In a still difficult economic context, in 2015 the Intesa Sanpaolo Group achieved economic results marked by significant growth. The consolidated income statement for 20151 reported net income of 2,739 million euro, a sharp rise on 1,251 million euro in 2014, not only due to the positive trend in operating income, but also due to the decreased need for adjustments to loans. More specifically, a significant contribution was made to operating income by net fee and commission income, as well as by profits on trading and, to a lesser extent, income from insurance business. The positive trends in these segments absorbed the downturn recorded in net interest income and the marginal growth in operating costs, as well as the significant charges related to the new resolution mechanisms for banking crises and deposit guarantee schemes and the bail-ins of four Italian banks placed in receivership. In relation to the dynamics described above, the operating margin increased by 1.4% compared to 2014, while the decreased need for adjustments and provisions, above all for credit risk, enabled growth by approximately 41% in income before tax from continuing operations.

As to balance sheet aggregates, loans to customers amounted to 350 billion euro (+3.2% compared to the end of 2014).

On the funding side, direct deposits from banking business increased, reaching 372 billion (+3.4% compared to the end of 2014), along with direct deposits from insurance business (+12%, to approximately 133 billion).

As at 31 December 2015, indirect customer deposits reached 494 billion euro, up 6% over the end of 2014, despite fluctuating financial market performance, almost entirely attributable to asset under management (+26 billion, approximately equal to 8.7%), thanks to the positive net inflows, with a positive performance recorded for both portfolio management and mutual funds.

The persisting headwinds in the macroeconomic environment and the financial markets’ volatility require constant control of the factors enabling the Group to pursue sustainable profitability: high liquidity, funding capacity, low leverage, adequate capital base and prudent asset valuations.

Group liquidity remains high: as at 31 December 2015, both regulatory indicators envisaged by Basel 3 (LCR and NSFR), adopted also as internal liquidity risk measurement metrics, had reached a level well above fully phased-in requirements. At the end of the year, Central Banks eligible liquidity reserves came to 117 billion euro (105 billion euro at the end of December 2014), of which 78 billion euro, net of haircut, was unencumbered (70 billion euro at the end of December 2014). The loan to deposit ratio at the end of 2015, calculated as the ratio of loans to customers to direct deposits from banking business, came to 94%.

In terms of funding, the widespread branch network remains a stable, reliable source: 70% of direct deposits from banking business come from retail operations (262 billion euro). Moreover, during the year, 6.5 billion euro in eurobonds was placed on the wholesale market (of which 2.25 billion euro in covered bonds) and 1 billion USD of Additional Tier 1. In 2015, 15 billion euro of funding was obtained from the targeted longer-term refinancing operation (TLTRO) programme launched by the European Central Bank, in addition to approximately 12.6 billion euro in 2014.

Intesa Sanpaolo Group leverage (6.8% as at 31 December 2015) continues to be at the top levels recorded in the sector and among the best in Europe. The capital base also remains high: the total capital ratio stood at 16.6%, while the ratio of the Group’s tier 1 capital to its total risk-weighted assets (tier 1 ratio) was 13.8%. The Common Equity Tier 1 ratio stood at 13.0%.

1. The figures and comments refer to the reclassified consolidated income statement published in the 2015 Financial Statements of Intesa Sanpaolo; annual percent changes were calculated based on restated 2014 figures, where necessary, in order to take into account the changes in the scope of consolidation. Amounts are in millions of euro. For additional details or information, see the 2015 Consolidated Financial Statements of Intesa Sanpaolo.