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Milano, 12 November 2002

 

  • In the third quarter of 2002 net interest income increased, costs decreased and operating results improved both compared to the third quarter of 2001 and to the second quarter of 2002: consolidated income from operating activities to 312 million euro (15 million euro in the third quarter of 2001)
  • Extraordinary charges lead to a negative consolidated net result for the quarter of 58 million euro (-323 million euro in the third quarter of 2001). Consolidated net income for the first nine months to 56 million euro
  • Capital ratios improve thanks to the quarterly results and the decrease in risk weighted assets (large corporates and credit derivatives )
  • Sold real estate assets for a book value of 250 million euro with capital gains of 200 million euro
  • Christian Merle resigns from Managing Director
  • Further strengthened the management team with the arrival of Massimo Arrighetti to the Retail Division and Mario Ciaccia to the Institutional Relations Unit and State and Infrastructures Unit
  • Summoned the Shareholders' Meeting: Banca Intesa is born

 

Milano, 12th November 2002 – IntesaBci’s Board of Directors met today chaired by Giovanni Bazoli and examined and approved the quarterly report as at 30th September 2002.

 

Third quarter results signal the first positive inversion in the trend as concerns both operating revenues and costs, in line with the strategic objectives contained in the 2003-2005 Business plan.

 

 

RESULTS FOR THE THIRD QUARTER OF 2002

In the third quarter of 2002, net interest income amounted to 1,420 million euro, up by 1.1% compared to 1,404 million euro of the corresponding quarter of 2001 and by 5.2% with respect to 1,350 million euro of the second quarter of 2002; net of foreign exchange effects, the growth rates would respectively equal 4.6% and 6.9%. Operating costs amounted to 1,568 million euro, with a 7.9% drop with respect to 1,702 million euro of the third quarter of 2001  and a 6% decline compared to 1,668 million euro of the second quarter of 2002; net of foreign exchange effects, the decreases would respectively equal 4% and 4.4%.

Operating margin therefore increased to 690 million euro compared to 663 million euro of the third quarter of 2001 (+4.1%, which rises to +8.2% net of foreign exchange effects), in spite of the decrease in income from services from 920 million euro to 818 million euro (-11.1%, which would equal –7.4% net of foreign exchange effects).

Income from operating activities in the third quarter of 2002 amounted to 312 million euro, compared to an income of 15 million euro in the third quarter of 2001 and a negative result of 260 million euro in the second quarter of 2002, which had been greatly affected by substantial provisions and net adjustments to loans.

The operating profitability achieved in the third quarter of 2002 enabled to absorb the negative impact of extraordinary components: the provisions of 660 million euro relative to Warrants Put IntesaBci (the book value of each own share repurchased following the exercise of the warrants was thus marked to market at IntesaBci’s stock price at the end of September, which equalled 1.7 euro), partly offset by the capital gain of 220 million euro deriving from the sale of the residual 25% stake held in Banca Carime. The quarter therefore closed with a negative net result of 58 million euro, with an improvement compared to the negative result of 323 million euro in  the third quarter of 2001; in the second quarter of 2002 the negative result totalled 311 million euro.

 

RESULTS FOR THE FIRST NINE MONTHS OF 2002

The cumulated figures for the first nine months of the year only partly benefited from the positive trends recorded in the third quarter. Net interest income amounted to 4,277 million euro, down by 4.1% compared to 4,462 million euro in the first nine months of 2001; net of foreign exchange effects, net interest income would be practically stable (-0.5%). Operating costs amounted to 5,027 million euro, down by 5.8% compared to 5.337 million euro of the corresponding period of 2001; the decrease would be contained to 1.6% net of foreign exchange effects. Operating margin declined to 2,426 million euro, with an 11.4% decrease compared to 2,739 million euro of the corresponding period of the previous year; the decline would equal 5.9%, net of both foreign exchange effects and the non-recurring dividends deriving from merchant banking activities booked in the first nine months of 2001.

Income from operating activities decreased to 591 million euro from 1,081 million euro in the first nine months of 2001, also following the increase in net adjustments (from 1,658 million euro to 1,835 million euro).

Cumulated figures for the first nine months of 2002 showed a net income of 56 million euro, compared to 1,063 million euro registered in the corresponding period of 2001. This last result had benefited from significant capital gains (approximately 1,500 million euro) deriving from the sale of equity investments and branches.

 

As at 30th September 2002, loans to customers amounted to approximately 170 billion euro, down by 6.6% with respect to September 2001 and 7.8% compared to 31st December 2001, customer deposits under administration exceeded 488 billion euro up by 2.6% with respect to September 2001 and with a 5% decline compared to 31st  December 2001.

 

* * *

 

ACHIEVED THE OBJECTIVES SET FOR THE END OF 2002

Gruppo IntesaBci is achieving the objectives for the end of 2002 set in the Business plan presented last September.

 

Risk profile and asset quality

In the first nine months of 2002, exposure to Large Corporates already declined by 11.7 billion euro, with respect to the target contained in the Plan of a 12.7 billion euro decrease to be achieved within the end of December 2002. This included exposure to International Large Corporates which already dropped by 7.6 billion euro, with respect to the target 8.8 billion euro decrease for the end of 2002.

Credit derivatives operations were significantly curtailed: “open positions”  dropped by approximately 40% during the third quarter, down from 11.7 billion euro to 7.1 billion euro.

In the period between the end of June and the end of September net doubtful loans showed a 1.5% decrease, down from 5,462 million euro to 5,378 million euro, with a 62% coverage.

Net interbank funding was almost halved, down from 37 billion euro as at 31st December 2001 to 19 billion euro as at 30th September 2002.

 

Further strengthening the management team

Consistently with the commitment of counting on the best professional capabilities available in every sector, the Board today appointed Massimo Arrighetti Head of the Retail Division, Giovanni Boccolini Head of the Italian Banks Division and of the Foreign Banks Division and Mario Ciaccia Head of both the Institutional Relations Unit and the State and Infrastructures Unit in the Corporate Division. Again within the Corporate Division, the Large Corporate Unit and the Merchant Banking Unit have been united under the responsibility of Gaetano Micciché.

 

Exit from Latin America

As concerns Argentina, IntesaBci received, as is generally known, a binding offer from Banco Patagonia SA, Buenos Aires, for Banco Sudameris Argentina. The offer entails the merger of the latter in Banco Patagonia, following which IntesaBci will hold a minority stake (under 20%) of the merged entity without any further commitment. The operation, which should be completed within the end of the current year, will lead to charges for the Group amounting to approximately 150 million euro which will be booked in the fourth quarter of 2002.

The due diligence is being completed in Peru and exit charges forecasted to be accounted for in the fourth quarter are estimated to be approximately 300 million euro.

As concerns the situation in Brazil, IntesaBci did not reach an agreement with Banco Itaù on the disposal price of Banco Sudameris Brasil. The latter’s sale is not expected within the end of the year. The commitment to sell the subsidiary is confirmed, however it must be conditional upon the possibility of achieving a price in line with its intrinsic value.

As forecasted in the Business plan, charges related to the exit from Latin America will be booked in the fourth quarter and have been covered by extraordinary income, made up of the capital gain on the 25% stake held in Banca Carime and the disposal of real estate approved today.

 

Real Estate Assets

The disposal of real estate assets was approved today and referred to properties for operating use located in Milano. The disposal is part of the space optimisation and operating cost reduction set out in the Business plan. Sales refer to real estate assets for a book value of approximately 250 million euro and led to capital gains of approximately 200 million euro.

 

Strengthening Capital Adequacy

The results of the third quarter combined with the reduction of credit exposure led to improve capital ratios as at 30th September 2002 compared to June 2002. In particular, the Tier 1 ratio, which as at 30th June 2002 equalled 6.4%, increased to 6.7% at the end of September.

The forecasted further reduction of credit exposure and economic results expected for the fourth quarter of the year lead to project that the Tier 1 ratio at year-end will exceed 6%.

 

* * *

 

The result of the entire year will be affected by negative and positive extraordinary components to be accounted for in the fourth quarter, among which the charges related to the exit from Latin America and for the Company’s restructuring and the income from the sale of non-strategic assets. Based on the results for the first nine months and the forecasted extraordinary items it is possible to forecast that the 2002 financial statements will close with a consolidated net income significantly lower than that recorded in 2001.

 

* * *

 

Christian Merle submitted his resignation as of the end of the current month. The Board thanked Mr. Merle for his work at the helm of the Company for five years, both during the Group’s expansion, and in the subsequent period of the implementation of the divisional model, as well as for his support in favouring the transition at the helm of the Company with the arrival of Corrado Passera.

Mr. Merle maintains the post, on behalf of IntesaBci, of Director of Crédit Lyonnais and Chairman of Banca Primavera.

 

 

* * *

 

In the framework of the creation of the new Group identity set out in the Business plan, the Board of Directors also decided to submit to the Shareholders' Meeting the change in the company name to “Banca Intesa”.

 

* * *

 

Finally, the Board summoned the ordinary and extraordinary Shareholders’ Meeting on 16th and 17th December 2002 on first and second call respectively, with the following Agenda of the meeting:

 

ordinary agenda:

  1. appointment of Directors, subsequent to the determination of their number;
  2. revocation  of  the  resolution  made  by the Shareholders’ Meeting held on 1st March 2001 with regard to the means of sale of the own shares purchased following the exercise of the Warrants Put IntesaBci. New authorisation for the means of use of the aforementioned own shares;

extraordinary agenda:

  1. approval of the project for the merger of  Finreme Sim
    Spa, BIL Servizi Finanziari Spa and Immobiliare MARAM Srl in IntesaBci Spa by annulment - without substitution -, of the whole share capital of the merged companies held by  the Parent Company; related and consequent resolutions;
  2. Amendment of Art. 1 (Company name) and formal adjustments to Articles 4 (Corporate purpose and activities) and 23 (Statutory Auditors) of the Articles of Association; related and consequent resolutions;
  3. Revocation of the resolution made by the Shareholders’ Meeting held on 1st March 2001 regarding the power delegated to the Board of Directors to increase share capital up to a maximum amount of 29,954,500.16 euro. Proposal for the attribution to the Board of Directors of the power to increase share capital, pursuant to Art. 2443 of the Italian Civil Code, with the exclusion of pre-emptive rights for existing shareholders pursuant to Art. 2441, par. 8 of the Italian Civil Code, one or more times, within a five-year period, for a maximum amount of 52,000,000.00 euro, through the issue of a maximum of 100,000,000 ordinary shares of nominal value 0.52 euro each, to be offered for subscription to employees of the Company or of subsidiary companies subject to the latter’s control; consequent change in Art. 5 (Share capital) of the Articles of Association; related and consequent resolutions.


Lastly the Board has summoned the Special Meeting of Saving Share Holders on 16th December 2002 on first call, 18th December 2002 on second call and 19th December 2002 on third call, for the appointment of the common representative of saving share holders and the determination of the relevant compensation.

 

* * *

 

 

In order to present more complete information regarding the quarterly results, the consolidated statement of income and balance sheet are attached (reclassified and in a summarised format). The latter are included in the report on operations approved by the Board of Directors. It must be pointed out that this quarterly report has not been subject to control by the auditing firm.

On this occasion, IntesaBci also notifies that - pursuant to provisions set forth in Art. 82, par. 2  of Consob resolution 11971 of 14th May 1999 as amended - the draft Parent Company’s financial statements and IntesaBci’s consolidated financial statements as at 31st December 2002 will be available for shareholders and the market within the maximum term of 31st March 2003, instead of the quarterly report as at 31st December 2002.

 

Reclassified consolidated statement of income
Quarterly development of the reclassified statement of income
Reclassified consolidated balance sheet
Quarterly development of the consolidated balance sheet

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