Annual profit falls 16% at Singapore’s

GCd’E and Banque Populaire form France’s third-largest
retail bank…

Handelsbanken fourth quarter profits up

Annual profit falls 16% at Singapore’s OCBC

Overseas-Chinese Banking Corporation (OCBC), Singapore’s
second-largest bank, has reported a fall in net profit of 16
percent to S$1.75 billion ($1.1 billion) for full-year 2008, and a
40 percent drop in fourth quarter results year-on-year to S$301
million. Local rival DBS Group posted a 17 percent fall in annual
earnings to S$2.06 billion (see RBI

The decrease at OCBC was attributed partly to a slump in
insurance revenue as net profit from subsidiary Great Eastern
Holdings (GEH) fell from S$449 million to S$160 million. Excluding
GEH figures, core earnings were down 7 percent.

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CEO David Conner said in a statement: “The current recession is
expected to continue throughout 2009. While our strategic direction
remains unchanged, we intend to manage our expenses more tightly
and maintain our high alert for risk management given the uncertain

GCd’E and
Banque Populaire form France’s third-largest retail

French banking giants Banque Populaire and Groupe Caisse
d’Epargne (GCd’E) have finalised their shotgun merger after
announcing the deal last October (see
RBI 600
). The two will form the third-largest retail bank
in France after La Banque Postale and Crédit Agricole, with some 34
million customers and 8,108 branches. Francois Perol, an economic
adviser to French president Nicolas Sarkozy, is to head the
combined bank.

After pushing the deal forward, the French government is to
inject €5 billion ($6.4 billion) into the new group in the form of
preferred convertible shares and subordinated debt. This could
potentially give the French state a maximum stake of 20 percent in
the company.

Both GCd’E and Banque Populaire posted large losses for fiscal
2008 due to their joint investment banking subsidiary, Natixis,
which last December said it could lose up to €450 million.

Handelsbanken fourth quarter profits up 39%

Sweden’s Svenska Handelsbanken has beaten estimates to report
fourth quarter operating profits up 39 percent to SEK5.22 million
($568 million) compared to the previous quarter.

Full-year operating profits for the bank were up 4 percent to
SEK15.3 billion, while deposits in Sweden rose 20 percent for the
same period to SEK145 billion. Return on shareholders’ equity on
continuing operations amounted to 16.0 percent while its
cost-income ratio improved to 44.3 percent.

Swedish rival SEB has reported a fourth-quarter operating profit
of SEK4 billion, up 59 percent compared to the previous quarter.
SEB recently announced it is attempting to raise SEK15 billion in
cash from shareholders.

UK’s HBOS annual loss amounts to over £10bn

Halifax-Bank of Scotland (HBOS), the UK bank acquired by the
former Lloyds TSB in a rushed merger last year, has reported annual
losses of £10.8 billion ($15.2 billion).

The newly formed Lloyds Banking Group, which is currently 43
percent owned by the UK taxpayer, completed a controversial,
politically charged deal to purchase the beleaguered HBOS franchise
in January and has itself reported a drop in full year profits of
80 percent to £807 million.

To protect the group, the UK government will now insure £250
billion of Lloyds’ toxic assets in return for a much larger stake,
which could be up to 77 percent after a forthcoming share swap.

Royal Bank of Scotland has also announced it is putting £325
billion of assets into the UK government’s asset insurance scheme,
meaning the UK taxpayer could end up with a 95 percent stake in the
troubled group (see RBS’s closing down

Visa goes global in new advertising campaign

Visa has launched a worldwide advertising campaign, the first
aimed at promoting the issuer as a single global entity. The move
is also a sign of attempts by the company to consolidate its global
marketing efforts to cut costs.

Under the slogan ‘More people go with Visa’ the hope is to
highlight the value Visa delivers versus cash and cheques – in its
own words: “security, control and convenience”.

While the campaign will start in the US, Visa’s international
markets will launch with a television commercial named ‘Gofesto’.
The spot, which will be customised for each Visa region, will show
different people from different places ‘enjoying what the world has
to offer’. In the following weeks, Visa will roll out a series of
print advertisements focusing on the benefits of the Visa Check

Antonio Lucio, chief marketing officer of Visa, said in a
statement: “The ‘More people go with Visa’ campaign is an
invitation to make the most out of life every day, a powerful

la Caixa says 4.9% stake in Austria’s Erste is a way to tap

The Spanish investment house Criteria CaixaCorp, which is
controlled by Spain’s largest savings bank, la Caixa, has reported
that it acquired a 4.9 percent stake in the Austrian banking group
Erste late last year. CaixaCorp stated that it had paid €628
million ($792 million) for the stake and that it had specifically
chosen Erste as the best route to gaining a retail banking foothold
in Central and Eastern Europe.

The disclosure comes on the back of Erste’s recent announcement
that it would be planning to raise €2.7 billion in capital from
shareholders and the Austrian government, with the state providing
up to €1.9 billion. Erste recently reported its net profit down
26.8 percent to €859.6 million after loan loss provision doubled
from the same time last year.

Banamex confident despite 28% profit drop

Banamex, the wholly-owned subsidiary of Citigroup and Mexico’s
second largest retail bank by assets, saw net profit fall by 28
percent to MXN13 billion ($849 million) in 2008. But the group
remained confident, and said it was investing in its business: as
well as launching a new m-banking service, Banamex said that its
branch network grew by 20 percent to 1,930 branches in 2008 and
that customer numbers rose by 1.5 million to 18 million.

The bank added that it had built up reserves amounting to MXN30
billion in 2008, more than twice the current non-performing loans
total, in order to safeguard against a further downturn. Banamex
has now re-invested 100 percent of its profits over the past three
years, and 90 percent of its profits since 2001.

Banamex’s CEO, Enrique Zorrilla, also reaffirmed Citigroup’s
commitment to the business amid continued speculation that the US
bank would be forced to sell Banamex in order to free up

One source close to Brazil’s Itau Unibanco Group, which has been
linked with a possible deal for Banamex, told RBI that his
bank had shown some interest in the franchise but there “had been
no negotiations at this point. It depends more on what Citi decides
to do”.

The source added Citi has not circulated documents to
prospective bidders as far as he knew. He said any deal was
expected to be lower than the $12.5 billion Citi paid for Banamex
in 2001, and lower than the $12 billion price reported in some
recent reports.

“$12 billion is probably too much – that’s about what Citi paid
for Banamex and I believe that the market price today would be
lower than that,” he said.

Citi and launch innovative US rewards

Citi has teamed up with leading social media service MySpace to
launch a credit card that rewards the holder for acts of financial
and social responsibility.

The Citi Forward by MySpace card lets customers earn ThankYou
Points for acts such as donating to food drives, switching to
energy efficient light bulbs, going paperless with their bills, and
volunteering. The points are then redeemed from MySpace in the form
of rewards such as music downloads, concert tickets and trips to
film premieres.

Citi Forward is part of a drive by Citi to reward responsible
behaviour, says the bank, with customers also earning points for
paying bills on time or staying within their credit limit, and
receiving a lower purchase interest rate if they stay within
certain conditions.

Co-operative banks welcome regulation

The European Association of Co-operative Banks has welcomed
recommendations proposed by a high-level group, headed by former
Bank of France governor, Jacques de Larosiere, to increase
supervision of all financial institutions across the union.

The taskforce was set up with the aim of avoiding another credit
crisis and has now reported, outlining 31 recommendations to the
European Commission regarding the future of financial supervision
in the EU as well as improvements in prudential regulation.

De Larosiere recommended there should be two new pan-EU
supervisory bodies, with one to monitor system-wide risks and the
other to monitor day-to-day supervision of banks, insurers and
markets. He proposed introducing the system over the next three
years. In response, European Commission president Jose Manuel
Barroso said the commission wanted to accelerate reform. “If we do
not do it now we will never do it. We cannot postpone the reform,”
said Barroso.

CBA drops ATM fees

Commonwealth Bank of Australia (CBA) has said it will no longer
charge customers a fee for using non-CBA ATMs in Australia. The
move coincided with Reserve Bank of Australia reforms, effective
since 3 March, requiring a message to appear on ATM screens showing
how much the ATM owner will charge the cardholder to use the other
banks’ terminals, dubbed ‘foreign ATMs’.

The changes were developed with the aim of giving cardholders
more choice and to increase transparency, and apply to all of the
country’s 26,500 ATMs (see RBI 605).

In addition, CBA customers now have access to BankWest’s 700
ATMs, augmenting CBA’s existing 3,300-strong network. By contrast,
rival National Australia Bank will charge its customers A$0.50
($0.32) when they use another bank’s ATM, while Westpac and ANZ
have also said they will continue to charge foreign ATM fees.

Alpha posts 33% profits fall, beats expectations

Alpha Bank, Greece’s third-largest bank, has posted profits down
by a third to €512 million ($642.4 million), hit by slower loan
growth and increased provisions, but ahead of analyst expectations.
Year-on-year, deposits were up 23 percent adequately funding loan
growth of 21 percent; net interest income grew 12 percent to €1.8
billion and net interest margin held up, at 3.0 percent compared to
3.1 percent in 2007.

Compared to its peers, Alpha has the lowest exposure to consumer
lending – unsecured consumer and credit cards represents only 12
percent of group loans – having grown its loan book less
aggressively than its rivals in the last three years.

Alpha, with operations in Albania, Bulgaria, Cyprus, Romania and
Serbia, said its exposure to emerging European economies was
limited, with the Balkans making up 13 percent of its loan

RESULTS hit by UK downturn

The UK’s largest bank product comparison website,, has posted a £51 million ($71.6 million)
pre-tax loss for 2008 after a £70 million goodwill impairment
charge, reflecting a weaker demand for financial products and
increased competition from rival aggregator websites. No comparable
data for the previous full year has been released by the firm.

While Moneysupermarket’s revenue was up 10 percent at £178.8
million for 2008 and total website traffic rose to 120 million
visitors compared to 91 million in 2007, the firm said trading
conditions had not improved in 2008 and it has launched a review of
the business.

The insurance business performed strongly, contributing 44
percent of group revenue in 2008 (£77.7 million), compared with 35
percent in 2007 and is now the largest revenue earner for the
company. By contrast, the firm’s Money division, which includes
loans and mortgages, posted revenue down 10 percent.

Moneysupermarket shares have lost almost 70 percent of their
value in the past year.

Canada’s banks buck the trend with strong Q1s

Canada’s major banks have continued to outperform their peers
worldwide, posting first quarter results which beat average analyst

In 2008, Canada’s banking system came out top in a ranking by
the World Economic Forum and 2009 has kicked off with fresh
vindication of the country’s conservative lending practices.

Toronto-Dominion, now the sixth-largest North American bank by
market capitalisation, started the Canadian earnings season,
reporting first-quarter net income of C$712 million ($553.3
million), compared with C$970 million a year ago.

The country’s largest bank, RBC Royal, reported group net income
of C$1.05 billion for the quarter, down 15 percent from a year ago,
with its Canadian banking unit posting net income up 3 percent at
C$696 million.

Scotiabank and Canadian Imperial Bank of Commerce, the country’s
third and fifth-largest banks, reported profits of C$842 million
(up 1 percent year-on-year) and C$147 million respectively. But
while Scotiabank’s revenue rose 16 percent to C$3.42 billion,
provisions for bad loans more than doubled to C$281 million.

BMO Bank of Montreal’s revenue rose 21 percent to C$2.44
billion, but provisions for loan losses almost doubled to C$428
million; while BMO’s net income fell by 12 percent from a year ago
to C$225 million, Canadian personal and commercial banking had a
strong quarter, with net income of $325 million, up 12 percent from
a year ago.

Barclaycard and Orange in UK NFC push

Barclaycard, the credit card arm of the UK’s third-largest
retail bank Barclays, has teamed up with French mobile telecom
supplier Orange in an ambitious partnership to develop a range of
mobile payments services based on Near Field Communications.

The new service, which will enable UK consumers to use their
mobile to pay for goods and services up to a value of £10 at
retailers by waving their handset at a reader, will seek to build
on Barclays’ current contactless market leading position.

The UK partnership, which will target Barclays and Orange’s
combined customer base of 28 million, follows Orange teaming up
with BNP Paribas in a similar m-payments agreement in France.

ICBC ‘first in China’ to break CNY10trn mark

Industrial & Commercial Bank of China (ICBC), currently the
world’s largest bank by market capitalisation, says it has become
the first bank in China to reach CNY10 trillion ($1.5 trillion) in

In a statement ahead of its annual 2008 results (published at
the end of March), ICBC said it would continue with its strategy of
“steady, moderate and balanced” growth in total assets as well as
its ongoing focus on overall profitability.

It continued: “ICBC has overcome the negative impact brought by
global economic crisis and [an] uncertain outside economic
environment and deeply boosted the… innovative development of
various businesses”.

ICBC, the country’s largest banking group, made a CNY64.5
billion profit in the first half of 2008, an increase of 56.75
percent year-on-year – making it the world’s most profitable bank
(see RBI 597).

Citigroup to sell stake in Brazilian card acquirer

Troubled Citigroup is to sell its profitable stake in Redecard,
the Brazilian card processor and acquirer, as part of its continued
attempts to free up capital and maintain stability.

The US bank has a 17 percent stake in Redecard, valued at around
$1.25 billion. Itaú and Unibanco, the two Brazilian institutions
which announced in October 2008 that they were to merge, hold a
combined 46.3 percent stake in Redecard. But Itaú-Unibanco
president Roberto Setubal said in February that the entity had no
plans to purchase Citi’s stake.

The consistently strong growth seen at Redecard suggests that
Citi did not take the decision lightly: fourth quarter net income
of BRL343.1 million ($141.8 million) compares with a figure of
BRL224.4 million in the comparable period of 2007, while quarterly
credit card and debit card financial volumes rose by 17.8 percent
and 20.6 percent, respectively, over the same period.

Malaysia’s largest banking group reports 11% earnings

Maybank has recorded a MYR1.31 billion ($350 million) profit
after tax for the first half of its fiscal 2009, announcing at the
same time a MYR6 billion rights issue to boost its capital strength
in the face of a souring south-east Asian economy.

While net interest income increased by 3.2 percent to MYR2.81
billion, the group recorded profit after tax of MYR1.31 billion for
the first half of the financial year, down 11 percent

The results for the half-year were impacted, it said, by a lower
contribution from the international banking, investment banking and
insurance operations – though the group’s Islamic Banking
operations showed “exceptional growth” of 38 percent. Maybank says
it is the largest Islamic financial services provider in the
Asia-Pacific region.

Revenue from corporate banking grew 24 percent on higher loan
growth of about 30 percent while revenue from business banking rose
10.7 percent on the back of steady net interest income and higher
fee based income especially from trade financing, cash management
and factoring. Revenue from consumer banking grew 1 percent and
insurance by 4.4 percent.

For its domestic Malaysian operations, annualised loan growth
for the half-year stood at 6.3 percent. Consumer loans grew 6.1
percent mainly as a result of growth in mortgages (2.7 percent),
hire purchase (9.1 percent) and credit card receivables (23.4
percent). Loan growth for international operations (mainly in
Indonesia, Singapore, Pakistan) increased 58 percent. This was
driven by 85 percent growth at recently acquired Bank Internasional
Indonesia. International operations contributed 33.6 percent of
total group loans, higher than the 27.6 percent as at December

Maybank said the rights issue will support the group’s
aspiration to be among the top five banks in South and South East
Asia by size and performance by 2015.

Zain jumps on African m-banking bandwagon

Mobile telecoms firm Zain has announced it is to partner with
banks such as Standard Chartered and Citi as it launches Zap, a new
mobile banking service initially targeted at the unbanked
populations of Kenya, Tanzania and Uganda.

Announcing the launch of the service, which the firm intends to
expand across the rest of its network of 22 countries in the Middle
East and Africa in due course, Zain cited figures showing that the
unbanked constitute 95 percent, 80 percent and 95 percent of the
total populace in Uganda, Kenya and Tanzania respectively.

The service will allow customers to pay bills, transfer money,
and top-up airtime accounts using Zain’s One Network service. Zain
will face competition from M-Pesa, the successful mobile banking
service which has signed up more than 5 million users in Kenya
since its launch 18 months ago (see M-Pesa: Kenya’s
revolutionary new bank
). M-Pesa is also present in Zain’s
other two launch markets: Uganda and Tanzania.

Hungary’s K&H Bank withstands downturn

K&H Bank, Hungary’s third largest bank by assets and a
subsidiary of Belgium’s KBC, has reported a 1 percent increase in
2008 net profit, which rose to HUF30 billion ($121 million) despite
the collapse in the Hungarian economy over the past six months.

The bank’s retail division saw its deposit portfolio rise by 2
percent on the year to HUF544 billion, giving K&H a deposit
market share of over 7 percent. The bank’s retail branch network
rose from 200 to 235 branches over the period.

The volume of retail loans increased by 33 percent to HUF706
billion, though the bank noted that 15 percent of this growth came
from the impact of fluctuating exchange rates. In November 2008
K&H joined most of its Hungarian peers in announcing a
suspension of Swiss franc retail lending in an effort to curb the
exchange rate risk seen since October, when the value of the forint
slumped sharply.

Asset quality holds at Bendigo and Adelaide

Bendigo and Adelaide Bank, Australia’s sixth-largest bank by
market capitalisation, has reported interim profit after tax before
significant items of A$118.8 million ($75.9 million) for the six
months to 31 December 2008, a 37.5 percent rise on the year-ago

The figures are complicated by the 2006-2007 merger between
Bendigo and Adelaide and subsequent changes in accounting policies.
The bank’s cash earnings rose by 72.8 percent year-on-year to
A$122.2 million over the six month period.

Significantly, the bank reported no notable deterioration in
asset quality, with gross loan impairments standing at 0.21 percent
of total assets, a figure that remains less than half of that seen
during the 2001 downturn and a quarter of the NPL ratio during the
1998 downturn.

The retail bank saw a 31.5 percent increase in deposits in
calendar 2008 to A$19.8 million, Bendigo and Adelaide added. The
group’s cost-income ratio fell from 60.5 percent in 2007 to 58.3
percent in 2008.