Earnings Presentation –1st Half 2010...Earnings Presentation –1st Half 2010 Consolidated...
Transcript of Earnings Presentation –1st Half 2010...Earnings Presentation –1st Half 2010 Consolidated...
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Earnings Presentation – 1st Half 2010
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Earnings Presentation – 1st Half 2010
DISCLAIMER
• This document is not an offer of securities for sale in the United States, Canada,
Australia, Japan or any other jurisdiction, Securities may not be offered or sold in
the United States unless they are registered pursuant to the US Securities Act of
1933 or are exempt from such registration. Any public offering of securities in the
United States, Canada, Australia or Japan would be made by means of a
prospectus that will contain detailed information about the company and
management, including financial statements.
• The information in this presentation has been prepared under the scope of the
International Financial Reporting Standards (‘IFRS’) of BCP Group for the purposes
of the preparation of the consolidated financial statements under Regulation (CE)
1606/2002.
• The figures presented do not constitute any form of commitment by BCP in regard
to future earnings.
• First six months figures for 2009 and 2010 were subject to a limited revision by
External Auditors.
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Earnings Presentation – 1st Half 2010
Summary 1st half of 2010
Operating costs under control: down by 4.5% in Portugal
Tier I ratio reaches 8.9%, calculated according to IRB methodologies (pro forma); according to standard method, Tier I ratio of 8.6%
Significant improvement in efficiency, with a cost to income of 46.2% in Portugal and 52.2% on a consolidated basis
Customer funds grew 1.2% and loans to customers rose by 1.5%, with a strong boost from international operations (+5.1% in customer funds and 10.0% in loans)
Net income reaches 163.2 million euros, up 10.7% from the the first half of 2009. Excluding 74 million euros of goodwill impairment, net income reaches 236.8 million euros, +87.5%
Liquidity: significant increase of assets discountable in central banks to 16.5 billion euros; needs for 2010 totally refinanced
Continued upward trend in core banking income: net interest income and commissions continue to grow on a quarterly and annual basis
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Earnings Presentation – 1st Half 2010
Net income up 10.7% and 87.5% excluding specific items
(Eur million)
Net income
Consolidated
163.2147.5
1H09 1H10
+10.7 %
236.8
126.3
1H09 1H10
+87.5 %
Net income ex-specific items
Consolidated
Specific items in 1H 09: accounting gain from the entry of new shareholders in Banco Millennium Angola's share capital, amounting to 21.2 million euros
Specific items in 1H 10: impairment in the Greek operation goodwill, amounting to 73.6 million euros
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Earnings Presentation – 1st Half 2010
Net income reaches 163.2 million euros
Net income
(Eur million)
Portugal
International operations
Consolidated
163.2147.5
1H09 1H10
+10.7 %
Excluding specific items 126.3 236.8+87.5 %
137.9138.7
1H09 1H10
25.3
8.8
1H09 1H10
-0.6%
+188.4%
Specific items in 1H 09: accounting gain from the entry of new shareholders in Banco Millennium Angola's share capital, amounting to 21.2 million euros
Specific items in 1H 10: impairment in the Greek operation goodwill, amounting to 73.6 million euros
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Earnings Presentation – 1st Half 2010
Stable loans and customer funds
Loans to customers (gross)*Customer funds*
Other customer funds from balance sheet
Deposits
Off balance sheet customer funds Mortgage
Consumer loans
Loans to companies
Consolidated(Eur million)
* Excluding Turkey and USA, in accordance with the sale agreements established
14,705 16,677
44,07244,066
4,8836,083
64,854 65,632
Jun 09 Jun 10
28,581 29,945
43,30143,352
4,9305,055
76,988 78,176
Jun 09 Jun 10
+1.5%
-0,1%
-2,5%
+4,8%
+1.2%
+€6 M
+€1,972 M
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Earnings Presentation – 1st Half 2010
Tier I ratio reaches 8.9%
Solvency ratio IRB (pro forma) *
11.1% 9.7%11.0%
Actuarial losses and
change in the pension
fund corridor (–62 bp)
2Q10
* Reported values in the 1st half of 2009
** The presented pro forma ratios were calculated in accordance with the IRB methods, taking into consideration the revision process, by the Bank of Portugal (BdP), of the submission of the proposal to
adopt these methods. Estimates of the probability of default and the lost given default (IRB Advanced) for the retail portfolio collateralized by commercial and residential real state, and estimates of the
probability of default (IRB Foundation) for the corporate portfolio were considered in Portugal. At the 1st semester of 2009, the Bank received authorization from BdP to adopt the advanced methods
(internal model) to the generic market risk and the adoption of standard method for the operational risk
Consolidated
RWA (M€)
Total ratio
Core Tier I
Tier I9.7% 8.9%8.4%
7.3% 6.6%7.2%
Jun 09*
Standard 6.2%
Jun 10**
Standard 5.6%
Mar 10**
Standard 6.4%
Jun 09*
Standard 8.0%
Jun 10**
Standard 8.6%
Mar 10**
Standard 9.3%
56,591 59,52760,723
* ** **
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Earnings Presentation – 1st Half 2010
Good results in the CEBS stress test
Adverse scenario Iberian Banks results – Tier I
Shock scenario Iberian Banks results – Tier I
BCP shows strong resilience in adverse scenarios
Source: CEBS, Bank of Portugal and Bank of Spain
BCP
8.4% 8.4%Iberian average 8.2%
Iberian average 7.6%
BCP
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Earnings Presentation – 1st Half 2010
(Eur million)
� Actuarial losses in 1st Half of 2010 of 365 million euros
� Return of pension funds of –3.9% in 1H10
� Pension liabilities coverage of 102%; no need for additional contributions
� Equity exposure of 19% in 2009
� No changes in actuarial assumptions
2006 2007 2008 2009 1H10
Pension liabilities 5,715 5,879 5,723 5,410 5,404
Pension fund 5,578 5,616 5,322 5,530 5,154
Liabilities' coverage* 105% 102% 100% 109% 102%
Fund's profitability 11% 4% -14% 9% -4%
Actuarial differences 1,240 1,353 2,140 1,514 1,855
Corridor 572 588 572 553 540
Outside the corridor 668 765 1,568 961 1,315
Actuarial gains (losses) 157 (160) (827) 557 (365)
% Equities in the Pension Fund 49% 35% 20% 22% 19%
* Includes the amount registered in the balance sheet
Pension liabilities coverage of 102%
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Earnings Presentation – 1st Half 2010
5.2
4.2
4.2
6.6
2.70.4
4.8
18.8
16.5
2009* 1H10 2H10 2011 2012 Total
Low refinancing needs for the 2nd half, comfortable portfolio of eligible assets(Eur billion)
Issued
during
2009**
Eligible
assets with
Central
Banks
Refinancing needs of long term debtConsolidated
* Includes 0.5 billion euros of bonds that were early redeemed** Includes the issue of 1 billion euros of Subordinated Perpetual Securities (June, August and December 2009)
Issued in
2010
25.8
Already
repaid
MTN
Jan10: €0.8bn
Mar10: €0.3bn
Private
Placements
€1.6bn
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Earnings Presentation – 1st Half 2010
Liquidity Plan
� Reduce commercial gap
� Reinforce relationships
with correspondent banks
� Increase eligible assets
with central banks to
>€20bn
� Coverage of all refinancing
needs until 2011
19.5
~1
>20
16.5
11.3
7.3
10.6
2007 2008 2009 1Q10 2Q10 Jul 10 2010 (E)
(Eur billion)
>2025
11.6
5.4
5.2
Eligible assets Other initiatives Total Total funding up
to 2011
Liquidity plan
Eligible assets with central banks
22.2
ECB
usage
MLT 2010-11
ST funding
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Earnings Presentation – 1st Half 2010
Consolidated
Income statement
(Eur million)
(1) Includes in 1H09 gain accounted from the entry of new shareholders in BancoMillennium Angola's share capital, amounting to 21.2 million euros
(2) Includes in 1H10 impairment from the revaluation of Greek operation, amounting to 73.6 million euros
1H09 1H10 YoY
Net interest income 675.6 705.0 4.4%
Commissions 346.6 405.0 16.8%
Net trading income 214.1 314.6 46.9%
Dividends, equity acc. earnings and other income 63.9 63.1 -1.3%
Banking income 1,300.2 1,487.6 14.4%
Staff costs 444.2 424.2 -4.5%
Other administrative costs 278.7 301.1 8.0%
Depreciation 52.3 51.6 -1.5%
Operating costs 775.2 776.9 0.2%
Operational profit before impairment 525.0 710.7 35.4%
Loans impairment (net of recoveries) 279.1 384.2 37.7%
Other impairment and provisions 60.9 40.6 -33.3%
Income tax and minorities 58.8 49.1 -16.5%
Net income excluding specific items 126.3 236.8 87.6%
Specific items (1) 21.2 (2) -73.6 -447.2%
Net income 147.5 163.2 10.7%
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Earnings Presentation – 1st Half 2010
Banking income growth and costs under control
Banking income* Operating costs
Consolidated(Eur million)
* Includes net interest income, commissions, net trading income, dividends, other income and equity accounted earnings
775.2 776.9
1H09 1H10
1,321.4
1,487.6
1H09 1H10
+12.6%
+0.2%
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Earnings Presentation – 1st Half 2010
52.2%54.5%
64.4%
55.8%
63.6%
59.6%58.6%
Cost-to-income ratio*
International operations
Portugal
Consolidated
* On a comparable basis, excluding specific items
Efficiency improvement; strong recovery in the last
quarters
46.2%
50.6%
60.2%60.7%
50.7%
54.0% 54.6%
72.3% 70.5%
62.7%66.2%
67.8% 69.9%71.9%
2008 3M09 6M09 9M09 2009 3M10 6M10
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Earnings Presentation – 1st Half 2010
(Eur million)
Net interest income
Portugal
International operations
Consolidated
Increase of net interest income, with strong recovery ininternational operations
705.0675.6
1H09 1H10
NIM
+4.4%
1,61%1,61%
138.3132.2 142.3138.6131.7
2T09 3T09 4T09 1T10 2T10
+8.0%
129.9116.3 129.2120.189.2
2T09 3T09 4T09 1T10 2T10
+44.8%
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Earnings Presentation – 1st Half 2010
Sustained net interest income recovery
Quarterly net interest income
(%, Eur million)
Consolidated
412.2 429.7434.8 444.4
373.8
301.8322.6
364.4340.6336.0
2.05% 2.07% 2.00%2.11%
1.80%
1.43% 1.49%1.56% 1.58%
1.64%
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
NIM
+7.0%
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Earnings Presentation – 1st Half 2010
Net interest margin recovery in Portugal
Net interest margin (%)
International operations
Portugal
Consolidated
1.80
1.43
2.05 2.072.00
2.11
1.49 1.561.58 1.64
2.88 2.92 2.79 2.682.28 2.41
1.421.301.321.26
1.82 1.82 1.751.91 1.79
1.32
2.301.81 1.75
2.18
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
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Earnings Presentation – 1st Half 2010
Sustained commissions growth in Portugal and in international operations
(Eur million)
Portugal
International operations
Consolidated
Banking commissions
Market-related commissions
Commissions
289.5324.1
57.1
80.9346.6
405.0
1H09 1H10
+16.8% 280.5251.0
1H09 1H10
124.595.6
1H09 1H10
+11.8%
+30.1%
+41.7%
+11.9%
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Earnings Presentation – 1st Half 2010
Consolidated
Significant growth in commissions YoY and QoQ
(Eur million)
1H09 1H10 YoY 2Q09 1Q10 2Q10
Banking commissions 289.5 324.1 11.9% 151.0 159.7 164.3 8.8% 2.9%
Cards 90.4 89.8 -0.6% 45.6 43.6 46.3 1.5% 6.1%
Loans and guarantees 87.7 85.4 -2.6% 43.8 41.8 43.6 -0.4% 4.5%
Bancassurance 25.1 37.2 48.5% 13.1 18.7 18.5 41.9% -1.1%
Other commissions 86.4 111.6 29.2% 48.5 55.7 55.9 15.1% 0.4%
Market related commissions 57.1 80.9 41.7% 26.9 42.4 38.5 43.0% -9.1%
Securities operations 35.4 54.3 53.6% 15.8 29.5 24.9 57.0% -15.5%
Asset management 21.7 26.6 22.4% 11.1 13.0 13.6 23.0% 5.3%
Total commissions 346.6 405.0 16.8% 177.9 202.2 202.8 14.0% 0.3%
2Q10/
2Q09
2Q10/
1Q10
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Earnings Presentation – 1st Half 2010
Core income consistent recovery
Core income = Net interest income and Commissions
Consolidated
Net interest income
Commissions
(Eur million)
373.8301.8 322.6 336.0 340.6
364.4
168.7
177.9187.1 198.0 202.2
202.8
542.5479.7 509.7
567.2542.8534.0
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
+18.2%
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Earnings Presentation – 1st Half 2010
Costs reduction in Portugal
Operating costs
Portugal
International operations
Depreciation
Other administrative costs
Staff costs
(Eur million)
Consolidated
52.3 51.6
444.2 424.2
278.7 301.1
1H09 1H10
-1.5%
+8.0%
-4.5%
+0.2% 479.9502.5
1H09 1H10
296.9272.7
1H09 1H10
-4.5%
+8.9%
775.2 776.9
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Earnings Presentation – 1st Half 2010
Impairment reinforced; credit quality at expected levels and in line with current economic cycle
Impairment
coverage > 90
days
Overdue loans
ratio > 90 days
Gross impairment charges as % of total loans
Impairment charges net of recoveries as % of
total loans
(Eur million)
Credit quality Impairment charges as % of total loans
< 90 days
> 90 days
Consolidated
Accumulated annualized figures
Total
overdue
loans*
0.76 0.740.85
0.720.71 0.72
0.82
0.70
0.98
1.02
0.860.83
0.770.86
2008 3M09 6M09 9M09 2009 3M10 6M10
105.1%132.6%
1.9% 2.7%
2,146.0
1,444.4
273.5
283.4
Jun 09 Jun 10
1,727.8
2,419.5
* Excluding Turkey and USA, in accordance with the sale agreements established
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Earnings Presentation – 1st Half 2010
Cost of risk aligned with current economic cycle
Impairment charges as % of total loans (accumulated annualized figures)
Average = 0.47
Grossimpairment
charges as % oftotal loans
Impairment charges net of recoveries as % of total loans
0.850.98
0.570.75
0.640.49
0.61
0.83 0.86 0.76 0.74 0.770.86
0.21
0.70 0.720.72
0.26
0.82
0.40 0.460.30
0.55
0.22
0.71
0.39
0.95 1.02
0.690.48
2000 2001 2002 2003 2004 2005 2006 2007 2008 3M09 6M09 9M09 2009 3M10 6M10
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Earnings Presentation – 1st Half 2010
Millennium bcp presents one of the better provisioning levels among the Iberian banks
On balance sheet total loans impairment as loans %
Source: Banks’ reports, 2Q10 when already disclosed, otherwise 1Q10
3.13% 3.15%3.10%
1.38%
1.98%
2.59%
1.79%
2.24%
3.00%
2.76%2.89%
Bank 10 Bank 9 Bank 8 Bank 7 Bank 6 Bank 5 BCP Bank 4 Bank 3 Bank 2 Bank 1
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Earnings Presentation – 1st Half 2010
� Portugal
� International operations
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Earnings Presentation – 1st Half 2010
Income statement
(Eur million)
(1) Includes in 1H09 gain accounted from the entry of new shareholders in BancoMillennium Angola's share capital, amounting to 21.2 million euros
(2) Includes in 1H10 impairment from the revaluation of Greek operation, amounting to 73.6 million euros
1H09 1H10 YoY
Net interest income 495.5 445.9 -10.0%
Commissions 251.0 280.5 11.8%
Net trading income 118.3 254.1 114.7%
Dividends, equity acc. earnings and other income 56.1 58.2 3.7%
Banking income 920.9 1,038.8 12.8%
Staff costs 314.1 281.9 -10.3%
Other administrative costs 157.9 170.5 7.9%
Depreciation 30.4 27.6 -9.5%
Operating costs 502.5 479.9 -4.5%
Operational profit before provisions 418.4 558.8 33.5%
Loans impairment (net of recoveries) 204.0 294.9 44.6%
Other impairments and provisions 60.0 41.7 -30.6%
Income tax and minorities 36.9 10.8 -70.8%
Net income excluding specific items 117.5 211.5 80.0%
Specific items (1) 21.2 (2) -73.6 -447.2%
Net income 138.7 137.9 -0.6%
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Earnings Presentation – 1st Half 2010
13,824 15,465
29,65830,032
4,7986,046
49,902 49,922
Jun 09 Jun 10
Stable volumes in Portugal
(Eur million)
Loans to customers (gross)Customer funds
Other customer funds from balance sheet
Deposits
Off balance sheet customer funds Mortgage
Consumer loans
Loans to companies
+€20 M
-1.2%
+11.9%
36,609 36,067
21,395 21,876
3,411 3,097
61,04061,415
Jun 09 Jun 10
-0.6%
-9.2%
+2.2%
-1.5%
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Earnings Presentation – 1st Half 2010
Growth in banking income and cost containment
(Eur million)
Banking income* Operating costs
* Includes net interest income, commissions, net trading income, dividends, other income and equity accounted earnings
502.5 479.9
1H09 1H10
942.11,038.8
1H09 1H10
+10.3%
-4.5%
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Earnings Presentation – 1st Half 2010
Best cost to income ratio in the last 4 years
Cost to income*
* On a comparable basis, excluding specific items
67.7%
53.8%
60.9%
46.2%
58.5%
63.9%
56.4%
51.8%
54.6%
1H06 2H06 1H07 2H07 1H08 2H08 1H09 2H09 1H10
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Earnings Presentation – 1st Half 2010
Net interest income and net interest margin recovery
Net interest income
(%, Eur million)
� On an annual basis margin penalised by
steep decrease of market interest rates
� Vs. 4Q 10:
– Maintenance of interest rates decrease– Margin penalized by base rate effect – Unfavourable sazonality, -2 interest
days
– Improvement of customer spreads
Euribor 3 months (%, quarterly average)
NIM
Clients
spread
206.3215.9 210.7
235.2212.5
1.26%1.32%
1.30%
1.42%
1.32%
1.65%
1.38%1.36%
1.49%1.56%
2Q09 3Q09 4Q09 1Q10 2Q10
0.66
0.87
1.31
0.690.72
2Q09 3Q09 4Q09 1Q10 2Q10
� Margin still being pressed by last year’s
steep fall of interest rates
� Vs. 1Q10:
– reversal of interest rates downwardtrend
– improvement of customer spread: credit repricing and recovery of deposits
margin
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Earnings Presentation – 1st Half 2010
0.830.93 0.89 0.88
1.11
1.61
2.22 2.04 2.00
0.99 0.98 0.96 0.94 0.95 0.96 0.98 1.00 1.021.04
1.94
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
1.641.71 1.74
1.79
1.962.06
2.202.30
2.402.49
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Portfolio
New production
Portfolio
� Period of repricing of corporates portfolio (59% of total loans) up to 3 years
� Mortgage portfolio (36% of loans) cannot be re-priced. New production booked with adequate
spreads
Repricing in loans is offsetting the reduction of deposit margin
Corporates
(contractual spread, %)
Mortgage
(contractual spread, %)
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Earnings Presentation – 1st Half 2010
Sustained commissions growth in Portugal
Banking commissions
Market-related commissions
(Eur million)
Commissions
117.9 115.3122.6
114.1122.5
13.7 16.916.1
24.219.7
131.7 132.2138.6 138.3 142.3
2Q09 3Q09 4Q09 1Q10 2Q10
+8.0%
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Earnings Presentation – 1st Half 2010
Operating costs in Portugal drop by 4.5%
(Eur million)
Operating costs
Depreciation
Staff costs
Other administrative costs
30.427.6
281.8314.1
170.5157.9
502.5479.9
1H09 1H10
-9.5%
-4.5%
-10.3%
+7.9%
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Earnings Presentation – 1st Half 2010
Impairment reinforced; credit quality at expected levels and in line with current economic cycle
(%, Eur million)
Impairment
coverage > 90
days
Overdue loans
ratio > 90
days
Grossimpairment
charges as % oftotal loans
Impairmentcharges net ofrecoveries as %of total loans
Credit qualityImpairment charges as % of total loans (accumulated figures, annualized)
< 90 days
> 90 days
Total
overdue
loans
0.82
0.640.71
0.660.64 0.61
0.97
0.650.69 0.71
0.85
1.00
0.690.83
2008 3M09 6M09 9M09 2009 3M10 6M10
1,651.71,125.4
209.0
256.7
1,382.1
1,860.7
Jun 09 Jun 10
105,5%138,5%
1,8% 2,7%
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Earnings Presentation – 1st Half 2010
Client satisfaction at record level since the launch of the single brand
Client satisfaction index
Basis 100
79.078.7
79.8
78.1 78.2
79.0
77.7
78.9
80.3
79.1
2004 2005 2006 2007 2008 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Client satisfaction
Source: Clients satisfaction survey (SGC)
81.0
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Earnings Presentation – 1st Half 2010
� Portugal
� International operations
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Earnings Presentation – 1st Half 2010
Strong recovery of international operations
(Eur million)
Net income
1H09 1H10 YoY
YoY in
local
currency
International operations 8.8 25.3 188.4% 230.0%
Poland 4.6 34.4 >100% >100%
Mozambique 27.2 29.9 9.7% 35.8%
Angola 6.3 9.8 55.9% 88.2%
Greece 3.3 -10.2 < -100% < -100%
Romania -15.6 -13.1 15.9% 17.9%
Turkey -3.4 -1.9 44.8% 48.1%
USA -5.5 -2.1 62.0% 61.9%
Other 4.9 5.0 0.7% 2.8%
Minorities -13.1 -26.4 na na
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Earnings Presentation – 1st Half 2010
Poland: sustained profitability improvement
(Eur million)
Net income
Banking income Operating costs
Excluding FX effect. Rates €PLN used: Profit and Loss account: 3,99590833; Balance Sheet: 4,1470
*Net interest income + Net commission income
131.0130.1
1H09 1H10
180.3 206.9
1H09 1H10
5.3
34.4
1H09 1H10
+14.7% +0.7%
+554%
� Net income in 1H10 (34.4 M€) 6 times higher
than in the same period of 2009. ROE grew from
1.5% to 7.7%
� Operating income up 14.7% Y/Y, driven by core
income* growth(+43.2% Y/Y), whereas trading
and other income decreased when compared to
the exceptionally high levels of 1H09
� Operating costs under control allowing for the
improvement of cost to income ratio from
72.1% to 63.3%
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Earnings Presentation – 1st Half 2010
Net interest income recovery clearly visible on an annual and quarterly basis
NIM
(%, Eur million)
Net interest income* NIM evolution*
Loans’ margin Deposits’ margin
* Pro-forma data. Margin from all derivatives, including those hedging FX denominated loan portfolio, is presented in Net Interest Income, whereas in accounting terms part of this margin (9.6 M€ no
1H10 and 20.9 M€ in 1H09) is presented in Net trading income. Since 2009, new methodology applied, which transferred FX impact on accrued interests from Net Interest Income to FX gains
58.4 60.1
118.5
74.2
1H09 1Q10 2Q10 1H10
2.93%2.63% 2.97%2.79% 2.96%
-0.74%
-0.29%
-0.12% -0.11%-0.20%
2Q 09 3Q09 4Q09 1Q10 2Q10
2.2% 2.1%1.1%
+59.7%
1.8% 1.9%
+2,9%
� Net interest margin showed a significant improvement in 1H10 compared to 1H09 and
maintained the quarterly growth trend (+2.9% Q/Q) in spite of a strong deposits promotional
campaign
� Net interest margin stabilized at 2.1% as both loans and deposits spreads changed only
slightly during 2Q10. Higher competition on loans, lower WIBOR rates and promotion
campaigns were the main factors that influenced NIM in 2Q
Excluding FX effect. Rates €PLN used: Profit and Loss account: 3,99590833; Balance Sheet: 4,1470
-
40
Earnings Presentation – 1st Half 2010
58.2 71.1
1H09 1H10
7
3.1
9.2
17.2
11.1
4.7
0.95.2
12.7
Commissions growth on an annual basis
Accounts related
Loans and guarantees
Cards & ATMBrokerage and Custody
Mutual Funds
Transfers
Bancassurance
3rd party savingsOther
(Eur million)
Net commission income Net commission breakdown
� Net commissions posted a significant Y/Y growth of 22.2% in 1H10. This increase was driven by
cards, mutual funds, other capital market related savings products, as well as by current accounts.
The significant growth in these items more than compensated the decrease in bancassurance
commissions.
� The decrease of commissions on a quarterly basis was mainly caused by seasonally higher
commissions from bancassurance in 1Q10
+22,2%
Excluding FX effect. Rates €PLN used: Profit and Loss account: 3,99590833; Balance Sheet: 4,1470
-
41
Earnings Presentation – 1st Half 2010
10.0 9.5
63.960.7
57.659.4
1S09 1S10
Operating costs under control
Operating costs
Number of employees
Number of branches
Depreciation
Other administrative costs
Staff costs
(Eur million)
Excluding FX effect. Rates €PLN used: Profit and Loss account: 3,99590833; Balance Sheet: 4,1470
-5.6%
-3.0%
+5.4%
+0.7%
130,1 131,0
465484
Jun 09 Jun 10
6.1806.414
Jun 09 Jun 10
-3.6%
-3.9%
-
42
Earnings Presentation – 1st Half 2010
Credit and customer funds growth
Loans to companies
Loans to individuals
(Eur million)
* Includes deposits, bank’s bonds sold to individuals and investment products
Excluding FX effect. Rates €PLN used: Profit and Loss account 3. 99590833; Balance Sheet 4.1470
Customer funds*
8,5759,032
Jun 09 Jun 10
+5.3%
2,204 2,188
6,213 6,605
8,7938,418
Jun 09 Jun 10
+4.5%
+6.3%
-0.7%
Loans to customers (net)
-
43
Earnings Presentation – 1st Half 2010
Cost of risk reduction
* Impairment charges/ average net loans in the period (in bps, annualized). These ratios based on gross loans in 1H09 and 1H10 were 103 bp and 73 bp, respectively.
Impairment
coverage
Impairment
ratio
Total
Impaired
loans
Credit quality Impairment charges
Impairment
charges as %
of total loans
(%, Eur million)
Excluding FX effect. Rates €PLN used: Profit and Loss account 3. 99590833; Balance Sheet 4.1470
53%54%
4.8% 5.9%
106 bp* 76 bp *
46.3
20.811.7
32.5
1H09 1Q10 2Q10 1H10
-29.8%
-43.8%
� Net Provisions decreased in 1H10 by 30% versus 1H09. Cost of risk decreased from 106 bps in
1H09 to 76 bps in 1H10
� New provisions in 1H10 were almost evenly divided between companies and retail exposures
(in the latter most of them connected with unsecured consumer loans)
415.0 496.5 535.8
Jun 09 Mar 10 Jun 10
55%
6.0%
-
44
Earnings Presentation – 1st Half 2010
� GDP growth in Mozambique remains
at high levels: ~5% in 2010(P)
� Net income rises 35.8% in local
currency (+9.7% in euros)
� ROE reaches 38.4%
� Net income evolution sustained by
banking income good performance
� Conservative provisioning policy
� Ongoing expansion program
� Strong volumes increase
Banking income
Employees
Operating costs
Net impairment charges %
total gross loans
(accumulated)
Branches
Net income(Eur million)
(Eur million)
Mozambique: sustained evolution of net income supportedby banking income, in spite of expansion plan
29.927.2
1H09 1H10
67.6 74.1
1H09 1H10
31.2 30.4
1H09 1H10
103
119
Jun 09 Jun 10
1,8032,013
Jun 09 Jun 10
+9.7% +9.6%-2.4%
0.94
1.521.81
6M09 12M09 6M10
-
45
Earnings Presentation – 1st Half 2010
Sustained volume growth, mainly on loans to customers, with low level of delinquency
(Eur million)
Customer funds
+34% in local currency
+20.4%965
801
Jun 09 Jun 10
Loans to customers (gross)
Impairment
coverage > 90
days
Overdue
ratio > 90 days
+74% in local currency
24
27
598
365
197
136
526
821
Jun 09 Jun 10
+56.2%
541%460%
0.9% 0.9%
Mortgage
Consumer loans
Loans to companies
-
46
Earnings Presentation – 1st Half 2010
Angola: strong increase in net income, despite ongoing expansion
Loans to customers (gross)
Branches
Banking income
Employees
Operating costs
Customer funds
Net income(Eur million)
(Eur million)
� Network expansion to 28 branches
� Strong loans, deposits and revenues
growth
� Despite the ongoing expansion,
profitability remains high
(ROE of 16.3%)
6.39.8
1H09 1H10
20.4
41.1
1H09 1H10
13.8
24.1
1H09 1H10
259411
Jun 09 Jun 10
368 514
Jun 09 Jun 10
1828
Jun 09 Jun 10
401619
Jun 09 Jun 10
+55.9% +101.7% +74.0%
+58.4% +39.9%
-
47
Earnings Presentation – 1st Half 2010
Greece: increase in provisions, lower trading income and deterioration of funding conditions
177 176
Jun 09 Jun 10
-10.2
3.3
1H09 1H10
Operating income
-8.3%
Operating costs
Impairment charges % total gross loans
Net Income
-3.3%
0.81
0.410.50
0.37
1.16
2Q09 3Q09 4Q09 1Q10 2Q10
81.2 74.5
1H09 1H10
59.962.0
1H09 1H10
� Net losses of €10.2mn euros in 1H10
� Impairment charges up 96% to €25.4mn in 1H10, as
unprecedented economic conditions led
delinquency to increase dramatically
� Particularly challenging market conditions led to
net trading losses of €0.7mln in 1H10, compared
to €7.1mn gains in H109
� Net interest income at €56.3mn, 4% down from
H109, reflecting intense competition for deposits
(deposit pricing) and the impact of the end of the
fixed-rate teaser for mortgages granted for a two
years period
� Commissions 16% up from 1H09, in spite of slowing
down loans new production
Employees
Branches
1,522 1,506
Jun 09 Jun 10
(Eur million)
(Eur million)
-
48
Earnings Presentation – 1st Half 2010
3.88 4.08 3.98 3.87 3.77
-0.95 -0.89 -1.18-1.57
-0.87
2Q09 3Q09 4Q09 1Q10 2Q10
Income impacted by significant deterioration of funding conditions
NIM
Cost-to-Income
Net Interest Income (quarterly) Loans and deposits spread
Loans spread
Deposits spread
(%, Eur million)
31.6 32.933.2
30.4
25.9
2.02% 2.08% 2.12% 1.90%1.61%
2Q09 3Q09 4Q09 1Q10 2Q10
74.2% 71.2% 72.9% 71.7%
91.1%
2Q09 3Q09 4Q09 1Q10 2Q10
-
49
Earnings Presentation – 1st Half 2010
3,508 3,062
377356
3,4193,885
Jun 09 Jun 10
Lower deposits reflect decrease from institutional customers andvery intense competition in customer funding
Off balance sheet funds
Deposits
(%, Eur million)
-12.0%
Loans to customers (gross)
Impairment
coverage > 90 days
Overdue
ratio > 90 days
1,943 2,079
2,365 2,426
732 681
5,1865,039
Jun 09 Jun 10
+2.9%
59.5%43.3%
3.0% 3.2%
Customer funds
Loans to companies
Consumer loans
Mortgage
-12.7%
-5.5%
-
50
Earnings Presentation – 1st Half 2010
Focus and Transformation: strong growth potential of international operations contribution
Weight of international operations (1H10)
Branches100% = 1,807
* Excluding Turkey and USA
International operationsPortugal
Banking income100% = 1,481 million €
Net income100% = 163.2 million €
30.2
Customer fundsgrowth*
97.5%
15.5%
Customer funds *100%* = 66 billion €
23.9%
49.6%
Customers100% = 5.1 million
50.1%
1H09 figures
49.3%
48.0%
28.7%
6.0%
23.1%
30.2%
97.5%
23.9%
49.7%
50.1%
15.5%
-
51
Earnings Presentation – 1st Half 2010
Focus and Transformation: focus on core international operations
+ 7x
+55.9%
+9.7%
Net income of core international operations
+94.3%
Poland *
Angola Mozambique
* Excluding FX effect. Rates €PLN used: Profit and Loss account 3. 99590833; Balance Sheet 4.1470
74.1
38.1
1H09 1H10
6.39.8
1H09 1H10
29.927.2
1H09 1H10
34.4
4.6
1H09 1H10
(Eur million)
-
52
Earnings Presentation – 1st Half 2010
-4.4%
0.2%
-7.8%
2008 2009 1S10
Focus and Transformation: focus on profitability
Core income evolution * Operating costs evolution
... and cutting costsReversing banking income trend...
(Eur million)
567543534
510480
2Q09 3Q09 4Q09 1Q10 2Q10
* Net interest income and commissions
Consolidated
-
53
Earnings Presentation – 1st Half 2010
Highlights of 1st half of 2010
� Improvement of net income to 163.2 million euros, increasing 10.7%;
excluding specific items net income increases 87.5% to 236.8 million
euros
� Recovery of international operations
� Consistent recovery of margin and commissions since the 3rd quarter
of 2009
� Cost under control: +0.2% in consolidated operating costs and -4.5% in
Portugal
� Reinforcement of impairment and provisions
� Overdue loans aligned with expected levels at this point in the cycle
� Adequate liquidity
� Stress test results show resilience and adequate capital
-
54
Earnings Presentation – 1st Half 2010
Annexes
-
55
Earnings Presentation – 1st Half 2010
Staff costs containment in Portugal
(Eur million)
Staff costs
1H09 1H10 YoY
YoY in
local
currency
Portugal 314.1 281.9 -10.3% -10.3%
Remunerations 228.2 234.5 2.8% 2.8%
Pension costs 85.9 47.4 -44.9% -44.9%
International operations 130.0 142.3 9.5% 7.0%
Poland 53.5 63.9 19.5% 5.4%
Mozambique 14.8 14.0 -5.6% 16.9%
Angola 5.2 8.7 66.6% 101.1%
Greece 30.3 28.6 -5.8% -5.8%
Other 26.1 27.1 3.7% 0.6%
Staff costs 444.2 424.2 -4.5% -5.2%
-
56
Earnings Presentation – 1st Half 2010
(Eur million)
Recovery in commissions YoY and QoQ
1H09 1H10 YoY 2Q09 1Q10 2Q10
Banking commissions 218.9 236.6 8.1% 117.9 114.1 122.5 3.9% 7.4%
Cards 56.0 50.8 -9.3% 28.2 24.5 26.3 -6.9% 7.3%
Loans and guarantees 70.5 67.3 -4.6% 37.6 32.3 35.0 -6.9% 8.3%
Bancassurance 25.1 37.2 48.5% 13.1 18.7 18.5 41.9% -1.1%
Other commissions 67.4 81.3 20.7% 39.1 38.6 42.8 9.4% 10.8%
Market related commissions 32.1 43.9 36.9% 13.7 24.2 19.7 43.5% -18.5%
Securities operations 20.5 31.3 52.8% 8.0 18.1 13.1 63.6% -27.4%
Asset management 11.6 12.7 8.9% 5.7 6.1 6.6 15.2% 8.0%
Total commissions 251.0 280.5 11.8% 131.7 138.3 142.3 8.0% 2.9%
2Q10/
2Q09
2Q10/
1Q10
-
57
Earnings Presentation – 1st Half 2010
(Eur million)
Consolidated
Credit portfolio quality and coverage
Credit PortfolioOverdue > 90
days
Overdue > 90
days / total
loans
Overdue > 90
days / total
loans
Coverage
Jun 10 Jun 10 Mar 10 Jun 10
Individuals 568 1.6% 1.5% 96.0%
Mortgage 169 0.6% 0.5% 109.5%
Consumer 399 8.1% 7.0% 90.2%
Corporate 1,578 3.6% 3.3% 108.4%
Services 489 2.8% 2.8% 107.6%
Commerce 296 5.9% 5.4% 90.1%
Construction 374 7.2% 5.7% 59.9%
Others 419 2.7% 2.5% 165.8%
Total 2,146 2.7% 2.5% 105.1%
-
58
Earnings Presentation – 1st Half 2010
(Eur million)
Credit portfolio quality and coverage
Credit PortfolioOverdue > 90
days
Overdue > 90
days / total
loans
Overdue > 90
days / total
loans
Coverage
Jun 10 Jun 10 Mar 10 Jun 10
Individuals 348 1.4% 1.3% 94.7%
Mortgage 137 0.6% 0.6% 117.3%
Consumer 210 6.8% 6.1% 80.0%
Corporate 1,304 3.6% 3.3% 108.4%
Services 371 2.4% 2.5% 122.5%
Commerce 260 6.6% 6.1% 86.8%
Construction 332 7.5% 6.0% 61.0%
Others 340 2.8% 2.5% 156.0%
Total 1,652 2.7% 2.5% 105.5%
-
59
Earnings Presentation – 1st Half 2010
Romania: improvement of core income and control of operating costs
Branches
Banking income
Employees
Operating costs
Customer funds
Net income(Eur million)
(Eur million)
Loans to customers (gross)� Focus on customer funds translated
into strong deposit growth,
improving loans to deposits ratio
� Recovery of core income: net
interest income and commissions
grew by more than 4x vs. 2Q09
� Controlled costs
252 312
Jun 09 Jun 10
699 705
Jun 09 Jun 10
158221
Jun 09 Jun 10
+24.0% +40.3%
-13.1-15.6
1H09 1H10
12.8 12.0
1H09 1H10
-6.2% 20.520.9
1H09 1H10
-1.7%
7374
Jun 09 Jun 10
-
60
Earnings Presentation – 1st Half 2010
Turkey
Agreement to sell the Turkish operation concluded in 1Q10. Transaction is expected to be concluded in 3Q10
Loans to Customers (gross)
Branches
Banking income
Employees
Operating costs
Customer funds
Net income(Eur million)
(Eur million)
376 423
Jun 09 Jun 10
347 359
Jun 09 Jun 10
-3.4-1.9
1H09 1H10
10.9 10.7
1H09 1H10
7.7 7.8
1H09 1H10
+3.7% +12.5%
+0.5%-1.7%
18 18
Jun 09 Jun 10
316 298
Jun 09 Jun 10
-
61
Earnings Presentation – 1st Half 2010
USA
Agreement to sell the USA operation concluded in 1Q10.Transaction is expected to be concluded in 3Q 10. Branches
Banking income
Employees
Operating costs
Customer funds
Net income(Eur million)
Loans to customers (gross)
(Eur million)
12.611.8
1H09 1H10
-6.4%11.9 11.7
1H09 1H10
451 455
Jun 09 Jun 10
491 510
Jun 09 Jun 10
222 191
Jun 09 Jun 10
17 17
Jun 09 Jun 10
-1.8%
+3.8%
-2.1
-5.5
1H09 1H10
+1.0%
-
62
Earnings Presentation – 1st Half 2010
Financial Statements
-
63
Earnings Presentation – 1st Half 2010
Consolidated Balance Sheet
At 30 June, 2010 and 2009 and 31 December 200930 June
2010
31 December 2009
30 June 2009
Assets
Cash and deposits at central banks 1,149,109 2,244,724 2,041,485 Loans and advances to credit institutions Repayable on demand 1,016,118 839,552 537,870 Other loans and advances 1,239,636 2,025,834 2,255,496 Loans and advances to customers 75,920,346 75,191,116 75,854,735 Financial assets held for trading 3,671,978 3,356,929 3,337,301 Financial assets available for sale 2,570,369 2,698,636 2,086,423 Assets with repurchase agreement 74,609 50,866 43,514 Hedging derivatives 581,780 465,848 383,388 Financial assets held to maturity 5,834,514 2,027,354 1,333,660 Investments in associated companies 428,233 438,918 374,688 Non current assets held for sale 1,922,777 1,343,163 824,433 Investment property 418,616 429,856 427,417 Property and equipment 625,690 645,818 708,151 Goodwill and intangible assets 463,403 534,995 539,831 Current tax assets 31,312 24,774 24,161 Deferred tax assets 605,886 584,250 586,795 Other assets 2,438,912 2,647,777 2,427,123
98,993,288 95,550,410 93,786,471
Liabilities
Amounts owed to central banks 11,584,409 3,409,031 1,270,014 Amounts owed to others credit institutions 5,194,916 6,896,641 6,256,064 Amounts owed to customers 44,072,444 46,307,233 44,852,968 Debt securities 19,573,724 19,953,227 21,683,547 Financial liabilities held for trading 1,495,234 1,072,324 1,297,701 Other financial liabilities held for trading at fair value through results 4,687,815 6,345,583 7,910,876 Hedging derivatives 395,806 75,483 93,550 Non current liabilities held for sale 969,040 435,832 - Provisions for liabilities and charges 254,605 233,120 228,965 Subordinated debt 1,988,449 2,231,714 2,519,439 Current income tax liabilities 2,028 10,795 1,422 Deferred income tax liabilities 4,107 416 370 Other liabilities 1,471,084 1,358,210 1,279,560
Total Liabilities 91,693,661 88,329,609 87,394,476
Equity
Share capital 4,694,600 4,694,600 4,694,600 Treasury stock (88,721) (85,548) (73,141) Share premium 192,122 192,122 183,276 Preference shares 1,000,000 1,000,000 1,000,000 Other capital instruments 1,000,000 1,000,000 300,000 Fair value reserves 46,965 93,760 29,377 Reserves and retained earnings (165,128) (243,655) (221,336) Profit for the period attributable to Shareholders 163,240 225,217 147,480
Total Equity attributable to Shareholders of the Bank 6,843,078 6,876,496 6,060,256
Minority interests 456,549 344,305 331,739
Total Equity 7,299,627 7,220,801 6,391,995
98,993,288 95,550,410 93,786,471
(Thousands of Euros)
-
64
Earnings Presentation – 1st Half 2010
Consolidated Income Statement
For the six month periods ended 30 June, 2010 and 200930 June
201030 June
2009
Interest income 1,636,856 1,991,263 Interest expense (931,897) (1,315,700)
Net interest income 704,959 675,563
Dividends from equity instruments 19,087 3,108 Net fees and commission income 404,991 346,635 Net gains / losses arising from trading and hedging activities 319,980 221,912 Net gains / losses arising from available for sale financial assets (5,423) (7,787) Other operating income 9,091 20,774
1,452,685 1,260,205
Other net income from non banking activity 8,564 8,818
Total operating income 1,461,249 1,269,023
Staff costs 424,214 444,162 Other administrative costs 301,094 278,699 Depreciation 51,552 52,329
Operating costs 776,860 775,190
684,389 493,833
Loans impairment (384,177) (279,056) Other assets impairment (20,393) (41,824) Goodwill impairment (73,565) - Other provisions (20,266) (19,118)
Operating profit 185,988 153,835
Share of profit of associates under the equity method 28,887 30,944 Gains / (losses) from the sale of subsidiaries and other assets (2,554) 21,466
Profit before income tax 212,321 206,245 Income tax Current (28,508) (56,842) Deferred 6,761 10,904
Profit after income tax 190,574 160,307
Attributable to: Shareholders of the Bank 163,240 147,480 Minority interests 27,334 12,827
Profit for the period 190,574 160,307
Earnings per share (in euros) Basic 0.05 0.05 Diluted 0.05 0.05
(Thousands of Euros)
-
65
Earnings Presentation – 1st Half 2010
Consolidated Income Statement (Quarterly Evolution)
For the six month periods ended 30 June, 2010 and 2009(Eur million)
∆ %
10 / 09
Net interest income 301.8 322.6 336.0 340.6 364.4 675.6 705.0 4.4%
Dividends from equity instruments 2.5 1.2 -1.0 0.9 18.2 3.1 19.1 >100%
Net fees and commission income 177.9 187.1 198.0 202.2 202.8 346.6 405.0 16.8%
Other operating income 15.9 75.6 5.7 5.0 10.1 51.1 15.1 -70.4%
Net trading income 64.4 -26.0 37.2 135.4 179.2 214.1 314.6 46.9%
Equity accounted earnings 19.4 16.9 18.4 16.7 12.1 30.9 28.9 -6.6%
Banking income 581.9 577.4 594.3 700.7 786.8 1,321.4 1,487.6 12.6%
Staff costs 212.2 222.9 198.2 208.8 215.4 444.2 424.2 -4.5%
Other administrative costs 136.1 148.0 143.5 147.7 153.4 278.7 301.1 8.0%
Depreciation 26.1 26.3 26.1 25.8 25.8 52.3 51.6 -1.5%
Operating costs 374.5 397.2 367.9 382.2 394.6 775.2 776.9 0.2%
Operating profit bef. imp. 207.4 180.3 226.4 318.5 392.2 546.2 710.7 30.1%
Loans impairment (net of recoveries) 119.0 130.4 150.6 164.8 219.4 279.1 384.2 37.7%
Other impairm. and provisions 24.1 14.5 21.9 21.8 92.4 60.9 114.2 87.4%
Profit before income tax 64.4 35.4 53.9 131.9 80.4 206.2 212.3 2.9%
Income tax 17.1 5.4 -5.1 22.0 -0.3 45.9 21.7 -52.7%
Minority interests 6.5 -0.7 11.9 13.5 13.8 12.8 27.3 >100%
Net income 40.8 30.7 47.1 96.4 66.8 147.5 163.2 10.7%
Year-to-dateQuarterly
2Q 09 Jun09 Jun102Q 101Q 104Q 093Q 09
-
66
Earnings Presentation – 1st Half 2010
Consolidated Income Statement (Portugal and International operations)
For the six month periods ended 30 June, 2010 and 2009(Eur million)
Jun09 Jun10 ∆ % Jun09 Jun10 ∆ % Jun09 Jun10 ∆ % Jun09 Jun10 ∆ % Jun09 Jun10 ∆ % Jun09 Jun10 ∆ % Jun09 Jun10 ∆ %
Interest income 1,991 1,637 -17.8% 1,419 1,068 -24.7% 572 569 -0.6% 265 292 10.2% 56 59 4.2% 156 123 -20.9% 95 95 0.0%
Interest expense 1,316 932 -29.2% 923 622 -32.6% 392 310 -21.0% 218 183 -16.0% 12 16 31.3% 98 67 -31.2% 65 44 -32.0%
Net interest income 676 705 4.4% 495 446 -10.0% 180 259 43.9% 47 109 >100% 44 43 -3.3% 59 56 -3.8% 30 51 68.3%
Dividends from equity instruments 3 19 >100% 3 19 >100% 0 0 3.8% 0 0 3.6% 0 0 12.9% 0 0 -9.7% 0 0 100% 44 43 -3.3% 59 56 -3.8% 30 51 68.3%
Net fees and commission income 347 405 16.8% 251 281 11.8% 96 124 30.1% 51 71 38.5% 12 11 -3.1% 14 17 16.4% 18 25 38.2%
Other operating income 51 15 -70.4% 45 11 -76.2% 6 4 -24.5% 1 -1 100%
Basic income 1,076 1,144 6.3% 794 756 -4.9% 282 388 37.7% 100 179 79.2% 59 57 -2.8% 74 75 1.3% 49 77 57.1%
Net trading income 214 315 46.9% 118 254 >100% 96 60 -36.9% 57 26 -54.7% 9 17 94.1% 7 -1 100%
Loans impairment (net of recoveries) 279 384 37.7% 204 295 44.6% 75 89 19.0% 41 33 -20.3% 2 7 >100% 13 25 96.3% 19 24 27.8%
Other impairm. and provisions 61 114 87.4% 60 115 92.0% 1 -1 100% 5 34 >100% 27 30 9.7% 3 -10
-
67
Earnings Presentation – 1st Half 2010
Banco Comercial Português, S.A., a public company (sociedade aberta) having its registered office at Praça D. João I, 28, Oporto, registered at the Commercial Registry of Oporto, with the single commercial and tax identification number 501 525 882 and the share capital of EUR 4.694.600.000
Investor Relations Division:
Sofia Raposo, Head of Investor Relations
Francisco Pulido Valente
João Godinho Duarte
Tl: +351 21 1131 085
Email: [email protected]