Milano, 28 March 2006
The draft of the Parent Company’s financial statements and the consolidated financial statements for 2005 approved. Preliminary results disclosed on 6th March confirmed: consolidated net income at 3,025 million euro, up 64.3% from 1,841 million euro in 2004.
●The distribution of a dividend of 22 euro cents to ordinary shares and 23.1 euro cents to saving shares for a total amount of 1,532 million euro will be proposed at the Ordinary Shareholders’ Meeting summoned for 19th-20th April 2006.
●Annual report on Corporate Governance and new Internal Dealing regulation approved.
●Sale of shareholdings in tax collection companies to Riscossione S.p.A. authorised.
The Board of Directors of Banca Intesa, which met today under the chairmanship of Giovanni Bazoli, approved the draft of the Parent Company’s financial statements and Banca Intesa’s consolidated financial statements for 2005, drawn up in accordance with the new international IAS/IFRS standards. The preliminary results which had been examined by the Board and disclosed on 6th March were confirmed.
The results for 2005 highlighted an improvement in profitability in line with the targets set forth in the 2003-2005 and 2005-2007 Business Plans: consolidated net income rose to 3,025 million euro (up 64.3% from 1,841 million for 2004) and earning per share climbed to 0.44 euro (from 0.28 euro in 2004). Consolidated net income would be 2,525 million euro, with a 37% rise compared to 2004 and EPS would be 0.37 euro, the latter higher than the 0.32-0.35 euro target set out in the Business Plan for 2005 if the main non-recurring components were excluded (on one hand capital gains of 731 million resulting from both the sale of 65% of Nextra in the framework of the strategic agreement for asset management activities with Crédit Agricole and that of the loan servicing business of Intesa Gestione Crediti, on the other hand the strengthening, on a prudential basis, of the allowance for risks and charges by 250 million euro and charges of 63 million for the stock granting programme and a related tax saving of 82 million).
For comparison purposes the statement of income of the first nine months of 2005 and that of full-year 2004 were reclassified pro-forma, on one hand by consolidating line by line the companies which entered the full consolidation area in the fourth quarter of 2005 (Carifano, Banca Intesa Beograd, formerly Delta Banka, and KMB Banka) on the other by allocating these companies’ contribution in terms of net income to minority interests so that the Group’s net income recorded in the referred periods remained unchanged. Moreover, in the 2005 statement of income and - for consistency purposes – that of 2004, the contribution from items affected by the sale, without recourse, of approximately 70% of Gruppo Intesa’s gross doubtful loans and that of 81% of the loan servicing business of Intesa Gestione Crediti was allocated to the specific caption related to discontinued operations required by IAS/IFRS. This transaction was approved by the Board of Directors on 30th May 2005 and finalised in December the same year. In particular, the economic effects connected with discontinued operations were extracted from the various profit/loss items and their balance was recognised, net of the related fiscal effect, in the “income/loss from discontinued operations” caption. In 2005, this caption registered a 33 million euro income including a capital gain of 49 million euro on the sale of the loan servicing business. The 2004 figures of both the statement of income and the balance sheet were restated in the comparative analysis with 2005 under IAS/IFRS, including the estimated effects of IAS 39.
The distribution of a dividend per share of 22 euro cents to ordinary shares and 23.1 euro cents to saving shares (compared to 10.5 and 11.6 euro cents respectively for 2004) for a total amount of 1,532 million euro (versus 729 million for 2004) will be proposed for approval at the Ordinary Shareholders’ Meeting summoned for 19th April 2006 on first call and 20th April 2006 on second call. Payment of dividends, if approved at the Shareholders’ Meeting, will take place starting from 27th April 2006 (with coupon presentation on 24th April 2006).
The consolidated statement of income for 2005 registered operating income of 10,167 million euro, up 8.5% with respect to the 9,372 million of 2004 restated under IAS/IFRS and above the 7.4% annual average increase targeted in the Business Plan for the 2005-2007 period. As part of it, net interest income rose 6.3% and net fee and commission income was up 12.5% driven by commissions on insurance products, placement of third-party structured bonds, dealing and placement of other securities and credit and debit cards.
Operating costs equalled 5,593 million euro, up 0.2% with respect to the 5,582 million of the previous year and below the 1.1% annual average increase set out in the Business Plan for the 2005-2007 period. This rise is due to a 1.1% growth in personnel expenses following the registration of 63 million euro charges related to the purchase plan of own ordinary shares and their assignment, for free, to employees which will be submitted for approval at the Ordinary Shareholders’ Meeting scheduled for 19th-20th April 2006. Excluding the stock granting component operating costs would be down 0.9%.
Consequently, operating margin rose to 4,574 million euro, up 20.7% on the 3,790 million of the previous year and higher than the 15.6% annual average growth target set out in the Business Plan for the 2005-2007 period. The cost/income ratio showed a marked improvement, down from 59.6% to 55%.
Total provisions and net value adjustments (net provisions for risks and charges, net adjustments to loans, net impairment losses on other assets) equalled 1,190 million euro, down 1.3% from 1,206 million in 2004 although in 2005 allowance for risks and charges was prudentially strengthened by 250 million euro. Profits/losses on investments held to maturity and on other investments registered a positive balance of 834 million euro compared to the 219 million for 2004 mainly due to the capital gain of 682 million euro resulting from the sale of 65% of Nextra.
Income before tax from continuing operations was up 50.3% to 4,212 million euro from 2,803 million in 2004.
In 2005, consolidated net income rose to 3,025 million euro, up 64.3% compared to the 1,841 million in the previous year after the registration of income taxes for 1,089 million, income after tax from discontinued operations for 33 million, which included the 49 million capital gain on the sale of the loan servicing business of Intesa Gestione Crediti, and minority interests for 131 million. The Parent Company’s net income amounted to 1,564 million euro compared to net income of 1,234 million for 2004 (the difference in performance between the Parent Company’s net income and consolidated net income is mainly attributable to the 682 million capital gain registered by Intesa Asset Management, the Group’s company which sold 65% of Nextra in the framework of the strategic agreement for asset management activities with Crédit Agricole).
As regards the consolidated balance sheet figures, as at 31st December 2005 loans to customers amounted to 169 billion euro, up 6.3% on the figure as at 31st December 2004 restated to take into account IAS/IFRS and the items related to the sale of doubtful loans accounted for on a consistent basis. Doubtful loans net of adjustments totalled 1.2 billion euro compared to one billion euro as at 31st December 2004 restated on a consistent basis, with an impact of 0.7% on total loans (0.6% at year-end 2004) and a degree of coverage of 69% (slightly decreased from 71% at year-end 2004 after the debt-for-equity swap of the Parmalat position which had a degree of coverage at 88%).
Customer deposits under administration amounted to 475 billion euro, with a 5.1% rise compared to 31st December 2004, restated on a consistent basis due to the exit of Nextra from the full consolidation area at year-end 2005 after the finalisation of the agreement for asset management activities with Crédit Agricole. As part of it, direct customer deposits equalled 188 billion up 3.9% compared to those of 31st December 2004 and indirect customer deposits reached 288 billion, up 6% compared to those of year-end 2004 on a consistent basis. Assets under management, which after the finalisation of the above-mentioned agreement no longer include mutual funds, reached 59 billion euro, with a 15.7% rise over the figure at the end of 2004 due to both individual portfolio management schemes (up 12.8%) and bancassurance (in 2005, Gruppo Intesa placed life insurance policies for approximately 8.3 billion euro).
As at 31st December 2005, capital ratios resulted in: Core Tier 1 ratio at 7.1% (6.7% at 31st December 2004), Tier 1 ratio at 7.9% (7.6% at 31st December 2004) and total capital ratio at 10.3% (11% at 31st December 2004).
* * *
Moreover, the Board of Directors approved the annual report on Corporate Governance having previously verified, also on the basis of information provided by each interested party, that eight non-executive independent directors sit on the Board itself: Giovanni Ancarani, Francesco Arcucci, Benito Benedini, Giampio Bracchi, Alfonso Desiata, Paolo Fumagalli, Giangiacomo Nardozzi and Eugenio Pavarani.
In addition, the Board approved the new Internal Dealing regulation wherein internal procedures regarding the disclosure requirements for transactions carried out by “Relevant parties” on listed financial instruments issued by Banca Intesa have been made compliant with new regulatory provisions (Art. 114 of combined regulations on financial intermediation and Consob regulation on issuers) coming into effect as of 1st April 2006. The new Internal Dealing regulation replaces the Code of Conduct adopted by Banca Intesa as of 1st January 2003 in compliance with provisions contained in the Italian Stock Exchange regulation.
Furthermore, the Board of Directors authorised the sale of up to 100% of the shareholdings of Gruppo Intesa in tax collection companies to Riscossione S.p.A.. The latter is a publicly controlled company, wherein the Italian Tax Office and Italian National Social Security Institute have shareholdings, to which tax collection services will be conferred as of 1st October 2006. The amount to be paid, based on predefined parameters, must be reinvested in shares of the same company. Said shares can be divested two years after their purchase and must be first offered to public shareholders. Moreover, it is set forth that public shareholders will be obliged to repurchase within 31st December 2010 the Riscossione shares held by the current shareholders of the tax collection companies at predefined conditions. As at 31st December 2005, the Gruppo Intesa tax collection companies had a carrying value of approximately 54 million euro.
* * *
In order to provide more complete information of the results generated in 2005, the consolidated statement of income and balance sheet and the Parent Company’s statement of income and balance sheet (reclassified in condensed format) included in the Report approved by the Board of Directors are attached. The Report will be available for shareholders and the market within the deadline of 31st March 2006. Please note that the auditing firm in charge of auditing the 2005 Annual Report has not yet completed its analysis.
Investor Relations
+39.02.87943180
investorelations@bancaintesa.it
Media Relations
+39.02.87963531
stampa@bancaintesa.it
www.bancaintesa.it
Last updated 28 March 2006 at 12:40
