Banco Comercial Portugues S.a. · EURONEXT:BCP

Banco Comercial Portugues — Q1 2019 Earnings Presentation

58 slides from Banco Comercial Portugues's earnings presentation, May 9, 2019

  1. Slide 1: Millennium Earnings Presentation 3M 2019

    Millennium EARNINGS . PRESENTATION @ 7) 3M 2019 SIMPLE si imnHORGALAAN

  2. Slide 2: Disclaimer

    Disclaimer 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. The figures presented d

  3. Slide 3: Agenda

    Agenda  Highlights  Group • Profitability • Business activity • Capital  Portugal  International operations  Key figures 3

  4. Slide 4: Highlights

    Highlights 1• Improved profitability, with net earnings of €153.8 million in the 1st quarter of 2019 2• Contribution of activity in Portugal of €94.3 million, more than doubling the contribution of the first 3 months of 2018 1 Improved profitability 2 Net earnings in Portugal more than double (Conso

  5. Slide 5: Highlights

    Highlights 3• Improved credit quality, with decreasing NPEs (-€1.9 billion from March 31, 2018) and cost of risk (68bp in the 1st quarter of 2019) 4• NPE coverage by loan-loss reserves increases to 55%, total* coverage rises to 110% 3 Improved asset quality 4 Increased NPE coverage (Non-performing e

  6. Slide 6: Highlights

    Highlights 5• Capital ratio raised to15.2%*, boosted by earnings in the last 12 months and by AT1 issue in January 2019, and comfortably above SREP requirements 6• Increasing business volumes, with performing loans up by €2.4 billion and total Customers funds up €3.7 billion from March 31, 2018 5 St

  7. Slide 7: Growing active Customer base

    Highlights 7 Growing active Customer base* (‘000 Customers) +326,000 Customers Active Customers 4,592 4,918 Grupo • +326,000 active Customers from March +134,000 Customers 31, 2018, of which 134,000 in Portugal Active Customers • Best ranked bank (among the top 5 2,275 Portugal 2,141 banks) in Bank

  8. Slide 8: New digital solutions support transformation process

    Highlights New digital solutions support transformation process • Faster, simpler and more intuitive • Created based on Customers’ ideas and experience: an app that’s focused on Customers and their needs • Always visible menu bar, bureaucracy-free online personal and car loans, real time alerts, pri

  9. Slide 9: Recent rating upgrades

    Highlights 8• Recent rating upgrades recognise Millennium bcp’s improvement over the last years Moody’s Baseline Credit Assessment Long-term rating upgraded on April 1, 2019, positive outlook • Most recent rating upgrade: Moody’s ba3 (April 1, 2019) b1 b2 b3 • Moody’s rating action reflects Caa1 Mil

  10. Slide 10: Agenda

    Agenda  Highlights  Group • Profitability • Business activity • Capital  Portugal  International operations  Key figures 10

  11. Slide 11: Profit of €153.8 million in the 1st quarter of 2019

    Profit of €153.8 million in the 1st quarter of 2019 Impact on (million euros) 1Q18 1Q19 YoY earnings Net interest income 344.8 362.7 +5.2% +17.9 Commissions 167.8 166.6 -0.7% -1.2 Core income 512.6 529.3 +3.3% +16.7 Other income* 25.2 68.3 +171.4% +43.2 Banking income 537.8 597.7 +11.1% +59.9 Operat

  12. Slide 12: Net interest income increases

    Net interest income increases (Million euros) Net interest income Consolidated Portugal NIM 1.8% 1.8% NIM 2.2% 2.2% +4.9% 192.0 201.5 +5.2% 362.7 344.8 1Q18 1Q19 International operations NIM 3.2% 3.0% +5.5% 152.8 161.2 1Q18 1Q19 1Q18 1Q19 12

  13. Slide 13: Fees and commissions

    Fees and commissions: in Portugal, stronger banking business more than compensates for lower market-related fees and commissions (Million euros) Fees and commissions Consolidated Portugal +1.7% 113.0 114.9 -0.7% 14.1 -22.6% 10.9 167.8 166.6 +5.1% 98.9 104.0 Market-related fees and 28.7 -16.3% 24.0 c

  14. Slide 14: Other income expands significantly

    Other income* expands significantly (Million euros) Other income* Consolidated Portugal +135.1% 171.4% 66.4 68.3 28.2 18.7 25.2 1Q18 1Q19 Equity earnings + dividends 19.9 International operations 60.3 1.9 Net trading income 34.4 Other operating -10.6 -3.1 income -29.1 1Q18 1Q19 Mandatory contributio

  15. Slide 15: Recurring operating costs under control

    Recurring operating costs under control (Million euros) Operating costs Consolidated Portugal +4.5% +2.7% Recurring 242.6 253.5 Recurring 150.0 154.0 +4.3% 153.4 160.0 +5.5% 259.5 246.0 Depreciation 14.2 26.8 * Other 1Q18 1Q19 administrative 89.5 80.5 * costs International operations Includes non-us

  16. Slide 16: 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 information 80% -4pp 76% vs. peers in vs. Euro-zone -37pp Portugal banks 86% 48% excluding non-usual items 49% 49% 49% Bank 1 49% 56% 2013 1Q19 Bank 2 55% 80% Cost to income 67%

  17. Slide 17: Cost of risk continues trending to normalisation

    Cost of risk continues trending to normalisation (Million euros) Impairment and provision charges Consolidated Portugal Cost of risk 96bp 73bp Cost of risk 85bp 68bp -17.2% 108.0 89.4 Other 19.0 -20.0% 21.4 129.9 Loans 89.0 68.0 Other 23.9 103.9 1Q18 1Q19 17.4 Loan-loss reserves 2,915 2,310 Internat

  18. Slide 18: Relevant NPE reduction and strengthened coverage

    Relevant NPE reduction and strengthened coverage (Million euros) Credit quality Consolidated Portugal NPE total coverage* 104% 110% -29.4% NPE coverage by NPE 6,286 -1.8 billion LLRs 48% 55% 4,437 -27.3% NPE 7,122 -1.9 billion Other 2,799 5,178 Mar 18 Mar 19 2,358 International operations NPL>90d 4,

  19. Slide 19: Agenda

    Agenda  Highlights  Group • Profitability • Business activity • Capital  Portugal  International operations  Key figures 19

  20. Slide 20: Strong business dynamics results in growing Customer funds

    Strong business dynamics results in growing Customer funds… (Billion euros) Total Customers funds* Consolidated Total Customers funds* in Portugal Individuals: +5.2% Individuals: +6.1% +5.1% +5.0% 75.3 51.8 54.3 71.6 Off-BS funds 14.4 14.9 Other BS funds 1.3 1.3 18.1 Term deposits 19.1 18.1 Off-BS f

  21. Slide 21: Increasing loan portfolio

    … together with an increasing loan portfolio (Billion euros) Loans to Customers (gross) Consolidated Portugal NPE: -27.3% (-€1.9 billion) Performing: +5.4% (+€2.4 billion) -1.8% +0.8% 38.0 +0.7 37.2 +0.5 37.3 51.0 51.4 -0.4 -1.5 Mortgage 23.4 23.9 Mar 18 NPE Performing Dez 18 NPE Performing Mar 19 I

  22. Slide 22: Comfortable liquidity position

    Comfortable liquidity position Net loans to deposits ratio ECB funding (Billion euros) Eligible 14.2 16.9 assets -4pp 3.2 2.9 91% 87% Mar 18 Mar 19 Liquidity ratios (CRD IV/CRR) 253% 134% 100% Mar 18 Mar 19 NSFR (Net stable LCR (Liquidity funding ratio) coverage ratio) 22

  23. Slide 23: Agenda

    Agenda  Highlights  Group • Profitability • Business activity • Capital  Portugal  International operations  Key figures 23

  24. Slide 24: Strengthened capital

    Strengthened capital Capital ratio Fully implemented Requirement +€883m  CET1 capital ratio of 12.7%* (fully implemented) as of 15.2% March 31, 2019 Total 13.5% 13.5% 13.1%  Increase from 11.8% as of March 31, 2018 and from 12.0% as of December 31, 2018 due to earnings for the last 4 quarters and

  25. Slide 25: Capital at adequate levels

    Capital at adequate levels Leverage ratio Fully implemented, latest available data 7.2% 5.4% 5.7% 6.0% 4.0%  Leverage ratio at 7.2% as of March 31, 2019, a 3.0% comfortable and comparatively strong figure in FR DE ES IT European banking RWA density  High RWA density (55% as of March 31, 2019), com

  26. Slide 26: Agenda

    Agenda  Highlights  Group • Profitability • Business activity • Capital  Portugal  International operations  Key figures 26

  27. Slide 27: Increased net income

    Increased net income (Million euros) Net income* Banking income 382.8 +49.8 333.3 94.3 44.5 1Q18 1Q19 1Q18 1Q19 Operating costs Includes non-usual negative impact of €6.0  Net earnings of €94.3 in the 1st quarter of 2019, +€49.8 million (staff costs) million compared to €44.5 million in the same pe

  28. Slide 28: Net interest income

    Net interest income Net interest income (Million euros) +4.9% +6.6 201.5 192.0 +2.9 +3.2 -2.1 -0.6 -0.4 1.8% NIM 1.8% 1Q18 Credit Effect of cost Effect of Credit rate Effect of Other 1Q19 volume of time wholesale cost effect securities (includes IFRS9) effect deposits portfolio  Net interest income

  29. Slide 29: Continued effort to reduce the cost of deposits

    Continued effort to reduce the cost of deposits Spread on the book of term deposits Spread on the performing loan book (vs 3m Euribor) (vs 3m Euribor) 1Q18 1Q19 2.7% 2.7% -0.5% -0.6% 1Q18 1Q19 NIM  Continued improvement in the spread of the portfolio of term deposits: from -0.6% in 1st quarter of 2

  30. Slide 30: Commissions and other income

    Commissions and other income* (Million euros) Fees and commissions Other income* 1Q18 1Q19 YoY +135.1% 66.4 Banking fees and commissions 98.9 104.0 +5.1% Cards and transfers 26.4 26.1 -1.3% 28.2 Loans and guarantees 25.4 27.7 +8.9% Bancassurance 20.6 22.2 +7.7% 1Q18 1Q19 Customer account related 23.

  31. Slide 31: Operating costs

    Operating costs (Million euros) Operating costs Employees Recruitment in digital areas, including +2.7% internalisation of outsourcers Recurring 150.0 154.0 +107 7,155 7,262 +4.3% 160.0 153.4 Depreciation 9.0 16.5 * Other Mar 18 Mar 19 administrative 53.3 46.3 * costs Branches Includes non-usual neg

  32. Slide 32: Lower NPEs, with reinforced coverage

    Lower NPEs, with reinforced coverage (Million euros) Non-performing exposures (NPE) NPE build-up -29.4% Mar 19 Mar 19 6,286 vs.Mar 18 vs.Dec 18 Other NPE 4,437 Opening balance 6,286 4,797 2,413 Net exits -719 -209 2,056 NPL>90d Write-offs -488 -77 3,872 2,381 Sales -641 -74 Mar 18 Mar 19 Ending bala

  33. Slide 33: NPE coverage

    NPE coverage NPE total coverage* NPL>90d total coverage* 114% 111% 116% 112% 100% 100% 35% 26% Real estate 43% Real estate 37% collateral collateral 22% 73% 20% 68% 17% Cash, other 15% Cash, other fin.collat., EL gap fin.collat., EL gap 2% 60% 52% 2% 68% 58% LLRs LLRs 26% 30% Individuals Companies T

  34. Slide 34: Foreclosed assets and corporate restructuring funds

    Foreclosed assets and corporate restructuring funds Foreclosed assets Corporate restructuring funds (Million euros) (Million euros) -2.7% 1,757 1,022 995 Impairment 232 1,409 203 199 164 Industry Net value 1,525 -20.9% 1,206 823 831 RE/tourism Mar 18 Mar 19 Mar 18 Mar 19 Sales of foreclosed assets 

  35. Slide 35: Increased Customer funds and performing credit portfolio

    Strong business dynamics leads to increased Customer funds and performing credit portfolio (Billion euros) Total Customers funds* • Total Customers funds in Portugal up by 5.0% from +5.0% March 31, 2018, with total Customers funds held by 51.8 54.3 individuals growing 6.1% Off-BS funds 14.4 14.9 Oth

  36. Slide 36: Agenda

    Agenda  Highlights  Group • Profitability • Business activity • Capital  Portugal  International operations  Key figures 36

  37. Slide 37: Positive contribution from international operations

    Positive contribution from international operations (Million euros) Δ% Δ% Capital 1Q18 1Q19 ROE local currency euros ratio* Poland 36.3 37.3 +3.0% +0.3% 10.3% 25.6% Mozambique 25.9 27.3 +5.5% +10.8% 23.3% 38.5% Angola** Before IAS 29 impact 2.9 4.9 IAS 29 impact*** -0.8 0.7 Total Angola including IA

  38. Slide 38: Growing net income

    Growing net income (Million euros) Net income Banking income ROE 9.7% 10.3% +12.9% +3.0% 173.0 153.3 36.3 37.3 1Q18 1Q19 1Q18 1Q19 Eurobank acquisition: expected Operating costs completion at the end of May 2019  Net earnings of €37.3 million (+3.0%), with ROE of 10.3% +16.4%  Banking income up by

  39. Slide 39: Increased net interest income

    Increased net interest income (Million euros) Net interest income* Operating costs NIM 2.5% 2.5% +14.6% Cost to income 45.9% 44.6% 116.8 +16.4% 102.0 89.8 77.1 Resol. fund and DGF 19.6 12.8 +22.8% 29.9 Other 27.5 Staff costs 36.8 +9.4% 40.3 1Q18 1Q19 1Q18 1Q19 Commissions and other income Mandatory

  40. Slide 40: Credit quality

    Credit quality (Million euros) NPL>90d Loan-loss reserves Credit ratio Mar 18 Mar 19 Coverage ratio Mar 18 Mar 19 NPL>90d 2.7% 2.4% NPL>90d 137% 135% 311.2 309.8 426.1 418.1 Mar 18 Mar 19 Mar 18 Mar 19 Loan impairment (net of recoveries)  NPL>90d accounted for 2.4% of total credit as of March Cost

  41. Slide 41: Growing volumes

    Growing volumes (Million euros) Customer funds Loans to Customers (gross) +16.8% excluding FX +9.3% mortgage loans 17,534 16,048 +11.9% 12,949 1,908 Off-BS funds -10.2% 138 11,577 2,125 Other BS 107 +28.8% 3,349 funds Mortgage +19.9% 5,885 local currency 2,793 Term deposits 5,514 +6.7% 3,327 Mortgag

  42. Slide 42: Growing net income

    Growing net income (Million euros) Net income Banking income 25.9% 23.3% +8.7% ROE 65.3 +5.5% 60.1 25.9 27.3 1Q18 1Q19 1Q18 1Q19 Operating costs  Net earnings of €27.3 million (+5.5%), with ROE of 23.3%, increasing banking income (+8.7%) +7.0%  Customer funds grew 6.6%, with loan portfolio down by

  43. Slide 43: Growing income partially offset by increase in operating costs

    Growing income partially offset by the increase in operating costs (Million euros) Net interest income Operating costs Cost to income 36.3% 35.7% NIM 11.6% 9.8% +7.0% -8.8% 21.8 23.3 50.1 45.7 Other 12.6 +5.6% 13.3 Staff costs 9.2 +9.0% 10.1 1Q18 1Q19 1Q18 1Q19 Commissions and other income Employees

  44. Slide 44: Credit quality performance influenced by challenging environment

    Credit quality performance influenced by challenging environment (Million euros) NPL>90d Loan-loss reserves Credit ratio Mar 18 Mar 19 Coverage ratio Mar 18 Mar 19 NPL>90d 14.7% 16.1% NPL>90d 66% 73% 90.4 91.7 137.9 125.8 Mar 18 Mar 19 Mar 18 Mar 19 Loan impairment (net of recoveries)  NPL>90d rati

  45. Slide 45: Business volumes reflect a conservative approach

    Business volumes reflect a conservative approach under a challenging environment (Million euros) Customer funds Loans to Customers (gross) +6.6% 1,563 1,466 -16.7% 938 Mortgage 11 -5.3% -14.8% 654 Personal and 781 156 -14.1% Term deposits 768 other 10 134 Companies 771 909 -17.4% 636 Demand +30.2% d

  46. Slide 46: Agenda

    Agenda  Highlights  Group • Profitability • Business activity • Capital  Portugal  International operations  Key figures 46

  47. Slide 47: Key figures

    Key figures Consolidated 1Q18 1Q19 2021 Active Customers 4.6 million 4.9 million >6 million Franchise Digital Customers 52% 56% >60% growth Mobile Customers 29% 35% >45% Cost to Income 46% 43% ≈40% (45% excluding non-usual items) (42% excluding non-usual items) RoE 6.1% 10.6% ≈10% Value CET1 11.8% 1

  48. Slide 48: Appendix

    Appendix AGILE | MODERN | PERSONAL | SIMPLE | SUSTAINABLE 48

  49. Slide 49: Sovereign debt portfolio

    Sovereign debt portfolio Sovereign debt portfolio Sovereign debt maturity (Million euros) >5y, ≤8y >8y, ≤10y Mar 18 Dec 18 Mar 19 YoY QoQ 12% 2% >10y 2% Portugal 4,696 6,609 7,375 +57% +12% T-bills and other 452 853 1,932 +327% >100% >2y, ≤5y Bonds 4,244 5,755 5,443 +28% -5% ≤1y 40% Poland 3,981 4,9

  50. Slide 50: Sovereign debt portfolio

    Sovereign debt portfolio (Million euros) Portugal Poland Mozambique Other Total Trading book* 40 180 0 1 220 ≤ 1 year 0 42 0 0 42 > 1 year and ≤ 2 years 34 61 0 0 95 > 2 years and ≤ 5 years 4 33 0 0 37 > 5 years and ≤ 8 years 1 29 0 0 30 > 8 years and ≤ 10 years 0 15 0 0 15 > 10 years 1 1 0 1 2 Bank

  51. Slide 51: Diversified and collateralised portfolio

    Diversified and collateralised portfolio Loan portfolio Consolidated Companies Loans per collateral 46% Mortgage 61% 27% 12% 46% Real guarantees Other guarantees Unsecured LTV of the mortgage portfolio in Portugal 16% 11% 14% 28% 10% 11% 10% Personal/ 0-40 40-50 50-60 60-75 75-80 80-90 >90 other 8%

  52. Slide 52: Consolidated earnings

    Consolidated earnings Impact on (million euros) 1Q18 1Q19 YoY earnings Net interest income 344.8 362.7 +5.2% +17.9 Net fees and commissions 167.8 166.6 -0.7% -1.2 Other income* 25.2 68.3 +171.4% +43.2 Banking income 537.8 597.7 +11.1% +59.9 Staff costs -142.3 -152.2 +7.0% -9.9 Other administrative c

  53. Slide 53: Consolidated balance sheet

    Consolidated balance sheet (Million euros) 31 March 31 March 31 March 31 March 2019 2018 2019 2018 ASSETS LIABILITIES Cash and deposits at Central Banks 2,292.1 2,265.8 Financial liabilities at amortised cost Loans and advances to credit institutions repayable on demand 288.2 254.5 Resources from cr

  54. Slide 54: Consolidated income statement

    Consolidated income statement Per quarter (Million euros) Quarterly 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 Net interest income 344.8 342.8 365.2 370.8 362.7 Dividends from equity instruments 0.1 0.6 0.0 0.0 0.0 Net fees and commission income 167.8 172.4 169.9 174.0 166.6 Other operating income -29.1 -61.0 1.

  55. Slide 55: Income statement (Portugal and International operations)

    Income statement (Portugal and International operations) For the 3-month periods ended March 31st, 2018 and 2019 (Million euros) 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 M ar 18 M ar 19

  56. Slide 56: 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

  57. Slide 57: 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

  58. Slide 58: Investor Relations Division

    illenniu INVESTOR RELATIONS DIVISION Bernardo Collaco, Head EQUITY DEBT AND RATINGS Luis Pedro Monteiro Luis Morais +351 21 1131 084 +351 21 1131 337 investorsamillenniumbcp.pt Banco Comercial Portugués, S.A., a public company (sociedade aberta) having its registered office at Praca D. Joao |, 28, O

Banco Comercial Português, S.A. (Millennium bcp) — Q1 2019 Earnings Presentation on 6ix