BCV Group: Good Q3 08 results with trading performance back in positive territory

BCV Group's performance* during the first nine months of the year was in line with expectations, reflecting the Bank's stable business trend. Trading activities returned to positive territory in Q3 following a loss in the first half, with the Bank maintaining its risk-reduction strategy in equity-derivative trading. Despite difficult market conditions, the Group performed well in the third quarter with gross profit of CHF 127m (versus CHF 122m in Q3 07). Gross profit for the first nine months of the year was CHF 293m.

Revenues lower, as expected

Total revenues in the first nine months of 2008 were down 21% (YoY) to CHF 669m, influenced by the transfer of IT subsidiary Unicible's operations to IBM on 1 June 2007 and the sale of the Group’s stake in its Spanish wealth management subsidiary, Asesores y Gestores Financieros (A&G). Excluding these transfers, revenues were down 15%. Interest income, BCV's main revenue stream, rose 1% to CHF 384m. Fee and commission income fell 9% to CHF 262m amid turbulent market conditions, although half of this decline was due to the disposal of A&G's assets. Trading income posted a profit of CHF 27m in Q3, ending two quarters of negative performance and reducing the trading loss to CHF 18m at 30 September. Other ordinary income was down 63% to CHF 41m, mainly reflecting the effects of the Unicible transfer and a fall-off in sales of financial investments compared with the exceptionally high levels observed in 2007.

Gross profit of CHF 293m

Total operating expenses dropped 10% to CHF 376m (YoY); on a like-for-like basis, they fell by 1%. Personnel costs were down 14% to CHF 230m, while other operating expenses declined by 4% to CHF 146m. This trend reflects the Group's commitment to maintaining a firm grip on costs. Consequently, gross profit was CHF 293m. Following the good Q3 results, the year-on-year decline in gross profit is 32% for the first nine months of 2008, compared with 46% in H1 08 and 62% in Q1 08. This relative improvement is in line with the Group’s guidance.

Total assets: client-driven activities expand and trading portfolio declines

Total assets dropped 2% to CHF 34.7bn year-to-date mainly as a result of the fall in trading portfolio assets, which shed CHF 1.1bn (-56%) to CHF 900m. Client-driven activities, however, were on the rise, with mortgage lending volumes up CHF 249m (+1%) and commercial lending volumes up CHF 247m (+4%). Excluding the effect of reductions in impaired loans, mortgage lending rose CHF 332m (+2%) and commercial lending grew CHF 326m (+6%). Amounts due from banks climbed CHF 442m (+7%) to CHF 6.8bn; this increase was mainly reinvested in repurchase agreements with other banks. On the liabilities side, savings deposits, other funds due to customers and medium-term notes climbed CHF 47m owing to the increase in customer deposits and the reduction in the number of low-margin time deposits. Mirroring developments on the assets side, the item “Due to banks” rose CHF 392m (+16%) to CHF 2.9bn as a result of the growth in interbank operations.

Decrease in AuM

In the first nine months of the year, the Group's assets under management dropped CHF 10.5bn to CHF 73.9bn owing to the downslide in financial markets and the disposal of A&G (which alone accounts for CHF 3.9bn of the decline). Net new funds stood at CHF 251m, as an inflow of approximately CHF 1.1bn from private onshore clients and local SMEs was partly offset by a fall of around CHF 0.8bn in time deposits and fiduciary deposits held by large corporates and trade-finance clients.

New strategy announcement

The Bank will outline its new strategy for the coming years on 25 November.

Full-year outlook

Financial projections are difficult under current market conditions. However, barring any major deterioration in the economic situation, the Group expects full-year gross profit to decline as announced, given BCV's positive trading results and good overall business performance. This decline should be less than originally expected.

Lausanne, Switzerland, 11 November 2008

*unaudited figures

Contact(s)

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

Wilhelm Blaeuer, Investor relations
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.