Banco Comercial Portugues S.a. · EURONEXT:BCP
Banco Comercial Portugues — Q1 2008 Earnings Presentation
63 slides from Banco Comercial Portugues's earnings presentation, May 12, 2008
Slide 1: Earnings Presentation 1st Quarter 2008
Earnings Presentation 1st Quarter 2008 12 May 2008
Slide 2: Disclaimer
Earnings Presentation – 1st Quarter 2008 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
Slide 3: Highlights
Earnings Presentation – 1st Quarter 2008 Highlights 1 Pretax income from Portuguese operation up 45% from 4Q07 2 Pretax income for International operations up 29% from 4Q07 3 Group pretax income up 40% from 4Q07 4 Rights issue more than 2x oversubscribed 5 Successful covered bond issue 6 Devaluation
Slide 4: Highlights
Earnings Presentation – 1st Quarter 2008 Highlights Expand retail operations in higher potential markets Reinforce pricing, risk and capital discipline 9 Successful rights issue (€1.3Bn) more than 2x oversubscribed. 9 Successful covered bonds issue (€1.0Bn). 9 “Ratings”: Stable “outlook” by all rati
Slide 5: Highlights
Earnings Presentation – 1st Quarter 2008 Highlights Expand retail operations Reinforce in higher potential markets pricing, risk and capital discipline 9 Turnaround in Portugal starting with visible positive impact on margins. margins 9 Capital position Streamline the Bank (Core Tier 1>6%), adequate
Slide 6: Highlights
Earnings Presentation – 1st Quarter 2008 Highlights Expand retail operations in higher potential markets Reinforce pricing, risk and capital discipline Streamline the Bank in order to reach superior efficiency levels Refocus on clients, Strengthen stimulate commercial activity and institutional impr
Slide 7: Highlights
Earnings Presentation – 1st Quarter 2008 Highlights Expand retail operations in higher potential markets Reinforce pricing, risk and capital 9 Volumes continue to grow- +10% in customers’ funds and +14%discipline in loans . 9 Expansion projects according to plan: 43 new branches opened during d i fi
Slide 8: Highlights
Earnings Presentation – 1st Quarter 2008 Highlights Expand retail operations in higher potential markets Reinforce pricing, risk and capital discipline 9 Number of clients stabilises with capture efforts 9 2 million clients level crossed outside Portugal Portugal. 9 1 million active retail Streamlin
Slide 9: Agenda
Earnings Presentation – 1st Quarter 2008 Agenda Group Portugal Poland Greece Other International operations 9
Slide 10: YoY lower consolidated net income but improving versus last quarter
Earnings Presentation – 1st Quarter 2008 YoY lower consolidated net income but improving versus last quarter (Eur million) Net Income Portugal -36.8% 191.3 -29.9% 134.2 Specific Items: 165.0 +21.4% 14.7 - BPI stake (-132.7). 104.3 - Reduction of variable 85.9 119.5 remuneration accrued in 2007 (+13.
Slide 11: Group net interest income growth compensating for lower trading profits
Earnings Presentation – 1st Quarter 2008 Group net interest income growth compensating for lower trading profits (Eur million) Operating Income Portugal -0.6% 660.3 656.1 Trading + Other 92.1 -25.7% 68.4 491.7 447.3 -9.0% Financial Margin 568.2 +3.4% 587.7 + Commissions 1Q07 1Q08 1Q07 1Q08 Internati
Slide 12: Improved efficiency from cost control
Earnings Presentation – 1st Quarter 2008 Improved efficiency from cost control (Eur million) Jaws Highlights Basic Revenues and Costs Base 100: 1Q06 Stable revenue growth. Operating costs decreasing vs. Q4 111 109 114 109 114 112 107 Revenues 07, in spite of expansion projects. 100 101 Costs I
Slide 13: Double digit growth in volumes in both credit and customer funds
Earnings Presentation – 1st Quarter 2008 Double digit growth in volumes in both credit and customer funds (Eur million) Loans to Customers (*) Customers’ Funds (gross) +14.3% +10.1% 72,110 69,998 63,094 63,953 63,098 57,302 28,629 29,256 18,598 17,442 25 519 25,519 Mortgage Off BS 19,248 Customers’
Slide 14: Stable cost of risk in the context of sustained loan volume growth
Earnings Presentation – 1st Quarter 2008 Stable cost of risk in the context of sustained loan volume growth (Eur million) Credit Quality Impairment charges as % of Total Loans * Gross Impairment 0.95 charges as % of Loans 0.84 Impairment 267.0% 238.1% 0.69 coverage > 90 days 0.61 ** Overdue 0.8% 0.8
Slide 15: Good credit quality performance
Earnings Presentation – 1st Quarter 2008 Good credit quality performance Overdue Loans / Total Loans % Portfolio 1Q07 2Q07 3Q07 4Q07 1Q08 Individuals 0.61 0.59 0.62 0.60 0.67 Mortgage 0.31 0.28 0.30 0.31 0.33 Consumer 2.47 2.45 2.62 2.37 2.74 Companies 1 05 1.05 1 12 1.12 1 16 1.16 0 97 0.97 1 04 1.
Slide 16: Solvency evolution and proforma including the share capital increase
Earnings Presentation – 1st Quarter 2008 Solvency evolution and proforma including the share capital increase (Eur million) Basel I Basel II Core Tier 1: 4.3% 4.2% 4.0% 6.2% Tier 1: 5.5% 5.3% 5.1% 7.7% Total: 9.6% 9.2% 8.9% 11.4% 4,057 Core Tier 1 2,674 2,637 2,637 Dec 07 Mar 08 Mar 08 Mar 08 (*) In
Slide 17: Share Capital Increase Successfully Completed
Earnings Presentation – 1st Quarter 2008 Share Capital Increase Successfully Completed 9 Share Capital Increase fully subscribed, resulting in the issuance of 1,083,270,433 shares 9Strong support from shareholders, with 1,071,230,855 shares subscribed to pursuant to the exercise of subscription righ
Slide 18: Credit ratings: stable outlook from all rating agencies
Earnings Presentation – 1st Quarter 2008 Credit ratings: stable outlook from all rating agencies Short Term Long Term Outlook Moody's P-1 Aa3 Stable Standard and Poor's A-1 A Stable Fitch Ratings F1 A+ Stable 18
Slide 19: Positive evolution of liquidity position
Earnings Presentation – 1st Quarter 2008 Positive evolution of liquidity position Wholesale funding (Eur billion) Variance May 08 vs. Mar 07 Medium Long Term Wholesale 28.6 28.8 30.1 0.4 29.0 Funding – Maturity profile 2.4 -0.6 Other M/L 3.0 2.7 2.4 2,809 Term instr. 10.3 1.3 EMTN 9.0 10.5 10.3 Ext.
Slide 20: Agenda
Earnings Presentation – 1st Quarter 2008 Agenda Group Portugal Poland Greece Other International operations 20
Slide 21: Net income lower YoY, but clearly higher QoQ
Earnings Presentation – 1st Quarter 2008 Net income lower YoY, but clearly higher QoQ (Eur million) Net Income -36.8% 165.0 104.3 +21.4% 104.3 85.9 1Q07 1Q08 4Q07 1Q08 Excluding specific items. 21
Slide 22: Top line reflects adverse market environment and lower commissions
Earnings Presentation – 1st Quarter 2008 Top line reflects adverse market environment and lower commissions yoy, but already recovering from 4Q07 (Eur million) Operating Income 491.7 -9.0% 447.3 65.5 -42.7% Trading + Other 37.5 Financial Margin 426.2 -3.8% 409.8 + Commissions 1Q07 1Q08 +2.3% 497.4 4
Slide 23: Solid net interest income performance with credit margin recovery
Earnings Presentation – 1st Quarter 2008 Solid net interest income performance with credit margin recovery (Eur million) Financial Margin +1.1% 290.8 287.7 Dividends 2.3 0.7 Net interest income 285.4 +1.7% 290.2 1Q07 1Q08 Quarterly Net Interest Income Spreads on Corporate Loans Spreads on Mortgage L
Slide 24: Lower commissions mainly reflect adverse financial markets
Earnings Presentation – 1st Quarter 2008 Lower commissions mainly reflect adverse financial markets (Eur million) Commissions 138.4 -14.1% 118.9 43.3 -25.5% Securities and Asset Management 32.3 45.5 -17.6% 37.5 Bank. Services & other 23.6 -2.3% 23.1 Credit related 26.0 +0.3% 26.0 Cards 1Q07 1Q08 151
Slide 25: Stable operating costs from greater focus in efficiency
Earnings Presentation – 1st Quarter 2008 Stable operating costs from greater focus in efficiency (Eur million) Operating Costs +0.1% 264.5 264.7 17.4 -1.9% 17.0 Depreciation 88.7 92.5 Administ. +4.2% Staff 158.4 155.2 -2.0% 1Q07 1Q08 264.5 273.3 288.7 273.5 264.7 17.2 17.4 17.4 Depreciation 17.4 17.
Slide 26: Improved C/I position in the face of a challenging context
Earnings Presentation – 1st Quarter 2008 Improved C/I position in the face of a challenging context (Eur million) Jaws Highlights Basic Revenues and Op.Costs Base 100: 1Q06 Stable revenues . 110 111 105 106 103 Costs under tight control. 100 102 103 99 Improvement in cost to income vs. Revenue
Slide 27: Yoy strong volume growth in both loans and customers funds
Earnings Presentation – 1st Quarter 2008 Yoy strong volume growth in both loans and customers funds (Eur million) Loans to Customers (*) Customers’ Funds (gross) +6.8% +9.1% 59,433 51,380 50,528 58,320 54,454 47,323 16 206 16,206 15,631 22,984 23,109 Off BS 17,310 Mortgage 21,498 Customers’ Funds 3,
Slide 28: Solid growth across business segments
Earnings Presentation – 1st Quarter 2008 Solid growth across business segments (Eur million) Retail Banking Corporate and Companies Private Banking and Asset Management Loans to Customers +8.6% 34,099 31,399 +13.5% 22,074 +23.5% 3,412 19,440 2,763 1Q07 1Q08 1Q07 1Q08 1Q07 1Q08 Customers’ Funds -12.9
Slide 29: Stable asset quality & cost of risk in the context of sustained credit volume growth
Earnings Presentation – 1st Quarter 2008 Stable asset quality & cost of risk in the context of sustained credit volume growth (Eur million) Credit Quality Impairment charges as % of Total Loans (*) Gross Impairment 0.74 charges as % Impairment of Loans 357.1% 292.5% 0.65 ** coverage > 90 days Overdu
Slide 30: Good credit quality performance
Earnings Presentation – 1st Quarter 2008 Good credit quality performance Overdue Loans / Total Loans % Portfolio 1Q07 2Q07 3Q07 4Q07 1Q08 Individuals 0.51 0.51 0.53 0.46 0.53 Mortgage 0.30 0.28 0.30 0.30 0.35 Consumer 2.05 2.13 2.22 1.55 1.85 Companies 0.71 0.82 0.88 0.77 0.85 Services 0.30 0.35 0.4
Slide 31: Millennium 2010 Program – New Branches
Earnings Presentation – 1st Quarter 2008 Millennium 2010 Program – New Branches (# branches) Change from 2000 Change from 2005 Change from 2007 to 2005 to 2007 to 1Q08 -474 -24 14 -43 39 n.a. 104 69 6 -29 100 17 -38 139 3 31
Slide 32: Agenda
Earnings Presentation – 1st Quarter 2008 Agenda Group Portugal Poland Greece Other International operations Exchange rate: fixed exchange rate was used for comparison purposes (Balance sheet: 1€ =3.5220 PLN; P/L: 1€ = 3.57603333PLN) 32
Slide 33: Sustained net income growth
Earnings Presentation – 1st Quarter 2008 Sustained net income growth (Eur million) Net Income +50.8% 35,5 23,6 1Q07 1Q08 +4.1% 35.8 35.6 34.1 35.5 23.6 1Q 2Q 3Q 4Q 1Q 2007 2008 33
Slide 34: Strengthened operating income performance on the back of sound core business
Earnings Presentation – 1st Quarter 2008 Strengthened operating income performance on the back of sound core business (Eur million) Operating Income 124.4 +20.1% 16.8 103.6 Trading + Other 21.2 -20.9% 107.6 82.4 +30.7% Financial Margin (*) + Commissions 1Q07 1Q08 125.3 129.7 124.4 119.4 103.6 27.0 2
Slide 35: Strong net interest income growth
Earnings Presentation – 1st Quarter 2008 Strong net interest income growth (Eur million) Financial Margin +38.4% 69.9 50.5 Net interest income 2.9% 3.2% 1Q07 1Q08 Quarterly Net Interest Income 69.9 67.2 58.8 52.8 50.5 NIM 2.9% 2.9% 3.1% 3.3% 3.2% 1Q07 2Q07 3Q07 4Q07 1Q08 35
Slide 36: Sustained increase in commissions
Earnings Presentation – 1st Quarter 2008 Sustained increase in commissions (Eur million) 37.7 Commissions +18.4% 31.9 12,9 -12.9% 14,8 Securities and Asset +8.4% 9,0 Management +16.5% 3,2 Bank. Services & other 8,3 +17.1% 4,2 Credit related 2,7 Cards 3,6 +244.3% 8,5 Insurance 2,5 1Q07 1Q08 39.3 40.2
Slide 37: Operating costs growing at a slower pace than revenues
Earnings Presentation – 1st Quarter 2008 Operating costs growing at a slower pace than revenues (Eur million) Operating Costs +19.3% 76.8 3.6 64.6 Depreciation 4.6 -20% 31.6 Administ. 25.8 +22% 41.7 Staff 34.1 +22% 1Q07 1Q08 86.5 76.8 69.4 75.7 11.0 64.6 4.8 3.6 4.6 4.4 Depreciation 34.7 31.6 29.2 3
Slide 38: Improved efficiency ratio
Earnings Presentation – 1st Quarter 2008 Improved efficiency ratio (Eur million) Jaws Highlights Basic Revenues and Costs Base 100: 1Q06 Fast pace revenues growth although at a lower rate than 186 188 179 Revenues 4Q07. 163 143 Costs under control despite 115 108 122 expansion. 100 Costs 133 140
Slide 39: Sustained volume growth
Earnings Presentation – 1st Quarter 2008 Sustained volume growth (Eur million) Loans to Customers (*) Customers’ Funds (net) +33.3 % 43.9% 6,813 6,254 8,124 7,927 1,275 , 1,737 4,734 6,093 4,116 3,717 Other Customers’ 1,503 Mortgage 2,569 Funds 6,849 514 535 6,190 Deposits Consumer Loans 393 4,590 L
Slide 40: Improvement in asset quality & cost of risk in absolute and relative terms
Earnings Presentation – 1st Quarter 2008 Improvement in asset quality & cost of risk in absolute and relative terms (Eur million) Credit Quality Impairment charges as % of Total Loans (*) Impairment 75% 72% coverage 1.42 Impairment ratio 5.4% 3.2% G Gross Impairment 269 charges as % 225 0.76 of Loan
Slide 41: The 4th biggest retail branch network in Poland
Earnings Presentation – 1st Quarter 2008 The 4th biggest retail branch network in Poland Branch expansion status Total number of branches With 425 branches, Bank 366 410 425 490 560 Millennium has the fourth biggest network in Poland. 282 85% of new branches to be 49 opened until 2008 year- Tran
Slide 42: Agenda
Earnings Presentation – 1st Quarter 2008 Agenda Group Portugal Poland Greece Other International operations 42
Slide 43: Profitability suffers from expansion efforts
Earnings Presentation – 1st Quarter 2008 Profitability suffers from expansion efforts (Eur million) Net Income 4.6 -7.2% 4.2 1Q07 1Q08 -34.7% 6.5 5.6 5.3 4.6 4.2 1Q 2Q 3Q 4Q 1Q 2007 2008 43
Slide 44: Strong top line growth from core business
Earnings Presentation – 1st Quarter 2008 Strong top line growth from core business (Eur million) Operating Income 40.9 34.2 +19.5% 0.8 2.3 Trading + Other 40.1 Financial Margin 31.9 +25.6% + Commissions 1Q07 1Q08 37.3 38.6 39.7 45.2 40.9 34.2 3.5 4.6 0.8 Trading + Other 7.2 2.3 2.6 Financial Margin
Slide 45: Solid net interest income evolution despite pressure on credit margins
Earnings Presentation – 1st Quarter 2008 Solid net interest income evolution despite pressure on credit margins (Eur million) Financial margin 32,451 +17.7% 27,560 1Q07 1Q08 NIM 3.04% 2.47% Quarterly Net Interest Income Spreads on Corporate Loans Spreads on Mortgage Loans Spreads on Deposits 32.5 (Y
Slide 46: Improved efficiency from costs control
Earnings Presentation – 1st Quarter 2008 Improved efficiency from costs control (Eur million) Jaws Highlights Basic Revenues and Costs Total revenues growth hindered by 1Q06 = 100 almost zero trading profits Revenues Costs under control despite 162 151 132 120 137 142 aggressive expansion plan 1
Slide 47: Strong volume evolution driven by loans to companies and deposits
Earnings Presentation – 1st Quarter 2008 Strong volume evolution driven by loans to companies and deposits (Eur million) Loans to Customers (*) Customers’ Funds (gross) +39.6% +18.9 % 4,010 4,292 3,201 3,067 3,074 , 2,580 560 1 867 1,867 457 1,663 Other Customers’ 512 1,130 Funds Loans to companies
Slide 48: Stable asset quality but increasing cost of risk
Earnings Presentation – 1st Quarter 2008 Stable asset quality but increasing cost of risk (Eur million) Credit Quality Impairment charges as % of Total Loans Impairment 64.6% 62.3% coverage > 90 days Overdue 1.6% 1.7% ratio > 90 days 0 54 0.54 5.1 Total overdue 0.36 0.35 < 90 days 3.1 0.26 73.9 > 90
Slide 49: Branch Network: Catering for More Segments and Expanding Reach
Earnings Presentation – 1st Quarter 2008 Branch Network: Catering for More Segments and Expanding Reach Branches Opening in Q1 ‘08 Presence as of 31 Mar 08 6 174 branches all over Greece Other 2 4 areas 1 1 2 1 Attica Retail Prestige Financial Segments Center Mass Market Micro business Affluent SMEs
Slide 50: Agenda
Earnings Presentation – 1st Quarter 2008 Agenda Group Portugal Poland Greece Other International operations 50
Slide 51: Mozambique: Sustained and profitable leadership position
Earnings Presentation – 1st Quarter 2008 Mozambique: Sustained and profitable leadership position (Eur million) Highlights Volumes Loans to Customers Customers’ Funds Market leadership with market shares +7.1% +21.2% above 37%. 328 602 562 Sustained growth with strong 271 profitability. 1Q07 1Q0
Slide 52: US: Operation close to breakeven as result of cost control effort
Earnings Presentation – 1st Quarter 2008 To help protect y our priv acy , PowerPoint prev ented this external picture from being automatically downloaded. To download and display this picture, click Options in the Message Bar, and then click Enable external content. US: Operation close to breakeven
Slide 53: Turkey: Possible option to benefit from growth context
Earnings Presentation – 1st Quarter 2008 Turkey: Possible option to benefit from growth context (Eur million) Highlights Volumes Loans to Customers Customers’ Funds Main focus on cost control and -23.7% +28.2% rebalancing the loan portfolio. 450 833 351 636 Strong growth in customers loans. Mark
Slide 54: Angola: Strong credit volume growth on the back of solid macro performance
Earnings Presentation – 1st Quarter 2008 Angola: Strong credit volume growth on the back of solid macro performance (Eur million) Highlights Volumes Loans to Customers Customers’ Funds Strong credit volume growth. +6.9% +119.4% 134 152 163 Results affected by branch expansion 61 plan and dollar
Slide 55: Romania: Encouraging initial figures and good market acceptance
Earnings Presentation – 1st Quarter 2008 Romania: Encouraging initial figures and good market acceptance (Eur million) Highlights Volumes Loans to Customers Customers’ Funds Developing according to plan. 79 75 Highly accepted by clients. A credit oriented operation able to originate an important
Slide 56: Conclusion
Earnings Presentation – 1st Quarter 2008 Conclusion 9 Improved performance versus 4Q 2007 9 Devaluation of BPI fully recognized against earnings 9 Portuguese Business Remains Strong with Substantial Upside Potential via Cost Optimization and Repricing 9 International Business – Strong and Profitable
Slide 57: Appendix
Earnings Presentation – 1st Quarter 2008 Appendix 57
Slide 58: Financial Statements
Earnings Presentation – 1st Quarter 2008 Financial Statements 58
Slide 59: Consolidated Balance Sheet
Earnings Presentation – 1st Quarter 2008 Consolidated Balance Sheet At 31 March, 2008 and 2007 31 March 31 December 31 March 2008 2007 2007 (Thousands of Euros) Assets Cash and deposits at central banks 1.699.441 1.958.239 1.639.424 Loans and advances to credit institutions Repayable on demand 630.0
Slide 60: Consolidated Statement of Income
Earnings Presentation – 1st Quarter 2008 Consolidated Statement of Income At 31 March, 2008 and 2007 31 March 31 March 2008 2007 (Thousands of Euros) Interest income 1.232.456 989.772 Interest expense (820.235) (603.160) Net interest income 412.221 386.612 Dividends from equity instruments 1.686 2.2
Slide 61: Consolidated Statement of Income (*)
Earnings Presentation – 1st Quarter 2008 Consolidated Statement of Income (*) At 31 March, 2008 and 2007 and Quarterly Evolution Quarterly Year-to-date (EUR Million, except percentages) Δ% Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Mar 08 Mar 07 08 / 07 Net interest income 386.6 382.2 380.9 387.6 412.2 412.2 386
Slide 62: Income Statement
Earnings Presentation – 1st Quarter 2008 Income Statement National and International Operations March 2008 and 2007 (EUR Thousands, except percentages) International Operations Group Activ. in Portugal Total Millennium Bank (Greece) Bank Millennium (Poland) Other Int. Oper Mar 2008 Mar 2007 ∆% Mar 2
Slide 63: Investor Relations Division
Earnings Presentation – 1st Quarter 2008 Investor Relations Division: Pedro Esperança Martins, Head of Investor Relations, Francisco Pulido Valente Tl: +351 21 3211081 Email: Investors@millenniumbcp.pt Banco Comercial Português, S.A., a public company (sociedade aberta) having its registered office
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