CONSOLIDATED RESULTS AS AT 30 JUNE 2012

Transcription

1 CONSOLIDATED RESULTS AS AT 30 JUNE 2012 THE IMPLEMENTATION OF THE PROJECT TO SIMPLIFY THE GROUP CORPORATE STRUCTURE CONTINUES, WITH POSITIVE EFFECTS ON CAPITAL AND SYNERGIES FURTHER IMPROVEMENT IN THE LIQUIDITY PROFILE AND CAPITAL RATIOS NET PROFITABILITY IS AFFECTED BY ADVERSE MARKET CONDITIONS WHICH ARE HOWEVER COUNTERED BY EFFECTIVE STRUCTURAL COST CONTAINMENT MEASURES AN AGREEMENT HAS BEEN SIGNED TO ESTABLISH A STRATEGIC ALLIANCE WITHIN ASSET MANAGEMENT WITH ASSET MANAGEMENT HOLDING (AMH), THE HOLDING COMPANY OF ANIMA SGR, ITALY S LEADING INDEPENDENT ASSET MANAGEMENT COMPANY IMPORTANT AGREEMENT SIGNED WITH THE TRADE UNIONS CONCERNING IMPACTS ON EMPLOYMENT AND THE STRUCTURAL AND PERMANENT CONTAINMENT OF PERSONNEL EXPENSES THE GROUP S TOP MANAGEMENT SALARIES DECREASE BY 20% operating income: EUR 397 million (-6.6% y-o-y) operating expenses: EUR million (-3.9% y-o-y) net operating margin: EUR million (-11.9% y-o-y) net profit for the period: EUR 28.2 million (EUR 32.3 million as at June 2011) loans to customers: EUR 22.4 billion (+0.3% compared to December 2011) direct deposits: EUR 21.7 billion (-1.6% compared to December 2011) commercial deposits up by approximately EUR 580 million total deposits: EUR 33.1 billion (-1.6% compared to December 2011) Sondrio, 9 August 2012 The Credito Valtellinese Board of Directors, presided over by Giovanni De Censi, met today and approved the consolidated results as at 30 June 2012, presented by the Managing Director Miro Fiordi. The period s operating performance reflects the continuing instability in the general economic situation and increasing tensions on financial markets, which are affected by the sovereign debt crisis in peripheral European countries. Despite the accentuated criticalities in the business environment, the Creval Group remains primarily focused on carrying out the extraordinary transactions outlined in the Strategic Plan in force, to reach important goals in terms of efficiency, competitive positioning and profitability which is sustainable over the long term.

2 The capital increase project approved by the Board of Directors last March is in an advanced implementation phase; it entails a) the full early repayment of the "2009/2013 Credito Valtellinese fixed-rate convertible loan with the right of redemption in shares", completed last 7 May and resulting in an approximately EUR 106 million increase in Tier 1 capital, which positively affected the Core Tier 1 by approximately 50 basis points, b) the merger by incorporation of the subsidiary Credito Artigiano, which will be completed and become legally effective by this September, and which will support the establishment of significant synergies beginning next year and improve Core Tier 1 by approximately 40 basis points, c) the voluntary takeover bid and exchange on shares of the subsidiary Credito Siciliano, which will be launched by the end of this year. Balance sheet aggregates As at June 2012, loans to customers stood at EUR 22,397 million, a slight improvement over EUR 22,330 million in December 2011; this trend reflects the weak demand resulting from uncertainties concerning prospects for economic growth, despite the group banks diligent focus on supporting SMEs and households in the communities it serves, even while rigorous credit risk controls are being enforced. The economy's lasting weakness is also affecting credit quality. At the end of the interim period, impaired loans totalled EUR 1,926 million net of value adjustments, compared to EUR 1,671 million in December In this context, doubtful loans totalled EUR 637 million net of value adjustments, compared to EUR 573 million in December 2011, up by 11.3%, with a 2.8% impact on the loans portfolio, compared to 2.6% at the end of the year, and of which 54% was hedged. Other doubtful loans amounted to EUR 1,289 million compared to EUR 1,098 million last year, up by 17.4% with a 5.8% impact on the loans portfolio, compared to 4.9% at the end of The increase is also the result of the different classification of approximately EUR 150 million in loans, with effect from 1 January 2012, which have been past due for more than 90 and up to 180 days. The trend in commercial deposits is positive, up by approximately EUR 580 million net of the convertible bond loan repaid on last 7 May, even considering the effects related to the payment of the first municipal tax (IMU) instalment and the deposit of financial resources of local authorities into the Central Treasury, in compliance with recent regulatory measures. Direct customer deposits amounted to EUR 21,737 million, down by 1.6% compared to EUR 22,081 million in December of last year, which is however a slight improvement on the first quarter of The decrease takes into account the expiry of wholesale bond loans, as well as the early repayment of the convertible bond loan during the first six months. Financial market volatility continues to affect the performance of indirect deposits. The aggregate comes to EUR 11,377 million, compared to EUR 11,566 million at the end of 2011, with asset management accounting for EUR 4,814 million. Total deposits reached EUR 33,114 million, down by 1.6% compared to December 2011.

3 The liquidity position The liquidity position is more than sufficient. The Group currently has EUR 7 billion in eligible assets, net of the haircut, at the Central Bank, including EUR 1.3 billion in Ministry of Economy and Finance government-backed securities, EUR 3.2 billion in Italian government bonds and EUR 1.9 billion from securitisation transactions. ECB funding transactions, comprised of 3-year LTROs, totalled EUR 3.25 billion at the end of June The multioriginator securitisation transaction completed on last 6 August on a portfolio of company, trade and family business mortgages for a total of EUR 2.8 billion the first carried out by the Creval Group on a portfolio including exclusively business loans - helped to further increase the assets eligible for refinancing transactions at the European Central Bank. The main source of deposits is retail clients, which are stable and diversified, while the wholesale component, accounting for 12% of the total, remains limited. As at 30 June 2012, the direct deposits/customer loans ratio is 97%. Capital and regulatory requirements 1 Group shareholders' equity totalled EUR 1,940 million as at 30 June Regulatory Capital came out at EUR 2,305 million, compared to risk-weighted assets of EUR 20,990 million. The core capital ratio is 7.9%, compared to 7.3% in December 2011, while the total capital ratio is 11%, compared to 10.6% at the end of The improvement in capital ratios, in line with planned objectives, provides suitable support to the development of operating activities. Economic results Adverse market conditions significantly affected the net operating margin in the first half of 2012, especially during the second quarter. As a result, important repricing measures were implemented, the effects of which are expected to be more significant in the coming quarters, along with rigorous and stringent controls over operating expenses. The interest margin was EUR million as at 30 June 2012, down by 6% year-on-year due to the notable drop in market rates and a higher cost of funding, also in relation to the reclassification of on demand deposit components to time deposits, categories which contribute towards improving the short-term liquidity profile (LCR - Liquidity Coverage Ratio), but which are more costly. 1 The figures relative to capital ratios as at 30 June 2012 have been calculated on a temporary basis

4 Net fees and commissions amounted to EUR million, down 10.6% year-on-year, and also included a EUR 6.9 million negative component relative to the commission for liabilities guaranteed by the MEF, which was classified as commission expense. In detail, there were decreases in fees and commissions from financial brokerage (-21% y-o-y), which continue to be affected by the lasting market volatility, from lending and other (-14.4% y-o-y, a decrease which would be around 1% net of the commission expense for the government guarantee) and to a lesser extent (-1.5%) in current account management commissions, whereas collection and payment service commissions increased by 2.7% y-o-y. Income from investments in associates and companies subject to joint control, totalling EUR 8 million, was basically the same as at 30 June 2011; on the other hand, the net profit from trading, disposals/repurchases of AFS and hedging increased significantly, and now totals EUR 15.8 million compared to EUR 11.5 million in June of last year. Operating income amounted to EUR million, down by 6.6% compared to EUR million last year. Operating expenses, totalling EUR million, decreased by 3.9% year-on-year, due to effective cost saving measures. Personnel expenses of EUR million decreased by 6.3%, while other administrative expenses, totalling EUR 90.4 million, essentially remained the same as in the first half of The cost-income ratio was 68.4%, compared to 63.7% in December The net operating margin reached EUR million, marking a decrease of 11.9% against the EUR million recorded for the corresponding period of the previous year. Adjustments on loans stood at EUR 84.9 million, compared to EUR 72.6 million of the first half of 2011; the cost of credit, expressed as a percentage of total loans to customers, reached 73 basis points, an improvement compared to 75 b.p. at the end of Income before tax from continuing operations therefore amounted to EUR 37.6 million, compared to EUR 68.8 million of the previous year. Tax expenses for the period were estimated as EUR 6.7 million due to the recognition of EUR 18.5 million in positive components including a) EUR 8.5 million for the redemption of higher goodwill values posted, pursuant to Article 15, paragraph 10 of Law Decree no. 185 of 29 November 2008, and Article 176, paragraph 2-ter of the Consolidated Act on Income Tax; b) approximately EUR 10 million due to the analytical deductibility from IRES of portions of IRAP relative to personnel costs not deducted for tax periods beginning in 2007, pursuant to Law Decrees no. 201/2011 and no. 16/2012.

5 The profit from assets held for disposal 2, totalling EUR 1.8 million, and minority interests, totalling EUR 4.5 million, led to a net profit for the period of EUR 28.2 million, down by 12.5% compared to EUR 32.3 million at the end of the same period last year. Prospects for the current business year The general economic framework remains negative, and tensions and volatility on the financial markets do not seem to be easing; however, some positive signs can be seen in terms of the hold of the real economy in the areas served by the Group. Overall, conditions for the operations of banks, whose profitability is expected to remain limited in the year under way, are not favourable. The strategic asset management alliance The Board of Directors also approved an agreement, signed today, to develop a strategic alliance within the asset management sector with Asset Management Holding, the holding company of Anima SGR, Italy s leading independent asset management company; please see the joint press release issued today for the details of that agreement. In particular, the transaction, which is expected to be completed by the end of this year provided the necessary legal authorisations are obtained, will result in an improvement of approximately 11 bps in the consolidated Core Tier 1 ratio, on the basis of the consolidated RWA as at 30 June Structural containment of personnel costs In the last few days, an agreement was signed with the Group workers Trade Union Organisations, which favours the retirement of all Employees who will be eligible to receive pension benefits as of 31 December 2012 and the use of the credit sector Solidarity Fund for at least 30 resources who will become eligible for pension benefits by 31 December The agreement also sets forth that at least 70% of the Employees originally hired by Group companies with temporary or training contracts will be definitively hired. 2 The amount regards the disposal of the subsidiaries Aperta SGR and Lussemburgo Gestioni SA, resolved upon today by the Board of Directors within the scope of the Agreement with Asset Management Holding, as set forth in the joint press release issued today.

6 Today, the Board of Directors also resolved, with the full consent of those concerned, that the fixed remuneration of the Chairman, the Vice Chairmen, the Managing Director, the General Manager and the Co-General Manager would be reduced by 20% beginning on 1 September Also confirmed was the agreement of all managers concerned to the provisions of the National fund supporting employment in the credit sector (F.O.C.). They will now contribute 4% of their net annual remuneration to that fund. Those measures confirm the desire to tangibly contribute during this time of general difficulty, on the basis of the position held, by implementing the principle of proportionality in enacting measures aimed at company cost reduction. Declaration of the Executive in charge of drawing up the corporate accounting documents The Manager in charge of preparing the corporate accounting documents, Ms Simona Orietti, states pursuant to paragraph 2, Article 154 bis of the Consolidated Law on Finance that the accounting information provided in this report matches the information reported on the company s documents, books and accounting records. Signed Simona Orietti Below are the consolidated financial and economic highlights and reclassified Balance Sheet and Income Statement. The independent auditors are still carrying out their audit. Miro Fiordi, Managing Director, will present the results as at 30 June 2012 to the financial community in a conference call planned for today, 9 August 2012, at 5:00 pm (CEST). Company contacts Investor relations Media relations phone number phone number investorrelations@creval.it mediarelations@creval.it

7 CONSOLIDATED FINANCIAL AND ECONOMIC HIGHLIGHTS BALANCE SHEET DATA 30/06/ /12/2011 (in thousands of EUR) % change 30/06/2011 % change Loans to Customers 22,396,609 22,330,187 0,30 22,819, Financial assets and liabilities 3,256,222 1,857,388 75,31 2,203, Investments in associates and companies subject to joint control 225, ,315 3,03 215, Total assets 29,716,735 28,411,490 4,59 28,269, Direct deposits from customers 21,737,176 22,080,601-1,56 22,278, Indirect deposits from customers 11,377,323 11,566,237-1,63 12,740, of which: - Managed savings 4,813,822 5,013,245-3,98 5,774, Total deposits 33,114,499 33,646,838-1,58 35,019, Shareholders equity 1,940,023 1,864,466 4,05 2,078, SOLVENCY RATIOS 30/06/2012 (*) 31/12/2011 Tier 1 Regulatory Capital/Risk-weighted assets 7.91% 7.28% Regulatory Capital/Risk-weighted assets 10.98% 10.62% (*) The figures as at 30 June 2012 have been determined on a temporary basis pending the release of the official report. FINANCIAL STATEMENT RATIOS 30/06/ /12/2011 Indirect deposits from customers / Total deposits 34.4% 34.4% Managed savings / Indirect deposits from customers 42.3% 43.3% Direct deposits from customers / Total liabilities 73.1% 77.7% Customer loans / Direct deposits from customers 103.0% 101.1% Customer loans / Total assets 75.4% 78.6% CREDIT RISK 30/06/ /12/2011 % change Net doubtful loans (in thousands of EUR) 637, , Other net doubtful loans (in thousands of EUR) 1,289,067 1,098, Net doubtful loans / Loans to customers 2.8% 2.6% Other net doubtful loans / Loans to customers 5.8% 4.9% Hedging of doubtful loans 54.3% 56.5% Hedging of other doubtful loans 8.0% 8.1% Cost of credit (*) 0.73% 0.75% (*) Calculated as the ratio between the net value adjustments due to deterioration of loans and year-end loans.

8 ORGANISATIONAL DATA 30/06/ /12/2011 % change Number of employees 4,455 4, Number of branches Banc@perta line users 197, , OTHER ECONOMIC INFORMATION 1st half of st half of 2011 Cost/Income ratio 68.4% 63.7% 66.5%

9 RECLASSIFIED CONSOLIDATED FINANCIAL STATEMENTS RECLASSIFIED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (in thousands of EUR) ASSETS 30/06/ /12/2011 % change Cash and cash equivalents 167, , Financial assets held for trading 227, , Financial assets available for sale 2,774,587 1,412, Financial assets held to maturity 473, , Due from banks 1,302,907 1,618, Loans to customers 22,396,609 22,330, Investments in associates and companies subject to joint control 225, , Property, plant and equipment and intangible assets (1) 1,126,487 1,134, Non-current assets and groups of discontinued operations 3, Other assets (2) 1,018, , Total assets 29,716,735 28,411, (1) Include the items "120. Property, plant and equipment and 130. Intangible assets ; (2) Include the items 140. Tax assets and "160. Other assets". LIABILITIES AND SHAREHOLDERS EQUITY 30/06/ /12/2011 % change Due to banks 4,510,830 3,171, Direct customer deposits (1) 21,737,176 22,080, Financial liabilities held for trading 11,925 9, Hedging derivatives 207, , Liabilities associated with groups of discontinued operations 1, Other liabilities 799, , Provisions for specific purpose (2) 196, , Minority interests 312, , Shareholders equity (3) 1,940,023 1,864, Total liabilities and shareholders equity 29,716,735 28,411, (1) Include the items "20. Due to customers" and "30. Securities issued". (2) Include the items 80. Tax liabilities, 110. Employee termination indemnities and 120. Provisions for risks and charges ; (3) Includes items "140. Valuation reserves", "160. Equity instruments", "170. Reserves", "180. Share premium reserve", "190. Capital", "200. Treasury shares and "220. Profit (loss) for the period".

10 RECLASSIFIED CONSOLIDATED INCOME STATEMENT (in thousands of EUR) ITEMS 1st half of st half of 2011 (*) % change Interest margin 236, , Net fee and commission income 129, , Dividends and similar income 250 1, Income from investments in associates and companies subject to joint control carried at equity (1) 8,056 7, Profit (losses) on trading, hedging activities and disposals/repurchases 15,750 11, Other operating expenses/income (4) 6,437 7, Operating income 396, , Personnel expenses (161,540) (172,445) Other administrative expenses (2) (90,394) (90,192) 0.22 Net adjustments to/recoveries on property, plant and equipment and intangible assets (3) (19,557) (19,888) Operating expenses (271,491) (282,525) Net operating margin 125, , Value adjustments due to deterioration of loans and other financial assets (84,923) (72,610) Net provisions for risks and charges (2,779) (2,159) Profit on disposal of investments and investments in associates and companies subject to joint control (6) 1, Income before tax from continuing operations 37,593 68, Taxes on income from continuing operations (6,650) (34,176) Income after tax from continuing operations 30,943 34, Income (loss) after tax from discontinued operations 1,809 2, Minority interests (4,510) (4,782) Profit for the period 28,242 32, (*) the period presented for comparison purposes has been reclassified according to IFRS 5 (Aperta SGR and Lussemburgo Gestioni SA). Furthermore, EUR 2.2 million in expenses was reclassified from the item Personnel expenses to Other administrative expenses, and EUR 0.9 million in expenses was reclassified from Other administrative expenses to Other operating expenses/income. (1) Income from investments in associates and companies subject to joint control carried at equity includes the profit (loss) on investments carried at equity included in item 240 "Income from investments in associates and companies subject to joint control". The residual amount of that item is included in profit (losses) on disposal of investments in associates and companies subject to joint control, together with item 270 "Profit (losses) on disposal of investments"; (2) Other administrative expenses include recoveries of taxes and other recoveries recognised in item 220 Other operating expenses/income (EUR 28,713 thousand in the first half of 2012 and EUR 25,508 thousand in the first half of 2011); (3) Net adjustments to/recoveries on property, plant and equipment and intangible assets include items 200 Net adjustments to/recoveries on property, plant and equipment, 210 Net adjustments to/recoveries on intangible assets and the accumulated depreciation of costs incurred for leasehold improvements, included in item 220 Other operating expenses/income (EUR 2,956 thousand in the first half of 2012 and EUR 3,033 thousand in the first half of 2011); (4) Other income and charges correspond to item 220 "Other operating expenses/income" net of the above reclassifications.