22 July 2008
Earnings Presentation 1st Half 2008
22
Earnings Presentation – 1st Half 2008
DISCLAIMER
• This document is not an offer of securities for sale in the United States, Canada, Australia, Japan or any other jurisdiction. Securities may not be offered or 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.
33
Earnings Presentation – 1st Half 2008
Highlights
Portuguese operating profit up 19% from 1Q081
International operating profit up 3% from 1Q08. Without Romania the growth would have been 10%.
2
Group operating profit up 15% from 1Q083
Acceleration of volumes growth, mainly on Deposits4
5Restored capital position able to support franchise growth in core markets; expansion plans on track.
Excluding specific items.
44
Earnings Presentation – 1st Half 2008
Agenda
§ Group§ Portugal§ Poland§ Greece§ Other international operations
55
Earnings Presentation – 1st Half 2008
130.8134.2182.1
2Q07 1Q08 2Q08
265.0
373.4
1H07 1H08
YoY lower consolidated net income but in line last quarter(Eur million)
-29.0%
Specific Items*:- BPI stake (-176.9)- Reduction of variable
remuneration accrued in 2007 (+13.2)
101.4
119.5
-28.2%
Net Income
104.3 100.3147.8
2Q07 1Q08 2Q08
International
Portugal
29.9 30.634.2
2Q07 1Q08 2Q08
-32.1%
-3.8%
+2.2%
-10.5%
Excluding specific items.
65.5 163.6
307.9
(*) Net of taxes.
66
Earnings Presentation – 1st Half 2008
68.4
651.3591.8566.7 587.7606.3
76.6 69.961.884.2
2Q07 3Q07 4Q07 1Q08 2Q08
1,238.91,174.5
138.3176.3
1H07 1H08
Top line growth accelerates in 2Q, in spite of adverse financial market conditions(Eur million)
+2.0%1,350.8 1,377.3
721.2690.5 643.3
Financial Margin+ Commissions
Trading + Other
+9.9%
Financial Margin+ Commissions
Trading + Other
-21.5%
+5.5%
989.1 939.6
1H07 1H08
International
Portugal
437.7361.7
1H07 1H08
+21.0%
-5.0%
653.6 656.1
Excluding specific items.
Operating Income
+4.4%
77
Earnings Presentation – 1st Half 2008
Operating profitability is being restored, quarter after quarter …
60.2%58.7%55.9%
2Q07 1Q08 2Q08
-1.5pp
Cost to income ratio
Jaws
10095
104 102107
102107 105
114
10095
10194
99105 109
101108
2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
289.3252.5221.7 219.8
295.8
2Q07 3Q07 4Q07 1Q08 2Q08
14.5%
Operating Profit
§ Acceleration of revenue growth.§ Operating costs increasing vs. Q1
08 due to expansion projects.§ Improvement of cost to income
ratio when compared with last quarter.
Highlights
Basic Revenues and CostsBase 100: 2Q06
Costs
Revenues
(Eur million)
Excluding specific items.
88
Earnings Presentation – 1st Half 2008
In spite of expansion effort
New branches opened during the 1 half 08
Angola
Greece
Poland
Romania
Mozambique
Portugal
1
12
35
2
3
29
Turkey 2
Total of 84new branches opened
99
Earnings Presentation – 1st Half 2008
40,04445,355 49,175
18,59819,733
16,839
Jun 07 Dec 07 Jun 08
Mortgage
Consumer loans
Loans to companies
Double digit growth in volumes in both loans and customer funds (particularly as regards on balance-sheet funds)
Loans to Customers (*)
(gross)
(*) Includes securitized loans. (**) Includes Deposits and Debt Securities placed with customers.
34,291 36,724 39,114
4,645
26,55528,629
4,3834,797
29,776
Jun 07 Dec 07 Jun 08
+13.0%
69,998
(Eur million)
Off BS Customers’Funds
63,953
+10.4%
Customers’ Funds
66,01459,777
65,229
73,687
On BS Customers’Funds (**)
+22.8%
1010
Earnings Presentation – 1st Half 2008
483.4 536.8
81.2123.6
Jun 07 Jun 08
Credit Quality
Stable credit quality in the context of sustained loan volume growth, but increasing cost of risk due to collateral revaluation
Impairmentcoverage > 90 days
Overdueratio > 90 days
Total overdue
< 90 days
> 90 days
248.0%
0.8%
564.6
(Eur million)
0.8%
245.2%
660.40.39
0.22
0.460.34
0.55
0.04
0.580.61
0.70
0.47
0.69
0.95
0.84
0.48
2002 2003 2004 2005 2006 2007 1H08
Impairment charges as % of Total Loans (*)
Gross Impairment charges as % of
Total Loans
Impairment net of Recoveries as % of Total Loans
(*) Impairment charges on a comparable basis.(**) Of the yearly increase, 9 bps were justified by two particular cases. Excluding these cases, the impaiment net of recoveries would have been 30 bps.
(**)
(**)
Excluding specific items.
1111
Earnings Presentation – 1st Half 2008
Good credit quality performanceOverdue Loans / Total Loans
0.87
1.29
1.34
0.48
1.04
2.74
0.33
0.67
1Q08
0.90
1.49
1.58
0.44
1.16
2.62
0.30
0.62
3Q07
0.87
1.48
1.40
0.38
1.12
2.45
0.28
0.59
2Q07
0.79
1.20
1.45
0.37
0.97
2.37
0.31
0.60
4Q07
0.90Total
1.28Other
1.50Commerce
0.63Services
1.10Companies
2.69Consumer
0.34Mortgage
0.67Individuals
2Q08% Portfolio
No exposure to US subprime, no consumer credit issues and no exposure to insurance monoliners
1212
Earnings Presentation – 1st Half 2008
Positive evolution of liquidity position Wholesale funding
(Eur billion)
0.8
2.3 2.3
1.1
2.6
1H08 3Q08 2008 E
Maturity and projected issues
Accumulated values
High liquidity assets
2.3
1.0
Refinancing needs
3.3
Concluded operations
Projected operations
ü Increase until June 08 of €1.8 bn
ü Expected increase for the full year 2008 of €3.9 bn
Commercial Gap 1H08 *
Consolidated - € 0.17 bn
Portugal - € 0.26 bn
Poland + € 0.59 bn
* Commercial Gap = change of (Deposits + Debt Securities) – Loans to Customers before provisions
1313
Earnings Presentation – 1st Half 2008
BCP Group – solvency evolution (Basel II)
(Eur million)
Core Tier 1
Core Tier 1
Tier 1
4.0%
Total
5.1%
8.9%
RWA 65,299
6.1%
7.5%
10.9%
66,862
Eurmillion bp
1) Share capital increase 1,267 +194 bp
2) BPI devaluation -44 -6 bp3) Activity 83 +3 bp4) Driven by capital increase 150 +18 bp
Total 1,456 +209 bp4,093
2,637
Mar 08 Jun 08
1414
Earnings Presentation – 1st Half 2008
Agenda
§ Group§ Portugal§ Poland§ Greece§ Other International operations
1515
Earnings Presentation – 1st Half 2008
100.3104.375.7 85.9
147.8
2Q07 3Q07 4Q07 1Q08 2Q08
Net income lower YoY, but recovery trend is clear(Eur million)(Eur million)
204.5312.8
1H07 1H08
-34.6%
Excluding specific items.
Net Income
-3.8%
1616
Earnings Presentation – 1st Half 2008
Top line still reflects adverse market environment, but pace of recovery is picking up(Eur million)
37.5
470.8413.3402.3 409.8452.3
40.721.5
23.845.1
2Q07 3Q07 4Q07 1Q08 2Q08
880.6878.4
59.0110.7
1H07 1H08
989.1 939.6
447.3497.4
443.0
Financial Margin+ Commissions
Trading + Other
Financial Margin+ Commissions
Trading + Other
-46.7%
+0.2%
-5.0%
437.0 492.3
Excluding specific items.
+10.1%
Operating Income
+2.3%
1717
Earnings Presentation – 1st Half 2008
0.760.64
2.14 2.051.92 1.99 1.98
1.77
1.321.22
1.431.381.41 1.39
0.90 0.82 0.73 0.70
Positive net interest income performance in spite of higher funding costs
(Eur million)
0.96 0.91
3.54 3.453.493.433.20
3.42
0.88 0.97 0.99 1.04
0.870.680.760.82
0.910.99
Term Deposits
Demand Deposits
Spreads on Corporate Loans(%)
Spreads on Mortgage Loans(%)
Spreads on Deposits(%)
281.0
266.7
299.7
290.2
270.6
2Q07 3Q07 4Q07 1Q08 2Q08
Quarterly Net Interest Income
2008
589.9566.4
28.022.3
1H07 1H08
588.8 617.9
+4.1%
Dividends
Net interest income
Financial Margin
+4.9%
1Q 2Q 3Q 4Q
2007
Large Corporates
Retail SME
Corporate SME
1Q
2008
1Q 2Q 3Q 4Q
2007
1Q
2008
1Q 2Q 3Q 4Q
2007
1Q2Q 2Q 2Q
1818
Earnings Presentation – 1st Half 2008
Yoy lower commissions mainly reflect adverse financial markets but recovering from 1Q08
54.0
91.8 78.5
95.580.7
52.4
49.650.0
1H07 1H08
-9.3%289.6262.7
Cards
Securities and Asset Management
Credit related
Bank. Services & other
46.2 39.443.8
37.5 40.9
52.243.6
42.332.3
48.4
27.927.726.4 26.026.4
23.122.1 26.527.826.4
2Q07 3Q07 4Q07 1Q08 2Q08
143.8151.2131.5
Cards
Securities and Asset Management
Credit related
Bank. Services & other
-15.5%
-14.5%
-0.8%
+3.0%
141.7
(Eur million)
118.9
Excluding specific items.
Commissions
+20.9%
1919
Earnings Presentation – 1st Half 2008
316.2
189.8
34.6 33.9
315.0
188.2
1H07 1H08
Stable operating costs from continuingfocus on efficiency
+0.4%537.8 539.8
Staff
Depreciation
Administ.
17.2 17.4 17.4 17.0 16.8
161.0144.3164.0 155.2156.6
92.5107.3 97.3111.899.5
2Q07 3Q07 4Q07 1Q08 2Q08
275.1273.3 288.7 273.5
Staff
Depreciation
Administ.
-2.1%
+0.8%
+0.4%
(Eur million)
264.7
Excluding specific items.
Operating Costs
2020
Earnings Presentation – 1st Half 2008
Operating profit coming back …
57.3% 54.3%53.3%
2Q07 1Q08 2Q08
-3.0pp
Cost to income ratio
Jaws
100 98105
102106
9599 98
109
100 97 9793 96
10196 93
96
2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
217.3182.6
154.3 163.5
224.1
2Q07 3Q07 4Q07 1Q08 2Q08
+19.0%
Operating Profit
§ Revenues accelerating§ Costs under tight control.§ Improvement in cost to income vs.
last quarter.
HighlightsBasic Revenues and Op.CostsBase 100: 2Q06
Costs
Revenues
(Eur million)
Excluding specific items.
2121
Earnings Presentation – 1st Half 2008
31,60935,174 36,854
17,30916,206 15,198
Jun 07 Dec 07 Jun 08
Yoy strong volume growth in both loans and customers funds. Increased focus on BS funds.
Mortgage
Consumer Loans
Loans to companies
Loans to Customers (*)
(gross)
(*) Includes securitized loans.
30,596 32,178 33,653
3,158
21,95922,984
3,0673,180
23,127
Jun 07 Dec 07 Jun08
+7.8%
58,320 51,380
+6.4%
Customers’ Funds
(Eur million)
48,91852,05259,960
55,622
Off BS Customers’Funds
On BS Customers’Funds
+16.6%
2222
Earnings Presentation – 1st Half 2008
313.9 353.4
65.996.9
Jun 07 Jun 08
Credit Quality
Stable credit quality in the context of sustained loan volume growth, but increasing cost of risk due to collateral revaluation
Impairmentcoverage > 90 days
Overdueratio > 90 days
Total overdue
< 90 days
> 90 days
305.2%
0.6%
379.8
(Eur million)
0.6%
306.9%
450.2
Impairment charges as % of Total Loans (*)
0.40
0.01
0.21
0.23
0.64
0.78
0.500.46
0.74
0.65
2004 2005 2006 2007 1H08
Gross Impairment charges as % of
Total Loans
Impairment net of Recoveries as % of Total Loans
(*) Impairment charges on a comparable basis.(**) Of the yearly increase, 11 bps were justified by two particular cases. Excluding these cases, the impairment net of recoveries would have been 29 bps.
(**)
(**)
2323
Earnings Presentation – 1st Half 2008
Resilient loan quality, is spite of slight deterioration on exposure to corporates
0.71
1.02
1.26
0.45
0.85
1.85
0.35
0.53
1Q08
0.72
1.05
1.45
0.41
0.88
2.22
0.30
0.53
3Q07
0.68
1.00
1.34
0.35
0.82
2.13
0.28
0.51
2Q07
0.63
0.90
1.35
0.34
0.77
1.55
0.31
0.46
4Q07
0.75Total
1.01Others
1.36Commerce
0.60Services
0.91Companies
1.88Consumer
0.36Mortgage
0.55Individuals
2Q08% Portfolio
Overdue Loans / Total Loans
2424
Earnings Presentation – 1st Half 2008
Agenda
§ Group§ Portugal§ Poland§ Greece§ Other International operations
Exchange rate: fixed exchange rate was used for comparison purposes
(Balance sheet: 1€ =3.35130 PLN; P/L: 1€ = 3.498525PLN)
2525
Earnings Presentation – 1st Half 2008
Sustained net income growth
(Eur million)(Eur million)
36.6 36.4 34.9 36.3 35.8
2Q 3Q 4Q 1Q 2Q
72.1
60.6
1H07 1H08
+18.9%
2007 2008
Net Income
2626
Earnings Presentation – 1st Half 2008
Strengthened operating income performance reflects sound core business(Eur million)
17.2
112.4110.1101.1 110.094.2
27.0 26.222.427.9
2Q07 3Q07 4Q07 1Q08 2Q08
222.5
43.4
178.3
49.7
1H07 1H08
228.0
265.9
122.1128.1 132.4 127.2
Financial Margin+ Commissions
Trading + Other
Financial Margin+ Commissions
Trading + Other
-12.6%
+24.8%
+16.6%
138.6
(*) Proforma data. Margin from all derivatives hedging FX denominated loan portfolio is presented in Net Interest Income, whereas in accounting terms part of this margin is presented in Result on Financial Operations.
(*)
(*)
Operating Income
2727
Earnings Presentation – 1st Half 2008
Strong net interest income growth, benefiting from both volume and price trends …
(Eur million)
54.0
68.6
79.7
71.5
60.0
2Q07 3Q07 4Q07 1Q08 2Q08
Quarterly Net Interest Income
3.3%NIM 2.9% 3.1%
105.6
151.3
1H07 1H08
2.92% 3.41%
Net interest income
Financial Margin
+43.3%
3.2%
NIM
3.5%
2828
Earnings Presentation – 1st Half 2008
…more than compensated the drop of net commissions (due to adverse market conditions)
(Eur million)
14.4
5.2
6.313.4
14.9
6.78.0
9.4
26.239.4
1H07 1H08
-2.1%72.7 71.2
Cards
Securities and Asset Management
Credit related
Bank. Services & other
2.4 2.4 3.83.2 3.16.8 7.2 7.47.4 7.5
5.74.34.8 8.74.2
4.33.5 5.14.14.4
23.022.4 1511.2
21.9
2Q07 3Q07 4Q07 1Q08 2Q08
38.640.2 41.1
+11.1%
+23.0%+17.3%
+113.0%Insurance
-33.6%
41.5
Cards
Securities and A.M.
Credit related
Insurance
Bank. Services & other
Commissions
32.6
2929
Earnings Presentation – 1st Half 2008
85.8
69.49.1
9.3
71.4
56.3
1H07 1H08
Operating costs growing reflecting expansion plan
+20.2%136.7
164.4
Staff
Depreciation
Administ.
4.54.9 5.6
43.241.641.0 42.636.5
32.331.4 37.135.529.9
11.3 3.7
2Q07 3Q07 4Q07 1Q08 2Q08
70.977.4
88.478.6
Staff
Depreciation
Administ.
+2%
+23%
+20%
85.8
(Eur million)
Operating Costs
3030
Earnings Presentation – 1st Half 2008
Efficiency ratio in line with previous quarter
61.8% 61.8%60.0%
1H07 1Q08 1H08
+1.8pp
Cost to Income ratio
Jaws
100 94 106124
141161 163 156 152
100 102128 115 124 135 143 136 148
2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
91.076.7
1H07 1H08
+18.6%
Operating Profit
§ Fast pace revenues growth although at a lower rate than 4Q07.
§ Costs under control despite expansion.
§ Cost to income ratio in line.
Highlights
Basic Revenues and CostsBase 100: 2Q06
Costs
Revenues
(Eur million)
3131
Earnings Presentation – 1st Half 2008
Continuation of branch network expansion
§ 20 new branches were opened in 2Q 2008 and the Bank maintains 490 branches goal by the year end (and 560 by 2009).
§ Bank Millennium significantly increased network coverage in many regions and particularly in some big cities
§ 400 new employees recruited in 1H 2008 for the expansion project
Branch expansion status
410 445 490 560
Total number of branches
Dec 07 2008 2009
New
Transformed
163233
49
49212
282
83
45
128
Plan
June 08
107
46
153
Dec 06
22
53
354
31
3232
Earnings Presentation – 1st Half 2008
Sustained volume growth
Mortgage
Consumer Loans
Loans to companies
Loans to Customers (*)
(net)
(*) Includes securitized loans.
1,971 2,125 2,368
541
3,1543,907
475622
4,532
Jun 07 Dec 07 Jun 08
34.3%
6,573
Deposits
Other
Customers’
Funds
5,137
6,5057,668
1,120
1,825
2,194
Jun 07 Dec 07 Jun 08
8,330
+19.9 %
Customers’ Funds
(Eur million)
7,522
5,601
7,332
8,788
3333
Earnings Presentation – 1st Half 2008
Jun 07 Jun 08
Credit Quality
Improvement in asset quality & cost of risk in absolute and relative terms
Impairmentcoverage
Impairmentratio
Total Impaired loans
75%
4.6%
(Eur million)
3.1%
75%
Impairment charges as % of Total Loans (*)
(*) Impairment charges on a comparable basis.
0.440.400.45
1.42
0.36
0.31
0.30
-0.06
0.76
0.34
2004 2005 2006 2007 1H08
Gross Impairment charges as %
of Loans
Impairment net of
Recoveries
269237
3434
Earnings Presentation – 1st Half 2008
Agenda
§ Group§ Portugal§ Poland§ Greece§ Other International operations
3535
Earnings Presentation – 1st Half 2008
Increased net interest income and commissions resulted in higher net earnings(Eur million)(Eur million)
5.6 5.36.5
4.2
6.5
2Q 3Q 4Q 1Q 2Q
ComparableBase
10.210.7
1H07 1H08
+5.2%
2007 2008
+53.2%
3636
Earnings Presentation – 1st Half 2008
Strong operating income from core business more than compensates for lower trading income(Eur million)
0.2
39.540.636.2 40.136.0
3.5 2.64.32.5
38.5 39.7 44.9 40.3 42.1
2Q07 3Q07 4Q07 1Q08 2Q08
79.667.9
2.94.7
72.6 82.4
1H07 1H08
Financial Margin+ Commissions
Trading + Other
+4.6%
Financial Margin+ Commissions
Trading + Other
+17.2%
+13.6%
3737
Earnings Presentation – 1st Half 2008
1.96
1.991.90
2.412.30
2.45
2.01 2.06 2.10
1.94
Q2 Q3 Q4 Q1 Q2
Solid net interest income evolution despite stiff competition on deposits and impact of increased Euribor on ECB-linked mortgages
(Eur million)
0.05
3.403.573.68
3.40 3.48
0.28 0.33 0.250.05
Q2 Q3 Q4 Q1 Q2
0.871.040.960.901.07
Q2 Q3 Q4 Q1 Q2
Term Deposits
Current DepositsRevolving
Fixed term
Spreads on Corporate Loans(YTD %)
Spreads on Mortgage Loans(YTD %)
Spreads on Deposits(YTD %)
28.531.4 31.432.5
29.1
2Q07 3Q07 4Q07 1Q08 2Q08
Quarterly Net Interest Income
NIM(YTD)
2.90% 2.73%20082007
2.70% 2.47%
56.063.9
1H07 1H08
NIM 2.97% 2.36%
Net interest income
+14.0%
20082007200820072.26%
§ Widening spread between Euribor and ECB affects ECB-linked mortgages
§ Focus on liquidity impacts time deposits spreads
§ Successful repricing efforts on corporate loans
Highlights
3838
Earnings Presentation – 1st Half 2008
Sustained commission performance
11.9
15.7
1H07 1H08
+32.6%
(Eur million)
7.5 7.19.2 7.6 8.1
2Q07 3Q07 4Q07 1Q08 2Q08
+6.2%
3939
Earnings Presentation – 1st Half 2008
30.2
25.43.7
4.5
26.1
22.7
52.560.1
1H07 1H08
Operating costs increasing due to expansion plan
+14.4%
Staff
Depreciation
Administ.
1.9 2.02.0
2.22.3
15.514.313.6 14.713.1
11.512.4 13.815.711.8
26.8 27.932.0
28.531.6
2Q07 3Q07 4Q07 1Q08 2Q08
Staff
Depreciation
Administ.
+20.7%
+11.5%
+15.9%
(Eur million)
+10.8%
4040
Earnings Presentation – 1st Half 2008
Stable efficiency ratio in spite of aggressive expansion plan
72.9%72.4%
1H07 1H08
Cost to income ratio
Jaws
20.022.4
1H07 1H08
+11.5%
Operating Profit
§ Costs under control despite aggressive expansion plan (21 new branches from June 07) and immature branch network (1 out of 3 branches opened less than 3 years ago)
§ Cost to income excluding trading gains improves by 1.7 pps
Highlights
Basic Revenues and Costs1Q06 = 100
Costs
Revenues
100
113 113
132
120
136140 160 149 149
100 103 102
125115
120125
143
127
141
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08(Eur million)
76.6% 74.9%Excludingtrading gains
4141
Earnings Presentation – 1st Half 2008
Strong volume evolution with an increased focus on deposits
Mortgage
Consumer Loans
Loans to companies
Loans to Customers (*)
(gross)
(*) Includes securitised loans.
1,388 1,580 1,696
767
1,234
1,663
785
695
2,0053,317
4,010
4,486
Jun 07 Dec 07 Jun 08
+35.2%
2,282
2,6412,768
Jun 07 Dec 07 Jun 08
+21.3 %
Customers’ Deposits
(Eur million)
4242
Earnings Presentation – 1st Half 2008
78.1
4.1
52.3
6.9
1H07 1H08
Credit Quality
Stable asset quality and lower cost of risk
Impairmentcoverage > 90 days
Overdueratio > 90 days
Total overdue
< 90 days
> 90 days
67.1%
1.6%
(Eur million)
1.7%
58.2%
Impairment charges % Average Total Loans
0.34
0.44
0.35
2006 2007 1H08
Improved collection process results in lower weight of
impaired portfolio
4343
Earnings Presentation – 1st Half 2008
Products launched during 1H08 reflect a strong emphasis on increasing deposits and acquiring new Customers
12-month time deposit with an interest rate of up to 5.5%. Advertising included a strong TV presence.
5% 3-month time deposit for new funds from a minimum of 5,000 euros to a maximum of 100,000 euros.
15-month time deposit with an interest rate of 10% in the ending quarter, monthly interest payments and no penalties for early withdrawals.
Payroll programme featuring preferential interest rate on loans, an overdraft facility, a 24-hour over-the-phone medical assistance service and a credit card with no annual fee.
30,000 new Customers,
EUR 130 mlnincrease in
deposits
From Dec.07:
4444
Earnings Presentation – 1st Half 2008
Agenda
§ Group§ Portugal§ Poland§ Greece§ Other International operations
4545
Earnings Presentation – 1st Half 2008
Mozambique: Sustained and profitable leadership position
Highlights
§ Market leadership with market shares above 37%.
§ Sustained growth with strong profitability although impacted by dollar depreciation vs. Euro.
§ ROE near 50%.
§ Cost to Income of 45%.
Volumes
Net Profit Branches
Loans to Customers
278
377
1H07 1H08
+35.7%
21.923.8
1H07 1H08
+8.6%
Customers’ Funds
602661
1H07 1H08
+9.8%
7688
1H07 1H08
(Eur million)
4646
Earnings Presentation – 1st Half 2008
Angola: Strong credit volume growth on the back of solid macro performance
Highlights
§ Strong loans volume growth.
§ Results affected by branch expansion plan and dollar devaluation, although improving from last quarter.
§ Partnership with Sonangol and BPA will boost growth.
§ Angola is one of the fastest growing economies in the word.
Volumes
Net Profit Branches
Loans to Customers
71
1H07 1H08
+141.6%
3.12.4
1H07 1H08
710
1H07 1H08
Customers’ Funds
136
1H07 1H08
+44.1%
(Eur million)
170 196
4747
Earnings Presentation – 1st Half 2008
Romania: Encouraging initial figures and good market acceptance
Highlights
§ Lower than expected net loss driven by operating costs savings.
§ Highly accepted by clients. Accelerated origination of new clients during Q2.
§ Some risk on macro going forward but Romania is a high growth banking market on the medium/long term.
Volumes
Net Profit Branches
Loans to Customers Customers’ Funds
42
1H07 1H08
133
1H07 1H08
75
1H07 1H08
(Eur million)
* Including costs accounted at BCP.
*
-5.7-14.7
1H07 1H08
4848
Earnings Presentation – 1st Half 2008
US: Operation close to breakeven as result of cost control effort
Highlights
§ Community Bank at large, focused primarily on the Portuguese, Greek and Brazilian ethnic groups.
§ Operation at breakeven level as result of strict control cost program.
§ Global liquidity crisis and sharp reduction on interest rates in US affecting deposit’s volume and margins.
§ Potential negative impact expected from US economy recession.
§ Negative impact from dollar devaluation.
Volumes
Net Profit Branches
Loans to Customers
413 404
1H07 1H08
-2.3%
Customers’ Funds
451552
1H07 1H08
-18.3%
18 18
1H07 1H08
-1.2
-0.3
1H07 1H08
(Eur million)
4949
Earnings Presentation – 1st Half 2008
Turkey: recovery in the second quarter
Highlights
§ Main focus on cost control and rebalancing the loan portfolio.
§ Strong growth in customers loans. Market continues thorny on customers funds.
§ Second quarter showed a big improvement of operating performance. Breakeven reached on a quarter basis.
§ After the BRIC, Turkey is now considered one of the “Next Eleven”.
Volumes
Net Profit Branches
Loans to Customers Customers’ Funds
1618
1H07 1H08
(Eur million)
373434
1H07 1H08
+16.3%
604732
1H07 1H08
-17.5%
-2.0
-0.3
-1.9
1H07 1Q08 1H08
5050
Earnings Presentation – 1st Half 2008
ü Improved operational performance versus 1Q 2008.
ü Negative impact on impairment from collateral revaluation.
ü Strong volume growth particularly on Deposits
ü Turnaround of Portuguese Business starting with substantial upside via cost optimization and repricing.
ü International Business – Strong and profitable growth.
ü Comfortable liquidity position with capital position rebuilt capable of supporting organic growth projects.
ü Adequate strategy to the current business environment with focus on efficiency, risk control and retail oriented.
Conclusion
5151
Earnings Presentation – 1st Half 2008
Appendix
5252
Earnings Presentation – 1st Half 2008
Qualified Shareholdings as at June 30, 2008
Share capital : 4,694,600,000 shares
Sonangol 469,000,000 9.99% Teixeira Duarte Group 385,738,361 8.22% Eureko Group* 331,956,248 7.07% Berardo Group 290,139,979 6.18% Banco Sabadell 208,177,676 4.43% Caixa Geral Depósitos Group 177,970,530 3.79% EDP Group** 151,676,944 3.23% JP Morgan 137,356,230 2.93% UBS 133,747,257 2.85% Sogema 128,654,109 2.74% Banco BPI Group*** 110,991,109 2.36% Banco Privado Português 109,524,096 2.33% Stanley Ho Group 106,254,934 2.26% SFGP - Investimentos e Participações 102,063,855 2.17%
Total 2,843,251,328 60.56%
Number of Shares % Capital
* Although Eureko has entered into a series of derivative transactions with JP Morgan regarding 104,180,249 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. **EDP Pension Fund held as at June 30, 2008, 51,873,488 shares corresponding to 1.105% of BCP’s share capital*** Participation as at 4 July. This participation was reduced to 1.965% on 11 July.
5353
Earnings Presentation – 1st Half 2008
Financial Statements
5454
Earnings Presentation – 1st Half 2008
Consolidated Balance SheetAt 30 June, 2008 and 2007
30 June 2008
30 June
2007
Assets
Cash and deposits at central banks 1.951.747 1.535.710 Loans and advances to credit institutions Repayable on demand 695.849 617.604 Other loans and advances 7.189.891 8.381.224 Loans and advances to customers 69.534.060 60.350.789 Financial assets held for trading 3.920.302 3.369.210 Financial assets available for sale 4.465.508 4.866.371 Assets with repurchasing agreement 51.661 38.403 Hedging derivatives 149.691 731.015 Held to maturity 5.575 - Investments in associated companies 285.569 286.632 Property and equipment 709.199 740.517 Goodwill and intangible assets 534.934 529.883 Current tax assets 46.755 22.308 Deferred tax assets 603.543 574.860 Other assets 3.565.246 3.414.125
93.709.530 85.458.651
Liabilities
Amounts owed to central banks 1.564.626 526.843 Amounts owed to others credit institutions 8.237.932 10.420.745 Amounts owed to customers 41.964.378 34.624.245 Debt securities 25.912.544 27.873.940 Financial liabilities held for trading 1.171.785 938.976 Other financial liabilities held for trading at fair value through results 3.395.911 904.072 Hedging derivatives 208.621 780.244 Provisions for liabilities and charges 211.592 211.160 Subordinated debt 2.850.516 2.822.935 Current income tax liabilities 19.573 375 Deferred income tax liabilities 554 34 Other liabilities 1.930.467 1.330.713
Total Liabilities 87.468.499 80.434.282
Equity
Share capital 4.694.600 3.611.330 Treasury stock (65.134) (24.722) Share premium 183.369 881.707 Preference shares 1.000.000 1.000.000 Fair value reserves 173.852 471.902 Reserves and retained earnings (155.669) (1.465.985) Profit for the period attributable to Shareholders 101.358 307.868
Total Equity attributable to Shareholders of the Bank 5.932.376 4.782.100
Minority interests 308.655 242.269
Total Equity 6.241.031 5.024.369
93.709.530 85.458.651
(Thousands of Euros)
5555
Earnings Presentation – 1st Half 2008
Consolidated Statement of IncomeAt 30 June, 2008 and 2007
30 June 2008
30 June 2007
Interest income 2.514.900 2.029.687 Interest expense (1.672.964) (1.260.885)
Net interest income 841.936 768.802
Dividends from equity instruments 29.323 22.596 Net fees and commission income 367.689 294.371 Net gains arising from trading and hedging activities 82.015 129.785 Net gains arising from available for sale financial assets (196.181) (5.612) Other operating income 40.758 43.295
1.165.540 1.253.237
Other net income from non banking activity 8.288 9.790
Total operating income 1.173.828 1.263.027
Staff costs 451.510 435.491 Other administrative costs 311.818 282.898 Depreciation 54.147 52.989
Operating costs 817.475 771.378
356.353 491.649
Loans impairment (205.851) (97.751) Other assets impairment (21.541) (12.096) Other provisions 27.691 (6.836)
Operating profit 156.652 374.966
Share of profit of associates under the equity method 28.409 29.729 Gains from the sale of subsidiaries and other assets (454) (916)
Profit before income tax 184.607 403.779 Income tax Current (25.412) (16.926) Deferred (24.833) (52.505)
Profit after income tax 134.362 334.348
Attributable to: Shareholders of the Bank 101.358 307.868 Minority interests 33.004 26.480
Profit for the period 134.362 334.348
(Thousands of Euros)
5656
Earnings Presentation – 1st Half 2008
Consolidated Statement of Income (*)At 30 June, 2008 and 2007 and Quarterly Evolution
(EUR Million, except percentages) ? %
08 / 07
Net interest income 382,2 380,9 387,6 412,2 429,7 841,9 768,8 10%
Dividend Income 20,3 0,4 4,9 1,7 27,6 29,3 22,6 30%Net Commission Income 203,8 185,4 199,3 173,8 193,9 367,7 383,1 - 4%Other Net Operating Income 21,5 31,8 34,6 30,3 18,3 48,6 52,2 - 7%Net Income from Trading Activity 62,7 44,8 27,2 38,1 51,6 89,7 124,2 - 28%
Operating income 690,5 643,3 653,6 656,1 721,2 1.377,3 1.350,8 2%
Staff Costs 218,9 231,7 217,2 230,3 239,2 469,5 435,5 8%Administrative Costs 149,4 162,8 181,7 146,9 164,9 311,8 282,9 10%Depreciation 26,4 27,1 34,8 26,4 27,8 54,1 53,0 2%
Operating costs 394,7 421,6 433,8 403,5 432,0 835,5 771,4 8%Operating Profit before provisions 295,8 221,7 219,8 252,5 289,3 541,8 579,4 - 6%
Group Equity-accounted earnings 15,3 12,8 8,7 14,3 14,1 28,4 29,7 - 4%Loan Impairment (net of recoveries) 52,4 75,8 86,7 69,8 136,1 205,9 97,8 111%Other Provisions 13,0 12,2 2,8 2,9 - 9,0 - 6,1 18,9 - 132%
Income before specific items 245,7 146,6 138,9 194,2 176,4 370,5 492,5 - 25%
Specific items (*) - 65,5 - 9,0 51,1 - 119,5 - 44,2 - 163,7 - 65,5 150%
Income before taxes 180,2 137,5 190,0 74,7 132,2 206,9 426,9 - 52%
Provisions for income taxes 48,4 26,9 16,3 43,3 29,2 72,5 92,6 - 22%Minority interests 15,1 14,7 14,1 16,7 16,3 33,0 26,5 25%
Net income 116,6 95,9 159,6 14,7 86,6 101,4 307,9 - 67%
Year-to-dateQuarterly
Q2 07 Jun 07Jun 08Q2 08Q1 08Q4 07Q3 07
(*) In 2007, Q2 : General Tender Offer over BPI comissions (88.7 - 23.2); Q3 : restructuring costs (12.3 - 3.3); Q4 : General Tender Offer over BPI comissions (14.5 - 3.8), restructuring costs (109.5 - 29.0), gains on 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 and other impairment (153.0 - 20.3) and 2007 variable annual remuneration reversal (18.0 - 4.8); Q2 : BPI (50.9 - 6.7).
∆
5757
Earnings Presentation – 1st Half 2008
Income Statement National and International Operations June 2008 and 2007
(EUR Thousands, except percentages)
Jun 2008 Jun 2007 ? % Jun 2008 Jun 2007 ? % Jun 2008 Jun 2007 ? % Jun 2008 Jun 2007 ? % Jun 2008 Jun 2007 ? % Jun 2008 Jun 2007 ? %
Interest income 2,514,900 2,029,687 23.9% 1,926,374 1,620,466 18.9% 588,526 409,221 43.8% 172,443 121,661 41.7% 311,461 186,391 67.1% 104,623 101,169 3.4%Interest expense 1,672,964 1,260,885 32.7% 1,336,488 1,054,035 26.8% 336,475 206,850 62.7% 108,592 65,630 65.5% 179,748 96,243 86.8% 48,135 44,977 7.0%Net interest income 841,937 768,802 9.5% 589,886 566,431 4.1% 252,051 202,371 24.5% 63,851 56,031 14.0% 131,712 90,148 46.1% 56,488 56,192 0.5%
Dividend Income 29,323 22,596 29.8% 27,999 22,333 25.4% 1,324 263 0 0 -100.0% 313 263 19.2% 1,011 0Intermediation Margin 871,259 791,398 10.1% 617,884 588,764 4.9% 253,375 202,633 25.0% 63,851 56,031 14.0% 132,025 90,410 46.0% 57,499 56,192 2.3%
Net Commission Income 367,689 383,064 -4.0% 262,696 289,644 -9.3% 104,993 93,420 12.4% 15,719 11,858 32.6% 71,192 65,942 8.0% 18,082 15,619 15.8%Other Net Operating Income 48,592 52,170 -6.9% 44,439 46,641 -4.7% 4,153 5,528 -24.9% 687 731 -5.9% 1,812 3,534 -48.7% 1,654 1,263 30.9%Basic Revenue 1,287,540 1,226,631 5.0% 925,019 925,050 -0.0% 362,521 301,581 20.2% 80,258 68,620 17.0% 205,028 159,887 28.2% 77,235 73,074 5.7%
Net Income from Trading Activity 89,745 124,172 -27.7% 14,596 64,030 -77.2% 75,149 60,143 25.0% 2,178 3,968 -45.1% 58,904 46,043 27.9% 14,067 10,132 38.8%Operating Income 1,377,285 1,350,804 2.0% 939,615 989,080 -5.0% 437,670 361,724 21.0% 82,435 72,588 13.6% 263,932 205,930 28.2% 91,302 83,206 9.7%
Personnel Costs 469,510 435,491 7.8% 316,168 314,991 0.4% 153,343 120,500 27.3% 30,218 26,065 15.9% 85,779 64,687 32.6% 37,345 29,747 25.5%Administrative Costs 311,818 282,898 10.2% 189,734 188,203 0.8% 122,084 94,695 28.9% 25,361 22,743 11.5% 67,427 50,338 33.9% 29,296 21,615 35.5%Depreciation 54,147 52,989 2.2% 33,861 34,603 -2.1% 20,286 18,386 10.3% 4,506 3,735 20.7% 8,789 8,371 5.0% 6,991 6,280 11.3% Operating Expenses 835,475 771,378 8.3% 539,763 537,797 0.4% 295,712 233,580 26.6% 60,085 52,542 14.4% 161,995 123,396 31.3% 73,632 57,642 27.7%
Operating Profit before provisions 541,810 579,426 -6.5% 399,853 451,282 -11.4% 141,958 128,144 10.8% 22,350 20,046 11.5% 101,937 82,534 23.5% 17,671 25,564 -30.9%
Group Equity-accounted earnings 28,409 29,729 -4.4% 28,409 29,729 -4.4% 0 0 0 0 0 0 0 0
205,851 97,751 110.6% 183,667 78,250 134.7% 22,184 19,501 13.8% 7,185 6,145 16.9% 10,443 12,556 -16.8% 4,556 800Other Provisions -6,150 18,932 -132.5% -6,912 19,002 -136.4% 762 -70 169 167 1.3% 551 467 17.9% 42 -705 -106.0%Profit before specific items 370,518 492,472 -24.8% 251,506 383,759 -34.5% 119,012 108,713 9.5% 14,996 13,734 9.2% 90,943 69,510 30.8% 13,072 25,469 -48.7%
Specific items -163,663 -65,527 149.8% -163,663 -65,527 149.8% 0 0 0 0 0 0 0 0
Profit before taxes 206,855 426,945 -51.5% 87,843 318,232 -72.4% 119,012 108,713 9.5% 14,996 13,734 9.2% 90,943 69,510 30.8% 13,072 25,469 -48.7%
Income taxes 72,494 92,598 -21.7% 46,967 70,920 -33.8% 25,526 21,677 17.8% 4,251 3,518 20.8% 18,837 14,541 29.5% 2,439 3,618 -32.6%Minority Interests 33,004 26,480 24.6% 7 15 -55.0% 32,997 26,465 24.7% 2 0 0 0 32,995 26,465 24.7%
Net income 101,358 307,868 -67.1% 40,870 247,297 -83.5% 60,488 60,571 -0.1% 10,744 10,216 5.2% 72,107 54,969 31.2% -22,362 -4,614
Loan Impairment Provision (net of recoveries)
Other Int. Oper
International Operations
Bank Millennium (Poland)Group Activ. in Portugal Total Millennium Bank (Greece)
5858
Earnings Presentation – 1st Half 2008
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 3211081
Email: [email protected]