Banco Comercial Portugues S.a. · EURONEXT:BCP

Banco Comercial Portugues — Q1 2014 Earnings Presentation

61 slides from Banco Comercial Portugues's earnings presentation, May 2014

  1. Slide 1: Earnings Presentation 1Q 2014

    EARNINGS PRESENTATION MAY 2014 1Q 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 • Profitability • Capital • Liquidity  Portugal  International Operations  Conclusions 3

  4. Slide 4: Highlights

    Highlights Consolidated net income of -41 million euros, versus -152 million euros in 1Q13 Contribution of international operations (excluding Greece and Romania) to the consolidated net income of 48 million euros, an increase of 18.1% versus 1Q13, the best quarterly contribution of the last two yea

  5. Slide 5: Highlights 1Q14

    Highlights 1Q14 Net income Contribution of the international operations (Million euros) (Million euros) +18.1% 47.8 -40.7 40.5 152.0 +73.2% 1Q13 1Q14 1Q13 1Q14 Banking income Operating costs (Million euros) +23.0% (Million euros) 514.3 -4.3% 418.1 296.3 283.6 1Q13 1Q14 1Q13 1Q14 5

  6. Slide 6: Highlights 1Q14

    Highlights 1Q14 Net new entries in NPL in Portugal Core tier I (Million euros) (%) 13.9% 12.1% 12.2% -52.3% 514 388 185 mar 13 mar 14 phase-in 1Q12 1Q13 1Q14 BdP CRD IV/CRR Commercial Gap* Difference of net loans to Loans to deposit ratio* customers to BC customer Net loans to BS customer (Billion e

  7. Slide 7: Agenda

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

  8. Slide 8: Net income showing positive signs of trend inversion…

    Net income showing positive signs of trend inversion… Consolidated 1Q13 1Q14 Δ Net interest income 179.2 236.4 57.2 Of which: costs related with hybrids instruments (CoCo's) -66.6 -66.2 0.5 Net fees and commissions 160.3 164.6 4.4 Of which: State guarantee costs -17.3 -10.3 7.0 Other operating incom

  9. Slide 9: … 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) -40.7 -45.3 Hybrids (CoCo’s) interest (-66.2) Contribution to the banking setor and to -19.8 the guaranteed/resolution funds and cost of state guarantees

  10. Slide 10: Increase in net interest income in all the core operations

    Increase in net interest income in all the core operations (Million euros) Net interest income Portugal Consolidated +51.4% 97.0 +31.9% 236.4 64.0 179.2 1Q13 1Q14 International operations +21.0% 139.4 115.2 1Q13 1Q14 NIM 0.95% 1.31% NIM (excluding CoCo’s) 1.30% 1.67% 1Q13 1Q14 10

  11. Slide 11: 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 -1.2% 105.4 104.1 1Q13 1Q14 YoY Banking fees and commissions 133.9 129.7 -3.1% Cards and transfers 44.1 45.9 4.3% Loans and guarantees 35.3 38.8 10.1% 1Q13 1Q14 Bancassur

  12. Slide 12: Increase of net trading income in Portugal

    Increase of net trading income in Portugal, driven by the positive performance of Portuguese sovereign debt (Million euros) Net trading income Portugal Consolidated +99.8% 89.4 +54.1% 44.7 111.9 1Q13 1T14 72.6 International operations -19.2% 27.9 22.5 1Q13 1Q14 1Q13 1Q14 12

  13. Slide 13: Reduction of costs in Portugal

    Reduction of costs in Portugal (Million euros) Operating costs Portugal Consolidated -4.3% 296.3 -6.9% 283.6 185.4 172.6 Depreciation 16.8 -5.5% 15.9 Other administrative 113.4 107.6 -5.2% costs 1Q13 1Q14 International operations Staff costs 166.1 -3.5% 160.2 +0.1% 110.9 111.0 1Q13 1Q14 Cost-to-inco

  14. Slide 14: Provisioning in line with the strategic plan

    Provisioning in line with the strategic plan (Million euros) Loan impairments (net of recoveries) Portugal Consolidated +1.2% Cost of 122 bp risk 129 bp 169.6 171.6 186.9 191.7 1Q13 1Q14 1Q13 1Q14 International operations Cost of risk evolution (basis points) Strategic plan +16.4% 186 20.2 157 17.3

  15. Slide 15: Less net new entries in NPL allow stabilization in credit quality

    Less net new entries in NPL allow the stabilization in credit quality ratios and the increase in coverage (Million euros) Consolidated Net new entries in NPL in Portugal Credit quality 514 -52.3% Credit ratio mar 13 mar 14 388 NPL 11.0% 11.2% Credit at risk 11.9% 11.7% 185 6,754 6,666 1T12 1T13 1T14

  16. Slide 16: Diversified and collateralized credit portfolio

    Diversified and collateralized credit portfolio Loan portfolio Consolidated Companies Loans by collateral 50% Mortgage 59% 33% 7% 44% With real estate guarantees With other guarantees Without guarantees LTV of mortgage portfolio in Portugal 15% 9% 12% 24% 10% 18% 12% 0-40 40-50 50-60 60-75 75-80 80-

  17. Slide 17: Agenda

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

  18. Slide 18: Capital ratios complying comfortably with all regulatory requirements

    Capital ratios complying comfortably with all regulatory requirements Consolidated Core tier I ratio(%) - BdP 13.9% 12.1%  Core tier I ratio of 13.9%, above the 12.1% as at march 2013  Year-on-year, the reduction in the amount of Core tier I is majority Core tier I explained by the negative net in

  19. Slide 19: Capital ratios complying comfortably with all regulatory requirements

    Capital ratios complying comfortably with all regulatory requirements Consolidated Core tier I ratio (%) - BdP Common equity tier I ratio (%) - CRD IV/CRR 13.9% 12.2% 12.0% 12.1% 10.0% 9.5% 7.0% 5.4% Without With DTA * Without With DTA * Required Mar 13 Mar 14 Required DTA DTA Fully loaded Phased in

  20. Slide 20: Agenda

    Agenda  Main Highlights  Group • Profitability • Capital • Liquidity  Portugal  International Operations  Conclusions 20

  21. Slide 21: Stable customer deposits…

    Stable customer deposits… (Million euros) Consolidated Customer funds Customer deposits in Portugal +0.7% +1.2% 34,766 33,911 34,333 65,863 64,261 64,720 11,670 11,868 12,073 25,940 24,880 25,407 5,396 3,797 3,690 8,826 9,031 8,925 mar 13 dec 13 mar 14 On-demand deposits Term deposits 34,685 33,359

  22. Slide 22: … and credit evolution trending to stabilization

    … and credit evolution trending to stabilization (Milhões de euros) Consolidated Loans to customers (gross) Loans to customers (gross) in Portugal -0.6% -1.3% 49,295 47,251 46,632 61,394 59,734 59,392 27,059 26,444 26,252 mar 13 dec 13 mar 14 3,580 3,493 3,495 Loans to customers (gross) in internati

  23. Slide 23: Continuation of the improvement in liquidity position

    Continuation of the improvement in liquidity position and liquidity ratios higher than the future requirements (Billion euros) Commercial Gap * Loans to deposit ratio ** (BdP) Difference of net loans to BS Net loans to BS customer customer funds funds mar 13 mar 14 -5pp 121% 116% -4.7 -3.4 108% 106%

  24. Slide 24: Lower refinancing needs and customer deposits as main funding source

    Lower refinancing needs on the medium 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 * 2.9 1.1 1.8 0.1 0.3 0.6 0.4 2009 2010 2011 2012 2013 1Q14 2014 2015 2016 2017 >2017 Significant improvement

  25. Slide 25: Agenda

    Agenda  Main Highlights  Group • Profitability • Capital • Liquidity  Portugal  International Operations  Conclusions 25

  26. Slide 26: Portugal: deleveraging effort with increase in deposits and reduction of loans

    Portugal: deleveraging effort with increase in deposits and reduction of loans (Million euros) Customer funds Loans to customers (gross) +1.1% -1.3% 50,504 48,128 48,658 49,295 47,251 46,632 10,455 10,528 10,747 5,282 3,689 3,579 20,438 19,916 19,725 2,423 2,162 2,144 25,940 24,880 25,407 26,434 25,

  27. Slide 27: Net income improving with increase in banking income and lower 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  Banking income increases due to net interest margin and trading income increase -88.2

  28. Slide 28: Increase of net interest income in Portugal

    Increase of the net interest income in Portugal with the improvement in cost of deposits, although the negative effect of volumes Net interest income (Million euros) +51.4% 1Q14 1Q14 97.0 vs.4Q13 vs.1Q13 Deposits cost effect +8.5 +56.1 64.0 Loans volume effect -5.5 -26.7 Other -1.8 +3.6 Total +1.2 +

  29. Slide 29: 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 deposit rate Credit portfolio rate (%) (%) 5.0% Companies New production 4.8 4.8 4.6 4.5 4.4 4.0% 4.4 Portfolio 3.0% Mortgage 2.0% 1.5 1.5 1.3 1.4 1.4 1.4 1.0% S/11 D/11 M/12 J/12 S/12 D/12 M/13 J/13

  30. Slide 30: Market related commissions positive, banking commissions lower

    Positive performance of market related commissions and lower banking commissions, but improving in the last quarter (Million euros) 1Q13 1Q14 YoY Banking fees and commissions 94.2 86.7 -8.0% Cards and transfers 22.6 22.7 0.3% Loans and guarantees 29.1 30.3 4.4% Bancassurance 18.5 18.2 -2.0% Current

  31. Slide 31: Progressive improvement on costs base in Portugal

    Continuation of the progressive improvement on costs base in Portugal aiming at to achive the strategic goals (Million euros) Operating costs Employees -450 -6.9% 8,954 185.4 8,504 9.2 172.6 -10.3% 8.3 66.1 -11.7% 58.4 mar 13 mar 14 Branches 110.0 -3.7% 105.9 -54 802 748 1Q13 1Q14 Depreciation Other

  32. Slide 32: Credit quality shows signs of stabilization

    Credit quality shows signs of stabilization with reinforcement of coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio mar 13 mar 14 Coverage ratio mar 13 mar 14 NPL 13.0% 13.4% NPL 46% 48% Credit at risk 13.5% 13.6% Credit at risk 44% 47% 6,403 6,268 2,942 2,989 mar

  33. Slide 33: 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) -9.0% 598 Coverage 21.1% 26.3% 544 1,524 1,379 322 363 1Q13 1Q14 Value of properties (Million euros) 1,202 1,016 +29.3% 53 41 mar 13 mar 14 Impairments Net value 1Q13 1Q14

  34. Slide 34: Agenda

    Agenda  Main Highlights  Group • Profitability • Capital • Liquidity  Portugal  International Operations  Conclusions 34

  35. Slide 35: Significant growth of net income in high potential markets

    Significant growth of Net income in high potential markets (Million euros) Δ% Δ% ROE Net income 1Q13 1Q14 local euros (1Q14) currency International operations * 40.5 47.8 18.1% Poland 28.5 37.2 30.3% 29.4% 12% Mozambique 19.1 20.2 5.5% -0.3% 22% Angola 6.2 11.2 81.1% 73.3% 18% Other and non-controll

  36. Slide 36: Poland: customer funds and loans to customers growth

    Poland: customer funds and loans to customers growth (Million euros) Customer funds Loans to customers (gross) +3.3% 12,037 12,435 +4.9% 10,594 10,095 -1.6% 6,497 6,600 +18.8% 1,010 850 2,646 +16.7% 3,087 mar 13 mar 14 mar 13 mar 14 Mortgage Consumer Companies Excludes FX effect. €/Zloty rates used:

  37. Slide 37: Net income grows driven by banking income with stable operating costs

    Net income grows driven by banking income with stable operating costs (Million euros) Net income + 30.3%  Net income grows 30.3%, with ROE at 12% 37.2  Banking income increase (+13.8%): increase in 28.5 net interest income by 23.4% and commissions by 9.6%  Stable operating costs, reflecting a str

  38. Slide 38: Strong increase in net interest income and commissions

    Strong increase in net interest income and commissions with stable operating costs (Million euros) Net interest income * Operating costs +23.4% +0.7% 84.7 64.8 65.3 68.6 31.7 33.2 33.1 32.1 1Q13 1Q14 1Q13 1Q14 Other administrative costs and depreciation Commissions Staff costs +9.6% 33.7 36.9 Employ

  39. Slide 39: 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 mar 13 mar 14 Coverage ratio mar 13 mar 14 NPL 2.8% 3.0% NPL 104% 102% 298 323 317 286 mar 13 mar 14 Loan impairment (net of recoveries) Cost of 51 bp risk 61 bp mar 13 mar 14

  40. Slide 40: Mozambique: strong volumes growth

    Mozambique: strong volumes growth (Million euros) Customer funds Loans to customers (gross) +14.1% 1,535 +23.7% 1,346 1,254 23 1,014 260 24 +13,9% 228 +27,5% 971 762 mar 13 mar 14 mar 13 mar 14 Mortgage Consumer Companies Excludes FX effect. €/Metical used rates: Income statement 42.90416667; Balanc

  41. Slide 41: Net income increase benefited from banking income performance

    Net income increase benefited from banking income performance (Million euros) Net income  Net income increases 5.5%, with ROE at 22% +5.5%  Increase of 4.1% in banking income: increase in 19.1 20.2 net interest income (benefitting from volume effect, despite lower interest rates) and increase in c

  42. Slide 42: Consistent increase in net interest income and in commissions

    Consistent increase in net interest income and in commissions (Million euros) Net interest income Operating costs +2.5% +20.3% 22.3 22.9 32.5 2.2 2.4 27.0 9.1 9.5 11.1 11.0 1Q13 1Q14 1Q13 1Q14 Depreciation Other administrative costs Commissions Staff costs +10.9% Employees * Branches 9.4 10.4 +1.2%

  43. Slide 43: Credit quality and coverage

    Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio mar13 mar14 Coverage ratio mar13 mar14 NPL 3.6% 3.8% NPL 185% 146% 67 70 48 36 mar 13 mar 14 Loan impairment (net of recoveries) Cost of 129 bp 115 bp risk mar 13 mar 14 3.3 3.6 NPL (non-performin

  44. Slide 44: Angola: robust volumes growth

    Angola: robust volumes growth (Million euros) Customer funds Loans to customers (gross) +65.9% 1,272 +40.3% 693 767 494 mar 13 mar 14 mar 13 mar 14 Excludes FX effect. €/Kwanza used rates: Income statement 133.29333333; Balance sheet 134.5900 44

  45. Slide 45: Net income increases driven by higher banking income

    Net income increases driven by higher banking income (Million euros) Net income  Net income increases 81.1%, with ROE at 18% +81.1%  Increase in banking income by 12.9%: 11.2 increase in net interest income (benefiting from loans volume effect) and in 6.2 commissions  Operating costs increase by

  46. Slide 46: Strong growth in net interest income and commissions

    Strong growth in net interest income and commissions, operating costs in line with network expansion (Million euros) Net interest income Operating costs +18.3% +5.7% 16.8 17.8 19.1 1.9 16.2 1.7 8.0 8.6 7.1 7.3 1Q13 1Q14 1Q13 1Q14 Depreciation Other administrative costs Commissions Staff costs +13.8%

  47. Slide 47: Credit quality and coverage

    Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio mar13 mar14 Coverage ratio mar13 mar14 NPL 5.6% 4.9% NPL 117% 105% 32 36 34 28 mar 13 mar 14 Loan impariment (net of recoveries) Cost of 339 bp risk 56 bp mar 13 mar 14 4.2 1.0 NPL (non-performing

  48. Slide 48: Agenda

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

  49. Slide 49: Progress on strategic plan metrics

    Progress on strategic plan metrics PHASES Priorities 1Q13 1Q14 2015 Initiatives Demanding CT1 economic 12.1% 13.9 % … ~12% Maintaining solid capital ratios Stronger balance sheet (BdP) environment (2012-13) Strengthen liquidity position with the LTD * 108% 106% … <110% deleveraging process Improveme

  50. Slide 50: Singular performance on BCP share, having the highest turnover…

    Singular performance on BCP share, having the highest turnover… Comparative performance since the announcement of the recapitalization plan (June 4, 2012) 300% BCP PSI20 index Portuguese banking index European banking index BCP Announcement of the Conclusion of divestment in 250% recapitalization pl

  51. Slide 51: … with inversion of perception by analysts

    … with inversion of perception by analysts Analyst recommendations for BCP  Since the recapitalization plan in 2012, the perception of analysts is completely reversed, from 9% to 50% of BUY 9% recommendations 27% Buy 64% Neutral  Also the target price has been revised upwards by all Sell analysts

  52. Slide 52: Appendixes

    Appendixes 52

  53. Slide 53: Presence in key geographies recognized with distinctions

    Presence in key geographies recognized with distinctions PORTUGAL POLAND ANGOLA “Consumer Choice 2014” "Best Commercial Bank" in Portugal, in “Best Banking Offer" in Market “Brands of Excellence in Consumercoice the scope of the World Finance Pearls Angola 2012/13" 1st place in the Marktest Reputati

  54. Slide 54: Evolution of public debt portfolio

    Evolution of public debt portfolio (Million euros) Public debt portfolio Total maturity of public debt Δ% Δ% Mar 13 Dec 13 Mar 14 annually quarterly Portugal 5,886 5,879 6,363 8% 8% <1 year 33% T-bills 2,177 2,178 1,971 -9% -9% Bonds 3,709 3,701 4,392 18% 19% Poland 2,368 1,366 1,033 -56% -24% >3 ye

  55. Slide 55: Detail of public debt portfolio

    Detail of public debt portfolio (Million euros) Portugal Poland Mozambique Angola Romania Others Total Trading book 188 99 75 362 < 1 year 0 11 11 > 1 year and <2 years 14 6 20 > 2 year and <3 years 0 65 11 76 > 3 years 174 17 64 254 AFS book 4,316 934 396 423 51 5 6,125 < 1 year 1,973 70 355 264 34

  56. Slide 56: Romania: costs control policy and volumes growth

    Romania: costs control policy and volumes growth (Million euros) Net income Banking income Operating costs -17.4% -23.2% 8.0 -0.9 7.0 6.2 5.8 -2.1 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 Loans to customers (gross) Customer deposits  Net income improvement due to +7.9% operating costs reduction effect and 442

  57. Slide 57: Financial statements

    Financial statements 57

  58. Slide 58: Consolidated Balance Sheet and Income Statement

    Consolidated Balance Sheet and Income Statement 31 March 31 December 31 March 31 March 31 March 2014 2013 2013 2014 2013 (Thousands of Euros) (Thousands of Euros) Assets Interest and similar income 671,231 722,908 Cash and deposits at central banks 2,449,049 2,939,663 2,720,085 Interest expense and

  59. Slide 59: Consolidated income statement

    Consolidated income statement Quarterly evolution (Million euros) Quarterly Year-to-date Δ% 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 Mar 13 Mar 14 14 / 13 Net interest income 179.2 201.0 233.5 234.3 236.4 179.2 236.4 31.9% Dividends from equity instruments 0.0 1.5 0.2 2.0 3.3 0.0 3.3 >100% Net fees and commiss

  60. Slide 60: Consolidated income statement (Portugal and International operations)

    Consolidated income statement (Portugal and International operations) For the 3 months period ended 31th of March, 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

  61. Slide 61: 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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