Banco Comercial Portugues S.a. · EURONEXT:BCP

Banco Comercial Portugues — Q1 2015 Earnings Presentation

60 slides from Banco Comercial Portugues's earnings presentation, May 2015

  1. Slide 1: Earnings Presentation 3M 2015

    EARNINGS PRESENTATION 3M 2015 MAY 2015

  2. Slide 2: Disclaimer

    Disclaimer This document is not an offer of securities for sale in the United States, Canada, Australia, Japan or any other jurisdiction. Securities may not be offered or sold in the United States unless they are registered pursuant to the US Securities Act of 1933 or are exempt from such registrati

  3. Slide 3: Agenda

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

  4. Slide 4: Highlights

    Highlights • Return to profits. • Net profit at €70.4 million in the 1st quarter of 2015, compared with €40.7 losses in the same period of 2014. Profitability • Core net income* up by 89% to €221.7 million in 1Q15 from €117.4 million in 1Q14, reflecting Return to profits increased net interest incom

  5. Slide 5: Highlights

    Highlights Net income Return to profits Net income in Portugal (Million euros) after 4 years (Million euros) +€111.1 +€102.9 million million 70.4 14.8 -40.7 -88.2 1Q14 1Q15 1Q14 1Q15 Contribution of the international operations Capital ratios (CET1 – CRD IV / CRR)* (Million euros) (%) +14.8% 54.9 11

  6. Slide 6: Highlights

    Highlights Banking income in Portugal Net interest income in Portugal (Million euros) (Million euros) +49.9% 438.6 +80.8% 175.4 292.6 97.0 1Q14 1Q15 1Q14 1Q15 Operating costs in Portugal Loans to deposits ratio* (Million euros) (%) Net loans to BS Customer funds -8.7% -7pp 172.6 116% 157.6 108% 106%

  7. Slide 7: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 7

  8. Slide 8: 1Q15 earnings: return to profits…

    1Q15 earnings: return to profits… Impact on (million euros) 1Q14 1Q15 earnings Net interest income 236.4 328.4 +92.0 Of which: costs related with hybrids instruments (CoCos) -66.2 -15.7 +50.5 Net fees and commissions 164.6 169.9 +5.3 Other operating income 113.2 190.1 +76.9 Banking income 514.3 688.

  9. Slide 9: … after 4 years of losses

    … after 4 years of losses (Million euros) Net income Consolidated 70.4 1Q: -40.7 -226.6 -740.5 -848.6 -1,219.1 2011 2012 2013 2014 1Q15 9

  10. Slide 10: Core net income improves, both in Portugal and in international operations

    Core net income* improves, both in Portugal and in international operations (Million euros) Core net income* Portugal Consolidated +333.7% +88.8% 123.5 221.7 28.5 1Q14 1Q15 117.4 International operations +10.4% 89.0 98.2 1Q14 1Q15 1Q14 1Q15 * Core net income = net interest income + net fees and comm

  11. Slide 11: Net interest income increases, particularly in Portugal

    Net interest income increases, particularly in Portugal (Million euros) Net interest income Portugal Consolidated +80.8% 175.4 +38.9% 328.4 97.0 236.4 1Q14 1Q15 International operations +9.7% 153.0 139.4 1Q14 1Q15 Net interest margin 1.31% 1.94% Excluding CoCos 1.67% 2.04% 1Q14 1Q15 11

  12. Slide 12: Increase in fees and commissions driven by international operations

    Increase in fees and commissions driven by international operations (Million euros) Fees and commissions Portugal Consolidated +1.6% 1Q14 1Q15 YoY 104.1 105.8 Banking fees and commissions 129.7 139.1 +7.3% Cards and transfers 45.9 42.2 -8.1% Loans and guarantees 38.8 41.5 +6.9% Bancassurance 18.2 19

  13. Slide 13: Increased net trading income, benefiting from gains in public debt portfolio

    Increased net trading income, benefiting from gains in public debt portfolio (Million euros) Net trading income Portugal Consolidated Potential gains on the Portuguese public debt portfolio: +83.2% €258 million at March 31, 2015 163.8 +78.8% 200.1 89.4 1Q14 1Q15 111.9 International operations +61.4%

  14. Slide 14: Cost reduction proceeds in Portugal

    Cost reduction proceeds in Portugal (Million euros) Operating costs Portugal Consolidated -8.7% 172.6 -2.5% 157.6 283.6 276.6 Depreciation 15.9 +4.9% 16.7 Other administrative 107.6 -0.8% 106.7 costs 1Q14 1Q15 International operations +7.2% Staff costs 111.0 118.9 160.2 -4.3% 153.3 1Q14 1Q15 1Q14 1Q

  15. Slide 15: Higher provisioning charges…

    Higher provisioning charges… (Million euros) Loan impairment (net of recoveries) Portugal Consolidated +4.5% 129bp Cost of 142bp risk 171.6 179.4 205.6 191.7 1Q14 1Q15 International operations +30.1% 26.2 20.2 1Q14 1Q15 1Q14 1Q15 15

  16. Slide 16: … resulting in stronger coverage

    … resulting in stronger coverage (Million euros) Credit quality Loan impairment provisions (balance sheet) Credit ratio Mar 14 Mar 15 Coverage ratio Mar 14 Mar 15 NPL 11.2% 11.6% NPL 51% 54% Credit at risk 11.7% 12.1% Credit at risk 49% 51% 6,666 6,722 3,607 NPL (non- 3,422 performing loans) Mar 14

  17. Slide 17: Diversified and collateralised loan portfolio

    Diversified and collateralised loan portfolio Loan portfolio Consolidated Companies Loans per collateral 48% Mortgage 60% 32% 8% 45% Real guarantees Other guarantees Unsecured LTV of mortgage portfolio in Portugal 15% 10% 12% 25% 10% 17% 11% 0-40 40-50 50-60 60-75 75-80 80-90 >90 Consumer 7%  Loans

  18. Slide 18: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 18

  19. Slide 19: Deposits increase in Portugal and in international operations

    Deposits increase in Portugal (both individuals’ and companies’) and in international operations (Million euros) Individuals’ and Customer funds Customer deposits in Portugal companies’ deposits up by 5.7% from March 2014 Consolidated 0% +2.6% 34,333 34,293 64,720 66,383 4,315 -40.8% 2,555 9,291 +2.

  20. Slide 20: Credit to companies in Portugal increases again

    Credit to companies in Portugal increases again (Million euros) Credit to companies Loans to Customers (gross) Portugal in Portugal increases again Consolidated 46,632 -2.2% 43,784 -305 -174 +170 43,475 59,392 58,102 26,252 26,033 Mar 14 Dec 14 WO and Individuals Companies Mar 15 sales 3,495 4,175 I

  21. Slide 21: Continued improvement of the liquidity position

    Continued improvement of the liquidity position, current liquidity ratios exceed future requirements Commercial gap* Loans to deposits ratio** (Bank of Portugal) (Billion euros) Difference between BS Net loans to BS Customer funds Customer funds and net loans Mar 14 Mar 15 116% -7pp 108% -0.9 106% -

  22. Slide 22: Lower refinancing needs in the medium to long term

    Lower refinancing needs in the medium to long term, Customer deposits are the main funding source Refinancing needs of medium-long term debt (Billion euros) Already repaid To be repaid 5.2 4.9 5.5 ** 2.9 * 3.0 1.1 1.7 0.1 0.4 0.6 0.7 2009 2010 2011 2012 2013 2014 1T15 2015 2016 2017 >2017 Improvemen

  23. Slide 23: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 23

  24. Slide 24: Profitability and specific measures strengthen capital figures…

    Profitability and specific measures strengthen capital figures…  Capital ratios strengthened to +42bp 9.9% 9.9% on a fully implemented +46bp +16bp basis and to 11.8% according to Common 9.5% 8.9% phased-in criteria, as a result Equity Tier 1 of: ratio — Sale of a 15.4% stake in Bank Fully Millenniu

  25. Slide 25: … not yet including the impact of the Public Exchange Offer

    … not yet including the impact of the Public Exchange Offer, to raise them to European benchmark levels Terms and conditions Transaction announcement was well received by the market Closing stock price from announcement date (17 april 2015)  Offer targets domestic market; offering circular to be su

  26. Slide 26: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 26

  27. Slide 27: Portugal: deleveraging effort improves liquidity

    Portugal: deleveraging effort improves liquidity (Million euros) Customer funds Individuals’ and Loans to customers (gross) companies’ deposits up 5.7% vs March 2014 -0.8% -6.8% 48,658 48,256 46,632 43,475 10,747 11,271 3,579 2,692 19,725 18,971 2,144 25,407 24,534 2,488 24,763 22,016 8,925 9,760 Ma

  28. Slide 28: Net income improves, as banking income increases and operating costs decrease

    Net income improves, as banking income increases and operating costs decrease (Million euros) Net income  Improved net income, resulting from an increased banking income and a reduction in 14.8 operating costs  The increase in banking income reflects higher core income and trading income  Lower o

  29. Slide 29: Improvement trend on core income and reduction trend on operating costs in Portugal

    Improvement trend on core income and reduction trend on operating costs in Portugal are in place Core income* Operating costs* (Million euros) (Million euros) 288 281 247 185 185 183 212 204 201 224 181 179 189 173 173 169 Commissions 166 158 Net Interest Income 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q

  30. Slide 30: Increase on net interest income in Portugal reflects improvement in cost of deposits

    Increase on net interest income in Portugal reflects the improvement in cost of deposits, although impacted by lower loan volumes Net interest income Breakdown of net interest income growth (Million euros) (Million euros) 176 175 1Q15 vs. 1Q15 144 4Q14 vs.1Q14 106 96 97 111 Effect of cost of time de

  31. Slide 31: Continued strong efforts to reduce the cost of deposits

    Continued strong efforts to reduce the cost of deposits, in line with strategic plan Rate on term deposits portfolio Rate on credit portfolio 4.3% 5.0% Companies 4.1% 3.8% 3.5% 4.0% 3.1% 2.9% 2.7% 2.5% 2.4% 3.0% 2.2% 2.0% 1.8% 1.7% 1.5% 2.0% Mortgage 1.0% 0.0% D-11 M-12 J-12 S-12 D-12 M-13 J-13 S-13

  32. Slide 32: Increased commissions, benefiting from early repayment of State-guarantees

    Increased commissions, benefiting from early repayment of State-guarantees (Million euros) 1Q14 1Q15 YoY Banking fees and commissions 86.7 93.7 +8.1% Cards and transfers 22.7 23.3 +2.5% Loans and guarantees 30.3 28.4 -6.5% Bancassurance 18.2 19.1 +5.3% Current account related 19.3 18.9 -2.4% State g

  33. Slide 33: Continued reduction in costs in Portugal, on target with strategic goals

    Continued reduction in costs in Portugal, on target with strategic goals (Million euros) Operating costs Employees -821 -8.7% 8,475 172.6 7,654 Depreciation 8.3 -6.7% 157.6 7.7 Other administrative 58.4 -2.1% costs 57.2 Mar 14 Mar 15 Branches -53 Staff costs 748 105.9 -12.4% 695 92.8 1Q14 1Q15 Mar 1

  34. Slide 34: Credit quality shows signs of stabilization

    Credit quality shows signs of stabilization (Million euros) Credit quality Loan impairment provisions (balance sheet) Credit ratio Mar 14 Mar 15 Coverage ratio Mar 14 Mar 15 NPL 13.4% 14.3% NPL 48% 50% Credit at risk 13.6% 14.4% Credit at risk 47% 50% 6,268 6,223 2,989 3,116 NPL (non- performing loa

  35. Slide 35: Foreclosed assets sale above book value, confirming appropriate coverage

    Foreclosed assets sale above book value, confirming appropriate coverage Assets for sale Number of properties sold (Million euros) -21.0% 619 Coverage 26.3% 19.3% 489 1,494 1,379 288 363 1Q14 1Q15 Book value of sold properties (Million euros) 1,206 Sale value 1,016 -14.3% 56 48 59 56 Mar 14 Mar 15 I

  36. Slide 36: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 36

  37. Slide 37: Significant net income growth in international operations

    Significant net income growth in international operations (Million euros) Δ% Δ% 1Q14 1Q15 local ROE euros currency International operations* 47.8 54.9 +14.8% Poland 37.5 39.0 +3.9% +4.9% 11% Mozambique 22.6 25.9 +14.9% +28.5% 22% Angola 12.7 15.9 +25.3% +41.5% 19% Other and non-controlling interests

  38. Slide 38: Poland: Customer funds and loans to Customers growth

    Poland: Customer funds and loans to Customers growth (Million euros) Customer funds Loans to customers (gross) +8.7% +8.5% 13,807 11,737 12,699 10,818 7,028 6,635 +5.9% 1,031 1,253 + 21.5% 3,152 + 9.6% 3,456 Mar 14 Mar 15 Mar 14 Mar 15 Mortgage Consumer Companies FX effect excluded. €/Zloty constant

  39. Slide 39: Net income growth

    Net income growth (Million euros) Net income +3.9%  Net income grows 3.9%, with ROE of 11.3%, in spite of a difficult environment as long exchange rates 37.5 39.0 (CHF) and interest rates are concerned  Increased banking income increase (+0.3%) reflects the combined impact of stable net interest i

  40. Slide 40: Revenues and costs in line with 1Q14

    Revenues and costs in line with 1Q14 (Million euros) Net interest income* Operating costs -1.5% -0.1% 85.5 84.2 65.9 65.8 33.5 32.7 32.4 33.2 1Q14 1Q15 1Q14 1Q15 Staff costs Other admin costs + depreciation Fees and commissions Employees Branches +0.8% +122 37.3 37.6 5,878 6,000 435 -17 418 Mar 14 M

  41. Slide 41: Stable credit quality, strong coverage

    Stable credit quality, strong coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Mar 14 Mar 15 Coverage ratio Mar 14 Mar 15 NPL 3.0% 2.9% NPL 102% 101% 330 346 343 324 Mar 14 Mar 15 NPL (non- performing Loan impairment (net of recoveries) loans) 63bp Cost of 60bp ri

  42. Slide 42: Mozambique: strong volume growth

    Mozambique: strong volume growth (Million euros) Customer funds Loans to customers (gross) +14.8% +12.8% 1,933 1,551 1,375 25 1,684 25 322 285 +12.9% 1,204 1,065 +13.1% Mar 14 Mar 15 Mar 14 Mar 15 Mortgage Consumer Companies FX effect excluded. €/Metical constant as at March 2015: Income Statement 3

  43. Slide 43: Net income benefited from increased banking income

    Net income benefited from increased banking income (Million euros) Net income  Net income increases 14.9%, with ROE at +14.9% 22.2% 25.9  Increase of 16.9% in banking income: net 22.6 interest income up by 7.8%, benefitting from business expansion, and 8.2% increase in commissions  Operating cost

  44. Slide 44: Strong growth in core income and operating costs impacted by network expansion

    Strong growth in core income and operating costs impacted by network expansion (Million euros) Net interest income Operating costs +7.8% +11.4% 25.6 28.5 36.4 39.2 2.7 3.2 10.6 12.2 12.3 13.1 1Q14 1Q15 1Q14 1Q15 Depreciation Staff costs Other administrative costs Fees and commissions Employees* Bran

  45. Slide 45: Credit quality and coverage

    Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Mar 14 Mar 15 Coverage ratio Mar 14 Mar 15 NPL 3.8% 4.3% NPL 146% 125% 76 83 67 52 Mar 14 Mar 15 NPL (non- performing Loan impairment (net of recoveries) loans) Cost of 115bp risk 130bp 5.1 4.0 Ma

  46. Slide 46: Angola: strong credit growth, keeping a comfortable liquidity position

    Angola: strong credit growth, keeping a comfortable liquidity position (Million euros) Customer funds Loans to customers (gross) +4.9% 1,547 1,475 +36.5% 1,097 803 Mar 14 Mar 15 Mar 14 Mar 15 FX effect excluded. €/Kwanza constant as at March 2015: Income Statement 118.05166667; Balance Sheet 116.100

  47. Slide 47: Net income increase driven by higher banking income

    Net income increase driven by higher banking income (Million euros) Net income  Net income increases 25.3%, with ROE at 18.9% +25.3%  Increase of 26.8% in banking income strongly influenced by a 41.3% increase in 15.9 net interest, benefiting from business 12.7 expansion  Operating costs increase

  48. Slide 48: Strong growth in core income and operating costs impacted by network expansion

    Strong growth in core income and operating costs impacted by network expansion (Million euros) Net interest income Operating costs +13.6% +41.3% 30.5 20.1 22.8 21.6 2.2 2.9 9.7 10.1 8.2 9.8 1Q14 1Q15 1Q14 1Q15 Depreciation Staff costs Other administrative costs Fees and commissions Employees Branche

  49. Slide 49: Credit quality and coverage

    Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Mar 14 Mar 15 Coverage ratio Mar 14 Mar 15 NPL 4.9% 7.8% NPL 105% 67% 58 41 85 Mar 14 Mar 15 NPL (non- performing Loan impairment (net of recoveries) loans) 40 169bp Cost of 56bp risk 4.6 1.1 Mar

  50. Slide 50: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 50

  51. Slide 51: Progress on 2012 strategic plan metrics

    Progress on 2012 strategic plan metrics Actual Strategic plan Phases Priorities 1Q14 1Q15 2015 Initiatives Demanding Stronger capital, reflecting CET1* improved profitability, sale of 15.4% economic Stronger balance sheet (phased-in) 12.0% 11.8% … in Millennium Poland and gains on environment 2012-2

  52. Slide 52: Appendix

    Appendix 52

  53. Slide 53: Millennium bcp: a leading bank, better prepared for the future

    Millennium bcp: a leading bank, better prepared for the future 1 2 Poland  Universal banking model; strong Leading Unique Loans: €12 billion focus on Retail and Companies privately-held international Customer funds: €14 billion Bank in  Largest privately-held Bank in presence, 418 branches Portuga

  54. Slide 54: Sovereign debt portfolio

    Sovereign debt portfolio Sovereign debt portfolio Total sovereign debt maturity (Million euros) <1 year Δ% Δ% Mar 14 dez 14 Mar 15 annually quarterly 21% Portugal 6,363 4,688 4,487 -29.5% -4% >1 year and T-bills 1,971 815 452 -77.1% -44% <2 years Bonds 4,392 3,873 4,034 -8.1% +4% 9% >3 years Poland

  55. Slide 55: Sovereign debt portfolio

    Sovereign debt portfolio (Million euros) Portugal Poland Mozambique Angola Other Total Trading book 189 467 74 729 < 1 year 4 194 0 0 0 198 > 1 year and <2 years 0 92 0 0 11 103 > 2 year and <3 years 0 136 0 0 63 199 > 3 years 184 44 0 0 0.0040 228 Banking book* 4,298 1,684 571 494 58 7,105 < 1 year

  56. Slide 56: Financial Statements

    Financial Statements 56

  57. Slide 57: Consolidated Balance Sheet and Income Statement

    Consolidated Balance Sheet and Income Statement 31 March 31 31 March 31 March 31 March 2015 December 2014 2015 2014 2014 (T housands of Euros) (T housands of Euros) Assets Interest and similar income 607,633 671,231 Cash and deposits at central banks 2,382,977 1,707,447 2,449,049 Interest expense an

  58. Slide 58: Consolidated Income Statement

    Consolidated Income Statement Per quarter (Million euros) 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 Net interest income 236.4 259.6 295.0 325.2 328.4 Dividends from equity instruments 3.3 2.5 0.1 0.1 2.0 Net fees and commission income 164.6 176.5 165.0 174.7 169.9 Other operating income -15.0 62.4 -13.8 -22.2 -

  59. Slide 59: Consolidated Income Statement (Portugal and International Operations)

    Consolidated Income Statement (Portugal and International Operations) For the 3 months period ended 31st March, 2014 and 2015 (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.) M ille nnium A ngo la O t he r in

  60. Slide 60: Investor Relations Division

    Investor Relations Division Rui Coimbra, Head of Investor Relations Investor Relations Reporting and Ratings Luís Pedro Monteiro Luís Morais Paula Dantas Henriques Lina Fernandes Tl: +351 21 1131 084 Tl: + 351 21 1131 337 Email: Investors@millenniumbcp.pt Banco Comercial Português, S.A., a public co

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