ATLANTIC SECURITY BANK 2011 Annual Report

Transcription

1 ATLANTIC SECURITY BANK Annual Report

2 TABLE OF CONTENTS MARKET COMMENT Financial highlights 3 4 FINANCIAL RESULTS Net interest income Non-financial income Operating Expenses ASSETS AND LIABILITIES Assets Liabilities and net shareholders equity ASSET MANAGEMENT BUSINESS Balance Sheet Income Statement BOARD OF DIRECTORS AND MANAGEMENT 8

3 MARKET COMMENT 2.9% ON AVERAGE, IS THE EXPECTED GROWTH RATE IN THE GLOBAL ECONOMY FOR 2012 AND The performance of the world s main economies in was weak. After 2009 marked the beginning of post-crisis recovery, at the end of the US economy showed signs of decelerating due to higher fiscal deficit, indications of an upward swing in unemployment and low consumer confidence levels. The possibility of a sovereign debt crisis in Europe due to Greece s collapse constitutes another source of risk for the world economy. Contrary to the outlook for, one of the fears regarding the international market came true: a gradual deceleration was observed in the world s largest economies -the United States and the European Union- due to fiscal austerity policies and high fiscal deficits. The European crisis put the fragility of the Euro zone in evidence. In this part of the world, in addition to Greece s economic bailout, countries such as Portugal, Spain and Italy showed signs of weak economies and fiscal debt exposure, which have exacerbated the crisis s effect on this continent. The United States, in its attempt to make the adjustments necessary to its fiscal policies to improve its economic performance, decelerated significantly after the main risk rating agencies revised its debt downward from AAA to AA+, which increased the perception of risk. The Euro zone contributed 3 to market volatility given that fears of sovereign debt crisis loomed over Europe s main economies along with concerns that contagion would extend to the financial system, where the main European nations maintain high levels of exposure to sovereign debt from countries such as Greece, Spain, Portugal and Italy. In the economies of East Asia and Latin America, the economic boom continued and the main economies, including India and China, posted sustained growth of 9.3% and 7.% respectively. Brazil and Mexico grew between 3.7% and 3.8%, which although below the figure reported for still indicates that these countries performance continues to top that of developed countries (the United States and the European Union). In 2012 and 2013, the global economy is expected to continue growing at a moderate pace of 2.9% on average. For transition and emerging economies, sustained growth is expected to fall between 4.0% and 5.0% while the forecasts for growth in developed countries such as the United States, the European Union and Japan indicate moderate growth between 1.5% and 2.5%.

4 Financial Highlights Past due loans over total loans Provisions over past due loans Other information Balance Sheet (US$ millons, end of period) Assets Net Loans Trading securities and investments3 Deposits Net Equity Managed Funds Total Assets over Net Equity Loan Portafolio Quality (%) Operating efficiency (%) Operating Costs over Total Income Operating Costs over Average Assets2 Capital Adequacy (N of times) Profitability Net Income (US$ million) Net Income per Share (US$ per share) Return on average equity (%)1 Return on average assets (%)2 1, , ,801 1, , ,142 Number of shares, net (in millons) Number of employees 1 Averages determined from the monthly balances for each year. 2 Averages determined from the beggining, quarterly ending balances for each year. 3 Includes investments available for sale and held to maturity investments.

5 US$ MILLION 41.1 IS ASB S ANNUAL CONTRIBUTION TO CREDICORP. Financial Results In accumulated terms, total income in was US$ 43.3 million, which represented a 5.3% reduction with regard to. This result was attributable primarily to a drop in interest income (-1.2%) due to lower rates of return in the market in as well as a decrease in the income from sales of securities this year (drop of 49.8% in realized earnings). ASB s annual contribution to Credicorp was US$ 41.1 million, which is nonetheless significant given market conditions. NET INTEREST INCOME NON-FINANCIAL INCOME Net interest income of US$ 31.9 million represented a 15% decrease YoY, which coupled with volatility in the securities market due to strategies to cover derivative instruments and restructure and distribute the investment portfolio, affected income levels. Non-financial income of US$18.4 million included fee income, earnings on sales of securities, foreign exchange transaction and other fee income and expenses. This figure represents a decline of 17.0% with regard to the figure reported in. Lower income is attributable to a drop in earnings on sales of securities, which totaled US$.9 million, and fell 50% below the figure reported in. This result is directly related to conditions in the international securities market in, specifically the volatility that, coupled with the 5

6 + US$ MILLION 3.2 IN FEE INCOME. US economy s poor performance and the European crisis, impeded efforts to obtain higher income through sales of securities. Fee income, which includes management and custody of our clients assets and banking services, increased its contribution to earnings by 39.0% (US$ 3.2 million) due to the bank s active and dynamic approach to advisory services and investment product restructuring. OPERATING EXPENSES Operating expenses totaled US$ 8.0 million, which is equivalent to a 7.0% increase YoY. Higher operating costs and lower total income with regard to affected the bank s operating efficiency ratio, which went from 12.% to 1.0%. ASSETS AND LIABILITIES ASSETS LIABILITIES AND NET SHAREHOLDERS EQUITY Assets totaled US$ 1,524 million, which represents an increase of US$ 18 million in absolute terms and 14.0% YoY. This increase was attributable to the Peruvian economy s good performance that, alongside a securities market with low rates and moderate volatility, allowed the bank to capture new resources through directed strategies. These additional resources were used to increase ASB s positions in Investments Available for Sale for US$ 0 million and Loans for US$ 138 million respectively. Liabilities totaled US$ 1,334 million, which represents an increase of US$ 202 million in absolute terms and 18.0% YoY. Client deposits fell 18.0% due to efforts to capture new clients. During, ASB kept the proprietary investment portfolio s strategy and profile concentrated in high quality investments. Some changes were made to optimize returns and adapt the concentrations of investment assets to changing conditions in the international securities market through high-level risk management. The objective is to guarantee that results are obtained according to the group s guidelines and strategies. Net shareholders equity registered an 8.0% decline, going from US$ 205 million in to US$ 189 million at the end of due to a drop in the absolute value of the investment portfolio due to higher credit spreads for investment grade bonds and the high yields reported in mid-. In this context, ROAE was 21.7%, almost four percentage points below the figure reported in (25.5%). The bank s efficient approach to asset management and returns was reflected in an ROAA of 2.9%.

7 THE ASSET MANAGEMENT BUSINESS At the end of, ASB managed client funds for a market value of US$ 3,194 million. This indicates a net increase of only 0.5% due to a decrease in the portfolio s market value, which was attributable to an increase in the perception of risk, the downgrade of the United State s credit rating and the European crisis. Throughout, we faced many challenges and reported numerous achievements. In 2012, Peru s economy is expected to experience sustained growth while forecasts for the global economy s growth vary from low to moderate. ASB s strategy is to optimize its processes and offer its clients a diversified range of customized products that offer attractive returns. We manage our clients portfolios according to best practices and standards for market quality without sacrificing risk monitoring and control at any time. This helps ensure that our financial advisory services are considered among the best in the market. Balance Sheet (in US$ thousands) Assets Cash and due from banks Cash Deposits in other banks Overnight Investments Investments available for sale Term corporate investments Loans, net Current Less provisions Property, plant and equipment, net Other assets Total Assets 7 97, ,75 42,40 751,589 74,519 5,070 48,142 49, ,004 79, ,504 28,14 811,31 808,907 2,724 0,112 0, , , ,529 Liabilities and Net Equity Deposits Current account deposits Time deposits Due to banks and correspondents Other liabilities 1 117,95 273,84 844,011 3,42 11, ,47 457,075 83, ,47 Total liabilities Total net equity 1 132, , , , , ,529 Total Liabilities and Net Equity

8 Income Statement (in US$ thousands) Interest income 73,871 Dividend income 713 Interest expense -37,045 Net interest income 37,539 Non-financial income 22,103 Fee income 8,329 Gain on sale of securities 13,82 Net loss on foreign exchange transactions -297 Other income 245 Provision for loans 0 Provision for securities -3,250 Operating Expenses -7,49 Salaries and employee benefits -3,772 General and administrative expenses -3,579 Depreciation and amortization -14 3,090 1,014-32,223 31,880 18,3 11,570, ,000-8,025-3,58-4, Net income 41,091 48,89 BOARD OF DIRECTORS AND MANAGEMENT Dionisio Romero Paoletti Fernando Fort Benedicto Cigüeñas Reynaldo Llosa Raimundo Morales Juan Carlos Verme Eduardo Montero 8 President General Manager

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