[0] Banco Espirito Santo Announces 2001 First Quarter Results.Business Editors LISBON--(BUSINESS WIRE)--April 26, 2001 Banco Espirito Santo Santo, New Hebrides: see Espíritu Santo. (BES), the principal subsidiary of the Espirito Santo Financial Group S.A. (NYSE NYSE See: New York Stock Exchange :ESF (1) (Extended SuperFrame) An enhanced T1 format that allows a line to be monitored during normal operation. It uses 24 frames grouped together (instead of the 12-frame D4 superframe) and provides room for CRC bits and other diagnostic commands. ), today announced it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have 2001 First Quarter results.
HIGHLIGHTS:
- Significant Turnover Growth, namely deposits (+22.9%) and
credit (+22.7%)
- Net profit reduction (-14-4%) essentially linked to the drop
in trading and investment banking results
- Costs influenced by the acquisition/ incorporation of new
companies, reflecting on the cost to income
- Taxation of provisions for general credit risks increased tax
assessment, reducing the net profit for the period
1. OVERVIEW The deceleration deceleration /de·cel·er·a·tion/ (de-sel?er-a´shun) decrease in rate or speed. early deceleration of the economy started in the 3rd quarter of 2000 and became more noticeable in the 4th quarter, particularly in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , but also in the Euro area. In 2001 the Euro area is expected to grow by less than 2.5%, against 3.4% in the previous year. In Portugal Portugal (pôr`chəgəl), officially Portuguese Republic, republic (2005 est. pop. 10,566,000), 35,553 sq mi (92,082 sq km), SW Europe, on the western side of the Iberian Peninsula and including the Madeira Islands and the Azores in the , growth should also slow down, from 3% last year to below 2.5% in the current year. Bearing in mind the constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. referred, Group BES's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net profit reached Euro 55 million - a 14.4% drop versus the first quarter of last year. The results were strongly influenced by the drop in trading results, and all the more so since the 1st quarter of 2000 had witnessed an exceptional performance in terms of trading and investment banking. When set against a deteriorating de·te·ri·o·rate v. de·te·ri·o·rat·ed, de·te·ri·o·rat·ing, de·te·ri·o·rates v.tr. To diminish or impair in quality, character, or value: economic environment, this highlights the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. development of net interest income, which grew by 11.8% against the same period in the previous year, and also that of fees and commissions, up by 10.1%. Together, these two service areas show an increase of Euro 26.7 million (+ 11.2%). Contributing decisively de·ci·sive adj. 1. Having the power to decide; conclusive. 2. Characterized by decision and firmness; resolute. 3. Beyond doubt; unmistakable: a decisive defeat. to the growth of net interest income, interest-generating assets continued to rise, with particular emphasis on corporate credit (+25%) and mortgage lending (+21.3%). The margin was down by 9 basis points over the previous year, to 2.24% at the end of March. In the fees and commissions side, growth relied basically on traditional products. Commissions from bancassurance Bancassurance A French term referring to the selling of insurance through a bank's established distribution channels. Notes: The result is a bank that can offer banking, insurance, lending, and investment products to a customer. (+9%) and credit/debit cards (+13%) continued to perform well. Thanks to the outstanding development of the bancassurance business, contrasting with the sector's unfavorable performance, at the end of the first quarter Tranquilidade's life branch had increased its market share to 24.4%, compared to 18.5% in the same period in the previous year. Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , results from brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. (-95%) and asset management (-13%) suffered from the markets' adverse effects. However, the additional revenues generated by traditional activities were not sufficient to make up for the drop in trading and investment banking results, which fell by nearly 78%. However, the impact on results was lessened less·en v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. by the important reinforcement reinforcement /re·in·force·ment/ (-in-fors´ment) in behavioral science, the presentation of a stimulus following a response that increases the frequency of subsequent responses, whether positive to desirable events, or of provisions for securities and equity holdings in the first quarter of 2000. The drop in results was close to 41%, Euro 14 million, net of these provisions. On the other hand, the very positive performance of net income generated by the specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. consumer credit unit (+100%), leasing activities (+93%), BIC BIC See: Bank Investment Contract (+18%) and factoring operations (+18%). The tax reform effective since the beginning of the year will have a determining influence in the progress of the Portuguese economy. While profit before taxes and minority interests fell by 15%, the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as for taxes on profits dropped by a mere 8%, reflecting essentially the corporate income tax levied on half of the increase in provisions for general credit risks.
Thousand Euro
Table 1 - Income Statement Breakdown
(%)
MAR-00 MAR-01 Change
FINANCIAL RESULTS 153 023 171 083 11.8
+FEES & COMMISSIONS 85 117 93 736 10.1
+TRADING RESULTS 108 708 23 666 -78.2
=BANKING REVENUE 346 848 288 485 -16.8
-OPERATING COSTS 136 823 164 541 20.3
(DEPRECIATION) (23 833) (29 466) (23.6)
-NET PROVISIONS 105 020 34 684 -67.0
CREDIT 30 855 25 457 -17.5
SECURITIES 74 520 3 625 --
OTHERS -355 5 602 --
=EARNINGS BEFORE TAX
AND MINORITY INTERESTS 105 005 89 260 -15.0
-TAX ON PROFITS 19 158 17 608 -8.1
-MINORITY INTERESTS AND
EARNINGS IN ASSOCIATED
COMPANIES 21 622 16 664 -22.9
=NET PROFIT 64 225 54 988 -14.4
2. ACTIVITY AND FINANCIAL STRENGTH EVOLUTION
Net assets exceeded Euro 35 billion, the growth of lending
activities being particularly noteworthy, especially in mortgages
(+21.3%) and corporate credit (+25%). Our marketing strategy and the
progress achieved in purely commercial activities based on the most
advanced customer relationship management (CRM) techniques,
contributed extensively to the growth observed and yielded significant
market share gains.
Million Euros
%
Table 2 - MAIN BUSINESS VARIABLES MAR-00 MAR-01 Change
CONSOLIDATED NET ASSETS 28 518 35 044 22.9
GROSS LOANS 18 262 22 399 22.7
-MORTGAGE 6 064 7 355 21.3
-CONSUMER CREDIT 1 776 2 012 13.3
-CORPORATE LOANS 10 422 13 032 25.0
RETAIL LOANS/ TOTAL LOANS (%) 42,9 41,8
TOTAL CUSTOMER FUNDS IN 25 096 30 838 22.9
BALANCE SHEET 17 593 21 902 24.5
DESINTERMEDIATION 7 503 8 936 19.1
Funding also continued to grow at a good pace, namely considering the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in Portuguese economy and the liquidity reduction observed ob·serve v. ob·served, ob·serv·ing, ob·serves v.tr. 1. To be or become aware of, especially through careful and directed attention; notice. 2. in the Portuguese monetary aggregates. Total funding shown in the balance sheet was up by 24.5% (roughly 18% if excluding the EMTN EMTN Euro Medium-Term Note program). As to the increase in disintermediation The elimination of the distributor and/or retailer (the middleman) when making a purchase. The term is used to refer to purchasing directly from a manufacturer's Web site, the benefits of which are convenience, fast turnaround time and sometimes lower prices. , it reflects essentially the inclusion in the consolidation scope of Group BES units in Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. and Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and . The work of our global risk management (GRM GRM Gross Rent Multiplier GRM Geospatial Resource Management (GIS, mapping) GRM General Routing Matrix GRM General Relationship Model GRM Gregg Reference Manual GRM Gross Refining Margin GRM Global Request Manager ), based on increasingly sophisticated techniques, was mirrored in a better selection of risks and further enhanced our financial strength policy. The ratio of non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. at more than 90 days dropped to 1.67% (against 1.87% in March 2000), the respective coverage level by provisions improving from 132.7% to 134.9%. The same positive trend is shown in total non-performing loans, up by Euro 46 million, compared to an increase of Euro 71 million in the value of the corresponding provisions.
Table 3 - Financial Strength Indicators
MAR-00 MAR-01 (DELTA)
CUSTOMER LOANS ME 18 262 22 399 22.7
NON-PERFORMING CUSTOMER LOANS ME 377.1 423.4 12.3
TOTAL PROVISIONS FOR CREDIT ME 500.3 570.9 14.1
NPL/CUSTOMER LOANS (gross) % 2.06 1.89 -0.17 P.P.
NPL +90 DAYS/CUSTOMER
LOANS (gross) % 1.87 1.67 -0.20 P.P.
NPL COVERAGE % 146.8 152.2 5.5 P.P.
NPL COVERAGE (+ 90 days) % 132.7 134.9 2.2 P.P.
Our financial strength as measured by the traditional solvency
ratios was 9% (Bank of Portugal) and 10.5% (BIS).
3. PRODUCTIVITY
Operating costs rose by 20.3%, as a result of both the inclusion
of the new units in the consolidation and the performance of
depreciation. Considering the Group's universe of companies in March
2000 only, the operating costs have grown at a slower pace (9.6%).
Thousand Euros
CHANGE %
Table 4 - Operating Costs
MAR-00 MAR-01
Current W/acquis
STAFF COSTS 66 006 75 131 13.8 2.2
SUPPLIERS AND
EXTERNAL SERVICES 46 984 59 944 27.6 17.6
DEPRECIATION 23 833 29 466 23.6 14.4
OPERATING COSTS 136 823 164 541 20.3 9.6
Efficiency indicators have improved, if costs are compared to the
activity, and deteriorated, if set against net banking revenue.
Table 5 - Productivity Indicators
2000 1st Q/01 (DELTA)
COST-TO-INCOME (including trading) (%) 51.0 57.0 6.0 p.p.
COST-TO-INCOME (excluding trading) (%) 61.6 62.1 0.5 p.p.
OPERATING COSTS/ NET ASSETS (%) 2.08 1.94 -0.14 p.p.
TOTAL ASSETS PER EMPLOYEE 000'E 5 438 5 533 95
In tandem with the multi-channel strategy developed by BES during
the first quarter of 2001, we witnessed an increase in the number of
transactions made through the new distribution channels.
This very positive development not only allowed a rising number of
customers to do their banking with greater convenience but also
released the branches' commercial teams for other higher added-value
tasks.
Table 6 - Progress Of
Operations Through Direct
Channels 1st Q 1st Q. ANNUAL GROWTH
2000 2001 (2000-2001)
NO. OF BES DIRECTO CUSTOMERS 100 378 137 940 37%
NO. OF CALLS /MONTH 192 054 224 494 17%
NO. OF BESNET CUSTOMERS 16 375 182 937 1 017%
NO. OF LOGINS/MONTH 99 228 429 695 333%
TOTAL % OF TRANSAC.
(BES DIRECTO + BESNET) 6% 11% 83%
STOCK MARKET ORDERS 56% 71% 27%
TRANSFERS 8.8% 17.5% 99%
PAYMENT OF SERVICES 2.2% 7.1% 223%
CHECKBOOK REQUESTS 11.1% 18.8% 69%
Group BES's strategic guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. towards greater efficiency have seen fresh developments with the implementation of two far-reaching far-reach·ing adj. Having a wide range, influence, or effect: the far-reaching implications of a major new epidemic. projects: the back-office zero project, which seeks to eliminate administrative burdens at branch level, and the Integration Project, which will concentrate the entire logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. and information systems support to BES, BIC, BESI and BESSA activities, under a single operational basis. Over the next two years these two projects, which are progressing according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. plan, will cut approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 790 jobs.
THE BOARD OF DIRECTORS
BANCO ESPIRITO SANTO
CONSOLIDATED BALANCE SHEET AT MARCH 31, 2000
Mar, 2000 Mar, 2001
(10(3) EUR) (10(3) EUR)
NET ASSETS
Cash and liquid assets held at Central Banks 662 375 539 619
Current accounts with credit institutions 479 694 632 897
Other assets with credit institutions 2 781 773 3 750 886
(Provisions) (21 151) (40 803)
Advances and loans to customers 18 262 461 22 398 965
(Provisions) (291 810) (309 168)
Bonds and other fixed interest securities 3 825 019 4 543 804
(Provisions) (45 264) (55 314)
a) Public sector issuers 1 193 692 1 721 119
(Provisions) (8 070) (7 353)
b) Other issuers 2 610 958 2 761 600
(Provisions) (37 194) (47 961)
c) Own securities 20 369 61 085
Shares and other floating rate securities 897 400 655 317
(Provisions) (33 366) (58 738)
Shareholdings in associated companies 21 094 26 074
(Provisions)
Other shareholdings 81 273 800 728
(Provisions) (2 756) (2 424)
Intangible assets 285 570 360 971
(Depreciations) (145 463) (212 006)
Tangible assets 948 206 994 553
(Depreciations) (508 448) (550 866)
Treasury Stock 81 087
Other assets 544 217 471 734
(Depreciations) (18 564) (18 072)
Prepayments and accrued income 796 178 1 034 925
TOTAL NET ASSETS 28 518 438 35 044 169
BANCO ESPIRITO SANTO
CONSOLIDATED BALANCE SHEET AT MARCH 31, 2000
Mar, 2000 Mar, 2001
(10(3) EUR) (10(3) EUR)
LIABILITIES AND SHAREHOLDERS' EQUITY
Amounts due to Credit Institutions 7 084 113 8 510 581
a) Sight Deposits 1 054 770 509 305
b) Time or notice deposits 6 029 343 8 001 276
Amounts due to customers 14 352 023 15 128 892
a) Savings deposits 2 465 180 2 498 428
b) Sight deposits 4 778 629 5 178 812
c) Time deposits 7 108 214 7 449 652
Debt Securities 3 241 301 6 775 363
a) Outstanding bonds 2 193 909 4 140 363
b) Other 1 047 392 2 635 000
Other Liabilities 162 790 193 199
Accruals and deferred income 459 302 966 157
Provisions for risks and charges 212 141 265 724
a) Provisions for pensions and
similar charges 3 632 3 988
b) Other provisions 208 509 261 736
Fund for general banking risks 80 152 55 378
Subordinated debt 1 079 699 1 097 374
Subscribed capital 587 500 1 000 000
Share premium account 221 788 293 562
Reserves 126 132 - 82 127
Revaluation reserves 30 686
Results carried forward 177 150 189 023
Minority interests 639 436 598 055
Consolidated profit for year 64 225 54 988
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 28 518 438 35 044 169
BANCO ESPIRITO SANTO
CONSOLIDATED PROFIT AND LOSS ACCOUNTS AT MARCH 31, 2000
Mar, 2000 Mar, 2001
(10(3) EUR) (10(3) EUR)
CREDIT
Interest and similar income 629 233 651 585
Income from securities 702 204
Commissions 80 769 89 058
Dealing profits 626 878 1 209 111
Replacements and cancellations of
provisions 29 471 50 720
Results of associated companies and
branches excluded from the
consolidation 206 2 367
Other operating income 17 552 31 372
Extraordinary income 4 198 4 120
Minority interests - 271
TOTAL CREDIT 1 389 009 2 038 808
DEBIT
Interest and similar costs 476 210 480 502
Commissions 13 204 26 694
Losses on financial operations 518 872 1 185 649
General administrative costs 112 990 135 075
a) Staff costs 66 006 75 131
b) Other administrative costs 46 984 59 944
Amortisation and depreciations
over the year 23 833 29 466
Other operating costs 1 709 1 193
Provisions for overdue loans and
other risks 134 338 85 262
Provisions for financial
investments 153 142
Extraordinary losses 4 397 7 932
Corporations tax 19 158 17 608
Other taxes 1 602 1 441
Results of associated companies and
branches excluded from the
consolidation - 82
Minority interests 18 318 12 774
Consolidated profit for the year 64 225 54 988
TOTAL DEBIT 1 389 009 2 038 808
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