Banco Comercial Portugues S.a. · EURONEXT:BCP
Banco Comercial Portugues — FY2018 Earnings Presentation
61 slides from Banco Comercial Portugues's earnings presentation, 2019
Slide 1: Millennium Earnings Presentation 2018
Millennium EARNINGS . PRESENTATION @ 2018 2 Piss Mon Gad LAAT
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
Slide 3: Agenda
Agenda Highlights Group • Profitability • Business activity • Capital Portugal International operations Key figures 3
Slide 4: Highlights
Highlights 1• Improved profitability, with net earnings of €301.1 million in 2018 The Executive Committee proposed the Board of Directors to approve a proposal 2• Capital ratio reinforced to 14.5%**, boosted by AT1 issue in January 2019, and for a dividend distribution corresponding to comfortably a
Slide 5: Highlights
Highlights 3• Improved credit quality, with NPEs decreasing by €2.1 billion from December 31, 2017 4• NPE coverage by loan-loss reserves increases to 52%, total* coverage rises to 109% 3 Improved asset quality 4 Increased NPE coverage (Non-performing exposures, billion euros) (As a % of non-performi
Slide 6: Highlights
Highlights 5• Increasing business volumes, with performing loans up by €2.2 billion and total Customers funds up €3.7 billion from end- 2017 6• +351,000 active Customers from December 31, 2017 5 Increasing business volumes 6 Growing Customer base (Consolidated, billion euros) (Million Customers) +3.
Slide 7: Agenda
Agenda Highlights Group • Profitability • Business activity • Capital Portugal International operations Key figures 7
Slide 8: Improved profitability across geographies
Improved profitability across geographies (Million euros) Consolidated net earnings* Net earnings from domestic activity +61.5% +196.1% 301.1 115.5 186.4 39.0 2017 2018 2017 2018 Net earnings from international operations • Net earnings of €301.1 million in 2018, a 61.5% increase from €186.4 million
Slide 9: Profit of €301.1 million in 2018
Profit of €301.1 million in 2018 Impact on (million euros) 2017 2018 YoY earnings Net interest income 1,391.3 1,423.6 +2.3% +32.4 Commissions 666.7 684.0 +2.6% +17.3 Core income 2,058.0 2,107.7 +2.4% +49.7 Other income* 139.5 78.9 -43.5% -60.6 • Credit sales: -€40.2 million (-€9.2 million in 2017, -
Slide 10: Sound performance of net interest income
Sound performance of net interest income (Million euros) Net interest income Consolidated Portugal NIM 1.8% 1.8% NIM 2.2% 2.2% -0.6% 807.8 803.3 +2.3% 1,391.3 1,423.6 2017 2018 International operations NIM 3.1% 3.1% +6.3% 583.4 620.3 2017 2018 2017 2018 10
Slide 11: Commissions boosted by increased business volumes
Commissions boosted by increased business volumes (Million euros) Fees and commissions Consolidated Portugal +4.3% 455.5 475.2 +2.6% 666.7 684.0 Market-related fees and 120.1 -0.7% 119.3 commissions 2017 2018 International operations Lower fees on investment products and capital markets Banking fees
Slide 12: Other income influenced by credit sales
Other income* influenced by credit sales (Million euros) Other income* Consolidated Portugal -43.5% -60.2% 139.5 88.3 Equity earnings + 35.1 dividends 93.4 78.9 2017 2018 89.8 Mandatory contributions 57.9 66.5 Includes -€49.4 million Net trading 148.4 on credit sales • Banking sector PT: 33.1 income
Slide 13: Recurring operating costs under control
Recurring operating costs under control, in spite of the impact from the reversal of salary cuts (Million euros) Operating costs Consolidated Portugal Impact from reversal of salary cuts: +€7.5 million +3.3% Recurring +2.1% 601.8 614.5 Recurring 968.4 1,000.5 +9.1% 587.6 641.2 +7.7% 1,027.2 954.2 57
Slide 14: 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% -1pp 79% vs. peers in vs. Euro-zone -37pp Portugal banks 86% 47% excluding non-usual items 49% 49% 49% Bank 1 52% 57% 2013 2018 Bank 2 52% 66% Cost to income 67%
Slide 15: Cost of risk keeps a favourable trend
Cost of risk keeps a favourable trend (Million euros) Impairment and provision charges Consolidated Portugal Cost of risk 140bp 105bp Cost of risk 122bp 92bp -35.0% 786.9 -35.0% 924.8 Other 253.8 511.1 120.6 Loans 533.1 390.5 Other 301.1 601.1 2017 2018 Loan-loss reserves 2,864 2,383 135.2 Internati
Slide 16: Relevant NPE reduction and strengthened coverage
Relevant NPE reduction and strengthened coverage (Million euros) Credit quality Consolidated Portugal NPE total coverage* 103% 109% -29.0% NPE coverage by NPE 6,754 43% 52% -2.0 billion LLRs 4,797 -27.6% NPE 7,658 -2.1 billion Other 3,131 5,547 Dec 17 Dec 18 2,442 International operations NPL>90d 4,
Slide 17: Agenda
Agenda Highlights Group • Profitability • Business activity • Capital Portugal International operations Key figures 17
Slide 18: 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 +5.2% +4.6% 74.0 50.9 53.3 70.3 Other 15.6 15.6 17.4 18.2 Off-BS funds 17.7 Term deposits 18.9 1.3 Demand deposits 16.4 19.5 Other BS funds 1.5 Dec 17 Dec
Slide 19: Strong business dynamics, with increasing performing loan portfolio
Strong business dynamics, with increasing performing loan portfolio (Billion euros) Loans to Customers (gross) Consolidated Portugal NPE: -27.6% (-€2.1 billion) NPE: -29.0% (-€2.0 billion) Performing: +5.1% (+€2.2 billion) Performing: +3.7% (+€1.1 billion) +0.2% 51.0 51.0 -2.1% 38.0 37.2 Mortgage 23
Slide 20: Comfortable liquidity position
Comfortable liquidity position Net loans to deposits ratio ECB funding (Billion euros) Eligible 12.8 16.9 assets -6pp 3.0 2.7 93% 87% Dec 17 Dec 18 Liquidity ratios (CRD IV/CRR) 218% 133% 100% Dec 17 Dec 18 NSFR (Net stable LCR (Liquidity funding ratio) coverage ratio) 20
Slide 21: Agenda
Agenda Highlights Group • Profitability • Business activity • Capital Portugal International operations Key figures 21
Slide 22: Strengthened capital
Strengthened capital Capital ratio Fully implemented CET1 capital ratio of 12.0%* (fully implemented) as of December 31, 2018 Increase from 11.9% as of December 31, 2017 due to earnings for the year, partially offset by the impact of +557 the IFRS9 adoption, by negative FX effects and by 14.5% m
Slide 23: Successful AT1 issue
Successful AT1 issue AT1 issue Breakdown by type of investor Insurers and Issuer: Banco Comercial Português, S.A. PFunds 9% Rating (M/S/F/D): Caa1/CCC+/B-/B low Banks 11% Amount: €400 million Asset managers Issue date: 31 January 2019 Hedge Funds 53% 27% Optional redemption: By initiative of the iss
Slide 24: Capital at adequate levels
Capital at adequate levels Leverage ratio Fully implemented, latest available data 5.4% 5.7% 6.0% 6.2% 4.0% Leverage ratio at 6.2% as of 3.0% December 31, 2018, a comfortable and comparatively FR DE ES IT strong figure in European banking RWA density High RWA density (55% at year- RWAs as % of a
Slide 25: Pension fund
Pension fund Key figures Pension fund (Million euros) Shares 13% Dec 17 Dec 18 Cash and Pension liabilities 3,050 3,066 other 45% Pension fund 3,166 3,078 Liabilities' coverage 104% 100% Bonds 34% Fund's profitability +4.2% +0.2% Actuarial differences +29 (98) Real estate 8% Assumptions Dec 17 Dez 1
Slide 26: Agenda
Agenda Highlights Group • Profitability • Business activity • Capital Portugal International operations Key figures 26
Slide 27: Increased net income
Increased net income (Million euros) Net income Banking income +76.5 1,351.6 1,313.6 115.5 39.0 2017 2018 2017 2018 Operating costs Includes non-usual negative impact of €26.7 million and impact from reversal of salary cuts (+€7.5 million) Net earnings of €115.5 in 2018, +€76.5 million compared to
Slide 28: Net interest income
Net interest income Net interest income (Million euros) -0.6% +25.8 807.8 +18.3 803.3 -22.1 -11.6 -6.6 -8.2 NIM 1.8% 1.8% 2017 Effect of cost Effect of Effect of Credit Credit rate Other 2018 of time wholesale cost securities volume effect (includes deposits portfolio effect IFRS9) Net interest in
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) 2017 2018 2.7% 2.7% -0.6% -0.7% 2017 2018 NIM Continued improvement in the spread of the portfolio 1.8% 1.8% of term deposits: from -0.7% in 2017 t
Slide 30: Commissions and other income
Commissions and other income* (Million euros) Fees and commissions Other income* 2017 2018 YoY -60.2% 88.3 Banking fees and commissions 392.2 411.0 +4.8% Cards and transfers 104.9 111.3 +6.0% 35.1 Loans and guarantees 104.6 108.9 +4.2% Bancassurance 78.1 81.2 +3.9% 2017 2018 Customer account related
Slide 31: Operating costs
Operating costs (Million euros) Operating costs Employees Impact from reversal of salary cuts: +€7.5 million +2.1% Recurring 601.8 614.5 -94 +9.1% 7,189 7,095 641.2 587.6 36.4 Depreciation 33.2 218.8 Dec 17 Dec 18 Other 222.1 administrative Branches costs Includes non-usual negative Includes non-usu
Slide 32: Very strong pace of NPE reduction since 2013
Very strong pace of NPE reduction since 2013 (Million euros) Non-performing exposures (NPE) • NPE in Portugal down to €4.8 billion as of December 12,783 -8.0 31, 2018, a €2.0 billion reduction from year-end 2017 10,921 billion 9,777 8,538 • This decrease is attributable to a €1.4 billion NPL> 90d 6,
Slide 33: Lower NPEs, with reinforced coverage
Lower NPEs, with reinforced coverage (Million euros) Non-performing exposures (NPEs) NPE build-up -29.0% Dec 18 Dec 18 6,754 vs.Dec 17 vs.Sep 18 Other NPE 4,797 Opening balance 6,754 5,546 2,696 +/- Net exits -779 -281 2,146 - Write-offs -448 -146 NPL>90d 4,058 2,651 - Sales -730 -322 Ending balance
Slide 34: NPE coverage
NPE coverage NPE total coverage* NPL>90d total coverage* 112% 109% 116% 111% 100% 100% 35% 26% Real estate 44% Real estate 37% collateral collateral 23% 71% 20% 66% 17% Cash, other 15% Cash, other fin.collat., EL gap fin.collat., EL gap 3% 58% 50% 2% 67% 57% LLRs LLRs 32% 26% Individuals Companies T
Slide 35: Foreclosed assets and corporate restructuring funds
Foreclosed assets and corporate restructuring funds Foreclosed assets Corporate restructuring funds (Million euros) (Million euros) -1.5% 1,778 1,022 1,007 Impairment 232 1,474 205 199 179 Industry Net value 1,546 -17.9% 1,269 823 828 RE/tourism Dec 17 Dec 18 Dec 17 Dec 18 Sales of foreclosed assets
Slide 36: Strong business dynamics leads to increased Customer funds and performing credit
Strong business dynamics leads to increased Customer funds and performing credit portfolio (Billion euros) Total Customers funds* Loans to Customers (gross) +4.6% 53.3 50.9 NPE: -29.0% (-€2.0 billion) Performing: +3.7% (+€1.1 billion) 14.4 Off-BS funds 14.2 -2.1% 38.0 37.2 1.2 Other BS 1.4 funds 18.
Slide 37: Credit now growing in Portugal
Credit now growing in Portugal Performing credit portfolio Breakdown of performing credit growth (Billion euros) Companies 45% +3.7% 32.4 31.2 +1.1 Consumer and other Mortgage 13% 42% 15.8 16.3 Mortgage • Performing credit portfolio in Portugal expands by Consumer 1.5 1.7 €1.1 billion (+3.7%) from D
Slide 38: Agenda
Agenda Highlights Group • Profitability • Business activity • Capital Portugal International operations Key figures 38
Slide 39: Positive contribution from international operations
Positive contribution from international operations (Million euros) Δ% Δ% Capital 2017 2018 ROE local currency euros ratio* Poland 159.8 178.4 +11.7% +11.3% 9.6% 23.8% Mozambique 85.1 94.1 +10.5% +10.5% 22.2% 39.0% Angola** Before IAS 29 impact 18.1 20.7 IAS 29 impact*** -18.1 0.8 Total Angola inclu
Slide 40: Growing net income
Growing net income (Million euros) Net income Banking income ROE 9.3% 9.6% +6.1% +11,7% 603.2 639.8 159.8 178.4 2017 2018 2017 2018 Eurobank acquisition (2Q19) strengthens geographic presence outside main cities, reinforces market share in non-mortgage retail loans and results in a Operating costs 2
Slide 41: Increased net interest income
Increased net interest income (Million euros) Net interest income* Operating costs (Includes contribution to the resolution fund and to the DGF) NIM 2.6% 2.6% +8.1% Cost to income 46.8% 46.5% 440.5 +5.4% 407.4 282.1 297.4 Other 142.2 +3.9% 147.7 Staff costs 139.9 +7.0% 149.7 2017 2018 2017 2018 Comm
Slide 42: Credit quality
Credit quality (Million euros) NPL>90d Loan-loss reserves Credit ratio Dec 17 Dec 18 Coverage ratio Dec 17 Dec 18 NPL>90d 2.8% 2.5% NPL>90d 109% 133% 318.4 319.6 426.3 348.5 Dec 17 Dec 18 Dec 17 Dec 18 Loan impairment (net of recoveries) NPL>90d accounted for 2.5% of total credit as of Cost of ris
Slide 43: Growing volumes
Growing volumes (Million euros) Customer funds Loans to Customers (gross) +17.7% excluding FX +12.2% mortgage loans 17,391 +11.5% Off-BS funds 15,499 1,855 12,695 -10.1% 118 11,383 2,063 Other BS 106 +11.0% 3,226 5,547 Mortgage +23.3% funds local currency 2,616 Term deposits 5,648 -1.8% Mortgage -2.
Slide 44: Growing net income
Growing net income (Million euros) Net income Banking income 24.2% 22.2% +7.8% ROE 241.6 +10.6% 224.2 85.1 94.2 2017 2018 2017 2018 Operating costs Net earnings of €94.2 million (+10.6%), with ROE of 22.2% +7.5% Increasing banking income (+7.8%), driven by higher net 85.0 91.4 interest income an
Slide 45: Growing income partially offset by the increase in operating costs
Growing income partially offset by the increase in operating costs (Million euros) Net interest income Operating costs Cost to income 37.9% 37.8% NIM 10.2% 10.3% +7.5% +5.9% 85.0 91.4 173.3 183.5 Other 47.9 +8.4% 52.0 Staff costs 37.1 +6.3% 39.4 2017 2018 2017 2018 Commissions and other income Emplo
Slide 46: Credit quality performance influenced by challenging environment
Credit quality performance influenced by challenging environment (Million euros) NPL>90d Loan-loss reserves Credit ratio Dec 17 Dec 18 Coverage ratio Dec 17 Dec 18 NPL>90d 14.3% 16.4% NPL>90d 68% 69% 93.2 90.5 137.7 131.5 Dec 17 Dec 18 Dec 17 Dec 18 Loan impairment (net of recoveries) NPL>90d rati
Slide 47: Business volumes reflect a conservative approach under a challenging environment
Business volumes reflect a conservative approach under a challenging environment (Million euros) Customer funds Loans to Customers (gross) +11.1% 1,571 1,413 -16.8% 964 Mortgage 11 -8.3% +13.0% Consumer and 166 802 777 -12.9% Term deposits 687 other 10 145 Companies 787 Demand -17.8% 647 726 +9.4% 7
Slide 48: Agenda
Agenda Highlights Group • Profitability • Business activity • Capital Portugal International operations Key figures 48
Slide 49: Key figures
Key figures Consolidated 2017 2018 2021 Active Customers 4.5 million 4.9 million >6 million Franchise Digital Customers 49% 55% >60% growth Mobile Customers 26% 34% >45% Cost to Income 43% 47% ≈40% (44% excluding non-usual items) (46% excluding non-usual items) RoE 3.3% 5.2% ≈10% Value CET1 11.9% 12
Slide 50: Awards in 2018
Awards in 2018 Millennium bcp: Best Consumer Digital Bank ActivoBank: Best Commercial Bank in in Portugal; Best Online Deposit, Credit and Portugal Investment Product Offerings in Western Europe; Best Information Security and Fraud ActivoBank: brand with best reputation, Management in Western Europe
Slide 51: Appendix
Appendix AGILE | MODERN | PERSONAL | SIMPLE | SUSTAINABLE 51
Slide 52: Sovereign debt portfolio
Sovereign debt portfolio Sovereign debt portfolio Sovereign debt maturity (Million euros) >8y, ≤10y Dec 17 Sep 18 Dec 18 YoY QoQ 2% >10y >5y, ≤8y 0% Portugal 3,636 6,335 6,609 +82% +4% 17% T-bills and other 585 971 853 +46% -12% ≤1y Bonds 3,051 5,364 5,755 +89% +7% 16% Poland 3,160 4,047 4,925 +56%
Slide 53: Sovereign debt portfolio
Sovereign debt portfolio (Million euros) Portugal Poland Mozambique Other Total Trading book* 37 161 0 0 198 ≤ 1 year 0 3 0 0 3 > 1 year and ≤ 2 years 33 8 0 0 41 > 2 years and ≤ 5 years 2 115 0 0 118 > 5 years and ≤ 8 years 1 33 0 0 34 > 8 years and ≤ 10 years 0 3 0 0 3 > 10 years 0 0 0 0 0 Banking
Slide 54: Diversified and collateralised portfolio
Diversified and collateralised portfolio Loan portfolio Consolidated Companies Loans per collateral 46% Mortgage 60% 27% 13% 47% Real guarantees Other guarantees Unsecured LTV of the mortgage portfolio in Portugal 16% 11% 14% 28% 11% 11% 11% Consumer/ 0-40 40-50 50-60 60-75 75-80 80-90 >90 other 8%
Slide 55: Consolidated earnings
Consolidated earnings Impact on (million euros) 2017 2018 YoY earnings Net interest income 1,391.3 1,423.6 +2.3% +32.4 Net fees and commissions 666.7 684.0 +2.6% +17.3 Other income* 139.5 78.9 -43.5% -60.6 Banking income 2,197.5 2,186.5 -0.5% -11.0 Staff costs -526.6 -592.8 +12.6% -66.2 Other admini
Slide 56: Consolidated balance sheet
Consolidated balance sheet (Million euros) 31 December 31 December 31 December 31 December 2018 2017 2018 2017 ASSETS LIABILITIES Cash and deposits at Central Banks 2,753.8 2,167.9 Financial liabilities at amortised cost Loans and advances to credit institutions repayable on demand 326.7 295.5 Resou
Slide 57: Consolidated income statement
Consolidated income statement Per quarter (Million euros) 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 Net interest income 368.1 344.8 342.8 365.2 370.8 Dividends from equity instruments 0.1 0.1 0.6 0.0 0.0 Net fees and commission income 172.1 167.8 172.4 169.9 174.0 Other operating income -5.2 -29.1 -61.0 1.7 -1.
Slide 58: Income statement (Portugal and International Operations)
Income statement (Portugal and International Operations) For the 12-month period ended December 31st, 2017 and 2018 (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 D ec 17 D ec
Slide 59: 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 60: 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, results from derec
Slide 61: Investor Relations Division
illenniu INVESTOR RELATIONS DIVISION Rui Coimbra, Head EQUITY DEBT AND RATINGS Luis Pedro Monteiro and Paula Dantas Henriques Luts Morais +351 21 1131 084 +351 21 1131337 investorsamillenniumbcp.pt Banco Comercial Portugués, S.A., a public company (sociedade aberta) having its registered office at P
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