Banco Comercial Portugues S.a. · EURONEXT:BCP

Banco Comercial Portugues — FY2015 Earnings Presentation

67 slides from Banco Comercial Portugues's earnings presentation, February 2016

1. Slide 1: Earnings Presentation Full Year 2015

   EARNINGS PRESENTATION FULL YEAR 2015 FEBRUARY 2016

2. Slide 2: Disclaimer

   Disclaimer 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 The figures presented do not constit

3. Slide 3: Agenda

   Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions and targets for 2018 3

4. Slide 4: Highlights

   Highlights • Net profit of €235.3 million in 2015, compared to a loss of €226.6 million in 2014. Profitability and • Core net income* up 37.1%, from €647.4 million in 2014 to €887.9 million in 2015, reflecting a efficiency 16.6% increase in net interest income and lower operating costs (-3.7%, inclu

5. Slide 5: Highlights

   Highlights Net Income Contribution from Portuguese activity (Million euros) (Million euros) +€462.0 million 235,3 +€431.5 million 44,2 -226,6 -387,3 2014 2015 2014 2015 Including -384.6 58.8 discontinued op. Contribution from international activity Phased-in capital ratios (CET1 – CRD IV / CRR)** (M

6. Slide 6: Highlights

   Highlights Net interest income in Portugal Operating costs in Portugal (Million euros) (Million euros) 1.5% Cost to income 50.9% 41.4% NIM 1.0% +35.0% -7.0% 711,3 690,2 642,0 527,0 2014 2015 2014 2015 Loan impairment in Portugal Loans to deposits ratio* (Million euros) Net loans to on-BS Customers f

7. Slide 7: Highlights

   Highlights Retail Companies and Corporate Best benchmark scores ▪ Mobile banking users increased  New funding lines totalling “Basef Banca”, December scores twofold, resulting from the €700 million following  Increased penetration as 1st Mobile App’s new functions and agreements with EIB and EIF b

8. Slide 8: Agenda

   Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions and targets for 2018 8

9. Slide 9: 2015 earnings: profitability affirmed

   2015 earnings: profitability affirmed… Impact on (million euros) 2014 2015 YoY earnings Net interest income 1,116.2 1,301.6 16.6% +185.4 Net fees and commissions 680.9 692.9 1.8% +12.0 Other operating income 495.4 509.1 2.8% +13.7 Banking income 2,292.5 2,503.5 9.2% +211.1 Staff costs -635.6 -616.1

10. Slide 10: After 4 years of losses

    … after 4 years of losses (Million euros) Net Income €29.2 million losses in the Consolidated 4th quarter, including: • One-off impacts in Poland: -€17 million (-€14 235,3 million, net of taxes); • New contribution for the single resolution fund: -€31 million (-€22 million, net of taxes); • Losses i

11. Slide 11: Core net income improves, reflecting strong performance in Portugal

    Core net income improves, reflecting strong performance in Portugal (Million euros) Core net income* Portugal Consolidated +91.7% +37.1% 517,6 887,9 270,0 647,4 2014 2015 International operations -1.9% 377,4 370,4 2014 2015 2014 2015 * Core net income = net interest income + net fees and commission

12. Slide 12: Net interest income increases reflecting improvement in Portugal

    Net interest income increases reflecting improvement in Portugal (Million euros) Net interest income Portugal Consolidated Net Interest +16.6% Margin 1.0% 1.5% 1.301,6 +35.0% 711,3 1.116,2 527,0 2014 2015 International operations Net Interest Margin 3.2% 2.9% +0.2% 589,1 590,2 2014 2015 Net Interest

13. Slide 13: Increased commissions, despite demanding regulatory environment

    Increased commissions, despite demanding regulatory environment (Million euros) Fees and commissions Portugal Consolidated +3.5% 433,2 448,2 2014 2015 YoY Banking fees and commissions 545.1 562.5 +3.2% Cards and transfers 193.6 172.4 -11.0% 2014 2015 Loans and guarantees 159.6 178.6 +11.9% Internati

14. Slide 14: Other income: gains on sale of sovereign debt

    Other income: gains on the sale of sovereign debt were partially compensated by additional contributions (Million euros) Other income Portugal Consolidated -1.4% 395,7 390,1 +2.8% 495,4 509,1 2014 2015 International operations +19.3% 119,0 99,8 2014 2015 2014 2015 14

15. Slide 15: Cost reduction proceeds in Portugal

    Cost reduction proceeds in Portugal (Million euros) Operating costs Portugal Consolidated Cost to income 50.9% 41.4% Cost to income 51.7% 44.2% -7.0% 690,2 642,0 -3.7% 1,149.6 1,106.5 Depreciation 65,5 +1.6% 66,6 Other 448,5 -5.5% 2014 2015 admnistrative 423,8 costs International operations Cost to

16. Slide 16: Millennium bcp is one of the most efficient banks in Portugal and Eurozone

    Millennium bcp is one of the most efficient banks in Portugal and in the Eurozone Cost to core income* Cost to core income* Latest available data vs. peers in vs. Eurozone listed 110,3% -55pp Portugal banks 71,9% 55% 55% 55,5% Bank 1 83% 57% 2013 2014 2015 Bank 2 80% 67%  Millennium bcp is the most

17. Slide 17: Impairment slowing down in Portugal

    Impairment slowing down in Portugal… (Million euros) Loan impairment (net of recoveries) Portugal Consolidated 148bp 126bp Cost of on 2H15 on2H15 233bp 175bp risk Cost of risk 194bp 150bp -28.5% 1.020,8 -24.7% 729,8 1.107,0 833,0 2014 2015 International operations Cost of risk 64bp 75bp +19.7% 86,2

18. Slide 18: With lower delinquency and increased coverage

    … with lower delinquency and increased coverage (Million euros) Credit quality Loan impairment provisions (balance sheet) Cred at % of cred. 12.0% 12.1% 12.4% 11.9% 11.3% 50.8% 51.4% 51.7% 53.5% 55.1% risk % at risk NPL % 11.5% 11.6% 12.0% 11.5% 10.9% % of NPLS 52.9% 53.7% 53.5% 55.3% 57.3% 6.580 6.

19. Slide 19: Diversified and collateralised portfolio

    Diversified and collateralised portfolio Loan portfolio Consolidated Loans per collateral 61% 31% 8% Real guarantees Other guarantees Unsecured Mortgage Companies 45% 47% LTV of mortgage portfolio in Portugal 14% 10% 13% 27% 10% 16% 11% 0-40 40-50 50-60 60-75 75-80 80-90 >90 Consumer/ other 8%  Loa

20. Slide 20: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions and targets for 2018 20

21. Slide 21: Deposits increase, with individuals in Portugal and international operations standing out

    Deposits increase, with individuals in Portugal and international operations standing out (Million euros) Customer funds Customer deposits in Portugal Market Consolidated share: +1.2% 17.5% +2.2% Other (inc 34.408 34.816 66.176 public sector) 2.345 -24.7% 1.767 64.739 9.768 -1.7% 9.600 Companies Off

22. Slide 22: Credit increases in international operations

    Credit increases in international operations (Million euros) Market share: 18,2% New business Loans to customers (gross) Portugal Mortgage +60% Consumer +10% Consolidated Companies* +20% -3.0% -5.0% Factoring +140% Leasing +53% 43.784 41.595 Loans +13% 57.168 55.438 Mortgage 25.545 25.048 Dec 14 Dec

23. Slide 23: Continued improvement of the liquidity position

    Continued improvement of the liquidity position, current ratios exceed future requirements Commercial gap* Loans to deposits ratio** (BoP) (Billion euros) Difference between BS Net loans to BS Customer funds and net loans Customer funds -6pp +1.9 108% 102% -1.1 -0,4 102% 97% -3,9 +3.4 Dec 14 Dec 15

24. Slide 24: 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 Debt repayments (medium-long term) ECB Funding (Billion euros) (Billion euros) Already repaid To be repaid 6,6 5,3 5,2 4,9 5,5 2,9 3,0 1,7 1,1 0,6 0,7 0,9 2009 2010 2011 2012 2013 2014 2015 2016 2017 >2

25. Slide 25: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions and targets for 2018 25

26. Slide 26: Capital strengthened to European benchmarks

    Capital strengthened to European benchmarks, supported by profitability and specific measures Common Equity Tier 1 ratio* Common Equity Tier 1 ratio* Phased-in, latest available data Does not include effect of merge agreement in Angola (+0.4pp) vs. Eurozone listed 13.1% 13.3% banks 11.7% 9.6% 10.2%

27. Slide 27: Pension fund

    Pension fund Key figures Pension fund (Million euros) Loans to Equities banks, 21% other 28% Dec 14 Jun 15 Dec 15 Pension liabilities 3,133 3,136 3,136 Pension fund 3,095 3,070 3,158 Liabilities' coverage 110% 109% 111% Property Fund's profitability 8.1% 0.5% -0.8% 9% Actuarial differences (477) (38

28. Slide 28: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions and targets for 2018 28

29. Slide 29: Portugal: deleveraging effort improves liquidity position

    Portugal: deleveraging effort improves liquidity position (Million euros) Customer funds Loans to customers (gross) Individual’s deposits up 5.2% vs end-2014 +0.2% 47.881 47.965 -5.0% 43.784 Off-BS 10.800 10.909 41.595 funds Other BS 2.673 2.241 funds Mortgage 19.142 18.465 Term 21.936 Consumer 2.50

30. Slide 30: Net income improves significantly

    Net income improves significantly (Million euros) Net income  Improved net income resulting from an increased banking income (+14.3%), a 7.0% 44,2 reduction in operating costs and a lower cost of risk  The increase in banking income reflects higher core income -387,3  Lower operating costs result

31. Slide 31: Improvement trend on core income and operating costs in Portugal

    Improvement trend on core income and operating costs in Portugal proceeds Core net income* Core Income (Million euros) (Million euros) +200 518 1.160 +248 960 773 Commissions 270 Net interest 39 income 2013 2014 2015 2013 2014 2015 Operating costs** (Million euros) -48  Core income increases to €1,

32. Slide 32: Increase on net interest income in Portugal

    Increase on net interest income in Portugal reflects lower cost of deposits, in spite of the impact of lower loan volumes Net interest income Breakdown of net interest income growth (Million euros) (Million euros) +184 711 4Q15 vs. 2015 vs. 527 3Q15 2014 343 Effect of cost of time deposits +10.1 +18

33. Slide 33: Continued effort to reduce the cost of deposits

    Continued effort to reduce the cost of deposits Spread on term deposits portfolio Loan book spread (vs Euribor 3m, basis points) (vs Euribor 3m, basis points) 2011 2012 2013 2014 1Q15 2Q15 3Q15 4Q15 Companies 395 430 430 410 394 (124) (110) (99) Mortgage (173) (150) (132) (239) 161 131 136 139 2015:

34. Slide 34: Increased commissions, benefiting from early repayment of State-guarantees

    Increased commissions, benefiting from early repayment of State-guarantees (Million euros) 2014 2015 YoY Banking fees and commissions 368.0 389.8 +5.9% Cards and transfers 103.6 99.4 -4.0% Loans and guarantees 119.0 118.3 -0.6% Bancassurance 72.7 75.3 +3.6% Customer account related 76.5 84.2 +10.2%

35. Slide 35: Implementation of the plan proceeded, on target

    The implementation of the plan proceeded, on target with strategic goals (Million euros) Operating costs Employees Cost to income 50.9% 41.4% -309 -7.0% 7.768 7.459 690,2 Depreciation 32,4 642,0 -6.5% 30,3 Other 246,9 administrative -4.9% 234,7 Dec 14 Dec 15 costs Branches -24 Staff costs 410,8 -8.3

36. Slide 36: Reinforced coverage of delinquent loans

    Reinforced coverage of delinquent loans (Million euros) Credit quality Loans impairments provisions (balance sheet) Credit ratio Dec 14 Dec 15 Coverage ratio Dec 14 Dec 15 Non-performing loans 14.0% 13.4% Non-performing loans 49.5% 53.7% Credit at risk 14.1% 13.5% Credit at risk 49.1% 53.1% 6.134 5.

37. Slide 37: Foreclosed assets sold above book value

    Foreclosed assets sold above book value, confirming appropriate coverage Foreclosed assets Number of properties sold (Million euros) +7.3% Coverage 20.5% 16.2% 2.390 2.227 1.446 1.262 234 259 2014 2015 Impairment Book value of sold properties (Million euros) Sale value 244 257 1.212 +1.8% 1.003 227

38. Slide 38: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions and targets for 2018 38

39. Slide 39: Stable net income in international operations

    Stable net income in international operations (Million euros) Δ% Δ% 2014 2015 local ROE euros currency International operations* Poland 155.7 130.7 -16.0% -15.8% 9.1% Mozambique 84.1 84.2 +0.2% -4.8% 19.6% Angola 50.4 75.7 +50.1% +47.7% 22.8% Net income 290.2 290.6 +0.2% -1.5% Other and non-controll

40. Slide 40: Poland: growing Customer funds and loans to Customers

    Poland: growing Customer funds and loans to Customers (Million euros) Customer funds Loans to Customers (gross) +10.2% 14.047 Off-BS funds 12.747 1.591 +5.5% 71 +5.1% Other BS 1.508 11.218 funds 78 -9.3% 10.671 7.095 Term +5.0% 6.759 +3.0% 6.556 deposits Mortgage 6.365 Consumer 1.144 +16.0% 1.328 an

41. Slide 41: Net income penalised by additional contributions in 4th quarter 2015

    Net income penalised by additional contributions in the 4th quarter of 2015 (Million euros) Net income  Net income decreases 16.0%, reflecting one-offs of -€34 +2.5% without million (-€29 million, net of taxes) due to the one-offs bankruptcy of SK Bank, a contribution to the mortgage ROE 11.8% rest

42. Slide 42: Income reduction determined by additional contributions in 4th quarter 2015

    Income reduction determined by additional contributions in the 4th quarter 2015 (Million euros) Net interest income* Operating costs NIM 2.5% 2.2% Cost to income 50.2% 53.9% -2.2% -3.2% 350,3 265,8 260,0 339,3 Other admin costs + 135,0 129,2 depreciation Staff costs 130,8 130,8 2014 2015 2014 2015 C

43. Slide 43: Stable credit quality, with high levels of coverage

    Stable credit quality, with high levels of coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Dec 14 Dec 15 Coverage ratio Dec 14 Dec 15 Non-performing loans 3.0% 2.8% Non-performing loans 101% 110% 319 343 315 312 Dec 14 Dec 15 Dec 14 Dec 15 Loan impairment (net of

44. Slide 44: Mozambique: strong volume growth

    Mozambique: strong volume growth (Million euros) Customer funds Loans to customers (gross) +14.1% 1.744 +17.6% 0 1.378 1.528 19 Other BS 20 1.171 funds Mortgage 295 753 35 Term Consumer +28.9% 620 +21.4% 229 deposits and other 1.064 On- 990 Companies 908 +17.2% demand 887 +11.6% deposits Dec 14 Dec

45. Slide 45: Stable net income

    Stable net income (Million euros) Net income  Net income up by 0.2%, with ROE at 19.6% ROE 22.6% 19.6%  Increase of 13.9% in banking income +0.2% due to higher net interest income, 84,1 84,2 commissions and results from foreign exchange operations  Operating costs up by 12.8%  Common equity tier

46. Slide 46: Growth in core income partially offset by increase in operating costs

    Growth in core income partially offset by the increase in operating costs (Million euros) Net interest income Operating costs NIM 7.2% 6.3% Cost to income 44.4% 43.9% +5.3% +12.8% 106,1 133,6 140,8 94,0 11,5 Depreciation 10,3 +11.5% Other admin. 39,5 46,7 costs +18.2% Staff costs 44,2 +8.3% 47,9 201

47. Slide 47: Credit quality and coverage

    Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Dec 14 Dec 15 Coverage ratio Dec 14 Dec 15 Non-performing loans 4.1% 6.2% Non-performing loans 127% 96% 85,3 81,7 48,2 61,3 Dec 14 Dec 15 Dec 14 Dec 15 Loan impairment (net of recoveries)  Key in

48. Slide 48: Angola: strong volumes growth

    Angola: strong volumes growth (Million euros) Customer funds Loans to customers (gross) +37.5% 1.692 +16.9% 996 8 + 16.8% 94 1.230 Mortage 852 807 7 +6.3% Consumer 88 Term +39.4% and other deposits 579 894 Companies 756 + 18.2% On- 884 demand 651 +35.8% deposits Dec 14 Dec 15 Dec 14 Dec 15 FX effect

49. Slide 49: Net income increase driven by higher banking income

    Net income increase driven by higher banking income (Million euros) Net income  Net income increases 50.1%, with ROE at 22.8%; increase of 39.1% in banking income, influenced by higher net interest income and trading gains; ROE 18.4% 22.8% operating costs increased by 23.5% +50.1%  Capital ratio o

50. Slide 50: Strong growth in net interest income, partially compensated by increased operating costs

    Strong growth in net interest income, partially compensated by increased operating costs (Million euros) Net interest income Operating costs Cost to 50.9% 45.2% NIM 6.0% 6.0% income +28.0% +23.5% 91,3 111,0 73,9 Depreciation 12,5 86,7 8,7 Other admin. 36,6 33,5 costs Staff costs 31,6 42,1 2014 2015

51. Slide 51: Credit quality and coverage

    Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Dec 14 Dec 15 Coverage ratio Dec 14 Dec 15 Non-performing loans 6.4% 8.0% Non-performing loans 75% 60% 80,0 54,8 41,2 47,9 Dec 14 Dec 15 Dec 14 Dec 15 Loan impairment (net of recoveries)  Key ind

52. Slide 52: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions and targets for 2018 52

53. Slide 53: Progress on 2012 strategic plan metrics

    Progress on 2012 strategic plan metrics Actual Strategic plan Phases Priorities 2014 2015 2015 Demanding economic CET1* 11.7% 13.3% Stronger balance sheet  (phased-in) environment … >10% (fully 2012-2013 implemented) 7.8% 10.2% LtD** 102% 97% … <110%  Recovery of profitability in Creating Portugal

54. Slide 54: Significant transformation of Millennium bcp since the 2008 crisis

    Significant transformation of Millennium bcp over the last years, since the 2008 crisis Past 2015 Capital Capital ratio 4.2% 13.3% Core Tier 1 BoP, Mar 08 CET1 phased-in Loans to Deposits 175% 101% Mar 09 Liquidity Gap comercial 32.5 0.4 billion euros Mar 09 ECB funding usage 15.4 5.3 billion euros

55. Slide 55: Adapting Millennium bcp to a changing financial system

    Adapting Millennium bcp to a changing financial system A new framework for the financial system Market and Customers Competition Regulation New trends, digital Changing New supervision transformation competition mechanism, increased profile capital requirements The road to 2018 Credit Retail Compani

56. Slide 56: The road to 2018: targets

    The road to 2018: targets Target 2014 2015 2018 Branches 695 671 < 570 Customers with digital access 24% 26% > 35% [percentage of total Customers] Digital transactions 34% 40% > 50% [percentage of total transactions] Customer satisfaction #2 #2 #1 [ranking in Marktest’s Customer satisfaction index]

57. Slide 57: Road to 2018: financial targets

    Road to 2018: financial targets Target 2014 2015 2018 Phased-in CET1 ratio 11.7% 13.3% ≥11% Fully implemented CET1 ratio 7.8% 10.2% Loans to Deposits 108% 102% <100% Cost-core income 64.0% 55.4% <50% Cost-income 51.7% 44.2% <43% Cost of risk 194 bp 150 bp <75 pb ROE* -6.5% 5.3% >11% * Consistent wit

58. Slide 58: Appendix

    Appendix 58

59. Slide 59: Sovereign debt portfolio

    Sovereign debt portfolio Sovereign debt portfolio Total sovereign debt maturity (Million euros) (As at December 2015) Δ% Dec 14 Sep 15 Dec 15 YoY >5 years and < 1 year quarterly < 10 years 24% Portugal 4,688 5,049 3,848 -18% -24% 37% T-bills 815 199 881 +8% >100% Bonds 3,873 4,850 2,967 -23% -39% Po

60. Slide 60: Sovereign debt portfolio

    Sovereign debt portfolio (Million euros, as at December 2015) Portugal Poland Mozambique Angola Other Total Trading book* 180 96 0 2 38 316 ≤ 1 year 0 14 0 2 0 16 > 1 year and ≤ 2 years 0 34 0 0 38 73 > 2 year and ≤ 5 years 175 36 0 0 0 211 > 5 year and ≤ 10 years 4 12 0 0 0 16 > 10 years 0 0 0 0 0

61. Slide 61: Financial Statements

    Financial Statements 61

62. Slide 62: Consolidated Balance Sheet

    Consolidated Balance Sheet* (Million euros) 31 December 31 December 31 December 31 December 2015 2014 2015 2014 Liabilities Assets Amounts owed to credit institutions 8,591.0 10,966.2 Cash and deposits at central banks 1,840.3 1,707.4 Amounts owed to customers 51,538.6 49,816.7 Loans and advances to

63. Slide 63: Consolidated Income Statement

    Consolidated Income Statement* Per quarter (Million euros) Per quarter 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 Net interest income 325.2 328.4 299.6 328.7 344.9 Dividends from equity instruments 0.1 2.0 3.8 0.1 6.1 Net fees and commission income 174.7 169.9 180.7 169.7 172.5 Other operating income -10.1 -18.0

64. Slide 64: Consolidated Income Statement (Portugal and International Operations)

    Consolidated Income Statement (Portugal* and International Operations) For the 9-month periods ended 31th December, 2014 and 2015 (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

65. Slide 65: Consolidated Pro Forma Balance Sheet with Banco Millennium Angola equity-consolidated

    Consolidated Pro Forma Balance Sheet with Banco Millennium Angola equity-consolidated (Million euros) 31 December 31 December 2015 Liabilities 2015 Assets Amounts owed to credit institutions 8,375 Cash and deposits at central banks 1,335 Amounts owed to customers 49,847 Loans and advances to credit

66. Slide 66: Consolidated Pro Forma Income Statement with Banco Millennium Angola equity-consolidated

    Consolidated Pro Forma Income Statement with Banco Millennium Angola equity-consolidated (Million euros) Dec 15 Net interest income 1,191 Dividends from equity instruments 10 Net fees and commission income 660 Other operating income -122 Net trading income 539 Equity accounted earnings 61 Banking in

67. Slide 67: Investor Relations Division

    hiksalalle INVESTOR RELATIONS DIVISION Rui Coimbra, Head EQUITY DEBT Luis Pedro Monteiro and Paula Dantas Henriques Luis Morais and Lina Fernandes +351 21 1131 084 +351 21 1131 337 investors@millenniumbcp.pt Banco Comercial Portugués, S.A., a public company (sociedade aberta) having its registered o

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