341)		(5,365)		(258)		(3,922)		(41,362)	-	(990)	(14,582)
	Net fee and commission income	1,663,810		1,293,613		214,835		39,526		89,708		41,651	-	(979)		(14,544)

__________________________________________________________________________________________

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 491