Crédito Agrícola Group · 2021. 7. 13. · Annual Report 2009 - Consolidated 03 CRÉDITO...

Annual Report 2009 - Consolidated

03Crédito Agrícola Group Operations


03 CRÉDITO AGRÍCOLA GROUP OPERATIONS

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1. MAIN AREAS OF OPERATIONS

1.1. COMMERCIAL OPERATIONS

Despite the extremely unfavourable climate of the times, the Crédito Agrícola Group came in

with positive results, while holding to the policy followed in recent years to bolster its prudential

provisions so as to bring about the financial consolidation of the institution.

The current state of the Portuguese economy has placed complex challenges on credit

operations. The risks associated with them have had to be assessed and this has led to a

considerable reduction in the opportunities for the expansion of business based on an

acceptable level of risk.

The Group has, in fact, a comfortable liquidity position, but the need to comply with Banco

de Portugal recommendations on Tier 1 capital for solvency purposes led to pressure on the

expansion of credit at the Caixa Central and this, towards the end of the year, cut down the

leeway for growth of agency credit.

In tandem, much as in 2008, raising funds was hampered both by the current economic

framework, with weak growth in nominal GDP, leading to smaller growth in overall savings,

and by the aggressive commercial approach of other banks in the rates being offered for

deposits. It is well-known that most credit institutions in Portugal, the Crédito Agrícola aside,

have high funds/credit transformation ratios, and it is natural that this will colour their policy

on garnering deposits.

In terms of customer funds, the aim was to maintain the dynamism in placement of off-balance-

sheet products, given its importance as a way of cementing customer loyalty, especially when

traditional products are not competitive. These products, moreover, have the potential to

generate commissions and therefore push up the complementary margin.

Commercial operations were also bolstered by the fact that the network grew during the year,

rising from 670 branches at year-end 2008 to 682 a year later and also by the fact that new

complementary business channels also came on stream.

This set of factors also had an impact on SICAM operations, as can be seen in the following

indicators, which give an overview of the situation:



37

Sicam Balance Sheet figures in millions of euros

2008 2009 ∆ Abs. %

ASSETS (net) 11,447.3 12,096.9 649.6 5.7%

of which Customer credit (net) 7,945.3 8,391.5 446.2 5.6%

of which Funds held at creditinstitutuions (net)

1,429.5 907.6 -521.8 -36.5%

LIABILITIES 10,468.2 11,097.2 629.1 6.0%

of which Customer funds 9,612.5 10,070.1 457.5 4.8%

of which Funds from credit institutions 496.5 700.8 204.3 41.1%

OPERATING INCOME 979.1 999.7 20.6 2.1%

Consolidated net assets at SICAM rose to more than 12 thousand million euros, a year-on-year

rise of 5.7%.

Loans to customers rose by 5.8% (gross), corresponding to 486 million euros, translated into net

figures of 5.6%, which is 446 million euros. Customer loans accounted for 6.4% of net assets,

fundamentally unchanged; other headings, however, moved in ways that led to considerable

changes in the structure of the balance sheet.

On the liabilities side, the dominant figure is still customer funds, coming in at 90.8% of the

total (10,070 million euros). Funds from other credit institutions excluding central banks also

still hold a relatively minor position, standing at 5%. Looking at total liabilities and own funds,

customer funds are at 83.3% of the total at year-end, compared with 84% a twelve-month

earlier. This relative fall can be explained by the greater recourse to repo operations with

other institutions carried out by the financial department of the Caixa Central as part of their

proactive treasury management policy.

The move in SICAM’s operating income has remained positive, up 2.1% on the year, at around

20.6 million euros. This brings the overall figure to practically 1,000 million euros.

On top of this, again similar to 2008, the rate of growth for loans to customers (5.8%) was

again higher than the growth in funds coming in from customers (4.8%), leading to a rise in the

transformation ratio from 87.1% in 2008 to 88% a year later.



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Figures in thousands of euros, except percentages

2008 2009∆ Abs. 09/08

∆% 09/08

Customers funds 9,612.5 10,070.1 457.5% 4.8%

Credit to customers 8,372.7 8,858.8 486.1% 5.8%

Transformation ratio (%) 87.1% 88.0% 0.9 p.p.

If, however, application in commercial paper is excluded, then the situation is the opposite of what

happened in 2008, with customer loans higher, at 6.8%, and the transformation ratio moving from 81.8%

in 2008 to 83.4% in 2009. The figure therefore remained quite conservative.

Deposits in fact are still far larger than loans, which means that SICAM balance sheet liquidity is still

strong, as witnessed by its position in terms of placements in other credit institutions (deposits and debt

securities) and in public debt.

1.1.1. Deposits and other funds

Customer deposits at SICAM came in with solid growth, in spite of the smaller pace of growth

in the economy and the climate of recession which has set in, along with the relentless

interbank competition to attract funds and the fact that traditional deposits have lost their shine

because rates are so low. The growth was 4.8%, bringing the total to over 10,000 million euros

at year-end, another landmark in consolidated figures for the Crédito Agrícola. The growth was

higher than in the banking system, which posted 2.8% overall.

A number of factors came into play here, the first two fundamental: the commercial operations

of the Caixas themselves, and the confidence they have maintained among local people. Along

with these has come the impact of Group campaigns and other campaigns launched on the

initiative of specific local Caixas.



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Customer deposits Figures in thousands of euros, except percentages

2008 2009 ∆ Abs. ∆%

Current accounts 2,414.8 2,526.3 111.5 4.6%

Term and savings deposits 7,134.4 7,509.3 374.9 5.3%

Charges to pay net 63.3 34.5 -28.8 -45.6%

Funds on the balance sheet 9,612.5 10,070.1 457.5 4.8%

The growth in deposits and savings products continues to be bigger than growth in current

accounts.

In terms of off-balance-sheet products, there was a 27.8% growth overall with investment

funds, coming in at 42.2% and capitalization products at 21.9%.

Off-Balance-Sheet Funds Figures in thousands of euros, except percentages

2008 2009 ∆ Abs. ∆%

Investment funds 258.2 367.0 108.8 42.2%

Financial Investment Funds 111.4 123.4 12.0 10.7%

Property Investment Funds 146.7 243.6 96.9 66.0%

Capital growth products (*) 619.5 754.9 135.4 21.9%

Total 877.6 1,121.9 244.2 27.8%

(*) Total portfolio value. Gross premia issued in 2008 were 110.4 thousand euros and in 2009 187.4 thousand euros

In terms of funds, both property and securities, the growth was above the market average, the

first at 10.7% and the second at 66%.

The increase in F II was fundamentally on the back of subscription to units in the CA Fundo

Património Cresente held by third parties and the launch of the CA Fundo Arrendamento

Habitacional. The take-up illustrates the increasing popularity of this type of fund with

customers and with the public in general.

Part of the reason behind this upward move is the more dynamic approach to the sale of



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intermediation products as a way to offset the squeeze on the financial margin involving

traditional products and the commissions associated to them. Savers were also on the lookout

for other places to put their funds.

The structure of funds did not, however, change in any great way, in spite of the growth in off-

balance-sheet funds, with traditional deposits accounting for for the largest proportion.

1.1.2. Moves in Credit

Introduction: The risk function in the Crédito Agrícola

The Group continued with putting into place the various components of the project to transform

the risk function (Transformação da Função Risco). This scheme is made up of various

components of different nature and size in the area of assessment and exposure to credit risk,

forming however, a single coherent whole.

The project began in 2006, the idea being that it would cover a number of years, ensuring Group

compliance with the new regulations for the financial sector. The following are the most salient

features that were begun, developed or concluded during the year:

Invest-ment funds

(property)

20092008

Investment funds

(financial)

Current and

savings accounts

Structure of Funds

68.6% 67.3%

Current accounts

23%

1.1% 1.1%1.4%

Off-balance-sheet

22.7%

5.9% 6.7%2.2%

Invest-ment funds

(property)

Investment funds

(financial)

Current and

savings accounts

Current accounts

Off-balance-sheet



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The Impairment Model – The bureau to assess risks is responsible for calculating impairment

for the Caixa Central, while also monitoring the work carried out by the CCAM in this area.

It undertakes an overall analysis of customer portfolios while focusing on specific customer

operations with individual Caixas. Over the year, work continued on improving the tools and the

calculation procedures, both in terms of the models used and carrying out the most efficient

practices.

Matching Own Capital to Risk Profile – The tenor of Banco de Portugal Notice 15/2007 led to

procedures for self-assessment of own capital quality, specifically through the in-house ICAAP

application. The calculations and the stress tests undertaken (analysis of scenarios and sensitivity

– Banco de Portugal Instruction 18/2007) implied the development of new models for information

management along with the relevant reports. All of this is not only mandatory in regulatory terms,

but also involves the creation of important tools for strategic management.

Solution for Proposals and Credit Scoring (SPCS) – The purpose of the SPCS is to create

a standard work flow for procedures relating to granting loans to individuals and small

businesses, using a credit scoring model per segment. Three new models were introduced for

credit cards and the first backtesting was carried out for scoring in customer credit.

Management of Economic Groups and Risk – A functional design was concluded for a data

base devoted to management of economic groups and risk in SICAM. The aim of the tool is

to bring integrated credit risk management to groups of inter-related customers, providing

effective management of exposure limits, analyses of concentration and control and reporting

of exposures that go beyond the regulatory limits defined as major risks.

Internal Control System – Work continued on structuring and developing an internal control

system for the Group. Two projects are worth a particular note: one is to automate the function;

and the other is to develop a support portal for reporting deficiencies and monitoring progress

in resolving them. The risk management bureau is working in partnership with the DCO, the DAI

and the DCIG to coordinate the Group’s internal controls through the handling of information

related to insufficiencies detected in the area. It then produces reports, in accordance with the

regulatory requirements set out in Banco de Portugal Notice 5/2008.

A number of major projects took big steps forward during the year, both in terms of the

sizeable investment required and the anticipated impact on improvement to the quality of risk

management at SICAM.



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Among the projects, the following are worth a mention:

Management Tool for Guarantees Received – The purpose of this is to define a new procedure

for recording all guarantees received as backing for Group credit operations with suitable

characterisation and assessment ensured. During the year an emulation process was set up,

as part of the Profile system, providing an analysis of all the features of current guarantees,

enabling information to be corrected or completed. The management tool for guarantees is

also itself undergoing developments and it should be live during the third quarter of 2010.

Risk Support Infrastructure – This is one of the major objectives to be reached by the end of

2010, the creation of a data repository that is adequate for the Group’s risk function. During

2009, the technical specifications were finalized, the Datamart licencing was obtained, and

work got under way on consultations leading to implementation of the IT solution.

Market discipline report – The year saw publication of the annual report to disseminate

information on the main risk management policies and practices of the Crédito Agrícola Group

(in line with the provisions of Banco de Portugal Notice 10/2007).

Balance Sheet Unit – At the start of the year, the single data repository was up and running.

This brings together a large amount of economic and financial information relating to corporate

customers and details actual or potential involvement. The application provides the back up

needed for granting and monitoring credit and for the risk assessment model. This simplifies

the systematic analysis of the financial details and brings consistency to the information and to

its integration with other applications, among them the credit proposal workflow, the risk alert

system, impairment and the rating model.

1.1.2.1. Credit

The year saw a notable increase in credit operations, up 5.8% year on year, with credit to

companies playing a major part in this (up 6.9%). Commercial paper operations were down,

having risen the previous year, the fall being around 41 million euros. Leaving aside commercial

paper, much of which is backed by guarantees from other banks and therefore represents

fundamentally liquidity operations, credit to companies was up by 9% and total credit by 6.7%.



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Customer credit Figures in millions of euros, except %

2008 2009Variation Structure

2009absolute relative

Customer Credit 8,372.7 8,858.8 486.1 5.8% 100.0%

Companies 4,133.1 4,418.7 285.6 6.9% 49.9%

Individuals 4,239.6 4,440.1 200.4 4.7% 50.1%

Commitments to third parties 1,099.9 1,130.2 30.3 2.8% 100.0%

of which irrevocable credit lines 644.8 662.5 17.7 2.7% 58.6%

of which revocable credit lines 411.1 413.2 2.1 0.5% 36.6%

Guarantees given 1 315.1 361.7 46.6 14.8% n.a.

1 Includes guarantees and endorsement of documentary credit for imports

This growth stemmed from commercial operations in the Caixas and at the Caixa Central.

In terms of commitments to third parties, there was a 2.8% rise year on year – from 1,100 to

1,130 million euros – fundamentally on the back of irrevocable commitments, which were up

by around 18 million euros.

As for guarantees given, there was an increase (contrary to the 2008 move), coming in at 14.8%

overall. This can be explained by the underwriting of commercial paper, up by an absolute figure

of approximately 40 million euros, and by the knock-on effect from the reduction in the value of

guarantees issued the year before.



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Credit by type of operation Figures in millions of euros except %

2008 2009 ∆ Abs. ∆ %

Mortgage Credit a) 2,117.3 2,341.7 224.4 10.6%

Current Accounts With Restrictions 673.2 665.1 -8.1 -1.2%

Commercial Discounts 106.7 90.0 -16.7 -15.7%

Leasing 147.7 167.1 19.4 13.1%

Credit Cards 40.8 42.6 1.8 4.4%

Overdrafts 42.9 28.2 -14.7 -34.3%

Foreign Exchange Operations 10.2 9.8 -0.4 -4.0%

Commercial Paper 511.0 463.4 -47.6 -9.3%

Financing Contracts b) 4,686.7 5,029.3 342.6 7.3%

Income Receivable (net) 56.1 36.9 -19.2 -34.3%

Deferred Income (net) -20.0 -15.3 4.7 -23.4%

Customer Credit 8,372.7 8,858.8 486.1 5.8%

a) The heading Mortgage credit includes the “Crédito multiusos” option (complimentary credit)b) Includes loans with different maturities

There follows the most salient information in credit broken down by type of operation:

In the case of mortgage loans, the proportion in the credit structure of SICAM was down

marginally (from 24.8% in 2008 to 24.5% a year later), but the portfolio grew at a much faster

pace than the banking sector as a whole (10.6% for the Group as opposed to 2.6% across the

system). Many customers came in as a result of the multimedia campaign launched to promote

the product, in a context where other institutions were reining in their activity, hampered by

balance sheet constraints and by the interruption to securitization operations. The Crédito

Agrícola has not needed recourse to such operations up to now, given its liquidity situation.

These loans have great potential in terms of building customer loyalty, and the Group took full

strategic advantage of the current crisis, where its own position is based on its comfortable

liquidity and solvency cushion.



45

As in previous years, financial leasing was an operation much favoured by customers. More

than 90% of the Caixas were involved in contracts of this kind on behalf of their customers

(see the detailed information in 1.1.2.4.). The total financing in this field was 167 million euros,

compared with 148 million the previous year (a 13.1% rise).

Agency credit was again down, this time by 3.5%, and is steadily losing importance in the Caixa

Central portfolio.

Agency credit per type of credit Figures in millions of euros except %

2008 2009Variation

Absolute %

Mortgage * 221.8 208.9 -12.8 -5.8%

Credit cards 23.8 23.6 -0.2 -0.9%

Commercial discounts 1.5 0.9 -0.7 -43.2%

Guaranteed current accounts 25.6 23.5 -2.1 -8.3%

Financing 177.3 167.0 -10.3 -5.8%

Leasing 111.1 117.6 6.5 5.9%

Operations with foreign entities 2.1 2.0 -0.1 -4.3%

TOTAL 563.2 543.5 -19.7 -3.5%

* The heading Mortgage credit includes the “Crédito multiusos” option (complimentary credit)

The move is happening in spite of a change in the commissioning system, which was brought

in to make this method more attractive to the Caixas. Part of the reason behind the continuing

shift is the fact that the Caixas have greater capacity now to offer credit, with the policy of

mergers giving them more financial capacity; and part is also due to the fact that a growing

number of Caixas are obtaining authorization to increase the scope of their operations.

Leasing in fact was the only type of credit where there was a positive and growing move in

agency operations: a 5.9% increase in 2009 compared with 2.6% a year earlier.



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1.1.2.2. Companies

There was a notable 6.9% rise in this segment, with a fall in credit through commercial paper

(the biggest item to move in 2008), and very big growth in financial leasing (up 16.5%).

Companies Figures in thousands of euros except %



Credit to Companies 4,133.1 4,418.7 285.6 6.9% 100.0%

Current Accounts with Restrictions 554.1 558.9 4.8 0.9% 12.6%

Commercial Discounts 90.3 78.8 -11.5 -12.8% 1.8%

Leasing 118.1 137.6 19.5 16.5% 3.1%

Financing 1 3,370.6 3,643.4 272.9 8.1% 82.5%

of which commercial paper 504.8 463.4 -41.4 -8.2% 10.5%

1 Includes overdrafts and loans of various maturities, in euros and in foreign currency

The number of current accounts with some form of restriction was virtually unchanged, an

indicator of the greater rigour shown in granting this kind of credit.

Commercial discounts fell by 12.8% as his kind of financing loses its appeal.

1.1.2.3. Individuals

There was steady growth in this segment, which was up 4.7% year on year.



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Individuals and micro-enterprises Figures in thousands of euros except %



Credit to Individuals 4,239.6 4,440.1 200.4 4.7% 100.0%

Mortgage Credit 1 2,117.3 2,341.7 224.4 10.6% 52.7%

Consumer Credit 2 381.1 395.6 14.5 3.8% 8.9%

of which Credit Cards 40.4 41.9 1.5 3.7% 0.9%

Leasing 28.3 28.3 -0.1 -0.3% 0.6%

Other Credit 3 1,713.0 1,674.6 -38.4 -2.2% 37.7%

1 The heading Mortgage credit includes the “Crédito multiusos” option (complimentary credit)2 Figures in terms of line, subline and purpose of the loan (including overdrafts)3 Includes overdrafts, current accounts and loans with different maturities

The move was fundamentally on the back of the growth in mortgage loans, up by 224.4 million

euros (4.7% higher), the result of promotional efforts as part of the more dynamic approach

to network operations. Agency operations in the mortgage field are, however, down by around

5.8%, 12.8 million euros short of the 2008 figure. This is due partly to the overall trend, but also

to the fact that there were transfers of agency credit to other financial institutions or to the

Caixas themselves.

Consumer credit was up by 3.8%, fundamentally as a result of increased use of cards (up

3.7%), though this form of credit is still only a small part of the total (8.9%), where the biggest

slice is mortgage credit (52.7%). This is a situation common to the banking system as a whole.

1.1.2.4. Financial Leasing

As already mentioned, this form of finance continues to be attractive to Crédito Agrícola

customers for investment purposes, with only 6 Caixas not being involved in contracts in this

area.

A new product was launched in the second quarter of the year, called consortium leasing

(Leasing em Consórcio) and this allows the Caixas to carry out such operations for the purchase

of property for their customers. This can provide an alternative to a mortgage, and in fact the

guarantee is stronger, given that the Caixa Agrícola becomes a co-owner (together with the

Caixa Central), as a proportion of the value of the property fianced by them.



48

A number of associated Caixas have taken up this option, and the number of operations has

been steadily rising.

As already mentioned, the overall credit portfolio in financial leasing reached 167.1 million

euros at year-end, a 13.1% growth year on year. This can be broken down as follows:

Type of asset Figures in millions of euros

2008 2009Variation 2008/2009 Portfolio Structure

Absolute % 2008 2009

Vehicles 47.2 51.3 4.0 8.6% 32.0% 30.7%

Equipment 48.5 65.3 16.8 34.7% 32.8% 39.1%

Property 52.0 50.5 -1.5 -2.9% 35.2% 30.2%

Total 147.7 167.1 19.4 13.1% 100.0% 100.0%

During the year, the consortium leasing mode came in with assets worth approximately

2.8 million euros.

In terms of vehicle leasing – where the individual Caixa has a greater role in the contract –

there has been an increase in this form of financing for light vehicles, coming in at 62% of the

total portfolio. Financing in this way accounts for 30.7% of the total leasing portfolio at year-

end, and grew by 8.6% during the year, although the car market plummeted.

The biggest growth, however, came in the leasing of equipment, up 34.7% and accounting for

39.1% of the portfolio.

1.1.3. Electronic Forms of Payment

Operations in this field continued to be strongly influenced by the change to the business

model for forms of payment, with structural implications in the domestic market an impact on

profitability on the commercial side. Another relevant factor relates to the potential area for

growth in credit cards, bearing in mind the differential between our market share in debit cards

as against credit cards.

Among the operations that gave a spur to the growth of this business across several areas, the

following are worth a mention:



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New products

Membership of MasterCard, with the aim of complementing the service provided by the

Crédito Agrícola as issuer and in order to support the future Acquiring service;

Development of the Business card for the Group companies and business segment, currently

at IT structuring stage;

The conditions were created for the pilot launch of a CONTACTLESS card, in partnership

with SIBS and with most of the other issuing banks, with a Mastercard (debit) card and a

Visa (credit) card. The pilot scheme will allow the Group to issue innovatory products with

the focus on ease of use, leading to greater use of the cards for small transactions (“war on

cash”), and also penetration in the market through the customer data base;

The launch of Co-Branded cards for the Centro Cultural e Congressos de Caldas da Rainha,

Santa Casa da Misericórdia de Pombal, Beira Sumos, Intermarché de Mirandela, CEVAL –

Centro Empresarial dos Vales do Lima e Minho, and Panike.

New Services

The Acquiring service is ready for launch. This means that traders can deal directly with the

Group concerning conditions relating to customer payments with VISA and MasterCard, giving

them scope to be more competitive since they will hold a bigger slice of the value generated by

use of the cards. The aim of this service is to give greater penetration in the business segment.

The trial run is undergoing tests and will be launched through the brand CA&companhia –

business segment – with this line being renovated for the brand “Rede CA&companhia”.

Development of co-Branded partnerships

The protocol with Pharma+ was extended, with preferential conditions defined for various

services they offer, among them support for payment of prescriptions (Antecipação de

Comparticipação de Receituário), support for treasury operations (Apoio à Tesouraria),

support for investment in and purchase of properties (Apoio ao Investimento e Aquisição

de Imóveis), and support for rehabilitation and modernisation of pharmacies (Apoio à

recuperação e Modernização da Farmácia);



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A procedure is under way for migration to CA&companhia (image migration) involving Co-

Branded partnerships that are giving a higher return on cards placed (up to 5,000 cards)

A strategy was defined for placing Co-Branded cards according to sector: CA&companhia

Distribuição, Cartão Instituições de Solidariedade, Cartão Bombeiros, Cartão Santas Casas

da Misericórdia, Cartão Educação and Cartão AEP.

Summary of the main indicators

Increase in the number of cards, specifically credit cards, where there was an 18% rise

in the number of Co-Branded cards in circulation. This meant that the Group reached a

market share of 4% in the number of credit cards in circulation and 11% for debit cards;

The increase in number of transactions was 7% (credit cards) and 10% (debit cards);

There was an increase in the number of ATMs (the Multibanco system), coming in at 5% year

on year, with a 10% market share for the Group;

20092008

220,000

200,000

∆1%

Number of credit cards

20092008

∆18%

100,000

60,000

80,000

Number of coBranded cards

∆7%

20092008

75,000,000

70,000,000

65,000,000

60,000,000

Number of transactions

∆10%

20092008

4,000,000

2,000,000

3,000,000

Volume of transactions (thousands of €)



51

More POS (point of sales) units were installed, and this service is still on the increase, the Pack

CA&companhia bringing a market share of 6%.

1.1.4. Complementary Channels

The year saw the start-up of a number of projects, and further work on some which had started

in 2008. One of these was the reinforcement of security on the Homebanking channel with

the launch of the SAF (Sistema de Autenticação Forte). This consists basically of providing

an additional security tier and the definition of daily time limits. There was a substantial rise

in the credit recovery service for individuals through the direct line service. New projects

were also started to boost business and information on Group services through the range of

complementary channels, targeting all the Crédito Agrícola Group and, above all, its customers.

∆5%

20092008

1,400

1,200

1,300

Number of ATMs

Crédito Agrícola

∆7%

20092008

15,500

14,500

13,500

15,000

14,000

Nunber of TPAs

Crédito Agrícola



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It is clear that response to customer demand (in terms of new products and quality) has become

a strategic concern for banks as a measure of whether they can rise to the new business

challenges. This has led to constant pressure through the demand for new functionalities and

the ever-broader base for the services being used.

The following major initiatives marked the year:

Reinforcement of credit recovery through the direct line service (call centre), at the request of many Caixas,

to provide a response to this need and to increase recovrey;

Start on the project to overhaul the contents of the CA Site,

focusing fundamentally on separating customer segments –

individuals and companies, with a new web design, new search

options, reorganisation of the whole structure, presentation of

associate Caixa micro-websites, updating and validating all

contents, integration of new market information and other

developments;

Implementation of an additional security tier (known as SAF), consisting of transmission of

an SMS code for each transaction on line, with daily limits also introduced;

During the year, additional requirements were defined, to be implemented during 2010,

aimed at preventing fraud through the Internet.

The end of the first half of the year saw the

presentation of a pilot scheme was presented based

on an innovatory concept, the Banking Kiosk. The

project was put together as a response to the need for

a space with a range of services and financial options

in places where there are no CA branches. The kiosks

must serve the needs of customers, allowing them to

interact with their local Caixa;

During the second half of the year, a wide range of new on-line functionalities was put in

place, among them the possibility of setting up direct debits, all aspects of validation and

provision of information through the DMIF, consultation of structured deposits and other

improvements now available;



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Towards the end of the year, there was a commercial campaign using various channels of

communication, with the main aim being to build up the number of customers using the on-

line service for individuals (On-Line Particulares) and the SAF scheme.

The main indicators for each of these services over the year are detailed below.

A) The Contact Centre (Linha Directa)

This service grew by 9% in terms of inbound contacts. The number of customers in touch

through the service grew by 11% year on year.

In terms of outbound operations, there were activities involving Caixa-based tele-collection for

their own loans (involving 10 Caixas up to the end of the year), agency credit and credit cards.

The results of these actions were 62% of customers recovered and 43% of amounts. This is an

increase of 2% in the first of these, though there was a 9% falloff in the second in year-on-year

terms.

The fall stems from a considerable rise in the number of defaults (up 62% year on year).

The last quarter, however, saw amounts recovered on the way up.

9%

20092008

Total inbound contacts

295,804

270,682

11%

20092008

Total customer contacts

245,513

221,938



54

B) The Internet Banking Service – On-Line

B1) On-Line Companies

There was a growth in the number of those joining the service, up around 57%, with a rise of

56% in active users (in year-on-year terms).

The following table shows the move in volume (half-year figures) for the On-Line service. This

rose by 35% in the second half of the year.

20092008

26,425

16,844

57%

On-line companies total contracts

56%

20092008

24,751

15,915

On-line companies active participants

1st half year 2nd half year

2,187,278

350,082 398,551

3,031,917

Operations Consultations

On-line – Total Financial Operations / Consultations



55

B2) On-Line for individuals

This service grew by around 14% in terms of registrations on the multi-channel system (Sistema

MultiCanal). The numbers actively using the service were up by 26% year on year.

The table below shows the half-yearly move in volume of transactions for the service, showing

a 21% rise between the first and the second half of the year.

14%

20092008

180,075

158,435

On-Line individuals total contracts

26%

20092008

86,452

68,474

On-Line individuals active participants

1st half year 2008 2nd half year 2008

5,077,810

655,406 711,774

6,251,449


On-Line individuals – total financial operations / consultations



56

C) The Balcão 24 Service

This was the fifth year of operations since the launch and there were 197 branches registered,

a 13% increase in the services set up over 2008. The network of Caixas that participate was

down by 4% as a result of mergers during the year.

The number of transactions rose by 21% year on year, with the average number per month per

individual (equipment) standing at 2,351.

13%

20092008

B24 –ATMs started up

195

172

-4%

20092008

Balcão 24

6770

749,909 21%

975,519 5,233,662

4,313,608

4,258,143

3,563,699Year 2008

Year 2009




57

The table below shows the half-yearly move in volume of transactions for the service during

the year, with an 8% growth from the first to the second half of the year.

D) The Crédito Agrícola Site (www.creditoagricola.pt)

During the year, there were 7,485,269 visits (up 33% on 2008), representing an average of

625,000 visits/month, with 1,887,198 single visits.

As result, 12,580,344 pages were seen, a rise of 24% over a year earlier, when the figure was

10,128,783).

Below are the main indicators relating to the institutional site during the year:

1st half year 2009 2nd half year 2009

B24 - Total Financial Operations / Consultations

2,213,620


508,157467,362

2,044,523



58

1.1.5. The International Area, Emigration and Agencies Abroad

1.1.5.1. The international area

Operations on the international front were hampered by the economic and financial crisis,

demanding permanent vigilance to minimise counterpart and country risk.

In the last part of the year, the world economy began to show signs of recovery and new limits

were defined for financial institutions, though guided always by caution in setting criteria.

In terms of correspondent banks, it is worth highlighting the winning of new operations to

support companies that are part of international groups working in Portugal. Work was also

carried out on seeking opportunities for renegotiating conditions.

In the business promotion area, there was continuing work on the statistics and analysis of

operations abroad, broken down into Caixa, customer and product.

At the request of various Caixas, visits to specific customers were accompanied by a specialist

in order to boost business.

International business where the Caixa Central acted as an intermediary stood at 1,439 million

euros as at 31 December 2009. This was a fall of around 16.33% year on year, a situation that

can be explained by reference to the drop in Portuguese foreign trade. In fact, market share

moved up, from 1.67% to 1.71%.

24%24%

20092008

Visits to pages

12,580,344

10,128,783

38%33%

Number of Visits Visitors

Number of visits / visitors

7,485,269

5,624,269

2008 2009

1,887,1981,370,940



59

Documentary operations rose by 39.5%, going against the trend of recent years. The situation,

however, derived from a one-off operation involving the issuing of a bank guarantee for a

particularly large amount. This related to the import of agricultural produce, on request from

and with the counter-guarantee of a front line European financial institution. The guarantee

has in fact been reduced following the standard breakdown into quantities to be imported by

various different operators interested in the business.

Leaving out this operation, growth was only to the order of 4.6% and there was a fall in volume

of around 15.5%.

There has been stagnation in foreign business for several years now, and there needs to be a

more proactive approach by the commercial areas in the Group to turn this situation around.

This is even truer as the economy contracts, given the overall fall in business that will increase

competition between the banks.

Work continued on developing the SEPA project, with the highlight on the payment services

directive which came into force. This required adaptations both in terms of regulations and in

information technology.

The Caixa Central continued to work actively in the working groups organised by the interbank

payment system committee (CISP - Comissão Interbancária para os Sistemas de Pagamento)

and took part in working groups organised by the EBA (European Banking Association).

Foreign operations Figures in thousands of euros except %

2008 2009 2009/2008

Volume Structure % Volume Structure % ∆%

Documentary Operations (*) 60,410 3.5% 59,283 4.1% -1.9%

Non-Documentary Operations 1,659,505 96.5% 1,379,799 95.9% -16.9%

Total 1,719,915 100.0% 1,439,083 100.0% -16.3%

(*) Includes balances on operations that involve credit up to December 2009



60

As mentioned above, market share moved up, to stand at 1.71%, compared with 1.67% a year

earlier.

Internacional trade - CA market share Figures in thousands of euros except %

Domestic(*) CA(**) Share

2008 99,123 1,660 1.67%

2009 81,159 1,384 1.71%

(*) Figures for trade in goods and services(**) Excluding emigration

1.1.5.2. Emigration and representation abroad

This is a Caixa Central structure that has a transverse role for the Group, since its operations

cover the segment of non-residents in Portugal, and the opening up and monitoring of business

with Portuguese customers abroad. This means improving and strengthening ties with this

segment.

The strategic aim has been to take the first steps in creating the conditions for a real

internationalisation of the Crédito Agrícola. With this in mind, a number of actions were carried

out over the year to increase the public profile of the Group. This has involved, among other

things, participation in and sponsorship of cultural events, philanthropic activities and training

courses given abroad.

Given this more notable presence with Portuguese communities and companies based abroad

which want to maintain or develop business with Portugal, there has been a flow of customers

(individuals and companies) wishing to start a commercial relationship with the Crédito

Agrícola.

Emigration

The importance of this segment is well known in the Crédito Agrícola, clearly justifying the

focus it gets with the commercial areas that operate abroad and through the commercial

activity that is undertaken.



61

As a result of this strategy, the CA Group market share rose again year on year both in terms of

remittances from emigrant workers and deposits from the Portuguese diaspora. This means

that there has been a period of growth unbroken for 10 years. Remittances rose by 3.3% in

volume (8.8% in the number of operations), taking the Group’s market share to over 15%, a

growth of approximately 2pp.

In terms of deposits, there was also growth, against the run of overall figures for the country,

where there was a fall-off.

Emigrant Remittances Figures in thousands of euros except %

No. Operations Volume Share

2007 427,652 319,701 12.4%

2008 473,741 336,393 13.5%

2009 515,502 347,337 15.4%

∆ 08/09 8.8% 3.3% + 1.9 p.p.

150,0002000 2001 2002 2003 2004 2005 2006 2007 2008 2009

200,000

250,000

300,000

350,000

Volume of remittances to the Group from abroad

(Figures in thousands of €)



62

Emigrant deposits Figures in thousands of euros except %

National CA GROUP Share

2007 7,240,000 255,312 3.5%

2008 7,837,000 261,077 3.3%

2009 7,670,000 265,288 3.5%

∆ 08/09 -2.1% 1.6% + 0.2 p.p.

Emigrant deposits offshore not included

A word is also warranted for the recent move on the immigrant population. Here, the set up

was concluded on the Western Union international transfer service through the CA network.

There has been considerable growth, coming in at more than 4.5 million euros in transfers

during the year.

Foreign branches

The foreign branches of the Caixa Central are the preferred organisation for products and

services on offer to non-residents in general and Portuguese emigrants in particular.

The foreign branches operate in an extremely competitive market for picking up business,

and they are also present in financial markets where risk management and volatility make

their work ever more demanding. Their aim over the year was to ensure the competitiveness

of their products on the one hand and on the other the rigorousness and safety of financial

management on their balance sheets.

The consolidated results are noteworthy: around 1.2 million euros, a rise of more than 121%

over 2008.

The strategy of the Group in 2010 is to give pride of place to sustained development of operations

with non-residents and to finding business opportunities abroad with Portuguese enterprises

which are looking to expand beyond the country’s borders. This strategy will be based on

greater diversification of the Group in its representation abroad.



63

1.2. FINANCIAL OPERATIONS AND THE CAPITAL MARKET

1.2.1. Treasury Strategy And Operations

The year was marked by the continuing aftershocks from the financial crisis which reached a climax

towards the end of 2008 in the aftermath of the bankruptcy of Lehman Brothers. Since then central

banks above all have fired off a real battery of anti-crisis measures. Among these are the brutal cuts

in official interest rates, leading them purely and simply to land at values near 0%. In the euro area, the

European Central Bank base rate (which was rising in July 2008, when it reached 4.5%), fell steeply

after the ECB meeting on 8 October 2008, to reach 1% in May of the following year. Euribor rates also hit

historic lows, falling to 0.700% and 0.987% for three and six months respectively.

In this context, treasury investment was guided by the following points of reference:

To minimize the impact of the steep fall in interest rates on returns;

To manage from a change in the mix, taking advantage of the big spread in the market,

with an additional margin to transfer to associated Caixas – specifically through the special

deposit vehicle (Depósito a Prazo Especial de Cobertura - DPEC) – to shore up the deposit

base in circumstances where the adjustment of interest rates on commercial funds was

reaching a natural limit as reference rates dived towards zero and as cut-throat competition

reared its head again;

Ensure that this was done without damaging liquidity, in line with loan criteria tightly hedged

about in the crisis atmosphere, maintaining all the while the duration of Caixa placements

at the Caixa Central, this being an appropriate alignment in the circumstances.

This approach led to a series of initiatives consistently followed through during 2009. Salient

among these were:

Increasing the duration of placements in the interbank money market, with the set up of a

portfolio of bonds at fixed rate on credit institutions (the nominal value of which stood at 211

million euros at year end 2009), including those with state guarantee, the return anchored

in a context of falling base rates in the market;



64

The use of securities portfolios with spot liquidity, to carry out repo operations at the

European Central Bank or in the market (the average volume through the year coming in

at 512 million euros), reaching margins that were exceptionally high in the circumstances

between placements on the interbank money markets and those realized through the

guarantee on the securities;

The acquisition of bonds at floating rate, medium-term, high spread although falling apace

during the year (with 311 million euros nominal value at year-end);

The acquisition of portfolios for liquidity cover, launched during the year, these being

the guaranteed income deposit (Depósito Rendimento Seguro) and the growth in savings

product (CA Aforro Crescente), reaching 141 million euros nominal value at year-end.

These initiatives, even in a context of steep falls in interest rates, made it possible to:

Hold firm the rate of return on excess liquidity placed by the associated Caixas at the Caixa

Central;

Put one-off measures for the Caixas into place, the special term deposit (Depósito a Prazo

Especial) being the most typical to provide support for the financial efforts they were making

to bolster their fund base;

Safeguard the Caixa Central’s financial margin.

Assets under management at the financial department Figures in thousands of euros

Amount Variation % of the total

31.12.08 31.12.09 Absolute Relative 2008 2009

Money market, commercial paperand deposits at Banco de Portugal

2,125,435 1,50,088 -616,347 -29.0% 76.5% 54.8%

Securities 653,913 1,246,895 592,982 90.7% 23.5% 45.2%

Total 2,779,348 2,755,983 -23,365 -0.8% 100.0% 100.0%



65

1.2.2. Associated Caixas and the Corporate Desk

Throughout the year, the CEACD continued to develop the project which targeted cooperation

between the associated Caixas Associadas and the commercial areas of the Caixa Central.

The focus was on promotion, sale and distribution of treasury products and financial markets.

This concluded the round of visits to the Caixas, carried out with a view to presentation of the

service known as associated Caixas and the corporate desk, providing a list of opportunities for

developing cooperation in this sphere.

The Caixas, working with the human resources department, set up more visits to the markets

room. The training department has now welcomed representatives from around 40% of the

associated Caixas since the start of this programme. During the visit, there is a chance to

get to know how the financial department works and how it is organized along with a look

at the operations carried out there. The purpose behind this is to give representatives from

the Caixas a chance to find out more about technical features and the way products can be

handled commercially, as well as the operational and financial risks to be borne in mind

during negotiations and processing. The aim is also to develop mutual understanding and

make it possible to reach a more informal contact needed for promotion and development of

commercial operations on a day-to-day basis.

The creation of a specific mechanism to cover term deposits made by the Caixas at the Caixa

Central meant that the CEACD would be involved in monitoring the product and adapting it to

specific situations outlined by the Caixas for their own needs. With this in mind, control and

reporting mechanisms were developed to cover the Caixas using the product.

The IT platform developed by CA Serviços for the distribution of structured deposits was

concluded in 2008, and during the year under review, work was started on upgrading the tool so

as to cope with specific requirements and streamline its use even more. The upgrade involves

automatic production of documentation, more flexible cover, and it includes the new contract

and deposit lock-in.

1.2.3. The financial function at the Crédito Agrícola Group

During the year, the asset and liabilities management (ALM) project became fully operational,

with a committee in place (ALCO) to manage operations. The focus was on developing solutions



66

which could ease the impact of the market environment on the financial margin of the Caixa

Central and members of SICAM.

Against a backdrop of high uncertainty, the focus was also on actions that could increase

available liquidity on the balance sheet.

The ALCO continues to provide a decisive contribution to the integrated and consistent

management of balance sheet risks associated with each and every member of SICAM and of

the Group as a whole. In this way it can assist in the joint analysis and decision-making process

within the scope of this committee and look closely into the various functional aspects relevant

to its operations, among them the financial, the risk-related and the commercial.

The year saw an on-going search for a solution as to how profitability of the business units

could be assessed using internal transfer prices.

1.2.4. Risk Control in the Treasury Field

Treasury operations involve specific risks, among them market, credit, counterpart and

operational risks, with control exercised in the first instance by the coordination units in

the market room and in CEACD and on a second line by the specialist office in the financial

department. This is on permanent alert regarding the risk limits set out, and produces daily

reports of actions carried out.

There was a much sought-after intensification and diversification of treasury activities,

covering a wide range of markets and instruments, with a dynamic approach to promoting and

selling treasury and market products and services through CEACD, and this is leading to more

stringent demands.

With this in mind, there was continuing work on the project to find a new support that would

integrate front, back and middle office operations in the financial department. This solution

will bring a revision of internal ways of working and bring management of operational, market

and counterpart risks up to the highest possible level of control.

The development of this IT solution is also making additional products available and these are

important for strengthening the efficiency of treasury management. A wide field of commercial

applications is open for development through CEACD.



67

1.2.5. Intermediation in the Capital Markets

Operations here tracked up, with growth in revenue, in spite of the persistent crisis in the

financial markets. The details are given below:

Figures in thousands of euros

ActivityValue Gross commissions

2008 2009 2008 2009

Money market, 2,643,043 1,118,238 256 272

Custodian / Depositary operations* 1,072,370 1,141,029 770 1,385

Commercial paper * 32,750 120,041 196 442

(*) Balance at 31/12/2009

Number of contracts Gross commissions

2008 2009 2008 2009

Futures market 68,434 35,062 266 164

There was growing income from the reception and transmission of orders, even though volumes

processed were down, with containment of operations involving Group companies in response

to the climate in the financial markets.

This factor also weighed on customer operations in the futures markets throughout the year.

There was a considerable increase in profits in custodian and depositary operations year

on year, with more portfolios under management and higher depositary commissions from

investment funds.

There were 6,933 securities accounts at year-end, following definitive closure of accounts that

had not migrated to CA Dealer. There were 69 accounts existing for negotiations in futures.

The year also saw a growth in the number of credit operations involving mutual guarantee

enterprises (Sociedades de Garantia Mútua). These operations involved 538 securities

accounts, with related deposit of shares and drawing up of pledges.



68

The securities department worked with the DCCC and CA Serviços on the analysis and

specification of requirements to improve automatic recording of information to be reported to

the DGCI.

There were ever more customers with access to the platform for dealing at the Stock Exchange

as part of the Internet banking operation in the Crédito Agrícola - CA Online. The number stood

at 2,301 at year-end 2008 and moved up to 3,393 a year later.

There have been changes in the prudential rules that are applicable to financial institutions,

with lifting of the solvency ratio to not less than 8% of core capital (Tier I), and a special issue of

bonds was made to cover this. The securities are called Títulos Especiais de Investimento Tier

1 - “Caixa Central/ 2009”, with placement totalling 35.5 million euros. The issue is in the form

of subordinated debt equivant to core funds and of unspecified duration. It was exclusive to the

associated Caixas, and took place in two stages, in September and November 2009.

Another operation of interest was the commercial paper issue progamme, with limited

placement, carried out in collaboration with the office handling businesses (Gabinete Comercial

de Empresas). Six new programmes were put together to a total of 80.5 million euros, with 102

issues over the year.

There was work on a series of functionalities for IT applications in the Group, carried out in

collaboration with CA Serviços and other areas of the Caixa Central. The work involved the

analysis, structuring and specifications for requirements, development and tests. The main

features of the new functionalities are as follows:

Validation through the IT systems (Aplicação Central – Profile, Solução Local, SIFOX -

Central Online and Crédito Agrícola Online), of the need to classify customers who wish to

deal or open investment accounts in financial instruments handled by the DMIF;

Verification through these systems of adequacy in the products that the customer wishes to

deal in, with reference to the classification of the DMIF;

The central register (on the Aplicação Central) of the DMIF data for each customer

(classification, results of adequacy tests and confirmation of order on the type of complex

instrument) with availability for consultation;

This area of the Group also worked on organising and putting on training courses for those



69

working for the Crédito Agrícola on the subject of the impact of the functionalities involved in

automating DMIF procedures.

1.3. BANCASSURANCE

1.3.1. Insurance – Non-life

This was the year in which CA Seguros celebrated its 15th Anniversary, a point which came

just as the success of the non-life bancassurance project was assured. The project had been

a root and branch concept created by the Crédito Agrícola. In the special 2009 edition of the

magazine Exame on the biggest and best companies in Portugal, it was selected as the best

non-life insurer, based on its highly positive operational indicators and the level of financial

guarantees it provided.

During the year, the portfolio of gross policies issued by CA Seguros came in at 74.9 million

euros, a rise of 2.5%, bucking the market trend, where the overall figure for non-life in Portugal

was down by 4.2%. Among the salient points was the growth in specific market segments

and in products, among these being personal accident, house and home, and health. This

strengthened the overall balance of the portfolio, and helped to bring in higher than expected

results.

During the year, around 2,300 of those working for the Caixas Agrícolas played an active part in

this, helping to bring in higher levels of production and new thresholds of operations. At year-

end, CA Seguros had 193 thousand clients on its books and 343 thousand renewable policies.

This of course poses new challenges and a focus on higher levels of motivation.

There are several factors that have brought a distinctive quality in the services to clients and

the relationship with third parties, among them proper in-house operations, articulation

between the various areas in the company, and efficient claims management, together with

the improvements that are constantly being introduced.

In the first quarter of 2009, a new organisational structure was put in place. The aim was to

give CA Seguros the proper conditions for growing its business more rapidly, cutting costs and

steadily and substantially improving its response to the CCAM and the quality of its service.

To this end, a new procedure for client complaints was put in place, with an ombudsman and



70

a new policy for handling clients and adopting principles that led to good communications

through advertising.

The strategy of CA Seguros continues in bancassurance operations to be exclusively through the Crédito

Agrícola, and within an institutional framework geared to cooperation and profit-sharing. The aim is to

provide a top-quality service and ensure high levels of protection for all non-life clients.

Bolstering this strategy involves constant emphasis on greater involvement from all those who work

for the Crédito Agrícola. In fact, the number of branches and staff actively involved in non-life products

has increased again and this is a sure sign of the effectiveness of the strategy. For the first time, new

production in annual commercial premia rose above 17 million euros, and this helped boost the number

of participants in the IV Annual Convention of CA Seguros. Among those present were the staff who

reached the objectives defined for the occasion. There were other incentives for the staff of the CCAM,

with the best performance in the sale of insurance. Those working in the CCAM have been unanimous

in praising these initiatives and refer to them as one of the most motivating factors for them to continue

improving their commercial performance.

In terms of integrated campaigns included in the Group’ marketing plan, the aim was to capitalise on

the synergies of cross-selling banking and insurance products. Worth a special mention here is the

campaign coded “CM20”, where 23 thousand new policies were started in personal accidents, bringing

in 15 thousand new clients to CA Seguros.

There was regular communication about insurance in the Group’s information network, including the

Internet page, which continued to maintain the brand’s visibility.

The good performance in production had a positive impact on the size of the insurance portfolio. There

was a 14.0% increase in the number of policies year on year, and a 13.6% rise in the number of clients,

going from 170 thousand to 193 thousand.

The rate of penetration of CA Seguros among customers of the Crédito Agrícola has been positive over

the last few years, and the ratio stood at 18.3% at year-end 2009, meaning there is still considerable

scope for growth.

The overall claims rate was 56.6% – before imputation of costs per function – representing

an increase over the previous year. This move can be explained by an increased set-aside for

claims during the year to the amount of 5.9 million euros, a conservative policy on provisions

which reflects the bigger number of claims than earlier years.



71

Operating costs rose by 7.7%, among which was a 6.7% rise in payment for insurance mediation.

Net results for the year came in at over 2,565 thousand euros, a 55% increase over the year.

For the third time in a row, the AGM approved a proposal from the Executive Council to pay

dividends to shareholders, this time to the amount of 1,296 thousand euros, corresponding to

around 50% of net results for the year.

The asset situation at CA Seguros has remained stable over the years, with a steady increase in

own funds and a high level of cover through financial guarantees, as required by the Portuguese

Insurance Institute (Instituto de Seguros de Portugal). The company ended the year with own

funds totalling 26.6 million euros, up on the 2008 figure of 22.6 million euros.

On the asset side, financial investment grew by 8.8% bringing up its proportion of the total from

78.1% in 2008 to 79,8% in 2009. On the liabilities side, the company held to its cautious policy

on provisioning, as in previous years. Overall, provisions for claims rose by 4.8 million euros to

stand at 85.1 million euros as at 31 December 2009.

Responsibilities towards policyholders are duly covered and at year-end technical provisions

and the solvency margin were well above the market average for non-life, the latter coming in

at 231%. Eligible assets for technical provisions provided a degree of cover standing at 124%.

Unit: Thousands of euros

Heading 2007 2008 2009

Gross Premia Issued 68,516 73,077 74,934

Assets 130,887 139,250 148,306

Own Funds 21,532 22,618 26,575

Net Results 4,206 1,656 2,565

Staff on Tenure at Year-End 125 137 139



72

1.3.2. Insurance – Life

CA Vida grew both in production and in the supply of solutions, improving its net results

substantially as a consequence of its strategy and in spite of the slowdown in the insurance

sector and the troubles facing it in the early part of the year.

Production during the year brought the company for the first time to eighth position in the

ranking of life insurance companies in Portugal. Its year-on-year growth was 61% and net

results stood at 6,015 thousand euros. The improvement in financial markets played its part

here, after the massive turmoil of the previous year.

The year was marked by an overhaul of the products made available to the Group, with the

company continuing to bank on innovation and differentiated products with a view to improving

the service for the Group and satisfying the needs of clients.

In this context, CA Vida Plena was developed. This is made up of three options for secure

capital and with a simplified form of subscription. It provides another in an array of options

available for the Group’s clients, with increased competitiveness an added benefit.

The success of cross-selling also involves interconnection between products. With this in mind,

the company designed CA Protecção Livre, which is even more closely geared to the credit

options marketed by the Group, marked out by different limits of capital secure, the form of

payment and the age bands to be used in subscription.

CA Vida also put the CA PPR on the market. The aim of this was to provide a plan for additional

funds geared to a pension. The rate is indexed to euribor and reviewed annually. It provides

another form of investment for customers concerned about their pensions.

In terms of Pension funds, the range was broadened with a new open fund with a more

conservative risk profile.

The portfolios of a number of pension funds benefited from the recovery in the financial

markets and appreciated considerably over the year. Examples are the 6.94% in the Crédito

Agrícola fund, 9.07% in the Fundo Aberto CA Reforma Tranquila and 15.72% in the fund Aberto

CA Reforma Mais.



73

CA Vida took a number of decisions in matching its products to the new features of life insurance

and as a result saw gains in competitiveness, meaning that its business was able to play a

greater part in Group operations. This is clear from the fact its market share rose from 1.2%

in 2008 to 2% in 2009.

As for production in terms of the number of policies issues, the company came in at year-end

with 158.4% of the objective set down for the year. There were 46 Caixas which turned in more

policies than their objective, compared with 13 a year earlier. This was also true in terms

of branches, with 54% reaching their target, totalling 382 branches compared with 191 the

previous year. The new products mentioned above played a big part in the increase that was

seen.

The company’s growth translated into a 25% increase in the remunerations for the Caixas in

terms of insurance mediation.

In light of the results achieved, the Executive Board of the Crédito Agrícola proposed, as in

previous years, that dividends be distributed to shareholders, to the total of 750,000 euros. The

proposal was approved in the AGM.

The company continued to focus on direct communications through the branches, giving it

a channel to highlight its proximity to staff at the Caixas. It used new technology to be ever

closer to staff throughout the network of Caixas, ever quicker in response and ever more visibly

present.

There were regular meetings through the year with many of the Caixas, providing opportunities

to reinforce proximity through interaction between all those involved.

There was also more activity through traditional forms of communication such as the newsletter

“A Folha” and “Flash”. These provided ways of informing staff of the most important events

and activities throughout the year and give the Group an insight into technical and operational

issues connected with solutions in the life insurance arm.

One of the permanent points of focus for the company has been training. This is a major

investment at all levels, playing its part in the readiness, dedication and development in human

resources in the whole Group.

The company not only carried out its complete training plan for the year: it also provided

proposals that gave specialists the opportunity to increase their knowledge of technical issues

and provide a service that was forthright, proactive and dynamic. At the same time, whenever



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there were specific needs for one of the Caixas, the company carried out on its own initiative

whatever action was necessary to provide updated information.

In-house, there was a new document handling system that covered the whole organisation,

including the company’s business procedures. This meant that documents could be made

available exclusively through e-communication. This reduced operational risk and enhanced

service quality.

The year also saw an easily available replication set up that guarantees business continuity if

basic systems are ever out of service. A simulation was carried out and the results showed how

efficient the system was.

Actuarial software was acquired as part of the Solvency II project, which is structured to work

within the current and possible future regulatory framework. The application can analyse

profitability, study Asset Liability Management (ALM) and work out provisions, as well as

carrying out other operations.

Control mechanisms were also strengthened through tools that could analyse risk management

and internal control to automate, integrate and validate information. The tool can also work

within the parameters of regulatory directives in the field.

CA Vida Figures in thousands of euros except %

2008 2009

Gross Premia Issued 129,289 207,990

Contributions to Pension Fund 8,652 4,695

Net Assets 657,092 797,608

Own Funds 33,277 43,199

Net Results -275 6,015

Staff on Tenure at Year-End 40 44



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1.4. INVESTMENT BANKING

1.4.1. Asset Management and Investment Funds

The overall value of assets under CA Gest management grew considerably during the year,

coming in 19.1% higher (compared with the 11.5% average in the Portuguese market. Total

value posted was, for the first time, over a thousand million euros.

Investment funds

The overall net value of funds managed by the company and marketed through the Crédito

Agrícola came in at 123.4 million euros in December 2009, which was a 10.7% recovery over a

year earlier, though not enough to get back to the 2007 total of 161.1 million euros at year-end.

This move came above all on the back of a 16.9% growth in the OICVM, with the special

investment funds only growing by 3.5%, contained by termination of the Raiz Valor Ibérico

special fund in December 2009.

2007 2008 2009

901.1 904.9

1,077

Figures in millions of euros

Ca Gest - Assets Under Management

Investment Funds (financial) Portfolio Management

793.5

953.9

740.0

161.1 111.4 123.4



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With the exception of the Fundos Tesouraria Euro, the OICVM funds managed by the company

were all up more than the average across the system. They were up overall by an average

16.9%, whereas the sub-sector average was 10. 6%.

As a result of this development, the company moved up one notch in the ranking of investment

fund managers (as it had a year earlier). At year-end it was 11th, even though it saw a very

slight fall in its market share (0.8% in 2008 and 0.7% in 2009).

Portfolio management

The customer portfolios at year-end stood at 953.9 million euros, 20.2% higher than a year

earlier.

This upswing was entirely on the back of institutional clients, which moved 21.1% higher, while

individual portfolios were down by 21.6%.

Growth in the amount under management was above the average, leading to a slight

improvement in market share (1.5% in 2008 and 1.6% in 2009), with the company holding its

7th place in the ranking.

CA Gest - Assets Under Management by Type of FundOverall Net Figures

Special Investment Funds42,9%

RetirementSavings / Education

0,4%

Funds in Shares5,4%

Mixed Funds and Funds of Funds

12,2%Income Funds

18,8%

Money Market and Treasury Funds

20,8%



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Diversification of supply

The company pursued the aim of diversifying the range of investment funds available, giving pride

of place to funds which ensure return on capital invested and provide a competitive rate of interest.

In July, the company launched the special open investment, the Fundo Especial de Investimento

Aberto CA Euribor II, with the following conditions:

a) Guaranteed return of capital invested at the end of the investment period;

b) Periodical net income corresponding to 80% of the 6-month euribor rate in force at the date

of the start of each period relating to the income, plus a spread of 0.85%.

This fund is another version of the concept which underlay the 2008 product the Fundo Especial

de Investimento Aberto CA Euribor +.

In addition, December of the same year saw the first Fundo Especial de Investimento Aberto

indexed to an upward move in the value of the product in the health sector, the CA Saúde

Valorização. The aim of this fund is:

a) To guarantee return of capital invested at the end of the four-year term;

b) To give an income stream (net) to a maximum value of 16% of the amount invested,

accumulated at the end of the four years, depending on a basket of figures, made up of five

companies in the health sector;

c) To provide for a minimum net return of 1.6% of the amount invested, to be paid out at the

end of the investment.

The company overhauled the asset management service, specifically by diversifying and adjusting the

management models of individual client portfolios, incorporating he lessons learnt in the financial

market crisis and increasing the management response capacity to any major instability in these

markets.

Work was also carried out in the area of institutional clients, touching on two aspects: the revision of

investment policies and ways of managing portfolios so as to bolster risk control; and the development

of new products and financial solutions that would be a better match to client profiles.



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Main financial indicators Figures in thousands of euros

CA Gest 2008 2009Variation

Value %

Financial Margin 111 20 -91 -81.9%

Net Worth 2,105 1,903 -202 -9.6%

Operating Costs 1,826 1,724 -102 -5.6%

Results (net) 163 104 -59 -36.0%

Total Assets (net) 3,818 4,052 234 6.1%

Liabilities 476 606 130 27.3%

Operating Income 3,342 3,446 104 3.1%

The financial margin, which is made up exclusively of returns on financial investments, came

in 81.9% lower as a result of the steep fall in interest rates. This fall had a major impact on net

worth and operating income.

There was a robust recovery in the amounts under management, fundamentally in the last

quarter of the year, though net commissions were still 5.1% lower, sending net worth down by

around 102 thousand euros.

The same reason is behind the 18.2% fall in commissions on sales and deposits paid to the

Caixa Central and to the members of the CCAM, coming in at 380.8 thousand euros. This meant

that net worth came in on the downside, falling by around 201.2 thousand euros, a 9.6% fall on

the previous year.

The cost-cutting policy put in place during the year led to a 5.6% fall in operating costs,

corresponding to around 102 thousand euros.

The cost control related to payroll, down 1.4%, though without any change to the staff working

at the company, and to general administrative costs, which were cut by 5.2%.

As in the previous year, the company decided to set aside 40 thousand euros in provisions

to cover any negative circumstances that might arise in liabilities relating to investment

fund management and client portfolios, given the uncertain climate in which the company is

currently operating (there are none explicit to date).



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Results for the year before tax were down by 35.8%, standing at 178.9 thousand euros, 58.6

thousand euros less than 2008. Net worth was down with the fall in interest rates and the tardy

recovery in the value of funds under management, even though costs were also down.

Total assets rose by 6.1% and own funds stood above 3.4 million euros, a 3.1% rise over a

twelve-month earlier.

Return on equity stood at 3.1%, lower than the 9.8% average of the last 5 years.

1.4.1.1. Investment funds (property)

CA Património Crescente Fund

This fund has now completed four years, and holds around 95.90 million euros under

management, around 2.1% in terms of market share within the category of open investment

funds (property), according to figures issued by the markets regulator (CMVM). This is a 42%

growth year on year.

In December 2009, the fund had 2,712 participants (compared with 1,791 in 2008), from 245

branches of the Crédito Agrícola, corresponding to 64 Caixas.

This fund came in with a net profit of 4.44% over the last 12 months, 4.74% in the last 24 and

4.55% in the last 36. This return, seen from the participant’s side, is the second most profitable

for the first period and the best for the last two periods.

Although the fund has only existed for four years, and although it was only in February 2010

that it reached 100 million euros, it has already had two special mentions:

In May 2009, the Portuguese consumer organisation (DECO), in an analysis of property

based funds in the Portuguese market (published in its supplement for financial products

“Dinheiro & Direitos”), considered the fund one of the “right choices” noting that “it is the

recommended fund for periods of more than 2 years”;



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In August 2009, the newspaper Jornal de Negócios, in an article entitled “Invista como um

Milionário” (Invest like a millionaire), placed 18% of its investment in property funds and

recommended CA Património Crescente as the best Portuguese fund of its type.

CA Arrendamento Habitacional Fund

This is a closed fund, made up of private subscription and with partial distribution of income.

Its main purpose – and it was set up during the worst economic crisis since the second world

war – is to enable those who are holding a mortgage loan to be able to transfer that part of their

property to the fund, signing at the same time a rental agreement with the option to switch to

a repayment plan for the amount in question at any time in the future.

The fund was operational on 23 October 2009, with 50 million euros in capital, and ended the year

with around 49.90 million euros under management, corresponding to 500,000 participation

units. As at 31 December, there were 7 Caixas Agrícolas involved, along with the Caixa Central.

CA Imobiliário Fund

This fund was set up in September 2005. It received special authorization from the markets

regulator in 2006 to switch from a closed to an open fund.

The fund was started on 1 September 2005 with 12 million euros in capital, and as at 31 December,

at the end of four complete years, it had around 170.9 million euros under management (compared

with 124.9 million in 2008) corresponding to 18,138,214 participation units (compared with

12,967,979 in 2008). The increase in asset volume is due fundamentally to the worsening economic

situation across the country.

1.4.2. Business Banking and Financial Consultancy

This was the fifth complete year of operations for the company within its new remit and the

strategic aim which was explicit in its restart in December 2004. The guidelines continue

to be (1) to provide the Group with a business banking unit, following the strategic aim of

(2) contributing to the total, integrated range of services available to customers. It would

complement and build up other Group services, that is banking, insurance and non-banking

financial intermediation.



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CA Consult continued to gear its operations to raising broader awareness of its role as a quality

consultant in the Agribusiness sector. In tandem with this focus, it has firmed up its position as

a quality consultant in the health sector. In this way it has created two cornerstones that mark

it out as having a distinctive approach in the market of financial consultancy and nationwide

management.

In addition, it has raised its profile and sought out new business in consultancy in a range

of sectors, among them renewable energy, tourism, packaging, facility services, manpower

services and light engineering.

In terms of operations involving venture capital, the company was involved – in spite of

the overcast economic climate – in appraising 14 investment possibilities ( 8 fewer than in

2008). The proposals for participation came from the following sectors: egg production and

related activities, preparation and preservation of fruits, production and sales of olive oil (two

operations); vineyards and wine production, fruit farming, flowers, forest management and

information technology.

Operations in this field are fundamentally in agribusiness, where the company was greatly

assisted by the nationwide sectoral survey which it undertook and has kept fully up-to-date.

This details the economic and financial standing of SMEs in eligible areas for investment

through FCR Agrocapital.

On the side of financial and management consultancy, and with a view to consolidating its

position in agribusiness, other operations were carried out and the benefits from these are

expected to accrue during 2010, given the investment in research and preparation for sales in

2009. Operations cover consolidation in the cooperative sector and internationalisation.

In other sectors of the economy, financial and management consultancy products were taken

to project level, salient among these being the health sector. One such involves the structuring

of a financing operation for shareholders in the Grupo Privado de Saúde for a capital increase;

another is consultancy with a view to acquiring business units for use in work on complementary

means of diagnosis for a private holding and a diagnostic scheme for a management company

assets, along with recommendations on future strategy. In renewables, one of the most

important is the consultancy for the Caixa Central (Co-Mandated Lead Arranjer) in structuring

and carrying out a financing operation for a 12.7 MWp power station in the Alentejo to produce

electricity from photo-voltaic cells, costing 40 million euros overall. There are other sectors



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where the company carried out consultancy during the year, among them flexible packaging,

public-private partnerships, temporary manpower and facility services.

In the same context – including the economic and financial circumstances – the company worked

towards a successful conclusion of mandates already in hand and opened up opportunities for

management and financial consultancy related to corporate debt. This led to mandates for

financial consultancy in project finance and in corporate debt in renewable energy, health,

restaurants and catering and wine.

The company has also moved horizontally across its field, strengthening its capacity to offer

consultancy services and building relationships with other operators in the same line, in

venture capital, both Portuguese and international, private equity and other international

bodies, working for instance through Pandion Partners.

From the point of view of accounts and results, the main performance indicators for operations

during the year are as follows:

A slackening of activity, which stands now at around 11% lower than a year before;

A 17% fall in gross value added as a consequence, on the back of lower revenue and an

increase in the value of FSEs;

A negative move in staff operational indicators, in spite of the cut in human resources, the

lower operating revenue and the higher costs with personnel and FSE;

A negative return on equity (31%), fundamentally due to the combined effect of lower net

results and the fall in own funds from the negative results for the year (absorbing the upside

results from 2008).

Net results for the year come in 147.116 euros on the downside, influenced by:

A fall in operating profits of approximately 11%;

A fall in operating cash flow (EBITDA) totalling around 158%;

Bolstering adjustments for debts from customers where collection is doubtful;



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Unit thousands of euros

CA Consult 2007 2008 2009

Net Assets 768 839 654

Operating Income 421 472 325

Net Results 94 51 -147

Staff on Tenure 17 21 19

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