3rd Quarter Results

LUXEMBOURG/PORTUGAL--(BUSINESS WIRE)--

ESPÍRITO SANTO FINANCIAL GROUP S.A. ANNOUNCES ITS UNAUDITED CONSOLIDATED RESULTS FOR THE FIRST NINE MONTHS OF 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 nine months of 2010. The report is compiled under IFRS as implemented by the EU.

HIGHLIGHTS FOR THE REPORTING PERIOD¹

• Consolidated Net Income for 9M10 reached EUR 85.6 million, a decline of 15.5% when compared to a year earlier (EUR 101.3 million);
• Consolidated Banking Income at ESFG rose by 5.5% to EUR 1.7 billion (EUR 1.6 billion);
• Consolidated Net Interest Income decreased 7.4% YoY to EUR 904.2 million (EUR 976.5 million), reflecting the low interest rate and continued challenging financing environment;
• Consolidated Net Fees and Commissions rose 14.8% YoY to EUR 609.5 million (EUR 530.8 million) as ESFG continues to expand its international operations with very strong growth in foreign trade related fees at Banco Espírito Santo (“BES”);
• Consolidated Insurance Earned Premiums Net of Reinsurance rose 4.1% YoY to EUR 242 million (EUR 232.6 million) despite continued competitive market pressures;
• Consolidated Claims Incurred Net of Reinsurance rose 5.0% YoY to EUR 181.1 million (EUR 172.4 million);

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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].

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.

FORWARD

An agreement between the Portuguese minority Government and the main opposition party has ensured the Parliamentary approval of the 2011 budget, allowing the deficit reduction process to proceed in an environment of political stability. Tough austerity measures in the budget include a 5% cut in public sector pay and a 2% rise in VAT. These measures are expected to lead a fall in the budget deficit from 7.3% to 4.6% of GDP in 2011. This should be seen as an important step in regaining market confidence and normalising of access to external funds.

Portugal and Portuguese banks have been affected by the limited access to external funds since April this year; this has triggered an increase in the use of ECB funds which peaked in August at EUR 49.1 billion. In September however available data indicates a drop in ECB fund usage to EUR 39.7 billion.

MACRO ECONOMIC ENVIRONMENT

The Portuguese economy grew in the first nine months of the year (1.5% YoY), benefiting in part from the dynamic performance of exports, which registered nominal year-on-year growth of 14.0% in the three months to 31 August. However, sluggish domestic demand points to dampened growth in the second half of the year. The PSI-20 gained 6.25% between July and September.

Despite the initial positive impact of the disclosure from the stress tests performed on the European banking sector, the third quarter of 2010 was marred by concerns over the sovereign risk of peripheral members of the Euro Zone. The spread between the 10-year Irish and Greek public debt securities and the German benchmark bunds rose from 291 and 771 basis points (“bp”) in July to 430 and 817 basis points in September (with a peak of 449 and 952bp) respectively. The Bund spread between the Portuguese public debt also increased over the same period from 301 basis points to 402 basis points (with a peak of 426 bp).

In contrast Spain’s sovereign spreads tightened during the quarter, narrowing the difference between the German 10-year bunds with a downward move from 201 basis points to 184 basis points. Faced with continued risk concerns within the market financing of these economies, the ECB extended the unlimited provision of liquidity under auctions of 3-month government securities. However demand for ECB funds from Euro Zone financial institutions fell during the period, reflecting a degree of normalisation in the money markets. The 3-month Euribor rose from 0.767% to 0.892%.

In the US, expectations of moderate nominal growth and that the Fed will reinforce its quantitative easing policy contributed to a fall in the 10-year Treasury yield by 40 bp, to 2.512%. In Germany, the 10-year public debt securities yield dropped by 30 bp, to 2.278%. The Euro rose by 11.1% against the dollar, to EUR/USD 1.36 (The Euro continues to remain strong reaching 1.40 to the dollar in the fourth quarter).

A combination of global recovery in economic activity and contained inflation helped boost the main equity indices. Between July and September, the DAX, CAC40 and IBEX indices gained 4.42%, 7.91% and 13.51%, respectively. In the US, the Dow Jones, Nasdaq and S&P 500 advanced by 10.37%, 12.3% and 10.72% in the quarter, and in Brazil, the Bovespa index was up by 13.94%.

OVERVIEW OF OPERATIONS

ESFG’s un-audited consolidated net profit for the first nine months of 2010, attributable to equity holders of the Company, reached EUR 85.6 million. Overall recurrent income remained healthy despite a difficult operating environment. Operating income remained unchanged at EUR 2.2 billion (EUR 2.2 billion). Total consolidated assets remains stable at EUR 85.4 billion (EUR 85.3 billion 9M09). The consolidated result represents a year-on-year fall in Net Income (“NI”) of 15.5% from EUR 101.3 million during the same period in 2009. Quarter on quarter net income fell by 7.9% to EUR 27.9 million (EUR 30.3 million).

Despite the financial challenges experienced by southern European banks BES continues to pursue its strategic path, and is central to long term profitability. The strong performance from both Angolan (BES Angola) and Brazilian (BES Investimento do Brasil) operations qualifies the strategic decision made ten years ago for greater internationalisation. Spain, the third area within the bank’s strategic triangle also reported positive results in 2010. In the first nine months of 2010 the strategic triangle made up 61% of the international contribution at BES and 25% of BES’ consolidated results. The UK banking operations remain strong making up 29.9% of the international contribution at BES.

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”) contributed to a dilution in net profits. BESA is the principal contributor to international net income at BES. Income attributable to minority interests rose to EUR 369.8 million in 9M10 (EUR 287.6 million).

ESFG posted improved results in consolidated Net Fees and Commissions and Capital Market results. Fees and commissions totalled EUR 609.5 million (EUR 530.8 million in 9M09) and capital market results grew to EUR 183.3 million (EUR 102.0 million in 9M09). Net Interest Income (“NII”) fell during the period given the back-drop of historically low interest rates and continued pressure on liability spreads, the consolidated figure reached EUR 904.1 million for the first nine months of 2010.

ESFG’s insurance operations results continue to be affected by heightened competition and a stagnant market, despite a rise in individual premiums at Tranquilidade of 5.2% year-on-year. Results were also affected by floods in Madeira and other storms that occurred at the beginning of the year, multi-perils claims contributed to an increase in the claims ratio. The expense ratio improved from 31.4% to 29.1% reflecting the ongoing cost reduction programme which included a 6.6% fall in expenses and 1.3% decrease in personnel costs.

Operating expenses during the period fell by 2.2% year-on-year despite an increase in interest costs at ESFG namely due to the Lower Tier II (EUR 400 million) issued in late 2009. ESFG’s drive towards international expansion, principally at BES, saw staff costs and general administrative rise by 8.2%. Operating costs at the Bank grew by 10.3% due to its focus on its international business where costs grew by 36.3%, the bank’s Cost to Income ratio remains below 50.0%. Staff costs at BES increased with 144 new admissions and the inclusion of 404 employees at Aman Bank, Libya.

BANKING OPERATIONS:

Consolidated Banking Income, including market results, at ESFG during the first nine months of 2010 rose by 5.5% to EUR 1.7 billion (EUR 1.6 billion).

At BES 9M10 net individual income rose by 12.4% year-on-year to EUR 405.4 million, commercial banking income rose by 2% to EUR 1.5 billion. Corporate loans growth remains strong, up by 8.9% year-on-year equivalent to EUR 3.1 billion. Customer deposits also grew strongly, by 22.6%. Customer funds decreased however by 2.3% as a consequence of a reduction in debt securities, issued by the bank, namely certificates of deposit.

The growth in BES’ international operations continues to make strong contributions to ESFG’s net income, particularly towards net interest income (“NII”) where non Portuguese NII rose by 50.5% year-on-year to EUR 339.1 million compared to a fall in the bank’s domestic NII of 28.0%. Banking income at BES rose by 2.5%, Portuguese operations, however, fell by 6.5% year-on-year whilst banking income outside Portugal increased by 27.5% during the same period. The importance of BES’ international growth strategy is highlighted by its international operations accounting for 41.0% of total income at the bank in 9M10.

BES, through its fully owned subsidiary BES África SGPS, made further steps into North Africa through its acquisition of a 40.0% stake and management control of Aman Bank in Libya. In October 2010, BES also announced its purchase of a 25.1% stake in Moza Bank S.A., a Mozambican bank founded in June 2008. These acquisitions reinforce the Group’s strategy of supporting its corporate client base both nationally and internationally. In July, BES fully inaugurated its fully owned bank in Cabo Verde, BES Cabo Verde. 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.

BES Angola has been operating in the Angolan market for almost 10 years and continues to make substantial contributions to BES’ international growth. Net income grew by 16.2% year-on-year to EUR 64.6 million. Brazil, Africa and Spain make up the three members of the strategic triangle and combined contributed EUR 101.7 million to BES’ international net income. The investment banking business at Banco Espírito Santo de Investimento S.A. (“BESI”) reported a 44.1% year-on-year increase in pre-tax individual profit to EUR 49.1 million. Individual banking income rose by 22.1% year-on-year, to EUR 196.6 million. Business outside Portugal represented 68.0% of total banking income.

At ESFG’s French banking operations Banque Espírito Santo et de la Vénétie (“BESV”) was able to buffer the negative impacts of low interest rates and high refinancing costs through a positive commercial performance, an increase in credit spreads and the commission income which was in part generated by new business lines. Banking income grew by 22.1% year-on-year, while operating costs increased by 8.6%. The cost to income was 55.9%. The gross operating income totalled EUR 15.6 million, representing a year-on-year increase of 39.2%.

ES Bankers (Dubai) Limited (“ESBD”) reported an individual Net Income reached EUR 1.8 million (EUR 1.4 million). The Dubai operation 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 EUR 3.3 million in 9M10, a year-on-year rise of 14.3%.

In Switzerland, Banque Privée Espírito Santo (“BPES”), which focuses on private banking, continues to make positive contributions to ESFG’s consolidated results. Overall results were influenced by the devaluation of the EUR and USD versus the CHF and by the weak economic picture in Europe. Despite a seasonal slowdown in the third quarter individual net income reached CHF 5.0 million for the first nine months of 2010, with individual banking income, for the same period, at CHF 43.3 million. Brokerage fees grew by 28.0% year-on-year, whilst historically low interest rates lead to a 53.0% fall in NIM. Net new entries at BPES grew by CHF 171 million in the first nine months of the year. Assets under management fell by 5.0% however to CHF 495.0 million due the weaker EUR.

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 2.1% by the end of the third quarter 2010. According to the Bank of Portugal BES’ NPL figures compare favourably to an average quarterly figure in the Portuguese banking sector of 3.4%. BES’ coverage ratio remains strong at 172%.

The associated 9M10 credit provisioning charge reached EUR 258.1 million, 9M09’s figure included an extraordinary charge of EUR 40 million. BES maintains a conservative risk profile with a cost of risk of 63 basis points in the quarter and 65 basis points in 9M10. The total provisions for credit against gross loans at the end of the first nine months of 2010 increased to 3.27%.

INSURANCE OPERATIONS:

ESFG’s combined insurance operations, the largest private insurance operator by overall premiums (life and non life) in Portugal, were negatively affected by heightened competition and a stagnant market, despite a rise in premiums. The Group’s non life market share, through Tranquilidade, BES Seguros and Seguros LOGO, continues to grow strongly during the period and is expected to grow further. Net individual income reached EUR 5.8 million, technical results during the period fell to EUR 51.1 million from EUR 54.8 million a year earlier. Financial results rose during the period to EUR 23.4 million (EUR 16.0 million in 9M09). The combined ratio at Tranquilidade reached 106.7% from 104.4% on the back of an increase in the loss ratio.

Tranquilidade’s market share rose to 7.8% with priority products; health, fire and other perils and motor insurance up 12.2%, 3.3% and 6.4% respectively. The assurance programme of cross selling banking products through its agents accounted for 19% of new clients at BES and 9% of all mortgages. Tranquilidade’s distribution chain is made up of 73 franchise shops and 363 points of sale. The expense ratio improved from 31.4% to 29.1% reflecting the ongoing cost reduction programme which included a 6.6% fall in expenses and 1.3% decrease in personnel costs.

On the 20 September 2010 Fitch affirmed Tranquilidade’s stand alone rating as A- and moved ESFG’s insurance operation from negative outlook to stable. Fitch qualified its decision by stating that it recognised the insurance group’s capital strength and reflected the strong franchise and market position held as well as the financial flexibility offered by being part of ESFG. Fitch further acknowledged Tranquilidade’s strategy of organic domestic growth and moves for international expansion. In August 2010, Tranquilidade announced that it had entered into an agreement with Banco Pastor for the purchase of a 50% stake in Pastor Vida whilst the remaining 50% stake will be held by Banco Pastor. The agreement is subject to regulatory approval.

T-Vida reported a 2.9% increase in individual net income to EUR 3.7 million. Technical results improved during the period (EUR 6.4 million in 9M10) as historically low interest rates acted favourably on the life insurance liability adequacy test.

HEALTHCARE OPERATIONS:

Year-on-year operating revenues at ESFG’s healthcare operator Espírito Santo Saúde (“ESS”) rose by 15.7% to EUR 184 million (EUR 159 million 9M09). Individual net income remains positive with EBITDA at 15.3%. Hospital da Luz, the largest private hospital in Portugal and key investment at ESS, saw revenue growth up by 16.5% year-on-year. Concerns over the Portuguese economy and pressure on the ability of banks to lend have translated into widened spreads and increased funding costs. Individual financial results at ESS have been negatively affected by this constraint on lending.

ESS, operating 18 healthcare units, reported that in the third quarter work had concluded at Cliria and Hospital da Arrábida which doubled the capacity at the two sites. Hospital da Arrábida reported a year-on-year growth of 20%. Cliria‘s activity grew by 25% during the same period having integrated the Oiã clinic in July 2009. Other healthcare units including Hospor (Clipóvia and Hospital de Santiago), Cliínica Parque dos Poetas and IRIO all saw strong revenue growth of 13%, 47% and 70% respectively.

INCOME STATEMENT SUMMARY

(EUR Thousands)	9M09	9M10	Change YoY
+ Net Interest Income	976 461	904 227	-7.4%
+ Net Fees and Commissions	530 803	609 523	14.8%
= Commercial Banking Income	1 507 264	1 513 750	0.4%
+ Capital Markets Results	101 968	183 310	80.0%
+ Insurance Earned Premiums Net of Reinsurance	232 593	242 023	4.1%
= Operating Income	2 235 261	2 233 034	-
- Operating Expenses	1 785 284	1 746 417	-2.2%
= Profit before Tax (inc. Gains from Financial Investments & Share of profit of Associates)	473 090	516 532	9.2%
- Tax	84 206	61 735	-26.7%
- Minority Interests	287 625	369 189	28.4%
= Net Income	101 259	85 608	-15.5%

PRINCIPAL ITEM ANALYSIS

Consolidated Net Interest Income fell by 7.4% year-on-year to EUR 904.2 million (EUR 976.5 million); solvency concerns of the European banking sector and more recently concerns over peripheral European sovereign debt has lead to the drying up of the interbank market and resulted in significant increases in financing costs. The increase in the volume effect was insufficient to compensate for the fall in Net Interest Margin (“NIM”). The rise in the perceived risk and consequently increase in spreads led to a 27 basis point fall in NIM at BES from 1.89% to 1.65%, interest earning assets fell by 59 basis points to 3.95% whilst the average rate of interest bearing liabilities fell by 35 basis points to 2.3%

The contribution from non Portuguese markets has had a decisive effect on the third quarter results at BES. NII from non Portuguese business rose to 45% from 28% a year earlier. To a lessening degree the use of the ECB liquidity facility contributed to an improved third quarter, as did the contribution from the Bank’s bond portfolio.

Consolidated Fees and Commissions (Net of Expenses) saw an increase of 14.8% year-on-year to EUR 609.5 million (EUR 530.8 million). The first nine months of 2010 saw a dynamic growth in documentary credit and strong increases in guarantees and commissions on loans. At BES, documentary credit fees grew by 104.2% year-on-year, with commissions on loans and guarantees up by 31% and 21.9% respectively. Capital market related fees grew by 3.9%. These figures have been reinforced by ESFG’s continued internationalisation strategy seen in Angola, Brazil and elsewhere.

Consolidated Capital Markets Results totalled EUR 183.3 million in 9M10. This demonstrates the capacity of ESFG’s banking subsidiary BES to return resilient and consistent results despite very difficult circumstances with all capital markets business lines reporting profits. The bank reported top line performance in FX instruments as well as equity trading. On going concerns over sovereign debt has led to significantly widening credit spreads for public debt and financial institutions with greatly reduced liquidity.

Liquidity: As a financial holding company ESFG’s debt requirements are focused on the provision of debt for regulatory purposes. ESFG’s subsidiaries access the market either directly or, on limited occasions, with the guarantee of ESFG. BES is the key proponent within the Group in terms of raising funds to support its banking business. In its report for the first nine months of 2010 dated 9 November 2010 BES demonstrated that it had initiated a strong deleveraging process which has translated into sharp decrease in the loan to deposit ratio to 171% from 198% in just one quarter. Furthermore BES has decreased its use of the ECB liquidity facilities from EUR 6 billion to EUR 4.3 billion in September. ECB eligible assets (net of haircuts) more than covers the refinancing needs in 2011.

Capital Ratios: 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. 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. 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. BES also announced the bank’s stress test results. The estimated consolidated Tier I capital ratio would change to 8% 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.

Consolidated Insurance Earned Premiums Net of Reinsurance increased by 4.1% to EUR 242 million from EUR 232.6 million in the first nine months of 2010. Consolidated Claims Incurred Net of Reinsurance rose 5% to EUR 181.1 million in H110, compared to EUR 172.4 million in 9M10. Overall consolidated contribution of all insurance activities at ESFG fell year-on-year. Tranquilidade’s, non-life business premiums increased by 5.2% and compares favourably to a market average growth rate of 0.2%. Tranquilidade’s market share rose to 7.8%.

Tranquilidade’s direct insurance business Seguros LOGO, the non life start up operation established in 2008 and expected to break even in 2012, reported that it had achieved gross written premiums of EUR 14.1 million abut a net loss of EUR 5.7 million during the first nine months of 2010. The internet and telephone based insurer broke through the 100,000 client mark in July and reached 105,000 by the end of the third quarter 2010.

Consolidated Staff Costs and General Administrative Expenses increased by 8.2 % to EUR 936.1 million from EUR 865 million in 9M09. 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. Overall operating expenses, however, fell 2.2% in the period reflecting a reduction in loan impairments.

Espírito Santo Saúde (“ESS”) represents the principal driver to Other Operating Income and Expenses. 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 15.7% came in despite of the difficult economic conditions, EBITDA margin rose to 15.3%.

Dividend income rose 12.3% to EUR 76.4 million in the first nine months of 2010 (EUR 68.1 million 9M09).

DEVELOPMENTS DURING 9M10 AND SUBSEQUENT EVENTS

• On 10 October, BES announced the purchase by its subsidiary BES Africa S.G.P.S. of 25.1% of the share capital of Moza Banco, S.A., a Mozambican bank, founded in June 2008.
• On 5 August, Companhia de Seguros Tranquilide S.A. announced that it had entered into an agreement with Banco Pastor for the purchase of a 50% stake in Pastor Vida.
• On 5 August, 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.
• In August BES, Banco do Brasil and Bradesco had signed a memorandum of understanding (MoU) 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-. On the 8 November Fitch Ratings announced a two notch downgrade of ESFG’s senior rating to BBB- (negative outlook) and a one notch downgrade to its short term rating from F2 to F3. This followed a 2 notch downgrade of BES which subsequently announced that it would terminate its contract with Fitch as the rating of BBB+ did not reflect the financial soundness of the Bank.
• 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 –

CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2010 AND 31 DECEMBER 2009
	(in thousands of euro)
	30-09-2010	30-09-2009	31-12-2009
Assets
Cash and deposits at central banks	887 216	1 309 937	2 224 331
Deposits with banks	854 673	854 277	793 844
Financial assets held for trading	4 329 249	3 875 638	4 490 699
Other financial assets at fair value through profit or loss	1 882 078	2 432 629	1 273 417
Available-for-sale financial assets	12 237 007	8 355 202	9 079 449
Loans and advances to banks	1 483 315	7 008 023	7 648 348
Loans and advances to customers	53 439 530	49 870 668	50 508 217
Held-to-maturity investments	2 598 465	2 568 506	2 535 309
Derivatives for risk management purposes	524 044	385 819	455 115
Non-current assets held for sale	635 918	326 291	407 585
Property and equipment	1 149 994	1 015 452	1 014 776
Investment properties	65 364	89 522	89 817
Intangible assets	388 083	358 922	373 851
Investments in associates	491 425	398 152	418 162
Technical reserves of reinsurance ceded	61 737	53 805	59 396
Current income tax assets	56 203	63 726	28 631
Deferred income tax assets	235 908	113 610	217 932
Other assets	4 088 108	5 072 700	3 698 108
Total assets	85 408 317	84 152 879	85 316 987
Liabilities
Deposits from central banks	6 653 665	3 320 012	3 817 643
Financial liabilities held for trading	2 289 311	1 640 056	1 568 896
Deposits from banks	6 405 376	8 138 363	6 890 825
Due to customers	30 260 654	24 884 281	25 694 477
Debt securities issued	26 511 051	32 601 788	34 039 730
Derivatives for risk management purposes	213 973	286 090	253 148
Investment contracts	388 993	419 825	395 158
Non-current liabilities held for sale	43 150	63 451	21 609
Provisions	207 945	163 672	193 174
Technical reserves of direct insurance	1 019 630	1 001 998	994 752
Current income tax liabilities	120 541	109 002	162 508
Deferred income tax liabilities	102 937	79 242	83 193
Subordinated debt	2 738 450	2 710 113	3 048 825
Other liabilities	1 424 147	2 313 093	1 412 361
Total liabilities	78 379 823	77 730 986	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	113 843	115 171	114 368
Fair value reserve	50 782	41 487	60 507
Other reserves and retained earnings	( 96 095)	( 209 323)	( 208 773)
Profit for the year attributable to equity holders of the Company	85 608	101 259	157 477
Total equity attributable to equity holders of the Company	1 580 857	1 476 313	1 551 298
Minority interest	5 447 637	4 945 580	5 189 390
Total equity	7 028 494	6 421 893	6 740 688
Total equity and liabilities	85 408 317	84 152 879	85 316 987

CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2010 AND 2009
	(in thousands of euro)
	30-09-2010	30-09-2009
Interest and similar income	2 862 123	3 070 845
Interest expense and similar charges	1 957 896	2 094 384
Net interest income	904 227	976 461
Dividend income	76 397	68 053
Fee and commission income	698 448	608 986
Fee and commission expenses	( 88 925)	( 78 183)
Net gains / (losses) from financial assets and financial liabilities at fair value through profit or loss	( 107 791)	( 5 523)
Net gains from available-for-sale financial assets	227 239	92 019
Net gains from foreign exchange differences	66 072	33 788
Net gains / (losses) from the sale of other assets	( 2 210)	( 18 316)
Insurance earned premiums net of reinsurance	242 023	232 593
Other operating income	217 554	325 383
Operating profit	2 233 034	2 235 261
Staff costs	566 097	532 260
General and administrative expenses	369 999	332 732
Claims incurred net of reinsurance	181 055	172 380
Change on the technical reserves net of reinsurance	3 586	( 4 664)
Insurance commissions	26 651	26 087
Depreciation and amortisation	105 409	91 956
Provisions net of reversals	29 644	23 273
Loans impairment net of reversals and recoveries	249 369	370 231
Impairment on other financial assets net of reversals	37 506	37 626
Impairment on other assets net of reversals	28 148	28 979
Other operating expenses	148 953	174 424
Operating expenses	1 746 417	1 785 284
Gains on disposal of investments in subsidiaries and associates	-	-
Share of profit of associates	29 915	23 113
Profit before income tax	516 532	473 090
Income tax
Current tax	73 565	101 031
Deferred tax	( 11 830)	( 16 825)
	61 735	84 206
Profit for the year	454 797	388 884
Attributable to equity holders of the company	85 608	101 259
Attributable to minority interest	369 189	287 625
	454 797	388 884