Milano, 10 March 2003
- Consolidated net income: 200 million euro
- Dividends: 1.5 euro cents to circulating ordinary shares and 2.8 euro cents to saving shares for a total amount of 108 million euro; 159 million treasury shares distributed to all shareholders for a countervalue of over 300 million euro
- Capital ratios strengthened: Tier 1 ratio up to 6.8%
- Business Plan targets confirmed
Banca Intesa’s Board of Directors met today, chaired by Giovanni Bazoli, and approved the draft of the Parent Company’s financial statements and the consolidated financial statements for 2002.
Banca Intesa’s consolidated net income equalled 200 million euro, after approximately 3.5 billion euro provisions. The reduction of risk profile and the disposal of non-strategic assets led to a significant improvement in capital ratios: as at 31st December 2002, the Tier 1 Ratio rose to 6.8%, in respect to 6% at year-end 2001, and the total capital ratio reached 11.1% in respect to 9.3% as at 31st December 2001.
The Board will be proposing for the approval of the Shareholders the distribution of a dividend per share of 1.5 euro cents to circulating ordinary shares, 2.8 euro cents to saving shares (for a total amount of 108 million euro, 96 million of which coming from the Extraordinary reserve) and the distribution to all shareholders of 159 million treasury shares, equal to approximately one third of the total number held by Banca Intesa.
More precisely, the proposal will regard the assignment of 159,243,488 treasury shares at the ratio of one Banca Intesa ordinary share, which starts to accrue rights as of January 1st 2003, for 40 Banca Intesa ordinary shares and/or saving shares in circulation. The Bank’s treasury shares reserve will thus be reduced by 2.049 euro for each share assigned, a value corresponding to the unit carrying value in the financial statements as at December 31st 2002.
Considering this carrying value (2.049 euro), the assignment of treasury shares to shareholders will be the equivalent of a total dividend per share of 6.6 euro cents to ordinary shares and 7.9 euro cents to saving shares (respectively 4.5 euro cents and 8.0 euro cents for 2001) with a total pay-out of 434 million euro, compared to 331 million euro of the previous year.
The Board summoned the ordinary and extraordinary Shareholders’ Meeting for 15th April 2003 on first call and 16th April 2003 on second call. Payment of dividends and assignment of treasury shares, if approved by the Shareholders’ Meeting, will take place starting from 25th April 2003 (with presentation of the coupons on 22nd April 2003).
The Board also approved the proposed agreement to set up a joint venture in life bancassurance with Generali Group and Crédit Agricole Group to be realised in Intesa Vita.
Banca Intesa has purchased a 1.4% stake in Generali (in addition to the 0.5% stake already held as a pledge with voting rights) with an investment of around 300 million euro (representing less than 1% of the total securities and equity investments portfolio and around 2% of shareholders’ equity of Gruppo Intesa). This purchase will strengthen the existing partnerships between Banca Intesa and Gruppo Generali, crucial to the success of Gruppo Intesa’s Business Plan, in particular while the setting up of the bancassurance joint-venture is announced.
2002 CONSOLIDATED FINANCIAL STATEMENTS
The 2002 consolidated statement of income was affected by the unfavourable trend recorded by financial markets which impacted on revenues. Net interest income totalled 5,753 million euro, down by 4.5% compared to 6,024 million in 2001; net of foreign exchange effects from the South American currencies, the decrease rate would be contained to 1.2%. Net commissions totalled 3,335 million euro from 3,677 million (-9.3%), as a result of the drop in securities trading (-37%) and asset management (-14%), not offset by the trend of commercial banking activities, particularly in payment cards (+13%). Profits on financial transactions amounted to 189 million euro, in line with 194 million in the previous year. On the whole, net interest and other banking income totalled 9,924 million euro, down by 6.3% compared to 10,592 million in 2001; net of foreign exchange effects, the decline rate would equal 3.6%.
The decrease in revenues was faced with costs reduction mainly achieved with specific actions carried out in the second half of 2002. Total operating costs amounted to 6,816 million euro, down by 7.7% compared to 7,388 million in 2001; net of foreign exchange effects, the decrease rate would equal 4.4%. As part of it personnel costs declined by 9% (net of foreign exchange effects, by 6.2%) due to staff reduction and to a decrease in the payroll variable component, connected to the recent poor results of the company; other administrative costs went down by 7.7% (net of foreign exchange effects, by 3.5%); depreciations and amortisations were essentially unchanged with respect to 2001.
As a result, operating margin amounted to 3,108 million euro, down by 3% compared to 3,204 million in 2001; net of foreign exchange effects, the decline rate would be contained to 1.9%.
The effect of the cost cutting policy undertaken in the second half of 2002 is particularly clear if the 2002 second half is compared with the 2001 second half and the 2002 first half with the 2001 first half.
Faced with a decline of roughly 6% in net interest and other banking income in both the above comparisons, operating costs went down by 3.5% between the first half of 2001 and the first half of 2002 but decreased by about 12% between the second half of 2001 and the second half of 2002. As a result, operating margin decreased by 12% between the first half of 2001 and the first half of 2002 but it rose by about 12% between the second half of 2001 and the second half of 2002. The 2002 second half trend in respect to the corresponding period of 2001 would be confirmed even net of foreign exchange effects: considering a decline of roughly 2% in net interest and other banking income, operating costs would have declined by 7.5% and the operating margin would have risen by 16.5%.
In the second half of 2002 - notwithstanding the positive trend in operating margin - the profit and loss account was affected by provisions envisaged in the Business Plan related to a cut in risk profile and extraordinary charges for staff reduction which were only partially offset by the extraordinary income from disposal of non-core assets.
In 2002 total provisions and net value adjustments (excluding goodwill amortisation) amounted to 3,026 million euro, compared to 3,158 million in 2001: approximately 950 million euro were related to Latin America of which 530 million euro were recorded in the fourth quarter of the year to face exit costs from Argentina, restructuring charges for the Peruvian subsidiary and generic risks for the exposure in that area; 165 million euro referred to the write-down of stakes in Commerzbank (109 million) and Bayerische Hypo-Vereinsbank (56 million) booked in the fourth quarter of the year.
Extraordinary items resulted in a 286 million euro net income, compared to 1,196 million in 2001. Extraordinary income included the sale of non-strategic equity investments - Banco di Chiavari (246 million), Banca Carime (220 million), Monte Titoli and Borsa Italiana (93 million) - the disposal of real estate assets (253 million) and the mark to market of the stake in Crédit Lyonnais (281 million). Extraordinary charges were mainly due to the valuation effects on the Put Warrants - partly offset by the subsequent valuation of the treasury shares - totalling 437 million euro and to 437 million euro charges booked in the fourth quarter of 2002 for the allowance related to the planned reduction of redundant staff.
Consolidated net income thus equalled 200 million euro, compared to 928 million euro recorded in 2001, with the Parent Company’s net income down to 12 million euro from 337 million in 2001.
With regard to consolidated balance sheet figures as at 31st December 2002, loans to customers amounted to 168.5 billion euro, down by 7.8% with respect to 31st December 2001, customer deposits under administration amounted to 483,8 billion euro, down by 6.1% with respect to 31st December 2001. At the end of 2002, Gruppo Intesa’s operating structure included 4,277 branches - of which 3,277 in Italy and 1000 abroad - and 71,501 employees, 2,363 lower than the previous year.
TARGETS SET FOR THE END OF 2002 ACHIEVED
Gruppo Intesa has reached the objectives set for the end of 2002 in the Business Plan.
In 2002, exposure to Large Corporates declined by 14.9 billion euro, with respect to the target set forth in the Plan of a 12.7 billion euro decrease. As part of it the exposure to international Large Corporates dropped by 10.5 billion euro, with respect to the target of a 8.8 billion euro decrease.
Credit derivatives operations were significantly curtailed: “open positions” more than halved in the second semester of 2002, down from 8.1 billion euro to 3.8 billion.
Compared with the end of 2001 net doubtful loans showed a 3% decrease, down from 5,513 billion euro to 5,348 billion, with a coverage ratio up to 63% from 59%.
Net interbank funding was more than halved for the year, down from 37 billion euro as at 31st December 2001 to 14 billion as at 31st December 2002.
Capital ratios as at 31st December 2002 showed the Tier 1 ratio up to 6.8%, in respect to a 6% target, and the total capital ratio up to 11.1% in respect to a 10% target.
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As regards this year’s outlook, Banca Intesa confirms its Business Plan targets aimed at a substantial recovery in profitability starting in 2003, with expectations of an adequate return on capital.
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The consolidated statement of income and balance sheet and the Parent Company’s statement of income and balance sheet (reclassified in condensed format) included in the Report approved by the Board of Directors are attached in order to provide more complete information of results generated in 2002. It must be pointed out that the auditing firm in charge of auditing the 2002 Annual Report has not yet completed its examination.
Last updated 10 March 2003 at 12:22
