Credito Valtellinese Group: consolidated and individual financial statements approved as at 31.12.2005, showing a positive trend in primary economic and equity totals. The Group's restructuring project in the local tax sector approved.
| Consolidated financial statements (IAS/IFRS) (figures in million of euros) |
2005 | 2004 (*) | Var. % |
| Net profit | 92.9 (**) | 50.0 | +86.0% |
| Interest margin | 297.4 | 272.0 | +9.3% |
| Brokerage margin | 513.1 | 461.9 | +11.1% |
| Gross operating profit on activities | 120.8 | 97.5 | +23.9% |
| Direct deposits | 10,488.9 | 9,674.9 | +8.4% |
| Indirect deposits | 11,587.1 | 10,455.7 | +10.8% |
| Overall deposits | 22,076.0 | 20,130.6 | +9.7% |
| Loans | 9,863.2 | 8,247.1 | +19.6% |
| Individual financial statements (Legislative Decree 87/92) (figures in million of euros) |
2005 | 2004 | Var. % |
| Net profit | 41.8 | 36.5 | +14.7% |
| Interest margin | 102.8 | 93.3 | +10.2% |
| Brokerage margin | 185.0 | 165.7 | +11.6% |
| Gross operating profit | 79.1 | 68.8 | +15.0% |
| Direct deposits | 4,080.0 | 3,839.0 | +6.3% |
| Indirect deposits | 4,145.2 | 3,753.1 | +10.5% |
| Overall deposits | 8,225.2 | 7,592.1 | +8.3% |
| Loans | 3,919.6 | 3,303.9 | +18.6% |
| Total dividends | 31,387.4 | 26,404.3 | +18.9% |
| Proposed dividend € 0.40 per share | |||
* The Credito Valtellinese Group availed itself of the option, foreseen by IFRS 1, of not applying accounting principles 32 and 39 to comparison figures from the 2004 financial year.
** Including a positive non-recurrent component of € 37.4 million connected to the tax effect deriving from the application of the monetary revaluation law on the Group's real estate assets.
Sondrio, 21 March 2006 - Today, the Board of Directors of Credito Valtellinese s.c. examined and approved the consolidated financial statements - drafted in accordance to new IAS/IFRS international accounting standards - and individual financial statements, drafted in accordance to national accounting principles previously in force. The 2005 financial year saw a net consolidated profit of € 92.9 million, a significant growth (+86.0%) compared to € 50 million in 2004. This increase was partly due to the positive, € 37.4 million, non-recurrent component connected to the real estate revaluation tax effect. In terms of the parent company, net results for the period increased by 14.7%, going from € 36.5 million at the end of 2004, to € 41.8 million in 2005. The Board of Directors will propose the distribution of a €0.40 dividend - unchanged compared to the previous year - but spread over a greater number of shares (+18.9%) representing the share capital, due to the conversion of the first tranche of the "Credito Valtellinese 2.8% 2004-2007 convertible" bond loan, which lead to 12,457,831 new shares being issued during the course of the year. In 2005, the activities of the Credito Valtellinese Group focused on the operative implementation of the projects foreseen within the "4C" Strategic Plan, approved in May 2004 by the parent company's administrative body and based on four elements: external and internal Growth, the development of innovative methods to approach the market and respond more effectively Customer needs, improving individual Skills, and further developing external Control systems. The "4C" Strategic Plan guidelines, and results of the 2005 financial statements, shall be presented to the financial community on March 29 at 10.30pm at the Palazzo delle Stelline in Milan, Corso Magenta 59.
CONSOLIDATED FINANCIAL STATEMENTS
(The consolidated financial statements have been drafted in accordance to IAS/IFRS international accounting principles)
Economic figures
A significant increase in brokerage volumes lead to a 9l.3% increase in the interest margin, going from € 272 million in the previous financial year to € 297.4 million in 2005. The increase in managed asset stocks, combined with satisfactory sales volumes for finance and investment services, lead to a positive development in net commissions (+12.4%), going from € 174 million in 2004, to € 195.6 million in 2005. Activities in the financial sector showed a net trading result of € 16.4 million (+14.9 million compared to € 14.2 million in the previous financial year). The brokerage margin therefore stands at € 513.1 million, showing an 11.1% increase compared to €461.9 million in 2004. Subtracting net adjustments to financial activities - equal to € 43 million, and essentially stable with respect to 2004 - net results for financial management are equal to € 470.1 million, showing a 12.2% increase compared to figures for the previous year (€ 418.9 million). Investments connected to strengthening the Group's commercial and productive structure lead to an 8.7% growth in operating costs (sum total of administrative costs, provisions for risks and expenses, net adjustments to tangible and intangible assets, and net of other income) which stand at € 349.3 million (€ 321.4 million in 2004). The cost/income ratio is therefore equal to 68.1%, compared to 69.6% for the previous year, confirming the progressive improvement which resulted from jointly pursuing careful operation cost control policies and income margin expansion policies. The net consolidated result, equal to € 92.9 million (+86.0% compared to the previous period) includes a positive non-recurrent income component equal to € 37.4 million, resulting from tax savings created by applying the substitutive tax on real estate revaluation as provided for by Law 266/05, at 6% ( to physically non-amortizable real estate) and 12% (for physically amortizable real estate); in view of the first application of international accounting principles, fair value accounting for real estate in substitution of the previous book value, had instead been discounted at a 38.25% tax rate. Results for the financial year, net of the previous non-recurrent component, therefore total € 55.5 million (+11.0% compared to € 50 million registered in 2004). Consequently, ROE stands at 12.3%, a significant increase compared to 7.7% for the previous financial year. Insulating the indicator for the abovementioned non-recurrent tax effect, a figure of 7.3% is obtained, in line with the figure for 2004, in spite of the increase in overall assets, equal to € 86.9 million, connected to the conversion of the first tranche of the "Credito Valtellinese 2.8% 2004-2007 convertible" bond loan.
Financial figures
An examination of the balance sheet highlights a positive trend in direct deposits, equal to € 10,488.9 million (+8.4% compared to € 9,674.9 million in 2004). The short term component was significantly more dynamic (equal to € 7,914.6 million, +11.6% for the year) compared to medium and long term securities deposits, which remain at 2004 levels. As at 31 December 2005, indirect deposits for the Group totalled € 11,587.1 million, registering a 10.8% increase compared to € 10,455.7 million for the previous year. Managed assets, comprised of mutual investment funds, customer asset management and insurance funds, total € 5,910.6 million, a 13.5% increase compared to € 5,208.3 million at the end of December 2004. Managed assets, represented by cash and marketable securities deposited by customers in Banks belonging to the Group, reached € 5,676.6 million, showing a growth of 8.2% compared to the same figure at the end of the previous financial year. The fact that the proportion of managed assets compared to total indirect deposits is equal to 51.0% as at 31.12.2005 must be underlined. The Group has entrusted the management of individual customer assets to Aperta SGR - company specialising in asset management services and authorised to perform its activities by the Monitoring Authority in Augusof 2005. The Group's SGR began its own activities on October 1 with the transfer from the parent company Bancaperta of the company branch comprising of all asset management activities carried out by the Credito Valtellinese Group on behalf of third parties, equal to € 4.2 billion. Overall deposits, the sum of direct and indirect deposits, therefore total € 22,076.0 million, a 9.7% increase compared to € 20,130.6 million as at the end of December 2004. Loans to customers, granted to artisans, small and medium sized industries and families operating in local areas presided by territorially based Banks belonging to the Group, on a priority basis, saw a sustained increase (+19.6%), going from € 8,247.1 million in 2004 to € 9,863.2 m illion in 2005. Mortgages and leases once again proved to be the most dynamic loan forms. With this respect, it must be noted that a project aimed at streamlining operations for the Group in the loans sector, with Mediocreval taking on the role of Bank specialising in granting medium and long term loans, was started in 2005. With the Mediocreval start of operations in the medium and long term loan sector, foreseen for the second semester of 2006, the Credito Valtellinese Group will have a structure with an elevated degree of specialised skills placed in a highly strategic sector of operations. Net non-performing loans fell by 32%, going from € 249.1 million in 2004 to € 169.3 million at the end of 2005. The ratio between non-performing loads and loans to customers therefore saw a contraction, going from 3% in 2004 to 1.4% at the end of 2005. The dynamics of the indicator were markedly influenced by both the application of the IAS accounting principle to the 2005 consolidated financial statements as well as the effective operation carried out by Mediocreval to recover deteriorated loans and the rigorous loan risk control policies constantly pursued by the Banks during lending transactions.
Other information
As at 31.12.2005 the Credito Valtellinese Group structure was comprised of 346 branch offices, of which 19 were opened during the year in question. The implementation of the "Veneto Project" - aimed at supporting the expansion of the subsidiary Banca dell'Artigianato e dell'Industria in the north east with the institution of 40 new branch offices by 2009 - was vigorously pursued. The expansion of the sales network and the strengthening of productive structures and corporate centres, lead to 186 net new employments; as at 31.12.2005, Gruppo Credito Valtellinese employees stood at 3,307.
SIGNIFICANT EVENTS FOLLOWING 31 DECEMBER 2005 AND FORESEEABLE MANAGEMENT EVOLUTION
- Within the Group's streamlining project of the medium/long term loan sector, the Finanziaria San Giacomo S.p.A. was established on 12 January 2006. It will become the non-performing credit transferee for Mediocreval, and, in future, for other Banks belonging to the Group. The new Company, with a € 3 million share capital entirely held by Mediocreval, formally entered into the Group and was registered in the general role of subjects operating in the financial sector in accordance with Article 106 of the Single Text on banking and financial legislation.
- The offer period for the first tranche of the capital increase decided by the Mediocreval Shareholders' Meeting of 2 December 2005 - whose total was set at approximately 29.4 million by the Bank's Board of Directors - ended on 17 February 2006 with the integral subscription of the shares offered. Mediocreval capital has therefore increased from € 29,376,000 to € 44,064,000.
- On 24 February 2006, Credito Valtellinese finalised the acquisition of 600,000 shares belonging to Banca della Ciociaria for a total value of approximately € 6.9 million.
- During the month of February, Credito Valtellinese - within the Euro Medium Term Notes Programme renewed in December 2005 - issued a € 350 million senior five year variable rate bond listed on the Luxemburg Stock exchange. The Moody rating for the aforementioned issue is BAA1.
- The conversion period for the expiry of the second share of the convertible bond loan "Credito Valtellinese 2.8% 2004-2007" - for an initial total of € 293.7 million - began on March 20, at nominal value of € 300 per bond held with an original value of € 1,000.
INDIVIDUAL FINANCIAL STATEMENTS
(The financial statements have been drafted in accordance with Legislative Decree 87/92)
Economic figures
Interest margins for the parent company stand at € 102.8 million, with an increase of 10.2% compared to € 93.3 million at the end of 2004. As regards net income from services, net commissions totalled € 51.8 million (+13.8%), due to a constant growth in active commissions from financial services, collection and payment services and other services. The total for other net income is equal to € 3.4 million (+7.3%). The service margin, which is the sum of net commissions and other net income, therefore totalled € 55.2 million in 2005, up 13.4% over the € 48.8 million for the previous financial year. The incidence of the service margin on the brokerage margin at the end of 2005 stands at almost 30%, a significant increase compared to 29% in the previous year. Net profits from financial operations registered a positive result equal to € 4.3 million for the year, in line with 2004 figures. The brokerage margin, the sum of the interest margin, the service margin, and dividends and net profits from financial operations, totalled € 185 million in 2005, a marked increase (+11.6%) compared to € 165.7 million in 2004. As at 31.12.2005, total net administrative expenses stood at € 95.5 million, with a 6.4% increase compared to the total for the previous financial year. Adjustments to tangible and intangible assets registered a noteworthy increase (+44.8%), due to the revaluation of real estate assets. The ratio of administrative expenses on the brokerage margin therefore improved, decreasing from 58.% in 2004 to 57.2% in 2005. Gross operating profit for 2005 totalled € 79.1 million, up 15% over the € 68.8 million in 2004. Value adjustments were also made on fixed financial assets for € 6.9 million. This figure is due to a reduction in the ownership of the collection company Rileno S.p.A., as a result of new legislation on the reform of the current collection system which will be introduced starting on 1 October 2006. Profit from ordinary activities grew by 4.8% with respect to the previous financial year, reaching € 56.9 mill ion compared to € 54.3 million in 2004. Taking the economic effect of the extraordinary activity into account - negative for € 1 million - the use of the general banking risk provision for € 6.5 million, and tax liabilities for 2005, equal to € 20.5 million, profit stands at € 41.8 million, growing by 14.7% compared to € 36.5 registered in the previous financial year.
Financial figures
With regard to total assets belonging to Credito Valtellinese, direct deposits from customers reached € 4,080 million as at 31 December 2005, up 6.3% over the figure of € 3,839 million at the end of the previous year. Indirect deposits, the sum total of securities in safe custody and administration, managed assets, mutual funds and the insurance fund, registered a significant expansion, going from € 3,753.1 million to € 4,145.2 million as at the end of December 2005 - an increase of 10.5%. The total is comprised of administered funds for 49.6% and managed assets, mutual investment funds, and the insurance fund, for the remaining 50.4%. Administered funds, represented by securities deposited by customers at the Bank, showed a 9.6% increase, going from € 1,874.9 million to € 2,054.3 million as at the end of December 2005. Managed funds registered a noteworthy increase equal to 11.3% compared to end of 2004 figures, totalling € 2,090.9 million. As at 31 December 2005, the Bank's overall deposits - sum of direct and indirect deposits - therefore stood at € 8,225.2 million, growing by 8.3% compared to € 7,592.1 million at the end of 2004. Cash credits to customers at the end of December 2005 totalled € 3,919.6 million, a considerable increase compared to the end of the previous financial year (+18.6%), and a confirmation of the constant attention focused on the financial needs of the territories in question, in terms of both families and the entrepreneurial community. Mortgages are reconfirmed as the most dynamic component of the total in 2005, reaching € 1,248.2 million, an increase of 20.5% compared to the end of 2004.
As at the end of December 2005, total net positions registered as non-performing were equal to € 27.6 million, compared to € 19.2 million at the end of 2004. The ratio between net non-performing loans and net loans therefore stood at 0.7% (0.6% at the end of 2004), as proof of the constant attention focused by the commercial network and the central decisional bodies on maintaining a healthy turnover, careful management, and controlling loan risks.
SHAREHOLDERS' MEETING
An Ordinary General Shareholders' Meeting has been called for 21 April 2006, and should a second session be necessary, for 22 April. The Board of Directors will present a proposal for the allocation of the year's profits at the meeting, which foresees allocating over € 9 million to reserves, € 1,000,000 to the charity fund, and the payment of a €0.40 per share dividend. This dividend is equal to that paid in 2004, but in relation to the greater number of shares making up the share capital (78,468,482, as opposed to 66,010,651 in the previous financial year, an 18.9% increase). Registration of the dividend is scheduled for May 2, whereas the date for dividend payment will be 5 may 2006. Other items on the agenda are to include the engagement to review accounts for the 2006-2011 period. A proposal will also be made at the Meeting to renew the authorisation of the Board of Directors to carry out, in accordance to Art. 12 of the Bylaws and current regulations, purchases of own shares, as well as replacing or retiring the same. The proposal, approved by the Board of Directors in general terms, is aimed at encouraging trading in its stock within normal brokerage activities, and foresees that activities be carried out according to the methods and with respect to the limits listed bellow:- With the exception of the provision in the 3rd comma of Art. 132 of Legislative Decree 58/98, purchase and sales of own shares - effecting ordinary Credito Valtellinese shares at a nominal value of € 3 each - must be carried out on markets regulated in accordance with the operation methods established in the organisation and management regulations of the same markets, which do not allow for the direct coupling of purchase proposal negotiations with predetermined negotiation proposals to sell;
- the same operations may take place via multiple actions, in the period between the current Meeting and the next Meeting called to approve financial statements for 2006;
- the purchase of own shares may take place for a maximum of 4,000,000 shares (on a current total of 78,468,482 shares in circulation) for a total of € 50,000,000.00;
- the overall number of own shares negotiated on a monthly basis may not exceed 25% of the total monthly exchange average in the previous quarter;
- the amount of own shares in portfolio may not exceed 3% (three percent) of the total number of shares constituting the share capital;
- shares must be purchased at a price not above the maximum official price registered on the stock exchange in the session preceding each individual sale, and not below the share's minimum nominal value;
- own hares 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 retirements of own shares must take place in accordance with the provisions of the bylaws and current regulations, employing the reserve for own shares to cover any differences between the par value and the purchase price;
- apart from for notification requirements before the start of operations, a monthly communication will also be issued on to the market on the share purchase programme.
RILENO PROJECT
The Credito Valtellinese s.c. Board of Directors, during today's session, approved the Rileno S.p.A - a tax collection company entirely owned by the parent company, operating in the provinces of Como and Lecco - reorganisation operation.
The project - which falls within the new legislative framework for the collection sector, pursuant to Law 248/2005 - provides for the spin-off of the company branch operating in regards to local taxes from Rileno. As a result, a new company - entirely owned by Credito Valtellinese - will be established, to take over local tax collection activities formerly carried out by Rileno.
The spin-off will be take place by taking Rileno's equity situation, as per the draft financial statements as at 31 December 2005, as a reference point. The newly established company's share capital will be € 2,600,000. The operation will be finalised, in accordance to the law and subject to obtaining all relevant authorisations, by 30 September 2006.
Accounting schedules: consolidated, reclassified and individual (drafted according to national accounting principles) balance sheets and income statements (drafted according to IAS/IFRS international accounting principles)
- available in italian -
For further information, contact:
Head Administrative Office
Telephone +39 0342 522647 - +39 02 80637813
Email: rocca.enzo@creval.it
Tiziana Camozzi
Institutional Communication Service
Telephone +39 02 80637471
Email: camozzi.tiziana@creval.it
