BANIF BANCO INTERNACIONAL DO FUNCHAL SA
Reuters: BANIF.LS Bloomberg: BANIF PL ISIN: PTBAF0AM0002 www.banif.pt/investidores
2015
1H2015
CONSOLIDATED RESULTS
Lisbon, 7 August 2015
Unaudited information
Highlights:
Positive growth in net profits... Significant recovery in net interest income and commissions Structural streamlining with a positive impact in terms of cost savings Lower level of impairment over the semester Significant improvement in business performance has resulted in a net consolidated profit. Net profits for the first half of 2015 came to 16.1 million euros. This compares extremely favourably with the loss of 97.7 million euros recorded for the same period of the previous year. Improvement in net interest income, which rose 25.1% year-on-year in the first half of 2015, to stand at 55.9 million euros. This was largely the result of lower funding costs, particularly as regards deposits. Compared to the previous quarter, net interest income went up by 24.5% to 31.0 million euros. Improvement in net commissions, which increased by22.0% year-on-year over the first half of 2015, to 34.9 million euros. This performance reflects a business approach focused on the core segments, the ongoing implementation of greater commercial assertiveness and is also the result of the amortization of Government guaranteed bonds.
Reduction in operating costs, which fell by 24.5% compared to the first half of 2014. This reduction was achieved across the range of structural costs. Staff costs came down by 22.3%, general and administrative costs by27.3% and amortisations also fell by 29.0%.
Reduction in impairments of 62.6%, year-on-year, to
54.0 million euros. Despite this improvement, impairments were affected by the provisions for real estate assets classified as Non-Current Assets Held for Sale.
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Consolidated Results - 1H2015
However, it should be noted that, despite this positive growth, net profits were adversely affected, in year-on-year terms, by the significant fall in capital gains made on the disposal of Portuguese public debt securities (90.7 million euros in the first half of 2014, compared to 44.7 million euros in the first half of 2015), and was also penalized by the higher capital losses on the sale of real estate assets, and the higher provisions for real estate assets (-17.8 million euros in the first half of 2014, compared to -45.9 million euros in the first half of 2015). Furthermore, net profits in the 1H2014 had been positively influenced by the 38 million euros in capital
gains made on the disposal of the write-offs portfolio.
Liquidity at comfortable levels | Stable commercial gap, compared to December 2014, with the loans-to-deposits ratio standing at 105.8% (as opposed to 105.5% as at December 2014 and 106.7% for the first quarter of 2015). ECB funding rose by some 175.6 million euros between December 2014 and June 2015. However, since December 2014 until today the exposure to ECB decreased by around 410 million to 1,259 million euros. |
Capital ratio above regulatory requirements | As at 30 June 2015, the Common Equity Tier 1 ratio, calculated in accordance with the CRD IV/CRR rules (phasing in) stood at 8,4% and the total solvency ratio at 9,4%, above the minimum levels required by the regulatory authorities. |
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Consolidated Results - 1H2015
Jun-15
Jun-14 D
Results
Operating revenues 116.8 189.1 -38.2% Operating costs -81.2 -107.5 -24.5% Loans impairment net of reversals and recovery -29.1 -120.2 -75.8% Impairment of other financial assets net of reversals and recovery -1.4 -17.1 - Impairment of other assets net of reversals and recovery -24.6 -8.0 - Income from discontinued operations 36.4 -27.0 - Net income 16.1 -97.7 116.5%
Jun-15 Dec-14 D
Liquidity
Loans-to-deposits ratio 105.8% 105.5% 0.3pp
Capital
Common Equity Tier 1 ratio CRD IV/CRR (phasing in) 8.4% 8.4% -
Amounts in millions of euros.
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Consolidated Results - 1H2015
Results
Balance Sheet
Liquidity
CapitalNet profitof 16.1 million euros, compared to the 97.7 million euro loss of 1H2014.
Operating income: 116.8 million euros, -38.2%, year-on- year(yoy);
Net Interest Income: 55.9 million euros,
+25.1% yoy;
Net Commissions: 34.9 million euros,
+22.0% yoy;
Gains on Financial Operations: 44.5 million euros, -
45.5%, year-on-year(yoy);
Other operating income: -18.9 million euros, which compares favourably to the 33.4 million euros of the
1st half of 2014.
Operating costs: 81.2 million euros, -24.5%, (yoy);
Net provisions and impairments: 54.0 million euros, -
62.6% yoy.
Loan book(net): 6.6 thousand million euros.
Total customer resourceson the balance sheet: 6.5 thousand million euros.
Loan-to-deposit ratio:105.8%.
Common Equity Tier 1 ratioAs at 30 June 2015 the Common Equity Tier 1 ratio, calculated in accordance with the CRD IV/CRR rules (phasing in), and the total solvency
ratio stood at 8.4% and 9.4%, respectively.
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Consolidated Results - 1H2015
Jun-15 Dec-14
Cash and balances at central banks 120.1 113.8
Deposits w ith banks 76.9 102.9
Financial assets held for trading 35.9 65.1
Financial assets at fair value through profit or loss 49.4 48.8
Available-for-sale financial assets 1,968.0 1,960.8
Loans and advances to banks 248.6 250.8
Loans and advances to customers 6,637.3 6,855.0
Held-to-maturity investment securities 5.6 5.5
Financial assets w ith repurchase agreements 36.1 26.9
Non-current assets held for sale 1,502.6 2,154.7
Investment property 712.5 736.5
Other tangible assets 184.7 207.3
Intangible assets 12.0 13.4
Investments in associates, affiliates and joint ventures 55.5 146.3
Current tax assets 0.8 1.6
Deferred tax assets 287.2 266.2
Other assets 176.9 169.9
Total Assets 12,110.1 13,125.5
Deposits from central banks 1,669.3 1,493.7
Financial liabilities helding for trading 34.4 30.4
Financial liabilities at fair value through profit or loss 12.8 12.8
Deposits from banks 359.8 882.5
Customer accounts and other loans 6,270.7 6,499.3
Financial liabilities 1,467.7 1,645.6
Non-current liabilities held for sale 892.2 1,130.0
Provisions 9.7 10.9
Current tax liabilities 19.5 3.9
Deferred tax liabilities 50.0 66.2
Instruments representing capital 130.3 130.2
Other subordinated liabilities 268.8 181.6
Other liabilities 228.5 234.9
Total Liabilities 11,413.7 12,322.0
Share capital 1,720.7 1,720.7
Issue premiums 199.8 199.8
Revaluation reserves -11.1 61.4
Other reserves and retained earnings -1,245.9 -952.2
Profit for the period 16.1 -295.4
Minority interests 16.8 69.2
Total Equity 696.4 803.5
Total Equity + Liabilities 12,110.1 13,125.5
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Consolidated Results - 1H2015
Jun/15 Jun/14 D15/14
Restated (*)
Interest and similar income 147.8 197.0 -25.0%Interest and similar expense -91.9 -152.3 -39.7%Net interest income 55.9 44.7 25.1%
Dividend income 0.4 0.8 -50.0%
Net fees and commissions 34.9 28.6 22.0%Gains and losses in financial operations 44.5 81.6 -45.5%Other operating income -18.9 33.4 -
Operating revenue 116.8 189.1 -38.2%
Personnel costs -49.6 -63.8 -22.3%Selling and General Administrative costs -24.5 -33.7 -27.3%Depreciation and amortisation -7.1 -10.0 -29.0%
Operating Income 35.6 81.6 -56.4%
Provisions net of reinstatement and w rite-offs 1.1 0.8 37.5%Loans impairment net of reversals and recovery -29.1 -120.2 -75.8%Impairment of other financial assets net of reversals and recovery -1.4 -17.1 -91.8%Impairment on other assets net of reversals -24.6 -8.0 -Equity accounted earnings 1.9 -5.9 -
Profits before tax -16.5 -68.8 76.0%
Taxes -3.0 -0.7 -
Profits after tax -19.5 -69.5 71.9%
Income from discontinued operations (*)36.4 -27.0 -
Minority interests -0.8 -1.2 33.3%
Net income for the period 16.1 -97.7 116.5%
(*) Group entities Banif - Banco Internacional do Funchal (Brasil), SA, Banif Bank (Malta), PLC, Banco Caboverdiano de
Negócios (BCN) and Banif Mais SGPS are classified as discontinued operational units in the consolidated profit and loss accounts, as at 30 June 2015 and 2014. In June 30, 2015 Açoreana Seguros was classified in this category.
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Consolidated Results - 1H2015
In the first half of 2015, Banif made a net profit of 16.1 million euros. This reflects the measures being implemented under the bank's restructuring programme, which is designed to completely reshape the business plan and ensure the bank's viability in a highly challenging economic and regulatory environment.
Over this period, banking income came to 116.8 million euros. This income was affected by a number of factors, including:
The 25.1% rise in net interest income,to 55.9 million euros. Despite the positive effect of the policy of reducing deposit cost (currently at 1%), which has improved significantly over recent quarters, due to changes made to the fundraising policy.
However, net interest income was negatively affected by the following: (i) the effect of the fall in loan volumes, a consequence of the deleveraging of the non-financial sectors of the economy and the lowering of spreads on loans; (ii) reference interest rates that have remained historically low; and (iii) the cost of the interest on the
CoCos, which totalled 6.1 million euros in the first half of 2015.
amortization of Government guaranteed bonds.
There was a 45.5% fall in profits from financial operations, which came to
44.5 million euros. This compares with 81.6 million euros in the first half of 2014. The decrease is largely explained by the lower capital gains made on the sale of fixed yield Portuguese public debt securities (44.7 million euros in the first half of 2015, compared to 90.7 million euros over the same period of 2014).
Other operating losses,which came to 18.9 million euros, compared to profits of
33.4 million euros in 1H2014. The losses recorded for the first half of 2015 are largely the result of the capital losses sustained on the disposal of real estate assets. The profits made in the same period of the previous year were mostly explained by the capital gains made on the disposal of the write-offs portfolio.
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Consolidated Results - 1H2015
Banking Income: Structure
17.7%
38.1%
43.2%
29.9%
15.1%
23.6%
47.9%
-16.2%
Jun-14 (*) Jun-15
Net interest margin Dividend income
Net fees and comissions Gains and losses in financial operations
Other operating income
(millions of euros) (*) Restated
Structural costs totalled 81.2 million euros for the first half of 2015. This is24.5% lower than in the same period of the previous year and can be attributed to the benefits accruing from the restructuring process, particularly as regards the accelerated schedule for branch closures and the staff reorganisation programme. This reduction was achieved across the full range of structural costs. Staff costs came down by 22.3%, general and administrative costs by 27.3%. Over the period, amortisations also fell by 29.0%. Staff costs stood at 49.6 million euros for 1H2015 (that is,22.3% lower than in1H2014). Excluding the impact of non-recurring costs arising from the voluntary redundancy programme, staff costs fell by 15.1% year-on-year.
General administrative costs totalled 24.5 million euros for the first half of 2015, a year-on-yearfall of 27.3%. Excluding the costs associated with the recapitalisation process, general administrative costs fall by 26.4%, year-on-year. This decrease can be attributed to the gains in efficiency resulting from the rationalisation and optimisation strategy being applied to operating procedures and also to the renegotiation of contracts, the resizing of the distribution network and the reduction in staffing levels. Amortisations for the period totalled 7.1 million euros at the end of the first half of the year,29.0% less than in the previous year. This partly reflects the downsizing of the bank's structure and the rationalisation of our investment policy to provide a better
fit to the reshaped business model.
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Consolidated Results - 1H2015
However, it should be noted that, despite this positive growth, net profits were adversely affected, in year-on-year terms, by the significant fall in capital gains made on the disposal of Portuguese public debt securities (90.7 million euros in the first half of 2014, compared to 44.7 million euros in the first half of 2015), the increased capital losses on the sale of real estate assets and the higher provisions for real estate assets (-17.8 million euros in the first half of 2014, compared to -45.9 million euros in the first half of
2015). Net profits in the first half of 2014 had been positively influenced by the 38
million euros in capital gains made on the disposal of the write-offs portfolio.
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Consolidated Results - 1H2015
3.1% compared to 31 December 2014. This fall reflects not only the lower demand for loans in a Portuguese economy that is deleveraging but also the bank's lower exposure to non-strategic sectors. It is also the result of an increasingly closer scrutiny of client credit risk, with priority being given to loans to lower risk operations, as a way of improving the quality of the balance sheet assets.
Nevertheless, it is important to note, in the context of Banif's support for Portuguese businesses, that the bank is developing a repositioning strategy that will allow it to focus more closely on the corporate sector (Micro and SME).
Moreover, during the first half of the year Banif focused on strengthening: i) its positioning in the foreign trade and non-resident businesses, so that it can play an increasingly important role in the internationalisation of Portuguese companies, particularly those in the small and medium enterprise categories, the main drivers of development in the Portuguese economy, and ii) its relationship with Portuguese communities abroad, by taking advantage of its foreign network, particularly the offices /
incorporated companies in the USA, Canada, Venezuela and South Africa.
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Consolidated Results - 1H2015
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