BCV Group in the first half of 2004

SUCCESSFULLY IMPLEMENTED STRATEGIC RE-ALIGNMENT AND SHARP RISE IN PROFITS*

BCV Group has reached a key milestone in the implementation of its new strategic approach during the first half of the 2004 financial year, moves which have paid off with very good financial results. Strategic refocusing on BCV's core business is now practically completed: there have been successfully managed withdrawals from ship financing and oil-trade finance as well as lending outside Vaud Canton, and all major decisions concerning the Group's foreign subsidiaries are already well-advanced. In spite of a decline in revenue resulting from these strategic divestments and withdrawals, H1 04 gross profit held steady YoY at CHF 192.9 mn. This reflected a strong showing by the Group in its core business areas. Driven by both a large drop in depreciation and write-offs and provision recoveries, net profit was up sharply, to CHF 196.8 mn, as compared with CHF 55.7 mn for the year-earlier period.

Revenue Stable

Total income for the period under review showed only a slight downtrend (off 2% to CHF 469.5 mn) in spite of a CHF 20 mn shortfall in revenue due to BCV's strategic divestments and withdrawals. Interest income was down by 4.9% to CHF 205.4 mn, reflecting a decline in lending volumes in line with strategic refocusing. Commission and fee income, however, rose 7.9% and stood at CHF 151.3 mn for the period, thanks mainly to favorable developments in institutional asset management. Income from equity, forex and derivative trading stood at CHF 50.2 mn, down 15.4 % from the exceptional numbers posted in H1 03 in this area of business. Other ordinary income was flat, totaling CHF 62.6 mn.

Operating Expenses Down and Gross Profit Stable

Continuing cost-control efforts underpinned a 3.4% YoY decline in Group operating expenses, which amounted to CHF 276.7 mn in H1 04. The cost-control drive yielded results both in terms of personnel costs (down 2.2% to CHF 185.3 mn, in line with a drop in the Group headcount from 2557 to 2469), and other operating expenses (down 5.6% to CHF 91.3 mn). With revenue holding up well against a backdrop of reduced expenses, gross profit was stable compared with H1 03 and stood at CHF 192.9 mn, while the Group's cost / income ratio improved from 70% to 68%.

Net Profit Up Sharply

BCV's H1 04 net profit rose sharply, and amounted to CHF 196.8 mn as against CHF 55.7 mn for the year-earlier period. Several factors were behind this strong showing. First of all, depreciation and write-offs fell back to normal levels in H1 04, as against a year-earlier period which had seen substantial goodwill write-offs on the Bank's financial holdings. In addition, the Group registered a reduction in provisioning needs whose net effect was substantial recoveries. This positive trend in provisioning needs may be traced to three causes: first, new provisioning requirements are currently very low, in line with the high quality of the Bank's portfolio of non-impaired loans; second, the recent strategic divestments and withdrawals were implemented in highly favorable market environments, reducing in part the need for the divestment-related provisions which had been constituted in 2003; finally, the Bank's strategy of pro-active value extraction on impaired loans and a buoyant real-estate market have also reduced provisioning needs, resulting in releases to the income statement. These factors were behind a marked decline in the item "value adjustments, provisions and losses" (down 61% to CHF 23.7 mn) as well as CHF 84.1 mn of extraordinary income for the period under review.

Further Reductions and Optimization of the Balance Sheet

BCV Group's balance sheet fell 4.2% to CHF 32.8 bn in H1 04. The largest declines on the assets side involved the Bank's lending activities, and in particular non-mortgage loans, which dropped by 5.9% to CHF 6.9 bn as a result of the Bank's strategic withdrawals and successful efforts to reduce the volume of impaired loans. The Group maintained its position on the local mortgage-loan market in spite of a highly competitive environment, with mortgages holding steady at CHF 15.8 bn for the period under review. On the liabilities side, customer savings and investment accounts continued to climb, reaching CHF 8.9 bn, a 1.6% YoY increase. The Bank took advantage of its strong cash position to redeem rather than secure further long-term borrowings, which resulted in an 8.4% drop in that item, to CHF 7.8 bn. Value adjustments, provisions and losses fell by 9.8% to CHF 2.0 bn, in line with the efforts undertaken to reduce the volume of impaired loans (which declined by CHF 400 mn during the period).

Strategic Re-alignment Essentially Completed

The strategic re-alignment on core business initiated in 2003 is practically completed, and its implementation has been successful. In particular, the planned withdrawals from ship financing and oil-trade finance as well as lending outside Vaud are now finished. As for the Group's wealth-management operations outside Switzerland, BCV has divested its holdings in Greece and initiated the liquidation of its Italian subsidiary. The Group has also decided to withdraw from the French market (BCV Finance France). The Group is satisfied with the current operational trend and market environment in Spain, and given our positive outlook regarding that market's potential, BCV will keep its holdings in Spain. BCV Asia's future structure remains to be determined in conjunction with BCV subsidiary Banque Piguet & Cie SA by the end of 2004.

Positive Outlook

The Board and Management are pleased with the Group's strong H1 04 performance, which was underpinned by the continuing trust of BCV's customer base and the unstinting efforts of staff in addition the positive effects of the strategic re-alignment. Although Management feels that the second half of the year might not be as good as the first given the current financial market environment, the annual net profit should still be significantly higher than it was last year.

Lausanne, Switzerland, 24 August 2004

Contact(s)

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

Paul Coudret, Press Relations
Phone +41 21 212 22 51
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.