Parent Company financial statements Profit and loss account

Annual Report on the Parent Company 2003
BANCA CR FIRENZE
Limited Liability Company

Table of Contents
Banca CR Firenze S.p.A. - Summary data 20
Reclassified profit and loss account 21
Reclassified balance sheet 22
Directors’ Report on the Parent Company
The economic scene 23
Comments on results 27
The Bank’s position 31
Developments in activities 45
Area coverage and human resources 54
Other information 58
Outlook for the future 62
Proposal to approve the financial statements and the allocation of the net profit for the year 63
Parent Company Financial Statements
Balance sheet 65
Profit and loss account 67
Notes to the Parent Company Financial Statements
Part A - Valuation methods and accounting principles 68
Section 1 • Description of valuation methods and accounting principles 68
Section 2 • Fiscal adjustments and provisions 71
Part B - Information on the balance sheet 72
Section 1 • Loans 72
Section 2 • Securities 77
Section 3 • Participating interests 80
Section 4 • Property and equipment, and intangible assets 87
Section 5 • Other assets 90
Section 6 • Borrowings 92
Section 7 • Provisions 94
Section 8 • Share capital, reserves, reserve for general banking risks and subordinated debt 99
Section 9 • Other liabilities 102
Section 10 • Guarantees and commitments 103
Section 11 • Concentration and distribution of assets and liabilities 106
Section 12 • Asset management, custody and administration 114
Part C - Information on the profit and loss account 116
Section 1 • Interest 116
Section 2 • Commissions 118
Section 3 • Gains and losses on financial transactions 120
Section 4 • Administrative expenses 122
Section 5 • Value adjustments, value re-adjustments and provisions 124
Section 6 • Other profit and loss components 128
Section 7 • Additional information on the profit and loss account 129
Part D - Other information 130
Section 1 • Directors and Statutory Auditors 130
Section 2 • Parent Company or European Union parent bank 131
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Table of Contents
Exhibits to the Parent Company Financial Statements
Statement of changes in share capital, reserves, reserve for general banking risks and net profit for the year 132
Statement of changes in financial position 133
Schedule of properties at the year-end 135
Schedule of participating interests 140
Accounts of the Supplementary Pension Funds (unincorporated) 142
Accounts of “CRF Previdenza” Open-end Contributory Pension Fund 147
Schedule of convertible bonds 178
Report on the Statutory Auditors 179
Report on the Independent Auditors 183
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Banca CR Firenze S.p.A. - Summary data
(amounts in millions of euros)
31 December 2003 31 December 2002 Change %
PROFIT AND LOSS ACCOUNT DATA
Interest margin 286.9 299.5 -4.2%
Net commissions and other operating income 235.7 222.1 6.1%
Administrative expenses 366.5 359.8 1.9%
Net provisions for and value adjustments to loans and non-current financial assets 61.7 57.4 7.5%
Profit from ordinary activities 145.9 162.5 -10.2%
Net profit for the year 90.5 90.1 0.4%
BALANCE SHEET DATA
Total assets (excluding own shares) 12,291.8 12,052.9 2.0%
Customer loans (excluding doubtful loans) 7,587.2 7,487.6 1.3%
Securities 1,352.5 1,332.3 1.5%
Participating interests 991.3 854.2 16.1%
Customer deposits, debt securities and third-party funds under administration 8,501.0 8,142.6 4.4%
Subordinated debt 964.2 704.2 36.9%
Shareholders’ equity (excluding own shares and including net profit for the year) 995.6 961.8 3.5%
CUSTOMERS’ FINANCIAL ASSETS
Total financial assets 20,872.8 19,762.0 5.6%
Direct borrowing 9,465.2 8,846.8 7.0%
Indirect borrowing 11,407.6 10,915.2 4.5%
- Administered savings 4,412.6 4,395.1 0.4%
- Managed savings 6,995.0 6,520.1 7.3%
- Asset management (assets managed with any destination – “GPM”;
- assets managed placed in open-end investment companies – “GPS”;
-assets managed placed only with funds run by related or associated banks - “GPF”) 1,714.9 1,344.8 27.5%
- Funds 3,469.7 3,722.7 -6.8%
- Insurance (actuarial reserves) 1,810.4 1,452.6 24.6%
EARNINGS RATIOS
ROE 1) 9.8% 10.1% -0.3%
Cost / Income ratio 2) 65.0% 63.4% 1.6%
RISK RATIOS ON LOANS
Net doubtful loans / net customer loans 1.21% 1.04% 0.17%
Net non-performing and restructured loans / net customer loans 1.59% 1.87% -0.28%
Net risk / net customers loans 2.81% 2.91% -0.10%
SOLVENCY RATIOS
Primary capital / Risk-weighted assets 9.04% 9.37% -0.33%
Regulatory capital / Risk-weighted assets 16.28% 14.76% 1.52%
THE BANK’S SHARE
Number of shares in circulation (millions) 1.088 1.086 0.2%
Unit share value (in euros)
- average 1.199 1.270 -5.6%
- minimum 1.051 1.010 4.1%
- maximum 1.440 1.429 0.8%
Earnings per share, calculated on the average number of shares in circulation (in euros) 0.083 0.083 0.0%
Dividend per share (in euros) 0.052 3) 0.052 0.0%
Dividend / average annual price 4.34% 3) 4.09% 0.25%
Equity per share in circulation (in euros) 0.915 0.886 3.3%
OPERATING STRUCTURE
Employees 3,337 3,401 -1.9%
Financial promoters 131 66 98.5%
Bank branches 15 10 60.0%
Financial spaces 278 273 1.8%
1) Net profit / Average equity excluding net profit for the year.
2) Administrative expenses (net of expense recoveries), charges for amortisation and depreciation and provisions for risks and charges relating to Supplementary Pension Fund staff /
Overall business margin (net of expense recoveries); had this ratio been calculated comparing administrative expenses (excluding indirect and miscellaneous taxes) and amortisation
and depreciation (excluding amortisation of goodwill) against the overall business margin, the cost/income ratios for 2003 and 2002 would have been 62.7% and 61.1% respectively.
3) Dividend proposed by the Board of Directors.
20

Parent Company financial statements
Introduction
The financial statements of Banca CR Firenze SpA (the “Bank”) have been prepared in compliance with the provisions of Legislative
Decree 87 of 27 January 1992 and subsequent Regulations issued by the Bank of Italy. They comprise the balance sheet, the profit and
loss account, the notes to the financial statements and the relative exhibits, which have all been drawn up in the form required by law.
They are accompanied by the Directors’ Report.
In accordance with the regulations issued by the Bank of Italy and Consob, the balance sheet and profit and loss account are drawn up
in euro units, whereas the notes to the financial statements and the exhibits have been prepared in thousands of euros, unless otherwise
indicated.
Prior year comparative figures are given for all items in the balance sheet, profit and loss account and notes to the financial statements,
unless otherwise stated.
The following exhibits are attached to the financial statements:
• statement of changes in share capital, share premium accountsovrapprezzi di emissione, reserves, reserve for general banking risks
and net profit for the year;
• statement of changes in financial position;
• schedule of properties held at the year-end, showing revaluations made over the years in accordance with the related laws (in euros);
• schedule of participating interests (lines 70 and 80 of the balance sheet) held at the year-end and changes therein in the year (in
euros);
• Supplementary Pension Funds (in euros);
• annual accounts of the contribution-based Open-end Pension Fund, known as the “CRF Previdenza” (in euros);
• schedule of convertible bonds (in euros).
The Bank’s 2003 financial statements will be deposited within the date fixed by law at the Bank’s registered office together with integral
copies of the approved 31 December 2003 financial statements of subsidiaries and a summary schedule, if it is the case, of the key
data for any subsidiaries whose financial statements might be presented for approval to their respective Shareholders’ Meetings subsequent
to the parent company financial statements.
The financial statements are audited by PricewaterhouseCoopers SpA who were appointed by the 28 April 2003 Annual General
Meeting of Shareholders as auditors for the 2003/2005 three-year period.
In addition, the consolidated financial statements of the Banca CR Firenze Group (the “Group”il “Gruppo) are presented together with
the parent company financial statements, accompanied by the Directors’ Report on the Group. Pursuant to article 77 of Consob Directive
11971 of 1999 (the Italian regulator for listed companies), these documents will also be deposited at the Company’s registered office
together with the Independent Auditors’ Opinion and a summary schedule of the key data from the associated companies’ latest financial
statements.
64

Parent Company financial statements
Parent Company financial statements
Balance sheet
ASSETS 31 December 2003 31 December 2002
10 Cash on hand and with central banks and post offices 80,104,816 86,210,476
20 Italian government securities and similar
"securities eligible for refinancing withcentral banks" 15,257,512 110,884,530
30 Amounts owing by banks 1,360,277,676 1,403,578,323
(a) sight 396,048,249 281,699,857
(b) other 964,229,427 1,121,878,466
40 Customer loans 7,680,316,834 7,566,523,627
including:
- loans from third-party funds under administration 454,857 742,016
50 Bonds and other debt securities 1,309,444,026 1,186,904,226
(a) of public issuers 820,535,103 873,538,991
(b) of banks 322,110,702 199,464,316
including:
- own securities 39,389,709 34,675,316
(c) of financial institutions 77,463,677 51,200,939
(d) of other issuers 89,334,544 62,699,980
60 Shares and other equity securities 27,749,854 34,519,263
70 Participating interests, other than in Group companies 331,075,181 302,295,338
80 Participating interests in Group companies 660,247,390 551,890,359
90 Intangible assets 38,675,899 33,080,572
including:
- goodwill 10,558,362 0
100 Property and equipment 196,964,122 243,154,068
120 Own shares (Nominal value Euro 22,800) 56,720 209,686
130 Other assets 527,253,898 471,272,520
140 Accrued income and prepayments 64,426,931 62,584,995
(a) accrued income 62,189,451 60,014,250
(b) prepayments 2,237,480 2,570,745
including:
- issue discounts on securities 1,499,949 403,208
TOTAL ASSETS 12,291,850,859 12,053,107,983
65

LIABILITIES AND SHAREHOLDERS' EQUITY 31 December 2003 31 December 2002
10 Amounts owing to banks 950,455,588 1,326,627,971
(a) sight 338,631,266 485,684,144
(b) at maturity date or notice 611,824,322 840,943,827
20 Customer deposits 6,116,339,175 5,727,213,285
(a) sight 5,568,471,917 5,138,681,127
(b) at maturity date or notice 547,867,258 588,532,158
30 Debt securities issued 2,382,550,992 2,412,379,218
(a) bonds 2,107,696,840 2,088,254,225
(b) certificates of deposit 223,297,047 271,673,161
(c) other 51,557,105 52,451,832
40 Third-party funds under administration 2,161,027 2,958,371
50 Other liabilities 457,573,252 488,561,094
60 Accrued liabilities and deferred income 59,623,169 59,493,479
(a) accrued liabilities 56,413,846 55,715,778
(b) deferred income 3,209,323 3,777,701
70 Provision for staff termination pay 114,416,445 111,282,904
80 Provisions for risks and charges 231,541,628 240,885,617
(a) provisions for pensions and similar obligations 115,310,667 111,672,505
(b) tax provisions 68,498,053 79,207,747
(c) other provisions 47,732,908 50,005,365
90 Provisions for loan losses 17,374,544 17,647,893
100 Reserve for general banking risks 62,474,880 62,474,880
110 Subordinated debt 964,190,080 704,190,080
120 Share capital 620,151,521 619,154,744
130 Share premium 375,438 0
140 Reserves 222,115,558 190,182,407
(a) legal reserve 124,286,949 124,286,949
(b) reserve for own shares 56,720 209,686
(c) statutory reserves 10,969,421 11,383,304
(d) other reserves 86,802,468 54,302,468
170 Net profit for the year 90,507,562 90,056,040
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 12,291,850,859 12,053,107,983
GUARANTEES AND COMMITMENTS 31 december 2003 31 december 2002
10 Guarantees issued 479,847,107 454,754,713
including:
- acceptances 9,297,797 8,594,672
- other guarantees 470,549,310 446,160,041
20 Commitments 308,488,282 330,970,407
66

Parent Company financial statements
Parent Company financial statements
Profit and loss account
31 December 2003 31 December 2002
10 Interest earned and similar income 463.743.878 531.266.054
including:
- on customer loans 395.017.117 450.352.273
- on debt securities 33.884.350 45.671.507
20 Interest expense and similar charges -176.859.417 -231.803.259
including:
- on customer deposits -63.263.200 -83.583.334
- on debt securities -84.154.109 -104.960.459
30 Dividends and other income 69.024.083 94.353.741
(a) on shares and other equity securities 274.426 1.573.882
(b) on participating interests, 17.311.413 48.097.515
(c) on participating interests in Group companies 51.438.244 44.682.344
40 Commissions earned 179.409.053 165.512.741
50 Commissions expense -18.721.507 -17.205.209
60 Gains (losses) on financial transactions 22.741.025 8.064.397
65 Net income from investments earmarked
"for pension funds and similar obligations" 7.605.302 5.555.904
70 Other operating income 78.338.693 77.281.668
80 Administrative expenses -366.454.471 -359.836.014
(a) staff costs -223.371.442 -221.122.609
including:
- salaries and wages -162.817.674 -161.481.294
- social security contributions -39.678.326 -39.564.888
- staff severance pay -14.595.604 -14.179.466
- pensions and similar obligations -2.053.071 -1.644.420
(b) other administrative expenses -143.083.029 -138.713.405
85 Transfer-out of net income from investments earmarked for
pension funds and similar obligations -7.605.302 -5.555.904
90 Value adjustments to intangible assets and property and equipment -40.278.299 -44.263.283
100 Provisions for risks and charges -8.678.623 -18.655.289
110 Other operating expenses -3.280.313 -3.449.441
120 Value adjustments to loans and "to provisions for guaranteesand commitments" -58.110.556 -50.051.828
130 Value re-adjustments to loans and
"to provisions for guaranteesand commitments" 19.632.842 26.587.546
140 Provisions for loan losses -11.816.429 -11.407.715
150 Value adjustments to non-current financial assets -2.998.537 -4.941.834
160 Value re-adjustments to non-current financial assets 217.695 1.034.945
170 Profit from ordinary operations 145.909.117 162.487.220
180 Exceptional income 19.779.479 11.667.841
190 Exceptional charges -9.015.997 -9.600.799
200 Gain on exceptional items - net 10.763.482 2.067.042
220 Income taxes for the year -66.165.037 -74.498.222
230 Net profit for the year 90.507.562 90.056.040
67

Reclassified profit and loss account
(amounts in millions of euros)
31 December 2003 31 December 2002 Change %
Interest margin 286.9 299.5 -4.2%
Net commissions and other operating income – net 235.7 222.1 6.1%
Gains on financial transactions and share dividends 23.0 9.6 139.6%
Dividends from participating interests 68.7 92.8 -26.0%
Overall business margin 614.3 624.0 -1.6%
Administrative expenses -366.5 -359.8 1.9%
- staff costs -223.4 -221.1 1.0%
- other administrative expenses -143.1 -138.7 3.2%
Depreciation of property and equipment and amortisation
of intangible assets -40.2 -44.3 -9.3%
Operating profit 207.6 219.9 -5.6%
Provisions for risks and charges, and net value adjustments
to loans and non-current financial assets -61.7 -57.4 7.5%
Profit from ordinary activities 145.9 162.5 -10.2%
Gains (losses) on exceptional items – net 10.8 2.1 414.3%
Gross profit 156.7 164.6 -4.8%
Income taxes for the year -66.2 -74.5 -11.1%
Net profit for the year 90.5 90.1 0.4%
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