BCV Group: a mixed first half, but positive overall

The first half year was marked by a continuing positive economic trend, particularly in Switzerland and Europe - even though we began to see increasing signs of a slowdown -, in contrast with the depressed state of the stock markets. These opposing trends are reflected in the BCV Group's financial statements: whereas the volume of loans and deposits advanced, leading to an improvement in results from interest operations, and documentary business continued its strong expansion, asset management business marked time slightly in a particularly tough context. However, the unfavourable trend on the stock markets made its largest impact on the results from securities trading.

Gross profit up 5.3% thanks to the sale of participations

During the first six months of the year, income from interest operations grew by CHF 17.3 million or 8.6% to reach CHF 217.4 million, as a result of an increase in the volume of transactions combined with a slight improvement in margin in percentage terms. Stable at parent company level, income from commission operations fell back CHF 15.1 million or 9% for the Group as a whole, coming in at CHF 152.6 million. The strong rise in commission on loan operations (+7.8 million or 35.7% to CHF 29.5 million), linked to the boom in international commodity trade financing business, and the marked fall in commission expenses (-8.7 million or 15.9% to CHF 45.9 million), only partially offset the weakening of the private banking business result. In this field, commission collected fell CHF 33.1 million or 17.2%, coming in at CHF 158.9 million. The Group's assets under management saw a moderate drop (-2.1 billion or 3.3% to CHF 61 billion), mainly related to the decision of an important institutional customer to concentrate its assets under global custody in another bank, while giving to BCV a discretionary management mandate for a part of them. The biggest drop was in trading operations (-48.1 million or 78.9% to CHF 12.8 million): securities portfolios were hit by the pullback on the stock markets and the result of currency operations was also penalised by the weakness of transaction volume on the financial markets. However, transactions on financial investments, particularly the sale of the non-hedged portion of BCV's stake in the company Orange Communication, more than outweighed the drop in the result of trading operations and is the main explanation for the strong increase in other ordinary results, which have advanced from CHF 47.8 to 133.8 million from one year to the next.

The Group's total income therefore advanced by CHF 40.1 million or 8.4% over the first half of 2000, coming in at CHF 516.6 million. The operating expenses totalled CHF 277.8 million, i.e. 27.9 million or 11.2% more than the previous year. Staff expenses grew 15.2% to CHF 175.5 million under the impact, i.a., of an increase in the Group's staffing level (+2.1% to 2289 persons). As for the other operating expenses, they increased 4.9% to CHF 102.3 million. Gross profit thus came in at 238.8 million, versus 226.7 million for the first six months of last year, showing an advance of CHF 12.1 million or 5.3%.

Consolidated balance sheet down slightly

The Group's balance-sheet total, 98% of which is accounted for by the parent company, stood at CHF 37.55 billion at 30 June 2001, down CHF 416 million or 1.1% over 31 December last. This movement can be explained above all by the drop of over CHF 1 billion in amounts due to and from banks.

On the asset side, amounts due from customers totalled CHF 26.73 billion at 30 June, i.e. CHF 480 million or 1.8% more than at the end of the year 2000. Commercial loans (+322 million to CHF 11.02 billion francs) grew more strongly than mortgage loans (+158 million to CHF 15.71 billion). The securities trading portfolios (+237 million or 19.4% to CHF 1.46 billion) increased mainly as a result of the development of structured products and derivatives. Finally, the strong rise in other assets, like that of other liabilities, reflects the increase in the volume of transactions on derivatives, whose replacement value appears under these headings.

On the liabilities side, deposits and long-term borrowings increased 213 million or 0.8% to CHF 27.91 billion. The erosion of savings continued, albeit at a slower rate (-238 million or 2.8% to CHF 8.4 billion), as did that of cash bonds (-50 million or 7.6% to CHF 606 million). However, sight and time liabilities towards customers advanced CHF 315 million of 3.6%, to CHF 8.95 billion. Long-term borrowings increased CHF 186 millions or 1.9% to CHF 9.95 billion.

Outlook

The second half-year will be marked by a moderate slowdown of the domestic economy, which could, however, be accompanied, at international level, by a gradual improvement of outlooks for the coming year, particularly if the central banks continue with their policy of easing interest rates. In this context, the financial markets could be better oriented than in the first half. In the face of the current uncertainties, it would, however, be imprudent to hazard an over-optimistic forecast for the BCV Group's full-year result. A gross profit comparable with that of last year would already constitute a good performance and allow the bank to cover provisioning needs which will remain at a high level.

Lausanne, 17 August 2001