Practical Financial Statement Analysis - Assignment Example

ASSESSING PERFORMANCE, ANALYSING STRATEGY AND EVALUATING STRATEGY PART B. There are several criteria to use when comparing the performance of two or more organizations in an industry, both qualitative and quantitative. Basic techniques of financial statement analysis are usually the best measure of performance of an organization1. In order to identify leader and laggard from the three organizations, I will carry out an assessment of each company based on their profitability, risk management, and investors’ confidence. This will entail assessing the company’s operating performance to know if it is applying its assets in an efficient and profitable manner and assessing the company’s financial condition to know if it is able to meet its financial obligations. Comparative ratio analysis2 is effective if the financial statements of the organizations being assessed are of the same financial period. Financial period disparity may distort the effectiveness of ratio analysis and may therefore lead to unreliable conclusions. Therefore, I will compare the performance of these three organizations using financial statements based on averages for the last three years, 2011 to 2013. These financial statements are provided in the appendices. Profitability Analysis The primary concern of every firm is to increase its profitability, as most investors will first look at the profits in evaluating the performance of that firm. Profitability ratios measure the operating success of a company for a given financial period. When the profit figure is expressed as a percentage of sales or capital employed, these ratios can be compared with those of previous years, or those from companies in the same industry. Net Profit Margin The net profit margin shows how much of each sales dollar shows up as net income after all expenses are paid. The net profit margin measures profitability after consideration of all expenses including taxes, interest, and depreciation. Here the higher NPM indicates higher profitability of the firm. The calculation is: Net Income/Net Sales = _____%. Company/Years 2011 2012 2013 Averages BBVA Group 22.84 11.08 15.25 16.39 Santander Group 18.45 7.67 16.85 14.32 Standard Chartered Group 29.98 26.77 - 28.38 Return on Equity (ROE) The Return on Equity ratio is perhaps the most important of all the financial ratios to investors in the company. It measures the return on the money the investors have put into the company. This is the ratio potential investors look at when deciding whether or not to invest in the company. The calculation is: Net Income/Stockholders Equity = _____%. Company/Years 2011 2012 2013 Averages BBVA Group 10.9 10.7 7.10 9.0 Santander Group 7.12 2.91 5.42 5.15 Standard Chartered Group 14.6 14.4 11.9 13.2 In general, the higher the percentage, the better earning capability against its equity, as it shows that the company is doing a good job using the investors money. Risk management analysis Financial leverage ratios assess how much financial risk the company has taken on and measure the company’s ability to survive over a long period3. A company that has borrowed money obviously has a commitment to pay future interest charges and make capital repayments. This can be a financial burden and possibly increase the risk of insolvency. Debt to assets ratio The debt ratio compares a companys total debt to its total assets, which is used to gain a general idea as to the amount of leverage being used by a company. A low percentage means that the company is less dependent on money borrowed from and/or owed to others. The lower the ratio, the less leverage a company is using and the stronger its equity position. In general, the higher the ratio, the more risk that company is considered to have taken on. Company/Years 2011 2012 2013 Average BBVA Group 0.9330 0.9313 0.9252 0.9298 Santander Group 0.9354 0.9360 0.9284 0.9333 Standard Chartered Group 0.9302 0.9276 0.9305 0.9294 Total debt to equity ratio This ratio indicates the relative uses of debt and equity as sources of capital to finance the company’s assets, evaluated using book values of capital sources as: Total Debt/Total Shareholders’ equity = _____ Company/Years 2011 2012 2013 Average BBVA Group 13.92 13.56 12.38 13.29 Santander Group 14.48 14.62 12.96 14.02 Standard Chartered Group 13.32 12.82 13.40 13.18 The lower the ratio the lower the risk while higher debt to equity ratio is unfavorable as it indicates that the firm relies more on external lenders hence the risk is higher. Investors’ confidence analysis These ratios translate the overall results of operations so that they can be compared in terms of a share of stock. They focus on the interest of the owners and give a clear picture to interested investors on the current position of the company and the expected returns if they were to invest in that company. Earnings per share (EPS) This ratio represents the earnings made and available to shareholders during an accounting period. The trend in earnings per share over time is used to help assess the investment potential of a company’s shares. It is calculated as: Net Income Available to Shareholders/Number of Shares Outstanding = _____ Company/Years 2011 2012 2013 Average BBVA Group 0.60 0.31 0.40 0.4367 Santander Group 0.60 0.23 0.40 0.41 Standard Chartered Group1 1.46 1.45 1.19 1.3667 1 Converted to Euros using an avarage exchange rate of 1 Euro = 1.38 US$ Ranking these three organizations in terms of profitability, risk management, and investors’ confidence using the above ratio analysis measures will be as follows: Rank Net Profit Margin Return on Equity Debt to Asset ratio Debt to Equity ratio Earnings per Share 1 Standard Chartered Group Standard Chartered Group Standard Chartered Group Standard Chartered Group Standard Chartered Group 2 Santander Group BBVA Group BBVA Group BBVA Group Santander Group 3 BBVA Group Santander Group Santander Group Santander Group BBVA Group From this analysis, we can clearly see that Standard Chartered Group is the leader as it has dominated in the performance measures. On the other hand, determining the laggard is a bit difficulty because Santander Group and BBVA group are alternating positions two and three in the different ratios. Although BBVA Group is better off in three of the five ratios as compared to Santander Group, we cannot conclude that it has performed better from that alone. However, BBVA Group has outdone Santander Group as it has superiority in both profitability and risk management. Even though Santander Group ranks ahead of BBVA Group in Net Profit Margin, it is clear that BBVA Group has performed better in 2013 recording a Net profit Margin of 16.85% as compared to 15.25% of Santander Group. Another important aspect of EPS usually ignored is the capital required to generate those earnings. Like in the case of BBVA Group and Santander Group, two companies may have the same EPS but the company that is deemed to be more efficient will be one that has less equity, BBVA Group. Therefore, we can conclude that Santander Group is the laggard. PART B. Standard Chartered Group’ corporate strategy for the past five years has been, “Leading the way in Asia, Africa, and the Middle East.”4 The group aims at becoming the world’s best international bank in these three regions, providing Consumer Banking, and Wholesale Banking services. The group has put an unequivocal focus to the Middle East, Africa and Asia as it considers these economies as fast growing in which it can achieve a clear competitive advantage over its competitors. In Consumer Banking, this strategy is based on three pillars: Different business models for different countries with a focus on high value segments Distinctive customer focused value propositions Focusing on liquidity and risk management Wholesale Banking is the center of everything in Standard Chartered Group and it has the following corporate strategy pillars: Become the core bank to more of our clients Maintain strong balance sheet to support the existing clients Build scale in local markets and increase cross-border capabilities to better support our clients in achieving their ambitions Based on this we can analyze the corporate strategy of Standard Chartered Group using Miles and Snow typology that suggests that corporate strategies fall into four groups: prospector, defender, analyzer, and reactor. It is clear that the corporate strategy pursued by Standard Chartered Group falls under the prospector category, which focuses on locating new opportunities. This can be attributed to it being a highly innovative firm that is constantly in the lookout for new opportunities and new markets and is oriented towards growth and risk taking. The prospector type of strategy is evidenced by the group’s expansion in the Asian market through the expansion of Islamic Banking to cater for rising demand for Shariah-compliant products and encouraging diversity and inclusion through initiatives like Standard Chartered Women of the Year awards in India. In Africa, Standard Charter Group has invested in expanding its network through innovative ways of carrying out transactions. These innovations include enabling cross-border networking for SME clients, providing valuable loan facilities to key corporate clients and its commitment to increasing access to financial services for economic development. Standard Chartered Group has also deepened its relationships in the Middle East through strengthening its capabilities and the incorporation of market innovation, transaction convenience, client led strategy and community investment. Standard Chartered group is also focused on growth of its operations through organic growth as the primary driver in achieving their strategy and value creation for the shareholders. The Group’s strong franchise, built mainly through years of organic growth, has positioned it to take advantage of the next upturn in the global economy. In cases where the group cannot use organic growth within a reasonable time frame, it uses acquisition as an alternative to reinforce their corporate strategy. These growth strategies are in line with the prospector’s orientation towards growth and risk taking. The Bank supplemented organic growth with selective acquisitions in 2008, which provided the businesses with specialist capabilities in key markets. The acquisition of AEB, which was completed in February 2008, was one such addition, which added both scale to the Private Bank as well as boosting the Group’s transaction banking capabilities. The Bank made good progress in integrating AEB, amalgamating businesses in 47 countries by the end of the year. The Group’s other acquisitions included a majority stake in UTI Securities, an Indian retail brokerage; Yeahreum Mutual Savings Bank in Korea; Asia Trust and Investment Corporation, a bank in Taiwan; Lehman Brothers’ Brazilian franchise; and JPMorgan Cazenove’s Asian brokerage operations, which completed in 2009. In conclusion, the Miles and Snow typology is an influential and helpful framework in enriching our understanding on organization’s corporate strategies in a given industry5. Nevertheless, it limits our analysis of corporate strategy used by different firms as one single firm can exhibit properties of more than one category. In the case of Standard Chartered Group, we can see some of analyzers strategy. In as much as the strategy focuses on the Middle East, Asia and Africa, it has also some focus on the stable Europe market. However, there is a clear focus on diversification towards these fast growing economies in the group’s corporate strategy that clearly undermines the other stable economies. Therefore, we can conclude that Standard Chartered Group has been using a prospector strategy in the last five years. PART C. Standard Chartered Group’s corporate strategy is to be the best international bank providing Consumer Banking and Wholesale Banking services in the world, focusing on the Middle East, Asia, and Africa. An evaluation of Standard Chartered Group will focus on its sustained delivery to shareholders, clients, and customers. This will give a clear picture on its appropriateness for the external environment, whether it is aligned with internal conditions in the organization and its consistency toward the company’s objectives. Therefore, I will use key performance indicators that the group has put in regard to corporate strategy to achieve an extensive evaluation of its performance. To be the world’s best international bank This can be evaluated using the normalized earnings per share and normalized return on shareholders’ equity. Over the last five years, the group has delivered a consistent year-on-year steady improvements in earnings per share. It has also delivered normalized returns while balancing its long-term requirements of having strong yet efficient levels of capital. Focusing on Asia, Africa and the Middle East The income streams of the group remain highly diversified with 26 markets delivering over hundred million US dollars income in the last five years. It is however clear that most of the groups’ income is from the three markets that the corporate strategy is focusing, the Middle East, Asia and Africa. In the last five years the cumulative income attributed to these three markets has been consistently over 85 per cent of the total group’s income as compared to the Americas, United Kingdom and Europe markets whose cumulative incomes has been below15 per cent of the total group’s income. Building long-term, reliable relationships with our clients and customers In both Consumer Banking and Wholesale Banking, the group continue to increase the total number of clients and focus is on client relationships on markets that deliver incomes in excess of one million US dollars. The groups aim is to increase customer satisfaction by providing better products and services so as to become the bank that people recommend. Focusing on organic growth as the main driver to value creation The group aims at sustaining organic momentum in line with growing revenues. Operating income has been steadily growing over the last five years with the drivers of growth remaining well distributed across clients and customers, products and geographies. In 2008, organic growth played an important role in income growth, delivering almost 80 per cent of the total income. Comparing the group’s performance to the industry and sector The group has performed well in terms of shareholders’ returns as evidenced by higher P/E low ratio, dividend yield and dividends growth rate than the industry and sector over the last five years6. However, the company should be worried as this corporate strategy is leading to lower growth rates profitability and management effectiveness. This means this corporate strategy is not performing well in comparison to the corporate strategies of other companies in the same sector and industry. This is attributed to lower sale growth rate, return on equity, and return on assets, net profit margins, EBITD, a negative capital spending growth rate and a negative EPS growth rate over the last five years. In conclusion, this corporate strategy seems to be serving the group well when considering internal criteria as it has in depth knowledge about these markets and have a long-standing relationship with customers in these regions. These three markets are considered to be growing economies with several opportunities for growth and expansion. The group is striving to incorporate its values and culture that aims at running the Group as one bank across different countries. In addition, it is committed to building a consistent performance through incorporating the corporate strategy into products and services, business models and involvement in corporate social responsibility to the communities. On the other hand, evaluating the corporate strategy using external criteria has shown that this strategy is performing poorly if we were to compare it with the other strategies used by companies in the same industry and sector. In as much as it is performing well in regard to its internal conditions and consistence, the group needs to review its competitive position in the industry and sector. Therefore, the group’s management needs to revisit this strategy and implement a strategy that will give it a competitive advantage over its competitors as it needs to compete favorably with other companies in the same industry and sector. Bibliography Foulke, Roy. 1968. “Practical Financial Statement Analysis.” McGraw-Hill Book Company. Hao, T., and Yiming T. n.d. “Applying the Miles and Snow’s Business Strategy Typology to China’s Real Estate Development Industry” Reuters, 2014. Standard Chartered PLC. Accessed March 21 2014 Standard Chartered Bank GB, 2014. Standard Chartered Group. Accessed March 21 2014 Stephens, R. 1980. “Uses of Financial Information in Bank Lending Decisions.” Tamari M, Tamari. M. 1978. “Financial Ratios: Analysis and Prediction”. Appendix Appendix 1: BBVA Group Consolidated balance sheet BBVA Group Consolidated balance sheet (1)     (Million euros)   31-12-13 ∆% 31-12-12 31-12-11 Cash and balances with central banks 37,064 (1.0) 37,434 30,939 Financial assets held for trading 72,301 (9.6) 79,954 70,602 Other financial assets designated at fair value 2,734 (4.2) 2,853 2,977 Available-for-sale financial assets 80,848 13.1 71,500 58,144 Loans and receivables 363,575 (5.2) 383,410 381,076 Loans and advances to credit institutions 24,203 (8.7) 26,522 26,107 Loans and advances to customers 334,744 (5.2) 352,931 351,900 Other 4,628 16.9 3,957 3,069 Held-to-maturity investments - n.s. 10,162 10,955 Investments in entities accounted for using the equity method 1,497 (78.0) 6,795 5,843 Tangible assets 7,723 (0.8) 7,785 7,330 Intangible assets 8,165 (8.4) 8,912 8,677 Other assets 25,576 (11.7) 28,980 21,145 Total assets 599,482 (6.0) 637,785 597,688 Financial liabilities held for trading 45,782 (18.1) 55,927 51,303 Other financial liabilities at fair value 2,772 10.2 2,516 1,825 Financial liabilities at amortized cost 480,307 (5.2) 506,487 479,904 Deposits from central banks and credit institutions 87,746 (17.6) 106,511 92,503 Deposits from customers 310,176 6.0 292,716 282,173 Debt certificates 65,497 (24.9) 87,212 81,930 Subordinated liabilities 10,579 (10.6) 11,831 15,419 Other financial liabilities 6,309 (23.2) 8,216 7,879 Liabilities under insurance contracts 9,844 9.0 9,032 7,737 Other liabilities 15,962 (20.3) 20,021 16,861 Total liabilities 554,667 (6.6) 593,983 557,630 Non-controlling interests 2,371 (0.1) 2,372 1,893 Valuation adjustments (3,866) 77.0 (2,184) (2,787) Shareholders funds 46,310 6.2 43,614 40,952 Total equity 44,815 2.3 43,802 40,058 Total equity and liabilities 599,482 (6.0) 637,785 597,688 Memorandum item:         Contingent liabilities 36,437 (7.8) 39,540 39,904 (1) Pro forma financial statements with Garanti Group accounted for by the proportional consolidation method, without early application of the IFRS 10, 11 and 12. Appendix 2: BBVA Group Consolidated income statement BBVA Group Consolidated income statement (1) (Million euros)       Δ% at constant       2013 ∆% exchange rates 2012 2011 Net interest income 14,613 (3.4) 2.7 15,122 13,152 Net fees and commissions 4,431 1.8 6.4 4,353 4,031 Net trading income 2,527 43.0 49.3 1,767 1,481 Dividend income 365 (30.7) (30.4) 527 601 Income by the equity method 72 75.8 83.1 41 57 Other operating income and expenses (612) n.s. n.s. 82 206 Operating income 21,397 (2.3) 2.6 21,892 19,528 Operating expenses (11,201) 3.8 8.4 (10,786) (9,737) Personnel expenses (5,788) 2.2 6.3 (5,662) (5,191) General and administrative expenses (4,280) 4.3 9.3 (4,106) (3,707) Depreciation and amortization (1,133) 11.3 16.3 (1,018) (839) Operating income 10,196 (8.2) (3.0) 11,106 9,791 Impairment on financial assets (net) (5,776) (27.6) (26.6) (7,980) (4,226) Provisions (net) (630) (3.2) 6.8 (651) (508) Other gains (losses) (1,040) (39.7) (39.6) (1,726) (2,110) Income before tax 2,750 267.3 n.s. 749 2,946 Income tax (593) n.s. n.s. 276 (206) Net income from ongoing operations 2,158 110.6 214.9 1,024 2,740 Results from corporate operations 823 (36.8) (36.2) 1,303 745 Net income 2,981 28.1 51.0 2,327 3,485 Non-controlling interests (753) 15.6 39.8 (651) (481) Net attributable profit 2,228 32.9 55.1 1,676 3,004 Adjusted (2) (967) (65.6) (65.6) (2,814) (1,123) Net attributable profit (adjusted) (2) 3,195 (28.9) (24.8) 4,490 4,127 Basic earnings per share (euros) 0.40     0.31 0.60 Basic earnings per share diluted (euros) (3) 0.39     0.31 0.60 Adjusted earnings per share diluted (euros) (2-3) 0.56     0.80 0.81 (1) Pro forma financial statements with Garanti Group accounted for by the proportional consolidation method, without early application of the IFRS 10, 11 and 12. Appendix 3: Standard Chartered Group Summary Consolidated Balance Sheet Group Summary Consolidated Balance Sheet 20121 Increase/ Increase/ 2013 (Decrease) (Decrease) $million $million $million % Assets Advances and investments Cash and balances at central banks 54,534 60,537 (6,003) (10) Loans and advances to banks 83,702 67,797 15,905 23 Loans and advances to customers 290,708 279,638 11,070 4 Investment securities held at amortised cost 2,828 3,851 (1,023) (27) 431,772 411,823 19,949 5 Assets held at fair value Investment securities held available-for-sale 99,888 95,374 4,514 5 Financial assets held at fair value through profit or loss 29,335 27,076 2,259 8 Derivative financial instruments 61,802 49,495 12,307 25 191,025 171,945 19,080 11 Other assets 51,583 47,440 4,143 9 Total assets 674,380 631,208 43,172 7 Liabilities Deposits and debt securities in issue Deposits by banks 43,517 36,427 7,090 19 Customer accounts 381,066 372,874 8,192 2 Debt securities in issue 64,589 55,979 8,610 15 489,172 465,280 23,892 5 Liabilities held at fair value Financial liabilities held at fair value through profit or loss 23,030 23,064 (34) (0) Derivative financial instruments 61,236 47,192 14,044 30 84,266 70,256 14,010 20 Subordinated liabilities and other borrowed funds 20,397 18,588 1,809 10 Other liabilities 33,704 31,029 2,675 9 Total liabilities 627,539 585,153 42,386 7 Equity 46,841 46,055 786 2 Total liabilities and shareholders funds 674,380 631,208 43,172 7 1 Amounts have been restated as explained in note 31 Appendix 4: Standard Chartered Group Consolidated income statement Consolidated income statement For the year ended 31 December 2013 2013 20121 Notes $million $million Interest income 17,593 17,827 Interest expense (6,437) (7,046) Net interest income 11,156 10,781 Fees and commission income 4,581 4,575 Fees and commission expense (480) (496) Net trading income 3 2,514 2,739 Other operating income 4 1,006 1,184 Non-interest income 7,621 8,002 Operating income 18,777 18,783 Staff costs 5 (6,570) (6,492) Premises costs 5 (877) (863) General administrative expenses 5 (2,032) (2,707) Depreciation and amortization 6 (714) (660) Operating expenses (10,193) (10,722) Operating profit before impairment losses and taxation 8,584 8,061 Impairment losses on loans and advances and other credit risk provisions 7 (1,617) (1,196) Other impairment Goodwill 8 (1,000) - Other 8 (129) (196) Profit from associates and joint ventures 226 182 Profit before taxation 6,064 6,851 Taxation 9 (1,864) (1,866) Profit for the year 4,200 4,985 Profit attributable to: Non-controlling interests 28 110 98 Parent company shareholders 4,090 4,887 Profit for the year 4,200 4,985 Cents Cents Earnings per share: Basic earnings per ordinary share 11 164.4 199.7 Diluted earnings per ordinary share 11 163.0 197.7 Dividends per ordinary share : Interim dividends paid 10 28.80 27.23 Final proposed dividend2 10 57.20 56.77 $million $million Total dividend: Interim dividend paid 696 650 Final proposed dividend2 1,385 1,366 1 Amounts have been restated as explained in note 31 2 The final proposed dividend in respect of 2013 will be accounted for in 2014 as explained in note 10 Appendix 5: Santander Group Consolidated balance sheet 2012 Santander Group 2012 Consolidated balance sheet Variation % 2010 Assets 2012 2011 amount cash on hand and deposits at central banks 118,488 96,524 21,965 22.8 77,785 trading portfolio 177,917 172,637 5,281 3.1 156,762 Debt securities 43,101 52,704 (9,602) (18.2) 57,871 Customer loans 9,162 8,056 1,107 13.7 755 Equities 5,492 4,744 748 15.8 8,850 Trading derivatives 110,319 102,498 7,820 7.6 73,069 Deposits from credit institutions 9,843 4,636 5,208 112.3 16,216 other financial assets at fair value 28,356 19,563 8,793 44.9 39,480 Customer loans 13,936 11,748 2,188 18.6 7,777 Other (deposits at credit institutions, debt securities and equities) 14,420 7,815 6,605 84.5 31,703 available-for-sale financial assets 92,267 86,612 5,654 6.5 86,235 Debt securities 87,724 81,589 6,136 7.5 79,689 Equities 4,542 5,024 (481) (9.6) 6,546 Loans 758,228 779,525 (21,298) (2.7) 768,858 Deposits at credit institutions 53,785 42,389 11,396 26.9 44,808 Customer loans 697,384 730,296 (32,912) (4.5) 715,621 Debt securities 7,059 6,840 219 3.2 8,429 Investments 4,453 4,154 299 7.2 273 intangible assets and property and equipment 17,296 16,840 455 2.7 14,584 Goodwill 24,626 25,089 (463) (1.8) 24,622 Other 47,997 50,580 (2,583) (5.1) 48,901 total assets 1,269,628 1,251,525 18,103 1.4 1,217,501 Shareholders equity and liabilities trading portfolio 143,241 146,949 (3,708) (2.5) 136,772 Customer deposits 8,897 16,574 (7,677) (46.3) 7,849 Marketable debt securities 1 77 (77) (99.0) 365 Trading derivatives 109,743 103,083 6,659 6.5 75,279 Other 24,600 27,214 (2,614) (9.6) 53,279 other financial liabilities at fair value 45,418 44,908 510 1.1 51,020 Customer deposits 28,638 26,982 1,656 6.1 27,142 Marketable debt securities 4,904 8,185 (3,281) (40.1) 4,278 Due to central banks and credit institutions 11,876 9,741 2,134 21.9 19,600 financial liabilities at amortized cost 959,321 935,669 23,652 2.5 898,969 Due to central banks and credit institutions 131,670 116,368 15,302 13.1 79,537 Customer deposits 589,104 588,977 126 0.0 581,385 Marketable debt securities 201,064 189,110 11,954 6.3 188,229 Subordinated debt 18,238 22,992 (4,754) (20.7) 30,475 Other financial liabilities 19,245 18,221 1,024 5.6 19,343 insurance liabilities 1,425 517 908 175.6 10,449 Provisions 12,872 15,571 (2,699) (17.3) 15,660 other liability accounts 23,026 25,052 (2,026) (8.1) 23,717 total liabilities 1,185,302 1,168,666 16,636 1.4 1,136,586 shareholders equity 81,243 80,895 348 0.4 77,334 Capital stock 5,161 4,455 706 15.9 4,165 Reserves 74,528 72,660 1,868 2.6 66,258 Attributable profit to the Group 2,205 5,351 (3,146) (58.8) 8,181 Less: dividends (650) (1,570) 920 (58.6) (1,270) equity adjustments by valuation (6,590) (4,482) (2,108) 47.0 (2,315) Minority interests 9,672 6,445 3,227 50.1 5,896 total equity 84,326 82,859 1,467 1.8 80,914 total liabilities and equity 1,269,628 1,251,525 18,103 1.4 1,217,501 Appendix 6: Santander Group Consolidated income statement 2012 Santander Group 2012 Consolidated income statement Variation % 2010 2012 2011 amount net interest income 30,147 29,110 1,037 3.6 27,728 Dividends 423 394 29 7.3 362 income from equity-accounted method 427 775 (348) (44.9) 470 net fees 10,307 10,208 100 1.0 9,551 Gains (losses) on financial transactions 2,698 2,499 199 8.0 2,585 other operating income/expenses (327) (232) (94) 40.5 (110) gross income 43,675 42,754 921 2.2 40,586 operating expenses (20,116) (19,559) (557) 2.9 (17,905) General administrative expenses (17,928) (17,468) (460) 2.6 (15,986) Personnel (10,323) (10,157) (167) 1.6 (9,196) Other general administrative expenses (7,604) (7,311) (293) 4.0 (6,790) depreciation and amortization (2,189) (2,091) (98) 4.7 (1,919) net operating income 23,559 23,195 364 1.6 22,682 net loan-loss provisions (12,666) (9,900) (2,766) 27.9 (9,400) impairment losses on other assets (853) (173) (680) 394.3 (471) other income (1,593) (2,811) 1,218 (43.3) (1,048) ordinary profit before taxes 8,447 10,311 (1,864) (18.1) 11,762 tax on profit (2,299) (2,500) 201 (8.0) (2,686) ordinary profit from continuing operations 6,148 7,812 (1,663) (21.3) 9,077 net profit from discontinued operations (7) (24) 17 (71.6) (27) ordinary consolidated profit 6,141 7,787 (1,646) (21.1) 9,050 Minority interests 890 766 124 16.2 869 ordinary attributable profit to the group 5,251 7,021 (1,769) (25.2) 8,181 net capital gains and provisions (3,047) (1,670) (1,377) 82.4 — attributable profit to the group 2,205 5,351 (3,146) (58.8) 8,181 Eps (euros) 0.23 0.60 (0.38) (62.5) 0.94 Diluted Eps (euros) 0.22 0.60 (0.37) (62.5) 0.94 pro memoria: average total assets 1,287,086 1,228,382 58,704 4.8 1,190,361 average shareholders equity 78,806 74,901 3,904 5.2 69,334 Read More