Credito Valtellinese: approval of draft consolidated and individual statements as at 31.12.2004
Summary (figures shown in €/000)
The Board of Directors of Credito Valtellinese S.c. a r.l., the parent company in the banking group of the same name, today examined and approved the drafts of the consolidated and individual financial statements as at 31 December 2004.
The positive results shown in these statements mark a further stage in the ongoing growth of primary combined assets and economic figures for the bank and its group, with a noteworthy increase in the volume of managed funds and in revenues.
In administrative terms, the past year was marked by the approval of the group's new strategic plan, which will guide the evolution of the conglomerate well beyond the hundredth anniversary of the parent company's foundation, within a framework which places strong emphasis on its traditional commitment to customer service in key territories, to be carried out in part through innovative approaches to the market.
CONSOLIDATED STATEMENT
As regards the consolidated financial statement, an increase in brokerage volume brought the interest margin to 267.6 million euros, up 6.7% for the year. Revenue from interest reached a figure of 416.9 million euros (+2.7%), while interest payments stood at 149.3 million euros (-3.9%)
As part of the service margin, which rose from 170.7 million euros to 187.1 million euros, with an annual growth of 9.6%, net commissions were up 11.5%, showing a profit margin for the group which is linked to the development of its range of services.
The margin on financial operations amounted to 14.1 million euros, as compared with the 2003 figure of 13.8 million euros, showing an annual increase of 1.8%.
The brokerage margin came in at 481.1 million euros, up 8.4% as compared with 443.9 million euros in 2003.
In the context of considerable expansion in the group's staff, which increased from 121 to 3121 employees, operating expenses reached a total of 353 million euros (+4.2% for the year), 180.6 million euros of which went to personnel expenses.
The ratio between operating expenses - calculated net of goodwill depreciation and differences in consolidation and net equity - and the brokerage margin has improved, rising from 72%, in 2003, to 68.5%, and demonstrating the attention which has been devoted to cost and income dynamics.
Due to the results described above, the gross operating profit came in at 128 million euros, an increase of 21.7% over the previous year's profit of 105.2 million euros.
Taking into account extraordinary operations, which showed profits of 2.7 million euros compared to the previous year's losses of 0.8 million euros, the gross profit amounted to 79.8 million euros (+22.6% for the year).
After deducting 45.2 million euros in taxes, 7.2 million euros in minority interests, and a 3.5 million euro increase to the general banking risk provision, one arrives at a net profit of 23.9 million euros, up 51% over the 2003 profit of 15.8 million euros.
As regards assets, direct deposits from customers reached 9,656 million euros at year's end (up 11% over the previous year's figure of 8699.8 million euros), whereas indirect deposits grew 10.9%, rising from 9426.3 million euros to 10455.7 million euros.
Administered funds accounted for 50.2% of the latter figure, managed assets for 40.2%, and the remaining 9.65% is made up of insurance funds.
The overall assets managed on behalf of customers, as the sum of direct and indirect deposits, reached 20111.7 million euros, showing a 11% increase over the figure of 18126.1 million euros at the end of December 2003.
The group's lending activity was aimed particularly at small and medium-sized businesses, artisans, and families, which have always been its primary customer base. In lending transactions, a strong focus was placed on the specific characteristics of the sector and territory. At the end of December 2004, loans to customers amounted to 8240.2 million euros, compared with 7432.6 million euros at the end of 2003, an increase of 807.6 million euros (up 10.9% for the year); this growth came about without prejudice to loan performance, considering that the ratio between non-performing loans and total net loans came in at 3%, a further improvement over the previous financial year's ratio of 3.5%.
ROE, net of the effect of goodwill depreciation and differences in consolidation and net equity on profits for the financial year, amounted to 9.26%, whereas the corresponding figure for 2003 was 8%.
INDIVIDUAL FINANCIAL STATEMENT
The brokerage margin came in at 93.3 million euros, up 6.1% as compared with 87.9 million euros in the previous financial year.
As regards net income from services, net commissions stood at 45.6 million euros (up 15.5% for the year), due to a considerable increase in commissions received for management, brokerage, consulting, and other services. The total for other net income dropped to 3.2 million euros.
The service margin, which is the sum of net commissions and other net income, came in at 48.8 million euros (up 11% over 43.9 million euros the previous year).
In terms of operating costs, net administrative expenses totalled 89.8 million euros in 2004 , a 0.4% increase over the total for 2003. Specifically, one notes that personnel costs, including costs for personnel under management at the bank, net of recovered expenses for personnel under management at other companies, came in at 42.2 million euros. Other administrative costs, net of applicable recovered expenses, dropped 3.9% from the previous year's figure.
The ratio between operating expenses and the brokerage margin shows a positive trend, dropping from 61.4% to 58.5%, whereas the ratio between personnel costs and the brokerage margin rose from 25.4% in 2003 to 25.5% in 2004.
The gross operating profit reached 68.8 million euros, up 13,1% over the 2003 figure of 60.8 million euros.
After adjustments and provisions totalling 14.5 million euros, earnings from ordinary operations reached 54.3 million euros in 2004, as opposed to 48.5 million euros in 2003, an increase of 11.8% over the previous year.
The results of extraordinary operations had an effect on results for the 2004 financial year, showing a loss of 1.1 million euros.
Deducting taxes for the 2004 financial year, which amounted to 16.7 million euros, yields a net profit for the year of 36.5 million euros, up 13.8% over 2003.
With regard to total assets, direct deposits from customers reached 3,839 million euros as at 31 December 2004, up 12.9% over the figure of 3,401.2 million euros at the end of the previous year.
Indirect deposits, made up of securities in safe custody and administration, managed assets, mutual funds, and insurance funds, showed a 4.2% increase, rising from 3,601.4 million euros to 3,753.1 million euros at the end of December 2004; 50% of the total figure is comprised of administrated funds, 39.3% of managed assets, and the remaining 10.7% of insurance funds.
As at 31 December 2004, the total financial assets managed by the bank- the sum of direct and indirect deposits - stood at 7592.1 million euros, as compared with 7002.6 million euros at the end of 2003 (up 8.4% for the year).
The total sum of cash credits to customers reached 3,303.9 million euros at the end of December 2004, with a significant, 348.5 million euro increase since the close of the previous year (+11.8%). This figure demonstrates the major focus that the bank has placed on meeting the financial needs of both families and businesses in the local community.
In 2004, the bank continued to follow a careful policy for assessment of creditworthiness, aided by its close familiarity with the territories it serves and an proper diversification in areas of business.
At the end of December 2004, the ratio between net non-performing loans and net loans was 0.6% (0.4% at the end of 2003). The percentage of average coverage of losses on loans was 48%.
SHAREHOLDERS' MEETING
An Ordinary and Extraordinary General Shareholders' Meeting has been called for 15 April 2005, and should a second session be necessary, for 16 April.
The Board of Directors will present the meeting with a proposal for allocation of the year's profits, which foresees allocating over 9 million euros to reserves, 950,000 euros to the charity fund, and the payment of a €0.40 per share dividend.
This dividend is equal to that paid in 2003, but is in relation to the greater number of shares making up the share capital (66,010,651, as opposed to 54,577,884 in the previous financial year).
Registration of the dividend is scheduled for 25 April, whereas the date for dividend payment will be 28 April.
Other items on the agenda are to include the approval of a plan for amending certain provisions of the bylaws, in part due to new legislative provisions completing the corporate law reform.
The Shareholders' Meeting will also be presented with a proposal to renew the Board of Directors' authorisation, pursuant to art. 12 of the bylaws and current regulations, and when deemed necessary and within the scope of standard brokerage activities aimed at encouraging trading in its stock, to purchase or buyback own shares, as well as replacing or retiring them, in accordance with the terms and restrictions specified below:
the purchase and sale of own shares must be carried out through normal forms of stock market brokerage, without employing public offering procedures, and may take place through multiple operations, for a period lasting from the next Shareholders' Meeting scheduled for 15/16 April 2005 and the Shareholders' Meeting for the approval of the 2005 financial statement;
treasury shares must be purchased at a price not exceeding the official price registered on the stock exchange in the session proceeding each individual transaction, without prejudice to the fact that the number of own shares in the company's portfolio must not, in any case, exceed 5% of the total shares making up the share capital;
treasury shares must be sold at a price not less than the official price registered on the stock exchange in the session preceding each individual sale;
upon purchases of own shares, a transfer will be made from the statutory reserve to a special reserve for treasury shares, whereas, upon sales of own shares, this reserve will be decreased by the corresponding sum with a transfer to the statutory reserve;
any buybacks or retirements of own shares must take place in accordance with the provisions of the bylaws and current regulations, employing the reserve for treasury shares to cover any differences between the par value and the purchase price.
There have not been any significant events since the close of the financial year that have significantly affected the operations of the bank and the economic results shown above.
As regards expected operating trends, it is believed that Credito Valtellinese, despite an economic context which remains challenging and uncertain, will follow a process of ongoing, balanced growth in size and performance, in confirmation of the development trend seen over the past few years.
One should note that measures for preparing the consolidated accounting information in accordance with IAS/IFRS international accounting standards were undertaken in 2004 and will be completed in the course of 2005, and that the switchover to the new regulations has required the implementation of new procedures and the review of existing ones.
The data needed to reconcile the figures related to the 2004 financial statement with IAS/IFRS have not yet been determined, considering that certain options have been only recently set out by the European Commission, specifically with regard to IAS 39. The Credito Valtellinese group expects to prepare and report quantitative information based on the new international accounting standards starting with the half-yearly report as at 30 June 2005.
Lastly, one should note that at present, the external auditing firm has not yet been entrusted with the task of reviewing data resulting from the transition process.
Accounting schedules: reclassified balance sheet and income statement (PDF file, 94 KB)
One should note that review is still underway by the external auditing firm and the Board of Statutory Auditors.
For more information, contact:
Credito Valtellinese group consolidated statement
2004
2003
var. %
Net profit
23,9
15,8
+51%
Interest margin
267,6
250,7
+6,7%
Brokerage margin
481,1
443,9
+8,4%
Gross operating profit
128
105,2
+21,7%
Direct deposits
9.656
8.699,8
+11%
Indirect deposits
10.455,7
9.426,3
+ 10,9%
Overall deposits
20.111,7
18.126,1
+ 11%
Loans
8.240,2
7.432,6
+10,9%
Credito Valtellinese individual statement
2004
2003
var. %
Net profit
36,5
32,1
+13,8%
Interest margin
93,3
87,9
+6,1%
Brokering margin
165,7
157,4
+ 5,2%
Gross operating profit
68,8
60,8
+ 13,1%
Profit or loss on ordinary operations
54,3
48,5
+11,8%
Direct deposits
3.839
3.401,2
+12,9%
Indirect deposits
3.753,1
3.601,4
+ 4,2%
Overall deposits
7.592,1
7.002,6
+8,4%
Loans
3.303,9
2.955,4
+11,8%
Prosposed dividend: €0.40 per share
One should note that as at 31 December 2004, the bank did not hold any treasury shares in the company portfolio.
Enzo Rocca
Head Administrative Office
Telephone 0342 522647 02 80637813
E-mail rocca.enzo@creval.it
Alberto Della Penna
General Office
Telephone 0342 522664
E-mail dellapenna.alberto@creval.it
