BCV Group's half-yearly results in line with that of the parent company

BCV Group's performance for the first half of the current financial year was in line with that of the parent company, which represents 98% of the total balance sheet, and whose H1 numbers were released on 17 July. The subsidiaries had a positive impact on net profit. Against a backdrop of sluggish economic conditions and depressed stock markets, however, the net was adversely affected by the parent company's provisioning needs, which were made public on 17 July. The trend in operating income was somewhat below forecasts, but the breakdown brings to light several sources of satisfaction.

Business affected by the markets, but only to a limited extent
In the first half, the decline in interest income (down 3% to CHF 210.9 million) corresponds to the drop in business volumes on the balance sheet. The interest margin as a percentage of the balance sheet total remained practically unchanged. The decline in commission income (down 3.3% to CHF 147.6 million) is mainly attributable to lower commissions in the wealth management business. After commission expenses, net commission income showed a decline in proportion with that registered by the Group's assets under management, which amounted to CHF 51.79 billion at the end of the period under review. Income from trading operations rose markedly (up 187.5% to CHF 36.9 million) compared to H1 2001. But other ordinary income was down, which can be accounted for by the fact that a non-recurrent profit had been booked in H1 2001 on the sale of shares in Orange Communication.

The Group's total income thus fell 16.8% compared to H1 2001, to CHF 429.7 million. With operating expenses lower than a year ago, particularly because partially profit-indexed employee remuneration packages entailed decreased personnel expenses, gross profit came in at CHF 166.4 million (-30.3%). While amortisations declined, provisions doubled, notably because of a CHF 52 million provision that was made to cover the estimated losses resulting from the Allied Deals - RBG Resources swindle. After extraordinary income and taxes, BCV Group took a first-half net loss of CHF 75.3 million.

Business volumes on the balance sheet down
The Group's balance sheet total - 98% of which is accounted for by the parent company - stood at CHF 35.23 billion at 30 June 2002.

On the assets side, loans to clients fell because of lower demand, particularly from the public sector. Mortgage loans dropped only slightly in an increasingly competitive market. Securities trading portfolios grew thanks to the development of derivative products, and the sharp increase in other assets and liabilities reflected higher trading volumes on derivative instruments.

On the liabilities side, funds due to clients (deposits and long-term borrowings) declined. The erosion of savings continued at a moderate pace, but cash bonds rose for the first time in years. Client sight and term accounts declined, as did long-term borrowings.

After the net loss taken on the first half of 2002, shareholders' equity stood at CHF 1.41 billion at 30 June, but rose to CHF 2.05 billion thanks to the capital increase, which ended on 12 August 2002.

Outlook
The second half of the year still looks difficult. No pick-up in the economy is expected until next year, and without concrete signs of improved economic conditions, the financial markets are likely to remain skittish. However, the central banks' highly flexible monetary policy should prevent any further economic deterioration. Against this mixed backdrop, the Group will strive to implement cost- and risk-control measures that will have an immediate impact on profitability and result in a satisfactory showing in 2003.

Lausanne, 23 August 2002

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Daniel Herrera, Head of Communications
Phone +41 844 228 228
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