Earnings Release • Nov 6, 2008
Earnings Release
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(unaudited figures)
Banif - SGPS, SA Public Limited Company Company Headquarters: Rua de João Tavira, 30 – 9000 Funchal Registered at Funchal Company Registry Office Single Registration and Collective Person Number 511 029 730 Share Capital: 350,000,000 Euros
Banif – SGPS, SA, the holding company of the Banif Financial Group, achieved a consolidated net profit of 50.1 million euros in the period to the end of the third quarter of 2008. This result represents a decrease of 22.6% on the equivalent period of the previous year.
The Banif Financial Group had total net assets of 12,742 million euros as at 30 September 2008. This corresponds to an increase of 25.1% compared with the end of the third quarter of 2007.
For its part, (gross) credit to customers, excluding debt securities reclassified as "loans and receivables", came to 10,324 million euros, 23.1% higher than the figure recorded on 30 September 2007. Over the same period the ratio of credit impairment/total credit rose from 2.08% to 2.29%, reflecting the adverse effects of the current economic situation.
Customer deposits on the balance sheet grew by 20.4% relative to 30 September 2007, to 8,533 million euros. In terms of "off-balance sheet" funds, the figure for the Group was 2,419 million euros (+13.6% versus the year-earlier period). The rise in total customer funds was fuelled in part by an increase in the number of Banif Financial Group points of sale from 423 to 474 between the ends of the third quarters of 2007 and 20081 . The number of bank branches in Portugal rose from 266 to 309.
So far this year, the Banif Financial Group has opened 37 branches in Portugal, three in Malta and two in Brazil. It is foreseen that a further 13 branches will open in Portugal in the final quarter of 2008, along with another three in Brazil and three more in Malta.
It is important to note, moreover, the strong growth in the number of banking customers of the Group as a result of the marketing campaigns conducted in recent years and the policy of expansion and diversification of distribution networks. A three-year programme is currently under way to increase the number of products and services sold to customers, with the objective of reinforcing their loyalty and identification with the Banif Financial Group and so obtaining a greater value from cross-selling activities among the various Group companies.
The equity of the Banif Financial Group (excluding minority interests) increased by 20.2%, as a result of the following situations:
Thus the Group had equity of 626.1 million euros at the end of the third quarter of 2008.
1 Excluding the following banks in which Banif-SGPS, SA does not have a majority shareholding: Banca Pueyo (Spain), with 82 branches; Bankpime (Spain), with 23 branches; and Banco Caboverdiano de Negócios, with 14 branches.
The Banif Financial Group had operating revenues of 354.0 million euros at the end of third quarter 2008, an increase of 18.5% in relation to the year-earlier period. The main components of revenue were:
Operating costs, which comprise general administrative expenditure and staff costs, came to a total of 210.4 million euros, 21.3% more than over the same period in 2007. This was due to the major expansion of distribution networks in Portugal, Brazil and Malta, and to costs associated with the advertising campaign to promote the Banif Financial Group's new image, which ran in the first few months of this year.
Net provisions and impairment for the period show an increase of 100.5%, reaching 46.8 million euros at the end of the third quarter of 2008. This reflects the current deterioration in the domestic and international macroeconomic situation, as a consequence of which it has been necessary to adopt a policy of greater prudence in the evaluation of certain collective credit impairment indicators.
The Banif Financial Group's consolidated operational cash flow came to 143.6 million euros (+ 14.6% on the year-earlier period), while the cost-to-income ratio (operating costs + depreciation / operating revenues) increased, from 61.4% in the third quarter of 2007, to 64.4% in the third quarter of 2008.
Considering only recurrent profits in the period in question, there was a decrease of 51.10% between third quarter 2007 and third quarter 2008: the consolidated net result fell from 57.7 million euros on 30 September 2007, to 28.2 million euros on 30 September 2008. This decrease reflects the narrower financial intermediation margin and greater provisions for credit impairment, as mentioned above, and lower profits from insurance business and investment banking at the level of commissions and trading operations.
As far as the insurance business of the Banif Financial Group is concerned, the total volume of premiums issued came to 338.8 million euros (9.8% less than at the end of the third quarter of 2007); within this total there was a 2.9% increase in the value of non-life premiums.
On the basis of the Banif Financial Group's net profit of 50.1 million euros as at 30 September 2008, ROE (Return on Equity) was 11.4% (as against 19.5% in the year-earlier period), while ROA (Return on Assets) came to 0.57% (versus 0.95% in the year-earlier period). Both ratios have been annualised and calculated using average values for the Group's equity and assets.
Lisbon, 6 November 2008
THE BOARD OF DIRECTORS
Banif Financial Group '000 Euros
| Balance sheet | 30-09-2008 | 30-09-2007 | Absolute | % |
|---|---|---|---|---|
| variation | variation | |||
| 1 Net assets | 12.741.968 | 10.182.064 | 2.559.904 | 25,1% |
| 2 Lending (gross) (1) | 10.323.604 | 8.387.131 | 1.936.473 | 23,1% |
| 3 Customer deposits (balance sheet) | 8.533.063 | 7.085.223 | 1.447.840 | 20,4% |
| 4 Equity (2) | 626.112 | 520.948 | 105.164 | 20,2% |
| Income statement | 30-09-2008 | 30-09-2007 | Absolute | % |
| variation | variation | |||
| 5 Interest margin (including earnings on equity instruments) | 198.578 | 182.380 | 16.198 | 8,9% |
| 6 Profits on financial operations (net) | 60.338 | 25.955 | 34.383 | 132,5% |
| 7 Other income (net) | 95.095 | 90.517 | 4.578 | 5,1% |
| 8 Operating revenue | 354.011 | 298.852 | 55.159 | 18,5% |
| 9 Personnel costs | 119.995 | 98.519 | 21.476 | 21,8% |
| 10 Overheads | 90.445 | 75.008 | 15.437 | 20,6% |
| 11 Cash flow | 143.571 | 125.325 | 18.246 | 14,6% |
| 12 Depreciation in the period | 22.207 | 19.710 | 2.497 | 12,7% |
| 13 Provisions and impairment (net) | 46.855 | 23.364 | 23.491 | 100,5% |
| 14 Equity method | 4.505 | 9.363 | -4.858 | -51,9% |
| 15 Pre-tax profit | 79.014 | 91.614 | -12.600 | -13,8% |
| 16 Taxes (current and deferred) | 23.196 | 18.589 | 4.607 | 24,8% |
| 17 Minority interests | 5.738 | 8.340 | -2.602 | -31,2% |
| 18 Consolidated income for the period | 50.080 | 64.685 | -14.605 | -22,6% |
| Other indicators | 30-09-2008 | 30-09-2007 | Absolute | % |
| variation | variation | |||
| 19 Insurance premiums (total) | 338.823 | 375.449 | -36.626 | -9,8% |
| - Life | 208.191 | 248.439 | -40.248 | -16,2% |
| - Non-life | 130.632 | 127.010 | 3.622 | 2,9% |
| 20 Assets under management (in million euros) | 2.419 | 2.129 | 290 | 13,6% |
| 21 Credit impaiment / Total lending | 2,29% | 2,08% | - | - |
| 22 ROE | 11,4% | 19,5% | - | - |
| 23 ROA | 0,57% | 0,95% | - | - |
| 24 Pre-tax profit and minority interests / Average net assets | 0,90% | 1,34% | - | - |
| 25 Operating revenue / Average net assets | 4,03% | 4,38% | - | - |
| 26 Pre-tax profit and minority interests /Average equity (including minority interests) | 13,9% | 22,2% | - | - |
| 27 Operating costs + Depreciation / Operating revenue (3) | 64,4% | 61,4% | - | - |
| 28 Personnel costs / Operating revenue (3) | 33,8% | 32,6% | - | - |
(1) Excluding debt securities classified as "loans and receivables"
(2) Less minority interests
(3) These ratios exclude non-financial and auxiliary activities. Operating revenues include profits on investment in associates excluded from consolidated accounts.
* ANNEX II *
INDIVIDUAL/CONSOLIDATED QUARTERLY REPORT (Unaudited)
| Company: BANIF - SGPS, S.A. | |||||||
|---|---|---|---|---|---|---|---|
| Reg.Off.: Rua de Joao Tavira, 30 9004 - 509 Funchal | 511 029 730 | ||||||
| Reference period: | 01-01-2008 | ||||||
| 1st Quarter | X 3rd Quarter |
5th Quarter(1) | (000 euros) | 30-09-2008 |
| BalanceSheet Items | Individual | Consolidated | ||||
|---|---|---|---|---|---|---|
| 30/09/08 | 30/09/07 | Var. (%) | 30/09/08 | 30/09/07 | Var. (%) | |
| (000 EUR) | AAS | AAS | AAS | IAS | IAS | IAS |
| NET ASSETS | ||||||
| Due from other banks | 15.842 | 17.014 | (6,9%) | 621.243 | 679.443 | (8,6%) |
| Loans and advances to customers | - | - | - | 10.156.858 | 8.196.475 | 23,9% |
| Trading securities | 1.766 | 1.272 | 38,8% | 559.652 | 520.126 | 7,6% |
| Available-for-sale financial assets | 488.006 | 435.097 | 12,2% | 162.275 | 96.503 | 68,2% |
| Held-to-maturity investment securities | - | - | - | 75.620 | - | - |
| EQUITY AND EQUIVALENT | ||||||
| Share Capital | 350.000 | 250.000 | 40,0% | 350.000 | 250.000 | 40,0% |
| No. ordinary shares (5) | 350.000.000 | 250.000.000 | 40,0% | 350.000.000 | 250.000.000 | 40,0% |
| No. other shares | - | - | - | - | - | - |
| Treasury shares | - | - | - | - | - | - |
| No. of voting shares (voting rights impaired) | - | - | - | 6.005 | 130.261 | (95,4%) |
| No. non-voting shares | - | - | - | - | - | |
| Subordinated loans | - | - | - | 349.397 | 379.400 | (7,9%) |
| Minority interests | - | - | - | 197.732 | 122.348 | 61,6% |
| LIABILITIES | ||||||
| Deposits from other banks | 38.655 | 69.747 | (44,6%) | 2.254.686 | 1.662.598 | 35,6% |
| Customer accounts and other loans | 35.011 | 15.000 | 133,4% | 6.508.263 | 4.945.901 | 31,6% |
| Debt securities in issue | 123.693 | 72.236 | 71,2% | 2.024.800 | 2.139.322 | (5,4%) |
| TOTAL ASSETS (NET) | 672.221 | 536.427 | 25,3% | 12.741.968 | 10.182.064 | 25,1% |
| TOTAL EQUITY | 458.682 | 365.896 | 25,4% | 823.844 | 643.296 | 28,1% |
| TOTAL LIABILITIES | 213.539 | 170.531 | 25,2% | 11.918.124 | 9.538.768 | 24,9% |
| Income Statement Items | Individual | Consolidated | ||||
|---|---|---|---|---|---|---|
| 30/09/08 | 30/09/07 | Var. (%) | 30/09/08 | 30/09/07 | Var. (%) | |
| (EUR) | AAS | AAS | AAS | IAS | IAS | IAS |
| Interest margin (2) | (6.475) | (2.470) | (162,1%) | 195.968 | 179.302 | 9,3% |
| Fee and commission income (net) | (178) | (137) | 29,9% | 95.095 | 90.517 | 5,1% |
| Income on securities and financial operating profits (net) | 1.856 | 9.607 | (80,7%) | 62.948 | 29.033 | 116,8% |
| Operating income | (4.797) | 7.000 | (168,5%) | 354.011 | 298.852 | 18,5% |
| Personnel, admin. and other costs | 1.870 | 690 | 171,0% | 210.440 | 173.527 | 21,3% |
| Depreciation | 13 | 31 | (58,1%) | 22.207 | 19.710 | 12,7% |
| Provision / Impairment | 68 | 506 | (86,6%) | 46.855 | 23.364 | 100,5% |
| Income from companies recognized by equity method | - | - | - | 4.505 | 9.363 | (51,9%) |
| Pre-tax profits | (6.748) | 5.773 | (216,9%) | 79.014 | 91.614 | (13,8%) |
| Tax on income (3) | 950 | (1.483) | 164,1% | (23.196) | (18.589) | 24,8% |
| Minority interests | - | - | - | (5.738) | (8.340) | (31,2%) |
| Net profit for the quarter | (5.798) | 4.290 | (235,2%) | 50.080 | 64.685 | (22,6%) |
| Net profit for the quarter per share EUR (5) | -0,02 | 0,02 | (196,5%) | 0,14 | 0,26 | (44,7%) |
| Net cash flow (4) | (5.717) | 4.827 | (218,4%) | 119.142 | 107.759 | 10,6% |
(1) Applicable in the first accounting period of companies which adopt a company year different from the calendar year (Article 65-A of the Companies Code)
(2) Interest margin = Interest and equivalent income - Interest and equivalent expense
(3) Estimate of tax on income and deferred taxes
(4) Net cash flow = Net profits + Depreciation + Provisions
NIC - International Accounting Standards
NCA - Adjusted Accounting Standards
(Summary ofthe company's operations so as to permit investors to form an opinion on its affairs over the quarter)
An account of the business affairs of Banif - SGPS, S.A., in the third quarter of 2008 is contained in item 1 of the Report preceding this Annex.
(Persons who take responsibility for the information, office held and respective signatures)
The Board of Directors
* Save as otherwise indicated, the figures required should be expressed in thousands of euros, without decimals. * Negative amounts should be stated in brackets ( ).
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