Banco Comercial Portugues S.a. · EURONEXT:BCP
Banco Comercial Portugues — H1 2019 Earnings Presentation
65 slides from Banco Comercial Portugues's earnings presentation, 2019
Slide 1: Earnings Presentation
EARNINGS PRESENTATION
Slide 2: Disclaimer
Disclaimer l 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. l The figures present
Slide 3: Agenda
AGENDA 3
Slide 4: Highlights
01 Highlights 4
Slide 5: Highlights
Highlights Core income (net interest income + commissions) Improved profitability (Million euros) (Million euros) +5.3% 1,027.9 1,082.3 +12.7% +0.6% 342.2 Fees and commissions 340.2 169.8 150.6 Net interest income 687.7 +7.6% 740.1 1H18 1H19 Impairment and provisions (Million euros) Cost of risk 88b
Slide 6: Highlights
Highlights Improved asset quality Increased NPE coverage Total coverage* Coverage by loan-loss reserves (Billion euros) 109% 108% -1.7 106% 5.5 5.0 Eurobank: NPE Group 6.7 €128 million 52% 54% 50% -1.8 NPE Portugal 5.9 Jun 18 Dec 18 Jun 19 4.8 4.1 Other NPE 2.4 Lower cost of risk 2.1 1.8 Cost of ris
Slide 7: Highlights
Highlights Strong capital Increasing business volumes (Fully implemented capital ratio) (Consolidated, billion euros) Requirement +13.5% +€696m 43.8 45.5 49.7 Performing loans 14.7% +8.9% Total 13.3% 13.5% 13.1% 133.9 Total business 122.9 125.1 volume 54.7 Loans to 50.5 51.0 Customers (gross) CET1 1
Slide 8: Growing active Customer base
Growing active Customer base* (‘000 Customers) +217,000 Customers Active Customers 4,722 4,938 Group (excluding Eurobank) +121,000 Customers Active Customers 2,299 2,177 Portugal Digital Customers 911 1,045 Portugal Jun 18 Jun 19 *Customer counting criteria used in the 2021 Strategic Plan. 88
Slide 9: Consistent performance on digital
Consistent performance on digital (Consolidated, ‘000 Customers) +26% Digital Customers vs Dec 17 2,819 2,673 2,495 2,237 1,811 1,640 +54% Mobile 1,445 Customers vs Dec 17 1,173 Dec 17 Jun 18 Dec 18 Jun 19 Digital Customers 57% Mobile Customers 37% 9
Slide 10: Bringing technology to processes and business model
Bringing technology to processes and business model, benefitting Customer relationship and the Bank’s efficiency Customer journeys (‘000 Customers) • Transforming most relevant journeys +25% Digital • Digital labs 1,045 983 Customers • Advanced analytics vs Dec 17 911 • More advanced and efficient p
Slide 11: Highlights: rating upgrades
Highlights Recent rating upgrades recognise the improvement of BCP’s profitability, asset quality and business model DBRS Standard & Poor’s Senior debt : +1 notch to BBB (low), Stable Outlook Senior debt: +3 notches, Stable Outlook Senior debt rating upgraded to investment grade BBB(low) • DBRS has
Slide 12: Group: Profitability
02 Group Profitability 12
Slide 13: Net earnings of €169.8 million in 1st half of 2019
Net earnings of €169.8 million in 1st half of 2019 Impact on (million euros) 1H18 1H19 YoY earnings Net interest income 687.7 740.1 +7.6% +52.4 Commissions 340.2 342.2 +0.6% +2.0 Core income 1,027.9 1,082.3 +5.3% +54.4 Operating costs excluding non-usual items -492.8 -525.8 +6.7% -33.0 Core earnings
Slide 14: Net earnings excluding non-usual items
Net earnings of €169.8 million, a significant improvement when non-usual items are excluded (Million euros) +19.1 Net impact: -38.3 +57.4 169.8 150.6 -33.5 -9.9 +28.9 -8.6 -7.6 -7.5 Net income DTA Staff: Impact of low First day Mandatory Gains on PT Improvement to Net income 1H18 derecognition restr
Slide 15: Net interest income increases in spite of an adverse environment
Net interest income increases in spite of an adverse environment Net Interest Income Portugal (Consolidated, million euros) (Million euros) Net interest margin 1.8% 1.7% +3.8% Net interest margin 2.2% 2.1% 399.4 384.8 +7.6% 740.1 687.7 1H18 1H19 International operations (Million euros) Net interest
Slide 16: Stronger commissions, in spite of lower market-related fees
Stronger comissions, in spite of lower market-related fees Fees and commissions Portugal (Consolidated, million euros) (Million euros) +0.7% 234.0 235.5 Stronger banking business more than compensates for lower market-related fees and commissions 32.9 -21.4% 25.9 +0.6% 340.2 342.2 201.0 +4.3% 209.6
Slide 17: Growing other income
Growing other income*, in spite of higher mandatory contributions and of a low interest rate environment Other income* Portugal (Consolidated, million euros) (Million euros) +82.5% Includes: • Sovereign debt: 55.4 28.7 • Sales of assets: 19.8 15.7 +45.2% 28.9 42.0 Includes -€8.6 million impact of lo
Slide 18: Recurring operating costs reflect growth strategy
Recurring operating costs reflect growth strategy Operating costs Portugal (Consolidated, million euros) (Million euros) +6.7% +2.5% Recurring 492.8 525.8 Recurring 305.2 312.8 +7.0% +9.5% 313.2 335.2 548.2 500.8 57.0 * Depreciation 28.4 1H18 1H19 Other administrative 167.0 * costs 182.7 Internation
Slide 19: 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 -4pp 80% 76% vs. peers in vs. Euro-zone -36pp Portugal 51% including compensation banks 51% including compensation for temporary salary cuts for temporary salary cut
Slide 20: Cost of risk continues trending to normalisation
Cost of risk continues trending to normalisation Impairment (Consolidadas, million euros) and provision charges Portugal (Consolidated, million euros) (Million euros) 67bp excluding first day Cost of risk 103bp 76bp impairment Eurobank Cost of risk 88bp 74bp -24.7% 241.3 181.6 49.8 41.0 -13.1% 191.5
Slide 21: Lower NPE and strengthened coverage
Lower NPE and strengthened coverage Qualidade (Consolidadas, million euros)do crédito Portugal (Consolidated, million euros) (Million euros) NPE total -30.9% 106% 108% coverage* Down by €349 -1.8 billion million in 2Q19 and NPE coverage by 50% 48% 54% NPE 5,913 by €710M in 1H19 LLRs -25.4% 4,088 NPE
Slide 22: Group: Business activity
02 Group Business activity 22
Slide 23: Customer funds keep growing
Customer funds keep growing Total Customers funds* Total Customers funds* in Portugal (Consolidated, billion euros) (Billion euros) Individuals: +5.8% +4.9% +9.3% Individuals: +11.0% 55.6 53.0 79.2 Off-BS funds 15.3 72.5 14.4 Other BS funds 1.1 1.5 Term deposits 19.2 17.5 18.5 Off-BS funds 17.8 Dema
Slide 24: Increasing loan portfolio
Increasing loan portfolio Loans to Customers (gross) Portugal (Consolidated, billion euros) (Billion euros) NPE: -25.4% (-€1.7 billion) -0.4% Performing: +13.5% (+€5.9 billion) +8.4% 37.4 37.2 54.7 -1.8 +1.7 50.5 25.6 Jun 18 NPE Performing Jun 19 Mortgage 23.4 International operations (Billion euros
Slide 25: Comfortable liquidity position
Comfortable liquidity position Net loans to deposits ratio ECB funding (Billion euros) Eligible assets 15.6 16.4 3.1 2.0 88% 88% Jun 18 Jun 19 Liquidity ratios (CRD IV/CRR) 214% 135% 100% Jun 18 Jun 19 NSFR (Net stable LCR (Liquidity funding ratio) coverage ratio) 25
Slide 26: Group: Capital
02 Group Capital 26
Slide 27: Capital levels adjusted to business model
Capital levels adjusted to business model Capital ratio (Fully implemented) CET1 capital ratio of 12.2%* (fully implemented) as of June 30, 2019 Requirement +€696m 14.7% Total 13.3% 13.5% 13.1% Increase from 11.7% as of June 30, 2018 and from 12.0% as of December 31, 2018 due to earnings and lower D
Slide 28: Capital at adequate levels
Capital at adequate levels Leverage ratio (Fully implemented, latest available data) 7.0% 5.7% 6.1% 4.4% Leverage ratio at 7.0% as of June 30, 2019, a 3.8% comfortable and comparatively strong figure in European 3.0% banking FR DE ES IT RWA density (RWAs as % of assets, latest available data) High R
Slide 29: Pension fund
Pension fund Key figures Pension fund (Million euros) Shares 13% Dec 18 Jun 19 Pension liabilities 3,066 3,319 Cash and Pension fund 3,078 3,174 other 44% Liabilities' coverage 100% 96% Fund's profitability +0.2% +4.7% Actuarial differences* (98) (158) Bonds 35% Assumptions Real estate 8% Dec 18 Jun
Slide 30: Portugal
03 Portugal 30
Slide 31: Increased net income
Increased net income Net income* Net operating revenue (Million euros) (Million euros) +4.6% 634.4 663.6 +23.2% 72.7 59.0 1H18 1H19 1H18 1H19 Operating costs (Million euros) • Net earnings of €72.7 million in the 1st half of 2019, 335.2 • €12.4 million compensation for +23.2% compared to €59.0 milli
Slide 32: Net interest income
Net interest income (Million euros) +3.8% +9.1 399.4 +6.3 +2.7 384.8 +2.7 -6.2 1.7% NIM 1.8% 1H18 Credit Deposits' rate Effect of Credit rate Other (includes 1H19 volume effect wholesale cost effect securities and IFRS9) effect • Net interest income stood at €399.4 million in the 1st half of 2019, c
Slide 33: Continued effort to reduce the cost of deposits
Continued effort to reduce the cost of deposits Spread on the book vs 3mof term deposits Euribor Spread on the performing loan book (vs 3m Euribor) (vs 3m Euribor) 1H18 1H19 2.7% 2.7% -0.5% -0.6% 1H18 1H19 NIM • Continued improvement in the spread of the portfolio of term deposits: from -0.6% in 1st
Slide 34: Commissions and other income
Commissions and other income* Fees and commissions Other income* (Million euros) (Million euros) (Million euros) Includes -€8.6 million impact of low interest rates on insurer +82.5% 1H18 1H19 YoY 28.7 Banking fees and commissions 201.0 209.6 +4.3% 15.7 Cards and transfers 53.1 52.8 -0.6% Loans and
Slide 35: Controlled recurring operating costs
Controlled recurring operating costs Operating costs Employees (Million euros) Recruitment in digital areas, including internalisation of outsourcers +2.5% +113 Recurring 305.2 312.8 7,264 7,151 +7.0% 335.2 313.2 33.9 * Jun 18 Jun 19 Depreciation 17.9 94.0 * Other 107.9 Branches administrative costs
Slide 36: Lower NPE, with reinforced coverage
Lower NPE, with reinforced coverage Non-performing exposures (NPE) NPE build-up (Million euros) Jun 19 Jun 19 (EUR million) -30.9% vs.Jun 18 vs.Dec 18 5,913 Opening balance 5,913 4,797 4,088 Net exits -627 -255 Other NPE 2,352 Write-offs -601 -324 1,774 Sales -598 -131 NPL>90d 3,561 2,313 Ending bal
Slide 37: NPE coverage
NPE coverage NPE total coverage* NPL>90d total coverage* 114% 111% 119% 115% 100% 100% 35% 25% 43% Real estate collateral 36% Real estate collateral 24% 73% 19% Cash, other fin.collat., 18% Cash, other fin.collat., 15% 67% EL gap EL gap 2% 61% 52% 3% 70% LLRs 60% LLRs 25% 30% Individuals Companies T
Slide 38: Foreclosed assets and corporate restructuring funds
Foreclosed assets and corporate restructuring funds Foreclosed assets Corporate restructuring funds (Million euros) (Million euros) -2.9% 1,664 1,020 990 216 1,329 Impairment 195 161 Industry 208 Net value 1,448 -22,6% 1,121 825 829 RE/tourism Jun 18 Jun 19 Jun 18 Jun 19 • Net foreclosed assets were
Slide 39: Growing customer funds and loans to customers
Growing customer funds and loans to customers Total Customers funds* Loans to Customers (gross) (Billion euros) (Billion euros) Individuals: +5.8% +4,9% NPE: -30.9% (-€1.8 billion) Performing: +5.3% (+€1.7 billion) 55.6 53.0 -0.4% 37.4 37.2 15.3 Off-BS funds 14.4 Other BS funds 1.1 1.5 Mortgage 17.1
Slide 40: Strong credit activity to companies in Portugal
Strong credit activity to companies in Portugal Performing credit portfolio (Billion euros) • Performing credit portfolio in Portugal up by €1.7 +5,3% billion (+5.3%) from June 30, 2018 31.4 33.1 +1,7 • Millennium bcp reinforced its role as the Bank of Portuguese Companies: Mortgage 15.9 16.5 – Stro
Slide 41: International operations
04 International operations 41
Slide 42: Contribution from international operations to group earnings
Contribution from international operations to group earnings (Million euros) Δ% Δ% 1H18 1H19 local currency euros Poland 81.2 77.9 -4.1% -5.4% Mozambique 52.9 48.0 -9.3% -6.1% Angola* Before IAS 29 impact 6.5 7.0 IAS 29 impact** -2.0 -0.7 Total Angola including IAS 29 impact 4.5 6.3 Other 8.6 6.3 Ne
Slide 43: Net earnings affected by Eurobank's acquisition
Net earnings affected by Eurobank’s acquisition Net income Net operating revenue (Million euros) +16% excluding (Million euros) Eurobank’s integration ROE 9.5% 9.7% +18.0% 365.1 -4.1% 309.5 81.2 77.9 1H18 1H19 1H18 1H19 • Net earnings of €77.9 million, with ROE of 9.7% • Net operating revenue up by
Slide 44: Successful completion of Eurobank's acquisition
Successful completion of Eurobank’s acquisition Eurobank’s business volumes (Billion euros) • Impact on business volumes: 3.0 • +3.0 billion in loans (18% of Bank Millennium’s loan portfolio) 1.5 • +2.0 billion in deposits (11% of Bank 2.0 Mortgage Millennium’s total deposits) Term deposits 0.9 • Si
Slide 45: Increased net interest income
Increased net interest income Net interest income* Operating costs (Million euros) (Million euros) NIM 2.5% 2.7% Cost to income 46.3% 46.0% +21.5% +19.6% 253.3 176.5 208.5 147.6 22.4 Resol. fund and DGF 16.3 57.5 67.2 Other +16.8% Staff costs 73.8 +17.7% 86.9 1H18 1H19 1H18 1H19 Commissions and othe
Slide 46: Credit quality
Credit quality NPL>90d Loan-loss reserves (Million euros) (Million euros) Credit ratio Coverage ratio NPL>90d 2,7% 2,4% NPL>90d 133% 110% 399.7 443.1 439.7 332.7 Jun 18 Jun 19 Jun 18 Jun 19 Loan impairment (net of recoveries) (Million euros) 52bp excluding first day impairment Eurobank • NPL>90d acc
Slide 47: Growing volumes
Growing volumes Customer funds Loans to Customers (gross) (Million euros) (Million euros) +49.4% excluding FX mortgage loans +23.6% Eurobank: €2.0 20,155 billion +33.7% Eurobank: €3.0 16,419 billion 1,906 157 16,304 -10.0% 5,034 Off-BS funds 2,119 12,278 +64.0% 6,838 Other BS funds 96 +68.7% Mortgag
Slide 48: Normalisation of interest rate environment leads to lower earnings
Normalisation of interest rate environment leads to lower earnings… Net income Net operating revenue (Million euros) (Million euros) ROE 26.1% 20.6% -2,3% -9.3% 125.1 122.2 52.9 48.0 1H18 1H19 1H18 1H19 Operating costs • Net earnings of €48.0 million, with ROE of 20.6%, reflecting lower net interest
Slide 49: Reflecting lower net interest income
… reflecting lower net interest income Net interest income Operating costs (Million euros) (Million euros) NIM 10.9% 9.6% Cost to income 35.7% 38.3% +4.9% -6.7% 44.6 46.8 95.4 89.1 Other 25.4 +3.4% 26.3 Staff costs 19.2 +6.8% 20.5 1H18 1H19 1H18 1H19 Commissions and other income Employees* Branches
Slide 50: Credit quality performance influenced by challenging environment
Credit quality performance influenced by challenging environment NPL>90d Loan-loss reserves (Million euros) (Million euros) Credit ratio Coverage ratio NPL>90d 15.9% 17.2% NPL>90d 55% 57% 142.1 127.4 78.1 72.4 Jun 18 Jun 19 Jun 18 Jun 19 Net impairment (net of recoveries) (Million euros) • NPL>90d r
Slide 51: Business volumes reflect a conservative approach
Business volumes reflect a conservative approach under a challenging environment Recursos de clientes Crédito a clientes (bruto) Customer funds Loans to Customers (gross) (Million euros) (Million euros) +3.8% 1,539 -17.2% 1,483 895 Mortgage 11 -3.8% Personal and 150 741 715 other -12.3% 10 Term depo
Slide 52: Key figures
05 Key figures 52
Slide 53: Strategic Plan 2021
Strategic Plan 2021 Franchise growth 1H18 1H19 2021 Active Customers 4.7 million 4.9 million >6 million Digital Customers 53% 57% >60% Value creation Mobile Customers 31% 37% >45% Cost to income 47% 49% ≈40% (47% excl. non-usual costs) (47% excl. non-usual costs) RoE 5.3% 5.7% ≈10% CET1 11.7% 12.2%
Slide 54: Awards in 2019
Awards in 2019 Millennium bcp: Leadership in the Bank Millennium: Best bank in Poland “PME Excelência ’18” and “PME Líder ’18” programmes , with the largest number of submissions and awards Millennium bcp among participating banks Consumer choice 2019, “Large Banks” category Millennium bcp: Marketee
Slide 55: Appendix
Appendix 55
Slide 56: Sovereign debt portfolio
Sovereign debt portfolio Sovereign debt portfolio Sovereign debt maturity (Consolidated, million euros) >5y, ≤8y 16% >2y, ≤5y Jun 18 Mar 19 Jun 19 YoY QoQ 40% >8y, ≤10y Portugal 5,938 7,375 7,229 +22% -2% 3% T-bills and other 673 1,932 1,665 +147% -14% >10y Bonds 5,265 5,443 5,564 +6% +2% 1% Poland
Slide 57: Sovereign debt portfolio
Sovereign debt portfolio Portugal Poland Mozambique Other Total Trading book* 35 165 0 1 200 ≤ 1 year 32 9 0 0 40 > 1 year and ≤ 2 years 3 53 0 0 57 > 2 years and ≤ 5 years 0 66 0 0 66 > 5 years and ≤ 8 years 0 30 0 0 30 > 8 years and ≤ 10 years 0 1 0 0 1 > 10 years 0 5 0 1 6 Banking book** 7,194 4,
Slide 58: Diversified and collateralised portfolio
Diversified and collateralised portfolio Loan portfolio (Consolidated) LTV of the mortgage portfolio Loans per collateral in Portugal Other 75-80 Mortgage guarantees 10% 47% 26% 60-75 80-90 29% 11% Companies 43% Real >90 guarantees 10% 59% Unsecured 50-60 15% 14% 0-40 40-50 16% 11% Personal/ other 1
Slide 59: Consolidated earnings
Consolidated earnings Impact on (million euros) 1H18 1H19 YoY earnings Net interest income 687.7 740.1 +7.6% +52.4 Net fees and commissions 340.2 342.2 +0.6% +2.0 Other income* 28.9 42.0 +45.2% +13.1 Net operating revenue 1,056.8 1,124.2 +6.4% +67.4 Staff costs -289.8 -324.2 +11.9% -34.5 Other admin
Slide 60: Consolidated balance sheet
Consolidated balance sheet (Million euros) 30 June 30 June 30 June 30 June 2019 2018 2019 2018 ASSETS LIABILITIES Cash and deposits at Central Banks 3,586.1 2,165.8 Financial liabilities at amortised cost Loans and advances to credit institutions repayable on demand 313.4 240.6 Resources from credit
Slide 61: Consolidated income statement per quarter
Consolidated income statement per quarter (Million euros) 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 Net interest income 342.8 365.2 370.8 362.7 377.4 Dividends from equity instruments 0.6 0.0 0.0 0.0 0.6 Net fees and commission income 172.4 169.9 174.0 166.6 175.6 Other operating income -61.0 1.7 -1.0 -10.6 -64
Slide 62: Income statement
Income statement (Million euros) For the 6-month periods ended June 30th, 2018 and 2019 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 Jun 18 Jun 19 Δ % Jun 18 Jun 19 Δ % Jun 18 Jun 19 Δ % Ju
Slide 63: 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 64: 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 and results from de
Slide 65: Investor Relations Division
Millennium bcp INVESTOR RELATIONS DIVISION Bernardo Collaco, Head EQUITY DEBT AND RATINGS Luis Pedro Monteiro — Luis Morais +351 21 1131 084 +351 211131 337 Vv investors@millenniumbcp.pt Banco Comercial Portugués, S.A., a public company (sociedade aberta) having its registered office at Praga D. Joa
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