Largest banks operating in Portugal

Transcription

CORPORATE
PRESENTATION
September 2016
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 matters discussed in this document may include forward-looking statements that are subject to risks and uncertainties. By their nature,
forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future and may cause the actual results, performance or achievements of BCP to be materially different from future
results, performance or achievements expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to
factors that are beyond BCP's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of
other market participants, the actions of regulators and other factors such as BCP's ability to continue to obtain financing to meet its liquidity
needs, changes in the political, social and regulatory framework in which BCP operates or in economic or technological trends or conditions,
including inflation and consumer confidence. Attendees at this presentation are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this presentation. Even if BCP’s financial condition, business strategy, plans and objectives of
management for future operations are consistent with the forward-looking statements contained in this presentation, those results or
developments, as well as BCP past performance, may not be indicative of results or developments in future periods. BCP expressly disclaims any
obligation or undertaking to release any updates or revisions to these forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable law
A informação constante neste documento foi preparada de acordo com as normas internacionais de relato financeiro (‘IFRS’) do Grupo BCP no
âmbito da preparação das demonstrações financeiras consolidadas, de acordo com o Regulamento (CE) 1606/2002
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
First 6 months figures for 2015 and 2016 not audited
The business figures presented exclude Banco Millennium in Angola
The European Central Bank (ECB) has not requested or validated the disclosure of the results of the stress tests referred to herein. Any references
refer to the result of the stress test on a bottom-up perspective, it is not possible to infer from them any information relating to top-down
projections of the ECB or the topics covered on the appropriate quality assurance process
2
Summary
1.
Portuguese macroeconomic update
2.
Millennium bcp’s Strategic Plan
3.
Appendix
A.
1H2016 Earnings
B.
Other Information
3
Fiscal consolidation creates the conditions for the sustainability of the public debt,
leading to normalisation of yields on sovereign debt
Budget deficit decreases…
…with significant effort on expenditure
(% of GDP)
(total expenditure, % of GDP)
51.8
11.2
50.0
7.4
7.2
5.7
4.8
48.5
50.1
51.7
48.3
46.3
4.4
2.2
2010
2011
2012
2013
2014
2015
2010
2016E
Source: Statistics Portugal; Ministry of Finance.
2011
2012
2013
2014
Yields have been decreasing
(Public debt, % of GDP)
10y Portuguese bonds (yield, %)
129.0
2016E
Source: Bank of Portugal; Ministry of Finance.
Debt level is already decreasing
126.2
2015
130.2
128.8
127.7
18
15
111.1
12
9
96.2
6
Average: >10%
Average: ~4%
 3%
3
0
2010
2011
2012
2013
Source: Bank of Portugal; Ministry of Finance.
2014
2015
2016E
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Thomson Reuters.
4
Portugal has been undergoing profound structural reforms, which are already
showing positive results
Real GDP Growth rate (yoy)
Current account balance (% of GDP)
1.9
0.9
1.5
1.4
2011
0.6
2013
2014
2015
0.9
-5.6
-4.0
2010
0.3
-2.0
-1.6
-1.8
0.7
2012
-10.1
2013
2014
2015
2016E
2010
2011
2012
2016E
Source: Statistics Portugal; IMF.
Unemployment rate (%)
16.8
16.2
13.9
13.9
12.4
11.4
2011
2012
2013
2014
2015
 Structural changes in the economy and
the public sector are being undertaken
to increase the external competitiveness
of the country and of the private sector
2016E
5
Summary
1.
2.
3.
Appendix
A.
1H2016 Earnings
B.
Other Information
6
Significant transformation of Millennium bcp over the last years, since the
2008 crisis
Past
Capital
Liquidity
Costs
Capital ratio
12.3%
CET1 phased-in
175%
Commercial gap
-32.5
Mar 09
billion euros
Mar 09
ECB funding usage
15.4
billion euros
Sep 11
102%
-0.4
4.9
Cost-income
76.5%
45.7%
6M13
Cost-core income: 53.3%
Operating costs in Portugal
1,031
million euros
Cost of risk in Portugal
2008
920
Set 08
243 bp
9M14
Credit at risk in Portugal
7.4
billion euros
Jun 12
Net income
Profitability
4.2%
Core Tier 1 BoP, Mar 08
Loans to Deposits
Branches in Portugal
Asset quality
1H16
million euros
ROE
-1,219
2012
-35.4%
2012
309.8
646
286 bp
5.8
-197.3
-8.8%
7
Improvement trend on core income and operating costs
in Portugal proceeds
Core net income*
Core Income
(Million euros)
(Million euros)
+230
+290
554.2
277.8
234.5
358.1
587.6
424.7
Commissions
73.5
Net interest
income
1H13
-12.5
1H13
1H14
1H15
1H14
1H15
1H16
1H16
Operating costs
(Million euros)
 Core income increases to €588 million in the 1st
half of 2016
-61
370.6
351.1
319.7
1H13
1H14
1H15
 Operating costs down to €310 million in the
same period
309.8
 Continuation of the core net income* expansion
trend to €278 million in the 1st half of 2016
1H16
* Core net income = net interest income + net fees and commission income – operating costs.
8
Continued effort to reduce the cost of deposits
Spread on term deposits portfolio
Spread on the performing loan book
(vs 3m Euribor)
(vs 3m Euribor)
2013
2014
2015
-1.2%
1H16
3.2%
3.1%
3.0%
2.9%
2013
2014
2015
1H2016
-0.8%
-1.7%
-2.4%
NIM
1.5%
1.6%
1.0%
 Stable spread on the total loan book, at 2.9%
again in the 2nd quarter of 2016
0.6%
2013
2014
 Continued improvement of the spread of the
portfolio of term deposits, up to -84bp in 2Q16;
June’s front book priced at an average yield of
32bp, substantially below current back book’s
2015
1H16
 NIM stood at 1.6% in the 2nd quarter of 2016, an
improvement both from the previous quarter and
from the same period of 2015
9
Operating costs: significant reduction over the last years
Operating costs down by >30% vs pre-programme
levels...
...with a >20% reduction in branches...
Operating costs* (Million euros)
Total branches (#)
924
2011
734
690
642
620
885
774
695
671
646
2013
2014
2015
Jun 16
2011
2013
2014
2015
Jun 16
... and employees
Largest banks operating in Portugal
Employees (#)
Operating costs cumulative performance 2011-2016*
+12%
9,959
8,584
7,795
7,459
7,402
-3%
-22%
2011
2013
2014
2015
Jun 16
-32%
BCP
* Non-annual figures were annualized. Figures related to the activity in Portugal were considered, whenever available.
Bank #1
Bank #2
Bank #3
10
Millennium bcp is one of the most efficient banks in Portugal and
in the Eurozone
Cost to core income*
Latest available data
vs. peers in
Portugal
vs. Eurozone listed
banks
-33pp
85.7%
64.0%
53%
Banco 1
76%
53%
Banco 3
74%
69%
55.0%
52.5%
2015
1H16
62%
2013
Banco 2
Cost-income:
45.7%
74%
99%
2014
85.7%
78.5%
Banco 4
57%
76.2%
76%
52.5%
67%
2013
* Core Income = net interest income + net fees and commissions.
2014
2015
1H16
11
Cost of risk to benefit from improved credit quality
Non-performing loans
Cost of risk
(Basis points)
Impairment
charges
(Million euros)
(Million euros)
470
369
464
619
7,192
6,606
6,783
11.8%
11.4%
12.1%
11.5%
Jun 13
Jun 14
Jun 15
Jun 16
234
155
165
127
<75
As a % of total
loans
6,096
120*
1H13
1H14
1H15
1H16
2018
* Ecluding non-recurrent itens.
Coverage of credit at risk by LLRs,
real/financial guarantees and equity
Loan-loss reserves
(Million euros)
3,505
As a % of NPLs
3,127
3,624
3,744
48.7%
47.3%
53.4%
61.4%
Jun 13
Jun 14
Jun 15
Jun 16
Coverage inc.
attrib equity
146%
146%
178%
181%
Coverage by
LLRs and
guarantees
107%
106%
110%
113%
Jun 13
Jun 14
Jun 15
Jun 16
12
Specific issues affect NPLs in Portugal
NPL coverage by LLRs and collaterals
Property prices
104%
103%
96%
95%
94%
87%
87%
87%
85%
84%
84%
82%
81%
60%
73%
Euro area average: 89.5%
98%
(Q1’2000=100)
250
200
Spain
150
Portugal
100
FI GE FR BE
SI
AT LV
IE
IT NL LT SK EL CY ES PT
Source: ECB, Risks and vulnerabilities for euro area financial stability, 6 April 2016.
Time to resolve civil, commercial, administrative and
other cases
(First instance, in days)
1,000
800
600
Portugal: 2.4 years
(banking credit recovery: 4.1 years)
EU average: 8 months
Q1'00
Q4'00
Q3'01
Q2'02
Q1'03
Q4'03
Q3'04
Q2'05
Q1'06
Q4'06
Q3'07
Q2'08
Q1'09
Q4'09
Q3'10
Q2'11
Q1'12
Q4'12
Q3'13
Q2'14
Q1'15
Q4'15
50
Source: BIS.
 Including loan-loss reserves and collaterals, NPL coverage in
Portugal stands at 104% and is the highest in the euro-zone
(whose average is just below 90%)
 Unlike Spain, real-estate prices in Portugal have been roughly
stable (there was no RE “bubble” in Portugal). Real-estate
collaterals are not overvalued and their market values are
predictable to a large extent
400
200
DK
EE
AT
LT
CZ
BG
HU
NL
FI
SI
RO
HR
SE
LU
LV
SK
FR
IT
DE
CY
EL
MT
PT
0
 The time to resolve banking credit cases in Portugal is clearly
excessive: a large part of NPLs booked in Portugal’s banks
balance sheets would be already written-off in most other
European countries
Source: CEPEJ (EC), 2015 Study on the functioning of judicial systems in the EU Member States.
13
Millennium bcp is bringing down NPEs
Non-Performing Exposure (NPE)
(Billion euros)
10.6
6.4
Target for 2017:
2.0 – 2.5 bn
reduction
9.8
9.5
5.6
5.8
Jun15
Dec15
Jun16
127%
118%
131%

On top of NPLs (ie overdue portion of
loans in arrears by more than 90 days,
plus remaining principal), NPEs include
also cross-default and restructured
loans whose changes from initial terms
have resulted in the bank being in a
higher risk position than previously

From June 2015, NPEs have already
decreased by €1.2bn, standing at
€9.5bn at end-June 2016

We have a plan to reduce NPEs by, at
least, €2.0-2.5bn up to year-end
2017
NPE
NPL
Texas
ratio*
78% if NPE down by
2.5 bn
* Texas ratio = (NPE – loan loss reserves) / Phased-in CET1 capital.
14
Millennium bcp is a brand with unique international presence
focused on key strategic markets
Single brand
Millennium
Millennium bcp
Market share: 18% on loans and 17.3% on
deposits
Loans to customers (gross): 40,719 M€
Customer funds: 47,213 M€
Employees: 7,402
Branches: 646
Poland
Market share: 4.6% on loans and 5.1% on
deposits
Employees: 5,897
Branches: 392
Angola
Loans to customers market share up to
11%
Customer funds market share up to 9%
Data as at June 2016, except market shares in international operations (May 16).
Macau
Millennium BCP onshore branch
Loans to customers (gross): 618 M€
Customer funds: 925 M€
Employees: 12
Branches: 1
China
(Guangzhou)
Millennium BCP
Representative office
based in Guangzhou
Employees: 2
Mozambique
Market share: 28.7% on loans and 28.2%
on deposits
Employees: 2,520
Branches: 170
15
Unique international presence focused on key strategic markets delivering strong
earnings growth
Net income
Real GDP Growth*
(Million euros)
13.0%
(CAGR)
291
131
7.2%
(CAGR)
119
2015
2016
2017
2018
Poland
+3.6%
+3.6%
+3.6%
+3.5%
Mozambique
+6.3%
+6.0%
+6.8%
+7.9%
Angola
+3.0%
+2.5%
+2.7%
+3.2%
158
International presence of BCP
81
84
Net
income
(1S16)
ROE
(1S16)
LTD
(1S16)
BV
(1S16)
BCP
stake
Poland
€98.4m
13.1%
87%
€1.3bn**
50.1%
Mozambique
€36.8m
21.1%
74%
€0.2bn
66.7%
Angola
€21.4m
-
-
-
22.5%
77
53
39
2006
76
24
2010
* Source: IMF – WEO April 2016.
** Market capitalisation as at 30 June 2016
2015
16
Liquidity position: net loans as a percentage of BS Customer funds now at
100%
Commercial gap (net loans – deposits)
(Billion euros)
-29.1
29.5
Dec 09
28.3
20.5
Dec 10
13.1
Dec 11
Dec 12
7.8
3.9
3.4
0.4
0.4
Dec 13
Dec 14
Jun 15
Dec 15
Jun 16
162%
Loans to deposits ratio
102%
147%
Loans to on BS funds ratio
97%
Refinancing needs of medium-long term debt
(Billion euros), Cocos not included
5.2
2009
4.9
2010
Already repaid
5.5
2.9
2011
1.1
2012
2013
To be repaid
3.0
2014
0.6
0.3
0.6
1.6
1.2
2015
1H16
2H16
2017
>2017
17
Balance sheet breakdown
Balance sheet breakdown
Securities portfolio
(Billion euros)
(Billion euros)
Securities
Other,net
3.7
13.7 13.8
3.6
5.0
4.1
12.2 7.7
7.8
8.3
Dec 13
13.7
0.8
1.2
3.4
Loans- deposits
3.3
12.6
3.9
7.0
0.4
Dec 14
5.7
6.4
5.1
Dec 15
4.7
5.0
Equity
5.7
Debt
12.8
0.4
Money
7.2 market, net
Jun 16
Sovereign debt portfolio
12.6
0.9
1.6
2.7
12.8
0.8
1.4
2.1
8.3
7.6
7.3
8.5
Dec13
Dec 14
Dec 15
Jun 16
Debt
(Million euros)
Dec 13
Dec 14
Dec 15
Jun 16
Portugal
5.879
4.688
3.865
5.331
T-bills
2.178
815
881
1.261
Bonds
3.701
3.873
2.984
4.070
1.366
1.820
2.312
2.740
Poland
12.2
1.1
1.5
2.1
Angola
393
367
579
0
Mozambique
319
587
472
302
Other
375
130
91
92
Total
8.332
7.592
7.319
8.465
Debt securities
Other
Equities
Other debt
Sovereign
debt
(Million euros)
Dec 13
Dec 14
Dec 15
Jun 16
9,310
5,650
4,720
3,999
Senior unsecured
6,585
3,822
2,950
2,273
Covered bonds
2,185
1,345
1,331
1,322
540
483
439
404
4,274
2,016
1,638
1,646
1,222
1,225
849
859
Securitisation
Subordinated debt
Dated
Perpetual
28
29
29
29
CoCos
3,025
763
760
758
Accruals
188
69
56
33
13,773
7,735
6,414
5,678
Total
18
Stable capital, supported by recurring profitability and lower RWAs
Common Equity Tier 1 ratio
Common Equity Tier 1 ratio*
Phased-in, latest available data
vs. Euro-zone listed
banks
12.2%
11.7%
13.3%
12.3%
9.3%
12.3%
Dec 13
11.8%
Dec 14
Dec 15
Jun 16
Dec 13
Phased-in
RWAs
(€MM)
46.8
43.5
43.3
7.8%
Dec 14
10.2%
9.6%
Dec 15
Jun 16
Fully implemented
38.4
45.5
42.8
42.7
38.0
12.3%
11.6%
 Common equity tier 1 ratio of 12.3% according to phased-in
criteria and of 9.6% on a fully implemented basis, supported
by recurring profitability and lower RWAs
 Millennium bcp has the 2nd strongest capital in Portugal, and is
in line with European benchmarks on a phased-in basis
11.1%
* Estimates.
19
High leverage ratios and RWA density
Leverage ratio
Leverage ratio
Fully implemented
banks
6.7%
6.6%
4.9%
5.2%
Jun 15
Jun 16
5.2%
Jun 15
Jun 16
Phased-in
Fully implemented
5.3%
RWAs density in selected European countries
57%
5.6%
46%
46%
ES
IT
27%
4.1%
FR
20
Road to 2018: targets
CET1 phased-in ratio**
1H15*
1H16*
13.1%
12.3%
Target
2018
≥11%
CET1 fully implemented ratio**
9.6%
9.6%
Loans to Deposits
107%
102%
<100%
Cost-core income
56.3%
52.5%
<50%
Cost-income
37.3%
45.7%
<43%
Cost of risk
165 bp
234 bp
<75 bp
ROE
11.4%
-8.8%
>11%***
* Includes gains on sovereign debt and devaluation of corporate restructuring funds in 2015, and, in 2016, gains on the Visa transaction, devaluation of corporate restructuring
funds and additional impairment charges to reinforce coverage, impacting cost-income and ROE. | ** Estimates. | ***Consistent with a 11% CET1 ratio.
21
Summary
1.
2.
3.
Appendix
A.
1H2016 Earnings
B.
Other Information
22
Agenda
 Highlights
 Group
• Profitability
• Liquidity
• Capital
 Portugal
 International operations
 Conclusions
23
Highlights
Stress tests
Strong results
Capital
Adequate position
Asset quality
Coverage reinforced
significantly
• Strong results on ECB’s stress tests (relevant for the calculation of minimum
capital): phased-in common equity tier 1 in excess of 7% under the adverse
scenario, compared to a reference value of 5.5% and to 2.99% in the 2014 stress
tests.
• Common equity tier 1 ratio of 12.3% according to phased-in criteria. This ratio
stood at 9.6% under a fully implemented basis, the same figure posted as at
June 30th 2015 (estimates).
• NPE coverage by provisions, expected loss gap and collaterals strengthened to
97% (91% as at June 30th 2015), supporting the plan to bring NPEs down by more
than €2 billion in December 2017.
• Non-performing loans ratio down to 11.5% as at the end of the 1st half of 2016
from 12.1% as at the same date of 2015; NPL coverage by provisions
strengthened to 61.4% (53.4% as at June 30th 2015), 113.0% including real and
financial guarantees.
24
Highlights
Profitability and
efficiency
Earnings excluding nonusual items reinforced
Business
performance
Healthy balance sheet
• Net result of -€197.3 million in the 1st half of 2016. Excluding non-usual items*,
net profits amounted to €56.2 million in 1H16, compared to €21.2 million
losses in 1H15.
• Core net income** up 10.3% to €437.1 million, resulting in cost to core
income** improving by 4pp to 52.5% (cost to income of 45.7%).
• Commercial gap improved further, with net loans as a percentage of on-balance
sheet Customers funds now standing at 97%. As a percentage of deposits (BoP
criteria)***, net loans improved to 102% (107% as at June 30th, 2015).
• Customer deposits totalled €48.8 billion, with deposits from individuals in
Portugal up by 3.7%.
• More than 5.3 million Customers, 5.9% up from the 1st half of 2015.
* Non-usual items in 1H16: gains on Visa transaction, devaluation of corporate restructuring funds, additional impairment charges to increase coverage; non-usual items in 1H15: capital gains on
Portuguese sovereign debt and devaluation of corporate restructuring funds. | ** Core net income = net interest income + net fees and commission income – operating costs, core income = net interest
income + net fees and commission income. | ** According to the current version of Notice 16/2004 of the Bank of Portugal.
25
Highlights
Core net income*
Net income excluding non-usual items**
(Million euros)
(Million euros)
396.4
+40.7
+77.4
437.1
56.2
-21.2
1H15
1H16
Net income
Loans to deposits ratio***
1H15
1H16
240.7
-197.3
Phased-in capital ratio (CET1 – CRD IV / CRR)****
-5pp
107%
13.1%
102%
97%
1H15
1H16
Net loans to on-BS Customers funds
12.3%
102%
Jun 15
Fully loaded
9.6%
Jun 16
9.6%
* Core net income = net interest income + net fees and commission income – operating costs. | ** Non-usual items in 1H16: gains on Visa transaction, devaluation of corporate
restructuring funds, additional impairment charges to increase coverage; non-usual items in 1H15: capital gains on Portuguese sovereign debt and devaluation of corporate
restructuring funds. | *** According to the current version of Notice 16/2004 of the Bank of Portugal. | *** Estimates.
26
Highlights
Core net income*
Core income (net interest income + net commissions)
(Million euros)
(Million euros)
+18.5%
234.5
1H15
+6.0%
277.8
554.2
587.6
1H16
1H15
1H16
Operating costs
Loans impairments in Portugal
(Million euros)
Cost to core
income
57.7%
319.7
(Million euros)
-3.1%
52.7%
Cost of
risk
196pb
309.8
+38.8%
286pb
582.6
419.6
1H15
1H16
* Core net income = net interest income + net fees and commission s income – operating costs.
1H15
1H16
27
Highlights
Customers
Cards
(Million)
(Million)
+5.9%
5.0
5.3
International
2.7
+10.2%
3.0
Portugal
2.3
+0.8%
2.3
Jun 15
6.1
Jun 16
+5.5%
International
2.8
+8.3%
Portugal
3.3
+3.2%*
Jun 15
6.4
3.0
3.4
Jun 16
* Total card invoicing up by 7.1%.
POS
 Key indicators of business dynamics perform strongly,
both in Portugal and in international operations:
(Thousands)
+14.8%
Internacional
45.3
6.5
+17.2%
52.0
7.6
Portugal
38.8
+14.4%
44.4
Jun 15
– Customers exceed 5.3 million at June 30th 2016
(+5.9% from the end of 1H15). International
operations up by 10.2%;
– Cards up by 5.5% from the end of 1H15, exceeding
6.4 million at June 30th 2016. International
operations up by 8.3%;
– Number of POS up by 14.8% from the end of 1h15
to approximately 52,000 equipments at June 30th
2016.
Jun 16
28
Highlights
Retail
Companies and Corporate
 Customers with bundled/pre-paid solutions now exceed
900,00
 Market share among exporting companies up to
16.2%
 Customer acquisition increases 11% (+25% for
residents abroad)
 New “2020” app, an innovating digital application
allowing companies to monitor the execution or their
projects approved under the “Portugal 2020”
programme, on a daily basis
 Mobile banking: number of users increases twofold
from June 2015, exceeding 200,000
 Leader in online brokerage, with a market share in
excess of 24%
 Up by 4.3% in insurance business, contrasting to a
decrease of the insurance industry in Portugal
“Basef Banca”/ “Marktest”, June 2016 scores
 Increased penetration as 1st bank (+1.9pp from June
2015)
 New “Easy Confirming” product
“Bfin DataE” (Companies), 2016 scores
 Bank most used by used by companies as main
bank
 Best bank in adequacy of products
 Main bank among upper and upper-middle classes:
market share up by 3.5pp from June 2015
 Best bank in innovation
 Best bank in proximity to Customers
 Best bank in proximity to Customers
 Leader in overall Customer satisfaction in internet
and mobile banking
 Best bank (overall) for companies
 Best bank in efficiency
Global Finance 2016
 “Best Consumer Digital Bank” in Portugal
Ranking among the 5 largest banks.
29
Agenda
 Highlights
 Group
• Profitability
• Liquidity
• Capital
 Portugal
 Conclusions
30
Earnings excluding non-usual items improve
(million euros)
1H15
1H16
Impact on
earnings
Core net income
Mandatory contributions (Portugal and Poland)
Other operating income
396.4
-42.1
115.6
437.1
-80.4
127.7
+40.7
-38.3
+12.2
Operating net income (bef. impairment and provisions)
469.9
484.4
+14.5
Impairment and provisions
-538.6
-390.3
+148.2
Net income before income tax
-68.7
94.1
+162.8
Income taxes, non-controlling interests and disc. operations
47.6
-37.8
-85.4
Net income excluding non-usual items
-21.2
56.2
+77.4
Gains on Visa transaction
Capital gains on Portuguese sovereign debt
Devaluation of corporate restructuring funds
Additional impairment charges (to increase coverage)*
0.0
273.6
-11.7
0.0
47.1
0.0
-89.0
-211.5
+47.1
-273.7
-77.3
-211.5
Total non-usual items, net
261.9
-253.5
-515.4
Net income
240.7
-197.3
-438.0
* Credit impairment charges for 2Q16, minus those necessary to keep NPE coverage constant at 1Q16 levels.
31
(Million euros)
-438.0
Total impact: -515.4
240.7
-273.7
-197.3
-211.5
-77.3
Net income 1H15 Impact of lower
gains on
sovereign debt
Impact of
additional
impairment
Impact of
devaluation
corporate restr
funds
+77.4
+47.1
Impact of Visa
transaction
Improvement to Net income 1H16
earnings
excluding
non-usual items
32
Core net income improves, reflecting strong performance in
Portugal
(Million euros)
Core net income*
Portugal
Consolidated
+18.5%
277.8
234.5
+10.3%
437.1
396.4
1H15
International operations
-1.6%
1H15
1H16
1H16
+12.8% w/o FX
impact
161.9
159.3
1H15
1H16
33
Net interest income: impact of the significant decrease of Euribor
rates dampened by a lower cost of deposits
(Million euros)
Net interest income
Portugal
Consolidated
Net interest margin
Net interest margin
1.7%
1.9%
Excluding CoCos
1.8%
2.0%
+5.1%
571.5
1.4%
+8.8%
1.5%
329.2
358.1
1H15
1H16
600.8
Net interest margin
2.6%
242.2
1H15
1H16
1H15
+16.3%
w/o FX impact
+0.2%
2.7%
242.7
1H16
34
Performance of commissions determined by a demanding
regulatory environment and FX devaluation
(Million euros)
Fees and commissions
Portugal
Consolidated
+2.0%
1H15
1H16
YoY
271.4
263.1
-3.1%
Cards and transfers
79.8
71.1
-10.9%
Loans and guarantees
84.5
81.1
-4.0%
Bancassurance
37.7
39.1
+3.6%
Customer account related
39.8
45.4
+14.0%
Other fees and commissions
29.6
26.5
-10.7%
Market related fees and commissions
64.7
57.3
-11.5%
Securities operations
44.8
38.9
-13.1%
Asset management
19.9
18.3
-8.1%
336.1
320.3
-4.7%
Banking fees and commissions
Total fees and commissions
225.0
229.5
1H15
1H16
-7.6% w/o FX
impact
111.1
1H15
-18.2%
90.9
1H16
35
Performance of other income influenced by gains on PT sovereign debt in
1H15 and gains on the Visa transaction in 1H16
(Million euros)
Portugal
Other income
Consolidated
461.6
-70.0%
407.2
-84.9%
61.4
1H15
138.3
1H16
+41.2%
Visa transaction
Gains on PT sovereign
debt
1H15
1H16
0.0
91.0
388.1
0.0
54.4
1H15
76.8
1H16
36
Cost reduction proceeds
(Million euros)
Portugal
Operating costs
Consolidated
Cost to core
income
Cost to core
income
56.3%
511.2
Depreciation
Other
administrative
costs
27.7
194.9
52.5%
319.7
-5.3%
288.6
1H15
52.7%
-3.1%
309.8
484.1
-7.9%
25.5
-5.1%
184.9
1H15
-5.2%
1H16
Cost to core
income
Staff costs
57.7%
54.2%
273.7
191.5
1H16
1H15
52.2%
-9.0%
+5.1% w/o FX
impact
174.3
1H16
37
Millennium bcp is one of the most efficient banks in Portugal and
in the Eurozone
Latest available data
vs. peers in Portugal
vs. Eurozone listed
banks
-33pp
85.7%
64.0%
53%
Bank1
76%
53%
Bank 3
74%
69%
68%
95%
2014
57%
52.5%
2015
1H16
85.7%
78.5%
Bank 4
55.0%
60%
2013
Bank 2
Cost-income:
45.7%
75.4%
75%
52.5%
67%
2013
* Core income = net interest income + net fees and commissions.
2014
2015
1H16
38
We have reinforced the balance sheet with a significant amount of
additional impairment and provision charges...
(Million euros)
Portugal
Consolidated
+47.1%
+52.2%
198.0
Other impairment
and provisions
555.3
91.6
Loan impairment,
net of recoveries
Cost of risk
772.9
816.6
618.7
190.3
Other impairment
and provisions
507.9
88.3
Loan impairment,
net of recoveries
419.6
Cost of risk
196bp
286bp
1H15
1H16
582.6
463.7
165bp
234bp
Other impairment
and provisions
1H15
1H16
Devaluation of corporate
restr funds
16.7
126.3
Aditional impairment (to
reinforce coverage)
0.0
300.0
47.3
3.3
-7.7%
43.7
7.6
Loan impairment,
net of recoveries
44.0
Cost of risk
66bp
59bp
1H15
1H16
36.1
39
… with lower delinquency and increased coverage
(Million euros)
Credit quality
NPL %
12.1%
6,783
Loan loss reserves
-10.1%
11.5%
53.4%
61.4%
6,096
3,624
3,744
Jun 16
Jun 15
Jun 16
% of NPL
NPL
Jun 15
Coverage by BS impairment and real/financial
guarantees
109.5%
Jun 15
Net NPL entries in Portugal
113.0%
477
Jun 16
1H15
-17.9%
392
1H16
40
Diversified and collaterised portfolio
Consolidated
Loan portfolio
Companies
46%
Loans by collateral
Mortgage
46%
61%
Real guarantees
31%
Other guarantees
8%
Unsecured
LTV of mortgage portfolio in Portugal
14%
0-40
10%
40-50
13%
50-60
27%
60-75
10%
75-80
14%
12%
80-90
>90
Consumer /
Other 8%

Loans to companies accounted for 46% of the loan portfolio at June 30, 2016, including 9%
to construction and real-estate sectors

92% of the loan portfolio is collateralised

Mortgage accounted for 46% of the loan portfolio, with low delinquency levels and an
average LTV of 67%
41
Agenda
 Highlights
 Group
• Profitability
• Liquidity
• Capital
 Portugal
 Conclusions
42
Deposits influenced by FX impact in international operations; individuals
in Portugal stand out
(Million euros)
Customer funds
Customer deposits in Portugal
Consolidated
Off-BS funds
Other BS
funds
Other (inc
public sector)
64,241
62,823
12,594
12,323
2,547
34,211
Companies
2,119
9,393
Individuals
22,699
1,738
+0.9%
-33.1%
+1.8%
1,417
9,566
+3.7%
23,549
Jun 15
Term
deposits
28,810
30,174
Jun 16
Customer deposits in international op.
-0.7%
On-demand
deposits
-4.4%
18,926
19,952
Jun 15
Jun 16
34,531
On a comparable basis: excludes Millennium bcp Gestão de Activos, following the discontinuation processes.
+5.9% w/o FX
impact
14,889
14,231
Jun 15
Jun 16
43
Credit influenced by FX impact
(Million euros)
Portugal
Loans to Customers (gross)
Consolidated
56,137
Mortgage
25,820
-5.7%
42,872
3,988
40,719
52,930
24,494
Market share among
exporting companies
Consumer
and other
-5.0%
3,918
Jun 15
Jun 16
15.5%
16.2%
+1.5% w/o FX
impact
-7.9%
Companies
26,330
24,518
Jun 15
Jun 16
13,265
12,211
Jun 15
Jun 16
44
Continued improvement of the liquidity position, current ratios
exceed future requirements
Loans to deposits ratio** (BoP)
Commercial gap*
(Billion euros)
Difference between BS Customer
funds and net loans
+1.3
-0.9
-3.4
Net loans to BS Customer funds
107%
-5pp
102%
-0.4
102%
97%
Jun 16
Jun 15
Jun 16
+3.0
Jun 15
Liquidity ratios (CRD IV/CRR)
 Commercial gap narrows €3.0 billion from
June 30, 2015
113%
NSFR (Net stable funding
ratio)
121%
LCR (Liquidity coverage
ratio)
* Based on Customer deposits and net loans to Customers.
** According to the current version of Notice 16/2004 of the Bank of Portugal.
 Loans to deposit ratio (Bank of Portugal
criteria) at 102%, 97% if all BS Customer
funds are included
 Liquidity ratios CRD IV/CRR higher than
the required 100%
45
Lower refinancing needs in the medium to long term, Customer deposits
are the main funding source
Debt repayments (medium-long term)
ECB funding
(Billion euros, CoCos not included)
(Billion euros)
Already repaid
5.5
5.2 4.9
3.0
2.9
6.1
To be repaid
1.1
1.6 1.2
0.6 0.3 0.6
2009 2010 2011 2012 2013 2014 2015 1H16 2H16 2017 >2017
TLTRO
1.5
Other
4.6
4.9
3.5
1.4
Jun 15
Jun 16
Improved funding structure
Other
24%
22%
 Net usage of ECB funding at €4.9 billion (€3.5 billion related
to TLTRO), compared to €6.1 billion at the end of the 1st half
of 2015 (TLTRO: €1.5 billion)
 €12.8 billion (net of haircut) of eligible assets available for
refinancing operations with ECB, with a €7.9 billion buffer
Customer
deposits
76%
78%
 Customer deposits account for 78% of funding
 Future debt repayments (medium-long term) significantly
lower than in the past
Jun 15
Jun 16
46
Agenda
 Highlights
 Group
• Profitability
• Liquidity
• Capital
 Portugal
 Conclusions
47
Outcome of the stress tests
Assumptions, adverse scenario
Adverse scenario
Euro Area
Portugal
2016
2017
2018
2016
2017
2018
GDP growth
-1.0%
-1.3%
0.6%
-2.1%
-2.6%
-0.6%
HIPC inflation
-0.9%
-0.1%
0.1%
-1.3%
-1.9%
-1.0%
Unemployment rates
11.0%
11.7%
12.4%
12.4%
13.3%
15.2%
Residential property prices
-7.3%
-2.3%
0.1%
-7.3%
-3.4%
-1.2%
Prime commercial property prices
-4.5%
-5.7%
-1.5%
-4.9%
-5.9%
-2.0%
2.1%
2.4%
2.3%
3.8%
3.9%
3.8%
Public debt long term yields
 BCP’s CET1 phased-in ratio stood at 7.2% under the
adverse scenario (2.99% in the stress test of 2014).
 The minimum 5.5% CET1 ratio (phased-in) required in 2014
was kept as a reference in the adverse scenario.
 Test involved a significant sample of banks in the
European Union; outcomes were disclosed for 51 banks, of
which 37 directly supervised by the ECB, covering 70% of
banking assets in the euro area.
Outcome for Millennium bcp
CET1 ratio
 As regard the Portuguese banks, the adverse scenario
consisted of an economic recession, together with
deflation, increase in unemployment, increase in public
debt yields and a massive real estate devaluation.
Adverse scenario
2016
2017
2018
Phased-in
9.9%
8.6%
7.2%
Fully Loaded
6.3%
6.3%
6.1%
 Led by EBA in articulation with the ECB. EBA was
responsible for running the exercise for the major banks in
the Euro Area. ECB has conducted a parallel stress test for
the additional significant banks, including Millennium bcp.
 No minimum capital was set, but the outcome of the
stress tests will be taken as an input for the 2016
Supervisory Review and Evaluation Processes (SREP).
48
Stable capital, supported by recurring profitability and lower RWAs
Common Equity Tier 1 ratio
Common Equity Tier 1 ratio*
Phased-in, latest available data
banks
13.1%
12.3%
9.6%
9.6%
Jun 15
Jun 16
12.3%
Jun 15
11.8%
Jun 16
Phased-in
RWAs
(€MM)
44.1
Fully implemented
38.4
43.5
38.0
12.3%
11.6%
 Common equity tier 1 ratio of 12.3% according to phased-in
criteria and of 9.6% on a fully implemented basis, supported
by recurring profitability and lower RWAs
 Millennium bcp has the 2nd strongest capital in Portugal, and is
in line with European benchmarks on a phased-in basis
11.1%
* Estimates.
49
High leverage ratios and RWA density
Leverage ratio
Leverage ratio
Fully implemented
banks
6.7%
6.6%
4.9%
5.2%
Jun 15
Jun 16
5.2%
Jun 15
Jun 16
Phased-in
Fully implemented
5.3%
RWAs density in selected European countries
57%
5.6%
46%
46%
ES
IT
27%
4.1%
FR
50
Pension fund
Key figures
Pension fund
(Million euros)
Pension liabilities
Pension fund
Liabilities' coverage
Fund's profitability
Actuarial differences
Jun 15
Dec 15
Jun 16
3,136
3,070
109%
0.5%
(38)
3,136
3,158
111%
-0.8%
(111)
3,170
3,138
109%
-2.8%
(189)
Loans to
banks,
other 30%
Equities
17%
Property 9%
Bonds 44%
Assumptions
Dec 14
Discount rate
Dec 15
Jun 15
 Pension liabilities coverage at 109%
2.5%
0.75% until 2017
 Negative actuarial differences in 2016
resulting from the fund’s profitability
being below assumptions
Salary growth rate
1.00% after 2017
0.00% until 2017
Pensions growth rate
0.50% after 2017
Projected rate of return of fund assets
2.5%
Mortality Tables
Men
Women
Tv 73/77-2 years
Tv 88/90-3 years
Tv 88/90
 Change to men’s mortality tables has a
negative impact on actuarial
differences
51
Agenda
 Highlights
 Group
• Profitability
• Liquidity
• Capital
 Portugal
 Conclusions
52
Portugal: deleveraging improves liquidity position
(Million euros)
Customer funds
47,704
Deposits from
individuals advance
3.7% from June 30, 2015
-1.0%
47,213
Off-BS
funds
11,044
11,040
Other BS
funds
2,449
1,641
Term
deposits
21,500
On-demand
deposits
21,561
12,712
12,970
Jun 15
Jun 16
42,872
-5.0%
40,719
Mortgage
18,868
Consumer
and other
2,392
2,348
Companies
21,613
20,226
Jun 15
Jun 16
On a comparable basis: excludes Millennium bcp Gestão de Activos, following the discontinuation processes.
18,145
53
(Million euros)
Net income excluding non-usual items*
-25.4
-140.5
1H15
Net income
+115.2
121.4

Positive impact on lower operating costs
-305.1
Operating costs
961.4
-32.5%
649.0
Gains on Portuguese
sovereign debt
Net income of -€305.1 million in the 1st half of
2016. Net income excluding non-usual items* of €25.4 million, compared to -€140.5 million in the
1st half of 2015.
1H16
Banking income
Visa transaction

1H15
1H16
0.0
26.4
388.1
0.0
319.7
1H15
-3.1%
309.8
1H16
* Non-usual items in 1H16: gains on Visa transaction, devaluation of corporate restructuring funds, additional impairment charges to increase coverage; non-usual items in 1H15:
capital gains on Portuguese sovereign debt and devaluation of corporate restructuring funds.
54
Improvement trend on core income and operating costs in Portugal
proceeds
Core net income*
Core Income
(Million euros)
(Million euros)
234.5
+18.5%
1H15
277.8
1H16
554.2
+6.0%
587.6
225.0
229.5
Commissions
329.2
358.1
Net interest
income
1H15
1H16
Operating costs
(Million euros)
319.7
-3.1%
309.8
 Core income increases to €588 million in the
1st half of 2016
 Operating costs down to €310 million in the
same period
 Continuation of the core net income*
expansion trend to €278 million in the 1st half
of 2016
1H15
1H16
55
Lower cost of deposits partially offset by the decrease of Euribor
Net interest income
Breakdown of net interest income decrease
(Million euros)
(Million euros)
+8.8%
NIM
329.2
358.1
1H15
1H16
1.4%
1.5%
Commercial margin
Performing loans volume effect
Effect of lower Euribor on credit
Effect of cost of time deposits
Funding and other
Total commercial margin
Securities
NPL effect
Other
Total
2Q16 vs.
1Q16
1H16
vs.1H15
-3.7
-6.8
+8.1
+11.8
+9.5
+4.5
+1.5
-0.4
-31.4
-47.8
+92.2
+10.4
+23.5
-27.1
+31.0
+1.6
+15.1
+28.9
 Net interest income increased from 1st quarter 2016, mainly driven by:
 Consistent reduction of the cost of term deposits
 Decreasing cost of funding, partially offset by the reduction of Euribor rates on the credit portfolio
 Growing contribution from the securities portfolio
 These impacts were partially offset by lower credit volumes
 Increase in net interest income from 1H2015 reflects the impact of the continuous decrease of time deposits pricing and
from lower NPLs, that more than offset the unfavourable impacts stemming from lower Euribor rates, lower credit volumes
and a lower contribution of the securities portfolio
56
Continued effort to reduce the cost of deposits
Spread on the book of term deposits
Spread on the performing loan book
(vs 3m Euribor)
(vs 3m Euribor)
2Q15
-1.3%
3Q15
-1.1%
4Q15
-1.0%
1Q16
-0.9%
2Q16
1.3%
1.7%
1.5%
3.0%
2.9%
2.9%
2.9%
2Q15
3Q15
4Q15
1Q16
2Q16
-0.8%
NIM
1.5%
3.0%
1.6%
 Continued improvement of the spread of the
portfolio of term deposits, up to -84bp in 2Q16;
June’s front book priced at an average yield of
32bp, substantially below current back book’s
 Stable spread on the total loan book, at 2.9%
again in the 2nd quarter of 2016
 NIM stood at 1.6% in the 2nd quarter of 2016, an
improvement both from the previous quarter and
from the same period of 2015
2Q15
3Q15
4Q15
1Q16
2Q16
57
Increased commissions
(Million euros)
1H15
1H16
YoY
197.7
203.3
+2.8%
Cards and transfers
48.8
47.7
-2.2%
Loans and guarantees
64.0
54.5
-14.8%
Bancassurance
37.7
39.1
+3.6%
Customer account related
39.8
45.4
+14.1%
Banking fees and commissions
Other fees and commissions
7.5
16.6 +121.9%
Market related fees and commissions
27.2
26.2
-3.9%
Securities operations
23.8
23.6
-1.0%
3.4
2.6
-23.9%
225.0
229.5
+2.0%
Asset management
Total fees and commissions
58
Continuous reduction of costs, in line with the new commercial
approach
(Million euros)
Operating costs
Cost to core
income
Employees
57.7%
319.7
Depreciation
Other
administrative
costs
15.4
-3.1%
-7.3%
117.0
-2.6%
52.7%
-197
7,599
7,402
Jun 15
Jun 16
309.8
14.3
114.0
Branches
Staff costs
187.2
1H15
-3.1%
181.5
691
1H16
Jun 15
-45
646
Jun 16
59
Reinforced coverage of NPLs
(Million euros)
Credit quality
Credit ratio
Loan loss reserves
Jun 15
Jun 16
14.8%
14.1%
Coverage ratio
Jun 15
Jun 16
50.1%
58.2%
6,361
5,755
3,188
3,348
Jun 15
Jun 16
Jun 15
Jun 16
NPL
NPL buildup
Loan impairment (net of recoveries)
Jun 16 vs.
Jun 16 vs.
Jun 15
Mar 16
Opening balance
6,361
5,583
+/- Net entries
+179.4
+264.8
- Write-offs
-649.6
-89.5
- Sales
-135.6
-3.5
5,755
5,755
Ending balance
Cost of
risk
196bp
286bp
582.6
419.6
1H15
1H16
60
NPEs are decreasing, coverage is increasing and prospects are favourable
NPEs
(Billion euros)
10.9
9.8
Dec 14
Dec 15
9.5
Jun 16
 Coverage of NPEs by provisions, expected loss gap
and collaterals strengthened to 97%, supporting the
goal to bring down NPEs by more than €2 billion at
December 2017.
 We have a plan to bring down the level of NPEs
significantly (>€2.0 billion) by December 2017. Key
measures under this plan include:
NPE coverage*
97.4%
90.3%
 Measures implemented in the last years with
positive impact on NPEs: strengthening of the
monitoring of credit quality, implementation and
development of new assessment models, new
internal regulations and recovery model,
improvement to the risk management governance
model
92.6%
– Stepping up write-offs;
– Loan sales, especially strongly-collateralised
corporates and, for individuals, loans with low
likelihood of recovery;
– Preventing mortgage cases from reaching courts
and reducing the recovery period for cases
handled by external law offices.
Dec 14
Dec 15
* By loan-loss reserves, expected loss gap and collaterals.
Jun 16
61
Specific issues affect NPLs in Portugal
NPL coverage by LLRs and collaterals
Property prices
104%
103%
96%
95%
94%
87%
87%
87%
85%
84%
84%
82%
81%
60%
73%
Euro area average: 89.5%
98%
(Q1’2000=100)
250
200
Spain
150
Portugal
100
FI GE FR BE
SI
AT LV
IE
IT NL LT SK EL CY ES PT
Source: ECB, Risks and vulnerabilities for euro area financial stability, 6 April 2016.
Time to resolve civil, commercial, administrative and
other cases
(First instance, in days)
1,000
800
600
Portugal: 2.4 years
(banking credit recovery: 4.1 years)
EU average: 8 months
Q1'00
Q4'00
Q3'01
Q2'02
Q1'03
Q4'03
Q3'04
Q2'05
Q1'06
Q4'06
Q3'07
Q2'08
Q1'09
Q4'09
Q3'10
Q2'11
Q1'12
Q4'12
Q3'13
Q2'14
Q1'15
Q4'15
50
Source: BIS.
 Including loan-loss reserves and collaterals, NPL coverage in
Portugal stands at 104% and is the highest in the euro-zone
(whose average is just below 90%)
 Unlike Spain, real-estate prices in Portugal have been roughly
stable (there was no RE “bubble” in Portugal). Real-estate
collaterals are not overvalued and their market values are
predictable to a large extent
400
200
DK
EE
AT
LT
CZ
BG
HU
NL
FI
SI
RO
HR
SE
LU
LV
SK
FR
IT
DE
CY
EL
MT
PT
0
 The time to resolve banking credit cases in Portugal is clearly
excessive: a large part of NPLs booked in Portugal’s banks
balance sheets would be already written-off in most other
European countries
Source: CEPEJ (EC), 2015 Study on the functioning of judicial systems in the EU Member States.
62
Foreclosed assets sold above book value; construction restructuring funds
affected by international environment
Foreclosed assets
Corporate restructuring funds
(Million euros)
(Net asset value, Dec 2014 = 100)
Coverage
19.1%
13.4%
1,583
212
1,308
Impairment
249
Net value
1,371
1,059
Jun 15
Jun 16
Book value of sold properties
(Million euros)
Sale value
112
101
1H15
100
-10.1%
91
98.8
RE/Tourism
94.3
Generic
43.7
Dec 14
Dec 15
Construction
Jun 16
 Generic funds: stakes in companies from several
industries (textiles, food, automobile, fuel, chemicals,
building materials). EBITDA growth rate: 18.2%.
 RE/tourism: real estate and tourist assets in Portugal
(projects to be developed; projects under development;
hotels under operation; housing, commercial and
industrial buldings for sale). EBITDA growth rate: 65.5%.
 Construction: includes stakes in construction companies
operating in Portugal and abroad. Negative performance in
1H16 resulting from distress in countries to which these
companies are exposed, notably Angola, Mozambique,
Venezuela and other African and Latin-American
countries.
1H16
63
Agenda
 Highlights
 Group
• Profitability
• Liquidity
• Capital
 Portugal
 Conclusions
64
Contribution from international operations
Δ%
local
currency
1H15
1H16
Poland
74.9
98.4
+31.5%
Mozambique
32.2
36.8
Angola*
12.8
21.4
Δ%
euros
ROE
Contribution from
international
operations
increases on a
comparable basis
Other
Net income
Non-controlling interests Poland and Mozambique
Exchange rate effect
+24.1%
13.1%
+14.1%
-23.3%
21.1%
+66.5%
+11.8%
7.6
4.2
-44.5%
-45.7%
127.5
160.8
+26.1%
+4.3%
-42.4
-61.4
19.4
--
104.6
99.4
Millennium Poland shareholding at 50.1% in 1Q15
98.6
99.4
+0.9%
Same as above without FX effect
79.4
99.4
+25.2%
Total contribution international operations
-4.9%
On a comparable basis:
* Contribution of the Angolan operation.
104.6
-5.7
-19.4
+25.2%
99.4
79.4
Significant FX
impact
Contribution 1H15
15.4% Poland
FX effect
Note: subsidiaries’ net income presented for 2015 at the same exchange rate as of 2016 for comparison purposes.
1H15 comparable
Contribution 1H16
65
Poland: growing Customer funds
(Million euros)
Customer funds
+3.9%
Off-BS
funds
Other BS
funds
Term
deposits
On-demand
deposits
13,045
1,652
69
6,577
4,746
Jun 15
-13.2%
+39.4%
-4.9%
+21.6%
13,559
1,434
97
-0.2%
10,926
10,907
6,258
5,771
Mortgage
6,547
-3.2%
6,335
Consumer
and other
1,217
+11.5%
1,357
Companies
3,162
+1.7%
3,215
Jun 16
FX effect excluded. €/Zloty constant at June 2016 levels: Income Statement 4.37878333; Balance Sheet 4.4362.
Jun 15
Jun 16
66
New banking tax and Visa Europe transaction strongly impact net
earnings
(Million euros)
Net income
ROE
11.2%
13.1%
+31.5%
98.4
 Net earnings increased by 31.5%, as the new banking tax
(€18.4 million) was more than compensated by the
aggregate impact (€42.3 million, net of taxes) of the
gains on the Visa transaction with booking additional
provisions for tax litigation, FX options and fraud
 Increased core net income, driven by the 8.1% expansion
of net interest income
74.9
 Common equity tier 1 ratio of 16.9% at the end of the 1st
half of 2016
1H15
1H16
Banking income
Operating costs
+21.2%
248.7
1H15
Cost to income
301.5
1H16
50.1%
124.6
1H15
+1.3%
41.9%
126.2
1H16
67
Stronger net interest income, other income impacted by Visa
Europe transaction
(Million euros)
Operating costs
Net interest income*
NIM
2.2%
+8.1%
159.7
2.4%
172.6
Cost to income
Other admin.
costs +
depreciation
Staff costs
1H15
+44.7%
Other
89.0
19.6
+238.6%
Commissions
69.5
-9.9%
1H15
124.6
+1.3%
128.8
126.2
61.8
+1.6%
62.8
62.8
+1.0%
63.5
Employees
66.2
41.9%
1H15
1H16
Commissions and other income
50.1%
1H16
Branches
-42
-19
5,939
5,897
Jun 15
Jun 16
411
392
Jun 15
Jun 16
62.6
1H16
* Pro forma data. Margin from derivative products, including those from hedging FX denominated loan portfolio, is included in net interest income, whereas in accounting terms, part
of this margin (€7.5 million in 1H15 and €5.1 million in 1H16) is presented in net trading income.
68
Improved credit quality and coverage
(Million euros)
Loan loss reserves
Credit quality
Credit ratio
Jun 15
Jun 16
3.0%
2.6%
Coverage ratio
Jun 15
Jun 16
102%
112%
325
285
332
320
Jun 15
Jun 16
Jun 15
Jun 16
Cost of
risk
56bp
29.0
1H15
45bp
-16.6%
24.2
1H16
 NPL ratio improved to 2.6% of total credit as at June
30, 2016 from 3.0% on the same date of the previous
year
 Provision coverage of NPLs increased to 112% from
102% at the end of the 1st half of 2015
 Lower provisioning effort, as reflected by cost of risk
decreasing to 45bp in 1H16 from 56bp in 1H15
69
Mozambique: strong volume growth
(Million euros)
Customer funds
+14.9%
Other BS
funds
Term
deposits
1,122
14
1,290
0
1,044
14
550
Mortgage
Consumer
and other
516
+6.6%
On-demand
deposits
+22.7%
593
Jun 15
+24.9%
740
Companies
Jun 16
FX effect excluded. €/Metical constant at June 2016 levels: Income Statement 58.65500000; Balance Sheet 72.8950.
851
13
182
+17.0%
655
+24.6%
Jun 15
+5.1%
213
817
Jun 16
70
Increasing net income in a complex environment
(Million euros)
Net income
ROE
21.0%
21.1%
+14.1%
32.2
1H15

Net income up by 14.1%, with ROE at 21.1%,
in spite of an increased tax burden

Increase of 25.3% in banking income due to
higher net interest income and results on
foreign exchange operations

Operating costs up by 17.6%

Capital ratio of 19.6% at June 30, 2016
36.8
1H16
Banking income
Operating costs
+25.3%
108.1
86.3
Cost to
income
43.4%
37.5
1H15
1H16
1H15
+17.6%
40.8%
44.0
1H16
71
Growth in core income partially offset by the increase in
operating costs
(Million euros)
Net interest income
Operating costs
Cost to income
NIM
6.4%
7.6%
+40.2%
70.4
50.2
Depreciation
Other admin.
costs
Staff costs
1H15
+4.5%
36.0
37.5
37.7
19.5
+7.1%
20.9
Commissions
16.5
+1.3%
16.7
1H16
40.8%
44.0
+10.5%
4.6
16.0
+21.7%
19.4
17.3
+15.6%
20.0
4.2
Employees*
Other
+17.6%
1H15
1H16
Commissions and other income
1H15
43.4%
1H16
Branches
+2
+24
2,342
2,366
168
170
Jun 15
Jun 16
Jun 15
Jun 16
* Excludes employees from SIM (insurance company)
72
Credit quality and coverage
(Million euros)
Loan loss reserves
Credit quality
Credit ratio
45.5
Jun 15
Jun 15
Jun 16
5.4%
5.4%
Coverage ratio
56.2
48.6
Jun 16
Jun 15
Jun 15
Jun 16
107%
124%
69.6
Jun 16
Cost of
risk
151bp
196bp
12.7
 Increased provisioning effort, as reflected by a 196bp
cost of risk in 1H16, up from 151bp in the same
period of 2015
8.0
1H15
 NPL ratio of 5.4% as at June 30, 2016 with reinforced
coverage: 124% at the end of 1H16, compared to 107%
at June 30, 2015
1H16
73
Agenda
 Highlights
 Group
• Profitability
• Liquidity
• Capital
 Portugal
 Conclusions
74
Road to 2018: targets
CET1 phased-in ratio**
1H15*
1H16*
13.1%
12.3%
Target
2018
≥11%
CET1 fully implemented ratio**
9.6%
9.6%
Loans to Deposits
107%
102%
<100%
Cost-core income
56.3%
52.5%
<50%
Cost-income
37.3%
45.7%
<43%
Cost of risk
165 bp
234 bp
<75 bp
ROE
11.4%
-8.8%
>11%***
* Includes gains on sovereign debt and devaluation of corporate restructuring funds in 2015, and, in 2016, gains on the Visa transaction, devaluation of corporate restructuring
funds and additional impairment charges to reinforce coverage, impacting cost-income and ROE. | ** Estimates. | ***Consistent with a 11% CET1 ratio.
75
Appendix
76
Consolidated earnings
(million euros)
1H15
1H16
Impact on
earnings
Net interest income
Net fees and commissions
571.5
336.1
461.6
600.8
320.3
138.3
+29.3
-15.8
-323.3
0.0
-32.6
388.1
91.0
-51.7
0.0
+91.0
-19.1
-388.2
1,369.2
1,059.4
-309.8
Staff costs
Other administrative costs and depreciation
-288.6
-222.6
-273.7
-210.4
+14.9
+12.2
Operating costs
-511.2
-484.1
+27.1
Operating net income (before impairment and provisions)
858.0
575.4
-282.6
Of which: core net income
Loans impairment (net of recoveries)
Other impairment and provisions
396.4
-463.7
-91.6
437.1
-618.7
-198.0
+40.7
-155.0
-106.4
-16.7
-126.3
-109.6
-555.3
-816.6
-261.4
302.8
-241.3
-544.0
Income taxes
Non-controlling interests
Net income from discontinued or to be discontinued operations
-46.1
-68.9
52.9
78.3
-79.5
45.2
+124.4
-10.7
-7.7
Net income
240.7
-197.3
-438.0
Of which: Visa transaction
Of which: Mandatory contributions in Portugal
Of which: Capital gains on Portuguese sovereign debt
Banking income
Of which: Devaluation of corporate restructuring funds
77
Sovereign debt maturity
(Million euros)
(June 2016)
Jun 15
Portugal
Mar 16
Jun 16
YoY
QoQ
4,505
5,499
5,331
+18%
-3%
T-bills
156
1,499
1,261
+708%
-16%
Bonds
4,349
4,000
4,070
-6%
+2%
Poland
2,422
2,766
2,740
+13%
-1%
Angola
536
626
0
-100%
-100%
Mozambique
592
409
302
-49%
-26%
Other
999
91
92
-91%
+1%
9,054
9,391
8,465
-7%
-10%
Total
>8y, ≤10y
5%
>10y
0%
≤1y
23%
>5y, ≤8y
26%
>1y, ≤2y
17%
>2y, ≤5y
29%
 Sovereign debt portfolio totals €8.5 billion, €1.9 billion of which maturing in less than 1 year
 The value of Portuguese and Polish sovereign portfolios increased from June 30th 2015; exposure to
Angolan and Mozambican sovereign debt decreased
78
(Million euros, June 2016)
Portugal
Poland
Mozambique
Other
Total
Trading book*
≤ 1 year
> 1 year and ≤ 2 years
> 2 years and ≤ 5 years
> 10 years
392
215
117
56
0
2
1
37
9
11
17
0
0
0
0
0
0
0
0
0
0
39
0
38
0
0
0
0
467
225
166
73
0
2
1
Banking book**
≤ 1 year
> 10 years
4,939
1,046
386
1,002
2,119
380
7
2,703
481
836
1,262
82
5
36
302
168
48
85
0
0
0
53
0
0
51
1
1
0
7,998
1,696
1,271
2,400
2,202
386
42
Total
≤ 1 year
> 10 years
5,331
1,261
503
1,058
2,119
382
8
2,740
490
847
1,279
83
5
36
302
168
48
85
0
0
0
92
0
38
51
1
1
1
8,465
1,920
1,437
2,473
2,203
388
44
* Includes financial assets held for trading at fair value through net income (€145 million).
** Includes AFS portfolio (€7,947 million) and HTM portfolio (€51 million).
79
Financial Statements
80
Consolidated balance sheet
(Million euros)
30 June
30 June
30 June
30 June
2016
2015
2016
2015
Liabilities
Assets
Cash and deposits at central banks
2,178.3
2,426.8
Loans and advances to credit institutions
Repayable on demand
Other loans and advances
Loans and advances to customers
Financial assets held for trading
Financial assets available for sale
Assets with repurchase agreement
415.5
1,389.2
49,186.1
1,234.3
1,140.8
831.0
53,408.6
2,216.9
11,228.6
12,412.9
Amounts owed to customers
48,762.0
50,601.1
4,018.1
5,262.9
Financial liabilities held for trading
613.6
824.2
Hedging derivatives
484.3
779.3
Provisions for liabilities and charges
290.5
302.8
1,659.5
1,660.5
18.2
6.5
Debt securities
Subordinated debt
11,023.4
11,703.6
10.6
31.3
Current income tax liabilities
Deferred income tax liabilities
Hedging derivatives
115.0
80.9
Financial assets held to maturity
419.0
436.7
Investments in associated companies
Amounts owed to credit institutions
Other liabilities
1.7
13.1
977.3
1,216.1
68,053.9
73,079.5
4,094.2
4,094.2
558.7
305.4
1,906.1
1,674.7
Investment property
133.2
166.4
Equity
Property and equipment
475.2
706.1
Share capital
Goodwill and intangible assets
195.0
207.2
Treasury stock
(3.7)
36.1
40.5
Share premium
16.5
16.5
2,767.4
2,544.6
Preference shares
59.9
171.2
Non current assets held for sale
Current tax assets
Deferred tax assets
Other assets
879.4
808.8
73,067.5
78,730.4
Total Liabilities
Other capital instruments
Fair value reserves
Reserves and retained earnings
Net income for the year attrib. to Shareholders
Total equity attrib. to Shareholders of the Bank
Total Equity
2.9
(120.1)
9.9
(52.1)
(100.9)
238.2
313.7
(197.3)
240.7
4,158.6
4,625.2
-
855.0
1,025.7
-
5,013.6
5,650.9
73,067.5
78,730.4
81
Consolidated income statement
Per quarter
(Million euros)
Int e rna t io na l o pe ra t io ns
G ro up
Jun 15
Interest inco me
Interest expense
N e t int e re s t inc o m e
Dividends fro m equity instruments
P o rt uga l
Δ %
Jun 16
Jun 15
T o tal
Δ %
Jun 16
Jun 15
B a nk M ille nnium ( P o la nd)
Δ %
Jun 16
Jun 15
Δ %
Jun 16
M ille nnium bim ( M o z.)
Jun 15
O t he r int . o pe ra t io ns
Δ %
Jun 16
Jun 15
Δ %
Jun 16
1,092
965
-11.6%
694
598
-13.8%
398
367
-7.8%
278
258
-7.1%
117
106
-9.5%
3
3
1.8%
521
365
-30.0%
365
240
-34.2%
156
125
-20.1%
117
91
-22.3%
42
36
-16.2%
-3
-2
47.2%
571
601
5 .1%
329
358
8 .8 %
242
243
0 .2 %
16 1
3 .9 %
75
70
- 5 .7 %
6
5
- 2 4 .8 %
16 8
3
6
81.0%
3
5
87.9%
0
0
21.6%
0
0
21.6%
0
0
--
0
0
--
575
607
5 .6 %
332
364
9 .5 %
243
243
0 .2 %
16 2
16 8
3 .9 %
75
70
- 5 .7 %
6
5
- 2 4 .8 %
336
320
-4.7%
225
229
2.0%
111
91
-18.2%
74
63
-14.9%
25
17
-31.9%
13
12
-11.3%
-41
-88
<-100%
-43
-55
-28.1%
1
-33
<-100%
-5
-37
<-100%
7
3
-54.1%
0
0
28.5%
870
839
- 3 .5 %
5 14
538
4 .6 %
355
300
- 15 .4 %
230
19 4
- 15 .5 %
10 6
90
- 15 .0 %
19
16
- 15 .4 %
479
183
-61.8%
426
76
-82.2%
53
107
>100%
29
88
>100%
22
18
-19.2%
2
2
-37.0%
21
38
82.9%
21
35
65.9%
0
3
>100%
0
0
100.0%
0
0
--
0
3
--
1,3 6 9
1,0 5 9
- 2 2 .6 %
961
649
- 3 2 .5 %
408
4 10
0 .6 %
258
282
9 .2 %
12 8
10 8
- 15 .7 %
21
20
- 4 .0 %
Staff co sts
289
274
-5.2%
187
181
-3.1%
101
92
-9.0%
67
63
-4.7%
26
20
-22.3%
9
9
-3.4%
Other administrative co sts
195
185
-5.1%
117
114
-2.6%
78
71
-9.0%
51
48
-4.9%
24
19
-18.1%
3
3
-6.6%
Depreciatio n
28
25
-7.9%
15
14
-7.3%
12
11
-8.5%
6
6
9.5%
6
5
-25.7%
0
0
-11.6%
O pe ra t ing c o s t s
511
484
-5.3%
320
310
-3.1%
191
174
-9.0%
123
118
-4.1%
56
44
-20.9%
12
12
-4.4%
73
64
- 11.8 %
9
9
- 3 .6 %
7.7%
<-100%
0
0
1
0
>100%
-100.0%
9
8
- 9 .3 %
Int e rm e dia t io n m a rgin
Net fees and co mmissio n inco me
Other o perating inco me
B a s ic inc o m e
Net trading inco me
Equity acco unted earnings
B a nk ing inc o m e
O pe ra t ing ne t inc o m e be f . im p.
858
575
- 3 2 .9 %
642
339
- 4 7 .1%
2 16
236
9 .2 %
13 5
16 4
2 1.3 %
Lo ans impairment (net o f reco veries)
Other impairm. and pro visio ns
464
92
619
198
33.4%
>100%
420
88
583
190
38.8%
>100%
44
3
36
8
-18.1%
>100%
32
2
23
8
-29.2%
>100%
N e t inc o m e be f o re inc o m e t a x
10 0
12
1
303
-241
<- 10 0 %
13 4
-434
<- 10 0 %
16 9
19 2
13 .9 %
13 3
3 2 .1%
52
- 13 .3 %
Inco me tax
46
-78
<-100%
13
-128
<-100%
33
50
48.3%
21
34
62.1%
11
15
29.2%
1
1
No n-co ntro lling interests
69
80
15.5%
0
-1
<-100%
69
80
16.0%
0
0
--
1
1
-15.9%
69
80
16.3%
18 8
-242
<- 10 0 %
12 1
<- 10 0 %
66
63
- 5 .7 %
79
98
2 4 .1%
- 2 3 .3 %
-61
-73
- 19 .3 %
N e t inc o m e ( be f o re dis c . o pe r.)
Net inco me arising fro m disco nt. o peratio ns
N e t inc o m e
-305
60
13
-1
48
37
-21.8%
53
45
-14.6%
38
37
-3.6%
38
37
-3.6%
241
- 19 7
<- 10 0 %
10 5
99
- 4 .9 %
-23
-36
- 5 7 .9 %
82
Income statement
For the 6-month periods
(Portugal and International operations)
ended 30th June, 2015 and 2016
(Million euros)
Quarterly
2Q 15
3Q 15
4Q 15
1Q 16
2Q 16
Net interest income
273.6
305.1
314.0
292.4
308.4
Dividends from equity instruments
Net fees and commission income
Net trading income
Equity accounted earnings
Banking income
1.3
173.8
-24.0
287.7
14.6
727.0
0.3
161.8
-12.3
26.9
4.5
486.4
6.2
162.3
-66.4
33.5
-1.6
447.9
2.0
163.9
-12.4
28.3
13.9
488.1
3.8
156.4
-75.6
154.5
23.8
571.3
Staff costs
Other administrative costs
Depreciation
Operating costs
145.2
97.8
13.9
256.9
141.6
94.4
13.3
249.3
143.7
100.0
13.1
256.8
138.4
91.8
12.8
243.1
135.2
93.1
12.7
241.0
Operating net income bef. imp.
470.1
237.1
191.1
245.1
330.3
Loans impairment (net of recoveries)
Other impairm. and provisions
262.6
21.4
186.1
150.0
25.5
61.7
204.2
43.0
-56.1
160.7
15.4
69.1
458.0
182.6
-310.3
Income tax
Net income (before disc. oper.)
13.3
38.7
134.1
21.0
36.1
4.5
-29.4
20.7
-47.3
15.0
36.4
17.7
-93.3
43.1
-260.2
36.3
19.3
18.1
29.0
16.2
170.3
23.8
-29.2
46.7
-243.9
Net income arising from discont. operations
Net income
83
Glossary (1/2)
Capitalisation products – includes unit linked saving products and retirement saving plans (“PPR”, “PPE” and “PPR/E”).
Commercial gap – total loans to customers net of BS impairments accumulated minus on-balance sheet customer funds.
Cost of risk, gross (expressed in bp)- ratio of impairment charges accounted in the period to customer loans (gross).
Cost of risk, net (expressed in bp)- ratio of impairment charges (net of recoveries) accounted to customer loans (gross).
Cost to income – operating costs divided by net operating revenues.
Cost to core income - operating costs divided by the net interest income and net fees and commission income.
Core income - net interest income plus net fees and commission income.
Core net income - corresponding to net interest income plus net commissions deducted from operating costs.
Coverage of credit at risk by balance sheet impairments – total BS impairments accumulated for risks of credit divided by credit at risk (gross)
Coverage of credit at risk by balance sheet impairments and real/financial guarantees –total BS impairments accumulated for risks of credit plus real and financial guarantees
divided by credit at risk (gross).
Coverage of non-performing loans by balance sheet impairments – total BS impairments accumulated for risks of credit divided by NPL
Credit at risk – definition broader than the non performing loans which includes also restructured loans whose changes from initial terms have resulted in the bank being in a higher
risk position than previously; restructured loans which have resulted in the bank becoming in a lower risk position (e.g. reinforced collateral) are not included in credit at risk.
Credit at risk (net) – credit at risk deducted from BS impairments accumulated for risks of credit.
Customer spread – Difference between the spread on the loans to customers book over 3 months Euribor and the spread on the customers’ deposits portfolio over 3 months Euribor.
Debt securities - debt securities issued by the Bank and placed with customers.
Dividends from equity instruments - dividends received from investments in financial assets held for trading and available for sale.
Equity accounted earnings - results appropriated by the Group related to the consolidation of entities where, despite having a significant influence, the Group does not control the
financial and operational policies.
Loan book spread - average spread on the loan portfolio over 3 months Euribor.
Loan to value ratio (LTV) – Mortgage amount divided by the appraised value of property.
Loan to Deposits ratio (LTD) – Total loans to customers net of accumulated BS impairments for risks of credit to total customer deposits.
Net interest margin - net interest income for the period as a percentage of average interest earning assets.
Net operating revenues - net interest income, dividends from equity instruments, net commissions, net trading income, equity accounted earnings and other net operating income.
Net trading income - net gains/losses arising from trading and hedging activities, net gains/losses arising from available for sale financial assets, net gains/losses arising from
financial assets held to maturity.
Non-performing loans – Overdue loans more than 90 days including the non-overdue remaining principal of loans, i.e. portion in arrears, plus non-overdue remaining principal.
Non-performing loans ratio (net) – Loans more than 90 days overdue and doubtful loans reclassified as overdue for provisioning purposes less BS impairments accumulated for credit
risk divided by total loans (gross).
Non-performing loans coverage ratio – total BS impairments accumulated for credit risk divided by overdue and doubtful loans divided.
84
Glossary (2/2)
Loans more than 90 days overdue coverage - total BS impairments accumulated for risk of credit divided by total amount of loans overdue with installments of capital and interest
overdue more than 90 days.
Operating costs - staff costs, other administrative costs and depreciation.
Other impairment and provisions - other financial assets impairment, other assets impairment, in particular provision charges related to assets received as payment in kind not fully
covered by collateral, goodwill impairment and other provisions.
Other net income – net commissions, net trading income, other net operating income, dividends from equity instruments and equity accounted earnings.
Other net operating income - other operating income, other net income from non-banking activities and gains from the sale of subsidiaries and other assets.
Overdue loans - loans in arrears, not including the non-overdue remaining principal.
Overdue loans coverage ratio – total BS impairments accumulated for risks of credit divided by total amount of loans overdue with installments of capital and interest overdue.
Overdue and doubtful loans - loans overdue by more than 90 days and the doubtful loans reclassified as overdue loans for provisioning purposes.
Return on equity (ROE) – Net income (including the minority interests) divided by the average attributable equity, deducted from preference shares and other capital instruments.
Return on average assets (ROA) – Net income (including minority interests) divided by the average total assets.
Securities portfolio - financial assets held for trading, financial assets available for sale, assets with repurchase agreement, financial assets held to maturity and other financial
assets held for trading at fair value through net income.
Spread on term deposits portfolio – average spread on terms deposits portfolio over 3 months Euribor.
Total customer funds - amounts due to customers (including debt securities), assets under management and capitalisation products.
Total operating income – net interest income, dividends from equity instruments, net fees and commissions income, trading income, equity accounted earnings and other operating
income.
85
Summary
1.
2.
3.
Appendix
A.
1H2016 Earnings
B.
Other Information
86
Millennium bcp is the largest private sector bank in Portugal, and second
only to State-owned CGD
#x
Ranking, latest available
Main figures (Jun 2016. EUR bln, except percentages)
73.1
Total assets
Loans to
Customers
49.2
Customer
deposits
48.8
#2
#2
Loans as % of
Assets:
67%
#1
CET1 phasedin*
12.3%
CET1 fully
implemented*
#2
9.6%
#2
#2
Market shares (Mar 2015)
Loans to
Customers
18.1%
#2
Credit to
Companies
Deposits
17.5%
#2
Credit to
Individuals
BS Customer
funds
17.9%
#2
Mortgages
Consumer and
other
19.9%
#2
16.6%
#2
18.2%
#2
10.9%
#1
87
Building the largest bank in Portugal and a relevant bank in Europe
and in affinity markets
From foundation…
1985 - 1995
December
2011
– …2011
2005 – 2010
2000 - 2005
1995 - 2000
451
Focus on Portugal and
on affinity markets
66
Luxemburg
UK
France
M&A to reach
“critical mass”
Canada
Spain
Incorporation and
organic growth to
become relevant
player
Consolidation of
international
expansion with a
single brand
Leadership
Germany
in
Portugal, setting the
foundations for
expansion in Poland
1
and Greece
Reference Bank in
Portugal
Portugal - Poland –
Mozambique - Angola
884
China
120
1
Venezuela
U.S.A.
61
138
Brazil
South Africa
Australia
… to leadership in Portugal and to international
presence through growth in selected affinity retail markets
88
Delivering on key areas
2013
Restructuring
Plan
approved by
the EC
• December: Sale of
Millennium Bank
Greece (inc.
Piraeus shares)
2014
• February: Set up of the Non-Core Business Portfolio
and respective governance model
2015
• January: Sale of Banca
Millennium Romania
• May: Sale of Millennium bcp
Asset Management
• On going: Headcount and branch network optimisation in Portugal
• On going: Reduction of ECB funding
Reduction of
the State
support and
ECB funding
• February: Access to wholesale funding market
(€500mln senior debt issue)
• August: Repayment of €2.25bln of CoCos (only €750mln
outstanding)
• October: Repayment of all State-Guaranteed debt
• May: Non-Life Insurance sale
• July: €2.25bln rights issue
Capital
Measures and
other
• October: Approval of the special regime for DTAs
• March: sale of a 15.41% stake
in Bank Millennium Poland
• June: €454mln debt-equity
swap
• September: Agreement for the
merger between Millennium
Angola and Atlantico
89
A transformational project to prepare Millennium bcp for the future
Retail
Companies
Credit Recovery
Processes
• Adjusting
business model to
support growth
• Optimising credit
recovery areas
• Re-designing and
simplifying
operating model
• Redefining the
distribution
model
Business-related
• Re-launching the
affluent segment
• Strengthening
leadership in
small businesses
Digital evolution for Millennium bcp
• Risk Appetite Framework (RAF)
Organizationalrelated
• Cross networking program across departments and geographies
• Program of cultural transformation/ human resources
90
Millennium bank: growing Customer funds and loans to Customers but penalized
on net income by additional contributions in the 4Q15
(Million euros)
CUSTOMER FUNDS
BRANCHES
FOOTPRINT1
ELECTRONIC
FOOTPRINT
Pomeranian
1.4 million clients
63
West Pomeranian
15
Lubusz
411 branches
6
Warmian-Masurian
Greater
Poland
27
27
3
519
ATM
11
LOANS TO CUSTOMERS (GROSS)
Lodz
Lublin
Subcarpathian
5
Awards2
Nationale-Nederlanden
9.5%
Aviva
6.5%
EBRD
2.6%
31.3%
• Bank Millennium won the 4th edition of the "Bank of
Quality" survey, undertaken by the TNS Polska agency,
conquering the distinction of the bank that offers the best
service to the Customer
• Distinction of Bank Millennium with three awards attributed
from among four categories within the scope of Newsweek's
Bank Awards 2015: "Best Branch Banking", "Best Internet
Banking" and "Best Mortgage Banking"
Data as at December 2015
1 Data as at April 2016
2 Awards are the exclusive responsibility of the entities that attributed them
4.6%
2
Lesser
Poland
20
50.1%
Market share
+5.1%
9
Swiytokrzyskie
Silesian
38
14,047
12,747
Masovian
19
Opole
Podlaskie
101
24
Shareholder structure
Others
22
KuyavianPomeranian
Lower
Silesian
5,911 employees
Others
5.3%
+10.2%
18 years
BCP (Portugal)
Market share
11,218
10,671
NET INCOME
-16.1%
156
131
2014
2015
91
Millennium bank: in 1998, a sucessful partnership was created
Presence of Millennium Group in Poland: history so far
1998
2000
•Joint venture between BIG Bank Gdański and BCP for the creation of the Millennium project:
developing a modern branch network with centralised IT services
•Banco Comercial Português becomes a strategic shareholder (44% stake) following a takeover
bid from Deutsche bank
•New investment reinforces BCP’s stake to 50% of the share capital
2002
•BIG Bank GDAŃSKI rebranded to Bank Millennium
2003
•Stake reinforced to 65.5% of share capital
2006
2010
2015
•BCP participates in rights issue, keeping its stake unchanged
•BCP sells a 15.4% stake in the market, thus keeping a majority 50.1% stake in Bank
Millennium’s share capital
92
Millennium bank: increasing share of Poland’s banking market, while
containing operating structure
Customer deposits
Customers(‘000)
CAGR
Branches
(‘000 PLN)
12.7%
37,103
41,600
45,364
47,642
-2.3%
59,890
4.0%
1,175
2011
2012
2013
2014
1,242
1,275
1,291
2012
2013
2014
1,376
451
447
439
423
411
2015
2011
2012
2013
2014
2015
2015
Loans to Customers
(‘000 PLN)
3.1%
40,984 39,942 41,591
2011
2012
2013
44,085
46,369
2011
Cards (debit + credit)
2014
2015
Headcount
(‘000)
8.9%
Net earnings
(‘000 PLN)
1,487
-1.5%
1,611
1,585
1,605
2012
2013
2014
1,729
6,289
6,041
6,108
5,881
5,911
4.0%
466
472
2011
2012
536
2013
651
2014
547
2015
2011
2015
2011
2012
2013
2014
2015
93
Millennium bim: a market leader in Mozambique, with strong volume growth
and a stable net income
(Million euros)
CUSTOMER FUNDS
Market share
+14.1%
21 years
BRANCHES
FOOTPRINT
Cabo Delgado
Niassa
10
7
Nampula
Tete
10
1.5 million clients
Zambézia
Manica
8
169 branches
Gaza
12
2,505 employees
458
1,744
1,528
ATM
8
Sofala
7,268
17
POS
Market share
+17.6%
28.4%
Inhambane
13
1,378
1,171
67
Maputo Cidade
+ Maputo Província
Awards1
Others
17
ELECTRONIC
FOOTPRINT
27.7%
BCP (Portugal)
66.7%
State of Mozambique
17.1%
Social Security
5.0%
EMOSE
4.2%
FDC
1.1%
Employees
5.9%
NET INCOME
• Recognition of Millennium bim as "Bank of the Year in
Mozambique in 2015" by the international publication "The
Banker", of the Financial Times group
• Received the "Most Innovative Bank in Africa" award from
the prestigious African Banker magazine
• Conquered four PMR Africa 2015 distinctions, in the
categories of banking services - Individuals, Companies and
Investment Banking – and in the products area, in the Credit
Cards category
+0.2%
84.1
84.2
2014
2015
94
Millennium bim is a 21-year old sucess story in Mozambique
2011 - …
2005-2010
2000 - 2005
1995
Incorporation of BIM as
a partnership between
Banco Comercial
Português and the
Mozambican State
Acquisition of BCM,
followed by BCP/Banco
Mello and
BCM/Millennium bim
mergers
Racionalization and
centralisation of
structures related to
the insurance
businesses of the
merged banks leads to
the incorporation of
SIM – Seguradora
Internacional de
Moçambique
Business developed in
all major segments:




Retail
Affluent
Corporate
Investment banking
BIM becomes largest
bank in Mozambique
95
Strong business performance by Millennium bim over the last years
Customer deposits
Customers (‘000)
CAGR
Branches
(‘000 MZN)
18.4%
45,327
53,918
65,600
78,169
89,205
5.2%
9.2%
1,173
1,216
2012
2013
1,454
1,306
138
151
157
2012
2013
166
169
2014
2015
1,024
2011
2012
2013
2014
2015
Loans to Customers
(‘000 MZN)
18.0%
34,192 38,230
2011
2012
47,921
56,795
66,331
2011
2014
2015
Cards (debit + credit)
2013
2014
2015
Headcount
(‘000)
8.6%
Net earnings
(‘000 MZN)
2011
841
936
1,004
1.3%
1,170
1,060
2,377
2,444
2,476
2,513
2,505
2012
2013
2014
2015
0.3%
3,647
2011
3,136
2012
3,425
3,678
3,685
2013
2014
2015
2011
2012
2013
2014
2015
2011
96
Millennium Atlantico: A merged bank with nationwide coverage, driven by
higher net income and strong volume growth
After Merging process
(Million euros)
Before Merging process
CUSTOMER FUNDS
Market share
3.9%
+37.5%
Reinforced partnership with a
reference bank in Angola
BRANCHES FOOTPRINT1
ELECTRONIC
FOOTPRINT
Cabinda
5
Zaire
>600 thousand clients
Luanda
2
Bengo Kwanza
Norte
95
3
3
Malanje
Kwanza-Sul
153 branches
4
Benguela
12
Namibe
>2,000 employees
2
222
Uíge
4
Huambo
3
2
Others
Others
77.5%
2
Bié
Moxico
2
2
5,411
POS
6
Cunene
2
Awards2
• Banco Millennium Angola was distinguished with the "Best
Commercial Bank Angola 2015" award by Capital Finance
International (cfi.co), a prestigious British magazine
specialized in economic and financial affairs
• Distinction of the custody operation of Bank Millennium, in
the best performance category, attributed by the Global
Custodian magazine, in the 2014 "Agent Banks in Emerging
Markets" survey
1 Data as at May 2016
3.7%
996
852
KuandoKubango
Market share
+16.9%
Huíla
22.5%
ATM
Lunda-Norte
Lunda-Sul
2
BCP (Portugal)
1,692
1,230
NET INCOME
+50.1%
75.7
50.4
2014
2015
97
BCP creates conditions to increase profitability in Angola through a very
favourable transaction for its shareholders and Customers
BCP with a 22.5% stake in the resulting entity
Reinforced position in Angola
Market share
Loans [%]
22.5%
Deposits [%]
BPC
30%
BAI
12%
11%
BIC
BFA
Other
Shareholders 77.5%
 22.5% of net earnings to be equityconsolidated
- Banco Privado Atlantico
8%
4%
 BCP’s stake to be booked under
“Investments in associated companies”
18%
17%
16%
13%
8%
7%
Stake in Banco Millennium Atlantico to be
equity-consolidated in BCP’s financials
BAI
BFA
BPC
BIC
9%
SOL
SBA
6%
4%
3%
3%
 A reference bank in Angola, with a
reinforced partnership
 Transaction estimated to yield an
extra 5pp to return on invested
capital
 Positive impact on phased-in capital
ratio estimated at 0.4pp
- Banco Millennium Atlantico
98
Millennium Group is present in Macao since 1993 and in Guangzhou
(China) since 1997
Historical Evolution
BCA¹ Macao’s office,
part of BPA2 Group,
is converted into a
local Bank – BCM3
Set up of CSM Vida
and Rep. Office in
Guangzhou
Sale of BCM, CSM and CSM
Vida to Dah Sing Bank
Growth of Macao’s
branch activity
License to
on-shore
Acquisition of BCM³
and CSM4 via BPA³
Developing of
offshore branch
BCP Offshore branch
opening
1974
1993
1995
1998
2006
2010
2011
2016
¹BCA – Banco Comercial de Angola | 2 BPA - Banco Português do Atlântico | ³ BCM – Banco Comercial de Macau | 4 CSM – Companhia de Seguros de Macau
99
International operations account for a significant part of the Group’s main
figures
2015
Staff [%]
Branches [%]
43%
Portugal
50%
Portugal
50%
57%
Internacional
Customers loans+deposits
Internacional
Net earnings
[%]
[M€]
Portugal
29%
44.2
Portugal
71%
Internacional
Internacional
191.1
100
Diversified shareholder base, geographically scattered
Qualified participations (>2%)
(As of 30 June 2016)
Qualified
holdings
28%
Sonangol
Sabadell group
Retail
53%
EDP group
Interoceânico
Institutional
19%
Number of shareholders
Geographic distribution
(thousands)
(As of 30 June 2016)
187.2 174.2 189.8 196.1 194.3 194.5
170.9 182.3
Others
17.3%
US/UK
4.5%
Africa
18.2%
Portugal
60.0%
Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Mar 16 Jun 16
101
One-tier management and supervisory model, composed by a
Board of Directors
General Meeting of
Shareholders
Remuneration
and Welfare Board
Board for
International Strategy
Client
Ombudsman
Board of Directors
• Commission for Nominations and Remunerations
• Commission for Corporate Governance, Ethics and
Professional Conduct
• Commission for Risk Assessment
Statutory Auditor
Audit Committee
Executive Committee
Company Secretary
Committees ans Sub-Committees
• Approval of New Products
• Legal Affairs
• Costs and Investments
- Costs and Investments Sub-Committee
• Companies
• Banking Services and Processes
• Human Resources
• Retail
- Customer Experience Sub-Committee
- Investment Products Sub-Committee
• Non Core Business
• Compliance
- AML Sub-Committee
• Pension Fund Monitoring
• Credit
• Capital, Assets and Liabilities Management
• Risk
•Credit at Risk Monitoring
•Pension Funds Risk Monitoring
•Security
102
Ratings
Moody's
Primary Analist: Pepa Mori
Intrinsic
Baseline Credit Assessment
Adjusted Baseline Credit Assessment
LT/ST
Counterparty LT / ST
Deposits LT / ST
Senior Unsecured LT
Outlook deposits / senior
Other
Subordinated Debt - MTN
Preference Shares
Other short term debt
Covered Bonds
Fitch Ratings
Primary Analist: Roger Turró
Intrinsic
Viability Rating
Support
Support Floor
LT/ST
Deposits LT / ST
Senior unsecured debt issues LT
Outlook
Other
Subordinated Debt Lower Tier 2
Preference Shares
Covered Bonds
Standard & Poor's
Primary Analist: Elena Iparraguirre
b3
Stand-alone credit profile (SACP)
b3
Ba2 / NP
B1 / NP
B1 / NP
Stable /
Negative
((P) Caa1
Caa3 (hyb)
P (NP)
A3
Counterparty Credit Rating LT / ST
Senior Unsecured LT / ST
Outlook
Subordinated Debt
Preference Shares
Certificates of Deposits
b+
B+ / B
B+ / B
Positive
CCC
D
B+ / B
DBRS
Primary Analist: María Rivas
bb5 Intrinsic Assessment (IA)
No Floor
BB (high)
BB- / B LT/ST Debt & Deposit
BB- / B
Stable Trend
BB (high)
/ R-3
Stable
B+ Dated Subordinated Notes
B- Covered Bonds
BBB-
BB
A (low)
103
104

Largest banks operating in Portugal

Transcription

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