Banco Comercial Portugues S.a. · EURONEXT:BCP

Banco Comercial Portugues — H1 2017 Earnings Presentation

62 slides from Banco Comercial Portugues's earnings presentation, 2017

1. Slide 1: Earnings Presentation 1H 2017

   Millennium bcp C7) EARNINGS @ MODERN PRESENTATION @ PERSONAL 1H 2017 Q

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 The figures presented do not constit

3. Slide 3: Agenda

   Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International operations  Conclusions 3

4. Slide 4: Summary

   Summary •1 Net profit of €89.9 million (-€197.3 million in the 1st half of 2016), benefitting from the continued expansion of core net income to €558.6 million*, compared to €437.1 million in the 1st half of 2016 •2 Significant NPE and NPL>90d reduction (€721 million and €471 million down in the 1st

5. Slide 5: Highlights: improved profitability

   1 Highlights: improved profitability (Million euros) Core net income* • Core net income increases to €558.6 Positive non-usual impact million in 1H17 (€534.9 million excluding of €23.7 million (staff costs) 558.6 a positive non-usual impact of €23.7 437.1 million on staff costs), with a noteworthy 3

6. Slide 6: Highlights: improved asset quality

   2 Highlights: improved asset quality (Million euros) Non-performing exposures (NPEs) 86% 90% 93% 100% 105% Coverage* • NPEs in Portugal down to €7.8 billion as at June 30, 2017, showing a strong pace 12,783 of reduction from 2013: €1.4 billion 10,921 9,777 8,538 per year, on average 7,817 Other NPEs

7. Slide 7: Highlights: credit stabilising in Portugal

   3 Highlights: credit stabilising in Portugal (Billion euros) Non-NPE portfolio • Non-NPE portfolio stable from end- 34.5 2016 32.9 31.8 30.8 30.9 • Structural change to the portfolio of loans to companies over recent years, with a growing weight of exporting industries, together with a lower weight

8. Slide 8: Highlights: strong business performance, Customer acquisition and experience

   Highlights: strong business performance, especially 4 in Customer acquisition and Customer experience Individuals Awards YoY growth Over 200 thousand new Best Consumer Digital Bank in Portugal +4.4% and Poland Customer customers Global Finance base Over 100,000 Customers +21% Customer choice in Port

9. Slide 9: Agenda

   Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International operations  Conclusions 9

10. Slide 10: Profit of €89.9 million in 1H17, with improvement of core net income

    Profit of €89.9 million in 1H17, with a significant improvement of core net income Impact on (million euros) 1H16 1H17 YoY earnings 437.1 558.6 +27.8% +121.5 Core net income (net int income+commissions–oper. costs) Non-usual items (staff costs) -1.2 23.7 +24.9 Core net income excluding non-usual ite

11. Slide 11: Core net income increases in all geographies

    Core net income increases in all geographies (Million euros) Core net income* Consolidated Portugal Non-usual positive Non-usual positive +27.8% effect (staff costs) +23.9% effect (staff costs) 558.6 344.3 277.8 23.7 23.7 320.6 437.1 1H16 1H17 International operations 534.9 +38.7% w/o FX impact +34.

12. Slide 12: Net interest income boosted by lower cost of deposits and CoCo repayment

    Net interest income boosted by the continued reduction in the cost of deposits and by CoCo repayment (Million euros) Net interest income Consolidated Portugal Net interest margin 1.5% 1.8% Net interest margin 1.9% 2.2% +9.0% 358.1 390.2 +12.9% 678.5 600.8 1H16 1H17 +23.0% w/o FX impact Net interest

13. Slide 13: Increase of commissions in international operations stands out

    Increase of commissions in international operations stands out (Million euros) Fees and comissions Consolidated Portugal -1.9% 1H16 1H17 YoY 229.5 225.2 Banking fees and commissions 263.1 265.9 +1.1% Cards and transfers 71.1 75.2 +5.8% Loans and guarantees 79.9 78.5 -1.7% 1H16 1H17 Bancassurance 43.

14. Slide 14: Other income: mandatory contributions and Visa gains in 1H16

    Increased other income influenced by higher mandatory contributions and by gains on Visa transaction in 1H16 (Million euros) Other income Consolidated Portugal -56.9% 61.4 26.5 -71.1% 138.3 1H16 1H17 Visa transaction 26.4 0.0 Mandatory contributions 51.7 57.9 • Banking sector PT: 31.0 40.0 Internati

15. Slide 15: Cost reduction continues…

    Cost reduction continues… (Million euros) Operating costs Consolidated Portugal Cost to income 47.7% 42.2% Cost to income 45.7% 42.9% Cost to core income* 52.7% 44.1% Cost to core 52.5% 44.6% income* 309.8 Non-usual -7.0% positive 484.1 effect of Depreciation 450.2 271.1 €23.7 million 25.5 +2.5% 26.

16. Slide 16: One of the most efficient banks in the Eurozone

    … making Millennium bcp one of the most efficient banks in the Eurozone Cost to core income* Cost to core income* Latest available data vs. peers in vs. Euro-zone Portugal banks 80% +4pp 84% 86% -41pp 45% 45% Bank 1 66% 57% 47% w/o non- Bank 2 63% 69% usual items 45% Bank 3 72% 89% Bank 4 53% 100% 5

17. Slide 17: Cost of risk trending towards normalisation

    Strengthening the balance sheet: cost of risk now trending towards normalisation Impairment and provision charges Consolidated Portugal Cost of risk 286bp 133bp Cost of risk 234bp 118bp -52.1% 772.9 Other 190.3 -49.1% 370.0 816.6 112.3 Loans 582.6 257.7 Other 198.0 1H16 1H17 International operations

18. Slide 18: Lower delinquency and increased coverage

    Lower delinquency and increased coverage (Million euros) Credit quality Consolidated Portugal NPE total coverage* 97% 105% NPE total -17.7% coverage* 97% 103% NPEs 9,498 7,817 -14.3% NPEs 10,227 8,761 Jun 16 Jun 17 Other 4,130 3,348 3,165 3,721 International operations NPE total coverage* 86% 90% NP

19. Slide 19: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International operations  Conclusions 19

20. Slide 20: Growing deposits in Portugal and in international operations

    Growing deposits in Portugal and in international operations (Million euros) Customer funds Consolidated Customer deposits in Portugal +0.9% Other (inc 34,531 34,843 +5.2% public sector) 66,070 1,417 1,346 3.9% increase vs 62,823 Jun16 including the placement of €912 million in Off-BS 13,842 Individ

21. Slide 21: Credit portfolio reflects NPE reduction

    Credit portfolio reflects NPE reduction, in spite of support to economy (Million euros) Loans to Customers (gross) Consolidated Portugal 40,719 -2.4% 52,930 51,684 39,361 -960 +69 38,709 -399 -721 Mortgage 24,494 23,678 Jun 16 NPE Non-NPE Dec 16 NPE Non-NPE Jun 17 Consumer and other 3,918 4,233 Inte

22. Slide 22: Growing new loans, leasing and factoring invoicing

    Growing new loans to individuals, new leasing business and factoring invoicing (Million euros) Loans to individuals, new business Leasing, new business +43.3% 231.7 +20.1% 161.6 888.6 740.1 1H16 1H17 Factoring invoicing +32.8% 2,788 2,100 +26.8% 1,532 Confirming 1,208 892 +40.9% 1,257 Factoring 1H16

23. Slide 23: Comfortable liquidity position

    Comfortable liquidity position Net loans to deposits ratio ECB funding (Billion euros) Elegible Net loans as a % assets 12.8 12.0 of BS Customer 97% 92% funds 4.9 3.6 -6pp 101% 95% Jun 16 Jun 17 Liquidity ratios (CRD IV/CRR) 155% 123% Jun 16 Jun 17 NSFR (Net stable LCR (Liquidity funding ratio) cove

24. Slide 24: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International operations  Conclusions 24

25. Slide 25: Strengthened capital, in line with European peers

    Strengthened capital, in line with European peers Common Equity Tier 1 ratio Common Equity Tier 1 ratio* Phased-in, latest available data vs. Euro-zone banks 13.0% 12.3% 11.3% 13.0%* 9.7% 12.4% 12.0% Jun 16 Jun 17 Jun 16 Jun 17 11.7% Phased-in Fully implemented Total 13.4% 14.0% 10.7% 12.4% ratio 11

26. Slide 26: Capital at comfortable levels, high leverage ratios

    Capital at comfortable levels, high leverage ratios Leverage ratio Leverage ratio Phased-in, latest available data 6.6% 6.6% 5.8% 6.1% 6.6% 5.2% 5.8% 4.9% 4.1% Jun 16 Jun 17 Jun 16 Jun 17 FR DE ES IT Phased-in Fully implemented RWA density Texas ratio* RWAs as % of assets, latest available informati

27. Slide 27: Pension fund

    Pension fund Key figures Pension fund (Million euros) Equities 13% Dec 16 Jun 17 Cash and other 38% Pension liabilities 3,093 3,056 Pension fund 3,124 3,187 Liabilities' coverage 112% 115% Fund's profitability -2.6% +3.5% Bonds 40% Actuarial differences (303) +46 Real estate 9% Assumptions Dec 16 Ju

28. Slide 28: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International operations  Conclusions 28

29. Slide 29: Increased net income

    Increased net income (Million euros) Net income  Net Income of €1.6 million in the 1st half 1.6 of 2017, a €306.7 million increase from a €305.1 million loss in the 1st half of 2016  Net income driven by growing NII and by -305.1 the reduction of operating costs and significant decrease of cost of

30. Slide 30: Improvement trend on core income and operating costs in Portugal

    Improvement trend on core income and operating costs continues in Portugal Core net income* Core Income (Million euros) Includes non usual (Million euros) positive effect of €23.7 million +4.7% +23.9% 587.6 615.4 344.3 Comissions 277.8 229.5 225.2 Net 358.1 390.2 interest income 1H16 1H17 1H16 1H17

31. Slide 31: Lower cost of time deposits compensates lower credit volumes and Euribor

    Lower cost of time deposits more than compensates for the decreases of credit volumes and Euribor Net interest income (Million euros) +9.0% +39.1 390.2 358.1 -2.7 +26.5 +11.9 1.8% NIM 1.5% -20.1 -17.7 -4.8 1H16 Effect of lower Performing Securities NPL CoCo Effect of cost Other 1H17 Euribor on loans

32. Slide 32: 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) 1H16 1H17 2.9% 2.8% -0.7% -0.9% 1H16 1H17 NIM  Continued improvement of the spread of the portfolio of term deposits: from -0.9% in 1H16 to 1.8% -0.

33. Slide 33: Commissions affected by non-recurring operations in 1H16

    Commissions affected by the booking of non-recurring operations in the 1st half of 2016 (Million euros) 1H16 1H17 YoY Banking fees and commissions 203.3 194.0 -4.6% Cards and transfers 47.7 51.4 +7.7% Loans and guarantees 54.5 51.7 -5.1% Bancassurance 39.1 39.3 +0.5% Customer account related 45.4 46

34. Slide 34: Continuous reduction of costs

    Continuous reduction of costs, in line with the new commercial approach (Million euros) Operating costs Employees Cost to income 47.7% 42.2% Cost to core -99 income* 52.7% 44.1% 7,402 7,303 309.8 Depreciation 14.3 271.1 16.1 Other 114.0 Jun 16 Jun 17 administrative costs 109.9 Branches Includes non

35. Slide 35: Reinforced coverage of NPL>90d

    Reinforced coverage of NPL>90d NPL>90d Loan-loss reserves Credit ratio Jun 16 Jun 17 Coverage ratio Jun 16 Jun 17 NPL>90d 14.1% 11.8% NPL>90d 58.2% 69.4% 5,755 3,348 3,165 4,558 Jun 16 Jun 17 Jun 16 Jun 17 NPL>90d build-up Loan impairment (net of recoveries) Non-NPE portfolio: Jun 17 Jun 17 Cost of

36. Slide 36: Lower NPEs with reinforced coverage

    Lower NPEs with reinforced coverage Non-performing exposures (NPEs) NPE coverage (Million euros) 97% 105% Coverage* 107% 104% 105% -17.7% 9,498 Real estate 7,817 37% 46% collateral 70% Other NPEs 20% 18% Cash, other fin. collat., EL gap 5,755 NPL>90d 14% 4,558 47% 40% LLRs 23% Jun 16 Jun 17 Individu

37. Slide 37: Foreclosed assets sold and corporate restructuring funds

    Foreclosed assets sold and corporate restructuring funds Foreclosed assets Corporate restructuring funds (Million euros) (Million euros) Original credit exposure: €2,006 million 1,825 Book value (30 Jun 2017): €1,068 million 1,583 196 Total impairment (credit+restr. funds): €938 million Impairment 2

38. Slide 38: Improved liquidity position

    Improved liquidity position (Million euros) Customer funds Loans to Customers (gross) +3.0% 48,645 47,213 -4.9% Off-BS 12,311 11,040 40,719 funds 38,709 Other BS 1,641 1,491 funds Mortgage 18,145 17,314 21,561 19,420 Term deposits Consumer 2,348 and other 2,477 Companies 20,226 18,918 On- 15,424 dem

39. Slide 39: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International operations  Conclusions 39

40. Slide 40: Contribution from international operations

    Contribution from international operations (Million euros) Δ% Δ% 1H16 1H17 local ROE euros currency International operations Poland 101.2 73.7 -27.1% -25.1% 8.9% Mozambique 30.0 42.8 +42.6% +16.3% 25.8% Angola* 21.1 15.8 -25.3% -26.3% Other 4.3 5.9 +37.5% +39.5% Net income 156.5 138.1 -11.8% -14.1%

41. Slide 41: Poland: net earnings influenced by Visa transaction and mandatory contributions

    Strong performance of net earnings influenced by Visa transaction in 1H16 and higher mandatory contributions in 1H17 (Million euros) Net income Banking income ROE 13.1% 8.9% -8.2% Net income 101.2 309.8 73.7 284.3 Impact from Visa transaction 52.3 48.8 +51.0% 1H16 1H17 1H16 1H17 Operating costs  Ne

42. Slide 42: Poland: increased net interest income and commissions

    Increased net interest income and commissions (Million euros) Net interest income* Operating costs NIM 2.4% 2.5% Cost to income 41.9% 46.3% +11.3% +1.5% 129.8 131.7 177.4 197.4 Other 64.5 -3.1% 62.5 Staff costs 65.2 +6.1% 69.2 1H16 1H17 1H16 1H17 Commissions and other income Employees Branches -34.4

43. Slide 43: Poland: stable credit quality, comfortable coverage

    Stable credit quality, comfortable coverage (Million euros) NPL>90d Loan-loss reserves Credit ratio Jun 16 Jun 17 Coverage ratio Jun 16 Jun 17 NPL>90d 2.6% 2.7% NPL>90d 114% 109% 336 344 295 316 Jun 16 Jun 17 Jun 16 Jun 17 Loan impairment (net of recoveries)  NPL>90d ratio at 2.7% of total credit a

44. Slide 44: Poland: growing volumes

    Growing volumes (Million euros) Customer funds Loans to Customers (gross) +8.3% 15,423 Off-BS 14,236 funds 1,834 +21.8% +0.8% 1,506 102 11,451 11,542 Other BS 102 0.0% funds 6,014 Term 6,570 -8.5% 6,351 Mortgage 6,651 -4.5% deposits Consumer 1,425 1,554 +9.0% On- +23.3% 7,473 and other demand 6,059

45. Slide 45: Mozambique: significant activity and net income growth

    Significant activity and net income growth, in a demanding environment (Million euros) Net income Banking income +31.2% ROE 21.1% 25.8% 115.6 +42.6% 88.2 42.8 30.0 1H16 1H17 1H16 1H17 Operating costs  Net income up by 42.6%, with ROE at 25.8%  Increase of 31.2% in banking income due to higher net

46. Slide 46: Mozambique: core income growth offset by operating costs

    Growth in core income partially offset by the increase in operating costs (Million euros) Net interest income Operating costs Cost to income 40.8% 36.9% NIM 7.6% 10.7% +18.8% 42.7 +59.0% 35.9 91.3 +23.0% 24.1 57.4 Other 19.6 Staff costs 16.3 +13.9% 18.6 1H16 1H17 1H16 1H17 Commissions and other inco

47. Slide 47: Mozambique: credit quality

    Credit quality (Million euros) NPL>90d Loan-loss reserves Credit ratio Jun 16 Jun 17 Coverage ratio Jun 16 Jun 17 NPL>90d 5.4% 14.0% NPL>90d 124% 65% 104.8 161.9 73.9 59.6 Jun 16 Jun 17 Jun 16 Jun 17 Loan impairment (net of recoveries) Cost of  NPL>90d ratio of 14.0% as at June 30, 2017 risk 196bp

48. Slide 48: Mozambique: growing volumes

    Growing volumes (Million euros) Customer funds Loans to Customers (gross) +10.9% 1,518 1,369 +4.5% 1,157 1,108 13 679 Mortgage 15 -12.8% Term 584 Consumer 203 deposits +16.4% 226 and other -10.4% On- Companies +8.6% 942 839 867 demand 786 +6.8% deposits Jun 16 Jun 17 Jun 16 Jun 17 FX effect excluded

49. Slide 49: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International operations  Conclusions 49

50. Slide 50: Road to 2018: targets

    Road to 2018: targets Consolidated 1H16 1H17 2018 Phased-in: 12.3% Phased-in: 13.0% CT1 / CET1* ≈ 11% Fully implemented: 9.7% Fully implemented: 11.3% Loans to 101% 95% < 100% Deposits Stated: 45.7% Stated: 42.9% Cost–Income < 43% Excluding non-usual items: 45.6% Excluding non-usual items: 45.2% Cos

51. Slide 51: Millennium bcp: a solid bank, ready for the future

    Millennium bcp: a solid bank, ready for the future • Largest private sector bank based in Portugal with a balanced shareholder structure and a sound balance sheet (phased-in CET1 ratio of 13.0%, loans to deposits of 95%) Profitability and • Profitable operation with a recurring capacity to generate

52. Slide 52: Appendix

    Appendix AGILE | MODERN | PERSONAL | SIMPLE| SUSTAINABLE 52

53. Slide 53: Sovereign debt portfolio

    Sovereign debt portfolio Sovereign debt portfolio Sovereign debt maturity (Million euros) >10y >8y, ≤10y 0% 4% ≤1y 24% Jun 16 Mar 17 Jun 17 YoY QoQ >5y, ≤8y 26% Portugal 5,331 4,241 5,089 -5% +20% T-bills 1,261 589 845 -33% +44% Bonds 4,070 3,652 4,244 +4% +16% Poland 2,740 3,745 3,847 +40% +3% Moza

54. Slide 54: Sovereign debt portfolio

    Sovereign debt portfolio (Million euros) Portugal Poland Mozambique Other Total Trading book* 158 98 0 37 292 ≤ 1 year 119 7 0 36 162 > 1 year and ≤ 2 years 0 38 0 0 38 > 2 years and ≤ 5 years 36 41 0 0 78 > 5 years and ≤ 8 years 1 0 0 0 1 > 8 years and ≤ 10 years 1 11 0 0 12 > 10 years 0 0 0 0 0 Ba

55. Slide 55: Diversified and collaterised portfolio

    Diversified and collaterised portfolio Loan portfolio Consolidated Companies 46% Loans by collateral Mortgage 58% 25% 16% 46% Real guarantees Other guarantees Unsecured LTV of mortgage portfolio in Portugal 16% 11% 13% 27% 10% 11% 11% 0-40 40-50 50-60 60-75 75-80 80-90 >90 Consumer/ other 8%  Loans

56. Slide 56: Consolidated earnings

    Consolidated earnings Impact on (million euros) 1H16 1H17 YoY earnings Net interest income 600.8 678.5 12.9% +77.7 Net fees and commissions 320.3 330.3 3.1% +10.0 Other operating income 138.3 40.0 -71.1% -98.3 Banking income 1,059.4 1,048.8 -1.0% -10.6 Staff costs -273.7 -241.5 -11.8% +32.2 Other ad

57. Slide 57: Consolidated balance sheet

    Consolidated balance sheet (Million euros) 30 June 30 June 30 June 30 June 2017 2016 2017 2016 Assets Liabilities Cash and deposits at central banks 1,650.9 2,178.3 Resources from credit institutions 9,373.2 11,228.6 Loans and advances to credit institutions Resources from customers 50,635.7 48,762.

58. Slide 58: Consolidated income statement

    Consolidated income statement Per quarter (Million euros) Quarterly 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 Net interest income 308.4 306.2 323.1 332.3 346.2 Dividends from equity instruments 3.8 1.2 0.8 0.1 1.5 Net fees and commission income 156.4 160.8 162.7 160.8 169.5 Other operating income -75.6 -8.3 -9.

59. Slide 59: Income statement (Portugal and International Operations)

    Income statement (Portugal and International Operations) For the 6-month periods ended June 30th, 2016 and 2017 (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 Jun 16 Jun 17 Δ

60. Slide 60: Glossary (1/2)

    Glossary (1/2) Balance sheet total customer funds - debt securities and customer deposits. Capitalisation products – includes unit linked saving products and retirement saving plans (“PPR”, “PPE” and “PPR/E”). Commercial gap – total loans to customers net of BS impairments accumulated for risk of cr

61. Slide 61: Glossary (2/2)

    Glossary (2/2) Operating costs - staff costs, other administrative costs and depreciation. Other impairment and provisions - other financial assets impairment, other assets impairment, in particular provision charges related to assets received as payment in kind not fully covered by collateral, good

62. Slide 62: Investor Relations Division

    illenniu INVESTOR RELATIONS DIVISION Rui Coimbra, Head EQUITY DEBT AND RATINGS Luis Pedro Monteiro and Paula Dantas Henriques Luis Morais and Lina Fernandes +351 21 1131 084 +351 21 1131 337 investors@millenniumbcp.pt Banco Comercial Portugués, S.A., a public company (sociedade aberta) having its re

Banco Comercial Português, S.A. (Millennium bcp) — H1 2017 Earnings Presentation on 6ix