2005 results presentation · 1q11 results presentation (unaudited figures) 2nd may 2011. 1

1Q11 Results Presentation(Unaudited Figures)

2nd May 2011

11Q11 Results Presentation

2 May 2011

The global macroeconomic environment was marked, in 1Q 2011, by a deterioration of the sovereign risk crisis in the Euro

Area and by an increase in global inflationary pressures, in this case as a result of higher commodity prices. There were

signs of growth moderation in the main economic areas by the end of the quarter (namely in the US).

Anticipating a new cycle of policy rate hikes by the ECB, market interest rates were higher in the Euro Area, both at the

short and long end of the curve. In this context, the euro appreciated from EUR/USD 1.337 to EUR/USD 1.419 in the quarter

and now stands at close to EUR/USD 1.49.

In Portugal, the non approval in Parliament of a new Stability and Growth Programme and the consequent resignation of the

Government resulted on cumulative five rating downgrades by S&P, Fitch and Moody’s and in a further deterioration of

investor sentiment, with 10-year Government Bond yield spread vs. Germany rising 142bps in the quarter, to 505bps (with a

further increase to 634bps by the end of April). Increasing constraints associated with external market funding eventually

led to a formal request of external assistance to the European Commission. Negotiations over a Stabilization Programme

are currently under way with the IMF/EC/ECB and are expected to reach an agreement in mid May with a programme

approved by the main political parties in Portugal.

Exports continue to support economic activity, with close to 22% YoY nominal growth in the quarter ending in February.

However, the adjustment under way in domestic demand should have resulted in a QoQ retreat in real GDP.

The deleverage of the economy is underway, with net external financing needs declining, in 2010, from 9.7% to 8.5% of GDP

and with the domestic savings rate (including all sectors of the economy) rising to 9.2% of GDP in 4Q 2010. In this context,

Portuguese Banks’ deposits have continued very resilient in 1Q 2011. Also, Banks hold ample external assets, which can be

an important source of liquidity in the current situation. Unlike in Ireland or Spain, Portuguese banks haven’t been facing

any hangover of a bubble bursting in house prices.

Foreword: Macroeconomic highlights


2 May 2011

The decision to request financial aid was catalysed by the intensification of rating downgrades in March and April 2011, especially after the start of the political crisis.

Source: Rating Agencies and Bloomberg

15 Mar

23 Mar

24 Mar

24 Mar

29 Mar

1 Apr

5 Apr

6 Apr

Moody’s downgrades Portuguese Republic from A1

to A3/Negative/P2

4th Growth & Stability Programme rejected by the

Parliament

S&P downgrades Portuguese Republic from A- to BBB/Negative/A2

Fitch downgrades Portuguese Republic from A+

to A-/Negative/F2

S&P downgrades Portuguese Republic from BBB to BBB-/Negative/A3

Fitch downgrades Portuguese Republic from A-

to BBB-/Negative/F3

Moody’s downgrades Portuguese Republic from A3

to Baa1/Negative/P2

The Portuguese Government announced the

financial aid request

0

250

500

750

1000

Dec-09 Jun-10 Nov-10 Apr-11

Portugal BES

BES 641

Portugal 653

5Y CDS: BES and Portugal The Portuguese Government announced the

financial aid request


2 May 2011

A tough environment requires strict financial disciplineDespite the massive ratings downgrades of Portugal and all the Portuguese banks, BES CDS spreads were top performers among the

Iberian Banks in 2011 YTD.

In an environment of scarce access even to short term wholesale markets, while longer maturities have been closed for Portuguese

banks for one year, BES has implemented in the second half of 2010 a strict plan to deleverage the balance sheet, aiming to reach a loan

to deposits ratio of 120% by Yend 2012, which should provide liquidity to cope with debt maturities in a scenario of continued lack of

well functioning markets. Through the disposal of international loans and a focus on growing core deposits, BES has been able to show

already encouraging results in the last three quarters. In fact, the LTD ratio decreased from 198% in June 2010 to 163% in March 2011.

The use of ECB facilities has been important to cope with short term liquidity management, namely as the maturities of 2011 are highly

concentrated in the first quarter (over 60% of MLT debt maturing in the year), while the deleverage is expected to have more gradual

results throughout the year. In any case, as ECB is seen as a last resort and not a normal funding source, BES expects to reach the end

of 2012 with a use of ECB funds with a cap of 5% of net assets.

Additionally, management has also been adopting measures aiming to reinforce solvency ratios, with a focus on core capital, ahead of

the establishment of new regulatory minimum levels, and despite a conservative risk profile in its balance sheet with a very limited

exposure to European sovereign debt and a strong credit provisioning coverage on top of resilient asset quality. Core tier I of 7.9%

under IRB should be reinforced to 8.2% following the sale of a Bradesco stake announced last 28th April, while Tier I of 8.8% should be

reinforced c. 60 bp to 9.4% with that same transaction.

Profitability represents an additional challenge, pressured by domestic macro conditions and costs of the deleverage plan with impact

on the P&L. Management is implementing a strong programme of cost cutting with immediate measures aiming to reach a flat operating

cost base YoY by Yend 2011.

International business provide a stream of strong performance and significant prospects for future growth.

The measures management is taking reflect a strict financial discipline, with a strong focus on conservatively managing liquidity in a

scenario of limited availability of wholesale market funds and reinforcing solvency ratios in a very challenging environment.


2 May 2011

BES continues to follow a clear path based on four pillars: long-term profitability, deleverage plan, strong solvency, and high provision coverage

The deleverage BES is implementing since the 2H2010 is on track to reach a 120% LTD ratio by Ye 2012 Management expects to maintain a use ECB facilities at YE 2011 with a cap of 5% of net assets, with full year debt maturities paid with the proceeds of balance sheet deleverage (MLT debt maturing in 1Q11 represents over 60% of full year 2011)

BES strong provision coverage (3.47% of gross loans or Eur1.8bn) provides flexibility to accommodate expected deterioration in asset quality resulting from domestic economic conditionsTrack record of resilient asset quality, with NPL ratios consistently below the average of Portuguese system

Liquidity and Funding

Asset quality

Long term profitability

Solvency

BES international presence in strong growth emerging economies is key to compensate domestic slowdown and sustain future profitability International business already account for 44% of Consolidated Commercial Banking Income, +8 p.p. vis-à-vis 1Q10Implementation of cost cutting measures aiming to reach flat cost growth in 2011 (consolidated)

Core Tier I of 8.2% (pro-forma considering the sale of Bradesco stake) places BES in a strong capital position, with limited sovereign exposure and strong provision buffer.Possibility of increasing hybrid capital from a current weight of 15% in Tier I up to 35%

Deleverage of the Balance Sheet aiming to reach a 120% LTD

ratio

Strict monitoring of asset quality, with

continued reinforcement of

provision coverage

Increased contribution of International

business

Reinforce capital ratios with a focus on Core

Tier I

Main Challenges BES Strategic guidelines Description


2 May 2011

Main KPI reflect the increasing contribution of international business, the continuous focus on balance sheet deleverage, the reinforcement of solvency ratios and the strong provision coverage

56.0

37.3

48.1

1Q10 4Q10 1Q11

3.473.383.07

2.382.29

2007 2008 2009 2010 1Q11

Long-term Profitability: strong growth in international business

Liquidity & funding: deleverage of the B/S

Solvency: reinforcement of capital ratios Asset quality: strong provision coverage

198%

171%165%

163%

2Q10 3Q10 4Q10 1Q11 2012 YE

Loans to Deposit Ratio

+16.5%

International Net income (Eur mn)

120%

6.8

8.89.4

8.27.97.9

5.8

8.1

1Q09 1Q10 1Q11 1Q11 w/Bradesco

sale

CoreTier I

Core Tier I & Tier I (%) B/S provisions as % of Gross Loans

BoP8%

Pro-forma, including expected impact of Bradesco

sale: c.30bps on Core and c. 60 bps on

Tier I


2 May 2011

Table of contents

I. 1Q 2011 Performance: international business key to compensate pressure on domestic

profitability

II. Strict financial discipline: deleverage of the balance sheet provide a solid ground to

cope with funding and liquidity needs

III. Strong and conservative solvency: reinforced core capital above 8%, with limited

sovereign exposure

IV. Conservative risk management: increased provision reserve to anticipate asset quality

deterioration

V. Wrap up

Appendix 1: Detailed financial data

Appendix 2: Macro fundamentals and forecasts: Portugal, Spain, Angola and Brazil


2 May 2011

(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 YoY

253.7 7.0%

-1.1%

3.5%

3.4%

n.a.

n.a.

-5.4%

8.6%

-18.6%

-10.4%

-24.1%

-0.8%

o.w. Special tax on banks 0.0 0.0 0.0 0.0 7.6 n.a. n.a.

Proforma Net Income excl. impact of loan sales 119.1 163.0 123.3 105.1 96.1 -19.3% -8.6%

80.0%

-48.9%

191.8

445.4

97.1

12.7

o.w. Sale of other assets -0.6 -2.6 1.9 35.4 -38.6 n.a.

555.2

269.1

286.1

115.1

171.0

30.1

QoQ

+ Net Interest Income

21.7

119.1

292.7

197.8

490.5

97.8

-1.9

586.4

294.2

292.2

123.7

168.5

-8.6

14.1

163.0

-0.1%271.4

201.8

473.2

128.1

52.9

654.2

315.5

338.7

182.8

155.9

-10.8

61.7

-6.1%

-2.6%

-21.6%

n.a.

-19.7%

-7.4%

-31.2%

-43.6%

-16.8%

n.a.

-36.7%

-42.1%

346.2 271.3

105.1

Fees and Commissions 215.5 189.6+

=

+

+ Other results 0.2 -35.9

= Net Income 123.3 60.9

=

-

=

-

=

-

Commercial Banking Income 561.8 460.9

Capital Markets Results 46.1 100.4

Banking Income 608.0 525.3

Operating Costs 290.6 292.3

Net Operating Income 317.4 233.0

Net Provisions 112.0 103.1

Income Bef. Taxes and Minorities 205.4 129.8

Taxes 33.1 29.9

Minority Interests 49.0 39.1-

1Q 2011 results overall in line with recent trends, though impacted by Eur 1.1 bn ofloan portfolio sales with a net negative impact of Eur 35.2 mn

Includes Eur 41mn of loan sales’ negative impact (net: Eur 35.2

mn)


2 May 2011

Consolidated banking income decreased 5.4% YoY to Eur 525mn. Without the negative impact of loan portfolio sales it would have reached Eur 566mn, increasing 2% YoY

Consolidated NIM & NII: growth backed by international business

Fees & Commissions: In line YoY and down QoQ, reflecting traditional seasonality

Banking Income: supported by international activity, but impacted by loan sales and domestic weakness

(%; Eur mn)

254 271 271

141152 156

0

50

100

150

200

250

300

350

400

1Q10 4Q10 1Q110.00%

5000.00%

10000.00%

15000.00%

20000.00%

NII

NIM

+7.0% (Eur mn)

192 202 190

0

50

100

150

200

250

300

1Q10 4Q10 1Q11

-1.1%

100

128

97

1Q10 4Q10 1Q11

Trading: Keeping the strong performance

(EUR mn)

+3.4%(EUR mn)

525

654555

41

0

100

200

300

400

500

600

700

1Q10 4Q10 1Q11

-5.4% Without the Eur 41mn negative impact of

loan sales, Banking income

would have reached

Eur566mn (+2% YoY)


2 May 2011

207234

211

0

50

100

150

200

250

300

1Q10 4Q10 1Q11

269316

292

0

50

100

150

200

250

300

350

400

1Q10 4Q10 1Q11

1Q10 4Q10 YoY QoQ

Admin 100.6 117.2 107.5 6.8% -8.3%

174.0

24.3

315.5

144.9

23.7

269.1

1Q11

Staff 158.7 9.6% -8.8%

Total 292.3 8.6% -7.4%

26.1Depreciation 10.3% 7.6%

63

82 81

0

20

40

60

80

100

120

1Q10 4Q10 1Q11

International operating costs

Domestic operating costs

(Eur mn)

(EUR mn)

+2.2%

Costs under control at domestic level and increasing abroad as international investments continued. Management is implementing a set of cost cutting measures aiming to reach a YoY flat cost base by Yend 2011

Operating costs affected by international expansion (namely the consolidation of Execution Noble) and by the effect of incorporation of domestic employees in Social Security. Excluding these effects, costs would

have increase just 1% YoY

+8.6%

+29.5%

Operating costs

(Eur mn)


2 May 2011

In the past years, BES has closed 82 branches and has a pipeline of 20 additional closures identified for 2011 (Total: 102). The continuous pursuit of the rightsizing of the Retail Banking network can also be observed on the important amount of branches with 3 or less employees: 38% of the total network

14%

17%

22%

12%

14%

14%

7%

Branch Size as a function of the number of employees (% of total branches)

>6

6

5

4

3

2

1

38%

Employees 100%

20 102

14

320

12

6

27

2006 2007 2008 2009 2010 YTD2011

Planned Total

Number of branches closed since 2006

Mainly due to Cost-to-Income optimization

Capture of cost synergies opportunities following the merger of BIC (bank of the BES Group previously with 122 branches)

All branches are identified


2 May 2011

International business continues to deliver strong results, key to offset a slowdown on domestic activity. Domestic Net Income was negatively impacted by a Eur 35.2 mnresult (net) from loan sales

Domestic International

= Net Income 71.1 4.9 -93.1% 48.1 56.0 16.5% 92.0%

(euro million) 1Q10 1Q11 YoY 1Q10 1Q11 YoY

146.6 25.5%

30.3%

26.6%

-77.1%

20.0%

29.5%

14.5%

-44.4%

29.9%

13.0%

67.3%

16.5%

55.3

201.9

2.5

204.4

81.0

123.4

12.4

111.0

15.7

39.3

56.0

116.9

42.5

159.4

10.9

170.3

62.5

107.8

22.3

85.4

13.9

23.5

48.1

-8.7%

-10.1%

-9.4%

-37.4%

-16.6%

2.2%

-38.5%

-2.2%

-78.0%

-12.7%

n.a.

-43.6%

124.8

134.2

259.0

61.8

320.9

211.3

109.6

90.7

18.8

14.2

-0.2

40.1

136.7

149.3

286.0

98.9

384.9

206.6

178.3

92.8

85.5

16.2

-1.8

71.1

% of Total (Consolid.)

+ Net Interest Income 54.0%

+

=

+

=

-

=

-

=

-

-

Fees and Commissions 29.2%

Commercial Banking Income 43.8%

Capital Markets Results & Other 3.9%

Banking Income 38.9%

Operating Costs 27.7%

Net Operating Income 53.0%

Net Provisions 12.0%

Income Bef. Taxes and Minorities

85.5%

Taxes 52.6%

Minority Interests n.a.

Proforma Net Income excl. the impact of loan sales

92.0%


2 May 2011

In an operational segment analysis, income before taxes and minorities grew significantly in all International activities, including Investment Banking

129.8

-53,5

-32,8

8.6

15.7

94.8

47.6

21.8

27.6

Income before Taxes and Minorities1Q11. Euro million

Total Group

Retail

Private Banking

Corporate and Institutional Clients

International Commercial Banking

InvestmentBanking

Asset Management

Markets & Strategic Participations

CorporateCentre

Δ YoY EUR mn Δ YoY

Banking Income1Q1110

Operating Costs1Q1110

EUR mn Δ YoY EUR mn Δ YoY

DomesticCommercialBanking

145.3

25.3

85.4

153.1

64.6

14.2

37.3

525.3

-1.8%

…

-23.1%

+23.1%

+6.6%

-2.7%

-56.9%

-5.4%

105.5

5.1

16.5

48.1

45.5

5.6

12.3

53.5

292.3

12.2

-1.6

21.2

10.2

3.4

0.0

57.8

103.1

-8.0%

…

-36.3%

+39.6%

-19.1%

-1.1%

…

0%

-24.1%

Provisions1Q1110

+0.1%

-12.1%

+5.4%

+18.2%

+47.2%

-5.1%

+8.8%

0%

+8.6%

-2.4%

…

+3.0%

-35.4%

-67.0%

…

+5.3%

-10.4%


2 May 2011

International activity strong performance was backed by Commercial Banking Income growth. International NII and Commissions already accounted for 44% of consolidated Commercial Banking Income, contributing to resilient profitability of the Group

Domestic and International weight on Commercial Banking income

24% 24% 28% 26%36% 32%

40% 43% 44%

76% 76% 72% 74%64% 68%

60% 57% 56%

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

International Domestic

(%)

International Commercial Banking income

119 121132

117

159 158

227206 202

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

(Eur mn)

+70%

+27%

461473562491445451471511486

Consolidated Commercial Banking Income (Eur mn)


2 May 2011

The strategic triangle continues to be the main contributor for international operations growth. Net Income from Africa, Brazil and Spain increased 60% YoY during 1Q 2011. In UK, net income fall is explained by NII reduction as a result of loan portfolio sales

Net Income Contribution

1Q10

24.2

% of international 50% 69%

% of consolidated 20% 64%

US 2.3 4.5 98%

Total International 48.1 56.0 +16.5%

UK 20.5 10.2 -50%

1.1

1Q11 YoY

Strategic Triangle(1) 38.7

2.6Other

60%

142%

International Net Income Breakdown (Eur mn)

UK: 10.2(20.5)

( ) 1Q10

US: 4.5(2.3)

Other: 2.6(1.1)

StrategicTriangle:

38.7(24.2)

Africa: 27.2 *(18.6)

Brazil: 5.7(3.1)

Spain: 5.8(2.5)

International Business(Eur mn)

(1) Includes Africa, Brazil and Spain(*) Includes Angola, C. Verde, Libya and Mozambique


2 May 2011

BES Investimento also continued its international diversification, with international activity accounting for 85% of 1Q11 net income

Banking Income 1Q11: EUR 64.3m (5.8% YoY)

Net Profit 1Q11: EUR 9.1m (-39.4% YoY)

International79%

Portugal21%

Net Interest Income

30%

Fees & Commissions

68%

Capital MktsResults

2%

International85%

Portugal15%

Domestic market: slowing down but some interesting deals closedJoint Lead Manager on EDP Finance B.V. (Eur 750 million) and Portugal

Telecom International Finance B.V. (Eur 600 million) Eurobond issues.Mandated Lead Arranger on the Eur 75 million financing to Secil for the

acquisition of 100% of Lafarge Betões and on the Eur 22 million financing to PortQuay for the acquisition of 10% of Media Capital group.

Leadership of the Portuguese Brokerage market, ending March with a 10.9% accumulated market share.

International activity: Brazil leads the way, Poland and UK also wellIn Spain, the Bank ranked 2nd in the Spanish Stock Exchange with a market

share of 7.8%. It also acted as Financial Adviser to a bidding consortium for the Autovía A-308 Eur 200 million concession .

In Brazil, the Bank acted as (i) Co-Manager on the IPO of Sonae Sierra Brasil(R$ 465 million) and on the Follow on of Tecnisa (R$ 400 million); (ii) Financial Adviser on the sale of a 28.78% stake in UOL by Portugal Telecom group.

Also in Brazil, the Bank was Lender on a R$ 180 million bridge loan to Gestamp Wind for the development of 4 renewable energy projects and Issuer of a letter of credit in favour of BNDES, to guarantee Via Bahia Concessionáriade Rodovias R$ 290 million obligations.

In the US, the Bank acted as Mandated Lead Arranger on the US$ 273 million financing to Icon Parking, a leading provider of car parking in New York City.

In Poland, the Bank acted as Joint Bookrunner on the 11.9% privatisation of the utility Tauron (PLN 1,282 million), as Joint Lead Manager on MazovianRailways debut Eurobond issue (Eur 100 million) and as Sole Bookrunner on Kredyt Inkaso’s Secondary Public Offer (PLN 50 million).

In the UK and via Execution Noble, the Bank acted as Joint Bookrunner for Shaftesbury Plc, raising £102 million placing, as Sole Bookrunner placing £ 81 million of GlobeOp and as Financial Adviser to AB Fagerhult’s £ 12 million acquisition of Designplan Lighting ltd.

Banking Income

Net Income

Net Income 2010: EUR 60.0mn (19.1% YoY)


2 May 2011

Table of contents

I. 1Q2011 Performance: international business key to compensate pressure on domestic

profitability




sovereign exposure


deterioration

V. Wrap up




2 May 2011

26.5 26.1

29.9 30.8 30.5

24.425.225.3 25.4

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

50.849.8

51.049.9

49.047.647.347.1

51.7

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

Net Loan Portfolio Evolution(EUR bn; excludes securitised credit)

Total Deposits(EUR bn)

Loans to Deposits Ratio

163%

120%

188%192%195%188%186%

171%165%

198%

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2012

-1.9 bn+4.6 bn

+0.8 bn

LTD of 120% should be achieved by reducing the loan portfolio, namely by disposing of international credit portfolios (such as project finance), and simultaneously focusing on increasing core deposits.

In light of the absence of debt markets, BES management is implementing since mid 2010 an aggressive deleverage of the balance sheet. LTD ratio already decreased to 163% from 198% in 1H2010 and should reach 120% by Ye 2012

120%

+4.4 bn


2 May 2011

2,500

1,18848126

726300114

(4,243)

(632)(609)(465)(13)

(1,251)(1,273)

Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-Dec11 Total 2011

Eur 1.3 bn Executed

Up to February 2011 Eur 76mn of debt maturing in February

was bought in the market.

Medium and Long Term

Debt maturing in

2011

LoanPortfolio

Salesin

2011

Loan Portfolio Sales vs Medium and Long Term Debt Maturing in 2011

(Eur mn)

During 1Q 2011, BES has already sold Eur 1.3 bn of loans, which represents 53% of the annual target of Eur 2.5 bn, of which Eur 1.1 bn settled in 1Q11


2 May 2011

Strong growth in deposits YoY backed by focus on increasing core deposits in recent quarters. On a quarterly basis, the 0.9% decrease reflects 1Q traditional seasonality

Deposits

(EUR mn)

26 52230 819 30 545

0

5000

10000

15000

20000

25000

30000

35000

40000

1Q10 4Q10 1Q11

+15.2%

-1 609 -1 682

-2 645

-3 278

-1 706

-1 059

1 076

-274

-8.0% -8.2%

-12.7%-14.9%

-7.2%

4.2%

-4.0%-0.9%

-4000

-3000

-2000

-1000

0

1000

2000

-20%

-15%

-10%

-5%

0%

5%

10%

1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11

Deposits seasonality: 1Q changes in deposits since 2004

(EUR mn)Traditionally, deposits

show great seasonality, falling in 1Q on a quarterly

basis for 7 out of last 8 years. During 1Q11

deposits decrease rate was the lowest since

2004, reflecting BES’sretention efforts. 2010 was

an atypically year


2 May 2011

Domestically, all main segments contributed significantly to the deleverage program

5.5%12.9%

4.5%13.1%

27.5%

18.3%

33.0%

69.6%

24.5%

10.5%

3.9%

-6.1%

3.7%

-1.3%-3.0%

Total FundsYoY Growth. %

On-Balance Sheet Client FundsYoY Growth. %

Gross Loans to ClientsYoY Growth. %

PrivateBanking

Corporate and InstitutionalMass Market Small BusinessesAffluent

(QoQ: -1.1%) (QoQ: -1.1%) (QoQ: -1.9%) (QoQ: -2.0%) (QoQ: +0.9%)


2 May 2011

Distribution of redemptions is very concentrated in the first quarter. In fact, 60% of medium and long term debt maturing in 2011 was already repaid. Remaining quarters represent undemanding cash requirements as deleverage continues

0.0

0.6

1.1

2.6

1Q11 2Q11 3Q11 4Q11

0.00.3

0.9

2.8

1Q12 2Q12 3Q12 4Q12

14%3Q11

26%2Q11 60%

1Q11

Medium and Long Term Debt maturing in 2011 Medium and Long Term Debt maturing in 2012

Alreadyrepaid

Medium and Long Term Debt maturity profile

(Eur bn)

1.7

4.0

2.1

3.1

3.9

2011 2012 2013 2014 2015

(EUR bn; Total Eur 4.3bn) (EUR bn; Total Eur 4.0bn)

Ow: Eur 0.5mn EMTN and Eur 0.4bn Sub.

Ow: Eur 0.5bn EMTN

Ow: Eur 1.5bn Senior

Guaranteed and Eur 1.2bn

EMTN

Ow: Eur 0.4mn EMTN and Eur

0.4bn Sub (UTII).

Eur 0.3bn EMTN


2 May 2011

3.9 3.9

+1.7

1.8

+0.3

+2.6

-1.1

-1.4

-2.0

ECB Use YE 2010

1Q11 Redemptions

Loan Portfolio

Sales

ECB Use 1Q11

Redemptions until YE

Other ECB Use YE 2011

(expected)

BES use of ECB liquidity facilities (net)

ECB liquidity facilities have been key to cope with short term liquidity needs. Until year end, the use of ECB is expected to decrease to levels below 5% of net assets

< 5% of netassets

(EUR bn)

Other

5.65

Loan Portfolio

Sales


2 May 2011

The portfolio of repoable securities have been increased to cope with the current challenges. The buffer of repoable securities (ECB and other) represents a cushion to liquidity management

9.7

4.05

8.65

+4.6

-5.65

ECBeligibleassets

ECBfacilities

used (net)

Available ECB buffer

Additionalrepoableassets

Totalrepoable

assets excl. ECB used facilities

Repoable Securities available

(EUR bn)

12.2

14.3

5.9

9.7

1Q10 1Q11

ECB Eligible Total

Total Repoable Securities

(EUR bn)

ECB Eligible: +3.8bnTotal: +2.1bn


2 May 2011

Table of contents


profitability




sovereign exposure


deterioration

V. Wrap up




2 May 2011

BES maintains strong capital levels, being in a good position to face forthcoming BIS 3 challenges. Core capital was maintained at 7.9%, with the positive impact of deleverage being offset by the negative impact of ratings downgrades in RWA. Sale of Bradesco to increase Core Tier I to c. 8.2%

Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational risk. Preliminary data as of Dec 2010.

Solvency Ratios (%)

8.1 8.1

8.8

7.97.97.9

1Q10 FY2010 1Q11Core Tier I

Core Tier I and Tier I following sale of Bradesco (%)

9.4

8.2

8.8

7.9

+0.6

+0.3

CT1 1Q11

CT1 1Q11 pro-

forma

Sale of

Bradesco

T1 1Q11

T1 1Q11 pro-

forma

Sale of

Bradesco


2 May 2011

BES European sovereign exposure is quite limited, amounting to Eur 1.6 bn (2% of net assets) in the 1Q11 vs Eur 2.3 bn at 2010 YE. 67% of BES’ European sovereign exposure is short-term Portuguese debt

Treasury Bills Bonds Total

Portugal 1 062 508

0

0

5

513

1 570

Ireland 0 0

Greece 0 0

Spain 3 8

Total 1 065 1 578

European Sovereign Exposure

<3M4%

> 1Y20%

3M to 1Y

76%

Maturity profile of the European Sovereign Exposure

(%)(Eur mn)

1 578

2 279

4Q10 1Q11

Evolution of European Sovereign Exposure

(Eur mn) -701 mn


2 May 2011

Table of contents


profitability




sovereign exposure


deterioration

V. Wrap up




2 May 2011

BES’ Credit portfolio is mainly composed by Corporate loans. It continues to be well diversified, with no major concentration per sector

Credit Portfolio as of March 2011 (Eur 51.7 bn Gross Loans)

(excludes securitised credit)

Corporate72.2%

(Eur 37.3 bn)

Consumer5.2% (Eur 2.7bn)

Mortgage22.6%

(Eur 11.7 bn)

1 Represents a composite of other sectors of the economy none representing more than 2% per se.

15%

12%

10%

8%

7%

4%

4%

13%

Services

Con.& Pub Works

Real Estate

Retail

Other Man.

T&C

Other Services1

Fin. Inst.


2 May 2011

Despite the higher weight of Corporate loans (72% of the loan book), asset quality has proved to be very resilient, even in periods of recession, consistently below the Portuguese average

1. 9%2 . 1%

1. 9%

1. 5%1. 3 %

1. 2%1. 3 %

1. 8%

2 . 1%2 . 4%

4. 8%

2 . 1% 2 . 2%2 . 0%

1. 7%

2 . 2 %

3 . 4%

3 . 7%

3 . 2 %

2 . 4%2 . 3 %

1. 8%

2 . 1%

3 . 6%

2 . 6%

2 . 2 % 2 . 3 %

1. 9%1. 6%

3 . 2 %

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10

Total Overdue Loans/Gross Loans BESTotal Overdue Loans/Gross Loans System

BES Overdue Loans Ratio Evolution vs Portuguese System

Source: BES and BoP. Data for System as of February 2011

2.72%

0.84%

4.46%

4.66%

1.75%

8.01%Consumer

& Other

Mortgage

Corporate

System

BES

1Q11


2 May 2011

8197

178

104

162

8095

8494

0

50

100

150

200

250

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

Resilient asset quality is complemented with high provisioning coverage. Total provisions reserve is close to EUR 1.8 bn, or 3.47% of the loan portfolio

BES On-BS Provisions Reserve

1 7901 777

1 552

1 148

990

2007 2008 2009 2010 1Q11

Quarterly Credit Provisions & Cost of Risk

67 bp

Ow Eur 40 mn extra

Ow Eur 66 mnextra

86 bp excl. extraord.

(Eur mn)(Eur mn)

Provisions as % of Gross Loans

2.29% 2.38% 3.07% 3.38% 3.47%

1.8x

Cost of Risk (bps)

80 147 85 128 62 71 63 71 63


2 May 2011

2.27% 2.38% 2.40%2.66% 2.74%

2.98%

4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

NPL ratios are comfortably covered above 100%, as BES has been conservatively reinforcing its provisioning to anticipate asset quality deterioration

Total Overdue Loans Ratio (+30d) & Coverage (%)

Overdue and Doubtful Loans Ratio & Coverage (%) Net New Entries as % of Performing Loans

(quarterly annualised)Quarterly Write Offs (Eur mn)

1.60% 1.67% 1.70%1.90% 1.95%

2.17%

4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

Overdue Loans +90 days Ratio & Coverage (%)

191% 188% 185% 173% 173% 159%

1.77%1.94% 1.90%

2.07% 2.10%2.38%

4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

174% 161% 166% 158% 161% 145%

135% 131% 131% 123% 123% 116%

0.13%

1.03%

0.23%

0.74%

0.37%

1.23%

4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

17.7 22.8 20.0 14.1 34.8 30.0


2 May 2011

Table of contents


profitability




sovereign exposure


deterioration

V. Wrap up




2 May 2011

With a strict financial discipline, BES is addressing current challenges while maintaining a strong international profile which provides a resilient stream of future profitability

Strong growth prospects for international business mitigate domestic slowdown

Exposure to high growth emerging countries with increasing economic ties with Portugal and

Portuguese companies provides intrinsic profitability, besides providing access to additional

funding pools

Prudent and

conservative

management

Implementation of a balance sheet deleverage plan aiming to reduce the LTD ratio

to 120% in two years

Reinforced solvency ratios, with core tier I of ca. 8.2% following the sale of

Bradesco

Limited exposure to European sovereign debt

Strong provision reserve covering close to 3.5% of gross loans provide a cushion to

expected asset quality deterioration in domestic business

Proved financial discipline, with the adoption of strict measures in both liquidity and

capital management:


2 May 2011

Table of contents


profitability




sovereign exposure


deterioration

V. Wrap up




2 May 2011

BES Main figures

1Q10 2Q10 3Q10 4Q10

119.1

Net Income excl. Loan Sales Eur mn 119.1 163.0 123.3 105.1 96.1

48.1

8.1

48.5

49,898

26,522

188

7.9

8.1

10.6

3.12

1.67

163.0

187.5

62

105.1123.3

70.4

9.1

47.8

51,032

29,923

171

7.9

8.3

11.0

3.27

1.90

172.5

63

37.3

8.6

48.2

50,829

30,819

165

7.9

8.8

Total % 11.2 11.3 11.4

Provisions as % Gross Loans % 3.15 3.38 3.47

NPL + 90 days % 1.70 1.95 2.17

Coverage % 184.9 173.0 159.4

Loan loss charge bp 71 71 63

International net income Eur mn 48.0 56.0

Cost / Income % 50.2 55.6

9.6

Net Loan Portfolio Eur mn 51,674 49,862

Deposits Eur mn 26,082 30,545

198

Solvency: Basel II (1)

Tier I % 8.4 8.8

Core Tier I % 7.9 7.9

Eur mn

%

%

1Q11

Net Income (consolidated) 60.9

ROE (Excl. Loan Sales in 1Q11) 6.5

Loan to Deposit Ratio 163

Liquidity and Funding

Asset quality

Profitability

Solvency

Main Challenges

(1) Basel II ratios as of 2010 (estimate) assume the Foundation approach for credit risk (Advanced for retail portfolios) and Standard method for operational risk, both certified by the Bank of Portugal.

* Accumulated


2 May 2011

Quarterly consolidated income statement

(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 QoQ

271.4

201.8

473.2

128.1

52.9

654.2

315.5

338.7

182.8

155.9

-10.8

61.7

105.1

48.2%

271.3

66.7%

189.6

-0.1%

-6.1%

-2.6%

-21.7%

n.a.

-19.7%

-7.4%

-31.2%

-43.6%

-16.8%

n.a.

-36.7%

-42.1%

7.4 p.p.

460.9

100.4

-35.9

525.3

292.3

233.0

103.1

129.8

29.9

39.1

60.9

55.6%

3.3 p.p.63.4%

346.2

215.5

561.7

46.2

0.2

607.9

290.6

317.3

112.0

205.3

33.1

49.0

123.2

47.8%

51.7%

292.7

197.8

490.5

97.8

-1.9

586.4

294.1

292.3

123.7

168.6

-8.6

14.1

= Net Income 119.1 163.1 -48.9%

Cost to Income 48.5% 50.2% 7.1 p.p.

Cost to Income ex-Markets 60.4% 60.0% 3.0 p.p.

253.7

191.8

445.5

97.1

12.7

555.3

269.2

286.1

115.1

171.0

30.2

21.7

YoY


-1.1%

3.5%

3.2%

n.a.

-5.4%

8.6%

-18.6%

-10.4%

-24.1%

-0.8%

80.0%

+ Fees and Commissions

= Commercial Banking Income

+ Capital Markets Results

+ Other Results

= Banking Income

- Operating Costs

= Net Operating Income

- Net Provisions

= Income Bef. Tax & Min.

- Taxes

- Minorities


2 May 2011

Quarterly domestic income statement


117.7

149.8

267.4

186.0

453.5

233.7

219.8

145.5

74.1

-18.4

25.1

67.5

51.5%

124.8

87.3%

134.2

6.0%

-10.4%

-3.2%

-66.8%

-29.3%

-9.6%

-50.2%

-37.7%

-74.7%

n.a.

n.a.

-92.8%

14.3 p.p.

259.0

61.8

320.9

211.3

109.6

90.7

18.8

14.2

-0.2

4.9

65.8%

-5.7 p.p.81.6%

171.8

163.1

334.9

34.8

369.7

218.8

150.9

90.7

60.2

6.7

0.4

53.2

59.2%

65.3%

184.9

147.8

332.7

89.2

421.9

227.4

194.4

101.4

93.1

-20.5

-1.5

= Net Income 71.0 115.0 -93.1%

Cost to Income 53.7% 53.9% 12.1 p.p.


136.8

149.3

286.1

98.9

385.0

206.7

178.3

92.8

85.5

16.3

-1.8

YoY

+ Net Interest Income -8.7%

-10.1%

-9.4%

-37.4%

-16.6%

2.3%

-38.5%

-2.2%

-78.0%

-12.7%

n.a.


= Commercial Banking Income

+ Capital Markets & Other Results

= Banking Income

- Operating Costs


- Net Provisions

= Income Bef. Taxes and Min.

- Taxes

- Minorities


2 May 2011

Quarterly international income statement


153.7

52.0

205.8

-5.0

200.7

81.8

118.9

37.2

81.7

7.4

36.6

37.6

40.9%

146.6

39.8%

55.3

-4.7%

6.4%

-1.8%

-146.9%

2.0%

-1.1%

4.2%

-66.6%

36.5%

114.1%

7.1%

50.1%

-1.3 p.p.

201.9

2.5

204.4

81.0

123.4

12.4

111.0

15.7

39.3

56.0

39.6%

0.3 p.p.40.1%

107.8

50.0

157.8

6.7

164.5

66.7

97.8

22.3

75.4

12.0

15.6

48.0

40.5%

42.3%

174.4

52.4

226.8

11.4

238.2

71.8

166.4

21.3

145.1

26.4

48.6

= Net Income 48.1 70.1 16.5%


Cost to Income 36.7% 30.1% 2.9 p.p.

116.9

42.5

159.4

10.9

170.3

62.5

107.8

22.3

85.5

13.9

23.5

YoY


30.3%

26.6%

-77.1%

20.0%

29.5%

14.5%

-44.4%

29.9%

13.0%

67.3%


= Commercial Bkg Income

+ Capital Mkts & Other Res.

= Banking Income

- Operating Costs


- Net Provisions

= Income Bef. Taxes & Min.

- Taxes

- Minorities


2 May 2011

Angola: Quarterly income statement

(EUR million) 1Q10 2Q10 4Q10 1Q11 QoQ

92.3 86.8

6.2

93.0

5.3

98.3

19.2

79.2

4.7

74.4

47.3

27.1

19.5%

6,210.1

3,029.4

526.9

6.0

-6.0%

3.7%

-5.4%

-39.5%

-8.2%

-4.1%

-9.1%

-66.4%

2.0%

1.5%

2.9%

0.8%

4.8%

7.3%

98.3

8.8

107.1

20.0

87.1

14.2

72.9

46.6

26.3

18.6%

5,923.9

2,823.6

485.7 8.5%

38.6

7.5

46.1

3.9

50.0

17.6

32.4

3.0

29.5

18.6

10.8

35.2%

5,520.8

2,443.1

369.0

YoY3Q10

48.7 116.1

6.3

122.4

-0.5

121.9

19.2

102.7

3.8

98.9

63.1

35.8

15.7%

5,211.6

2,553.9

419.0

5.8

54.4

11.2

65.6

14.9

50.7

2.3

48.4

30.4

18.0

22.8%

4,775.5

1,966.9


303.1

78.4%

6.9%

= Commercial Bkg Income 70.8%

Cost to Income -3.3%

Total Assets 30.0%

Total Credit (Gross) 54.0%

-52.3%

49.8%

28.1%

56.2%

108.7%

53.8%

55.6%

= Net Income 50.6%

73.8%


+ Capital Mkts & Other

= Banking Income

- Operating Costs


- Net Provisions


- Taxes & Minority Interests

Equity


2 May 2011

Spain: Quarterly income statement


24.5 25.4

12.5

37.9

5.1

43.0

22.3

20.7

13.3

7.4

1.6

5.8

51.9%

3,736.4

142 bp

5,502.6

11.1

3.7%

12.7%

6.5%

n.a.

22.5%

-1.7%

67.0%

50.3%

108.7%

61.3%

126.9%

-12.8 p.p.

-4.9 p.p.

-

35.6

-0.5

35.1

22.7

12.4

8.8

3.5

1.0

2.6

64.7%

4,093.7

60 bp

5,498.4 0.1%

23.9

12.8

36.7

1.4

38.1

21.0

17.2

11.1

6.0

0.5

5.6

55.0%

4,197.7

105 bp

5,722.3

YoY3Q10

24.5 21.7

12.8

34.5

2.2

36.7

22.0

14.6

10.7

3.9

1.8

2.1

60.1%

4,111.7

103 bp

5,527.0

14.6

39.1

1.6

40.7

23.1

17.5

14.6

2.9

0.4

2.5

56.9%

4,156.1

141 bp


6,029.4

3.5%

-14.2%

= Commercial Bkg Income -3.1%

Cost to Income -4.9 p.p.

Credit -0.2 p.p.

Cost of Risk (bp) -

223.9%

5.7%

-3.5%

17.8%

-9.3%

154.8%

298.0%

= Net Income 132.0%

-8.7%


+ Capital Markets & Other

= Banking Income

- Operating Costs


- Net Provisions



Assets


2 May 2011

Brazil: Quarterly income statement


14.0 14.1

10.1

24.2

-1.8

22.4

9.6

12.8

1.5

11.3

5.6

5.7

42.7%

2,755.7

8.5

0.8%

19.8%

7.9%

-43.2%

16.5%

-5.8%

41.3%

29.4%

43.1%

217.0%

-7.5%

-10.1 p.p.

22.4

-3.2

19.2

10.2

9.1

1.2

7.9

1.8

6.1

55.8%

2,672.2 3.1%

14.0

7.9

21.9

0.2

22.1

8.9

13.2

-0.1

13.3

6.0

7.3

40.2%

2,340.5

YoY3Q10

12.5 12.8

13.9

26.7

7.8

34.5

9.6

24.8

1.4

23.4

7.8

15.7

28.0%

2,301.5

6.8

19.3

-2.8

16.5

8.5

8.0

2.6

5.4

2.3

3.1

51.6%


1,962.4

12.2%

49.9%

= Commercial Banking Income 25.4%

Cost to Income -8.9 p.p.

-35.5%

35.8%

12.3%

60.9%

-40.0%

108.9%

140.4%

= Net Income 84.7%

40.4%



= Banking Income

- Operating Costs


- Net Provisions



Assets


2 May 2011

UK: Quarterly income statement


12.9 12.8

18.4

31.1

-7.2

24.0

18.3

5.7

-4.3

10.0

-0.2

10.2

76.2%

2,349.2

13.3

-1.0%

37.9%

18.7%

n.a.

55.4%

39.5%

144.3%

n.a.

n.a.

n.a.

n.a.

-8.7 p.p.

26.2

-10.8

15.4

13.1

2.3

11.5

-9.1

-6.7

-2.5

84.9%

2,699 -13.0%

19.0

11.3

30.3

0.8

31.1

4.4

26.7

3.6

23.1

2.2

20.9

14.0%

3Q10 YoY

2,987

20.5

6.5

26.9

-0.3

26.7

4.4

22.2

-0.2

22.4

1.9

20.5


16.5%

2,814

15.2

5.7

20.9

1.2

22.2

4.9

17.3

6.1

11.2

2.9

8.3

22.0%

2,980


-37.6%

183.7%

= Commercial Bkg Income 15.6%

Cost to Income 59.7 p.p.

Credit (Eur mn) -16.5%

n.a.

-10.1%

314.5%

-74.4%

n.a.

-55.4%

n.a.

= Net Income


= Banking Income

- Operating Costs


- Net Provisions



-50.3%


2 May 2011

Quarterly Net Interest Income(N

IM in

bp;

Qua

rterly

Fig

ures

)

254

293

346

271

271

258

253

269

306

315

335

300

250

156152190

161141176 169 167 188 193 171

199

141

0

50

100

150

200

250

300

350

400

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

0

50

100

150

200

NII

NIM

454437397401380375423 406 395

3.553.32.983.083.58 3.38 3.25

3.02 3.03

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

Credit NII (LHS, Eur mn) Credit Margin (RHS, %)

-136-110

-66-57

-52-41-39-36

-47

-1.78-1.45

-0.97-0.88-0.83-0.66-0.61-0.59-0.74

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

Deposits NII (LHS, Eur mn) Deposits Margin (RHS, %)

Credit Margin Deposit Margin

Quarterly Net Interest Income & NIM Euribor 3M (quarterly average)(%)

0.66 0.69 0.87 1.02 1.09

4.484.86 4.98

4.21

2.01

1.310.87 0.72

0

1

2

3

4

5

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11


2 May 2011

Quarterly fees & commissions

(1) Includes trade finance and letters of credit(2) Includes Brokerage(3) Includes discretionary management

Note: change calculated based on figures in thousand euros

(EUR million)1Q10 2Q10 4Q10 1Q11 QoQ

22.4 19.4

23.8

12.3

15.0

25.6

29.6

23.7

9.7

11.7

1.9

16.8

189.6

35.3

-13.4%

-32.6%

-19.7%

-4.4%

-9.8%

99.3%

-9.2%

-9.9%

-9.1%

-11.1%

-5.9%

15.4

15.6

28.4

14.8

26.1

10.8

12.9

2.1

17.8

201.8 -6.0%

21.2

32.6

16.3

17.2

23.6

12.1

24.7

9.8

17.0

1.9

21.3

197.8

19.6

27.1

27.6

13.9

18.1

15.6

25.2

8.9

13.0

2.2

20.6

191.8

3Q10 YoY

Account Management Fees 21.6

35.8

35.0

22.8

22.1

8.4

25.9

10.5

13.5

2.2

17.8

215.5

Commissions on Loans

-1.0%

-12.2%

-55.3%

7.4%

41.5%

90.3%

-6.1%

9.8%

-9.6%

-12.5%

-18.5%

Trade Finance & Exp. related (1)

Corporate & Project Finance

Guarantees

Securities related fees (2)

Asset Management (3)

Cards

Bancassurance

Factoring

Other

-1.1%Total Fees & Commissions


2 May 2011

Quarterly capital markets results and VAR

(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11

-133.7 50.5

37.8

8.4

4.3

49.9

45.6

4.3

100.4

0.6

99.8

15.09.4

32.9-19.1

38.20.6%

22.0

-147.7

-8.0

261.8

144.9

116.9

128.1

39.4

88.7

16.214.219.1

-27.1

22.40.4%

58.1

-9.5

44.7

22.9

-12.1

-19.6

7.5

46.0

4.8

41.2

13.515.143.2

-33.2

38.60.7%

-0.6

3.0

-32.3

28.7

98.4

32.7

65.7

97.8

16.0

81.8

9.531.613.4

-20.0

34.50.6%

48.7

14.4

18.3

16.0

48.4

45.2

3.2

97.1

16.4

80.7

4.918.735.1

-15.5

43.30.8%

YoY

Interest Rate & FX 3.7%

… Interest rate 162.5%

Capital Markets net of Provisions for securities 23.6%

VAR – Value at RiskInterest RateFXEquity & CommoditiesDiversification Effect

Global VAR

… Credit -54.1%

… FX & Other -73.1%

3.1%

0.9%

… Income from securities 34.4%

Capital market results 3.4%

Provisions for Securities -96.2%

Equity

… Trading

Global VAR as % of Tier I *


2 May 2011

100.4

128.1

97.1

1Q10 4Q10 1Q11

The trading results had an average weight above 15% in the Banking Income throughout the last 6 years

Since 1999 the positive trading revenues totalled Eur 2,912 mn, while the negative results reported in just two quarters amounted to Eur15 mn

Weight in Banking Income

64

36

324

-115

88

28 35 2551 50 54 53 55

1935 26

51

84

13

46

80 82

4466 68 73

196

3955

72

155

-14

16

48

124108

97 98

46

128100

4927

2

84109

109

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

2Quarterly capital markets results

19.1%

Quarterly history of trading results since 1999

(EUR mn)

Trading results 1Q11

(EUR mn)

19.6%17.5%


2 May 2011

Quarterly equity accounted earnings and other results

Equity Accounted Earnings and Other Results (Quarterly)

3Q10 1Q11

4.1

2.9

1.2

-40.0

-35.9

8.4

5.3

11.4

-16.5

1Q10

0.2

4Q10

8.0

3.2

4.8

44.9

52.9

8.6

4.8

… Other 3.8 1.7

Other Results 4.1 -14.1

12.7

2Q10

12.2

2.2

-1.9

(EUR million)

Equity Accounted Earnings

… BES Vida

Total Equity Accounted and Other Results

-40.0

2.9

4.1

1Q11

-26.5

12.3

29.2

9M10

-10.0

7.0

20.8

1H10

4.1

4.8

8.6

1Q10

18.4

15.5

37.2

FY10

Equity Accounted Earnings and Other results (Accumulated)

Other Results

… BES Vida

Equity Accounted Earnings, ow

(EUR million)


2 May 2011

Quarterly other results: Reconciliation between IFRS P&L and Presentation

Quarterly

3Q10 4Q10

-13.4

6.2

-29.1

… Special Tax on Banks - - - - - - - - -7.6

9.5

-5.1

12.6

-7.6

-10.0

2Q10

-11.2

8.2

-8.1

-11.4

4Q09

-4.8

14.2

-16.7

… Other -7.2 -11.7 -24.1 -2.2 4.6

3Q09

-1.4

1Q10

16.1

10.7

0.8

-1.7

9.1

13.3

2Q09

3.8

5.3

10.2

1Q09

98.5

9.2

96.5

(EUR million) 1Q11

Other Results (IFRS), ow 36.0

… Fees 9.0

… Capital Markets 36.0

Accumulated

9M10 FY10

-13.6

37.7

-44.0

… Special Tax on Banks - - - - - - - - -7.6

-7.3

-0.2

31.5

-14.9

-16.8

6M10

4.9

18.9

-7.3

-6.8

3M10

16.1

10.7

0.8

… Other -7.2 -18.9 -43.0 -45.2 4.6 -1.4

FY09

95.8

37.8

103.3

9M09

100.6

23.6

120.0

6M09

102.3

14.5

106.7

3M09

98.5

9.2

96.5

(EUR million) 3M11

Other Results (IFRS), ow 36.0

… Fees 9.0

… Capital Markets 36.0


2 May 2011

Quarterly operating costs

(EUR million)1Q10 2Q10 4Q10 1Q11 QoQ

174.1 158.7

116.0

18.1

24.6

107.5

26.1

292.3

128.5

-8.8%

-9.7%

-26.7%

17.7%

-8.3%

7.6%

-7.3%

24.7

20.9

117.2

24.3

315.5

154.0

116.2

20.6

17.2

113.3

26.8

294.1

144.9

108.1

20.3

16.5

100.6

23.7

269.2

3Q10 YoY

Staff costs 155.4

113.0

…Pension Benefits 25.1 -10.7%

…Long term service benefits & Other 17.3 49.3%

109.9

25.3

290.6

…Remunerations

9.6%

7.3%

6.8%

10.4%

Admin costs

Depreciation

Total Operating Costs 8.6%


2 May 2011

Quarterly operating costs: domestic and international


112.4

72.8

17.2

22.4

78.6

20.3

211.3

46.3

43.2

0.9

2.2

28.9

5.8

81.0

127.3 -11.6%

-16.4%

-29.2%

41.5%

-9.5%

3.4%

-9.6%

-1.1%

4.4%

133.8%

-57%

-5.1%

25.1%

87.1

24.3

15.8

86.8

19.6

233.7

46.8

41.4

0.4

5.0

30.4

4.7

81.9 -1.1%

115.1

75.6

24.1

15.5

84.8

18.9

218.8

40.3

37.3

1.1

1.9

25.1

6.4

71.8

107.7

73.0

19.4

15.3

79.6

19.4

206.7

37.2

35.2

0.8

1.1

21.0

4.3

YoY

62.5

116.7

82.2

…Pension Benefits 19.6 -11.5%

…Long term service benefits & Other 14.9 46.4%

… Long term service benefits & Other 2.3 88.4%

89.2

21.6

227.4

International

Staff Costs 37.3 24.5%

…Remunerations 34.0 22.9%

1.0

24.1

5.3

Domestic

66.7

4.4%

-0.2%

-1.2%

4.4%

2.2%

8.0%

37.3%

34.8%

29.5%

Staff costs

…Remunerations

Admin costs

Depreciation

Domestic Operating Costs

…Pension Benefits

Admin costs

Depreciation

International Operating Costs


2 May 2011

Quarterly provisions

(EUR million)1Q10 2Q10 3Q10 4Q10 1Q11 QoQ

93.7 80.9

63bp

63bp

70.1

68bp

68bp

10.7

40bp

0.6

21.6

103.0

71 bp

-13.7%

-

-

11.5%

-

-

-65.1%

-

-98.4%

-56.5%

-43.6%

71 bp

62.9

61 bp

61 bp

30.8

110 bp

39.4

49.7

182.8

83.6

63 bp

63 bp

64.1

62 bp

62 bp

19.5

68 bp

4.8

23.6

112.0

80.0

62bp

62bp

60.1

59bp

59bp

19.9

74bp

16.4

18.7

115.1

YoY

94.5

71 bp

71 bp

71.6

69 bp

69 bp

22.9

78 bp

16.0

13.2

123.7

…Credit 1.1%

cost of risk (bp) -

cost of risk ex extra (bp) -

cost of risk ex extra (bp) -

… Domestic 16.7%

cost of risk (bp) -

cost of risk (bp) -

… International -46.1%

…Securities -96.2%

…Other 15.8%

-10.4%Total Provisions

Note: Detailed credit provisions and asset quality data in following slides


2 May 2011

Quarterly balance sheet: assets

(Eur mn) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11

931 1,252

671

3,398

1,525

10,777

3,765

49,862

( 1,790)

2,349

-

296

605

-

780

230

961

99

292

3,886

80,746

558

3,942

1,424

11,775

4,245

50,829

(1,777)

2,459

-

447

575

-

809

234

962

99

283

4,083

83,655

847

555

4,300

1,618

11,642

2,596

51,032

(1,725)

2,606

-

524

636

-

792

153

868

29

220

3,719

82,137

1,943

501

5,966

1,611

10,115

3,570

51,674

(1,682)

2,757

-

533

486

-

746

153

852

25

237

3,705

84,874

YoY QoQ

Cash and deposits at central banks 2,115 -40.8%

31.9%

-15.9%

-42.5%

19.0%

-43.3%

-0.1%

11.3%

-11.8%

-

-39.2%

37.4%

-

9.6%

70.3%

10.1%

446.5%

52.9%

5.9%

-4.0%

34.6%

Deposits with banks 509 20.2%

Financial assets held for trading 4,041 -13.8%

Financial assets at fair value through P&L 2,653 7.1%

Financial assets available for sale 9,058 -8.5%

Loans and advances to banks 6,635 -11.3%

Loans and advances to customers 49,898 -1.9%

(Provisions) (1,609) 0.7%

Held to maturity investments 2,664 -4.5%

Financial Assets with repurchase agreements - -

Hedging derivatives 486 -33.9%

Non current assets held for sale 440 5.3%

Investment property - -

Other tangible assets 712 -3.6%

Intangible assets 135 -1.7%

Investments in associated companies 872 -0.1%

Current income tax assets 18 -0.7%

Deferred income tax assets 191 3.2%

Other assets 3,670 -4.8%

Total Assets 84,098 -3.5%


2 May 2011

Quarterly balance sheet: liabilities


7,965 8521

1875

-

7199

30545

20742

-

217

5

212

27

110

-

2327

1603

73,386

2,088

-

6,381

30,819

24,110

-

229

5

215

25

116

-

2,292

1,935

76,179

6,654

2,275

-

6,215

29,923

25,643

-

214

43

192

84

94

-

2,311

1,226

74,874

4,222

1,736

-

7,302

26,522

33,062

-

215

26

172

126

70

-

2,306

1,219

76,978

YoY QoQ

Amounts owed to central banks 8,996 101.8%

8.0%

-

-1.4%

15.2%

-37.3%

-

0.8%

-78.9%

23.4%

-78.2%

56.4%

-

0.9%

31.5%

-4.7%

7.0%

Financial liabilities held for trading 2,169 -10.2%

Financial assets at fair value through P&L - -

Deposits from banks 7,112 12.8%

Due to customers 26,082 -0.9%

Debt securities 29,451 -14.0%

Financial liabilities associated to transferred assets - -

Hedging derivatives 241 -5.2%

Non current liabilities held for sale 35 0.0%

Provisions 180 -1.2%

Current income tax liabilities 97 8.2%

Deferred income tax liabilities 92 -4.9%

Instruments representing capital - -

Other subordinated loans 2,306 1.5%

Other liabilities 1,197 -17.1%

Total Liabilities 77,959 -3.7%


2 May 2011

Quarterly balance sheet: equity


6,474 6,738

3,500

1,085

269

-1

600

-33

1,317

61

0

562

7,361

3,500

1,085

320

-

600

( 10)

979

511

-

491

7,476

6,446

3,500

1,085

-

(25)

600

292

993

405

-

412

7,263

6,686

3,500

1,086

-

(25)

600

326

1,198

119

-

315

YoY QoQ

Shareholders' Equity

7,120

6,243

3,500

1,085

-

(25)

600

60

1,023

282

-

390

6,915

0.8%

0.0%

-0.1%

n.a.

-96.0%

0.0%

-110.1%

9.9%

-48.9%

-

78.2%

3.4%

4.1%

Share capital 0.0%

Share premium 0.0%

Other capital instruments -15.8%

Treasury stock n.a.

Preference shares 0.0%

Fair value reserve 243.6%

Other reserves and retained earnings 34.6%

Net Profit for the period / year -88.1%

Anticipated dividends -

Minority interests 14.4%

Total Equity -1.5%


2 May 2011

Quarterly loan portfolio (including securitised)

(EUR million) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11

17,630 17,378

14,695

14,222

473

2,683

2,348

335

37,319

27,441

9,878

54,697

44,011

10,686

20%

14,808

14,324

483

2,822

2,468

354

38,083

27,734

10,349

55,713

44,527

11,186

20%

17,651

14,894

14,398

496

2,757

2,428

329

38,278

27,701

10,577

55,929

44,427

11,403

20%

17,728

14,933

14,429

504

2,794

2,461

333

37,136

27,164

9,972

54,864

44,054

10,810

YoY QoQ

20%

17,775

14,981

14,484

497

2,794

2,451

343

38,823

27,990

10,833

56,597

44,925

11,673

21%

-1.4%

-0.8%

-0.7%

-2.1%

-4.9%

-4.9%

-5.4%

-2.0%

-1.1%

-4.6%

-1.8%

-1.2%

-4.5%

-2.0%

-1.6%

-1.4%

-6.2%

-4.0%

-4.6%

0.6%

0.5%

1.0%

-0.9%

-0.3%

-0.1%

-1.1%

Loans to Individuals

… ow Mortgages

… Domestic

… International

… ow Other

… Domestic

… International

Corporate Lending

… Domestic

… International

Loan portfolio

… Domestic

… International

% total

(1) Considering the outstanding amounts of securitised credit. Securitised credit only includes domestic loans.


2 May 2011

Quarterly asset quality indicators

Mar 10 Jun 10 Sep 10 Dec 10 Mar11

1.90% 2.17%

159.4%

2.38%

0.84%

4.46%

2.27%

145.4%

2.99%

116.1%

3.47%

63bp

68bp

40bp

142bp

172.5%

2.07%

0.84%

4.14%

2.30%

157.8%

2.66%

122.7%

3.27%

63 bp

62 bp

68 bp

1.67%

103 bp

1.95%

173.0%

2.10%

0.80%

4.08%

2.36%

160.6%

2.74%

123.5%

3.38%

71 bp

61 bp

110 bp

60 bp

187.5%

1.94%

0.86%

3.59%

2.16%

160.7%

2.38%

131.0%

3.12%

62 bp

59 bp

74 bp

141 bp

Overdue Loans >90 days / Gross Loans 1.70%

Coverage of Overdue Loans > 90 days 184.9%


Mortgage (>30d) 0.82%

Consumer (>30d) 3.64%

Corporates (>30d) 2.09%

Coverage of Overdue Loans >30 days 166.3%

QoQ Provision Charge 71 bp

… Domestic 69 bp

Spain 106 bp

… International 78 bp

Overdue and Doubtful Loans Ratio (BoP) (1) 2.40%

Coverage of Overdue and Doubtful Loans (BoP) 131.1%

Provisions for Credit / Total Gross Loans 3.15%

(1) According to Bank of Portugal rules (Circular Letter N. 99/09/2003)


2 May 2011

Quarterly asset quality indicators: Domestic and International

(EUR million) Mar 10 Jun 10 Sep 10 Dec 10 Mar11

52,757.0 51,652.1

40,966.3

10,685.8

1,231.5

1018.7

212.8

1,122.7

931.7

191.0

1,790.1

1,516.3

273.8

41,354.3

11,402.7

1,093.4

900.9

192.5

1,000.1

833.1

167.9

1,725.3

1,469.2

51,509.2

256.0

52,606.1

41,419.6

11,186.5

1,106.7

…Domestic 812.4 837.4 913

…Domestic 1,367.1 1,421.9 1,494.7

… International 241.8 259.6 282.3

… International 189.0 174.0 193

1,027.1

850.4

176.7

1,777.0

…Domestic 40,697.3 41,682.3

… International 10,809.8 11,672.8

1,001.3

858.0

…Domestic 719.0 764.6

… International 139.0 144.7

1,608.9

Gross Loans 53,355.1

Total Overdue Loans (> 30 days) 1,011.4

Overdue Loans > 90 days 909.3

Total Credit Provisions (BS) 1,681.5


2 May 2011

Quarterly asset quality indicators: Domestic and International

Mar 10 Jun 10 Sep 10 Dec 10

1.90% 1.95%

2.05%

1.58%

173.0%

175.8%

159.5%

2.10%

2.21%

1.73%

160.6%

163.7%

146.0%

2.01%

1.47%

172.5%

176.4%

152.5%

2.07%

2.18%

1.69%

157.8%

163.1%

133.0%

Mar 11

1.67% 2.17%

2.27%

1.79%

159.4%

…Domestic 190.1% 186.0% 162.7%

…Domestic 168.3% 170.4% 148.8%

… International 127.9% 149.2% 128.6%

… International 174.0% 179.4% 143.3%

2.38%

2.49%

1.99%

145.4%

…Domestic 1.77% 1.83%

… International 1.29% 1.24%

187.5%

1.94%

…Domestic 2.00% 2.01%

… International 1.75% 1.49%

160.7%


Coverage of Overdue Loans > 90 days 184.9%


Coverage of Overdue Loans >30 days 166.3%


2 May 2011

Quarterly and accumulated credit provision charge & net new entries

(EUR million; % annualised) 1Q10 2Q10 3Q10 1Q11

83.6 80.9

70.1

10.7

13.3

63bp

68bp

40bp

142bp

323.5

280.5

43.0

13.3

63bp

68bp

40bp

142bp

123bp

123bp

30.0

64.1

19.5

10.6

63 bp

62 bp

68 bp

103 bp

258.1

195.8

62.3

36.3

65 bp

63 bp

73 bp

118 bp

74 bp

66 bp

14.1

94.5

71.6

22.9

11.1

71 bp

69 bp

78 bp

106 bp

174.5

131.7

42.8

25.7

65 bp

63 bp

73 bp

123 bp

23 bp

61 bp

20.0

80.0

60.1

19.9

14.6

62 bp

59 bp

74 bp

141 bp

80.0

60.1

19.9

14.6

62 bp

59 bp

74 bp

141 bp

103 bp

Net new entries as % Performing Loans (accum.) 103 bp 59 bp

28.8

… Domestic 62.9

ow Spain 6.2

… Domestic 61 bp

… Domestic 258.7

Net new entries as % Performing Loans (quarter) 37 bp

… International 93.1

ow Spain 42.5

… Domestic 62 bp


ow Spain 104 bp


ow Spain 60 bp

… International 30.8

4Q10

P&L Credit Provisions Quarter 93.7

71 bp

351.8

67 bp

34.8

As % Loan Portfolio (bp)

P&L Credit Provisions Accumulated

As % Loan Portfolio (bp)

Quarterly Write Offs (Eur mn)


2 May 2011

Quarterly customer funds

(EUR million) Mar 10 Jun 10 Dec 10 Mar 11

30,819 30,545

8,145

22,401

2,006

5,747

38,298

17,715

56,013

41,732

14,281

25%

8,676

22,143

1,749

6,326

38,894

17,094

55,988

43,147

12,841

23%

26,082

7,974

18,108

5,834

5,924

37,841

18,006

55,847

40,375

15,472

28%

26,522

7,053

19,469

8,626

6,460

41,609

18,985

60,594

41,728

18,865

% total 31% 23% - -

Sep 10 YoY QoQ

Deposits 29,923

7,929

21,994

3,653

5,596

39,171

17,763

56,934

43,969

15.2%

12,965

… Sight 15.5%

-0.9%

-6.1%

1.2%

14.7%

-9.2%

-1.5%

3.6%

4.5%

-3.3%

11.2%

… Term

Certificates of Deposits -76.7%

15.1%

-11.0%

-8.0%

-6.7%

-7.6%

0.0%

-24.3%

Debt Securities placed with Clients

On-BS Customer Funds

Off-BS Funds

Total

… Domestic

… International


2 May 2011

Quarterly off-BS customer funds

(EUR million) Mar 10 Jun 10 Dec 10 Mar 11

4,459 5,437

2,585

2,852

1,356

1,275

81

2,673

2,539

134

4,805

3,444

2,638

806

17,715

13,842

3,873

2,406

2,053

1,375

1,291

84

2,655

2,522

133

5,374

3,231

2,801

430

17,094

14,394

2,700

4,709

2,732

1,977

1,439

1,353

86

2,639

2,486

153

5,716

3,503

3,053

450

18,006

15,340

2,666

5,179

3,044

2,135

1,328

1,251

77

2,707

2,569

138

5,846

3,925

3,437

488

18,985

16,147

2,838

Sep 10 YoY QoQ

Mutual Funds 4,620

2,659

1,961

1,429

1,350

79

2,643

2,508

135

5,705

3,366

2,930

436

17,763

15,152

2,611

… Domestic

21.9%5.0%

-15.1%

33.6%

2.1%

… Domestic 1.9% -1.2%

… International 5.2% -3.6%

-1.3%

-1.2%

-2.9%

-17.8%

-12.3%

-23.2%

65.2%

-6.7%

… International

-14.3%

7.4%

38.9%

-1.4%

0.7%

0.7%

0.8%

-10.6%

6.6%

-5.8%

87.4%

3.6%

… Domestic -3.8%

Real Estate Funds

36.5%

Pension Funds

… Domestic

… International

Bancassurance (Domestic)

Other (*)

… Domestic

… International

Total Off-BS Funds

43.4%… International

(*) Other includes off-BS structured products, discretionary management and venture capital


2 May 2011

Available for Sale Portfolio – main equity holdings potential gains & losses

(EUR million) Acquis. Value Stake (%) 2007 2008 2009 1Q10 3Q10 4Q10 1Q11

291.5 170.2

-49.9

-7.3

7.3

120.3

-55.8

135.0

0.0

-28.7

6.3

141.2

6.5

383.4 112.6

284.9

-18.9

51.4

7.1

324.5

316.7

-0.6

67.4

7.3

390.8

2Q10

Bradesco 708.0 1.85% 661.7 -20.5 185.1

-74.7

46.5

6.0

162.9Total 1,471.0 838.8 -179.5

0.0%

10.02%

0.25%

-75.8

-91.2

8.0

70.5

76.0

8.6

EDP 0.0

PT 760.5

BMCE 2.5

Potential Gains and Losses


2 May 2011

Quarterly solvency ratios

(EUR million)Mar 09(IRB)

Jun 09(IRB)

Sep 09(IRB)

Dec 09(IRB)

Mar 10(IRB)

Sep 10(IRB)

Dec 10(IRB)

67,210 68,802

60,610

4,219

3,973

7,798

5,416

6,040

1,758

920

15%

7.9%

8.8%

11.3%

59,642

3,900

3,668

7,393

5,303

5,589

1,807

600

11%

7.9%

8.3%

11.0%

Mar 11(IRB)

67,063 68,567

60,205

4,389

3,973

7,838

5,395

6,033

1,805

920

15%

7.9%

8.8%

11.4%

59,092

4,303

3,668

7,104

5,276

5,405

1,699

600

11%

7.9%

8.1%

10.6%

65,097

57,426

4,003

3,668

7,256

5,232

5,405

1,851

600

11%

8.0%

8.3%

11.1%

62,034

55,176

3,712

3,146

7,536

5,074

5,450

2,086

600

11%

8.2%

8.8%

12.1%

59,453

52,265

3,742

3,146

7,234

4,922

5,263

1,971

600

11%

8.3%

8.9%

12.2%

59,005

52,796

3,063

3,146

5,838

3,416

3,901

1,928

600

15%

5.8%

6.6%

9.9%

Jun 10(IRB)

RWA (BoP) 67,469

59,394

4,407

3,668

7,516

5,300

5,668

1,857

600

11%

7.9%

8.4%

11.2%

…Banking Book

…Trading Book

…Oper. Risk

Total Capital

Core Tier I

As % Tier I

Tier I (%)

Tier I

Other

Hybrid Capital

Core Tier I (%)

Total (%)

Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational riskPreliminary data as of Mar 2011.


2 May 2011

Table of contents


profitability




sovereign exposure


deterioration

V. Wrap up




2 May 2011

Annual growth up by 1.3% in 2010. Exports to assume an increasingly important role in economic activity, as domestic demand proceeds its adjustment.

Year Quarter Private Consumption

Public Consumption IInvestment Exports Imports GDP

20072Q 2.5 0.5 1.0 8.0 5.5 2.3 3Q 2.5 0.9 2.9 6.9 5.9 2.3 4Q 2.9 0.9 6.6 5.4 7.4 2.4

2008

1Q 2.5 0.7 2.4 4.9 7.4 0.9 2Q 1.7 0.6 2.7 2.6 4.4 0.9 3Q 2.2 0.9 0.1 0.7 3.8 0.3 4Q 0.8 2.1 -7.1 -9.1 -4.0 -2.0

2009

1Q -1.6 4.1 -15.6 -19.0 -15.5 -3.7 2Q -1.3 3.0 -16.4 -15.4 -14.5 -3.1 3Q -1.2 3.9 -11.6 -9.7 -8.5 -2.2 4Q 0.2 2.7 -12.5 -1.3 -3.7 -1.0

2010

1Q 2.7 1.6 -4.1 8.8 5.6 1.7 2Q 2.8 6.4 -4.5 9.2 9.9 1.3 3Q 1.6 0.1 -8.2 8.6 1.6 1.4 4Q 0.9 4.6 -5.5 8.1 4.5 1.2

Year Quarter Private Consumption

Public Consumption IInvestment Exports Imports GDP

20072Q 0.7 0.3 1.1 1.0 2.8 0.0 3Q 0.5 0.2 0.2 1.3 2.3 -0.1 4Q 0.8 0.1 2.9 0.7 1.2 1.0

2008

1Q 0.4 0.1 -1.8 1.7 0.9 0.1 2Q -0.1 0.2 1.4 -1.2 -0.1 -0.1 3Q 1.0 0.5 -2.3 -0.5 1.7 -0.6 4Q -0.6 1.3 -4.4 -9.1 -6.4 -1.4

2009

1Q -2.0 2.0 -10.8 -9.4 -11.1 -1.6 2Q 0.2 -0.8 0.3 3.3 1.0 0.6 3Q 1.2 1.4 3.3 6.2 8.9 0.2 4Q 0.9 0.1 -5.4 -0.7 -1.5 -0.1

2010

1Q 0.4 0.9 -2.2 -0.2 -2.5 1.0 2Q 0.3 3.8 -0.1 3.7 5.1 0.2 3Q 0.0 -4.5 -0.7 5.6 0.7 0.3 4Q 0.1 4.6 -2.5 -1.1 1.3 -0.3

65

GDP and components (%, q-o-q).

GDP and components (%, y-o-y).

GDP growth (%, y-o-y).

Sources: INE, Bank of Portugal.

Weight of Exports in GDP (%).

31.6

29.4

32.532.6

31.0

28.228.3

25.9 25.9 26.4

27.7

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


2 May 2011

2.94.2

2.8 2.9 3.2

5.9

3.83.1 3.5

10.19.1

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

%

-15000

-13000

-11000

-9000

-7000

-5000

-3000

-1000

Jan Feb Mar Apr May Jun Jul Aug Set Oct Nov Dec

2009

20102011

Public Deficit (% GDP)

The ongoing budget consolidation and the additional fiscal measures associated with the IMF/EC/ECB stabilisation programme should have a negative short term impact on economic growth.

The non approval in Parliament of a new Stability and Growth Programme and the consequent resignation of the Government resulted in a deterioration of investor sentiment. Increasing constraints associated with external market funding eventually led to a formal request of external assistance to the European Commission . Negotiations over a Stabilisation Programme are currently under way with the IMF/EC/ECB. The inclusion of some public companies and PPP projects in the Public Administration perimeter, and the accounting of the (one-off) Government assistance to two minor banks, have resulted in an upward revision of the 2010 deficit, to 9.1% of GDP.

The overall budget deficit of the Central Government and Autonomous Funds in 1Q 2011 is down by EUR 1.7 billion y-o-y, to EUR 148 million. Social Security reached a surplus of EUR 580 million in 1Q 2011.

Sources: INE, DGO, ES Research

Central Government Deficit (EUR million)


2 May 2011

Portugal has already adopted policy measures that are as broad-based as Greece’s and Ireland’s IMF-led measures.

PortugalTop marginal rate increased to 45%. Revenues at close to 6% of GDP. Higher rates (+1

to 1.5 pp). Lower benefits and deductions (broadening of

the tax base).

Statutory top rate at 25% plus 1.5% local tax (with

revenues at 3.7% of GDP), now increased to 27.5%

(+1.5%) for profits above EUR 2 million. Lower tax benefits.

Higher rates (5% to 6%, 12% to 13% and 20% to 23%).

Tighter limits for the reduced rate.

Current gasoline duty tax at EUR 0.52/litre. Higher fuel

taxes through the VAT increase. Introduction of new

highway tolls.

Higher social contributions from public sector workers.

Higher capital gains tax.

Instrument

Personal Income Tax

Corporate Income Tax

VAT

Excise/Consumption Taxes

IrelandTop marginal rate at

41%. Review of tax brackets and lower tax credits. Lower benefits

and deductions.

Statutory rate maintained at 12.5%.

Higher rates (from 21% to 22% in 2013 and

further increase to 23% in 2014).

Higher tax on CO2 emissions. Fuel tax to increase (current fuel

duty tax at EUR 0.56/litre). New local

services contribution.

Increase in property tax, capital gains tax, social

contributions

Other revenues

GreeceTop marginal rate at 45%, but

low efficiency (revenues at 4.7% of GDP). New imputed taxable income, abolition of most tax exemptions, new

measures against tax evasion.

Statutory top rate at 24%, revenues at 2.4% of GDP.

Tighter auditing of corporate tax liabilities. New special tax

on higher profits.

Higher rates (4.5% to 6.5%, 9% to 13%, 19% to 23%).

Broadening of the tax base. Tighter limits for the reduced

rate.

Higher tobacco, alcohol and fuel taxes (gasoline excise

duty raised by close to 10%, to EUR 0.68/litre). Special tax on luxury goods. New tax on CO2

emissions.

Broadening of the property tax base. Higher capital gains

tax.

http://www.cia.gov/cia/publications/factbook/flags/ei-flag.html

http://www.cia.gov/cia/publications/factbook/flags/gr-flag.html


2 May 2011

PortugalFreeze in public sector promotions and hiring.

Reduction in public sector hired staff. Public employment

spending to decline from 12.3% to 10.8% of GDP.

Average 5% cut in public sector pay (progressive cuts above EUR1500 monthly wages).

Reductions in overtime pay and travel expenses allowances. No accumulation of public wages

with public pensions.

Freeze in pensions. Cuts in “Social Inclusion” income (20%), family allowances, public health

spending and unemployment benefits . Tighter means-

testing.

Extinction/merger of public sector institutions. Cuts in

consumption (currently 5.3% of GDP) and investment (now at 2.5% of GDP). Suspension of

infrastructure projects.

Instrument

Public sector employment

Public sector pay

Social expenditure

Operating and investment spending

GreeceWorkforce reduction, applying

the rule 5:1. Cancellation of short term contracts and

vacancies in the public sector. Public employment spending

to decline from 13.5% to 12.3% of GDP.

Reductions in wage allowances and cuts in (or

abolition of) Easter, summer and Christmas bonuses,

implying an overall cumulative average cut in

nominal wages of around 14%.

Progressive cut in pensions (9% average). Suspension of

pension indexation. Cut in the “solidarity allowance”. Tighter

means testing in unemployment benefits.

Lower transfers to public sector companies. Cuts in consumption (from 7.1% to

5.2% of GDP) and investment (from 3.4% to 2.5% of GDP) .

IrelandWorkforce reduction (by 25K), to the levels

observed in 2005. Public employment spending to decline from 12.3% to 11.4%

of GDP.

10% average cut in public sector pay (15% to 20% for

Government officials). Pay rates

for new civil servants further reduced by

10%.

Progressive cuts in public service

pensions (average 4%). 4% cut in

working-age social welfare spending.

Cuts in consumption (EUR 1 billion) and investment (EUR 3 billion), currently at

5.9% and 4.5% of GDP, respectively.

Fiscal measures announced in 2010 with an impact in 2011 represent savings of 5.3% of GDP(1), with the bulk of deficit reduction efforts (around 2/3) focused on lower spending

(1) Includes measures announced in May 2010, as well as in the 2011 Budget(measures implemented in 2010 account for 0.8% of GDP)




2 May 2011

Portugal is well ahead in the structural reform of social security, which favours long-term public debt sustainability.

Merger of separate pension funds into one unified new system. Rise in minimum contributive period (from 37 to 40 years). New statutory retirement age of 65 years (current average retirement age around 53 years). Retirement age to adjust in line with life expectancy. New penalties for early retirement. Pensionable earnings based on entire working life (up from last 5 years). Lower average accrual rate.

Age-related public spending increase in 2010-2060 currently estimated at 16% of GDP.

Pensions to be based on lifetime career average earnings (vs. current final salary). Retirement age will increase to 66 years in 2014, 67 in 2021 and 68 in 2028.Lower pension tax relieves and deductions.

Age-related public spending increase in 2010-2060 currently estimated at 8.5% of GDP.

Social Security Reform

Irlanda Grécia Portugal

New Social Security Law approved in 2007.

Introduction of a “sustainability factor”, linking pensions to life expectancy at 65 years (legal retirement age). New penalties for earlier retirements and benefits for late retirements.

Pensionable earnings based on entire working life. Lower average accrual rate.

Public sector system to adjust gradually to new rules, until 2015.

Age-related public spending increase in 2010-2060 estimated at 2.9% of GDP.




2 May 2011

5

6

7

8

9

10

11

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

9.8%

%

Private consumption coincidentindicator (y-o-y) and consumerconfidence (EC).

Households’ savings rate(% disposable income).

Source: INE, Banco de Portugal, Comissão Europeia

We expect lower private consumption in 2011, mainly as a result of restrictive fiscal policy measures (eg. lower wages, higher taxes and social contributions) and a fall in confidence levels. Domestic demand should also be constrained by tighter financing conditions.

In spite of low GDP growth (and a recession in 2009), non-performing loans have remained contained as a proportion of total loans (particularly in housing loans),

Non-performing loans(% y-o-y).

Domestic demand expected to proceed its adjustment in 2011...


2 May 2011Source:s Reuters EcoWin Pro, Banco de Portugal, Comissão Europeia, INE.

… but external demand should remain strong, partially compensating the expected decline in domestic demand.

0

5

10

15

20

25

30

35

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

%

0.0

New manufacturing orders, external market (%, y-o-y, 6-month MA).

Empréstimos a sociedadesnão-financeiras% YoY

Exports(nominal % y-o-y, 3-month MA).

Strong external demand has continued to support business activity. Exports were up by close to 22% y-o-y in the quarter ending in February and new external orders to the manufacturing sector increased close to 40% y-o-y in the same period (6-month MA).

Loans to non-financial corporations are showing low growth, reflecting lower demand for business investment and tighter financing conditions.

-35

-25

-15

-5

5

15

25

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

%

21.7%Feb.


2 May 2011

Ongoing deleverage process in the Portuguese economy has already translated intohigher domestic savings rate and a lower external deficit.

The deleverage of the economy is underway, with net external financing needs declining, in 2010, from 9.7% to 8.5% of GDP and with the domestic savings rate (including all sectors of the economy) rising to 9.2% of GDP in 4Q 2010.

Domestic Savings Rate (% GDP)

Sources: INE, ES Research

External Deficit (net external financing needs of theeconomy), % GDP

02468

101214161820

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

%

9.2%

9.2 9.0

6.7

4.4

6.6

8.99.5

8.9

11.4

9.78.5

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

%


2 May 2011 73Sources: Reuters EcoWin Pro, Bank of Portugal,

European Commission, INE; Central Bank of Greece.

Liquidity provision by the ECB (EUR billion).

Portuguese Banks’ deposits(EUR billion).

Greek Banks’ deposits(EUR billion).

• The increase in Portuguese banks’demand for central bank liquidity has been a direct result of the downgrading in sovereign ratings (banks’ ratings were automatically adjusted after the downgrading of the Republic and market financing therefore became less available). Portuguese banks have had no exposure to toxic assets, they are not suffering any effects of a bubble bursting in the housing sector and non-performing loans are contained.

• Portuguese banks haven’t had access to the wholesale funding market for a year. In this context, the banks have been pursuing an aggressive deleverage process, selling loans and other assets (not related to domestic activity), reducing domestic loans and increasing domestic deposits (eg. taking advantage of higher domestic savings and “re-intermediating”savings). Household deposits reached a historical high in January, reflecting the ongoing confidence in the banking sector.

Irish Banks’ deposits(EUR billion).

Portuguese banks’ deposits continued to increase in 1Q 2011.

0

20

40

60

80

100

120

140

160

Jan. 2007 Jan. 2008 Jan. 2009 Jan. 2010 Jan. 2011

EUR

Billi

on

Portugal(39.1; Mar. 2011)

Spain(41.0 Mar. 2011)

Greece(91.8; Feb. 2011)

Ireland(114.5; Mar. 2011)

150

160

170

180

190

200

210

220

230

Jan-08 Mai-08 Set-08 Jan-09 Mai-09 Set-09 Jan-10 Mai-10 Set-10 Jan-11

150

155

160

165

170

175

180

185

190

Jan-08 Mai-08 Set-08 Jan-09 Mai-09 Set-09 Jan-10 Mai-10 Set-10 Jan-11150

170

190

210

230

250

Jan-08 Jun-08 Nov-08 Abr-09 Set-09 Fev-10 Jul-10 Dez-10


2 May 2011

Sources:Banco de Portugal; Ministério da Economia, da Inovação e do Desenvolvimento; Ministério das Finanças e da Administração Pública

1996 2010

Serviços

Traditional goods

(from 56% to 48%)

Merca-dorias

24%

Portuguese Exports Profile

68%

32%

Goods with hightechnological components (from 44% to

52%)

Serviços

Merca-dorias

76%

• Portuguese exportswere up by 8.7% in real terms in 2010

• For 2011 and 2012, exports growth around6% is forecasted

Portuguese exports profile has changed significantly, with an increase of high valueadded goods and services


2 May 2011

Main maritime trade routes to Iberia

Potential route to the Spanish ports of Barcelona, Valência andAlgeciras

Potential routes to the Portuguese ports of Lisbon, Sines and Setúbal

Portuguese ports can play a very important role in the trade flows between America, Africa, Asia and Europe. The development of logistic platforms (with all the associated services) should be an engine of growth of the economy.

(…)

(…)


2 May 2011

Main European trade routes.

Source: European Commission.

The main European trade routes are expected to expand to the east, as a consequence of the EU enlargement and of stronger economic growth in the region. Given the potential trade flows originating from North and South America, and given the signs of congestion in the Spanish ports of Valencia and Barcelona, Portuguese ports should be seen as privileged gateways to merchandise inflows in Europe.


2 May 2011

Annual growth rates (%), except where indicated

F: Forecast;

Sources: Bank of Portugal, INE, ES Research, European Commission, IMF, OECD.

* These forecasts do not include the impact of the new austerity measures that will be part of the IMF/EC/ECB stabilisationprogramme. While a revision will be made when the details of this programme are available, it is expected that they will result in negative GDP growth in 2012.

Portugal: Main Forecasts 2011-2012

2006 2007 2008 2009 2010E 2011F 2012F

GDP 1.4 2.4 0.0 -2.5 1.3 -1.3* 0.3*

Private Consumption 1.8 2.5 1.8 -1.0 2.0 -1.9 -0.6

Public Consumption -0.7 0.5 1.1 3.4 3.2 -3.5 -1.5

Investment -0.6 2.0 -0.5 -14.0 -5.6 -8.2 -3.2

Exports 11.6 7.6 -0.3 -11.6 8.7 6.7 6.3

Imports 7.2 5.5 2.8 -10.6 5.3 -0.6 1.4

Inflation (%) 3.1 2.5 2.6 -0.8 1.4 3.2 1.9

Budget Balance (% GDP) -4.1 -3.1 -3.5 -10.1 -9.1 -4.6 -3.0

Public Debt (% GDP) 63.9 68.3 71.6 83.0 93.0 97.3 97.5

Unemployment (% Labour Force) 7.7 8.0 7.6 9.5 10.8 11.6 12.2


2 May 2011

Macro Spain Highlights: Avoiding contagion effects

Sources: INE & Bloomberg (Spain)

Domestic demand adjustments and austerity measures are still impacting the Spanish economy, but a stabilising trend in activity has been visible. This should result in a return to positive annual GDP growth in 2011. The Budget deficit declined significantly in 2010 and, although risks remain in place, so far Spain appears to have avoided contagion effects from the Euro Area periphery’s sovereign risk crisis. The reform of the banking sector shouldremain under focus in 2011.

5 year-CDS Spreads (sovereign and financial) (basis points)

PMI Services, PMI Manufacturing and GDP (%, y-o-y).

2025303540455055606570

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Index (Points)

%

GDP (LHS)PMI Services (RHS)

PMI Manufacturing (RHS)

0

50

100

150

200

250

300

350

400

450

Jan. 2008 Jul. 2008 Jan. 2009 Jul. 2009 Jan. 2010 Jul. 2010 Jan. 2011

Basis

Poi

nts

Sovereign

Financial Sector


2 May 2011

Sources: INE, Bank of Spain, ES Research, European Commission.

Spain: Main Forecasts 2011-2012

Annual real growth rates (%), except where indicated. 2006 2007 2008 2009 2010F 2011F 2012F

GDP 3.9 3.6 0.9 -3.7 -0.1 0.8 1.4

Private Consumption 3.9 3.6 -0.6 -4.3 1.3 0.7 1.3

Public Consumption 4.6 5.5 5.8 3.2 -0.1 -1.1 -1.2

Investment 7.1 4.6 -4.8 -16.0 -7.4 -3.1 -0.5

Exports 6.7 6.6 -1.1 -11.6 9.2 8.0 6.6

Imports 10.3 8.0 -5.3 -17.8 3.5 2.7 3.6

Inflation (%) 3.4 2.8 4.1 -0.3 1.8 2.4 2.0

Budget Deficit (% GDP) 2.0 1.9 -4.2 -11.1 -9.2 -6.0 -4.4

Public Debt (% GDP) 39.6 36.1 39.8 53.3 60.1 71.9 73.5

Current & Capital Account Balance (% GDP)

-8.4 -9.6 -9.1 -4.5 -3.7 -3.5 -3.1

Unemployment (% of Labour Force) 8.5 8.3 11.3 18.0 20.0 20.5 20.5


2 May 2011

GDP growth(% , yoy)

Macro Angola Highlights: Recovery underway.

Sources: BNA, OPEC & Bloomberg

The acceleration of economic activity in 2010 was supported by a rise in oil revenues (in spite of a fall in production), and a stronger growth of non-energy sectors. Private investment has been recovering. External reserves are showing a recovery trend, benefiting from higher oil revenues and from the impact of financial stabilisation measures. After 1.6% growth in 2010, GDP is expected to increase around 7.3% in 2011.

Net external reserves(USD billion)

5

7

9

11

13

15

17

19

21

Jan. May Sep. Jan. May Sep. Jan. May Sep.2008 2009

USD

billio

ns2010

3.3

11.2

20.6 19.5

23.9

13.8

2.4 1.6

7.3 10.3

9.0

14.1

27.5

20.1 14.7

5.2

6.0

8.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2003 2004 2005 2006 2007 2008 2009 2010F 2011F

%

Non-oil sector

GDP


2 May 2011 8181

Sources: IMF, Angolan Central Bank, Finance Ministry, ES Research.

Angola: Main Forecasts 2011-2012

2006 2007 2008 2009 2010F 2011F 2012F

GDP (real growth rate, %) 19.5 23.9 13.8 2.4 1.6 7.3 9.7

GDP per capita (USD, current prices) 2 847 3 705 5 010 4 082 4 425 4 584 5 064

Inflation (%) 13.3 12.3 12.5 13.7 14.5 13.3 11.0

Current Account Balance (% GDP) 25.2 15.7 8.5 -10.0 0.6 -4.8 0.2

Budget Balance (% GDP) 14.8 11.3 8.9 -8.6 7.5 4.5 7.2

Exchange Rate (USD/KZ), annual average 80.4 76.8 75.0 79.3 91.7 92.0 92.0

BNA Rediscount Rate (%), end of period 14.0 19.6 19.6 30.0 25.0 20.0 15.0


2 May 2011

Macro Brazil Highlights: A new cycle in monetary policy

Y-o-Y Inflation and Selic Target Rate (%).GDP growth (%, q-o-q and y-o-y)

Sources: IBGE, BACEN & Bloomberg

GDP grew 5% y-o-y in 4Q 2010 and 7.5% in the whole year 2010, and the latest indicators continue to suggest relatively robust, but decelerating, activity growth, based on exports and private consumption. Investment outlays have apparently peaked and, amidst stricter credit conditions, are likely to grow at a much milder pace than the one observed in 2010. Annual growth is thus expected to fall to 4% in 2011. As inflationary pressures have been building recently, in spite of a stronger BRL and a higher level of interest rate, the Brazilian Central Bank will probably continue to raise the basic interest rate in order to guarantee the convergence of inflation to the targeted level (4.5%) in 2012.

2000 2002 2004 2006 2008 2010

Per

cent

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

22.5

25.0

27.5

-6-4-202468

10

2002 2003 2004 2005 2006 2007 2008 2009 2010

%

Y-o-Y

Q-o-Q

5.0

0.7


2 May 2011

Sources: IBGE, Central Bank of Brazil, ES Research.

Brazil: Main Forecasts 2010-2011

2006 2007 2008 2009 2010F 2011F 2012F

GDP (real growth rate, %) 4.0 6.1 5.2 -0.6 7.5 4.0 4.0

Inflation (%) 3.1 4.5 5.9 4.3 5.9 6.2 4.8

Primary Budget Balance (% GDP) 3.2 3.4 4.0 2.0 2.8 2.9 3.1

Public Debt (% GDP) 47.0 45.1 38.1 42.8 40.4 39.0 38.0

Unemployment (% of Labour Force) 10.0 9.3 7.9 8.1 6.7 6.8 7.0

Current Account Balance (% GDP) 1.2 0.1 -1.7 -1.5 -2.3 -2.8 -3.1

Exchange Rate (USD/BRL), annual

average2.18 1.95 1.84 2.00 1.76 1.63 1.73

SELIC Interest Rate (%, End of Period) 13.25 11.25 13.75 8.75 10.75 12.75 11.00

2005 results presentation · 1q11 results presentation (unaudited figures) 2nd may 2011. 1

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