Banco Comercial Portugues S.a. · EURONEXT:BCP

Banco Comercial Portugues — 9M 2017 Earnings Presentation

61 slides from Banco Comercial Portugues's earnings presentation, Nov 13, 2017

1. Slide 1: Earnings Presentation 9M 2017

   Millennium bcp C7) EARNINGS @ MODERN PRESENTATION @ PERSONAL 9M 2017 @

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 €133.3 million (-€251.1 million in the first nine months of 2016), benefitting from the continued expansion of core net income to €823.2 million in the first nine months if 2017*, compared to €665.8 million in the same period of 2016 •2 NPEs in Portugal, down by €1.4 billion

5. Slide 5: Highlights: improved profitability

   1 Highlights: improved profitability (Million euros) Core net income* • Core net income increases to €823.2 Positive non-usual impact million in the first nine months of 2017 of €23.7 million (staff costs) 823.2 (€799.6 million excluding a positive 665.8 non-usual impact of €23.7 million on staff 61

6. Slide 6: Highlights: improved asset quality

   2 Highlights: improved asset quality (Million euros) Non-performing exposures (NPEs) • NPEs in Portugal down to €7.2 billion as 12,783 at September 30, 2017, showing a 10,921 strong pace of reduction from 2013 9,777 8,538 7,168 • €1.4 billion NPE reduction in the first Other NPEs nine months of 2017

7. Slide 7: Highlights: credit stabilising in Portugal

   3 Highlights: credit stabilising in Portugal (Billion euros) Performing portfolio • Performing portfolio stable from end- 2016 34.5 32.9 • Structural change to the portfolio of 31.8 loans to companies over recent years, 30.8 30.8 with a lower weight of construction and real estate activities and of

8. Slide 8: Highlights: strong business performance and Customer service

   Highlights: strong business performance, especially 4 as long as Customers and service are concerned Group Awards 3Q17 Customer 5.4 million active Customers Best branch experience base (+6% vs Sep. 2016) Best Customer Experience Awards | Portugal Best site/ financial services app ACEPI Navegantes |

9. Slide 9: Agenda

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

10. Slide 10: Profit of €133.3 million in first nine months of 2017

    Profit of €133.3 million in the first nine months of 2017, with a significant improvement of core net income Impact on (million euros) 9M16 9M17 YoY earnings 665.8 823.2 +23.7% +157.5 Core net income (net int income+commissions–oper. costs) Non-usual items (staff costs) -1.7 23.7 +25.4 Core net inco

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 effect (staff costs) +23.7% +20.0% 823.2 505.7 421.5 23.7 23.7 665.8 482.0 9M16 9M17 International operations 799.6 +30.0% 317.6 244.3 9M16 9M17 9M16 9M17 *Core net income = net int

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

    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 1.6% 1.8% Net interest margin 1.9% 2.2% +9.0% 543.0 591.8 +12.8% 1,023.2 907.0 9M16 9M17 International operations Net int

13. Slide 13: Increase of commissions in international operations

    Increase of commissions in international operations stands out, stable in Portugal (Million euros) Fees and commissions Consolidated Portugal -1.6% 9M16 9M17 YoY 343.2 337.7 Banking fees and commissions 391.7 400.0 +2.1% Cards and transfers 107.8 115.3 +6.9% Loans and guarantees 117.9 117.9 -0.1% 9M

14. Slide 14: Increased other income

    Increased other income*, influenced by higher mandatory contributions and by gains on Visa transaction in 2016 (Million euros) Other income* Consolidated Portugal -50.1% 98.5 49.1 -58.4% 183.8 9M16 9M17 Visa transaction 26.4 0.0 Mandatory contributions 51.7 57.9 • Bank. sector extra cont. PT: 31.0 I

15. Slide 15: Cost reduction continues

    Cost reduction continues… (Million euros) Operating costs Consolidated Portugal Cost to income 47.2% 43.3% Cost to income 46.0% 43.6% Cost to core income* 52.4% 45.6% Cost to core 52.0% 45.8% income* 464.7 Non-usual -3.8% positive 722.4 423.8 effect of Depreciation 694.6 €23.7 million 37.0 +7.3% 39.

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% -2pp 78% 86% -41pp 46% 46% Banco 1 64% 59% 47% w/o non- Banco 2 76% 85% usual items 46% Banco 3 69% 100% Banco 4 53% 1

17. Slide 17: Cost of risk trending towards normalisation

    Strengthening the balance sheet: cost of risk now trending towards normalisation (Million euros) Impairment and provision charges Consolidated Portugal Cost of risk 270bp 137bp -46.9% Cost of risk 221bp 120bp 1,050.9 Other 234.2 -43.5% 558.4 1,113.0 Loans 816.7 168.5 390.0 242.8 Other 628.5 9M16 9M1

18. Slide 18: Lower delinquency and increased coverage

    Lower delinquency and increased coverage (Million euros) Credit quality Consolidated Portugal NPE total NPE total coverage* 98% 103% 99% 105% coverage* 12.6% including -22.6% NPE as a % of 19.0% 15.9% debt securities NPEs 9,257 total credit (EBA definition) 7,168 -19.1% NPEs 9,983 8,079 Sep 16 Sep 1

19. Slide 19: Agenda

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

20. Slide 20: Growing Customer funds in Portugal and internationally

    Growing Customer funds in Portugal and in international operations (Million euros) Total Customer funds* Consolidated Total Customer funds* in Portugal +5.8% from Sep16 including OTRVs +5.2% +4.5% 70,231 49,294 51,493 66,781 Other 14,961 16,212 Off-BS 17,966 Term 19,299 16,206 deposits 20,716 funds

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 NPE: -19.1% Performing: +0.1% -5.8% -3.5% 40,291 52,610 37,947 50,754 Mortgage 24,273 23,406 Sep 16 Sep 17 Consumer and other 4,074 International operations 3,768

22. Slide 22: Comfortable liquidity position

    Comfortable liquidity position Net loans to deposits ratio ECB funding (Billion euros) Elegible Net loans as a % assets 13.1 12.5 of BS Customer 97% 91% funds 4.9 3.4 -6pp 100% Sep 16 Sep 17 93% Liquidity ratios (CRD IV/CRR) 158% 124% Sep 16 Sep 17 NSFR (Net stable LCR (Liquidity funding ratio) cove

23. Slide 23: Agenda

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

24. Slide 24: 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 12.2% 13.2% 11.7% 9.5% banks Sep 16 Sep 17 Sep 16 Sep 17 13.2%* Phased-in Fully implemented Total 13.2% 14.2% 10.4% 12.7% ratio 13.0% RWAs 38.3 38.3

25. Slide 25: Capital at comfortable levels, high leverage ratios

    Capital at comfortable levels, high leverage ratios Leverage ratio Leverage ratio Phased-in, latest available data 6.2% 6.7% 6.0% 6.7% 4.8% 5.8% 6.1% 4.9% 4.1% Sep 16 Sep 17 Sep 16 Sep 17 FR DE ES IT Phased-in Fully implemented RWA density Texas ratio* RWAs as % of assets, latest available informati

26. Slide 26: Agenda

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

27. Slide 27: Portugal: Increased net income

    Increased net income (Million euros) Net income Core net income* 0.8 +20.0% 505.7 421.5 -394.3 9M16 9M17 9M16 9M17 Banking income Operating costs Includes non usual -0.6% positive effect of €23.7 million 984.6 978.6 -8.8% 464.7 423.8 9M16 9M17 9M16 9M17 *Core net income = net interest income + net f

28. Slide 28: Lower cost of time deposits compensates lower credit volumes

    Lower cost of time deposits more than compensates for the decreases of credit volumes and Euribor Net interest income (Million euros) +9.0% +49.9 591.8 543.0 +42.8 +13.9 -4.0 -23.0 -28.1 -2.7 1.8% NIM 1.6% 9M16 Effect of lower Performing Securities NPL CoCo Effect of cost Other 9M17 Euribor on loans

29. 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) 9M16 9M17 2.9% 2.8% -0.7% -0.9% 9M16 9M17 NIM  Continued improvement of the spread of the portfolio of term deposits: from -0.9% in 9M16 to -0.7% in

30. Slide 30: Commissions and other income

    Commissions and other income* (Million euros) Fees and commissions Other income* -50.1% 98.5 9M16 9M17 YoY 49.1 Banking fees and commissions 300.7 293.0 -2.6% Cards and transfers 74.5 78.5 +5.4% 9M16 9M17 Loans and guarantees 80.9 77.9 -3.6% Visa transaction 26.4 0.0 Mandatory contributions 51.7 57.

31. Slide 31: Continuous reduction of costs

    Continuous reduction of costs, in line with the new commercial approach (Million euros) Operating costs Employees Cost to income 47.2% 43.3% Cost to core -148 income* 52.4% 45.6% 7,429 7,281 464.7 Depreciation 21.2 423.8 24.5 Other 169.5 Sep 16 Sep 17 administrative 164.1 costs Branches Includes non

32. Slide 32: Lower NPL>90d, with reinforced coverage

    Lower NPL>90d, with reinforced coverage (Million euros) NPL>90d Loan-loss reserves As a % of 62.5% 68.9% NPL>90d -22.0% 3,408 5,454 2,932 4,255 Sep 16 Sep 17 Loan impairment (net of recoveries) Cost of 270bp 137bp risk 816.7 390.0 Sep 16 Sep 17 9M16 9M17 32

33. Slide 33: Lower NPEs

    Lower NPEs (Million euros) Non-performing exposures (NPEs) NPE build-up -22.6% Sep 17 Sep 17 9,257 vs.Sep 16 vs.Jun 17 Opening balance 9,257 7,816 +/- Net entries -785 -187 - Write-offs -527 -261 7,168 Other NPE 3,803 - Sales -777 -200 Ending balance 7,168 7,168 2,913  NPEs in Portugal down by €2.1

34. Slide 34: Lower NPEs, with reinforced coverage

    Lower NPEs, with reinforced coverage NPE total coverage* NPE total coverage* 105% 107% 105% 105% 99% Real estate 37% Real estate 46% 46% collateral 46% collateral 71% Cash, other fin. 20% 16% 18% 18% Cash, other fin. collat., EL gap collat., EL gap 13% 48% 36% 41% LLRs 41% LLRs 23% Sep 16 Sep 17 Ind

35. Slide 35: Foreclosed assets and corporate restructuring funds

    Foreclosed assets and corporate restructuring funds Foreclosed assets Corporate restructuring funds (Million euros) (Million euros) Original credit exposure: €2,006 million Book value (30 Sep 2017): €1,065 million Total impairment (credit+restr. funds): €940 million 1,685 1,836 (47% coverage) 201 EB

36. Slide 36: Improved liquidity position

    Improved liquidity position (Million euros) Total Customer funds* Loans to Customers (gross) +4.5% 51,493 49,294 Off-BS 14,743 -5.8% 13,422 40,291 funds 37,947 Other BS 1,539 1,469 funds Mortgage 17,902 17,203 19,299 Term 20,716 deposits Consumer 2,473 and other 2,013 Companies 19,916 18,730 On- 13,

37. Slide 37: Growing new loans, leasing and factoring

    Growing new loans to individuals, new leasing business and factoring invoicing (Million euros) Loans to individuals, new business Leasing, new business +19.6% 337.3 +27.4% 282.1 1,398 1,097 9M16 9M17 Factoring invoicing +21.3% 4,203 3,466 +25.1% 2,362 Confirming 1,888 1,577 +16.7% 1,841 Factoring 9M

38. Slide 38: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International operations  Conclusions 38

39. Slide 39: Contribution from international operations

    Contribution from international operations (Million euros) Δ% Δ% 9M16 9M17 local ROE euros currency International operations Poland 133.8 117.8 -12.0% -9.6% 9.3% Mozambique 47.2 60.5 +28.2% +16.9% 23.7% Angola* 27.7 24.4 -11.8% -14.4% Other 6.5 7.5 +15.8% +15.9% Net income 215.1 210.2 -2.3% -3.1% No

40. Slide 40: Poland: strong net earnings adjusted by Visa transaction

    Strong performance of net earnings adjusted by Visa transaction in 2016 (Million euros) Net income Banking income ROE 11.4% 9.3% 443.9 438.8 Net income 133.8 Impact from Visa 66.4 117.8 transac., before tax Impact from Visa transac., net of tax 53.8 +16.2% 377.5 80.0 +47.3% 9M16 9M17 9M16 9M17 Opera

41. Slide 41: 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 43.9% 45.6% +12.1% +2.5% 302.3 195.0 200.0 269.8 Other 97.0 -1.4% 95.7 Staff costs 98.0 +6.4% 104.2 9M16 9M17 9M16 9M17 Commissions and other income Employees Branches -21.

42. Slide 42: Poland: stable credit quality, comfortable coverage

    Stable credit quality, comfortable coverage (Million euros) NPL>90d Loan-loss reserves Credit ratio Sep 16 Sep 17 Coverage ratio Sep 16 Sep 17 NPL>90d 2.7% 2.8% NPL>90d 108% 110% 323.7 349.7 299.1 318.6 Sep 16 Sep 17 Sep 16 Sep 17 Loan impairment (net of recoveries)  NPL>90d ratio at 2.8% of total

43. Slide 43: Poland: growing volumes

    Growing volumes (Million euros) Customer funds Loans to Customers (gross) +6.6% 15,247 Off-BS 14,297 funds +24.3% 1,975 +2.8% 1,589 11,101 11,406 Other BS 105 94 +12.1% funds 5,815 Term 6,347 -8.4% 6,191 Mortgage 6,380 -3.0% deposits 1,571 Consumer 1,428 +10.0% On- 7,352 and other 6,267 +17.3% deman

44. Slide 44: Mozambique: net income growth

    Net income growth in a demanding environment (Million euros) Net income Banking income +18.7% ROE 21.6% 23.7% 164.6 +28.2% 138.7 60.5 47.2 9M16 9M17 9M16 9M17 Operating costs  Net income up by 28.2%, with ROE at 23.7%  18.7% increase in banking income, on the back of +12.7% higher net interest inc

45. Slide 45: Mozambique: growing income offset by operating costs

    Growing income partially offset by the increase in operating costs (Million euros) Net interest income Operating costs Cost to income 40.7% 38.7% NIM 7.8% 10.1% +12.7% 63.7 +39.1% 56.5 128.6 92.5 Other 31.0 +14.9% 35.6 Staff costs 25.5 +10.1% 28.1 9M16 9M17 9M16 9M17 Commissions and other income Emp

46. Slide 46: Mozambique: credit quality

    Credit quality (Million euros) NPL>90d Loan-loss reserves Credit ratio Sep 16 Sep 17 Coverage ratio Sep 16 Sep 17 NPL>90d 5.3% 14.0% NPL>90d 129% 66% Down from €162 million as reported in june 101.0 152.5 81.0 62.7 Sep 16 Sep 17 Sep 16 Sep 17 Loan impairment (net of recoveries) Cost of  NPL>90d rat

47. Slide 47: Mozambique: growing deposits and lower credit

    Growing deposits and lower credit, in a challenging environment (Million euros) Customer funds Loans to Customers (gross) +2.3% 1,428 1,461 -7.5% 1,174 Mortgage 14 1,086 -16.9% 12 Term 625 672 Consumer 217 deposits +7.5% and other 184 -14.9% On- Companies 944 -5.7% 890 demand 803 -1.7% 789 deposits

48. Slide 48: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International operations  Conclusions 48

49. Slide 49: Road to 2018: targets

    Road to 2018: targets Consolidated 9M16 9M17 2018 Phased-in: 12.2% Phased-in: 13.2% CT1 / CET1* ≈11% Fully implemented: 9.5% Fully implemented: 11.7% Loans to 100% 93% <100% Deposits Stated: 43.6% Cost–Income 46.0% <43% Excluding non-usual items: 45.1% Cost-Core Stated: 45.8% 52.0% <50% Income** Exc

50. Slide 50: Millennium bcp: a bank ready for the future

    Millennium bcp: a bank ready for the future 1• Largest private sector bank based in Portugal with a balanced shareholder structure and a sound balance sheet (phased-in CET1 ratio of 13.2%, loans to deposits of 93%) 2• Successful implementation of the NPE reduction plan in Portugal: €1.4 billion down

51. Slide 51: Appendix

    Appendix AGILE | MODERN | PERSONAL | SIMPLE| SUSTAINABLE 5

52. Slide 52: Sovereign debt portfolio

    Sovereign debt portfolio Sovereign debt portfolio Sovereign debt maturity (Million euros) >10y >8y, ≤10y 0% 4% ≤1y Sep 16 Jun 17 Sep 17 YoY QoQ 27% >5y, ≤8y Portugal 4,355 5,089 4,945 +14% -3% 31% T-bills 827 845 712 -14% -16% Bonds 3,528 4,244 4,232 +20% -0% Poland 3,406 3,847 3,734 +10% -3% Mozamb

53. Slide 53: Sovereign debt portfolio

    Sovereign debt portfolio (Million euros) Portugal Poland Mozambique Other Total Trading book* 157 95 0 1 253 ≤ 1 year 119 12 0 0 131 > 1 year and ≤ 2 years 0 22 0 0 23 > 2 years and ≤ 5 years 37 51 0 0 88 > 5 years and ≤ 8 years 1 3 0 0 4 > 8 years and ≤ 10 years 1 5 0 0 6 > 10 years 0 0 0 1 1 Banki

54. Slide 54: Diversified and collaterised portfolio

    Diversified and collaterised portfolio Loan portfolio Consolidated Companies Loans per collateral 47% Mortgage 59% 25% 16% 46% Real guarantees Other guarantees Unsecured LTV of the mortgage portfolio in Portugal 15% 11% 13% 27% 11% 12% 11% 0-40 40-50 50-60 60-75 75-80 80-90 >90 Consumer/ other 7% Lo

55. Slide 55: Consolidated earnings

    Consolidated earnings Impact on (million euros) 9M16 9M17 YoY earnings Net interest income 907.0 1,023.2 12.8% +116.2 Net fees and commissions 481.1 494.6 2.8% +13.5 Other income* 183.8 76.5 -58.4% -107.3 Banking income 1,571.9 1,594.3 1.4% +22.4 Staff costs -410.4 -380.1 -7.4% +30.3 Other administr

56. Slide 56: Consolidated balance sheet

    Consolidated balance sheet (Million euros) 30 September 30 September 30 September 30 September 2017 2016 2017 2016 Assets Liabilities Cash and deposits at central banks 2,144.8 2,618.3 Resources from credit institutions 9,185.5 11,302.7 Loans and advances to credit institutions Resources from custom

57. Slide 57: Consolidated income statement

    Consolidated income statement Per quarter (Million euros) 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 Net interest income 306.2 323.1 332.3 346.2 344.7 Dividends from equity instruments 1.2 0.8 0.1 1.5 0.1 Net fees and commission income 160.8 162.7 160.8 169.5 164.3 Other operating income -8.3 -9.5 -15.2 -71.4 -1

58. Slide 58: Income statement (Portugal and International operations)

    Income statement (Portugal and International operations) For the 9-month periods ended September 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 Sep 16 Sep

59. Slide 59: 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

60. Slide 60: 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

61. Slide 61: 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

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