Banco Comercial Portugues S.a. · EURONEXT:BCP

Banco Comercial Portugues — 9M 2015 Earnings Presentation

59 slides from Banco Comercial Portugues's earnings presentation, November 2015

1. Slide 1: Earnings Presentation 9M 2015

   EARNINGS PRESENTATION 9M 2015 NOVEMBER 2015

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 3

4. Slide 4: Highlights

   Highlights • Net profit of €264.5 million in the first 9 months of 2015, compared to a loss of €109.5 million in the same period of 2014*. Net profit of €23.8 million in the 3rd quarter of 2015. • Core net income**up 48.2% to €651.6 million in the first 9 months of 2015 from €439.6 million in the sa

5. Slide 5: Highlights

   Highlights Net income* Contribution from Portuguese activity* (Million euros) (Million euros) +€374.0 million +€327.6 264.5 million 100.5 -109.5 9M14 9M15 -227.1 9M14 9M15 Contribution from international activity Phased-in capital ratios (CET1 – CRD IV / CRR)*** (Million euros) -€2.4 million 13.2% 1

6. Slide 6: Highlights

   Highlights Banking income in Portugal* Net interest income in Portugal (Million euros) (Million euros) +23.5% 1,253.6 +46.2% 1,015.2 513.7 351.3 9M14 9M15 9M14 9M15 Operating costs in Portugal Loans to deposits ratio** (Million euros) Net loans to on-BS Customers funds -8.1% 517.0 475.2 -7pp 111% 10

7. Slide 7: Agenda

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

8. Slide 8: 9M2015 earnings: profitability affirmed…

   9M2015 earnings: profitability affirmed… Impact on (million euros) 9M14 * 9M15 YoY earnings Net interest income 791.0 956.7 20.9% +165.7 Of which: costs related with hybrids instruments (CoCos) -162.8 -48.7 -70.1% +114.0 Net fees and commissions 506.2 520.3 2.8% +14.1 Other operating income 412.8 52

9. Slide 9: … after 4 years of losses

   … after 4 years of losses (Million euros) Net Income* Consolidated 264.5 9M: -109.5 -226.6 -740.5 -848.6 -1,219.1 2011 2012 2013 2014 9M15 * Following the first application of IFRIC 21 in June 2015, whose impacts at Group level are related with the recognition of the contributions from the banking s

10. Slide 10: Core net income improves in Portugal

    Core net income* improves in Portugal (Million euros) Core net income* Portugal Consolidated +140.4% +48.2% 372.2 651.6 154.8 439.6 9M14 9M15 International operations -1.9% 284.8 279.4 9M14 9M15 9M14 9M15 * Core net income = net interest income + net fees and commission income – operating costs 10

11. Slide 11: Net interest income increases, particularly in Portugal

    Net interest income increases, particularly in Portugal (Million euros) Net interest income Portugal Consolidated +20.9% +46.2% 956.7 513.7 351.3 791.0 9M14 9M15 International operations +0.8% 439.6 443.0 9M14 9M15 Net interest margin 1.46% 1.86% Excluding CoCos 1.76% 1.96% 9M14 9M15 11

12. Slide 12: Stable commissions, despite demanding regulatory environment

    Stable commissions, despite demanding regulatory environment (Million euros) Fees and commissions Portugal Consolidated +4.1% 333.7 320.5 9M14 9M15 YoY Banking fees and commissions 402.5 424.9 +5.6% Cards and transfers 144.5 129.6 -10.3% Loans and guarantees 116.9 133.6 +14.3% 9M14 9M15 Bancassuranc

13. Slide 13: Net trading income boosted by gains on sale of sovereign debt

    Net trading income in 2015 boosted by gains on the sale of sovereign debt in the 1st half (Million euros) Net trading Income Portugal Consolidated +49.7% +55.1% 431.6 554.1 288.3 357.2 9M14 9M15 International operations +77.8% 122.5 68.9 9M14 9M15 9M14 9M15 13

14. Slide 14: Cost reduction proceeds in Portugal

    Cost reduction proceeds in Portugal (Million euros) Operating costs Portugal Consolidated -8.1% -3.8% 517.0 857.6 475.2 825.4 48.3 Depreciation +1.3% 49.0 Other 331.2 -4.8% 315.3 administrative costs 9M14 9M15 International operations +2.8% Staff costs 478.0 340.5 350.2 -3.5% 461.1 9M14 9M15 9M14 9M

15. Slide 15: 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 -30pp 85.7% Portugal banks 64.0% 56% 56% 55.9% Bank 1 83% 59% 2013 2014 9M15 Bank 2 97% 74%  Millennium bcp is the most

16. Slide 16: Impairment slowing down in Portugal…

    Impairment slowing down in Portugal… (Million euros) Loan impairment (net of recoveries) Portugal Consolidated 109bp on 3Q15 -32.9% Cost of 201bp risk 149bp 813.4 -28.2% 545.4 874.5 628.0 9M14 9M15 International operations +35.0% 82.6 61.2 9M14 9M15 9M14 9M15 16

17. Slide 17: … with lower delinquency and increased coverage

    … with lower delinquency and increased coverage (Million euros) Credit quality Loan impairment provisions (balance sheet) Credit ratio Sep 14 Sep 15 Coverage ratio Sep 14 Sep 15 Non-perf. loans 11.6% 11.5% Non-perf. loans 51.8% 55.3% Credit at risk 12.1% 11.9% Credit at risk 49.8% 53.5% 6,767 6,451

18. Slide 18: Diversified and collateralised portfolio

    Diversified and collateralised portfolio Loan Portfolio Consolidated Companies Loans per collateral 48% Mortgage 59% 33% 8% 45% Real guarantees Other guarantees Unsecured LTV of mortgage portfolio in Portugal 15% 10% 13% 26% 10% 16% 11% 0-40 40-50 50-60 60-75 75-80 80-90 >90 Consumer 7%  Loans to C

19. Slide 19: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 19

20. Slide 20: 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: +0.7% 17.5% +0.5% Other (inc 34,241 34,480 64,942 65,237 public sector) 2,700 -21.5% 2,120 Companies 9,555 9,373 -1.9% Off

21. Slide 21: Credit increases in international operations

    Credit increases in international operations (Million euros) Market share: 18.3% Loans to customers (gross) Portugal New production Mortgage +53% Consolidated Consumer +7% Companies* +25% -3.2% -5.1% Factoring +176% 44,554 42,265 Leasing +69% Loans +12% 57,926 Other +20% 56,044 Mortgage 25,819 25,29

22. Slide 22: Continued improvement of the liquidity position

    Continued improvement of the liquidity position, current ratios exceed future requirements Difference between BS Commercial gap* Customer funds and net loans Loans to deposits ratio** (Bank of Portugal) (Billion euros) Net loans to BS Customer funds +0.5 Sep 14 Sep 15 -7pp 111% 104% 103% 99% -1.9 -1

23. Slide 23: 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 To be repaid 5.2 4.9 5.5 2.9 3.0 1.1 1.6 0.9 0.4 0.1 0.7 2009 2010 2011 2012 2013 2014 9M15 4Q15 2016 2017 >2017 Improvement of

24. Slide 24: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 24

25. Slide 25: 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 12.8% 13.1% 13.2% banks 9.6% 10.0%

26. Slide 26: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 26

27. Slide 27: Portugal: deleveraging effort improves liquidity position

    Portugal: deleveraging effort improves liquidity position (Million euros) Customer funds Loans to customers (gross) Individuals’ deposits up 4.5% vs September 2014 -1.1% 48,072 47,550 -5.1% 44,554 Off BS 10,689 42,265 10,844 funds Other BS 3,141 2,226 funds Mortgage 19,337 18,692 Term 22,942 Consume

28. 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 (+23.5%) and a 100.5 8.1% reduction in operating costs  The increase in banking income* reflects higher core income and trading

29. Slide 29: Improvement trend on core income and operating costs in Portugal

    Improvement trend on core income and operating costs in Portugal proceed Core net income** Core Income* (Million euros) (Million euros) +176 847 +217 372 672 570 Commissions 155 Net interest 16 income 9M13 9M14 9M15 9M13 9M14 9M15 Operating costs* (Million euros) -42  Core income increases to €847

30. Slide 30: 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) +162 514 3Q15 vs. 9M15 vs. 351 2Q15 9M14 247 Effect of cost of time deposits +14.5 +13

31. Slide 31: 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 Companies 395 430 430 410 398 (124) (150) (132) (110) Mortgage (173) (239) 161 131 136 142 9M15: 115 (31

32. Slide 32: Increased commissions, benefiting from early repayment of State-guarantees

    Increased commissions, benefiting from early repayment of State-guarantees (Million euros) 9M14 9M15 YoY Banking fees and commissions 269.8 293.1 +8.6% Cards and transfers 76.8 73.9 -3.9% Loans and guarantees 88.8 90.7 +2.1% Bancassurance 54.7 56.5 +3.3% Current account related 57.5 62.2 +8.1% State

33. Slide 33: The implementation of the plan proceeded, on target with strategic goals

    The implementation of the plan proceeded, on target with strategic goals (Million euros) Operating costs Employees -711 -8.1% 8,266 517.0 7,555 Depreciation 24.6 475.2 -6.8% 22.9 Other administrative 180.9 -4.6% costs 172.6 Sep 14 Sep 15 Branches -42 Staff costs -10.2% 721 311.5 679 279.7 9M14 9M15

34. Slide 34: Reinforced coverage of delinquent loans

    Reinforced coverage of delinquent loans (Million euros) Credit quality Loans impairments provisions (balance sheet) Credit ratio Sep 14 Sep 15 Coverage ratio Sep 14 Sep 15 Non-performing loans 14.1% 14.0% Non-performing loans 48.2% 52.2% Credit at risk 14.2% 14.1% Credit at risk 47.9% 51.8% 6,286 5,

35. Slide 35: Foreclosed assets sold above book value

    Foreclosed assets sold above book value, confirming appropriate coverage Foreclosed assets Number of properties sold (Million euros) -4.0% 1,688 1,621 Coverage 23.7% 19.0% 1,309 1,209 248 Impairment 287 9M14 9M15 Book value of sold properties (Million euros) Sale value -4.2% 161 154 1,061 Net value

36. Slide 36: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 36

37. Slide 37: Significant net income growth in international operations

    Significant net income growth in international operations (Million euros) Δ% Δ% 9M14 9M15 local ROE euros currency International operations* Poland 118.7 118.8 +0.0% +0.8% 11.1% Mozambique 66.2 67.6 +2.0% +4.6% 20.2% Angola 38.6 57.4 +48.7% +54.2% 23.0% Net income 223.6 243.8 +9.0% +11.0% Other and

38. Slide 38: Poland: growing Customer funds and loans to Customers

    Poland: growing Customer funds and loans to Customers (Million euros) Customer funds Loans to Customers (gross) +7.7% 13,734 Off BS funds 12,756 1,601 +6.5% +5.4% 1,503 74 11,221 Other BS funds 78 -4.9% 10,650 6,751 Term 6,625 +1.9% +3.6% 6,576 deposits Mortgage 6,347 Consumer 1,108 +17.5% 1,302 and

39. Slide 39: Stable net income, despite difficult environment

    Stable net income, despite difficult environment (Million euros) Net income  Net income in line with the same period of 2014, with a 11.1% ROE +0.05% 118.7 118.8  Difficult environment as long as exchange and interest rates are concerned, as well as regulatory developments led to a 2.7% reduction

40. Slide 40: Reduction of income compensated by lower costs

    Reduction of income, resulting from a challenging environment, compensated by lower costs (Million euros) Net interest income* Operating costs -4.9% -2.5% 267.4 200.3 195.4 254.4 Other admin costs + 101.7 96.4 depreciation Staff costs 98.6 98.9 9M14 9M15 9M14 9M15 Commissions and other income Employ

41. Slide 41: 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 Sep 14 Sep 15 Coverage ratio Sep 14 Sep 15 Non-performing loans 3.0% 2.9% Non-performing loans 101% 103% 320 339 316 331 Sep 14 Sep 15 Sep 14 Sep 15 Loan impairment (net of

42. Slide 42: Poland: resilient business model

    Poland: resilient business model Operating efficiency Asset quality (Annual growth rates) Cost to income 49.8% 55.0% NPLs 2.9% 6.0% +1.9% 67 57 Core -2.5% Cost of -4.3% risk (bp) income* Op. costs -7.0%  Core income* decreased by 4.3% from the first 9 months of 2014, affected by Net earnings and ca

43. Slide 43: Mozambique: strong volume growth

    Mozambique: strong volume growth (Million euros) Customer funds Loans to customers (gross) +21.9% 1,738 +19.6% 22 1,379 21 1,426 -0.2% Other BS 1,153 298 22 Mortgage funds 766 21 Consumer +18.3% Term +34.8% 252 568 and other deposits 1,060 On- Companies 880 +20.5% +13.7% 950 demand 836 deposits Sep

44. Slide 44: Net income boosted by increased banking income

    Net income boosted by increased banking income (Million euros) Net income  Net income up by 2.0%, with ROE at 20.2% +2.0%  Increase of 15.2% in banking income: 66.2 67.6 due to higher net interest income, commissions and results from foreign exchange operations  Operating costs up by 12.4% (+8 br

45. Slide 45: Growth in core income and operating costs driven by network expansion

    Growth in core income and operating costs driven by network expansion (Million euros) Net interest income Operating costs +12.4% +3.8% 82.3 73.2 105.4 109.3 9.0 Depreciation 8.0 +12.2% Other admin. 35.8 costs 30.4 +17.8% Staff costs 34.8 +7.8% 37.5 9M14 9M15 9M14 9M15 Commissions and other income Em

46. Slide 46: Credit quality and coverage

    Credit quality and coverage (Million euros) Credit quality Loan impairment (balance sheet) Credit ratio Sep 14 Sep 15 Coverage ratio Sep 14 Sep 15 Non-performing loans 3.6% 6.2% Non-performing loans 148% 95% 86 81 61 41 Sep 14 Sep 15 Sep 14 Sep 15 Loan impairment (net of recoveries)  Key indicators

47. Slide 47: Angola: strong performance despite lower commodity prices

    Angola: strong performance despite lower commodity prices (Million euros) Net income  Net income increases 48.7%, with ROE at 23.0%  Banking income up by 36.7%, boosted by a higher net interest income (business expansion) and +48.7% trading gains 57.4  Operating costs up by 16.2% as a result of n

48. Slide 48: Millennium Angola + ATLANTICO merger creates 2nd largest private bank in Angola

    Millennium Angola + ATLANTICO: merger creates the 2nd largest private sector bank in Angola... Main indicators Complementary business models (June 2015, million euros, local GAAP) (Strategic focus: segments) Private Corporate Total assets 2,083.1 3,305.2 Equity 295.3 365.3 Affluent Customer funds 1,

49. Slide 49: Merger maintains contribution from activities in Angola

    ... making it possible to maintain the contribution from activities in the country at levels in line with Millennium bcp’s ambitions • Merger strengthens capacity to grow in Angola, creating conditions for growth in adverse environment and Merger simultaneously adapting the bank to the implications

50. Slide 50: Agenda

    Agenda  Highlights  Group • Profitability • Liquidity • Capital  Portugal  International Operations  Conclusions 50

51. Slide 51: Progress on 2012 strategic plan metrics

    Progress on 2012 strategic plan metrics Actual Strategic plan Phases Priorities 9M14 9M15 2015 Demanding economic CET1* 12.8% 13.2% Stronger balance sheet  (phased-in) environment … >10% (fully 2012-2013 implemented)** 9.2% 10.0% LtD*** 103% 99% … <110%  Recovery of profitability in Creating Portu

52. Slide 52: Appendix

    Appendix 52

53. Slide 53: Sovereign debt portfolio

    Sovereign debt portfolio Sovereign debt portfolio Total sovereign debt maturity (Million euros) (As at September 2015) >10 years Δ% Sep 14 Jun 15 Sep 15 YoY 5% < 1 year quarterly 15% Portugal 5,133 4,505 5,049 -2% +12% >1 year and T-bills 1,055 156 199 -81% +27% <2 years Bonds 4,078 4,349 4,850 +19%

54. Slide 54: Sovereign debt portfolio

    Sovereign debt portfolio (Million euros, as at September 2015) Portugal Poland Mozambique Angola Other Total Trading book 183 160 0 0 38 381 ≤ 1 year 4 80 0 0 0 84 > 1 year and ≤ 2 years 0 68 0 0 38 106 > 2 year and ≤ 5 years 174 8 0 0.454 0 183 > 5 year and ≤ 10 years 3 4 0 0 0.0038 7 > 10 years 1

55. Slide 55: Financial Statements

    Financial Statements 55

56. Slide 56: Consolidated Balance Sheet

    Consolidated Balance Sheet* (Million euros) 30 September 30 September 30 September 30 September 2015 2014 2015 2014 Assets Liabilities Cash and deposits at central banks 1,514.5 1,757.2 Amounts owed to credit institutions 10,288.9 10,639.0 Loans and advances to credit institutions Amounts owed to cu

57. Slide 57: Consolidated Income Statement

    Consolidated Income Statement* Per quarter (Million euros) Quarterly 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 Net interest income 295.0 325.2 328.4 299.6 328.7 Dividends from equity instruments 0.1 0.1 2.0 3.8 0.1 Net fees and commission income 165.0 174.7 169.9 180.7 169.7 Other operating income -1.7 -10.1 -1

58. Slide 58: Consolidated Income Statement (Portugal and International Operations)

    Consolidated Income Statement (Portugal* and International Operations) For the 9-month periods ended 30th September, 2014 and 2015 (Million euros) International operations G roup P ortuga l Tota l Ba nk Mille nnium (P ola nd) Mille nnium bim (Moz. ) Mille nnium Angola O the r int. ope ra tions s e p

59. Slide 59: 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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