Post on 23-Jun-2020
Earnings Presentation – 4th Quarter 2008
DISCLAIMER
• This document is not an offer of securities for sale in the United States, Canada,Australia, Japan or any other jurisdiction. Securities may not be offered or soldin the United States unless they are registered pursuant to the US Securities Actof 1933 or are exempt from such registration. Any public offering of securities inthe United States, Canada, Australia or Japan would be made by means of aprospectus that will contain detailed information about the company andmanagement including financial statements
22
management, including financial statements
• The information in this presentation has been prepared under the scope of theInternational Financial Reporting Standards (‘IFRS’) project of BCP Group for thepurposes of the preparation of the consolidated financial statements underRegulation (CE) 1606/2002
• The figures presented do not constitute any form of commitment by BCP inregard to earnings
Earnings Presentation – 4th Quarter 2008
A particularly challenging year
Macroeconomic slowdown
Interest rates expected to continue low; increasing price of risk not entirely covered by the increase in spreads; asset prices
expected to continue depressed
Economic recession and increasing unemployment, affecting growth, earnings and impairments across the financial sector
Pressure over interest rates and asset prices
33
Financial sector subject to uncertainties and pressures
from multiple variables
Recent evolution of capital markets together with increasing refinancing needs represent a major challenge to access funding under attractive conditions (cost and term)
New “surprises” at international level are not to be excluded and uncertainty regarding the perspectives of short term economic recovery
Shortness of capital and liquidity
Overall uncertainty
Earnings Presentation – 4th Quarter 2008
A particularly challenging year: The Bank
1st Semester
“Bank Stabilization”
Priorities and Key InitiativesBank’s management focus:
Reestablishing institutional stability (General Meeting, May 27)
Strengthening of financial position:€1,300 million capital increase in AprilTwo issues of long-term corporate debt totaling €2,250
million in May
M2010 was drawn in April 2007 under a completely different market context
44
2nd Semester
“Management under market crisis”
Unparalleled deterioration of the international financial crisis implied “management under crisis” aiming at immediate results
Divestment of equity stakes (sale of BPI), portfolio
evaluation
Increase of liquidity contingency levels
Cost reduction
Adjustments to credit/liquidity risk pricing
context
After stabilization, it is now justified launching new Mbcp priorities for 2009
Earnings Presentation – 4th Quarter 2008
Millennium bcp is now prepared to face the challenges ahead
Fran
chis
e…Portugal: 2.6 million active clients; largest branch network (918)Poland: 7% market share in deposits and branches (4th largest network); 38% spontaneous awareness in 2008 (ranking 4th in awareness)Mozambique: market leader with 40% market share; national distribution network with >100 branchesGreece: 4% market share in branches; 15% client growth in 2008 (reaching ~500 thousand); 78% of clients highly satisfied
Capture of 174 thousand new retail clients in Portugal in 2008 Increase of on balance-sheet customer funds by ~ €3 billion
…strong, resilient retail…
…reinforced brand and identity
55
Client satisfaction index recovered and reached the highest level in the last 3 years
Presence in multiple geographies allowing for:Sharing of know-how and capture of synergies across platformsDiversification of risk and growth options
Reinforcement of Tier 1 from 5.5% in 2007 to 7.1% in 2008. With adoption of IRB advance, Tier 1 of 8.6%Improvement of management mechanisms and definition of liquidity and capital targets Deceleration of commercial gap and wholesale funding
Bank
…
…with a balanced portfolio …
…and reinforced capital and liquidity base
Earnings Presentation – 4th Quarter 2008
Highlights 2008
Portugal with recovery on core revenues growth and cost control
1
International operations with impact from current crisis2
Sustained volumes growth, mainly on deposits3
66
Sustained volumes growth, mainly on deposits3
Prudency on risk evaluation. Impairment increased to support current cycle and due to collateral revaluation4
5Adequate capital position and in line with annouced target. May issue non-dilutive Tier 1 instruments to meet future regulatory requirements
Earnings Presentation – 4th Quarter 2008
Agenda
GroupPortugalPolandMozambique
77
MozambiqueGreeceAngolaOther international operations
Earnings Presentation – 4th Quarter 2008
201.2
23.5
225.0563.3
426.2
586.8
FY07 FY08
Net income impacted by BPI stake and adverse market environment(Eur million)
-27.4%
Specific items* in 2008:- BPI stake (-€232.6m)- Reduction of variable
remuneration accrued in 2007 and restructuring costs (+€7.6m)
Net income
-64.3%
88
FY07 FY08
* Net of taxes
1,170.01,020.9
FY07 FY08
Operating profit before provisions
+14.6%
(Excluding specific items)
Earnings Presentation – 4th Quarter 2008
Positive intermediation margin performance in spite of adverse financial market conditions
(Eur million)
Quarterly net interest income
Dividends
Net interest income
Intermediation margin
1,721.11 537 3
36.827.9
1,565.21,757.9
+12.3%
434.8412.2444.4429.7
387.6
+14.7%
99
Net interest income
NIM
,1,537.3
2007 2008
+12.0%
4Q07 1Q08 2Q08 3Q08 4Q08
2.05% 2.11%2.01% 2.07% 2.00%2.06%2.09%
Earnings Presentation – 4th Quarter 2008
Core banking commissions growing yoy and qoq; lower capital markets related commissions
Capital markets related
(Eur million)
Commissions
221.7265.4
-3.6%
767.8 740.4
65.749.7
63.9 57.4 50.7
187.4185.3
-16.5%
199.3173.8
-6.0%
193.9
1010
Core banking business
Excluding specific items
518.7502.4
2007 2008
133.6 127.9124.1 130.0 136.7
4Q07 1Q08 2Q08 3Q08 4Q08
+3.2%
+2.3%
Earnings Presentation – 4th Quarter 2008
Resilient core revenues growth
(Eur million)
Core operating income(excluding financial market)
590.9605.7568.3 578.2560.7
2,343.12,186.1
+7.2%+5.4%
*
1111
Core operating income: Net interest income + Dividends + Banking related commissions and other operating income
Excluding specific items
* Dividends: € 27.6 million
4Q07 1Q08 2Q08 3Q08 4Q082007 2008
Earnings Presentation – 4th Quarter 2008
Strong cost control in an expansion year; qoq demonstrates focus on efficiency
Depreciation
Administrative
Operating costs(Eur million)
642.6
112.8
627.4
114.9
+3.3%
1,681.0
34.9 26.327.8 28.4 30.3
161.6146.9 169.2164.9181.7
429.1 416.4433.8 403.5-1.8%
+2.4%
432.0
-4.0%1,626.7
1212Excluding specific items
Staff
+175
+1,467
Cost-to-income ratio
925.6884.4
2007 2008
216.9239.3230.3 239.1217.2
4Q07 1Q08 2Q08 3Q08 4Q08
+4.6%
58.6%60.3%-1.7pp
Number of branches* 1,8031,628
Number of employees 22,58921,122
* Net of closures
Earnings Presentation – 4th Quarter 2008
Double digit growth in volumes in both loans and on balance-sheet funds
Loans to customers *(gross)
(Eur million)
Customers’ funds
On BS customers’28 538
+10.4%
66,873
63,953
+3.6%66,264
73,849
1313
45,35551,682Mortgage
Consumer loans
Loans to companies
* Excluding securitized loans not presented in the balance sheet and securities reclassified as credit** Includes: deposits, certificates of deposits and debt securities placed with customers
Off BS customers’ funds
customers funds **
14.58218.598
Dec07 Dec08
36,725 40,434
4,877
25,50328,538
4,645
Dec07 Dec08
+13.9%
Securitized loans 3,126 2,625
+10.1%
+5.0%
+11.9%
Earnings Presentation – 4th Quarter 2008
151 6
Credit quality*
Credit quality deteriorating in line with current economic cycle, and increasing cost of risk mainly due to lower market value of collaterals
Impairmentcoverage > 90 days
Overdueratio > 90 days
211.1%
(Eur million)
251.8%
851.1
0.7% 1.0%
0 91 0.94
1.27
Impairment charges as % of total loans*(annualized)
Gross impairment
charges as % of total loans
1414
485.5699.5
151.6
69.1
Dec07 Dec08
Total overdue
< 90 days
> 90 days
554.6 1.11
0.52
0.77
0.40
0.74
0.850.91
0.48
0.94
4Q07 1Q08 2Q08 3Q08 4Q08
Impairment net of recoveries as % of total loans
Prudence in the revaluation of potential risks due to depressed market environment
* Excluding financial assets
Earnings Presentation – 4th Quarter 2008
Credit quality and coverage*
Portfolio Overdue >90 days Impairment
Overdue >90 days / Total
loansCoverage
Individuals 260 414 0.8% 159.6%
Mortgage 112 209 0.4% 186.5%
Consumer 148 205 3.0% 139.3%
(Eur million)
1515
Companies 440 1,063 1.1% 241.5%
Services 81 320 0.6% 395.2%
Commerce 90 170 1.7% 188.5%
Others 269 573 1.2% 213.1%
Total 700 1,477 1.0% 211.1%
* Excluding financial assets
Earnings Presentation – 4th Quarter 2008
Gross impairment and recoveries
233.9
165.9 154.5151.8
+54.1%
Gross impairment
-54.2%
Recoveries
(Eur million)
1616
83.2
4Q07 1Q08 2Q08 3Q08 4Q08
29.829.813.4 19.865.1
4Q07 1Q08 2Q08 3Q08 4Q08
Earnings Presentation – 4th Quarter 2008
Liquidity positionWholesale funding
(Eur billion)
2.6
4.74 00.0
Maturity
Refinancing needs of long term debtCurrent highly liquid asset portfolio allows to obtain additional €5bn from ECBTotal portfolio of ECB collateralexpected at year end 2009 of around €9bn
1717
1.6
0.5 4.0
1Q09 2Q09 3Q09 4Q09 FY09 FY10
around €9bnAlready issued €1.5bn with State guaranteeState guaranty available of €2.5bn
Earnings Presentation – 4th Quarter 2008
Commercial gap evolution
Loans / On balance sheet funds
151%147%
143%
1818
Improvement of 8percentage points
2006 2007 2008
Earnings Presentation – 4th Quarter 2008
Pension Fund – prudence on changing actuarial assumptions
588
7651,568
572
+293
+797 +27 -402+112 -40
Actuarial losses
Corridor
Outside corridor
Fully fundedEffective return of the fund: -14%
(Eur million)
1919
Dec07 Expected
return
Asset
devaluation
Non financial
losses
Chg in
discount rate
Chg mortality
table women
Amortization Dec08
Capital impact: 2008
Change in actuarial losses 827.4
Expected return of the fund (293.2)
Deferred for capital purposes 534.2
Annual amortization estimate for the next 4 year 133.5
Actuarial Assumptions 2007 2008
Increase in future compensation levels 3.25% 3.25%
Pensions increase rate 2.25% 2.25%
Projected rate of return of fund assets 5.50% 5.50%
Discount rate 5.25% 5.75%
Mortality tables
Men TV 73/77 - 1
year
TV 73/77 - 1
year
Women TV 88/90 TV 88/90 - 2
years
Earnings Presentation – 4th Quarter 2008
7.1%
Core Tier 1 - Perspective
Core Tier 1
Tier 1
4.3%
Total
5.5%
9.6%
6.5%
7.8%
11.2%
5.8%
10.5%
Solvency ratio
(Eur million)
7.3%
8.6%
12.4%Estimated impact of the implementation
of IRB Advanced (Basel II)***:
Core Tier I: +156bpTier I: +148bpT t l 195b
*
2020
Core Tier 1
RWA** 61,687 66,976
3,8853,8854,364
2,752
Dec07 Sep08 Dec08 Dec08
67,426
* According to the criteria of the Bank of Portugal, Core Tier 1 excludes the deduction related to financial stakes. Figures presented on a comparable basis ** RWA = Risk Weighted Assets*** Assuming a cap of 20% that will be in place for 2009
Proforma with IRB Advanced
Total: +195bp
53,072
Earnings Presentation – 4th Quarter 2008
Re-affirmed credit ratings by all rating agencies
Short term Long term Outlook
Moody's P-1 Aa3 Stable
2121
Standard and Poor's A-1 A
Fitch Ratings F1 A+ Stable
Negative
Earnings Presentation – 4th Quarter 2008
Agenda
GroupPortugalPolandMozambique
2222
MozambiqueGreeceAngolaOther International operations
Earnings Presentation – 4th Quarter 2008
Net income and operating profit
(Eur million)(Eur million)
332.3474.4
-29.9%
Net income
893.0769.1
+16.1%
Operating profit before provisions
2323
FY07 FY08
Excluding specific items
FY07 FY08
Earnings Presentation – 4th Quarter 2008
Strong net interest income performance
(Eur million)
299.7308.0
297.3290.2
Quarterly net interest income
1,195.21,103.7
29.327.5
1,131.21,224.4
Dividends
Net interest income
Intermediation margin
+8.2%+15.5%
+8.3%
2424
266.7
4Q07 1Q08 2Q08 3Q08 4Q08FY07 FY08
1.81% 1.89%1.70% 1.82% 1.75%1.82%NIM 1.82%
Earnings Presentation – 4th Quarter 2008
1 32
2.13 2.232.08 2.04
1.691.57 1.54
1.99
1.56
2.48
Credit repricing reflects market conditions
3.45
2.39
3.683.43 3.49
0.920.880.90
1.090.95
Term deposits
Demand deposits
Spreads on corporate loans(%)
Spreads on mortgage loans(%)
Spreads on deposits(%)
Retail SME
Corporate SME
* *
2525
1.32
0.940.951.030.93
4Q07 1Q08 2Q08 3Q08 4Q08
0.721.04 0.95 0.91 0.89
4Q07 1Q07 2Q07 3Q07 4Q074Q07 1Q08 2Q08 3Q08 4Q08
p
Large corporates
* Excluding liquidity premium as shownin previous quarters
Earnings Presentation – 4th Quarter 2008
Yoy lower commissions mainly reflect adverse financial markets; increase of core commissions qoq
181.5 160.5
-5.0%
562.8 534.9
Capital markets related
42.332.3
48.4 42.7 37.1
143.8 134.1 138.1-11.6%
141.7
(Eur million)
118.9
Commissions
-2.5%
2626
374.4381.3
FY07 FY08
99.4 91.486.6 95.4 101.0
4Q07 1Q08 2Q08 3Q08 4Q08
-1.8%
Excluding specific items
Core banking business +1.6%
Earnings Presentation – 4th Quarter 2008
Core revenues continues to show growth even in this extremely difficult environment(Eur million)
410.5397.6439.5404.8398.5
1,652.41,608.1
Core operating income(excluding financial market)
+3.0%
*
+2.8%
2727
4Q07 1Q08 2Q08 3Q08 4Q08FY07 FY08
Core operating income: Net interest income + Dividends + Banking related commissions and other operating income
Excluding specific items
* Dividends: €27.3 million
Earnings Presentation – 4th Quarter 2008
614.2
377.4
66.9
623.3
407.3
69.4
Decreasing operating costs in spite of the broader branch network; good evolution of cost-to-income ratio
-3.8%1,058.5
Staff
Depreciation
Administrative
17.4 17.0 16.8 16.7 16.4
144.3 157.1155.2 161.0 140.9
111.8 97.395.1
92.5 92.5
275.1 252.4266.3273.5
-3.5%
-7.4%
-1.5%
(Eur million)
264.7
Operating costs-7.7%
1,100.0
2828
10,66710,821
FY07 FY08
FY07 FY08 4Q07 1Q08 2Q08 3Q08 4Q08
Excluding specific items
Cost-to-income ratio 53.7%57.3%
-3.6pp
918885
FY07 FY08
+33-154
Number of employees Number of branches*
* Net of closures. New branches opened during 2008 of 51
Earnings Presentation – 4th Quarter 2008
38 692
Sustain volume growth, supported in on BS funds
Mortgage
Loans to customers *
(gross)
20,89319,858
+6.6%
55,194
51,380
+1.8%
Customers’ funds
(Eur million)
52,322
58,861
On BS customers’
+10.0%
+5.5%
2929
35,174 38,692
16,206 13,630
Dec07 Dec08
Mortgage
Consumer loans
Loans to companies
* Excludes securitized loans and securities reclassified as credit
32,178 34,811
3,1573,158
Dec07 Dec08
Off BS customers’ funds
funds
Securitizedloans
3,126 2,625
+8.0%
-0.2%
Earnings Presentation – 4th Quarter 2008
Prudent approach to a depressed economy
Credit quality*
Impairmentcoverage > 90 days
Overdueratio > 90 days
251.3%
(Eur million)
317.3%
597.9
0.6% 0.8%
1 180 891.03
1.07
1.38
Impairment charges as % of total loans
(annualized)
Gross impairment charges as % of
total loans
3030
312.1477.0
120.9
53.3
Dec07 Dec08
Total overdue
< 90 days
> 90 days
365.41.18
0.56
0.87
0.42
0.77
0.89
0.50
.
4Q07 1Q08 2Q08 3Q08 4Q08
Impairment net of recoveries as % of total loans
Conservative review of portfolio risk to account for depressed market environment
* Excluding financial assets
Earnings Presentation – 4th Quarter 2008
Credit quality and coverage*
Portfolio Overdue >90 days Impairment
Overdue >90 days / Total
loansCoverage
Individuals 156 293 0.6% 188.4%
Mortgage 97 188 0.5% 194.5%
Consumer 59 105 1.9% 178.5%
(Eur million)
3131
Companies 321 906 0.9% 281.7%
Services 76 312 0.6% 409.3%
Commerce 75 149 1.8% 197.7%
Others 170 445 0.9% 261.7%
Total 477 1,199 0.8% 251.3%
* Excluding financial assets
Earnings Presentation – 4th Quarter 2008
Gross impairment and recoveries
203.3152.9
71.0129.5141.7
+43.4%
Gross impairment
64 3
-54.9%
Recoveries
(Eur million)
3232
4Q07 1Q08 2Q08 3Q08 4Q08
29.028.212.0 17.364.3
4Q07 1Q08 2Q08 3Q08 4Q08
Earnings Presentation – 4th Quarter 2008
Agenda
GroupPortugalPolandMozambique
3333
MozambiqueGreeceAngolaOther International operations
Exchange rate: fixed exchange rate was used for comparison purposes
(Balance sheet: 1€ =4.1535 PLN; P/L: 1€ = 3.50572917 PLN)
Earnings Presentation – 4th Quarter 2008
Resilient performance in a less favorable environment; strengthened operating income performance reflects sound core business
(Eur million)(Eur million)
29.4131.7
+11.9%
Net income
471 6
55.798.8
487.6 527.3Trading + other
+8.1%
Operating income
- Loss on options with Clients
(-43.4m)- Dividends from Visa
(+7.1m)
147.3
-10.4%
3434
117.9
FY07 FY08
471.6388.8
FY07 FY08
Financial margin+ commissions
+21.3%
* Proforma data. Margin from all derivatives hedging FX denominated loan portfolio is presented in Net Interest Income, whereas inaccounting terms part of this margin is presented in Result on Financial Operations
*
- Tax effect (+6.9m)
Earnings Presentation – 4th Quarter 2008
Strong net interest income growth, benefiting from both volume and price trends …
(Eur million)
337.0
233.9
Net interest income
Financial Margin
+44.1%
36.475.1
-13.1%
154.9134.6
Capital markets related
-51.4%
Commissions
3535
FY07 FY08
3.1% 3.4%NIM
98.279.9
FY07 FY08
+22.9%Core banking business
Earnings Presentation – 4th Quarter 2008
173.7
145.525.2
20.7
153.7
123.0
Improved profitability although operating costs reflect the expansion plan
+12.6%
301.9339.9
Staff
Depreciation
Administrative
11.23.7
6.2
43 343 142 5 44.841 6
36.132.3 40.237.035.4
5.6 5.288.2
78.485.7 86.1
-18%
+18%
+13%
89.7
(Eur million)
Operating costs
3636
7,0496,067
YE2007 YE2008
153.7
FY07 FY08
Staff 43.343.142.5 44.841.6
4Q07 1Q08 2Q08 3Q08 4Q08
+13%
Cost to income ratio
64.5%61.9% +2.6pp
490410
YE2007 YE2008
+80+982
Number of employees Number of branches
Earnings Presentation – 4th Quarter 2008
102.6%95.1%
Dec07 Dec08
Sustained volume growth
Loans to Customers *
(net)
+53.2%
D i
(Eur million)
8,125
5 303
Loans to deposits ratio
3737
Mortgage
Consumer loans
Loans to companies
* Includes securitized loans
1,715 2,196
594
3,152
5,336
436
Dec07 Dec08
5,2497,662
Dec07 Dec08
Deposits5,303
+46.0%
Earnings Presentation – 4th Quarter 2008
Credit Quality
Stable asset quality and cost of risk
Impairmentcoverage
Impairmentratio
79%
3.4%
(Eur million)
3.4%
67%
Impairment charges as % of Total Loans(YTD)
0 45
0.52
Impairment net of recoveries as % of total loans
3838
184
280
Dec07 Dec08
Total Impaired loans
0.450.35
0.20 0.31
4T07 1T08 2T08 3T08 4T08
Earnings Presentation – 4th Quarter 2008
Strong market share growth, especially in deposits from individuals
Market shares evolution
Deposits from Individuals 7.1%Corporate Deposits 3.8%Total Deposits 5.6%
Millenni m M t al F nds 2 2%
Dec. 2007 Dec. 2008
5.2%4.0%
4.6%
3 7%
57
6
12
Ranking (Sep.08)Dec. 2006
4.0%3.7%
3.9%
3 6%
3939* Ranking in number of credit cards
Corporate Loans 3.2%of which Leasing (sales) 6.0%
Total Loans 5.4%
3.2%
6.3%4.8%
8
45
Millennium Mutual Funds 2.2%3.7% 12Loans to Individuals 7.4%
of which Mortgage loans 11.5%of which Cards loans 5.6%
6.6%
11.2%5.5%
426 *
3.4%
6.2%4.3%
3.6%
5.4%
9.8%4.9%
Earnings Presentation – 4th Quarter 2008
Mortgage loans instalment sensitivity to FX and interest rate changes
ILLUSTRATIVE EXAMPLE
700
800
900
1,000
1,100
1,200
J-08 M-08 M-08 J-08 S-08 N-08 J-09
Evolution of Monthly Instalment in PLN
Initial Loan Amont (PLN) 200,000
Initial Loan Amont (CHF) 87,336
Date of Dirbursement (PLN) Jan-08
Tenor (months) 360
Spread 1.30%
Initial 2.76%
Current* 0.67%
Initial 2.3
Market Rate (Libor 90d)
Exchange Rate
Highest instalment in Dec 08Illustrative
4040* As of 31st January 2009
** As of 11 February 2009
The impact from the recent sharp decrease of the CHF interest rates more than compensated the PLN depreciation
Current** 2.8Exchange Rate
Initial 924.5
Current 919.3Monthly Installment (PLN)
Evolution of Exchange Rate and Reference Rate
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Jan08 Mar08 May08 Jul08 Sep08 Nov08 Jan09
1.0
1.5
2.0
2.5
3.0
Libor CHF 90d
PLN/CHF
Earnings Presentation – 4th Quarter 2008
Agenda
GroupPortugalPolandMozambique
4141
MozambiqueGreeceAngolaOther International operations
Earnings Presentation – 4th Quarter 2008
Strong performance in a less favorable world economy
(Eur million)(Eur million)
51.541.4
+24.6%
19.314.6
100.3120.0
Trading + Other +32.2%
+19.5%
Net income Operating income
4242
FY07 FY08
100.685.7
FY07 FY08
Financial margin+ Commissions
+17.4%
Earnings Presentation – 4th Quarter 2008
Strong net interest income and commissions growth
(Eur million)
78.1
67.1
Net interest income
Financial margin
+16.5%22.5
18.6
Commissions
+20.7%
4343
FY07 FY08
11.0% 10.3%NIM
FY07 FY08
Earnings Presentation – 4th Quarter 2008
21.87.3
6.7
19.2
Operating costs under control and reflecting the expansion plan
+11.0%
48.954.3
Depreciation
Administrative
-7.2%
+13.4%
(Eur million)
Operating costs
1,7621,595+167
Number of employees
4444
25.822.4
FY07 FY08
Staff+14.8%
10085
YE2007 YE2008
+15
Number of branches
Earnings Presentation – 4th Quarter 2008
Sustained volume growth with improved credit quality
Mortgage
Consumer loans
Loans to customers (gross)
12224
25
75
+34.1%
804
653
Deposits(Eur million)
506
378
+23.2%
4545
loans
Loans to companies
279359
Dec07 Dec08
Dec07 Dec08414%
1.2% 0.8%
537%Impairmentcoverage > 90 days
Overdueratio > 90 days
Earnings Presentation – 4th Quarter 2008
Agenda
GroupPortugalPolandMozambique
4646
MozambiqueGreeceAngolaOther International operations
Earnings Presentation – 4th Quarter 2008
Earnings affected by focus on liquidity, impacting on spreads on deposits and disbursements of new loans for the year(Eur million)(Eur million)
22.1
15.1
-31.4%
9.812.5
157.1 167.8Trading + Other
+6.8%
Net income Operating income
4747
FY07 FY08
158.0144.6
FY07 FY08
+9.3%Financial margin+ Commissions
Earnings Presentation – 4th Quarter 2008
Solid financial margin growth despite price competition on deposits and impact of wider Euribor-ECB gap on loan portfolio
(Eur million)
31.4 31.4 31.131.032.5
Quarterly net interest income
116.5 126.0
Net interest income
+8.1%
Financial margin
4848
4Q07 1Q08 2Q08 3Q08 4Q08
NIM(YTD) 2.70% 2.47% 2.26% 2.19%
Dec07 Dec08
NIM 2.46% 2.27% 2.17%
Earnings Presentation – 4th Quarter 2008
3.18
3.45
2.10 1.942.45 2.38
Improving spreads on credit
(Eur million)
3.683.403.89
1 91
3.57
1.58
Current DepositsRevolving
Spreads on business loans(%)
Spreads on mortgage loans(%)
Spreads on deposits(%)
4949
1.99 1.941.96 1.89
4Q07 1Q08 2Q08 3Q08 4Q08-1.08
1.91
-0.200.050.050.25
4Q07 1Q08 2Q08 3Q08 4Q08
0.870.871.040.91
4Q07 1Q08 2Q08 3Q08 4Q08
Term Deposits
Fixed term
Earnings Presentation – 4th Quarter 2008
Sustained commission performance
28.232.1
+13.9%
(Eur million)
9.27.6 8.1 7.4
9.0
Commissions
5050
FY07 FY08 4Q07 1Q08 2Q08 3Q08 4Q08
Earnings Presentation – 4th Quarter 2008
62.3
54.97.8
9.1
54.0
50.8
112.5126.3
Operating costs increasing due to expansion plan
+12.3%
St ff
Depreciation
Administrative 2.02.2 2.3 2.3 2.3
16 315 514 7 15 814 3
13.911.5 15.613.815.7
32.0 28.5 31.6 32.0 34.2+17.3%
+8.1%
+15 5%
(Eur million)
Operating costs
5151
FY07 FY08
Staff 16.315.514.7 15.814.3
4Q07 1Q08 2Q08 3Q08 4Q08
+15.5%
1,411 1,554
YE2007 YE2008
+143
165 178
YE2007 YE2008
+13
Number of employees Number of branches
Earnings Presentation – 4th Quarter 2008
Investing in the build-up of the retail franchise
71.6% 75.3%
Cost to income ratio
41.544.6
-7.0%
Operating Profit before provisions(Eur million)
5252
FY07 FY08 FY07 FY08
Earnings Presentation – 4th Quarter 2008
Reduced commercial liquidity gap
Loans to customers *
(gross)
4,848
+20.9%
+22.9 %
Customers’ deposits
(Eur million)
5353
Mortgage
Consumer loans
Loans to companies
* Includes securitised loans
1,580 1,873
799
1,6632,176
767
4,010
Dec07 Dec08
2,6413,246
Dec07 Dec08
Earnings Presentation – 4th Quarter 2008
Credit quality
Lower cost of risk, resulting from improved collection process, limited the P&L impact of deteriorating economic conditions
Impairmentcoverage > 90 days
Overdueratio > 90 days
64.7%
1.7%
(Eur million)
2.1%
53.8%
Impairment charges % average total loans
Improved collection process
5454
100.9
5.0
67.4
3.9
71.4
105.9
FY07 FY08
days
Total overdue
< 90 days
> 90 days
0.370.42
0.35
2006 2007 2008
Earnings Presentation – 4th Quarter 2008
Substantial customer and deposit acquisition in 2008,focus on deposit-gathering to continue in 2009
6-month time deposit with interest of up to 6.25% from a minimum of 10,000 euros to a maximum of 400,000 euros
More than502,000 Customers
(+67,000 from end-07)
New record highs:
3-month time deposit with interest of up to 6% for new funds from a minimum of 10,000 euros to a maximum of 400,000 euros
5555
IKEA credit card, mainly aimed at Customer acquisition. Allows purchases at IKEA stores to be split in installments with preferential interest
Payroll programme featuring preferential interest on loans, an overdraft facility, a 24-hour over-the-phone medical assistance service and a credit card with no annual fee
More thanEUR 3.2 billion in
deposits(+EUR 605 million from
end-07)
Earnings Presentation – 4th Quarter 2008
Agenda
GroupPortugalPolandMozambique
5656
MozambiqueGreeceAngolaOther International operations
Earnings Presentation – 4th Quarter 2008
Angola: Strong volume growth on the back of solid macro performance
Highlights
Strong volume growth
Results affected by branch expansion plan
Partnership with Sonangol and BPA
Volumes
Loans to customers
119219
FY07 FY08
+84.1%
Customers’ funds
150279
FY07 FY08
+86.0%
(Eur million)
5757
Partnership with Sonangol and BPA will boost growth
Angola is one of the fastest growing economies in the world
Net profit Branches
5.0 4.4
FY07 FY08
9
16
FY07 FY08
Earnings Presentation – 4th Quarter 2008
Agenda
GroupPortugalPolandMozambique
5858
MozambiqueGreeceAngolaOther International operations
Earnings Presentation – 4th Quarter 2008
Romania: Encouraging initial figures and good market acceptance
Highlights
Lower than expected net loss driven by operating costs savings
Highly accepted by clients
Continuous strong origination of new
Volumes
Loans to customers Customers’ funds
236
38
FY07 FY08
38
105
FY07 FY08
(Eur million)
+174.2%
5959
Continuous strong origination of new clients
Some risk on macro going forward but Romania is a high growth banking market on the medium/long term
Net profit Branches
40
65
FY07 FY08
* Including costs accounted at BCP
*
-34.9-26.4
FY07 FY08
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Earnings Presentation – 4th Quarter 2008
US: Impact from crisis in US
Highlights
Community Bank focused primarily on the Portuguese, Greek and Brazilian ethnic groups
Global liquidity crisis and sharp reduction on interest rates in US affecting deposit’s volume and
i
Volumes
Loans to customers
417468
FY07 FY08
+12.2%
Customers’ funds
478528
FY07 FY08
-9.6%
(Eur million)
6060
margins
Positive performance of operating profit (from –0.5 m€ in 2007 to +0.9 m€ in 2008)
Negative impact from US economy recession reflected in significant increase of loan impairment provision
Net profit Branches
18 18
FY07 FY08
-0.5
-6.1
FY07 FY08
Earnings Presentation – 4th Quarter 2008
Turkey: recovery under way
Highlights
Main focus on cost control and rebalancing the loan portfolio
Strong growth in customers loans in local currency (+20.2%). Impact from devaluation of Turkish lira
Volumes
Loans to customers Customers’ funds
(Eur million)
412429
FY07 FY08
-3.9%
461
706
FY07 FY08
-34.6%
6161
devaluation of Turkish lira
Market continues thorny on customers funds
Net income benefited from sale of headquarters building
Net profit Branches
1618
FY07 FY08
1.8
-0.8
FY07 FY08
Earnings Presentation – 4th Quarter 2008
Recovering performance in Portugal and prudently preparing for a difficult year
Strong volume growth particularly in Deposits and other balance sheet customers funds
International Business – Strong growth but profitability reduced
Conclusion
6262
International Business Strong growth but profitability reduced due to market conditions
Stable liquidity position, with adequate capital position
Adequate strategy to the current business environment with focus on efficiency, risk control and retail oriented
Earnings Presentation – 4th Quarter 2008
Soundness and Trust
Priorities for 2009
1. Proactive and rigorous risk management
2. Integrated and prudent liquidity and capital management
3. Deep commitment to clients and maximization of
Stronger Commitment
6363
Commitment and Performance
Sustainability and Value
funds and results
4. Acceleration of cost reduction and organizational streamlining
5. Adjustment of business models and materialization of growth opportunities
6. Talent management and employees mobilization
Earnings Presentation – 4th Quarter 2008
Five key principles for a new Program “Rumo ao Futuro”
Bank with long-lasting relationships – focus on relationships (more than on products and transactions), increase proximity and frequent contact with clients, long term commitment
“Commitment to clients”
Bank with strong risk management and capital optimization capabilities– effective use of capital and liquidity, proactive risk perspective, strengthening of credit decision processes, rigorous operational risk control
“Effective risk management”
Leaner simpler and more cost-effective bank along organizational“Si li it d
6464
Leaner, simpler and more cost-effective bank – along organizational structure, internal processes, relationship with clients, business lines, and even product and services offer
“Simplicity and efficiency”
Bank with options – portfolio with operations where the Bank can “make a difference” and add value, which contribute to growth, risk diversification and value creation for the Group in the long term
“Diversified international
presence”
Bank focused on its capabilities – bank focused on its distinctive capabilities, which may constitute competitive advantages: retail/commercial banking, branch network based distribution, employees experience and know-how across geographies
“Focus on capabilities”
Earnings Presentation – 4th Quarter 2008
Appendix
6565
Appendix
Earnings Presentation – 4th Quarter 2008
Qualified Shareholdings according to shareholders information
Share capital : 4,694,600,000 shares
Sonangol 469,000,000 9.99% Eureko Group (1) 331,956,248 7.07% Grupo Teixeira Duarte (2) 329,755,255 7.02% Berardo Group (3) 292,141,478 6.22% Banco Sabadell 208,177,676 4.43% Caixa Geral Depósitos Group 177,607,866 3.78%
Number of Shares % Capital
6666
Caixa Geral Depósitos Group , ,Grupo EDP (4) 152,075,727 3.24% Sogema 125,766,734 2.68% Privado Financeiras 109,461,901 2.33% Stanley Ho Group 106,254,934 2.26% SFGP - Investimentos e Participações 102,062,855 2.17%
Total 2,404,260,674 51.21%
(1) Although Eureko has entered into a series of derivative transactions with JP Morgan regarding 135,238,429 BCP shares, the PortugueseSecurities Market Commission (CMVM) considers that the voting rights inherent to those shares should be attributed to Eureko, thus increasing itsparticipation to 9.95% of total voting rights. (2) Teixeira Duarte- Sociedade Gestora de Participações Sociais, S.A. informed, through anannouncement dated December 12, that its subsidiary Teixeira Duarte – Gestão de Participações e Investimentos Imobiliários, S.A. has agreed toacquire 102,483,872 BCP shares from C+P.A. - Cimentos e Produtos Associados, S.A., and therefore the voting rights related to those sharesshould be attributable to the former (3) The shares and voting rights held by Fundação José Berardo and Metalgest are subject to reciprocalimputation. Therefore, Metalgest stake, 64,106,512 shares, was included (4) EDP Pension Fund held 52,805,044 BCP shares, corresponding to1.125% of the bank share capital
Earnings Presentation – 4th Quarter 2008
Financial Statements
6767
Financial Statements
Earnings Presentation – 4th Quarter 2008
Consolidated Balance SheetAt 31 December, 2008 and 2007
2008 2007
Assets
Cash and deposits at central banks 2.064.407 1.958.239 Loans and advances to credit institutions Repayable on demand 1.048.348 820.699 Other loans and advances 2.892.345 6.482.038
Loans and advances to customers 75.165.014 65.650.449Financial assets held for trading 3.903.267 3.084.892 Financial assets available for sale 1.714.178 4.418.534 Assets with repurchase agreement 14.754 8.016 Hedging derivatives 117.305 131.069 Financial assets held to maturity 1.101.844 - Investments in associated companies 343.934 316.399 Non current assets held for sale 19.558 24.180 Property and equipment 745.818 699.094 Goodwill and intangible assets 540.228 536.533 Current tax assets 18.127 29.913 Deferred tax assets 586.952 650.636 Other assets 4.147.645 3.355.470
94.423.724 88.166.161
(Thousands of Euros)
6868
Liabilities
Amounts owed to central banks 3.342.301 784.347 Amounts owed to others credit institutions 5.997.066 8.648.135 Amounts owed to customers 44.907.168 39.246.611Debt securities 20.515.566 26.798.490Financial liabilities held for trading 2.138.815 1.304.265 Other financial liabilities held for trading at fair value through results 6.714.323 1.755.047
Hedging derivatives 350.960 116.768 Provisions for liabilities and charges 221.836 246.949 Subordinated debt 2.598.660 2.925.128 Current income tax liabilities 4.826 41.363 Deferred income tax liabilities 336 46 Other liabilities 1.383.633 1.399.757
Total Liabilities 88.175.490 83.266.906
Equity
Share capital 4.694.600 3.611.330 Treasury stock (58.631) (58.436) Share premium 183.368 881.707 Preference shares 1.000.000 1.000.000 Fair value reserves 214.593 218.498 Reserves and retained earnings (274.622) (1.598.704)Profit for the period attributable to Shareholders 201.182 563.287
Total Equity attributable to Shareholders of the Bank 5.960.490 4.617.682
Earnings Presentation – 4th Quarter 2008
Consolidated Statement of IncomeAt 31 December, 2008 and 2007
2008 2007
Interest income 5.269.597 4.332.187 Interest expense (3.548.549) (2.794.884)
Net interest income 1.721.048 1.537.303
Dividends from equity instruments 36.816 27.921 Net fees and commission income 740.417 664.583 Net gains / losses arising from trading and hedging activities 277.631 199.138 Net gains / losses arising from available for sale financial assets (259.532) 193.211 Other operating income 57.580 97.861
2.573.960 2.720.017
Other net income from non banking activity 17.390 12.925
Total operating income 2.591.350 2.732.942
St ff t 915 307 1 006 227
(Thousands of Euros)
6969
Staff costs 915.307 1.006.227 Other administrative costs 642.641 627.452 Depreciation 112.843 114.896
Operating costs 1.670.791 1.748.575
920.559 984.367
Loans impairment (544.699) (260.249) Other assets impairment (60.024) (45.754) Other provisions 15.500 (49.095)
Operating profit 331.336 629.269
Share of profit of associates under the equity method 19.080 51.215 Gains from the sale of subsidiaries and other assets (8.407) 7.732
Profit before income tax 342.009 688.216 Income tax Current (44.001) (73.045) Deferred (39.997) 3.475
Profit after income tax 258.011 618.646
Attributable to: Shareholders of the Bank 201.182 563.287 Minority interests 56.829 55.359
Profit for the period 258.011 618.646
Earnings Presentation – 4th Quarter 2008
Consolidated Statement of Income (Quarterly Evolution)
At 31 December, 2008 and 2007
∆(Millions of euros) Δ %
08 / 07
Net interest income 388 412 430 435 444 1,721 1,537 12%
Dividends from equity instruments 5 2 28 - 0 8 37 28 32%Net fees and commission income 199 174 194 185 187 740 768 - 4%Other operating income 35 30 18 16 2 67 119 - 44%Net inc. from trading activity 27 36 52 50 148 286 196 46%
Operating income 654 654 721 685 790 2,851 2,648 8%
Staff costs 217 230 239 239 217 926 884 5%Other administrative costs 182 147 165 162 169 643 627 2%Depreciation 35 26 28 28 30 113 115 - 2%
Operating costs 434 404 432 429 416 1,681 1,627 3%
Year-to-dateQuarterly
Q4 07 Dec 07Dec 08Q4 08Q3 08Q2 08Q1 08
7070
(*) In 2007, Q2 : general tender offer over BPI commissions (88.7 - 23.2);Q3 : restructuring costs (12.3 - 3.3);Q4 : merger project with BPI commissions (14.5 - 3.8), restructuring costs (109.5 - 29.0), gains from the sale of EDP and
Sabadell (290.2 - 17.6), BPI and other impairment (94.0 - 14.3), asset revaluations (13.4 - 3.5) and contingencies (47.5 - 6.6).In 2008, Q1 : BPI impairment (151.3 - 20.0) and 2007 variable annual remuneration reversal (18.0 - 4.8);
Q2 : BPI impairment (50.9 - 6.7); Q3 : BPI impairment (44.7 - 5.9);Q4 : BPI impairment (21.1 - 2.8) and restructuring costs (7.8 - 2.1).
Operating costs 434 404 432 429 416 1,681 1,627 3%
Operating profit before provisions 220 251 289 256 374 1,170 1,021 15%
Equity accounted earnings 9 14 14 7 - 17 19 51 - 63%Loans impairment (net of recoveries) 87 70 136 135 204 545 260 109%Other provisions 3 3 - 9 20 31 45 34 31%
Profit before income tax 139 192 176 109 122 600 778 - 23%
Income tax 16 43 29 12 33 117 136 - 14%Minority interests 14 17 16 18 6 57 55 3%
Net income before spec. items 108 133 131 80 83 426 587 - 27%
Specific items (*) 51 - 118 - 44 - 39 - 24 - 225 - 24 >500%Net income 160 15 87 41 59 201 563 - 64%
Earnings Presentation – 4th Quarter 2008
Consolidated Statement of Income (National and International Operations)
At 31 December, 2008 and 2007
(EUR Thousands, except percentages)
Dec08 Dec07 ? % Dec08 Dec07 ? % Dec08 Dec07 ? % Dec08 Dec07 ? % Dec08 Dec07 ? % Dec08 Dec07 ? % Dec08 Dec07 ? %
Interest income 5,270 4,332 21.6% 3,952 3,431 15.2% 1,318 901 46.2% 711 425 67.1% 100 86 17.3% 377 271 39.3% 130 120 8.3%Interest expense 3,549 2,795 27.0% 2,757 2,327 18.5% 792 468 69.3% 431 222 94.4% 22 18 20.1% 251 154 62.9% 88 73 19.4%Net interest income 1,721 1,537 12.0% 1,195 1,104 8.3% 526 434 21.3% 280 204 37.4% 78 67 16.5% 126 116 8.1% 42 46 -9.4%
Dividends from equity instruments 37 28 31.9% 29 27 6.5% 8 0 >200% 7 0 >200% 0 0 >200% 0 0 111.1% 0 0 31.2%Intermediation margin 1,758 1,565 12.3% 1,224 1,131 8.2% 533 434 22.9% 287 204 40.7% 78 67 16.5% 126 117 8.2% 42 46 -9.4%
Net fees and commission income 740 768 -3.6% 535 563 -5.0% 206 205 0.3% 135 143 -6.1% 22 19 20.7% 32 28 13.9% 16 15 10.3%Other operating income 67 119 -43.8% 54 96 -44.0% 13 23 -43.3% 2 15 -86.0% 5 3 43.6% 2 5 -64.4% 4 0 >200%Basic revenue 2,565 2,452 4.6% 1,813 1,790 1.3% 752 662 13.6% 424 362 17.1% 106 89 18.4% 160 150 6.8% 63 61 2.4%
Net inc from trading activity 286 196 45 9% 139 80 74 1% 148 117 26 6% 99 87 13 7% 14 11 28 4% 8 7 6 1% 26 11 146 2%
Millennium bim (Moz.)
International operations
Group Portugal Total Bank Millennium (Poland) Millennium Bank (Greece) Other int. operations
7171
Net inc. from trading activity 286 196 45.9% 139 80 74.1% 148 117 26.6% 99 87 13.7% 14 11 28.4% 8 7 6.1% 26 11 146.2%Operating income 2,851 2,648 7.7% 1,951 1,869 4.4% 900 779 15.5% 523 449 16.4% 120 100 19.5% 168 157 6.8% 89 72 23.6%
Staff costs 926 884 4.6% 614 623 -1.5% 311 261 19.2% 174 142 22.2% 26 22 14.8% 62 54 15.5% 50 43 16.6%Other administrative costs 643 627 2.4% 377 407 -7.4% 265 220 20.6% 142 112 26.1% 22 19 13.4% 55 51 8.1% 47 38 24.5%Depreciation 113 115 -1.8% 67 69 -3.4% 46 45 0.7% 20 23 -12.6% 7 7 -7.2% 9 8 17.3% 10 7 32.3%Operating costs 1,681 1,627 3.3% 1,058 1,100 -3.8% 623 527 18.2% 335 277 20.9% 54 49 11.0% 126 112 12.3% 107 88 21.3%
Operating profit bef. imp. 1,170 1,021 14.6% 893 769 16.1% 277 252 10.0% 188 172 9.3% 66 51 27.7% 42 45 -7.0% -18 -16 11.3%
Equity accounted earnings 19 51 -62.7% 19 51 -62.7% 0 0 0 0 0 0 0 0 0 0
545 260 109.3% 470 220 113.5% 75 40 86.3% 37 17 125.1% 1 6 -75.7% 16 15 12.5% 19 3 >200%
Other provisions 45 34 31.0% 41 33 25.3% 3 1 199.1% 2 1 54.7% 1 0 >200% 0 0 -15.0% 0 0 >200%Profit before income tax 600 778 -22.9% 401 567 -29.3% 199 211 -5.5% 149 154 -3.5% 63 46 38.4% 25 30 -16.5% -38 -19 98.9%
Income tax 117 136 -14.0% 70 94 -25.4% 47 42 11.6% 31 32 -4.8% 11 4 189.9% 10 8 26.8% -5 -2 149.8%Minority interests 57 55 2.7% -2 -1 69.4% 58 56 3.7% 0 0 1 0 11.3% 0 0 16.3% 58 56 3.7%Net income before spec. items 426 587 -27.4% 332 474 -29.9% 94 112 -16.5% 118 122 -3.2% 52 41 24.6% 15 22 -31.4% -91 -73 24.5%
Specific items -225 -24 >200% -225 -24 >200% 0 0 0.0% 0 0 0.0% 0 0 0.0% 0 0 0.0% 0 0 0.0%Net income 201 563 -64.3% 107 451 -76.2% 94 112 -16.5% 118 122 -3.2% 52 41 24.6% 15 22 -31.4% -91 -73 24.5%
Loans impairment (net of recoveries)
Earnings Presentation – 4th Quarter 2008
7272
Banco Comercial Português, S.A., a public company (sociedade aberta) having its registered office at Praça D. João I, 28, Oporto, registered at theCommercial Registry of Oporto, with the single commercial and tax identification number 501 525 882 and the share capital of EUR 4.694.600.000
Investor Relations Division:Pedro Esperança Martins, Head of Investor RelationsFrancisco Pulido Valente
Tl: +351 21 1131 085Email: Investors@millenniumbcp.pt