SGPS CD #1 [ing]

Transcription

SGPS CD #1 [ing]

Report and Accounts
2003
:content
Board of Directors and Officers
5
Note
6
Message to Shareholders
7
Diagram of Banif Group Holdings
9
Banif Group Distribution Networks
11
I. Economic Background
12
1. The International Economy
2. The Portuguese Economy
3. The Financial System
II. Banif Group Operations In 2003
1. Banif SGPS, SA
13
16
17
23
24
1.1 Banif Comercial SGPS, SA
1.1.1 Banif – Banco Internacional do Funchal, SA
1.1.2 Banco Comercial dos Açores, SA
1.1.3 Banif Leasing, SA
1.1.4 Banif Crédito – Sociedade Financeira para Aquisições a Crédito, SA
1.1.5 Banif Rent – Aluguer, Gestão e Comércio de Veículos Automóveis, SA
1.1.6 Banco Banif Primus, SA
25
26
52
55
56
57
58
1.2 Banif Seguros SGPS, SA
1.2.1 Companhia de Seguros Açoreana, SA
60
61
1.3 Banif Investimentos SGPS, SA
1.3.1 Banif – Banco de Investimento, SA
1.3.2 Banif – Banco Internacional do Funchal (Cayman), Ltd
1.3.3 Banif Securities
63
63
70
72
1.4 Other Banif Group Companies
1.4.1 Banif Imobiliária, SA
1.4.2 BanifServ – Empresa de Serviços, Sistemas e Tecnologias de Informação, ACE
73
73
74
III. Analysis Of Individual And Consolidated Accounts
75
IV. Allocation Of Profits
81
V. Closing Remarks and Acknowledgements
83
VI. Financial Statements
86
Individual Balance Sheet
Income Statement
Consolidated Balance Sheet
Consolidated Income Statement
87
89
91
93
3
VII. Documentation Attached to the Accounts
95
1. Annexes to the Accounts
Introductory Note
1.1 Notes to the Finnancial Statements
Banif SGPS, SA - Consolidated Accounts
2. Statement of Cash Flows
3. Income Statement by Function
96
96
96
96
154
157
VIII. Report on Corporate Governance
159
IX. Other Disclosures
172
- Report and Opinion of the Audit Board
- Legal Accounts Certificate and External Auditor’s Report
- Legal Accounts Certificate and External Auditor’s Report (Consolidated Accounts)
4
:board of directors and officers
General Meeting
Advisory Board
Chairman
Prof. Dr. António Soares Pinto Barbosa
Chairman
Comendador Horácio da Silva Roque, representing
Rentipar – Sociedade Gestora
de Participações Sociais, SA.
Secretaries
Comendador Jorge de Sá
Dr. José Lino Tranquada Gomes
Vice Chairmen
Dr. Fernando José Inverno da Piedade,
representing
Renticapital – Investimentos Financeiros, SA.
Comendador João Francisco Justino
Board of Directors
Chairman
Comendador Horácio da Silva Roque
Dr. Fernando Mário Teixeira de Almeida
Dr. Rui Alberto Faria Rebelo,
representing
Empresa de Electricidade da Madeira, SA.
Dr. Gonçalo Cristóvam Meirelles de Araújo Dias
Prof. Doutor Luís Manuel Moreira Campos e Cunha
Engº. António Fernando Couto dos Santos
Dr. Miguel José Luís de Sousa
Engº. Nicolau de Sousa Lima
Vice Chairmen
Dr. Joaquim Filipe Marques dos Santos
Dr. Carlos David Duarte de Almeida
Directors
Dr. António Manuel Rocha Moreira
Dr. Artur Manuel da Silva Fernandes
Dr. Artur de Jesus Marques
Dr. José Marques de Almeida
Alternate Director: Dr. Fernando José Inverno da Piedade
Auditors
Ernst & Young Audit & Associados – SROC, SA.
Supervision Board
Chairman
Dr. Carlos Alberto Rosa
Full Members
Ernst & Young Audit & Associados – Sociedade
de Revisores Oficiais de Contas, SA, represented by
Dr. Alfredo Guilherme da Silva Gândara
Dr. José Luís Pereira de Macedo
Alternate Members
Dr. Luciano Joaquim Jardim
Dr. Pedro Manuel Travassos de Carvalho
Secretary General
Dr. Carlos Oliveira
Board of Directors
Artur Marques
Rocha Moreira
Marques dos Santos
Horácio Roque
Duarte de Almeida
Marques de Almeida
Artur Fernandes
5
:note
This CD contains the full text of the Annual Report and Accounts of Banif SGPS, SA for 2003, including the Report
on Corporate Governance, the Report and Opinion of the Audit Board, and the Individual and Consolidated Legal
Accounts Certificates and the Audit Reports relating to the same period. It also contains an English language version
of the same documents, in which chapters VII (Annex to the Accounts) and IX (Other Disclosures) are presented in
abridged form, including the information regarded as most relevant.
6
:message to shareholders
Following on from the reorganisation of the Banif Group in 2002, the financial year of 2003 was one of sustained
consolidation of the new Banif Group structure, in order to make it increasingly functional, efficient and competitive.
To achieve these goals, co-ordination units have been set up for the different business areas, in order to allow for
Group-wide intervention, a greater degree of integration and a coherent commercial approach.
Work has also continued to extend cross-selling, an essential part of the efforts to integrate the different companies
in the Group. This has brought very positive results, allowing for increasingly competitive intervention in the market.
In line with the Group’s policy of diversification into market niches and of seizing new business opportunities, a new
fleet management company started operating in the Banif Group, Banif Rent – Aluguer, Gestão e Comércio de Veículos
Automóveis, SA.
At the same time, in order to make better use of the Banif brand and to develop greater synergies within the Group,
Mundileasing SLF, SA and Mundicre SFAC, SA changed their names to Banif Leasing, SA and Banif Crédito SFAC, SA.
Following on from the merger of Banif Ascor and Banif Patrimónios into Banif – Banco de Investimento SA, the same
philosophy of organisational streamlining was applied to the merger, in December 2003, with effect as from 1 January
2004, of Banif Imo – Sociedade Gestora de Fundos de Investimento Imobiliário, SA into Banifundos – Sociedade
Gestora de Fundos de Investimento Mobiliário, SA, which changed its name to Banif Gestão de Activos – Sociedade
Gestora de Fundos de Investimento Mobiliário, SA, and increased it share capital to €2,000,000.00.
As a prime example of the high quality standards sought by the Banif Group and its companies, Companhia de Seguros
Açoreana, SA was for the second year running considered the best life insurance company in Portugal, in research
conducted by Exame magazine, in partnership with Dun & Bradstreet and Deloitte & Touche. Companhia de Seguros
Açoreana was also rate highly in non-life business, and was considered the best Portuguese owned company in this
field.
Although this was reported last year, it is wholly relevant to mention here that Banif – Banco Internacional do Funchal,
SA was awarded an international rating in January 2003, with the rating agencies Moody’s and Fitch IBCA awarding
the Bank long term scores of Baa 1 and BBB+, and short term scores of P-2 and F-2. This is a good rating, and reflects
the sound quality of the Bank’s lending risks, giving it access to finance on better terms.
On 24 September 2003, Rentipar, SA, the main shareholder in Banif SGPS, SA, launched a public takeover bid for
shares in Banif SGPS, SA, resulting in acquisition of 6,362,186 shares in the company, and giving it a direct interest
of 54.14% in the respective capital.
In connection with this bid, Banif Comercial SGPS, SA, acting in substitution of Rentipar SGPS, SA, launched another
takeover bid, on 14 November 2003, for shares in Banco Comercial dos Açores, SA.
As a result, at a special stock exchange session held on 3 December 2003 in order to determine the outcome of the
bid, Banif Comercial SGPS, SA acquired 2,502,737 shares in Banco Comercial dos Açores, SA, giving it a direct holding
of 10,327,010 shares representing 99.5% of the share capital in Banco Comercial dos Açores, SA. It then resolved
to resort to the procedure for discretionary acquisition of 51,463 shares in BCA, as provided for in article 194 of the
Securities Code.
As part of what we can regard as a second phase in the reorganisation of the Banif Group, designed to improve the
efficiency of the Group’s planning and management activities, Banif SGPS, SA resolved to sell to Banif Investimentos
SGPS, SA 15.2% of the share capital of Banif Comercial SGPS, SA, the respective contract being concluded on 30
December 2003.
Another important development was the increase in the share capital of Banif – Banco Internacional do Funchal
(Cayman), Ltd, to USD 42 million, in November, and the increase of E 25 million in the share capital of Banif Finance
Ltd, in December. Both increases were effected through issue of non-voting preference shares.
7
On 15 January 2003 the Group celebrated the 15th Anniversary of the incorporation of Banif – Banco Internacional
do Funchal, SA, the founding company of the Banif Group. Various initiatives were organised over the course of the
year to mark this event, attracting the interest of our customers and also the general public. One major event was a
lecture in Funchal, on the actual anniversary date, by the former prime minister, Prof. Aníbal Cavaco Silva, on the
subject “Where is the Portuguese economy heading?”. In addition to this the Group arranged concerts and performances
in Funchal and Lisbon, as well as the second Banif Painting Prize, attracting entries from more than 300 artists. The
Banif Group also celebrated its 15th Anniversary with events aimed at Portuguese communities in Brazil, South Africa
and Venezuela, all of which were enthusiastically attended.
As a result of the Group’s operations in 2003, and despite the difficult economic climate, Banif SGPS, SA was able
to record a consolidated net result of €25.4 million, and consolidated cash flow of €95.9 million, representing increases
of 21.5% and 15.1% over the previous year.
These results naturally reflect the positive performance of the Banif Group as a whole, and we are confident that this
success continue, sustained by the dedication and expertise of our staff, whom I wish to thank for their commitment,
and also by the loyalty of our Clients,
to whom we will seek to provide an increasingly high standard of service.
Horácio da Silva Roque
Chairman of the Board of Directors
8
:diagram of banif group holdings
as at 31/12/2003
Banif Imobiliária
100%
Share C.: 750.000 €
100%
Soc. Imobiliária Piedade
Share C.: 50.000 €
84,80%
100%
Banif Comercial SGPS, SA
Share C.: 280.000.000 €
Banif Seguros SGPS, SA
Share C.: 23.300.000 €
15,20%
52.31%
Banif - Banco Internacional
do Funchal, SA
100%
Banif (Açores) SGPS, SA
100%
Share C.: 25.075.000 €
Share C.: 240.000.000 €
CSA - Companhia
de Seguros Açoreana, SA
Share C.: 36.250.000 €
Banif Finance, Ltd
100%
99,57%
14.07%
BCA - Banco Comercial
dos Açores, SA
Share C.: d)
Share C.: 51.892.365 €
100%
Banif Leasing, SA
100%
Share C.: 10.000.000 €
100%
Banif & Comercial Açores, Inc
San José c)
Share C.: USD 1.000.000
Banif Crédito-SFAC, SA
Share C.: 3.000.000 €
100%
Banif & Comercial Açores, Inc
Fall River
Share C.: USD 100.000
70%
Banif Rent, SA
Share C.: 300.000 €
75%
Banif Primus
100%
Share C.: R$ 31.000.000
Banif Primus Corretora
Share C.l: R$ 11.350.000
10%
90%
Banif Primus Asset Management
Share C.: R$100.000
a) Because this is a company grouping (ACE), its location in the diagram may be reconsidered in the light of the legislation applicable to such groupings.
b) Paid up share capital 100,000 Euros.
c) Paid up share capital USD 100
d) Percentage control of voting capital is 100%, the share capital being comprised of:
1,000 ordinary shares with a nominal value of USD 1 and 5,000 preference shares (non-voting) with a nominal unit value of EUR 1.
e) The percentage of control of voting capital is 100%, the share capital being comprised of:
26,000,000 ordinary shares with a nominal value of USD 1 and 16,000.000 preference shares (non-voting), with a nominal value of USD 1.
f) On 30/12/2003 Banif Imo was merged by deed into Banifundos, with legal effect as from 01/01/2004.
9
Banif SGPS, SA
Share C.: 200.000.000 €
BanifServ a)
100%
Banif Investimentos SGPS, SA
Share C.: 8.750.000 €
100%
Banif - Banco de Investimento
Banif (Cayman), Ltd e)
100%
Share C.: 20.000.000 €
Banifundos f)
100%
85%
Share C.: 1.500.000 €
100%
Banif Imo f)
Share C.: 500.000 €
60%
Share C.: USD 42.000.000
Banif Securities Holdings, Ltd
100%
Share C.: USD 2.108.000
80%
FINAB
Banif Securities, Inc
Share C.: USD 1.620.000
Banif (Brasil), Ltd
Share C.: R$ 150.000
20%
30%
20%
29.19%
47.57%
Banif Açor Pensões
Share C.: 1.850.000 €
10.81%
30%
10%
100%
100%
Banif Inf. Tech. Holdings b)
Share C.: 1.000.000 €
Banif Financial Services, Inc
Banif International
Asset Management
100%
Banif Mortgage Company
100%
Newcapital
Share C.: 750.000 €
10
85%
Econofinance, SA
Share C.: BRL 2.817.750
:banif group distribution networks
Points of Sale as at 31/12/2003
Mainland
Madeira
Azores
Abroad
Total
151
37
54
9
251
145
36
0
1
182
117
32
0
0
149
19
2
0
0
21
• Call Centre
1
0
0
0
1
• Offshore Branch
0
2
0
0
2
• Others (2)
8
0
0
1
9
1
0
54
4
59
• Branch Offices
1
0
44
0
45
• Business Centres (1)
0
0
5
0
5
• Offshore Branch
0
0
1
1
2
• Others (2)
0
0
4
3
7
3. Banif Leasing/Banif Crédito
5
1
0
0
6
4. Banif-Primus (3)
0
0
0
4
4
39
1
19
0
59
39
1
19
0
59
Banif Investimentos
2
1
1
5
9
1. Banif Cayman
0
0
0
1
1
2. Banif-Banco de Investimento
2
1
1
0
4
3. Others (4)
0
0
0
4
4
192
39
74
14
319
Banif Comercial
1. Banif
• Branch Offices
• Business/Client Centres (1)
2. BCA
Banif Seguros
1. CSA
Total
(1) Includes branches and resident teams.
(2) Includes, in mainland Portugal, 7 Private Client Branches, 1 home loans shop and, abroad, 1 Representative Office (Venezuela)
(3) Includes Banif Primus Corretora and Banif Primus Asset Management
(4) Includes Banif Securities, Banif Brasil, Banif Financial Services and Banif Mortgage Company
11
Banif SGPS - Head Office, Rua de João Tavira.
I.economic background
1. The International Economy
The international political and economic situation in 2003 was characterised by the following essential factors:
• Political instability as a result of the war in Iraq and the subsequent peace keeping process;
• The prospects of an economic upturn were confirmed in the major economic zones, led by the United States;
• Most economies continued with expansionist monetary and budgetary policies, designed to sustain the recovery
and to face down the risks of deflation;
• Worsening trade and budget deficits in the United States and violation by some countries of the Stability
and Growth Pact in the European Union;
• A sharp corrective fall in the dollar against the euro and the yen;
• Reversal of trends in equity markets, which recorded their first positive year since 1999;
• The sharp upward trend in physical asset prices continued in the more developed countries, namely in most
commodities and real estate;
• Significant reduction in corporate bond spreads, reflecting expectations of a generalised recovery and an improvement
in corporate returns;
• Accounting scandals in European companies (Ahold, Addeco and Parmalat, amongst others), in the wake of similar
affairs in the United States;
• China continued to play an increasingly strong role in the international economy, causing some trading tensions
with the United States.
Increasing geo-political stability in late 2002 culminated in March when a military force headed by the United States
of America (USA) entered Iraq, marking the start of a war which lasted three weeks, ending officially on 1 May. In
parallel with this, after the corporate scandals which dominated the US news in 2002, the financial year of 2003 revealed
similar situations in Europe, especially in Ahold and Parmalat.
In the USA, the war and peace-keeping effort in Iraq over the course of 2003 led to approval of a finance package
of USD 87,000 million in October. This effort was combined with an expansionist fiscal policy, centred on aggressive
tax cuts, which had first been implemented in 2002; at the same time the US Federal Reserve held steady in its monetary
Policy. The Fed again cut its reference rate (Fed Funds Rate) by 25 base points, meaning that the accumulated reduction
since 2001 has been 550 base points, from 6.5% to only 1% at present.
Despite the fiscal and monetary incentives provided during 2003, business in the first quarter was severely dampened
by geopolitical instability and the start of the war. The consumer confidence index published by the University
of Michigan bottomed out in March at 77.6, later rallying significantly in late 2003, ending the year at 92.6.
The industrial confidence index measured by the ISM (Institute for Supply Management) followed the same pattern,
rising from a low of 45.4 in April to 66.2 in December. Gross Domestic Product (GDP) in the USA is expected to record
an annual average growth rate (AAGR) of 4.3%, up from 2.2% in the previous year and 0.3% in 2001. With the
recovery in the USA setting the trend for the rest of the world, the global economy is expected to have recorded
an AAGR of 3.2% in 2003, slightly up from the figure of 3% in 2002 and significantly better than the rate of 2.4%
recorded in 2001.
In the Euro Zone, the trend towards recovery was not so clear as in the USA, given that growth in GDP (at constant
prices) is thought to have stood at 0.6% in 2003, down from the figure of 0.9% recorded in 2002. At the same time,
the unemployment rate continued to rise, reaching 9.1% in 2003, as against 8.4% in 2002 and 8% in 2001.
13
As a combined result of economic trends and geopolitical uncertainty in the first quarter of 2003, European producer
and consumer confidence levels reached their lowest points in March, and then recovered over the rest of the year.
The IFO in Germany bottomed out at 87.4 in March, rallying to 96.8 in December.
After two years of near stagnation, with GDP growth of 0.2% in 2002 and –0.4% in 2001, GDP in Japan is expected
to show the first concrete signs of recover in 2003, with growth estimated at 2%. However, the recovery in growth
is not expected to be reflected in the unemployment rate, which rose to a historic high of 5.5% in 2003, after standing
at 5.4% in 2002 and 5% in 2001.
GDP Evolution (Real Average Growth)
3,0%
2,5%
2,0%
1,5%
1,0%
0,5%
0,0%
-0,5%
2001
2002
2003 (E)
USA
Euro Zone
Japan
The main Asian economies (ASEAN) recorded slower economic growth, suffering from economic near-paralysis in the
early part of the year due to SARS. Accordingly, having recorded AAGR in GDP at constant prices of 4.8% in 2002,
growth in 2003 is estimated at 2.3%. Despite being penalised by the effects of SARS in the early part of the year, China
is expected to record GDP growth of 7.5%, only 50 base points less than that recorded in 2002, and equal to 2001.
This explosive growth provoked trading tensions with the rest of the world, and especially with the United States.
The Eastern European economies are estimated to have recorded GDP growth of 3.4%, as compared with 3% in 2002 and
3.1% in 2001. This recovery is partly related to the approaching entry of some of these countries into the European Union.
For its part, Russia is expected to have recorded 6% growth in GDP, as against 4.3% and 5% in 2002 and 2001, respectively.
The financial years of 2001 and 2002 were turbulent in Latin America. On the one hand, there were the serious
financial problems faced in Argentina in 2001, and on the other the uncertainty which lasted throughout the election
period in Brazil, and social and political instability in Venezuela in 2002. Although the instability of the previous year
cast a shadow over the early months of the year, 2003 was a year of stabilisation and gradual recovery.
This process of stabilisation allowed the member states of Mercosul (Argentina, Brazil, Paraguay, Uruguay, Bolivia and
Chile) to record GDP growth at constant prices of 2.2%, after negative growth of 1.1% in 2001 and zero growth in
2002. Nonetheless, this trend was not so evident in 2003 in the Brazilian economy, where GDP is expected to have
recorded an AAGR of only 1.5%, equal to that in 2002, and slightly up from the figure of 1.4% in 2001. This was due
essentially to devaluation of the Real by 34.7% against the USD in 2002 which, despite the uncertainty this provoked,
then sustained the growth of the Brazilian economy. At the same time, political and economic stabilisation caused the
USD to rise by 22.4% against the USD in 2003, which to a certain extent placed a cap on growth during the year.
The general recovery in the world economy in 2003 led to a general but moderate rise in prices. This was encouraged by
the average price of crude which, after holding practically steady in 2002, rose by 18.7% in 2003 to USD 31.06/barrel.
This was due not only to the economic recovery, but also largely to the war in Iraq and the OPEP cut in production in October.
14
In the Euro Zone, average inflation is expected to have stood at 2% (in line with the target established by the European
Central Bank), down from the figures of 2.3% and 2.4% recorded in 2002 and 2001 respectively. This drop was due
essentially to a 20.0% rise in the Euro against the US dollar over the course of the year. The downward trend in the
dollar against other leading currencies over the year led to a different trend in the US, where inflation rose from 1.6%
in 2002 to 2.1% in 2003.
Inflation Evolution (Annual Average Rate)
3,0%
2,0%
1,0%
0,0%
-1,0%
-2,0%
2001
2002
2003 (E)
USA
Euro Zone
Japan
After two years of markedly expansionist policies, the US and European central banks pushed these policies even
further in 2003. In the US, the Federal Reserve dropped its leading rate, the Fed Funds Rate, by a mere 25 base points
over the course of 2003, to 1%, as compared with cuts of 50 base points in 2002 and 475 base points in 2001.
The European Central Bank reduced its leading rate by a further 75 base points, from 2.75% at the start of the year,
to 2% by year end. This reduction consolidated the cuts of 50 base points in 2002 and 150 base points in 2001,
bringing Euro Zone interest rates down to historic lows.
Leading Rates in the USA and Euro Zone
3,50%
3,00%
2,50%
2,00%
1,50%
1,00%
0,50%
Fed Funds Rate
N
ov
03
3
t0
Se
3
l0
Ju
03
M
ai
3
ar
0
M
03
n
Ja
N
ov
02
2
Se
t0
2
l0
Ju
ai
02
M
2
ar
0
M
Ja
n
02
0,00%
ECB
15
2. The Portuguese Economy
The crisis in confidence which first hit the Portuguese economy in late 2001 continued into mid-2003, and its effects
were reinforced by budgetary containment measures implemented by the Portuguese Government, in order to comply
with the deficit objectives under the Stability and Growth Pact. However, from the second half of 2003 onwards,
consumer and producer confidence indexes in Portugal slowly started rising.
After what had been a very sharp slowdown in 2002, GDP at constant prices is expected to have fallen by 0.8% in
2003, as compared with an AAGR of 0.4% in 2003, and 1.6% in the previous year. As in 2002, Portugal recorded
GDP growth significantly lower than the average for the Euro Zone (which, as we have seen, is expected to record
an AAGR of 0.5% in 2003). The fall in Portuguese GDP was the result of a combined deterioration in consumer
spending, public spending and investment. More specifically, growth in consumer spending, which in 2002 had slowed
significantly to 0.6%, is thought to have fallen by 1%, with a similar reduction in public spending. Investment, which
had been down by 5.3% in 2002, is expected to have fallen to 9% in 2003. Portuguese exports grew by 2,5%, and
made the largest positive contribution of any aggregate to the GDP figures.
GDP Evolution - Portugal (Real Average Growth)
6,0%
5,0%
4,0%
3,0%
2,0%
1,0%
0,0%
1995
1996
1997
1998
1999
2000
2002
2001
Portugal
Euro Zone
As might be expected from the trend in GDP, and also in investment over the course of 2003, the unemployment rate
in Portugal is expected to stand at 6.5% for 2003, significantly up from the rate of 5.1% in December 2002 and 4.1%
at the end of 2001.
Consumer Confidence Index
10
0
-10
-20
-30
-40
-50
Portugal
16
Jan-03
Jan-02
Jan-01
Jan-00
Jan-99
Jan-98
Jan-97
Jan-96
Jan-95
Jan-94
Jan-93
Jan-92
Jan-91
Jan-90
Jan-89
-60
Euro Zone
In keeping with the reduction in domestic spending, in both the private and public sectors, and thanks also to the
strength of the Euro against the Dollar, the Harmonised Retail Price Index (HRPI) recorded an increase in the order of
3.1%, as compared with 3.7% in 2002 and 4.1% in 2001.
Inflation (Annual Variation in RPI)
6,0
5,0
4,0
3,0
2,0
1,0
03
20
03
30
/0
9/
20
02
/0
30
/1
30
4/
20
02
Portugal (%)
1/
20
02
30
/0
6/
20
01
31
/0
1/
20
01
31
/0
8/
20
00
31
/0
3/
20
00
31
/1
0/
20
99
31
/0
5/
19
99
31
/1
2/
19
99
31
/0
7/
19
98
28
/0
2/
19
98
30
/0
9/
19
97
30
/0
4/
19
97
1/
19
30
/1
6/
/0
30
31
/0
1/
19
97
0,0
Euro Zone (%)
Despite the rise in the Euro against the Dollar, the Portuguese economy began to benefit from the economic upturn
which had begun to be felt in the Euro Zone countries, Portugal main trading partners. As a result, and despite the
recession experienced by the country, the deficit in the Balance on Current Transactions improved, from 7.1% of GDP
in 2002 to 4.9% in 2003.
3. The Financial System
3.1 Overview
With Portugal experiencing an economic recession over the course of 2003 and implementation of programmes to
streamline the structure of Portuguese financial groups, the country’s banking industry focussed essentially on controlling
credit risks, reducing operating costs and diversifying sources of income.
The economic situation in Portugal led to a slowdown in growth in lending, especially in relation to home loans,
although interest rates remained at historically low levels.
Despite the fact that the Portuguese economy had already been cooling off in 2002, this had not been felt in the
home loans market, which grew by 13.5% over the year, as compared with 13% in 2001. This was due above all the
end of State subsidised interest rates, which had led to an increase in loans taken out in the previous period. Accordingly,
despite the continued downward trend in interest rates over the course of 2003, home loans grew rather more
moderately, up by 8.7% through to October.
Consumer credit recorded a different trend. After falling in 2001, when the confidence crisis started in Portugal, and
growing by 2.6% in 2002, consumer credit grew by approximately 7.8% through to October. This recovery may be
explained not only by the continued fall in interest rates, but also as a form of offsetting the reduction in the spending
power of Portuguese consumers, by taking out credit, as the consumer confidence indexes started to recover. In overall
terms, lending in Portugal grew by 6.6% through to October 2003, as against growth of 12.1% in 2002 and 10.3%
in the previous year.
17
Lending to Private Clients (Annual Average Variation)
25,0%
20,0%
15,0%
10,0%
5,0%
0,0%
-5,0%
2000
2001
2002
Home Loans
Consumer Credits
Total
3.2 Equity Markets
Share Indexes - USA
12.000
2.500
10.000
2.000
8.000
1.500
6.000
1.000
4.000
500
2.000
-
DOW Jones
03
03
/1
2/
20
31
/1
0/
20
31
03
03
/0
8/
20
29
03
/0
6/
20
30
03
/0
4/
20
30
02
/0
2/
20
28
02
/1
2/
20
31
02
/1
0/
20
31
02
/0
8/
20
30
02
/0
6/
20
28
02
/0
4/
20
30
/0
2/
20
28
31
/1
2/
20
01
-
NASDAQ
The swift resolution of the war in Iraq made possible a significant reduction in the uncertainty which had been holding
the financial markets down since the end of 2002. In addition to this, influenced by the improvement in confident
indexes, for consumers and producers, economic indicators started to show the first signs of recovery. In the second
half of 2003, companies started to feel the benefits of this upturn, and presented a significant improvement in results
and, for the first time in three years, in their revenues. Driven on also by the ample liquidity in the financial system,
the main international indexes recorded significant gains over the period.
In the USA, after three consecutive years of negative growth, the Dow Jones recorded an annual increase of 25.3%
(or 38.9% in relation to the low reached in March), as compared with falls of 16.8% and 7.1% recorded in 2002 and
2001. The NASDAQ Composite rose by 50% over 2002, when it had recorded a fall of 31.5%, whilst the S&P 500
index was up by 26.3%, after a drop of 23.4% in 2002.
In Europe, the signs of a turnaround were also clear, driven by the upturn observed in the USA, and especially by the removal
of the main factors which had led to losses in value in 2000/2002. The situation instability experienced in Latin America
has been overcome, and at the same time reorganisation programmes designed to cut the borrowing of certain corporations
began to bear fruit. As in the USA, European corporations also began to show consistent improvements in their results.
18
The EuroStoxx 50 was up by 15.7% over the period, after falling by 37.3% in 2002, whilst the PSI 20 was up by
15.7%, as against a fall of 25,6% in 2002. In Spain, the IBEX35 index recorded a rise of 32.3%, as compared with a
fall of 28.1% in the previous year, while the FTSE-100 and the DAX30 recorded growth of 14.8% and 37.1%
respectively, after falls of 24.5% and 43.9% in 2002. The Japanese market recorded an increase in value of 24.5%,
after losing 18.6% in 2002.
Share Indexes - Europe
9.000
4.000
8.000
3.500
7.000
3.000
6.000
2.500
5.000
2.000
4.000
1.500
3.000
2.000
1.000
1.000
500
03
/1
2/
20
03
31
/1
0/
20
03
31
/0
8/
20
03
PSI 20
29
30
/0
6/
20
03
/0
4/
20
03
30
/0
2/
20
02
28
/1
2/
20
02
31
/1
0/
20
02
31
/0
8/
20
02
30
/0
6/
20
02
28
30
/0
4/
20
02
20
2/
/0
28
31
/1
2/
20
01
-
EuroStoxx50
Despite the upward trend in the main international share indexes, only at the end of 2003 did a recovery begin in
the number of public offerings of shares; however, the only public offering in the Portuguese market was for Gescartão.
As a result, the normal sessions at the Lisbon Euronext exchange recorded total trading of €19 thousand million, down
12.3% on the figure of €21.7 thousand million recorded in the previous year; nonetheless, this percentage reduction
was lower than that of 28.7% recorded in 2002. This trend is due essentially to the fact that investors remain averse
to risk, as a result of losses in the main international indexes over three consecutive years. The equity market therefore
continued to lose weight as a proportion of total trading at normal stock exchange sessions, falling from 91.5% in
2002 to 85% in 2003.
3.3 Money Markets and Foreign Exchange
Despite the narrowing of the interest rate differential between the dollar and euro earnings curves, the USD continued
to fall against the EUR. This was due largely to the worsening in the US trade deficit, and the increase in the US budget
deficit, partly as a result of expansionist fiscal policies, but essentially explained by the presence in Iraq. The USD was
therefore 20% down on its December 2002 level, falling from 1.049 USD to the Euro to 1.259 at the end of the year.
19
Exchange Rates
1,3
140
135
1,2
130
1,1
125
1
120
115
0,9
110
0,8
105
100
03
/1
2
/2
0
03
/1
0
Euro Dollar
31
/2
0
03
31
/0
8
29
/2
0
/0
6
/2
0
03
03
30
30
/0
2
/0
4
/2
0
03
/2
0
02
28
/1
2
/2
0
02
31
31
/1
0
/2
0
02
/0
8
/2
0
02
30
/0
6
/2
0
02
28
30
/0
4
/2
0
02
/2
0
/0
2
28
31
/1
2
/2
0
01
0,7
Yen Dollar
With the ECB and the Federal Reserve keeping to expansionist policies, combined with a improvement in economic
indicators, which further boosted expectations of a sustained recovery, the Euribor earnings curve moved from
a downwards curve in December 2002 to a positive curve in December 2003. The Euribor 1 and 3 month rates fell
from 2.898% and 2.865% at 31 December 2002 to 2.101% and 2.124% at year end 2003, respectively. At the same
time, the 6 month and 1 year leading rates recorded a smaller reduction of 63.6 and 34.4 base points, to 2.168%
and 2.305% respectively, at year end 2003.
Euribor Rates
3,0
2,5
2,0
1,5
1M
2M
31-12-2003
3M
4M
30-9-2003
5M
28-06-2003
6M
9M
30-03-2003
1Y
31-12-2002
3.4 Bond Market
The improvement in consumer and producer confidence, combined with economic data pointing to a sustained recovery
in the economy, and a continued expansionist policy on the part of the European and US central banks, also led to
steeper yield curves.
Despite the cut of 25 base points in the Fed Funds Rate, returns on 2-year US treasuries rose by 22 base points,
from 1.61% as at 31 December 2002 to 1.83% at the end of 2003.
20
The end of the conflict in Iraq, combined with the improving prospects of economic recovery in the US, led to a larger
rise in 10-year rates. Accordingly, the 30-year rate rose by 30 base points to 5.08%, slightly less than the increase
of 43 base point in 10-year rates, which rose to 4.25%, but significantly greater than the rise of 22 base points in
2-year rates.
Earning Curves - Euro
5,50
4,50
3,50
2,50
1,50
0,50
3M
6M
1Y
2Y
3Y
4Y
31-12-2003
5Y
6Y
7Y
30-09-2003
8Y
9Y
30-06-2003
10Y
15Y
20Y
30-03-2003
25Y
30Y
31-12-2002
As might be expected, the same trend was followed in the Euro Zone, although the ECB followed a policy of cutting
its leading rates slightly more aggressively than the Federal Reserve. As a result, after ending 2002 with an interest
rate differential between the two economies (Euro Zone vs. USA) at 10 years of 35 base points, one year later this
differential had been reduced to 4 base points, whilst the 2-year differential fell from 111 to 77 base points.
Earning Curves - Germany
5,40
4,90
4,40
3,90
3,40
2,90
2,40
1,90
3M
6M
1Y
2Y
3Y
31-12-2003
4Y
5Y
30-09-2003
6Y
7Y
8Y
30-06-2003
9Y
10Y
15Y
31-03-2003
20Y
25Y
30Y
31-12-2002
Although the effects of the economic recovery were not yet very clear in Portugal, interest rates followed the same
pattern as those in the Euro Zone; nonetheless, the 10-year interest rate differential in relation to Germany increased
slightly, from 13 base points in 2002 to 15 base points in December 2003.
21
Portugal - Germany Differential / 10 Years Yields
0,3
0,25
0,2
0,15
0,1
0,05
Oct 03
Jul 03
Apr 03
Jan 03
Oct 02
Jul 02
Aprr 02
Jan 02
0
3.5 Retail Market
As with earnings curves, the retail market witnessed a reduction in interest rates. More specifically, lending rates
for operations between 181 days and 1 year to non-financial companies fell from 5.1% in November 2002 to 4.52%
in October 2003.
Over the same period, lending rates for periods of more than 5 years, for personal customers (most reflecting home
loans) fell from 4.9% to 3.87% in October 2003. In addition, the average interest rates on deposits with terms
of up to 1 year fell from 2.9% at the end of 2002 to 2% in October 2003, whilst the 1-year rate fell even more sharply,
from 3.1% in December 2002 to 1.8% in October 2003.
22
Banif Central Office, Av. José Malhoa.
II.banif group operations
in 2003
The following sections present Group operations in 2003, in the form of the business activities of the different group
companies.
1. Banif SGPS, SA
In 2003 the company focussed its activities on managing its financial holdings and also on restructuring its holdings
and the borrowing it incurred during the reorganisation of the Group in the 1st quarter of 2002.
In terms of its holding structure, at the end of 2003 the company sold a total of 8,512,000 shares, representing 15.2%
of the share capital of Banif Comercial, SGPS, SA to Banif Investimentos SGPS, SA, at a price of EUR 5.90 per share.
This price was determined by a independent valuation conducted by Manuel L. Brito & Associados, permitting a capital
gain, only recorded in the company’s individual accounts, of 7,407.3 thousand Euros.
In order to restructure its borrowing, the company made two bond issues, the first on 31 March 2003, of 50,000
bonds with a nominal value of EUR 1,000.00, making a total of EUR 50 million maturing in 2006, and then again on
15 December 2003, when it issued 700,000 bonds with a nominal value of EUR 100.00, representing a total of EUR
70 million.
With a view to increasing specialisation and obtaining greater financial and economic efficiency, the business premises
used by Banif – Banco Internacional do Funchal, SA and by Banco Comercial dos Açores, SA was sold to Banif Imobiliária,
SA, the Group subsidiary operating in the property management and development sector.
In view of this, Banif SGPS, SA provided Banif Imobiliária, SA with finance, in the form of a shareholder loan, of EUR
103,500 thousand.
The subsidiary Banif Comercial SGPS, SA made a partial repayment of EUR 8 million in relation to the finance granted
by the company by way of a shareholder loan.
As at 30 December 2003, the company paid an interim dividend of EUR 0.09 per share, corresponding to a total
amount of EUR 5,040 thousand. Included in the accounts for 2003, are the dividends approved by Banif Seguros SGPS,
SA, in the amount of EUR 1,677.6 thousand, according to IAS 18.
In terms of the principal indicators, the company’s net assets stood at 31 December 2003 at EUR 424,392.8 thousand,
as against EUR 384,334.1 thousand in the same period in 2002, recording an after tax profit of EUR 12,442.7 thousand,
as compared with the loss of EUR 1,083.2 thousand recorded at year end 2002.
Shareholders’ funds stood at the end of the year at EUR 282,293.6 thousand, as against EUR 280,138.7 thousand
at 31 December 2002.
24
As a result of concluding the agreement to acquire 799,793 shares representing 1.99% of the share capital of Banif
– SGPS, SA, at a unit price of EUR 5.00 (five Euros), Rentipar – Sociedade Gestora de Participações Sociais, SA* became
the holder of more than 50% of the share capital voting rights (under the terms of article 20 of the Securities Code)
in Banif SGPS, SA, obliging it to launch a public takeover bid for all the shares in Banif SGPS, SA.
As a result of this takeover bid, Rentipar – Sociedade Gestora de Participações Sociais, SA now holds more than 2/3
of the share capital of Banif SGPS, SA.
In view of the mandatory takeover bid for Banif SGPS, SA, Rentipar SGPS, SA was also required to launch a public
takeover bid for share issued by Banco Comercial dos Açores, SA This bid was launched by Banif Comercial SGPS, SA,
as detailed below.
1.1 Banif Comercial SGPS, SA
In keeping with its articles of association, the company centred its activities on managing its capital holdings.
On 25 February 2003 the company acquired 5% of the share capital in Banco Banif Primus, SA for a total price of
626 thousand Euros, giving it a total holding of 75% in the bank.
As already reported, takeover bids were made in 2003 by Rentipar SGPS, SA for all shares in Banif SGPS, SA and by
Banif Comercial SGPS, SA (substituting Rentipar SGPS, SA) for all shares in Banco Comercial dos Açores, SA.
Banif Comercial SGPS, SA launched its takeover bid for BancoComercial dos Açores, SA (BCA) on 14 November 2003,
at a price of EUR 6.00 per share.
At the special session of the stock exchange held on 3 December 2003, the company acquired 2,502,737 shares in BCA.
Outside the scope of the takeover bid, Banif Comercial SGPS, SA also acquired a further 153,080 shares in BCA during
the course of 2003, and as a result it reached 31 December 2003 with a total of 10,334,178 shares, representing
99.57% of the share capital.
* By public deed of 11/12/2003, Rentipar SGPS, SA changed its name to Rentipar Financeira SGPS, SA.
25
Because its financial holding in BCA was in excess of 90%, the Board of Directors of Banif Comercial SGPS, SA resolved,
at the end of the financial year, under the terms of article 195 of the Securities Code, to acquire, on the basis
of compulsory acquisition, the remaining 51,463 shares at a price of EUR 6.00 per share, i.e. for the same price
as offered in the takeover bid launched on 14 November 2003.
In order to diversify and complement the Group’s business, the company acquired a 70% stake in the share capital
of Sky Rent – Aluguer, Gestão, Compra e Venda de Veículos Automóveis, Lda, which was transformed into a public
limited company with the name Banif Rent – Aluguer, Gestão, Compra e Venda de Veículos Automóveis, SA.
With a view to rationalising cash flow, the company made a partial repayment, on 5 May 2003, to its parent company
Banif SGPS, SA of EUR 8 million, in relation to the finance obtained by way of a shareholder loan of EUR 51 million.
However, in view of the investments it had to make, it also obtained in 2003 two loans to support its cash flow, from
Banif – Banco Internacional do Funchal, SA and from Rentipar – SGPS, SA, of EUR 12 million and EUR 5 million
respectively.
During the course of the financial year the company received dividends from its subsidiaries Banif – Banco Internacional
do Funchal, SA, Banco Comercial dos Açores, SA, Banif Leasing, SA, Banif Crédito SFAC, SA and Banco Banif Primus,
SA, amounting to a total of 12,332 thousand Euros.
At year end 2003 the company had net assets of 355,272 thousand Euros (as against 334,924 thousand Euros
at 31/12/2002), and recorded an after tax profit of 12,219 thousand Euros (1,199 thousand Euros in 2002).
The company had no employees at the end of 2003.
1.1.1 Banif – Banco Internacional do Funchal, SA
1. Business in Madeira
The Bank operated in Madeira in 2003 against a background of a modest upturn in economic activity, characterised
by contradictory indicators, with strong public spending and a recovery in the property sector, but a drop in consumer
spending, associated with high levels of household debt, social and political instability in Venezuela and South Africa,
which are home to large numbers of emigrants from the islands, and the continued downward path of the Dollar
against the Euro.
The impact of heavy public sector investment, injecting fresh life into the regional economy, was felt primarily from
the 2nd half of 2003 onwards, with the current government plan for 2000-2004 entering its final phase.
Client deposits with the Madeira Commercial Division (MCD) increased by only 2%, thanks above all to growth
in deposits by residents, given that deposits by non-residents were sharply hit by the negative performance
of the Dollar and a reduction in emigrant remittances.
26
Lending again grew strongly (up by 13%), reflecting the Bank’s major contribution to the regional economy. It should
be noted that this growth relates to lending for investment, given that consumer credit slowed significantly, and was
down on the year as a whole.
Over the course of the year it was possible to step up sales work, with significant improvements in quality, efficiency
and speed of service, thereby increasing customer satisfaction and loyalty.
In order to provide a better service environment at the Branch Network (MBN) and to bring the bank closer to its
Customers, renovation work was carried out at the Quinta Deão and Caniço branches.
In its second full year of operation, Banif Privado (PCCM), which is aimed primarily at the medium/high segment of
Customers, recorded high levels of satisfaction, reflected by good performance in attracting new clients and recovering
old Clients.
The Business Centre (BCM), which operates to strict standards of security, profitability and enhanced service quality,
was able to broaden its client base, consolidating the Bank’s leadership in this segment.
Cross selling of products from different Group companies reached new levels, thanks to the Bank’s well established
position in the market and a sales stance geared to increasing the degree of product penetration per Client, allowing
for increasing profitability and Customer loyalty.
In order to increase the Bank’s capacity and market share in the home loans sector, an Agency Channels Unit (ACU)
was set up, in order to provide real estate developers with a co-operation agreement with the Bank and to offer
customers a better service, with high quality standards, based on fast decision making and rapid processing. As another
means of attaining this objective, Banif opened a Home Loans Shop in Funchal on 15/03/2003, offering standards of
quality and convenience acknowledged by the market.
In April 2003, the Bank launched a consumer credit with the name “Personal Loans – Customer Point of Sale – Banif
Madeira”, marketed directly by retailers in the region. This is an innovative product on the market, and is primarily
designed to help our Clients to purchase goods and services in the retail outlets taking part in the scheme.
In terms of institutional business, the co-operation agreements with Madeira’s Regional Government and local authorities
were extended further in relation to company services in the fields of health, education, sport, civil construction and
public works.
27
In keeping with the Bank’s high profile in Madeira and our in-depth knowledge of our Clients’ needs, we promoted
and supported a number of scientific, sporting and cultural events, including the Banif Golf Tournament, the Zarco
prize, the 2nd Meeting of Generations (held in Caracas and aimed at the Madeiran expatriate community in Venezuela)
and sponsorship of Clube Sport Marítimo and the “School Games” programme organised by the Regional Department
of Education.
In overall terms, the Bank operated in a highly competitive environment, although the previous trend towards narrower
margins was inverted. This, combined with a sharp increase in the collection of commissions, permitted a significant
increase in banking earnings, up by 10% from 2002 to 2003.
Var. 03/02
Lending
+ 13%
Deposits
+ 2%
Client Base
+ 6%
2. Business in Mainland Portugal
2.1 Business in the Corporate Segment
During 2003 the Business Centre Division (BCD) pursued its established role of monitoring and managing its portfolio
of small and medium sized companies, through a number of business centres (and branch offices) in mainland Portugal.
At the same time, the BCD also adopted a new strategy of placing products and acting as a supplier channel for other
areas of the Bank, and in 2003 started to market factoring products.
In order to maximise the total contribution in financial terms, a policy of moderate and prudent growth was maintained
in relation to credit, combined with an aggressive policy towards bringing in deposits and providing services on which
commissions can be earned.
Within its traditional area of business, the BCD continued to monitor closely any customers showing signs for concern,
and pursued the objective, set out at the beginning of the year, of minimising lending risks. This involved:
-
Demobilising and reducing the Bank’s involvement with clients presenting a higher rate of risk;
Diversifying risk and reducing the level of concentration of credit;
Reducing exposure in some sectors where the difficult economic situation was felt more acutely;
Attracting new Clients with a proven good level of risk.
In relation to cross-selling with other Group companies:
- The Bank recorded growth of 16.5% in the placement of leasing (real estate and other), in relation to 2002,
despite market shrinkage of 0.7%;
- The Bank exceeded its insurance premium target by 254%;
- A total of 8.8 million Euros and 831 thousand Euros respectively were placed in securities funds and retirement
savings schemes.
In 2003, the BCD adopted two new objectives: to place other Bank products with its clients and to channel clients
and business to other sales divisions in the Bank in mainland Portugal (BND and HIPCD), functioning as an indirect
sales channel.
28
Although the new strategy was implemented only in April, the results achieved can be regarded as highly encouraging,
especially in terms of credit card sales, registration with Banif@st and introduction of potential clients to the Cash
Management Account and Banif Privado.
In 2003, the Banif Group extended its range of financial products, starting to market renting and factoring products
(the former through a new Group company, Banif Rent).
The factoring project was prepared and developed wholly within the BCD. Drawing on the experience of some of the
Bank’s staff and using proven software, the factoring unit started up with marketing the product, carrying out the
work needed for pricing, risk analysis, forms, internal rules and training of sales staff, with the first contracts and
invoices being issued by the end of 2003.
Finally, mention should be made of the reorganisation of the BCD in Northern Portugal, with the creation of 3 new
Business Centres:
- Vale do Ave Business Centre, comprising the Guimarães and Famalicão Branch Offices (formerly belonging
to the Braga Business Centre);
- Porto Business Centre, comprising the Aliados and Vila Nova da Gaia Branch Offices.
- São João da Madeira Business Centre.
At the same time the Guimarães, Aliados and Vila Nova da Gaia Business Centres were closed down, and the Vila
Real Branch Office was allocated to the Maia Business Centre (previously belonging to the Aliados Business Centre).
Thanks to the sales efforts described above, the BCD recorded growth of 7.5% in lending, in average terms, representing
an increase of 104 million Euros, as well as growth of 22.3% in deposits, with an additional 87 million Euros.
Commissions were up by 8.2% which, added to the growth in the contribution made by lending and deposits,
represents an increase in the total contribution of almost 5,7 million Euros, i.e. 13.1% up on 2002.
Var. 03/02
Lending (average balance)
+ 6,9%
Deposits (average balance)
+ 22,3%
Client base
+ 11%
2.2 High Income Private Clients
In 2003, the High Income Private Clients Division (HIPCD) reorganised its business under the Banif Privado brand aimed
at the top segment of the personal banking sector. This involved:
- Reorganisation of business into only 2 Banif Privado Centres in Mainland Portugal: one in Lisbon (with a branch office
in Faro) and another in Porto;
- Redefinition of the target segment;
- Creation of a service platform designed for growth in this sector, with a consultancy service and a range of products
and services designed to meet the overall financial needs of our Customers.
After the reorganisation of Banif Privado, the current 13 Private Banking Managers managed approximately 1000
Clients at year end 2003, representing deposits in the balance sheet of EUR 503 million and lending of EUR 39 million.
These figures were in line with the targets established.
29
There was an increase in the average number of products per Banif Privado Client, thanks to a strategy of cross-selling.
As a result, the Clients are closely involved with the Banif Group, a factor which leads to enhanced customer loyalty.
One of the prime achievements of 2003 was the good co-operation established with Banif - Banco de Investimento,
SA, which permitted a significant increase in the distribution of investment products:
- Placement of securities and property funds grew substantially, with an increase of approximately 118% over
the course of the year, representing EUR 47.6 million in 2003;
- Placement of structured products stood at EUR 62.5 million, also representing an increase of 54% over 2002.
The path to be followed in 2004 will be based on consolidating the existing strategy and the client base, and improving
returns in this business area, by developing synergies with other sales networks in the Group and offering new financial
products and services.
Excellence of service quality will continue to be Banif Privado’s priority.
2.3 Business in the Retail Segment
In 2003 the Branch Network Division (BND) continued to concentrate on selling products and providing services, aimed
primarily at personal customers, the self employed and small businesses.
The main role in marketing strategic products (home loans, Cash Management Accounts, cards and personal loans)
is taken by the Branches, which also seek to maintain a good level of deposits and to exploit the potential for cross
selling with other Group companies.
The BND now has a total of 117 branches, 6 of which started up in 2003 – Alcântara, Fânzeres, Bragança, Fátima,
Fafe and Senhora da Hora. In an increasingly competitive environment, special attention has been paid to the branch
image as perceived by Clients, and various changes have been made to premises in order to modernise them.
Major changes took place in the BND in the course of 2003, including the reallocation of human resources and the
creation of two new sales sectors, in order to optimise their role of monitoring and supervising the work of the
branches. In order to improve the quality of management information transmitted to the sales network, a management
information system has been developed and is available over the Bank’s intranet. At the same time, with the collaboration
of the Risk Management Division, the new Lending Regulations for the BND were revised and approved.
30
In the year under consideration, the Branch Network Division increased its sales base by approximately 28,000 new
Customers, with a positive variation in deposits (up by 4%), which reached a total of EUR 1,014 million. In relation
to total lending, the BND recorded growth of approximately 12%, corresponding to an increase of EUR 152 million,
led by lending to small businesses (up by 10%) and home loans (up by 16%). As at 31 December 2003, total lending
stood at EUR 1,397 million.
Mention should be made of the provision of e-banking services by Banif@st, designed to bring the bank closer to its
Customers, and vice versa, with a reduction in operating costs. This service has already achieved a penetration rate
of 40.7%.
Work continued in 2003 to strength the relations with the Agency Channel Office, thereby helping to channel customers
and business to the branches.
Banking earnings grew by 15.5% in 2003 in relation to the previous year.
Var. 03/02
Lending
Deposits
Client base
+ 12%
+ 4%
+ 19,3%
2.4 Home Loans
Mortgage lending business grew during 2003, despite the drastic slowdown in business throughout the property sector.
The Bank’s home loans business represented a total of EUR 1,078 millions in 2003 (Mainland: EUR 897.3 million
and Madeira: EUR 180.7 million), corresponding to approximately 21.500 contracts.
Thanks to new lending, the Bank’s mortgage lending business increased by EUR 170.4 million in 2003, representing
growth of 16% and leading to a slight increase in the market share.
The total amount under Banif’s management, including securitised credit, therefore represented a total of EUR 1,248.4
million at year end 2003 (Mainland: EUR1,031 million and Madeira: EUR 217.4 million), corresponding to 24,5129
contracts.
The balance of securitised lending stood at EUR 458.2 million at the end of the year.
In view of the economic conditions and the extremely aggressive competition in this market, the results obtained are
fairly satisfactory.
Banif recorded a positive balance in terms of credit transfers, demonstrating the competitiveness of the Bank’s products
and its commitment to winning business from competitor banks.
Another major feature of this business was the competition between the banks operating in this market, and a clear
effort was made by all financial groups to offer products which were competitive in terms of price, speed of processing
and innovation in coverage of Client needs.
31
In this context, Banif started the year by launching two new products with specific characteristics: home loans for
young people and home loans for older Clients, the former offering a repayment period of up to 50 years and the
latter an age limit of 80 years. This permitted the Bank to offset to a certain extent the end of the subsidised loans
scheme and to win business with older home buyers.
At the end of the year, a third mortgage lending product with innovative characteristics was launched, the Complementary
Cash Management Line, aimed at the self-employed, business people and small companies.
2.5 Private and Business Lending
- Cards and other electronic means of payment
Banif’s electronic payments business, consisting of cards, TPA’s and ATM’s, was marked by the depressed state of the
Portuguese economy.
Accordingly, the number of bank cards in the Portuguese market is expected to have increased by little more than
3% in relation to 2002, making 2003 the year with the lowest growth for a long time. In addition to this, a number
of market operators launched dynamic sales drives designed to increase their market share, with aggressive pricing
and marketing campaigns.
In view of this, the moderate growth of 5.4% recorded in the number of Banif cards can be considered as positive,
as the Bank once again increased its market share, albeit slightly.
The Bank’s leading performer in this market was the Excellence Card, a Visa Gold Card, which recorded growth
in card numbers of 17% over the previous year. The main business indicators in this sector also included the financial
results obtained from growth in interest bearing cards, which rose by 27%.
Over the course of the year the Bank carried out continuous direct marketing of credit cards, making special use
of telemarketing.
Banif took an active part in Visa’s promotional campaign in Portugal under the slogan “Within 4 months you can have
a taste of Hollywood fame”, with one of the prizes going to a Banif customer.
Despite the difficult economic circumstances, TPA and ADM business recorded very healthy growth.
In TPA’s, the reorganisation of the business model and review of the pricing structure resulted in net earnings which
more than doubled, which is all the more significant in view of the increase, still very positive in itself, in the number
of TPA’s, up 17% in relation to 2002.
In ATM’s, the Bank continued to apply the principle of installation in all new branches, as well as installing new machines
in interesting locations off branch premises. There was an increase of 7% in the number of ATM’s. Net earnings
generating by ATM business increased at a healthy rate, with growth of 34%.
This area of business was also significantly reorganised over the course of the year, with the Card Unit being merged
into the new Products Division.
32
- Cash Management Account
The Small Business area, represented by an integrated product known as the Cash Management Account, concentrated
primarily in 2003 on getting to know its Client base, resulting in an increase in business and the margin of the associated
financial contribution. Special attention was paid to improving the lending risks and to taking specific action in situations
where a high level of risk is detected.
The Cash Management Account is one of Banif’s leading strategic products, and continues to be its main product
aimed at the segment of small businesses and the self-employed. As in previous years, this product is distributed
through the branches, the Banif Direct Network (Call Centre) and the Agency Channel Network. The Bank has continued
to work at signing protocol agreements with business associations, with a view to offering the product directly to their
members.
During the period under analysis, lending grew by approximately 10.2%, bringing it up to a final balance of EUR 226.8
million. This total corresponds to 16,200 accounts, up by 4% over the previous year.
Deposit business recorded significant growth of 22%, and a year end balance of EUR 33 million.
The product’s overall contribution to the Bank’s earnings was up by 41% over the accumulated figure in December
2002, thanks to optimised management of pricing in line with lending risks during the year now ended.
In view of the need felt by CMA Clients for medium or long term credit to finance investment projects, the Bank
launched at new product in 2003 – the Complementary Cash Management Line (CCML). This product is a blend of
two existing products, the Cash Management Account and Banif Property Loans.
As well as combining the distinctive features of each of these products, the CCML also allows Clients to benefit from
a significant improvement in pricing and other preferential terms of access.
- Personal Loans
As in 2002, a tight cap was kept on consumer spending in 2003.
This situation kept demand for consumer credit in check, and Banif experienced the same constraints as the rest of
the market.
In Mainland Portugal, Banif’s consumer credit business consisted of 3,272 new operations, with a total value of EUR
26 million, representing only 64% of production in the previous year. This fact, combined with the ageing of the
existing portfolio, led to a reduction of around 19.5% in the size of overall lending, as compared with December 2002,
with an overall balance of EUR 78 million. It should be noted that this figure includes securitised credit.
However, during 2003 Banif established a partnership with Banco Cetelem SA, and started to offer its Customers an
additional range of consumer credit products, including Banif Pessoal Permanente, which is a revolving credit product,
Banif Pessoal Presente and Banif Pessoal Projecto, the latter two in the same vein as Crédito Pessoal Banif, which
already existed.
Given that these products were only came into production in December, the resulting improvement in lending
performance will only be visible in 2004.
33
2.6 New Distribution Channels and Business Area Support Channels
2.6.1 Call Center
In accordance with the established plan, various campaigns were conducted in 2003 aimed at the Bank’s Clients and
potential Clients. In the field of lending, these sales drives included campaigns for Home Loans, Cash Management
Accounts and the pro-active allocation of Classic and Excellence cards.
In relation to deposits, promotional work went ahead for Banif4 savings products and fiscal savings products.
Approximately 27% of active Clients were contacted in these campaigns.
BCA’s revolving personal credit and Banif Leasing’s BanifCar product were both products of associate companies
promoted in these campaigns in 2003.
The Contact Centre which supports telephone based relationships with Banif and BCA Clients recorded an increase
of more than 42% in the number of incoming calls. The telephone services associated with Banif@st and Bcaglob@l
also recorded growth of 22% over 2002.
The Contact Centre, based on an immediate decision making model, took over the response to Point of Sale Credit
for clients in the Azores and Madeira as from the first quarter.
The development of this area of activity in 2003 involved full use of the available communication stations during the
daily fourteen hours of operation each day, supported by a pool of 40 staff.
The number of outbound calls rose to more than 980,000 (10% up from 2002) whilst the incoming component –
Linha Banif – recorded an increase of 45%, with in the order of 103,000 calls.
Special care was paid to increasing quality and service levels, with the result that Banif was awarded the Teleperformance
Trophy at the CRM Awards 2003, for the Financial Services sector.
34
2.6.2 Agency Channels
In March 2001 the Bank set up the Agency Channels Office (AGO), with the primary mission of providing an alternative
distribution channel to those already existing in the Group. This has proved to be a successful initiative, permitting the
Bank to broaden its reach in a market which is increasingly well informed, sophisticated and demanding, and also allowing
the Bank to monitor closely the market’s needs. The Banif Salesmen have made a special contribution in this area.
The Bank has adopted a strategy of relationship marketing, through imposition of its market strategies and positioning
its products. With the stress on providing an excellent standard of service, the products not only need to have added
quality, but this quality must also be present in the interpersonal relations between the parties involved: Bank, Salesman
and Client.
In 2003, in keeping with the strategic guidelines defined, and thanks to its accumulated expertise, the AGO set itself
the target of increasing the number of salesmen. By the end of the year the department had a total of 705 salesmen
operating in a network built around important values such as quality, dedication and professionalism. Total turnover
stood at 80 million Euros in commission-bearing products, as well as additional turnover of more than 12 million Euros
in products not paying any commission.
Also in the course of the year, the AGO undertook a broad marketing campaign with its salesmen, through telemarketing
campaigns, training/promotional sessions, an annual competition (following on from the Annual Salesmen’s Convention)
and, more recently, based on a resources campaign. Thanks to this strategy, the Agency Channel has been able to
bring in 3,448 new clients, making a total of 7,200 Clients recruited since it started operating.
The targets for 2004 are even more ambitious, and special attention will be paid to salesmen who reveal the potential
for effective operation of their micro-market in order to lever the Bank’s business to a satisfactory extent. Other key
objectives for the year will be ongoing assimilation of a market stance geared to cross-selling, with the salesman
playing a central role in offering a comprehensive and integrated product solution for all his Clients (and future Clients
of the Bank), together with the recruitment of new Clients and the offering of new commission-bearing products.
2.6.3 Cross-Selling and e-banking
- Cross-Selling
The consolidation of cross selling was one of the Banif Group’s main strategic goals for 2003. Efforts were focussed
on optimising the Bank’s sales networks, by building up levels of customer loyalty and involvement, leading to a
substantial increase in the ratio of the average number of products per Client.
The three main areas of cross selling were funds, insurance and leasing, which all recorded very satisfactory growth,
at above market levels, meaning that the Group has increased its market share in these areas.
In relation to property leasing, the market continued in recession, with output down by 6.3%. Banif was able to
overcome the difficult market conditions an increase production by 34%, with a significant contribution from the ECD
leading the way.
In the investment funds area, the Bank recorded growth of more than 90%, far above overall market growth, which
was only 4%. Sales were recorded for both securities and property funds, and in both cases the targets set at the
beginning of the year were easily exceeded.
With regard to insurance, the market recorded growth of 17%. Here too Banif grew at above the market rate and
penetration by the Group’s insurance company in the client portfolio stood at close to 30%.
35
Several structural projects are currently underway in order to improve the quality of products and services offered to
clients and to increase the group’s productivity in cross selling. This is an activity in which the Group is already recorded
successful results.
- E-banking
In 2003 the Banif Group consolidated its e-banking activities. This was due to the efforts made to fine tune the
technological platforms and consequently to restructure the image of the Group and the Bank on the internet,
increasing the penetration of e-banking in the Group’s Client base and in the overall quality of the service provided.
The restructuring of the Banif Group and Bank sites has made it possible to create a uniform image and to make them
more coherent in the eyes of the market. This has involved reformulating the site contents, optimising user interfaces
facilitating interaction with users, in order to increase Customer loyalty. Through partnerships with leading companies,
new web spaces have been developed, such as Atrium Banif, designed to present non-banking information of public
interest, which will in the near future allow for purchases of a range of articles.
At the same time, as part of the new Banif site, the Banif Madeira channel has ben launched, designed to present
the various aspects of the Madeira region, and also to offer the Bank’s products aimed exclusively at the islands.
Even from the short period for which the sites have been available it is possible to conclude that they have had
a successful impact on the market, judging from the large number of hits by new and frequent users.
The transactional area of the e-banking service (Banif@st and Bcaglob@l) recorded a substantial increase in its penetration
of the Bank’s Client base, with 30% of Clients having registered for the electronic channels. Of those registered, 20%
frequently use the channels provided (Internet, Banifone and Wap).
The overall quality of the service has been another major concern. Considerable work has been carried out in this area,
including the launch of new functions designed primarily to meet Client needs, and also the conclusion of projects
with less impact on users but which place the Group e-banking service at the forefront of the sector in terms
of convenience and security.
The next steps will be to ensure continued growth in the transactional areas of the e-banking service (Banif@st and
Bcaglob@l) in proportion to the client base, efforts (such as the launch of the new SMS channel) to increase frequent
use and to broaden the range of transactions on the Internet channel, to include other non-banking products, in order
to provide a broader response to the needs of all users.
36
3. Marketing and New Business Development
The Bank’s marketing efforts in 2003 aimed to provide a coherent marketing framework for the launch and relaunch
of products and services, in line with the strategy of consolidation and bolstering of sustained growth, as recorded
by the Bank since its founding, in January 1988.
At the same time, and capitalising on the fact that 2003 marked the 15th Anniversary of the founding of the Bank,
a number of initiatives were developed to consolidated the cultural values which Banif seeks to associate with its
internal and external image.
As part of this, a lecture by the former prime minister, Prof. Aníbal Cavaco Silva, was organised in Madeira on 15
January 2003, on the question “Where is the Portuguese economy heading?”. In May, the Bank organised a performance
by the Irish dance company Spirit of the Dance at the Colilseu dos Recreios in Lisbon, for its Employees and Clients,
followed in November, in Madeira, by a concert by the Orquestra Clássica da Madeira, accompanied by Ala dos
Namorados and António Chaínho.
In terms of products, work proceeded on renewing the Bank’s range, and the marketing department supported the
launch of the CCML, Banif Crédito Shopping (the Bank’s point of sale consumer credit product, marketed exclusively
in Madeira through contracts with retailers), and the relaunch of the Banif 4 saving accounts, personal loans, under
the Banif Pessoal brand, through a partnership with Banco Cetelem, and, at the end of the year, of Banifiscal
and Geração +, a package of products designed to establish loyalty with young Clients, marketed in Madeira.
In the second half of the year, the marketing department conducted specific campaigns for Banif Triplus, with a member
get member campaign, and for Banif Home Loans, with a advertising campaign in October and November.
In the field of corporate communication, the department organised the 2nd Banif Painting Prize in conjunction with
the Centro Nacional de Cultura. The competition was won by the painter Ricardo Cruz-Filipe, with his work Voz
Sombria, subsequently purchased by the Bank.
The Bank collaborated with the Diário de Notícias da Madeira on organising the 2003 Zarco Prize, awarded every two
years to citizens of the islands who have distinguished themselves in the artistic, scientific or literary life of the region.
The prize was awarded to Prof. Duarte Freitas, a researcher at the University of Madeira.
The department also redesigned the Bank’s internal magazine Banifactors, which now has a more attractive image
and an easier to read layout.
4. Credit Recovery and Legal Departement
Overdue credit recovered by the Legal Department stood at a total of 25,886 thousand Euros in 2003. This figure
included a sum of 2,487 thousand Euros relating to credits already written off in the balance sheet.
Provisions for specific lending risks (including overdue credit and interest and doubtful debts, as defined in Notices
3/95 and 8/2003 of the Bank of Portugal) stood at the end of the year at 47,126 thousand Euros.
Provisions for specific credit risks added to risks for general credit risks totalled 75,462. thousand Euros and corresponded
to 135.23% of outstanding credit (122.82% in 2002).
The quality indicators for the lending portfolio improved in relation to the previous year, with outstanding credit
representing 1.71% of total lending, as compared with 1.89% in 2002.
37
In 2003, a total of 33,118 thousand Euros of debts regarded as uncollectable was written off on the balance sheet.
Full provision had been made for this.
In the course of 2003 a number of software solutions for overdue credit and legal proceedings reached the completion
stage, and these will make it possible to provide real time data on the state of all recovery proceedings to all those
involved in the process.
Efforts also continued in 2003 to provide the Legal and Debt Recovery Division with staff from the sales area, to work
in conjunction with their legal colleagues to ensure a more dynamic flow of debt recovery through non-judicial means.
This ties in with the overall aim of reducing legal costs incurred in recovering debts and seeking more flexible solutions
of a type not available under the court system.
5. Human Resources
The Bank’s human resources policy has been guided by a constant concern to enhance the quality of our staff, through
development of the relevant systems – performance assessment, skills analysis, personnel recruitment and training,
all provided for in the Omega Project – which tend to highlight and acknowledge the role played by all our staff in
achieving the Bank’s objectives, and to advance and further their careers and determine their remuneration in line
with the results of their work.
Because of the importance attached to the Omega Project in the development of human resources, the Bank and
various Banif Group companies have pooled efforts to unify policies and procedures in the field of human resources,
working towards the creation of a common thread in their activities, methods, procedures, overall objectives and
consolidation of the Group culture.
This is the spirit in which the Omega Project has been implemented in Banif, BCA and BanifServ, and more recently
in Banif Leasing, Banif Crédito and Banif Rent, reinforcing tghe view that the contribution of each employee is important
to consolidating a culture of management by objectives, to improving individual and team results, to increased selfadvancement and participation and recognition of merit.
In addition to this project, successful work was carried out in 2003 in the fields of recruitment, training and development
of human resources software.
At year end 2003 the Bank had 1,478 employees, six more than at the end of the previous year, despite the opening
of six new branches during the year. The reason for this small increase lies in the efforts to streamline the work of
the Bank at all levels. As a proportion of the total Group workforce (2,815 employees), Banif staff represents 52.5%.
Both the average age and the qualifications of Banif staff are worthy of note: the average age rose from 36.2 to 36.8
years, whilst the proportion of graduates on the staff rose from 36.3% to 37.7%.
Another important area of activity has been training. A total of 242 training initiatives were organised in 2003 (189
internal and 53 external), with a total of 2,118 participants and 27,029 training hours. This represents approximately
18 hours training per employee/year. Some of the most important training has included training in leadership and
management behaviour and induction training.
In relation to the working atmosphere, the company undertook a second Satisfaction at Work Study. The findings
were satisfactory overall, especially as concerns internal relations between employees and between employees and
managers, and with regard to duties/responsibilities. Some dissatisfaction was detected in relation to careers policy
and sense of belonging to the Group.
38
Individual employee files have now been digitalised and a computer data base created of Bank Employees, representing
an important step in the direction of modernisation and rationalisation.
6. Executive Operations
In the Executive Operations area, Banif has made great efforts to streamline activities, and from September onwards
this process was extended to include Banco Comercial dos Açores.
At Banif, the Executive Operations department has taken over the servicing of structured products, cards, seizure and
legal proceedings, as well as centralising in Lisbon the Funchal and Porto EOD.
At the same time, substantial efforts have been needed to streamline operations, and this has involved standardising
workflows and launching a set of software systems, such as:
- Direct debit system, allowing for a higher level of automation and permitting the Bank to provide a collection
service to creditors;
- Digital clearance, in line with Bank of Portugal instructions, introducing clearance of cheque images;
- Secured current accounts, permitting greater flexibility in repayment plans and improving fiscal aspects;
- Trade Innovation, replacing Eximbills, providing better information and a higher level of automation in the processing
of payment orders;
- Digital archive of home loan files, with 30,000 files already digitalised;
- CAF, developed over the course of the current year, set to come into production in March 2004.
These measures made it possible to streamline the department’s human resources, which stood at 127 at the beginning
of the year and 111 at 31 December.
7. Information Systems
In this field the Bank has made great efforts to stabilise existing information systems and to develop and implement
new solutions.
The process of stabilising systems and applications in production took place mostly during 2002 and the first half of
2003, resulting in a significant reduction in corrective maintenance, allowing BanifServ to focus primarily on developing
projects and strengthening the technological infrastructure.
In the area of software systems, work continued on the architectural standardisation of application, and framework
applications providing services to the system have been created and consolidated. These include interfaces specialising
in data base intervention, tables management processes and common services.
A standard technological model has been defined, and this has served as the basis for a number of architectural
structures. One example of this is the implementation, currently underway, of a multi-channel platform, to support
the new branch software, and also, in the near future, the Banif@st electronic channels and ATM’s.
Inter-system communication standards have been defined and implemented. These have been integrated into technical
standards, which are the recommendations needed for putting the model into practice.
39
The department has studied the form in which applications are presented to users, and a common standard has been
established, to be implemented gradually. This can be integrated into the multi-channel platform, currently being
installed.
In addition to the systems referred to in the chapter on Executive Operations, the following major systems are amongst
those which have received our attention:
- Application Management – automation of application processes for home loans and personal loans;
- Deposit of Banif Cheques – greater and better automation of the process;
- Management of Pending Situations - includes pending situations relating to tele-clearance, Banif cheques
and the provision of services;
- Factoring – system designed to support factoring business;
- Collateral – automation of this area, which was previously wholly manual;
- Renewal of Debit and Credit Cards – complete automation of these processes;
- MBNet – implementation of secure payment system by Internet;
- SwifNet – “webization” of Swift (*);
- Centralisation of Credit Risk – inclusion of Bank of Portugal notification of credits written off from assets;
- Instantaneous Gaming – complete automation of this service in Madeira;
- Balance Certification – automation of this annual process, which previously consumed significant amounts of labour;
- SRC – development of new functions;
- Paygest – development of support system for human resources management (*);
- Digital archive of individual Bank employee files;
- Fixed Asset Management;
- Budget Management;
- Banif@st – development of new functions designed to maintain Banif’s competitive advantage in this field (*);
- Bank Standards – 71 new standards published, revoking 648.
(*) Systems which also cover BCA.
In the field of structures, the department has studies a Group-wide Operations Continuity Plan (a Disaster Recovery
Plan has already been implemented for Banif’s central systems), and a storage area network (SAN) has been implemented.
In addition to offering more effective management of disk space, this also provides for automatic data back-up.
40
Systems and data security continued to merit careful attention, both in the form of web intrusion tests and, in relation
to structures, the launch of process to define a security policy, currently underway.
A process for consolidation of departmental servers has been studied, selected and partially implemented, making it
possible to improve the effectiveness of processes and to lower management costs.
8. Control of Operating Risks
Risk management activities are one of the central pillars in the Bank’s security. All the business carried on has underlying
risk factors, and it is considered crucial that all areas can and should contribute to mitigating the risks involved.
The Risk Management Division (RMD) is the body most directly involved in this area, and its responsibilities include:
- Helping to define the management policies and methods for the Bank’s assets and liabilities, proposing rules
and general standards designed to limit the Bank’s exposure to the risks of banking activities;
- Promoting and transmitting the risk management policy defined by the Bank and the monetary authorities,
ensuring it is properly applied and implemented;
- Analysis of lending contracts, other investments and the source of funds, resulting from the Bank’s commercial
and financial activities, in order to detect and monitor the various risk levels involved, warning of situations
which may lead to losses;
- Reporting to the Bank’s Executive Board on the evolution of asset risk and operations in an irregular situation;
- Preparation of specific studies contributing to an improved overall level of risk management;
- Helping to improve, innovate and create operational systems which optimise risk management;
- Co-operation with the sales divisions on plans for training in lending risk;
- Collaboration on implementation of the technological resources needed for risk control;
- Participation in the process of analysing and deciding on lending operations, giving its opinion on the acceptability
to the Bank of the risk levels potentially involved.
Lending Risk
The risk acceptance process is defined in accordance with the characteristics of different business segments and
different particular products. Banif has General Lending Regulations which seek to establish general principles and
rules on lending, applicable throughout the Bank, as well as specific lending regulations for the corporate segment
and the retail segment. There is also a set of rules applicable in retail lending to what are called standardised lending
products (home loans, personal loans, credit cards and cash management account).
The Bank has internal risk scoring systems, assigning to each counterpart (corporate segment) and operation (retail
segment) a risk score which corresponds to the expected likelihood of default. These risk scores limit the process of
approval of operations, in relation to both size and price.
The Banks sets limits and systematically controls its aggregated exposure at various levels, in accordance with Bank
of Portugal recommendations on internal control.
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Exposure limits were established in 2003 by sector, geographical region, rating, type of guarantee and type of guarantee
associated with rating, and also for the dispersal/concentration of risk, thereby fixing guidelines for commercial activities
and the acceptance of operations. These measures made it possible to produce better information on lending operations
and also to avoid exposures where, historically and in keeping with market trends, the potential for risk is high.
In connection with this, below we give a number of indicators concerning the Bank’s lending portfolio:
Lending is divided primarily between the corporate and equivalent segment and the retail segment, which includes
personal customers and small businesses; these two segments represent 66.6% and 33.4% respectively.
The Bank’s position in the corporate segment is fairly diversified, given that most of the lending is to SME’s, where
the average exposure is 132 thousand Euros per lending Client.
Diversification indicators are adequate in view of the number of Clients and the size of the Bank. It should be noted
that the Bank’s 20 largest Clients represented approximately 8.1% of total exposure.
In the personal lending sector, average exposure per customer is 34 thousand Euros, with home loans constituting
the main product, and representing approximately 21% of the total lending portfolio at the end of the year.
Lending covered by real guarantees represents more than 43% of total lending; more than 76% of lending to personal
Clients and more than 30% of corporate lending is guaranteed by mortgages. In the corporate segment, the Bank
takes constant care to increase guarantees in the case of lending to companies with poorer risk ratings.
42
Breakdown of corporate segment lending by the main industrial sectors:
Dec 02
%
Dec 03
%
Food, beverages and tobacco
2,33%
2,13%
Textiles
3,15%
2,50%
Timber, cork and processing
1,80%
1,45%
Pulp, paper and cardboard, related articles, publishing and printing
1,35%
1,26%
Manufacture of chemical, energy and plastic products
1,03%
1,01%
Manufacture of other non-metallic mineral products
1,03%
1,07%
Basic metallurgical industry and metal products
2,12%
1,61%
Other manufacturing industries
1,95%
1,79%
Construction
18,07%
18,99%
Wholesale and retail
23,27%
21,31%
Hotel and catering
3,84%
4,27%
Transportation, warehousing and communications
2,64%
2,68%
Financial
Real estate, rental and corporate services
Education, health, other public, social and personal services
2,65%
5,31%
19,45%
20,90%
3,56%
3,63%
Breakdown of lending by the most representative geographical areas:
Aveiro
Braga
Coimbra
Faro
Funchal
Leiria
Lisboa
Porto
Setúbal
Vila Real
Viseu
Dec 02
%
Dec 03
%
6,82%
6,88%
1,31%
5,15%
24,07%
3,71%
23,95%
17,84%
5,95%
1,21%
1,30%
6,40%
5,39%
1,26%
4,94%
27,75%
3,60%
26,81%
14,03%
5,64%
1,03%
1,04%
Although debt recovery management does not fall within the remit of the RMD, the Division plays an active role in
this field. Personalised alert reports are regularly issued for all segments and products, listing all outstanding debts,
and notifying all sales areas of their lending clients in default with the banking system, therefore making it possible
to take preventive measures in relation to potential default.
In the corporate segment, a credit risk control system has been established based on identification of higher risk Clients
(effective and potential risk), allowing for special monitoring of these Clients through regular meetings between sales
staff, risk and legal divisions, analysing in each case the steps to be taken in relation to liabilities, and existing guarantees
and guarantees to be required.
43
Market Risks
All components of market risks are subject to limits which are periodically reviewed by the management bodies, as
well as subject to rules on operations and control contained in internal regulations and supervisory standards.
Banif’s portfolio of marketable securities includes foreign exchange, flat rate and variable rate risks, which are accounted
for and periodically revalued at market prices. The essential work in this area is to hedge against the risk of more
volatile assets, which are the flat rate products and foreign exchange aspects of operations contracted with Clients.
Structural liquidity is measured in keeping with the time scale of commitments accepted and resources obtained. The
obtaining of funding from Clients, recourse to the money market, the contracting of medium to long term loans
(including a programme of EMTM’s) and the credit securitisation programme Atlantes Mortgage No. 1, have contributed
to the stability of the Bank’s liquidity structure, with the liquidity gap and the cumulative gap remaining with the limits
previously established for the different periods.
Interest rate risk is assessed periodically in keeping with the repricing periods for assets and liabilities, and stress limits
approved by the authorities were maintained through the period.
The Assets and Liabilities Committees remain active, helping to inform different Bank bodies of prevailing conditions
in the Portuguese and international markets, aspects of the macro-economic situation and trends, together with
assessment of the main balance sheet risks and yield performance, factors which determine pricing conditions and
funding policy associated with the various assets under management.
Adjustement to the New Basle Agreement
A prominent part of Banif’s risk management activity in 2003 consisted of a specific project to assess and diagnose
the Bank’s position vis-à-vis the New Basle Agreement.
The following work was undertaken in relation to lending risks:
- compliance with internal risk models was assessed, and opportunities for improvement identified;
- gaps relating to the data base and information system were identified;
- an exhaustive survey was conducted of the entire lending process;
- a top-down analysis was carried out, assessing the impact of the new agreement on each of the methodologies
proposed, in terms of capital consumption;
- finally, a master plan was drawn up for overall lending risk management.
In relation to operating risk, the Bank concentrated in 2003 on drawing up a master plan which, after designing
various scenarios in the light of the proposed methodologies, is designed to equip the Bank with the means and the
structure needed to implement a methodology suited to quantifying levels of operating risk, in keeping with the Bank’s
size and its business activities.
In both cases working schedules were defined, and detailed plans drawn up, in order to comply in full with the
requirements associated with the methodologies to be adopted by the Bank, in relation to the different risks which
contribute to the new form of calculating capital requirements.
44
9. Financial Operations
The Financial Division continued to concentrate on integrated management of the Bank’s assets and liabilities, intervening
on behalf of the Bank and some of the Group companies in the money markets and foreign exchanges, and also coordinating the Bank’s operations with those of other Portuguese and foreign financial institutions.
Very modest levels of economic growth in the world’s leading economies, combined with the conflict in Iraq and the
fear of terrorist attacks, led investors to seek lower risk investments offering greater liquidity, taking refuge in banking
products and bond and treasury funds, to the detriment of investments in the stock markets and high risk funds.
Markets continued to be volatile, and the high degree of uncertainty as to future trends led the Bank to limit its
portfolio of equities and bonds, giving priority to liquidity.
Overall, the Bank’s portfolio of investment and marketable securities in 2003 recorded a negative result of 1 million
Euros, as against 786,2 thousand Euros in 2002. Nonetheless, the value of provisions for depreciation in securities
fell by 2,510 thousand Euros between year-end 2002 and year-end 2003.
Profits on “other financial operations” stood at 6.1 million Euros, almost all of this deriving from securitisation operations
underway, and especially from the mortgage lending operation (Atlantes Mortgage Nº.1), concluded in 2003, with a
value of 500 million Euros.
On the foreign exchanges, the Euro rose strongly in 2003, reaching 1.2647 on the last day of the year, representing
appreciation of 20.91% against the dollar over the course of the year.
An increase in Banif’s counterparts on the international foreign exchanges also led to an increase in the volume of
trading in the main market currencies. This in turn led to an increase in the Bank’s foreign exchange earnings, which
stood at 988 thousand Euros at the end of 2003, as against 656 thousand at the end of 2002.
In overall terms therefore, net results from financial operations grew by 190%, standing at 6 million Euros at the end
of 2003.
In the capital markets in 2003, the Financial Division took part in preparing the securitisation operation for property
loans mentioned above, with a value of EUR 500 million, and also participated in the mounting of an EMTN programme
with a value of one thousand million Euros, with the 1st tranche being issued in November 2003 with a value of EUR
200 million, through a Bank subsidiary created for this purpose, Banif Finance, Ltd.
10. Internacional Operations
The Bank recorded a significant increase in correspondent banking business in 2003, and visits were made to more
than 150 financial institutions in various countries around the world, especially in Europe and the United States, seeking
at all times to gain a higher profile for the Banif and the Banif Group, so as to make a significant contribution to
developing it business interests and those of our Clients in the world markets.
The positive image projected by Banif is increasingly visible in the international markets. This factor, combined with
the investment grade ratings assigned at the beginning of the year by Moody’s (Baa1/P-2) and Fitch (BBB+/F2), provided
significantly better access to the international capital markets, on improved terms. Thanks to this situation, the Bank
brought in medium term (3 years) funding in the first half of 102.5 million Euros, through two syndicated operations,
and in the last quarter of the year, under the Euro Medium Term Note Programme for 1,000 million Euros, it issued
notes for a total of 200 million Euros, also at 3 years, through its subsidiary Banif Finance, Ltd. These operations were
very well received by the markets, attracting a wide range of investors, with a good geographical spread.
45
Thanks to careful analysis of the risk of counterparts, commercial and cash limits were established for a larger number
of correspondent banks, and we established relations with a large number of banks worldwide.
The Bank stepped up efforts to bring in operations without recourse, concentrating essentially on risk operations
involving Portuguese companies, our Clients with a good level of risk, whose business is monitored by our Business
Centres. The poor economic situation meant that the level of operations approved was not so significant as in 2002.
Banif continued to enjoy success in bringing trade finance operations in emerging markets, especially in relation to
Brazil risk, short term operations (up to one year) relating to import, pre-export and export finance, quoted in dollars.
As at 31 December 2003, this business amounted in consolidated terms to USD 37.5 million, representing 0.85% of
total consolidated lending, close to the figures recorded at year end 2002 (0.81% of total consolidated lending).
Given the start-up in 2003 of Banif Mortgage Company, Miami, offering mortgage credit to non-resident Clients for
the purchase of a second home in the USA or commercial premises for rent, short term funding was arranged at this
initial phase for the operations effected, totalling USD 11.3 million.
Finally, mention should be made of the Bank’s positive experience and the collaboration obtained through membership
of the GEB – Groupement Européen de Banques, and its excellent relations with all the members, which has contributed
greatly to development of joint activities and operations. Banif is to organise the annual GEB meeting in Lisbon
in 2004.
11. Foreign Residents
During 2003, various factors in the international economy, notably the sharp depreciation of the US Dollar, lower
interest rates and foreign exchange restrictions imposed in the host countries of Madeira’s two largest expatriate
communities (Venezuela and South Africa) had a negative effect on the business of the Non-Resident Clients Division
(NRCD) and the Madeira Offshore Branch (OB).
This situation was reflected in a drop in deposits, meaning that the contribution of the NRCD and the OB to the Bank’s
total Client deposits declined by approximately 5% in relation to the previous year.
Over the course of the year, steps were taken to equip the Bank’s foreign offices with human and IT resources capable
of consolidating the good standards of performance and support provided to the Bank’s Clients.
The Offshore Branch continued to enjoy its traditional success in 2003 in dealings with non-resident Clients, achieving
an increase in the flow of capitals from abroad, thanks to promotional efforts aimed at management companies.
The Madeira Free Trade Zone has firmly established itself as a sound and credible alternative for foreign entrepreneurs
and investors, inside and outside the European Union, and it now provides business opportunities to which the OB
has paid careful attention.
In addition to the Bank’s normal activities in terms of supporting and sponsoring cultural events organised by Portuguese
communities in countries where the Banif Group operates, the NRCD extended its activities in 2003 with the
commemorations of Banif’s 15th anniversary, which took place over the course of the year.
In general terms, the Non-Resident Clients Division recorded positive performance, and thanks to its external structure
it was able to maintain the existing degree of loyalty of its Clients resident abroad. This result has given us the confidence
and motivation to consider expanding our operations to other countries with Portuguese expatriate communities,
where the Bank is not yet represented.
46
12. Client Support Office
The Clients Support Office continued to process and resolve complaints made by customers, which covered a wide
range of questions, of a varying degree of importance.
A total of 341 complained were received in 2003, and 317 of these were resolved by the end of the year.
The Office’s work has been found to make a considerable contribution to customer satisfaction, and provides information
which makes it possible to improve the quality of services offered by the Bank.
13. Analysis of Acounts
A comparative analysis of the financial statements clearly reflects the main features of the Bank’s operations in 2003:
- A reduction in Net Assets of 834.2 million Euros (with a year-end total of 4.126.7 million Euros) as a result partly
of a change in the law, as from the beginning of the year, permitting direct investment at head office of surplus
liquidity from the Madeira Offshore Branch, amounting to approximately 650 million Euros, and also due to the
Atlantes Mortgage No. 1 securitisation operation, under which the Bank transferred total credit of 500 million Euros
relating to home loans. This operation also explains the reduction of 6.7% in the lending account in 2003,
which in gross terms stood at 3,276.6 million Euros at the end of the year. Client accounts added to debts represented
by securities recorded modest growth of 2%, for the period under analysis, standing at 2,317.9 million Euros.
- In view of this evolution, the deposits to lending conversion ratio decreased by 7.1 p.p., standing at 141.4% at the
end of 2003 (as against 148.5% in 2002), reversing the trend recorded in recent years. The financial margin
was up by 5.1% on 2002, offsetting the negative effect of a slight but steady narrowing of financial brokerage
margins over recent years.
- Banif’s shareholders’ funds rose by approximately 12 million Euros, standing at 348.5 million Euros at the end
of 2003 (as against 336.5 million at the end of 2002). The solvency ratio stood at 10.78% at the end of 2003,
up from 10.2% at the end of 2002. Tier 1 shareholders’ funds stood at 253.4 million Euros, generating
a solvency - Tier 1 ratio of 7.84% (7.05% in 2002).
- Although the difficult economic climate both nationally and internationally in 2002 and 2003 caused a degree
of deterioration in lending risk, both because of high levels of household debt, and because of falling sales in most
companies, with negative effects on their financial health, the ratio of outstanding credit to total lending rose only
slightly, to 2.2% in 2003, as against 1.9% in 2002, and coverage by total provisions for lending stayed above 100%,
standing at 111.3% at the end of 2003.
- Clear containment of overhead expenses and a sharp increase in all components of banking income led to a significant
improvements in the indicators of the returns on banking operations under the Banif brand in 2003, with net results
rising by 47,4%, in relation to the 2002 pro-forma results (see explanation below), to a figure of 23.190 thousand
Euros. ROE and ROA stood at 8.9% and 0.51% respectively.
Balance Sheet
The account for “Cash and Funds with Central Banks”, which mostly consists of isolated current account deposits
with the Bank of Portugal, in order to meet the legal cash reserve requirements, stood at 192.2 million Euros at the
end of 2003. The account for “sight deposits with banks” fell by 21.8 million Euros (down by 30.7% on the balance
recorded at the end of 2002), and consisted primarily of collectables. These items increased their proportional weight
in the Banif balance sheet structure, from 3.1% in 2002 to 5.9% in 2003.
The account “Other Loans and Advances to Banks” was down by 70.1% in relation to 2002, standing at a total of
311.0 million Euros at the end of 2003 (representing 7.6% of total balance sheet assets, as against 21.0% at the end
of 2002). Since the beginning of the year, the Bank has been able to deposit the liquidity surplus from the Madeira
Offshore office with the head office, instead of having to invest it with institutions outside the Group, as was previously
the case. This explains the reduction in this item and also in the account for “Deposits by Banks”, which fell by 38.5%,
shrinking as a proportion of balance sheet structure from 42.4% in 2002 to 31.4% in 2003.
47
The account for “Loans and Advances to Clients” was down in gross terms by 6.7% in 2003, corresponding to
a reduction of 236.1 million Euros, to 3,276.6 million Euros. In the first quarter of 2003 the Bank transferred to home
loan credits of 500 million Euros through the Atlantes Mortgage No. 1 securitisation operation. If the credit sold were
added to the account for “loans and advances to Clients”, this would record growth of 7.6% over the year.
This account, less provisions for specific lending risks, represented 78.4% of total net assets at the end of 2003 (69.9%
at the end of 2002).
At the start of the year, the Bank of Portugal issued Notice 8/2003, partially amending the rules on calculation of
provisions for lending risks established in Notice 3/95, increasing the provisions required for doubtful debts and dividing
outstanding credit into 12 different categories, as opposed to 5 as existed previously. Application of these rules altered
the structure of provisions, with provisions for doubtful debts rising from 1,981 thousand Euros to 8,632 thousand
Euros, with provisions for general lending risks being cut from 35.5 million Euros in 2002 to 28 million in 2003, due
in particular to the reduction in the general provisions for certain home loans.
A total of 33.1 million Euros was written off in the balance sheet in 2003 in respect of credit deemed to be either
very difficult to recover, or else irrecoverable (15.5 million Euros in 2002).
Fixed Assets Accounts (“Intangible Fixed Assets” and “Tangible Fixed Assets”) recorded an overall reduction in value,
net of depreciation, of 88.4 million Euros, standing at 23.8 million Euros at year end 2003 (as against 112.3 million
Euros at the end of 2002), as a result of the business premises being sold to Banif Imopredial and to the Banif Imogest
Property Funds, for a total value of 93 million Euros. This sale caused total capital gains in the accounts of 8.2 million
Euros. As a result of this, fixed assets accounts represented a smaller proportion of the total balance sheet structure
(0.5%, as against 2.3% in 2002). The Bank’s fixed asset ratio (which includes financial fixed assets), determined
according to Bank of Portugal rules, fell from 39.1% at the end of 2002 to 15.9% in 2003.
The account for “Other Assets”, comprising essentially “property not used for company operations” (total of 35.9
million Euros, as against 37.4 million Euros at year end 2002) and “Debtors” (18.3 million Euros, as against 16.3 million
Euros in 2002), stood at a total of 57.4 million Euros at the end of 2003, representing an increase in net terms of
6.6% over the previous year.
Accruals and deferrals (on the assets and liabilities side) registered a net credit balance of 19.6 million Euros, representing
a substantial reduction of 26.6% when compared with the total of 26.7 million Euros recorded in 2002. These accounts
continue to represent only a small part of the total balance sheet structure (1.8% and 2.3% respectively in 2003, and
1.0% and 1.5% respectively in 2002).
In relation to liabilities, for reasons already indicated, third party deposits were down by 840,5 million Euros in 2003
when compared with the previous year, standing at 3,830.1 million Euros (4,670.6 million Euros at the end of 2002),
with the result that net asset coverage by third party deposits fell from 94.2% to 92.8%.
In relation to Client accounts, current accounts grew by 7.2%, standing at 796.6 million Euros at year end 2003 (743,0
million in 2002), whilst deposit accounts and savings accounts recorded a reduction of 4.2%, standing at 1,477.4
million Euros (1,541.7 million Euros at the end of 2002). As a result of the cross selling policy implemented by the
Bank, combined with our Customer’s lively interest in new investment products, such as securities and property
investment funds, structured products and bonds, these products recorded overall growth of 80.2%, and at the end
of the year the value of these products placed with Clients by the Bank’s commercial networks stood at 517.9 million
Euros. At year end 2003, the account for “Client accounts” represented 55,1% of the Bank’s balance sheet structure
(as against 46.1% in 2002).
48
The account for “debts represented by securities” declined significantly in 2003, falling by 36.8 million Euros, as a
result of bonds for 7.5 million Euros reaching maturing, together with deposit certificates of 29.3 million Euros placed
with Clients.
Overall, total Client accounts (excluding ex-balance sheet deposits) fell by 2% from year end 2002 to year end 2003,
totalling 2,317.9 million Euros (2,365.4 million Euros in 2002).
Shareholders’ funds stood at 268.3 million Euros in 2003, up 5.3% from the figure of 254.7 million Euros recorded
in 2002. The equity to net assets ratio increased from 5.1% to 6.5% over the period.
The Bank’s solvency indicators (calculated in accordance with Bank of Portugal instructions) are at appropriate levels,
with the solvency ratio at 10.8% at the end of 2003 (10.2% in 2002), above the lower limit of 8%, whilst at Tier 1
the same ratio stands at 7.8% (7.1% in 2002).
Balance sheet structure
Percentage
2003
2002
Var %
2003
2002
Var %
Cash and Funds with Central Banks
4,7
1,7
128,9
Deposits by Banks
31,3
42,4
38,5
Deposits with Banks
1,2
1,4
-30,9
Clients Accounts - Sight Deposits
19,3
15,0
7,2
Loans and Advances to Banks
7,6
21,0
-70,1
Clients Accounts - Term Deposits
35,8
31,1
-4,2
Loans and Advances to Clients
78,2
69,9
-6,9
Debts Represented by Securities
1,1
1,6
-45,6
Investments in Securities
4,1
1,3
159,2
Other Liabilities
0,3
0,3
-5,6
Shares in Related Companies
0,5
0,4
11,1
Accruals and Deferrals
2,3
1,5
25,6
Intangible Fixed Assets
0,1
0,2
-31,8
Subordinated Debt
2,7
2,3
0,0
Tangible Fixed Assets
0,4
2,1
-82,5
Other Provisions
0,7
0,7
-20,3
Own Shares
0,0
0,0
0,0
Shareholders´ Funds and Results
6,5
5,1
5,2
Other Assets
1,4
1,1
6,6
Accrual and Deferrals
1,8
1,0
54,8
100,0
100,0
-17,0
100,0
100,0
-17,0
49
Income Statement
Preliminary Note
In 2002, banking business under the Banif brand was carried on by Banif SGPS, SA (the former Banif –
1st quarter) and by the new Banif, SA in the remaining months of 2002. In view of this, pro-forma financial
statements were drawn up for 2002, including all the banking business carried on under the Banif brand,
during the financial year of 2002, in order to be comparable with the figures presented in 2003.
Despite the further narrowing of financial brokerage margins in some areas of lending business (especially in lending
to good risk personal Clients), it was possible to offset this with a generalised rise in spreads in lending to companies,
meaning that the financial margin rose by 5.1%, from 99.2 million Euros in 2002 to 104.5 million in 2003.
The accounts for “net profits from financial operations” stood at 6.1 million Euros, up 3.8 million Euros from
the previous year, led by the profits obtained from operations relating to the securitisation operations carried out.
The account for “commissions and other income (net)” also rose by an impressive 12.7% over the previous year,
standing in 2003 at 40.5 million Euros, and representing in gross terms (45.1 million Euros) approximately 29%
of banking income, which in 2003 stood at 155.7 million Euros (up 9.2% from 2002).
The gross operating margin rose by 9.7% in 2003, standing at 151.1 million Euros (137.7 million Euros in 2002),
corresponding to rates of return of 3.33% and 57.8% on net assets and equity, at average 2003 values (2.84%
and 56% in 2002).
As already stated, the account for “Administrative Overheads” (which includes “Personnel Costs” and “third party
supplies and services”) stood at 82.5 million Euros in 2003, as against 79.9 million Euros in 2002. This corresponds
to growth of only 3.3%, although the Bank continued to expand its activities and to extend its distribution networks
and channels. As a result, there was an efficiency gain in the ratio of “Administrative Overheads/Gross Operating
Margin”, which fell from 58% in 2002 to 54.6% in 2003.
Personnel costs stood at 47.8 million Euros at year end 2003, up by 2.3%, with the average cost per employees rising
by 2.1% from 31.8 thousand Euros in 2002 to 32.5 thousand in 2003.
The account for “Other Administrative Overheads” (third party supplies and services) stood at 34.6 million Euros (as
compared to 33.1 million Euros in 2002), up by only 4.8%, thanks to a management policy based on strict control
of consumption, streamlining of costs and permanent price negotiation with suppliers.
The cost-to-income ratio (general administrative overheads and depreciation/gross operating margin) also recorded
an appreciable increase in efficiency of 4.5 p.p., rising from 65.97% in 2002 to 61.29% in 2003.
As a result, operating cash flow stood at 68.6 million Euros, representing a significant increase of 18.6% when
compared with the figure of 57.9 million Euros recorded in 2002. This cash flow represents rates of return of 1.5%
and 26.3% respectively on net assets and equity, at average 2003 values (as against 1.2% and 23.5% in 2002).
Depreciation totalled 10.1 million Euros, down by 7.8%, whilst allocations to provisions (net of reinstatement) grew
by 10.5%, standing in 2003 at 29.4 million Euros. This figures remains below the barrier of 50% of operating cash
flow (42.9% in 2003 as against 46% in 2002).
50
The account for “Extraordinary Gains” (net) was down on the previous year, at – 5.8 million Euros. On the gains side,
there were significant capital gains on the disposal of business premises as mentioned above, amounting to 8.2 million
Euros, whilst on the loss side there were the losses relating to the part not covered by insurance in a fraud, totalling
10.8 million Euros, at one of the Bank’s branches, detected in 2003 by the Bank’s own inspection and audit services.
This sale of the Bank’s business premises allowed the recording of fiscal losses, which have reduced the Bank’s tax
burden to near zero in 2003. The result for the period, after tax, therefore stands at 23.190 thousand Euros, representing
a significant rise of 47,4% when compared with the figure of 15.736 thousand Euros recorded in 2002 pro forma.
Comparative Analysis
Banif - Banco Internacional do Funchal
Thousand Euros
31-12-2003
31-12-2002
Pro forma
Absolute
Variation
Variation %
Net Assets
4.126.690
4.960.862
-834.172
-16,8%
Net Lending
3.229.141
3.466.695
-237.554
-6,9%
23.852
112.314
-88.462
-78,8%
Net Fixed Assets
Deposits by Clients
2.317.897
2.365.426
-47.529
-2,0%
Shareholders' Funds
268.286
254.696
13.390
5,3%
Financial Margin (inc. income from securities)
104.509
99.436
5.072
5,1%
Profits on Financial Operations (net)
6.078
2.319
3.759
162,1%
40.510
35.945
4.564
12,7%
Gross Margin
151.097
137.700
13.398
9,7%
General Overheads
-82.480
-79.850
-2.630
3,3%
Other Earnings (net)
Operating Cash Flow
68.617
57.850
10.767
18,6%
Depreciation
-10.130
-10.990
861
-7,8%
Provisions (net)
-29.356
-26.570
-2.786
10,5%
Operating Result
29.131
20.290
8.841
43,6%
Extraordinary Gains (net)
-5.767
598
-6.365
-
-174
-5.152
4.978
-96,6%
Result for the period (net of tax)
23.190
15.736
7.454
47,4%
ROE
8,87%
6,36%
ROA
0,52%
0,32%
61,29%
65,97%
Provision for tax on profits
Cost to Income*
*Ratio (general administrative overheads+depreciation) / gross operating margin
51
1.1.2 Banco Comercial dos Açores, SA
The main strategy thrust adopted and systematically pursued by Banco Comercial dos Açores has been to centre its
activities on its natural markets - the home market, in the Azores, and with expatriate communities from the Azores.
This determines the size of the Bank, and also shapes the framework for its business.
Growth and organisational development are therefore prudent, sustained and tailored to the market, and the Bank
seeks to close ties with its clientele, so as to ensure customer loyalty. Investment and process re-engineering are
constant features of the Bank’s policy, geared to achieving efficiency gains throughout the structure. At the same time,
BCA’s stance as a Bank offering a comprehensive service has been consolidated by constantly adding to the range of
products and services offered, both through internal development, and by offering the products and services of Banif
Group companies. The prime aim is to maintain a strong presence and a high profile, with a view, when possible, to
increasing the large market share which the Bank has historically enjoyed.
Changes occurred to the shareholder structure of the Bank in the course of 2003: in March/April the 5th phase of
the privatisation of BCA went ahead, in which the Regional Government of the Azores sold off its remaining holding,
and in December, as the result of a public takeover bid, Banif Comercial SGPS, SA became the holder of 99.6% of
the share capital and voting rights in Banco Comercial dos Açores.
A fraud was detected in the course of 2003, causing the Bank a net loss of EUR 4.2 million. This amount has been
absorbed in full by the Bank’s operating account, with a negative result on its Net Profits, which fell by 13.2% from
2002 to 2003.
Below we describe the main developments in 2003, in the Bank’s commercial activities, central administration
and operations:
- Commercial activities
BCA takes a segmented approach to the market, whilst concentrating sales efforts in a single Division, which now
includes a network operational marketing unit and a cross selling unit. The former has the task of increasing sales
through specific and carefully targeted campaigns, and was responsible for 22 campaigns over the course of the year,
making a highly significant contribution to the attainment of the Bank’s objectives. The cross selling unit seeks to
increase the level of cross selling in the Bank, through well-managed co-ordination with other Group companies and
by promoting this area of business within the Bank.
52
New products were also launched, thereby maintaining BCA’s tradition of innovation. These included the BCA Valor
account, and the new system for BCA debit cards.
BCA’s e-banking service, Bcaglob@l, has been provided with new functions: opening of deposit accounts, transfers
to deposit accounts, payment of bills and mobile telephone cards. In addition to this, great efforts were made to
promote registration by Clients, making it possible to increase fivefold the number of customers using this service
as compared with the previous year.
Work has continued on extending and improving the traditional distribution network. Two new branches were opened
- Parque Atlântico, in Ponta Delgada, and São Pedro, in Angra do Heroísmo. Projects were also launched to revamp
and modernise other branches: Santa Maria, Angra do Heroísmo, Pico, Flores and São Miguel. This process was
completed in the course of the year at the Santa Maria, Largo 2 Março and Lagoa branches.
The commercial division’s activities resulted in growth in lending in the order of 101 million Euros, representing an
increase of 12.4% over the previous year. The main area of growth was in lending to personal customers, which rose
by 14.2%, levered by home loans which continued to represent an important proportion of total lending. Deposits
also performed well, with growth of 36.5 million Euros at the end of the year, corresponding to a percentage increase
of 4.8% in the year in question.
- Central and Operational Areas
The activities of central and operational areas is also geared to strategic goals of improving the level of service offered by
the Bank to its Clients, and achieving efficiency gains in productivity and structure, helping to make the Bank more competitive.
The Bank therefore runs programmes for sustained investment in technological infrastructures, seeking to achieve
higher levels of automation and better workflows. At the same time, measures have been taken to integrate the Bank
into the Banif Group, and harmonisation programmes are being implemented in various areas. Work started in 2003
on operations executive areas in the Group’s two commercial banks, after conclusion of identical programmes for
financial operations, non-resident clients, human resources, audit and supervision.
Banif and BCA are also working together on a project for new software and a new IT platform for branches.
The balance sheet figures for overdue credit was also favourable, with the Bank closing the year with overdue credit
representing 1.42% of total lending, after writing off 1,087 thousand Euros in debts regarded as uncollectable, for which
full provision had been made. This represented an improvement in relation to 2002, when this indicator had stood at 1.87%.
53
At the close of the year, provisions for doubtful debts and overdue credit provided cover for 77.2% of the doubtful
and overdue credit (61.1% in the previous year). If the provision for general lending risks are included, then level of
coverage rises to 132.4%, as against 115.9% at year end 2002.
The Bank had an average workforce of 444 employees in 2003, as against 452 in the previous year. At 31 December
the workforce stood at 441 employees.
In general, the Bank was very successful in implementing its operating plan in 2003, enabling it to maintain its aggressive
market stance and to enhance the value chain in the Bank’s service. As already stated, the fraud detected in 2003
was on a scale which affected the Bank’s net results, which fell, from 2002 to 2003, by 993 thousand Euros, or 13.2%,
to 6,543 thousand Euros. At year end, banking income was down by 1.9% on 2002, standing at 41,062 thousand
Euros, influenced by the poor performance of the financial margin and results from financial operations, which fell
by 917 thousand and 648 thousand Euros respectively, to 29,983 thousand and 1,273 thousand Euros.
In contrast, income from banking services performed well, rising by 19.7% over 2002 to 8,367 thousand Euros in
2003, representing 26.5% of banking earnings.
There was a 6.7% increase in overheads, not fully offset by the reduction in depreciation, meaning that the cost to
income ratio stood at 60% at the end of the year.
The Bank’s balance of extraordinary results was affected negatively by coverage of the entirety of the fraud referred
to above, and positively by capital gains, of 3.3 million Euros realised on the disposal of business premises to Banif
Imobiliária and the bank’s Pension Fund.
The positive performance of the Bank’s lending portfolio meant that the net funds required to create provisions for
overdue credit were practically nil in 2003. Nonetheless, the Bank created provisions for fiscal contingencies for 2002
and 2003, amounting to a total of 3,087 thousand Euros.
The following table provides an overview of other data and indicators for the Bank in 2003. It should be noted that
the large reduction in ent assets was due almost entirely to a very significant reduction in interbank operations within
the Banif Group.
54
Thousand Euros
2003
2002
1.184.260
2.520.324
-53,0%
Lending
908.948
808.357
12,4%
Client deposits
798.942
762.473
4,8%
Shareholders’ funds and results
85.685
81.737
4,8%
Operating cash flow
16.393
18.649
-12,1%
Result for the period
6.543
7.536
-13,2%
ROE
8,3%
10,2%
-1,9 p.p.
ROA
0,6%
0,3%
+ 0,3 p.p.
Solvency ratio
12,4%
8,9%
+ 3,5 p.p.
Cost to Income
60,0%
55,0%
+ 5,0 p.p.
1,4%
1,9%
- 0,5 p.p.
132,4%
115,9%
+ 16,5 p.p.
1,1%
1,6%
- 0,5 p.p.
Net assets
Overdue credit/Total lending
Total provisions for lending/Overdue credit
Defaulting credit*/Total lending
Var %
* As defined in Bank of Portugal circular no. 99/03/2003.
1.1.3 Banif Leasing, SA
Banif Leasing, SA recorded total business in 2003 of approximately 133.6 million Euros, of which 106.3 million Euros
related to equipment leases and 27.3 million Euros to property leases. These figures represent overall growth of 10.8%
over the previous year, led by growth of 30.9% in property leases.
The sector as a whole shrunk in 2003 by 0.7%, with property leases recording a drop in business of 6.3% and
equipment leases growing by 13.9%.
Banif’s distribution networks contributed very significantly to business in equipment leases (approximately 47.2%),
and were the main source of property leasing business (78.1%).
Total lending stood at 185.0 million Euros at the end of 2003, up 69.9% from 2002, due in particular to the reduction
in credit transferred through the securitisation operations underway.
The financial margin increased by 44.9%, rising from 3,431 thousand Euros in 2002 to 4,970 thousand Euros in 2003.
The operating lease yield rose in turn from 5,816 thousand Euros in 2002 to 6,753 thousand Euros in 2003, representing
an increase of 16.1%.
The cost to income ratio, considering operating costs and leasing income, fell from 52.8% to 47.8%.
Net profits were down by 79.7% in relation to 2002, standing at 89 thousand Euros. However, the cash flow generated
stood at 3,745 thousand Euros, representing growth of 29.5% over 2002. Operations in 2003 were hit by the sharp
increase in provisions (up by 60.9%), which rose to total coverage (net of reinstatement and write-offs) of 3,104
thousand Euros in 2003.
55
As at 31 December 2003, the company had 39 employees.
As the result of reorganisation in 2003, a banking channel was created in Banif Leasing’s Sales Division, for operations
sourced through the Banif and BCA sales networks, together with a suppliers channel, for operations sourced from
suppliers and agency channels. The company has public offices only in Porto, Leiria and Lisbon.
Thousand Euros
2003
2002
Var %
Net assets
185.112
111.917
+ 65,4
Total lending
185.047
108.904
+ 69,9
12.073
12.325
- 2,0
Cash flow
3.751
2.893
+ 29,7
Net result
89
435
- 79,7
ROE
0,7
3,5
- 79,1
ROA
0,1
0,4
- 87,6
Solvency ratio
8,8
10,2
- 13,7
47,8
52,8
- 9,5
3,3%
3,4%
- 1,8
112,1%
111,6%
+ 0,5
Shareholders’ funds
Cost to income
Total provisions /Overdue credit
1.1.4 Banif Crédito – Sociedade Financeira para Aquisições a Crédito, SA
The company concluded a total of 2394 new contracts in 2003, representing business worth a total of 22.8 million
Euros, figures which fall significantly fall of targets and represent growth of 1% over the same period in 2002.
The vast majority of contracts continue to relate to second hand vehicles, and most borrowers are private Clients.
In a very difficult economic climate, these results were achieved thanks to the following measures in 2003:
- Creation of an annual commercial recall plan, designed to create loyalty amongst the main sources of business;
- Creation of a product for financing suppliers’ stocks, in return for the business channelled to the company;
- Launch of a sales challenge for the first seven months of the year, with prizes for suppliers in the form of package
tours if they achieve the sales targets negotiated;
- A promotional campaign with the slogan “Stress-free holidays”, based on a product deferring the first monthly
payment;
- Organisation of a 4WD excursion, in conjunction with Banif Leasing, in order to consolidate the company’s image
with suppliers.
The lending portfolio stood at 37.8 million Euros at the end of 2003, up 36.4% over the previous year.
The financial margin increased sharply to 81%, rising from 937 thousand Euros in 2002 to 1,679 thousand in 2003.
56
The cost to income ratio also performed well, falling from 47.7% to 37% between 2002 and 2003. However, substantial
funds were allocated to provisions, meaning that the net result at the end of the year stood at 406 thousand Euros,
as against 489 thousand Euros in 2002, representing a reduction of approximately 17% in relation to the previous year.
The need to increase provisions derived essentially from a more restrictive policy on provisions for overdue credit,
instituted in Notice 8/2003 of the Bank of Portugal, requiring an increase in specific provisions for lending risks in the
order of 1,651 thousand Euros, which made it possible to attain a coverage level of 91.4% of overdue credit and
interest (up by 34% and considering total provisions for lending risks).
In order to pursue the company’s strategic objectives, a Director General was appointed, and the company’s strategic
goals were revalidated in its role as the group’s specialist in point of sale credit. It was accordingly decided to separate
the structures shared with Banif Leasing, as from 1 September 2003, except for legal affairs and information technology.
In December 2003, Banif Crédito and Banif Leasing moved offices, and ceased to share the same premises.
As at 31 December 2003, the company had 29 employees.
Thousand Euros
2003
2002
Var %
Net assets
38.335
28.102
36,4
Net lending portfolio
37.829
27.723
36,5
4.373
4.347
0,006
Cash flow
2.377
1.358
75
Net result
406
489
- 17
ROE
9
6
50
ROA
1,06%
1,74%
- 39,08
Solvency ratio
9,7%
10%
-3
Cost to income
37%
47,7%
- 22,4
6,7%
6%
12
Total provisions /Overdue credit
134%
75%
79
1.1.5 Banif Rent – Aluguer, Gestão e Comércio de Veículos Automóveis, SA
Banif exists in its present form since 16 April 2003, resulting from acquisition of 70% of the company Sky Rent by
the Banif Group.
The Banif Group took over management control of Banif Rent on 1 May 2003, and it started trading on 1 September
2003.
As a result of Banif Rent’s activities in 2003, a total of 17 new contracts were concluded, with a financing capital of
528,203 thousand Euros.
Banif Rent, SA closed the 2003 with a fleet of 135 vehicles, corresponding to the same number of fleet management
contracts, 89 of which include a maintenance contract. In addition to this, company has a total of 24 maintenance
management contracts.
57
The financial statements of Banif Rent, SA present an after tax result of -255.5 thousand Euros.
Banif Rent currently has seven employees, having taken on three new staff in June.
Activities in 2003 included:
- Creation of corporate image and review of the fleet management contract for the new company;
- Design of a new driver’s pack;
- Placing of the Banif FleetCare product with the Business Centres, through training sessions.
Thousand Euros
2003
2002
Var %
2.146
3.007
- 29
Shareholder’s funds
155
411
- 62
Cash Flow
- 24
957
- 103
- 255
222
- 215
Assets
Results net of tax
1.1.6 Banco Banif Primus, SA
In 2003, Banco Banif Primus, SA geared its operations to financing companies, working actively in commercial lending
and foreign trade operations. At the same time, a number of measures were implemented to raise the profile of the
Banif brand in the market and with the Portuguese community in Brazil.
The commercial lending portfolio recorded sustained growth over the course of the year, standing at R$ 119 million
at year end. The main activities undertaken were bonded receivables operations with corporate clients, credit purchase
operations from smaller banks on a co-obligation basis, and consumer credit operations, with repayments debited
direct from the borrowers’ salaries. These operations were undertaken at all times with a view to minimising the credit
risk and maximising the profitability of the Bank’s lending portfolio.
In the field of trade, one of Banco Banif Primus’ core businesses, the Bank continued to serve its clients in this segment,
comprising the largest private and public groups in the country, ending the year with a foreign trade lending portfolio
of approximately R$ 80 million, and a total of USD 85 million in external financing operations for the Group.
In view of this, and by consolidating commercial credit operations and trade finance operations in local currency, Banco
Banif Primus achieved a credit portfolio of approximately R$ 199 million at the end of 2003, representing growth of
around 30% when compared with the figure of R$ 155 million recorded at the end of 2002.
Following the commercial strategy mapped out by the management, commercial branches were opened in order to
better explore local business opportunities, especially in areas where Portuguese communities have more influence,
or where there is greater business potential in the Bank’s strategic areas, notably private banking and trade finance.
The Alphaville branch in Greater São Paulo had been opened at the end of 2002, and in 2003 greatly expanded its
business, meeting all the targets set, and bringing in substantial deposits from high income Clients, as well as increasing
business in commercial and trade finance.
58
In the second half of 2003, a new branch was opened in Santos, in São Paulo State. This city is home to Brazil’s largest
port and one of the world’s largest ports for long haul cargo, with huge potential for developing foreign exchange
and foreign trade operations. In addition, there is a strong Portuguese presence, mostly drawn from Madeira. Targets
were defined for attracting local high income clients for cross selling with private banking.
In keeping with the strategy adopted in previous years, the Bank sought to consolidate its prominent position on the
foreign exchanges and gold markets, once again figuring amongst the fifteen most active banks on the foreign
exchanges, according to the monthly ranking published by the Brazilian Central Bank. The Bank also kept up a
significant presence on the interbank markets, especially in financing for small and medium sized banks.
The treasury department played an important role in obtaining the funding needed to support the Bank’s lending
activities, principally in commercial credit and trade finance. In addition to bringing in funds in Brazilian currency from
Clients and institutions, two foreign debt issues were made in 2003, the first (trade related notes) with a value of EUR
20 million, resulting from the securitisation of foreign trade credits, and the second (CD placement) amounting to
EUR 17.5 million.
In the field of corporate finance, as in the previous years, bond issues were carried out with Brazil’s main airlines, TAM,
VASP and VARIG, with the Bank supporting these companies in structuring issues designed to securitise debts to
INFRAERO – Empresa Brasileira de Infra-Estrutura Aeroportuária.
The Bank also supported Termo Bahia, SA, a power generation company, in structuring an issue of bonds to transfer
part of the holding owned by Petrobrás – Petróleo Brasileiro SA to institutional investors. The Bank also carried out a
series of valuations, for various purposes, for Clients in the power generation area (hydroelectric and thermal power
plants) and in the property sector.
In September 2003, in Lisbon, Banif – Banco Internacional do Funchal, SA, Banif – Banco de Investimento, SA and
Banco Banif Primus, SA signed a Heads of Agreement with BDMG – Banco de Desenvolvimento de Minas Gerais, SA,
with the participation of the Department of Development of the State of Minas Gerais. The agreement is designed
to increase the level of business involvement by Portuguese companies in Minas Gerais, and to promote trading links
between Portuguese companies and local enterprises. The Bank has already started to work jointly with BDMG, in
relation to Portuguese companies with investments in Brazil and interests in Minas Gerais.
The process of privatising State Banks is to be resumed in 2004, and Banco Banif Primus is positioned as the employees’
representative in two institutions: Banco do Estado do Piauí and Banco do Estado do Ceará. Also in 2004, the
development of public-private partnerships and the dissemination of new credit securitisation instruments may represent
additional business opportunities for the Bank in this area.
This was also a propitious year for asset management business in Brazil, making it possible to turn around the losses
recorded in the previous year. Banif Primus Asset Management recorded substantial growth in assets under management,
broadening its Client base and incorporating new products into its management activities. Assets under management
rose from R$ 96 million at year end 2002 to R$ 167 million in December 2003, corresponding to growth of 74% over
the year, well above the rate of growth recorded by the sector as a whole.
At the end of 2003, Banco Banif Primus restructured its investment sector, and this will allow it in 2004 act with greater
flexibility and also more systematically in exploiting business opportunities in the local capital markets, the international
capital markets, mergers and acquisitions, derivatives and asset management.
The results for 2003 were hit badly by the effect of the revaluation of the Real against the Dollar on the foreign
exchange which had been made in the pre-electoral period in 2002, and which was only cancelled by a management
decision at the end of the 1st quarter of 2003.
59
Thousand Euros
2003
2002
Var %
178.740
138.318
29,2
Lending
60.346
20.581
189,4
Client deposits
17.516
9.675
81,0
- 0,2
Net assets
9.820
9.836
Cash Flow
- 18
1.309
Net result
- 316
1.172
1.2 Banif Seguros SGPS, SA
The company continued to carry on its business in keeping with the legal framework for holding companies.
The company’s activities were therefore relatively limited, consisting of managing its holding in Companhia de Seguros
Açoreana, SA.
The balance sheet structure is based essentially on the financial holding of approximately 23,325 throusand Euros, in
the form of 3,792,500 shares representing 52.31% of the share capital in Companhia de Seguros Açoreana, SA.
However, in accordance with Accounting Directive no. 9, the company applied the equity method in order to value
this holding, with the result that the value of the holding as at 31 December 2003 stood at 33,582 thousand Euros.
The company therefore recorded a profit in 2003 of 5,269 thousand Euros in 2003, as compared with 3,074 thousand
Euros in 2002.
60
1.2.1 Companhia de Seguros Açoreana, SA
Three leading facts merit attention with regard to the operations of Companhia de Seguros Açoreana, SA (CSA) in
2003:
- The sustained trend towards a larger market share. In 1996, CSA had an individual market share of 0.64%;
today, this share stands at 3.4%. In life business, the company has a 3.2% share, and in non-life business it rises
to 3.6% (as per provisional data supplied by the Portuguese Insurance Association).
- Consistent improvements in results and cash flow, and a financial and assets situation which is increasingly sound.
- Successful conclusion of the process of integration with the insurance companies which have been merged into CSA,
and extraordinarily positive results from the modernisation process, with an impact on customer service
and improvement in efficiency and productivity indicators.
In the field of modernisation of business, systems and operating platforms, a new voice and data communication infrastructure
was completed in 2003. This state-of-the-art system, with the capacity to incorporate and channel new services, including
broad band internet throughout the company, will allow CSA to exploit the internal communication capability in order to
improve information and CSA employees training, and also to build on relations with various external partners.
The Claims Ready software was also upgraded. This projected was extended to the Azores, and will result in very significant
gains in terms of simplification, process effectiveness and management capacity in the automobile insurance sector. Also
in the field of technological modernisation and improving levels of efficiency and productivity, a project has been completed
in relation to data quality, designed to eliminate redundant and contradictory data, and also to broaden the company’s
data base by adding further Client information. Work is currently proceeding on unified listing of policy holders.
Açoreana’s corporate site on the internet was also revamped, with changes to both image and content.
Açornet has firmly established itself as an excellent platform for dialogue and relations with the brokerage network,
given the number of agents who have already registered (almost 600). New functions are still being introduced, making
this increasingly an essential working tool for our sales network.
In October, the contact centre platform started up. This is designed to host an advance professional services centre,
dealing with less complicated questions.
Two training projects using e-learning techniques were launched in 2003 and recorded considerable success.
These projects will continue with increased momentum in 2004.
61
In terms of improving overall effectiveness, work continued on a number of structural projects, including drives
to increase cross-selling and to develop partnerships within the Banif Group.
In the bancassurance channel, a very large amount of business has been sourced through placement by the Banif and BCA
banking networks. As part of the assurfinance project, programmes continued to involve brokers in the sale of banking
and leasing products, achieving considerable success, obtaining new business of more than 9.8 million Euros in 2003.
The CRM (Customer Relationship Management) schemes have continued, achieving considerable success, introducing
the company’s sales teams to the use of techniques for segmentation and developing client potential through division
into segments and using an intensive approach to achieve penetration.
At the same time, with a view to exploiting the business potential of existing Clients and brokers and to establish the
conceptual basis for designing the sales strategies of the company’s offices, the RDSMM (Results Driven Sales
Management Model) project has been revived, supported by an appropriate and well structured software.
Work proceeded on the RUMO project, designed to streamline, standardise and simplify administrative procedures,
and to enhance the efficiency of business procedures.
The Datawarehouse project was completed, improving the quality and availability of management data, providing more
comprehensive information on business and permitting users to interact in creating statistics and comparative tables.
Huge efforts have also been made to develop affinity solutions and to develop the company’s own dedicated network. This
proceeded at a good pace, with new exclusive and preferred agents being appointed, to bring the total up to more than 420.
In order to promote the brand and raise the public profile of the company, a media campaign was carried out to
publicise the merger, and the company successfully implemented the programme of support for brokers, sponsorship
and other initiatives established in the marketing plan for 2003.
Extremely significant progress has been made by magazine, Apólice, both in terms of new content and graphic design.
At the same time the “Aces Club” has played an increasingly important role in creating closer links between the
company and its agents, through leisure and training activities.
An internal staff meeting was organised in September. Attendance was voluntary, and around 300 employees came
together in a healthy atmosphere of camaraderie.
As regard the launch of new products and renewal of the product range, collective life insurance has been extended
to individuals aged over 70, a new personal accident product was launched, automobile and household products were
restyled, and a new 1 year version of Top Invest was launched.
In economic terms, CSA’s turnover, measured by gross premiums written, was in excess of 318.4 million Euros,
of which 146.6 million Euros related to property insurance and 171.8 million to life insurance. These figures represented
increases of 25.3%, 10.3% and 41.8% respectively, as compared with 2002.
Net results stood at more than 10.1 million Euros, 24.7% up on the result recorded in 2002, clearly reflecting the
company’s capacity to generate funds during this period.
The figures for operating cash flow also reveal the momentum for growth and the improvement in the company’s
economic and financial situation, with cash flow standing at 13.8 million Euros, approximately 23% up on 2002. The
solvency margin and the guarantee fund, calculated in accordance with the rules currently in force, show that
Companhia de Seguros Açoreana has excess capacity to meet its future commitments, with a coverage rate of 123.4%.
62
Net assets stood at 575 million Euros, 18.6% higher than in the previous year, whilst shareholders’ fund rose from
around 58 million Euros to approximately 64 million Euros (up 10.9%).
Thousand Euros
Variation 2003/2002
2003
2002
Var %
Life premiums
171.846
121.168
41,8
Non-life premiums
146.572
137.873
10,3
Total premiums
318.418
254.041
25,3
13.767
11.206
22,9
Net assets
575.423
485.346
18,6
Net investments
519.249
436.452
19,0
64.198
57.871
10,9
Net results
10.120
8.118
24,7
Operating cash flow
1.3 Banif Investimentos SGPS, SA
The company operated in accordance with the legal framework for holding companies, as defined by Decrees-Law
nos. 495/88, of 30 December, no. 318/94, of 24 December and no. 378/98 of 27 November, concentrating essentially
on supervising and supporting its subsidiaries.
In the course of its business, the company acquired from Banif SGPS, SA 8,512,000 shares, representing 15.2%
of the share capital of Banif Comercial SGPS, SA, at a unit price of EUR 5.90. This represented total investment
of 50,220.8 thousand Euros.
The company subscribed a total of USD 942,000 in the increase in the share capital of Banif Securities Holding, Ltd,
from USD 1,000,000 to USD 2,108,000.00.
During the course of the financial year, the company received dividends of EUR 1,100,000.00 from its subsidiary
Banif- Banco de Investimento, SA, and of EUR 94,546.18 from Banif – Banco Internacional do Funchal (Cayman), Ltd
It also paid a dividend of EUR 1,750,000.00 to its sole shareholder, Banif SGPS, SA.
New borrowing was also taken out from the subsidiary Banif – Banco Internacional (Cayman), Ltd, at renewable six
month periods bearing interest at cost of funds + 1%, to support cash flow. The total indebtedness to this subsidiary
stood at approximately EUR 71.2 million at year end 2003.
The company also reorganised its borrowing by obtaining a medium term loan of EUR 20,000,000.00 from Euro invest
Limited, which it used to pay off borrowing of the same amount to its subsidiary Banif – Banco Internacional (Cayman), Ltd.
1.3.1 Banif – Banco de Investimento, SA
Banif – Banco de Investimento, SA (“Banif Investimento”) is the Banif Group company which currently centralises and
co-ordinates all the Group’s national and international business in the field of investment banking, namely the activities
of Banif Securities, Inc. (in the United States) and Banif Primus C.V.C, SA (in Brazil).
63
Fund management business (securities, property and pension funds) is carried on by subsidiaries of Banif Investimento,
whilst as a result of the merger of Banif Patrimónios and Banif Ascor into Banif Investimento on 30 December 2002,
all other forms of business are carried on within the investment bank itself.
As a result of this merger process, and with a view to continuous specialisation of human resources, the Bank altered
its organisational structure in 2003, with two new divisions being created in line with commercial strategy: the Private
Banking Division and the Project Finance and Securitisation Division.
The Private Banking Division was created by upgrading the existing dedicated department in the Commercial Division.
The prime goals of the new division are to bring in new private Clients for the Bank, by providing financial consultancy
services and asset management services with a high level of added value. As a result of this change, the Commercial
Division now concentrates on cross-selling of investment banking products, with a special focus on asset management
products, such as investment and pension funds and structured funds, through the Banif Group’s sales networks. The
Project Finance and Securitisation Division is geared to financial consultancy and mounting of securitisation operations
and structured finance, on a project finance basis.
In the course of the first half of 2003, the Bank launched its online investment site – BInvestor – in collaboration with
MediaCapital, one of Portugal’s leading media groups.
Also during the first half, a venture capital company was created (NewCapital – Sociedade de Capital de Risco, SA),
together with a venture capital fund for qualified investors (CAPVEN – Capital Ventures - FCR). A new company, Banif
International Asset Management (BIAM), was also incorporated in the Cayman islands, designed to provide asset
management services to the non-resident Clients of the Banif Group. This company therefore joins Banif Multi Fund
(offshore investment fund management company), also based in the Cayman Islands, which BIAM acquired from Banif
(Cayman), Ltd over the course of the year.
At the end of the year, Banif Imo – Sociedade Gestora de Fundos de Investimento Imobiliário, SA was merged into
Banifundos - Sociedade Gestora de Fundos de Investimento Mobiliário, SA, which then changed its name to Banif
Gestão de Activos - Sociedade Gestora de Fundos de Investimento Mobiliário, SA. This merger will make it possible
for all securities and property fund management business to be conducted by a single company, which in future will
take over the rest of the asset management business.
Banif Investimento’s principal asset, its bond portfolio, stood at an overall value of approximately 152 million Euros at 31
December 2003. In view of the upward tendency in most flat rate markets, the Bank decided as from the middle of the
year to extend its assets to include structured securities (RMBS, CMBS and ABS), as well as asset swaps and credit default
swaps. These new portfolios will make it possible to maintain returns and at the same time to diversify investment risks.
64
During 2003 Banif Investimento also took steps to add new life to its own equity investments, obtaining a positive
net result of approximately 201 thousand Euros, with average exposure at less than 1 million Euros.
In terms of funding policy, the existing structure was maintained, based on a number of medium term deposits, the
capital available within the bank, repo lines granted by leading international banks andissue of deposit certificates.
In relation to derivatives and foreign exchange, Banco Investimento carried out a number of operations with a total
nominal value of approximately 300 million Euros, all associated with capital markets operations, meaning that they
involved no financial risk for the Bank’s balance sheet.
In 2003 Banif Investimento generated banking income of 12.0 million Euros, representing cash flow of 4.8 million
Euros and individual net results of 2.3 million Euros.
Thousands Euros
Individual Accounts
2003
2002
Var %
274.895,5
173.275,1
+ 58,7%
23.298,4
22.127,1
+ 5,3%
Banking income
12.012,1
8.119,8
+ 47,9%
Cash-Flow
4.787,8
2.166,2
+ 121,0%
2.271,3
1.243,6
+ 82,6%
ROA
1,01%
0,80%
-
ROE
10,25%
5,80%
-
Cost to Income
71,3%
85,8%
-
Solvency ratio
12,6%
17,2%
-
Net assets
In consolidated terms, Banif Investimento generated banking income of 14.3 million Euros, cash flow of 6.0 million
Euros and a net result of 3.1 million Euros.
65
The operations of Banif – Banco de Investimento, SA in 2003 are described sector by sector below:
1. Corporate Finance
In 2003, the Corporate Finance and M&A Division continued to consolidate its activities in the provision of financial
consultancy services and support for the mounting of structured operations, once again concentrating on supplying
services of a high standard and monitoring its Clients on a permanent basis.
The financial consultancy services supplied by this division included the following: (i) supply of financial consultancy
services and respective valuations, including work for Doctortel – Assistência Técnica de Telecomunicações, SA and
Tapeçaria Regional de Coimbra, SA; (ii) financial consultancy services to the Regional Government of the Azores, in the
privatisation of EDA – Electricidade dos Açores, SA (regional power utility), and the respective valuation of the company,
(iii) financial consultancy services supplied to RTP in the disposal of its interest in Sport TV, and (iv) financial consultancy
in the financial valuation of a chemicals company and a company in the construction and public works sector.
The Division was also involved in 2003 in a number of operations to organise and mount commercial paper issue
programmes, including for Transinsular – Transportes Marítimos Insulares, SA and Meci – Montagens Eléctricas, Civis
e Industriais, SA, and also the structuring and mounting of a financing operations to support the Cofina Group in
taking up a 5.13% interest in Gescartão, SGPS, SA, as part of the privatisation of this company.
The Corporate Finance and M&A Divisions also took part in mounting various issues for general subscription, leading
the public offering for the 5th and final phase of privatisation of Banco Comercial dos Açores, SA and the mandatory
takeover bid launched by Banif Comercial SGPS, SA for the entirety of the shares in the same company.
2. Capital Markets
In the primary market, Banif Investimento maintained an active presence in the structuring and mounting of Asset
Backed Securities operations, with 4 operations being carried out with a total value of 55 million Euros.
In addition, Banif Investimento restructured various operations for a total of 226.5 million Euros for Banif Group issuers,
including: (i) two issues of Banif SGPS bonds, with a total value of 120 million Euros; (ii) an issue of Trade Related
Notes and an issue of Deposit Certificates for Banco Banif Primus, SA with a total value of 37.5 million Euros; (iii) two
issues of structured bonds for Banif – Banco Internacional do Funchal (Cayman), Ltd, with a total value of 25 million
Euros; (iv) an issue of Brazil credit linked notes for Banif Investimento, with a value of 15 million Euros; (v) an issue of
bonds for SOIL SGPS, SA, with a value of 27.5 million Euros; and (vi) an issue of bonds for FNI – Fábrica Nacional de
Iluminação, SA, with a value of 1.5 million Euros.
Banif Invesitmento (i) was involved in leading and placing an issue of notes for the Brazilian company, Brasturinvest
– Investimentos Turísticos, SA (Pestana Group), with a total value of 17.5 million Euros, (ii) took part as a dealer in
the underwriting syndicate for the Multi Currency Commercial paper Programme for Brazcomp 1 Limited (Votorantim
Group),with a total value of 65 million Euros, and (iii) was a member of the issue underwriting syndicate for 150 million
Euros in Floating Rate Notes by Banco Itaú Europa, SA, acting as Co-Lead Manager.
In the field of financial consultancy, Banif Investimento advised ANAM – Aeroportos e Navegação Aérea da Madeira,
SA on the choice of the consortium of financial institutions to lead the process of obtaining an international rating
for ANA – Aeroportos de Portugal, SA and for the mounting of a private placement of 50 million Euros in order to
gain access to the International capital markets.
66
Banif Investimento’s experience in organising and following through rating processes also included work for Banif –
Banco Internacional do Funchal, SA, with Banif Investimento serving as joint arranger with Citigroup Global Markets
Limited and Caixa – Banco de Investimento, SA, in the Bank’s Multi-Issuer Euro Medium Term Notes (EMTN) Programme,
with a total value of 1 billion Euros, and also as joint lead manager in its first issue of Floating Rate Notes (“FRN’s”),
with a value of 200 million Euros. In addition, Banif Investimento structured and led an issue of preference shares by
Banif Finance, Ltd, for a value of 25 million Euros, an operation designed to strengthen the Banif Group’s Tier 1.
Banif Investimento recorded trading in flat rate securities on the secondary market in 2003 of more than 2.7 billion
Euros (as against 2.0 billion Euros in 2002). A significant y part of this – more than 50% - relates to trading with
international investors. All business areas (structuring, trading and sales) recorded growth, and the priority in the sales
area continued to be coverage of the main institutional investors and international private banking in Portugal, Spain,
Luxembourg, Switzerland, Brazil, and the USA (Miami) and Cayman Islands.
3. Asset Management
Banif Investimento carried on asset management business directly for its clients, and also through its specialist subsidiaries
(investment fund management companies): Banifundos – Sociedade Gestora de Fundos de Investimento Mobiliário,
SA, Banif Imo - Sociedade Gestora de Fundos de Investimento Imobiliário, SA and Banif Açor Pensões – Sociedade
Gestora de Fundos de Pensões, SA.
The Asset Management area’s strategy for 2003 was based on the following priorities: (i) building up relations with
the Banif Group, improving existing levels of cross-selling and the rate of penetration of these types of products with
Group Clients; (ii) concentration on an attitude of innovation, as reflected in the constitution of the Art Invest – FEI
fund, which was the first special investment fund in Portugal and also the country’s first investment fund specialising
in art; and (iii) development of Banif Investimento’s activities in the structuring and placement of products with
institutional investors and companies.
As at 31 December 2003, the asset management area had total assets under management of 605 million Euros, as
compared with 411 million Euros as at 31 December 2002, representing growth of 47%.
3.1 Asset Management Service
Asset management business was reorganised in 2003, and a greater number of risk profiles now co-exist, with a more
efficient blend of direct investment and indirect investment through mutual funds. This change, combined with the
recovery of the equity markets from the middle of the year, made it possible to improve the performance of the various
portfolios under management and to attract an appreciable number of new clients, and achieve significant increases
in the value of existing portfolios.
In this context, Banif Investimento had total assets under management at 31 December 2003 of 135.5 million Euros,
as against approximately 115.5 million Euros as at 31 December 2002, representing growth of 17.3%.
3.2 Banifundos (Securities Funds)
In view of the strategy mapped out for the asset management area, the company concentrated on positioning its
funds at above average levels for returns in their respective classes, and at the same time promoting a range of funds
suited to the commercial interest which they attract.
After the success of 2002, in which the company placed more than half of its funds in the top three in their respective
classes, in 2003 Banifundos placed 7 of the 9 funds it managed in the top five of these classes, confirming the
soundness of the management policies adopted. To refer only to the funds in the top three in the last three years,
67
Banifundo Euro Tesouraria was once again the highest earning fund in the market, at 12, 24 and 36 months. Banifundo
Euro Renda Mensal was the most profitable fund at 36 months and Banifundo Acções Portugal was the 2nd most
profitable at 36 months and the 3rd most profitable at 24 months. Finally, Banifundo Estratégia Equilibrada was also
the 2nd most profitable at 24 months. Thanks to these results, Banifundos was once again one of the securities fund
management companies with the best average ranking for its funds.
Finally, mention should be made of developments in relation to distribution channels, with funds managed by Banifundos
being available for subscription and redemption on the BInvestor online financial transactional site, as from February 2003.
As at 31 December 2003, securities fund assets under management stood at 189 million Euros, representing an increase
of 54.8% over the value recorded for 2002. In the same period, total assets under management in the sector rose
from 21 to 23 thousand million Euros, representing growth of 10.9%. As a result, Banifundos’ market share rose from
0.60% at the end of 2002 to 0.80% in December 2003.
Given that the accounting effects of the merger of Banifundos with Banif Imo were referred back to 1 January 2003,
the book values recorded at 31 December 2003 by Banif Gestão de Activos (Banifundos’ new name) include securities
and property fund management business, meaning that they are not directly comparable with the figures recorded
at 31 December 2002, which only included securities fund management business.
The Company therefore recorded a net result of 758.9 thousand Euros, as against only 36.9 thousand in 2002.
Thousand Euros
2003
2002
Var %
Net assets
3.903,3
1.817,0
114,8%
3.148,3
1.681,6
87,2%
758,9
36,9
-
3.3 Banif Açor Pensões (Pension funds)
In commercial terms, Banif Açor Pensões benefited in 2003 from a more upbeat market situation in 2003, with the
equity markets turning around from April onwards, and also from the sales initiatives implemented and the excellent
relative level of performance recorded in 2002. As a result, the company was able to bring in 4 new funds over the
course of the year, and is hopeful of obtaining various new contracts in 2004.
The investment strategy pursued by the company in fund management in 2003 was still conservative, although the
equity component in funds increased over the course of the year. Funds under management therefore recorded returns
of between 4.1% and 6.3%.
Assets under management rose from 113.3 million Euros in 2002 to 125.7 million at the end of the financial year,
representing an increase of 10.9%.
The company recorded net results of 139.6 thousand Euros, as against 21.0 thousand in 2002.
Thousand Euros
2003
68
2002
Var %
Net assets
2.873,8
3.956,0
-27,4%
2.589,7
2.450,1
+5,7%
139,6
21,0
+564,2%
3.4 Banif Imo (Property investment funds)
This was an extremely successful year for Banif Imo, given that the negative situation in the equity markets until April
and the context of fairly low interest rates meant that property funds represented one of the most important opportunities
for investors over the course of the year.
The property funds managed by the company were once again amongst the most profitable in their respective classes,
increasing their commercial appeal. Banif Imopredial closed 2003 with a yield of 5.82%, placing it, as in 2002, in 2nd
place in the yield ranking for open ended property funds and in 1st place at 24 months. Banif Imogest recorded a
yield of 8.08% for the period, and increased its capital in September, in view of its participants’ interest in increasing
their investment in the fund.
Assets under management in property funds rose by 141.4%, from 50.2 million Euros at year end 2002 to 144.9
million Euros at the end of 2003.
The results obtained in property fund management business are reflected in the accounts of Banif Gestão de Activos,
because the accounting effects of the merger of Banif Imo with Banifundos, which changed its name to Banif Gestão
de Activos, are referred back to 1 January 2003.
4. Brokerage
In Banif Investimento’s first full year of integrated brokerage, several important changes were made to structure and
strategy. As a result, all brokerage orders are now received at the Lisbon room, which has permitted more efficient
management of resources, and well as adding further edge to the company’s commercial activities in this area.
Efforts were also made to diversify sources of revenue by market, with the result that in 2003 the volume of trading
on foreign bourses represented 36% of total trading, as against only 19% in 2002. The drop of 16% in the Bank’s
trading on the Euronext Lisboa exchange was consistent with the trend in the Portuguese market, and its market share
held steady at 2%.
The doubling of trading brokered on foreign stock exchanges in 2003 contributed to growth of 6.4% in total trading
in relation to 2002.
In this context, with total gross commissions of 2 million Euros in 2003, up 7% on the previous year, the international
market represented 60% of total gross commissions generated in Banif Investimento’s brokerage business.
In order to improve the service offered to Banif Investimento’s clients, the Bank has been working towards greater
integration with Banif Securities and with Banif Primus in Brazil. This means that the Clients of Banif Investimento can
now benefit from the expertise of these two companies in the emerging markets and the USA.
5. Private Banking
In order to pursue the strategy of creating an integrated area of management of Banif Investimento’s commercial
relations with its private Clients, various steps have been taken to attract direct clients for the private banking sector.
The advantages offered to clients in this area consist of an integrated financial consultancy services, involving the
creation and offering of specific products aimed at this client segment. An example of this strategy is the creation of
the investment management account (IMA), which combined access to a broad range of investment products with
an automatic credit line attached, of a value varying in line with the assets allocated to the account.
69
The results of this strategy were felt over the course of 2003, and a significant number of new accounts were opened
with Banif Investimento. Special success was enjoyed in attracting clients for asset management, where the total
amount under management increased more than fourfold in 2003.
6. Project Finance and Securitisation
In addition to following through the securitisation operations for the Banif Group’s personal loans and leasing contracts,
already underway, this Division also took part in the first half of 2003 in a further securitisation operation for mortgage
lending, with a value of 500 million Euros for Banif – Banco Internacional do Funchal, SA. In this operation Banif
Investimento acted as co-manager and provides permanent support in then monitoring of the characteristics of the
contracts securitised and the financial flows associated with the operation.
In addition, Banif Investimento also acts as Backup Services in the CHAVES 3 (BPN Group) securitisation operation.
7. Private Equity
As already mentioned, NewCapital – Sociedade de Capital de Risco, SA is a venture capital company recently incorporated
by Banif Investimento, which has already taken up holdings in the companies BlueBird and Money Media (Carteira
Magazine), of a value of approximately 784 thousand Euros.
As at 31 December 2003 the company had total net assets of 2,772.8 thousand Euros, shareholders’ funds of 766.6
thousand Euros and a net result for 2003 of 16.6 thousand Euros.
At present, Banif Investimento acts as manager of the venture capital fund for qualified CAPVEN investors; the aim
of the fund is to take up temporary holdings in small and medium sized companies in Portugal, quoted and unquoted,
with great potential for growth and led by professional management teams, equipped with a strategic business vision.
Work is currently underway on setting up another venture capital fund, to be called New Early Stage Fund, which will
invest in high potential companies at the early stages of their life cycle.
Thousand Euros
Consolidated accounts
2003
2002
Var %
273.382,4
172.096,0
+ 58,9%
24.399,9
22.417,5
+ 8,8%
Banking income
14.315,3
9.473,1
+ 51,1%
Cash-Flow
6.042,9
2.616,4
+ 131,0%
3.113,0
1.482,9
+109,9 %
ROA
1,40%
0,89%
-
ROE
13,62%
6,84%
-
67,8%
84,3%
-
Net assets
Cost to Income
1.3.2 Banif – Banco Internacional do Funchal (Cayman), Ltd
In 2003, the Bank recorded growth of 9.8% in the Client base in relation to 2002, although this was not matched
by corresponding growth in deposits, which were up by only 0.3% from 2002, rising from USD 793.4 million to 795.6
million in 2003.
In contrast, however, the Bank recorded growth of approximately 75% in the placement of structured products, with
business rising from USD 37 million in 2002 to USD 64.7 million at the end of 2003.
70
Two bond issues were made in 2003, with a total value of 25 million Euros (“Banif – Cayman – Capital Europa –
4.125%, 2003/2005” and “Banif Cayman-Invest Europa – 2003/2007”). These issues were placed in full with Banif
Group Clients, and made it possible to carry out trading operation on the underlying assets, making a positive
contribution to the Bank’s results.
Lending performed well, growing by approximately 41% in 2003, rising from USD 120.1 million to USD 169.6 million.
Only USD 30.4 million of this total relates to short term trade related operations with Brazil, corresponding to preexport & export financing for well known companies and banks. The rest of the portfolio relates, almost in its entirety,
to short term financial credit operations, involving the Bank’s Clients.
The Bank was again busy in financial operations on the money markets and foreign exchanges (almost also within
the Banif Group), which stood at around 80% of total net assets at the end of 2003. For their part, total net assets
were down by 29.7%, from USD 1,683 million to USD 1,184 million at the end of 2003; this reduction was entirely
due to a very significant drop in the volume of triangulated interbank operations, involving other financial institutions
in the Banif Group.
In operating terms, the Bank recorded significant growth in net profits (up from USD 110 thousand in 2002 to USD
447 thousand in 2003), thanks to the good performance of results from financial operations (USD 981 thousand in
2003 as against USD –513 thousand in 2002) and the strong performance of the financial margin, which rose from
USD 3.9 million in 2002 to USD 6.2 million in 2003.
This positive performance was offset to a certain extent by increases in allocations to provisions to in administrative
and operating overheads, up 61% and 40% over the previous year, standing in 2003 at 2,722 thousand Euros and
1,508 thousand Euros.
In November the Bank increased its share capital by USD 16 million through the issue of 16 million non-voting preference
shares, at a nominal value of 1 dollar, placed outside the Banif Group.
The Bank continues to have a holding of 60% in the share capital of FINAB, the corporate management and incorporation
company, based in the Cayman islands (which had a total of 57 companies under management at year end 2003),
and a 30% interest in BITH – Banif Information and Technology Holdings, Ltd, the Banif Group holding company for
the information technology and internet sector, which owns 85% of the Brazilian company Econofinance, SA, owner
of the Econofinance portal.
Thousand Euros
2003
Net assets
2002
Var %
1.184.097
1.683.214
- 29,65%
49.577
32.019
+ 54,83%
447
110
+ 306,36%
- International Private Banking
The International Private Banking (IPB) service seeks to offer Portuguese and international Clients a vast range of high
quality products and services, supplied by the Bank and through contractors.
The main competitive advantage offered by this service is the innovative model based on two complementary channels.
On the one hand, Clients are given specialist and personalised advice and assistance by a traditional account manager,
whilst on the other hand the Clients can use an online transactional service, with direct interaction with the Banif IPB
71
Portal, which also acts as an online account manager. The service therefore offer the highest standards of confidentiality,
ease of use and convenience.
The IPB service therefore combined the advantages of offshore banking with the security, comfort and speed of
sophisticated internet banking, allowing the Clients to access the Banif IPB Portal from any location, and at any time,
in order to consult their financial assets, to effect banking transactions or carry out operations in relation to a vast
range of products and services, as well as gaining access to useful information for their business affairs.
The target segments are Clients with medium/high financial investment potential, including both personal customers
and offshore companies.
Assets under manager grew by 6.62% over the previous year, standing at close to USD 1,033 million, distributed
between 4559 active Clients.
1.3.3 Banif Securities Holdings, Ltd/Banif Securities, Inc.
During 2003 Banif Securities Holdings, Ltd continued to focus on supporting the business activities of its subsidiary,
Banif Securities, Inc.. With a view to this objective, Banif Securities Holdings, Ltd:
a) took out a further loan for USD 2 million from Banif Cayman, which was passed on to Banif Securities, Inc.
in the form of a new subordinated loan; and
b) increased the share capital of Banif Securities, Inc. by a further USD 500 thousand.
This was a year of significant adjustments for BSI, which were needed in order for it to affirm its presence and grow
as a financial brokerage firm operating in the United States. These adjustments were made in the fields of custody,
settlements, systems, strategic marketing, on floor presence, products and human resources.
In the field of custody, BSI substituted its custody agent for the USA, thereby obtaining a significant cost saving in
this type of services.
In addition, BSI implemented an arbitrage platform for ADRs. This platform was designed to respond to the demand
in the Brazilian market for cost effective custody and order execution services.
BSI’s presence on the floor of the New York Stock exchange required significant attention. Our main Client in this area
went through a phase of reorganisation, with significant changes in terms of business strategy and management, with
the result that Banif Securities, Inc. lost this Client during the second half. However, by contracting a new floor broker
with his own portfolio, BSI was able to make its presence on the floor of the New York Stock Exchange profitable again.
In the medium term, BSI’s objective is to double its presence on the floor, and to reach a situation where it no longer
needs to outsource services. An increased presence will open the way to business diversification and a wider Client base.
In the sales area, BSI continued to work on expanding its Client base, maintaining its focus on the institutional investors
segment. At the same time, BSI set up an equity research unit, which has enabled the company to face up to its
competition, and at the same time improved its positioning/image as a specialist in this regional market.
Another important feature of operations was cross selling of Banif products, and co-operation with Banco Banif Primus
was particularly important, especially as regards its capacity in the fields of FX and trade finance.
72
Proprietary trading was an particularly important area of business, insofar as it enabled BSI to diversify, making it less
dependent on the Latin American market, and levering other business for the company. Whilst we will seek to avoid
being over dependent on the results of this trading activity, it is a fact that the financial brokerage companies operating
in the USA and BSI itself obtained significant results in this area of business in 2003.
BSI’s future plans include developing a line of products in the area of fixed yield securities. A sales trader specialising
in this type of products has already been contracted, and will start to operate in early 2004.
In 2003, Banif Securities, Inc. (“BSI”) recorded earnings of USD 2,995 thousand, up 65.6% on the previous year.
At the same time, it was possible to cut losses by 33.2% to USD 521 million.
Thousand USD
Variation 2003/2002
2003
2002
Var %
Total earnings
2.995
1.808
+65,7%
Net assets
5.482
3.937
+39,2%
476
486
-2,1%
(521)
(780)
+ 33,2%
Results
1.4 Other Banif Group Companies
1.4.1 Banif Imobiliária, SA
Until 31 October 2003, Banif Imobiliária’s mission was merely to manage property belonging to Banif Group companies
in mainland Portugal and Madeira, and not used for operations, with the central objective of selling or letting this
property, or else developing it for subsequent sale or let.
As a result of an integrated management decision taken at Group level, it was decided that as from this date it should
take over management of all property belonging to Banif and BCA, including that used and not used for operations,
located in mainland Portugal and in the island regions.
This change in objectives resulted in the substantial investment made on 29 November 2003 in order to acquire all
the property used for the operations of the Group’s commercial banks; this investment totalled more than 94 million
Euros.
As a result, the total value of property assets under the management of Banif Imobiliária as at 31 December 2003
stood at EUR 132.5 million, divided as follows:
- Property not allocated to operations – EUR 38.5 million
- Property allocated to operations – EUR 94.0 million
An alteration was made to the criterion for recording the value of sales, with the proceeds now being entered in the
accounts on the date of the deed of transfer, and not at the time of negotiation. Consequently, the sales recorded
by Banif Imobiliária in 2003 amounted to approximately EUR 5.7 million, and the company also negotiated new leases
which will generate annual rentals of approximately EUR 41 thousand (representing an average yield of 3.8%). Rentals
collected in 2003 stood at 738.6 thousand Euros, and the commissions generated stood at 303.9 thousand Euros.
Finally, it should be noted that the company carried out work which cannot be immediately quantified, in relation to
development of property under management. It is expected that the results of this work will become visible in 2004.
73
Thousand Euros
Variation 2003/2002
Net assets
2003
2002
Var %
110.684
8.146
s.s.
1.553
1.284
+ 23%
313
17
s.s.
s.s. - sem significado
1.4.2 BanifServ – Empresa de Serviços, Sistemas e Tecnologias de Informação, ACE
In 2003, Banifserv focussed essentially on projects geared to supporting business, in three fundamental areas: cross
selling, distribution channels and technological modernisation.
In the field of cross selling, the second phase of the Group Client project was completed and brought into production.
This consists of providing a Group Client data base, showing the overall position for products subscribed by each
Client; this phase followed on from integrating the biographical data of clients of the various companies. The next
phase, planned for 2004, will involve providing details of the contracts taken out by Clients with each Group company.
This whole process is associated with the provision of a Group-wide catalogue of products and services, which will
offer an overview of supply in the field of cross selling.
Distribution channels also received special attention, and the Banif@st channel recorded high significant growth,
through implementation of a wider range of functions, as well and investment in system management, statistics, SMS
channel and the authentication process. A Banif/BCA link-up was created at end customer level, i.e. when using the
e-banking service, a Client of both banks has easy access to the other bank.
The Banif Group portal was completely overhauled, making it easier to use and explore, as well as now being available
through micro-computer, mobile phones and PDA.
In April 2003, a new project was launched to replace the existing branch application. This will facilitate the work of
the commercial area and significant increase the number of transactions available through presentation screens which
are more ergonomic and easier to use, making it possible to reduce the administrative burden on branches. This project
is currently in development and will be implemented in Banif and BCA.
In relation to operations management and control, systems were finalised and installed for bonded current accounts
and security and collateral management, together with phase one of the foreign currency operations system. In
addition, a tele-clearance systems was developed and implemented with processing of cheque images, as well as a
system for direct debits.
In the field of products, a management and support system has been installed for factoring operations, and work
began on development of a new application for deposit and savings accounts.
A needs assessment was conducted in the field of loans, and the respective implementation project has been launched.
A securities and funds management systems was also developed, with the final tests being conducted at the end of
2003. This project is also intended for Banif and BCA. A commercial protocol management project is set to lead to
system start-up in January 2004.
Work continued on studying a management information system in connection with the requirements of the Basle II process.
In the infrastructure area, the technical implementation of the electronic archives was completed and work started
on digitalising the home loan records at Banif and BCA, as well as on digitalising personnel files for the two banks.
A system has been developed to control access to information, and will be implemented in 2004.
In 2003, BanifServ recorded income of 9,123 thousand Euros, of which 6,203 thousand Euros related to services
rendered to Group companies, and 2,859 Euros to work underway and in-house.
74
Banif Porto - Av. Aliados
III.analysis of individual
and consolidated accounts
1. Individual Accounts
Banif SGPS, SA was formed as the result of altering the name and business activities of the company known prior
to 1 April 2002 as Banif – Banco Internacional do Funchal S.A., as part of the reorganisation of the Banif Group.
This company has served as holding company for the Banif Group and had also carried on banking business, which
business was then transferred to a new company, which took over the name of Banif – Banco Internacional do Funchal,
SA, with the former company adopting the name Banif SGPS, SA.
As a result of this, most of the income statement items are not comparable with the previous years, given that the
accounts as at 31 December 2003 represent twelve months of business as a holding company, whilst the comparative
figures as at 31 December 2002 include twelve months’ business as a holding company as well as the banking business
carried on in the first quarter of 2002. In order to provide a clearer and more objective picture of the evolution of the
company’s affairs, a column has been included in the income statement with the title Pro forma 2002, representing
only the business carried on as a holding company in 2002, which business is directly comparable with business carried
on in 2003.
Comparative analysis of the accounting documents reveals the following:
- Net assets stood at 426.1 million Euros, up 10.9% when compared with the figure of 384.3 million Euros
recorded at year end 2002.
- The account for “shares in related companies”, which records all holdings in other Group companies, totalled
272.4 million Euros (as against 315.3 million Euros in 2002), down 13.6%, as a result of disposal of 15.2%
of Banif Comercial SGPS, SA to Banif Investimentos SGPS, SA.
- The account for “other assets” was up by 87,3 million Euros, standing at 149.5 million Euros at the end of 2003.
This account includes shareholder loans provided to affiliates (Banif Imobiliária, SA and Banif Comercial SGPS, SA),
totalling 146.6 million Euros.
- In order to optimise the company’s financial structure, borrowing had to be restructured during 2003,
with Banif SGPS, SA making two bond issues (Banif SGPS 2003/2006, for a total of 50 million Euros, and Banif SGPS
2003/2008, for a total of 70 million Euros), with the result that the account for “debts represented by securities”
stood at 120 million Euros at the end of 2003.
- The financial margin, including earnings from securities, stood at 6.6 million Euros in 2003 (as against – 244 million
Euros in 2002), representing an increase of 6.8 million Euros, resulting, on the income side, from dividends from
other subsidiaries of 7.3 million Euros and interest on financial investments of 1 million Euros and, on the costs side,
interest payable on borrowing obtained through loans and bonds.
- Extraordinary results totalled 7.1 million Euros, thanks to capital gains realised on the disposal of 15.2%
of Banif Comercial, as mentioned above.
- As a result of these developments, Banif SGPS, SA recorded a net result of 12.4 million Euros in 2003, as compared
with a negative result of 2.1 million Euros in 2002 (pro-forma) and 1.1 million Euros, as reported in the financial
statements for 2002.
76
Thousand Euros
31-12-2003
31-12-2002
Pro-forma
Absolute variation
Variation %
Net assets
426,097
384,334
41,763
10.9%
Shares in related companies
272,364
315,264
-42,900
-13.6%
Other assets
149,493
62,217
87,276
140.3%
Debts represented by securities
120,000
0
120,000
Shareholders' funds
283,998
279,055
4,943
6,576
-244
6,820
-
-578
-239
-338
141.2%
5,998
-483
6,482
-
-574
-58
-516
-
5,425
-542
5,967
-86
-194
108
-55.7%
Comparative Analysis - Banif SGPS, SA
Financial Margin (inc. income from securities)
Other income (net)
Gross margin
General overheads
Cash flow
Depreciation
1.8%
-
0
-760
760
-100.0%
Operating results
5,339
-1,495
6,834
-457.0%
Extraordinary gains (net)
7,104
-557
7,661
-
0
-85
85
-
12,443
-2,137
14,580
-
Provisions (net)
Provision for tax on profits
Result for the period (net of tax)
2. Consolidated Accounts
We have consolidated the accounts of Banif SGPS, SA, as parent company, with those of its affiliates and associates,
as required by Decree-Law 36/92, of 28 March 1992, and in accordance with the Technical Rules for Consolidation
of Accounts issued by the Bank of Portugal under the terms of article 7 of the said Decree-Law.
Analysis of the Banif Group’s consolidated financial statements reveals some of the main trends in the Group’s business
and results in 2003:
- The Banif Group recorded a net profit after tax of 25,358 thousand Euros, up 21.5% on those obtained in 2002.
As a result, there was also an improvement in the leading indicators of returns, showing rates of return of 0.43%
and 8.0% on average net asset and average equity (as against 0.35% and 7.5% respectively, in the previous year).
The cost-to-income ratio also improved in 2003, standing at 66.2%, representing an efficiency gain of 2.3 p.p.
over the year.
- Net assets stood at 5,711.6 million Euros at year end 2003, representing a decrease of 5.9% over the previous year,
as a result of the situations described below.
- As a result of legislative changes taking effect as from the beginning of 2003, Banif SA was able to invest in its head
office the liquidity surplus from its Madeira offshore branch, instead of investing this outside the Group, as in previous
years. This means that on the asset side the account for “other loans and advances to banks” fell by 647.5 million
Euros (down by 84.3%), whilst on the liabilities side the account for “deposits by banks” fell by 633.9 million Euros
(down by 45.9%) at the end of 2003 when compared with the end of 2002.
- The account for “loans and advances to Clients” recorded a reduction of 0.4% in comparison with the previous year,
standing at 4,406.9 million Euros at the end of 2003. However, if we were to add to this the credit sold through
the securitisation operations in which the Banif Group has taken part, amounting to 559.4 million Euros, this account
would show growth of 12.2% over the year.
77
- The deposits to lending conversion ratio ended the year at 104.44%, up by 5.2 p.p. in relation to the previous year
(109.7% at the end of 2002).
- Outstanding credit as a proportion of total lending rose by only 2.0%, to 2.2%, despite the difficult economic climate,
whilst the coverage of outstanding credit by total provisions for lending risks rose slightly, from 118.5% to 114.6%
between year end 2002 and year end 2003. The defaulting credit/total lending ratio, calculated in accordance
with Bank of Portugal rules, stood at 2.25% at the end of 2003.
- The account for “bonds and other fixed yield securities” stood at 328.8 million Euros at the end of 2003, representing
an increase of 47.6% over the end of the previous year, and reflecting greater Group liquidity over the year
in question and greater involvement in capital markets operations, both by Banif - Banco de Investimento and
by the commercial banks in the Group (Banif and BCA)l.
- The Banif Group’s net assets (including financial holdings) fell by 8.6% to 147.7 million Euros at the end of 2003,
as the result of the sale of some of Banif’s business premises to the Banif Imogest and Banif Imopredial property
investment funds, for a total of 20.4 million Euros, and due to small scale and careful investment over the course
of the year.
- Current accounts grew by 7.7% to 1,169.7 million Euros at the end of 2003, whilst deposit account fell by 6%
to 2,536.9 million Euros over the same period. In contrast, the Banif and BCA sales networks placed with their clients
a total of 349.8 million Euros in securities and property investment funds, up 72.4% on the previous year.
The account for “debts represented by securities” recorded an increase of 106% over the previous year, standing
at 512.8 million Euros, which includes bonds issued by Banif SGPS, SA, for a total of 120 million Euros, and by Banif
Finance Ltd. for a total of 200 million Euros, placed with Clients and institutional investors in Portugal and abroad.
- As a result, total client deposits recorded growth of 4.6% in 2003, standing at 4,219.5 million Euros at the end
of the year, without including in this amount the substantial growth in the placement of other financial products
with Clients, as referred to above.
- The Banif Group’s solvency ratio increased from 9.4% to 9.7% between year end 2002 and year end 2003,
thanks mainly to the increase in the Group’s shareholders’ funds (calculated in accordance with Bank of Portugal
instructions), which stood at 457.3 million Euros at the end of 2003 (405.7 million Euros at the end of 2002),
which represents growth of approximately 12,7%, as a result of the issue of preference shares by Banco Internacional
do Funchal (Cayman) Ltd, with a value of USD 16 million (12.7 million Euros) and by Banif Finance Ltd, with a value
of 25 million Euros, and also due to inclusion of the non-distributable results for 2003 (15.4 million Euros).
Tier 1 Shareholders’ Funds stood at 320.1 million Euros at the end of 2003, whilst the respective solvency ratio
stood at 6.82%.
Turning to the Banif Group’s Income Statement, we may point to the following developments, which led to the final
result described above:
- The Financial Margin increased by 11.6%, standing at 152,534 thousand Euros, thanks to effective growth in lending
business (albeit mitigated by the effects of selling home loans credits to Atlantes Mortgage No. 1, as already stated)
and the containment of the financial brokerage margin (3.18% in average terms in 2002, and 3.14% in 2003,
for Banif).
- Earnings from banking services stood in gross terms at 76,113 thousand Euros, up by 20.6% from the figure recorded
in the previous year, which reflects the Banif Group’s growth in new fee business areas, as well as adequate pricing
management in relation to services and financial disintermediation operations at Group level. As a result this type
of income increased as a proportion of total Group banking earnings from 29.5% at year end 2002 to 31.5%
at year end 2003.
- Banif Group banking earnings increased by 12.8% over the previous year, standing in 2003 at 241,623 thousand
Euros, whilst the gross operating margin stood at 226,182 thousand Euros (up by 13.3% on the previous year).
78
- General administrative overheads rose by 11.9% over 2002, standing at 130,257 thousand Euros in 2003,
thanks to a significant increase in third party supplies and services (up by 21.1%), due especially to Banco Banif
Primus, Banif Banco de Investimento, Banif Leasing and BanifServ). Personnel costs also showed an increase
over the previous year of 6.1%, with Banif - Banco de Investimento, BCA and Banif Primus contributing the largest
relative increases. Despite these increases, general administrative overheads represented a slightly smaller proportion
of the gross operating margin in comparison with 2002 (57.6% in 2003 as against 58.3% in 2002).
- The Banif Group cost-to-income ratio (general administrative overheads + depreciation/gross operating margin)
also improved slightly, standing at 66.2% at the end of 2003, as against 68.5% at year end 2002. If we add to the
gross operating margin the results of associates and affiliates excluded from the consolidated accounts (amounting
to 6,737 thousand Euros, thanks in particular to the contribution from Companhia de Seguros Açoreana), this ratio
fell at the end of 2003 to 64.3% (66.8% in 2002).
- Banif Group operating cash flow once again rose substantially (up by 15.1% in 2003, as after an increase of 20.8%
in 2002), standing at 95,925 thousand Euros, as against 83,325 thousand Euros recorded in 2002, reflecting growth
in the Group’s business and improved performance in the main areas of banking business.
- The extraordinary results showed a net negative balance of 11,253 thousand Euros. This account was badly hit by
the losses caused by frauds in Banif and BCA, the value of which and the corresponding loss to the Group had been
fully determined by the end of 2003 (the overall loss was fixed at 15 million Euros; 10.8 million at Banif,
after deducting compensation of 5 million Euros already paid to the Bank under the existing insurance policy,
and 4.2 million Euros at BCA). Extraordinary gains in 2003 included the capital gains realised on the disposal by Banif
of its business premises to the property investment funds managed by Banif Imo, amounting to 3,532
thousand Euros.
- Thanks to the measures adopted to increase the fiscal efficiency of the financial and organisational structure
of the Banif Group, the tax burden was reduced from 30.6% bin 2002 to 13.9% in 2003.
- Finally, the Banif Group’s net profits after tax showed growth of 21.5% in 2003, rising from 20,868 thousand Euros
in 2002 to 25,358 thousand Euros in 2003.
79
Thousand Euros
Comparativ Analysis - Group Banif
31-12-2003
31-12-2002
Absolute variation
Variation %
Net assets
5.711.558
6.066.775
-355.217
-5,9%
Loan Portfolio (gross)
4.406.902
4.424.719
-17.817
-0,4%
Loan Portfolio (net)
4.343.287
4.366.716
-23.429
-0,5%
Net fixed assets
147.685
161.516
-13.831
-8,6%
Deposits from costumers
3.706.683
3.785.442
-78.759
-2,1%
Customers Funds
4.219.451
4.034.312
185.139
4,6%
327.676
308.787
18.889
6,1%
42.186
24.574
17.612
71,7%
152.534
136.628
15.906
11,6%
Trading gains
12.976
14.492
-1.516
-10,5%
Other income (net)
60.672
48.570
12.102
24,9%
Capital Reserves and Results *
Minority Interests
Net Interest Income (inc. Inc. from sec.)
Banking revenues
Operating Expenses
Cash flow
226.182
199.690
26.492
13,3%
-130.257
-116.365
-13.892
11,9%
95.925
83.325
12.600
15,1%
Depreciation
-19.577
-20.416
839
-4,1%
Provisions (net)
-41.097
-36.004
-5.093
14,1%
35.251
26.905
8.346
31,0%
Recurring profits
Extraordinary gains (Loss)
-11.253
104
-11.357
Tax
-4.109
-9.213
5.104
-55,4%
Minority Interests
-1.267
-1.908
642
-33,6%
6.736
4.980
1.755
35,2%
25.358
20.868
4.490
21,5%
Results from Associated Companies
Consolidate Net Profit
ROE
8,0%
7,5%
ROA
0,43%
0,35%
Cost to Income **
66,2%
68,5%
* - Less consol. and equity method differ. on the assets side and plus consol. and equity method differ.on the liability side
** - Ratio "(General AdministrativeOverheads + Depreciation) / Gross operating margin"
80
-
Banif - Banco de Investimento, Amoreiras, Lisboa.
IV.allocation of profits
Whereas:
1. In the financial year of 2003, Banif SGPS, SA obtained, as a result of its specific activities as a holding company,
an individual result of EUR 12,442,695.87 and a consolidated profit of EUR 25,358,162.00;
2. It has been the company’s policy to distribute profits to its Shareholders in all financial years, in keeping with
the results obtained and the need to plough back profits;
3. All the requirements of the articles of association and the law, namely articles 32 and 33 of the Companies Code,
have been complied with;
4. The company increased its share capital in December 2002 by EUR 150,000,000.00 to EUR 200,000,000.00,
and the dividend proposed below corresponds to distribution of approximately 39.4% of the consolidated profits
for the period, which represents an increase of 4.4% in relation to the proportion of the consolidated results
distributed for 2002.
The Board of Director proposes:
Under the terms of para. 1 b) of article 376 of the Companies Code and article 97 of the General Regulations
on Credit Institutions and Finance Companies, that the Results be allocated as follows:
Euros
Legal Reserve
Retained earnings
Distribution of dividends (*)
Free Reserve
Total
(*) Dividend of EUR 0.25 (twenty five cents) per Share
82
1.244.269,59
1.083.200,76
10.000.000,00 (*)
115.225,52
12.442.695,87
Banif - Banco de Investimento, Amoreiras, Lisboa
V.closing remarks
and acknowledgements
As stated in the interim report for the first half of 2003, the Annual General Meeting held on 31 March 2003 elected
the officers provided for in the articles of association for the period 2003/2005, as follows:
General Meeting
Chairman: Prof. Doutor António Soares Pinto Barbosa
Secretaries: Comendador Jorge de Sá
Dr. José Lino Tranquada Gomes
Board of Directors
Alternate Director: Dr. Fernando José Inverno da Piedade
Supervison Board
Chairman: Dr. Carlos Alberto Rosa
Full Members: Ernst & Young Audit & Associados – Sociedade de Revisores Oficiais de Contas, SA, represented by:
Dr. Alfredo Guilherme da Silva Gândara
Alternate Members: Dr. Luciano Joaquim Jardim
Dr. Pedro Manuel Travassos de Carvalho (ROC no. 634)
Advisory Board
Comendador Horácio da Silva Roque, representing
Rentipar – Sociedade Gestora de Participações Sociais, SA
Dr. Fernando José Inverno da Piedade, representing
Renticapital - Investimentos Financeiros, SA
Comendador João Francisco Justino
Dr. Fernando Mário Teixeira de Almeida
Dr. Rui Alberto Faria Rebelo, representing
Empresa de Electricidade da Madeira, SA
Dr. Gonçalo Cristóvam Meirelles de Araújo Dias
Prof. Doutor Luís Manuel Moreira Campos e Cunha
Engº António Fernando Couto dos Santos
Dr. Miguel José Luís de Sousa
Engº Nicolau de Sousa Lima
84
Remuneration Committee
Rentipar - Sociedade Gestora de Participações Sociais, SA
Vestiban - Gestão e Investimentos, SA
Renticapital - Investimentos Financeiros, SA
At the meeting of the Board of Directors held on 31/03/2003, it was resolved to appoint Comendador Horácio da
Silva Roque as Chairman of the Board of Directors and Dr. Joaquim Filipe Marques dos Santos and Dr. Carlos David
Duarte de Almeida as Vice-Chairmen.
At the meeting of the Advisory Board held on 26/05/2003, Comendador Horácio da Silva Roque was elected as
Chairman and Dr. Fernando José Inverno da Piedade and Comendador João Francisco Justino were elected as ViceChairmen.
In closing this report on the company’s operations in 2003, the Directors would like to thank the Supervision Board
and the Advisory Board for their ready support and co-operation throughout the year.
Lisbon, 18 de February 2004
The Board of Directors
Chairman
Joaquim Filipe Marques dos Santos
Vice-Chaiman
Carlos David Duarte de Almeida
Vice-Chaiman
António Manuel Rocha Moreira
Artur Manuel da Silva Fernandes
Artur de Jesus Marques
José Marques de Almeida
85
BCA - Ponta Delgada, Açores
VI.financial statement
Banif SGPS, SA
Individual Balance Sheet as at 31 December 2003
Thousand Euros
31/12/2003
Assets
Gross
Prov. and
Dep.
31/12/2002
Net
Net
940
940
3.826
272.364
272.364
315.264
87
172
149.493
149.493
62.217
3.214
3.214
1.772
1. Cash and Funds with Central Banks
2. Sight Deposits with Banks
3. Other Loans and Advances to Banks
4. Loans and Advances to Clients
5. Bonds and other Fixed Yield Securities
a) Public
b) Other
c) Own Shares and Bonds
6. Shares and other Variable Yield Securities
7. Shares and Investments
8. Shares in Related Companies
9. Intangible Fixed Assets
258
171
10. Tangible fixed assets
(Of which: Property)
11. Own Shares
12. Other Assets
13. Accruals and Deferrals
14. Loss for the Period
1.083
Total
426.269
171
384.334
426.098
Thousand Euros
Memorandum Accounts
30/06/03 30/06/02
1. Contingent liabilities
Of which:
1.1. Acceptances and Commitments from
Endorsement of Rediscounted Effects
1.2. Bonds and Collateral
2. Commitments
Of which:
2.1. Sales with Repurchase Option
2.2. Other
Total
The Accountant
0
0
87
Banif SGPS, SA
Individual Balance Sheet as at 31 December 2003
Thousand Euros
31/12/2003
31/12/2002
0
100.000
0
100.000
20.000
0
20.000
0
120.000
0
a) Bonds in Circulation
120.000
0
433
166
1.088
3.451
578
578
578
578
200.000
200.000
10. Issue Premiums
58.214
58.214
11. Reserves
14.425
21.925
12. Profit and Loss Account brought forward
(1.083)
0
13. Profit for the Period
12.443
0
426.098
384.334
Liabilities and Shareholder’s Funds
1. Deposits by Banks
a) Sight
b) Term or Prior Notice
2. Client Accounts
a) Saving Accounts
b) Other Accounts – Sight
c) Other Accounts – Term
3.
b) Others
4.
Other Liabilities
5.
6.
Provision for Risks and Charges
a) Provisions for Pensions and other charges
b) Other Provisions
7.
Fund for General Banking Risks
8.
Subordinated Liabilities
9.
Paid up Share Capital
Total
The Accountant
88
Banif SGPS, SA
Income Statement as at 31 December 2003
Debit
31/12/2003
31/12/2002
Pró-Forma
31/12/2002 (a)
A. Costs
5.271
43.722
3.802
251
816
204
0
859
574
19.978
58
4.1 Personnel Costs
127
12.018
58
4.2 Other Administrative Overheads
447
7.960
86
2.846
194
6. Other Operating Costs
0
265
0
7. Provisions for Outstanding Credit and other Risks
0
9.299
760
8. Provision for Financial Fixed Assets
0
0
307
1.468
1.119
0
35
85
326
272
12. Profit for the Period
12.443
0
Total
19.258
79.560
1. Interest and Equivalent Costs
2. Commissions
3. Losses on Financial Operations
4. Administrative Overheads
5. Depreciation in the Period
9. Extraordinary Losses
10. Corporation Tax
11. Other Taxes
6.222
(a) The Pro-Forma column includes holding company operations for 2002, in order to be comparable with the figures presented for 31/12/2003.
The Accountant
89
Thousand Euros
Credit
31/12/2003
31/12/2002
Pro-Forma
30/06/2002 (a)
B. Income
1. Interest and Equivalent Earnings
1.887
64.185
808
2. Earnings from Securities
9.960
2.750
2.750
3. Commissions
0
4.628
4. Profits on Financial Operations
0
1.083
5. Adjustments to Provisions
0
1.674
0
0
0
3.681
7.411
476
6. Results in Related Companies not
included in Consolidated Accounts
7. Other Operating Income
8. Extraordinary Gains
9. Minority Interests
10. Loss for the Period
Total
19.258
1.083
2.664
79.560
6.222
90
Banif SGPS, SA
Consolidated Balance Sheet as at 31 December 2003
Thousand Euros
31/12/2003
Assets
Gross
1. Cash and Funds with Central Banks
277.056
2. Sight Deposits with Banks
Prov. and
Dep.
85.331
3. Other Loans and Advances to Banks
43
120.643
4. Loans and Advances to Clients
31/12/2002
Net
Net
277.056
146.269
85.288
113.475
120.643
768.145
4.406.902
63.615
4.343.287
4.366.716
329.686
875
328.811
222.814
a) Public
63.490
13
63.477
43.347
b) Other
266.196
862
265.334
179.468
0
0
89.020
13.228
75.792
53.538
5. Bonds and other Fixed Yield Securities
c) Own Securities
6. Shares and other Variable Yield Securities
7. Shares in Associated Companies
8. Shares in Affiliated Companies not included in Consolidated Accounts
48.084
48.084
32.516
9. Other Financial Holdings
4.649
313
4.336
2.843
10. Intangible Fixed Assets
59.621
37.797
21.824
23.263
11. Tangible Fixed Assets
192.735
71.210
121.525
135.410
(Of which: property)
112.707
8.963
103.744
116.108
2.070
13
2.057
16
26.347
10.334
16.013
17.594
16. Other Assets
110.856
4.119
106.737
87.106
17. Accruals and Deferrals
160.105
160.105
97.070
0
0
5.711.558
6.066.775
12. Revaluation Differences - Equity Method
13. Goodwill
14. Unrealized Share Capital
15. Own Shares
18. Consolidated loss for the Period
Total
5.913.105
201.547
Thousand Euros
31/12/03
31/12/02
669.249
662.354
1.2. Guarantees
536.514
547.329
1.3. Others
132.736
115.025
2. Commitments
557.751
628.582
Memorandum Accounts
1. Guarantees given and contingent liabilities
Of which:
1.1. Bills accepted and endorsed
Of which:
2.1. Sales with repurchase option
2.2. Others
Totais
The Accountant
557.751
628.582
1.227.000
1.290.936
91
Banif SGPS, SA
Consolidated Balance Sheet as at 31 December 2003
Thousand Euros
31/12/2003
31/12/2002
Liabilities and Shareholder’s Funds
1. Deposits by Banks
746.996
1.380.902
15.809
496.778
731.187
884.124
3.706.683
3.785.442
166.765
153.485
b) Sight Accounts
1.169.747
1.085.774
c) Term Accounts
2.370.171
2.546.183
512.768
248.869
a) Bonds in Circulation
438.483
139.674
b) Others
74.285
109.195
4.
Other Liabilities
31.379
29.314
5.
126.516
68.105
6.
Revaluation Differences - Equity Method
3.629
5.422
7.
Goodwill
8.468
4.915
8.
Provision for Risks and Charges
43.833
47.119
43.833
47.119
1.854
2.456
10. Subordinated Liabilities
153.597
153.597
11. Paid up Share Capital
200.000
200.000
12. Issue Premiums
58.214
58.214
13. Reserves
49.220
33.570
1.940
1.940
15. Profit and Loss account brought forward
(1.083)
1.468
42.186
24.574
17. Consolidated Profit for the Period
25.358
20.868
5.711.558
6.066.775
a) Sight
b) Term or Prior Notice
2. Client Accounts
a) Savings Accounts
3.
a) Provision for Pensions and other charges
b) Other Provisions
9.
Fund for General Banking Risks
14. Revaluation Reserves
Total
The Accountant
92
Banif SGPS, SA
Consolidated Income Statement as at 31 December 2003
Debit
31/12/2003
31/12/2002
155.912
221.372
8.240
6.403
88.786
42.199
4. Administrative Overheads
130.258
116.365
4.1. Personnel Costs
75.262
70.938
4.2. Other Administrative Overheads
54.996
45.427
19.577
20.416
5,023
6.127
60.795
48.816
1
3
22.875
6.664
10. Corporation Tax
4.109
9.213
11. Other Taxes
2.178
1.999
179
123
1.267
1.908
25.358
20.868
524.558
502.476
A. Costs
1. Interest and Equivalent Costs
2. Commissions
3. Losses on Financial Operations
5. Depreciation in the Period
6. Other Operating Costs
7. Provisions for Outstanding Credit and other Risks
8. Provision for Financial Fixed Assets
9. Extraordinary Losses
12. Results from Associated Companies
and Aff. not included in the com. acc.
14. Consolidated Profit for the Period
Total
The Accountant
93
Thousand Euros
31/12/2003
31/12/2002
306.973
354.912
1.473
3.088
43.649
35.213
101.762
56.691
19.700
12.815
6.915
5.103
7. Other Operating Income
32.464
27.886
8. Extraordinary Gains
11.622
6.768
524.558
502.476
Credit
B. Income
1. Interest and Equivalent Earnings
2. Earnings from Securities
3. Commissions
4. Profits on Financial Operations
5. Adjustments to Provisions
6. Results from Associated Companies
and Aff. not included in the con. acc.
10. Consolidated Loss for the Period
Total
94
VII.documentation attached
to the financial statements
1. Annexes to the Accounts
Introductory Note
Banif SGPS, results in it’s present form from the change of business and name effected on 1st of April 2002, as part
of the reorganization of the Banif Group. Prior to this date under the name Banif the company caried on banking
operations wich after the reorganization are now caried on by a new company called Banif - Banco Internacional do
Funchal, SA.
Because of this, most of the accounts in the balance sheet and income statement are not comparable with the previous
period, as this financial year included 12 months of operations as a holding company and the first three months of
banking operations.
However, in order to give a clearer and more objective picture of the company’s affairs we have decided it would be helpful:
- to include a pro-forma column in the income statement of the individual accounts of Banif SGPS SA, containing
the operations in 2002 comparable with those in 2003. The pro-forma column therefore includes the company’s
affair during 2002.
- to maintain the explanatory notes aplicable to banking operations.
1.1 Notes to the Financial Statements
Banif SGPS, SA – Individual Accounts
31 December de 2003
(figures in ‘000 Euros uunless expressly indicated otherwise)
1.6 Financial Holdings
Banif SGPS, SA, in its capacity as parent company of the Group, has a holding greater than or equal to 20%
in the following companies:
Share capital
% Holding owned
by Banif Group
(for consolidation
purposes)
Value of
Holding (1)
Shareholders’
Funds
December 2003
Results
December
2003
Diff. between value of
holding (1) and
corresponding portion in
shareholders’ funds (2)
Banif Comercial - SGPS, SA
Rua João Tavira, 30
Funchal
280.000
100 %
289.545
295.084
12.219
(5.539)
Banif – Banco Internacional do Funchal, SA
Funchal
240.000
100% (1)
240.451
268.286
23.190
(27.835)
Banco Comercial dos Açores,SA
Largo da Matriz, 42
Ponta Delgada
51.892
99.57%(1)
70.622
85.686
6.543
(14.696)
Banif Leasing SA
Av. Columbano Bordalo Pinheiro Lt A – 81 2º
Lisboa
10.000
100%(1)
12.563
12.070
89
493
Banif Crédito – SFAC, SA
Lisboa
3.000
100%(1)
4.133
4.374
406
(241)
Banco Banif Primus, SA (3)
Av. República do Chile, 230-9º
Rio de Janeiro – Brasil
8.459
75%(1)
11.235
9.820
(316)
3.870
25.075
100% (9)
24.932
20.086
1.966
4.846
Name and Registered Offices
Banif ( Açores ) SGPS, SA
Rua Dr. José Bruno Tavares Carreiro
Edifício Sol Mar
Ponta Delgada
96
Share capital
% Holding owned
by Banif Group
(for consolidation
purposes)
Value of
Holding (1)
Shareholders’
Funds
December 2003
Results
December
2003
Diff. between value of
holding (1) and
corresponding portion in
shareholders’ funds (2)
Banif – Imobiliária, SA
Avª José Malhoa, lote 1792,
1099-012 Lisboa
750
100%
985
1.553
313
(568)
Banif Seguros – SGPS, SA
1099-012 Lisboa
23.300
100%
23.325
33.753
5.269
(10.428)
8.750
100 %
8.729
12.067
(9)
(3.338)
Banif – Banco de Investimento, SA
1099-012 Lisboa
20.000
100% (6)
21.879
23.298
2.271
(1.419)
Banif-Banco Inter. do Funchal (Cayman) Ltd (12)
P.O. Box 30124 Georgetown
Grand Cayman
33.254
100% (6)
20.776
39.253
354
(18.477)
500
100% (5)
493
1.379
671
(886)
1.500
100% (5)
1.644
1.769
87
(125)
41
100% (2)
41
22
7
19
100
69.96%
70
(48)
(99)
104
1.669
85% (6)
1419
1.331
(268)
288
Banif Financial Services, Inc
1001 Brickell Bay Drive
Suite 1712
Miami – USA
294
100% (6)
294
116
(26)
178
Suite 1712
Miami – USA
238
100% (6)
238
356
157
(118)
27
60%(4)
17
35
1
(4)
769
59.46%
766
(202)
(177)
886
40
100%(5)
40
45
5
(5)
6
100%(9)
1
24.955
(46)
(24.954)
750
100%(5)
750
767
17
(17)
Sociedade Imobiliária Piedade (10)
Av. José Malhoa, lote 1792, 9º
Lisboa
50
100%
70
(126)
(14)
196
Com. Açores – San José (11)
2 B North 33 rd Street
S. José Califórnia
79
99.57%
79
79
0
0
Com. Açores – Fall River (11)
1645, Pleasant Street
Fall River – Massachusetts
0
99.57%
0
(41)
(6)
41
Name and Registered Offices
Banif Investimentos - SGPS, SA
Funchal
(Âmbito Institucional da Zona Franca da Madeira )
Banif IMO, SA
1099-012 Lisboa
Banifundos
Rua Tierno Galvan, Torre 3 – 14º
Lisboa
Banif (Brasil),SA
Alameda Jaú, nr. 389 – 14º Sala 141
São Paulo – Brasil
Banif Information Technology Holdings, Ltd (7)
Genesis Building- 3rd Floor
Grand Cayman
Banif Securities Holding, Ltd (8)
Genesis Building- 3rd Floor
Grand Cayman
FINAB
P.O. Box 30124
GeorgeTown – Grand Cayman
Cayman Islands, B.W.I.
Econofinance
Av. República do Chile, 230 - 8º andar
Cep 20031-170 RIO DE JANEIRO
BRASIL
Banif International Asset Management
Genesis Building, 3rd Floor
P.O. Box 32338-SMB, Grand Cayman
Cayman Islands
Banif Finance Ltd (13)
PO BOX 1093 GT Queensgate House South Church Street,
George Town
Grand Cayman
Newcapital
Lisboa
97
(1) The holding indicated corresponds to that held by Banif Comercial SGPS, S.A.
(2) Held indirectly as follows: 20% by Banif, SA and 80% by Banif Investimentos, SGPS, SA
(3) Amounts consolidated with Banif Primus – Corretora de Valores e Câmbios, S.A. and Banif Primus Asset Management
(4) The holding indicated corresponds to that held by Banif Cayman, Ltd.
(5) The holding indicated corresponds to that held by Banif – Banco de Investimento, SA
(6) The holding indicated corresponds to that held by Banif Investimentos SGPS, S.A.
(7) Amounts consolidated with Econofinance, SA – Participações: Banif (Cayman), 30%; BCA, 10%; Banif Investimentos – SGPS, SA, 30%; CSA, 20%.
(8) Amounts consolidated with Banif Securities, Inc.
(9) The holding indicated corresponds to that held by Banif – Banco de Internacional do Funchal, SA
(10) Held by Banif Imobiliária, SA.
(11) Held by Banco Comercial dos Açores.
(12) Percentage control of voting stock is 100%, the share capital comprising: 26,000,000 ordinary shares with a unit nominal value of USD 1 and 16,000,000
non-voting preference shares, with a nominal value of USD 1.
(13) Percentage control of voting stock is 100%, the share capital comprising: 1000 ordinary shares with a unit nominal value of USD 1 and 5000 non-voting
preference shares with an unit nominal value of EUR 1.
Other holdings of more than 20% but excluded from the consolidated accounts are set out in point 6
of these Notes.
A BanifServ, ACE has no share capital, and is therefore detailed in point 5.
98
1.8 Accounts Receivable - Associates and Subsidiaries
Banif SGPS, SA, as the parent company of the Banif Group, has no credits over associated or subsidiary companies.
1.9 Accounts Receivable - Affiliated Companies
In relation to consolidation operations, credits between related companies are detailed below (‘000 euros):
2003
From:
With:
Banif, SA
Banif Primus
Liquid Assets
in Banks
Outras Aplicações
em IC
2002
Other Inv.
in Banks
866
BanifServ
3.202
Banif Leasing
10.150
90.464
Banif Crédito
467
26.000
8.698
BCA
Total
Total
866
157
13.185
11.900
11.876
15.078
141.074
16.000
116.614
39.874
26.467
16.488
13.185
Banif (Cayman). Ltd
Banif Banco de Investimento
Securities
35.597
44.295
5.817
172.260
172.260
148.117
Banif SGPS. SA
100.000
SIP
240
240
207
Banif Investimentos SGPS. SA
0
Banifundos
0
Banif Imobiliária
0
Banif Comercial
12.000
12.000
8.008
8.008
Banif Rent
286
286
NewCapital
236
236
Espaço 10
3.079
Banif. SA
5.842
5.842
250
Banif (Açores) SGPS. SA
Banif. SA
3
3
17.854
BCA
5
5
11
211
107
Banif Primus
Banif. SA
11
200
Banif Securities Holdings Ltd
BanifServ
Banif. SA
Banif (Cayman). Ltd
Banif. SA
123
1.228
8.082
Banif Primus
BCA
702.496
710.578
1.606
71.216
71.216
39.934
8.263
8.263
21.970
10.500
10.500
1.425.5
FINAB
Banif Banco Investimentos
20.000
171
39
20.773
229
Banif Inf. Tech. Holdings Ltd
1.424
1.424
1.512
Banif securities Holdings Ltd
4.972
4.972
4.196
Banif Finance
Banif Crédito
171
773
9.017
Banif. SA
3
BCA
1
99
2003
Liquid Assets
in Banks
Outras Aplicações
em IC
2002
Other Inv.
in Banks
From:
With:
Banif Leasing
Banif. SA
5
BCA
2
Banifundos
Banif. SA
Banif. SA
Banif (Cayman). Ltd
18
4
1.775
3.260
24
Banif Leasing
BCA
Securities
NewCapital
8.546
BCA
Banif. SA
3.263
11
1.545
3.260
6.224
6
299
299
299
5
27
1.133
1.133
1.850
5.183
Banif. SA
18
1.779
133
1.850
Banif Primus
Banif Imobiliária
69.971
Banif Primus
5.183
8.546
95
73.234
1.502.916
2.000
2.000
Banif Leasing
2.993
Banif Crédito
998
998
998
10.500
10.500
13.000
7.993
Banif (Cayman). Ltd
0
Banif. SA
19
Banif Inf. Tech. Holdings Ltd
Banif (Cayman). Ltd
Banif Securities Holdings. Ltd
Banif Securities Inc
Banif Comercial SGPS. SA
Banif. SA
Banif SGPS. SA
Banif. SA
BCA
Banif Seguros SGPS
Banif. SA
New Capital
Banif Finance
Banif Cayman
SIP
Banif. SA
TOTAIS
100
4.193
5.000
Banif Imo
Total
109
5
Banif SGPS
Total
1.560
1.560
670
51
3.959
2.861
566
566
2.047
860
860
3.622
40
40
203
185
185
15
15
3.959
32.026
192.200
224.226
3
72.214
1.313.729
156.986
57.911
3
6
1.600.840
3.597.438
1.10 Inventory of Securities and Shares as at 31st December 2003.
Total Quoted
Value EUR
Total Balance
Sheet Val. EUR
A. Securities - Marketable
43.261.307,10
43.261.307,10
Fixed yield securities
34.289.539,43
34.289.539,43
Issued by non-redidents
34.289.539,43
34.289.539,43
Foreign public issuers
24.656.714,99
24.656.714,99
24.656.714,99
24.656.714,99
5.281.742,27
11.717.833,24
7.657.139,47
5.281.742,27
11.717.833,24
7.657.139,47
9.632.824,44
9.632.824,44
2.343.715,00
2.343.715,00
2.343.715,00
2.343.715,00
7.289.109,44
7.289.109,44
6.035.219,18
172.186,08
175.820,56
405.734,25
12.388,44
487.760,93
6.035.219,18
172.186,08
175.820,56
405.734,25
12.388,44
487.760,93
Variable yield securities
8.971.767,67
8.971.767,67
Issued by residents
7.034.073,86
7.034.073,86
7.034.073,86
7.034.073,86
3.942.000,00
70.800,00
31.800,00
146.300,00
571.318,22
1.635.900,00
473.750,20
157.465,44
4.740,00
3.942.000,00
70.800,00
31.800,00
146.300,00
571.318,22
1.635.900,00
473.750,20
157.465,44
4.740,00
1.937.693,81
1,937.693,81
1.937.693,81
1.937.693,81
51.050,00
54.421,50
65.138,50
87.958,00
34.726,86
41.171,83
56.650,00
92.880,00
64.400,00
31.720,13
78.520,00
43.335,72
60.063,37
43.341,27
976.215,15
30.847,50
3.300,00
69.450,00
52.503,98
51.050,00
54.421,50
65.138,50
87.958,00
34.726,86
41.171,83
56.650,00
92.880,00
64.400,00
31.720,13
78.520,00
43.335,72
60.063,37
43.341,27
976.215,15
30.847,50
3.300,00
69.450,00
52.503,98
B. Securities - Investment
370.142.563,48
375.444.615,00
Fixed yield securities
293.148.468,09
292.999.531,49
Issued by residents
47.566.441,91
47.949.004,41
Portuguese public debt
22.365.779,56
22.145.455,40
501,93
501,26
Type of Securities
Quantity
Currency
Denom.
Total Value
Nominal EUR
Average Acq.
Value EUR
Quoted
Value EUR
- Short term
LETRAS DO TESOURO NACIONAL
LETRAS DO TESOURO NACIONAL
NOTAS DO TESOURO NACIONAL
5.281.742,27
11.717.833,24
7.657.139,47
BRL
BRL
BRL
1,00
1,00
1,00
1,00
1,00
1,00
Other non-residents
- Short term
BRASTURINVEST INV TUR 04/03
2.365.000,00
EUR
99,10%
99,10%
- medium and long term
FORD MOTOR CREDIT 4 7/8 05/07
LLOYDS BANK TSB BANK PLC
MERRILL LYNCH 09/08
POPULAR CAPITAL SA
RENTIPAR SGPS
SOL MELIA EUROPE 4.3 11/14/08
6.000.000,00
164.687,33
175.000,00
400.000,00
12.500,00
500.000,00
EUR
USD
EUR
EUR
EUR
EUR
100,59%
104,55%
100,47%
101,43%
99,11%
97,55%
100,59%
104,55%
100,47%
101,43%
99,11%
97,55%
- Shares
BANCO BPI SA
BANCO COMERCIAL PORTUGUÊS
BRISA
EDP
ELECTRICIDADE DE PORTUGAL, SA
PORTUGAL TELECOM, SGPS - Nom
PT MULTIMEDIA SERVIÇOS
SONAE SGPS
SONAECOM
40.000,00
6.000,00
70.000,00
273.358,00
205.000,00
30.763,00
238.584,00
2.000,00
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1.350.000,00
40.000,00
6.000,00
70.000,00
273.358,00
205.000,00
30.763,00
238.584,00
2.000,00
2,92
1,77
5,30
2,09
2,09
7,98
15,40
0,66
2,37
2,92
1,77
5,30
2,09
2,09
7,98
15,40
0,66
2,37
Issued by non-residents
- Shares
ALCATEL
BANCO BILBAO VIZCAYA ARGENTARIA
CAP GEMINI SA
E.ON AG
EBOOKERS PLC - ADR
FORD MOTOR CO
FRANCE TELECOM SA
HVB FUNDING TRUST VII
INDITEX
INTEL CORP
KONINKLIJKE AHOLD NV
KONINKLIJKE KPN NV
MARVELL TECHNOLOGY GROUP INC
MICROSOFT CORP
MILLENIUM PNB
NOKIA OYJ
PARMALAT FINANZIARIA SPA
PHILIPS ELECTRONICS NV
WAL-MART STORES INC
5.000,00
4.970,00
1.850,00
1.700,00
3.000,00
3.250,00
2.500,00
3.600,00
4.000,00
1.250,00
13.000,00
7.081,00
2.000,00
2.000,00
43.114,00
2.250,00
30.000,00
3.000,00
1.250,00
EUR
EUR
EUR
EUR
USD
USD
EUR
EUR
EUR
USD
EUR
EUR
USD
USD
BRL
EUR
EUR
EUR
USD
1,00
1,00
1,00
1,00
0,79
0,79
1,00
1,00
1,00
0,79
1,00
1,00
0,79
0,79
22,64
1,00
1,00
1,00
0,79
5.000,00
4.970,00
1.850,00
1.700,00
2.375,30
2.573,24
2.500,00
3.600,00
4.000,00
989,71
13.000,00
7.081,00
1.583,53
1.583,53
976.215,15
2.250,00
30.000,00
3.000,00
989,71
10,21
10,95
35,21
51,74
11,58
12,67
22,66
25,80
16,10
25,38
6,04
6,12
30,03
21,67
22,64
13,71
0,11
23,15
42,00
10,21
10,95
35,21
51,74
11,58
12,67
22,66
25,80
16,10
25,38
6,04
6,12
30,03
21,67
22,64
13,71
0,11
23,15
42,00
- Short term
OBRIGAÇÕES TES MEDIO PRAZO 8,875
EUR
500,00
100,25%
100,39%
- Medium and long term
OB TESOURO SETEMBRO/1998-2013
OB. TESOURO MEDIO PRAZO 05
OB. TESOURO MEDIO PRAZO 3% 2006
EUR
EUR
EUR
4.987.980,00
32.000,00
8.500.000,00
105,15%
102,32%
99,94%
106,00%
104,57%
100,25%
501,93
501,26
22.365.277,64
22.144.954,14
5.287.258,80
33.462,40
8.521.250,00
5.244.751,23
32.741,15
8.494.591,10
101
Total Value
Nominal EUR
Average Acq.
Value EUR
Quoted
Value EUR
Total Quoted
Value EUR
Total Balance
Sheet Val. EUR
93.600,00
1.250,00
5.704.267,00
100,00
2.210.837,00
100,71%
108,47%
106,12%
102,03%
100,58%
108,88%
113,83%
108,50%
107,60%
100,90%
101.911,68
1.422,93
6.189.129,70
107,60
2.230.734,53
94.268,27
1.355,87
6.053.451,47
102,03
2.223.693,02
2,145,030.44
2.109.126,63
113.925,40
1.995.191,59
100,01%
100,00%
100,00%
101,80%
113.925,40
2.031.105,04
113.935,04
1.995.191,59
Other residents
23.055.631,91
23.694.422,391
- Short term
16.697.096,35
16.697.029,03
Commercial Paper
16.433.078,49
16.433.078,49
2.500.000,00
2.496.994,75
1.150.000,00
1.000.000,00
1.250.000,00
555.555,56
1.200.000,00
2.400.000,00
150.000,00
1.855.528,18
1.875.000,00
2.500.000,00
2.496.994,75
1.150.000,00
1.000.000,00
1.250.000,00
555.555,56
1.200.000,00
2.400.000,00
150.000,00
1.855.528,18
1.875.000,00
264.017,86
263.950,54
190.095,00
73.922,86
190.000,00
73.950,54
6.358.535,56
6.997.393,36
0,00
250.000,00
62.848,53
0,00
22.263,17
230.201,46
0,00
1,495.000,00
511.912,50
99.800,00
989.024,27
488.572,54
735.210,63
748.650,00
186.562,50
71.754,56
466.735,39
24,939,89
250.000,00
62.848,53
24.939,89
23.210,04
231.941,02
387.615,85
1,495.000,00
682.550,00
99.800,00
996.484,53
498.797,90
737.373,21
749.647,05
187.500,00
71.826,39
472.919,06
245.582.026,18
245.050.527,08
14.568.985,73
14.578.884,14
7.090.442,30
7.102.073,28
2.723.490,00
273.883,37
811.367,21
1.687.282,95
1.594.418,78
2,736,624,69
273,883,37
811.367,21
1.687.282,95
1.592.915,07
7.478.543,43
7.476.810,86
576.810,00
6.901.733,43
575.077,43
6.901.733,43
1.379.129,86
1.379.129,86
844.789,06
534.340,80
844.789,06
534.340,80
Other non-residents
229.633.910,58
229.198.928,96
- Short term
19.549.214,17
19.534.069,56
2.003.000.00
2.500.750,00
58.163,80
21.905,87
1.979.415,00
932.307,50
2.501.250,00
2.094.597,00
2.000.000,00
2.499.699,48
58.163,80
21.905,87
1.979.681,26
926.425,54
2.500.792,55
2.094.741,89
Type of Securities
Quantity
OB. TESOURO MEDIO PRAZO 5,45
OB. TESOURO MEDIO PRAZO 9,5%
OB. TESOURO MÉDIO PRAZO 97-23/02/07
OB.TESOURO AGOSTO/1999-2004
Currency
Denom.
EUR
EUR
EUR
EUR
EUR
EUR
OB.GRA 1992/2005
OB.GRA 1993/2005 - 1ª Emissão
CPC DI 33ª EMISSÃO
EDA-ELECTRICIDADE DOS AÇORES 22ª EM
EUROGÉS 13ª EMISSÃO
FERNANDO SIMÃO SGPS
JB FERNANDES 46ª EMISSÃO
JORNAL NOTÍCIAS 34ª EMISSÃO
LISGRÁFICA 27ª EM
LISGRÁFICA 27ª EMISSÃO
LISGRÁFICA 28ª EMISSÃO
TERTIR
TRANSINSULAR -2º EMISSÃO
11.392.539,81
199.519.159,00
EUR
EUR
0,01
0,01
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
2.500.000,00
2.496.994,75
1.150.000,00
1.000.000,00
1.250.000,00
555.555,56
1.200.000,00
2.400.000,00
150.000,00
1.855.528,18
1.875.000,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
EUR
EUR
190.000,00
74.071,00
100,00%
99,84%
100,05%
99,80%
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
24.939,89
250.000,00
62.848,53
24.939,89
36.497,00
231.941,02
387.615,85
1.495.000,00
682.550,00
99.800,00
996.498,01
498.797,90
737.422,90
750.000,00
187.500,00
71.826,39
473.843,04
100,00%
100,00%
100,00%
100,00%
63,59%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
99,99%
99,95%
100,00%
100,00%
99,81%
0,00%
100,00%
100,00%
0,00%
61,00%
99,25%
0,00%
100,00%
75,00%
100,00%
99,25%
97,95%
99,70%
99,82%
99,50%
99,90%
98,50%
Other securities
BANCO ALVES RIBEIRO, SA 04
BANCO MELLO, SA 06/04
AGERG
BANCO ALVES RIBEIRO 99-04
CARRIS 98-05
COBRE/87 - Série A
CRÉDITO PREDIAL PORTUGUÊS 06/49
EDP/1996-2006 - 22ª Emissão
FNACINVESTE/91
FNI 2003/2008
IMOLOC 98-28/04/2004
METRO 95-07
MUNDICENTER 97-16/3/2004
PARTEST 98-08
PETROGAL 94-04
PORTUCEL 99-04
SALVADOR CAETANO 99- 06/01/2004
SECIL/CMP 95- 01/03/2005
SONAE IMOBILIARIA 98-05
Issued by non-residents
Portuguese public issuers
- Short term
BUNDESSCHATZANW 4 06/25/04
CERTIFICADO DE DEPOSITO BANCARIO
LETRAS FINANCEIRAS DO TESOURO
US TREASURY N/B 07/04
EUR
BRL
BRL
BRL
USD
2.700.000,00
273.883,37
811.367,21
1.687.282,95
1.583.532,00
101,36%
100,00%
100,00%
100,00%
100,59%
100,87%
100,00%
100,00%
100,00%
100,69%
EUR
BRL
580.000,00
6.901.733,43
99,15%
100,00%
99,45%
100,00%
EUR
EUR
748.196,85
496.000,00
104,47%
99,01%
112,91%
107,73%
BEI/1996-2006
BEI/1997-2007
CITROSUCO
CLN KPN FLOAT 04
COTAS DE FUNDOS DE INVESTIMENTO
DIVIDAS SECURITIZADAS
HERTZ CORP 08/04
KONINKLIJKE KPN 4% 06/04
PINAULT-PRINTEMPS-REDOUT 07/04
PQU 0 12/03/04
102
EUR
EUR
BRL
BRL
USD
EUR
EUR
EUR
2.000.000,00
2.50.000,00
58.163,80
21.905,87
1.979.415,00
925.000,00
2.500.000,00
2.110.000,00
100,00%
99,99%
100,00%
100,00%
100,01%
100,15%
100,03%
99,28%
100,15%
100,03%
100,00%
100,00%
100,00%
100,79%
100,05%
99,27%
Type of Securities
RENAULT CREDIT INTL 07/04
REPSOL INTL FINANCE 3 3/4 02/23/04
TELEFONICA EUROPE BV 04
VOTORANTRADE
XEROX CAP EUROPE 5 1/4 12/03/04
Quantity
Currency
Denom.
Total Value
Nominal EUR
Average Acq.
Value EUR
Quoted
Value EUR
Total Quoted
Value EUR
Total Balance
Sheet Val. EUR
EUR
EUR
EUR
EUR
2.000.000,00
1.000.000,00
2.000.000,00
2.250.000,00
200.000,00
100,19%
99,87%
100,19%
99,82%
100,20%
99,99%
100,18%
100,45%
99,81%
100,80%
1.999.800,00
1.001.800,00
2.008.900,00
2.245.725,00
201.600,00
2.003.727,52
998.714,37
2.003.837,17
2.245.973,82
200.406,29
210.084.696,41
209.664.859,40
EUR
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
USD
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
FRF
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
500.000,00
500.000,00
2.000.000,00
2.000.000,00
2.000.000,00
1.979.415,00
650.000,00
5.000.000,00
612.000,00
6.000.000,00
2.573.239,50
2.000.000,00
1.800.000,00
2.220.000,00
1.400.000,00
2.000.000,00
400.000,00
2.500.000,00
2.500.000,00
1.979.415,00
5.000.000,00
1.170.000,00
2.500.000,00
2.375.298,00
2.462.754,61
2.000.000,00
542.000,00
2.490.000,00
5.694.000,00
6.500.000,00
2.500.000,00
2.000.000,00
2.500.000,00
5.000.000,00
12.500.000,00
300.000,00
3.000.000,00
1.745.792,90
2.500.000,00
4.009.409,15
1.000.000,00
500.000,00
500.000,00
3.000.000,00
2.000.000,00
3.000.000,00
5.500.000,00
3.000.000,00
4.000.000,00
7.000.000,00
4.000.000,00
2.500.000,00
349.300,00
3.562.947,00
2.000.000,00
2.000.000,00
2.000.000,00
1.250.000,00
1.000.000,00
3.000.000,00
2.000.000,00
2.000.000,00
2.500.000,00
5.000.000,00
100.000,00
352.000,00
1.000.000,00
1.000.000,00
2.000.000,00
2.000.000,00
6.000.000,00
1.000.000,00
6.000.000,00
11.400.000,00
4.300.000,00
1.500.000,00
2.500.000,00
97,61%
87,76%
100,00%
100,00%
100,00%
100,00%
123,00%
99,93%
100,00%
99,89%
100,00%
100,00%
100,04%
99,45%
99,78%
100,00%
100,00%
100,13%
100,02%
99,81%
100,72%
98,96%
99,82%
99,92%
100,01%
100,00%
99,95%
100,50%
100,07%
100,72%
99,93%
100,09%
100,00%
99,91%
102,00%
101,52%
99,75%
100,00%
100,25%
100,00%
100,00%
100,42%
100,33%
99,90%
100,06%
99,86%
100,79%
100,00%
100,00%
99,91%
100,19%
100,68%
100,00%
99,88%
100,15%
100,00%
99,13%
99,97%
100,52%
99,88%
100,00%
100,10%
100,00%
100,00%
98,92%
93,00%
99,70%
100,00%
100,10%
100,00%
100,39%
100,00%
100,41%
100,00%
100,00%
100,00%
100,00%
100,15%
94,10%
100,00%
100,00%
100,00%
100,00%
123,00%
99,96%
100,00%
99,95%
100,00%
99,95%
99,88%
99,90%
99,85%
99,95%
99,95%
100,17%
100,03%
100,00%
100,85%
99,50%
99,95%
99,94%
100,17%
100,00%
101,25%
100,25%
100,15%
101,00%
100,15%
100,00%
100,00%
99,90%
101,80%
101,85%
100,02%
100,00%
100,12%
105,25%
99,46%
98,75%
100,30%
100,09%
100,30%
100,09%
101,15%
100,40%
100,00%
100,36%
101,07%
101,07%
98,50%
100,47%
100,00%
100,00%
99,10%
100,34%
100,30%
100,65%
99,70%
99,50%
100,00%
100,22%
99,94%
93,00%
99,46%
100,18%
100,18%
100,15%
100,17%
100,00%
100,17%
100,00%
100,00%
100,00%
100,07%
500.750,00
470.500,00
2.000.000,00
2.000.000,00
2.000.000,00
1.979.415,00
799.500,00
4.998.112,00
612.000,00
5.997.000,00
2.573.239,50
1.999.000,00
1.797.840,00
2.217.780,00
1.397.830,00
1.999.000,00
399.800,00
2.504.250,00
2.500.750,00
1.979.415,00
5.042.500,00
1.164.150,00
2.498.750,00
2.373.872,82
2.466.941,29
2.000.000,00
548.775,00
2.496.225,00
5.702.541,00
6.565.000,00
2.503.750,00
2.000.000,00
2.500.000,00
4.995.000,00
12.725.000,00
305.550,00
3.000.600,00
1.745.792,90
2.503.000,00
4.219.903,13
994.600,00
493.750,00
501.500,00
3.002.700,00
2.006.000,00
3.002.700,00
5.563.250,00
3.012.000,00
4.000.000,00
7.025.200,00
4.042.800,00
2.526.750,00
344.060,50
3.579.653,27
2.000.000,00
2.000.000,00
1.982.000,00
1.254.250,00
1.003.000,00
3.019.500,00
1.994.000,00
1.990.000,00
2.500.000,00
5.011.000,00
99.940,00
327.360,00
994.600,00
1.001.800,00
2.003.600,00
2.003.000,00
6.010.200,00
1.000.000,00
6.010.200,00
11.400.000,00
4.300.000,00
1.500.000,00
2.501.750,00
488.030,75
438.777,70
2.000.000,00
2.000.000,00
2.000.000,00
1.979.415,00
799.500,00
4.996.501,70
612.000,00
5.993.632,90
2.573.239,50
2.000.000,00
1.800.795,01
2.207.815,66
1.396.896,80
2.000.000,00
400.000,00
2.503.139,04
2.500.615,50
1.975.578,67
5.035.896,94
1.157.828,15
2.495.528,23
2.373.290,87
2.462.892,91
2.000.000,00
541.711,06
2.502.450,00
5.698.212,01
6.546.653,18
2.498.261,58
2.001.858,07
2.500.000,00
4.995.704,32
12.749.916,54
304.565,21
2.992.550,41
1.745.792,90
2.506.166,66
4.009.409,15
1.000.000,00
502.080,51
501.655,08
2.997.147,57
2.001.198,00
2.995.846,22
5.543.644,64
3.000.000,00
4.000.000,00
6.993.463,84
4.007.785,93
2.516.964,60
349.300,00
3.558.796,64
2.002.961,60
2.000.000,00
1.982.621,11
1.249.653,38
1.005.168,71
2.996.277,94
2.000.000,00
2.001.990,48
2.500.000,00
5.000.000,00
98.916,89
327.360,00
997.045,00
1.000.000,00
2.001.985,30
2.000.000,00
6.023.490,92
1.000.000,00
6.024.878,61
11.400.000,00
4.300.000,00
1.500.000,00
2.500.000,00
74.699.917,61
80.048.098,90
ABB INTL FINANCE NV
ALCATEL SA 02/17/09
AMSTEL SEC 15AGO2013
AURUM INVESTMENTS SA
BANCAJA FONDO DE TITULIZACION DE AC
BANCO BRADESCO 0 08/20/10
BANCO ESPIRITO SANTO 05
BANCO ITAU EUR FLOAT 24JUL06
BANCO (CAYMAN)
BANCO ITAU EUROPA, SA
BANCO ITAU, SA (CAYMAN)
BBVSM FLOAT 17JUL2013
BCP FINANCE BANK LTD 05/06
BES FINANCE LTD FLOAT 07
BRE FINANCE FRANCE SA
CLARE FUNDING FLOAT 14SET09
CLARE SPECIAL CO 3,9
CLN FRTEL FLOAT 28MAR2004
CLN KPN FLOAT 28MAR2004
COUNTRYWIDE HOME LOAN 09/05
DAIMLERCHRYSLER FLOAT 5DEZ05
DAIMLERCHRYSLER NA 09/05
EFG HELLAS PLC 04/06
EGG BANKING PLC
EIGER TRUST CLASS C FL 11/15/2010
EMERALD MORTGAGES PLC
ERICSSON LM TEL 11/10
EURO INVEST LIMITED 4 03/31/07
EURO INVEST LIMITED 4.8 09/08
FORD MOTOR CRED FLOAT 6JAN06
FRIESLAND BANK FLOAT 05/06
GALP 0% 12JUL2010
GALP INVESTMENT PLC
GE APITAL EURO FUNDING
GMAC CANADA FLOAT 12SET2008
HEIDELBERGCEMENT FIN BV
HIPO HIPO 6 C 31DEZ2034
HIPO-BANK 2007
HOLMES FINANCING FLOAT JUL40
INTERNATIONAL ENDESA BV 02/09
KENSINGTON GROUP PLC
KONINKLIJKE AHOL 5 7/8 05/08
LEHMAN BROS FLOAT 21 FEV 2006
LEHMAN BROS FLOAT 3NOV2008
LEHMAN BROS HOLDINGS 02/06
MARKS & SPENCER FLOAT JAN07
MBNA EUROPE FUND
MEMPH 2003-I B
MERRIL LYNCH FLOAT 15SET2008
METRO AG 0 05/29/06
METRO FLOAT 29MAI2006
MORGAN 97-07
MORGAN STANLEY GROUP
MOUND FINANCING 0% 8FEV2042
MOUND FINANCING PLC
NYMPHENBURG LTD
OTE PLC
PALAZZO FINANCE TRE SRL
PORTUGAL TELECOM INT FIN 05
PROMISE PLC COL-03 B
PROVIDE FLOAT 28JUL2055
RAMS MTG SEC FLOAT 11AGO2034
RCI BANQUE FLOAT 03MAR2006
RENAULT CREDIT INTL 05
RHODIA SA 05/31/05
RMS 14X M2 3,597% 10JUN2036
SAECURE BV
SAECURE FLOAT 31AGO2070
SOCIETA CARTO IMMOBILI
TELECOM ITALIA SPA
TEMPO CD0 1 LTD
TIM FLOAT 21JUN2006
TRADE INVEST LIMITED 7,125%
TRADE INVEST LIMITED 8,125%
VELA HOME SRL
VOLKSWAGEN 3,304 11/21/05
Variable yield securities
103
Type of Securities
Quantity
Currency
Denom.
Total Value
Nominal EUR
Average Acq.
Value EUR
Quoted
Value EUR
Issued by residents
- Shares
BANCO BPI
BEIRA VOUGA
BRISA - Nom (Priv)
CPTP
EDP
ESTORIL PRAIA FUTEBOL SAD
GALERIAS NAZONI
IMOVALOR
IMPRESA SGPS - NOM
INAPA
MACEDO & COELHO
Nova Comp. Grande Hotel
PORTUGAL TELECOM
PT MULTIMÉDIA
REAL SEGUROS
REDITUS SGPS
RENDIMO
SC BRAGA SAD
SEMAPA SGPS
SONAE SGPS
TERTIR - Terminais Portugal
615,00
41.817,00
360,00
357.626,00
162.350,00
13.601,00
750,00
19.890,00
23.648,00
416.372,00
188,00
50.300,00
18.495,00
13.750,00
12.698,00
160.652,00
97.000,00
20,00
58.265,00
696.000,00
61.547,00
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
1,00
0,47
1,00
0,42
1,00
5,00
4,99
4,99
1,00
5,00
4,99
3,66
1,00
0,50
5,00
215.459,00
247.506,00
180.670,00
114.109,00
1.299.278,00
149.850,00
547.799,00
1.000,00
104
30.146.813,04
4.162.764,71
6.347.390,79
1.795,80
19.815,40
1.908,00
148.414,79
339.311,50
68.005,00
3.741,00
311.477,40
82.768,00
1.170.005,32
5,64
184.255,94
147.590,10
211.750,00
99.261,26
236.790,99
334.721,18
322,81
209.754,00
459.360,00
131.710,58
1.495,64
19.815,40
1.727,00
148.414,79
410.764,50
83.918,17
7.481,96
280.766,85
147.416,48
2.323.029,38
62,04
184.255,94
167.367,59
168.265,00
228.014,49
572.247,24
427.388,33
322,81
231.162,05
636.480,00
306.995,14
4,99
5,00
1,00
1,00
5,00
2,92
0,47
5,30
0,42
2,09
5,00
4,99
15,66
3,50
2,81
0,03
3,66
7,98
15,40
7,82
1,47
3,45
16,14
3,60
0,66
2,14
20.419.709,41
23.799.422,25
EUR
EUR
EUR
5,00
5,00
5,00
1.077.295,00
1.237.530,00
903.350,00
27,47
2,83
4,98
29,41
2,61
4,98
6.337.119,22
646.422,54
900.371,15
5.918.779,00
699.872,85
899.632,58
EUR
EUR
EUR
EUR
EUR
5,00
5,00
5,00
6,41
5.000,00
570.545,00
6.496.390,00
749.250,00
3.511.391,59
5.000.000,00
4,38
5,00
5,01
6,45
5.000,00
3,92
2,15
5,01
6,46
5.000,00
447.831,67
2.798.514,88
750.613,64
3.538.836,32
5.000.000,00
499.753,06
6.496.390,00
749.999,25
3.534.995,51
5.000.000,00
50.117.443,48
49.901.285,86
4.769.712,49
4.626.651,58
63.854,17
1,90
813.031,65
99.547,02
141.940,00
45.945,00
112.672,00
153.395,00
103.480,00
81.576,00
96.600,00
55.080,00
57.875,00
82.020,44
69.493,45
36.674,00
80.443,11
44.763,48
73.424,42
44.921,20
69.916,01
81.202,89
78.310,77
7.422,81
37.927,25
57.901,85
34.726,84
62.485,23
86.577,20
86.409,41
69.675,38
19.167,11
83.251,09
78.369,37
64.968,22
69.784,24
61.190,30
37.015,04
47.490,52
85.030,70
33.278,83
63.324,17
59.685,55
103.836,10
40.726,70
36.375,05
2,05
813.031,65
70.591,61
139.154,82
49.465,00
115.895,00
147.227,67
84.300,00
75.240,00
101.145,60
55.950,00
56.225,00
78.286,59
68.906,93
37.282,12
77.032,41
47.131,60
69.243,76
45.427,33
66.879,11
79.124,66
76.931,03
118.764,90
35.129.31
54.348,43
32.909,74
59.051,22
75.350,71
77.684,98
61.134,20
17.396,03
78.464,15
77.848,33
58.821,23
69.230,01
60.909,56
27.366,19
47.788,45
77.217,69
29.592,68
57.067,35
60.722,48
106.138,55
42.761,42
- Shares
300.000,00
2.298,00
813.031,65
6.000.000,00
23.500,00
4.500,00
3.200,00
5.500,00
2.000,00
3.600,00
6.000,00
9.000,00
2.500,00
2.223,00
1.766,00
2.045,00
2.565,00
5.505,00
1.153,00
4.611,00
2.037,00
3.624,00
2.695,00
37.500,00
2.454,00
7.100,00
3.000,00
1.188,00
2.667,00
2.656,00
5.500,00
1.043,00
3.394,00
2.185,00
2.234,00
2.750,00
1.496,00
5.000,00
8.939,00
2.091,00
3.535,00
1.556,00
3.337,00
3.500,00
4.927,00
24.582.474,13
2,43
0,47
4,80
0,42
2,53
6,17
9,98
14,12
6,23
5,58
0,33
3,66
9,05
12,24
17,96
3,56
4,41
16,14
3,97
0,91
4,99
Issued by non residents
CIA SIDERURGIA PAU PRF
TELE NORDESTE CELULAR-CM RC
TERMO DE AÇÕES
UNIÃO BANCOS BRASILEIROS
AHOLD
ALCATEL
CAP GEMINI SA
DOW JONES EURO STOXX 50 GFR
EON AG
FRANCE TELECOM
INDITEX
KONINKLIJKE KPN NV
PHILIPS ELECTRONICS
ABBOT LABORATORIES
ALLTEL CORP
ALTERA CORP
AUTOMATIC DATA PROCESSING
AXCELIS TECHNOLOGIES
BANK OF AMERICA
BEA SYSTEMS INC
BED BATH & BEYOND
BELL SOUTH CORP
BIOGEN IDEC INC
BRASIL FAST FOOD CORP
DIGITALNET HOLDINGS INC
DOUBLECLICK INC
EBOOKERS PLC- ADR
EXPRESS SCRIPTS INC
EXXON MOBIL CORP
FIRST DATA CORP
FORD MOTOR COMPANY
GAP INC DELAWARE
GENERAL ELECTRIC CO
GENERAL MILLS INC
GILLETTE CO
INTEL CORP
JOHNSON & JOHNSON
K FORCE
KOPIN CORP
L 3 COMMUNICATIONS HLDGS INC
LIBERTY MEDIA CORP
LOCKEED MARTIN CORP
MACROVISION
MARVELL TECHNOLOGY GROUP LTD
MERIDIAN BIOSCIENCE INC
Total Balance
Sheet Val. EUR
615,00
19.815,40
360,00
148.414,79
162.350,00
68.005,00
3.742,50
99.251,10
23.648,00
2.081.860,00
938,12
184.253,93
18.495,00
6.875,00
63.490,00
0,00
484.030,00
100,00
58.265,00
696.000,00
307.735,00
- Participation units
BANIF IMOGEST
BANIFUNDO ESTRATÉGIA AGRESSIVA
BANIFUNDO ESTRATÉGIA
CONSERVADORA
BANIFUNDO ESTRATÉGIA EQUILIBRADA
BANIFUNDO EURO ACÇÕES
BANIFUNDO EURO RENDA MENSAL
BANIFUNDO EURO TESOURARIA
FUNDO CAPITAL DE RISCO CAPVEN
Total Quoted
Value EUR
BRL
BRL
BRL
BRL
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
0,27
0,27
1,00
0,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
0,79
0,79
0,79
0,79
0,79
0,01
0,79
0,79
0,79
0,79
0,79
0,79
0.01
0,79
0,01
0,79
0,80
0,79
0,79
0,84
0,80
1,58
3,96
1,58
0,01
0,80
0,80
0,80
1,58
1,58
0,79
1,58
81.864,32
627,08
813.031,65
16.372,86
23.500,00
4.500,00
3.200,00
5.500,00
2.000,00
3.600,00
6.000,00
9.000,00
2.500,00
1.760,09
1.398,26
1.619,16
2.030,88
4.358,67
9,13
3.650,83
1.612,83
2.869,36
2.133,81
29.691,21
1.942,99
56,22
2.375,30
9,41
2.111,64
2.123,96
4.354,71
825,81
2.848,49
1.747,31
3.537,61
10.886,78
2.368,96
39,59
7.148,37
1.672,14
2.826,88
2.463,97
5.284,24
2.771,18
7.802,06
0,12
0,00
1,00
0,01
5,92
10,99
36,22
26,77
42,15
20,90
16,86
6,22
22,49
35,22
39,02
18,23
30,03
8,56
60,06
9,85
32,83
21,83
28,55
3,17
14,32
7,65
10,97
49,71
28,25
29,25
11,12
16,68
23,12
35,63
26,33
25,17
40,71
5,47
5,35
36,93
8,37
36,68
18,20
30,33
8,68
0,21
0,00
1,00
0,02
6,04
10,21
35,21
27,89
51,74
22,66
16,10
6,12
23,15
36,90
39,35
17,93
31,36
8,13
63,68
9,74
34,32
22,41
29,06
0,20
15,46
8,16
11,58
52,60
32,46
32,53
12,67
18,38
24,53
35,87
29,08
25,38
40,90
7,40
5,31
40,67
9,41
40,70
17,89
29,67
8,27
Type of Securities
MICROSOFT CORP
NABORS INDUSTRIES LTD
PENTAIR INC
PEPSICO INC
PFIZER INC
REHABCARE GROUP INC
SATYAM COMPUTER SERVICES
SCHLUMBERGER LTD
TAIWAN SAMICONDUCTOR - ADR
THE GAP INC
TIME WARNER INC
UNITEDHEALTH GROUP INC
UNIVISION COMMUNICATIONS
UTILITIES SELECT SECTOR SPDR
WAL-MART STORES INC
XILINX INC
Quantity
Currency
Denom.
Total Value
Nominal EUR
Average Acq.
Value EUR
Quoted
Value EUR
Total Quoted
Value EUR
Total Balance
Sheet Val. EUR
84.580,43
73.076,82
42.334,92
67.032,39
63.247,15
38.261,24
41.614,70
87.300,70
27.663,42
44.251,53
86.161,20
76.007,11
68.224,08
55.932,89
105.007,92
32.604,57
79.842,27
66.740,68
39.503,35
69.258,18
60.719,31
29.978,98
29.599,97
74.862,64
29.565,24
40.151,35
75.687,74
68.684,56
57.461,95
54.577,58
103.250,20
30.220,97
8.337.278,85
8.264.182,14
378.446,21
622.141,05
1.128.642,88
376.329,63
1.201.895,07
896.727,60
1.610.034,00
379.824,02
1.242.000,30
477.150,75
24.087,35
391.464.82
598.574.90
1.168.860.00
392.082.40
1.190.023.92
809.469.64
1.520.940.00
475.000.00
1.200.000.00
494.240.00
23.526.46
37.010.452,14
37.010.452,14
7.917.999,60
5.318.270,45
13.750.000,00
7.834.730,59
201.378,74
201.378,74
201.377,53
1.585.316,50
7.917.999,60
5.318.270,45
13.750.000,00
7.834.730,59
201.378,74
201.378,74
201.377,53
1.585.316,50
2.294.177,78
2.396.984,60
2.294.177,78
2.396.984,60
98,77
1.150.000,00
745.578,16
59,41
398.441,44
96,96
1.250.000,00
747.904,31
59,86
398.923,48
25.164.361,48
72.058.862,63
5.838.150,85
4.649.071,00
5.797.378,81
4.612.138,79
0,00
0,00
355.543,14
1.781.704,98
6.212,64
49,88
355.394,04
1,250.000,00
49.879,79
663.363,03
122.350,14
14.794,79
49,88
10.973,55
497.370,03
689.692,92
19.951,92
1.246,99
355.543,14
503.980,41
3.990,38
49,88
535.307,30
1,250.000,00
49.879,79
444.897,88
122.350,14
25.000,00
49,88
10.973,55
497.370,03
791.547,50
40.772,04
36.932,21
189,94
26.207,44
14.374,66
189,25
26.207,44
10.535,52
19.326.210,63
19.326.210,63
14.640.625,00
14.640.625,00
3.903,00
2.224,00
1.170,00
1.816,00
2.261,00
2.273,00
1.792,00
2.015,00
3.412,00
2.408,00
6.049,00
1.650,00
2.171,00
3.028,00
2.500,00
1.066,00
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
4,76
1,58
0,92
0,93
0,83
0,80
0,82
0,80
1,58
0,04
0,80
0,80
0,80
0,79
0,79
0,80
18.572,47
3.521,77
1.074,58
1.682,28
1.879,69
1.817,68
1.475,60
1.611,36
5.403,01
95,33
4.837,28
1.319,48
1.736,11
2.397,47
1.979,41
852,46
20,46
30,01
33,76
38,14
26,86
13,19
16,52
37,15
8,67
16,67
12,51
41,63
26,47
18,02
41,30
28,35
21,67
32,86
36,18
36,91
27,97
16,83
23,22
43,33
8,11
18,38
14,24
46,06
31,43
18,47
42,00
30,59
5.000,00
7.500,00
15.000,00
5.000,00
15.000,00
10.000,00
15.000,00
5.000,00
12.000,00
5.000,00
1.304,00
USD
USD
USD
USD
USD
USD
EUR
EUR
EUR
EUR
EUR
79,18
79,18
79,18
79,18
79,18
79,18
100,00
100,00
100,00
100,00
0,79
395.882,82
593.824,23
1.187.648,46
395.882,82
1.187.648,46
791.765,64
1.500.000,00
500.000,00
1.200.000,00
500.000,00
1.032,46
78,29
79,81
77,92
78,42
79,33
80,95
101,40
95,00
100,00
98,85
18,04
75,69
82,95
75,24
75,27
80,13
89,67
107,34
75,96
103,50
95,43
18,47
7.917.999,60
5.318.270,45
13.750.000,00
7.834.730,59
166.667,00
166.667,00
166.667,00
1.585.316,50
100,00%
100,00%
100,00%
100,00%
120,83%
120,83%
120,83%
100,00%
100,00%
100,00%
100,00%
100,00%
120,83%
120,83%
120,83%
100,00%
- Participation units
AGGRESSIVE STRATEGY FUND
BALANCED STRATEGY FUND
BRAZILIAN BOND FUND
BRAZILIAN EQUITY FUND
BRAZILIAN MONEY MARKET FUND
CONSERVATIVE STRATEGY FUND
EUROPEAN BOND FUND
European Equitu Fund
EUROPEAN MONEY MARKET FUND
PORTUGAL EQUITY FUND
UTILITIES SECTOR INDEX
- Other securities
ATLANTES CERTIFICATES Nº1 CLASSE D NOTES
ATLANTES CERTIFICATES Nº2 CLASSE D NOTES
ATLANTIS MORTGAGE Nº1
BMC / POOL Nº1 FUNDED SRP
MADRAGOA EXPEDIÇÃO SGPS - A
MADRAGOA EXPEDIÇÃO SGPS - B
MADRAGOA EXPEDIÇÃO SGPS - C
MONEY FUND SBGH
EUR
EUR
EUR
USD
EUR
EUR
EUR
USD
Subordinated securities
BANCO TOTTA & AÇORES 07/06
BAYER HIPO 05MAI2014
BCP/1995-2005
CAIXA ECO MONTEPIO GERAL 12/06
ESSI/1996-2006
20.000,00
1.250.000,00
74.819.685,00
12.000,00
8.000,00
EUR
EUR
EUR
EUR
EUR
0,00
1,00
0,01
0,00
49,88
99,76
1.250.000,00
748.196,85
59,86
399.040,00
0,97
1,00
1,00
1,00
1,00
0,99
0,92
1,00
0,99
1,00
D. Financial Fixed Assets
Holdings
- In other companies in Portugal
AMBELIS
ATLÂNTICO CLUBE INT. FÉRIAS AÇORES
CABO TV AÇOREANA, SA
CABO TV MADEIRENSE SA
CENTRO DE EMP. E INOV. DA MADEIRA, LDA
COLISEU MICAELENSE, SA
FINANGEST
HABIPREDE
NORMA Açores-Soc. Est. Apoio Des. Reg.,SA
SIBS- SOC INTERBANCARIA DE SERVIÇOS,SA
SOGEO-Soc. Geotermica dos Açores, SA
SUBLOC- LOCAÇÃO DE SUBMARINOS, SA
TEATRO MICAELENSE, SA
TRANSINSULAR (Açores)-Transp.M.Insul.,SA
UNICRE- CARTÃO INTERN. DE CRÉDITO, SA
VIA LITORAL, SA
400,00
250,00
66.000,00
87.860,00
800,00
83,00
526,00
5.000,00
10.000,00
103.436,00
24.529,00
2.500,00
83,00
2.000,00
24.335,00
4.750,00
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
4,99
5,00
0,50
5,00
5,00
5,00
5,00
0,50
5,00
5,00
0,00
1.247,50
330.000,00
0,00
0,00
41,50
0,00
25.000,00
50.000,00
517.180,00
122.645,00
0,00
41,50
10.000,00
121.675,00
0,00
49,88
4,99
5,39
5,74
4,99
0,60
1.017,55
250,00
4,99
4,30
4,99
10,00
0,60
5,49
20,32
166,64
0,00
0,00
5,39
20,28
7,77
0,60
675,51
250,00
4,99
6,41
4,99
5,92
0,60
5,49
20,44
145,20
206,00
0,00
1.375,00
0,92
10,48
957,77
0,92
10,48
1.306,79
- In other companies abroad
EURONEXT N V
NASDQ Stock Market, Inc
SWIFT Soc Woeldwide Interb. Finan. Telecom.,SC
Other financial holdings
- Shareholder loan contracts
206,00
2.500,00
11,00
1,00
EUR
USD 26.207,44
125,00
EUR
105
Type of Securities
Quantity
HABIPREDE - SOCIEDADE DE CONSTRUÇÕES, SA
VIA LITORAL
1,00
1,00
Currency
Denom.
EUR
EUR
Total Value
Nominal EUR
Average Acq.
Value EUR
Quoted
Value EUR
1,00
1,00
1,00
1,00
13.750.000,00
890.625,00
13.750.000,00
890.625,00
1,00
445.826,09
498.797,90
7.061,58
1.612,78
3.717.323,34
14.963,94
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
1,00
- Others
AÇÕES EMPRESARIAIS DE LIQ. E CUSTODIA
IMOLOC
OUTROS INVESTIMENTOS
RENDIMO
TITULOS PATRIMONIAIS
VISA
445.826,09
498.797,90
7.061,58
1.612,78
3.717.323,34
14.963,94
EUR
EUR
1,00
EUR
1,00
Total Quoted
Value EUR
Total Balance
Sheet Val. EUR
13.750.000,00
890.625,00
13.750.000,00
890.625,00
4.685.585,63
4.685.585,63
445.826,09
498.797,90
7.061,58
1.612,78
3.717.323,34
14.963,94
445.826,09
498.797,90
7.061,58
1.612,78
3.717.323,34
14.963,94
- Share capital in affiliated companies
excluded from the consolidated accounts
48.083.581,00
BANIF AÇOR PENSÕES
BANIF RENT
COMPANHIA DE SEGUROS AÇOREANA
ESPAÇO 10
INVESTAÇOR
1.511.857,00
108.793,00
42.614.469,00
1.359,00
3.847.103,00
TOTAL
106
438.568.232,06
490.764.784,73
1.11 Intangible and Tangible Fixed Assets
Accounts
Prior period balance
Gross
Accrued
depreciation
45.411.710
28.858.946
257.049
85.674
Formation costs
3.549.957
2.695.679
Multi-annual costs
3.359.652
2.786.944
Research and development costs
6.892.373
5.961.067
31.232.617
17.232.349
120.062
97.233
Tangible Fixed Assets
217.879.932
87.267.639
Property in own use
126.571.678
19.609.350
18.623
10.263
Works in rented property
12.459.491
16.470.994
Equipment
69.845.115
55.767.978
Intangible Fixed Assets
Goodwill
Automatic data processing systems ( software)
Other
Other property
Art works
655.143
Fixed assets acquired under finance leases
872.154
705.410
Other tangible fixed assets
7.457.728
4.703.644
Fixed Assets in Progress
11.511.349
0
Intangible fixed assets
5.735.349
Property in own use
1.970.301
Rented property
1.177.395
Equipment
1.555.928
Art works
Other tangible fixed assets
Prepayments for tengible/intangible fixed assets
Total
97.264
974.802
274.802.991
116.126.585
107
(Euros)
Increases
Aquisitions
Revaluation
(net)
Transfers
Depreciations
for the period
Adjustments
Reductions
Value net
as at 31/12/2003
1.108.710
0
2.095.117
6.817.434
2.128.612
2.231
10.808.314
0
12.659
158.716
0
23.332
649.192
-61.763
343.186
160.516
268.209
465.015
164.787
982.937
1.007.732
1.071.298
842.1017
928.332
4.859.602
2.063.672
20.040
-32.013
2.407.666
11.045.839
-1.951.697
27.927.696
118.575.896
1.814.791
2.029.069
-146.343
27.927.696
195.362.177
220
0
14.484
53.005
48.817
22.577.775
0
16.180.735
6.344
2.231
8.845.196
83.619
580.409
216.361
967.149
10.114
2.847
5.805.157
5.720.486
468.911
7.504.744
-1.968.338
126.686
14.603.442
655.143
690.193
35.050
54.751
9.143.819
0
-261.989
6.119
-101.364
169.592
538.758
254.014
85.212
2.1000.443
-4.502.783
0
75.949
2.111.591
13.964.845
0
7.238.954
-846.776
1.851.197
10.276.640
316.523
-2.026.430
260.394
0
1.533.083
-147.531
2.562.947
657
-1.294.609
261.976
0
54.602
32.830.304
108
0
-23.584
4.006
124.276
-163.853
71.943
739.006
0
17.863.273
252.864
30.041.518
143.349.055
1.14 Other accounts receivable - Banks and Clients
Other accounts receivable - Banks
The balance for other accounts receivable from other banks breaks down as follows:
Investments in Banks in Portugal
2003
2002
- Interbank money market and dep. cert.
19.578
45.338
- Loans
17.419
0
- Other investments
10.439
4.851
47.436
50.189
2003
2002
Investments in foreign Banks
- Loans
- Other investments
114.784
2.299
58.423
715.657
73.207
717.956
Gross balance
120.643
768.145
0
0
Net balance
120.643
768.145
2003
2002
99.707
722.056
6.686
23.044
14.250
23.045
-
-
- Provisions
Amounts in this account break down into the following residual terms to maturity:
- Up to 3 months
- 3 months to 1 year
- 1 year to 5 years
- More than 5 years
- Indefinite duration
-
-
120.643
768.145
109
Accounts Receivable - Clients
Accounts Receivable - Clients
2003
2002
- Trade discount
169.098
177.376
- Credit secured by effects
200.003
201.755
1.237.971
1.173.179
89.086
101.126
2.613.989
2.684.223
4.310.147
4.337.659
- Current account credits
- Overdrafts on current accounts
- Other credits
- Credits and intrest accrued
Gross balance
- Provisions for credit, interest accrued, doubtful debts
and country risk
Net balance
96.755
87.060
4.406.902
4.424.719
63.615
58.003
4.343.287
4.366.716
2003
2002
1.863.841
824.072
418.475
867.444
454.771
1.171.050
1.573.060
1.475.093
- Up to 3 months
- 1 year to 5 years
- More than 5 years
- Indefinite duration (Overdue credit)
110
96.755
87.060
4.406.902
4.424.719
1.18 Funds obtained
Deposits by Banks
The balance for deposits by banks breaks down as follows:
2003
2002
12.594
6.211
Sight
- Portugal
- Abroad
3.215
490.567
15.809
496.778
Term or prior notice
In Portugal
58.000
176.000
107.360
103.427
165.360
279.427
565.827
604.697
731.187
884.124
746.996
1.380.902
2003
2002
- Up to 3 months
515.979
1.104.722
117.791
262.371
- 1 year to 5 years
113.226
13.809
-
-
- Interbank Money Market
- Term deposits and other funds
Abroad
- Term deposits and other funds
- More than 5 years
-
-
746.996
1.380.902
2003
2002
- Current Accounts
1.169.747
1.085.774
- Deposit Accounts
2.357.564
2.537.701
166.765
153.485
Deposits by Clients
The balance for Client deposits breaks down as follows:
- Saving Accounts
- Cheques and Payment Orders
- Other Funds
2.457
7.368
10.150
1.114
3.706.683
3.785.442
111
2003
2002
- Up to 3 months
2.311.489
3.154.481
1.094.077
630.034
- 1 year to 5 years
199.560
927
- More than 5 years
101.557
-
-
-
3.706.683
3.785.442
2003
2002
74.285
109.1951
- Up to 3 months
22.958
18.240
21.301
77.760
- 1 year to 5 years
30.026
13.195
- More than 5 years
-
-
-
-
74.285
109.195
Debits represented by Securities
- Deposit Certificates
112
1.21 Debits to Affiliated/Related Rompanies
Within the scope of the consolidation operations, the following debits exist between subsidiaries
(‘000 euros):
2003
From:
With:
Banif, SA
Debits
to Banks
2002
Debits Rep.
by Securities
Subordinated
Liabilities
5.842
3
Banif Primus
Debits
to Clients
211
Total
5.842
250
3
17.854
211
BanifServ
Banif (Cayman) Ltd
8.082
702.496
710.578
3
18
3.260
8.546
Banif Imobiliária
BCA
73.234
3
Banif Imo
566
Banif SGPS. SA
860
Sociedade Imobiliária Piedade, SA
Banif Seguros SGPS
Banif (Cayman) Ltd
Banif Primus
Banif. SA
Banif (Cayman) Ltd
18
11
3.260
6.224
8.546
95
73.234
1..502.916
3
19
566
2.047
860
3.622
3
3
6
185
185
-
8.008
8.008
-
71.216
39.934
71.216
866
866
157
8.263
8.263
21.970
BCA
2.000
2.000
Banif Banco Investimentos
5.183
5.183
BanifServ
Banif, SA
13.185
Banif (Cayman), Ltd
Banif, SA
3.202
11.876
24
109
13.185
11.900
15.078
141.074
133
Banif Finance
192.200
Banif, SA
100.614
32.026
224.226
0
16.000
116.614
39.874
299
299
299
5.000
7.993
4.193
26.467
26.467
16.488
998
998
998
44.295
44.295
5.817
BCA
Banif Crédito
Banif, SA
BCA
2.993
0
Banif Leasing
Banif, SA
4
Banifundos
BCA
1.560
20.773
Banif SGPS, SA
103.500
1.779
1.545
10.500
13.000
1.560
670
20.773
15
Newcapital
Banif Imobiliaria
1.775
10.500
Banif Imo
Banif Cayman
6
51
BITH
Banif Leasing
1.606
5
Banif Crédito
107
1.228
Banif Leasing
Banifundos
Total
15
103.500
6.788
113
From:
With:
BCA
Banif. SA
Debits
to banks
Banif Leasing
Debits Rep.
by Securities
Subordinated
Liabilities
172.260
Banif (Cayman) Ltd
Debits
to clients
2003
2002
Total
Total
172.260
5
11
10.500
10.500
1.425.539
3
3
2
5
5
27
40
203
171
229
Banif Crédito
148.117
5
1
Banif SGPS. SA
40
FINAB
Banif (Cayman) Ltd
171
Econofinance
Banif Inf. Tech. Holdings
Banif (Cayman) Ltd
1.424
1.424
1.512
Banif Securities Holding Ltd
Banif (Cayman) Ltd
4.972
4.972
4.196
255
255
Banif Primus
Banif SGPS, SA
Banif SA
123
3.959
43.100
12.000
3.959
3.261
43.100
51.100
12.000
-
Banif. SA
100.000
Banif SGPS, SA
Banif Seguros SGPS. SA
Banif SGPS, SA
SIP
Banif, SA
Newcapital
1.133
1.133
0
10
240
Banif Imobilária
1.859
1.850
240
207
1.859
-
1.850
Banif Finance
Banif Cayman
Total
114
9.017
892.720
798.167
42.076
16.090
9.017
-
1.749.053
3.597.438
1.22 Subordinated Liabilities
The Banif Group’s subordinated liabilities relate to subordinated cash bonds, with a value of 169,687 thousand
euros of which 153.597 thousand euros are outside the Banif Group, as detailed below:
- On 9 December 1996 Banif – Banco Internacional do Funchal, SA, issued subordinated cash bonds of 24.940
thousand euros represented by 2,493,989,488 certificates of 0,01 euros each. The interest on these bonds
matures at six month intervals and in arrears on 9 June and 9 December each year and were calculated for
the 1st coupon on the basis of a rate of 7.25% and for subsequent coupons in accordance with the Lisbor
rate resulting from the arithmetical average of the last 5 business days prior to the penultimate business day
of the six months period, plus 0.25% and rounded up to 1/16 of the nearest percentage point. The loan
is to be repaid at par in one instalment, on 9 December 2006 but may however be paid back in advance
on the Bank’s option (call option), with authorization from the Bank of Portugal, on maturity of the 10th,
12th, 14th 16th or 18th coupons, with no premium on the amount repaid.
- On 2 December 1997 Banif – Banco Internacional do Funchal, SA, issued subordinated cash bonds of 24,940
thousand euros represented by 2.493.989.488 certificates of 0,01 euros each The interest on these bonds
matures at six month intervals and in arrears on 2 June and 2 December each year and were calculated for
the 1st coupon on the basis of a rate of 5,75% and for subsequent coupons in accordance with the Lisbor
rate resulting from the arithmetical average of the last 5 business days prior to the penultimate business day
of the six months period, plus 0.30% and rounded up to 1/16 of the nearest percentage point. The loan
is to be repaid at par in one instalment, on 2 December 2007 but may however be paid back in advance
- On 31 July 2000 Banif – Banco Internacional do Funchal, SA, issued subordinated cash bonds of 25,000
thousand euros represented by 25,000 certificates of 1,000 euros each The interest on these bonds matures
at six month intervals and in arrears on 31 January and 31 July each year and were calculated for the
1st coupon on the basis of a rate of 5,648% and for subsequent coupons in accordance with the Euribor
6 months rate in force on the second business day prior to the beginning of each six month period, plus 0.75%
and rounded up to 1/16 of the nearest percentage point. As from the 11th coupon, the interest rate will
be the Euribor six month rate plus 1.15%. The loan is to be repaid at par in one instalment, on 31 July 2010
but may however be paid back in advance on the Bank’s option (call option), with authorization from the Bank
of Portugal, on maturity of the 10th, 12th, 14th 16th or 18th coupons, with no premium on the amount
repaid.
- On 8 December 2000 Banif – Banco Internacional do Funchal, SA, issued subordinated cash bonds of 25,000
thousand euros represented by 25,000 certificates of 1,000 euros each. The interest on these bonds matures
at six month intervals and in arrears on 8 June and 8 December each year and were calculated for the
1st coupon on the basis of a rate of 5.701% and for subsequent coupons (up to the 10th coupon) in accordance
with the Euribor 6 months rate in force on the second business day prior to the beginning of each six month
period, plus 0.75% and rounded up to 1/16 of the nearest percentage point. As from the 11th coupon,
the interest rate will be the Euribor six month rate plus 1.15%. The loan is to be repaid at par in one instalment,
on 8 December 2010 but may however be paid back in advance on the Bank’s option (call option),
with authorization from the Bank of Portugal, on maturity of the 10th, 12th, 14th 16th or 18th coupons,
with no premium on the amount repaid.
- On 16 July 2001 Banif – Banco Internacional do Funchal, SA, issued subordinated cash bonds of 12,500
thousand euros represented by 12,500 certificates of 1,000 euros each The interest on these bonds matures
at six month intervals and in arrears on 16 January and 16 July each year and were calculated for the
1st coupon on the basis of a rate of 5,375% and for subsequent coupons in accordance with the Euribor
6 months rate in force on the second business day prior to the beginning of each six month period,
plus 0.75%.
115
The loan is to be repaid at par in one instalment, on 16 July 2011 but may however be paid back in advance
- Mundileasing/97 subordinated cash bonds, with a value of 3,741 thousand euros issued on 6 June 1997
for a period of 10 years, variable rate, indexed to Lisbor + 0,30% and rounded up to 1/16 of the nearest
percentage point;
- BCA/98 subordinated cash bonds Variable Rate - 1998 - 2008
On 27 November 1998 BCA issued subordinated cash bonds with a value of 1,000,000 thousand PTE,
represented by 100,000 certificates for 10,000$00 each.
On 25 October 2001, this bond issue was redenominated, and the issue was from then on represented
by 498,797,897 bonds with a nominal value of one cent, with a total value of 4,987,978.97 euros.
The interest on these bonds matures at six month intervals and in arrears on 27 May and 27 November
each year and were calculated for the 1st coupon on the basis of a rate of 4.5% and for subsequent coupons
in accordance with the Lisbor rate resulting from the arithmetical average of the last 5 business days prior
to the penultimate business day of the six months period, plus 0.5% and rounded up to 1/16 of the nearest
percentage point. The rates for the 2nd, 3rd, 4th, 5th, 6th e 7th coupons were 3,1875%, 4,0625%, 5,25%,
5,75%,5,125% and 3,875% respectively. The loan is to be repaid at par in one instalment, on 27 November
2008 but may however be paid back in advance on the Bank’s option (call option), with authorization from
the Bank of Portugal, on maturity of the 10th, 12th, 14th 16th or 18th coupons, with no premium on the
amount repaid.
- BCA/00 subordinated cash bonds Variable Rate - 2000 - 2010 – 1st Issue
On 23 October 2000 BCA issued subordinated cash bonds with a value of 1,000,000 thousand PTE, represented
by 100,000 certificates for 10,000$00 each.
On 25 October 2001, this bond issue was redenominated, and the issue was from then on represented
by 498,797,897 bonds with a nominal value of one cent, with a total value of 4,987,978.97 euros.
The interest on these bonds matures at six month intervals and in arrears on 23 April and 23 October each
year and were calculated for the first five years of the loan at the Euribor 6 months rate in force on the second
business day prior to the beginning of each six month period, plus 0.75% and rounded up to 1/16 of the
nearest percentage point. As from the 11th coupon, and for the remaining lifetime of the loan, the interest
rate will be the Euribor six month rate plus 1.15%. The interest rates for the 1st, 2nd and 3rd coupons
were 5,847, 5,369% and 4,249 %.
- BCA/00 subordinated cash bonds Variable Rate - 2000 - 2010 – 1st Issue
On 4 December 2000 BCA issued subordinated cash bonds with a value of 10,000,000 thousand euros,
represented by 200,000 certificates for 50 euros each.
The interest on these bonds matures at six month intervals and in arrears on 4 June and 4 December each
business day prior to the beginning of each interest period, plus 0.75% and rounded up to 1/16 of the nearest
percentage point. As from the 11th coupon, and for the remaining lifetime of the loan, the interest rate will
be the Euribor six month rate plus 1.15%. The interest rates for the 1st, 2nd and 3rd coupons were 5,848%,
5,258% and 4,037%.
- BCA/02 subordinated cash bonds Variable Rate - 2002 - 2012
On 25 September 2002, BCA issued subordinated cash bonds with a value of 10,000,000 thousand euros,
represented by 200,000 certificates for 50 euros each.
The interest on these bonds matures at six month intervals and in arrears on 25 March and 25 September
each year and were calculated for the first five years of the loan at the Euribor 6 months rate in force on the
second business day prior to the beginning of each interest period, plus 0.75% and rounded up to 1/16 of
the nearest percentage point. As from the 11th coupon, and for the remaining lifetime of the loan, the interest
rate will be the Euribor six month rate plus 1.15%. The interest rates for the 1st coupon is 4,022%.
116
- Issue of subordinated cash bonds by Banif (Cayman), Ltd, wholly owned by Banif-Banco Internacional
do Funchal, SA (with a value of 17,020 thousand euros) on 15 June 1998 for a period of 10 years, variable
rate, indexed at the Lisbor 6 month rate + 2.50%. The loan is to be repaid at par in one instalment, on
27 November 2008, and may be repaid in advance at the option of Banif (Cayman) (call option), in full or in
tranches of 3,000,000 USD, as from maturity of the 10th coupon.
- Cash bonds issued by Banif – Banco de Investimento, SA, Variable Rate – 2001 – 2011 – 1st Issue.
On 29 June 2001, Banif – Banco de Investimento, SA, issued subordinated cash bonds with a value of 7,500,000
Euros represented by 7.500.000 certificates of 1 Euro each.
The interest on these bonds matures at six month intervals and in arrears on 29 December and 29 June each
business day prior to the beginning of each interest period, plus 0.75%. As from the 11th coupon (inclusive),
and for the remaining lifetime of the loan, the interest rate will be the Euribor six month rate plus 1.15%
- Cash bonds issued by Banif Securities Inc., variable rate 2005
On 26 July 2002 Banif Securities Inc., issued subordinated cash bonds with a value of 5,000,000 USD,
with interest maturing quarterly and calculated at the Libor index rate for 3 months plus 1,5%. These bonds
were held at the end of 2003 by Banif Securities Holding, Ltd..
1.25 Marketable securities, investment securities and financial holdings
Securities are recorded as marketable securities when they are acquired with the intention of selling them
in the subsequent six months and when there is no doubt as to their market security, with a view to benefiting
from potential gains on their disposal. Securities are recorded as investment securities when acquired with
the intention of being kept for a period of more than six months. Securities initially recorded as marketable
securities, but which are not disposed of within six months of acquisition, are also recorded as investment
securities.
Financial holdings comprise securities acquired with the objective of establishing a permanent presence in the
institution, through holdings in related companies and other financial investments with the nature of fixed
assets.
Securities acquired with the intention of keeping them through to repayment are recorded as Securities held
for Maturity.
1.27 Accurals and Deferrals
2003
2002
- Income receivable
46.265
42.227
- Expenses with deferral costs
17.963
12.497
- Other accurals and deferrals
95.877
42.346
160.105
97.070
Assets
Liabilities
- Revenues with deferred income
11.067
2.827
- Costs payable
41.784
34.512
- Liabilities for holiday pay and subsidies
- Other accurals and deferrals
9.400
8584
64.265
22.182
126.516
68.105
117
1.28 Securities Portfolio
Bonds and other fixed rate securities
The composition of this account is detailed in the Inventory of Securities and Financial Holdings included
in this report.
The make-up of this account may be summarized as follows:
2003
2002
22.145
13.793
Bonds issued by public issuers:
- Portuguese public debt securities
- Bonds – other public issuers
2.109
3.931
- Foreign public debt securities
39.236
25.758
Gross balance
63.490
43.482
13
135
63.477
43.347
2003
2002
- Provisions
Net balance
Bonds issued by other issuers, residents
- Subordinated cash bonds
1.147
1.147
- Other bonds, not mature
6.824
16.009
16.433
25.614
437
437
24.841
43.207
- Commercial Paper
- Other bonds, mature
Bonds issued by other non-resident issuers
- Subordinated cash bonds
1.250
1.250
- Other bonds, not mature
240.105
136.348
- Commercial Paper
Gross balance
Provisions
Net balance
Own securities
118
-
-
241.355
137.598
266.196
180.805
862
1.337
265.334
179.468
-
Shares and other variable rate securities
The composition of this account is detailed in the Inventoty of Securities and Financial Holdings included in this
report. In brief:
2003
2002
- Shares, issued by residents
13.382
11.376
- Participation units issued by residents
23.800
10.870
6.564
12.339
- Shares, issued by non-residents
- participation units issued by non-residents
- Other securities
Gross balance
- Provisions
Net balance
8.264
7.586
37.010
20.579
89.020
62.750
13.228
9.212
75.792
53.538
a) Differences, as at 31 december 2003, between the book value and nominal value of investment securities:
- Securities issued at below repayment value
60 thousand euros
- Securities acquired at above nominal value
1.360 thousand euros
- Securities acquired at below nominal value
253 thousand euros
- Maturing securities, sold prior to redemption
0 thousand euros
119
b) Valuation differences for Bonds and other Fixed Rate Securities break down as follows, as at 31/12/03:
Public issuers - Residents
Gains
Losses
OB TESOURO SETEMBRO/1998-2013
43
0
OB. TESOURO MEDIO PRAZO 3% 2006
27
0
8
0
135
0
7
0
OB. TESOURO MEDIO PRAZO 5,45
OB.TESOURO AGOSTO/1999-2004
36
0
256
0
Gains
Losses
FNACINVESTE 91
0
388
COBRE 87 SÉRIE A
0
25
ARGERG
0
25
0
438
Gains
Losses
CRÉDITO PREDIAL PORTUGUÊS 06/49
0
1
EDP/1996-2006 - 22ª Emissão
0
2
IMOLOC 98-28/04/2004
0
171
MUNDICENTER 97-16/3/2004
0
7
PARTEST 98-08
0
10
PETROGAL 94-04
0
2
PORTUCEL 99-04
0
1
SALVADOR CAETANO 99- 06/01/2004
0
1
SONAE IMOBILIARIA 98-05
0
6
0
201
Gains
Losses
0
13
US TREASURY N/B 07/04
1
0
2
0
3
13
OB.GRA 1993/2005 - 1ª Emissão
Securities Maturing
Other Issuers - Residents
Public Issuers - Non-residents
120
International Financial Organisations
Gains
Losses
63
0
43
0
106
0
Gains
Losses
BCITROSUCO
3
0
CLN KPN FLOAT 04
1
0
KONINKLIJKE KPN 4% 06/04
6
0
RENAULT CREDIT INTL 07/04
0
4
REPSOL INTL FINANCE 3 3/4 02/23/04
3
0
TELEFONICA EUROPE BV 04
5
0
XEROX CAP EUROPE 5 1/4 12/03/04
1
0
ABB INTL FINANCE NV
13
0
ALCATEL SA 02/17/09
32
0
BANCO ITAU EUR FLOAT 24JUL06
2
0
BANCO ITAU EUROPA, SA
3
0
BBVSM FLOAT 17JUL2013
0
1
BCP FINANCE BANK LTD 05/06
0
3
Other Issuers - Non-residents
10
0
BRE FINANCE FRANCE SA
1
0
CLARE FUNDING FLOAT 14SET09
0
1
CLN FRTEL FLOAT 28MAR2004
1
0
COUNTRYWIDE HOME LOAN 09/05
4
0
DAIMLERCHRYSLER FLOAT 5DEZ05
7
0
DAIMLERCHRYSLER NA 09/05
6
0
EFG HELLAS PLC 04/06
3
0
EIGER TRUST CLASS C FL 11/15/2010
4
0
ERICSSON LM TEL 11/10
7
0
EURO INVEST LIMITED 4 03/31/07
0
6
EURO INVEST LIMITED 4.8 09/08
4
0
BES FINANCE LTD FLOAT 07
18
0
FRIESLAND BANK FLOAT 05/06
5
0
GALP 0% 12JUL2010
0
2
FORD MOTOR CRED FLOAT 6JAN06
121
Other Issuers - Non-residents
Losses
0
1
GMAC CANADA FLOAT 12SET2008
0
25
HEIDELBERGCEMENT FIN BV
1
0
HIPO HIPO 6 C 31DEZ2034
8
0
HOLMES FINANCING FLOAT JUL40
0
3
INTERNATIONAL ENDESA BV 02/09
210
0
KENSINGTON GROUP PLC
0
6
KONINKLIJKE AHOL 5 7/8 05/08
0
8
LEHMAN BROS FLOAT 3NOV2008
6
0
5
0
7
0
MARKS & SPENCER FLOAT JAN07
20
0
MBNA EUROPE FUND
12
0
MERRIL LYNCH FLOAT 15SET2008
32
0
METRO AG 0 05/29/06
35
0
METRO FLOAT 29MAI2006
10
0
0
5
GE APITAL EURO FUNDING
MORGAN 97-07
21
0
MOUND FINANCING 0% 8FEV2042
0
3
NYMPHENBURG LTD
0
1
OTE PLC
5
0
0
2
23
0
MORGAN STANLEY GROUP
PALAZZO FINANCE TRE SRL
PORTUGAL TELECOM INT FIN 05
PROMISE PLC COL-03 B
0
6
PROVIDE FLOAT 28JUL2055
0
12
11
0
RENAULT CREDIT INTL 05
1
0
RMS 14X M2 3,597% 10JUN2036
0
3
SAECURE BV
2
0
SAECURE FLOAT 31AGO2070
2
0
SOCIETA CARTO IMMOBILI
3
0
TELECOM ITALIA SPA
0
13
TIM FLOAT 21JUN2006
0
15
RCI BANQUE FLOAT 03MAR2006
VOLKSWAGEN 3,304 11/21/05
122
Gains
2
0
555
120
Subordinated Securities
Gains
Losses
BAYER HIPO 05MAI2014
0
100
BCP/1995-2005
0
2
CAIXA ECO MONTEPIO GERAL 12/06
0
1
0
103
875
Total Provisions
Valuation differences in variable rate securities break down as follows, as at 31/12/03 (’000 euros):
Shares - Residents
Gains
Losses
EDP
0
72
ESTORIL PRAIA FUTEBOL SAD
0
16
0
4
31
0
GALERIAS NAZONI
IMOVALOR
IMPRESA SGPS - NOM
0
65
INAPA
0
1.153
0
18
PT MULTIMÉDIA
43
0
REAL SEGUROS
0
129
REDITUS SGPS
0
336
RENDIMO
0
93
SEMAPA SGPS
0
21
SONAE SGPS
0
177
TERTIR - Terminais Portugal
0
175
74
2.259
Gains
Losses
418
720
BANIFUNDO ESTRATÉGIA
0
53
AGRESSIVA
1
0
BANIFUNDO ESTRATÉGIA CONSERVADORA
0
52
BANIFUNDO ESTRATÉGIA EQUILIBRADA
0
3.698
BANIFUNDO EURO ACÇÕES
1
0
BANIFUNDO EURO RENDA MENSAL
4
0
424
3.803
PORTUGAL TELECOM
Participation Units - Residents
BANIF IMOGEST
BANIFUNDO EURO TESOURARIA
123
Shares - Non-residents
AHOLD
ALCATEL
CAP GEMINI SA
DOW JONES EURO STOXX 50 GFR
EON AG
FRANCE TELECOM
INDITEX
KONINKLIJKE KPN NV
PHILIPS ELECTRONICS
ABBOT LABORATORIES
ALTERA CORP
AUTOMATIC DATA PROCESSING
AXCELIS TECHNOLOGIES
BANK OF AMERICA
BEA SYSTEMS INC
BED BATH & BEYOND
BELL SOUTH CORP
BIOGEN IDEC INC
BRASIL FAST FOOD CORP
DIGITALNET HOLDINGS INC
DOUBLECLICK INC
EBOOKERS PLC- ADR
EXPRESS SCRIPTS INC
EXXON MOBIL CORP
FIRST DATA CORP
FORD MOTOR COMPANY
GAP INC DELAWARE
GENERAL ELECTRIC CO
GENERAL MILLS INC
GILLETTE CO
JOHNSON & JOHNSON
K FORCE
L 3 COMMUNICATIONS HLDGS INC
LIBERTY MEDIA CORP
LOCKEED MARTIN CORP
MACROVISION
MARVELL TECHNOLOGY GROUP LTD
MERIDIAN BIOSCIENCE INC
MICROSOFT CORP
NABORS INDUSTRIES LTD
PENTAIR INC
PEPSICO INC
PFIZER INC
REHABCARE GROUP INC
SATYAM COMPUTER SERVICES
SCHLUMBERGER LTD
TAIWAN SAMICONDUCTOR - ADR
THE GAP INC
TIME WARNER INC
UNITEDHEALTH GROUP INC
UNIVISION COMMUNICATIONS
UTILITIES SELECT SECTOR SPDR
WAL-MART STORES INC
XILINX INC
124
Gains
Losses
27
29
3
0
0
6
19
6
0
0
2
4
0
3
0
4
0
3
2
1
0
3
4
2
3
11
9
9
2
5
1
6
1
10
8
4
6
0
0
0
5
6
3
0
3
8
12
12
0
4
11
7
11
1
2
2
0
0
0
4
3
0
0
0
5
1
0
0
1
0
2
0
1
0
0
0
111
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
2
2
0
0
0
2
0
0
0
0
2
0
0
0
0
0
0
0
280
137
Participation Units - Non-residents
Gains
Losses
0
13
24
0
BRAZILIAN BOND FUND
0
40
BRAZILIAN EQUITY FUND
0
16
BRAZILIAN MONEY MARKET FUND
12
0
CONSERVATIVE STRATEGY FUND
87
0
EUROPEAN BOND FUND
89
0
0
95
AGGRESSIVE STRATEGY FUND
BALANCED STRATEGY FUND
European Equity Fund
42
0
0
17
254
181
Gains
Losses
ATLANTES CERTIFICATES Nº1 CLASSE D NOTES (1)
0
1.588
ATLANTES CERTIFICATES Nº2 CLASSE D NOTES (1)
0
3.540
ATLANTIS MORTGAGE Nº1 (1)
0
1.678
0
6.806
EUROPEAN MONEY MARKET FUND
PORTUGAL EQUITY FUND
Other Securities
Country risk
116
25
41
Total Provisions
13.227
(1) These losses reflect provisions created for securitised credit (live credit, doubtful debts and overdue credit)
in accordance with Notice 3/95, of the Bank of Portugal.
c) and d)
As at 31/12/2003, marketable securities had an accounting value 68 thousand euros higher than would
derive from valuation on the basis of acquisition, 68 thousand euros.
The following associated amounts are recorded in Costs and Income:
Positive revaluation differences in trading portfolio
99
Negative revaluation differences in trading portfolio
0
99
125
1.31 Other assets
- Debtors
- Gold and other precious metals, coins, medals and other liquid assets
- Property not in own use
- Other investments
- Other financial fixed assets
Gross balance
Provisions for other assets, property not in own use and other financial fixed assets
Net balance
2003
2002
40.494
29.217
4.089
4.106
45.192
41.377
1.755
11.446
19.326
4.879
110.856
91.025
4.119
3.919
106.737
87.106
2003
2002
Other liabilities
- Sundry accounts payable
- Creditors
8.212
11.815
22.734
17.376
433
123
-
-
31.379
29.314
- Suppliers of fixed assets on leases
- Other liabilities
1.34 Information on the workforce of the Banif Group and professional categorics is given in note 12.
2003
2002
4.556
3.577
- Remuneration of employees
52.240
49.235
- Mandatory social charges
16.493
16.315
Personnel Costs
- Remuneration of Directors and Members of Audit Board
- Other charges
126
1.973
1.811
75.262
70.938
1.38 Breakdown of Income
This information is contained in note 11.
1.39 Other Operating Costs and Income and Extraordinary Gains
Other Operating Costs
- Donations and subscriptions
2003
2002
513
406
250
321
4.260
5.400
5.023
6.127
2003
2002
548
7
- Valuation costs
- Losses on disposal of fixed assets acq. through finance leases
- Others
Extraordinary Losses
- Losses on disposal of fixed assets
- Prior period losses
- Others
Other Operating Income
- Earnings from services
6.019
809
16.308
5.848
22.875
6.664
2003
2002
4.586
5.632
13.598
9.967
- Property income
642
237
- Gains on disposal of fixed assets acq. through finance leases
133
131
13.505
11.919
32.464
27.886
2003
2002
- Reimbursement of expenses
- Other Income
Extraordinary Gains
- Indemnity payments
98
89
- Profits on disposal of property
4.895
3.622
- Prior period profits
2.013
972
- Others
4.616
2.085
11.622
6.768
1.43 The accounts of Banif SGPS, SA are consolidated with those of its parent company, wich are in turn consolidated
by Sociedade Rentipar – Sociedade Gestora de Participações Sociais, SA, in its capacity as a Finance Company,
as classified on 24th December 1997, by the Bank of Portugal.
127
1.48 Securitization Operations
Like other Portuguese financial groups, the Banif Group carried out two securitization operations for personal
loans and leasing contracts, through Deutsche Bank, on 17 November 1999 and 10 May 2002, with the titles
“Atlantes No.1” and Atlantes No. 2”, as well as a mortgage credit securitization operation, with the title “Atlantes
Mortgage No. 1”, on 13 February 2003.
Operation “Atlantes no.1”, with a value of 200 million Euros, involved the transfer of personal loans by
Banif – Banco Internacional do Funchal, SA (approx. 57.5 million Euros), Banco Comercial dos Açores, SA
(approx. 32.1 million Euros) and Mundicre – Sociedade Financeira para Aquisições a Crédito, SA, today called
Banif Crédito, SA (approx. 25.5 million Euros), and also the transfer of leasing contracts by Mundileasing
– Sociedade de Locação Financeira, SA, today called Banif Leasing, SA (approx. 84.9 million Euros).
The Atlantes no. 1 operation has a maximum duration of 9.5 years and a revolving period of 2.5 years,
ending in May 2002, during which the organizations involved could transfer further personal loans and leasing
contracts each quarter, replacing loans and contracts which had already been repaid. This option for reinstatement
of the value of the credits and contracts transferred was subject to a series of conditions related to the characteristics
of these credits and contracts and to maintenance of default and legal proceedings within upper limits defied
in the respective documentation. It should be noted that this reinstatement option has been exercised by
Banif Group companies in full.
Operation “Atlantes no 2”, with a total value of 300 million Euros, involved the transfer of credits with a value
of 150 million Euros, and involved the transfer of personal loans by Banif (approx. 65,4 million Euros) and Banco
Comercial dos Açores (approx. 24,6 million Euros) and also the transfer of leasing contracts by Banif Leasing,
SA (approx. 60,0 million Euros).
The Atlantes no. 2 Operation also has a maximum duration of 9.5 years and a revolving period of 2.5 years,
and the Banif Group did not exercise the option to transfer further credits of up to 150 million Euros, in order
to reach the total operation value of 300 million Euros.
As with Atlantes no. 1, the organizations involved in Atlantes no. 2 may, during the revolving period,
transfer further personal loans and leasing contracts each quarter, replacing loans and contracts which had
already been repaid. This option for reinstatement of the value of the credits and contracts transferred
was subject to a series of conditions related to the characteristics of these credits and contracts and to maintenance
of default and legal proceedings within upper limits defied in the respective documentation.
In relation to the Atlantes no. 2 operation, and in keeping with the relevant legislation, a Credit Securization
fund was created with the name Fundo Atlantes Finance No. 2, currently managed by Navegator – Sociedade
Gestora de Fundos de Titularização de Créditos, SA, which acquired the personal loans and leasing contracts
from the transferors, and obtaining finance by selling participation units in the fund.
In the “Atlantes Mortgage No. 1” operation, with a total value of 500 million Euros and a maximum duration
of 33 years, only mortgage lending from Banif – Banco Internacional do Funchal, SA (“Banif”) was transferred.
In structuring the “Atlantes Mortgage No. 1” operation, a number of characteristics were included to confer
a significant degree of flexibility on the originator, namely the possibility of replacing, within certain limits,
the contracts where, for commercial reasons, Banif decides to amend the respective basic conditions
(amount, interest rate, index linking, spread, period, etc.), by others with the same characteristics as the contracts
replaced, and also the existence of a set-up date, at the end of 7 years, which amongst other things allows
for refinancing of the operation.
In relation to the “Atlantes Mortgage No. 1” operation, and under the legislation in force, a Credit Securitization
Fund was also created with the name Atlantes Mortgage Finance No. 1 Fundo, managed by Navigator – Sociedade
Gestora de Fundos de Titularização de Créditos, SA, which acquired the mortgage lending from the transferors,
and obtaining finance by selling participation units in the fund.
128
As a result of these operations, the risk associated with personal loans, leasing contracts and mortgage lending
granted by Banif Group companies was transferred in full to the securitization vehicle, in the case of the Atlantes
no. 1 operation, to Atlantes no., 1 Limited, based in Jersey, in the Channel Isles, in the case of Atlantes no. 2
to Atlantes Finance no. 2 Plc., based in Dublin, Ireland, and in the case of Atlantes Mortgage No. 1 to the
company Atlantes Mortgage No. 1 Plc, also based in Dublin, Ireland.
In order to obtain finance, the company Atlantes no. 1 Limited issued notes with a total value of 200 million
Euros, and a maximum duration of 9.5 years, guaranteed exclusively by these personal loans and leasing contracts,
and residual certificates, with a higher degree of subordination and unrated, with a nominal value of 16,768
million Euros, with the same maturity period.
In order to obtain finance, the company Atlantes Finance no. 2 Plc also issued notes with a total value of 160,325
million Euros, and a maximum duration of 9.5 years, guaranteed exclusively by these personal loans and leasing
contracts. This amount included 10,325 Euros in class D notes, with a higher degree of subordination and unrated,
which were acquired by Banif Group organizations.
The companies Atlantes No. 1 Limited and e Atlantes Finance No. 2 Plc have no other business interests other
than holding the personal loans and leasing contracts sold by the Banif Group, meaning that payment of
the capital and interest on the notes issued by these companies will depend solely on these investments and
on the amounts obtained from the issue of residual certificates and class D notes.
In order to obtain finance, the company Atlantes Mortgage No. 1 Plc. also issued notes with a total value
of 515.4 million Euros, and a maximum duration of 33 years, guaranteed exclusively by the mortgage lending
transferred. The amount included 15.4 million Euros of class E notes, with a higher degree of subordination
and unrated, which were acquired by Banif.
The companies Atlantes No. 1 Limited, Atlantes Finance No. 2 Plc and Atlantes Mortgage No.1 Plc. have no other
business interests other than holding the personal loans, leasing contracts and mortgage lending sold by
the Banif Group, meaning that payment of the capital and interest on the notes issued by these companies
will depend solely on these investments and on the amounts obtained from the issue of residual certificates,
class D notes and class E notes respectively.
The Banif Group cannot therefore be held liable for any default on the consumer credit, leasing contracts
and mortgage lending sold in excess of the balance sheet values of these residual certificates, class D notes
and class E notes recorded in its books.
In relation to the 200 million Euros in notes issued by Atlantes No. 1 Limited, the rating agencies Standard
& Poor´s and Fitch Ibca gave a rating of “AAA” to 182 million Euros (Senior Secured Floating Rate Notes), “AA”
to 10 million Euros (Mezzanine Secured 5,515% Notes) and “A” to 8 million Euros (Junior Secured Floating Rate
Notes). The notes rated “AAA” and “A” were issued at variable interest rates indexed to the Euribor 3 month
rate, whilst the notes rated “AA” were issued at a flat rate.
The company Atlantes Finance No. 2 Plc issued 150 million Euros in notes with the following ratings assigned
by Standard & Poor´s, Moody’s and Fitch Ibca: “AAA” for 139.5 million Euros (Class A Secured Floating Rate
Notes); “A”, “A1” and “A+”, respectively, for 7.35 million Euros (Class B Secured Floating Rate Notes);
and “BBB”, “Baa2” and “BBB”, respectively, for 3.15 million Euros (Class C Secured Floating Rate Notes).
All these rated notes were issued at variable interest rates indexed to the Euribor 3 month rate.
The company Atlantes Mortgage No. 1 Plc issued 500 million Euros in notes with the following ratings assigned
by Standard & Poor´s, Moody’s and Fitch Ratings: “AAA” for 462.5 million Euros (Class A Mortgage Backed
Floating Rate Notes); “A”, “A1” and “A”, respectively, for 22.5 million Euros (Class B Mortgage Backed Floating
Rate Notes); and “BBB”, “Baa3” and “BBB”, respectively, for 12.5 million Euros (Class C Mortgage Backed
Floating Rate Notes); and “BB”, “Ba2” and “BB”, respectively for 2.5 million Euros (Class D Mortgage Backed
Floating Rate Notes). All these rated notes were issued at variable interest rates indexed to the Euribor 3 month rate.
129
The remuneration on the residual certificates, class D notes and class E notes is variable and depends on
the performance of the credits transferred, corresponding to gains and residual profits recorded by the securitization
vehicles, paid quarterly and recognized as income in the operating account of the holding companies.
As at 31 December 2003, the nominal value of the Senior Secured Floating Rate Notes issued by Atlantes
No. 1 Limited was 76.8 million Euros. At the same date the nominal value of the Mortgage Backed Floating
Notes with a rating issued by Atlantes Mortgage No. 1 Plc was 472 million Euros. No redemption took place
of the 150 million Euros in rated notes issued by Atlantes Finance No. 2 Plc.
The rated notes issued by the said company were placed in full by Deutsche Bank AG and Credit Suisse First
Boston (Europe) Limited, in the international financial markets, meaning that no Banif Group company holds
them in their assets or traded in them up to 31 December 2003.
The residual certificates issued by Atlantes No. 1 Limited, the class D notes issued by Atlantes Finance No. 2 Plc.
and the Class E Notes issdued by Atlantes Mortgage No.1 Plc, on the other hand, are held in full by the Banif
Group, with a balance sheet value as at 31 December 2003 of approx. 4,932 million Euros, 8,304 million Euros
and 13,750 million Euros, respectively. Under the terms of a recent understanding of the Bank of Portugal
on the classification of credits transferred under securitization operations, as set out in Instruction no. 27/2000,
there existed in the Banif Group, as at 31 December 2003, total provisions allocated to these securities with
a value of 3,315 million Euros, 3,539 million Euros and 1,678 million Euros respectively, meaning that their
net balance sheet value stands at 1,617 million Euros, 4,764 million Euros and 12,071 million Euros, respectively.
In addition, and under the said Instruction of the Bank of Portugal, approximately 384.4 thousand Euros
was recorded as at 31 December 2003 as provisions for general risks.
It should also be noted that the residual certificates issued by Atlantes No. 1 Limited represent almost all
the cash reserve of the securitization vehicle (4,667 million Euros). In relation to the values of the Class D
and Class E Notes issued respectively by Atlantes Finance no. 1 Plc and Atlantes Mortgages no. 1 Plc, a substantial
part of the respective value also represents the cash reserves of the issuer companies, standing at 5.775
and 5.000 million Euros respectively.
In addition to the Banif Group organisations already referred to, taking part in these securitization operations
in the twofold capacity of transferors of the credits and servicers, on behalf of the companies Atlantes no. 1
Limited, Atlantes Finance no. 2 Plc and Atlantes Mortgage No.1 Plc, and Navegator – SGFTC, SA, in its capacity
as management company of the Atlantes Finance no. 2 and the Atloantes Mortgage No. 1 Funds, this operation
also involved participation by various organizations belonging to the Deutsche Bank Group and the Credit Suisse
First Boston Group, in the capacity as purchasers, agents, payer agents, cash administrators, parties to swap
contracts and trustees.
In return for administrative services for management and collection of the credits to which these securitization
operations relate, each Banif Group company transferring the loans or leasing contracts receives quarterly
an annual servicing fee of 1% of the credits transferred, for personal loans and leasing contracts, and 0.15%
per annum for mortgage lending.
In recording these transactions and the related flows, the Banif Group companies have adopted the accounting
principles and policies laid down by the Bank of Portugal, and as a result the assets transferred cease to be
recorded in the balance sheets of the transferor companies and are recorded in current accounts; the differences
between the nominal value of the credits transferred and the transfer value is recorded immediately under
income. Provisions have been created for the assets transferred in accordance with Notice no. 3/95 and Instruction
no. 27/2000 of the Bank of Portugal.
As at 31 October 2003, the date of the last rollover prior to 31 December 2003, the securitization vehicle Atlantes
no. 1, Limited had risks relating to:
(i) Personal loan contracts issued by Banif – Banco Internacional do Funchal, SA with a value of approx. 20.6
million Euros, with an average residual maturity of 22.7 months and an average weighted interest rate of 11.3%;
130
(ii) Personal loan contracts issued by Banco Comercial dos Açores, SA with a value of approx. 11.3 million Euros,
with an average residual maturity of 26.5 months and an average weighted interest rate of 11.825%;
(iii) Personal loan contracts issued by Mundicre (now called Banif Crédito – SFAC, SA) with a value of approx.
10.4 Million Euros, with an average residual maturity of 23.9 months and an average weighted interest rate
of 14.61; and
(iv) Leasing contracts issued by Mundileasing (now called Banif Leasing, SA) with a value of approx. 34.5 million
Euros, with an average residual maturity of 20.7 months and an average weighted interest rate of 7.023%.
As at 31 December 2003, the date of the last rollover, the securitization vehicle Atlantes Finance No. 2 Plc
had risks relating to:
(i) Personal loan contracts issued by Banif – Banco Internacional do Funchal, SA with a value of approx. 55.36
million Euros, with an average residual maturity of 36.4 months and an average weighted interest rate of 11.9%;
(ii) Personal loan contracts issued by Banco Comercial dos Açores, SA with a value of approx. 48.96 million Euros,
with an average residual maturity of 48.4 months and an average weighted interest rate of 12.88%; and
(iii) Leasing contracts issued by Mundileasing (now called Banif leasing, SA) with a value of approx. 45.6 million
Euros, with an average residual maturity of 28.8 months and an average weighted interest rate of 5.83%.
As at 31 December 2003, the securitization vehicle Atlantes Mortgage No. 1 Plc had risks relating to mortgage
loans issued by Banif – Banco Internacional do Funchal, SA with a value of approx. 458.3 million Euros, with
an average residual maturity of 274.84 months and an average weighted interest rate of 3.88%.
In relation to the Atlantes No. 1 and Atlantes no. 2 securitization operations, a total of four interest rate swaps
were contracted between Banif – Banco Internacional do Funchal, SA and Deutsche Bank AG, two for
each operation.
In relation to the Atlantes no. 1 operation, a floating rate for floating rate swap and a fixed rate for floating rate
swap were contracted, with notional values, as at 31 December 2003, of 34.07 and 32.79 million Euros respectively.
In relation to the Atlantes no. 2 operation, a floating rate for floating rate swap and a fixed rate for floating
rate swap were contracted, with notional values, as at 31 December 2003, of 40.89 and 109.1 million
Euros respectively.
Both of the fixed rate for floating rate swaps are covered by two other swaps in the other direction.
In relation to the Atlantes Mortgage Nol. 1 operation, two interest rate swaps were contracted between
Banif – Banco Internacional do Funchal, SA and Credit Suisse First Boston International, both of them floating
rate for floating rate, with notional values, as at 31 December 2003, of 27.2 and 444.7 million Euros respectively.
1.49 Retirement and Survivors’ Pension
In accordance with the Vertical Collective Employment Agreement for the Banking Sector,
Banif – Banco Internacional do Funchal, SA, has accepted full liability for the payment of retirement,
disability and survivors’ pensions for its employees or their families, to complement the pensions paid by
the national social security system.
On 7 December 1989, with a view to financing its liabilities in this field, Banif – Banco Internacional do Funchal,
SA, constituted an independent pension fund, in keeping with Decree-Law no. 396/86, of 25 November.
This pension fund is managed by Banif Açor Pensões – Sociedade Gestora de Fundos de Pensões, SA.
From 2001 onwards, these liabilities were hedged and the cost of contributions to the pension fund recognized
in accordance with the new rules established in Notice 12/2001 of the Bank of Portugal, of 23 November.
As at 31 December 2003, the fund covered a population of 41 pensioners and 1,381 employees.
131
Liabilities and coverage as at this date:
Liabilities
Current value of pensions payable
7.860
Current vale of liability for past service
23.103
Total
30.963
Coverage of Liabilities
Value of pension fund
Mathematical provision for income insurance
Total
32.561
1.536
34.097
The current value of liabilities for future services, as at 31 December 2003, is 20,617thousand euros.
In the financial year of 2003, the Bank recognized the following costs of hedging liabilities for retirement
and survivors’ pensions:
Cost of current service
+ 1.152
Cost of interest
+ 2.069
Expected income on Fund assets
- 1.932
Total
1.289
As a result of an alteration of the pension plan in the course of the year, the plan for depreciation of liabilities
for the past services of current employees as at 31 December 1994, with a presumable date of retirement prior
to 31 December 1997 , as provided for in para. 1 c) of Notice 12/2001 of the Bank of Portugal, which at
31 December 2003 had stood at 2,757.8 thousand euros, was extinguished on the same date because the said
liabilities were fully covered by the value of the Fund.
As at 31 December 2003, the Bank recorded in a specific account for Floating Values, up to the limit of the
“corridor” fixed in para. 1 e) of no. 2 of Notice no. 12/2001, an accrued total of 3,409.6 thousand euros.
The value of actuarial losses occurred in the period, 720.4 thousand euros, was recorded in the respective account
for deferred costs plus the accrual from the “Floating Values” balance for the previous year, amounting to
–38.2 thousand Euros, and with the value of cuts and settlements, amounting to 8,494.4 thousand Euros,
was recorded in the respective account for deferred income.
In the course of 2003, the Pension Fund paid out pensions with a value of 518 thousand euros, and received
contributions of 363 thousand euros, paid in cash.
The total value of property making up the assets of the pension fund and which are used, under leases,
either by the Bank or by companies in the same group, totals 6,696 thousand euros.
132
The main actuarial and financial assumptions are:
Actuarial valuation method:
Unit Credit Projected (UCP)
Discount rate:
6,00%
Expected return on fund assets:
6,00%
Expected rate of growth in salaries and other benef.:
3,00%
Expected rate of growth in pensions:
2,00%
Mortality table:
TV 73/77
Disability table:
EVK 80
Not applied
Turnover table:
Type of decrements uses:
Disability 3) art. 7 Notice 12/2001 200112/2001 12/2001
Rates effectively recorded during the financial year:
Rate of return on value of pension fund:
6,31%
Rate of growth in salaries and other benef.:
5,56%
Rate of growth in pensions:
11,31%
Mortality table:
1,30‰
Disability table:
0,70‰
Turnover table:
7,58%
In addition to the pension fund, there are two insurance contracts for life annuities to cover the retirement
pension of one pensioner, taken out with insurance companies outside the group. The pension insured is fixed,
paid 14 times a year, and is 40% reversible on the death of the pensioner under the terms of the pension plan,
the respective annual increments being borne by the pension fund.
In accordance with the Collective Employment Agreement for the Banking Sector, Banco Comercial dos Açores,
SA has accepted liability for payment of retirement, invalidity and survivors’ pensions to employees or their
families, insofar as they are not covered by the national social security system.
On 30 December 1988, with a view to financing its liabilities in this field, Banco Comercial dos Açores, SA,
constituted an independent pension fund, in keeping with Decree-Law no. 396/86, of 25 November. This pension
fund is managed by Banif Açor Pensões – Sociedade Gestora de Fundos de Pensões, SA.
From 2001 onwards, these liabilities were hedged and the cost of contributions to the pension fund recognized
in accordance with the new rules established in Notice 12/2001 of the Bank of Portugal, of 23 November.
As at 31 December 2003, the fund covered a population of 184 pensioners and 439 employees.
133
Liabilities and hedges as at this date:
Liabilities
Current value of pensions payable
28.393
Current value of liability for past service
31.271
Total
59.664
Hedge for Liabilities
Value of pension fund
Balance Repayments Plan (para. 1 c) of Notice 12/2001)
Accounts payable
Total
53.614
5.406
644
59.664
The payments plan provided for in para. 1 c) of Notice no. 12/2002 of the Bank of Portugal, relates to the
shortfall in financing for liabilities for past service of employees in service as at 31 December 1994, expected
to retire after 31 December 1997, and which is still recognized as a cost and financed in according with this
payment plan, with fixed instalments over 20 years, ending on 31/12/2014.
The accounts payable correspond to the non-financed part of liabilities, in accordance with para. 5 of Notice
12/2001, which are recognized as a liability, under account 305 - Other Accounts Payable – Contributions
to Pension Fund.
The current value of liabilities for future services, as at 31 December 2003, is 24,094 thousand euros.
In the financial year of 2003, the Bank recognized the following costs of hedging liabilities for retirement
and survivors’ pensions:
+ Cost of current service
1.286
+ Cost of interest
3.381
- Expected income on Fund assets
3.022
+ Balance Repayments Plan (para. 1 c) of Notice 12/2001)
320
+ Cost of early retirement programmes
1.844
Total
3.809
In accordance with para. 2 1) e) of Notice 12/2001, the Bank recorded actuarial gains for the period, of 316
thousand Euros, in the account for Floating Values, the balance of which stood at 4,342 thousand Euros, as at
31 December 2003, within the limits of the “corridor”.
In the course of 2003, the Pension Fund paid out pensions with a value of 1,993 thousand euros, and received
contributions of 3,309 thousand Euros, of which 2,454 thousand Euros related to current contributions and
855 related to extraordinary contributions. Contributions made in cash totalled 1,609 thousand Euros,
and contributions made by the allocation of property stood at 1,700 Euros. The Bank uses, under lease, property
constituting pension fund assets with a value of 5,584 thousand Euros.
134
The main actuarial and financial assumptions are:
Actuarial valuation method:
Unit Credit Projected (UCP)
Discount rate:
6,00%
Expected return on fund assets:
6,00%
Expected rate of growth in salaries and other benef.:
3,00%
Expected rate of growth in pensions:
2,00%
Mortality table:
TV 73/77
Disability table:
EVK 80
Turnover table:
Type of decrements uses:
Not applied
Disability 3) art. 7 Notice 12/2001 200112/2001 12/2001
Rates effectively recorded during the financial year:
Rate of return on value of pension fund:
5,74%
Rate of growth in salaries and other benef.:
4,73%
Rate of growth in pensions:
1,82%
Mortality table:
0,00%
Disability table:
0,48%
Turnover table:
2,47%
135
1.50 Financial Holdings
Holdings
Nº Shares
Ambelis
Cabo TV Madeirense SA
Valuation
Acquisition
Value
Market
Value
Presumable
Trading Value
Accrued
Provisions
Net
Gains
Losses
400
19.952
-
0
19.952
0
0
0
87.860
503.980
-
2.672.557
0
503.980
2.168.577
0
Centro de Emp. e Inovação da Madeira, Lda
800
3.990
-
9.319
0
3.990
5.329
0
Finangest
526
535.230
-
5.162
179.913
355.317
0
350.155
103.436
444.898
-
995.044
0
444.898
550.146
0
24.335
497.370
-
746.055
0
497.370
248.685
0
S.I.B.S. – Soc. Interbancária de Serviços, SA
UNICRE – Cartão Internacional de Crédito, SA
SUBLOC – locação de submarinos, SA
2.500
25.000
-
22.192
10.206
14.794
0
2.808
Via Litoral, SA
4.750
791.548
-
1.034.539
101.855
689.693
141.136
0
Atlântico Clube Int. Férias Açores
250
1.247
-
0
1.247
1.247
0
0
Cabo TV Açoreana, SA
66.000
355.543
-
533.314
0
355.543
177.771
0
Coliseu Micaelense, SA
83
50
-
75
0
50
25
0
Teatro Micaelense, SA
83
50
-
75
0
50
25
0
Norma Açores – Soc. Est. Apoio Des. Reg., SA
10.000
49.880
-
74.820
0
49.880
24.940
0
SOGEO – Soc. Geotérmica dos Açores, SA
24.529
122.350
-
183.525
0
122.350
61.175
0
Transinsular (Açores) – Transp. M. Insul., SA
2.000
10.974
-
16.461
0
10.974
5.487
0
11
10.536
-
21.562
0
10.536
3.839
0
206
189
-
284
0
189
1
0
S.W.I.F.T. Soc. Worldwide Interbank
Financial Telecomunications, SC
Euronext N.V.
NASDAQ Stock Market, Inc
2.500
26.207
-
39.311
0
26.207
13.104
0
Habiprede
5.000
1.250.000
-
1.250.000
0
1.250.000
0
0
The valuation criteria used to account for financial holdings are those established in Notice 3/95, of 30 June
and Notice 4/2002, of 30 June;
The presumable vale of transaction is determined by multiplying the corresponding part of the net worth of
the company in question by a factor of 1.5.
There are no risk reduction instruments hedging the devaluation risks of these investments.
136
1.51 Other Complementary Disclosures Relating to the Consolidated Accounts
a) Cash and Funds with Central Banks
- Portuguese notes and coins
- Foreign notes and coins
- Current accounts with the Bank of Portugal
2003
2002
29.107
30.033
4.590
8.944
243.359
107.292
277.056
146.269
2003
2002
b) Sight Deposits with Banks
Deposits with Banks in Portugal
- Current Accounts
- Accounts receivable
- Other deposits
6.574
5.781
37.872
72.300
-
-
44.446
78.081
2003
2002
39.452
33.138
1.433
2.280
Deposits with Banks abroad
- Current accounts
- Accounts receivable
40.885
35.418
Gross balance
85.331
113.499
43
24
Net balance
85.288
113.475
- Provisions
c) Issue premiums
Issue premiums expressed in the balance sheet of Banif SGPS, AS, the company which resulted from the change
in the name of Banif – Banco Internacional do Funchal, SA, as referred to in the introductory note to chapter
VII, and relate to issue premiums on capital increases by public deed of 26 July 1988, 31 January 1989,
02 September 1996, and 29 September 1998, of, respectively, 19,952 thousand euros, 12,470 thousand euros,
2,494 thousand euros, 23,658 thousand euros and from incorporation of reserves of 360 thousand euros
in the share capital, as a result of redenomination in euros.
d) The company has no outstanding debts to the State, the social security authorities or other pubic bodies.
2. The valuation criteria used for the different items in the consolidated accounts, and the methods for calculating
provisions and depreciation, together with conversion method used for figures originally expressed in foreign
currency, are detailed in point 1.3.
137
3. Goodwill
Calculations effected to determine “Goodwill”
The account for “Goodwill” in the consolidated balance sheet reflects the net contribution to the Banif Group
of companies included by means of the full consolidation method, corresponding to the difference between
the book value of the holding in the share capital of each company and the proportional share in the respective
Shareholders’ Funds and Retained Earnings, determined when first consolidated.
Goodwill breaks down as follows (in ‘000 euros):
Goodwill
Company - Affiliate
Gross
Assets
Depr.
Net
Liabilities
188
Banif Leasing - Soc. Locação Fin.
FINAB– Int. Corp. Management Services. Ltd
3
Banif Securities Holding. Inc
2
4.722
Banco Comercial Açores
3.553
Banif Banco de Investimento. SA
755
755
0
Banif (Brasil)
21
3
18
Banif Information Technology Holdings
21
6
15
1
0
1
1.574
493
1.081
20
18
2
Banif Financial Services
Banif Açores SGPS
Banif Imobiliária. SA
Sociedade Imobiliária Piedade. SA
Banco Comercial dos Açores
200
40
160
15.355
5.793
9.562
Banif Crédito
Banif Primus
Banifundos
Com. Açores San José
9
8
1
8.329
3.211
5.118
36
4
32
26
3
23
26.347
10.334
16.013
8.468
The Goodwill for Banif Açores SGPS, is determinated as follows:
Detail of Goodwill in Banif (Açores). SGPS. SA
Share Capital
Reserves
138
25.075
1
Retained earnings
-6.956
Total
18.120
New Goodwill
a) 100% of the Shareholders’ Funds
in Banif (Açores), SGPS, S.A.
b) Book value of holding in Banif (Açores),
SGPS, S.A.
18.120
- 24.932
-6.812
c) Write-off of existing provisions for
Holdings in Related Companies
4.846
-1.966
- 100% results for the period of Banif (Açores),SGPS, SA
- Current Goodwill
- Difference from Goodwill on first consolidation
1.966
0
1.413
This differences results from the reorganization of the Banif Group, which resulted in the sale of the holdings of Banif
(Açores), SA in Banco Comerical dos Açores, S.A. and Companhia de Seguros Açoreana, SA, meaning that the Goodwill
on the 1st consolidation on that date should be considered. Movements were accordingly made in the equity accounts,
as detailed below:
- Share capital at the date of the 1st Consolidation
- Retained Earnings at the date of 1st Consolidation
25.075
- 641
24.434
- Investment cost
23.021
1.413
- Share capital at the date of 2nd Consolidation
25.075
- Retained earnings at the date of the 2nd Consolidation
-7.567
17.508
- 10% of Shareholders’ Funds
1.750
- Investment cost
1.911
161
Total
1.574
The Goodwill for Banif Açores SGPS will be depreciated over 20 years, with depreciation of 78 thousand Euros imputed
to the financial year of 2003.
139
The Goodwill in Banco Banif Primus, SA was calculated as follows:
Shareholders’ Funds Banco Banif Primus, SA
- Share capital at date of 1st consolidation (51%)
17.264
- Reserves at date of 1st consolidation (51%)
358
- Retained earnings at date of 1st consolidation (51%)
- 97
- Result for the period at date of 1st consolidation (51%)
612
18.137
- 51% of Shareholders’ funds
9.249
- Investment cost
16.172
Goodwill (1st consolidation)
- Share capital at date of 2nd consolidation (51%)
- Reserves at date of 2nd consolidation (51%)
- Retained earnings at date of 2nd consolidation (51%)
- Result for the period at date of 2nd consolidation (51%)
-
16.336
416
1.239
17.991
2.699
- Investment costs
3.739
- Fluctuation in values
86
Goodwill (2nd consolidation)
- Share capital at date of 3rd consolidation (51%)
- Reserves at date of 3rd consolidation (51%)
1.126
11.009
855
- Retained earnings at date of 3rd consolidation (51%)
- 530
- Result for the period at date of 3rd consolidation (51%)
1.272
-
12.606
504
- Investment costs
796
- Fluctuation in values
- 106
Goodwill (3rd consolidation)
140
6.923
186
- Share capital at date of 4th consolidation (5%)
- Reserves at date of 4th consolidation (5%)
9426
729
- Retained earnings at date of 4th consolidation(5%)
1191
- Result for the period at date of 4th consolidation (5%)
-251
567
- Investments cost
661
Goodwill (4th consolidation)
94
Total Goodwill
8.329
The Goodwill in Banco Banif Primus, SA will be depreciated over 10 years, with depreciation of 833 thousand euros
imputed to the financial year of 2003.
Goodwill in Banco Comercial dos Açores, SA was calculated as follows:
Shareholders’ funds in Banco Comercial dos Açores, SA
Share capital
51.892
Reserves
7.707
Revaluation reserves
2.190
Revaluation diff. equity method (liabilities)
2.721
Retained earnings
17.353
TOTAL
81.863
Determination of New Goodwill
a) 99.57% of the shareholders’ funds in Banco Comercial
dos Açores, S.A. (79,143 thousand euros X 99.57%)
78.803
b) Book value of holding in Banco Comercial dos Açores, S.A.
-70.622
c) Goodwill (Current)
8.181
Goodwill - 1st Consolidation (Positive)
15.355
Goodwill – 2nd Consolidation
Increase in holding (74.202 thousand euros X 5.56%)
4.126
Investment cost
3.284
New goodwill (negative)
842
141
Goodwill – 3rd consolidation
Increase in holding (74.202 thousand euros X 5.77%)
4.281
Investment cost
4.062
219
In accordance with International Accounting Standard 22, negative goodwill was recorded under earnings in 2002.
Goodwill – 4th Consolidation
Increase in holding (89.574 thousand euros x 25.59%)
22.922
Investment cost
15.898
7.024
Amount recognised under negative goodwill
3.553
Amount recognised in income for the period.
3.471
The new negative goodwill of 2,552 thousand euros corresponds to future losses relating to the extraordinary
contribution to pension funds in relation to early retirement and insufficient coverage of liabilities for the past services
of current employees as at 31.12.1994, in other words, it will be recognised as an income when the future expenses
are recognised. The sum of 3,471 thousand euros is the surplus of the new goodwill recorded as income for the
period.
The goodwill for Banco Comercial dos Açores, SA will be depreciated over twenty years, with the sum of 767 thousand
euros being allocated to the financial year of 2003.
Goodwill in Banif Crédito SFAC, SA was calculated as follows:
Current Goodwill
Goodwill 1st consolidation
0
9
9
The goodwill for Banif Crédito SFAC, SA will be depreciated over ten years, with the sum of 0.9 thousand euros being
allocated to the financial year of 2003.
Minority Interests
The Minority Interests accounts refers to the proportional value of the shareholders’ funds in each of the companies
included in the consolidated accounts by the full consolidation difference, corresponding to the part not held by the
Banif Group.
142
As at 31 December 2003 this account breaks down as follows:
Subsidiary
Minority Interests
Banif Primus
2.247
Banif Cayman
12.710
Banco Comercial dos Açores
2.055
FINAB
14
-15
Banif Securities Holdings
200
Econofinance
-82
57
Banif Finance
25.000
42.186
Revaluation Differences – Equity Method
The account for Revaluation Difference – Equity Method results from the difference between the book value of the
holding in the companies revalued under the equity methods and the value of the share they represent in the respective
shareholders’ funds.
The amount recorded in the consolidated balance sheet of the Banif Group for this item breaks down as follows (‘000
euros):
Equity Method Differences
Banif Açor Pensões, SA
Companhia de Seguros Açoreana, SA
Gross
Assets Deprec.
Net
Liabilities
34
10
24
22
-
-
-
3.579
4
3
1
-
Banif Rent
2.032
-
2.032
28
Investaçor
2.070
13
2.057
3.629
Espaço Dez - Sociedade Imobiliária, Lda
Revaluation differences – equity method are depreciated over the anticipated useful of the investments, which has
been set at 10 years.
4. Banif Group structure
The structure of the Banif Group, the respective organizational chart and changes in the course of 2003 are described
in the chapter on Banif Group Operations of this Report.
143
5. Affiliated/Related Companies included in the consolidated accounts
Name and Registred Offices
Percentage holding of Banif Group
Affiliates holding the direct interest
Banif Imobiliaria. SA
Av. José Malhoa. Lote 1792
Lisboa
100%
Banif SGPS.SA
100%
Soc. Imobiliaria Piedade. SA
Lisboa
100%
Banif Imobiliaria. SA
100%
Banifserv. ACE
Rua de João Tavira. 30
Funchal
100%
A.C.E.
Lisboa
100%
Banif SGPS.SA
Funchal
100%
Banif SGPS. SA
100%
Banif-Banco Internacional do Funchal. SA
Funchal
100%
Banif Comercial SGPS.SA
100%
Banif (Açores) SGPS. SA
Edifício Sol Mar - Ponta Delgada
100%
Banif-Banco Internacional do
Funchal. SA. SA
100%
Banco Comercial dos Açores. SA
Edifício Sol Mar - Ponta Delgada
99.57%
Banif Comercial SGPS.SA
Comercial dos Açores. Inc
1645. Pleasant Street - Fall River
Massachusetts - EUA
99.57%
100%
Comercial dos Açores. Inc.
2B 33rd North Street - San José
Califórnia . EUA
99.57%
100%
(*)
84.80%
15.20%
99.57%
Banif Leasing. SA
Av. Columbano Bordalo Pinheiro Lt A – 81 2º Lisboa
100%
100%
Banif Crédito SFAC, SA
Av. Columbano Bordalo Pinheiro Lt A – 81 2º Lisboa
100%
100%
Banco Banif Primus. SA
Av. República do Chile. 230-9º
75%
75%
75%
100%
Banif Primus Asset Management
75%
90%
10%
Lisboa
100%
100%
Banifundos, SA
Lisboa
100%
100%
Banif Imo. SA
Lisboa
100%
100%
Banif (Cayman) Ltd
P.O. Box 30124 Georgetown
Grand Cayman
100%
100%
FINAB
Genesis Building. 3rd Floor
PO Box 32338-SMB
Georgetown. Cayman Islands. BWI
60%
Banif (Cayman) Ltd
60%
Genesis Building. 3rd Floor
PO Box 32338-SMB
Georgetown. Cayman Islands. BWI
85%
85%
144
Suite 1712
Miami. Fl. 33131 – USA
Banif (Brasil). Ltd
Alameda Jaú nº 389.14º sala 141
São Paulo – Brasil
85%
100%
100%
Banif-Banco Internacional do Funchal. SA
20%
80%
rd
Genesis Building-3 Floor
Grand Cayman
83.22%
Banif Investimentos SGPS . SA
Banif (Cayman) Ltd
Comp. Seguros Açoreana. SA
30%
10%
30%
20%
Econofinance
70.74%
85%
Banif Finantial Services Inc
Suite 1712
Miami. Fl. 33131- USA
100%
100%
Suite 1712
Miami. Fl. 33131- USA
100%
100%
Banif Seguros. SGPS
Lisboa
100%
Banif SGPS. SA
100%
Newcapital
Lisboa
100%
100%
Banif International Asset Management
Genesis Building, 3rd Floor
P.O. Box 32338-SMB, Grand Cayman
Cayman Islands
100%
100%
(*) A Banifserv – ACE is a joint venture by the following Banif Group companies:
50.0%
Banco Comercial dos Açores, SA
25.0%
10.0%
Mundicre – Sociedade Financeira para Aquisições a Crédito, SA
2.5%
Banif Banco de Investimento, SA
2.5%
Banif Patrimónios – Soc. Gestora de Patrimónios, SA
2.5%
Banifundos Soc. Gestora de Fundos de Inv. Mobiliários, SA
2.5%
Banif Investimentos, SGPS, SA
5.0%
145
6. Affiliated/Related Companies Excluded from the Consolidated Accounts
Companhia Seguros Açoreana. SA
Largo da Matriz. 45-52
Ponta Delgada
62.72%
Banif Seguros. SGPS. SA
52.31%
14.07%
Banif Açor Pensões. SA
R. Dr. José Bruno T. Carreiro
Edifício BCA - 9º- Ponta Delgada
77.69%
Companhia de Seguros Açoreana. SA
47.57%
10.81%
29.19%
Espaço Dez
Av. Barbosa du Bocage. 83 a 85 - 5º
Lisboa
Banif Rent
Lisboa
25%
25%
70%
70%
7. Companies Included in the Consolidated Accounts by the Proportional Method
No companies have been included in the consolidated accounts by the proportional method.
8. Associated Companies
There are no companies, other than those referred to in points 5 and 6, where the direct or indirect holding
is greater than 20%.
9. The consolidated balance sheet includes 1,573,060thousand euros in debts where the residual maturity is greater
than 5 years; none of these were contracted by the Banif Group.
10. Financial commitments accepted by the Banif Group, as reflected in memorandum accounts and not written off
in the consolidation process, total 1,227,000 thousand euros.
Of these, 5,406 thousand euros relate to commitments accepted in relation to payment of pensions.
146
11. Breakdown of income statement accounts by business areas and geographical markets
Business Areas
Interest and Equivalent Income
Portugues
Portugues
439,235
102.150,404
109.413,833
94.384,507
56.926,981
439,235
7.765,897
52.486,852
4.628,563
590,631
3.370,314
27.018,654
75,000
357,465
661,404
2.801,454
Interest and Equivalent Costs
Financial Margin
Commissions and other operating profits
Commissions and other operating costs
Earnings from securities
Retail banking
25.255,242
Profits on financial operations
101.761,874
Losses on financial operations
88.786,463
Other taxes
Brokerage (retail)
47,520
440,883
25,834
420,542
4.935,279
45.788,834
2.683,076
76.283,310
0
0
0
0
Personnel Costs
1.680,226
13.338,520
781,594
22.234,604
Other Administrative Overheads
1.050,065
9.742,354
570,870
16.240,021
Cash Flow
2.204,988
22.707,960
1.330,612
37.808,686
Adjustments to Provisions
15,972
7.603,667
5.412,823
Provisions for the Year
52,662
3.968,088
20.593,770
325,813
3.355,367
196,614
5.586,677
1.842,485
22.988,171
1.133,999
17.041,061
1.842,485
22.988,171
1.133,999
17.041,061
113,267
1.413,198
69,713
1.047,599
1.729,218
21.574,973
1.064,286
15.993,462
Total Income
Depreciation in the Period
Operating Result
Results before Taxes
Taxes corporation
Net Income
147
Commercial Banking
Payments and Settlements
Custody
Asset Management
Other
Reconciliation
Total
16.771,772
1.718,328
74.520,522
306.973,050
76.502,070
2.670,714
74.572,097
155.912,175
-952.386
-51.575
151.060,875
91.269,702
27.701,159
13.592,429
646.638
371.199
9.736,066
11.532,366
76.113,289
5.319,454
571,733
14.000
36.091
6.082,130
2.655,852
13.263,079
23.782,071
1.473,171
101.761,874
88,784,463
1.083,869
124,176
6.033
3.196
25.764
112.567,539
12.896,521
626.605
331.912
2.675,786
1
0
0
0
0
32.738,221
3.703,546
182.533
96.688
505.923
31.407,514
2.743,954
133.321
70.620
493.708
7.456.853
54.995,574
48.421,804
6.449,020
310.751
164.605
1.676,154
25.150,157
95.924,422
3.612,370
1.963,144
19.699,895
5.018,208
2.177,816
32.607,010
75.261,855
7.818,449
60.795,695
24.322
1.950,389
19.577,163
140.282
- 4.480,314
28.362,726
7.139,145
952,918
45.917
17.938,140
5.496,102
264.834
17.938,140
5.46,102
264.834
140.282
-10.264,310
1.102,747
337,873
16.281
8.624
0
16.835,393
5.158,229
248.553
131.658
-10.264,310
27.133,301
-5.783,996
148
226.181,851
35.251,459
-5.783,996
27.133.301
29.467,463
4.109,301
27.113,301
25.358,162
Geographical Markets
Portugal
Rest of EU
Rest of Europe
North America
Interest and Equivalent Income
328.018,153
36.107,494
Interest and Equivalent Costs
187.646,875
31.199,902
Financial Margin
140.371,278
4.907,592
Commissions and other operating profits
78.763,501
4.659,725
Commissions and other operating costs
10.799,916
4.474,916
Earnings from securities
24.216,481
79.953
Profits on financial operations
55.958,012
1.253,607
Losses on financial operations
42.652,365
483.269
1.026,943
300.446
244.830.048
5.642,246
Personnel Costs
69.662,390
2.208,902
Other Administrative Overheads
55.381,541
2.178,354
119.786,117
1.254,990
Adjustments to Provisions
20.372,290
1.290,752
Provisions for the Year
58.640,728
2.154,967
Depreciation in the Period
19.157,741
209.443
Operating Result
62.359,938
181.332
-5.156,562
-521.508
Results before Taxes
57.203,376
702.840
3.887,021
8.557
53.316,355
694.283
Other taxes
Total Income
Cash Flow
Corporation Taxes
Net Income
149
América
Latina
Latin America
Inglês
Asia
Africa
Rest of the World
Other
Reconciliation
Total
17.367,895
74.520,522
306.973,020
11.637,493
74.572,097
155.912,173
5.730,402
-51.575
151.060,847
4.22,429
11.532,366
76.113,286
644.100
2.655,852
13.263,080
968.805
23.792,068
1.473,171
44.550,258
101.761,877
45.650,830
88.786,464
850.427
2.177,816
8.326,537
32.617,007
226.181,824
75.261,857
3.390,565
4.892,530
7.456,853
54.995,572
43.442
25.160,154
95.924,395
1.963,144
19.699,898
60.795,695
19.577,149
209.965
-166,523
27.123,298
-5.783,986
-105.916
-60.607
27.123,298
150
29.467,463
4.109,301
213.723
-274.330
35.251,449
27.123,298
25.358,162
12. At year end 2003, the workforce of the Banif Group divided into the following professional categories:
2003
2002
Senior management
165
150
Tecnical Staff
546
478
Middle ranking staff
Administrative
Others
Average annual force
390
377
1085
1.130
40
50
2.226
2.185
2.217
2.159
The workforces of Companhia de Seguros Açoreana, SA, Banif Açor Pensões, SA and Banif Rent (not included in the
above figures) break down as follows:
Banif Rent
2003
2002
581
590
2
2
7
-
590
592
13. Banif Group companies are consolidated by the proportional method.
14. Tax Burden
Differences between taxation imputed to the financial year and previous two financial years and tax actually paid in
relation to the same:
Tax
Period
Difference
Imputed
Paid
2001
5.313
5.047
266
2002
9.213
4.933
4.280
2003
4.109
2.736
1.373
15. Remuneration of Directors and Auditors
Total remuneration paid to the directors and auditors, considering the liabilities of directly and indirectly controlled
companies in relation to directors and auditors, stood at 3,262 thousand euros as at 31 December 2003.
The directors of Banif SGPS, S.A. earned total remuneration of 2,636 thousand euros, for performance of duties as
directors of Banif (Cayman), Ltd, Banco Comercial dos Açores, SA , Companhia de Seguros Açoreana, S.A., Banif
Crédito SFAC, SA, Banif Leasing, SA, Banif – Banco de Investimento, SA, Banifundos, SA, Banif – Banco Internacional
do Funchal, SA and Banif SGPS, SA.
151
The members of the Audit Board of Banif (excluding the respective official auditors) earned remuneration of 75
thousand euros for their duties as auditors of Banif – Banco Internacional do Funchal, SA, and Banco Comercial dos
Açores, S.A..
There are liabilities of 5,326 thousand euros deriving or contracted in relation to retirement pensions for former
members of the above boards.
No credits have been granted to the members of these boards, other than those resulting from personnel policies and
for welfare reasons.
16. No credits have been granted to the members of these boards, other than those resulting from personnel policies
and for welfare reasons.
17. a) Formation of Consolidated Results
The consolidated result of the Banif Group was determined as follows:
2003
2002
Banif SGPS, SA
12.443
( 1.083 )
12.219
1.199
(9)
3.235
( 25 )
( 10 )
23.190
14.245
5.040
5.575
6.718
5.092
2.271
1.244
1.966
611
354
105
81
11
Banif (Cayman) Ltd
7
( 12 )
( 26 )
( 86 )
Banif Imo, SA
671
206
Banif Imobiliária, SA
313
17
Banif (Brasil), SA
Banif Financial Services Inc
( 69 )
( 40 )
Banif Mortage Company
156
( 33 )
Banco Banif Primus
( 237 )
689
( 227 )
( 57 )
( 351 )
( 622 )
87
26
Com. Açores – Fall River
(6)
(8)
Com. Açores – San José
0
0
( 105 )
( 118 )
116
( 123 )
Banifundos
Econofinance SA
Espaço Dez
FINAB
Banif Crédito SFAC, SA
152
1
2
406
489
2003
89
435
( 14 )
( 20 )
Banif Leasing SA
Sociedade Imobiliária Piedade
Banif Finance
Banif Rent
2002
( 45 )
-
( 179 )
-
17
-
5
-
64.857
30.969
Newcapital
Banif Inter. Assent Management
Adjustements to net results of the Group
Write-off and reinstatement of provisions
Write-off of dividends and other intra-group operations
Depreciation of goodwill
Consolidated Result
( 1.418 )
( 793 )
( 36.368 )
( 8.840 )
( 1.713 )
( 468 )
( 39.499 )
( 10.101 )
25.358
20.868
b) In view of the Regulations of the Council and the European Parliament no. 1606/2002, of 19 July 2002,
on the application of International Accounting Standards, the Banif Group conducted in 2003l with the support
of an independent external consultant, a thorough survey of divergences between the Group’s current accounting
practices and International Accounting Standards (IAS/IFRS). Also within the scope of this survey, a High Level
Action Plan was drawn up to serve as the basis for detailed implementation plans for adoption of the IAS/IFRS
by the Banif Group.
c) As duly reported in the notes to the financial statements for 2002, the audit and inspection office of
Banif – Banco Internacional do Funchal, S.A. detected irregularities, in February 2003l, at one of the Bank’s
branches. These were investigated in full during 2003, in respect of the amounts involved and the damage to the
Bank, which stood at 10.8 million Euros, after receiving compensation of 5 million Euros under the Bank’s insurance
policy for this type of risk.
The audit and inspection office at Banco Comercial dos Açores also detected a fraud in October 2003, involving
irregularities committed by a branch manager. After investigation this was found to have caused losses of
4.2 million Euros, which in this case were not covered by any insurance policy.
These frauds at Banif and BCA were fully resolved by the end of 2003, with a total loss calculated at 15 million
Euros, which has also been recorded in full in the account for extraordinary losses in the Banif Group Income
Statement for 2003, as well as in the operating accounts of the respective banks.
It should be noted that the frauds have been reported to the relevant criminal police authorities.
153
2.1 Banif SGPS (Individual Accounts)
(Thousand Euros)
Dec - 03
1. Cash Flows Operating Activities
1.1. Operating Result
Profit for the period
Depreciation in the period
Exceptional profits, net
12.443
86
7.104
19.633
1.2 Variations in Assets and Operating Liabilities
Increase in other assets
-87.276
Variations in accruals and deferrals/asset side
-1.443
Variations in accruals and deferrals/liabilities side
-2.363
Reduction in deposits by Banks
-100.000
Increase in deposits by Clients
140.000
Increase in other liabilities
267
-50.815
Total cash flows from Operating Activities
-31.182
2. Cash Flows Investing Activities
Variations in financial holdings
42.900
42.900
Total cash flows from Investing Activities
3. Cash Flows Financing Activities
Dividends distributed, financial year of 2002
-7.500
Exceptional gains
-7.104
-14.604
Total cash flows from Financing Activities
-2.886
4. Flows of Cash Equivalents and Cash Equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
3.826
940
-2.886
154
2.2 Banif SGPS (Consolidated Accounts)
(Thousand Euros)
Dec - 03
1. Cash Flows Operating Activities
1.1. Operating Result
Profit for the period
25.358
Provisions for overdue credit
40.872
Other provisions
19.924
Depreciation in the period
19.577
Allocation for taxes
Exceptional profits, net
Minority interests
Result of companies not included in consoldated acc.
4.109
11.253
1.267
-6.736
115.624
1.2 Variations in Assets and Operating Liabilities
Reduction in investments in other banks
Increase in investments in securities
Reduction in client lending
647.502
-131.669
17.817
Increase in other assets
-19.831
Variations in accruals and deferrals-asset side
-63.035
Variations in accruals and deferrals - liabilities side
Reduction in deposits by banks
Increase in deposits by clients
Increase in other liabilities
58.411
-633.906
185.140
2.065
Total cash flows from Operating Activities
62.494
178.118
2. Cash Flows Investing Activities
Acquisition of fixed assets
-32.830
Revaluation of fixed assets
0
Disposal of fixed assets(net)
30.042
Adjustments to fixed assets
253
Variations in financial holdings
Goodwill and reval. differences-equity meth./asset side
Goodwill and reval. differences-equity meth./liabilities side
Depreciation of goodwill and revaluation diff.-equity method
-16.813
-2.175
1.760
-3
Deprec. for the period of goodwill-first consolidation
-1.714
Gains on disposal of fixed assets
-4.348
Minority interests
17.612
-8.216
155
2.2 Banif SGPS (Consolidated Accounts)
(Thousand Euros)
Dec - 03
3. Cash Flows Financing Activities
Dividends distributed, financial year of 2002
Use and reinstatement of provisions
Exchange rate variations in provisions
Allocation to tax on profits for 2003
Results of companies excluded from consolidated acc.
Exceptional gains
-7.500
-55.119
-129
-4.109
6.736
-11.253
Increase in share capital
0
Incease in revaluation reserves
0
Subordinated liabilities
0
Other variations in shareholders' funds
4.091
-67.283
102.61
Flows of Cash and Cash Equivalents
Opening cash and cash equivalents
259.768
Closing cash and cash equivalents
362.387
102.619
156
3. Income Statement - by Function
3.1 Banif SGPS Individual
(Thousand Euros)
1. Financial margin
-3.384
2. Provision for credit risks
0
3 . Net financial margin
-3.384
4. Net commissions
-251
5. Other net operating results
-326
6. Service margin
-577
7. Earnings from securities
9.960
8. Results consolidated by equity method
0
9. Results of financial operations
0
10. Provisions for decpreciation of securities
0
11. Depreciation of goodwill
0
12. Operating result before transformation costs
5.999
13. Personnel costs
127
14. Ohter administrative costs
447
15. Depreciation
16. Transformation costs
17. Operating result
86
660
5.339
18. Other provisions
0
19. Results from disposal of financial holdings
0
20. Others extraordinary results
21. Result before tax and minority interests
7.104
12.443
22. Taxes
0
23. Minority interests
0
24. Net result
25. Result per share
Other earnings / Total earnings
Transformation costs / Total earnings
12.443
0.31
125.8%
5.0%
157
3. Income Statement - by Function
3.2 Consolidated Accounts
(Thousand Euros)
1. Financial margin
2. Provision for credit risks
38.948
3. Net financial margin
112.113
4. Net commissions
35.409
5. Other net operating results
25.263
6. Service margin
60.672
7. Earnings from securities
1.473
8. Results consolidated by equity method
6.736
9. Results of financial operations
12.976
10. Provisions for decpreciation of securities
3.571
11. Depreciation of goodwill
1.714
12. Operating result before transformation costs
188.685
13. Personnel costs
75.262
14. Other administrative costs
54.996
15. Depreciation
17.863
16. Transformation costs
148.121
17. Operating result
40.564
18. Other provisions
-1.423
19. Results from disposal of financial holdings
20. Others extraordinary results
21. Result before tax and minority interests
22. Taxes
0
-11.253
30.734
4.109
23. Minority interests
-1.267
24. Net result
25.358
25. Result per share
158
151.061
0.63
Other earnings / Total earnings
31.9%
Transformation costs / Total earnings
66.8%
VIII.report on corporate
governance
The following disclosures on Corporate Governance comply with the requirements of Regulations 7/2001 of the
Securities Market Commission.
Chapter 0
Declaration of compliance
In accordance with Chapter 0 of the Annex to Regulations 7/2001 of the Securities Market Commission, information
is provided below on the SMC corporate governance recommendations adopted and those not adopted.
I - Disclosure of information
1. Because of the very small number of enquiries from investors, there is no investor support office, and the questions
raised are answered directly by the Board of Directors or by the Company Secretary.
II - Exercise of Voting Rights and Representation of Shareholders
2. Under the terms of article 17 of the Articles of Association, “Shareholders may attend and take part in General
Meetings provided they comply with the general requirements of the law, and provided also that they register
in their names, no less than 8 (eight) days (inclusive) prior to the date set for the respective meeting, shares entitling
them to no less than one vote, such shares remaining listed or registered at least until the close of the General
Meeting” (para. 3) and “Save in respect of resolutions on the amendment of the Articles of Association and the
election of company officers, shareholders shall not exercise voting rights at General Meetings by means of postal
votes” (para. 5). There is therefore deemed to exist a slight difference between the provisions of para. 3 of article
17 of the articles of association in relation to the freezing of shares (8 days) and the provisions of para. 2 a) of the
recommendations (maximum of 8 days). In view of the content of article 17, para. 5, of the articles of association,
transcribed above, the recommendation contained in para. 2 b) has not been adopted. With regard to para. 2 c)
of the recommendations, the recommendation is adopted insofar as it has been determined that postal votes received
up to the last business day prior to the holding of the General Meeting shall be accepted. A detailed explanation
of the procedures for postal votes, without using pre-existing voting slips, is set out in the notice of general meetings,
although no postal votes have yet been cast, meaning that the company has not regarded it necessary to provide
voting slips.
III - Company Rules
3. The company has a Risk Committee, as detailed below; the recommendation contained in item III 3 is therefore
deemed to have been adopted.
4. No measures have been adopted to prevent the success of public takeovers; the recommendation relating to this
is therefore not applicable.
IV. Management Body
5. The recommendation contained in this item has been adopted.
6. The recommendation contained in this item has been adopted.
7. In view of the company’s activity as a holding company, with no employees, no need has arisen for the creation
of internal monitoring commissions to assess company structure and governance.
8. The remuneration of directors makes it possible to align their interests with those of the company. The individual
remuneration of directors is not disclosed annually, as it is considered that the added openness which this might
create would not compensate the drawbacks of such a move, and also that it is unlikely that this would permit
effective assessment of the performance of each sector of the company.
9. This recommendation has not been adopted in full in view of the situation explained in Chapter I, item 9, below.
10. Not applicable given that no share allocation or share option schemes have been established.
160
V - Institutional Investors
Not applicable.
Chapter I
Disclosures
1. Company Structure
As shown in the holdings diagram for the Banif Group at the beginning of the Report and Accounts, Banif SGPS,
SA controls 3 holding companies: Banif Comercial SGPS, SA, Banif Investimentos SGPS, SA and Banif Seguros, SGPS,
SA, which function essentially as sub-holdings for commercial banking, investment and insurance business, respectively.
The Board of Directors of Banif SGPS, SA includes members of the Board of Directors of the main Group companies,
in the 3 business areas referred to above, ensuring co-ordination and centralised management of the companies
in the Banif Group. Accordingly, a number of Committees and Offices have been created, answerable to the Board
of Directors, and comprising directors of the various Group companies, as shown in the following diagram:
Banif SGPS, SA
Structure - Corporate Governance
Banif - SGPS, SA
Board of Directors
Tecnical and
Administrative Office
Media and
Image Office
Strategic Planing and
Budget Committee
Risk Committee
Procurement
Committee
Cross Selling
Committee
2. Specific committees
No specific committees have been created in the company.
3. Risk control system
As shown in the diagram in item 1, the company has created a Risk Committee, comprising a member of the Board
of Directors of Banif SGPS, SA and Risk Managers from the banking concerns in the Group. The task of this committee
is to manage risks relating to lending, operations and markets.
Lending risk is managed through definition of overall limits in keeping with a range of criteria, setting minimum
and expected levels of return, definition and assessment of risk measurement methods, namely rating and scoring
models, definition of general policies for granting credit, analysis of the risk presented by products and activities,
analysis of macro-economic conditions, analysis of scenarios and their possible repercussions on lending risk
and analysis of the various exposure limits stipulated.
161
In order to manage operating risk, a general strategy is defined, together with the overall internal policies
for operating risk, definition and assessment of assessment tools, measurement and control of operating risk,
assessment of the risk presented by new products, activities, processes and systems and analysis of mitigation procedures.
Finally, market risk is also managed by defining the respective overall strategy, designing common policies, procedures
and methods for defining overall limits for exposure, in keeping with a range of criteria and analysis of performance
and analysis of different levels of exposure, in view of the overall limits established.
4. Quoted share prices
Shares in Banif SGPS, SA were traded at 230 of the 255 normal sessions of Euronext Lisboa. A total of approximately
1.7 million shares were traded during the year, with a value of approximately 8.1 million Euros, corresponding
to an average of approximately 6.5 million Banif shares being traded daily. Stock market capitalisation of quoted
shares in Banif SGPS, SA stood at 244 million Euros as at 31 December 2003, representing 0.84% of stock market
capitalisation of shares quoted in the official Euronext Lisboa market as at the same date.
The consolidated results for 2002 and those for the 1st half of 2003 were published on 18 March and 26 September
2003 respectively. The consolidated results for the 1st and 3rd quarters of 2003 were published on 30 April
and 29 October 2003, respectively.
As from 17 April 2003, in keeping with the resolution adopted at the General Meeting of Shareholders on 31 March
2003, a gross dividend per share, relating to the financial year of 2002, of 0.250 Euro, was placed at the disposal
of shareholders, with shares not entitled to dividends being traded as from 14 April. The net value of the dividend
was 0.200 Euro per share held by residents, and 0.175 Euro per share held by non-residents.
In view of the conclusion of an agreement to buy 799,793 shares, representing 1.99% of the share capital in Banif
SGPS, SA, at a unit price of 5 Euros, Rentipar SGPS, SA exceeded the 50% threshold, as defined in article 20 of the
Securities Code, of the share capital and voting rights in Banif SGPS, SA, and was required to launch a public takeover
bid for all the shares in Banif SGPS, SA.
As a consequence of the obligatory launching of a public takeover bid for shares issued by Banif SGPS, SA, for which
a preliminary advertisement was issued on 5 June 2003, Rentipar was also required to launch a public takeover bid
for share issued by Banco Comercial dos Açores, SA.
In view of the position of Banif SGPS, SA as a dominant shareholders in Banco Comercial dos Açores, SA, and when
questioned by Rentipar SGPS, SA*, as to whether it might be interested in substituting, either directly or through
a company which it dominated, Rentipar SGPS, SA, under the terms of para. 2 of Article 191 of the Securities Code,
in the launch of the public takeover bid for all the shares issued by Banco Comercial dos Açores, SA, Banif SGPS,
SA resolved to delegate, in its capacity as sole shareholder and in substitution of Rentipar SGPS, SA, the obligation
to launch the takeover bid to Banif Comercial, SGPS, SA.
Accordingly, Banif Comercial SGPS, SA published the preliminary advertisement for the public takeover bid for
all the shares in Banco Comercial dos Açores, SA on 28 June 2003.
On 3 September 2003, the report provided for in para. 1 of article 181 of the Securities Code was published,
in which the Directors of Banif SGPS, SA regarded the takeover bid as opportune, and the proposed price as adequate.
In view of this, the Notice of the Launch of a General and Obligatory Takeover Bid was published on 24 September
2003 for 19,914,688 shares in Banif SGPS, SA, at a unit price of 5 Euros, in which the co-offerers were Rentipar
SGPS, SA and FINPRO – Infraestruturas, SGPS, SA, which had been invited by Rentipar SGPS, SA to substitute it,
partially, in its legal duty from which the bid derived, which invitation was accepted, from the perspective
of a financial investment.
This Public Takeover Bid took place between 26 September and 9 October 2003, and on 10 October 2003 a special
session of the Euronext Lisboa stock exchange was held to determine the outcome, which resulted in acquisition
by Rentipar SGPS, SA of a total of 6,362,186 shares in Banif SGPS, SA, without FINPRO – Infraestruturas, SGPS, SA
having acquired any shares.
* By deed of 11/12/2003, Rentipar SGPS, SA changed its name to Rentipar Financeira SGPS, SA.
162
As stated in the bid prospectus, and in keeping with the characteristics of the bid, it was never the intention of the
co-offerers to resort to discretionary acquisition as provided for in para. 1 of Article 194 of the Securities Code,
in the event of acquiring more than 90% of the share capital and voting rights in Banif SGPS, SA, nor that
this company should cease to be a public limited company, which status it in fact retains.
As a result of this bid and the market transactions effected, Rentipar SGPS, SA announced on 13 October 2003 that,
as at such date, it owned a qualifying holding (considering shares included by operation of para. 1 of Article 20
of the Securities Code) of 26,668,693 shares, corresponding to 66.67% of the share capital of Banif SGPS, SA.
The definitive notice of the Public Takeover Bid by Banif Comercial SGPS, SA for shares in Banco Comercial
dos Açores, SA not yet held by the former company was published on 14 November 2003 and the bid took place
between 17 and 28 November 2003. A special session of the Euronext Lisboa stock exchange took place on
3 December 2003 to determine the outcome, which resulted in acquisition by Banif Comercial SGPS, SA of a total
of 2,502,737 shares in Banco Comercial dos Açores, SA at a unit price of 6 Euros. After this bid, Banif Comercial
SGPS, SA owned a direct holding of 10,327,010 shares in Banco Comercial dos Açores, SA, representing 99.5%
of the respective share capital.
The following graph shows the quoted prices of shares in Banif compared with the PSI index for the financial
intermediary sector (PSI Index 209) from 2 January 2003 to 30 January 2004.
Quoted Prices of Shares in Banif SGPS, SA compared with Index for the Financial Sector (Daily Rates)
2,500
6.0
2,000
5.0
Index
5.5
4.5
Banif Shares
04
Ja
n
D
ec
03
03
N
ov
O
ct
03
03
Se
p
03
A
ug
Ju
l0
3
03
Ju
n
03
M
ay
A
pr
03
M
ar
03
03
1,500
Fe
b
03
4.0
Ja
n
Banif Quoted Price
6.5
PSI209 Index
5. Dividend distribution policy
The shares representing the share capital of Banif hav been quoted on the official Euronext Lisboa stock exchange
(formerly called the Lisbon Stock Exchange), since November 1992.
On 1 April 2002, as a result of the reorganisation of the Banif Group which took place on that date, the name
of the company whose shares were quoted was changed to Banif SGPS, SA.
In the course of 2002, the company’s share capital was increased by 50 million Euros, from 150 to 200 million Euros,
through issue of 10 million new shares, with a nominal value of 5 Euros each. These new shares, which carry
no entitlement to dividends for 2002, were admitted for trading on the official Euronext Lisboa market
on 11 February 2003.
As a result, as from 11 February 2003, a total of 40 million ordinary registered and book-entry shares, with a nominal
value of 5 Euros each, have been admitted for quotation, divided into two categories, depending on whether
or not they carry dividend rights in relation to the financial year of 2002. As from 14 April 2003, with the start
of trading in Banif shares without such dividend rights, the two types became interchangeable, meaning that from
this point on there was only one category of shares quoted on the market.
163
The following table shows the main indicators relating to the market performance and value of Banif shares
over the last five years, against the benchmark of consolidated accounting values.
(Euros)
31/12/1999 31/12/2000
31/12/2001
31/12/2002
31/12/2003
No. of shares issued
30.000.000
30.000.000
30.000.000
40.000.000
40.000.000
No. of shares quoted
30.000.000
30.000.000
30.000.000
30.000.000
40.000.000
7,50
7,01
6,40
4,89
6,10
Price (€)
Market Capitalization (’000 €)
225.000,0
210.300,0
192.000,0
146.700,0
244.000,0
Net Result per Share (€)
0,5086
0,5664
0,6694
0,5217
0,6340
Cash Flow per Share (€)
1,8486
1,8700
2,2993
2,0831
2,3981
Book Value per Share (€)
7,6616
7,9508
8,2608
7,7197
8,1919
Price/Book Value (PBV)
0,98
0,88
0,77
0,63
0,74
Price/Cash Flow (PCF)
4,06
3,75
2,78
2,35
2,54
Price/Net Earnings per Share (PER)
14,75
12,38
9,56
9,37
9,62
Gross Dividend per Share (€)
0,2200
0,3000
0,3000
0,2500
0,2500
Net Dividend per Share (€)
0,1760
0,2250
0,2400
0,2000
0,2125
Gross Dividends/Net Result
43,3%
53,0%
44,8%
35,9%
39,4%
Divident per Shares/Av. Book Value
2,84%
3,84%
3,70%
3,13%
3,14%
Dividend per Share/Av. Price
2,96%
3,85%
4,57%
4,22%
5,09%
6. Share allocation or share option schemes
No such schemes have been instituted in the company.
7. Transactions and operations with company officers, holders of qualifying holdings and related companies
As a result of the reorganisation of the Banif Group which began in late 2001, designed to group holdings
by business area and to launch the 2nd phase in the reorganisation plan with a view to increasing management
and planning efficiency at Group level, the directors unanimously resolved on 26/11/2003 to dispose of 8,512,000
shares representing 15.2% of the share capital of Banif Comercial SGPS, SA, of which Banif SGPS, SA was the sole
and legitimate holder, to Banif Investimentos SGPS, SA This operation, subject to prior authorisation by the Bank
of Portugal, went ahead on 31/12/2003, for a value of 5.90 per share.
Also in relation to this item, it was resolved on 18/12/2003 to request Rentipar SGPS, SA, the holder of a qualifying
holding in the company, to provide finance of up to ¤ 20,000,000.00, to support cash flow, as from 30 December
2003, maturing at one year, at the quarterly EURIBOR rate plus 1.25%, the interest being computed daily on the
capital outstanding and paid quarterly.
8. Investor Support Office
There is currently no office with specific responsibility for investor relations. When necessary, support is provided
directly by the Board of Directors or through the company secretary. The company’s internet site is at www.grupobanif.pt.
The representative for market relations is Dr. Carlos David Duarte de Almeida, Vice-Chairman of the Board of Directors.
164
9. Remuneration Committee
The Remuneration Committee elected for 2003-2005 comprises Rentipar, SGPS, SA, Vestiban – Gestão e Investimentos,
SA and Renticapital – Investimentos Financeiros, SA. These companies are represented by Dra. Teresa Henriques
da Silva Moura Roque, Dr. Carlos Gomes Nogueira and Mr. Vítor Hugo Simons. Dra. Teresa Henriques da Silva Moura
Roque is next of kin of Comendador Horácio da Silva Roque, Chairman of the Board of Directors.
10. Annual remuneration paid to the auditor
Ernst & Young - auditor annual remuneration by type of services and Comapanies
Group Company
Banif SGPS, SA
Total
Statutory
Audit Services
%
Tax
Consultant Services
%
109,008.08
95,589.00
88%
13,419.08
12%
BanifServ
12,145.00
9,145.00
75%
3,000.00
25%
15,438.00
15,438.00
100%
0.00
0%
110,317.00
50,992.00
46%
59,325.00
54%
Banif (Açores) SGPS
13,075.69
2,500.00
19%
10,575.69
81%
59,686.56
57,650.00
97%
2,036.56
3%
Banif Leasing
24,354.86
17,240.00
71%
7,114.86
29%
Banif Crédito SFAC
15,094.34
11,531.00
76%
3,563.34
24%
Banif Rent
19,500.00
19,500.00
100%
0.00
0%
Banco Banif Primus
31,927.09
31,927.09
100%
0.00
0%
10,369.48
10,369.48
100%
0.00
0%
13,600.00
13,600.00
100%
0.00
0%
Comp. Seguros Açoreana, SA
57,087.00
57,087.00
100%
0.00
0%
12,023.00
12,023.00
100%
0.00
0%
31,050.00
31,050.00
100%
0.00
0%
Banifundos
4,171.00
4,171.00
100%
0.00
0%
Banif Imo
3,477.00
3,477.00
100%
0.00
0%
30,290.00
24,290.00
80%
6,000.00
20%
572,614.10
467,579.57
82%
105,034.53
18%
Banif, S.A.
Banif (Cayman)
TOTAL
(Excluding VAT)
Ernst & Young has established an internal system for controlling and monitoring policies relating to independence,
which take into account the independence standards in force in Portugal and internationally, the threats
to independence and the respective safeguards. This policy defines services which are prohibited due to their impact
on the independence of the auditor.
These policies are monitored worldwide through an intranet application entitled “Ernst & Young Global Monitoring
System – GMS”. Each shareholder, management and professional member of staff declares he or she is aware
of the policy and any alterations to it. Training is provided periodically on this policy.
165
In practical terms, the fiscal consultancy services supplied to the Banif Group included review of tax returns
and assistance with matters relating to fiscal planning and advice on fiscal affairs. It should be noted that all
the services rendered are permitted under the Recommendation of the European Commission no. C (2002) 1873,
of 16 May 2002.
In keeping with the policy established for the provision of these services, it was ensured that no decision was taken
or no part taken in the adoption of decisions on behalf of Banif SGPS, SA or any of its subsidiaries in fiscal or other
related affairs.
Chapter II
Exercise of Voting Rights and Representation of Shareholders
1. Exercise of voting rights
Under the terms of article 17, para. 1 of the Articles of Association, shareholders entitled to no less than one vote
may attend the General Meeting. As stated in Chapter 0, Item II above, “Save in respect of resolutions on the
amendment of the Articles of Association and the election of company officers, shareholders shall not exercise voting
rights at General Meetings by means of postal votes” (article 17, para. 5 of the Articles of Association).
2. Postal vote form
There is currently no pre-existing form for postal voting.
3. Electronic voting
Electronic voting is currently not permitted.
4. Deposit or freezing of shares for the purpose of attendance of General Meetings
Under article 17, para. 3 of the Articles of Association, attendance by shareholders of General Meetings
and the respective exercise of voting rights is dependant on their registering in their name, no less than eight days
prior to the date set for the meeting in question, shares entitling them to no less than one vote.
5. Period between receipt of postal votes and the date of the General Meeting
When postal votes are permitted, votes sent by registered letter with recorded delivery and received at the head
offices of the company by 17.00 hours on the business day prior to the date of the general meeting are considered.
6. Number of shares corresponding to one vote
Under article 17, para. 2 of the Articles of Association, shareholders are entitled to one vote for each one hundred
shares.
Chapter III
Company Rules
1. Company Code of Conduct
Banif SGPS, SA does not have specific rules of conduct, in its exclusive capacity as holding company of the
Banif Group.
However, codes of conduct have been instituted in the main Group companies in the banking and insurance sectors.
166
Accordingly, given that banking business must be conducted in keeping with strict principles of impartiality
and transparency, which must be observed by all staff, internal rules concerning professional ethics, establishing
directives on these questions, are in force in Banif – Banco Internacional do Funchal, SA, Banco Comercial dos Açores,
SA and Banif – Banco de Investimento, SA.
There are also Internal Regulations on Rules of Conduct in the Exercise of Securities Brokerage, defining rules
and procedures to be followed in brokerage activities, established in the light of the rules in this field established
by the Securities Code and the Code of Conduct drawn up by the Portuguese Association of Banks.
2. Internal risk control procedures
Information on this item can be found in item 3 of Chapter I, above.
3. Measures which may interfere with the success of Takeover Bids
There are no limits on the exercise of voting rights, except for the restricting on technical voting procedures referred
to in Chapter II above, nor are there any restrictions on the transferability of shares, the special rights of any
shareholders or shareholders’ agreements of which the company should be informed.
Chapter IV
Management Body
1. Description
a) The Board of Directors of Banif SGPS, SA currently comprises the following members:
Chairman: Comendador Horácio da Silva Roque
Vice-Chairmen: Dr. Joaquim Filipe Marques dos Santos
Directors: Dr. António Manuel Rocha Moreira
All members of the Board of Directors are executive directors. Under the terms of article 1, para. 2 of Regulations
7/2001 of the Securities Market Commission, the directors Comendador Horácio da Silva Roque and Dr. José Marques
de Almeida are not considered independent, both being members of the Board of Directors of Rentipar Financeira
SGPS, SA, the company controlling Banif SGPS, SA Comendador Horácio da Silva Roque is also the holder of
a qualifying holding in the company, under the terms of article 20 of the Securities Code.
b) Below we give a list of the offices held in other companies by members of the management body, such duties
being performed within the scope of the Rentipar Financeira SGPS, SA Group, unless otherwise indicated:
- Rentipar Financeira, SGPS, SA
- Banif Comercial SGPS, SA
- Banif – Banco Internacional do Funchal, SA
- Banco Comercial dos Açores, SA
- Banco Banif Primus, SA
- Banif Primus – Corretora de Valores e Câmbio, SA
- Banif - (Açores) - SGPS, SA
167
- Banif Investimentos, SGPS, SA
- Banif - Banco de Investimento, SA
- Banif Securities Holding, Ltd.
- Banif Seguros, SGPS, SA
- Companhia de Seguros Açoreana, SA
- Renticapital - Investimentos Financeiros, SA
Chairman of the General Meeting
- Banif Leasing, SA (representing Rentipar Financeira - SGPS, SA)
- Banif Crédito – Sociedade Financeira para Aquisições a Crédito, SA (representing Rentipar Financeira- SGPS, SA)
- Banif Rent, SA
- Banif Primus – Corretora de Valores e Câmbio, SA
- Banif Gestão de Activos – Sociedade Gestora de Fundos de Investimento Mobiliário, SA
(representing Rentipar Financeira, SGPS, SA)
- New Capital – Sociedade de Capital de Risco, SA (representing Rentipar Financeira, SGPS, SA)
- Banif Imobiliária, SA (representing Rentipar Financeira - SGPS, SA)
- SIP – Sociedade Imobiliária Piedade, SA (representing Rentipar Financeira - SGPS, SA)
Offices in companies not belonging to the Rentipar Financeira SGPS, S.A. Group
- Rentipar Indústria, SGPS, S.A.
- Rentiglobo – SGPS, SA
- SIET - Sociedade Imobiliária de Empreendimentos Turísticos Savoi, SA
- SOIL – SGPS, SA
- Mundiglobo - Habitação e Investimentos, SA
- Rentimundi - Investimentos Imobiliários, SA
- Tivil – Sociedade Imobiliária, SA
Vice-Chairman of the Board of Directors
- EMT - Empresa Madeirense de Tabacos, SA
- Vitecaf - Fábrica de Rações da Madeira, SA
- RAMA - Rações para Animais, SA
- Aviatlântico – Avicultura, SA
Director
- Fomentinvest – SGPS, SA
Manager
- Ronardo - Gestão de Empresas, Lda.
- Mundiplanos - Planeamento e Construção, SA
- Genius – Mediação de Seguros, SA
- Rentimedis - Mediação de Seguros, SA
- Mundiglobo Trading - Comércio Internacional, SA
- EMT - Empresa Madeirense de Tabacos, SA
- Vitecaf - Fábrica de Rações da Madeira, SA
- RAMA - Rações para Animais, SA
- Investaçor - SGPS, SA
Vice-Chairman of the General Meeting of the following companies:
- SIET - Sociedade Imobiliária de Empreendimentos Turísticos Savoi, SA
168
- Banif Leasing – Sociedade de Locação Financeira, SA
- Banif Crédito, SFAC, SA
- Banif Rent – Aluguer, Gestão e Comércio de Veículos Automóveis, SA
- Banif - Banco Internacional do Funchal (Cayman), Ltd.
- BanifServ - Empresa de Serviços e Tecnologias de Informação, ACE.
- Banif Finance, Ltd.
Chairman of the Executive Board and Vice – Chairman of the Board of Directors
- Banif - Banco Internacional do Funchal, SA
Vice – Chairman of the Board of Directors
- Banif Primus Corretora de Valores e Câmbio, SA
- Banif Securities Holdings, Ltd.
Director
- Banif Investimentos - SGPS, SA
- Banif (Açores) - Sociedade Gestora de Participações Sociais, SA
- Banif Seguros SGPS, SA
- Banif – Banco de Investimento, SA
Other offices held outside the Rentipar Financeira, SGPS Group
- Representative in his own name of Banif - Banco Internacional do Funchal, SA on the General Board of AMBELISAgência para a Modernização da Base Económica de Lisboa, SA
- Director of the Associação Portuguesa de Bancos, representing Banif - Banco Internacional do Funchal, SA
- Chairman of the General Meeting of UNICRE – Cartão Internacional de Crédito, SA
- Chairman of the General Meeting of SIBS – Sociedade Interbancária de Serviços, SA
- Banif Financial Services Inc.
- Banif Mortgage Company
- Banif Açor Pensões – Sociedade Gestora de Fundos de Pensões, SA
Vice-Chairman of the Board of Directors
- Banif – Banco de Investimento, SA
- Banif Securities, Inc.
Director
- Banif – Banco Internacional do Funchal (Cayman), Ltd.
169
- Banif Investimentos SGPS, SA
- Banif (Açores) – SGPS, SA
- Banif Primus Corretora de Valores e Câmbio, SA
- BanifServ – Empresa de Serviços, Sistemas e Tecnologias de Informação, ACE
- Econofinance, SA
- Banif Securities Holdings, Ltd.
Vice – Chairman of the Board of Directors:
- Banif Rent – Aluguer, Gestão e Comércio de Veículos Automóveis, SA
Director:
- Banif - Banco Internacional do Funchal, SA
- Banif Leasing – Sociedade de Locação Financeira, SA
- Banif Crédito, SFAC, SA
- Banif Açor Pensões - Sociedade Gestora de Fundos de Pensões, SA
- Banif (Açores)- Sociedade Gestora de Participações Sociais, SA
- BanifServ - Empresa de Serviços, Sistemas e Tecnologias de Informação, ACE
- Banif - Banco Internacional do Funchal (Cayman), Ltd.
- Banif Gestão de Activos – Sociedade Gestora de Fundos de Investimento Mobiliário, SA
- Banif Comercial, SGPS, SA
- Banif – Multifund, Ltd.
Chairman of the Audit Board
- Cabo TV Madeirense, SA
Chairman of the Board of Directors and the Executive Board
- Banif Gestão de Activos - Sociedade Gestora de Fundos de Investimento Mobiliário, SA
- Banif Multifund, Ltd .
- NewCapital – Sociedade de Capital de Risco, SA
- Banif International Asset Management, Ltd.
- Banif Securities, Inc.
Chairman of the Executive Board and Vice – Chairman of the Board of Directors
- Banif - Banco de Investimento, SA
Director
- Banco Banif Primus, SA,
- Banif Primus Corretora de Valores e Câmbio, SA,
- Banif Primus Asset Management, Lda.
- BanifServ – Empresa de Serviços, Sistemas e Tecnologias de Informação, ACE.
170
- Banif Investimentos – SGPS, SA
- Econofinance, SA
- Banif Açor Pensões – Sociedade Gestora de Fundos de Pensões, SA
Chairman of the Executive Board
Director
- BanifServ – Empresa de Serviços, Sistemas e Tecnologias de Informação, ACE
Chairman of the Advisory Board
- APS – Associação Portuguesa de Seguradores
Director
- Rentipar Financeira SGPS, SA
- Vestiban – Gestão e Investimentos, SA
2. Existence or otherwise of Executive Board
As no director has been appointed as managing director and no executive board has been created, all directors
are executive directors.
3. Management body procedures
In the absence of an executive board in Banif SGPS, SA, all questions of ordinary management and strategy,
and all matters relating to the life of the company are considered and resolved on by the Board of Directors.
In accordance with the Articles of Association, the Board of Directors meets no less than once a quarter,
and extraordinary meetings are held whenever called by the Chairman or two other directors. A total of 15 meetings
of the Board of Directors were held in 2003.
4. Remuneration Policy
The directors’ annual remuneration consists of a fixed component and a variable component; the form of fixing
the variable component constitutes a factor aligning the interests of the members of the management body
with those of the company.
5. Remuneration of members of the management body
The following remuneration was paid to directors by the Group companies in which they hold office
- Fixed Remuneration - €1.391.580,21
- Variable Remuneration - €1.244.707,75
The company does not have an Executive Board.
171
Açoreana - Central Office - Av. Barbosa du Bocage
IX.other disclosures
1. Own shares
As at either 1/01/2003 or 31/12/2003 the company held no own shares or the equivalent under the terms of article
325 A of the Companies Code, and there was likewise no trading in such shares during 2003.
2. Holders of qualifying holdings
Under the terms of para. 1 e) of article 6 of Regulations no. 12/2000 of the Securities Market Commission,
the following information is disclosed on shareholders with qualifying holdings at the end of the financial year,
in accordance with the information available at the company:
Horácio da Silva Roque, holder of identity card no. 503 965, tax payer no. 124 616 917, resident at Av. Conde
de Barcelona, 1057, Estoril – Held directly, as at 31/12/2003, 124,656 shares in Banif SGPS, SA, corresponding
to 0.31% of the share capital.
The voting rights corresponding to the following are imputed to this holding:
- 22,468,280 shares held by Rentipar Financeira SGPS, SA (company in which Horácio da Silva Roque is the majority
shareholder), corresponding to 56.17% of the share capital;
- 93,056 shares held by members of the Board of Directors of Rentipar, SGPS, SA corresponding to 0.23% of
the share capital;
- 3,989,998 shares held by Renticapital – Investimentos Financeiros, SA (company in which Rentipar Financeira,
SGPS, SA is the majority shareholder), corresponding to 9.97% of the share capital;
- 1,853 held by Mundiglobo – Habitação e Investimentos, SA (company in which Horácio da Silva Roque has an
indirect majority holding), corresponding to 0.005% of the share capital;
- 40,000 shares held by Espaço Dez – Sociedade Imobiliária, Lda (company in which Horácio da Silva Roque has
an indirect majority holding), corresponding to 0.1% of the share capital;
- 30,000 shares held by a manager of Espaço Dez – Sociedade Imobiliária, Lda., corresponding to 0.075% of
the share capital.
- Seguros e Pensões Gere, SGPS, SA, corporate person no. 502 352 914, with registered offices at Av. José
Malhoa, 9 in Lisbon, with share capital of 380,000,000 Euros and registered at the Lisbon Companies Registry under
no. 1 532, controls the companies Império Bonança – Companhia de Seguros, SA, Auto Gere – Companhia
Portuguesa de Seguros, SA, Ocidental – Companhia Portuguesa de Seguros, SA and Ocidental – Companhia
Portuguesa de Seguros de Vida, SA, which together had a holding corresponding to 1,616,700 shares rerpesenting,
overall, 4.04% of the share capital.
- Instituto de Seguros de Portugal – Fundo de Garantia Automóvel, corporate person no. 501 328 599,
with registered offices at Av. de Berna, no. 19, 1050-037, Lisbon, held 1,528,560 shares representing 3.82%
of the share capital.
- Fundo de Pensões do Grupo Banco Comercial Português, represented by Pensões Gere – Sociedade Gestora
de Fundos de Pensões, SA, corporate no. 503 455 229, with registered offices at Rua Alexandre Herculano, 53,
Lisbon, registered at the Conservatória do Registo Comercial de Lisboa under no. 04529 and with share capital
of 1,200,000 Euros, held 1,468,877 shares representing 3.67% of the share capital.
- Vestiban – Gestão e Investimentos, SA – corporate person no. 505 775 212, with registered offices at Av. José
Malhoa Lote 1792, Lisbon, registered at the Lisbon Companies Registry under no. 12161 and with share capital
of 250,000 Euros, held 1,266,666 shares, corresponding to 3.17% of the share capital.
Voting rights corresponding to 10,666 acções held by directors of Vestiban – Gestão e Investimentos, SA, corresponding
to 0.03% of the share capital are imputed to this holding.
173
- Jorge Sá, resident at Rua do Til, n.º 56, Funchal, tax payer no. 102.136.297, holder of identity card no. 47528.9,
indirectly held 827,205 shares, corresponding to 2.07% of the share capital. Also imputable to him are the voting
rights corresponding to 13,450 shares (corresponding to 0.03% of the share capital) and 147,870 shares (corresponding
to 0.37% of the share capital) in Banif SGPS, SA, held by companies he controls J. Sá & Filhos, Lda. and Oliveira,
Freitas & Ferreira, Lda., respectively.
(NB: Given that there are managers/directors common to various companies - Rentipar Financeira SGPS, SA,
Espaço Dez – Sociedade Imobiliária, Lda. , Vestiban – Gestão e Investimentos, SA – the shares they hold in Banif
SGPS, SA are only counted once – in the first applicable instance – for the purpose of imputing voting rights).
Given that there were no non-voting shares as at 31/12/03, the percentage of voting rights for each share coincides
with the respective percentage share in the capital.
Shareholder
Nº. of Shares (total imputable)
% Voting rights (total imputable)
26.747.843
66,87%
Seguros e Pensões Gere, SGPS, SA
1.616.700
4,04%
Instituto de Seguros de Portugal - FGA
1.528.560
3,82%
Fundo de Pensões do Grupo Banco Comercial Português
1.468.877
3,67%
Vestiban - Gestão e Investimentos, SA
1.277.332
3,19%
988.525
2,47%
Jorge Sá
174
Report and Opinion of the Audit Board
Shareholders,
1. In compliance with provisions of paragraph g) of article 420 of the Companies Code, the Supervisory Board
has drawn up this report on its auditing work during 2003 and to give its opinion under the terms of the said
law on the report, accounts and proposals submitted by the Directors.
2. The Audit Board has maintained, as is its custom, a constant dialogue with the auditors and the official audit firm,
as this is essential for many aspects of its supervisory duties.
3. The Directors’ Report provides a detailed account of the operations of the different Group companies over
the course of 2003. It should be noted that, in relation to the operations and accounts of each of these companies,
the respective audit board and sole auditors have drawn up their opinions and reports, meaning that no further
comment is required here.
We shall merely refer here, in view of its importance, to the fact that Banif – Banco internacional do Funchal, SA
has obtained an international rating.
4. We should however not omit to mention that progress has been made on the highly necessary and desirable
implementation of cross selling, and the progressive internationalization of the Group.
5. We feel we should also mention a number of operations in 2003 which were of considerable relevance to the
Company and the Group, in terms of consolidating and reorganising the Group as a whole:
a) the takeover bid for shares in Banif SGPS, SA, launched by Rentipar SGPS, SA, the main shareholders in the
company, which now directly holds 54.14% of the capital, and a total of 66.67% when its direct and indirect
holdings are considered;
b) the 5th phase of privatisation of Banco Comercial dos Açores, which led to the sale, through a public offering,
of 15% of the share capital in the Company held by the Autonomous Region of the Azores, meaning that the Bank
is now 100% private;
c) the takeover bid in December for shares in Banco Comercial dos Açores, SA by Banif Comercial SGPS, SA,
which now holds 99.57% of its share capital, given that a block of shares was also acquired outside the context
of the takeover bid;
d) the sale by Banif SGPS, SA to Banif Investimentos SGPS, SA of 15.2% of the share capital of Banif Comercial
SGPS, SA;
e) the increases in the share capital of Banif – Banco Internacional do Funchal (Cayman), Ltd and Banif Finance, Ltd;
f) bond issues by Banif SGPS, SA, with a view to restructuring its borrowing;
g) the granting of a shareholder loan by Banif SGPS, SA to Banif Imobiliária, SA, to allow the latter to acquire
the business premises belonging to Banco Internacional do Funchal and Banco Comercial dos Açores.
6. Having stressed these points, we do not feel that any additional comments are needed, on either the individual
or the consolidated accounts.
7. The Audit Board has assessed the Report of the Official Audit Firm and the respective Legal Certificate issued
by such firm, and hereby declares its agreement with this, for the purposes of para. 2 of article 453 of the
Companies Code.
8. The Audit Board has examined the company’s consolidated accounts, as at 31 December 2003, and assessed
the conformity of these accounts with the consolidated management report – article 508 D, para. 1, of the
Companies Code.
175
9. In conclusion, the Audit Board recommends that the General Meeting:
a) Approves the Directors' Report for the Financial Year ended on 31 December 2003;
b) Approves the Accounts for the same financial year;
c) Approves the proposal for the Distribution of Profits contained in the Directors' Report, which accords with
the relevant legal requirements;
d) Approves the Bank's Consolidated Management Report and the Consolidated Accounts for the same
financial year;
e) Under the terms of article 455 of the Companies Code, assesses the work of the Bank's Directors and
the Supervisory Board;
f) Issues a vote of thanks to the Directors and the Executive Board for their sterling work in managing the affairs
of the Bank in 2003.
Lisbon, 10 March 2004
Dr. Carlos Alberto Rosa (Chairman)
Ernst & Young Audit & Associados - Sociedade
de Revisores Oficiais de Contas, represented by
Dr. Alfredo Guilherme da Silva Gândara (ROC)
176
Legal Accounts Certificate and External Auditor's Report
Introduction
1. Under the terms of the relevant legislation, we are pleasedto present the Legal Accounts Certificate and the External
Auditor's Report on the Management Report and Financial Statements attached for the financial year ended
31 December 2003 of Banif SGPS, SA, which comprise the Balance Sheet as at 31 December 2003 (which records
a total of 426,098 thousand euros and total shareholders' funds of 283,999 thousand euros, including a net result
of 12,443 thousand euros), the Income Statement (by nature and by function) the statement of cash flows,
and the corresponding notes to the financial statements.
Responsibilities
2. It is the responsibility of the Directors to:
a) prepare the management report and the financial statements for the financial year which give a true and fair
view of the financial position of the Bank, the result of its operations and cash flows;
b) to provide historic financial information, which shall be prepared in accordance with generally accepted accounting
principles and which is complete, true, current, clear, objective and lawful, as required by the Securities Code;
c) adopt appropriate accounting policies and criteria;
d) maintain an appropriate system of internal control; and
e) report any relevant occurrence which has influenced the company’s activities, state of affairs or results.
3. It is our responsibility to check the financial information given in the financial statements referred to above,
and to ensure that it is complete, true, current, clear, objective and lawful, as required by the Securities Code,
and to express a professional and independent opinion on such information, on the basis of our audit.
Scope
4. Our audit was performed in accordance with the Rules and Recommendations of the Chamber of Official Auditors,
and, on a supplementary basis, with International Audit Standards, which require that the audit be planned
and performed in such a way as to give a reasonable assurance that the financial statements are free from, or that
they are not free from, material misstatement. To this end our audit included:
- examination, on a test basis, of the evidence relevant to the amounts and disclosures in the financial statements
and an assessment of estimates, based on judgements and criteria defined by the Directors, used in preparing
the financial statements;
- an assessment of the suitability of the accounting policies adopted and disclosure of these policies, taking
the circumstances into account;
- an assessment of whether or not the going concern principle is applicable;
- an assessment of the overall adequacy of the presentation of information in the financial statements; and
- an assessment of whether the financial information is complete, true, current, clear, objective and lawful.
5. Our audit also included checking to ensure that the financial information contained management report corresponds
to that in the other financial statements.
6. We believe that our audit gives us a reasonable basis on which to issue our opinion.
Opinion
7. In our opinion, the financial information contained in the documents referred to above give a true and fair view,
in all materially relevant aspects, of the state of affairs of Banif SGPS, SA as at 31 December 2003 and the result
of its operations and cash flows in the financial year then ended, in keeping with accounting principles generally
accepted in Portugal, and the information contained them is complete, true, current, clear, objective and lawful.
177
Remarks
8. Without affecting our opinion as stated in the preceding paragraph, we wish to draw attention to the following:
a) As indicated in § 51 e) of the Notes to the Financial Statements, in the financial year of 2003 the Company
recognised a sum of 1,677.6 thousand Euros in the Income Statement account Earnings from securities, against
the Balance Sheet account Other Assets, relating to part of the results for 2003 recorded by the (wholly owned)
subsidiary Banif Seguros, SGPS, SA, proposed for distribution in the respective Directors’ Report, dated 17 February
2004. On 5 March 2004, the Bank of Portugal issued Circular 18/04/DSBDR giving notice that it will not lift
its objections to this procedure.
b) As indicated in the Introductory Note to the Notes to the Financial Statements (individual accounts), in view
of the reorganisation of the Banif Group, in the 1st half of 2002, the figures stated in the financial statements
as at 31 December 2003 are not comparable with those for 2002. A separate pro-forma column is therefore included
in the financial statements, indicating the figures for holding company business carried on in the previous year,
which are comparable with the figures for 2003.
Ernst & Young Audit & Associados - SROC, SA
Registered with the Stock Market Board under no. 9011
Represented by:
Alfredo Guilherme da Silva Gândara
178
Legal Accounts Certificate and External Auditor's Report (Consolidated accounts)
Introduction
1. Under the terms of the relevant legislation, we are pleased to present the Legal Accounts Certificate and the External
Auditor's Report on the Management Report and Consolidated Financial Statements attached for the financial year
ended 31 December 2003 of Banif SGPS, SA, which comprise: the Balance Sheet as at 31 December 2003
(which records a total of 5,711,558 thousand euros and total shareholders' funds of 345,746 thousand euros,
including a net profit of 25,358 thousand euros), the Consolidated Income Statement (by nature and by function),
the consolidated statement of cash flows for the financial year then ended, and the corresponding notes to
the financial statements.
Responsibilities
2. It is the responsibility of the Directors of the Bank to:
a) prepare the consolidated financial statements for the financial year which give a true and fair view of the financial
position of the group of companies included in the consolidated accounts, the consolidated result of their
operations and consolidated cash flows;
b) to provide historic financial information, which shall be prepared in accordance with generally accepted accounting
principles and which is complete, true, current, clear, objective and lawful, as required by the Securities Code;
c) adopt appropriate accounting policies and criteria;
d) maintain an appropriate system of internal control; and
e) report on any relevant occurrence which has influenced the activities of the group of companies included in
the consolidated accounts, their state of affairs or results.
3. It is our responsibility to check the financial information given in the financial statements referred to above,
and to ensure that it is complete, true, current, clear, objective and lawful, as required by the Securities Code,
and to express a professional and independent opinion on such information, on the basis of our audit.
Scope
4. Our audit was performed in accordance with the Rules and Recommendations of the Chamber of Official Auditors,
and, on a supplementary basis, with International Audit Standards, which require that the audit be planned
and performed in such a way as to give a reasonable assurance that the consolidated financial statements are free
from, or that they are not free from, material misstatement. To this end our audit included:
- checking that the financial statements of the companies included in the consolidated accounts have been correctly
audited and, in significant instances where this is not the case examination, on a test basis, of evidence relevant
to the amounts and disclosures in the financial statements and an assessment of estimates, based on judgements
and criteria defined by the respective directors, used in preparing the financial statements;
- an examination of consolidation operations and the application of the equity method;
- an assessment of the suitability of the accounting policies adopted and disclosure of these policies, taking
the circumstances into account;
- checking whether or not the going concern principle is applicable;
- an assessment of the overall adequacy of the presentation of information in the consolidated financial statements;
and
- an assessment of whether the consolidated financial information is complete, true, current, clear, objective
and lawful.
5. Our audit also included checking that the financial information contained in the consolidated management report
corresponding to the other financial statements.
6. We believe that our audit gives us a reasonable basis on which to issue our opinion.
179
Opinion
7. In our opinion, the financial information contained in the documents referred to above gives a true and fair view,
in all materially relevant aspects, of the state of affairs of the companies included in the consolidated accounts
of Banif SGPS, SA as at 31 December 2003 and the consolidated result of their operations and consolidated cash
flows in the financial year then ended, in keeping with accounting principles generally accepted in Portugal,
and that the information which they contain is complete, true, current, clear, objective and lawful.
Remarks
8. Without affecting our opinion as stated in the preceding paragraph, we wish to draw attention to the following:
a) The Legal Accounts Certificate and Audit Report for the consolidated accounts for 2002 contained a reservation
regarding the shortfall in provisions for other risks and charges in relation to liabilities deriving from irregularities
at a branch of Banif – Banco Internacional do Funchal, SA, detected after the close of the accounts. As stated
in 17 c) of the Notes to the Financial Statements, the losses incurred as a result of such irregularities are recorded
in full in the financial statements for 2003, in the Income Statement account for Extraordinary Losses, meaning
that such reservation is no longer applicable.
Ernst & Young Audit & Associados – SROC, SA
Registered with the Stock Market Board under no. 9011
Represented by:
Alfredo Guilherme da Silva Gândara
180
Banif SGPS, S.A. • Public Limited Company • Registered Offices: Rua de João Tavira, 30 • 9004 - 509 Funchal • Share Capital: 200.000.000 Euros
Corporate person no. 511 029 730 • Registered under no. 3658 at the Funchal Companies Registry
www.grupobanif.pt
181
Tecnical Credits
Design and pagination
Pre-production, Printing and Finishing
Legal Deposit
Ogilvy Design
Puzzle
n.º 208841/04

SGPS CD #1 [ing]

Transcription

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