LUXEMBOURG/PORTUGAL--(BUSINESS WIRE)--
ESPÍRITO SANTO FINANCIAL GROUP S.A. ANNOUNCES ITS CONSOLIDATED RESULTS FOR THE FULL YEAR 2010
Luxembourg/Portugal – 23 March 2011 - Espírito Santo Financial Group S.A. (“ESFG” or the “Company”) (NYSE Euronext Lisbon: ESF; Bloomberg: ESF PL; Reuters: ESF LS) today announces its unaudited consolidated results for the full year 2010. The report is compiled under IFRS as implemented by the EU.
HIGHLIGHTS FOR THE REPORTING PERIOD1
- Consolidated Net Income for FY10 reached EUR 122.2 million, a decline of 22.4% when compared to a year earlier (EUR 157.5 million);
- Consolidated Banking Income at ESFG rose by 3.0% to EUR 2.01 billion (EUR 1.95 billion);
- Consolidated Net Interest Income fell by 3.2% to EUR 1.19 billion (EUR 1.23 billion), reflecting the low interest rate and persisting challenges in the financing environment;
- Consolidated Market Results2 rose 7.8% to EUR 219.3 million (EUR 203.4 million) on the back of strong financial results at BES;
- Consolidated Net Fees and Commissions rose 13.5% YoY to EUR 818.3 million (EUR 720.7 million) as ESFG continues to expand its international operations with very strong growth in foreign trade related fees at Banco Espírito Santo (“BES”);
- Consolidated Insurance Earned Premiums Net of Reinsurance rose 5.1% YoY to EUR 325.2 million (EUR 309.3 million) despite continued competitive market pressures;
- Consolidated Claims Incurred Net of Reinsurance rose 8.1% YoY to EUR 238.4 million (EUR 220.6 million);
- At the upcoming AGM, the Board of Directors will propose a dividend per share of EUR 0.28, which represents a dividend yield of 2.0% relative to the share price at year end 2010.
1 A year-on-year comparison of the key
indicators is provided. Figures in parentheses following the operational
and financial results for 2010 refer to the same item in 2009.
2
Aggregate of Net Gains/Losses from Financial Assets at Fair Value
through Profit and Loss, Net Gains on Available for Sale Financial
Assets, Net Gains from Foreign Exchange Differences and Net Gains/Losses
from the Sale of Other Assets.
CONFERENCE CALL
A conference call for investors and analysts will be held today at 3pm (GMT) / 4pm (CET) / 11am (EDT). An instant replay of the call will be available for two weeks. For details, contact Devina Artley at Taylor Rafferty on telephone number +44 (0) 207 614 2900.
Figures in parentheses following the operational and financial figures for 2010 refer to the same item in 2009.
MACRO ECONOMIC ENVIRONMENT DURING REPORING PERIOD
The Euro Area sovereign debt crisis of 2010, primarily brought about by a marked imbalance in Greece’s public accounts and the noticeable difficulties faced by Ireland’s financial sector, severely affected Portugal’s public accounts, weighed heavily on the operating environment of ESFG and its operating subsidiaries. Greece and Ireland both required financial support from the EU and the IMF raising fears of contagion with other Euro Area periphery economies, particularly Portugal and Spain. In Portugal spreads between yields on 10-year public debt securities and the German benchmark Bunds rose by 296 bps in the year, to 364 bps (with a high of 460 bps in mid-November).
The resulting downgrades on peripheral Euro Area member states were triggered by fears over the deterioration of credit quality (both sovereign debt and mortgage credit) which also penalised the funding conditions of European banks. The iTraxx Financials index, which tracks the spreads on Credit Default Swaps, rose by 102 bps in 2010, to 177 bps; this move reflected the deterioration of investor confidence. The EUR dropped by 6.7% against the dollar, to EUR/USD 1.336 at year-end, while the CAC40, IBEX and PSI-20 indices fell by 3.3%, 17.4% and 10.3%, respectively. The DAX, representing core Europe, rose by 16.1%, underpinning investors’ confidence in the performance of the German economy. The ECB left the key benchmark rate unchanged at 1.0%, extended the unlimited provision of liquidity under concessional terms, and also increased the acquisition of debt securities in the second half of the year. The 3-month EURIBOR rose from 0.7% to 1.006%.
Despite fears of financial instability, the year saw an improvement in activity in the main economic areas. After having fallen in 2009, GDP grew by 3.6% in Germany, 1.7% in the Euro Area and 2.9% in the US. The US, benefiting from the expansionary stance of the Federal Reserve’s monetary policy, gained from investor confidence with the Dow Jones, Nasdaq and S&P500 indices rising in the year by 11.0%, 16.9% and 12.8%, respectively. The main emerging economies remained strong, with GDP growing by 10% in China and 7.5% in Brazil.
In Portugal, notwithstanding the deterioration of the financial condition, GDP growth surpassed expectations, rising by an estimated 1.4% in 2010, only slightly below the European average of 1.7%. Portugal, when compared against the other peripheral European countries of Spain, Greece and Ireland, was the only member state with positive growth. This growth resulted from a dynamic performance in exports, which are expected to have registered real growth of close to 9.0%.
OVERVIEW OF OPERATIONS
ESFG’s un-audited consolidated net profit for the full year 2010, attributable to equity holders of the Company, reached EUR 122.2 million (EUR 157.5 million). Overall recurrent income remained healthy despite a difficult operating environment. Increased interest costs relating to ESFG’s commitment to maintaining a strong capital position, as required under Basel 3, contributed to a fall in overall results. Operating income rose 3.7% to EUR 3.06 billion (EUR 2.95 billion). Total consolidated assets also rose year-on-year to EUR 87.1 billion (EUR 85.3 billion). The consolidated result represents a year-on-year fall in net income of 22.4% compared to 2009.
Despite the financial challenges experienced by southern European banks, ESFG’s primary banking investment BES, reported an individual net income of EUR 510.5 million (EUR 522.1 million). This represents a fall of only 2.2%, as the Bank continues to pursue its strategic geographical diversification central to long term profitability. BES’ non- Portuguese commercial banking income represented 48.0% of total income on a recurrent basis. Strong performances from both Angolan (BES Angola) and Brazilian (BES Investimento do Brasil) operations validate the strategic decision made ten years ago for greater internationalisation. Spain, the third area within the bank’s strategic triangle also reported positive results in 2010. In 2010, the strategic triangle of South America, Africa and Iberia, made up 67.0% of the international contribution at BES and 27.0% of BES’ overall results.
ESFG’s non-controlling interest contributions increased year-on-year, resulting in part from the sale, in late 2009, of a 24.0% stake in Banco Espírito Santo Angola (“BESA”), which contributed to a dilution in net profits. BESA is the principal contributor to international net income at BES. Income attributable to minority interests at EFG rose to EUR 504.9 million in 2010 (EUR 423.2 million). Excluding non recurrent items at BES, net income at the Bank reached EUR 421.4 million, down from EUR 462.1 million in 2009, on a comparable basis, which translates into a reduction in net income of 8.8% year-on-year.
ESFG posted improved results in consolidated Net Fees and Commissions and Capital Market results. Fees and commissions totalled EUR 818.3 million (EUR 720.7 million) and capital market results grew to EUR 219.3 million (EUR 203.4 million). Net Interest Income (“NII”) proved resilient during the period given the back-drop of historically low interest rates and continued pressure on liability spreads, the consolidated figure dropped to EUR 1.19 million (EUR 1.23 billion) at year end 2010.
ESFG’s insurance operations results continue to be affected by heightened competition and a stagnant market although, despite this, individual premiums at Tranquilidade rose. Results were also affected by floods in Madeira and other storms that occurred at the beginning of last year, with multi-perils claims contributing to an increase in the claims ratio. The expense ratio improved from 31.7% to 30.3% reflecting the ongoing cost reduction programme. On the 23 December, Companhia de Seguros Tranquilidade S.A. announced that it had signed an acquisition agreement with Banco Pastor for the purchase of a 50% stake in Pastor Vida.
Consolidated Insurance Earned Premiums Net of Reinsurance rose 5.1% year-on-year to EUR 325.2 million (EUR 309.3 million) despite continued competitive market pressures. Consolidated Claims Incurred Net of Reinsurance rose 8.1% year-on-year to EUR 238.4 million (EUR 220.6 million);
Operating expenses during the period remained unchanged despite a marked increase in interest costs at ESFG namely due to the Lower Tier II (EUR 400 million) issued in late 2009, with its first coupon paid in late 2010. ESFG’s drive towards international expansion, principally at BES, saw staff and general administrative costs rise by 8.1%.
Operating costs at the Bank grew by 10.8% due to its focus on international business, where costs grew by 27.7%; whilst costs in Portugal rose by 6.3%. The Bank’s Cost to Income ratio remains below 50.0%. Staff costs at BES increased by 11.0% in 2010. BES announced that, from 1 January 2011, in accordance with a general agreement through the Portuguese Banks Association and the Portuguese Government, working employees would be integrated into the General Social Security Scheme, with the effect of reducing future liabilities and leading to a fall in wage costs at the bank.
BANKING OPERATIONS
Consolidated Banking Income, including market results, rose 3.4% to EUR 2.23 billion (EUR 2.15 billion) at ESFG during 2010. BES remains the single most important contributor to ESFG’s net income, with all other banking interests contributing positively, though to a lesser degree.
At BES, net individual income in 2010 decreased by 2.2% year-on-year to EUR 510.5 million whilst commercial banking income rose by 2.7% to EUR 1.97 billion. Fees and commissions compensated for the 3.1% decline in net interest income. Provisioning charges at the bank remained high, 43.0% of gross interest income were allocated to provisions.
As stated in ESFG’s third quarter press release and in light of the unprecedented limitations on market funds, BES implemented a strict programme of deleveraging its balance sheet and reducing the loan deposit ratio to 120.0% by year end 2012. By year end 2010 BES had lowered its LTD from 198.0% to 165.0%. The deleverage process is focused on the reduction of international loan portfolios which are, by nature, wholesale funded such as project finance; and increased attention towards core deposits growth. The measures taken reflect the focus on conservatively managing liquidity in the event of limited availability of wholesale market funds, whilst containing the use of ECB facilities. BES was able to reduce net ECB facilities by more than EUR 2 billion in the second half of 2010, from a net amount of EUR 6.0 billion in June 2010, to EUR 3.9 billion at year end.
The growth in BES’ international operations made strong contributions to ESFG’s net income in 2010, particularly towards net interest income (“NII”). Non- Portuguese NII rose from 29.0% of NII to 47.0%, a rise of 63.1% year-on-year to EUR 552.8 million compared to a fall in the bank’s domestic NII of 29.1%. Banking income at BES rose by 2.7%, although Portuguese operations fell by 10.1% year-on-year.
In January 2011, BES announced the conclusion of its purchase of a 25.1% stake in Moza Bank S.A., initially announced in October 2010. Moza Bank S.A. is a Mozambican bank founded in June 2008. This and other acquisitions by BES África SGPS reinforce the Group’s strategy of supporting its corporate client base, both nationally and internationally. In July 2010, BES inaugurated its fully owned bank in Cabo Verde, BES Cabo Verde. BES Angola has been operating in the Angolan market for almost 10 years and continues to make substantial contributions to BES’ international growth (through its fully owned subsidiary BES África). Net income at BES África grew to EUR 92.6 million (EUR 92.4 million).
In August 2010, BES’ asset manager ESAF announced the acquisition of Gespastor from the Spanish bank, Banco Pastor. The purchase will include an exclusive commercial agreement for the period of seven years.
The investment banking business at Banco Espírito Santo de Investimento S.A. (“BESI”) reported a 13.2% year-on-year increase in banking income to EUR 259.7 million (EUR 229.4 million); pre-tax individual profit rose to EUR 60.0 million. BESI maintained its leading position in equity trading at NYSE Euronext Lisbon and ranked third on the Madrid Stock Exchange. Operations outside Portugal accounted for 65.0% of consolidated banking income, increasing by 30.9% year-on-year. In November, BESI completed its acquisition of a 50.1% stake in Execution Noble. The acquisition reinforces the investment bank’s presence in London as well broadening its reach with offices in Hong Kong and India, gaining greater exposure to rapidly expanding markets. In late 2010, BESI also opened a joint representative office with BES in Mexico City.
At ESFG’s French banking operations, Banque Espírito Santo et de la Vénétie (“BESV”) was able to buffer the negative impacts of low interest rates and high refinancing costs through: a positive commercial performance, notably in real estate credit; an increase in credit spreads; and, the commission income which was, in part, generated by new business lines. Banking income grew by 21.8% year-on-year to EUR 42.4 million. Operating costs increased by 16.9% however, the cost to income fell from 56.9% in 2009 to 55.0%. The gross operating income totalled EUR 19.2 million, representing a year-on-year increase of 28.3%. Net individual income reached EUR 8.5 million at year end 2010 (EUR 6.0 million).
ES Bankers (Dubai) Limited (“ESBD”) reported individual Net Income had reached EUR 1.7 million (EUR 2.2 million). The Dubai operation focuses on both the traditional geographical client distribution of ESFG and also the Indian Sub-continent, South Asia and the Gulf Co-operation Countries. At ES Bank (Panama) (“ESBP”) individual net income reached EUR 4.8 million in 2010, a year-on-year rise of 19.0%.
In Switzerland, Banque Privée Espírito Santo (“BPES”), which focuses on private banking, continues to make positive contributions to ESFG’s consolidated results. Overall, results were influenced by the devaluation of the EUR and USD versus the CHF and by the weak economic picture in Europe. Despite a seasonal slowdown in 2010 the individual net income reached CHF 6.4 million. Individual banking income for the same period reached CHF 51.5 million. Brokerage fees grew by 21.0% year-on-year, whilst historically low interest rates led to a 35.0% fall in NIM. Net new entries at BPES grew by CHF 106 million in 2010. Assets under management, however, fell by 12.5% to CHF 4.7 billion due to significant strengthening of the Swiss Franc against key currencies.
Assets under Management (‘AUM’) at ESFG’s asset management and private banking subsidiaries reached EUR 23.9 million at year end 2010. AUM are predominantly held at ESAF with further AUM (including deposits) held at ESFG’s private banking operations at BPES and ESBD.
Overall, asset quality at ESFG’s principal banking operations, BES, remained resilient. The economic downturn has had its effect on the levels of overdue loans both in Portugal and elsewhere. Non Performing Loans (NPL) at BES rose from 1.77% at the end of 2009 to 2.1% at year end 2010. According to the Bank of Portugal BES’ NPL figures compare favourably to an average quarterly figure in the Portuguese banking sector of 3.7%. BES’ coverage ratio, of over 90 days, remains strong at 173%.
The associated 2010 year end credit provisioning charge reached EUR 352.0 million, which is lower than 2009’s full year figure. However, in 2009 BES made an additional charge of EUR 106.0 million. The bank maintains a conservative risk profile with a cost of risk of 67 basis points. The total provisions for credit against gross loans at the end of 2010 increased to 3.38% (3.07%) or EUR 1.8 billion.
INSURANCE OPERATIONS
Despite the stagnant non-life market, the ESFG insurance operations contributed positively to the overall net profit. When combining both Life and non-Life business ESFG ranks as the second largest insurance group in Portugal, with a combined market share of 12.1%. The combined market share in the Life business of T-Vida and BES Vida reached 12.8% (T-Vida 1.4% and BES Vida 11.4%). ESFG’s market share in the non-Life sector, through Tranquilidade, BES Seguros and Seguros LOGO (‘LOGO’), grew strongly during the period reaching 10.1%, up from the 9.6% at year end 2009.
Tranquilidade’s net individual income reached EUR 11.6 million, a 26.2% year-on-year increase. However, technical results fell during the period by 23.3% to EUR 51.4 million. Major storms which occurred in early 2010 had a negative impact of EUR 4.9 million on the bottom line. Financial results rose 37.1% year-on-year to EUR 27.9 million and operational costs decreased 5.0% to EUR 69.9 million. Tranquilidade's market share rose from 7.5% in 2009 to 7.8% at year end 2010.
Tranquilidade’s market share in health, motor and workers compensation increased 6.4% to 6.7%, 7.7% to 8.2% and 8.4% to 9.1%, respectively. The assurance programme of cross-selling banking products through its agents accounted for 19.0% of new clients at BES and 8.0% of all mortgages. Tranquilidade's distribution chain is made up of 1,700 points of sale, of which 38 are own branches and 74 franchise shops. The combined ratio at Tranquilidade stood at 104.9% due to the increase in its loss ratio. The expense ratio improved from 31.7% to 30.3%, reflecting the ongoing cost reduction programme which included a 5.0% fall in expenses and 1.6% decrease in personnel costs.
On the 20 September 2010, Fitch affirmed Tranquilidade's stand alone rating as A- and moved ESFG's insurance operation from negative outlook to stable. Fitch qualified its decision by stating that it recognised the insurance group's capital strength which reflected its strong franchise and market position as well as the financial flexibility offered by being part of ESFG. Fitch further acknowledged Tranquilidade's strategy of organic domestic growth and its moves toward international expansion. Tranquilidade entered into an agreement with Banco Pastor to purchase of a 50.0% stake in Pastor Vida including management control, with the remaining 50.0% stake being held by Banco Pastor. The agreement went into effect in January 2011.
Tranquilidade's direct insurance business, LOGO, reported that its client acquisition had reached 115,000 clients and gross written premiums of EUR 20.0 million. LOGO is now the second largest direct insurer in Portugal. Established in 2008, Logo reported a net individual loss of EUR 8.0 million, reflecting an increase in the loss ratio and its impact on the unexpired risk reserve. LOGO is expected to break even by 2013.
T-Vida reported an individual net profit of EUR 5.1 million. Technical results improved 14.7% during the period, reaching EUR 8.4 million and reflecting an increase in the sales of risk products. Gross written premiums grew 59.5% to EUR 164.4 million, with priority given to risk and pension products.
HEALTHCARE OPERATIONS
Year-on-year operating revenues at ESFG’s healthcare operator Espírito Santo Saúde (“ESS”) rose by 15.4% to EUR 251.6 million (EUR 218.0 million). Individual net income remains positive with EBITDA at 15.6%, up from 15.5% in 2009. Individual net income rose to EUR 1.5 million despite economic pressures in Portugal and the increased cost of funding. Hospital da Luz, the largest private hospital in Portugal and key investment at ESS, saw revenue growth up by 14.0% year-on-year.
ESS, operating 18 healthcare units, reported that in 2010 there was 20.0% rise in operating revenue at Hospital da Arrábida and Cliria. Capacity doubled at the two sites with Cliria having integrated the Oiã clinic in July 2009. Cliínica Parque dos Poetas saw strong year-on-year revenue growth of 43.0%. The ambulatory clinic covers the affluent Lisbon suburbs of Oeiras and Cascais.
At Hospital Residencial do Mar, the introduction of measures that included significant changes to the pricing mix have led to a 9.0% growth in revenues with the residential hospital reporting positive results in 2010. ESS’ partnership with the Portuguese government at Hospital de Loures is on track. The hospital, currently under construction, is expected to open in January 2012, as planned. ESS expects continued organic expansion of its units and will support ESFG’s strategy for continued international growth and will draw on synergies and cross selling with other subsidiaries within the Group.
INCOME STATEMENT SUMMARY
| (EUR Thousands) | FY09 | FY10 | Change YoY | ||||
| + Net Interest Income | 1 228 585 | 1 189 041 | (3.2%) | ||||
| + Net Fees and Commissions | 720 722 | 818 310 | 13.5% | ||||
| = Commercial Banking Income | 1 949 307 | 2 007 351 | 3.0% | ||||
| + Capital Markets Results and other operating income | 603 661 | 573 385 | (5.0%) | ||||
| + Insurance Earned Premiums Net of Reinsurance | 309 289 | 325 168 | 5.1% | ||||
| = Operating Income | 2 952 142 | 3 100 642 | 5.0% | ||||
| - Operating Expenses | 2 483 430 | 2 506 032 | 0.0% | ||||
|
= Profit before Tax (inc. Gains from Financial
Investments & Share of profit of Associates) |
701 750 | 678 598 | (3.3%) | ||||
| - Tax | 121 077 | 51 494 | (57.6%) | ||||
| - Minority Interests | 423 196 | 504 944 | 19.3% | ||||
| = Net Income | 157 477 | 122 165 | (22.4%) |
PRINCIPAL ITEM ANALYSIS
Consolidated Net Interest Income fell by 3.2% year-on-year to EUR 1.19 billion (EUR 1.23 billion); solvency concerns of the European banking sector and more recently concerns over peripheral European sovereign debt has led to the drying up of the interbank market and resulted in significant increases in financing costs. The increase in the volume effect was insufficient to compensate for the fall in Net Interest Margin (“NIM”). The rise in the perceived risk and consequent increase in spreads, led to a 27 basis point fall in NIM at BES from 1.89% to 1.65%. Interest earning assets fell by 59 basis points to 3.95%, whilst the average rate of interest bearing liabilities fell by 35 basis points to 2.3%.
The contribution from non-Portuguese markets has had a decisive effect on the full year results at BES. NII from non-Portuguese business rose by 63.1% to EUR 552.8 million or 47.8% of total NII. To a lessening degree the use of the ECB liquidity facility contributed to the banks consolidated NII. NIM at the bank fell 16 basis points to 1.61% (the average rate on interest earning assets dropped by 27 basis points, whilst interest bearing liabilities fell by 11 basis points).
Consolidated Fees and Commissions (Net of Expenses) saw an increase of 13.5% year-on-year to EUR 818.3 million (EUR 720.7 million). 2010 saw a dynamic growth in documentary credit and strong increases in guarantees and commissions on loans. At BES, documentary credit fees grew by 78.9% year-on-year, with commissions on loans and guarantees up by 21.7% and 26.1% respectively. Asset management related fees grew by 3.3%.
Consolidated Capital Markets’ Results totalled EUR 219.3 million by year end 2010. This demonstrates the capacity of ESFG’s banking subsidiary BES to return resilient and consistent results despite very difficult circumstances, with all capital markets’ business lines reporting profits. The bank reported top line performance in FX instruments as well as equity trading. On-going concerns over sovereign debt have led to significantly widening credit spreads for public debt and financial institutions.
Liquidity: As a financial holding company ESFG’s debt requirements are focused on the provision of debt for regulatory purposes. ESFG’s subsidiaries access the market either directly or, on limited occasions, with the guarantee of ESFG. BES is the key proponent within the Group, in terms of raising funds to support its banking business. BES’ deleveraging process is well under way with sharp decrease in the loan to deposit ratio to 165.0% at year end 2010 from 198.0%. Bes has stated that its 2012 target is to reach a LTD ratio of 120.0%. Furthermore, BES has decreased its use of the ECB liquidity facilities from EUR 6 billion in June 2010 to EUR 3.9 billion at the end of 2010. ECB eligible assets (net of haircuts) more than cover the refinancing needs in 2011.
Capital Ratios: As of 31 December 2010 ESFG’s capital ratios, reported to the Bank of Portugal under IRB foundation, stood at: Core Tier I of 6.9% (6.0%), and a Tier I of 8.3% (7.7%). ESFG’s total capital ratio remained stable at 10.7% (10.7%). The reference indicators are aligned with the minimum capital requirements under the Bank of Portugal instruction Aviso 06/10. On the 23 July 2010, the committee of European Banking Supervisors (“CEBS”), in cooperation with the European Central Bank and the Bank of Portugal, announced that ESFG had successfully completed the EU-wide Stress Test Exercise. As a result of the assumed shock under the adverse scenario, which included sovereign scenarios, the estimated consolidated Tier I capital ratio at ESFG met the requirements set by the committee.
Consolidated Insurance Earned Premiums Net of Reinsurance increased by 5.1% to 325.2 million in 2010 (EUR 309.3 million), despite continuing competitive market pressures. Consolidated Claims Incurred Net of Reinsurance rose 7.9% YoY to EUR 238.4 million (EUR 220.6 million). ESFG’s combined insurance operations saw a fall in consolidated contribution to net results.
Consolidated Staff Costs and General Administrative Expenses increased by 8.2 % to EUR 1.28 billion from EUR 1.18 million in 2009. The increase in staff costs resulted from ESFG’s subsidiaries continued international expansion. Staff costs in Portugal remain under control. Costs relating to pension liabilities for the amortisation of actuarial differences are included within staff costs. However, overall operating expenses fell 0.6% in the period reflecting a reduction in loan impairments, net of reversals and recoveries, to EUR 338.8 million (EUR 531.6 million).
Espírito Santo Saúde (“ESS”) represents the principal driver to Other Operating Income and Expenses. The healthcare company operates 18 hospitals, out-patient clinics, residential hospitals, senior care residencies, as well as participating in the Public-Private Partnership at the Beatriz Ângelo in Loures Hospital in Portugal, which is currently under construction and will be in service in January 2012. The hospital, which is state owned but run by ESS, will hold over 424 beds over 63,000m2 and employ over 1,200 medical and service staff. The year-on-year growth in operating income at ESS of 15.4% to EUR 251.6 million came despite the difficult economic conditions and EBITDA margin rose to 15.6%.
Dividend income at ESFG rose by 116.7% to EUR 194.7 million in 2010 (EUR 89.9 million).
RECENT DEVELOPMENTS
- On 24 February 2011 Espírito Santo Financière S.A. Luxembourg (“ESFIL”) announced that it had signed an agreement that gives ESFIL a 40% stake in ADEPA, through a capital increase. ADEPA is a leading provider of investment fund and corporate services as well as asset management.
- On 21 January 2011, ESFG announced its decision to terminate its contract with Fitch Ratings (‘Fitch’). The decision follows a similar action taken by BES, announced on the 8th November 2010.
- On 23 December 2010, Companhia de Seguros Tranquilidade S.A. announced that it had completed the acquisition from Banco Pastor of a 50% stake in Pastor Vida with Tranquilidade holding management control. It was also announced on this that Espírito Santo Gestión, SGIIC, SA (“ESGestión”), fully acquired Gespastor SGIIC, S.A. (“Gespastor”) from Banco Pastor.
- On 10 October 2010, BES announced the purchase by its subsidiary BES Africa S.G.P.S. of 25.1% of the share capital of Moza Banco, S.A., a Mozambican bank founded in June 2008.
- On 5 August 2010, ES Gestión announced the agreement to fully acquire Banco Pastor’s fund manager Gespastor for the sum of EUR 25.75 million. The purchase includes an exclusive commercial agreement for the period of 7 years. ES Gestión is a fully owned subsidiary of Banco Espírito Santo.
CONTACTS
| Espírito Santo Financial Group | Taylor Rafferty | ||
| Filipe Worsdell | Faisal Kanth | ||
| +44 (0) 203 4292100 | +44 (0) 207 614 2900 | ||
The Espírito Santo Financial Group provides, through its subsidiaries, a global and diversified range of financial services to its clients including Commercial banking, Insurance, Investment banking, Stock-brokerage, Healthcare services and Asset management in Portugal and internationally. For additional information on Espírito Santo Financial Group, its subsidiaries, operations and results, please visit the Company’s website on www.esfg.com.
| CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2010 AND 2009 | |||||||||||||||
| 31.12.2010 | 31.12.2009 | ||||||||||||||
| (in thousands of euro) | |||||||||||||||
| Assets | |||||||||||||||
| Cash and deposits at central banks | 976 515 | 2 224 331 | |||||||||||||
| Deposits with banks | 879 561 | 793 844 | |||||||||||||
| Financial assets held for trading | 3 951 786 | 4 490 699 | |||||||||||||
| Other financial assets at fair value through profit or loss | 1 325 449 | 1 273 417 | |||||||||||||
| Available-for-sale financial assets | 12 474 836 | 9 079 449 | |||||||||||||
| Loans and advances to banks | 3 071 674 | 7 648 348 | |||||||||||||
| Loans and advances to customers | 53 346 807 | 50 508 217 | |||||||||||||
| Held-to-maturity investments | 2 453 465 | 2 535 309 | |||||||||||||
| Derivatives for risk management purposes | 447 304 | 455 115 | |||||||||||||
| Non-current assets held for sale | 574 550 | 407 585 | |||||||||||||
| Property and equipment | 1 165 040 | 1 014 776 | |||||||||||||
| Investment properties | 341 410 | 89 817 | |||||||||||||
| Intangible assets | 524 577 | 373 851 | |||||||||||||
| Investments in associates | 585 240 | 418 162 | |||||||||||||
| Technical reserves of reinsurance ceded | 65 098 | 59 396 | |||||||||||||
| Current income tax assets | 103 074 | 28 631 | |||||||||||||
| Deferred income tax assets | 327 788 | 217 932 | |||||||||||||
| Other assets | 4 502 837 | 3 698 108 | |||||||||||||
| Total assets | 87 117 011 | 85 316 987 | |||||||||||||
| Liabilities | |||||||||||||||
| Deposits from central banks | 7 964 837 | 3 817 643 | |||||||||||||
| Financial liabilities held for trading | 2 121 305 | 1 568 896 | |||||||||||||
| Deposits from banks | 6 617 077 | 6 890 825 | |||||||||||||
| Due to customers | 31 205 688 | 25 694 477 | |||||||||||||
| Debt securities issued | 24 904 746 | 34 039 730 | |||||||||||||
| Derivatives for risk management purposes | 228 944 | 253 148 | |||||||||||||
| Investment contracts | 324 934 | 395 158 | |||||||||||||
| Non-current liabilities held for sale | 5 411 | 21 609 | |||||||||||||
| Provisions | 233 614 | 193 174 | |||||||||||||
| Technical reserves of direct insurance | 1 157 019 | 994 752 | |||||||||||||
| Current income tax liabilities | 57 765 | 162 508 | |||||||||||||
| Deferred income tax liabilities | 131 289 | 83 193 | |||||||||||||
| Subordinated debt | 2 689 697 | 3 048 825 | |||||||||||||
| Other liabilities | 2 206 082 | 1 412 361 | |||||||||||||
| Total liabilities | 79 848 408 | 78 576 299 | |||||||||||||
| Equity | |||||||||||||||
| Share capital | 778 549 | 778 549 | |||||||||||||
| Share premium | 253 656 | 253 656 | |||||||||||||
| Preference shares | 394 514 | 395 514 | |||||||||||||
| Other equity components | 115 109 | 114 368 | |||||||||||||
| Fair value reserve | ( 39 766) | 60 507 | |||||||||||||
| Other reserves and retained earnings | ( 82 818) | ( 208 773) | |||||||||||||
| Profit for the year attributable to equity holders of the Company | 122 165 | 157 477 | |||||||||||||
| Total equity attributable to equity holders of the Company | 1 541 409 | 1 551 298 | |||||||||||||
| Non-controlling interest | 5 727 194 | 5 189 390 | |||||||||||||
| Total equity | 7 268 603 | 6 740 688 | |||||||||||||
| Total equity and liabilities | 87 117 011 | 85 316 987 | |||||||||||||
| CONSOLIDATED INCOME STATEMENT | |||||||||||||||||
| FOR THE YEARS ENDED 31 DECEMBER 2010 AND 2009 | |||||||||||||||||
| 31.12.2010 | 31.12.2009 | ||||||||||||||||
| (in thousands of euro) | |||||||||||||||||
| Interest and similar income | 3 838 928 | 3 949 582 | |||||||||||||||
| Interest expense and similar charges | 2 649 887 | 2 720 997 | |||||||||||||||
| Net interest income | 1 189 041 | 1 228 585 | |||||||||||||||
| Dividend income | 194 738 | 89 885 | |||||||||||||||
| Fee and commission income | 940 092 | 830 289 | |||||||||||||||
| Fee and commission expenses | ( 121 782) | ( 109 567) | |||||||||||||||
| Net gains / (losses) from financial assets and financial liabilities at fair value through profit or loss | ( 197 574) | ( 44 761) | |||||||||||||||
| Net gains from available-for-sale financial assets | 374 318 | 193 539 | |||||||||||||||
| Net gains from foreign exchange differences | 55 334 | 82 137 | |||||||||||||||
| Net gains / (losses) from the sale of other assets | ( 12 773) | ( 27 468) | |||||||||||||||
| Insurance earned premiums net of reinsurance | 325 168 | 309 289 | |||||||||||||||
| Other operating income | 354 080 | 400 214 | |||||||||||||||
| Operating profit | 3 100 642 | 2 952 142 | |||||||||||||||
| Staff costs | 782 889 | 722 658 | |||||||||||||||
| General and administrative expenses | 495 425 | 459 113 | |||||||||||||||
| Claims incurred net of reinsurance | 238 404 | 220 643 | |||||||||||||||
| Change on the technical reserves net of reinsurance | 2 477 | ( 7 682) | |||||||||||||||
| Insurance commissions | 34 736 | 33 391 | |||||||||||||||
| Depreciation and amortisation | 139 512 | 123 842 | |||||||||||||||
| Provisions net of reversals | 55 099 | 53 005 | |||||||||||||||
| Loans impairment net of reversals and recoveries | 338 459 | 531 642 | |||||||||||||||
| Impairment on other financial assets net of reversals | 79 390 | 72 138 | |||||||||||||||
| Impairment on other assets net of reversals | 60 839 | 49 512 | |||||||||||||||
| Other operating expenses | 278 802 | 225 168 | |||||||||||||||
| Operating expenses | 2 506 032 | 2 483 430 | |||||||||||||||
| Gains on disposal of investments in subsidiaries and associates | 46 401 | 199 578 | |||||||||||||||
| Share of profit of associates | 37 592 | 33 460 | |||||||||||||||
| Profit before income tax | 678 603 | 701 750 | |||||||||||||||
| Income tax | |||||||||||||||||
| Current tax | 68 558 | 186 306 | |||||||||||||||
| Deferred tax | ( 17 064) | ( 65 229) | |||||||||||||||
| 51 494 | 121 077 | ||||||||||||||||
| Profit for the year | 627 109 | 580 673 | |||||||||||||||
| Attributable to equity holders of the company | 122 165 | 157 477 | |||||||||||||||
| Attributable to non-controlling interest | 504 944 | 423 196 | |||||||||||||||
| 627 109 | 580 673 | ||||||||||||||||