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Cheuvreux EMEA Conference24 March 2009
22
Cheuvreux EMEA Conference
DISCLAIMER
• This document is not an offer of securities for sale in the United States, Canada, Australia, Japan or any other jurisdiction. Securities may not be offered or sold in the United States unless they are registered pursuant to the US Securities Act of 1933 or are exempt from such registration. Any public offering of securities in the United States, Canada, Australia or Japan would be made by means of a prospectus that will contain detailed information about the company and management, including financial statements
• The information in this presentation has been prepared under the scope of the International Financial Reporting Standards (‘IFRS’) project of BCP Group for the purposes of the preparation of the consolidated financial statements under Regulation (CE) 1606/2002
• The figures presented do not constitute any form of commitment by BCP in regard to earnings
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Cheuvreux EMEA Conference
1985 - 1995
1995 - 2000
2000 - 2004
2005 – 2010
1985-2008
From incorporation …
… to leadership
Organic growth to become
relevant player
Consolidation to reach critical
dimension
Leadership in Portugal,
setting up the basis for
expansion in Poland and
Greece
On the path to the future…
Consolidation of international expansion with a single brand, focused on organic growth and value creation.
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Cheuvreux EMEA Conference
49% of our branches are located outside Portugal 53% of our staff works abroad
Portugal
(December 2008)
Eur Millions
A leading Group focused in the Retail business in Portugal, Poland, Greece and Mozambique
Source: BCP. Market shares in Portugal are based on Portuguese Banking Association and Portuguese banks’ public data. Market shares in Poland are from the Polish Banks Association and Polish Asset Managers Association. Market shares in Greece are based on Bank of Greece and Greek banks’ public data. Market shares in Mozambique are based on Bank of Mozambique public data.
24.5%
Dec. ‘08
Market Shares
OtherMozambiqueGreecePoland
8.125 4.794 1.3478.241
3.558 1.339
57.622
484
52.322
804
11.5% 5.6% 2.0% 1.1%
Mortgage Loans
December 2008
DepositsDecember
Total Loans
December 2008
DepositsNovember
2008
41.2% 36.8%
Total Loans
October 2008
DepositsOctober
2008
Loans to Customers (2)
Customers’ Funds
Loans to Customers
(net)
Customers’ Funds
Loans to Customers
(net)
Customers’ Funds
Loans to Customers
(net)
Customers’ Funds
Employees Branches Employees Branches Employees Branches Employees
Loans to Customers
(net)
Customers’ Funds
Employees BranchesBranches
7.0491.5571.554
10.667
1762 117178490
918
100
25.8%
(1) Excluding securitization(2) Net, excludes credit represented by securities)
Dec ’08 (1)
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Cheuvreux EMEA Conference
Millennium bcp has become a leading Portuguese financial institution in several retail banking activities, providing an integrated and complete offer to its customer base.
Market shares: December 2008Customers’ fundsMortgage loans
(Portugal, gross, including securitization)
BranchesNet operating revenues**
** Million euros, on a comparable basis.
Loans to customers(gross, excluding securitization)
Millennium bcp positioning and market share vs. main competitors
#1 #3 #2 #3
18,3%
28,4%24,5%
16,7%
25,8%26,1%
13,6%
27,7%
20,0%
#3#1 #3 #1 #3#1
3.4372.870
1.890
818918
831
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Cheuvreux EMEA Conference
Portuguese Banking SystemMarket Shares
Loans to customers
26.1%
25.8%
14.4%15.2% 15.2% 15.4%
16.4% 16.5% 16.5%
9.8% 10.2% 10.2%10.7% 10.5% 10.4% 10.3% 10.0%
24.9%
25.7%
25.1%
25.3%26.5%
25.5%25.6%
25.5%25.4%25.4%24.9%
26.0%26.8%26.7%
16.2%
13.2%
11.2%11.6%11.6%
12.4%11.7%
13.3%
9.8%
Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Jun 08 Set 08 Dec 08
CGD
BCP
BES
S.Totta
BPI
BCP on comparable basis (excluding Interbanco, BCM, Banque BCP, bcpbank Canada) Loans to customers: gross, excluding securitizations. BCP and CGD includes commercial paper. Source of sector data: APB (Associação Portuguesa de Bancos)
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Cheuvreux EMEA Conference
Portuguese Banking SystemMarket Shares
Loans to customers: Portugal
24.1% 23.7%23.2%
24.1%
25.4%
27.0%25.7%
25.0%24.1%
24.1%
14.7% 14.4% 14.7%15.5% 15.8% 15.8%
11.0% 10.9% 11.2%11.8% 12.1% 11.7% 11.5% 11.1%
24.1%
25.4%
24.2%
24.1% 24.4%24.1%
14.7%
15.3%
13.2%13.8%13.7%
13.4%14.0%14.0%
14.8%
14.4%
Dec 04 Dec 05 Sep 06 Dec 06 Dec 07 Jun 08 Set 08 Dec 08
CGD
BCP
BES
S.Totta
BPI
BCP on comparable basis (excluding Interbanco, BCM, Banque BCP, bcpbank Canada) Loans to customers: gross, excluding securitizations. BCP and CGD includes commercial paper. Source of sector data: APB (Associação Portuguesa de Bancos)
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Cheuvreux EMEA Conference
Portuguese Banking SystemMarket shares: loans to customers –Portugal
Retail
(Gross, including securitization)
18.2% 18.6% 18.9% 18.8% 18.8% 18.9% 18.7% 18.6% 18.3% 18.3% 18.3%
23.4% 23.3% 23.1%24.1%
22.8% 22.9% 22.9%
24.7%
11.6% 11.5% 11.6% 11.6% 11.6% 11.6% 11.6% 11.7% 11.6% 11.5% 11.4%
8.8% 8.5% 8.4% 8.4% 8.5% 8.5% 8.5% 8.6% 8.7% 8.8% 8.8%
25.1% 25.1% 25.2%24.6%
25.7% 26.0% 26.0%
24.4%
23.9% 23.4%23.9%
12.3% 12.5% 12.6% 12.6% 12.7% 12.6% 12.5% 12.6% 12.6% 12.5% 12.4%
25.1% 25.0%25.2%
Dec
04
Dec
05
Dec
06
Mar
07
Jun
07
Set
07
Dec
07
Mar
08
Jun
08
Set
08
Dec
08
CGD
BCP
Outros
S.Totta
BES
BPI
Estimated market shares using as souce Bank of Portugal (crédito de outras instituições financeiras a instituições não monetárias, administração pública exceptogovernocentral, sociedades não financeiras e particulares ).BCP and CGD includes commercial paper.
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Cheuvreux EMEA Conference
Portuguese Banking SystemMarket shares: loans to customers –Portugal
SME and Corporate(Gross, including securitization)
17.8%
18.7%19.2% 19.4%
10.5%
16.6% 16.6%
19.1%
18.4%16.4% 18.5%
20.3%
18.7%
20.8%
18.9%19.5%
18.9%
19.3%
16.1%
17.7%
18.7%18.8% 19.1%
12.6%
12.3%13.0% 12.9%
12.7%13.2%
12.5%
12.2%
12.0%
9.7%
11.5%12.0%
11.4%
10.5% 10.6% 10.7%10.8%
10.5% 10.7%10.9%
10.7%
15.4%
14.3%
11.9%
16.8%
13.0% 11.5%
9.9%
12.1%12.5%
12.8%
9.9%
27.8% 27.4% 27.3% 26.8% 26.9% 26.6% 26.6% 26.2% 26.0%
27.8%
29.5%
Dec
04
Dec
05
Dec
06
Mar
07
Jun
07
Set
07
Dec
07
Mar
08
Jun
08
Set
08
Dec
08
CGD
BCP
Outros
S.Totta
BES
BPI
Estimated market shares using as souce Bank of Portugal (crédito de outras instituições financeiras a instituições não monetárias, administração pública exceptogovernocentral, sociedades não financeiras e particulares ).BCP and CGD includes commercial paper.
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Portuguese Banking System Market share: customers’ funds –Portugal
Capitalization insurance considred for CGD as “outside balance sheet” for comparison purposesExcludes EMTNs and CDs.
On balance sheet
32.5%
34.5% 34.8%33.6%
32.4%31.7%
32.9% 33.1% 32.5%
20.1%
22.3%
20.4%21.1% 21.5% 21.9%
15.0% 14.7%
16.2%
8.4%
21.9% 22.7% 22.1%
14.1% 14.6% 14.8%
15.9%15.2%
14.7%
12.1%
12.9%
11.0%
8.3%9.3%
10.4% 12.4%11.0%
9.5%9.4%8.5%8.8%
8.8%
9.5%10.5%
10.4%
9.5%
Dec 04 Dec 05 Dec 06 Jun 07 Set 07 Dec 07 Jun 08 Set 08 Dec 08
CGD
BCP
BES
S.Totta
BPI
1111
Cheuvreux EMEA Conference
Portuguese Banking System Market share: customers’ funds –Portugal
Capitalization insurance considred for CGD as “outside balance sheet” for comparison purposesExcludes EMTNs and CDs.
Total customers’ funds
21.5% 21.9%
29.7% 31.2%
17.0%
21.0%22.5%
21.4%21.2%20.9% 22.4%22.0%
31.2%31.0%29.9% 30.3% 29.8% 30.8% 31.2%
15.1%14.9% 15.2%15.2%14.8%15.9% 16.1% 15.7%
11.0% 11.4%
9.8%9.2%
10.8%
11.1%
10.2%
11.5% 11.9%
10.7%10.9%
11.2% 11.6% 11.0%11.3%
10.5%11.0% 11.0%
Dec 04 Dec 05 Dec 06 Jun 07 Set 07 Dec 07 Jun 08 Set 08 Dec 08
CGD
BCP
BES
S.Totta
BPI
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Cheuvreux EMEA Conference
A particularly challenging year
Macroeconomic slowdown
Financial sector subject to uncertainties and pressures
from multiple variables
Interest rates expected to continue low; increasing cost of funding not entirely reflected in higher loan spreads; asset prices expected to continue depressed
Recent evolution of capital markets together with increasing refinancing needs of the financial sector represent a major challenge to access funding under attractive conditions (cost and term)
New “surprises” at international level are not to be excluded Uncertainty regarding the perspectives of short term economic recovery
Disfunctional markets translate into general shortness of capital and liquidity
Overall uncertainty
Economic recession and increasing unemployment affecting growth, earnings and impairments across the financial sector
Pressure over interest rates and asset prices
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Focus on stabilizing the Bank and managing in a turbulent environment
1st Semester
“Bank Stabilization”
Priorities and Key Initiatives
2nd Semester
“Management under market crisis”
Bank’s management focus:§ Reestablishing institutional stability
(General Meeting, May 27, 2008)§ Strengthening of financial position
€1,300 million capital increase in April 2008Two issues of long-term corporate debt totaling €2,250 million in May 2008
Unparalleled deterioration of the international financial markets -“management under crisis” aiming at immediate results§ Divestment of equity stakes (sale of BPI), portfolio evaluation§ Increase of liquidity contingency levels§ Cost reduction§ Adjustments to credit/liquidity risk pricing
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Highlights 2008
Portugal with recovery on core revenues growth and cost control
1
International operations with impact from current crisis2
Sustained volumes growth, mainly on deposits3
Prudence on risk evaluation. Impairment increased to support current cycle
4
5Adequate capital position and in line with announced target. Capital measures are been considered to meet future regulatory recommendations
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201.2
23.5
225.0563.3
426.2
586.8
FY07 FY08
Net income impacted by BPI stake and adverse market environment(Eur million)
-27.4%
Specific items* in 2008:- BPI stake (-€232.6m)- Reduction of variable
remuneration accrued in 2007 and restructuring costs (+€7.6m)
Net income
* Net of taxes
-64.3%
1,170.01,020.9
FY07 FY08
Operating profit before provisions
+14.6%
(Excluding specific items)
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Resilient core revenues growth
(Eur million)
Core operating income: Net interest income + Dividends + Banking related commissions and other operating income
Excluding specific items
Core operating income(excluding financial market)
* Dividends: € 27.6 million
590.9605.7568.3 578.2560.7
4Q07 1Q08 2Q08 3Q08 4Q08
2,343.12,186.1
2007 2008
+7.2%+5.4%
*
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Strong cost control in an expansion year; qoqdemonstrates focus on efficiency
Excluding specific items
Staff
Depreciation
Administrative
Operating costs
+175
+1,467
Cost-to-income ratio
(Eur million)
925.6
642.6
112.8
884.4
627.4
114.9
2007 2008
+3.3%
1,681.0
34.9 26.327.8 28.4 30.3
216.9239.3230.3 239.1217.2
161.6146.9 169.2164.9181.7
4Q07 1Q08 2Q08 3Q08 4Q08
429.1 416.4433.8 403.5-1.8%
+2.4%
+4.6%
432.0
-4.0%1,626.7
58.6%60.3%-1.7pp
Number of branches*
1,8031,628
Number of employees 22,58921,122
* Net of closures
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45,355 51,682Mortgage
Consumer loans
Loans to companies
Double digit growth in volumes in both loans and on balance-sheet funds
Loans to customers *(gross)
* Excluding securitized loans not presented in the balance sheet and securities reclassified as credit** Includes: deposits, certificates of deposits and debt securities placed with customers
(Eur million)
Off BS customers’funds
Customers’ funds
On BS customers’funds **
14.58218.598
Dec07 Dec08
36,725 40,434
4,877
25,50328,538
4,645
Dec07 Dec08
+10.4%
66,873
63,953
+3.6%66,264
73,849
+13.9%
2,6253,126Securitized loans
+10.1%
+5.0%
+11.9%
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Cheuvreux EMEA Conference
1,11
0,52
0,77
0,40
0,74
0,850,91
0,48
0,94
1,27
4Q07 1Q08 2Q08 3Q08 4Q08
Critical to ensure proactive credit risk management (in credit granting and recovery)
Gross impairment
charges as % of total loans
Impairment net of recoveries as % of total loans
(Million Euros)
Impairment charges as % of total loans(annualized)*
Prudent revaluation of potential risks due to depressed market environment
* Excluding loans placed with customers
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Cheuvreux EMEA Conference
0,22
0,04
0,30
0,55 0,46 0,34
0,39
0,740,480,59
0,850,84
0,48
0,69
0,95
0,47
2001 2002 2003 2004 2005 2006 2007 2008
Critical to ensure proactive credit risk management (in credit granting and recovery)
Gross impairment
charges as % of total loans
Impairment net of recoveries as % of total loans
(Million Euros)
Impairment charges as % of total loans *
Prudent revaluation of potential risks due to depressed market environment
* Excluding loans placed with customers
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Cheuvreux EMEA Conference
Evolution of Past Due ratio in Portugal.
2,52,6 2,6
2,5
2,3 2,3
2,1 2,1
1,92,0
2,1 2,1
1,92,0
1,92,0
1,92,0 2,0 2,0
1,7
2,02,1
2,3 2,3
1,4 1,4 1,4 1,4
1,2 1,21,1
1,0
0,80,7 0,7 0,7 0,7 0,7 0,7 0,7
0,6 0,7 0,7 0,80,7
0,7 0,8
1,0 1,0
2002
Dez
2003
Mar
2003
Jun
2003
Set
2003
Dez
2004
Mar
2004
Jun
2004
Set
2004
Dez
2005
Mar
2005
Jun
2005
Set
2005
Dez
2006
Mar
2006
Jun
2006
Set
2006
Dez
2007
Mar
2007
Jun
2007
Set
2007
Dez
2008
Mar
2008
Jun
2008
Set
2008
Dez
MarketMillennium bcp
Total Past Due ratioSource: Bank of Portugal and Millennium bcp
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Cheuvreux EMEA Conference
An average family with a €100,000 mortgage and a spread of 1% will pay today €104 less than it paid at the peak in 2008, and taking into consideration the evolution of interest rates, is likely to be paying €199 less in July 2009.
€ 601
€ 497
€ 594
€ 402€ 419
0
100
200
300
400
500
600
700
Jan-
08
Apr-
08
Jul-
08
Oct
-08
Jan-
09
Apr-
09
Jul-
09
Simulation: 30 years loan of 100 thousand Euros with 1.00% spread – evolution of instalment
3 m Euribor =1.629%
-33%
There has been an instalment decrease
2323
Cheuvreux EMEA Conference
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Jan-
08
Feb-
08
Mar
-08
Apr-
08
May
-08
Jun-
08
Jul-
08
Aug-
08
Sep-
08
Oct
-08
Nov
-08
Dec-
08
Jan-
09
Feb-
09
Mar
-09
3 Months Euribor
BCE Ref. Rate
Rates came down380 bp in 6 months
Interest rates are at historic low levels
2424
Cheuvreux EMEA Conference
Source: Moody s Global Soverigne – Impact of Global Crisis on EMU – March 2009
Portugal as negligible refinancing risk according to Moodys
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Liquidity positionWholesale funding
(Eur billion)
1.6
0.5
2.6
4.74.00.0
1Q09 2Q09 3Q09 4Q09 FY09 FY10
Maturity
Refinancing needs of long term debt§ Current highly liquid asset
portfolio allows to obtain additional €5bn from ECB
§ Total portfolio of ECB collateralexpected at year end 2009 of around €9bn
§ Already issued €1.5bn with State guarantee
§ State guaranty available of €2.5bn
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Cheuvreux EMEA Conference
Pension Fund – prudence on changing actuarial assumptions
588
7651,568
572
+293
+797 +27 -402+112 -40
Dec07 Expected
return
Asset
devaluation
Non financial
losses
Chg in
discount rate
Chg mortality
table women
Amortization Dec08
Actuarial losses
Corridor
Outside corridor
Fully fundedEffective return of the fund: -14%
(Eur million)
Capital impact: 2008
Change in actuarial losses 827.4
Expected return of the fund (293.2)
Deferred for capital purposes 534.2
Annual amortization estimate for the next 4 years 133.5
Actuarial Assumptions 2007 2008
Increase in future compensation levels 3.25% 3.25%
Pensions increase rate 2.25% 2.25%
Projected rate of return of fund assets 5.50% 5.50%
Discount rate 5.25% 5.75%
Mortality tables
Men TV 73/77 - 1
year
TV 73/77 - 1
year
Women TV 88/90 TV 88/90 - 2
years
2727
Cheuvreux EMEA Conference
Pension Fund discount rate in line with European Actuaries assumptions and below corporate yields
2828
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Pension Fund structure
National
shares24%
European shares9%
International shares
2%Fixed rate
33%
Real Estate
12%
Alternative
Investments
5%
FRNS and Liquidity
15%
National
shares14% European shares
8%International
shares
1%
Fixed rate
21%Real Estate
13%
Alternative
Investments
4%
FRNS and Liquidity
39%
December 2007 December 2008
(million euros)
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Cheuvreux EMEA Conference
7.1%
Core Tier 1 - Perspective
Core Tier 1
RWA** 61,687 66,976
3,8853,8854,364
2,752
Dec07 Sep08 Dec08 Dec08
67,426
Core Tier 1
Tier 1
4.3%
Total
5.5%
9.6%
6.5%
7.8%
11.2%
5.8%
10.5%
* According to the criteria of the Bank of Portugal, Core Tier 1 excludes the deduction related to financial stakes. Figures presented on a comparable basis ** RWA = Risk Weighted Assets*** Assuming a cap of 20% that will be in place for 2009
Solvency ratio
(Eur million)
Proforma with IRB Advanced
7.3%
8.6%
12.4%Estimated impact of the implementation
of IRB Advanced (Basel II)***:
Core Tier I: +156bpTier I: +148bpTotal: +195bp
53,131
*
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Cheuvreux EMEA Conference
Basel II Project: Impact on Capital Ratio
Percentage; Euro millionAll Entities as of December 31st 2008
December-2008
Standardized
Approaches
December-2008
IRB, Int.Model,
Stand.(op.risk)
10% floor
December-2008
IRB, Int.Model,
Stand.(op.risk)
20% floor (2009)
Credit and Counterparty Risk 61.845 47.618 47.618
Market Risk 436 1.089 1.089
Operational Risk 5.143 4.424 4.424
Total 67.425 53.131 53.131
Basel I Proxy 66.340 66.340 66.340RWA reduction floor 10% 20%
RWA floor adjusted 67.425 59.706 53.131
Core Tier 1 3.885 3.885 3.885
Tier 1 (adjusted) 4.780 4.546 4.546
Total Capital (adjusted) 7.057 6.589 6.589
Total Ratio 10,5% 11,0% 12,4%Core Tier 1 Ratio 5,8% 6,5% 7,3%Tier 1 Ratio 7,1% 7,6% 8,6%
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Basel II Project: Major impacts
Euro millionAll Entities as of December 31st 2008
Working Approach:IRB for Portugal and Retail segment in Poland, Standardised for all other entitiesStandardised for Banks, Sovereigns and Equity exposuresNon-Classified customers treated as Standardised
RWA STD RWA IRB/STD Difference
Portugal 45.275 32.630 -12.645 Corporate -1.586Retail (excluding SMEs) -4.290
SMEs -6.757Other -12
Poland 6.028 4.840 -1.188 Retail (excluding SMEs) -1.090SMEs -98
Greece 3.313 3.313 0Other Entities 2.363 2.363 0
Other Assets 4.866 4.472 -394
Credit and counterparty risk 61.845 47.618 -14.227Market risk 436 1.089 653
Operational risk 5.143 4.424 -719
Total Group 67.425 53.131 -14.294
Detail
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Cheuvreux EMEA Conference
Conservative PD and LGD assumptions
PD LGD
PORTUGAL 2,8% 27,2%
Corporate 1,6% 36,0%
Other Retail 3,5% 32,6%
Credit cards 4,6% 40,0%
Residential Retail 3,4% 16,3%
SME Corporate 2,9% 32,0%
SME Retail 3,5% 31,3%
POLAND 2,3% 23,3%
Other Retail 2,4% 35,0%
Credit cards 3,4% 40,3%
Residential Retail 2,0% 14,8%
SME Retail 2,4% 33,5%
3333
Cheuvreux EMEA Conference
Mortgage loans instalment sensitivity to FX and interest rate changes
* As of 31st January 2009
** As of 11 February 2009
The impact from the recent sharp decrease of the CHF interest rates more than compensated the PLN depreciation
ILLUSTRATIVE EXAMPLE
700
800
900
1,000
1,100
1,200
J-08 M-08 M-08 J-08 S-08 N-08 J-09
Evolution of Monthly Instalment in PLN
Initial Loan Amont (PLN) 200,000
Initial Loan Amont (CHF) 87,336
Date of Dirbursement (PLN) Jan-08
Tenor (months) 360Spread 1.30%
Initial 2.76%Current* 0.67%
Initial 2.3Current** 2.8
Market Rate (Libor 90d)
Exchange Rate
Initial 924.5
Current 919.3Monthly Installment (PLN)
Evolution of Exchange Rate and Reference Rate
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Jan08 Mar08 May08 Jul08 Sep08 Nov08 Jan09
1.0
1.5
2.0
2.5
3.0
Libor CHF 90dPLN/CHF
Highest instalment in Dec 08Illustrative
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Cheuvreux EMEA Conference
Re-affirmed credit ratings by all rating agencies
Short term Long term Outlook
Moody's P-1 Aa3 Stable
Standard and Poor's A-1 A
Fitch Ratings F1 A+ Stable
Negative
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Cheuvreux EMEA Conference
A strong position on critical performance vectors
§ Portugal: 2.6 million active clients; largest branch network (918)§ Poland: ~7% market share in deposits and branches (4th largest network);
38% spontaneous awareness in 2008 (ranking 4th in awareness)§ Mozambique: market leader with 40% market share; national
distribution network with >100 branches§ Greece: 4% market share in branches; 15% client growth in 2008
(reaching ~500 thousand); 78% of clients highly satisfied
§ Capture of 174 thousand new retail clients in Portugal in 2008 § Client satisfaction index recovered and reached the highest level in the
past 3 years
§ Reinforcement of Tier 1 from 5.5% in 2007 to 7.1% in 2008. With adoption of IRB advanced, Tier 1 of 8.6%
§ Increase of on balance-sheet customer funds by ~ €3 billion§ Deceleration of commercial gap and wholesale funding
Strong, resilient Retail
Reinforced brand and identity
Reinforced capital and liquidity
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Soundness and Trust
Clients and Performance
Sustainability
The Bank has a management agenda with clear priorities for 2009
1. Rigorous risk management
2. Prudent liquidity and capital management
3. Deep commitment to clients
4. Cost reduction and organizational streamlining
5. Adjustment of business models and materialization of growth opportunities
6. Talent management and employee motivation
Reinforced Commitment
Sustainable value creation
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Five key principles for a new Program “Towards the Future”
Bank with long-lasting relationships – focus on relationships (more than on products and transactions), increase proximity and frequent contact with clients, long term commitment
“Commitment to clients”
Bank with strong risk management and capital optimization capabilities– effective use of capital and liquidity, proactive risk perspective, strengthening of credit decision processes, rigorous operational risk control
“Effective risk management”
Leaner, simpler and more cost-effective bank – in the organizational structure, internal processes, relationship with clients, business lines, and even product and services offer
“Simplicity and efficiency”
Bank with options – portfolio of operations where the Bank can “make a difference” and add value, which contribute to growth, risk diversification and value creation for the Group in the long term
“Diversified international
presence”
Bank focused on its capabilities – bank focused on its distinctive capabilities and competitive advantages: retail/commercial banking, branch network based distribution, employees experience and know-howacross geographies
“Focus on capabilities”
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Banco Comercial Português, S.A., a public company (sociedade aberta) having its registered office at Praça D. João I, 28, Oporto, registered at the Commercial Registry of Oporto, with the single commercial and tax identification number 501 525 882 and the share capital of EUR 4.694.600.000
Investor Relations Division:
Pedro Esperança Martins, Head of Investor Relations
Francisco Pulido Valente
Tl: +351 21 1131 085
Email: [email protected]
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Appendices
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Portuguese Banking System Market shares
Activity in Portugal market shares of the five biggest banks, except CGD and Santander that includes all activities. Analysis excluding specific items .
Net Interest Income (NII) Commissions
25.7% 26.0%
23.2% 22.7% 22.1% 21.9% 21.9% 22.3% 22.3% 22.3%
33.7% 33.0%
36.9% 37.7%38.7% 38.6% 39.1% 39.2% 39.2% 38.9%
15.3% 15.3% 15.7% 15.7% 15.7% 15.8% 15.5% 15.2% 15.2% 15.6%
10.9% 11.0% 10.2% 10.1% 9.9% 9.9% 9.2% 9.2% 9.2% 9.2%
14.1%14.1%14.1%14.3%13.8%13.7%13.7%14.0%14.8%14.5%
Dec 04 Dec 05 Dec 06 Jun 07 Set 07 Dec 07 Mar 08 Jun 08 Set 08 Dec 08
CGD
BCP
Totta
BES
BPI
28.9% 28.8%28.0% 27.6%
26.9% 26.7%26.0%
16.8% 17.1%18.2% 18.1% 18.2%
18.8%
26.6%25.5%
23.1%23.7%
24.3% 23.8%
13.8%13.2% 13.4% 13.6% 13.5%
14.2%13.7%
12.7% 12.5% 12.5%
26.1%25.8%
24.3%
18.2%
20.4%20.2%
19.7%
24.3%23.8%24.1%
25.2%
13.9%
15.4%
17.3% 17.0% 17.0% 16.5%
18.7%
17.7%17.5%
16.8%
Dec 04 Dec 05 Dec 06 Jun 07 Set 07 Dec 07 Mar 08 Jun 08 Set 08 Dec 08
CGD
BCP
S.Totta
BES
BPI
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Portuguese Banking System Operating profit and costs (Portugal) – market shares
Activity in Portugal market shares of the five biggest banks, except CGD and Santander that includes all activities. Analysis excluding specific items .
24.7% 24.2%23.5% 23.4%
22.5% 23.3% 23.3% 23.4%
28.5% 28.0%
31.2% 31.9%32.7% 32.7%
33.4% 33.8% 34.0% 33.7%
18.8% 18.5% 17.9% 18.1% 18.2% 18.2% 18.1% 17.6% 17.6% 18.0%
11.8% 11.6% 11.2% 11.1% 11.0% 11.2%10.4% 10.2% 10.1% 10.1%
26.9%26.7%
14.3% 15.0% 15.0% 14.7% 14.7% 14.6%15.5% 15.1% 15.0% 14.8%
Dec 04 Dec 05 Dec 06 Jun 07 Set 07 Dec 07 Mar 08 Jun 08 Set 08 Dec 08
CGD
BCP
S.Totta
BES
BPI
NII + Commissions NII + Commissions + Other Income
25.4% 24.8%24.1% 24.1%
23.3% 23.8% 23.5% 23.3%
28.6% 28.0%
31.9% 32.4%33.3% 33.2% 33.7% 34.2%
34.9% 35.0%
17.9% 18.0%17.3% 17.7% 17.7% 17.7% 17.5% 17.1% 17.0% 17.4%
11.2% 11.3% 10.9% 10.7% 10.6% 10.9% 10.4% 10.3% 10.0% 10.0%
28.5% 27.9%
14.4%14.6%14.7%15.0%14.2%14.2%14.3%14.5%14.8%13.8%
Dec 04 Dec 05 Dec 06 Jun 07 Set 07 Dec 07 Mar 08 Jun 08 Set 08 Dec 08
CGD
BCP
S.Totta
BES
BPI
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Portuguese Banking System Operating profit and costs (Portugal) – market shares
Activity in Portugal market shares of the five biggest banks, except CGD and Santander that includes all activities. Analysis excluding specific items .
Operating Profit Operating Costs
23.2%21.2% 21.5% 21.6% 21.0% 21.5% 21.2%
22.2%
31.0%33.1%
36.2% 36.5% 36.3% 35.5% 35.4% 35.6%
38.6%
17.8% 17.6% 17.0% 16.5% 16.2%
11.0% 10.5% 10.7% 10.9% 10.8%11.7% 12.0%
11.2% 10.3%9.5%
25.6%27.1%
38.2%
18.0%17.4%18.1%18.5%18.9%
13.1% 13.3% 13.0%12.4% 12.9% 13.1%
14.1% 13.7% 13.7% 13.6%
Dec 04 Dec 05 Dec 06 Jun 07 Set 07 Dec 07 Mar 08 Jun 08 Set 08 Dec 08
CGD
BCP
S.Totta
BES
BPI
24.4%23.4% 23.6% 23.4% 22.8% 22.7% 22.4% 21.9%
32.6%
36.0% 36.8% 36.9% 36.6% 36.9% 36.0% 36.3% 36.7% 38.1%
16.0% 15.8% 16.2% 16.1% 16.3% 16.1% 16.8% 17.0% 17.2% 16.9%
10.7% 10.8% 11.5% 12.2% 12.3% 12.4%13.2% 12.9% 12.6% 12.1%
29.4%
26.6%
11.0%11.1%11.1%11.3%11.2%11.2%11.3%11.0%10.9%11.3%
Dec 04 Dec 05 Dec 06 Jun 07 Set 07 Dec 07 Mar 08 Jun 08 Set 08 Dec 08
CGD*
BCP
S.Totta
BES
BPI
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RWA Calculation – Standardized Approach
Percentage; Euro millionAll Entities as of December 31st 2008 Other Entities BCP Group
RWA Portugal Poland Greece Others BCP
Total corporate (not including receivables); of which: 10.515 1.853 487 875 13.731
Corporate (not including SMEs, specialised lending and receivables) 8.543 1.611 479 875 11.510
Specialised lending (SL) 1.972 242 8 0 2.221
Sovereign 30 29 0 532 591
Bank 681 346 19 60 1.107
Retail (not including SMEs); of which: 13.105 2.948 1.331 790 18.175
Residential mortgages 9.081 1.518 637 504 11.740
Other retail 3.623 1.281 587 281 5.772
Qualifying revolving retail exposures 402 149 107 5 663
SMEs; of which: 19.104 781 1.393 105 21.382
Treated as corporate 15.681 209 1.139 68 17.097
Treated as retail 3.423 571 253 37 4.285
Purchased receivables (PR) 1.310 71 83 1.464
with recourse 676 71 62 809
without recourse 634 0 21 655
Securitization 530 530
Other assets 4.866
Total RWA 45.275 6.028 3.313 2.363 61.845
436
5.143
67.425RWA DEC-2008
EU entities
Market Risk
Operational risk
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RWA Calculation – IRB approach
Percentage; Euro millionAll Entities as of December 31st 2008
Other Entities BCP Group
RWA Greece OthersIRB STD IRB STD STD STD IRB STD
Total corporate (not including receivables); of which: 8.432 836 0 1.853 487 875 8.432 4.052 12.484
Corporate (not including SMEs, specialised lending and receivables) 6.263 836 0 1.611 479 875 6.263 3.803 10.066Specialised lending (SL) 2.168 0 0 242 8 0 2.168 249 2.417
Sovereign 0 30 0 29 0 532 0 591 591Bank 0 681 0 346 19 60 0 1.107 1.107Retail (not including SMEs); of which: 8.315 500 1.602 256 1.331 790 9.917 2.877 12.795
Residential mortgages 6.472 376 877 71 637 504 7.348 1.588 8.936Other retail 1.663 105 651 178 587 281 2.314 1.151 3.465
Qualifying revolving retail exposures 181 20 74 7 107 5 255 138 393SMEs; of which: 11.871 476 115 570 1.393 105 11.986 2.543 14.529
Treated as corporate 10.259 354 0 209 1.139 68 10.259 1.771 12.029Treated as retail 1.612 122 115 360 253 37 1.727 773 2.500
Purchased receivables (PR) 968 3 2 67 83 970 153 1.122
with recourse 334 3 2 67 62 0 336 132 468without recourse 634 0 0 0 21 0 634 21 655
Securitization 518 0 0 0 0 0 518 0 518Other assets 956 3.516 4.472
Total RWA 30.104 2.526 1.719 3.121 3.313 2.363 32.778 14.839 47.618
TOTAL 3.313 2.363 47.618
1.089
4.424
53.131RWA DEC-2008
EU entities
Market Risk
Operational risk
32.630 4.840
Portugal
53.131
Poland BCP
47.618
1.089
4.424
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Alternatives for increasing Banco Comercial Português’sown funds
1. The levels of own funds reported as of December 31, 2008 (Core Tier 1 of 5,8%, Tier 1 of 7,1% and a Total Solvency ratio of 10,5%) are in line with the previously-announced goal of operating with a Core Tier 1 of around 6%. It should be noted, in this context, that the favourable impact on Core Tier 1, and the other indicators, resulting from the capital increase of Banco Millennium Angola, which has been approved and which will boost Core Tier 1 by 0,12%, is not reflected in the values provided for December 2008, nor are the favourable impacts that are expected to occur in 2009, resulting from the application of the IRB Advanced methodology, under Basel II, with a favourable impact on Core Tier 1 of around 1.5%.
2. Given the context outlined in point 1, the Bank is considering, in addition to the steps that will result from the execution of the previously-announced strategy (which includes the refocusing of the portfolio of international operations, which will also yield favourable impacts on solvency ratios), on a supplementary basis, and to the extent recommended from a perspective of prudent capital management, to issue non-dilutive financial instruments (that is, excluding common stock and instruments that are convertible into common stock) with characteristics that allow them to be included in the capital base.
By way of example, these instruments include subordinated perpetual bonds, such as those issued recently by various European banks.
During the press conference held on February 17, 2009, and for illustrative purposes, it was mentioned that, as of December 31, 2008, and considering the limit set by the Bank of Portugal for hybrid instruments eligible for own funds, the Bank could issue up to a maximum of 1,200 million euros, though it is to be expected that the amount that will actually be issued will be below the maximum mentioned. The amount value will depend on the expected impact and the timing of the other measures mentioned.
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Qualified Shareholdings according to shareholders information
Share capital : 4,694,600,000 shares
Sonangol 469,000,000 9.99% Eureko Group (1) 331,956,248 7.07% Grupo Teixeira Duarte (2) 329,755,255 7.02% Berardo Group (3) 292,141,478 6.22% Banco Sabadell 208,177,676 4.43% Caixa Geral Depósitos Group 177,607,866 3.78% Grupo EDP (4) 152,075,727 3.24% Sogema 125,766,734 2.68% Privado Financeiras 109,461,901 2.33% Stanley Ho Group 106,254,934 2.26% SFGP - Investimentos e Participações 102,062,855 2.17%
Total 2,404,260,674 51.21%
Number of Shares % Capital
(1) Although Eureko has entered into a series of derivative transactions with JP Morgan regarding 135,238,429 BCP shares, the Portuguese Securities Market Commission (CMVM) considers that the voting rights inherent to those shares should be attributed to Eureko, thus increasing its participation to 9.95% of total voting rights. (2) Teixeira Duarte- Sociedade Gestora de Participações Sociais , S.A. informed, through an announcement dated December 12, that its subsidiary Teixeira Duarte – Gestão de Participações e Investimentos Imobiliários , S.A. has agreed to acquire 102,483,872 BCP shares from C+P.A. - Cimentos e Produtos Associados , S.A., and therefore the voting rights related to those shares should be attributable to the former (3) The shares and voting rights held by Fundação José Berardo and Metalgest are subject to reciprocal imputation. Therefore, Metalgest stake, 64,106,512 shares, was included (4) EDP Pension Fund held 52,805,044 BCP shares, corresponding to 1.125% of the bank share capital
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Consolidated Balance SheetAt 31 December, 2008 and 2007
2008 2007
Assets
Cash and deposits at central banks 2.064.407 1.958.239 Loans and advances to credit institutions Repayable on demand 1.048.348 820.699 Other loans and advances 2.892.345 6.482.038 Loans and advances to customers 75.165.014 65.650.449 Financial assets held for trading 3.903.267 3.084.892 Financial assets available for sale 1.714.178 4.418.534 Assets with repurchase agreement 14.754 8.016 Hedging derivatives 117.305 131.069 Financial assets held to maturity 1.101.844 - Investments in associated companies 343.934 316.399 Non current assets held for sale 19.558 24.180 Property and equipment 745.818 699.094 Goodwill and intangible assets 540.228 536.533 Current tax assets 18.127 29.913 Deferred tax assets 586.952 650.636 Other assets 4.147.645 3.355.470
94.423.724 88.166.161
Liabilities
Amounts owed to central banks 3.342.301 784.347 Amounts owed to others credit institutions 5.997.066 8.648.135 Amounts owed to customers 44.907.168 39.246.611 Debt securities 20.515.566 26.798.490 Financial liabilities held for trading 2.138.815 1.304.265 Other financial liabilities held for trading at fair value through results 6.714.323 1.755.047 Hedging derivatives 350.960 116.768 Provisions for liabilities and charges 221.836 246.949 Subordinated debt 2.598.660 2.925.128 Current income tax liabilities 4.826 41.363 Deferred income tax liabilities 336 46 Other liabilities 1.383.633 1.399.757
Total Liabilities 88.175.490 83.266.906
Equity
Share capital 4.694.600 3.611.330 Treasury stock (58.631) (58.436) Share premium 183.368 881.707 Preference shares 1.000.000 1.000.000 Fair value reserves 214.593 218.498 Reserves and retained earnings (274.622) (1.598.704) Profit for the period attributable to Shareholders 201.182 563.287
Total Equity attributable to Shareholders of the Bank 5.960.490 4.617.682
(Thousands of Euros)
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Consolidated Statement of IncomeAt 31 December, 2008 and 2007
2008 2007
Interest income 5.269.597 4.332.187 Interest expense (3.548.549) (2.794.884)
Net interest income 1.721.048 1.537.303
Dividends from equity instruments 36.816 27.921 Net fees and commission income 740.417 664.583 Net gains / losses arising from trading and hedging activities 277.631 199.138 Net gains / losses arising from available for sale financial assets (259.532) 193.211 Other operating income 57.580 97.861
2.573.960 2.720.017
Other net income from non banking activity 17.390 12.925
Total operating income 2.591.350 2.732.942
Staff costs 915.307 1.006.227 Other administrative costs 642.641 627.452 Depreciation 112.843 114.896
Operating costs 1.670.791 1.748.575
920.559 984.367
Loans impairment (544.699) (260.249) Other assets impairment (60.024) (45.754) Other provisions 15.500 (49.095)
Operating profit 331.336 629.269
Share of profit of associates under the equity method 19.080 51.215 Gains from the sale of subsidiaries and other assets (8.407) 7.732
Profit before income tax 342.009 688.216 Income tax Current (44.001) (73.045) Deferred (39.997) 3.475
Profit after income tax 258.011 618.646
Attributable to: Shareholders of the Bank 201.182 563.287 Minority interests 56.829 55.359
Profit for the period 258.011 618.646
(Thousands of Euros)
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Consolidated Statement of Income (Quarterly Evolution)
At 31 December, 2008 and 2007
∆
(*) In 2007, Q2 : general tender offer over BPI commissions (88.7 - 23.2);Q3 : restructuring costs (12.3 - 3.3);Q4 : merger project with BPI commissions (14.5 - 3.8), restructuring costs (109.5 - 29.0), gains from the sale of EDP and
Sabadell (290.2 - 17.6), BPI and other impairment (94.0 - 14.3), asset revaluations (13.4 - 3.5) and contingencies (47.5 - 6.6).In 2008, Q1 : BPI impairment (151.3 - 20.0) and 2007 variable annual remuneration reversal (18.0 - 4.8);
Q2 : BPI impairment (50.9 - 6.7); Q3 : BPI impairment (44.7 - 5.9);Q4 : BPI impairment (21.1 - 2.8) and restructuring costs (7.8 - 2.1).
(Millions of euros) ? %
08 / 07
Net interest income 388 412 430 435 444 1,721 1,537 12%
Dividends from equity instruments 5 2 28 - 0 8 37 28 32%Net fees and commission income 199 174 194 185 187 740 768 - 4%Other operating income 35 30 18 16 2 67 119 - 44%Net inc. from trading activity 27 36 52 50 148 286 196 46%
Operating income 654 654 721 685 790 2,851 2,648 8%
Staff costs 217 230 239 239 217 926 884 5%Other administrative costs 182 147 165 162 169 643 627 2%Depreciation 35 26 28 28 30 113 115 - 2%
Operating costs 434 404 432 429 416 1,681 1,627 3%
Operating profit before provisions 220 251 289 256 374 1,170 1,021 15%
Equity accounted earnings 9 14 14 7 - 17 19 51 - 63%Loans impairment (net of recoveries) 87 70 136 135 204 545 260 109%Other provisions 3 3 - 9 20 31 45 34 31%
Profit before income tax 139 192 176 109 122 600 778 - 23%
Income tax 16 43 29 12 33 117 136 - 14%Minority interests 14 17 16 18 6 57 55 3%
Net income before spec. items 108 133 131 80 83 426 587 - 27%
Specific items (*) 51 - 118 - 44 - 39 - 24 - 225 - 24 >500%Net income 160 15 87 41 59 201 563 - 64%
Year-to-dateQuarterly
Q4 07 Dec 07Dec 08Q4 08Q3 08Q2 08Q1 08
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Consolidated Statement of Income (National and International Operations)
At 31 December, 2008 and 2007
(EUR Thousands, except percentages)
Dec08 Dec07 ? % Dec08 Dec07 ? % Dec08 Dec07 ? % Dec08 Dec07 ? % Dec08 Dec07 ? % Dec08 Dec07 ? % Dec08 Dec07 ? %
Interest income 5,270 4,332 21.6% 3,952 3,431 15.2% 1,318 901 46.2% 711 425 67.1% 100 86 17.3% 377 271 39.3% 130 120 8.3%Interest expense 3,549 2,795 27.0% 2,757 2,327 18.5% 792 468 69.3% 431 222 94.4% 22 18 20.1% 251 154 62.9% 88 73 19.4%Net interest income 1,721 1,537 12.0% 1,195 1,104 8.3% 526 434 21.3% 280 204 37.4% 78 67 16.5% 126 116 8.1% 42 46 -9.4%
Dividends from equity instruments 37 28 31.9% 29 27 6.5% 8 0 >200% 7 0 >200% 0 0 >200% 0 0 111.1% 0 0 31.2%Intermediation margin 1,758 1,565 12.3% 1,224 1,131 8.2% 533 434 22.9% 287 204 40.7% 78 67 16.5% 126 117 8.2% 42 46 -9.4%
Net fees and commission income 740 768 -3.6% 535 563 -5.0% 206 205 0.3% 135 143 -6.1% 22 19 20.7% 32 28 13.9% 16 15 10.3%Other operating income 67 119 -43.8% 54 96 -44.0% 13 23 -43.3% 2 15 -86.0% 5 3 43.6% 2 5 -64.4% 4 0 >200%Basic revenue 2,565 2,452 4.6% 1,813 1,790 1.3% 752 662 13.6% 424 362 17.1% 106 89 18.4% 160 150 6.8% 63 61 2.4%
Net inc. from trading activity 286 196 45.9% 139 80 74.1% 148 117 26.6% 99 87 13.7% 14 11 28.4% 8 7 6.1% 26 11 146.2%Operating income 2,851 2,648 7.7% 1,951 1,869 4.4% 900 779 15.5% 523 449 16.4% 120 100 19.5% 168 157 6.8% 89 72 23.6%
Staff costs 926 884 4.6% 614 623 -1.5% 311 261 19.2% 174 142 22.2% 26 22 14.8% 62 54 15.5% 50 43 16.6%Other administrative costs 643 627 2.4% 377 407 -7.4% 265 220 20.6% 142 112 26.1% 22 19 13.4% 55 51 8.1% 47 38 24.5%Depreciation 113 115 -1.8% 67 69 -3.4% 46 45 0.7% 20 23 -12.6% 7 7 -7.2% 9 8 17.3% 10 7 32.3%Operating costs 1,681 1,627 3.3% 1,058 1,100 -3.8% 623 527 18.2% 335 277 20.9% 54 49 11.0% 126 112 12.3% 107 88 21.3%
Operating profit bef. imp. 1,170 1,021 14.6% 893 769 16.1% 277 252 10.0% 188 172 9.3% 66 51 27.7% 42 45 -7.0% -18 -16 11.3%
Equity accounted earnings 19 51 -62.7% 19 51 -62.7% 0 0 0 0 0 0 0 0 0 0
545 260 109.3% 470 220 113.5% 75 40 86.3% 37 17 125.1% 1 6 -75.7% 16 15 12.5% 19 3 >200%
Other provisions 45 34 31.0% 41 33 25.3% 3 1 199.1% 2 1 54.7% 1 0 >200% 0 0 -15.0% 0 0 >200%Profit before income tax 600 778 -22.9% 401 567 -29.3% 199 211 -5.5% 149 154 -3.5% 63 46 38.4% 25 30 -16.5% -38 -19 98.9%
Income tax 117 136 -14.0% 70 94 -25.4% 47 42 11.6% 31 32 -4.8% 11 4 189.9% 10 8 26.8% -5 -2 149.8%Minority interests 57 55 2.7% -2 -1 69.4% 58 56 3.7% 0 0 1 0 11.3% 0 0 16.3% 58 56 3.7%Net income before spec. items 426 587 -27.4% 332 474 -29.9% 94 112 -16.5% 118 122 -3.2% 52 41 24.6% 15 22 -31.4% -91 -73 24.5%
Specific items -225 -24 >200% -225 -24 >200% 0 0 0.0% 0 0 0.0% 0 0 0.0% 0 0 0.0% 0 0 0.0%Net income 201 563 -64.3% 107 451 -76.2% 94 112 -16.5% 118 122 -3.2% 52 41 24.6% 15 22 -31.4% -91 -73 24.5%
Loans impairment (net of recoveries)
Millennium bim (Moz.)
International operations
Group Portugal Total Bank Millennium (Poland) Millennium Bank (Greece) Other int. operations
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Banco Comercial Português, S.A., a public company (sociedade aberta) having its registered office at Praça D. João I, 28, Oporto, registered at the Commercial Registry of Oporto, with the single commercial and tax identification number 501 525 882 and the share capital of EUR 4.694.600.000
Investor Relations Division:
Pedro Esperança Martins, Head of Investor Relations
Francisco Pulido Valente
Tl: +351 21 1131 085
Email: [email protected]