Banco Comercial Portugues S.a. · EURONEXT:BCP
Banco Comercial Portugues — FY2019 Earnings Presentation
68 slides from Banco Comercial Portugues's earnings presentation, February 2020
Slide 1: Banco Comercial Português February 2020
FEBRUARY 2020 Banco Comercial Português 1
Slide 2: Disclaimer
Disclaimer l The information in this presentation has been prepared under the scope of the International Financial Reporting Standards (‘IFRS’) of BCP Group for the purposes of the preparation of the consolidated financial statements under Regulation (CE) 1606/2002, as amended. l The figures present
Slide 3: Agenda
AGENDA 3
Slide 4: Highlights
01 Highlights 4
Slide 5: Highlights
Highlights Net income Core income (net interest income + commissions) (Million euros) (Million euros) +0.3% +6.9% 2,107.7 2,252.0 301.1 302.0 Fees and commissions 684.0 +2.8% 703.5 Net interest income 1,423.6 +8.8% 1,548.5 2018 2019 2018 2019 Net income before income tax Impairment and provisions (M
Slide 6: Highlights: improved asset quality
Highlights Improved asset quality Improved asset quality Total coverage* Coverage by loan-loss reserves (Billion euros) 116% -€1.3 billion 109% NPE Group 5.5 5.0 4.2 58% 52% -€1.6 billion NPE Portugal 4.8 Dec 18 Dec 19 4.1 Other NPE 3.2 Lower cost of risk 2.1 1.8 1.6 Cost of risk PT, bp Cost of risk
Slide 7: Highlights: strong capital, increasing business volumes
Highlights Strong capital Increasing business volumes (Fully implemented capital ratio) (Consolidated, billion euros) Requirement +11.0% +€1.0bn 45.5 50.5 Performing loans 15.6% +9.1% Total 13.5% 13.31% Total business 136.4 volume 125.1 Loans to 54.7 51.0 Customers (gross) CET1 12.0% 12.2% 9.81% Tot
Slide 8: Growing Customer base, mobile Customers standing out
Growing Customer base, mobile Customers standing out ‘000 Customers +705,000 Customers Active Customers, 4,888 5,593 Group +14% +577,000 Customers Mobile Customers, 1,640 2,217 Group (40%) +35% +141,000 Customers +6% 2,394 Active Customers, Portugal 2,253 1,133 Digital Customers, Portugal +190,000 9
Slide 9: Millennium app: increasingly relevant in Customer relationship
Millennium app: increasingly relevant in Customer relationship Mobile first: a Annual growth rates (2018-2019) catalyst for digital growth Mobile Customers • Superior convenience and (‘000 Customers) speed of transactions, with +34% new navigation and expanded payment services, including Mbway 750 •
Slide 10: Bringing new technologies to processes and business model
Bringing new technologies to processes and business model, with a positive impact on Customer relationship and on the Bank’s efficiency Open banking and new New skills Operating efficiency Customer solutions and ways of working Robotization and artificial Open banking Reinforcement of internal skill
Slide 11: Rating upgrades in 2019
Highlights Rating upgrades in 2019 recognise Millennium bcp’s improved profitability, asset quality and business model Upgrade of Upgrade of Upgrade of Positive Positive senior debt senior debt deposits rating to outlook outlook rating rating to investment grade investment and of senior debt grade r
Slide 12: Group Profitability
02 Group Profitability 12
Slide 13: Net earnings of €302.0 million, with 29% improvement of activity-related earnings
Net earnings of €302.0 million, with a 29% improvement of activity-related earnings (Million euros) +87.8 Impact on net income: -86.9 +29% 301.1 +37.5 302.0 -53.8 -26.0 -11.0 -9.2 -8.6 -8.4 -7.3 Net Improvement to Non-usual CHF mortgages Euro Bank Staff: increase in Impact of low Initial Increase in
Slide 14: Net earnings of €302.0 million in 2019
Net earnings of €302.0 million in 2019 Impact on (Million euros) 2018 2019 YoY earnings Net interest income 1,423.6 1,548.5 +8.8% +124.9 Commissions 684.0 703.5 +2.8% +19.5 Core income 2,107.7 2,252.0 +6.9% +144.4 Operating costs excluding non-usual items -1,000.5 -1,103.1 +10.3% -102.6 Core earning
Slide 15: Net interest income increases in spite of an adverse environment
Net interest income increases in spite of an adverse environment Net interest income Portugal (Consolidated, million euros) (Million euros) Net interest margin 1.8% 1.7% -1.8% Net interest margin 2.2% 2.2% 803.3 789.2 +8.8% 1,548.5 1,423.6 2018 2019 International operations (Million euros) Net inter
Slide 16: Stronger commissions, in spite of lower market-related fees
Stronger commissions, in spite of lower market-related fees Fees and commissions Portugal (Consolidated, million euros) (Million euros) +2.8% +1.7% 703.5 475.2 483.2 684.0 64.2 -19.3% 51.8 Market-related -11.4% 105.6 fees and 119.3 commissions 411.0 +5.0% 431.4 2018 2019 International operations (Mi
Slide 17: Performance of other income reflects stronger trading gains
Performance of other income reflects stronger trading gains Other income Portugal (Consolidated, million euros) (Million euros) +75.7% 61.7 +9.5% 35.1 86.4 40.5 78.9 55.1 43.8 51.5 12.3 Equity earnings + -32.3 -30.2 dividends 89.8 2018 2019 +0.2% Of which: Mandatory contributions 66.5 66.6 • Banking
Slide 18: Recurring operating costs reflect growth strategy
Recurring operating costs reflect growth strategy Operating costs Portugal (Consolidated, million euros) (Million euros) Includes +10.3% Euro Bank +3.2% Recurring 1,000.5 1,103.1 Recurring 614.5 634.2 Includes non-usual impact of €66.4 million: +5.2% Includes non-usual impact of €26.7 +13.8% • Compe
Slide 19: Millennium bcp: one of the most efficient banks in the Eurozone
Millennium bcp: one of the most efficient banks in the Eurozone Cost to core income* Cost to core income* Latest available data -6pp 80% 74% vs. peers in vs. Eurozone -37pp Portugal banks 52% including non- 52% including non- 86% 52% including non- usual costs usual costs usual costs 49% 49% 49% Ban
Slide 20: Cost of risk continues trending to normalisation
Cost of risk continues trending to normalisation Impairment (Consolidated, million euros) and provision charges Portugal (Consolidated, million euros) (Million euros) Cost of risk 105bp 76bp 68bp excl. initial impairment Euro Bank -27.4% Cost of risk 92bp 72bp 511.1 371.1 121.9 -9.9% 91.9 601.1 389.
Slide 21: Lower NPEs and strengthened coverage
Lower NPEs and strengthened coverage Credit (Consolidated, millionquality euros) Portugal (Consolidated, million euros) (Million euros) -€1.6 billion NPE total 109% 116% NPE 4,797 Down by €0.4bn coverage* -32.3% in Q4’19 3,246 NPE coverage by 52% 48% 58% LLRs -€1.3 billion NPE 5,547 -24.2% Dec 18 De
Slide 22: Group Business activity
02 Group Business activity 22
Slide 23: Customer funds keep growing
Customer funds keep growing Total Customers funds* Total Customers funds* Portugal (Consolidated, billion euros) (Billion euros) Individuals: +8.5% Individuals: +12.9% +6.6% +10.3% 53.3 56.8 81.7 14.4 15.8 74.0 1.2 1.6 18.2 16.7 19.1 Off-BS funds 17.4 19.5 22.7 1.8 Other BS funds 1.3 Dec 18 Dec 19 2
Slide 24: Increasing loan portfolio
Increasing loan portfolio Loans to Customers (gross) Portugal (Consolidated, billion euros) (Billion euros) NPE: -24.2% (-€1.3 billion) -€0.5 billion Performing: +11.1% (+€5.0 billion) -1.3% +7.2% 37.2 36.7 54.7 51.0 +1.55 +1.08 25.9 Dec 18 NPE Performing Dec 19 Mortgage 23.8 International operation
Slide 25: Comfortable liquidity position
Comfortable liquidity position Comfortable liquidity position ECB funding (Billion euros) Eligible assets 16.9 17.1 -€2.4 billion 87% 86% 2.7 -89.3% 0.3 Dec 18 Dec 19 Liquidity ratios (CRD/CRR) 216% 135% 100% Dec 18 Dec 19 NSFR (Net stable LCR (Liquidity funding ratio) coverage ratio) 25
Slide 26: Group Capital
02 Group Capital 26
Slide 27: Capital levels adjusted to business model
Capital levels adjusted to business model Capital ratio (Fully implemented) CET1 capital ratio of 12.2%* (fully implemented) as of December 31, Requirement 2019 +€1.0bn 15.6% Total 13.5% 13.31% Increase from 12.0% as of December 31, 2018 reflects capacity to generate capital organically, more than c
Slide 28: Capital at adequate levels
Capital at adequate levels Leverage ratio (Fully implemented, latest available data) 6.4% 7.0% 5.5% 5.9% 4.4% Leverage ratio at 7.0% as of December 31, 2019, a comfortable and comparatively strong figure in European 3.0% banking FR DE ES IT RWA density (RWAs as % of assets, latest available data) Hi
Slide 29: Pension fund
Pension fund Key figures Pension fund (Million euros) Shares 12% Deposits at Dec 18 Jun 19 Dec 19 banks and other 31% Pension liabilities 3,066 3,319 3,490 Pension fund 3,078 3,174 3,501 Liabilities' coverage 100% 96% 100% Fund's profitability +0.2% +4.7% +8.2% Real-estate 7% Bonds 50% Assumptions D
Slide 30: Portugal
03 Portugal 30
Slide 31: Increased net income
Increased net income Net income* Net operating revenue (Million euros) (Million euros) +25.4% +1.6% 1,313.6 1,334.1 144.8 115.5 2018 2019 2018 2019 Operating costs (Million euros) 641.2 674.3 • €12.4mn compensation for temp. • Net earnings of €144.8 million in 2019, +25,4% salary cuts • €27.7mn rest
Slide 32: Net interest income
Net interest income (Million euros) -1.8% +10.6 803.3 +3.8 +8.2 789.2 -13.4 NIM 1.8% -23.3 1.7% 2018 Credit volume Effect of Deposits' rate Credit rate Securities 2019 effect wholesale cost effect effect and other Net interest income stood at €789.2 million in 2019, compared to €803.3 million in 201
Slide 33: Continued effort to reduce the cost of deposits
Continued effort to reduce the cost of deposits Spread on the book vs 3mof term deposits Euribor Spread on the performing loan book (vs 3m Euribor) (vs 3m Euribor) 2018 2019 2.72% 2.74% -0.56% -0.56% 2018 2019 3m Euribor 3m Euribor (average) -0.32% -0.36% (average) -0.32% -0.36% NIM • Spread on the
Slide 34: Commissions and other income
Commissions and other income Fees and commissions Other income (Million euros) (Million euros) (Million euros) Includes -€8.6 million impact of low interest rates on insurer and AQR Angola +75.7% 61.7 2018 2019 YoY 35.1 40.5 Banking fees and commissions 411.0 431.4 +5.0% Equity earnings + dividends
Slide 35: Controlled recurring operating costs
Controlled recurring operating costs Operating costs Employees (Million euros) Recruitment in digital areas, including internalisation of outsourcers +3.2% +109 Recurring 614.5 634.2 7,095 7,204 +5.2% 674.3 641.2 36.4 68.9 Depreciation Dec 18 Dec 19 218.8 194.0 Other administrative costs Branches In
Slide 36: Lower NPEs, with reinforced coverage
Lower NPEs, with reinforced coverage Non-performing exposures (NPE) NPE build-up (Million euros) Dec 19 Dec 19 Dec 19 (Million euros) -€1.6 billion vs.Dec 18 vs.Sep 19 vs.Jun 19 4,797 Opening balance 4,797 3,691 4,088 -32.3% 3,246 Net exits -561 -223 -304 Other NPE 2,146 Write-offs -521 -136 -200 1,
Slide 37: NPE coverage
NPE coverage NPE total coverage* NPL>90d total coverage* 118% 124% 118% 114% 102% 102% 13% 29% 26% Real estate collateral 38% Real estate collateral 34% 22% 26% Cash, other fin.collat., 72% 18% Cash, other fin.collat., 66% EL gap EL gap 67% 4% 77% 66% LLRs 3% 58% LLRs 26% 32% Individuals Companies T
Slide 38: Foreclosed assets and corporate restructuring funds
Foreclosed assets and corporate restructuring funds Foreclosed assets Corporate restructuring funds (Million euros) (Million euros) -8.2% 1,007 924 1,474 Impairment 206 1,020 179 130 Industry -€431 million 184 Net value 1,268 828 795 RE/tourism 837 -34.0% Dez 18 Dez 19 Dec 18 Dec 19 Sales of foreclo
Slide 39: Growing customer funds and performing loans to Customers
Growing customer funds and performing loans to Customers Total Customers funds* Loans to Customers (gross) (Billion euros) (Billion euros) Individuals: +8.5% +6.6% NPE: -32.3% (-€1.6 billion) 56.8 Performing: +3.3% (+€1.1 billion) 53.3 -1.3% 37.2 36.7 15.8 Off-BS funds 14.4 Other BS funds 1.2 1.6 Mo
Slide 40: Prudent and balanced growth of credit in Portugal
Prudent and balanced growth of credit in Portugal Performing credit portfolio (Billion euros) +€1.1 billion • Performing credit portfolio in Portugal up by €1.1 billion (+3.3%) from December 31, 2018 +3.3% 32.4 33.5 • Millennium bcp reinforced its role as the Bank of Portuguese Companies: Mortgage 1
Slide 41: International operations
04 International operations 41
Slide 42: Contribution from international operations to group earnings
Contribution from international operations to group earnings (Million euros) Δ% Δ% 2018 2019 local currency euros Poland 177.1 130.5 -26.3% -26.8% Poland, comparable* 177.1 207.0 +16.9% +16.0% Mozambique 96.4 99.5 +3.2% +5.8% Angola** Before IAS 29 impact 15.0 8.2 IAS 29 impact*** 0.5 -5.7 Total Ang
Slide 43: Net earnings affected by Euro Bank's acquisition
Net earnings affected by Euro Bank’s acquisition Net income Net operating revenue (Million euros) +16.9% excluding (Million euros) one-offs* ROE 9.6% 6.4%* -26.3% +27.3% 177.1 Impact from one- offs*: €76.4 million 808.2 635.0 130.5 2018 2019 2018 2019 • Net earnings of €130.5 million, with ROE of 6.
Slide 44: Well succeeded integration of Euro Bank, in all fronts
Well succeeded integration of Euro Bank, in all fronts Well succeeded integration of Euro Bank, in all fronts • Customers: significant expansion of Agreement Closing Legal merger Operational merger the Customer base 5 November 2018 31 May 2019 1 October 2019 11 November 2019 • Operating model: combi
Slide 45: FX mortgage loans legal risk
FX mortgage loans legal risk FX mortgage litigation Provisions and capital for legal risk • 2,010 loan agreements of Bank Millennium • Public advertising campaigns to encourage under individual litigation as at the end of claims against banks may lead to an increase in 2019. the number of court disp
Slide 46: Increased net interest income
Increased net interest income Net interest income* Operating costs (Million euros) (Million euros) Excluding Euro Bank +27.2% NIM 2.6% 2.8% integration costs 295.2 375.6 +33.1% +36.1% 581.9 401.8 437.2 295.2 28.7 Resol. fund and DGF 24.6 178.4 Other 122.1 +46.1% Staff costs 148.6 +31.1% 194.7 2018 2
Slide 47: Credit quality
Credit quality NPL>90d Loan-loss reserves (Million euros) (Million euros) Credit ratio Coverage ratio NPL>90d 2.5% 2.7% NPL>90d 133% 107% 430.8 481.2 450.3 322.9 Dec 18 Dec 19 Dec 18 Dec 19 Loan impairment (net of recoveries) (Million euros) 57bp excl. initial impairment Euro Bank • NPL>90d accounte
Slide 48: Growing volumes
Growing volumes Customer funds Loans to Customers (gross) (Million euros) (Million euros) +42.3% excluding FX mortgage loans +20.8% 21,237 +31.6% 16,887 1,931 17,574 148 +3.0% Off-BS funds 1,875 5,131 6,190 12,828 Other BS funds 119 +24.3% +57.4% +10.4% Mortgage 3,260 Term deposits 5,605 local curre
Slide 49: Stable earnings, reflecting normalisation of the interest rate environment
Stable earnings, reflecting the normalisation of the interest rate environment Net income Net operating revenue (Million euros) (Million euros) ROE 22.2% 20.3% -0.1% +3.2% 247.5 247.4 96.4 99.5 2018 2019 2018 2019 Operating costs (Million euros) • Net earnings of €99.5 million, with ROE of 20.3% • C
Slide 50: Net interest income reflects normalisation of the interest rate environment
Net interest income reflects the normalisation of the interest rate environment Net interest income Operating costs (Million euros) (Million euros) NIM 10.3% 9.5% Cost to income 37.8% 39.5% +4.5% -3.0% 93.6 97.8 188.0 182.4 Other 53.2 +4.6% 55.7 Staff costs 40.4 +4.5% 42.2 2018 2019 2018 2019 Commis
Slide 51: Credit quality performance influenced by challenging environment
Credit quality performance influenced by challenging environment NPL>90d Loan-loss reserves (Million euros) (Million euros) Credit ratio Coverage ratio NPL>90d 16.4% 16.7% NPL>90d 69% 71% 91.1 85.1 132.3 119.8 Dec 18 Dec 19 Dec 18 Dec 19 Loan impairment (net of recoveries) (Million euros) • NPL>90d
Slide 52: Business volumes reflect a conservative approach
Business volumes reflect a conservative approach under a challenging environment Customer funds Loans to Customers (gross) (Million euros) (Million euros) +6.6% 1,685 1,580 -11.1% 807 Mortgage 10 +3.6% 717 Personal and 146 +10.1% 861 other -8.6% 11 Term deposits 781 133 Companies 651 -11.9% 573 Dema
Slide 53: Key figures
05 Key figures 53
Slide 54: Strategic Plan 2021
Strategic Plan 2021 Franchise growth 2018 2019 2021 Active Customers 4.9 million 5.6 million >6 million Digital Customers 55% 58% >60% Value creation Mobile Customers 34% 40% >45% Cost to income 47% 50% ≈40% (46% excluding non-usual costs) (47% excluding non-usual costs) RoE 5.2% 5.1% ≈10% CET1 12.0
Slide 55: Commitment to People and Society
Commitment to People and Society Culture of Social Dimensions of Millennium bcp intervention Responsibility The new Sustainability Master Plan 2021 will guide the Influence the Bank's long-term implementation of ESG (Environmental, Social and value proposition, in balance with Governance) policies a
Slide 56: Main initiatives
Main initiatives Sustainability Millennium bcp Commitments foundation “Millennium Festival ao Largo” Subscription of the Charter of bringing free-for-all classical music Restoration of the Panels of St. Commitment to Sustainable Vincent of the National Museum of shows to the streets Financing in Por
Slide 57: Awards in 2019
Awards in 2019 Millennium bcp: Leadership in the “PME Bank Millennium: Best bank in Poland Excelência ’18” and “PME Líder ’18” programmes , with the largest number of submissions and awards among participating banks Millennium bcp Millennium bcp: Marketeer award, “Banking” Bank Millennium: Best webs
Slide 58: Appendix
Appendix 58
Slide 59: Sovereign debt portfolio
Sovereign debt portfolio Sovereign debt portfolio Sovereign debt maturity (Consolidated, million euros) >2y, ≤5y: 40% Dec 18 Mar 19 Jun 19 Sep 19 Dec 19 YoY >5y, ≤8y: 12% Portugal 6,609 7,375 7,229 7,413 6,520 -1% T-bills and other 853 1,932 1,665 1,536 1,923 +125% Bonds 5,755 5,443 5,564 5,876 4,59
Slide 60: Sovereign debt portfolio
Sovereign debt portfolio Portugal Poland Mozambique Other Total Trading book* 35 206 0 1 241 ≤ 1 year 35 18 0 0 53 > 1 year and ≤ 2 years 0 73 0 0 73 > 2 years and ≤ 5 years 0 55 0 0 55 > 5 years and ≤ 8 years 0 11 0 0 11 > 8 years and ≤ 10 years 0 48 0 0 48 > 10 years 0 0 0 1 1 Banking book** 6,486
Slide 61: Diversified and collateralised portfolio
Diversified and collateralised portfolio Loan portfolio (Consolidated) LTV of the mortgage portfolio Breakdown Loans per collateral in Portugal Other Mortgage 60-75 75-80 guarantees 47% 27% 9% 26% 80-90 Companies 10% 42% Real >90 guarantees 50-60 7% 59% 15% Unsecured 16% 0-40 40-50 12% 21% Personal/
Slide 62: Consolidated earnings
Consolidated earnings Impact on (Million euros) 2018 2019 YoY earnings Net interest income 1,423.6 1,548.5 +8.8% +124.9 Net fees and commissions 684.0 703.5 +2.8% +19.5 Other income* 78.9 86.4 +9.5% +7.5 Net operating revenue 2,186.5 2,338.4 +6.9% +151.9 Staff costs -592.8 -668.2 +12.7% -75.4 Other
Slide 63: Consolidated balance sheet
Consolidated balance sheet (Million euros) 31 December 31 December 31 December 31 December 2019 2018 2019 2018 ASSETS LIABILITIES Cash and deposits at Central Banks 5,166.6 2,753.8 Financial liabilities at amortised cost Loans and advances to credit institutions repayable on demand 320.9 326.7 Resou
Slide 64: Consolidated income statement per quarter
Consolidated income statement per quarter (Million euros) 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 Net interest income 370.8 362.7 377.4 412.9 395.6 Dividends from equity instruments 0.0 0.0 0.6 0.1 0.1 Net fees and commission income 174.0 166.6 175.6 176.9 184.4 Other operating income -1.0 -10.6 -64.8 -12.5 -
Slide 65: Income statement
Income statement (Million euros) For the 12-month periods ended December 31st, 2018 and 2019 Int e rna t io na l o pe ra t io ns G ro up P o rt uga l T o tal B a nk M ille nnium ( P o la nd) M ille nnium bim ( M o z.) O t he r int . o pe ra t io ns D ec 18 D ec 19 Δ % D ec 18 D ec 19 Δ % D ec 18 D e
Slide 66: Glossary (1/2)
Glossary (1/2) Assets placed with customers – amounts held by customers in the context of the placement of third-party products that contribute to the recognition of commissions. Balance sheet customer funds – deposits and other resources from customers and debt securities placed with customers. Com
Slide 67: Glossary (2/2)
Glossary (2/2) Net trading income – results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting operations, results from derecognition of financial assets and financial liabilities measured at amortised cost and results from de
Slide 68: Millennium bcp Investor Relations Division
Millennium bcp INVESTOR RELATIONS DIVISION Bernardo Collaco, Head EQUITY DEBT AND RATINGS Luis Pedro Monteiro —_ Luis Morais +351 21 1131 084 +351 211151 537 Vv investors@millenniumbcp.pt Banco Comercial Portugués, S.A., a public company (sociedade aberta) having its registered office at Praga D. Jo
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