BCV Group in Q1 2003

BCV GROUP POSTS GOOD FIRST-HALF FINANCIAL RESULTS AND MAKES CONCRETE PROGRESS ON STRATEGIC RE-ALIGNMENT

BCV Group posted encouraging financial results for the first half of 2003, with a clear improvement on the year-earlier figures. The trend in operating earnings is positive: in terms of both revenues and expenses, there were several sources of satisfaction in H1 2003. These positive developments drove a 15.8% increase in gross profit, which amounted to CHF 193 mn for the period under review. (On a like-for-like basis in terms of the scope of consolidation, gross profit was up 10%, to CHF 183 mn). Net profit for the first half amounted to CHF 56 mn, as against a net loss of CHF 76 mn a year earlier. In addition, there has been real progress in the implementation of the new strategic approach made public last February: the Bank is focusing on core areas of expertise, implementing planned organizational re-alignments, and streamlining its business processes.

The financial results shown in the half-yearly Income Statement are generally line with expectations. While interest income rose slightly (up 2.4% to CHF 216 mn), commission and fee income was noticeably down (off 14%, to CHF 127 mn) as a result of BCV's gradual withdrawal from certain areas of international trade finance (in line with the strategic re-alignment previously announced) and the still-unfavorable situation in the field of wealth management. Income from equity, forex and derivative trading posted a marked improvement on the year-earlier figure (up 60.9% to CHF 59 mn). The year-on-year jump in the item "Other ordinary income" (up 123.3% to CHF 77 mn) results solely from the fact that the IT company UNICIBLE's financial results were fully consolidated during the period; on a like-for-like basis in terms of the scope of consolidation, the item was stable compared to H1 2002.

Gross Profit up 15.8%, with a Net Profit of CHF 56 mn

Total income was up 11.5%, to CHF 479 mn, while operating expenses amounted to CHF 286 mn, an increase of 8.8%. At constant scope, operating expenses were actually down 2.8%. Gross profit rose 15.8% to CHF 193 mn. Although the item "Depreciation and write-offs on fixed assets" was up considerably (+66.5%, to CHF 72 mn), mostly due to goodwill write-offs, provisioning needs dropped by almost 70% and stood at CHF 61 mn at the end of the period under review. H1 2003 net profit after minority interests thus came to CHF 56 mn, as against a net loss of CHF 76 mn a year earlier.

Balance Sheet Down Very Slightly
The balance sheet total slipped only very slightly during H1 2003, (down 0.8%), and stood at CHF 34.87 bn at 30 June. On the assets side the main drops were in credit volumes, which contracted by 2.6%, or CHF 645 mn, mostly as a result of BCV's strategic re-alignment, and trading portfolio assets, which fell 10.9% or CHF 121 mn. In addition, real-estate earmarked for sale, which is booked under "financial investments," fell by 15% in a market buoyed by low interest rates. The declines in most of the items listed under assets were offset by a corresponding sharp rise in the Bank's treasury, with an increase of CHF 1.29 bn or 42.7% in the item "Due from banks," which stood at CHF 4.32 bn on 30 June 2003.

On the liabilities side, customer savings and investment accounts (up 2.1%, or CHF 178 mn, to CHF 8.52 bn) were a source of satisfaction: the increase in savings deposits shows BCV has earned the renewed trust of its clientele. The item "Due to customers, other" contracted by 5.3% or CHF 436 mn, and totalled CHF 7.77 bn at 30 June. This decline was produced by a combination of two opposed trends: on one hand sight accounts rose vigorously, while on the other hand time deposits were intentionally reduced. Reduced re-financing needs relating to declines in various items listed as assets and increased shareholders' equity are the two factors behind this large voluntary reduction in time deposit accounts. Reduced re-financing requirements also explain the decision to repay bond issues which had reached maturity, with a resulting decline of CHF 623 mn or 6.2% in the item "Bonds and mortgage-backed bonds." As for medium-term notes, they were hit by weak interest rates and fell by 15.1%, or CHF 87 mn, to CHF 490 mn. Overall, customer deposits and borrowings contracted by 3.6%, or CHF 968 mn, and stood at CHF 26.24 bn at the end of the period under review. Shareholders' equity, up by CHF 1.24 bn or 106.1%, to CHF 2.41 bn, once again stands at a level which complies fully with both Swiss and international requirements, thanks to the February 2003 participation-certificate issue.

Implementation of the New Strategic Approach on Track

The new strategic approach defined at the beginning of the year by the Board of Directors is currently being implemented. Thanks to the commitment and efforts of BCV's staff, significant progress has been made, with the following concrete results:

• Relative to the decision to withdraw from trade finance activities in petroleum products and shipping, buyers have been found for 80% of the portfolio. The remaining 20%, which BCV does not intend to divest, involves local businesses and transactions which are guaranteed by the Swiss Confederation.
• BCV's Zurich office has been closed, and client relationships are now handled from the Lausanne headquarters.
• Divestment of Dimension Corporate Finance has been completed via an MBO.
• An initial agreement has been reached concerning the disposal of BCV's stake in a Greek private banking establishment.
• Internal structural re-alignments have been implemented.
• Business processes have been streamlined.

In addition, a solution has been found concerning the divestment of Banque Galland & Cie SA. An agreement has been reached with Banque Franck S.A., in Geneva. According to this agreement Banque Franck will acquire Banque Galland's private banking activities. Banque Franck intends to set up a Lausanne branch office in the current premises of Banque Galland and will take on 13 members of Banque Galland's current staff. Banque Galland staff not integrated within the new structure will be taken on at BCV.

Achieving a lasting improvement in profitability will entail major efforts on both the strategic and operational levels. Nevertheless, the Board of Directors and the Executive Board are convinced that BCV Group is now firmly on pace to achieve this objective.

Lausanne, Switzerland, 22 August 2003