Espirito Santo Financial Group S.A. Announces First Quarter Results of Its Main Subsidiary, Banco Espirito Santo.

LONDON--(BUSINESS WIRE)--April 30, 1999--

Espirito Santo Financial Group S.A. ("ESFG") (NYSE:ESF) is pleased to announce the results of its principal subsidiary Banco Espirito Santo ("BES") for the first quarter 1999.

BES' consolidated results at the end of March 1999, grew by 11.6 per cent over those of the same period in 1998, to reach PTE 10,680 million, corresponding to a return on equity of 21.8 per cent.

This growth occurred in spite of the negative effects felt at ESAF - Espirito Santo Activos Financeiros in Brazil, which translated in a loss of PTE 296 million in the first quarter of 1999, against a profit of PTE 530 million in the same period in the previous year.

Principal factors in the results achieved by BES were the 25.3 per cent increase in net interest income and the 15.9 per cent growth in fees and commissions. A significant dynamism in credit, particularly retail credit, was instrumental in the improvement in net interest income. Retail loans achieved a 43 per cent weight in the total portfolio, against 36.4 per cent in the first quarter of 1998. On the other hand, the progress in fees and commissions owes a lot to the strength in cross-selling activities.

Trading results declined 25.1 per cent against those of the first quarter of 1998, as a result of less activity in the equity market at the level of the investment bank; however, trading in bonds, futures, swaps and derivatives had good results, particularly in the international markets. -0-

INCOME STATEMENT

PTE Millions

                             3/99          3/98         % growth

Net Interest Income        28,451        22,702            25.3
Trading Results             9,715        12,975           -25.1
Fees & Commissions         12,818        11,058            15.9
                           ----------------------------

Gross Banking Income       50,984        46,735             9.1
Operating Costs           (25,490)      (22,490)           13.3
  of which Depreciation     4,505         3,382            33.2

Extraordinary Items        (1,099)          315             -
Taxes & Provisions         (9,583)      (12,061)          -20.5
Minority Interests         (4,132)       (2,933)           40.9
                           --------------------------

Consolidated Net Income    10,680         9,566            11.6

The growth of 13.3 per cent in operating costs was due, to a large extent, to the increase in depreciation of new information systems and the changes required by the introduction of the Euro and the Year 2000 matter.

PERFORMANCE AND SOLVENCY RATIOS

Net assets grew by 25.1 per cent to reach PTE 5,400 billion, due mostly to the increase in lending activities, namely mortgage loans. -0-

PERFORMANCE INDICATORS

PTE Billions

                             3/99          3/98          % growth

Net Assets                  5,400         4,318          25.1
Gross Loans                 2,900         2,044          41.9
0f which
   Mortgages                  907           510          77.8
  Other Retail                340           235          44.7
  Corporate                 1,653         1,299          27.3
Clients' Resources          4,314         3,757          14.8
   In Balance Sheet         2,905         2,568          13.1
   Desintermediation        1,409         1,189          18.5

    The following table highlights solvency and non performing loan
    indicators:-

                                                   3/99        3/98

Non Performing Loans ("NPLs")
     (PTE billions)                               70.6         67.5

NPLs -  90 days +
      (PTE billions)                              61.0         61.1

Provisions (PTE billions)                         85.0         71.2

NPLs/Gross Loans  (%)                             2.44         3.30

NPLs/ Gross Loans (90 days +)   (%)               2.10         2.99

Coverage of NPLs (%)                             120.4        105.5

Coverage of NPLs (90 days +) (%)                 139.3        116.5

In spite of the strong growth in its activities, BES' solvency ratios remain at levels well above the minimum established by the Banco de Portugal and the BIS, respectively 9.2 and 10.9 per cent.

PRODUCTIVITY

Significant economies of scale have been achieved as a consequence of growth and the drive for greater efficiency. These have resulted in a reduction in average costs as shown in the following table:- -0-

PRODUCTIVITY INDICATORS
(%)
                       3/99              3/98             change pp

Operating Costs/
Average Net Assets      1.97             2.11            -0.14

Operating Costs/
Total Assets(a)         1.50             1.63            -0.13

Cost to Income
(excluding trading)     61.8             66.6             -4.8

Cost to Income
(including trading)     50.0             48.1             +1.9

(a) includes disintermediation

INTERNATIONAL EXPANSION

BES has increased its participation in the capital of Kredyt Bank PBI, from 5 to 10 per cent, in a capital increase which took place on 17th March 1999. This corresponds to an increase in investment to the amount of PTE 4 billion.

FOR FURTHER INFORMATION:

Further information on Espirito Santo Financial Group S.A. can be obtained on the following page on the internet at http://www.esfg.com