Banco Comercial Portugues S.a. · EURONEXT:BCP

Banco Comercial Portugues — H1 2014 Earnings Presentation

60 slides from Banco Comercial Portugues's earnings presentation, July 2014

1. Slide 1: Earnings Presentation 1H 2014

   — EARNINGS PRESENTATION JULY 2014 1H 2014

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 registra

3. Slide 3: Agenda

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

4. Slide 4: Highlights

   Highlights Successful completion of the rights issue of 2,242 million euros (total demand of 2,734 million Capital euros) in order to allow the total reimbursement of 2,250 million euros of CoCos to the strongly Portuguese State * reinforced and above the Common equity tier I pro forma ** ratio at 1

5. Slide 5: Highlights

   Highlights Capital ratios Loans to deposit ratio* (%) Net loans to BS customer (%) funds 14.5% -6pp 12.5% 12.5% 122% 9.0% 116% 110% 106% phased-in * fully Jun 13 Jun 14 * implemented * Jun 13 Jun 14 CET I (CRDIV/ CRR) ** CT I (BoP) * Calculated based on customer deposits and net loans to customers (

6. Slide 6: Highlights

   Highlights Contribution of the international operations to Banking income net income (Million euros) +40.5% (Million euros) +12.8% 1,088.4 98.5 87.4 774.5 1H13 1H14 1H13 1H14 Operating costs Net new entries in NPL in Portugal (Million euros) (Million euros) -3.2% 1,890 596.1 -63.5% 576.7 919 336 1H1

7. Slide 7: Agenda

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

8. Slide 8: Rights issue of €2,242M…

   Rights issue of €2,242M…  Amount: € 2,242M  Reserved to the shareholders with transferable pre-emptive subscription rights  Subscription price : €0.065 per share Characteristics  Number of new shares: approx. 34,488 million issued  Subscription ratio: 7 new shares for 4 existing shares  Syndic

9. Slide 9: …with a successful completion

   …with a successful completion Participation by shareholder type Results Qualified 32% Results of Demand Supply the offer (m€) (m€) Retail 41% Subscription 2,215 2,242 99% Allocation of unsubscribed 601 26 23x shares Institucionals 27% Total 2,734 2,242 126% Share price evolution (€)  Participation

10. Slide 10: Allowing the anticipation of the CoCos repayment, complying with regulatory requirements

    ... allowing the anticipation of the CoCos repayment, complying with regulatory requirements and in line with market demands Consolidated CET I – CRDIV/CRR (phased-in) * ratio 11.9% 4.8% 4.9% 12.5% 0.8% Mar 14 Rights issue Reimb. of CoCos ** Other impacts 2Q14 Jun 14 *** RWA (M €) 45,968 43,773 CET

11. Slide 11: Pension Fund

    Pension Fund Main indicators Pension Fund (Million euros) Deposits Jun 13 Dec 13 Jun 14 and Others Shares 30% 27% Pension liabilities 2,304 2,533 2,759 Pension fund 2,417 2,547 2,786 Liabilities' coverage 117% 112% 112% Fund's profitability 0.6% 4.4% 11.0% Actuarial differences (45) (212) (2) Real E

12. Slide 12: Agenda

    Agenda  Main Highlights  Group • Capital • Liquidity • Profitability  Portugal  International operations  Conclusions 12

13. Slide 13: Stable customer deposits…

    Stable customer deposits… (Million euros) Customer funds Customer deposits in Portugal Consolidated +0.1% -0.3% 33,739 33,631 63,881 63,976 3,558 2,987 9,598 9,428 11,759 12,061 4,590 3,451 20,583 +3.1% 21,215 Jun 13 Jun 14 33,217 32,595 Individuals Companies Others ( includes public sector) Custome

14. Slide 14: … and credit evolution with a stabilizing trend

    … and credit evolution with a stabilizing trend (Million euros) Loans to customers (gross) Loans to customers (gross) in Portugal Consolidated -4.4% -4.4% 48,932 60,920 1,670 47,262 58,261 45,195 26,671 26,043 Jun 13 Write-offs Jun 14 and sales 3,555 3,574 Loans to customers (gross) in international

15. Slide 15: Continuation of the improvement in liquidity position

    Continuation of the improvement in liquidity position and current liquidity ratios higher than the future requirements (Billion euros) Commercial Gap * Loans to deposit ratio ** (BoP) Difference of net loans to BS Net loans to BS customer customer funds funds Jun 13 Jun 14 122% -6pp 116% -5.4 -3.3 1

16. Slide 16: Lower refinancing needs in the medium to long term

    Lower refinancing needs in the medium to long term and customer deposits as the main funding source (Billion euros) Refinancing needs of medium-long term debt Already repaid 5.2 4.9 5.5 ** 2.9 * 1.1 1.7 1.4 1.8 0.4 0.6 0.5 2009 2010 2011 2012 2013 1H14 2H14 2015 2016 2017 >2017 Improvement of the fu

17. Slide 17: Agenda

    Agenda  Main Highlights  Group • Capital • Liquidity • Profitability  Portugal  International operations  Conclusions 17

18. Slide 18: Net income before income tax already positive and showing recovery…

    Net income before income tax already positive and showing recovery… Consolidated (million euros) 1H13 1H14 Δ Net interest income 380.2 496.0 115.7 Of which: costs related with hybrids instruments (CoCo's) -134.7 -130.6 4.1 Of which: liability management 2011 -96.3 -79.1 17.2 Net fees and commissions

19. Slide 19: … but still affected by relevant factors

    … but still affected by relevant factors (Million euros) Net income Relevant factors with impact on net income Consolidated Net of taxes* (gross) -62.2 -89.4 Hybrids (CoCo’s) interest(-130.6) -54.2 Liability management 2011 (-79.1) -488.2 +87.3% Contribution to the banking setor and to -36.1 the gua

20. Slide 20: Net interest income increases in all the core operations

    Net interest income increases in all the core operations, with particular focus in Portugal (Million euros) Net interest income Portugal Consolidated +46.9% 207.7 +30.4% 496.0 141.4 380.2 1H13 1H14 International operations +20.7% 288.2 238.9 1H13 1H14 NIM 1.00% 1.37% NIM (excluding CoCo’s) 1.35% 1.7

21. Slide 21: Total fees and commissions increase driven by international operations

    Total fees and commissions increase driven by international operations (Million euros) Fees and commissions Portugal Consolidated +0.1% 216.7 217.0 1H13 1H14 YoY Banking fees and commissions 273.8 270.6 -1.2% Cards and transfers 88.1 96.5 9.5% Loans and guarantees 74.6 79.9 7.1% Bancassurance 36.7 3

22. Slide 22: Increase of net trading income in Portugal

    Increase of net trading income in Portugal (Million euros) Net trading income Portugal Consolidated 131.7 +229.6% 175.2 -1.8 1H13 1H14 Sale of loans -53.6 18.3 portfolio International operations 53.1 -20.9% 55.0 43.5 1H13 1H14 1H13 1H14 22

23. Slide 23: Reduction of costs in Portugal

    Reduction of costs in Portugal (Million euros) Operating costs Portugal Consolidated -3.2% -6.2% 374.3 596.1 351.1 576.7 Depreciation 33.3 -4.5% 31.8 Other -2.1% administrative 226.1 221.5 costs 1H13 1H14 International operations Staff costs -3.9% 336.6 323.4 +1.7% 221.7 225.6 1H13 1H14 Cost-to-inco

24. Slide 24: Provisioning in line with the strategic plan

    Provisioning in line with the strategic plan (Million euros) Loan impairments (net of recoveries) Portugal Consolidated -24.8% Cost of 156 bp risk 128 bp 439.4 474.0 330.6 371.6 1H13 1H14 1H13 1H14 International operations Cost of risk evolution (basis points) +18.7% Strategic plan 186 41.1 34.6 157

25. Slide 25: Less net new entries in NPL allows stabilization in credit quality ratios

    Less net new entries in NPL allows for the stabilization in credit quality ratios (Million euros) Consolidated Net new entries in NPL in Portugal Credit quality Credit ratio Jun 13 Jun 14 1,890 NPL 11.7% 11.3% -63.5% Credit at risk 12.6% 11.9% 919 7,144 6,577 336 1H12 1H13 1H14 Jun 13 Jun 14 Loan im

26. Slide 26: Diversified and collateralized credit portfolio

    Diversified and collateralized credit portfolio Loan portfolio Consolidated Companies Loans by collateral 49% Mortgage 59% 34% 7% 45% With real estate guarantees Com outras garantias Without guarantees LTV of mortgage portfolio in Portugal 14% 9% 11% 23% 10% 17% 15% 0-40 40-50 50-60 60-75 75-80 80-9

27. Slide 27: Agenda

    Agenda  Main Highlights  Group • Capital • Liquidity • Profitability  Portugal  International operations  Conclusions 27

28. Slide 28: Portugal: deleveraging effort…

    Portugal: deleveraging effort… (Million de euros) Customer funds Loans to customers (gross) -2.2% -7.6% 48,754 47,682 48,932 45,195 10,533 10,708 4,482 20,232 3,344 19,532 2,380 2,145 24,895 24,002 26,320 23,518 8,844 9,629 Jun 13 Jun 14 Jun 13 Jun 14 On-demand deposits Other BS customer funds Mortg

29. Slide 29: Net income improving with the increase in banking income and reduction in operating costs

    Net income improving with the increase in banking income and reduction in operating costs (Million euros) Net income  Net income improving with the increase in banking income and the reduction in operating costs -127.1  Banking income increased due to net interest margin and trading income improve

30. Slide 30: Increase in the net interest income in Portugal

    Increase in the net interest income in Portugal with the improvement in cost of deposits, although impacted by lower loan volumes Net interest income (Million euros) 2Q14 1H14 +46.9% vs.1Q14 vs.1H13 207.7 Cost of deposits effect +13.9 +87.4 141.4 Loans volume effect -9.7 -57.5 NPL effect +8.4 +24.7

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

    Continuation of strong efforts to reduce the cost of deposits, in line with the strategic plan Term deposits rate Credit portfolio rate (%) (%) 5.0% Companies New production 4.8 4.8 4.6 4.5 4.4 4.4 4.0% 4.2 Portfolio 3.0% Mortgage 2.0% 1.3 1.4 1.4 1.4 1.5 1.5 1.4 1.0% S/11 D/11 M/12 J/12 S/12 D/12 M

32. Slide 32: Positive performance of market commissions and lower banking commissions

    Positive performance of market commissions and lower banking commissions, but with an improvement in the last quarter (Million euros) 2Q14/ 1H13 1H14 YoY 1Q14 2Q14 1Q14 Banking fees and commissions 189.6 182.1 -4.0% 86.7 95.3 9.9% Cards and transfers 45.9 50.1 9.2% 22.7 27.4 20.7% Loans and guarante

33. Slide 33: Continuation of the progressive improvement in costs base in Portugal

    Continuation of the progressive improvement in costs base in Portugal aiming to achieve the strategic goals (Million euros) Operating costs Employees -6.2% -393 8,744 374.3 8,351 18.0 351.1 -8.5% 16.5 129.9 -7.1% 120.7 Jun 13 Jun 14 Branches 226.4 -5.5% -57 214.0 797 740 1H13 1H14 Depreciation Other

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 Jun 13 Jun 14 Provision coverage ratio Jun 13 Jun 14 NPL 13.9% 13.7% NPL 45% 43% Credit at risk 14.4% 13.9% Credit at risk 44% 42% 6,798 6,188 3,065 2,659 Jun 13 Jun 14

35. Slide 35: Reduction of foreclosed assets with an increase in coverage

    Reduction of foreclosed assets with an increase in coverage Foreclosed assets porfolio Number of properties sold (Million euros) -17.5% Coverage 21.6% 25.0% 1,483 1,224 1,474 1,389 319 348 1H13 1H14 Value of sold properties (Million euros) 1,155 1,041 +2.6% 116 119 Jun 13 Jun 14 Impairments Net valu

36. Slide 36: Agenda

    Agenda  Main Highlights  Group • Capital • Liquidity • Profitability  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% 1H13 1H14 local ROE euros currency International operations * 87.4 98.5 12.8% Poland 60.7 76.4 25.9% 26.3% 12% Mozambique 37.5 41.7 11.1% 2.9% 23% Angola 17.3 23.1 33.6% 26.1% 18% Other and non-controlling interests -28.

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) +4.3% 12,663 +3.3% 12,141 10,413 10,761 -3.0% 6,481 6,683 +18.7% 1,077 907 2,824 +13.4% 3,203 Jun 13 Jun 14 Jun 13 Jun 14 Mortgage Consumer Companies Excluded FX effect. €/PLN rates used: I

39. Slide 39: Net income growth driven by banking income increase and stable operating costs

    Net income growth driven by banking income increase and stable operating costs (Million euros) Net income + 25.9% 76.4  Net income grows 25.9%, with ROE of 12% 60.7  Banking income increase (+12.5%): increase of 21.9% in net interest income and 6.4% in commissions  Stable operating costs, reflect

40. Slide 40: Strong increase in core income with stable operating costs

    Strong increase in core income with stable operating costs (Million euros) Net interest income * Operating costs +21.9% +0.2% 175.2 143.7 132.0 132.3 65.8 67.9 66.2 64.5 1H13 1H14 1H13 1H14 Other administrative costs and depreciations Fees and commissions Staff costs +6.4% 71.5 76.1 Employees Branch

41. Slide 41: Stable credit quality with a high coverage level

    Stable credit quality with a high coverage level (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Jun 13 Jun 14 Coverage ratio Jun 13 Jun 14 Non-performing loans 2.7% 2.9% Non-performing loans 107% 105% 306 326 311 286 Jun 13 Jun 14 Loan impairment (net of recoveries) Cost

42. Slide 42: Mozambique: strong volumes growth

    Mozambique: strong volumes growth (Million euros) Customer funds Loans to customers (gross) +9.4% +19.9% 1,556 1,293 1,423 1,078 23 23 267 169 +58.3% +13.1% 1,003 886 Jun 13 Jun 14 Jun 13 Jun 14 Mortgage Consumer Companies Excluded FX effect. €/Metical rates used: Income Statement 42.97791667; Balan

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

    Net income benefited from banking income increase (Million euros) Net income  Net income increases 11.1%, with ROE of 23.2% +11.1%  Increase of 7.9% in banking income: increase of 41.7 37.5 19.9% in net interest income (benefited from business expansion) and increase of 12.2% in commissions  Oper

44. Slide 44: Consistent increase in net interest income and commissions

    Consistent increase in net interest income and commissions (Million euros) Net interest income Operating costs +19.9% +8.5% 66.4 55.4 42.8 46.5 4.3 5.0 18.1 19.4 20.4 22.2 1H13 1H14 1H13 1H14 Depreciation Other administrative costs Fees and commissions Staff costs +12.2% 21.0 Employees* Branches 18.

45. Slide 45: Credit quality and coverage

    Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Jun 13 Jun 14 Coverage ratio Jun 13 Jun 14 Non-performing loans 3.8% 3.5% Non-performing loans 168% 151% 69 69 46 41 Jun 13 Jun 14 Loan impairment (net of recoveries) Cost of 134 bp risk 77 bp Jun

46. Slide 46: Angola: strong volumes growth

    Angola: strong volumes growth (Million euros) Customer funds Loans to customers (gross) +37.8% 1,265 +55.3% 918 787 507 Jun 13 Jun 14 Jun 13 Jun 14 Excluded FX effect. €/Kwanza rates used: Income Statement 133.73083333; Balance Sheet 133.2000 46

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

    Net income increased driven by higher banking income (Million euros) Net income  Net income increases 33.6%, with ROE of +33.6% 17.9% 23.1  Increase of 15.3% in banking income: increase 17.3 of 28.9% in net interest income (benefited from business expansion) and increase of 6.6% in commissions  O

48. Slide 48: Strong growth in core income and operating costs in line with network expansion

    Strong growth in core income and operating costs in line with network expansion (Million de euros) Net interest income Operating costs +28.9% +9.6% 40.6 36.6 33.4 31.5 3.9 3.5 15.8 17.7 14.1 15.0 1H13 1H14 1H13 1H14 Depreciation Other administrative costs Fees and commissions Staff costs +6.6% Emplo

49. Slide 49: Credit quality and coverage

    Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Jun13 Jun14 Coverage ratio Jun13 Jun14 Non-performing loans 5.0% 4.3% Non-performing loans 111% 113% 38 34 28 25 Jun 13 Jun 14 Loan impairment (net of recoveries) Cost of 145 bp risk 78 bp Jun 13

50. Slide 50: Agenda

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

51. Slide 51: Progress on strategic plan metrics

    Progress on strategic plan metrics PHASES Priorities 1H13 1H14 2015 Initiatives Strengthening of capital ratios Demanding CET1 (phased-in) 12.5% >10% with the rights issue performed, economic na … Stronger balance sheet (fully 9.0% sale of non-life insurance business environment implemented) and sec

52. Slide 52: Appendixes

    Appendixes 52

53. Slide 53: Evolution of public debt portfolio

    Evolution of public debt portfolio (Million euros) Sovereign debt portfolio Sovereign debt total maturity Δ% Δ% <1 year Jun 13 Mar 14 Jun 14 annually quarterly 21% Portugal 6,552 6,363 6,514 -1% 2% T-bills 2,681 1,971 1,547 -42% -22% Bonds 3,871 4,392 4,967 28% 13% >1 year and Poland 2,132 1,033 1,1

54. Slide 54: Detail of public debt portfolio

    Detail of public debt portfolio (Million euros) Portugal Poland Mozambique Angola Romania Others Total Trading book 186 160 76 422 < 1 year 0 1 0 0 0 0 1 > 1 year and <2 years 14 17 0 0 0 0 31 > 2 year and <3 years 0 41 0 0 0 11 53 > 3 years 172 101 0 0 0 65 337 AFS book 4,515 1,036 345 393 42 5 6,3

55. Slide 55: Romania: costs control policy

    Romania: costs control policy (Million euros) Net income Banking income Operating costs -9.0% -16.8% 14.9 13.6 12.4 12.4 -1.0 -3.4 1H13 1H14 1H13 1H14 1H13 1H14 Loans to customers (gross) Customer deposits -7.7% -3.9%  Net income improvement due to 489 452 357 343 operating costs reduction effect,

56. Slide 56: Financial Statements

    Financial Statements DI =

57. Slide 57: Consolidated Balance Sheet and Income Statement

    Consolidated Balance Sheet and Income Statement 30 June 31 30 June 30 June 30 June 2014 December 2013 2014 2013 (Thousands of Euros) (Thousands of Euros) Assets Interest and similar income 1,349,673 1,437,891 Cash and deposits at central banks 1,927,947 2,939,663 1,735,451 Interest expense and simil

58. Slide 58: Consolidated income statement

    Consolidated income statement Quarterly evolution (Million euros) Quarterly Year-to-date Δ% 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 Jun 13 Jun 14 14 / 13 Net interest income 201.0 233.5 234.3 236.4 259.6 380.2 496.0 30.4% Dividends from equity instruments 1.5 0.2 2.0 3.3 2.5 1.5 5.7 >100% Net fees and commiss

59. Slide 59: Consolidated income statement (Portugal and International operations)

    Consolidated income statement (Portugal and International operations) For the 6 months period ended 30th of June, 2013 and 2014 (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

60. Slide 60: Investor Relations Division

    Investor Relations Division Rui Coimbra, Head of Investor Relations Investor Relations Reporting and Ratings João Godinho Duarte, CFA 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 publ

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