Banco Comercial Portugues S.a. · EURONEXT:BCP
Banco Comercial Portugues — 9M 2016 Earnings Presentation
62 slides from Banco Comercial Portugues's earnings presentation, 2016
Slide 1: Earnings Presentation 9M 2016
Millennium bcp EARNINGS PRESENTATION 9M 2016
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
Slide 3: Agenda
Agenda Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 3
Slide 4: Highlights
Highlights • Earnings excluding non-usual items* improves by €67.9 million, efficiency improves by 3pp and balance sheet strengthens, with NPE total coverage** Summary now at 99%; total earnings significantly affected by non-usual impairment charges related to the legacy portfolio, aimed at reinforc
Slide 5: Highlights
Highlights • Commercial gap improved further, with net loans as a percentage of on-balance sheet Customers funds now standing at 97%. Business performance • ECB funding usage down to €4.9 billion (€4.0 billion of Healthy balance sheet which TLTRO) from €5.9 billion as at September 30, 2015. • 5.4 mi
Slide 6: Highlights
Highlights Core net income* Net income excluding non-usual items** (Million euros) (Million euros) +51.7 665.8 +67.9 614.1 74.5 6.5 9M15 9M16 9M15 9M16 Net income 264.5 -251.1 Loans to deposits ratio*** Phased-in capital ratio (CET1 – CRD IV / CRR)**** Net loans to on-BS Customers funds Fully loaded
Slide 7: Highlights
Highlights Core net income* Core income (net interest income + net commissions) (Million euros) (Million euros) +4.6% +13.7% 886.1 421.5 370.6 847.4 9M15 9M16 9M15 9M16 Operating costs Loans impairment in Portugal (Million euros) (Million euros) Cost to core Cost of 56.3% 52.4% 172bp 270bp income -2
Slide 8: Highlights
Highlights Individuals Companies Acquired over 100,000 new New production of over €1bn Customers Customers in 2016, (+7% Small in loans to small companies YoY) companies until September 2016 Over 575,000 active users; New €70 million protocol with #1 in Customer satisfaction Start ups EIB to finance
Slide 9: Agenda
Agenda Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 9
Slide 10: Earnings excluding non-usual items improve
Earnings excluding non-usual items improve Impact on (million euros) 9M15 9M16 earnings Core net income 614.1 665.8 +51.7 Mandatory contributions (Portugal and Poland) -47.6 -96.4 -48.9 Other operating income 141.5 189.2 +47.7 Operating net income (bef. impairment and provisions) 708.0 758.5 +50.5 I
Slide 11: Earnings excluding non-usual items improve...
Earnings excluding non-usual items improve... (Million euros) -515.6 Total impact : -583.6 264.5 -272.9 -282.0 -251.1 +67.9 -75.7 +47.1 Net income Impact of lower Impact of Impact of Impact of Visa Improvement to Net income 9M15 gains on additional devaluation transaction earnings 9M16 Portuguese im
Slide 12: Core net income reflecting strong performance in Portugal
… as well as core net income, reflecting strong performance in Portugal (Million euros) Core net income* Portugal Consolidated +13.7% 421.5 370.6 +8.4% 665.8 614.1 9M15 9M16 International operations +15.6% w/o FX impact +0.3% 243.5 244.3 9M15 9M16 9M15 9M16 * Core net income = net interest income +
Slide 13: Net interest income and Euribor decrease
Net interest income: impact of the significant decrease of Euribor rates dampened by a lower cost of deposits... (Million euros) Net interest income Portugal Consolidated Net interest margin 1.4% 1.6% +5.7% Net interest margin 1.7% 1.9% 513.7 543.0 Excluding CoCos 1.8% 2.0% +3.5% 907.0 876.6 9M15 9M
Slide 14: FX devaluation led to lower commissions
… whereas FX devaluation led to lower commissions (Million euros) Fees and commissions Portugal Consolidated +2.8% 333.7 343.2 9M15 9M16 YoY Banking fees and commissions 402.5 391.7 -2.7% Cards and transfers 119.6 107.8 -9.8% 9M15 9M16 Loans and guarantees 122.1 119.8 -1.9% Bancassurance 56.5 57.9 +
Slide 15: Performance of other income
Performance of other income influenced by gains on PT sovereign debt in 2015, and by gains on the Visa transaction and higher regulatory contributions in 2016 (Million euros) Other income Portugal Consolidated -61.8% 481.0 -75.8% 407.8 98.5 183.8 9M15 9M16 International operations +16.5% 9M15 9M16 8
Slide 16: Cost reduction continues...
Cost reduction continues... (Million euros) Operating costs Portugal Consolidated Cost to core income 56.3% 52.4% Cost to core income 55.3% 52.0% -2.5% -5.0% 476.8 464.7 760.5 722.4 Depreciation 41.0 -9.7% 37.0 Other 289.3 -5.0% 9M15 9M16 administrative 274.9 costs Operações internacionais Cost to c
Slide 17: One of the most efficient banks in Portugal and Eurozone
... making Millennium bcp one of the most efficient banks in Portugal and in the Eurozone Cost to core income* Cost to core income* Latest available data -34pp vs. peers in vs. Euro-zone Portugal banks 85.7% Cost-income 46.0% 64.0% 55.0% 52.0% 52% 52% Bank 1 75% 59% 2013 2014 2015 9M16 Bank 2 64% 86
Slide 18: Reinforced balance sheet with additional impairment and provisions
We have reinforced the balance sheet with a significant amount of additional impairment and provision charges... (Million euros) Impairment and provisions Portugal Consolidated +59.4% +52.3% 1,051 1,113.0 234.2 659 Other impairment 242.8 and provisions 114.1 Loan impairment, 816.7 730.7 net of recov
Slide 19: Lower delinquency and increased coverage
… with lower delinquency and increased coverage (Million euros) Credit quality Loan loss reserves % of NPL>90d % 11.5% 11.0% NPL>90d 55.5% 65.5% -8.3% 6,334 3,566 3,804 5,808 Sep 15 Sep 16 Sep 15 Sep 16 Total coverage* Decrease in NPL>90d ratio to 11.0% at September 30th 2016 from 11.5% at the 117
Slide 20: Diversified and collaterised portfolio
Diversified and collaterised portfolio Loan portfolio Consolidated Companies 46% Loans by collateral Mortgage 59% 33% 8% 46% Real guarantees Other guarantees Unsecured LTV of mortgage portfolio in Portugal 14% 10% 13% 27% 10% 14% 12% 0-40 40-50 50-60 60-75 75-80 80-90 >90 Consumer/ other 8% Loans
Slide 21: Agenda
Agenda Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 21
Slide 22: Deposits influenced by FX impact; individuals in Portugal stand out
Deposits influenced by FX impact in international operations; individuals in Portugal stand out (Million euros) Customer funds Customer deposits in Portugal Consolidated -0.4% Other (inc 34,480 34,334 public sector) 2,120 -15.2% 1,799 63,757 63,354 Off-BS Companies funds 12,271 12,779 and 32,359 +0.
Slide 23: Credit portfolio reflects support to key business sectors
Credit portfolio reflects support to the economy in key business sectors (Million euros) Loans to Customers (gross) Portugal Consolidated -4.7% -4.6% 55,137 42,265 40,291 Reduction of exposure to construction/real 52,610 estate activities (-17%); strong performance of Mortgage 18,692 17,902 mining a
Slide 24: Continued improvement of the liquidity position
Continued improvement of the liquidity position Commercial gap* Loans to deposits ratio* (Billion euros) Difference between BS Net loans to BS Customer Customer funds and net loans funds -5pp +1.8 105% 100% +0.1 100% -0.1 97% -2.5 +2,6 Sep 15 Sep 16 Sep 15 Sep 16 Liquidity ratios (CRD IV/CRR) Comm
Slide 25: Lower refinancing needs, deposits main funding source
Lower refinancing needs in the medium to long term, Customer deposits are the main funding source Debt repayments (medium-long term) ECB funding (Billion euros, CoCos not included) (Billion euros) 5.9 Already repaid To be repaid 4.9 TLTRO 1.5 3.3 4.0 1.6 1.3 Other 4.4 0.4 0.5 0.9 Average 9M16 4Q16 2
Slide 26: Agenda
Agenda Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 26
Slide 27: Capital at adequate levels
Capital at adequate levels Common Equity Tier 1 ratio Common Equity Tier 1 ratio* Phased-in, latest available data vs. Euro-zone 13.2% banks 12.2% 10.0% 9.5% 12.2% Sep 15 Sep 16 Sep 15 Sep 16 11.7% Phased-in Fully implemented RWAs 43.9 38.3 43.3 37.8 (€MM) 12.7% Common equity Tier 1 ratio of 12.2%
Slide 28: Capital above minimum requirements, high leverage ratios
Capital above minimum requirements, with high leverage ratios and RWA density From equity to CET1 capital RWA density (Million euros, September 2016) RWAs as % of assets, latest available information Phased-in: 12.2% +750 Deductions 9.5% CET1 ratio 52% 4,067 fully imp. 45% 46% +78 3,565 -829 -284 -2
Slide 29: Agenda
Agenda Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 29
Slide 30: Portugal: deleveraging improves liquidity position
Portugal: deleveraging improves liquidity position (Million euros) Customer funds Loans to Customers (gross) -0.5% 47,550 47,301 -4.7% Off-BS 42,265 funds 10,844 11,428 40,291 Other BS 2,226 funds 1,539 Mortgage 18,692 17,902 Term 22,942 20,716 Consumer deposits and other 2,297 2,473 Companies 21,27
Slide 31: Earnings excluding non-usual items improve
Earnings excluding non-usual items improve (Million euros) Net income excluding non-usual items Net income of -€394.3 million in the first -42.5 nine months of 2016. Net income of -€42.5 million in the first -157.5 nine months 2016 excluding non-usual +115.0 items, a €115.0 million improvement 9
Slide 32: Improvement trend on core income and operating costs in Portugal
Improvement trend on core income and operating costs in Portugal continues Core net income* Core Income (Million euros) (Million euros) +4.6% +13.7% 847.4 886.1 421.5 370.6 333.7 343.2 Commissions Net interest 513.7 543.0 income 9M15 9M16 9M15 9M16 Operating costs (Million euros) Core income incre
Slide 33: Lower cost of deposits offset by lower credit volumes and Euribor
Lower cost of deposits partially offset by the decrease of credit volumes and Euribor Net interest income Breakdown of net interest income (Million euros) (Million euros) 3Q16 vs. 9M16 2Q16 vs.9M15 +5.7% Commercial margin 513.7 543.0 Loans volume effect -4.7 -47.6 Effect of lower Euribor on credit -
Slide 34: 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) 9M15 9M16 3.0% 2.9% -0.9% -1.3% 9M15 9M16 NIM Continued improvement of the spread of the portfolio of term deposits: from -1.3% in the first nine m
Slide 35: Increased commissions
Increased commissions (Million euros) 9M15 9M16 YoY Banking fees and commissions 293.1 300.7 +2.6% Cards and transfers 73.9 74.5 +0.8% Loans and guarantees 90.7 80.9 -10.8% Bancassurance 56.5 57.9 +2.5% Customer account related 62.2 68.1 +9.5% Other fees and commissions 9.9 19.4 +96.0% Market relate
Slide 36: Continuous reduction of costs
Continuous reduction of costs, in line with the new commercial approach (Million euros) Operating costs Employees Cost to core income 56.3% 52.4% -126 -2.5% 7,555 7,429 476.8 464.7 Depreciation 22.9 21.2 -7.4% Other 174.2 169.5 administrative Sep 15 Sep 16 -2.7% costs Branches -45 Staff costs 279.7
Slide 37: Reinforced coverage of NPL>90d
Reinforced coverage of NPL>90d (Million euros) NPL>90d Loan loss reserves Credit ratio Sep15 Sep 16 Coverage ratio Sep 15 Sep 16 NPL>90d 14.0% 13.5% NPL>90d 52.2% 62.5% 5,917 5,454 3,408 3,091 Sep 15 Sep 16 Sep 15 Sep 16 NPL>90d buildup Loan impairment (net of recoveries) Sep 16 vs. Sep 16 vs. Cost
Slide 38: NPEs decreasing, coverage increasing
NPEs are decreasing, coverage is increasing and prospects are favourable NPEs (Million euros) 12,783 Measures implemented in the last years with 10,921 10,327 positive impact on NPEs: strengthening of the 9,777 9,257 monitoring of credit quality, implementation and development of new assessment mo
Slide 39: Foreclosed assets sold above book value
Foreclosed assets sold above book value Foreclosed assets Number of properties sold (Million euros) 18.9% 12.5% -3.3% Coverage 1,621 1,568 1,685 210 1,309 9M15 9M16 Impairment 248 Book value of sold properties (Million euros) 1,475 Sale value 175 145 -16.0% Net Value 1,061 156 131 Sep 15 Sep 16 9M15
Slide 40: Agenda
Agenda Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 40
Slide 41: Contribution from international operations
Contribution from international operations (Million euros) Δ% Δ% 9M15 9M16 local ROE euros currency International operations Poland 112.8 130.3 +15.5% +9.7% 11.4% Contribution Mozambique 42.5 51.8 +21.9% -23.3% 21.6% from Angola* 20.2 28.5 +40.9% -1.0% international Other 9.7 6.5 -33.3% -34.4% opera
Slide 42: Poland: growing Customer funds
Poland: growing Customer funds (Million euros) Customer funds Loans to Customers (gross) +5.3% 14,208 Off-BS 13,498 funds 1,537 -2.3% +0.3% 1,574 100 Other BS +36.6% 11,028 11,063 funds 73 6,325 Term 6,634 -4.7% 6,463 -1.6% 6,359 deposits Mortgage Consumer 1,279 +11.2% 1,423 and other On- +19.7% 6,2
Slide 43: New banking tax and Visa Europe transaction impact net earnings
New banking tax and Visa Europe transaction strongly impact net earnings (Million euros) Net income Banking income ROE 11.1% 11.4% +16.0% +15.5% 130.3 432.3 112.8 372.6 9M15 9M16 9M15 9M16 Operating costs Net earnings increased by 15.5%, as the new banking tax (€29.2 million) was more than compens
Slide 44: Stronger net interest income, other income impacted by Visa
Stronger net interest income, other income impacted by Visa Europe transaction (Million euros) Net interest income* Operating costs NIM 2.2% 2.4% Cost to income 49.8% 43.9% +8.7% +2.3% 262.7 185.6 189.9 241.6 Other admin. costs + 91.6 +3.2% 94.5 depreciation +1.5% 95.4 Staff costs 94.0 9M15 9M16 9M1
Slide 45: Improved credit quality and coverage
Improved credit quality and coverage (Million euros) NPL>90d Loan loss reserves Credit ratio Sep 15 Sep 16 Coverage ratio Sep 15 Sep 16 NPL>90d 2.9% 2.7% NPL>90d 103% 107% 325 302 333 323 Sep 15 Sep 16 Sep 15 Sep 16 Loan impairment (net of recoveries) NPL>90d ratio improved to 2.7% of total credit
Slide 46: Mozambique: strong volume growth
Mozambique: strong volume growth (Million euros) Customer funds Loans to Customers (gross) +24.3% 1,172 0 +28.8% Other BS 943 964 funds 12 11 513 +2.6% 178 748 Term Mortgage 11 deposits 416 Consumer +9.8% +23.4% 162 and other 774 659 Companies +34.6% On- 515 +27.9% 575 demand deposits Sep 15 Sep 16
Slide 47: Increasing net income in a complex environment
Increasing net income in a complex environment (Million euros) Net income Banking income +29.1% ROE 20.2% 21.6% 152.1 +21.9% 51.8 117.8 42.5 9M15 9M16 9M15 9M16 Operating costs Net income up by 21.9%, with ROE at +19.7% 21.6%, in spite of an increased tax burden 62.0 51.8 Increase of 29.1% in ba
Slide 48: Growth in core income offset by higher operating costs
Growth in core income partially offset by the increase in operating costs (Million euros) Net interest income Operating costs Cost to income 44.0% 40.7% NIM 6.3% 7.8% +19.7% 62.0 +47.5% 51.8 6.2 101.4 Depreciation 5.6 +9.3% Other admin. 27.8 68.8 22.5 +23.5% costs Staff costs 23.6 +18.5% 28.0 9M15 9
Slide 49: Credit quality and coverage
Credit quality and coverage (Million euros) NPL>90d Loan loss reserves Credit ratio Sep 15 Sep 16 Coverage ratio Sep 15 Sep 16 NPL>90d 6.2% 5.3% NPL>90d 95% 129% 66.5 46.6 51.5 44.1 set 15 set 16 Sep 15 Sep 16 Loan impairment (net of recoveries) Cost of NPL>90d ratio of 5.3% as at September 30th,
Slide 50: Agenda
Agenda Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 50
Slide 51: Road to 2018: targets
Road to 2018: targets Consolidated 9M15 9M16 2018 13.2% phased 12.2%* phased CT1 / CET1 > 11% 10.0% fully 9.5%* fully Loans to 104% 100% < 100% Deposits Cost - Income 41.0%** 46.0% < 43% Cost - Core 55.3% 52.0% < 50% Income Cost of risk 148 bp 221 bp < 75 bp ROE 8.1% -7.7% > 11% With a 11% fully imp
Slide 52: Appendix
Appendix AGIL | MODERNO | PROXIMO | SIMPLES | SUSTENTAVEL 52
Slide 53: Sovereign debt portfolio
Sovereign debt portfolio Sovereign debt portfolio Sovereign debt maturity (Million euros) (September 2016) >8years, >10years ≤10years 0% ≤1year Sep 15 Jun 16 Sep 16 YoY QoQ 6% 19% >5years, Portugal 5,049 5,331 4,355 -14% -18% ≤8years T-bills 199 1,261 827 +315% -34% 25% Bonds 4,850 4,070 3,528 -27%
Slide 54: Sovereign debt portfolio
Sovereign debt portfolio (Million euros, September 2016) Portugal Poland Mozambique Other Total Trading book* 184 96 0 37 317 ≤ 1 year 6 13 0 36 55 > 1 year and ≤ 2 years 118 5 0 0 123 > 2 years and ≤ 5 years 57 54 0 0 111 > 5 years and ≤ 8 years 0 10 0 0 10 > 8 years and ≤ 10 years 3 14 0 0 17 > 10
Slide 55: Consolidated earnings
Consolidated earnings Impact on (million euros) 9M15 9M16 earnings Net interest income 876.6 907.0 +30.4 Net fees and commissions 498.0 481.1 -16.8 Other operating income 481.0 183.8 -297.2 Of which: Visa transaction 0.0 91.0 +91.0 Of which: Mandatory contributions in Portugal -32.6 -51.7 -19.1 Of w
Slide 56: Consolidated balance sheet
Consolidated balance sheet (Million euros) 30 September 30 September 30 September 30 September 2016 2015 2016 2015 Assets Liabilities Cash and deposits at central banks 2,618.3 1,514.5 Amounts owed to credit institutions 11,302.7 10,288.9 Loans and advances to credit institutions Amounts owed to cus
Slide 57: Consolidated income statement
Consolidated income statement Per quarter (Million euros) Quarterly 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 Net interest income 305.1 314.0 292.4 308.4 306.2 Dividends from equity instruments 0.3 6.2 2.0 3.8 1.2 Net fees and commission income 161.8 162.3 163.9 156.4 160.8 Other operating income -12.3 -66.4 -1
Slide 58: Income statement (Portugal and International operations)
Income statement (Portugal and International operations) For the 9-month periods ended 30th September, 2015 and 2016 (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 Sep 15 Sep
Slide 59: We continue to innovate and to modernise the Bank
We continue to innovate and to modernise the Bank Modern Digital 30% of the branch 26 branches with new Millennium mobile app Online account opening network renovated format and service model with new functionalities Paperless banking for Free wifi available in all M2020: only available App Fully on
Slide 60: Glossary (1/2)
Glossary (1/2) 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 minus on-balance sheet customer funds. Cost of risk, gross (expressed in bp)- ratio of imp
Slide 61: Glossary (2/2)
Glossary (2/2) Loans more than 90 days overdue coverage - total BS impairments accumulated for risk of credit divided by total amount of loans overdue with instalments of capital and interest overdue more than 90 days. Operating costs - staff costs, other administrative costs and depreciation. Other
Slide 62: Investor Relations Division
hiksalalle INVESTOR RELATIONS DIVISION Rui Coimbra, Head EQUITY DEBT 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 registered o
Banco Comercial Português, S.A. (Millennium bcp) — 9M 2016 Earnings Presentation on 6ix