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Milano, 13 November 2003

 

BANCA INTESA: CONSOLIDATED QUARTERLY REPORT AS AT 30th SEPTEMBER 2003

 

  • Consolidated third-quarter results:

            -Net income at 328 million euro (-58 million for the third quarter 2002)

            -Ordinary income up to 621 from 306 million euro

            -Operating margin up by 34%

 

  • Consolidated nine-month results:

             -Net income up to 1,038 million euro (56 million for the first nine months 2002)

             -Ordinary income up to 1,766 from 564 million euro

             -Operating margin up by 21%

             -Cost/income ratio decreased significantly to 61.9% from 67.4%

 

  • Shareholders’ Ordinary Meeting summoned to appoint the Board of Directors

 

 

Milano, 13th November 2003 - Banca Intesa’s Board of Directors, which met today under the chairmanship of Giovanni Bazoli, approved the consolidated quarterly report as at 30th September 2003.

 

 

Results for the third quarter of 2003

 

The consolidated income statement for the third quarter of 2003 recorded net interest income of 1,257 million euro, in line with 1,253 million for the previous quarter and down 7.5% with respect to 1,359 million of the corresponding quarter of 2002 due to structural factors such as the decision to reduce the non-core loan book and the securities portfolio and the decline in market interest rates.

 

Net commissions showed a 5.4% increase with respect to the third quarter of 2002 up to 838 million euro from 795 million, mainly due to the sustained trend in revenues from bancassurance (+64%) and commercial banking activities (+12%), while a contraction was registered in revenues from mutual funds and segregated managed accounts (-7%) though signs of recovery were visible in the 8.1% increase in comparison with the second quarter of 2003.

 

Profits on financial transactions went up to 186 million euro compared to the negative figures of the 2002 third quarter (-33 million euro), thanks to the sale of structured bonds and corporate derivatives and to the structural improvement in the Group’s capital markets operations and securities portfolio management which had already marked the first half of this year.

 

On the whole, net interest and other banking income totalled 2,416 million euro, up 9.5% compared to 2,207 million in the third quarter 2002.

 

Total operating costs amounted to 1,510 million euro with a 1.4% decrease compared to 1,532 million in the 2002 third quarter. As part of it, personnel costs increased 0.9% (the 2002 third quarter had benefited from the reduction in the salary variable component due to the poor performance of year 2002) and other administrative costs went down 4.8%, depreciations and amortisations declined 1.7%.

 

As a result, operating margin rose to 906 million euro, increasing 34.2% compared to 675 million of last year’s third quarter, with a marked improvement in the cost/income ratio down to 62.5% from 69.4% of the 2002 corresponding period.

 

Total provisions and net value adjustments (excluding goodwill amortisation) amounted to 255 million, down 17.5% with respect to 309 million for the 2002 third quarter and in line with the current year’s second quarter (if provisions for Latin America are excluded from the latter).

 

Therefore, ordinary income rose to 621 million euro from 306 million registered in the third quarter of 2002.

 

Extraordinary items showed a 7 million euro negative result with respect to the net charges for 373 million euro of the 2002 third quarter.

 

The 2003 third quarter closed with a consolidated net income of 328 million euro (-58 million for the third quarter of 2002), with the Parent Company’s net income at 314 million euro (-226 million  for the third quarter of 2002).

 

 

Results for the first nine months of 2003

 

The consolidated income statement for the first nine months of 2003 recorded interest margin equalling 3,973 million euro, down 5.9% compared to 4,222 million in the first nine months of 2002, mainly as a result of structural reasons: reduction in the securities portfolio linked with the strategic repositioning of capital markets activities from interest to non-interest based business, reduction in exposure to Large Corporates and narrowing in the spread between market rates and cost of funding. These factors were only partially offset by growth in lending to individuals and SMEs.

 

Net commissions showed a 0.2% increase up to 2,454 million euro from 2,448 million, mainly due to the growth in revenues from bancassurance (+43%) and commercial banking activities (+4%) while a contraction was registered in revenues from mutual funds and segregated managed accounts (-16%). Profits on financial transactions went up to 687 million euro, with respect to 170 million of the corresponding period of 2002 also due to the sale of structured bonds and corporate derivatives almost non-existent in year 2002.

 

On the whole, net interest and other banking income totalled 7,370 million euro, up 4% compared to 7,088 million for the first nine months 2002.

 

Total operating costs amounted to 4,563 million euro with a 4.4% decrease compared to 4,774 million in the first nine months of 2002. As part of it, personnel costs decreased 5.3% and other administrative costs went down 4.8%, depreciations and amortisations rose 1.4% also due to investments for over 200 million euro made in the first nine months of the current year.

 

As a result, operating margin rose to 2,807 million euro, increasing 21.3% compared to 2,314 million in the first nine months of 2002 with a marked improvement in the cost/income ratio, down to 61.9% from 67.4% of the 2002 corresponding period.

 

Total provisions and net value adjustments (excluding goodwill amortisation) amounted to 947 million euro, down 42% with respect to 1,643 million for the first nine months of 2002: 130 million euro  were due to Latin America, of which 120 million were set aside in the 2003 first half.

 

Therefore, ordinary income rose to 1,766 million euro from 564 million for the first nine months of 2002.

 

Extraordinary items, which had been almost entirely accounted for in the first half of the year, showed a net positive result of 107 million euro (-322 million in the first nine months of 2002). Extraordinaries included 235 million euro income from the mark to market of the treasury shares held by Banca Intesa and approximately 160 million euro charges from Latin America disengagement.

.

The first nine months of 2003 closed with a consolidated net income of 1,038 million euro, compared to 56 million of the first nine months of 2002, with the Parent Company’s net income at 988 million euro (-52 million for the corresponding period of 2002).

 

* * *

 

As regards the consolidated balance sheet figures, as at 30th September 2003 loans to customers amounted to 157 billion euro, down 5.2% with respect to 31st December 2002 and down 5.6% to 30th September 2002. This decline is mainly due to the decision to reduce exposure to Large Corporates - mainly international ones with no business links with Italy - and, when comparison is drawn with the end of September 2002, also to the securitisation transaction for about 2 billion euro of residential mortgage loans. Doubtful loans net of adjustments decreased below five billion euro, diminishing 4.7% with respect to December 31st 2002,  and represented 3.2% of total loans; the degree of coverage was 64%.

 

Customer deposits under administration amounted to 472 billion euro, with a 0.5% decrease with respect to 31st December 2002 and a 1% decrease with respect to 30th September 2002. As part of it, direct customer deposits reached 176 billion euro decreasing by 0.5% compared to both 31st December 2002 and 30th September 2002; assets under management amounted to 126 billion euro, up 2.9% compared to 31st December 2002 and up 1.9% to 30th September 2002.

 

As at 30th September 2003 capital ratios resulted in: Core Tier 1 ratio at 6.3% (5.9% at 31st December 2002), Tier 1 ratio at 7.2% (6.8% at 31st December 2002) and total capital ratio at 11.1% (unchanged with respect to 31st December 2002).

 

As at 30th September 2003 Gruppo Intesa’s operating structure was made up of 3,856 branches - of which 3,169 in Italy and 687 abroad - and 61,295 employees, 4,017 lower than at 31st December 2002.

 

Since October all branches have been using the same IT system. This was one of the most important commitments presented in the Business Plan and has been delivered on as scheduled. The use of a single IT system is not only crucial to the full integration of the three merged banks but also enables the Group to launch new products already from the first quarter of 2004, as planned.

 

* * *

 

As regards the 2003 outlook, positive results are expected for the entire year, based on the results for the first nine months, in line with the Group’s business plan targets.

 

* * *

 

Finally, the Board summoned the Shareholders’ Ordinary Meeting on 29th December 2003 and 13th January 2004 on first and second call respectively for the appointment of Directors, subsequent to the determination of their number.  

 

* * *

 

In order to present more complete information regarding the first nine-month 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, Banca Intesa 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 Banca Intesa’s consolidated financial statements as at 31st December 2003 will be available for shareholders and the market within the maximum term of 31st March 2004, instead of the quarterly report as at 31st December 2003.


Consolidated Financial Statements

 

 

   

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