1H13 Results Presentation(Unaudited Figures)
26th July 2013
Macroeconomic highlights: economic activity shows signs of stabilisation
Gl b l i i i h d i f d i 2Q 2013 i l l i ibl i h i d l d Global economic activity showed signs of moderate recovery in 2Q 2013, particularly visible in the main developed economies. However, with liquidity flows in the Euro Area still subdued, the ECB cut the main refi rate in May by 25 bps, to 0.5%. Concerns related to the potential tapering of the Fed’s Quantitative Easing policy led to an increase in US Treasury and German Bund yields, from 1.9% to 2.5% and from 1.29% to 1.72%, respectively. This translated into an increase in the 10-year PGB yield to 6.4%, from a low of 5.2% in May. The PSI-20 stock index retreated 4.6% in the quarter.
In Portugal, GDP is expected to have increased in 2Q (close to 0.5% QoQ, for the first time since 3Q 2010, following consistent signs of stabilisation in the economy. Exports are recovering and showing an accelerating trend, with a 5.7% nominal YoY growth in the quarter ending in May (4.1% YoY in January-May). Sales to markets outside the EU rose 12.2% YoY in the same period, while the ongoing recovery in the Euro Area translated into stronger intra-EU exports growth (3.1% YoY). Particularly important is the fact that Portuguese exports to Spain, accounting for close to 24% of the total, already increased7.4% YoY. Favourable leading indicators pointing to a recovery in Spanish, German and French economic activity from 2H g p g y p y2013 onwards, suggest a further strengthening in exports.
The performance of exports has translated into a 4.5% YoY growth in industrial production in May, while leading business confidence indicators (e.g. rise in export order books) point to further improvements in 2H 2013 and in 2014. GDP could contract less than previously expected in 2013 (around 2%) and return to positive growth next year (around 0.4%). This should also be supported by the ongoing stabilisation in domestic demand and by policy measures focusing on incentives to growth and employment (including lower corporate income taxes and new credit lines to exporting firms).
Economic prospects should also be sustained by further improvements in financing conditions. The surplus in external accounts increased to 1.2% of GDP in 1Q 2013 and it estimated to rise to around 4.5% of GDP by year-end, reflecting a further increase in domestic savings. The household savings rate rose to 12.9% of disposable income in this period in 1Q, supporting a gradual rising trend in household deposits.
1H2013 Results Presentation 126 July 2013
pp g g g p
BES financials: continuous focus on strengthening the balance sheet placing the Bank in a favourable position to benefit from the expected improvement in business conditions
The current business environment continues very demanding for Portuguese Banks, though the signs of stabilisation of the economy in the second half of the year are now more robust. With GDP falling by the third consecutive year and unemployment reaching historical highs, Portuguese banks’ asset quality deterioration should be the driver of subdued profitability in 2013. p y
In fact, BES’ provision charges for this quarter more than doubled vis-à-vis the first quarter, surpassing Eur 500mn, which drove accumulated provisions to Eur 747mn (+75% YoY) and cost of risk to 2.16% in the semester. This strong provisioning effort demonstrates BES’ strict financial discipline and conservative approach to the current challenging macro environment. Despite the QoQ recovery of NII and the resilient performance of the core operating income the significant provisioning led toDespite the QoQ recovery of NII and the resilient performance of the core operating income, the significant provisioning led to losses in the quarter.
With solvency levels above minimum regulatory requirements, having avoided state funds for recapitalisation, BES Management continues focused on the balance sheet, with capital preservation as the key priority. Despite net losses in the semester, Core Tier I according to BoP methodology remained fairly stable in June at 10.4% (with RWA/TA of 78%, one of the highest in Europe). Considering the positive impact of the capital increase of BES Angola approved in General Meeting last June, pro-forma Core Tier I would be 10.7%. The recovery of the Portuguese economy should translate into a slowdown of asset quality deterioration, leading on the one side to lower provisioning needs, hence less pressure on profitability, and on the other to improved risk profile, ultimately translating into even stronger solvency levels.
The deleverage of the Balance Sheet maintains a downward trend, with the LTD ratio reaching 125%, mainly backed by a continued increase in the deposit base, which has been benefiting from the strong franchise of the Bank. In fact, since June 2010 when BES implemented a deleverage plan the deposit base increased by 45% or ca Eur 12bn In 2013 alone BES’2010, when BES implemented a deleverage plan, the deposit base increased by 45% or ca. Eur 12bn. In 2013 alone, BES’ deposit base increased Eur 3.4bn (+10%). As a result, the funding structure improved substantially, with deposits and bancassurance products now representing 66% of the total funding mix.
All in all, with a comfortable liquidity position, solid solvency levels and a domestic leading franchise complemented by a
1H2013 Results Presentation
sensible international footprint, BES is in a unique position to benefit from the recovery in macro conditions in Portugal.
226 July 2013
Table of contents
I. Funding & Liquidity: Comfortable liquidity position, with significant improvement in funding mix, deleverage plan driving LTD to 125% and high level of repoable assets covering MLT redemptions for over 3 yearsredemptions for over 3 years
II. Asset Quality: Conservative and prudent risk management, with reinforced provision reserve to cope with current macroeconomic conditions in Portugal
III. 1H13: BES continues to focus on B/S, with deleverage and strong provisioning pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of both BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlookAppendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
1H2013 Results Presentation 326 July 2013
LTD ratio maintained a downward trend, reaching 125% in Jun.13, as a result of the strict deleverage plan the Bank implemented in the 2H10. Since then, LTD already decreased 73 p.p.
Transformation Ratio
198%-73 p.p. Domestic LtD :
125%
171%165% 163%
155%146% 147%
International LtD :126%
146%141%
135%
147%142%
137%129%
125%137%130% 131% 130%
*
120%
-5 p.p.
125% 122% 119% 117%124% 122% 120%
113% 112%
120%
1H10 9M10 FY10 1Q11 1H11 9M11 FY11 1Q12 1H12 9M12 FY12 1Q13 2Q13 Target YE14
Loans to Deposits Ratio Loans / On-BS Customer Funds
1H2013 Results Presentation
p
* Calculated according to BoP definition for Funding and Capital Plan. 426 July 2013
This reduction in LTD was achieved through a strong deposits growth (+45% or Eur 11.8bn since Jun.10) as well as a decrease in the loan portfolio (-4% or Eur 2.2bn since Jun.10). After the sharp increase during 1Q13 deposits continued to grow steadily in 2Q13 (Eur 0 5bn)
Gross Loan Portfolio Evolution
(EUR bn; excludes securitised credit)
Total Deposits Evolution
(EUR bn)
the sharp increase during 1Q13, deposits continued to grow steadily in 2Q13 (Eur 0.5bn)
- 2.3bn- 4%
-0.1bn0 1%
+ 11.8 bn+ 45%
+5.1 bn+16%
-0.1%
51.2
53.452.6
51.7 51.2 50.451.3 32.8
30.8 32.034.2 34.5
37.4
QoQ:51.1
37.9
26.1QoQ:-0.2bn (-0.3%)
Domestic-114mn
+0.5bn (1%)
Domestic+552mn
International-57mn
51.7 50.8 49.7 49.0 48.7 47.7 48.4 48.0
International-42mn
-57mn
Jun.
10
Dec
.10
Jun.
11
Dec
.11
Jun.
12
Dec
.12
Mar
.13
Jun.
13
Jun.
10
Dec
.10
Jun.
11
Dec
.11
Jun.
12
Dec
.12
Mar
.13
Jun.
13
1H2013 Results Presentation
Net Loans
526 July 2013
After the sale of international loans in 2010-2011, deleverage on the asset side is now being driven by mortgages. BES continues to support domestic companies and exporting SME’s
Loans per segment – YoY Growth Rate
(%)
Breakdown of Domestic Loans
(EUR bn; gross loans excluding securitised credit)
+0.2 bn+1%
38.2 38.42,1
1,2
10,6 10,41,9 1,8
25,7 26,2 Corporates: +500mn
Other Ind.: -140mnMortgage: -170mn-1,2
-0,6
-2,2
-0,7
-1 3 -1 0
0,6
-0,1
Dec.12 Jun.13
Breakdown of International Loans(EUR bn; gross loans excluding securitised credit)
-2,0-2,4
-4,1 -3,9 -3,8
,-1,3 1,0
-2,3-1,6-1.3
4,1
Mar
.12
Apr
.12
Mai
.12
Jun.
12
Jul.1
2
Aug
.12
Sep.
12
Oct
.12
Nov
.12
Dec
.12
Jan.
13
Feb.
13
Mar
.13
Apr
.13
Mai
.13
Jun.
13
Mortgage Corporates Total
+0.5 bn+4%
12.2 12.7
Mortgage Corporates Total
0,5 0,50,7 0,7
11,0 11,5 Corporates: +500mn
Other Ind.: +12mnMortgage: +14mnLoans to Portuguese exporting SME’s increased 7% since
Jun.10
1H2013 Results Presentation
Dec.12 Jun.13
626 July 2013
Backed by strong growth in deposits and life insurance products, Customer funds increased 12% YoY (Eur 6.2bn), clearly demonstrating BES strong franchise and Clients’ confidence Cost of deposits resumed its downward trend
Total Customer Funds
(EUR bn) (%)
Deposits – average rate evolution (stock)
confidence. Cost of deposits resumed its downward trend
+6.2 bn+12%
4Q11: 3.49%
1Q12
5,2 4,510,011,4
11,1 11,252.456.2 58.5 3Q11:
3.34%1Q12: 3.44%
3Q12: 2.98% 1Q13:
2.88%
58.6
1Q11:
3,7 5,04,8 5,06,0
5,35,2 4,5
2Q12: 3.07%
4Q12: 2.72%
On B/S Customer
Funds 2Q13: 2.79%
2Q11: 3.03%
4Q10: 2.47%
Q2.85%
32,8 34,5 37,4 37,9 Eur 47.4bn
+ 5.0bn YoY+12% YoY
1Q10:
2Q10: 1.57%
3Q10: 1.85%
Jun.12 Dec.12 Mar.13 Jun.13
Deposits Life InsuranceOth O /BS F d Off B/S F d
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13
1Q10: 1.49%
Jun-13
1H2013 Results Presentation
Other On /BS Funds Off B/S Funds
726 July 2013
A strong domestic franchise has been key to continue to increase Retail and Private Banking Customer funds in Portugal (Eur 1.2bn or 8.5% YtD). Additionally, BES ranked 1st
among top 5 Portuguese Banks in consumer satisfaction
Customer Funds (Retail and Private Banking) – YtD Growth
(EUR bn)
among top 5 Portuguese Banks in consumer satisfaction
European Consumer Satisfaction Index
(ECSI; %)
69,1 69,2 70,2 71,7 73,3
2012+8.5% in
the semester
Bank 3 Bank 2 Bank 1 Bank 4 BES
1st
1.10.1 1.2 (+17%
annualized)
Households Deposits: BES vs System
(Jan.11 = Base 100)
Retail Private banking
Total 142%BES System (source: BoP)
Retail and Private Banking customer funds are outperforming the market, clearly demonstrating Clients’
confidence in BES franchiseJan 11 Jul 11 Jan 12 Jul 12 Jan 13
110%
1H2013 Results Presentation 826 July 2013
Jan-11 Jul-11 Jan-12 Jul-12 Jan-13
The strong deposits growth and the deleverage plan led to a significant improvement in BES’ funding structure. Deposits and bancassurance products represent 66% of the funding mix (+30 f YE09) hil MLT h l l f d l t f 23% ( 31 f YE09)(+30 p.p from YE09), while MLT wholesale funds only account for 23% (-31 p.p. from YE09)
Evolution of Funding mix
27% 23%
2%
(%)
8%8%54%
43%35%
27% 23%
Deposits
and
36%46% 55% 53% 58%
a d
Bancassurance:
66%
10% 11% 10% 12% 11%-8% -11% -8% -12%
2009 2010 2011 2012 Jun.13
Equity Deposits Bancassurance MLT Funds Treasury Gap (net interbank deposits)
Share of customer funds in funding mix increased significantly, currently representing 66% of the funding structure
1H2013 Results PresentationNote: ECB included in the Treasury Gap. 926 July 2013
MLT maturities for 2013 were already completely redeemed. BES annual MLT refinancing needs for the period 2013 – 2017 are on average Eur 1.5bn p.a., which compares with Eur 3.9bn on average in 2011-20123.9bn on average in 2011 2012
Medium and Long Term Debt maturing in 2013
(EUR bn; Total Eur 1.6bn)
Medium and Long Term Debt maturity profile
(Eur bn)
Includes the exchangeable notes linked to EDP and to
Bradesco
already repaidalready repaid
Bradesco
0,7
0,9
4,3 Average: Eur 1.5bn
Average: Eur 3.9bn
3,43,1
1.62.3
1Q13 2Q13 3Q13 4Q13
0,4
2011 2012 2013 2014 2015 2016 2017
0.0 0.0 0.2
During 2013, BES had Eur 1.6bn of MLT redemptions, fully repaid in the 1st Semester
2013-2017 MLT annual redemptions are much lower than in 2011-2012
1H2013 Results Presentation 1026 July 2013
With markets closed for Portuguese banks between 2Q10 and 4Q12, the deleverage plan implemented by BES allowed it to cover internally a liquidity gap of Eur 11.3bn. During the last 3 years BES redeemed Eur 19 6bn of wholesale debt (*) currently using only Eur 8 3bn
Evolution of net ECB use and BES redemptions net of issues (*)The liquidity gap was covered
last 3 years, BES redeemed Eur 19.6bn of wholesale debt ( ), currently using only Eur 8.3bn of ECB facilities
(Eur bn) Eur 11.3bn
The liquidity gap was covered internally through deleverage (increase of deposits, sale of international loans an
cash flow generation)+19.6bn
15.8
19.5 18.5
13 7
18.7Redemptions (net of issues): Eur 19.6bn
BES redeemed Eur 21.2bn of wholesale debt, o.w. Eur 14.6bn MLT and Eur 6.6bn ST.
19.6
+8.6bn
5 3
8.7
13.7
6.9 7.9
BES was able to place 3 MLT issues amounting to ca. Eur 1.6bn since November 2012. BES re-opened wholesale debt markets for Portuguese Banks8.3
0.0
5.3
-0.3
3.9Net use of ECB amounts to Eur 8.3bn, with Eur 9.2bn in LTRO’s, Eur 0.3bn ST and Eur 1.2bn in deposits.
During 1H13 BES redeemed Eur 1 0bn fromMar-10 Dec-10 Dec-11 Jun-12 Dec-12 Mar-13 Jun-13
Net use of ECB BES' Redemptions - Issues
A A- BB-BBS&P BB-S&P: 7 notches / Moody’s: 8 notches
BB-
During 1H13, BES redeemed Eur 1.0bn from the 1st LTRO
BB-
1H2013 Results Presentation(*) Includes ST and MLT redemptions, net of issues
A1 A2 Ba3Ba2Moody’s Ba3S&P: - 7 notches / Moody’s: - 8 notches
Ba3
1126 July 2013
Ba3
The use of ECB liquidity facilities decreased significantly from its peak in Jun.12. Repoable assets provide a significant liquidity buffer, covering MLT maturities for over 3 years
BES ECB exposure (net)
(EUR bn)
Total Repoable Assets1
(EUR bn)
BES use of ECB liquidity facilities (net)
(EUR bn)
13,7 22,4 21,822,3
25,4 24,6
+ 0.4bn Inflows: 5 1
Outflows: 6.5
- 5.4bn YoY
8,77 9 8,3
15,0
19,4
,
18,9
6.9
2.8 0.1 8.3
Inflows: 5.1
6,97,9
-3.4-0 5
2.50.4
0.7
Dec 11 Jun 12 Dec 12 Mar 13 Jun 13 Dec. 11 Dec.12 Mar.13 Jun.13Dec
.12
posi
ts
ance
s
ey M
kt
Loan
s
Equi
ty
d C
P's
ptio
ns
Oth
er
Jun.
13
-0.5-1.2
Dec. 11 Jun. 12 Dec.12 Mar.13 Jun. 13
ECB
Use
D
De
MLT
Issu
Mon
e
Bon
ds a
nd E
CD
's a
nd
MLT
Red
emp
ECB
Use
J
> 1 year: Eur 9.2bn< 1 year: Eur 0.3bnDeposits: Eur 1.2bn
Total
ECB Eligible
1H2013 Results Presentation
1) Pre-haircuts. Includes repo’ed assets
1226 July 2013
After the increase of the Portuguese sovereign book during 1H12, BES exposure to public debt decreased in the 2H12. Taking advantage of a significant liquidity position, BES bought T Bills in the 1H13 increasing its sovereign exposure again
European Sovereign Exposure
T-Bills in the 1H13, increasing its sovereign exposure again
Portuguese Yield Curve
(Eur mn)
T-Bills
Bonds6 840
(%)
14.5 15.0
12.89.7
Dec-116 604
1618
1177
467
3931 32314 787
5 550
4 2833 883
6.99.3
3.35.0
6.9 Dec-12Jun-12
6.7 Jun-133.55.6
3.1694.373
3.8152 983 2 909 3.374
1545
1618 4679002 949 3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y
Portuguese Government Bond yields
1.4043.169 2.983 2.909
Dec.11 Mar.12 Jun.12 Sep.12 Dec.12 Mar.13 Jun.1314.512.8
(%)10Y2Y
9.3
Maturity: > 1y
26% 53% 77% 93%
Jun.13 includes Eur 1.6bn from BES Vida
4.76.481%
6.9
3.3
6.7
3.5
64% 55%6.9
1H2013 Results Presentation
Dez-11 Jun-12 Dez-12 Jun-13
1326 July 2013
Data as of July 22nd, 2013
The European sovereign exposure in Jun. 13 is concentrated in Portuguese and Spanish debt, the majority accounted in the AFS portfolio
European Sovereign Exposure
5Y
Maturity profile of the European Sovereign Exposure
(Eur mn)(%)
Total o.w. Bonds o.w. T-Bills
> 5Y 37%
Includes Portugal 4 416 2 797 1 619
Spain 1 919 503 1 416
Italy 218 22 196
< 1Y 45%
1Y to 5Y 18%
Eur 0.4bn in 18
months T-bills
Greece 48 48 -
Germany 3 3 -
Ireland - - -
Breakdown of European Sovereign Exposure by portfolio
(%)Total 6 604 3 374 3 231
Total Mar.13 6 840 2 909 3 931
Total Dec.12 3 883 2 983 900
(%)HTM2%
Trading
Fair value20%
AFS75%
3%
1H2013 Results Presentation 1426 July 2013
Table of contents
I. Funding & Liquidity: Comfortable liquidity position, with significant improvement in funding mix, deleverage plan driving LTD to 125% and high level of repoable assets covering MLT redemptions for over 3 yearsredemptions for over 3 years
II. Asset Quality: Conservative and prudent risk management, with reinforced provision reserve to cope with current macroeconomic conditions in Portugal
III. 1H13: BES continues to focus on B/S, with deleverage and strong provisioning pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of both BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlookAppendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
1H2013 Results Presentation 1526 July 2013
Corporate lending represents the bulk of the loan portfolio with no significant concentration per sector. International loans account for 24.9% (Eur 12.7bn) of credit portfolio
% of Total Credit Portfolio
Credit Portfolio as of Jun 2013 (Eur 51.1bn Gross Loans)
Excludes securitised credit
wn
Consumer & Other4.9% (Eur 2.5bn)
Mortgage21.5%
15,4%
13,4%
11,4%
Services
Real estate
Other Sectors1
Sect
or
Bre
akdo
w
Corporate73.6%
(Eur 37.6bn)
(Eur 11.0 bn) 7,6%
7,2%
6,5%
6,4%
Const. & Public Works
Whol. & Retail
Other Manuf.
Fin. Inst.
,
5,9%T&C
% of Total Credit Portfolio
ogra
phic
ea
kdow
n
Domestic75.1%
(Eur 38.4bn)International
24.9%
11,2%
6,6%
3,8%
Spain
UK
Angola
Geo Bre (Eur 12.7bn)
1,2%
1,2%
0,9%
USA
Brazil
Other
1H2013 Results Presentation
1 Represents a composite of other sectors of the economy none representing more than 3% per se. 1626 July 2013
As widely expected, the recession in Portugal continues to impact asset quality. Despite the increase, and notwithstanding BES’ overweight in corporate lending, NPL levels continue to be lower than sector averagebe lower than sector average
BES Overdue Loans Ratio* Evolution vs Portuguese System
(%)
5 86.3 6.3
6.7 Corporate
Overdue loans continue to increase, reflecting the deterioration of macroeconomic conditions
(%)
11.3%
6.8%
7.2
4.8
3.63 2
3.4
4.65.3
5.8
System4.3 2.1%4 2
4.9
5.6
2.6
2.1 2.2 2.2 2.32.0 1.9 1.7 1.6
2.2
3.2Mortgage BES
3.22.4
2.31.9 1.8
2.1 2.11.9
1 5 1.82.1
3.03.5
3.7%
0.9%
4.2
'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 Consumer & Other1Q
122Q
123Q
12
1.8 1.5 1.3 1.2 1.31.8
12.3%
8.1%4Q12
1Q13
2Q13
Source: BES and BoP (data for BoP as of May 2013)
Total Overdue Loans/Gross Loans SystemTotal Overdue Loans/Gross Loans BES
1H2013 Results Presentation
* Overdue loans + 30 days System data as of May 2013; Source: BoP
1726 July 2013
On B/S provision reserve continues to be reinforced, reaching 6.1% of gross loans or Eur 3.1bn. Overdue loans +90 days and credit at risk increased to 5.1% and 10.7% respectively, with a coverage of 120% and 57% p y, g % %
BES On-BS Provisions Reserve Evolution of Credit at Risk ratio
(Eur mn)(%)+29%
On BS provisions reserve increased
to 6.13%2 692
6 6%7,2%
7,9%
9,3% 9,4%10,1%
10,7%
2 823
3 134
1 777
2 167
2 4356,6%
Dec. 11 Mar. 12 Jun. 12 Sep. 12 Dec. 12 Mar. 13 Jun. 13
10,7%C ( l di ll t l
1 148
1 552Overdue and Credit at Risk ratios
(%)
5,1% 5,6%2.38% 3.07% 3.38% 4.23%
Coverage (excluding collaterals and guarantees)
4.76% 5.34% 5.51% 6.13%
2008 2009 2010 2011 Jun-12 2012 Mar-13 Jun-13
Provisions as % of Gross LoansOverdue
loans Overdue
loans Credit at
Risk*
120% 110% 57%
1H2013 Results Presentation
+ 90 days + 30 days
(*) According to Instruction 23/2011 of Bank of Portugal. Credit at risk includes: a) total value of credit with capital or interest past due by 90 days or more; b) other restructured credit, where the principal or interest payments were past due by more than 90 days and have been capitalized or refinanced without full coverage by collaterals or the interest fallen due have not been fully paid by the debtor and c) credits of an insolvent or bankrupt debtors.
1826 July 2013
Table of contents
I. Funding & Liquidity: Comfortable liquidity position, with significant improvement in funding mix, deleverage plan driving LTD to 125% and high level of repoable assets covering MLT redemptions for over 3 yearsredemptions for over 3 years
II. Asset Quality: Conservative and prudent risk management, with reinforced provision reserve to cope with current macroeconomic conditions in Portugal
III. 1H13: BES continues to focus on B/S, with deleverage and strong provisioning pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of both BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlookAppendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
1H2013 Results Presentation 1926 July 2013
Net interest income increased 12% QoQ, driven by the T-Bills portfolio, lower cost of deposits and positive contributions from Angola and Spain
Consolidated NII & NIM Domestic NII
(Eur mn; bps) (Eur mn) NII to gradually
ith
271 272
331307 295 313 299
274
125164 188 168
197 222 217187
128 134
recover with improved credit mix,
lower rates of deposits and contribution
1H12: Eur 608mn 1H13:
Eur 470mn -22.6% YoY
271 272 274222
2481Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Asset repricingoffset increasing cost of deposits
Sov. portfolio drove NII up, compensating
sharp E ribor decline
Despite the recover in 2Q13, NII still pressured by lower contribution from Sov Debt and by record low Euribor
of T-bills
+12%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 International NII
(Eur mn)
cost of deposits sharp Euribor decline Sov. Debt and by record low Euribor
NII to improve156NIM 155 187 174 171 179 170 157 128 143
NII in 2Q13 recovered vis-à-vis 1Q13 (+12%, with NIM up 15bps), benefiting from the T-bills portfolio, lower cost of
147107
143 1399
115
NII to improve with gradual recovery in Angola and
growth in countries
h S i
156(bps) 155 187 174 171 179 170 157 128 143
p ) g pdeposits and positive contributions from Angola and Spain.
Despite the recovery, NII is still pressured by i) the deleverage of the B/S; ii) record low interest rates; iii) lower
contribution of the sovereign bond portfolio and iv) non-performing loans
107 97 91 83 87 945
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
such as Spain or
Mozambique
Lower contribution of Gradual recovery of
1H2013 Results Presentation
performing loans. Lower contribution of Angola to NII
Gradual recovery of Angola
2026 July 2013
Fees & Commissions flat QoQ. Capital markets & Other Results benefiting from the reinsurance agreement of BES Vida
Fees & Commissions
(Eur mn)
Capital Markets & Other
(Eur mn)
452
343 0 3%
-24%
169 +82%
+28%
343
172 171
-0.3%132
169
60
109
+82%
1H12 1H13 1Q13 2Q13
1H12 1H13 YoY
1H12 1H13 1Q13 2Q13
1H12 1H13 YoY
Fees & Commissions 452.0 343.1 -24.1%
Costs with GGB’s and other non-recurrent fees
-56.6 30.1 -
Total (like-for-like) 395 4 373 2 -5 6%
Interest rate, Credit and FX 320.4 47.5 -85.2%
Equity -91.8 39.5 -
Other Results -96.7 81.9 -
Total 131 9 168 9 +28 0%
Like-for-like fees & commissions (excluding the cost of GGB’s and other non-recurrent fees booked in 1H12) down 5.6% YoY
Total (like-for-like) 395.4 373.2 -5.6% Total 131.9 168.9 +28.0%
Other results in 1H13 include Eur 182mn (gross amount) related to the reinsurance agreement of BES Vida
1H2013 Results PresentationGGB’s = Government Guaranteed Bonds 2126 July 2013
Operating costs remain under control (excluding new consolidations, costs are down 0.5% YoY). BES is implementing a cost cutting programme during 2013-2015 that is expected to produce cost savings of c. Eur 100mn in the period
Domestic operating costs
(Eur mn)
p g p
Operating costs *
(Eur mn)Like-for-like costs
(excluding the impact of new consolidations) -3%of new consolidations)
down 0.5% YoY.
BES will implement a cost cutting
programme during
Cost cutting measures
already producing results in
388 375
190 185
-2%560 563
+0.7%
+0.6%
2013-2015 that should allow gradual
cost savings in domestic business
of ca. Eur 100mn (3%
results in Portugal. Like-for-like costs down 4.9%
YoY
190 185
1H12 1H13 1Q13 2Q13
281 283
International operating costs
(Eur mn)1H12 1H13 YoY 1Q13 2Q13 QoQ
in 2013; 5% in 2014 and 6% in 2015)
1H12 1H13 1Q13 2Q13
1H12 1H13 1Q13 2Q13
Staff 291.5 289.5 -0.7% 145.6 143.9 -1.2%
Admin. 214.2 220.9 3.2% 108.9 112.0 2.9%
Dep. 53.8 52.6 -2.2% 26.0 26.6 2.3%
Outside Portugal, costs
reflect the 172 188 +7%
+9%
Total 559.5 563.0 0.6% 280.5 282.5 0.7%
New consolidations 2.1 8.6 - 3.9 4.7 -
Total (l-f-l) 557.3 554.4 -0.5% 276.6 277.8 0.4%
expansion of international operations, namely in
Angola
91 97
1H2013 Results Presentation 2226 July 2013
1H12 1H13 1Q13 2Q13
Total provisions in 2Q13 surpassed Eur 500mn, more than doubling QoQ (cost of risk of 2.86% in 2Q13 vs. 1.46% in 1Q13). Strong provisioning effort represents a conservative approach to current macro environment
Credit Provisions & Cost of Risk Total Provisions
(Eur mn)(Eur mn; %)
1H13: Eur 553mn +57% YoY
267
366 Includes Eur
79.4mn for
foreclosed assets1H12:
Eur 352mn 747
+75%
225
148 147 149
203
267
196 187194 +111%
747
507
8095
84 94 81
553
74141426
240
Cost of
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
352
187
36653
Risk (bps)
7162 63 71 17463 114 115 159117 211 156 146
201067 bps
2011117 bps
2012162 bps
286
1H13216 bps
1H12 1H13 1Q13 2Q13
Credit Securities & Other
1H2013 Results Presentation
67 bps 117 bps 162 bps
2326 July 2013
216 bps
1H13 P&L reflects the current macro difficult environment. BES continued to strengthen its B/S, with deleverage and provisions reinforcement pressuring net income. Improvement of
(EUR million) 1H12 1H13 YoY 1Q13 2Q13 QoQ
macro conditions should allow results to recover in the coming quarters
(EUR million) 1H12 1H13 YoY 1Q13 2Q13 QoQ
+ Net Interest Income 607.6 470.4 -23% 221.9 248.5 12%
+ Fees and Commissions 452.0 343.1 -24% 171.8 171.3 -
= Commercial Banking Income 1 059.6 813.5 -23% 393.7 419.8 7%
+ Capital Markets & Other Results 131.9 168.9 28% 60.0 108.9 82%
= Banking Income 1 191.5 982.4 -18% 453.7 528.7 17%
- Operating Costs 559.5 563.0 1% 280.5 282.5 1%
= Net Operating Income 632.0 419.4 -34% 173.2 246.2 42%
- Net Provisions 426.3 747.3 75% 240.1 507.2 111%
f= Income Bef. Taxes and Minorities 205.7 -327.9 - -66.9 -261.0 -
- Taxes 115.4 -89.9 - 0.2 -90.2 -
o.w. Special tax on banks 14.0 13.0 - 6.5 6.5 -
Mi it I t t 64 8 0 5 5 1 4 7- Minority Interests 64.8 -0.5 - -5.1 4.7 -
= Net Income 25.5 -237.4 - -62.0 -175.4 -
1H2013 Results Presentation 2426 July 2013
During 1H13, BES continued to expand its international activity. BES Spain presented strong growth in deposits, BES Angola started to implement its new strategic plan and BES’ presence in Mozambique was reinforced
Spain – Main highlights Angola – Main highlights
During 1H13 BES Spain continued to
p q
Mozambique – Main highlights
During 1H13, BES Spain continued to grow organically:
Deposits: + Eur 1.3bn (+43% YtD)
# of Branches: +5 in 1H13
A new Board of Directors and a USD 500mn capital increase were approved
in the General Meeting held last June
In June, BES increased its stake in Moza Banco to 49%. Additionally, a strategic plan was agreed with Moçambique Capitais (51% stake in
(Barcelona, 2 in Madrid, Palma de Mallorca and Logroño). BES is currently studying new openings for 2H13 (10 potential branches already id tifi d)
In 1H13, BES Angola started to implement its new business plan:
Expand branch network: double current number of branches with the
Moza Banco) to:
i) Develop and expand the commercial activity of Moza,
ii) Ne Asset Management andidentified) current number of branches, with the opening of ca. 50 new branches / corporate centres in the next 2 years
New commercial strategy, with reinforced approached to specific
ii) New Asset Management and Investment Bank business lines
Moza Banco is currently the 5th
player in Mozambique with a 5 5%(+2)
(+1)
reinforced approached to specific market segments (oil companies; SME’s , affluent)
Multichannel approach: internet b ki bil b ki ll t
player in Mozambique, with a 5.5% market share as of Jun.13 (increased 1.7p.p. from 3.8% in Dec.12)
Network of 23 branches,
30 branches and 7 corporate centres
banking, mobile banking, call center, cards, POSs, ATMs
corresponding to 36 business units (22 retail, 10 corporate centres and 4 Private banking units) and should reach 27 branches by end of 2013
1H2013 Results Presentation
(1) >= Eur 50k
2526 July 2013
Investment Banking: Capital Markets business still very dynamic
Banking Income: Eur 121.2mn (-1.5% YoY)
123.1 121.2
Domestic Market: Leading the most important bond issues The Bank acted as Joint Lead Manager on Portugal Telecom’s (Eur 1bn) and ESFIL’s
(Eur 200mn) bond issues, as Joint Global Coordinator on Benfica SAD’s public bond offering(Eur 45mn) and as Sole Lead Manager on ESF Portugal (Eur 80mn) and Sonae
1H12 1H13
International contribution57%67%
(Eur 45mn) and as Sole Lead Manager on ESF Portugal (Eur 80mn) and SonaeInvestimentos (Eur 50 mn) bond issues.
The Bank ranked #3 in the Portuguese brokerage market, ending 1H2013 with a 6.3%accumulated market share and maintained the leadership of the M&A market (by numberand value of concluded transactions).
NII32%
Fees & Commissions
45%
International activity: Increased presence in Mexico In Mexico, the Bank increased its presence through the incorporation of Lusitânia Capital,
SOFOM a non-banking subsidiary focusing in local advising and financing activities. TheB k t d S l L d M th b d i f C di i (USD 30 ) 45%
Capital Markets23%
Net Profit: Eur 2 1mn (-86% YoY)
Bank acted as Sole Lead Manager on the bond issue of Crediamigo (USD 30mn).
In Brazil, the Bank advised the acquisition of 70% of Trefinox by Codimetal, and was JointBookrunner on the follow-on of BHG (R$ 378mn), on the bond issue of Andrade Gutierrez(USD 500mn) and on the Infrastructure Debenture issue of Rodovias do Tietê(R$ 1.1mm). It also concluded long-term funding for ViaBahia, through BNDES (BRL 46mn). Net Profit: Eur 2.1mn ( 86% YoY)
14.8
( $ ) g g , g ( )
In the UK, the Bank acted as Joint Bookrunner on the placing of 131.6 million new shares ofVertu Motors Plc (GBP 50mn) and as Sole Bookrunner on the placing of 1.2 million existingshares of Ted Baker (GBP 20mn).
In Poland, the Bank was Joint Global Coordinator and Joint Bookrunner on the sale of a
1H12 1H13
2.1
,25% stake in KRUK SA by PE Fund Enterprise Investors.
In Spain, the Bank ranked #7 in the Madrid Stock Exchange (5.0% market share) and #2 inthe Iberian M&A market (by value of concluded transactions).
O erall profitabilit constrained b increased credit impairment in Iberia
1H2013 Results Presentation
1H12 1H13Overall, profitability constrained by increased credit impairment in Iberia.
2626 July 2013
Table of contents
I. Funding & Liquidity: Comfortable liquidity position, with significant improvement in funding mix, deleverage plan driving LTD to 125% and high level of repoable assets covering MLT redemptions for over 3 yearsredemptions for over 3 years
II. Asset Quality: Conservative and prudent risk management, with reinforced provision reserve to cope with current macroeconomic conditions in Portugal
III. 1H13: BES continues to focus on B/S, with deleverage and strong provisioning pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of both BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlookAppendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
1H2013 Results Presentation 2726 July 2013
In the current environment, capital preservation is a top priority for BES. Despite net losses, Core Tier I remained fairly stable at 10.4% in Jun.13 (10.7% pro-forma, considering the approved capital increase of BES Angola). Risk weight of 78% is one of the highest inthe approved capital increase of BES Angola). Risk weight of 78% is one of the highest in Europe, reflecting BES’ conservative risk profile.
Solvency Ratios (%)
(BoP)
7.9
9.2
10.5 10.5 10.4 +0.3 10.7
Core Tier I
7.9
RWAs (Eur bn)RWA / TA (%)
68.882.2%
Core Tier I
65.481.5%
61.778.0%
61.876.3%
60.878.0%
Dec.10 Dec.11 Dec.12 Mar.13 Jun.13
RWA / TA (%) 82.2% 81.5% 78.0% 76.3% 78.0%
Capital increase in BES Angola,
approved in June’s GM
Jun.13Pro-forma
In the last 2 years, BES significantly reinforced its Core Tier I ratio, without the use of any public funds. According to BoPmethodology, Core Tier I is at 10.4% in Jun13 (or 10.7% on a pro-forma basis, considering the impact of the already approved
capital increase of USD 500mn in BES Angola) comfortably above minimum regulatory thresholds
June’s GM
1H2013 Results Presentation
capital increase of USD 500mn in BES Angola), comfortably above minimum regulatory thresholds .
Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational risk. Preliminary data as of Jun-13RWA / TA excludes BES Vida, which for regulatory purposes is not fully consolidated
2826 July 2013
Core Tier I Ratio above both BoP and EBA minimum requirements without the use of any public funds allows BES to maintain its strategic independence
Solvency Ratios Risk weighted assets and Capital
(%)
Eur bn Dec. 12 Mar.13 Jun. 13(1)
RWA (BoP) 61,681 61,726 60,787
… Banking book 56,484 56,092 55,545EBA Jun/2012 minimum
BoP Dec/2012 minimum requirement: 10%
10.4%
9 5% … Trading book 1,503 1,940 1,548
… Oper. Risk 3,694 3,694 3,694
Net Assets (2) 79,117 80,929 77,961
minimum requirement: 9%
9.5%
RWA / TA 78.0% 76.3% 78.0%
Total Capital 6,963 6,910 6,488
… Core Tier I 6,471 6,510 6,293
d d ti AFS 52 37 115ow deductions AFS: 52 37 115
… Tier I 6,442 6,436 6,107
... Tier II and Other 521 474 381
BoP EBA
RWA’s(Jun 2013)
Eur 60.8bn(1) Preliminary data (2) Regulatory definition: excludes BES Vida(Jun 2013) (1) Preliminary data (2) Regulatory definition: excludes BES Vida
Core Tier I Ratio comfortably above both BoP and EBA minimum requirements
Core capital reinforced in the last 2 years with the debt / equity exchange offer concluded in Dec.11 and the rights issue concluded in May. 12. RWA’s decreased 12% during this period, despite the impact
of IRB pro cyclicality
1H2013 Results Presentation
Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational risk. Preliminary data as of Mar-13RWA / TA excludes BES Vida, which for regulatory purposes is not fully consolidated
2926 July 2013
of IRB pro-cyclicality.
Table of contents
I. Funding & Liquidity: Comfortable liquidity position, with significant improvement in funding mix, deleverage plan driving LTD to 125% and high level of repoable assets covering MLT redemptions for over 3 yearsredemptions for over 3 years
II. Asset Quality: Conservative and prudent risk management, with reinforced provision reserve to cope with current macroeconomic conditions in Portugal
III. 1H13: BES continues to focus on B/S, with deleverage and strong provisioning pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of both BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
A di 2 P t E tl kAppendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
1H2013 Results Presentation 3026 July 2013
Backed by a strict financial discipline and a consistent strategy deployed over the years, BES has been proactively addressing the though macro, market and regulatory challenges by continuously strengthening the Balance Sheet. The Bank is in a favourable position toby continuously strengthening the Balance Sheet. The Bank is in a favourable position to benefit from the recovery in macro conditions in Portugal
Balance Sheet Management 1H13 Results
Deleverage plan: LtD decreased 73 p.p. since mid 2010 to 125% in Jun.13. Deposits increased 10% or Eur 3.4bn during 1H13
Significant improvement in BES’ funding structure, with deposits and
NII pressured by deleverage, low interest rates and lower contribution from sovereign portfolio. In 2Q NII recovered vis-
Funding & Liquidity
bancassurance products representing 66% of the funding mix
Contained use of ECB facilities, with repoable assets providing a significant liquidity buffer, covering over 3 years of MLT maturities
BES increased its sovereign exposure in 1H13 mainly through T
pà-vis 1Q (+12%, with NIM up 15bps), benefiting from the T-bills portfolio, lower cost of deposits and positive contributions from A l d S i BES increased its sovereign exposure in 1H13, mainly through T-
Bills, taking advantage of a significant liquidity position. Angola and Spain.
BES is implementing a cost cutting programme during 2013-2015 that should allow cost savings of c Eur 100mn in the
Solvency Capital preservation as one of BES top priorities. Core Tier I of 10.4% and 9.5% according to BoP and EBA. Pro-forma BoP CTI considering the approved capital increase of BES Angola at 10.7%.
savings of c. Eur 100mn in the domestic business.
Very strong provisioning effort, with total provisions reaching Eur 747mn and cost of
Asset Quality On-BS provision reserve of Eur 3.1bn or 6.13% of gross loans. BES continues to pursue a conservative risk management approach, with reinforced provision reserve as a cushion to overcome asset
grisk of 216bps (286 bps in the 2Q)
Lower banking income together with strong provisioning effort led to net
Recessionary environment
1H2013 Results Presentation
pquality deterioration in Portugal losses in the semester
3126 July 2013
Table of contents
I. Funding & Liquidity: Comfortable liquidity position, with significant improvement in funding mix, deleverage plan driving LTD to 125% and high level of repoable assets covering MLT redemptions for over 3 yearsredemptions for over 3 years
II. Asset Quality: Conservative and prudent risk management, with reinforced provision reserve to cope with current macroeconomic conditions in Portugal
III. 1H13: BES continues to focus on B/S, with deleverage and strong provisioning pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of both BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
A di 2 P t E tl kAppendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
1H2013 Results Presentation 3226 July 2013
Consolidated Income Statement: recent profitability hampered by macro environment leading to high provision charges
(EUR million) 2007 2008 2009 2010 2010 Restated*
2011 2012 YoY
+ Net Interest Income 953.7 1,086.2 1,200.8 1,164.0 1,164.0 1,181.6 1,180.5 -0.1%
+ Fees and Commissions 643.4 636.2 717.9 806.9 806.9 790.5 828.4 4.8%
= Commercial Banking Income 1,597.1 1,722.4 1,918.8 1,970.9 1,970.9 1,972.1 2,008.9 1.9%
+ Capital Markets Results 363.6 228.8 389.0 369.0 369.0 268.4 698.5 -
Oth lt 40 5 63 0 141 7 63 9 63 9 290 3 128 3+ Other results 40.5 -63.0 141.7 63.9 63.9 -290.3 -128.3 -
o.w. Insurance Premiums and Costs - - - - - - 0.7 -
= Banking Income 2,001.2 1,888.1 2,449.4 2,403.9 2,403.9 1,950.2 2,579.1 32.2%
O i C 9 0 1 001 6 1 0 1 169 1 123 1 1 129 2 1 149 1 1 8%- Operating Costs 950.7 1,001.6 1,055.7 1,169.5 1,123.1 1,129.2 1,149.1 1.8%
= Net Operating Income 1,050.5 886.5 1,393.7 1,234.4 1,280.7 821.0 1,430.0 74.2%
Net Op. Income ex-Mkts & Other 646.4 720.8 863.1 801.4 847.8 842.9 859.8 2.0%
Net Provisions 262 9 375 9 708 8 533 6 533 6 848 3 1 199 4 41 4%- Net Provisions 262.9 375.9 708.8 533.6 533.6 848.3 1,199.4 41.4%
= Income Bef. Taxes and Minorities 787.6 510.6 684.9 700.8 747.1 -27.3 230.6 -
- Taxes 152.5 83.5 109.8 43.8 43.8 -31.1 110.8 -
o.w. Special tax on banks - - - - - 30.5 27.9 -8.5%
- Minority Interests 28.0 24.9 53.0 146.5 146.5 112.5 23.7 -78.9%
= Net Income 607.0 402.3 522.1 510.5 556.9 -108.8 96.1 -
1H2013 Results Presentation 33(*) 2010 staff costs restated due to the change of the accounting policy related to emplyees long term benefits, which are now accounted in Other Comprehensive Income 26 July 2013
Income statement: domestic and international
Domestic International Consolidated
(EUR million) 1H12 1H13 YoY % Total Consol 1H12 1H13 YoY % Total.
Consol 1H12 1H13 YoYConsol. Consol.
+ Net Interest Income 419.4 261.3 -38% 56% 188.2 209.1 11% 44% 607.6 470.4 -23%
+ Fees & Commissions 276.0 237.1 -14% 69% 179.0 106.0 -40% 31% 452.0 343.1 -24%
= Commercial Bkg Inc. 695.4 498.4 -28% 61% 364.2 315.1 -13% 39% 1,059.6 813.5 -23%
+ Capital Mkts & Other 106.4 189.1 78% - 25.6 -20.2 - - 131.9 168.9 28%
ow Insurance Prem. & Costs 1.1 167.0 - - - - - - 1.1 167.0 -
= Banking Income 801.7 687.5 -14% 70% 389.8 294.9 -24% 30% 1,191.5 982.4 -18%
- Operating Costs 387.8 375.3 -3% 78% 171.7 187.7 9% % 559.5 563.0 1%
= Net Oper. Income 413.9 312.2 -25% 80% 218.1 107.2 -51% % 632.0 419.4 -34%
- Net Provisions 378.9 669.1 77% 92% 47.4 78.2 65% % 426.3 747.2 75%
… credit 307.9 492.2 60% 99% 44.1 60.9 38% % 352.0 553.1 57%… credit 307.9 492.2 60% 99% 44.1 60.9 38% % 352.0 553.1 57%
… securities 18.8 49.9 165% 78% 0.0 2.9 - % 18.8 52.8 -
… other 52.2 127.0 144% 81% 3.3 14.4 - % 55.5 141.4 -
= Inc. pre-Tax&Min. 35.0 -356.9 - - 170.7 29.0 -83% - 205.7 -327.8 -
- Taxes & Minorities 87.7 -100.6 - - 92.5 10.1 -89% - 180.2 -90.4 -
= Net Income -52.7 -256.3 - - 78.2 18.9 -76% 59% 25.5 -237.5 -
Cost to Income 48% 55% 7pp 44% 64% 20pp 47% 57% 10 pp
Cost to Income ex-Markets 56% 75% 19pp 47% 60% 13pp 53% 69% 16 pp
1H2013 Results Presentation 3426 July 2013
Quarterly consolidated income statement*
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ
+ Net Interest Income 271.3 271.5 331.4 307.3 294.5 313.1 299.2 273.7 221.9 248.5 -21% 12%
+ Fees and Commissions 189.6 213.3 195.2 192.4 206.4 245.6 174.3 202.1 171.8 171.3 -30% -
C Bk I= Com. Bkg Income 460.9 484.8 526.6 499.7 500.9 558.7 473.5 475.8 393.7 419.8 -25% 7%
+ Capital Markets Results 100.4 244.7 33.7 -110.5 39.2 189.3 206.4 263.4 92.6 -5.7 -103% -106%
+ Other Results -35.9 15.7 -33.9 -236.1 -11.4 -85.3 3.4 -35.0 -32.7 114.6 - -
o.w. Insurance prem. & costs 0.0 0.0 0.0 0.0 0.0 1.1 -1.2 0.8 -1.7 168.7 - -p 0.0 0.0 0.0 0.0 0.0 1.1 1.2 0.8 1.7 168.7
= Banking Income 525.3 745.2 526.4 153.2 528.8 662.7 683.3 704.2 453.6 528.7 -20% 17%
- Operating Costs (restated) 281.0 276.4 272.8 298.9 271.9 287.6 285.8 303.8 280.5 282.5 -2% 1%
Note: Amort. actuarial diff. Eliminated 11.3 11.3 11.4 - - - - - - -
= Net Operating Income 244.3 468.8 253.6 -145.7 256.9 375.1 397.5 400.4 173.2 246.3 -34% 42%
- Net Provisions 103.1 366.5 191.0 187.6 190.7 235.6 326.0 447.1 240.1 507.1 105% 111%
= Income Bef.Tax & Min. 141.3 102.3 62.6 -333.4 66.2 139.5 71.5 -46.7 -66.9 -260.8 - -
- Taxes 29.9 -21.0 30.2 -70.1 25.3 90.1 9.7 -14.4 0.2 -90.2 - -
… Income Tax 13.3 50.7 0.4 7.7 41.0 3.8 41.6 48.8 43.7 65.2 - 49%
… Deferred Taxes 9.0 -79.4 22.2 -85.4 -23.5 80.1 -38.9 -70.2 -49.9 -161.8 - -
… Special Tax 7.6 7.6 7.6 7.6 7.8 6.2 7.0 7.0 6.5 6.5 5% -
- Minorities 39.1 16.9 39.2 17.4 29.3 35.4 -3.1 -38.0 -5.1 4.7 - -
= Net Income 72.3 106.4 -6.8 -280.6 11.6 13.9 64.9 5.7 -62.0 -175.3 -
Cost to Income 53.5% 37.1% 51.8% -. 51.4% 43.4% 41.8% 43.1% 61.8% 53.4%
C/I ex-Markets 61.0% 57.0% 51.8% 59.8% 54.3% 51.5% 60.4% 63.9% 71.3% 67.3%
1H2013 Results Presentation 35
(*) The change in the accounting policy related to emplyees long term benefits, now accounted in Other Comprehensive Income, led to a restatement of the staff costs line in 2010 and in the first three quarters of 2011
26 July 2013
Quarterly domestic income statement*
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ
+ Net Interest Income 124.8 164.4 188.2 168.4 197.3 222.1 216.6 187.2 127.5 133.8 -40% 5%
+ Fees and Commissions 134.2 163.7 150.6 151.5 142.8 133.2 131.2 125.9 122.6 114.5 -14% -6%
= Commercial Bkg Income 259.0 328.1 338.8 320.0 340.1 355.3 347.8 313.2 250.0 248.4 -30% -1%
+ Capital Mkts & Other Results 61.8 252.1 -7.1 -340.7 21.3 85.0 182.4 210.5 75.5 113.6 34% 50%
ow Insurance Prem. & Costs 0.0 0.0 0.0 0.0 0.0 1.1 -1.2 0.8 -1.7 168.7 - -
= Banking Income 320.9 580.2 331.7 -20.8 361.4 440.3 530.2 523.7 325.6 362.0 -18% 11%
- Operating Costs (restated) 200.0 197.6 190.8 205.1 188.5 199.3 196.0 198.1 189.8 185.4 -7% -2%
= Net Operating Income 120 9 382 6 140 9 226 5 173 0 240 9 334 2 325 5 135 8 176 5 27% 30%= Net Operating Income 120.9 382.6 140.9 -226.5 173.0 240.9 334.2 325.5 135.8 176.5 -27% 30%
- Net Provisions 90.7 335.1 174.7 178.1 165.3 213.6 300.8 293.8 207.3 461.6 116% 123%
= Income Bef. Taxes and Min. 30.2 47.5 -33.8 -404.6 7.7 27.3 33.3 31.7 -71.5 -285.1 - -
Taxes 14 2 30 5 18 0 90 9 14 3 71 1 16 8 25 9 0 9 91 0- Taxes 14.2 -30.5 18.0 -90.9 14.3 71.1 -16.8 25.9 0.9 -91.0 - -
- Minorities -0.2 -1.1 2.4 -2.4 4.7 -2.4 -1.2 -4.0 -6.1 -4.3 - -
= Net Income 16.2 79.1 -54.2 -311.3 -11.3 -41.5 51.3 9.8 -66.4 -189.8 - -
Cost to Income 62.3% 34.1% 57.7% - 52.1% 45.3% 37.0% 37.8% 58.3% 51.2% 6pp -7pp
Cost to Income ex-Markets 77.2% 60.2% 56.5% 64.1% 55.4% 56.1% 56.4% 63.3% 75.9% 74.7% 19pp -1pp
(*) The change in the accounting policy related to employees long term benefits, now accounted in Other Comprehensive Income, ledto a restatement of the staff costs line in 2010 and in the first three quarters of 2011
1H2013 Results Presentation 3626 July 2013
Quarterly international income statement
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ
+ Net Interest Income 146.6 107.1 143.2 138.9 97.2 90.9 82.5 86.5 94.4 114.7 26% 22%
+ Fees and Commissions 55.3 49.6 44.6 40.9 63.6 112.3 43.1 76.2 49.3 56.7 -50% 15%
= Commercial Bkg Income 201.9 156.7 187.9 179.8 160.9 203.3 125.7 162.7 143.7 171.5 -16% 19%
+ Capital Mkts & Other Res. 2.5 8.4 7.0 -5.9 6.5 19.1 27.5 18.0 -15.6 -4.6 - -
= Banking Income 204.4 165.1 194.8 173.9 167.4 222.4 153.1 180.7 128.1 166.8 -25% 30%
- Operating Costs 81.0 78.9 82.0 94.3 83.5 88.2 89.8 105.7 90.7 97.0 10% 7%
= Net Operating Income 123.4 86.2 112.8 79.9 83.8 134.2 63.3 75.0 37.4 69.8 -48% 86%
- Net Provisions 12.4 31.3 16.4 9.6 25.4 22.1 25.1 153.4 32.8 45.5 106% 39%
= Income Bef. Taxes & Min. 111.0 54.9 96.4 70.3 58.5 112.2 38.2 -78.4 4.6 24.3 -78% -
- Taxes 15.7 9.4 12.2 20.8 10.9 19.1 26.5 -40.3 -0.7 0.9 - -
- Minorities 39.3 18.0 36.9 19.8 24.5 37.9 -1.9 -34.0 0.9 9.0 -76% -
= Net Income 56.0 27.3 47.3 29.8 22.9 55.3 13.6 -4.1 4.4 14.5 -74% -
Cost to Income 39.6% 47.8% 42.1% 54.1% 49.9% 39.6% 58.6% 58.5% 70.8% 58.2%
Cost to Income ex-Markets 40.1% 50.3% 43.6% 52.4% 51.9% 43.4% 71.4% 65.0% 63.1% 56.6%
1H2013 Results Presentation 3726 July 2013
Strategic triangle income statement: Africa, Brazil and Spain
Africa* Brazil Spain Strategic Triangle
(EUR million) 1H12 1H13 YoY 1H12 1H13 YoY 1H12 1H13 YoY 1H12 1H13 YoY(EUR million) 3 o 3 o 3 o 3 o
+ Net Interest Income 80.9 102.3 26% 34.9 25.8 -26% 44.0 45.0 2% 159.8 173.1 8%
+ Fees and Com. 100.3 26.7 -73% 17.2 13.0 -24% 24.6 22.6 -8% 142.1 62.3 -56%
= Com Bkg Income 181 3 129 0 -29% 52 1 38 8 -25% 68 6 67 5 -2% 302 0 235 3 -22% Com. Bkg Income 181.3 129.0 -29% 52.1 38.8 -25% 68.6 67.5 -2% 302.0 235.3 -22%
+ Markets & Other 16.7 -6.5 - -11.1 -7.5 -33% 11.8 -0.6 - 17.4 -14.6 -
= Banking Income 197.9 122.5 -38% 41.0 31.4 -23% 80.5 66.9 -17% 319.4 220.8 -31%
Operating Costs 51 4 62 1 21% 20 4 21 5 5% 42 5 43 2 2% 114 3 126 8 11%- Operating Costs 51.4 62.1 21% 20.4 21.5 5% 42.5 43.2 2% 114.3 126.8 11%
= Net Op. Income 146.5 60.4 -59% 20.6 9.9 -52% 37.9 23.7 -37% 205.0 94.0 -54%
- Net Provisions 18.7 37.7 102% 0.4 3.6 - 26.0 44.4 70.5% 45.1 85.7 90%
I B f T & Mi 127 8 22 6 20 2 6 3 69% 11 9 20 7 159 9 8 2= Income Bef. Tax & Min. 127.8 22.6 - 20.2 6.3 -69% 11.9 -20.7 - 159.9 8.2 -
- Taxes & Min. 84.9 15.0 - 9.9 4.9 -51% 1.4 -6.4 - 96.2 13.5 -
= Net Income 43.0 7.7 - 10.2 1.4 -86% 10.5 -14.3 - 63.7 -5.2 -
Cost to Income 26% 51% 50% 68% 53% 65% 36% 57%
* Comprising Angola, Cape Verde, Mozambique and Libya
1H2013 Results Presentation 3826 July 2013
Brazil: Quarterly income statement
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ
+ Net Interest Income 14.1 10.7 13.6 14.4 14.9 20.0 14.0 12.3 13.2 12.7 -37% -4%
+ Fees and Commissions 10.1 11.9 6.9 3.2 10.0 7.2 3.5 6.4 6.9 6.1 -15% -11%
= Commercial Bkg Income 24.2 22.6 20.5 17.7 24.9 27.2 17.5 18.7 20.1 18.8 -31% -6%
+ Capital Markets & Other -1.8 3.0 -1.8 2.7 -1.9 -9.2 -4.9 -3.2 -3.0 -4.5 -52% -
= Banking Income 22.4 25.5 18.7 20.4 23.0 17.9 12.6 15.5 17.1 14.3 -20% -16%
- Operating Costs 9.6 10.3 9.3 11.8 9.7 10.7 10.5 10.9 10.0 11.5 7% 16%
N t O ti I 12 8 15 2 9 4 8 5 13 3 7 2 2 1 4 6 7 1 2 8 61% 61%= Net Operating Income 12.8 15.2 9.4 8.5 13.3 7.2 2.1 4.6 7.1 2.8 -61% -61%
- Net Provisions 1.5 1.6 0.0 -1.5 0.6 -0.2 1.1 0.5 2.5 1.1 - -57%
= Income Bef. Taxes & Min. 11.3 13.6 9.4 10.1 12.7 7.5 1.0 4.1 4.6 1.7 -77% -63%
- Taxes & Minority Interests 5 6 5 6 4 4 8 2 5 7 4 2 1 4 2 9 3 2 1 7 -61% -48%- Taxes & Minority Interests 5.6 5.6 4.4 8.2 5.7 4.2 1.4 2.9 3.2 1.7 -61% -48%
= Net Income 5.7 8.0 5.0 1.8 7.0 3.2 -0.3 1.2 1.4 0.0 - -
Cost to Income 42.7% 40.4% 49.7% 58.0% 42.0% 59.7% 83.3% 70.4% 58.3% 80.5%
Assets 2,755.7 2,711.4 2,502.1 2,645.7 2,425.7 2,711.6 2,392.3 2,440.0 2,966.2 2676.5 -1% -10%, , , , , , , , ,
1H2013 Results Presentation 3926 July 2013
Angola: Quarterly income statement
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ
+ Net Interest Income 86.8 57.3 92.3 87.1 44.8 33.7 30.6 32.1 41.2 58.2 73% 41%
+ Fees and Commissions 6.2 6.3 5.8 5.9 20.8 73.6 7.8 21.9 6.4 12.5 -83% 96%
= Commercial Bkg Income 93.0 63.6 98.0 93.0 65.6 107.3 38.5 54.0 47.6 70.7 -34% 48%
+ Capital Mkts & Other 5.3 -1.8 9.4 -1.1 8.8 3.4 20.8 2.7 -6.4 -1.9 - -
= Banking Income 98.3 61.8 107.5 91.9 74.4 110.7 59.2 56.7 41.2 68.8 -38% 67%
- Operating Costs 19.2 16.5 20.8 23.6 22.4 22.5 24.9 36.3 26.3 28.4 26% 8%
= Net Operating Income 79.2 45.3 86.7 68.3 52.0 88.2 34.4 20.3 14.9 40.4 -54% -
- Net Provisions 4 7 5 1 7 4 10 7 7 0 12 4 14 1 104 2 16 8 20 3 64% 21%- Net Provisions 4.7 5.1 7.4 10.7 7.0 12.4 14.1 104.2 16.8 20.3 64% 21%
= Income Bef. Taxes & Min. 74.4 40.2 79.3 57.6 45.1 75.8 20.3 -83.9 -1.9 20.1 -74% -
- Taxes & Minority Interests 47.3 25.6 50.3 36.6 32.6 48.1 20.9 -75.9 1.0 11.1 -77% -
= Net Income 27.1 14.6 29.0 21.0 12.5 27.7 -0.6 -8.0 -2.9 8.9 -68% -
Cost to Income 19.5% 26.7% 19.4% 25.7% 30.0% 20.3% 42.0% 64.1% 63.8% 41.3% 21pp -22pp
Total Assets 6,210.1 5,992.8 6,880.8 6,867.0 6,778.5 7,625.3 7,915.4 7,970.7 8,431.4 8,547.1 12% 1%
Total Credit (Gross) 3,029.4 3,221.2 3,579.5 3,946.3 4,061.9 4,558.3 4,898.2 5,382.1 5,745.4 5,699.2 25% -1%
Equity 526.9 556.1 653.6 721.3 734.2 844.6 820.9 762.7 774.0 801.7 -5% 4%
1H2013 Results Presentation 4026 July 2013
Spain: Quarterly income statement
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ
+ Net Interest Income 25.4 22.3 20.5 21.7 21.9 22.1 21.1 23.6 20.7 24.3 10% 17%
+ Fees and Commissions 12.5 12.7 12.3 14.0 12.7 12.0 11.5 11.5 11.6 10.9 -9% -6%
= Commercial Bkg Income 37.9 34.9 32.8 35.7 34.6 34.1 32.5 35.0 32.3 35.2 3% 9%
+ Capital Markets & Other 5.1 2.5 -0.1 0.8 0.8 11.1 11.4 -0.7 1.6 -2.1 -
= Banking Income 43.0 37.5 32.7 36.5 35.3 45.1 44.0 34.3 33.9 33.0 -27% -2%
- Operating Costs 22.3 20.3 21.1 21.9 21.4 21.1 20.6 22.1 21.6 21.6 2% -
= Net Operating Income 20.7 17.2 11.6 14.6 13.9 24.0 23.4 12.2 12.3 11.4 -53% -7%
- Net Provisions 13.3 16.9 14.4 11.1 9.1 16.9 9.4 18.7 17.3 27.0 60% 56%
= Income Bef. Taxes & Min. 7.4 0.2 -2.7 3.5 4.8 7.1 14.0 -6.5 -5.0 -15.6 - -
- Taxes & Minority Interests 1 6 -0 6 -1 0 -1 4 0 1 1 2 3 7 -1 5 -1 2 -5 1 - -Taxes & Minority Interests 1.6 0.6 1.0 1.4 0.1 1.2 3.7 1.5 1.2 5.1
= Net Income 5.8 0.8 -1.7 5.0 4.7 5.9 10.3 -5.0 -3.8 -10.5 - -
Cost to Income 51.9% 54.1% 64.5% 60.1% 60.7% 46.8% 46.8% 64.6% 63.7% 65.5% 19pp 2pp
Credit (Gross) 3,736.4 3,690.5 3,564.8 3,495.1 3,371.5 3,347.2 3,194.4 3,258.7 3,343.7 3,376.6 1% 1%
Cost of Risk (bp) 142 bp 178 bp 161 bp 115 bp 94 bp 183 bp 107bp 138bp 130bp 235bp 52bp 105bp
Assets 5,502.6 4,792.0 4,874.2 5,302.5 5,139.2 5,013.0 4,654.5 4,652.6 5,601.3 5,597.9 12% 0%
1H2013 Results Presentation 4126 July 2013
UK: Quarterly income statement
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ
+ Net Interest Income 12 8 9 7 9 6 7 8 7 8 7 0 8 7 6 8 8 8 6 6 6% 25%+ Net Interest Income 12.8 9.7 9.6 7.8 7.8 7.0. 8.7 6.8 8.8 6.6 -6% -25%
+ Fees and Commissions 18.4 8.5 13.0 5.7 12.2 8.6 11.4 23.7 12.4 14.7 72% 19%
= Commercial Bkg Income 31.1 18.2 22.6 13.6 20.0 15.6 20.1 30.5 21.1 21.3 36% 1%
+ Capital Markets & Other -7.2 0.6 -2.6 -8.7 -4.8 6.9 -0.7 11.2 -7.2 0.6 - - Capital Markets & Other 7.2 0.6 2.6 8.7 4.8 6.9 0.7 11.2 7.2 0.6
= Banking Income 24.0 18.9 20.0 4.8 15.2 22.5 19.3 41.6 13.9 21.9 -3% 57%
- Operating Costs 18.3 17.5 18.7 17.3 13.5 14.8 14.3 13.7 12.9 13.0 -12% 1%
= Net Operating Income 5.7 1.3 1.3 -12.5 1.7 7.6 5.0 28.0 1.1 8.9 16% -
- Net Provisions -4.3 7.6 -6.2 -14.7 8.9 -7.6 0.0 26.7 -3.9 -1.5 - -
= Income Bef. Taxes & Min. 10.0 -6.3 7.5 2.2 -7.2 15.3 4.9 1.2 4.9 10.4 - -
- Taxes & Minority Interests -0.2 -3.6 -4.0 2.6 -5.0 1.7 0.0 -1.6 -4.2 0.2 - -
= Net Income 10.2 -2.7 11.5 -0.4 -2.1 13.5 5.0 2.9 9.1 10.2 -24% 12%
Cost to Income 76.2% 92.9% 93.5% - 88.9% 66.0% 74.2% 32.9% 92.4% 59.4% -7pp -33pp
Credit (Gross) 2,349.2 2,122.5 2,079.1 1,930.5 2,122.5 2,051.3 2,100.7 2,028.1 1,994.5 1,950.4 -5% -2%
1H2013 Results Presentation 4226 July 2013
Quarterly Net Interest Income
gure
s)
190
Quarterly Net Interest Income & NIM Euribor 3M (quarterly average)(%)
2,01
bp; Q
uarte
rly F
i
193 199171141141
161
190
152156155187 174171179 170
157128
143
50
100
150
200
100
150
200
250
300
350
400
1,31
0,870,720,660,69
0,871,021,09
1,411,56 1,5
1,04
0,7
0,360 2 0 210 21
(NIM
in b
315
335
300
250
254
293
346
271
271
272
331
307
295
313
299
274
222
249
0
50
0
50
100
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
0,2 0,210,21
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
4,524 294 354,654 44
-47
-36
-39
-41
-52
-57
-66
-110
-136
-129
-146
-173
-206
-202
-218
-216
-236
-238
Credit Margin Deposit Margin
3,583,383,25
3,023,033,082,983,3 3,553,55
3,924,22
,5 4,294,35 4,444,41
-0,74-0,59-0,61-0,66-0,83-0,88-0,97
423
406
395
375
380
401
397
437
454
455
507
546
562
540
553
585
550
553
-1,45-1,78-1,64-1,78-2,0
-2,39-2,38-2,63-2,53-2,67-2,58
1H2013 Results Presentation 43
Credit NII (LHS, Eur mn) Credit Margin (RHS, %) Deposits NII (LHS, Eur mn) Deposits Margin (RHS, %)
26 July 2013
Net Interest income & Net Interest Margin (quarterly)
1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013A A A A A A
(EUR million)Avrg
Balance Interest Yield AvrgBalance Interest Yield Avrg
Balance Interest Yield AvrgBalance Interest Yield Avrg
Balance Interest Yield AvrgBalance Interest Yield
Interest Earning Assets 68,597 926.6 5.48 70,059 921.4 5.28 69,790 891.7 5.07 69,345 830.8 4.75 70,059 797.5 4.61 69,687 816.3 4.70
... Loan Portfolio 50,430 692.0 5.57 50,487 627.1 4.98 50,402 598.8 4.71 49,924 609.3 4.84 50,154 575.8 4.66 50,312 579.3 4.62
Securities and Other 18 167 234 6 5 24 19 571 294 3 6 03 19 388 293 0 6 00 19 421 221 4 4 57 19 905 221 7 4 52 11 374 237 0 4 91... Securities and Other 18,167 234.6 5.24 19,571 294.3 6.03 19,388 293.0 6.00 19,421 221.4 4.57 19,905 221.7 4.52 11,374 237.0 4.91
Other non interest earning assets 1,388 - - - - - - - - - - - - - -
Total 69,985 926.6 5.37 70,059 921.4 5.28 69,790 891.7 5.07 69,345 830.8 4,75 70,059 797.5 4.61 69,687 816.3 4.70
Interest Bearing Liabilities 69,985 632.1 3.66 69,510 608.3 3.51 67,089 592.6 3.50 65,767 557.1 3.36 66,909 575.6 3.49 66,676 567.8 3.41
... Deposits 34,981 296.3 3.44 34,050 260.9 3.07 33,016 248.4 2.98 33,809 232.1 2.72 35,855 254.3 2.88 36,944 257.0 2.79
... Other Liabilities 35,004 335.8 3.89 35,461 347.4 3.93 34,073 344.2 4.01 31.959 324.9 4.03 31,054 321.3 4.30 29,732 310.8 4.19
Other non interest bearing liabilities - - - 549 - - 2,700 - - 3,578 - - 3,150 - - 3,011 - -
Total 69,985 632.1 3.66 70,059 608.3 3.48 69,790 592.6 3.37 69,345 557.1 3.19 70,059 575.6 3.33 69,687 567,8 3.27
NII / NIM 294.5 1.71 313.1 1.79 299.2 1.70 273.7 1.57 221.9 1.28 248.5 1.43
Average Euribor 3M 1.04 0.70 0.36 0.20 0.21 0.21
1H2013 Results Presentation 4426 July 2013
Quarterly fees & commissions
(EUR million)1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ 1H12 1H13 YoY
Account Management Fees 19.4 19.6 20.0 22.1 19.3 19.9 20.1 19.6 18.7 19.0 -5% 2% 39.2 37.7 -4%
Commissions on Loans 23.8 27.7 24.9 27.9 29.1 22.7 27.2 26.4 27.2 30.6 35% 12% 51.8 57.8 11%
Trade Finance & Exp. Rel. (1) 12.3 21.4 32.9 18.6 19.4 24.1 23.3 21.1 17.1 18.8 -22% 10% 43.5 36.0 -17%
Corporate & Project Finance 15 0 21 9 10 8 12 0 15 9 9 1 8 1 8 6 11 9 8 4 7% 29% 24 9 20 3 19%Corporate & Project Finance 15.0 21.9 10.8 12.0 15.9 9.1 8.1 8.6 11.9 8.4 -7% -29% 24.9 20.3 -19%
Guarantees 25.6 36.9 30.8 39.2 29.9 39.0 33.4 37.2 36.7 38.1 -2% 4% 68.9 74.8 9%
Securities related fees (2) 29.6 22.6 19.5 18.2 18.4 19.0 17.5 18.5 19.3 14.5 3% 1% 37.4 38.7 4%
Asset Management (3) 23.7 25.0 21.2 15.9 19.9 18.6 19.7 27.7 21.3 21.6 16% 1% 38.5 42.9 11%
Cards 9.7 10.0 10.2 11.1 10.0 10.4 10.6 25.7 8.4 9.4 -10% 12% 20.4 17.8 -13%
Bancassurance 11.7 10.2 10.3 2.7 19.1 8.4 8.8 11.4 5.7 5.6 -34% -2% 27.5 11.3 -59%
Factoring 1.9 2.0 2.2 2.2 1.8 1.6 2.0 2.2 1.8 2.3 43% 29% 3.4 4.1 21%
Other 16.8 16.1 12.7 22.1 23.6 72.8 3.7 3.7 3.8 -2.1 - - 96.4 1.7 -98%
... Cost of issuing GGB - - -3.4 -3.8 -12.6 -14.8 -15.0 -16.1 -15.0 -15.1 27.4 30.1 %
Note: Changes calculated based on figures in thousand euros.
Total Fees & Commissions 189.6 213.3 195.4 192.1 206.4 245.6 174.3 202.1 171.8 171.3 -30% - 452.0 343.1 -24%
Commissions related to the issuance of Government Guaranteed Bonds are included in “Other”
1H2013 Results Presentation 45
(1) Includes trade finance and letters of credit(2) Includes Brokerage(3) Includes discretionary management
26 July 2013
Quarterly capital markets results
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 1H12 1H13
Interest Rate, Credit & FX 50.5 7.6 164.2 -47.2 80.9 239.5 243.6 261.0 86.0 -38.5 320.4 47.5
… Interest rate 37.8 5.5 46.4 -36.5 58.1 221.9 236.0 265.3 87.4 33.5 280.0 120.9
Credit 8 4 14 3 99 6 19 0 23 3 -13 2 -14 8 37 2 -5 9 -62 7 10 1 -68 6… Credit 8.4 14.3 99.6 19.0 23.3 -13.2 -14.8 37.2 -5.9 -62.7 10.1 -68.6
… FX & Other 4.3 -12.2 18.2 -9.1 -0.5 30.8 22.4 -41.5 4.5 -9.3 30.3 -4.8
Equity 49.9 237.0 -130.3 -63.3 -41.7 -50.0 -37.2 2.4 6.7 29.8 -91.6 39.5
… Trading 45.6 100.3 -131.5 -88.8 -78.4 -113.8 -7.6 0.7 4.8 -18.1 -192.2 -13.3
… Income from securities 4.3 136.7 1.2 25.6 36.7 63.9 -29.6 1.7 1.9 50.9 100.6 52.8
Capital market results 100.4 244.6 33.9 -110.5 39.2 189.4 206.4 263.4 92.7 -5.7 228.8 87.0p
Provisions for Securities 0.6 55.8 5.3 11.6 1.9 16.9 13.7 74.1 18.5 34.3 18.8 52.8
Capital Markets net of Provisions for securities 99.8 188.8 28.6 -122.1 37.3 172.5 192.7 189.3 74.2 -40.0 210.0 34.2
1H2013 Results Presentation 4626 July 2013
2Quarterly capital markets results
Quarterly history of capital markets results since 1999
(EUR )
245
206
263
(EUR mn)
196
155
109128
189
206
49
84
109
64
88
51 50 54 53 55 51
84
46
80 82
66 6873
55
72
48
124
10897 98
46
128
10093
49
27
2
36
3
24
-1
1528
3525
51 50
19
3526
13
46 44 39
16
48 4634
-4
39
-6Excludes the one-off impact of-14
1Q99
2Q99
3Q99
4Q99
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
pEur 107mn related to the
partial transfer of the pensionfund to the Social Security
1H2013 Results Presentation 4726 July 2013
Quarterly equity accounted earnings and other results
Equity Accounted Earnings andEquity Accounted Earnings and Other Results (Quarterly)
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Equity Accounted Earnings 4.1 8.8 -9.5 -178.6 3.4 3.8 1.5 -0.5 1.8 -0.7
… BES Vida 2.9 -0.2 -12.6 -183.3 -0.2 3.0 - - - -… BES Vida 2.9 0.2 12.6 183.3 0.2 3.0
… Other 1.2 9.0 3.1 4.7 3.6 0.8 1.5 -0.5 1.8 -0.7
Other Results, ow -40.0 6.9 -24.5 -57.5 -14.8 -90.3 3.1 -35.3 -38.5 115.3
… Results from sale other assets -38.6 -7.2 -23.0 -21.0 -10.4 -14.6 -9.5 -23.3 -6.3 2.2
Insurance Premiums & Costs 1 1 1 2 0 8 1 7 168 7… Insurance Premiums & Costs - - - - - 1.1 -1.2 0.8 -1.7 168.7
Total Equity Accounted & Other -35.9 15.7 -33.9 -236.1 -11.4 -85.3 3.4 -35.0 -32.7 115.3
Equity Accounted Earnings and Other results (Accumulated)Other results (Accumulated)
(EUR million) 3M11 6M11 9M11 FY11 3M12 6M12 9M12 FY12 3M13 6M13
Equity Accounted Earnings, ow 4.1 12.9 3.4 -175.2 3.4 7.2 8.8 8.3 1.8 1.1
… BES Vida 2.9 2.7 -9.9 -193.2 -0.2 2.8 2.8 2.8 - -
O h R l 40 0 33 1 11 1 14 8 104 0 102 1 138 0 40 2 6 8Other Results, ow -40.0 -33.1 -57.5 -115.1 -14.8 -104.0 -102.1 -138.0 -40.2 76.8
… Results from sale of other assets -40.0 -33.1 -68.8 -89.9 -10.4 -25.0 -34.4 -57.7 -6.3 -4.1
… Insurance Premiums & Costs - - - - - 1.1 -0.1 0.7 -1.7 168.7
1H2013 Results Presentation 4826 July 2013
Quarterly other results: Reconciliation between IFRS P&L and Presentation
Quarterly
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Other Results (IFRS), ow 36.0 127.2 190.7 3.9 30.2 -46.0 4.7 40.0 -39.1 -83.5
… Fees 9.0 9.3 7.7 6.4 10.1 7.9 7.8 8.7 8.8 6.0
… Capital Markets 36.0 111.4 192.1 41.5 32.3 27.9 -8.7 -29.7 -14.9 -27.6
… Special Tax on Banks -7.6 -7.6 -7.6 -7.6 -7.8 -6.2 -6.9 -7.0 -6.5 -6.6
… Other -1.4 14.1 -1.4 -13.8 -4.4 -75.7 12.6 -12.0 -26.5 -55.5
Accumulated
(EUR million) 3M11 6M11 9M11 FY11 3M12 6M12 9M12 FY12 3M13 6M13
Other Results (IFRS), ow 36.0 163.2 353.9 357.8 30.2 -15.8 -11.1 -51.1 -39.1 -122.6
… Fees 9.0 18.3 26.0 32.4 10.1 18.0 25.8 34.5 8.8 14.8
… Capital Markets 36.0 147.4 339.5 381.0 32.3 60.2 51.5 21.8 -14.9 -42.5
… Special Tax Banks -7.6 -15.2 -22.9 -30.5 -7.8 -14.0 -20.9 -27.9 -6.5 -13.1
… Other -1.4 12.7 11.3 -25.1 -4.4 -80.1 -67.5 -79.5 -26.5 -82.0
1H2013 Results Presentation 4926 July 2013
Breakdown of operating costs*
Quarterly Operating Costs(EUR million)
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ 1H12 1H13 YoY
Staff costs 147.4 142.4 148.2 149.5 143.1 148.4 148.3 159.1 145.6 143.9 -3% -1% 291.5 289.5 -1%
…Remunerations 116.0 111.9 117.5 126.2 114.7 119.0 118.9 131.2 116.2 115.1 -3% -1% 233.7 231.3 -1%
…Pension Benefits (restated) 6.8 6.2 6.8 2.9 4.8 4.7 5.7 3.3 5.0 4.7 - -6% 9.5 9.7 2%
…LT service benefits & Other 24.6 24.3 23.9 20.3 23.6 24.7 23.7 24.6 24.4 24.1 -2% -1% 48.3 48.5 -
Admin costs 107.5 107.9 98.1 120.3 102.2 112.0 110.8 117.2 108.9 112.0 - 3% 214.2 220.9 3%
Depreciation 26.1 26.2 26.5 29.1 26.6 27.1 26.8 27.5 26.0 26.6 -2% 2% 53.8 52.6 -2%
Total Operating Costs 280.9 276.5 272.8 298.9 271.9 287.5 285.8 303.8 280.5 282.5 -2% 1% 559.5 563.0 1%
(*) The change in the accounting policy related to employees long term benefits now accounted in Other(*) The change in the accounting policy related to employees long term benefits, now accounted in Other
Comprehensive Income, led to a restatement of the staff costs line in 2010 and the first three quarters of 2011
1H2013 Results Presentation 5026 July 2013
Breakdown of quarterly operating costs: domestic* and international
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ 1H12 1H13 YoY
Domestic
Staff costs 101.1 99.1 100.2 94.8 94.7 97.9 97.6 99.5 94.7 90.9 -7% -15% 192.6 185.5 -4%
…Remunerations 72.8 71.6 71.6 74.4 68.8 71.0 70.7 75.0 68.7 65.1 -8% -5% 139.8 133.8 -4%
…Pension Benefits 5.8 5.3 6.0 1.9 4.0 3.8 4.9 1.7 4.0 4.1 -8% 2% 7.8 8.1 4%
…LT service benefits & Other 22.4 22.1 22.7 18.5 21.9 23.1 22.0 22.8 22.0 21.7 -6% -1% 45.0 43.7 -3%
Admin costs 78.6 78.6 70.4 89.1 73.9 82.1 79.3 79.3 76.7 76.0 -7% -1% 156.0 152.7 -2%
Depreciation 20.3 20.0 20.2 21.1 19.8 19.4 19.2 19.4 18.4 18.6 -4% 1% 39.2 37.1 -6%
Domestic Operating Costs 199.9 197.6 190.8 205.1 188.4 199.4 196.0 198.2 189.8 185.5 -7% -2% 387.8 375.3 -3%
International
Staff Costs 46.3 43.3 48.0 54.7 48.4 50.5 50.7 59.6 51.0 53.0 5% 4% 98.9 104.0 5%
…Remunerations 43.2 40.3 45.9 51.9 45.8 48.0 48.2 56.3 47.5 50.0 4% 5% 93.8 97.5 4%
…Pension Benefits 0.9 0.8 0.8 1.1 0.8 0.9 0.8 1.5 1.1 0.6 -33% -45% 1.7 1.7 -
… LT service benefits & Other 2.2 2.2 1.3 1.8 1.7 1.6 1.7 1.8 2.4 2.4 50% - 3.3 4.8 45%
Admin costs 28.9 29.3 27.8 31.1 28.3 29.9 31.5 37.9 32.2 36.0 20% 12% 58.2 68.2 17%
Depreciation 5 8 6 2 6 2 8 0 6 8 7 7 7 6 8 2 7 5 8 0 4% 7% 14 6 15 5 7%Depreciation 5.8 6.2 6.2 8.0 6.8 7.7 7.6 8.2 7.5 8.0 4% 7% 14.6 15.5 7%
International Operating Costs 81.0 78.9 82.0 93.8 83.5 88.1 89.8 105.7 90.7 97.0 10% 7% 171.7 187.7 9%
(*) The change in the accounting policy related to employees long term benefits, now accounted in Other Comprehensive Income, led to a restatement of the staff costs line in
2010 and the first three quarters of 2011
1H2013 Results Presentation 5126 July 2013
Quarterly provisions
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YoY QoQ 1H12 1H13 YoY(EUR million)
…Credit 80.9 224.6 147.8 147.4 149.0 203.0 266.9 196.0 187.1 366.0 80% 96% 352.0 553.1 57%
cost of risk (bp) 63 174 114 115 117 159 210 156 146 286 127bp 140bp 138 216 78bp
D ti 70 1 197 4 132 4 138 3 126 4 181 4 247 4 168 5 166 0 326 2 80% 97% 307 9 492 2 60%… Domestic 70.1 197.4 132.4 138.3 126.4 181.4 247.4 168.5 166.0 326.2 80% 97% 307.9 492.2 60%
cost of risk (bp) 68 191 128 137 126 183 254 176 172 340 157bp 168bp 155 256 101bp
… International 10.7 27.2 15.4 9.0 22.5 21.6 19.4 27.5 21.2 39.8 84% 88% 44.1 60.9 38%
cost of risk (bp) 40 104 59 33 82 75 66 90 66 125 50bp 59bp 76 96 20 bp
…Securities 0.6 55.7 5.3 11.6 1.9 16.9 13.7 74.1 18.5 34.3 - - 18.8 52.8 -
…Other 21.6 86.1 37.9 28.6 39.8 15.8 45.4 177.1 34.5 106.9 - - 55.5 141.4 -
Total Provisions 103.0 366.5 191.0 187.6 190.7 235.7 326.0 447.2 240.1 507.1 115% 111% 426.3 747.2 75%
… Domestic 90.7 335.1 174.7 178.1 165.3 213.6 300.8 293.8 207.4 461.6 116% 123% 378.9 669.0 77%
… International 12.4 31.3 16.4 9.6 25.4 22.1 25.1 153.4 32.8 45.5 106% 39% 47.4 78.2 20%
1H2013 Results Presentation 52
Note: Detailed credit provisions and asset quality data in following slides
26 July 2013
Quarterly taxes: domestic and international
(EUR million) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 1H12 1H13
Domestic
Income Tax 5.7 43.6 8.0 5.9 38.3 -0.4 16.5 62.4 27.9 63.0 38.0 90.8
Deferred taxes 0.8 -81.7 2.4 -104.5 -31.8 65.3 -40.3 -43.5 -33.4 -160.5 33.4 -194.0
Banking sector special tax 7.6 7.6 7.6 7.6 7.8 6.2 7.0 7.0 6.5 6.5 14.0 13.0
Total domestic taxes 14.2 -30.5 18.0 -91.0 14.3 71.1 -16.8 25.9 0.9 -91.0 85.5 -90.1
International
Income Tax 7.5 7.2 -7.6 1.8 2.7 4.2 25.1 -13.6 15.8 2.2 6.9 18.0
Deferred taxes 8.2 2.3 19.8 19.1 8.3 14.8 1.4 -26.7 -16.5 -1.3 23.1 -17.8
Total international taxes 15.7 9.5 12.2 20.9 11.0 19.0 26.5 -40.3 -0.7 0.9 30.0 0.2
Consolidated
Income Tax 13.2 50.8 0.4 7.7 41.0 3.8 41.6 48.8 43.7 65.2 44.9 108.8
Deferred taxes 9 0 79 4 22 2 85 4 23 5 80 1 38 9 70 2 49 9 161 8 56 5 211 8Deferred taxes 9.0 -79.4 22.2 -85.4 -23.5 80.1 -38.9 -70.2 -49.9 -161.8 56.5 -211.8
Banking sector special tax 7.6 7.6 7.6 7.6 7.8 6.2 7.0 7.0 6.5 6.5 14.0 13.0
Total taxes 29.9 -21.0 30.2 -70.1 25.3 90.1 9.7 -14.4 0.2 -90.2 115.5 -89.9
1H2013 Results Presentation 5326 July 2013
Quarterly balance sheet: assets
(Eur mn) Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep12 Dec 12 Mar 13 Jun 13 YoY QoQ(Eur mn) Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep12 Dec 12 Mar 13 Jun 13 YoY QoQ
Cash & deposits at central banks 1,252 1,085 1,015 1,090 1,527 1,646 1,183 1,378 1,410 1,209 -26% -14%
Deposits with banks 671 538 610 581 562 723 617 681 511 565 -22% 11%
Financial assets held for trading 3,398 3,007 3,458 3,435 3,885 3,904 3,994 3,925 4128 3,219 -18% -22%
Fi i l t t FV 1 525 1 063 1 487 1 964 2 096 3 194 3 059 2 822 2 780 3 894 22% 40%Financial assets at FV 1,525 1,063 1,487 1,964 2,096 3,194 3,059 2,822 2,780 3,894 22% 40%
Financial assets AFS 10,777 10,925 12,137 11,483 12,438 14,298 12,025 10,755 13,559 12,129 -15% -11%
Loans and advances to banks 3,765 3,439 4,049 3,283 2,288 2,084 2,520 5,427 3,093 2,454 18% -21%
Loans and adv. to customers 49,862 49,718 49,933 49,043 48,713 48,741 48,234 47,706 48,443 47,977 -2% -1%
(Provisions) ( 1,790) (1,983) (2,101) (2,167) (2,271) (2,435) (2,577) (2,692) (2,823) (3,085) 27% 11%
Held to maturity investments 2,349 2,252 2,092 1,541 1,183 1,310 972 942 921 1,025 -22% 11%
Hedging derivatives 296 329 435 510 468 485 483 517 450 392 -19% -13%
Non current assets held for sale 605 637 674 1,647 1,827 2,164 2,176 3,278 3,489 3,365 56% -4%
Investment property - - - - - 385 394 442 395 393 2% -
Other tangible assets 780 798 823 852 834 865 947 932 971 954 10% -2%
Intangible assets 230 221 223 230 227 485 515 555 548 405 -17% -26%
Investments in assoc. Companies 961 961 948 807 858 577 587 581 583 608 5% 4%Investments in assoc. Companies 961 961 948 807 858 577 587 581 583 608 5% 4%
Current income tax assets 99 108 40 29 31 38 21 25 23 33 -13% 41%
Deferred income tax assets 292 377 375 712 714 665 672 729 779 936 41% 20%
Reinsurance Technical Prov. 3 3 4 2 12 - -
Other assets 3,886 4,704 4,467 3,031 3,614 3,724 3,464 2,994 2,859 3,046 -18% 6%
…Direct & Indirect Insur. Debtors 9 8 1 9 352 - -
... Other assets 3,886 4,704 4,467 3,031 3,614 3,715 3,456 2,994 2,850 2,694 -27% -5%
Total Assets 80,746 80,162 82,767 80,237 81,265 85,292 81,866 83,691 84,946 82,616 -3% -3%
1H2013 Results Presentation 5426 July 2013
Quarterly balance sheet: liabilities
(Eur mn) Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 YoY QoQ
Amounts owed to central banks 8521 9,673 11,422 10,014 13,316 14,356 11,224 10,893 9,947 10,042 -30% 1%
Financial liabilities held for trading 1,875 1,895 2,113 2,125 1,943 2,167 2,187 2,122 1,949 1,568 -28% -20%
Deposits from banks 7,199 5,961 6,170 6,239 4,950 5,767 5,072 5,089 5,592 5,197 -10% -7%
Due to customers 30,545 31,972 33,854 34,206 35,959 32,765 33,240 34,540 37,417 37,912 16% 1%
Debt securities 20,742 19,907 18,649 18,453 15,116 15,615 15,108 15,433 14,582 12,732 -18% -13%
H d i d i ti 217 230 225 239 182 184 118 125 162 170 8% 5%Hedging derivatives 217 230 225 239 182 184 118 125 162 170 -8% 5%
Investment Contracts - - - - - 1,844 2,655 3,414 3,293 3,475 88% 6%
Non current liabilities held for sale 5 5 5 141 141 165 156 176 176 156 -6% -11%
Provisions 212 207 200 190 166 186 215 237 230 193 3% -16%% %
Technical provisions - - - - - 1,817 1,668 1,577 1,532 1,495 -18% -2%
Current income tax liabilities 27 25 24 45 46 44 78 221 207 123 - -41%
Deferred income tax liabilities 110 79 94 111 115 136 163 154 151 172 27% 14%
Other subordinated loans 2,327 1,578 1,158 961 946 834 839 840 835 831 - -
Other liabilities 1,603 1,642 1,950 1,321 1,996 1,887 1,384 1,146 1,187 1,320 -30% 11%
… Direct and Indirect Insurance Creditors - - - - - 11 25 2 21 22 - 4%
… Other liabilities 1,603 1,642 1,950 1,321 1,996 1,876 1,359 1,144 1,166 1,297 -31% 11%
Total Liabilities 73,386 73,175 75,863 74,045 74,875 77,768 74,107 75,958 77,261 75,384 -3% -2%
1H2013 Results Presentation 5526 July 2013
Quarterly balance sheet: equity
(Eur mn) Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 YoY QoQ
Shareholders' Equity 6,738 6,274 6,132 5,713 5,769 6,837 7,022 6,967 7,066 6,819 - -3%
Share capital 3,500 3,500 3,500 4,030 4,030 5,040 5,040 5,040 5,040 5,040 - -
Share premium 1,085 1,085 1,085 1,082 1,082 1,067 1,069 1,070 1,069 1,069 - -
Other capital instruments 269 269 269 30 29 29 29 29 29 29 - -
Treasury stock (1) (1) (1) (1) (1) (11) (9) (7) (1) (1) - -
Preference shares 600 456 409 212 199 193 193 193 193 168 -13% -13%
Fair value reserve (33) (383) (467) (1,086) (900) (821) (632) (687) (710) (886) 8% 25%
Other reserves and retained earnings 1,317 1,322 1,337 1,447 1,330 1,340 1,330 1,329 1,445 1,399 4% -3%
Net Profit for the period / year 61 156 138 (109) 12 25 90 96 (62) (237) - -
Minority interests 562 583 634 588 609 663 647 669 682 650 -2% -5%
Total Equity 7 361 6 987 6 904 6 192 6 389 7 525 7 759 7 733 7 685 7 232 4% 6%Total Equity 7,361 6,987 6,904 6,192 6,389 7,525 7,759 7,733 7,685 7,232 -4% -6%
1H2013 Results Presentation 5626 July 2013
Quarterly gross loan portfolio (excluding securitised)
(EUR million) Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 YoY QoQ
Loans to Individuals 14,333 14,292 14,157 14,326 14,095 13,979 13,768 13,762 13,617 13,477 -4% -1%
… ow Mortgages 11,650 11,646 11,595 11,610 11,496 11,411 11,317 11,134 11,044 10,974 -4% -1%
… Domestic 11,177 11,172 11,112 11,075 10,975 10,875 10,785 10,598 10,503 10,425 -4% -1%
… International 473 474 483 535 522 536 532 536 541 549 2% 2%
… ow Other 2,683 2,646 2,562 2,716 2,599 2,567 2,450 2,628 2,573 2,502 -3% -3%
… Domestic 2,348 2,305 2,228 2,130 2,034 1,952 1,849 1,937 1,844 1,799 -8% -2%
… International 335 341 334 586 565 615 601 691 729 703 14% -4%
Corporate Lending 37,319 37,409 37,876 36,885 36,889 37,197 37,043 36,637 37,650 37,634 1% -
… Domestic 27,441 27,764 28,159 27,160 27,003 26,777 26,344 25,656 26,144 26,153 -2% -
… International 9,878 9,645 9,717 9,725 9,885 10,420 10,700 10,981 11,505 11,481 10% -
Loan portfolio 51,652 51,701 52,033 51,211 50,984 51,176 50,811 50,399 51,267 51,111 - -
… Domestic 40,966 41,241 41,499 40,365 40,012 39,604 38,978 38,191 38,491 38,377 -3% -… Domestic 40,966 41,241 41,499 40,365 40,012 39,604 38,978 38,191 38,491 38,377 3%
… International 10,686 10,460 10,534 10,846 10,972 11,572 11,833 12,208 12,775 12,734 10% -
Int as % total 21% 20% 20% 21% 21% 23% 23% 24% 25% 25%
1H2013 Results Presentation 5726 July 2013
Quarterly asset quality indicators
Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13
O d L >90 d / G L 2 17% 2 35% 2 60% 2 74% 2 96% 3 30% 3 75% 3 90% 4 34% 5 09%Overdue Loans >90 days / Gross Loans 2.17% 2.35% 2.60% 2.74% 2.96% 3.30% 3.75% 3.90% 4.34% 5.09%
Coverage of Overdue Loans > 90 days 159.4% 163.0% 155.0% 154.5% 150.3% 144.0% 135.3% 136.9% 126.8% 120.4%
Overdue Loans >30 days / Gross Loans 2.38% 2.59% 2.85% 3.02% 3.48% 3.73% 4.18% 4.34% 4.92% 5.57%
Mortgage (>30d) 0.84% 0.82% 0.85% 0.84% 0.83% 0.86% 0.87% 0.92% 0.94% 0.95%
Consumer (>30d) 4.46% 4.55% 4.87% 4.98% 5.40% 6.01% 6.61% 7.44% 7.61% 8.08%
Corporates (>30d) 2.27% 3.00% 3.33% 3.56% 4.18% 4.45% 5.02% 5.15% 5.90% 6.76%
Coverage of Overdue Loans >30 days 145.4% 148.3% 141.6% 140.2% 127.8% 127.6% 121.5% 123.2% 112.0% 110.0%
Credit at Risk (BoP) (1) 5.22% 5.62% 6.22% 6.59% 7.15% 7.91% 9.30% 9.44% 10.10% 10.73%
Coverage of Credit at Risk 66.4% 68.3% 64.9% 64.2% 62.3% 60.1% 54.5% 56.6% 54.5% 57.1%Coverage of Credit at Risk 66.4% 68.3% 64.9% 64.2% 62.3% 60.1% 54.5% 56.6% 54.5% 57.1%
Provisions for Credit / Total Gross Loans 3.47% 3.83% 4.04% 4.23% 4.45% 4.76% 5.07% 5.34% 5.51% 6.13%
QoQ Provision Charge 63bp 174bp 114bp 115bp 117bp 159bp 210bp 156bp 146bp 286bp
… Domestic 68bp 191bp 128bp 137bp 126bp 184bp 254bp 176bp 172bp 340bp
… International 40bp 104bp 59bp 33bp 82bp 75bp 66bp 90bp 66bp 125bp
1H2013 Results Presentation 5826 July 2013
Overdue loans ratios and coverage
Total Overdue Loans Ratio (+30d) & Coverage (%)Overdue Loans +90 days Ratio & Coverage (%)
161% 166% 158% 161%145% 148% 142% 140%
188% 185%173%173% 2 6% 2 9% 3 0%
3,5% 3,7% 4,2% 4,3% 4,9%5,57%
145% 142% 140%128% 128% 122% 123%
112% 110%
5,09%
173%159% 163%
155%155% 150% 144%135% 137%
127% 120%
1,9% 1,9% 2,1% 2,1% 2,4% 2,6% 2,9% 3,0%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
1,67%1,70%1,90%1,95%2,17%2,35%2,60%2,74%2,96%
3,30%3,75% 3,90%
4,34%
5,09%
2.98%2.94%
Net New Entries as % of Performing Loans(quarterly annualised)
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
1.03%0 74%
1.23%0.88%
1.29%0.91%
2.05%
1.26%
1.90%
0.83%
0.23%
0.74%0.37%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Quarterly Write Offs
1H2013 Results Presentation 5926 July 2013
22.8 20.0 14.1 34.8 30.0 5.0 16.4 50.5 21.8 24.2 17.5 36.6 26.9 26.9
Quarterly asset quality indicators: Domestic and International
(EUR million) Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13
Gross Loans 51,652.1 51,700.5 52,033.5 51,210.8 50,984.4 51,175.5 50,810.9 50,398.7 51,266.8 51,110.9
…Domestic 40,966.3 41,240.9 41,499.2 40,364.8 40,012.4 39,603.8 38,978.1 38,191.1 38,491.4 38,377.3
… International 10,685.8 10,459.7 10,534.3 10,846.1 10,972.9 11,571.8 11,833.8 12,207.7 12,775.4 12,733.7
Total Overdue Loans (> 30 d) 1 231 5 1 337 1 1 483 4 1 545 6 1 776 5 1 908 0 2 121 5 2 185 4 2 521 3 2 849 2Total Overdue Loans (> 30 d) 1,231.5 1,337.1 1,483.4 1,545.6 1,776.5 1,908.0 2,121.5 2,185.4 2,521.3 2,849.2
…Domestic 1018.7 1,101.1 1,213.5 1,236.7 1,488.6 1,582.0 1,764.0 1,810.5 2,119.1 2,386.5
… International 212.8 236.0 269.9 308.9 287.9 326.0 357.5 375.0 402.2 462.7
Overdue Loans > 90 days 1,122.7 1,216.2 1,355.2 1,403.3 1,510.8 1,690.8 1,904.9 1,966.0 2,226.9 2,602.8
…Domestic 931.7 996.0 1,101.3 1,123.2 1,242.3 1,407.5 1,566.1 1,652.0 1,853.1 2,172.1
… International 191.0 220.2 253.9 280.1 268.5 283.4 338.8 314.0 373.8 430.7
Credit at Risk 2,693.8 2,904.0 3,239.0 3,373.6 3,646.8 4,049.0 4,726.0 4,758.4 5,177.9 5,485.0
Total Credit Provisions (BS) 1,790.1 1,982.6 2,100.6 2,167.4 2,271.2 2,434.7 2,577.1 2,692.3 2,823.4 3,134.2
…Domestic 1,516.3 1,694.8 1,798.7 1,865.9 1,935.9 2,082.4 2,204.7 2,297.9 2.434.6 2,718.5
… International 273.8 287.8 301.8 301.6 335.2 352.3 372.4 394.4 388.8 415.7
1H2013 Results Presentation 6026 July 2013
Quarterly asset quality indicators: Domestic and International
Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13
O d L >90 d / G L 2 17% 2 35% 2 60% 2 74% 2 96% 3 30% 3 75% 3 90% 4 34% 5 09%Overdue Loans >90 days / Gross Loans 2.17% 2.35% 2.60% 2.74% 2.96% 3.30% 3.75% 3.90% 4.34% 5.09%
…Domestic 2.27% 2.41% 2.65% 2.78% 3.10% 3.55% 4.02% 4.33% 4.81% 5.66%
… International 1.79% 2.11% 2.41% 2.58% 2.45% 2.45% 2.86% 2.57% 2.93% 3.38%
C f O d L 90 dCoverage of Overdue Loans > 90 days 159.4% 163.0% 155.0% 154.5% 150.3% 144.0% 135.3% 136.9% 126.8% 120.4%
…Domestic 162.7% 170.2% 163.3% 166.1% 155.8% 148.0% 140.8% 139.1% 131.4% 125.2%
… International 143.3% 130.7% 118.9% 107.7% 124.8% 124.3% 109.9% 125.6% 104.0% 96.5%
Overdue Loans >30 days / Gross Loans 2.38% 2.59% 2.85% 3.02% 3.48% 3.73% 4.18% 4.34% 4.92% 5.57%
…Domestic 2.49% 2.67% 2.92% 3.06% 3.72% 3.99% 4.53% 4.74% 5.51% 6.22%
… International 1.99% 2.26% 2.56% 2.85% 2.62% 2.82% 3.02% 3.07% 3.15% 3.63%
Coverage of Overdue Loans >30 days 145.4% 148.3% 141.6% 140.2% 127.8% 127.6% 121.5% 123.2% 112.0% 110.0%
…Domestic 148.8% 153.9% 148.2% 150.9% 130.1% 131.6% 125.0% 126.9% 114.9% 113.9%
… International 128.6% 121.9% 111.8% 97.6% 116.5% 108.1% 104.2% 105.2% 96.7% 89.8%
Credit at Risk Ratio (BoP) 5.22% 5.62% 6.22% 6.59% 7.15% 7.91% 9.30% 9.44% 10.10% 10.73%
1H2013 Results Presentation 6126 July 2013
Quarterly and accumulated credit provision charge & net new entries
(EUR million; % annualised) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
P&L Credit Provisions Quarter 80.9 224.6 147.8 147.4 149.0 203.0 266.9 196.0 187.1 366.0
… Domestic 70.1 197.4 132.4 138.3 126.4 181.4 247.4 168.5 166.0 326.2
… International 10.7 27.2 15.4 9.0 22.6 21.5 19.4 27.5 21.2 39.8
As % Loan Portfolio (bp) 63bp 174bp 114bp 115bp 117bp 159bp 210bp 156bp 146bp 286bp
… Domestic 68bp 191bp 128bp 137bp 126bp 183bp 254bp 176bp 172bp 340bp
… International 40bp 104bp 59bp 33bp 82bp 75bp 66bp 90bp 66bp 125bp
P&L Credit Provisions Accumulated 80.9 305.4 453.2 600.6 149.0 352.0 618.9 814.8 187.1 553.1
D ti 70 1 267 5 399 7 538 2 126 4 307 9 555 3 723 8 166 0 492 2… Domestic 70.1 267.5 399.7 538.2 126.4 307.9 555.3 723.8 166.0 492.2
… International 10.7 37.9 53.5 62.4 22.6 44.1 63.5 91.0 21.2 60.9
As % Loan Portfolio (bp) 63bp 118bp 116bp 117bp 117bp 138bp 162bp 162bp 146bp 216bp
… Domestic 68bp 130bp 128bp 133bp 126bp 155bp 190bp 190bp 172bp 256bp… Domestic 68bp 130bp 128bp 133bp 126bp 155bp 190bp 190bp 172bp 256bp
… International 40bp 71bp 68bp 58bp 82bp 76bp 72bp 75bp 66bp 96bp
Net new entries as % Performing Loans
... Quarterly net new entries 123bp 88bp 129bp 91bp 205bp 126bp 190bp 83bp 298bp 294py p p p p p p p p p p
... Accumulated net new entries 123bp 105bp 113bp 109bp 205bp 166bp 175bp 153bp 298bp 297bp
Quarterly Write Offs (Eur mn) 30.0 5.0 16.4 50.5 21.8 24.2 17.5 36.6 26.9 26.9
1H2013 Results Presentation 6226 July 2013
Quarterly customer funds
(EUR million) Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 YoY QoQ
Deposits 30,545 31,972 33,854 34,206 35,959 32,765 33,240 34,540 37,417 37,912 16% 1%
… Sight 8,145 8,466 8,730 8,573 9,119 8,521 8,927 10,458 10,718 10,506 23% -2%
Term 22 401 23 506 25 124 25 633 26 840 24 244 24 313 24 082 26 699 27 405 13% 3%… Term 22,401 23,506 25,124 25,633 26,840 24,244 24,313 24,082 26,699 27,405 13% 3%
Life Insurance Products - - - - - 3,661 4,323 4,991 4,825 4,969 36% 3%
Certificates of Deposits 2,006 1,650 1,573 644 652 773 619 612 493 379 -51% -23%
Debt Securities placed with
(1)
Debt Securities placed with Clients 5,747 5,988 5,273 5,820 4,804 5,226 5,111 4,642 4,692 4,150 -21% -11%
On-BS Customer Funds 38,298 39,610 40,699 40,670 41,415 42,425 43,293 44,785 47,427 47,410 12% -
Off-BS Funds 17,715 16,522 14,788 13,714 13,260 9,976 10,918 11,403 11,090 11,170 12% 1%Off BS Funds 17,715 16,522 14,788 13,714 13,260 9,976 10,918 11,403 11,090 11,170 12% 1%
Total 56,013 56,132 55,487 54,383 54,675 52,401 54,211 56,188 58,518 58,580 12% -
… Domestic 41,732 42,351 42,057 42,479 41,572 36,719 38,414 42,694 43,495 43,902 20% 1%
… International 14,281 13,781 13,430 11,905 13,103 15,682 15,797 13,494 15,023 14,679 7% -2%
% total 25% 25% 24% 22% 24% 26% 26% 24% 26% 25%
1H2013 Results Presentation 63(1) The increase of Life Insurance Products reflects the full consolidation of BES Vida from 2Q2012.
26 July 2013
Quarterly off-BS customer funds
(EUR million) Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 De c 12 Mar 13 Jun 13 YoY QoQ(EUR million) Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 De c 12 Mar 13 Jun 13 YoY QoQ
Mutual Funds 5,437 5,038 4,629 4,633 4,717 4,724 4,731 5,115 5,348 5,501 16% 3%
… Domestic 2,585 2,267 2,051 2,381 2,463 2,535 2,602 2,896 3,142 3,454 36% 10%
I t ti l… International 2,852 2,772 2,578 2,252 2,254 2,189 2,129 2,219 2,206 2,046 -6% -7%
Real Estate Funds 1,356 1,329 1,297 1,203 1,144 1,111 1,102 1,076 1,070 1,081 -3% 1%
… Domestic 1,275 1,249 1,209 1,110 1,052 1,013 1,005 982 973 970 -4% -
… International 81 80 88 93 92 98 97 93 96 111 13% 15%
Pension Funds 2,673 2,687 2,555 2,155 1,809 1,772 1,798 1,783 1,908 1,874 6% -2%
… Domestic 2,539 2,448 2,332 1,933 1,580 1,554 1,572 1,551 1,670 1,636 5% -2%
… International 134 239 223 222 229 218 226 233 238 239 10% -
Bancassurance(Domestic) 4,805 4,315 3,794 3,478 3,292 89 86 90 96 99 12% 3%
Other (2) 3,444 3,153 2,513 2,245 2,298 2,280 3,202 3,339 2,669 2,615 15% -2%
(1)(1)
… Domestic 2,638 2,349 1,874 1,684 1,746 1,755 2,759 2,886 2,188 2,123 21% -3%
… International 806 804 639 561 552 525 443 453 481 491 -6% 2%
T t l Off BS F d 17 715 16 522 14 788 13 714 13 260 9 976 10 918 11 403 11 090 11 170 12% 1%(1)Total Off-BS Funds 17,715 16,522 14,788 13,714 13,260 9,976 10,918 11,403 11,090 11,170 12% 1%
… Domestic 13,842 12,627 11,260 10,586 10,133 6,946 8,024 8,404 8,069 8,283 19% 3%
… International 3,873 3,895 3,528 3,128 3,127 3,030 2,895 2,998 3,022 2,887 -5% -4%
(1) The decrease of Bancassurance funds reflects the full consolidation of BES Vida Life Insurance Products are included in On Balance Sheet customer funds as from
( )
1H2013 Results Presentation 64
(1) The decrease of Bancassurance funds reflects the full consolidation of BES Vida. Life Insurance Products are included in On Balance Sheet customer funds as from 2Q2012.
(2) Other includes off-BS structured products, discretionary management and venture capital
26 July 2013
Quarterly solvency ratios
(EUR million) Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13
RWA (BoP) 68,576 66,431 66,715 65,385 64,587 63,844 63,295 61,651 61,726 60,787
…Banking Book 60,214 59,482 60,524 59,705 58,451 58,081 57,419 56,454 56,092 55,545
…Trading Book 4,389 2,976 2,218 1,742 2,198 1,825 1,938 1,503 1,940 1,548
…Oper. Risk 3,973 3,973 3,973 3,938 3,938 3,938 3,938 3,694 3,694 3,694
Total Capital 7,838 7,577 7,038 6,970 6,967 7,118 7,021 6,963 6,910 6,488
Core Tier I 5,395 5,445 5,380 6,020 6,067 6,725 6,770 6,471 6,510 6,293
Tier I 6,033 6,127 6,020 6,171 6,185 6,683 6,651 6,442 6,436 6,107
Tier II and Other 1,805 1,517 1,018 799 782 435 370 521 474 381
Hybrid Capital 920 775 729 245 233 226 226 226 226 201
As % Tier I 15% 13% 12% 4% 4% 3% 3% 3% 3% 3%
Core Tier I (%) 7.9% 8.2% 8.1% 9.2% 9.4% 10.5% 10.7% 10.5% 10.5% 10.4%
Tier I (%) 8.8% 9.2% 9.0% 9.4% 9.6% 10.4% 10.5% 10.4% 10.4% 10.0%
Total (%) 11.4% 11. 5% 10.6% 10.7% 10.8% 11.1% 11.1% 11.3% 11.2% 10.7%
1H2013 Results Presentation 65Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational risk. Preliminary data as of Jun 2013. 26 July 2013
Available for Sale Portfolio – main equity holdings potential gains & losses
Potential Gains and Losses
(EUR million) Acquis. Value Stake (%) 2010 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
EDP 173.8 2.38% -49.9 0.0 -20.1 -30.1 -24.1 -8.5 -10.1 11.0 24.5 34.7 41.0
PT 346.7 10.4% -7.3 -28.7 -146.8 -200.9 -151.0 -117.2 -99.8 -0.4 -10.7 1.1 -77.6
BMCE 82.4 2.69% 7.3 6.3 5.2 6.2 5.7 5.5 -1.3 -10.5 -3.6 -10.6 1.4
Total 602.9 120.3 112.6 -161.7 -224.8 -169.4 -120.2 -111.2 0.1 10.1 25.2 -35.2
1H2013 Results Presentation 6626 July 2013
Table of contents
I. Funding & Liquidity: Comfortable liquidity position, with significant improvement in funding mix, deleverage plan driving LTD to 125% and high level of repoable assets covering MLT redemptions for over 3 yearsredemptions for over 3 years
II. Asset Quality: Conservative and prudent risk management, with reinforced provision reserve to cope with current macroeconomic conditions in Portugal
III. 1H13: BES continues to focus on B/S, with deleverage and strong provisioning pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of both BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
A di 2 P t E tl kAppendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
1H2013 Results Presentation 6726 July 2013
Programme implementation is translating into a rapid rebalancing of the Portuguese economy. The combined current and capital account balance reached a surplus of 1.2% of GDP in 1Q 2013
External Balance (Net external financing needs (-) / capacity (+) of the economy, % GDP)
Net financing needs (-) / capacity (+) by sector (% GDP)*
100
-2
0
2 1Q 2013:1.2%
4.6
7.7
3.34.0
6.0
8.0
10.01Q 20121Q 2013
10
-8
-6
-4 0.0
-2.8-4.0
-2.0
0.0
2.0
-14
-12
-10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
-4.6 -4.5
-7.1-8.0
-6.0
Households Non-Financial Corporations
Financial Sector General Government
Data for year ending in each quarter. Latest data for 1Q 2013
* Savings – investment.
Data for year ending in each quarter.
1H2013 Results Presentation 68Sources: INE, ES Research. 26 July 2013
This is the result of a strong improvement in the trade balance, resulting from a contraction in imports and from a favourable and resilient performance of exportsimports and from a favourable and resilient performance of exports
Trade Balance, Goods and Services (year ending in month EUR billion)
Contributions to the change in the trade balance over the last year (year ending in month EUR billion)
20
3.0
month, EUR billion) last year (year ending in month, EUR billion)
0.0
1.0
2.0
on
-2.0
-1.0EUR
Billio
-4.0
-3.0
Exports ImportsExports Imports
Latest data for MayLatest data for May
1H2013 Results Presentation 69Sources: INE, Bank of Portugal, ES Research. 26 July 2013
Portugal has been expanding its relevant market to fast growing emerging markets
Portuguese merchandise exports to selected countries
(%)Weight merchandise
exports %Growth merchandise
exports %
Top 5 merchandise exports
(2013 May , weight, %)
56,1
14,6
10 7
exports, % exports, %
Morocco
Brazil
Transportation Vehicles
Mineral Fuels
Machinery and electrical equipment
1,8
1,4
5 9
(1.2)
(1.3)8,3
10,7
11,2
10,7
9,5
7,4
Angola
Mozambique
Spain
Common Metals
Machinery and mechanical appliances
5,9
0,7
23,5
(5.6)
(0.6)
(22.8) 6,5
8,1
0 5 10 15
6,5
5,1
4,0
USA
United Kingdom
Poland
4,3
5,3
0,9
(4.2)
(5.2)
(0.9)
Top 5 services exports
(2013 May, weight, %)
-0,4
-2,3
-30,1
TotalY-o-Y
GrowthJan-May:
France
Germany
China
11,8
12,0
1,3
(12.3)
(12.8)
(2.0)
Travel and Tourism
Transportation
Other Business Services 16,0
30,9
39,3
,
-32,14.1%
Growth May 2013/12Weight May 2013( ) May 2012
Japan
,
0,3
( )
(0.5) Communications services
Construction services 3,0
3,1
16,0
1H2013 Results Presentation 70Sources: INE, ES Research.
0 20 40 60
26 July 2013
Extra-EU exports already represent close to 30% of total exports. Also, the profile of Portuguese exports has been changing, with an increase in the weight of higher added value goods and services
Portuguese Exports Profile (2000 - 2012)%∆ 2012/11
(EUR bn)
17,9 17,6 19,2 19,1
Total: 3.9%
5 8%
%∆ 2012/11
27,2 31,1 38,8 31,7 37,3 42,9 45,39,8 12,2
,16,3
17,6
2000 2005 2008 2009 2010 2011 2012
Services
Goods
5.8%Goods
-0.3%Services2000 2005 2008 2009 2010 2011 2012 Services
Portuguese Exports (Goods) Breakdown, Intra-EU and Extra-EU
(2000-2013 weight %)(2000-2013, weight, %) %∆ 2013/12
(Goods,Jan-May)29,0 29,219,1 20,0 25,6 24,6 24,6 25,6
INTRA-EU (Goods) EXTRA-EU (Goods)
4.1%80,9 80,0 74,4 75,4 75,4 74,4 71,0 70,8
2000 2005 2008 2009 2010 2011 2012 2013(Until
1H2013 Results Presentation 71Sources: INE, Bank of Portugal, ES Research.
May.)
26 July 2013
Main contributions to merchandise exports growth
Main contributions to merchandise exports growth, by Main contributions to merchandise exports growth, country (p.p.) by sector (p.p.)
1.68
2 662.66
0.66 0.65 0.60
0.32 0.27 0.270.18 0.15 0.14
0.700.46 0.35 0.31 0.27 0.21 0.20 0.16 0.15
Spain
Alge
ria
Moro
cco
Ango
la
Nethe
rland
s
USA
ted Ki
ngdo
m
Braz
il
South
Afric
a
Cana
da
Mine
ral F
uels
ood a
nd D
rinks
Plas
tics
Cellu
lose P
ulp,
Pape
r
Mach
inery
and
mech
anica
l ap
plian
ces
Chem
icals
Mach
inery
and
electr
ical
equip
ment
Footw
ear
ommo
n Meta
ls
Optic
al an
d Pr
ecisi
on
Instru
ments
May 2013 May 2013
N
Unit S
Fo C M M Co
1H2013 Results Presentation 72Sources: INE, Bank of Portugal, ES Research. 26 July 2013
External competitiveness is also being supported by favorable developments in unit labour costs, following structural adjustments in the economy and the ongoing “internal devaluation”g j y g g
Unit Labour Costs (% y-o-y)Real Effective Exchange Rate Index (2010 = 100)
2.03.04.05.0
-20-1.00.01.0
-5.0-4.0-3.02.0
Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012
-4.2
Dec. 2007 Dec. 2008 Dec. 2009 Dec. 2010 Dec. 2011 Dec. 2012
Year ending in each quarter. Latest data for 4Q 2012.
1H2013 Results Presentation 73Sources: BIS, Reuters Ecowin. 26 July 2013
From a different perspective, the improvement in the external balance is also a result of a deleveraging process among all sectors with a rising trend in domestic savingsdeleveraging process among all sectors, with a rising trend in domestic savings
Households’ Savings Rate (% of disposable income)Domestic Savings Rate (% of GDP) Households Savings Rate (% of disposable income)Domestic Savings Rate (% of GDP)
%20%
1011121314
12.9%
12141618
14.4%
6789
10
2468
10
56
2001 2003 2005 2007 2009 2011 201302
2001 2003 2005 2007 2009 2011 2013
Data for year ending in each quarter. Latest data for 1Q 2013. Data for year ending in each quarter. Latest data for 1Q 2013.
1H2013 Results Presentation 74Sources: INE, ES Research. 26 July 2013
Household deleveraging efforts are already translating into a declining trend in aggregate indebtednessindebtedness
Household IndebtednessLoans to Households
3540
Household Indebtedness (% of Disposable Income)
Loans to Households(%, y-o-y)
20253035
Mortgage
Consumption
100
120
140 130.7121.9
Consumption andOther
Housing
05
1015
Mortgage
40
60
80
-10-5
1999 2001 2003 2005 2007 2009 2011 2013
-3.8-7.8
0
20
40
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Latest data for May 2013.
1H2013 Results Presentation 75Sources: Bank of Portugal, ES Research. 26 July 2013
A declining trend in non-financial corporations borrowing is also visible
Non-Financial Corporations IndebtednessLoans to Non-Financial Corporations
35%
160
Non-Financial Corporations Indebtedness (% GDP)
Loans to Non-Financial Corporations(%, y-o-y)
20
25
30
100
120
140
160 142.7
5
10
15
40
60
80
100
-5
0
1999 2001 2003 2005 2007 2009 2011 2013
-2.70
20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Latest data for May 2013.
1H2013 Results Presentation 76Sources: Bank of Portugal, ES Research. 26 July 2013
In 2012, cyclical components – particularly on the revenue side – and non-recurring effects were mostly responsible for the gap vs. the initial deficit target. This was partially compensated by a stronger than budgeted fall in operational spending
2012 General Government Budget Deficit, Headline vs. Deficit for EFAP* purposes (% GDP)
General Government Budget deficit (% GDP)
10.2 9.810
12
6.4
0.70.5
0.5
3.4 3.7 4.0
6.5
4.6
313.6
4.42
5.5
4.0
7.41
5.84
4
6
8
4.85
6.43
6.4
4.8
Budget deficit, ANA concession Recapitalisation of Recapitalisation of Deficit reported for 3.4 3.12.5
0
2
4
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
g ,Maastricht criteria
pCGD
pSAGESTAMO
pEFAP purposes
2012 General Government Budget Deficit, Headline vs. Deficit excluding one-off effects (% GDP)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
1. 2011 underlying deficit, without one-off measures (Banks’ pension funds); 2. 2011 deficit after one-off measures, and reported to Eurostat;3 2012 nominal deficit reported to Eurostat (includes non recurring 6 4
0.5
0.53. 2012 nominal deficit reported to Eurostat (includes non-recurringexpenditures related to the recapitalisation of CGD and Sagestamo).
4. 2012 underlving deficit, excluding non-recurrent effects. 5. Deficit reported to the Troika for the purpose of the Economic and Financial
Adjustment Programme.
6.4
5.8
0.3
Budget deficit, Recapitalisation of CGD Recapitalisation of Other adjustments Deficit excluding one-off ( 4G ti
Sources: Ministry of Finance, INE, ES Research, NCPAMoU. 77
gMaastricht criteria
p pSAGESTAMO
j geffects(e.g. 4G auction,
personal income taxsurcharge, etc).
* EFAP = Economic and Financial Adjustment Programme.
26 July 20131H2013 Results Presentation
In spite of the challenges in meeting the deficit targets, the commitment to fiscal consolidationhas been very clear Primary expenditure has been cut by close to EUR 11 billion in 2011-12 andhas been very clear. Primary expenditure has been cut by close to EUR 11 billion in 2011-12, andthe structural primary deficit has been reduced by 6.2 p.p. of GDP
Primary Balance and Structural Primary Balance(% GDP)
Public Expenditure (EUR billion)*
47 4% ofPrimary Balance49.4% of
GDP
51.5% ofGDP
-0.40.30.2
0.92.2
1
3
47.4% ofGDP
Primary BalanceStructural Primary Balance
89.084.5
78.4Capital
Interest 4.86.9
GDP
-2.0
-1.0
-2.5
5
-3
-178.4Capital
Expenditure
74 2 70 7 66 1
6.9
7.39.9
6.85.0
-7.3 -7.0
-6.0 -6.0
-9
-7
-5 CurrentPrimary
Expenditure
74.2 70.7 66.1
2009 2010 2011 2012 2013E 2014E 2010 2011 2012
* Vertical axis starts at EUR 30 billion.
Sources: Ministry of Finance, INE, ESResearch. 7826 July 20131H2013 Results Presentation
Portugal’s official creditors continue to see debt as sustainable
IMF’s Projections for Portugal’s public debt (% GDP)*
123,0122,4 123,7
122,5
119,4120,0
122,2 122,3
120,0 117 2
123,6
120
125
108,1
117,2
108,3110
115
108,0,
100
105 Initial MoU Scenario
6th Review
7th Review
93,593,3
94,0
90
95Observed values (Eurostat)
2010 2011 2012 2013 2014 2015 2016
1H2013 Results Presentation 79Sources: IMF, EC, ECB, ES Research-NACPMoU 26 July 2013
The ongoing deleveraging is also translating into a lower stock of net external liabilities in the financial sector
40
The increase in net external liabilities of the General Government (and of the economy) reflects a price effect, related to the rise in the value of Portuguese Government bonds held by non-residents, i.e. a rise in the value of Government liabilities, in spite of the declining trend in the Government’s net financing needs.
-10.3-17.9
-24.7-20
0
20
Stock of net 24.7-31.9-39.5
-46.3-55.4 -58.2 -63.1 -67.4
-78.888 9
-80
-60
-40%
of GD
Pexternal liabilities of the Portuguese economy (1)
-88.9-96.1
-110.6-107.2 -104.9
-116.5 -118.1
-140
-120
-100(% GDP)
Banking Sector Monetary authority General GovernmentOther Sectors Total net external liabilities
Banking Sector Monet. Authorities General Gov. Other Sectors2009 1Q 2013
-46 -112009 1Q 2013
+2 -152009 1Q 2013
-60 -762009 1Q 2013
-7 -15
1H2013 Results Presentation 80
(1) The stock of narrow net external debt stood at 99.1% of GDP at the end of 2012. Net external debt corresponds to net external liabilities excluding participation in capital and reinvested profits from FDI, shares and other participations from portfolio investment, derivatives and reserve assets. Source: Bank of Portugal.
26 July 2013
Ample external assets provide stability in the face of a tough financing environment. Portugal is one of the main world holders of gold reservesPortugal is one of the main world holders of gold reserves
200
Portugal’s gold reservesPortugal’s gross external assets (% GDP)
(% GDP)(% GDP)
~ EUR 15 billion
8
10
125
150
175
200 9.3172
4
6
50
75
100
125
% of
GDP
0
2
199920002001200220032004200520062007200820092010201120122013Q10
25
50
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1H2013 Results Presentation 81Sources: Bank of Portugal, INE, ES Research. 26 July 2013
The shift of resources away from domestic oriented, non-tradable, sectors is penalisingemployment and tax revenues Lending to exporting firms is increasing illustrating the shift inemployment and tax revenues. Lending to exporting firms is increasing, illustrating the shift in resources towards the tradable sector
Unemployment Rate (% Labour Force) Loans to Exporting Non-Financial Corporations(%, y-o-y)
4
5
6May5.1%
%
14
16
18 17.7
1
2
3
4
6
8
10
12
-1
0
1
2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 0
2
4
6
1983 1987 1991 1995 1999 2003 2007 2011 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar1983 1987 1991 1995 1999 2003 2007 2011
Latest data for 1Q 2013 Latest data for May 2013.
1H2013 Results Presentation 82Sources: INE, Bank of Portugal, ES Research. 26 July 2013
The Government has presented a programme aimed at promoting economic growth based on investment in the tradable sectors, leading to stronger growth in exports
Main elements of the Government’s Programme to Promote Investment and Growth
Areas Key MeasuresAreas Key Measures
Skills, education and learning
•Strengthening the dual learning system (academic/professional), with the goal of involving 200 000 students
•New credit line to exports activities, in the amount of EUR 1 billion (immediate availability of EUR 500 million).
Corporate Income Tax Credit in 2013:
Tax deduction of 20% of i t t di
Financing
( y )
• Creation of a new development bank, specializing in SME financing.
•Lower spreadsand higher maturities in SME financing (negotiations
•Strengthen the role of CGD in the financing of economic activity (EUR 1 billion in 2013, EUR 2.5 billion in 2014).
investment spending, up to 70% of the tax collection.
In the limit, possibility of lowering the effective tax rate to
A more dynamic corporate sector
Promoting investment •Reform of the National Interest Projects innitiative.
•Streamlining mergers and acquisitions.
Lower spreads and higher maturities in SME financing (negotiations with Banks).
effective tax rate to 7.5%.
For investments up to EUR 5 million, between June 1st and December 31st 2013
Tax competitiveness
Innovation and entrepreneurship
Internationalisation
•Reform of the Corporate Income Tax.
•Reducing bureaucracy and simplifying licencing procedures.
•Allocation of 50% of European structural funds in the 2014-2020 December 31 2013.
Possibility of deduction for a period of 5 years.
Internationalisation
Logistic Infrastructure •Lower the costs of ports operations by 50%.
pProgramme to the suppoort of competitiveness of firms.
1H2013 Results Presentation 83Sources: MEE, ES Research, NCPAMoU. 26 July 2013
In response to new regulatory demands, Portuguese banks have been successfully lowering their transformation ratio…
Banking sector deposits Portugal vs Other periphery
120Portugal
Portuguese banking sector, Transformation Ratio (%) Banking sector deposits, Portugal vs. Other peripheryeconomies under adjustment programmes, 2009 = 100
The reference to the 120% target has been
100
110
Portugal
Spain
157
140128
120
gdropped by the Troika in the 7th assessment.
80
90
Ireland
120
60
70
Dec-2009 Sep-2010 Jun-2011 Mar-2012 Dec-2012
Greece
2010 2011 2012 (Est) Target 2014
Data for April 2013.
1H2013 Results Presentation 84Sources: Bank of Portugal, INE, National Central Banks, ES Research. 26 July 2013
... with a resilient behaviour of deposits reflecting the ongoing confidence in the sector. No signs of contagion from the Cyprus crisisg g yp
Stock of households’ bank deposits (EUR billion) Stock of non-financial corporations’ bank deposits(EUR billi )
40
130
140
(EUR billion)
May 2013 May 2013
-9.1% YoY+2 9% M M
+0.7% YoY+0 5% MoM
30
35
110
120
130 +2.9% MoM+0.5% MoM
20
25
90
100
10
15
70
80
Jan. 2008 Jan. 2009 Jan. 2010 Jan. 2011 Jan. 2012 Jan. 2013Jan. 2008 Jan. 2009 Jan. 2010 Jan. 2011 Jan. 2012 Jan. 2013
1H2013 Results Presentation 85Source: Bank of Portugal. 26 July 2013
Exposure to the ECB has been stable, with a slight downward trend
Central Bank liquidity provision (including ELA estimates for Greece and Ireland*), EUR Billion
% GDP (1) % Banks’ Assets (2)
17 1 6 4350
400
17.1
23.6
6.4
7.0250
300
350
RBil
lion Spain
(250.1;Jun. 2013)
Italy(261.4;May 2013)
42.4
32 6
19.3
4 5100
150
200
EUR
Greece(85.3;May 2013)
Ireland(4 1 M 2013) 32.6
29.3
4.5
8.90
50
2007 2008 2009 2010 2011 2012 2013
(47.1;May 2013)Portugal
(49.4; Jun 2013)
(1) 2012 GDP; (2) Banks’ assets in Dec. 2012(*) Ireland’s use of ELA came down from close to EUR 40 billion to zero in February 2013.
1H2013 Results Presentation 86Sources: Bank of Portugal, Bloomberg, National Central Banks, ES Research. 26 July 2013
Portuguese banks have strengthened their capital ratios, going beyond the Programme’s targets
Recapitalisation of Portuguese BanksEUR billion
Portuguese Banks Average Core Tier 1 Ratio (%) *
Public fundsPrivate funds
1 6 1 3
3.0
1.17.8 8.1 8.7
9.611.2 11.5
Target 2012: 10%
1.00.2 0.5 0.45
1.6 1.3
May-12 Jun-12 Jul-12 Set-12 Jan-13
Core Tier I. March 2013 (%)Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12
(Est)
BP
EBA
* Bank of Portugal criteria12.1%15.0%11.5%
9.6%
10.5% n.a.
n.a.9.6%9.4%9.9%
1H2013 Results Presentation 87Sources: Bank of Portugal, Bloomberg, National Central Banks, ES Research. 26 July 2013
No bubble in the housing sector. Real house prices increased very moderately in Portugal in the i t th E A d bt i i i l t t ith th iyears prior to the Euro Area debt crisis, in clear contrast with other economies
House PricesResidential Property,
% May2013
(% y-o-y)p y,
Accumulated Real Price Growth 1998-2011 (%)1
96
468
1012
May 2013
Confidencial Imobiliário76
(market prices)
-6-4-202
-3.5-5.07
44
-10-8-6
1996 1998 2000 2002 2004 2006 2008 2010 2012
5.0INE7
Portugal Euro Area Ireland Spain
(Bank appraisals)
(1) Accumulated nominal house price growth minus accumulated CPI growth
Latest data for May 2013.
1H2013 Results Presentation 88Sources: ECB, Bloomberg, Confidencial Imobiliário, ES Research. 26 July 2013
The current fall in house prices in Portugal is reflecting the ongoing recession, and not the aftermath of a bubble burst in the housing sector. House prices have been relatively stable g p yover the last decade, comparing with other European economies
House Price Growth, Portugal vs. Spain (1987=100)
20
25600%Price index Portugal (lhs)
Price index Spain (lhs)
Nominal change Spain (rhs)
10
15
20
400
500
g p ( )
Nominal change Portugal (rhs)
0
5300
Index
15
-10
-5
100
200
-20
-15
0
1H2013 Results Presentation 89Sources: Confidencial Imobiliário (Portugal), Ministerio de Fomento (Spain), ES Research. 26 July 2013
Economic activity contracted 0.4% q-o-q and 4% y-o-y in 1Q 2013. But most indicators are signaling a stabilisation trend in 2013 and a small recovery in 2014
OECD Leading Indicator. (1)
102
103
104
100
101
102
Long term
97
98
99g
average
95
96
97
94Jan-2005 Jan-2006 Jan-2007 Jan-2008 Jan-2009 Jan-2010 Jan-2011 Jan-2012 Jan-2013
1H2013 Results Presentation 90Sources: INE, OECD, ES Research. (1) Leading indicator based on domestic and export order books, industrial production, share prices and unfilled job vacancies. 26 July 2013
Ongoing recovery in exports and industrial production, and a stabilisation trend in private consumption. GDP should have posted a slight q-o-q increase in Q2 2013
BoP activity coincident indicator (% y-o-y).
EC business confidence indicators (net balances).
Exports of goods and services (% y-o-y, 3m MA).
Jan-June 2013: -1.9% y-o-yJune
2012: -3.3% y-o-y
%
Industrial production and services turnover (% y-o-y, 3m MA).
External orders in manufacturing (% y-o-y 6m MA) vs. IFO.
BoP private consumption coincident indicator vs. consumer confidence.
Jan-June 2013: -3.9% y-o-y2012 5 7%120050
%
50
0.0
5.0
10.0
1.8%
Industrial production(May 2013)
2012: -5.7% y-o-y
(Y-o-Ysimples: +4.5%)
100.0
105.0
110.0
115.0
120.0
10
20
30
40
50IFO (Advced.6m, RHS)Jun. 2013
-200
-15.0
-10.0
-5.0-6.2%
Services Turnover (May 2013)
80.0
85.0
90.0
95.0
-40
-30
-20
-10
0-1.1%
New manufacturing orders,external market (LHS)May 2013
1H2013 Results Presentation
20.02006 2006 2007 2008 2008 2009 2010 2010 2011 2012 2012
91Sources: Bank of Portugal, European Commission, INE, DGEG, Bloomberg.
Oct. 2006
Jun. 2007
Feb. 2008
Oct. 2008
Jun. 2009
Feb. 2010
Oct. 2010
Jun. 2011
Feb. 2012
Oct. 2012
Jun. 2013
26 July 2013
Along with the supportive stance of the ECB (with the OMTs), the improvement in the external perception of Portugal’s adjustment translated into a significant decline in Government bond pe cept o o o tuga s adjust e t t a s ated to a s g ca t dec e Go e e t bo dyields. The initial negative impact of the recent political turmoil on yields has been reversed
Portuguese Government Bond yields in the secondary market (%)
Average yields in Treasury Bill issues (%)
OMTs official
182022
2Y404.55.05.5
6 Month12 Month
April 6th 2011: Request for
Official Financial
announcementby the ECB(06/09/2012)
Political turbulence
810121416
10Y2.02.53.03.54.0
3 Month
18 Month
1.72%1.60%
Financial Assistance
Fed announces tapering of
QE (May 22nd)
(resignation of the
Finance and Foreign Ministers,
July 1st and 2nd).
02468
4.386.41
0.00.51.01.5
21S 2N 4J 1 F b 2M 19S 16J 1 A 1 J l
1.04%0.74%
Jan. 2010Jul. 2010Jan. 2011Jul. 2011Jan. 2012Jul. 2012Jan. 2013Jul. 201321 Sep. 2011
2 Nov. 2011
4 Jan. 2012
15 Feb. 2012
2 May 2012
19 Sep. 2012
16 Jan. 2013
17 Apr. 2013
17 Jul. 2013
Latest data for July 23rd.
1H2013 Results Presentation 92Sources: IGCP, Reuters Ecowin, Bloomberg. 26 July 2013
The successful 5 and 10 year Government bond issues in January and May 2013 are important steps in the long way back to full market access and to the gradual stabilisation of financial conditions
January 23rd 2013: Syndicated tap of the OT 4.35% due 16 May 7th 2013: Sale of a new benchmark bond (OT 5.65%) due 15 y y pOctober 2017
y ( )February 2024
10%4% 2%
Distribution by Investor Type
6%7%
Distribution by Investor Type
60%24%
Asset Managers
Hedge Funds
Banks
Insurance/Pension Funds51%
12%
Asset Managers
Hedge Funds
Banks
Insurance/Pension Funds
CentralBanks
Distribution by GeographyDistribution by Geography
60%Others
7%
17%
Central Banks
Others
16%
10%
7%4% 1%
y g p y
USUKOther EuropeGer./Aus./Swi.Asia
33%
9%
9%
7% 2%
y g p y
USUKOther Europe
Issue Amount: EUR 2.5bn
Maturity: October 2017
Issue Amount: EUR 3bn
Maturity: February 2024
Yield: 5.669%
27%
2%7%2%14%
10%PortugalScandinaviaFranceItalySpainOthers
11%
9% pGer./Aus./Swi.AsiaPortugalOthers
Yield: 4.891%
Spread: Mid-Swap + 395
bps
Spread: Mid-Swap + 400
bps
1H2013 Results Presentation
2%7%2%29%
93Sources: IGCP, Reuters Ecowin. 26 July 2013
Portugal is fully funded in 2013 and already partially funded in 2014, with an estimated funding gap of around EUR 9 billionfunding gap of around EUR 9 billion
General Government’s estimated financing needs and sources 2012-2017 (EUR billion)
0.8
49.5 34.5 33.0 22.7 27.3 20.9 24.9 18.5 20.6 14.2 18.5 12.1
165
27.5
10.1
0.1
12.318.1 15.0 16.9
103
8.9
16.5
7.8 5.8
14.214.5
9.986
8.00.5
2.73.7
9.0
18.514.2 12.1
12.3 10.3 6.7 6.4 3.5 6.41.6
6.4-0.18.6
Fontes Necessidades Fontes Necessidades Fontes Necessidades Fontes Necessidades Fontes Necessidades Fontes Necessidades
2012 2013E 2014F 2015F 2016F 2017F
Sources Needs Sources Needs Sources Needs Sources Needs Sources Needs Sources Needs
FundinggapNet financingneedsPre-funding
EFAP financing(official loans)RedemptionsPGBs/ MTN’s
PGBsissuesandTBillsnet issues
1H2013 Results Presentation 94Sources: IGCP, Ministry of Finance, ES Research-NCPAMoU 26 July 2013
The 7 year extension of the maturities of the EFSF and EFSM loans will improve the debt repayment profilerepayment profile
General Government refinancing needs 2013-2023 (EUR million)
20
25 Other M/L term IMF EFSM EFSF The Eurogroup and Ecofin Ministers have agreed to lengthen the
maturities of the EFSM and EFSF loans to Portugal by increasing the
15
20
UR Bi
llion
loans to Portugal, by increasing the weighted average maturity limit by 7 years, to a maximum of 19.5 years for EFSM loans and 22 years for
EFSF loans.
5
10
EU
The extension implies an increase of the average residual maturity of total
debt from 6.7 years, to about 8.5
02013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
years.
The extension focused in lengthening the maturity of the
l i i ll i i 2016Total amount disbursed of official loans: EUR 64.5 billion.Average maturity of official loans (years): 11.2 (EFSM:12.4; EFSF:14.4; IMF:7.3).Estimated cost of loans (incl. interest and fees): EFSM:3%; EFSF:2.8%; IMF:3.8%; Average EU-IMF: 3.2%
loans originally maturing in 2016-2022, which amount to roughly EUR
22 billion.
1H2013 Results Presentation 95NOTE: Average maturity of total public debt: 6.7 years; average implicit cost of total public debt in 2012 (interest spending/stock of debt): 3.6%. Sources: IGCP, Reuters Ecowin, ES Research. 26 July 2013
Table of contents
I. Funding & Liquidity: Comfortable liquidity position, with significant improvement in funding mix, deleverage plan driving LTD to 125% and high level of repoable assets covering MLT redemptions for over 3 yearsredemptions for over 3 years
II. Asset Quality: Conservative and prudent risk management, with reinforced provision reserve to cope with current macroeconomic conditions in Portugal
III. 1H13: BES continues to focus on B/S, with deleverage and strong provisioning pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of both BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
A di 2 P t E tl kAppendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
1H2013 Results Presentation 9626 July 2013
Portugal: Main Forecasts 2013-2014
2007 2008 2009 2010 2011 2012E 2013F 2014F
GDP 2.4 0.0 -2.9 1.9 -1.6 -3.2 -2.3 0.4
Pri ate Cons mption 2 5 1 3 2 3 2 5 3 8 5 6 3 7 0 7
Annual growth rates (%), except where indicated
Private Consumption 2.5 1.3 -2.3 2.5 -3.8 -5.6 -3.7 -0.7
Public Consumption 0.5 0.3 4.7 0.1 -4.3 -4.4 -3.0 -1.7
Investment 2.1 -0.1 -13.3 1.4 -13.8 -13.7 -8.2 -3.2
Exports 7.5 -0.1 -10.9 10.2 7.2 3.3 2.5 4.6
Imports 5.5 2.3 -10.0 8.0 -5.9 -6.9 -3.1 0.4
Inflation (%) 2 5 2 6 0 8 1 4 3 7 2 8 0 9 1 2Inflation (%) 2.5 2.6 -0.8 1.4 3.7 2.8 0.9 1.2
Budget Balance (% GDP) -3.1 -3.6 -10.2 -9.8 -4.4 (7.4)* -6.4 (5.8)** -5.5*** -4.0***
Public Debt (% GDP) 68.4 71.7 83.7 94.0 108.3 123.6 122.9*** 124.2***
Unemployment (% Labour Force)*** 8.0 7.6 9.5 10.8 12.7 15.7 18.0 18.3
Current & Capital Account Balance (% GDP) -8.9 -11.1 -10.1 -9.0 -5.6 0.8 4.5 6.3
* The 4 4% reading includes the effects of the integration of the banks’ pension funds and other one off measures Without these effects the deficit would be 7 4% of GDP The 4.4% reading includes the effects of the integration of the banks pension funds and other one-off measures. Without these effects, the deficit would be 7.4% of GDP. ** Including one-off effects related to the recapitalisation of CGD and Sagestamo, worth close to 1% of GDP. Without these and other one-off effects, the deficit would be 5.8%
of GDP. The Government has reported a deficit of 4.7% of GDP to the Troika for the purpose of the Economic and Financial Adjustment Programme (which includes the revenue from the concession to ANA of the airport management services).
*** Economic and Financial Adjustment Program targets.E: Estimate; F: Forecast.
1H2013 Results Presentation 97
;Sources: Bank of Portugal, INE, ES Research, European Commission, IMF, OECD.
26 July 2013
Spain: Main Forecasts 2013-2014
2008 2009 2010 2011 2012F 2013F 2014F
GDP 0 9 3 7 0 3 0 4 1 4 1 5 0 6
Annual real growth rates (%), except where indicated.
GDP 0.9 -3.7 -0.3 0.4 -1.4 -1.5 0.6
Private Consumption -0.6 -3.8 0.7 -1.0 -2.0 -2.1 0.0
Public Consumption 5.9 3.7 1.5 -0.5 -4.8 -7.0 -1.3
Investment -4.7 -18.0 -6.2 -5.3 -9.0 -5.7 -0.2
Exports -1.0 -10.0 11.3 7.6 2.1 4.2 5.8
Imports -5.2 -17.2 9.2 -0.9 -6.2 -3.3 2.3
Inflation (%) 4.1 -0.2 2.0 3.1 2.4 1.7 1.0
Budget Deficit (% GDP) -4.5 -11.1 -9.7 -9.4 -10.6 -6.7 -7.2
Public Debt (% GDP) 40 1 53 8 61 5 69 3 88 4 95 8 101 0Public Debt (% GDP) 40.1 53.8 61.5 69.3 88.4 95.8 101.0
Current & Capital Account Balance (% GDP) -9.2 -4.5 -4.4 -3.7 -1.9 1.0 2.5
Unemployment (% of Labour Force) 11.3 18.0 20.1 21.7 25.0 26.6 26.1
1H2013 Results Presentation 98Sources: INE, Bank of Spain, ES Research, European Commission. 26 July 2013
Angola: Main Forecasts 2013-2014
2008 2009 2010 2011 2012F 2013F 2014F
GDP (real growth rate, %) 13.8 2.4 3.4 3.9 8.4 6.5 7.0
GDP per capita (USD, current prices) 4 671 4 082 4 329 5 305 5 873 6 033 6 292
Inflation (%) 12.5 13.7 14.5 13.5 10.3 9.4 8.4
Current Account Balance (% GDP) 10.3 -9.9 8.1 12.6 9.6 3.5 1.3
Budget Balance (% GDP) -4.5 -7.4 5.5 10.2 8.5 -1.2 -1.9
Exchange Rate (USD/KZ), annual average 75.0 79.2 91.9 93.7 95.3 95.4 95.0
1H2013 Results Presentation 99Sources: IMF, Angolan Central Bank, Finance Ministry, ES Research. 26 July 2013
Brazil: Main Forecasts 2013-2014
2008 2009 2010 2011 2012E 2013F 2014F
GDP (real growth rate %) 5 2 0 3 7 5 2 7 0 9 2 3 2 5GDP (real growth rate, %) 5.2 -0.3 7.5 2.7 0.9 2.3 2.5
Inflation (%) 5.7 4.9 5.0 6.5 5.8 5.8 6.0
Primary Budget Balance (% GDP) 4.0 2.0 2.7 3.1 2.4 2.0 2.5y g ( )
Public Debt (% GDP) 38.0 41.5 39.2 36.4 35.1 35.4 35.1
Unemployment (% of Labour Force) 7.9 8.1 6.7 6.0 5.5 5.3 5.5
Current Account Balance (% GDP) -1.7 -1.5 -2.2 -2.1 -2.4 -3.3 -2.9
Exchange Rate (USD/BRL), annual average 1.84 1.99 1.76 1.68 1.96 2.15 2.28
SELIC Interest Rate (%, End of Period) 13.75 8.75 10.75 11.00 7.25 9.25 9.25
1H2013 Results Presentation 100Sources: IBGE, Central Bank of Brazil, ES Research. 26 July 2013
Disclaimer
This news release may include certain statements relating to the Banco Espírito Santo Group that are neither reported
financial results nor other historical information. These statements, which may include targets, forecasts, projections,
descriptions of anticipated cost savings, statements regarding the possible development or possible assumed future results of
operations and any statement preceded by, followed by or that includes the words “believes”, “expects”, “aims”, “intends”,
“may” or similar expressions or negatives thereof are or may constitute forward-looking statements.
By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty. There are a
number of factors that could cause actual results and developments to differ materially from those expressed or implied by
forward-looking statements. These factors include, but are not limited to, changes in economic conditions in individual
countries in which the BES Group conducts its business and internationally, fiscal or other policies adopted by various
governments and regulatory authorities of Portugal and other jurisdictions, levels of competition from other banks and financial
i i ll f t h d i t t tservices companies as well as future exchange and interest rates.
Banco Espírito Santo does not undertake to release publicly any revision to the forward-looking information included in this
news release to reflect events circumstances or unanticipated events occurring after the date hereofnews release to reflect events, circumstances or unanticipated events occurring after the date hereof.
1H2013 Results Presentation
Investor Relations
NUMBER OF SHARES: 4,018 million
SHARE CAPITAL: EUR 5.04 bn
LISTING: NYSE Euronext
BLOOMBERG: BES PL
SECTOR: Financial Services: Banking
INDEX MEMBERSHIP: 36 Indices, including: PSI20, Euronext 100, Eurostoxx, Stoxx Banks FTSE4GOOD
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Stoxx Banks, FTSE4GOOD
Investor Relations Contacts
Website: www.bes.pt/irPhone: + 351 21 359 7390E-mail: investor relations@bes ptE mail: [email protected]: + 351 21 359 7001
1H2013 Results Presentation
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