2010 financial results

Operating profit up 2% and net profit up 4% at BCV Group

BCV Group turned in very strong 2010 financial results, once again posting a year-on-year improvement. Revenues increased 2% to CHF 996m on sharply rising business volumes. Operating profit rose 2% to CHF 480m and net profit was up 4% to CHF 314m despite a non-recurring charge-off of CHF 34m resulting from the final settlement with the Swiss Federal Tax Administration. The Group is pressing ahead with the dividend policy and equity-optimization strategy announced in 2008. At the next Annual Shareholders’ Meeting, the Board of Directors will therefore propose an ordinary dividend of CHF 22 as well as a distribution of CHF 10 per share out of paid-in reserves. This will allow the Group to return CHF 275m to shareholders.

Revenues up 2%

Total revenues rose by 2% to CHF 996m.

Interest income edged up 1% to CHF 511m. This rise, which was smaller than the growth in business volumes, resulted from the Bank's prudent approach to liquidity management (placing funds primarily with the Swiss National Bank) and the low interest rate environment.

Fee and commission income rose 7% to CHF 352m. This was mainly due to an increase in fees and commissions from wealth management activities, which were up 4% to CHF 288m.

Trading income came in at CHF 98m, which was comparable to the excellent 2009 figure. Customer-driven forex transactions played a major role in this performance.

Other ordinary income fell by CHF 6m to CHF 35m.

Operating profit up 2% to CHF 480m

Total operating expenses were up 2% to CHF 516m. Personnel costs grew 3% to CHF 326m as a result of higher staff numbers, ordinary pay increases and additional employee training. Other operating expenses remained stable at CHF 190m.

Operating profit increased 2% to CHF 480m, driven by revenue growth combined with firm cost control. The cost/income ratio improved from 60% to 59%.

Net profit at CHF 314m

Depreciation and write-offs declined 2% to CHF 78m. Value adjustments, provisions and losses dropped sharply to CHF 5m (-71%), while extraordinary income, which mainly consisted of provision releases, climbed to CHF 45m (+168%). These figures testify to the quality of BCV’s loan book.

Net profit increased 4% to CHF 314m, despite the charge-off of CHF 34m resulting from the final settlement with the Swiss Federal Tax Administration. Excluding this factor, net profit would have risen 13%.

Robust growth in customer-driven business volumes

Total assets were practically unchanged at CHF 35.6bn.

Mortgage lending volumes showed an 8% rise, up CHF 1.5bn to CHF 20.3bn. Other on-balance-sheet loans contracted by CHF 294m to CHF 5.2bn (-5%), while off-balance-sheet lending increased by CHF 327m (+14%).

Reflecting prudent management of bank-counterparty risk, amounts due from banks fell by 45% to CHF 3bn. Liquidity was instead placed mainly with the Swiss National Bank in the form of SNB bills, which resulted in a rise in money-market instruments of CHF 1.8bn.

On the liabilities side, customer savings deposits expanded by CHF 1.0bn (+11%) to CHF 10.9bn, reflecting strong customer trust in the Bank.
Shareholders’ equity was stable at CHF 3.3bn. Capital ratios remained at comfortable levels, with the FINMA capital adequacy ratio at 175% and the BIS Tier 1 ratio (Basel II IRB) at 17.6%.

Net new money of CHF 758m and stable AuM

Net new money for the period was solid at CHF 758m. This figure is the result of two distinct factors. On one hand, the private-client and SME segments continued to bring in net new money (+CHF 1.3bn). On the other, short-term deposits by large corporate and institutional clients contracted ( CHF 0.5bn) following the Bank's decision to keep deposit interest rates low in an environment marked by plentiful liquidity. Assets under management declined 1% to CHF 75.8bn owing to market trends, particularly the impact of exchange rates.

Proposals to distribute CHF 275m to shareholders through an ordinary dividend of CHF 22 and a distribution of CHF 10 per share out of paid-in reserves

BCV Group is pressing ahead with the equity-optimization strategy announced in 2008. Accordingly, the Board of Directors will submit a proposal to increase the ordinary dividend from CHF 21 to CHF 22 per registered share at the Annual Shareholders' Meeting on 5 May 2011. It will also propose distributing CHF 10 per share by drawing on paid-in reserves pursuant to Swiss Corporate Tax Reform II. If these resolutions are approved, BCV will return CHF 275m to shareholders.

Board: proposal to appoint a new member; new Vice Chairman named

As announced on 11 November 2010, the Board of Directors will propose Reto Donatsch to replace outgoing member Jean-Luc Strohm, the current Vice Chairman, who in 2011 will reach the age limit for BCV's board members stipulated by law. The Board wishes to extend its warmest thanks to Mr. Strohm for the services he has rendered to the Bank over the years. His broad experience, financial expertise and in-depth knowledge of the local economy, together with his open-minded approach and courteous nature, have contributed greatly to BCV Group's recent successes.

At its meeting on 9 February 2011, the Vaud Cantonal Government appointed Stephan A. J. Bachmann to replace Mr. Strohm as Vice Chairman of BCV’s Board as of 6 May 2011. Mr. Bachmann has been a BCV Board member and Chairman of the Audit and Risk Committee since January 2008. He previously served on the Management Board and Board of Directors of PricewaterhouseCoopers S.A, where he was head of Audit and Advisory in Switzerland. As a certified public accountant and former licensed bank auditor, he has extensive experience in auditing financial and manufacturing companies both in Switzerland and abroad. Mr. Bachmann has been living in Vaud Canton for many years.

Acquisition of Banque Franck Galland & Cie S.A.

In December, BCV Group announced the acquisition of Banque Franck Galland & Cie S.A. from Johnson Financial Group. BCV intends to merge this bank with wealth management subsidiary Banque Piguet & Cie S.A. in spring 2011. The new entity, Banque Piguet Galland & Cie S.A., will be one of the leading wealth managers in Western Switzerland, with AuM of CHF 8bn. It will provide highly personalized services to clients in this part of the country and intends to significantly increase AuM over the medium term.

Upgrade of S&P’s outlook on BCV

In December, rating agency Standard & Poor’s raised BCV's outlook from stable to positive, reflecting the Bank's solid financials, while affirming its long-term credit rating of AA-. BCV’s management welcomed this announcement, which reflects the string of successes achieved in the transformation of the Bank since 2003 and the Bank’s strong financial position today.

Final settlement with the Swiss Federal Tax Authority

In mid-2010, BCV reached a final settlement with the Swiss Federal Tax Authority (FTA). In December 2008, the FTA asked BCV to pay CHF 150m, representing the sum of withholding taxes reimbursed to the Bank from 2004 to 2006 in connection with some of its equity-derivative trading activities. BCV firmly opposed this request and asked the FTA to reconsider its position on the grounds that the FTA had agreed to the reimbursement in 2003 but subsequently retracted its decision retroactively. Following an in-depth analysis by both parties, BCV’s position was largely accepted by the FTA, with the exception of a limited number of transactions corresponding to CHF 29m, or less than 20% of the withholding tax initially demanded. According to the FTA, those transactions were not strictly within the scope of the agreement. Including late interest, the non-recurring charge-off was CHF 34m.

Outlook

Management is very satisfied with these results. They reflect strong client confidence in BCV and good business growth amid an improving economy, despite lackluster financial markets. Business development for 2011 as a whole is expected to trend along the same lines as in 2010.

Lausanne, Switzerland, 24 February 2011

2011 financial calendar:

* Total distribution comprising an ordinary dividend of CHF 22 per share and CHF 10 per share drawn from paid-in reserves, subject to approval at the Annual Shareholders’ Meeting

Contact(s)

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

Gregory Duong, Investor Relations Officer
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.