Espirito Santo Financial Group S.A. Announces the 2003 Half Year Results of Its Subsidiary Banco Espirito Santo, Unaudited.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)--July 25, 2003 Espirito Santo Santo, New Hebrides: see Espíritu Santo. Financial Group ("ESFG") (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. ) (Lisbon Stock Exchange Lisbon Stock Exchange (LSE) Stock exchange trading stocks, bonds, and unit trusts. The BVL general index is the exchange's official index. :ESF) subsidiary, Banco Espirito Santo (BES), today announced its first half 2003 results. HIGHLIGHTS -- Net profit was up 12.8%, to euro 115.3 million, corresponding to an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. of 12.4%. -- Fees and commissions grew 11.8%, driven by the continuous improvement of service quality and the cross-selling Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. policy, more than offsetting the decrease in net interest income (0.9%). Commercial banking revenue (excluding trading) grew 3.4%. The strong growth of capital markets results, up by 65%, was based on good performance in fixed-rate instruments. -- Costs grew on track with the estimate for the year, rising by 1.2%, (+4.4% in June June: see month. 2002), with a positive impact on cost to income, which dropped from 55.4% in June 2002 to 51.1% this semester se·mes·ter n. One of two divisions of 15 to 18 weeks each of an academic year. [German, from Latin (cursus) s . -- Provisions increased significantly (euro 215.3 million), particularly through an exceptional charge of the fund for general banking risks (of euro 86.0 million), mostly (euro 65.3 million) originated by the sale of a 45% stake in Credibom to Sofinco. This reinforces BES Group prudent stance vis-a-vis the economic situation domestically and abroad. -- Moderate business growth, mirrored a tough macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. environment. Credit was up by 2.8%, while on-balance sheet customer funds rose by 6.4%, with a positive impact on the transformation ratio, which dropped to 108%, from 112% in June 02. -- The solvency ratio Solvency Ratio One of many ratios used to gauge a company's ability to meet long-term obligations. Notes: Derived by taking a company's net worth and dividing by total assets. See also: Asset, Asset Valuation, Balance Sheet, Fundamental Analysis, Income Statement remains comfortable and way above recommended levels while the coverage of overdue OVERDUE. A bill, note, bond or other contract, for the payment of money at a particular day, when not paid upon the day, is overdue. 2. The indorsement of a note or bill overdue, is equivalent to drawing a new bill payable at sight. 2 Conn. 419; 18 Pick. loans, consistently reinforced, remains high. An interview with President of the Executive Committee Ricardo Ri·car·do , David 1772-1823. British economist whose major work, Principles of Political Economy and Taxation (1817), supported the laws of supply and demand in a free market. Noun 1. Espirito Santo Salgado Salgado is a municipality located in the Brazilian state of Sergipe. Its population was 20,229 (2005) and its area is 248 km².[1] References 1. ^ IBGE - [1] in audio and text will be available from 8:00 am on: http://www.bes.pt. 1. ECONOMIC ENVIRONMENT The first half of 2003 was characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by the continuing rise of unemployment and low confidence levels. In addition to the uncertainties surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the situation in Iraq Iraq or Irak (both: ēräk`, ĭrăk`), officially Republic of Iraq, republic (2005 est. pop. 26,075,000), 167,924 sq mi (434,924 sq km), SW Asia. and SARS outbreak, other problems persisted, namely excessive capacity, the delocalization of companies to Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. and rising competition from Asian economies: China and India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. . 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. , and after having risen at an annualized real rate of 1.4% in the first three months of the year, GDP GDP (guanosine diphosphate): see guanine. is thought to have grown at a very modest pace of around 2% in the second half of the year. However, private consumption was sustained by income tax cuts and an expansionary monetary policy Expansionary monetary policy is monetary policy that seeks to increase the size of the money supply. In most nations, monetary policy is controlled by either a central bank or a finance ministry. (the benchmark rate fell to 1%). The outlook for economic growth had improved by the end of the semester. In the Euro area, economic activity remained stagnant stagnant /stag·nant/ (stag´nant) 1. motionless; not flowing or moving. 2. inactive; not developing or progressing. . Weak domestic demand, the rise of the euro and growing unemployment, presented important 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)]. to growth, giving rise, in some countries, to difficulties in complying with the budgetary stability criteria. A clear downward trend in inflation (2% in June) allowed the European Central Bank European Central Bank (ECB) Bank created to monitor the monetary policy of the countries that have converted to the Euro from their local currencies. The original 11 countries are: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, to cut once again its benchmark rates, the key refinancing Refinancing An extension and/or increase in amount of existing debt. rate having dropped by 75 basis points, to stand at 2% at the end of June. By the end of the semester, equity markets had consolidated the recovery initiated by mid-March n. 1. the middle part of March. Noun 1. mid-March - the middle part of March period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" , reflecting rising confidence indices and investors' accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. propensity for risk. Between January and June the Dow Jones Dow Jones the best known of several U.S. indexes of movements in price on Wall Street. [Am. Hist.: Payton, 202] See : Finance and Nasdaq indices were up by respectively 7.7% and 21.5%. In Portugal, the PSI 20 index rose by 11.8% between March and June, annulling the losses registered early in the year. The Portuguese economy is thought to have reached the bottom of the current economic cycle during the first six months of the year. Domestic demand remained depressed, reflecting the adjustment of families and companies to high indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. levels, rising unemployment and stagnant disposable income disposable income Portion of an individual's income over which the recipient has complete discretion. To assess disposable income, it is necessary to determine total income, including not only wages and salaries, interest and dividend payments, and business profits, but also . An unfavorable economic situation worldwide limited the contribution of exports to growth. Inflation continued to decline, the year-on-year inflation rate dropping to 3.3% at the end of the semester. 2. PRIOR NOTE TO THE ANALYSIS OF THE ACTIVITY AND RESULTS As announced in due time, Banco Espirito Santo sold to Banque Sofinco shares representing 45% of the share capital of Credibom - Sociedade Financeira para Aquisicao a Credito S.A.. This transaction was reflected in the financial statements for the period ended on June 30, 2003, through an extraordinary profit of euro 74.3 million in BES' individual accounts and euro 65.3 million in the consolidated accounts. This extraordinary result was fully allocated to reinforcing, by euro 86.0 million, the fund for general banking risks, thus canceling the effects of the operation on the half-year net profit. BES consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. as of June 30, 2003 excludes Credibom's assets and liabilities, while the income statement still reflects Credibom's consolidation, as, from the economic standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , this company contributed to BES Group half-year results. For purposes of comparability with previous periods and whenever justified by circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , the published financial and business data will also be presented proforma Proforma A financial projection based on assumptions. (exclusion of Credibom). 3. ACTIVITY HIGHLIGHTS BES Group continued to conduct its commercial activity based on a strategy of product innovation, deeper segmentation and sustained improvement of quality standards. These factors proved decisive in the growth of on-balance sheet customer funds, which rose by 6.4%, and particularly in that of total customer funds, which were up by 10.5%.
MAIN BUSINESS VARIABLES
euro million
June
---------------------------%(2003/2002(a))
2002 2002(a) 2003
Net Assets 39,268 38,912 40,752 4.7
Loans to Customers (gross) 25,760 25,309 26,018 2.8
- Mortgage 8,956 8,956 8,961 0.1
- Other Loans to Individuals 1,801 1,349 1,294 -4.1
- Corporate 15,003 15,004 15,763 5.1
Loans to Individuals /
Customer Loans(%) 41.8 40.7 39.5 -2.3 p.p.
Funds
+ Deposits 17,630 17,638 18,101 2.6
+ Debt Securities 9,436 9,436 10,282 9.0
= On-Balance Sheet Funds 27,066 27,074 28,383 4.8
- EMTN and Commercial Paper 5,039 5,039 4,940 -2.0
= On-Balance Sheet
Customer Funds 22,027 22,035 23,443 6.4
+ Off-Balance Sheet Funds 9,996 9,996 11,936 19.4
= Total Customer Funds 32,023 32,031 35,379 10.5
Transformation Ratio (%) 114 112 108 -6 p.p.
(a) Proforma: excludes Credibom
Customer loans, reflecting the adverse conditions that the Portuguese and the international economies are going through, posted moderate growth: 2.8% if excluding securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. credit, and 6.1% including securitized credit.
euro million
June 02(b) June 03 Change(%)
Excluding Including Excluding Including Excluding Including
securiti- securiti- securiti- securiti- securiti- securiti-
zation(b) zation(b) zation zation zation zation
Loan
Portfolio 25,309 25,864 26,018 27,450 2.8 6.1
Mortgage 8,956 8,956 8,961 9,924 0.1 10.8
Other Loans
to Ind. 1,349 1,637 1,294 1,503 -4.1 -8.2
Corporate 15,004 15,271 15,763 16,023 5.1 4.9
(b) Proforma excluding Credibom
Mortgage loans remained the most dynamic item overall, rising by 10.8%; other loans to individuals, reflecting 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. criteria, were down by 8.2%; corporate lending maintained 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. trend of the previous quarters, growing by 4.9%. The increase in customer funds coupled with the moderate growth of customer loans led to an improvement in the transformation ratio, from 112% in June 2002 to 108% at the end of the first half of 2003. 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. activity, mutual funds and structured products continued to post a significant growth (+19.4%). This trend reflects an increase in demand for alternative saving products, explained by the current low level of interest rates. 4. RESULTS AND PROFITABILITY Consolidated net income reached euro 115.3 million, a year-on-year increase of 12.8%. Moreover, income before taxes and minority interests was up by 15.2%. Return on equity (ROE), based on annualized net income, stood at 12.4%.
INCOME STATEMENT
euro million
----------------------------------------------------------------------
June
------------------- Change
2002 2003 (%)
======================================================================
Net Interest Income 379.7 376.4 -0.9
+ Fees and Commissions 193.0 215.7 11.8
= Commericial Banking Income 572.7 592.1 3.4
+ Capital Markets Results 63.3 104.5 65.1
= Banking Income 636.0 696.6 9.5
- Operating Costs 352.0 356.2 1.2
- Net Provisions 121.6 215.3 77.1
Credit 91.1 126.7 39.1
Securities 22.7 -10.7 ---
Other 7.8 99.3 ---
+ Extraordinary Results
and Other -18.9 40.2 ---
= Results Before Taxes
and Minorities 143.5 165.3 15.2
- Income Taxes 23.3 33.3 42.8
- Minorities 18.0 16.7 -7.3
= Net Income for the Period 102.2 115.3 12.8
----------------------------------------------------------------------
4.1 Net Interest Income Net interest income reached euro 376.4 million, which represents a year-on-year decrease of 0.9%, mainly explained by declining interest rates (the ECB See electronic code book. cut the refi rate by 75 basis points during this half-year), scarce liquidity and reduced exposure to consumer credit. Net interest margin and net interest income are expected to keep reflecting the adverse economic situation and moderate business growth. Net interest margin for the semester stood at 2.09%, which compares to 2.12% in March 2003 and 2.18% in the first half of 2002. 4.2 Fees and Commissions Fees and commissions reached euro 215.7 million, a year-on-year increase of 11.8%, mainly explained by traditional products, the positive contribution of 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 and bancassurance, and also non-recurrent fees and commissions from project finance. Improved service quality and initiatives aimed at boosting loyalty in the customer base were crucial contributors to the growth achieved. In the first half of 2003, Infrastructure Journal released the Project Finance League Tables for 2002, where, based on the number of operations carried out, BES was ranked as follows: -- 1st, as Arranger in the Transport Sector, and 7th as Advisor; -- 2nd as Arranger in Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). , and 3rd as Advisor; -- 9th as Global Arranger and Advisor. BES Investimento is thus the leading Iberian bank in project finance, also showing the strong development of this business in recent years. 4.3 Capital Markets Results In line with the first quarter, BES continued to steer steer castrated male cattle beast over a year of age. See also bullock, buller steer. steer bulling see bulling. steer Medtalk verb financial management in order to benefit from opportunities arising out of a rebounding equity market and in particular from the evolution of interest rates, the latter benefiting from interest rate cuts during this semester. Investment Banking activity also performed positively this semester. BES Investimento consolidated its leadership in Portugal (Euromoney's award for Best M&A House) and reinforced its presence in Spain and Brazil, particularly as originator Originator A bank, savings and loan, or mortgage banker that initially made a mortgage loan that is part of a pool. Also, an investment bank that has worked with the issuer of a new securities offering from the beginning and is usually appointed manager of the underwriting of cross-border operations. This strong commercial dynamism was mirrored in the expressive growth of banking income, up 31.2% year-on-year to euro 51.6 million, and of net profit, that increased 135.4% to euro 12.0 million. 4.4 Operating Costs operating costs npl → gastos mpl operacionales Operating costs were kept within planned limits, rising by 1.2% year-on-year, benefiting from several projects and initiatives aiming at cost control. Depreciation and amortization showed the strongest increase, reflecting the depreciation of investments made in modernizing processes.
OPERATING COSTS
euro million
June Change
2002 2003 (%)
Staff Costs 161.0 157.2 -2.4
Other Administrative Costs 128.3 129.8 1.2
Depreciation 62.7 69.2 10.3
Operating Costs 352.0 356.2 1.2
The rationalization rationalization, in psychology: see defense mechanism. plan for 2003 is proceeding 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. There was a net reduction of 106 employees in the first half of the year. The objective for the full year remains at net reduction of 250 employees. 4.5 Provisioning Net provision charge for the period amounted to euro 215.3 million, an annual increase of 77.1%. Credit provisions were reinforced by 39.1% to euro 126.7 million, while other provisions reached euro 99.3 million, including the charge for general banking risks, which shows BES prudent stance vis-a-vis the economic situation. The balance of fund for general banking risks reached euro 100.6 million, from euro 14.6 million in December 2002. 4.6 Extraordinary Results and Other Extraordinary and other results include the amortization of extraordinary pension charges, as well as an extraordinary capital gain of euro 65.3 million from the disposal of 45% of Credibom. 4.7 Profitability Return on assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). (ROA ROA See: Return on assets ROA See: Right of accumulation ROA See return on assets (ROA). ) improved on first half 2002, positively influenced by the securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. operations. Return on equity (ROE), based on annualized results, stood broadly stable versus first half of 2002.
PROFITABILITY
(%)
----------------------------------------------------------
June 2002 June 2003
----------------------------------------------------------
Return on Equity (ROE) 12.9 12.4
Return on Assets (ROA) 0.53 0.57
----------------------------------------------------------
5. ASSET QUALITY AND SOLVENCY The ability of an individual to pay his or her debts as they mature in the normal and ordinary course of business, or the financial condition of owning property of sufficient value to discharge all of one's debts. solvency n. Bearing in mind the adverse economic environment, credit provisions were increased by euro 141 million, above the increase of overdue loans (+euro 93 million).
Jun 02 Dec 02 Mar 03 Jun 03 YoY Change (a)
(a) (a) (a) -----------------
Absolute Relative
Loans to (%)
Customers
(Gross) (EUR MN) 25,309 25,318 25,472 26,018 709 2.8
Overdue Loans (EUR MN) 480.0 521.6 539.4 572.5 93 19.3
Overdue Loans
greater than
90 Days (EUR MN) 404.1 457.4 472.4 500.8 97 23.9
Provisions for
Credit (EUR MN) 609.2 685.3 702.7 750.1 141 23.1
Overdue Loans /
Loans to
Customers
(gross) % 1.90 2.06 2.12 2.20 0.30 p.p.
Overdue Loans
greater than
90 days/ Loans
to Customers
(gross) % 1.60 1.81 1.85 1.92 0.32 p.p.
Coverage of
Overdue Loans % 126.9 131.4 130.3 131.0 4.10 p.p.
Coverage of
Overdue Loans
greater than
90 days % 150.8 149.8 148.8 149.8 -1.00 p.p.
(a) Proforma excluding Credibom
The ratio of overdue loans over 90 days stood at 1.92%, while the coverage ratio remained strong (149.8% for overdue loans over 90 days and 131.0% for total overdue loan coverage). The solvency ratio remains at comfortable levels: 10.9% according to the Bank of Portugal's rules (vs. 10.7% in December 2002) and 13.0% under the BIS criteria (December 2002: 12.6%). Early in July BES Group issued preference shares in the amount of euro 450 million. This issue aims to stabilize stabilize See peg. the value of preference shares in the capital base of the Bank, in so far as outstanding issues are US Dollar denominated, thus suffering from FX effect. Nevertheless, in order to maintain a stable weight of preference shares in Tier I, next August 18 the Group will redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. the 10 million preference shares (amounting to USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 250 million) issued in November 1999, currently listed on the London Stock Exchange London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. .
Dec 02 Jun 03(a)
Solvency Ratio (Bank of Portugal)
- TIER I 6.06 6.21
- Total 10.74 10.89
Solvency Ratio (BIS)
- TIER I 6.99 7.29
- Total 12.61 13.00
(a) estimate
The medium and long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. rating is A1, as assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. by Moody's, A- by Standard and Poor's Noun 1. Standard and Poor's - a broadly based stock market index Standard and Poor's Index and A+ by FitchRatings. 6. PRODUCTIVITY Given that current macroeconomic context tends to limit revenue growth, the results achieved through the cost restraint policy are worth noting, as they led to further improvements in the cost to income (at 51.1%). The Board of Directors is committed to reach a cost to income of 50% at the end of 2003 and contain cost growth up to 1%. The remaining productivity ratios also improved significantly, particularly the Operating Costs / Average Net Assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. and Total Assets per Employee ratios.
----------------------------------------------------------------------
Change
Jun 02 Dec 02 Jun 03 YoY
----------------------------------------------------------------------
Cost to Income (including markets) % 55.4 53.4 51.1 -4.3p.p.
Cost to Income (excluding markets) % 61.5 59.5 60.2 -1.3p.p.
Operating Costs/Average Net Assets % 1.84 1.85 1.77 -0.07p.p.
Total Assets(a)
per Employee Eur 10(3) 6,389 7,017 7,207 12.8%
----------------------------------------------------------------------
(a) Includes Asset and Liability off balance-sheet items
7. ELECTRONIC BANKING The first half of 2003 was marked by an increase in customers using the direct channels, confirming the growing importance of these channels in customer-bank relationships. In June 30, 2003, 765 thousand customers were using BES telephone banking service and 647 thousand were using internet banking service for individual customers, accounting for an overall penetration rate in retail customer base of 46%. Moreover, 30 thousand companies were using internet banking service for corporate customers, which represents a penetration rate of 55% in the customer base of medium companies and 11% in small enterprises.
USERS OF DIRECT CHANNELS
Jun 02 Jun 03 Change (%)
----------------------------------------------------------------------
BES Directo 669,009 765,145 14%
BESnet 463,839 647,409 40%
BESnet Negocios 20,045 30,633 53%
----------------------------------------------------------------------
In the first half of 2003, 9 million visitors accessed BES website (+83%) and 6 million logged-in to the internet banking services (+33%). Telephone service totaled 1.3 million (-24%) calls. Low value-added operations performed through the direct channels continued to grow, reaching 1.1 million, which represents a year-on-year increase of 36%. Despite the competitive environment, Banco BEST is performing in line with the objectives, with 14 thousand customers and assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. totaling euro 250 million. Espirito Santo Financial Consultants were integrated during the first half of the year, aiming to fuel the business future development. Users of pmelink.pt already exceed 32 thousand companies, of which 9 thousand are frequent users. The performance was in line with the business plan, and December should show positive cash flow. 8. INTERNATIONAL ACTIVITY The 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 Banco Espirito Santo, SA (BESSA) branch network, that now stands at 31 branches, was concluded in April. BESSA concentrates the Group's entire business with individual customers in Spain: affluent segment and private banking. Corporate banking remains chiefly focused on serving BES customers with business in Spain. The operation posted a positive progress, driven by the network rationalization and by a persistent effort to reduce costs. The activity of Espirito Santo B&M in Spain performed in line with expectations (revenues increased 10.7% year-on-year), benefiting from the increasing consolidation of the Iberian investment banking project. BES Investimento in Brazil posted considerable growth (+54.3%), driven by the fees obtained in M&A operations, namely through advising CSN CSN Crosby, Stills, and Nash (band) CSN Centrala studiestödsnämnden (Swedish: state education grant and loan program) CSN Confédération des Syndicats Nationaux (French) in the acquisition of Lusosider share capital; Bradesco, in taking control of BBV BBV Banco Bilbao-Vizcaya BBV Black Box Voting (unsecure voting machines) BBV Blood-borne Virus BBV Blockbuster Video (store) BBV Beroepsorganisatie Banken Verzekeringen (Dutch) (Brazil); Telesp Celular, in taking control of Tele Centro Oeste; and Lead or Joint Lead Manager in the bond issue for: Banco do Brasil Banco do Brasil S.A. is a major Brazilian bank headquartered in Brasília. The bank was founded in 1808 and is the oldest surviving bank in Brazil — one of the oldest of Latin America. , Bradesco, Usiminas, Telesp Celular and Bandeirantes Energia.
BANCO ESPIRITO SANTO
CONSOLIDATED INCOME STATEMENT AS AT JUNE 30, 2003
(Unaudited Figures)
--------------------------------------------- ------------ -----------
Jun 02 Jun 03
(10(3) (10(3)
EUR) EUR)
--------------------------------------------- ------------ -----------
--------------------------------------------- ------------ -----------
CREDIT
Interest income 1,069,912 1,096,426
Income from securities 8,669 15,123
Commissions 170,634 183,912
Profits arising from trading activity 1,602,056 1,307,962
Write-back of provisions 87,759 148,578
Income arising from the equity method
of consolidation 2,940 4,364
Other operating income 49,213 54,822
Extraordinary gains 13,894 80,198
Minority interests 2,327 1,657
--------------------------------------------- ------------ -----------
--------------------------------------------- ------------ -----------
TOTAL CREDIT 3,007,404 2,893,042
--------------------------------------------- ------------ -----------
--------------------------------------------- ------------ -----------
DEBIT
Interest expense 690,139 720,026
Commissions 26,878 23,039
Losses arising from trading activities 1,547,464 1,218,558
General administrative costs 289,295 286,993
a)Staff costs 160,983 157,164
b)Other
administrative
costs 128,312 129,829
Depreciation 62,737 69,191
Other operating expenses 4,457 2,844
Provisions for loan losses and other risks 209,113 362,091
Provisions for investments 237 1,814
Extraordinary losses 27,226 34,240
Income taxes 23,303 33,284
Other taxes 4,010 5,395
Losses arising from the equity method
of consolidation 1,892
Minority interests 20,355 18,365
Consolidated net income for the period 102,190 115,310
--------------------------------------------- ------------ -----------
--------------------------------------------- ------------ -----------
TOTAL DEBIT 3,007,404 2,893,042
--------------------------------------------- ------------ -----------
BANCO ESPIRITO SANTO
CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2003
(Unaudited Figures)
-------------------------------------------- ------------- -----------
Jun 2002 Jun 2003
(10(3) EUR) (10(3) EUR)
-------------------------------------------- ------------- -----------
-------------------------------------------- ------------- -----------
NET ASSETS
Cash and deposits at Central Banks 667,307 688,367
Loans and advances to credit institutions
repayable on demand 618,971 644,563
Other loans and advances to credit
institutions 4,114,891 5,792,238
(Provisions) (8,516) (12,934)
Loans and advances to customers 25,760,437 26,017,945
(Provisions) (332,532) (374,466)
Bonds and other fixed income securities 4,300,972 3,873,243
(Provisions) (87,614) (67,829)
a)Issued by
Government and
Public entities 1,249,829 854,481
(Provisions) (6,427) (4,662)
b)Issued by other
entities 3,043,979 3,001,418
(Provisions) (81,187) (63,167)
c)Own securities 7,164 17,344
Shares and other variable income securities 996,311 514,764
(Provisions) (80,728) (99,622)
Investments in associated companies 41,528 59,964
(Provisions) (2,384)
Other investments 930,550 973,067
(Provisions) (14,730) (47,477)
Intangible assets 475,935 549,414
(Amortization) (297,518) (376,393)
Tangible assets 1,028,695 881,386
(Depreciation) (606,181) (528,657)
Treasury stock
Other debtors 541,797 534,904
(Depreciations) (20,798) (20,102)
Prepayments and accrued income 1,238,818 1,751,824
-------------------------------------------- ------------- -----------
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TOTAL NET ASSETS 39,267,595 40,751,815
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LIABILITIES AND SHAREHOLDERS' EQUITY
Amounts owed to credit institutions 6,439,077 6,840,868
a)Repayable on
demand 339,637 383,092
b)With agreed
maturity date 6,009,440 6,457,776
Amounts owed to customers 17,630,455 18,100,886
a)Savings accounts 2,404,481 2,161,585
b)Repayable on
demand 6,310,609 6,907,000
c)With agreed
maturity date 8,915,365 9,032,301
Debt securities 9,435,698 10,281,974
a)Outstanding Bonds 7,648,448 8,946,750
b)Other securities 1,787,250 1,335,224
Other liabilities 286,429 295,225
Accruals and deferred income 868,075 567,268
Provisions for liabilities and charges 341,556 419,914
a)Pension plan and
equivalent
charges 291
b)Other provisions 341,265 419,914
Provisions for general banking risks 62,521 100,551
Subordinated debt 1,709,744 1,680,723
Share capital 1,500,000 1,500,000
Share premium 300,000 300,000
Reserves 40,111 61,407
Revaluation reserves
Retained earnings
Minority interests 551,739 487,689
Consolidated net income for the period 102,190 115,310
-------------------------------------------- ------------- -----------
-------------------------------------------- ------------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 39,267,595 40,751,815
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