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CORPORATE
PRESENTATION
2
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 registration. Any public offering of securities in the United States, Canada, Australia or Japan would be made by means of a
prospectus that will contain detailed information about the company and management, including financial statements
The matters discussed in this document may include forward-looking statements that are subject to risks and uncertainties. By their
nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of BCP to be
materially different from future results, performance or achievements expressed or implied by such forward looking statements. Many
of these risks and uncertainties relate to factors that are beyond BCP's ability to control or estimate precisely, such as future market
conditions, currency fluctuations, the behavior of other market participants, the actions of regulators and other factors such as BCP's
ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which
BCP operates or in economic or technological trends or conditions, including inflation and consumer confidence. Attendees at this
presentation are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this
presentation. Even if BCP’s financial condition, business strategy, plans and objectives of management for future operations are
consistent with the forward-looking statements contained in this presentation, those results or developments, as well as BCP past
performance, may not be indicative of results or developments in future periods. BCP expressly disclaims any obligation or
undertaking to release any updates or revisions to these forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable law
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
Figures for 2017 not audited
3
Agenda
Strategic Plan
Appendix
– 2017 earnings
– Other information
4
Key highlights
*Core income = net interest income + net fees and commission income.
**By loan-loss reserves, expected loss gap and collaterals.
• Profitable operation with a recurring capacity to generate operating results in
excess of €1.2 billion per annum
Net interest benefits from continuing reduction in cost of deposits and
repayment of CoCos: NIM of 2.2% in 2017 (Portugal:1.8%, up from 0.6% in 2013)
Consistent track record of delivering reduction in operating costs: cost to core-
income of 46%*, vs Eurozone’s 76%. Largest operating restructuring in Portugal, with
operating costs down by >40% from 2011 (pre-programme)
• Focused NPE management through a dedicated recovery strategy in Portugal: NPE
reduction of €6.0bn from €12.8bn at year-end 2013 to €6.8bn at December 31, 2017.
Total coverage** of 106% at December 31, 2017
• Resilient international recurring earnings contribution of €175mn in 2017
• Sustainable funding strategy: loans to deposits ratio at 93% as of December 31, 2017.
ECB funding at €3.0 billion as of the same date, down from a maximum of €12.4 billion
at year-end 2011
• Enhanced capital position: fully implemented CET1 ratio of 11.9%, phased-in of
13.2%, compared to minimum required phased-in CET1 (SREP) of 8.81% for 2018; fully
implemented total capital ratio of 13.7% and phased-in total capital ratio of 14.8%
(SREP requirement: 12.31%)
1
2
3
4
5
5
Net interest income to benefit from continuing reduction in
cost of deposits and total funding costs 1
-239 -173
-123 -83 -69
2013 2014 2015 2016 2017
Net Interest Income
... leading to a decrease in total funding
costs
NII to improve, as cost of time deposits keeps
decreasing ...
(€ mn)
(Interest expenses divided by Interest-bearing liabilities) (Portugal, spread on TDs book vs 3m Euribor, bps)
808
343
527
711 736
2013 2014 2015 2016 2017
2.41% 1.92%
1.21% 0.78% 0.44%
2013 2014 2015 2016 2017
Front book
-49 bp
NIM
0.6%
1.0%
1.5% 1.6% 1.8%
2013 2014 2015 2016 2017
6
Consistent track record of delivering reduction in
operating costs 1
9,959 8,584 7,795 7,459 7,333 7,189
2011 2013 2014 2015 2016 2017
* Excluding non-usual items in 2016: impact from revision of collective labour agreement net of restructuring costs.
**Source: Companies’ financials.
885 774 695 671 618 578
2011 2013 2014 2015 2016 2017
588
1,039
853
690 644 624
2011 2013 2014 2015 2016 2017
...with a >30% reduction in branches...
Operating costs down by > 40% vs 2011 (pre-
programme) ...
Branches (#)
Employees (#)
... and >25% reduction in employees
Operating costs (€ mn)
*
7
Millennium bcp is one of the most efficient banks in the
Eurozone 1
Cost to core income*
*Core income = net interest income + net fees and commission income.
Latest available data
Cost to core income*
PPP (Pre-provision profit)
474.1
1,243.3
2013 2017
Bank 1
Bank 2
Bank 3
Bank 4
vs. peers in
Portugal
vs. Euro-zone
banks
54%
53%
68%
78%
51%
46%
76%
101%
103%
85%
59%
46%
86%
46%
2013 2017
-40pp
80% 76% -4pp
8
157
233 175
266
140
2013 2014 2015 2016 2017
Asset quality metrics to benefit further from continued focus
on NPE reduction
2
86% 90% 93%
100% 106%
Dec13 Dec14 Dec15 Dec16 Dec 17
743 1,021 730 1,045
NPE total coverage*
Cost of risk and loan-loss charges
Impairment
charges (€mn)
Cost of risk
(basis points)
12.8 10.9
9.8 8.5
6.8
Dec13 Dec14 Dec15 Dec16 Dec 17
-1.5p.a.
NPEs (EBA definition) (€ bn)
Other
NPLs>90d
(Basis points)
Continued decrease of NPEs over the last 4 years at a
pace of €1.5bn per year as a result of a stabilisation of
the macro environment and the measures implemented
Reduction of €6.0bn from Dec 13 to Dec 17
Implemented plan to reduce NPEs by €3 billion up to
2018, with the target already achieved in Dec 17, one
year earlier
Cost of risk at 140bps in 2017 reinforcing NPE total
coverage* to 106% at end-Dec 17
533
* Coverage by LLRs, collateral and expected loss gap.
9
Strong coverage levels
Individuals 27%
Companies 73%
NPLs >90d 60%
Other NPEs 40%
2
(December 2017)
NPE breakdown Total NPEs: €6.8bn
*By loan-loss reserves, expected loss gap and collaterals.
NPE total coverage*
Other NPE total coverage* NPL >90d total coverage*
LLRs
Real estate
collateral
Cash, other fin.
collat., EL gap
LLRs
Real estate
collateral
Cash, other fin.
collat., EL gap LLRs
Real estate
collateral
Cash, other fin.
collat., EL gap
22% 50% 42%
14%
19% 18%
71%
36% 45%
107% 105% 106%
Individuals Companies Total
12% 41% 34%
24%
16% 18%
78% 49% 56%
115% 106% 108%
Individuals Companies Total
28% 57% 48%
8%
22% 18%
67%
26% 38%
102% 105% 104%
Individuals Companies Total
10
Diversified and coherent international exposure delivering resilient
contribution 3
159
178
170 170 175
2013 2014 2015 2016 2017
Key international operations Contribution to consolidated results**
* Excludes employees from SIM (insurance company)
** Comparable, assuming shareholding in Bank Millennium (Poland) constant at 50.1% and excluding discontinued operations
*** Excluding IAS 29 impact for the Angola operation in the amount of €28.4 million
(€ mn)
***
Market share: 4.4% on loans, 5.0% on deposits
Loans to Customers (gross): €11,713 million
Customers funds: €15,948 million
Customers: 1.6 million
Employees: 5,830
Branches: 355
BCP shareholding: 50.1%
Poland
Data as at December 31,2017, except Angola data (September 2017)
Angola
Loans market share: >11%
Deposits market share: >12%
Customers: >1,000,000
Employees: >1,800
Branches: 140
BCP shareholding: 22.5%
De-consolidated from June 2016
Market share: 27.3% on loans, 26.9% on
deposits
Loans to Customers (gross): €965 million
Customer funds: €1,414 million
Customers: 1.3 million
Employees: 2,476*
Branches: 186
BCP shareholding: 66.7%
Mozambique
11
Stronger funding and liquidity 4
Net loans Deposits
(€ bn)
Commercial gap (net loans – deposits)
Important deleveraging process: -30% loans
+8% deposits which account for 85% of funding
compared to 62% in 2011
Loans to deposit ratio at 93% versus 143% in 2011
Foreign operations self funded
(€ bn)
143% 93% Loans to deposits ratio
20.5 13.2 7.8 3.9 0.4
-0.8 -3.6
Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec 17
(€ bn)
68.0 62.6 56.8 53.7 52.0 48.0 47.6
Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17
47.5 49.4 49.0 49.8 51.5 48.8 51.2
Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec 17
-30% +8%
12
Credit now growing 4
(Billion euros)
Performing portfolio
34.5 32.9
31.8 30.8 31.2
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
Companies portfolio
• The performing portfolio increased in
Portugal in 2017 for the first time in 8
years
• Structural change to the portfolio of
loans to companies over recent years,
with a lower weight of construction and
real estate activities and of non-financial
holding companies
• Strong credit activity:
– Individuals: more than €2.0 billion in
new credit
– Companies: more than €600 million
granted under the “Portugal 2020”
programme; 17.2% market share in
loans to exporting companies
-4.0 -2.0
-1.2
+0.9
25.2
19.2 18.9
Dec 13 Construction, real estate, holding cos.
Other activities
Dec 16 Construction, real estate, holding cos.
Other activities
Dec 17
13
Stable deposits
Customer deposits per type Customer deposits per holder
(Billion euros) (Billion euros)
• Stable deposits as the decrease of term deposits
(due to historically low yields) has been
compensated by expanding demand deposits
• Customer deposits are now higher than at the
end of 2013, in spite of the decrease of the
deposits from public sector 9.0 10.1 12.9 14.1
16.4
24.9 24.3 21.9 19.9
18.9
33.9 34.4 34.8 34.0 35.3
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
On-demand
deposits
Term
deposits
30.0 32.1 33.0 32.7 34.2
3.9 2.3 1.8 1.4 1.1 33.9 34.4 34.8 34.0 35.3
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
Individuals and
companies
Other (inc
public sector)
4
14
Continued reduction of ECB funding 4
ECB funding
(€ bn)
Net usage of ECB funding at €3.0 billion, compared to
€12.4 billion at December 31, 2011
€12.8 billion (net of haircut) of eligible assets available
for refinancing operations with ECB, of which €2.3
billion are related to Portuguese sovereign debt, with a
€9.8 billion buffer
Future debt repayments (medium-long term)
significantly lower than in the past
Compliance with relevant liquidity ratios
Liquidity ratios (CRD IV/CRR)
124%
158%
NSFR (Net stable funding ratio)
LCR (Liquidity coverage ratio)
Buffer
ECB
funding
Total
collateral
(€ bn)
Outstanding debt repayments (medium-long term)
Already repaid To be repaid
2.3 2.3
0.7 0.4
4.8
Average 2011-2016
2017 2018 2019 >2019
12.4 10.5 10.0 6.6 5.3 4.4 3.0
15.7
22.3 19.9
14.2 13.9 12.1 12.8
Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec 17
15
Enhanced capital position 5
Minimum phased-in capital requirements (SREP)
Capital ratio* (Million euros)
-926 -392 -25
6,081
4,738
Equity DTAs EL gap Other CET1 fully imp.
From equity to CET1 capital*
11.9% CET1 ratio
fully imp.
6.4%
9.3%
12.8% 13.2%
Dec09 Dec11 Dec16** Dec17
CT1 ratio, BoP definition CET1 ratio phased-in, CRDIV/CRR
11.9% Fully
imp. 11.1%
Pillar 1Conservation
buffer
Counter-
cyclical
buffer
Other syst.
important
institutions
buffer
Pillar 2
requirements
(P2R)
Total
require
-ments
Dec 17
Phased-in*
CET1 4.50% 1.875% 0.00% 0.1875% 2.25% 8.81% 13.2%
Total capital 8.00% 1.875% 0.00% 0.1875% 2.25% 12.31% 14.8%
*Estimates including earnings for the year. **Estimates as at January 1, 2017, adjusted by the impact of the capital increase and of CoCos
repayment, both completed in February 2017.
16
23% 20%
44% 41%
56%
FR DE ES IT
Strengthened capital, in line with European peers, with high RWA
density and leverage ratios
RWA density
Leverage ratio
Phased-in, latest available data
5
RWAs as % of assets, latest available information
4.5% 4.2%
5.8% 6.5%
7.2%
FR DE ES IT
Common Equity Tier 1 ratio
*Estimates including earnings for the year.
Phased-in, latest available data
vs. Euro-zone
banks
*
12.0%
13.4%
12.3%
13.3%
13.2%
17
Strategic plan for 2018 reaffirmed on a stronger equity base
1 Estimates including earnings for the year. | 2 Estimates as at January 1, 2017, adjusted by the impact of the capital increase and of CoCo
repayment, both completed in February 2017. | 3 Core income = net interest income + net fees and commissions income. | 4 Based on a
fully implemented CET1 of 11%.
Consolidated
Cost of risk
Cumulative NPE reduction (PT)
- Target (€ billion)
- Actual (€ billion)
CT1 / CET11
Loans to Deposits
Cost-Core Income3
Cost–Income
2016 2017 2018
216 bp
-1.0
-1.2
Phased-in: 12.8%2
Fully implemented: 11.1%2
98%
41.6% (51.5% excluding non-usual items)
37.2% (48.5% excluding non-usual items)
122 bp
-2.0
-3.0
Phased-in: 13.2%
Fully implemented: 11.9%
93%
46.4%
43.4%
<75 bp
-3.0
≈11%
<100%
<50%
<43%
0.5% 4.4% ≈10% RoE4
18
Investment case
1
2
3
4
Reference private sector bank in Portugal, and well-positioned in a rapidly
changing landscape, following the completion of the restructuring plan
successfully implemented over the last years: one of the most efficient
banks in the Eurozone, with cost to core income ratio of 46% (Eurozone:
76%) and cost to income ratio of 43%
Profitable commercial banking business model with highly recurrent
operating results, supported by a continued track record of improvement
in operating performance: PPP in excess of €1.2 billion per annum
Profitable and self-funded international operations
Strong balance sheet (phased-in CET1 ratio at 13.2%, loans to deposits of
93%)
Distinct
position
Return to normalization allows Millennium bcp to focus on its core
strengths
19
Agenda
Strategic Plan
Appendix
– 2017 earnings
– Other information
20
2017 earnings
Highlights
Group
• Profitability
• Liquidity
• Capital
Portugal
International operations
Conclusions
21
Summary
• Net profit of €186.4 million (€23.9 million in 2016), on the back of
improved earnings from the domestic activity. Stable recurring
international contribution
NPEs in Portugal, down by €1.8 billion in the year to €6.8 billion at
year-end 2017, were clearly lower than the €7.5 billion target.
Total coverage, including guarantees, increased to 106%
• The performing credit portfolio increased in Portugal in 2017 for
the first time in 8 years
• Strong business performance, with Customer acquisition standing
out. Active Customers for the Group total 5.4 million, an increase
in excess of 300,000 Customers from December 31, 2016
1
2
3
4
22
Highlights: improved profitability 1
(Million euros)
Net income
Core net income*
908.2
185.7
215.8
647.4 833.6
1,094.0 1,103.8
2013 2014 2015 2016 2017
• Net earnings of €186.4 million in 2017, a
substantial improvement from previous years
• Improved earnings from domestic activity,
whose contribution amounted to €39.0 million
• Stable recurring international contribution
• Core net income increased to €1,104 million
in 2017, supported by the continued expansion
of net interest income: NIM stood at 2.2% in
2017, compared to 1.9% in 2016 and to 1.1% in
2013
• One of the most efficient banks in the
Eurozone, with cost to core income of 46%
(cost to income of 43%, compared to 73% in
2013)
-36.6
-740.5
-226.6
235.3
23.9
186.4
2013 2014 2015 2016 2017
Not including
extraordinary gains on
Portuguese sovereign
debt of €272 million
Impact from revision of collective labour
agreement, net of restructuring costs
*Core net income = net interest income + net fees and commission income - operating costs.
23
Highlights: improved asset quality 2
(Million euros)
Non-performing exposures (NPEs)
NPE coverage*
6,213 6,134 5,572 5,029 4,058
12,783 10,921
9,777 8,538
6,754
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
NPL>90d
Other
NPEs
• NPEs in Portugal down to €6.8 billion as at
December 31, 2017, showing a strong pace
of reduction from 2013 (-€1.5 billion per
year, in average)
• €1.8 billion NPE reduction in 2017,
exceeding the annual €1 billion reduction
target
• The NPE decrease from December 31, 2016
is attributable to a €1.0 billion NPL>90d
reduction and to a €0.8 billion reduction
of other NPEs
• NPE total coverage* of 106%, broken down
as follows:
– coverage by loan-loss reserves of 42%
– coverage by real estate collateral of 45%
– coverage by cash and other financial
collateral of 13%
– coverage by expected loss gap of 6%
*By loan-loss reserves, expected loss gap and collaterals.
5% 4% 4%
1% 6% 86% 90% 93%
101% 106%
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
Coverage by
impairment 31% 39% 23% 28% 42%
Coverage
by EL gap
24
Highlights: credit now growing in Portugal 3
(Billion euros)
Performing portfolio
34.5 32.9
31.8 30.8 31.2
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
Companies portfolio
• The performing portfolio increased in
Portugal in 2017 for the first time in 8
years
• Structural change to the portfolio of
loans to companies over recent years,
with a lower weight of construction and
real estate activities and of non-financial
holding companies
• Strong credit activity:
– Individuals: more than €2.0 billion in
new credit
– Companies: more than €600 million
granted under the “Portugal 2020”
programme; 17.2% market share in
loans to exporting companies
-4.0 -2.0
-1.2
+0.9
25.2
19.2 18.9
Dec 13 Construction, real estate, holding cos.
Other activities
Dec 16 Construction, real estate, holding cos.
Other activities
Dec 17
25
Highlights: strong business performance, especially
as long as Customers and service are concerned 4
4Q17
2017
Consumer choice
Superbrands | Portugal and Moçambique
Best bank
Euromoney | Mozambique
Branch transformation model
Celent Model Bank Award | Portugal
Best bank in trade finance
Global Finance | Mozambique
Best private bank in Portugal
The Banker | Portugal
Banking category
Marketeer | Portugal
Closest to Customers, most innovating,
most adequate products
Data E| Portugal
Best Consumer Digital Bank
Global Finance | Portugal and Poland
Best commercial bank
World Finance| Activobank Portugal
Best digital strategy
ACEPI Navegantes | Activobank
Portugal
Best financial services site/app
ACEPI Navegantes | Portugal
Best branch experience
Best Customer Experience Awards |
Portugal
Consumer choice bank
Consumer choice award| Portugal
Best bank in Mozambique
The Banker and Global Finance | Mozambique
Group
Customer
base
Digital
Customers
5.4 million active Customers
(>300,000 vs 2016)
2.5 million active digital
Customers (+16.0% vs 2016)
Portugal
Customer
acquisition
Digital
Customers
Individuals: >220,000 Customers
Companies: >16,000 Customers
Individuals: 790,000 active
(+15.1%)
Companies: 99,400 active
(+10.8%)
Awards
Customer
base 2.4 million active Customers
(approximately +100,000 vs 2016)
#1 in both traditional and mobile banking
Newsweek Friendly Bank| Poland
Innovative Wealth Management Technology Platform Private Banker International Editor’s Choice Award | Switzerland
26
2017 earnings
Highlights
Group
• Profitability
• Liquidity
• Capital
Portugal
International operations
Conclusions
27
Profit of €186.4 million in 2017
*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.
(million euros) 2016 2017 YoYImpact on
earnings
Net interest income + Commissions 1,874.0 2,058.0 +9.8% +184.0
Operating costs -780.0 -954.2 +22.3% -174.2
Core net income 1,094.0 1,103.8 +0.9% +9.8
Other income* 222.7 139.5 -37.4% -83.2
Operating net income 1,316.7 1,243.3 -5.6% -73.4
Impairment and provisions -1,598.0 -924.8 -42.1% +673.2
Net income before income tax -281.3 318.5 +599.8
Income taxes, non-controlling interests and disc. operations 305.2 -132.1 -437.3
Net income 23.9 186.4 +162.5
€965.7 million excluding impact from
revision of collective labour agreement,
net of restructuring costs (€185.7 million)
€126.5 million excluding gains on
Visa transaction (€96.2 million)
€1,034.8 million excluding impact
from revision of collective labour
agreement, net of restructuring
costs, and gains on Visa transaction
28
Net interest income boosted by the continued reduction in the
cost of deposits and by CoCo repayment
(Million euros)
Net interest income Portugal
Net interest margin 1.9% 2.2%
1,230.1
1,391.3
2016 2017
+13.1%
494.0 583.4
2016 2017
Net interest margin 1.6% 1.8%
736.1 807.8
2016 2017
+9.7%
International operations
+18.1% Net interest margin 2.7% 3.1%
Consolidated
29
Increase of commissions in international operations stands out,
stable in Portugal
(Million euros)
456.6 455.5
2016 2017
Fees and commissions
187.2 211.2
2016 2017
+12.8%
Portugal
International operations
-0.2%
Consolidated
2016 2017 YoY
Banking fees and commissions 532.3 546.6 +2.7%
Cards and transfers 144.4 155.5 +7.7%
Loans and guarantees 157.9 158.0 +0.1%
Bancassurance 89.1 94.7 +6.3%
Customer account related 101.9 103.8 +1.9%
Other fees and commissions 39.0 34.5 -11.5%
Market related fees and commissions 111.5 120.1 +7.6%
Securities operations 73.3 77.5 +5.7%
Asset management 38.3 42.6 +11.3%
Total fees and commissions 643.8 666.7 +3.6%
30
Other income* influenced by higher mandatory contributions and by
gains on Visa transaction in 2016
(Million euros)
Other income*
222.7
139.5
2016 2017
Visa transaction 96.2 0.0
Mandatory
contributions 112.1 125.6
Portugal
International operations
89.3
51.3
2016 2017
Visa transaction 26.4 0.0
Mandatory
contributions 51.7 57.9
Visa transaction 69.9 0.0
Mandatory
contributions 60.4 67.8
133.5 88.3
2016 2017
• Bank. sector extra cont. PT: 31.0
• European Resolution Fund: 18.2
• Resolution Fund/DGF PT: 8.6
Consolidated
*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.
31
356.6
526.6
373.6
374.0 49.8
53.6
780.0
954.2
2016 2017
Operating costs
(Million euros)
Operating costs
Staff costs
Other
administrative
costs
Depreciation
438.3
587.6
2016 2017
341.7 366.6
2016 2017
Portugal
International operations
Consolidated
€965.7 million excluding impact from
revision of collective labour agreement,
net of restructuring costs (€185.7 million) €624.0 million
excluding impact
from revision of
collective labour
agreement, net of
restructuring costs
(€185.7 million)
32
Millennium bcp: one of the most efficient banks in the
Eurozone
Cost to core income*
Bank 1
Bank 2
Bank 3
Bank 4
Latest available data
vs. peers in
Portugal
vs. Euro-zone
banks
54%
53%
68%
78%
51%
46%
76%
101%
103%
85%
59%
46%
86%
46%
2013 2017
-40pp
Cost to core income*
80% 76% -4pp
73%
43%
2013 2017
-30pp
Cost to income
67% 64% -3pp
*Core income = net interest income + net fees and commission income.
33
Strengthening the balance sheet: cost of risk now trending
towards normalisation (Million euros)
1,116.9
623.7
481.1
301.1
1,598.0
924.8
2016 2017
International operations
1,045.2 533.1
470.6
253.8
1,515.9
786.9
2016 2017
-48.1%
-42.1%
216bp 122bp
Loans
Cost of risk
Other
71.7 90.6 10.4
47.3 82.1
137.9
2016 2017
Loans
Cost of risk
Other
Loans
Cost of risk
Other
266bp 140bp
+67.9% 58bp 70bp
Loan-loss
reserves 3,741 3,322
Loan-loss
reserves 3,346 2,864
Loan-loss
reserves 395 458
Impairment and provision charges Portugal Consolidated
34
8,538 6,754
Dec 16 Dec 17
836 904
Dec 16 Dec 17
Lower delinquency and increased coverage
*EBA definition.
**By loan-loss reserves, expected loss gap and collaterals.
(Million euros)
NPEs
NPL>90d
Other
NPEs
NPEs
+8.1%
-20.9%
5,385 4,527
3,989
3,131
9,374
7,658
Dec 16 Dec 17
-18.3%
Down from €944
million at June 30
Portugal Credit quality Consolidated
International operations
Dec 16 Dec 17
NPL>90 days ratio 10.4% 8.9%
NPE ratio* 18.1% 15.0%
NPE ratio inc. securities and off-BS* 14.5% 11.1%
NPE coverage by loan-loss reserves 39.9% 43.4%
NPE total coverage** 100% 103%
35
2017 earnings
Highlights
Group
• Profitability
• Liquidity
• Capital
Portugal
International operations
Conclusions
36
Strong business dynamics results in growing Customer funds in
Portugal and in international operations (Million euros)
Tot. Customer funds* international operations
Total Customer funds* in Portugal
22,017 25,447
26,781 25,740
1,636 1,501
16,544 18,698
66,978
71,386
Dec 16 Dec 17
Total Customer funds*
On-
demand
deposits
Term
deposits
Other BS
funds
Off-BS
funds
+6.6%
Consolidated
14,084 16,401
19,938 18,889
15,252 16,659
49,274 51,949
Dec 16 Dec 17
Demand
deposits
Term
deposits
Other
+5.4%
+6.3% including
OTRVs
7,933 9,046
6,843 6,851
2,929 3,539
17,704 19,437
Dec 16 Dec 17
Demand
deposits
Term
deposits
Other
+9.8%
*Deposits, debt securities, assets under management, capitalisation products and investment funds placed with Customers.
37
Credit volumes reflect increasing performing portfolio, in spite of
continued NPE reduction
(Million euros)
Loans to customers (gross)
23,682 23,753
4,058 3,795
24,018 23,408
51,758 50,955
Dec 16 Dec 17
Companies
Consumer
and other
Mortgage
International operations
Portugal
-1.6%
12,398 12,960
Dec 16 Dec 17
+4.5%
Consolidated
NPE: -18.2%
Performing: +2.1%
39,361 37,996
Dec 16 Dec 17
-3.5%
NPE: -20.9%
Performing: +1.4%
38
Comfortable liquidity position
Net loans to deposits ratio
98%
93%
Dec 16 Dec 17
-5pp
ECB funding
(Billion euros)
4.4 3.0
Dec 16 Dec 17
12.8 12.1 Eligible
assets
Liquidity ratios (CRD IV/CRR)
124%
158%
NSFR (Net stable funding ratio)
LCR (Liquidity coverage ratio)
39
2017 earnings
Highlights
Group
• Profitability
• Liquidity
• Capital
Portugal
International operations
Conclusions
40
Strengthened capital, in line with European peers
Common Equity Tier 1 ratio Phased-in, latest available data
vs. Euro-zone
banks
*Estimates including earnings for the year. **Estimates as at January 1, 2017, adjusted by the impact of the capital increase and of CoCos
repayment, both completed in February 2017.
*
12.0%
13.4%
12.3%
13.3%
13.2%
Phased-in Fully implemented
12.8% 13.2% 11.1% 11.9%
Dec 16 Dec 17 Dec 16 Dec 17
39.3 40.2 38.8 39.8
14.0% 14.8% 12.3% 13.7%
Common Equity Tier 1 ratio*
Capital Ratios CET1 of 13.2% (phased-in) and 11.9% (fully implemented).
ECB decision on 2018 SREP requirements: minimum CET1 of 8.8% with a Pilar 2 SREP requirement
of 2.25% (-0.15pp versus 2017).
Increased fully implemented capital ratio from 11.1% as at the end of 2016 due to:
– net earnings for the year (+0.5pp);
– improved fair value reserves (+0.8pp, reflecting, to a large extent, lower yields on the
Portuguese sovereign debt portfolio), compensated by increased RWAs and expected loss
gap, among others (-0.5pp)
Increased fully implemented capital ratio from 11.7% as at September 30, 2017 due to:
– net earnings for the quarter (+0.2pp impact);
– improved fair value reserves (+0.2pp)
– lower DTA deductions, more than compensated an increase in RWAs
Total capital ratios of 14.8% (phased-in) and 13.7% (fully implemented), boosted by the €300
million subordinated debt issue (tier 2)
** **
ECB requirement (SREP)
for CET1 in 2018: 8.8%
RWAs (€Bn)
Total
ratio
41
Successful subordinated debt issue signals Millennium
bcp’s return to Tier 2 market
Asset Managers
48%
Hedge Funds 37%
Banks 10%
Insurers and
PFunds 5%
UK & Ireland 43%
Iberia 17%
Germany, Austria &
Switzerland 15%
France, Belgium & Luxembourg
13%
Asia 5%
Other 4% Italy 3%
5 yr subordinated debt issue
Breakdown by type of Geography
Issuer: Banco Comercial Português, S.A.
Issue rating (S/M/F/D): B3/B-/B+/BB(L)
Amount: €300 million
Issue date: 7 December 2017
Maturity: 7 December 2027
Issuer’s Call: 7 December 2022, subject to
previous authorization by the
relevant authorities
Cupon: 4.50% (Fixed, Annual) until 7
December 2022. One time reset
year 5 to prevailing 5Y MS +
4.267% (initial margin)
Listing / ISIN: Irish Stock Exchange /
PTBCPWOH0034
Demand: 3 times oversubscribed
Breakdown by type of Investor
42
4.5% 4.2%
5.8% 6.5%
7.2%
FR DE ES IT
Capital at comfortable levels, strong leverage ratios
Leverage ratio
Texas ratio*
Leverage ratio
Phased-in Fully implemented
7.4% 7.2% 6.0% 6.5%
Dec 16 Dec 17 Dec 16 Dec 17
Phased-in, latest available data
101.2% 82.9%
Dec 16 Dec 17
23% 20%
44% 41%
56%
FR DE ES IT
RWA density RWAs as % of assets, latest available information
*Texas ratio = NPE / (Tangible equity + loan-loss reserves).
43
Pension fund
Assumptions of the fund unchanged
from December 31, 2016
Pension liabilities coverage at 104%
Positive actuarial differences in 2017
(+€29 million), reflecting the fund’s
performance above the assumptions
Pension fund
Shares 12%
Bonds 33%
Real Estate 8%
Cash and Others 47%
Key figures
Assumptions
(Million euros)
Dec 16 Dec 17
Pension liabilities 3,093 3,050
Pension fund 3,124 3,166
Liabilities' coverage 101% 104%
Fund's profitability -2.6% +4.2%
Actuarial differences (303) +29
Discount rate
Projected rate of return of fund assets
Mortality Tables
Men
Women
2.10%
Tv 88/90
Tv 88/90-3 years
Tv 88/90
Dec 17
2.10%
0.25% until 2019
Tv 88/90-3 years
2.10%
Salary growth rate
Pensions growth rate
Dec 16
2.10%
0.25% until 2019
0.75% after 2019
0.00% until 2019
0.50% after 2019
0.75% after 2019
0.00% until 2019
0.50% after 2019
44
2017 earnings
Highlights
Group
• Profitability
• Liquidity
• Capital
Portugal
International operations
Conclusions
45
438.3 587.4
2016 2017
-157.3
39.0
2016 2017
1,326 1,352
2016 2017
Increased net income
(Million euros)
Net income
Operating costs
Banking income
Net income of €39.0 million in 2017, + €196.3 million
compared to the loss of €157.3 million booked in 2016
Net income was driven by a 9.7% increase in net interest
income and a significant improvement in credit
impairment (-49.0%, with a reduction in the cost of risk
from 266bp to 140bp), as well as by the reduction of
other impairments and provisions (-46.1%)
Results for 2016 also influenced by the booking of gains
on the Visa transaction (€26.4 million) and resulting from
the revision of the collective labour agreement (€185.7
million, net of restructuring costs)
€624.0 million excluding impact from
revision of collective labour agreement,
net of restructuring costs (€185.7 million)
46
Lower cost of time deposits more than compensates for the
decreases of credit volumes and Euribor
Net interest income (Million euros)
Increase in net interest income compared to 2016, reflecting the impact of the consistent
reduction of the cost of time deposits, the repayment of CoCos and the reduction of NPLs,
more than compensating for the negative effects of the reduction of Euribor rates and of lower
credit volumes, reflecting, to a large extent, the focus on NPE reduction
The increase of the net interest income from €201.6 million in 3Q17 to €216.0 million in 4Q17
is mainly attributable to the reduction of the cost of funding (retail and wholesale including
the impact of TLTRO)
+9.7%
-24.5 -36.5
+11.8 +59.2
+57.6 +4.1 736.1
807.8
2016 Effect of lower Euribor on
credit
Performing loans volume
effect
NPL effect
CoCo repayment
effect
Effect of cost of time deposits
Other 2017
1.6% 1.8%
NIM
47
Continued effort to reduce the cost of deposits
Continued improvement of the spread of
the portfolio of term deposits: from -0.9%
in 2016 to -0.7% in 2017; December’s
front book, priced at an average spread of
-49bp, is still below current back book’s
spread
Spread on the performing loan book at
2.7% in 2017 (2.9% in 2016)
NIM stood at 1.8% (1.6% in 2016)
Spread on the performing loan book
-0.9% -0.7%
2016 2017
(vs 3m Euribor)
Spread on the book of term deposits (vs 3m Euribor)
2.9% 2.7%
2016 2017
NIM
1.6% 1.8%
2016 2017
48
Commissions and other income*
(Million euros)
Visa transaction 26.4 0.0
Mandatory
contributions 51.7 57.9
133.5
88.3
2016 2017
-33.9%
Fees and commissions Other income*
Stable commissions in spite of the
booking of investment banking
operations in 2016 (under "other
commissions")
Other income* was influenced by
higher mandatory contributions and
by gains on the Visa transaction in
2016
*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.
2016 2017 YoY
Banking fees and commissions 397.0 392.2 -1.2%
Cards and transfers 100.2 104.9 +4.7%
Loans and guarantees 107.6 104.6 -2.8%
Bancassurance 76.7 78.1 +1.8%
Customer account related 90.5 92.5 +2.2%
Other fees and commissions 22.0 12.1 -45.2%
Market related fees and commissions 59.6 63.4 +6.4%
Securities operations 53.5 56.7 +6.0%
Asset management 6.1 6.6 +9.7%
Total fees and commissions 456.6 455.5 -0.2%
49
Operating costs
Employees
Branches
(Million euros)
176.1
332.3
232.7
222.1 29.4
33.2
438.3
587.6
2016 2017
Operating costs
618 578
Dec 16 Dec 17
-40
7,333 7,189
Dec 16 Dec 17
-144
Staff costs
Other
administrative
costs
Depreciation
€624.0 million excluding
impact from revision of
collective labour agreement,
net of restructuring costs
(€185.7 million)
50
Lower NPL>90d, with reinforced coverage
(Million euros)
3,346 2,864
Dez 16 Dez 17
NPL>90d
5,029
4,058
Dec 16 Dec 17
Loan-loss reserves
1,045.2
533.1
2016 2017
266bp 140bp
Loan impairment (net of recoveries)
Cost of
risk Jun 17
vs.Jun 16
Jun 17
vs.Mar 17
Saldo inicial 5.755 4.819
+/- Entradas líquidas -215,5 16,6
- Anulações -356,2 -71,2
- Vendas -625,5 -206,5
Saldo final 4.558 4.558
As a % of
NPL>90d 66.5% 70.6%
-19.3%
51
Lower NPEs
(Million euros)
Non-performing exposures (NPEs) NPE build-up
NPEs in Portugal down by €1.8 billion, from €8.5 billion
as at December 30, 2016 to €6.8 billion as at the same
date of 2017
This decrease results from net exits of €613 million,
sales of €670 million and write-offs of €500 million
The decrease in NPE from December 30, 2016 is
attributable to a €1.0 billion reduction of NPL>90d and
to a €0.9 decrease of other NPE
Significant NPE decrease during the 4th quarter, to €6.8
billion at end-December from €7.2 billion at end-
September (-€0.4 billion)
5,029 4,058
3,509
2,696
8,538
6,754
Dec 16 Dec 17
-20.9%
NPL>90d
Other NPEs
Dec 17
vs.Dec 16
Dec 17
vs.Sep 17
Opening balance 8,538 7,168
+/- Net entries -613 -218
- Write-offs -500 -99
- Sales -670 -97
Ending balance 6,754 6,754
52
Reinforced NPE coverage
NPE total coverage* NPE total coverage*
Other NPE total coverage* NPL >90d total coverage*
LLRs
Real estate
collateral
Cash, other fin.
collat., EL gap
LLRs
Real estate
collateral
Cash, other fin.
collat., EL gap LLRs
Real estate
collateral
Cash, other fin.
collat., EL gap
22% 50% 42%
14%
19% 18%
71%
36% 45%
107% 105% 106%
Individuals Companies Total
12% 41% 34%
24%
16% 18%
78% 49% 56%
115% 106% 108%
Individuals Companies Total
28% 57% 48%
8%
22% 18%
67%
26% 38%
102% 105% 104%
Individuals Companies Total
LLRs
Real estate
collateral
Cash, other fin.
collat., EL gap
39% 42%
15% 18%
46% 45%
100% 106%
Dec 16 Dec 17
*By loan-loss reserves, expected loss gap and collaterals.
53
Foreclosed assets and corporate restructuring funds
Foreclosed assets
Number of properties sold
(Million euros)
(Million euros)
248
379
2016 2017
+53.1%
Book value
1,582 1,546
200 232
1,782 1,778
Dec 16 Dec 17
Net value
Impairment
Corporate restructuring funds
(Million euros)
# properties
sold 2,566 3,852
Sale value 272 428
108 1
866
819
227
199
1,201
1,019
Dec 16 Dec 17
Original credit exposure: €2,006 million
Book value (31 Dec 2017): €1,019 million
Total impairment (credit+restr. funds): €986 million
(49% coverage)
EBITDA yoy growth (ex-construction): +31% in 2016,
+30% in 2015
Construction
RE/tourism
Industry
54
14,084 16,401
19,938 18,889
1,545 1,391
13,707 15,268
49,274 51,949
Dec 16 Dec 17
19,227 18,863
2,435 1,988
17,698 17,145
39,361 37,996
Dec 16 Dec 17
Strong business dynamics leads to increased Customer funds and
performing credit portfolio
(Million euros)
Loans to Customers (gross) Total Customer funds*
+5.4%
-3.5%
On-
demand
deposits
Term
deposits
Other BS
funds
Off-BS
funds
Companies
Consumer
and other
Mortgage
NPE: -20.9%
Performing: +1.4%
*Deposits, debt securities, assets under management, capitalisation products and investment funds placed with Customers.
55
2017 earnings
Highlights
Group
• Profitability
• Liquidity
• Capital
Portugal
International operations
Conclusions
56
Contribution from international operations
(Million euros)
172.8 146.2
28.4 174.6
Contribution 2016 Contribution 2017 IAS 29 impact (Angola) Contribution 2017 (comparable)
+1.0%
*Contribution of the Angolan operation.
Subsidiaries’ net income presented for 2016 at the same exchange rate as of 2017 for comparison purposes.
2016 2017Δ %
local currency
Δ %
eurosROE
Poland 164.9 160.2 -2.9% -0.0% 9.3%
Mozambique 69.1 85.1 +23.2% +19.5% 24.2%
Angola*
Before IAS 29 impact 30.3 28.5
IAS 29 impact -- -28.4
Total Angola including IAS 29 impact 30.3 0.1
Other 13.2 9.0 -31.4% -31.9%
Net income 277.4 254.5 -8.3% -8.0%
Non-controlling interests Poland and Mozambique -105.3 -108.3
Exchange rate effect 0.7 --
Contribution from international operations 172.8 146.2 -15.4%
On a comparable basis:
Contribution international op. excluding IAS 29 (Angola) 172.8 174.6 +1.0%
57
Strong performance of net earnings adjusted by Visa transaction in
2016
261.6 272.0
2016 2017
(Million euros)
Net income
Operating costs
ROE 10.4% 9.3%
+3.9%
FX effect excluded. €/Zloty constant at December 2017 levels: Income Statement 4.25142917; Balance Sheet 4.1756. | *Pro forma data.
Margin from derivative products, including those from hedging FX denominated loan portfolio, is included in net interest income, whereas in
accounting terms, part of this margin (€9.5 million in 2017 and €11.9 million in 2016) is presented in net trading income.
Banking income
106.7
58.2
164.9 160.2
2016 2017
+50.1%
Net earnings at €160.2 million, with ROE of 9.3%.
The decrease from 2016 reflects the impact of
the Visa transaction (net gain of €58.2 million in
2016)
Net interest income up by 11.6%*, commissions
by 14.2% and operating costs by 3.9%
Customer funds up by 5.3%, with loans to
customers increasing by 1.1%
1.6 million active Customers, 10% up from
December 31, 2016, with 1.1 million active
digital Customers (+16%)
509.6
71.9
581.5 594.0
2016 2017
+16.5%
Impact from Visa
transac., before tax Impact from Visa
transac., net of tax
58
136.7 156.1
78.7 29.3
215.4 185.4
2016 2017
Increased net interest income and commissions
131.4 140.3
130.2 131.7
261.6 272.0
2016 2017
Net interest income*
Commissions and other income
Operating costs
Branches Employees
+3.9%
368 355
Dec 16 Dec 17
366.1 408.5
2016 2017
+11.6%
(Million euros)
Staff costs
Other
-13.9%
Commissions
Other
NIM 2.4% 2.6% Cost to income 45.0% 45.8%
+14.2%
+6.8%
+1.1%
5,844 5,830
Dec 16 Dec 17
-14 -13
*Pro forma data. Margin from derivative products, including those from hedging FX denominated loan portfolio, is included in net interest
income, whereas in accounting terms, part of this margin (€9.5 million in 2017 and €11.9 million in 2016) is presented in net trading
income. | FX effect excluded. €/Zloty constant at December 2017 levels: Income Statement 4.25142917; Balance Sheet 4.1756.
59
53.6 59.8
2016 2017
Credit quality
NPL>90d
Loan impairment (net of recoveries)
Loan-loss reserves
(Million euros)
NPL>90d ratio at 2.8% of total credit as at
December 31, 2017, compared to 2.6% as at the
same date of the previous year
Provision coverage of NPL>90d at 109%
(unchanged vs. December 31, 2016)
Cost of risk increased to 54bp (49bp in 2016)
Credit ratio Dec 16 Dec 17
NPL>90d 2.6% 2.8%
Coverage ratio Dec 16 Dec 17
NPL>90d 109% 109%
326.9 358.6
Dec 16 Dec 17
300.4 327.6
Dec 16 Dec 17
Cost of risk
49bp 54bp
+11.6%
FX effect excluded. €/Zloty constant at December 2017 levels: Income Statement 4.25142917; Balance Sheet 4.1756.
60
7,129 7,904
6,252 5,812
97 110 1,671
2,122
15,149 15,948
Dec 16 Dec 17
Growing volumes
3,425 3,821
1,501 1,640
4,353 3,560
2,308 2,691
11,588 11,713
Dec 16 Dec 17
+1.1%
-18.2%
+9.3%
+11.6%
(Million euros)
Loans to Customers (gross) Customer funds
Companies
Consumer
and other
Mortgage foreign exchange
On-
demand
deposits
Term
deposits
Other BS
funds
Off-BS
funds
+5.3%
+10.9%
-7.0%
+13.4%
+27.0%
FX effect excluded. €/Zloty constant at December 2017 levels: Income Statement 4.25142917; Balance Sheet 4.1756.
+12.7% excluding FX
mortgage loans
Mortgage local currency
+16.6%
61
Growing net earnings
69.1 85.1
2016 2017
+23.2%
(Million euros)
Net income
Operating costs
198.0 224.1
2016 2017
+13.2% ROE 23.1% 24.2%
Banking income
77.8 84.9
2016 2017
+9.2%
Net income up by 23.2%, with ROE at 24.2%
13.2% increase in banking income, on the back of
higher net interest income (+27.9%) and commissions
(+2.4%), in spite of the increase in operating costs
(+9.2%)
Customer funds up by 1.8%, loans to customers down
by 19.5%
445,000 active mobile Customers, +17% from end-
December, 2016
FX effect excluded. €/Metical constant at December 2017 levels : Income Statement 71.69020833; Balance Sheet 70.4400.
62
34.8 37.0
43.0 47.9
77.8 84.9
2016 2017
2,402 2,476
Dec 16 Dec 17
Growing income partially offset by the increase in
operating costs
+9.2%
(Million euros)
*Excludes employees from SIM (insurance company)
Net interest income
Commissions and other income
Operating costs
Branches Employees*
Staff costs
Other 135.5
173.2
2016 2017
+27.9%
176
186
Dec 16 Dec 17
+74 +10
+6.4%
+11.5%
NIM 8.3% 10.2% Cost to income 39.3% 37.9%
29.7 30.4
32.8 20.5
62.5 50.9
2016 2017
-18.6%
+2.4%
-37.6%
FX effect excluded. €/Metical constant at December 2017 levels : Income Statement 71.69020833; Balance Sheet 70.4400.
Commissions
Other
63
Credit quality
NPL>90d
Loan impairment (net of recoveries)
Loan-loss reserves
(Million euros)
NPL>90d ratio of 14.3% as at December 31,
2017, with a 68% coverage by loan-loss
reserves as at the same date
Increased provisioning effort, as reflected
by a 295bp cost of risk in 2017, up from
195bp in 2016
Credit ratio Dec 16 Dec 17
NPL>90d 6.0% 14.3%
Coverage ratio Dec 16 Dec 17
NPL>90d 121% 68%
87.3 93.3
Dec 16 Dec 17
71.9
137.8
Dec 16 Dec 17
Cost of risk 195bp 295bp
22.9 27.9
2016 2017
+21.8%
Down from €162
million as reported in
June
FX effect excluded. €/Metical constant at December 2017 levels : Income Statement 71.69020833; Balance Sheet 70.4400.
64
970 787
215
167
14
11
1,199
965
Dec 16 Dec 17
Growing deposits and lower credit
-19.5%
-22.6%
-18.8%
(Million euros)
Loans to Customers (gross) Customer funds
Companies
Consumer
and other
Mortgage
On-
demand
deposits
Term
deposits
-5.4%
+10.8%
+1.8%
-16.3%
FX effect excluded. €/Metical constant at December 2017 levels : Income Statement 71.69020833; Balance Sheet 70.4400.
768 726
621 688
1,389 1,414
Dec 16 Dec 17
65
2017 earnings
Highlights
Group
• Profitability
• Liquidity
• Capital
Portugal
International operations
Conclusions
66
Road to 2018: targets
1 Estimates including earnings for the year. | 2 Estimates as at January 1, 2017, adjusted by the impact of the capital increase and of CoCo
repayment, both completed in February 2017. | 3 Core income = net interest income + net fees and commissions income. | 4 Based on a
fully implemented CET1 of 11%.
Consolidated
Cost of risk
Cumulative NPE reduction (PT)
- Target (€ billion)
- Actual (€ billion)
CT1 / CET11
Loans to Deposits
Cost-Core Income3
Cost–Income
2016 2017 2018
216 bp
-1.0
-1.2
Phased-in: 12.8%2
Fully implemented: 11.1%2
98%
41.6% (51.5% excluding non-usual items)
37.2% (48.5% excluding non-usual items)
122 bp
-2.0
-3.0
Phased-in: 13.2%
Fully implemented: 11.9%
93%
46.4%
43.4%
<75 bp
-3.0
≈11%
<100%
<50%
<43%
0.5% 4.4% ≈10% RoE4
67
Millennium bcp: a bank ready for the future
Profitability and
balance-sheet
indicators in line
with targets for
2017/2018
• Largest private sector bank based in Portugal with a balanced
shareholder structure and a sound balance sheet (phased-in
CET1 ratio of 13.2%, loans to deposits of 93%)
• Successful implementation of the NPE reduction plan in Portugal:
€1.8 billion down in 2017 to €6.8 billion, exceeding the annual
reduction target to <€7.5 billion
• Profitable operation with a recurring capacity to generate
operating results in excess of €1.2 billion per year; positive and
growing contribution from domestic activity
• One of the most efficient banks in the Eurozone, with a cost to
core income ratio of 46% (Eurozone: 76%) and a cost to income
ratio of 44% (Eurozone: 64%)
• Well-positioned in a rapidly changing landscape, following the
completion of the restructuring plan successfully implemented
over the last years: 6.3% increase in new active Customers to
5.4 million,16.0% increase in active digital Customers to 2.5
million
1
2
3
4
5
68
Appendix
69
Sovereign debt portfolio
(Million euros)
The sovereign debt portfolio totalled €7.8 billion, €2.3 billion of which maturing within one year
The Portuguese sovereign debt portfolio totalled €3.6 billion, whereas the Polish and Mozambican
portfolios amounted to €3.2 billion and to €0.5 billion, respectively; “other” includes US sovereign
debt of €0.5 billion
Sovereign debt maturity Sovereign debt portfolio
≤1y 29%
>1y, ≤2y 15%
>2y, ≤5y 32%
>5y, ≤8y 22%
>8y, ≤10y 1%
>10y 1%
Portugal 4,124 4,945 3,636 -12% -26%
T-bills 655 712 585 -11% -18%
Bonds 3,469 4,232 3,051 -12% -28%
Poland 3,324 3,734 3,160 -5% -15%
Mozambique 228 370 491 +116% +33%
Other 90 559 553 >100% -1%
Total 7,765 9,607 7,841 +1% -18%
QoQDec 16 Dec 17 YoYSep 17
70
Sovereign debt portfolio
(Million euros)
*Includes financial assets held for trading at fair value through net income (€142 million).
**Includes AFS portfolio (€7,486 million) and HTM portfolio (€120 million).
Portugal Poland Mozambique Other Total
Trading book* 152 81 0 1 234
≤ 1 year 114 6 0 0 120
> 1 year and ≤ 2 years 0 34 0 0 34
> 2 years and ≤ 5 years 37 27 0 0 64
> 5 years and ≤ 8 years 1 8 0 0 10
> 8 years and ≤ 10 years 0 6 0 0 6
> 10 years 0 0 0 1 1
Banking book** 3,483 3,079 491 552 7,606
≤ 1 year 585 699 299 548 2,131
> 1 year and ≤ 2 years 228 852 64 0 1,144
> 2 years and ≤ 5 years 889 1,521 22 1 2,432
> 5 years and ≤ 8 years 1,723 1 0 2 1,726
> 8 years and ≤ 10 years 56 6 37 1 100
> 10 years 2 0 70 0 73
Total 3,636 3,160 491 553 7,841
≤ 1 year 699 705 299 548 2,251
> 1 year and ≤ 2 years 228 886 64 0 1,178
> 2 years and ≤ 5 years 925 1,548 22 1 2,496
> 5 years and ≤ 8 years 1,725 9 0 2 1,736
> 8 years and ≤ 10 years 56 12 37 1 106
> 10 years 2 0 70 1 73
71
Diversified and collaterised portfolio
Mortgage 46%
Consumer / other 7%
Companies 47%
58% 25% 17%
Real guarantees Other guarentees Unsecured
Loan portfolio
Loans per collateral
Consolidated
LTV of the mortgage portfolio in Portugal
Loans
Loans to companies accounted for 47% of the loan portfolio at December 31, 2017, including 8% to construction
and real-estate sectors
Mortgage accounted for 46% of the loan portfolio, with low delinquency levels and an average LTV of 65%
83% of the loan portfolio is collateralised
Collaterals
Real estate accounts for 93% of total collateral value
80% of the real estate collateral is residential
15% 11% 13% 28% 11% 11% 11%
0-40 40-50 50-60 60-75 75-80 80-90 >90
72
Consolidated earnings
*Includes dividends from equity instruments, other net operating income, net trading income and equity accounted earnings.
**Core net income = net interest income + net fees and commission income - operating costs.
(million euros) 2016 2017 YoYImpact on
earnings
Net interest income 1,230.1 1,391.3 13.1% +161.1
Net fees and commissions 643.8 666.7 3.6% +22.9
Other income* 222.7 139.5 -37.4% -83.2
Banking income 2,096.7 2,197.5 4.8% +100.8
Staff costs -356.6 -526.6 47.7% -170.0
Other administrative costs and depreciation -423.4 -427.6 1.0% -4.2
Operating costs -780.0 -954.2 22.3% -174.2
Operating net income (before impairment and provisions) 1,316.7 1,243.3 -5.6% -73.4
Of which: core net income** 1,094.0 1,103.8 0.9% +9.8
Loans impairment (net of recoveries) -1,116.9 -623.7 -44.2% +493.2
Other impairment and provisions -481.1 -301.1 -37.4% +180.0
Impairment and provisions -1,598.0 -924.8 -42.1% +673.2
Net income before income tax -281.3 318.5 +599.8
Income taxes 381.9 -30.2 -412.0
Non-controlling interests -121.9 -103.2 +18.7
Net income from discontinued or to be discontinued operations 45.2 1.2 -44.0
Net income 23.9 186.4 +162.5
73
Consolidated balance sheet
(Million euros)
31 December
2017
31 December
2016
Assets
Cash and deposits at central banks 2,167.9 1,573.9
Loans and advances to credit institutions
Repayable on demand 295.5 448.2
Other loans and advances 1,065.6 1,056.7
Loans and advances to customers 47,633.5 48,017.6
Financial assets held for trading 897.7 1,048.8
Other financial assets held for trading
at fair value through profit or loss 142.3 146.7
Financial assets available for sale 11,471.8 10,596.3
Assets with repurchase agreement - 20.5
Hedging derivatives 234.3 57.0
Financial assets held to maturity 411.8 511.2
Investments in associated companies 571.4 598.9
Non current assets held for sale 2,164.6 2,250.2
Investment property 12.4 12.7
Other tangible assets 490.4 473.9
Goodwill and intangible assets 164.4 162.1
Current tax assets 25.9 17.5
Deferred tax assets 3,137.8 3,184.9
Other assets 1,052.0 1,087.8
71,939.5 71,264.8
31 December
2017
31 December
2016
Liabilities
Resources from credit institutions 7,487.4 9,938.4
Resources from customers 51,187.8 48,797.6
Debt securities issued 3,007.8 3,512.8
Financial liabilities held for trading 399.1 547.6
Hedging derivatives 177.3 384.0
Provisions 324.2 321.1
Subordinated debt 1,169.1 1,544.6
Current tax liabilities 12.6 35.4
Deferred tax liabilities 6.0 2.7
Other liabilities 988.5 915.5
Total Liabilities 64,759.7 65,999.6
Equity
Share capital 5,600.7 4,268.8
Treasury shares (0.3) (2.9)
Share premium 16.5 16.5
Preference shares 59.9 59.9
Other capital instruments 2.9 2.9
Legal and statutory reserves 252.8 245.9
Fair value reserves 82.1 (130.6)
Reserves and retained earnings (120.2) (102.3)
Net income for the period attrib. to Shareholders 186.4 23.9
Total equity attrib. to Shareholders of the Bank 6,080.8 4,382.1
Non-controlling interests 1,098.9 883.1
Total Equity 7,179.7 5,265.2
71,939.5 71,264.8
74
(Million euros)
Consolidated income statement Per quarter
Net interest income 323.1 332.3 346.2 344.7 368.1
Dividends from equity instruments 0.8 0.1 1.5 0.1 0.1
Net fees and commission income 162.7 160.8 169.5 164.3 172.1
Other operating income -9.5 -15.2 -71.4 -10.4 -5.2
Net trading income 27.9 36.4 53.5 25.1 33.4
Equity accounted earnings 19.9 19.6 15.5 21.7 34.8
Banking income 524.8 534.0 514.8 545.5 603.2
Staff costs -53.8 136.9 104.6 138.6 146.5
Other administrative costs 98.6 88.7 94.0 92.2 99.3
Depreciation 12.8 12.7 13.4 13.6 13.9
Operating costs 57.6 238.3 211.9 244.4 259.6
Operating net income bef. imp. 467.2 295.8 302.9 301.1 343.6
Loans impairment (net of recoveries) 246.7 148.9 156.1 153.6 165.1
Other impairm. and provisions 238.2 54.3 56.0 59.6 131.2
Net income before income tax -17.8 92.5 90.8 87.9 47.3
Income tax -313.7 19.1 24.3 19.7 -33.0
Non-controlling interests 20.8 23.3 27.9 24.8 27.1
Net income (before disc. oper.) 275.0 50.1 38.6 43.4 53.1
Net income arising from discont. operations 0.0 0.0 1.3 0.0 0.0
Net income 275.0 50.1 39.8 43.4 53.1
4Q 16 4Q 173Q 172Q 171Q 17
75
Income statement (Portugal and International operations)
For the 12-month periods ended December 31st, 2016 and 2017
(Million euros)
D ec 16 D ec 17 Δ % D ec 16 D ec 17 Δ % D ec 16 D ec 17 Δ % D ec 16 D ec 17 Δ % D ec 16 D ec 17 Δ % D ec 16 D ec 17 Δ %
Interest income 1,910 1,914 0.2% 1,172 1,054 -10.0% 738 860 16.5% 520 564 8.4% 211 289 36.8% 6 6 5.2%
Interest expense 680 523 -23.1% 436 247 -43.4% 244 276 13.3% 176 165 -6.3% 72 116 61.8% -4 -5 -18.9%
N et interest inco me 1,230 1,391 13.1% 736 808 9.7% 494 583 18.1% 344 399 16.0% 140 173 24.0% 10 11 10.6%
Dividends from equity instruments 8 2 -77.3% 7 1 -84.6% 0 1 37.5% 0 1 40.8% 0 0 -27.3% 0 0 --
Intermediat io n margin 1,238 1,393 12.5% 743 809 8.8% 494 584 18.1% 345 400 16.0% 140 173 23.9% 10 11 10.6%
Net fees and commission income 644 667 3.6% 457 456 -0.2% 187 211 12.8% 133 156 17.5% 31 30 -0.7% 24 25 3.6%
Other operating income -106 -102 3.4% -42 -50 -20.1% -64 -52 18.7% -72 -61 15.0% 9 10 11.5% -1 0 25.2%
B asic inco me 1,776 1,957 10.2% 1,158 1,214 4.8% 618 743 20.3% 405 494 22.0% 179 213 19.1% 33 35 6.2%
Net trading income 240 148 -38.3% 100 85 -14.9% 140 63 -55.0% 112 51 -54.3% 25 11 -57.1% 3 1 -64.3%
Equity accounted earnings 81 92 13.8% 68 52 -23.3% 13 40 >100% 0 0 100.0% 0 0 -- 13 40 >100%
B anking inco me 2,097 2,197 4.8% 1,326 1,352 1.9% 771 846 9.8% 516 545 5.6% 204 224 9.7% 50 76 53.3%
Staff costs 357 527 47.7% 176 332 88.7% 181 194 7.6% 128 140 9.9% 36 37 3.1% 17 17 0.0%
Other administrative costs 374 374 0.1% 233 222 -4.6% 141 152 7.9% 98 105 7.3% 37 40 9.4% 6 6 7.2%
Depreciation 50 54 7.5% 29 33 12.7% 20 20 0.1% 13 12 -0.6% 8 8 1.8% 0 0 -22.6%
Operat ing co sts 780 954 22.3% 438 588 34.1% 342 367 7.3% 238 258 8.3% 80 85 5.9% 23 23 1.7%
Operat ing net inco me bef . imp. 1,317 1,243 -5.6% 888 764 -14.0% 429 479 11.8% 278 287 3.3% 124 139 12.2% 27 53 97.6%
Loans impairment (net of recoveries) 1,117 624 -44.2% 1,045 533 -49.0% 72 91 26.4% 50 61 22.1% 24 28 18.1% -2 2 >100%
Other impairm. and provisions 481 301 -37.4% 471 254 -46.1% 10 47 >100% 10 9 -15.5% 0 -1 <-100% 0 40 >100%
N et inco me befo re inco me tax -281 318 >100% -628 -23 96.4% 347 341 -1.5% 218 218 -0.1% 100 112 12.0% 28 11 -60.3%
Income tax -382 30 >100% -470 -56 88.1% 88 86 -1.8% 58 57 -0.3% 28 27 -6.0% 2 2 16.2%
Non-contro lling interests 122 103 -15.4% -1 -6 <-100% 123 109 -11.3% 0 0 -- 1 1 -8.8% 122 108 -11.3%
N et inco me (befo re disc. o per.) -21 185 >100% -157 39 >100% 136 146 7.5% 160 160 -0.0% 71 85 19.5% -95 -99 -3.9%
Net income arising from discont. operations 45 1 -97.3% 37 0 -100.0% 37 0 -100.0%
N et inco me 24 186 >100% 173 146 -15.4% -59 -99 -69.0%
M illennium bim (M o z.)
Internat io nal o perat io ns
Gro up P o rtugal T o tal B ank M illennium (P o land) Other int . o perat io ns
76
Glossary (1/2)
Balance sheet total customer funds - debt securities and customer deposits.
Capitalisation products – includes unit linked saving products and retirement saving plans (“PPR”, “PPE” and “PPR/E”).
Commercial gap – total loans to customers net of BS impairments accumulated for risk of credit minus on-balance sheet total customer funds.
Core income - net interest income plus net fees and commission income.
Core net income - corresponding to net interest income plus net fees and commission income deducted from operating costs.
Cost of risk, gross (expressed in bp) - ratio of impairment charges accounted in the period to loans to customers (gross).
Cost of risk, net (expressed in bp) - ratio of impairment charges (net of recoveries) accounted in the period to loans to customers (gross).
Cost to core income - operating costs divided by core income (net interest income and net fees and commission income).
Cost to income – operating costs divided by net operating revenues.
Coverage of credit at risk by balance sheet impairments – total BS impairments accumulated for risks of credit divided by credit at risk (gross).
Coverage of credit at risk by balance sheet impairments and real and financial guarantees – total BS impairments accumulated for risks of credit plus real and financial
guarantees divided by credit at risk (gross).
Coverage of non-performing loans by balance sheet impairments – total BS impairments accumulated for risks of credit divided by NPL.
Credit at risk – definition broader than the non performing loans which includes also restructured loans whose changes from initial terms have resulted in the bank being in a
higher risk position than previously; restructured loans which have resulted in the bank becoming in a lower risk position (e.g. reinforced collateral) are not included in credit at
risk.
Credit at risk (net) – credit at risk deducted from BS impairments accumulated for risks of credit.
Credit at risk (net) ratio – credit at risk (net) divided by loans to customers deducted from total BS impairments accumulated for risks of credit.
Credit at risk ratio – credit at risk divided by loans to customers (gross).
Debt securities - debt securities issued by the Bank and placed with customers.
Dividends from equity instruments - dividends received from investments in financial assets held for trading and available for sale.
Equity accounted earnings - results appropriated by the Group related to the consolidation of entities where, despite having a significant influence, the Group does not control
the financial and operational policies.
Loan to Deposits ratio (LTD) – Total loans to customers net of accumulated BS impairments for risks of credit divided by total customer deposits.
Loan to value ratio (LTV) – Mortgage amount divided by the appraised value of property.
Net interest margin (NIM) - net interest income for the period as a percentage of average interest earning assets.
Net operating revenues - net interest income, dividends from equity instruments, net commissions, net trading income, equity accounted earnings and other net operating
income.
Net trading income - net gains/losses arising from trading and hedging activities, net gains/losses arising from available for sale financial assets, net gains/losses arising from
financial assets held to maturity.
Non-performing exposures (NPE, according to EBA definition) – Non-performing loans and advances to customers more than 90 days past-due or unlikely to be paid without
collateral realisation, even if they recognised as defaulted or impaired. Considers also all the exposures if the on-BS 90 days past due reaches 20% of the outstanding amount of
total on-BS exposure of the debtor, even if no pull effect is used for default or impairment classification. Includes also the loans in quarantine period over which the debtor has to
prove its ability to meet the restructured conditions, even if forbearance has led to the exit form default or impairments classes.
Non-performing loans (NPL) – Overdue loans more than 90 days including the non-overdue remaining principal of loans, i.e. portion in arrears, plus non-overdue remaining
principal.
Non-performing loans ratio – Loans more than 90 days overdue and doubtful loans reclassified as overdue for provisioning purposes divided by total loans (gross).
77
Glossary (2/2)
Operating costs - staff costs, other administrative costs and depreciation.
Other impairment and provisions - other financial assets impairment, other assets impairment, in particular provision charges related to assets received as payment in kind not
fully covered by collateral, goodwill impairment and other provisions.
Other net income – net commissions, net trading income, other net operating income, dividends from equity instruments and equity accounted earnings.
Other net operating income - other operating income, other net income from non-banking activities and gains from the sale of subsidiaries and other assets.
Overdue and doubtful loans - loans overdue by more than 90 days and the doubtful loans reclassified as overdue loans for provisioning purposes.
Overdue and doubtful loans (net) - overdue and doubtful loans deducted from BS impairments accumulated for risks of credit.
Overdue and doubtful loans (net) ratio - overdue loans and doubtful loans (net) divided by loans to customers deducted from total BS impairments accumulated for risks of
credit.
Overdue and doubtful loans coverage by BS impairments - BS impairments accumulated for risks of credit divided by overdue loans and doubtful loans (gross).
Overdue and doubtful loans ratio - overdue and doubtful loans divided by loans to customers (gross).
Overdue loans - loans in arrears, not including the non-overdue remaining principal.
Overdue loans by more than 90 days coverage ratio - total BS impairments accumulated for risk of credit divided by total amount of loans overdue with installments of capital
and interest overdue more than 90 days.
Overdue loans coverage ratio – total BS impairments accumulated for risks of credit divided by total amount of overdue loans.
Return on average assets (Instruction from the Bank of Portugal no. 16/2004) – Net income (before tax) divided by the average total assets.
Return on average assets (ROA) – Net income (before minority interests) divided by the average total assets.
Return on equity (Instruction from the Bank of Portugal no. 16/2004) – Net income (before tax) divided by the average attributable equity + non-controlling interests.
Return on equity (ROE) – Net income (after minority interests) divided by the average attributable equity, deducted from preference shares and other capital instruments.
Securities portfolio - financial assets held for trading, financial assets available for sale, assets with repurchase agreement, financial assets held to maturity and other financial
assets held for trading at fair value through net income.
Spread - increase (in percentage points) to the index used by the Bank in loans granting or fund raising.
Total customer funds - balance sheet customer funds, assets under management and capitalisation products.
78
Summary
Strategic Plan
Appendix
– 2017 earnings
– Other information
79
Building the leading private sector bank in Portugal and a
relevant player in selected markets
… to leadership in Portugal and to international
presence through growth in selected affinity retail markets
From foundation…
Incorporation
and organic
growth to
become
relevant player
Consolidation to
reach “critical
mass”
Leadership in
Portugal, setting
the foundations
for expansion in
Poland and
Greece
Partnership
with Ageas
for insurance
business
Consolidation
of international
expansion
with a single
brand
Focus on
Portugal and on
affinity markets
Optimization of
the capital
structure,
profitability
recovery in
Portugal and
strong presence
in Africa
Portugal -
Poland –
Mozambique –
Angola (since
2016 with a
partnership with
BPA)
Leading bank in
Portugal and
strong position
in Poland and
Mozambique
Business model
transformation
to adapt to new
customer needs 1985-1995
1995-2000
2000-2005
2005–2011
2012–2017
2017- …
80
Other 42.2%
UK/US 11.1%
Africa 15.5%
Portugal 31.2%
Diversified shareholder base, geographically scattered
Number of Shareholders
Shareholder structure
Per geography
(Last information available)
Fosun 27%
Sonangol 15%
EDP 2% PT retail 23%
PT institutionals 6%
Non-PT retail 1%
Non-PT institutionals 26%
170.9 167.0
Dec10 Dec 17
(x1000) (Last information available)
81
One-tier management and supervisory model, composed by a
Board of Directors
General Meeting of Shareholders
Board for International Strategy
Remuneration and Welfare Board
Statutory Auditor (ROC)
Audit Committee
Executive Committee Company Secretary
Board of Directors
Commissions and Sub-Commissions
• Legal Affairs • Costs and Investments – Costs and Investments Sub-Committee • Companies • Human Resources • Retail – Customer Experience Sub-Committee – Investment Products Sub-Committee
•Pension Funds Risk Monitoring • Security and Data Quality Commission •Digital Transformation and Procedures Commission • Operational Risk and Internal Control Monitoring •CrossNetworking
• Committee for Nominations and Remunerations • Committee for Corporate Governance, Ethics and Professional Conduct • Committee for Risk Assessment
Client Ombudsman
•Compliance Office – AML Sub-Committee • Pension Fund Monitoring • Credit • NPE Credit • Capital, Assets and Liabilities Management •Risk •Credit at Risk
82
96.2 111.4
126.2 129.0 130.6 128.8 130.1 125.6
2010 2011 2012 2013 2014 2015 2016 2017
51.8 50.0
48.5 49.9
51.8
48.2
44.9 45.9
2010 2011 2012 2013 2014 2015 2016 2017
0
2
4
6
8
10
12
14
16
18
2004 2006 2008 2010 2012 2014 2016 2018
Fiscal consolidation creates the conditions for the sustainability of the
public debt, leading to normalisation of yields on sovereign debt
Average >10%
Average≈4%
<2%
10y Portuguese bonds (yield, %)
Yields have decreased
…with significant effort on expenditure Budget deficit decreases…
(% of GDP) (total expenditure, % of GDP)
(Public debt, % of GDP)
Debt level is expected to decrease
Source: Bank of Portugal; Ministry of Finance.
Source: Statistics Portugal for 2010-16; Bank of Portugal estimate for 2017
Source: Thomson Reuters.
0.9
11.2
7.4
5.7 4.8
7.2
4.4
2.0 3.0
2010 2011 2012 2013 2014 2015 2016 2017E
Includes impact
from re-
capitalisation of
CGD
Source: Statistics Portugal
1
83
+1.9
-1.8
-4.0
-1.1
+0.9 +1.8 +1.6
+2.7
2010 2011 2012 2013 2014 2015 2016 2017
10.8 12.7
15.6 16.2
13.9 12.4
11.1 8.9
2010 2011 2012 2013 2014 2015 2016 2017
-10.2
-6.0 -2.2
+0.2 +0.3 +0.6 +0.6
2010 2011 2012 2013 2014 2015 2016 2017
Portugal has been undergoing profound structural reforms, which are already
showing positive results
Real GDP growth rate (yoy) Current account balance (% of GDP)
Unemployment rate (%)
Source: Statistics Portugal (INE); Ministry of Finance. Source: Statistics Portugal; Ministry of Finance.
Source: Statistics Portugal (INE); Ministry of Finance.
Budget deficit at 0.9% in 2017 (excluding impact from the
recapitalization of CGD), down from 11.2% in 2010, mainly
on the back of lower levels of expenditure as a percentage
of GDP
GDP up by 2.7% in 2017 from 1.6% in 2017, following the
2011-2013 recession
Unemployment has decreased significantly and continuously
from a 16.2% peak in 2013, standing at 8.9% at 2017
Following ≈10% deficits for most of the decade up to 2010,
the current account has turned positive from 2013 (0.6%
surplus in 2017)
84
Portuguese financial system
Sector overview (Consolidated)
(€ bn for gross loans and deposits, 2Q17)
Gross loans Deposits Branches Employees
CGD 65.4 69.6 1,108 15,334
Millennium bcp 51.7 50.6 1,136 15,809
SantanderTotta 33.0 27.6 600 6,096
NB 32.2 25.4 475 5,706
CaixaBank 23.5 20.0 528 5,406
Montepio 14.9 11.6 365 4,151
Caixa Agrícola 9.0 11.9 670 4,054
*
* Gross Loans includes securitizations.
85
Portuguese financial system market shares
Branches Employees
23.1% 17.4% 16.0%
12.9% 10.6%
Bank 1 Millennium bcp Bank 3 Bank 4 Bank 5
Gross loans
26.5%
17.4% 13.6%
10.2% 9.9%
Bank 1 Millennium bcp Bank 3 Bank 4 Bank 5
20.1% 15.9% 13.2% 11.7% 11.6%
Bank 1 Millennium bcp Bank 3 Bank 4 Bank 5
Deposits
13.8% 13.5% 13.4% 11.9% 10.1%
Bank 1 Bank 2 Millennium bcp Bank 4 Bank 5
(September 2017) (September 2017)
(June 2017) (June 2017)
86
Portuguese financial system
178% 172% 161% 152% 147%
132% 130% 125% 124% 119%
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
Loans and deposits as a % of GDP
112% 102% 96% 95% 93%
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
LTD (Loans-to-deposits ratio)
30
5
-10 -12 -18
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
Commercial gap
48
31 26
22 22
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
ECB funding
Deposits
Loans
(€ bn ) (€ bn )
230
283
226
304
Deposits
Loans
(€ bn, Portugal )
87
Portuguese financial system
7.2% 7.0% 5.7% 13.5%
10.8% 7.9%
28.3% 29.5% 25.2%
17.5% 17.2%
13.3%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2015 2016 2017
Mortgage Consumer Companies Total
NPEs (Non-performing exposures) NPEs coverage
Leverage ratio CET1 ratio
23.5% 21.0% 22.8%
67.2% 68.7% 66.2%
44.4% 48.9%
53.8%
40.8% 45.5% 49.3%
-5%
5%
15%
25%
35%
45%
55%
65%
2015 2016 2017
Mortgage Consumer Companies Total
12.2% 11.3% 12.4% 11.4% 13.9%
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
6.8% 6.9% 7.6% 6.6% 7.8%
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
88
Housing prices and bank appraisals are recovering
Source: Eurostat.
Housing bank appraisals House price index (HPI) (€ /m2) (HPI base 100=2015)
Property prices (2010=100)
85
95
105
115
125
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
3Q
16
1Q
17
3Q
17
Total Existing New
800
900
1000
1100
1200
1300
1400
1500
Jun-0
9
Dec-0
9
Jun-1
0
Dec-1
0
Jun-1
1
Dec-1
1
Jun-1
2
Dec-1
2
Jun-1
3
Dec-1
3
Jun-1
4
Dec-1
4
Jun-1
5
Dec-1
5
Jun-1
6
Dec-1
6
Jun-1
7
Dec-1
7
Portugal Lisbon Area
Source: Statistics Portugal. Source: Statistics Portugal.
The House Price Index increased 10.5% in 4Q17 when compared
to 4Q16, with existing dwellings recording an average increase
in excess of new dwellings (+11.8% vs. +5.9%, respectively)
The average value of housing bank appraisals in Portugal stood
at €1,160 per square meter in Feb 18, up 4.6% y-o-y (+5.5% to
€1,422 in the Lisbon area)
Property prices were more stable in Portugal since 2000,
comparing to a volatile property market in neighboring Spain
The housing costs accounted for 18.9% of disposable household
income in Portugal, compared to 21.8% for the Eurozone as a
whole (latest available data: 2015)
0
50
100
150
200
250
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Spain 129
Portugal 92
89
4.1 +0.3 +0.2
+1.4
+0.8 6.8
NPLs >90d
Cross- default
Quaran -tine*
LLR/gross loans>20% or LLR>€5mn
Other triggers
NPEs
The NPE reduction plan is being implemented Reconciliation of NPLs>90d with NPEs (EBA definition)
NPEs down €6.0 billion from end-2013 NPLs>90d vs NPEs (EBA definition)
(Billion euros, December 2017)
* 9 months following payment is resumed for loans to companies, 3 months for retail loans.
(Billion euros)
-1.8
-3.0
-1.2
12.8
6.8
Dec13 Net new entries
Write offs
Sales Dec17
90
Balanced Balance Sheet
Sovereign debt portfolio
Securities portfolio (€ bn)
(Billion euros) Debt issued
Balance sheet breakdown (€ bn)
68.0
47.5 47.6 51.2
12.1
12.9 12.9
3.2
18.5 5.9
5.9
4.4
7.2
Dec 11 Dec 17
2.2
Equity
MM (net) Debt issued
Other (net)
Loans
Securities
Other
Sovereign
debt
(Billion euros)
7.3 7.8
4.8 5.1
12.1 12.9
Dec 11 Dec 17
Deposits
Dec 11 Dec 17
Portugal 4.7 3.6
T-bills 1.7 0.6
Bonds 3.0 3.1
Poland 0.8 3.2
Mozambique 0.3 0.5
Other 1.5 0.6
Total 7.3 7.8
Dec 11 Dec 17
Debt securities 16.2 3.0
Senior - MTN 7.6 0.2
Senior - Retail Bonds 4.1 1.5
Covered bonds 3.3 1.0
Securitisation 1.2 0.3
Subordinated debt 1.1 1.2
Loan Agreements 1.2 1.7
Total 18.5 5.9
91
Latest Rating Actions recognized the progress made by
BCP in implementing its strategic plan
+3 notches +3 notches
+2 notches
S&P Stand-alone credit profile (SACP)
Fitch Viability Rating (VR)
Moody’s Baseline Credit Assessment (BCA)
BB-
B+
B
B-
2013 2014 2015 2016 2017
b2
b3
Caa1
Caa2
2013 2014 2015 2016 2017
bb-
b+
b
2013 2014 2015 2016 2017
Rating Agencies have recognized the progress achieved
by Millennium bcp since 2013
Excluding the effect of Government support removal
due to change in Rating Agencies methodology in order
to adjust for the BRRD, the intrinsic rate of BCP was
upgraded by 3 notches by S&P and Moody’s and by 2
notches by Fitch
Future upgrades of the Portuguese Republic rating
should provide room for an upgrade of BCP ratings
92
Ratings
Moody's Standard & Poor's
Intrinsic Baseline Credit Assessment
Adjusted Baseline Credit Assessment
b2
B2 Stand-alone credit profile (SACP) bb-
LT/ST
Counterparty LT/ST
Deposits LT/ST
Senior unsecured LT/ST
Outlook deposits / senior
Ba1 / NP
B1 / NP
B1 / NP
Positive
Counterparty Credit Rating LT/ST
Senior Unsecured LT/ST
Outlook
BB-/ B
BB-/ B
Positive
Other
Subordinated Debt - MTN
Preference Shares
Other short term debt
Covered Bonds
(P) B3
Caa2 (hyb)
P (NP)
A2
Subordinated debt
Preference shares
B-
D
Fitch Ratings DBRS
Intrinsic
Viability Rating
Support
Support floor
bb- Intrinsic
Critical obligations
BB (high)
BBB/R-2(high) 5
No floor
LT/ST
Deposits LT/ST
Senior unsecured debt issues LT/ST
Outlook
BB- / B
BB- / B
Positive
Short-Term Debt LT / ST
Deposit LT / ST
Trend
BB (high) / R-3
BB (high) / R-3
Stable
Other
Subordinated Debt Lower Tier 2
Preference Shares
Covered Bonds
B+
CCC-
BBB+
Dated Subordinated Notes
Covered Bonds
BB (low)
A
93
Progress recognised by the market
CDS 5 yr Portuguese Republic
CDS BCP yield curve (senior)
CDS 5 yr BCP
BCP CDS spreads have narrowed since the end of 2016
and after the completion of the share capital increase in
February 2017 but reflect also the progress made by the
Bank in reducing NPEs as well as the increase in NPEs
coverage
Besides this BCP’s intrinsic factors the BCP CDS spreads
benefitted also from the decrease in Portuguese
Republic CDS spreads
Spreads on senior preferred debt have also narrowed in
recent months because there was the introduction of a
new debt class in the Iberian markets: the senior non
preferred debt
0
200
400
600
800
1 2 3 4 5 6 7 8 9 10
1 year ago
As at March,
31
b.p.
b.p. b.p.
(Years)
0
150
300
450
Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 0
200
400
600
800
1000
Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17
94
New Senior Bond, CB and Subordinated issues signal
Millennium bcp’s return to capital debt markets
Issuer: Banco Comercial Português, S.A.
Issue Rating (M/F/D): A3/BBB+/A
Issue type: Mortgage Bonds
Amount: € 1,000m
Issue date: 23 May 2017
Settlement date: 31 May 2017
Maturity: 31 May 2022
Coupon: 0.750 %
Spread: MS+65bps
Re-offer yield: 0.876 %
Listing / ISIN: Irish Stock Exchange / PTBCPIOM0057
Asset Managers
45%
Central Banks & Official
Institutions 29%
Banks 21%
Insurance & Pension Funds
5%
Portugal 36%
Germany & Austria
25%
Spain 10%
France 10%
Benelux 7%
UK & Ireland
4%
Switzerl. 3%
Italy 3%
Other 2%
3 Yr Senior Unsecured Notes Breakdown by Investor Type and Geography
Breakdown by Investor Type and Geography 5 Yr Covered Bond Issue
Investment Funds 60%
Banks 16%
Hedge Funds 12%
Insurance and Pension Funds 10%
Other 2%
UK 33%
Portugal 20%
Italy 15%
France 11%
Deutschland 6%
Austria 6%
Spain 5%
Switzerland 4%
Issuer: Banco Comercial Português, S.A.
Issue Rating (S/M/F/D): B (Neg.) / B1 (Neg.) / BB- (Neg.) / BBBL (Neg.)
Issue type: Senior Unsecured Unsubordinated
Amount: € 500m
Issue date: 19 February 2014
Settlement date: 27 February 2014
Maturity: 27 February 2017
Coupon: 3.375 %
Spread: MS+285bps
Re-offer yield: 3.422 %
Listing / ISIN: London Stock Exchange / PTBITIOM0057
Breakdown by Investor Type and Geography 5 Yr subordinated Debt Issue
Issuer: Banco Comercial Português, S.A.
Issue Rating (M/S/F/D): B3/B-/B+/BB(L)
Amount: € 300mm
Issue date: 7 December 2017
Maturity: 7 December 2027
Issuer’s Call: 7 December 2022, subject to the prior approval of the
Relevant Authority
Coupon: 4.50 % (Fixed, Annual) until 7th December 2022. One time
reset year 5 to prevailing 5Y MS + 4.267% (initial margin)
Re-offer price: 100%
Listing / ISIN: Irish Stock Exchange / PTBCPWOM0034
Asset Manager
48% Hedge
Fund 37%
Bank & Private
Bank 11%
Insurance & Pension
5%
UK & Ireland 43%
Iberia 17%
Germany, Austria &
Switzerland 15%
FraBeLux 13%
Asia 5%
Other 4% Italy 3%
95