Espirito Santo Financial Group Announces 2002 Consolidated Results.Business Editors LUXEMBOURG Luxembourg, province, Belgium Luxembourg, Du. Luxemburg, province (1991 pop. 232,813), 1,706 sq mi (4,419 sq km), SE Belgium, in the Ardennes, bordering on the Grand Duchy of Luxembourg in the east and on France in the south. & PORTUGAL--(BUSINESS WIRE)--April 30, 2003 -- Consolidated losses reflect the negative effect of poor performance of equity markets over life assurance portfolios; -- Demonstrated improvements in operational indicators: net interest income, fee generation, streamlining and cost cutting in banking and insurance; -- Repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. of insurance activities produce positive results in operational performance of insurance operations; -- 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 capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. in banking and insurance groups; -- Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of insurance investment portfolios designed to lessen 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. future impact of stock prices decline; Espirito Santo Santo, New Hebrides: see Espíritu Santo. Financial Group S.A. ("ESFG") (Euronext Lisbon Euronext Lisbon is a Portuguese stock exchange headquartered in Lisbon. It belongs to the NYSE Euronext group, the first global stock exchange. Euronext Lisbon trades equities, public and private bonds, participation bonds, warrants, corporate warrants, investment trust and 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 its 2002 consolidated results. ESFG showed a consolidated loss of 45.1 million Euros at end 2002 against a profit of 11.0 million Euros at the end of the preceding year. These results were positively influenced by good performances in terms of net interest income and commissions, against a backdrop Backdrop may refer to:
From an operational perspective, the performance of ESFG's Portuguese banking operations was very creditable cred·it·a·ble adj. 1. Deserving of often limited praise or commendation: The student made a creditable effort on the essay. 2. Worthy of belief: a creditable story. in 2002 (a trend which continued through the first quarter of 2003), in view of the difficult economic and market conditions in Portugal. This performance undoubtedly helped ESFG's main banking subsidiary Banco Espirito Santo successfully to undertake a major capital increase in the Portuguese domestic market in early 2002. Meanwhile, the performance of ESFG's insurance subsidiaries already showed positive trends as a result of the restructuring efforts carried out and the changes in business priorities implemented since 2001. Particular care was dedicated in 2002 to strengthening the capital of the insurance operations and to reforming their financial investment portfolios in order to reduce their vulnerability to further declines in market prices. The results of these policies became more noticeable in the first quarter of 2003. Main Item Analysis Net interest income grew 8.4% to reach 823.0 million Euros, against 759.1 million in 2001. This increase basically reflected the growth in volume and in margin experienced by Banco Espirito Santo and its subsidiaries in Portugal ("BES Group"). Indeed a good performance was achieved by BES Group's institutions in the area of retail and corporate banking, and in particular that of BES Group's operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon , set against a particularly difficult year. BES Group's proactive stance in the innovation of savings products, the advance made in the segmentation process and enhanced customer service quality, were determining factors in this performance. The 62.0% growth in ESFG's consolidated provisions for loan losses to 231.8 million Euros in 2002 against 143.1 million Euros in 2001 corresponds principally to measures undertaken at the level BES Group, where provisions increased very significantly both for credit and for securities risks, in view of the 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 conditions in Portugal. ESFG's consolidated fees and commissions showed a small gain of 0.7% in the year, from 295.4 million Euros in 2001 to 297.5 million Euros in 2002. Again, this result was due mainly to the performance of BES Group where the improvement in the quality of services and the increase in the number of products sold to each client to four on average, were important factors. Corporate and project financing Project financing A form of asset-based financing in which a firm finances a discrete set of assets on a stand-alone basis. activities also contributed to this increase. A good level of commissions was achieved at other subsidiary levels, namely at Compagnie Bancaire Espirito Santo, the private banking subsidiary based in Lausanne Lausanne (lōzän`), city (1990 pop. 117,600), capital of Vaud canton, W Switzerland, on the Lake of Geneva. An important rail junction and lake port (see Ouchy), it is the trade and commercial center of a rich agricultural region. , Switzerland Switzerland (swĭt`sərlənd), Fr. Suisse, Ger. Schweiz, Ital. Svizzera, officially Swiss Confederation, federal republic (2005 est. pop. 7,489,000), 15,941 sq mi (41,287 sq km), central Europe. . Results from consolidated capital markets activities are reflected in the 7.7% growth in the aggregate of net trading account Trading Account 1. An account similar to a traditional bank account, holding cash and securities, and is administered by an investment dealer. 2. An account held at a financial institution and administered by an investment dealer that the account holder uses to employ a profits, net investment securities gains and net gains on foreign currency transactions, which resulted from trading in the Portuguese domestic market and extraordinary profits resulting from the sale of Banco Espirito Santo's participation in Kredit Bank in Poland Poland, Pol. Polska, officially Republic of Poland, republic (2005 est. pop. 38,635,000), 120,725 sq mi (312,677 sq km), central Europe. It borders on Germany in the west, on the Baltic Sea and the Kaliningrad region of Russia in the north, on Lithuania, and the swap of BVLP BVLP Bolsa de Valores de Lisboa e Porto (Portuguese Stock Exchange) shares for Euronext  Euronext N.V. is a pan-European stock exchange based in Paris[1] shares.Consolidated Insurance Revenues declined 8.2% in 2002 to 1.2 billion Euros, following a deliberate strategy implemented by ESFG's insurance subsidiaries in Portugal, designed to improve the quality of the insurance portfolio and reduce the level of claims. This strategy encompassed two main principles, firstly the increase in risk selectivity selectivity /se·lec·tiv·i·ty/ (se-lek-tiv´i-te) in pharmacology, the degree to which a dose of a drug produces the desired effect in relation to adverse effects. selectivity 1. , secondly the de-emphasizing of certain types of insurance products, such as capitalization products, where the level of risk is higher and the use of capital greater. At the level of Companhia de Seguros Tranquilidade Tranquilidade (tranquility in english) is a Portuguese insurance company, founded in Oporto in 1871. It is part of the Portuguese economic group "Grupo Espirito Santo". ("Tranquilidade"), the non-life company, these actions resulted in a small decline of 2.4% in premiums as a consequence of the increased selectivity criteria applied (overall market share declined from 9.5% in 2001 to 8.5% in 2002), significantly followed by an important reduction in the claims ratio from 73.5% to 66.3%. Furthermore, policies of cost reduction and reduction in headcount were carried out in the period. As a consequence, technical results before reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. increased 80.2% in 2002 to 77.2 million Euros, whilst technical results net of reinsurance increased 49.2% to 54.1 million Euros in the same period, highlighting the negative effect of the increase in reinsurance costs. Tranquilidade's combined ratio (including reinsurance activities) improved from 115.0% in 2001 to 107.3% in 2002 (112.8% to 100.0 before reinsurance) with the most significant reductions originating in the areas of fire, household comprehensive, workers compensations and motor insurance. The performance of Companhia de Seguros Tranquilidade Vida ("Tranquilidade Vida"), the life assurance subsidiary, was positively influenced by the shift away from capitalisation n. 1. same as capitalization. Noun 1. capitalisation - writing in capital letters capitalization writing - letters or symbols that are written or imprinted on a surface to represent the sounds or words of a language; "he turned the paper products towards traditional risk and private pension fund products. Tranquilidade Vida's market share in the traditional products increased from 10.1% to 11.0% and in private pension plans reached 28.3%, as Tranquilidade Vida maintained its leadership in this activity in the Portuguese market. However, overall premiums declined 12.1% to 702.1 million Euros in 2002 reflecting the deliberate move away from capitalisation products, causing Tranquilidade Vida's overall market share to decline from 18.0% in 2001 to 15.0% in 2002. Claims declined by 11.7% in the same period as the volume of policy maturities declined in 2002 when compared with the previous year. The above mentioned progress achieved at the operational level both at Tranquilidade and Tranquilidade Vida, is the main factor behind the reduction of 9.3% registered by consolidated insurance benefits and claims compared to the prior year. However, results at Tranquilidade Vida were still significantly affected by the continuing decline in stock prices in 2002. The resulting un-realized losses incurred in Tranquilidade Vida's portfolio in 2002 reflect, at ESFG's consolidated level, in the item insurance underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and related expenses, which showed a 103.1% growth in 2002 to reach 230.3 million Euros. During the course of 2002 specific actions were undertaken to reduce the vulnerability of the portfolio to further declines in market prices. These included a reduction in the exposure to equity, and the conversion of certain equity-related derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. into bond-related derivatives, which were considered advantageous, since equity and equity-related securities must be valued at market and bond and bond- related securities can be valued at cost. The overall weight of bonds in the investment portfolio of Tranquilidade Vida was increased from 56% to 64% whilst the weight of shares and investment funds Noun 1. investment funds - money that is invested with an expectation of profit investment assets - anything of material value or usefulness that is owned by a person or company was reduced from 22% to 17% by the end of 2002. Significant reductions in cost growth achieved at the level of BES Group and, to a lesser extent, the insurance group, have helped keep the increase in consolidated salaries and benefits (+0.5%) and occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal (+2.4%) relatively minimal. Operating costs operating costs npl → gastos mpl operacionales at BES Group were below estimates, posting a nominal growth of 1.2%. Major contributors to this cost control were the effects of the integration of the main operating units (which resulted in a reduction of employees), the restructuring of transaction processes, the policy of renegotiating supply contracts and the general drive for cost cutting. The Espirito Santo Financial Group provides, through its subsidiaries, a global and diversified diversified (di·verˑ·s range of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. to its clients including Commercial banking, Insurance, Merchant banking, Stock-brokerage and Asset management in Portugal and internationally. (Tables to Follow)
CONSOLIDATED BALANCE SHEETS
December
31,
2001 2002
(in (in
millions millions
of of
Euros) Euros)
ASSETS
Cash and due from banks 2,028.6 1,815.2
Interest-earning deposits with other banks 3,497.2 4,929.7
Trading account securities 625.6 483.3
Investment securities 8,292.2 7,947.7
Loans and advances to customers 26,037.8 27,199.5
Allowance for loan losses (637.4) (782.6)
Accrued interest income 262.9 252.6
Investment in unconsolidated subs 754.3 808.4
Property and equipment 529.8 527.6
Other assets 1,357.5 2,407.2
TOTAL ASSETS 42,748.5 45,588.6
LIABILITIES
Deposits from banks 3,698.4 3,977.0
Demand deposits 6,656.9 6,832.2
Time deposits 12,020.7 12,383.4
Securities sold under repurchase agreements 761.9 1,536.3
Other short-term borrowings 1,929.3 1,433.5
Insurance policy reserves 4,501.1 4,977.5
Accrued interest and other liabilities 1,132.1 1,088.6
Corporate borrowings and long-term debt 10,038.8 10,983.1
Convertible bonds 199.5 307.3
TOTAL LIABILITIES 40,938.7 43,518.9
MINORITY INTERESTS 1,716.8 2,029.4
SHAREHOLDERS' EQUITY
Common stock, $10 per value : 479.1 479.1
100'000'000 shares authorized (2001 :
100'000'000)
47'908'551 issued (2001 : 47'908'551)
Treasury stock, at cost (73.1) (35.9)
Retained earnings (326.8) (407.8)
Accumulated other comprehensive income 13.8 4.9
TOTAL SHAREHOLDERS' EQUITY 93.0 40.3
TOTAL LIABILITIES and SHAREHOLDERS' EQUITY 42,748.5 45,588.6
CONSOLIDATED STATEMENTS OF INCOME
31-Dec-00 31-Dec-01 31-Dec-02
(in (in (in millions
millions millions of Euros)
of of
Euros) Euros)
Interest income
Interest on loans 1,267.0 1,631.3 1,489.6
Interest and dividends on
securities
Trading securities 11.7 28.0 98.0
Investment
securities 266.4 242.0 180.5
Other interest income 200.3 244.6 119.6
Total interest income 1,745.4 2,145.9 1,887.7
Interest expense
Interest on deposits 705.6 859.9 524.1
Interest on securities
sold under repurchase
agreements 22.7 28.2 41.9
Interest on short-term
borrowings 116.3 95.0 47.5
Interest on corporate
borrowings and long-term
debt 255.1 402.4 438.3
Interest on convertible
bonds 0.0 1.3 12.9
Total interest expense 1,099.7 1,386.8 1,064.7
Net interest income 645.7 759.1 823.0
Provisions for loan losses (135.2) (143.1) (231.8)
Net interest income after
provision for loan losses 510.5 616.0 591.2
Other income
Fee and commission income 315.3 295.4 297.5
Net trading account
profits 31.0 (2.3) (47.3)
Net investment securities
gains 31.7 (50.9) (30.2)
Insurance revenues 1,525.2 1,348.9 1,219.0
Net gains on foreign
currency transactions 113.1 147.1 216.2
Other operating income 119.2 132.8 152.7
Total other income 2,135.5 1,871.0 1,807.9
Other expenses
Salaries and benefits 361.3 439.7 441.8
Occupancy cost 62.6 53.9 55.2
Insurance benefits and
claims 1,302.5 1,161.4 1,053.1
Insurance underwriting and
related expenses 77.6 113.4 230.3
Depreciation 59.0 62.9 65.6
Amortization 70.9 82.7 93.3
Other expenses 291.2 343.4 342.4
Total other expenses 2,225.1 2,257.4 2,281.7
Income before income taxes and
minority interests 420.9 229.6 117.4
Income taxes (74.6) (49.4) (14.2)
Minority interests in income
of consolidated subsidiaries (241.7) (169.4) (146.4)
Earnings in associated
undertakings 1.7 0.2 (1.9)
Net income 106.3 11.0 (45.1)
NET INCOME PER SHARE 2.42 0.25 (1.04)
Basic 2.42 0.25 -1 (1.04)-1
Diluted
Weighted average number of
shares outstanding 43,943,526 44,253,510 43,253,371
For basic earnings per
share 43,943,526 44,253,510 -1 43,253,371 -1
(1) Convertible bonds interest and convertibles shares are
excluded from the calculation due to anti-dilutive effect.
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion