Banco Comercial Portugues S.a. · EURONEXT:BCP
Banco Comercial Portugues — FY2014 Earnings Presentation
62 slides from Banco Comercial Portugues's earnings presentation, February 2015
Slide 1: Earnings Presentation FY 2014
EARNINGS PRESENTATION FY 2014 FEBRUARY 2015
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 registrati
Slide 3: Agenda
Agenda Main Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 3
Slide 4: Highlights
Highlights • Recurring net income breaks-even in the 4th quarter of 2014. • Consolidated net income for the year strongly improved to -€217.9 million in 2014 from -€740.5 Profitability million in 2013. Improving trend • Excellent performance of operating net income: a more than twofold increase, ref
Slide 5: Highlights
Highlights Net income Recurring net income Contribution of the international operations (Million euros) reaches break-even (Million euros) in 4Q14 +13.1% 201.5 178.2 -217.9 Includes up-front effect on DTAs, influenced by the reduction of the statutory tax -740.5 +522.5 rate (-€83.5 million) 2013 201
Slide 6: Highlights
Highlights Net interest income per quarter New entries in NPL in Portugal, net of recoveries (Million euros) (Million euros) 325 634 -14.7% 295 541 260 234 234 236 201 179 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 2013 2014 Loans to deposit ratio* Capital ratios (CET1 – CRD IV / CRR) (%) Net loans to
Slide 7: Agenda
Agenda Main Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 7
Slide 8: Net income before income tax showing recovery…
Net income before income tax showing recovery… (million euros) 2013 2014 C Net interest income 848.1 1,116.2 268.1 Of which: costs related with hybrids instruments (CoCo's) -269.0 -180.0 89.0 Of which: liability management 2011 -192.5 -158.1 34.4 Net fees and commissions 663.0 680.9 17.9 Other opera
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) -126.9 Hybrids (CoCos) interest (-180.0) -217.9 -111.5 Liability management 2011 (-158.1) -221.0 AQR-related impairment in 3Q14 (-313,5) +522.5 -32.1 Inco
Slide 10: Recurring net income breaks-even in 4Q14
Recurring net income breaks-even in 4Q14 (million euros) 4Q14 Net interest income 325.2 Net fees and commissions 174.7 Other operating income 70.6 Banking income 570.5 Staff costs -157.6 Other administrative costs and depreciation -134.5 Operating costs -292.0 Operating net income (before impairment
Slide 11: Net interest income increases, particularly in Portugal
Net interest income increases, particularly in Portugal (Million euros) Net interest income Portugal Consolidated +53.7% +31.6% 1,116.2 527.0 343.0 848.1 2013 2014 International operations +16.6% 589.1 505.1 2013 2014 NIM 1.12% 1.56% NIM (excluding CoCos) 1.48% 1.81% 2013 2014 11
Slide 12: Increase in fees and commissions driven by international operations
Increase in fees and commissions driven by international operations (Million euros) +5.9% excluding effect Fees and Commissions Portugal of regulatory changes Consolidated +0.7% 430.3 433.2 2013 2014 YoY Banking fees and commissions 538.5 545.1 1.2% Cards and transfers 181.1 193.6 6.9% Loans and gua
Slide 13: Increased net trading income in Portugal, benefiting from gains in public debt portfolio
Increased net trading income in Portugal, benefiting from gains in public debt portfolio (Million euros) Net trading income Portugal Consolidated As of 31 December 2014, there are still €316 343.7 million potential gains on the investment +117.4 % portfolio (AFS/HTM) of Portuguese public debt 158.1
Slide 14: Reduction of costs in Portugal
Reduction of costs in Portugal (Million euros) Operating costs* Portugal* Consolidated -2.3% 1,176.2 1,149.6 -5.9% 733.8 68.1 65.5 690.2 -3.8% 457.5 448.5 -2.0% 2013 2014 International operations 650.6 -2.3% 635.6 +3.9% 459.4 442.4 2013 2014 Depreciation Other administrative costs Staff costs 2013 2
Slide 15: Increased provisioning due to specific impacts
Increased provisioning due to specific impacts (Million euros) Loan impairment (net of recoveries) Portugal Consolidated Cost of 194bp +37.5% 1,021.0 137bp risk 1,107.0 742.8 820.8 2013 2014 2013 2014 International operations Cost of risk evolution +10.5% Strategic (basis points) 86.2 194 plan 78.1
Slide 16: Higher coverage ratios, resulting from lower entries in NPL and higher provision charges
Higher coverage ratios, resulting from lower entries in NPL and higher provision charges (Million euros) Consolidated Net entries in NPL in Portugal Credit quality Credit ratio Dec 13 Dec 14 NPL 11.0% 11.5% 634 -14.7% Credit at risk 11.8% 12.0% 541 6,586 6,580 NPL (non- performing loans) 2013 2014 D
Slide 17: Diversified and collateralized credit portfolio
Diversified and collateralized credit portfolio Loan portfolio Consolidated Companies Loans per collateral 48% Mortgage 58% 35% 8% 45% Real guarantees Other guarantees Unsecured LTV of mortgage in Portugal 14% 9% 12% 25% 10% 17% 13% 0-40 40-50 50-60 60-75 75-80 80-90 >90 Consumer 7% Loans to compani
Slide 18: Agenda
Agenda Main Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 18
Slide 19: Deposits increase both in Portugal and in international operations
Deposits increase both in Portugal (individuals and companies) and in international operations (Million euros) Individuals’ and Customer funds Customer deposits in Portugal companies’ deposits up 7% from 2013 Consolidated +0.7% +1.5% 33,911 34,408 64,261 64,739 3,934 2,345 9,385 +4.1% 9,768 11,868 1
Slide 20: No significant changes to credit performance
No significant changes to credit performance (Million euros) Loans to Customers (gross) Portugal New production of loans to individuals increases 21% vs 2013 Consolidated -4.3% -4.7% 59,734 47,251 1,295 57,168 45,956 43,784 26,444 25,545 Dec 13 Write-offs and Dec 13 Dec 14 sales comparable 3,493 4,0
Slide 21: Continued improvement of the liquidity position
Continued improvement of the liquidity position. Current liquidity ratios in excess of future requirements Commercial Gap* Loans to deposit ratio** (BoP) (Billion euros) Difference between BS Net loans to BS Customer funds Customer funds and net loans Dec 13 Dec 14 -8pp 117% -1.1 108% 109% -4.0 -3.9
Slide 22: Lower refinancing needs in the medium to long term
Lower refinancing needs in the medium to long term. Customer deposits are the main funding source Refinancing needs of medium-long term debt (Billion euros) Already repaid 5.2 4.9 5.5 ** 2.9* 3.0 1.1 1.8 0.4 0.6 0.6 2009 2010 2011 2012 2013 2014 2015 2016 2017 >2017 Improvement of the funding struct
Slide 23: Agenda
Agenda Main Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 23
Slide 24: Capital ratios comply with regulatory requirements
Capital ratios comply with regulatory requirements CET I ratio – CRD IV/CRR (fully-implemented)* CET I ratio – CRD IV/CRR (phased-in) 12.2% 12.0% 9.3% 8.9% 1 Jan 14 Dec 14 1 Jan 14 Dec 14 RWA (M €) 46,757 43,261 RWA (M €) 45,500 42,200 Historical evolution of core tier I ratio in BCP (%) Capital rat
Slide 25: Revised pension fund assumptions, with impact in capital ratios
Revised pension fund assumptions, resulting from lower market yields, with impact in capital ratios Revision to pension fund assumptions Pension Fund (Million euros) Shares 24% Loans and €600M advances to 3,133 credit inst. -169 and others 2,533 +769 37% Properties Bonds 29% 10% Liabilities Discount
Slide 26: Agenda
Agenda Main Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 26
Slide 27: Portugal: deleveraging effort
Portugal: deleveraging effort (Million euros) Individuals’ and New production of Customer funds companies’ deposits Loans to Customers (gross) loans to individuals up 7% from 2013 increases 21% vs 2013 -0.5% -7.3% 48,128 47,881 47,251 43,784 10,528 10,800 3,689 2,673 19,916 19,142 2,162 24,880 24,33
Slide 28: Net income improves, as banking income increases and operating costs decrease
Net income improves, as banking income increases and operating costs decrease (Million euros) Net income Improved net income, resulting from an increased banking income and a reduction in operating costs The increase in banking income reflects higher -387.3 net interest and trading income Lower oper
Slide 29: Net interest income in Portugal reflects the improvement in cost of deposits
Net interest income in Portugal reflects the improvement in cost of deposits, although impacted by lower loan volumes Net interest income (Million euros) 4Q14 vs. 2014 176 3Q14 vs.2013 144 Cost of deposits effect +7.5 +172.9 CoCos effect 106 111 +14.9 +89.0 96 97 Performing loans volume effect 77 -5
Slide 30: Continued strong efforts to reduce the cost of deposits
Continued strong efforts to reduce the cost of deposits, in line with strategic plan Term deposits rate Credit portfolio rate (%) (%) 5.0% Companies 5.0% New Production 4.0% 4.0% Portfolio 3.0% 3.0% 2.0% 2.0% Mortgage 1.0% 1.0% 0.0% 0.0% S/11D/11M/12J/12S/12D/12M/13J/13S/13D/13M/14J/14S/14D/14 D-12
Slide 31: Strong performance of market commissions, lower banking fees
Strong performance of market commissions, lower banking fees (Million euros) 2013 2014 YoY Banking fees and commissions 370.0 368.0 -0.6% Cards and transfers 92.8 103.6 11.6% Loans and guarantees 125.2 119.0 -4.9% Bancassurance 72.5 72.7 0.3% Current account related 105.1 76.5 -27.3% State guarantee
Slide 32: Continued reduction in costs in Portugal, on target with strategic goals
Continued reduction in costs in Portugal, on target with strategic goals (Million euros) Operating costs* Employees -5.9% -816 733.8 690.2 8,584 Strategic Depreciation 38.2 -15.2% Plan 32.4 7,768 Other 263.0 7,500 246.9 administrative -6.1% costs Staff costs 432.6 410.8 -5.0% Dec 13 Dec 14 Dec 17 20
Slide 33: Continued increase of core income and reduction of operating costs in Portugal
Continued increase of core income and reduction of operating costs in Portugal Core Income* Operating costs* (Million euros) (Million euros) 288 247 185 185 183 212 224 181 179 189 204 201 173 173 169 Commissions 166 Net Interest Income 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q13 2Q13 3Q13 4Q13 1Q1
Slide 34: Credit quality shows signs of stabilization
Credit quality shows signs of stabilization (Million euros) Credit quality Loan impairment provisions (balance sheet) Credit ratio Dec 13 Dec 14 Provision coverage ratio Dec13 Dec 14 NPL 13.1% 14.0% NPL 48% 49% Credit at risk 13.6% 14.1% Credit at risk 46% 49% 6,213 6,134 2,953 3,034 Dec 13 Dec 14 D
Slide 35: Foreclosed assets sale above book value, confirming appropriate coverage
Foreclosed assets sale above book value, confirming appropriate coverage Foreclosed assets portfolio Number of properties sold (Million euros) -35.0% 3,434 Coverage 26.5% 17.9% 2,233 1,395 1,442 258 370 2013 2014 Book value of sold properties (Million euros) 1,184 -20.9% 1,025 306 242 dec 13 dec 14
Slide 36: Agenda
Agenda Main Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 36
Slide 37: Significant net income growth in international operations
Significant net income growth in international operations (Million euros) C% C% 2013 2014 local ROE euros currency International operations* 178.2 201.5 13.1% Poland 127.8 155.2 21.5% 22.1% 12% Mozambique 82.4 88.5 7.4% 3.4% 23% Angola 40.1 51.2 27.6% 25.5% 18% Other and non-controlling interests -7
Slide 38: Poland: Customer funds and loans to Customers growth
Poland: Customer funds and loans to Customers growth (Million euros) Customer funds Loans to Customers (gross) +4.8% + 5.6% 12,719 12,139 10,648 10,081 +0.5% 6,351 6,317 + 19.0% 1,142 959 2,805 + 12.5% 3,155 Dec 13 Dec 14 Dec 13 Dec 14 Mortgage Consumer Companies FX effect excluded. €/Zloty constant
Slide 39: Net income growth driven by higher banking income and stable operating costs
Net income growth driven by higher banking income and stable operating costs (Million euros) Net income + 21.5% 155.2 Net income grows 21.5%, with ROE of 11.8% 127.8 Banking income increase (+10.4%): increase of 15.3% in net interest income and 3.9% in commissions Stable operating costs (+2.0%), ref
Slide 40: Strong increase in core income, stable operating costs
Strong increase in core income, stable operating costs (Million euros) Net interest income* Operating costs +15.3% +2.0% 349.4 259.9 265.1 303.1 129.4 134.6 130.5 130.5 2013 2014 2013 2014 Other administrative costs and depreciation Fees and commissions Staff costs +3.9% Employees Branches 140.4 145
Slide 41: Stable credit quality, high coverage level
Stable credit quality, high coverage level (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Dec 13 Dec 14 Coverage ratio Dec 13 Dec 14 NPL 2.9% 3.0% NPL 106% 101% 307 318 314 289 Dec 13 Dec 14 Loan impairment (net of recoveries) Cost of 56 bp 61 bp risk Dec 13 Dec 14 55.8
Slide 42: Millennium bank's CHF-denominated mortgage portfolio is solid
Millennium bank’s CHF-denominated mortgage portfolio is solid; a set of risk-mitigating measures has been designed Millennium bank Comparison of CHF vs. PLN installment, in PLN The Fx-denominated mortgages portfolio of Millennium bank totalled CHF 5 billion (€4.2 billion) at year-end 2014, with an a
Slide 43: Mozambique: strong volume growth
Mozambique: strong volume growth (Million euros) Customer funds Loans to Customers (gross) +19.2% 1,932 +17.8% 1,481 1,621 44 1,257 24 289 +6.2% 272 +19.5% 1,148 961 Dec 13 Dec 14 Dec 13 Dec 14 Mortgage Consumer Companies FX effect excluded. €/Metical constant as at December 2014: Income Statement 4
Slide 44: Net income benefited from increased banking income
Net income benefited from increased banking income (Million euros) Net income +7.4% Net income increases 7.4%, with ROE at 22.6% 88.5 Increase of 10.3% in banking income: net interest 82.4 income up by 15.6%, benefitting from business expansion, and 9.1% increase in commissions Operating costs up by
Slide 45: Consistent increase in net interest income and commissions
Consistent increase in net interest income and commissions (Million euros) Net interest income Operating costs +15.6% +9.9% 140.6 121.6 98.9 90.0 10.8 9.0 38.2 41.5 42.8 46.5 2013 2014 2013 2014 Depreciation Staff costs Fees and commissions Other administrative costs +9.1% Employees* Branches 45.3 4
Slide 46: Credit quality and coverage
Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Dec 13 Dec 14 Coverage ratio Dec 13 Dec 14 NPL 3.9% 4.1% NPL 151% 127% 73 78 61 49 Dec 13 Dec 14 Loan impairment (net of recoveries) Cost of 88 bp the risk 84 bp 10.7 12.0 Dec 13 Dec 14 NPL (non p
Slide 47: Angola: strong volume growth
Angola: strong volume growth (Million euros) Customer funds Loans to Customers (gross) +10.6% 1,452 1,313 +44.9% 1,005 694 Dec 13 Dec 14 Dec 13 Dec 14 FX effect excluded. €/Kwanza constant as at December 2014: Income Statement 130.35875000; Balance Sheet 124.900 47
Slide 48: Net income increase driven by higher banking income
Net income increase driven by higher banking income (Million euros) Net income Net income increases 27.6%, with ROE at 18.4% +27.6% Increase of 11.7% in banking income: net interest 51.2 income up by 32.3%, reflecting business 40.1 expansion, with commissions up by 7.6% Operating costs increased by
Slide 49: Strong growth in core income and operating costs in line with network expansion
Strong growth in core income and operating costs in line with network expansion (Million euros) Net interest income Operating costs +32.3% 88.1 +7.7% 69.7 75.0 66.6 7.2 8.8 33.6 34.1 28.8 32.1 2013 2014 2013 2014 Depreciation Staff costs Other administrative costs Fees and commissions +7.6% Employee
Slide 50: Credit quality and coverage
Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Dec 13 Dec 14 Coverage ratio Dec 13 Dec 14 NPL 4.7% 6.4% NPL 114% 75% 49 37 65 dez 13 dez 14 33 Loan impairment (net of recoveries) Cost of 160 bp risk 102 bp 10.7 9.8 Dec 13 Dec 14 NPL (non perfo
Slide 51: Agenda
Agenda Main Highlights Group • Profitability • Liquidity • Capital Portugal International operations Conclusions 51
Slide 52: Progress on strategic plan metrics
Progress on strategic plan metrics Phases Priorities 2013 2014 2015 Initiatives Demanding Capital ratios in excess of economic CET1 na 12.0% >10% Stronger balance sheet (phased-in) requirements, reflecting rights environment … (fully issue, insurer sale, securitisation implemented) na 8.9%* (2012-13
Slide 53: Appendixes
Appendixes 53
Slide 54: Sovereign debt portfolio
Sovereign debt portfolio (Million euros) Sovereign debt portfolio Total sovereign debt maturity C% C% <1 year Dez 13 Sep 14 Dez 14 annually quarterly 23% Portugal 5,879 5,133 4,688 -20% -9% T-bills 2,178 1,055 815 -63% -23% >1 year and >3 years <2 years Bonds 3,701 4,078 3,873 5% -5% 50% 9% Poland 1
Slide 55: Sovereign debt portfolio details
Sovereign debt portfolio details (Milhões de euros) Portugal Poland Mozambique Angola Others Total Trading book 194 218 73 486 < 1 year 4 1 0 0 0 5 > 1 year and <2 years 10 61 0 0 0 71 > 2 year and <3 years 0 40 0 0 73 114 > 3 years 180 117 0 0 0.0047 296 AFS book 2,627 1,601 587 367 7 5,189 < 1 yea
Slide 56: Pension Fund
Pension Fund Assumptions Dec 13 Jun 14 Dec 14 Discount rate 4.00% 3.50% 2.50% 1.00% until 2016 0.75% until 2017 Salary growth rate 1.75% after 2016 1.00% after 2017 0.00% until 2016 0.00% until 2017 Pensions growth rate 0.75% after 2016 0.50% after 2017 Projected rate of return of fund assets 4.00%
Slide 57: The Angolan economy is increasingly diversified; BMA's exposure to the oil industry is immaterial
The Angolan economy is increasingly diversified; BMA’s exposure to the oil industry is immaterial Main macroeconomic indicators The fiscal and budget mechanisms implemented by the Angolan Government during the last oil crisis (2009) allowed 2008 2009 Ch.% 2014f 2015f GDP growth not do drop below rea
Slide 58: Financial Statements
Financial Statements 58
Slide 59: Consolidated Balance Sheet and Income Statement
Consolidated Balance Sheet and Income Statement 2014 2013 2014 2013 (Thousands of Euros) (T housands of Euros) Interest and similar income 2,652,638 2,832,912 Assets Interest expense and similar charges (1,536,487) (1,984,825) Cash and deposits at central banks 1,707,447 2,939,663 Net interest incom
Slide 60: Consolidated Income Statement
Consolidated Income Statement Quarterly evolution (Million euros) Quarterly Year-to-date C% 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 Dec 13 Dec 14 14 / 13 Net interest income 234.3 236.4 259.6 295.0 325.2 848.1 1,116.2 31.6% Dividends from equity instruments 2.0 3.3 2.5 0.1 0.1 3.7 5.9 60.0% Net fees and commi
Slide 61: Consolidated Income Statement (Portugal and International Operations)
Consolidated Income Statement (Portugal and International Operations) For the 12 months period ended 31th December, 2013 and 2014 (Million euros) Int e rna t io na l o pe ra t io ns Gro 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
Slide 62: Investor Relations Division
Investor Relations Division Rui Coimbra, Head of Investor Relations Investor Relations Reporting and Ratings Luís Pedro Monteiro 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 public co
Banco Comercial Português — FY2014 Earnings Presentation on 6ix