RNS Number:8416N
Banco Comercial Portugues S.A.
22 July 2003
FOR IMMEDIATE RELEASE
JULY 22, 2003
BANCO COMERCIAL PORTUGUES ("BCP")
EARNINGS RELEASE FOR THE SECOND QUARTER OF 2003
* Net income for the second quarter of 2003 at Euro 114.7 million, 20.0% up
from the previous quarter;
* Successful cost controls led to improvement in domestic cost-income ratio
to 56.5% from 60.7% in the first quarter of 2003;
* Seguros e Pensoes (consolidated by the equity method) makes a positive
contribution to consolidated net income;
* Increased commission income boosted by fees from cards, operations on
securities and investment banking;
* Outsourcing of part of the Group's IT infrastructure expected to strongly
reduce future IT costs and investments;
* Focused growth of loans to customers. Special emphasis on mortgages:
loans up 4.9% from the end of March 2003, and market leadership in terms of new
business during the quarter;
* Reinforced provisions for loan losses and maintenance of high credit
quality: loans overdue by more than 90 days at 1.6% of total loans and coverage
by provisions at 145.2%;
* BCP Investimento considered by Euromoney one of the best investment banks
operating in Portugal four years in a row, this time taking the award for "Best
Domestic Securities Firm in Portugal";
* Leadership in internet banking:
- cidadebcp leads domestic online financial services, according to
market surveys by Marktest, and is considered the best financial site in
Portugal by the PC Guia magazine, for the second consecutive year;
- 2003 edition of the "World's Best Internet Banks" awards, granted by
Global Finance: managerland considered the Best Corporate/Institutional Internet
Bank in Portugal and the Best Corporate/Institutional Integrated Site in Europe.
ActivoBank7 winner of the European awards for Best Consumer Online Securities
Trading and Best Consumer Web Site Design.
The consolidated net income of Banco Comercial Portugues amounted to Euro 114.7
million in the second quarter of 2003, up 20.0% from Euro 95.6 million in the
previous quarter. Consolidated net income for the first half of 2003 totalled
Euro 210.2 million, compared to Euro 320.9 million in the same period of 2002.
Return on equity stood at 18.2%, with return on assets standing at 0.7%.
PROFITABILITY 2nd Quarter 1st Quarter Change
INDICATORS 2003 2003 1Q03-2Q03
Net income 114.7 95.6 20.0%
(Millions of euros)
ROE 18.2% 17.9% -
ROA 0.7% 0.6% -
ROA before minority interests 0.8% 0.7% -
"The 20% increase in our quarterly earnings reflects the rebound in Seguros e
Pensoes' results and our efforts to improve the Bank's profitability, aimed at
the preservation of interest margins - compensating the continuing decrease in
interest rates through a focused loan growth, with the emphasis on mortgages
reflected in the Group's leadership of the Portuguese market, in terms of new
mortgage loans - and at boosting commissions, as well as concentrating on the
continued implementation of cost rationalisation initiatives, both domestically
and abroad", commented Mr. Jardim Goncalves, BCP's Chairman and CEO, with regard
to BCP's consolidated earnings performance during the second quarter of 2003.
"The acquisition of Seguros e Pensoes at the end of March 2003 has made a
positive contribution to consolidated earnings, reflecting the substantial
progress of the programmes aimed at reducing Seguros e Pensoes' exposure to
market risks and at decreasing its costs and improving its operating
performance. We were also able to take advantage of the significant capital and
extraordinary gains resulting from the more positive performance of capital
markets over the last months to reinforce the Bank's provisions for loan losses,
thus increasing provision coverage of past due loans."
Net interest income increased to Euro 367.3 million in the second quarter of
2003 from Euro 364.0 million in the previous quarter. This performance was
mainly attributable to a higher volume of interest-earning assets stemming from
increased business. This offset the impact of credit securitisation. It was also
helped by the fact that BCP was able to restrict the decrease in net interest
margin, down from 2.8% in the first quarter of 2003 to 2.7% in the second
quarter, to less than that of the key market interest rates. Net interest income
also benefited from the impact of BCP's share capital increase at the end of
March 2003.
The Bank's prudent provisioning policy, aimed at keeping high coverage of past
due loans, and the strengthening of provisions to take advantage of significant
market gains during the quarter, resulted in an increase in charges to
provisions for loan losses to Euro 113.1 million in the second quarter of 2003
from Euro 78.5 million in the first quarter.
The steep increase in income from securities, to Euro 65.5 million in the second
quarter of 2003 from Euro 11.7 million in the previous quarter, resulted from
the appropriation of Seguros e Pensoes' net income from March 31 and from the
booking of dividends from the Group's investments in EDP, Intesa and Friends
Provident.
Net commissions totalled Euro 143.1 million, compared to Euro 135.7 million in
the first quarter of 2003, and were boosted by continuing efforts to optimise
pricing. The performance of income from cards and from operations on securities
stood out, the latter being influenced by the impact of BCP's share capital
increase. Commissions from investment banking are also worth mentioning. The
expertise of the BCP Group in this business is demonstrated by the fact that BCP
Investimento is, for the fourth consecutive year, considered by Euromoney to be
one of the best investment banks operating in Portugal, taking the award for the
Best Domestic Securities Firm.
Whilst still maintaining a prudent approach to market risks, the Bank was able
to take advantage of increased volatility in euro and US dollar interest rates
in the second quarter, mainly in long maturities. This resulted in an increase
in net trading income to Euro 37.1 million from Euro 28.6 million in the first
quarter of 2003.
Other net operating income totalled Euro 81.3 million in the second quarter of
2003 (Euro 74.6 million in the first quarter of 2003), benefiting from increased
cross-selling related income.
OTHER INCOME 2nd Quarter 1st Quarter Change
(Millions of euros) 2003 2003 1Q03-2Q03
Net Commissions 143.1 135.7 5.5%
Trading Gains 37.1 28.6 29.8%
Other Net Operating Income 81.3 74.6 9.0%
Operating costs (staff costs, other administrative expenses and depreciation)
amounted to Euro 419.1 million, roughly unchanged from Euro 419.3 million in the
first quarter of 2003. Domestic cost-income ratio improved to 56.5% from 60.7%
in the first three months of 2003. Operating costs benefited from the
implementation of the operating efficiency programme started in 2002 and from
staff downsizing measures. Part of the Group's IT infrastructure was outsourced
for a 10-year period, and this is expected to have a significant positive impact
on efficiency and on IT-related investments and costs.
Operating costs continued to be affected by increased expenses relating to the
expansion of the Group's activity abroad. Banque Privee BCP started its
operations in Switzerland, and NovaBank's business expanded both in Greece and
in Turkey.
Staff costs totalled Euro 216.8 million in the second quarter of 2003, compared
to Euro 218.5 million in the previous quarter. The increase in domestic staff
costs resulted from the integration of staff from Seguros e Pensoes into
ServiBanca and from the increase in salaries established by the new Labour
Agreement agreed with trade unions.
Other administrative expenses stood at Euro 151.0 million (149.9 million in the
first quarter of 2003) and were affected by increased advertising and
outsourcing expenses.
OPERATING COSTS 2nd Quarter 1st Quarter Change
(Millions of euros) 2003 2003 1Q03-2Q03
Staff Costs 216.8 218.5 -0.8%
Of which: domestic activity 170.0 166.2 2.3%
Other Administrative Expenses 151.0 149.9 0.7%
Of which: domestic activity 104.7 103.1 1.5%
Depreciation 51.3 50.9 0.7%
Of which: domestic activity 33.4 32.7 2.0%
Operating Costs 419.1 419.3 0.0%
Of which: domestic activity 308.1 302.0 2.0%
Loans to customers totalled Euro 48,526 million at June 30, 2003 and Euro 48,285
million at the end of the first quarter of 2003. The Bank maintained its efforts
to limit exposure to large risks and focused on mortgage loans, up to Euro
12,573 million from Euro 11,981 million at March 31, 2003. The BCP Group led the
Portuguese mortgage market in terms of new loans granted during the quarter.
Total customers' funds amounted to Euro 50,399 million at June 30, 2003,
compared to Euro 50,670 million at March 31. Securities showed a strong
performance, up 14.5% from the end of the first quarter, reflecting the transfer
of customers' savings from other instruments. Assets under management and
capitalisation insurance have also increased.
ACTIVITY 30 Jun. 2003 31 Mar. 2003 Change
INDICATORS Mar. 03-Jun. 03
(Millions of euros)
Total Assets 65,496 66,239 -1.1%
Loans to Customers 48,526 48,285 0.5%
Total Customers' Funds
- Deposits 29,048 30,214 -3.9%
- Assets under Management 9,159 9,038 1.3%
- Capitalisation Insurance 6,604 6,539 1.0%
- Securities 5,588 4,879 14.5%
- Total 50,399 50,670 -0.5%
Credit quality improved from the end of the first quarter of 2003, a
particularly outstanding performance given current economic conditions. Loans
overdue by more than 90 days accounted for 1.6% of total loans, while provision
coverage reached 145.2% (1.7% and 141.8%, respectively, at March 31, 2003).
LOAN QUALITY INDICATORS 30 Jun. 2003 31 Mar. 2003
Loans overdue by more than 90 days/Total loans 1.6% 1.7%
Provisions/ Loans overdue by more than 90 days 145.2% 141.8%
Solvency was maintained at roughly the levels seen at the end of the first
quarter, after capital strengthened significantly as a result of the
capital-raising operations that took place in 2002 and in the first quarter of
2003. The consolidated solvency ratio stood at 10.7% at June 30, 2003 according
to the rules of the Bank of Portugal, and at 11.6% according to BIS principles
(Tier One of 7.2%).
REGULATORY CAPITAL (BIS) 30 Jun. 2003 31 Mar. 2003 Change
(Millions of euros) Mar. 03-Jun. 03
Tier One Capital
- "Core" 2,669 2,665 0.1%
- Preference Shares 1,169 1,193 -2.0%
- Total 3,838 3,858 -0.5%
Tier Two Capital
- Debt 2,960 3,043 -2.7%
- Deductions (599) (569) 5.2%
- Total 2,361 2,474 -4.6%
Total Regulatory Capital 6,199 6,332 -2.1%
Risk Weighted Assets 53,632 53,038 1.1%
Ratios
- Tier One 7.2% 7.3% -
- Tier Two 4.4% 4.6% -
- Total 11.6% 11.9% -
In the first half of 2003, the BCP Group, through cidadebcp, became the
undisputed domestic leader in online financial services. This leadership was
confirmed by external entities such as Marktest and the PC Guia magazine, which
considered cidadebcp the best financial site in Portugal the second year in a
row. Three years after it started operating, cidadebcp reached 714,000
registered customers, 300,000 of which are registered to use SMS banking
services. At the end of June 2003 cidadebcp launched a specific service for
PDAs, making it a European reference in terms of mobile financial services.
In July, the Group's internet banking businesses received four Global Finance
awards, three of which were on a European level. In the 2003 edition of the "
World's Best Internet Banks" awards, managerland was considered the Best
Corporate/Institutional Internet Bank in Portugal and the Best Corporate/
Institutional Integrated Site in Europe. ActivoBank7 won the European awards for
Best Consumer Online Securities Trading and Best Consumer Web Site Design.
Commenting on BCP's operations abroad, Mr. Jardim Goncalves stated: "NovaBank's
activity in Greece continues its dynamic progress with its business expanding
into the Private Banking and Corporate segments. This follows its focus on high
net-worth individuals, the success of which is demonstrated by the increase of
business indicators, and also reflected in the improvement to its profit and
loss account". He ended with a reference to the BCP Group's activity in Poland:
"In spite of the significant impact on earnings arising from the fact that Bank
Millennium ceased to consolidate PZU, an insurance company, using the equity
method, the benefits stemming from the cost reduction programme currently under
way are already visible. Bank Millennium continues to follow an organic growth
strategy, focused on selective loan growth and on capturing customers' funds."
BANCO COMERCIAL PORTUGUES
Consolidated Balance Sheet as at 30 June, 2003 and 2002
2003 2002
(Thousands of Euros)
Assets
Cash and deposits at central banks 986,329 1,264,840
Loans and advances to credit institutions
Repayable on demand 656,135 759,449
Other loans and advances 2,535,875 3,470,180
Loans and advances to customers 48,526,209 44,216,241
Securities 4,421,944 4,172,345
Treasury stock - 23,984
Investments 2,537,500 2,642,094
Intangible assets 179,493 138,995
Tangible assets 1,242,206 1,175,280
Other debtors 1,176,729 809,978
Prepayments and accrued income 3,233,351 2,122,358
65,495,771 60,795,744
Liabilities
Amounts owed to credit institutions
Repayable on demand 211,504 429,226
With agreed maturity date 12,137,616 10,965,966
Amounts owed to customers
Repayable on demand 11,918,307 11,871,335
With agreed maturity date 17,122,304 16,373,392
Debt securities 12,896,379 12,113,536
Other liabilities 554,901 438,190
Accruals and deferred income 2,675,163 1,632,697
Provision for liabilities and charges 1,013,928 859,384
Subordinated debt 2,910,913 2,882,675
Total Liabilities 61,441,015 57,566,401
Shareholders' Equity
Share capital 3,257,401 2,326,715
Mandatorly convertible notes 528,207 -
Share premium 674,229 715,117
Reserves and retained earnings (1,920,223) (1,178,122)
Total Shareholders' Equity 2,539,614 1,863,710
Minority interests 345,752 160,341
Minority interests in preference shares 1,169,390 1,205,292
Total Minority Interests 1,515,142 1,365,633
65,495,771 60,795,744
BANCO COMERCIAL PORTUGUES
Consolidated Statement of Income
for the three months ended 30 June, 2003 and 2002
2003 2002
(Thousands of Euros)
Interest income 1,571,438 1,492,564
Interest expense 840,106 828,530
Net interest income 731,332 664,034
Provision for loan losses 211,679 174,739
Net interest income after
provision for loan losses 519,653 489,295
Other operating income
Income from securities 77,233 113,779
Net commissions 278,846 245,255
Net income arising from trading activity 65,714 74,190
Other income 226,368 280,030
648,161 713,254
Other operating expenses
Staff costs 435,387 379,136
Other administrative costs 300,922 262,879
Depreciation 102,169 81,403
Other provisions (4,673) 42,966
Other expenses 70,425 35,656
904,230 802,040
Income before income taxes 263,584 400,509
Income taxes 20,402 41,928
Income after income tax 243,182 358,581
Minority interests 32,964 37,708
Net income for the period 210,218 320,873
This information is provided by RNS
The company news service from the London Stock Exchange
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