Espirito Santo Financial posted some nice numbers yesterday!
Espirito Santo Financial Group S.A. Announces Banco Espirito Santo's
Results to June 30, 1999
LONDON--(BUSINESS WIRE)--July 28, 1999--Espirito Santo Financial Group S.A. (NYSE :ESF - news) announced today the first half year results of Banco Espirito Santo (''BES'') (NYSE:ESB - news).
In the period to June 30, 1999, BES' consolidated net profits totalled PTE 21.2 billion, an increase of 8.4% over the same period in the previous year, corresponding to an ROE of 21.5% .
Various factors contributed to this good performance, its best to date in the same period. The significant growth of 28.7% in net interest income resulted from an increase in loan activity, namely in the retail area. The mix of the credit portfolio allowed for an improvement in the financial margin as well as in the non-performing loans' ratios. Another important contributor was the rise of 20% in revenues from services to clients, particularly those resulting from cross-selling activities.
Trading revenues were 11% lower than in June 1998 as a result of the decrease in the activities in the areas of investment banking and securities markets, namely in the sector of privatizations, and in Portuguese equities in general during the first six months of 1999.Trading results from fixed income products and derivatives which had performed well in the first three months of the year declined in the second quarter partly as a consequence of the increase in interest rates in the US.
INCOME STATEMENT
PTE Millions
June 1999 June 1998 %
Net Interest Income 59,871 46,533 28.7
+Trading Revenues 15,025 16,889 - 11.0
+ Clients Services 29,246 24,372 20.0
= Banking Revenue 104,142 87,794 18.6
- Operating Costs 51,551 45,757 12.7
Amortization 8,957 6,603 35.7
+ Others -675 -129 -
-Provisions and tax 23,528 18,744 25.5
-Minority interests and
participations in the results
of associated companies 7,205 3,615 99.3
= Net income 21,183 19,549 8.4
In this period operating costs increased by 12.7% (less than gross banking income which grew by 18.6% ) as a result of a 35.7% increase in amortization, caused by increased depreciation of investments in systems, the work needed for the introduction of the EURO and the Year 2000 . Without this increase in depreciation the operating costs would have increased by only 8.8%.
GROWTH IN ACTIVITY AND FINANCIAL STRENGTH
On a consolidated basis, BES' net assets reached PTE 5,501 bn, reflecting an increase of 21.9% against the same period in the previous year, resulting mainly from an increase in loans, in particular mortgage loans.
Growth In Activity
PTE Billions
June 1999 June 1998 %
Net Assets 5,501 4,512 21.9
Total Gross Loans 3,172 2,280 39.1
Mortgage Loans 997 584 70.7
Other Retail Loans 350 298 17.4
Corporate Loans 1,825 1,398 30.5
Retail Loans/Total Loans (%) 42.5 38.7
Total Clients' Resources 4,522 3,929 15.1
In Balance Sheet 3,134 2,657 18.0
Desintermediation 1,388 1,272 9.1
Financial Strength, an important strategic objective of BES, continued to consolidate as reflected in the table below. In the period June 98/99, total credit provisions were increased by PTE 15.9 bn in spite of an increase in total non-performing loans of only PTE 3.5bn. The increase in general provisions together with the substantial increase in loans also contributed to this fact.
Financial Strength
June 1999 June 1998
Non-Performing Loans PTE billion 73,0 69,5
Non-Performing Loans
(more than 90 days) PTE billion 65,7 63,3
Credit provisions PTE billion 87,9 72,0
Non-Performing Loans/Total Gross
Loans % 2.30 3.05
Non-Performing Loans/Total Gross
Loans (more than 90 days) % 2.07 2.78
Coverage of Non-Performing
Loans % 120.40 103.40
Coverage of Non -Performing
Loans (more than 90 days) % 133.90 113.90
In spite of the dynamic growth of the BES Group, the solvency ratio is 9.2% ( Bank of Portugal ) and 10.9 % (BIS), both well above the required minimum levels.
PRODUCTIVITY
Significant economies of scale continued to be achieved resulting in a decrease in average costs. This resulted from a substantial growth in activities, the implementation of the "Projecto Eficiencia" and the improvement in systems.
Productivity Indicators
( %)
June 1999 June 1998 p.p.
Operating Costs/net average assets 1.99 2.10 -0.11
Operating Costs/total assets(a) 1.50 1.58 -0.08
Cost to Income (without trading) 57.80 64.50 -6.70
Cost to Income (with trading) 49.50 52.10 -2.60
(a)includes desintermediation
INTERNATIONAL
In Brazil Banco Boavista InterAtlantico (BBIA) continued its restructuring programme with the number of staff reducing from 2,700 in October 1997 to 1,650 in the beginning of July 1999. At the end of June 1999, the capital of BBIA's holding company, Holding Inter-Atlantico, was increased by US$100 million. After the increase in capital, BES percentage in the capital of the holding company increased from 24% to 27%. In addition, in June 1999 BBIA issued US$100 million in Eurobonds.
In Poland, the activities of Kredyt Bank PBI are progressing well and BES increased its participation in the capital of Kredyt Bank PBI from 5% to 10%.
Finally it was with pleasure that the management of BES and Banco Espirito Santo de Investimento S.A. received the news that the banks were respectively awarded with the titles of ''Best Bank'' and ''Best Securities Firm '' in Portugal in the Euromoney Awards for Excellence for the year 1999, based on the banks' performance in 1998.
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