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13 BILLION OF NEW LENDING TO SUPPORT THE ECONOMY
POSITIVE ECONOMIC PERFORMANCE AND SOUND CAPITAL BASE CONFIRMED
Rome, 2 August 2018 h 2.35 pm The Board of Directors of Cassa Depositi e Prestiti S.p.A.(CDP), chaired by Mr Massimo Tononi, approved the Consolidated Half-Year Report of the CDP Group at 30 June 2018 submitted by Chief Executive Officer Fabrizio Palermo.
New lending and main initiatives
During the first half of 2018, CDP Group continued to play a key role in support of the Italian economy, in line with its mandate as a National Promotional Institution.
Parent Company CDP
The contribution of the Parent Company CDP to new lending, investments and managed resources amounted to over € 8.3 billion, decreasing if compared to the same period of the previous year, which was characterized by some transactions of significant amount2. In particular, new lending was distributed as follows: € 4.2 billion for Enterprises (50% of the total); € 2.4 billion for International Expansion (29%); € 1.8 billion for the Government, P.A. and Infrastructure sector (21%); € 0.04 billion for Real Estate (0.4%)3
The new lending, investments and managed resources by the Group amounted to € 12.8 billion. The amount of new lending decreased compared to the same period of the previous year (-18%), for the reasons reported above (see note 2). The greatest share of resources, amounting to € 6.5 billion (51% of the total), was employed for International expansion; € 4.4 billion (34%) went to Enterprises; € 1.8 billion (14%) went to finance the Government, PA and Infrastructure sector, while the remaining € 0.1 billion was earmarked to support Real Estate (1%).
During the first half of the year, CDP completed a number of initiatives for the benefit of enterprises, local authorities and local communities.
With regard to Public Entities, a new loan renegotiation programme was launched for provinces and metropolitan cities; the subsidised financing agreements for energy efficiency upgrading projects for school and university buildings have been finalised and managed, and a new ordinary lending instrument has been launched for investments relating to the targets of the 2017-2019 Three-year Plan for ICTs in the Public Administration.
With regard to Infrastructure, lending agreements were concluded in the following areas: i) renewable energies, ii) sustainable transport, with the purchase of new commuter trains, iii) completion of investments in the motorway network.
With regard to Enterprises, activity continued in synergy both with the banking channel, via financing transactions, and with institutional investors, by subscribing for bond issues. In particular, CDP carried out the first two operations of the EFSI Thematic Investment Platform under the framework of the Juncker Plan, in support of the investment plans of Italian enterprises (mainly national Mid-cap companies). With regard to equity investments, CDP subscribed for funds operating in the impact investing sector. Moreover, in collaboration with the European Commission and other National Promotional Institutions, investments in the development of ultra-broadband infrastructure were made, in order to contribute to achievement of the targets set out in the European Digital Agenda.
To boost the capacity of Financial Institutions to grant liquidity in support of the real economy, several major initiatives were undertaken, including the signing of funding agreements with the Council of Europe Development Bank (CEB), for the application of better financing terms and conditions for both post-earthquake reconstruction projects and for SMEs investing in capital goods. Moreover, within the EFSI Thematic Investment Platform for Italian SMEs, CDP has signed an agreement with the SME Fund for the issue by CDP of a counter-guarantee on a portfolio of new guarantees issued in favour of enterprises in the creative-cultural sectors.
Furthermore, during the half-year, the Group companies have provided significant support in the areas of export, international expansion and real estate. Specifically, the SACE Group has contributed with significant operations, mainly supporting the infrastructure, aviation and banking industries.
In the Real Estate sector, substantial support was provided by the funds managed by CDP Investimenti SGR via investments in particular in social housing and in the tourism sector.
Economic results and equity
Parent Company CDP4
In the 1st half of 2018, the Gross income of the Parent Company CDP rose markedly to € 1.9 billion (+21% compared to the 1st half of the previous year), while Net interest income remained largely stable at € 1.6 billion (+2.1%).
Net income for the period reached approximately € 1.4 billion, up from the same period of the previous year (+13%), mainly thanks to the increase in net commission income and to the contribution from the equity investment portfolio.
As at 30 June 2018, the Total assets stood at approximately € 367 billion, essentially stable compared to the end of the previous year (-0.2%):
With regard to balance sheet liabilities:
In the 1st half of 2018, the Group’s profitability improved, with Gross income rising to € 1.6 billion (+12% on the first half of 2017), driven primarily by the Parent Company’s net interest income and the measurement of equity investments using the equity method of accounting.
Overall, the Group’s Net income was positive at € 2.2 billion7, albeit down from the same period of the previous year (-10%), of which € 1.4 billion pertaining to the Parent Company (-8%).
As at 30 June 2018, the Group’s Total assets stood at € 420 billion, largely unchanged from the previous year’s closing balance (+0.1% compared to 31 December 2017).
Total equity amounted to € 35.4 billion, slightly down from the end of the previous year (€ 35.9 billion), of which € 22.7 billion pertaining to the Group (€ 23.1 billion at the end of 2017)8, mainly due to the distribution of dividends, which was only partially offset by net income for the period.
Please note that the Independent Auditors are completing a limited auditing of the condensed consolidated half-year financial report as at 30 June 2018. The reclassified financial statements set out in the Annexes are not subject to auditing by the Independent Auditors.
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The Manager in charge with preparing the company's financial reports, Fabrizio Palermo, declares pursuant to Article 154-bis, paragraph 2, of the Consolidated Law on Finance that the accounting information contained in this press release corresponds to documentary evidence and the accounting books and records.
The 2018 Half-Year Financial Report, together with the certification pursuant to Article 154-bis of the Consolidated Law on Finance and the Independent Auditors’ Report will be available to the public at the Company's registered office, on the CDP website and in any other manner provided for by the applicable law, within the legal time limits.
1The financial statements and the reclassified financial tables presented and commented in this release have been amended with respect to those previously in use, following the first-time adoption (FTA) of the accounting standard IFRS 9, as required by Bank of Italy’s Circular no. 262/2005 on banks’ financial statements, as amended.
2 Among which, guarantee transaction with SME Fund for a unit value of € 2.4 bn, recognised in the 1st half of 2017.
3The sum of the volumes for each individual sector does not equal total new lending due to the rounding of figures.
4 The CDP data presented and commented below include the company balance sheet and income statement figures, reclassified on an operational basis, as shown in the accompanying reconciliation statements. The comparative data refer to the reclassified figures as at 31 December 2017 for the reclassified balance sheet and at 30 June 2017 for the reclassified income statement. The comparative data as at 31 December 2017 and at 30 June 2017 do not include the effects of application of the new IFRS 9 and IFRS 15 accounting standards, recognised on equity as at 1 January 2018.
5As a consequence of the dividends distributed in the period and of the negative effects of the first-time adoption (FTA) of the new IFRS9 – Financial Instruments, partly offset by net income for the period.
6 The CDP Group’s data, presented and commented below, include the consolidated balance sheet and the consolidated income statement figures, reclassified on an operational basis, as shown in the accompanying reconciliation statements. The comparative data refer to the reclassified consolidated figures as at 31 December 2017 for the consolidated reclassified balance sheet and at 30 June 2017 for the consolidated reclassified income statement. The latter figures have been restated in order to take into account completion of the Purchase Price Allocation (PPA) process performed on the equity investment held in Poste Italiane. The comparative data as at 31 December 2017 and as at 30 June 2017 do not include the effects of application of the new IFRS 9 and IFRS 15 accounting standards, recognised in equity as at 1 January 2018 and which are described in the Half-Year Report at 30 June 2018.
7The same period of the previous year included a non-recurring component amounting to € 0.6 billion. If this non-recurring component is excluded, the net income of the first half of 2018 shows an increase.
8Application of IFRS 9 and IFRS 15 generated at consolidated level an overall positive effect of € 153 million on Total equity. The greatest net value adjustments arising from application of the new impairment rules amounted to € -597 million gross (increased by the effect of IFRS 15, amounting to € -46 million gross), offset by the effect of the measurement of financial instruments amounting to € 640 million and reduced by the overall fiscal effects (€ 156 million).