Banco Espirito Santo 1H2005 Consolidated Results (Unaudited).LISBON, Portugal -- Banco Espirito Santo (BES; Bloomberg BESNN PL; Reuters BESN.IN) today announced its 1H2005 results. HIGHLIGHTS --Net income (IFRS) rose to euro 149.0 million in the first half of 2005, up by 13.0% from the first half of 2004 results (PABS - Portuguese accounts for the banking system), which corresponds to ROE of 13.6%. 2004 first half results under IFRS stood at euro 74 million, penalised by pension costs. --Banking income grew by 2.6%, subdued by poor economic activity, low interest rates, capital markets and aggressive competition with direct impact on net interest income and commissioning. --Operating costs dropped by 6.3%, pulled by decrease of pension costs and significant reduction in depreciation. Productivity and efficiency continue to reflect a consistent improvement trend. --Sound business growth: customer loans, including securitisation, increased by 9.8% whereas total customer funds grew 5.0% pushed by off --balance sheet products (+17.5%). --Clearly positive Assurfinance results, namely in the new product called "T-Card": 12 000 new clients acquired; mortgage production represents 15% of total BES new mortgage production; the number of cards issued reached 15 000. --Credit provision reinforcement policy has been maintained, improving the overdue loans coverage ratio (over 90 days) to 181.1% (156.1% in June 2004). --Significant gains in the main equity exposures in the available for sale portfolio, which unrealised capital gains reached euro 128.1 million as of 30 June 2005 (euro 48.2 million in March 2005). --Bes Group received several awards in the Investor Relations area, from which we highlight the following: Best Annual Report among the Financial Institutions, Best Corporate Governance Information, Best Financial Institution in Research.
INDEX
1. Foreword on the new regulatory framework
2. Economic overview
3. Results
3.1 Net interest income
3.2 Fees and commissions
3.3 Capital markets results and other
3.4 Operating costs
4. Activity summary
5. Asset quality, provisioning and solvency
6. Productivity
7. Profitability
8. Bank of Portugal reference indicators
9. Direct banking and other
1. FOREWORD ON THE NEW REGULATORY FRAMEWORK The Regulation (EC) 1606/2002 of 19 July, 2002 of the European Parliament and of the Council defines that companies with securities listed on a regulated market of any Member State should prepare their consolidated accounts for each financial year starting 1 January 2005, and thereafter, under the International Financial Reporting Standards (IFRS), also known as the International Accounting Standards (IAS). When this regulation was transposed into the Portuguese legislation, the Bank of Portugal issued the Notice N. 1/2005 that established the standards and reporting model for the institutions subject to its supervision. Given that BES is subject to these rules, the 2005 full year and interim financial statements were prepared under the IFRS. Furthermore, and due to this change in the accounting regulations, BES Group's 2005 financial statements (prepared under the IFRS/IAS) are not directly comparable with the financial statements disclosed in 2004, which had been prepared under the (Portuguese) Plan of Accounts for the Banking System (PABS), as defined by instruction N. 4/96 and N. 71/96 from the Bank of Portugal. Therefore, in order to make the financial statements comparable, and in line with the recommendations of the Committee of European Securities Regulators (CESR CESR - Center for Earth Systems Research CESR - Center for Economic and Social Rights CESR - Center for the Economic Study of Religion CESR - Centre d'Etude Spatiale des Rayonnements CESR - Committee of European Securities Regulators CESR - Communications Electronics Schedule Review CESR - Computer Equipment or Service Request CESR - Consolidated Exercise Support Request CESR - Cornell Electron Storage Ring CESR - Customer Enhanced Service Ring (Sprint)) and the Portuguese Securities Market Commission (CMVM CMVM - Comissão do Mercado de Valores Mobiliários (Portugal)), the BES Group has restated its 2004 financial statements applying IAS/IFRS, except IAS 32 and IAS 39 application, as allowed by IFRS 1. According to the Instruction N. 23/2004 from the Bank of Portugal, the individual accounts and only the individual accounts, are to be prepared under the Adjusted Accounting Standards (AAS) from 2005 onwards. The AAS framework is similar to the IAS/IFRS, except on the following issues: --maintains the old method for valuation and provisioning of loans granted; --defers the accounting adjustment arising from recognition of certain liabilities related to retirement pensions and post-retirement health benefits; --does not allow fair value application to tangible assets. 2. ECONOMIC OVERVIEW World economic forecasts were reviewed downwards during the first half of 2005, generalising the expectation of an activity slowdown in the United States, Europe and Asia as from the second half of the year. This was in part due to the persistently high levels of oil prices - Brent barrel price jumped by 36.3% in the first six months of the year to USD 54.85 - as well as to the rise in the US reference rates, and its medium term potential subduing effect on the North-American and global economies. Thus, the main US stock market indices dropped during the first half of the year (although recovered slightly in the second quarter): the Nasdaq fell by 5.45%, while the general Dow Jones and S&P 500 indices were down by 4.71% and 1.7% respectively. Despite the fall in the economic agents' confidence levels, the US economy maintained a favourable performance, with positive signs in labour and housing markets. Nevertheless, European stock markets rose, driven by interest rates at historically low levels (BCE refi Refi - Refinance/Refinancing rate at 2%) and the euro's downward trend against the dollar (-10.78% in 1H05, to EUR/USD 1.2094, with potential benefits for the export sector). Hence the Paris CAC 40 is up by 10.68%, the Frankfurt DAX - by 7.76% and the Madrid IBEX 35 - by 7.74%. Portugal's PSI20 fell by 1.18%. In the Euro Area, economic activity is thought to have cooled, with GDP levels going from 0.5% in Q1 to 0.3% in Q2. No signs of inflationary pressures, given the current situation marked by corporate restructuring efforts and high levels of unemployment translating into a continuous deceleration of labour costs. In Portugal, the real GDP growth in H1 was close to zero, reflecting the downturn trend in economic activity (particularly visible in industrial production and residential housing indices). Consumer confidence levels dropped sharply in June, interrupting the recovery observed earlier in 2005. 3. RESULTS 2005 first half net income totalled euro 149.0 million, compared to euro 131.8 million in the first half of 2004, under the accounting regulations in force at the time (PABS) and euro 74.0 million, under the IFRS(1). Please note that the 2004 year-end results, restated under IFRS, were negatively influenced by disability retirement costs that occurred during that year. The table below shows the income statement for 2005 first half along with the 2004 comparative data:
Income Statement
Euro million
----------------------------------------------------------------------
June D%
------------------------------------
2004 2004 2005
PABS IFRS IFRS IFRS
----------------------------------------------------------------------
Net Interest Income 352.134 9.53 45.7 -1.1
(+)Fees and Commissions 275.927 5.92 55.4 -7.4
(=)Commercial Banking Income 628.0 625.4 601.1 -3.9
(+)Trading and Other Results 93.0 75.2 118.0 56.9
(=)Banking Income 721.0 700.6 719.1 2.6
(-)Operating Costs 363.742 9.64 02.6 -6.3
(=)Gross Results 357.3 271.0 316.5 16.8
(-)Net Provisions 179.515 5.51 46.1 -6.0
Credit 131.813 1.81 20.5 -8.6
Securities 6.0 6.0 17.9 198.3
Other 41.7 17.7 7.7 -56.5
(=)Income before Taxes
and Minorities 177.8 115.5 170.4 47.5
(-)Taxes 24.5 26.2 19.4 -26.0
(=)Income after Taxes 153.3 89.3 151.0 69.1
(-)Minority Interests 21.5 15.3 2.0 -86.9
(=)Net Income 131.8 74.0 149.0 101.4
----------------------------------------------------------------------
(1)IAS 32 and 39 were not applied in 2004, based on IFRS 1.
3.1 Net Interest Income Net interest income, at euro 345.7 million, reflecting a YoY drop of 1.1%. The first half of the year continued to feature the same external constraints that have been negatively influencing the progress of net interest income, namely pressure on credit products spreads, particularly in lower risk segments, and the continuing very low level of euro interest rates, hampering the profitability of funds. These adverse factors were to some extent offset by the positive impact of business growth, namely in loans that grew 9.8% (including securitised loans) YoY. IFRS has brought yet another constraint, introducing more restrictive criteria for hedging policies definition. This obliged, as from 1 January 2005, to reclassify part of the derivatives transactions from the hedging portfolio to the trading portfolio, which means that the corresponding results were recognised as results from financial operations instead of net interest income. 3.2 Fees and Commissions The performance of fees and commissions in the first half of the year has been conditioned by the volatile nature of investment banking activities and the adverse effects of fierce competition backed by aggressive promotion of sharp price reductions and even free services. Furthermore, the introduction of IFRS has lead to accrual of fees of commissions.
Fees and Commissions
Euro million
----------------------------------------------------------------------
June
--------------
2004 2005
IFRS IFRS D%
----------------------------------------------------------------------
Fees and Commissions based on applicable rules 275.9 255.4 -7.4
Investment Banking Effect (37.4) (24.1) -
Deferred Commissions effect (10.6) - -
----------------------------------------------------------------------
Comparable Fees and Commissions 227.9 231.3 1.5
----------------------------------------------------------------------
BES Group Fees and Commissions went up by 1.5% on a comparable basis (i.e. with accruals and investment banking activity effects). 3.3 Capital markets results and other IFRS adoption has introduced significant changes to trading results analysis: --New classification of securities portfolios, that are now subject to the fair value revaluation principle (market price or fair value), with potential impact on the income statement or equity; and --More restrictive criteria in hedging policies definition, specifically when more volatile instruments such as derivatives are used. Capital markets and other results reached euro 118.0 million in 2005 first half. As in the past, these results were based diversification of market risk. In the second quarter of 2005 we have increased emphasis on emerging markets trading, with a special focus on Latin American countries. Both interest rate and exchange rate performance was favourable, thus compensating the flattening yield curves of European and US markets as well as the negative performance of the domestic market. 3.4 Operating costs Operating costs reached euro 402.6 million in the first half of 2005, corresponding to a YoY drop of 6.3%. The cost reduction has been underpinned by lower investment, translating into a 20.4% drop in amortisation and depreciation, as well as by lower pension costs, which in 2004 were influenced by disability retirement costs.
Operating Costs
Euro million
----------------------------------------------------------------------
June
------------------------- D%
2004 2004 2005 IFRS
PABS IFRS IFRS
----------------------------------------------------------------------
Staff Costs 161.7 236.5 202.6 -14.2
Salaries 148.6 171.1 175.8 2.7
Pensions 13.1 65.4 26.8 -58.9
Other Admin Expenses 136.3 142.6 159.8 12.1
Depreciation and Amortisation 65.7 50.5 40.2 -20.4
----------------------------------------------------------------------
Operating Costs 363.7 429.6 402.6 -6.3
----------------------------------------------------------------------
Staff costs, driven by the annual salary increases and promotions, went up by 2.7%. These costs already include the accrual of employee bonuses, which will naturally be subject to adjustments during the year. General administrative costs, though slowing down when compared to Q1, rose by 12.1% (14% in Q1). The cost of information and operative systems changes due to Basel II compliance projects as well as adaptation to the introduction of the IFRS totalled euro 12 million. A further euro 2.1 million was spent on promotion of "T-Card" project, an Assurfinance project focused on acquiring Clients from Tranquilidade that are not yet BES Clients. Excluding the above mentioned projects costs and pension costs, the administrative costs would have fallen by 0.7%. 4. ACTIVITY SUMMARY BES Group's activity during the first quarter of the year continued to focus on the following key commercial factors: --Differentiation through quality; --Commitment to the higher value Clients and products; --Specific value proposition for the Clients of Tranquilidade. The Group maintained a strong commercial activity, with total assets rising by 14.8% and customer loans by 9.8%. Total customer funds grew by 5.0%, despite the increasing competition and the increase of migration of savings to alternative products, namely off- balance sheet products.
Main business variables
Euro million
----------------------------------------------------------------------
June
-------------------------
2004 2004 2005 D%
PABS IFRS IFRS IFRS
----------------------------------------------------------------------
Total Assets(1) 60 945 58 042 66 603 14.7
----------------------------------------------------------------------
----------------------------------------------------------------------
Net Assets 44 082 41 568 46 999 13.1
Gross Loans (including
securitised) 29 819 29 943 32 885 9.8
Mortgage 10 737 10 737 11 694 8.9
Other Loans to Individuals 1 505 1 505 1 728 14.8
Corporate 17 577 17 700 19 463 10.0
Loans to Individuals / Gross
Loans (%) (2) 37.2 37.0 35.4 -1.6 p.p.
Customer Funds
+ Deposits and equivalents(3) 21 190 21 250 20 509 -3.5
+ Debt Securities placed with
Customers 5 110 3 207 3 581 11.7
= On-Balance Sheet Customer
Funds 26 300 24 457 24 090 -1.5
+ Off- Balance Sheet Customer
Funds 12 637 12 637 14 843 17.5
= Total Customer Funds 38 937 37 094 38 933 5.0
------------------------------------- ------- ------- -------------
Transformation Ratio (%) (2) 102 112 122 10 p.p.
------------------------------------- ------- ------- -------------
(1) Net Assets + Asset Management + Other Off-Balance Sheet Funds
+ Securitised Credit
(2) Considering On-Balance Sheet Credit
(3) Includes: Deposits and Deposit Certificates
Credit displayed balanced growth, with mortgage loans rising by 8.9% and corporate loans advancing by 10%. Other loans to individuals were up by 14.8%, driven by Plano BES 95, that reached euro 149 million in total amount placed until 30 June 2005.
LOANS TO CUSTOMERS
Euro million
-------------------------------------------------------------
Jun,04 Jun,04
PABS IFRS
------------------------------------------------
Excluding Including Excluding Including
securitised securitised securitised securitised
credit credit credit credit
-------------------------------------------------------------
Gross Loans 27 587 29 819 28 100 29 943
Mortgage 8 923 10 737 8 923 10 737
Other Loans to
Individuals 1 346 1 505 1 476 1 505
Corporate 17 318 17 577 17 700 17 700
LOANS TO CUSTOMERS
Euro million
-------------------------------------------------------------
Jun,05 D IFRS (%)
IFRS
------------------------------------------------
Excluding Including Excluding Including
securitised securitised securitised securitised
credit credit credit credit
-------------------------------------------------------------
-------------------------------------------------------------
Gross Loans 30 115 32 885 7.2 9.8
Mortgage 8 924 11 694 0.0 8.9
Other Loans
to
Individuals 1 728 1 728 17.1 14.8
Corporate 19 463 19 463 10.0 10.0
Regarding the BES Investimento (BESI) activity we highlight the following operations in the M&A area: (i) advisory WhatEverNet that sold 99.69% of its capital to Pararede; (ii) advisory Salvador Caetano Group that bought 100% of Setucar Group capital; (iii) advisory to AII2IT that merged with Tecnidata. In the Project finance area: (i) Lead financer of Concessao Rodoviaria Litoral Centro (highway concessionary) that amounted euro 553 million; (ii) lead-arranger of financing of different wind energy parks, amounting euro 28 million; (iii) financial advisory to several bidders for 5 new no-toll highways in Spain. In Brokerage, we highlight growth of 90% in the portfolio management activity; In Capital markets - Fixed income, the highlight goes to: lead-arranger in financing of senior debt to Permira to acquire Supermercados Ahold in Spain. Regarding Variable income, the advisory services to EDA - Electricidade dos Acores in the privatization process of 33.92% of share capital deserves a comment. BES Group has a stake in this venture, that belongs to Bensaude Group (leader) and Fundacao Oriente. BAC - BES dos Acores (BES in the Azores islands) holds 6.5% and BES has a 9.5% in the joint holding. BAC has maintained a significant growth in mortgages and Clients funds that increased 20% and 13.4% respectively. Banco Internacional de Credito (BIC) has achieved significant results in the cross-selling activity. The cross-selling of Bancassurance (life and non-life) deserves a special note since generated 20% more fees YoY. BIC net profit stood at euro 22.1 million at half year end. Espirito Santo Activos Financeiros (ESAF ESAF - Electric Safe Arm and Fire ESAF - Enhanced Structural Adjustment Facility ESAF - Escola de Administração Fazendária (Brazil)) has reached a 17% market share in the first half of the year in assets under management. Mutual Fund grew 30.8%, a growth rate that is significantly higher than the market average of 10.8%. In Portfolio Management ESAF reached 22% of market share where as in Real Estate funds maintained the leadership position with a 18.9% market share in Portugal. As for the High Value Clients, the 360 and Small Businesses segments have maintained the positive performance, as a result of specialised approach for each segment. In the 360 segment the financial involvement and the number of Loyal Clients grew YoY by 11% and 8.5%, respectively. In the Small Businesses segment the financial involvement and the number of Loyal Clients grew YoY by 13% and 8.5%, respectively. The Assurfinance Program was launched this year aimed at acquiring Tranquilidade Clients that are not yet BES Clients. Therefore a specific value proposition has been developed with T-Card being the star product. So far this venture has reached very positive results, regarding both the number of new Clients acquired (12 000), new mortgage production (weighting 15% of total BES production, vs. 12% as at June 2004) and T-Cards placed (15 000). The Middle Market has also registered a positive performance, with an increase of financial involvement (14.9% YoY) and of the Client base (5% YoY). In the international arena we highlight the activity undertaken by BESSA in Spain, whose assets under management grew by 17% (annualised) and loans and guarantees by 35%, as a result of a significant increase of Client acquisition and transactions. BESSA is now present in S. Sebastian and Marbella, thus increasing its coverage area to 26 main Spanish cities after the merger with Banco Inversion. BES Angola reached a net profit of euro 10.3 million (the same as total of 2004). The bank increased its geographic coverage, opening new agencies in several provinces, including Zaire, which is the area of largest production of petroleum and natural gas, Cunene Cunene or Kunene (both: k  nā`nə), river, rising in W central Angola and flowing c.750 mi (1,200 km) S and W to the Atlantic Ocean. Its lower course forms part of Angola's border with Namibia. and Huila.5. ASSET QUALITY, PROVISIONING AND SOLVENCY The introduction of the IFRS led to significant changes in the provisioning rules: --IFRS impairment methodology now applies to loans granted, which differs from the former by extending the method for discounting cash flows to all segments of credit; --in the portfolio of securities available for sale, unrealised capital losses in securities are no longer provisioned at all times, but only when there is evidence of impairment; --with regard to the remaining assets and contingencies, there are no significant changes versus the former policy adopted by the Group. As referred in the first quarter results presentation, and notwithstanding the new regulatory framework, an adjustment of euro 20 million was made in provisions for credit, mainly through application of the discounted cash flow method to certain credits for which provisions had not been calculated under this method. In the first half of the year the Group maintained its traditionally prudent stance in credit provisioning, the provision charge totalling euro 120.5 million. Hence the provision coverage of overdue loans over 90 days rose to 181.1% (156.1% in June 2004), while the ratio of overdue loans over 90 days to total loans dropped to 1.50% (1.80% in June 2004). Overdue loans dropped by euro 71.4 million YoY, mainly due to a euro 71 million sale of mortgage overdue loans.
ASSET QUALITY
----------------------------------------------------------------------
Change IFRS
---------------------
Jun,04 Jun,04 Jun,05 absolute relative(%)
PABS IFRS IFRS
----------------------------------------------------------------------
----------------------------------------------------------------------
Gross Loans eur mn 27 587 28 100 30 115 2 015 7.2
Overdue Loans eur mn 582.9 588.0 516.6 -71.4 -12.1
Overdue Loans
greater than
90 days eur mn 505.3 505.3 451.3 -54.0 -10.7
Overdue and
Doubtful Loans
(BoP) (a) eur mn 586.4 586.4 562.0 -24.4 -4.2
Provisions for
Credit eur mn 788.7 788.7 817.3 28.6 3.6
----------------------------------------------------------------------
----------------------------------------------------------------------
Overdue Loans /
Gross Loans % 2.11 2.09 1.72 -0.37 p.p.
Overdue Loans
greater than 90
Days / Gross
Loans % 1.83 1.80 1.50 -0.30 p.p.
Overdue and
Doubtful Loans
/ Gross Loans % 2.13 2.09 1.87 -0.22 p.p.
Coverage of
Overdue Loans % 135.3 134.1 158.2 24.1 p.p.
Coverage of
Overdue Loans
greater than 90
Days % 156.1 156.1 181.1 25.0 p.p.
Coverage of
Overdue and
Doubtful Loans % 134.5 134.5 145.4 10.9 p.p.
----------------------------------------------------------------------
(a) According to BoP Circular- Letter no. 99/03/2003
Provisions for securities were reinforced by euro 17.9 million in the period, mainly due to the losses in PT Multimedia equity holding. Other provisions reinforcement led to a surplus of around euro 9 million that is intended to meet possible adjustments in impairment models. As for the highest equity exposures in the available for sale portfolio, there were significant improvements, except for Portugal Telecom Group.
Available for sale portfolio
Euro million
----------------------------------------------------------------------
Fair Value Reserves
----------------------------------
31-Mar-05 30-Jun-05
----------------------------------------------------------------------
Portugal Telecom -23.1 -63.5
PT Multimedia 10.0 0.7
Bradesco 58.1 185.5
BMCE Bank 1.4 3.6
Jeronimo Martins 1.8 1.8
----------------------------------------------------------------------
48.2 128.1
----------------------------------------------------------------------
Value fluctuations in these investments are reflected into fair value reserves of shareholder equity. For capital ratio purposes, only 45% of potential gains are eligible for Tier II. The Group's solvency ratio remains at comfortable levels compared with the minimum requirements of the Supervision Authority.
SOLVENCY
(Bank of Portugal)
Euro million
---------------------------------------------------------
Jun, 05(*)
---------------------------------------------------------
Risk Weighted Assets 35 514
Regulatory Capital 4 192
Tier I 2 288
Tier II 1 967
Deductions ( 63)
Preference Shares 600
---------------------------------------------------------
Core Tier I 4.75%
Tier I 6.44%
Total 11.80%
---------------------------------------------------------
(*) estimate
We remind that the impact of IFRS adoption on regulatory capital and risk assets is deferred for a period of 3 to 7 years. At the end of the first half of the year, Standard & Poor's reaffirmed its rating at "A-" for the medium term and long term debt and "A-2" for the short term, with stable outlook. The rating agency's decision was based on the Group's strong competitive position in retail, its adequate profitability based on operating efficiency as well as a more balanced funding structure and asset quality. 6. PRODUCTIVITY Productivity and efficiency ratios continued to make good progress: --operating costs per unit of average net assets under management dropped from 2.12% to 1.82%; --total assets per employee reached nearly euro 9.2 million, corresponding to an increase of 15.7%; --the cost to income once again shows sustained improvement.
Productivity Indicators
-----------------------------------------------------------------
Jun,04 Jun,04 Jun,05 D
PABS IFRS IFRS IFRS
-----------------------------------------------------------------
Cost to Income (incl.
Capital Markets) 50.2% 61.3% 56.0% -5.3 p.p.
Cost to Income (excl.
Capital Markets) 57.9% 68.7% 67.0% -1.7 p.p.
Operating Costs / Average
Net Assets 1.69% 2.12% 1.82% -0.30 p.p.
Total Assets (*) per
Employee (eur '000) 8 317 7 921 9 163 15.7 %
-----------------------------------------------------------------
(*) Net Assets + Asset Management + Other Off-Balance Sheet Funds
+ Securitised Credit
7. PROFITABILITY Based on the annualised results of the first half 2005, Return on equity (ROE) stood at 13.6% and Return on Assets (ROA) at 0.67%.
Profitability
(%)
----------------------------------------------------------------------
2004
----------------- Jun,05
PABS IFRS IFRS
----------------------------------------------------------------------
Return on Equity (ROE) 13.9 6.1 13.6
Return on Assets (ROA) 0.82 0.35 0.67
----------------------------------------------------------------------
8. BANK OF PORTUGAL REFERENCE INDICATORS According to the instruction N. 16/2004 from Bank of Portugal, financial institutions should disclose reference indicators (calculated under the methodology set forth in this regulation), when releasing information concerning Solvency, Credit Quality, Profitability and Efficiency. The table below lists these indicators for both June 2005 and 2004.
Bank of Portugal Indicators
(%)
----------------------------------------------------------------------
Jun,04 Jun,04 Jun,05
PABS IFRS IFRS
----------------------------------------------------------------------
SOLVENCY
----------------------------------------------------------------------
Regulatory Capital / Risk Weighted Assets 10.95 10.95 11.80
Tier I Capital / Risk Weighted Assets 6.90 6.90 6.44
ASSET QUALITY
----------------------------------------------------------------------
Overdue & Doubtful Loans (a)/ Gross Loans 2.13 2.09 1.87
Overdue & Doubtful Loans Net of Provisions (b)
/ Net Loans (b) 0.53 0.52 -0.87
PROFITABILITY
----------------------------------------------------------------------
Income before Taxes and Minorities / Average
Equity (c) 13.30 8.82 12.24
Banking Income (d) / Average Net Assets 3.34 3.45 3.25
Income before Taxes and Minorities / Average
Net Assets 0.82 0.57 0.72
EFFICIENCY
----------------------------------------------------------------------
General Admin Costs (d)+ Depreciation / Banking
Income (d) 50.4 61.3 56.0
Staff Costs / Banking Income (d) 22.4 33.8 28.2
======================================================================
(a) Calculated according to BoP Circular Letter no. 99/03/2003
(b) Credit net of provisions for overdue loans and for doubtful loans
(c) Includes Average Minorities
(d) Calculated according to BoP Instruction no 16/2004
9. DIRECT BANKING AND OTHER Direct Channels The number of users of Internet Banking for individual customers - BESnet - reached 728 000 in June, corresponding to a YoY increase of 6.1%. The number of logins and transactions continued to grow at a sustained pace, rising YoY by respectively 14.8% and 13.5%. Low value transactions processing reached 39.8%, above 36.0% registered in 1H 2004. The website increased its role as a source of information on the Bank's product offer, with a 2.3 million average monthly visits between January and June (+25.3% YoY). The number of companies using the Internet banking service for corporate customers - BESnet Negocios - reached 40 000, a YoY increase of 14.8%. Logins were up by 25.5% and transactions by 44.3%, proving the importance of this channel as a transactional support to the companies' activity. Electronic Banking Pmelink.pt, the largest domestic online business centre for companies promoted under a joint venture between BES, CGD CGD - Caixa Geral de Depósitos (Portuguese bank) CGD - Canonical Gradient Descent CGD - Center for Global Development CGD - Chronic Granulomatous Disease CGD - Climate and Global Dynamics (US National Center for Atmospheric Research) CGD - Coast Guard District CGD - Combined Graphic Display CGD - Comptroller General Decision CGD - Course Graduation Date and PT, already has more than 19 995 companies as customers (14 460 in June 2004), a YoY increase of 38%. Turnover of the portal reached euro 6.3 million, a 36% YoY increase. In the first half of 2005, Banco BEST reinforced its asset management product offer by selling mutual funds from highly recognised investment management firms. The Client base reached 38 000, up 37% YoY. Assets under management totalled euro 450 million, corresponding to an increase of 34% versus June 2004. Other aspects In the 2005 edition of the Investor Relations Awards (promoted by Deloitte Consulting with the support of Diario Economico and Semanario Economico), an initiative intended to stimulate improvements and transparency in the financial information of listed companies, BES Group was distinguished with the following prizes: Grand Prize for the Best Global Investor Relations Programme among the PSI20 companies -- BES Best annual report among financial institutions -- BES Best information about Corporate Governance -- BES Best use of technology for Investor Relations -- BES Best CEO in Investor Relations -- Ricardo Salgado Best Investor Relations Officer -- Elsa Jardim Best Research House -- ES Investment Best Research Analyst -- Miguel Viana (ES Investment)
THE BOARD OF DIRECTORS
BANCO ESPIRITO SANTO, S.A.
CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2005
---------------------------------------------------------------------
Jun,04 Jun,04 Jun,05
PABS IFRS IFRS
(eur '000) (eur '000) (eur '000)
---------------------------------------------------------------------
NET ASSETS
Cash and deposits at Central
Banks 692 504 693 357 691 435
Loans and advances to credit
institutions 443 858 443 858 538 370
Financial Assets held for
trading 1 868 300 1 868 300 3 459 707
Other financial assets at fair
value through the P&L 2 133 902
Financial Assets available for
sale 5 061 680 3 630 770 3 004 860
Other loans and advances to
credit institutions 5 277 866 5 318 100 4 731 296
Loans and advances to
customers 27 146 129 27 311 173 29 297 721
(Provisions) (788 700) (788 700) (817 331)
Financial Assets held to
maturity 560 587 560 587 556 234
Financial Assets with
repurchase agreements - - -
Fair value of Hedging
derivatives 165 608 165 608 53 532
Non current assets held for
sale 81 727 81 727 123 438
Property and equipment - - -
Other tangible assets 338 697 338 697 348 737
Intangible assets 155 310 101 920 75 310
Investments in associated
companies 45 748 53 477 60 746
Current tax assets 4 847 4 847 23 174
Deferred tax assets - 102 646 195 868
Other assets 2 238 819 892 691 1 704 924
---------------------------------------------------------------------
TOTAL NET ASSETS 44 081 680 41 567 758 46 999 254
---------------------------------------------------------------------
LIABILITIES
Amounts owed to central banks 106 942 106 942 464 148
Financial liabilities held for
trading 613 663 613 663 1 653 026
Other financial liabilities at
fair value through the P&L - - -
Amounts owed others credit
institutions 6 552 101 6 571 503 7 769 746
Amounts owned to customers 19 580 592 19 640 775 17 993 592
Debt securities 11 701 640 9 798 649 12 924 300
Passivos financeiros
associados a activos
transferidos - - -
Fair value of hedging
derivatives 123 237 123 237 64 659
Non current liabilities held
for sale - - -
Provisions 560 217 83 859 109 559
Current tax liabilities 10 905 10 905 27 957
Deferred tax liabilities - 31 942 102 892
Capital instruments - - -
Other subordinated liabilities 1 534 346 1 551 656 2 023 437
Other liabilities 395 041 361 225 1 117 754
---------------------------------------------------------------------
TOTAL LIABILITIES 41 178 684 38 894 356 44 251 070
---------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital 1 500 000 1 500 000 2 100 000
Share premium 300 000 300 000 300 000
Other capital instruments - - -
Revaluation reserves - - 158 750
Other reserves and retained
earnings 199 495 113 027 50 171
(Treasury stock) - 100 174 90 120
Net income for the year 131 765 73 995 148 960
(Anticipated dividends) - - -
Minority interests 771 736 786 554 80 423
---------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 2 902 996 2 673 402 2 748 184
---------------------------------------------------------------------
TOTAL LIABILITIES +
SHAREHOLDERS' EQUITY 44 081 680 41 567 758 46 999 254
---------------------------------------------------------------------
BANCO ESPIRITO SANTO, S.A.
CONSOLIDATED INCOME STATEMENT AS AT 30 JUNE 2005
--------------------------------------------------------------------
Jun,04 Jun,04 Jun,05
PABS IFRS IFRS
(eur '000) (eur '000) (eur '000)
--------------------------------------------------------------------
Interest Income 1 060 697 1 056 425 937 269
Interest expense 708 554 706 868 591 584
--------------------------------------------------------------------
Net interest income 352 143 349 557 345 685
--------------------------------------------------------------------
Dividends on securities 13 325 13 325 30 659
Commissions and other similar
income 224 578 224 578 227 418
Commissions and other similar
expenses 22 814 22 814 33 514
Gains and losses in financial
assets at fair value 7 896 7 896 (44 597)
Gains and losses in financial
assets available for sale 70 738 27 077 72 752
Gains and losses in foreign
exchange revaluation 4 893 4 893 51 590
Gains and losses in the sale of
others assets 35 490 35 490 31 271
Other net income from banking
activity 32 886 58 708 34 592
--------------------------------------------------------------------
Banking Income 719 135 698 710 715 856
--------------------------------------------------------------------
Staff expenses 161 722 236 513 202 632
Other administrative expenses 136 305 142 596 159 782
Depreciation 65 711 50 498 40 243
Provisions net of reversals 30 858 6 858 12 520
Loan impairment net of reversals
and recoveries 131 814 131 814 120 534
Other financial assets' impairment
net of reversals and recoveries 15 769 15 769 14 777
Other assets' impairment net of
reversals and recoveries 1 115 1 115 (1 698)
Equity in earnings of associated
companies 1 934 1 934 3 335
--------------------------------------------------------------------
Income before taxes 177 775 115 481 170 401
--------------------------------------------------------------------
Taxes
Current 24 545 24 545 31 905
Deferred - 1 679 (12 508)
--------------------------------------------------------------------
Income after taxes 153 230 89 257 151 004
--------------------------------------------------------------------
Minority interests 21 465 15 262 2 044
--------------------------------------------------------------------
Net income for half year 131 765 73 995 148 960
--------------------------------------------------------------------
This news release may include certain statements relating to the Banco Espirito Santo Group that are neither reported financial results nor other historical information. These statements may include targets, forecasts, projections, descriptions of anticipated cost savings, statements regarding the possible development or possible assumed future results of operations and any statement preceded by, followed by or including words like "believes", "expects", "aims", "intends", "may" or similar expressions. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by forward-looking statements. These factors include, but are not limited to, changes in economic conditions in individual countries in which the BES Group conducts its business and internationally, fiscal or other policies adopted by various governments and regulatory authorities of Portugal and other jurisdictions, levels of competition from other banks and financial services companies as well as future exchange and interest rates. Banco Espirito Santo does not undertake to release publicly any revision to the forward-looking information included in this news release to reflect events, circumstances or unanticipated events occurring after the date hereof. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion