SECOND HALF 2004
To our shareholders, clients and affiliates
We have closed 2004 with excellent news that we wish to share with you. The financial statements
corresponding to this year evidence the flawless performance of the human team working in this organization,
which has led us to rank as the undisputable leader in Venezuelan banking.
Throughout the year we offered our customers the best quality of service, satisfying the needs of all sectors
of the market we serve by means of the most modern and extensive network of agencies nationwide.
The successful performance demonstrated by our financial statements is a result of our strategy during
the previous years, consisting of the adoption of the best practices worldwide, maintaining stable and
adequate level of reserves, a large base capital and leadership in the small markets, particularly credit cards
and mortgage loans.
Throughout 2004 we have confirmed our good standing before clients and shareholders as well as our
commitment to be a socially responsible business. This goal was accomplished by means of a relevant
number of partners and our team of volunteers which comprises over 500 employees.
Striving for excellence
Juan Carlos Escotet Rodríguez
Chairman of the Board of Directors
SECOND HALF 2004
I Sem II Sem I Sem II Sem Variarions
(Thousand Million VEB) 2003 2003 2004 2004 II Sem 2004 - I Sem -2004 II Sem 2004 - II Sem -2003
Absolute % Absolute %
Total Assets 3,062.2 4,289.4 5,353.9 7,661.8 2,307.9 43.1% 3,372.4 78.6%
Cash and Due from Banks 519.5 725.4 869.1 1,182.1 313.0 36.0% 456.7 63.0%
Security Investments 1,064.2 1,886.5 2,472.9 3,612.0 1,139.1 46.1% 1,725.5 91.5%
Credit Portfolio 745.4 918.7 1,212.5 2,005.9 793.4 65.4% 1,087.1 118.3%
Depositis from Clients 2,350.4 3,447.9 4,270.2 6,439.6 2,169.4 50.8% 2,991.7 86.8%
Deposits in current accounts 1,257.8 1,919.0 2,107.9 3,056.9 949.0 45.0% 1,138.0 59.3%
Savings deposits 451.7 730.6 885.0 1,337.1 452.1 51.1% 606.5 83.0%
Time deposits 560.2 747.4 1,112.6 1,944.0 831.4 74.7% 1,196.6 160.1%
Other Deposits 80.7 51.0 164.6 101.7 -63.0 -38.2% 50.6 99.3%
Total stockholders' equity 513.8 644.6 820.5 957.5 137.0 16.7% 312.9 48.5%
Trust Assets 1,947.8 2,266.7 3,100.9 4,092.9 991.9 32.0% 1,826.2 80.6%
Debtor Accounts Due To Trust Assignments (FMH) 451.1 517.9 598.8 700.2 101.4 16.9% 182.3 35.2%
Financial Revenues 299.5 305.8 342.9 420.7 77.9 22.7% 114.9 37.6%
Financial Expenses 108.5 90.0 106.5 135.3 28.8 27.0% 45.3 50.4%
Gross Financial Margin 191.0 215.8 236.3 285.4 49.1 20.8% 69.6 32.2%
Financial Intermediation Margin 303.9 384.9 515.3 480.9 -34.4 -6.7% 96.0 24.9%
Transformation Expenses 195.7 201.4 228.7 247.2 18.5 8.1% 45.8 22.8%
Income Taxes 2.3 2.8 2.5 2.7 0.1 5.8% -0.1 -4.8%
Annual Net Income 82.2 159.4 234.8 203.6 -31.2 -13.3% 44.2 27.7%
Yielded Investments 1,010.2 1,630.4 1,797.0 2,183.1 386.1 21.5% 552.7 33.9%
Accumulate Agriculture Portfolio 108.9 135.0 159.7 224.3 64.6 40.4% 89.3 66.2%
Official Institutions Deposits 406.3 681.1 1,102.4 1,927.3 824.9 74.8% 1,246.2 183.0%
- - 37.8 55.2 17.3 45.9% 0.0 0.0%
Commercial Loans 393.2 549.7 778.0 1,283.3 505.3 64.9% 733.6 133.4%
Credits to Consumer 240.6 271.9 343.1 455.0 111.9 32.6% 183.1 67.4%
Vehicles 1.4 0.8 3.5 0.9 -2.5 -72.7% 0.1 13.6%
Credit Cards 239.3 271.0 339.6 454.0 114.4 33.7% 183.0 67.5%
Mortgage Loans 111.6 97.1 91.4 80.9 -10.5 -11.5% -16.2 -16.7%
Number of Depositors 1,644,782 1,701,779 1,692,031 2,134,347 442,316 26.1% 432,568 25.4%
In Current Accounts 652,304 643,909 685,493 862,287 176,794 25.8% 218,378 33.9%
In Savings Accounts 991,362 1,056,779 1,005,375 1,270,805 265,430 26.4% 214,026 20.3%
In Time Accounts 1,116 1,091 1,163 1,255 92 7.9% 164 15.0%
Credit Cards 1,221,813 1,319,820 1,342,279 1,488,221 145,942 10.9% 168,401 12.8%
Loan Portfolio Provisions/Non Accrual Loans 207.39% 320.35% 320.55% 383.77%
Non Accrual Loans/ Gross Loan Portfolio 6.20% 3.39% 2.81% 1.15%
Net Results / Average Assets 5.56% 7.34% 9.63% 7.87%
Net Results / Average Equity 31.13% 44.14% 64.04% 53.90%
Liquidity 55.13% 57.81% 42.32% 51.68%
SECOND HALF 2004
Chairman of the Board of Directors
Juan Carlos Escotet Rodríguez
Luis Xavier Luján Puigbó
Jorge Caraballo Rodríguez
María Josefina Fernández Maroño
Nelson Becerra Méndez
Gonzalo Clemente Rincón
Fernando Crespo Suñer
Salvador Cores González
Carlos Acosta López
SECOND HALF 2004
The year 2004 marked the return of investments as a priority for both the public and
Financial Management private sectors of the economy. Progress was made in the search for business, such
as the new Legal Stability Contracts provided for by the Investment Protection and
Promotion Act, whose publication was promoted among actual and potential
investors. Binational business agreements related to the hydrocarbons industry
and non-petroleum economic activities also returned during 2004.
activity, the stability in the
political arena and the
accumulation of international
An improvement in the economy was evidenced in 2004 after the contraction reserves resulted in a
experienced during 2002 and 2003. The activities which evidenced the largest significant reduction of
growth were procyclical, that is, those which behave in a manner directly proportional country risk.
to the behavior of the GDP: construction, commerce and manufacturing.
Despite the recovery of aggregate demand, inflation receded approximately seven points
compared to 2003. This behavior was owing to the large idle capacity in the economy, which resulted in a lesser
impact in terms of cost upon the reactivation of economic activities.
The stability of the non-official foreign exchange market also affected the prices. Improvements made by Cadivi
resulted in a deceleration of the exchange rate in the parallel market, and the maintaining of the foreign
exchange control allowed international reserves to increase approximately 16% compared to 2003.
Gross Domestic Product
During 2004 the economy experienced a considerable The increase in end product spending on the private
recovery measured in all its variables, particularly the sector was mainly the result of the recovery of
Gross Domestic Product (GDP), the balance of employment rates, the deceleration of inflation, the
payments and international reserves. By the fourth reduction of interest rates and a greater availability
trimester of 2004, the GDP evidenced an increase of of imported goods.
11.2% and therefore the accrued growth for 2004
was 17.3%, which constitutes the highest level As for gross fixed investments, the role played by
recorded by the BCV. construction and the purchase of machinery and
equipment is to be highlighted. Foreign demand for
This was the result of the behavior of petroleum as goods and services evidenced a growth of 13.3%,
well as non-petroleum activities, which experienced of which a 9.2% increase corresponds to petroleum
growths of 8.7% and 17.8% respectively. From the products export and a 23.1% increase to non-
institutional point of view, growth was also observed petroleum products.
in the public and private sectors, 11.0% and 18.6%
correspondingly. Balance of Payments
During 2004 the indicators corresponding to the
Concerning public and balance of payments reflected the situation registered
evidenced significant growth p r i v a t e p e t r o l e u m by the GDP. By the fourth trimester of the year
in all its activities, particularly activities, extraction and current accounts closed with a surplus US$ 3,889
in manufacturing (25.4%), refining operations were million, while the capital and financial accounts
construction (32.1%), transport normalized, registering closed with a deficit of US$ 1,630 million, and
and storage (26.4%), domestic growths of 7.0% and together totaled a positive net balance of US$ 2,259
15.7% respectively. million.
commerce (25.5%) and
This resulted mainly from The positive net variation of international reserves
the increase in the demand of for the fourth trimester of 2004 was equivalent to
end products and investments, since US$ 1,604 million. For the year 2004 as a whole,
economic agents benefited from greater financing, the current account closed with a surplus of US$
due among other things to the lowering of interest 14,575 million.
rates. Likewise, the aggregate value of the
government’s service producers increased 13.8%,
contributing to the reactivation of the economy. Petroleum Market
The global petroleum scenario was characterized
Domestic Demand by an improvement in the levels of country risk of
Aggregate domestic demand evidenced an increase emerging markets, the military situation of the US
of 27.9%, determined by the private sectors’ in Iraq, the attacks to petroleum facilities and the
consumption of end goods (16.6%), gross fixed instability of key players such as Saudi Arabia, all of
investments (43.0%) and the government’s which resulted in prices of approximately US$ 15.
consumption of end products (13.9%). In the future goods market, in sight of a possible cut
6 1. Venezuelan Council for Investment Promotion
SECOND HALF 2004
of the supply, prices were affected upon the increase special fund for the development of social programs
of speculative activity as a result of adverse news, financed by said corporation.
mainly concerning the situation in Iraq, Saudi Arabia,
Nigeria and Russia. In the budget for 2005 the proceeds generated by
the BCV (no less than VEB 2.9 thousand billion) are
In the last session of 2004, the London Brent crude once again considered as part of fiscal resources.
prices reached US$ 40.46 per barrel, more than US$ This time said income was not deemed ordinary,
10.00 above the last day of the therefore abolishing the requirement of fund transferring
The previous year, averaging in to state governments and municipalities for this
decreased 2004 US$ 38.19 per barrel, account.
production capacity representing a 34%
affected nominal prices, increase before the
resulting in a powerful average price of US$ Monetary Market
limitation for the total 28.48 in 2003. Concerning monetary matters, resulting of the
aggregate supply, after a pressuring requirement for liquidity greatly owing to
greater demand for The Venezuelan basket the fiscal policy, the BCV acted by placing deposit
energy was closed on December 26 in certificates and repurchase agreements for VEB 1,134
evidenced. US$ 34.71, registering a thousand million, which resulted in a restrictive effect
monthly average of US$ 32.32 of VEB 464 thousand million. Consequently, the
and an annual average of US$ 33.61, resulting in a surplus liquidity of banking registered lower levels
surplus US$ 13.61 compared to the US$ 20.00 price than those of previous periods, together with a strong
fixed for the 2004 budget 2. reduction of the interbank rate. The Central
Government received a total VEB 150 thousand
million worth of National Public Debt
Fiscal Management Bonds and VEB 49 thousand
By the end of the third trimester of 2004 the increased million worth of bills of By December
petroleum fiscal income resulted in a variation of VEB exchange. 31 liquidity reached
6.4 thousand million (73.2%) compared to the figures VEB 45,840 thousand
of the previous year. Notwithstanding this increase Economic dynamics, as in million, representing a
(3% of the GDP), the fiscal breach among ordinary 2003, remained subject to growth of 48.7%
income and current expenses has not been salvaged, the foreign currency compared to
to the point that by September it presented a negative exchange control, together 2003.
balance of VEB 3.9 thousand billion (2% of the GDP), with an expansive fiscal policy,
whereas the financing needs of the Executive grew which maintained significant levels of liquidity, reaching
to VEB 11.9 thousand billion (6% of the GDP) upon by December 31 VEB 45.840 thousand million,
the addition of payments for the representing a growth of VEB 15,004 thousand million
amortization of public debt (VEB (48.7%) compared to 2003.
8 thousand million by the end
The collection of
of the third trimester). The BCV’s international reserves remained stable,
bank debit tax is to
reaching lower levels during the second semester
become an ordinary income,
and therefore, the Government The Ministry of Finance of 2004, yet higher than those reached during the
will be required to transfer 20% resolved this difference by same period in 2003. By December 2004 this
of this income to all regions of means of new public variable closed with US$ 23,462 million. Upon
the country, the goal being credit transactions, the consideration of the resources of the
use of the proceeds Macroeconomic Stabilization Fund (FEM) the
set at VEB 1.9 thousand
generated by the BCV for resulting figure is US$ 24,172 million, registering
the purchase and sale of foreign an increase of 13.5% compared to the previous
currency, and the financial year. The repurchase of bonds by PDVSA in
operations of the Government abroad. international markets for US$ 2,509 million was
one of the most determining elements
By the closing of the third trimester, bank debit tax of said result.
had produced VEB 1.3 thousand million, which helped
reduce the negative balance in more than 0.5% of
the GDP. Investment
The Superintendence of Foreign Investments (SIEX)
According to the Public Budget Act, the fiscal year registered in 2004 a total US$ 491.9 million entering
2005 reaches the figure of VEB 69.9 thousand million. the country, mainly addressed to the manufacturing
Petróleos de Venezuela shall provide no less than sector (US$ 415.8 million), real estate investment and
37.7% (VEB 26.1 thousand million), besides the VEB financial services (US$ 55.1 million) and commerce
4.3 thousand billion that will be transferred to the (US$ 14.3 million), among others.
2. According to the Venezuelan Ministry of Energy and Mining (MEM) 7
SECOND HALF 2004
Statistics Institute (INE),
a reduction of 3.7 points
in the unemployment
index was evidenced by
Foreign investment closed in 2003 with US$ 294.9 In the informalsector, the percentage of informal
million, thus evidencing a growth of 66.8% by the workers by December 2004 was 48.7%, which
closing of 2004 compared to the previous year. compared to the same period in 2003 when it
The U.S. was still the largest investor, with US$ 173.0 reached 52.4%, evidences a decrease of 3.7 points.
million (35.4%) worth of investments. It is closely Informal workers account for 15% of the GDP3,
followed by Switzerland with US$ 157.1 million (31.9%); equivalent to US$ thousand million per year.
France, with US$ 50.2 million (10.2%); and Colombia,
with US$ 21.3 million (4.3%). Perspectives for 2005
The growth expectations of world economy
remain the same for next year, which is a positive
Inflation variable for the behavior of investment flow. In
The behavior of inflation was related to the use of a this account, the Venezuelan case shall greatly
fixed exchange rate as a nominal anchor of the depend upon the dissipation of political
economy and to the prices control, which has uncertainty, which probably had kept potential
permitted containing inflationary expectations which investors at bay. For the year 2005 the
have been caused before during periods of political expectation concerning international investment
confrontation and downfalls in the demand for money. flow are positive. Capitals are expected to recover
as a result of the momentum given by world
Indicators such as the core inflation revealed that economic growth.
during the second semester of 2004, inflationary
deceleration acquired a dynamic of its own as a result An increase in the world demand for petroleum
of the greater supply and the confidence in the is expected, particularly as a result of the
strengthening of the economy. expected growth of the U.S. and China.
Petroleum prices are expected to remain high,
The Consumers Price Index (IPC) for the Caracas though on average may result slightly below
Metropolitan Area registered in December a variation those of 2004.
of 1.6%, lower than that registered in December 2003
(1.8%). Owing to this result, the accumulated variation Â The Venezuelan petroleum production may
of the IPC in 2004 was 19.2%, lower than the IPC prove to be restrained by PDVSA’s lack of
variation for 2003 (27.1%). productive capacity, and therefore the
eventual increase of the production would
Controlled goods closed 2004 with an accumulated be mainly supported by strategic
variation of 14.9%, while non-controlled goods closed associations.
Â The expansive fiscal policies which
characterized 2004 shall remain in force
Unemployment until mid-2005, which will generate a strong
In the formal sector, the employment rate by pressure on money supply.
December 2004 was 51.3% (equivalent to Â
5,580,029 workers), while by December 2003 was Fiscal policies would be mainly funded by
47.6% (equivalent to 4.885.220 workers), evidencing large petroleum income, domestic public
a variation of 3.7 points upon the incorporation of debt operations and the proceeds of
694,809 workers to the formal sector. exchange operations of the BCV.
8 3. According to Fundaempleo
SECOND HALF 2004
Public expense could be more significant during
the first semester of the year.
Â The foreign currency exchange control shall remain
in force throughout 2005, however with greater
The expected official exchange rate
is VEB 2,150 per US$.
As a result of the foreign Exchange
control and the increased levels
of liquidity, interest rates will
Anti-inflation policies shall
also remain in force, based
on exchange rate and price
controls, and a broadening
of the network of consumer
goods operated by the
The Financial System
Throughout 2004 the financial
system remained mostly stable
concerning the number of
institutions it includes. Only one
foreign bank withdrew its
operations from Venezuela,
therefore totaling 51 banking
institutions in the country by
December 2004 according to the
f i g u re s p u b l i s h e d b y t h e
Superintendence of Banks. Of said
total, universal and commercial
banking represent 63% of the financial
system, which by the closing of
December 2004 registered total assets
of VEB 57,470 thousand million.
The increased economic activity made
necessary the opening of new branches during
2004 as well as the hiring of additional personnel.
By December 2004 the number of agencies had
increased with 92 new agencies and 3,339 new direct
positions had been opened, resulting in a total 2,818
agencies in our network and a total 54,966 employees in Throughout the
the organization. second semester of 2004
the banking sector registered
The behavior of the consolidated balance sheet of Venezuelan an increase of 28.2% (VEB
commercial and universal banking evidences the improved conditions 12,391 thousand million) in its
prevalent in its immediate economic environment as well as the total assets, greater than the
economic environment of its clients and affiliates. growth pace evidenced
during the first six
Throughout the second semester of 2004 a significant increase in its months of the year.
total assets was registered, equivalent to 29.2% (VEB 12,391 thousand
million), greater than the growth pace evidenced during the first six months of
the year when some temporary conflict still prevailed and affected the behavior of the
economy’s real sector, which is the true engine of the development of any nation.
SECOND HALF 2004
The productive framework experienced a favorable ending the year with a figure above VEB 1,900
Financial Management reaction to the cease of electoral uncertainty, boosting
once more the demand for loans which during 2004
was driven to a point where it doubled its figures for
2003, reaching by December 2004 the figure of VEB
21,283 thousand million (+108.7%).
thousand million, representing an annual increase
Both portfolios, vehicles purchase loans and credit
cards, are linked to external factors such as legal
regulations and government decrees which
The ratio measuring the intermediation management significantly affect the decision to purchase made
increased 6 points compared to the first semester of by the consumer at a certain time. The considerable
2004 and 11 points compared to the percentage growth which both portfolios have registered in the
registered in December 2003, closing the July – previous year is related, in the case of credit cards,
December 2004 period with a percentage of 48.04%, to the users’ need of electronic transactions that
the highest registered in the last two years. ease the financed purchase of goods and services,
both nationally and abroad. In the case of vehicle
This growth of the portfolio was accompanied by the purchase loans, the growth of the portfolio is related
excellent improvement in is quality, which averaged to the Family Vehicle Program and also to the
for banking as a whole barely 1.65% of fixed assets eventual increase in the prices based on a possible
to gross portfolio by the closing of December 2004. devaluation of our currency.
By June 2004, a change in the orientation of the The mortgage loans account ended 2004 with VEB
financing system business was to be expected, 565 thousand million, equivalent to 2.65% of the net
consisting in a return to loan intermediation. Today commercial and universal portfolios, upon registering
it is evident that the tendency towards a greater a slight increase of 8.42% compared to the second
strengthening of the demand for loans will remain semester of 2003.
current. By the closing of the second semester of
2004 a greater relative relevance of loans compared Concerning liabilities, during the ending semester the
to investments was evidenced, reporting a loan banking sector registered an increase of public funds
portfolio to total assets ratio of 37.82%, nearly 10 of approximately 32.71% (VEB 10.918 thousand
points above the level registered in December 2003. million), well over the figure of VEB 44 billion registered
in the previous period.
The boost of the loan portfolio (+ VEB 7,128
thousand million) during the last six months of 2004 The most significant variation between semesters in
is consistent with these favorable expectations, absolute terms was registered by current accounts (+
confirming the tendency towards the fall of VEB 5,054 thousand million compared to June 2004),
investments which in 2004 represented 33.74% in still with the greater weight in total public funds (50.11%).
the total assets, that is 6 points below the percentage
registered in 2003, when it neared 40%. Resources managed by universal and commercial
banks maintained the tendency towards an increase
The orientation of loans has reflected a change in during the previous year, registering an annual variation
its composition to match the economic recovery of 48.4% and 26.5% between semesters, reaching
of some productive sectors such as commerce, by December 2004 the figure of VEB 76,920 thousand
towards which 72.04% of net loans granted by million, all in conformity with the increase un public
commercial and universal banking were directed, expense and therefore the higher level of liquidity in
totaling VEB 15,333 by December 2004, after the economic system.
experiencing a growth of 110.19% compared to
the balance registered in December 2003. In the financial statement corresponding to the second
Consumer credits, on the other hand, evidenced semester of 2004, commercial and universal banking
a variation of 61.84% throughout the December registered a net income of VEB 1,193 thousand million,
2003 – December 2004 period, ending with a figure that is VEB 212 thousand million below the figure
over VEB 2,600 thousand million, equivalent to obtained in the first semester of the year, when net
12.51% of the net loan portfolio. income totaled VEB 1,405 thousand million, owing
mostly to the downfall of other operative income (-
This boost of the loan portfolio owes mainly to the VEB 486 thousand million).
upheaval evidenced in financing for the purchase
of vehicles, which by December 2004 doubled the Annual profitability reached VEB 2,598 thousand
figure registered by December 2003 when it million upon totaling the results of both semesters of
registered VEB 320 thousand million, currently 2004, which is VEB 798 thousand million above the
reaching VEB 683 thousand million. results for 2003.
The evolution of the credit cards portfolio also During the last months of 2004 the tendency towards
evidenced a tendency to increase throughout 2004, a lesser profitability of productive assets of banking
SECOND HALF 2004
in general was maintained,
considering the fall of lending
interest rates during said period,
the excess monetary liquidity and
the foreign exchange rate control,
all of which has significantly affected
the decreased profitability of BCV
Banesco Banco Universal
The year 2004 ended with excellent results
in all areas of operation of Banesco Banco
Universal. It reaffirmed its status as the first bank
of the country, evidenced by its financial statements:
Banesco Banco Universal concentrates 17.42% of all funds
managed through commercial and universal banking, as a result
of the wide public acceptance of our financial products and services.
The process of strategic planning initiated by Banesco Banco Universal, as well
as the purposefulness of its human team, have doubtlessly resulted in the Banesco Banco
achievement of all set goals concerning its share and positioning in the national Universal reaffirmed
banking market, obtaining a relevant differentiation from our closest competitors. its position as the first bank
of the country, concentrating
The intensification of market investigation processes pursued by our institution 17.42% of all funds
allowed not only to know better our current and potential customers, but managed through
also to avoid obstacles generated in a hardly predictable and uncertain commercial and
environment, and moreover, to maintain the achieved leadership. universal banking.
The considerable semester increase of VEB 2,308 thousand million in our total assets
was fundamentally the result of the boost of all productive assets of the bank and the decided support of
intermediation on behalf of the high management, achieving during the last six months a growth of VEB 793
thousand million (65.4%) of our loan portfolio, well over the market’s average, which registered a relative
variation of 50.36% during said period.
The wider knowledge of our customers, their businesses and activities, made possible the
improvement of our quality portfolio, registering upon the closing of the second semester
During the last of the year a ratio of frozen portfolio of 1.15%, which was below the average for
semester a growth of commercial and universal banking (1.65%). Moreover, Banesco maintained by the
VEB 793 thousand closing of December 2004 a level of covered frozen portfolio of 383.77%.
million (65.4%) was Product crossing and the greater fidelity of our clients made possible that our total
registered in our loan deposits, considered as the addition of public funds and transferred investments (VEB
portfolio, well over the 8,623 thousand million), registered throughout 2004 a growth of VEB 3,544 thousand
market’s average. million (69.8%) compared to the balance registered at the end of the previous year.
By the end of the second semester of 2004, Banesco Banco Universal claimed a new leading
position, becoming the most important bank in the fund trust business by concentrating 17.66% of the fund
trust assets of the national financial system, and 20.18% of the commercial and universal banks sector with
a figure of VEB 4,093 thousand million by December 2004 after an increase of approximately 80.6% (VEB
1,826 thousand million) compared to 2003.
During 2004 the bank reaffirmed its leading position in the market as the most important administrator of
funds from the Housing Mutual Fund, upon ending 2004 with a total VEB 700 thousand million and 37
thousand loans granted subject to the Housing Policy Act.
The management of the semester was also favorable to all our products and services portfolios, achieving
results which reflect its consolidation in the national banking market.
Notwithstanding the fact that the tendency towards the fall of interest rates was maintained throughout 2004
and evidenced a progressive decrease of the differential ratio between lending and deposit interest
SECOND HALF 2004
rates, by December and owing to seasonal factors and the greater competition
for deposits the deposit rate increased slightly, leading to a particular decrease
of nearly 2 points in average of the financial margin.
Banesco maintained the average cost of its funds at a similar level than that
observed during the first semester or 2004, showing a stability that also allowed
it to increase its gross financial margin by VEB 49 thousand million compared to
the figure registered in the financial statements corresponding to the first semester
of the year.
This evidences a balanced management regardless of the abrupt changes which
characterize a highly competitive environment, generating a financial intermediation
margin of VEB 481 thousand million in the second half of 2004,
margin which was wide enough so as not to depend
excessively upon the obtaining of other operative
income and to cover transformation costs with
great ease. This led to the achievement
of a net proceeds of VEB 204 thousand
million by the closing of December
2004, which together with the
figures of June 2004 (VEB 235
thousand million) brought
an annual net result of
VEB 439 thousand
result with the
annual profit of
45.17%, and also
above the inflation
rate during 2004
management and an efficient
handling of available resources
allowed not only a favorable return
on the investment of shareholders, but
also to develop ambitious projects of all
kinds that have placed Banesco Banco
Universal as a model to follow in the technology
area as well as in the social and educational environments.
On behalf of the Board of Directors, we wish to express our most sincere
gratefulness to all our clients, employees and affiliates for their valuable contributions
in the achievement of our current results.
SECOND HALF 2004
Management and Human Resources Banesco volunteers
Human Capital Management
At the end of the second semester of 2004, the The work of Banesco’s Corporate Volunteers,
department of Human Capital Management comprising more than 500 employees, deserves to
highlighted the role of Banesco as be highlighted.
a job position generator, upon
Banesco as a accounting a total 1,603 Its creation was an inspiration and a motivation for
job position new employees compared our workers and their families to participate in social
generator, upon to 2003. Likewise, programs, helping to create a social conscience and
accounting a total permanent career plans stimulating solidarity as a corporate and human
1,603 new enabled 577 promotions value required for coexistence.
employees. benefiting our employees,
and as part of our developing In December 2004 the team of The creation of
plan for continuous improvement, volunteers received an Banesco’s Corporate
580 training events were held as part of the acknowledgement from the Volunteers is our pride
management and supervising competence project. Venezuelan Red Cross for the and a motivation to
campaign developed in the participate in social
Banesco values: where cultures meet Asoplacer community in programs.
Our organization believes values in direction are Guarenas, which consisted in the
fundamental to decision making. education of the population concerning
the alleviation of situation of emergency caused by
Among other programs directed to found natural disasters.
organizational culture, a special project was
developed allowing the reformulation of our values, The social conscience of Banesco’s employees and
which were later transmitted nationwide through their social responsibility are also to be highlighted.
all the organization’s leaders in a dynamic and By the second semester of 2004, teaching events
active manner by means of a training process. The in special educational workshops addressed to
new values are the fundamental pillars of the students of the IUJO in Catia were more numerous,
success of our vision and our mission: Integrity as well as the participation as promoters of health
and Trustworthiness, Individual and Social prevention measures and primary medical attention
Responsibility, Innovation and Quality of Service, in low-income communities.
Endeavor, Interdependence and Leadership,
Renovation and Personal Excellence, Diversity and
Adaptability. Banesco’s social responsibility:
Building a country
The best of talents Banesco renders accounts to Venezuela
During the second semester of 2004 the and to its Social Partners
development of training programs was multiplied The bank has presented the country the results of
by jeans of massive distance learning, thanks to its social management by publicizing its Social
the incorporation of E-Learning methodology, which Balance Sheet summed up with the same technology
has produced successful results. as that used for its financial statements. Our Social
Balance Sheet evidences our transparency in
Work environment destining proceeds to the management of our
At Ciudad Banesco, social responsibility begins Corporate Social Responsibility Program. This
with its employees. Therefore, Banesco keeps up balance sheet is the accounting expression of an
permanent events and open and productive dialogue with our social
programs that improve its Social partners, with whom we have maintained a
employees’ quality of life programs commitment to education, health issues and children
and contribute to their strengthen the during the last semester of 2004. The following are
wellbeing. These behavior and some of the projects and programs initiated with
events include sports identification of the our social partners:
tournaments, employees with
performance awards organizational Fe y Alegría
and labor benefits. goals. We reaffirmed our commitment with this educational
institution, with whom we have a compromise to
Besides the projects included in the collective provide with VEB 10 thousand million throughout a
employment contract other non-contractual 5-year period in order to build 3 superior education
programs are offered to employees, such as: centers in the country. During the second semester
provision of work uniforms, vocational programs of this year we opened the new ‘Instituto Universitario
for children, discount fairs, additional medical San Francisco’ in Maracaibo, which will begin
services and documentation services. operating with some 800 students.
SECOND HALF 2004
The action of our Corporate Volunteers has been fundamental in the support we offer to Fe y Alegría, as
the team has begun participating in the comprehensive education of youths.
Venezuelan Network of Youths’ and Children’s Orchestras
Banesco understands the importance of the effort made by this institution and entered into an agreement with
the Venezuelan Network of Youths’ and Children’s Orchestras headed by the musical master José Antonio
Abreu, consisting of a VEB 3 thousand million fund trust to be carried throughout a period of three years.
The funds shall be used for the creation and furbishing of a center to house the Social
Action for Music Program. The plan is to renovate one of the classrooms of the Instituto
Universitario Jesús Obrero in Catia, belonging to Fe y Alegría, in order to convert it
an agreement with the
into a center for musical education, therefore linking the IUJO and master Abreu’s
Social Action for Music
network of orchestras.
Program, which has been
designated by the Interamerican
Development Bank (IDB) as a With the Social Action for Music Program, master Abreu supports young and
leading program in the areas talented Venezuelan musicians. Education being its most important goal as
a socially responsible corporation, Banesco is proud to have successfully
of social inclusion and
completed the educational programs meant to be carried out during the second
semester of 2004.
We have contributed with VEB 768 million to be used for the construction of a new classrooms module
in the campus of the Universidad Católica Andrés Bello, which shall offer needed new space for academic
activities in a modern and adequate environment. The construction area is approximately 9,300 square
meters. Funds provided by Banesco shall be used in the construction of one of three type A classrooms,
the furbishing of which is to be different than regular classrooms as they may be used as small auditoriums
housing 200 seats each.
Archdioceses Schools in Maracaibo
In order to keep up the program started in 1976 by Monsignor Roa Pérez and consisting today of 23
schools providing quality and comprehensive education to more than 20 thousand students in Zulia State,
Banesco entered into an agreement with the Archdioceses of Maracaibo that will enable the process of
including other local schools to the program. The amount to be contributed by Banesco is VEB 400 million.
‘Colegio San Ignacio’ in Caracas
Banesco sponsored the XIII “Activating Personal and Social Commitments to Overcoming Poverty” Congress
with a contribution of VEB 45 million. The vent was organized by former alumni of the Society of Jesus and
was held in the grounds of the ‘Colegio San Ignacio’ school in Caracas. Moreover, Banesco donated VEB
20 million to be used for the renovation of the school’s olympic pool.
A total VEB 35 million was contributed by Banesco to hold the IV Social Responsibility in Action Symposium
organized by Venamcham, ‘Venezuela Sin Límites’ and the IDB, in order to promote corporate social
responsibility actions among private corporations.
Archdioceses of Mérida
Banesco donated VEB 25.34 million to be used in the renovation of the Archdiocesan Museum of Mérida,
a valuable artistic and architectonic landmark of Mérida state.
Office of the Academic Vice-Chancellor of the UCV
We supported the Office of the Academic Vice-Chancellor of the ‘Universidad Central de Venezuela’ with
a donation of VEB 25 million to be destined to the activities held during the university’s Alumni Week which
is traditionally celebrated November 15 – 20, and which was sponsored by Banesco this year.
‘San Vicente de Paúl’ Conference in Caracas
Banesco donated VEB 21.41 million to this institution for the purchase of a new x-ray machine.
‘Apoye’ Civil Association
We contributed with VEB 10 million to ‘Apoye,’ an association helping people with special needs.
SECOND HALF 2004
Building a country Banesco is currently en route to receive
an AA1000-Standard International
Certification in the field of Corporate Social
Banesco began in the second semester of 2004 the
process of adopting the AA1000
Standard in the field of Corporate
Our range of products
The best offers to close 2004
The best choice: sight deposits with the return of
a fixed investment. With only VEB 100,000, all
In the second Social Responsibility. The customers may enjoy 13% interest rate on their
semester of 2004, AA100 Standard is an sight deposits in Liquid Checking Accounts, free
Banesco donated 65 international tool for the of maintenance fees.
computers, typing machines evaluation and accounting
and office equipment to several of corporations’ social
educational institutions and actions, which will provide Banesco Christmas credit cards were a
organizations which carry Banesco with the standards gift on their own with 19.75% interest rates
out social assistance needed to consolidate its Only the leader in credit cars could offer its clients
projects. corporate management. the best Christmas present: Visa and MasterCard
credit cards with a preferred rate of 19.75% for all
By obtaining the AA1000-Standard national and international purchases.
International Certification we seek to assess and
improve our corporate performance in accordance
with set standards for a socially responsible Banesco Mortgage Loans with preferred
management. interest rates
We offered an attractive fixed rate of 23% for one
The AA1000 Certification will reaffirm our role as a year to all clients requesting mortgage loans, as
dynamic and responsible corporation, aware of its our bank is Number 1 in the loan market.
actions and commitments to internal and external
groups, and shall identify us as a leading corporation
in the field of corporate social responsibility. The Sambil credit card arrives at
In keeping with the opening of the ‘Centro Sambil
Branding, Products and Campaigns Maracaibo’ Mall, a regional campaign was launched
Banesco reaffirms its leadership as a brand in October inviting the public to request free of
Surveys made by acknowledged consulting agencies charge the Sambil credit card, in order to access
indicate that Banesco is the banking institution best a world of VIP services, promotions and discounts.
remembered by the public in general and among
representatives of small and medium-sized enterprises,
with figures of 80% and 75% respectively. Automatic recharge of Movilnet phone
cards through BanescOnline
Among the ABC+, C and D sectors of the population, Registered users of are now able to authorize
Banesco is the most acknowledged bank and its automatic debiting of their checking or savings
publicity is deemed as the best. Moreover, the accounts to immediately recharge their Movilnet
preference and expectations of its customers are phone cards.
above the expectations of customers of other financial
Navigate BanescOnline and fish out a new
The pillars that support Banesco’s brand equity and laptop
which set it aside from the rest of the banking market, From June 27 to December 15, 2004, users of
positioning it as one of the greatest quality brands, BanescOnline participated in the sweepstakes to
are the following: win new laptops upon accumulation of electronic
Â Excellent customer service coupons when performing online banking
Â Safe and trustworthy transactions operations.
Â Services to fit all kinds of customers
Â Nationwide network of agencies
Â Treatment of customers as persons and not Private Banking Referral Plan
numbers With the Private Banking Referral Plan, our
Â Fast and simple processes customers in this sector won immediately and
without participating in any sweepstakes tickets
The public in general prefers these functional for two to fabulous destinations across the world,
characteristics and Banesco is the brand that provides simply by referring three or more friends to become
the best performance and therefore is preferred. clients of Banesco’s Private Banking.
SECOND HALF 2004
Branding… Products… Campaigns…
Throughout the second semester of the year we were acknowledged by diverse organizations and enterprises
for many of our projects and activities. To be highlighted are the following: the National Construction 2004
Award which the Ciudad Banesco project received from the Venezuelan Construction Chamber; the first
place won in the “Art with Arts” Awards organized by the El Nacional newspaper in order to prize distinguished
publicity in print; the ‘Producto’ Award received in its October edition; and for the third year in a row, we
were awarded the P&M acknowledgement as the ‘Best Advertiser in the Banking Sector.’
Updated Electronic Channels
By the end of 2004 average transactions made electronically experienced an accelerated growth compared
to the previous year, and as a result electronic channels reaffirmed their participation in the total transactions
of the organization.
Electronic Data Interchange
Electronic transactions increased 28%; services of payroll-managed services, payments to suppliers and
payments domiciled by means of our electronic data interchange platform increased 89%; and the number
of customers affiliated to these services increased 97% compared to the previous year.
A customizable account statement was introduced with our electronic payments services, allowing merchant
customers to view movements of their accounts by means of a standard EDI format that permits the
automated reconciliation of administrative processes.
An increase of 98% in the average number of transactions was achieved, and also a 66% increase in the
number of registered users compared to 2003.
Upon closing the semester, BanescOnline had more than 400,000 registered users and managed a monthly
average of 3.75 million transactions and VEB 267,040 million, thus becoming the second most important
electronic banking service in both indicators.
The scope of products and services offered through this channel was broadened with the inclusion of fund
trust operations and viewing fund trust transactions, and the incorporation of electronic banking password
Phone Banking Services
By the end of 2004 the Phone Banking Center handled a significant monthly
amount of calls and transactions substantially handled by the IVR robot.
Calls answered by our phone banking agents report highly competitive
levels of service within the local and international markets.
Phone authorizations improved by 6 points the levels of
acceptance of both classic and gold credit cards, an
additional 3.5 points for platinum credit cards and 1.5
points for debit cards, therefore ranking above the
average required by card franchises for the local
Nationwide Electronic Banking growths of 106.8%,
At the end of 2004, Banesco had 650 40.8% and 58.3% in the
ATMs (14.63% of the market share), 108 monthly average of
self-service tellers and the widest network transactions processed through
of POS and checkbook dispensing its self-service tellers,
machines in the market, with 237 and checkbook dispensing
20,928 machines respectively. machines and POS,
Transactions made through its ATMs by
customers and non-customers experienced
growths of 51.3% and 42.8% respectively
compared to the previous year, maintaining
SECOND HALF 2004
therefore the leadership in customer transactions in the Suiche7B and Conexus networks with
a market share of 19.6% by the end of the year.
ATM availability improved almost 10 points as a result of the incorporation
of Gasper monitoring technology and the support of the Comprehensive
Monitoring Center (CIM).
A pilot program for the new Banesco Visa Smart credit card
was launched, which makes available to our customers
the most advanced security technology.
Banesco makes history
with its credit cards
In order to keep providing
its customers with the
leadership in the
market, sets new records
the credit limit to
and makes history with
more than 300
its credit cards totaling
thousand credit card
holders, in time for
them to make their
purchases with the best interest
rate in the market: 19.75%.
Banesco Debit Cards
By the end of 2004, Banesco
reaffirmed its ranking in
Maestro (POS) sales, as the
figure experienced an increase
of 96.2% compared to the
previous year and shortened
the distance from the first place
in the ranking by 1.29 points.
As a result of the diverse
strategic alliances made during
the second semester of 2004, our
debit and credit customers enjoyed
innumerable benefits and discounts.
In order to provide greater ease and
keep offering the best of services to our
Gold customers, a new service was
introduced during the second semester of
the period consisting of automatic relocation
of CANTV phone bill payments to other
accounts in case of reported loss or theft of debit
All customers with Maestro Gold debit cards now enjoy an
exclusive benefit: insurance for their ATM transactions, ATMSafe,
offered by MasterCard for the Maestro Gold program.
SECOND HALF 2004
A quality portfolio was
Throughout maintained thanks to
the second semester the management of
of 2004, Banesco our Department of
complied at all times with Loan Assessment
the required monthly 3% which kept risks
of its loans portfolio under control. As a
granted as micro result 2004 was
loans. ended with a low late
index (1.2%), mostly
owing to excellent collection
management and to the improved
quality of the portfolio.
Banesco Agricultural Loans
Our Department of Agricultural Banking offered
unrelenting support to the agricultural sector, owing
to its significance for Venezuelan economy since
it is a profitable business which generates
Loans market employment opportunities and secures food
Throughout 2004 the loans market was determined resources.
by an increased demand for loans on behalf of all
economic sectors, driven by the greater flexibility During 2004, 752 loans were granted for a total
of currency exchange regulations and the greater VEB 291 thousand million, of which 457 were
stability of sales volume which evidence the recovery granted during the second semester of the year
of markets during the period. In general, 2004 was for a total VEB 135 thousand million, ending the
a year in which clients were aided in their year with an agricultural loans portfolio of VEB 224
businesses, and new business opportunities and thousand million, surpassing by far the required
attractive investment mechanisms were found percentages of loans granted according to the
again. Agricultural Loans Act.
Banesco Loans Customers of the agricultural sector made deposits
Banesco had set clear goals for 2004’s strategic totaling VEB 162 thousand million, therefore proving
planning in order to maintain its market share. The the reciprocity of clients and the bank.
bank perused new customers and it was
satisfactory to see the results evidenced in the The Chairman of the bank endorsed this practice
growth of our loans portfolio. by visiting several producers and entrepreneurs
associations of the Venezuelan agricultural sector
Comercial Loans Portafolio in order to reaffirm our support, maintain close
This portfolio evidenced the greatest relative growth relations with our customers of this sector and
index of all, registering a figure of VEB 2,022 increase knowledge of their business, which shall
thousand million, having increased 63% compared doubtlessly allow the design of precise strategies
to the period ended on June 30, 2004 among its to satisfy their needs.
Micro loans During the second half of 2004 nearly 4,000
Throughout the second semester of the year mortgage loans were granted according to the
Banesco complied with the required number of requirements of the Housing Policy Act, both short-
micro loans granted, equivalent to a monthly 3% and long-termed, benefiting approximately 16,000
of its total loans portfolio. people nationwide and substantially contributing
to improve our clients’ quality of life, which in turn
The micro loans portfolio manages loans of VEB allows us to strengthen our values regarding
1 million to VEB 100 million, and the average loan Individual and Social Responsibility.
amount is VEB 30 million. Rather than a requirement,
this portfolio has become a standing business, Throughout the last six months of the year
since its late index is a stable 2%, consists of a substantial improvements in loan management
short-term portfolio (as loans are granted for periods were made, including the reduction of average
not exceeding a year) and is addressed to approval time to 21 days and in many cases to
established merchants who maintain excellent only 17 days, a market record for this type of
levels of commitment towards the bank. transactions.
SECOND HALF 2004
Concerning deposits made for Housing
Over 10,000 Policy Mutual Funds, Banesco remains
new companies the leader in the market, managing
preferred Banesco to more than 28% of funds deposited
deposit their contributions in the financial system for this
to their Housing Policy purpose. Moreover, this has allowed
Mutual Funds it to become the most important bank
during 2004. in granting loans for this program, and
its portfolio reached VEB 652 thousand
million by the end of 2004, totaling 37,969
Respecting the collection of funds according to
the Housing Policy Act, Banesco widened the
breach with the next following bank by more than
VEB 72 thousand million, therefore consolidating
its leading position in the sector with a portfolio of
VEB 700 thousand million, and achieving during
the second half of 2004 the collection of 75
thousand new savings customers, funding of more
than VEB 181 thousand million and setting a new
record of monthly deposits equivalent to VEB 21
semester of 2004
for 2005 is to
represented the consolidation
keep offering our
of Banesco as the leading bank
in management of funds of the
e ff i c i e n t a n d
Housing Policy Mutual Fund,
ranking as the most important
brand with the highest level
will result in a
of acceptance in the
population that will at
all times prefer the services
of the best bank in the country.
During the last half of 2004 Banesco’s goal was to
maintain the quality levels offered with our customer
service, based on the quality of the infrastructure
of banking agencies, quality in technology and a
wide array of products and services ever oriented
towards satisfying our customers’ needs.
Therefore, with this clear purpose and its impact
on the strengthening of Banesco’s position in the
financial system, the results achieved by our network
of agencies are highlighted as follows:
Leadership is maintained with
Banesco nationwide network of sales and 364
surpassed the goal set service centers, supported by the
for deposits in 2004, latest technology available in the
contributing to the market and highly-qualified human
strengthening of the leadership resources.
attained during the year as
Number 1 in customer Â We renewed the strategy
funds and transferred oriented towards the segmentation
investments. of clients according to specific needs
SECOND HALF 2004
and obtained palpable results in the CD+ and services tailored to meet clients’ needs, therefore
Premium segments of individuals and in the Small strengthening customer relations and earning
and Medium Enterprises segment in the corporate customer fidelity.
Our micro loans portfolio evidenced a sustainable Regional Conventions
growth of 146%, maintaining our support of small In order to strengthen relations and exchange ideas
and medium producers and merchants. with our clients, suppliers and affiliates, we have
continued to organize regional conventions.
New agencies opened in the We have held regional conventions in Mérida,
second half of 2004 Puerto La Cruz, Puerto Ordaz, San Cristóbal and
In order to broaden the scope of our service centers the Sambil Mall in Maracaibo.
in the largest cities of the country, during this period
eight new agencies were opened, where we
continue to offer our clients excellent service quality. Government Banking Management
By December 2004 funds from this specialized
The changes made to our network of agencies are banking increased 45%, which in real terms
the following: reflected deposits of approximately VEB 700
New Agencies: thousand million during the second half of the year.
Â Unicentro El Marqués. The successful administration of government
Â Centro Sambil Maracaibo. banking also affected favorably the diversification
Â C.C. Hyper Jumbo. of sight and term deposits compared to June 2004,
Â C.C. Marina Plaza. as well as making new customers.
New service tellers:
Â Central El Batey A total 34 new fund trusts were executed,
Â Brahma Aragua representing approximately VEB 340 thousand
Â Hospital Vargas million by the end of December 2004, and were
Â Brahma Guatire. mostly comprised of Management Fund Trusts for
autonomous government agencies.
Consolidating our Premium New payroll accounts were opened in this segment,
Segment of customers belonging to both old and new customers, and
By December 31, 2004, the total portfolio of resulting in the incorporation of some 40,000 payroll
customers in this segment remained proportionate accounts for government employees nationwide.
to the total customer portfolio of the bank (5%), This process was thoroughly completed via Internet,
and was comprised by a combination of liabilities since Electronic Accounts were opened in bulk.
70% - 30% concerning term and sight deposits Throughout the second half of 2004 we were the
respectively. These figures speak of the profitability leading institution in Government Payment
of this segment of customers. Programs.
The total number of customers in this segment is
13,324, receiving personalized customer care from
111 sales executives belonging to the
corresponding department team. The result
is an average product crossover of 4.82
During the second semester
of 2004, 87 new Business
training of our
a s a re s u l t
SECOND HALF 2004
Supporting the Risk Management
Petroleum Segment Operative Risk
Banesco was the leading supporter of this sector Â Launch of a new methodology for operative
with a contribution of VEB 30,000 thousand million risk management nationwide and
by means of a syndicated loan of VEB 60,000 development of a pilot Project: “Identifying
thousand million. and managing operative risk.”
Significant new clients were made in the Training of 300 new Operative Risk
Petroleum Segment and its affiliates, Delegates nationwide, to be the engines of
With allowing the consolidation of a identification of operative risk and the design
the results of portfolio of corporate customers and organization of the first Operative Risk
2004, the institution in this sector and the increase Workshop.
was PDVSA’s first of its participation. In order to
paying bank of its achieve this goal, it was relevant Â Activation of an Operative Risk Committee
correspondent bank to know the market, visualize and its linking with the Comprehensive Risk
agreement. business opportunities and make Committee in order to determine priorities
use of the bank’s strength as an and make decisions regarding the follow-
institution. up of strategies, events and design of
operative risk policies.
The synergy among corporation within this segment
has been decisive in the making of new businesses. Safety of Data
Through Banesco Seguros, the purchase by the Â Nationwide launch o fan awareness plan
banking sector of insurance against all risk and addressed to our clients, employees and
civil responsibility was achieved. This allowed the shareholders, with the slogan: “Safety of
bank to participate in the petro-chemical market, Data: Reaffirming our Commitment.”
which is expected to experience a significant growth Â
in 2005. Initiation of annual training and nationwide
re-certification regarding Data Safety
Banesco in the
international market Â Completion of the Data Safety Site, where
International banks and activities related to foreign all data safety policies are to be found as
commerce have managed to achieve the goals set well as prevention tips for backing up
for 2004, with more than USD 150 million in information assets.
deposits and more than USD 115 million in letters
of credit. Â Design and maintenance of an awareness
plan addressed to Banesco’s employees
During the second semester of 2004 the automation concerning data safety.
of services concerning check cashing, deposits in
USD and the purchase and sale of travelers’ checks Â Continuing processes for the permanent
charging the customer’s account was implemented. security of the technological platform and
Likewise, the issuance of debit cards for customers information assets, and application
of Banesco Internacional Panamá was incorporated of advanced technologies such as
to the list of services. biometrics.
Moreover, in order to broaden the scope of our Credit Risk
international banks a process was begun which In a continuous effort to implement the best
consists of installing in all Banesco agencies a practices advised by internationally renowned
platform for our international banks, including brands, Banesco completed the development of
Banesco Puerto Rico which now offers savings a process consisting of internal classification of
accounts to its customers. credit risk and the design of a first model to be
applied in order to estimate possible losses
In August 2004 a new commissions scheme was ensuing with the business and how to cover
defined for savings accounts in USD, as an such losses.
additional effort to improve the corresponding
portfolio. For this purpose the best methodological backup
was used in accordance with the regulations of
Credit facilities with correspondent banks were the Basilea II Agreement and the processes of
improved, allowing greater ease in the negotiation continuous training and updating included in the
of foreign commerce products. general area strategy.
SECOND HALF 2004
Market and Liquidity Risk
Technology and Processes
As part of the plan for the improvement of market and liquidity risk processes, a
project for the implantation of price risk was completed with the advice of experts
in the area. As a result, processes were updated in order to determine the
limits of exposure to risk and its proper follow-up.
Moreover, an induction program was completed which included
all personnel of the areas of the bank involved in market and
liquidity risk, where the theoretical elements necessary for
an adequate management of risk associated with the
structure of the balance and the bank’s investment
portfolio were lectured.
Technology and Processes
Customer care systems
Website for Affiliates and Patrons: A site
where fund trust clients, whether beneficiaries
of patrons, may perform online transactions,
24 hours a day and 365 days a year.
Credit WorkFlow: An innovative
technological tool supporting credit
processes, with functional improvements
that ease and optimize answering times
offered to our credit customers.
New communication channels: Our
customers may now use a Suggestions
Box, a new technological tool meant to
receive customer ideas concerning their
needs and the improvement of our products.
Empowerment: Automation of new operative
and functional policies in oroder to adequately
empower operative roles.
Migration of the Biztalk Platform for Electronic
Data Interchange to the 2004 version: This
platform is the axis of all services concerning electronic
data interchange, such as payrolls, domiciliation, automatic
payments to suppliers, request of customized bank
statements, and others.
Supporting Business Executives’ decision making
Empowerment: Automation of new operative and functional policies
in order to adequately empower operative roles.
Management indicators module for fund trust customer requests: Supporting
analysis and decision-making throughout the process of utilization of resources.
Auditing of services, supported by hand-held equipment allowing the reduction
of assessment time and the increase in productivity of auditing services.
Strategic Planning Comprehensive Program (PIPE), to ease the design,
coordination, conciliation and registration of investment operations.
Technological Support for our Projects Department: A Microsoft case study
The technological platform of the applications supporting the Department of Portfolios
and Projects was successfully substituted, in conformity with the organization’s
SECOND HALF 2004
Strategic Planning Strategy. Microsoft
Corporation has determined the implantation
Technology and Processes of this platform in Banesco as a reference case
study for its international clients.
Quality in the development of internal
processes and systems of the
Department of Information and
Implementation of Change Management
Processes in 80% of all critical services.
Creation of a portal for the administration
of application requirements to support all
Systems Departments in order to service
Adequacy of the methodological frame in Phone requests: 1’05’’ in average.
all service areas, positively affecting the Email requests: 4 to 8 hours.
quality of system products and all Web requests: 1 minute in average.
methodologies within the bank.
70% of all requests are answered when the first
Business Support Systems and compliance contact is made, close to the international standard
with Credit Card Franchise regulations of 80%.
On Demand Reports: Reduction of stationery costs
by using electronic reports. Processes:
Design and development of service and internal
Migration of the Collection Management System customer care model.
to a new (iCS) version: Defining customized
collection strategies for each area of business. Design of processes for incident and problem
Business Support Systems and Compliance
with the regulations of the BCV, CADIVI and
Sudeban concerning Fund Trusts, Treasury Cash Operations
and Capital Markets Securities and Cash
ROCA (Regulation Process): automates processes By the closing of 2004 our own figures of cash sales
related to Sudeban (reports, files and requests) and to nationwide banks tripled compared to 2003,
allows the optimization of information delivery times. representing a reduction of costs of approximately
VEB 295 million.
Improvement of automated processes related
to the issuance of bonds for the fourth issuance Back Office Automation
of USD Bonds for sale. The Project for the automation of remittance and
delivery of transfers among national banks was
Implantation of the Integrated Fund Trusts successfully completed, addressed to orders of
System (GESTOR) for collective products. transfer received through BanescOnline.
Support Systems for our Employees As a result of the completion of this Project, a great
Technology for our employees: part of the remittance of transfers to other banks and
A new technological platform, the Corporate Intranet, its reception is automated, therefore the process is
is available to all Banesco employees. This new eased, costs are reduced and the quality of the service
platform is meant to satisfy employees’ needs is improved. This service is in great demand by our
concerning self-management and self-service. customers.
Service Desk Advanced Electronic Clearing
Internal Clients: Electronic Clearing Chamber Project: Banesco
Of a total 81,863 events, incidents and requests, led this pilot project together with another 5 banking
95% were provided with solutions, thus supporting institutions (Banco Venezolano de Crédito, Helm Bank
the operation and continuity of business. de Venezuela, Bolívar Banco, Banvalor and Banpro).
Incorporation of new service channel (Intranet): Installation of Users Access Platform: The UAP
A significant improvement was made to the waiting shall serve as a messenger for data sent and received
times to process. between Banesco and the BCV.
SECOND HALF 2004
As of December 31, 2004 and June 30, 2004
Stated in million VEB
Operatios in Consolidated Operations Consolidated
Venezuela with Foreign in Venezuela with Foreign
Dec-2004 Dec- 2004 Jun-2004 Jun-2004
CASH AND DUE FROM BANKS 1,182,132 1,186,743 869,186 987,023
Cash 164,120 164,129 102,050 102,059
Central Bank of Venezuela 896,395 896,395 632,848 632,848
Local banks and other financial institutions 9,642 9,642 4,804 4,804
Foreign banks 12,758 17,361 20,938 138,767
Notes receivable 99,219 99,219 108,547 108,547
Provision for bank accounts -2 -2 -2 -2
SECURITY INVESTMENTS 3,611,965 3,988,053 2,472,986 2,682,814
Investments in Central Bank 2,106,806 2,126,496 897,676 928,080
Security investments for negotiation 0 0 0 0
Available for sale security investments 39,028 40,497 40,118 41,586
Security investments held until maturity 1,409,692 1,762,851 1,479,655 1,655,849
Other security investments 50,142 51,912 49,526 51,288
Limited availability investments 6,296 6,296 6,012 6,012
CREDIT PORTFOLIO 2,005,878 2,022,914 1,212,562 1,238,632
Outstanding credits 1,988,359 2,014,405 1,199,642 1,226,639
Restructured credits 85,883 85,883 95,562 95,562
Past due credits 23,317 24,998 34,219 43,729
Credits in litigation 768 768 3,248 3,248
Provision for credit portfolio -92,450 -103,141 -120,109 -130,545
INTEREST AND COMMISSIONS RECEIVABLE 76,141 80,682 87,376 92,838
Interest receivable from cash and cash equivalents 0 0 0 870
Interest receivable from security investments 51,097 54,826 64,675 68,042
Interest receivable from credit portfolio 35,775 36,588 34,510 35,735
Commissions receivable 2,613 2,613 2,325 2,325
Provision for interest receivable and other -13,345 -13,345 -14,134 -14,134
INVESTMENTS IN SUBSIDIARY COMPANIES, AFFILIATES, AND BRANCHES 152,918 16,748 115,006 13,709
Investments in subsidiary companies, affiliates and branches 153,471 17,301 115,406 14,109
Provision for investments in subsidiary companies, affiliates -553 -553 -400 -400
PROPERTY RECEIVED IN LIEU OF PAYMENT 8,236 8,236 13,444 13,444
PROPERTY IN USE 347,157 347,506 325,457 325,815
OTHER ASSETS 277,398 277,401 257,883 258,046
Total assets 7,661,825 7,928,283 5,353,899 5,612,322
Contingent Debtor Accounts 139,843 215,114 146,006 168,978
Trust Assets 4,092,881 4,092,881 3,100,902 3,100,902
Other Trusts Assignments 33,619 33,619 33,949 33,949
Debtor Accounts Due to Trust Assignments (FMH) 700,243 700,243 598,844 598,844
Other Debtor Accounts from FMH 5,804 5,804 5,613 5,613
Other Debtor Memorandum Accounts 11,545,938 11,552,867 8,191,836 8,203,282
Other Debtor Book Accounts 48,989 48,989 46,346 46,346
SECOND HALF 2004
As of December 31, 2004 and June 30, 2004
Stated in million VEB
Operations Consolidated Operations Consolidated
in Venezuela with Foreign in Venezuela with Foreign
Dec-2004 Dec-2004 Jun-2004 Jun-2004
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS FROM CLIENTS 6,439,633 6,657,073 4,270,226 4,460,672
Deposits in current accounts- 3,056,935 3,056,935 2,107,911 2,107,911
Non-remunerated checking accounts 1,556,431 1,556,431 1,029,504 1,029,504
Remunerated checking accounts 1,500,504 1,500,504 1,078,407 1,078,407
Other demand liabilities 100,846 100,846 163,773 163,773
Savings deposits 1,337,050 1,459,172 885,053 998,573
Time deposits 1,943,990 2,039,308 1,112,613 1,189,539
Securities issued by the institution 773 773 838 838
Restricted deposits from clients 39 39 38 38
DEPOSITS FROM CLIENTS AND OBLIGATIONS WITH BANAP 161 161 6,325 6,325
OTHER FINANCING OBTAINED 65,938 122,541 51,144 113,328
Liabilities with local financial institutions up to one year 43,812 43,133 36,121 34,488
Liabilities with foreign financial institutions up to one year 0 0 0 0
Liabilities with foreign financial institutions over one year 19,305 76,588 11,526 75,343
Liabilities for other financing up to one year 0 0 0 0
Obligations for other financing over one year 0 0 0 0
Liabilities for other financing over than one year 2,821 2,821 3,497 3,497
OTHER FINANCIAL OBLIGATIONS 24,685 24,685 25,723 25,723
INTEREST AND COMMISSIONS PAYABLE 8,325 8,649 8,699 8,892
Expenses payable due to deposits from clients 8,203 8,241 8,591 8,625
Expenses payable due to deposits from clients and liabilities with BANAP 0 0 0 0
Expenses payable due to other financing obtained 55 55 55 55
Expenses payable due to other financial obligations 67 353 53 213
ACCRUALS AND OTHER LIABILITIES 165,617 157,708 171,263 176,863
Total Liabilities 6,704,358 6,970,816 4,533,381 4,791,804
Capital paid-in 427,996 427,996 427,996 427,996
Non-capitalized equity contributions 0 0 0 0
Capital reserves 178,235 178,235 137,515 137,515
Accumulated income 374,042 374,042 287,963 287,963
Non-realized gain or (loss) on available for sale security investments 11,978 11,978 12,771 12,771
Treasury stock -34,784 -34,784 -45,727 -45,727
Total stockholders' equity 957,467 957,467 820,518 820,518
Total liabilities and stockholders' equity 7,661,825 7,928,283 5,353,899 5,612,322
SECOND HALF 2004
Statements of Earnings
Balance Sheets As of December 31, 2004 and June 30, 2004
Stated in million VEB
FINANCIAL REVENUES 420,724 435,017 342,849 350,217
Revenues from cash and cash equivalents 261 262 309 1,865
Revenues from security investments 242,078 253,671 200,691 204,166
Revenues from credit portfolio 159,301 162,000 126,114 128,450
Revenues from other accounts receivable 19,084 19,084 15,535 15,535
Revenues from investments in subsidiary companies, affiliates and branches 0 0 0 0
Other financial revenues 0 0 201 201
FINANCIAL EXPENSES 135,353 136,970 106,515 108,179
Expenses due to deposits from clients 130,361 131,576 101,629 102,679
Expenses due to obligations with BCV 0 0 0 0
Expenses due to deposits from clients and obligations with BANAP 329 329 329 329
Expenses due to other financing obtained 439 842 181 795
Expenses due to other financial obligations 34 34 38 38
Other financial expenses 4,190 4,190 4,338 4,338
GROSS FINANCIAL MARGIN 285,372 298,047 236,335 242,038
INCOME FROM RECOVERED FINANCIAL ASSETS 15,152 15,152 10,523 10,523
EXPENSES DUE TO UNCOLLECTIBILITY OF CREDITS AND OTHER 20,000
ACCOUNTS RECEIVABLE 350 550 20,000 232,561
NET FINANCIAL MARGIN 300,174 312,649 226,857 317,066
Other operating income 191,905 170,478 310,158 32,406
Other operating expenses 11,172 11,215 21,708 517,220
FINANCIAL INTERMEDIATION MARGIN 480,907 471,912 515,308 229,198
TRANSFORMATION EXPENSES 247,167 248,377 228,658 89,672
Personnel expenses 107,630 107,873 89,455 127,765
Administrative and general expenses 124,552 125,518 127,442 9,158
Contributions to Deposit Guarantee and Bank Protection Fund 10,961 10,961 9,158 2,604
Contributions to Superintendency of Banks and Other Financial Institutions 4,024 4,024 2,604 288,022
GROSS OPERATING MARGIN 233,740 223,535 286,649 6,111
Income from adjudicated goods 3,981 3,981 6,111 694
Income from sundry accounts 768 2,226 594 6,343
Expenses due to realizable property 5,251 5,251 6,343 49,598
Expenses due to sundry accounts 23,878 15,131 48,126 238,887
NET OPERATING MARGIN 209,359 209,360 238,887 0
Extraordinary income 0 0 0 1,576
Extraordinary expenses 3,095 3,095 1,576 237,311
GROSS INCOME BEFORE TAXES 206,264 206,264 237,311 2,516
INCOME TAXES 2,665 2,665 2,516 234,794
NET INCOME 203,599 203,599 234,794
APPLICATION OF NET INCOME 46,959
Legal reserve 40,720 40,720 46,959 2,348
LOSEP Contribution 2,036 2,036 2,348 184,666
Accumulated income 160,131 160,131 184,666
Principal Financial Indicators
Equity + Operative Management / Total Assets 12.50 15.03
Non-Productive Assets / Equity + Operative Management 154.11 159.21
Loan Portfolio Provisions / Gross Loan Portfolio 4.41 10.87
Non Accrual Loans / Gross Loan Portfolio 1.15 3.39
Personnel Expenses + Operative Expenses/ Average Productive Assets * 10.27 15.52
Personnel Expenses + Operative Expenses / Financial Income * 58.81 63.43
Net Results / Average Assets * 7.87 7.34
Net Results / Average Equity * 53.90 44.14
Availability / Customer Funds 18.36 21.04
Availability + Investment in Securities / Customer Funds 51.68 57.81
28 * Annual Percentages
SECOND HALF 2004
As of 1998
Stated in VEB
Solidarity (Capital and Regional) 1.012.925.000
Vargas State 816.958.000
Apure & Amazonas States 145.967.000
Merida State 50.000.000
Social Knowledge Enterprise Network "IESA" 140.000.000
"FUNDANA" Foundation 907.582.000
Words for Venezuela 2.814.143.000
Year 2002 592.911.000
Year 2004 2.221.232.000
"Fe y Alegria" Foundation 4.884.142.000
Throughout our existence as a Venezuelan
Trust Investment "Fe y Alegria" Foundation 5.333.332.000 enterprise, the promotion of education has become
"FUNDACUID" Organization 29.000.000 one of our greatest causes. When promoting our
corporate social responsibility policies we are stating
National Park "Los Roques" 20.000.000
that it is necessary to build the country. Therefore,
Vargas Hospital 17.749.000 our social commitment extends to our
Hospital Ortopédico Infantil “Children´s Hospital” 31.644.000
stockholders, our 7,000 employees and their
families, our 3,000,000 clients, our suppliers and
House of Art and Occupations "Jacobo Borges" 11.422.000 the rest of the community.
Donations of Computer Equipment 293.198.000
The creation of the Banesco Group of Volunteers
Other Contributions 3.525.467.000
Alliance for a Venezuela without Drugs 39.513.000 is our pride and a motivation to participate in
Central University of Venezuela Contributions 40.000.000 social issues. We strive to be corporate citizens
"Fair of Cantaura" Foundation 48.000.000 by creating awareness and stimulating solidarity
"Claret Homes" Foundation 20.000.000
"Children´s Museum" Foundation 50.000.000 towards others.
"Let us Unite to the World for the Life" Foundation 20.000.000
Other Contributions 3.017.230.000 We wish to present our accounts to Venezuela
and our social associates: Fe y Alegría Foundation,
"Andres Bello" Catholic University Scholarships 16.030.000 Fundana Foundation, the AVEC, the Don Bosco
Social Benefits Housing Program, Casarte, the IESA, the UCAB,
Noncontractual for BANESCO employees 6.855.784.000 Fundaexcelencia, the Excelsior Foundation, the
Restaurant-Cafeteria Subsidy 5.312.689.000
Medical Service 1.062.129.000 Children’s Museum, the Damas Salesianas
Employees Parking Subsidy 480.966.000 Association, the Venezuelan Red Cross, the
Contribution Corporative Voluntary Service 13.277.000
Foundation against Child Paralysis and the
Voluntary Service Training and Formation 3.853.000 Venezuelan Anticancer Society.
Special projects 3.418.000
Workshops of complementary formation 6.006.000
TOTAL ASSETS 25.905.695.000
Order Accounts 3.670.839.000
Cultural Events (Antidrug Campaigns) 2.972.853.000
Prevention and Control of the Legitimation of Capital 697.986.000
Accounts Payable Due to "Fe y Alegria" Organization 5.333.332.000
Contribution of the BANESCO Organization 20.128.363.000
Contribution of the public 444.000.000
TOTAL LIABILITIES AND EQUITY 25.905.695.000
Order Accounts 3.670.839.000
SECOND HALF 2004
International Area Verónica Cubek
General Manager, International Bank
Telf. (58212) 501.9940
José Antonio Oliveros
Vicepresident Treasurer International
Telf. (58212) 501-8414
Rafael Eduardo Padrón
Correspondent Banking Division, Manager
Telf. (58212) 501-9943
Rosa Mariela Padrino
International Treasurer Manager
Telf. (58212) 501-9108
International Bussines Division, Manager
Telf. (58212) 501-7255
International Operations Division, Manager
Telf. (58212) 501-7754
Banesco International Bank Inc., Panamá
Banesco International Bank Corp., Puerto Rico
Banesco Banco Universal C.A., Sucursal Panamá
Banesco Banco Universal C.A., Bogotà Representative Office
Banco Uniòn C.A., Sao Paulo
Eduardo Loures, President
Telf (55 11) 3253-3722
Mailing Address: Banesco, Banco Universal C.A.
8424 NW, 56 Street,
Miami, Florida 33166, U.S.A.
SECOND HALF 2004
Argentina: Banco de la Provincia de Buenos Aires, Banco de la Nación Argentina, Banco
Galicia, Banco Societé Generale S.A.
Australia: ANZ Bank.
Austria: Bank Austria Creditanstalt A.G.
Belgium: Fortis Banque SA/NV.
Bolivia: Banco Unión S.A., Banco Do Brasil.
Brasil: Banco Bradesco, BICBANCO, Banco Do Brasil, Banco Itau S.A., Unibanco.
Canada: Toronto Dominion Bank, American Express Bank.
Chile: Banco de Chile, Banco del Estado de Chile, Bci Banco de Crédito e Inversiones.
China: American Express Bank, Commerzbank A.G., OCBC Bank.
Colombia: Banco de Bogotá, Bancafé, Bancolombia, Bancoldex.
Costa Rica: Banco Nacional de Costa Rica, Banco de Costa Rica.
Curacao: Maduro & Curiel’s Bank.
Denmark: Danske Bank.
Ecuador: Banco del Pichincha, Banco del Pacífico, PRODUBANCO.
El Salvador: Banco Cuscatlán.
England: The Royal Bank of Scotland, HSBC Bank P.L.C., Wachovia Bank
Finland: Nordea Bank.
France: Credit Industriel et Comercial, BNP Paribas Group, Banque Sudameris,
Germany: Commerzbank A.G., American Express Bank Ghmb.
Guatemala: Banco Industrial, Banco GT Continental.
Holand: ABN Amro Bank, ING Bank
Honduras: Banco Atlántida
Hong Kong: HSBC Bank, American Express Bank, Wachovia Bank
India: American Express Bank, Wachovia Bank
Ireland: Bank of Ireland
Israel: Bank Leumi Le Israel, Bank Hapoalim B.M.
Italy: Banca Nazionale del Lavoro, Capitalia Spa, Unicredito Italiano Insa BCI Spa,
Japan: The Bank of Tokyo and Mitsubischi Bank, american Express Bank, Wachovia Bank.
Korea: American Express Bank, Wachovia Bank, KEB Bank
Luxemburg: Kredietbank S.A.
Malaysia: Bumiputra Commerce Bank Berhad, Public Bank, OCBC Bank.
Mexico: Banamex, S.A.
Norway: Nordea Bank.
New Zealand: ANZ Bank
Panama: Banesco International Bank Inc., Banesco Banco Universal, Metrobank, HSBC Bank.
Paraguay: Banco Do Brasil.
Peru: Banco de Crédito del Perú, Banco Financiero, Interbank
Portugal: Banco Espirito Santo S.A., Banco Totta & Acores.
Puerto Rico: Banesco International Bank Corp., Banco Popular de Puerto Rico
Singapore: OCBC Bank.
Spain: Banco Sabadell, Commerzbank A.G., Confederación Española de Cajas de Ahorro
Sweden: Nordea Bank.
Switzerland: U.B.S. Credit Swiss First Boston, HSBC Private Bank, Nordea Bank.
U.S.A.: American Express Bank, The International Bank of Miami, JP Morgan Chase Bank,
Wachovia Bank, Regions Bank, Citibank N.A.
Uruguay: Banco de la Provincia de Buenos Aires, Banco ACAC.
SECOND HALF 2004
International Banking Products
International Banking Products International Checking Account Plan
Non-Active Commercial Account
Commercial Checking Account Plan
Personal Checking Account Plan
International Savings Account Plan
• All accounts bear interest on daily balances.
• Deposit Certificates.
• Free Life Insurance.
• Fund transfers to other banks in other countries.
• Traveler Checks.
• And many other services.
Letters of Credit for Imports anywhere in the world.
Confirmation of Letters of Credit for Exports.
Money Orders anywhere in the world.
International Financing Operations.
Ciudad Banesco, Avenida Principal de Colinas de Bello Monte,
entre calles Sorbona y Lincoln, Municipio Baruta.
Caracas - Venezuela
Telephone Banking: 0500BANCO24 - 0500 226.26.24
Master Phone: (0212) 501.71.11