Gruppo bancario Credito Valtellinese

Credito Valtellinese Group's half-yearly profits up 48.3%, at € 9.3 million Credito Valtellinese boosts its profits by 6.2% to € 28 million

Launched takeover bid on convertible shares and bonds issued by controlled company based in Brescia Banca dell'Artigianato e dell'Industria S.p.A. (BAI)

Consolidated results:

Direct deposits at € 9,258.2 million (+ 6.4% over December 2003)
indirect deposits at € 9,715.5 million (+ 3.1% over December 2003)
credits to the customers at € 8,029.7 million (+8% over December 2003)
operating margin at € 233.2 million (+9.6% over first half 2003)
profit for the period at € 9.3 million (+48.3% over first half 2003)

Parent company's results:

Direct deposits at € 3,618.3 million (+ 6.4% over December 2003)
indirect deposits at € 3,637.2 million (+1% over December 2003)
credits to the customers at € 3,151.6 million (+6.3% over December 2003)
operating margin at € 91.1 million (+5.5% over first half 2003)
profits for the period at € 28 million (+6.2% over first half 2003)

CONSOLIDATED BALANCE SHEET OF THE CREDITO VALTELLINESE BANKING GROUP

Sondrio, September 7, 2004. At today's meeting the Board of Directors of Credito Valtellinese has approved the consolidated half-yearly results for the period ended June 30, 2004.
During the first half of the current year, thanks to the expertise of the staff at the specialized companies, the Group has continued to be committed to offering innovative products and technologically advanced solutions to its customers.
Strategic partnerships have been set up, among which a cooperation agreement with Banca Popolare di Cividale, intended to develop business opportunities for both parties. Under the agreement, the Creval Group has taken a stake of 22.22% in Banca di Cividale S.p.A., while Banca Popolare di Cividale has acquired a minority equity stake of 5% in Banca dell' Artigianato e dell'Industria, thereby enabling the bank based in Brescia to expand its banking network in the Venetian area.
A new Strategic Plan has been prepared which sets out common business objectives for the Group member companies for the next years, until the 100th anniversary of the parent bank Credito Valtellinese.
The consolidated balance sheet recorded positive performances of all aggregates throughout the first half of 2004.
As of June 30, 2004, direct deposits stood at € 9,258.2 million posting a 6.4% increase over December 31, 2003 (€ 8,699.8 million). Indirect deposits amounted in all to € 9,715.5 million, posting a growth of 3.1 percent over December 2003. The aggregate is made up of deposits held for administration for € 4,666.4 million (-2.6%), assets administrations and funds for € 4,139.4 million (+2.7%) and insurance deposits for € 909.7 million (+1.9%). Total assets under management - consisting of both direct and indirect deposits - stood at € 18,973.6 million , posting an increase by 4.7 percent over December 2003 (€ 18,126.1 million).
In accordance with its tradition, the Group has continued to provide support to small and medium-sized enterprises, craftsmen and private individuals. As a result, there was a significant increase (+8%) in the credits to the customers, which amounted in all to € 8,029.7 million, compared with € 7.432,6 million as at December 31, 2003.
Net unpaid bills stood at € 258.9 million, compared with € 259.1 million as at December 31, 2003 (-0.1%). The quality of credits has improved, as shown by the ratio between unpaid bills and total amount of credits allowed, which stood at 3.2%, compared with 3.5% as at December 31 2003.

As regards the consolidated profit and loss account, as of June 30, 2004, the interest margin stood at € 130.5 million (+ 7% over the first half of 2003), while the operating margin at € 233.2 million, posting a 9.6% increase over the same period last year, mainly thanks to the performances of the proceeds from services, in particular of net banking commissions (+ 20.7%) and net proceeds (+ 3.9%).
Personnel expenses rose to € 91 million, a growth of 4 percent due to an increase in the number of employees in the staff (3,041 people working with the Group as at June 30 2004). Other administrative expenses rose to € 60.1 million (+ 2.5%).
Value adjustments in respect of tangible and intangible fixed assets stood at € 25.1 million (+ 10.7%). The gross operating income rose to € 57 million, posting a growth of 29.5 percent over the same period last year .Taking account of the provision for covering credit risks, risks associated with banking and tax charges, along with value adjustments in respect of financial fixed assets (in all 24.5 million euros), ordinary profits amounted to € 32.5 million (+19.4%).
After taking account of cash flow related to extraordinary activities for € 0.4 million, taxes on income for € 19 million, a variation of € 2.1 million in the reserve for covering general risks associated with banking, profits due to third parties for € 2.6 million, the consolidated profit for the period January 1-June 30, 2004 rose to € 9.3 million, posting a growth of 48.3 percent over the same period last year (€ 6.3 million).

Such excellent results were made possible by the strong commitment of all member companies in a structure which combines the traditional banking facilities (a network made up of 316 branches) with highly innovative channels and products. The number of banc@perta users (Internet banking services offered by the Creval Group) has been increasing significantly over the first half of the current year being at present around 174,111 customers.

BALANCE SHEET OF CREDITO VALTELLINESE S.C. A R.L.

The parent bank Credito Valtellinese has been successfully committed to improving the quality of the services it provides to the customers in the areas served within its home territory.
Balance-sheet and profit and loss account figures show further increases in all aggregates as well as in the main economic indicators, in line with budget forecasts.
As regards assets under management as at June 30 2004, direct deposits amounted to € 3,618.3 million, compared with € 3,401.2 million as at December 31 2003 (+ 6.4%).
Indirect deposits stood at € 3,637.2 million, substantially unchanged with respect to December 2003 (+1%). Details of this aggregate were as follows: deposits held for administration (€ 1,792.9 million ) saw a slight decrease over December 2003, assets administrations and funds (€1,469.8 million) were up 4 percent, and insurance deposits (€ 374.5 million) were up 1.6%. The total amount of deposits rose to € 7,255.5 million, with an increase by 3.6 percent over December 31 2003.
Credits to the customers rose significantly as well, by 6.3 percent to € 3,151.6 million.
Net unpaid bills amounted to € 19 million, compared with € 12.7 million as at December 31 2003, with the ratio between unpaid bills and net amount of credits allowed standing at 0.6% (0.4% at December 2003).
Profit & loss account figures show a 7.8% increase in the interest margin, which amounted to € 45.6 million thanks to a steady and balanced development of assets under management as opposed to a progressive contraction of the spreads and of interest rates.
Proceeds from services - consisting of net banking commissions and other proceeds - have continued to show a positive trend, posting an increase of 20.8 percent over the same period last year, from € 20.3 million to € 24.5 million.
Profit on financial operations stood at € 1.6 million, compared with € 4.1 million as at June 30 2003.
Taking account also of dividends, the operating margin amounted to € 91.1 million, with a 5.5% increase over the first half of last year (€ 86.4 million).
Operating costs - consisting of administrative expenses and value adjustments in respect of tangible and intangible fixed assets - recorded € 48.6 million, showing a slight decrease compared with the same period last year. Particularly, personnel expenses remained substantially unchanged (€ 21 million ), while other administrative expenses decreased by 3.2 percent and value adjustments in respect of tangible and intangible fixed assets stood at € 3.5 million. The ratio between operating costs and the operating margin fell to 53.4% (56.9% as at June 30 2003).
The operating income rose to € 42.5 million, posting a growth of 14.1 percent over June 2003 (€ 37.2 million).
Taking account of net adjustments in respect of credits and financial fixed assets, as well as a provision for covering risks and charges (in all € 6.4 million), the ordinary profit for the period January-June 2004 amounted to € 36.1 million, with a 14.8% increase over the same period last year.
Cash flow associated with extraordinary activities recorded € -1.9 million, tax charges - after the recent changes which have abolished tax on dividends - € 6.2 million. Profits for the period rose to € 28 million, with a 6.2% increase over the first half of 2003.
Following the opening of new agencies in Lonate Pozzolo, Castellanza, Busto Arsizio and Lecco, as at June 30 2004, the banking network of Credito Valtellinese was made up of 90 bank agencies. In addition, the parent bank has opened two more agencies in the second half of the current year, one in Bergamo and the other in Curno, Bergamo.
The parent bank has had great feedback also on Internet Banking. Now the number of banc@perta users is around 51,098.

LAUNCHED TAKEOVER BID ON CONVERTIBLE SHARES AND BONDS ISSUED BY THE BAI

At today's meeting, the Board of Directors of Credito Valtellinese has approved a takeover bid by the parent bank on convertible shares and bonds issued by the controlled company based in Brescia Banca dell'Artigianato e dell'Industria S.p.A. (BAI).
The bid is for all of the ordinary shares of the BAI, as well as for all of the bonds issued through the bond issue called "B.A.I. T.V. 2000 - 2005, convertible, subordinated cum warrant", other than those already held by the Creval Group member companies or by Banca Popolare di Cividale S.c. a r.l. . Banca Popolare di Cividale, in fact, has recently concluded an agreement with the Bai intended to develop the banking network of the latter in the Venetian area.
The financial instruments are as follows: 2,729,533 ordinary shares of the BAI worth € 5.16 each (nominal value); 5,315 bonds issued through bond issue "B.A.I. T.V. 2000 - 2005, convertible, subordinated cum warrant" (nominal value € 200).
The bid is intended to create a close-knit group of shareholders committed to pursuing the new objectives of the bank. Particularly, the bid will enable minority shareholders and convertible bondholders to realize their investment goals in accordance with the new strategies.
The guidelines of this project for the development of the BAI will be described in a Document available to shareholders and bondholders in accordance with the current law and regulations regarding bids.
The value of the consideration to be received by investors for each ordinary share will be fixed, shortly before the announcement is made to Consob of the bid, between 6.80 and 7.20 euros.
The value of the consideration to be received for each convertible bond (nominal value € 200) will be fixed in a range of between 270.08 and 295.68 euros (in addition to interest due on date of payment ).
The investment amount for Credito Valtellinese will be of between 20.0 and 21.2 million euros at the most . The announcement to Consob of the Document regarding the bid is expected within October 2004, while the takeover bid will be implemented by January, 2005.