Banks. Banca Carige. Italy Full Rating Report. Rating Rationale. Key Rating Drivers. Profile

Transcription

1 Italy Full Rating Report Ratings Foreign Currency Long Term IDR Short Term IDR A F1 Individual Rating B/C Support Rating 3 Support Rating Floor BB Sovereign Risk Foreign Currency Long Term IDR Local Currency Long Term IDR Outlooks Foreign Currency Long Term IDR Sovereign Foreign Currency Long Term IDR Sovereign Local Currency Long Term IDR Financial Data 31 Dec 09 AA AA Stable Stable Stable 31 Dec 08 Total assets (USDm) 52, ,515.2 Total assets (EURm) 36, ,986.4 Total equity (EURm) 3, ,576.3 Operating profit (EURm) Published net income (EURm) Comprehensive income (EURm) Operating ROAA (%) Operating ROAE (%) Eligible capital/ 9.55 NA weighted risks (%) Tier 1 ratio (%) Analysts Christian Scarafia christian.scarafia@fitchratings.com Francesca Vasciminno francesca.vasciminno@fitchratings.com Related Research Applicable Criteria Global Financial Institutions Rating Criteria (December 2009) Rating Rationale The ratings of (Carige) are based on its expansion through organic growth and the acquisition of branches, which has helped to underpin operating revenue generation; on a good franchise in its home region; on sound liquidity; and on adequate capitalisation, which has benefited from regular capital increases to finance the bank s growth. The ratings also reflect risks linked to fast expansion, including integration risk and the potential for deterioration of asset quality. Carige s expansion has resulted in geographic diversification, but the bank has maintained a strong franchise in its home region of Liguria, with a market share of about 30% of deposits. Revenue from newly acquired branches helped Carige to maintain good revenue generation during 2009, when the bank generated EUR209m net income, almost unchanged from In Q109, operating profit fell 25%, mainly as a result of lower net interest income as spreads tightened and volumes remained flat. Fitch Ratings expects 2010 to remain a challenging year as margins remain tight, and asset quality is likely to deteriorate further. Carige s asset quality deteriorated during 2009 and Q110, but the bank s asset quality ratios benefit from the fast loan growth. Gross impaired loans were equal to 5.92% of gross loans at end March 2010; this ratio would have been about 7% excluding the bank s loan growth in 2007 and Carige s appetite for market risk is moderate, and trading activities are limited. The bank has strengthened risk management in its two small insurance subsidiaries (end 2009 equity: EUR316m). The bank benefits from a good customer deposit base, and customer funding increased in 2009, improving to 98% the ratio of loans to customer funding (including bonds sold to bank clients). Carige issued a EUR1bn covered bond in Q409, but capital market funding contributes only a small portion of funding. Capitalisation has benefited from capital increases to finance the bank s growth, and Fitch considers capital ratios adequate. Carige issued EUR160m hybrid Tier 1 capital in Q408, and in Q110 a EUR392m convertible bond (conversion at the option of the issuer after a period of 18 months). Support Given Carige s importance in the regions in which it operates, Fitch considers there to be a moderate probability that the authorities would provide support if required. Key Rating Drivers The Outlook on Carige s Long Term IDR is Stable, reflecting the stability of its performance, which should help it operate in a difficult environment. Significant asset quality deterioration would put pressure on the bank s ratings. Profile Carige is a multi regional banking group with two small insurance subsidiaries, 643 bank branches, a strong market share in Liguria and an increasing presence in regions across Italy. At end 2009, it was one of Italy s 15 largest banks, with a national market share of about 1.5% of deposits. 24

2 Table 1: Composition of Carige Group (End 2009) (EURm) Region Ownership (%) Total assets Equity Customer funding Net income Branches Carige (parent bank) Liguria and n.a. 29,787 3,783 23, rest of Italy CRS Liguria , , BML Tuscany CRC Tuscany , BCP Lombardy CarigeAss Italy a 143 n.a CarigeVN Italy 100 2,914 a 173 n.a Total (c.) n.a. 36,299 3,853 25, b CRS: Cassa di Risparmio di Savona; BML: Banca del Monte di Lucca; CRC: Cassa di Risparmio di Carrara; BCP Banca Cesare Ponti; Carige Ass: Carige Assicurazioni; CarigeVN: Carige Vita Nuova Excludes asset management subsidiary a Net technical reserves for insurance subsidiaries b Bank branches excluding insurance agencies Source: Carige; not reclassified by Fitch Medium sized bank servicing a predominantly retail and SME client base Expansion has resulted in a nation wide presence Regional market share in Liguria strong at about 30%; national market share below 2% 2009 performance underpinned by higher business volumes, but Q110 performance suffered from tighter spreads and static lending volumes Loan impairment charges remained moderate in 2009 at 53bp of gross loans 2010 will remain challenging, with continued margin pressure, and Fitch expects further pressure on asset quality Profile As the result of its expansion strategy, Carige has since 1999 grown from its home base in the coastal city of Genoa in north western Italy into a medium sized banking group with a presence throughout the country. The bank s expansion included the acquisition of smaller banks, of branches sold by larger banks and, in the early 1990s, of two small insurance companies (Table 1). Carige is continuing its growth strategy and announced the acquisition of 22 branches sold by Banca Monte dei Paschi di Siena (MPS) in January 2010 after having bought 119 branches in Although the bank has increased its geographic coverage across Italy, its domestic market share remains modest at below 2%, while its market share in Liguria is strong at just below 30% of customer deposits. Carige s strategy is based on strengthening the performance of its newly acquired branches and on improving the profitability of its existing client base. In the areas where the group acquired new branches it plans to increase business volumes by acquiring new customers. Carige expects that volume growth should be possible, also because the branches acquired in 2008 and 2009 included only retail lending and no corporate clients. Over the medium term, Carige expects to continue its growth strategy; opportunities for further expansion could arise from the establishment of a new banking subsidiary in the region of Piedmont in cooperation with a banking foundation, but plans for this project are currently at an early stage. Performance Carige s profitability during the financial crisis to date has been supported by revenue from the branches acquired in 2008, and the bank managed to generate EUR209m net income for 2009, almost unchanged from the results in As a result of acquisitions and organic growth (the latter mainly in its home region of Liguria), Carige s loan portfolio grew by almost 9% in 2009, which mitigated the spread tightening during the year, but net interest income declined from Q309, and in Q110 was 15% lower than in Q109. Positive trading results in 2009, which benefited from higher valuations after unrealised valuation losses in 2008, also contributed to the overall performance. As with other Italian banks with large customer funding bases, net interest income suffered in the low interest rate environment throughout the year, and the bank s net interest margin declined significantly as the profitability of customer deposits declined markedly. Spreads will remain under pressure as long as interest rates remain low, which is likely to result in lower net interest income for 2010, which the bank plans to counterbalance by organic lending growth, mainly outside its home region. In addition, the acquisition of the 22 branches from MPS will start contributing to earnings after the closing of the transaction, expected for Q210, which should at least partially mitigate the pressure on spreads. 2

3 Table 2: Key Performance Indicators Unlike at other banks, net fees and commissions increased in 2009, benefiting partly from commissions on overdrafts (previously part of net interest income) and from commissions earned on loan syndications. Net fees and commissions increased 17% in Q110, mainly as a result of higher account fees and better asset management commissions. Trading income was positive in 2009 and Q110 after a loss in the previous year that had been caused by unrealised valuation losses on its securities portfolio. However, trading profits will unlikely contribute materially to overall results in Profitability was also underpinned by an improved contribution from Carige s insurance activities, with the volume of life insurance products sold increasing strongly and net premium income increasing by 56% in 2009 and both insurance subsidiaries posting net profit in 2009 (CarigeVN: EUR19.2m; CarigeAss: EUR6.3m). Operating expenses have continued to increase, reflecting the group s expansion. During 2009, personnel expenses grew by 2.6% and other operating expenses by 18%. The bank s cost/income ratio during 2009 deteriorated only slightly, as revenue strengthened, but operating expenses are likely to continue to increase in 2010 to support the bank s growth. In Q110, operating expenses remained flat compared with the previous year, but lower revenue generation resulted in a deterioration to 65.9% compared with 59.8% in Q109. In a difficult economic environment in 2009, loan impairment charges increased by 28% and gross doubtful loans ( sofferenze ) by 34%. Loan impairment charges in 2009 were equal to about 53bp of gross loans as the bank released generic impairment allowances for small impaired loans during Q309 following a review of the historic recoveries on these exposures. Although the quality of Carige s loan book benefits from the acquired branches containing no impaired loans at the time of the transaction, the fast loan growth during 2009 and the ongoing weakness of the domestic economy are likely to result in higher impairment charges in Table 3: Q110 Results Q110 Q109 Net interest income Net fees and commissions Other operating income Operating expenses Pre impairment operating profit Loan impairment charge Other impairment charges Operating profit Other income and expenses 0 0 Tax expense Net income Source: Carige Carige BPM ( A /Neg/ B/C ) BPER ( A /Neg/ B/C ) Credem ( A /Stable/B/C ) (%) Net interest margin Operating ROAE Operating ROAA Pre impairment ROAA Cost/income Loan and securities impairment charges/ pre impairment op. profit Equity (EURm) 3,853 3,576 3,522 3,388 4,221 3,958 1,850 1,749 Eligible capital/rwa Tier 1 ratio BPM: Banca Popolare di Milano; BPER: Banca Popolare dell Emilia Romagna; Credem: Credem Credito Emiliano Source: Banks financial statements; Fitch 3

4 However, the bank expects them to remain well below the levels experienced by other banks (see Credit Risk below) at about 50bp of gross loans, and loan impairment charges in Q110 were 15% below their Q109 level, equal to 44bp of gross loans. In Fitch s opinion, the group has managed to perform relatively well compared with its peers in the current downturn, as it has benefited from newly acquired assets that have mitigated pressure on margins. The bank s strategy to continue business growth outside its home region is, in Fitch s opinion, likely to relieve pressure on revenue generation in the short term but might, over the medium term, expose the group to increased credit risk in new geographic areas and might result in an increase in impaired loans. In addition, the group will have to manage its operating costs carefully during the growth phase. Carige s main exposure is to credit risk, but asset quality deterioration has remained moderate to date Modest market risk exposure, mainly arising from the bank s investment portfolios Expansion might give rise to some integration risk, but the bank has a good track record Risk Management Risk management is centralised within the parent bank s risk management department to ensure the consistency of policies and procedures across the group, but a separate risk management unit at the insurance subsidiaries is responsible for the risks of the insurance activities. Carige s main exposure is to credit risk, given its commercial banking activities, with moderate exposure to market, operational and because of the limited size of insurance activities insurance risks. Credit Risk Carige s appetite for credit risk is moderate, and its main exposure to credit risk arises from its loan portfolio. Lending volumes continued to grow strongly during 2009, when net loans increased by about 9%, above the sector average but in line with other medium sized banks. Customer loans contracted slightly, by 1.3%, in Q110. Excluding reverse repurchase agreements accounted for as loans, customer loans grew slightly, by 0.5% during the quarter. Carige plans to continue its loan growth in The bank calculates regulatory capital requirements for credit risk using the standardised approach but uses internal rating models for the management and measurement of credit risk. The group s loan portfolio reflects its client base and is adequately fragmented. Lending to the mass market (individuals and families) and private client segments accounts for about 30% of the total and predominantly relates to residential mortgage lending. Small business (turnover below EUR1m) lending accounts for about 10% of lending; lending to small and medium sized companies (turnover between EUR1m and EUR100m) for 37%; lending to corporate clients (turnover above EUR100m) for about 10%; lending to public sector entities for about 4.5%; and other for about 9.5%. A relatively high proportion of over 51% of the group s loan book is secured by mortgages on residential or commercial properties. Given its operations in Genoa, the bank has some exposure to the shipping sector (equal to about 3% of granted lines), but losses during the downturn in the industry to date have remained minimal and the bank has concentrated on well known clients with a sound track record. Exposure to the hotel sector is moderate and mainly to smaller family run hotels in the bank s home region. Lending to the real estate segment is mainly in the form of residential mortgages and to small real estate developers (developments have an average size of 30 to 40 units), with lending to real estate investors being modest. The geographical diversification of the bank s loan book has increased as a result of its expansion, with lending in the region of Liguria accounting for 37% of total loans, 4

5 the region of Lombardy for 17%, the regions of Lazio, Tuscany, Piedmont and Emilia Romagna for between 7% and 8% each, and the rest in other regions. Single name concentration has been reduced as the bank has expanded, but Carige reported three large exposures (exceeding 10% of regulatory capital) at end All three were to highly rated counterparties (including a public sector related counterparty), and one was mainly composed of an equity stake held for investment purposes. Overall concentration is moderate, with the 20 largest agreed lending limits equal to about 220% of eligible capital and the 20 largest loans accounting for about 12% of total customer loans at end Table 4: Asset Quality (%) Carige BPER BPM Credem Gross impaired loans/gross loans Reserves for impaired loans/impaired loans Reserves for impaired loans/gross loans Impaired loans net/equity Loan impairment charge/gross loans Source: Banks financial statements; Fitch Gross impaired loans (doubtful and watch list loans) increased by 25% between Q109 and Q110 and reached EUR1.36bn at end March 2010, reflecting the weak operating environment. At 5.9% at end March 2010, Carige s gross impaired loan ratio is slightly better than those of some of its peers, but the bank benefits from the fast growth of its loan book and the fact that the loan portfolios bought through the branch acquisitions did not contain any impaired loans. Using end 2007 gross loans as the denominator (ie excluding loan growth in 2008 and 2009), the group s gross impaired loans ratio would have reached over 7.5% based on end March 2010 impaired loan data. Fitch acknowledges the benefits the bank has had from the acquisition of the cleaned up loan portfolios that did not include exposure from corporate borrowers, but expects impaired loans to increase in 2010 as new loans age. The fact that loan growth during 2009 occurred mainly in its home region of Liguria, where the bank has a good knowledge of its customers, should have helped the bank to avoid undue credit risk taking. In addition, Carige s reserve coverage of impaired loans decreased during 2009 before improving slightly during Q110 to 42.25%; however, this is mitigated by the somewhat stronger coverage of doubtful loans (sofferenze) of 47.1%, the availability of security, collateral and guarantees on part of the portfolio of impaired loans. Other Assets Carige s securities portfolio (including EUR667m transferred to loans and receivables) amounted to EUR8.2bn at end 2009, of which around EUR3.46bn belonged to the bank s insurance subsidiaries. The group s securities portfolio increased in 2009 as a result of increased life insurance business and of the bank increasing its investment in mainly government securities. The securities in the bank s portfolios (excluding the insurance portfolios) are generally highly rated, with 4% rated AAA, 68% in the AA range, 18% in the A range and only 2% either rated sub investment grade or unrated. Of the bank s own portfolio, government debt (of which about 50% Italian government debt) accounted for 57% of the total; corporate bonds 12%, bank bonds 15%, structured bonds 7%, and equities and private equity investments 3%. Equities include a strategic investment in a financial institution made by the bank in

6 The rest was composed of postal savings bonds (3%), asset backed securities (1%) and investment funds (2%). Excluded from the break down above is the bank s equity stake in the Banca d Italia valued at EUR792m, classified as available for sale (AFS). Carige VN s securities portfolio at end 2009 amounted to EUR2.9bn (of which EUR673m backing indexlinked policies) and was primarily composed of government securities (61%) and bonds issued by corporates and banks (30%), with investments in equities and funds remaining modest. CarigeAss s securities portfolio remained small at EUR692m at end Market Risk Carige s appetite for market risk is moderate and arises mainly from its investment activities, as trading is limited (a large part of the treasury s activity is client related) and structural interest rate mismatches are largely hedged. The bank s value at risk (VaR) model captures all securities (including AFS securities and loans and receivables) and VaR utilisation has remained well within its limit. The bank uses gap and duration analysis to monitor interest rate mismatches in its banking book, which is generally kept low by hedging: at end 2009, Carige calculated that a 200bp upward (downward) parallel shift in the yield curve would have caused an increase in the value of equity equal to a moderate 4.4% of equity (a decrease of 4%). Operational and Other Risks In Fitch s opinion, the group s structure, which includes a number of banking and other subsidiaries, exposes Carige to higher operational risk than other banks of a similar size. However, controls have been centralised, which should have reduced this exposure. Carige has strengthened the risk management and governance of its insurance subsidiaries. The group has also strengthened the insurance subsidiaries internal audit and risk management functions and implemented an operational risk management framework for the insurance business. Good customer franchise underpins solid funding base Shareholders have continued to provide capital to finance the bank s expansion Funding and Capital Carige s strong franchise in its home region of Liguria has helped the bank to maintain sound customer funding, and it has a particularly strong market share of almost a quarter of retail deposits in its home city of Genoa. During 2009, current account deposits saw strong growth, and at end 2009 customer funding (including deposits and bonds issued to the bank s own clients through its branch network) were equal to 102% of customer loans (end 2008: 90%). Bonds issued under the bank s EUR4bn Euro medium term note programme amounted to EUR1.9bn at end 2009, almost unchanged from end In Q409 Carige issued a EUR1bn covered bond with a scheduled maturity of seven years. Outstanding funding from securitisations at end 2009 amounted to EUR305m. Despite its fast loan growth, Carige s liquidity has remained adequate, helped by growth in customer funding, which continued during the first months of Liquidity is underpinned by the availability of EUR4bn assets eligible for refinancing operations with the ECB and by Carige s positive net interbank position. The bank s growth strategy has been accompanied by regular capital increases, where the bank benefited from good access to fresh capital from its shareholders. In December 2008 Carige issued EUR160m hybrid Tier 1 capital (assigned 50% equity credit), and in Q110 the bank issued a EUR392m five year convertible bond, which can be converted at the option of the issuer after 18 months. 6

7 Table 5: Funding Current accounts 11,550 10,267 Savings and term deposits 3, ,377.3 Securities issued 9,396 8,870 Of which to customers 7, ,008.9 Of which covered bonds 1,000 0 Subordinated bonds 1,101 1,053.9 Other funding Non bank funding 25,639 22,114 Deposits from banks 1, Of which from central banks Of which repurchase agreements Total funding 24, ,965.5 Memo: Customer loans 21, ,648.2 Source: Carige; excludes index linked insurance products issued Table 6: Fitch Eligible Capital (EURm) 2009 Reported equity 3,853 FVOD 0.00 Hybrids included in equity 0 Non loss absorbing NCIs 0.00 Goodwill 1,644.8 Other intangibles DTAs on losses 0 Net asset value of 316 insurance subsidiaries Core capital 1,812.7 Hybrids (weighted) 80 Eligible capital 1,892.7 Fitch core capital ratio 9.15 (%) Fitch eligible capital 9.55 ratio (%) Memo: Risk weighted 19,812.9 assets Source: Carige, Fitch As a result of regular capital increases, the bank s capitalisation has remained adequate, with a Fitch eligible capital ratio of 9.3% and a regulatory Tier 1 ratio of 7.87% at end The Fitch eligible capital ratio is higher than the regulatory Tier 1 capital ratio because the regulator does not consider the bank s revaluation reserve relating to the stake Carige holds in the Banca d Italia (EUR792m at end 2009). Deducting this stake from eligible capital, the Fitch eligible capital ratio would have been about 5.5% at end Under Italian regulations, Carige is classified as a conglomerate. The parent bank s stake in the insurance subsidiaries and subordinated loans to these entities are deducted from total capital, whereas Fitch deducts the equity of the insurance subsidiaries from core capital. 7

8 Income Statement 31 Mar Dec Dec Dec Months 1st Quarter 3 Months 1st Quarter As % of Year End As % of Year End As % of Year End As % of USDm EURm Earning EURm Earning EURm Earning EURm Earning Unaudited Unaudited Assets Unqualified Assets Unqualified Assets Unqualified Assets 1. Interest Income on Loans , Other Interest Income Dividend Income Gross Interest and Dividend Income , , , Interest Expense on Customer Deposits Other Interest Expense Total Interest Expense Net Interest Income Net Gains (Losses) on Trading and Derivatives Net Gains (Losses) on Other Securities Net Gains (Losses) on Assets at FV through Income Statement Net Insurance Income Net Fees and Commissions Other Operating Income n.a. n.a. n.a. n.a. n.a. 15. Total Non Interest Operating Income Personnel Expenses Other Operating Expenses Total Non Interest Expenses Equity accounted Profit/ Loss Operating Pre Impairment Operating Profit Loan Impairment Charge Securities and Other Credit Impairment Charges Operating Profit Equity accounted Profit/ Loss Non operating n.a. n.a. n.a. n.a. n.a. 25. Non recurring Income n.a. n.a. n.a. n.a Non recurring Expense n.a. n.a. n.a. n.a. n.a. 27. Change in Fair Value of Own Debt n.a. n.a. n.a. n.a. n.a. 28. Other Non operating Income and Expenses n.a. n.a n.a Pre tax Profit Tax expense Profit/Loss from Discontinued Operations n.a. n.a n.a. 32. Net Income Change in Value of AFS Investments Revaluation of Fixed Assets n.a. n.a. n.a. n.a. n.a. 35. Currency Translation Differences n.a. n.a. n.a. n.a. n.a. 36. Remaining OCI Gains/(losses) Fitch Comprehensive Income Memo: Profit Allocation to Non controlling Interests n.a. n.a Memo: Net Income after Allocation to Non controlling Interests Memo: Common Dividends Relating to the Period n.a. n.a. n.a. n.a. n.a. 41. Memo: Preferred Dividends Related to the Period n.a. n.a. n.a. n.a. n.a. Exchange rate USD1 = EUR USD1 = EUR USD1 = EUR USD1 = EUR

9 Balance Sheet 31 Mar Dec Dec Dec Months 1st Quarter 3 Months 1st Quarter As % of Year End As % of Year End As % of Year End As % of USDm EURm Assets EURm Assets EURm Assets EURm Assets Assets A. Loans 1. Residential Mortgage Loans n.a. n.a. n.a. n.a. n.a. 2. Other Mortgage Loans n.a. n.a. n.a. n.a. n.a. 3. Other Consumer/ Retail Loans n.a. n.a. n.a. n.a. n.a. 4. Corporate & Commercial Loans n.a. n.a. n.a. n.a. n.a. 5. Other Loans 31, , , , , Less: Reserves for Impaired Loans/ NPLs Net Loans 30, , , , , Gross Loans 31, , , , , Memo: Impaired Loans included above 1, , , , Memo: Loans at Fair Value included above n.a. n.a. n.a. n.a. n.a. B. Other Earning Assets 1. Loans and Advances to Banks 3, , , , , Trading Securities and at FV through Income , , , Derivatives Available for Sale Securities 8, , , , , Held to Maturity Securities n.a. 6. At equity Investments in Associates Other Securities n.a. n.a. n.a. 8. Total Securities 10, , , , , Memo: Government Securities included Above n.a. n.a. 2, , Investments in Property n.a. n.a Insurance Assets , Other Earning Assets Total Earning Assets 44, , , , , C. Non Earning Assets 1. Cash and Due From Banks Memo: Mandatory Reserves included above n.a. n.a. n.a. n.a. n.a. 3. Foreclosed Real Estate n.a. n.a. n.a. n.a. n.a. 4. Fixed Assets 1, , Goodwill 2, , , , Other Intangibles Current Tax Assets Deferred Tax Assets Discontinued Operations n.a. n.a. 10. Other Assets , Total Assets 50, , , , , Liabilities and Equity D. Interest Bearing Liabilities 1. Customer Deposits Current 20, , , , , Customer Deposits Savings n.a. n.a. n.a. n.a. n.a. 3. Customer Deposits Term n.a. n.a n.a. n.a. 4. Total Customer Deposits 20, , , , , Deposits from Banks 1, , , Other Deposits and Short term Borrowings n.a. n.a. n.a. n.a. n.a. 7. Total Deposits, Money Market and Short term Funding 21, , , , , Senior Debt Maturing after 1 Year 14, , , , , Subordinated Borrowing n.a. n.a Other Funding , n.a. 11. Total Long Term Funding 15, , , , , Derivatives Trading Liabilities n.a. n.a. n.a. n.a. n.a. 14. Total Funding 37, , , , , E. Non Interest Bearing Liabilities 1. Fair Value Portion of Debt n.a. n.a. n.a. n.a. n.a. 2. Credit impairment reserves n.a. n.a. n.a. n.a. n.a. 3. Reserves for Pensions and Other Current Tax Liabilities Deferred Tax Liabilities Other Deferred Liabilities n.a. n.a. n.a. n.a. n.a. 7. Discontinued Operations n.a. n.a. n.a. n.a. n.a. 8. Insurance Liabilities 4, , , , , Other Liabilities 1, , , , , Total Liabilities 44, , , , , F. Hybrid Capital 1. Pref. Shares and Hybrid Capital accounted for as Debt n.a. 2. Pref. Shares and Hybrid Capital accounted for as Equity n.a. n.a. n.a. n.a. n.a. G. Equity 1. Common Equity 4, , , , , Non controlling Interest Securities Revaluation Reserves n.a. n.a. n.a Foreign Exchange Revaluation Reserves n.a. n.a. n.a. n.a. n.a. 5. Fixed Asset Revaluations and Other Accumulated OCI Total Equity 5, , , , , Total Liabilities and Equity 50, , , , , Memo: Fitch Core Capital 2, , n.a. n.a. n.a. 9. Memo: Fitch Eligible Capital 2, , n.a. n.a. n.a. Exchange rate USD1 = EUR USD1 = EUR USD1 = EUR USD1 = EUR

10 Summary Analytics 31 Mar Dec Dec Dec Months 1st Quarter Year End Year End Year End A. Interest Ratios 1. Interest Income on Loans/ Average Gross Loans Interest Expense on Customer Deposits/ Average Customer Deposits Interest Income/ Average Earning Assets Interest Expense/ Average Interest bearing Liabilities Net Interest Income/ Average Earning Assets Net Int. Inc Less Loan Impairment Charges/ Av. Earning Assets Net Interest Inc Less Preferred Stock Dividend/ Average Earning Assets B. Other Operating Profitability Ratios 1. Non Interest Income/ Gross Revenues Non Interest Expense/ Gross Revenues Non Interest Expense/ Average Assets Pre impairment Op. Profit/ Average Equity Pre impairment Op. Profit/ Average Total Assets Loans and securities impairment charges/ Pre impairment Op. Profit Operating Profit/ Average Equity Operating Profit/ Average Total Assets Taxes/ Pre tax Profit Pre Impairment Operating Profit / Risk Weighted Assets Operating Profit / Risk Weighted Assets C. Other Profitability Ratios 1. Net Income/ Average Total Equity Net Income/ Average Total Assets Fitch Comprehensive Income/ Average Total Equity Fitch Comprehensive Income/ Average Total Assets Net Income/ Av. Total Assets plus Av. Managed Assets n.a. n.a. n.a. n.a. 6. Net Income/ Risk Weighted Assets Fitch Comprehensive Income/ Risk Weighted Assets D. Capitalization 1. Fitch Eligible Capital/ Fitch Adjusted Weighted Risks n.a. n.a. 2. Tangible Common Equity/ Tangible Assets Tangible Common Equity/ Total Business Volume Tier 1 Regulatory Capital Ratio Total Regulatory Capital Ratio Fitch Eligible Capital/ Tier 1 Regulatory Capital n.a. n.a. n.a. 7. Equity/ Total Assets Cash Dividends Paid & Declared/ Net Income n.a. n.a. n.a. n.a. 9. Cash Dividend Paid & Declared/ Fitch Comprehensive Income n.a. n.a. n.a. n.a. 10. Net Income Cash Dividends/ Total Equity E. Loan Quality 1. Growth of Total Assets Growth of Gross Loans Impaired Loans(NPLs)/ Gross Loans Reserves for Impaired Loans/ Gross loans Reserves for Impaired Loans/ Impaired Loans Impaired Loans less Reserves for Imp Loans/ Equity Loan Impairment Charges/ Average Gross Loans Net Charge offs/ Average Gross Loans n.a. n.a. n.a. n.a. 9. Impaired Loans + Foreclosed Assets/ Gross Loans + Foreclosed Assets F. Funding 1. Loans/ Customer Deposits Interbank Assets/ Interbank Liabilities

11 Reference Data 31 Mar Dec Dec Dec Months 1st Quarter 3 Months 1st Quarter As % of Year End As % of Year End As % of Year End As % of USDm EURm Assets EURm Assets EURm Assets EURm Assets A. Off Balance Sheet Items 1. Managed Securitized Assets Reported Off Balance Sheet n.a. n.a. n.a. n.a. n.a. 2. Other off balance sheet exposure to securitizations n.a. n.a. n.a. n.a. n.a. 3. Guarantees n.a. n.a. n.a. n.a. n.a. 4. Acceptances and documentary credits reported off balance sheet n.a. n.a. n.a. n.a. n.a. 5. Committed Credit Lines n.a. n.a. n.a. n.a. n.a. 6. Other Contingent Liabilities n.a. n.a. n.a. n.a. n.a. 7. Total Business Volume 50, , , , , Memo: Total Weighted Risks 27, , n.a. 19, , Fitch Adjustments to Weighted Risks n.a. n.a. n.a. 10. Fitch Adjusted Weighted Risks 27, , n.a. 19, , B. Average Balance Sheet Average Loans 31, , , , , Average Earning Assets 44, , , , , Average Assets 49, , , , , Average Managed Assets (OBS) n.a. n.a. n.a. n.a. n.a. Average Interest Bearing Liabilities 37, , , , , Average Common equity 4, , , , , Average Equity 5, , , , , Average Customer Deposits 20, , , , , C. Maturities Asset Maturities: n.a. n.a. n.a. n.a. n.a. Loans & Advances < 3 months n.a. n.a. n.a. n.a. n.a. Loans & Advances 3 12 Months n.a. n.a. n.a. n.a. n.a. Loans and Advances 1 5 Years n.a. n.a. n.a. n.a. n.a. Loans & Advances > 5 years n.a. n.a. n.a. n.a. n.a. Debt Securities < 3 Months n.a. n.a. n.a. n.a. n.a. Debt Securities 3 12 Months n.a. n.a. n.a. n.a. n.a. Debt Securities 1 5 Years n.a. n.a. n.a. n.a. n.a. Debt Securities > 5 Years n.a. n.a. n.a. n.a. n.a. Interbank < 3 Months n.a. n.a. n.a. n.a. n.a. Interbank 3 12 Months n.a. n.a. n.a. n.a. n.a. Interbank 1 5 Years n.a. n.a. n.a. n.a. n.a. Interbank > 5 Years n.a. n.a. n.a. n.a. n.a. Liability Maturities: Retail Deposits < 3 months n.a. n.a. n.a. n.a. n.a. Retail Deposits 3 12 Months n.a. n.a. n.a. n.a. n.a. Retail Deposits 1 5 Years n.a. n.a. n.a. n.a. n.a. Retail Deposits > 5 Years n.a. n.a. n.a. n.a. n.a. Other Deposits < 3 Months n.a. n.a. n.a. n.a. n.a. Other Deposits 3 12 Months n.a. n.a. n.a. n.a. n.a. Other Deposits 1 5 Years n.a. n.a. n.a. n.a. n.a. Other Deposits > 5 Years n.a. n.a. n.a. n.a. n.a. Interbank < 3 Months n.a. n.a. n.a. n.a. n.a. Interbank 3 12 Months n.a. n.a. n.a. n.a. n.a. Interbank 1 5 Years n.a. n.a. n.a. n.a. n.a. Interbank > 5 Years n.a. n.a. n.a. n.a. n.a. Senior debt Maturing < 1 year n.a. n.a. n.a. n.a. n.a. Senior debt Maturing > 1 year n.a. n.a. n.a. n.a. n.a. Total Senior Debt on Balance Sheet 15, , , , , Fair Value Portion of Senior Debt n.a. n.a. n.a. n.a. n.a. Subordinated Debt maturing < 1 year n.a. n.a. n.a. n.a. n.a. Subordinated Debt maturing > 1 year n.a. n.a. n.a. n.a. n.a. Total Subordinated Debt on Balance Sheet n.a. n.a Fair Value Portion of Subordinated Debt n.a. n.a. n.a. n.a. n.a. D. Equity Reconciliation 1. Equity 5, , , , , Add: Pref. Shares and Hybrid Capital accounted for as Equity n.a. n.a. n.a. n.a. n.a. 3. Add: Other Adjustments n.a. n.a. n.a. n.a. n.a. 4. Published Equity n.a. n.a. n.a. n.a. n.a. E. Fitch Eligible Capital Reconciliation 1.Total Equity as reported (including non controlling interests) 5, , , , , Fair value effect incl in own debt/borrowings at fv on the B/S CC only n.a. n.a. n.a. 3. Non loss absorbing non controlling interests n.a. n.a. n.a. 4. Goodwill 2, , , , Other intangibles Deferred tax assets deduction n.a. 7. Net asset value of insurance subsidiaries n.a. n.a. n.a. 8. Embedded value of insurance business n.a. n.a. n.a. 9. First loss tranches of off balance sheet securitizations n.a. n.a. n.a. 10. Fitch Core Capital 2, , n.a. n.a. n.a. 11. Eligible weighted Hybrid capital Government held Hybrid Capital n.a. n.a. n.a. 13. Fitch Eligible Capital 2, , n.a. n.a. n.a. 14. Eligible Hybrid Capital Limit 1, n.a. n.a. n.a. Exchange Rate USD1 = EUR USD1 = EUR USD1 = EUR USD1 = EUR

12 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. Copyright 2010 by Fitch, Inc., Fitch Ratings Ltd. and its subsidiaries. One State Street Plaza, NY, NY Telephone: , (212) Fax: (212) Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. All of the information contained herein is based on information obtained from issuers, other obligors, underwriters, and other sources which Fitch believes to be reliable. Fitch does not audit or verify the truth or accuracy of any such information. As a result, the information in this report is provided "as is" without any representation or warranty of any kind. A Fitch rating is an opinion as to the creditworthiness of a security. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed, suspended, or withdrawn at anytime for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of Great Britain, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. 12