H1 08 net profit of CHF 192m*

BCV Group’s first-half financial results were mixed. Net interest income, the Bank’s main revenue stream, held up well despite difficult market conditions. In line with the announcement made in Q1, the Bank’s trading activities posted a loss. H1 gross profit fell 46% to CHF 166m as a result of trading losses, disposals of business activities, and the forecast decline in other ordinary income. BCV Group nevertheless reported an H1 net profit of CHF 192m, which as expected was below the year-earlier figure.

Revenues fall 29%

First-half revenues were down 29% to CHF 420m, due mainly to trading losses, but also to the transfer of Unicible's operations and the sale of the Group’s stake in Spanish wealth management subsidiary A&G. On a like-for-like basis, revenues dropped 22%. Net interest income–the primary source of revenues–rose 1% to CHF 257m. Fee and commission income decreased by 9% to CHF 176m; excluding the A&G sale, the decline would be 4%. Trading activities posted a loss of CHF 45m, of which CHF 35m in Q1 and CHF 10m in Q2. This relative improvement was a result of the risk-reduction strategy implemented at the beginning of the year. The Group expects a positive trading performance in H2, as risks related to equity derivatives have been sharply reduced. Other ordinary income fell 65% to CHF 32m. This reflected both the Unicible transfer and a fall-off in sales of financial investments compared with the exceptionally high levels of the year-earlier period. Excluding the Unicible transfer, other ordinary income fell 31%.

Gross profit of CHF 166m

Total operating expenses were down 11% to CHF 254m (up 2% like-for-like). This reflected both the disposals and ongoing cost control. Personnel costs dropped 16% to CHF 156m; on a like-for-like basis, they remained virtually stable (+1%). Other operating expenses contracted by 1% to CHF 98m (+3% like-for-like). Gross profit declined by 46% to CHF 166m, mainly due to losses in trading.

Net profit of CHF 192m

Depreciation and write-offs fell to CHF 39m (-14%), while value adjustments were down 85% to CHF 1m. Despite the expected decline in provision releases, extraordinary income grew 27% to CHF 114m following the sale of A&G and the transfer of consumer-credit operations. The Bank’s tax liability increased by 98% to CHF 46m since its tax credits have now been used up. As a result, net profit declined 39% to CHF 192m.

Total assets drop following reduced trading activities

Total assets declined 4% to CHF 34.1bn. This is due to a drop in equity-derivative trading activities under the Bank’s risk-reduction strategy and, to a lesser extent, to a decrease in interbank loans and commitments.

Asset volumes relating to client-driven activities, on the other hand, were higher than in H1 07. Mortgage lending expanded by CHF 180m (+1%) to CHF 17.0bn; excluding the reduction in impaired loans, this item was up 1.4% (CHF 240m). Other loans increased by 4% (CHF 199m); excluding the reduction in impaired loans and the transfer of consumer-credit operations, this item rose 6% to CHF 340m. The strategic reduction in risks relating to equity-derivative trading led to a CHF 937m decline in trading portfolio assets and a CHF 326m decrease in replacement values for derivative financial instruments (carried under “Other assets”).

On the liabilities side, savings deposits held steady at CHF 8.1bn after a period of contraction. Other customer accounts dropped 3% to CHF 12.0bn, largely as a result of a decrease in the volume of low-margin time deposits. Medium-term notes jumped 24% to CHF 501m.

Decrease in AuM

The Group’s assets under management declined 10% to CHF 75.9bn due to the A&G disposal (CHF 3.9bn) and current market conditions. Net new funds stood at CHF 342m; this figure reflects new fund inflows of CHF 900m less a CHF 558m decline in low-margin time deposits.

Recent developments

The Group sold its 50% stake in the Spanish wealth-management firm A&G early this year, bringing to a successful close the strategic realignment on core businesses that Management initiated in 2003. In March, BCV joined a pool of other banks in transferring its consumer-credit operations to Aduno Group; this led to the creation of Swiss One Finance, now Switzerland's third-largest consumer-credit company.

On 1 January, Jean-Luc Strohm became the new Vice Chairman of the Board of Directors. Stephan Bachmann and Pierre Lamunière also joined the Board during the first half. On 1 May, Pascal Kiener became CEO of the Bank and will continue as acting CFO until a successor is appointed. On 4 August, the Executive Board gained a new member, Markus Gygax, who will take charge of the Retail Division from 1 October.

Outlook

Management expects the Bank's financials to continue their gradual return to normal levels in H2. This will include a further decline in extraordinary income, as previously announced. In addition, the Bank will pursue the equity optimization and dividend strategy that it unveiled at the beginning of the year.

Barring any extraordinary factors, the Group expects its risk-reduction strategy to lead to a positive performance in trading in H2.

Full-year 2008 net and gross profit will be affected by the poor performance in trading at the beginning of the year. However, Management remains confident in the Bank's main revenue streams.

Lausanne, Switzerland, 19 August 2008

*Unaudited figures

Contact(s)

Christian Jacot-Descombes, Press Officer
Phone + 41 21 212 28 61
E-mail

Wilhelm Blaeuer, Investor relations
Phone + 41 21 212 20 71
E-mail

This press release is being issued outside the trading hours of the SIX, Swiss Exchange in order to comply with the principles of ad hoc disclosure pursuant to the SIX listing rules.

The above text is a translation of the original French document; only the French version is authoritative.