THE BOARD OF DIRECTORS OF “BANCO DI DESIO E DELLA BRIANZA S.P.A.” HAS APPROVED THE CONSOLIDATED INTERIM MANAGEMENT REPORT AS AT 30 SEPTEMBER 2008
The Board of Directors of the Parent Company Banco di Desio e della Brianza S.p.A., met on 13 November 2008 and approved the consolidated interim management report as at 30 September 2008, drawn up pursuant to art., 154-ter of Legislative Decree 58/1998 and prepared according to the applicable international accounting standards which are recognised by the European Community pursuant to Community Regulation n. 1606 of 19 July 2002 and IAS 34- Interim Reporting, in particular.
CONSOLIDATED FIGURES AS AT 30 SEPTEMBER 2008
Direct deposits from customers EUR 5,984.9 million (+14.8%)
Financial liabilities measured at fair value (insurance companies) EUR 1,071.6 million (+0.3%)
Total indirect deposits EUR 17,017.5 million (-15.8%)
of which Indirect Deposits from customers EUR 8,939.0 million (- 23.0%)
Net loans to customers EUR 5,471.5 million (+15.6%)
“Net non-performing loans/net loans to customers” ratio 0.69% (prev. 0.63%)
Parent Company Profit for the period EUR 673.8 million (+3.6%) (1)
Tier 1 9.6% (2)
Operating income EUR 266.5 million (+7.0%)
of which interest income EUR 171.9 million (+16.0%)
Operating charges EUR 164.5 million (+10.1%)
Operating profit/loss EUR 102.0 million (+2.3%)
Parent company profit for the period EUR 39.3 million (prev. EUR 42.9 million) (3) without application of the amendment to IAS 39 on the classification of financial instruments.
In light of the consolidated results and those of the parent company, as well as the provisional results of the current quarter, the Board of Directors maintains that it will be possible to propose distribution of an ordinary dividend that is essentially unchanged compared to the previous one, to the next Assembly for approval of the financial statements.
(1) Including the profit for the period
(2) As at 30.06.08
(3) The comparative figure as at 30 September 2007 does not include the capital gains of EUR 126.5 million net of taxes from the disposal by the Parent Company of a 29.72% share in Anima Sgrp.A., which took place in July 2007.
Key figures as at 30 September 2008
The highlighted results set forth below are compared with the situation as at 30 September 2007.
The economic data reported refers to the reclassified Income Statement as set forth in attachment no. 1.
The balance sheet figures as at 30 September 2008 are pro-forma, as in the column of the balance sheet in attachment no. 2, as the various items also include the balances of subsidiary Chiara Vita S.p.A., which is the object of a 70% disposal by the parent company that was concluded on 1 October 2008 and which is now an associated company pursuant to art. 2359 of the Italian Civil Code, as the Parent Company now holds 30% of the shares (conversely, in the accounting schedules attached to the interim management report, these balances are grouped under the items “non-current assets held for sale and discontinued operations” and “liabilities linked to discontinued operations,” in application of IAS 34).
The recent introduction of the amendment to IAS 39 following the financial crisis currently underway has waived the mandatory reference to market prices for the “trading portfolio,” providing that under certain conditions reference can be made to the value as at 1 July 2008, thus modifying the previously adopted classification so that capital losses can be “frozen” in the income statement on the aforementioned date with obvious benefits to the period results.
However, having assessed the portfolio risk as moderate, the Group opted not to take advantage of this opportunity.
Thus, uniformity in the adoption of the international accounting standards will continue for the period under review as well.
Balance sheet data
At the end of the third quarter, the total customer assets under management amounted to approximately EUR 24.1 billion, which is EUR 2.4 billion or 9.1% lower than the figure at the end of September 2007, which is attributable to the performance of indirect deposits, particularly of institutional clients following the reduction of the amounts involving the custodian bank services, which was partially offset by the increase in direct deposits.
Direct deposits exceeded EUR 6 billion, showing an increase of 14.8%.
As regards indirect deposits, the total aggregate growth dropped by approximately EUR 3.2 billion, or 15.8% compared to the third quarter of 2007, as they continue to be affected by the prolonged and worsening negative performance of international financial markets. We note in particular the negative performance by EUR 2.7 billion of deposits attributable to institutional clients, following the reduction in the volumes pertaining to custodian bank services which mainly involve associated company Anima Sgr.p.A..
The total value of loans to customers reached EUR 5.5 billion approximately, an increase of 15.6% compared to the same period last year. The credit risk index, determined by the “non-performing loans/net loans to customers” ratio stood at 0.69%, compared to 0.63% on the comparison date, which is lower than the last figure recorded within the bank system in general of 1.0% in July 2008.
The Group’s overall financial assets amounted to EUR 2.3 billion, down by EUR 0.1 billion compared to the figure for the same period last year.
The net interbank position was at higher levels, with a positive balance of EUR 0.3 billion, compared to the also positive figure of EUR 0.2 billion recorded at the end of the third quarter last year.
Net shareholders’ equity , including the profit for the period, amounts to EUR 673.8 million, up by EUR 23,2 million compared to the third quarter of 2007.
The consolidated capital ratios as at 30 June 2008, calculated according to the applicable Basel 2 criteria and approved by the Board of Directors of the parent company in October, show Tier 1 capital at 9.6% and Tier 2 capital at 10.0%.
Income statement data
The year’s third quarter closed with Parent Company’s profit at approximately EUR 39.3 million.
The performance of the main items in the reclassified Income Statement showed the following:
The main operating items show an overall increase of 7.0% on the third quarter of the previous year, reaching EUR 266.5 million. Specifically, this growth can be attributed to the performance of net interest income, amounting to EUR 171.9 million, which has increased by 16.0% and constitutes 64.5% of the total aggregate amount.
Net commissions, which stood at EUR 57.5 million, represented 21.6% of operating income, a slight decrease compared to the previous period, mainly due to the negative trend in commissions for securities placements and, in general, in the asset management sector, which was adversely affected by the crisis in the financial markets and the ensuing sector difficulties affecting the entire system.
The item comprising the Profit/loss on trading, hedging and disposal/repurchase of financial assets and liabilities measured at fair value shows a balance of EUR 3.5 million. This decrease compared to the positive balance of EUR 8 million at the end of September 2007 can be specifically attributed to trading and hedging activities and was partially offset by the increase in other items.
An increase was seen in the other items in the aggregate, dividends and similar income, the profit/loss from insurance management and other operating income/charges amounting to EUR 4.4 million, while the profit from investments in associated companies was adversely affected by the lower contribution from the result of Anima Sgr.p.A. compared to the same period last year.
Operating charges, which include personnel expenses, other administrative expenses, net adjustments to property, plant and equipment and intangible assets, show a balance of EUR 164.5 million, which is an increase of 10.1% on QIII 2007, substantially reflecting the increase in staff (122 employees), as well as in the size of the Group’s distribution network (14 branches) and operations.
Operating profit at the end of the period under review amounted to EUR 102 million, showing an increase of 2.3% from the EUR 99.6 million as at 30 September 2007.
Profit (Loss) from current operations before tax
A profit (loss) from current operations before tax of EUR 65.9 million results from applying the net adjustments for impairment of loans, amounting to EUR 36.6 million and almost completely due to the size of the write-downs effected (as the losses recorded in profit and loss amount to EUR 2.4 million), the net adjustments for impairment of available for sale financial assets and other financial transactions of EUR 1.4 million, as well as the positive balance of EUR 0.1 million for net allocations to provisions for risks and charges, and the balance of EUR 1.8 million for the profit (loss) from investments and disposals of investments to operating profit. The comparison of this result with the figure for the third quarter of last year is not material as the latter included in the item “Profit (loss) from investments in associated companies” capital gains of EUR 126.5 million after taxes deriving from the disposal by the Parent Company of a 29.72% share of Anima Sgr.p.A. in July 2007. However, we note the higher write-downs on loans
which amounted to a total of EUR 21.6 million and on impairment of available for sale financial assets and other financial transactions of EUR 1.3 million as well as the lower contribution from net allocations to provisions for risks and charges by EUR 1.5 million.
Parent Company Profit (Loss) for the period
Given the income taxes of EUR 26.7 million for the period, the Parent Company’s profit amounts to approximately EUR 39.3 million as compared to EUR 42.9 million as at 30 September 2007, net of the aforementioned capital gains of EUR 126.5 million from the disposal by the Parent Company of 29.72% of Anima Sgr.p.A. in July 2007.
As at 30 September 2008, the Group’s distribution network reached a total of 156 branches, an increase of 14 units compared to the total in June 2007, while employees totalled 1,783, representing an increase of 122 employees, or a 7.3% increase compared to the figure for the comparative period.
We hereby announce that as at 30 September, the Group’s exposure to the Lehman risk was extremely contained based on the following:
- bonds in the portfolio the counter value of which is approximately EUR 100 thousand;
- exposure to a negative mark to market derivative of approximately EUR 300 thousand;
- no interbank deposits.
Desio, 13 November 2008
BANCO DI DESIO E DELLA BRIANZA S.p.A.