Interim Management Statement

LUXEMBOURG/PORTUGAL--(BUSINESS WIRE)--

ESPÍRITO SANTO FINANCIAL GROUP S.A. ANNOUNCES ITS UNAUDITED CONSOLIDATED RESULTS FOR THE FIRST HALF OF 2010

Luxembourg/Portugal – 16 August 2010 - Espírito Santo Financial Group S.A. (“ESFG” or the “Company”) (NYSE Euronext Lisbon: ESF; Bloomberg: ESF PL; Reuters: ESF LS) today announces its unaudited consolidated results for the first half of 2010. The report is compiled under IFRS as implemented by the EU.

HIGHLIGHTS FOR THE REPORTING PERIOD¹

• Consolidated Banking Income at ESFG during the first six months of 2010 rose by 3.8% to EUR 1.08 billion (EUR 1.04 billion);
• Despite the continued challenging environment ESFG posted positive results for the first half of 2010 demonstrating its resilience to weak market conditions. Consolidated Net Income in H110, however, decreased by 18.8% YoY to EUR 57.7 million (EUR 71.0 million);
• Consolidated Net Interest Income decreased 17.8% YoY to EUR 548.2 million (EUR 666.9 million), reflecting the low interest rate and challenging financing environment;
• Consolidated Net Fees and Commissions rose 11.2% YoY to EUR 394.6 million (EUR 354.8 million) as ESFG continues to expand its international operations;
• Consolidated Market Results² contribution rose strongly to EUR 134.1 million (EUR 15.6 million), with strong results from both interest rate and equity instruments;
• Consolidated Insurance Earned Premiums Net of Reinsurance rose 1.8% YoY to EUR 155.9 million (EUR 153.1 million) despite continued competitive market pressures;
• Consolidated Claims Incurred Net of Reinsurance remained stable YoY at EUR 113.0 million (EUR 112.2 million);
• Consolidated Staff Costs and General Administrative Expenses increased by 8.0% to EUR 614.9 million (EUR 569.6 million) due to an increase in staff costs in the international expansion of ESFG’s subsidiaries;
• In July 2010, the Committee of European Banking Supervisors (“CEBS”), in cooperation with the European Central Bank and the Bank of Portugal, announced that ESFG had successfully completed the EU-wide stress testing exercise;
• Companhia de Seguros Tranquilidade S.A. (“Tranquilidade”) announced that it had entered into an agreement with Banco Pastor, on the 5 August, for the purchase of a 50.0% stake in Pastor Vida, S.A. de Seguros y Reaseguros (“Pastor Vida”). The move supports ESFG’s strategy of continued internationalisation of its business units;
• As part of Banco Espírito Santo’s (“BES”) continued expansion of its international business, ESFG’s principal banking subsidiary, announced in April of this year the conclusion of the acquisition of 40.0% of Aman Bank in Libya for EUR 39.8 million, including management control;
• In late July 2010, BES announced the signing of a Memorandum of Understanding by its subsidiary BES Africa S.G.P.S. to acquire 25.1% of the share capital of Moza Banco, S.A., a Mozambican bank, founded in June 2008.
• In August it was announced that BES, Banco do Brasil and Bradesco had signed a Memorandum of Understanding for an international partnership focusing on Portugal, Brazil and Africa. As a result of the partnership, Banco do Brasil and Bradesco will have a stake in BES Africa, BES’ holding for its financial investments in Africa.

¹ A year-on-year comparison of the key indicators is provided. Figures in parentheses following the operational and financial results for 2010 refer to the same item in 2009.

² Aggregate of Net Gains/Losses from Financial Assets at Fair Value through Profit and Loss; Net Gains on Available for Sale Financial Assets, Net Gains from Foreign Exchange Differences and Net Gains/Losses from the Sale of Other Assets.

CONFERENCE CALL

A conference call for investors and analysts will be held today at 3pm (GMT) / 4pm (CET) / 11am (EDT). An instant replay of the call will be available for two weeks. For details, contact Devina Artley at Taylor Rafferty on telephone number [phone].

MACRO ECONOMIC ENVIRONMENT

The second half of 2010 was marked by the deterioration of European sovereign risk, with spreads peaking at the beginning of May. The interest spread between the 10-year Greek public debt securities and the German benchmark bunds reached a high of 965 bps on 7 May and, on the same day, the same spread for Portugal and Spain reached 349 bps and 164 bps respectively. Investor confidence was further impacted by a downgrade, by one of the main rating agencies, of the sovereign ratings of Greece to BB+ (below investment grade), Portugal to A- and Spain to AA. The creation by the EU and the IMF of a financial stability fund, and the support provided by both these institutions to the Greek economy contributed to a partial restoration of confidence and the narrowing of sovereign spreads. However, at the end of the second quarter of 2010 spreads remain abnormally high (785 bps in Greece, 312 bps in Portugal and close to 200 bps in Spain).

The second half of 2010 also saw deterioration in investor sentiment on the back of the potential impact of the sovereign risk crisis on the European financial sector. At the end of the first half of 2010 liquidity in the money and credit markets had dried up. This affected, in particular, the economies in the periphery of the Euro Zone and led the ECB to increase the provision of liquidity to those economies. During March and June the 3-month EURIBOR rose from 0.634% to 0.767%, whilst the Euro dropped by 9.4% against the dollar to EUR/USD 1.226.

In this climate of high risk aversion and increased demand for safe haven assets, the yield on 10-year German government bonds fell by 52 bps, to 2.58% whilst the main stock market indices fell during the quarter. From March to June, the DAX and CAC40 indices lost 14.8% and 12.8% respectively, whilst the IBEX and the PSI-20 fell by 14.8% and 12.8%. In the US, the Dow Jones, Nasdaq and S&P500 declined by 10.0%, 12.0% and 11.9% respectively, and in Brazil the Bovespa index dropped by 13.4%. Despite the deterioration in confidence, global economic activity saw a recovery during the first half of the year, which was led by the main emerging economies but also supported by the acceleration of GDP growth in the US and Euro Zone in the second quarter. Portugal also benefited in the period from a more dynamic performance in exports, which grew by 18.4% year-on-year until May 2010. The Portuguese GDP is estimated to have registered year-on-year growth rate of close to 1.8% in both the first and second quarters.

OVERVIEW OF OPERATIONS

ESFG’s un-audited consolidated net profit for the first half of 2010, attributable to equity holders of the Company, reached EUR 57.7 million. Overall recurrent income remained healthy despite a very difficult operating environment, with operating income down by 3.2% to EUR 1.45 billion (EUR 1.50 billion). Total consolidated assets rose from EUR 85.3 billion at the end of 2009 to EUR 88.0 billion at the end of the first half of 2010.

The consolidated result represents a year-on-year fall in Net Income (“NI”) of 18.8% from EUR 71.0 million during the same period in 2009. ESFG’s insurance operations contributed negatively during the period, with heightened competition and a stagnant market, despite a rise in tariffs, results were affected by floods in Madeira and other storms that occurred at the beginning of the year. Tranquilidade’s direct line insurer, Seguros LOGO, established in 2008, reported a net loss of EUR 3.5 million in the period, despite strong growth in client numbers of over 100,000 clients by July 2010. ESFG’s non-controlling interest contributions increased year-on-year resulting, in part, from the sale in late 2009 of a 24.0% stake in Banco Espírito Santo Angola (“BESA”) which contributed to a dilution in net profits. BESA is one of the principal contributors to international net income at BES.

ESFG posted improved results in consolidated Net Fees and Commissions and Capital Market results. Fees and commissions totalled EUR 394.7 million (EUR 354.8 million in H109) and capital market results grew to EUR 134.1 million, dividend income grew by 10.6% to EUR 68.9 million. Net Interest Income (“NII”) fell during the period given the back-drop of historically low interest rates and continued pressure on liability spreads and the consolidated figure reached EUR 548.2 million for the first half of 2010.

Operating expenses during the period fell by 3.0% year-on-year. ESFG’s drive towards international expansion, namely at BES, saw staff costs and general administrative rise by 8.0%. Operating costs at BES grew by 9.9% driven due to its focus on its international business. Operating costs in Portugal increased by 4.4% year-on-year whilst costs in its international operations grew by 33.9% (6.6% QoQ). BES has increased its workforce outside of Portugal by 155 in the past 12 months.

BANKING OPERATIONS:

Retail banking at BES, supported by a network of 725 branches, includes 38 on-site branches, resulting from the bank’s partnership with insurance agents of Tranquilidade under the assurfinance programme. Corporate loans growth at BES remains strong, up by 11.1% year-on-year, 4.5% QoQ, evenly split between its Portuguese and international units.

The growth in BES’ international operations continues to make strong contributions to ESFG’s net income, particularly towards net interest income which rose by 26.4% year-on-year compared to a fall in the bank’s Portuguese NII of 31.9%. Banking income in the Portuguese operations fell by 6.9% year-on-year, banking income outside of Portugal increased by 14.6% during the same period. The importance of BES’ international growth strategy is highlighted by its international operations accounting for 34.1% of total income at the bank in H110.

BESA, which has been operating in the Angolan market for almost 10 years, continues to make substantial contributions to BES’ international growth. Operating income grew by 44.0% year-on-year and net interest income grew by 68.0%. Net assets grew year-on-year by 42.0% to EUR 5.5 billion. Individual net income rose by 20.0% to EUR76.8 million. BESA’s medium- and long-term strategy is to promote European enterprise activity as well as its activities in the local market which includes commercial banking and asset management.

BES made further steps into North Africa through its acquisition of a 40.0% stake and management control of Aman Bank in Libya. The acquisition reinforces the BES strategy of supporting its corporate client base both nationally and internationally. Aman Bank was founded in 2003 and operates 24 branches, concentrated in Tripoli and along the coast, with over 30,000 clients. In August 2010 BES’ asset manager ESAF announced the acquisition of Gespastor from the Spanish bank Banco Pastor. The purchase will include an exclusive commercial agreement for the period of 7 years.

The investment banking business at Banco Espírito Santo de Investimento (“BESI”) maintained its positive performance in the first half of 2010. Individual banking income rose by 21.2% YoY, to EUR 127.9 million. Non Portuguese business activity represented 60% of total banking income. Pre-tax income grew to EUR 43.0 million in 1H10, 26.8% higher YoY.

At ESFG’s French banking operations Banque Espírito Santo et de la Vénétie (“BESV”) banking income grew by 18.1% whilst operating costs grew by 10.3% year-on-year. Net income, however, dropped during the period on the back of a reduced contribution from its structured finance business, although in contrast BESV’s traditional lines of business improved. Increased credit spreads and higher commission income were countered by the low interest rate environment and higher financing costs.

ES Bankers (Dubai) (“ESBD”) reported Assets under Management (“AUM”), at the end of the first half of 2010 at USD 600 million, distributed amongst 200 private high net worth accounts. Individual income reached EUR 1.3 million, a year-on-year rise of 38.7%. The Dubai based operations focuses on both the traditional geographical client distribution of ESFG and also the Indian Sub-continent, South Asia and the Gulf Co-operation Countries. At ES Bank (Panama) (“ESBP”) individual net income reached USD 3.0 million in H110, a year-on-year rise of 25.0%.

In Switzerland, Banque Privée Espírito Santo (“BPES”), which focuses on private banking business, continues to make strong contributions to ESFG’s consolidated results. Individual net income rose by 14.3% to CHF 4.0 million in the first half of 2010 from CHF 3.5 million in H109. Despite the sharp devaluation in the EUR, particularly against the CHF, fees from securities trading grew by 12.0%. Capital market results, principally FX, increased by 4.0% year-on-year. AUM fell slightly, 1.5% year-on-year; Net New Money, however, grew by CHF 206 million.

Overall, asset quality at ESFG’s principal banking operations, BES, remained resilient. The economic downturn has had its effect on the levels of overdue loans both in Portugal and elsewhere. Non Performing Loans (NPL) at BES rose from 1.77% at the end of 2009 to 1.9% by the end of the second quarter 2010. According to the Bank of Portugal (May 2010) BES’ NPL figures compare favourably to an average quarterly figure in the Portuguese banking sector of 3.3%. BES’ coverage ratio remains strong at 185.0%.

The associated H110 credit provisioning charge reached EUR 174.5 million, lower than the H109 figure but which included an extraordinary charge of EUR 40 million. The H110 charge of 65 basis points of the loan portfolio was down to a 62 basis point charge in the first quarter 2010 followed by a 72 basis point charge in the second quarter. The total provisions for credit at the end of the first half of 2010 increased to 3.15%.

INSURANCE OPERATIONS:

On a consolidated basis ESFG’s insurance operations contributed negatively during the period, with heightened competition and a stagnant market, despite a rise in tariffs, results were affected by floods in Madeira and other storms that occurred at the beginning of the year.

Tranquilidade’s stand alone net profit increased by 12.1% year-on-year to EUR 5.1 million during the period. Despite the decrease in the technical results (EUR 32.4 million in H109 to EUR 24.3 million in H110), a reduction in general costs (EUR 36.4 million to EUR 34.3 million) and an increase in financial results (EUR 11.9 million to EUR 18.3 million). Tranquilidade’s combined ratio increased from 101.2% to 104.0%, due to the increase in the loss ratio.

In August 2010, Tranquilidade announced that it had entered into an agreement with Banco Pastor for the purchase of a 50.0% stake in Pastor Vida whilst the remaining 50.0% stake will be held by Banco Pastor. The stake in Pastor Vida will cost Tranquilidade EUR 64 million, paid over the next 5 years. A further variable amount paid to Banco Pastor, and based on the performance of Spanish life insurer over the next 10 years, will be limited to no more than EUR 38 million made in two tranches at the end of December 2014 and 2019.

Tranquilidade will assume management control of Pastor Vida and has the exclusivity in distribution of its life products through the Banco Pastor Branch network. Banco Pastor, founded in 1776, is the seventh largest banking group in Spain and permits Tranquilidade to broaden its international presence. The transaction is subject to a number of conditions, as is usual with this type of agreement, and includes the authorisation and non impediment clauses from the competent authorities.

HEALTHCARE OPERATIONS:

Year-on-year operating revenues at ESFG’s healthcare operator Espírito Santo Saúde (“ESS”) rose by 14.4% to EUR 124.0 million in the first half of 2010. Individual net income at the healthcare unit remains positive. Hospital da Luz, the largest private hospital in Portugal and key investment at ESS, saw revenue growth up by 17.0% year-on-year. The healthcare operator’s positive performance is a key growth driver seen in ESFG’s Other Operating Income.

INCOME STATEMENT SUMMARY

(EUR Thousands)	H109	H110	YoY
+ Net Interest Income	666 867	548 190	-17.8%
+ Net Fees and Commissions	354 795	394 648	11.2%
+ Capital Markets Results	15 555	134 129	-
= Banking Income	1 037 217	1 076 967	3.8%
+ Insurance Earned Premiums Net of Reinsurance	153 127	155 916	1.8%
+ Other Results & Dividend Income	312 101	221 370	-29.0%
= Operating Income	1 502 445	1 454 253	-3.2%
- Operating Expenses	1 193 227	1 155 898	-3.1%
= Profit before Tax (inc. Gains from Financial Investments & Share of profit of Associates)	324 069	319 755	-1.3%
- Tax	58 012	30 048	-48.2%
- Minority Interests	195 064	232 054	19.0%
= Net Income	70 993	57 653	-18.8%

PRINCIPAL ITEM ANALYSIS

Consolidated Net Interest Income fell by 17.8% year-on-year to EUR 548.2 million (EUR 666.9 million); solvency concerns of the European banking sector, seen in H110, lead to the drying up of the interbank market and resulted in significant increases in financing costs. The increase in the volume of business was insufficient to compensate for the fall in Net Interest Margin (“NIM”). The rise in the perceived risk increase in spreads led to a 45 basis point fall in NIM at BES from 1.96% to 1.51%, interest earning assets fell by 96 basis points to 3.9% whilst the average rate of interest bearing liabilities fell by 52 basis points to 2.38%

It is important to note that there has been a slight improvement, quarter-on-quarter, in NII in the second quarter of H110. The increase of yields in the Bank’s securities portfolio and an increased use of the ECB liquidity facility both contributed to the improvement. BES London Branch, which focuses on the European wholesale banking market, remains a key contributor to BES’ international operations. Fund raising activities declined, however, most notably following the downgrade of Portugal’s sovereign debt in April 2010.

Consolidated Fees and Commissions (Net of Expenses) saw an increase of 11.2% year-on-year to EUR 394.7 million (EUR 354.8 million). The first half of 2010 saw a dynamic growth in documentary credit and strong increases in guarantees and fees on securities activities. At BES, documentary credit fees grew by 48.9% year-on-year, with commissions on loans and guarantees up by 20.5% and 22.3% respectively. Capital market related fees grew by 27.6%, supported by the improvement in investor confidence on managed asset products. These figures reinforce ESFG’s internationalisation strategy seen in Angola, Brazil and elsewhere.

Consolidated Capital Markets Results totalled EUR 134.1 million in H110. This demonstrates the capacity of ESFG’s banking subsidiary BES to return resilient results despite very difficult circumstances. The bank reported improved results in interest rate, FX instruments as well as equity trading, having gained from dividend payments in the second quarter. On going concerns over sovereign debt has led to a lower probability of an increase in interest rates, thus influencing all areas of risk.

On 23 July the committee of European Banking Supervisors (“CEBS”), in cooperation with the European Central Bank and the Bank of Portugal announced that ESFG has successfully completed the EU-wide Stress Test Exercise. The stress test compliments the risk management procedures and regular stress testing programmes set up at ESFG under the Pillar 2 framework of Basel II and the Capital Requirements Directive. The exercise was conducted using the scenarios, methodology and key assumptions provided by CEBS. As a result of the assumed shock under the adverse scenario, the estimated consolidated Tier I capital ratio would change to 7.4% in 2011 compared to 7.7% as of the end of 2009 against the threshold of 6.0%. An additional sovereign risk scenario would have a further impact of 0.5% on the estimated Tier I capital ratio, bringing it to 6.9% at the end of 2011, compared with the regulatory minimum of 4.0%.

On 6 August BES announced the bank’s stress test results. The exercise was conducted under the same EU-wide Stress Test Exercise as ESFG. The estimated consolidated Tier I capital ratio would change to 8.0% in 2011 compared to 8.3% as of the end of 2009. An additional sovereign risk scenario would have a further impact on the estimated Tier I capital ratio, bringing it to 7.5% at the end of 2011.

ESFG’s capital ratios reported to the Bank of Portugal, under IRB Foundation at the end of June 2010 are: Core Tier 1 6.9%, Tier I 8.0% and a total solvency of 9.6%. The solvency position at ESFG’s principal banking operation, BES, for the same period were 7.9%, 8.4% and 11.0% respectively.

Consolidated Insurance Earned Premiums Net of Reinsurance increased by 1.8% to EUR 155.9 million from EUR 153.1 million in the first half of 2010. Consolidated Claims Incurred Net of Reinsurance remained relatively unchanged at EUR 113.0 million in H110, compared to EUR 112.2 million in H109. Overall consolidated contribution of all insurance activities at ESFG fell year-on-year.

Insurance activities continue to be impacted by the stagnant Portuguese Non-Life market. However, Tranquilidade premiums increased by 4.2% compared to H109 (above a market growth of -0.5%), the non life market share increased to 7.8%. Health products grew by 15.3%, fire and other perils increasing by 3.8%, and motor rose by 5.1%. The assurfinance programme continues to provide cross selling through Tranquilidade’s agents, accounting for close to 20.0% of new clients generated at BES and 8.0% of new mortgages. Distribution at Tranquilidade is made through 73 franchised shops and a total of 358 points-of-sale in H110.

The expense ratio improved from 29.6% to 27.8% during the period. Expenses at Tranquilidade decreased by 5.7% with personnel costs falling by 0.8%, highlighting the positive effects of the going cost reduction programme.

ESFG’s direct insurance business Seguros LOGO reported that it had achieved gross written premiums of EUR 8.5 million and a net loss of EUR 3.5 million in H110. The internet and telephone based non life insurer broke through the 100,000 client mark during the period. T-Vida reported an individual profit of EUR 2.3 million a year-on-year rise of 10.9% and despite a decrease in the technical result from EUR 5.1 million to EUR 4.4 million, which was due to the impact of the interest rates decrease on the liability adequacy test. Risk products continue to represent the main company focus.

Consolidated Staff Costs and General Administrative Expenses increased by 8.0 % to EUR 614.9 million from EUR 570.0 million in H109. The increase in staff costs resulted from ESFG’s subsidiaries continued international expansion. Staff costs in Portugal remain under control. Costs relating to pension liabilities for the amortisation of actuarial differences are included within staff costs.

Espírito Santo Saúde (“ESS”) represents the principal driver to Other Operating Income and Expenses. ESS remains a key driver to this income. The healthcare company operates 18 hospitals, out-patient clinics, residential hospitals, senior care residencies as well as participating in the Public-Private Partnership at the Loures Hospital in Portugal, which is currently under construction and will be in service by early 2012. The year-on-year growth in operating income at ESS of 14.4% came in despite of the difficult economic conditions. Dividend income rose 10.6% to EUR 68.9 million in the first half of 2010 as capital markets improved.

DEVELOPMENTS DURING H110 AND SUBSEQUENT EVENTS

• Companhia de Seguros Tranquilide S.A. announced that it had entered into an agreement with Banco Pastor, on the 5 August, for the purchase of a 50.0% stake in Pastor Vida. The move supports ESFG’s strategy of continued internationalisation of its business units.
• On the same day, Espírito Santo Gestión, SGIIC, SA (“ES Gestión”) announced the agreement to fully acquire Banco Pastor’s fund manager Gespastor SGIIC, S.A. (“Gespastor”) for the sum of EUR 25.75 million. The purchase will include an exclusive commercial agreement for the period of 7 years. ES Gestión is a fully owned subsidiary of Banco Espírito Santo.
• On 26 July BES announced the signing of a Memorandum of Understanding by its subsidiary BES Africa S.G.P.S. to acquire 25.1% of the share capital of Moza Banco, S.A., a Mozambican bank, founded in June 2008. In August BES, Banco do Brasil and Bradesco had signed a Memorandum of Understanding for an international partnership focusing on Portugal, Brazil and Africa. As a result of the partnership, Banco do Brasil and Bradesco will have a stake in BES Africa, BES’ holding for its financial investments in Africa.
• On 23 July the CEBS, in cooperation with the European Central Bank, and the Bank of Portugal, announced that ESFG had successfully completed the EU-wide stress testing exercise.
• On 21 July Fitch Ratings announced the downgrade of ESFG’s long-term debt by one notch to BBB+ (negative outlook) from A-, this followed the downgrade of BES from A+ to A (negative outlook). ESFG’s short-term debt rating was affirmed at F-2.
• On 14 July Moody’s Investor Services announced the downgrade of ESFG’s long-term debt rating to Baa1 (negative Outlook) from A3, following the two notch downgrade of Portugal’s rating and subsequent one notch rating downgrade at BES. ESFG’s short-term debt rating was affirmed at P-2.
• On 4 May ESFG announced the adjusted conversion price of the SWInG EUR 500 million convertible (XS0234103546) to EUR 21.66. The adjustment was in effect as of 28 May 2010.
• A dividend per share of EUR 0.35 was approved at ESFG’s AGM held on 30 April 2010 in Luxembourg. The figure represents a dividend yield of 2.4% relative to the share price at year end 2009.
• On 15 April BES announced the conclusion of the acquisition of 40.0% of Aman Bank in Libya for EUR 39.8 million, including management control.

CONTACTS

Espírito Santo Financial Group	Taylor Rafferty
Filipe Worsdell	Faisal Kanth
[phone]	[phone]
[e-mail]	[e-mail]

The Espírito Santo Financial Group provides, through its subsidiaries, a global and diversified range of financial services to its clients including Commercial banking, Insurance, Investment banking, Stock-brokerage, Healthcare services and Asset management in Portugal and internationally. For additional information on Espírito Santo Financial Group, its subsidiaries, operations and results, please visit the Company’s website on www.esfg.com.

– Tables to follow –

ESPÍRITO SANTO FINANCIAL GROUP SA
CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2010, 30 JUNE 2009 AND 31 DECEMBER 2009
	(in thousands of euro)
	30.06.2010	30.06.2009	31.12.2009
	Unaudited	Unaudited	Audited
Assets
Cash and deposits at central banks	1 984 339	1 240 548	2 224 331
Deposits with banks	749 525	766 690	793 844
Financial assets held for trading	5 997 018	4 052 970	4 490 699
Other financial assets at fair value through profit or loss	1 833 577	1 918 003	1 273 417
Available-for-sale financial assets	10 786 267	7 951 398	9 079 449
Loans and advances to banks	2 396 664	10 443 053	7 648 348
Loans and advances to customers	53 954 202	49 478 565	50 508 217
Held-to-maturity investments	2 750 025	2 669 805	2 535 309
Derivatives for risk management purposes	532 552	487 164	455 115
Non-current assets held for sale	486 369	252 108	407 585
Property and equipment	1 106 574	985 231	1 014 776
Investment properties	78 910	91 049	89 817
Intangible assets	387 735	355 187	373 851
Investments in associates	474 315	291 362	418 162
Technical reserves of reinsurance ceded	83 987	54 963	59 396
Current income tax assets	27 726	62 943	28 631
Deferred income tax assets	282 168	179 675	217 932
Other assets	4 129 236	3 451 559	3 698 108
Total assets	88 041 189	84 732 273	85 316 987
Liabilities
Deposits from central banks	8 995 744	3 239 863	3 817 643
Financial liabilities held for trading	2 186 039	1 602 529	1 568 896
Deposits from banks	7 399 880	10 834 819	6 890 825
Due to customers	26 425 812	25 537 562	25 694 477
Debt securities issued	30 091 363	31 216 611	34 039 730
Derivatives for risk management purposes	241 304	310 510	253 148
Investment contracts	340 490	409 245	395 158
Non-current liabilities held for sale	35 217	41 938	21 609
Provisions	192 984	158 671	193 174
Technical reserves of direct insurance	1 019 718	1 000 756	994 752
Current income tax liabilities	129 488	75 941	162 508
Deferred income tax liabilities	110 241	82 996	83 193
Subordinated debt	2 728 244	2 671 537	3 048 825
Other liabilities	1 447 855	1 522 970	1 412 361
Total liabilities	81 344 379	78 705 948	78 576 299
Equity
Share capital	778 549	778 549	778 549
Share premium	253 656	253 656	253 656
Preference shares	394 514	395 514	395 514
Other equity components	113 905	115 171	114 368
Fair value reserve	( 19 918)	( 48 254)	60 507
Other reserves and retained earnings	( 81 579)	( 210 472)	( 208 773)
Profit for the period attributable to equity holders of the Company	57 653	70 993	157 477
Total equity attributable to equity holders of the Company	1 496 780	1 355 157	1 551 298
Non-controlling interest	5 200 030	4 671 168	5 189 390
Total equity	6 696 810	6 026 325	6 740 688
Total equity and liabilities	88 041 189	84 732 273	85 316 987

CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2010 AND 2009
	(in thousands of euro)
	30.06.2010	30.06.2009
	Unaudited	Unaudited
Interest and similar income	1 907 431	2 171 018
Interest expense and similar charges	1 359 241	1 504 151
Net interest income	548 190	666 867
Dividend income	68 879	62 306
Fee and commission income	451 451	403 855
Fee and commission expenses	( 56 803)	( 49 060)
Net gains / (losses) from financial assets and financial liabilities at fair value through profit or loss	( 56 754)	( 299)
Net gains from available-for-sale financial assets	170 678	1 771
Net gains from foreign exchange differences	24 041	19 105
Net gains / (losses) from the sale of other assets	( 3 836)	( 5 022)
Insurance earned premiums net of reinsurance	155 916	153 127
Other operating income	152 491	249 795
Operating profit	1 454 253	1 502 445
Staff costs	374 821	350 286
General and administrative expenses	240 121	219 265
Claims incurred net of reinsurance	113 008	112 214
Change on the technical reserves net of reinsurance	4 519	( 5 609)
Insurance commissions	16 431	15 813
Depreciation and amortisation	69 774	60 471
Provisions net of reversals	12 877	13 967
Loans impairment net of reversals and recoveries	168 992	270 001
Impairment on other financial assets net of reversals	30 300	22 734
Impairment on other assets net of reversals	21 078	19 480
Other operating expenses	103 977	114 605
Operating expenses	1 155 898	1 193 227
Gains on disposal of investments in subsidiaries and associates	-	832
Share of profit of associates	21 400	14 019
Profit before income tax	319 755	324 069
Income tax
Current tax	49 077	60 282
Deferred tax	( 19 029)	( 2 270)
	30 048	58 012
Profit for the period	289 707	266 057
Attributable to equity holders of the company	57 653	70 993
Attributable to non-controlling interest	232 054	195 064
	289 707	266 057