2005 Results presentation · 1Q11 Results Presentation (Unaudited Figures) 2nd May 2011. 1
Transcript of 2005 Results presentation · 1Q11 Results Presentation (Unaudited Figures) 2nd May 2011. 1
1Q11 Results Presentation(Unaudited Figures)
2nd May 2011
11Q11 Results Presentation
2 May 2011
The global macroeconomic environment was marked, in 1Q 2011, by a deterioration of the sovereign risk crisis in the Euro
Area and by an increase in global inflationary pressures, in this case as a result of higher commodity prices. There were
signs of growth moderation in the main economic areas by the end of the quarter (namely in the US).
Anticipating a new cycle of policy rate hikes by the ECB, market interest rates were higher in the Euro Area, both at the
short and long end of the curve. In this context, the euro appreciated from EUR/USD 1.337 to EUR/USD 1.419 in the quarter
and now stands at close to EUR/USD 1.49.
In Portugal, the non approval in Parliament of a new Stability and Growth Programme and the consequent resignation of the
Government resulted on cumulative five rating downgrades by S&P, Fitch and Moody’s and in a further deterioration of
investor sentiment, with 10-year Government Bond yield spread vs. Germany rising 142bps in the quarter, to 505bps (with a
further increase to 634bps by the end of April). Increasing constraints associated with external market funding eventually
led to a formal request of external assistance to the European Commission. Negotiations over a Stabilization Programme
are currently under way with the IMF/EC/ECB and are expected to reach an agreement in mid May with a programme
approved by the main political parties in Portugal.
Exports continue to support economic activity, with close to 22% YoY nominal growth in the quarter ending in February.
However, the adjustment under way in domestic demand should have resulted in a QoQ retreat in real GDP.
The deleverage of the economy is underway, with net external financing needs declining, in 2010, from 9.7% to 8.5% of GDP
and with the domestic savings rate (including all sectors of the economy) rising to 9.2% of GDP in 4Q 2010. In this context,
Portuguese Banks’ deposits have continued very resilient in 1Q 2011. Also, Banks hold ample external assets, which can be
an important source of liquidity in the current situation. Unlike in Ireland or Spain, Portuguese banks haven’t been facing
any hangover of a bubble bursting in house prices.
Foreword: Macroeconomic highlights
21Q11 Results Presentation
2 May 2011
The decision to request financial aid was catalysed by the intensification of rating downgrades in March and April 2011, especially after the start of the political crisis.
Source: Rating Agencies and Bloomberg
15 Mar
23 Mar
24 Mar
24 Mar
29 Mar
1 Apr
5 Apr
6 Apr
Moody’s downgrades Portuguese Republic from A1
to A3/Negative/P2
4th Growth & Stability Programme rejected by the
Parliament
S&P downgrades Portuguese Republic from A- to BBB/Negative/A2
Fitch downgrades Portuguese Republic from A+
to A-/Negative/F2
S&P downgrades Portuguese Republic from BBB to BBB-/Negative/A3
Fitch downgrades Portuguese Republic from A-
to BBB-/Negative/F3
Moody’s downgrades Portuguese Republic from A3
to Baa1/Negative/P2
The Portuguese Government announced the
financial aid request
0
250
500
750
1000
Dec-09 Jun-10 Nov-10 Apr-11
Portugal BES
BES 641
Portugal 653
5Y CDS: BES and Portugal The Portuguese Government announced the
financial aid request
31Q11 Results Presentation
2 May 2011
A tough environment requires strict financial disciplineDespite the massive ratings downgrades of Portugal and all the Portuguese banks, BES CDS spreads were top performers among the
Iberian Banks in 2011 YTD.
In an environment of scarce access even to short term wholesale markets, while longer maturities have been closed for Portuguese
banks for one year, BES has implemented in the second half of 2010 a strict plan to deleverage the balance sheet, aiming to reach a loan
to deposits ratio of 120% by Yend 2012, which should provide liquidity to cope with debt maturities in a scenario of continued lack of
well functioning markets. Through the disposal of international loans and a focus on growing core deposits, BES has been able to show
already encouraging results in the last three quarters. In fact, the LTD ratio decreased from 198% in June 2010 to 163% in March 2011.
The use of ECB facilities has been important to cope with short term liquidity management, namely as the maturities of 2011 are highly
concentrated in the first quarter (over 60% of MLT debt maturing in the year), while the deleverage is expected to have more gradual
results throughout the year. In any case, as ECB is seen as a last resort and not a normal funding source, BES expects to reach the end
of 2012 with a use of ECB funds with a cap of 5% of net assets.
Additionally, management has also been adopting measures aiming to reinforce solvency ratios, with a focus on core capital, ahead of
the establishment of new regulatory minimum levels, and despite a conservative risk profile in its balance sheet with a very limited
exposure to European sovereign debt and a strong credit provisioning coverage on top of resilient asset quality. Core tier I of 7.9%
under IRB should be reinforced to 8.2% following the sale of a Bradesco stake announced last 28th April, while Tier I of 8.8% should be
reinforced c. 60 bp to 9.4% with that same transaction.
Profitability represents an additional challenge, pressured by domestic macro conditions and costs of the deleverage plan with impact
on the P&L. Management is implementing a strong programme of cost cutting with immediate measures aiming to reach a flat operating
cost base YoY by Yend 2011.
International business provide a stream of strong performance and significant prospects for future growth.
The measures management is taking reflect a strict financial discipline, with a strong focus on conservatively managing liquidity in a
scenario of limited availability of wholesale market funds and reinforcing solvency ratios in a very challenging environment.
41Q11 Results Presentation
2 May 2011
BES continues to follow a clear path based on four pillars: long-term profitability, deleverage plan, strong solvency, and high provision coverage
The deleverage BES is implementing since the 2H2010 is on track to reach a 120% LTD ratio by Ye 2012 Management expects to maintain a use ECB facilities at YE 2011 with a cap of 5% of net assets, with full year debt maturities paid with the proceeds of balance sheet deleverage (MLT debt maturing in 1Q11 represents over 60% of full year 2011)
BES strong provision coverage (3.47% of gross loans or Eur1.8bn) provides flexibility to accommodate expected deterioration in asset quality resulting from domestic economic conditionsTrack record of resilient asset quality, with NPL ratios consistently below the average of Portuguese system
Liquidity and Funding
Asset quality
Long term profitability
Solvency
BES international presence in strong growth emerging economies is key to compensate domestic slowdown and sustain future profitability International business already account for 44% of Consolidated Commercial Banking Income, +8 p.p. vis-à-vis 1Q10Implementation of cost cutting measures aiming to reach flat cost growth in 2011 (consolidated)
Core Tier I of 8.2% (pro-forma considering the sale of Bradesco stake) places BES in a strong capital position, with limited sovereign exposure and strong provision buffer.Possibility of increasing hybrid capital from a current weight of 15% in Tier I up to 35%
Deleverage of the Balance Sheet aiming to reach a 120% LTD
ratio
Strict monitoring of asset quality, with
continued reinforcement of
provision coverage
Increased contribution of International
business
Reinforce capital ratios with a focus on Core
Tier I
Main Challenges BES Strategic guidelines Description
51Q11 Results Presentation
2 May 2011
Main KPI reflect the increasing contribution of international business, the continuous focus on balance sheet deleverage, the reinforcement of solvency ratios and the strong provision coverage
56.0
37.3
48.1
1Q10 4Q10 1Q11
3.473.383.07
2.382.29
2007 2008 2009 2010 1Q11
Long-term Profitability: strong growth in international business
Liquidity & funding: deleverage of the B/S
Solvency: reinforcement of capital ratios Asset quality: strong provision coverage
198%
171%165%
163%
2Q10 3Q10 4Q10 1Q11 2012 YE
Loans to Deposit Ratio
+16.5%
International Net income (Eur mn)
120%
6.8
8.89.4
8.27.97.9
5.8
8.1
1Q09 1Q10 1Q11 1Q11 w/Bradesco
sale
CoreTier I
Core Tier I & Tier I (%) B/S provisions as % of Gross Loans
BoP8%
Pro-forma, including expected impact of Bradesco
sale: c.30bps on Core and c. 60 bps on
Tier I
61Q11 Results Presentation
2 May 2011
Table of contents
I. 1Q 2011 Performance: international business key to compensate pressure on domestic
profitability
II. Strict financial discipline: deleverage of the balance sheet provide a solid ground to
cope with funding and liquidity needs
III. Strong and conservative solvency: reinforced core capital above 8%, with limited
sovereign exposure
IV. Conservative risk management: increased provision reserve to anticipate asset quality
deterioration
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Macro fundamentals and forecasts: Portugal, Spain, Angola and Brazil
71Q11 Results Presentation
2 May 2011
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 YoY
253.7 7.0%
-1.1%
3.5%
3.4%
n.a.
n.a.
-5.4%
8.6%
-18.6%
-10.4%
-24.1%
-0.8%
o.w. Special tax on banks 0.0 0.0 0.0 0.0 7.6 n.a. n.a.
Proforma Net Income excl. impact of loan sales 119.1 163.0 123.3 105.1 96.1 -19.3% -8.6%
80.0%
-48.9%
191.8
445.4
97.1
12.7
o.w. Sale of other assets -0.6 -2.6 1.9 35.4 -38.6 n.a.
555.2
269.1
286.1
115.1
171.0
30.1
QoQ
+ Net Interest Income
21.7
119.1
292.7
197.8
490.5
97.8
-1.9
586.4
294.2
292.2
123.7
168.5
-8.6
14.1
163.0
-0.1%271.4
201.8
473.2
128.1
52.9
654.2
315.5
338.7
182.8
155.9
-10.8
61.7
-6.1%
-2.6%
-21.6%
n.a.
-19.7%
-7.4%
-31.2%
-43.6%
-16.8%
n.a.
-36.7%
-42.1%
346.2 271.3
105.1
Fees and Commissions 215.5 189.6+
=
+
+ Other results 0.2 -35.9
= Net Income 123.3 60.9
=
-
=
-
=
-
Commercial Banking Income 561.8 460.9
Capital Markets Results 46.1 100.4
Banking Income 608.0 525.3
Operating Costs 290.6 292.3
Net Operating Income 317.4 233.0
Net Provisions 112.0 103.1
Income Bef. Taxes and Minorities 205.4 129.8
Taxes 33.1 29.9
Minority Interests 49.0 39.1-
1Q 2011 results overall in line with recent trends, though impacted by Eur 1.1 bn ofloan portfolio sales with a net negative impact of Eur 35.2 mn
Includes Eur 41mn of loan sales’ negative impact (net: Eur 35.2
mn)
81Q11 Results Presentation
2 May 2011
Consolidated banking income decreased 5.4% YoY to Eur 525mn. Without the negative impact of loan portfolio sales it would have reached Eur 566mn, increasing 2% YoY
Consolidated NIM & NII: growth backed by international business
Fees & Commissions: In line YoY and down QoQ, reflecting traditional seasonality
Banking Income: supported by international activity, but impacted by loan sales and domestic weakness
(%; Eur mn)
254 271 271
141152 156
0
50
100
150
200
250
300
350
400
1Q10 4Q10 1Q110.00%
5000.00%
10000.00%
15000.00%
20000.00%
NII
NIM
+7.0% (Eur mn)
192 202 190
0
50
100
150
200
250
300
1Q10 4Q10 1Q11
-1.1%
100
128
97
1Q10 4Q10 1Q11
Trading: Keeping the strong performance
(EUR mn)
+3.4%(EUR mn)
525
654555
41
0
100
200
300
400
500
600
700
1Q10 4Q10 1Q11
-5.4% Without the Eur 41mn negative impact of
loan sales, Banking income
would have reached
Eur566mn (+2% YoY)
91Q11 Results Presentation
2 May 2011
207234
211
0
50
100
150
200
250
300
1Q10 4Q10 1Q11
269316
292
0
50
100
150
200
250
300
350
400
1Q10 4Q10 1Q11
1Q10 4Q10 YoY QoQ
Admin 100.6 117.2 107.5 6.8% -8.3%
174.0
24.3
315.5
144.9
23.7
269.1
1Q11
Staff 158.7 9.6% -8.8%
Total 292.3 8.6% -7.4%
26.1Depreciation 10.3% 7.6%
63
82 81
0
20
40
60
80
100
120
1Q10 4Q10 1Q11
International operating costs
Domestic operating costs
(Eur mn)
(EUR mn)
+2.2%
Costs under control at domestic level and increasing abroad as international investments continued. Management is implementing a set of cost cutting measures aiming to reach a YoY flat cost base by Yend 2011
Operating costs affected by international expansion (namely the consolidation of Execution Noble) and by the effect of incorporation of domestic employees in Social Security. Excluding these effects, costs would
have increase just 1% YoY
+8.6%
+29.5%
Operating costs
(Eur mn)
101Q11 Results Presentation
2 May 2011
In the past years, BES has closed 82 branches and has a pipeline of 20 additional closures identified for 2011 (Total: 102). The continuous pursuit of the rightsizing of the Retail Banking network can also be observed on the important amount of branches with 3 or less employees: 38% of the total network
14%
17%
22%
12%
14%
14%
7%
Branch Size as a function of the number of employees (% of total branches)
>6
6
5
4
3
2
1
38%
Employees 100%
20 102
14
320
12
6
27
2006 2007 2008 2009 2010 YTD2011
Planned Total
Number of branches closed since 2006
Mainly due to Cost-to-Income optimization
Capture of cost synergies opportunities following the merger of BIC (bank of the BES Group previously with 122 branches)
All branches are identified
111Q11 Results Presentation
2 May 2011
International business continues to deliver strong results, key to offset a slowdown on domestic activity. Domestic Net Income was negatively impacted by a Eur 35.2 mnresult (net) from loan sales
Domestic International
= Net Income 71.1 4.9 -93.1% 48.1 56.0 16.5% 92.0%
(euro million) 1Q10 1Q11 YoY 1Q10 1Q11 YoY
146.6 25.5%
30.3%
26.6%
-77.1%
20.0%
29.5%
14.5%
-44.4%
29.9%
13.0%
67.3%
16.5%
55.3
201.9
2.5
204.4
81.0
123.4
12.4
111.0
15.7
39.3
56.0
116.9
42.5
159.4
10.9
170.3
62.5
107.8
22.3
85.4
13.9
23.5
48.1
-8.7%
-10.1%
-9.4%
-37.4%
-16.6%
2.2%
-38.5%
-2.2%
-78.0%
-12.7%
n.a.
-43.6%
124.8
134.2
259.0
61.8
320.9
211.3
109.6
90.7
18.8
14.2
-0.2
40.1
136.7
149.3
286.0
98.9
384.9
206.6
178.3
92.8
85.5
16.2
-1.8
71.1
% of Total (Consolid.)
+ Net Interest Income 54.0%
+
=
+
=
-
=
-
=
-
-
Fees and Commissions 29.2%
Commercial Banking Income 43.8%
Capital Markets Results & Other 3.9%
Banking Income 38.9%
Operating Costs 27.7%
Net Operating Income 53.0%
Net Provisions 12.0%
Income Bef. Taxes and Minorities
85.5%
Taxes 52.6%
Minority Interests n.a.
Proforma Net Income excl. the impact of loan sales
92.0%
121Q11 Results Presentation
2 May 2011
In an operational segment analysis, income before taxes and minorities grew significantly in all International activities, including Investment Banking
129.8
-53,5
-32,8
8.6
15.7
94.8
47.6
21.8
27.6
Income before Taxes and Minorities1Q11. Euro million
Total Group
Retail
Private Banking
Corporate and Institutional Clients
International Commercial Banking
InvestmentBanking
Asset Management
Markets & Strategic Participations
CorporateCentre
Δ YoY EUR mn Δ YoY
Banking Income1Q1110
Operating Costs1Q1110
EUR mn Δ YoY EUR mn Δ YoY
DomesticCommercialBanking
145.3
25.3
85.4
153.1
64.6
14.2
37.3
525.3
-1.8%
…
-23.1%
+23.1%
+6.6%
-2.7%
-56.9%
-5.4%
105.5
5.1
16.5
48.1
45.5
5.6
12.3
53.5
292.3
12.2
-1.6
21.2
10.2
3.4
0.0
57.8
103.1
-8.0%
…
-36.3%
+39.6%
-19.1%
-1.1%
…
0%
-24.1%
Provisions1Q1110
+0.1%
-12.1%
+5.4%
+18.2%
+47.2%
-5.1%
+8.8%
0%
+8.6%
-2.4%
…
+3.0%
-35.4%
-67.0%
…
+5.3%
-10.4%
131Q11 Results Presentation
2 May 2011
International activity strong performance was backed by Commercial Banking Income growth. International NII and Commissions already accounted for 44% of consolidated Commercial Banking Income, contributing to resilient profitability of the Group
Domestic and International weight on Commercial Banking income
24% 24% 28% 26%36% 32%
40% 43% 44%
76% 76% 72% 74%64% 68%
60% 57% 56%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
International Domestic
(%)
International Commercial Banking income
119 121132
117
159 158
227206 202
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
(Eur mn)
+70%
+27%
461473562491445451471511486
Consolidated Commercial Banking Income (Eur mn)
141Q11 Results Presentation
2 May 2011
The strategic triangle continues to be the main contributor for international operations growth. Net Income from Africa, Brazil and Spain increased 60% YoY during 1Q 2011. In UK, net income fall is explained by NII reduction as a result of loan portfolio sales
Net Income Contribution
1Q10
24.2
% of international 50% 69%
% of consolidated 20% 64%
US 2.3 4.5 98%
Total International 48.1 56.0 +16.5%
UK 20.5 10.2 -50%
1.1
1Q11 YoY
Strategic Triangle(1) 38.7
2.6Other
60%
142%
International Net Income Breakdown (Eur mn)
UK: 10.2(20.5)
( ) 1Q10
US: 4.5(2.3)
Other: 2.6(1.1)
StrategicTriangle:
38.7(24.2)
Africa: 27.2 *(18.6)
Brazil: 5.7(3.1)
Spain: 5.8(2.5)
International Business(Eur mn)
(1) Includes Africa, Brazil and Spain(*) Includes Angola, C. Verde, Libya and Mozambique
151Q11 Results Presentation
2 May 2011
BES Investimento also continued its international diversification, with international activity accounting for 85% of 1Q11 net income
Banking Income 1Q11: EUR 64.3m (5.8% YoY)
Net Profit 1Q11: EUR 9.1m (-39.4% YoY)
International79%
Portugal21%
Net Interest Income
30%
Fees & Commissions
68%
Capital MktsResults
2%
International85%
Portugal15%
Domestic market: slowing down but some interesting deals closedJoint Lead Manager on EDP Finance B.V. (Eur 750 million) and Portugal
Telecom International Finance B.V. (Eur 600 million) Eurobond issues.Mandated Lead Arranger on the Eur 75 million financing to Secil for the
acquisition of 100% of Lafarge Betões and on the Eur 22 million financing to PortQuay for the acquisition of 10% of Media Capital group.
Leadership of the Portuguese Brokerage market, ending March with a 10.9% accumulated market share.
International activity: Brazil leads the way, Poland and UK also wellIn Spain, the Bank ranked 2nd in the Spanish Stock Exchange with a market
share of 7.8%. It also acted as Financial Adviser to a bidding consortium for the Autovía A-308 Eur 200 million concession .
In Brazil, the Bank acted as (i) Co-Manager on the IPO of Sonae Sierra Brasil(R$ 465 million) and on the Follow on of Tecnisa (R$ 400 million); (ii) Financial Adviser on the sale of a 28.78% stake in UOL by Portugal Telecom group.
Also in Brazil, the Bank was Lender on a R$ 180 million bridge loan to Gestamp Wind for the development of 4 renewable energy projects and Issuer of a letter of credit in favour of BNDES, to guarantee Via Bahia Concessionáriade Rodovias R$ 290 million obligations.
In the US, the Bank acted as Mandated Lead Arranger on the US$ 273 million financing to Icon Parking, a leading provider of car parking in New York City.
In Poland, the Bank acted as Joint Bookrunner on the 11.9% privatisation of the utility Tauron (PLN 1,282 million), as Joint Lead Manager on MazovianRailways debut Eurobond issue (Eur 100 million) and as Sole Bookrunner on Kredyt Inkaso’s Secondary Public Offer (PLN 50 million).
In the UK and via Execution Noble, the Bank acted as Joint Bookrunner for Shaftesbury Plc, raising £102 million placing, as Sole Bookrunner placing £ 81 million of GlobeOp and as Financial Adviser to AB Fagerhult’s £ 12 million acquisition of Designplan Lighting ltd.
Banking Income
Net Income
Net Income 2010: EUR 60.0mn (19.1% YoY)
161Q11 Results Presentation
2 May 2011
Table of contents
I. 1Q2011 Performance: international business key to compensate pressure on domestic
profitability
II. Strict financial discipline: deleverage of the balance sheet provide a solid ground to
cope with funding and liquidity needs
III. Strong and conservative solvency: reinforced core capital above 8%, with limited
sovereign exposure
IV. Conservative risk management: increased provision reserve to anticipate asset quality
deterioration
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Macro fundamentals and forecasts: Portugal, Spain, Angola and Brazil
171Q11 Results Presentation
2 May 2011
26.5 26.1
29.9 30.8 30.5
24.425.225.3 25.4
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
50.849.8
51.049.9
49.047.647.347.1
51.7
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
Net Loan Portfolio Evolution(EUR bn; excludes securitised credit)
Total Deposits(EUR bn)
Loans to Deposits Ratio
163%
120%
188%192%195%188%186%
171%165%
198%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2012
-1.9 bn+4.6 bn
+0.8 bn
LTD of 120% should be achieved by reducing the loan portfolio, namely by disposing of international credit portfolios (such as project finance), and simultaneously focusing on increasing core deposits.
In light of the absence of debt markets, BES management is implementing since mid 2010 an aggressive deleverage of the balance sheet. LTD ratio already decreased to 163% from 198% in 1H2010 and should reach 120% by Ye 2012
120%
+4.4 bn
181Q11 Results Presentation
2 May 2011
2,500
1,18848126
726300114
(4,243)
(632)(609)(465)(13)
(1,251)(1,273)
Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-Dec11 Total 2011
Eur 1.3 bn Executed
Up to February 2011 Eur 76mn of debt maturing in February
was bought in the market.
Medium and Long Term
Debt maturing in
2011
LoanPortfolio
Salesin
2011
Loan Portfolio Sales vs Medium and Long Term Debt Maturing in 2011
(Eur mn)
During 1Q 2011, BES has already sold Eur 1.3 bn of loans, which represents 53% of the annual target of Eur 2.5 bn, of which Eur 1.1 bn settled in 1Q11
191Q11 Results Presentation
2 May 2011
Strong growth in deposits YoY backed by focus on increasing core deposits in recent quarters. On a quarterly basis, the 0.9% decrease reflects 1Q traditional seasonality
Deposits
(EUR mn)
26 52230 819 30 545
0
5000
10000
15000
20000
25000
30000
35000
40000
1Q10 4Q10 1Q11
+15.2%
-1 609 -1 682
-2 645
-3 278
-1 706
-1 059
1 076
-274
-8.0% -8.2%
-12.7%-14.9%
-7.2%
4.2%
-4.0%-0.9%
-4000
-3000
-2000
-1000
0
1000
2000
-20%
-15%
-10%
-5%
0%
5%
10%
1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
Deposits seasonality: 1Q changes in deposits since 2004
(EUR mn)Traditionally, deposits
show great seasonality, falling in 1Q on a quarterly
basis for 7 out of last 8 years. During 1Q11
deposits decrease rate was the lowest since
2004, reflecting BES’sretention efforts. 2010 was
an atypically year
201Q11 Results Presentation
2 May 2011
Domestically, all main segments contributed significantly to the deleverage program
5.5%12.9%
4.5%13.1%
27.5%
18.3%
33.0%
69.6%
24.5%
10.5%
3.9%
-6.1%
3.7%
-1.3%-3.0%
Total FundsYoY Growth. %
On-Balance Sheet Client FundsYoY Growth. %
Gross Loans to ClientsYoY Growth. %
PrivateBanking
Corporate and InstitutionalMass Market Small BusinessesAffluent
(QoQ: -1.1%) (QoQ: -1.1%) (QoQ: -1.9%) (QoQ: -2.0%) (QoQ: +0.9%)
211Q11 Results Presentation
2 May 2011
Distribution of redemptions is very concentrated in the first quarter. In fact, 60% of medium and long term debt maturing in 2011 was already repaid. Remaining quarters represent undemanding cash requirements as deleverage continues
0.0
0.6
1.1
2.6
1Q11 2Q11 3Q11 4Q11
0.00.3
0.9
2.8
1Q12 2Q12 3Q12 4Q12
14%3Q11
26%2Q11 60%
1Q11
Medium and Long Term Debt maturing in 2011 Medium and Long Term Debt maturing in 2012
Alreadyrepaid
Medium and Long Term Debt maturity profile
(Eur bn)
1.7
4.0
2.1
3.1
3.9
2011 2012 2013 2014 2015
(EUR bn; Total Eur 4.3bn) (EUR bn; Total Eur 4.0bn)
Ow: Eur 0.5mn EMTN and Eur 0.4bn Sub.
Ow: Eur 0.5bn EMTN
Ow: Eur 1.5bn Senior
Guaranteed and Eur 1.2bn
EMTN
Ow: Eur 0.4mn EMTN and Eur
0.4bn Sub (UTII).
Eur 0.3bn EMTN
221Q11 Results Presentation
2 May 2011
3.9 3.9
+1.7
1.8
+0.3
+2.6
-1.1
-1.4
-2.0
ECB Use YE 2010
1Q11 Redemptions
Loan Portfolio
Sales
ECB Use 1Q11
Redemptions until YE
Other ECB Use YE 2011
(expected)
BES use of ECB liquidity facilities (net)
ECB liquidity facilities have been key to cope with short term liquidity needs. Until year end, the use of ECB is expected to decrease to levels below 5% of net assets
< 5% of netassets
(EUR bn)
Other
5.65
Loan Portfolio
Sales
231Q11 Results Presentation
2 May 2011
The portfolio of repoable securities have been increased to cope with the current challenges. The buffer of repoable securities (ECB and other) represents a cushion to liquidity management
9.7
4.05
8.65
+4.6
-5.65
ECBeligibleassets
ECBfacilities
used (net)
Available ECB buffer
Additionalrepoableassets
Totalrepoable
assets excl. ECB used facilities
Repoable Securities available
(EUR bn)
12.2
14.3
5.9
9.7
1Q10 1Q11
ECB Eligible Total
Total Repoable Securities
(EUR bn)
ECB Eligible: +3.8bnTotal: +2.1bn
241Q11 Results Presentation
2 May 2011
Table of contents
I. 1Q2011 Performance: international business key to compensate pressure on domestic
profitability
II. Strict financial discipline: deleverage of the balance sheet provide a solid ground to
cope with funding and liquidity needs
III. Strong and conservative solvency: reinforced core capital above 8%, with limited
sovereign exposure
IV. Conservative risk management: increased provision reserve to anticipate asset quality
deterioration
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Macro fundamentals and forecasts: Portugal, Spain, Angola and Brazil
251Q11 Results Presentation
2 May 2011
BES maintains strong capital levels, being in a good position to face forthcoming BIS 3 challenges. Core capital was maintained at 7.9%, with the positive impact of deleverage being offset by the negative impact of ratings downgrades in RWA. Sale of Bradesco to increase Core Tier I to c. 8.2%
Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational risk. Preliminary data as of Dec 2010.
Solvency Ratios (%)
8.1 8.1
8.8
7.97.97.9
1Q10 FY2010 1Q11Core Tier I
Core Tier I and Tier I following sale of Bradesco (%)
9.4
8.2
8.8
7.9
+0.6
+0.3
CT1 1Q11
CT1 1Q11 pro-
forma
Sale of
Bradesco
T1 1Q11
T1 1Q11 pro-
forma
Sale of
Bradesco
261Q11 Results Presentation
2 May 2011
BES European sovereign exposure is quite limited, amounting to Eur 1.6 bn (2% of net assets) in the 1Q11 vs Eur 2.3 bn at 2010 YE. 67% of BES’ European sovereign exposure is short-term Portuguese debt
Treasury Bills Bonds Total
Portugal 1 062 508
0
0
5
513
1 570
Ireland 0 0
Greece 0 0
Spain 3 8
Total 1 065 1 578
European Sovereign Exposure
<3M4%
> 1Y20%
3M to 1Y
76%
Maturity profile of the European Sovereign Exposure
(%)(Eur mn)
1 578
2 279
4Q10 1Q11
Evolution of European Sovereign Exposure
(Eur mn) -701 mn
271Q11 Results Presentation
2 May 2011
Table of contents
I. 1Q2011 Performance: international business key to compensate pressure on domestic
profitability
II. Strict financial discipline: deleverage of the balance sheet provide a solid ground to
cope with funding and liquidity needs
III. Strong and conservative solvency: reinforced core capital above 8%, with limited
sovereign exposure
IV. Conservative risk management: increased provision reserve to anticipate asset quality
deterioration
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Macro fundamentals and forecasts: Portugal, Spain, Angola and Brazil
281Q11 Results Presentation
2 May 2011
BES’ Credit portfolio is mainly composed by Corporate loans. It continues to be well diversified, with no major concentration per sector
Credit Portfolio as of March 2011 (Eur 51.7 bn Gross Loans)
(excludes securitised credit)
Corporate72.2%
(Eur 37.3 bn)
Consumer5.2% (Eur 2.7bn)
Mortgage22.6%
(Eur 11.7 bn)
1 Represents a composite of other sectors of the economy none representing more than 2% per se.
15%
12%
10%
8%
7%
4%
4%
13%
Services
Con.& Pub Works
Real Estate
Retail
Other Man.
T&C
Other Services1
Fin. Inst.
291Q11 Results Presentation
2 May 2011
Despite the higher weight of Corporate loans (72% of the loan book), asset quality has proved to be very resilient, even in periods of recession, consistently below the Portuguese average
1. 9%2 . 1%
1. 9%
1. 5%1. 3 %
1. 2%1. 3 %
1. 8%
2 . 1%2 . 4%
4. 8%
2 . 1% 2 . 2%2 . 0%
1. 7%
2 . 2 %
3 . 4%
3 . 7%
3 . 2 %
2 . 4%2 . 3 %
1. 8%
2 . 1%
3 . 6%
2 . 6%
2 . 2 % 2 . 3 %
1. 9%1. 6%
3 . 2 %
'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
Total Overdue Loans/Gross Loans BESTotal Overdue Loans/Gross Loans System
BES Overdue Loans Ratio Evolution vs Portuguese System
Source: BES and BoP. Data for System as of February 2011
2.72%
0.84%
4.46%
4.66%
1.75%
8.01%Consumer
& Other
Mortgage
Corporate
System
BES
1Q11
301Q11 Results Presentation
2 May 2011
8197
178
104
162
8095
8494
0
50
100
150
200
250
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
Resilient asset quality is complemented with high provisioning coverage. Total provisions reserve is close to EUR 1.8 bn, or 3.47% of the loan portfolio
BES On-BS Provisions Reserve
1 7901 777
1 552
1 148
990
2007 2008 2009 2010 1Q11
Quarterly Credit Provisions & Cost of Risk
67 bp
Ow Eur 40 mn extra
Ow Eur 66 mnextra
86 bp excl. extraord.
(Eur mn)(Eur mn)
Provisions as % of Gross Loans
2.29% 2.38% 3.07% 3.38% 3.47%
1.8x
Cost of Risk (bps)
80 147 85 128 62 71 63 71 63
311Q11 Results Presentation
2 May 2011
2.27% 2.38% 2.40%2.66% 2.74%
2.98%
4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
NPL ratios are comfortably covered above 100%, as BES has been conservatively reinforcing its provisioning to anticipate asset quality deterioration
Total Overdue Loans Ratio (+30d) & Coverage (%)
Overdue and Doubtful Loans Ratio & Coverage (%) Net New Entries as % of Performing Loans
(quarterly annualised)Quarterly Write Offs (Eur mn)
1.60% 1.67% 1.70%1.90% 1.95%
2.17%
4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
Overdue Loans +90 days Ratio & Coverage (%)
191% 188% 185% 173% 173% 159%
1.77%1.94% 1.90%
2.07% 2.10%2.38%
4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
174% 161% 166% 158% 161% 145%
135% 131% 131% 123% 123% 116%
0.13%
1.03%
0.23%
0.74%
0.37%
1.23%
4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
17.7 22.8 20.0 14.1 34.8 30.0
321Q11 Results Presentation
2 May 2011
Table of contents
I. 1Q2011 Performance: international business key to compensate pressure on domestic
profitability
II. Strict financial discipline: deleverage of the balance sheet provide a solid ground to
cope with funding and liquidity needs
III. Strong and conservative solvency: reinforced core capital above 8%, with limited
sovereign exposure
IV. Conservative risk management: increased provision reserve to anticipate asset quality
deterioration
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Macro fundamentals and forecasts: Portugal, Spain, Angola and Brazil
331Q11 Results Presentation
2 May 2011
With a strict financial discipline, BES is addressing current challenges while maintaining a strong international profile which provides a resilient stream of future profitability
Strong growth prospects for international business mitigate domestic slowdown
Exposure to high growth emerging countries with increasing economic ties with Portugal and
Portuguese companies provides intrinsic profitability, besides providing access to additional
funding pools
Prudent and
conservative
management
Implementation of a balance sheet deleverage plan aiming to reduce the LTD ratio
to 120% in two years
Reinforced solvency ratios, with core tier I of ca. 8.2% following the sale of
Bradesco
Limited exposure to European sovereign debt
Strong provision reserve covering close to 3.5% of gross loans provide a cushion to
expected asset quality deterioration in domestic business
Proved financial discipline, with the adoption of strict measures in both liquidity and
capital management:
341Q11 Results Presentation
2 May 2011
Table of contents
I. 1Q2011 Performance: international business key to compensate pressure on domestic
profitability
II. Strict financial discipline: deleverage of the balance sheet provide a solid ground to
cope with funding and liquidity needs
III. Strong and conservative solvency: reinforced core capital above 8%, with limited
sovereign exposure
IV. Conservative risk management: increased provision reserve to anticipate asset quality
deterioration
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Macro fundamentals and forecasts: Portugal, Spain, Angola and Brazil
351Q11 Results Presentation
2 May 2011
BES Main figures
1Q10 2Q10 3Q10 4Q10
119.1
Net Income excl. Loan Sales Eur mn 119.1 163.0 123.3 105.1 96.1
48.1
8.1
48.5
49,898
26,522
188
7.9
8.1
10.6
3.12
1.67
163.0
187.5
62
105.1123.3
70.4
9.1
47.8
51,032
29,923
171
7.9
8.3
11.0
3.27
1.90
172.5
63
37.3
8.6
48.2
50,829
30,819
165
7.9
8.8
Total % 11.2 11.3 11.4
Provisions as % Gross Loans % 3.15 3.38 3.47
NPL + 90 days % 1.70 1.95 2.17
Coverage % 184.9 173.0 159.4
Loan loss charge bp 71 71 63
International net income Eur mn 48.0 56.0
Cost / Income % 50.2 55.6
9.6
Net Loan Portfolio Eur mn 51,674 49,862
Deposits Eur mn 26,082 30,545
198
Solvency: Basel II (1)
Tier I % 8.4 8.8
Core Tier I % 7.9 7.9
Eur mn
%
%
1Q11
Net Income (consolidated) 60.9
ROE (Excl. Loan Sales in 1Q11) 6.5
Loan to Deposit Ratio 163
Liquidity and Funding
Asset quality
Profitability
Solvency
Main Challenges
(1) Basel II ratios as of 2010 (estimate) assume the Foundation approach for credit risk (Advanced for retail portfolios) and Standard method for operational risk, both certified by the Bank of Portugal.
* Accumulated
361Q11 Results Presentation
2 May 2011
Quarterly consolidated income statement
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 QoQ
271.4
201.8
473.2
128.1
52.9
654.2
315.5
338.7
182.8
155.9
-10.8
61.7
105.1
48.2%
271.3
66.7%
189.6
-0.1%
-6.1%
-2.6%
-21.7%
n.a.
-19.7%
-7.4%
-31.2%
-43.6%
-16.8%
n.a.
-36.7%
-42.1%
7.4 p.p.
460.9
100.4
-35.9
525.3
292.3
233.0
103.1
129.8
29.9
39.1
60.9
55.6%
3.3 p.p.63.4%
346.2
215.5
561.7
46.2
0.2
607.9
290.6
317.3
112.0
205.3
33.1
49.0
123.2
47.8%
51.7%
292.7
197.8
490.5
97.8
-1.9
586.4
294.1
292.3
123.7
168.6
-8.6
14.1
= Net Income 119.1 163.1 -48.9%
Cost to Income 48.5% 50.2% 7.1 p.p.
Cost to Income ex-Markets 60.4% 60.0% 3.0 p.p.
253.7
191.8
445.5
97.1
12.7
555.3
269.2
286.1
115.1
171.0
30.2
21.7
YoY
+ Net Interest Income 7.0%
-1.1%
3.5%
3.2%
n.a.
-5.4%
8.6%
-18.6%
-10.4%
-24.1%
-0.8%
80.0%
+ Fees and Commissions
= Commercial Banking Income
+ Capital Markets Results
+ Other Results
= Banking Income
- Operating Costs
= Net Operating Income
- Net Provisions
= Income Bef. Tax & Min.
- Taxes
- Minorities
371Q11 Results Presentation
2 May 2011
Quarterly domestic income statement
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 QoQ
117.7
149.8
267.4
186.0
453.5
233.7
219.8
145.5
74.1
-18.4
25.1
67.5
51.5%
124.8
87.3%
134.2
6.0%
-10.4%
-3.2%
-66.8%
-29.3%
-9.6%
-50.2%
-37.7%
-74.7%
n.a.
n.a.
-92.8%
14.3 p.p.
259.0
61.8
320.9
211.3
109.6
90.7
18.8
14.2
-0.2
4.9
65.8%
-5.7 p.p.81.6%
171.8
163.1
334.9
34.8
369.7
218.8
150.9
90.7
60.2
6.7
0.4
53.2
59.2%
65.3%
184.9
147.8
332.7
89.2
421.9
227.4
194.4
101.4
93.1
-20.5
-1.5
= Net Income 71.0 115.0 -93.1%
Cost to Income 53.7% 53.9% 12.1 p.p.
Cost to Income ex-Markets 72.2% 68.4% 9.4 p.p.
136.8
149.3
286.1
98.9
385.0
206.7
178.3
92.8
85.5
16.3
-1.8
YoY
+ Net Interest Income -8.7%
-10.1%
-9.4%
-37.4%
-16.6%
2.3%
-38.5%
-2.2%
-78.0%
-12.7%
n.a.
+ Fees and Commissions
= Commercial Banking Income
+ Capital Markets & Other Results
= Banking Income
- Operating Costs
= Net Operating Income
- Net Provisions
= Income Bef. Taxes and Min.
- Taxes
- Minorities
381Q11 Results Presentation
2 May 2011
Quarterly international income statement
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 QoQ
153.7
52.0
205.8
-5.0
200.7
81.8
118.9
37.2
81.7
7.4
36.6
37.6
40.9%
146.6
39.8%
55.3
-4.7%
6.4%
-1.8%
-146.9%
2.0%
-1.1%
4.2%
-66.6%
36.5%
114.1%
7.1%
50.1%
-1.3 p.p.
201.9
2.5
204.4
81.0
123.4
12.4
111.0
15.7
39.3
56.0
39.6%
0.3 p.p.40.1%
107.8
50.0
157.8
6.7
164.5
66.7
97.8
22.3
75.4
12.0
15.6
48.0
40.5%
42.3%
174.4
52.4
226.8
11.4
238.2
71.8
166.4
21.3
145.1
26.4
48.6
= Net Income 48.1 70.1 16.5%
Cost to Income ex-Markets 39.2% 31.6% 0.9 p.p.
Cost to Income 36.7% 30.1% 2.9 p.p.
116.9
42.5
159.4
10.9
170.3
62.5
107.8
22.3
85.5
13.9
23.5
YoY
+ Net Interest Income 25.5%
30.3%
26.6%
-77.1%
20.0%
29.5%
14.5%
-44.4%
29.9%
13.0%
67.3%
+ Fees and Commissions
= Commercial Bkg Income
+ Capital Mkts & Other Res.
= Banking Income
- Operating Costs
= Net Operating Income
- Net Provisions
= Income Bef. Taxes & Min.
- Taxes
- Minorities
391Q11 Results Presentation
2 May 2011
Angola: Quarterly income statement
(EUR million) 1Q10 2Q10 4Q10 1Q11 QoQ
92.3 86.8
6.2
93.0
5.3
98.3
19.2
79.2
4.7
74.4
47.3
27.1
19.5%
6,210.1
3,029.4
526.9
6.0
-6.0%
3.7%
-5.4%
-39.5%
-8.2%
-4.1%
-9.1%
-66.4%
2.0%
1.5%
2.9%
0.8%
4.8%
7.3%
98.3
8.8
107.1
20.0
87.1
14.2
72.9
46.6
26.3
18.6%
5,923.9
2,823.6
485.7 8.5%
38.6
7.5
46.1
3.9
50.0
17.6
32.4
3.0
29.5
18.6
10.8
35.2%
5,520.8
2,443.1
369.0
YoY3Q10
48.7 116.1
6.3
122.4
-0.5
121.9
19.2
102.7
3.8
98.9
63.1
35.8
15.7%
5,211.6
2,553.9
419.0
5.8
54.4
11.2
65.6
14.9
50.7
2.3
48.4
30.4
18.0
22.8%
4,775.5
1,966.9
+ Net Interest Income
303.1
78.4%
6.9%
= Commercial Bkg Income 70.8%
Cost to Income -3.3%
Total Assets 30.0%
Total Credit (Gross) 54.0%
-52.3%
49.8%
28.1%
56.2%
108.7%
53.8%
55.6%
= Net Income 50.6%
73.8%
+ Fees and Commissions
+ Capital Mkts & Other
= Banking Income
- Operating Costs
= Net Operating Income
- Net Provisions
= Income Bef. Taxes & Min.
- Taxes & Minority Interests
Equity
401Q11 Results Presentation
2 May 2011
Spain: Quarterly income statement
(EUR million) 1Q10 2Q10 4Q10 1Q11 QoQ
24.5 25.4
12.5
37.9
5.1
43.0
22.3
20.7
13.3
7.4
1.6
5.8
51.9%
3,736.4
142 bp
5,502.6
11.1
3.7%
12.7%
6.5%
n.a.
22.5%
-1.7%
67.0%
50.3%
108.7%
61.3%
126.9%
-12.8 p.p.
-4.9 p.p.
-
35.6
-0.5
35.1
22.7
12.4
8.8
3.5
1.0
2.6
64.7%
4,093.7
60 bp
5,498.4 0.1%
23.9
12.8
36.7
1.4
38.1
21.0
17.2
11.1
6.0
0.5
5.6
55.0%
4,197.7
105 bp
5,722.3
YoY3Q10
24.5 21.7
12.8
34.5
2.2
36.7
22.0
14.6
10.7
3.9
1.8
2.1
60.1%
4,111.7
103 bp
5,527.0
14.6
39.1
1.6
40.7
23.1
17.5
14.6
2.9
0.4
2.5
56.9%
4,156.1
141 bp
+ Net Interest Income
6,029.4
3.5%
-14.2%
= Commercial Bkg Income -3.1%
Cost to Income -4.9 p.p.
Credit -0.2 p.p.
Cost of Risk (bp) -
223.9%
5.7%
-3.5%
17.8%
-9.3%
154.8%
298.0%
= Net Income 132.0%
-8.7%
+ Fees and Commissions
+ Capital Markets & Other
= Banking Income
- Operating Costs
= Net Operating Income
- Net Provisions
= Income Bef. Taxes & Min.
- Taxes & Minority Interests
Assets
411Q11 Results Presentation
2 May 2011
Brazil: Quarterly income statement
(EUR million) 1Q10 2Q10 4Q10 1Q11 QoQ
14.0 14.1
10.1
24.2
-1.8
22.4
9.6
12.8
1.5
11.3
5.6
5.7
42.7%
2,755.7
8.5
0.8%
19.8%
7.9%
-43.2%
16.5%
-5.8%
41.3%
29.4%
43.1%
217.0%
-7.5%
-10.1 p.p.
22.4
-3.2
19.2
10.2
9.1
1.2
7.9
1.8
6.1
55.8%
2,672.2 3.1%
14.0
7.9
21.9
0.2
22.1
8.9
13.2
-0.1
13.3
6.0
7.3
40.2%
2,340.5
YoY3Q10
12.5 12.8
13.9
26.7
7.8
34.5
9.6
24.8
1.4
23.4
7.8
15.7
28.0%
2,301.5
6.8
19.3
-2.8
16.5
8.5
8.0
2.6
5.4
2.3
3.1
51.6%
+ Net Interest Income
1,962.4
12.2%
49.9%
= Commercial Banking Income 25.4%
Cost to Income -8.9 p.p.
-35.5%
35.8%
12.3%
60.9%
-40.0%
108.9%
140.4%
= Net Income 84.7%
40.4%
+ Fees and Commissions
+ Capital Markets & Other
= Banking Income
- Operating Costs
= Net Operating Income
- Net Provisions
= Income Bef. Taxes & Min.
- Taxes & Minority Interests
Assets
421Q11 Results Presentation
2 May 2011
UK: Quarterly income statement
(EUR million) 1Q10 2Q10 4Q10 1Q11 QoQ
12.9 12.8
18.4
31.1
-7.2
24.0
18.3
5.7
-4.3
10.0
-0.2
10.2
76.2%
2,349.2
13.3
-1.0%
37.9%
18.7%
n.a.
55.4%
39.5%
144.3%
n.a.
n.a.
n.a.
n.a.
-8.7 p.p.
26.2
-10.8
15.4
13.1
2.3
11.5
-9.1
-6.7
-2.5
84.9%
2,699 -13.0%
19.0
11.3
30.3
0.8
31.1
4.4
26.7
3.6
23.1
2.2
20.9
14.0%
3Q10 YoY
2,987
20.5
6.5
26.9
-0.3
26.7
4.4
22.2
-0.2
22.4
1.9
20.5
+ Net Interest Income
16.5%
2,814
15.2
5.7
20.9
1.2
22.2
4.9
17.3
6.1
11.2
2.9
8.3
22.0%
2,980
+ Fees and Commissions
-37.6%
183.7%
= Commercial Bkg Income 15.6%
Cost to Income 59.7 p.p.
Credit (Eur mn) -16.5%
n.a.
-10.1%
314.5%
-74.4%
n.a.
-55.4%
n.a.
= Net Income
+ Capital Markets & Other
= Banking Income
- Operating Costs
= Net Operating Income
- Net Provisions
= Income Bef. Taxes & Min.
- Taxes & Minority Interests
-50.3%
431Q11 Results Presentation
2 May 2011
Quarterly Net Interest Income(N
IM in
bp;
Qua
rterly
Fig
ures
)
254
293
346
271
271
258
253
269
306
315
335
300
250
156152190
161141176 169 167 188 193 171
199
141
0
50
100
150
200
250
300
350
400
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
0
50
100
150
200
NII
NIM
454437397401380375423 406 395
3.553.32.983.083.58 3.38 3.25
3.02 3.03
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
Credit NII (LHS, Eur mn) Credit Margin (RHS, %)
-136-110
-66-57
-52-41-39-36
-47
-1.78-1.45
-0.97-0.88-0.83-0.66-0.61-0.59-0.74
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
Deposits NII (LHS, Eur mn) Deposits Margin (RHS, %)
Credit Margin Deposit Margin
Quarterly Net Interest Income & NIM Euribor 3M (quarterly average)(%)
0.66 0.69 0.87 1.02 1.09
4.484.86 4.98
4.21
2.01
1.310.87 0.72
0
1
2
3
4
5
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
441Q11 Results Presentation
2 May 2011
Quarterly fees & commissions
(1) Includes trade finance and letters of credit(2) Includes Brokerage(3) Includes discretionary management
Note: change calculated based on figures in thousand euros
(EUR million)1Q10 2Q10 4Q10 1Q11 QoQ
22.4 19.4
23.8
12.3
15.0
25.6
29.6
23.7
9.7
11.7
1.9
16.8
189.6
35.3
-13.4%
-32.6%
-19.7%
-4.4%
-9.8%
99.3%
-9.2%
-9.9%
-9.1%
-11.1%
-5.9%
15.4
15.6
28.4
14.8
26.1
10.8
12.9
2.1
17.8
201.8 -6.0%
21.2
32.6
16.3
17.2
23.6
12.1
24.7
9.8
17.0
1.9
21.3
197.8
19.6
27.1
27.6
13.9
18.1
15.6
25.2
8.9
13.0
2.2
20.6
191.8
3Q10 YoY
Account Management Fees 21.6
35.8
35.0
22.8
22.1
8.4
25.9
10.5
13.5
2.2
17.8
215.5
Commissions on Loans
-1.0%
-12.2%
-55.3%
7.4%
41.5%
90.3%
-6.1%
9.8%
-9.6%
-12.5%
-18.5%
Trade Finance & Exp. related (1)
Corporate & Project Finance
Guarantees
Securities related fees (2)
Asset Management (3)
Cards
Bancassurance
Factoring
Other
-1.1%Total Fees & Commissions
451Q11 Results Presentation
2 May 2011
Quarterly capital markets results and VAR
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11
-133.7 50.5
37.8
8.4
4.3
49.9
45.6
4.3
100.4
0.6
99.8
15.09.4
32.9-19.1
38.20.6%
22.0
-147.7
-8.0
261.8
144.9
116.9
128.1
39.4
88.7
16.214.219.1
-27.1
22.40.4%
58.1
-9.5
44.7
22.9
-12.1
-19.6
7.5
46.0
4.8
41.2
13.515.143.2
-33.2
38.60.7%
-0.6
3.0
-32.3
28.7
98.4
32.7
65.7
97.8
16.0
81.8
9.531.613.4
-20.0
34.50.6%
48.7
14.4
18.3
16.0
48.4
45.2
3.2
97.1
16.4
80.7
4.918.735.1
-15.5
43.30.8%
YoY
Interest Rate & FX 3.7%
… Interest rate 162.5%
Capital Markets net of Provisions for securities 23.6%
VAR – Value at RiskInterest RateFXEquity & CommoditiesDiversification Effect
Global VAR
… Credit -54.1%
… FX & Other -73.1%
3.1%
0.9%
… Income from securities 34.4%
Capital market results 3.4%
Provisions for Securities -96.2%
Equity
… Trading
Global VAR as % of Tier I *
461Q11 Results Presentation
2 May 2011
100.4
128.1
97.1
1Q10 4Q10 1Q11
The trading results had an average weight above 15% in the Banking Income throughout the last 6 years
Since 1999 the positive trading revenues totalled Eur 2,912 mn, while the negative results reported in just two quarters amounted to Eur15 mn
Weight in Banking Income
64
36
324
-115
88
28 35 2551 50 54 53 55
1935 26
51
84
13
46
80 82
4466 68 73
196
3955
72
155
-14
16
48
124108
97 98
46
128100
4927
2
84109
109
1Q99
2Q99
3Q99
4Q99
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Quarterly capital markets results
19.1%
Quarterly history of trading results since 1999
(EUR mn)
Trading results 1Q11
(EUR mn)
19.6%17.5%
471Q11 Results Presentation
2 May 2011
Quarterly equity accounted earnings and other results
Equity Accounted Earnings and Other Results (Quarterly)
3Q10 1Q11
4.1
2.9
1.2
-40.0
-35.9
8.4
5.3
11.4
-16.5
1Q10
0.2
4Q10
8.0
3.2
4.8
44.9
52.9
8.6
4.8
… Other 3.8 1.7
Other Results 4.1 -14.1
12.7
2Q10
12.2
2.2
-1.9
(EUR million)
Equity Accounted Earnings
… BES Vida
Total Equity Accounted and Other Results
-40.0
2.9
4.1
1Q11
-26.5
12.3
29.2
9M10
-10.0
7.0
20.8
1H10
4.1
4.8
8.6
1Q10
18.4
15.5
37.2
FY10
Equity Accounted Earnings and Other results (Accumulated)
Other Results
… BES Vida
Equity Accounted Earnings, ow
(EUR million)
481Q11 Results Presentation
2 May 2011
Quarterly other results: Reconciliation between IFRS P&L and Presentation
Quarterly
3Q10 4Q10
-13.4
6.2
-29.1
… Special Tax on Banks - - - - - - - - -7.6
9.5
-5.1
12.6
-7.6
-10.0
2Q10
-11.2
8.2
-8.1
-11.4
4Q09
-4.8
14.2
-16.7
… Other -7.2 -11.7 -24.1 -2.2 4.6
3Q09
-1.4
1Q10
16.1
10.7
0.8
-1.7
9.1
13.3
2Q09
3.8
5.3
10.2
1Q09
98.5
9.2
96.5
(EUR million) 1Q11
Other Results (IFRS), ow 36.0
… Fees 9.0
… Capital Markets 36.0
Accumulated
9M10 FY10
-13.6
37.7
-44.0
… Special Tax on Banks - - - - - - - - -7.6
-7.3
-0.2
31.5
-14.9
-16.8
6M10
4.9
18.9
-7.3
-6.8
3M10
16.1
10.7
0.8
… Other -7.2 -18.9 -43.0 -45.2 4.6 -1.4
FY09
95.8
37.8
103.3
9M09
100.6
23.6
120.0
6M09
102.3
14.5
106.7
3M09
98.5
9.2
96.5
(EUR million) 3M11
Other Results (IFRS), ow 36.0
… Fees 9.0
… Capital Markets 36.0
491Q11 Results Presentation
2 May 2011
Quarterly operating costs
(EUR million)1Q10 2Q10 4Q10 1Q11 QoQ
174.1 158.7
116.0
18.1
24.6
107.5
26.1
292.3
128.5
-8.8%
-9.7%
-26.7%
17.7%
-8.3%
7.6%
-7.3%
24.7
20.9
117.2
24.3
315.5
154.0
116.2
20.6
17.2
113.3
26.8
294.1
144.9
108.1
20.3
16.5
100.6
23.7
269.2
3Q10 YoY
Staff costs 155.4
113.0
…Pension Benefits 25.1 -10.7%
…Long term service benefits & Other 17.3 49.3%
109.9
25.3
290.6
…Remunerations
9.6%
7.3%
6.8%
10.4%
Admin costs
Depreciation
Total Operating Costs 8.6%
501Q11 Results Presentation
2 May 2011
Quarterly operating costs: domestic and international
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 QoQ
112.4
72.8
17.2
22.4
78.6
20.3
211.3
46.3
43.2
0.9
2.2
28.9
5.8
81.0
127.3 -11.6%
-16.4%
-29.2%
41.5%
-9.5%
3.4%
-9.6%
-1.1%
4.4%
133.8%
-57%
-5.1%
25.1%
87.1
24.3
15.8
86.8
19.6
233.7
46.8
41.4
0.4
5.0
30.4
4.7
81.9 -1.1%
115.1
75.6
24.1
15.5
84.8
18.9
218.8
40.3
37.3
1.1
1.9
25.1
6.4
71.8
107.7
73.0
19.4
15.3
79.6
19.4
206.7
37.2
35.2
0.8
1.1
21.0
4.3
YoY
62.5
116.7
82.2
…Pension Benefits 19.6 -11.5%
…Long term service benefits & Other 14.9 46.4%
… Long term service benefits & Other 2.3 88.4%
89.2
21.6
227.4
International
Staff Costs 37.3 24.5%
…Remunerations 34.0 22.9%
1.0
24.1
5.3
Domestic
66.7
4.4%
-0.2%
-1.2%
4.4%
2.2%
8.0%
37.3%
34.8%
29.5%
Staff costs
…Remunerations
Admin costs
Depreciation
Domestic Operating Costs
…Pension Benefits
Admin costs
Depreciation
International Operating Costs
511Q11 Results Presentation
2 May 2011
Quarterly provisions
(EUR million)1Q10 2Q10 3Q10 4Q10 1Q11 QoQ
93.7 80.9
63bp
63bp
70.1
68bp
68bp
10.7
40bp
0.6
21.6
103.0
71 bp
-13.7%
-
-
11.5%
-
-
-65.1%
-
-98.4%
-56.5%
-43.6%
71 bp
62.9
61 bp
61 bp
30.8
110 bp
39.4
49.7
182.8
83.6
63 bp
63 bp
64.1
62 bp
62 bp
19.5
68 bp
4.8
23.6
112.0
80.0
62bp
62bp
60.1
59bp
59bp
19.9
74bp
16.4
18.7
115.1
YoY
94.5
71 bp
71 bp
71.6
69 bp
69 bp
22.9
78 bp
16.0
13.2
123.7
…Credit 1.1%
cost of risk (bp) -
cost of risk ex extra (bp) -
cost of risk ex extra (bp) -
… Domestic 16.7%
cost of risk (bp) -
cost of risk (bp) -
… International -46.1%
…Securities -96.2%
…Other 15.8%
-10.4%Total Provisions
Note: Detailed credit provisions and asset quality data in following slides
521Q11 Results Presentation
2 May 2011
Quarterly balance sheet: assets
(Eur mn) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11
931 1,252
671
3,398
1,525
10,777
3,765
49,862
( 1,790)
2,349
-
296
605
-
780
230
961
99
292
3,886
80,746
558
3,942
1,424
11,775
4,245
50,829
(1,777)
2,459
-
447
575
-
809
234
962
99
283
4,083
83,655
847
555
4,300
1,618
11,642
2,596
51,032
(1,725)
2,606
-
524
636
-
792
153
868
29
220
3,719
82,137
1,943
501
5,966
1,611
10,115
3,570
51,674
(1,682)
2,757
-
533
486
-
746
153
852
25
237
3,705
84,874
YoY QoQ
Cash and deposits at central banks 2,115 -40.8%
31.9%
-15.9%
-42.5%
19.0%
-43.3%
-0.1%
11.3%
-11.8%
-
-39.2%
37.4%
-
9.6%
70.3%
10.1%
446.5%
52.9%
5.9%
-4.0%
34.6%
Deposits with banks 509 20.2%
Financial assets held for trading 4,041 -13.8%
Financial assets at fair value through P&L 2,653 7.1%
Financial assets available for sale 9,058 -8.5%
Loans and advances to banks 6,635 -11.3%
Loans and advances to customers 49,898 -1.9%
(Provisions) (1,609) 0.7%
Held to maturity investments 2,664 -4.5%
Financial Assets with repurchase agreements - -
Hedging derivatives 486 -33.9%
Non current assets held for sale 440 5.3%
Investment property - -
Other tangible assets 712 -3.6%
Intangible assets 135 -1.7%
Investments in associated companies 872 -0.1%
Current income tax assets 18 -0.7%
Deferred income tax assets 191 3.2%
Other assets 3,670 -4.8%
Total Assets 84,098 -3.5%
531Q11 Results Presentation
2 May 2011
Quarterly balance sheet: liabilities
(Eur mn) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11
7,965 8521
1875
-
7199
30545
20742
-
217
5
212
27
110
-
2327
1603
73,386
2,088
-
6,381
30,819
24,110
-
229
5
215
25
116
-
2,292
1,935
76,179
6,654
2,275
-
6,215
29,923
25,643
-
214
43
192
84
94
-
2,311
1,226
74,874
4,222
1,736
-
7,302
26,522
33,062
-
215
26
172
126
70
-
2,306
1,219
76,978
YoY QoQ
Amounts owed to central banks 8,996 101.8%
8.0%
-
-1.4%
15.2%
-37.3%
-
0.8%
-78.9%
23.4%
-78.2%
56.4%
-
0.9%
31.5%
-4.7%
7.0%
Financial liabilities held for trading 2,169 -10.2%
Financial assets at fair value through P&L - -
Deposits from banks 7,112 12.8%
Due to customers 26,082 -0.9%
Debt securities 29,451 -14.0%
Financial liabilities associated to transferred assets - -
Hedging derivatives 241 -5.2%
Non current liabilities held for sale 35 0.0%
Provisions 180 -1.2%
Current income tax liabilities 97 8.2%
Deferred income tax liabilities 92 -4.9%
Instruments representing capital - -
Other subordinated loans 2,306 1.5%
Other liabilities 1,197 -17.1%
Total Liabilities 77,959 -3.7%
541Q11 Results Presentation
2 May 2011
Quarterly balance sheet: equity
(Eur mn) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11
6,474 6,738
3,500
1,085
269
-1
600
-33
1,317
61
0
562
7,361
3,500
1,085
320
-
600
( 10)
979
511
-
491
7,476
6,446
3,500
1,085
-
(25)
600
292
993
405
-
412
7,263
6,686
3,500
1,086
-
(25)
600
326
1,198
119
-
315
YoY QoQ
Shareholders' Equity
7,120
6,243
3,500
1,085
-
(25)
600
60
1,023
282
-
390
6,915
0.8%
0.0%
-0.1%
n.a.
-96.0%
0.0%
-110.1%
9.9%
-48.9%
-
78.2%
3.4%
4.1%
Share capital 0.0%
Share premium 0.0%
Other capital instruments -15.8%
Treasury stock n.a.
Preference shares 0.0%
Fair value reserve 243.6%
Other reserves and retained earnings 34.6%
Net Profit for the period / year -88.1%
Anticipated dividends -
Minority interests 14.4%
Total Equity -1.5%
551Q11 Results Presentation
2 May 2011
Quarterly loan portfolio (including securitised)
(EUR million) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11
17,630 17,378
14,695
14,222
473
2,683
2,348
335
37,319
27,441
9,878
54,697
44,011
10,686
20%
14,808
14,324
483
2,822
2,468
354
38,083
27,734
10,349
55,713
44,527
11,186
20%
17,651
14,894
14,398
496
2,757
2,428
329
38,278
27,701
10,577
55,929
44,427
11,403
20%
17,728
14,933
14,429
504
2,794
2,461
333
37,136
27,164
9,972
54,864
44,054
10,810
YoY QoQ
20%
17,775
14,981
14,484
497
2,794
2,451
343
38,823
27,990
10,833
56,597
44,925
11,673
21%
-1.4%
-0.8%
-0.7%
-2.1%
-4.9%
-4.9%
-5.4%
-2.0%
-1.1%
-4.6%
-1.8%
-1.2%
-4.5%
-2.0%
-1.6%
-1.4%
-6.2%
-4.0%
-4.6%
0.6%
0.5%
1.0%
-0.9%
-0.3%
-0.1%
-1.1%
Loans to Individuals
… ow Mortgages
… Domestic
… International
… ow Other
… Domestic
… International
Corporate Lending
… Domestic
… International
Loan portfolio
… Domestic
… International
% total
(1) Considering the outstanding amounts of securitised credit. Securitised credit only includes domestic loans.
561Q11 Results Presentation
2 May 2011
Quarterly asset quality indicators
Mar 10 Jun 10 Sep 10 Dec 10 Mar11
1.90% 2.17%
159.4%
2.38%
0.84%
4.46%
2.27%
145.4%
2.99%
116.1%
3.47%
63bp
68bp
40bp
142bp
172.5%
2.07%
0.84%
4.14%
2.30%
157.8%
2.66%
122.7%
3.27%
63 bp
62 bp
68 bp
1.67%
103 bp
1.95%
173.0%
2.10%
0.80%
4.08%
2.36%
160.6%
2.74%
123.5%
3.38%
71 bp
61 bp
110 bp
60 bp
187.5%
1.94%
0.86%
3.59%
2.16%
160.7%
2.38%
131.0%
3.12%
62 bp
59 bp
74 bp
141 bp
Overdue Loans >90 days / Gross Loans 1.70%
Coverage of Overdue Loans > 90 days 184.9%
Overdue Loans >30 days / Gross Loans 1.90%
Mortgage (>30d) 0.82%
Consumer (>30d) 3.64%
Corporates (>30d) 2.09%
Coverage of Overdue Loans >30 days 166.3%
QoQ Provision Charge 71 bp
… Domestic 69 bp
Spain 106 bp
… International 78 bp
Overdue and Doubtful Loans Ratio (BoP) (1) 2.40%
Coverage of Overdue and Doubtful Loans (BoP) 131.1%
Provisions for Credit / Total Gross Loans 3.15%
(1) According to Bank of Portugal rules (Circular Letter N. 99/09/2003)
571Q11 Results Presentation
2 May 2011
Quarterly asset quality indicators: Domestic and International
(EUR million) Mar 10 Jun 10 Sep 10 Dec 10 Mar11
52,757.0 51,652.1
40,966.3
10,685.8
1,231.5
1018.7
212.8
1,122.7
931.7
191.0
1,790.1
1,516.3
273.8
41,354.3
11,402.7
1,093.4
900.9
192.5
1,000.1
833.1
167.9
1,725.3
1,469.2
51,509.2
256.0
52,606.1
41,419.6
11,186.5
1,106.7
…Domestic 812.4 837.4 913
…Domestic 1,367.1 1,421.9 1,494.7
… International 241.8 259.6 282.3
… International 189.0 174.0 193
1,027.1
850.4
176.7
1,777.0
…Domestic 40,697.3 41,682.3
… International 10,809.8 11,672.8
1,001.3
858.0
…Domestic 719.0 764.6
… International 139.0 144.7
1,608.9
Gross Loans 53,355.1
Total Overdue Loans (> 30 days) 1,011.4
Overdue Loans > 90 days 909.3
Total Credit Provisions (BS) 1,681.5
581Q11 Results Presentation
2 May 2011
Quarterly asset quality indicators: Domestic and International
Mar 10 Jun 10 Sep 10 Dec 10
1.90% 1.95%
2.05%
1.58%
173.0%
175.8%
159.5%
2.10%
2.21%
1.73%
160.6%
163.7%
146.0%
2.01%
1.47%
172.5%
176.4%
152.5%
2.07%
2.18%
1.69%
157.8%
163.1%
133.0%
Mar 11
1.67% 2.17%
2.27%
1.79%
159.4%
…Domestic 190.1% 186.0% 162.7%
…Domestic 168.3% 170.4% 148.8%
… International 127.9% 149.2% 128.6%
… International 174.0% 179.4% 143.3%
2.38%
2.49%
1.99%
145.4%
…Domestic 1.77% 1.83%
… International 1.29% 1.24%
187.5%
1.94%
…Domestic 2.00% 2.01%
… International 1.75% 1.49%
160.7%
Overdue Loans >90 days / Gross Loans 1.70%
Coverage of Overdue Loans > 90 days 184.9%
Overdue Loans >30 days / Gross Loans 1.90%
Coverage of Overdue Loans >30 days 166.3%
591Q11 Results Presentation
2 May 2011
Quarterly and accumulated credit provision charge & net new entries
(EUR million; % annualised) 1Q10 2Q10 3Q10 1Q11
83.6 80.9
70.1
10.7
13.3
63bp
68bp
40bp
142bp
323.5
280.5
43.0
13.3
63bp
68bp
40bp
142bp
123bp
123bp
30.0
64.1
19.5
10.6
63 bp
62 bp
68 bp
103 bp
258.1
195.8
62.3
36.3
65 bp
63 bp
73 bp
118 bp
74 bp
66 bp
14.1
94.5
71.6
22.9
11.1
71 bp
69 bp
78 bp
106 bp
174.5
131.7
42.8
25.7
65 bp
63 bp
73 bp
123 bp
23 bp
61 bp
20.0
80.0
60.1
19.9
14.6
62 bp
59 bp
74 bp
141 bp
80.0
60.1
19.9
14.6
62 bp
59 bp
74 bp
141 bp
103 bp
Net new entries as % Performing Loans (accum.) 103 bp 59 bp
28.8
… Domestic 62.9
ow Spain 6.2
… Domestic 61 bp
… Domestic 258.7
Net new entries as % Performing Loans (quarter) 37 bp
… International 93.1
ow Spain 42.5
… Domestic 62 bp
… International 83 bp
ow Spain 104 bp
… International 110 bp
ow Spain 60 bp
… International 30.8
4Q10
P&L Credit Provisions Quarter 93.7
71 bp
351.8
67 bp
34.8
As % Loan Portfolio (bp)
P&L Credit Provisions Accumulated
As % Loan Portfolio (bp)
Quarterly Write Offs (Eur mn)
601Q11 Results Presentation
2 May 2011
Quarterly customer funds
(EUR million) Mar 10 Jun 10 Dec 10 Mar 11
30,819 30,545
8,145
22,401
2,006
5,747
38,298
17,715
56,013
41,732
14,281
25%
8,676
22,143
1,749
6,326
38,894
17,094
55,988
43,147
12,841
23%
26,082
7,974
18,108
5,834
5,924
37,841
18,006
55,847
40,375
15,472
28%
26,522
7,053
19,469
8,626
6,460
41,609
18,985
60,594
41,728
18,865
% total 31% 23% - -
Sep 10 YoY QoQ
Deposits 29,923
7,929
21,994
3,653
5,596
39,171
17,763
56,934
43,969
15.2%
12,965
… Sight 15.5%
-0.9%
-6.1%
1.2%
14.7%
-9.2%
-1.5%
3.6%
4.5%
-3.3%
11.2%
… Term
Certificates of Deposits -76.7%
15.1%
-11.0%
-8.0%
-6.7%
-7.6%
0.0%
-24.3%
Debt Securities placed with Clients
On-BS Customer Funds
Off-BS Funds
Total
… Domestic
… International
611Q11 Results Presentation
2 May 2011
Quarterly off-BS customer funds
(EUR million) Mar 10 Jun 10 Dec 10 Mar 11
4,459 5,437
2,585
2,852
1,356
1,275
81
2,673
2,539
134
4,805
3,444
2,638
806
17,715
13,842
3,873
2,406
2,053
1,375
1,291
84
2,655
2,522
133
5,374
3,231
2,801
430
17,094
14,394
2,700
4,709
2,732
1,977
1,439
1,353
86
2,639
2,486
153
5,716
3,503
3,053
450
18,006
15,340
2,666
5,179
3,044
2,135
1,328
1,251
77
2,707
2,569
138
5,846
3,925
3,437
488
18,985
16,147
2,838
Sep 10 YoY QoQ
Mutual Funds 4,620
2,659
1,961
1,429
1,350
79
2,643
2,508
135
5,705
3,366
2,930
436
17,763
15,152
2,611
… Domestic
21.9%5.0%
-15.1%
33.6%
2.1%
… Domestic 1.9% -1.2%
… International 5.2% -3.6%
-1.3%
-1.2%
-2.9%
-17.8%
-12.3%
-23.2%
65.2%
-6.7%
… International
-14.3%
7.4%
38.9%
-1.4%
0.7%
0.7%
0.8%
-10.6%
6.6%
-5.8%
87.4%
3.6%
… Domestic -3.8%
Real Estate Funds
36.5%
Pension Funds
… Domestic
… International
Bancassurance (Domestic)
Other (*)
… Domestic
… International
Total Off-BS Funds
43.4%… International
(*) Other includes off-BS structured products, discretionary management and venture capital
621Q11 Results Presentation
2 May 2011
Available for Sale Portfolio – main equity holdings potential gains & losses
(EUR million) Acquis. Value Stake (%) 2007 2008 2009 1Q10 3Q10 4Q10 1Q11
291.5 170.2
-49.9
-7.3
7.3
120.3
-55.8
135.0
0.0
-28.7
6.3
141.2
6.5
383.4 112.6
284.9
-18.9
51.4
7.1
324.5
316.7
-0.6
67.4
7.3
390.8
2Q10
Bradesco 708.0 1.85% 661.7 -20.5 185.1
-74.7
46.5
6.0
162.9Total 1,471.0 838.8 -179.5
0.0%
10.02%
0.25%
-75.8
-91.2
8.0
70.5
76.0
8.6
EDP 0.0
PT 760.5
BMCE 2.5
Potential Gains and Losses
631Q11 Results Presentation
2 May 2011
Quarterly solvency ratios
(EUR million)Mar 09(IRB)
Jun 09(IRB)
Sep 09(IRB)
Dec 09(IRB)
Mar 10(IRB)
Sep 10(IRB)
Dec 10(IRB)
67,210 68,802
60,610
4,219
3,973
7,798
5,416
6,040
1,758
920
15%
7.9%
8.8%
11.3%
59,642
3,900
3,668
7,393
5,303
5,589
1,807
600
11%
7.9%
8.3%
11.0%
Mar 11(IRB)
67,063 68,567
60,205
4,389
3,973
7,838
5,395
6,033
1,805
920
15%
7.9%
8.8%
11.4%
59,092
4,303
3,668
7,104
5,276
5,405
1,699
600
11%
7.9%
8.1%
10.6%
65,097
57,426
4,003
3,668
7,256
5,232
5,405
1,851
600
11%
8.0%
8.3%
11.1%
62,034
55,176
3,712
3,146
7,536
5,074
5,450
2,086
600
11%
8.2%
8.8%
12.1%
59,453
52,265
3,742
3,146
7,234
4,922
5,263
1,971
600
11%
8.3%
8.9%
12.2%
59,005
52,796
3,063
3,146
5,838
3,416
3,901
1,928
600
15%
5.8%
6.6%
9.9%
Jun 10(IRB)
RWA (BoP) 67,469
59,394
4,407
3,668
7,516
5,300
5,668
1,857
600
11%
7.9%
8.4%
11.2%
…Banking Book
…Trading Book
…Oper. Risk
Total Capital
Core Tier I
As % Tier I
Tier I (%)
Tier I
Other
Hybrid Capital
Core Tier I (%)
Total (%)
Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational riskPreliminary data as of Mar 2011.
641Q11 Results Presentation
2 May 2011
Table of contents
I. 1Q2011 Performance: international business key to compensate pressure on domestic
profitability
II. Strict financial discipline: deleverage of the balance sheet provide a solid ground to
cope with funding and liquidity needs
III. Strong and conservative solvency: reinforced core capital above 8%, with limited
sovereign exposure
IV. Conservative risk management: increased provision reserve to anticipate asset quality
deterioration
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Macro fundamentals and forecasts: Portugal, Spain, Angola and Brazil
651Q11 Results Presentation
2 May 2011
Annual growth up by 1.3% in 2010. Exports to assume an increasingly important role in economic activity, as domestic demand proceeds its adjustment.
Year Quarter Private Consumption
Public Consumption IInvestment Exports Imports GDP
20072Q 2.5 0.5 1.0 8.0 5.5 2.3 3Q 2.5 0.9 2.9 6.9 5.9 2.3 4Q 2.9 0.9 6.6 5.4 7.4 2.4
2008
1Q 2.5 0.7 2.4 4.9 7.4 0.9 2Q 1.7 0.6 2.7 2.6 4.4 0.9 3Q 2.2 0.9 0.1 0.7 3.8 0.3 4Q 0.8 2.1 -7.1 -9.1 -4.0 -2.0
2009
1Q -1.6 4.1 -15.6 -19.0 -15.5 -3.7 2Q -1.3 3.0 -16.4 -15.4 -14.5 -3.1 3Q -1.2 3.9 -11.6 -9.7 -8.5 -2.2 4Q 0.2 2.7 -12.5 -1.3 -3.7 -1.0
2010
1Q 2.7 1.6 -4.1 8.8 5.6 1.7 2Q 2.8 6.4 -4.5 9.2 9.9 1.3 3Q 1.6 0.1 -8.2 8.6 1.6 1.4 4Q 0.9 4.6 -5.5 8.1 4.5 1.2
Year Quarter Private Consumption
Public Consumption IInvestment Exports Imports GDP
20072Q 0.7 0.3 1.1 1.0 2.8 0.0 3Q 0.5 0.2 0.2 1.3 2.3 -0.1 4Q 0.8 0.1 2.9 0.7 1.2 1.0
2008
1Q 0.4 0.1 -1.8 1.7 0.9 0.1 2Q -0.1 0.2 1.4 -1.2 -0.1 -0.1 3Q 1.0 0.5 -2.3 -0.5 1.7 -0.6 4Q -0.6 1.3 -4.4 -9.1 -6.4 -1.4
2009
1Q -2.0 2.0 -10.8 -9.4 -11.1 -1.6 2Q 0.2 -0.8 0.3 3.3 1.0 0.6 3Q 1.2 1.4 3.3 6.2 8.9 0.2 4Q 0.9 0.1 -5.4 -0.7 -1.5 -0.1
2010
1Q 0.4 0.9 -2.2 -0.2 -2.5 1.0 2Q 0.3 3.8 -0.1 3.7 5.1 0.2 3Q 0.0 -4.5 -0.7 5.6 0.7 0.3 4Q 0.1 4.6 -2.5 -1.1 1.3 -0.3
65
GDP and components (%, q-o-q).
GDP and components (%, y-o-y).
GDP growth (%, y-o-y).
Sources: INE, Bank of Portugal.
Weight of Exports in GDP (%).
31.6
29.4
32.532.6
31.0
28.228.3
25.9 25.9 26.4
27.7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
661Q11 Results Presentation
2 May 2011
2.94.2
2.8 2.9 3.2
5.9
3.83.1 3.5
10.19.1
0
2
4
6
8
10
12
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
%
-15000
-13000
-11000
-9000
-7000
-5000
-3000
-1000
Jan Feb Mar Apr May Jun Jul Aug Set Oct Nov Dec
2009
20102011
Public Deficit (% GDP)
The ongoing budget consolidation and the additional fiscal measures associated with the IMF/EC/ECB stabilisation programme should have a negative short term impact on economic growth.
The non approval in Parliament of a new Stability and Growth Programme and the consequent resignation of the Government resulted in a deterioration of investor sentiment. Increasing constraints associated with external market funding eventually led to a formal request of external assistance to the European Commission . Negotiations over a Stabilisation Programme are currently under way with the IMF/EC/ECB. The inclusion of some public companies and PPP projects in the Public Administration perimeter, and the accounting of the (one-off) Government assistance to two minor banks, have resulted in an upward revision of the 2010 deficit, to 9.1% of GDP.
The overall budget deficit of the Central Government and Autonomous Funds in 1Q 2011 is down by EUR 1.7 billion y-o-y, to EUR 148 million. Social Security reached a surplus of EUR 580 million in 1Q 2011.
Sources: INE, DGO, ES Research
Central Government Deficit (EUR million)
671Q11 Results Presentation
2 May 2011
Portugal has already adopted policy measures that are as broad-based as Greece’s and Ireland’s IMF-led measures.
PortugalTop marginal rate increased to 45%. Revenues at close to 6% of GDP. Higher rates (+1
to 1.5 pp). Lower benefits and deductions (broadening of
the tax base).
Statutory top rate at 25% plus 1.5% local tax (with
revenues at 3.7% of GDP), now increased to 27.5%
(+1.5%) for profits above EUR 2 million. Lower tax benefits.
Higher rates (5% to 6%, 12% to 13% and 20% to 23%).
Tighter limits for the reduced rate.
Current gasoline duty tax at EUR 0.52/litre. Higher fuel
taxes through the VAT increase. Introduction of new
highway tolls.
Higher social contributions from public sector workers.
Higher capital gains tax.
Instrument
Personal Income Tax
Corporate Income Tax
VAT
Excise/Consumption Taxes
IrelandTop marginal rate at
41%. Review of tax brackets and lower tax credits. Lower benefits
and deductions.
Statutory rate maintained at 12.5%.
Higher rates (from 21% to 22% in 2013 and
further increase to 23% in 2014).
Higher tax on CO2 emissions. Fuel tax to increase (current fuel
duty tax at EUR 0.56/litre). New local
services contribution.
Increase in property tax, capital gains tax, social
contributions
Other revenues
GreeceTop marginal rate at 45%, but
low efficiency (revenues at 4.7% of GDP). New imputed taxable income, abolition of most tax exemptions, new
measures against tax evasion.
Statutory top rate at 24%, revenues at 2.4% of GDP.
Tighter auditing of corporate tax liabilities. New special tax
on higher profits.
Higher rates (4.5% to 6.5%, 9% to 13%, 19% to 23%).
Broadening of the tax base. Tighter limits for the reduced
rate.
Higher tobacco, alcohol and fuel taxes (gasoline excise
duty raised by close to 10%, to EUR 0.68/litre). Special tax on luxury goods. New tax on CO2
emissions.
Broadening of the property tax base. Higher capital gains
tax.
681Q11 Results Presentation
2 May 2011
PortugalFreeze in public sector promotions and hiring.
Reduction in public sector hired staff. Public employment
spending to decline from 12.3% to 10.8% of GDP.
Average 5% cut in public sector pay (progressive cuts above EUR1500 monthly wages).
Reductions in overtime pay and travel expenses allowances. No accumulation of public wages
with public pensions.
Freeze in pensions. Cuts in “Social Inclusion” income (20%), family allowances, public health
spending and unemployment benefits . Tighter means-
testing.
Extinction/merger of public sector institutions. Cuts in
consumption (currently 5.3% of GDP) and investment (now at 2.5% of GDP). Suspension of
infrastructure projects.
Instrument
Public sector employment
Public sector pay
Social expenditure
Operating and investment spending
GreeceWorkforce reduction, applying
the rule 5:1. Cancellation of short term contracts and
vacancies in the public sector. Public employment spending
to decline from 13.5% to 12.3% of GDP.
Reductions in wage allowances and cuts in (or
abolition of) Easter, summer and Christmas bonuses,
implying an overall cumulative average cut in
nominal wages of around 14%.
Progressive cut in pensions (9% average). Suspension of
pension indexation. Cut in the “solidarity allowance”. Tighter
means testing in unemployment benefits.
Lower transfers to public sector companies. Cuts in consumption (from 7.1% to
5.2% of GDP) and investment (from 3.4% to 2.5% of GDP) .
IrelandWorkforce reduction (by 25K), to the levels
observed in 2005. Public employment spending to decline from 12.3% to 11.4%
of GDP.
10% average cut in public sector pay (15% to 20% for
Government officials). Pay rates
for new civil servants further reduced by
10%.
Progressive cuts in public service
pensions (average 4%). 4% cut in
working-age social welfare spending.
Cuts in consumption (EUR 1 billion) and investment (EUR 3 billion), currently at
5.9% and 4.5% of GDP, respectively.
Fiscal measures announced in 2010 with an impact in 2011 represent savings of 5.3% of GDP(1), with the bulk of deficit reduction efforts (around 2/3) focused on lower spending
(1) Includes measures announced in May 2010, as well as in the 2011 Budget(measures implemented in 2010 account for 0.8% of GDP)
691Q11 Results Presentation
2 May 2011
Portugal is well ahead in the structural reform of social security, which favours long-term public debt sustainability.
Merger of separate pension funds into one unified new system. Rise in minimum contributive period (from 37 to 40 years). New statutory retirement age of 65 years (current average retirement age around 53 years). Retirement age to adjust in line with life expectancy. New penalties for early retirement. Pensionable earnings based on entire working life (up from last 5 years). Lower average accrual rate.
Age-related public spending increase in 2010-2060 currently estimated at 16% of GDP.
Pensions to be based on lifetime career average earnings (vs. current final salary). Retirement age will increase to 66 years in 2014, 67 in 2021 and 68 in 2028.Lower pension tax relieves and deductions.
Age-related public spending increase in 2010-2060 currently estimated at 8.5% of GDP.
Social Security Reform
Irlanda Grécia Portugal
New Social Security Law approved in 2007.
Introduction of a “sustainability factor”, linking pensions to life expectancy at 65 years (legal retirement age). New penalties for earlier retirements and benefits for late retirements.
Pensionable earnings based on entire working life. Lower average accrual rate.
Public sector system to adjust gradually to new rules, until 2015.
Age-related public spending increase in 2010-2060 estimated at 2.9% of GDP.
701Q11 Results Presentation
2 May 2011
5
6
7
8
9
10
11
12
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
9.8%
%
Private consumption coincidentindicator (y-o-y) and consumerconfidence (EC).
Households’ savings rate(% disposable income).
Source: INE, Banco de Portugal, Comissão Europeia
We expect lower private consumption in 2011, mainly as a result of restrictive fiscal policy measures (eg. lower wages, higher taxes and social contributions) and a fall in confidence levels. Domestic demand should also be constrained by tighter financing conditions.
In spite of low GDP growth (and a recession in 2009), non-performing loans have remained contained as a proportion of total loans (particularly in housing loans),
Non-performing loans(% y-o-y).
Domestic demand expected to proceed its adjustment in 2011...
711Q11 Results Presentation
2 May 2011Source:s Reuters EcoWin Pro, Banco de Portugal, Comissão Europeia, INE.
… but external demand should remain strong, partially compensating the expected decline in domestic demand.
0
5
10
15
20
25
30
35
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
%
0.0
New manufacturing orders, external market (%, y-o-y, 6-month MA).
Empréstimos a sociedadesnão-financeiras% YoY
Exports(nominal % y-o-y, 3-month MA).
Strong external demand has continued to support business activity. Exports were up by close to 22% y-o-y in the quarter ending in February and new external orders to the manufacturing sector increased close to 40% y-o-y in the same period (6-month MA).
Loans to non-financial corporations are showing low growth, reflecting lower demand for business investment and tighter financing conditions.
-35
-25
-15
-5
5
15
25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
%
21.7%Feb.
721Q11 Results Presentation
2 May 2011
Ongoing deleverage process in the Portuguese economy has already translated intohigher domestic savings rate and a lower external deficit.
The deleverage of the economy is underway, with net external financing needs declining, in 2010, from 9.7% to 8.5% of GDP and with the domestic savings rate (including all sectors of the economy) rising to 9.2% of GDP in 4Q 2010.
Domestic Savings Rate (% GDP)
Sources: INE, ES Research
External Deficit (net external financing needs of theeconomy), % GDP
02468
101214161820
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
%
9.2%
9.2 9.0
6.7
4.4
6.6
8.99.5
8.9
11.4
9.78.5
0
2
4
6
8
10
12
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
%
731Q11 Results Presentation
2 May 2011 73Sources: Reuters EcoWin Pro, Bank of Portugal,
European Commission, INE; Central Bank of Greece.
Liquidity provision by the ECB (EUR billion).
Portuguese Banks’ deposits(EUR billion).
Greek Banks’ deposits(EUR billion).
• The increase in Portuguese banks’demand for central bank liquidity has been a direct result of the downgrading in sovereign ratings (banks’ ratings were automatically adjusted after the downgrading of the Republic and market financing therefore became less available). Portuguese banks have had no exposure to toxic assets, they are not suffering any effects of a bubble bursting in the housing sector and non-performing loans are contained.
• Portuguese banks haven’t had access to the wholesale funding market for a year. In this context, the banks have been pursuing an aggressive deleverage process, selling loans and other assets (not related to domestic activity), reducing domestic loans and increasing domestic deposits (eg. taking advantage of higher domestic savings and “re-intermediating”savings). Household deposits reached a historical high in January, reflecting the ongoing confidence in the banking sector.
Irish Banks’ deposits(EUR billion).
Portuguese banks’ deposits continued to increase in 1Q 2011.
0
20
40
60
80
100
120
140
160
Jan. 2007 Jan. 2008 Jan. 2009 Jan. 2010 Jan. 2011
EUR
Billi
on
Portugal(39.1; Mar. 2011)
Spain(41.0 Mar. 2011)
Greece(91.8; Feb. 2011)
Ireland(114.5; Mar. 2011)
150
160
170
180
190
200
210
220
230
Jan-08 Mai-08 Set-08 Jan-09 Mai-09 Set-09 Jan-10 Mai-10 Set-10 Jan-11
150
155
160
165
170
175
180
185
190
Jan-08 Mai-08 Set-08 Jan-09 Mai-09 Set-09 Jan-10 Mai-10 Set-10 Jan-11150
170
190
210
230
250
Jan-08 Jun-08 Nov-08 Abr-09 Set-09 Fev-10 Jul-10 Dez-10
741Q11 Results Presentation
2 May 2011
Sources:Banco de Portugal; Ministério da Economia, da Inovação e do Desenvolvimento; Ministério das Finanças e da Administração Pública
1996 2010
Serviços
Traditional goods
(from 56% to 48%)
Merca-dorias
24%
Portuguese Exports Profile
68%
32%
Goods with hightechnological components (from 44% to
52%)
Serviços
Merca-dorias
76%
• Portuguese exportswere up by 8.7% in real terms in 2010
• For 2011 and 2012, exports growth around6% is forecasted
Portuguese exports profile has changed significantly, with an increase of high valueadded goods and services
751Q11 Results Presentation
2 May 2011
Main maritime trade routes to Iberia
Potential route to the Spanish ports of Barcelona, Valência andAlgeciras
Potential routes to the Portuguese ports of Lisbon, Sines and Setúbal
Portuguese ports can play a very important role in the trade flows between America, Africa, Asia and Europe. The development of logistic platforms (with all the associated services) should be an engine of growth of the economy.
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761Q11 Results Presentation
2 May 2011
Main European trade routes.
Source: European Commission.
The main European trade routes are expected to expand to the east, as a consequence of the EU enlargement and of stronger economic growth in the region. Given the potential trade flows originating from North and South America, and given the signs of congestion in the Spanish ports of Valencia and Barcelona, Portuguese ports should be seen as privileged gateways to merchandise inflows in Europe.
771Q11 Results Presentation
2 May 2011
Annual growth rates (%), except where indicated
F: Forecast;
Sources: Bank of Portugal, INE, ES Research, European Commission, IMF, OECD.
* These forecasts do not include the impact of the new austerity measures that will be part of the IMF/EC/ECB stabilisationprogramme. While a revision will be made when the details of this programme are available, it is expected that they will result in negative GDP growth in 2012.
Portugal: Main Forecasts 2011-2012
2006 2007 2008 2009 2010E 2011F 2012F
GDP 1.4 2.4 0.0 -2.5 1.3 -1.3* 0.3*
Private Consumption 1.8 2.5 1.8 -1.0 2.0 -1.9 -0.6
Public Consumption -0.7 0.5 1.1 3.4 3.2 -3.5 -1.5
Investment -0.6 2.0 -0.5 -14.0 -5.6 -8.2 -3.2
Exports 11.6 7.6 -0.3 -11.6 8.7 6.7 6.3
Imports 7.2 5.5 2.8 -10.6 5.3 -0.6 1.4
Inflation (%) 3.1 2.5 2.6 -0.8 1.4 3.2 1.9
Budget Balance (% GDP) -4.1 -3.1 -3.5 -10.1 -9.1 -4.6 -3.0
Public Debt (% GDP) 63.9 68.3 71.6 83.0 93.0 97.3 97.5
Unemployment (% Labour Force) 7.7 8.0 7.6 9.5 10.8 11.6 12.2
781Q11 Results Presentation
2 May 2011
Macro Spain Highlights: Avoiding contagion effects
Sources: INE & Bloomberg (Spain)
Domestic demand adjustments and austerity measures are still impacting the Spanish economy, but a stabilising trend in activity has been visible. This should result in a return to positive annual GDP growth in 2011. The Budget deficit declined significantly in 2010 and, although risks remain in place, so far Spain appears to have avoided contagion effects from the Euro Area periphery’s sovereign risk crisis. The reform of the banking sector shouldremain under focus in 2011.
5 year-CDS Spreads (sovereign and financial) (basis points)
PMI Services, PMI Manufacturing and GDP (%, y-o-y).
2025303540455055606570
-5.0
-3.0
-1.0
1.0
3.0
5.0
7.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Index (Points)
%
GDP (LHS)PMI Services (RHS)
PMI Manufacturing (RHS)
0
50
100
150
200
250
300
350
400
450
Jan. 2008 Jul. 2008 Jan. 2009 Jul. 2009 Jan. 2010 Jul. 2010 Jan. 2011
Basis
Poi
nts
Sovereign
Financial Sector
791Q11 Results Presentation
2 May 2011
Sources: INE, Bank of Spain, ES Research, European Commission.
Spain: Main Forecasts 2011-2012
Annual real growth rates (%), except where indicated. 2006 2007 2008 2009 2010F 2011F 2012F
GDP 3.9 3.6 0.9 -3.7 -0.1 0.8 1.4
Private Consumption 3.9 3.6 -0.6 -4.3 1.3 0.7 1.3
Public Consumption 4.6 5.5 5.8 3.2 -0.1 -1.1 -1.2
Investment 7.1 4.6 -4.8 -16.0 -7.4 -3.1 -0.5
Exports 6.7 6.6 -1.1 -11.6 9.2 8.0 6.6
Imports 10.3 8.0 -5.3 -17.8 3.5 2.7 3.6
Inflation (%) 3.4 2.8 4.1 -0.3 1.8 2.4 2.0
Budget Deficit (% GDP) 2.0 1.9 -4.2 -11.1 -9.2 -6.0 -4.4
Public Debt (% GDP) 39.6 36.1 39.8 53.3 60.1 71.9 73.5
Current & Capital Account Balance (% GDP)
-8.4 -9.6 -9.1 -4.5 -3.7 -3.5 -3.1
Unemployment (% of Labour Force) 8.5 8.3 11.3 18.0 20.0 20.5 20.5
801Q11 Results Presentation
2 May 2011
GDP growth(% , yoy)
Macro Angola Highlights: Recovery underway.
Sources: BNA, OPEC & Bloomberg
The acceleration of economic activity in 2010 was supported by a rise in oil revenues (in spite of a fall in production), and a stronger growth of non-energy sectors. Private investment has been recovering. External reserves are showing a recovery trend, benefiting from higher oil revenues and from the impact of financial stabilisation measures. After 1.6% growth in 2010, GDP is expected to increase around 7.3% in 2011.
Net external reserves(USD billion)
5
7
9
11
13
15
17
19
21
Jan. May Sep. Jan. May Sep. Jan. May Sep.2008 2009
USD
billio
ns2010
3.3
11.2
20.6 19.5
23.9
13.8
2.4 1.6
7.3 10.3
9.0
14.1
27.5
20.1 14.7
5.2
6.0
8.6
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2003 2004 2005 2006 2007 2008 2009 2010F 2011F
%
Non-oil sector
GDP
811Q11 Results Presentation
2 May 2011 8181
Sources: IMF, Angolan Central Bank, Finance Ministry, ES Research.
Angola: Main Forecasts 2011-2012
2006 2007 2008 2009 2010F 2011F 2012F
GDP (real growth rate, %) 19.5 23.9 13.8 2.4 1.6 7.3 9.7
GDP per capita (USD, current prices) 2 847 3 705 5 010 4 082 4 425 4 584 5 064
Inflation (%) 13.3 12.3 12.5 13.7 14.5 13.3 11.0
Current Account Balance (% GDP) 25.2 15.7 8.5 -10.0 0.6 -4.8 0.2
Budget Balance (% GDP) 14.8 11.3 8.9 -8.6 7.5 4.5 7.2
Exchange Rate (USD/KZ), annual average 80.4 76.8 75.0 79.3 91.7 92.0 92.0
BNA Rediscount Rate (%), end of period 14.0 19.6 19.6 30.0 25.0 20.0 15.0
821Q11 Results Presentation
2 May 2011
Macro Brazil Highlights: A new cycle in monetary policy
Y-o-Y Inflation and Selic Target Rate (%).GDP growth (%, q-o-q and y-o-y)
Sources: IBGE, BACEN & Bloomberg
GDP grew 5% y-o-y in 4Q 2010 and 7.5% in the whole year 2010, and the latest indicators continue to suggest relatively robust, but decelerating, activity growth, based on exports and private consumption. Investment outlays have apparently peaked and, amidst stricter credit conditions, are likely to grow at a much milder pace than the one observed in 2010. Annual growth is thus expected to fall to 4% in 2011. As inflationary pressures have been building recently, in spite of a stronger BRL and a higher level of interest rate, the Brazilian Central Bank will probably continue to raise the basic interest rate in order to guarantee the convergence of inflation to the targeted level (4.5%) in 2012.
2000 2002 2004 2006 2008 2010
Per
cent
2.5
5.0
7.5
10.0
12.5
15.0
17.5
20.0
22.5
25.0
27.5
-6-4-202468
10
2002 2003 2004 2005 2006 2007 2008 2009 2010
%
Y-o-Y
Q-o-Q
5.0
0.7
831Q11 Results Presentation
2 May 2011
Sources: IBGE, Central Bank of Brazil, ES Research.
Brazil: Main Forecasts 2010-2011
2006 2007 2008 2009 2010F 2011F 2012F
GDP (real growth rate, %) 4.0 6.1 5.2 -0.6 7.5 4.0 4.0
Inflation (%) 3.1 4.5 5.9 4.3 5.9 6.2 4.8
Primary Budget Balance (% GDP) 3.2 3.4 4.0 2.0 2.8 2.9 3.1
Public Debt (% GDP) 47.0 45.1 38.1 42.8 40.4 39.0 38.0
Unemployment (% of Labour Force) 10.0 9.3 7.9 8.1 6.7 6.8 7.0
Current Account Balance (% GDP) 1.2 0.1 -1.7 -1.5 -2.3 -2.8 -3.1
Exchange Rate (USD/BRL), annual
average2.18 1.95 1.84 2.00 1.76 1.63 1.73
SELIC Interest Rate (%, End of Period) 13.25 11.25 13.75 8.75 10.75 12.75 11.00