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 LUXEMBOURG, Sept. 2 /PRNewswire/ -- The consolidated income statement of Espirito Santo Financial Holding S.A. ("ESFH") (NYSE: ESF) for the six months to June 30, 1993 closes with a net income of US$19.5 million, reflecting an increase of 52.3 percent over the same period in the previous year.
 This increase is due to a higher percentage of ownership in Banco Espirito Santo (BES), higher non-interest income from banking and related activities, improved insurance results, as well as the effects of a strict program of cost control. At the same time, growth of net income was adversely affected by the strength of the U.S. dollar against European currencies.
 The increase in ESFH's economic interest in BES from an average 16 percent in the first half of 1992 to 22.5 percent in the first half of 1993, primarily mirrors the fact that the second phase of the bank's privatization, during which ESFH significantly extended its participation, only took place at the end of February 1992.
 For the commercial banking, merchant banking, stockbroking and fund management activities, non-interest income (fee income, gains on trading account and investment securities, gains on foreign currency transactions as well as part of other operating income) grew 33 percent to US$173.8 million for the first half of 1993. This increase substantially offset the reduction in net interest income resulting from lower spreads. (Interest income rose 3.9 percent to US$784.6 million while interest expenses increase 12.99 percent to US$587.8 million). At the same time other expenses for these activities were 0.2 percent lower at US$191.6 million despite increases in the charges for "Depreciation and Amortization" and "Goodwill Amortization" of 20.1 percent and 18.4 percent, respectively.
 For the insurance activities, total income rose 22.9 percent to US$190.5 million for the first half of 1993 (first half of 1992: US$155.0 million), while expenses rose 16.8 percent to US$182.6 million for the same period (comparable period in 1992: US$156.4 million). As a result, income before taxes in this area was US$7.9 million compared to a loss before taxes of US$1.4 million for 1992.
 Given that exchange rate translations masked the progress achieved by the main operating subsidiaries of ESFH, the following paragraphs provide a summary of the performance of these subsidiaries, based on their results in foreign currencies.
 Banco Espirito Santo
 BES's net profits for the first half of 1993 increased 5.7 percent to Esc. 11.1 billion (gross profits increased 21.4 percent to Esc. 20.4 billion) mainly as a result of a 10.1 percent increase in net interest income and a 14.7 percent increase in fees and commission. Operating costs grew only 3.1 percent over the same period last year (compared with a 35.1 percent increase for the six months to June 30, 1992) due in part to a program of cost containment at BES. In addition, the reduction in headcount achieved in the six months of 1993, combined with the 22.4 percent growth in BES's net assets due primarily to larger loan and securities portfolios resulted in a 31 percent growth in assets per employee.
 BES's prudent reserve policy resulted in an increase of the total charges for provisions (for non-performing loans, pensions and securities portfolio) of 44.7 percent over the first half of 1992 (15.6 percent). At the same time the ratio of non-performing loans to gross loans at BES declined from 4.4 percent at June 30, 1992 to 4.2 percent at June 30, 1993.
 Companhia De Seguros Tranquilidade
 Total premiums of Companhia de Seguros Tranquilidade ("Tranquilidade") increase 30.4 percent in the first half of 1993 (comparable period of 1992 18.8 percent). The Portuguese average for the first half of 1993 was 16.8 percent (based on the 20 largest insurance companies which accounted for 85.5 percent of the Portuguese market in 1992). The increase in life premiums at Tranquilidade in the first half of 1993 was 95.5 percent (average for the sector 13.3 percent) whereas casualty premiums rose by 18.95 percent in the same period (average for the sector 17.7 percent). Cross selling between BES and Tranquilidade has continued to develop with 80 percent of Tranquilidade's life policies being marketed through BES's branch network in the first half of 1993 (68 percent in the second half of 1992). Tranquilidade's technical results for the first half of 1993 increased 6.5 percent to Esc. 2.3 billion, an improvement over the first half of 1992 which had shown a decrease of 1.5 percent. Investment income showed an increase of 39.2 percent over 1992.
 Investment Banking and Fund Management
 Banco ESSI ("ESSI"), the merchant banking subsidiary of ESFH, has strengthened its position in the Portuguese domestic capital market, becoming the leader in issues of commercial paper and the second largest manager of bonds. ESSI established a new development capital fund, Espirito Santo Development Capital Investors which will make equity and equity related development capital investment in companies either located in or with significant business activities in Portugal. It will be sponsored by the Espirito Santo Group and the lead investor is Soros Capital II LP.
 Fund management activities have been strong in the first half of 1993, both in Switzerland through Compagnie Financiere Espirito Santo S.A. ("CFESSA") and in Portugal through subsidiaries of the more recently established Espirito Santo Activos Financeiros S.A. ("ESAF"). At CFESSA the total funds under management increased 11 percent to US$2.0 billion for the first half of 1993 (Comparable period 1992: US$1.8 billion). Net income for the first half of 1993 was CHF 5.3 million reflecting an increase of 88.5 percent over the same period in 1992. At ESAF's subsidiaries total funds under management grew by 23.6 percent to Esc. 312 billion in the first half of 1993. Net income of ESAF and its subsidiaries for the first half of 1993 was Esc. 117.7 million.
 ESFH's New York Listing
 In June 1993, a registered public offering of the company's ordinary shares by certain selling shareholders was effected in the U.S. The total number of ordinary shares sold was 2,650,000. ESFH's shares were admitted to the New York Stock Exchange on June 30, 1993 where they traded under the symbol "ESF." ESFH's shares are now listed in three major stock exchanges: Luxembourg, London and New York.
 Consolidated Statement of Income
 (Unaudited, in million of US dollars
 except for earnings per share)
 Six months Six months Twelve months
 Period ended 6/30/93 6/30/92 12/31/92
 Interest income:
 Interest on loans 459.9 437.3 970.9
 Interest and dividends
 on securities:
 Trading securities 45.4 48.1 119.2
 Investment securities 142.2 134.2 300.9
 Interest on deposits
 with bank 137.1 135.8 306.3
 Total interest income 784.6 755.4 1,697.3
 Interest expense:
 Interest on deposits 409.0 384.1 937.4
 Interest on securities
 sold under agreements
 to repurchase 43.8 28.9 102.3
 Interest on other short-
 term borrowings 101.0 73.4 91.0
 Interest on corporate
 borrowings and long
 term debt 27.0 27.5 61.0
 Interest on convertible
 bonds 7.0 6.9 14.3
 Total Interest Expense 587.8 520.8 1,206.0
 Net interest income 196.8 234.6 491.3
 Provisions for loan losses (47.7) (35.3) (90.4)
 Net interest income after
 provision for loan losses 149.1 199.3 400.9
 Other income:
 Fee and commission income 75.9 55.7 130.6
 Net trading account profits 24.4 15.4 33.9
 Net investment securities
 gains/(losses) 29.8 21.3 53.4
 Net gains of foreign
 currency transactions 28.5 18.9 32.1
 Insurance revenues 184.4 150.1 330.1
 Other operating income 21.3 24.3 46.0
 Total other income 364.3 285.7 626.1
 Other expenses:
 Salaries and benefits 143.2 135.0 281.0
 Occupancy cost 7.3 7.2 14.7
 Insurance benefits
 and claims 124.5 103.1 228.3
 Insurance underwriting and
 related expenses 24.7 19.9 43.9
 Depreciation and amort. 19.3 16.4 37.6
 Goodwill amortization 7.8 6.9 14.7
 Other expenses 47.4 59.9 115.7
 Total other expenses 374.2 348.4 735.9
 Income before inc. taxes,
 minority interests and
 equity in earnings
 of affiliates 139.2 136.6 291.1
 Income taxes (25.5) (14.5) (55.4)
 Minority interests in
 income of consolidated
 subsidiaries (94.9) (110.6) (199.4)
 Equity in earnings
 of affiliates 0.7 1.3 1.8
 Net income 19.5 12.8 38.1
 Net income applicable
 to ordinary share 19.5 12.8 38.1
 Earnings per share
 Primary 1.76 1.15 3.43
 Fully diluted 1.68 1.29 3.33
 Weighted average number of
 shares outstanding
 Primary 11,099,380 11,099,380 11,099,380
 Fully diluted 15,775,673 15,775,673 15,775,673
 -- The results for the affiliate, Banco Internacional de Credito, for the six months to June 1993 have been accounted for on an equity basis, since ESFM no longer has majority voting control.
 For the six months to June 1992, BIC was consolidated line by line and contributed US$89.1 million to "interest income," US$68.9 million to "interest expense," US$7.1 million to "Provisions for loan losses," US$10.8 million to "Other income," US$18.5 million to "Other expenses," US$0.7 million to "Income taxes" and US$3.2 million to "Minority interests in income of consolidated subsidiaries."
 -0- 9/2/93
 /CONTACT: Erich Dahler of Espirito Santo Financial Holding S.A., 010-4121-619-5555, or Fern Lazar of Dewe Rogerson Inc., 212-688-6840/

CO: Espirito Santo Financial Holding S.A. ST: New York IN: FIN SU: ERN

SH-MP -- NY016 -- 8336 09/02/93 10:32 EDT
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Date:Sep 2, 1993

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