Banco Comercial Portugues S.a. · EURONEXT:BCP
Banco Comercial Portugues — 9M 2019 Earnings Presentation
64 slides from Banco Comercial Portugues's earnings presentation, 2019
Slide 1: Banco Comercial Portugues
BANCO COMERCIAL PORTUGUES
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: Highlights
Highlights Core income (net interest income + commissions) Improved profitability (Million euros) (Million euros) +7.0% 1,562.9 1,672.0 +5.0% +1.8% 519.1 Fees and commissions 510.1 270.3 Net interest income 1,052.8 +9.5% 1,153.0 257.5 9M18 9M19 Impairment and provisions (Million euros) Cost of risk
Slide 6: Highlights
Highlights Improved asset quality NPE coverage Total coverage* Coverage by loan-loss reserves (Billion euros) 109% -1.7 107% 107% Euro Bank: NPE Group 6.3 5.5 4.6 55% €142 million 52% 51% -1.9 Sep 18 Dec 18 Sep 19 NPE Portugal 5.5 4.8 Other NPE 2.2 3.7 Lower cost of risk 2.1 1.7 Cost of risk PT, bp
Slide 7: Highlights
Highlights Strong capital Increasing business volumes (Fully implemented capital ratio) (Consolidated, billion euros) Requirement +11.6% +€1.2bn 45.5 50.1 Performing loans 44.8 15.7% +8.8% Total 13.4% 13.5% 13.1% Total business 134.8 123.9 125.1 volume Loans to 54.7 51.2 51.0 Customers (gross) CET1
Slide 8: Growing Customer base, mobile Customers standing out
Growing Customer base, mobile Customers standing out (‘000 Customers) +246,000 Customers 4,805 5,051 Active Customers Group +430,000 Customers 1,530 1,960 Mobile Customers Group +141,000 Customers 2,361 Active Customers Portugal 2,219 1,084 Digital Customers Portugal 938 +189,000 Customers 511 699 M
Slide 9: Bringing technology to processes and business model
Bringing technology to processes and business model (Consolidated, ‘000 Customers) 2,916 2,678 2,580 Digital Customers Mobile Customers 1,960 2,385 1,640 1,530 1,323 58% 39% Dec 17 Sep 18 Dec 18 Sep 19 Transforming Increasing time Increased branch operations through allocated by efficiency (sales pe
Slide 10: >1 million digital Customers in Portugal, with a significant increase since the launch of the new app
>1 million digital Customers in Portugal, with a significant increase since the launch of the new app (# transactions, (‘000 Customers) individuals) 1 084 983 938 834 46% 24% 699 560 Digital Digital 511 transactions sales 413 Since the launch of the new app (may 2019): Dec 17 Sep 18 Dec 18 Sep 19 Di
Slide 11: Highlights
Highlights Recent rating upgrades recognise Millennium bcp’s improvement over the last years DBRS Standard & Poor’s Senior debt : +1 notch to BBB (low), Stable Outlook Senior debt rating upgraded to investment grade Senior debt: +3 notches, Positive Outlook • Fitch Ratings and S&P have upgraded the
Slide 12: Group Profitability
02 Group Profitability 12
Slide 13: Net earnings of €270.3 million in the 1st nine months of 2019
Net earnings of €270.3 million in the 1st nine months of 2019 Impact on (Million euros) 9M18 9M19 YoY earnings Net interest income 1,052.8 1,153.0 +9.5% +100.2 Commissions 510.1 519.1 +1.8% +9.0 Core income 1,562.9 1,672.0 +7.0% +109.2 Operating costs excluding non-usual items -742.2 -808.0 +8.9% -6
Slide 14: Net earnings of €270.3 million, a significant improvement when non-usual items are excluded
Net earnings of €270.3 million, a significant improvement when non-usual items are excluded (Million euros) +12.8 Net impact: -41.4 +54.3 270.3 257.5 -33.5 -8.6 -8.6 +29.2 -8.4 -6.0 -5.5 Net earnings DTA Staff: Impact of low Additional Euro Bank Mandatory Gains on PT Improvement to Net earnings 9M18
Slide 15: Net interest income increases in spite of an adverse environment
Net interest income increases in spite of an adverse environment Net Interest Income Portugal (Consolidated, million euros) (Million euros) Net interest margin 1.8% 1.7% Net interest margin +0.7% 2.2% 2.2% 595.8 600.1 +9.5% 1,153.0 1,052.8 9M18 9M19 International operations (Million euros) Net inter
Slide 16: Stronger commissions, in spite of lower market-related fees
Stronger commissions, in spite of lower market-related fees Fees and commissions Portugal (Consolidated, million euros) (Million euros) +1.2% 352.5 356.9 Stronger banking business more than compensates for lower market-related fees 49.4 -23.8% 37.6 +1.8% 510.1 519.1 303.1 319.3 +5.3% Market-related
Slide 17: Performance of other income reflects higher mandatory contributions and low interest rate environment
Performance of other income reflects higher mandatory contributions and low interest rate environment Other income Portugal (Consolidated, million euros) (Million euros) -1.2% 40.9 40.4 -3.6% 43.1 27.9 73.6 70.9 41.5 48.0 Equity earnings + 39.7 -35.4 72.5 -43.7 dividends 9M18 9M19 Of which: Mandator
Slide 18: Recurring operating costs reflect growth strategy
Recurring operating costs reflect growth strategy Operating costs Portugal (Consolidated, million euros) (Million euros) +8.9% +2.9% Recurring 742.2 808.0 Recurring 456.9 470.4 Includes non-usual impact of €39.3 million: +5.5% Includes non-usual impact of €12.0 +12.3% • Compensation temp. salary cut
Slide 19: 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 information -3pp 80% 77% vs. peers in vs. Euro-zone -38pp Portugal banks 51% including non- 51% including non- 86% 51% including non- usual costs usual costs usual costs 48% 48%
Slide 20: Cost of risk continues trending to normalisation
Cost of risk continues trending to normalisation Impairment and provision charges Portugal (Consolidated, million euros) (Million euros) 68bp excl. additional Cost of risk 102bp 74bp impairment Euro Bank -24.7% Cost of risk 88bp 73bp 364.7 274.6 76.6 -12.1% 68.3 429.0 288.2 206.3 377.1 Other 92.2 9M
Slide 21: Lower NPEs and strengthened coverage
Lower NPEs and strengthened coverage Credit quality Portugal (Consolidated, million euros) (Million euros) NPE total 107% 107% coverage* NPE coverage by -33.4% Down by €0.4bn in 51% 48% 55% NPE 5,546 Q3’19 and by €1.1bn LLRs -€1.9 billion from end-2018 3,691 -27.1% NPE 6,307 -€1.7 billion Other 2,51
Slide 22: Group Business activity
02 Group Business activity 22
Slide 23: Customer funds keep growing
Customer funds keep growing Total Customers Funds* Total Customers Funds* Portugal (Consolidated, billion euros) (Billion euros) Individuals: +6.9% +5.7% +10.1% Individuals: +11.5% 56.2 53.2 80.2 14.5 15.7 72.8 1.2 1.6 18.9 18.7 16.9 Off-BS funds 17.9 18.8 22.0 1.7 Other BS funds 1.3 Sep 18 Sep 19 2
Slide 24: Increasing loan portfolio
Increasing loan portfolio Loans to Customers (gross) Portugal (Consolidated, billion euros) (Billion euros) NPE: -27.1% (-€1.7 billion) -1.1% Performing: +11.6% (+€5.2 billion) +6.9% 37.6 37.2 54.7 -1.9 +1.4 51.2 25.6 Sep 18 NPE Performing Sep 19 Mortgage 23.6 International operations (Billion euros
Slide 25: Comfortable liquidity position
Comfortable liquidity position Net loans to deposits ratio ECB funding (Billion euros) Elegible assets 15.6 18.4 3.1 1.9 89% 88% Sep 18 Sep 19 Liquidity ratios (CRD IV/CRR) 223% 138% 100% Sep 18 Sep 19 NSFR (Net stable LCR (Liquidity funding ratio) coverage ratio) 25
Slide 26: Group Capital
02 Group Capital 26
Slide 27: Capital levels adjusted to business model
Capital levels adjusted to business model Capital ratio (Fully implemented) CET1 capital ratio of 12.3%* (fully implemented) as of September 30, Requirement 2019 +€1.2bn 15.7% Total 13.4% 13.5% 13.1% Increase from 11.8% as of September 30, 2018 and from 12.0% as of December 31, 2018 due to earnings
Slide 28: Capital at adequate levels
Capital at adequate levels Leverage ratio (Fully implemented, latest available data) 7.1% 5.8% 6.2% 4.2% Leverage ratio at 7.1% as of September 30, 2019, a 3.7% comfortable and comparatively strong figure in European 3.0% banking FR DE ES IT RWA density (RWAs as % of assets, latest available data) H
Slide 29: Portugal
03 Portugal 29
Slide 30: Increased net income
Increased net income Net income* Net operating revenue (Million euros) (Million euros) +0.8% +7.1% 989.3 997.5 117.1 125.5 9M18 9M19 9M18 9M19 Operating costs (Million euros) • €12.4mn compensation for temp. • Net earnings of €125.5 million in the 1st nine months 468.9 494.8 salary cuts of 2019, +7.
Slide 31: Net interest income
Net interest income (Million euros) +0.7% +7.2 +10.7 600.1 595.8 +3.6 -9.9 -7.3 NIM 1.8% 1.7% 9M18 Credit volume Deposits' rate Effect of Credit rate Securities and other 9M19 effect effect wholesale cost effect Net interest income stood at €600.1 million in the 1st nine months of 2019, comparing to
Slide 32: 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) 9M18 9M19 2.72% 2.72% -0.55% -0.57% 9M18 9M19 3m Euribor 3m Euribor (average) -0.32% -0.34% (average) -0.32% -0.34% NIM • Continued impr
Slide 33: Commissions and other income
Commissions and other income Fees and commissions Other income* (Million euros) (Million euros) (Million euros) Includes -€8.6 million impact of low interest rates on insurer -1.2% 40.9 40.4 9M18 9M19 YoY Equity earnings + dividends 43.1 27.9 Banking fees and commissions 303.1 319.3 +5.3% Cards and
Slide 34: Controlled recurring operating costs
Controlled recurring operating costs Operating costs Employees (Million euros) Recruitment in digital areas, including internalisation of outsourcers +2.9% +129 Recurring 456.9 470.4 7,259 7,130 +5.5% 494.8 468.9 27.1 51.2* Sep 18 Sep 19 Depreciation Other 160.6 141.9* administrative costs Branches
Slide 35: Lower NPEs, with reinforced coverage
Lower NPEs, with reinforced coverage Non-performing exposures (NPE) NPE build-up (Million euros) Sep 19 Sep 19 (Million euros) -33.4% vs.Set 18 vs.Dec 18 Opening balance 5,546 4,797 5,546 -€1.9 billion Net exits -617 -336 3,691 Other NPE 2,222 Write-offs -534 -388 1,671 Sales -705 -382 NPL>90d 3,324
Slide 36: NPE coverage
NPE coverage NPE total coverage* NPL>90d total coverage* 113% 119% 114% 110% 101% 101% 16% 30% 29% Real estate collateral 40% Real estate collateral 28% 21% 65% 22% Cash, other fin.collat., 72% 17% Cash, other fin.collat., EL gap EL gap 3% 74% 2% 62% 54% LLRs 64% LLRs 26% 33% Individuals Companies T
Slide 37: Foreclosed assets and corporate restructuring funds
Foreclosed assets and corporate restructuring funds Foreclosed assets Corporate restructuring funds (Million euros) (Million euros) -5.3% 1,510 1,023 969 Impairment 205 1,134 199 Industry 139 -27.4% 186 Net value 1,305 824 829 RE/tourism -€357 million 948 Sep 18 Sep 19 Sep 18 Sep 19 • Net foreclosed
Slide 38: Growing customer funds and loans to customers
Growing customer funds and loans to customers Total Customers Funds* Loans to Customers (gross) (Billion euros) (Billion euros) Individuals: +6.9% +5.7% NPE: -33.4% (-€1.9 billion) 56.2 Performing: +4.5% (+€1.4 billion) 53.2 -1.1% 37.6 37.2 15.7 Off-BS funds 14.5 Other BS funds 1.2 1.6 Mortgage 17.1
Slide 39: Strong credit activity to companies in Portugal
Strong credit activity to companies in Portugal Performing credit portfolio (Billion euros) • Performing credit portfolio in Portugal up by €1.4 +4.5% billion (+4.5%) from September 30, 2018 +€1.4 billion 32.1 33.5 • Millennium bcp reinforced its role as the Bank of Portuguese Companies: Mortgage 16
Slide 40: International operations
04 International operations 40
Slide 41: Contribution from international operations to group earnings
Contribution from international operations to group earnings (Million euros) Δ% Δ% 9M18 9M19 local currency euros Poland 127.6 124.2 -2.6% -3.7% Mozambique 74.5 74.7 +0.3% +3.4% Angola* Before IAS 29 impact 11.7 12.6 IAS 29 impact** 1.2 -1.5 Total Angola including IAS 29 impact 12.9 11.1 Other 11.1
Slide 42: Net earnings affected by Euro Bank's acquisition
Net earnings affected by Euro Bank’s acquisition Net income Net operating revenue (Million euros) +7% excluding Euro (Million euros) Bank’s integration Euro Bank: ROE 9.5% 9.2% €59.4 million -2.6% +24.9% 127.6 124.2 586.0 469.0 9M18 9M19 9M18 9M19 • Net earnings of €124.2 million, with ROE of 9.2% O
Slide 43: Integration of Euro Bank
Integration of Euro Bank Legal merger completed on October, 1st Agreement Closing Legal merger Operational merger 5 November 2018 31 May 2019 1 October 2019 November 2019 • Euro Bank’s integration proceeds according to the plan: legal merger completed on October, 1st; full merger (single brand and I
Slide 44: Increased net interest income
Increased net interest income Net interest income* Operating costs (Million euros) (Million euros) +23.6% Euro Bank: Excluding Euro Bank NIM 2.6% 2.8% integration costs 220.7 272.8 €33.3 million Euro Bank: +30.3% +30.4% 416.6 €54.8 million 287.7 319.8 220.7 25.5 Resol. fund and DGF 20.4 121.7 Other
Slide 45: Credit quality
Credit quality NPL>90d Loan-loss reserves (Million euros) (Million euros) Credit ratio Coverage ratio NPL>90d 2.7% 2.6% NPL>90d 134% 107% 419.8 422.9 448.1 321.2 Sep 18 Sep 19 Sep 18 Sep 19 Loan impairment (net of recoveries) (Million euros) 61bp excl. additional impairment Euro Bank • NPL>90d accou
Slide 46: Growing volumes
Growing volumes Customer funds Loans to Customers (gross) (Million euros) (Million euros) +49.2% excluding FX Euro Bank: €2.0 mortgage loans +28.6% 20,387 billion +35.4% Euro Bank: €2.9 1,861 16,343 billion 146 15,858 -6.1% 5,074 Off-BS funds 1,983 +49.5% 6,531 12,071 Other BS funds 98 +67.5% Mortga
Slide 47: Stable earnings, reflecting the normalisation of the interest rate environment
Stable earnings, reflecting the normalisation of the interest rate environment Net income Net operating revenue (Million euros) (Million euros) ROE 23.5% 20.7% +2.3% +0.3% 182.9 187.1 74.5 74.7 9M18 9M19 9M18 9M19 Operating costs • Net earnings of €74.7 million, with ROE of 20.7%, reflecting (Millio
Slide 48: Stable net interest income, reflecting the normalisation of the interest rate environment
Stable net interest income, reflecting the normalisation of the interest rate environment Net interest income Operating costs (Million euros) (Million euros) NIM 10.4% 9.8% Cost to income 37.3% 38.7% +6.4% -0.4% 68.2 72.5 140.0 139.4 Other 38.6 +7.0% 41.3 Staff costs 29.5 +5.6% 31.2 9M18 9M19 9M18 9
Slide 49: 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 15.9% 17.0% NPL>90d 60% 67% 145.4 87.8 84.8 126.2 Sep 18 Sep 19 Sep 18 Sep 19 Net impairment (net of recoveries) (Million euros) • NPL>90d r
Slide 50: Business volumes reflect a conservative approach under a challenging environment
Business volumes reflect a conservative approach under a challenging environment Customer funds Loans to Customers (gross) (Million euros) (Million euros) +4.3% 1,645 1,578 -19.0% 917 Mortgage 11 Personal and other 153 +0.9% 804 743 Term deposits 809 11 -10.3% -0.5% 138 Companies 753 -21.0% 594 769
Slide 51: Key figures
05 Key figures 51
Slide 52: Strategic Plan 2021
Strategic Plan 2021 Franchise growth 9M18 9M19 2021 Active Customers 4.8 million 5.1 million >6 million Digital Customers 54% 58% >60% Value creation Mobile Customers 32% 39% >45% Cost to income 46% 49% ≈40% (45% excluding non-usual costs) (46% excluding non-usual costs) RoE 6.0% 6.0% ≈10% CET1 11.8
Slide 53: Awards in 2019
Awards in 2019 Millennium bcp: Leadership in the Bank Millennium: Best bank in Poland “PME Excelência’18” and “PME Millennium bcp Líder’18” programmes, with the largest Best consumer digital bank in number of submissions and awards Portugal; Best Information among participating banks Security and Fr
Slide 54: Appendix
Appendix 54
Slide 55: Sovereign debt portfolio
Sovereign debt portfolio Sovereign debt portfolio Sovereign debt maturity (Consolidated, million euros) Sep 18 Jun 19 Sep 19 YoY QoQ >2y, ≤5y: 38% >5y, ≤8y: 19% Portugal 6,335 7,229 7,413 +17% +3% T-bills and other 971 1,665 1,536 +58% -8% >8y, ≤10y: 4% Bonds 5,364 5,564 5,876 +10% +6% >10y: 1% Pola
Slide 56: Sovereign debt portfolio
Sovereign debt portfolio Portugal Poland Mozambique Other Total Trading book* 35 172 0 1 207 ≤ 1 year 35 7 0 0 42 > 1 year and ≤ 2 years 0 59 0 0 59 > 2 years and ≤ 5 years 0 70 0 0 70 > 5 years and ≤ 8 years 0 26 0 0 26 > 8 years and ≤ 10 years 0 9 0 0 9 > 10 years 0 0 0 1 1 Banking book** 7,378 4,
Slide 57: Diversified and collateralised portfolio
Diversified and collateralised portfolio Loan portfolio (Consolidated) LTV of the mortgage portfolio Loans per collateral in Portugal Other 75-80 Mortgage guarantees 10% 47% 26% 60-75 80-90 29% 11% Companies 42% Real >90 guarantees 9% 59% Unsecured 50-60 16% 14% 0-40 40-50 16% 11% Personal/ other 11
Slide 58: Consolidated earnings
Consolidated earnings Impact on (Million euros) 9M18 9M19 YoY earnings Net interest income 1,052.8 1,153.0 +9.5% +100.2 Net fees and commissions 510.1 519.1 +1.8% +9.0 Other income* 73.6 70.9 -3.6% -2.6 Net operating revenue 1,636.5 1,743.0 +6.5% +106.5 Staff costs -435.6 -488.0 +12.0% -52.5 Other a
Slide 59: Consolidated balance sheet
Consolidated balance sheet (Million euros) 30 September 30 September 30 September 30 September 2019 2018 2019 2018 ASSETS LIABILITIES Cash and deposits at Central Banks 3,766.3 2,192.5 Financial liabilities at amortised cost Loans and advances to credit institutions repayable on demand 286.3 330.3 R
Slide 60: Consolidated income statement per quarter
Consolidated income statement per quarter (Million euros) 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 Net interest income 365.2 370.8 362.7 377.4 412.9 Dividends from equity instruments 0.0 0.0 0.0 0.6 0.1 Net fees and commission income 169.9 174.0 166.6 175.6 176.9 Other operating income 1.7 -1.0 -10.6 -64.8 -12
Slide 61: Income statement
Income statement (Million euros) For the 9-month periods ended September 30th, 2018 and 2019 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.) O t he r int . o pe ra t io ns Sep 18 Sep 19 Δ % Sep 18 Sep 19 Δ % Sep 18 Sep 19 Δ
Slide 62: 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. Com
Slide 63: 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 amortised cost and results from de
Slide 64: 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 211131 537 Vv investors@millenniumbcp.pt Banco Comercial Portugués, S.A., a public company (sociedade aberta) having its registered office at Praga D. Joa
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