Analyst Presentation 1H03 GROWTH AND CONSOLIDATION

Transcription

1 BancoSabadell Analyst Presentation 1H03 GROWTH AND CONSOLIDATION 21st July

2 DISCLAIMER Banco Sabadell cautions that this presentation may contain forward looking statements with respect to the business, financial condition, results of operations, strategy, plans and objectives of the Banco Sabadell Group. While these forward looking statements represent our judgement and future expectations concerning the development of our business, a certain number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market, macroeconomic, governmental, political and regulatory trends, (2) movements in local and international securities markets, currency exchange rates, and interest rates, (3) competitive pressures, (4) technical developments, (5) changes in the financial position or credit worthiness of our customers, obligors and counterparts. The risk factors and other key factors that we have indicated could adversely affect our business and financial performance contained in our past and future filings and reports, including those with the Spanish Securities and Exchange Commission (Comisión Nacional del Mercado de Valores). The distribution of this presentation in certain jurisdictions may be restricted by law. Persons into whose possession this Presentation comes are required by Banco Sabadell to inform themselves about and to observe any such restriction. These slides do not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities nor shall they or any one of them form the basis of or be relied on in connection with any contract or commitment whatsoever. 2

3 AGENDA 1. MAIN FINANCIAL HIGHLIGHTS 2. ANALYSIS 1H03 FINANCIAL RESULTS 3. BUSINESS EVOLUTION 4. PRIORITIES FOR 2003 FOLLOW-UP 5. REMOVAL TO LANDSCAPE SANT CUGAT 3

4 MAIN FINANCIAL HIGHLIGHTS m % growth jun-02 jun-03 1H03/1H02 Total Assets , ,4 6,3 Gross loans to customers , ,4 16,6 On-balance sheet customer funds , ,3 9,2 Funds under management , ,4 11,1 GROUP NET PROFIT 120,4 124,7 3,6 4

5 GROUP NET PROFIT m % growth 1H02 1H03 1H03/1H02 NET INTEREST INCOME 358,3 385,3 7,5 Gross operating income 494,2 553,8 12,1 NET OPERATING INCOME 174,2 246,4 41,4 INCOME BEFORE TAXES 184,3 207,6 12,6 Corporate tax 63,5 77,2 21,6 Minority interests 0,5 5,7 - GROUP NET PROFIT 120,4 124,7 3,6 5

6 AGENDA 1. MAIN FINANCIAL HIGHLIGHTS 2. ANALYSIS 1H03 FINANCIAL RESULTS 3. BUSINESS EVOLUTION 4. PRIORITIES FOR 2003 FOLLOW-UP 5. REMOVAL TO LANDSCAPE SANT CUGAT 6

7 NET INTEREST INCOME (I) m 0,4 13,4 5,5 6,1 7,7 11,5 1H03 Net Int. Inc. 385,3 Net comms 144,5 ROF 24,1 Gross Oper.Inc. 553,8 175,2 169,4 171,5 173,0 180,1 185,9 Other op.inc 3,8 Personnel exp. -186,6 Admin. exp. -96,0 Deprec.& amort. -24,6 Other Op.costs -4,0 Net Oper. Inc. 246,4 358,3 385,3 19,3 13,8 344,5 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 +7,5% 366,0 Adjusted net interest income Dividends and others Equity-acc hold. 12,8 Goodwill amort. -6,3 Group transac. 4,1 B&DD's provis. -69,0 Other income 19,5 Inc. before tax. 207,6 Corporate tax -77,2 Minority interes. -5,7 Group net prof 124,7 1H02 1H03 7

8 NET INTEREST INCOME (II). EVOLUTION m Loans to customers / floors = Net interest income effect (offseting interest rate decreases) Public Debt +11,6 Reducing duration on liabilities: (traslation of interest rate cuts) Customer funds +33,1 Capital Markets +4,5 8

9 NET INTEREST INCOME (III). EVOLUTION 5,85% 5,73% 5,63% 5,53% 5,21% 5,02% Customer loan yield 3,75% 3,45% 3,59% 3,44% 3,47% 3,51% 3,36% 3,30% 3,35% 2,87% 2,52% 2,15% 2,10% 2,13% 2,16% 2,02% 1,85% 1,67% 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 Customer spread 3 M Euribor Cost of customer funds 2,71% 2,54% 2,51% 2,53% 2,63% 2,61% Adjusted net interest income 1 1Q01 2Q02 3Q02 4Q02 1Q03 2Q03 1 Adjusted for dividends and others 9

10 COMMISSIONS m Lending Services Ass.Mgm 1 68,9 70,7 69,7 75,8 69,4 75,1 20,9 21,5 21,5 22,3 21,1 24,8 28,1 29,0 28,8 34,1 28,9 31,0 19,8 20,1 19,5 19,4 19,4 19,3 1H03 Net Int. Inc. 385,3 Net comms 144,5 ROF 24,1 Gross Oper.Inc. 553,8 Other op.inc 3,8 Personnel exp. -186,6 Admin. exp. -96,0 Deprec.& amort. -24,6 Other Op.costs -4,0 Net Oper. Inc. 246,4 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 Equity-acc hold. 12,8 Goodwill amort. -6,3 Lending Services Ass.Mgm 1 139,5 42,5 57,1 39,9 +3,5% 144,5 45,8 59,9 38,7 +8,0% +4,8% -3,1% Group transac. 4,1 B&DD's provis. -69,0 Other income 19,5 Inc. before tax. 207,6 Corporate tax -77,2 Minority interes. -5,7 Group net prof 124,7 1H02 1 Includes commissions of mutual funds, pension funds and life insurance commissions. 1H03 10

11 RESULTS ON FINANCIAL TRANSACTIONS m Foreign exchange Others 24,1-3,6 12,1 13,3 12,0-16,9 Recurrent 1H03 Net Int. Inc. 385,3 Net comms 144,5 ROF 24,1 Gross Oper.Inc. 553,8 Other op.inc 3,8 Personnel exp. -186,6 Admin. exp. -96,0 Deprec.& amort. -24,6 Other Op.costs -4,0 Net Oper. Inc. 246,4 Equity-acc hold. 12,8 Goodwill amort. -6,3 Group transac. 4,1 B&DD's provis. -69,0 Other income 19,5 Inc. before tax. 207,6 1H02 1H03 Corporate tax -77,2 Minority interes. -5,7 Group net prof 124,7 11

12 PERSONNEL EXPENSES m 1,6 2,0 4,1 180,4 1H02-0,8% 188,1 186,6 0,8 3,3 3,8 178,7 1H03 Sibis/Euro/B.Herrero integration ActivoBank Staff severance costs Recurrent personnel expenses 1H03 Net Int. Inc. 385,3 Net comms 144,5 ROF 24,1 Gross Oper.Inc. 553,8 Other op.inc 3,8 Personnel exp. -186,6 Admin. exp. -96,0 Deprec.& amort. -24,6 Other Op.costs -4,0 Net Oper. Inc. 246,4 Equity-acc hold. 12,8 Goodwill amort. -6,3 Group transac. 4,1 B&DD's provis. -69,0 Other income 19,5 Inc. before tax. 207,6 Corporate tax -77,2 Minority interes. -5,7 Group net prof 124,7 12

13 ADMINISTRATIVE EXPENSES m 109,1 12,9 6,8 0,6-12,0% 96,0 11,3 3,9 0,0 1H03 Net Int. Inc. 385,3 Net comms 144,5 ROF 24,1 Gross Oper.Inc. 553,8 Other op.inc 3,8 Personnel exp. -186,6 Admin. exp. -96,0 Deprec.& amort. -24,6 Other Op.costs -4,0 88,8 80,8 Net Oper. Inc. 246,4 Equity-acc hold. 12,8 Goodwill amort. -6,3 Group transac. 4,1 B&DD's provis. -69,0 Other income 19,5 Inc. before tax. 207,6 1H02 1H03 B. Herrero/Activobank integration SIBIS Euro Recurrent costs Corporate tax -77,2 Minority interes. -5,7 Group net prof 124,7 13

14 COST/INCOME RATIO jun jun-03 Base 60,1% 66,2% 51,0% Inc. Depreciation 65,3% 71,9% 55,5% 14

15 EQUITY-ACCOUNTED HOLDINGS m 38,2 5,7 31,0 1H03 Net Int. Inc. 385,3 BCP Real Estate Bs Vida Others 11,8 8,2 12,5 1S02 26,0 8,1 11,8 0,7 8,8 9,9 6,0 6,3 1S03 12,8 5,7 Equity- accounted holdings + dividends Payment of dividends to net interest income Net comms 144,5 ROF 24,1 Gross Oper.Inc. 553,8 Other op.inc 3,8 Personnel exp. -186,6 Admin. exp. -96,0 Deprec.& amort. -24,6 Other Op.costs -4,0 Net Oper. Inc. 246,4 Equity-acc hold. 12,8 Goodwill amort. -6,3 Group transac. 4,1 B&DD's provis. -69,0 Other income 19,5 Inc. before tax. 207,6 Corporate tax -77,2 Minority interes. -5,7 Group net prof 124,7 5,3 1S02 4,9 3,2-1,0 1S03 15

16 B&DD s PROVISIONS m Generic FECI Specific Others +4,3% 48,8 6,0 28,4 69,0 19,8 35,8 21,5 21,3-7,9-7,0 1H02 1H03 Loans + contingent liabilities +7,9% 1H03 Net Int. Inc. 385,3 Net comms 144,5 ROF 24,1 Gross Oper.Inc. 553,8 Other op.inc 3,8 Personnel exp. -186,6 Admin. exp. -96,0 Deprec.& amort. -24,6 Other Op.costs -4,0 Net Oper. Inc. 246,4 Equity-acc hold. 12,8 Goodwill amort. -6,3 Group transac. 4,1 B&DD's provis. -69,0 Other income 19,5 Inc. before tax. 207,6 Corporate tax -77, , , , ,1 Minority interes. -5,7 Group net prof 124,7 dec-01 jun-02 dec-02 jun-03 16

17 CORPORATE TAXES m 1H03 Inc. before tax. 207,6 6,3 8,1 Corporate tax -77,2 Minority interes. -5,7 Group net prof 124,7 10,1 232,1 207,6 35% 37,2% Effective tax rate 77,2 Income Before Taxes 30/6/03 Nondeductible provisions Goodwill amort Other 30/06/03 fiscal profit Taxes 17

18 AGENDA 1. MAIN FINANCIAL HIGHLIGHTS 2. ANALYSIS 2Q03 FINANCIAL RESULTS 3. BUSINESS EVOLUTION 4. PRIORITIES FOR 2003 FOLLOW-UP 5. REMOVAL TO LANDSCAPE SANT CUGAT 18

19 NUMBER OF PRODUCTS PER CLIENT We are increasing our market penetration... jun-02 sep-02 dec-02 mar-03 jun-03 Commercial Banking SMEs Banking Banco Herrero Solbank Sabadell Banca Privada 4,44 4,46 4,54 6,01 6,32 6,36 2,08 2,09 2,12 3,35 3,33 3,35 4,47 4,51 4,57 4,64 6,64 2,14 3,39 4,58 4,87 6,83 2,15 3,53 4,62 TOTAL GROUP 3,63 3,66 3,73 3,80 3,88 3,63 3,66 3,73 3,80 3,88 jun-02 sep-02 dec-02 mar-03 jun-03 19

20 GROSS LOANS TO CUSTOMERS with a diversified business structure Of which to SMEs... 37% 20% 62,6% 14% 29% 32,3% Bill discounting Leasing Mortgages Others 4,7% 0,5% Of which to individuals... 22% Individuals SMEs Others Public Adm Mortgages 78% Customer lending Individuals includes shops and self-employed people 20

21 GROSS LOANS TO CUSTOMERS m ,4 +16,6% ,4 Mortgages 8.032,4 +23,5% 9.923,7 570,4 619,3 Others ,9 12,6% ,6 355,7 337,8 1H02 1H03 Other securitised loans Securitised mortgages 21

22 MORTGAGE EVOLUTION m Other secured loans Mortgages 8.032,4 316, ,3 +23,5% 9.923,7 345, ,2 1H01 1H03 Secured loans 43,0% 45,2% Other 57,0% 54,8% 1H02 1H03 22

23 MORTGAGE PORTFOLIO Breakdown by type of property 8% 16% 57% 91% 9% 19% Developers Housing Commercial Others Residential Others Mortgage average amount Debt service cost/net family income 1 23,2% Average LTV 56,4% B & DD mortgages 0,28% Interest rates +1% +2% Debt service cost/net family inc. 25,3% 27,3% 1 Data on mortgages granted in the last 12 months 23

24 LTV BREAKDOWN LTV average 56,39% 13% 15% 32% 40% <= 30% > 30% & <= 60% > 60% & <= 80% >80% Mortgage with a LTV > 80% Additional personnel guarantees Historical Property valuations ( i.e. subrogation of mortgages, ) 24

25 ON-BALANCE SHEET CUSTOMER FUNDS m ,2% ,4 Debt securities Repo s Customer Promissory Notes Customer deposits (ex repo s) 3.242, , , , ,6 677, ,2 1H02 1H03 25

26 AUM (OFF BALANCE SHEET ITEMS) m 7.869,7 +7,2% 8.438,4 Insurance 2.026,0 +5,0% 2.126,6 Pension funds 1.316,3 +17,9% 1.552,2 Mutual funds 4.527,4 +5,1% 4.759,6 jun-02 jun-03 26

27 ASSET MANAGEMENT (I) Market share evolution 2,34% 2,30% 2,28% 2,30% 2,36% 2,37% 2,31% 2,28% 2,20% 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 AuM evolution m Q01 3Q01 4Q01 1Q02 2Q02 4Q02 4Q02 1Q03 2Q03 27

28 ASSET MANAGEMENT (II) Mutual funds: Breakdown by fund category 34% Fixed-income funds 48% Balanced funds Equity funds Fixed-income guaranteed return funds 4% 14% FIXED- INCOME MUTUAL FUNDS: MARKET SHARE BY FUND CATEGORY 1 BALANCED EQUITY FIXED-INCOME GUARANTEED TOTAL MUTUAL FUNDS jun-02 1,53% 3,20% 1,30% 3,79% 2,30% jun-03 1,40% 2,45% 1,15% 4,59% 2,28% 1 Source: Inverco 28

29 BANCASSURANCE (I) Technical reserves evolution m 2.026,0 +5,0% 2.126,6 397,4 304,2 509,7 211, , ,1 jun-02 jun-03 Guaranteed interest Unit Linked Annuities Market share evolution 1Q02 2Q02 3Q02 4Q02 1Q03 2,12% 2,11% 2,12% 2,17% 2,06% Source: ICEA (Investigación cooperativa entre entidades Aseguradoras y Fondos de Pensiones) and DGS 29

30 BANCASSURANCE (II) Life risk insurance: Premium evolution m + 11,0% % Penetration 14,1% 12,65 14,04 1H02 1H03 30

31 BANCASSURANCE (III) Pension Funds: assets under management m +17,9% 1.552, ,3 642,8 811,3 673,6 740,8 jun-02 Individuals jun-03 Companies Market share evolution 1Q02 2Q02 3Q02 4Q02 1Q03 3,11% 3,05% 2,98% 3,16% 3,12% Source: INVERCO 31

32 BASIC MARGIN Jun-02 Jun-03 % growth NET INTEREST INCOME 358,3 385,3 7,5 COMMISSIONS 139,5 144,5 3,5 OTHER COMMISSIONS 99,6 105,8 6,2 MUTUAL FUND COMMISSIONS 29,2 27,5-5,8 PENSION FUND COMMISSIONS 7,9 7,9-2,0 INSURANCE COMMISSIONS 2,8 3,4 22,7 BASIC MARGIN 497,9 529,8 6,4 32

33 COMMISSIONS Main commissions concepts m Lending commissions 9% % Growth 1H03/1H02 Related to lending 4,8% Guarantees 7,2% Others -11,6% 35% 56% Service commissions 12% 11% 4% 44% Cards Payment orders Securities Customer accounts Others 3,7% 3,4% 8,6% 17,7% 31,3% 29% Asset mgm commissions 20% 9% Mutual funds Pension funds Life insurance -5,8% -2,0% 22,7% 71% 33

34 NETWORK BASIC MARGIN Network basic margin by business units 52,3% 26,1% 4,3% 12,0% 4,2% 0,2% 0,8% BS SMEs BH SMEs BS Commercial BH Commercial Solbank Activobank SBP Net interest income Commissions 34

35 NPL RATIO AND COVERAGE % 316, ,87 2 0,58 0,52 0,53 0,47 0,49 0,45 m T T 3T 4T 1T 2T 461 Provisions Generic: 227 Statistical: 176 Specific: NPL 93 Including off-balance sheet risks and their provisions 1 As of 30/06/02 2 As of 30/06/ /6/03 35

36 CHANNELS (I) Branch expansion NETWORK OPENINGS CLOSURES NETWORK 31/12/02 Forecast 31/12/03 REAL 30/06/03 Forecast REAL 31/12/03 30/06/03 Forecast 31/12/03 REAL 30/06/03 Banco Sabadell Banco Sabadell (B.empresas) Solbank Banco Herrero+Banco Asturias Sabadell Banca Privada Activobank TOTAL * Areas of Banco Sabadell expansion: Madrid, Barcelona, Valencia and coastal areas for Solbank branches 1 ActivoBank branches: Customer advice points * Includes 2002 outstanding expansion =6 36

37 CHANNELS (II) Remote and on-line contracts: companies jun-01 sep-01 dec-01 mar-02 jun-02 sep-02 dec-02 mar-03 jun-03 Infobanc Managerland Total Companies 37

38 CHANNELS (III) Remote and on-line clients: individuals % YoY change on active clients 31% jun-01 sep-01 dec-01 mar-02 jun-02 sep-02 dec-02 mar-03 jun-03 On-line contracts Active Client: Clients with at least one transaction made during the last quarter 38

39 CHANNELS (IV) ATMs installed 2Q03/2Q02 5,12% Q02 3Q02 4Q02 1Q03 2Q03 Market share evolution (over 4B system) (without BH) 2Q02 3Q02 4Q02 1Q03 2Q03 ATMs 6,1% 6,2% 6,5% 6,4% 6,3% 39

40 CHANNELS (V) Issued cards Number % Var. jun-03/jun-02 % ACTIVE DEBIT ,05% 38,8% CREDIT ,95% 34,6% SHOPPING ,62% 27,6% SOLRED ,43% Market share evolution (over 4B system) 2Q02 3Q02 4Q02 1Q03 2Q03 DEBIT 6,7% 7,3% 7,6% 7,4% 7,5% CREDIT 6,8% 7,4% 7,1% 6,9% 6,7% 40

41 ACTIVOBANK (I) G On-line reference brand G High quality products G Focused on the medium-high and high segment G R+D in direct multichannel sales G Keeping its market presence G Targeted client: Disposed to operate through direct channels Medium-high and high net worth individuals Autonomous management profile Non price-speculators G Mission: To maximise saving-investment profitability of their clients 41

42 ACTIVOBANK (II) No. accounts jun-02 sep-02 dec-02 mar-03 jun-03 ActivoBank funds under management evolution m Jun Jun % Var 142,8 168,9 18,3% Current accouns 9,8 14,1 43,9% Deposits 74,1 60,3-18,7% FIM and Unit Linked 31,3 39,6 26,6% Pension funds 2,5 9,3 272,4% Securities, warrants, future guarantees and credibolsa 25,0 45,6 82,0% 42

43 IBERSECURITIES Strengthening as a reference broker in the Spanish market. Value added into BS group activities such as: Asset Management, Private Banking and Personal Banking. Market share march-2003: 2,25% First class research team Spain, Portugal & Eurostoxx 50 coverage Independent position since 1989 (freedom of action) Leadership and innovation: On-line brokerage since jul-98 First on-line broker in derivate products and in offering leverage facilities Madrid & Barcelona Stock Exchange member 43

44 SABADELL BANCA PRIVADA m 1.773,1 +9,9% 1.947,9 +10,3% 469,7 517,9 Securities Pension Funds Insurance +0,8% 772,2 778,6 Mutual Funds +28,7% 458,8 590,4 On balance sheet customer deposits Jun-02 Jun-03 44

45 AGENDA 1. MAIN FINANCIAL HIGHLIGHTS 2. ANALYSIS 2Q03 FINANCIAL RESULTS 3. BUSINESS EVOLUTION 4. PRIORITIES FOR 2003 FOLLOW-UP 5. REMOVAL TO LANDSCAPE SANT CUGAT 45

46 2003 PRIORITIES Growth and consolidation II Lending and Deposit growth. Special costs cutting programmes. Banco Asturias merger with BS Banco Herrero integration into BS to be finalised. ActivoBank integration into BS to be finalised. Emphasis in the new IT platform, but clearly reaching the final stages. Commercial organisation stable. Consolidated Management Team Substitution of non recurring by ordinary income. 46

47 BANCO HERRERO INTEGRATION Technological integration was effective on 19th May Complete success in implementation. Integration will allow cost savings from 2004 (which were already included in our cost forecasts for ). Technological integration guaranties an unified and common evolution of Banco Sabadell Group systems, with the consequent commercial, operative and economic advantages. 47

48 ACTIVOBANK INTEGRATION Technological integration is planned for the third quarter This integration will allow cost savings from 2004 (which were already included in our cost forecasts for ), allowing the Group to recover its investment before 2004 year-end. 48

49 GENERAL ADMINISTRATIVE COSTS FORECAST m 667,1-49,6 589,5 599,6 617,5 286,2 204,3 204,0 210,6 380,9 385,2 395,6 406, e 2004e 2005e Personnel costs Other costs e 5,0% 7,5% 10,0% Gross operating income 1.008, , , ,6 Cost/income ratio 66,2% 52,9% 49,3% 46,0% 49

50 1H03 GENERAL ADMINISTRATIVE COSTS FOLLOW-UP m Real 2002 Budget 2003 Budget 1S03 Real 1S03 % deviation PERSONNEL COSTS 380,9 385,2 189,6 186,6-1,6% Recurrents 358,1 370,8 181,6 178,7-1,6% Non recurrents 22,8 14,4 7,9 7,9-0,6% OTHER COSTS 286,2 204,3 94,6 96,0 1,4% Recurrents 186,0 173,9 79,6 80,8 1,4% Non recurrents 100,2 30,4 15,0 15,2 1,3% 667,1 589,5 284,2 282,6-0,6% 667,1-3,2 Other costs 589,5 586,3 Personnel costs 286,2 204,3 207,2 P2003= Budget 2003 E2003= New 2003 forecast 380,9 385,2 379, P2003 E

51 AGENDA 1. MAIN FINANCIAL HIGHLIGHTS 2. ANALYSIS 2Q03 FINANCIAL RESULTS 3. BUSINESS EVOLUTION 4. PRIORITIES FOR 2003 FOLLOW-UP 5. REMOVAL TO LANDSCAPE SANT CUGAT 51

52 LANDSCAPE BUILDING INAUGURATION IN SANT CUGAT Business units have moved to the new Landscape building in Sant Cugat in the period from 16th April to 13th June 52

53 BancoSabadell ANNEXES

54 HIGHLIGHTS m jun-02 dec-02 jun-02 % growth 1H03/1H02 % growth 2Q03/4Q02 Total Assets , , ,4 6,3 6,5 Loans to customers , , ,4 16,6 9,1 On-balance sheet customer deposits , , ,3 9,2 9,8 Mutual funds 4.527, , ,6 5,1 4,2 Pension funds 1.316, , ,2 17,9 1,9 Technical reserves (bancassurance) 2.026, , ,6 5,0-5,6 Funds under management , , ,7 8,6 7,3 Shareholders' equity 2.317, , ,6-12,9-1,6 Employees Domestic Branches ATM's GROUP NET PROFIT 55,9 49,6 55,9 0,1 12,8 1 On balance-sheet deposits + Mutual Funds + Pension funds + Technical Reserves 54

55 PROFIT AND LOSS ACCOUNT % growth % growth m 2Q02 3Q02 4Q02 1Q03 2Q03 2Q03/2Q02 2Q03/4Q02 NET INTEREST INCOME 182,8 177,0 179,1 187,9 197,4 8,0 10,3 Net commissions 70,7 69,7 75,8 69,4 75,1 6,3-1,0 BASIC REVENUE 253,4 246,7 254,9 257,2 272,5 7,5 6,9 Results on financial transactions -8,8-14,3 26,6 10,7 13,3-251,9-49,9 GROSS OPERATING INCOME 244,7 232,4 281,5 268,0 285,9 16,8 1,6 Personnel expenses -97,9-95,7-97,1-88,8-97,8-0,2 0,6 General expenses -62,5-73,2-104,0-44,7-51,3-17,9-50,6 PERSONNEL + GENERAL -160,4-168,9-201,1-133,5-149,1-7,1-25,9 Depreciation and amortisation -12,9-17,6-13,9-12,6-12,1-6,9-13,1 Other operating costs 1,9 0,7 4,7 0,2-0,4-120,5-108,2 NET OPERATING INCOME 73,2 46,6 71,2 122,1 124,3 69,9 74,6 Equity-acc holdings (net) 14,4 7,0 12,5 10,2 2,7-81,5-78,7 Group transactions -2,6-5,5-17,5 2,6 1,5-157,1-108,4 Provisions for loan-losses -26,5-29,7-22,5-31,9-37,1 40,0 64,5 Goodwill amortisation -2,5-128,6 6,5-3,2-3,2 26,7-148,9 Other income 24,6 121,9 14,8 18,0 1,5-93,9-89,8 INCOME BEFORE TAXES 80,6 11,7 64,2 117,8 89,7 11,3 39,8 Corporate tax -27,1 37,1-2,8-46,3-30,8 13,8 1018,7 Minority interests 2,4 1,6-11,9-2,7-3,0-224,0-75,0 GROUP NET PROFIT 55,9 50,4 49,6 68,8 55,9 0,1 12,8 55

56 NET INTEREST INCOME % growth % growth m 2Q02 3Q02 4Q02 1Q03 2Q03 2Q03/2Q02 2Q03/4Q02 Net interest income 182,8 177,0 179,1 187,9 197,4 8,0 10,3 Dividends and others -13,4-5,5-6,1-7,7-11,5-14,2 88,9 ADJUSTED NET INTEREST INCOME 169,4 171,5 173,0 180,1 185,9 9,8 7,5 56

57 EQUITY-ACCOUNTED HOLDINGS % growth % growth m 2Q02 3Q02 4Q02 1Q03 2Q03 2Q03/2Q02 2Q03/4Q02 Equity-acc holdings 14,4 7,0 12,5 10,2 2,7-81,5-78,7 Dividends (net interest income) 12,1 4,2 12,3 7,3 10,9-10,0-11,5 Adjusted Equity-acc holdings 26,5 11,2 24,8 17,4 13,6-48,8-45,3 57

58 GOODWILL AMORTISATION Bal. Amortisation 2002 Amortisation m Q02 2Q02 3Q02 4Q02 Var. Acc.Bal 1Q03 2Q03 BCP 250,4-1,7-1,7-127,6 8,0-18,7 108,7-1,6-1,6 Grupo ActivoBank 30,9-0,4-0,4-0,4-0,9 39,1 67,8-0,9-0,9 Others 392,7-0,4-0,4-0,6-0,6-349,6 41,1-0,6-0,7 GOODWILL 674,0-2,5-2,5-128,6 6,5-329,2 217,7-3,1-3,2 BCP: Goodwill arosen in BCP transaction has been partly written-off against generic provisions ( 126,2 million) 58

59 NON-PERFORMING LOAN PROVISIONS m 2Q02 3Q02 4Q02 1Q03 2Q03 Provisions -12,5-18,1-40,5-16,0-25,1 Generic provisions -4,8-7,1-12,7-8,4-11,4 Specific provisions -7,7-11,0-27,8-7,6-13,7 Amortisations -1,4-0,4-1,9-1,5-1,6 Recoveries 5,4 3,0 3,1 4,3 3,5 Country risk 0,7 0,2 12,8 1,9 1,4 Provisions for bad and doubtful debts -8,0-15,4-26,4-11,3-21,9 Statistical provisions -18,5-14,3 3,9-20,6-15,2 TOTAL -26,5-29,7-22,5-31,9-37,1 59

60 EXTRAORDINARY ITEMS m 2Q02 3Q02 4Q02 1Q03 2Q03 Extraordinary profits 30,7-1,1 19,1 25,0 7,0 Extraordinary losses -6,1-3,0-4,4-7,0-5,3 TOTAL 24,6-4,1 14,8 18,0 1,7 60

61 MINORITY INTERESTS BREAKDOWN m 2Q02 3Q02 4Q02 1Q03 2Q03 Preference shares -2,8-2,8-2,8-2,8-2,7 SIM's Banco Herrero 5,1 4,3-9,1 0,0 0,0 Others 0,1 0,2 0,0 0,1-0,2 Minority interests 2,4 1,6-11,9-2,7-3,0 61

62 CONSOLIDATED BALANCE SHEET - ASSETS % growth % growth m 2Q02 4Q02 2Q03 2Q03/2Q02 2Q03/4Q02 Cash and deposits with Central Banks 410,2 356,3 479,0 16,8 34,4 Government securities 599,7 883, ,9 67,4 13,6 Financial institutions 3.363, , ,9-35,4-10,5 Total net loans and advances to customers , , ,7 15,5 8,0 Bonds and other fixed-income securities 861,2 737,1 678,3-21,2-8,0 Shares and equity investments 506,8 551,1 548,8 8,3-0,4 Goodwill on consolidation 544,1 217,7 213,9-60,7-1,7 Tangible assets 448,7 454,9 446,8-0,4-1,8 Losses of Group companies 121,4 99,9 170,1 40,1 70,3 Accrued income and other assets 1.015,6 766,3 883,9-13,0 15,4 TOTAL ASSETS , , ,4 6,3 6,5 62

63 CONSOLIDATED BALANCE SHEET - LIABILITIES % growth % growth m 2Q02 4Q02 2Q03 2Q03/2Q022Q03/4Q02 Financial institutions 2.003, , ,5 0,8-27,8 Deposits and temporary asset sales , , ,8-5,3-2,0 Liabilities on negotiable securities Accrued expenses and other liabilities General reserve and other provisions 2.946, , ,3 87,1 76, ,2 796, ,3 18,7 57,2 239,6 138,3 108,7-54,6-21,4 Subordinated liabilities 295,2 595,2 595,2 101,6 0,0 Shareholders' equity 2.451, , ,3-10,3 7,6 Minority interests 308,1 262,5 261,9-15,0-0,2 Consolidated profits for the year 120,9 231,2 130,4 7,9-43,6 TOTAL LIABILITIES , , ,4 6,3 6,5 63

64 LENDING BREAKDOWN % growth % growth m 2Q02 4Q02 2Q03 2Q03/2Q02 2Q03/4Q02 Loans to the public sector 149,7 114,9 105,5-29,5-8,2 Loans to the private sector , , ,0 16,1 8,3 Commercial loans 2.199, , ,7 7,3 2,7 Mortgage loans 7.716, , ,2 24,1 10,1 Personal loans 3.129, , ,1 7,2 1,2 Loan and credit accounts 3.281, , ,8 23,2 17,9 Other secured loans 316,1 308,4 345,5 9,3 12,0 Overdrafts and sundry accounts 417,3 348,6 468,4 12,2 34,4 Repo's 309,9 218,4 95,4-69,2-56,3 Leasing 1.669, , ,1 14,9 8,7 Factoring 406,2 461,8 400,9-1,3-13,2 Pro-memoria: Loans to the resident sector , , ,3 16,8 8,4 Loans to the non-resident sector 1.159, , ,7 3,6 5,1 Doubtful assets 105,9 102,5 103,6-2,2 1,0 TOTAL GROSS LOANS AND ADVANCES TO CUSTOMERS , , ,1 15,6 8,1 Provisions for bad and doubtful debts -314,4-333,5-393,4 25,1 18,0 TOTAL NET LOANS AND ADVANCES TO CUSTOMERS , , ,7 15,5 8,0 Securitised loans 926,1 819,3 957,2 3,3 16,8 TOTAL NET LENDING TO CUSTOMERS , , ,8 14,9 8,3 64

65 DEPOSITS AND ISSUED SECURITIES % growth % growth m 2Q02 4Q02 2Q03 2Q03/2Q02 2Q03/4Q02 Creditors, public sector 172,5 151,0 159,3-7,7 5,5 Current accounts 6.700, , ,3 10,1 11,1 Savings accounts 1.307, , ,8-0,4 2,5 Fixed-term deposits 7.242, , ,8-6,5-8,3 Temporary asset sales 2.412, , ,6-46,7-27,9 Creditors, private sector , , ,5-5,2-2,0 Promemoria Resident sector , , ,2-6,1-3,5 Non-resident sector 1.614, , ,2 3,2 13,4 Senior debt issuance 2.946, , ,3 87,1 76,4 Subordinated liabilities 295,2 595,2 595,2 101,6 0,0 TOTAL ON-BALANCE SHEET DEPOSITS AND ISSUED SEC , , ,3 9,2 9,8 65

66 MUTUAL AND PENSION FUNDS %growth % growth m 2T02 4Q02 2Q03 2Q03/2Q02 2Q03/4Q02 Equity funds 275,3 210,1 167,9-39,0-20,1 Balanced funds 975,4 821,8 587,1-39,8-28,6 Fixed-income funds 1.400, , ,0 10,2 4,2 Guaranteed return funds 1.507, , ,3 35,3 21,4 Open-end and closed-end inv.co. 369,0 377,7 422,2 14,4 11,8 Mutual funds 4.527, , ,6 5,1 4,2 Individual 662,0 698,8 719,0 8,6 2,9 Company 642,8 804,6 811,3 26,2 0,8 Group 11,6 19,5 21,8 88,8 12,2 Pension funds 1.316, , ,2 17,9 1,9 TOTAL FUNDS 5.843, , ,7 8,0 3,6 66

67 BAD AND DOUBTFUL DEBTS % growth % growth m 2Q02 4Q02 2Q03 2Q03/2Q02 2Q03/4Q02 Opening balance 100,9 100,9 114,6 13,6 13,6 Increase due to new loan defaults 84,3 172,5 82,2-2,5-52,3 Recoveries -49,5-97,0-59,0 19,2-39,2 Amounts written off -15,8-61,7-20,2 27,4-67,3 Total bad and doubtful debts 119,8 114,6 117,6-1,8 2,6 Total gross loans and advances to cust , , ,1 15,6 8,1 Contingent liabilities 3.027, , ,0 13,3 6,6 Total risks , , ,1 15,3 7,9 Total provisions BAD AND DOUBTFUL DEBTS AS % OF TOTAL LENDING TOTAL PROVISIONS AS % OF BAD AND DOUBTFUL DEBTS TOTAL PROVISIONS AS % OF BAD AND DOUBTFUL DEBTS Pro-memoria: NPL Ratio including securitised loans 378,6 402,4 461,0 21,8 14,6 0,53% 0,47% 0,45% 316,1% 351,1% 391,9% 335,9% 373,7% 416,7% 0,51% 0,46% 0,43% 67

68 SHAREHOLDERS EQUITY % growth % growth m 2Q02 4Q02 2Q03 2Q03/2Q02 2Q03/4Q02 Issued capital 102,0 102,0 102,0 0,0 0,0 Reserves 2.114, , ,1-10,9 8,0 Consolidation reserves 235,5 199,3 215,3-8,6 8,0 Losses of Group companies -121,4-99,9-170,1 40,1 70,3 Treasury stock -13,2-13,0-12,6-4,5-3,3 Net attributable profit 220,4 Less: dividends -102,0 TOTAL SHAREHOLDERS' EQUITY 2.317, , ,6-12,9-1,6 68

69 BIS RATIO % growth % growth m 2Q02 4Q02 2Q03 2Q03/2Q02 2Q03/4Q02 Issued capital 102,0 102,0 102,0 0,0 0,0 Reserves 2.377, , ,3-10,5 5,1 Minority interests 308,1 262,5 262,0-15,0-0,2 Other capital accounts 6,4 6,4 6,6 3,1 2,1 Deductions -737,9-344,0-419,7-43,1 22,0 Primary capital 2.055, , ,1 1,1 1,4 TIER I (%) 8,56% 8,16% 7,69% -10,2-5,8 Revaluation reserves 37,0 37,0 37,0 0,0 0,0 Generic provisions 318,0 348,0 402,9 26,7 15,8 Subordinated liabilities 291,0 591,0 591,0 103,1 0,0 Deductions -47,1-49,7-38,5-18,2-22,6 Secondary capital 599,0 926,3 992,5 65,7 7,1 Tier II (%) 2,50% 3,69% 3,67% 47,2-0,4 Capital base 2.654, , ,6 15,7 3,2 Minimum capital requirement 1.920, , ,0 12,6 7,6 Capital surplus 734,6 967,4 909,6 23,8-6,0 BIS RATIO (%) 11,06% 11,85% 11,37% 2,8-4,1 Risk weighted assets , , ,7 13,1 7,8 69

70 YIELDS AND COSTS (I) Year to date basis st quarter 2nd quarter 3rd quarter 4th quarter Vol. Rate % Prof. Vol. Rate % Prof. Vol. Rate % Prof. Vol. Rate % Prof. Cash and deposits (Central Banks) 538 1, , , ,95 8 Financial institutions , , , , Loans and advances to customers , , , , Fixed income and government bonds , , , ,15 59 Equity securities 517 0, , , ,85 20 Subtotal , , , , Tangible and intangible assets Other assets Total assets , , , , st quarter 2nd quarter 3rd quarter 4th quarter Vol. Rate % Prof. Vol. Rate % Prof. Vol. Rate % Prof. Vol. Rate % Prof. Financial institutions , , , , Customer deposits , , , , Repo.agreements & others , , , ,22 69 Subtotal , , , , Other liabilities Special funds Shareholders' equity Total liabilities , , , ,

71 YIELDS AND COSTS (II) Year to date basis st quarter 2nd quarter Vol. Rate % Prof. Vol. Rate % Prof. Cash and deposits (Central Banks) 364 1, ,74 3 Financial institutions , ,14 35 Loans and advances to customers , , Fixed income and government bonds , ,23 35 Equity securities 555 5, ,04 19 Subtotal , , Tangible and intangible assets Other assets Total assets , , st quarter 2nd quarter Vol. Rate % Prof. Vol. Rate % Prof. Financial institutions , ,83 96 Customer deposits , , Repo.agreements & others , ,57 21 Subtotal , , Other liabilities Special funds Shareholders' equity Total liabilities , ,

72 YIELDS AND COSTS (III) Quarterly basis st quarter 2nd quarter 3rd quarter 4th quarter Vol. Rate % Prof. Vol. Rate % Prof. Vol. Rate % Prof. Vol. Rate % Prof. Cash and deposits (Central Banks) 538 1, , , ,13 2 Financial institutions , , , ,94 25 Loans and advances to customers , , , , Fixed income and government bonds , , , ,14 17 Equity securities 517 0, , , ,11 1 Subtotal , , , , Tangible and intangible assets Other assets Total assets , , , , st quarter 2nd quarter 3rd quarter 4th quarter Vol. Rate % Prof. Vol. Rate % Prof. Vol. Rate % Prof. Vol. Rate % Prof. Financial institutions , , , ,76 54 Customer deposits , , , ,02 80 Repo.agreements & others , , , ,24 17 Subtotal , , , , Other liabilities Special funds Shareholders' equity Total liabilities , , , ,

73 YIELDS AND COSTS (IV) Quarterly basis st quarter 2nd quarter Vol. Rate % Prof. Vol. Rate % Prof. Cash and deposits (Central Banks) 364 1, ,56 2 Financial institutions , ,11 17 Loans and advances to customers , , Fixed income and government bonds , ,90 17 Equity securities 555 5, ,43 12 Subtotal , , Tangible and intangible assets Other assets Total assets , , st quarter 2nd quarter Vol. Rate % Prof. Vol. Rate % Prof. Financial institutions , ,67 49 Customer deposits , ,67 67 Repo.agreements & others , ,41 9 Subtotal , , Other liabilities Special funds Shareholders' equity Total liabilities , ,