Espirito Santo Financial Group S.A. Announces 1H2005 Consolidated Results for Its Subsidiary Banco Espirito Santo (Unaudited)

HIGHLIGHTS

-- Net income (IFRS) rose to euro 149.0 million in the first half of 2005, up by 13.0% from the first half of 2004 results (PABS - Portuguese accounts for the banking system), which corresponds to ROE of 13.6%. 2004 first half results under IFRS stood at euro 74 million, penalised by pension costs.

-- Banking income grew by 2.6%, subdued by poor economic activity, low interest rates, capital markets and aggressive competition with direct impact on net interest income and commissioning.

-- Operating costs dropped by 6.3%, pulled by decrease of pension costs and significant reduction in depreciation. Productivity and efficiency continue to reflect a consistent improvement trend.

-- Sound business growth: customer loans, including securitisation, increased by 9.8% whereas total customer funds grew 5.0% pushed by off --balance sheet products (+17.5%).

-- Clearly positive Assurfinance results, namely in the new product called "T-Card": 12 000 new clients acquired; mortgage production represents 15% of total BES new mortgage production; the number of cards issued reached 15 000.

-- Credit provision reinforcement policy has been maintained, improving the overdue loans coverage ratio (over 90 days) to 181.1% (156.1% in June 2004).

-- Significant gains in the main equity exposures in the available for sale portfolio, which unrealised capital gains reached euro 128.1 million as of 30 June 2005 (euro 48.2 million in March 2005).

-- Bes Group received several awards in the Investor Relations area, from which we highlight the following: Best Annual Report among the Financial Institutions, Best Corporate Governance Information, Best Financial Institution in Research.
INDEX

1. Foreword on the new regulatory framework

2. Economic overview

3. Results

3.1 Net interest income

3.2 Fees and commissions

3.3 Capital markets results and other

3.4 Operating costs

4. Activity summary

5. Asset quality, provisioning and solvency

6. Productivity

7. Profitability

8. Bank of Portugal reference indicators

9. Direct banking and other

1. FOREWORD ON THE NEW REGULATORY FRAMEWORK

The Regulation (EC) 1606/2002 of 19 July, 2002 of the EuropeanParliament and of the Council defines that companies with securitieslisted on a regulated market of any Member State should prepare theirconsolidated accounts for each financial year starting 1 January 2005,and thereafter, under the International Financial Reporting Standards(IFRS), also known as the International Accounting Standards (IAS).When this regulation was transposed into the Portuguese legislation,the Bank of Portugal issued the Notice N. 1/2005 that established thestandards and reporting model for the institutions subject to itssupervision. Given that BES is subject to these rules, the 2005 fullyear and interim financial statements were prepared under the IFRS.

Furthermore, and due to this change in the accounting regulations,BES Group's 2005 financial statements (prepared under the IFRS/IAS)are not directly comparable with the financial statements disclosed in2004, which had been prepared under the (Portuguese) Plan of Accountsfor the Banking System (PABS), as defined by instruction N. 4/96 andN. 71/96 from the Bank of Portugal.

Therefore, in order to make the financial statements comparable,and in line with the recommendations of the Committee of EuropeanSecurities Regulators (CESR) and the Portuguese Securities MarketCommission (CMVM), the BES Group has restated its 2004 financialstatements applying IAS/IFRS, except IAS 32 and IAS 39 application, asallowed by IFRS 1.

According to the Instruction N. 23/2004 from the Bank of Portugal,the individual accounts and only the individual accounts, are to beprepared under the Adjusted Accounting Standards (AAS) from 2005onwards. The AAS framework is similar to the IAS/IFRS, except on thefollowing issues:

-- maintains the old method for valuation and provisioning of loans granted;

-- defers the accounting adjustment arising from recognition of certain liabilities related to retirement pensions and post-retirement health benefits;

-- does not allow fair value application to tangible assets.

2. ECONOMIC OVERVIEW

World economic forecasts were reviewed downwards during the firsthalf of 2005, generalising the expectation of an activity slowdown inthe United States, Europe and Asia as from the second half of theyear. This was in part due to the persistently high levels of oilprices - Brent barrel price jumped by 36.3% in the first six months ofthe year to USD 54.85 - as well as to the rise in the US referencerates, and its medium term potential subduing effect on theNorth-American and global economies.

Thus, the main US stock market indices dropped during the firsthalf of the year (although recovered slightly in the second quarter):the Nasdaq fell by 5.45%, while the general Dow Jones and S&P 500indices were down by 4.71% and 1.7% respectively. Despite the fall inthe economic agents' confidence levels, the US economy maintained afavourable performance, with positive signs in labour and housingmarkets. Nevertheless, European stock markets rose, driven by interestrates at historically low levels (BCE refi rate at 2%) and the euro'sdownward trend against the Dollar (-10.78% in 1H05, to EUR/USD 1.2094,with potential benefits for the export sector). Hence the Paris CAC 40is up by 10.68%, the Frankfurt Dax - by 7.76% and the Madrid IBEX 35 -by 7.74%. Portugal's PSI20 fell by 1.18%.

In the Euro Area, economic activity is thought to have cooled,with GDP levels going from 0.5% in Q1 to 0.3% in Q2. No signs ofinflationary pressures, given the current situation marked bycorporate restructuring efforts and high levels of unemploymenttranslating into a continuous deceleration of labour costs.

In Portugal, the real GDP growth in H1 was close to zero,reflecting the downturn trend in economic activity (particularlyvisible in industrial production and residential housing indices).Consumer confidence levels dropped sharply in June, interrupting therecovery observed earlier in 2005.

3. RESULTS

2005 first half net income totalled euro 149.0 million, comparedto euro 131.8 million in the first half of 2004, under the accountingregulations in force at the time (PABS) and euro 74.0 million, underthe IFRS(1). Please note that the 2004 year-end results, restatedunder IFRS, were negatively influenced by disability retirement coststhat occurred during that year.

The table below shows the income statement for 2005 first halfalong with the 2004 comparative data:
Income Statement
Euro million
----------------------------------------------------------------------
June D%
------------------------------------
2004 2004 2005
PABS IFRS IFRS IFRS
----------------------------------------------------------------------
Net Interest Income 352.134 9.53 45.7 -1.1
(+)Fees and Commissions 275.927 5.92 55.4 -7.4
(=)Commercial Banking Income 628.0 625.4 601.1 -3.9
(+)Trading and Other Results 93.0 75.2 118.0 56.9
(=)Banking Income 721.0 700.6 719.1 2.6
(-)Operating Costs 363.742 9.64 02.6 -6.3
(=)Gross Results 357.3 271.0 316.5 16.8
(-)Net Provisions 179.515 5.51 46.1 -6.0
Credit 131.813 1.81 20.5 -8.6
Securities 6.0 6.0 17.9 198.3
Other 41.7 17.7 7.7 -56.5
(=)Income before Taxes
and Minorities 177.8 115.5 170.4 47.5
(-)Taxes 24.5 26.2 19.4 -26.0
(=)Income after Taxes 153.3 89.3 151.0 69.1
(-)Minority Interests 21.5 15.3 2.0 -86.9
(=)Net Income 131.8 74.0 149.0 101.4
----------------------------------------------------------------------
(1)IAS 32 and 39 were not applied in 2004, based on IFRS 1.

3.1 Net Interest Income

Net interest income, at euro 345.7 million, reflecting a YoY dropof 1.1%.

The first half of the year continued to feature the same externalconstraints that have been negatively influencing the progress of netinterest income, namely pressure on credit products spreads,particularly in lower risk segments, and the continuing very low levelof euro interest rates, hampering the profitability of funds. Theseadverse factors were to some extent offset by the positive impact ofbusiness growth, namely in loans that grew 9.8% (including securitisedloans) YoY.

IFRS has brought yet another constraint, introducing morerestrictive criteria for hedging policies definition. This obliged, asfrom 1 January 2005, to reclassify part of the derivativestransactions from the hedging portfolio to the trading portfolio,which means that the corresponding results were recognised as resultsfrom financial operations instead of net interest income.

3.2 Fees and Commissions

The performance of fees and commissions in the first half of theyear has been conditioned by the volatile nature of investment bankingactivities and the adverse effects of fierce competition backed byaggressive promotion of sharp price reductions and even free services.Furthermore, the introduction of IFRS has lead to accrual of fees ofcommissions.
Fees and Commissions
Euro million
----------------------------------------------------------------------
June
--------------
2004 2005
IFRS IFRS D%
----------------------------------------------------------------------
Fees and Commissions based on applicable rules 275.9 255.4 -7.4
Investment Banking Effect (37.4) (24.1) -
Deferred Commissions effect (10.6) - -
----------------------------------------------------------------------
Comparable Fees and Commissions 227.9 231.3 1.5
----------------------------------------------------------------------

BES Group Fees and Commissions went up by 1.5% on a comparablebasis (i.e. with accruals and investment banking activity effects).

3.3 Capital markets results and other

IFRS adoption has introduced significant changes to tradingresults analysis:

-- New classification of securities portfolios, that are now subject to the fair value revaluation principle (market price or fair value), with potential impact on the income statement or equity; and

-- More restrictive criteria in hedging policies definition, specifically when more volatile instruments such as derivatives are used.

Capital markets and other results reached euro 118.0 million in2005 first half. As in the past, these results were baseddiversification of market risk. In the second quarter of 2005 we haveincreased emphasis on emerging markets trading, with a special focuson Latin American countries. Both interest rate and exchange rateperformance was favourable, thus compensating the flattening yieldcurves of European and US markets as well as the negative performanceof the domestic market.

3.4 Operating costs

Operating costs reached euro 402.6 million in the first half of2005, corresponding to a YoY drop of 6.3%. The cost reduction has beenunderpinned by lower investment, translating into a 20.4% drop inamortisation and depreciation, as well as by lower pension costs,which in 2004 were influenced by disability retirement costs.
Operating Costs
Euro million
----------------------------------------------------------------------
June
------------------------- D%
2004 2004 2005 IFRS
PABS IFRS IFRS
----------------------------------------------------------------------
Staff Costs 161.7 236.5 202.6 -14.2
Salaries 148.6 171.1 175.8 2.7
Pensions 13.1 65.4 26.8 -58.9
Other Admin Expenses 136.3 142.6 159.8 12.1
Depreciation and Amortisation 65.7 50.5 40.2 -20.4
----------------------------------------------------------------------
Operating Costs 363.7 429.6 402.6 -6.3
----------------------------------------------------------------------

Staff costs, driven by the annual salary increases and promotions,went up by 2.7%. These costs already include the accrual of employeebonuses, which will naturally be subject to adjustments during theyear.

General administrative costs, though slowing down when compared toQ1, rose by 12.1% (14% in Q1). The cost of information and operativesystems changes due to Basel II compliance projects as well asadaptation to the introduction of the IFRS totalled euro 12 million. Afurther euro 2.1 million was spent on promotion of "T-Card" project,an Assurfinance project focused on acquiring Clients fromTranquilidade that are not yet BES Clients.

Excluding the above mentioned projects costs and pension costs,the administrative costs would have fallen by 0.7%.

4. ACTIVITY SUMMARY

BES Group's activity during the first quarter of the yearcontinued to focus on the following key commercial factors:

-- Differentiation through quality;

-- Commitment to the higher value Clients and products;

-- Specific value proposition for the Clients of Tranquilidade.

The Group maintained a strong commercial activity, with totalassets rising by 14.8% and customer loans by 9.8%. Total customerfunds grew by 5.0%, despite the increasing competition and theincrease of migration of savings to alternative products, namely off-balance sheet products.
Main business variables
Euro million
----------------------------------------------------------------------
June
-------------------------
2004 2004 2005 D%
PABS IFRS IFRS IFRS
----------------------------------------------------------------------
Total Assets(1) 60 945 58 042 66 603 14.7
----------------------------------------------------------------------
----------------------------------------------------------------------
Net Assets 44 082 41 568 46 999 13.1

Gross Loans (including
securitised) 29 819 29 943 32 885 9.8
Mortgage 10 737 10 737 11 694 8.9
Other Loans to Individuals 1 505 1 505 1 728 14.8
Corporate 17 577 17 700 19 463 10.0

Loans to Individuals / Gross
Loans (%) (2) 37.2 37.0 35.4 -1.6 p.p.

Customer Funds
+ Deposits and equivalents(3) 21 190 21 250 20 509 -3.5
+ Debt Securities placed with
Customers 5 110 3 207 3 581 11.7
= On-Balance Sheet Customer
Funds 26 300 24 457 24 090 -1.5
+ Off- Balance Sheet Customer
Funds 12 637 12 637 14 843 17.5
= Total Customer Funds 38 937 37 094 38 933 5.0
------------------------------------- ------- ------- -------------
Transformation Ratio (%) (2) 102 112 122 10 p.p.
------------------------------------- ------- ------- -------------

(1) Net Assets + Asset Management + Other Off-Balance Sheet Funds
+ Securitised Credit

(2) Considering On-Balance Sheet Credit

(3) Includes: Deposits and Deposit Certificates

Credit displayed balanced growth, with mortgage loans rising by8.9% and corporate loans advancing by 10%. Other loans to individualswere up by 14.8%, driven by Plano BES 95, that reached euro 149million in total amount placed until 30 June 2005.
LOANS TO CUSTOMERS
Euro million
-------------------------------------------------------------
Jun,04 Jun,04
PABS IFRS
------------------------------------------------
Excluding Including Excluding Including
securitised securitised securitised securitised
credit credit credit credit
-------------------------------------------------------------
Gross Loans 27 587 29 819 28 100 29 943
Mortgage 8 923 10 737 8 923 10 737
Other Loans to
Individuals 1 346 1 505 1 476 1 505
Corporate 17 318 17 577 17 700 17 700


LOANS TO CUSTOMERS
Euro million
-------------------------------------------------------------
Jun,05 D IFRS (%)
IFRS
------------------------------------------------
Excluding Including Excluding Including
securitised securitised securitised securitised
credit credit credit credit
-------------------------------------------------------------
-------------------------------------------------------------
Gross Loans 30 115 32 885 7.2 9.8
Mortgage 8 924 11 694 0.0 8.9
Other Loans
to
Individuals 1 728 1 728 17.1 14.8
Corporate 19 463 19 463 10.0 10.0

Regarding the BES Investimento (BESI) activity we highlight thefollowing operations in the M&A area: (i) advisory WhatEverNet thatsold 99.69% of its capital to Pararede; (ii) advisory Salvador CaetanoGroup that bought 100% of Setucar Group capital; (iii) advisory toAII2IT that merged with Tecnidata.

In the Project finance area: (i) Lead financer of ConcessaoRodoviaria Litoral Centro (highway concessionary) that amounted euro553 million; (ii) lead-arranger of financing of different wind energyparks, amounting euro 28 million; (iii) financial advisory to severalbidders for 5 new no-toll highways in Spain.

In Brokerage, we highlight growth of 90% in the portfoliomanagement activity;

In Capital markets - Fixed income, the highlight goes to:lead-arranger in financing of senior debt to Permira to acquireSupermercados Ahold in Spain. Regarding Variable income, the advisoryservices to EDA - Electricidade dos Acores in the privatizationprocess of 33.92% of share capital deserves a comment. BES Group has astake in this venture, that belongs to Bensaude Group (leader) andFundacao Oriente. BAC - BES dos Acores (BES in the Azores islands)holds 6.5% and BES has a 9.5% in the joint holding. BAC has maintaineda significant growth in mortgages and Clients funds that increased 20%and 13.4% respectively.

Banco Internacional de Credito (BIC) has achieved significantresults in the cross-selling activity. The cross-selling ofBancassurance (life and non-life) deserves a special note sincegenerated 20% more fees YoY. BIC net profit stood at euro 22.1 millionat half year end.

Espirito Santo Activos Financeiros (ESAF) has reached a 17% marketshare in the first half of the year in assets under management. MutualFund grew 30.8%, a growth rate that is significantly higher than themarket average of 10.8%. In Portfolio Management ESAF reached 22% ofmarket share where as in Real Estate funds maintained the leadershipposition with a 18.9% market share in Portugal.

As for the High Value Clients, the 360 and Small Businessessegments have maintained the positive performance, as a result ofspecialised approach for each segment. In the 360 segment thefinancial involvement and the number of Loyal Clients grew YoY by 11%and 8.5%, respectively. In the Small Businesses segment the financialinvolvement and the number of Loyal Clients grew YoY by 13% and 8.5%,respectively.

The Assurfinance Program was launched this year aimed at acquiringTranquilidade Clients that are not yet BES Clients. Therefore aspecific value proposition has been developed with T-Card being thestar product. So far this venture has reached very positive results,regarding both the number of new Clients acquired (12 000), newmortgage production (weighting 15% of total BES production, vs. 12% asat June 2004) and T-Cards placed (15 000).

The Middle Market has also registered a positive performance, withan increase of financial involvement (14.9% YoY) and of the Clientbase (5% YoY).

In the international arena we highlight the activity undertaken byBESSA in Spain, whose assets under management grew by 17% (annualised)and loans and guarantees by 35%, as a result of a significant increaseof Client acquisition and transactions. BESSA is now present in S.Sebastian and Marbella, thus increasing its coverage area to 26 mainSpanish cities after the merger with Banco Inversion.

BES Angola reached a net profit of euro 10.3 million (the same astotal of 2004). The bank increased its geographic coverage, openingnew agencies in several provinces, including Zaire, which is the areaof largest production of petroleum and natural gas, Cunene and Huila.

5. ASSET QUALITY, PROVISIONING AND SOLVENCY

The introduction of the IFRS led to significant changes in theprovisioning rules:

-- IFRS impairment methodology now applies to loans granted, which differs from the former by extending the method for discounting cash flows to all segments of credit;

-- in the portfolio of securities available for sale, unrealised capital losses in securities are no longer provisioned at all times, but only when there is evidence of impairment;

-- with regard to the remaining assets and contingencies, there are no significant changes versus the former policy adopted by the Group.

As referred in the first quarter results presentation, andnotwithstanding the new regulatory framework, an adjustment of euro 20million was made in provisions for credit, mainly through applicationof the discounted cash flow method to certain credits for whichprovisions had not been calculated under this method.

In the first half of the year the Group maintained itstraditionally prudent stance in credit provisioning, the provisioncharge totalling euro 120.5 million. Hence the provision coverage ofoverdue loans over 90 days rose to 181.1% (156.1% in June 2004), whilethe ratio of overdue loans over 90 days to total loans dropped to1.50% (1.80% in June 2004). Overdue loans dropped by euro 71.4 millionYoY, mainly due to a euro 71 million sale of mortgage overdue loans.
ASSET QUALITY
----------------------------------------------------------------------
Change IFRS
---------------------
Jun,04 Jun,04 Jun,05 absolute relative(%)
PABS IFRS IFRS
----------------------------------------------------------------------
----------------------------------------------------------------------

Gross Loans eur mn 27 587 28 100 30 115 2 015 7.2
Overdue Loans eur mn 582.9 588.0 516.6 -71.4 -12.1
Overdue Loans
greater than
90 days eur mn 505.3 505.3 451.3 -54.0 -10.7
Overdue and
Doubtful Loans
(BoP) (a) eur mn 586.4 586.4 562.0 -24.4 -4.2
Provisions for
Credit eur mn 788.7 788.7 817.3 28.6 3.6
----------------------------------------------------------------------
----------------------------------------------------------------------
Overdue Loans /
Gross Loans % 2.11 2.09 1.72 -0.37 p.p.
Overdue Loans
greater than 90
Days / Gross
Loans % 1.83 1.80 1.50 -0.30 p.p.
Overdue and
Doubtful Loans
/ Gross Loans % 2.13 2.09 1.87 -0.22 p.p.

Coverage of
Overdue Loans % 135.3 134.1 158.2 24.1 p.p.
Coverage of
Overdue Loans
greater than 90
Days % 156.1 156.1 181.1 25.0 p.p.
Coverage of
Overdue and
Doubtful Loans % 134.5 134.5 145.4 10.9 p.p.
----------------------------------------------------------------------
(a) According to BoP Circular- Letter no. 99/03/2003

Provisions for securities were reinforced by euro 17.9 million inthe period, mainly due to the losses in PT Multimedia equity holding.Other provisions reinforcement led to a surplus of around euro 9million that is intended to meet possible adjustments in impairmentmodels. As for the highest equity exposures in the available for saleportfolio, there were significant improvements, except for PortugalTelecom Group.
Available for sale portfolio

Euro million
----------------------------------------------------------------------
Fair Value Reserves
----------------------------------
31-Mar-05 30-Jun-05
----------------------------------------------------------------------
Portugal Telecom -23.1 -63.5
PT Multimedia 10.0 0.7
Bradesco 58.1 185.5
BMCE Bank 1.4 3.6
Jeronimo Martins 1.8 1.8
----------------------------------------------------------------------
48.2 128.1
----------------------------------------------------------------------

Value fluctuations in these investments are reflected into fairvalue reserves of shareholder equity. For capital ratio purposes, only45% of potential gains are eligible for Tier II.

The Group's solvency ratio remains at comfortable levels comparedwith the minimum requirements of the Supervision Authority.

SOLVENCY
(Bank of Portugal)
Euro million
---------------------------------------------------------
Jun, 05(*)
---------------------------------------------------------
Risk Weighted Assets 35 514
Regulatory Capital 4 192
Tier I 2 288
Tier II 1 967
Deductions ( 63)
Preference Shares 600
---------------------------------------------------------
Core Tier I 4.75%
Tier I 6.44%
Total 11.80%
---------------------------------------------------------
(*) estimate

We remind that the impact of IFRS adoption on regulatory capitaland risk assets is deferred for a period of 3 to 7 years.

At the end of the first half of the year, Standard & Poor'sreaffirmed its rating at "A-" for the medium term and long term debtand "A-2" for the short term, with stable outlook. The rating agency'sdecision was based on the Group's strong competitive position inretail, its adequate profitability based on operating efficiency aswell as a more balanced funding structure and asset quality.

6. PRODUCTIVITY

Productivity and efficiency ratios continued to make goodprogress:

-- operating costs per unit of average net assets under management dropped from 2.12% to 1.82%;

-- total assets per employee reached nearly euro 9.2 million, corresponding to an increase of 15.7%;

-- the cost to income once again shows sustained improvement.

Productivity Indicators
-----------------------------------------------------------------
Jun,04 Jun,04 Jun,05 D
PABS IFRS IFRS IFRS
-----------------------------------------------------------------
Cost to Income (incl.
Capital Markets) 50.2% 61.3% 56.0% -5.3 p.p.
Cost to Income (excl.
Capital Markets) 57.9% 68.7% 67.0% -1.7 p.p.

Operating Costs / Average
Net Assets 1.69% 2.12% 1.82% -0.30 p.p.
Total Assets (*) per
Employee (eur '000) 8 317 7 921 9 163 15.7 %
-----------------------------------------------------------------
(*) Net Assets + Asset Management + Other Off-Balance Sheet Funds
+ Securitised Credit

7. PROFITABILITY

Based on the annualised results of the first half 2005, Return onequity (ROE) stood at 13.6% and Return on Assets (ROA) at 0.67%.

Profitability
(%)
----------------------------------------------------------------------
2004
----------------- Jun,05
PABS IFRS IFRS
----------------------------------------------------------------------
Return on Equity (ROE) 13.9 6.1 13.6

Return on Assets (ROA) 0.82 0.35 0.67
----------------------------------------------------------------------

8. BANK OF PORTUGAL REFERENCE INDICATORS

According to the instruction N. 16/2004 from Bank of Portugal,financial institutions should disclose reference indicators(calculated under the methodology set forth in this regulation), whenreleasing information concerning Solvency, Credit Quality,Profitability and Efficiency.

The table below lists these indicators for both June 2005 and2004.
Bank of Portugal Indicators
(%)
----------------------------------------------------------------------
Jun,04 Jun,04 Jun,05
PABS IFRS IFRS
----------------------------------------------------------------------
SOLVENCY
----------------------------------------------------------------------
Regulatory Capital / Risk Weighted Assets 10.95 10.95 11.80
Tier I Capital / Risk Weighted Assets 6.90 6.90 6.44

ASSET QUALITY
----------------------------------------------------------------------
Overdue & Doubtful Loans (a)/ Gross Loans 2.13 2.09 1.87
Overdue & Doubtful Loans Net of Provisions (b)
/ Net Loans (b) 0.53 0.52 -0.87

PROFITABILITY
----------------------------------------------------------------------
Income before Taxes and Minorities / Average
Equity (c) 13.30 8.82 12.24
Banking Income (d) / Average Net Assets 3.34 3.45 3.25
Income before Taxes and Minorities / Average
Net Assets 0.82 0.57 0.72

EFFICIENCY
----------------------------------------------------------------------
General Admin Costs (d)+ Depreciation / Banking
Income (d) 50.4 61.3 56.0
Staff Costs / Banking Income (d) 22.4 33.8 28.2
======================================================================

(a) Calculated according to BoP Circular Letter no. 99/03/2003

(b) Credit net of provisions for overdue loans and for doubtful loans

(c) Includes Average Minorities

(d) Calculated according to BoP Instruction no 16/2004

9. DIRECT BANKING AND OTHER

Direct Channels

The number of users of Internet Banking for individual customers -BESnet - reached 728 000 in June, corresponding to a YoY increase of6.1%. The number of logins and transactions continued to grow at asustained pace, rising YoY by respectively 14.8% and 13.5%. Low valuetransactions processing reached 39.8%, above 36.0% registered in 1H2004.

The website increased its role as a source of information on theBank's product offer, with a 2.3 million average monthly visitsbetween January and June (+25.3% YoY).

The number of companies using the Internet banking service forcorporate customers - BESnet Negocios - reached 40 000, a YoY increaseof 14.8%. Logins were up by 25.5% and transactions by 44.3%, provingthe importance of this channel as a transactional support to thecompanies' activity.

Electronic Banking

Pmelink.pt, the largest domestic online business centre forcompanies promoted under a joint venture between BES, CGD and PT,already has more than 19 995 companies as customers (14 460 in June2004), a YoY increase of 38%. Turnover of the portal reached euro 6.3million, a 36% YoY increase.

In the first half of 2005, Banco BEST reinforced its assetmanagement product offer by selling mutual funds from highlyrecognised investment management firms. The Client base reached 38000, up 37% YoY. Assets under management totalled euro 450 million,corresponding to an increase of 34% versus June 2004.

Other aspects

In the 2005 edition of the Investor Relations Awards (promoted byDeloitte Consulting with the support of Diario Economico and SemanarioEconomico), an initiative intended to stimulate improvements andtransparency in the financial information of listed companies, BESGroup was distinguished with the following prizes:

Grand Prize for the Best Global Investor Relations Programme amongthe PSI20 companies -- BES

Best annual report among financial institutions -- BES

Best information about Corporate Governance -- BES

Best use of technology for Investor Relations -- BES

Best CEO in Investor Relations -- Ricardo Salgado

Best Investor Relations Officer -- Elsa Jardim

Best Research House -- ES Investment

Best Research Analyst -- Miguel Viana (ES Investment)
BANCO ESPIRITO SANTO, S.A.
CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2005
---------------------------------------------------------------------
Jun,04 Jun,04 Jun,05
PABS IFRS IFRS
(eur '000) (eur '000) (eur '000)
---------------------------------------------------------------------
NET ASSETS
Cash and deposits at Central
Banks 692 504 693 357 691 435
Loans and advances to credit
institutions 443 858 443 858 538 370
Financial Assets held for
trading 1 868 300 1 868 300 3 459 707
Other financial assets at fair
value through the P&L 2 133 902
Financial Assets available for
sale 5 061 680 3 630 770 3 004 860
Other loans and advances to
credit institutions 5 277 866 5 318 100 4 731 296
Loans and advances to
customers 27 146 129 27 311 173 29 297 721
(Provisions) (788 700) (788 700) (817 331)
Financial Assets held to
maturity 560 587 560 587 556 234
Financial Assets with
repurchase agreements - - -
Fair value of Hedging
derivatives 165 608 165 608 53 532
Non current assets held for
sale 81 727 81 727 123 438
Property and equipment - - -
Other tangible assets 338 697 338 697 348 737
Intangible assets 155 310 101 920 75 310
Investments in associated
companies 45 748 53 477 60 746
Current tax assets 4 847 4 847 23 174
Deferred tax assets - 102 646 195 868
Other assets 2 238 819 892 691 1 704 924
---------------------------------------------------------------------
TOTAL NET ASSETS 44 081 680 41 567 758 46 999 254
---------------------------------------------------------------------
LIABILITIES
Amounts owed to central banks 106 942 106 942 464 148
Financial liabilities held for
trading 613 663 613 663 1 653 026
Other financial liabilities at
fair value through the P&L - - -
Amounts owed others credit
institutions 6 552 101 6 571 503 7 769 746
Amounts owned to customers 19 580 592 19 640 775 17 993 592
Debt securities 11 701 640 9 798 649 12 924 300
Passivos financeiros
associados a activos
transferidos - - -
Fair value of hedging
derivatives 123 237 123 237 64 659
Non current liabilities held
for sale - - -
Provisions 560 217 83 859 109 559
Current tax liabilities 10 905 10 905 27 957
Deferred tax liabilities - 31 942 102 892
Capital instruments - - -
Other subordinated liabilities 1 534 346 1 551 656 2 023 437
Other liabilities 395 041 361 225 1 117 754
---------------------------------------------------------------------
TOTAL LIABILITIES 41 178 684 38 894 356 44 251 070
---------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital 1 500 000 1 500 000 2 100 000
Share premium 300 000 300 000 300 000
Other capital instruments - - -
Revaluation reserves - - 158 750
Other reserves and retained
earnings 199 495 113 027 50 171
(Treasury stock) - 100 174 90 120
Net income for the year 131 765 73 995 148 960
(Anticipated dividends) - - -
Minority interests 771 736 786 554 80 423
---------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 2 902 996 2 673 402 2 748 184
---------------------------------------------------------------------
TOTAL LIABILITIES +
SHAREHOLDERS' EQUITY 44 081 680 41 567 758 46 999 254
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BANCO ESPIRITO SANTO, S.A.
CONSOLIDATED INCOME STATEMENT AS AT 30 JUNE 2005
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Jun,04 Jun,04 Jun,05
PABS IFRS IFRS
(eur '000) (eur '000) (eur '000)
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Interest Income 1 060 697 1 056 425 937 269
Interest expense 708 554 706 868 591 584
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Net interest income 352 143 349 557 345 685
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Dividends on securities 13 325 13 325 30 659
Commissions and other similar
income 224 578 224 578 227 418
Commissions and other similar
expenses 22 814 22 814 33 514
Gains and losses in financial
assets at fair value 7 896 7 896 (44 597)
Gains and losses in financial
assets available for sale 70 738 27 077 72 752
Gains and losses in foreign
exchange revaluation 4 893 4 893 51 590
Gains and losses in the sale of
others assets 35 490 35 490 31 271
Other net income from banking
activity 32 886 58 708 34 592
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Banking Income 719 135 698 710 715 856
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Staff expenses 161 722 236 513 202 632
Other administrative expenses 136 305 142 596 159 782
Depreciation 65 711 50 498 40 243
Provisions net of reversals 30 858 6 858 12 520
Loan impairment net of reversals
and recoveries 131 814 131 814 120 534
Other financial assets' impairment
net of reversals and recoveries 15 769 15 769 14 777
Other assets' impairment net of
reversals and recoveries 1 115 1 115 (1 698)
Equity in earnings of associated
companies 1 934 1 934 3 335
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Income before taxes 177 775 115 481 170 401
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Taxes
Current 24 545 24 545 31 905
Deferred - 1 679 (12 508)
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Income after taxes 153 230 89 257 151 004
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Minority interests 21 465 15 262 2 044
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Net income for half year 131 765 73 995 148 960
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This news release may include certain statements relating to theBanco Espirito Santo Group that are neither reported financial resultsnor other historical information. These statements may includetargets, forecasts, projections, descriptions of anticipated costsavings, statements regarding the possible development or possibleassumed future results of operations and any statement preceded by,followed by or including words like "believes", "expects", "aims","intends", "may" or similar expressions.

By their nature, forward-looking statements are inherentlypredictive, speculative and involve risk and uncertainty. There are anumber of factors that could cause actual results and developments todiffer materially from those expressed or implied by forward-lookingstatements. These factors include, but are not limited to, changes ineconomic conditions in individual countries in which the BES Groupconducts its business and internationally, fiscal or other policiesadopted by various governments and regulatory authorities of Portugaland other jurisdictions, levels of competition from other banks andfinancial services companies as well as future exchange and interestrates.

Banco Espirito Santo does not undertake to release publicly anyrevision to the forward-looking information included in this newsrelease to reflect events, circumstances or unanticipated eventsoccurring after the date hereof.