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2010 ANNUAL REPORT & ACCOUNTS 1 de 134

ANNUAL REPORT & ACCOUNTS 2010


MESSAGE FROM THE CHAIRMAN

The year under review was one of transition at Unicre - Instituição Financeira de Crédito, SA, driven

by the alterations to its equityholder structure and by the start to the Mais Máquina project

involving renovation of its applicational architecture.

The alteration, at the end of June, to the Company's equityholder structure caused by the sale of

equityholdings by Caixa Geral de Depósitos, SA, by Banco Português de Negócios, SA, and by BNP

Paribas, SA, brought about new challenges, and also new opportunities, for Unicre, imposing careful

reflection on its strategic position in this business area and within the Portuguese financial system.

The strategic plan for 2010-12, which came to be approved following the election on August 24,

2010 of the new corporate officers for this term of office, now reflects this new context of Unicre's

business insofar as the evolution of the Acquiring market is concerned, and it takes into account the

predicted worsening of the situation of the economy in 2011 and 2012, with its particularly negative

impact on net interest income as a result of the growth of borrowing costs, of the slowdown of

demand for consumer credit and the growth of the default risk.

Fortunately, prior to the approval of this new plan, the Board of Directors still in office, successfully

developed policies that led, throughout 2010, to a significant reduction of past-due loans, to the

reduction of overheads and to a strengthening of commercial activity. This involved optimisation of

the distribution channels, lending continuity to the sustainability and financial robustness that have

always marked the Company.

A very special word is due to the most important change, one that warrants 2010 being considered a

year of transition of Unicre. We refer to the start-up of the Mais Máquina project, directed at

renovation of the applicational architecture that has existed at the Company since 1996. It

constitutes a transformation in the area of information technology of a complexity unmatched in

the history of the Company. This renovation was long overdue in view of the obsolescence of the

applicational architecture (some suppliers no longer carried out maintenance of important

applications), the high costs (mainframe-based) and its increasing inability to accompany the

development of new products and services.

We have a demanding path before us. A path that we view with confidence, underpinned by the

commitment, cohesion and professionalism demonstrated by our employees throughout 2010.

In closing, a word is due to our equityholders. A word of thanks, for their support of and confidence

in the Board of Directors, and of affirmation of our ambition to build up Unicre's foundations to

achieve a new and better service for all our customers.

Fernando Adão da Fonseca


CONTENTS

1. Highlights.........................................................................................................................4

2. Unicre ...............................................................................................................................5

2.1. Institutional Situation..............................................................................................6 2.2. Organisational Structure ......................................................................................10 2.3. The Outlook .........................................................................................................13 2.4. 2010 Highlights ....................................................................................................15 2.5. Sustainability........................................................................................................18 2.6. Governance .........................................................................................................23

3. Macroeconomic Surroundings ....................................................................................31

3.1. The Global Economy ...........................................................................................31 3.2. The Portuguese Economy ...................................................................................34

4. Unicre's Business .........................................................................................................39

4.1. Review of the Business in 2010...........................................................................39 4.2. Organisation & Internal Resources......................................................................51 4.3. Risk Management................................................................................................56

5. Financial Review ...........................................................................................................68

5.1. Summary & Main Indicators.................................................................................68 5.2. Income Statement................................................................................................69 5.3. Balance Sheet .....................................................................................................75

6. Proposal for the appropriation of profits ....................................................................78

7. Closing Remarks ...........................................................................................................79

8. Financial Statements ....................................................................................................80

9. Notes to the Financial Statements...............................................................................85

10. Legal Certification of the Accounts...........................................................................129

11. Report and Opinion of the Statutory Auditor............................................................131

12. Formulae ......................................................................................................................133


1. HIGHLIGHTS Million euros. Percentage. Percentage points.

Value %

BALANCE SHEET

Net assets 307,5 298,6 310,2 11,6 3,9%

Net Loans & advances to customers 266,9 244,2 226,4 (17,8) (7,3%)

Equity 46,2 57,3 61,8 4,6 8,0%

OPERATING ACCOUNT

Net Interest Income adjusted(1) 35,2 39,0 39,5 0,5 1,2%

Operating income(2) 105,9 91,9 78,1 (13,8) (15,0%)

Overheads (3) 62,9 56,0 47,7 (8,3) (14,8%)

Operating profit 43,0 35,9 30,4 (5,5) (15,4%)

Pre-tax profit 32,3 19,9 16,9 (3,0) (15,3%)

Net profit 25,7 15,2 11,3 (3,9) (25,6%)

RATIOS

PROFITABILITY

Return on Equity (RoE) 60,9% 26,7% 18,2%

Pre-tax profit / Average equity (4) 76,5% 35,1% 27,2%

Return on Assets (RoA) 8,7% 5,2% 3,9%

Pre-tax profit / Average net assets (4) 11,0% 6,8% 5,9%

Operating income (2) / Average net assets (4) 35,9% 31,4% 27,3%

CREDIT QUALITY

Non-performing loans (5) / Total loans (6)(12) 9,4% 13,1% 10,9%

Non-performing loans, net (7) / Total loans (6), net 2,9% 5,5% 4,3%

Cover of loans past-due by more than 90 days(13) 108,5% 87,2% 104,0%

COST-TO-INCOME

Cost-to-Income 56,9% 59,0% 58,5%

Overheads (3) / Operating Income (2) 59,4% 60,9% 61,1%

Staff costs / Operating Income (2) 19,6% 16,7% 21,4%

SOLVENCY (8)

Total equity 41,9 54,6 50,5 (4,1) (7,5%)

Equity requirements (9) 31,7 30,6 29,8 (0,9) (2,8%)

Total Equity Adequacy Ratio 10,6% 14,3% 13,6%

Tier I Capital Adequacy Ratio 9,3% 11,6% 11,8%

EMPLOYEES

Number of employees in service (10) 259 255 276 21,0 8,2%

Net assets per employee (11) 1,11 1,16 1,15 (0,0) (0,4%)

Operating income per employee (11) 0,38 0,36 0,29 (0,1) (18,5%)

(0,7 p.p.)

0,2 p.p.

(9) Calculation of the equity requirements in accordance with the Basel II rules(10) As at December 31 (11) Calculation performed on the basis of the average number of employees in service

(5) Loans past-due by more than 90 days + Doubtful debt classified and past-due for the purpose of provisions - Bank of Portugal Instruction 16/2004 (6) Total loans & advances corrected for the amounts of automatic transfers, of the amount of interest receivable and of the accrual of annual instalments(7) Non-performing loans - (loan-loss provisions + Doubtful-debt provisions) - Bank of Portugal Instruction 16/2004 (8) In keeping with the framework of Bank of Portugal Instruction 23/2007, with exclusion of the retention of the Net profit generated in 2009

(12) Figures adjusted in 2008 to ensure comparability of the information with the adjustment of the methodology used to determine and classify non-performing loans undertaken in 2009(13) Includes General credit-risk provisions

(1,1 p.p.)

(0,5 p.p.)

(1) Income generated by the Cash Advance on Account product considered in Net Interest Income (Income & similar income) and excluding Services Income & Commissions(2) Net interest income, returns on securities, net commissions, returns on financial transactions and Other operating income - Bank of Portugal Instruction 16/2004 (3) Costs of staff, third-party supplies & services and depreciation charges for the year(4) Calculation of average net assets and of average equity includes, besides the amounts under the headings at the extremes of the interval, the amounts recorded in each intermediate quarter - Bank of Portugal Instruction 16/2004

Summary of Indicators 2009Change

(8,5 p.p.)

2008 2010

(1,2 p.p.)

(7,9 p.p.)

(0,9 p.p.)

(4,2 p.p.)

16,8 p.p.

0,2 p.p.

(2,3 p.p.)

4,7 p.p.


2. UNICRE

Unicre – Instituição Financeira de Crédito, SA, is a financial institution authorised to operate under

Decree-Law 186/2002 of August 21 and Decree-Law 298/1992 of December 31 (General Credit

Institutions and Financial Companies Legislation).

Unicre was incorporated on April 17, 1974 under the name Unicre – Cartão Internacional de Crédito

SA, as a company specialised in credit-card issue and management. It altered its articles of

association in December 2005, and its corporate object came to be the performance of all

operations permitted to banks, with the exception of deposit-taking, and it took on its present

name.

Unicre's business is centred on three major areas: the issue and management of credit cards;

providing personal loans and provision of services associated with acceptance of payments using

cards, particularly acquirer services in respect of international brand cards.

Additionally, Unicre provides other specialised services to financial and similar institutions, within

the scope of payment-card transactions.


2.1. INSTITUTIONAL SITUATION

2.1.1. EQUITYHOLDERS

CONTRIBUTED CAPITAL

Unicre – Instituição Financeira de Crédito, SA has a fully-subscribed and paid up capital in the sum

of €10,000,000, represented by 2,000,000 shares each of a par value of €5.

EQUITY STRUCTURE

At the end of June the holdings in Unicre were restructured. This involved the sale of the shares

held by Caixa Geral de Depósitos, SA, Banco Português de Negócios, SA, and BN Paribas, SA, and

treasury shares held by Unicre itself to the remaining equityholders.

Unicre's equityholder structure at the end of 2010 was as follows:

Banks Shares %

Banco Comercial Português, SA 634,118 31.71%

Banco Santander Totta, SA 430,000 21.50%

Banco BPI, SA 412,993 20.65%

Banco Espírito Santo, SA 350,029 17.50%

Caixa Económica do Montepio Geral 69,562 3.48%

Banco International do Funchal, SA 35,076 1.75%

Banco Bilbao Vitória Argent aria, SA 19,098 0.95%

Banco do Brasil, SA 7,207 0.36%

Banco Activo Bank (Portugal), SA 5,882 0.29%

Banco Popular Portugal, SA 7,207 0.36%

Banco Português de Investimento, SA 7,207 0.36%

Barclays Bank. EPCE 7,207 0.36%

Caixa Central de Crédito Agrícola Mútuo, CRL 7,207 0.36%

Finibanco, S.A. 7,207 0.36%


At the same time, Unicre's governance model was altered and four equityholders came to have a

seat on the Board of Directors and an Executive Committee was created, by delegation, having

three independent executive directors.


2.1.2. CORPORATE OFFICES

UP TO AUGUST 24, 2010

BOARD OF THE GENERAL MEETING

Rui Manuel Parente Chanterelle de Machete (chairman)

António Luna Vaz (secretary)

BOARD OF DIRECTORS

António Palma Ramalho (chairman)

Amadeu Ferreira de Paiva (director)

Vasco Manuel da Silva Pereira (director)

AUDIT COMMITTEE

José Gomes Pedro (chairman)

Ludovico Morgado Cândido (member)

António Luna Vaz (secretary)

Paulo Alexandre Rosa Pereira Antunes (alternate)

OFFICIAL AUDITOR

Deloitte & Associados, SROC, SA, represented by Maria Augusta Cardoso Francisco.

2010 ANNUAL REPORT & ACCOUNTS 9 of 134

AFTER AUGUST 24, 2010

BOARD OF THE GENERAL MEETING

António Pedro Sá Alves Lameiro (chairman)

Eugénio Fernando Jesus Quinta Lopes (secretary)

BOARD OF DIRECTORS

Fernando Adão da Fonseca (chairman)

Amadeu Ferreira de Paiva (member)

António Luna Vaz (member)

António Palma Ramalho (member)

Isabel Ramos de Almeida (member)

João Eduardo da Silva Freitas (member)

Miguel de Bragança (member)

EXECUTIVE COMMITTEE

Fernando Adão da Fonseca (chairman)

Amadeu Ferreira de Paiva (member)

Isabel Ramos de Almeida (member)

AUDIT COMMITTEE

António Luna Vaz (chairman)

Jorge Manuel Arriaga da Cunha (member)

João Aníbal Torres Martins (member)

Eugénio Fernando Jesus Quinta Lopes (alternate)

OFFICIAL AUDITOR

Deloitte & Associados, SROC, SA, represented by Maria Augusta Cardoso Francisco.


2.2. ORGANISATIONAL STRUCTURE

Unicre's management is entrusted to a Board of Directors comprising seven members, elected by the

General Meeting held on August 24, 2010, for the 2010-12 term of office.

At its meeting on September 20, 2010, the Board of Directors adopted a unanimous resolution, in

accordance with Articles 407.3 to 407.8 of the Companies Code and with Article 21.2 of the articles

of association, to delegate the routine management of the Company on an executive committee

comprising the chairman of the Board of Directors, Fernando Adão da Fonseca, also appointed

chairman of the Executive Committee, and directors Amadeu Ferreira de Paiva and Isabel Ramos de

Almeida.

ORGANISATIONAL STRUCTURE

Redunicre Division

Information Systems Division

Issue Division

Support Services Division

Financial & Means

Division

Strategy & Compliance Division

Audit & Internal Control

Credit-Risk Division

Shared servicesBusiness Units

Remuneration Committee Officia lAuditor

Board of Directors

Executive Committee

General Meeting


CORPORATE AREAS

AUDIT & INTERNAL CONTROL

Assists the Board of Directors in the definition, revision, monitoring and ongoing improvement of the

internal control systems. It is also responsible for internal audits both of processes and of risks, and

for relations in this connection with the external auditor and the supervisory entities.

STRATEGY & COMPLIANCE DIVISION

Assists the Board of Directors in matters related with Strategy and Management Control, Corporate

Communication and Risk and Compliance. In Corporate Communication Strategy and Management

Control assistance is provided in respect of the guidelines and strategic planning of the Company's

business, as well as in monitoring and analysing the relevant variables of the business and the offer

by the competition. In Corporate Communication the division provides assistance in the

management of the corporate image and its communication, as well as in the organisation of

institutional events and promotion of social responsibility. In Risk and Compliance assistance is

provided in respect of the understanding of the nature and materiality of the Company's risks, both

internal and external, and fulfilment of obligations and duties, in accordance with the applicable

Codes of Ethics and of Conduct and with rules and regulations issued by the Bank of Portugal, and

International Payment Cards Systems.

BUSINESS UNITS

ISSUE DIVISION

Responsible for the management and development of the payment-card business, credit cards in

particular, other credit products and associated products and services, directed at Individuals and

Companies, both own brand – Unibanco – and brands associated with other entities.

REDUNICRE DIVISION

Responsible for the provision of services and management of the payment-card acquiring service in

respect of those brands for which Unicre is the acquirer, for the development, marketing and

provision of services associated with acceptance of transactions undertaken with cards and other

payment solutions based on the use of cards (Business to Business and Business to Consumer).


SHARED SERVICES

INFORMATION SYSTEMS DIVISION

Responsible for the development, maintenance and management of the Company's information

systems and technologies to suit them to the strategic goals and day-to-day needs of Unicre's

business.

SUPPORT SERVICES DIVISION

Set up in 2010, it provides a number of diversified, specialised services related with issue and

acquiring to internal and external customers.

FINANCIAL & MEANS DIVISION

Responsible for the management of the organisation's general means and resources, particularly

management of the accounting, financial and cash, human resources, procurement and installations

systems.

CREDIT RISK DIVISION

Set up in 2010, the division ensures compliance with the credit policies established by the Board of

Directors with a view to keeping the Unicre loan portfolio within levels adequate to the profitability

of the portfolio.


2.3. THE OUTLOOK

The year under review was marked by the start to the Mais Máquina project, a major project

designed to provide Unicre with a new applicational platform to support the business areas. It will

(i) allow greater operational efficiency, (ii) allow enlargement and innovation of the offer of

Products, Services and Solutions, (iii) reduce the time-to-market and (iv) provide Unicre with

technological platforms that have a guarantee of technical assistance.

The Mais Máquina project is set to continue in 2011. It is a critical area of the Company's plan of

activities that will absorb an important part of the Company's resources and energy. At the same

time, the old system is to be kept fully operational right up to the end of the transition period,

during which it will co-exist with the new system. The transition of the acquiring area is scheduled

for the end of 2011 and its issue for 2012.

Several other internal and external conditioning factors will affect the life of the Company in 2011.

Though they may well open up opportunities to consolidate the Company's position in the

marketplace, they will require careful assessment of the risks, essentially associated with the

country's macroeconomic framework in general and that of the financial system in particular.

Attention is drawn to (i) the careful management of borrowing costs as a result of the liquidity

difficulties currently affecting the Portuguese financial sector and (ii) the pondered management of

the credit risk, in order to minimise the effects of the predicted worsening of the economic and

social surroundings.

Despite the severe conditioning factors expected in 2011, Unicre is committed to the ambitious

profitability and growth targets of its 2010-12 Strategic Plan.

With regard to the card business, the Issue Division's challenges in 2011 include (i) improvement of

the rate of activation of the cards of the present portfolio, (ii) redefinition of the card portfolio on

the basis of segmentation criteria, (iii) optimisation of the offer of products (driving the service of

excellence of the existing products), (iv) strengthening Up-selling and Cross-selling activities, (v)

review of the O2O and Advantage partnerships models through alteration of the network's

performance incentives and the commercial focus on core partnerships and (vi) focus on integration

of the distribution channels and development of the corporate channel (with a focus of Company

Cards).


With regard to credit, the goals for 2011 are designed to (i) increase credit extended through the

launch of new credit lines and exploiting credit opportunities at the point of sale and (ii) ongoing

efficacy in the recovery of non-performing loans through the introduction of new debt-restructuring

solutions.

With regard to the Redunicre Division, the lines of action are centred on (i) increase of the offer of

value-added products through upgrades of the Customer-Currency-Option, E-Commerce and

Integrated Payment Systems for the Hotel-trade and Retail solutions, (ii) optimisation of the multi-

brand strategy with a progressive revision of the pricing and differentiation of costs per brand, (iii)

co-operation with the Banking channel as the pillar sustaining market share, and (iv) development

of new solutions, customer-loyalty solutions in particular, using existing EPT solutions and fast

payment systems (payments up to €20 with no need to enter the PIN).


2.4. 2010 HIGHLIGHTS

JANUARY

Participation, for the second straight year,

in the "Best Companies to Work For"

initiative organised by Exame magazine and

by consultants Heidrick & Struggles, with an

improvement of the score received

compared to last year. Unicre has retained

an outstanding position in the group of the

best big companies to work for.

Launch of the pilot version of the

Contactless payment acceptance

technology.

FEBRUARY

Launch of the Unibanco Advantage

operation with Míele.

Launch of the Mais Máquina Project for the

renovation of the entire Unicre IT platform.

Implementation of the final stage of the

Mais Casa Project.

MARCH

Installation of the first Tax Free Service

terminals (at Massimo Dutti).

Involvement of 32 Unicre employees in the

"Learning Entrepreneurship" programmes of

the Junior Achievement Portugal

Association.

The Unicre Annual General Meeting is held,

with approval of the Report & Accounts.

Unicre brand at the universities:

Participation in the Business Forum of the

Faculty of Economics of the Universidade

Nova de Lisboa.

Evolution of the Unibanco magazine to the

Unistore concept.

APRIL

Launch of the Visa – FIFA 2010 World

Championship Advertising Campaign.

Provision of new tools to Redunicre sales

staff and a fraud control and prevention

aid.

Institution of the Customer Ombudsman.

Launch of the Financial Protection Plan

subscription campaign.

MAY

Merger by incorporation of subsidiary

Consulprest (wholly owned by Unicre), with

the transfer of its 20 employees to Unicre.

Protocol entered into with ISEGI (Higher

Institution of Statistics and Information

Management), with a view to acquisition of

scientific knowledge encouraging best

practices for the development of the

business in the CRM area.

Launch of commercial operations to foster

the Maxfinance and Halcon partnerships.

Development of the Internet Unibanco Life

campaign.


JUNE

The Redunicre MOTO solution comes into

production on the Monext platform (first

customer: Nespresso).

Alteration of the equityholder structure and

of the governance model.

JULY

Start to the pilot project of the Redunicre

solution for payments at car parks.

Start to the Recheio Distribution Card

Operation.

Enlargement of the Money Box concept to

all Unibanco private cards.

Relaunch of the Unibanco Experience Card

for Gold Cardholders and its extension to

the Metropolis Cardholders.

Organisation of the second edition of the

OTL (Spare Time Occupation) 2010 -

involving 37 of the employee's children.

Development of the partnership with

UNICEF.

AUGUST

Election of new corporate officers.

Implementation of the ECI (Electronic

Commerce Indicator) monitoring tool for

the E-Commerce transactions: secure

transaction processing.

Summer Training Programme for youths who

have not yet concluded their university

studies, aimed at providing experience

involving specific duties and objectives

within a company.

Launch of the Unibanco co-branded Banco

Privée Espírito Santo partnership.

SEPTEMBER

Start to the Active Life Initiation Training

Course Programme.

Launch of the "Commemorative Health

Dates Campaign", involving the first Free

Prostate Cancer Check within the scope of

the World Prostate Cancer Day.

Voluntary blood collection for the IPO

(Lisbon Cancer Institute).

Inauguration of the Gymnasium at the head-

office building for use by employees.

Start of the New Customers Life Cycle

programme, with a view to monitoring and

involving customers through the Unibanco

brand.

Online presence and direct management of

cards and credit via Google Adwords.

Support by Redunicre for local commerce in

Braga within the scope of the Champions

League.

OCTOBER

Presence at the E-Commarketing Show.

Upgrade of the MOTO Virtual Electronic

Electronic Payment Terminal - provision of

new functions.

Enlargement of the "Commemorative Health

Dates Campaign", involving free


osteoporosis check-ups for Unicre

employees.

Launch of the Fast Payments pilot-project

at the MacDonald's restaurant chain.

Participation in “Portugal Internet Week

´10”.

NOVEMBER

Start to the provision of the Banks Portal to

the Redunicre acquirer partners.

Unicre brand at the universities: Presence

at the Careers Forum – Faculty of Economic

and Business Sciences of Universidade

Católica de Lisboa.

Launch of Unigift, a pre-paid "gift" card that

can be used at any establishment that

subscribes to the Visa network, in

association with UNICEF. On buying the

card, customers make a €2 donation to

UNICEF.

Launch of the first Unibanco/Redunicre

online store dedicated to the sale of the

Unigift card.

Launch of the Unibanco co-branded Sofinloc

partnership.

Development of the "Spending and Saving"

campaign.

DECEMBER

Installation of the Integrated Payments

Solution at the Sheraton Porto and Le

Meridien Penina hotels.

Start to the partnership with Caja Duero for

the marketing of the Unibanco Business

cards.

Launch of the "Life Cycle" programme for

new Unibanco cardholders.

Unicre Christmas party.


2.5. SUSTAINABILITY

Despite the adverse situation of the economy in 2010, especially in the financial sector, Unicre kept

to its commitment to initiatives related with sustainability in the environmental, economic and

social fields.

2.5.1. INITIATIVES IN THE ENVIRONMENTAL FIELD

"UNICRE COMMITMENT TO REDUCE THE ECOLOGICAL FOOTPRINT"

The "2010 Commitment to Reduce the Ecological Footprint" report attested the 21% reduction of the

impact of Unicre's business on the use of natural resources, the result of alterations to internal

process and of the implementation, throughout the year, of concrete measures to reduce the

ecological footprint. Besides these, continuity was lent to the rehabilitation of the Alcabrichel

River, the ultimate aim being to re-establish a species of fish endemic to the western part of

Portugal: the Western Ruivaco. Sensitivity measures involved participation of 55 Unicre volunteers

and their families in planting trees of the western region, divulging information in-house about the

project and the various stages of intervention, and organisation of a photographic exhibition with

pictures of the volunteers and of the recuperation of the banks of the river.

GREEN STATEMENT

Another initiative having a major impact on the environment was the active promotion of the so-

called "Green Statement", involving customer awareness campaigns. One of the measures involved

sending a message to cardholders on their birthday, encouraging them to opt for the monthly card-

statement in a secure digital format, via a certified address.

Cumulatively, a message was divulged to the effect that Unicre is making a donation to the

reafforestation of the national forest of 2 cents per digital statement issued.

2.5.2. INITIATIVES IN THE ECONOMIC FIELD

REDUCTION OF THE ECOLOGICAL FOOTPRINT

The alterations to in-house processes, the introduction and replacement of daily routines and

processes associated with the Ecological Footprint reduction initiative described above also had a

positive impact in terms of cost reduction, which should be pointed out.


UNIGIFT GIFT CARD

Unicre launched its first pre-paid card and the first gift card for use throughout the entire Visa

network in Portugal. It is a solidarity card created in partnership with UNICEF. Those acquiring the

card were able to contribute two euros to improving the living conditions of the world's needier

children. This project also involved the launch, in November 2010, of an online store, the result of

the joint work of two of Unicre's main business areas.

SUPPORT FOR THE MADEIRA TRADESPEOPLE

Right from the outset the commerce of Madeira was able to count on support by Unicre. This

involved various aspects: fast support for the replacement of the POS terminals lost in the storm

and implementation of measures of a financial nature during the first half of 2010. Of the latter,

the following should be mentioned: (i) suspension of collection of the minimum quarterly minimum

revenue till June 2010, (ii) exemption from the monthly equipment charge during February 2010,

and (iii) exemption from the TSC (tradespeople's service charge) on the JCB, Diners and Discover

brands from March 1 to 31, 2010.

HELPING TO SAVE

Considering the situation of the economy, Unicre launched a savings-incentive campaign in July

2010 covering its entire cardholder portfolio. The campaign increased the disclosure and

communication of the "Money Box Option" associated with the Unibanco card, available to all

Unibanco private cardholders. Under the "Saving and Gaining" banner, cardholders set aside each

month 5% of purchases made using the card (for each €1 five cents are set aside). At the end of 12

months, the amount saved is increased by 5%. The total amount is credited to the card after 12

consecutive months have elapsed since activation of the Money Box card.

RENOVATION OF THE COMPANY'S RECEPTION AREAS

The renovation of the Company's reception areas was conceived not only to improve the Company's

environment but also to provide savings of resources and of expenditure, reflected in the following:

implementation of a single reception on floor zero, involving a reduction of security services for

people and property;

better natural lighting for the entrance to the Company through use of materials such as glass.

IN CO-OPERATION WITH THE CUSTOMERS: SUPPORT FOR MEASURES OF A SOCIAL NATURE


With a view to fostering the disclosure of social projects of recognised merit, Unicre, through the

Unibanco Experience 2010 campaign, joined up with the Nariz Vermelho (Red Nose) Association.

Besides divulging the association's project, the initiative aims to attract funds from Unibanco

cardholders to support the project, the goals of which are to provide an ongoing programme of visits

by professional clowns to children interned in Portuguese hospitals. At this time weekly visits are

being made during 42 weeks a year at 11 of the country's hospitals. The team of artists comprises 20

"Clown Doctors" and a backstage team of 8 professionals. Funds that are collected are to be used to

train clowns and to remunerate their work

SECTORS DIRECTLY INVOLVED IN ECONOMIC PRODUCTION

The following initiatives in support of sectors directly involved in economic production warrant a

word:

continuation of the support for the educational activity of the Lisbon School of Commerce,

lending consistency to the co-operation that Unicre has provided to this institution over more

than a decade, involving training related with the acceptance of payment means at the point of

sale and the award of prizes to the more outstanding students during the academic year;

co-operation in measures of national ambit undertaken by business associations involved in

Commerce and Tourism, with logistic support provided by Unicre to the Braga Commercial

Association and to UACS;

promotion by Unicre as principal sponsor and logistic supporter of initiatives linked to

commerce via the Internet, developed in partnership with ACEPI (Electronic Trade and

Interactive Advertising Association).

2.5.3. INITIATIVES IN THE SOCIAL FIELD

The sustainability initiatives that fall within this category are centred on social balance and on the

development of human and community components fundamentally linked to Unicre employees:

THE COMPANY AS A PLACE OF COMFORT AND ORGANISATION

Projects were concluded involving the remodelling of spaces allowing the creation of comfortable,

functional working conditions for all employees. In 2010, the main moments of the Mais Casa

Project, begun in 2008, calling for the remodelling of the premises, were the conclusion of the

redecoration and reorganisation of the Unicre shop and of the entrance to the Company, referred to


earlier, and the opening of the gymnasium for employees, where a personal trainer is available

daily.

PROMOTION OF MEASURES TO INVOLVE EMPLOYEES IN COMMUNITY SERVICES

In this connection emphasis is given to the encouragement given by Unicre to its employees to get

involved in specific voluntary community services:

Launch of a voluntary blood donation campaign for the Lisbon IPO (Cancer Institute), in which

not only Unicre employees but also their families took part;

Voluntary involvement in the "Learn to be an Entrepreneur" programmes organised by Junior

Achievement Portugal, designed to promote in youths initiative and individual creativity, an

attitude of thought and making a difference, and creating change.

This initiative consisted of providing time off for employees to provide training at basic-

education schools in the Greater Lisbon area from January to April;

For the first time, participation in and support for the "Right Hand" project, also organised by

Junior Achievement Portugal, on the occasion of the Entrepreneurship Week. This project

allowed a student of the Marketing and Communication Course of the Professional School of

Arts, Technologies and Sport to accompany during a day the activities of the Unicre chairman

and of the Communication and Marketing areas. The aim is to give a youth the opportunity to

accompany a day of the work of a top manager or entrepreneur and, in this way, to instil

greater self-confidence in opening up academic and professional education options in keeping

with the ambitions and talents of each. The young participants in this project are chosen by

their determination in making a start to following a given professional path;

Involvement in and support for the Social Values Exchange of Portugal from the very outset. The

objective of this exchange is to provide help in realising social-intervention projects through

promotion of encounters between non-governmental organisations (NGOs) submitting relevant

social-intervention project and work of proven results in the field of Education and

Entrepreneurship, and donors (known as social investors). The donors are companies, Company

employees and the community in general that, through the Social Values Exchange, choose the

project they wish to support. Unicre is one of the founder entities of the Social Values Exchange

and it has divulged the project, encouraging its employees to become involved;

The "Unicre Commitment to the Reduction of the Ecological Footprint" involved 55 employees

and their families. On December 1, 2010 they took part, as volunteers, in planting trees along

the banks of the Alcabrichel River, an important step towards the sustainability and cleanliness

of the river's bed and banks.


PROMOTION OF HEALTH-CARE CONDITIONS FOR EMPLOYEES

In this field emphasis is given to the special concern as to health care, alongside a policy of

increasingly sustainable use of resources. The Company thus appears as a promoter of primary and

preventive health care and wellbeing through initiatives and information directed at fostering a

health atmosphere among its employees.

The Company's employees and their close relatives thus continued to be provided with free-of-

charge Night-time Medical Assistance, covering the period between 8 p.m. and 8 a.m.,

weekends and holidays included;

All the Company's employees were provided with free check-ups - PSA and osteoporosis – at a

facility within Unicre, monitored by a team of physicians;

Almost complete financing continued to be provided to the Unicre Workers Sports and Cultural

Group (GDCTU), providing the means for around 15 different sports, particularly organisation of

in-house tournaments and the formation of mixed teams, besides other personal-enhancement,

leisure and cultural activities, taking into account the importance of socialisation among

employees and between these and external entities;

In 2010, for the second time, Unicre, using solely its own resources, organised an Occupation of

Spare Time initiative for employees' children during school holidays. A total of 42 children aged

from 6 to 13 took part. During a week they were able to take part in various leisure and

educational activities in various municipalities of the Greater Lisbon Area;

Besides detailed information about everything that takes place within the Company in the social

and commercial areas, special emphasis was given in the Espaço Unicre (the Company's

Intranet), as from August 2010, to interaction with other employees, encouraging the sharing of

the Company's values and renovation of the contents, lending emphasis to the results achieved

in the various measures that were undertaken;

For the second straight year Unicre submitted its candidature for the “Best Companies to Work

For”, a Heidrick & Struggles and Exame magazine initiative. It was distinguished with inclusion

in the list of the best companies;

In the two Behavioural Supervision Reports drawn up by the Bank of Portugal in 2010, Unicre

came second in the national ranking of financial institutions that market consumer-credit

products and have the smallest number of complaints, thus showing the quality of the service

that has been provided to its customers.


2.6. GOVERNANCE

2.6.1. INTRODUCTION

Unicre's governance is governed by its articles of association and by applicable legislation. Its

current by-laws include international recommendations on Corporate Governance, particularly the

principles approved by the Basel Committee on Banking Supervision (September 1999) and by the

Organisation for Economic Co-operation and Development (April 2004).

2.6.2. CONTRIBUTED CAPITAL

The Company's contributed capital currently stands at €10,000,000, and its equity at €50.5 million.

Over the past three years Unicre has distributed the following dividends:

After-tax profit (thousand euros)

Dividends (thousand

euros) 2007 13,870 10,480 2008 25,690 15,969 2009 15,153 11,478

2.6.3. GOVERNANCE

In keeping with Unicre's articles of association, the management and supervision of the Company

are entrusted to a Board of Directors and a Board of Auditors, while the supervision of the Company

also involves an Official Auditor or firm of Official Auditors other than a member of the Board of

Auditors.

GENERAL MEETING

In accordance with Unicre's articles of association, the General Meeting represents the whole of the

equityholders, and its resolutions are binding on them all when taken in accordance with the law

and the articles of association.

The General Meeting is charged in particular with:

electing the Board of the General Meeting for a 3-year tenure;

electing the members of the Board of Directors and its chair;

electing the full and alternate members of the Board of Auditors and its chair, as well as, if

applicable, the official auditor or firm of official auditors, both full and alternate, and adopting


a resolution as to the appropriateness of the supervisory activity being complemented by the

services of a firm of auditors.

The resolutions of the General Meeting are adopted by the majority of votes cast, save legal or

statutory provision requiring a qualified majority. Resolutions concerning alterations to the articles

of association are adopted by two thirds of the votes cast, while resolutions on the merge, split or

transformation of the Company are adopted by three quarters of the votes cast, in both cases

regardless of whether the meeting is held on first or second call. Abstentions are not counted.

BOARD OF DIRECTORS

In accordance with the articles of association, the management of the Company may be exercised

by a Board comprising 3 to 15 members elected by the General Meeting for a three-year tenure, re-

eligible on one or more occasions.

Without prejudice to those duties generically entrusted to it by law, the Board of Directors is

charged with:

managing the business of the Company, performing every act and operation inherent in its

corporate object;

acquiring, burdening and disposing of any assets and rights, movable or immovable, as and

where deemed appropriate for the Company;

with due observance of the law, deciding freely as to the Company's participation in the equity

capital of companies having any corporate object, even though different from that of the

Company, headquartered in Portugal or not, be they limited liability companies or otherwise,

and in companies governed by special laws or in incorporated joint ventures or any of form of

association of companies;

mobilising financial resources and undertaking such credit operations as are not prohibited by

law;

hiring Company employees, fixing their remuneration, fringe benefits and other pecuniary

income, and exercising the respective management and disciplinary powers;

appointing attorneys to perform certain acts or categories of acts;

complying and ensuring compliance with legal and statutory precepts and the resolutions of the

General Meeting;

defining the organisation and work method of the Company's corporate activity;

delegating powers on its members;


representing the Company in judicature and thereout, being empowered to contract

obligations, to propose and follow-up proceedings, to waive and transact in law suits, to

compromise in arbitration and to sign declarations of responsibility;

drawing up forecasts of the Company's business and respective execution reports;

adopting resolutions as to or making reasoned proposals concerning necessary increases of

contributed capital;

studying and executing corporate business development and expansion plans, taking legal

conditioning factors into account; and

resolving all matters not falling within the sphere of other corporate offices.

In accordance with Unicre's articles of association, the Board of Directors may delegate the

Company's day-to-day management matters on two or more directors or on an Executive Committee

comprising three or five directors. Duties of day-to-day management of the Company have been

delegated on three members of the Board of Directors in 2010.

Issue DivisionFinancial and Means Division

Strategy and Compliance Division

Redunicre DivisionCredit-Risk Division

Support Services DivisionInformation Systems Division

DISTRIBUTION OF FUNCTIONAL ACTIVITIES TO EXECUTIVE DIRECTORS

CHAIRMAN

General Co-ordination of the Management of the Company

List of EquityholdersAudit & Internal Control

Fernando Adão da Fonseca

Isabel Ramos de Almeida Amadeu Paiva

SUPERVISION OF THE COMPANY

Supervision of the corporate business is performed by a Board of Auditors comprising three full and

one alternate members, and by a full and an alternate firm of official auditors not members of the

Board of Auditors.


Deloitte & Associados, SROC, SA, is the firm of official auditors responsible for the legal

certification of the accounts and for the audit reports.

INTERNAL CONTROL SYSTEM

Internal control at Unicre is performed by (i) sectoral committees and by the Credit Board, set up to

monitor, discuss and take decisions in various critical areas of the Company, (ii) Internal Audit and

Control, (iii) the Risk Management and Compliance Area; (iv) the Credit Risk Management Division;

(v) in-house policies and procedures and (vi) the organisational culture and values.

SECTORAL COMMITTEES

RISK MANAGEMENT COMMITTEE

The mission of the Risk Management Committee is to monitor the profile of Unicre's overall risk and

to ensure its alignment with the Company's strategy and with the Board of Directors' directives. It

comprises the members of the Executive Committee and the heads of the various business and

support areas. It meets quarterly and is chaired by the chair of the Executive Committee.

The activity of the Risk Management Committee involves Unicre's Risk-management System as a

whole, and involves the following areas:

Supervision – monitoring and issuing opinions on Risk Management and Risk Matrix Policies and

issuing reports on Risk Management;

Prescriptive – to the extent that it has to assess the risks to which Unicre is exposed, in the light

of the approved tolerance levels, and to assess and define measures for their correction/

mitigation; and

Pedagogic – to the extent that it must a make a contribution to the dissemination of the risk and

control culture across the whole organisation.

The goals of the Risk Management Committee are to ensure the coherence and efficacy of the

working of the Risk Management System and to contribute to the promotion of a risk and control

culture within the organisation.

BUSINESS COMMITTEE

The Business Committee comprises the members of the Executive Committee and the heads of the

various business and support areas. It meets monthly and its duties are:

to monitor the market and the competition;


adequate assessment of proposed new business projects in the light of the Company's strategy,

its socio-economic framework and the profit potential;

analysis and discussion of new products, new services and the respective expected results, and

to propose their creation to the Board of Directors.

INFORMATION SYSTEMS COMMITTEE

The Information Systems Committee comprises the members of the Executive Committee and the

heads of the various business and support areas. It meets monthly and its duties are:

to monitor the evolution of the information systems projects resulting from the Unicre business

plan and to look for solutions for any conflicts of an operational or organisational nature in

respect of the development of these projects; and

analysis and resolution of such critical issues in respect of the overall orientation as may arise

during the implementation of the Unicre business plan (e.g., alterations of scope, calendar and

budget).

HUMAN RESOURCES COMMITTEE

The Human Resources Committee comprises the members of the Executive Committee and the

heads of the various business and support areas. It meets monthly and its duties are:

to monitor general aspects of the evolution and applicability of in-house and external policies

and rules and regulations in the matter of human resources management;

to monitor specific indicators concerning the composition and evolution of the human resources

(e.g., personnel structure, movements, costs, mobility, training, etc.); and

to assess the adequacy of the personnel in the light of the needs and of Unicre's business

surroundings, with a view to proposing any necessary alterations/ adjustments.

AUDIT & INTERNAL CONTROL (AIC)

Employing independent, objective audit and consultancy activities, the AIC aims to add value and to

improve the organisation's operations and use of resources, and to advise the Board of Directors in

the definition, monitoring, review and ongoing improvement of the Internal Control System.

Particularly through the design, review and ongoing improvement of the business processes and

through assessment of the adequacy of the information systems in responding to the strategic

objectives of the organisation, the aims of the AIC are:

to ensure a culture of ethical values throughout the organisation and a management culture

directed at effective performance and accountability;

to ensure the timeliness and reliability of the relevant financial and operational information;


to ensure effective, efficient use of the organisation's resources and their adequate protection;

and

to assess and ensure the effectiveness and adequacy of the risk-management process and to

contribute to its improvement.

STRATEGY MANAGEMENT & COMPLIANCE

The mission of the Risk Management & Compliance area is to ensure proper understanding of the

nature and materiality of the risks to which Unicre is exposed. Additionally, all risks considered

material must be identified, assessed, mitigated, monitored and controlled, and the obligations and

duties to which Unicre is bound in carrying on its business must be fulfilled, particularly in

accordance with the Codes of Ethics and of Conduct and with the relevant rules and regulations

issued by the Bank of Portugal and with the Payment Cards System. In undertaking this mission, it it

charged in particular with:

fostering the risk culture across the Company;

developing risk-management practices, methodologies and tools;

monitoring the Company's risk profile and indicators;

ensuring the monitoring and assessment of the internal control procedures in the matter of

prevention of money laundering and of financing terrorism, as well as centralising information

and communicating it to the proper authorities; and

advising the Board of Directors on the definition of policies to increase to efficacy of the Unicre

Risk Management System.

CREDIT-RISK MANAGEMENT

Credit-risk management is of particular importance to Unicre, both in carrying on its business and in

the associated risk, given the potential impact on profit & loss or on the Company's contributed

capital.

To ensure effective and efficient management of this risk, which is one of the biggest in the

Company's business, the Credit Board and the Credit Risk Division form part of the structure of

Unicre's internal control system.

CREDIT BOARD

The Credit Board comprises the director in charge of the Credit Risk Division, another executive

director, the managers of the Credit Risk Division, of the Issue Division, of the Redunicre Division

and of the Financial and Means Division, as well as the co-ordinator of the Customer Service

Department. The Credit Board also includes as an observer the manager of the Strategy and


Compliance Division and the head of the Risk Management and Compliance area. It meets ordinarily

once a month and also as and when its intervention is necessary within the scope of the

responsibilities entrusted to it. The mission of the Credit Board is to optimise credit management in

keeping with Unicre's strategy and with the Board of Directors' directives in this connection. Its

duties are:

to propose to the Board of Directors the credit policy to be followed;

to decide as to the attribution both of cards and of credit, as well as to credit recovery and

collection processes, under the terms stipulated by the Board of Directors;

to appraise and submit proposals on the internal regulations in the matters of attributing cards,

extending credit, and collecting debts, in keeping with the competences delegated on it;

to appraise and submit proposals on the scoring models and criteria in respect of attribution,

comportment, automatic increases of limits or other alterations to strategies that imply

automatic adjustments to Unicre's credit-risk exposure;

to appraise both from the standpoint of development of the business and also from that of

mitigation of the credit risk, the performance reports and the credit-business indicators in

general and the credit risk in particular, in the latter case in the matter of default probability,

concentration and correlation of losses given the default, and of the risk exposure;

to decide as to the credit-portfolio assessment methodologies, policies, procedures and

instruments, as well as to the corrective-measure plans and implementation of adequate

measures;

to assess compliance with the legal and regulatory framework in the matter of credit and its

operational consequences.

CREDIT-RISK DIVISION

Created in 2010, the Credit Risk Division is the result of the spin-off of the credit-risk unit that was

formerly a part of the Issue Division. Its aim is to manage and keep the credit levels of the portfolio

within limits adequate to its profitability, in accordance with the risk-management strategies and

policies defined by Unicre, through the allocation of credit limits both for cards and for the other

credit products marketed, as well as to recover non-performing loans, while ensuring fulfilment of

all legal obligations.

The competences of the Division are:

to propose credit-risk management policies and strategies to act as guidelines for extending

credit and its recovery;

to ensure efficient management in extending credit, in keeping with the credit and risk policies

instituted and with the credit profile of the various customer segments, with a view to

optimising profitability and to keeping the portfolio's customers active;


to promote more efficient use of resources in the recovery of non-performing loans from a cost-

benefit standpoint;

to ensure operational efficiency in the provision of services, with optimisation of the use of

resources, of the organisation and of processes, driving the essential economies of scale,

besides cost reduction, so as to ensure competitiveness in terms of the quality and costs of the

services provided.

INTERNAL POLICIES & PROCEDURES

Unicre has a set of internal policies and procedures that orient operating principles and work-

process systematisation, and define duties and responsibilities. These internal policies and

procedures, adequately disseminated throughout the Company, are intended to reduce the risks

inherent in the business, to promote more organisation and discipline and to constitute a platform

for the performance of internal-audit activities.

ORGANISATIONAL CULTURE & VALUES

In order to ensure the alignment of the competences and values of all the employees before its

stakeholders, Unicre has a Code of Conduct. The Code of Conduct (available at www.unicre.pt):

details the values and standards of conduct governing the actions of all employees, not only in

their in-house relations with other colleagues but also in their relations with the customers,

suppliers, competitors, regulatory entities and media; and

encourages the sharing of principles and values, thus consolidating the internal culture and

identity and an institutional image of rigour and competence.


3. MACROECONOMIC SURROUNDINGS 3.1. THE GLOBAL ECONOMY

During 2008 the financial markets were shaken by the most serious financial crisis of the post-war

era. As a result, the international economy deteriorated very considerably in 2009, affecting the

GDP of most countries. During 2009, global GDP decreased by 0.7% compared to 2008, a figure

completely divergent from the 2.8% growth of the previous year.

The year under review was marked by the first signs of recovery, with some of the main economic

indicators returning to positive figures, though still lower than those observed prior to the crisis.

According to the IMF, the Global Economy will have grown by 4.5% in 2010.

The Advanced Economies, which were the most affected in 2009, their GDP falling by around 3.5%,

are set to have made a significant recovery in 2010, returning growths in the order of 2.6%.

* Korea, Hong Kong, Taiwan and SingaporeSource: IMF, European Commission

EVOLUTION OF THE GLOBAL ECONOMYPercentage

2008 2009 2010F 2011FGDPGlobal Economy 2,8 -0,7 4,5 3,9Advanced Economies 0,2 -3,5 2,6 2,0 USA 0,0 -2,7 2,7 2,1 Japan -1,2 -5,2 3,5 1,3 Euro Area 0,4 -4,1 1,7 1,5 New Industrialised Economies of Asia* 1,8 -0,9 7,8 4,5Emerging and developing market economies 5,7 2,6 6,8 6,1Central & Eastern Europe 3,0 -3,6 3,7 3,1Community of Independent States 5,3 -6,5 4,3 4,6 Russia 5,6 -7,9 3,5 3,8Developing Asian countries 7,7 6,9 9,4 8,4 China 9,0 8,7 10,5 9,2 India 6,7 7,4 8,5 8,3Middle East and North Africa 5,0 2,0 4,1 5,1Latin America 4,3 -1,7 5,7 4,0Sub-Saharan Africa 5,6 2,1 5,0 5,5 Angola 13,3 0,7 5,9 7,1Consumer PricesAdvanced Economies 3,4 0,1 1,4 1,3 Euro Area 3,3 0,3 1,5 1,8 USA 3,8 -0,3 1,4 1,0

Prices rose in most counties, with an increase in the Advanced Economies in the order of 1.4%,

compared to 0.1% in 2009.

In international trade, trade in goods and services performed well, though growth was more

significant in goods’ transactions. Exports of goods increased 14.8%, in accumulated terms from


January to November, while imports rose by 9.68%, with fuel accounting for approximately 2% in

both indicators.

EURO AREA

In the Euro Area, where the GDP had decreased by 4.1% in 2009, there will have been a recovery in

2010, with a growth of 1.7% in aggregate terms.

Ireland, Spain and Greece continue to make a negative contribution to the economy of the Euro

Area, with Greece being of greater concern with a negative variation of 4.2% compared to the

previous year, while the trend in Spain and Ireland was likewise down by 0.2% compared to 2009.

Germany was able to achieve a growth of 3.3% in 2010, a figure that it had not seen since its

unification, completely the opposite of the previous year, when the GDP fell by 4.7%.

-8%

-4%

0%

4%

8%

Ireland Portugal

Greece Spain

GDP Evolution in the Euro Area

REAL GDP GROWTH RATEPercentage change over previous year

Source: European Commission, Bank of Portugal

-8%

-4%

0%

4%

8%

-8%

-4%

0%

4%

8%

-8%

-4%

0%

4%

8%

2007 2008 2009 2010F

GDP Growth

2007 2008 2009 2010F

2007 2008 2009 2010F

2007 2008 2009 2010F

With regard to the employment market, emphasis is given to the growth of the jobless rate,

reaching two digits in 2010. Several Member States have very high unemployment rates, which tend

to grow, as in Spain, where in 2010 the jobless rate stood at 20.1%, accompanied by Ireland, Greece

and Portugal, at more than 10%.

In the Euro Area the consumer price index grew by more than the 2009 figure of 0.3%, up by 1.6% in

average annual terms. The trend of this indicator during 2010 was constantly upward, to stand at

2.2% during the closing month of the year. The evolution of energy prices was the main factor of

this growth.


PRICE GROWTH Euro Area. Average monthly year-on-year changes %

Source: ECB

1,1

1,51,7

2,0

0,4

-0,4

3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010

The European Central Bank has kept its monetary policy stable, having maintained its refi rates at

1% since May 2009.

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

Jan-

04A

pr-0

4Ju

l-04

Oct

-04

Jan-

05A

pr-0

5Ju

l-05

Oct

-05

Jan-

06A

pr-0

6Ju

l-06

Oct

-06

Jan-

07A

pr-0

7

Jul-

07O

ct-0

7Ja

n-08

Apr

-08

Jul-

08O

ct-0

8Ja

n-09

Apr

-09

Jul-

09O

ct-0

9Ja

n-10

Apr

-10

Jul-

10O

ct-1

0

North AmericanFederal Reserve

EuropeanCentral Bank

EVOLUTION OF THE REFERENCE RATES Percentage

Source: ECB; Federal Reserve

Interest rates tended to rise until mid November, then stabilised up to the end of the year.


EVOLUTION OF THE EURIBOR RATES5-month Euribor. Percentage at the end of the period

Source: Bank of Portugal

0,92 0,90 0,90 0,89 0,85 0,85 0,84 0,86 0,890,94

1,05 1,04 1,051,18 1,16 1,14

Sep

-09

Oct

-09

No

v-0

9

De

c-09

Jan

-10

Feb

-10

Mar

-10

Ap

r-1

0

May

-10

Jun

-10

Jul-

10

Au

g-1

0

Sep

-10

Oct

-10

No

v-1

0

De

c-10

In accordance with the latest forecasts of the European Commission, the public-administration

deficits of the countries of the Euro Area are set to have stabilised in 2010. This notwithstanding,

countries such as Greece and Ireland continue to be faced with serious public-deficit problems. In

2010, these countries were obliged to fall back on the European Financial Stability Fund and on the

International Monetary Fund, and to implement restrictive policies in order to ensure the

sustainability of their membership of the Euro Area.

3.2. THE PORTUGUESE ECONOMY

In recent years the Portuguese economy, a small, open economy, has been greatly affected by the

international crisis. This crisis, allied to the structural weaknesses of the economy, triggered a

major recession, more worrying than that of most European countries.

Nevertheless, despite the difficult internal and external situation of the economy, the Portuguese

economy is forecast to have grown by 1.3% compared to 2009. This is a recovery compared to the

decrease of activity seen in 2009 (down 2.6%) and involved a recovery transverse to the various

components of the GDP.


* Gross Savings/Gross Disposable Income** Percentage of GDP

Source: European Commission, IMF, Eurostat, Bank of Portugal

GENERAL DATA ON THE PORTUGUESE ECONOMYYear-on-Year Change %

2008 2009 2010F 2011F

GDP 0,0 -2,6 1,3 -1,3 Private Consumption 1,8 -1,0 1,8 -2,7 Public Consumption 0,8 2,9 3,2 -4,6 Gross Fixed-Capital Formation -1,8 -11,9 -5,0 -6,8 Of which : Equipment 3,7 -14,4 -3,0 -3,4 Exports -0,3 -11,8 9,0 5,9 Imports 2,8 -10,9 5,0 -1,9

Unemployment 7,7 9,6 10,5 11,1Household Savings Rate* 7,8 11,0 10,5 9,9HCPI 2,7 -0,9 1,4 2,7Current Account Balance** -12,5 -10,4 -8,8 -7,1Public Deficit** -2,9 -9,3 -7,3 -4,9Public Debt** 65,3 76,1 82,8 88,8

Despite the growth predicted for 2010, the year was marked by a clear economic slowdown during

the last quarter. According to the Bank of Portugal, this was largely influenced by the sharp

slowdown of most components of domestic demand, the main emphasis being on private

consumption. This indicator has been severely affected by the expectations of the economic agents,

which declined considerably, although the indicator remains very volatile.


CONFIDENCE INDICATORSPortugal. Balance of External Answers – seasonally adjusted


-60

-50

-40

-30

-20

-10

0

10

Jan 2009 Jun 2009 Jan 2010 Jun 2010 Dec 2010

Industry

Consumers

Services

The budget consolidation measures implemented throughout 2010 contributed to the expectations

of the economic agents; they involved the 2nd and 3rd Stability and Growth Plans (SGP), in June

and October respectively. As a result of the large Portuguese public-administration deficit, far

greater than allowed in the Euro Area – and to correct it – a number of measures were taken that

were to affect not only the expectations of the economic agents but also household disposable

income.

According to the Bank of Portugal, the public-administration deficit is expected to amount to 7.3%

of the GDP in 2010, down 2 p.p. compared to the previous year.

Public Debt is expected to stand at 82.8% of the GDP, reflecting an upward movement of this

indicator.

Long-term interest rates on Portuguese sovereign debt rose to high levels in 2010, as much as 7%,

the result of the reduction of the credibility of the Portuguese Republic in the financial markets,

stemming from the aforesaid increase of public and private debt.

The jobless rate has risen to historically very high levels, reaching two digits in 2010 (10.7%), in line

with the upward trend that started in recent years.


The harmonised consumer price index is set to have stood at 1.4% in 2010, reflecting a general

growth of prices, contrary to the deflation seen in 2009 (down 0.9%).

With regard to the credit market, there was a stabilisation of the growth credit extended in 2010 at

figures similar to those of 2009, though considerably lower than in previous years.


8,14,6

23,8

-1,2-0,4-0,6

8,8

3,4

11,6

0,6

Sep

-08

Dec

-08

Mar

-09

Jun

-09

Sep

-09

Dec

-09

Mar

-10

Jun

-10

Sep

-10

No

v-10

HousingConsumption

Total

Other PurposesNon-FinancialCompanies

LOANS GRANTED BY FINANCIAL INSTITUTIONS TO RESIDENTSYear-on-Year Change %

In past-due loans to individuals the trend was one of a clear slowdown of growth in every area

(mortgage loans, consumer credit and other purposes), with the growth of total past due loans

standing at 16.2% at the end of 2010, lower than the 27.3% at the end of 2009. However, despite

this slowdown, its growth was far greater than that of the credit portfolio (which stabilised); the

past-due to total credit ration therefore worsened substantially in 2010.


HousingConsumption

Total

OtherPurposes

13,69,7

41,8

24,0

-5,9

21,713,7

16,2

Sep

-08

Dec

-08

Mar

-09

Jun

-09

Sep

-09

Dec

-09

Mar

-10

Jun

-10

Sep

-10

No

v-10

EVOLUTION OF PAST-DUE LOANS TO INDIVIDUALSPercentage of annual change over the past 12 months



4. UNICRE'S BUSINESS 4.1. REVIEW OF THE BUSINESS IN 2010

4.1.1. ISSUE DIVISION

BUSINESS SUMMARY

During 2010 the cards business area combined its regular activities of maintaining the existing

business with the development of a number of measures directed at the strategic goal of business

growth.

Throughout the year, the implementation of various measures to attract new customers and the

focus on strengthening and growing the personal-attendance and Internet sales channels, as well as

on retaining existing ones, ensured continuation of the growth of the card portfolio that has been

seen since 2007.

In activities involving present customers, special emphasis is given to the incentives to billing

provided through specific customer-activation campaigns, promotion of card use and product cross-

selling measures.

Total billing of Unibanco cards fell slightly in 2010, though less so than in 2009.

The main areas of activity directed at the growth of the business in 2010 consisted

of optimisation of the card portfolio, consolidation of partnerships involving

integrated offers, optimisation of strategies designed to attract and activate

customers, and greater relations with the customers.


OPTIMISATION OF THE UNIBANCO CARDS PORTFOLIO

With a view to improving the Unibanco service of excellence,

Unibanco lent continuity to the Unibanco Experience loyalty

programme developed in 2009 for Unibanco Gold cardholders and

extended it to the Unibanco Metropolis cardholders.

On using the Unibanco Gold and Unibanco Metropolis cards

cardholders accumulate points providing access to a diverse

range of prizes.

Encouraging savings habits, Unicre launched the Bonus Money Box concept for all its cardholders,

allowing them to "transform the Unibanco card into a 5% bonus money box".

PARTNERSHIPS PROVIDING INTEGRATED OFFERS

Within the scope of its social responsibility policy Unicre has

teamed up with UNICEF to launch an innovative product – Unigift –

a prepaid gift card that can be used as a means of payment at any

establishment subscribing to the Visa network in Portugal. By

acquiring this card the cardholder contributes a €2 gift to UNICEF's

programmes.

Strengthening the partnership-management strategy, 2010 was

marked by the consolidation and greater dynamism of fourteen 020

and four Unibanco Advantage partnerships, and also by the launch

of 2 new partnerships: Sofinloc and Banque Privée Espírito Santo.

STRENGTHENING THE CARD PORTFOLIO

COMMUNICATION

Under the "Save every time you buy" concept, an

advertising campaign was organised to promote

the Unibanco Attitude card, using the Internet

and the communication channel as well as

presence at shopping malls.


OPTIMISATION OF THE MARKETING AND ACTIVATION STRATEGIES

With a view to optimisation of commercial

activity, priority was given to strengthening the

physical and Internet sales channels.

In physical-presence sales, measures were

implemented across the country, involving the

use of 15 external networks, 12 financial

consultancy agencies and 18 attendances at fairs

and shopping malls. Also implemented was a

network of external promoters and brokers.

In parallel, the Company invested in the Internet, involving the development of two new

partnerships to attract new customers and to create in-house skills allowing the definition of a

strategy with a view to the management of our direct involvement in the Google Adwords.

As a means of encouraging cardholders to use their Unibanco

cards and to increase their involvement right from the outset,

the New Customer Life Cycle was implemented during 2010. The

intention is to suit the offer to the cardholders’ behavioural

profile though an integrated communication strategy segmented

by their use profile.


STRENGTHENING CROSS-SELLING MEASURES

Since one of Unicre's strategic vectors in 2010 involved development of the sale of third-party

products, offering customers the advantage of interest-free instalment payments, the Unibanco

magazine evolved towards the Unistore concept. The Unistore offer is reflected as a 'Shopping Mall

on Paper', where customers can buy, browse or just admire.

Complementing this was online disclosure of these third-party products.

In cross-selling, another area focused in 2010, attention was directed at disclosure of the Financial

Protection Plan, insurance that protects the balance of the card at times when the cardholders are

most in need of protection.

Several multi-channel cross-selling activities were organised, offering the possibility of buying

various products on credit.

To promote credit products an integrated communication strategy was developed, based on new

automation and target-segment propensity models. This promoted the offer among a considerable

number of customers.

Also underscored is the TR3S card as a means of providing a credit line involving payment schemes

within the scope of instalment purchases.

These initiatives made a contribution to the growth of Credit Production throughout 2010,

especially during the 4th quarter.


100

117

158

174

1Q 2Q 3Q 4Q

Source: Unicre

EVOLUTION OF CREDIT PRODUCTIONAmount of Personal Credit extended. Base 100 = 1st quarter 2010

2010

STRENGTHENING CUSTOMER RELATIONS

During 2010 Unicre continued to focus on the development of the Internet channel as a means of

attracting new custom and of maintaining relations with Unibanco cardholders.

To enable active, periodic communication with the customers, several initiatives were drawn up to

attract custom and to update their e-mail addresses.

Complementing this, cardholders were encouraged to

access the digital statement of account rather than the

customary paper statement.

Through the interchange of knowledge between Universidade Nova/ISEGI and Unicre, customer

relationship management (CRM) activity acquired a new scientific component.

The main objectives of this partnership include:

- promotion of proximity between the academic and the business worlds, ensuring continuity of the

knowledge acquired at the university and its immediate application to banking business;

- intensification of the study and development of scientific work in areas relevant to generating

knowledge as to customer expectations, attitudes and comportment.

Lending continuity to the strategy of offering customers more-innovative solutions, Unicre, in

conjunction with MasterCard, Visa, SIBS and other banking entities, took part in the pre-launch pilot

project of the Contactless technology, and also launched a new product – Unibanco Go On. This is a


new solution for electronic payments, based on the innovative Contactless technology, developed to

make small payments in security and quickly, more conveniently and in a simpler manner.

The Customer Service Satisfaction polls undertaken in 2010 continue to show high overall

satisfaction levels. 83.5% for the front office and 86% for the back office.


4.1.2. REDUNICRE DIVISION

BUSINESS SUMMARY

The year under review was one of consolidation of a number of initiatives begun in previous years

focused on continuation of growth through an increase of distribution, improvement of the offer of

products and services and securing efficiency gains.

It was also a year of concern as to strengthening Unicre's ability to react to the growth of

competition in the acquiring market, taking into account (i) the actual start-up of NetCaixa as part

of the Netpay network; (ii) the entry of CCAM; (iii) the presence of international acquirers, at hotel

chains in particular.

With regard to billing acquired, the year 'closed' with a 6.8% growth (0.44% decrease in 2009). These

results were achieved against a background of economic and financial crisis, in which the growth of

the macro indicators more determinant to Unicre's business was but slight.

In payments using foreign cards in 2010 there was a frank recovery compared to 2009, y-o-y growth

standing at 15.3% (a decrease of 11.9% in 2009).

ACQUIRING NETWORK

At the end of 2010 the number of establishments subscribing to the Redunicre network stood at

about 49,500 (2.79% more than in 2009), involving 76,900 electronic payment terminals installed

and active (5.5% more than in 2009).


23,0

23,7

23,8

2008

2009

2010

Source: Unicre

EVOLUTION OF THE ACCEPTANCE NETWORK

POSThousand

MerchantsThousand

TerminalsThousand

65,1

72,9

76,9

2008

2009

2010

45,6

48,2

49,5

2008

2009

2010

5.5% 0.2% 2.7%Y-o-Y change 10/09

8.7% 1.6% 4.2%CAGR 10/08

The value of transactions with cards in which Unicre is acquirer totalled about €17.3 million. In

turn, the number of transactions was in excess of 418 million (3.91 million in 2009), of which less

than 0.1% were not processed electronically.

16,3 16,217,3

2008 2009 2010

375 391 419

2008 2009 2010

2009 2010

41 41

7.1%

2008

43

VOLUMES HANDLED BY REDUNICRE

Source: Unicre

Number of TransactionsMillion

Average value per transactionEuros

Billing VolumeBillion euros

6.8%


In accordance with the Regular Study performed by the Redunicre Merchants’ Panel, the customer

satisfaction/ loyalty levels continued to be high in 2010: on a scale of 1 to 10, the overall

satisfaction index was 7.4 and the recommendation level 7.5; 54.4% of the customers consider

themselves loyal to Unicre and 14.0% devotees.

During 2010 8,998 new customers were acquired (9,990 in 2009). The negative economic climate

and the alterations to the retail-trade structure in Portugal continued to be reflected in the

business. Of the merchants that, in 2010, cancelled the acquiring contract with Unicre about 56.7%

mentioned as the reason the close of the business, minimal revenue or inactivity. Only about 11% of

these cancellations were caused by change of acquirer.

SERVICE OF EXCELLENCE

The offer of Products and Services increased in 2010.

REDUNICRE E-COMMERCE

By the end of 2010 more than 260 merchants were already using this

platform, with the spotlight on: Fnac, Staples, Ticketline, FCPorto, SLBenfica, SportingCP and

Netviagens. During 2010 transactions totalled more than €20.7 million with an average transaction

of €93. Consequently, the Redunicre E-commerce as a whole grew by 30% compared to 2009.

CUSTOMER CURRENCY OPTION

The terminals that provide the “Customer Currency Option /

Dynamic Currency Conversion” option were in excess of 650, involving more than 300

establishments, including many of the country's better hotels as well as the more significant luxury

stores.

INTEGRATED PAYMENTS SOLUTION FOR HOTELS

The first integrated payment system for the hotel trade were installed in December at the Sheraton

Porto and Meridien Penina Hotels.

This solution provides the interface between the payment terminal and the Opera/Micros Fidelio

management applications. This solution means that there can be penetration of customers till now

obliged to use international acquirers to have this type of 'architecture'.

TAX FREE SERVICE

The Tax Free automatic operative was launched for the Fixed-IP

terminals. This solution increases the uniqueness of our offer and generates extra income (for

merchants and Unicre alike), increasing customer satisfaction and loyalty levels.


DISTRIBUTION CARD

Emphasis is given to the agreement closed with Jerónimo Martins

for the launch of the Recheio Card (the market leader in Cash&Carry business).

Also signed was the agreement for the launch of the IKEA Card (to be launched early in 2011).

The billing of this solution increased threefold from 2009 to 2010.

FAST PAYMENTS SOLUTION WITH CONTACT

A pilot project was developed in partnership with Monext at the car parks.

OPERATIONAL EFFICIENCY

The ongoing increase of operational efficiency reflects the accumulated effects of the systematic

improvement of processes, the reorganisation of the operation, the rationalisation of resources and

the increase of the effective market response capacity.

During 2010 we provided:

- the Banks Portal, which means we now have a communication/ relationship platform with all the

banks that attract merchants for Redunicre;

- new management-information consultation functions accessible via the Services Portal for those

customers having the Distribution Card Solution;

- local delivery throughout the country of consumables on a personalised basis, while retaining the

previous operating cost, though improving service quality and reducing delays and returns.


4.1.3. OTHER SERVICES

SUPPORT SERVICES DIVISION

MANAGEMENT OF TRANSACTION COMPLAINTS

During 2010 Unicre continued to provide – through the Chargeback Transactions Management Unit –

a number of support services for other domestic issuers, in connection with the processing of all

transaction chargebacks occurring in Portugal and abroad, in keeping with criteria of efficiency,

efficacy and minimisation of losses, driving the creation of value and contributing to maintenance of

the high service quality of payments using cards in Portugal.

Throughout the year, foreign chargebacks increased in number, the result not only of the increase

of transactions involving the use of foreign cards in Portugal, but also of the growing number of

transactions involving non-presential transactions

0

5.000

10.000

2008 2009 2010

EVOLUTION OF DOMESTIC AND FOREIGN DISPUTES

Domestic DisputesNumber

0

15.000

30.000

2008 2009 2010

Foreign DisputesNumber

Source: Unicre


SUPPORT TO ISSUERS AND ACQUIRERS

Within the scope of the provision of specialised services to financial and similar institutions, a new

concept of service was developed with the deepening of relations with

national and international operators. To this end, an Issuers and Acquirers

Support department was set up to provide customised technical services in

support of the operations of issuers and acquirers in the fields of card

management and issue, clearing & settlement and security.

Unicre now provides this service to several entities, 4 of which are international operators (Europe

and Africa).


4.2. ORGANISATION & INTERNAL RESOURCES

4.2.1. INFORMATION SYSTEMS

During 2010, the Information Systems Division combined its regular activities of evolutive

maintenance of the present applications that support the business with development and

implementation of the Mais Máquina Programme (MMK).

MAIS MÁQUINA PROGRAMME

In line with the strategic goals set up by Unicre, and on conclusion of the critical stages designed to

determine the procedural, human and technical conditions essential to the materialisation of a

project of an estimated execution time of 2 years, with direct impacts on Unicre's business, which

constitutes the biggest transformation in the field of information technologies undertaken to date, a

start was made in 2010 to the implementation stage of the “Mais Máquina Programme” (MMK). It is

directed at implementing a new applicational architecture and technique centred on a new Kernel

for the Card & Merchant Management System, based in the Openway Way4 package and the

construction of a number of satellite applications, which constitute the integration layers that will

support the interconnection between the new Kernel and the other applications both internal and

external to Unicre, such as the front-end, Channels, CRM and management information, among

others.

In this connection, and as one of the main vectors of the activity of the Information Systems

Division, the following were undertaken during 2010:

definition of the Migration and Roll-Out strategy necessary to a staggered transition, with

two major sequential start-up stages in real time, (i) Acquiring and (ii) Issue:

functional survey of the CMS, MMS and LMS components to be supported by the WAY4

solution as the future Kernel;

definition of the integration architecture designed to maintain the Kernel system as the

generator of 'raw' information, so that, at integration-layer level, the standards be applied

as defined for the Unicre institution, partners and external entities from the viewpoint of

provision of services, as a generator of a small Time-to-Market and an increase of the offer

of products, services and solutions;

functional survey of the Scoring, Attribution and Behavioural areas;

preparation of the conceptual design of a number of architectural requirements, aimed at

the definition, orchestration and monitoring of Unicre's business processes. This activity

addresses implementation of a Business Process Management (BPM) model, with recourse to

the native capacities of the technical architecture being implemented;


start to the technical design of the integration layers in the Acquiring area.

Additionally, a Process Unit was set up under the Information Systems Division.

The mission of the Process Unit is to identify the organisational processes, to adapt them and to

support their implementation in the new technological infrastructure that will result from the MMK

Project.

BUSINESS DEVELOPMENT SUPPORT PROGRAMME

In parallel with the activities referred to earlier, and within the scope of the business-development

support projects as the second vector of the activity of this division, a number of new functions

were implemented in line with the imperatives and strategies defined by Unicre, increasing their

operational efficiency.

Of the initiatives included in this project, the focus is on:

development/opening of new issue operations (e.g., Unigift);

evolution of the Unibanco partners' portal;

evolution of the Money Box solution for the entire Unibanco portfolio;

optimisation of Fraud reporting in the Acquiring area;

opening of new Distribution Card operations; evolution of the available functions,

particularly allowing new payment terms, improving the statistical processing of

transactions, improving the process of off-line authorisations so as to ensure rejection of

cards on the black-list;

alterations to Unicre's transaction-processing technical infrastructure for Visa-brand cards,

stemming from the creation of Visa Europe's European processing centre and from the need

to migrate all traffic to this centre;

alterations to Unicre's transaction-processing technical infrastructure to allow the

processing of transactions with JCB's EMV cards, increasing security in the acceptance of

cards of this brand;

development allowing online/real-time authorisations with JCB, via MasterCard, with Unicre

no longer the stand-in authorising entity;

provision of a technical infrastructure allowing acceptance of cash-advance transactions for

JCB cards.


4.2.2. HUMAN RESOURCES

Within the scope of Human Resources strategic management, Unicre continued to focus on

recognition of in-house merit and potential, the development of employee capabilities and skills,

and the strengthening and creation of a better balance between professional and family life in

2010.

2008 2009 2010

Employees in service* 259 255 276

Retired 39 45 47

* December 31

At the end of 2010 Unicre's staff consisted of 276 employees, an 8% increase compared to 2009,

reflecting 31 new employees and 11 departures (3 of whom on retirement). This increase was

influenced by the inclusion of 20 Consulprest employees as a result of the merger of this company

by incorporation in May 2010, now wholly owned by Unicre.

The average age of the Unicre personnel is unchanged at 44, their breakdown by gender reflecting a

slight increase of female employees (47% in 2010 compared to 44% in 2009).

34

77

64

42

25

4

13 13

4

18-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60 +

HUMAN RESOURCES IN SERVICE December 31, 2010. Percentage. Number of employees

Female(47%)

Male(53%)(53%)

Female(47%)

AGE

Average44

100% = 276

Source: Unicre


During 2010 Unicre continued to focus on hiring recent graduates with a view to rejuvenation and to

gradually increasing the skills of its staff. This contributed to a 12% increase of the number of

employees having higher education compared to last year.

27%

42%

31%

Elementary Education

University Education

Secondary Education

1 p.p.

0 p.p.

Y-o-Y Change

-1 p.p.

ACADEMIC EDUCATION OF UNICRE EMPLOYEES Evolution 2010 compared to 2009

Source: Unicre

Lending continuity to the policy based on delegation of responsibilities, empowerment and greater

internal mobility constituted focal points of Human Resources management.

With a view to recognising, differentiating and stimulating excellent performance among its

employees, Unicre has lent greater emphasis to the variable-remuneration components. In 2010,

the weight of bonuses rose slightly compared to 2009 (1.65 p.p.).

Unicre continued its training-course programme in 2010, having awarded 19 remunerated courses,

of which 14 took place within the scope of the "Initiation to Active Life" with a duration of six

months. The others lasted one month, under the "Summer Training Course Programme", in which

activities and goals to be met were defined with a view to participants gaining experience in real-

life situations at the place of work.

During 2010, training continued to be a strategic pillar. A total of 8,885 training hours were

organised (an 18% increase over last year), or 32 hours per employee. The “Mais Talento” (More

Talent) and “Academia Redunicre” (Redunicre Academy) programmes continued in the field of

personal-skills development and of knowledge of the business.


For the second straight year, Unicre took part in the "Best Companies to Work For" initiative

organised by Exame magazine and by consultants Heidrick & Struggles, having achieved a 71%

general employee satisfaction index and inclusion in the group of the best big companies to work

for.

Considering diagnosis and prevention an important means of improving the quality of life of its

employees, Unicre organised two initiatives with the Medicine at Work company: Prostate Disease

(PSA) Check-Up and Osteoporosis Check-up, involving 51% of our employees.

Also in respect of improving the general health conditions and wellbeing of the employees, there

was another initiative: "Just do it", involving the opening of a gym, now used by 20% of the Unicre

personnel.

The year under review saw repetition of the Occupation of Spare Time experiment for employees'

children. It took place during the summer holidays, involving 42 children aged between 6 and 13.

The Unicre Employees' Sports and Cultural Group continues to play an important role in fostering

and organising several intellectual and sports activities, providing the opportunity for employees

and their families to socialise. Unicre continued to sponsor the group in 2010.


4.3. RISK MANAGEMENT

In a context of increasing decline of confidence in the financial markets and of widespread risk

aversion, risk-management in 2010 continued to play an important role in the day-to-day life of the

Institution in strengthening its sustainable development and in preserving the profitability required

by its equityholders.

4.3.1. RISK MANAGEMENT AT UNICRE

MAIN DEVELOPMENTS IN 2010

During the year now ended risk management continued to be undertaken through various measures,

the following in particular:

creation of the Credit Risk Division in April 2010, the result of the spin-off of the Credit Risk

Department, formerly a part of the Issue Division;

review of the credit-limit management strategies with a view to more prudent management;

alteration of the collection strategies, involving introduction of measures allowing faster action

when customers default;

introduction of new credit-allocation criteria, allowing an increase of the transaction approval

rates, notwithstanding a resultant reduction of delinquency;

creation of the post of Compliance interlocutor, a single interlocutor for each of the Unicre

divisions, responsible for ensuring fulfilment of the compliance requirements of the division to

which they belong;

continuation of the work involved in the consolidation of the risk-management system through

the acquisition, at the end of 2010, of a specific Risk-Management and Compliance tool, the

aim being to improve the in-house procedures of gauging, monitoring and reporting the various

risks, especially the operational and compliance risks;

Within the scope of the Basel II Pillar 2 (Supervisor), emphasis is given to the preparation of the

interim information of the "ICAAP (Internal Capital Adequacy Assessment Process) Report as at

December 31, 2009;

Within the scope of the ICAAP report Unicre revised the Company's risk-management policy,

particularly that on overall risk appetite;

Within the scope of the Basel II Pillar 3 (Transparency), emphasis is given to the production, in

April 2010, of the report on "Market Discipline" referred to the end of 2009, published on the

Institution's site.

RISK MANAGEMENT ORGANISATION STRUCTURE


In the matter of risk management Unicre maintained its organisation structure comprising three

lines of defence which, taken together, ensure effective risk management.

1st

lin

eORGANISATIONAL MODEL OF THE 3 LINES OF DEFENCE

DE

DSI

DFM

DEC

DSA

Risk-Management Committee

Business Committee

Inform. Syst. Committee.

3rd

lin

e

External Audit

Board of Auditors

Present functional relationship lines Present hierarchic reporting Committees External unit

ACI

Internal Audit

Internal Control

HR Committee

Credit Board

DEC

Risk Management and Compliance

DRC

Independent Audit: Performs auditing and consultancy activities for the 1st & 2nd lines and ensures efficient use of the organisation's resources.

Internal Control System: Provides assistance to the Executive Committee in the definition, monitoring, review and ongoing improvement of the Internal Control Syst.

Operationalisation: Daily risk-management activities in accordance with the instituted business strategy, standards and internal procedures and Risk-Management policy

DRU

Risk-Management & Compliance:Provides identification, evaluation, mitigation, monitoring & control of all risks and compliance with laws and regulations

Executive Committee

2nd

lin

e

Credit-Risk Management

Source: Unicre

The Board of Directors establishes the guidelines for the Company's risk profile, approves and

decides the risk-management policies and the high-level controls to be followed.

Audit & Internal Control is responsible for performing internal audit activities in an independent,

objective manner and for advising the Board of Directors on the definition, review, monitoring and

constant improvement of the internal-control systems.

The Risk Management Committee is responsible for monitoring the profile of Unicre's overall risk

and for ensuring its alignment with the Company's strategy and with the Board of Directors'

directives.

The Risk Management and Compliance Area ensures:

understanding the nature and materiality of the overall risks to which Unicre is exposed (credit,

operational, interest-rate, liquidity, reputation and strategy), ensuring due identification,

assessment, mitigation, monitoring and control of all risks considered material in accordance

with best practices and the requirements of the Basel Accord;

fulfilment of the obligations and duties to which the Institution is subject, in particular

compliance with applicable laws, regulations, professional standards, and codes of ethics and of

conduct.

The Credit Risk Division is responsible for keeping the credit levels of the portfolio within limits

adequate to its profitability, in accordance with the risk-management strategies and policies

defined for the Company, and is involved in the allocation of credit limits both for cards and for the


other credit products marketed, as well as monitoring the respective portfolio and recovering non-

performing loans.

The Credit Board is responsible for optimising the management of the credit portfolio in keeping

with the Company's strategy and with the Board of Directors' directives issued in this connection.

The organisation model of the three lines of defence also includes the Company's other divisions and

the Sectoral Committees.

This ensures that risk management is a function transverse to the entire Institution and is

undertaken with the contribution of every area. The conditions are likewise created for the

development of a veritable 'Risk Culture' that, with the participation and involvement of the whole

organisation, should allow the identification, assessment, monitoring and control of relevant risks.

PRUDENTIAL MECHANISM

In calculating equity requirements for the credit risk Unicre uses the Standard Method in accordance

with Notice 5/2007, while in the calculation of the equity requirements for the operational risk it

employs the Basic Indicator Method defined in Notice 9/2007.

4.3.2. MATERIALLY-RELEVANT RISKS

Unicre considers risks materially-relevant for the Institution to be those in which the inherent

events have a significant probability of occurrence and will cause major impacts on the Institution's

financial conditions, as portrayed in the Risk Assessment Model: credit, liquidity, interest-rate,

operational (including compliance and information systems), strategy and reputation risks.

4.3.3. CREDIT RISK

The credit risk is associated with the probability of occurrence of negative impacts on profit or

contribute capital, stemming from failure by the Institution's customers to fulfil their contractual

obligations assumed in the wake of credit extended via cards issued by the Company or through

personal loans granted.

The credit risk that stems from credit extended to customers is the risk of greatest material

importance in Unicre's business, both in the light of the probability of occurrence and in that of its

severity.

Identification and monitoring of this risk are performed by the Credit Risk Division, which is

responsible for extending credit, for monitoring the portfolio and for the recovery of past-due

credit.

At the proposal of the Credit Risk Division and/or of the Customer Support Service, the Credit Board

is charged with appraising and deciding the best commercial options to be taken in keeping with the

gravity of the situation under analysis, the customer's profile and the established risk policy.


CREDIT-RISK MANAGEMENT

Management of the credit risk is undertaken from an overall standpoint over the entire life cycle of

the contracts, from the extending of the credit to its recovery, not forgetting its monitoring.

During the stage of extending credit contact is established with the customer allowing all the

information to be gathered, the risk to be assessed, a decision to be taken as to the credit

operation and the overall exposure limits to be established.

As from the moment Unicre establishes a credit relation with a customer a start is made to the

Monitoring stage through which the follow-up of the transactions and the determination of the

customers' risk profiles are assured and such preventive and corrective measures as are seen to be

necessary are taken.

During the third or Recovery stage efforts are made to recover the credit extended that is in

default. This stage begins following non-compliance or if it is considered that there is no way to

prevent default.

MEASUREMENT AND ASSESSMENT

In the process of extending credit, the measurement and assessment of the risk is performed with

the aid of the result obtained in the Credit Allocation Scoring Model that assigns the credit limits

and the degree of risk on the basis of the assessment of the economic and social situation of each

customer and of the Risk Database.

The basis of the scoring system is the Fair Isaac matrix and it is fed by statistical models based on

accumulated experience, on information provided and on clear, objective criteria that allow

automation of the decision on standardisable credit applications.

The Risk Database is an in-house database fed with information on customer delinquency, including

fraud, and information from the Bank of Portugal's credit-risk centralisation.

During the life of the contract, as an 'already customer' there is an additional set of instruments to

support the measurement and assessment of this risk:

Behavioural Scoring models, which take into account the customer's current financial situation,

repayment capacity, relationship history, historic pattern of action and other specific

characteristics that could affect the prospects of receiving the principal and interest;

Credit-Risk indicators that allow Unicre's risk profile to be analysed on the basis of its historic

analysis and of the projection of its future evolution (credit quality, internal/external recovery

rate, credit-risk cover, etc.);

Internal model for the calculation and monitoring of the risk factors of the credit portfolio, of

the probability of default (PD), of recovery (LGD) and of the exposure to default (EAD), both for

the whole of the portfolio and by customer segments (score and age) and by the class of

customer default;

stress tests of the risk notation (scoring) models with a view to periodically gauging their quality,

assessing their adequacy in the light of the credit portfolio and determining whether the


variables that impact on the model are really those that influence the risks that the credit

operations represent for the Institution in case of unfavourable events.

CONTROL & MITIGATION

Unicre has implemented measures designed to control and reduce the credit risk and, at the same

time, allow the Institution to have greater response capacity when faced with adverse alterations in

the market in which it operates.

WARNING-MONITORING SYSTEM

With regard to credit risk there are several warning signals that trigger intervention measures that

allow cases of possible default to be avoided. These signals provide warning of situations that affect

not only the customer and the credit transaction but also the context or market involved.

MANAGEMENT REPORTS

Management Reports are produced periodically, reporting the evolution of the main credit-business

indicators in general and of the credit risk in particular, in the latter case in respect of the

probability of default, concentration and correlation of the losses caused by default, and risk

exposure. These reports provide relevant information for decision-taking in respect of ways to

mitigate the credit risk.

ORGANISATIONAL MITIGATION

The combination of the functions of the Credit Risk Division and of the Credit Board provide a

number of additional controls in the search for optimisation of credit-risk management.

CREDIT RISK MANUAL

Unicre has a Credit Risk manual that defines the general policies for the management of this type of

risk and the principles for their application in extending, monitoring and recovering credit, and it

also acts as a control allowing the Company to mitigate this type of risk.

DELEGATION OF RESPONSIBILITIES

In 2010 the Board of Directors reviewed the delegation of responsibilities matrix and introduced

additional measures related with the credit-risk management policy, particularly in the allocation of

cards, in extending and recovering credit and in collections.

In the delegation of responsibilities there are various approval levels that assign responsibility to the

various parties involved in the analysis and recovery process. It is assigned in the light of the risk of


the Company and of the transaction, as defined by a set of variables/characteristics of the decision

in question.

LIMITS

Unicre has a system that ensures the complete identification of the limits, established for each

account, of the exposure to credit risk.

The exposure limits per account are defined by type of credit and have regard for existing

regulatory restrictions in respect of the composition and diversification of the portfolio and the

limits of exposure to counterparts. Any excess over the limit is preceded by an analysis of the risk so

as to duly justify it.

RISK DATABASE

The Database is also a means of mitigating the credit-risk, for it allows the analysts to identify those

customers that do not fall within the Institution's risk profile and they therefore refuse operations

with them.

4.3.4. LIQUIDITY RISK

The Liquidity Risk involves the probability of occurrence of financial losses, under profit & loss or

contributed capital, stemming from the Institution's inability to have the liquid funds needed to

fulfil its obligations as and when they fall due.

LIQUIDITY-RISK MANAGEMENT

Given Unicre's nature as a credit institution, it can be expected that a major part of its borrowing

requirements continues to be provided through recourse to the interbank money market involving

short-term operations.

To ensure that management of the liquidity risk is performed efficiently, the Company undertakes

day-to-day borrowing management on the basis of cash flows. Contracting the amounts and

maturities of the borrowings 1 takes into account the Company's forecast cash flows stemming from

the business areas and it is managed in a manner such as to avoid the risks (liquidity and

deterioration of spreads) associated with a concentration, in time, of the borrowing requirements.

Day-to-day management of the Liquidity Risk is the responsibility of the Financial and Means

Division.

1 As a rule, for a given operation at least four banks are consulted, including the two that submitted the lowest spreads for the preceding operation; the lender bank of the funding that is to be replaced, if applicable; and one bank of those not consulted for a longer period.



Day-to-day management of the Company's funding is underpinned by cash-flow forecasts.


With a view to minimising its liquidity-risk exposure, the Company performs daily control of the

amounts of the balances of borrowings, seeking to ensure that there is a positive, though residual,

balance for the banks with which the Institution does not have funding agreements and that the

other bank accounts are optimised in the light of the contractual conditions offered by all the

banking entities.

On the other hand, the position of the borrowings is reviewed weekly and presented to the Board of

Directors.

In order to reduce the liquidity risk to which Unicre is exposed the amounts and maturity dates of

the borrowings are so contracted as to ensure that the total value of the maturities does not exceed

certain limits per period (day, week and month), except in the case of borrowings having a maturity

of more than one year or in those situations in which the liquidity risk does not exist or is

attenuated by operations of another type (e.g., underwritten issues, firm credit lines).

Occasionally, Unicre uses placements of cash surpluses as a form of management of its liquidity.

4.3.5. INTEREST-RATE RISK

The Interest-Rate Risk involves the probability of occurrence of negative impacts on profit & loss or

on contributed capital, owing to adverse movements of interest rates.

Unicre's main financial asset is its portfolio of loans & advances to customers (holders of the cards

that it issues).

Taking into account the nature of its business, the principal source of Unicre's exposure to market

risk is the evolution of interest rates.

Historically, both the rates charged and the rates paid by Unicre were very-short-term rates, which

contributed to the reduction of the exposure to the interest-rate risk. The interest rate on credit

extended could, for the most part, be revised quarterly, keeping in step with the variation of the

short-term interest rates on the money market.

The widening of the credit-product range offered to customers, which was reflected, in particular,

in a lengthening of the repayment terms and in fixed instalments for the payment, came to increase

the exposure to the interest-rate risk.

Day-to-day management of the Interest-Rate Risk is the responsibility of the Financial and Means

Division.



Monthly measurement and assessment of the interest-rate risk is performed using calculation of the

modified duration in respect of each financial instrument and respective portfolios, and through the

mismatch between the expected change of the value of the liabilities portfolio in the light of a

parallel shift of the market interest-rate curve, maximum exposure limits having been fixed.


In the wake of these developments Unicre has defined an interest-rate risk management policy that

allows efficient, timely management of this type of risk. Maximum limits are established as a form

of mitigation of this type of risk for the Institution.

4.3.6. OPERATIONAL RISK

Operational risk is understood to be the possibility that the Company may incur direct or indirect

losses by virtue of inadequate internal procedures or failures thereof, of human error, of failures of

the information systems, of internal or external fraud, and of failures in the analysis, processing or

liquidation of operations.

The operational risk is the second biggest of all the risks confronted by Unicre, immediately after

the credit risk.


Annual self-appraisal questionnaires are mainly directed at determining and assessing Unicre's

operational-risk level. Nevertheless, it is essentially the specific operational-risk indicators that

constitute the main means used to measure this risk.


In this market for over 35 years, Unicre has adopted a number of mitigation practices that have

been seen to be highly efficient in the management of this risk.

ORGANISATIONAL MITIGATION

Unicre's organic and functional structure allows it to detect operational failures in good time,

through validation of the information by means of control activities. There is an historic record of

all operations carried out, detailing who undertook them, when and using what means.

The budget control performed by the Strategy and Compliance Division acts as an additional control

of possible operational failures and of the consequent impact on the organisation, allowing fast

identification of incorrect situations and their regularisation.

Unicre's accounting is performed using specific software (SAP), the respective parametrisation

having been undertaken in accordance with specific accounting standards and other valuation

criteria established for the banking industry.


The accounting of transactions complies with principles of segregation of duties. It is performed by

different members of the Financial and Means Division, allowing errors in the accounting records to

be detected and corrected in good time. The accounting balances and their reasonableness are also

monitored on a regular basis, as are the details of the principal control accounts.

AUTOMATIC IRREGULARITIES DETECTION SYSTEM

Under an outsourcing arrangement, the firm Paywatch monitors transactions round the clock, seven

days a week to ensure timely detection of possible fraud.

PCI DSS – PAYMENT CARD INDUSTRY DATA SECURITY STANDARDS

With a view to obtaining certification under PCI DSS (Payment Card Industry Data Security

Standards), Unicre made a start in 2009 to a project, in co-operation with a qualified security

assessor, approved by the international systems.

The PCI security standards involve technical and operational requirements defined by the PCI

Security Standards Council (PCI SSC) directed at protecting the confidentiality and integrity of

sensitive information.

The PCI Council is a forum set up by the international cards systems: Visa Inc., MasterCard

Worldwide, JCB International, American Express and Discover Financial Services.

During 2010 Unicre planned and began a number of measures designed to obtain certification in PCI

DSS in step with the introduction of the new applicational architecture.

BUSINESS CONTINUITY PLAN (BCP)

The Company has instituted a Business Continuity Plan, including a disaster recovery plan, directed

at ensuring continuity of operations in the event of a catastrophic situation, thus minimising the

negative effects in respect of cardholders and merchants.

INTERNAL EMERGENCY PLAN

The aim of this Emergency Plan is to respond promptly to possible emergency situations of an

internal or external nature and to ensure the safety of people and property, as well as the

continuity of the work. A number of simple, practical instructions are provided to prevent or

minimise possible human and material losses.

PANDEMIC CONTINGENCY PLAN

Unicre's Pandemic Contingency Plan was defined to respond to a scenario of a Swine Flu (H1N1)

pandemic. However, it can be applied to any other similar situation in which what is in question is

high employee absenteeism, for it was considered that 40% of the employees might be infected or

have a close relative in such a situation.


This plan was created with a view to anticipating and managing the impact of a possible case of

pandemic flu among the employees and on Unicre's business. It is intended to prepare operational

response in minimising the propagation conditions of the pandemic and to keep essential services in

working order.

MEASURES RELATED WITH THE PHYSICAL SECURITY OF THE PREMISES AND OF THE WORKERS

The physical security of the premises and of the workers is provided for through compliance with a

set of in-house rules and relevant legislation in force in the matter of hygiene and health at work.

Potential losses are further minimised by Unicre through appropriate insurance cover.

4.3.7. INFORMATION SYSTEM AND LEGAL RISKS – SPECIFICS

In addition to the assessment of the operational risk, there is a different chapter for the

information systems and compliance risks, normally included under the operational risk.

LEGAL RISK

The legal or compliance risk can lead to sanctions of a legal or regulatory nature, to limitation of

business opportunities, to a reduction of growth potential or to impossibility of demanding

fulfilment of contractual obligations.

To assess this type of risk within the context of the Company, Unicre, in addition to the self-

assessment questionnaire, performs analysis of distinct indicators such as fines, penalties and other

legal or regulatory sanctions.

COMPLIANCE INTERLOCUTOR

With a view to formalising in-house allocation of responsibilities in complying with the various

regulatory requirements with which Unicre is faced and to ensure timely control of the fulfilment of

the requirements of each division, the post of “compliance interlocutor” was created in April 2010.

CODE OF CONDUCT

In order to reduce the compliance risk, the Company has a Code of Conduct (specified in Internal

Rule 114) and a money-laundering prevention and monitoring policy. The Institution also has legal

consultancy services and monitors applicable legal and taxation alterations, and sends reports to

regulatory entities.

INFORMATION-SYSTEMS RISK

The risk associated with the information systems weighs heavily in the Institution's risk

management, owing to the preponderant role they play in Unicre's business, as is customary in the


banking world. At Unicre the entity in charge of the management of risks of this type is the

Information Systems Division (DSI).

Nevertheless, owing to the crucial role played by the information systems in the pursuit of the

strategic goals, in the development of the business and in the improvement of Unicre's operating

efficiency, there is also an Information Systems Committee, as mentioned earlier. It meets monthly

and one of its main duties is to monitor the proper evolution of the information-systems projects

resulting from the Unicre business plan and to contribute to resolving conflicts of a strategic and

organisational nature.

INFORMATION-SYSTEMS RISK CONTROL TECHNIQUES

So as to reduce exposure to this type of risk Unicre has mechanisms for the protection of its

software, as well as operator handbooks and technical manuals for the systems, applications and IT

routines. One of these mechanisms is the provision of an uninterrupted support services for internal

problems/requests related with the IT support available within the Company.

Unicre's software runs on the SIBS technological structure under an outsourcing contract. This

software has its own protection mechanisms that prevent an unauthorised user from calling its

operationality and integrity into question. Additionally, controls have been implemented that

identify users and control their activity. Access to the IT applications differs in accordance with the

users' profiles, in keeping with their needs and complying with job-segregation rules. New accesses

or alterations to existing ones have to be authorised by the user's superiors and by the Information

Systems Division.

The information resident in Unicre's IT systems is subject to periodic back-up in order to safeguard

it and to restore it in the event of an incident causing its loss or corruption.

4.3.8. STRATEGY RISK

Unicre's strategy is oriented by a three-year Strategic Plan, which coincides with the tenure of the

corporate officers, that establishes medium-term goals.

To manage the strategy risk effectively, Unicre also prepares, each year, a business plan and a

budget for the following year in keeping with the three-year Strategic Plan approved for the period.

The existence of this budget is fundamental to control over the Unicre strategic plan. On the other

hand, the fact that budget-execution reports are drawn up and subsequently appraised is reflected

in taking decisions as to measures to mitigate the strategy risk.

With a view to ensuring, on the one hand, better integration between the Institution's various areas

and the channelling of the resources required to meet the strategic goals and, on the other,

reduction of the strategy risk to which Unicre is exposed, the Company keeps the Business

Committee in activity. This committee is a forum whose main responsibilities include dynamic


monitoring of the market and of the competition and appraisal of business proposals and projects

for Unicre and suiting them to the Company's strategy.

4.3.9. REPUTATION RISK

The Reputation Risk reflects the probability of occurrence of negative impacts on profit & loss or on

contributed capital stemming from a negative perception, founded or unfounded, of the Institution's

public image by customers, suppliers, financial analysts, employees, investors, the media or public

opinion in general.


The means of assessing the reputation risk employed at Unicre involves self-assessment

questionnaires, monitoring of the brand's awareness rating, analysis of customer complaints and the

customer-satisfaction questionnaire. In this connection, stress tests are also performed through

sensitivity analyses that provide a prospective vision of the possible impact of certain situations on

the Institution.


The reputation risk is a risk that can easily stem from any of the other risks detailed above. Unicre

has implemented a number of control and management measures to ensure minimisation of its

exposure to this risk, to wit:

management of Unicre's communication is performed by an external company hired on an

outsourcing basis;

Unicre monitors the treatment and control of customer complaints. This monitoring is essential if

the Institution is to be able to take timely measures to correct any failures of the procedures or

systems identified in any complaints;

to reduce the Reputation Risk Unicre also has a Code of Conduct applicable to all the Institution's

employees.


5. FINANCIAL REVIEW

This financial review is based on Unicre's financial statements, prepared in accordance with the

Adjusted Accounting Standards (AAS), within the scope of the application of Bank of Portugal Notice

1/2005 of February 21 and Instructions 23/2004 and 9/2005, reported in point 8 of this report.

In the wake of the occurrence, in 2009, of a non-recurrent event resulting from gains on the sale of

30% of the portfolio of shares in Visa International Incorporated, for the sum of €4 million, Unicre

opted to present in this management report, for comparison purposes, the operating statement

restated for this transaction.

5.1. SUMMARY & MAIN INDICATORS

In 2010 Unicre returned a Pre-tax Profit of 16.9 million, 6.19% more than the comparable result for

2009.

Operating income fell by 11.1% compared to the 2009 figure. Of the indicators that make up

Operating Income, emphasis is given to the 1.2% growth of Net Interest Income and to the decrease

of Adjusted Net Commissions and of Other Operating Profits, down 22.5% and 14.0% respectively.

Operating Costs declined by 15.7% through the reduction of General Administrative Costs in the

wake of the reduction of Processing Costs and of Operative Functioning Costs.

The reduction of Overheads by more than the decrease of Operating Income allowed an

improvement of the Efficiency Ratio from 63.7% to 61.8%.

The Credit-Risk Cost fell by 26.5% in the wake of the reduction of the default rate.

Net Assets rose 3.9% to €310 million, despite the decrease of the Loans & Advances to Customers

portfolio.

As far as Contributed Capital is concerned, Unicre closed the year with a solvency ratio of 13.7%,

corresponding to a Tier I of 11.9%.


5.2. INCOME STATEMENT

Thousand euros

Value %

Net Interest Income adjusted(1) 39.049 39.522 473 1,2%

Interest & similar income adjusted (1) 45.501 44.226 (1.275) (2,8%)

Interest & similar costs (6.452) (4.704) 1.747 (27,1%)

Income on equity instruments 251 128 (123) (49,0%)

Income on services and commissions 185.571 196.717 11.146 6,0%

Expenditure on services and commissions (146.734) (166.602) (19.868) 13,5%

Currency revaluation results 12 0 (12) (99,9%)

Results of available-for-sale financial assets 42 0 (42) (100,0%)

Other operating results 9.664 8.309 (1.355) (14,0%)

Operating income 87.855 78.074 (9.781) (11,1%)

Staff costs (15.342) (16.712) (1.370) 8,9%

Of which:

Wages, salaries & other social charges (14.953) (15.908) (956) 6,4%

Other staff costs (389) (803) (414) 106,4%

General administrative costs (38.860) (28.969) 9.892 (25,5%)

Depreciation charges for the year (1.756) (2.003) (247) 14,1%

Recovery of loans, interest & expenses 5.815 6.187 373 6,4%

Corr. of amounts assoc. w/Loans & advances and (23.726) (17.121) 6.605 (27,8%)

Impairment of other assets, net of items written 42 (326) (368) (866,6%)

Provisions net of items written back and written 1.856 (2.270) (4.127) (222,3%)

Pre-tax profit 15.885 16.861 977 6,1%

Taxes (3.955) (5.591) (1.637) 41,4%

Current (4.393) (6.627) (2.234) 50,8%

Deferred 438 1.035 597 136,2%

Net profit 11.930 11.270 (660) (5,5%)

2009 (R)

(1) Adjusted Interest & similar includes income generated by the Cash Advance on Account product

(2) Adjusted Services & commissions income excludes the income generated by the Cash Advance on Account product

Change2010

(R) Adjusted for non-recurrent items related with gains realised on the sale of 30% of the Visa International Incorporation share portfolio

Unicre's Pre-tax Profit stood at €16.9 million, 6.19% above the comparable 2009 profit.

Despite the reduction of Operating Income stemming from the decrease both of Net Commissions

and of Other Operating Profits, a favourable contribution to the performance of Pre-tax Profit was

made by the reduction of General Administrative Costs and also by Provisions as a result of the good

performance observed under default.


NET INTEREST INCOME

Adjusted Net Interest Income 2 closed up 1.2% in 2010 compared to 2009, to stand at €39.5 million.

A major contribution to this good performance was made by borrowing costs, which offset the

decrease seen in credit extended (7.3% of net credit).

Thousand euros

Year Year

2009 2010 Value %

Interest & similar income adjusted 45.501 44.226 (1.275) (2,8%)

Interest & similar costs (6.452) (4.704) 1.747 (27,1%)

Net Interest Income adjusted 39.049 39.522 473 1,2%

Change

NET COMMISSIONS

Adjusted Net Commissions 3 decreased by €8.7 million compared to 2009. A negative contribution

to this heading was made by the new Negotiation and Growth and Use of Account paid to the

Acquiring Banks, the reduction of revenue generated by the annual instalments charged to card

customers, and the increase of costs incurred under the International Systems price list.

Notwithstanding the decline of Adjusted Net Commissions, emphasis is given to the performance, in

line with that of 2009, of Purchase Transaction Commissions in respect of acquiring business (Net

Discounts on Interchange Fees).

Thousand euros

Year Year

2009 2010 Value %

Adjusted commission income 185.571 196.717 11.146 6,0%

Commissions cost (146.734) (166.602) (19.868) 13,5%

Net commissions adjusted 38.837 30.115 (8.722) (22,5%)

For memory:

Discounts & Net interchange fees 36.905 36.791 (114) (0,3%)

Other net commissions 1.931 (6.676) (8.607) (445,6%)

Change

2 Adjusted Interest & similar income includes income generated by the Cash Advance on Account product 3 Adjusted Services & commissions income, excludes the income generated by the Cash Advance on Account product


BREAKDOWN OF OPERATING INCOME

Adjusted Net Interest Income again increased its relative weight and, in 2010, accounted for 51% of

total Operating Income.

On the other hand, the weight of Adjusted Net Commissions and of Other Net Income fell as a

proportion of Operating Income, accounting for 39% and 11% of the total, respectively.

In 2010 this performance of Operating income essentially had to do with the said reduction of

Adjusted Net Commissions as a result of the new Negotiation and Growth and Use of Account paid to

the Acquiring Banks, the reduction of revenue generated by the annual instalments charged to card

customers, and the increase of costs incurred under the International Systems price list.

Net commissionsadjusted

Net Interest Income adjusted

Other Net Income

10,8%

44,2%38,6%

44,4%50,6%

11,4%

87.9 78.1

EVOLUTION OF THE OPERATING INCOME MIXMillion euros. Percentage

2009(R) 2010

2009(R) Excluding the impact of non-recurrent events resulting from the 30% gain on the Visa Incorporation portfolio in the sum of €4mn.Source: Unicre

OVERHEADS

Overheads in 2010 amounted to €47.7 million, down €8.3 million compared to 2009.

Staff Costs rose by 8.9% compared to 2009 as a result of the transfer of the Consulprest employees

to Unicre and of the restructuring provision.


Thousand euros

Value %

Employees 9.278 9.791 513 5,5%

Management and supervision bodies 1.161 1.084 -77 -6,7%

Remuneration 10.439 10.875 437 4,2%

Social Security & other staff costs

Retirement pension costs

Cost for the year (Note 15) 2.134 2.081 -53 -2,5%

Other 40 25 -16 -38,8%

Cost of other long-term benefits:

Death benefit (Note 15.) 104 110 6 5,7%

Length-of-service bonus (Note 15.) 73 127 54 73,8%

SAMS (Medical Services) (Note 15) 215 223 8 3,9%

SAMS - Other 0 46 46

Family benefit 903 1.011 107 11,9%

SAMS & Social Security 875 1.105 230 26,3%

Workmen's compensation insurance 61 58 -3 -4,3%

Contractual & restructuring indemnities (Note 13) 389 803 414 106,4%

Other 109 248 139 127,0%

Social Security & other staff costs 4.903 5.837 934 19,1%

Staff costs 15.342 16.712 1.371 8,9%

Year 2009

Year 2010

Change

A contribution to the decrease of Overheads was made by the decline of Operating Costs under

Third-party Supplies & Services largely as a result of the elimination of the Bank Support

Commission paid to the support banks and of the efforts to cut the operatives function costs (down

9.3%), which includes a €0.4 million reduction related with the take-over by Unicre of the activities

of the now-extinct Consulprest.

Thousand euros

Year Year

2009 2010 Value %

Third-party supplies & services 38.860 28.969 (9.892) (25,5%)

Processing 16.709 7.449 (9.260) (55,4%)

Software & licensing 6.978 7.313 335 4,8%

IT outsourcing 5.785 6.006 221 3,8%

Software licences & other costs 1.193 1.307 114 9,6%

Operative working costs (1) 10.959 9.944 (1.015) (9,3%)

Other 4.214 4.263 48 1,1%

Marketing & advertising 2.060 1.642 (418) (20,3%)

Studies & consultation 2.154 2.621 466 21,6%

(1) Communications, labour services, equipment maintenance & repair, stationery, insurance & other

Change


Leveraged by the reduction of Operating Costs (15.7%) and by the lesser reduction of Operating

income (11.1%), Unicre's Cost-to-Income performed well, falling 3.2 percentage points.

Cost-to-IncomeOperating Costs

Operating Income

54,2

45,7

61,7%

58,5%

EVOLUTION OF UNICRE'S COST-TO-INCOME Million euros. Percentage

87,9

78,1-11.1%

-15.7%

2009(R) 2010

2009(R) 2010

2009(R) 20102009(R) Excluding the impact of non-recurrent events resulting from the 30% gain on the Visa Incorporation portfolio in the sum of €4mn.

Source: Unicre

-3.2 p.p.

On adding depreciation to the operating costs, and despite the increase of depreciation caused by

the renovation of the electronic payment terminals in progress, the efficiency ratio still fell by 2.6

percentage points.

EfficiencyRatio*

Cost-to-Income

EVOLUTION OF THE COST-TO-INCOMEPercentage

* Efficiency Ratio = (Operating Costs (Staff & Third-party Suppl. & Services) + Depreciation)/Operating Income adjusted for non-recurrent items2008R Excluding the impact of non-recurrent events resulting from the receipt of dividends from Visa International Incorporation, of the amortisation in profit &

loss for the year of the actuarial and financial deviations in excess over the corridor limit, and of indemnities for rescission of contracts with employees of the Security Centre shut down on its transfer to outsourcing

2009(R) Excluding the impact of non-recurrent events resulting from the 30% gain on the Visa Incorporation portfolio in the sum of €4mn.

Source: Unicre

58,5%61,7%62,8%

61,1%63,7%

65,6%

2008 2009 2010

-2.6 p.p.

(R) (R)


PROVISIONS, IMPAIRMENTS & NET CREDIT CORRECTIONS

During 2010 movements under provisions, impairments and net credit corrections amounted to

€19.7 million, a decrease of €2.1 million compared to 2009. A major contribution to the good

performance of provisions was made by the reduction of loan-loss provisions in the wake of the

decline of the default levels (reduction of the ratio of loans past-due by over 90 days by 2.3

percentage points compared to 2009).

Thousand euros

Year Year

2009 2010 Value %

Provisions net of items written back and written off (1.856) 2.270 4.127 (222,3%)

General credit-risk provisions (362) 1.971 2.332 (644,9%)

Provisions for other contingencies & liabilities (1.495) 300 1.794 (120,1%)

Provisions for non-performing loans net of items written back and written off

23.726 17.121 (6.605) (27,8%)

Impairment of other assets net of items written back and written off

(42) 326 368 (866,6%)

Provisions, impairments & net corrections 21.828 19.717 (2.110) (9,7%)

Change

With regard to the cost of the credit risk, there was a reduction of €4.6 million in 2010 as a result of

the said reduction of loan-loss provisions.

Thousand euros

Year Year

2009 2010 Value %

Provisions for loans, net of corrections 23.365 19.091 (4.273) (18,3%)

Provisions for non-performing loans net of items written back and written off

23.726 17.121 (6.605) (27,8%)

General credit-risk provisions (362) 1.971 2.332 (644,9%)

Recovery of loans, interest & expenses 5.815 6.187 373 6,4%

Credit-risk cost 17.550 12.904 (4.646) (26,5%)

Var. 2010 / 2009


5.3. BALANCE SHEET

At the end of 2010 Unicre's Total Net Assets stood at €310.2 million, an increase of 3.9% over 2009.

The growth of Total Net Assets was mainly the result of the increase of Other assets under

Placements with credit institutions and of Intangible fixed assets, the latter in the wake of the

investments made under the Mais Máquina Project.

244,2 226,4

54,4 83,7

2009 2010

Loans & advances to customers

Other assets

310.23.9%

298.6

EVOLUTION OF NET ASSETSMillion euros

Source: Unicre

In 2010 Return on Assets (RoA) stood at 4.0% and Return on Equity (RoE) at 18.2%

Return on Assets (RoA) Return on Equity (RoE)

18,2%21,0%

EVOLUTION OF PROFITABILITYPercentage

4,0%4,1%

2009(R) 20102009(R) 2010

2009(R) Excluding the impact of non-recurrent events resulting from the 30% gain on the Visa Incorporation portfolio in the sum of €4mn.Source: Unicre


CREDIT EXTENDED TO CUSTOMERS

Thousand euros

Year Year Change 0

2009 2010 Value %

Net Loans & advances to customers 244.187 226.433 (17.754) -7,3%

Domestic loans & interest receivable 229.065 215.168 (13.897) -6,1%

Past-due loans & interest 36.713 27.855 (8.859) -24,1%

Provisões para Crédito a Clientes e Juros Vencidos (-) 21.591 16.589 (5.002) -23,2%

Net Credit Extended to customers fell by 7.3% compared to 2009 following the slowdown of the

credit market and the implementation of the policing of containment of extending credit early in

2010.

Non-performing loans saw an improvement in 2010 compared to 2009.

Loan-Quality Ratio*

13,1%

10,9%

2009 2010

EVOLUTION OF NON-PERFORMING LOANSPercentage

* Loans past-due by more than 90 days /Total loans corrected for the amounts of automatic transfers, interest receivable and accrual accounting of annual instalments

Source: Unicre

-2.3 p.p.

OTHER ASSETS & LIABILITIES - PENSION LIABILITIES

The asset value of the Unicre Pension Fund as at December 31, 2010 amounted to €72.1 million, an

increase of 5.6% over 2009.

Although, at the end of 2010, the level of financial liabilities for past services stood at 91%, the sum

of €4.087 million was recorded under Other Liabilities – Amount to be delivered to the Pension

Fund, in respect of the 2010 contribution to be paid in 2011, leading to a 96.60% cover of the

liabilities.


Thousand euros

Year Year

2009 2010 Value %

Liabilities for past services 68.289 72.118 3.829 5,6%

Asset value of the Fund 65.848 65.576 -272 -0,4%

Cover of Liabilities for past services (1) 96,4% 90,9%

Income of the Fund 5,87% 1,86%

-5,50 p.p.

Change

-4,01 p.p.

(1) Asset value of the Fund / Liabilities for past services

EQUITY

Like the other financial institutions, Unicre is subject to the equity requirements stipulated by the

Bank of Portugal. In calculating the credit-risk requirements Unicre uses the standard method and,

for the estimate of the needs for the operational risk, the basic indicator method.

At the end of 2010 Unicre's Equity (excluding the Net Profit for the Year) stood at €50.5 million, of

which 87% were Tier I capital.

This represents a 7.5% reduction compared to 2009, the result of:

the reduction of available equity through the increase of deductions relating to

intangible assets not offset by the 2010 net profit; and

reduction of requirements in respect of the credit risk, through the evolution seen in

credit business.

Within the scope of Basel II, Unicre's Capital Adequacy ratio stood at 13.6% and the Tier I ratio at

11.8%.

Thousand euros

31 Dec. 31-Dez

2009 2010 Value %

Total equity 54.618 50.523 -4.095 -7%

Tier I Capital 44.453 43.866 -587 -1,3%

Tier II Capital 10.165 6.657 -3.508 -34,5%

Equity requirements 30.649 29.797 -928 -2,8%

Equity Adequacy Ratio 14,3% 13,6%

Tier I Capital Adequacy Ratio 11,6% 11,8%

Change

In accordance with the framework of Bank of Portugal Notice 06/2010

(0,69 p.p.)

0,17 p.p.


6. PROPOSAL FOR THE APPROPRIATION OF PROFITS

In 2010 Unicre returned a net profit of €11,269,975.

Therefore and considering:

(i) legal and statutory provisions;

(ii) maintenance of the present solvency ratio;

(iii) the prudence required by the scenario of economic crisis; and

(iv) the demanding goals that Unicre has set up, for which the strategic investments to be

made are essential,

The Board of Directors proposes the following dividend distribution in respect of 2010:

to legal reserve (Article 97.1 of the Credit Institutions and Financial Companies Legislation)

€1,126,997.48

to dividend €7,320,000.00

to free reserve €2,822,977.31

Total €11,269,974.79


7. CLOSING REMARKS

For all due purposes it is hereby declared that, following the end of the period, no relevant facts

occurred other than those mentioned, and that the business is being carried on as usual.

Lisbon, 28 February 2011

The Board of Directors

_______________________________________________

Fernando Adão da Fonseca, chairman

_______________________________________________

Amadeu Paiva

_______________________________________________

António Farinha de Morais

_______________________________________________

António Palma Ramalho

_______________________________________________

João Freitas

_______________________________________________

Isabel Ramos de Almeida

_______________________________________________

Miguel de Bragança


8. FINANCIAL STATEMENTS

BALANCE SHEETS AS OF DECEMBER 31, 2010 AND 2009

(TRANSLATION OF BALANCE SHEETS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 32)

(AMOUNTS EXPRESSED IN THOUSANDS OF EUROS)

December 31, 2009

ASSETS

Notes Net Net

Cash and deposits at Central Banks 3 10 - 10 15

Loans and advances to other credit institutions repayable on demand 4 57 - 57 124

Available-for-sale financial assets 5 9,476 - 9,476 8,455

Loans and advances to credit institutions 6 41,680 - 41,680 20,300

Loans and advances to customers 7 243,022 (16,589) 226,433 244,187

Other tangible assets 8 51,003 (41,489) 9,514 9,520

Intangible assets 9 35,860 (27,743) 8,117 3,583

Investments in subsidiaries, associates and

jointly controlled entities 10 298 - 298 402

Tax assets 24 4,589 - 4,589 4,616

Other assets 11 10,951 (970) 9,981 7,361

Total Assets 396,946 (86,791) 310,155 298,563

December 31, 2010

Amounts before provisions,

impairment, depreciation and

amortization

Provisions, impairment,

depreciation and amortisation

LIABILITIES AND SHAREHOLDERS' EQUITY NotesDecember 31, 2010

December 31, 2009

Resources of other credit institutions 12 155,607 161,466Provisions 13 12,370 9,641Tax liabilities 24 3,767 1,859Other liabilities 14 65,308 53,187 Total Liabilities 237,052 226,153

Share capital 16 10,000 10,000(Treasury shares) 16 0 (243)Revaluation reserves 17 7,455 6,825Other reserves and retained earnings 18 44,378 40,675Net income for the year 11,270 15,153 Total Shareholders' Equity 73,102 72,410

Total Liabilities and Shareholders' Equity 310,155 298,563

The accompanying notes form an integral part of these balance sheets.


STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

(TRANSLATION OF STATEMENTS OF COMPREHENSIVE INCOME ORIGINALLY ISSUED IN PORTUGUESE - NOTE 32)


Notes 2010 2009

Sale of available-for-sale financial assets 5 - ( 2,049)

Valuation of available-for-sale financial assets 5 1,021 4,518

Deferred Taxes - Available-for-sale financial assets 26 ( 390) (1,157)

Sale of Treasury shares 16 249 -

Current Taxes - Sale of Treasury shares 16 ( 2) -

Merger with Consulprest 10 24 -

Income not included in the income statement 902 1,312

Net income after tax 11,270 15,153

Comprehensive income 12,172 16,465

The accompanying notes form an integral part of these statements.


STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

(TRANSLATION OF STATEMENTS OF INCOME ORIGINALLY ISSUED IN PORTUGUESE - NOTE 32)


Notes 2010 2009

Interest and similar income 19 38,986 37,322Interest and similar expense 20 (4,704) (6,452)Financial margin 34,282 30,870

Income from equity instruments 5 128 251Commission income 21 201,957 193,750Commission expense 21 (166,602) (146,734)Foreign exchange difference 0 12Gain on available-for-sale financial assets 5 0 4,069Other operating income, net 22 8,309 9,664Operating income from banking activity 78,074 91,882

Personnel costs 23 and 24 (16,712) (15,342)General administrative costs 25 (28,969) (38,860)Depreciation and amortisation 8 and 9 (2,003) (1,756)Recovery of loans, interest and expenses 13 6,187 5,815Correction of the amount of loans and advances to customers and other receivables, net 13 (17,121) (23,726)Impairment of other assets, net 13 (326) 42Provisions, net 13 (2,270) 1,856Net income before income tax 16,861 19,911

Income tax Current 26 (6,627) (5,196) Deferred 26 1,035 438

Net income after tax 11,270 15,153



STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

(TRANSLATION OF STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 32)


Treasury Revaluation Other reserves and Net income

Notes shares reserves retained earnings for the year Total

Balances at December 31, 2008 10,000 (243) 5,513 30,954 25,690 71,914

Dividends paid in 2009 - - - - (15,969) (15,969)

Appropriation of net income for 2008 to reserves - - - 9,721 (9,721) -

Valuation of available-for-sale financial assets 5 - - 4,518 - - 4,518

Sale of available-for-sale financial assets - net of tax 5 - - (2,049) - - (2,049)

Deferred Taxes - Available-for-sale financial assets 25 - - (1,157) - - (1,157)

Net income for the year 2009 - - - - 15,153 15,153

Balances at December 31, 2009 10,000 (243) 6,825 40,675 15,153 72,410

Dividends paid in 2010 - - - - (11,478) (11,478)

Appropriation of net income for 2009 to reserves - - - 3,675 (3,675) -

Valuation of available-for-sale financial assets 5 - - 1,021 - - 1,021

Deferred Taxes - Available-for-sale financial assets 26 - - (390) - - (390)

Sale of treasury shares - realised gain net of tax 16 - 243 - 4 - 247

Merger with Consulprest 10 - - - 24 - 24

Net income for the year 2010 - - - - 11,270 11,270

Balances at December 31, 2010 10,000 0 7,456 44,378 11,270 73,102

Share capital



STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

(TRANSLATION OF STATEMENTS ORIGINALLY ISSUED IN PORTUGUESE - NOTE 32)


2010 2009

OPERATING ACTIVITIES:

Interest, commission and similar income received 250,318 241,311

Interest, commission and similar expenses paid (171,920) (153,986)

Recovery of loans and interest in arrears 6,187 3,876

Payments to personnel and suppliers (55,657) (52,735)

Net cash from income and expenses 28,928 38,466

Decrease (increase) in:

Loans and advances to credit institutions (21,380) (20,300)

Loans and advances to customers 14,458 (270)

Other assets (4,768) 9,450

Net cash used in operating assets (11,690) (11,120)

Increase (decrease) in:

Resources of central banks and other credit institutions (3,103) (6,449)

Other liabilities 7,580 2,854

Net cash (used in)/from operating liabilities 4,477 (3,594)

Contributions to the Pension Fund (96) (1,191)

Income tax paid (4,051) (9,271)

17,568 13,290

INVESTING ACTIVITIES:

Purchase/incorporation of subsidiaries and associates - (1)

Purchase of tangible fixed assets and intangible assets (6,527) (1,623)

Sale of tangible fixed assets 4 84

Sale of tangible fixed assets held for sale - 4,069

Dividends received and other income 113 75

(6,410) 2,604

FINANCING ACTIVITIES:

Dividends paid (11,478) (15,969)

Sale of Treasury shares 248 -(11,230) (15,969)

Net decrease in cash and cash equivalents (72) (75)

Cash and cash equivalents at the beginning of the year 139 214

Cash and cash equivalents at the end of the year 67 139



9. NOTES TO THE FINANCIAL STATEMENTS

(TRANSLATION OF NOTES ORIGINALLY ISSUED IN PORTUGUESE – NOTE 32)

(AMOUNTS EXPRESSED IN THOUSANDS OF EUROS - TEUROS)

1. INTRODUCTION

Unicre – Instituição Financeira de Crédito, S.A. (previously named Unicre - Cartão Internacional de Crédito, S.A.) is a financial institution that has its head office in Avenida António Augusto Aguiar, nº. 122, 1500-019 Lisbon. Unicre is authorised to operate in accordance with Decree-Law 186/2002 of August 21 and the General Regime for Credit Institutions and Financial Companies (“Regime Geral das Instituições de Crédito e Sociedade Financeiras”).

Unicre was founded on April 17, 1974 as a company specialised in the issuance and management of credit cards. In December 2005 Unicre changed its articles of association, having changed its name to the present one and its corporate objects. Unicre’s corporate objects became the practice of all operations allowed for banks, except to receive deposits. Under the above change Unicre increased its share capital from eight million five hundred thousand Euros to ten million Euros.

Unicre operates in three major areas: the issuance and management of credit cards, the granting of personal credit and the rendering of services relating to the acceptance of payments with cards, namely acquirer services of international brand cards. Unicre also renders other services relating to its activities.

2. BASES OF PRESENTATION AND PRINCIPAL ACCOUNTING POLICIES

Bases of presentation

The accompanying financial statements were prepared on a going concern basis from the books and accounting records of Unicre, in conformity with the Adjusted Accounting Standards (Normas de Contabilidade Ajustadas - NCA) established by the Bank of Portugal in accordance with Notice 1/2005 of February 21 and Instructions 23/2004 of December 29 and 9/2005 of March 11 as a result of the competence conferred on it by paragraph 3 of Article 115 of the Legal Framework of Credit Institutions and Financial Institutions approved by Decree-Law 298/92 of 31 December and are expressed in thousands of euros.

The Adjusted Accounting Standards correspond in general to International Financial Reporting Standards (IAS/IFRS) as endorsed by the European Union, except as follows as regards impact on Unicre’s financial statements:

i) The credit and guarantees portfolio is subject to the recording of provisions for specific risks and general credit risks in accordance with the terms of Bank of Portugal Notice 3/1995 of June 30 with the amendments introduced by Notice 3/2005 of February 21;

ii) The impact of recording Unicre’s liability for retirement pensions as of December 31, 2005 in accordance with IAS 19 was recognised in retained earnings in 2006, as permitted by Bank of Portugal Notice 4/2005 of February 21;


iii) The restriction established in the NCAs regarding the application of some options (namely tangible assets cannot be valued at fair value).

Unicre’s financial statements were approved by the Board of Directors on February 28, 2011 and are subject to approval by the corresponding corporate boards. However, Unicre’s Board of Directors believes that they will be approved without significant changes.

Adoption of new standards and interpretations (amended or revised)

The following standards, interpretations, amendments and revisions endorsed by the European Union, with mandatory application in financial years beginning on or after January 1, 2010, were first adopted in the year ended December 31, 2010:

Standard/Interpretation

Effective Date (Years beginning

on or after)

IFRS 3 – Business combinations and IAS 27 – Consolidated and separate financial statements (2008 review)

July-01-2009

This review is mandatory for years beginning on or after July 1, 2009 and introduces some changes to the recording of business combinations, particularly in relation to: (a) the measurement of non-controlling interests (previously referred to as minority interest); (b) the recognition and subsequent measurement of contingent payments; (c) the treatment of direct costs relating to a merger; (d) the recording of transactions relating to the purchase of interests in already controlled entities and sales transactions of interests not resulting in the loss of control; and (e) calculation of the profit/loss on the sale of equity participations without maintaining control and the need for remeasuring the retained interest in the equity participation held.

IAS 28 (2008 review) Investments in associates

July-01-2009The above mentioned and adopted items of IAS 27 (2008) for clearance of the sale of equity participations is extended to IAS 28.

Revisions to IFRS 1 – First-time adoption of international financial reporting standards

Jan-01-2010This standard was revised to consolidate the various amendments made since its first release.

IFRS 1 - Amendments (Adictional Benefits) Jan-01-2010

This amendment considers a set of benefits in the retrospective application, particularly in terms of assets resulting from the exploitation of mineral resources, responsibilities and decommissioning, of the requirements of the application of IFRIC 4.

IFRS 2 - Amendments (share based payment transactions between entities of the same group)

Jan-01-2010This amendment clarifies some aspects of share-based payments settled financially within business groups.

IFRIC 12 – Service concession arrangements Jan-01-2010

This interpretation is mandatory for years beginning on or after January 1, 2010 and introduces rules for the recognition and measurement by the private operator involved in the provision of infrastructure construction and operation services in public/private concessions.

IFRIC 15 – Agreements for the construction of real estate

Jan-01-2010This interpretation clarifies how to assess whether a real estate construction agreement is within the scope of IAS 11 - Construction contracts or IAS 18 - Revenue and how the corresponding revenue should be recognized.

IFRIC 16 – Hedges of a net investment in a foreign operation

July-01-2009This interpretation provides guidance on the recording of hedges of net investments in foreign operations.

IFRIC 17 – Distributions of non-cash assets to owners

July-01-2009This interpretation provides guidance on the recording of assets other than cash distributed to shareholders as dividends.

IFRIC 18 – Transfers of assets from customers

July-01-2009This interpretation provides guidance on the recording by operators of tangible assets "of customers".




on or after)

Improvement of International Financial Reporting Standards - 2009

Several (generally Jan-01-2010

This process involved a revision of 12 accounting standards.

IAS 39 - Hedge accounting (Amendment) July-01-2009This interpretion clarifies certain aspects relating to the use of hedge accounting for the inflation risk component as well as the use of purchased options in fair value hedge operations.

The effect on Unicre’s financial statements for the year ended December 31, 2010 of the adoption of the above standards, interpretations, amendments and revisions was not significant.

New standards and interpretations, amended or revised not adopted

The following standards, interpretations, amendments and revisions, with mandatory application in future financial years, were endorsed by the European Union up to the date of approval of these financial statements.



on or after)

IAS 24 - Related Party Disclosures - (Amendment)

Jan-01-2011The review made to the text of the standard introduces a partial exemption to the general disclosure requirements relating to entities in which the State has control.

IFRS 1 - Limited exemption from the requirement to present comparative disclosures under IFRS 7 for first time adopters (Amendment)

July-01-2010This amendment simplifies the disclosure requirements relating to comparable financial instruments in relation to the first-time adoption of IFRS.

IAS 32 - Treasury shares (Amendment) Feb-01-2010This interpretation clarifies under what conditions securities issued are considered as equity instruments.

IFRIC 14 - Minimum funding requirements(Amendment)

Jan-01-2011The review made to the text of this interpretation clarifies the composition and accounting treatment of the minimum funding of prepaid future contributions.

IFRIC 19 - Settlement of liabilities through the issuance of equity instruments

July-01-2010This interpretation is intended to clarify the accounting treatment relating to the settlement of liabilities through the issuance of equity instruments as well as their measurement criteria.

These standards, although endorsed by the European Union, were not adopted by Unicre in the year ended December 31, 2010, because their application is not yet mandatory. Their adoption is not expected to have a significant impact on the financial statements.


Main accounting policies

The significant accounting policies used in preparing the financial statements are as follows:

a) Financial assets and liabilities (IAS 32 and IAS 39)

Financial assets and liabilities are recognised in the balance sheet on the trade or contracting date, unless there is an express contractual stipulation or applicable legal or regulatory regime under which the transactions’ inherent rights and obligations are transferred at a different date, in which case the different date is applicable.

Financial assets and liabilities are initially recorded at fair value plus direct transaction costs.

Fair value is the amount for which an asset can be exchanged, or a liability settled, between equally knowledgeable, willing parties. On the date of contracting or initiating an operation, fair value is generally the amount of the transaction.

Fair value is determined based on:

- prices on an active market; or

- valuation methods and techniques (when there is no active market) supported by: (i) mathematical calculations based on recognised financial theories; or (ii) prices calculated based on similar assets or liabilities traded on active markets or based on statistical estimates or other quantitative methods.

i) Loans and advances to customers

Loans and advances to customers include the balance due and amounts receivable from users of cards issued by Unicre, which includes transactions realised pending settlement.

Loans and amounts receivable are recognised at fair value at the inception date. In general, fair value at the inception date corresponds to the amount of the transaction and includes commission, charges and other costs and income relating to the credit operation.

Loans and amounts receivable are subsequently recorded at amortised cost, based on the effective interest rate method and are subject to the recording of provisions.

Interest and annuities relating to credit operations are recognised over the period of the operations, independently of when they are received or paid.

Interest on overdue credit is recognised as income when it is received.


Provisions for credit

The loans portfolio and other amounts receivable are subject to the recording of provisions for overdue credit and for general credit risks.

The provision for overdue credit and interest is subject to the provisions of Notice 3/95 of June 30 (as amended by Notice 3/2005 of February 21) and other rules issued by the Bank of Portugal, and serves to cover the risks of collection of instalments and debts which are overdue at the end of the year. This provision is recorded based on the time elapsed since the due date, and is presented in the balance sheet as a deduction to the caption “loans and advances to customers”.

The provision for general credit risks is classified in the liability caption “Provisions”. In accordance with Bank of Portugal Notice 3/95 of June 30 (as amended by Notice 3/2005 of February 21), this provision is of an overall nature and serves to cover credit collection risks not specifically identified. The provision is calculated based on the general rate of 1.5% of performing loans granted and other assets as of the balance sheet date.

Increases in the provision for general credit risks as from January 1, 2001 are no longer accepted as tax deductible costs. However, in accordance with the transition regime, 50% of the increase in the provision in 2001 and 2002 was considered as tax deductible. Additionally, in accordance with current tax legislation, when reversals of provisions for general credit risks are made, the first to be considered as income for the year are those that were considered as tax deductible costs in the years they were recorded.

Unicre writes off loans when it considers that they are uncollectible (generally after 18 months) and the provision covers the full amount of the loan. Subsequent recoveries of these loans are recorded in the statement of income caption “Recovery of loans, interest and expenses” in the year in which they occur.

ii) Available-for-sale financial assets

At December 31, 2010 and 2009 this caption included variable yield securities not listed on the stock exchange.

Assets classified as available for sale are stated at fair value, except for equity instruments not listed on an active market, where fair value cannot be reliably measured or estimated, in which case they remain recorded at cost.

Gains and losses resulting from changes in the fair value of available-for-sale financial assets are recognised directly in the shareholders’ equity caption “Fair value revaluation reserve”, net of any taxes (deferred or current), except in the case of impairment losses and exchange gain and loss on monetary assets, which are recognised in the statement of income when they occur. When an asset is sold, the gain or loss previously recognised in shareholders’ equity is transferred to the statement of income.

iii) Loans and advances and resources of other credit institutions

After initial recognition, loans and advances and resources of other credit institutions are stated at amortised cost, using the effective interest rate method.


iv) Foreign currency transactions

Foreign currency transactions are translated to Euros at the transaction date, being settled or invoiced in that currency.

Foreign currency balances are recorded at the official exchange rates, exchange differences being recognised as income or costs for the year, in the caption foreign exchange difference.

b) Other tangible assets (IAS 16)

Tangible assets used by Unicre in its operations are recorded at cost (including direct purchase costs) less accumulated depreciation and impairment losses.

Depreciation of property and installations and furniture is provided on a straight-line systematic basis over the estimated useful life of the assets. Depreciation of the remaining assets is provided in accordance with the diminishing amount method, over their estimated periods of useful life. Depreciation of the assets is provided based on the following estimated periods of useful life:

Years

Property 50 Furniture and material 8 Machinery and tools 4 - 8 Computer hardware 3 Interior installations 10 Transport material 4 Security equipment 10

In compliance with IFRS 1, tangible assets acquired by Unicre up to January 1, 2005 were recorded at book value as of the transition date to NCA, which corresponds to cost restated in accordance with legal revaluations based on the evolution of the general price index, the corresponding revaluation reserve, in the amount of tEuros 2,845, being reclassified to retained earnings. 40% of the increase in depreciation resulting from the revaluations, not yet realised through use or sale of the assets, is not tax deductible, the corresponding deferred tax liability having been recognised.

c) Tangible assets acquired under finance lease (IAS 17)

Tangible assets acquired under finance lease contracts, in which Unicre has all the risks and benefits of ownership, are recorded and depreciated in accordance with the procedures explained in the preceding paragraph.

Lease instalments are made up of a financial cost and a principal repayment component. The liability is reduced by the amount corresponding to the principal repayment component of each instalment and the financial cost component is recognised in the statement of income over the period of the lease.


d) Intangible assets (IAS 38)

The cost of software acquired, in which the expected impact extends beyond the period in which it is incurred, as well as the necessary additional costs incurred to implement it are recorded in this caption. To date no internally generated costs relating to the development and implementation of software have been capitalized.

Intangible assets are amortised on a straight-line annual basis over their estimated useful lives which, in general, corresponds to a period of three years.

Software maintenance costs are recognised in the statement of income as incurred.

e) Investments in subsidiaries, associates and jointly controlled entities (IAS 28 and IFRS 3)

Investments in companies, the corporate objects of which are complementary to those of Unicre are stated in accordance with the equity method of accounting, under which Unicre’s proportionate participation in their share capital is recognised in the caption “Investments in subsidiaries, associates and jointly controlled entities”.

Where there is evidence of impairment, the impairment loss is recognised in the statement of income by corresponding credit to the caption “Provision for other risks and charges”.

f) Accruals basis (IAS 18)

Other income and costs are recognised on an accruals basis, being reflected in the statement of income for the period to which they relate, independently of when they are received or paid. Pension costs are recognised as explained in paragraph g) below.

g) Post-employment benefits (IAS 19)

Defined benefit plan

Unicre has assumed the commitment to pay its employees pensions due to age, incapacity and survivor pensions based on their estimated salaries when they retire and their time of service.

In addition, in accordance with the provisions of the Collective Vertical Labour Agreement (“Acordo Colectivo de Trabalho Vertical” - ACTV) for the banking sector, Unicre must make monthly contributions to a healthcare service (SAMS), corresponding to 6.5% of the amounts paid to retired personnel and pensioners. Unicre also guarantees the payment of a death subsidy to families.

Unicre determines the amount of the past service liability annually, by actuarial calculation using the “Projected Unit Credit” method. The actuarial assumptions (financial and demographic), which are in accordance with the requirements of IAS 19, are based on expectations regarding the increase in salaries and pensions as of the balance sheet date and on mortality tables adapted to the Company’s population. The discount rate is determined based on market rates of high quality corporate bonds with similar maturities to those of the liability. The expected income rate is determined consistently in accordance with the actual market conditions, and with the nature and profitability of the Fund Assets. The amount of the liability includes, in addition to the retirement pension benefits, the post employment healthcare benefits (SAMS) and death subsidy.


The captions “Other assets” and “Other liabilities” (Notes 11 and 14) – Actuarial deviations include the net accumulated amount (as from January 1, 2005) of actuarial gains and losses resulting from changes in the actuarial and financial assumptions and the differences between the actuarial and financial assumptions used and the actual amounts. Actuarial and financial deviations are deferred on the balance sheet, in the corridor, provided that the accumulated amount of the corridor does not exceed the greater of the following amounts as of the end of the year that serves as a basis for calculating the deviations:

. 10% of the present value of the pension liability under payment and past service liability of serving personnel; or

. 10% of the amount of the pension fund assets.

Actuarial and financial deviations that exceed the above limits are amortised to the statement of income.

Increases in the past service liability resulting from early retirements are fully recognised as cost in the statement of income for the year.

Increases and decreases in the past service liability resulting from changes in the conditions of the Pension Plans are recognised in full as costs or income in the case of vested benefits, or amortised over the period up to the time the benefits become vested. The amount of the increase/decrease not yet recognised as cost/income is reflected in the captions, “Other assets” or “Other liabilities” (Notes 11 and 14).

The past service liability for post employment benefits is covered by a pension fund. The amount of the pension fund corresponds to the fair value of its assets as of the balance sheet date.

Bank of Portugal Notice 4/2005 establishes the requirement to fully fund the liability for pensions under payment and at least 95% of the past service liability for current personnel.

The past service liability for post employment benefits, net of the amount of the pension fund and of the actuarial deviations not recognized in the statement of income, is recognised in Unicre’s financial statements in the captions “Other assets” or “Other liabilities”.

Unicre’s results include the following costs and income relating to post employment benefits:

i) current service cost;

ii) interest cost;

iii) expected income of the Pension Fund;

iv) cost of the increased liability resulting from early retirements;

v) amortisation of the actuarial and financial deviations exceeding the corridor;

vi) cost (or amortisation) resulting from changes in the conditions of the Pension Plan.

The above components are recognised in personnel costs.


At the transition date, Unicre adopted the option allowed under IFRS 1, of not recalculating actuarial gains and losses deferred since the inception of the pension plans (reset option). Consequently, in compliance to Bank of Portugal Notice 4/2005, the change in the liability resulting from applying IAS 19 as of December 31, 2005 was recognised in full in retained earnings in 2006.

Defined contribution plan

For the employees who entered the banking sector after March 2009 and that are not covered by the Pension Fund, Unicre pays a contribution of 1.5% of the monthly payroll to a defined contribution plan in compliance with the Vertical Collective Employment Agreement.

h) Long service bonus (IAS 19)

Under the terms of the Collective Vertical Labour Agreement (Acordo Colectivo de Trabalho Vertical) for the Portuguese Banking Sector, Unicre has assumed the commitment to pay current employees that have completed fifteen, twenty five and thirty years of good and effective service, a long service bonus corresponding, respectively, to one, two and three months of their effective monthly remuneration (in the year the bonus is granted).

The present value of the long service bonus liability is determined annually by actuarial calculation using the “Projected Unit Credit” method. The actuarial assumptions used (financial and demographic) are based on the expectations, as of the balance sheet date, regarding salary increases, using mortality tables adapted to the Company’s population. The discount rate used is determined based on market rates for high quality corporate bonds with similar maturities to those of the liability.

The long service bonus liability is reflected under the caption “Other liabilities” (Note 14) and is paid directly by Unicre.

Unicre’s results include the following costs relating to the long service bonus liability:

i) current service cost;

ii) interest cost;

iii) gain and loss resulting from actuarial and financial deviations in the assumptions and change in the conditions of the benefits.

The above components are recognised under personnel costs.

i) Treasury shares (IAS 32)

Treasury shares are recorded at cost, in equity captions, and are not subject to revaluation. Realised gains and losses on the sale of treasury shares, as well as the resulting taxes, are recorded directly in shareholders’ equity, not affecting net income for the year.

j) Other provisions (IAS 37)

This caption includes provisions to cover specific risks arising from Unicre’s operations, namely restructuring costs, contingencies and other known liabilities (Note 13).

Provisions are recognised when (i) there is a present legal or constructive obligation, (ii) it will probably have to be paid and (iii) the amount of the obligation can be reliably estimated.

These provisions are not usually tax deductible.


k) Income taxes (IAS 12)

Unicre is subject to Corporate Income Tax, plus a corresponding municipal surcharge, at the aggregate rate for 2010 and 2009 of 26.5%. Additionally, as from 2010 there is an additional State surcharge of 2.5% for corporate income tax in excess of 2 million Euros.

Current taxes are calculated at the legal tax rates in force in Portugal, and correspond to the expected amount payable on the taxable income for the year as well as any adjustment to prior year taxes.

In addition, deferred taxes are recorded, corresponding to taxes recoverable and payable in future periods resulting from temporary differences between the carrying value of assets and liabilities and their respective tax bases. Tax losses carried forward and tax credits also give rise to deferred tax assets.

Deferred tax assets are recognised only to the extent of the probable existence of sufficient expected future taxable income to absorb the deductible temporary differences.

Deferred tax assets and liabilities have been calculated using the tax rates decreed for the period in which the respective assets or liabilities are expected to be realised.

Current and deferred taxes are recognised in the statement of income, except for those relating to amounts recorded directly in shareholders’ equity (namely gains and losses on treasury shares and on the revaluation reserve).

l) Cash and cash equivalents (IAS 7)

The caption “Cash and cash equivalents” in the statement of cash flows includes the amounts reflected on the balance sheet that, as of the date of initial application, mature in less than three months, and includes cash and demand deposits in other credit institutions, for current treasury management purposes.

m) Main estimates and uncertainties relating to the application of the accounting policies

Unicre’s financial statements have been prepared using estimates and expected future amounts in the following main areas:

Employees’ post employment benefits and long service bonus

Post employment benefits and long service bonus have been estimated based on actuarial tables and pension and salary growth assumptions. These assumptions are based on Unicre’s expectations regarding the period in which the liabilities will be settled. Changes in these assumptions may have a significant impact on the amounts recognised.


Income tax

Current and deferred taxes have been recognised based on the tax legislation currently in force or on legislation already published for future application. Changes in the interpretation of tax legislation can influence the amount of income tax.

Additionally, the recognition of deferred tax assets presupposes the existence of future taxable income to cover them.

Provisions for loans

Unicre’s loans portfolio is subject to the recording of provisions for overdue credit and general credit risks in accordance with Bank of Portugal Notice 3/95 of June 30 (as amended by Notice 3/2005 of February 21), which can differ from the amount of impairment losses determined based on expected cash flows and the estimated amounts recoverable.

3. CASH AND DEPOSITS AT CENTRAL BANKS

This caption is made up as follows:

December 31, 2010

December 31, 2009

Demand deposits at the Bank of Portugal - -Cash 10 15

Cash and deposits at Central Banks 10 15

4. LOANS AND ADVANCES TO OTHER CREDIT INSTITUTIONS REPAYABLE ON DEMAND


December 31, 2010

December 31, 2009

Cheques for collection 56 117Deposits at Credit Institutions abroad 1 7

Loans and advances to other credit institutions repayable on demand 57 124

The caption “Cheques for collection” corresponds to cheques for collection over domestic

credit institutions received on the last business day of each period, relating to payments by customers that were only collected in the first business days of the following period.


5. AVAILABLE-FOR-SALE FINANCIAL ASSETS

At December 31, 2010 and 2009 this caption is made up as follows:

December 31, 2010

Book value Unrealised Realised

Company Quantity Cost (Fair value) Gain Gain Notes

Visa International Corporation 181,526 - 9,470 9,470 - (i)

Visa Europe Limited 1 - - - - (ii)

Inst. Formação Comércio e Turismo de Braga n.a. 6 6 - -

Available-for-sale financial assets 6 9,476 9,470 -

December 31, 2009

Book value Unrealised Realised

Company Quantity Cost (Fair value) Gain Gain Notes

Mastercard International Corporation - - - - 43 (iii)

Visa International Corporation 181,526 - 8,449 8,449 4,026 (i)

Visa Europe Limited 1 - - - - (ii)

Inst. Formação Comércio e Turismo de Braga n.a. 6 6 - -

Available-for-sale financial assets 6 8,455 8,449 4,069

(i) In 2008, by resolution of Visa Europe Limited’s Annual General Meeting and following an

internal corporate restructuring process of that International Payment Mark, money and shares were distributed to members of the new company then created – Visa International Corporation. Thus, Unicre received 259,323 Class C shares of Visa International Incorporation. These shares have liquidity restrictions, being restricted to trading between shareholders of that company, and give the right to dividends and to vote on certain issues, in accordance with the company’s articles of association, and must be converted into Class A shares (listed on the stock exchange) in March 2011. These securities, expressed in USD, are stated on the balance sheet at a reference value, which is the closing price on December 31 of each year of Class A shares, corrected by a liquidity discount factor, which has been reduced in proportion to the time elapsed between the delivery date of the shares and the conversion date into Class A shares.

In 2009 Unicre joined a program to convert 30% of the shares into Class A shares, and subsequently realised a gain of tEuros 4,026 on the sale on the stock exchange.

In 2010, 50% of shares held by Unicre were converted into Class A shares.

In 2010 and 2009, tEuros 73 and tEuros 75, respectively, relating to dividends paid by Visa Incorporation were also recorded in the caption “Income from equity instruments”.

(ii) Corresponds to one share of Visa Europe Limited, European association of broadcasters and acquires, which is valued at its nominal value of €10.

(iii) In 2005, following a public share offering, Mastercard International Corporation, redefined its capital structure, Unicre having 21,268 Class C shares at the end of that process. In 2008 and 2009, conversion programs were opened and subsequently Unicre sold these shares on the stock exchange, under certain rules, to which Unicre agreed, realizing a gain of tEuros 43 in 2009.

In 2010 and 2009 no impairment losses were recorded in the available-for-sale financial assets portfolio.

6. LOANS AND ADVANCES TO CREDIT INSTITUTIONS

At December 31, 2010 and 2009 Unicre had very short-term applications in domestic credit institutions. The applications amounting tEuros 41,680 (tEuros 20,300 in 2009), bear interest at the annual average rates of 6.52% and 4%, respectively.


7. LOANS AND ADVANCES TO CUSTOMERS


December 31, 2010

December 31, 2009

Credit:

Cards - Free float 39,036 39,105

Cards - Revolving 134,012 139,584

Other credit granted 42,040 50,415

Automatic transfers 214 27

215,302 229,131

Overdue credit and interest 27,855 36,713

Amounts receivable

Interest receivable 2,014 2,300

Other deferred income (274) (315)

Accrued annuities (1,874) (2,051)

243,022 265,778

Provision for overdue credit and interest (Note 13) (16,589) (21,591)

Loans and advances to costumers 226,433 244,187

The caption “Cards – Free float” reflects non-interest-bearing credit granted to customers between the purchase and the maturity date of the bill (on average 35 days) and the caption “Cards – Revolving” corresponds to interest-bearing credit granted on cards.

The caption “Automatic transfers” corresponds to the amount processed relating to customers’ credit cards issued by Unicre, in which the form of payment defined contractually is by automatic bank transfer of the percentage agreed on the due dates.

The credit relating to payments by credit cards does not have a fixed repayment term and so is considered as short term.


In addition, Unicre grants other credit (cash on account) under maturities that vary between 1 and 5 years, as follows, by estimated cash flow terms:

December 31, 2010

December 31, 2009

Up to 3 months 4,210 5,541

From 3 to 12 months 11,033 13,736

From 1 to 3 years 20,980 23,911

From 3 to 5 years 5,817 7,228

Total 42,040 50,415

Credit granted is mainly to individuals, as follows:

December 31, 2010

December 31, 2009

Individuals 237,721 260,256

Corporate 5,301 5,522

243,022 265,778 Collateral received as guarantee is not significant.

In addition to the above Provision for overdue credit, at December 31, 2010 and 2009 Unicre had a provision for general credit risks of tEuros 10,843 and tEuros 8,873, respectively (Note 13).

Overdue credit at December 31, 2010 and 2009, by aging, is presented in Note 28.

8. OTHER TANGIBLE ASSETS

The changes in other tangible assets in 2010 were as follows:

Balance at Balance at Balance at Depreciation Balance at Balance at Balance at

Dec 31, 2009 Additions Transfers Write-offs Dec 31, 2010 Dec 31, 2009 for the year Transfers Write-offs Dec 31, 2010 Dec 31, 2010 Dec 31, 2009

Property:

- For own use 10,700 10,700 3,130 157 3,287 7,413 7,570

Furniture and material 1,885 132 55 2,072 1,623 70 1,693 378 262

Machinery and tools 2,610 10 1 2,621 2,577 17 2,594 27 33

Computer hardware 29,452 754 68 (1) 30,273 29,077 701 (2) 29,776 497 375

Interior installations 4,768 161 57 4,986 3,639 209 3,848 1,138 1,129

Transport material 42 31 (26) 47 33 11 (26) 18 29 9

Security equipment 291 5 296 269 4 273 23 22

Artistic assets 8 8 - - 8 8

Fixed assets in progress 113 68 (181) - - - - - - 113

49,869 1,160 - (27) 51,003 40,349 1,169 - (28) 41,489 9,514 9,520

Gross Depreciation Net


The changes in other tangible assets in 2009 were as follows:

Balance at Balance at Balance at Depreciation Balance at Balance at Balance at


Property:

- For own use 10,700 - - - 10,700 2,974 170 - (14) 3,130 7,570 7,727

- Other property 65 - - (65) - 15 - - (15) - - 51

Furniture and material 1,946 19 - (80) 1,885 1,645 58 - (81) 1,622 264 301

Machinery and tools 2,585 25 - - 2,610 2,552 25 - - 2,577 33 33

Computer hardware 29,211 262 66 (87) 29,452 28,566 598 - (87) 29,077 375 645

Interior installations 4,369 325 94 (19) 4,769 3,418 240 - (18) 3,640 1,128 951

Transport material 42 12 - (12) 42 43 3 - (12) 35 9 (1)

Security equipment 286 5 - - 291 260 9 - - 268 22 26

Artistic assets 8 - - - 8 - - - - - 8 8Fixed assets in progress 66 207 (160) - 113 - - - - - 113 66

49,278 855 - (263) 49,869 39,472 1,103 - (227) 40,349 9,521 9,806

Gross Depreciation Net

9. INTANGIBLE ASSETS

The changes in intangible assets in 2010 were as follows:

Balance at Balance at Balance at Amortisation Balance at Balance at Balance atDec 31, 2009 Additions Transfers Write-offs Dec 31, 2010 Dec 31, 2009 for the year Transfers Write-offs Dec 31, 2010 Dec 31, 2010 Dec 31, 2009

Software 27,655 135 423 28,214 26,905 833 27,738 476 750Others 5 5 4 1 5 - 1

Intangible assets in progress 2,832 5,232 (423) 7,641 - - - - 7,641 2,832

30,492 5,367 - - 35,860 26,909 834 - - 27,743 8,117 3,583

Gross Amortisation Net

The changes in intangible assets in 2009 were as follows:

Balance at Balance at Balance at Amortisation Balance at Balance at Balance at


Software 27,347 31 277 - 27,655 26,255 650 - - 26,905 750 1,092

Others 5 - - - 5 2 3 - (1) 4 1 2

Intangible assets in progress 222 2,887 (277) - 2,832 - - - - - 2,832 222

27,574 2,918 - - 30,492 26,257 653 - (1) 26,909 3,583 1,316

Gross Amortisation Net

In 2009, the Documentation Management Project that was in progress was concluded and the corresponding amount was transferred to fixed assets. At December 31, 2010 and 2009 the amount in the “Intangible assets in progress” caption referred to the Renewal Application Architecture Project, which is estimated to be completed in 2012 at a total estimated cost of tEuros 15,000.

10. INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINTLY CONTROLLED ENTITIES

At December 31, 2010 and 2009 this caption is made up as follows:

2010

Company % Book Shareholders' Result for Head

participation Cost value equity the year office

Paywatch - Serviços Integrados de Segurança em Pagamentos, SA * 40% 200 298 746 76 Lisbon

200 298

2009

Company % Book Shareholders' Result for Head

participation Cost value equity the year office

Consulprest - Sociedade Prestadora de Serviços de Consultoria, Lda. * 100% 25 25 273 4 Lisbon

Paywatch - Serviços Integrados de Segurança em Pagamentos, SA * 40% 200 377 941 441 Lisbon

225 402

* Estimated values (not audited)

“Paywatch – Serviços Integrados de Segurança em Pagamentos, SA” was incorporated in December 2008 by public deed with share capital of tEuros 500, in which Unicre has a 40% participation, the remaining shareholders being SIBS Group companies. The objects of the company are to provide integrated services for the prevention and detection of fraud in the operation of electronic payment systems.


11. OTHER ASSETS


December 31, 2010

December 31, 2009

Sundry debtors - overdue 302 189Debit notes issued to merchants 836 629Debit notes issued to banks 128 98Deferred costs 728 529Post - employment responsabilities and other benefits (Note 15)

Present amount of post employment liabilities (72,118) (68,289) Pension fund assets 65,576 65,848 Actuarial deviations 5,700 4,317 Amount to be contributed to the pension fund (Note 14) 4,087 -Accounts receivable from International Systems 5,036 3,518Accounts receivable from merchants and banks due to adjustments 372 747VAT recoverable 46 1Others 258 472

10,951 8,059Provision for other debtors - overdue (Note 13) (970) (698)

Other assets, net 9,981 7,361 The caption “Deferred costs” at December 31, 2010 and 2009 includes costs billed in advance, relating to software maintenance and licenses which are deferred over the corresponding period, and costs of promotional gifts allocated to customers based on the level of use of the card in a specific pre-defined timeframe. These costs are recorded by charge to a decrease in commission received, in the caption “Commission income - Others”.

The caption “Accounts receivable from International Systems” reflects the amounts receivable relating to transactions using Unicre cards abroad, to be settled through International Systems (Visa, Mastercard, JCB and Diners), as well as amounts receivable relating to transactions using those brands of international cards in Unicre’s acquirer network, in the last days of each year.

The caption “Accounts receivable from merchants and banks due to adjustments” corresponds to amounts billed to the banks for services rendered to them.


12. RESOURCES OF OTHER CREDIT INSTITUTIONS


December, 31 Average December, 31 Average

2010 Rates 2009 RatesShort term loans:

"Hot money" 129,500 2.18% 128,100 3.50% Bank overdrafts 313 2.76% 2,847 3.73% Accrued interest - short term loans 2,051 2,236

131,864 133,183Advances to banks resulting from cards (1,641) (2,236)

130,223 130,946

Medium and long term loans 25,000 4.49% 30,000 4.63%Accrued interest - medium and long term loans 384 520

Resources of other credit institutions 155,607 161,466 The caption “Advances to banks resulting from cards” refers to amounts charged by Unicre to

banks for processing their card transactions which are pending confirmation at the end of the month. These operations are settled in the first days of the following month.

13. PROVISIONS AND IMPAIRMENT

The changes in Unicre’s provisions and impairment in 2010 and 2009 were as follows:

December Provisions and Personnel Provisions and Personnel December

2009 impairment costs impairment costs Utilisation Transfers 2010

Overdue credit and interest (Note 7) 21,591 17,121 - - - (22,123) - 16,589

Other overdue debtors (Note 11) 698 383 - (57) - (54) - 970

Loans and advances to customers and Other debtors 22,289 17,504 - (57) - (22,177) - 17,559

General credit risks (Note 7) 8,873 2,178 (208) - 10,843

Restructuring (Note 23) 401 715 (352) - 764

Others 370 300 194 (102) - 762

Other provisions 9,640 2,478 909 (208) - (454) - 12,370

Provisions and impairment 31,929 19,982 909 (265) - (22,631) - 29,928

2010

Increases Reversals

December Provisions and Personnel Provisions and Personnel December

2008 impairment costs impairment costs Utilisation Transfers 2009

Overdue credit and interest (Note 7) 12,410 23,726 - (539) - (14,006) - 21,591

Other overdue debtors (Note 11) 816 161 - (203) - (75) - 699

Loans and advances to customers and Other debtors 13,226 23,887 - (742) - (14,082) - 22,289

General credit risks (Note 7) 9,233 - - (362) - - - 8,873

Restructuring (Note 23) 1,188 - 304 - - (1,091) - 401

Incentives for EMV terminals 646 - - (646) - - - -

Others 1,307 - - (848) - (90) - 370

Other provisions 12,374 - 304 (1,856) - (1,181) - 9,640

Provisions and impairment 25,599 23,887 304 (2,598) - (15,263) - 31,929

2009

Increases Reversals


Provisions for overdue credit and interest and general credit risks

In January 2009 after a process of testing and monitoring, Unicre adjusted its calculation methodology and classification of overdue credit, in order to reflect more accurately the behaviour and characteristics of its credit portfolio. This change had no impact on net assets and involved an increase in provisions for credit (“Correction of the amount of loans and advances to customers and other receivables, net” caption of the Statement of income), which was offset by an increase in the “Recovery of loans, interest and expenses” caption in the Statement of income.

Unicre has the procedure of using provisions when overdue credit reaches eighteen months. Recovery of such credits is recognised in the caption “Recovery of loans, interest and expenses”.

The provision for overdue credit and interest at December 31, 2010 and 2009 includes tEuros 7,614 and 5,436, respectively, relating to impairment losses recorded to cover the risk of collection of Unicre’s credit portfolio, in excess of the minimums required under Notice 3/95 of June 30 (as amended by Notice 3/2005 of February 21) and other rules issued by the Bank of Portugal.

Other provisions

The caption “Other provisions – Restructuring” is to cover costs of early retirement agreements and indemnities for termination of labour contracts to be incurred under the restructuring of Unicre’s processes and services.

The caption “Other provisions – Others” serves essentially to cover any fines to be applied by Visa and Mastercard, as the safety rules required by these entities have not been implemented.


14. OTHER LIABILITIES


December 31, 2010

December 31, 2009

Sundry suppliers:

Domestic a) 5,156 5,324 Foreign 331 19Guarantees from merchants b) 2,270 2,304Commission payable to banks c) 2,843 2,269Invoicing payable to merchants d) 44,783 37,538Amount to be contributed to the pension fund (Note 11 e) ) 4,087 -Stamp tax payable 434 268Personal Income Tax withheld 240 150Social Security contributions 178 157Deferred annuities 70 69Other creditors 236 293Accrued costs:

Personnel costs

Vacation pay and vacation subsidy (including social charges) 1,702 1,467 Bonus 620 731 General administrative costs 1,131 1,411Other accruals 23 22Liability for long service premium (Note 15) 1,160 1,121Others 44 44

Other liabilities 65,308 53,187

a) The caption “Sundry suppliers – Domestic” at December 31, 2010 and 2009 includes tEuros 843 and tEuros 1,035, respectively, payable to SIBS – Sociedade Interbancária de Serviços, S.A. relating to the use of computerised equipment which includes the central system for processing operations and P.O.S transaction support.

b) The caption “Guarantees from merchants” corresponds to deposits made by merchants at the time of signing up to Unicre. The deposits are refunded when the merchants decide to no longer belong to the network.

c) The caption “Commission payable to banks” at December 31, 2010 and 2009 includes:

December 31, 2010

December 31, 2009

Commission for bank support services 1,215 1,843Trading and growth and use of account 1,294 -Issuer optional fee commission 319 374Charges of card issuing members 15 37Others - 15

2,843 2,269


The caption “Trading and growth and use of account” corresponds to amounts at the balance sheet date that had not yet been paid to the banks for trading services and account usage.

This commission was charged by banks in 2010 for procuring new merchants for the Unicre acquisition network.

d) The caption “Invoicing payable to merchants” corresponds to amounts pending the closing, by merchants, of automatic payment terminals (APTs), for the corresponding settlement to be made.

e) At December 31, 2010 the caption “Amount to be contributed to the Pension Fund”, in the amount of tEuros 4,087, corresponds to contributions for the year 2010, which were only made on February 4, 2011.

15. EMPLOYEES’ LONG TERM BENEFITS

Evolution of the liability and balance of the funds (of both the Pension Fund and accounting provisions) in the last 5 years was as follows:

2010 2009 2008 2007 2006

Past service liability of the Pension Fund

Retired personnel 22,993 21,387 18,297 16,031 14,402Current personnel 43,573 41,992 40,993 41,760 37,307Dismissed personnel (former participants) 5,552 4,910 5,368 3,767 3,507

72,118 68,289 64,658 61,558 55,216

Net assets of the fund 65,576 65,848 62,345 59,479 57,170

Excess / (insufficiency) of the cover (6,542) (2,441) (2,313) (2,079) 1,954

Minimum Funding level 94% 100% 100% 100% 108%

Amount to be contributed to the pension fund 4,087 - - - -

Death grant * - - - - 1,119Long service bonus 1,160 1,120 1,130 1,187 1,108

Accounting provision for non funded liability covered by the pension fund 1,160 1,120 1,130 1,187 2,227

* Since 2007 the liability for the death grant has been included in the pension plan funded by Unicre's Pension Fund.

Liability for retirement and survivor pensions

The past service liability for pensions payable to Pensioners and Employees, funded by pension funds, is calculated in accordance with IAS 19.

With the publication of Decree-Law 1-A/2011 of January 3, Unicre’s serving employees as of January 4, 2011 and beneficiaries of Caixa de Abono de Família dos Empregados Bancários (CAFEB) were transferred to the social security system’s general regime covering of maternity, paternity, adoption and old age retirement benefits. Consequently, as from that date the old age pension liability is no longer the sole responsibility of the Pension Fund, this being shared with the Social Security. This integration had no impact on the past service liability as of December 31, 2010.

Up to March 1, 2009 Pensõesgere – Sociedade Gestora de Fundos de Pensões, S.A. was the entity responsible for the actuarial calculation of the retirement and survivor pension liability and management of the Unicre pension fund. Since that date these functions are being performed by BPI Pensões – Sociedade Gestora de Fundo de Pensões, S.A..

The Projected Unit Credit method is used to calculate normal cost and past service liability.

The main actuarial and financial assumptions used to calculate the pension liability at December 31, 2010 and 2009 were as follows:


2010 2009 2010 2009

Demographic assumptions:

Mortality table TV 88/90 TV 88/90

Disability table EKV80

Personnel turnover Nil Nil

Financial assumptions:

Discount rate 5.25% 5.25% - -

Fund income rate 5.00% 5.00% 1.86% 5.87%

Salary increase rate 3.50% 3.50% 2.90% 2.30%

Pension increase rate 2.50% 2.50% 1.00% 1.50%

Assumption Actual

The Pensioners and Employees that benefit from the pension plans funded by Unicre’s pension fund at December 31, 2010 and 2009 were as follows:

2010 2009

Current employees 218 225

Pensioners 55 48

273 273

Former participants 224 222

497 495 Former employees of Unicre who, due to termination of their labour contracts, have been

recognised as being entitled to retirement pensions under the Pension Plan in accordance with clause 137 A and 140 of the Vertical Labour Collective Agreement (Acordo Colectivo de Trabalho Vertical - ACTV) for the Banking Sector are considered as “Former participants”.

The liability for pensions, post employment medical care, and death subsidy at December 31, 2010 and 2009 relating to the general conditions of the pension plan in force as of those dates, and respective coverage, are as follows:

Post employment healthcare Death subsidy Total

2010 2009 2010 2009 2010 2009 2010 2009

Past service liability:

Retired personnel 21,818 20,274 904 834 271 279 22,993 21,387

Current personnel 41,029 39,308 1,821 1,733 723 951 43,573 41,992

Dismissed personnel (former participants) 5,552 4,910 0 n.a. - n.a. 5,552 4,910

68,399 64,492 2,725 2,567 994 1,230 72,118 68,289

Net assets of the fund 65,576 65,848

Excess / (insufficiency) of the cover (6,542) (2,441)

Degree of cover of the liability 90.93% 96.43%

Amount to be contributed to the pension fund 4,087

Pensions due to age and early retirement

At December 31, 2010 was recorded in the caption "Amount to be contributed to the Pension

Fund" the amount of tEuros 4,087, relating to the contribution to the Pension Fund for 2010 due in 2011. After this contriburion the degree of coverage of the liability is 96.60%. This contribution was made in early February 2011.


The changes in the pension fund in the years ended December 31, 2010 and 2009 were as follows:

2010 2009

Net assets of the fund at the beginning of the year 65,848 62,345Contribution from Unicre 96 1,191

Pensions paid (1,595) (1,346)

Fund Income, net 1,227 3,658

Net assets of the fund at the end of the year 65,576 65,848

In 2010 and 2009 all the contributions made to the pension fund were in cash.

At December 31, 2010 and 2009 the pension fund did not have assets used by Unicre or securities issued by it. The pension fund assets are as follows:

2010 2009

Fixed return instruments 43,050 38,219

Variable return instruments 19,312 22,836

Term deposits 650 2,000

Cash 2,564 2,793

Net assets of the fund 65,576 65,848 The changes in the present value of the past service liability for post employment benefits in

the years ended December 31, 2010 and 2009 were as follows:

Post employment healthcare Death subsidy Total

2010 2009 2010 2009 2010 2009 2010 2009

Liability at the beginning of the year 64,492 61,101 2,567 2,396 1,230 1,161 68,289 64,658

Current service cost 1,889 1,939 85 86 43 42 2,017 2,067

Interest cost 3,450 3,282 138 129 67 63 3,655 3,474

Early retirements/incapacity 389 977 8 34 2 6 399 1,017

Actuarial (gain) and loss (483) (1,510) (22) (29) (348) (42) (853) (1,581)

Pensions / subsidies paid (1,338) (1,297) (51) (49) - - (1,389) (1,346)

Liability at the end of the year 68,399 64,492 2,725 2,567 994 1,230 72,118 68,289

Pensions due to age and early retirements

The changes in actuarial deviations in the years ended December 31, 2010 and 2009 were as follows:

Post employment healthcare Death subsidy Fund profitability Total

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

Actuarial gain and (loss) at the beginning of the year (1,066) (2,576) (95) (124) (131) (173) (3,025) (3,593) (4,317) (6,466)

Deviation in fund income - - - - - - (2,032) 568 (2,032) 568

Change in actuarial and financial assumptions - - - - - - - - - -

Deviation in pensions paid (120) (250) (5) 1 (78) - - - (203) (249)

Deviation in salary and pensions growth 1,670 862 74 34 27 16 - - 1,771 912

Other deviations (1,187) 898 (52) (6) 321 26 - - (918) 918

Actuarial gain and (loss) at the end of the year (703) (1,066) (78) (95) 139 (131) (5,057) (3,025) (5,700) (4,317)

Pensions due to age


Personnel costs for 2010 and 2009 include the following amounts relating to coverage of the pension liability (Note 23):

2010 2009

Pensions due to age

Current service cost 1,889 1,939

Interest cost 3,450 3,282

Post employment healthcare

Current service cost 85 86

Interest cost 138 129

Death subsidy


Interest cost 67 63

Expected Fund income (-) (3,258) (3,090) Early retirement cost 89 -

Early retirements in the period:

Utilisation of the provision 310 1,017

2,813 3,468 In 2010 and 2009, there were no actuarial deviations in excess of the corridor limit.

The cost of health benefits has a significant impact on pension costs. Health care of Unicre’s employees is provided by a social medical assistance department (SAMS), which is an autonomous entity, to which fixed contributions are made, as required by negotiations between the banks and trade unions. Thus, the rate of contributions to the care system cannot vary unilaterally, but depend on agreement between the various entities in the banking sector, and do not depend directly on the annual variation in the growth of the cost of medical care.

Other long term benefits

The past service liability for other benefits at December 31, 2010 and 2009 is made up as follows:

2010 2009

Past service liability:

Pensioners n.a. n.a.

Current employees 1,160 1,120

1,160 1,120

Long service premium


The changes in the past service liability for other employee benefits in 2010 and 2009 were as follows:

2010 2009

Liability at the beginning of the year 1,120 1,130


Interest cost 60 61

Actuarial (gain) and loss - (46)

Amounts paid (87) (85)

Liability at the end of the year 1,160 1,120

Long service bonus

Personnel costs for 2010 and 2009 include the following amounts relating to other long term employee benefits (Note 23):

2010 2009

Cost for the year 126 121

Actuarial deviations - (46)

126 75


16. CAPITAL

Unicre’s capital at December 31, 2010 and 2009 is made up of 2,000,000 subscribed and fully paid up shares of 5 Euros each.

(%) (%)

Percentage Amount Percentage Amount

Banco Comercial Português, S.A. 31.71 3,171 30.02 3,002

Banco Santander Totta, S.A. 21.50 2,150 18.09 1,809

Banco BPI, S.A. 20.65 2,065 17.31 1,732

Banco Espírito Santo, S.A. 17.50 1,750 9.09 910

Caixa Económica Montepio Geral 3.48 348 2.84 284

Banco Internacional do Funchal, S.A. 1.75 175 1.43 144

Banco Bilbao & Vizcaya (Argentaria), S.A. 0.95 95 0.78 78

Banco do Brasil AG - Sucursal em Portugal 0.36 36 0.29 29

Finibanco, S.A. 0.36 36 0.29 29

Caixa Central de Crédito Agrícola Mútuo, C.R.L. 0.36 36 0.29 29

Barclays Bank, S.A. 0.36 36 0.29 29

BPI - Banco Português de Investimento, S.A. 0.36 36 0.29 29

Banco Popular de Portugal 0.36 36 0.29 29

Banco Activo Bank, S.A. 0.29 29 0.29 29

Caixa Geral de Depósitos, S.A. - - 17.60 1,761

BNP Paribas, S.A. - - 0.29 29

Banco Português de Negócios, S.A. - - 0.29 29

100.00 10,000 99.80 9,981

Unicre (Treasury shares) - - 0.19 19

Capital 100 10,000 100 10,000

2010 2009

As shown in the above schedule, at the end of June 2010, the shares owned by CGD, BPN, BNP and the treasury shares were sold to the remaining shareholders (see Statements of changes in shareholders' equity).

In 2010, Unicre sold all its treasury shares. Consequently, at December 31, 2010 does not have any treasury shares.


17. REVALUATION RESERVE

The changes in the revaluation reserve in 2009 and 2010 were as follows:

Revaluation Deferred Total

reserve taxes

6,362 (849) 5,513

Sale of available-for-sale financial assets (Note 5) (2,429) 380 (2,049)

Valuation of available-for-sale financial assets (Note 5) 4,518 - 4,518

Deferred tax - available-for-sale financial assets (Note 26) - (1,421) (1,421)

Current Tax - available-for-sale financial assets (Note 26) - 264 264

8,451 (1,626) 6,824

Valuation of available-for-sale financial assets (Note 5) 1,021 - 1,021

Deferred tax - available-for-sale financial assets (Note 26) - (390) (390)

9,472 (2,015) 7,455

Balance at December 31, 2008



18. OTHER RESERVES AND RETAINED EARNINGS


December 31, 2010

December 31, 2009

Legal reserve 11,683 10,168Free reserves 19,352 17,188Retained earnings 13,343 13,319

44,378 40,675 In accordance with article 97 of the General Regime for Credit Institutions and Financial

Companies approved by Decree-Law 298/91 of December 31, as amended by Decree-Law 210/2002 of September 25, Unicre must appropriate at least 10% of annual net income to a legal reserve until it equals the greater of capital or the sum of free reserves and retained earnings.

The caption “Retained earnings” includes the impact of adopting the NCA standards as well as the revaluation reserve of other tangible assets recorded in accordance with legislation prior to January 1, 2005, resulting from evolution of the general price index, net of the corresponding deferred tax liability, in the amount of tEuros 2,258. In accordance with current legislation the reserve cannot be distributed to the shareholders but can be used for future capital increases of the Company or for other matters specified in legislation.

In 2010, this caption includes the amount of tEuros 24 relating to the merger of Consulprest into Unicre.


19. INTEREST AND SIMILAR INCOME

This caption includes interest charged to users of credit cards issued by Unicre (revolving), as well as short-term investment interest, as follows:

December 31, 2010

December 31, 2009

Cards - Unibanco brands 35,890 36,056Cards - Other brands 1,261 1,254Other loans 1,694 -Investment interest 141 12

Interest and similar income 38,986 37,322

20. INTEREST AND SIMILAR EXPENSE

This caption corresponds to interest on resources obtained from domestic credit institutions and is made up as follows:

December 31, 2010

December 31, 2009

“Hot money” 3,514 5,328Bank overdrafts 205 25Long term loans 985 1,099

Interest and similar expense 4,704 6,452


21. COMMISSION INCOME AND EXPENSE

These captions are made up as follows:

December 31, 2010

December 31, 2009

Discount received from merchants:

Domestic invoicing 178,350 166,986 Foreign invoicing 1,633 2,299Service charges 17,568 19,423Annuities 4,530 5,096Others (124) (54)

201,957 193,750

Amounts charged by card issuing members 149,496 137,692Commission on cash advanced 6,899 6,537Charges for banking services 282 406Charges for procuring cards 1,604 1,620Trading and growth and use of account 7,782 -Cash back paid to card holders 539 479

166,602 146,734

Commission income

Commission expense

Unicre receives commission from merchants for services acquired, calculated as a discount over

the amounts paid through cards, which is recorded in the caption “Commission income – Discount received from merchants”. On the other hand, the Interchange fees paid to card issuers are recorded in the caption “Commission expense – Amounts charged by card issuing members”.

In its activity as a representative of international brands and as a card issuer, Unicre charges to international systems and to its customers, respectively, service charges for operations of cash advanced at ATMs and at bank counters. At December 31, 2010 and 2009, the commissions chard for these services, in the amounts of tEuros 10,592 and tEuros 12,614, respectively, are recorded in the caption “Service charges”

In addition, the caption “Commission on cash advanced” reflects the amounts paid by Unicre to the banks’ ATM network owners for cash advanced to holders of cards issued and/or represented by it and cards of foreign brands which it acquires.

The caption “Service charges” also includes commissions received on account credits and instalment credits, which in 2010 amounted to tEuros 5,240 (tEuros 8,179 in 2009).

In 2010, in order for the banking network to procure new merchants to add to the Unicre acquiring network, protocols were signed with several banks, which charged a trading and growth and use of account commission.


22. OTHER OPERATING INCOME, NET


December 31, 2010

December 31, 2009

P.O.S. maintenance charges 3,454 3,710Services rendered 832 1,520Reimbursement of expenses 65 519Amounts charged to customers 1,604 1,841Installation and adherence charges 158 128Minimum quarterly income 721 627Coparticipation in insurance policies 46 99Premium on seized cards 96 38Others 2,201 2,038

9,177 10,520

Fraudulent invoicing 432 309Other taxes 184 308Vehicle rent 154 159Subscriptions 82 80Donations 16 -

868 856

8,309 9,664

Other operating income:

Other operating costs:


23. PERSONNEL COSTS


December 31, 2010

December 31, 2009

Employees 9,791 9,278Corporate boards 1,084 1,161

10,875 10,439

Retirement pensions -

Cost for the year (Note 15) 2,081 2,134 Others 25 40Other long term benefits –

Death subsidy (Note 15) 110 104 Long service bonus (Note 15) 127 73 Healthcare (SAMS) (Note 15) 223 215 Others (SAMS) 46 -Child Benefit Cash 1,011 903Healthcare (SAMS) and Social Security 1,105 875Labour accident insurance 58 61Contractual indemnities and restruturing (Note 13) 803 389Others 248 109

5,837 4,903

Personnel costs 16,712 15,342

Salaries:

Social charges and other personnel costs:

In 2010 and 2009, the caption “Contractual indemnities and restructuring” includes tEuros 715 and tEuros 304, respectively, relating to costs incurred with the restructuring process in progress at the end of each year (Note 13).


24. EMPLOYEES

The average and year-end number of employees of Unicre in 2010 and 2009, by professional category, was as follows:

2010 2009 2010 2009

Board members and senior management 14 15 15 13Managers 17 20 18 19With specific functions 80 79 77 80Administrative personnel 148 134 156 133Others 10 10 10 10

269 258 276 255

2009 2008 2010 2009

Group I 259 248 266 245Group II 1 1 1 1Group III 9 9 9 9

269 258 276 255

Average number of employees Year-end number of employees

Following the merger of Consulprest into Unicre in May 2010 (see Note 10), 20 employees were transferred to Unicre.

25. GENERAL ADMINISTRATIVE COSTS


December 31, 2010

December 31, 2009

Processing, Outsourcing and licensing 14,762 23,687Computer services 13,464 13,701Supporting bank charges (9) 8,793Licenses and other software costs 1,307 1,193

Operating costs 9,944 10,959Communication 1,602 1,815Finishing service costs 139 204Insurance 733 837Maintenance and repairs 960 1,006Printed and other material 353 405Database 72 226Labour 2,029 2,727Remuneration and fees 655 581Travel, lodging and representation expenses 481 460Rent and leasing 249 149Legal expenses and outsourced legal collections 1,202 1,177Other operanting costs 1,469 1,372

Others 4,263 4,214Audit, studies and consultations 2,621 2,154Publicity and publications 1,642 2,060

28,969 38,860

The caption “Computer services” refers mainly to costs incurred relating to the merchants’ network, including use of SIBS - Sociedade Interbancária de Serviços, S.A.’s computers which include the central system for processing operations and support for P.O.S. transactions.


The caption “Supporting bank charges” refers to amounts charged to Unicre by banks for procuring and maintaining customers and promoting Redunicre’s business. These agreements were discontinued in 2009.

26. INCOME TAX

In 2010 and 2009, the income tax charged to the statement of income, as well as the imputed tax burden, are as follows:

2010 2009

Current tax 6,627 5,196

Recognition and reversal of the temporary differences in:. Deferred tax assets (305) 302. Deferred tax liabilities (730) (740)

(1,035) (438)Total tax charged to the statement of income 5,592 4,758

Net income for the year before taxes 16,861 19,911Tax burden 33.17% 23.90%

Following is a reconciliation of the nominal tax rate with the effective tax rate for 2010 and 2009, as well as the reconciliation of the tax cost / income with the product of accounting net income by the nominal tax rate:

Tax Tax

rate Amount rate Amount

Net income before tax 16,861 19,911Tax determined based on the current tax rate 29.00% 4,890 26.50% 5,276

Decrease in taxed provisions 0.00% - -0.97% (193)Provision for loans granted 5.26% 888 0.00% -Non tax deductible pension costs 0.12% 20 0.40% 80Accounting and tax capital gains -0.01% (1) -1.36% (271)Non tax deductible social benefits 0.04% 7 0.04% 7Equity method effect -0.09% (16) -0.24% (47)Other non deductible costs/(income) 0.81% 137 0.13% 26State surcharge - deferred tax -1.92% (324) 0.00% -State surcharge - current tax -0.30% (50) 0.00% -Autonomous taxation 0.24% 41 0.21% 41Corporate Income Tax in excess from previous periods 0.00% - -0.81% (161)

33.17% 5,592 23.90% 4,758

2010 2009


The captions “Tax assets” and “Tax liabilities” at December 31, 2010 and 2009 are made up as follows:

2010 2009

Tax assets:

Current tax assets

Corporate Income Tax recoverable - 332

Deferred tax assets

Due to temporary differences 4,589 4,284

4,589 4,616

Tax liabilities:

Current tax liability

Corporate Income Tax payable 2,248 -

Deferred tax liability

Due to temporary differences 1,519 1,859

3,767 1,859

The changes in “Corporate Income Tax – Current Tax” in 2009 and 2010 were as follows:

Balance at December 31, 2008 3,930

Payments made during the year

- relating to the preceding year (3,662)

- payments on account (5,518)

- other adjustment accounts (278)

Income tax charge

- recorded in the statement of income 5,196

Balance at December 31, 2009 (332)

Payments made during the year

- relating to the preceding year 525

- payments on account (4,552)

- other adjustment accounts (22)

Income tax charge

- recorded in the statement of income 6,627

- recorded in equity (treasury shares) 2

Balance at December 31, 2010 2,248

Each year, the excess estimated for corporate income tax remains in this caption, being only reversed after review of the year in question by the tax authorities.

Deferred tax assets and liabilities correspond to the amount of tax recoverable and payable in future periods resulting from differences between the book value of assets and liabilities and their base for tax purposes. Deferred taxes were calculated using the tax rates decreed for the period in which the respective differences in assets and liabilities are expected to reverse.


Deferred tax assets and liabilities at December 31, 2010 and 2009 are made up as follows:

2010 2009

Deferred taxes:

Assets 4,589 4,284

Liabilities (1,519) (1,859)

3,070 2,425

Recorded by corresponding entry to:

Other reserves and retained earnings 3,434 2,996

Revaluation reserve (1,400) (1,009)

Statement of income 1,035 438

3,070 2,425

The changes in deferred taxes in 2010 are as follows:

Description

December 2009

Cost for the year

Reversals / Utilisation

AdjustmentsDecember

2010

Provision for credit 8,298 2,178 (207) (2,844) 7,425

Restructuring 401 715 (352) - 764 Incentives for EMV terminals and others 110 447 - - 557 Impairment of property 499 - (15) - 484Other non tax deductible provisions 1,010 1,162 (367) - 1,805

Early retirement 3,222 469 (794) - 2,897 Post employment healthcare 1,470 - (56) - 1,414 Death subsidy 1,078 110 (78) - 1,110 Long service bonus 1,073 127 (88) - 1,112 Others 14 46 - - 60Long term employee benefits for 6,858 752 (1,016) - 6,594Temporary differences that result in deferred tax assets 16,165 4,092 (1,590) (2,844) 15,824

Revaluation of fixed assets (429) 14 - - (415) Revaluation of available-for-sale assets (3,807) - - (1,020) (4,827) Amortisation of the impact of IAS 19 in accordance with Notice 4/2005 (2,779) - 2,779 -Temporary differences that result in deferred tax liabilities (7,015) 14 2,779 (1,020) (5,242)

Basis

Equity and result for the year

Description

December 2009

Cost for the year


AdjustmentsImpact (fee

change)December

2010Result for the year

Retained earnings

Revaluation reserve

Provision for credit 2,199 632 (60) (825) 207 2,153 (46) - -

Restructuring 106 207 (102) - 10 221 115 - - Incentives for EMV terminals and others 29 130 - - 3 162 132 - - Impairment of property 132 - (4) - 12 140 8 - -Other non tax deductible provisions: 268 337 (106) - 25 524 256 - -

Early retirement 854 136 (230) - 81 841 (13) - - Post employment healthcare 390 - (16) - 37 411 21 - - Death subsidy 286 32 (23) - 27 322 36 - - Long service bonus 284 37 (25) - 27 323 39 - - Others 4 13 - - - 17 13 - -Long term employee benefits 1,817 218 (295) - 171 1,913 94 - -Temporary differences that result in deferred tax assets 4,284 1,187 (461) (825) 404 4,589 305 - -

Revaluation of fixed assets (114) 4 - - (11) (121) (6) - - Revaluation of available-for-sale financial assets (1,009) - - (296) (95) (1,400) - - (390) Amortisation of the impact of IAS 19 in accordance with Notice 4/2005 (736) - 806 - (69) - 736 - -Temporary differences that result in deferred tax liabilities (1,859) 4 806 (296) (175) (1,519) 730 - (390)

2,425 1,191 345 (1,120) 229 3,069 1,035 - (390)

Deferred tax

The changes in deferred taxes in 2009 are as follows:


DescriptionDecember

2008Cost for the

yearReversals / Utilisation

AdjustmentsDecember

2009

Provision for credit 8,298 - - - 8,298

Restructuring 1,188 304 (1,091) - 401 Incentives for EMV terminals and others 950 - (840) - 110 Impairment of property 514 - (15) - 499Other non tax deductible provisions 2,650 304 (1,947) - 1,007

Early retirement 2,717 1,276 (771) - 3,222 Post employment healthcare 1,519 - (49) - 1,470 Death subsidy 974 104 - - 1,078 Long service bonus 1,130 73 (130) - 1,073 Others 14 - - - 14 Revaluation of available-for-sale assets 153 - (153) - -Long term employee benefits for 6,507 1,453 (1,102) - 6,858Temporary differences that result in deferred tax assets 17,455 1,757 (3,049) - 16,163

Revaluation of fixed assets (444) 14 - - (430) Revaluation of available-for-sale assets (35) - - (3,772) (3,807) Amortisation of the impact of IAS 19 in accordance with Notice 4/2005 (5,558) - 2,779 - (2,779)Temporary differences that result in deferred tax liabilities (6,037) 14 2,779 (3,772) (7,016)

Basis

Equity and result for the year

Description

December 2008

Cost for the year


AdjustmentsDecember

2009Result for the year

Retained earnings

Revaluation reserve

Provision for credit 2,199 - - - 2,199 - - -

Restructuring 315 81 (289) - 106 (209) - - Incentives for EMV terminals and others 252 - (223) - 30 (223) - - Impairment of property 136 - (4) - 132 (4) - -Other non tax deductible provisions 703 81 (516) - 268 (435) - -

Early retirement 720 338 (204) - 854 134 - - Post employment healthcare 403 - (13) - 390 (13) - - Death subsidy 258 28 - - 286 28 - - Long service bonus 299 19 (34) - 284 (15) - - Others 4 - - - 4 - - - Revaluation of available-for-sale assets 41 - (41) - - - - (41)Long term employee benefits 1,724 385 (295) - 1,817 134 - (41)Temporary differences that result in deferred tax assets 4,626 466 (811) - 4,284 (302) - (41)

Revaluation of fixed assets (117) 4 - - (114) 4 - - Revaluation of available-for-sale financial assets (9) - - (1,000) (1,009) - - (1,000) Amortisation of the impact of IAS 19 in accordance with Notice 4/2005 (1,473) - 736 - (737) 736 - -Temporary differences that result in deferred tax liabilities (1,600) 4 736 (1,000) (1,859) 740 - (1,000)

3,026 469 (75) (1,000) 2,425 438 - (1,039)

Deferred tax

In accordance with current legislation tax returns are subject to review by the Tax Administration during a period of four years (five years in the case of Social Security). At December 31, 2010 Unicre’s tax returns for the years 2008 to 2010 were still subject to revision. Given the nature of the possible corrections that could be made, it is not possible to quantify them at this time. However, Unicre’s Board of Directors believes that any additional assessments for the above years will not have a significant impact on the accompanying financial statements.


27. CAPITAL REQUIREMENTS

Since Unicre was transformed into a Credit Financial Institution on January 1, 2006, it has had to comply permanently with the regulatory capital requirements established by the Bank of Portugal, which are calculated in accordance with Notice 6/2010 of December. The minimum total own funds ratio is 8% and so Unicre’s own funds exceed those required by the Bank of Portugal.

At December 31, 2010 and 2009 Unicre’s own funds amounted to 51 million Euros and 55 million Euros, respectively, excluding net income for the year, which exceeds the minimum requirements by 21 million Euros and 24 million Euros, respectively, as follows:

Dez 2010 Dez 2009

Base own funds 43,866 44,453

Complementary own funds 6,657 10,165

Total own funds 50,523 54,618

Total requirements 29,797 30,649

Credit Risk 15,568 16,635

Operational Risk 14,229 14,014

Total own funds ratio 13.56% 14.26%

Base own funds ratio 11.78% 11.60%

Complementary own funds ratio 1.79% 2.65%

The decrease in the own funds ratio at December 31, 2010 in relation to the preceding year is due essentially to the decrease of the available own funds related to increased deductions for intangible assets not offset by retained earnings of 2009. On the other hand, credit risk requirements have also decreased, due to changes in the lending business.


28. FAIR VALUE AND FINANCIAL RISK

FAIR VALUE

The fair value of the financial instruments at December 31, 2010 is as follows:

Assets

Cash and deposits at Central Banks 10 - 10 10 -

Loans and advances to other credit institutions repayable on demand 57 - 57 57 -

Available-for-sale financial assets 9,475 - 9,476 9,476 -

Loans and advances to credit institutions 41,680 - 41,699 41,699 19

Loans to customers 226,433 - 230,975 230,975 4,542

277,656 - 282,217 282,217 4,561

Liabilities

Resources of other credit institutions 155,607 156,430 156,430 (823)

155,607 - 156,430 156,430 (823)

122,049 - 125,787 125,787 3,738

Differences in the valuation of financial assets recognised in the revaluation reserve 9,472

Total 13,210

December 31, 2010

Net book valueActive Market li ti g

Valuation techniques

Fair ValueDifference

The fair value of the financial instruments at December 31, 2009 is as follows:

Assets

Cash and deposits at Central Banks 15 - 15 15 -

Loans and advances to other credit institutions repayable on demand 124 - 124 124 -

Available-for-sale financial assets 8,455 - 8,455 8,455 -

Loans and advances to credit institutions 20,300 20,305 20,305 5

Loans to customers 244,187 - 247,844 247,844 3,657

273,082 - 276,742 276,742 3,661

Liabilities

Resources of other credit institutions 161,466 - 162,680 162,680 (1,213)

161,466 - 162,680 162,680 (1,213)

111,616 - 114,062 114,062 2,448

Differences in the valuation of financial assets recognised in the revaluation reserve 8,449

Total 10,897

December 31, 2009

Net book valueActive Market listings

Fair Value

Difference

Valuation techniques

Whenever possible, fair value is determined based on prices on active markets.

However, an active market does not presently exist in Portugal for some financial instruments, such as loans to customers, and as result internal valuation techniques were used by Unicre, based on discounted cash-flow of principal and expected future interest, considering that they occur on the dates contractually established. The discount rate used incorporates the market rates for the corresponding residual terms and entity spread, including a credit risk factor. The results obtained are influenced by the parameters used, which include some subjectivity, namely credit risk spread, and ignore factors such as the future development of the business.

Therefore, the amounts presented (i) do not correspond to the realisable value in a sale or liquidation scenario, (ii) cannot be understood as an estimate of the economic value of the company and (iii) could be different if other assumptions were used.

In 2010 and 2009 changes in the fair value of financial instruments occurred in the available-for-sale financial assets caption and were recorded by corresponding entry to revaluation reserves as shown in the Statement of Changes in Equity.

No financial instruments for which it was not possible to determine fair value on a reliable basis were derecognised in 2010 and 2009 and so there was no impact on net income.


CREDIT RISK

One of the main risks the Company faces in its operations is the risk of credit granted through credit cards.

Credit risk results from the possibility of financial loss occurring as a result of non compliance by customers with the contractual obligations established with Unicre in its credit activity.

Credit risk control starts with the credit concession process itself.

Credit risk is assessed based on the results obtained from the scoring model used by Unicre, which automatically assigns credit limits and risk ratings based on the economic and social situation of each customer.

The monitoring and control activities have the objective of quantifying and controlling credit risk, enabling concrete measures to be defined in advance for specific situations that indicate increased risk, as well as overall management strategies of the credit portfolio.

In addition, there is a Credit Committee that has the mission of optimising credit management, assessing, proposing and giving opinions on methodologies, policies, procedures and valuation instruments relating to the evolution and behaviour of the credit portfolio, corrective action plans and implementation of appropriate measures, as well as Internal Credit Norms that include in a single document the rules for granting, monitoring and recovering credit.

With the objective of increasing the importance attached by Unicre to credit risk control measures, a risk quality ratio is used as a performance indicator in the incentives system that exists in the Company.

The maximum exposure to credit risk at December 31, 2010 was as follows:

Assets

Loans to customers 243,022 27,432 215,590

Gross Book Value

Provisions Net Book Value

The maximum exposure to credit risk at December 31, 2009 was as follows:

Assets

Loans to customers 265,778 30,464 235,314

Gross Book Value

Provisions Net Book Value

Unicre does not provide irrevocable credit lines or other off balance sheet guarantees and collateral received as guarantee of credit granted is insignificant, which is mostly of individuals.

Overdue credit granted and accrued interest at December 31, 2010 and 2009 is made up as follows, by default class:

Dec-10 Dec-09 Dec-10 Dec-09 Dec-10 Dec-09 Dec-10 Dec-09 Dec-10 Dec-09

Overdue credit 601 681 7,892 9,996 10,368 15,304 8,117 9,636 26,978 35,617

Overdue interest 877 1,096 - - - - - - 877 1,096

Gross amount 1,478 1,777 7,892 9,996 10,368 15,304 8,117 9,636 27,855 36,713

Specific provisions 22 27 1,973 2,499 6,477 9,429 8,117 9,636 16,589 21,591

Net amount 1,456 1,750 5,919 7,497 3,891 5,875 - - 11,266 15,122

TotalUp to 3 months From 3 to 6 months From 6 to 12 months More than a year

In addition to the provision for overdue credit and interest shown above, at December 31, 2010 and 2009 Unicre had a provision for general credit risks of tEuros 10,843 and tEuros 8,873, respectively (Note 13).


MARKET RISK

Market risk consists in general of possible changes in the value of a financial asset due to unexpected fluctuations in interest rates, exchange rates, prices on the stock market and the metals and other commodities markets.

Unicre’s current exposure to stock market fluctuation is limited due to the small amount and strategic nature of its investments. Similarly, exposure to exchange risk is insignificant because of the insignificant amount of Unicre’s foreign currency assets and liabilities.

Unicre’s most significant asset is its customer loans portfolio (mainly to company-issued card holders), interest rate risk being the most significant market risk exposure, which is increased by the extended loan repayment terms.

Interest rate risk is assessed and monitored by the concept of modified duration and mismatch between the expected change in value of the assets portfolio and the expected change in liabilities due to changes in the market interest rate curve, maximum exposure limits corresponding to 0.1% of the market value of the assets having been established. The impact of a 1% increase in interest rates on Unicre’s assets and liabilities at December 31, 2010 corresponds to a loss of tEuros 377 (loss of tEuros 219 in 2009), due to the reduction in the average duration of the liabilities.

LIQUIDITY RISK

Unicre is funded by shareholders’ equity, but essentially by short term money market current account loans under agreements established with the main banks. In 2007 Unicre started using medium term fixed rate loans.

Current funding management is supported by cash flow forecasts so as to avoid excessive risks resulting from the deterioration of spreads and shortage of liquidity, maximum term exposure limits having been established.

Current account balances are controlled daily, to ensure that Unicre has positive but residual balances with banks which it does not have financing agreements and to optimise the remaining accounts given the contractual conditions of the different banks.

The funding position is analysed monthly by the Executive Committee.

The residual contractual terms of the financial liabilities at December 31, 2010 and 2009 are as follows:

From 3 months From 1 to From 3 to

Demand Up to 3 months to 1 year 3 years 5 years Undetermined Total

Liabilities

Resources of other credit institutions - 59,631 90,542 5,434 - - 155,607

- 59,631 90,542 5,434 - - 155,607

From 3 months From 1 to From 3 to

Demand Up to 3 months to 1 year 3 years 5 years Undetermined Total

Liabilities

Resources of other credit institutions - 88,497 42,250 30,520 - - 161,267

- 88,497 42,250 30,520 - - 161,267

Residual terms - 2009

Residual terms - 2010


29. RELATED PARTIES

Unicre’s related parties at December 31, 2010 and 2009 were as follows:

Head Direct EffectiveName of related party office participation participation

Shareholders with participations exceeding 10% (see Note 16)

Banco Comercial Português Group Portugal 31.71% 32.00%Santander Totta Group Portugal 21.50% 21.50%Banco BPI Group Portugal 20.65% 21.01%BES Group (after June 30, 2010) Portugal 17.50% 17.50%Caixa Geral de Depósitos Group (after June 30, 2010) Portugal n.a n.a

Subsidiary and associated companies

Consulprest - Sociedade Prestadora

de Serviços de Consultoria, Lda. (until May 1, 2010) - See Note 10 Portugal 100% 100%Paywatch - Seviços integrados de

segurança em pagamentos, S.A. Portugal 40% 40%

Members of Unicre's Board of Directors

Executive Committee:

Fernando Adão da Fonseca - President *

Amadeu Ferreira de Paiva - Member

Isabel Ramos de Almeida - Member*

Non-executive Directors:

António Farinha de Morais - Member

António Palma Ramalho - Member (President **)

João Eduardo Moura da Silva Freixa - Member

Miguel de Campos Pereira de Bragança - Member

Vasco Manuel da Silva Pereira - Member **

Members of Unicre's Supervisory Board

António Manuel Luna Vaz - President *

José Gomes Pedro - President **

Jorge Manuel Arriaga da Cunha - Member *

João Anibal Torres Martins - Member *

Ludovico Morgado Cândido - Member **

Eugénio Fernando Jesus Quintais Lopes - Alternate member

Unicre personnel Pension Fund

Unicre Pension Fund Portugal

* after August 24, 2010

** until August 24, 2010


Total assets and liabilities relating to transactions with Unicre’s related entities at December 31, 2010 and 2009 are as follows:

Shareholders with Subsidiaries and

part. exceeding 10% ass. companies TotalAssets

Investments in associates - 298 298Other assets 16 - 16

16 298 314Liabilities

Resources of other credit institutions 60,032 - 60,032Accrued interest 1,339 - 1,339Other liabilities 2,389 27 2,417

63,761 27 63,788


part. exceeding 10% ass. companies TotalAssets

Investments in associates - 402 402Other assets 10 1 11

10 403 413Liabilities

Resources of other credit institutions 108,059 - 108,059Accrued interest 1,837 - 1,837Other liabilities 1,841 89 1,930

111,738 89 111,827

2010

2009

In 2010, Unicre paid the management commission and made a contribution in cash to its

Pension Fund, in the amounts of tEuros 53 and tEuros 96, respectively (tEuros 99 and tEuros 1,191, respectively, in 2009) (Note 15).

Additionally, in February 2011 contributed with tEuros 4,087 to its Pension Fund.


In 2010 and 2009, the total costs and income on transactions with related parties of Unicre were as follows:


part. exceeding 10% ass. companies TotalIncome

Income from equity instruments - 55 55Other operating income 23 - 23

23 55 78Costs

Interest and similar expense 3,196 - 3,196Commission expense 80,966 - 80,966Bank charges 205 - 205General administrative costs - 177 177

84,367 177 84,545


part. exceeding 10% ass. companies TotalIncome

Income from equity instruments - 176 176Other operating income 164 133 164

164 309 340Costs

Interest and similar expense 4,396 - 4,396Commission expense 93,135 - 93,135Bank charges 278 - 278General administrative costs 4,809 689 5,497

102,618 689 103,306

2010

2009

30. BOARD REMUNERATION

Remuneration of the members of the Board of Directors, made up of 3 Executive Directors, 4 Non-Executive Directors and members of the Supervisory Board, is decided by the Remuneration Committee, which consists of 3 representatives of the shareholders.

Only the Executive Directors receive remuneration from Unicre. The remuneration policy for the Board of Directors in office until August 24, 2010 did not include the payment of any variable remuneration. After that date and exceptionally for the remainder of 2010, the Remuneration Committee decided to give the new executive members of the Board of Directors a performance premium in proportion to the time service in the year, calculated on an annual basis at 6 times the monthly remuneration. This performance premium is payable after the approve of the annual accounts by the Shareholders’ General Meeting, based on their objective performance, in the current financial year measured by net income before income tax.

At December 31, 2010 there were no balances receivable from or payable to members of Unicre’s Board of Directors or Supervisory Board, the members of these Boards having in 2010 earned remuneration of tEuros 1,158.

In addition, pension charges were recorded and other post-employment benefits were granted to current members of the Board of Directors, amounting tEuros 25.


In 2010 the remuneration paid to the members of the Unicre’s Board of Directors and Supervisory Board were as follows:

Until August 24

Board of Directors

António Palma Ramalho 290

Amadeu Ferreira de Paiva 263

Vasco Manuel da Silva Pereira 294

847

Surpervisory Board

José Gomes Pedro 9

António Manuel Luna Vaz - Member 6

Ludovico Morgado Cândido - Member 5

20

After August 24

Board of Directors

Fernando Adão da Fonseca 106

Amadeu Ferreira de Paiva 88

Isabel Ramos de Almeida 87

281

Surpervisory Board

António Manuel Luna Vaz 5

Jorge Manuel Arriaga da Cunha - Member 2

João Aníbal Torres Martins - Member 2

10


31. PORTUGUESE STATUTORY AUDITOR

Deloitte & Associados, SROC, S.A (Deloitte), is the Portuguese Statutory Auditor of Unicre and was re-elected until 2012 at the Shareholders’ General Meeting held on August 24, 2010. Maria Augusta Cardador Francisco is the partner responsible for the audit of the financial statements of Unicre.

In 2010 and 2009 the remuneration of Deloitte for services rendered to Unicre amounted to tEuros 509 and tEuros 368, respectively, divided as follows by nature of the work:

2010 2009

Statutory Audit 59 57

Consulting 119 99

Tax Consulting 286 98

Others 45 114

509 368

32. NOTE ADDED FOR TRANSLATION

These financial statements are a translation of financial statements originally issued in Portuguese in conformity with the Adjusted Accounting Standards issued by the Bank of Portugal, some of which may not conform to generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.


10. LEGAL CERTIFICATION OF THE ACCOUNTS Deloitte 6 Associados, SROC SA. OROC Registration n° 43 CMVM Registration n* 231

LEGAL CERTIFICATION OF ACCOUNTS Edifício Atrium Saldanha Praça Duque de Saldanha, 1 - 6° 1050-094 Lisbon Portugal

(Expressed in thousand of euros - €k) Tel:+(351) 210427 500 Fax: +(351) 210427950 www.deloitte.pt

Introduction

1. We have audited the attached financial statements of Unicre - Instituição Financeira de Crédito, SA (Unicre), which comprise the Balance Sheet as at December 31, 2010, which shows a total of €310,155k and an equity of €73,102k, including a net profit of €11,270k, the Statement of Comprehensive Income, the Income Statement , the Statement of Changes in Equity and the Cash-flow Statement for the year then ended, and the Notes to the Accounts.

Responsibilities

2. The Unicre Board of Directors is responsible for the preparation of financial statements that truly and fairly present Unicre's financial position, the results and comprehensive income of its operations, the changes of its equity and its cash flows, as well as for the adoption of adequate accounting policies and criteria and for the maintenance of an appropriate system of internal control. Our responsibility is to express a professional, independent opinion based on our audit of the said financial statements.

Scope

3. Our audit was performed in accordance with the Technical Rules and with the Auditing Directives of the Association of Official Auditors, which require that it be so planned and performed as to obtain an acceptable degree of certainty as to whether the financial statements are exempt from materially relevant distortions. This audit includes verification, on a test basis, of the documents underlying the figures and information disclosed in the financial statements and an evaluation of the estimates, based on judgements and criteria established by the Board of Directors, used in their preparation; The audit likewise includes an appraisal as to the adequacy of the accounting policies adopted and of their disclosures, taking the circumstances into account, and verification of the applicability of the going-concern principle and an appraisal as to the adequacy, in overall terms of the presentation of the financial statements. Our audit also included verification of the consistency of the financial information contained in the Management Report with the consolidated financial statements. We believe that the audit performed provides an acceptable basis for the expression of our opinion.

Opinion

4. In our opinion, the financial statements referred to in paragraph 1 hereabove truly and fairly present, in all materially relevant aspects, the financial position of Unicre - Instituição Financeira de Crédito, SA, as at December 31, 2010, the results and comprehensive income of its operations, that changes in its equity and its cash flow for the year then ended, in accordance with the Adjusted Accounting Standards issued by the Bank of Portugal (Note 2).

Report on other legal requirements

5. We are also of the opinion that the financial opinion contained in Management Report is consistent with the financial statements for the year ended December 31, 2010.

Lisbon, March 1, 2011 Deloitte & Associados, SROC S.A. Represented by Maria Augusta Cardador Francisco


11. REPORT AND OPINION OF THE STATUTORY AUDITOR

BOARD OF AUDITORS’ REPORT AND OPINION

To the Members of Unicre, Instituição Financeira de Crédito, SA,

1. INTRODUCTION

In accordance with the law and the articles of association, the Board of Auditors is charged with submitting to you for appraisal our Report on and Opinion of the Annual Report and Accounts of Unicre, Instituição Financeira de Crédito, SA, for the year ended December 31st 2010.

The Board of Auditors monitored on a systematic basis, as it is duty-bound, the evolution of the company’s management and results in a year that was notably adverse. Of the activity of the Board of Auditors during 2010, emphasis is given to the meetings regularly held with:

a) the head of the Financial and Means Division, to appraise the company’s accounts;

b) the head of the Audit and Internal Control Division, to monitor the execution and development of the company’s internal control system; and

c) the Board of Directors to review in detail the evolution of the company’s management and of the financial information.

2. APPRAISAL OF THE ANNUAL REPORT AND ACCOUNTS

The Directors’ Report accurately shows how the management of the company took place during 2010, and it is consistent with the financial statements.

Emphasis is given:

a) in the matter of provisions: to the reduction of the volume of loans & advances as a result of the situation of the economy during the year that led to a reduction of net provisions, although the cover of non-performing loans increased significantly when compared to 2009;

b) In the matter of recovery of loans: to the improvement of the respective indicators, in particular the recovery of loans at the dunning stage and the introduction of more-demanding criteria in extending new credit;

c) in the matter of costs: to the maintenance of adequate, appropriate cost control

3. OPINION

In view of the foregoing, and bearing in mind the legal certification of the accounts issued by an independent entity, the opinion of the Board of Auditors is that the General meeting:

a) approve the 2010 annual report and accounts presented by the Board of Directors; and

b) approve the proposal for the appropriation of profit submitted by the Board of Directors.


Lastly, the Board of Auditors would like to express its gratitude and appreciation to the Board of Directors and to the Company’s services for the collaboration and willingness displayed at all times.

Lisbon, March 1st, 2011

THE BOARD OF AUDITORS

António Luna Vaz

Jorge Arriaga da Cunha

João Torres Martins


12. FORMULAE

RETURN ON ASSETS – ROA -

(Net after-tax profits for the year)/(Average of quarterly net assets)

RETURN ON EQUITY - ROE -

(Net after-tax profits for the year)/(Average quarterly equity, excluding the year's net results)

OPERATING COSTS

Staff costs + Third-party supplies & services

OVERHEADS

Operating costs + Depreciation

OPERATING INCOME

Net interest income + Returns on securities + Net commission + Returns on financial transactions + Results of associate companies and affiliates (if on a consolidated basis) + Other operating results

COST-TO-INCOME

(Operating costs)/(Operating income)

COVER OF LOANS PAST-DUE BY MORE THAN 90 DAYS

(Loan-loss provisions + Provisions for general credit risks)/(Loans past-due by more than 90 days)

OPERATING PROFIT

Operating income - Overheads

RECURRENT PROFIT

Net profit corrected for the impact of non-recurrent events

NON-PERFORMING LOANS

Loans past-due by more than 90 days + Doubtful debt reclassified as past-due for the purpose of provisions

NON-PERFORMING LOANS, NET

Non-performing loans - (provisions for past-due loans + Doubtful debt provisions)

TOTAL LOANS, NET

Total loans - (Provisions for past-due loans + Doubtful debt provisions)


EQUITY ADEQUACY RATIO4

(Equity)/(Equity requirements X 12.5)

TIER I CAPITAL ADEQUACY RATIO4

(Tier I)/(Equity requirements X 12.5)

NON-PERFORMING LOAN RATIO

(Non-performing loans)/(Total Loans)

NON-PERFORMING LOAN, NET OF PROVISIONS, RATIO

(Non-performing loans, net)/(Total Loans, net)

EFFICIENCY RATIO

(Operating costs + Depreciation)/(Operating income)

4 Equity requirements are as stipulated by Notice 6/2010.

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