|
Thus cumulative net attributable profit for the year to September comes to €2.73 billion, a year-on-year increase of 24.9%. The key to this growth lies in the positive performance of operating profit. This came to €4.87 billion, a rise of 19.7%, boosted in turn by higher recurrent earnings. The lower part of the income statement contains lower loan loss provisions (due to higher asset quality) and provisions for early retirements which are offset by lower capital gains from divestment of holdings in other companies. One particular feature of the group’s results this year are the progressively bigger improvements in profit each quarter. This is reflected in all the lines on the income statement. Specifically the cumulative growth in operating profit was 15.0% in March, 17.7% in June and 19.7% in September. The figures for net attributable profit were 18.0% in March, 20.1% in June and 24.9% in September.
NET INTEREST INCOME
In the third quarter net interest income came to €1.82 billion, which is a year-on-year increase of 21.4%. It brings the cumulative figure for the first nine months to €5.19 billion, an increase of 14.5% year-on-year. The increase at 30-Jun-05 was 11.1%. Net interest income excluding dividends rose to €5.0 billion, 14.7% higher than the first nine months of 2004 (it was 11.7% higher at 30-Jun-05). Dividends accounted for the remaining €183m and this figure is 10.4% higher than a year earlier. The firm and sustained growth of business conducted with resident customers in Spain helped to offset customer spreads which declined to 2.56% in the third quarter. This decline was partly due to seasonal factors such as formalization fees and the cost of the Libreton campaign and the trend is similar to the one registered in the same period of last year. In the Americas the trend in spreads is positive, especially in Mexico where the difference between the yield on loans and the cost of deposits in pesos was 11.63% in the third quarter. In the previous quarter the spread was 11.55% and in the third quarter of 2004 it was 10.86%.
ORDINARY REVENUES
In the third quarter net fee income contributed €1.02 billion, 18.7% more than the same period of 2004. Insurance activity provided another €130m, an increase of 27.8%. Both items grew faster compared to the half year figures. Net fee income grew 13.1% in the year to September and insurance 18.1%. The aggregate of both concepts grew 13.6% (10.5% in June) to €3.22 billion. All three areas performed favourably: Retail Banking in Spain and Portugal was up 9.5%, Wholesale and Investment Banking 24.0% and the Americas 15.8%. Net income from equity method (mainly BNL and Corporación IBV) came to €79m in the year to September with an increase of 11.6%. The sum of net interest income, net fee income, insurance and equity-accounted income brought core revenues to €8.49 billion for the first nine months. This was an increase of 14.1% (10.9% in the first half). In the year to September, net trading income came to €839m, an increase of 16.3%. Relevant contributions to this increase were provided by the market units in the Wholesale and Investment Banking Area, by holdings in major industrial and financial companies, by the Americas Area and by the placement of treasury products with retail banking customers. As a result ordinary revenues rose to €3.23 billion in the quarter (19.4% more than the same period last year). The figure for the first nine months was €9.33 billion, bringing the year-on-year increase to 14.3% (11.8% for the first half). After adding €110m from net sales from non-financial activities (mainly real estate business), total revenues come to €9.44 billion, a rise of 14.6% over the first nine months of 2004.
OPERATING PROFIT
In the first nine months of the year, general administrative expenses came to €4.5 billion and this was 10.3% higher than the same period last year. In domestic businesses the increase was 4.9% and in the Americas it was 16.9% (10.5% excluding Laredo National Bancshares, Hipotecaria Nacional and Valley bank). At 30-Sep-05, the group had 91,770 employees and the network consisted of 7,208 branches. There are 3,510 branches in Spain after the net increase of 62 in the third quarter (128 have been added the last 12 months). This increase is associated with the expansion in retail banking and Dinero Express. After the increase of 14.6% in operating revenues (ordinary revenues plus non-financial activities) and the increase of 11.6% in general administrative expenses net of recovered costs, the cost/income ratio (which relates both concepts) improved to 43.6% (44.7% in the first nine months of 2004). Including depreciation, the cost/income ratio is 47.0%. This is an improvement of 1.9 points compared to the first nine months of 2004. There were significant improvements in efficiency in all business areas. Operating profit for the third quarter came to €1.67 billion. The year-on-year increase was 23.8%, beating the figure of 17.7% in the first half. As a result the cumulative figure for the year to date grew 19.7% to €4.87 billion. Growth was higher in all three business areas compared to previous periods: 14.3% in Retail Banking in Spain and Portugal, 42.6% in Wholesale and Investment Banking and 36.4% in The Americas (50.2% in Mexican banking). When comparing operating profit with 2004, the figures are increasingly less affected by variations in exchange rates. At constant rates, operating profit grew 20.1% for the group as a whole and 37.3% in the Americas. On a like-for-like basis (ie, excluding Laredo National Bancshares, Hipotecaria Nacional and Valley Bank) operating profit at constant exchange rates grew 17.8% for the group and 32.1% in the Americas.
PROVISIONS AND OTHERS
Up to September €531m were set aside for loan loss provisions. This is 10.7% less than the same period last year because asset quality has improved and there has been an increase in recovery of provisions. Provisions for the first nine months of the year were €329m. This was a year-on-year decrease of 53.9% mainly due to lower early retirement costs. Finally the net result of other gains and losses contributed €151m in the first nine months of the year against €396m last year. The decrease is explained by lower income from divestment of holdings. Compared to €19m obtained in the first nine months of this year, there were capital gains of €283m in the same period in 2004 (divestment of Banco Atlántico, Direct Seguros, Grubarges and Vidrala).
ATTRIBUTABLE PROFIT
Pre-tax profit came to €1.41 billion in the third quarter and €4.13 billion in the year to September. The year-on-year increases are 40.1% and 31.1%, respectively. After providing for tax, cumulative net profit came to €2.92 billion, some 25.7% higher. Minority interests are entitled to €196m and therefore the net profit attributable to the group is €2.73 billion, which is a 24.9% increase over last year (25.3% at constant exchange rates). Earnings per share in the first nine months came to €0.80. This is 24.0% higher than the €0.65 obtained in the same period last year. Return on equity (ROE) was 35.2%, and return on assets (ROA) was 1.07% (compared to 33.3% and 0.97%, respectively, a year earlier).
|