1H12 Results Presentation · 2020. 9. 23. · 1H12 Results Presentation 30 July 2012 1 In spite of...

1H12 Results Presentation(Unaudited Figures)

30 July 2012

11H12 Results Presentation 30 July 2012

In spite of some favourable signs in the first months of the year, the first half of 2012 saw a deterioration in global confidence levels, with expectations of lower global activity growth and with rising risk aversion, mainly related to renewed concerns with the Euro Area debt crisis. Notwithstanding the initial favourable market reaction to the decisions from the European Summit at the end of June, risk aversion has continued to be fed by a contagion of the debt crisis to Spain and Italy and by the ongoing worsening conditions regarding Greece’s public finances.

GDP is expected to have contracted in 2Q 2012 in the Euro Area, as a result of restrictive fiscal policies, the ongoing deleveraging in the private sector, adverse financing conditions and deteriorated confidence levels. In the same period, GDP decelerated in the US, Brazil and China. In this context, in 2Q the main central banks pursued more expansionary monetary policies. In the beginning of July, the ECB cut the main refi rate to 0.75% and the overnight deposit rate to 0%. In 1H 2012, the 3-month Euribor fell 70 bps, to 0.65%.

In this adverse context, the Portuguese economy continued to show a very strong adjustment capacity. Economic activity contracted in 1H 2012, with the restrictive fiscal policy, the deleveraging in the private sector and the rising unemployment contributing to a strong retreat in domestic demand. But exports continued to show a very strong performance, even if decelerating. Merchandise exports rose 9% YoY (nominal growth) in January-May, with extra-EU exports rising close to 28%, as emerging markets in Africa, Latin America and Asia increased their weight in total exports. The coincident indicator of economic activity, which tracks GDP YoY growth, fell 2.5% in 1H 2012, supporting the forecast of an annual GDP contraction slightly below 3% in 2012, above initial expectations.

According to the IMF-EC-ECB, the implementation of the Economic and Financial Adjustment Programme remains “strong”, with “both the fiscal and external current account deficits narrowing significantly” and with “advances in the agreed structural reforms.” These developments have translated into improved market perception of Portugal, with 10 year Government bond yields falling in the secondary market to 10%-11%, from a January high of 17.4%.

Foreword: Macroeconomic highlights


BES financials reflect a strict financial discipline, key to address the current macro, market and regulatory challenges. The rights issue concluded in May is a key driver for stronger and more solid balance sheet

During this quarter (in May) BES concluded a Eur 1bn rights issue, which represents a landmark in the

capitalization of Portuguese banks, insofar as it permitted to comply, without resorting to any public funds, with

the minimum 9% threshold imposed by EBA for June 2012 as well as with the minimum 10% threshold defined

by the BoP for Portuguese banks for year-end 2012. In fact, Core Tier I (BoP) ratio reached 10.5% in June and

EBA Core Tier I was 9.9%, both comfortably above minimum required levels.

Also during this quarter, BES concluded the acquisition of 50% of BES Vida (life insurance), with the company being 100% consolidated as from May. The implementation of the necessary measures to turnaround the company already led to a positive contribution of Eur 17.4mn to the consolidated net income, partially compensating for the Eur 54.1mn one-off first consolidation adjustment.

Strong cash flow generation is key to compensate for the necessary increase in provisions as asset quality is deteriorating, as expected. In 2Q12, net operating income posted a 46% increase QoQ, backed by a significant banking income growth and cost containment, offsetting the significant increase of provisions.

In this challenging environment, 1H12 net profit stood at Eur 25.5mn, with credit provisions increasing 15% YoY. As a consequence of this prudent stance vis-à-vis risk management, the 1H12 provision charges of 138 bps led to a 4.76% coverage of gross loans, one of the highest levels in Iberia.


On the liquidity front, this was another challenging quarter as the worsening of the sovereign debt crisis in Europe (namely with the spreading of uncertainties to the Spanish economy) led to an increase in risk aversion from large corporate and institutional clients, which impacted corporate deposits in the quarter. In any case, with a 147% LTD ratio BES is on track to reach the 120% level recommended for 2014 as the deleverage process implemented back in the 2H2010 translated into a sharp decrease of this indicator in the past 2 years, driven by a Eur 6.7bn increase in deposits and a Eur 3.0 bn reduction of the loan portfolio.

Retail and private banking customer funds in Portugal continued to increase (+ 1.3% QoQ and +4.2%YoY), demonstrating the clients’ confidence in the banking system in general and in BES in particular, but with a shift to higher yielding products. In fact, the new rules established by the BoP on deposits pricing reduced the attractiveness of deposits. A wide offer of other products, including corporate bonds issued by some of the Portuguese major companies has been well accepted in the market, showing that the Portuguese savers are starting to shift their capital to less insured products, which allows to finance the economy in the medium term. Emigrants remittances to Portugal maintain an upward trend (+ 18% YoY), which is an additional sign of confidence in the Portuguese economy.

In light of the continued absence of wholesale markets, the pool of collaterals eligible for rediscount with central banks was increased further, with the ECB eligible assets pool providing a comfortable buffer to cope with future redemptions. Over 95% of the MLT debt maturing in 2012 was already repaid in the 1H12 (amounting to Eur 3.3bn).

All in all, this quarter financials continue to show a resilient performance, with management focused on addressing the macro, market and regulatory challenges with strategic independence and a strict financial discipline.

BES financials reflect a strict financial discipline, key to address the current macro, market and regulatory challenges. The rights issue concluded in May is a key driver for stronger and more solid balance sheet


Table of contents

I. Solvency: strong capitalisation levels, with core capital comfortably above minimum

regulatory thresholds of EBA and BoP

II. 1H12 results: strong revenues allowing for reinforced provisioning levels

III. Asset Quality: Conservative and prudent risk management, with strong provision

reserve

IV. Funding & Liquidity: Increase in repoable assets leading to a comfortable buffer of

ECB eligible pool

V. Wrap up

Appendix 1: Detailed financial data

Appendix 2: Portuguese Economy: setting conditions for sustainable growth

Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil


1H12 solvency ratios were significantly reinforced with the Eur 1bn rights issue concluded in May. Core Tier I stands at 10.5%

8.2

9.2

10.5

9.2 9.4

10.4

Jun-11 Dec-11 Jun-12

Core Tier I

Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational risk. Preliminary data as of Jun 12

Solvency Ratios (%) Risk weighted assets and Capital

782

6,185

143

6,067

6,967

79.1%

81,649

3,938

2,198

58,451

64,587

Mar 12

82,42180,23780,162Net Assets

77.4%81.5%82.7%Risk weight

436

6,666

139

6,708

7,102

3,938

1,825

58,054

63,817

Jun 12

799

6,171

194

6,020

6,970

3,938

1,742

59,705

65,385

Dec 11

187ow deductions AFS:

5,445… Core Tier I

6,127… Tier I

2,976… Trading book

3,973… Oper. Risk

7,644Total Capital

1,517

59,367

66,316

Jun 11

... Tier II and Other

… Banking book

RWA (BoP)

Eur bn

(BoP)

RWA’s decreased 3.8% YoY and CTI was reinforced in almost Eur 1.3bn YoY.

CTI ratio improved from 8.2% in Jun-11 to 10.5% in Jun-12.

CTI: +230 bp YoY


Core tier I is now comfortably above both BoP and EBA’s thresholds. BES was able to comply with regulatory requirements without using public funds

Stated Core Tier I (BoP and EBA) – Jun 12

(%)

10.59.9

BoP EBA

% RWAs(30-Jun-2012)

Eur 63,817mn

EBA Jun/2012 minimum

requirement: 9%

BoP Dec/2012 minimum requirement: 10%

Quarterly evolution of Core Tier I - BoP

CTI Mar12

RightsIssue

BES Vida PensionFunds &

SIP

RWA's &Other

CTI Jun12

9.4%

1.5%

-0.2% -0.4%

10.5%0.2%(%)

Quarterly evolution of Core Tier I - EBA

CTI Mar12

RightsIssue

BES Vida PensionFunds &

SIP

SovereignBuffer

RWA's &Other

CTI Jun12

9.2%1.5%

-0.2%-0.4%

9.9%-0.2%

(%)

0.0%

Capital ratios as of Jun-12 already include the full regulatory impact of the Special Inspections Program (SIP), the partial transfer of Pension Funds to Social Security and EBA’s Sovereign buffer


BES European sovereign exposure increased to Eur 5.6bn (6.5% of net assets) in June 12, as a result of full consolidation of BES Vida. European sovereign exposure is concentrated in Portuguese debt with unrealised potential gains

Total 1Q12

Total

Germany

Austria

Netherlands

Spain

Italy

Greece

Ireland

Portugal

-

2

-

-

-

1

-

-

-

1

T-Bills

o.w. BES Vida

-

1 065

6

3

1

-

1

-

24

1 030

Bonds

o.w. BESTotal

--1

--3

--6

3 3081 1755 550

---

3 169

29

-

-

3 279

Bonds

232

1 618-

-1

-24

1 1735 483

T-Bills

European Sovereign Exposure

Up to 1M

12.0%

1M to 12M

11.0%

> 1Y77.0%

Maturity profile of the European Sovereign Exposure

(Eur mn)(%)

Breakdown of European Sovereign Exposure by portfolio

(%)

AFS86%

HTM3%Trading

5%

At the end of 1H12, BES had a potential gain in its consolidated European sovereign debt portfolio

Fair value6%


Table of contents





reserve


ECB eligible pool

V. Wrap up





-1.10.0-1.10.0Insurance Premiums and Costs+

11.6

29.3

7.8

25.3

66.2

190.7

229.0

256.9

271.9

528.8

27.9

500.9

206.4

294.5

1Q12

13.9

35.4

6.2

90.1

139.5

235.6

271.1

375.1

287.6

661.6

102.9

558.7

245.6

313.1

2Q12

19.8%

20.8%

-20.5%

256.1%.

110.7%

23.5%

18.4%

46.0%

5.8%

25.1%

268.8%

11.5%

19.0%

6.3%

QoQ

-85.7%

15.7%

-7.9%

-

-15.5%

-9.2%

28.8%

-11.4%

0.4%

-6.3%

-59.7%

12.0%

12.2%

11.9%

YoY

178.6

56.0

15.2

8.8

243.4

469.7

388.3

713.1

557.4

1,270.5

324.8

945.7

402.9

542.8

1H11

500.1Net Op. Income ex-Mkts & Other

14.0o.w. Special tax on banks

25.5

64.8

115.4

205.7

426.3

632.0

559.5

1,190.4

130.8

1,059.6

452.0

607.6

1H12

Net Income=

-

-

=

-

=

-

=

+

=

+

+

Minority Interests

Taxes

Income Bef. Taxes and Minorities

Net Provisions

Net Operating Income

Operating Costs

Banking Income

Capital Markets & Other Results

Commercial Banking Income

Fees and Commissions

Net Interest Income

(EUR million)

In a very challenging environment, BES has been able to generate operating cash flow to reinforce provisions significantly. Core net operating income increased 28.8% YoY, driven by a 12% YoY growth in commercial banking income and flat operating costs

In December 2011 BES Group changed the accounting policy for booking actuarial differences determined in post employment benefit liabilities, which are now recognised under Other Comprehensive Income (OCI). As provided for in IAS 8, changes in accounting policies with material impact require the restatement of prior periods for comparison purposes. Accordingly, the Balance Sheet and Income Statement include the restated data for 2011

Note: 1H11 capital markets results were positively impacted by the sale of Bradesco


BES Vida full consolidation: P&L impact

(EUR mn)

25.5

BES Vida control acquisition

(1st consolidation)

Net Income 1H12 excluding one-off effect

of 1st consolidation of BES Vida

Net Income

1H12

54.1 79.6BES Vida: Eur 17.4mn

BES: Eur 62.2mn

BES Vida full consolidation had a total negative impact of Eur 36.7mn in 1H12 P&L:

i) Negative Eur 54.1mn due to control acquisition (1st consolidation)

ii) Positive Eur 17.4mn recurrent profit

BES Vida full consolidation: BS impact

(EUR mn)

-36.7…Net profit

17.4o.w. BES Vida recurrent profit

-16.3...Treasury stock

12.0…Minority interests

2,950

-54.1

98.0

57

2,893

2,950

…Reserves

Total Equity

o.w. BES Vida 1st consolidation adjustment

Total Liabilities

Total Liabilities & Equity

Total Assets

Net Income reached Eur 25.5mn in 1H12 or Eur 13.9mn in 2Q12. BES Vida was fully consolidated for the first time with a negative impact of Eur 54.1mn from 1st consolidation control acquisition. Without this effect, BES’ net income would have reached Eur 79.6mn in 1H12 or Eur 68mn in 2Q12

BES Vida full consolidation had an impact of Eur 2,950mn in Assets


Commercial banking income increased 12% YoY, backed by both NII (+11.9% YoY) and Fees & Commissions (+12.2% YoY)

Consolidated NII Fees & Commissions

Commercial Banking Income

(Eur mn) (Eur mn)

(EUR mn)

1.87 1.74 1.71 1.791.55

3.95 4.33 4.58

-1.97 -1.96 -2.22 -2.62 -2.79

3.833.52

2Q11 3Q11 4Q11 1Q12 2Q12

NIM

AssetsSpread

LiabilitiesSpread

1H12 includes Eur 27.4mn paid to Portuguese government due to GGB’s.

543608

295 313

0

100

200

300

400

500

600

700

1H11 1H12 1Q12 2Q12

6.3%

11.9%

NIM: 24bps

403452

206 246

0

100

200

300

400

500

600

700

1H11 1H12 1Q12 2Q12

12.2%

19.0%

9461060

501 559

0

200

400

600

800

1000

1200

1400

1H11 1H12 1Q12 2Q12

12.0%

11.5%


Domestic operating costs

International operating costs

(Eur mn)

(EUR mn)

Operating costs under strict control (+0.4% YoY), with cost cutting measures already producing results in domestic operations. International costs increased mainly due to new branches opened in Venezuela and Luxembourg

Operating costs *

(Eur mn)Domestic

operating costs decreased 2.5% YoY

* Note: costs of 2011 restated due to changes in accounting policies

International operating costs

increased 7.4% YoY

557 560

272 288

0

100

200

300

400

500

600

700

1H11 1H12 1Q12 2Q12

5.8%

0.4%

559.5

53.8

214.2

291.6

1H12

9.6%112.0102.2-0.5%215.4Admin.

QoQ2Q12

0.4%

2.9%

0.6%

YoY

557.4

52.3

289.7

1H11

5.7%287.5271.9Total

3.7%148.4143.1Staff

26.7

1Q12

27.1 1.7%Dep.

398 388

188 199

0

100

200

300

400

500

600

1H11 1H12 1Q12 2Q12

-2.5%

5.8%

160 172

84 88

0

50

100

150

200

250

300

1H11 1H12 1Q12 1Q12

7.4%

5.6%


Strong growth of core operating income shows the resilient earnings power of the Bank, compensating high provisioning effort, with cost of risk up to 1.38% in 1H12

Core Net Operating Performance

(Core Net Operating Income: Commercial Bkg Income – Op. Costs; Eur mn)

388

500

180208

229271

0

100

200

300

400

500

600

1H11 1H12 1Q11 2Q12 1Q12 2Q12

305

352

225

149

203

81

1H11 1H12 1Q11 2Q11 1Q12 2Q12

Credit Provisions

(Eur mn)

1.18Cost of Risk28.8%

18.4%

1.38 0.63 1.74 1.17 1.59

15.2%

36.2%


Domestic business would have been break-even without the negative impact from the 1st consolidation of BES Vida. Net income from International operations reached Eur 78.2mn, with special focus on the Strategic Triangle (Africa, Brazil and Spain)

International Business

(Eur mn)

(1) Includes Africa, Brazil and Spain

Domestic Business

(Eur mn)

1H12 includes the negative impact of

the first consolidation of BES Vida (Eur

54.1mn). Without this effect,

domestic results would have been

Eur 1.4mn

Eur 54.1 mn

78.2

-0.8

3.9

11.4

63.7

10.5

10.2

43.0

1H12

-42.9Africa

-25%13.6Brazil

59%6.6Spain

-46%7.1US

-6.3%83.5Total

52%7.5UK

5.8

63.1

1H11

n.m

1%

YoY

Other

Strategic Triangle (1)

-52.7

95.1

1.4

1H11 1H12

1H11 includes profits form the sale of Bradesco stake and extraordinary dividends of PT (partly offset by higher

provisions)

Africa68%

Brazil16%

Spain16%

Africa includes Angola, C. Verde, Libya and Mozambique

Total: Eur 63.7mn

Strategic Triangle breakdown


Investment Banking: Portuguese Privatisations and internationalisation

Banking Income: Eur 123.1 mn (+4.0%)

NII37% Fees &

Commissions49%

Capital Mkts14%

0%

2000%

4000%

6000%

8000%

10000%

12000%

1H11 1H12

118.3 123.1

Domestic

International

International contribution

Net Profit: Eur 14.8mn +181.3%)

79%

21%

67%

33%

0

5

10

15

20

1H11 1H12

5.3

14.8

Domestic Market: Important role on the privatisations

Advisory of REN on the acquisition of a 7.5% stake in Hidroeléctrica de CahoraBassa (Eur 38m), while REN and EDP’s privatisations were concluded.

Joint Lead Manager on the Public Bond Offerings of EDP (Eur 250 million) and ZON Multimedia (Eur 250 million).

Leadership in the Portuguese brokerage market, ending June with a 12.4% accumulated market share and also in M&A market by value and number of deals (Mergermarket).

International activity: Brazil remains active, India starts operation

In India, Espírito Santo Securities India Private Limited started the brokerage activity in May.

In Brazil, the Bank advised Meizler Biopharma shareholders on the sale of a 51% stake of the company to UCB and Aegea Saneamento on the auction promoted by the municipality of Piracicaba (São Paulo State) to award the construction, operation and maintenance of a sewage treatment system. The Bank acted as exclusive broker on the purchase of a 2.8% stake in Portugal Telecom by Oi S.A. (Eur 99.8mn) and as Bookrunner on the R$ 209 million debentures issue by OAS Engenharia.

In the UK, the Bank acted as Sole Bookrunner on the 22.9 million shares placement of Xchanging plc (£ 22.4m). The Bank reached the 3rd position on the Leading Pan-European Brokerage Firm for UK Small & Mid Caps ranking (ThomsonExtel Surveys 2012).

In Poland, the Bank advised Gebomsa Polska Sp. z.o.o. on the acquisition of a local competitor, Betopompa, and was Mandated Lead Arranger on the PLN 4.8m financing for this acquisition. The Bank ranked 12th in the Polish brokerage market, with a 2.9% market share in the 1H2012.

In Spain, the Bank ranked #3 in the Madrid Stock Exchange with a 6.7% market share in the 1H2012.

162% 45%


Table of contents





reserve


ECB eligible pool

V. Wrap up





0.8

1.14

0.850.76

0.620.71 0.630.710.63

1.141.151.17

1.59

0.33

0.52

1.74

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

81

148 147 149

203

97

138104 96

8095 84 94

22540

66

0

50

100

150

200

250

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

Quarterly Credit ProvisionsCost of Risk

Eur 40 mnadditional

charge

(Eur mn)(%)

Economic conditions in Portugal still impose a strong provisioning effort, with operating cash flow being used to steadily reinforce provision reserve. Maintaining a prudent stance vis-à-vis asset quality, cost of risk was 1.59% in 2Q12 (1.38% in 1H12)

Eur 66 mnadditional

charge

1.47%, including additional LLC

2009Eur 540mn

2010Eur 352mn

2011Eur 601mn

2009107 bps

201067 bps

2011117 bps

(1)

(1) Includes Eur 42.7 mn of provisions resulting from the SIP. The difference vs the initial amount of Eur 125mn is explained by the fact that the remaining provision charges were made in accordance with BES Group’s usual criteria.

1.28%, including additional LLC

1H12138 bps

1H12Eur 352 mn


Total provisions reserve is 4.76% of the loan portfolio (Eur 2.4bn), one of the highest levels in Iberia. Credit at risk totals 7.9% of the loan portfolio, with a 60% coverage by provisions on BS (excluding collaterals and guarantees)

BES On-BS Provisions Reserve

2 1672 271

2 435

1 983

1 777

1 552

1 148990

2007 2008 2009 2010 Jun-11 2011 Mar-12 Jun-12

Overdue and Credit at Risk ratios

(Eur mn) (%)

Provisions as % of Gross Loans

2.29% 2.38% 3.07% 3.38% 3.83%

Overdue loans

+ 90 days

7.91%

3.73%3.30%

Overdue loans

+ 30 days

Credit at Risk*

144%

Coverage (excluding collaterals and guarantees)

128% 60%

4.23%

(*) According to Instruction 23/2011 of Bank of Portugal. Credit at risk includes: a) total value of credit with capital or interest past due by 90 days or more; b) other restructured credit, where the principal or interest payments were past due by more than 90 days and have been capitalized or refinanced without full coverage by collaterals or the interest fallen due have not been fully paid by the debtor and c) credits of an insolvent or bankrupt debtors.

4.45%

+23%On BS provisions

reserve increased to 4.76%, one of the

highest levels in Iberia

4.76%


Overdue loans ratios are consistently below Portuguese average, showing BES excels in risk management

1. 9% 1. 9%

1. 2%

1. 8%2 . 1%

4. 8%

5. 7%

1. 3 %1. 3 %1. 5%

2 . 1%

3 . 0%

3 . 7 %

3 . 5%3 . 2%

2 . 4%2 . 3 %

1. 8%2 . 1%

5. 3 %

4. 5%

2 . 2 %

3 . 2 %3 . 4%

1. 7%1. 6%

1. 9%2 . 0%

2 . 3 %2 . 2 %

2 . 2%2 . 1%

2 . 6%

3 . 6%

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

BES Overdue Loans Ratio* Evolution vsPortuguese System

Source: BES and BoP. May 2012* Overdue loans + 30 days

4.45%

0.86%

6.01%

8.5%

1.9%

10.7%Consumer

& Other

Mortgage

Corporate

System

BES

Overdue loans continue to increase, reflecting the

deterioration of macroeconomic conditions

Total Overdue Loans/Gross Loans SystemTotal Overdue Loans/Gross Loans BES

1Q12

System data as of May 2012; Source: BoP

2Q12


Credit portfolio is mainly composed by Corporate loans (72.7% of total) and remains well diversified

Credit Portfolio as of June 2012 (Eur 51.2 bn Gross Loans)

Excludes securitised credit

Corporate72.7%

(Eur 37.2 bn)

Consumer & Other5.0% (Eur 2.6bn)

Mortgage22.3%

(Eur 11.4 bn)

1 Represents a composite of other sectors of the economy none representing more than 3% per se.

Services

Con.& Pub Works

Real Estate

Retail

Other Man.

T&C

Other Services1

Fin. Inst.

13.1%

10.1%

12.6%

6.3%

7.0%

6.9%

4.3%

12.5%

Services

Const. & Public Works

Real Estate

Whol. & Retail

Other Manuf.

T&C

Fin. Inst.

Other Sectors1

% of Total Credit Portfolio


Credit Portfolio as of June 2012 (Eur 51.2bn Gross Loans)

Excludes securitised credit

Domestic77.4%

(Eur 39.6 bn)

International22.6%

(Eur 11.6 bn)

8.9%

6.5%

4.0%

1.3%

1.2%

0.7%

Angola

Spain

US

(Eur 4.6bn)

Brazil

Other

(Eur 3.3bn)

(Eur 2.1bn)

(Eur 0.6bn)

(Eur 0.6bn)

(Eur 0.3bn)

International loans account for 22.6% (Eur 11.6bn) of credit portfolio. Main exposures are Angola and Spain. UK portfolio has been reducing with the deleverage plan

UK


Table of contents





reserve


ECB eligible pool

V. Wrap up





Wholesale markets have been closed for Portuguese banks since 2Q10. As a result, BES implemented a deleverage plan since 2H10 that allowed it to redeem Eur 19.5bn of wholesale debt in the period, while ECB facilities were used in the amount of Eur 13.7bn

Evolution of ECB use and BES redemptions (*)

(Eur bn)

(*) Includes MLT and ST redemptions

13.7

8.7

3.9

-0.3

19.5

15.8

5.3

0.0

Use of ECB Redemptions

14.0

6.7

12.8

Increase in useof ECB

Redemptions

Mar-10 Dec 10 Jun 12

14.0

Increase in ECB use and BES redemptions (*) since March 2010

MLT

ST

19.5+19.5bn

Eur 5.8bn

Dec 11

+14.0bn

AA1

A-A2

BB-Ba3

BBBa2

S&PMoody’s

(-7 notches)(-8 notches)

The liquidity gap was covered internally through deleverage (increase of deposits, sale of

international loans an cash flow generation)


54% 43% 35% 29%

6%

36%46% 55% 52%

10% 11% 10% 12%

-8% -11%

2%

-16%

2009 2010 2011 Jun-12

MLT Funds Bancassurance Deposits Equity Treasury Gap (net interbank deposits)

Weight of deposits in overall funding mix increased from 36% to 52% (+16 p.p.) between 2009 and Jun-12, while MLT Funds decreased from 54% to 29% (-25p.p.)

Evolution of Funding mix

(%)

Share of customer funds in funding mix increased significantly

Note: ECB included in Treasury Gap.


2.8

0.50.1

0

1Q12 2Q12 3Q12 4Q12

Over 95% of 2012 MLT maturities already repaid in 1H12. Remaining quarters represent undemanding cash requirements. 2013-2015 annual MLT refinancing needs are much lower than in 2011-2012

4.3

3.31.8

2.42.5

0.1

2011 2012 2013 2014 2015

Medium and Long Term Debt maturing in 2012 Medium and Long Term Debt maturity profile

(Eur bn)(EUR bn; Total Eur 3.4bn)

Of which: Eur 1. 5bn

Senior Guar. and Eur

1.2bn EMTN

3.4

already repaid

From the Eur 3.4bn to be redeemed in 2012, over 95%, or Eur 3.3bn, was already repaid

already repaid

2013-2015 MLT annual redemptions are much lower than in 2011-2012

Average: Eur 3.9bn

Average: Eur 2.2bn


ECB

Use

Dec.

11

1H12

MLT

Rede

mpt

ions

Fina

ncia

las

sets

BES

Vida

Depo

sits

ST L

ines

Oth

er

Righ

ts Is

sue

Debt

Issu

ance

ECB

Use

1H12

Use of ECB liquidity facilities increased to Eur 13.7bn during 1H12. Repoable assets continued to be significantly reinforced and provide a substantial liquidity buffer

BES use of ECB liquidity facilities (net) (EUR bn)

16.5 16.918.9

24.227.0

10.813.2

15.1

20.522.6

Dec-10 Jun-11 Dec-11 Mar-12 Jun-12

ECB Eligible Total

Total Repoable Assets1

(EUR bn)

8.7

3.31.4

1.4 0.1

-1.0-0.8

Outflows: 6.8

Inflows: 1.8

ECB: +11.2bnTotal: +9.8bn

+ Eur 5.0 bn

1. Pre-haircuts..Includes repo’ed assets.

0.4

< 1year: Eur 3.5bn

> 1year: Eur 10.2bn

13.70.2


198%

165% 163%155%

146% 147%135%

171%

141%137%130% 131% 130% 125% 122% 124%

117%119%

1H10 9M10 FY10 1Q11 1H11 9M11 FY11 1Q12 1H12 Target

Loans to DepositsRatio

Loans / On-BSCustomer Funds

*

Transformation Ratio

LTD ratio reached 147% in Jun-12. Despite the quarterly increase, LTD is 51 p.p. lower than 2 years ago and on track to reach the 120% recommended target. Loans to On-BS Customer funds ratio stands at 124%

120%

-51 p.p.

-27 p.p.

* Calculated according to BoP definition for Funding and Capital Plan.


Net Loan Portfolio Evolution

(EUR bn; excludes securitised credit)

48.7 48.749.9

51.7 51.0 50.849.9 49.7 49.0

1H10 9M10 FY10 1Q11 1H11 9M11 FY11 1Q12 1H12

Gross loans decreased 1.0% YoY (Eur 0.5bn) to Eur 51.2bn. Despite the deleverage, BES continues to support exporting SME’s and domestic corporates

Gross loans: YoY growth

(EUR bn)

(Base 100 = Jun 10)

Evolution of credit components

Exporting SME’s: +12%

Domestic corporate segment: +2%

Jun10 Dec10 Dec11Jun11

International credit*: -29%

* International credit excludes Angola and Brazil

51.7 51.2 51.0 51.2

0

10

20

30

40

50

60

70

80

Jun-11 Dec-11 Mar-12 Jun-12

-0.5bn-1.0% -3.0bn

-5.7%

-1.0bn-2.0%

Jun12

The Eur 0.2bn increase in 2Q12 gross

loans is mainly due to FX impacts


Core deposits up 2.5% YoY (Eur 0.8bn) to Eur 32.8bn. On a quarterly basis, deposits decreased Eur 3.2bn driven mainly by institutional and corporate Clients

Total Deposits Evolution

(EUR bn)

Deposits – quarterly breakdown

(EUR bn)

26.1

29.9 30.8 30.532.0

33.9 34.236.0

32.8

1H10 9M10 FY10 1Q11 1H11 9M11 FY11 1Q12 1H12

+6.7bn+25.6%

+0.8bn+2.5%

-3.2bn-8.9%

DepositsMar-12

Corporates Individuals DepositsJun-12

36.0

-2.8 -0.4

32.8

Mainly explained by Large Corporates & Institutional, due to i) increase in risk aversion related to the

Euro Zone debt crisis and ii) companies deleverage

Mainly explained by Clients moving their savings to

higher yielding investment products, following new

rules regarding pricing of deposits applied by BoPfrom April 2012 onwards


+520+660

-140

DepositsOther

Customer Funds

Total Customer

Funds

In Domestic activity, Retail & Private Banking savings continue to show an upward trend, with customer funds increasing Eur 570mn in the quarter. Decrease in deposits compensated by stronger increase in higher yielding products

Domestic Customer Funds (quarterly evolution) (*)

(EUR bn)

Deposits - average rate evolution

(%)

Retail

Private Banking

+50+430

-380

In Portugal, Retail & Private Banking deposits decreased c.Eur 0.4bn, with Clients moving their savings to higher

yielding investment products, following new rules regarding pricing of deposits applied by BoP from April 2012 onwards

(*) Change in average monthly balance

3.49 3.44

3.07

4Q11 1Q12 2Q12

110100

136

Dec Mar Jun Sep Dec Mar

Stock of Household Deposits(December 2010: Index 100)

BES

Market

2010 2011 2012


Table of contents





reserve


ECB eligible pool

V. Wrap up





Proactively addressing challenges: strong capital ratios, conservative risk management with operating cash-flow used to increase provision reserve and high level of repoable assets to provide a comfortable liquidity buffer

Solvency

Rights issue concluded in May strengthened BES’ capitalisation level, based solely on market solutions and internal capital generation. No use of public funds allows the Bank to maintain its strategic independence. Core Tier I of 10.5% in Jun 12 (9.9% applying EBA methodology) is comfortably above minimum regulatory thresholds. Public debt portfolio concentrated in Portugal and with unrealised capital gains.

Conservative risk management with provision reserve being a cushion to overcome expected asset quality deterioration. In Jun 12, on-Balance Sheet provisions reached Eur 2.4bn or 4.76% of gross loans.Despite an expected increase, overdue loan ratios are consistently below the Portuguese average (despite higher weight of corporate loans).

Operating income ex-markets increased 29% YoY, driven by a 12% YoY growth in commercial banking income and flat operating costs.Strong cash-flow generation key to compensate high level of provision charges.

Risk Management

1H12 Results

Successful implementation of a deleveraging programme since 2H10. LTD decreased 51 p.p. in the last 2 years to 147% in Jun 12, on track to reach the recommended target of 120% by Y-end 2014.ECB eligible pool of repoable assets increased to Eur 22.6bn, leading to a comfortable liquidity buffer.

Funding & Liquidity

Portuguese economy continues to show a strong adjustment capacity, recognised by the IMF / ECB / EC. Market perception is also improving, translating into declining bond yields.Strong exports growth coupled with contraction of domestic demand is positively impacting external deficit, expected to turn positive already in 2013.Increase of emigrants remittances to Portugal (+18% YoY) and appetite for higher risk savings products mirror an increased confidence in the Portuguese economy.

Portuguese Economy


Table of contents





reserve


ECB eligible pool

V. Wrap up





Accumulated income statement: domestic and international

--0.00.0--1.10.0+ Insurance premiums and costs

Domestic

-

51.3%

83.0%

5.9%

-

12.5%

11.1%

34.5%

30.7%

32.7%

19.6%

34.4%

38.9%

31.0%

% Total. Consolidated

-

48.7%

17.0%

94.1%

100.0%

87.5%

88.9%

65.5%

69.3%

67.3%

80.4%

65.6%

61.1%

69.0%

% Total Consolidated

2.6pp47.2%44.6%-12.0pp55.8%67.7%Cost to Income ex-Markets

16.3%44.137.915.1%307.9267.5… credit

-0.0-0.1-66.7%18.856.5… securities

-43.7%3.35.9-48.8%52.2102.0… other

International

0.8pp

-6.3%

12.1%

2.8%

8.4%

4.0%

7.4%

5.5%

-

1.5%

67.7%

-25.8%

YoY

43.3%

83.5

82.5

166.0

43.7

209.7

159.9

369.6

10.9

358.7

105.0

253.7

1H11

44.1%

78.2

92.5

170.7

47.4

218.1

171.7

389.8

25.6

364.2

176.0

188.2

1H12

4.3pp

-

-

-54.8%

-11.0%

-17.8%

-2.5%

-11.1%

-66.5%

18.5%

-7.4%

45.1%

YoY

48.4%44.1%Cost to Income

-52.795.1= Net Income

87.7

35.0

378.9

413.9

387.8

800.6

105.2

695.4

276.0

419.4

1H12

17.7

77.4

426.0

503.4

397.5

900.9

313.9

587.0

297.9

289.1

1H11

- Taxes & Minorities

= Inc. pre-Tax&Min.

- Net Provisions

= Net Oper. Income

- Operating Costs

= Banking Income

+ Capital Mkts & Other

= Commercial Bkg Inc.

+ Fees & Commissions

+ Net Interest Income

(EUR million)

(*) 2011 quarterly staff costs reflect the change of the accounting policy related to emplyees long term benefits, accounted in Other Comprehensive Income as from 2011


Quarterly consolidated income statement*

1.10.00.00.00.00.00.00.00.00.0+ Insurance Premiums and Costs

54.3%

51.4%

11.6

29.3

7.8

-23.5

41.0

25.3

66.2

190.7

229.2

256.9

-

271.9

528.8

-11.4

39.2

500.9

206.4

294.5

1Q12

51.5%

43.5%

13.9

35.4

6.2

80.1

3.8

90.1

139.5

235.6

271.1

375.1

-

287.6

661.6

-86.4

189.3

558.7

245.6

313.1

2Q12

-11.411.311.311.611.611.611.6Note: Amort. actuarial diff. eliminated

59.8%

-.

-280.6

17.4

7.6

-85.4

7.7

-70.1

-333.4

187.6

200.8

-145.7

298.9

153.2

-236.1

-110.5

499.7

192.4

307.3

4Q11

18.3%30.1%253.8208.4179.9169.3282.7208.0187.9NOI ex-Mkts & Other

57.0%

37.1%

106.4

16.9

7.6

-79.4

50.7

-21.0

102.3

366.5

468.8

276.4

745.2

15.7

244.7

484.8

213.3

271.5

2Q11

19.8%

20.8%

-18.4%

-

-90.7%

-

110.7%

23.5%

46.0%

5.8%

25.1%

-

-

11.5%

19.0%

6.3%

QoQ

-18.4%7.67.60000… Special Tax

-92.5%0.413.3-0.518.86.734.8… Income Tax

-22.29.0-10.314.3-15.3-4.6… Deferred Taxes

51.8%

51.8%

-6.8

39.2

30.2

62.6

191.0

253.6

272.8

526.4

-33.9

33.7

526.6

195.2

331.4

3Q11

64.2%

46.5%

116.6

61.7

-10.8

167.5

182.8

350.3

303.9

654.2

52.9

128.1

473.2

201.8

271.4

4Q10

61.0%

53.5%

72.3

39.1

29.9

141.3

103.1

244.3

281.0

525.3

-35.9

100.4

460.9

189.6

271.3

1Q11

49.7%

45.9%

134.8

49.0

33.1

216.9

112.0

328.9

279.0

607.9

0.2

46.2

561.7

215.5

346.2

3Q10

57.6%57.8%Cost to Income ex-Markets

48.2%46.4%Cost to Income

-86.9%174.7130.7= Net Income

14.1

-8.6

180.2

123.7

303.9

282.5

586.4

-1.9

97.8

490.5

197.8

292.7

2Q10

21.7

30.2

182.6

115.1

297.7

257.6

555.3

12.7

97.1

445.5

191.8

253.7

1Q10

-

-

36.4%

-35.7%

-20.0%

4.1%

-11.2%

-

-

15.2%

15.1%

15.3%

YoY

- Minorities

- Taxes

= Income Bef. Tax & Min.

+ Other Results

- Net Provisions

= Net Operating Income

- Operating Costs (restated)

= Banking Income

+ Capital Markets Results

= Commercial Bkg Income

+ Fees and Commissions


(EUR million)

(*) The change in the accounting policy related to emplyees long term benefits, now accounted in Other ComprehensiveIncome, led to a restatement of the staff costs line in 2010 and in the first three quarters of 2011


Quarterly domestic income statement*

-1.10.00.00.00.00.00.00.00.00.0+ Insurance Premiums and Costs

55.4%

52.1%

-11.3

4.7

14.3

7.7

165.3

151.7

173.0

188.5

361.4

21.3

340.1

142.8

197.3

1Q12

56.1%

45.4%

-41.5

-2.4

71.1

27.3

213.6

155.9

240.9

199.3

439.2

83.9

355.3

133.2

222.1

2Q12

64.1%

-

-311.3

-2.4

-90.9

-404.6

178.1

115.0

-226.5

205.1

-20.8

-340.7

320.0

151.5

168.4

4Q11

2.8%19.5%148.0130.559.045.3172.4116.991.0NOI ex-Mkts & Other

56.5%

57.7%

-54.2

2.4

18.0

-33.8

174.7

140.9

190.8

331.7

-7.1

338.8

150.6

188.2

3Q11

0.7pp

-6.7pp

-

-

-

-

29.2%

39.2%

5.8%

21.5%

-

4.5%

-6.7%

12.6%

QoQ

77.2%

62.3%

16.2

-0.2

14.2

30.2

90.7

120.9

200.0

320.9

61.8

259.0

134.2

124.8

1Q11

83.1%

49.0%

79.2

25.1

-18.4

85.9

145.5

231.4

222.1

453.5

186.0

267.4

149.8

117.7

4Q10

60.2%

34.1%

79.1

-1.1

-30.5

47.5

335.1

382.6

197.6

580.2

252.1

328.1

163.7

164.4

2Q11

61.9%

56.0%

64.7

0.4

6.7

71.8

90.7

162.5

207.2

369.7

34.8

334.9

163.1

171.8

3Q10

-4.1pp64.9%68.2%Cost to Income ex-Markets

+11.3pp51.1%50.7%Cost to Income

-126.782.6= Net Income

-1.5

-20.5

104.7

101.4

206.1

215.8

421.9

89.2

332.7

147.8

184.9

2Q10

-1.8

16.3

97.1

92.8

189.9

195.1

385.0

98.9

286.1

149.3

136.8

1Q10

-

-

-42.5%

-36.3%

-37.0%

0.9%

-24.3%

-66.7%.

8.3%

-18.6%

35.1%

YoY

- Minorities

- Taxes

= Income Bef. Taxes and Min.

- Net Provisions


- Operating Costs (restated)

= Banking Income

+ Capital Mkts & Other Results




(EUR million)

(*) The change in the accounting policy related to emplyees long term benefits, now accounted in Other ComprehensiveIncome, led to a restatement of the staff costs line in 2010 and in the first three quarters of 2011


Quarterly international income statement

51.9%

49.9%

22.9

24.5

10.9

58.5

25.4

77.4

83.8

83.5

167.4

6.5

160.9

63.6

97.2

1Q12

52.4%

54.1%

29.8

19.8

20.8

70.3

9.6

85.5

79.9

94.3

173.9

-5.9

179.8

40.9

138.9

4Q11

43.4%

39.6%

55.3

37.9

19.1

112.2

22.1

115.2

134.2

88.2

222.4

19.1

203.3

112.3

90.9

2Q12

48.8%48.1%105.977.8120.9123.9155.091.196.9NOI ex-Mkts & Other

43.6%

42.1%

47.3

36.9

12.2

96.4

16.4

112.8

82.0

194.8

7.0

187.9

44.6

143.2

3Q11

-8.5pp

-10.3pp

141.5%

55.1%

75.2%

91.9%

14.9%

59.9%

5.6%

32.9%

-

26.4%

76.1%

-6.5%

QoQ

40.1%

39.6%

56.0

39.3

15.7

111.0

12.4

123.4

81.0

204.4

2.5

201.9

55.3

146.6

1Q11

39.8%

40.9%

37.6

36.6

7.4

81.7

37.2

118.9

81.8

200.7

-5.0

205.8

52.0

153.7

4Q10

50.3%

47.8%

27.3

18.0

9.4

54.9

31.3

86.2

78.9

165.1

8.4

156.7

49.6

107.1

2Q11

42.3%

40.5%

48.0

15.6

12.0

75.4

22.3

97.8

66.7

164.5

6.7

157.8

50.0

107.8

2Q10

-6.9bp31.6%39.2%Cost to Income ex-Markets

102.6%70.148.1= Net Income

-8.2pp30.1%36.7%Cost to Income

48.6

26.4

145.1

21.3

166.4

71.8

238.2

11.4

226.8

52.4

174.4

3Q10

23.5

13.9

85.5

22.3

107.8

62.5

170.3

10.9

159.4

42.5

116.9

1Q10

111.1%

103.2%

104.4%

-29.7%

55.8%

11.8%

34.8%

127.4%

29.8%

126.6%

-15.0%

YoY

- Minorities

- Taxes

= Income Bef. Taxes & Min.

- Net Provisions


- Operating Costs

= Banking Income

+ Capital Mkts & Other Res.




(EUR million)


Strategic triangle income statement: Africa, Brazil and Spain

53.0%

6.6

1.0

7.6

30.2

37.8

42.6

80.4

7.7

72.7

25.1

47.6

1H11

Spain

52.9%

10.5

1.4

11.9

26.0

37.9

42.5

80.5

11.8

68.6

24.6

44.0

1H12

-

59%

37

56%

-14%

-

-

-

54%

-6%

-2%

-8%

YoY

Strategic TriangleBrazilAfrica*

24.3%

42.8

73.7

116.5

11.6

128.1

41.2

169.3

5.5

163.8

18.4

145.4

1H11

26.0%

43.0

84.9

127.8

18.7

146.5

51.4

197.9

16.7

181.3

100.3

80.9

1H12

1.7pp

-

15%

10%

61%

14%

25%

17%

-

11%

-

-44%

YoY

35.8%

63.7

96.2

159.9

45.1

205.0

114.3

319.4

17.4

302.0

142.1

159.8

1H12

8.3pp

-25%

-12%

-19%

-87%

-27%

2.5%

-15%

-

11%

-22%

41%

YoY

41.5%

13.6

11.3

24.9

3.1

28.0

19.9

47.9

1.2

46.7

22.0

24.7

1H11

1pp

1%

12%

7%

-

6%

10%

7%

21%

7%

117%

-27%

YoY

49.8%

10.2

9.9

20.2

0.4

20.6

20.4

41.0

-11.1

52.1

17.2

34.9

1H12

34.8%Cost to Income

63.0= Net Income

86.0

149.0

44.9

193.9

103.7

297.6

14.4

283.2

65.5

217.7

1H11

- Taxes & Min.

= Income Bef. Tax & Min.

- Net Provisions

= Net Op. Income

- Operating Costs

= Banking Income

+ Markets & Other

= Com. Bkg Income

+ Fees and Com.


(EUR million)

* Comprising Angola, Cape Verde, Mozambique and Libya


Angola: Quarterly income statement

734.2

4,061.9

6,778.5

30.0%

12.5

32.6

45.1

7.0

52.0

22.4

74.4

8.8

65.6

20.8

44.8

1Q12

844.6

4,558.3

7,625.3

20.3%

27.7

48.1

75.8

12.4

88.2

22.5

110.7

3.4

107.3

73.6

33.7

2Q12

556.1

3,221.2

5,992.8

22.3%

41.7

72.9

114.6

9.8

124.4

35.7

160.1

3.6

156.5

12.5

144.1

1H11

4,558.3

7,625.3

24.2%

40.2

80.6

120.8

19.4

140.2

44.9

185.1

12.2

172.9

94.4

78.5

1H12

41%

27%

1.9pp

-3%

11%

5%

97%

13%

26%

16%

-

11%

-

-45%

YoY

721.3

3,946.3

6,867.0

25.7%

21.0

36.6

57.6

10.7

68.3

23.6

91.9

-1.1

93.0

5.9

87.1

4Q11

653.6

3,579.5

6,880.8

19.4%

29.0

50.3

79.3

7.4

86.7

20.8

107.5

9.4

98.0

5.8

92.3

3Q11

15.0%

12%

12%

-9.7pp

122%

48%

68%

78%

70%

1%

49%

-61%

64%

-

-25%

QoQ

51.9%556.1526.9485.7419.0369.0303.1Equity

3,029.4

6,210.1

19.5%

27.1

47.3

74.4

4.7

79.2

19.2

98.3

5.3

93.0

6.2

86.8

1Q11

3,221.2

5,992.8

26.7%

14.6

25.6

40.2

5.1

45.3

16.5

61.8

-1.8

63.6

6.3

57.3

2Q11

2,823.6

5,923.9

18.6%

26.3

46.6

72.9

14.2

87.1

20.0

107.1

8.8

98.3

6.0

92.3

4Q10

2,443.1

5,520.8

35.2%

10.8

18.6

29.5

3.0

32.4

17.6

50.0

3.9

46.1

7.5

38.6

2Q10 (EUR million)

2,553.9

5,211.6

15.7%

35.8

63.1

98.9

3.8

102.7

19.2

121.9

-0.5

122.4

6.3

116.1

3Q10

1,966.9

4,775.5

22.8%

18.0

30.4

48.4

2.3

50.7

14.9

65.6

11.2

54.4

5.8

48.7

1Q10

27%Total Assets

41%Total Credit (Gross)

-6.4ppCost to Income

69%= Commercial Bkg Income

90%= Net Income

88%

89%

144%

95%

37%

79%

-

-

-41%

YoY

- Taxes & Minority Interests


- Net Provisions


- Operating Costs

= Banking Income

+ Capital Mkts & Other




Brazil: Quarterly income statement

2,425.7

42.0%

7.0

5.7

12.7

0.6

13.3

9.7

23.0

-1.9

24.9

10.0

14.9

1Q12

2,645.7

58.0%

1.8

8.2

10.1

-1.5

8.5

11.8

20.4

2.7

17.7

3.2

14.4

4Q11

2,711.4

41.5%

13.6

11.3

24.9

3.1

28.1

19.9

47.9

1.2

46.8

22.0

24.7

1H11

2,711.6

49.8%

10.2

9.9

20.2

0.4

20.6

20.4

41.0

-11.1

52.1

17.2

34.9

1H12

2,711.6

59.7%

3.2

4.2

7.5

-0.2

7.2

10.7

17.9

-9.2

27.2

7.2

20.0

2Q12

2,502.1

49.7%

5.0

4.4

9.4

0.0

9.4

9.3

18.7

-1.8

20.5

6.9

13.6

3Q11

11.8%

17.7pp

-54-

-25%

-41%

-

-46%

11%

-22%

-

9%

-28%

34%

QoQ

2,755.7

42.7%

5.7

5.6

11.3

1.5

12.8

9.6

22.4

-1.8

24.2

10.1

14.1

1Q11

--2,711.42,672.22,301.52,340.51,962.4Assets

40.4%

8.0

5.6

13.6

1.6

15.2

10.3

25.5

3.0

22.6

11.9

10.7

2Q11

8.3pp

-25%

-12%

-19%

-87%

-27%

3%

-15%

-.

11%

-22%

41%

YoY

55.8%

6.1

1.8

7.9

1.2

9.1

10.2

19.2

-3.2

22.4

8.5

14.0

4Q10

40.2%

7.3

6.0

13.3

-0.1

13.2

8.9

22.1

0.2

21.9

7.9

14.0

2Q10(EUR million)

28.0%

15.7

7.8

23.4

1.4

24.8

9.6

34.5

7.8

26.7

13.9

12.8

3Q10

51.6%

3.1

2.3

5.4

2.6

8.0

8.5

16.5

-2.8

19.3

6.8

12.5

1Q10

19.3ppCost to Income

21%= Commercial Bkg Income

-60%= Net Income

-25%

-45%

-

-52%

4%

-30%

-

-40%

88%

YoY



- Net Provisions


- Operating Costs

= Banking Income

+ Capital Markets & Other




Spain: Quarterly income statement

5,139.2

94 bp

3,371.5

60.7%

4.7

0.1

4.8

9.1

13.9

21.4

35.3

0.8

34.6

12.7

21.9

1Q12

5,302.5

115 bp

3,495.1

60.1%

5.0

-1.4

3.5

11.1

14.6

21.9

36.5

0.8

35.7

14.0

21.7

4Q11

4,792.0

161bp

3,690.5

52.9%

6.6

1.0

7.6

30.2

37.9

42.6

80.5

7.7

72.8

25.1

47.6

1H11

5,013.0

bp

3,347.2

52.9%

10.5

1.4

11.9

26.0

37.9

42.5

80.5

11.8

68.6

24.6

44.0

1H12

5,013.0

183 bp

3,347.2

46.8%

5.9

1.2

7.1

16.9

24.0

21.1

45.1

11.1

34.1

12.0

22.1

2Q12

4,874.2

161 bp

3,564.8

64.5%

-1.7

-1.0

-2.7

14.4

11.6

21.1

32.7

-0.1

32.8

12.3

20.5

3Q11

-2%

89 bp

-1%

-13.9pp

26%

-

50%

85%

73%

-2%

28%

-

-2%

-5%

1%

QoQ

5,502.6

142 bp

3,736.4

51.9%

5.8

1.6

7.4

13.3

20.7

22.3

43.0

5.1

37.9

12.5

25.4

1Q11

4,792.0

178 bp

3,690.5

54.1%

0.8

-0.6

0.2

16.9

17.2

20.3

37.5

2.5

34.9

12.7

22.3

2Q11

5%

Bp

-9%

-

59%

37%

56%

-14%

-

-

-

55%

-6%

-2%

-8%

YoY

5,498.4

60 bp

4,093.7

64.7%

2.6

1.0

3.5

8.8

12.4

22.7

35.1

-0.5

35.6

11.1

24.5

4Q10

5,722.3

105 bp

4,197.7

55.0%

5.6

0.5

6.0

11.1

17.2

21.0

38.1

1.4

36.7

12.8

23.9

2Q10(EUR million)

5,527.0

103 bp

4,111.7

60.1%

2.1

1.8

3.9

10.7

14.6

22.0

36.7

2.2

34.5

12.8

21.7

3Q10

6,029.4

141 bp

4,156.1

56.9%

2.5

0.4

2.9

14.6

17.5

23.1

40.7

1.6

39.1

14.6

24.5

1Q10

-5 bpCost of Risk (bp)

-9%Credit (Gross)

-7.3ppCost to Income

-2%= Commercial Bkg Income

-= Net Income

5%

-

-

-

40%

4%

21%

-

-5%

-1%

YoY

Assets



- Net Provisions


- Operating Costs

= Banking Income





UK: Quarterly income statement

2,122.5

88.9%

-2.1

-5.0

-7.2

8.9

1.7

13.5

15.2

-4.8

20.0

12.2

7.8

1Q12

1,930.5

-

-0.4

2.6

2.2

-14.7

-12.5

17.3

4.8

-8.7

13.6

5.7

7.8

4Q11

2,122.5

83.6%

7.5

-3.8

3.7

3.3

7.0

35.8

42.8

-6.5

49.4

26.9

22.5

1H11

2,051.3

75.1%

11.4

-3.3

8.1

1.2

9.3

28.3

37.7

2.1

35.6

20.8

14.8

1H12

2,051.3

66.0%

13.5

1.7

15.3

-7.6

7.6

14.8

22.5

6.9

15.6

8.6

7.0.

2Q12

2,079.1

93.5%

11.5

-4.0

7.5

-6.2

1.3

18.7

20.0

-2.6

22.6

13.0

9.6

3Q11

-3.4%

-

-

-

-

-

-

10%

48%

-

-22%

-30%

-10%

QoQ

2,349.2

76.2%

10.2

-0.2

10.0

-4.3

5.7

18.3

24.0

-7.2

31.1

18.4

12.8

1Q11

2,122.5

92.9%

-2.7

-3.6

-6.3

7.6

1.3

17.5

18.9

0.6

18.2

8.5

9.7

2Q11

-3.4%

-8.5pp

52%

-

119%

-63%

33%

-21%.

-12%

-.

28%

-23%

-34%%

YoY

2,699.1

84.9%

-2.5

-6.7

-9.1

11.5

2.3

13.1

15.4

-10.8

26.2

13.3

12.9

4Q10

2,986.9

14.0%

20.9

2.2

23.1

3.6

26.7

4.4

31.1

0.8

30.3

11.3

19.0

2Q10(EUR million)

2,814.4

16.5%

20.5

1.9

22.4

-0.2

22.2

4.4

26.7

-0.3

26.9

6.5

20.5

1Q10

2,979.7

22.0%

8.3

2.9

11.2

6.1

17.3

4.9

22.2

1.2

20.9

5.7

15.2

3Q10

-3.4%Credit (Gross)

-Cost to Income

-15%= Commercial Bkg Income

-= Net Income

-

-

-

-

-15%

19%

-

1%

-28%

YoY



- Net Provisions


- Operating Costs

= Banking Income





Quarterly Net Interest Income(N

IM in

bp;

Qua

rterly

Fig

ures

)

254

293

346

271

271

272

331

307

295

313

258

253

269

306

315

335

300

250

179171174187

155156152

190161

141176 169

167188193 171199

141

0

50

100

150

200

250

300

350

400

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

0

50

100

150

200

NII

NIM45

4

455

507

546

562

540

437

397

401

380

375

423

406

395

4.294.524.22

3.923.553.553.32.983.08

3.583.38 3.25

3.02 3.03

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

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

-47

-36

-39

-41

-52

-57

-66

-110

-136

-129

-146

-173

-206

-203

-2.38-2.39-2.0-1.78-1.64-1.78

-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

2Q11

3Q11

4Q11

1Q12

2Q12

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 1.091.41 1.56 1.50

1.040.70

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

2Q11

3Q11

4Q11

1Q12

2Q12

75

95

115

135

155

175

195


Quarterly fees & commissions

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

Note: Changes calculated based on figures in thousand euros.

206.4

36.2

1.8

19.1

10.0

19.9

18.4

17.3

15.9

19.4

29.1

19.3

1Q12

192.1

26.0

2.2

2.7

11.1

15.9

18.2

35.5

12.0

18.6

27.9

22.1

4Q11

402.9

32.9

3.9

21.9

19.7

48.7

52.2

62.5

36.8

33.8

51.5

39.0

1H11

452.0

123.8

3.4

27.5

20.4

38.5

37.4

41.5

24.9

43.5

51.8

39.2

1H12

12%

-

-11%

26%

4%

-21%

-28%

-34%

-32%

29%

1%

1%

YoY

245.6

87.6

1.6

8.4

10.4

18.6

19.0

24.1

9.1

24.1

22.7

19.9

2Q12

195.4

16.2

2.2

10.3

10.2

21.2

19.5

27.4

10.8

32.9

24.9

20.0

3Q11

19%

-

-9%

-56%

4%

-7%

3%

39%

-43%

24%

-22%

3%

QoQ

189.6

16.8

1.9

11.7

9.7

23.7

29.6

25.6

15.0

12.3

23.8

19.4

1Q11

213.3

16.1

2.0

10.2

10.0

25.0

22.6

36.9

21.9

21.4

27.7

19.6

2Q11

201.8

17.8

2.1

12.9

10.8

26.1

14.8

28.4

15.6

15.4

35.3

22.4

4Q10

197.8

21.3

1.9

17.0

9.8

24.7

12.1

23.6

17.2

16.3

32.6

21.2

2Q10

191.8

20.6

2.2

13.0

8.9

25.2

15.6

18.1

13.9

27.6

27.1

19.6

1Q10

215.5

17.8

2.2

13.5

10.5

25.9

8.4

22.1

22.8

35.0

35.8

21.6

3Q10

15%

-

-17%

-18%

5%

-26%

-16%

-35%

-59%

13%

-18%

2%

YoY

Trade Finance & Exp. related (1)

Corporate & Project Finance

Other

Bancassurance

Factoring

Guarantees

Total Fees & Commissions

Cards

Asset Management (3)

Securities related fees (2)

Commissions on Loans

Account Management Fees

(EUR million)


Quarterly capital markets results and VAR

37.3

1.9

39.2

36.7

-78.4

-41.7

-0.5

23.3

58.1

80.9

1Q12

-122.1

11.6

-110.5

25.6

-88.8

-63.3

-9.1

19.0

-36.5

-47.2

4Q11

172.5

16.9

189.4

63.9

-113.8

-50.0

30.8

-13.2

221.9

239.5

2Q12

288.6

56.4

345.0

141.0

145.9

286.9

-7.9

22.7

43.3

58.1

1H11

28.6

5.3

33.9

1.2

-131.5

-130.3

18.2

99.6

46.4

164.2

3Q11

188.8

55.8

244.6

136.7

100.3

237.0

-12.2

14.3

5.5

7.6

2Q11

209.8

18.8

228.6

100.6

-192.4

-91.8

30.3

10.1

280.0

320.4

1H12

99.8

0.6

100.4

4.3

45.6

49.9

4.3

8.4

37.8

50.5

1Q11

88.7

39.4

128.1

116.9

144.9

261.8

-8.0

-147.7

22.0

-133.7

4Q10

41.2

4.8

46.0

7.5

-19.6

-12.1

22.9

44.7

-9.5

58.1

3Q10

81.8

16.0

97.8

65.7

32.7

98.4

28.7

-32.3

3.0

-0.6

2Q10

80.7

16.4

97.1

3.2

45.2

48.4

16.0

18.3

14.4

48.7

1Q10

Capital Markets net of Provisions for securities

… Interest rate

… Credit

… FX & Other

Provisions for Securities

Capital market results

… Income from securities

… Trading

Equity

Interest Rate, Credit & FX

(EUR million)


64

36

3

2415

88

28 3525

51 50 54 53 55

1935

26

51

84

13

46

80 82

44

66 68 73

196

3955

72

155

-14

16

48

124108

97 98

46

128

100

245

34 39

189

-1-4

49

27

2

84

109

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

2Q11

3Q11

4Q11

1Q12

2Q12

2Quarterly capital markets results

Quarterly history of capital markets results since 1999

(EUR mn)

Excludes the one-offimpact of Eur 107mn related to the partial

transfer of the pension fundto the Social Security


Quarterly equity accounted earnings and other results

-11.4

-10.4

-14.8

3.6

-0.2

3.4

1Q12

-236.1

-21.0

-57.5

4.7

-183.3

-178.6

4Q11

-33.9

-23.0

-24.5

3.1

-12.6

-9.5

3Q11

15.7

-7.2

6.9

9.0

-0.2

8.8

2Q11

-35.9

-38.6

-40.0

1.2

2.9

4.1

1Q11

-86.4

-14.6

-90.3

0.8

3.0

3.8

2Q12

0.2

1.9

-16.5

11.4

5.3

8.4

3Q10

52.9

35.4

44.9

4.8

3.2

8.0

4Q10

-2.6-0.6… Results from sale other assets

1.73.8… Other

-14.14.1Other Results, ow

12.7

4.8

8.6

1Q10

-1.9

2.2

12.2

2Q10

Equity Accounted Earnings and Other Results (Quarterly)

Total Equity Accounted and Other Results

… BES Vida

Equity Accounted Earnings

(EUR million)

-10.4

-14.8

-0.2

3.4

3M12

-89.9

-115.1

-193.2

-175.2

FY11

-68.8

-57.5

-9.9

3.4

9M11

-105.1-33.1-40.018.4-26.5-10.04.1Other Results, ow

-33.1

2.7

12.9

6M11

-40.0

2.9

4.1

3M11

-25.0

2.8

7.2

6M12

-26.5

12.3

29.2

9M10

-10.0

7.0

20.8

6M10

4.1

4.8

8.6

3M10

18.4

15.5

37.2

FY10

Equity Accounted Earnings and Other results (Accumulated)

… Results from sale of other assets

… BES Vida

Equity Accounted Earnings, ow

(EUR million)


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

-4.4

-7.8

32.3

10.1

30.2

1Q12

-13.8

-7.6

41.5

6.4

3.9

4Q11

-1.4

-7.6

192.1

7.7

190.7

3Q11

14.1

-7.6

111.4

9.3

127.2

2Q11

-1.4

-7.6

36.0

9.0

36.0

1Q11

-6.2--------… Special Tax on Banks

9.5

-29.1

6.2

-13.4

4Q10

-10.0

-7.6

12.6

-5.1

3Q10

-11.4

-8.1

8.2

-11.2

2Q10

-75.74.6-2.2-24.1-11.7-7.2… Other

-16.7

14.2

-4.8

4Q09

0.8

10.7

16.1

1Q10

13.3

9.1

-1.7

3Q09

10.2

5.3

3.8

2Q09

96.5

9.2

98.5

1Q09

Quarterly

27.9… Capital Markets

7.9… Fees

-46.0Other Results (IFRS), ow

2Q12(EUR million)

-4.4

-7.8

32.3

10.1

30.2

3M12

-25.1

-30.5

381.0

32.4

357.8

FY11

11.3

-22.9

339.5

26.0

353.9

9M11

12.7

-15.2

147.4

18.3

163.2

6M11

-1.4

-7.6

36.0

9.0

36.0

3M11

-14.0--------… Special Tax Banks

-7.3

-44.0

37.7

-13.6

FY10

-16.8

-14.9

31.5

-0.2

9M10

-6.8

-7.3

18.9

4.9

6M10

-80.14.6-45.2-43.0-18.9-7.2… Other

0.8

10.7

16.1

3M10

103.3

37.8

95.8

FY09

120.0

23.6

100.6

9M09

106.7

14.5

102.3

6M09

96.5

9.2

98.5

3M09

Accumulated

60.2… Capital Markets

18.0… Fees

-15.8Other Results (IFRS), ow

6M12(EUR million)


Breakdown of operating costs*

271.9

26.6

102.2

23.6

4.8

114.7

143.1

1Q12

298.9

29.1

120.3

20.3

2.9

126.2

149.5

4Q11

557.4

52.3

215.4

48.9

13.0

227.9

289.7

1H11

559.5

53.8

214.2

48.3

9.5

233.7

291.5

1H12

0.4%

2.9%

-0.5%

-1.2%

-26.9%

2.5%

0.6%

YoY

272.8

26.5

98.1

23.9

6.8

117.5

148.2

3Q11

5.7%

1.7%

9.6%

4.7%

-2.6%

3.8%

3.7%

QoQ

287.5

27.1

112.0

24.7

4.7

119.0

148.4

2Q12

280.9

26.1

107.5

24.6

6.8

116.0

147.4

1Q11

276.5

26.2

107.9

24.3

6.2

111.9

142.4

2Q11

303.9

24.3

117.2

20.9

13.1

128.5

162.4

4Q10

282.6

26.8

113.3

17.2

9.0

116.3

142.4

2Q10

257.5

23.7

100.6

16.5

8.7

108.1

133.2

1Q10

1.6%17.3…LT service benefits & Other

-24.2%13.5…Pension Benefits (restated)

279.1

25.3

109.9

113.0

143.8

3Q10

4.0%

3.8%

3.8%

6.3%

4.2%

YoY

…Remunerations

Admin costs

Total Operating Costs

Depreciation

Staff costs

Quarterly Operating Costs(EUR million)

(*) The change in the accounting policy related to employees long term benefits, now accounted in Other Comprehensive Income, led to a

restatement of the staff costs line in 2010 and the first three quarters of 2011


Breakdown of quarterly operating costs: domestic* and international

83.5

6.8

28.3

1.7

0.8

45.8

48.4

188.4

19.8

73.9

21.9

4.0

68.8

94.7

1Q12

93.8

8.0

31.1

1.8

1.1

51.9

54.7

205.1

21.1

89.1

18.5

1.9

74.4

94.8

4Q11

159.9

12.0

58.3

4.4

1.7

83.5

89.6

397.5

40.3

157.1

44.5

11.1

144.4

200.1

1H11

171.7

14.6

58.2

3.3

1.7

93.8

98.9

387.8

39.2

156.0

45.0

7.8

139.8

192.6

1H12

7.4%

21.7%

-0.2%

-25.0%

-

12.3%

10.4%

-2.4%

-2.7%

-0.7%

1.1%

-29.7%

-3.2%

-3.7%

YoY

5.6%

14.7%

5.7%

-23.8%

12.5%

%

4.3%

5.8%

-2.0%

11.1%

5.5%

-5.0%

3.2%

3.4%

QoQ

88.1

7.7

29.9

1.6

0.9

48.0

50.5

199.4

19.4

82.1

23.1

3.8

71.0

97.9

2Q12

82.0

6.2

27.8

1.3

0.8

45.9

48.0

190.8

20.2

70.4

22.7

6.0

71.6

100.2

3Q11

81.0

5.8

28.9

2.2

0.9

43.2

46.3

199.9

20.3

78.6

22.4

5.8

72.8

101.1

1Q11

78.9

6.2

29.3

2.2

0.8

40.3

43.3

197.6

20.0

78.6

22.1

5.3

71.6

99.1

2Q11

81.9

4.7

30.4

5.0

0.4

41.4

46.8

222.0

19.6

86.8

15.8

12.7

87.0

115.6

4Q10

71.8

6.4

25.2

1.9

1.1

37.2

40.2

207.3

18.9

84.7

15.5

12.4

75.7

103.6

3Q10

62.5

4.3

21.0

1.1

0.8

35.2

37.2

195.0

19.3

79.6

15.3

7.8

73.0

96.1

1Q10

-27.3%2.3… LT service benefits & Other

4.5%14.9…LT service benefits & Other

-28.3%8.0…Pension Benefits

%34.1…Remunerations

16.6%37.4Staff Costs

International

66.7

5.3

24.0

1.0

215.9

21.6

89.3

82.2

105.1

2Q10

11.8%

25.8%

2.0%

12.5%

0.9%

-3.0%

4.5%

-0.8%

-1.2%

YoY

…Remunerations

International Operating Costs

Admin costs

Depreciation

Admin costs

…Pension Benefits

Domestic Operating Costs

Depreciation

Staff costs

Domestic

(EUR million)

(*) The change in the accounting policy related to employees long term benefits, now accounted in Other Comprehensive Income, led to a restatement of the

staff costs line in 2010 and the first three quarters of 2011


Quarterly provisions

25.4

165.3

190.7

39.8

1.9

82bp

22.5

126bp

126.4

117bp

149.0

1Q12

9.6

178.1

187.6

28.6

11.6

33bp

9.0

137bp

138.3

115bp

147.4

4Q11

-11.0%378.9425.829.2%-36.3%213.6174.7335.190.7145.590.7101.492.8… Domestic

8.5%47.443.7-12.9%-29.6%22.116.431.312.437.221.322.322.3… International

235.7

15.8

16.9

75bp

21.6

183bp

181.4

159bp

203.0

2Q12

366.5

86.1

55.7

104bp

27.2

191bp

197.4

174bp

224.6

2Q11

191.0

37.9

5.3

59bp

15.4

128bp

132.4

114bp

147.8

3Q11

-35.7%

-81.8%

-69.7%

-29bp

-21.0%

-8bp

-8.1%

-15bp

-9.6%

YoY

23.6%

-60.6%

-

-7bp

-4.4%

57bp

43.6%

42bp

36.3%

QoQ

426.3

55.5

18.8

76bp

44.1

155bp

307.9

138bp

352.0

1H12

103.0

21.6

0.6

40bp

10.7

68bp

70.1

63bp

80.9

1Q11

469.5

107.7

56.3

71bp

37.9

130bp

267.5

118bp

305.5

1H11

182.8

49.7

39.4

110 bp

30.8

61 bp

62.9

71 bp

93.7

4Q10

112.0

23.6

4.8

68 bp

19.5

62 bp

64.1

63 bp

83.6

3Q10

115.1

18.7

16.4

74bp

19.9

59bp

60.1

62bp

80.0

1Q10

123.7

13.2

16.0

78 bp

22.9

69 bp

71.6

71 bp

94.5

2Q10

5bpcost of risk (bp)

15.1%… Domestic


16.4%… International

-66.6%…Securities

-48.5%…Other


-9.2%

15.2%

YoY

…Credit

Total Provisions

(EUR million)

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


Quarterly taxes: domestic and international

25.3

7.8

-23.5

41.0

11.0

8.3

2.7

14.3

7.8

-31.8

38.3

1Q12

80.1-85.422.2-79.49.0-10.514.5-15.3-4.6Deferred taxes

International

4.21.8-7.67.27.5-3.817.03.88.7Income Tax

14.819.119.82.38.210.09.58.25.2Deferred taxes

19.020.912.29.515.77.326.611.913.9Total international taxes

-70.1

7.6

7.7

-91.0

7.6

-104.5

5.9

4Q11

3.80.450.813.2-1.718.76.734.7Income Tax

6.27.67.67.6----Banking sector special tax

90.1

71.1

6.2

65.3

-0.4

2Q12

-21.0

-30.5

7.6

-81.7

43.6

2Q11

29.9

14.2

7.6

0.8

5.7

1Q11

30.2

18.0

7.6

2.4

8.0

3Q11

-11.1

-18.4

-

-20.5

2.1

4Q10

33.3

6.7

-

5.0

1.7

3Q10

30.1

16.2

-

-9.8

26.0

1Q10

-Banking sector special tax

Consolidated

-8.6

-20.5

-23.5

2.9

2Q10

Deferred taxes

Total taxes

Total domestic taxes

Income Tax

Domestic

(EUR million)


Quarterly balance sheet: assets

--3Reinsurance Technical Provisions

3.0%-20.8%3,7243,6143,0314,4674,7043,8864,0833,7193,7053,670Other assets

--9… Direct and Indirect Insurance Creditors

81,265

3,614

714

31

858

227

834

-

1,827

468

1,183

(2,271)

48,713

2,288

12,438

2,096

3,885

562

1,527

Mar 12

80,237

3,031

712

29

807

230

852

-

1,647

510

1,541

(2,167)

49,043

3,283

11,483

1,964

3,435

581

1,090

Dec 11

85,292

3,715

665

38

577

485

865

385

2,164

485

1,310

(2,435)

48,741

2,084

14,298

3,194

3,904

723

1,646

Jun 12

82,767

4,467

375

40

948

223

823

-

674

435

2,092

(2,101)

49,933

4,049

12,137

1,487

3,458

610

1,015

Sep 11

5.0%

2.8%

-6.8%

22.0%

-32.7%

113.9%

3.6%

-

18.5%

3.6%

10.8%

7.2%

0.1%

-8.9%

15.0%

52.4%

0.5%

28.8%

7.8%

QoQ

80,746

3,886

292

99

961

230

780

-

605

296

2,349

( 1,790)

49,862

3,765

10,777

1,525

3,398

671

1,252

Mar 11

80,162

4,704

377

108

961

221

798

-

637

329

2,252

(1,983)

49,718

3,439

10,925

1,063

3,007

538

1,085

Jun 11

83,655

4,083

283

99

962

234

809

-

575

447

2,459

(1,777)

50,829

4,245

11,775

1,424

3,942

558

931

Dec 10

82,137

3,719

220

29

868

153

792

-

636

524

2,606

(1,725)

51,032

2,596

11,642

1,618

4,300

555

847

Sep 10

84,874

3,705

237

25

852

153

746

-

486

533

2,757

(1,682)

51,674

3,570

10,115

1,611

5,966

501

1,943

Jun 10

6.4%

-21.0%

76.6%

-64.8%

-39.9%

119.5%

8.3%

-

-

47.3%

-41.8%

22.8%

-2.0%

-39.4%

30.9%

200.3%

29.8%

34.5%

51.7%

YoY

84,098Total Assets

3,670Other assets

191Deferred income tax assets

18Current income tax assets

872Investments in assoc. companies

135Intangible assets

712Other tangible assets

-Investment property

440Non current assets held for sale

486Hedging derivatives

2,664Held to maturity investments

(1,609)(Provisions)

49,898Loans and adv. to customers

6,635Loans and advances to banks

9,058Financial assets available for sale

2,653Financial assets FV through P&L

4,041Financial assets held for trading

509Deposits with banks

2,115Cash & deposits at central banks

Mar 10(Eur mn)


Quarterly balance sheet: liabilities

--11---------… Direct and Indirect Insurance Creditors

-5.5%14.9%1,8871,9961,3211,9501,6421,6031,9351,2261,1971,219Other liabilities

--1,817---------Technical provisions

--1,844---------Investment Contracts

74,875

1,996

946

115

46

166

141

182

15,116

35,959

4,950

1,943

13,316

Mar 12

74,045

1,321

961

111

45

190

141

239

18,453

34,206

6,239

2,125

10,014

Dec 11

77,768

1,876

834

136

44

186

165

184

15,615

32,765

5,767

2,167

14,356

Jun 12

75,863

1,950

1,158

94

24

200

5

225

18,649

33,854

6,170

2,113

11,422

Sep 11

17.8%

-6.0%

-11.9%

17.5%

-2.7%

12.4%

17.4%

1.5%

3.3%

-8.9%

16.5%

11.5%

7.8%

QoQ

73,386

1,603

2,327

110

27

212

5

217

20,742

30,545

7,199

1,875

8521

Mar 11

73,175

1,642

1,578

79

25

207

5

230

19,907

31,972

5,961

1,895

9,673

Jun 11

76,179

1,935

2,292

116

25

215

5

229

24,110

30,819

6,381

2,088

7,965

Dec 10

74,874

1,226

2,311

94

84

192

43

214

25,643

29,923

6,215

2,275

6,654

Sep 10

76,978

1,219

2,306

70

126

172

26

215

33,062

26,522

7,302

1,736

4,222

Mar 10

7.7%

14.2%

-47.2%

70.7%

78.9%

-9.7%

-

-19.9%

-21.6%

2.5%

-3.3%

14.3%

48.4%

YoY

77,959Total Liabilities

1,197… Other liabilities

2,306Other subordinated loans

92Deferred income tax liabilities

97Current income tax liabilities

180Provisions

35Non current liabilities held for sale

241Hedging derivatives

29,451Debt securities

26,082Due to customers

7,112Deposits from banks

2,169Financial liabilities held for trading

8,996Amounts owed to central banks

Jun 10(Eur mn)


Quarterly balance sheet: equity

6,389

609

12

1,330

(900)

199

(1)

29

1,082

4,030

5,769

Mar 12

6,192

588

(109)

1,447

(1,086)

212

(1)

30

1,082

4,030

5,713

Dec 11

7,525

663

25

1,340

(821)

193

(11)

29

1,067

5,040

6,837

Jun 12

6,904

634

138

1,337

(467)

409

(1)

269

1,085

3,500

6,132

Sep 11

17.8%

8.8%

120.3%

0.7%

-

-3.2%

-

-

-1.4%

25.1%

18.5%

QoQ

7,361

562

61

1,317

(33)

600

(1)

269

1,085

3,500

6,738

Mar 11

6,987

583

156

1,322

(383)

456

(1)

269

1,085

3,500

6,274

Jun 11

7,476

541

511

979

( 10)

600

-

270

1,085

3,500

6,474

Dec 10

7,263

412

405

993

292

600

(25)

-

1,085

3,500

6,446

Sep 10

7,120

315

119

1,198

326

600

(25)

-

1,086

3,500

6,686

Mar 10

6,915

390

282

1,023

60

600

(25)

-

1,085

3,500

6,243

Jun 10

7.7%

13.7%

-83.7%

1.3%

-

-57.7%

-

-

-1.7%

44.0%

9.4%

YoY

Total Equity

Minority interests

Net Profit for the period / year

Other reserves and retained earnings

Fair value reserve

Preference shares

Treasury stock

Other capital instruments

Share premium

Share capital

Shareholders' Equity

(Eur mn)


Quarterly loan portfolio (including securitised)

20%

10,972

42,834

53,806

9,885

27,038

36,923

565

2,013

2,578

522

13,783

14,305

16,883

Mar 12

21%

10,846

43,241

54,087

9,725

27,160

36,885

586

2,130

2,715

535

13,951

14,486

17,202

Dec 11

21%

11,572

42,376

53,948

10,420

26,777

37,197

615

1,952

2,567

536

13,648

14,184

16,751

Jun 12

19%

10,534

44,431

54,965

9,718

28,159

37,877

334

2,228

2,562

483

14,044

14,527

17,089

Sep 11

5.5%

-1.1%

0.3%

5.4%

-1.0%

0.7%

8.9%

-3.1%

-0.4%

2.7%

-1.0%

-0.8%

-0.8%

QoQ

20%

10,686

44,011

54,697

9,878

27,441

37,319

335

2,348

2,683

473

14,222

14,695

17,378

Mar 11

19%

10,460

44,229

54,689

9,645

27,764

37,409

341

2,305

2,646

474

14,160

14,634

17,280

Jun 11

20%

11,187

44,527

55,713

10,349

27,734

38,083

354

2,468

2,822

483

14,325

14,808

17,630

Dec 10

20%

11,403

44,427

55,929

10,577

27,701

38,278

329

2,428

2,757

496

14,398

14,894

17,651

Sep 10

20%

10,810

44,054

54,864

9,972

27,164

37,136

333

2,461

2,794

504

14,429

14,933

17,728

Mar 10

21%

11,673

44,925

56,597

10,833

27,990

38,823

343

2,451

2,794

497

14,484

14,981

17,775

Jun 10

10.6%

-4.2%

-1.4%

8.0%

-3.6%

-0.6%

80.4%

-15.3%

-3.0%

13.1%

-3.6%

-3.1%

-3.1%

YoY

… International

… Domestic

Loan portfolio

… International

Int as % total

… ow Other

… Domestic

Corporate Lending

… International

… Domestic

… International

… Domestic

… ow Mortgages

Loans to Individuals

(EUR million)

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


Quarterly gross loan portfolio (excluding securitised)

21%

10,972

40,012

50,984

9,885

27,003

36,889

565

2,034

2,599

522

10,975

11,496

14,095

Mar 12

21%

10,846

40,365

51,211

9,725

27,160

36,885

586

2,130

2,716

535

11,075

11,610

14,326

Dec 11

23%

11,572

39,604

51,176

10,420

26,777

37,197

615

1,952

2,567

536

10,875

11,411

13,979

Jun 12

20%

10,534

41,499

52,033

9,717

28,159

37,876

334

2,228

2,562

483

11,112

11,595

14,157

Sep 11

5.5%

-1.0%

0.4%

5.4%

-0.8%

0.8%

8.9%

-4.0%

-1.2%

2.7%

-0.9%

-0.7%

-0.8%

QoQ

21%

10,686

40,966

51,652

9,878

27,441

37,319

335

2,348

2,683

473

11,177

11,650

14,333

Mar 11

20%

10,460

41,241

51,701

9,645

27,764

37,409

341

2,305

2,646

474

11,172

11,646

14,292

Jun 11

21%

11,187

41,420

52,606

10,349

27,734

38,083

354

2,468

2,822

483

11,218

11,701

14,523

Dec 10

22%

11,403

41,354

52,757

10,577

27,701

38,279

329

2,428

2,757

496

11,225

11,722

14,479

Sep 10

21%

10,810

40,697

51,507

9,972

27,164

37,137

333

2,461

2,794

504

11,072

11,576

14,371

Mar 10

22%

11,673

41,682

53,355

10,833

27,990

38,823

343

2,451

2,794

497

11,242

11,739

14,532

Jun 10

10.6%

-4.0%

-1.0%

8.0%

-3.6%

-0.6%

80.4%

-15.3%

-3.0%

13.1%

-2.7%

-2.0%

-2.2%

YoY

… International

… Domestic

Loan portfolio

… International

Int as % total

… ow Other

… Domestic

Corporate Lending

… International

… Domestic

… International

… Domestic

… ow Mortgages

Loans to Individuals

(EUR million)


Quarterly asset quality indicators

75bp

184bp

159bp

4.76%

127.6%

4.45%

6.01%

0.86%

3.73%

144.0%

3.30%

Jun 12

82bp

126bp

117bp

4.45%

127.8%

4.18%

5.40%

0.83%

3.48%

150.3%

2.96%

Mar 12

33bp

137bp

115bp

4.23%

140.2%

3.56%

4.98%

0.84%

3.02%

154.5%

2.74%

Dec 11

59bp

128bp

114bp

4.04%

141.6%

3.33%

4.87%

0.85%

2.85%

155.0%

2.60%

Sep 11

104bp

191bp

174bp

3.83%

148.3%

3.00%

4.55%

0.82%

2.59%

163.0%

2.35%

Jun 11

40bp

68bp

63bp

3.47%

145.4%

2.27%

4.46%

0.84%

2.38%

159.4%

2.17%

Mar 11

68 bp

62 bp

63 bp

3.27%

157.8%

2.30%

4.14%

0.84%

2.07%

172.5%

1.90%

Sep 10

110 bp

61 bp

71 bp

3.38%

160.6%

2.36%

4.08%

0.80%

2.10%

173.0%

1.95%

Dec 10

74 bp

59 bp

62 bp

3.12%

160.7%

2.16%

3.59%

0.86%

1.94%

187.5%

1.67%

Mar 10

1.70%Overdue Loans >90 days / Gross Loans

184.9%Coverage of Overdue Loans > 90 days

2.09%Corporates (>30d)

3.64%Consumer (>30d)

0.82%Mortgage (>30d)

69 bp… Domestic

78 bp… International

71 bpQoQ Provision Charge

166.3%Coverage of Overdue Loans >30 days

3.15%Provisions for Credit / Total Gross Loans


Jun 10


1.67% 1.70%1.90% 1.95%

2.17%2.35%

2.96%3.30%

2.60%2.74%

188% 185%

173% 173%

159%163%

155% 155%150%

144%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q121.03%

0.23%

0.74%

0.37%

1.23%

0.88%

1.29%

0.91%

2.05%

1.26%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

Overdue loans ratios and coverage

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

Net New Entries as % of Performing Loans

(quarterly annualised)Quarterly Write Offs (Eur mn)

Overdue Loans +90 days Ratio & Coverage (%)

22.8 20.0 14.1 34.8 30.0

1.94% 1.90% 2.07% 2.10% 2.38% 2.59%

3.48% 3.73%

3.02%2.85%

161%166%

158% 161%145% 148% 142% 140%

128% 128%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

5.0 16.4 50.5 21.8 24.2


Quarterly asset quality indicators: Domestic and International

335.2

1,935.9

2,271.2

268.5

1,242.3

1,510.8

287.9

1,488.6

1,776.5

10,972

40,012

50,984

Mar 12

301.6

1,865.9

2,167.4

280.1

1,123.2

1,403.3

308.9

1,236.7

1,545.6

10,846

40,365

51,211

Dec 11

301.8

1,798.7

2,100.6

253.9

1,101.3

1,355.2

269.9

1,213.5

1,483.4

10,534.3

41,499.2

52,033.5

Sep 11

287.8

1,694.8

1,982.6

220.2

996.0

1,216.2

236.0

1,101.1

1,337.1

10,459.7

41,240.9

51,700.5

Jun 11

273.8

1,516.3

1,790.1

191.0

931.7

1,122.7

212.8

1018.7

1,231.5

10,685.8

40,966.3

51,652.1

Mar 11

352.3

2,082.4

2,434.7

283.4

1,407.5

1,690.8

326.0

1,582.0

1,908.0

11,572

39,604

51,176

Jun 12

256.0

1,469.2

1,725.3

167.9

833.1

1,000.1

192.5

900.9

1,093.4

11,402.7

41,354.3

52,757.0

Sep 10

1,494.71,421.91,367.1…Domestic

282.3259.6241.8… International

913837.4812.4…Domestic

193.3174.0189.0… International

1,777.0

176.7

850.4

1,027.1

1,106.7

11,186.5

41,419.6

52,606.1

Dec 10

41,682.340,697.3…Domestic

11,672.810,809.8… International

764.6719.0…Domestic

144.7139.0… International

1,608.9

858.0

1,001.3

51,509.2

Mar 10

53,355.1Gross Loans

1,011.4Total Overdue Loans (> 30 days)

1,681.5Total Credit Provisions (BS)

909.3Overdue Loans > 90 days

Jun 10(EUR million)


Quarterly asset quality indicators: Domestic and International

116.5%

130.1%

127.8%

2.62%

3.72%

3.48%

124.8%

155.8%

150.3%

2.45%

3.10%

2.96%

Mar 12

97.6%

150.9%

140.2%

2.85%

3.06%

3.02%

107.7%

166.1%

154.5%

2.58%

2.78%

2.74%

Dec 11

111.8%

148.2%

141.6%

2.56%

2.92%

2.85%

118.9%

163.3%

155.0%

2.41%

2.65%

2.60%

Sep 11

121.9%

153.9%

148.3%

2.26%

2.67%

2.59%

130.7%

170.2%

163.0%

2.11%

2.41%

2.35%

Jun 11

128.6%

148.8%

145.4%

1.99%

2.49%

2.38%

143.3%

162.7%

159.4%

1.79%

2.27%

2.17%

Mar 11

146.0%

163.7%

160.6%

1.73%

2.21%

2.10%

159.5%

175.8%

173.0%

1.58%

2.05%

1.95%

Dec 10

133.0%

163.1%

157.8%

1.69%

2.18%

2.07%

152.5%

176.4%

172.5%

1.47%

2.01%

1.90%

Sep 10

131.6%170.4%168.3%…Domestic

108.1%149.2%127.9%… International

148.0%186.0%190.1%…Domestic

124.3%179.4%174.0%… International

127.6%

2.82%

3.99%

3.73%

144.0%

2.45%

3.55%

3.30%

Jun 12

1.83%1.77%…Domestic

1.24%1.29%… International

2.01%2.00%…Domestic

1.49%1.75%… International

160.7%

1.94%

187.5%

1.67%

Mar 10


184.9%Coverage of Overdue Loans > 90 days

166.3%Coverage of Overdue Loans >30 days


Jun 10


Quarterly and accumulated credit provision charge & net new entries

21.8

205bp

205bp

82bp

126bp

117bp

22.6

126.4

149.0

82bp

126bp

117bp

22.6

126.4

149.0

1Q12

50.5

109bp

91bp

58bp

133bp

117bp

62.4

538.2

600.6

33bp

137bp

115bp

9.0

138.3

147.4

4Q11

16.4

113bp

129bp

68bp

128bp

116bp

53.5

399.7

453.2

59bp

128bp

114bp

15.4

132.4

147.8

3Q11

5.0

105bp

88bp

71bp

130bp

118bp

37.9

267.5

305.4

104bp

191bp

174bp

27.2

197.4

224.6

2Q11

30.0

123bp

123bp

40bp

68bp

63bp

10.7

70.1

80.9

40bp

68bp

63bp

10.7

70.1

80.9

1Q11

24.2

166bp

126bp

76bp

155bp

138bp

44.1

307.9

352.0

75bp

183bp

159bp

21.5

181.4

203.0

2Q12

14.1

66 bp

74 bp

73 bp

63 bp

65 bp

62.3

195.8

258.1

68 bp

62 bp

63 bp

19.5

64.1

83.6

3Q10

20.0

61 bp

23 bp

73 bp

63 bp

65 bp

42.8

131.7

174.5

78 bp

69 bp

71 bp

22.9

71.6

94.5

2Q10

59 bp103 bpNet new entries as % Performing Loans (accum.)

28.8

103 bp

74 bp

59 bp

62 bp

19.9

60.1

80.0

74 bp

59 bp

62 bp

19.9

60.1

80.0

1Q10

37 bpNet new entries as % Performing Loans (quarter)

258.7… Domestic

93.1… International

62 bp… Domestic


61 bp… Domestic


62.9… Domestic

30.8… International

34.8

67 bp

351.8

71 bp

93.7

4Q10

Quarterly Write Offs (Eur mn)

As % Loan Portfolio (bp)

P&L Credit Provisions Accumulated

As % Loan Portfolio (bp)

P&L Credit Provisions Quarter

(EUR million; % annualised)


Quarterly customer funds

--3,661---------Life Insurance Products

24%

13,103

41,572

54,675

13,260

41,415

4,804

652

26,840

9,119

35,959

Mar 12

22%

11,905

42,479

54,383

13,714

40,670

5,820

644

25,633

8,573

34,206

Dec 11

30%

15,682

36,719

52,401

9,976

42,425

5,226

773

24,244

8,521

32,765

Jun 12

24%

13,430

42,057

55,487

14,788

40,699

5,273

1,573

25,124

8,730

33,854

Sep 11

19.7%

-11.7%

-3.7%

-24.8%

2.4%

8.8%

18.6%

-9.7%

-6.6%

-8.9%

QoQ

25%

14,281

41,732

56,013

17,715

38,298

5,747

2,006

22,401

8,145

30,545

Mar 11

25%

13,781

42,351

56,132

16,522

39,610

5,988

1,650

23,506

8,466

31,972

Jun 11

23%

12,841

43,147

55,988

17,094

38,894

6,326

1,749

22,143

8,676

30,819

Dec 10

28%

15,472

40,375

55,847

18,006

37,841

5,924

5,834

18,108

7,974

26,082

Jun 10

23%31%% total

18,865

41,728

60,594

18,985

41,609

6,460

8,626

19,469

7,053

26,522

Mar 10

12,965

43,969

56,934

17,763

39,171

5,596

3,653

21,994

7,929

29,923

Sep 10

0.6%… Sight

3.1%… Term

2.5%Deposits

-53.1%Certificates of Deposits

13.8%

-13.3%

-6.2%

-39.6%

7.1%

-12.7%

YoY

Total

… International

… Domestic

Off-BS Funds

On-BS Customer Funds

Debt Securities placed with Clients

(EUR million)

(1) The increase of Life Insurance Products reflects the full consolidation of BES Vida as from 2Q2012.

(1)


Quarterly off-BS customer funds

3,127

10,133

13,260

552

1,746

2,298

3,292

229

1,580

1,809

92

1,052

1,144

2,254

2,463

4,717

Mar 12

3,128

10,586

13,714

561

1,684

2,245

3,478

222

1,933

2,155

93

1,110

1,203

2,252

2,381

4,633

Dec 11

3,030

6,946

9,976

525

1,755

2,280

89

218

1,554

1,772

98

1,013

1,111

2,189

2,535

4,724

Jun 12

3,895

12,627

16,522

804

2,349

3,153

4,315

239

2,448

2,687

80

1,249

1,329

2,772

2,267

5,038

Jun 11

-3.1%

-31.5%

-24.8%

-4.9%

0.5%

-0.8%

-

-5.0%

-1.6%

-2.1%

6.9%

-3.7%

-2.9%

-2.9%

2.9%

0.2%

QoQ

3,873

13,842

17,715

806

2,638

3,444

4,805

134

2,539

2,673

81

1,275

1,356

2,852

2,585

5,437

Mar 11

3,528

11,260

14,788

639

1,874

2,513

3,794

223

2,332

2,555

88

1,209

1,297

2,578

2,051

4,629

Sep 11

2,700

14,394

17,094

430

2,801

3,231

5,374

133

2,522

2,655

84

1,291

1,375

2,053

2,406

4,459

Dec 10

2,666

15,340

18,006

450

3,053

3,503

5,716

153

2,486

2,639

86

1,353

1,439

1,977

2,732

4,709

Jun 10

2,838

16,147

18,985

488

3,437

3,925

5,846

138

2,569

2,707

77

1,251

1,328

2,135

3,044

5,179

Mar 10

2,611

15,152

17,763

436

2,930

3,366

5,705

135

2,508

2,643

79

1,350

1,429

1,961

2,659

4,620

Sep 10

-18.9%… Domestic

22.3%… International

-22.2%

-45.0%

-39.6%

-34.7%

-25.3%

-27.7%

-

-8.8%

-36.5%

-34.1%

-16.4%

-21.0%

11.9%

-6.2%

YoY

… Domestic

Total Off-BS Funds

… International

… Domestic

… International

Pension Funds

Other (2)

Bancassurance (Domestic)

… International

… Domestic

Real Estate Funds

… International

… Domestic

Mutual Funds

(EUR million)

(1) The decrease of Bancassurance funds reflects the full consolidation of BES Vida. Life Insurance Products are included in On Balance Sheet customer funds as from 2Q2012. (2) Other includes off-BS structured products, discretionary management and venture capital

(1)


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

-120.2

5.5

-117.2

-8.5

1Q12

-169.4

5.7

-151.0

-24.1

4Q11

-224.8

6.2

-200.9

-30.1

3Q11

-161.7

5.2

-146.8

-20.1

2Q11

112.6

6.3

-28.7

0.0

1Q11

120.3

7.3

-7.3

-49.9

2010

-111.2

-1.3

-99.8

-10.1

2Q12

741.4Total

2.56%

12.57%

2.30%

Stake (%)

76.8BMCE

498.2PT

166.4EDP

Acquis.

Value(EUR million)

Potential Gains and Losses


Quarterly solvency ratios

10.8%

9.6%

9.4%

4%

233

782

6,185

6,067

6,967

3,938

2,198

58,451

64,587

Mar 12(IRB)

10.7%

9.4%

9.2%

4%

245

799

6,171

6,020

6,970

3,938

1,742

59,705

65,385

Dec 11(IRB)

10.6%

9.0%

8.1%

12%

729

1,018

6,020

5,380

7,038

3,973

2,218

60,524

66,715

Sep 11(IRB)

11. 5%

9.2%

8.2%

13%

775

1,517

6,127

5,445

7,577

3,973

2,976

59,482

66,431

Jun 11(IRB)

11.4%

8.8%

7.9%

15%

920

1,805

6,033

5,395

7,838

3,973

4,389

60,214

68,576

Mar 11(IRB)

11.3%

8.8%

7.9%

15%

920

1,758

6,040

5,416

7,798

3,973

4,219

60,610

68,802

Dec 10(IRB)

11.0%

8.3%

7.9%

11%

600

1,807

5,589

5,303

7,393

3,668

3,900

59,642

67,210

Sep 10(IRB)

11.1%

10.4%

10.5%

3%

226

436

6,666

6,708

7,102

3,938

1,825

58,054

63,817

Jun 12(IRB)

10.6%

8.1%

7.9%

11%

600

1,699

5,405

5,276

7,104

3,668

4,303

59,092

67,063

Mar 10(IRB)

11.2%

8.4%

7.9%

11%

600

1,857

5,668

5,300

7,516

3,668

4,408

59,115

67,191

Jun 10(IRB)

As % Tier I

…Banking Book

…Trading Book

…Oper. Risk

Core Tier I

Tier I (%)

Total Capital

Tier I

Tier II and Other

Core Tier I (%)

Total (%)

Hybrid Capital

RWA (BoP)

(EUR million)

Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational risk. Preliminary data as of Jun 2012.


Pension Funds

1.21.1

Assets Liabilities

Jun 11 Dec 11 Jun 12

Discount rate 5.50% 5.50% 5.50%

Expected Return of Plan Assets

5.50% 5.50% 5.50%

Increase in Salaries 3.25% 2.25% 2.25%

Increase in Pensions 1.75% 1.00% 1.00%

Pension Fund Assets & Liabilities Actuarial assumptions


Table of contents





reserve


ECB eligible pool

V. Wrap up





Sources: ECB, Bloomberg, Reuters EcoWin Pro.

EUR/USD.

External environment: Higher risk aversion, given renewed concerns with the Euro Area

Euro Area 5-year CDS spreads, financial sector (bps).Main world stock indices.

Government bond yields (%).10-year Government bond spreads(%).

OECD Leading Indicator.

0

50

100

150

200

250

2007 2008 2009 2010 2011 2012

Basis

Poi

nts

0200400600800

10001200140016001800200022002400260028003000320034003600

Oct. 2007 Jul. 2008 Apr. 2009 Jan. 2010 Oct. 2010 Jul. 2011 Apr. 2012

Pont

os B

ase

Greece

Ireland

Portugal

Spain

614

1024

509

2636

519Italy

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

2002 2004 2006 2008 2010 2012

EUR

/USD

1.226

YTD 2012: -5.4%

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

2007 2008 2009 2010 2011 2012

%

USA

Germany 1.401.23

92

94

96

98

100

102

104

2005 2006 2007 2008 2009 2010 2011 2012

Inde

x (P

oint

s)

China

US

Euro Area


Portugal: Economic activity is contracting, but most indicators are starting to suggest a gradual stabilisation trend over the next quarters

5

6

7

8

9

10

11

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

10.9%

94

95

96

97

98

99

100

101

102

103

104

Jan-2005 Jan-2006 Jan-2007 Jan-2008 Jan-2009 Jan-2010 Jan-2011 Jan-2012

OECD Leading IndicatorCoincident indicator of economicactivity (% y-o-y)

Retail sales (%, real annual averagegrowth, 12m MA)

Total electricity consumption(% y-o-y, 3m MA)

Households’ savings rate (% disposable income)

GDP growth (%)

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

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

%

Q-o-Q

Y-o-Y

-0.1

-2.2

May: -2.1% yoyJan-May: -2.6% yoy

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011

%

Total

-7.1

Food products

Non Food products

Total excl. fuel

-6.6

-4.3

-9.9

May. 2012

-7

-6

-5

-4

-3

-2

-1

0

1

Jan. 2011

Mar. 2011

May. 2011

Jul. 2011

Sep. 2011

Nov. 2011

Jan. 2012

Mar. 2012

May. 2012

%

-3.3%(May 2012)

%1Q 2012

May


• The Budget implementation from January-June shows a strong decline in the State’s discretionary public spending...

• Primary current spending: -3.5% y-o-y (vs. -3.1% target)• Wage spending: -16.9% y-o-y• Purchases of goods and services: -16% y-o-y• Investment spending: -49.7% y-o-y

• ... but the cyclical components of revenue and expenditure are falling (even if at a slower pace), reflecting the significant contraction in domestic demand and the increase in unemployment.

• Tax revenues: -3.1% y-o-y (vs. +2.6% target)• VAT revenue: -1.8% y-o-y• Unemployment benefits: +22.4% y-o-y• Interest spending: +19.9% y-o-y

• Overall, in January-June the State’s total expenditure decreased 2.2% y-o-y (vs. -0.9% target) and total revenues (excluding the one-off effect of the transfer of banks’ pension funds) fell 2.1% y-o-y (vs. +1.2% target).

• In spite of the risks and difficult challenges still remaining in 2012 and 2013, the budget implementation suggests that significant results are being achieved in fiscal consolidation. This has translatedinto improved market perceptions of Portugal, with 10 year Government bond yields falling in the secondary market.

With the strong commitment to fiscal consolidation, and in spite of the difficult challenges, investors’ perceptions of the Portuguese economy have improved

Portuguese Government Bond yields in thesecondary market (%)

Average yields in Treasury Bill issues (%)

Sources: Bloomberg,IGCP.

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

1 Jun. 2011

20 Jul. 2011

7 Sep. 2011

19 Oct. 2011

7 Dec. 2011

1 Feb. 2012

4 Apr. 2012

18 Jul. 2012

3 Month

6 Month12 Month

18 Month

2.29%

3.5%

02468

10121416182022

Jan. 2010 Jul. 2010 Jan. 2011 Jul. 2011 Jan. 2012 Jul. 2012

10Y

2Y

7.6010.5


Portugal’s public debt is sustainable, even under conservative assumptions. PSI is not envisaged nor required

Base scenarios for Portugal’s public debt (% GDP) (1) Public debt scenarios (% GDP) according to average GDP growth (% ) (1)(2)

No restructuring (or PSI) is expected. Also, given Portugal’s strong commitment to the financial and structural adjustment targets, the IMF/EU/ECB have reaffirmed their commitment to continue to support Portugal “until market access is regained”.

Sources: EC, IMF, ECB, ES Research.

(1) Includes EUR 12 billion of Bank recapitalisation funds, which are not expected to be used entirely. (2) ES Research analysis, assuming 2% GDP deflator, 5% average interest rate and 3% of GDP average primary surplus. .

60

70

80

90

100

110

120

130

2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

118.6

97.7

87.9

68.3

87.9

97.7

107.5

103.7

108.0

110.2

112.3

0.0 20.0 40.0 60.0 80.0 100.0 120.0

3.0

2.0

1.5

1.0


Portuguese exports increased 9% YoY (nominal growth) in the period January-May, with extra-EU exports increasing 28% YoY

2.0

0.6

5.7

1.1

4.2

0.5

0.9

1.3

5.1

12.2

13.0

22.5

196.7

63.7

37.3

33.5

33.1

24.6

12.4

12.0

10.5

4.8

2.0

-5.3

Portuguese merchandise exports to selected countries

(%)Weight merchandise

exports, %Growth merchandise

exports, %

(0.7)

(0.4)

(4.5)

(0.9)

(3.5)

(0.4)

(0.9)

(1.2)

(5.0)

(12.7)

(13.9)

(25.9)

Growth May 2012/11Weight May 2012( ) May 2011

Top 5 merchandise exports(2012 May, weight, %)

Top 5 services exports

(2012 May, weight, %)

6.3

8.3

8.4

8.7

13.1

0 5 10 15

Transportation Vehicles

Machinery and electrical equipment

Mineral Fuels

Common Metals

Machinery and mechanical appliances

2.8

3.1

16

31.2

38.8

0 20 40 60

Travel and Tourism

Transportation

Other business services

Communications services

Computer and information services

China

Mozambique

Angola

Morocco

USA

Japan

Poland

Brazil

UK

France

Germany

Spain

Sources: INE, ES Research.

741H12 Results Presentation 30 July 2012Sources: INE, Bank of Portugal, ES Research.

Portuguese Exports Profile (2000 - 2011)

(EUR bn)

Total: 13%

15%Merchandise

9%Services

%Δ 2011/10

Portuguese Exports Breakdown, Intra-EU and Extra-EU

(2000-2011, weight, %) %Δ 2012/11

(Merchandise,January-May)

9.0%

27.2 31.1 38.8 31.7 36.8 42.49.8 12.2

17.916.3 17.6 19.2

2000 2005 2008 2009 2010 2011

Services

Merchandise

79.2 79.5 74.5 74.7 74.1 73.3

26.7 25.9 25.3 25.5 20.5 20.8

2000 2005 2008 2009 2010 2011

EXTRA-EU

INTRA-EU

Portugal has been expanding its relevant market to fast growing emerging markets. The profile of Portuguese exports has been changing, with an increase in the weight of high value added goods and services


-10.3-17.9

-24.8-31.9

-39.5-46.3

-55.4 -58.2-63.1 -67.4

-78.8-88.9

-96.1

-110.6-107.3 -103.7-105.4

-120

-100

-80

-60

-40

-20

0

20

40

% of

GDP

Banking Sector Monetary authority General GovernmentOther Sectors Total net external liabilities

The ongoing deleveraging is also translating into a lower stock of net external liabilities, which declined from 110.6% to 105.4% of GDP between 2009 and 1Q 2012

Source: Bank of Portugal.

Banking Sector Monet. Auth. General Gov. Other Sectors2009 1Q 2012

-46 -12

Stock of net external

liabilities of the Portuguese economy

(% GDP)

2009 1Q 2012

+2 -222009 1Q 2012

-60 -532009 1Q 2012

-7 -18


0

2

4

6

8

10

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q 2012

0

25

50

75

100

125

150

175

200

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q 2012

% of

GDP

Ample external assets provide stability in the face of a tough financing environment. Portugal is one of the main world holders of gold reserves

Portugal’s gold reservesPortugal’s gross external assets (% GDP)

In the face of a difficult financing environment, Portugal benefits from holding ample external assets (173% of GDP in 1Q 2012). Also, Portugal is one of the main world holders of gold reserves (estimated at 9.6% of GDP).

9.6173

(% GDP)(% GDP)


The Portuguese language and the Portuguese communities abroad represent an important asset to Portuguese companies, giving them a comparative advantage in their approach to several fast growing markets and their neighbouring areas

AngolaBrazil

Cape Verde

Guinea Bissau

Mozambique

Portugal

EquatorialGuinea

East Timor

Macau

Countries with relevant Portuguese communities:

India

USA

Canada

France

UK

SwitzerlandLuxemburg

NetherlandsBelgium Germany

Spain

South AfricaArgentina

Venezuela

Australia> 15 000 and < 100 000

> 100 000 and < 500 000

> 500 000 and < 1 000 000

> 1 000 000

São Tomé and Príncipe

The Portuguese language in the world - 2011

1 Data for 2010 referring to countries with Portuguese as official language.Sources: UN, IMF, ES Research.

Population PIB International Trade1

256.5 million EUR 2 225.2 billion EUR 441.9 billion3.7% of world 4.4% of world 2% of world


Strong transport and logistic potential. Portuguese ports can play an important role in the trade flows between America, Africa, Asia and Europe

(…)

(…)

Potential routes to the Portuguese ports

Sources: IPTM, ES Research - Research Sectorial.

Container cargo, Portuguese ports, 2004 - 2011(Thousand TEUs/year)

Main maritime trade routes from South America and Western Africa are experiencing very strong growth.Portuguese ports are becoming privileged gateways into the European market given the signs of congestion at the major seaports of Europe.


• Reducing unit labour costs: Increase in the number of workdays and decrease in overtime work compensation.

• Labour market flexibility: Lower restrictions in individual dismissals; Lower severance payments, in line with EU average; Implementation of working time management mechanisms (e.g. the hour bank).

Ongoing structural reforms will also contribute to higher growth over the medium term

Labour marketreform

• Increased competition in Telecoms: Lower mobile termination rates; more competitive auction rules (e.g. 4G); Broader access of all operators to existing networks.

• Reducing excessive mark-ups and increased competition in Electricity: Convergence to market-based pricing, increased choice of service supplier.

• Ongoing implementation of the Services Directive: Liberalisation of access to regulated professions.

Product marketreform

• Competition environment: New Competition Law harmonised with EU practice, strengthening the power of the Competition Authority; Creation of a specialisedCourt on Competition, Regulation and Supervision.

• Rental market reform: Improving contract flexibility and the possibility of rent adjustments.

• Improved judicial system: Higher speed and simplification of corporate insolvencies and recoveries; Easier out-of-court settlements.

Improvingbusinessenvironment


The successful implementation of the privatisation programme underscores the attractiveness of the Portuguese economy to foreign investment and Portugal’s ability to diversify sources of capital and liquidity in a difficult funding environment

Sources: Ministry of Finance.

Air infrastructure

Electricity distribution Air transport Railway

logisticsTelevision

broadcasting

Water distributionInsuranceEnergy retail

and production

Mail distribution

✓

✓

2011 2012 20131H 2H

(1)

(1) Concession

NOTE: GALP privatisation waits favourable market conditions The Government sold its stake of 21.35% in EDP to China’s Three Gorges for EUR 2.69 bn; the operation will also involve investments of EUR 2 bn in wind farms and guaranteed funding of EUR 2 bn through Chinese banks. The Government also sold a 25% stake in REN to China’s State Grid (EUR 387 mn) and to Oman Oil (EUR 205 mn).


Sources: Reuters EcoWin Pro, Bank of Portugal, Other National Central Banks.

The correction of the macroeconomic imbalances is proceeding in a context of financial sector stability. Performance of Bank deposits in Portugal is in clear contrast with other periphery economies

Stock of Bank deposits (December 2009 = 100)* Central Bank liquidity provision (including ELA estimates for Greece and Ireland), EUR Billion

* Greece: data for June; Portugal and Ireland: data for May; Spain: data for April.

Changesince Dec.

2009

+16%

+16%

+2%+2%

-9%-9%

-35%

-35%

Deposits / GDP.

Dec.11

138%138%

215%215%

104%104%

84%84%0

255075

100125150175200225250275300325350

2007 2008 2009 2010 2011 2012EU

R B

illion

Spain(337.2Jun. 2012)

Greece(135.6;Jun. 2012)

Ireland(126.0; May 2012)

Italy(281.4;May2012)

Portugal(60.5; Jun. 2012)

60%

70%

80%

90%

100%

110%

120%

130%

Dez. 09 Abr. 10 Ago. 10 Dez. 10 Abr. 11 Ago. 11 Dez. 11 Abr. 12

Portugal

Spain

Ireland

Greece


100

150

200

250

300

1998 2000 2002 2004 2006 2008 2010

7

4457

96

No bubble in house prices. Between 1998 and 2011, Portugal real estate prices have shown very little real growth, in clear contrast with other Euro Area economies

Sources: ECB, Bloomberg, ES Research.

2011

Residential Property, Accumulated Real Price Growth 1998-2011 (%)1

Nominal House Price Index1998 = 100

(1) Accumulated nominal house price growth minus accumulated CPI growth

The Portuguese housing market faced the recent global financial crisis in a very different cyclical position from those in economies such as Ireland or Spain. House price growth has been moderate over the last years, essentially reflecting macroeconomic developments and fundamentals. Portuguese banks haven’t been facing the hangover of a bubble burst in house prices.


Table of contents





reserve


ECB eligible pool

V. Wrap up





2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F

GDP 2.4 0.0 -2.9 1.4 -1.6 -2.8 0.3 1.5 2.3

Private Consumption 2.5 1.3 -2.3 2.1 -4.0 -5.2 -1.6 0.4 1.0

Public Consumption 0.5 0.3 4.7 0.9 -3.8 -2.7 -1.1 0.2 0.3

Investment 2.1 -0.1 -13.3 -3.6 -13.9 -10.6 -4.5 0.2 2.7

Exports 7.5 -0.1 -10.9 8.8 7.6 4.2 4.5 5.7 6.7

Imports 5.5 2.3 -10.0 5.4 -5.3 -4.2 -1.5 2.6 3.9

Inflation (%) 2.5 2.6 -0.8 1.4 3.7 3.3 1.5 1.6 1.6

Budget Balance (% GDP) -3.1 -3.6 -10.1 -9.8 -4.2* -4.5** -3.0** -1.8** -1.0**

Public Debt (% GDP) 68.3 71.6 83.0 93.4 107.8 114.4 118.6 117.8 115.8

Unemployment (% Labour Force)*** 8.0 7.6 9.5 10.8 12.7 15.4 15.8 14.6 13.0

Current & Capital Account Balance (% GDP) -8.9 -11.1 -10.1 -8.3 -5.1 -1.7 0.8 1.0 1.1

Annual growth rates (%), except where indicated

* Including the effects of the integration of the banks’ pension funds and other one-off measures. Without these effects, the deficit would be 7.9% of GDP. ** Economic and Financial Adjustment Program targets.*** Figures for 2011 and following years not comparable with the previous figures, due to a change of series. F: Forecast.Sources: Bank of Portugal, INE, ES Research, European Commission, IMF, OECD.

Portugal: Main Forecasts 2012-2015


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

Spain: Main Forecasts 2012-2013

Annual real growth rates (%), except where indicated. 2007 2008 2009 2010 2011 2012F 2013F

GDP 3.5 0.9 -3.7 -0.1 0.7 -1.9 -0.8

Private Consumption 3.5 -0.6 -4.3 1.3 -0.1 -2.0 -1.5

Public Consumption 5.6 5.9 3.2 -0.1 -2.2 -11.5 -3.2

Investment 4.5 -4.7 -16.0 -7.4 -5.1 -6.5 1.6

Exports 6.7 -1.0 -11.6 9.2 9.0 3.8 4.0

Imports 8.0 -5.2 -17.8 3.5 -0.1 -6.0 -1.2

Inflation (%) 2.8 4.1 -0.2 2.0 3.1 1.9 1.1

Budget Deficit (% GDP) 1.9 -4.5 -11.1 -9.3 -8.9 -6.3 -4.5

Public Debt (% GDP) 36.2 40.1 53.8 61.0 68.5 79.8 81.0

Current & Capital Account Balance (% GDP) -9.6 -9.2 -4.5 -4.0 -3.4 -0.7 -1.0

Unemployment (% of Labour Force) 8.3 11.3 18.0 20.0 21.6 24.3 25.0


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

Angola: Main Forecasts 2012-2013

2007 2008 2009 2010 2011 2012F 2013F

GDP (real growth rate, %) 22.6 13.8 2.4 3.4 3.9 6.8 6.0

GDP per capita (USD, current prices) 3 443 4 671 4 082 4 329 5 144 6 009 6 231

Inflation (%) 12.3 12.5 13.7 14.5 13.5 10.8 8.6

Current Account Balance (% GDP) 21.7 12.7 -9.9 9.0 9.6 7.3 4.4

Budget Balance (% GDP) 11.3 8.9 -4.9 5.5 10.2 6.1 1.7

Exchange Rate (USD/KZ), annual

average76.8 75.0 79.2 91.9 93.7 95.2 95.4

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


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

Brazil: Main Forecasts 2012-2013

2007 2008 2009 2010 2011 2012F 2013F

GDP (real growth rate, %) 6.1 5.2 -0.3 7.5 2.7 2.2 4.5

Inflation (%) 4.5 5.9 4.3 5.9 6.5 5.0 5.8

Primary Budget Balance (% GDP) 3.4 4.0 2.0 2.7 3.1 2.8 3.1

Public Debt (% GDP) 45.1 38.0 41.5 39.2 36.5 37.0 36.3

Unemployment (% of Labour Force) 9.3 7.9 8.1 6.7 6.0 5.7 5.9

Current Account Balance (% GDP) 0.1 -1.7 -1.5 -2.2 -2.1 -2.5 -2.8

Exchange Rate (USD/BRL), annual

average1.95 1.84 1.99 1.76 1.68 1.93 1.92

SELIC Interest Rate (%, End of Period) 11.25 13.75 8.75 10.75 11.00 7.50 9.00


Disclaimer

This news release may include certain statements relating to the Banco Espírito Santo Group that are neither reported financial results nor other historical information. These statements, which may include targets, forecasts, projections, descriptions of anticipated cost savings, statements regarding the possible development or possible assumed future results of operations and any statement preceded by, followed by or that includes the words “believes”, “expects”, “aims”, “intends”, “may” or similar expressions or negatives thereof are or may constitute forward-looking statements.

By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by forward-looking statements. These factors include, but are not limited to, changes in economic conditions in individual countries in which the BES Group conducts its business and internationally, fiscal or other policies adopted by various governments and regulatory authorities of Portugal and other jurisdictions, levels of competition from other banks and financial services companies as well as future exchange and interest rates.

Banco Espírito Santo does not undertake to release publicly any revision to the forward-looking information included in this news release to reflect events, circumstances or unanticipated events occurring after the date hereof.


Investor Relations

Investor Relations Contacts

Website: www.bes.pt/irPhone: + 351 21 359 7390E-mail: [email protected]: + 351 21 359 7001

NUMBER OF SHARES: 4,018 millionSHARE CAPITAL: EUR 5.04 bnSECTOR: Financial Services: BankingINDEX MEMBERSHIP: 36 Indices, including:

PSI20, Euronext 100,Eurostoxx, Stoxx Banks FTSE4GOOD

LISTING: NYSE EuronextBLOOMBERG: BES PLREUTERS: BES.LSISIN CODE: PTBES0AM0007

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