Banco Comercial Portugues S.a. · EURONEXT:BCP
Banco Comercial Portugues — H1 2020 Earnings Presentation
71 slides from Banco Comercial Portugues's earnings presentation, July 2020
Slide 1: Banco Comercial Português – July 2020
JULY 2020 Banco Comercial Português 1
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: Five priorities that guide our actions in 2020 – main highlights
Five priorities that guide our actions in 2020 – main highlights • Continued and proactive testing of Employees for early detection of infection, usage of protective equipment, reinforcement of disinfection and adaptation of facilities and internal circuits Protect Employees • Implementation of a pr
Slide 6: Highlights
Highlights • Net profit of €76.0 million, influenced by the Covid-19 context • Core income up by 2.0% Net income for • Fully implemented CET1 capital ratio of 12.1%, above regulatory requirements of 8.83% the 1st half of • Strong liquidity, well in excess of regulatory requirements; eligible assets
Slide 7: Net income of 1H 2020 influenced by the Covid-19 context
Net income of 1H 2020 influenced by the Covid-19 context Core income (net interest income + commissions) Net income (Million euros) (Million euros) +2.0% 1,082.3 1,104.3 Fees and commissions 342.2 +0.9% 345.2 -55.3% 169.8 Net interest income 740.1 +2.6% 759.1 1H19 1H20 Impairment and provisions (Mil
Slide 8: Growing Customer base, mobile Customers standing out
Growing Customer base, mobile Customers standing out ‘000 Customers +683,000 Customers Active Customers Group 4,938 5,621 +14% +644,000 Customers Mobile Customers Group 1,811 2,455 44% +36% +97,000 Customers +4% Active Customers Portugal 2,299 2,396 +195,000 1,230 51% Digital Customers Portugal 1,04
Slide 9: Digital: Leading bank in Customer Satisfaction and Accelerated Growth
Digital: Leading bank in Customer Satisfaction and Accelerated Growth 4.7 rating on Google Play Store Strong mobile growth Y/Y 87% (Jan-Jun 2020 vs. Jan – Jun 2019) of digital interactions are mobile Leading bank in Customer +69% +79% satisfaction with digital channels, in all items assessed1 Logins
Slide 10: Digital: Innovation at the service of Customers
Digital: Innovation at the service of Customers Simplified Simplified day-to-day Innovative, digital- Focus on open registration: access management exclusive, products banking codes via app Apple Pay On/off travel insurance Money transfers from other banks' 100% digital card application accounts now
Slide 11: Increasing business volumes
Increasing business volumes Increasing performing loans portfolio Increasing total Customers funds (Consolidated, billion euros) (Consolidated, billion euros) +4.7% 49.7 52.1 Performing loans Individuals: +8.5% +2.4% +5.0% Total Customers 79.2 83.2 funds* 54.7 56.0 Loans to Customers (gross) Off-bal
Slide 12: Credit quality
Credit quality Credit quality NPE coverage Total coverage* Coverage by loan-loss reserves (Billion euros) -€1.1 billion 108% 109% -€273 million in 1H 2020 NPEs Group 5.0 3.9 58% 54% -€1.2 billion Jun 19 Jun 20 -€338 million in NPEs Portugal 4.1 1H 2020 2.9 Cost of risk Other NPEs 1.8 1.4 Cost of ris
Slide 13: Capital above regulatory requirements
Capital above regulatory requirements Total capital ratio (Fully implemented) • Capital ratio of 15.5%*, comfortably above Fully implemented +2.2pp vs requirement regulatory requirements 14.7% 15.5% 13.3% +5.3pp** O-SII buffer • MDA buffer at €1.0 billion above the level Conservation 2.50% buffer at
Slide 14: Reinforced liquidity position
Reinforced liquidity position Net loans to deposits ratio ECB funding, net (Billion euros) Eligible assets 16.4 21.5 +€2.2 billion 88% 4.3 85% 2.0 Jun 19 Jun 20 Liquidity ratios (CRD/CRR) 249% 137% 100% Jun 19 Jun 20 NSFR (Net stable LCR (Liquidity funding ratio) coverage ratio) 14
Slide 15: Group – Profitability
02 Group Profitability 15
Slide 16: Net earnings of €76.0 million in the 1st half of 2020
Net earnings of €76.0 million in the 1st half of 2020 Impact on (Million euros) 1H19 1H20 YoY earnings Net interest income 740.1 759.1 +2.6% +19.0 Commissions 342.2 345.2 +0.9% +3.0 Core income 1,082.3 1,104.3 +2.0% +22.0 Operating costs excluding non-usual items -519.7 -540.7 +4.0% -21.0 Core earni
Slide 17: Net interest income increases
Net interest income increases Net interest income Portugal (Million euros) • Excess liquidity and lower yields on the securities portfolio (Consolidated, million euros) penalised net interest income by more than €21 million • Q2 increases 3.5% from Q1 Net interest margin 1.71% 1.53% Net interest mar
Slide 18: Stable commissions in an adverse environment
Stable commissions in an adverse environment Fees and commissions Portugal (Consolidated, million euros) (Million euros) +0.9% -1.3% 345.2 235.5 232.4 342.2 29.6 +11.3% 32.9 Market-related fees and 56.3 +4.6% 58.8 commissions 205.9 -3.1% 199.5 1H19 1H20 International operations (Million euros) Banki
Slide 19: Other income influenced by specific items
Other income influenced by specific items Other income Portugal (Consolidated, million euros) (Million euros) 27.2 14.9 53.5 43.2 3.1 40.5 -41.2 -66.9 Equity earnings + dividends 21.9 -20.6 46.4 1H19 1H20 -3.6% Of which: Net trading income 95.5 Mandatory contributions 66.6 64.2 • Banking sector PT:
Slide 20: Recurring operating costs under control
Recurring operating costs under control Operating costs Portugal (Consolidated, million euros) (Million euros) +4.0% -2.0% Recurring 519.7 540.7 Recurring 311.3 305.2 -4.6% 333.7 318.3 +2.8% 546.7 561.8 57.0 69.2 1H19 1H20 Depreciation Other administrative 165.5 165.1 International operations costs
Slide 21: 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 data -12pp 80% 68% vs. peers in vs. Eurozone -37pp Portugal banks 51% including non- 51% including non- 86% 51% including non- usual costs usual costs usual costs 49% 49% 49% Ba
Slide 22: Cost of risk and provisions
Cost of risk and provisions Impairment (Consolidated, million euros) and provision charges Portugal (Consolidated, million euros) (Million euros) Cost of risk 76bp 82bp +12.7% Cost of risk 74bp 85bp 204.7 181.6 41.0 46.6 +44.5% 140.6 158.0 351.4 1H19 1H20 -23.4% Loan-loss reserves 2,146 1,644 114.0
Slide 23: Credit quality
Credit quality Credit (Consolidated, millionquality euros) Portugal (Consolidated, billion euros) (Billion euros) -€1.2 billion -€1.1 billion -28.8% NPE 4.1 -€338 -20.9% 2.9 million in NPE 1H 2020 5.0 -€273 3.9 million in 2.2 1H 2020 Other Jun 19 Jun 20 1.8 NPE loans ratio 11.0% 7.6% NPE ratio (EBA)
Slide 24: Group – Business activity
02 Group Business activity 24
Slide 25: Customer funds keep growing
Customer funds keep growing Total Customers funds* Total Customers funds* Portugal (Consolidated, billion euros) (Billion euros) Individuals: +12.0% Individuals: +8.5% +5.1% +5.0% 58.5 55.6 83.2 79.2 15.2 15.3 1.5 1.4 17.5 16.4 18.2 Off-BS funds 18.5 21.4 25.4 1.5 Other BS funds 1.7 Jun 19 Jun 20 22
Slide 26: Continued increase on the performing loan portfolio
Continued increase on the performing loan portfolio Loans to Customers (gross) Portugal (Consolidated, billion euros) (Billion euros) NPE: -20.9% (-€1.1 billion) +€1.2 billion Performing: +4.7% (+€2.4 billion) +3.3% +2.4% 38.4 37.2 -1.2 +2.4 54.7 56.0 Jun 19 NPE Performing Jun 20 Mortgage 25.6 26.1
Slide 27: Group – Capital
02 Group Capital 27
Slide 28: Capital levels adjusted to business model
Capital levels adjusted to business model Total capital ratio (Fully implemented) +2.2pp Fully implemented • Total capital ratio of 15.5%* (fully vs requirement implemented) as of June 30, 2020, boosted 14.7% 15.5% 13.3% O-SII buffer by the T2 issue completed in September +5.3pp** 2.50% Conservation
Slide 29: Capital at adequate levels
Capital at adequate levels Leverage ratio (Fully implemented, latest available data) 6.2% 6.6% 5.5% 4.3% Leverage ratio at 6.6% as of June 30, 2020, a 3.4% comfortable and comparatively strong figure in European 3.0% banking FR DE ES IT RWA density (RWAs as a % of assets, latest available data) High
Slide 30: Pension fund
Pension fund Key figures Pension fund (Million euros) Shares 13% Dec 19 Jun 20 Cash and other 34% Pension liabilities 3,490 3,391 Pension fund 3,501 3,423 Liabilities' coverage 100% 101% Fund's profitability +8.1% -0.2% Real-estate Bonds 46% Assumptions 7% Dec 19 Jun 20 Discount rate 1.40% 1.55% Sal
Slide 31: Portugal
03 Portugal 31
Slide 32: Net income affected by the Covid-19 context
Net income affected by the Covid-19 context Net income* Net operating revenue (Million euros) (Million euros) -37.9% 72.7 -10.7% 662.1 591.0 45.2 1H19 1H20 1H19 1H20 Operating costs (Million euros) -4.6% • Net earnings of €45.2 million in the 1st half of 2020, 333.7 318.3 • Compensation temp. salary
Slide 33: Net interest income
Net interest income (Million euros) -5.1% 399.4 +8.8 +6.6 +9.9 379.2 -7.7 -8.3 NIM -11.4 1.71% -13.6 -4.4 1.53% 1H19 Performing Effect of Deposits' rate Impact of Excess liquidity Credit rate Impact of the Other 1H20 credit volume wholesale cost effect NPE reduction (ECB, TBills) effect securities e
Slide 34: 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) 1H19 1H20 2.70% 2.69% -0.48% -0.53% 1H19 1H20 3-month Euribor 3-month Euribor (average) -0.31% -0.35% (average) -0.31% -0.35% NIM ▪ Spre
Slide 35: Commissions and other income
Commissions and other income Fees and commissions Other income (Million euros) (Million euros) (Million euros) 27.2 1H19 1H20 YoY Equity earnings+ dividends 14.9 -20.6 Banking fees and commissions 205.9 199.5 -3.1% Reversal of the liability adequacy test on Cards and transfers 52.8 46.6 -11.7% insur
Slide 36: Recurring operating costs under control
Recurring operating costs under control Operating costs Employees (Million euros) -110 -2.0% Recurring 311.3 305.2 7,264 7,154 -4.6% 333.7 318.3 Depreciation 33.9 37.9 Jun 19 Jun 20 Other 92.5 administrative costs 85.7 Branches Includes non-usual impact of €13.2 million: Includes non-usual impact of
Slide 37: Continued decrease of NPEs
Continued decrease of NPEs Non-performing exposures (NPE) NPE build-up (Million euros) -€1.2 billion Jun 20 Jun 20 (Million euros) vs.Jun 19 vs.Dec 19 -28.8% 4,088 Opening balance 4,088 3,246 3,246 2,908 Net exits -166 131 Other NPE 1,817 Write-offs -287 -85 1,559 1,435 Sales -726 -383 NPL>90d 2,270
Slide 38: NPE coverage
NPE coverage NPE total coverage* NPL>90d total coverage* 119% 127% 119% 115% 100% 100% 17% 30% Real estate collateral 36% Real estate collateral 33% 43% 24% Cash, other fin.collat., 68% 19% Cash, other fin.collat., 62% 15% EL gap EL gap 2% 77% 2% 65% 57% LLRs 65% LLRs 30% 36% Individuals Companies T
Slide 39: Foreclosed assets and corporate restructuring funds
Foreclosed assets and corporate restructuring funds Foreclosed assets Corporate restructuring funds (Million euros) (Million euros) -14.5% 1,329 990 Impairment 951 846 208 161 120 Industry 183 Net value 1,121 -€354 million 829 726 RE/tourism 767 -31.5% Jun 19 Jun 20 Jun 19 Jun 20 Sales of foreclosed
Slide 40: Growing Customer funds and performing loans to Customers
Growing Customer funds and performing loans to Customers Total Customers funds* Loans to Customers (gross) (Billion euros) (Billion euros) Individuals: +12.0% +5.1% NPE: -28.8% (-€1.2 billion) Performing: +7.2% (+€2.4 billion) 58.5 +3.3% 55.6 37.2 38.4 15.2 Off-BS funds 15.3 1.4 Other BS funds 1.5 1
Slide 41: Credit grows in Portugal
Credit grows in Portugal Performing credit portfolio (Billion euros) +€2.4 billion (+7.2%) 33.1 35.5 • Performing credit portfolio in Portugal up by €2.4 billion (+7.2%) from June 30, 2019 and by 16.5 16.9 Mortgage €2.0 billion in the 1st half of 2020 Personal and other 1.8 1.8 Companies 14.8 16.8 •
Slide 42: Supporting companies and families to tackle the challenges of the pandemic
Supporting companies and families to tackle the challenges of the pandemic Credit lines to companies Approved moratoria (Operations’ amounts in euro billion) (Operations’ amounts in euro billion) N.º of operations Amount HOUSEHOLDS N.º of operations Amount Mortgages: 92% Made available to Customers
Slide 43: International operations
04 International operations 43
Slide 44: Contribution from international operations to consolidated net income
Contribution from international operations to consolidated net income Δ% Δ% 1H19 1H20 local currency euros Contribution from international operations (Million euros) Poland 75.4 16.2 -78.5% -79.2% Poland, comparable* 96.6 89.1 -7.7% -10.7% -63.2% 83.7 Mozambique 46.1 42.5 -7.9% -11.4% Contribution o
Slide 45: Net earnings affected by provisions, mandatory contributions and Euro Bank’s acquisition
Net earnings affected by provisions, mandatory contributions and Euro Bank’s acquisition Net income Net operating revenue (Million euros) (Million euros) Impact from one- 75.4 offs*: -€21.2 million +13.9% 402.5 Impact from one- 353.3 offs*: -€72.9 million 16.2 1H19 1H20 1H19 1H20 Operating costs • N
Slide 46: Integration of Euro Bank
Integration of Euro Bank Impact of the integration of Euro Bank • Integration costs and capex incurred up to June 30, 2020 account for 77% of the overall Total Total plan (Million euros) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 2019 1H20 • Integration costs of Euro Bank integration costs -0.5 -4.0 -10.0
Slide 47: Increased net interest income
Increased net interest income Net interest income* Operating costs (Million euros) (Million euros) Excluding Euro Bank +20.6% NIM 2.66% 2.69% integration costs 166.4 200.6 +22.6% +22.1% 300.5 208.6 245.1 170.9 +17.7% 25.6 Resol. Fund and DGF 21.7 81.1 Other 65.0 +24.7% Staff costs 84.1 +21.2% 102.0
Slide 48: Credit quality
Credit quality NPL>90d Loan-loss reserves (Million euros) (Million euros) Credit ratio Coverage ratio NPL>90d 2.4% 2.7% 2.9% NPL>90d 110% 107% 108% 530.6 420.2 460.4 381.9 430.8 484.8 Jun 19 Dec 19 Jun 20 Jun 19 Dec 19 Jun 20 Loan impairment (net of recoveries) (Million euros) • NPL>90d accounted fo
Slide 49: Growing volumes
Growing volumes Customers funds Loans to Customers (gross) (Million euros) (Million euros) +9.7% +5.9% 21,130 19,259 1,605 16,621 116 15,689 Off-BS funds 1,821 Other BS funds 150 4,783 Mortgage 5,307 4,810 Term deposits 6,534 local currency 3,189 without Euro Bank Mortgage 3,143 3,416 foreign exchan
Slide 50: Net income impacted by provisions and normalisation of the interest rate environment
Net income impacted by provisions and by the normalisation of the interest rate environment Net income Net operating revenue (Million euros) (Million euros) -7.9% -7.7% 46.1 42.5 117.5 108.5 1H19 1H20 1H19 1H20 Operating costs (Million euros) • Net income of €42.5 million +7.1% • Customer funds grew
Slide 51: Net interest income impacted by the normalisation of the interest rate environment
Net interest income impacted by the normalisation of the interest rate environment Net interest income Operating costs (Million euros) (Million euros) NIM 9.6% 8.2% Cost to income 38.3% 44.4% +7.1% -4.9% 45.0 48.2 85.7 81.5 Other 25.3 +8.4% 27.4 Staff costs 19.7 +5.4% 20.8 1H19 1H20 1H19 1H20 Commis
Slide 52: 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 17.2% 16.7% 20.7% NPL>90d 57% 71% 67% 93.6 139.9 65.3 76.1 114.9 107.0 Jun 19 Dec 19 Jun 20 Jun 19 Dec 19 Jun 20 Loan impairment (net of rec
Slide 53: Business volumes
Business volumes Customers funds Loans to Customers (gross) (Million euros) (Million euros) +13.4% +1.3% 1,573 1,388 668 677 Mortgage 9 10 782 Personal and 119 +21.3% 119 Term deposits other 645 Companies 540 548 Demand deposits 743 +6.5% 791 Jun 19 Jun 20 Jun 19 Jun 20 FX effect excluded. €/Metical
Slide 54: Key figures
05 Key figures 54
Slide 55: Strategic Plan
Strategic Plan 1H19 1H20 Steady state* Franchise growth (original plan) Active Customers 4.9 million 5.6 million ... >6 million Digital Customers 57% 61% ... >60% Value creation Mobile Customers 37% 44% ... >45% Cost to income 49% 52% ... ≈40% (46% excluding non-usual costs) (50% excluding non-usual
Slide 56: Commitment to People and Society
COMMITMENT TO PEOPLE AND SOCIETY Mbcp Foundation Society Sustainability Manuel Amado Exhibition - Millennium Festival ao Largo - this year Painting without Alibi, at the Millennium bcp subscribes to the BCSD at the National Palace of Ajuda, Portugal's manifesto “Taking advantage Arpad Szenes-Vieira
Slide 57: Awards in 2020
Awards in 2020 Millennium bcp: Clearest information; most Bank Millennium: Most recommended bank and recommended bank; leader in Customer leader in Customer satisfaction (“Customer staisfaction, in product quality and in satisfaction satisfaction monitor of retail banks ARC Rynek i with account mana
Slide 58: Appendix
Appendix 58
Slide 59: Sovereign debt portfolio
Sovereign debt portfolio Sovereign debt portfolio Sovereign debt maturity (Consolidated, million euros) >5y, ≤8y: 34% Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 YoY QoQ Portugal 7,229 7,413 6,520 6,802 8,253 +14% +21% T-bills and other 1,665 1,536 1,923 1,872 1,605 -4% -14% >2y, ≤5y: 35% >8y, ≤10y: 3% Bonds
Slide 60: Sovereign debt portfolio
Sovereign debt portfolio Portugal Poland Mozambique Other Total Trading book 1,590 76 0 51 1,716 ≤ 1 year 1,590 26 0 50 1,666 > 1 year and ≤ 2 years 0 8 0 0 8 > 2 years and ≤ 5 years 0 19 0 0 19 > 5 years and ≤ 8 years 0 11 0 0 11 > 8 years and ≤ 10 years 0 12 0 0 12 > 10 years 0 0 0 0 0 Banking boo
Slide 61: Diversified and collateralised portfolio
Diversified and collateralised portfolio Loan portfolio (Consolidated) LTV of the mortgage portfolio Breakdown Loans per collateral in Portugal Other Mortgage guarantees 60-75 75-80 47% 27% 27% 8% 80-90 Companies 10% 43% Real 50-60 >90 guarantees 15% 7% 57% Unsecured 15% 0-40 40-50 12% 21% Personal/
Slide 62: Diversified loan portfolio, with reduced exposure to the most vulnerable sectors
Diversified loan portfolio, with reduced exposure to the most vulnerable sectors Diversified loan portfolio Sectors more sensitive to Covid-19 Loan-to-value (EAD as a % of performing credit portfolio) (EAD of the performing credit portfolio, million euros) Exposures to sectors more sensitive to the
Slide 63: Mortgage loan portfolio with low LTVs and controlled cost of risk
Mortgage loan portfolio with low LTVs and controlled cost of risk, even in adverse contexts Mortgage loan portfolio Cost of risk of loans to individuals (Annual average cost of risk – loans to individuals) Weight of mortgages in the portfolio of loans to LTV of the mortgage portfolio individuals Cos
Slide 64: Diversified exposure to SMEs and reduced weight in unsecured credit to individuals
Diversified exposure to SMEs and reduced weight in unsecured credit to individuals are positive factors in the European context Portuguese financial system exposure to SMEs Weight of unsecured exposures to individuals Exposure to SMEs per banking industry Unsecured exposure to individuals/ Total exp
Slide 65: Consolidated net income
Consolidated net income Impact on (Million euros) 1H19 1H20 YoY edrnings Net interest income 740.1 759.1 +2.6% +19.0 Net fees and commissions 342.2 345.2 +0.9% +3.0 Other income* 40.5 -33.4 -182.6% -73.9 Net operating revenue 1,122.7 1,070.8 -4.6% -51.9 Staff costs -324.2 -327.6 +1.0% -3.3 Other adm
Slide 66: Consolidated balance sheet
Consolidated balance sheet (Million euros) 30 June 30 June 30 June 30 June 2020 2019 2020 2019 ASSETS LIABILITIES Cash and deposits at Central Banks 4,302.6 3,586.1 Financial liabilities at amortised cost Loans and advances to credit institutions repayable on demand 350.2 313.4 Resources from credit
Slide 67: Consolidated income statement per quarter
Consolidated income statement per quarter (Million euros) 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 Net interest income 377.4 412.9 395.6 385.5 373.6 Dividends from equity instruments 0.6 0.1 0.1 0.1 3.4 Net fees and commission income 175.6 176.9 184.4 179.8 165.4 Other operating income -65.5 -13.3 -13.8 -40.4
Slide 68: Income statement
Income statement (Million euros) For the 6-month periods ended June 30th, 2019 and 2020 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 19 Jun 2 0 Δ % Jun 19 Jun 2 0 Δ % Jun 19 Jun 2 0 Δ % Jun 19 Jun 2 0 Δ % Jun 19 Jun 2 0 Δ
Slide 69: 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. Bus
Slide 70: 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 amortized cost and results from de
Slide 71: 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 211151 537 Vv investors@millenniumbcp.pt Banco Comercial Portugués, S.A., a public company (sociedade aberta) having its registered office at Praga D. Jo
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