BEKB | BCBE in the first half of 2005

Friday, 19. August 2005 08:09

BEKB | BCBE posted solid results for the first half of 2005. Net
pre-tax profits rose by 7.8 per cent to 56.6 million francs, as
compared with 52.5 million francs in the same period of the previous
year. Expansion continued in both our core business fields: mortgage
lending was up by 185 million francs, savings deposits by 243
million. Loans to clients are 100% backed by client funds. Besides
this, client assets under management in securities accounts rose by a
further influx of 148 million francs in new money. Costs were again
kept to a moderate level, remaining within the target range. We
continued to foster high-quality new companies. Funding was approved
for 62 new ventures.
In view of the Bank's positive results for 2004 and its sound
foundations, the General Meeting of Shareholders of BEKB | BCBE on 17
May 2005 approved the eighth dividend increase in succession, a
capital repayment and a rights issue. The reduction of the par-value
of the share to 35 francs took place on 5 August 2005, and the
concomitant payment of 10 francs per share was made on the same date.
Between 10 and 26 August shareholders were able to subscribe for new
shares at a price of 100 francs per share under the rights issue.

Lending in the first half of 2005 continued to focus particularly on
small and intermediate advances to private individuals and SMEs in
the Espace Mittelland. BEKB | BCBE advanced 3,762 new loans to
clients, with a total volume of 690 million francs. Overall lending
totalled 14.1 billion francs. Mortgage lending rose by 1.5 per cent
to 12.7 billion francs. Mortgage interest rates were at a very low
level on a historical comparison, leading to a rise in the proportion
of fixed-rate mortgage loans to some 76 per cent. Lending is subject
to the requirement that borrowers must be in a position to service
their advances even if interest rates were to stabilise at a higher
level. With its three mainstays - financing of new companies and
growth, financing of successor arrangements, seed financing - our
promotional concept supports SMEs and new companies. Lending to new
companies and financing of successor arrangements is subject to an
overall limit of 150 million francs, and loan commitments reached
76.7 million by the half-year point. Advances of a further 22.9
million francs were approved in the first half-year for projects in
all regions, helping to create 427 jobs.

BEKB | BCBE has a sound financing structure. Client funds in the
narrower sense of the term (savings deposits, medium-term notes and
other liabilities to clients) increased to 15.0 billion francs.
Clients continue to maintain a high level of liquidity. Savings
deposits were up 2.2 per cent to 11.2 billion francs. Total assets
at the end of the first half of 2005 were 20.9 billion francs, 3.1
per cent more than at the start of the year.

BEKB | BCBE continued its successful expansion programme in the
Canton of Solothurn, further increasing its client base to around
7,500. Overall business volume exceeded 790 million francs. Over
4,000 visitors attended the third BEKB | BCBE Family Day in the town
of Solothurn on 5 June 2005.

Income statement: Profit from interest operations was 137.5 million
francs, 3.1 per cent ahead of the comparable figure for the previous
year. Expansion in investment advice continued, the number of client
securities accounts rising by 1.6 per cent to over 85,000. Assets
under management rose by 5.6 per cent in the first half of 2005 to
18.4 billion francs. Securities under discretionary management rose
by 360 million francs to 4.5 billion francs, while investment-fund
holdings in client accounts rose by 279 million francs to 2.9 billion
francs. Profits from commission business increased by 11.4 per cent,
while profits from trading - consciously kept at a low level in line
with the Bank's overall policy - exceeded the figure for the
comparable period of the previous year by 8.4 per cent.

Continued cost control kept the ratio of operating expenditure to
operating earnings within the target range of 50-55 per cent.
Operating expenditure rose by 1.8 per cent. New lending provisions
were further reduced to 6.0 million francs, from the previous year's
figure of 8.4 million. Reserves for general banking risks increased
to 23.0 million francs (previous year: 15.5 million francs). The
increase was charged to extraordinary expenditure.

BEKB | BCBE attaches great importance to preparing the next
generation of employees and managers. We employ about a quarter of
all the banking-sector apprentices in the Canton of Berne. All 40
third-year apprentices (fourth-year in the case of the two IT
apprentices) successfully completed their basic training with
BEKB | BCBE this year, achieving above-average results.

In accordance with a resolution of the General Meeting of
Shareholders on 17 May 2005 the BEKB | BCBE dividend to shareholders
was increased for the eighth time in succession, from 3.00 to 3.10
francs per share. At the same time the General Meeting of
Shareholders approved two further shareholder-friendly proposals: for
a capital repayment and a rights issue. On 5 August 2005 the
par-value of BEKB | BCBE registered share was reduced from 45 to 35
francs, and 10 francs per share repaid to shareholders. Under the
rights issue (8.35 francs per share) shareholders were able to
acquire one new share for every ten previously held, at a price of
100 francs per share. The subscription period ended on 26 August
2005. With some 55,000 shareholders, BEKB | BCBE is one of the top
twelve Swiss companies in terms of the breadth of its shareholder
base. Since the positive outcome of the referendum on the change in
the legal form of BEKB | BCBE in November 1997 the price of our
registered share has more than doubled.

BEKB | BCBE continued to achieve good results in the first half of
2005. On a basis comparable with other canton banks, net pre-tax
profits reached 56.6 million francs - exceeding the previous year's
figure by 7.8 per cent. In term of earnings after tax there was an
increase of 4.6 per cent in interim profit to 42.1 million francs
(previous year: 40.3 million francs).

BEKB | BCBE has an ambitious financial target for the ten-year period
from 2003 to 2012: to generate free cash flow of between 800 million
and 1 billion francs. The business and lending policy of BEKB | BCBE
demonstrates continuity and maintains our long-term course.

At its meeting on 18 August 2005 the Board of Directors of the
BEKB | BCBE also elected Johannes Hopf (48) to the bank's senior
management team. He will join the bank on 1 November 2005. Johannes
Hopf has many years' experience of corporate management in
healthcare, and he has held senior positions in logistics and
accounting in both the insurance sector and industry. With
qualifications in accounting and financial control as well as the
degree of Master of Health Administration (MHA), he has also
fulfilled various functions in the financial field.

From November 2005 the senior management of the BEKB | BCBE will thus
consist of the following persons: Jean-Claude Nobili, Chief
Executive; Hanspeter Rüfenacht, Head of Sales; Stefan Gerber, Head of
Major Clients and the Solothurn region; Dr Walter A Eggenschwiler,
Head of Organisation, Resources and Quality Management; and Johannes
Hopf, Head of Production and Operations.

Berne, 19 August 2005 BEKB | BCBE

The full report including tables can be downloaded from the enclosed
View document
Jean-Claude Nobili
Phone +41 31 666 10 90
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