BEKB | BCBE expanded its core business and posted another good operating result in 2011. The annual profit before taxes was up 1.7 percent to CHF 162.7 million (previous year: CHF 159.9 million). Annual profit after taxes increased by 4.6 percent to CHF 130.1 million. In light of the bank's good performance, the Board of Directors will be proposing an increase in the dividend from CHF 5.10 to CHF 5.30 at the General Meeting of 15 May 2012. This is the fifteenth proposed dividend increase in a row.

BEKB | BCBE has a solid foundation. This is expressed in an equity ratio measured against the balance sheet total of 7.7 percent and a BIS tier 1 ratio of 18.3 percent (in accordance with the Swiss standard rate). Including value adjustments and provisions, at-risk assets account for more than 10 percent of the balance sheet total. BEKB | BCBE has a healthy financing structure with customer loans being refinanced in their entirety through customer assets. The balance sheet total has increased to CHF 25.2 billion.

In 2003 BEKB | BCBE set itself a long-term financial goal: it aims to achieve free cash flow amounting to CHF 800 million to 1 billion within ten years. After nine years the added value created exceeds the target range. Between 2003 and 2011, BEKB | BCBE generated a cumulative net cash flow of CHF 1,150 million, CHF 120 million of which in the past year.

More customer loans - strong mortgage business
In the 2011 business year BEKB | BCBE also provided support in particular for small and medium-sized enterprises within the cantons of Berne and Solothurn. Total customer loans (excluding public bodies) increased by 3.9 percent to CHF 17.2 billion and total mortgage obligations rose by 3.9 percent to CHF 16.2 billion. The bank's loan portfolio remained at the same high quality level as in the previous year. Non-performing loans accounted for less than 1 percent of all loans. Due to the ongoing low interest rates, more fixed-term mortgages were signed. The amount of fixed interest mortgages accounted for 86.5 percent of all mortgages as of the end of 2011 (previous year: 82.2 percent). For years, BEKB | BCBE has rigorously implemented its credit policy. In granting loans, BEKB | BCBE, using a calculatory interest rate of 5 percent, pays attention to ensure that customers have the capability to repay loans even at markedly higher interest rates. For new mortgage financing, customers are required to contribute at least 20 percent of their own funds (excluding pension funds) in their own longterm interest. As of the end of 2011, its provisions for individual and lump sum reimbursements accounted for 3.5 percent of all customer loans.

Solid refinancing - investment counselling further expanded
BEKB | BCBE has a sound financing structure. Customer assets in the strict sense of the term (savings deposits, deposit certificates and other liabilities toward customers) increased further in the past year and rose to CHF 20.5 billion (previous year: CHF 19.6 billion), thus exceeding the value of customer loans. BEKB | BCBE expanded both the private banking and institutional investor domains. In client assets, net new money inflow totalled CHF 262 million. Customer assets under management came to CHF 19.7 billion. Asset management mandates, through which clients entrust their deposits to the bank for comprehensive management, totalled CHF 4.4 billion as of the end of 2011.

Successful Cyber Bank
With its innovative offers, BEKB | BCBE's cyber bank is well-established on the market. The trade-net.ch platform enables customers to do their own trading online on the SIX and all of the world's major stock exchanges. family-net.ch, developed forDie Mobiliarin 2005,is sold at 35 locations in chosen Mobiliar agencies in Switzerland at present.

Good earning power - higher annual profit
BEKB | BCBE's 2011 operating income is split as follows: 62.5 percent from profit on interest earned from loans accounts, 8.5 percent from interest and dividends from financial investments, 16.8 percent from commissions and services and 12.2 percent from other business. Profit on interest amounted to CHF 354.7 million and thus remained on the same level as the previous year. Profit from commissions and services amounted to CHF 84.0 million. Earnings from trading transactions reached CHF 27.2 million, thus exceeding the result of the previous year by CHF 4.6 million. With CHF 264.0 million, operating costs increased by 4.5 percent compared to the previous year as a result of the targeted expansion of client consulting across the branch network, increased marketing activities and higher IT costs. The cost income ratio lay within the target range of 50 to 55 percent. The work force rose by 17 new positions to 1,465 employees. Reserves of CHF 20.3 million were set aside for default risks.
BEKB | BCBE's annual profit before taxes, comparable to other Cantonal banks, was CHF 162.7 milllion in 2011 (previous year: CHF 159.9 million), exceeding the previous year's result by 1.7 percent. Annual net profit after taxes was CHF 130.1 million, a 4.6 percent increase relative to the prior year.

Strong capital base - high core capital ratio
BEKB | BCBE assigns the statutory equity capital according to economic principles to the categories minimum capital stock (CHF 1.2 billion), reserves for general banking risks (CHF 571 million) and surplus capital (CHF 179 million). The reserves for general banking risks are fluctuation reserves necessary for business operations; they are earmarked and can be accumulated or used depending on the risk profile. Stockholders' capital (from a corporate law perspective, i.e. excluding reserves for general banking risks) as at the end of the reporting year amounted to CHF 1,379 million, which far exceeds statutory requirements. BEKB | BCBE is committed to a strategy based on a reasonable return target (risk-free interest rate + 2 to 4 percent) and a solid capital base. CHF 50 million was transferred from the income statement to general banking risk reserves. The stockholders capital quota (based on banking law, i.e. including reserves for general banking risks), as a proportion of the balance sheet total, was 7.7 percent (core stockholders capital quota of 18.3 percent). Including value adjustments and provisions, the at-risk assets of BEKB | BCBE accounted for more than 10 percent of the balance sheet total.

64,000 shareholders - significant financial contribution to the canton
With more than 64,000 shareholders BEKB | BCBE is among the top ten Swiss companies in terms of shareholder breadth. The registered shares are listed on Zurich's SIX Swiss Exchange (Domestic Standard) and on Berne's eXchange. Due to the positive operative result 2011, the Board of Directors will propose to the General Meeting of 15 May 2012 an increase in dividend from CHF 5.10 to CHF 5.30 per share. This also means the fifteenth increase in dividend in a row. Since the conversion of the legal structure of BEKB | BCBE into a private stock corporation in 1998, the canton of Berne has received more than CHF 1.6 billion as a financial contribution from the bank in the form of the repayment of endowment capital and share capital, placement of shares, the sale of subscription rights, compensation for the state guarantee, dividends and taxes. In 2011, the public sector received CHF 61.3 million in dividends from shares, taxes and compensation for state guarantee.

Sustainability in our business policy - CO2 neutrality achieved
BEKB | BCBE is committed to sustainable development as part of its corporate responsibility framework. With its 2012-2015 sustainability model, adopted in July 2011, BEKB | BCBE defines its goals in terms of products and services, business ecology and its social responsibility towards its employees and society at large. The environmental management system is certified in accordance with the ISO standard 14001. In 2011, BEKB | BCBE has reached its goal of achieving CO2 neutrality in its economic environment and living space.

Long-term outlook and model for limited remuneration
BEKB | BCBE has set itself a long-term financial goal: it aims to achieve free cash flow of between CHF 800 million and 1 billion within ten years (from 2003 until 2012). Between 2003 and 2011, BEKB | BCBE reached an accumulated total of CHF 1,150 million. After nine years, the added value is thus above the target range. Of the free cash flow that will be achieved by 2012, during the course of the ten year period, half will be disbursed to share owners and half will be used for business development purposes. A sustainability premium of 3 percent of free cash flow is paid out to the Board of Directors, the extended Executive Board as well as to the employees, as long as at least CHF 500 million are generated within the ten-year period. The bank's governance principles stipulate that the maximum total remuneration must not exceed twenty times the minimum level.

In the spirit of continuity
BEKB | BCBE's primary goal has always been to provide the citizens of the Canton of Berne with a robust and sound bank. BEKB | BCBE is committed to the realization of efficient bank governance accompanied by expert oversight so that it can do its part to further the development of the Canton of Berne and its infrastructure. BEKB | BCBE bases all of its activities on proximity to its clientèle, a broad shareholder and customer base, and the maintenance and development of a work force that is committed to continuity. For continuity is what BEKB | BCBE policies and management are all about, and it intends to continue pursuing this goal in the future.

Balance / Income statement 2011

Publication date: 15.03.2012