Mercantil Servicios Financieros CSE: MVZ.A / MVZ.B, OTC: MSFUY / MSVFY II QUARTER 2007 RESULTS
Mercantil Servicios Financieros Mercantil s Stock Corporate Strategy II Quarter 2007 Results Cumulative Annual Growth Recent Performance Positioning, Ratings and Awards Performance Subsidiaries Banco Mercantil Commercebank Holding Seguros Mercantil Merinvest Holding Mercantil Internacional Asset Management
Mercantil s Overall strategic direction 2004-2008 Mercantil Servicios Financieros will focus on key financial businesses (banking, asset management and insurance) in Venezuela and the US market primarily in Florida (excluding insurance). We will identify potential business opportunities in selected Latin-American markets and Europe We will reinforce our dominant role in the corporate, middle market and individual segments in Venezuela, and pursue additional key growth areas by implementing differentiated, yet integrated, value propositions, while maintaining shared leadership in other Venezuelan market segments. We will also maintain our international positioning and increase local activities in the US market We will develop strategic alliances with peer financial institutions in the target markets We will be the financial institution reference in quality service, risk management, products/services and operational efficiency. We will be recognized for our staff quality -2-
Mercantil s Executive Summary Leading financial institution in Venezuela Important international presence (mainly Venezuela, U.S.A. and Switzerland) to fulfill the financial needs its customer base Benefits from a well-diversified client base Achieved steady growth with excellent performance despite the unfavorable economic situation in Venezuela Focuses its efforts on increasing its operating efficiency, keeping adequate risk management standards and maintaining an efficient management assets and liabilities -3-
Mercantil is the leading financial institution in Venezuela Long-lasting performance in the Venezuelan market (since 1925) Among leaders in Loan Portfolio Leader in Mutual Funds Third largest insurance company in Venezuela Pioneer and leader in electronic services and trust funds Client base approximately 2.7 million Strong franchise with presence in 10 countries in the Americas and Europe Full range financial services Experienced management team -4-
Global Management Organization Executive Committee (average tenure 20 years) Board Directors Chairman and CEO Gustavo Marturet Luis A. Fernandes Global Chief Legal Counsel Luis A. Fernandes Global Strategic Planning Manager Salvador Chang Gerencia Global de Toribio Cabeza Global Audit Manager Toribio Cabeza Money Laundering Prevention and Compliance Officer Juan Livinalli Secretary the Board Guillermo Ponce Global Chief Risk Officer Millar Wilson Insurance and New Financial Business Manager President Seguros Mercantil Alberto Benshimol Manager Office the Presidency Luis Calvo Blesa Global International Operations Manager -Executive President Commercebank Guillermo Villar Global Commercial and Personal Banking Manager Nerio Rosales Global Corp. and Invest. Banking Manager - Executive President Merinvest. C.A. Philip Henríquez Global Operations and Technology Manager Armando Leirós Global Private Banking and Asset Management Manager Rosa María de Costantino Global Chief Financial Officer Executive President Banco Mercantil Alejandro González Sosa -5-
Mercantil s Corporate Chart 99.83% 100% 100% 100% 100% 100% Banco Mercantil Commercebank Holding Corporation Holding Mercantil Internacional Seguros Mercantil Merinvest Other Venezuelan Universal Bank (since 1925) - 313 branches - Miami Agency - Branch in Curacao - 6 Representative fices: London, Sao Paulo, Bogotá, Lima, Mexico and New York Commercebank N.A. U.S. Commercial Bank (since 1987) - 14 branches in Florida - 1 Branch in New York - 1Branch in Houston Commercebank Investment Services (CIS) (since 2002) - Broker-Dealer Commercebank Trust Company (CTC) (since 2004) - Trust Services in U.S.A. CTC Management Company Banco Mercantil (Schweiz), AG. Switzerland (since 2000) Banco Mercantil Venezolano NV (Curacao) (since 1975) BMC Bank & Trust (Cayman Islands) (since 1986) Banco del Centro (Panama) (since 1977) Insurance in Venezuela, focused on health, equity and automobile (since 1974) - 32 branches Merinvest Sociedad de Corretaje C.A. (since 1989) - Investment Banking - Brokerage, Trading in Venezuela Mercantil Sociedad Administradora de Entidades de Inversión Colectiva C.A. (since 1995) - Mutual Funds in Venezuela Mercantil Servicios de Inversión, C.A. (since 2002) Other Minor Investments number employees: 8,751 in Venezuela and 976 abroad -6-
Mercantil s Electronic Banking As As June June 30, 30, 2007 2007 Banco Mercantil: 1,322 ATM s linked to Conexus, Maestro, Cirrus and Visa Plus 1,030,052 Cardholders through Visa, MasterCard and Diners 29,223 P.O.S. Call Center (244 stations) Internet Banking: For Individuals since Dec. 1997 For Companies since June. 1999 e-commerce since Aug. 1999 Commercebank: 21 ATM s affiliated to Cirrus, Honors and other networks Call Center (38 stations) Internet Banking Seguros Mercantil: First company in Venezuela to fer insurance policies through the internet Call Center (30 stations) Merinvest: Mutual Funds in Bs. More than 630,000 clients use internet banking on a regular basis -7-
Mercantil s Summary - IIQ 2007 Net Income Earnings per Share ROE* Bs. 118 Billion (-28.5% IIQ06) US$ 55 Million (-28.5% IIQ06) Bs. 118 (-28.5% IIQ06) US$ 0,06 (-28.5% IIQ06) 17.9% in IIQ07 (23.6% in IIQ06) ROA* 1.4% in IIQ07 (2.2% in IIQ06) : Bs. 36,186 Billion (+34.2% Jun. 06) = US$ 16,873 Million Shareholders Equity: Bs. 2,729 Billion (+16.2% Jun. 06) = US$ 1,273 Million Past due and Non-performing Loans / Gross Loans: 0.6% (0.4% in IIQ06) Operating Expenses / Average : 5.4% (6.7% in IIQ06) Figures according to Venezuelan Securities Commission standards Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results at the average exchange rate, both: Bs. 2,144.60/1US$ as June 30, 2007. There is an exchange control in place in Venezuela since February 2003. (*) Annualized -8-
Contribution Mercantil s Subsidiaries (Bs.) As As June June 30, 30, 2007 2007 Banco Mercantil Equity: Bs. 1,617 MMM 99.83% 100% 100% 100% 100% 100% Commercebank Holding Corporation Equity: Bs. 729 MMM Holding Mercantil Internacional Equity: Bs. 149 MMM Equity: Bs. 2,729 MMM Seguros Mercantil Equity: Bs. 218 MMM Merinvest Equity: Bs. 88 MMM Other Equity: Bs. 69 MMM In billion Bolivars Banco M ercant il Commercebank Holding Corporat ion Holding M ercant il Int ernacional Seguro s M ercant il M erinvest Ot her Tot al 21,338 12,675 794 821 280 277 36,186 % 59.0% 35.0% 2.2% 2.3% 0.8% 0.8% 100.0% Loans (Net) 10,891 5,785 423 17,100 Investments 5,441 5,900 338 569 97 165 12,509 Deposits 18,694 9,530 708 1 28,933 Net Income (IIQ07) 104 20-20 11 3 0 118 Net Income (Semester) 198 40-20 18 4-1 239 % Net Income 82.8% 16.7% -8.4% 7.5% 1.7% -0.4% 100.0% Employees 7,419 907 51 1,226 51 73 9,727 Asset management 7,691 1,961 574 75 265 0 10,566 Financial Results according to Venezuelan Securities Commission standards There are differences in Deposits, Loans and Net Income when compared to figures each institution according to its own regulator -9-
Contribution Mercantil s Subsidiaries (US$) As As June June 30, 30, 2007 2007 Banco Mercantil Equity: US$ 754 MM 99.83% 100% 100% 100% 100% 100% Commercebank Holding Corporation Equity: US$. 340 MM Holding Mercantil Internacional Equity: US$ 69 MM Equity: US$ 1,273 MM Seguros Mercantil Equity: US$ 102 MM Merinvest Equity: US$ 41 MM Other Equity: US$ 32 MM In million US$ Banco M ercant il Commercebank Holding Corporat ion Holding M ercant il Int ernacional Seguro s M ercant il M erinvest Ot her Tot al 9,950 5,910 370 383 131 129 16,873 % 59.0% 35.0% 2.2% 2.3% 0.8% 0.8% 100.0% Loans 5,078 2,698 197 7,973 Investments 2,537 2,751 158 265 45 77 5,833 Deposits 8,717 4,444 330 13,491 Net Income (IIQ07) 48 9-9 5 1 0 55 Net Income (Semester) 92 19-9 9 2 0 111 % Net Income 82.8% 16.7% -8.4% 7.5% 1.7% -0.4% 100.0% Employees 7,419 907 51 1,226 51 73 9,727 Asset management 3,586 914 268 35 124 0 4,927 Figures according to Venezuelan Securities Commission standards. Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results at the average exchange rate, both: Bs. 2,144.60/US$ as 06/30/07. There is an exchange control in place in Venezuela since February 2003. There are differences in Deposits, Loans and Net Income when compared to figures each institution according to its own regulator. -10-
Mercantil s Subsidiaries Contribution to and Net Income As As June June 30, 30, 2007 2007 Net Net Income Income (Semester) (Semester) Holding Mercantil Int ern. 2.2% Seguro s Mercantil 2.3% Ot her 1.5% Holding Mercantil Int ern. -8.4% Seguro s Mercantil 7.5% Ot her 1.3% Commercebank 35.0% Banco Mercantil 59.0% Commercebank 16.7% Banc o Mercantil 82.8% : Bs. 36,186 Billion US$ 16,873 Million : Bs. 239 Billion US$ 111 Million Figures according to Venezuelan Securities Commission standards Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results are converted at the average exchange rate, both: Bs. 2,144.60/US$. There is an exchange control in place in Venezuela since February 2003. -11-
Mercantil s Distribution by Business Segment As As June June 30, 30, 2007 2007 + Managed Managed Income Income (Semester)(1) (1) Banking (74%) Banking (95%) Insurance (2%) Insurance (2%) Asset Management (23%) Others (1%) Asset Management (3%) Others (1%) Bs. 46,752 Billion US$ 21,800 Million Bs. 1,293 Billion US$ 603 Million Figures according to Venezuelan Securities Commission standards Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate Bs. 2,144.60/US$. There is an exchange control in place in Venezuela since February 2003. (1) Gross Financial + Other Operating Income, Net -12-
Mercantil s by Currency As As June June 30, 30, 2007 2007 US$ 41.4% Bs. 58.6% : Bs. 36,186 Billion US$ 16,873 Million Figures according to Venezuelan Securities Commission standards Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate Bs. 2,144.60/US$. There is an exchange control in place in Venezuela since February 2003. -13-
Mercantil s Distribution As As June June 30, 30, 2007 2007 in in U.S.A. U.S.A. 1% Loan Portfolio (46%) U.S. Government (19%) 35% U.S.Ag encies (4 %) in in Venezuela Venezuela Loan Portfolio (47%) Venezuelan Gov. (10%) Venez. Central Bank (15%) U.S. Government (1 %) Private (2%) Cash & Equivalent (19%) Ot her Asset s (6%) Invest ment s (28%) 4% 57% 3% : Bs. 36,186 Billion US$ 16,873 Million Private (23%) Ot her Asset s (8%) Investments (46%) Banco Mercantil s Branches (USA) Commercebank (USA) Other Companies (Venezuela) Banco Mercantil (Venezuela) Other Geographies Figures according to Venezuelan Securities Commission standards Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate Bs. 2,144.60/US$. There is an exchange control in place in Venezuela since February 2003. -14-
Mercantil s Financial Distribution Distribution Financial Financial Investment Investment Portfolio Portfolio Venezuelan Central Bank (27.2%) Investments 42% Lo ans 58% (1) International Priv. Sector (26.7%) US Government (21.3%) Venezuelan Government (17.7%) US Ag encies (4.6 %) Tot al: Bs. 29,819 Billion US$ 13,904 Million (1) Current and Rescheduled Loan Portfolio Tot al: Bs. 12,509 Billion US$ 5,833 Million Venezuelan Private Sector (2.5%) Venezuelan Government debt represents 0.8 times Mercantil s Equity Note: According to the Ministry Finance, MERCANTIL owned as March 31, 2007, 2.4% the public debt securities (mainly domestic) issued by the Venezuelan Government Gross Gross Loan Loan Portfolio Portfolio by by Economic Economic Activity Activity Tot al: Bs. 17,421 Billion US$ 8,122 Million Commerc ial (33%) Construction (14%) Agric ultural (10%) Trade (9%) Industrial (9%) Credit Cards (7%) Car loans (7%) Resid. Mortgage (5%) Other (5%) Serv ic es (3%) Gross Gross Loan Loan Portfolio Portfolio by by Type Type Risk Risk Unrecoverable 0.0% High Risk 0.1% Real Risk 1.1% Tot al: Bs. 17,421 Billion US$ 8,122 Million Potential Risk 1.3% Normal Risk 97.5% Figures according to Venezuelan Securities Commission standards Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate Bs. 2,144.60 /1US$. There is an exchange control in place in Venezuela since February 2003. -15-
Mercantil s Distribution Loans and Deposits by Client Segment Distribution Distribution Net Net Loans Loans (Billion (Billion Bs.) Bs.) 7,312 12% 42% 46% 54.5% 11,295 17% 38% 45% 29.1% 14,580 23% 35% 42% 17.2% 17,100 24% 32% 44% 2004 2005 2006 Jun-07 SME's Large Corporations Individuals Distribution Distribution Deposits Deposits (Billion (Billion Bs.) Bs.) 13,816 54% 30% 16% 40.9% 19,480 47% 32% 21% 29.6% 25,247 51% 25% 24% 14.5% 28,933 49% 26% 25% 2004 2005 2006 Jun-07 SME's Large Corporations Individuals -16-
Mercantil s Distribution Deposits As As June June 30, 30, 2007 2007 Demand Deposits 47% Sav ing s Deposits 26% Time Deposits 27% Tot al: Bs. 28,933 Billion US$ 13,491 Million Figures according to Venezuelan Securities Commission standards. Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate Bs. 2,144.60 /1US$. There is an exchange control in place in Venezuela since February 2003. -17-
Mercantil s Composition Income As As December December 31, 31, 2006 2006 As As June June 30, 30, 2007 2007 60% 71% Gross Financial Margin Commissions and Insurance Premiums, Net Gain in Securities Trading Other Income 22% 6% 12% 2006 Tot al Income: Bs. 2,392 Billion US$ 1,115 Million Gross Financial Margin Commissions and Insurance Premiums, Net Gain in Securities Trading Other Income 22% 8% -1% IS07 Tot al Income: Bs. 1,293 Billion US$ 603 Million Figures according to Venezuelan Securities Commission standards. Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate Bs. 2,144.60 /1US$. There is an exchange control in place in Venezuela since February 2003. -18-
Mercantil s Asset Quality As As June June 30, 30, 2007 2007 14.0% 13.0% 12.0% 11.0% Past due and Non-performing Loans/ Gross Loan Portfolio Allowances for losses on Loan Port folio/ Past due and Non-performing Loans 632.8% 650.0% 550.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 306.0% 264.3% 288.9% 234.4% 154.6% 179.4% 175.4% 3.2% 3.0% 2.6% 1.9% 0.8% 0.3% 0.8% 0.6% 2000 2001 2002 2003 2004 2005 2006 IIQ07 450.0% 350.0% 250.0% 150.0% 50.0% -50.0% -19-
Operating Efficiency Banco Mercantil Volume Transactions (Monthly Average) CAGR 13.3% 14,853 14,524 17,357 21,089 27,624 33,453 19% 4% 5% 8% 33% 23% 5% 3% 8% 34% 27% 32% 31% 28% 26% 23% 21% 19% Commercebank N.A. Volume Transactions (Monthly Average) 5% 2% 8% 36% CAGR 15.1%404,606 649,093 841,286 876,442 987,794 1,011,129 5% 1% 9% 31% 5% 1% 11% 26% 4% 1% 13% 2002 2003 2004 2005 2006 Jun-07 36% 41% 22% Internet IVR Operator POS ATM s Branches 58% 71% 77% 78% 79% 79% 5% 12% 4% 23% 4% 10% 3% 4% 4% 4% 2% 8% 8% 2% 7% 8% 1% 13% 2% 10% 1% 9% 8% 7% 2002 2003 2004 2005 2006 Jun-07-20-
Mercantil s Summary Consolidated Balance Sheet and Income Statement (*) 6/30/06 12/31/06 6/30/07 6/30/07 (%)Change in Bs. (%)Change in Bs. (Billion Bs.) (Billion Bs.) (Billion Bs.) (Million US$) (1) Dec-06 vs. Jun-07 Jun--06 vs. Jun-07 26,957 31,717 36,186 16,873 14.1% 34.2% Loan Portfolio (net) 12,915 14,580 17,100 7,972 17.3% 32.4% Investments in Securities 10,034 11,959 12,509 5,833 4.6% 24.7% Deposits 21,441 25,247 28,933 13,491 14.6% 34.9% Shareholders' Equity 2,349 2,589 2,729 1,273 5.4% 16.2% Net Income (Quarter) 165 162 118 55 n/ a -28.5% Net Income (Accumulated) 266 555 239 111 n/a -10.2% (*) Consolidated Balance Sheet according to Venezuelan Securities Commission standards (1) Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results at the average exchange rate both Bs. 2.144,60/1US$ as 06/30/07. There is an exchange control in place in Venezuela since February 2003. -21-
Mercantil s Financial Ratios (*) Balance Structure IIQ06 2006 IIQ07 Financial / 85.8% 84.3% 82.4% Loans/ Deposits 60.2% 58.9% 59.1% Pritability Net Income/ Average Equity (ROE) 23.6% (1) 23.6% 17.9% (1) Net Income/ Average (ROA) 2.2% (1) 2.1% 1.4% (1) N.I.M. 5.9% 6.3% 6.6% Efficiency Operating Expenses/ Average 5.9% (1) 5.8% 5.2% (1) Operating Expenses/ Revenues 65.9% (1) 64.7% 66.1% (1) Capital Equity/ 8.7% 8.2% 7.5% Equity/ Risk based (Required 8%) 16.0% 16.3% 14.4% (*) According to Venezuelan Securities Commission standards (1) Annualized -22-
Mercantil s Cumulative Annual Growth (Bs.) (Billion (Billion Bs.) Bs.) Deposits Deposits (Billion (Billion Bs.) Bs.) 4,896 5,626 9,292 CAGR 36.0 % 11,966 17,106 24,275 31,717 36,186 14.1% 3,806 4,404 CAGR 36.6 % 7,360 9,601 13,816 19,480 25,247 28,933 14.6% 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 Jun-07 Net Net Loan Loan Portfolio Portfolio (Billion (Billion Bs.) Bs.) Net Net Income Income (Billion (Billion Bs.) Bs.) 722 2,226 2,481 3,916 CAGR 36.8 % 4,573 7,313 11,295 14,580 17,100 17.3% CAGR 58,5 % 255 180 35 71 366 311* 411 555 35.0% 239 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 IS07 (*) Net earnings from the sale Bancolombia s Stockholding Figures according to Venezuelan Securities Commission standards Acquisitions in 2000 and 2001 were a key factor in Mercantil s steady growth, achieving a leading position in Venezuela Expansion in subsidiaries abroad contributed significantly to Asset growth Efforts in reducing operating expenses and contribution from position in foreign currency have contributed to results -23-
Mercantil s Cumulative Annual Growth (US$) (Million (Million US$) US$) Deposits Deposits (Million (Million US$) US$) 7,006 7,432 CAGR 14.5 % 8,932 6,640 7,497 11,319 14,789 16,873 14.1% CAGR 15.0 % 5,445 5,818 5,259 6,016 7,214 9,083 11,772 13,491 14.6% 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 Jun-07 Net Net Loan Loan Portfolio Portfolio (Million (Million US$) US$) Net Net Income Income (Million (Million US$) US$) 3,185 3,277 2,798 CAGR 15.2% 2,865 3,818 5,267 6,799 7,973 17.3% 51 98 TACC 31,1% 150 160 194 343 148* 195 259 32.8% 111 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 IS07 (*) Net earnings from the sale Bancolombia s Stockholding Figures according to Venezuelan Securities Commission standards Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results are converted at the average exchange rate, both: Bs. 2,144.60/US$ as 06/30/07. There is an exchange control in place in Venezuela since February 2003. -24-
Mercantil s Evolution Financial Ratios ROE ROE (%) (%) ROA ROA (%) (%) 36.9% (1) 3.6% (1) 6.3% 12.0% 23.2% 23.6% 23.6% 23.6% 17.9% 0.9% 1.3% 2.4% 2.4% 2.6% 2.1% 1.4% 2000 2001 2002 2003 2004 2005 2006 IIQ07(2) 2000 2001 2002 2003 2004 2005 2006 IIQ07(2) NIM NIM (%) (%) Commissions Commissions and and Other Other Income Income / Income Income (%) (%) 12.5% 10.5% 9.5% 8.2% 6.7% 5.8% 6.3% 6.6% 23.5% 26.8% 37.6% 34.8% 40.1% 50.1% 39.9% 28.9% 2000 2001 2002 2003 2004 2005 2006 IIQ07(2) 2000 2001 2002 2003 2004 2005 2006 IIQ07 Figures are based on Consolidated Financial Statements, according to Venezuelan Securities Commission s Standards (1) Earnings during 2005 include extraordinary gains from the sale investments in Bancolombia (2) Annualized -25-
Mercantil s Evolution Financial Ratios Equity Equity / (%) (%) Equity Equity / Risk- Risk- Weighted Weighted (%) (%) (1) (1) 11.6% 10.9% 9.8% 10.3% 9.9% 8.9% 8.2% 7.5% 20.7% 16.6% 15.9% 19.9% 17.9% 17.0% 16.3% 14.4% Mín. 8% 2000 2001 2002 2003 2004 2005 2006 IIQ07 2000 2001 2002 2003 2004 2005 2006 IIQ07 Operating Operating Expenses Expenses / Average Average (%) (%) Operating Operating Expenses Expenses / Income Income (%) (%) 9.6% 3.6% 6.0% 8.4% 7.8% 3.4% 6.5% 6.3% 3.3% 5.7% 5.8% 5.2% 2.6% 2.6% 2.6% 2.7% 2.6% 5.0% 4.5% 3.9% 3.7% 3.1% 3.1% 2.6% 82.7% 74.3% 61.3% 59.7% 64.4% 55.7% 64.7% 66.1% 2000 2001 2002 2003 2004 2005 2006(1) IIQ07(2) Operating Expenses Salaries and Employee Benefits 2000 2001 2002 2003 2004 2005 2006 IIQ07 Operating Expenses over Average demonstrates results from cost-reduction efforts and aggregated value obtained from acquisitions (2000-2001) Equity Growth has been led by excellent results and foreign currency position Figures are based on Consolidated Financial Statements, according to Venezuelan Securities Commission s Standards (1) Includes Bs. 50 billion from the new Mercantil Employee savings scheme (2) Annualized -26-
Mercantil Servicios Financieros Mercantil s Stock Corporate Strategy II Quarter 2007 Results Cumulative Annual Growth Recent Performance Positioning, Ratings and Awards Performance Subsidiaries Banco Mercantil Commercebank Holding Seguros Mercantil Merinvest Holding Mercantil Internacional Asset Management
Mercantil s Shareholder Structure MSF has two classes shares: A and B. A shares entitle the holder to one vote at any general shareholders meeting. B shares entitle the holder to 1/10 one vote at any general shareholders meeting, but only for the purposes appointing the statutory auditor and its alternate and for the approval financial statements submitted by the Board Directors. MSF currently has over 19,900 shareholders. MSF s shares are traded in the Caracas Stock Exchange (MVZ.A and MVZ.B). They are also traded over the counter in the US through an ADR Level 1 Program in place since 1996 (MSFUY/MSVFY). Market Capitalization s Bs. 4,306 Million (US$ 2,003 Million) as 12/31/2006 Market Capitalization s Bs. 3,444 Million (US$ 1,602 Million) as 09/18/2007 Other (lo cal mk t) 29% Employees 2% ADR s 23% Group traditional Shareholders 46% Number outstanding shares as 06/30/07: Common Shares Type A 578,769,572 Common Shares Type B 418,836,022 997,605,594 Number outstanding shares after dividend payment on 05/16/2007 Common Shares Type A 579.094.559 Common Shares Type B 419.099.035 998.193.594-28-
Mercantil s Stock Price As As September September 18, 18, 2007 2007 6,000 5,000 4,000 3,000 2,000 1,000 0 60,000 40,000 20,000 - -29-1/3/2005 1/31/2005 2/28/2005 3/28/2005 4/25/2005 5/23/2005 6/20/2005 7/18/2005 8/15/2005 9/12/2005 10/10/2005 11/7/2005 12/5/2005 1/2/2006 1/30/2006 2/27/2006 3/27/2006 4/24/2006 5/22/2006 6/19/2006 7/17/2006 8/14/2006 9/11/2006 10/9/2006 11/6/2006 12/4/2006 1/1/2007 1/29/2007 2/26/2007 3/26/2007 4/23/2007 5/21/2007 6/18/2007 7/16/2007 Price -(Bolívars) 8/13/2007 9/10/2007 Volume (Billion Bolivars) Traded Volume in Mercantil Market Volume (Excluding Mercantil) Pric e M V Z A Pric e M V Z B CSE Index (Adjusted)
Mercantil s Stock performance since inception (1) Daily Exchange Rates -30- Billions Bolivars Millions Dollars 5,400 5,100 4,800 4,500 4,200 3,900 3,600 3,300 3,000 2,700 2,400 2,100 1,800 1,500 1,200 900 600 300 - Bs. 3,411 Billion (US$ 1,602 Million*) As 09/ 18/ 2007 5,400 5,100 4,800 4,500 4,200 3,900 3,600 3,300 3,000 2,700 2,400 2,100 1,800 1,500 1,200 900 600 300-8/11/1997 11/3/1997 1/26/1998 4/20/1998 7/13/1998 10/5/1998 12/28/1998 3/22/1999 6/14/1999 9/6/1999 11/29/1999 2/21/2000 5/15/2000 8/7/2000 10/30/2000 1/22/2001 4/16/2001 7/9/2001 10/1/2001 12/24/2001 3/18/2002 6/10/2002 9/2/2002 11/25/2002 2/17/2003 5/12/2003 8/4/2003 10/27/2003 1/19/2004 4/12/2004 7/5/2004 9/27/2004 12/20/2004 3/14/2005 6/6/2005 8/29/2005 11/21/2005 2/13/2006 5/8/2006 7/31/2006 10/23/2006 1/15/2007 4/9/2007 7/2/2007 Market Cap in Bs. Market Cap in US$ Mercantil s price average compounded growth rate during the period December 1998 - December 2006 was 48.3%. The annual yield for an investment made in Mercantil during the period December 1998 November 2006 is 51.8% in Bolivar terms and 28.0%. in dollar terms. This takes into account the growth in market capitalization as well as cash and stock dividends.
Mercantil s Dividends According to Mercantil s Bylaws and in compliance with the Venezuelan Capital markets Law, Mercantil annually pays dividends to its shareholders at least 50% the company s base income the previous year. The base income is determined following the provisions the National Securities Commission. Dividends to be paid each year will be determined in keeping with the applicable regulatory capital indexes and in line with the company s investment and development plans. 2000 2001 2002 2003 2004 2005 2006 2007(*) paid Dividend (MM Bs) 11,777 17,250 22,289 44,510 32,428 108,097 136,088 113,888 Stock Dividend 1/10 1/15 1/15 2/5 0 2/5 0 2/5 Cash Cash Dividend Dividend vs. vs. Minimum Minimum amount amount required required by by the the Capital Capital Markets Markets Law Law (MM (MM Bs.) Bs.) 136,088 * 77,141 71,073 6,743 2,745 13,676 4,144 32,428 18,593 20,926 10,652 3,831 2,099 22,353 31,094 8,345 2000 2001 2002 2003 2004 2005 2006 2007(*) Cash Paid Dividend Minimum Req uired In million US$ 2000 2001 2002 2003 2004 2005 2006 2007(*) Cash Paid Dividend 9.90 18.86 15.50 13.11 17.17 36.62 63.46 33.14 Minimum Required 4.03 5.71 3.19 6.67 1.11 10.61 14.50 3.89 (*) Proposal approved at the General Shareholder's Meeting on March 30, 2007. Cash dividend per share: Bs 12 every quarter (Ordinary) and Bs. 30 by May (Extraordinary). Bs. 78 per share, plus a stock dividend 2 for every 5. -31-
Mercantil s Dividends Dividends Dividend Dividend vs. vs. Minimum Minimum amount amount required required by by the the Capital Capital Markets Markets Law Law (MM (MM Bs.) Bs.) 108,097 136,088 124,377 113,888 89,413 11,777 10,980 17,250 16,576 22,289 15,324 44,510 42,610 32,428 8,394 33,379 2000 2001 2002 2003 2004 2005 2006 2007(*) Cash Paid Div idend Minimum Cash Div idend Required In million US$ 2000 2001 2002 2003 2004 2005 2006 2007(*) Cash Paid Dividend 17.3 23.8 18.6 27.9 17.2 51.3 63.5 53.1 Minimum Required 16.1 22.9 12.8 26.7 4.4 42.4 58.0 15.6 Stock Dividend 1/ 10 1/ 15 1/ 15 2/ 5 0 2/ 5 0 2/ 5 (*) Proposal approved at the General Shareholder's Meeting on March 30, 2007. Cash dividend per share: Bs 12 every quarter (Ordinary) and Bs. 30 by May (Extraordinary). Bs. 78 per share, plus a stock dividend 2 for every 5. -32-
Mercantil s Stock Ratios IIQ2007 2006 2005 2004 2003 2002 2001 2000 1999 Earnings per Share (Bs.) 118 778 1,021 679 473 332 127 61 28 Price / Earnings per Share 29.6 7.7 2.4 5.1 5.2 4.6 6.8 13.7 11.9 Price / Book Value 1.3 1.7 0.8 1.1 1.1 0.7 0.5 0.5 0.2 Note: Earnings during 2005 include extraordinary gains from the sale investments in Bancolombia. -33-
Price / Book Value Mercantil has the lowest Book value levels among the leading Latin American Banks Leading Leading Latin Latin American American Banks Banks in in terms terms P/BV(x) P/BV(x) as as August August 2007 2007 4.16 3.42 3.46 3.70 3.09 3.47 3.09 2.14 1.30 Brazil Chile Mexico Colombia Venezuela Source: Bloomberg -34-
Mercantil Servicios Financieros Mercantil s Stock Corporate Strategy II Quarter 2007 Results Cumulative Annual Growth Recent Performance Positioning, Ratings and Awards Performance Subsidiaries Banco Mercantil Commercebank Holding Seguros Mercantil Merinvest Holding Mercantil Internacional Asset Management
Mercantil s Positioning As As June June 30, 30, 2007 2007 Vzla Ranking Market Share Volume (Million Bs.) Volume (Million US$) Banco Mercantil: Gross Loans 2 13.1% 10,973,809 5,117 Banco Mercantil: Deposits (1) 2 12.0% 16,700,420 7,787 Banco Mercantil: Deposits + Inv. Sold under Rep Agrmt. 2 11.7% 18,751,886 8,744 Banco Mercantil: Deposits (Excluding Government) 2 13.6% 15,471,888 7,214 Banco Mercantil: + Inv. Sold under Rep Agrmt. 3 10.7% 21,516,709 10,033 Banco Mercantil: (2) 2 10.9% 19,465,243 9,076 Banco Mercantil: Under Management 2 9.4% 6,577,113 3,067 Merinvest: Mutual Funds 1 45.6% 265,021 124 Seguros Mercantil: Net Premiums (3) 3 9.1% 648,553 302 U.S.A. Commercebank: Depósits (4) 19/ 349 0.8% 6,206,472 2,894 Banco Mercantil: Based on NON CONSOLIDATED financial statements, following Superintendency Banks standards. (1) Includes: Includes savings, time and demand deposits + securities issued by the Institution + Restricted Deposits + Other Liabilities with Financial Institutions in Venezuela up to and exceeding one year. Does not include investments sold under repurchase agreement (2) Does not include investments sold under repurchase agreement Seguros Mercantil: (3) Figures according to Venezuelan Insurance Superintendency standards Commercebank: (4) Figures based on US GAAP, following FDIC as 06/30/2006. Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results are converted at the average exchange rate, both: Bs. 2,144.6/1US$ as 06/30/07. There is an exchange control in place in Venezuela since February 2003. -36-
Mercantil s Ratings Mercantil Servicios Financieros Fitch Ratings Clave National Ratings Long-term AA+ (Ven) Short-term F1+ (Ven) Rating for Unsecured Bonds (Long-term in local currency) A2 A2 Rating for Commercial Paper (Short-term in local currency) A1 A1 Banco Mercantil Fitch Ratings Moody's National Ratings Long-term AA (Ven) - Short-term F1 (Ven) - International Ratings Long-term (Foreign Currency) B+ B3 Short-term (Foreign Currency) B - Individual D D- Commercebank Holding and Commercebank N.A. Fitch Ratings International Ratings Long-term Deposit BBB Long-term BBB- Short-term F3 Individual B/ C MSF ranks among the top Venezuelan issuers Banco Mercantil ranks on the top among Venezuelan banks in terms Venezuelan National Ratings Banco Mercantil has the highest international rating for banks in Venezuela Commercebank has Investment Grade Rating -37-
Mercantil s Awards The Venezuelan Standardization and Quality Certification Institute FONDONORMA awarded the ISO 9001:2000 certification to Banco Mercantil for four lines service: a) Operational processing for the settlement, collection, extension and renewal promissory notes and registration performance bonds and guarantees b) Services for corporate clients for the settlement, custody and payment in the secondary fixedincome securities market c) Processing ATM transactions for withdrawals, balance checks and account transfers with debit cards d) Handling and processing customer transactions in regional hub fices, and processing ATM transactions (the main fice in each region). In its March 2007 issue Mercantil Servicios Financieros (MERCANTIL) was selected among the top 2000 leading companies in the world by the prestigious Forbes Magazine. MERCANTIL came in at number 1,617 being the only Venezuelan institution from the financial sector and the first among the only two Venezuelan companies included in this ranking. Global Finance released the selection Banco Mercantil as the Best Trade Finance Bank published in its February 2007 issue. Criteria for choosing the winners included market share, transaction volume, scope global coverage, customer service, competitive pricing and innovative technologies. In its December 2006 issue, The Banker selected Banco Mercantil as the Best Bank in Venezuela for its outstanding financial performance. The Banker highlighted Mercantil s global scope among its business segments, its cost efficiency and the creation global private banking and asset management units. Latin Finance honored Banco Mercantil with the Best Bank in Venezuela for the year 2006, in its November 2006 issue. Latin Finance highlights that Banco Mercantil has a strong tradition sound credit management, with a ratio past-due and non-performing loans better than the entire Venezuelan financial system. All Logos are registered trademarks -38-
Mercantil s Awards Banco Mercantil was ranked number 9 and Seguros Mercantil number 17th by the Business Venezuela magazine among the Top 100 Companies 2006 in the country, published in its October 2006 issue. The magazine is specialized in economy and business. According to the magazine, companies in the top 10 places are important sources employment, devoting significant investments to social responsibility Mercantil Servicios Financieros was the only Venezuelan company selected by Forbes Magazine in its September 2006 issue, as one the 2000 leading companies in the world, ranking number 1896, being one the 46 South American selected companies. In its July 2006 issue, The Banker ranked Mercantil Servicios Financieros as number 15 among the Top 25 Latin American banks and number 500 among the 1.000 world most important institutions. In its July 2006 issue, Euromoney, one the leading publication for the global banking, finance and capital markets, selected Banco Mercantil as the Best Bank in Venezuela. Euromoney Awards for Excellence recognizes the best performing financial institutions in every significant financial market and product sector, as well as the leading banks in over 100 countries In its half-year 2006 special edition, The Venezuelan magazine Gerente chose Banco Mercantil as The Most Admired Company in the Banking Sector, ranking number 1 in the categories quality service and financially sound company. Seguros Mercantil was selected as the second most admired company in the insurance market, and Merinvest as the third most admired company in the capital market. These outstanding positions were achieved in this ranking The most admired companies following a survey among 600 Venezuelan executives. In March 2006, Euromoney magazine made a poll for the first time on the Best-Managed Companies in Latin America. Mercantil was ranked number 1 in Venezuela with 28.57% total votes. The ranking was based on a survey market analysts at major banks and research institutes in Latin America, taking into account market strengths, pritability, growth potential, management quality and results. All Logos are registered trademarks -39-
Mercantil Servicios Financieros Mercantil s Stock Corporate Strategy II Quarter 2007 Results Cumulative Annual Growth Recent Performance Positioning, Ratings and Awards Performance Subsidiaries Banco Mercantil Commercebank Holding Seguros Mercantil Merinvest Holding Mercantil Internacional Asset Management
Banco Mercantil
Banco Mercantil - Summary Consolidated Balance Sheet and Income Statement (*) 6/30/06 12/31/06 6/30/07 6/30/07 (%)Change in Bs. (%)Change in Bs. (Billion Bs.) (Billion Bs.) (Billion Bs.) (Million US$) (1) Dec-06 vs. Jun-07 Jun--06 vs. Jun-07 (2) 15,801 19,039 21,595 10,069 13.4% 36.7% Loan Port folio (net ) 7,863 8,609 10,962 5,111 27.3% 39.4% Investments in Securities (2) 4,782 5,928 5,474 2,552-7.7% 14.5% Deposits (2) 13,723 16,738 19,070 8,892 13.9% 39.0% Shareholders' Equity 1,307 1,518 1,678 783 10.5% 28.4% Net Income (Quarter) 123 119 123 57 3.4% 0.0% Net Income (Accumulated) 174 424 224 104 n/ a 28.7% (*) Consolidated Balance Sheet according to standards prescribed by the Superintendency Banks (1) Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results at the average exchange rate both Bs. 2.144,60/1US$ as 06/30/07. There is an exchange control in place in Venezuela since February 2003. (2) Includes Investments sold under repurchase agreement. -42-
Banco Mercantil - Financial Ratios (*) Balance Structure IIQ06 2006 IIQ07 Financial / 76.4% 74.5% 74.7% Loans/ Deposits 75.2% 60.1% 65.8% Pritability Net Income/ Average Equity (ROE) 27.7% (1) 31.2% 28.0% (1) Net Income / Average (ROA) 2.9% (1) 3.0% 2.4% (1) N.I.M. 10.2% 10.1% 10.1% Efficiency Operating Expenses/ Average 7.5% 6.7% 5.7% (1) Operating Expenses/ Revenues 59.8% (3) 55.1% 56.0% (1) Capital Equity/ (Current regulatory minimum 8 %. 10% up to June 11.4% 9.8% 9.4% 2006) (2,3) Equity/ Note: Risk Based (12%) (2,3) 12.9% 13.9% 12.2% Earnings during 2005 include extraordinary gains from the sale non-strategic investments (Bancolombia) (*) Consolidated Balance Sheet, according to Superintendency Banks standards (1) Annualized (2) Minimum capital ratios according to Superintendency Banks. The equity over total risk based assets index does not include investments sold under repurchase agreement (3) As 2006, Venezuelan Government Bonds are reduced from when calculating the Equity/ ratio. -43-
Banco Mercantil s Cumulative Annual Growth (Bs.) (Billion (Billion Bs.)(*) Deposits Deposits (Billion (Billion Bs.)(*) 3,433 3,530 CAGR 32.7 % 8,943 6,252 4,198 13,848 19,039 21,595 13.4% CAGR 34.6% 7,399 5,147 2,765 2,887 3,304 11,972 16,738 19,070 13.9% 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 Jun-07 Loan Loan Portfolio Portfolio (Net) (Net) (Billion (Billion Bs.) Bs.) Net Net Income Income (Billion (Billion Bs.) Bs.) 12,969 CAGR 39.0 % 6,762 8,609 50.6% CAGR 35.3 % 355 471 424 1,524 1,650 1,869 1,857 3,690 69 76 173 236-10,0% 224 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 IS07 Figures according to Superintendency Banks standards (*) Includes investments sold under repurchase agreement Note: Earnings during 2005 include extraordinary gains from the sale investments in Bancolombia -44-
Banco Mercantil s Cumulative Annual Growth (US$) (Million US$)(*) (Million Deposits Deposits (Million (Million US$)(*) 4,911 CAGR 11.7 % 4,663 3,917 3,000 4,669 6,457 8,878 10,069 13.4% 3,957 3,814 CAGR 13.3% 2,361 3,225 3,864 5,582 7,805 8,892 13.9% 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 Jun-07 Loan Loan Portfolio Portfolio (Net) (Net) (Million (Million US$) US$) Net Net Income Income (Million (Million US$) US$) 2,180 2,180 CAGR 17.0% 1,335 1,164 1,927 3,153 4,014 6,047 50.6% 102 106 CAGR 11.7% 144 148 188 224 198-11,6% 104 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 IS07 Note: Earnings during 2005 include extraordinary gains from the sale Figures according to the Superintendency Banks investments in Bancolombia Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results at the average exchange rate, both Bs. 2,144.60/1US$ as 06/30/07. There is an exchange control in place in Venezuela since February 2003. (*) Includes investments sold under repurchase agreement -45-
38.8% 37.2% 39.7% 42.5% 31.2% Banco Mercantil s Evolution Financial Ratios ROE ROE (%) (%) ROA ROA (%) (%) 4.9% 4.9% 5.1% 4.9% 24.5% 20.6% 28.0% 2.7% 2.5% 3.0% 2.4% 2000 2001 2002 2003 2004 2005 2006 IIQ07(1) 2000 2001 2002 2003 2004 2005 2006 IIQ07(1) NIM NIM (%) (%) Commissions Commissions and and Other Other Income Income / Income Income (%) (%) 17.4% 18.7% 20.0% 17.4% 12.3% 10.2% 10.1% 10.1% 14.5% 17.6% 31.6% 26.4% 35.1% 44.6% 36.9% 26.4% 2000 2001 2002 2003 2004 2005 2006 IIQ07 2000 2001 2002 2003 2004 2005 2006 IIQ07 Note: Earnings during 2005 include extraordinary gains from the sale investments in Bancolombia Figures are based on Consolidated Financial Statements, according to Venezuelan Superintendency Banks standards (1) Annualized -46-
7.3% 7.1% 6.7% 5.7% Banco Mercantil s Evolution Financial Ratios Equity Equity / (%) (%) Equity Equity / Risk- Risk- Weighted Weighted (12%) (12%) (1 (1 ) Mín. 10% 11.7% 12.4% 12.8% 13.4% 12.4% 11.1% 9.8% 9.4% Mín. 8% 14.8% 16.4% 17.9% 26.9% 20.0% 13.9% 13.9% 12.2% Mín. 12% 2000 2001 2002 2003 2004 2005 2006 IIQ07 2000 2001 2002 2003 2004 2005 2006 IIQ07 Operating Operating Expenses Expenses / Average Average (%) (%) Operating Operating Expenses Expenses / Income Income (%) (%) 10.6% 10.4% 10.7% 8.6% 65.5% 62.7% 52.1% 48.0% 48.6% 48.3% 55.1% 56.0% 2000 2001 2002 2003 2004 2005 2006 IIQ07(2) 2000 2001 2002 2003 2004 2005 2006 IIQ07 Figures are based on Consolidated Financial Statements, according to Venezuelan Superintendency Banks standards (1) Equity/Risk-Weighted do not include investments sold under repurchase agreement. (2) Annualized -47-
Loan Requirements in Venezuela Banks in Venezuela are required to lend to certain sectors considered strategic importance for the Government. There are specific percentages for each sector (normally based on the prior year-end figure for total loans), time measure and in some case preferential rates. Sect or % Compliance reached % Compliance required Jun-0 7 Reached (in Billion Bs.) Required (in Billion Bs.) Dec-07 % Compliance required Agriculture 21.3% 18.0% Bs. 1.826 billion Bs. 1.546 billion 21.0% Interest Rate as June 2007 Set weekly by the Central Bank (BCV), based on the weighted average lending rat e leading banks. At June 30, 2007 this is 12.85% Mortgage 7.6% - Bs. 244 billion short term Bs. 415 billion long term - 10.0% Set semi-annually by the Housing and Habitat Ministry, based on the weighted average lending rate leading banks. Currently set at 10.11% Microcredits 3.9% 3.0% Bs. 336 Billion Bs. 258 billion 3.0% Within minimum and maximum rates established by the Central Bank. Tourism 2.3% 2.0% Bs. 196 billion Bs. 172 billion 3.0% 35.1% 23.0% 37.0% Set monthly by the Central Bank, based on the weighted average lending rate leading banks. Between 12.75% and 14.35% at June 30, 2007, depending on the geographical region the project. -48-
Banco Mercantil and Peer Group * Market Share As As June June 30, 30, 2007 2007 Deposits Deposits + Inv. sold under rep. agreement Deposits (Exc. Govmt) Gross Loans + Inv. sold under rep. Agreement Banco Mercantil 12.0% 11.7% 13.6% 13.1% 10.9% 10.7% Provincial (BBVA) 10.1% 9.9% 11.2% 11.4% 9.5% 9.4% Venezuela (BSCH) 11.0% 11.0% 12.3% 13.1% 10.8% 10.8% Banesco 12.4% 14.4% 13.7% 13.9% 11.4% 13.0% Sub- 45.5% 47.0% 50.8% 51.5% 42.6% 43.9% Fin. System Bs. 139,166,445 160,563,244 113,461,859 83,457,368 179,048,889 200,445,687 Fin. System US$ 64,892 74,869 52,906 38,915 83,488 93,465 (*) Based on Non Consolidated figures, following Superintendency Banks standards -49-
Commercebank Holding Corporation
Commercebank Holding - Summary Consolidated Balance Sheet and Income Statement (*) 6/30/06 12/31/06 6/30/07 (%)Change in Bs. (%)Change in Bs. (Billion Bs.) (Billion Bs.) (Billion Bs.) Dec-06 vs. Jun-07 Jun--06 vs. Jun-07 4,553 5,019 5,910 17.8% 29.8% Loan Portfolio, net 2,162 2,574 2,680 4.1% 24.0% Investments Portfolio 1,802 2,045 2,322 13.5% 28.9% Deposits 3,256 3,505 4,123 17.6% 26.6% Shareholders' Equity 264 291 341 17.2% 29.2% Net Income (Quarter) 14 8 10 n/a -28.6% Net Income (Acumulated) 24 43 19 n/a -20.8% (*) Consolidated Financial Statement, based on US GAAP -51-
Commercebank Holding - Financial Ratios (*) Balance Sheet Structure IIQ06 2006 IIQ07 Financial / 91.4% 95.9% 91.9% Loans/ Deposit s 67.1% 74.2% 65.6% Pritability Net Income/ Average Equity (ROE) 18.5% (1) 16.2% 11.9% (1) Net Income / Average (ROA) 1.1% (1) 1.0% 0.7% (1) Efficiency Operating Expenses/ Average 2.4% 2.2% 2.2% Operating Expenses/ Revenues 40.4% (1) 39.2% 37.9% (1) Capital Equity "Tier 1"/ Commercebank Holding (2) 7.6% 7.3% 7.3% Equity "Tier 1"/ Commercebank N.A. (Min 5%) 7.5% 7.7% 7.4% Equity/ Risk Based - Comm. Holding (Basle) (Min 6%) (3) 11.2% 10.9% 10.4% Equity/ Risk Based - Commercebank N.A. (Basle) (Min 6%) 11.2% 11.7% 10.6% (*) According to US GAAP (1) Annualized (2) Tier 1 Equity includes Trust Preferred Securities which are considered as Equity under US regulations (3) Equity includes both the outstanding Trust Preferred Securities not considered as Tier 1 Capital, plus the percentage Trust Preferred Securities which are considered as Capital under US regulations -52-
Commercebank Holding s Cumulative Annual Growth (US$) Growth rates in other markets have continued. In the United States a small acquisition a financial institution (Florida Savings Bank with totaling US$ 132 million) was made at the end 2005, allowing the bank to expand its operations in three highly desirable markets in Florida. (Million (Million US$) US$) Deposits Deposits (Million (Million US$) US$) 1,563 2,226 CAGR 22.7 % 3,685 3,177 3,167 4,224 5,019 5,910 17.8% 590 1,854 CAGR 34.9% 2,659 2,505 2,892 3,124 3,505 4,123 17.6% 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 Jun-07 Loan Loan Portfolio Portfolio (Net) (Net) (Million (Million US$) US$) Net Net Income Income (Million (Million US$) US$) 897 1,029 CAGR 18.3% 1,587 1,746 1,356 1,973 2,574 2,680 4.1% 14 18 CAGR 20.6% 32 22 26 38 43 13.2% 19 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 IS07 Figures according to US GAAP -53-
Commercebank Holding and Peer Group As As March March 31, 31, 2007 2007 Commercebank Local Peer Group (Average) National Peer Group (Average) Non-accrual Loans / Loans Equity/ Net Int. Margin/Avg. Earning Efficiency Ratio ROA ROE 0.3% 0.4% 0.4% 8.7% 11.0% 10.2% 3.9% 4.1% 3.4% 59.0% 59.1% 56.1% 0.9% 0.9% 1.1% 10.7% 8.2% 11.6% Source: Federal Deposit Insurance Corporation - FDIC -54-
Seguros Mercantil
Seguros Mercantil Summary Consolidated Financial Statements (*) 6/ 30/ 06 12/ 31/ 06 6/ 30/ 07 6/ 30/ 07 (%)Change in Bs. (%)Change in Bs. (Billion Bs.) (Billion Bs.) (Billion Bs.) (Million US$) (1) Dec-06 vs. Jun-07 Jun--06 vs. Jun-07 709 824 953 444 15,7% 34,4% Equity 211 265 280 131 5,7% 32,7% Net Income (Acumulated) 27 57 17 8 n/ a -37,0% Net Premiums (Acumulated) 433 976 648 302 n/ a 49,7% IIQ06 2006 IIQ07 Combined Rat ios 98.0% 97.2% 98.2% Incurred Claims / Earned Premiums 67.0% 66.6% 66.5% Commissions and Adq. Expenses / Earned Premiums 17.2% 17.1% 18.8% Administrative Expenses / Earned Premiums 13.7% 13.5% 12.8% (*) Consolidated Balance Sheet according to Venezuelan Insurance Superintendency standards (1) Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results at the average exchange rate both Bs. 2.144,60/1US$ as 06/30/07. There is an exchange control in place in Venezuela since February 2003. -56-
Seguros Mercantil Summary Consolidated Income Statement (*) 6/ 30/ 06 12/ 31/ 06 6/ 30/ 07 6/ 30/ 07 (%)Change in Bs. (%)Change in Bs. (Billion Bs.) (Billion Bs.) (Billion Bs.) (Million US$) (1) Dec-06 vs. Jun-07 Jun--06 vs. Jun-07 Earned Premiums 311 722 509 237-29.5% 63.7% Paid Claims 208 481 338 158-29.7% 62.5% Paid Commissions 53 124 96 45-22.6% 81.1% Operating Expenses 43 97 65 30-33.0% 51.2% Technical Income 6 20 9 4-55.0% 50.0% Investment Income 28 48 16 7-66.7% -42.9% Net Income (Acumulated) 27 57 17 8 n/ a -37.0% Net Premiums 433 976 648 302 n/ a 49.7% (*) Consolidated Balance Sheet according to Venezuelan Insurance Superintendency standards (1) Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results at the average exchange rate both Bs. 2.144,60/1US$ as 06/30/07. There is an exchange control in place in Venezuela since February 2003. -57-
Seguros Mercantil s Cumulative Annual Growth (BS.) (*) (Billion (Billion Bs.) Bs.) Net Net Premiums Premiums (Billion (Billion Bs.) Bs.) 44 51 CAGR 60.5% 352 170 231 555 824 953 15.7% 73 81 TACC 54,1% 227 358 486 670 976 45,6% 648 2000 2001 2002 2003 2004 2005 2006 Jun-07 2000 2001 2002 2003 2004 2005 2006 IS07 Net Net Income Income (Billion (Billion Bs.) Bs.) TACC 96,2% 31 52 57 10,0% 1 2 16 8 17 2000 2001 2002 2003 2004 2005 2006 IS07 (*) Figures according to Venezuelan Insurance Superintendency standards -58-
Seguros Mercantil s- Cumulative Annual Growth (US$) (*) (Million (Million US$)(1) Net Net Premiums Premiums (Million (Million US$)(1) 63 67 122 CAGR 35.1% 145 184 258 384 445 15.7% 107 112 TACC 27,3% 186 225 258 318 455 43,1% 302 2000 2001 2002 2003 2004 2005 2006 Jun- 07 2000 2001 2002 2003 2004 2005 2006 IS07 Net Net Income Income (Million (Million US$)(1) TACC 73,2% 25 27 1 3 11 5 17 8,0% 8 2000 2001 2002 2003 2004 2005 2006 IS07 (*) Figures according to Venezuelan Insurance Superintendency standards (1) Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results at the average exchange rate both Bs. 2.144,60/1US$ as 06/30/07. There is an exchange control in place in Venezuela since February 2003. -59-
Seguros Mercantil - Portfolio by Activity As As June June 30, 30, 2007 2007 Transportation Others 1.9% 6.6% Fire 5.4% Life 3.3% Automobile 42.2% Healthcare 40.5% -60-
Seguros Mercantil and Peer Group * Venezuelan Insurance Market Net Premiums as As As June June 30, 30, 2007 2007 Company / Insurance Group Net Premiums (Million US$) (1) Net Premiums (Billion Bs.) Market Share %Growth in Bs. Banvalor C.A., Seguros 422 906 12.7% 194.0% Caracas de Liberty Mutual C.A.,Seguros 394 846 11.9% 30.7% Mercantil C.A., Seguros 303 649 9.1% 49.6% Previsora, C.N.A. d e Seguros La 296 634 8.9% 36.2% Mapfre La Segurid ad, C.A. d e Seguros 197 422 5.9% 2.1% Sub- first 5 1,612 3,457 48.4% 52.4% Other 1,716 3,680 51.6% 52.8% (49 Companies) 3,328 7,137 100.0% 55.8% (*) Figures, according to Venezuelan Insurance Superintendency standards (1) Dollar figures are presented for reference. Results are converted at the period average exchange rate Bs. 2,144.60/1US$. There is an exchange control in place in Venezuela since February 2003. -61-
Merinvest C.A.
Merinvest C.A. - Summary Consolidated Balance Sheet and Income Statement (*) 6/ 30/ 06 12/ 31/ 06 6/ 30/ 07 6/ 30/ 07 (%)Change in Bs. (%)Change in Bs. (Billion Bs.) (Billion Bs.) (Billion Bs.) (Million US$) (1) Dec-06 vs. Jun-07 Jun--06 vs. Jun-07 62 159 280 131 76.1% 351.6% Investments in Securities 58 69 97 45 40.6% 67.2% Shareholders' Equity 58 59 88 41 49.2% 51.7% Net Income (Quarter) 0 3 3 1 n/ a 100.0% Net Income (Acumulated) 5 17 4 2 n/ a -20.0% (*) Consolidated Balance Sheet according to Venezuelan Securities Commission standards (1) Dollar figures are presented for reference. Balance Sheet figures are converted at the period-end exchange rate and Results at the average exchange rate both Bs. 2.144,60/1US$ as 06/30/07. There is an exchange control in place in Venezuela since February 2003. -63-