Business segments

A. Primary reporting

Consistent with the Group’s operations characteristics and organisational structure, the primary reporting section includes the following business segments:

Private and Affluent, containing information on key private customers and on trustee activities;
Corporateⁱ, which includes the Middle Corporateⁱ and Large Corporateⁱ sub-segments;
Retail, which gathers together all business for small business customers, with regard to deposits and lending (Mass Market and Small Business);
Wealth Management, which mainly includes Carige SGR asset managementⁱ activities and Carige Vita Nuova life insurance activities;
Other business segments, grouping together other operational business units subject to internal auditing for periodic management reporting purposes (institutional customers, bearer relations, Cash Managementⁱ and Finance), Corporateⁱ Centre business (equity investments, credit collection on bad loans, property management, etc.), Carige Assicurazioni non life insurance business and other Group companies involved in financial and instrumental activities.

Calculation criteria for income statement and balance sheet components and indicators

The income statement and balance sheet items correspond, in terms of their totals, with their respective items in the financial statements. Calculation of the gross operating margin is based on the following criteria:

net interest income is identified by contribution, via an internal transfer ratingⁱ system differentiated by product;
net commissions and other components of net revenues from services are almost entirely allocated directly to the customer segments.

Operating costs are calculated as follows:

staff costs, other administrative costs and other operating income/expenses are allocated directly or via drivers, identifying various cost centre levels and adopting progressive charge-back stages. Orientation and coordination costs sustained are not charged back to the business units but allocated to the Corporateⁱ Centre;
provisions for risks and charges and net adjustments/write-backs on tangible and intangible assets are allocated to the Corporateⁱ Centre.

Asset components are allocated as follows:

Loans to and amounts owed to customers are divided among the various customer segments according to their counterpart characteristics.
Loans to and amounts owed to banks are allocated to the Finance Dept.
Securities in circulation and financial liabilities designated at fair valueⁱ are allocated to the various customer segments according to purchaser characteristics. The share not acquired by ordinary customers is allocated to the remaining segment “Other”.

The cost/income is calculated as the ratio between operating costs and the gross operating margin.

The figures for 2007 and the first 9 months of 2008 have been established on a consistent basis with current internal customer segmentation criteria, so that a significant time-based comparison is possible.

The 2008 income statement and balance sheet results in relation to ordinary customers (Private and Affluent, Corporateⁱ and Retail) show a positive trend when compared to the year before.

The Private and Affluent sector shows a gross operating margin of €199.2 million, 19.7% of the total, growth of 10.3% compared to the year before, due mainly to the effect of the changes in rates. Operating costs amounted to € 123.5 million (20.3% of the total), up 21.9% compared to 2007. Profit from ordinary activities was € 76.1 million, slightly down from the year before and equal to 24.6% of the gross total profit of the Group. Cost/income was 62%, compared to 56.1% for 2007 and 61.7% for the first nine months of 2008. With regards to aggregate balance sheet items, amounts owed to customers, € 4,805 million, was noticeably higher that the figure recorded at 31 December 2007 (+33.4%) and represented 40% of the total. Securities in circulation and financial liabilities designated at fair valueⁱ grew slightly from previous years (+45.3%), totalling € 4,771 million (43.8% of the total). Lending was maintained at marginal levels (2.5% of the total).
The Corporateⁱ sector, represented mainly by small and medium businesses, recorded a gross operating margin of € 213.5 million (21.1% of the total), growth of 17.4% compared with 2007, due mainly to the dynamics of scale. Net income from financial and insurance management totalled € 177.9 million (19.4% of the total), +13.5% from December 2007. Net of operating costs of € 45.2 million (7.4% of the total), profit from current operations amounted to € 132.7 million, +15.4% from 2007. The cost/income ratioⁱ of 21.2% improved from previous periods (23% at the end of 2007). With regards to aggregate balance sheet items, loans to customers amounted to € 9,011 million, an increase of 20.5% compared with 2007, equal to 43.1% of the Group total. Amounts owed to customers of € 1,244 million (10.4% of the total), grew 5.9% compared with 31 December 2007. Securities in circulation and financial liabilities designated at fair valueⁱ continued to represent a marginal portion of the Group total (1.1%).
The Retail sector grew during 2008, with gross operating margin of € 449.4 million (44.3% of the total), up 15.6% from 2007, because of the increase in mass use and the positive dynamics of quantities and spreads on collections. Net income from financial and insurance management totalled €414.6 million (45.3% of the total), +20.6% from the year before. Net of operating costs of € 307.9 million (+22.2% from 2007), profit from current operations amounted to € 106.7 million (34.6% of the total). Cost/income was 68.5%, compared to 64.8% for 2007 and 64.6% for the first nine months of 2008. Lending to customers recorded an increase of 22.6%, totalling €8,358 million at the end of 2008. Amounts owed to customers also increased from the year before (+31.8%), totalling € 4,567 million, whilst securities in circulation and financial liabilities designated at fair valueⁱ of € 1,393 million, recorded an increase of 23.5% compared to at 31 December 2007. In percentage terms, with respect to the Group total, lending measured 40%, amounts owed stood at 38%, and securities in circulation and financial liabilities designated at fair valueⁱ stood at 12.8%.

The Wealth Management sector recorded a net income from financial and insurance operations of € 28 million (3.1% of the total), up 74.3% compared to the year before. Net of operating costs of € 14.4 million, profit from current operations amounted to € 13.6 million (€1.2 million in 2007).
These results are reflected in the cost/income ratioⁱ, which went from 74.9% at the end of 2007 to 35.5% in 2008. With regards to aggregate balance sheet items, securities in circulation and financial liabilities designated at fair valueⁱ amounted to € 725 million (-4.2% compared to at 31 December 2007), 6.7% of the Group total.
The Other sector recorded a loss from current operations of € 20.3 million, which could be traced mainly to the poor results achieved in the Finance area. With regards to balance sheet items, securities in circulation and liabilities designated at fair valueⁱ amounted to € 3,869 million (35.6% of the total).

Business segments - (figures in thousands of €)

	Private and Affluent	Corporateⁱ	Retail	Wealth Management	Other	TOTAL
Net operating margin ⁽¹⁾
2008	199,179	213,470	449,388	40,742	110,691	1,013,470
9 months 2008	149,345	150,029	333,354	20,216	86,345	739,289
2007	180,620	181,871	388,607	19,782	187,186	958,066
Net income from financial and insurance operations ⁽²⁾
2008	199,629	177,872	414,636	27,995	96,092	916,224
9 months 2008	149,177	120,785	287,781	18,079	85,881	661,703
2007	180,442	156,722	343,873	16,058	187,811	884,906
Operating costs
2008	-123,523	-45,217	-307,888	-14,444	-116,405	-607,477
9 months 2008	-92,214	-32,126	-215,225	-11,841	-75,121	-426,527
2007	-101,352	-41,792	-251,909	-14,819	-105,446	-515,318
Profit (loss) from ordinary activities
2008	76,106	132,655	106,748	13,551	-20,313	308,747
9 months 2008	56,963	88,659	72,556	6,238	10,760	235,176
2007	79,090	114,930	91,964	1,239	82,365	369,588
Cost income (%)
2008	62.0	21.2	68.5	35.5	105.2	59.9
9 months 2008	61.7	21.4	64.6	58.6	87.0	57.7
2007	56.1	23.0	64.8	74.9	56.3	53.8
Net interbank
31/12/2008				103,204	344,161	447,365
30/09/2008				95,139	354,632	449,771
31/12/2007				21,149	-897,580	-876,431
Loans to customers
31/12/2008	521,185	9,011,419	8,358,329	99,263	2,926,159	20,916,355
30/09/2008	524,505	8,453,700	7,967,544	102,331	2,263,154	19,311,234
31/12/2007	507,711	7,480,292	6,820,091	18,499	2,190,788	17,017,381
Amounts owed to customers
31/12/2008	4,804,862	1,243,551	4,566,903	79	1,390,044	12,005,439
30/09/2008	4,064,780	1,119,905	4,201,648	205	1,380,174	10,766,712
31/12/2007	3,602,599	1,174,060	3,464,325	1,839	1,329,122	9,571,945
Securities in issue and financial liabilities valued at fair valueⁱ
31/12/2008	4,771,174	124,829	1,393,390	725,337	3,869,248	10,883,978
30/09/2008	4,579,289	121,462	1,354,503	703,590	3,653,963	10,412,807
31/12/2007	3,284,311	55,053	1,128,429	757,516	3,346,430	8,571,739

⁽¹⁾ Includes income from insurance operations.
⁽²⁾ Includes profits from equity investments and from disposal of investments.

Note: the figures of 2007 and those related to the first half of 2008 were reclassified in accordance with the current internal customer segmentation criteria, so that a significant time-based comparison is possible.

Business segments

(% on total)	Private and Affluent	Corporateⁱ	Retail	Wealth Management	Other	TOTAL
Net operating margin ⁽¹⁾
2008	19.7	21.1	44.3	4.0	10.9	100.0
9 months 2008	20.2	20.3	45.1	2.7	11.7	100.0
2007	18.9	19.0	40.6	2.1	19.4	100.0
Net income from financial and insurance operations ⁽²⁾
2008	21.8	19.4	45.3	3.1	10.4	100.0
9 months 2008	22.5	18.3	43.5	2.7	13.0	100.0
2007	20.4	17.7	38.9	1.8	21.2	100.0
Operating costs
2008	20.3	7.4	50.7	2.4	19.2	100.0
9 months 2008	21.6	7.5	50.5	2.8	17.6	100.0
2007	19.7	8.1	48.9	2.9	20.4	100.0
Profit (loss) from ordinary activities
2008	24.6	43.0	34.6	4.4	-6.6	100.0
9 months 2008	24.2	37.7	30.9	2.7	4.5	100.0
2007	21.4	31.1	24.9	0.3	22.3	100.0
Net interbank
31/12/2008	0.0	0.0	0.0	23.1	76.9	100.0
30/09/2008	0.0	0.0	0.0	21.2	78.8	100.0
31/12/2007	0.0	0.0	0.0	-2.4	102.4	100.0
Loans to customers
31/12/2008	2.5	43.1	40.0	0.5	13.9	100.0
30/09/2008	2.7	43.8	41.3	0.5	11.7	100.0
31/12/2007	3.0	44.0	40.1	0.1	12.8	100.0
Amounts owed to customers
31/12/2008	40.0	10.4	38.0	0.0	11.6	100.0
30/09/2008	37.8	10.4	39.0	0.0	12.8	100.0
31/12/2007	37.6	12.3	36.2	0.0	13.9	100.0
Securities in issue and financial liabilities valued at fair value
31/12/2008	43.8	1.1	12.8	6.7	35.6	100.0
30/09/2008	44.0	1.2	13.0	6.8	35.0	100.0
31/12/2007	38.3	0.6	13.2	8.8	39.1	100.0

⁽¹⁾ Includes income from insurance operations.
⁽²⁾ Includes profits from equity investments and from disposal of investments.
Note: the figures of 2007 and those related to the first half of 2008 were reclassified in accordance with the current internal customer segmentation so that a significant time-based comparison is possible.

Segment reporting

A. Secondary reporting

Following recent acquisitions, the Carige Group has introduced a secondary reporting system by geographic areas, since the network outside Liguria (Rete Foranea) now accounts for more than 60% of the branches of the Group and requires different commercial and operational strategies than the Liguria network.

Secondary reporting is broken down as follows:

“Liguria”: representing the numbers related to customers in the branches of the Parent Bank located in this area, together with the results from Cassa di Risparmio di Savona, which is located mainly in this region;
“Foraneo”: Representing the numbers related to customers at branches of the Parent Bank located in the remaining regions, together with the results from subsidiary banks located in these geographic areas (Cassa di Risparmio di Carrara, Banca del Monte di Lucca and Banca Cesare Ponti);
“Other”: includes the remaining clientele and other companies of the Group, which do business in asset managementⁱ, insurance (life and non-life), financing and instrumental work. Balance sheet information shown in the secondary reporting tables uses the same accounting criteria and level of detail as the primary reporting.

Business geographic areas

Year 2008	Liguria	Foraneo	Other	TOTAL
Net operating margin ⁽¹⁾	453,649	427,453	132,368	1,013,470
Net income from financial and insurance operations ⁽²⁾	438,840	372,056	105,328	916,224
Operating costs	-235,562	-256,790	-115,125	-607,477
Profit (loss) from ordinary activities	203,278	115,265	-9,796	308,747
Cost income (%)	51.9	60.1	87.0	59.9
Net interbank			447,365	447,365
Loans to customers	8,727,942	10,016,230	2,172,183	20,916,355
Amounts owed to customers	5,996,811	5,606,411	402,217	12,005,439
Securities in issue and financial liabilities valued at fair valueⁱ	4,270,054	2,081,721	4,532,203	10,883,978

⁽¹⁾ Includes income from insurance operations.
⁽²⁾ Includes profits from equity investments and from disposal of investments.

Note: the caption "Other" includes the Wealth Management segment.

Business geographic areas

(% on total)	Liguria	Foraneo	Other	TOTAL
Year 2008
Net operating margin ⁽¹⁾	44.8	42.2	13.0	100.0
Net income from financial and insurance operations ⁽²⁾	47.9	40.6	11.5	100.0
Operating costs	38.8	42.3	18.9	100.0
Profit (loss) from ordinary activities	65.8	37.3	-3.1	100.0
Net interbank	0.0	0.0	100.0	100.0
Loans to customers	41.7	47.9	10.4	100.0
Amounts owed to customers	50.0	46.7	3.3	100.0
Securities in issue and financial liabilities valued at fair valueⁱ	39.2	19.1	41.7	100.0

⁽¹⁾ Includes income from insurance operations.
⁽²⁾ Includes profits from equity investments and from disposal of investments.

Note: the caption "Other" includes the Wealth Management segment.

Net income from financial and insurance operations

Business segments

Tools

Consolidated Results